I.

NCC 15

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 80116 June 30, 1989

IMELDA MANALAYSAY PILAPIL, petitioner,

vs.
HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the Regional Trial Court of
Manila, Branch XXVI; HON. LUIS C. VICTOR, in his capacity as the City Fiscal of Manila; and
ERICH EKKEHARD GEILING, respondents.

REGALADO, J.:

An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce, only to be
followed by a criminal infidelity suit of the latter against the former, provides Us the opportunity to lay
down a decisional rule on what hitherto appears to be an unresolved jurisdictional question.

On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private respondent
Erich Ekkehard Geiling, a German national, were married before the Registrar of Births, Marriages and
Deaths at Friedensweiler in the Federal Republic of Germany. The marriage started auspiciously enough,
and the couple lived together for some time in Malate, Manila where their only child, Isabella Pilapil
Geiling, was born on April 20, 1980. 1

Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a
separation de facto between them.

After about three and a half years of marriage, such connubial disharmony eventuated in private
respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg Local
Court in January, 1983. He claimed that there was failure of their marriage and that they had been living
apart since April, 1982. 2

Petitioner, on the other hand, filed an action for legal separation, support and separation of property
before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the same is still
pending as Civil Case No. 83-15866. 3

On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany,
promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody of the
child was granted to petitioner. The records show that under German law said court was locally and
internationally competent for the divorce proceeding and that the dissolution of said marriage was legally
founded on and authorized by the applicable law of that foreign jurisdiction. 4

On June 27, 1986, or more than five months after the issuance of the divorce decree, private respondent
filed two complaints for adultery before the City Fiscal of Manila alleging that, while still married to said
respondent, petitioner "had an affair with a certain William Chia as early as 1982 and with yet another

1
man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los Reyes, Jr., after the
corresponding investigation, recommended the dismissal of the cases on the ground of insufficiency of
evidence. 5 However, upon review, the respondent city fiscal approved a resolution, dated January 8,
1986, directing the filing of two complaints for adultery against the petitioner. 6 The complaints were
accordingly filed and were eventually raffled to two branches of the Regional Trial Court of Manila. The
case entitled "People of the Philippines vs. Imelda Pilapil and William Chia", docketed as Criminal Case
No. 87-52435, was assigned to Branch XXVI presided by the respondent judge; while the other
case, "People of the Philippines vs. Imelda Pilapil and James Chua", docketed as Criminal Case No. 87-
52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the same court. 7

On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid
resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar petition
was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of Justice,
through the Chief State Prosecutor, gave due course to both petitions and directed the respondent city
fiscal to inform the Department of Justice "if the accused have already been arraigned and if not yet
arraigned, to move to defer further proceedings" and to elevate the entire records of both cases to his
office for review. 9

Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend further
proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings in Criminal
Case No. 87-52434. On the other hand, respondent judge merely reset the date of the arraignment in
Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date, petitioner moved for the
cancellation of the arraignment and for the suspension of proceedings in said Criminal Case No. 87-
52435 until after the resolution of the petition for review then pending before the Secretary of Justice. 11 A
motion to quash was also filed in the same case on the ground of lack of jurisdiction, 12 which motion was
denied by the respondent judge in an order dated September 8, 1987. The same order also directed the
arraignment of both accused therein, that is, petitioner and William Chia. The latter entered a plea of not
guilty while the petitioner refused to be arraigned. Such refusal of the petitioner being considered by
respondent judge as direct contempt, she and her counsel were fined and the former was ordered
detained until she submitted herself for arraignment. 13 Later, private respondent entered a plea of not
guilty. 14

On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a prayer for
a temporary restraining order, seeking the annulment of the order of the lower court denying her motion to
quash. The petition is anchored on the main ground that the court is without jurisdiction "to try and decide
the charge of adultery, which is a private offense that cannot be prosecuted de officio (sic), since the
purported complainant, a foreigner, does not qualify as an offended spouse having obtained a final
divorce decree under his national law prior to his filing the criminal complaint." 15

On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents from
implementing the aforesaid order of September 8, 1987 and from further proceeding with Criminal Case
No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A. Ordoez acted on the
aforesaid petitions for review and, upholding petitioner's ratiocinations, issued a resolution directing the
respondent city fiscal to move for the dismissal of the complaints against the petitioner. 16

We find this petition meritorious. The writs prayed for shall accordingly issue.

Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes against
chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended spouse. It has
long since been established, with unwavering consistency, that compliance with this rule is a
jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the jurisdiction of the
court over the offense is vested in it by the Judiciary Law, the requirement for a sworn written complaint is
just as jurisdictional a mandate since it is that complaint which starts the prosecutory proceeding 19 and
without which the court cannot exercise its jurisdiction to try the case.

2
Now, the law specifically provides that in prosecutions for adultery and concubinage the person who can
legally file the complaint should be the offended spouse, and nobody else. Unlike the offenses of
seduction, abduction, rape and acts of lasciviousness, no provision is made for the prosecution of the
crimes of adultery and concubinage by the parents, grandparents or guardian of the offended party. The
so-called exclusive and successive rule in the prosecution of the first four offenses above mentioned do
not apply to adultery and concubinage. It is significant that while the State, as parens patriae, was added
and vested by the 1985 Rules of Criminal Procedure with the power to initiate the criminal action for a
deceased or incapacitated victim in the aforesaid offenses of seduction, abduction, rape and acts of
lasciviousness, in default of her parents, grandparents or guardian, such amendment did not include the
crimes of adultery and concubinage. In other words, only the offended spouse, and no other, is
authorized by law to initiate the action therefor.

Corollary to such exclusive grant of power to the offended spouse to institute the action, it necessarily
follows that such initiator must have the status, capacity or legal representation to do so at the time of the
filing of the criminal action. This is a familiar and express rule in civil actions; in fact, lack of legal capacity
to sue, as a ground for a motion to dismiss in civil cases, is determined as of the filing of the complaint or
petition.

The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that the
same requirement and rationale would not apply. Understandably, it may not have been found necessary
since criminal actions are generally and fundamentally commenced by the State, through the People of
the Philippines, the offended party being merely the complaining witness therein. However, in the so-
called "private crimes" or those which cannot be prosecuted de oficio, and the present prosecution for
adultery is of such genre, the offended spouse assumes a more predominant role since the right to
commence the action, or to refrain therefrom, is a matter exclusively within his power and option.

This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the
outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently argued by
petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital relationship is still
subsisting at the time of the institution of the criminal action for, adultery. This is a logical consequence
since the raison d'etre of said provision of law would be absent where the supposed offended party had
ceased to be the spouse of the alleged offender at the time of the filing of the criminal case. 21

In these cases, therefore, it is indispensable that the status and capacity of the complainant to commence
the action be definitely established and, as already demonstrated, such status or capacity must
indubitably exist as of the time he initiates the action. It would be absurd if his capacity to bring the action
would be determined by his status before or subsequent to the commencement thereof, where such
capacity or status existed prior to but ceased before, or was acquired subsequent to but did not exist at
the time of, the institution of the case. We would thereby have the anomalous spectacle of a party
bringing suit at the very time when he is without the legal capacity to do so.

To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as to
when precisely the status of a complainant as an offended spouse must exist where a criminal
prosecution can be commenced only by one who in law can be categorized as possessed of such status.
Stated differently and with reference to the present case, the inquiry ;would be whether it is necessary in
the commencement of a criminal action for adultery that the marital bonds between the complainant and
the accused be unsevered and existing at the time of the institution of the action by the former against the
latter.

American jurisprudence, on cases involving statutes in that jurisdiction which are in pari materia with ours,
yields the rule that after a divorce has been decreed, the innocent spouse no longer has the right to
institute proceedings against the offenders where the statute provides that the innocent spouse shall have
the exclusive right to institute a prosecution for adultery. Where, however, proceedings have been
properly commenced, a divorce subsequently granted can have no legal effect on the prosecution of the
criminal proceedings to a conclusion. 22

3
In the cited Loftus case, the Supreme Court of Iowa held that

'No prosecution for adultery can be commenced except on the complaint of the husband
or wife.' Section 4932, Code. Though Loftus was husband of defendant when the offense
is said to have been committed, he had ceased to be such when the prosecution was
begun; and appellant insists that his status was not such as to entitle him to make the
complaint. We have repeatedly said that the offense is against the unoffending spouse,
as well as the state, in explaining the reason for this provision in the statute; and we are
of the opinion that the unoffending spouse must be such when the prosecution is
commenced. (Emphasis supplied.)

We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction,
considering our statutory law and jural policy on the matter. We are convinced that in cases of such
nature, the status of the complainant vis-a-vis the accused must be determined as of the time the
complaint was filed. Thus, the person who initiates the adultery case must be an offended spouse, and by
this is meant that he is still married to the accused spouse, at the time of the filing of the complaint.

In the present case, the fact that private respondent obtained a valid divorce in his country, the Federal
Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in the Philippines
insofar as private respondent is concerned 23 in view of the nationality principle in our civil law on the
matter of status of persons.

Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a United
States court between Alice Van Dornja Filipina, and her American husband, the latter filed a civil case in a
trial court here alleging that her business concern was conjugal property and praying that she be ordered
to render an accounting and that the plaintiff be granted the right to manage the business. Rejecting his
pretensions, this Court perspicuously demonstrated the error of such stance, thus:

There can be no question as to the validity of that Nevada divorce in any of the States of
the United States. The decree is binding on private respondent as an American citizen.
For instance, private respondent cannot sue petitioner, as her husband, in any State of
the Union. ...

It is true that owing to the nationality principle embodied in Article 15 of the Civil Code,
only Philippine nationals are covered by the policy against absolute divorces the same
being considered contrary to our concept of public policy and morality. However, aliens
may obtain divorces abroad, which may be recognized in the Philippines, provided they
are valid according to their national law. ...

Thus, pursuant to his national law, private respondent is no longer the husband of
petitioner. He would have no standing to sue in the case below as petitioner's husband
entitled to exercise control over conjugal assets. ... 25

Under the same considerations and rationale, private respondent, being no longer the husband of
petitioner, had no legal standing to commence the adultery case under the imposture that he was the
offended spouse at the time he filed suit.

The allegation of private respondent that he could not have brought this case before the decree of divorce
for lack of knowledge, even if true, is of no legal significance or consequence in this case. When said
respondent initiated the divorce proceeding, he obviously knew that there would no longer be a family nor
marriage vows to protect once a dissolution of the marriage is decreed. Neither would there be a danger
of introducing spurious heirs into the family, which is said to be one of the reasons for the particular
formulation of our law on adultery, 26 since there would thenceforth be no spousal relationship to speak of.

4
The severance of the marital bond had the effect of dissociating the former spouses from each other,
hence the actuations of one would not affect or cast obloquy on the other.

The aforecited case of United States vs. Mata cannot be successfully relied upon by private respondent.
In applying Article 433 of the old Penal Code, substantially the same as Article 333 of the Revised Penal
Code, which punished adultery "although the marriage be afterwards declared void", the Court merely
stated that "the lawmakers intended to declare adulterous the infidelity of a married woman to her marital
vows, even though it should be made to appear that she is entitled to have her marriage contract
declared null and void, until and unless she actually secures a formal judicial declaration to that effect".
Definitely, it cannot be logically inferred therefrom that the complaint can still be filed after the declaration
of nullity because such declaration that the marriage is void ab initio is equivalent to stating that it never
existed. There being no marriage from the beginning, any complaint for adultery filed after said
declaration of nullity would no longer have a leg to stand on. Moreover, what was consequently
contemplated and within the purview of the decision in said case is the situation where the criminal action
for adultery was filed before the termination of the marriage by a judicial declaration of its nullity ab initio.
The same rule and requisite would necessarily apply where the termination of the marriage was effected,
as in this case, by a valid foreign divorce.

Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore cited, 27 must suffer the
same fate of inapplicability. A cursory reading of said case reveals that the offended spouse therein had
duly and seasonably filed a complaint for adultery, although an issue was raised as to its sufficiency but
which was resolved in favor of the complainant. Said case did not involve a factual situation akin to the
one at bar or any issue determinative of the controversy herein.

WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and another one
entered DISMISSING the complaint in Criminal Case No. 87-52435 for lack of jurisdiction. The temporary
restraining order issued in this case on October 21, 1987 is hereby made permanent.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 138322 October 2, 2001

GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner,

vs.
REDERICK A. RECIO, respondents.

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 judgment; 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.

5
 The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the January 7,
1999 Decision1 and the March 24, 1999 Order2 of the Regional Trial Court of Cabanatuan City, Branch
28, in Civil Case No. 3026-AF. 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.

On June 26, 1992, respondent became an Australian citizen, as shown by a "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 license, respondent was declared as "single" and "Filipino." 8

Starting October 22, 1995, petitioner and respondent lived separately without prior judicial dissolution of
their marriage. While the two were still in Australia, their conjugal assets were divided on May 16, 1996, in
accordance with their Statutory Declarations secured in Australia.9

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 a prior subsisting marriage at the time he married
her on January 12, 1994. She claimed that she learned of respondent's marriage to Editha Samson only
in November, 1997.

In his Answer, respondent averred that, as far back as 1993, he had revealed 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 decree obtained in Australian in 1989; 12 thus, he was legally
capacitated to marry petitioner in 1994.1wphi1.nt

On July 7, 1998 or about five years after the couple's wedding and while the 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] irretrievably broken down." 13

Respondent prayed in his Answer that the Complained be dismissed on the ground that it stated no
cause of action.14 The Office of the Solicitor General agreed with respondent.15 The court marked and
admitted the documentary evidence of both parties.16 After they submitted their respective memoranda,
the case was submitted for resolution.17

Thereafter, the trial court rendered the assailed Decision and Order.

Ruling of the Trial Court

The trial court declared the marriage dissolved on the ground that the divorce issued in Australia was
valid and recognized in the Philippines. It deemed the marriage ended, but not on the basis of any defect
in an essential element of the marriage; that is, respondent's alleged lack of legal capacity to remarry.

6
Rather, it based its Decision on the divorce decree obtained by respondent. The Australian divorce had
ended the marriage; thus, there was no more martial union to nullify or annual.

Hence, this Petition.18

Issues

Petitioner submits the following issues for our consideration:

"I

The trial court gravely erred in finding that the divorce decree obtained in Australia by the
respondent ipso facto terminated his first marriage to Editha Samson thereby capacitating him to
contract a second marriage with the petitioner.

"2

The failure of the respondent, who is now a naturalized Australian, to present a certificate of legal
capacity to marry constitutes absence of a substantial requisite voiding the petitioner' marriage to
the respondent.

"3

The trial court seriously erred in the application of Art. 26 of the Family Code in this case.

"4

The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35, 40, 52 and 53 of
the Family Code as the applicable provisions in this case.

"5

The trial court gravely erred in pronouncing that the divorce 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

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 Editha Samson was proven, and (2) whether
respondent was proven to be legally capacitated to marry petitioner. Because of our ruling on these two,
there is no more necessity to take up the rest.

The Court's Ruling

The Petition is partly meritorious.

First Issue:

Proving the Divorce Between Respondent and Editha Samson

Petitioner assails the trial court's 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

7
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 celebrationist). 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
1522 and 1723 of the Civil Code.24 In mixed marriages involving a Filipino and a foreigner, Article 2625 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:

xxx xxx xxx

"(5) If previously married, how, when and where the previous marriage was dissolved or annulled;

xxx xxx xxx

"ART. 13. In case either of the contracting parties has been previously married, the applicant
shall be required to furnish, instead of the birth of baptismal certificate required in the last
preceding article, the death certificate of the deceased spouse 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 children's 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.

8
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 officially 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
attested33 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 aforemetioned
rules on evidence must be demonstrated.

Fortunately for respondent's cause, when the divorce decree of May 18, 1989 was submitted in evidence,
counsel for petitioner objected, not to its admissibility, 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
petitioner's qualification.37Hence, it was admitted in evidence and accorded weight by the judge. Indeed,
petitioner's failure to object properly rendered the divorce decree admissible as a written act of the Family
Court of Sydney, Australia.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 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:

9
 Respondent's 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.

Respondent's 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 remarrying 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 respondent's 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 3949 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

10
As it is, however, there is absolutely no evidence that proves respondent's 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. Recto (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. Recto and Editha D. Samson was in its records;54 and (e) Exhibit "E" Certificate of
Australian Citizenship of Rederick A. Recto;55 (2) for respondent: (Exhibit "1" Amended Answer;56 (b)
Exhibit "S" 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. Recto;58 (d) Exhibit "4"
Decree Nisi of Dissolution of Marriage in the Family Court of Australia Certificate; 59 and Exhibit "5"
Statutory Declaration of the Legal Separation Between Rederick A. Recto and Grace J. Garcia Recio
since October 22, 1995.60

Based on the above records, we cannot conclude that respondent, who was then a naturalized Australian
citizen, was legally capacitated to marry petitioner on January 12, 1994. We agree with petitioner's
contention that the court a quo erred in finding that the divorce decree ipso facto clothed respondent with
the legal capacity 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.

Neither can we grant petitioner's prayer to declare her marriage to respondent null and void on the ground
of bigamy. After all, it may turn out that under Australian law, he was really capacitated to marry petitioner
as a direct result of the divorce decree. Hence, we believe that the most judicious course is to remand
this case to the trial court to receive evidence, if any, which show petitioner's legal capacity to marry
petitioner. Failing in that, then the court a quo may declare a nullity of the 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 Malabon, Metro Manila dated March 1, 1987 and the other, in Cabanatuan City
dated January 12, 1994.

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 respondent's 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.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 124862 December 22, 1998

11
FE D. QUITA, petitioner,
vs.
COURT OF APPEALS and BLANDINA DANDAN, * respondents.

BELLOSILLO, J.:

FE D. QUITA and Arturo T. Padlan, both Filipinos, were married in the Philippines on 18 May 1941. They
were not however blessed with children. Somewhere along the way their relationship soured. Eventually
Fe sued Arturo for divorce in San Francisco, California, U.S.A. She submitted in the divorce proceedings
a private writing dated 19 July 1950 evidencing their agreement to live separately from each other and a
settlement of their conjugal properties. On 23 July 1954 she obtained a final judgment of divorce. Three
(3) weeks thereafter she married a certain Felix Tupaz in the same locality but their relationship also
ended in a divorce. Still in the U.S.A., she married for the third time, to a certain Wernimont.

On 16 April 1972 Arturo died. He left no will. On 31 August 1972 Lino Javier Inciong filed a petition with
the Regional Trial Court of Quezon City for issuance of letters of administration concerning the estate of
Arturo in favor of the Philippine Trust Company. Respondent Blandina Dandan (also referred to
as Blandina Padlan), claiming to be the surviving spouse of Arturo Padlan, and Claro, Alexis, Ricardo,
Emmanuel, Zenaida and Yolanda, all surnamed Padlan, named in the children of Arturo Padlan opposed
the petition and prayed for the appointment instead of Atty. Leonardo Casaba, which was resolved in
favor of the latter. Upon motion of the oppositors themselves, Atty. Cabasal was later replaced by Higino
Castillon. On 30 April 1973 the oppositors (Blandina and Padlan children) submitted certified photocopies
of the 19 July 1950 private writing and the final judgment of divorce between petitioner and Arturo. Later
Ruperto T. Padlan, claiming to be the sole surviving brother of the deceased Arturo, intervened.

On 7 October 1987 petitioner moved for the immediate declaration of heirs of the decedent and the
distribution of his estate. At the scheduled hearing on 23 October 1987, private respondent as well as the
six (6) Padlan children and Ruperto failed to appear despite due notice. On the same day, the trial court
required the submission of the records of birth of the Padlan children within ten (10) days from receipt
thereof, after which, with or without the documents, the issue on the declaration of heirs would be
considered submitted for resolution. The prescribed period lapsed without the required documents being
submitted.

The trial court invoking Tenchavez v. Escao 1 which held that "a foreign divorce between Filipino citizens
sought and decreed after the effectivity of the present Civil Code (Rep. Act 386) was not entitled to
recognition as valid in this jurisdiction," 2 disregarded the divorce between petitioner and Arturo.
Consecuently, it expressed the view that their marriage subsisted until the death of Arturo in 1972.
Neither did it consider valid their extrajudicial settlement of conjugal properties due to lack of judicial
approval. 3 On the other hand, it opined that there was no showing that marriage existed between private
respondent and Arturo, much less was it shown that the alleged Padlan children had been acknowledged
by the deceased as his children with her. As regards Ruperto, it found that he was a brother of Arturo. On
27 November 1987 4 only petitioner and Ruperto were declared the intestate heirs of Arturo. Accordingly,
equal adjudication of the net hereditary estate was ordered in favor of the two intestate heirs. 5

On motion for reconsideration, Blandina and the Padlan children were allowed to present proofs that the
recognition of the children by the deceased as his legitimate children, except Alexis who was recognized
as his illegitimate child, had been made in their respective records of birth. Thus on 15 February
1988 6 partial reconsideration was granted declaring the Padlan children, with the exception of Alexis,
entitled to one-half of the estate to the exclusion of Ruperto Padlan, and petitioner to the other
half. 7 Private respondent was not declared an heir. Although it was stated in the aforementioned records
of birth that she and Arturo were married on 22 April 1947, their marriage was clearly void since it was
celebrated during the existence of his previous marriage to petitioner.

12
In their appeal to the Court of Appeals, Blandina and her children assigned as one of the errors allegedly
committed by the trial court the circumstance that the case was decided without a hearing, in violation of
Sec. 1, Rule 90, of the Rules of Court, which provides that if there is a controversy before the court as to
who are the lawful heirs of the deceased person or as to the distributive shares to which each person is
entitled under the law, the controversy shall be heard and decided as in ordinary cases.

Respondent appellate court found this ground alone sufficient to sustain the appeal; hence, on 11
September 1995 it declared null and void the 27 November 1987 decision and 15 February 1988 order of
the trial court, and directed the remand of the case to the trial court for further proceedings. 8 On 18 April
1996 it denied reconsideration. 9

Should this case be remanded to the lower court for further proceedings? Petitioner insists that there is
no need because, first, no legal or factual issue obtains for resolution either as to the heirship of the
Padlan children or as to the decedent; and, second, the issue as to who between petitioner and private
respondent is the proper hier of the decedent is one of law which can be resolved in the present petition
based on establish facts and admissions of the parties.

We cannot sustain petitioner. The provision relied upon by respondent court is clear: If there is
a controversy before the court as to who are the lawful heirs of the deceased person or as to the
distributive shares to which each person is entitled under the law, the controversy shall be heard and
decided as in ordinary cases.

We agree with petitioner that no dispute exists either as to the right of the six (6) Padlan children to inherit
from the decedent because there are proofs that they have been duly acknowledged by him and
petitioner herself even recognizes them as heirs of Arturo Padlan; 10 nor as to their respective hereditary
shares. But controversy remains as to who is the legitimate surviving spouse of Arturo. The trial court,
after the parties other than petitioner failed to appear during the scheduled hearing on 23 October 1987 of
the motion for immediate declaration of heirs and distribution of estate, simply issued an order requiring
the submission of the records of birth of the Padlan children within ten (10) days from receipt thereof,
after which, with or without the documents, the issue on declaration of heirs would be deemed submitted
for resolution.

We note that in her comment to petitioner's motion private respondent raised, among others, the issue as
to whether petitioner was still entitled to inherit from the decedent considering that she had secured a
divorce in the U.S.A. and in fact had twice remarried. She also invoked the above quoted procedural
rule. 11 To this, petitioner replied that Arturo was a Filipino and as such remained legally married to her in
spite of the divorce they obtained. 12Reading between the lines, the implication is that petitioner was no
longer a Filipino citizen at the time of her divorce from Arturo. This should have prompted the trial court to
conduct a hearing to establish her citizenship. The purpose of a hearing is to ascertain the truth of the
matters in issue with the aid of documentary and testimonial evidence as well as the arguments of the
parties either supporting or opposing the evidence. Instead, the lower court perfunctorily settled her claim
in her favor by merely applying the ruling in Tenchavez v. Escao.

Then in private respondent's motion to set aside and/or reconsider the lower court's decision she stressed
that the citizenship of petitioner was relevant in the light of the ruling in Van Dorn v. Romillo Jr. 13 that
aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid
according to their national law. She prayed therefore that the case be set for hearing. 14 Petitioner
opposed the motion but failed to squarely address the issue on her citizenship. 15 The trial court did not
grant private respondent's prayer for a hearing but proceeded to resolve her motion with the finding that
both petitioner and Arturo were "Filipino citizens and were married in the Philippines." 16 It maintained that
their divorce obtained in 1954 in San Francisco, California, U.S.A., was not valid in Philippine jurisdiction.
We deduce that the finding on their citizenship pertained solely to the time of their marriage as the trial
court was not supplied with a basis to determine petitioner's citizenship at the time of their divorce. The
doubt persisted as to whether she was still a Filipino citizen when their divorce was decreed. The trial
court must have overlooked the materiality of this aspect. Once proved that she was no longer a Filipino

13
citizen at the time of their divorce, Van Dorn would become applicable and petitioner could very well lose
her right to inherit from Arturo.

Respondent again raised in her appeal the issue on petitioner's citizenship; 17 it did not merit
enlightenment however from petitioner. 18 In the present proceeding, petitioner's citizenship is brought
anew to the fore by private respondent. She even furnishes the Court with the transcript of stenographic
notes taken on 5 May 1995 during the hearing for the reconstitution of the original of a certain transfer
certificate title as well as the issuance of new owner's duplicate copy thereof before another trial court.
When asked whether she was an American citizen petitioner answered that she was since
1954. 19 Significantly, the decree of divorce of petitioner and Arturo was obtained in the same year.
Petitioner however did not bother to file a reply memorandum to erase the uncertainty about her
citizenship at the time of their divorce, a factual issue requiring hearings to be conducted by the trial court.
Consequently, respondent appellate court did not err in ordering the case returned to the trial court for
further proceedings.

We emphasize however that the question to be determined by the trial court should be limited only to the
right of petitioner to inherit from Arturo as his surviving spouse. Private respondent's claim to heirship was
already resolved by the trial court. She and Arturo were married on 22 April 1947 while the prior marriage
of petitioner and Arturo was subsisting thereby resulting in a bigamous marriage considered void from the
beginning under Arts. 80 and 83 of the Civil Code. Consequently, she is not a surviving spouse that can
inherit from him as this status presupposes a legitimate relationship. 20

As regards the motion of private respondent for petitioner and a her counsel to be declared in contempt of
court and that the present petition be dismissed for forum shopping, 21 the same lacks merit. For forum
shopping to exist the actions must involve the same transactions and same essential facts and
circumstances. There must also be identical causes of action, subject matter and issue. 22 The present
petition deals with declaration of heirship while the subsequent petitions filed before the three (3) trial
courts concern the issuance of new owner's duplicate copies of titles of certain properties belonging to the
estate of Arturo. Obviously, there is no reason to declare the existence of forum shopping.

WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals ordering the remand
of the case to the court of origin for further proceedings and declaring null and void its decision holding
petitioner Fe D. Quita and Ruperto T. Padlan as intestate heirs is AFFIRMED. The order of the appellate
court modifying its previous decision by granting one-half (1/2) of the net hereditary estate to the Padlan
children, namely, Claro, Ricardo, Emmanuel, Zenaida and Yolanda, with the exception of Alexis, all
surnamed Padlan, instead of Arturo's brother Ruperto Padlan, is likewise AFFIRMED. The Court however
emphasizes that the reception of evidence by the trial court should he limited to the hereditary rights of
petitioner as the surviving spouse of Arturo Padlan.

The motion to declare petitioner and her counsel in contempt of court and to dismiss the present petition
for forum shopping is DENIED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 162580 January 27, 2006

14
ELMAR O. PEREZ, Petitioner,
vs.
COURT OF APPEALS, Fifth Division, TRISTAN A. CATINDIG and LILY GOMEZ-
CATINDIG, Respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition for certiorari and prohibition under Rule 65 of the Rules of Court assails the July 25, 2003
Decision1of the Court of Appeals in CA-G.R. SP No. 74456 which set aside and declared as null and void
the September 30, 2002 Order2 of the Regional Trial Court of Quezon City, Branch 84, granting
petitioners motion for leave to file intervention and admitting the Complaint-in-Intervention3 in Civil Case
No. Q-01-44847; and its January 23, 2004 Resolution4 denying the motion for reconsideration.

Private respondent Tristan A. Catindig married Lily Gomez Catindig5 twice on May 16, 1968. The first
marriage ceremony was celebrated at the Central Methodist Church at T.M. Kalaw Street, Ermita, Manila
while the second took place at the Lourdes Catholic Church in La Loma, Quezon City. The marriage
produced four children.

Several years later, the couple encountered marital problems that they decided to separate from each
other. Upon advice of a mutual friend, they decided to obtain a divorce from the Dominican Republic.
Thus, on April 27, 1984, Tristan and Lily executed a Special Power of Attorney addressed to the Judge of
the First Civil Court of San Cristobal, Dominican Republic, appointing an attorney-in-fact to institute a
divorce action under its laws.6

Thereafter, on April 30, 1984, the private respondents filed a joint petition for dissolution of conjugal
partnership with the Regional Trial Court of Makati. On June 12, 1984, the civil court in the Dominican
Republic ratified the divorce by mutual consent of Tristan and Lily. Subsequently, on June 23, 1984, the
Regional Trial Court of Makati City, Branch 133, ordered the complete separation of properties between
Tristan and Lily.

On July 14, 1984, Tristan married petitioner Elmar O. Perez in the State of Virginia in the United
States7 and both lived as husband and wife until October 2001. Their union produced one offspring. 8

During their cohabitation, petitioner learned that the divorce decree issued by the court in the Dominican
Republic which "dissolved" the marriage between Tristan and Lily was not recognized in the Philippines
and that her marriage to Tristan was deemed void under Philippine law. When she confronted Tristan
about this, the latter assured her that he would legalize their union after he obtains an annulment of his
marriage with Lily. Tristan further promised the petitioner that he would adopt their son so that he would
be entitled to an equal share in his estate as that of each of his children with Lily. 9

On August 13, 2001, Tristan filed a petition for the declaration of nullity of his marriage to Lily with the
Regional Trial Court of Quezon City, docketed as Case No. Q-01-44847.

Subsequently, petitioner filed a Motion for Leave to File Intervention10 claiming that she has a legal
interest in the matter in litigation because she knows certain information which might aid the trial court at
a truthful, fair and just adjudication of the annulment case, which the trial court granted on September 30,
2002. Petitioners complaint-in-intervention was also ordered admitted.

Tristan filed a petition for certiorari and prohibition with the Court of Appeals seeking to annul the order
dated September 30, 2002 of the trial court. The Court of Appeals granted the petition and declared as

15
null and void the September 30, 2002 Order of the trial court granting the motion for leave to file
intervention and admitting the complaint-in-intervention.

Petitioners motion for reconsideration was denied, hence this petition for certiorari and prohibition filed
under Rule 65 of the Rules of Court. Petitioner contends that the Court of Appeals gravely abused its
discretion in disregarding her legal interest in the annulment case between Tristan and Lily.

The petition lacks merit.

Ordinarily, the proper recourse of an aggrieved party from a decision of the Court of Appeals is a petition
for review on certiorari under Rule 45 of the Rules of Court. However, if the error subject of the recourse
is one of jurisdiction, or the act complained of was granted by a court with grave abuse of discretion
amounting to lack or excess of jurisdiction, as alleged in this case, the proper remedy is a petition for
certiorari under Rule 65 of the said Rules.11 This is based on the premise that in issuing the assailed
decision and resolution, the Court of Appeals acted with grave abuse of discretion, amounting to excess
of lack of jurisdiction and there is no plain, speedy and adequate remedy in the ordinary course of law. A
remedy is considered plain, speedy, and adequate if it will promptly relieve the petitioner from the
injurious effect of the judgment and the acts of the lower court.12

It is therefore incumbent upon the petitioner to establish that the Court of Appeals acted with grave abuse
of discretion amounting to excess or lack of jurisdiction when it promulgated the assailed decision and
resolution.

We have previously ruled that grave abuse of discretion may arise when a lower court or tribunal violates
or contravenes the Constitution, the law or existing jurisprudence. By grave abuse of discretion is meant,
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of
discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty
or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law. 13 The word
"capricious," usually used in tandem with the term "arbitrary," conveys the notion of willful and
unreasoning action. Thus, when seeking the corrective hand of certiorari, a clear showing of caprice and
arbitrariness in the exercise of discretion is imperative.14

The Rules of Court laid down the parameters before a person, not a party to a case can intervene, thus:

Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of the court or of an officer thereof may, with
leave of court, be allowed to intervene in the action. The court shall consider whether or not the
intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether
or not the intervenors rights may be fully protected in a separate proceeding. 15

The requirements for intervention are: [a] legal interest in the matter in litigation; and [b] consideration
must be given as to whether the adjudication of the original parties may be delayed or prejudiced, or
whether the intervenors rights may be protected in a separate proceeding or not. 16

Legal interest, which entitles a person to intervene, must be in the matter in litigation and of such direct
and immediate character that the intervenor will either gain or lose by direct legal operation and effect of
the judgment.17 Such interest must be actual, direct and material, and not simply contingent and
expectant.18

Petitioner claims that her status as the wife and companion of Tristan for 17 years vests her with the
requisite legal interest required of a would-be intervenor under the Rules of Court.

16
Petitioners claim lacks merit. Under the law, petitioner was never the legal wife of Tristan, hence her
claim of legal interest has no basis.

When petitioner and Tristan married on July 14, 1984, Tristan was still lawfully married to Lily. The
divorce decree that Tristan and Lily obtained from the Dominican Republic never dissolved the marriage
bond between them. It is basic that 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.19 Regardless of where a citizen of the Philippines might be, he or she will be governed by
Philippine laws with respect to his or her family rights and duties, or to his or her status, condition and
legal capacity. Hence, if a Filipino regardless of whether he or she was married here or abroad, initiates a
petition abroad to obtain an absolute divorce from spouse and eventually becomes successful in getting
an absolute divorce decree, the Philippines will not recognize such absolute divorce. 20

When Tristan and Lily married on May 18, 1968, their marriage was governed by the provisions of the
Civil Code21 which took effect on August 30, 1950. In the case of Tenchavez v. Escano22 we held:

(1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the present
Civil Code (Rep. Act No. 386), is not entitled to recognition as valid in this jurisdiction; and neither is the
marriage contracted with another party by the divorced consort, subsequently to the foreign decree of
divorce, entitled to validity in the country. (Emphasis added)

Thus, petitioners claim that she is the wife of Tristan even if their marriage was celebrated abroad lacks
merit. Thus, petitioner never acquired the legal interest as a wife upon which her motion for intervention is
based.

Since petitioners motion for leave to file intervention was bereft of the indispensable requirement of legal
interest, the issuance by the trial court of the order granting the same and admitting the complaint-in-
intervention was attended with grave abuse of discretion. Consequently, the Court of Appeals correctly
set aside and declared as null and void the said order.

WHEREFORE, the petition is DISMISSED. The assailed Decision dated July 25, 2003 and Resolution
dated January 23, 2004 of the Court of Appeals in CA-G.R. SP No. 74456 are AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 133743 February 6, 2007

EDGAR SAN LUIS, Petitioner,

vs.
FELICIDAD SAN LUIS, Respondent.

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

17
G.R. No. 134029 February 6, 2007

RODOLFO SAN LUIS, Petitioner,

vs.
FELICIDAD SAGALONGOS alias FELICIDAD SAN LUIS, Respondent.

DECISION

YNARES-SANTIAGO, J.:

Before us are consolidated petitions for review assailing the February 4, 1998 Decision 1 of the Court of
Appeals in CA-G.R. CV No. 52647, which reversed and set aside the September 12, 1995 2 and January
31, 1996 3Resolutions of the Regional Trial Court of Makati City, Branch 134 in SP. Proc. No. M-3708;
and its May 15, 1998 Resolution 4 denying petitioners motion for reconsideration.

The instant case involves the settlement of the estate of Felicisimo T. San Luis (Felicisimo), who was the
former governor of the Province of Laguna. During his lifetime, Felicisimo contracted three marriages. His
first marriage was with Virginia Sulit on March 17, 1942 out of which were born six children, namely:
Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963, Virginia predeceased Felicisimo.

Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he had a son, Tobias.
However, on October 15, 1971, Merry Lee, an American citizen, filed a Complaint for Divorce 5 before the
Family Court of the First Circuit, State of Hawaii, United States of America (U.S.A.), which issued a
Decree Granting Absolute Divorce and Awarding Child Custody on December 14, 1973. 6

On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then surnamed Sagalongos, before
Rev. Fr. William Meyer, Minister of the United Presbyterian at Wilshire Boulevard, Los Angeles,
California, U.S.A. 7 He had no children with respondent but lived with her for 18 years from the time of
their marriage up to his death on December 18, 1992.

Thereafter, respondent sought the dissolution of their conjugal partnership assets and the settlement of
Felicisimos estate. On December 17, 1993, she filed a petition for letters of administration 8 before the
Regional Trial Court of Makati City, docketed as SP. Proc. No. M-3708 which was raffled to Branch 146
thereof.

Respondent alleged that she is the widow of Felicisimo; that, at the time of his death, the decedent was
residing at 100 San Juanico Street, New Alabang Village, Alabang, Metro Manila; that the decedents
surviving heirs are respondent as legal spouse, his six children by his first marriage, and son by his
second marriage; that the decedent left real properties, both conjugal and exclusive, valued
at P30,304,178.00 more or less; that the decedent does not have any unpaid debts. Respondent prayed
that the conjugal partnership assets be liquidated and that letters of administration be issued to her.

On February 4, 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his first marriage,
filed a motion to dismiss 9 on the grounds of improper venue and failure to state a cause of action.
Rodolfo claimed that the petition for letters of administration should have been filed in the Province of
Laguna because this was Felicisimos place of residence prior to his death. He further claimed that
respondent has no legal personality to file the petition because she was only a mistress of Felicisimo
since the latter, at the time of his death, was still legally married to Merry Lee.

On February 15, 1994, Linda invoked the same grounds and joined her brother Rodolfo in seeking the
dismissal10 of the petition. On February 28, 1994, the trial court issued an Order 11 denying the two
motions to dismiss.

18
Unaware of the denial of the motions to dismiss, respondent filed on March 5, 1994 her
opposition 12 thereto. She submitted documentary evidence showing that while Felicisimo exercised the
powers of his public office in Laguna, he regularly went home to their house in New Alabang Village,
Alabang, Metro Manila which they bought sometime in 1982. Further, she presented the decree of
absolute divorce issued by the Family Court of the First Circuit, State of Hawaii to prove that the marriage
of Felicisimo to Merry Lee had already been dissolved. Thus, she claimed that Felicisimo had the legal
capacity to marry her by virtue of paragraph 2, 13 Article 26 of the Family Code and the doctrine laid down
in Van Dorn v. Romillo, Jr. 14

Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately filed motions for
reconsideration from the Order denying their motions to dismiss. 15 They asserted that paragraph 2,
Article 26 of the Family Code cannot be given retroactive effect to validate respondents bigamous
marriage with Felicisimo because this would impair vested rights in derogation of Article 256 16 of the
Family Code.

On April 21, 1994, Mila, another daughter of Felicisimo from his first marriage, filed a motion to disqualify
Acting Presiding Judge Anthony E. Santos from hearing the case.

On October 24, 1994, the trial court issued an Order 17 denying the motions for reconsideration. It ruled
that respondent, as widow of the decedent, possessed the legal standing to file the petition and that
venue was properly laid. Meanwhile, the motion for disqualification was deemed moot and
academic 18 because then Acting Presiding Judge Santos was substituted by Judge Salvador S. Tensuan
pending the resolution of said motion.

Mila filed a motion for inhibition 19 against Judge Tensuan on November 16, 1994. On even date, Edgar
also filed a motion for reconsideration 20 from the Order denying their motion for reconsideration arguing
that it does not state the facts and law on which it was based.

On November 25, 1994, Judge Tensuan issued an Order 21 granting the motion for inhibition. The case
was re-raffled to Branch 134 presided by Judge Paul T. Arcangel.

On April 24, 1995, 22 the trial court required the parties to submit their respective position papers on the
twin issues of venue and legal capacity of respondent to file the petition. On May 5, 1995, Edgar
manifested 23 that he is adopting the arguments and evidence set forth in his previous motion for
reconsideration as his position paper. Respondent and Rodolfo filed their position papers on June
14, 24 and June 20, 25 1995, respectively.

On September 12, 1995, the trial court dismissed the petition for letters of administration. It held that, at
the time of his death, Felicisimo was the duly elected governor and a resident of the Province of Laguna.
Hence, the petition should have been filed in Sta. Cruz, Laguna and not in Makati City. It also ruled that
respondent was without legal capacity to file the petition for letters of administration because her marriage
with Felicisimo was bigamous, thus, void ab initio. It found that the decree of absolute divorce dissolving
Felicisimos marriage to Merry Lee was not valid in the Philippines and did not bind Felicisimo who was a
Filipino citizen. It also ruled that paragraph 2, Article 26 of the Family Code cannot be retroactively
applied because it would impair the vested rights of Felicisimos legitimate children.

Respondent moved for reconsideration 26 and for the disqualification 27 of Judge Arcangel but said
motions were denied. 28

Respondent appealed to the Court of Appeals which reversed and set aside the orders of the trial court in
its assailed Decision dated February 4, 1998, the dispositive portion of which states:

19
WHEREFORE, the Orders dated September 12, 1995 and January 31, 1996 are hereby REVERSED and
SET ASIDE; the Orders dated February 28 and October 24, 1994 are REINSTATED; and the records of
the case is REMANDED to the trial court for further proceedings. 29

The appellante court ruled that under Section 1, Rule 73 of the Rules of Court, the term "place of
residence" of the decedent, for purposes of fixing the venue of the settlement of his estate, refers to the
personal, actual or physical habitation, or actual residence or place of abode of a person as distinguished
from legal residence or domicile. It noted that although Felicisimo discharged his functions as governor in
Laguna, he actually resided in Alabang, Muntinlupa. Thus, the petition for letters of administration was
properly filed in Makati City.

The Court of Appeals also held that Felicisimo had legal capacity to marry respondent by virtue of
paragraph 2, Article 26 of the Family Code and the rulings in Van Dorn v. Romillo, Jr. 30 and Pilapil v.
Ibay-Somera. 31 It found that the marriage between Felicisimo and Merry Lee was validly dissolved by
virtue of the decree of absolute divorce issued by the Family Court of the First Circuit, State of Hawaii. As
a result, under paragraph 2, Article 26, Felicisimo was capacitated to contract a subsequent marriage with
respondent. Thus

With the well-known rule express mandate of paragraph 2, Article 26, of the Family Code of the
Philippines, the doctrines in Van Dorn, Pilapil, and the reason and philosophy behind the enactment of
E.O. No. 227, there is no justiciable reason to sustain the individual view sweeping statement of
Judge Arc[h]angel, that "Article 26, par. 2 of the Family Code, contravenes the basic policy of our state
against divorce in any form whatsoever." Indeed, courts cannot deny what the law grants. All that the
courts should do is to give force and effect to the express mandate of the law. The foreign divorce having
been obtained by the Foreigner on December 14, 1992,32 the Filipino divorcee, "shall x x x have capacity
to remarry under Philippine laws". For this reason, the marriage between the deceased and petitioner
should not be denominated as "a bigamous marriage.

Therefore, under Article 130 of the Family Code, the petitioner as the surviving spouse can institute the
judicial proceeding for the settlement of the estate of the deceased. x x x 33

Edgar, Linda, and Rodolfo filed separate motions for reconsideration 34 which were denied by the Court of
Appeals.

On July 2, 1998, Edgar appealed to this Court via the instant petition for review on certiorari. 35 Rodolfo
later filed a manifestation and motion to adopt the said petition which was granted. 36

In the instant consolidated petitions, Edgar and Rodolfo insist that the venue of the subject petition for
letters of administration was improperly laid because at the time of his death, Felicisimo was a resident of
Sta. Cruz, Laguna. They contend that pursuant to our rulings in Nuval v. Guray 37 and Romualdez v. RTC,
Br. 7, Tacloban City, 38 "residence" is synonymous with "domicile" which denotes a fixed permanent
residence to which when absent, one intends to return. They claim that a person can only have one
domicile at any given time. Since Felicisimo never changed his domicile, the petition for letters of
administration should have been filed in Sta. Cruz, Laguna.

Petitioners also contend that respondents marriage to Felicisimo was void and bigamous because it was
performed during the subsistence of the latters marriage to Merry Lee. They argue that paragraph 2,
Article 26 cannot be retroactively applied because it would impair vested rights and ratify the void
bigamous marriage. As such, respondent cannot be considered the surviving wife of Felicisimo; hence,
she has no legal capacity to file the petition for letters of administration.

The issues for resolution: (1) whether venue was properly laid, and (2) whether respondent has legal
capacity to file the subject petition for letters of administration.

20
The petition lacks merit.

Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of administration of the estate of
Felicisimo should be filed in the Regional Trial Court of the province "in which he resides at the time of his
death." In the case of Garcia Fule v. Court of Appeals, 40 we laid down the doctrinal rule for determining
the residence as contradistinguished from domicile of the decedent for purposes of fixing the venue of
the settlement of his estate:

[T]he term "resides" connotes ex vi termini "actual residence" as distinguished from "legal residence or
domicile." This term "resides," like the terms "residing" and "residence," is elastic and should be
interpreted in the light of the object or purpose of the statute or rule in which it is employed. In the
application of venue statutes and rules Section 1, Rule 73 of the Revised Rules of Court is of such
nature residence rather than domicile is the significant factor. Even where the statute uses the word
"domicile" still it is construed as meaning residence and not domicile in the technical sense. Some cases
make a distinction between the terms "residence" and "domicile" but as generally used in statutes fixing
venue, the terms are synonymous, and convey the same meaning as the term "inhabitant." In other
words, "resides" should be viewed or understood in its popular sense, meaning, the personal, actual or
physical habitation of a person, actual residence or place of abode. It signifies physical presence in a
place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal
residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in
a given place, while domicile requires bodily presence in that place and also an intention to make it ones
domicile. No particular length of time of residence is required though; however, the residence must be
more than temporary. 41 (Emphasis supplied)

It is incorrect for petitioners to argue that "residence," for purposes of fixing the venue of the settlement of
the estate of Felicisimo, is synonymous with "domicile." The rulings in Nuval and Romualdez are
inapplicable to the instant case because they involve election cases. Needless to say, there is a
distinction between "residence" for purposes of election laws and "residence" for purposes of fixing the
venue of actions. In election cases, "residence" and "domicile" are treated as synonymous terms, that is,
the fixed permanent residence to which when absent, one has the intention of returning. 42 However, for
purposes of fixing venue under the Rules of Court, the "residence" of a person is his personal, actual or
physical habitation, or actual residence or place of abode, which may not necessarily be his legal
residence or domicile provided he resides therein with continuity and consistency. 43 Hence, it is possible
that a person may have his residence in one place and domicile in another.

In the instant case, while petitioners established that Felicisimo was domiciled in Sta. Cruz, Laguna,
respondent proved that he also maintained a residence in Alabang, Muntinlupa from 1982 up to the time
of his death. Respondent submitted in evidence the Deed of Absolute Sale 44 dated January 5, 1983
showing that the deceased purchased the aforesaid property. She also presented billing
statements 45 from the Philippine Heart Center and Chinese General Hospital for the period August to
December 1992 indicating the address of Felicisimo at "100 San Juanico, Ayala Alabang, Muntinlupa."
Respondent also presented proof of membership of the deceased in the Ayala Alabang Village
Association 46 and Ayala Country Club, Inc., 47 letter-envelopes 48from 1988 to 1990 sent by the
deceaseds children to him at his Alabang address, and the deceaseds calling cards 49 stating that his
home/city address is at "100 San Juanico, Ayala Alabang Village, Muntinlupa" while his office/provincial
address is in "Provincial Capitol, Sta. Cruz, Laguna."

From the foregoing, we find that Felicisimo was a resident of Alabang, Muntinlupa for purposes of fixing
the venue of the settlement of his estate. Consequently, the subject petition for letters of administration
was validly filed in the Regional Trial Court 50 which has territorial jurisdiction over Alabang, Muntinlupa.
The subject petition was filed on December 17, 1993. At that time, Muntinlupa was still a municipality and
the branches of the Regional Trial Court of the National Capital Judicial Region which had territorial
jurisdiction over Muntinlupa were then seated in Makati City as per Supreme Court Administrative Order
No. 3. 51 Thus, the subject petition was validly filed before the Regional Trial Court of Makati City.

21
Anent the issue of respondent Felicidads legal personality to file the petition for letters of administration,
we must first resolve the issue of whether a Filipino who is divorced by his alien spouse abroad may
validly remarry under the Civil Code, considering that Felicidads marriage to Felicisimo was solemnized
on June 20, 1974, or before the Family Code took effect on August 3, 1988. In resolving this issue, we
need not retroactively apply the provisions of the Family Code, particularly Art. 26, par. (2) considering
that there is sufficient jurisprudential basis allowing us to rule in the affirmative.

The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a foreigner and his Filipino wife,
which marriage was subsequently dissolved through a divorce obtained abroad by the latter. Claiming
that the divorce was not valid under Philippine law, the alien spouse alleged that his interest in the
properties from their conjugal partnership should be protected. The Court, however, recognized the
validity of the divorce and held that the alien spouse had no interest in the properties acquired by the
Filipino wife after the divorce. Thus:

In this case, the divorce in Nevada released private respondent from the marriage from the standards of
American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of
the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799:

"The purpose and effect of a decree of divorce from the bond of matrimony by a competent jurisdiction
are to change the existing status or domestic relation of husband and wife, and to free them both from the
bond. The marriage tie, when thus severed as to one party, ceases to bind either. A husband without a
wife, or a wife without a husband, is unknown to the law. When the law provides, in the nature of a
penalty, that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed
from the bond of the former marriage."

Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would
have no standing to sue in the case below as petitioners husband entitled to exercise control over
conjugal assets. As he is bound by the Decision of his own countrys Court, which validly exercised
jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own
representation before said Court from asserting his right over the alleged conjugal property. 53

As to the effect of the divorce on the Filipino wife, the Court ruled that she should no longer be considered
married to the alien spouse. Further, she should not be required to perform her marital duties and
obligations. It held:

To maintain, as private respondent does, that, under our laws, petitioner has to be considered still
married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of
the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and
fidelity, and render support to private respondent. The latter should not continue to be one of her heirs
with possible rights to conjugal property. She should not be discriminated against in her own country
if the ends of justice are to be served. 54 (Emphasis added)

This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the Court recognized the validity of
a divorce obtained abroad. In the said case, it was held that the alien spouse is not a proper party in filing
the adultery suit against his Filipino wife. The Court stated that "the severance of the marital bond had the
effect of dissociating the former spouses from each other, hence the actuations of one would not affect or
cast obloquy on the other." 56

Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a Filipino is divorced by his
naturalized foreign spouse, the ruling in Van Dorn applies. 58 Although decided on December 22, 1998,
the divorce in the said case was obtained in 1954 when the Civil Code provisions were still in effect.

The significance of the Van Dorn case to the development of limited recognition of divorce in the
Philippines cannot be denied. The ruling has long been interpreted as severing marital ties between

22
parties in a mixed marriage and capacitating the Filipino spouse to remarry as a necessary consequence
of upholding the validity of a divorce obtained abroad by the alien spouse. In his treatise, Dr. Arturo M.
Tolentino cited Van Dorn stating that "if the foreigner obtains a valid foreign divorce, the Filipino spouse
shall have capacity to remarry under Philippine law." 59 In Garcia v. Recio, 60 the Court likewise cited the
aforementioned case in relation to Article 26. 61

In the recent case of Republic v. Orbecido III, 62 the historical background and legislative intent behind
paragraph 2, Article 26 of the Family Code were discussed, to wit:

Brief Historical Background

On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise
known as the "Family Code," which took effect on August 3, 1988. Article 26 thereof states:

All marriages solemnized outside the Philippines in accordance with the laws in force in the country
where they were solemnized, and valid there as such, shall also be valid in this country, except those
prohibited under Articles 35, 37, and 38.

On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was
likewise signed into law, amending Articles 26, 36, and 39 of the Family Code. A second paragraph was
added to Article 26. As so amended, it now provides:

ART. 26. All marriages solemnized outside the Philippines in accordance with the laws in force in the
country where they were solemnized, and valid there as such, shall also be valid in this country, except
those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.

Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino
spouse shall have capacity to remarry under Philippine law. (Emphasis supplied)

xxxx
Legislative Intent

Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of
Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil Code Revision Committee, is to
avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after
obtaining a divorce, is no longer married to the Filipino spouse.

Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v. Romillo,
Jr. The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The Court
held therein that a divorce decree validly obtained by the alien spouse is valid in the Philippines,
and consequently, the Filipino spouse is capacitated to remarry under Philippine law. 63 (Emphasis
added)

As such, the Van Dorn case is sufficient basis in resolving a situation where a divorce is validly obtained
abroad by the alien spouse. With the enactment of the Family Code and paragraph 2, Article 26 thereof,
our lawmakers codified the law already established through judicial precedent.1awphi1.net

Indeed, when the object of a marriage is defeated by rendering its continuance intolerable to one of the
parties and productive of no possible good to the community, relief in some way should be
obtainable. 64 Marriage, being a mutual and shared commitment between two parties, cannot possibly be
productive of any good to the society where one is considered released from the marital bond while the

23
other remains bound to it. Such is the state of affairs where the alien spouse obtains a valid divorce
abroad against the Filipino spouse, as in this case.

Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the divorce is void under Philippine
law insofar as Filipinos are concerned. However, in light of this Courts rulings in the cases discussed
above, the Filipino spouse should not be discriminated against in his own country if the ends of justice are
to be served. 67 In Alonzo v. Intermediate Appellate Court, 68 the Court stated:

But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its
purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should
be to discover in its provisions the intent of the lawmaker. Unquestionably, the law should never be
interpreted in such a way as to cause injustice as this is never within the legislative intent. An
indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to render
justice.

Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice
are inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid,
may seem arbitrary when applied in a particular case because of its peculiar circumstances. In such a
situation, we are not bound, because only of our nature and functions, to apply them just the same, in
slavish obedience to their language. What we do instead is find a balance between the word and the will,
that justice may be done even as the law is obeyed.

As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded,
yielding like robots to the literal command without regard to its cause and consequence. "Courts are apt
to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again, "where
these words import a policy that goes beyond them."

xxxx

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render
every one his due." That wish continues to motivate this Court when it assesses the facts and the law in
every case brought to it for decision. Justice is always an essential ingredient of its decisions. Thus when
the facts warrants, we interpret the law in a way that will render justice, presuming that it was the intention
of the lawmaker, to begin with, that the law be dispensed with justice. 69

Applying the above doctrine in the instant case, the divorce decree allegedly obtained by Merry Lee which
absolutely allowed Felicisimo to remarry, would have vested Felicidad with the legal personality to file the
present petition as Felicisimos surviving spouse. However, the records show that there is insufficient
evidence to prove the validity of the divorce obtained by Merry Lee as well as the marriage of respondent
and Felicisimo under the laws of the U.S.A. In Garcia v. Recio, 70 the Court laid down the specific
guidelines for pleading and proving foreign law and divorce judgments. It held that presentation solely of
the divorce decree is insufficient and that proof of its authenticity and due execution must be presented.
Under Sections 24 and 25 of Rule 132, a writing or document may be proven as a public or official record
of a foreign country by either (1) an official publication or (2) a copy thereof attested by the officer having
legal custody of the document. If the record is not kept in the Philippines, such copy must be (a)
accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine foreign
service stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his
office. 71

With regard to respondents marriage to Felicisimo allegedly solemnized in California, U.S.A., she
submitted photocopies of the Marriage Certificate and the annotated text 72 of the Family Law Act of
California which purportedly show that their marriage was done in accordance with the said law. As stated
in Garcia, however, the Court cannot take judicial notice of foreign laws as they must be alleged and
proved. 73

24
Therefore, this case should be remanded to the trial court for further reception of evidence on the divorce
decree obtained by Merry Lee and the marriage of respondent and Felicisimo.

Even assuming that Felicisimo was not capacitated to marry respondent in 1974, nevertheless, we find
that the latter has the legal personality to file the subject petition for letters of administration, as she may
be considered the co-owner of Felicisimo as regards the properties that were acquired through their joint
efforts during their cohabitation.

Section 6, 74 Rule 78 of the Rules of Court states that letters of administration may be granted to the
surviving spouse of the decedent. However, Section 2, Rule 79 thereof also provides in part:

SEC. 2. Contents of petition for letters of administration. A petition for letters of administration must be
filed by an interested person and must show, as far as known to the petitioner: x x x.

An "interested person" has been defined as one who would be benefited by the estate, such as an heir, or
one who has a claim against the estate, such as a creditor. The interest must be material and direct, and
not merely indirect or contingent. 75

In the instant case, respondent would qualify as an interested person who has a direct interest in the
estate of Felicisimo by virtue of their cohabitation, the existence of which was not denied by petitioners. If
she proves the validity of the divorce and Felicisimos capacity to remarry, but fails to prove that her
marriage with him was validly performed under the laws of the U.S.A., then she may be considered as a
co-owner under Article 144 76 of the Civil Code. This provision governs the property relations between
parties who live together as husband and wife without the benefit of marriage, or their marriage is void
from the beginning. It provides that the property acquired by either or both of them through their work or
industry or their wages and salaries shall be governed by the rules on co-ownership. In a co-ownership, it
is not necessary that the property be acquired through their joint labor, efforts and industry. Any property
acquired during the union is prima facie presumed to have been obtained through their joint efforts.
Hence, the portions belonging to the co-owners shall be presumed equal, unless the contrary is proven. 77

Meanwhile, if respondent fails to prove the validity of both the divorce and the marriage, the applicable
provision would be Article 148 of the Family Code which has filled the hiatus in Article 144 of the Civil
Code by expressly regulating the property relations of couples living together as husband and wife but are
incapacitated to marry. 78In Saguid v. Court of Appeals, 79 we held that even if the cohabitation or the
acquisition of property occurred before the Family Code took effect, Article 148 governs. 80 The Court
described the property regime under this provision as follows:

The regime of limited co-ownership of property governing the union of parties who are not legally
capacitated to marry each other, but who nonetheless live together as husband and wife, applies to
properties acquired during said cohabitation in proportion to their respective contributions. Co-ownership
will only be up to the extent of the proven actual contribution of money, property or industry. Absent proof
of the extent thereof, their contributions and corresponding shares shall be presumed to be equal.

xxxx

In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of co-ownership of
properties acquired by the parties to a bigamous marriage and an adulterous relationship, respectively,
we ruled that proof of actual contribution in the acquisition of the property is essential. x x x

As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or
the nature of the case, asserts an affirmative issue. Contentions must be proved by competent evidence
and reliance must be had on the strength of the partys own evidence and not upon the weakness of the
opponents defense. x x x81

25
In view of the foregoing, we find that respondents legal capacity to file the subject petition for letters of
administration may arise from her status as the surviving wife of Felicisimo or as his co-owner under
Article 144 of the Civil Code or Article 148 of the Family Code.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals reinstating and affirming the
February 28, 1994 Order of the Regional Trial Court which denied petitioners motion to dismiss and its
October 24, 1994 Order which dismissed petitioners motion for reconsideration is AFFIRMED. Let this
case be REMANDED to the trial court for further proceedings.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 171914 July 23, 2014

SOLEDAD L. LAVADIA, Petitioner,

vs.
HEIRS OF JUAN LUCES LUNA, represented by GREGORIO Z. LUNA and EUGENIA ZABALLERO-
LUNA, Respondents.

DECISION

BERSAMIN, J.:

Divorce between Filipinos is void and ineffectual under the nationality rule adopted by Philippine law.
Hence, any settlement of property between the parties of the first marriage involving Filipinos submitted
as an incident of a divorce obtained in a foreign country lacks competent judicial approval, and cannot be
enforceable against the assets of the husband who contracts a subsequent marriage.

The Case

The petitioner, the second wife of the late Atty. Juan Luces Luna, appeals the adverse decision
promulgated on November 11, 2005,1 whereby the Court of Appeals (CA) affirmed with modification the
decision rendered on August 27, 2001 by the Regional Trial Court (RTC), Branch 138, in Makati
City.2 The CA thereby denied her right in the 25/100 pro indiviso share of the husband in a condominium
unit, and in the law books of the husband acquired during the second marriage.

Antecedents

The antecedent facts were summarized by the CA as follows:

ATTY. LUNA, a practicing lawyer, was at first a name partner in the prestigious law firm Sycip, Salazar,
Luna, Manalo, Hernandez & Feliciano Law Offices at that time when he was living with his first wife,
herein intervenor-appellant Eugenia Zaballero-Luna (EUGENIA), whom he initially married ina civil
ceremony conducted by the Justice of the Peace of Paraaque, Rizal on September 10, 1947 and later

26
solemnized in a church ceremony at the Pro-Cathedral in San Miguel, Bulacan on September 12, 1948.
In ATTY. LUNAs marriage to EUGENIA, they begot seven (7) children, namely: Regina Maria L. Nadal,
Juan Luis Luna, Araceli Victoria L. Arellano, Ana Maria L. Tabunda, Gregorio Macario Luna, Carolina
Linda L. Tapia, and Cesar Antonio Luna. After almost two (2) decades of marriage, ATTY. LUNA and
EUGENIA eventually agreed to live apart from each other in February 1966 and agreed to separation of
property, to which end, they entered into a written agreement entitled "AGREEMENT FOR SEPARATION
AND PROPERTY SETTLEMENT" dated November 12, 1975, whereby they agreed to live separately and
to dissolve and liquidate their conjugal partnership of property.

On January 12, 1976, ATTY. LUNA obtained a divorce decree of his marriage with EUGENIA from the
Civil and Commercial Chamber of the First Circumscription of the Court of First Instance of Sto. Domingo,
Dominican Republic. Also in Sto.Domingo, Dominican Republic, on the same date, ATTY. LUNA
contracted another marriage, this time with SOLEDAD. Thereafter, ATTY. LUNA and SOLEDAD returned
to the Philippines and lived together as husband and wife until 1987.

Sometime in 1977, ATTY. LUNA organized a new law firm named: Luna, Puruganan, Sison and Ongkiko
(LUPSICON) where ATTY. LUNA was the managing partner.

On February 14, 1978, LUPSICON through ATTY. LUNA purchased from Tandang Sora Development
Corporation the 6th Floor of Kalaw-Ledesma Condominium Project(condominium unit) at Gamboa St.,
Makati City, consisting of 517.52 square meters, for P1,449,056.00, to be paid on installment basis for
36months starting on April 15, 1978. Said condominium unit was to be usedas law office of LUPSICON.
After full payment, the Deed of Absolute Sale over the condominium unit was executed on July 15, 1983,
and CCT No. 4779 was issued on August 10, 1983, which was registered bearing the following names:

"JUAN LUCES LUNA, married to Soledad L. Luna (46/100); MARIO E. ONGKIKO, married to Sonia P.G.
Ongkiko (25/100); GREGORIO R. PURUGANAN, married to Paz A. Puruganan (17/100); and TERESITA
CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x" Subsequently, 8/100 share of ATTY. LUNA
and 17/100 share of Atty. Gregorio R. Puruganan in the condominium unit was sold to Atty. Mario E.
Ongkiko, for which a new CCT No. 21761 was issued on February 7, 1992 in the following names:

"JUAN LUCES LUNA, married to Soledad L. Luna (38/100); MARIO E. ONGKIKO, married to Sonia P.G.
Ongkiko (50/100); TERESITA CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x"

Sometime in 1992, LUPSICON was dissolved and the condominium unit was partitioned by the partners
but the same was still registered in common under CCT No. 21716. The parties stipulated that the
interest of ATTY. LUNA over the condominium unit would be 25/100 share. ATTY. LUNA thereafter
established and headed another law firm with Atty. Renato G. Dela Cruzand used a portion of the office
condominium unit as their office. The said law firm lasted until the death of ATTY. JUAN on July 12, 1997.

After the death of ATTY. JUAN, his share in the condominium unit including the lawbooks, office furniture
and equipment found therein were taken over by Gregorio Z. Luna, ATTY. LUNAs son of the first
marriage. Gregorio Z. Luna thenleased out the 25/100 portion of the condominium unit belonging to his
father to Atty. Renato G. De la Cruz who established his own law firm named Renato G. De la Cruz &
Associates.

The 25/100 pro-indiviso share of ATTY. Luna in the condominium unit as well as the law books, office
furniture and equipment became the subject of the complaint filed by SOLEDAD against the heirs of
ATTY. JUAN with the RTC of Makati City, Branch 138, on September 10, 1999, docketed as Civil Case
No. 99-1644. The complaint alleged that the subject properties were acquired during the existence of the
marriage between ATTY. LUNA and SOLEDAD through their joint efforts that since they had no children,
SOLEDAD became co-owner of the said properties upon the death of ATTY. LUNA to the extent of
pro-indiviso share consisting of her share in the said properties plus her share in the net estate of
ATTY. LUNA which was bequeathed to her in the latters last will and testament; and thatthe heirs of

27
ATTY. LUNA through Gregorio Z. Luna excluded SOLEDAD from her share in the subject properties. The
complaint prayed that SOLEDAD be declared the owner of the portion of the subject properties;that the
same be partitioned; that an accounting of the rentals on the condominium unit pertaining to the share of
SOLEDAD be conducted; that a receiver be appointed to preserve ad administer the subject
properties;and that the heirs of ATTY. LUNA be ordered to pay attorneys feesand costs of the suit to
SOLEDAD.3

Ruling of the RTC

On August 27, 2001, the RTC rendered its decision after trial upon the aforementioned facts,4 disposing
thusly:

WHEREFORE, judgment is rendered as follows:

(a) The 24/100 pro-indiviso share in the condominium unit located at the SIXTH FLOOR of the
KALAW LEDESMA CONDOMINIUM PROJECT covered by Condominium Certificate of Title No.
21761 consisting of FIVE HUNDRED SEVENTEEN (517/100) SQUARE METERS is adjudged to
have been acquired by Juan Lucas Luna through his sole industry;

(b) Plaintiff has no right as owner or under any other concept over the condominium unit, hence
the entry in Condominium Certificate of Title No. 21761 of the Registry of Deeds of Makati with
respect to the civil status of Juan Luces Luna should be changed from "JUAN LUCES LUNA
married to Soledad L. Luna" to "JUAN LUCES LUNA married to Eugenia Zaballero Luna";

(c) Plaintiff is declared to be the owner of the books Corpus Juris, Fletcher on Corporation,
American Jurisprudence and Federal Supreme Court Reports found in the condominium unit and
defendants are ordered to deliver them to the plaintiff as soon as appropriate arrangements have
been madefor transport and storage.

No pronouncement as to costs.

SO ORDERED.5

Decision of the CA

Both parties appealed to the CA.6

On her part, the petitioner assigned the following errors to the RTC, namely:

I. THE LOWER COURT ERRED IN RULING THAT THE CONDOMINIUM UNIT WAS
ACQUIRED THRU THE SOLE INDUSTRY OF ATTY. JUAN LUCES LUNA;

II. THE LOWER COURT ERRED IN RULING THAT PLAINTIFFAPPELLANT DID NOT
CONTRIBUTE MONEY FOR THE ACQUISITION OF THE CONDOMINIUM UNIT;

III. THE LOWER COURT ERRED IN GIVING CREDENCE TO PORTIONS OF THE TESTIMONY
OF GREGORIO LUNA, WHO HAS NO ACTUAL KNOWLEDGE OF THE ACQUISITION OF THE
UNIT, BUT IGNORED OTHER PORTIONS OF HIS TESTIMONY FAVORABLE TO THE
PLAINTIFF-APPELLANT;

IV. THE LOWER COURT ERRED IN NOT GIVING SIGNIFICANCE TO THE FACT THAT THE
CONJUGAL PARTNERSHIP BETWEEN LUNA AND INTERVENOR-APPELLANT WAS

28
 ALREADY DISSOLVED AND LIQUIDATED PRIOR TO THE UNION OF PLAINTIFF-
APPELLANT AND LUNA;

V. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE ABSENCE OF

THE DISPOSITION OF THE CONDOMINIUM UNIT IN THE HOLOGRAPHIC WILL OF THE
PLAINTIFF-APPELLANT;

VI. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE FACTTHAT THE
NAME OF PLAINTIFF-APPELLANT DID NOT APPEAR IN THE DEED OF ABSOLUTE SALE
EXECUTED BY TANDANG SORA DEVELOPMENT CORPORATION OVER THE
CONDOMINIUM UNIT;

VII. THE LOWER COURT ERRED IN RULING THAT NEITHER ARTICLE 148 OF THE
FAMILYCODE NOR ARTICLE 144 OF THE CIVIL CODE OF THE PHILIPPINES ARE
APPLICABLE;

VIII. THE LOWER COURT ERRED IN NOT RULING THAT THE CAUSE OF ACTION OF THE
INTERVENOR-APPELLANT HAS BEEN BARRED BY PESCRIPTION AND LACHES; and

IX. THE LOWER COURT ERRED IN NOT EXPUNGING/DISMISSING THE INTERVENTION

FOR FAILURE OF INTERVENOR-APPELLANT TO PAY FILING FEE.7

In contrast, the respondents attributedthe following errors to the trial court, to wit:

I. THE LOWER COURT ERRED IN HOLDING THAT CERTAIN FOREIGN LAW BOOKS IN THE
LAW OFFICE OF ATTY. LUNA WERE BOUGHT WITH THE USE OF PLAINTIFFS MONEY;

II. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF PROVED BY

PREPONDERANCE OF EVIDENCE (HER CLAIM OVER) THE SPECIFIED FOREIGN LAW
BOOKS FOUND IN ATTY. LUNAS LAW OFFICE; and

III. THE LOWER COURT ERRED IN NOT HOLDING THAT, ASSUMING PLAINTIFF PAID FOR
THE SAID FOREIGN LAW BOOKS, THE RIGHT TO RECOVER THEM HAD PRESCRIBED
AND BARRED BY LACHES AND ESTOPPEL.8

On November 11, 2005, the CA promulgated its assailed modified decision,9 holding and ruling:

EUGENIA, the first wife, was the legitimate wife of ATTY. LUNA until the latters death on July 12, 1997.
The absolute divorce decree obtained by ATTY. LUNA inthe Dominican Republic did not terminate his
prior marriage with EUGENIA because foreign divorce between Filipino citizens is not recognized in our
jurisdiction. x x x10

xxxx

WHEREFORE, premises considered, the assailed August 27, 2001 Decision of the RTC of MakatiCity,
Branch 138, is hereby MODIFIEDas follows:

(a) The 25/100 pro-indiviso share in the condominium unit at the SIXTH FLOOR of the KALAW
LEDESMA CONDOMINIUM PROJECT covered by Condominium Certificate of Title No. 21761
consisting of FIVE HUNDRED SEVENTEEN (517/100) (sic) SQUARE METERS is hereby
adjudged to defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-Luna
(first marriage), having been acquired from the sole funds and sole industry of Juan Luces Luna

29
 while marriage of Juan Luces Luna and Eugenia Zaballero-Luna (first marriage) was still
subsisting and valid;

(b) Plaintiff-appellant Soledad Lavadia has no right as owner or under any other concept over the
condominium unit, hence the entry in Condominium Certificate of Title No. 21761 of the Registry
of Deeds ofMakati with respect to the civil status of Juan Luces Luna should be changed from
"JUAN LUCES LUNA married to Soledad L. Luna" to "JUAN LUCES LUNA married to Eugenia
Zaballero Luna";

(c) Defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-Luna(first
marriage) are hereby declared to be the owner of the books Corpus Juris, Fletcher on
Corporation, American Jurisprudence and Federal Supreme Court Reports found in the
condominium unit.

No pronouncement as to costs.

SO ORDERED.11

On March 13, 2006,12 the CA denied the petitioners motion for reconsideration.13

Issues

In this appeal, the petitioner avers in her petition for review on certiorarithat:

A. The Honorable Court of Appeals erred in ruling that the Agreement for Separation and
Property Settlement executed by Luna and Respondent Eugenia was unenforceable; hence, their
conjugal partnership was not dissolved and liquidated;

B. The Honorable Court of Appeals erred in not recognizing the Dominican Republic courts
approval of the Agreement;

C. The Honorable Court of Appeals erred in ruling that Petitioner failed to adduce sufficient proof
of actual contribution to the acquisition of purchase of the subjectcondominium unit; and

D. The Honorable Court of Appeals erred in ruling that Petitioner was not entitled to the subject
law books.14

The decisive question to be resolved is who among the contending parties should be entitled to the
25/100 pro indivisoshare in the condominium unit; and to the law books (i.e., Corpus Juris, Fletcher on
Corporation, American Jurisprudence and Federal Supreme Court Reports).

The resolution of the decisive question requires the Court to ascertain the law that should determine,
firstly, whether the divorce between Atty. Luna and Eugenia Zaballero-Luna (Eugenia) had validly
dissolved the first marriage; and, secondly, whether the second marriage entered into by the late Atty.
Luna and the petitioner entitled the latter to any rights in property. Ruling of the Court

We affirm the modified decision of the CA.

1. Atty. Lunas first marriage with Eugenia

subsisted up to the time of his death

30
The first marriage between Atty. Luna and Eugenia, both Filipinos, was solemnized in the Philippines on
September 10, 1947. The law in force at the time of the solemnization was the Spanish Civil Code, which
adopted the nationality rule. The Civil Codecontinued to follow the nationality rule, to the effect that
Philippine laws relating to family rights and duties, or to the status, condition and legal capacity of persons
were binding upon citizens of the Philippines, although living abroad. 15 Pursuant to the nationality rule,
Philippine laws governed thiscase by virtue of bothAtty. Luna and Eugenio having remained Filipinos until
the death of Atty. Luna on July 12, 1997 terminated their marriage.

From the time of the celebration ofthe first marriage on September 10, 1947 until the present, absolute
divorce between Filipino spouses has not been recognized in the Philippines. The non-recognition of
absolute divorce between Filipinos has remained even under the Family Code,16 even if either or both of
the spouses are residing abroad.17 Indeed, the only two types of defective marital unions under our laws
have beenthe void and the voidable marriages. As such, the remedies against such defective marriages
have been limited to the declaration of nullity ofthe marriage and the annulment of the marriage.

It is true that on January 12, 1976, the Court of First Instance (CFI) of Sto. Domingo in the Dominican
Republic issued the Divorce Decree dissolving the first marriage of Atty. Luna and
Eugenia.18 Conformably with the nationality rule, however, the divorce, even if voluntarily obtained
abroad, did not dissolve the marriage between Atty. Luna and Eugenia, which subsisted up to the time of
his death on July 12, 1997. This finding conforms to the Constitution, which characterizes marriage as an
inviolable social institution,19 and regards it as a special contract of permanent union between a man and
a woman for the establishment of a conjugal and family life.20 The non-recognition of absolute divorce in
the Philippines is a manifestation of the respect for the sanctity of the marital union especially among
Filipino citizens. It affirms that the extinguishment of a valid marriage must be grounded only upon the
death of either spouse, or upon a ground expressly provided bylaw. For as long as this public policy on
marriage between Filipinos exists, no divorce decree dissolving the marriage between them can ever be
given legal or judicial recognition and enforcement in this jurisdiction.

2. The Agreement for Separation and Property Settlement

was void for lack of court approval

The petitioner insists that the Agreement for Separation and Property Settlement (Agreement) that the
late Atty. Luna and Eugenia had entered into and executed in connection with the divorce proceedings
before the CFI of Sto. Domingo in the Dominican Republic to dissolve and liquidate their conjugal
partnership was enforceable against Eugenia. Hence, the CA committed reversible error in decreeing
otherwise.

The insistence of the petitioner was unwarranted.

Considering that Atty. Luna and Eugenia had not entered into any marriage settlement prior to their
marriage on September 10, 1947, the system of relative community or conjugal partnership of gains
governed their property relations. This is because the Spanish Civil Code, the law then in force at the time
of their marriage, did not specify the property regime of the spouses in the event that they had not
entered into any marriage settlement before or at the time of the marriage. Article 119 of the Civil
Codeclearly so provides, to wit:

Article 119. The future spouses may in the marriage settlements agree upon absolute or relative
community of property, or upon complete separation of property, or upon any other regime. In the
absence of marriage settlements, or when the same are void, the system of relative community or
conjugal partnership of gains as established in this Code, shall govern the property relations between
husband and wife.

Article 142 of the Civil Codehas defined a conjugal partnership of gains thusly:

31
Article 142. By means of the conjugal partnership of gains the husband and wife place in a common fund
the fruits of their separate property and the income from their work or industry, and divide equally, upon
the dissolution of the marriage or of the partnership, the net gains or benefits obtained indiscriminately by
either spouse during the marriage.

The conjugal partnership of gains subsists until terminated for any of various causes of termination
enumerated in Article 175 of the Civil Code, viz:

Article 175. The conjugal partnership of gains terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled;

(4) In case of judicial separation of property under Article 191.

The mere execution of the Agreement by Atty. Luna and Eugenia did not per sedissolve and liquidate
their conjugal partnership of gains. The approval of the Agreement by a competent court was still required
under Article 190 and Article 191 of the Civil Code, as follows:

Article 190. In the absence of an express declaration in the marriage settlements, the separation of
property between spouses during the marriage shall not take place save in virtue of a judicial order.
(1432a)

Article 191. The husband or the wife may ask for the separation of property, and it shall be decreed when
the spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction, or has
been declared absent, or when legal separation has been granted.

xxxx

The husband and the wife may agree upon the dissolution of the conjugal partnership during the
marriage, subject to judicial approval. All the creditors of the husband and of the wife, as well as of the
conjugal partnership shall be notified of any petition for judicialapproval or the voluntary dissolution of the
conjugal partnership, so that any such creditors may appear atthe hearing to safeguard his interests.
Upon approval of the petition for dissolution of the conjugal partnership, the court shall take such
measures as may protect the creditors and other third persons.

After dissolution of the conjugal partnership, the provisions of articles 214 and 215 shall apply. The
provisions of this Code concerning the effect of partition stated in articles 498 to 501 shall be applicable.
(1433a)

But was not the approval of the Agreement by the CFI of Sto. Domingo in the Dominican Republic
sufficient in dissolving and liquidating the conjugal partnership of gains between the late Atty. Luna and
Eugenia?

The query is answered in the negative. There is no question that the approval took place only as an
incident ofthe action for divorce instituted by Atty. Luna and Eugenia, for, indeed, the justifications for their
execution of the Agreement were identical to the grounds raised in the action for divorce.21 With the
divorce not being itself valid and enforceable under Philippine law for being contrary to Philippine public
policy and public law, the approval of the Agreement was not also legally valid and enforceable under

32
Philippine law. Consequently, the conjugal partnership of gains of Atty. Luna and Eugenia subsisted in
the lifetime of their marriage.

3. Atty. Lunas marriage with Soledad, being bigamous,

was void; properties acquired during their marriage
were governed by the rules on co-ownership

What law governed the property relations of the second marriage between Atty. Luna and Soledad?

The CA expressly declared that Atty. Lunas subsequent marriage to Soledad on January 12, 1976 was
void for being bigamous,22 on the ground that the marriage between Atty. Luna and Eugenia had not been
dissolved by the Divorce Decree rendered by the CFI of Sto. Domingo in the Dominican Republic but had
subsisted until the death of Atty. Luna on July 12, 1997.

The Court concurs with the CA.

In the Philippines, marriages that are bigamous, polygamous, or incestuous are void. Article 71 of the
Civil Codeclearly states:

Article 71. All marriages performed outside the Philippines in accordance with the laws in force in the
country where they were performed, and valid there as such, shall also be valid in this country, except
bigamous, polygamous, or incestuous marriages as determined by Philippine law.

Bigamy is an illegal marriage committed by contracting a second or subsequent marriage before the first
marriage has been legally dissolved, or before the absent spouse has been declared presumptively dead
by means of a judgment rendered in the proper proceedings.23 A bigamous marriage is considered void
ab initio.24

Due to the second marriage between Atty. Luna and the petitioner being void ab initioby virtue of its being
bigamous, the properties acquired during the bigamous marriage were governed by the rules on co-
ownership, conformably with Article 144 of the Civil Code, viz:

Article 144. When a man and a woman live together as husband and wife, but they are not married,
ortheir marriage is void from the beginning, the property acquired by eitheror both of them through their
work or industry or their wages and salaries shall be governed by the rules on co-ownership.(n)

In such a situation, whoever alleges co-ownership carried the burden of proof to confirm such
fact.1wphi1 To establish co-ownership, therefore, it became imperative for the petitioner to offer proof of
her actual contributions in the acquisition of property. Her mere allegation of co-ownership, without
sufficient and competent evidence, would warrant no relief in her favor. As the Court explained in Saguid
v. Court of Appeals:25

In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of co-ownership
ofproperties acquired by the parties to a bigamous marriage and an adulterous relationship, respectively,
we ruled that proof of actual contribution in the acquisition of the property is essential. The claim of co-
ownership of the petitioners therein who were parties to the bigamous and adulterousunion is without
basis because they failed to substantiate their allegation that they contributed money in the purchase of
the disputed properties. Also in Adriano v. Court of Appeals, we ruled that the fact that the controverted
property was titled in the name of the parties to an adulterous relationship is not sufficient proof of
coownership absent evidence of actual contribution in the acquisition of the property.

As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or
the nature of the case, asserts an affirmative issue. Contentions must be proved by competent evidence

33
and reliance must be had on the strength of the partys own evidence and not upon the weakness of the
opponents defense. This applies with more vigor where, as in the instant case, the plaintiff was allowed
to present evidence ex parte.1wphi1 The plaintiff is not automatically entitled to the relief prayed for. The
law gives the defendantsome measure of protection as the plaintiff must still prove the allegations in the
complaint. Favorable relief can be granted only after the court isconvinced that the facts proven by the
plaintiff warrant such relief. Indeed, the party alleging a fact has the burden of proving it and a
mereallegation is not evidence.26

The petitioner asserts herein that she sufficiently proved her actual contributions in the purchase of the
condominium unit in the aggregate amount of at least P306,572.00, consisting in direct contributions
of P159,072.00, and in repaying the loans Atty. Luna had obtained from Premex Financing and Banco
Filipino totaling P146,825.30;27 and that such aggregate contributions of P306,572.00 corresponded to
almost the entire share of Atty. Luna in the purchase of the condominium unit amounting to P362,264.00
of the units purchase price of P1,449,056.00.28 The petitioner further asserts that the lawbooks were paid
for solely out of her personal funds, proof of which Atty. Luna had even sent her a "thank you" note; 29 that
she had the financial capacity to make the contributions and purchases; and that Atty. Luna could not
acquire the properties on his own due to the meagerness of the income derived from his law practice.

Did the petitioner discharge her burden of proof on the co-ownership?

In resolving the question, the CA entirely debunked the petitioners assertions on her actual contributions
through the following findings and conclusions, namely:

SOLEDAD was not able to prove by preponderance of evidence that her own independent funds were
used to buy the law office condominium and the law books subject matter in contentionin this case proof
that was required for Article 144 of the New Civil Code and Article 148 of the Family Code to apply as to
cases where properties were acquired by a man and a woman living together as husband and wife but
not married, or under a marriage which was void ab initio. Under Article 144 of the New Civil Code, the
rules on co-ownership would govern. But this was not readily applicable to many situations and thus it
created a void at first because it applied only if the parties were not in any way incapacitated or were
without impediment to marry each other (for it would be absurd to create a co-ownership where there still
exists a prior conjugal partnership or absolute community between the man and his lawful wife). This void
was filled upon adoption of the Family Code. Article 148 provided that: only the property acquired by both
of the parties through their actual joint contribution of money, property or industry shall be owned in
common and in proportion to their respective contributions. Such contributions and corresponding shares
were prima faciepresumed to be equal. However, for this presumption to arise, proof of actual contribution
was required. The same rule and presumption was to apply to joint deposits of money and evidence of
credit. If one of the parties was validly married to another, his or her share in the co-ownership accrued to
the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in
bad faith was not validly married to another, his or her share shall be forfeited in the manner provided in
the last paragraph of the Article 147. The rules on forfeiture applied even if both parties were in bad faith.
Co-ownership was the exception while conjugal partnership of gains was the strict rule whereby marriage
was an inviolable social institution and divorce decrees are not recognized in the Philippines, as was held
by the Supreme Court in the case of Tenchavez vs. Escao, G.R. No. L-19671, November 29, 1965, 15
SCRA 355, thus:

xxxx

As to the 25/100pro-indivisoshare of ATTY. LUNA in the condominium unit, SOLEDAD failed to prove that
she made an actual contribution to purchase the said property. She failed to establish that the four (4)
checks that she presented were indeed used for the acquisition of the share of ATTY. LUNA in the
condominium unit. This was aptly explained in the Decision of the trial court, viz.:

34
"x x x The first check, Exhibit "M" for P55,000.00 payable to Atty. Teresita Cruz Sison was issued on
January 27, 1977, which was thirteen (13) months before the Memorandum of Agreement, Exhibit "7" was
signed. Another check issued on April 29, 1978 in the amount of P97,588.89, Exhibit "P" was payable to
Banco Filipino. According to the plaintiff, thiswas in payment of the loan of Atty. Luna. The third check
which was for P49,236.00 payable to PREMEX was dated May 19, 1979, also for payment of the loan of
Atty. Luna. The fourth check, Exhibit "M", for P4,072.00 was dated December 17, 1980. None of the
foregoing prove that the amounts delivered by plaintiff to the payees were for the acquisition of the
subject condominium unit. The connection was simply not established. x x x"

SOLEDADs claim that she made a cash contribution of P100,000.00 is unsubstantiated. Clearly, there is
no basis for SOLEDADs claim of co-ownership over the 25/100 portion of the condominium unit and the
trial court correctly found that the same was acquired through the sole industry of ATTY. LUNA, thus:

"The Deed of Absolute Sale, Exhibit "9", covering the condominium unit was in the name of Atty. Luna,
together with his partners in the law firm. The name of the plaintiff does not appear as vendee or as the
spouse of Atty. Luna. The same was acquired for the use of the Law firm of Atty. Luna. The loans from
Allied Banking Corporation and Far East Bank and Trust Company were loans of Atty. Luna and his
partners and plaintiff does not have evidence to show that she paid for them fully or partially. x x x"

The fact that CCT No. 4779 and subsequently, CCT No. 21761 were in the name of "JUAN LUCES
LUNA, married to Soledad L. Luna" was no proof that SOLEDAD was a co-owner of the condominium
unit. Acquisition of title and registration thereof are two different acts. It is well settled that registration
does not confer title but merely confirms one already existing. The phrase "married to" preceding
"Soledad L. Luna" is merely descriptive of the civil status of ATTY. LUNA.

SOLEDAD, the second wife, was not even a lawyer. So it is but logical that SOLEDAD had no
participation in the law firm or in the purchase of books for the law firm. SOLEDAD failed to prove that she
had anything to contribute and that she actually purchased or paid for the law office amortization and for
the law books. It is more logical to presume that it was ATTY. LUNA who bought the law office space and
the law books from his earnings from his practice of law rather than embarrassingly beg or ask from
SOLEDAD money for use of the law firm that he headed.30

The Court upholds the foregoing findings and conclusions by the CA both because they were
substantiated by the records and because we have not been shown any reason to revisit and undo them.
Indeed, the petitioner, as the party claiming the co-ownership, did not discharge her burden of proof. Her
mere allegations on her contributions, not being evidence,31 did not serve the purpose. In contrast, given
the subsistence of the first marriage between Atty. Luna and Eugenia, the presumption that Atty. Luna
acquired the properties out of his own personal funds and effort remained. It should then be justly
concluded that the properties in litislegally pertained to their conjugal partnership of gains as of the time of
his death. Consequently, the sole ownership of the 25/100 pro indivisoshare of Atty. Luna in the
condominium unit, and of the lawbooks pertained to the respondents as the lawful heirs of Atty. Luna.

WHEREFORE, the Court AFFIRMS the decision promulgated on November 11, 2005; and ORDERS the
petitioner to pay the costs of suit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

35
 SECOND DIVISION

G.R. No. 188289 August 20, 2014

DAVID A. NOVERAS, Petitioner,

vs.
LETICIA T. NOVERAS, Respondent.

DECISION

PEREZ, J.:

Before the Court is a petition for review assailing the 9 May 2008 Decision 1 of the Court of Appeals in CA-
G.R .. CV No. 88686, which affirmed in part the 8 December 2006 Decision2 of the Regional Trial Court
(RTC) of Baler, Aurora, Branch 96.

The factual antecedents are as follow:

David A. Noveras (David) and Leticia T. Noveras (Leticia) were married on 3 December 1988 in Quezon
City, Philippines. They resided in California, United States of America (USA) where they eventually
acquired American citizenship. They then begot two children, namely: Jerome T.

Noveras, who was born on 4 November 1990 and JenaT. Noveras, born on 2 May 1993. David was
engaged in courier service business while Leticia worked as a nurse in San Francisco, California.

During the marriage, they acquired the following properties in the Philippines and in the USA:

PHILIPPINES
PROPERTY FAIR MARKET VALUE
House and Lot with an area of 150 sq. m. P1,693,125.00
located at 1085 Norma Street, Sampaloc,
Manila (Sampaloc property)
Agricultural land with an area of 20,742 sq. m. P400,000.00
located at Laboy, Dipaculao, Aurora
A parcel of land with an area of 2.5 hectares P490,000.00
located at Maria Aurora, Aurora
A parcel of land with an area of 175 sq.m. P175,000.00 3

located at Sabang Baler, Aurora

3-has. coconut plantation in San Joaquin Maria P750,000.00
Aurora, Aurora
USA
PROPERTY FAIR MARKET VALUE
House and Lot at 1155 Hanover Street, Daly
City, California
$550,000.00
(unpaid debt of $285,000.00)

36
 Furniture and furnishings $3,000
Jewelries (ring and watch) $9,000
2000 Nissan Frontier 4x4 pickup truck $13,770.00
Bank of America Checking Account $8,000
Bank of America Cash Deposit
Life Insurance (Cash Value) $100,000.00
Retirement, pension, profit-sharing, annuities $56,228.00 4

The Sampaloc property used to beowned by Davids parents. The parties herein secured a loan from a
bank and mortgaged the property. When said property was about to be foreclosed, the couple paid a total
of P1.5 Million for the redemption of the same.

Due to business reverses, David left the USA and returned to the Philippines in 2001. In December
2002,Leticia executed a Special Power of Attorney (SPA) authorizing David to sell the Sampaloc property
for P2.2 Million. According to Leticia, sometime in September 2003, David abandoned his family and lived
with Estrellita Martinez in Aurora province. Leticia claimed that David agreed toand executed a Joint
Affidavit with Leticia in the presence of Davids father, Atty. Isaias Noveras, on 3 December 2003 stating
that: 1) the P1.1Million proceeds from the sale of the Sampaloc property shall be paid to and collected by
Leticia; 2) that David shall return and pay to Leticia P750,000.00, which is equivalent to half of the amount
of the redemption price of the Sampaloc property; and 3) that David shall renounce and forfeit all his
rights and interest in the conjugal and real properties situated in the Philippines. 5 David was able to
collect P1,790,000.00 from the sale of the Sampaloc property, leaving an unpaid balance of P410,000.00.

Upon learning that David had an extra-marital affair, Leticia filed a petition for divorce with the Superior
Court of California, County of San Mateo, USA. The California court granted the divorce on 24 June 2005
and judgment was duly entered on 29 June 2005.6 The California court granted to Leticia the custody of
her two children, as well as all the couples properties in the USA. 7

On 8 August 2005, Leticia filed a petition for Judicial Separation of Conjugal Property before the RTC of
Baler, Aurora. She relied on the 3 December 2003 Joint Affidavit and Davids failure to comply with his
obligation under the same. She prayed for: 1) the power to administer all conjugal properties in the
Philippines; 2) David and his partner to cease and desist from selling the subject conjugal properties; 3)
the declaration that all conjugal properties be forfeited in favor of her children; 4) David to remit half of the
purchase price as share of Leticia from the sale of the Sampaloc property; and 5) the payment
ofP50,000.00 and P100,000.00 litigation expenses.8

In his Answer, David stated that a judgment for the dissolution of their marriage was entered on 29 June
2005 by the Superior Court of California, County of San Mateo. He demanded that the conjugal
partnership properties, which also include the USA properties, be liquidated and that all expenses of
liquidation, including attorneys fees of both parties be charged against the conjugal partnership. 9

The RTC of Baler, Aurora simplified the issues as follow:

1. Whether or not respondent David A. Noveras committed acts of abandonment and marital
infidelity which can result intothe forfeiture of the parties properties in favor of the petitioner and
their two (2) children.

2. Whether or not the Court has jurisdiction over the properties in California, U.S.A. and the same
can be included in the judicial separation prayed for.

37
 3. Whether or not the "Joint Affidavit" x x x executed by petitioner Leticia T. Noveras and
respondent David A. Noveras will amount to a waiver or forfeiture of the latters property rights
over their conjugal properties.

4. Whether or not Leticia T. Noveras isentitled to reimbursement of onehalf of the P2.2 [M]illion
sales proceeds of their property in Sampaloc, Manila and one-half of the P1.5 [M]illion used to
redeem the property of Atty. Isaias Noveras, including interests and charges.

5. How the absolute community properties should be distributed.

6. Whether or not the attorneys feesand litigation expenses of the parties were chargeable
against their conjugal properties.

Corollary to the aboveis the issue of:

Whether or not the two common children of the parties are entitled to support and presumptive
legitimes.10

On 8 December 2006, the RTC rendered judgment as follows:

1. The absolute community of property of the parties is hereby declared DISSOLVED;

2. The net assets of the absolute community of property ofthe parties in the Philippines are
hereby ordered to be awarded to respondent David A. Noveras only, with the properties in the
United States of America remaining in the sole ownership of petitioner Leticia Noveras a.k.a.
Leticia Tacbiana pursuant to the divorce decree issuedby the Superior Court of California, County
of San Mateo, United States of America, dissolving the marriage of the parties as of June 24,
2005. The titles presently covering said properties shall be cancelled and new titles be issued in
the name of the party to whom said properties are awarded;

3. One-half of the properties awarded to respondent David A. Noveras in the preceding

paragraph are hereby given to Jerome and Jena, his two minor children with petitioner
LeticiaNoveras a.k.a. Leticia Tacbiana as their presumptive legitimes and said legitimes must be
annotated on the titles covering the said properties.Their share in the income from these
properties shall be remitted to them annually by the respondent within the first half of January of
each year, starting January 2008;

4. One-half of the properties in the United States of America awarded to petitioner Leticia
Noveras a.k.a. Leticia Tacbiana in paragraph 2 are hereby given to Jerome and Jena, her two
minor children with respondent David A. Noveras as their presumptive legitimes and said
legitimes must be annotated on the titles/documents covering the said properties. Their share in
the income from these properties, if any, shall be remitted to them annually by the petitioner
within the first half of January of each year, starting January 2008;

5. For the support of their two (2) minor children, Jerome and Jena, respondent David A. Noveras
shall give them US$100.00 as monthly allowance in addition to their income from their
presumptive legitimes, while petitioner Leticia Tacbiana shall take care of their food, clothing,
education and other needs while they are in her custody in the USA. The monthly allowance due
from the respondent shall be increased in the future as the needs of the children require and his
financial capacity can afford;

6. Of the unpaid amount of P410,000.00 on the purchase price of the Sampaloc property, the
Paringit Spouses are hereby ordered to pay P5,000.00 to respondent David A. Noveras

38
 and P405,000.00 to the two children. The share of the respondent may be paid to him directly but
the share of the two children shall be deposited with a local bank in Baler, Aurora, in a joint
account tobe taken out in their names, withdrawal from which shall only be made by them or by
their representative duly authorized with a Special Power of Attorney. Such payment/deposit shall
be made withinthe period of thirty (30) days after receipt of a copy of this Decision, with the
passbook of the joint account to be submitted to the custody of the Clerk of Court of this Court
within the same period. Said passbook can be withdrawn from the Clerk of Court only by the
children or their attorney-in-fact; and

7. The litigation expenses and attorneys fees incurred by the parties shall be shouldered by them
individually.11

The trial court recognized that since the parties are US citizens, the laws that cover their legal and
personalstatus are those of the USA. With respect to their marriage, the parties are divorced by virtue of
the decree of dissolution of their marriage issued by the Superior Court of California, County of San
Mateo on 24June 2005. Under their law, the parties marriage had already been dissolved. Thus, the trial
court considered the petition filed by Leticia as one for liquidation of the absolute community of property
regime with the determination of the legitimes, support and custody of the children, instead of an action
for judicial separation of conjugal property.

With respect to their property relations, the trial court first classified their property regime as absolute
community of property because they did not execute any marriage settlement before the solemnization of
their marriage pursuant to Article 75 of the Family Code. Then, the trial court ruled that in accordance with
the doctrine of processual presumption, Philippine law should apply because the court cannot take
judicial notice of the US law since the parties did not submit any proof of their national law. The trial court
held that as the instant petition does not fall under the provisions of the law for the grant of judicial
separation of properties, the absolute community properties cannot beforfeited in favor of Leticia and her
children. Moreover, the trial court observed that Leticia failed to prove abandonment and infidelity with
preponderant evidence.

The trial court however ruled that Leticia is not entitled to the reimbursements she is praying for
considering that she already acquired all of the properties in the USA. Relying still on the principle of
equity, the Court also adjudicated the Philippine properties to David, subject to the payment of the
childrens presumptive legitimes. The trial court held that under Article 89 of the Family Code, the waiver
or renunciation made by David of his property rights in the Joint Affidavit is void.

On appeal, the Court of Appeals modified the trial courts Decision by directing the equal division of the
Philippine properties between the spouses. Moreover with respect to the common childrens presumptive
legitime, the appellate court ordered both spouses to each pay their children the amount of P520,000.00,
thus:

WHEREFORE, the instant appeal is PARTLY GRANTED. Numbers 2, 4 and 6 of the assailedDecision
dated December 8, 2006 of Branch 96, RTC of Baler, Aurora Province, in Civil Case No. 828 are hereby
MODIFIED to read as follows:

2. The net assets of the absolute community of property of the parties in the Philippines are
hereby divided equally between petitioner Leticia Noveras a.k.a. Leticia Tacbiana (sic) and
respondent David A. Noveras;

xxx

4. One-half of the properties awarded to petitioner Leticia Tacbiana (sic) in paragraph 2 shall
pertain to her minor children, Jerome and Jena, as their presumptive legitimes which shall be
annotated on the titles/documents covering the said properties. Their share in the income

39
 therefrom, if any, shall be remitted to them by petitioner annually within the first half of January,
starting 2008;

xxx

6. Respondent David A. Noveras and petitioner Leticia Tacbiana (sic) are each ordered to pay the
amount ofP520,000.00 to their two children, Jerome and Jena, as their presumptive legitimes
from the sale of the Sampaloc property inclusive of the receivables therefrom, which shall be
deposited to a local bank of Baler, Aurora, under a joint account in the latters names. The
payment/deposit shall be made within a period of thirty (30) days from receipt ofa copy of this
Decision and the corresponding passbook entrusted to the custody ofthe Clerk of Court a
quowithin the same period, withdrawable only by the children or their attorney-in-fact.

A number 8 is hereby added, which shall read as follows:

8. Respondent David A. Noveras is hereby ordered to pay petitioner Leticia Tacbiana (sic) the
amount of P1,040,000.00 representing her share in the proceeds from the sale of the Sampaloc
property.

The last paragraph shall read as follows:

Send a copy of this Decision to the local civil registry of Baler, Aurora; the local civil registry of Quezon
City; the Civil RegistrarGeneral, National Statistics Office, Vibal Building, Times Street corner EDSA,
Quezon City; the Office of the Registry of Deeds for the Province of Aurora; and to the children, Jerome
Noveras and Jena Noveras.

The rest of the Decision is AFFIRMED.12

In the present petition, David insists that the Court of Appeals should have recognized the California
Judgment which awarded the Philippine properties to him because said judgment was part of the
pleading presented and offered in evidence before the trial court. David argues that allowing Leticia to
share in the Philippine properties is tantamount to unjust enrichment in favor of Leticia considering that
the latter was already granted all US properties by the California court.

In summary and review, the basic facts are: David and Leticia are US citizens who own properties in the
USA and in the Philippines. Leticia obtained a decree of divorce from the Superior Court of California in
June 2005 wherein the court awarded all the properties in the USA to Leticia. With respect to their
properties in the Philippines, Leticiafiled a petition for judicial separation ofconjugal properties.

At the outset, the trial court erred in recognizing the divorce decree which severed the bond of marriage
between the parties. In Corpuz v. Sto. Tomas,13 we stated that:

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our courts
do not take judicial notice of foreign judgments and laws. Justice Herrera explained that, as a rule, "no
sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another
country." This means that the foreign judgment and its authenticity must beproven as facts under our
rules on evidence, together with the aliens applicable national law to show the effect of the judgment on
the alien himself or herself. The recognition may be made in an action instituted specifically for the
purpose or in another action where a party invokes the foreign decree as an integral aspect of his claim or
defense.14

The requirements of presenting the foreign divorce decree and the national law of the foreigner must
comply with our Rules of Evidence. Specifically, for Philippine courts to recognize a foreign judgment

40
relating to the status of a marriage, a copy of the foreign judgment may be admitted in evidence and
proven as a fact under Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of the Rules of
Court.15

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 beaccompanied, 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, asthe case may be, and must be under
the official seal of the attesting officer.

Section 25 of the same Rule states that whenever a copy of a document or record is attested for the
purpose of evidence, the attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be. The attestation must be under the official seal of
the attesting officer, if there be any, or if hebe the clerk of a court having a seal, under the seal of such
court.

Based on the records, only the divorce decree was presented in evidence. The required certificates to
prove its authenticity, as well as the pertinent California law on divorce were not presented.

It may be noted that in Bayot v. Court of Appeals,16 we relaxed the requirement on certification where we
held that "[petitioner therein] was clearly an American citizenwhen she secured the divorce and that
divorce is recognized and allowed in any of the States of the Union, the presentation of a copy of foreign
divorce decree duly authenticatedby the foreign court issuing said decree is, as here, sufficient." In this
case however, it appears that there is no seal from the office where the divorce decree was obtained.

Even if we apply the doctrine of processual presumption17 as the lower courts did with respect to the
property regime of the parties, the recognition of divorce is entirely a different matter because, to begin
with, divorce is not recognized between Filipino citizens in the Philippines. Absent a valid recognition of
the divorce decree, it follows that the parties are still legally married in the Philippines. The trial court thus
erred in proceeding directly to liquidation.

As a general rule, any modification in the marriage settlements must be made before the celebration of
marriage. An exception to this rule is allowed provided that the modification isjudicially approved and
refers only to the instances provided in Articles 66,67, 128, 135 and 136 of the Family Code.18

Leticia anchored the filing of the instant petition for judicial separation of property on paragraphs 4 and 6
of Article 135 of the Family Code, to wit:

Art. 135. Any of the following shall be considered sufficient cause for judicial separation of property:

(1) That the spouse of the petitioner has been sentenced to a penalty which carries with it civil
interdiction;

(2) That the spouse of the petitioner has been judicially declared an absentee;

(3) That loss of parental authority ofthe spouse of petitioner has been decreed by the court;

(4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or her
obligations to the family as provided for in Article 101;

41
 (5) That the spouse granted the power of administration in the marriage settlements has abused
that power; and

(6) That at the time of the petition, the spouses have been separated in fact for at least one year
and reconciliation is highly improbable.

In the cases provided for in Numbers (1), (2), and (3), the presentation of the final judgment against the
guiltyor absent spouse shall be enough basis for the grant of the decree ofjudicial separation of property.
(Emphasis supplied).

The trial court had categorically ruled that there was no abandonment in this case to necessitate judicial
separation of properties under paragraph 4 of Article 135 of the Family Code. The trial court ratiocinated:

Moreover, abandonment, under Article 101 of the Family Code quoted above, must be for a valid cause
and the spouse is deemed to have abandoned the other when he/she has left the conjugal dwelling
without intention of returning. The intention of not returning is prima facie presumed if the allegedly [sic]
abandoning spouse failed to give any information as to his or her whereabouts within the period of three
months from such abandonment.

In the instant case, the petitioner knows that the respondent has returned to and stayed at his hometown
in Maria Aurora, Philippines, as she even went several times to visit him there after the alleged
abandonment. Also, the respondent has been going back to the USA to visit her and their children until
the relations between them worsened. The last visit of said respondent was in October 2004 when he and
the petitioner discussed the filing by the latter of a petition for dissolution of marriage with the California
court. Such turn for the worse of their relationship and the filing of the saidpetition can also be considered
as valid causes for the respondent to stay in the Philippines. 19

Separation in fact for one year as a ground to grant a judicial separation of property was not tackled in the
trial courts decision because, the trial court erroneously treated the petition as liquidation of the absolute
community of properties.

The records of this case are replete with evidence that Leticia and David had indeed separated for more
than a year and that reconciliation is highly improbable. First, while actual abandonment had not been
proven, it is undisputed that the spouses had been living separately since 2003 when David decided to go
back to the Philippines to set up his own business. Second, Leticia heard from her friends that David has
been cohabiting with Estrellita Martinez, who represented herself as Estrellita Noveras. Editha Apolonio,
who worked in the hospital where David was once confined, testified that she saw the name of Estrellita
listed as the wife of David in the Consent for Operation form.20 Third and more significantly, they had filed
for divorce and it was granted by the California court in June 2005.

Having established that Leticia and David had actually separated for at least one year, the petition for
judicial separation of absolute community of property should be granted.

The grant of the judicial separation of the absolute community property automatically dissolves the
absolute community regime, as stated in the 4th paragraph of Article 99 ofthe Family Code, thus:

Art. 99. The absolute community terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled or declared void; or

42
 (4) In case of judicial separation of property during the marriage under Articles 134 to 138.
(Emphasis supplied).

Under Article 102 of the same Code, liquidation follows the dissolution of the absolute community regime
and the following procedure should apply:

Art. 102. Upon dissolution of the absolute community regime, the following procedure shall apply:

(1) An inventory shall be prepared, listing separately all the properties of the absolute community
and the exclusive properties of each spouse.

(2) The debts and obligations of the absolute community shall be paid out of its assets. In case of
insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their
separate properties in accordance with the provisions of the second paragraph of Article 94.

(3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to
each of them.

(4) The net remainder of the properties of the absolute community shall constitute its net assets,
which shall be divided equally between husband and wife, unless a different proportion or division
was agreed upon in the marriage settlements, or unless there has been a voluntary waiver of
such share provided in this Code. For purposes of computing the net profits subject to forfeiture in
accordance with Articles 43, No. (2) and 63, No. (2),the said profits shall be the increase in value
between the market value of the community property at the time of the celebration of the marriage
and the market value at the time of its dissolution.

(5) The presumptive legitimes of the common children shall be delivered upon partition, in
accordance with Article 51.

(6) Unless otherwise agreed upon by the parties, in the partition of the properties, the conjugal
dwelling and the lot on which it is situated shall be adjudicated tothe spouse with whom the
majority of the common children choose to remain. Children below the age of seven years are
deemed to have chosen the mother, unless the court has decided otherwise. In case there is no
such majority, the court shall decide, taking into consideration the best interests of said children.
At the risk of being repetitious, we will not remand the case to the trial court. Instead, we shall
adopt the modifications made by the Court of Appeals on the trial courts Decision with respect to
liquidation.

We agree with the appellate court that the Philippine courts did not acquire jurisdiction over the California
properties of David and Leticia. Indeed, Article 16 of the Civil Code clearly states that real property as well
as personal property is subject to the law of the country where it is situated. Thus, liquidation shall only be
limited to the Philippine properties.

We affirm the modification madeby the Court of Appeals with respect to the share of the spouses in the
absolutecommunity properties in the Philippines, as well as the payment of their childrens presumptive
legitimes, which the appellate court explained in this wise:

Leticia and David shall likewise have an equal share in the proceeds of the Sampaloc
property.1wphi1 While both claimed to have contributed to the redemption of the Noveras property,
absent a clear showing where their contributions came from, the same is presumed to have come from
the community property. Thus, Leticia is not entitled to reimbursement of half of the redemption money.

43
David's allegation that he used part of the proceeds from the sale of the Sampaloc property for the benefit
of the absolute community cannot be given full credence. Only the amount of P120,000.00 incurred in
going to and from the U.S.A. may be charged thereto. Election expenses in the amount of P300,000.00
when he ran as municipal councilor cannot be allowed in the absence of receipts or at least the
Statement of Contributions and Expenditures required under Section 14 of Republic Act No. 7166 duly
received by the Commission on Elections. Likewise, expenses incurred to settle the criminal case of his
personal driver is not deductible as the same had not benefited the family. In sum, Leticia and David shall
share equally in the proceeds of the sale net of the amount of P120,000.00 or in the respective amounts
of P1,040,000.00.

xxxx

Under the first paragraph of Article 888 of the Civil Code, "(t)he legitime of legitimate children and
descendants consists of one-half or the hereditary estate of the father and of the mother." The children
arc therefore entitled to half of the share of each spouse in the net assets of the absolute community,
which shall be annotated on the titles/documents covering the same, as well as to their respective shares
in the net proceeds from the sale of the Sampaloc property including the receivables from Sps. Paringit in
the amount of P410,000.00. Consequently, David and Leticia should each pay them the amount
of P520,000.00 as their presumptive legitimes therefrom.21

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA G.R. CV No.
88686 is AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 205487 November 12, 2014

ORION SAVINGS BANK, Petitioner,

vs.
SHIGEKANE SUZUKI, Respondent.

DECISION

BRION, J.:

Before us is the Petition for Review on Certiorari1 filed by petitioner Orion Savings Bank (Orion) under
Rule 45 of the Rules of Court, assailing the decision2 dated August 23, 2012 and the resolution3 dated
January 25, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 94104.

The Factual Antecedents

In the first week of August 2003, respondent Shigekane Suzuki (Suzuki), a Japanese national, met with
Ms. Helen Soneja (Soneja) to inquire about a condominium unit and a parking slot at Cityland Pioneer,
Mandaluyong City, allegedly owned by Yung Sam Kang (Kang), a Korean national and a Special
Resident Retiree's Visa (SRRV) holder.

44
At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium Certificate of Title
(CCT) No. 18186]4 and Parking Slot No. 42 [covered by CCT No. 9118]5 were for sale for P3,000,000.00.
Soneja likewise assured Suzuki that the titles to the unit and the parking slot were clean. After a brief
negotiation, the parties agreed to reduce the price to P2,800,000.00. On August 5, 2003, Suzuki issued
Kang a Bank of the Philippine Island (BPI) Check No. 833496 for One Hundred Thousand Pesos
(P100,000.00) as reservation fee.7 On August 21, 2003, Suzuki issued Kang another check, BPI Check
No. 83350,8 this time for P2,700,000.00 representing the remaining balance of the purchase price. Suzuki
and Kang then executed a Deed of Absolute Sale dated August 26, 2003 9 covering Unit No. 536 and
Parking Slot No. 42. Soon after, Suzuki took possession of the condominium unit and parking lot, and
commenced the renovation of the interior of the condominium unit.

Kang thereafter made several representations with Suzuki to deliver the titles to the properties, which
were then allegedly in possession of Alexander Perez (Perez, Orions Loans Officer) for safekeeping.
Despite several verbal demands, Kang failed to deliver the documents. Suzuki later on learned that Kang
had left the country, prompting Suzuki to verify the status of the properties with the Mandaluyong City
Registry of Deeds.

Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No. 42 contained
no annotations although it remained under the name of Cityland Pioneer. This notwithstanding, Cityland
Pioneer, through Assistant Vice President Rosario D. Perez, certified that Kang had fully paid the
purchase price of Unit. No. 53610 and Parking Slot No. 42.11 CCT No. 18186 representing the title to the
condominium unit had no existing encumbrance, except for anannotation under Entry No. 73321/C-10186
which provided that any conveyance or encumbrance of CCT No. 18186 shall be subject to approval by
the Philippine Retirement Authority (PRA). Although CCT No. 18186 contained Entry No. 66432/C-10186
dated February 2, 1999 representing a mortgage in favor of Orion for a P1,000,000.00 loan, that
annotation was subsequently cancelled on June 16, 2000 by Entry No. 73232/T. No. 10186. Despite the
cancellation of the mortgage to Orion, the titles to the properties remained in possession of Perez.

To protect his interests, Suzuki thenexecuted an Affidavit of Adverse Claim 12 dated September 8, 2003,
withthe Registry of Deeds of Mandaluyong City, annotated as Entry No. 3292/C-No. 18186 in CCT No.
18186. Suzuki then demanded the delivery of the titles.13 Orion, (through Perez), however, refused to
surrender the titles, and cited the need to consult Orions legal counsel as its reason.

On October 14, 2003, Suzuki received a letter from Orions counsel dated October 9, 2003, stating that
Kang obtained another loan in the amount of P1,800,000.00. When Kang failed to pay, he executed a
Dacion en Pagodated February 2, 2003, in favorof Orion covering Unit No. 536. Orion, however, did not
register the Dacion en Pago, until October 15, 2003.

On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot No. 42 (covered
by CCT No. 9118) and this was annotated as Entry No. 4712/C-No. 9118 in the parking lots title.

On January 27, 2004, Suzuki filed a complaint for specific performance and damages against Kang and
Orion. At the pre-trial, the parties made the following admissions and stipulations:

1. That as of August 26, 2003, Kang was the registered owner of Unit No. 536 and Parking Slot
No. 42;

2. That the mortgage in favor ofOrion supposedly executed by Kang, with Entry No. 66432/C-
10186 dated February 2, 1999, was subsequently cancelled by Entry No. 73232/T No. 10186
dated June 16, 2000;

3. That the alleged Dacion en Pagowas never annotated in CCT Nos. 18186 and 9118;

45
 4. That Orion only paid the appropriate capital gains tax and the documentary stamp tax for the
alleged Dacion en Pago on October 15, 2003;

5. That Parking Slot No. 42, covered by CCT No. 9118, was never mortgaged to Orion; and

6. That when Suzuki bought the properties, he went to Orion to obtain possession of the titles.

The RTC Ruling

In its decision14 dated June 29, 2009, the Regional Trial Court (RTC), Branch 213, Mandaluyong City
ruled infavor of Suzuki and ordered Orion to deliver the CCT Nos. 18186 and 9118 to Suzuki.

The court found that Suzuki was an innocent purchaser for value whose rights over the properties
prevailed over Orions. The RTC further noted that Suzuki exerted efforts to verify the status of the
properties but he did not find any existing encumbrance inthe titles. Although Orion claims to have
purchased the property by way of a Dacion en Pago, Suzuki only learned about it two (2) months after he
bought the properties because Orion never bothered to register or annotate the Dacion en Pagoin CCT
Nos. 18186 and 9116.

The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral damages, exemplary
damages, attorneys fees, appearance fees, expenses for litigation and cost ofsuit. Orion timely appealed
the RTC decision with the CA.

The CA Ruling

On August 23, 2012, the CA partially granted Orions appeal and sustained the RTC insofar as it upheld
Suzukis right over the properties. The CA further noted that Entry No. 73321/C-10186 pertaining to the
withdrawal of investment of an SRRV only serves as a warning to an SRRV holder about the implications
of a conveyance of a property investment. It deviated from the RTC ruling, however, by deleting the
award for moral damages, exemplary damages, attorneys fees, expenses for litigation and cost of suit.

Orion sought a reconsideration of the CA decision but the CA denied the motion in its January 25, 2013
resolution. Orion then filed a petition for review on certiorariunder Rule 45 with this Court.

The Petition and Comment

Orions petition is based on the following grounds/arguments:15

1. The Deed of Sale executed by Kang in favor of Suzuki is null and void. Under Korean law, any
conveyance of a conjugal property should be made with the consent of both spouses;

2. Suzuki is not a buyer in good faith for he failed to check the owners duplicate copies of the
CCTs;

3. Knowledge of the PRA restriction under Entry No. 73321/C-10186, which prohibits any
conveyance or encumbrance of the property investment, defeats the alleged claim of good faith
by Suzuki; and

4. Orion should not be faulted for exercising due diligence.

In his Comment,16 Suzuki asserts that the issue on spousal consent was belatedly raised on appeal.
Moreover, proof of acquisition during the marital coverture is a condition sine qua nonfor the operation of

46
the presumption of conjugal ownership.17 Suzuki additionally maintains that he is a purchaser in good
faith, and is thus entitled to the protection of the law.

The Courts Ruling

We deny the petition for lack of merit.

The Court may inquire into conclusions of fact when the inference made is manifestly mistaken

In a Rule 45 petition, the latitude of judicial review generally excludes a factual and evidentiary re-
evaluation, and the Court ordinarily abides by the uniform factual conclusions of the trial court and the
appellate court.18 In the present case, while the courts below both arrived at the same conclusion, there
appears tobe an incongruence in their factual findings and the legal principle they applied to the attendant
factual circumstances. Thus, we are compelled to examine certain factual issues in the exercise of our
sound discretion to correct any mistaken inference that may have been made. 19

Philippine Law governs the transfer of real property

Orion believes that the CA erred in not ruling on the issue of spousal consent. We cannot uphold this
position, however, because the issue of spousal consent was only raised on appeal to the CA. It is a well-
settled principle that points of law, theories, issues, and arguments not brought to the attention of the trial
court cannot be raised for the first time on appeal and considered by a reviewing court.20 To consider
these belated arguments would violate basic principles of fairplay, justice, and due process.

Having said these, we shall nonetheless discuss the issues Orion belatedly raised, if only to put an end to
lingering doubts on the correctness of the denial of the present petition.

It is a universal principle thatreal or immovable property is exclusively subject to the laws of the country or
state where it is located.21 The reason is found in the very nature of immovable property its immobility.
Immovables are part of the country and so closely connected to it that all rights over them have their
natural center of gravity there.22

Thus, all matters concerning the titleand disposition ofreal property are determined by what is known as
the lex loci rei sitae, which can alone prescribe the mode by which a title canpass from one person to
another, or by which an interest therein can be gained or lost.23 This general principle includes all rules
governing the descent, alienation and transfer of immovable property and the validity, effect and
construction of wills and other conveyances.24

This principle even governs the capacity of the person making a deed relating to immovable property, no
matter what its nature may be. Thus, an instrument will be ineffective to transfer title to land if the person
making it is incapacitated by the lex loci rei sitae, even though under the law of his domicile and by the
law of the place where the instrument is actually made, his capacity is undoubted. 25

On the other hand, property relations between spouses are governed principally by the national law of the
spouses.26 However, the party invoking the application of a foreign law has the burden of proving the
foreign law. The foreign law is a question of fact to be properly pleaded and proved as the judge cannot
take judicial notice of a foreign law.27 He is presumed to know only domestic or the law of the forum.28

To prove a foreign law, the party invoking it must present a copy thereof and comply with Sections 24 and
25 of Rule 132 of the Revised Rules of Court which reads:

SEC. 24. Proof of official record. The record of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a

47
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 inwhich the record is kept, and authenticated by the seal
of his office. (Emphasis supplied)

SEC. 25. What attestation ofcopy must state. Whenever a copy of a document or record is attested for
the purpose of the evidence, the attestation must state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may be. The attestation must be under the official seal
of the attesting officer, if there be any, or if he be the clerk of a court having a seal, under the seal of such
court.

Accordingly, matters concerning the title and disposition of real property shall be governed by Philippine
law while issues pertaining to the conjugal natureof the property shall be governed by South Korean law,
provided it is proven as a fact.

In the present case, Orion, unfortunately failed to prove the South Korean law on the conjugal ownership
ofproperty. It merely attached a "Certification from the Embassy of the Republic of Korea" 29 to prove the
existence of Korean Law. This certification, does not qualify as sufficient proof of the conjugal nature of
the property for there is no showing that it was properly authenticated bythe seal of his office, as required
under Section 24 of Rule 132.30

Accordingly, the International Law doctrine of presumed-identity approachor processual presumption

comes into play, i.e., where a foreign law is not pleaded or, evenif pleaded, is not proven, the
presumption is that foreign law is the same as Philippine Law.31

Under Philippine Law, the phrase "Yung Sam Kang married to' Hyun Sook Jung" is merely descriptive of
the civil status of Kang.32 In other words, the import from the certificates of title is that Kang is the owner
of the properties as they are registered in his name alone, and that he is married to Hyun Sook Jung.

We are not unmindful that in numerous cases we have held that registration of the property in the name
of only one spouse does not negate the possibility of it being conjugal or community property.33 In those
cases, however, there was proof that the properties, though registered in the name of only one spouse,
were indeed either conjugal or community properties.34 Accordingly, we see no reason to declare as
invalid Kangs conveyance in favor of Suzuki for the supposed lack of spousal consent.

The petitioner failed to adduce sufficient evidence to prove the due execution of the Dacion en Pago

Article 1544 of the New Civil Codeof the Philippines provides that:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is
good faith.

48
The application of Article 1544 of the New Civil Code presupposes the existence of two or more duly
executed contracts of sale. In the present case, the Deed of Sale dated August 26, 2003 35 between
Suzuki and Kang was admitted by Orion36 and was properly identified by Suzukis witness Ms. Mary Jane
Samin (Samin).37

It is not disputed, too, that the Deed of Sale dated August 26, 2003 was consummated. In a contract of
sale, the seller obligates himself to transfer the ownership of the determinate thing sold, and to deliver the
same to the buyer, who obligates himself to pay a price certain to the seller. 38 The execution of the
notarized deed of saleand the actual transfer of possession amounted to delivery that produced the legal
effect of transferring ownership to Suzuki.39

On the other hand, although Orion claims priority in right under the principle of prius tempore, potior jure
(i.e.,first in time, stronger in right), it failedto prove the existence and due execution of the Dacion en
Pagoin its favor.

At the outset, Orion offered the Dacion en Pagoas Exhibit "5"with submarkings "5-a" to "5-c" to prove the
existence of the February 6, 2003 transaction in its Formal Offer dated July 20, 2008. Orion likewise
offered in evidence the supposed promissory note dated September 4, 2002 as Exhibit "12"to prove the
existence of the additional P800,000.00 loan. The RTC, however, denied the admission of Exhibits "5"
and "12,"among others, in its order dated August 19, 2008 "since the same [were] not identified in court
by any witness."40

Despite the exclusion of its most critical documentary evidence, Orion failed to make a tender ofexcluded
evidence, as provided under Section 40, Rule 132 of the Rules of Court. For this reason alone, we are
prevented from seriously considering Exhibit "5" and its submarkings and Exhibit "12" in the present
petition.

Moreover, even if we consider Exhibit "5" and its submarkings and Exhibit "12" in the present petition, the
copious inconsistencies and contradictions in the testimonial and documentary evidence of Orion, militate
against the conclusion that the Dacion en Pagowas duly executed. First, there appears to be no due and
demandable obligation when the Dacion en Pago was executed, contrary to the allegations of Orion.
Orions witness Perez tried to impress upon the RTC that Kang was in default in his P1,800,000.00 loan.
During his direct examination, he stated:

ATTY. CRUZAT:

Q: Okay, so this loan of P1.8 million, what happened to this loan, Mr. Witness?

A: Well it became past due, there has been delayed interest payment by Mr. Kangand...

Q: So what did you do after there were defaults[?]

A: We have to secure the money or the investment of the bank through loans and we have
executed a dacion en pagobecause Mr. Kang said he has no money. So we just execute[d] the
dacion en pago rather than going through the Foreclosure proceedings.

xxxx

Q: Can you tell the court when was this executed?

A: February 6, 2003, your Honor.41

49
A reading of the supposed promissory note, however, shows that there was nodefault to speak of when
the supposed Dacion en Pagowas executed.

Based on the promissory note, Kangs loan obligation wouldmature only on August 27, 2003. Neither can
Orion claim that Kang had been in default in his installment payments because the wordings of the
promissory note provide that "[t]he principal of this loanand its interest and other charges shall be paid by
me/us in accordance hereunder: SINGLE PAYMENT LOANS.42 "There was thus no due and demandable
loan obligation when the alleged Dacion en Pago was executed.

Second, Perez, the supposed person who prepared the Dacion en Pago,appears to only have a vague
idea of the transaction he supposedly prepared. During his cross-examination, he testified:

ATTY. DE CASTRO:

Q: And were you the one who prepared this [dacion en pago] Mr. witness?

A: Yes, sir. I personally prepared this.

xxxx

Q: So this 1.8 million pesos is already inclusive of all the penalties, interest and surcharge due
from Mr. Yung Sam Kang?

A: Its just the principal, sir.

Q: So you did not state the interest [and] penalties?

A: In the [dacion en pago], we do not include interest, sir. We may actually includethat but....

Q: Can you read the Second Whereas Clause, Mr. Witness?

A: Whereas the first party failed to pay the said loan to the second party and as of February 10,
2003, the outstanding obligation which is due and demandable principal and interest and other
charges included amounts to P1,800,000.00 pesos, sir.

xxxx

Q: You are now changing your answer[.] [I]t now includes interest and other charges, based on
this document?

A: Yes, based on that document, sir.43

Third, the Dacion en Pago,mentioned that the P1,800,000.00 loan was secured by a real estate
mortgage. However, no document was ever presented to prove this real estate mortgage aside
from it being mentioned in the Dacion en Pago itself.

ATTY. DE CASTRO:

Q: Would you know if there is any other document like a supplement to that Credit Line
Agreement referring to this 1.8 million peso loan by Mr. Yung Sam Kang which says that there
was a subsequent collateralization or security given by Mr. Yung [Sam]

50
 Kang for the loan?

xxxx

A: The [dacion en pago], sir.44

Fourth,the Dacion en Pago was first mentioned only two (2) months after Suzuki and Samin demanded
the delivery of the titles sometime in August 2003,and after Suzuki caused the annotation of his affidavit
of adverse claim. Records show that it was only on October 9, 2003, when Orion, through its counsel,
Cristobal Balbin Mapile & Associates first spoke of the Dacion en Pago. 45 Not even Perez mentioned any
Dacion en Pago on October 1, 2003, when he personally received a letter demanding the delivery of the
titles.Instead, Perez refused to accept the letter and opted to first consult with his lawyer.46

Notably, even the October 9, 2003 letter contained material inconsistencies in its recital of facts
surrounding the execution of the Dacion en Pago. In particular, it mentioned that "on [September 4, 2002],
after paying the original loan, [Kang] applied and was granted a new Credit Line Facility by [Orion] x x x
for ONE MILLION EIGHT HUNDRED THOUSAND PESOS (P1,800,000.00)." Perez, however, testified
that there was "no cash movement" in the original P1,000,000.00 loan. In his testimony, he said:

COURT:

xxxx

Q: Would you remember what was the subject matter of that real estate mortgage for that
first P1,000,000.00 loan?

A: Its a condominium Unit in Cityland, sir.

xxxx

Q: Would you recall if there was any payment by Mr. Yung Sam Kang of this P1,000,000.00 loan?

A: None sir.

Q: No payments?

A: None sir.

Q: And from 1999 to 2002, there was no payment, either by way of payment to the principal, by
way ofpayment of interest, there was no payment by Mr. Yung Sam Kang of this loan?

A: Literally, there was no actual cash movement, sir.

Q: There was no actual cash?

A: Yes, sir.

Q: And yet despite no payment, the bank Orion Savings Bank still extended an P800,000.00
additional right?

A: Yes, sir.47

51
Fifth, it is undisputed that notwithstanding the supposed execution of theDacion en Pago on February 2,
2003, Kang remained in possession of the condominium unit. In fact, nothing in the records shows that
Orion even bothered to take possession of the property even six (6) months after the supposed date of
execution of the Dacion en Pago. Kang was even able to transfer possession of the condominium unit to
Suzuki, who then made immediate improvements thereon. If Orion really purchased the condominium unit
on February 2, 2003 and claimed to be its true owner, why did it not assert its ownership immediately
after the alleged sale took place? Why did it have to assert its ownership only after Suzuki demanded the
delivery of the titles? These gaps have remained unanswered and unfilled.

In Suntay v. CA,48 we held that the most prominent index of simulation is the complete absence of
anattempt on the part of the vendee to assert his rights of ownership over the property in question. After
the sale, the vendee should have entered the land and occupied the premises. The absence of any
attempt on the part of Orion to assert its right of dominion over the property allegedly soldto it is a clear
badge of fraud. That notwithstanding the execution of the Dacion en Pago, Kang remained in possession
of the disputed condominium unit from the time of the execution of the Dacion en Pagountil the
propertys subsequent transfer to Suzuki unmistakably strengthens the fictitious nature of the Dacion en
Pago.

These circumstances, aside from the glaring inconsistencies in the documents and testimony of Orions
witness, indubitably prove the spurious nature of the Dacion en Pago.

The fact that the Dacion en Pago

is a notarized document does not
support the conclusion that the
sale it embodies is a true
conveyance

Public instruments are evidence of the facts that gave rise to their execution and are to be considered as
containing all the terms of the agreement.49 While a notarized document enjoys this presumption, "the fact
that a deed is notarized is not a guarantee of the validity of its contents."50 The presumption of regularity
of notarized documents is not absolute and may be rebutted by clear and convincing evidence to the
contrary.51

In the present case, the presumption cannot apply because the regularity in the execution of the Dacion
en Pago and the loan documents was challenged in the proceedings below where their prima facievalidity
was overthrown by the highly questionable circumstances surrounding their execution.52

Effect of the PRA restriction on

the validity of Suzukis title to the
property

Orion argues that the PRA restriction in CCT No. 18186 affects the conveyance to Suzuki. In particular,
Orion assails the status of Suzuki as a purchaser in good faith in view of the express PRA restriction
contained in CCT No. 18186.53

We reject this suggested approachoutright because, to our mind, the PRA restriction cannot affect the
conveyance in favor of Suzuki. On this particular point, we concur withthe following findings of the CA:

x x x the annotation merely servesas a warning to the owner who holds a Special Resident Retirees
Visa(SRRV) that he shall lose his visa if he disposes his property which serves as his investment in order
to qualify for such status. Section 14 of the Implementing Investment Guidelines under Rule VIII-A of the
Rules and Regulations Implementing Executive Order No. 1037, Creating the Philippine Retirement Park
System Providing Funds Therefor and For Other Purpose ( otherwise known as the Philippine Retirement
Authority) states:

52
Section 14. Should the retiree-investor withdraw his investment from the Philippines, or transfer the same
to another domestic enterprise, orsell, convey or transfer his condominium unit or units to another person,
natural or juridical without the prior approval of the Authority, the Special Resident Retirees Visa issued
to him, and/or unmarried minor child or children[,] may be cancelled or revoked by the Philippine
Government, through the appropriate government department or agency, upon recommendation of the
Authority.54

Moreover, Orion should not be allowed to successfully assail the good faith of Suzuki on the basis of the
PRA restriction. Orion knew of the PRA restriction when it transacted with Kang. Incidentally, Orion
admitted accommodating Kangs request to cancel the mortgage annotation despite the lack of payment
to circumvent the PRA restriction. Orion, thus, is estopped from impugning the validity of the conveyance
in favor of Suzuki on the basis of the PRA restriction that Orion itself ignored and "attempted" to
circumvent.

With the conclusion that Orion failed to prove the authenticity of the Dacion en Pago, we see no reason
for the application of the rules on double sale under Article 1544 of the New Civil Code. Suzuki,
moreover, successfully adduced sufficient evidence to establish the validity of conveyance in his favor.

WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against petitioner
Orion Savings Bank.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-19671 November 29, 1965

PASTOR B. TENCHAVEZ, plaintiff-appellant,

vs.
VICENTA F. ESCAO, ET AL., defendants-appellees.

I. V. Binamira & F. B. Barria for plaintiff-appellant.

Jalandoni & Jarnir for defendants-appellees.

REYES, J.B.L., J.:

Direct appeal, on factual and legal questions, from the judgment of the Court of First Instance of Cebu, in
its Civil Case No. R-4177, denying the claim of the plaintiff-appellant, Pastor B. Tenchavez, for legal
separation and one million pesos in damages against his wife and parents-in-law, the defendants-
appellees, Vicente, Mamerto and Mena,1 all surnamed "Escao," respectively.2

The facts, supported by the evidence of record, are the following:

Missing her late afternoon classes on 24 February 1948 in the University of San Carlos, Cebu City, where
she was then enrolled as a second year student of commerce, Vicenta Escao, 27 years of age (scion of
a well-to-do and socially prominent Filipino family of Spanish ancestry and a "sheltered colegiala"),
exchanged marriage vows with Pastor Tenchavez, 32 years of age, an engineer, ex-army officer and of

53
undistinguished stock, without the knowledge of her parents, before a Catholic chaplain, Lt. Moises
Lavares, in the house of one Juan Alburo in the said city. The marriage was the culmination of a previous
love affair and was duly registered with the local civil register.

Vicenta's letters to Pastor, and his to her, before the marriage, indicate that the couple were deeply in
love. Together with a friend, Pacita Noel, their matchmaker and go-between, they had planned out their
marital future whereby Pacita would be the governess of their first-born; they started saving money in a
piggy bank. A few weeks before their secret marriage, their engagement was broken; Vicenta returned
the engagement ring and accepted another suitor, Joseling Lao. Her love for Pastor beckoned; she
pleaded for his return, and they reconciled. This time they planned to get married and then elope. To
facilitate the elopement, Vicenta had brought some of her clothes to the room of Pacita Noel in St. Mary's
Hall, which was their usual trysting place.

Although planned for the midnight following their marriage, the elopement did not, however, materialize
because when Vicente went back to her classes after the marriage, her mother, who got wind of the
intended nuptials, was already waiting for her at the college. Vicenta was taken home where she admitted
that she had already married Pastor. Mamerto and Mena Escao were surprised, because Pastor never
asked for the hand of Vicente, and were disgusted because of the great scandal that the clandestine
marriage would provoke (t.s.n., vol. III, pp. 1105-06). The following morning, the Escao spouses sought
priestly advice. Father Reynes suggested a recelebration to validate what he believed to be an invalid
marriage, from the standpoint of the Church, due to the lack of authority from the Archbishop or the parish
priest for the officiating chaplain to celebrate the marriage. The recelebration did not take place, because
on 26 February 1948 Mamerto Escao was handed by a maid, whose name he claims he does not
remember, a letter purportedly coming from San Carlos college students and disclosing an amorous
relationship between Pastor Tenchavez and Pacita Noel; Vicenta translated the letter to her father, and
thereafter would not agree to a new marriage. Vicenta and Pastor met that day in the house of Mrs. Pilar
Mendezona. Thereafter, Vicenta continued living with her parents while Pastor returned to his job in
Manila. Her letter of 22 March 1948 (Exh. "M"), while still solicitous of her husband's welfare, was not as
endearing as her previous letters when their love was aflame.

Vicenta was bred in Catholic ways but is of a changeable disposition, and Pastor knew it. She fondly
accepted her being called a "jellyfish." She was not prevented by her parents from communicating with
Pastor (Exh. "1-Escao"), but her letters became less frequent as the days passed. As of June, 1948 the
newlyweds were already estranged (Exh. "2-Escao"). Vicenta had gone to Jimenez, Misamis Occidental,
to escape from the scandal that her marriage stirred in Cebu society. There, a lawyer filed for her a
petition, drafted by then Senator Emmanuel Pelaez, to annul her marriage. She did not sign the petition
(Exh. "B-5"). The case was dismissed without prejudice because of her non-appearance at the hearing
(Exh. "B-4").

On 24 June 1950, without informing her husband, she applied for a passport, indicating in her application
that she was single, that her purpose was to study, and she was domiciled in Cebu City, and that she
intended to return after two years. The application was approved, and she left for the United States. On
22 August 1950, she filed a verified complaint for divorce against the herein plaintiff in the Second
Judicial District Court of the State of Nevada in and for the County of Washoe, on the ground of "extreme
cruelty, entirely mental in character." On 21 October 1950, a decree of divorce, "final and absolute", was
issued in open court by the said tribunal.

In 1951 Mamerto and Mena Escao filed a petition with the Archbishop of Cebu to annul their daughter's
marriage to Pastor (Exh. "D"). On 10 September 1954, Vicenta sought papal dispensation of her marriage
(Exh. "D"-2).

On 13 September 1954, Vicenta married an American, Russell Leo Moran, in Nevada. She now lives with
him in California, and, by him, has begotten children. She acquired American citizenship on 8 August
1958.

54
But on 30 July 1955, Tenchavez had initiated the proceedings at bar by a complaint in the Court of First
Instance of Cebu, and amended on 31 May 1956, against Vicenta F. Escao, her parents, Mamerto and
Mena Escao, whom he charged with having dissuaded and discouraged Vicenta from joining her
husband, and alienating her affections, and against the Roman Catholic Church, for having, through its
Diocesan Tribunal, decreed the annulment of the marriage, and asked for legal separation and one
million pesos in damages. Vicenta claimed a valid divorce from plaintiff and an equally valid marriage to
her present husband, Russell Leo Moran; while her parents denied that they had in any way influenced
their daughter's acts, and counterclaimed for moral damages.

The appealed judgment did not decree a legal separation, but freed the plaintiff from supporting his wife
and to acquire property to the exclusion of his wife. It allowed the counterclaim of Mamerto Escao and
Mena Escao for moral and exemplary damages and attorney's fees against the plaintiff-appellant, to the
extent of P45,000.00, and plaintiff resorted directly to this Court.

The appellant ascribes, as errors of the trial court, the following:

1. In not declaring legal separation; in not holding defendant Vicenta F. Escao liable for
damages and in dismissing the complaint;.

2. In not holding the defendant parents Mamerto Escano and the heirs of Doa Mena Escao
liable for damages;.

3 In holding the plaintiff liable for and requiring him to pay the damages to the defendant parents
on their counterclaims; and.

4. In dismissing the complaint and in denying the relief sought by the plaintiff.

That on 24 February 1948 the plaintiff-appellant, Pastor Tenchavez, and the defendant-appellee, Vicenta
Escao, were validly married to each other, from the standpoint of our civil law, is clearly established by
the record before us. Both parties were then above the age of majority, and otherwise qualified; and both
consented to the marriage, which was performed by a Catholic priest (army chaplain Lavares) in the
presence of competent witnesses. It is nowhere shown that said priest was not duly authorized under civil
law to solemnize marriages.

The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the Ordinary, as
required by Canon law, is irrelevant in our civil law, not only because of the separation of Church and
State but also because Act 3613 of the Philippine Legislature (which was the marriage law in force at the
time) expressly provided that

SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the
contracting parties and consent. (Emphasis supplied)

The actual authority of the solemnizing officer was thus only a formal requirement, and, therefore, not
essential to give the marriage civil effects,3 and this is emphasized by section 27 of said marriage act,
which provided the following:

SEC. 27. Failure to comply with formal requirements. No marriage shall be declared invalid
because of the absence of one or several of the formal requirements of this Act if, when it was
performed, the spouses or one of them believed in good faith that the person who solemnized the
marriage was actually empowered to do so, and that the marriage was perfectly legal.

The good faith of all the parties to the marriage (and hence the validity of their marriage) will be presumed
until the contrary is positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco vs. Jason, 60 Phil.

55
442, 448). It is well to note here that in the case at bar, doubts as to the authority of the solemnizing priest
arose only after the marriage, when Vicenta's parents consulted Father Reynes and the archbishop of
Cebu. Moreover, the very act of Vicenta in abandoning her original action for annulment and
subsequently suing for divorce implies an admission that her marriage to plaintiff was valid and binding.

Defendant Vicenta Escao argues that when she contracted the marriage she was under the undue
influence of Pacita Noel, whom she charges to have been in conspiracy with appellant Tenchavez. Even
granting, for argument's sake, the truth of that contention, and assuming that Vicenta's consent was
vitiated by fraud and undue influence, such vices did not render her marriage ab initio void, but merely
voidable, and the marriage remained valid until annulled by a competent civil court. This was never done,
and admittedly, Vicenta's suit for annulment in the Court of First Instance of Misamis was dismissed for
non-prosecution.

It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta Escao
remained subsisting and undissolved under Philippine law, notwithstanding the decree of absolute
divorce that the wife sought and obtained on 21 October 1950 from the Second Judicial District Court of
Washoe County, State of Nevada, on grounds of "extreme cruelty, entirely mental in character." At the
time the divorce decree was issued, Vicenta Escao, like her husband, was still a Filipino citizen.4 She
was then subject to Philippine law, and Article 15 of the Civil Code of the Philippines (Rep. Act No. 386),
already in force at the time, expressly provided:

Laws relating to family rights and duties or to the status, condition and legal capacity of persons
are binding upon the citizens of the Philippines, even though living abroad.

The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo
matrimonii; and in fact does not even use that term, to further emphasize its restrictive policy on the
matter, in contrast to the preceding legislation that admitted absolute divorce on grounds of adultery of
the wife or concubinage of the husband (Act 2710). Instead of divorce, the present Civil Code only
provides for legal separation (Title IV, Book 1, Arts. 97 to 108), and, even in that case, it expressly
prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar. 1).

For the Philippine courts to recognize and give recognition or effect to a foreign decree of absolute
divorce betiveen Filipino citizens could be a patent violation of the declared public policy of the state,
specially in view of the third paragraph of Article 17 of the Civil Code that prescribes the following:

Prohibitive laws concerning persons, their acts or property, and those which have for their object
public order, 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.

Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in effect, give
rise to an irritating and scandalous discrimination in favor of wealthy citizens, to the detriment of those
members of our polity whose means do not permit them to sojourn abroad and obtain absolute divorces
outside the Philippines.

From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in the
Nevada divorce court. Primarily because the policy of our law cannot be nullified by acts of private parties
(Civil Code,Art. 17, jam quot.); and additionally, because the mere appearance of a non-resident consort
cannot confer jurisdiction where the court originally had none (Area vs. Javier, 95 Phil. 579).

From the preceding facts and considerations, there flows as a necessary consequence that in this
jurisdiction Vicenta Escao's divorce and second marriage are not entitled to recognition as valid; for her
previous union to plaintiff Tenchavez must be declared to be existent and undissolved. It follows, likewise,
that her refusal to perform her wifely duties, and her denial of consortium and her desertion of her
husband constitute in law a wrong caused through her fault, for which the husband is entitled to the

56
corresponding indemnity (Civil Code, Art. 2176). Neither an unsubstantiated charge of deceit nor an
anonymous letter charging immorality against the husband constitute, contrary to her claim, adequate
excuse. Wherefore, her marriage and cohabitation with Russell Leo Moran is technically "intercourse with
a person not her husband" from the standpoint of Philippine Law, and entitles plaintiff-appellant
Tenchavez to a decree of "legal separation under our law, on the basis of adultery" (Revised Penal Code,
Art. 333).

The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in accord
with the previous doctrines and rulings of this court on the subject, particularly those that were rendered
under our laws prior to the approval of the absolute divorce act (Act 2710 of the Philippine Legislature).
As a matter of legal history, our statutes did not recognize divorces a vinculo before 1917, when Act 2710
became effective; and the present Civil Code of the Philippines, in disregarding absolute divorces, in
effect merely reverted to the policies on the subject prevailing before Act 2710. The rulings, therefore,
under the Civil Code of 1889, prior to the Act above-mentioned, are now, fully applicable. Of these, the
decision in Ramirez vs. Gmur, 42 Phil. 855, is of particular interest. Said this Court in that case:

As the divorce granted by the French Court must be ignored, it results that the marriage of Dr.
Mory and Leona Castro, celebrated in London in 1905, could not legalize their relations; and the
circumstance that they afterwards passed for husband and wife in Switzerland until her death is
wholly without legal significance. The claims of the very children to participate in the estate of
Samuel Bishop must therefore be rejected. The right to inherit is limited to legitimate, legitimated
and acknowledged natural children. The children of adulterous relations are wholly excluded. The
word "descendants" as used in Article 941 of the Civil Code cannot be interpreted to include
illegitimates born of adulterous relations. (Emphasis supplied)

Except for the fact that the successional rights of the children, begotten from Vicenta's marriage to Leo
Moran after the invalid divorce, are not involved in the case at bar, the Gmur case is authority for the
proposition that such union is adulterous in this jurisdiction, and, therefore, justifies an action for legal
separation on the part of the innocent consort of the first marriage, that stands undissolved in Philippine
law. In not so declaring, the trial court committed error.

True it is that our ruling gives rise to anomalous situations where the status of a person (whether divorced
or not) would depend on the territory where the question arises. Anomalies of this kind are not new in the
Philippines, and the answer to them was given in Barretto vs. Gonzales, 58 Phil. 667:

The hardship of the existing divorce laws in the Philippine Islands are well known to the members
of the Legislature. It is the duty of the Courts to enforce the laws of divorce as written by
Legislature if they are constitutional. Courts have no right to say that such laws are too strict or
too liberal. (p. 72)

The appellant's first assignment of error is, therefore, sustained.

However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escao and his wife, the late
Doa Mena Escao, alienated the affections of their daughter and influenced her conduct toward her
husband are not supported by credible evidence. The testimony of Pastor Tenchavez about the Escao's
animosity toward him strikes us to be merely conjecture and exaggeration, and are belied by Pastor's own
letters written before this suit was begun (Exh. "2-Escao" and "Vicenta," Rec. on App., pp. 270-274). In
these letters he expressly apologized to the defendants for "misjudging them" and for the "great
unhappiness" caused by his "impulsive blunders" and "sinful pride," "effrontery and audacity" [sic]. Plaintiff
was admitted to the Escao house to visit and court Vicenta, and the record shows nothing to prove that
he would not have been accepted to marry Vicente had he openly asked for her hand, as good manners
and breeding demanded. Even after learning of the clandestine marriage, and despite their shock at such
unexpected event, the parents of Vicenta proposed and arranged that the marriage be recelebrated in
strict conformity with the canons of their religion upon advice that the previous one was canonically

57
defective. If no recelebration of the marriage ceremony was had it was not due to defendants Mamerto
Escao and his wife, but to the refusal of Vicenta to proceed with it. That the spouses Escao did not
seek to compel or induce their daughter to assent to the recelebration but respected her decision, or that
they abided by her resolve, does not constitute in law an alienation of affections. Neither does the fact
that Vicenta's parents sent her money while she was in the United States; for it was natural that they
should not wish their daughter to live in penury even if they did not concur in her decision to divorce
Tenchavez (27 Am. Jur. 130-132).

There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her original
suit for annulment, or her subsequent divorce; she appears to have acted independently, and being of
age, she was entitled to judge what was best for her and ask that her decisions be respected. Her
parents, in so doing, certainly cannot be charged with alienation of affections in the absence of malice or
unworthy motives, which have not been shown, good faith being always presumed until the contrary is
proved.

SEC. 529. Liability of Parents, Guardians or Kin. The law distinguishes between the right of a
parent to interest himself in the marital affairs of his child and the absence of rights in a stranger
to intermeddle in such affairs. However, such distinction between the liability of parents and that
of strangers is only in regard to what will justify interference. A parent isliable for alienation of
affections resulting from his own malicious conduct, as where he wrongfully entices his son or
daughter to leave his or her spouse, but he is not liable unless he acts maliciously, without
justification and from unworthy motives. He is not liable where he acts and advises his child in
good faith with respect to his child's marital relations in the interest of his child as he sees it, the
marriage of his child not terminating his right and liberty to interest himself in, and be extremely
solicitous for, his child's welfare and happiness, even where his conduct and advice suggest or
result in the separation of the spouses or the obtaining of a divorce or annulment, or where he
acts under mistake or misinformation, or where his advice or interference are indiscreet or
unfortunate, although it has been held that the parent is liable for consequences resulting from
recklessness. He may in good faith take his child into his home and afford him or her protection
and support, so long as he has not maliciously enticed his child away, or does not maliciously
entice or cause him or her to stay away, from his or her spouse. This rule has more frequently
been applied in the case of advice given to a married daughter, but it is equally applicable in the
case of advice given to a son.

Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social discrimination and with
having exerted efforts and pressured her to seek annulment and divorce, unquestionably caused them
unrest and anxiety, entitling them to recover damages. While this suit may not have been impelled by
actual malice, the charges were certainly reckless in the face of the proven facts and circumstances.
Court actions are not established for parties to give vent to their prejudices or spleen.

In the assessment of the moral damages recoverable by appellant Pastor Tenchavez from defendant
Vicente Escao, it is proper to take into account, against his patently unreasonable claim for a million
pesos in damages, that (a) the marriage was celebrated in secret, and its failure was not characterized by
publicity or undue humiliation on appellant's part; (b) that the parties never lived together; and (c) that
there is evidence that appellant had originally agreed to the annulment of the marriage, although such a
promise was legally invalid, being against public policy (cf. Art. 88, Civ. Code). While appellant is unable
to remarry under our law, this fact is a consequence of the indissoluble character of the union that
appellant entered into voluntarily and with open eyes rather than of her divorce and her second marriage.
All told, we are of the opinion that appellant should recover P25,000 only by way of moral damages and
attorney's fees.

With regard to the P45,000 damages awarded to the defendants, Dr. Mamerto Escao and Mena
Escao, by the court below, we opine that the same are excessive. While the filing of this unfounded suit
must have wounded said defendants' feelings and caused them anxiety, the same could in no way have
seriously injured their reputation, or otherwise prejudiced them, lawsuits having become a common

58
occurrence in present society. What is important, and has been correctly established in the decision of
the court below, is that said defendants were not guilty of any improper conduct in the whole deplorable
affair. This Court, therefore, reduces the damages awarded to P5,000 only.

Summing up, the Court rules:

(1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the present
Civil Code (Rep. Act 386), is not entitled to recognition as valid in this jurisdiction; and neither is the
marriage contracted with another party by the divorced consort, subsequently to the foreign decree of
divorce, entitled to validity in the country;

(2) That the remarriage of divorced wife and her co-habitation with a person other than the lawful
husband entitle the latter to a decree of legal separation conformably to Philippine law;

(3) That the desertion and securing of an invalid divorce decree by one consort entitles the other to
recover damages;

(4) That an action for alienation of affections against the parents of one consort does not lie in the
absence of proof of malice or unworthy motives on their part.

WHEREFORE, the decision under appeal is hereby modified as follows;

(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from defendant
Vicenta F. Escao;

(2) Sentencing defendant-appellee Vicenta Escao to pay plaintiff-appellant Tenchavez the amount of
P25,000 for damages and attorneys' fees;

(3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escao and the estate of his
wife, the deceased Mena Escao, P5,000 by way of damages and attorneys' fees.

Neither party to recover costs.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 178551 October 11, 2010

ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF PUBLIC HEALTH-

KUWAITPetitioners,
vs.
MA. JOSEFA ECHIN, Respondent.

DECISION

CARPIO MORALES, J.:

59
Josefina Echin (respondent) was hired by petitioner ATCI Overseas Corporation in behalf of its principal-
co-petitioner, the Ministry of Public Health of Kuwait (the Ministry), for the position of medical technologist
under a two-year contract, denominated as a Memorandum of Agreement (MOA), with a monthly salary of
US$1,200.00.

Under the MOA,1 all newly-hired employees undergo a probationary period of one (1) year and are
covered by Kuwaits Civil Service Board Employment Contract No. 2.

Respondent was deployed on February 17, 2000 but was terminated from employment on February 11,
2001, she not having allegedly passed the probationary period.

As the Ministry denied respondents request for reconsideration, she returned to the Philippines on March
17, 2001, shouldering her own air fare.

On July 27, 2001, respondent filed with the National Labor Relations Commission (NLRC) a
complaint2 for illegal dismissal against petitioner ATCI as the local recruitment agency, represented by
petitioner, Amalia Ikdal (Ikdal), and the Ministry, as the foreign principal.

By Decision3 of November 29, 2002, the Labor Arbiter, finding that petitioners neither showed that there
was just cause to warrant respondents dismissal nor that she failed to qualify as a regular employee,
held that respondent was illegally dismissed and accordingly ordered petitioners to pay her US$3,600.00,
representing her salary for the three months unexpired portion of her contract.

On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor Arbiters decision by Resolution 4 of
January 26, 2004. Petitioners motion for reconsideration having been denied by Resolution5 of April 22,
2004, they appealed to the Court of Appeals, contending that their principal, the Ministry, being a foreign
government agency, is immune from suit and, as such, the immunity extended to them; and that
respondent was validly dismissed for her failure to meet the performance rating within the one-year period
as required under Kuwaits Civil Service Laws. Petitioners further contended that Ikdal should not be
liable as an officer of petitioner ATCI.

By Decision6 of March 30, 2007, the appellate court affirmed the NLRC Resolution.

In brushing aside petitioners contention that they only acted as agent of the Ministry and that they cannot
be held jointly and solidarily liable with it, the appellate court noted that under the law, a private
employment agency shall assume all responsibilities for the implementation of the contract of
employment of an overseas worker, hence, it can be sued jointly and severally with the foreign principal
for any violation of the recruitment agreement or contract of employment.

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

Petitioners motion for reconsideration having been denied by the appellate court by Resolution 7 of June
27, 2007, the present petition for review on certiorari was filed.

Petitioners maintain that they should not be held liable because respondents employment contract
specifically stipulates that her employment shall be governed by the Civil Service Law and Regulations of
Kuwait. They thus conclude that it was patent error for the labor tribunals and the appellate court to apply
the Labor Code provisions governing probationary employment in deciding the present case.

60
Further, petitioners argue that even the Philippine Overseas Employment Act (POEA) Rules relative to
master employment contracts (Part III, Sec. 2 of the POEA Rules and Regulations) accord respect to the
"customs, practices, company policies and labor laws and legislation of the host country."

Finally, petitioners posit that assuming arguendo that Philippine labor laws are applicable, given that the
foreign principal is a government agency which is immune from suit, as in fact it did not sign any
document agreeing to be held jointly and solidarily liable, petitioner ATCI cannot likewise be held liable,
more so since the Ministrys liability had not been judicially determined as jurisdiction was not acquired
over it.

The petition fails.

Petitioner ATCI, as a private recruitment agency, cannot evade responsibility for the money claims of
Overseas Filipino workers (OFWs) which it deploys abroad by the mere expediency of claiming that its
foreign principal is a government agency clothed with immunity from suit, or that such foreign principals
liability must first be established before it, as agent, can be held jointly and solidarily liable.

In providing for the joint and solidary liability of private recruitment agencies with their foreign principals,
Republic Act No. 8042 precisely affords the OFWs with a recourse and assures them of immediate and
sufficient payment of what is due them. Skippers United Pacific v. Maguad 8 explains:

. . . [T]he obligations covenanted in the recruitment agreement entered into by and between the
local agent and its foreign principal are not coterminous with the term of such agreement so that if
either or both of the parties decide to end the agreement, the responsibilities of such parties towards the
contracted employees under the agreement do not at all end, but the same extends up to and until the
expiration of the employment contracts of the employees recruited and employed pursuant to the said
recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law
governing the employment of workers for foreign jobs abroad was enacted. (emphasis supplied)

The imposition of joint and solidary liability is in line with the policy of the state to protect and alleviate the
plight of the working class.9 Verily, to allow petitioners to simply invoke the immunity from suit of its
foreign principal or to wait for the judicial determination of the foreign principals liability before petitioner
can be held liable renders the law on joint and solidary liability inutile.

As to petitioners contentions that Philippine labor laws on probationary employment are not applicable
since it was expressly provided in respondents employment contract, which she voluntarily entered into,
that the terms of her engagement shall be governed by prevailing Kuwaiti Civil Service Laws and
Regulations as in fact POEA Rules accord respect to such rules, customs and practices of the host
country, the same was not substantiated.

Indeed, a contract freely entered into is considered the law between the parties who can establish
stipulations, clauses, terms and conditions as they may deem convenient, including the laws which they
wish to govern their respective obligations, as long as they are not contrary to law, morals, good customs,
public order or public policy.

It is hornbook principle, however, that the party invoking the application of a foreign law has the burden of
proving the law, under the doctrine of processual presumption which, in this case, petitioners failed to
discharge. The Courts ruling in EDI-Staffbuilders Intl., v. NLRC10 illuminates:

In the present case, the employment contract signed by Gran specifically states that Saudi Labor Laws
will govern matters not provided for in the contract (e.g. specific causes for termination, termination
procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply to the contract,
Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.

61
In international law, the party who wants to have a foreign law applied to a dispute or case has the burden
of proving the foreign law. The foreign law is treated as a question of fact to be properly pleaded and
proved as the judge or labor arbiter cannot take judicial notice of a foreign law. He is presumed to know
only domestic or forum law.

Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the International
Law doctrine of presumed-identity approach or processual presumption comes into play. Where a foreign
law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as
ours. Thus, we apply Philippine labor laws in determining the issues presented before us. (emphasis and
underscoring supplied)

The Philippines does not take judicial notice of foreign laws, hence, they must not only be alleged; they
must be proven. To prove a foreign law, the party invoking it must present a copy thereof and comply with
Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads:

SEC. 24. Proof of official record. The record of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in
which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy
or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service
of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the
seal of his office. (emphasis supplied)

SEC. 25. What attestation of copy must state. Whenever a copy of a document or record is attested for
the purpose of the evidence, the attestation must state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may be. The attestation must be under the official seal
of the attesting officer, if there be any, or if he be the clerk of a court having a seal, under the seal of such
court.

To prove the Kuwaiti law, petitioners submitted the following: MOA between respondent and the Ministry,
as represented by ATCI, which provides that the employee is subject to a probationary period of one (1)
year and that the host countrys Civil Service Laws and Regulations apply; a translated copy11 (Arabic to
English) of the termination letter to respondent stating that she did not pass the probation terms, without
specifying the grounds therefor, and a translated copy of the certificate of termination,12 both of which
documents were certified by Mr. Mustapha Alawi, Head of the Department of Foreign Affairs-Office of
Consular Affairs Inslamic Certification and Translation Unit; and respondents letter 13 of reconsideration to
the Ministry, wherein she noted that in her first eight (8) months of employment, she was given a rating of
"Excellent" albeit it changed due to changes in her shift of work schedule.

These documents, whether taken singly or as a whole, do not sufficiently prove that respondent was
validly terminated as a probationary employee under Kuwaiti civil service laws. Instead of submitting a
copy of the pertinent Kuwaiti labor laws duly authenticated and translated by Embassy officials
thereat, as required under the Rules, what petitioners submitted were mere certifications attesting
only to the correctness of the translations of the MOA and the termination letter which does not
prove at all that Kuwaiti civil service laws differ from Philippine laws and that under such Kuwaiti
laws, respondent was validly terminated. Thus the subject certifications read:

xxxx

This is to certify that the herein attached translation/s from Arabic to English/Tagalog and or vice versa
was/were presented to this Office for review and certification and the same was/were found to be in
order. This Office, however, assumes no responsibility as to the contents of the document/s.

62
This certification is being issued upon request of the interested party for whatever legal purpose it may
serve. (emphasis supplied)1avvphi1

Respecting Ikdals joint and solidary liability as a corporate officer, the same is in order too following the
express provision of R.A. 8042 on money claims, viz:

SEC. 10. Money Claims.Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under
this section shall be joint and several. This provision shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages
that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and damages. (emphasis and
underscoring supplied)

WHEREFORE, the petition is DENIED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 185582 February 29, 2012

TUNA PROCESSING, INC., Petitioner,

vs.
PHILIPPINE KINGFORD, INC., Respondent.

DECISION

PEREZ, J.:

Can a foreign corporation not licensed to do business in the Philippines, but which collects royalties from
entities in the Philippines, sue here to enforce a foreign arbitral award?

In this Petition for Review on Certiorari under Rule 45,1 petitioner Tuna Processing, Inc. (TPI), a foreign
corporation not licensed to do business in the Philippines, prays that the Resolution 2 dated 21 November
2008 of the Regional Trial Court (RTC) of Makati City be declared void and the case be remanded to the
RTC for further proceedings. In the assailed Resolution, the RTC dismissed petitioners Petition for
Confirmation, Recognition, and Enforcement of Foreign Arbitral Award 3 against respondent Philippine
Kingford, Inc. (Kingford), a corporation duly organized and existing under the laws of the Philippines, 4 on
the ground that petitioner lacked legal capacity to sue. 5

63
 The Antecedents

On 14 January 2003, Kanemitsu Yamaoka (hereinafter referred to as the "licensor"), co-patentee of U.S.
Patent No. 5,484,619, Philippine Letters Patent No. 31138, and Indonesian Patent No. ID0003911
(collectively referred to as the "Yamaoka Patent"),6 and five (5) Philippine tuna processors, namely, Angel
Seafood Corporation, East Asia Fish Co., Inc., Mommy Gina Tuna Resources, Santa Cruz Seafoods, Inc.,
and respondent Kingford (collectively referred to as the "sponsors"/"licensees")7 entered into a
Memorandum of Agreement (MOA),8 pertinent provisions of which read:

1. Background and objectives. The Licensor, co-owner of U.S.Patent No. 5,484,619, Philippine
Patent No. 31138, and Indonesian Patent No. ID0003911 xxx wishes to form an alliance with
Sponsors for purposes of enforcing his three aforementioned patents, granting licenses under
those patents, and collecting royalties.

The Sponsors wish to be licensed under the aforementioned patents in order to practice the
processes claimed in those patents in the United States, the Philippines, and Indonesia, enforce
those patents and collect royalties in conjunction with Licensor.

xxx

4. Establishment of Tuna Processors, Inc. The parties hereto agree to the establishment of
Tuna Processors, Inc. ("TPI"), a corporation established in the State of California, in order to
implement the objectives of this Agreement.

5. Bank account. TPI shall open and maintain bank accounts in the United States, which will be
used exclusively to deposit funds that it will collect and to disburse cash it will be obligated to
spend in connection with the implementation of this Agreement.

6. Ownership of TPI. TPI shall be owned by the Sponsors and Licensor. Licensor shall be
assigned one share of TPI for the purpose of being elected as member of the board of directors.
The remaining shares of TPI shall be held by the Sponsors according to their respective equity
shares. 9

xxx

The parties likewise executed a Supplemental Memorandum of Agreement10 dated 15 January 2003 and
an Agreement to Amend Memorandum of Agreement11 dated 14 July 2003.

Due to a series of events not mentioned in the petition, the licensees, including respondent Kingford,
withdrew from petitioner TPI and correspondingly reneged on their obligations. 12 Petitioner submitted the
dispute for arbitration before the International Centre for Dispute Resolution in the State of California,
United States and won the case against respondent.13 Pertinent portions of the award read:

13.1 Within thirty (30) days from the date of transmittal of this Award to the Parties, pursuant to the terms
of this award, the total sum to be paid by RESPONDENT KINGFORD to CLAIMANT TPI, is the sum
of ONE MILLION SEVEN HUNDRED FIFTY THOUSAND EIGHT HUNDRED FORTY SIX DOLLARS
AND TEN CENTS ($1,750,846.10).

(A) For breach of the MOA by not paying past due assessments, RESPONDENT
KINGFORD shall pay CLAIMANT the total sum of TWO HUNDRED TWENTY NINE THOUSAND
THREE HUNDRED AND FIFTY FIVE DOLLARS AND NINETY CENTS ($229,355.90) which is
20% of MOA assessments since September 1, 2005[;]

64
 (B) For breach of the MOA in failing to cooperate with CLAIMANT TPI in fulfilling the objectives
of the MOA, RESPONDENT KINGFORD shall pay CLAIMANT the total sum of TWO HUNDRED
SEVENTY ONE THOUSAND FOUR HUNDRED NINETY DOLLARS AND TWENTY CENTS
($271,490.20)[;]14 and

(C) For violation of THE LANHAM ACT and infringement of the YAMAOKA 619 PATENT,
RESPONDENT KINGFORD shall pay CLAIMANT the total sum of ONE MILLION TWO
HUNDRED FIFTY THOUSAND DOLLARS AND NO CENTS ($1,250,000.00). xxx

xxx15

To enforce the award, petitioner TPI filed on 10 October 2007 a Petition for Confirmation, Recognition,
and Enforcement of Foreign Arbitral Award before the RTC of Makati City. The petition was raffled to
Branch 150 presided by Judge Elmo M. Alameda.

At Branch 150, respondent Kingford filed a Motion to Dismiss.16 After the court denied the motion for lack
of merit,17 respondent sought for the inhibition of Judge Alameda and moved for the reconsideration of
the order denying the motion.18 Judge Alameda inhibited himself notwithstanding "[t]he unfounded
allegations and unsubstantiated assertions in the motion."19 Judge Cedrick O. Ruiz of Branch 61, to which
the case was re-raffled, in turn, granted respondents Motion for Reconsideration and dismissed the
petition on the ground that the petitioner lacked legal capacity to sue in the Philippines. 20

Petitioner TPI now seeks to nullify, in this instant Petition for Review on Certiorari under Rule 45, the
order of the trial court dismissing its Petition for Confirmation, Recognition, and Enforcement of Foreign
Arbitral Award.

Issue

The core issue in this case is whether or not the court a quo was correct in so dismissing the petition on
the ground of petitioners lack of legal capacity to sue.

Our Ruling

The petition is impressed with merit.

The Corporation Code of the Philippines expressly provides:

Sec. 133. Doing business without a license. - No foreign corporation transacting business in the
Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any
valid cause of action recognized under Philippine laws.

It is pursuant to the aforequoted provision that the court a quo dismissed the petition. Thus:

Herein plaintiff TPIs "Petition, etc." acknowledges that it "is a foreign corporation established in the State
of California" and "was given the exclusive right to license or sublicense the Yamaoka Patent" and "was
assigned the exclusive right to enforce the said patent and collect corresponding royalties" in the
Philippines. TPI likewise admits that it does not have a license to do business in the Philippines.

There is no doubt, therefore, in the mind of this Court that TPI has been doing business in the Philippines,
but sans a license to do so issued by the concerned government agency of the Republic of the
Philippines, when it collected royalties from "five (5) Philippine tuna processors[,] namely[,] Angel Seafood

65
Corporation, East Asia Fish Co., Inc., Mommy Gina Tuna Resources, Santa Cruz Seafoods, Inc. and
respondent Philippine Kingford, Inc." This being the real situation, TPI cannot be permitted to maintain or
intervene in any action, suit or proceedings in any court or administrative agency of the Philippines." A
priori, the "Petition, etc." extant of the plaintiff TPI should be dismissed for it does not have the legal
personality to sue in the Philippines.21

The petitioner counters, however, that it is entitled to seek for the recognition and enforcement of the
subject foreign arbitral award in accordance with Republic Act No. 9285 (Alternative Dispute Resolution
Act of 2004),22the Convention on the Recognition and Enforcement of Foreign Arbitral Awards drafted
during the United Nations Conference on International Commercial Arbitration in 1958 (New York
Convention), and the UNCITRAL Model Law on International Commercial Arbitration (Model Law),23 as
none of these specifically requires that the party seeking for the enforcement should have legal capacity
to sue. It anchors its argument on the following:

In the present case, enforcement has been effectively refused on a ground not found in the [Alternative
Dispute Resolution Act of 2004], New York Convention, or Model Law. It is for this reason that TPI has
brought this matter before this most Honorable Court, as it [i]s imperative to clarify whether the
Philippines international obligations and State policy to strengthen arbitration as a means of dispute
resolution may be defeated by misplaced technical considerations not found in the relevant laws. 24

Simply put, how do we reconcile the provisions of the Corporation Code of the Philippines on one hand,
and the Alternative Dispute Resolution Act of 2004, the New York Convention and the Model Law on the
other?

In several cases, this Court had the occasion to discuss the nature and applicability of the Corporation
Code of the Philippines, a general law, viz-a-viz other special laws. Thus, in Koruga v. Arcenas, Jr.,25 this
Court rejected the application of the Corporation Code and applied the New Central Bank Act. It
ratiocinated:

Korugas invocation of the provisions of the Corporation Code is misplaced. In an earlier case with similar
antecedents, we ruled that:

"The Corporation Code, however, is a general law applying to all types of corporations, while the New
Central Bank Act regulates specifically banks and other financial institutions, including the dissolution and
liquidation thereof. As between a general and special law, the latter shall prevail generalia specialibus
non derogant." (Emphasis supplied)26

Further, in the recent case of Hacienda Luisita, Incorporated v. Presidential Agrarian Reform
Council,27 this Court held:

Without doubt, the Corporation Code is the general law providing for the formation, organization and
regulation of private corporations. On the other hand, RA 6657 is the special law on agrarian reform. As
between a general and special law, the latter shall prevailgeneralia specialibus non derogant.28

Following the same principle, the Alternative Dispute Resolution Act of 2004 shall apply in this case as
the Act, as its title - An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the
Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes - would
suggest, is a law especially enacted "to actively promote party autonomy in the resolution of disputes or
the freedom of the party to make their own arrangements to resolve their disputes." 29 It specifically
provides exclusive grounds available to the party opposing an application for recognition and enforcement
of the arbitral award.30

66
Inasmuch as the Alternative Dispute Resolution Act of 2004, a municipal law, applies in the instant
petition, we do not see the need to discuss compliance with international obligations under the New York
Convention and the Model Law. After all, both already form part of the law.

In particular, the Alternative Dispute Resolution Act of 2004 incorporated the New York Convention in the
Act by specifically providing:

SEC. 42. Application of the New York Convention. - The New York Convention shall govern the
recognition and enforcement of arbitral awards covered by the said Convention.

xxx

SEC. 45. Rejection of a Foreign Arbitral Award. - A party to a foreign arbitration proceeding may oppose
an application for recognition and enforcement of the arbitral award in accordance with the procedural
rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the
New York Convention. Any other ground raised shall be disregarded by the regional trial court.

It also expressly adopted the Model Law, to wit:

Sec. 19. Adoption of the Model Law on International Commercial Arbitration. International commercial
arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law")
adopted by the United Nations Commission on International Trade Law on June 21, 1985 xxx."

Now, does a foreign corporation not licensed to do business in the Philippines have legal capacity to sue
under the provisions of the Alternative Dispute Resolution Act of 2004? We answer in the affirmative.

Sec. 45 of the Alternative Dispute Resolution Act of 2004 provides that the opposing party in an
application for recognition and enforcement of the arbitral award may raise only those grounds that were
enumerated under Article V of the New York Convention, to wit:

Article V

1. Recognition and enforcement of the award may be refused, at the request of the party against
whom it is invoked, only if that party furnishes to the competent authority where the recognition
and enforcement is sought, proof that:

(a) The parties to the agreement referred to in article II were, under the law applicable to
them, under some incapacity, or the said agreement is not valid under the law to which
the parties have subjected it or, failing any indication thereon, under the law of the
country where the award was made; or

(b) The party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to
present his case; or

(c) The award deals with a difference not contemplated by or not falling within the terms
of the submission to arbitration, or it contains decisions on matters beyond the scope of
the submission to arbitration, provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted, that part of the award which
contains decisions on matters submitted to arbitration may be recognized and enforced;
or

67
 (d) The composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was not in
accordance with the law of the country where the arbitration took place; or

(e) The award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law of which,
that award was made.

2. Recognition and enforcement of an arbitral award may also be refused if the competent
authority in the country where recognition and enforcement is sought finds that:

(a) The subject matter of the difference is not capable of settlement by arbitration under
the law of that country; or

(b) The recognition or enforcement of the award would be contrary to the public policy of
that country.

Clearly, not one of these exclusive grounds touched on the capacity to sue of the party seeking the
recognition and enforcement of the award.

Pertinent provisions of the Special Rules of Court on Alternative Dispute Resolution,31 which was
promulgated by the Supreme Court, likewise support this position.

Rule 13.1 of the Special Rules provides that "[a]ny party to a foreign arbitration may petition the court to
recognize and enforce a foreign arbitral award." The contents of such petition are enumerated in Rule
13.5.32 Capacity to sue is not included. Oppositely, in the Rule on local arbitral awards or arbitrations in
instances where "the place of arbitration is in the Philippines,"33 it is specifically required that a petition "to
determine any question concerning the existence, validity and enforceability of such arbitration
agreement"34 available to the parties before the commencement of arbitration and/or a petition for "judicial
relief from the ruling of the arbitral tribunal on a preliminary question upholding or declining its
jurisdiction"35 after arbitration has already commenced should state "[t]he facts showing that the persons
named as petitioner or respondent have legal capacity to sue or be sued."36

Indeed, it is in the best interest of justice that in the enforecement of a foreign arbitral award, we deny
availment by the losing party of the rule that bars foreign corporations not licensed to do business in the
Philippines from maintaining a suit in our courts. When a party enters into a contract containing a foreign
arbitration clause and, as in this case, in fact submits itself to arbitration, it becomes bound by the
contract, by the arbitration and by the result of arbitration, conceding thereby the capacity of the other
party to enter into the contract, participate in the arbitration and cause the implementation of the result.
Although not on all fours with the instant case, also worthy to consider is the

wisdom of then Associate Justice Flerida Ruth P. Romero in her Dissenting Opinion in Asset Privatization
Trust v. Court of Appeals,37 to wit:

xxx Arbitration, as an alternative mode of settlement, is gaining adherents in legal and judicial circles here
and abroad. If its tested mechanism can simply be ignored by an aggrieved party, one who, it must be
stressed, voluntarily and actively participated in the arbitration proceedings from the very beginning, it will
destroy the very essence of mutuality inherent in consensual contracts. 38

Clearly, on the matter of capacity to sue, a foreign arbitral award should be respected not because it is
favored over domestic laws and procedures, but because Republic Act No. 9285 has certainly erased any
conflict of law question.

68
Finally, even assuming, only for the sake of argument, that the court a quo correctly observed that
the Model Law, not the New York Convention, governs the subject arbitral award,39 petitioner may still
seek recognition and enforcement of the award in Philippine court, since the Model Law prescribes
substantially identical exclusive grounds for refusing recognition or enforcement.40

Premises considered, petitioner TPI, although not licensed to do business in the Philippines, may seek
recognition and enforcement of the foreign arbitral award in accordance with the provisions of
the Alternative Dispute Resolution Act of 2004.

II

The remaining arguments of respondent Kingford are likewise unmeritorious.

First. There is no need to consider respondents contention that petitioner TPI improperly raised a
question of fact when it posited that its act of entering into a MOA should not be considered "doing
business" in the Philippines for the purpose of determining capacity to sue. We reiterate that the foreign
corporations capacity to sue in the Philippines is not material insofar as the recognition and enforcement
of a foreign arbitral award is concerned.

Second. Respondent cannot fault petitioner for not filing a motion for reconsideration of the assailed
Resolution dated 21 November 2008 dismissing the case. We have, time and again, ruled that the prior
filing of a motion for reconsideration is not required in certiorari under Rule 45.41

Third. While we agree that petitioner failed to observe the principle of hierarchy of courts, which, under
ordinary circumstances, warrants the outright dismissal of the case, 42 we opt to relax the rules following
the pronouncement in Chua v. Ang,43 to wit:

[I]t must be remembered that [the principle of hierarchy of courts] generally applies to cases involving
conflicting factual allegations. Cases which depend on disputed facts for decision cannot be brought
immediately before us as we are not triers of facts.44 A strict application of this rule may be excused when
the reason behind the rule is not present in a case, as in the present case, where the issues are not
factual but purely legal.1wphi1 In these types of questions, this Court has the ultimate say so that we
merely abbreviate the review process if we, because of the unique circumstances of a case, choose to
hear and decide the legal issues outright.45

Moreover, the novelty and the paramount importance of the issue herein raised should be seriously
considered.46Surely, there is a need to take cognizance of the case not only to guide the bench and the
bar, but if only to strengthen arbitration as a means of dispute resolution, and uphold the policy of the
State embodied in the Alternative Dispute Resolution Act of 2004, to wit:

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to actively promote party
autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to
resolve their disputes. Towards this end, the State shall encourage and actively promote the use of
Alternative Dispute Resolution (ADR) as an important means to achieve speedy and impartial justice and
declog court dockets. xxx

Fourth. As regards the issue on the validity and enforceability of the foreign arbitral award, we leave its
determination to the court a quo where its recognition and enforcement is being sought.

Fifth. Respondent claims that petitioner failed to furnish the court of origin a copy of the motion for time to
file petition for review on certiorari before the petition was filed with this Court.47 We, however, find
petitioners reply in order. Thus:

69
26. Admittedly, reference to "Branch 67" in petitioner TPIs "Motion for Time to File a Petition for Review
on Certiorari under Rule 45" is a typographical error. As correctly pointed out by respondent Kingford, the
order sought to be assailed originated from Regional Trial Court, Makati City, Branch 61.

27. xxx Upon confirmation with the Regional Trial Court, Makati City, Branch 61, a copy of petitioner TPIs
motion was received by the Metropolitan Trial Court, Makati City, Branch 67. On 8 January 2009, the
motion was forwarded to the Regional Trial Court, Makati City, Branch 61.48

All considered, petitioner TPI, although a foreign corporation not licensed to do business in the
Philippines, is not, for that reason alone, precluded from filing the Petition for Confirmation, Recognition,
and Enforcement of Foreign Arbitral Award before a Philippine court.

WHEREFORE, the Resolution dated 21 November 2008 of the Regional Trial Court, Branch 61, Makati
City in Special Proceedings No. M-6533 is hereby REVERSED and SET ASIDE. The case
is REMANDED to Branch 61 for further proceedings.

SO ORDERED.

NCC 16

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 205487 November 12, 2014

ORION SAVINGS BANK, Petitioner,

vs.
SHIGEKANE SUZUKI, Respondent.

DECISION

BRION, J.:

Before us is the Petition for Review on Certiorari1 filed by petitioner Orion Savings Bank (Orion) under
Rule 45 of the Rules of Court, assailing the decision2 dated August 23, 2012 and the resolution3 dated
January 25, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 94104.

The Factual Antecedents

In the first week of August 2003, respondent Shigekane Suzuki (Suzuki), a Japanese national, met with
Ms. Helen Soneja (Soneja) to inquire about a condominium unit and a parking slot at Cityland Pioneer,
Mandaluyong City, allegedly owned by Yung Sam Kang (Kang), a Korean national and a Special
Resident Retiree's Visa (SRRV) holder.

At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium Certificate of Title
(CCT) No. 18186]4 and Parking Slot No. 42 [covered by CCT No. 9118]5 were for sale for P3,000,000.00.
Soneja likewise assured Suzuki that the titles to the unit and the parking slot were clean. After a brief
negotiation, the parties agreed to reduce the price to P2,800,000.00. On August 5, 2003, Suzuki issued

70
Kang a Bank of the Philippine Island (BPI) Check No. 833496 for One Hundred Thousand Pesos
(P100,000.00) as reservation fee.7 On August 21, 2003, Suzuki issued Kang another check, BPI Check
No. 83350,8 this time for P2,700,000.00 representing the remaining balance of the purchase price. Suzuki
and Kang then executed a Deed of Absolute Sale dated August 26, 2003 9 covering Unit No. 536 and
Parking Slot No. 42. Soon after, Suzuki took possession of the condominium unit and parking lot, and
commenced the renovation of the interior of the condominium unit.

Kang thereafter made several representations with Suzuki to deliver the titles to the properties, which
were then allegedly in possession of Alexander Perez (Perez, Orions Loans Officer) for safekeeping.
Despite several verbal demands, Kang failed to deliver the documents. Suzuki later on learned that Kang
had left the country, prompting Suzuki to verify the status of the properties with the Mandaluyong City
Registry of Deeds.

Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No. 42 contained
no annotations although it remained under the name of Cityland Pioneer. This notwithstanding, Cityland
Pioneer, through Assistant Vice President Rosario D. Perez, certified that Kang had fully paid the
purchase price of Unit. No. 53610 and Parking Slot No. 42.11 CCT No. 18186 representing the title to the
condominium unit had no existing encumbrance, except for anannotation under Entry No. 73321/C-10186
which provided that any conveyance or encumbrance of CCT No. 18186 shall be subject to approval by
the Philippine Retirement Authority (PRA). Although CCT No. 18186 contained Entry No. 66432/C-10186
dated February 2, 1999 representing a mortgage in favor of Orion for a P1,000,000.00 loan, that
annotation was subsequently cancelled on June 16, 2000 by Entry No. 73232/T. No. 10186. Despite the
cancellation of the mortgage to Orion, the titles to the properties remained in possession of Perez.

To protect his interests, Suzuki thenexecuted an Affidavit of Adverse Claim 12 dated September 8, 2003,
withthe Registry of Deeds of Mandaluyong City, annotated as Entry No. 3292/C-No. 18186 in CCT No.
18186. Suzuki then demanded the delivery of the titles.13 Orion, (through Perez), however, refused to
surrender the titles, and cited the need to consult Orions legal counsel as its reason.

On October 14, 2003, Suzuki received a letter from Orions counsel dated October 9, 2003, stating that
Kang obtained another loan in the amount of P1,800,000.00. When Kang failed to pay, he executed a
Dacion en Pagodated February 2, 2003, in favorof Orion covering Unit No. 536. Orion, however, did not
register the Dacion en Pago, until October 15, 2003.

On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot No. 42 (covered
by CCT No. 9118) and this was annotated as Entry No. 4712/C-No. 9118 in the parking lots title.

On January 27, 2004, Suzuki filed a complaint for specific performance and damages against Kang and
Orion. At the pre-trial, the parties made the following admissions and stipulations:

1. That as of August 26, 2003, Kang was the registered owner of Unit No. 536 and Parking Slot
No. 42;

2. That the mortgage in favor ofOrion supposedly executed by Kang, with Entry No. 66432/C-
10186 dated February 2, 1999, was subsequently cancelled by Entry No. 73232/T No. 10186
dated June 16, 2000;

3. That the alleged Dacion en Pagowas never annotated in CCT Nos. 18186 and 9118;

4. That Orion only paid the appropriate capital gains tax and the documentary stamp tax for the
alleged Dacion en Pago on October 15, 2003;

5. That Parking Slot No. 42, covered by CCT No. 9118, was never mortgaged to Orion; and

71
 6. That when Suzuki bought the properties, he went to Orion to obtain possession of the titles.

The RTC Ruling

In its decision14 dated June 29, 2009, the Regional Trial Court (RTC), Branch 213, Mandaluyong City
ruled infavor of Suzuki and ordered Orion to deliver the CCT Nos. 18186 and 9118 to Suzuki.

The court found that Suzuki was an innocent purchaser for value whose rights over the properties
prevailed over Orions. The RTC further noted that Suzuki exerted efforts to verify the status of the
properties but he did not find any existing encumbrance inthe titles. Although Orion claims to have
purchased the property by way of a Dacion en Pago, Suzuki only learned about it two (2) months after he
bought the properties because Orion never bothered to register or annotate the Dacion en Pagoin CCT
Nos. 18186 and 9116.

The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral damages, exemplary
damages, attorneys fees, appearance fees, expenses for litigation and cost ofsuit. Orion timely appealed
the RTC decision with the CA.

The CA Ruling

On August 23, 2012, the CA partially granted Orions appeal and sustained the RTC insofar as it upheld
Suzukis right over the properties. The CA further noted that Entry No. 73321/C-10186 pertaining to the
withdrawal of investment of an SRRV only serves as a warning to an SRRV holder about the implications
of a conveyance of a property investment. It deviated from the RTC ruling, however, by deleting the
award for moral damages, exemplary damages, attorneys fees, expenses for litigation and cost of suit.

Orion sought a reconsideration of the CA decision but the CA denied the motion in its January 25, 2013
resolution. Orion then filed a petition for review on certiorariunder Rule 45 with this Court.

The Petition and Comment

Orions petition is based on the following grounds/arguments:15

1. The Deed of Sale executed by Kang in favor of Suzuki is null and void. Under Korean law, any
conveyance of a conjugal property should be made with the consent of both spouses;

2. Suzuki is not a buyer in good faith for he failed to check the owners duplicate copies of the
CCTs;

3. Knowledge of the PRA restriction under Entry No. 73321/C-10186, which prohibits any
conveyance or encumbrance of the property investment, defeats the alleged claim of good faith
by Suzuki; and

4. Orion should not be faulted for exercising due diligence.

In his Comment,16 Suzuki asserts that the issue on spousal consent was belatedly raised on appeal.
Moreover, proof of acquisition during the marital coverture is a condition sine qua nonfor the operation of
the presumption of conjugal ownership.17 Suzuki additionally maintains that he is a purchaser in good
faith, and is thus entitled to the protection of the law.

The Courts Ruling

72
We deny the petition for lack of merit.

The Court may inquire into conclusions of fact when the inference made is manifestly mistaken

In a Rule 45 petition, the latitude of judicial review generally excludes a factual and evidentiary re-
evaluation, and the Court ordinarily abides by the uniform factual conclusions of the trial court and the
appellate court.18 In the present case, while the courts below both arrived at the same conclusion, there
appears tobe an incongruence in their factual findings and the legal principle they applied to the attendant
factual circumstances. Thus, we are compelled to examine certain factual issues in the exercise of our
sound discretion to correct any mistaken inference that may have been made.19

Philippine Law governs the transfer of real property

Orion believes that the CA erred in not ruling on the issue of spousal consent. We cannot uphold this
position, however, because the issue of spousal consent was only raised on appeal to the CA. It is a well-
settled principle that points of law, theories, issues, and arguments not brought to the attention of the trial
court cannot be raised for the first time on appeal and considered by a reviewing court. 20 To consider
these belated arguments would violate basic principles of fairplay, justice, and due process.

Having said these, we shall nonetheless discuss the issues Orion belatedly raised, if only to put an end to
lingering doubts on the correctness of the denial of the present petition.

It is a universal principle thatreal or immovable property is exclusively subject to the laws of the country or
state where it is located.21 The reason is found in the very nature of immovable property its immobility.
Immovables are part of the country and so closely connected to it that all rights over them have their
natural center of gravity there.22

Thus, all matters concerning the titleand disposition ofreal property are determined by what is known as
the lex loci rei sitae, which can alone prescribe the mode by which a title canpass from one person to
another, or by which an interest therein can be gained or lost.23 This general principle includes all rules
governing the descent, alienation and transfer of immovable property and the validity, effect and
construction of wills and other conveyances.24

This principle even governs the capacity of the person making a deed relating to immovable property, no
matter what its nature may be. Thus, an instrument will be ineffective to transfer title to land if the person
making it is incapacitated by the lex loci rei sitae, even though under the law of his domicile and by the
law of the place where the instrument is actually made, his capacity is undoubted.25

On the other hand, property relations between spouses are governed principally by the national law of the
spouses.26 However, the party invoking the application of a foreign law has the burden of proving the
foreign law. The foreign law is a question of fact to be properly pleaded and proved as the judge cannot
take judicial notice of a foreign law.27 He is presumed to know only domestic or the law of the forum.28

To prove a foreign law, the party invoking it must present a copy thereof and comply with Sections 24 and
25 of Rule 132 of the Revised Rules of Court which reads:

SEC. 24. Proof of official record. The record of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in
which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy
or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service

73
of the Philippines stationed in the foreign country inwhich the record is kept, and authenticated by the seal
of his office. (Emphasis supplied)

SEC. 25. What attestation ofcopy must state. Whenever a copy of a document or record is attested for
the purpose of the evidence, the attestation must state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may be. The attestation must be under the official seal
of the attesting officer, if there be any, or if he be the clerk of a court having a seal, under the seal of such
court.

Accordingly, matters concerning the title and disposition of real property shall be governed by Philippine
law while issues pertaining to the conjugal natureof the property shall be governed by South Korean law,
provided it is proven as a fact.

In the present case, Orion, unfortunately failed to prove the South Korean law on the conjugal ownership
ofproperty. It merely attached a "Certification from the Embassy of the Republic of Korea" 29 to prove the
existence of Korean Law. This certification, does not qualify as sufficient proof of the conjugal nature of
the property for there is no showing that it was properly authenticated bythe seal of his office, as required
under Section 24 of Rule 132.30

Accordingly, the International Law doctrine of presumed-identity approachor processual presumption

comes into play, i.e., where a foreign law is not pleaded or, evenif pleaded, is not proven, the
presumption is that foreign law is the same as Philippine Law.31

Under Philippine Law, the phrase "Yung Sam Kang married to' Hyun Sook Jung" is merely descriptive of
the civil status of Kang.32 In other words, the import from the certificates of title is that Kang is the owner
of the properties as they are registered in his name alone, and that he is married to Hyun Sook Jung.

We are not unmindful that in numerous cases we have held that registration of the property in the name
of only one spouse does not negate the possibility of it being conjugal or community property. 33 In those
cases, however, there was proof that the properties, though registered in the name of only one spouse,
were indeed either conjugal or community properties.34 Accordingly, we see no reason to declare as
invalid Kangs conveyance in favor of Suzuki for the supposed lack of spousal consent.

The petitioner failed to adduce sufficient evidence to prove the due execution of the Dacion en Pago

Article 1544 of the New Civil Codeof the Philippines provides that:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is
good faith.

The application of Article 1544 of the New Civil Code presupposes the existence of two or more duly
executed contracts of sale. In the present case, the Deed of Sale dated August 26, 2003 35 between
Suzuki and Kang was admitted by Orion36 and was properly identified by Suzukis witness Ms. Mary Jane
Samin (Samin).37

74
It is not disputed, too, that the Deed of Sale dated August 26, 2003 was consummated. In a contract of
sale, the seller obligates himself to transfer the ownership of the determinate thing sold, and to deliver the
same to the buyer, who obligates himself to pay a price certain to the seller. 38 The execution of the
notarized deed of saleand the actual transfer of possession amounted to delivery that produced the legal
effect of transferring ownership to Suzuki.39

On the other hand, although Orion claims priority in right under the principle of prius tempore, potior jure
(i.e.,first in time, stronger in right), it failedto prove the existence and due execution of the Dacion en
Pagoin its favor.

At the outset, Orion offered the Dacion en Pagoas Exhibit "5"with submarkings "5-a" to "5-c" to prove the
existence of the February 6, 2003 transaction in its Formal Offer dated July 20, 2008. Orion likewise
offered in evidence the supposed promissory note dated September 4, 2002 as Exhibit "12"to prove the
existence of the additional P800,000.00 loan. The RTC, however, denied the admission of Exhibits "5"
and "12,"among others, in its order dated August 19, 2008 "since the same [were] not identified in court
by any witness."40

Despite the exclusion of its most critical documentary evidence, Orion failed to make a tender ofexcluded
evidence, as provided under Section 40, Rule 132 of the Rules of Court. For this reason alone, we are
prevented from seriously considering Exhibit "5" and its submarkings and Exhibit "12" in the present
petition.

Moreover, even if we consider Exhibit "5" and its submarkings and Exhibit "12" in the present petition, the
copious inconsistencies and contradictions in the testimonial and documentary evidence of Orion, militate
against the conclusion that the Dacion en Pagowas duly executed. First, there appears to be no due and
demandable obligation when the Dacion en Pago was executed, contrary to the allegations of Orion.
Orions witness Perez tried to impress upon the RTC that Kang was in default in his P1,800,000.00 loan.
During his direct examination, he stated:

ATTY. CRUZAT:

Q: Okay, so this loan of P1.8 million, what happened to this loan, Mr. Witness?

A: Well it became past due, there has been delayed interest payment by Mr. Kangand...

Q: So what did you do after there were defaults[?]

A: We have to secure the money or the investment of the bank through loans and we have
executed a dacion en pagobecause Mr. Kang said he has no money. So we just execute[d] the
dacion en pago rather than going through the Foreclosure proceedings.

xxxx

Q: Can you tell the court when was this executed?

A: February 6, 2003, your Honor.41

A reading of the supposed promissory note, however, shows that there was nodefault to speak of when
the supposed Dacion en Pagowas executed.

Based on the promissory note, Kangs loan obligation wouldmature only on August 27, 2003. Neither can
Orion claim that Kang had been in default in his installment payments because the wordings of the
promissory note provide that "[t]he principal of this loanand its interest and other charges shall be paid by

75
me/us in accordance hereunder: SINGLE PAYMENT LOANS.42 "There was thus no due and demandable
loan obligation when the alleged Dacion en Pago was executed.

Second, Perez, the supposed person who prepared the Dacion en Pago,appears to only have a vague
idea of the transaction he supposedly prepared. During his cross-examination, he testified:

ATTY. DE CASTRO:

Q: And were you the one who prepared this [dacion en pago] Mr. witness?

A: Yes, sir. I personally prepared this.

xxxx

Q: So this 1.8 million pesos is already inclusive of all the penalties, interest and surcharge due
from Mr. Yung Sam Kang?

A: Its just the principal, sir.

Q: So you did not state the interest [and] penalties?

A: In the [dacion en pago], we do not include interest, sir. We may actually includethat but....

Q: Can you read the Second Whereas Clause, Mr. Witness?

A: Whereas the first party failed to pay the said loan to the second party and as of February 10,
2003, the outstanding obligation which is due and demandable principal and interest and other
charges included amounts to P1,800,000.00 pesos, sir.

xxxx

Q: You are now changing your answer[.] [I]t now includes interest and other charges, based on
this document?

A: Yes, based on that document, sir.43

Third, the Dacion en Pago,mentioned that the P1,800,000.00 loan was secured by a real estate
mortgage. However, no document was ever presented to prove this real estate mortgage aside
from it being mentioned in the Dacion en Pago itself.

ATTY. DE CASTRO:

Q: Would you know if there is any other document like a supplement to that Credit Line
Agreement referring to this 1.8 million peso loan by Mr. Yung Sam Kang which says that there
was a subsequent collateralization or security given by Mr. Yung [Sam]

Kang for the loan?

xxxx

A: The [dacion en pago], sir.44

76
Fourth,the Dacion en Pago was first mentioned only two (2) months after Suzuki and Samin demanded
the delivery of the titles sometime in August 2003,and after Suzuki caused the annotation of his affidavit
of adverse claim. Records show that it was only on October 9, 2003, when Orion, through its counsel,
Cristobal Balbin Mapile & Associates first spoke of the Dacion en Pago. 45 Not even Perez mentioned any
Dacion en Pago on October 1, 2003, when he personally received a letter demanding the delivery of the
titles.Instead, Perez refused to accept the letter and opted to first consult with his lawyer.46

Notably, even the October 9, 2003 letter contained material inconsistencies in its recital of facts
surrounding the execution of the Dacion en Pago. In particular, it mentioned that "on [September 4, 2002],
after paying the original loan, [Kang] applied and was granted a new Credit Line Facility by [Orion] x x x
for ONE MILLION EIGHT HUNDRED THOUSAND PESOS (P1,800,000.00)." Perez, however, testified
that there was "no cash movement" in the original P1,000,000.00 loan. In his testimony, he said:

COURT:

xxxx

Q: Would you remember what was the subject matter of that real estate mortgage for that
first P1,000,000.00 loan?

A: Its a condominium Unit in Cityland, sir.

xxxx

Q: Would you recall if there was any payment by Mr. Yung Sam Kang of this P1,000,000.00 loan?

A: None sir.

Q: No payments?

A: None sir.

Q: And from 1999 to 2002, there was no payment, either by way of payment to the principal, by
way ofpayment of interest, there was no payment by Mr. Yung Sam Kang of this loan?

A: Literally, there was no actual cash movement, sir.

Q: There was no actual cash?

A: Yes, sir.

Q: And yet despite no payment, the bank Orion Savings Bank still extended an P800,000.00
additional right?

A: Yes, sir.47

Fifth, it is undisputed that notwithstanding the supposed execution of theDacion en Pago on February 2,
2003, Kang remained in possession of the condominium unit. In fact, nothing in the records shows that
Orion even bothered to take possession of the property even six (6) months after the supposed date of
execution of the Dacion en Pago. Kang was even able to transfer possession of the condominium unit to
Suzuki, who then made immediate improvements thereon. If Orion really purchased the condominium unit
on February 2, 2003 and claimed to be its true owner, why did it not assert its ownership immediately

77
after the alleged sale took place? Why did it have to assert its ownership only after Suzuki demanded the
delivery of the titles? These gaps have remained unanswered and unfilled.

In Suntay v. CA,48 we held that the most prominent index of simulation is the complete absence of
anattempt on the part of the vendee to assert his rights of ownership over the property in question. After
the sale, the vendee should have entered the land and occupied the premises. The absence of any
attempt on the part of Orion to assert its right of dominion over the property allegedly soldto it is a clear
badge of fraud. That notwithstanding the execution of the Dacion en Pago, Kang remained in possession
of the disputed condominium unit from the time of the execution of the Dacion en Pagountil the
propertys subsequent transfer to Suzuki unmistakably strengthens the fictitious nature of the Dacion en
Pago.

These circumstances, aside from the glaring inconsistencies in the documents and testimony of Orions
witness, indubitably prove the spurious nature of the Dacion en Pago.

The fact that the Dacion en Pago

is a notarized document does not
support the conclusion that the
sale it embodies is a true
conveyance

Public instruments are evidence of the facts that gave rise to their execution and are to be considered as
containing all the terms of the agreement.49 While a notarized document enjoys this presumption, "the fact
that a deed is notarized is not a guarantee of the validity of its contents."50 The presumption of regularity
of notarized documents is not absolute and may be rebutted by clear and convincing evidence to the
contrary.51

In the present case, the presumption cannot apply because the regularity in the execution of the Dacion
en Pago and the loan documents was challenged in the proceedings below where their prima facievalidity
was overthrown by the highly questionable circumstances surrounding their execution. 52

Effect of the PRA restriction on

the validity of Suzukis title to the
property

Orion argues that the PRA restriction in CCT No. 18186 affects the conveyance to Suzuki. In particular,
Orion assails the status of Suzuki as a purchaser in good faith in view of the express PRA restriction
contained in CCT No. 18186.53

We reject this suggested approachoutright because, to our mind, the PRA restriction cannot affect the
conveyance in favor of Suzuki. On this particular point, we concur withthe following findings of the CA:

x x x the annotation merely servesas a warning to the owner who holds a Special Resident Retirees
Visa(SRRV) that he shall lose his visa if he disposes his property which serves as his investment in order
to qualify for such status. Section 14 of the Implementing Investment Guidelines under Rule VIII-A of the
Rules and Regulations Implementing Executive Order No. 1037, Creating the Philippine Retirement Park
System Providing Funds Therefor and For Other Purpose ( otherwise known as the Philippine Retirement
Authority) states:

Section 14. Should the retiree-investor withdraw his investment from the Philippines, or transfer the same
to another domestic enterprise, orsell, convey or transfer his condominium unit or units to another person,
natural or juridical without the prior approval of the Authority, the Special Resident Retirees Visa issued
to him, and/or unmarried minor child or children[,] may be cancelled or revoked by the Philippine

78
Government, through the appropriate government department or agency, upon recommendation of the
Authority.54

Moreover, Orion should not be allowed to successfully assail the good faith of Suzuki on the basis of the
PRA restriction. Orion knew of the PRA restriction when it transacted with Kang. Incidentally, Orion
admitted accommodating Kangs request to cancel the mortgage annotation despite the lack of payment
to circumvent the PRA restriction. Orion, thus, is estopped from impugning the validity of the conveyance
in favor of Suzuki on the basis of the PRA restriction that Orion itself ignored and "attempted" to
circumvent.

With the conclusion that Orion failed to prove the authenticity of the Dacion en Pago, we see no reason
for the application of the rules on double sale under Article 1544 of the New Civil Code. Suzuki,
moreover, successfully adduced sufficient evidence to establish the validity of conveyance in his favor.

WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against petitioner
Orion Savings Bank.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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 children: 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

79
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 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

80
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.

81
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So
ordered.

NCC 17

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 162894 February 26, 2008

RAYTHEON INTERNATIONAL, INC., petitioner,

vs.
STOCKTON W. ROUZIE, JR., respondent.

DECISION

TINGA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure
which seeks the reversal of the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No.
67001 and the dismissal of the civil case filed by respondent against petitioner with the trial court.

As culled from the records of the case, the following antecedents appear:

Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under
the laws of the State of Connecticut, United States of America, and respondent Stockton W. Rouzie, Jr.,
an American citizen, entered into a contract whereby BMSI hired respondent as its representative to
negotiate the sale of services in several government projects in the Philippines for an agreed
remuneration of 10% of the gross receipts. On 11 March 1992, respondent secured a service contract
with the Republic of the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt.
Pinatubo eruption and mudflows.3

On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and
Walter G. Browning for alleged nonpayment of commissions, illegal termination and breach of
employment contract.4 On 28 September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment
ordering BMSI and RUST to pay respondents money claims.5 Upon appeal by BMSI, the NLRC reversed
the decision of the Labor Arbiter and dismissed respondents complaint on the ground of lack of
jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a Resolution dated 26
November 1997. The Resolution became final and executory on 09 November 1998.

On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before the
Regional Trial Court (RTC) of Bauang, La Union. The Complaint,7 docketed as Civil Case No. 1192-BG,
named as defendants herein petitioner Raytheon International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case. The complaint essentially reiterated the allegations in
the labor case that BMSI verbally employed respondent to negotiate the sale of services in government
projects and that respondent was not paid the commissions due him from the Pinatubo dredging project

82
which he secured on behalf of BMSI. The complaint also averred that BMSI and RUST as well as
petitioner itself had combined and functioned as one company.

In its Answer,8 petitioner alleged that contrary to respondents claim, it was a foreign corporation duly
licensed to do business in the Philippines and denied entering into any arrangement with respondent or
paying the latter any sum of money. Petitioner also denied combining with BMSI and RUST for the
purpose of assuming the alleged obligation of the said companies. 9 Petitioner also referred to the NLRC
decision which disclosed that per the written agreement between respondent and BMSI and RUST,
denominated as "Special Sales Representative Agreement," the rights and obligations of the parties shall
be governed by the laws of the State of Connecticut.10Petitioner sought the dismissal of the complaint on
grounds of failure to state a cause of action and forum non conveniens and prayed for damages by way
of compulsory counterclaim.11

On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative
Defenses and for Summary Judgment12 seeking the dismissal of the complaint on grounds of forum non
conveniens and failure to state a cause of action. Respondent opposed the same. Pending the resolution
of the omnibus motion, the deposition of Walter Browning was taken before the Philippine Consulate
General in Chicago.13

In an Order14 dated 13 September 2000, the RTC denied petitioners omnibus motion. The trial court held
that the factual allegations in the complaint, assuming the same to be admitted, were sufficient for the trial
court to render a valid judgment thereon. It also ruled that the principle of forum non conveniens was
inapplicable because the trial court could enforce judgment on petitioner, it being a foreign corporation
licensed to do business in the Philippines.15

Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioners motion. Thus, it filed a
Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ of certiorari and a writ of
injunction to set aside the twin orders of the trial court dated 13 September 2000 and 31 July 2001 and to
enjoin the trial court from conducting further proceedings.20

On 28 August 2003, the Court of Appeals rendered the assailed Decision 21 denying the petition for
certiorari for lack of merit. It also denied petitioners motion for reconsideration in the assailed Resolution
issued on 10 March 2004.22

The appellate court held that although the trial court should not have confined itself to the allegations in
the complaint and should have also considered evidence aliunde in resolving petitioners omnibus motion,
it found the evidence presented by petitioner, that is, the deposition of Walter Browning, insufficient for
purposes of determining whether the complaint failed to state a cause of action. The appellate court also
stated that it could not rule one way or the other on the issue of whether the corporations, including
petitioner, named as defendants in the case had indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue should be threshed out during trial. 23 Moreover, the
appellate court deferred to the discretion of the trial court when the latter decided not to desist from
assuming jurisdiction on the ground of the inapplicability of the principle of forum non conveniens.

Hence, this petition raising the following issues:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE

COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST RAYTHEON
INTERNATIONAL, INC.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE

COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS.24

83
Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino Padua Law
Office, counsel on record for respondent, manifested that the lawyer handling the case, Atty. Rogelio
Karagdag, had severed relations with the law firm even before the filing of the instant petition and that it
could no longer find the whereabouts of Atty. Karagdag or of respondent despite diligent efforts. In a
Resolution25 dated 20 November 2006, the Court resolved to dispense with the filing of a comment.

The instant petition lacks merit.

Petitioner mainly asserts that the written contract between respondent and BMSI included a valid choice
of law clause, that is, that the contract shall be governed by the laws of the State of Connecticut. It also
mentions the presence of foreign elements in the dispute namely, the parties and witnesses involved
are American corporations and citizens and the evidence to be presented is located outside the
Philippines that renders our local courts inconvenient forums. Petitioner theorizes that the foreign
elements of the dispute necessitate the immediate application of the doctrine of forum non conveniens.

Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases involved in judicial
resolution of conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition and
enforcement of judgments. Thus, in the instances27 where the Court held that the local judicial machinery
was adequate to resolve controversies with a foreign element, the following requisites had to be proved:
(1) that the Philippine Court is one to which the parties may conveniently resort; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine
Court has or is likely to have the power to enforce its decision.28

On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a Philippine court
and where the court has jurisdiction over the subject matter, the parties and the res, it may or can
proceed to try the case even if the rules of conflict-of-laws or the convenience of the parties point to a
foreign forum. This is an exercise of sovereign prerogative of the country where the case is filed.29

Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the
law30 and by the material allegations in the complaint, irrespective of whether or not the plaintiff is entitled
to recover all or some of the claims or reliefs sought therein. 31 Civil Case No. 1192-BG is an action for
damages arising from an alleged breach of contract. Undoubtedly, the nature of the action and the
amount of damages prayed are within the jurisdiction of the RTC.

As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent (as
party plaintiff) upon the filing of the complaint. On the other hand, jurisdiction over the person of petitioner
(as party defendant) was acquired by its voluntary appearance in court. 32

That the subject contract included a stipulation that the same shall be governed by the laws of the State
of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter,
are precluded from hearing the civil action. Jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the
further question whether the application of a substantive law which will determine the merits of the case is
fair to both parties.33The choice of law stipulation will become relevant only when the substantive issues
of the instant case develop, that is, after hearing on the merits proceeds before the trial court.

Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse impositions
on its jurisdiction where it is not the most "convenient" or available forum and the parties are not
precluded from seeking remedies elsewhere.34 Petitioners averments of the foreign elements in the
instant case are not sufficient to oust the trial court of its jurisdiction over Civil Case No. No. 1192-BG and
the parties involved.

Moreover, the propriety of dismissing a case based on the principle of forum non conveniens requires a
factual determination; hence, it is more properly considered as a matter of defense. While it is within the

84
discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require the courts desistance. 35

Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its conclusion that
it can assume jurisdiction over the dispute notwithstanding its foreign elements. In the same manner, the
Court defers to the sound discretion of the lower courts because their findings are binding on this Court.

Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of action
against petitioner. Failure to state a cause of action refers to the insufficiency of allegation in the
pleading.36 As a general rule, the elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded.37

The complaint alleged that petitioner had combined with BMSI and RUST to function as one company.
Petitioner contends that the deposition of Walter Browning rebutted this allegation. On this score, the
resolution of the Court of Appeals is instructive, thus:

x x x Our examination of the deposition of Mr. Walter Browning as well as other documents
produced in the hearing shows that these evidence aliunde are not quite sufficient for us to mete
a ruling that the complaint fails to state a cause of action.

Annexes "A" to "E" by themselves are not substantial, convincing and conclusive proofs that
Raytheon Engineers and Constructors, Inc. (REC) assumed the warranty obligations of defendant
Rust International in the Makar Port Project in General Santos City, after Rust International
ceased to exist after being absorbed by REC. Other documents already submitted in evidence
are likewise meager to preponderantly conclude that Raytheon International, Inc., Rust
International[,] Inc. and Brand Marine Service, Inc. have combined into one company, so much so
that Raytheon International, Inc., the surviving company (if at all) may be held liable for the
obligation of BMSI to respondent Rouzie for unpaid commissions. Neither these documents
clearly speak otherwise.38

As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and RUST
merged together requires the presentation of further evidence, which only a full-blown trial on the merits
can afford.

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

NCC 18

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 126603 June 29, 1998

85
ESTRELLITA J. TAMANO, petitioner,
vs.
HON. RODOLFO A. ORTIZ, Presiding Judge, RTC-Br. 89, Quezon City, HAJA PUTRI ZORAYDA A.
TAMANO, ADIB A. TAMANO and the HON. COURT OF APPEALS, respondents.

BELLOSILLO, J.:

This Petition for Review on Certiorari seeks to reverse and set aside the decision of the Court of Appeals
of 30 September 1996 in CA-G.R. SP. No. 39656 which affirmed the decision of the Regional Trial Court-
Br. 89, Quezon City, denying the motion to dismiss as well as the motion for reconsideration filed by
petitioner Estrellita J. Tamano.

On 31 May 1958 Senator Mamintal Abdul Jabar Tamano (Tamano) married private respondent Haja Putri
Zorayda A. Tamano (Zorayda) in civil rites. Their marriage supposedly remained valid and subsisting until
his death on 18 May 1994. Prior to his death, particularly on 2 June 1993, Tamano also married petitioner
Estrellita J. Tamano (Estrellita) in civil rites in Malabang, Lanao del Sur.

On 23 November 1994 private respondent Zorayda joined by her son Adib A. Tamano (Adib) filed
a Complaint for Declaration of Nullify of Marriage of Tamano and Estrellita on the ground that it was
bigamous. They contended that Tamano and Estrellita misrepresented themselves
as divorced and single, respectively, thus making the entries in the marriage contract false and
fraudulent.

Private respondents alleged that Tamano never divorced Zorayda and that Estrellita was not single when
she married Tamano as the decision annulling her previous marriage with Romeo C. Llave never became
final and executory for non-compliance with publication requirements.

Estrellita filed a motion to dismiss alleging that the Regional Trial Court of Quezon City was without
jurisdiction over the subject and nature of the action. She alleged that "only a party to the marriage" could
file an action for annulment of marriage against the other spouse, 1 hence, it was only Tamano who could
file an action for annulment of their marriage. Petitioner likewise contended that since Tamano and
Zorayda were both Muslims and married in Muslim rites the jurisdiction to hear and try the instant case
was vested in the shari'a courts pursuant to Art. 155 of the Code of Muslim Personal Laws.

The lower court denied the motion to dismiss and ruled that the instant case was properly cognizable by
the Regional Trial Court of Quezon City since Estrellita and Tamano were married in accordance with the
Civil Code and not exclusively in accordance with PD No. 1083 2 or the Code of Muslim Personal laws.
The motion for reconsideration was likewise denied; hence, petitioner filed the instant petition with this
Court seeking to set aside the 18 July 1995 order of respondent presiding judge of the RTC-Br. 89,
Quezon City, denying petitioner's motion to dismiss and the 22 August 1995 order denying
reconsideration thereof.

In a Resolution dated 13 December 1995 we referred the case to the Court of Appeals for consolidation
with G.R. No. 118371. Zorayda and Adib A. Tamano however filed a motion, which the Court of Appeals
granted, to resolve the Complaint for Declaration of Nullity of Marriage ahead of the other consolidated
cases.

The Court of Appeals ruled that the instant case would fall under the exclusive jurisdiction
of shari'a courts only when filed in places where there are shari'a court. But in places where there are
no shari'a courts, like Quezon City, the instant case could properly be filed before the Regional Trial
Court.

86
Petitioner is now before us reiterating her earlier argument that it is the shari'a court and not the Regional
Trial Court which has jurisdiction over the subject and nature of the action.

Under The Judiciary Reorganization Act of 1980, 3 Regional Trial Courts have jurisdiction over all actions
involving the contract of marriage and marital relations. 4 Personal actions, such as the instant complaint
for declaration of nullity of marriage, may be commenced and tried where the plaintiff or any of the
principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at the
election of the plaintiff. 5 There should be no question by now that what determines the nature of an action
and correspondingly the court which has jurisdiction over it are the allegations made by the plaintiff in this
case. 6 In the complaint for declaration of nullity of marriage filed by private respondents herein, it was
alleged that Estrellita and Tamano were married in accordance with the provisions of the Civil Code.
Never was it mentioned that Estrellita and Tamano were married under Muslim laws or PD No. 1083.
Interestingly, Estrellita never stated in her Motion to Dismiss that she and Tamano were married under
Muslim laws. That she was in fact married to Tamano under Muslim laws was first mentioned only in
her Motion for Reconsideration.

Nevertheless, the Regional Trial Court was not divested of jurisdiction to hear and try the instant case
despite the allegation in the Motion for Reconsideration that Estrellita and Tamano were likewise married
in Muslim rites. This is because a court's jurisdiction cannot be made to depend upon defenses set up in
the answer, in a motion to dismiss, or in a motion for reconsideration, but only upon the allegations of the
complaint. 7 Jurisdiction over the subject matter of a case is determined from the allegations of the
complaint as the latter comprises a concise statement of the ultimate facts constituting the plaintiff's
causes of action. 8

Petitioner argues that the shari'a courts have jurisdiction over the instant suit pursuant to Art. 13, Title II,
PD No. 1083, 9 which provides

Art. 13. Application. (1) The provisions of this Title shall apply to marriage and divorce
wherein both parties are Muslims, or wherein only the male party is a Muslim and the
marriage is solemnized in accordance with Muslim law or this Code in any part of the
Philippines.

(2) In case of a marriage between a Muslim and a non-Muslim, solemnized not in

accordance with Muslim law or this Code, the Civil Code of the Philippines shall apply.

(3) Subject to the provisions of the preceding paragraphs, the essential requisites and
legal impediments to marriage, divorce, paternity and filiation, guardianship and custody
of minors, support and maintenance, claims for customary dower (mahr), betrothal,
breach of contract to marry, solemnization and registration of marriage and divorce, rights
and obligations between husband and wife, parental authority, and the property relations
between husband and wife shall be governed by this Code and other applicable Muslim
laws.

As alleged in the complaint, petitioner and Tamano were married in accordance with the Civil Code.
Hence, contrary to the position of petitioner, the Civil Code is applicable in the instant case. Assuming
that indeed petitioner and Tamano were likewise married under Muslim laws, the same would still fall
under the general original jurisdiction of the Regional Trial Courts.

Article 13 of PD No. 1083 does not provide for a situation where the parties were married both in civil and
Muslim rites. Consequently, the shari'a courts are not vested with original and exclusive jurisdiction when
it comes to marriages celebrated under both civil and Muslim laws. Consequently, the Regional Trial
Courts are not divested of their general original jurisdiction under Sec. 19, par. (6) of BP Blg. 129 which
provides

87
 Sec. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive
original jurisdiction: . . . (6) In all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising judicial or quasi-judicial functions . . .

WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals sustaining the 18
July 1995 and 22 August 1995 orders of the Regional Trial Court Br. 89, Quezon City, denying the
motion to dismiss and reconsideration thereof, is AFFIRMED. Let the records of this case be immediately
remanded to the court of origin for further proceedings until terminated.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 169766 March 30, 2011

ESTRELLITA JULIANO-LLAVE, Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, HAJA PUTRI ZORAYDA A. TAMANO and ADIB AHMAD A.
TAMANO, Respondents.

DECISION

DEL CASTILLO, J.:

A new law ought to affect the future, not what is past. Hence, in the case of subsequent marriage laws, no
vested rights shall be impaired that pertain to the protection of the legitimate union of a married couple.

This petition for review on certiorari assails the Decision1 dated August 17, 2004 of the Court of Appeals
(CA) in CA-G.R. CV No. 61762 and its subsequent Resolution2 dated September 13, 2005, which
affirmed the Decision of the Regional Trial Court (RTC) of Quezon City, Branch 89 declaring petitioner
Estrellita Juliano-Llaves (Estrellita) marriage to Sen. Mamintal A.J. Tamano (Sen. Tamano) as void ab
initio.

Factual Antecedents

Around 11 months before his death, Sen. Tamano married Estrellita twice initially under the Islamic
laws and tradition on May 27, 1993 in Cotabato City3 and, subsequently, under a civil ceremony officiated
by an RTC Judge at Malabang, Lanao del Sur on June 2, 1993.4 In their marriage contracts, Sen.
Tamanos civil status was indicated as divorced.

Since then, Estrellita has been representing herself to the whole world as Sen. Tamanos wife, and upon
his death, his widow.

On November 23, 1994, private respondents Haja Putri Zorayda A. Tamano (Zorayda) and her son Adib
Ahmad A. Tamano (Adib), in their own behalf and in behalf of the rest of Sen. Tamanos legitimate
children with Zorayda,5filed a complaint with the RTC of Quezon City for the declaration of nullity of
marriage between Estrellita and Sen. Tamano for being bigamous. The complaint 6 alleged, inter alia, that

88
Sen. Tamano married Zorayda on May 31, 1958 under civil rites, and that this marriage remained
subsisting when he married Estrellita in 1993. The complaint likewise averred that:

11. The marriage of the deceased and Complainant Zorayda, having been celebrated under the
New Civil Code, is therefore governed by this law. Based on Article 35 (4) of the Family Code, the
subsequent marriage entered into by deceased Mamintal with Defendant Llave is void ab initio
because he contracted the same while his prior marriage to Complainant Zorayda was still
subsisting, and his status being declared as "divorced" has no factual or legal basis, because the
deceased never divorced Complainant Zorayda in his lifetime, and he could not have validly done
so because divorce is not allowed under the New Civil Code;

11.1 Moreover, the deceased did not and could not have divorced Complainant Zorayda by
invoking the provision of P.D. 1083, otherwise known as the Code of Muslim Personal Laws, for
the simple reason that the marriage of the deceased with Complainant Zorayda was never
deemed, legally and factually, to have been one contracted under Muslim law as provided under
Art. 186 (2) of P.D. 1083, since they (deceased and Complainant Zorayda) did not register their
mutual desire to be thus covered by this law;7

Summons was then served on Estrellita on December 19, 1994. She then asked from the court for an
extension of 30 days to file her answer to be counted from January 4, 1995,8 and again, another 15
days9 or until February 18, 1995, both of which the court granted.10

Instead of submitting her answer, however, Estrellita filed a Motion to Dismiss 11 on February 20, 1995
where she declared that Sen. Tamano and Zorayda are both Muslims who were married under the
Muslim rites, as had been averred in the latters disbarment complaint against Sen. Tamano.12 Estrellita
argued that the RTC has no jurisdiction to take cognizance of the case because under Presidential
Decree (PD) No. 1083, or the Code of Muslim Personal Laws of the Philippines (Muslim Code), questions
and issues involving Muslim marriages and divorce fall under the exclusive jurisdiction of sharia courts.

The trial court denied Estrellitas motion and asserted its jurisdiction over the case for declaration of
nullity.13Thus, Estrellita filed in November 1995 a certiorari petition with this Court questioning the denial
of her Motion to Dismiss. On December 15, 1995, we referred the petition to the CA14 which was
docketed thereat as CA-G.R. SP No. 39656.

During the pendency of CA-G.R. SP No. 39656, the RTC continued to try the case since there can be no
default in cases of declaration of nullity of marriage even if the respondent failed to file an answer.
Estrellita was allowed to participate in the trial while her opposing parties presented their evidence. When
it was Estrellitas turn to adduce evidence, the hearings set for such purpose 15 were postponed mostly at
her instance until the trial court, on March 22, 1996, suspended the proceedings16 in view of the CAs
temporary restraining order issued on February 29, 1996, enjoining it from hearing the case. 17

Eventually, however, the CA resolved the petition adverse to Estrellita in its Decision dated September
30, 1996.18 Estrellita then elevated the appellate courts judgment to this Court by way of a petition for
review on certiorari docketed as G.R. No. 126603.19

Subsequent to the promulgation of the CA Decision, the RTC ordered Estrellita to present her evidence
on June 26, 1997.20 As Estrellita was indisposed on that day, the hearing was reset to July 9, 1997. 21 The
day before this scheduled hearing, Estrellita again asked for a postponement. 22

Unhappy with the delays in the resolution of their case, Zorayda and Adib moved to submit the case for
decision,23 reasoning that Estrellita had long been delaying the case. Estrellita opposed, on the ground
that she has not yet filed her answer as she still awaits the outcome of G.R. No. 126603. 24

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On June 29, 1998, we upheld the jurisdiction of the RTC of Quezon City, 25 stating as one of the reasons
that as sharia courts are not vested with original and exclusive jurisdiction in cases of marriages
celebrated under both the Civil Code and PD 1083, the RTC, as a court of general jurisdiction, is not
precluded from assuming jurisdiction over such cases. In our Resolution dated August 24, 1998,26 we
denied Estrellitas motion for reconsideration27 with finality.

A few days before this resolution, or on August 18, 1998, the RTC rendered the aforementioned judgment
declaring Estrellitas marriage with Sen. Tamano as void ab initio. 28

Ruling of the Regional Trial Court

The RTC, finding that the marital ties of Sen. Tamano and Zorayda were never severed, declared Sen.
Tamanos subsequent marriage to Estrellita as void ab initio for being bigamous under Article 35 of the
Family Code of the Philippines and under Article 83 of the Civil Code of the Philippines. 29 The court said:

A comparison between Exhibits A and B (supra) immediately shows that the second marriage of the late
Senator with [Estrellita] was entered into during the subsistence of his first marriage with [Zorayda]. This
renders the subsequent marriage void from the very beginning. The fact that the late Senator declared his
civil status as "divorced" will not in any way affect the void character of the second marriage because, in
this jurisdiction, divorce obtained by the Filipino spouse is not an acceptable method of terminating the
effects of a previous marriage, especially, where the subsequent marriage was solemnized under the
Civil Code or Family Code.30

Ruling of the Court of Appeals

In her appeal,31 Estrellita argued that she was denied her right to be heard as

the RTC rendered its judgment even without waiting for the finality of the Decision of the Supreme Court
in G.R. No. 126603. She claimed that the RTC should have required her to file her answer after the denial
of her motion to dismiss. She maintained that Sen. Tamano is capacitated to marry her as his marriage
and subsequent divorce with Zorayda is governed by the Muslim Code. Lastly, she highlighted Zoraydas
lack of legal standing to question the validity of her marriage to the deceased.

In dismissing the appeal in its Decision dated August 17, 2004, 32 the CA held that Estrellita can no longer
be allowed to file her answer as she was given ample opportunity to be heard but simply ignored it by
asking for numerous postponements. She never filed her answer despite the lapse of around 60 days, a
period longer than what was prescribed by the rules. It also ruled that Estrellita cannot rely on her
pending petition for certiorari with the higher courts since, as an independent and original action, it does
not interrupt the proceedings in the trial court.

As to the substantive merit of the case, the CA adjudged that Estrellitas marriage to Sen. Tamano is void
ab initio for being bigamous, reasoning that the marriage of Zorayda and Sen. Tamano is governed by the
Civil Code, which does not provide for an absolute divorce. It noted that their first nuptial celebration was
under civil rites, while the subsequent Muslim celebration was only ceremonial. Zorayda then, according
to the CA, had the legal standing to file the action as she is Sen. Tamanos wife and, hence, the injured
party in the senators subsequent bigamous marriage with Estrellita.

In its September 13, 2005 Resolution,33 the CA denied Estrellitas Motion for
Reconsideration/Supplemental Motion for Reconsideration where it debunked the additional errors she
raised. The CA noted that the allegation of lack of the public prosecutors report on the existence of
collusion in violation of both Rule 9, Section 3(e) of the Rules of Court 34 and Article 48 of the Family
Code35 will not invalidate the trial courts judgment as the proceedings between the parties had been
adversarial, negating the existence of collusion. Assuming that the issues have not been joined before the
RTC, the same is attributable to Estrellitas refusal to file an answer. Lastly, the CA disregarded

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Estrellitas allegation that the trial court erroneously rendered its judgment way prior to our remand to the
RTC of the records of the case ratiocinating that G.R. No. 126603 pertains to the issue on the denial of
the Motion to Dismiss, and not to the issue of the validity of Estrellitas marriage to Sen. Tamano.

The Parties Respective Arguments

Reiterating her arguments before the court a quo, Estrellita now argues that the CA erred in upholding the
RTC judgment as the latter was prematurely issued, depriving her of the opportunity to file an answer and
to present her evidence to dispute the allegations against the validity of her marriage. She claims that
Judge Macias v. Macias36 laid down the rule that the filing of a motion to dismiss instead of an answer
suspends the period to file an answer and, consequently, the trial court is obliged to suspend proceedings
while her motion to dismiss on the ground of lack of jurisdiction has not yet been resolved with finality.
She maintains that she merely participated in the RTC hearings because of the trial courts assurance
that the proceedings will be without prejudice to whatever action the High Court will take on her petition
questioning the RTCs jurisdiction and yet, the RTC violated this commitment as it rendered an adverse
judgment on August 18, 1998, months before the records of G.R. No. 126603 were remanded to the CA
on November 11, 1998.37 She also questions the lack of a report of the public prosecutor anent a finding
of whether there was collusion, this being a prerequisite before further proceeding could be held when a
party has failed to file an answer in a suit for declaration of nullity of marriage.

Estrellita is also steadfast in her belief that her marriage with the late senator is valid as the latter was
already divorced under the Muslim Code at the time he married her. She asserts that such law
automatically applies to the marriage of Zorayda and the deceased without need of registering their
consent to be covered by it, as both parties are Muslims whose marriage was solemnized under Muslim
law. She pointed out that Sen. Tamano married all his wives under Muslim rites, as attested to by the
affidavits of the siblings of the deceased. 38

Lastly, Estrellita argues that Zorayda and Adib have no legal standing to file suit because only the
husband or the wife can file a complaint for the declaration of nullity of marriage under Supreme Court
Resolution A.M. No. 02-11-10-SC.39

Refuting the arguments, the Solicitor General (Sol Gen) defends the CAs reasoning and stresses that
Estrellita was never deprived of her right to be heard; and, that filing an original action for certiorari does
not stay the proceedings of the main action before the RTC.

As regards the alleged lack of report of the public prosecutor if there is collusion, the Sol Gen says that
this is no longer essential considering the vigorous opposition of Estrellita in the suit that obviously shows
the lack of collusion. The Sol Gen also supports private respondents legal standing to challenge the
validity of Estrellitas purported marriage with Sen. Tamano, reasoning that any proper interested party
may attack directly or collaterally a void marriage, and Zorayda and Adib have such right to file the action
as they are the ones prejudiced by the marital union.

Zorayda and Adib, on the other hand, did not file any comment.

Issues

The issues that must be resolved are the following:

1. Whether the CA erred in affirming the trial courts judgment, even though the latter was
rendered prematurely because: a) the judgment was rendered without waiting for the Supreme
Courts final resolution of her certiorari petition, i.e., G.R. No. 126603; b) she has not yet filed her
answer and thus was denied due process; and c) the public prosecutor did not even conduct an
investigation whether there was collusion;

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 2. Whether the marriage between Estrellita and the late Sen. Tamano was bigamous; and

3. Whether Zorayda and Adib have the legal standing to have Estrellitas marriage declared void
ab initio.

Our Ruling

Estrellitas refusal to file an answer eventually led to the loss of her right to answer; and her pending
petition for certiorari/review on certiorari questioning the denial of the motion to dismiss before the higher
courts does not at all suspend the trial proceedings of the principal suit before the RTC of Quezon City.

Firstly, it can never be argued that Estrellita was deprived of her right to due process. She was never
declared in default, and she even actively participated in the trial to defend her interest.

Estrellita invokes Judge Macias v. Macias40 to justify the suspension of the period to file an answer and of
the proceedings in the trial court until her petition for certiorari questioning the validity of the denial of her
Motion to Dismiss has been decided by this Court. In said case, we affirmed the following reasoning of
the CA which, apparently, is Estrellitas basis for her argument, to wit:

However, she opted to file, on April 10, 2001, a Motion to Dismiss, instead of filing an Answer to the
complaint. The filing of said motion suspended the period for her to file her Answer to the complaint. Until
said motion is resolved by the Respondent Court with finality, it behooved the Respondent Court to
suspend the hearings of the case on the merits. The Respondent Court, on April 19, 2001, issued its
Order denying the Motion to Dismiss of the Petitioner. Under Section 6, Rule 16 of the 1997 Rules of
Civil Procedure [now Section 4], the Petitioner had the balance of the period provided for in Rule 11 of the
said Rules but in no case less than five (5) days computed from service on her of the aforesaid Order of
the Respondent Court within which to file her Answer to the complaint: x x x 41 (Emphasis supplied.)

Estrellita obviously misappreciated Macias. All we pronounced therein is that the trial court is mandated to
suspend trial until it finally resolves the motion to dismiss that is filed before it. Nothing in the above
excerpt states that the trial court should suspend its proceedings should the issue of the propriety or
impropriety of the motion to dismiss be raised before the appellate courts. In Macias, the trial court failed
to observe due process in the course of the proceeding of the case because after it denied the wifes
motion to dismiss, it immediately proceeded to allow the husband to present evidence ex parte and
resolved the case with undue haste even when, under the rules of procedure, the wife still had time to file
an answer. In the instant case, Estrellita had no time left for filing an answer, as she filed the motion to
dismiss beyond the extended period earlier granted by the trial court after she filed motions for extension
of time to file an answer.

Estrellita argues that the trial court prematurely issued its judgment, as it should have waited first for the
resolution of her Motion to Dismiss before the CA and, subsequently, before this Court. However, in
upholding the RTC, the CA correctly ruled that the pendency of a petition for certiorari does not suspend
the proceedings before the trial court. "An application for certiorari is an independent action which is not
part or a continuation of the trial which resulted in the rendition of the judgment complained of."42 Rule 65
of the Rules of Court is explicit in stating that "[t]he petition shall not interrupt the course of the principal
case unless a temporary restraining order or a writ of preliminary injunction has been issued against the
public respondent from further proceeding in the case."43 In fact, the trial court respected the CAs
temporary restraining order and only after the CA rendered judgment did the RTC again require Estrellita
to present her evidence.

Notably, when the CA judgment was elevated to us by way of Rule 45, we never issued any order
precluding the trial court from proceeding with the principal action. With her numerous requests for
postponements, Estrellita remained obstinate in refusing to file an answer or to present her evidence
when it was her turn to do so, insisting that the trial court should wait first for our decision in G.R. No.

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126603. Her failure to file an answer and her refusal to present her evidence were attributable only to
herself and she should not be allowed to benefit from her own dilatory tactics to the prejudice of the other
party. Sans her answer, the trial court correctly proceeded with the trial and rendered its Decision after it
deemed Estrellita to have waived her right to present her side of the story. Neither should the lower court
wait for the decision in G.R. No. 126603 to become final and executory, nor should it wait for its records
to be remanded back to it because G.R. No. 126603 involves strictly the propriety of the Motion to
Dismiss and not the issue of validity of marriage.

The Public Prosecutor issued a report as

to the non-existence of collusion.

Aside from Article 48 of the Family Code and Rule 9, Section 3(e) of the Rules of Court, the Rule on
Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-
10-SC)44 also requries the participation of the public prosecutor in cases involving void marriages. It
specifically mandates the prosecutor to submit his investigation report to determine whether there is
collusion between the parties:

Sec. 9. Investigation report of public prosecutor.(1) Within one month after receipt of the court order
mentioned in paragraph (3) of Section 8 above, the public prosecutor shall submit a report to the court
stating whether the parties are in collusion and serve copies thereof on the parties and their respective
counsels, if any.

(2) If the public prosecutor finds that collusion exists, he shall state the basis thereof in his report.
The parties shall file their respective comments on the finding of collusion within ten days from
receipt of a copy of the report. The court shall set the report for hearing and if convinced that the
parties are in collusion, it shall dismiss the petition.

(3) If the public prosecutor reports that no collusion exists, the court shall set the case for pre-trial.
It shall be the duty of the public prosecutor to appear for the State at the pre-trial.

Records show that the trial court immediately directed the public prosecutor to submit the required
report,45 which we find to have been sufficiently complied with by Assistant City Prosecutor Edgardo T.
Paragua in his Manifestation dated March 30, 1995, 46 wherein he attested that there could be no collusion
between the parties and no fabrication of evidence because Estrellita is not the spouse of any of the
private respondents.

Furthermore, the lack of collusion is evident in the case at bar. Even assuming that there is a lack of
report of collusion or a lack of participation by the public prosecutor, just as we held in Tuason v. Court of
Appeals,47 the lack of participation of a fiscal does not invalidate the proceedings in the trial court:

The role of the prosecuting attorney or fiscal in annulment of marriage and legal separation proceedings
is to determine whether collusion exists between the parties and to take care that the evidence is not
suppressed or fabricated. Petitioner's vehement opposition to the annulment proceedings negates the
conclusion that collusion existed between the parties. There is no allegation by the petitioner that
evidence was suppressed or fabricated by any of the parties. Under these circumstances, we are
convinced that the non-intervention of a prosecuting attorney to assure lack of collusion between the
contending parties is not fatal to the validity of the proceedings in the trial court. 48

The Civil Code governs the marriage of Zorayda and the late Sen. Tamano; their marriage was never
invalidated by PD 1083. Sen. Tamanos subsequent marriage to Estrellita is void ab initio.

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The marriage between the late Sen. Tamano and Zorayda was celebrated in 1958, solemnized under civil
and Muslim rites.49 The only law in force governing marriage relationships between Muslims and non-
Muslims alike was the Civil Code of 1950, under the provisions of which only one marriage can exist at
any given time.50 Under the marriage provisions of the Civil Code, divorce is not recognized except during
the effectivity of Republic Act No. 39451 which was not availed of during its effectivity.

As far as Estrellita is concerned, Sen. Tamanos prior marriage to Zorayda has been severed by way of
divorce under PD 1083,52 the law that codified Muslim personal laws. However, PD 1083 cannot benefit
Estrellita. Firstly, Article 13(1) thereof provides that the law applies to "marriage and divorce wherein both
parties are Muslims, or wherein only the male party is a Muslim and the marriage is solemnized in
accordance with Muslim law or this Code in any part of the Philippines." But we already ruled in G.R. No.
126603 that "Article 13 of PD 1083 does not provide for a situation where the parties were married both in
civil and Muslim rites."53

Moreover, the Muslim Code took effect only on February 4, 1977, and this law cannot retroactively
override the Civil Code which already bestowed certain rights on the marriage of Sen. Tamano and
Zorayda. The former explicitly provided for the prospective application of its provisions unless otherwise
provided:

Art. 186 (1). Effect of code on past acts. Acts executed prior to the effectivity of this Code shall be
governed by the laws in force at the time of their execution, and nothing herein except as otherwise
specifically provided, shall affect their validity or legality or operate to extinguish any right acquired or
liability incurred thereby.

It has been held that:

The foregoing provisions are consistent with the principle that all laws operate prospectively, unless the
contrary appears or is clearly, plainly and unequivocably expressed or necessarily implied; accordingly,
every case of doubt will be resolved against the retroactive operation of laws. Article 186 aforecited
enunciates the general rule of the Muslim Code to have its provisions applied prospectively, and implicitly
upholds the force and effect of a pre-existing body of law, specifically, the Civil Code in respect of civil
acts that took place before the Muslim Codes enactment.54

An instance of retroactive application of the Muslim Code is Article 186(2) which states:

A marriage contracted by a Muslim male prior to the effectivity of this Code in accordance with non-
Muslim law shall be considered as one contracted under Muslim law provided the spouses register their
mutual desire to this effect.

Even granting that there was registration of mutual consent for the marriage to be considered as one
contracted under the Muslim law, the registration of mutual consent between Zorayda and Sen. Tamano
will still be ineffective, as both are Muslims whose marriage was celebrated under both civil and Muslim
laws. Besides, as we have already settled, the Civil Code governs their personal status since this was in
effect at the time of the celebration of their marriage. In view of Sen. Tamanos prior marriage which
subsisted at the time Estrellita married him, their subsequent marriage is correctly adjudged by the CA as
void ab initio.

Zorayda and Adib, as the injured parties, have the legal personalities to file the declaration of nullity of
marriage. A.M. No. 02-11-10-SC, which limits to only the husband or the wife the filing of a petition for
nullity is prospective in application and does not shut out the prior spouse from filing suit if the ground is a
bigamous subsequent marriage.

Her marriage covered by the Family Code of the Philippines,55 Estrellita relies on A.M. No. 02-11-10-SC
which took effect on March 15, 2003 claiming that under Section 2(a) 56 thereof, only the husband or the

94
wife, to the exclusion of others, may file a petition for declaration of absolute nullity, therefore only she
and Sen. Tamano may directly attack the validity of their own marriage.

Estrellita claims that only the husband or the wife in a void marriage can file a petition for declaration of
nullity of marriage. However, this interpretation does not apply if the reason behind the petition is bigamy.

In explaining why under A.M. No. 02-11-10-SC only the spouses may file the petition to the exclusion of
compulsory or intestate heirs, we said:

The Rationale of the Rules on Annulment of Voidable Marriages and Declaration of Absolute Nullity of
Void Marriages, Legal Separation and Provisional Orders explicates on Section 2(a) in the following
manner, viz:

(1) Only an aggrieved or injured spouse may file petitions for annulment of voidable marriages and
declaration of absolute nullity of void marriages. Such petitions cannot be filed by the compulsory or
intestate heirs of the spouses or by the State. [Section 2; Section 3, paragraph a]

Only an aggrieved or injured spouse may file a petition for annulment of voidable marriages or declaration
of absolute nullity of void marriages. Such petition cannot be filed by compulsory or intestate heirs of the
spouses or by the State. The Committee is of the belief that they do not have a legal right to file the
petition. Compulsory or intestate heirs have only inchoate rights prior to the death of their predecessor,
and hence can only question the validity of the marriage of the spouses upon the death of a spouse in a
proceeding for the settlement of the estate of the deceased spouse filed in the regular courts. On the
other hand, the concern of the State is to preserve marriage and not to seek its dissolution.57

Note that the Rationale makes it clear that Section 2(a) of A.M. No. 02-11-10-SC refers to the "aggrieved
or injured spouse." If Estrellitas interpretation is employed, the prior spouse is unjustly precluded from
filing an action. Surely, this is not what the Rule contemplated.

The subsequent spouse may only be expected to take action if he or she had only discovered during the
connubial period that the marriage was bigamous, and especially if the conjugal bliss had already
vanished. Should parties in a subsequent marriage benefit from the bigamous marriage, it would not be
expected that they would file an action to declare the marriage void and thus, in such circumstance, the
"injured spouse" who should be given a legal remedy is the one in a subsisting previous marriage. The
latter is clearly the aggrieved party as the bigamous marriage not only threatens the financial and the
property ownership aspect of the prior marriage but most of all, it causes an emotional burden to the prior
spouse. The subsequent marriage will always be a reminder of the infidelity of the spouse and the
disregard of the prior marriage which sanctity is protected by the Constitution.

Indeed, Section 2(a) of A.M. No. 02-11-10-SC precludes the son from impugning the subsequent
marriage.1wphi1 But in the case at bar, both Zorayda and Adib have legal personalities to file an action
for nullity. Albeit the Supreme Court Resolution governs marriages celebrated under the Family Code,
such is prospective in application and does not apply to cases already commenced before March 15,
2003.58

Zorayda and Adib filed the case for declaration of nullity of Estrellitas marriage in November 1994. While
the Family Code is silent with respect to the proper party who can file a petition for declaration of nullity of
marriage prior to A.M. No. 02-11-10-SC, it has been held that in a void marriage, in which no marriage
has taken place and cannot be the source of rights, any interested party may attack the marriage directly
or collaterally without prescription, which may be filed even beyond the lifetime of the parties to the
marriage.59 Since A.M. No. 02-11-10-SC does not apply, Adib, as one of the children of the deceased
who has property rights as an heir, is likewise considered to be the real party in interest in the suit he and
his mother had filed since both of them stand to be benefited or injured by the judgment in the suit. 60

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Since our Philippine laws protect the marital union of a couple, they should be interpreted in a way that
would preserve their respective rights which include striking down bigamous marriages. We thus find the
CA Decision correctly rendered.

WHEREFORE, the petition is DENIED. The assailed August 17, 2004 Decision of the Court of Appeals in
CA-G.R. CV No. 61762, as well as its subsequent Resolution issued on September 13, 2005, are hereby
AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 193902 June 1, 2011

ATTY. MARIETTA D. ZAMORANOS, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES and SAMSON R. PACASUM, SR., Respondents.

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

G.R. No. 193908

ATTY. MARIETTA D. ZAMORANOS, Petitioner,

vs.
SAMSON R. PACASUM, SR., Respondent.

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

G.R. No. 194075

SAMSON R. PACASUM, SR., Petitioner,

vs.
ATTY. MARIETTA D. ZAMORANOS, Respondent.

DECISION

NACHURA, J.:

These are three (3) consolidated petitions for review on certiorari under Rule 45 of the Rules of Court,
assailing the Decision1 dated July 30, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 03525-MIN,
dismissing the petition for certiorari filed by petitioner Atty. Marietta D. Zamoranos (Zamoranos) in G.R.
No. 193902, thus, affirming the Order2 of the Regional Trial Court (RTC), Branch 6, Lanao del Norte, in
Criminal Case No. 06-12305 for Bigamy filed by petitioner Samson R. Pacasum, Sr. in G.R. No. 194075.

Before anything else, we disentangle the facts.

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On May 3, 1982, Zamoranos wed Jesus de Guzman, a Muslim convert, in Islamic rites. Prior thereto,
Zamoranos was a Roman Catholic who had converted to Islam on April 28, 1982. Subsequently, on July
30, 1982, the two wed again, this time, in civil rites before Judge Perfecto Laguio (Laguio) of the RTC,
Quezon City.

A little after a year, on December 18, 1983, Zamoranos and De Guzman obtained a divorce by talaq. The
dissolution of their marriage was confirmed by the Sharia Circuit District Court, 1st Circuit, 3rd District,
Isabela, Basilan, which issued a Decree of Divorce on June 18, 1992, as follows:

DECREE OF DIVORCE

This is a case for divorce filed by the herein complainant Marietta (Mariam) D. Zamoranos de Guzman
against her husband, the herein respondent, on the ground that the wife, herein complainant, was
previously given by her husband the authority to exercise Talaq, as provided for and, in accordance with
Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws of the Philippines.

When this case was called for hearing[,] both parties appeared and herein respondent, Jesus (Mohamad)
de Guzman[,] interposes no objection to confirm their divorce, which they have freely entered into on
December 18, 1983.

This Court, after evaluating the testimonies of the herein parties is fully convinced that both the
complainant and the respondent have been duly converted to the faith of Islam prior to their Muslim
wedding and finding that there is no more possibility of reconciliation by and between them, hereby issues
this decree of divorce.

WHEREFORE, premises considered and pursuant to the provisions of the Code of Muslim Personal Laws
of the Philippines, this petition is hereby granted. Consequently, the marriage between Marietta (Mariam)
D. Zamoranos de Guzman and Jesus (Mohamad) de Guzman is hereby confirmed dissolved.

Issued this 18th day of June, 1992, at Isabela, Basilan Province, Philippines.

(signed)

HON. KAUDRI L. JAINUL

Presiding Judge3

Now it came to pass that Zamoranos married anew on December 20, 1989. As she had previously done
in her first nuptial to De Guzman, Zamoranos wed Samson Pacasum, Sr. (Pacasum), her subordinate at
the Bureau of Customs where she worked, under Islamic rites in Balo-i, Lanao del Norte. Thereafter, on
December 28, 1992, in order to strengthen the ties of their marriage, Zamoranos and Pacasum renewed
their marriage vows in a civil ceremony before Judge Valerio Salazar of the RTC, Iligan City. However,
unlike in Zamoranos first marriage to De Guzman, the union between her and Pacasum was blessed with
progeny, namely: Samson, Sr., Sam Jean, and Sam Joon.

Despite their three children, the relationship between Zamoranos and Pacasum turned sour and, in 1998,
the two were de facto separated. The volatile relationship of Zamoranos and Pacasum escalated into a
bitter battle for custody of their minor children. Eventually, on October 18, 1999, Zamoranos and
Pacasum arrived at a compromise agreement which vested primary custody of the children in the former,
with the latter retaining visitorial rights thereto.

As it turned out, the agreement rankled on Pacasum. He filed a flurry of cases against Zamoranos, to wit:

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 1. Petition for Annulment of Marriage filed on March 31, 2003 before the RTC, Branch 2, Iligan
City, docketed as Civil Case No. 6249. Subsequently, on May 31, 2004, Pacasum amended the
petition into one for Declaration of a Void Marriage, alleging, among other things, that: (a)
Zamoranos, at the time of her marriage to Pacasum, was already previously married to De
Guzman on July 30, 1982; (b) Zamoranos first marriage, solemnized before the RTC, Quezon
City, presided over by Judge Laguio, subsisted at the time of the celebration of Zamoranos and
Pacasums marriage; (c) Zamoranos and Pacasums marriage was bigamous and void ab initio;
and (d) thus, Zamoranos, as the guilty spouse, should forfeit: (i) custody of her minor children to
their father, who should have sole and exclusive custody; (ii) her share in the community property
in favor of the children; and (iii) her inheritance from Pacasum by testate or intestate succession.

2. Criminal complaint for Bigamy under Article 349 of the Revised Penal Code (RPC), filed on
October 25, 2004.

3. Separate administrative cases for Zamoranos dismissal from service and disbarment before
the Civil Service Commission (CSC), the Integrated Bar of the Philippines, and the Bureau of
Finance Revenue Integrity Protection Service, respectively. Parenthetically, the administrative
cases were dismissed in due course. However, as of the date of the assailed CA Decision,
Pacasums appeal from the CSCs dismissal of the administrative case was still pending
resolution.

Quite ironically, soon after amending his petition in Civil Case No. 6249, Pacasum contracted a second
marriage with Catherine Ang Dignos on July 18, 2004.4

Meanwhile, on the criminal litigation front, the Office of the City Prosecutor, through Prosecutor Leonor
Quiones, issued a resolution dated February 2, 2005, finding prima facie evidence to hold Zamoranos
liable for Bigamy.5Consequently, on February 22, 2006, an Information for Bigamy was filed against
Zamoranos before the RTC, Branch 6, Iligan City, docketed as Criminal Case No. 06-12305.6

Zamoranos filed a motion for reconsideration of the City Prosecutors February 2, 2005 resolution. As a
result, the proceedings before the RTC, Branch 6, Iligan City, were temporarily suspended. On April 29,
2005, the City Prosecutor of Ozamis City, the acting City Prosecutor of Iligan City at the time, issued a
resolution granting Zamoranos motion for reconsideration and dismissing the charge of Bigamy against
Zamoranos.7

Not unexpectedly, Pacasum moved for reconsideration of the April 29, 2005 resolution of the City
Prosecutor, which was denied in a resolution dated August 15, 2005.8 Posthaste, Pacasum filed a Petition
for Review before the Office of the Secretary of Justice, assailing the dismissal of his criminal complaint
for Bigamy against Zamoranos.9

In yet another turn of events, the Secretary of Justice, on February 7, 2006, issued a resolution granting
Pacasums Petition for Review and reversed the February 2, 2005 and April 29, 2005 resolutions of the
City Prosecutor.10 Zamoranos immediately filed an Omnibus Motion and Supplement to the Urgent
Omnibus Motion: (1) for Reconsideration; (2) to Hold in Abeyance Filing of the Instant Case; and (3) to
Hold in Abeyance or Quash Warrant of Arrest, respectively dated February 20, 2006 and February 24,
2006, before the Secretary of Justice.11 Unfortunately for Zamoranos, her twin motions were denied by
the Secretary of Justice in a resolution dated May 17, 2006.12

Zamoranos second motion for reconsideration, as with her previous motions, was likewise denied.

On the other civil litigation front on the Declaration of a Void Marriage, docketed as Civil Case No. 6249,
the RTC, Branch 2, Iligan City, rendered a decision in favor of Zamoranos, dismissing the petition of
Pacasum for lack of jurisdiction. The RTC, Branch 2, Iligan City, found that Zamoranos and De Guzman
are Muslims, and were such at the time of their marriage, whose marital relationship was governed by

98
Presidential Decree (P.D.) No. 1083, otherwise known as the Code of Muslim Personal Laws of the
Philippines:

From the foregoing uncontroverted facts, the Court finds that the allegation of [Pacasum] to the effect that
his marriage with [Zamoranos] on December 28, 1992 is a bigamous marriage due to the alleged
subsisting previous marriage between [Zamoranos] and Jesus de Guzman is misplaced. The previous
marriage between Jesus de Guzman and [Zamoranos] has long been terminated [and] has gone with the
wind. The fact that divorce by Talaq was entered into by [Zamoranos] and her first husband in
accordance with PD 1083, x x x their marriage is dissolved and consequently thereof, [Zamoranos] and
Jesus de Guzman can re-marry. Moreover, the second marriage entered into by [Zamoranos] and her first
husband Jesus de Guzman under the Family Code on July 30, 1982 is merely ceremonial, being
unnecessary, it does not modify/alter or change the validity of the first marriage entered into by them
under PD 1083.

Likewise, in the case of [Pacasum] and [Zamoranos], their second marriage on December 28, 1992 under
the Family Code does not in any way modify, alter or change the validity of the first marriage on
December 20, 1989 entered into by [Pacasum] and [Zamoranos] under PD 1083, as amended. In fact,
according to Ghazali, one of the renowned Muslim author and jurist in Islamic Law and Jurisprudence and
concurred in by retired Justice Ra[s]ul of the Court of Appeals and also a Professor on Islamic Law and
Jurisprudence, in the case of combined marriage[s], the first marriage is to be considered valid and
effective as between the parties while the second marriage is merely ceremonial, being a surplusage and
unnecessary. Therefore, the divorce by Talaq dissolved the marriage between [Zamoranos] and her first
husband[,de Guzman,] being governed by PD 1083, x x x.

Article 13, Chapter I, Title II of the Code of Muslim Personal Laws, provides x x x:

"Application

The provisions of this title shall apply to marriage and divorce wherein both parties are Muslims[,] or
wherein only the male party is a Muslim and the marriage is solemnized in accordance with Muslim law or
this Code in any part of the Philippines."

Accordingly, matters relating to the marriages and divorce of [Zamoranos] and her first husband, Jesus
de Guzman[,] shall be governed by the Muslim Code and divorce proceedings shall be properly within the
exclusive original jurisdiction of the Sharia Circuit Court.

Art. 155, Chapter 2, Title II, Book 4 of the Muslim code, provides x x x:

"Jurisdiction The Sharia Circuit Courts shall have exclusive original jurisdiction over:

xxxx

2. All civil actions and proceedings between parties who are Muslims or have been married in
accordance with Article 13 involving disputes relating to:

a) Marriage;

b) Divorce recognized under this Code;

x x x x"

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The above provision of law clearly shows no concurrent jurisdiction with any civil courts or other courts of
law. And any divorce proceeding undertaken before the Shari[a] Court is valid, recognized, binding and
sufficient divorce proceedings.

Moreover, the instant case is one of the several cases filed by [Pacasum] against [Zamoranos] such as
complaints for disbarment, for immorality, for bigamy and misconduct before the Integrated Bar of the
Philippines (IBP) and in the Civil Service Commission which were all similar or [based on] the same set of
facts. A pure and simple harassment.

In the light of the foregoing findings, the Court is of the considered view and so hold that this Court has no
jurisdiction to hear and decide the above-entitled case for annulment of marriage entered into under PD
1083, x x x. It is the Sharia Circuit Court that has the exclusive original jurisdiction.

WHEREFORE, premises considered, the affirmative defenses which are in the nature of motion to
dismiss is hereby granted.

The above-entitled case is hereby dismissed for lack of jurisdiction.

SO ORDERED.13

On separate appeals, the CA and the Supreme Court affirmed the dismissal of Civil Case No. 6249 by the
RTC, Branch 2, Iligan City. On April 3, 2009, the denial by the Supreme Court of Pacasums appeal
became final and executory and was recorded in the Book of Entries of Judgments.14

In the meantime, on August 7, 2009, the RTC, Branch 6, Iligan City, upon motion of Pacasum, issued an
Order reinstating Criminal Case No. 06-12305 for Bigamy against Zamoranos.15

Not surprisingly, Zamoranos filed a Motion to Quash the Information, arguing that the RTC, Branch 6,
Iligan City, had no jurisdiction over her person and over the offense charged. Zamoranos asseverated, in
the main, that the decision of the RTC, Branch 2, Iligan City, in Civil Case No. 6249 categorically declared
her and Pacasum as Muslims, resulting in the mootness of Criminal Case No. 06-12305 and the
inapplicability of the RPC provision on Bigamy to her marriage to Pacasum. In all, Zamoranos claimed
that Criminal Case No. 06-12305 ought to be dismissed.16

On December 21, 2009, the RTC, Branch 6, Iligan City, denied Zamoranos Motion to Quash the
Information. Zamoranos motion for reconsideration thereof was likewise denied.17

Undaunted, Zamoranos filed a petition for certiorari for the nullification and reversal of the December 21,
2009 Order of the RTC, Branch 6, Iligan City. As previously adverted to, the CA dismissed Zamoranos
petition. The CA dwelt on the propriety of a petition for certiorari to assail the denial of a Motion to Quash
the Information:

A petition for certiorari alleging grave abuse of discretion is an extraordinary remedy. As such, it is
confined to extraordinary cases wherein the action of the inferior court is wholly void. The aim of certiorari
is to keep the inferior court within the parameters of its jurisdiction. Hence, no grave abuse of discretion
may be imputed to a court on the basis alone of an alleged misappreciation of facts and evidence. To
prosper, a petition for certiorari must clearly demonstrate that the lower court blatantly abused its
authority to a point so grave as to deprive it of its very power to dispense justice.

Simply put, in a petition for certiorari, the jurisdiction of the appellate court is narrow in scope. It is limited
to resolving only errors of jurisdiction. It is not to stray at will and resolve questions or issues beyond its
competence, such as an error of judgment which is defined as one in which the court or quasi-judicial

100
body may commit in the exercise of its jurisdiction; as opposed to an error of jurisdiction where the acts
complained of were issued without or in excess of jurisdiction.

xxxx

In the present case, [w]e have circumspectly examined [Zamoranos] Motion to Quash Information and
the action taken by the [RTC, Branch 6, Iligan City] in respect thereto, and [w]e found nothing that may
constitute as grave abuse of discretion on the part of the [RTC, Branch 6, Iligan City]. The Order dated
December 21, 2009, which first denied [Zamoranos] [M]otion to [Q]uash Information meticulously
explained the factual and legal basis for the denial of the issues raised by [Zamoranos] in said motion.
We find the [RTC, Branch 6, Iligan Citys] stance in upholding the sufficiency of the Information for bigamy
and taking cognizance of Criminal Case No. 06-12305 to be well within the bounds of its jurisdiction. Even
assuming arguendo that the denial of petitioners motion to quash is erroneous, such error was, at worst,
an error of judgment and not of jurisdiction.18

Interestingly, even Pacasum was not satisfied with the CAs dismissal of Zamoranos petition for certiorari.
Hence, these separate appeals by Zamoranos and Pacasum.

We note that Zamoranos is petitioner in two separate cases, filed by her two counsels, docketed as G.R.
Nos. 193902 and 193908, respectively, which assail the same CA Decision. However, upon motion of
counsel for Zamoranos, to obviate confusion and superfluity, we have allowed Zamoranos to withdraw
her petition in G.R. No. 193908 and for her earlier petition in G.R. No. 193902 to remain.

Zamoranos posits that it was grievous error for the CA to ignore the conclusions made by the RTC,
Branch 2, Iligan City, and affirmed by the CA and this Court, to wit:

1. Zamoranos is a Muslim and was validly married to another Muslim, De Guzman, under Islamic
rites;

2. Zamoranos and De Guzmans marriage ceremony under civil rites before Judge Laguio did not
remove their marriage from the ambit of P.D. No. 1083;

3. Corollary to paragraph 1, Zamoranos divorce by talaq to De Guzman severed their marriage

ties;

4. "Accordingly, matters relating to the marriages and divorce of [Zamoranos] and her first
husband, Jesus de Guzman[, are] governed by the Muslim Code and [the] divorce proceedings
properly within the exclusive original jurisdiction of the Sharia Circuit Court."

5. Zamoranos remarried Pacasum, another Muslim, under Islamic rites; and

6. On the whole, regular courts, in particular, RTC, Branch 6, Iligan City, have no jurisdiction to
hear and decide the case for declaration of nullity of marriage entered into under P.D. No. 1083
because it is the Sharia Circuit Court that has original jurisdiction over the subject matter.

For his part, Pacasum, although he agrees with the dismissal of Zamoranos petition, raises a quarrel with
the aforementioned conclusions of the CA. Pacasum vehemently denies that Zamoranos is a Muslim,
who was previously married and divorced under Islamic rites, and who entered into a second marriage
with him, likewise under Islamic rites.

We impale the foregoing issues into the following:

1. Whether the CA correctly dismissed Zamoranos petition for certiorari; and

101
 2. Whether the RTCs, Branch 2, Iligan City and the CAs separate factual findings that
Zamoranos is a Muslim are correct.

As a rule, certiorari lies when: (1) a tribunal, board, or officer exercises judicial or quasi-judicial functions;
(2) the tribunal, board, or officer has acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law. 19

The writ of certiorari serves to keep an inferior court within the bounds of its jurisdiction or to prevent it
from committing such a grave abuse of discretion amounting to excess or lack of jurisdiction, or to relieve
parties from arbitrary acts of courtsacts which courts have no power or authority in law to perform.20

The denial of a motion to quash, as in the case at bar, is not appealable. It is an interlocutory order which
cannot be the subject of an appeal.21

Moreover, it is settled that a special civil action for certiorari and prohibition is not the proper remedy to
assail the denial of a motion to quash an information. The established rule is that, when such an adverse
interlocutory order is rendered, the remedy is not to resort forthwith to certiorari or prohibition, but to
continue with the case in due course and, when an unfavorable verdict is handed down, to take an appeal
in the manner authorized by law.22

However, on a number of occasions, we have recognized that in certain situations, certiorari is

considered an appropriate remedy to assail an interlocutory order, specifically the denial of a motion to
quash. We have recognized the propriety of the following exceptions: (a) when the court issued the order
without or in excess of jurisdiction or with grave abuse of discretion; (b) when the interlocutory order is
patently erroneous and the remedy of appeal would not afford adequate and expeditious relief; (c) in the
interest of a "more enlightened and substantial justice";23 (d) to promote public welfare and public
policy;24 and (e) when the cases "have attracted nationwide attention, making it essential to proceed with
dispatch in the consideration thereof."25 The first four of the foregoing exceptions occur in this instance.

Contrary to the asseverations of the CA, the RTC, Branch 6, Iligan City, committed an error of jurisdiction,
not simply an error of judgment, in denying Zamoranos motion to quash.

First, we dispose of the peripheral issue raised by Zamoranos on the conclusiveness of judgment made
by the RTC, Branch 2, Iligan City, which heard the petition for declaration of nullity of marriage filed by
Pacasum on the ground that his marriage to Zamoranos was a bigamous marriage. In that case, the
decision of which is already final and executory, the RTC, Branch 2, Iligan City, dismissed the petition for
declaration of nullity of marriage for lack of jurisdiction over the subject matter by the regular civil courts.
The RTC, Branch 2, Iligan City, declared that it was the Sharia Circuit Court which had jurisdiction over
the subject matter thereof.

Section 47, Rule 39 of the Rules of Court provides for the principle of res judicata. The provision reads:

SEC. 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a court
of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

(a) In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or the
administration of the estate of a deceased person, or in respect to the personal, political, or legal
condition or status of a particular person or his relationship to another, the judgment or final order is
conclusive upon the title to the thing, the will or administration, or the condition, status or relationship of
the person; however, the probate of a will or granting of letters of administration shall only be prima facie
evidence of the death of the testator or intestate.

102
The requisites for res judicata or bar by prior judgment are:

(1) The former judgment or order must be final;

(2) It must be a judgment on the merits;

(3) It must have been rendered by a court having jurisdiction over the subject matter and the
parties; and

(4) There must be between the first and second actions, identity of parties, subject matter, and
cause of action.26

The second and fourth elements of res judicata are not present in this case. Suffice it to state that the
judgment rendered by RTC, Branch 2, Iligan City, was not a judgment on the merits. The lower court
simply dismissed the petition for declaration of nullity of marriage since it found that the Sharia Circuit
Court had jurisdiction to hear the dissolution of the marriage of Muslims who wed under Islamic rites.

Nonetheless, the RTC, Branch 6, Iligan City, which heard the case for Bigamy, should have taken
cognizance of the categorical declaration of the RTC, Branch 2, Iligan City, that Zamoranos is a Muslim,
whose first marriage to another Muslim, De Guzman, was valid and recognized under Islamic law. In fact,
the same court further declared that Zamoranos divorce from De Guzman validly severed their marriage
ties. Apart from that, Zamoranos presented the following evidence:

1. Affidavit of Confirmation27 executed by the Ustadz, Abdullah Ha-Ja-Utto, who solemnized the
marriage of Zamoranos and De Guzman under Islamic rites, declaring under oath that:

1. I am an Ustadz, in accordance with the Muslim laws and as such, authorized to

solemnize the marriages among Muslims;

2. On May 3, 1982, after I was shown the documents attesting that both parties are
believers of Islam, I solemnized the marriage of Jesus (Mohamad) de Guzman and
Marietta (Mariam) Zamoranos in accordance with Muslim Personal Laws in Isabela,
Basilan;

3. Sometime in 1992[,] Mr. Mohamad de Guzman and his former wife, Mariam
Zamoranos came to see me and asked my assistance to have their marriage and the
subsequent Talaq by the wife, which divorce became irrevocable pursuant to the
provisions of Presidential Decree No. 1083; registered [by] the Sharia Circuit Court in the
province of Basilan; and, after I was convinced that their divorce was in order, I
accompanied them to the [C]lerk of [C]ourt of the Sharia Circuit Court;

4. Satisfied that their marriage and the subsequent divorce were in accordance with
Muslim personal laws, the Clerk of Court registered their documents;

5. In June of 1993, the old Capitol building, where the Sharia Circuit Court was housed,
was razed to the ground; and, I found out later that all the records, effects and office
equipments of the Sharia Circuit Court were totally lost [in] the fire;

6. This is executed freely and voluntarily in order to establish the above statements of
fact; and

7. This is issued upon the request of Mr. De Guzman for whatever legal purposes it may
serve.

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 2. Certification28 issued by Judge Kaudri L. Jainul (Judge Jainul), which confirmed the divorce
agreement between Zamoranos and De Guzman.

3. Affidavit29 executed by Judge Uyag P. Usman (Judge Usman), former Clerk of Court of Judge
Jainul at the time of the confirmation of Zamoranos and De Guzmans divorce agreement by the
latter. Judge Usmans affidavit reads, in pertinent part:

1. I am the presiding Judge of the Sharias Circuit Court in the City of Pagadian;

2. The first time that a Sharias Circuit court was established in the Island Province of
Basilan was in 1985, with the Honorable Kaudri L. Jainul, as the Presiding Judge, while I
was then the First Clerk of Court of the Basilan Sharias Circuit Court;

3. The Sharias Circuit Council in the Island Province of Basilan was housed at the old
Capitol Building, in the City of Isabela, Basilan, Philippines;

4. As the Clerk of Court of the Sharias Circuit Court since 1985, I can recall that in 1992,
Mr. Jesus (Mohamad) de Guzman, who is a province mate of mine in Basilan, and his
former wife, Marietta (Mariam) Zamoranos, jointly asked for the confirmation of their
Talaq, by the wife; which divorce became irrevocable pursuant to the provisions of
Presidential Decree No. 1083;

5. In June of 1993, all the records of the Sharias Circuit Court were lost by reason of the
fire that gutted down the old Capitol Building in the City of Isabela;

6. This is executed freely and voluntarily in order to establish the above statements of
fact.

From the foregoing declarations of all three persons in authority, two of whom are officers of the court, it
is evident that Zamoranos is a Muslim who married another Muslim, De Guzman, under Islamic rites.
Accordingly, the nature, consequences, and incidents of such marriage are governed by P.D. No. 1083.

True, the Sharia Circuit Court is not vested with jurisdiction over offenses penalized under the RPC.
Certainly, the RTC, Branch 6, Iligan City, is correct when it declared that:

The Regional Trial Courts are vested the exclusive and original jurisdiction in all criminal cases not within
the exclusive original jurisdiction of any court, tribunal, or body. [Sec. 20 (b), BP Blg. 129] The Code of
Muslim Personal Laws (PD 1083) created the Sharia District Courts and Sharia Circuit Courts with limited
jurisdiction. Neither court was vested jurisdiction over criminal prosecution of violations of the Revised
Penal Code. There is nothing in PD 1083 that divested the Regional Trial Courts of its jurisdiction to try
and decide cases of bigamy. Hence, this Court has jurisdiction over this case. 30

Nonetheless, it must be pointed out that even in criminal cases, the trial court must have jurisdiction over
the subject matter of the offense. In this case, the charge of Bigamy hinges on Pacasums claim that
Zamoranos is not a Muslim, and her marriage to De Guzman was governed by civil law. This is obviously
far from the truth, and the fact of Zamoranos Muslim status should have been apparent to both lower
courts, the RTC, Branch 6, Iligan City, and the CA.

The subject matter of the offense of Bigamy dwells on the accused contracting a second marriage while a
prior valid one still subsists and has yet to be dissolved. At the very least, the RTC, Branch 6, Iligan City,
should have suspended the proceedings until Pacasum had litigated the validity of

104
Zamoranos and De Guzmans marriage before the Sharia Circuit Court and had successfully shown that
it had not been dissolved despite the divorce by talaq entered into by Zamoranos and De Guzman.

Zamoranos was correct in filing the petition for certiorari before the CA when her liberty was already in
jeopardy with the continuation of the criminal proceedings against her.

In a pluralist society such as that which exists in the Philippines, P.D. No. 1083, or the Code of Muslim
Personal Laws, was enacted to "promote the advancement and effective participation of the National
Cultural Communities x x x, [and] the State shall consider their customs, traditions, beliefs and interests in
the formulation and implementation of its policies."

Trying Zamoranos for Bigamy simply because the regular criminal courts have jurisdiction over the
offense defeats the purpose for the enactment of the Code of Muslim Personal Laws and the equal
recognition bestowed by the State on Muslim Filipinos.

Article 3, Title II, Book One of P.D. No. 1083 provides:

TITLE II.
CONSTRUCTION OF CODE AND DEFINITION OF TERMS

Article 3. Conflict of provisions.

(1) In case of conflict between any provision of this Code and laws of general application, the
former shall prevail.

(2) Should the conflict be between any provision of this Code and special laws or laws of local
application, the latter shall be liberally construed in order to carry out the former.

(3) The provisions of this Code shall be applicable only to Muslims and nothing herein shall be
construed to operate to the prejudice of a non-Muslim.

In Justice Jainal Rasul and Dr. Ibrahim Ghazalis Commentaries and Jurisprudence on the Muslim Code
of the Philippines, the two experts on the subject matter of Muslim personal laws expound thereon:

The first provision refers to a situation where in case of conflict between any provision of this Code and
laws of general application, this Code shall prevail. For example, there is conflict between the provision
on bigamy under the Revised Penal Code which is a law of general application and Article 27 of this
Code, on subsequent marriage, the latter shall prevail, in the sense that as long as the subsequent
marriage is solemnized "in accordance with" the Muslim Code, the provision of the Revised Penal Code
on bigamy will not apply. The second provision refers to a conflict between the provision of this Code
which is a special law and another special law or laws of local application. The latter should be liberally
construed to carry out the provision of the Muslim Code.31

On Marriage, Divorce, and Subsequent Marriages, P.D. No. 1083 provides:

TITLE II. MARRIAGE AND DIVORCE

Chapter One
APPLICABILITY CLAUSE

Article 13. Application.

105
 (1) The provisions of this Title shall apply to marriage and divorce wherein both parties are
Muslims, or wherein only the male party is a Muslim and the marriage is solemnized in
accordance with Muslim law or this Code in any part of the Philippines.

(2) In case of marriage between a Muslim and a non-Muslim, solemnized not in accordance with
Muslim law or this Code, the Civil Code of the Philippines shall apply.

xxxx

Chapter Two
MARRIAGE (NIKAH)

Section 1. Requisites of Marriage.

xxxx

Section 3. Subsequent Marriages

xxxx

Article 29. By divorcee.

(1) No woman shall contract a subsequent marriage unless she has observed an idda of three monthly
courses counted from the date of divorce. However, if she is pregnant at the time of the divorce, she may
remarry only after delivery.

xxxx

Chapter Three
DIVORCE (TALAQ)

Section 1. Nature and Form

Article 45. Definition and forms. Divorce is the formal dissolution of the marriage bond in accordance with
this Code to be granted only after the exhaustion of all possible means of reconciliation between the
spouses. It may be effected by:

(a) Repudiation of the wife by the husband (talaq);

xxxx

Article 46. Divorce by talaq.

(1) A divorce by talaq may be effected by the husband in a single repudiation of his wife during her non-
menstrual period (tuhr) within which he has totally abstained from carnal relation with her. Any number of
repudiations made during one tular shall constitute only one repudiation and shall become irrevocable
after the expiration of the prescribed idda.

(2) A husband who repudiates his wife, either for the first or second time, shall have the right to take her
back (ruju) within the prescribed idda by resumption of cohabitation without need of a new contract of
marriage. Should he fail to do so, the repudiation shall become irrevocable (talaq bain sugra).

106
xxxx

Article 54. Effects of irrevocable talaq; or faskh. A talaq or faskh, as soon as it becomes irrevocable, shall
have the following effects:

(a) The marriage bond shall be severed and the spouses may contract another marriage in
accordance with this Code;

(b) The spouses shall lose their mutual rights of inheritance;

(c) The custody of children shall be determined in accordance with Article 78 of this Code;

(d) The wife shall be entitled to recover from the husband her whole dower in case the talaq has
been effected after the consummation of the marriage, or one-half thereof if effected before its
consummation;

(e) The husband shall not be discharged from his obligation to give support in accordance with
Article 67; and

(f) The conjugal partnership if stipulated in the marriage settlements, shall be dissolved and
liquidated.

For our edification, we refer once again to Justice Rasul and Dr. Ghazalis Commentaries and
Jurisprudence on the Muslim Code of the Philippines:

If both parties are Muslims, there is a presumption that the Muslim Code or Muslim law is complied with. If
together with it or in addition to it, the marriage is likewise solemnized in accordance with the Civil Code
of the Philippines, in a so-called combined Muslim-Civil marriage rites whichever comes first is the
validating rite and the second rite is merely ceremonial one. But, in this case, as long as both parties are
Muslims, this Muslim Code will apply. In effect, two situations will arise, in the application of this Muslim
Code or Muslim law, that is, when both parties are Muslims and when the male party is a Muslim and the
marriage is solemnized in accordance with Muslim Code or Muslim law. A third situation occur[s] when
the Civil Code of the Philippines will govern the marriage and divorce of the parties, if the male party is a
Muslim and the marriage is solemnized in accordance with the Civil Code.32

Moreover, the two experts, in the same book, unequivocally state that one of the effects of irrevocable
talaq, as well as other kinds of divorce, refers to severance of matrimonial bond, entitling one to
remarry.331avvphi1

It stands to reason therefore that Zamoranos divorce from De Guzman, as confirmed by an Ustadz and
Judge Jainul of the Sharia Circuit Court, and attested to by Judge Usman, was valid, and, thus, entitled
her to remarry Pacasum in 1989. Consequently, the RTC, Branch 6, Iligan City, is without jurisdiction to
try Zamoranos for the crime of Bigamy.

WHEREFORE, the petition in G.R. No. 193902 is GRANTED. The petition in G.R. No. 194075 is
DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 03525-MIN is REVERSED and SET
ASIDE. Accordingly, the Motion to Quash the Information in Criminal Case No. 06-12305 for Bigamy is
GRANTED.

SO ORDERED.

107
 Republic of the Philippines
SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 188832 April 23, 2014

VIVENCIO B. VILLAGRACIA, Petitioner,

vs.
FIFTH (5th) SHARI'A DISTRICT COURT and ROLDAN E. MALA, represented by his father Hadji
Kalam T. Mala, Respondents.

DECISION

LEONEN, J.:

Shari' a District Courts have no jurisdiction over real actions where one of the parties is not a Muslim.

This is a petition for certiorari with application for issuance of temporary restraining order and/or
preliminary injunction to set aside the Fifth (5th) Shari'a District Court's decision 1 dated June 11, 2008 and
order2 dated May 29, 2009 in SDC Special Proceedings Case No. 07-200.

The facts as established from the pleadings of the parties are as follows:

On February 15, 1996, Roldan E. Mala purchased a 300-square-meter parcel of land located in
Poblacion, Parang, Maguindanao, now Shariff Kabunsuan, from one Ceres Caete. On March 3, 1996,
Transfer Certificate of Title No. T-15633 covering the parcel of land was issued in Roldans name.3 At the
time of the purchase, Vivencio B. Villagracia occupied the parcel of land. 4

By 2002, Vivencio secured a Katibayan ng Orihinal na Titulo Blg. P-60192 issued by the Land
Registration Authority allegedly covering the same parcel of land.5

On October 30, 2006, Roldan had the parcel of land surveyed. In a report, Geodetic Engineer Dennis P.
Dacup found that Vivencio occupied the parcel of land covered by Roldans certificate of title. 6

To settle his conflicting claim with Vivencio, Roldan initiated barangay conciliation proceedings before the
Office of the Barangay Chairman of Poblacion II, Parang, Shariff Kabunsuan. Failing to settle with
Vivencio at the barangay level, Roldan filed an action to recover the possession of the parcel of land with
respondent Fifth Sharia District Court.7

In his petition, Roldan alleged that he is a Filipino Muslim; that he is the registered owner of the lot
covered by Transfer Certificate of Title No. 15633; and that Vivencio occupied his property, depriving him
of the right to use, possess, and enjoy it. He prayed that respondent Fifth Sharia District Court order
Vivencio to vacate his property.8

Respondent court took cognizance of the case and caused service of summons on Vivencio. However,
despite service of summons, Vivencio failed to file his answer. Thus, Roldan moved that he be allowed to
present evidence ex parte, which motion respondent Fifth Sharia District Court granted in its order9 dated
January 30, 2008.10

In its decision11 dated June 11, 2008, respondent Fifth Sharia District Court ruled that Roldan, as
registered owner, had the better right to possess the parcel of land. It ordered Vivencio to vacate the

108
property, turn it over to Roldan, and pay P10,000.00 as moderate damages and P5,000.00 as attorneys
fees.

On December 15, 2008, respondent Fifth Sharia Distict Court issued the notice of writ of execution 12 to
Vivencio, giving him 30 days from receipt of the notice to comply with the decision. He received a copy of
the notice on December 16, 2008.13

On January 13, 2009, Vivencio filed a petition for relief from judgment with prayer for issuance of writ of
preliminary injunction.14 In his petition for relief from judgment, Vivencio cited Article 155, paragraph (2) of
the Code of Muslim Personal Laws of the Philippines15 and argued that Sharia District Courts may only
hear civil actions and proceedings if both parties are Muslims. Considering that he is a Christian, Vivencio
argued that respondent Fifth Sharia District Court had no jurisdiction to take cognizance of Roldans
action for recovery of possession of a parcel of land. He prayed that respondent Fifth Sharia District
Court set aside the decision dated June 11, 2008 on the ground of mistake.16

Respondent Fifth Sharia District Court ruled that Vivencio "intentionally [waived] his right to defend
himself."17 It noted that he was duly served with summons and had notice of the following: Roldans
motion to present evidence ex parte, respondent Fifth Sharia District Courts decision dated June 11,
2008, and the writ of execution. However, Vivencio only went to court "when he lost his right to assail the
decision via certiorari."18

According to respondent Fifth Sharia District Court, Vivencio cited the wrong provision of law. Article 155,
paragraph (2) of the Code of Muslim Personal Laws of the Philippines refers to the jurisdiction of Sharia
Circuit Courts, not of Sharia District Courts.19 It ruled that it had jurisdiction over Roldans action for
recovery of possession. Regardless of Vivencio being a non-Muslim, his rights were not prejudiced since
respondent Fifth Sharia District Court decided the case applying the provisions of the Civil Code of the
Philippines.20

Thus, in its order21 dated May 29, 2009, respondent Fifth Sharia District Court denied Vivencios petition
for relief from judgment for lack of merit. It reiterated its order directing the issuance of a writ of execution
of the decision dated June 11, 2008.

Vivencio received a copy of the order denying his petition for relief from judgment on June 17, 2009. 22

On August 6, 2009, Vivencio filed the petition for certiorari with prayer for issuance of temporary
restraining order with this court.23

In his petition for certiorari, Vivencio argued that respondent Fifth Sharia District Court acted without
jurisdiction in rendering the decision dated June 11, 2008. Under Article 143, paragraph (2)(b) of the
Code of Muslim Personal Laws of the Philippines,24 Sharia District Courts may only take cognizance of
real actions where the parties involved are Muslims. Reiterating that he is not a Muslim, Vivencio argued
that respondent Fifth Sharia District Court had no jurisdiction over the subject matter of Roldans action.
Thus, all the proceedings before respondent Fifth Sharia District Court, including the decision dated June
11, 2008, are void.25

In the resolution26 dated August 19, 2009, this court ordered Roldan to comment on Vivencios petition for
certiorari. This court subsequently issued a temporary restraining order enjoining the implementation of
the writ of execution against Vivencio.27

On September 21, 2011, Roldan filed his comment28 on the petition for certiorari. He allegedly filed the
action for recovery of possession with the Sharia District Court where "a more speedy disposition of the
case would be obtained":29

109
 1. That SDC Spl. Case No. 07-200 (Quieting of Title) was duly filed with the Fifth (5th) Shariah
District Court, Cotabato City at the option of herein private respondent (petitioner below) who
believed that a more speedy disposition of the case would be obtained when the action is filed
with the Shariah District Court than in the Regional Trial Courts considering the voluminous
pending cases at the Regional Trial Courts[.] 30

On Vivencios claim that respondent Fifth Sharia District Court had no jurisdiction to decide the
action for recovery of possession because he is a non-Muslim, Roldan argued that no provision in
the Code of Muslim Personal Laws of the Philippines prohibited non-Muslims from participating in
Sharia court proceedings, especially in actions where the Sharia court applied the provisions of
the Civil Code of the Philippines. Thus, respondent Fifth Sharia District Court validly took
cognizance of his action:

2. That the Shariah District Court is not a court exclusively for muslim litigants. No provision in the
Code on Muslim Personal Laws which expressly prohibits non-muslim to participate in the
proceedings in the Shariah Courts, especially in actions which applies the civil code and not the
Code on Muslim Personal Laws;

3. The Shariah District Courts has jurisdiction over action for quieting of title filed by a muslim
litigant since the nature of the action involved mere removal of cloud of doubt upon ones
Certificate of Title. The laws applied in this case is the Civil Code and other related laws, and not
the Code on Muslim Personal Laws[.]31

Since respondent Fifth Sharia District Court had jurisdiction to decide the action for recovery of
possession, Roldan argued that the proceedings before it were valid. Respondent Fifth Sharia
District Court acquired jurisdiction over the person of Vivencio upon service on him of summons.
When Vivencio failed to file his answer, he "effectively waived his right to participate in the
proceedings [before the Fifth Sharia District Court]" 32 and he cannot argue that his rights were
prejudiced:

4. That it is not disputed that herein petitioner (respondent below) was properly served with
summons, notices and other court processes when the SDC Spl. Case No. 07-200 was filed and
heard in the Fifth (5th) Shariah District Court, Cotabato City, but petitioner (respondent below)
intentionally or without known reason, ignore the proceedings;

5. That the main issue in the instant action for certiorari is whether or not herein petitioner
(respondent below) has effectively waived his right to participate in the proceedings below and
had lost his right to appeal via Certiorari; and the issue on whether or not the Fifth (5th) Shariah
District Court has jurisdiction over an action where one of the parties is a non-muslim;

6. That the Fifth (5th) Shariah District Court, Cotabato City acquired jurisdiction over the case and
that the same Court had correctly ruled that herein petitioner (respondent) intentionally waived his
right to defend himself including his right to appeal via certiorari;

7. That it is humbly submitted that when the Shariah District Court took cognizance of an action
under its concurrent jurisdiction with the Regional Trial Court, the law rules applied is not the
Code on Muslim Personal Laws but the Civil Code of the Philippines and the Revised Rules of
Procedure, hence the same would not prejudice the right of herein petitioner (respondent
below)[.]33

In the resolution dated November 21, 2011, this court ordered Vivencio to reply to Roldans comment. On
February 3, 2012, Vivencio filed his manifestation,34 stating that he would no longer file a reply to the
comment as he had "exhaustively discussed the issue presented for resolution in [his petition for
certiorari]."35

110
The principal issue for our resolution is whether a Sharia District Court has jurisdiction over a real action
where one of the parties is not a Muslim.

We also resolve the following issues:

1. Whether a Sharia District Court may validly hear, try, and decide a real action where one of
the parties is a non-Muslim if the District Court decides the action applying the provisions of the
Civil Code of the Philippines; and

2. Whether a Sharia District Court may validly hear, try, and decide a real action filed by a
Muslim against a non-Muslim if the non-Muslim defendant was served with summons.

We rule for petitioner Vivencio.

Respondent Fifth Sharia District

Court had no jurisdiction to hear, try,
and decide Roldans action for
recovery of possession

Jurisdiction over the subject matter is "the power to hear and determine cases of the general class to
which the proceedings in question belong."36 This power is conferred by law,37 which may either be the
Constitution or a statute. Since subject matter jurisdiction is a matter of law, parties cannot choose,
consent to, or agree as to what court or tribunal should decide their disputes. 38 If a court hears, tries, and
decides an action in which it has no jurisdiction, all its proceedings, including the judgment rendered, are
void.39

To determine whether a court has jurisdiction over the subject matter of the action, the material
allegations of the complaint and the character of the relief sought are examined. 40

The law conferring the jurisdiction of Sharia District Courts is the Code of the Muslim Personal Laws of
the Philippines. Under Article 143 of the Muslim Code, Sharia District Courts have concurrent original
jurisdiction with "existing civil courts" over real actions not arising from customary contracts 41 wherein the
parties involved are Muslims:

ART 143. Original jurisdiction. x x x x

(2) Concurrently with existing civil courts, the Sharia District Court shall have original jurisdiction over:

xxxx

(b) All other personal and real actions not mentioned in paragraph 1(d)42 wherein the parties involved are
Muslims except those for forcible entry and unlawful detainer, which shall fall under the exclusive original
jurisdiction of the Municipal Circuit Court; and

xxxx

When ownership is acquired over a particular property, the owner has the right to possess and enjoy
it.43 If the owner is dispossessed of his or her property, he or she has a right of action to recover its
possession from the dispossessor.44 When the property involved is real,45 such as land, the action to
recover it is a real action;46otherwise, the action is a personal action.47 In such actions, the parties
involved must be Muslims for Sharia District Courts to validly take cognizance of them.

111
In this case, the allegations in Roldans petition for recovery of possession did not state that Vivencio is a
Muslim. When Vivencio stated in his petition for relief from judgment that he is not a Muslim, Roldan did
not dispute this claim.

When it became apparent that Vivencio is not a Muslim, respondent Fifth Sharia District Court should
have motu proprio dismissed the case. Under Rule 9, Section 1 of the Rules of Court, if it appears that
the court has no jurisdiction over the subject matter of the action based on the pleadings or the evidence
on record, the court shall dismiss the claim:

Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the subject matter, that there is another
action pending between the same parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the claim.

Respondent Fifth Sharia District Court had no authority under the law to decide Roldans action because
not all of the parties involved in the action are Muslims. Thus, it had no jurisdiction over Roldans action
for recovery of possession. All its proceedings in SDC Special Proceedings Case No. 07-200 are void.

Roldan chose to file his action with the Sharia District Court, instead of filing the action with the regular
courts, to obtain "a more speedy disposition of the case."48 This would have been a valid argument had all
the parties involved in this case been Muslims. Under Article 143 of the Muslim Code, the jurisdiction of
Sharia District Courts over real actions not arising from customary contracts is concurrent with that of
existing civil courts. However, this concurrent jurisdiction over real actions "is applicable solely when both
parties are Muslims"49 as this court ruled in Tomawis v. Hon. Balindong.50 When one of the parties is not
a Muslim, the action must be filed before the regular courts.

The application of the provisions of the Civil Code of the Philippines by respondent Fifth Sharia District
Court does not validate the proceedings before the court. Under Article 175 of the Muslim Code,
customary contracts are construed in accordance with Muslim law.51 Hence, Sharia District Courts apply
Muslim law when resolving real actions arising from customary contracts.

In real actions not arising from contracts customary to Muslims, there is no reason for Sharia District
Courts to apply Muslim law. In such real actions, Sharia District Courts will necessarily apply the laws of
general application, which in this case is the Civil Code of the Philippines, regardless of the court taking
cognizance of the action. This is the reason why the original jurisdiction of Sharia District Courts over real
actions not arising from customary contracts is concurrent with that of regular courts.

However, as discussed, this concurrent jurisdiction arises only if the parties involved are Muslims.
Considering that Vivencio is not a Muslim, respondent Fifth Sharia District Court had no jurisdiction over
Roldans action for recovery of possession of real property. The proceedings before it are void, regardless
of the fact that it applied the provisions of the Civil Code of the Philippines in resolving the action.

True, no provision in the Code of Muslim Personal Laws of the Philippines expressly prohibits non-
Muslims from participating in Sharia court proceedings. In fact, there are instances when provisions in
the Muslim Code apply to non-Muslims. Under Article 13 of the Muslim Code,52 provisions of the Code on
marriage and divorce apply to the female party in a marriage solemnized according to Muslim law, even if
the female is non-Muslim.53 Under Article 93, paragraph (c) of the Muslim Code,54 a person of a different
religion is disqualified from inheriting from a Muslim decedent. 55 However, by operation of law and
regardless of Muslim law to the contrary, the decedents parent or spouse who is a non-Muslim "shall be
entitled to one-third of what he or she would have received without such disqualification." 56 In these
instances, non-Muslims may participate in Sharia court proceedings.57

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Nonetheless, this case does not involve any of the previously cited instances. This case involves an
action for recovery of possession of real property. As a matter of law, Sharia District Courts may only
take cognizance of a real action "wherein the parties involved are Muslims."58 Considering that one of the
parties involved in this case is not a Muslim, respondent Fifth Sharia District Court had no jurisdiction to
hear, try, and decide the action for recovery of possession of real property. The judgment against
Vivencio is void for respondent Fifth Sharia District Courts lack of jurisdiction over the subject matter of
the action.

That Vivencio raised the issue of lack of jurisdiction over the subject matter only after respondent Fifth
Sharia District Court had rendered judgment is immaterial. A party may assail the jurisdiction of a court or
tribunal over a subject matter at any stage of the proceedings, even on appeal. 59 The reason is that
"jurisdiction is conferred by law, and lack of it affects the very authority of the court to take cognizance of
and to render judgment on the action."60

In Figueroa v. People of the Philippines,61 Venancio Figueroa was charged with reckless imprudence
resulting in homicide before the Regional Trial Court of Bulacan. The trial court convicted Figueroa as
charged. On appeal with the Court of Appeals, Figueroa raised for the first time the issue of jurisdiction of
the Regional Trial Court to decide the case. Ruling that the Regional Trial Court had no jurisdiction over
the crime charged, this court dismissed the criminal case despite the fact that Figueroa objected to the
trial courts jurisdiction only on appeal.

In Metromedia Times Corporation v. Pastorin,62 Johnny Pastorin filed a complaint for constructive
dismissal against Metromedia Times Corporation. Metromedia Times Corporation actively participated in
the proceedings before the Labor Arbiter. When the Labor Arbiter ruled against Metromedia Times, it
appealed to the National Labor Relations Commission, arguing for the first time that the Labor Arbiter had
no jurisdiction over the complaint. According to Metromedia Times, the case involved a grievance issue
"properly cognizable by the voluntary arbitrator."63 This court set aside the decision of the Labor Arbiter on
the ground of lack of jurisdiction over the subject matter despite the fact that the issue of jurisdiction was
raised only on appeal.

There are exceptional circumstances when a party may be barred from assailing the jurisdiction of the
court to decide a case. In the 1968 case of Tijam v. Sibonghanoy, 64 the Spouses Tijam sued the Spouses
Sibonghanoy on July 19, 1948 before the Court of First Instance of Cebu to recover P1,908.00. At that
time, the court with exclusive original jurisdiction to hear civil actions in which the amount demanded does
not exceed P2,000.00 was the court of justices of the peace and municipal courts in chartered cities
under Section 88 of the Judiciary Act of 1948.

As prayed for by the Spouses Tijam in their complaint, the Court of First Instance issued a writ of
attachment against the Spouses Sibonghanoy. However, the latter filed a counter-bond issued by Manila
Surety and Fidelity Co., Inc. Thus, the Court of First Instance dissolved the writ of attachment.

After trial, the Court of First Instance decided in favor of the Spouses Tijam. When the writ of execution
returned unsatisfied, the Spouses Tijam moved for the issuance of a writ of execution against Manila
Surety and Fidelity Co., Inc.s bond. The Court of First Instance granted the motion. Manila Surety and
Fidelity Co., Inc. moved to quash the writ of execution, which motion the Court of First Instance denied.
Thus, the surety company appealed to the Court of Appeals.

The Court of Appeals sustained the Court of First Instances decision. Five days after receiving the Court
of Appeals decision, Manila Surety and Fidelity Co., Inc. filed a motion to dismiss, arguing for the first
time that the Court of First Instance had no jurisdiction over the subject matter of the case. The Court of
Appeals forwarded the case to this court for resolution.

This court ruled that the surety company could no longer assail the jurisdiction of the Court of First
Instance on the ground of estoppel by laches. Parties may be barred from assailing the jurisdiction of the

113
court over the subject matter of the action if it took them an unreasonable and unexplained length of time
to object to the courts jurisdiction.65 This is to discourage the deliberate practice of parties in invoking the
jurisdiction of a court to seek affirmative relief, only to repudiate the courts jurisdiction after failing to
obtain the relief sought.66 In such cases, the courts lack of jurisdiction over the subject matter is
overlooked in favor of the public policy of discouraging such inequitable and unfair conduct. 67

In Tijam, it took Manila Surety and Fidelity Co., Inc. 15 years before assailing the jurisdiction of the Court
of First Instance. As early as 1948, the surety company became a party to the case when it issued the
counter-bond to the writ of attachment. During trial, it invoked the jurisdiction of the Court of First Instance
by seeking several affirmative reliefs, including a motion to quash the writ of execution. The surety
company only assailed the jurisdiction of the Court of First Instance in 1963 when the Court of Appeals
affirmed the lower courts decision. This court said:

x x x x Were we to sanction such conduct on [Manila Surety and Fidelity, Co. Inc.s] part, We would in
effect be declaring as useless all the proceedings had in the present case since it was commenced on
July 19, 1948 and compel [the spouses Tijam] to go up their Calvary once more.

The inequity and unfairness of this is not only patent but revolting. 68

After this court had rendered the decision in Tijam, this court observed that the "non-waivability of
objection to jurisdiction"69 has been ignored, and the Tijam doctrine has become more the general rule
than the exception.

In Calimlim v. Ramirez,70 this court said:

A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is
that the jurisdiction of a court over the subject-matter of the action is a matter of law and may not be
conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any
stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements
which stemmed principally from the ruling in the cited case of [Tijam v. Sibonghanoy]. It is to be regretted,
however, that the holding in said case had been applied to situations which were obviously not
contemplated therein. x x x.71

Thus, the court reiterated the "unquestionably accepted"72 rule that objections to a courts jurisdiction over
the subject matter may be raised at any stage of the proceedings, even on appeal. This is because
jurisdiction over the subject matter is a "matter of law"73 and "may not be conferred by consent or
agreement of the parties."74

In Figueroa,75 this court ruled that the Tijam doctrine "must be applied with great care;"76 otherwise, the
doctrine "may be a most effective weapon for the accomplishment of injustice": 77

x x x estoppel, being in the nature of a forfeiture, is not favored by law. It is to be applied rarely only
from necessity, and only in extraordinary circumstances. The doctrine must be applied with great care
and the equity must be strong in its favor. When misapplied, the doctrine of estoppel may be a most
effective weapon for the accomplishment of injustice. x x x a judgment rendered without jurisdiction over
the subject matter is void. x x x. No laches will even attach when the judgment is null and void for want of
jurisdiction x x x.78

In this case, the exceptional circumstances similar to Tijam do not exist. Vivencio never invoked
respondent Fifth Sharia District Courts jurisdiction to seek affirmative relief. He filed the petition for relief
from judgment precisely to assail the jurisdiction of respondent Fifth Sharia District Court over Roldans
petition for recovery of possession.

114
Thus, the general rule holds. Vivencio validly assailed the jurisdiction of respondent Fifth Sharia District
Court over the action for recovery of possession for lack of jurisdiction over the subject matter of Roldans
action.

II

That respondent Fifth Sharia

District Court served summons on
petitioner Vivencio did not vest it
with jurisdiction over the person of
petitioner Vivencio

Roldan argued that the proceedings before respondent Sharia District Court were valid since the latter
acquired jurisdiction over the person of Vivencio. When Vivencio was served with summons, he failed to
file his answer and waived his right to participate in the proceedings before respondent Fifth Sharia
District Court. Since Vivencio waived his right to participate in the proceedings, he cannot argue that his
rights were prejudiced.

Jurisdiction over the person is "the power of [a] court to render a personal judgment or to subject the
parties in a particular action to the judgment and other rulings rendered in the action." 79 A court acquires
jurisdiction over the person of the plaintiff once he or she files the initiatory pleading.80 As for the
defendant, the court acquires jurisdiction over his or her person either by his or her voluntary appearance
in court81 or a valid service on him or her of summons.82

Jurisdiction over the person is required in actions in personam 83 or actions based on a partys personal
liability.84Since actions in personam "are directed against specific persons and seek personal
judgments,"85 it is necessary that the parties to the action "are properly impleaded and duly heard or given
an opportunity to be heard."86 With respect to the defendant, he or she must have been duly served with
summons to be considered properly impleaded; otherwise, the proceedings in personam, including the
judgment rendered, are void.87

On the other hand, jurisdiction over the person is not necessary for a court to validly try and decide
actions in rem.88 Actions in rem are "directed against the thing or property or status of a person and seek
judgments with respect thereto as against the whole world."89 In actions in rem, the court trying the case
must have jurisdiction over the res, or the thing under litigation, to validly try and decide the case.
Jurisdiction over the res is acquired either "by the seizure of the property under legal process, whereby it
is brought into actual custody of the law; or as a result of the institution of legal proceedings, in which the
power of the court is recognized and made effective."90 In actions in rem, summons must still be served
on the defendant but only to satisfy due process requirements.91

Unlike objections to jurisdiction over the subject matter which may be raised at any stage of the
proceedings, objections to jurisdiction over the person of the defendant must be raised at the earliest
possible opportunity; otherwise, the objection to the courts jurisdiction over the person of the defendant is
deemed waived. Under Rule 9, Section 1 of the Rules of Court, "defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived."

In this case, Roldan sought to enforce a personal obligation on Vivencio to vacate his property, restore to
him the possession of his property, and pay damages for the unauthorized use of his property. 92 Thus,
Roldans action for recovery of possession is an action in personam. As this court explained in Ang Lam
v. Rosillosa and Santiago,93an action to recover the title to or possession of a parcel of land "is an action
in personam, for it binds a particular individual only although it concerns the right to a tangible
thing."94 Also, in Muoz v. Yabut, Jr.,95 this court said that "a judgment directing a party to deliver
possession of a property to another is in personam. It is binding only against the parties and their
successors-in-interest by title subsequent to the commencement of the action."96

115
This action being in personam, service of summons on Vivencio was necessary for respondent Fifth
Sharia District Court to acquire jurisdiction over Vivencios person.

However, as discussed, respondent Fifth Sharia District Court has no jurisdiction over the subject matter
of the action, with Vivencio not being a Muslim. Therefore, all the proceedings before respondent Sharia
District Court, including the service of summons on Vivencio, are void.

III

The Sharia Appellate Court and the

Office of the Jurisconsult in Islamic
law must now be organized to
effectively enforce the Muslim legal
system in the Philippines

We note that Vivencio filed directly with this court his petition for certiorari of respondent Fifth Sharia
District Courts decision. Under the judicial system in Republic Act No. 9054, 97 the Sharia Appellate Court
has exclusive original jurisdiction over petitions for certiorari of decisions of the Sharia District Courts. He
should have filed his petition for certiorari before the Sharia Appellate Court.

However, the Sharia Appellate Court is yet to be organized.1wphi1 Thus, we call for the organization of
the court system created under Republic Act No. 9054 to effectively enforce the Muslim legal system in
our country. After all, the Muslim legal system a legal system complete with its own civil, criminal,
commercial, political, international, and religious laws 98 is part of the law of the land,99 and Sharia
courts are part of the Philippine judicial system.100

Sharia Circuit Courts and Sharia District Courts created under the Code of Muslim Personal Laws of the
Philippines shall continue to discharge their duties.101 All cases tried in Sharia Circuit Courts shall be
appealable to Sharia District Courts.[[102]

The Sharia Appellate Court created under Republic Act No. 9054 shall exercise appellate jurisdiction
over all cases tried in the Sharia District Courts.103 It shall also exercise original jurisdiction over petitions
for certiorari, prohibition, mandamus, habeas corpus, and other auxiliary writs and processes in aid of its
appellate jurisdiction.104 The decisions of the Sharia Appellate Court shall be final and executory, without
prejudice to the original and appellate jurisdiction of this court.105

This court held in Tomawis v. Hon. Balindong106 that "until such time that the Sharia Appellate Court shall
have been organized,"107 decisions of the Sharia District Court shall be appealable to the Court of
Appeals and "shall be referred to a Special Division to be organized in any of the [Court of Appeals]
stations preferably composed of Muslim [Court of Appeals] Justices."108 However, considering that To m a
w i s was not yet promulgated when Vivencio filed his petition for certiorari on August 6, 2009, we take
cognizance of Vivencios petition for certiorari in the exercise of our original jurisdiction over petitions for
certiorari.109

Moreover, priority should be given in organizing the Office of the Jurisconsult in Islamic law. A
Jurisconsult in Islamic law or "Mufti" is an officer with authority to render legal opinions or "fatawa"110 on
any questions relating to Muslim law.111 These legal opinions should be based on recognized
authorities112 and "must be rendered in precise accordance with precedent."113 In the Philippines where
only Muslim personal laws are codified, a legal officer learned in the Quran and Hadiths is necessary to
assist this court as well as Sharia court judges in resolving disputes not involving Muslim personal laws.

All told, Sharia District Courts have jurisdiction over a real action only when the parties involved are
Muslims. Respondent Fifth Sharia District Court acted without jurisdiction in taking cognizance of Roldan
E. Malas action for recovery of possession considering that Vivencio B. Villagracia is not a Muslim.

116
Accordingly, the proceedings in SDC Special Proceedings Case No. 07-200, including the judgment
rendered, are void.

WHEREFORE, the petition for certiorari is GRANTED. Respondent Fifth Sharia District Courts decision
dated June 11, 2008 and order dated May 29, 2009 in SDC Special Proceedings Case No. 07-200 are
SET ASIDE without prejudice to the filing of respondent Roldan E. Mala of an action with the proper court.

SO ORDERED.

M.

Republic of the Philippines

SUPREME COURT

SECOND DIVISION

G.R. No. 157314 July 29, 2005

FAR EAST BANK AND TRUST COMPANY, NOW BANK OF THE PHILIPPINE ISLANDS, Petitioners,
vs.
THEMISTOCLES PACILAN, JR., Respondent.

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by Far East Bank and Trust Company (now
Bank of the Philippines Islands) seeking the reversal of the Decision1 dated August 30, 2002 of the Court
of Appeals (CA) in CA-G.R. CV No. 36627 which ordered it, together with its branch accountant, Roger
Villadelgado, to pay respondent Themistocles Pacilan, Jr.2 the total sum of P100,000.00 as moral and
exemplary damages. The assailed decision affirmed with modification that of the Regional Trial Court
(RTC) of Negros Occidental, Bacolod City, Branch 54, in Civil Case No. 4908. Likewise sought to be
reversed and set aside is the Resolution dated January 17, 2003 of the appellate court, denying petitioner
banks motion for reconsideration.

The case stemmed from the following undisputed facts:

Respondent Pacilan opened a current account with petitioner banks Bacolod Branch on May 23, 1980.
His account was denominated as Current Account No. 53208 (0052-00407-4). The respondent had since
then issued several postdated checks to different payees drawn against the said account. Sometime in
March 1988, the respondent issued Check No. 2434886 in the amount of P680.00 and the same was
presented for payment to petitioner bank on April 4, 1988.

Upon its presentment on the said date, Check No. 2434886 was dishonored by petitioner bank. The next
day, or on April 5, 1988, the respondent deposited to his current account the amount of P800.00. The
said amount was accepted by petitioner bank; hence, increasing the balance of the respondents deposit
to P1,051.43.

Subsequently, when the respondent verified with petitioner bank about the dishonor of Check No.
2434866, he discovered that his current account was closed on the ground that it was "improperly
handled." The records of petitioner bank disclosed that between the period of March 30,

117
1988 and April 5, 1988, the respondent issued four checks, to wit: Check No. 2480416 for P6,000.00;
Check No. 2480419 for P50.00; Check No. 2434880 for P680.00 and; Check No. 2434886 for P680.00,
or a total amount of P7,410.00. At the time, however, the respondents current account with petitioner
bank only had a deposit of P6,981.43. Thus, the total amount of the checks presented for payment on
April 4, 1988 exceeded the balance of the respondents deposit in his account. For this reason, petitioner
bank, through its branch accountant, Villadelgado, closed the respondents current account effective the
evening of April 4, 1988 as it then had an overdraft of P428.57. As a consequence of the overdraft, Check
No. 2434886 was dishonored.

On April 18, 1988, the respondent wrote to petitioner bank complaining that the closure of his account
was unjustified. When he did not receive a reply from petitioner bank, the respondent filed with the RTC
of Negros Occidental, Bacolod City, Branch 54, a complaint for damages against petitioner bank and
Villadelgado. The case was docketed as Civil Case No. 4908. The respondent, as complainant therein,
alleged that the closure of his current account by petitioner bank was unjustified because on the first
banking hour of April 5, 1988, he already deposited an amount sufficient to fund his checks. The
respondent pointed out that Check No. 2434886, in particular, was delivered to petitioner bank at the
close of banking hours on April 4, 1988 and, following normal banking procedure, it
(petitioner bank) had until the last clearing hour of the following day, or on April 5, 1988, to honor the
check or return it, if not funded. In disregard of this banking procedure and practice, however, petitioner
bank hastily closed the respondents current account and dishonored his Check No. 2434886.

The respondent further alleged that prior to the closure of his current account, he had issued several
other postdated checks. The petitioner banks act of closing his current account allegedly preempted the
deposits that he intended to make to fund those checks. Further, the petitioner banks act exposed him to
criminal prosecution for violation of Batas Pambansa Blg. 22.

According to the respondent, the indecent haste that attended the closure of his account was patently
malicious and intended to embarrass him. He claimed that he is a Cashier of Prudential Bank and Trust
Company, whose branch office is located just across that of petitioner bank, and a prominent and
respected leader both in the civic and banking communities. The alleged malicious acts of petitioner bank
besmirched the respondents reputation and caused him "social humiliation, wounded feelings,
insurmountable worries and sleepless nights" entitling him to an award of damages.

In their answer, petitioner bank and Villadelgado maintained that the respondents current account was
subject to petitioner banks Rules and Regulations Governing the Establishment and Operation of
Regular Demand
Deposits which provide that "the Bank reserves the right to close an account if the depositor frequently
draws checks against insufficient funds and/or uncollected deposits" and that "the Bank reserves the right
at any time to return checks of the depositor which are drawn against insufficient funds or for any
reason."3

They showed that the respondent had improperly and irregularly handled his current account. For
example, in 1986, the respondents account was overdrawn 156 times, in 1987, 117 times and in 1988,
26 times. In all these instances, the account was overdrawn due to the issuance of checks against
insufficient funds. The respondent had also signed several checks with a different signature from the
specimen on file for dubious reasons.

When the respondent made the deposit on April 5, 1988, it was obviously to cover for issuances made
the previous day against an insufficiently funded account. When his Check No. 2434886 was presented
for payment on April 4, 1988, he had already incurred an overdraft; hence, petitioner bank rightfully
dishonored the same for insufficiency of funds.

After due proceedings, the court a quo rendered judgment in favor of the respondent as it ordered the
petitioner bank and Villadelgado, jointly and severally, to pay the respondent the amounts of P100,000.00

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as moral damages and P50,000.00 as exemplary damages and costs of suit. In so ruling, the court a
quo also cited petitioner banks rules and regulations which state that "a charge of P10.00 shall be levied
against the depositor for any check that is taken up as a returned item due to insufficiency of funds on
the date of receipt from the clearing office even if said check is honored and/or covered by sufficient
deposit the following banking day." The same rules and regulations also provide that "a check returned for
insufficiency of funds for any reason of similar import may be subsequently recleared for one more time
only, subject to the same charges."

According to the court a quo, following these rules and regulations, the respondent, as depositor, had the
right to put up sufficient funds for a check that was taken as a returned item for insufficient funds the day
following the receipt of said check from the clearing office. In fact, the said check could still be recleared
for one more time. In previous instances, petitioner bank notified the respondent when he incurred an
overdraft and he would then deposit sufficient funds the following day to cover the overdraft. Petitioner
bank thus acted unjustifiably when it immediately closed the respondents account on April 4, 1988 and
deprived him of the opportunity to reclear his check or deposit sufficient funds therefor the following day.

As a result of the closure of his current account, several of the respondents checks were subsequently
dishonored and because of this, the respondent was humiliated, embarrassed and lost his credit standing
in the business community. The court a quo further ratiocinated that even granting arguendo that
petitioner bank had the right to close the respondents account, the manner which attended the closure
constituted an abuse of the
said right. Citing Article 19 of the Civil Code of the Philippines which states that "[e]very person must, in
the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith" and Article 20 thereof which states that "[e]very person who, contrary to
law, wilfully or negligently causes damage to another, shall indemnify the latter for the same," the court a
quo adjudged petitioner bank of acting in bad faith. It held that, under the foregoing circumstances, the
respondent is entitled to an award of moral and exemplary damages.

The decretal portion of the court a quos decision reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

1. Ordering the defendants [petitioner bank and Villadelgado], jointly and severally, to pay plaintiff [the
respondent] the sum of P100,000.00 as moral damages;

2. Ordering the defendants, jointly and severally, to pay plaintiff the sum of P50,000.00 as exemplary
damages plus costs and expenses of the suit; and

3. Dismissing [the] defendants counterclaim for lack of merit.

SO ORDERED.4

On appeal, the CA rendered the Decision dated August 30, 2002, affirming with modification the decision
of the court a quo.

The appellate court substantially affirmed the factual findings of the court a quo as it held that petitioner
bank unjustifiably closed the respondents account notwithstanding that its own rules and regulations

allow that a check returned for insufficiency of funds or any reason of similar import, may be subsequently
recleared for one more time, subject to standard charges. Like the court a quo, the appellate court
observed that in several instances in previous years, petitioner bank would inform the respondent when
he incurred an overdraft and allowed him to make a timely deposit to fund the checks that were initially
dishonored for insufficiency of funds. However, on April 4, 1988, petitioner bank immediately closed the

119
respondents account without even notifying him that he had incurred an overdraft. Even when they had
already closed his account on April 4, 1988, petitioner bank still accepted the deposit that the respondent
made on April 5, 1988, supposedly to cover his checks.

Echoing the reasoning of the court a quo, the CA declared that even as it may be conceded that petitioner
bank had reserved the right to close an account for repeated overdrafts by the respondent, the exercise
of that right must never be despotic or arbitrary. That petitioner bank chose to close the account outright
and return the check, even after accepting a deposit sufficient to cover the said check, is contrary to its
duty to handle the respondents account with utmost fidelity. The exercise of the right is not absolute and
good faith, at least, is required. The manner by which petitioner bank closed the account of the
respondent runs afoul of Article 19 of the Civil Code which enjoins every person, in the exercise of his
rights, "to give every one his due, and observe honesty and good faith."

The CA concluded that petitioner banks precipitate and imprudent closure of the respondents account
had caused him, a respected officer of several civic and banking associations, serious anxiety and
humiliation. It had, likewise, tainted his credit standing. Consequently, the award of damages is
warranted. The CA, however, reduced the amount of damages awarded by the court a quo as it found the
same to be excessive:

We, however, find excessive the amount of damages awarded by the RTC. In our view the reduced
amount of P75,000.00 as moral damages and P25,000.00 as exemplary damages are in order. Awards
for damages are not meant to enrich the plaintiff-appellee [the respondent] at the expense of defendants-
appellants [the petitioners], but to obviate the moral suffering he has undergone. The award is aimed at
the restoration, within limits possible, of the status quo ante, and should be proportionate to the suffering
inflicted.5

The dispositive portion of the assailed CA decision reads:

WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION that the
award of moral damages is reduced to P75,000.00 and the award of exemplary damages reduced
to P25,000.00.

SO ORDERED.6

Petitioner bank sought the reconsideration of the said decision but in the assailed Resolution dated
January 17, 2003, the appellate court denied its motion. Hence, the recourse to this Court.

Petitioner bank maintains that, in closing the account of the respondent in the evening of April 4, 1988, it
acted in good faith and in accordance with the rules and regulations governing the operation of a

regular demand deposit which reserves to the bank "the right to close an account if the depositor
frequently draws checks against insufficient funds and/or uncollected deposits." The same rules and
regulations also provide that "the depositor is not entitled, as a matter of right, to overdraw on this deposit
and the bank reserves the right at any time to return checks of the depositor which are drawn against
insufficient funds or for any reason."

It cites the numerous instances that the respondent had overdrawn his account and those instances
where he deliberately signed checks using a signature different from the specimen on file. Based on
these facts, petitioner bank was constrained to close the respondents account for improper and irregular
handling and returned his Check No. 2434886 which was presented to the bank for payment on April 4,
1988.

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Petitioner bank further posits that there is no law or rule which gives the respondent a legal right to make
good his check or to deposit the corresponding amount to cover said check within 24 hours after the
same is dishonored or returned by the bank for having been drawn against insufficient funds. It vigorously
denies having violated Article 19 of the Civil Code as it insists that it acted in good faith and in accordance
with the pertinent banking rules and regulations.

The petition is impressed with merit.

A perusal of the respective decisions of the court a quo and the appellate court show that the award of
damages in the respondents favor was anchored mainly on Article 19 of the Civil Code which, quoted
anew below, reads:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.

The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which is
exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. 7 Malice or bad faith is
at the core of the said provision.8 The law always presumes good faith and any person who seeks to be
awarded damages due to acts of another has the burden of proving that the latter acted in bad faith or
with ill-motive.9 Good faith refers to the state of the mind which is manifested by the acts of the individual
concerned. It consists of the intention to abstain from taking an unconscionable and unscrupulous
advantage of another.10 Bad faith does not simply connote bad judgment or simple negligence, dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty due to some
motives or interest or ill-will that partakes of the nature of fraud.11Malice connotes ill-will or spite and
speaks not in response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad
faith or bad motive.12

Undoubtedly, petitioner bank has the right to close the account of the respondent based on the following
provisions of its Rules and Regulations Governing the Establishment and Operation of Regular Demand
Deposits:

10) The Bank reserves the right to close an account if the depositor frequently draws checks against
insufficient funds and/or uncollected deposits.

12)

However, it is clearly understood that the depositor is not entitled, as a matter of right, to overdraw on this
deposit and the bank reserves the right at any time to return checks of the depositor which are drawn
against insufficient funds or for any other reason.

The facts, as found by the court a quo and the appellate court, do not establish that, in the exercise of this
right, petitioner bank committed an abuse thereof. Specifically, the second and third elements for abuse
of rights are not attendant in the present case. The evidence presented by petitioner bank negates the
existence of bad faith or malice on its part in closing the respondents account on April 4, 1988 because
on the said date the same was already overdrawn. The respondent issued four checks, all due on April 4,
1988, amounting to P7,410.00 when the balance of his current account deposit was only P6,981.43.
Thus, he incurred an overdraft of P428.57 which resulted in the dishonor of his Check No. 2434886.
Further, petitioner bank showed that in 1986, the current account of the respondent was overdrawn 156
times due to his issuance of checks against insufficient funds.13 In 1987, the said account was overdrawn
117 times for the same

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reason.14 Again, in 1988, 26 times.15 There were also several instances when the respondent issued
checks deliberately using a signature different from his specimen signature on file with petitioner
bank.16 All these circumstances taken together justified the petitioner banks closure of the respondents
account on April 4, 1988 for "improper handling."

It is observed that nowhere under its rules and regulations is petitioner bank required to notify the
respondent, or any depositor for that matter, of the closure of the account for frequently drawing checks
against insufficient funds. No malice or bad faith could be imputed on petitioner bank for so acting since
the records bear out that the respondent had indeed been improperly and irregularly handling his account
not just a few times but hundreds of times. Under the circumstances, petitioner bank could not be faulted
for exercising its right in accordance with the express rules and regulations governing the current
accounts of its depositors. Upon the opening of his account, the respondent had agreed to be bound by
these terms and conditions.

Neither the fact that petitioner bank accepted the deposit made by the respondent the day following the
closure of his account constitutes bad faith or malice on the part of petitioner bank. The same could be
characterized as simple negligence by its personnel. Said act, by itself, is not constitutive of bad faith.

The respondent had thus failed to discharge his burden of proving bad faith on the part of petitioner bank
or that it was motivated by ill-will or spite in closing his account on April 4, 1988 and in inadvertently
accepting his deposit on April 5, 1988.

Further, it has not been shown that these acts were done by petitioner bank with the sole intention of
prejudicing and injuring the respondent. It is conceded that the respondent may have suffered damages
as a result of the closure of his current account. However, there is a material distinction between
damages and injury. The Court had the occasion to explain the distinction between damages and injury in
this wise:

Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the
injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there
can be damage without injury in those instances in which the loss or harm was not the result of a violation
of a legal duty. In such cases, the consequences must be borne by the injured person alone, the law
affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong.
These situations are often called damnum absque injuria.

In other words, in order that a plaintiff may maintain an action for the injuries of which he complains, he
must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff
a concurrence of injury to the plaintiff and legal responsibility by the person causing it. The underlying
basis for the award of tort damages is the premise that the individual was injured in contemplation of law.
Thus, there must first be a breach of some duty and the imposition of liability for that breach before
damages may be awarded; and the breach of such duty should be the proximate cause of the injury. 17

Whatever damages the respondent may have suffered as a consequence, e.g., dishonor of his other
insufficiently funded checks, would have to be borne by him alone. It was the respondents repeated
improper

and irregular handling of his account which constrained petitioner bank to close the same in accordance
with the rules and regulations governing its depositors current accounts. The respondents case is clearly
one of damnum absque injuria.

WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2002 and Resolution dated
January 17, 2003 of the Court of Appeals in CA-G.R. CV No. 36627 are REVERSED AND SET ASIDE.

SO ORDERED.

122
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 146322 December 6, 2006

ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., petitioners,

vs.
ERNESTO QUIAMCO, respondent.

DECISION

CORONA, J.:

Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others
and to give everyone his due. These supreme norms of justice are the underlying principles of law and
order in society. We reaffirm them in this petition for review on certiorari assailing the July 26, 2000
decision1 and October 18, 2000 resolution of the Court of Appeals (CA) in CA-G.R. CV No. 47571.

In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan, 2 Josefino Gabutero and
Raul Generoso to amicably settle the civil aspect of a criminal case for robbery3 filed by Quiamco against
them. They surrendered to him a red Honda XL-100 motorcycle and a photocopy of its certificate of
registration. Respondent asked for the original certificate of registration but the three accused never came
to see him again. Meanwhile, the motorcycle was parked in an open space inside respondents business
establishment, Avesco-AVNE Enterprises, where it was visible and accessible to the public.

It turned out that, in October 1981, the motorcycle had been sold on installment basis to Gabutero by
petitioner Ramas Uypitching Sons, Inc., a family-owned corporation managed by petitioner Atty. Ernesto
Ramas Uypitching. To secure its payment, the motorcycle was mortgaged to petitioner corporation. 4

When Gabutero could no longer pay the installments, Davalan assumed the obligation and continued the
payments. In September 1982, however, Davalan stopped paying the remaining installments and told
petitioner corporations collector, Wilfredo Verao, that the motorcycle had allegedly been "taken by
respondents men."

Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen, 5 went to
Avesco-AVNE Enterprises to recover the motorcycle. The leader of the police team, P/Lt. Arturo Vendiola,
talked to the clerk in charge and asked for respondent. While P/Lt. Vendiola and the clerk were talking,
petitioner Uypitching paced back and forth inside the establishment uttering "Quiamco is a thief of a
motorcycle."

On learning that respondent was not in Avesco-AVNE Enterprises, the policemen left to look for
respondent in his residence while petitioner Uypitching stayed in the establishment to take photographs of

123
the motorcycle. Unable to find respondent, the policemen went back to Avesco-AVNE Enterprises and, on
petitioner Uypitchings instruction and over the clerks objection, took the motorcycle.

On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft and/or violation of
the Anti-Fencing Law6 against respondent in the Office of the City Prosecutor of Dumaguete
City.7 Respondent moved for dismissal because the complaint did not charge an offense as he had
neither stolen nor bought the motorcycle. The Office of the City Prosecutor dismissed the complaint 8 and
denied petitioner Uypitchings subsequent motion for reconsideration.

Respondent filed an action for damages against petitioners in the RTC of Dumaguete City, Negros
Oriental, Branch 37.9 He sought to hold the petitioners liable for the following: (1) unlawful taking of the
motorcycle; (2) utterance of a defamatory remark (that respondent was a thief) and (3) precipitate filing of
a baseless and malicious complaint. These acts humiliated and embarrassed the respondent and injured
his reputation and integrity.

On July 30, 1994, the trial court rendered a decision10 finding that petitioner Uypitching was motivated
with malice and ill will when he called respondent a thief, took the motorcycle in an abusive manner and
filed a baseless complaint for qualified theft and/or violation of the Anti-Fencing Law. Petitioners acts
were found to be contrary to Articles 1911 and 2012 of the Civil Code. Hence, the trial court held petitioners
liable to respondent for P500,000 moral damages, P200,000 exemplary damages and P50,000 attorneys
fees plus costs.

Petitioners appealed the RTC decision but the CA affirmed the trial courts decision with modification,
reducing the award of moral and exemplary damages to P300,000 and P100,000,
respectively.13 Petitioners sought reconsideration but it was denied. Thus, this petition.

In their petition and memorandum, petitioners submit that the sole (allegedly) issue to be resolved here is
whether the filing of a complaint for qualified theft and/or violation of the Anti-Fencing Law in the Office of
the City Prosecutor warranted the award of moral damages, exemplary damages, attorneys fees and
costs in favor of respondent.

Petitioners suggestion is misleading. They were held liable for damages not only for instituting a
groundless complaint against respondent but also for making a slanderous remark and for taking the
motorcycle from respondents establishment in an abusive manner.

Correctness of the Findings of the RTC and CA

As they never questioned the findings of the RTC and CA that malice and ill will attended not only the
public imputation of a crime to respondent14 but also the taking of the motorcycle, petitioners were
deemed to have accepted the correctness of such findings. This alone was sufficient to hold petitioners
liable for damages to respondent.

Nevertheless, to address petitioners concern, we also find that the trial and appellate courts correctly
ruled that the filing of the complaint was tainted with malice and bad faith. Petitioners themselves in fact
described their action as a "precipitate act."15 Petitioners were bent on portraying respondent as a thief. In
this connection, we quote with approval the following findings of the RTC, as adopted by the CA:

x x x There was malice or ill-will [in filing the complaint before the City Prosecutors Office]
because Atty. Ernesto Ramas Uypitching knew or ought to have known as he is a lawyer, that
there was no probable cause at all for filing a criminal complaint for qualified theft and fencing
activity against [respondent]. Atty. Uypitching had no personal knowledge that [respondent] stole
the motorcycle in question. He was merely told by his bill collector ([i.e.] the bill collector of
Ramas Uypitching Sons, Inc.)[,] Wilfredo Verao[,] that Juan Dabalan will [no longer] pay the
remaining installment(s) for the motorcycle because the motorcycle was taken by the men of

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 [respondent]. It must be noted that the term used by Wilfredo Verao in informing Atty. Ernesto
Ramas Uypitching of the refusal of Juan Dabalan to pay for the remaining installment was
[]taken[], not []unlawfully taken[] or stolen. Yet, despite the double hearsay, Atty. Ernesto
Ramas Uypitching not only executed the [complaint-affidavit] wherein he named [respondent] as
the suspect of the stolen motorcycle but also charged [respondent] of qualified theft and fencing
activity before the City [Prosecutors] Office of Dumaguete. The absence of probable cause
necessarily signifies the presence of malice. What is deplorable in all these is that Juan Dabalan,
the owner of the motorcycle, did not accuse [respondent] or the latters men of stealing the
motorcycle[,] much less bother[ed] to file a case for qualified theft before the authorities. That
Atty. Uypitchings act in charging [respondent] with qualified theft and fencing activity is tainted
with malice is also shown by his answer to the question of Cupid Gonzaga16[during one of their
conversations] - "why should you still file a complaint? You have already recovered the
motorcycle"[:] "Aron motagam ang kawatan ug motor." ("To teach a lesson to the thief of
motorcycle.")17

Moreover, the existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the
trial court, when affirmed by the appellate court, are conclusive on this Court. We see no compelling
reason to reverse the findings of the RTC and the CA.

Petitioners Abused Their Right of Recovery as Mortgagee(s)

Petitioners claim that they should not be held liable for petitioner corporations exercise of its right as
seller-mortgagee to recover the mortgaged vehicle preliminary to the enforcement of its right to foreclose
on the mortgage in case of default. They are clearly mistaken.

True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its
foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of
mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on
foreclosure, he must bring a civil action either to recover such possession as a preliminary step to the
sale, or to obtain judicial foreclosure.18

Petitioner corporation failed to bring the proper civil action necessary to acquire legal possession of the
motorcycle. Instead, petitioner Uypitching descended on respondents establishment with his policemen
and ordered the seizure of the motorcycle without a search warrant or court order. Worse, in the course of
the illegal seizure of the motorcycle, petitioner Uypitching even mouthed a slanderous statement.

No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly disregarded the
lawful procedure for the enforcement of its right, to the prejudice of respondent. Petitioners acts violated
the law as well as public morals, and transgressed the proper norms of human relations.

The basic principle of human relations, embodied in Article 19 of the 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 every one his due, and observe honesty and good faith.

Article 19, also known as the "principle of abuse of right," prescribes that a person should not use his right
unjustly or contrary to honesty and good faith, otherwise he opens himself to liability.19 It seeks to
preclude the use of, or the tendency to use, a legal right (or duty) as a means to unjust ends.

There is an abuse of right when it is exercised solely to prejudice or injure another. 20 The exercise of a
right must be in accordance with the purpose for which it was established and must not be excessive or
unduly harsh; there must be no intention to harm another.21 Otherwise, liability for damages to the injured
party will attach.

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In this case, the manner by which the motorcycle was taken at petitioners instance was not only attended
by bad faith but also contrary to the procedure laid down by law. Considered in conjunction with the
defamatory statement, petitioners exercise of the right to recover the mortgaged vehicle was utterly
prejudicial and injurious to respondent. On the other hand, the precipitate act of filing an unfounded
complaint could not in any way be considered to be in accordance with the purpose for which the right to
prosecute a crime was established. Thus, the totality of petitioners actions showed a calculated design to
embarrass, humiliate and publicly ridicule respondent. Petitioners acted in an excessively harsh fashion
to the prejudice of respondent. Contrary to law, petitioners willfully caused damage to respondent. Hence,
they should indemnify him.22

WHEREFORE, the petition is hereby DENIED. The July 26, 2000 decision and October 18, 2000
resolution of the Court of Appeals in CA-G.R. CV No. 47571 are AFFIRMED.

Triple costs against petitioners, considering that petitioner Ernesto Ramas Uypitching is a lawyer and an
officer of the court, for his improper behavior.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 160273 January 18, 2008

CEBU COUNTRY CLUB, INC., SABINO R. DAPAT, RUBEN D. ALMENDRAS, JULIUS Z. NERI,
DOUGLAS L. LUYM, CESAR T. LIBI, RAMONTITO* E. GARCIA and JOSE B. SALA, petitioners,
vs.
RICARDO F. ELIZAGAQUE, respondent.

DECISION

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision1 dated January 31, 2003 and Resolution dated October 2,
2003 of the Court of Appeals in CA-G.R. CV No. 71506.

The facts are:

Cebu Country Club, Inc. (CCCI), petitioner, is a domestic corporation operating as a non-profit and non-
stock private membership club, having its principal place of business in Banilad, Cebu City. Petitioners
herein are members of its Board of Directors.

Sometime in 1987, San Miguel Corporation, a special company proprietary member of CCCI, designated
respondent Ricardo F. Elizagaque, its Senior Vice President and Operations Manager for the Visayas and
Mindanao, as a special non-proprietary member. The designation was thereafter approved by the CCCIs
Board of Directors.

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In 1996, respondent filed with CCCI an application for proprietary membership. The application was
indorsed by CCCIs two (2) proprietary members, namely: Edmundo T. Misa and Silvano Ludo.

As the price of a proprietary share was around the P5 million range, Benito Unchuan, then president of
CCCI, offered to sell respondent a share for only P3.5 million. Respondent, however, purchased the
share of a certain Dr. Butalid for only P3 million. Consequently, on September 6, 1996, CCCI issued
Proprietary Ownership Certificate No. 1446 to respondent.

During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on
respondents application for proprietary membership was deferred. In another Board meeting held on July
30, 1997, respondents application was voted upon. Subsequently, or on August 1, 1997, respondent
received a letter from Julius Z. Neri, CCCIs corporate secretary, informing him that the Board
disapproved his application for proprietary membership.

On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration.
As CCCI did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still,
CCCI kept silent. On November 5, 1997, respondent again sent CCCI a letter inquiring whether any
member of the Board objected to his application. Again, CCCI did not reply.

Consequently, on December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71,
Pasig City a complaint for damages against petitioners, docketed as Civil Case No. 67190.

After trial, the RTC rendered its Decision dated February 14, 2001 in favor of respondent, thus:

WHEREFORE, judgment is hereby rendered in favor of plaintiff:

1. Ordering defendants to pay, jointly and severally, plaintiff the amount of P2,340,000.00 as
actual or compensatory damages.

2. Ordering defendants to pay, jointly and severally, plaintiff the amount of P5,000,000.00 as
moral damages.

3. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as
exemplary damages.

4. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as and
by way of attorneys fees and P80,000.00 as litigation expenses.

5. Costs of suit.

Counterclaims are hereby DISMISSED for lack of merit.

SO ORDERED.2

On appeal by petitioners, the Court of Appeals, in its Decision dated January 31, 2003, affirmed the trial
courts Decision with modification, thus:

WHEREFORE, premises considered, the assailed Decision dated February 14, 2001 of the
Regional Trial Court, Branch 71, Pasig City in Civil Case No. 67190 is hereby AFFIRMED with
MODIFICATION as follows:

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 1. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount
of P2,000,000.00 as moral damages;

2. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount

of P1,000,000.00 as exemplary damages;

3. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the mount

of P500,000.00 as attorneys fees and P50,000.00 as litigation expenses; and

4. Costs of the suit.

The counterclaims are DISMISSED for lack of merit.

SO ORDERED.3

On March 3, 2003, petitioners filed a motion for reconsideration and motion for leave to set the motion for
oral arguments. In its Resolution4 dated October 2, 2003, the appellate court denied the motions for lack
of merit.

Hence, the present petition.

The issue for our resolution is whether in disapproving respondents application for proprietary
membership with CCCI, petitioners are liable to respondent for damages, and if so, whether their liability
is joint and several.

Petitioners contend, inter alia, that the Court of Appeals erred in awarding exorbitant damages to
respondent despite the lack of evidence that they acted in bad faith in disapproving the latters
application; and in disregarding their defense of damnum absque injuria.

For his part, respondent maintains that the petition lacks merit, hence, should be denied.

CCCIs Articles of Incorporation provide in part:

SEVENTH: That this is a non-stock corporation and membership therein as well as the right of
participation in its assets shall be limited to qualified persons who are duly accredited owners of
Proprietary Ownership Certificates issued by the corporation in accordance with its By-Laws.

Corollary, Section 3, Article 1 of CCCIs Amended By-Laws provides:

SECTION 3. HOW MEMBERS ARE ELECTED The procedure for the admission of new
members of the Club shall be as follows:

(a) Any proprietary member, seconded by another voting proprietary member, shall submit to the
Secretary a written proposal for the admission of a candidate to the "Eligible-for-Membership
List";

(b) Such proposal shall be posted by the Secretary for a period of thirty (30) days on the Club
bulletin board during which time any member may interpose objections to the admission of the
applicant by communicating the same to the Board of Directors;

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 (c) After the expiration of the aforesaid thirty (30) days, if no objections have been filed or if there
are, the Board considers the objections unmeritorious, the candidate shall be qualified for
inclusion in the "Eligible-for-Membership List";

(d) Once included in the "Eligible-for-Membership List" and after the candidate shall have
acquired in his name a valid POC duly recorded in the books of the corporation as his own, he
shall become a Proprietary Member, upon a non-refundable admission fee of P1,000.00,
provided that admission fees will only be collected once from any person.

On March 1, 1978, Section 3(c) was amended to read as follows:

(c) After the expiration of the aforesaid thirty (30) days, the Board may, by unanimous vote of all
directors present at a regular or special meeting, approve the inclusion of the candidate in the
"Eligible-for-Membership List".

As shown by the records, the Board adopted a secret balloting known as the "black ball system" of voting
wherein each member will drop a ball in the ballot box. A white ball represents conformity to the
admission of an applicant, while a black ball means disapproval. Pursuant to Section 3(c), as amended,
cited above, a unanimous vote of the directors is required. When respondents application for proprietary
membership was voted upon during the Board meeting on July 30, 1997, the ballot box contained one (1)
black ball. Thus, for lack of unanimity, his application was disapproved.

Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or
disapprove an application for proprietary membership. But such right should not be exercised arbitrarily.
Articles 19 and 21 of the Civil Code on the Chapter on Human Relations provide restrictions, thus:

Article 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.

Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

In GF Equity, Inc. v. Valenzona,5 we expounded Article 19 and correlated it with Article 21, thus:

This article, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which must be observed not only in the exercise of one's rights but also in
the performance of one's duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted
by law as such, may nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms enshrined in Article 19 and
results in damage to another, a legal wrong is thereby committed for which the wrongdoer
must be held responsible. But while Article 19 lays down a rule of conduct for the government
of human relations and for the maintenance of social order, it does not provide a remedy for its
violation. Generally, an action for damages under either Article 20 or Article 21 would be proper.
(Emphasis in the original)

In rejecting respondents application for proprietary membership, we find that petitioners violated the rules
governing human relations, the basic principles to be observed for the rightful relationship between
human beings and for the stability of social order. The trial court and the Court of Appeals aptly held that
petitioners committed fraud and evident bad faith in disapproving respondents applications. This is
contrary to morals, good custom or public policy. Hence, petitioners are liable for damages pursuant to
Article 19 in relation to Article 21 of the same Code.

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It bears stressing that the amendment to Section 3(c) of CCCIs Amended By-Laws requiring the
unanimous vote of the directors present at a special or regular meeting was not printed on the application
form respondent filled and submitted to CCCI. What was printed thereon was the original provision of
Section 3(c) which was silent on the required number of votes needed for admission of an applicant as a
proprietary member.

Petitioners explained that the amendment was not printed on the application form due to economic
reasons. We find this excuse flimsy and unconvincing. Such amendment, aside from being extremely
significant, was introduced way back in 1978 or almost twenty (20) years before respondent filed his
application. We cannot fathom why such a prestigious and exclusive golf country club, like the CCCI,
whose members are all affluent, did not have enough money to cause the printing of an updated
application form.

It is thus clear that respondent was left groping in the dark wondering why his application was
disapproved. He was not even informed that a unanimous vote of the Board members was required.
When he sent a letter for reconsideration and an inquiry whether there was an objection to his application,
petitioners apparently ignored him. Certainly, respondent did not deserve this kind of treatment. Having
been designated by San Miguel Corporation as a special non-proprietary member of CCCI, he should
have been treated by petitioners with courtesy and civility. At the very least, they should have informed
him why his application was disapproved.

The exercise of a right, though legal by itself, must nonetheless be in accordance with the proper norm.
When the right is exercised arbitrarily, unjustly or excessively and results in damage to another, a legal
wrong is committed for which the wrongdoer must be held responsible. 6 It bears reiterating that the trial
court and the Court of Appeals held that petitioners disapproval of respondents application is
characterized by bad faith.

As to petitioners reliance on the principle of damnum absque injuria or damage without injury, suffice it to
state that the same is misplaced. In Amonoy v. Gutierrez,7 we held that this principle does not apply
when there is an abuse of a persons right, as in this case.

As to the appellate courts award to respondent of moral damages, we find the same in order. Under
Article 2219 of the New Civil Code, moral damages may be recovered, among others, in acts and actions
referred to in Article 21. We believe respondents testimony that he suffered mental anguish, social
humiliation and wounded feelings as a result of the arbitrary denial of his application. However, the
amount of P2,000,000.00 is excessive. While there is no hard-and-fast rule in determining what would be
a fair and reasonable amount of moral damages, the same should not be palpably and scandalously
excessive. Moral damages are not intended to impose a penalty to the wrongdoer, neither to enrich the
claimant at the expense of the defendant.8 Taking into consideration the attending circumstances here,
we hold that an award to respondent of P50,000.00, instead of P2,000,000.00, as moral damages is
reasonable.

Anent the award of exemplary damages, Article 2229 allows it by way of example or correction for the
public good. Nonetheless, since exemplary damages are imposed not to enrich one party or impoverish
another but to serve as a deterrent against or as a negative incentive to curb socially deleterious
actions,9 we reduce the amount from P1,000,000.00 to P25,000.00 only.

On the matter of attorneys fees and litigation expenses, Article 2208 of the same Code provides, among
others, that attorneys fees and expenses of litigation may be recovered in cases when exemplary
damages are awarded and where the court deems it just and equitable that attorneys fees and expenses
of litigation should be recovered, as in this case. In any event, however, such award must be reasonable,
just and equitable. Thus, we reduce the amount of attorneys fees (P500,000.00) and litigation expenses
(P50,000.00) to P50,000.00 and P25,000.00, respectively.

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Lastly, petitioners argument that they could not be held jointly and severally liable for damages because
only one (1) voted for the disapproval of respondents application lacks merit.

Section 31 of the Corporation Code provides:

SEC. 31. Liability of directors, trustees or officers. Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of the corporation or acquire any personal or
pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly
and severally for all damages resulting therefrom suffered by the corporation, its stockholders or
members and other persons. (Emphasis ours)

WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in
CA-G.R. CV No. 71506 are AFFIRMED with modification in the sense that (a) the award of moral
damages is reduced from P2,000,000.00 to P50,000.00; (b) the award of exemplary damages is reduced
from P1,000,000.00 to P25,000.00; and (c) the award of attorneys fees and litigation expenses is
reduced from P500,000.00 and P50,000.00 to P50,000.00 and P25,000.00, respectively.

Costs against petitioners.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 165443 April 16, 2009

CALATAGAN GOLF CLUB, INC. Petitioner,

vs.
SIXTO CLEMENTE, JR., Respondent.

DECISION

TINGA, J.:

Seeking the reversal of the Decision1 dated 1 June 2004 of the Court of Appeals in CA-G.R. SP No.
62331 and the reinstatement of the Decision dated 15 November 2000 of the Securities and Exchange
Commission (SEC) in SEC Case No. 04-98-5954, petitioner Calatagan Golf Club, Inc. (Calatagan) filed
this Rule 45 petition against respondent Sixto Clemente, Jr. (Clemente).

The key facts are undisputed.

Clemente applied to purchase one share of stock of Calatagan, indicating in his application for
membership his mailing address at "Phimco Industries, Inc. P.O. Box 240, MCC," complete residential
address, office and residence telephone numbers, as well as the company (Phimco) with which he was
connected, Calatagan issued to him Certificate of Stock No. A-01295 on 2 May 1990 after
paying P120,000.00 for the share.2

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Calatagan charges monthly dues on its members to meet expenses for general operations, as well as
costs for upkeep and improvement of the grounds and facilities. The provision on monthly dues is
incorporated in Calatagans Articles of Incorporation and By-Laws. It is also reproduced at the back of
each certificate of stock.3As reproduced in the dorsal side of Certificate of Stock No. A-01295, the
provision reads:

5. The owners of shares of stock shall be subject to the payment of monthly dues in an amount as may
be prescribed in the by-laws or by the Board of Directors which shall in no case be less that [sic] P50.00
to meet the expenses for the general operations of the club, and the maintenance and improvement of its
premises and facilities, in addition to such fees as may be charged for the actual use of the facilities x x x

When Clemente became a member the monthly charge stood at P400.00. He paid P3,000.00 for his
monthly dues on 21 March 1991 and another P5,400.00 on 9 December 1991. Then he ceased paying
the dues. At that point, his balance amounted to P400.00.4

Ten (10) months later, Calatagan made the initial step to collect Clementes back accounts by sending a
demand letter dated 21 September 1992. It was followed by a second letter dated 22 October 1992. Both
letters were sent to Clementes mailing address as indicated in his membership application but were sent
back to sender with the postal note that the address had been closed.5

Calatagan declared Clemente delinquent for having failed to pay his monthly dues for more than sixty
(60) days, specifically P5,600.00 as of 31 October 1992. Calatagan also included Clementes name in the
list of delinquent members posted on the clubs bulletin board. On 1 December 1992, Calatagans board
of directors adopted a resolution authorizing the foreclosure of shares of delinquent members, including
Clementes; and the public auction of these shares.

On 7 December 1992, Calatagan sent a third and final letter to Clemente, this time signed by its
Corporate Secretary, Atty. Benjamin Tanedo, Jr. The letter contains a warning that unless Clemente
settles his outstanding dues, his share would be included among the delinquent shares to be sold at
public auction on 15 January 1993. Again, this letter was sent to Clementes mailing address that had
already been closed.6

On 5 January 1993, a notice of auction sale was posted on the Clubs bulletin board, as well as on the
clubs premises. The auction sale took place as scheduled on 15 January 1993, and Clementes share
sold for P64,000.7 According to the Certificate of Sale issued by Calatagan after the sale, Clementes
share was purchased by a Nestor A. Virata.8 At the time of the sale, Clementes accrued monthly dues
amounted to P5,200.00.9 A notice of foreclosure of Clementes share was published in the 26 May 1993
issue of the Business World.10

Clemente learned of the sale of his share only in November of 1997.11 He filed a claim with the Securities
and Exchange Commission (SEC) seeking the restoration of his shareholding in Calatagan with
damages.

On 15 November 2000, the SEC rendered a decision dismissing Clementes complaint. Citing Section 69
of the Corporation Code which provides that the sale of shares at an auction sale can only be questioned
within six (6) months from the date of sale, the SEC concluded that Clementes claim, filed four (4) years
after the sale, had already prescribed. The SEC further held that Calatagan had complied with all the
requirements for a valid sale of the subject share, Clemente having failed to inform Calatagan that the
address he had earlier supplied was no longer his address. Clemente, the SEC ruled, had acted in bad
faith in assuming as he claimed that his non-payment of monthly dues would merely render his share
"inactive."

Clemente filed a petition for review with the Court of Appeals. On 1 June 2004, the Court of Appeals
promulgated a decision reversing the SEC. The appellate court restored Clementes one share with a

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directive to Calatagan to issue in his a new share, and awarded to Clemente a total of P400,000.00 in
damages, less the unpaid monthly dues of P5,200.00.

In rejecting the SECs finding that the action had prescribed, the Court of Appeals cited the SECs own
ruling in SEC Case No. 4160, Caram v. Valley Golf Country Club, Inc., that Section 69 of the Corporation
Code specifically refers to unpaid subscriptions to capital stock, and not to any other debt of stockholders.
With the insinuation that Section 69 does not apply to unpaid membership dues in non-stock
corporations, the appellate court employed Article 1140 of the Civil Code as the proper rule of
prescription. The provision sets the prescription period of actions to recover movables at eight (8) years.

The Court of Appeals also pointed out that since that Calatagans first two demand letters had been
returned to it as sender with the notation about the closure of the mailing address, it very well knew that
its third and final demand letter also sent to the same mailing address would not be received by
Clemente. It noted the by-law requirement that within ten (10) days after the Board has ordered the sale
at auction of a members share of stock for indebtedness, the Corporate Secretary shall notify the owner
thereof and advise the Membership Committee of such fact. Finally, the Court of Appeals ratiocinated that
"a person who is in danger of the imminent loss of his property has the right to be notified and be given
the chance to prevent the loss."12

Hence, the present appeal.

Calatagan maintains that the action of Clemente had prescribed pursuant to Section 69 of the
Corporation Code, and that the requisite notices under both the law and the by-laws had been rendered
to Clemente.

Section 69 of the Code provides that an action to recover delinquent stock sold must be commenced by
the filing of a complaint within six (6) months from the date of sale. As correctly pointed out by the Court
of Appeals, Section 69 is part of Title VIII of the Code entitled "Stocks and Stockholders" and refers
specifically to unpaid subscriptions to capital stock, the sale of which is governed by the immediately
preceding Section 68.

The Court of Appeals debunked both Calatagans and the SECs reliance on Section 69 by citing another
SEC ruling in the case of Caram v. Valley Golf. In connection with Section 69, Calatagan raises a
peripheral point made in the SECs Caram ruling. In Caram, the SEC, using as take-off Section 6 of the
Corporation Code which refers to "such rights, privileges or restrictions as may be stated in the articles of
incorporation," pointed out that the Articles of Incorporation of Valley Golf does not "impose any lien,
liability or restriction on the Golf Share [of Caram]," but only its (Valley Golfs) By-Laws does. Here,
Calatagan stresses that its own Articles of Incorporation does provide that the monthly dues assessed on
owners of shares of the corporation, along with all other obligations of the shareholders to the club, "shall
constitute a first lien on the shares and in the event of delinquency such shares may be ordered sold by
the Board of Directors in the manner provided in the By-Laws to satisfy said dues or other obligations of
the shareholders."13 With its illative but incomprehensible logic, Calatagan concludes that the prescriptive
period under Section 69 should also apply to the sale of Clementes share as the lien that Calatagan
perceives to be a restriction is stated in the articles of incorporation and not only in the by-laws.

We remain unconvinced.

There are fundamental differences that defy equivalence or even analogy between the sale of delinquent
stock under Section 68 and the sale that occurred in this case. At the root of the sale of delinquent stock
is the non-payment of the subscription price for the share of stock itself. The stockholder or subscriber
has yet to fully pay for the value of the share or shares subscribed. In this case, Clemente had already
fully paid for the share in Calatagan and no longer had any outstanding obligation to deprive him of full
title to his share. Perhaps the analogy could have been made if Clemente had not yet fully paid for his
share and the non-stock corporation, pursuant to an article or by-law provision designed to address that

133
situation, decided to sell such share as a consequence. But that is not the case here, and there is no
purpose for us to apply Section 69 to the case at bar.

Calatagan argues in the alternative that Clementes suit is barred by Article 1146 of the Civil Code which
establishes four (4) years as the prescriptive period for actions based upon injury to the rights of the
plaintiff on the hypothesis that the suit is purely for damages. As a second alternative still, Calatagan
posits that Clementes action is governed by Article 1149 of the Civil Code which sets five (5) years as the
period of prescription for all other actions whose prescriptive periods are not fixed in the Civil Code or in
any other law. Neither article is applicable but Article 1140 of the Civil Code which provides that an action
to recover movables shall prescribe in eight (8) years. Calatagans action is for the recovery of a share of
stock, plus damages.

Calatagans advertence to the fact that the constitution of a lien on the members share by virtue of the
explicit provisions in its Articles of Incorporation and By-Laws is relevant but ultimately of no help to its
cause. Calatagans Articles of Incorporation states that the "dues, together with all other obligations of
members to the club, shall constitute a first lien on the shares, second only to any lien in favor of the
national or local government, and in the event of delinquency such shares may be ordered sold by the
Board of Directors in the manner provided in the By-Laws to satisfy said dues or other obligations of the
stockholders."14 In turn, there are several provisions in the By-laws that govern the payment of dues, the
lapse into delinquency of the member, and the constitution and execution on the lien. We quote these
provisions:

ARTICLE XII MEMBERS ACCOUNT

SEC. 31. (a) Billing Members, Posting of Delinquent Members The Treasurer shall bill al members
monthly. As soon as possible after the end of every month, a statement showing the account of bill of a
member for said month will be prepared and sent to him. If the bill of any member remains unpaid by the
20th of the month following that in which the bill was incurred, the Treasurer shall notify him that if his bill
is not paid in full by the end of the succeeding month his name will be posted as delinquent the following
day at the Clubhouse bulletin board. While posted, a member, the immediate members of his family, and
his guests, may not avail of the facilities of the Club.

(b) Members on the delinquent list for more than 60 days shall be reported to the Board and their
shares or the shares of the juridical entities they represent shall thereafter be ordered sold by the
Board at auction to satisfy the claims of the Club as provided for in Section 32 hereon. A member
may pay his overdue account at any time before the auction sale.

Sec. 32. Lien on Shares; Sale of Share at Auction- The club shall have a first lien on every share of stock
to secure debts of the members to the Club. This lien shall be annotated on the certificates of stock and
may be enforced by the Club in the following manner:

(a) Within ten (10) days after the Board has ordered the sale at auction of a members share of
stock for indebtedness under Section 31(b) hereof, the Secretary shall notify the owner thereof,
and shall advise the Membership Committee of such fact.

(b) The Membership Committee shall then notify all applicants on the Waiting List and all
registered stockholders of the availability of a share of stock for sale at auction at a specified
date, time and place, and shall post a notice to that effect in the Club bulletin board for at least
ten (10) days prior to the auction sale.

(c) On the date and hour fixed, the Membership Committee shall proceed with the auction by viva
voce bidding and award the sale of the share of stock to the highest bidder.

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 (d) The purchase price shall be paid by the winning bidder to the Club within twenty-four (24)
hours after the bidding. The winning bidder or the representative in the case of a juridical entity
shall become a Regular Member upon payment of the purchase price and issuance of a new
stock certificate in his name or in the name of the juridical entity he represents. The proceeds of
the sale shall be paid by the Club to the selling stockholder after deducting his obligations to the
Club.

(e) If no bids be received or if the winning bidder fails to pay the amount of this bid within twenty-
four (24) hours after the bidding, the auction procedures may be repeated from time to time at the
discretion of the Membership Committee until the share of stock be sold.

(f) If the proceeds from the sale of the share of stock are not sufficient to pay in full the
indebtedness of the member, the member shall continue to be obligated to the Club for the
unpaid balance. If the member whose share of stock is sold fails or refuse to surrender the stock
certificate for cancellation, cancellation shall be effected in the books of the Club based on a
record of the proceedings. Such cancellation shall render the unsurrendered stock certificate null
and void and notice to this effect shall be duly published.

It is plain that Calatagan had endeavored to install a clear and comprehensive procedure to govern the
payment of monthly dues, the declaration of a member as delinquent, and the constitution of a lien on the
shares and its eventual public sale to answer for the members debts. Under Section 91 of the
Corporation Code, membership in a non-stock corporation "shall be terminated in the manner and for the
causes provided in the articles of incorporation or the by-laws." The By-law provisions are elaborate in
explaining the manner and the causes for the termination of membership in Calatagan, through the
execution on the lien of the share. The Court is satisfied that the By-Laws, as written, affords due
protection to the member by assuring that the member should be notified by the Secretary of the looming
execution sale that would terminate membership in the club. In addition, the By-Laws guarantees that
after the execution sale, the proceeds of the sale would be returned to the former member after deducting
the outstanding obligations. If followed to the letter, the termination of membership under this procedure
outlined in the By-Laws would accord with substantial justice.

Yet, did Calatagan actually comply with the by-law provisions when it sold Clementes share? The
appellate courts finding on this point warrants our approving citation, thus:

In accordance with this provision, Calatagan sent the third and final demand letter to Clemente on
December 7, 1992. The letter states that if the amount of delinquency is not paid, the share will be
included among the delinquent shares to be sold at public auction. This letter was signed by Atty.
Benjamin Tanedo, Jr., Calatagan Golfs Corporate Secretary. It was again sent to Clementes mailing
address Phimco Industries Inc., P.O. Box 240, MCC Makati. As expected, it was returned because
the post office box had been closed.

Under the By-Laws, the Corporate Secretary is tasked to "give or cause to be given, all notices required
by law or by these By-Laws. .. and keep a record of the addresses of all stockholders. As quoted
above, Sec. 32 (a) of the By-Laws further provides that "within ten (10) days after the Board has ordered
the sale at auction of a members share of stock for indebtedness under Section 31 (b) hereof, the
Secretary shall notify the owner thereof and shall advise the Membership Committee of such fact.," The
records do not disclose what report the Corporate Secretary transmitted to the Membership Committee to
comply with Section 32(a). Obviously, the reason for this mandatory requirement is to give the
Membership Committee the opportunity to find out, before the share is sold, if proper notice has been
made to the shareholder member.

We presume that the Corporate Secretary, as a lawyer is knowledgeable on the law and on the standards
of good faith and fairness that the law requires. As custodian of corporate records, he should also have
known that the first two letters sent to Clemente were returned because the P.O. Box had been closed.

135
Thus, we are surprised given his knowledge of the law and of corporate records that he would send
the third and final letter Clementes last chance before his share is sold and his membership lost to
the same P.O. Box that had been closed.

Calatagan argues that it "exercised due diligence before the foreclosure sale" and "sent several notices to
Clementes specified mailing address." We do not agree; we cannot label as due diligence Calatagans
act of sending the December 7, 1992 letter to Clementes mailing address knowing fully well that the P.O.
Box had been closed. Due diligence or good faith imposes upon the Corporate Secretary the chief
repository of all corporate records the obligation to check Clementes other address which, under the
By-Laws, have to be kept on file and are in fact on file. One obvious purpose of giving the Corporate
Secretary the duty to keep the addresses of members on file is specifically for matters of this kind, when
the member cannot be reached through his or her mailing address. Significantly, the Corporate Secretary
does not have to do the actual verification of other addressees on record; a mere clerk can do the very
simple task of checking the files as in fact clerks actually undertake these tasks. In fact, one telephone
call to Clementes phone numbers on file would have alerted him of his impending loss.

Ultimately, the petition must fail because Calatagan had failed to duly observe both the spirit and letter of
its own by-laws. The by-law provisions was clearly conceived to afford due notice to the delinquent
member of the impending sale, and not just to provide an intricate faade that would facilitate Calatagans
sale of the share. But then, the bad faith on Calatagans part is palpable. As found by the Court of
Appeals, Calatagan very well knew that Clementes postal box to which it sent its previous letters had
already been closed, yet it persisted in sending that final letter to the same postal box. What for? Just for
the exercise, it appears, as it had known very well that the letter would never actually reach
Clemente.1avvphi1

It is noteworthy that Clemente in his membership application had provided his residential address along
with his residence and office telephone numbers. Nothing in Section 32 of Calatagans By-Laws requires
that the final notice prior to the sale be made solely through the members mailing address. Clemente
cites our aphorism-like pronouncement in Rizal Commercial Banking Corporation v. Court of
Appeals15 that "[a] simple telephone call and an ounce of good faith x x x could have prevented this
present controversy." That memorable observation is quite apt in this case.

Calatagans bad faith and failure to observe its own By-Laws had resulted not merely in the loss of
Clementes privilege to play golf at its golf course and avail of its amenities, but also in significant
pecuniary damage to him. For that loss, the only blame that could be thrown Clementes way was his
failure to notify Calatagan of the closure of the P.O. Box. That lapse, if we uphold Calatagan would cost
Clemente a lot. But, in the first place, does he deserve answerability for failing to notify the club of the
closure of the postal box? Indeed, knowing as he did that Calatagan was in possession of his home
address as well as residence and office telephone numbers, he had every reason to assume that the club
would not be at a loss should it need to contact him. In addition, according to Clemente, he was not even
aware of the closure of the postal box, the maintenance of which was not his responsibility but his
employer Phimcos.

The utter bad faith exhibited by Calatagan brings into operation Articles 19, 20 and 21 of the Civil
Code,16 under the Chapter on Human Relations. These provisions, which the Court of Appeals did apply,
enunciate a general obligation under law for every person to act fairly and in good faith towards one
another. A non-stock corporation like Calatagan is not exempt from that obligation in its treatment of its
members. The obligation of a corporation to treat every person honestly and in good faith extends even to
its shareholders or members, even if the latter find themselves contractually bound to perform certain
obligations to the corporation. A certificate of stock cannot be a charter of dehumanization.

We turn to the matter of damages. The award of actual damages is of course warranted since Clemente
has sustained pecuniary injury by reason of Calatagans wrongful violation of its own By-Laws. It would
not be feasible to deliver Clementes original Certificate of Stock because it had already been cancelled
and a new one issued in its place in the name of the purchases at the auction who was not impleaded in

136
this case. However, the Court of Appeals instead directed that Calatagan to issue to Clemente a new
certificate of stock. That sufficiently redresses the actual damages sustained by Clemente. After all, the
certificate of stock is simply the evidence of the share.

The Court of Appeals also awarded Clemente P200,000.00 as moral damages, P100,000.00 as
exemplary damages, and P100,000.00 as attorneys fees. We agree that the award of such damages is
warranted.

The Court of Appeals cited Calatagan for violation of Article 32 of the Civil Code, which allows recovery of
damages from any private individual "who directly or indirectly obstructs, defeats, violates or in any
manner impedes or impairs" the right "against deprivation of property without due process of laws." The
plain letter of the provision squarely entitles Clemente to damages from Calatagan. Even without Article
32 itself, Calatagan will still be bound to pay moral and exemplary damages to Clemente. The latter was
able to duly prove that he had sustained mental anguish, serious anxiety and wounded feelings by reason
of Calatagans acts, thereby entitling him to moral damages under Article 2217 of the Civil Code.
Moreover, it is evident that Calatagans bad faith as exhibited in the

course of its corporate actions warrants correction for the public good, thereby justifying exemplary
damages under Article 2229 of the Civil Code.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs
against petitioner.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 161921 July 17, 2013

JOYCE V. ARDIENTE, PETITIONER,

vs.
SPOUSES JAVIER AND MA. THERESA PASTORFIDE, CAGAYAN DE ORO WATER DISTRICT AND
GASPAR GONZALEZ,* JR., RESPONDENTS.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision1 and Resolution2 of the Court of Appeals (CA), dated August 28, 2003
and December 17, 2003, respectively, in CA-G.R. CV No. 73000. The CA Decision affirmed with
modification the August 15, 2001 Decision3 of the Regional Trial Court (RTC) of Cagayan de Oro City,
Branch 24, while the CA Resolution denied petitioner's Motion for Reconsideration.

The facts, as summarized by the CA, are as follows:

137
[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of a housing
unit at Emily Homes, Balulang, Cagayan de Oro City with a lot area of one hundred fifty-three (153)
square meters and covered by Transfer Certificate of Title No. 69905.

On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. "B", pp. 470-473,
Records) selling, transferring and conveying in favor of [respondent] Ma. Theresa Pastorfide all their
rights and interests in the housing unit at Emily Homes in consideration of P70,000.00. The Memorandum
of Agreement carries a stipulation:

"4. That the water and power bill of the subject property shall be for the account of the Second Party (Ma.
Theresa Pastorfide) effective June 1, 1994." (Records, p. 47)

vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured by Joyce
Ardiente from the National Home Mortgage (Records, Exh. "A", pp. 468-469)

For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente was never
questioned nor perturbed (T.S.N., October 31, 2000, pp. 7-8) until on March 12, 1999, without notice, the
water connection of Ma. Theresa was cut off. Proceeding to the office of the Cagayan de Oro Water
District (COWD) to complain, a certain Mrs. Madjos told Ma. Theresa that she was delinquent for three (3)
months corresponding to the months of December 1998, January 1999, and February 1999. Ma. Theresa
argued that the due date of her payment was March 18, 1999 yet (T.S.N., October 31, 2000, pp. 11-12).
Mrs. Madjos later told her that it was at the instance of Joyce Ardiente that the water line was cut off
(T.S.N., February 5, 2001, p. 31).

On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12). On the same
date, through her lawyer, Ma. Theresa wrote a letter to the COWD to explain who authorized the cutting
of the water line (Records, p. 160).

On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez, Jr., answered
the letter dated March 15, 1999 and reiterated that it was at the instance of Joyce Ardiente that the water
line was cut off (Records, p. 161).

Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint for damages
[against petitioner, COWD and its manager Gaspar Gonzalez] (Records, pp. 2-6).

In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected when the [trial]
court issued a writ of preliminary mandatory injunction on December 14, 1999 (Records, p. 237). 4

After trial, the RTC rendered judgment holding as follows:

xxxx

In the exercise of their rights and performance of their duties, defendants did not act with justice, gave
plaintiffs their due and observe honesty and good faith. Before disconnecting the water supply,
defendants COWD and Engr. Gaspar Gonzales did not even send a disconnection notice to plaintiffs as
testified to by Engr. Bienvenido Batar, in-charge of the Commercial Department of defendant COWD.
There was one though, but only three (3) days after the actual disconnection on March 12, 1999. The due
date for payment was yet on March 15. Clearly, they did not act with justice. Neither did they observe
honesty.

They should not have been swayed by the prodding of Joyce V. Ardiente. They should have investigated
first as to the present ownership of the house. For doing the act because Ardiente told them, they were
negligent. Defendant Joyce Ardiente should have requested before the cutting off of the water supply,

138
plaintiffs to pay. While she attempted to tell plaintiffs but she did not have the patience of seeing them.
She knew that it was plaintiffs who had been using the water four (4) years ago and not hers. She should
have been very careful. x x x5

The dispositive portion of the trial court's Decision reads, thus:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants [Ardiente, COWD
and Gonzalez] to pay jointly and severally plaintiffs, the following sums:

(a) P200,000.00 for moral damages;

(b) 200,000.00 for exemplary damages; and

(c) 50,000.00 for attorney's fee.

The cross-claim of Cagayan de Oro Water District and Engr. Gaspar Gonzales is hereby dismissed. The
Court is not swayed that the cutting off of the water supply of plaintiffs was because they were influenced
by defendant Joyce Ardiente. They were negligent too for which they should be liable.

SO ORDERED.6

Petitioner, COWD and Gonzalez filed an appeal with the CA.

On August 28, 2003, the CA promulgated its assailed Decision disposing as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the modification that the
awarded damages is reduced to P100,000.00 each for moral and exemplary damages, while attorney's
fees is lowered to P25,000.00. Costs against appellants.

SO ORDERED.7

The CA ruled, with respect to petitioner, that she has a "legal duty to honor the possession and use of
water line by Ma. Theresa Pastorfide pursuant to their Memorandum of Agreement" and "that when
[petitioner] applied for its disconnection, she acted in bad faith causing prejudice and [injury to] Ma.
Theresa Pastorfide."8

As to COWD and Gonzalez, the CA held that they "failed to give a notice of disconnection and derelicted
in reconnecting the water line despite payment of the unpaid bills by the [respondent spouses
Pastorfide]."9

Petitioner, COWD and Gonzalez filed their respective Motions for Reconsideration, but these were denied
by the CA in its Resolution dated December 17, 2003.

COWD and Gonzalez filed a petition for review on certiorari with this Court, which was docketed as G.R.
No. 161802. However, based on technical grounds and on the finding that the CA did not commit any
reversible error in its assailed Decision, the petition was denied via a Resolution 10 issued by this Court on
March 24, 2004. COWD and Gonzalez filed a motion for reconsideration, but the same was denied with
finality through this Court's Resolution11 dated June 28, 2004.

Petitioner, on the other hand, timely filed the instant petition with the following Assignment of Errors:

139
 7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS REDUCED THE LIABILITY INTO
HALF) HAS STILL COMMITTED GRAVE AND SERIOUS ERROR WHEN IT UPHELD THE
JOINT AND SOLIDARY LIABILITY OF PETITIONER JOYCE V. ARDIENTE WITH CAGAYAN
DE ORO WATER DISTRICT (COWD) AND ENGR. GASPAR D. GONZALES FOR THE
LATTER'S FAILURE TO SERVE NOTICE UPON RESPONDENTS SPOUSES PASTORFIDE
PRIOR TO THE ACTUAL DISCONNECTION DESPITE EVIDENCE ADDUCED DURING TRIAL
THAT EVEN WITHOUT PETITIONER'S REQUEST, COWD WAS ALREADY SET TO EFFECT
DISCONNECTION OF RESPONDENTS' WATER SUPPLY DUE TO NON-PAYMENT OF
ACCOUNT FOR THREE (3) MONTHS.

7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR
WHEN IT RULED TOTALLY AGAINST PETITIONER AND FAILED TO FIND THAT
RESPONDENTS ARE GUILTY OF CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED TO
PAY THEIR WATER BILLS FOR THREE MONTHS AND TO MOVE FOR THE TRANSFER OF
THE COWD ACCOUNT IN THEIR NAME, WHICH WAS A VIOLATION OF THEIR
MEMORANDUM OF AGREEMENT WITH PETITIONER JOYCE V. ARDIENTE.
RESPONDENTS LIKEWISE DELIBERATELY FAILED TO EXERCISE DILIGENCE OF A GOOD
FATHER OF THE FAMILY TO MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE NEW
CIVIL CODE.

7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DISREGARDED

THE FACT THAT RESPONDENT SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO
OBSERVE ARTICLE 19 OF THE NEW CIVIL CODE, i.e., IN THE EXERCISE OF THEIR
RIGHTS AND IN THE PERFORMANCE OF THEIR DUTIES TO ACT WITH JUSTICE, GIVE
EVERYONE HIS DUE AND OBSERVE HONESTY AND GOOD FAITH.

7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED AN

AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES AS AGAINST
PETITIONER ARDIENTE.12

At the outset, the Court noticed that COWD and Gonzalez, who were petitioner's co-defendants before
the RTC and her co-appellants in the CA, were impleaded as respondents in the instant petition. This
cannot be done. Being her co-parties before the RTC and the CA, petitioner cannot, in the instant petition
for review on certiorari, make COWD and Gonzalez, adversary parties. It is a grave mistake on the part of
petitioner's counsel to treat COWD and Gonzalez as respondents. There is no basis to do so, considering
that, in the first place, there is no showing that petitioner filed a cross-claim against COWD and Gonzalez.
Under Section 2, Rule 9 of the Rules of Court, a cross-claim which is not set up shall be barred. Thus, for
failing to set up a cross-claim against COWD and Gonzalez before the RTC, petitioner is already barred
from doing so in the present petition.

More importantly, as shown above, COWD and Gonzalez's petition for review on certiorari filed with this
Court was already denied with finality on June 28, 2004, making the presently assailed CA Decision final
and executory insofar as COWD and Gonzalez are concerned. Thus, COWD and Gonzalez are already
precluded from participating in the present petition. They cannot resurrect their lost cause by filing
pleadings this time as respondents but, nonetheless, reiterating the same prayer in their previous
pleadings filed with the RTC and the CA.

As to the merits of the instant petition, the Court likewise noticed that the main issues raised by petitioner
are factual and it is settled that the resolution of factual issues is the function of lower courts, whose
findings on these matters are received with respect and considered binding by the Supreme Court subject
only to certain exceptions, none of which is present in this instant petition. 13 This is especially true when
the findings of the RTC have been affirmed by the CA as in this case.14

In any case, a perusal of the records at hand would readily show that the instant petition lacks merit.

140
Petitioner insists that she should not be held liable for the disconnection of respondent spouses' water
supply, because she had no participation in the actual disconnection. However, she admitted in the
present petition that it was she who requested COWD to disconnect the Spouses Pastorfide's water
supply. This was confirmed by COWD and Gonzalez in their cross-claim against petitioner. While it was
COWD which actually discontinued respondent spouses' water supply, it cannot be denied that it was
through the instance of petitioner that the Spouses Pastorfide's water supply was disconnected in the first
place.

It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to cause the
transfer of the former's account with COWD to the latter's name pursuant to their Memorandum of
Agreement. However, the remedy to enforce such right is not to cause the disconnection of the
respondent spouses' water supply. The exercise of a right must be in accordance with the purpose for
which it was established and must not be excessive or unduly harsh; there must be no intention to harm
another.15 Otherwise, liability for damages to the injured party will attach.16 In the present case, intention
to harm was evident on the part of petitioner when she requested for the disconnection of respondent
spouses water supply without warning or informing the latter of such request. Petitioner claims that her
request for disconnection was based on the advise of COWD personnel and that her intention was just to
compel the Spouses Pastorfide to comply with their agreement that petitioner's account with COWD be
transferred in respondent spouses' name. If such was petitioner's only intention, then she should have
advised respondent spouses before or immediately after submitting her request for disconnection, telling
them that her request was simply to force them to comply with their obligation under their Memorandum of
Agreement. But she did not. What made matters worse is the fact that COWD undertook the
disconnection also without prior notice and even failed to reconnect the Spouses Pastorfides water
supply despite payment of their arrears. There was clearly an abuse of right on the part of petitioner,
COWD and Gonzalez. They are guilty of bad faith.

The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that every person
must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith.

In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle Publishing Corporation 17 is
instructive, to wit:

xxxx

This provision of law sets standards which must be observed in the exercise of ones rights as well as in
the performance of its duties, to wit: to act with justice; give everyone his due; and observe honesty and
good faith.

In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that while Article 19
"lays down a rule of conduct for the government of human relations and for the maintenance of social
order, it does not provide a remedy for its violation. Generally, an action for damages under either Article
20 or Article 21 would be proper." The Court said:

One of the more notable innovations of the New Civil Code is the codification of "some basic principles
that are to be observed for the rightful relationship between human beings and for the stability of the
social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE
PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which
merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental
precepts which were "designed to indicate certain norms that spring from the fountain of good
conscience" and which were also meant to serve as "guides for human conduct [that] should run as
golden threads through society, to the end that law may approach its supreme ideal, which is the sway
and dominance of justice." (Id.) Foremost among these principles is that pronounced in Article 19 x x x.

141
 xxxx

This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain
standards which must be observed not only in the exercise of one's rights, but also in the performance of
one's duties. These standards are the following: to act with justice; to give everyone his due; and to
observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in
their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by
itself legal because recognized or granted by law as such, may nevertheless become the source of some
illegality. When a right is exercised in a manner which does not conform with the norms enshrined in
Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer
must be held responsible. But while Article 19 lays down a rule of conduct for the government of human
relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally,
an action for damages under either Article 20 or Article 21 would be proper.

Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently causes
damage to another shall indemnify the latter for the same." It speaks of the general sanctions of all other
provisions of law which do not especially provide for its own sanction. When a right is exercised in a
manner which does not conform to the standards set forth in the said provision and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be responsible. Thus, if the
provision does not provide a remedy for its violation, an action for damages under either Article 20 or
Article 21 of the Civil Code would be proper.

The question of whether or not the principle of abuse of rights has been violated resulting in damages
under Article 20 or other applicable provision of law, depends on the circumstances of each case. x x x 18

To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her unjustifiable
act of having the respondent spouses' water supply disconnected, coupled with her failure to warn or at
least notify respondent spouses of such intention. On the part of COWD and Gonzalez, it is their failure to
give prior notice of the impending disconnection and their subsequent neglect to reconnect respondent
spouses' water supply despite the latter's settlement of their delinquent account.

On the basis of the foregoing, the Court finds no cogent reason to depart from the ruling of both the RTC
and the CA that petitioner, COWD and Gonzalez are solidarily liable.

The Spouses Pastorfide are entitled to moral damages based on the provisions of Article 2219, 19 in
connection with Articles 2020 and 2121 of the Civil Code.

As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way of
example or correction for the public good. Nonetheless, exemplary damages are imposed not to enrich
one party or impoverish another, but to serve as a deterrent against or as a negative incentive to curb
socially deleterious actions.22 In the instant case, the Court agrees with the CA in sustaining the award of
exemplary damages, although it reduced the amount granted, considering that respondent spouses were
deprived of their water supply for more than nine (9) months, and such deprivation would have continued
were it not for the relief granted by the RTC.

With respect to the award of attorney's fees, Article 2208 of the Civil Code provides, among others, that
such fees may be recovered when exemplary damages are awarded, when the defendant's act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest, and where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable claim.

WHEREFORE, instant petition for review on certiorari is DENIED. The Decision and Resolution of the
Court of Appeals, dated August 28, 2003 and December 17, 2003, respectively, in CA-G.R. CV No.
73000 are AFFIRMED.

142
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 89252 May 24, 1993

RAUL SESBREO, petitioner,

vs.
HON. COURT OF APPEALS, DELTA MOTORS CORPORATION AND PILIPINAS BANK, respondents.

Salva, Villanueva & Associates for Delta Motors Corporation.

Reyes, Salazar & Associates for Pilipinas Bank.

FELICIANO, J.:

On 9 February 1981, petitioner Raul Sesbreo made a money market placement in the amount of
P300,000.00 with the Philippine Underwriters Finance Corporation ("Philfinance"), Cebu Branch; the
placement, with a term of thirty-two (32) days, would mature on 13 March 1981, Philfinance, also on 9
February 1981, issued the following documents to petitioner:

(a) the Certificate of Confirmation of Sale, "without recourse," No. 20496 of one (1) Delta
Motors Corporation Promissory Note ("DMC PN") No. 2731 for a term of 32 days at
17.0% per annum;

(b) the Certificate of securities Delivery Receipt No. 16587 indicating the sale of DMC PN
No. 2731 to petitioner, with the notation that the said security was in custodianship of
Pilipinas Bank, as per Denominated Custodian Receipt ("DCR") No. 10805 dated 9
February 1981; and

(c) post-dated checks payable on 13 March 1981 (i.e., the maturity date of petitioner's
investment), with petitioner as payee, Philfinance as drawer, and Insular Bank of Asia
and America as drawee, in the total amount of P304,533.33.

On 13 March 1981, petitioner sought to encash the postdated checks issued by Philfinance. However, the
checks were dishonored for having been drawn against insufficient funds.

On 26 March 1981, Philfinance delivered to petitioner the DCR No. 10805 issued by private respondent
Pilipinas Bank ("Pilipinas"). It reads as follows:

PILIPINAS BANK
Makati Stock Exchange Bldg.,

143
 Ayala Avenue, Makati,
Metro Manila

TO Raul Sesbreo

144
 DENOMINATED CUSTODIAN RECEIPT

This confirms that as a duly Custodian Bank, and upon instruction of PHILIPPINE
UNDERWRITES FINANCE CORPORATION, we have in our custody the following
securities to you [sic] the extent herein indicated.

SERIAL MAT. FACE ISSUED REGISTERED AMOUNT

NUMBER DATE VALUE BY HOLDER PAYEE

2731 4-6-81 2,300,833.34 DMC PHIL. 307,933.33

UNDERWRITERS
FINANCE CORP.

We further certify that these securities may be inspected by you or your duly authorized
representative at any time during regular banking hours.

Upon your written instructions we shall undertake physical delivery of the above
securities fully assigned to you should this Denominated Custodianship Receipt remain
outstanding in your favor thirty (30) days after its maturity.

P
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B
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145
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1

On 2 April 1981, petitioner approached Ms. Elizabeth de Villa of private respondent Pilipinas, Makati
Branch, and handed her a demand letter informing the bank that his placement with Philfinance in the
amount reflected in the DCR No. 10805 had remained unpaid and outstanding, and that he in effect was
asking for the physical delivery of the underlying promissory note. Petitioner then examined the original of
the DMC PN No. 2731 and found: that the security had been issued on 10 April 1980; that it would mature
on 6 April 1981; that it had a face value of P2,300,833.33, with the Philfinance as "payee" and private
respondent Delta Motors Corporation ("Delta") as "maker;" and that on face of the promissory note was
stamped "NON NEGOTIABLE." Pilipinas did not deliver the Note, nor any certificate of participation in
respect thereof, to petitioner.

Petitioner later made similar demand letters, dated 3 July 1981 and 3 August 1981, 2 again asking private
respondent Pilipinas for physical delivery of the original of DMC PN No. 2731. Pilipinas allegedly referred
all of petitioner's demand letters to Philfinance for written instructions, as has been supposedly agreed

146
upon in "Securities Custodianship Agreement" between Pilipinas and Philfinance. Philfinance did not
provide the appropriate instructions; Pilipinas never released DMC PN No. 2731, nor any other instrument
in respect thereof, to petitioner.

Petitioner also made a written demand on 14 July 1981 3 upon private respondent Delta for the partial
satisfaction of DMC PN No. 2731, explaining that Philfinance, as payee thereof, had assigned to him said
Note to the extent of P307,933.33. Delta, however, denied any liability to petitioner on the promissory
note, and explained in turn that it had previously agreed with Philfinance to offset its DMC PN No. 2731
(along with DMC PN No. 2730) against Philfinance PN No. 143-A issued in favor of Delta.

In the meantime, Philfinance, on 18 June 1981, was placed under the joint management of the Securities
and exchange commission ("SEC") and the Central Bank. Pilipinas delivered to the SEC DMC PN No.
2731, which to date apparently remains in the custody of the SEC. 4

As petitioner had failed to collect his investment and interest thereon, he filed on 28 September 1982 an
action for damages with the Regional Trial Court ("RTC") of Cebu City, Branch 21, against private
respondents Delta and Pilipinas. 5 The trial court, in a decision dated 5 August 1987, dismissed the
complaint and counterclaims for lack of merit and for lack of cause of action, with costs against petitioner.

Petitioner appealed to respondent Court of Appeals in C.A.-G.R. CV No. 15195. In a Decision dated 21
March 1989, the Court of Appeals denied the appeal and held: 6

Be that as it may, from the evidence on record, if there is anyone that appears liable for
the travails of plaintiff-appellant, it is Philfinance. As correctly observed by the trial court:

This act of Philfinance in accepting the investment of plaintiff and

charging it against DMC PN No. 2731 when its entire face value was
already obligated or earmarked for set-off or compensation is difficult to
comprehend and may have been motivated with bad faith. Philfinance,
therefore, is solely and legally obligated to return the investment of
plaintiff, together with its earnings, and to answer all the damages
plaintiff has suffered incident thereto. Unfortunately for plaintiff,
Philfinance was not impleaded as one of the defendants in this case at
bar; hence, this Court is without jurisdiction to pronounce judgement
against it. (p. 11, Decision)

WHEREFORE, finding no reversible error in the decision appealed from, the same is
hereby affirmed in toto. Cost against plaintiff-appellant.

Petitioner moved for reconsideration of the above Decision, without success.

Hence, this Petition for Review on Certiorari.

After consideration of the allegations contained and issues raised in the pleadings, the Court resolved to
give due course to the petition and required the parties to file their respective memoranda. 7

Petitioner reiterates the assignment of errors he directed at the trial court decision, and contends that
respondent court of Appeals gravely erred: (i) in concluding that he cannot recover from private
respondent Delta his assigned portion of DMC PN No. 2731; (ii) in failing to hold private respondent
Pilipinas solidarily liable on the DMC PN No. 2731 in view of the provisions stipulated in DCR No. 10805
issued in favor r of petitioner, and (iii) in refusing to pierce the veil of corporate entity between Philfinance,
and private respondents Delta and Pilipinas, considering that the three (3) entities belong to the "Silverio
Group of Companies" under the leadership of Mr. Ricardo Silverio, Sr. 8

147
There are at least two (2) sets of relationships which we need to address: firstly, the relationship of
petitioner vis-a-vis Delta; secondly, the relationship of petitioner in respect of Pilipinas. Actually, of course,
there is a third relationship that is of critical importance: the relationship of petitioner and Philfinance.
However, since Philfinance has not been impleaded in this case, neither the trial court nor the Court of
Appeals acquired jurisdiction over the person of Philfinance. It is, consequently, not necessary for present
purposes to deal with this third relationship, except to the extent it necessarily impinges upon or intersects
the first and second relationships.

I.

We consider first the relationship between petitioner and Delta.

The Court of appeals in effect held that petitioner acquired no rights vis-a-vis Delta in respect of the Delta
promissory note (DMC PN No. 2731) which Philfinance sold "without recourse" to petitioner, to the extent
of P304,533.33. The Court of Appeals said on this point:

Nor could plaintiff-appellant have acquired any right over DMC PN No. 2731 as the same
is "non-negotiable" as stamped on its face (Exhibit "6"), negotiation being defined as the
transfer of an instrument from one person to another so as to constitute the transferee
the holder of the instrument (Sec. 30, Negotiable Instruments Law). A person not a holder
cannot sue on the instrument in his own name and cannot demand or receive payment
(Section 51, id.) 9

Petitioner admits that DMC PN No. 2731 was non-negotiable but contends that the Note had been validly
transferred, in part to him by assignment and that as a result of such transfer, Delta as debtor-maker of
the Note, was obligated to pay petitioner the portion of that Note assigned to him by the payee
Philfinance.

Delta, however, disputes petitioner's contention and argues:

(1) that DMC PN No. 2731 was not intended to be negotiated or otherwise transferred by
Philfinance as manifested by the word "non-negotiable" stamp across the face of the
Note 10 and because maker Delta and payee Philfinance intended that this Note would be
offset against the outstanding obligation of Philfinance represented by Philfinance PN No.
143-A issued to Delta as payee;

(2) that the assignment of DMC PN No. 2731 by Philfinance was without Delta's consent,
if not against its instructions; and

(3) assuming (arguendo only) that the partial assignment in favor of petitioner was valid,
petitioner took the Note subject to the defenses available to Delta, in particular, the
offsetting of DMC PN No. 2731 against Philfinance PN No. 143-A. 11

We consider Delta's arguments seriatim.

Firstly, it is important to bear in mind that the negotiation of a negotiable instrument must be distinguished
from the assignment or transfer of an instrument whether that be negotiable or non-negotiable. Only an
instrument qualifying as a negotiable instrument under the relevant statute may be negotiated either by
indorsement thereof coupled with delivery, or by delivery alone where the negotiable instrument is in
bearer form. A negotiable instrument may, however, instead of being negotiated, also
be assigned or transferred. The legal consequences of negotiation as distinguished from assignment of a
negotiable instrument are, of course, different. A non-negotiable instrument may, obviously, not be

148
negotiated; but it may be assigned or transferred, absent an express prohibition against assignment or
transfer written in the face of the instrument:

The words "not negotiable," stamped on the face of the bill of lading, did not destroy its
assignability, but the sole effect was to exempt the bill from the statutory provisions
relative thereto, and a bill, though not negotiable, may be transferred by assignment; the
assignee taking subject to the equities between the original parties. 12 (Emphasis added)

DMC PN No. 2731, while marked "non-negotiable," was not at the same time stamped "non-transferable"
or "non-assignable." It contained no stipulation which prohibited Philfinance from assigning or transferring,
in whole or in part, that Note.

Delta adduced the "Letter of Agreement" which it had entered into with Philfinance and which should be
quoted in full:

A
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Philippine Underwriters Finance Corp.

Benavidez St., Makati,
Metro Manila.

Attention: Mr. Alfredo O. Banaria

SVP-Treasurer

GENTLEMEN:

This refers to our outstanding placement of P4,601,666.67 as evidenced by your

Promissory Note No. 143-A, dated April 10, 1980, to mature on April 6, 1981.

As agreed upon, we enclose our non-negotiable Promissory Note No. 2730 and 2731 for
P2,000,000.00 each, dated April 10, 1980, to be offsetted [sic] against your PN No. 143-A
upon co-terminal maturity.

Please deliver the proceeds of our PNs to our representative, Mr. Eric Castillo.

V
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r
y
T
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u

149
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150
We find nothing in his "Letter of Agreement" which can be reasonably construed as a prohibition upon
Philfinance assigning or transferring all or part of DMC PN No. 2731, before the maturity thereof. It is
scarcely necessary to add that, even had this "Letter of Agreement" set forth an explicit prohibition of
transfer upon Philfinance, such a prohibition cannot be invoked against an assignee or transferee of the
Note who parted with valuable consideration in good faith and without notice of such prohibition. It is not
disputed that petitioner was such an assignee or transferee. Our conclusion on this point is reinforced by
the fact that what Philfinance and Delta were doing by their exchange of their promissory notes was this:
Delta invested, by making a money market placement with Philfinance, approximately P4,600,000.00 on
10 April 1980; but promptly, on the same day, borrowed back the bulk of that placement, i.e.,
P4,000,000.00, by issuing its two (2) promissory notes: DMC PN No. 2730 and DMC PN No. 2731, both
also dated 10 April 1980. Thus, Philfinance was left with not P4,600,000.00 but only P600,000.00 in cash
and the two (2) Delta promissory notes.

Apropos Delta's complaint that the partial assignment by Philfinance of DMC PN No. 2731 had been
effected without the consent of Delta, we note that such consent was not necessary for the validity and
enforceability of the assignment in favor of petitioner. 14 Delta's argument that Philfinance's sale or
assignment of part of its rights to DMC PN No. 2731 constituted conventional subrogation, which required
its (Delta's) consent, is quite mistaken. Conventional subrogation, which in the first place is never lightly
inferred, 15 must be clearly established by the unequivocal terms of the substituting obligation or by the
evident incompatibility of the new and old obligations on every point. 16 Nothing of the sort is present in
the instant case.

It is in fact difficult to be impressed with Delta's complaint, since it released its DMC PN No. 2731 to
Philfinance, an entity engaged in the business of buying and selling debt instruments and other securities,
and more generally, in money market transactions. In Perez v. Court of Appeals, 17 the Court, speaking
through Mme. Justice Herrera, made the following important statement:

There is another aspect to this case. What is involved here is a money market
transaction. As defined by Lawrence Smith "the money market is a market dealing in
standardized short-term credit instruments (involving large amounts) where lenders and
borrowers do not deal directly with each other but through a middle manor a dealer in the
open market." It involves "commercial papers" which are instruments "evidencing
indebtness of any person or entity. . ., which are issued, endorsed, sold or transferred or
in any manner conveyed to another person or entity, with or without recourse". The
fundamental function of the money market device in its operation is to match and bring
together in a most impersonal manner both the "fund users" and the "fund suppliers." The
money market is an "impersonal market", free from personal considerations. "The market
mechanism is intended to provide quick mobility of money and securities."

The impersonal character of the money market device overlooks the individuals or
entities concerned. The issuer of a commercial paper in the money market necessarily
knows in advance that it would be expenditiously transacted and transferred to any
investor/lender without need of notice to said issuer. In practice, no notification is given to
the borrower or issuer of commercial paper of the sale or transfer to the investor.

xxx xxx xxx

There is need to individuate a money market transaction, a relatively novel institution in

the Philippine commercial scene. It has been intended to facilitate the flow and
acquisition of capital on an impersonal basis. And as specifically required by Presidential
Decree No. 678, the investing public must be given adequate and effective protection in
availing of the credit of a borrower in the commercial paper market.18 (Citations omitted;
emphasis supplied)

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We turn to Delta's arguments concerning alleged compensation or offsetting between DMC PN No. 2731
and Philfinance PN No. 143-A. It is important to note that at the time Philfinance sold part of its rights
under DMC PN No. 2731 to petitioner on 9 February 1981, no compensation had as yet taken place and
indeed none could have taken place. The essential requirements of compensation are listed in the Civil
Code as follows:

Art. 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;

(2) That both debts consists in a sum of money, or if the things due are consumable, they
be of the same kind, and also of the same quality if the latter has been stated;

(3) That the two debts are due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor. (Emphasis supplied)

On 9 February 1981, neither DMC PN No. 2731 nor Philfinance PN No. 143-A was due. This was
explicitly recognized by Delta in its 10 April 1980 "Letter of Agreement" with Philfinance, where Delta
acknowledged that the relevant promissory notes were "to be offsetted (sic) against [Philfinance] PN No.
143-A upon co-terminal maturity."

As noted, the assignment to petitioner was made on 9 February 1981 or from forty-nine (49) days before
the "co-terminal maturity" date, that is to say, before any compensation had taken place. Further, the
assignment to petitioner would have prevented compensation had taken place between Philfinance and
Delta, to the extent of P304,533.33, because upon execution of the assignment in favor of petitioner,
Philfinance and Delta would have ceased to be creditors and debtors of each other in their own right to
the extent of the amount assigned by Philfinance to petitioner. Thus, we conclude that the assignment
effected by Philfinance in favor of petitioner was a valid one and that petitioner accordingly became owner
of DMC PN No. 2731 to the extent of the portion thereof assigned to him.

The record shows, however, that petitioner notified Delta of the fact of the assignment to him only on 14
July 1981, 19that is, after the maturity not only of the money market placement made by petitioner but also
of both DMC PN No. 2731 and Philfinance PN No. 143-A. In other words, petitioner notified Delta of his
rights as assignee after compensation had taken place by operation of law because the offsetting
instruments had both reached maturity. It is a firmly settled doctrine that the rights of an assignee are not
any greater that the rights of the assignor, since the assignee is merely substituted in the place of the
assignor 20 and that the assignee acquires his rights subject to the equities i.e., the defenses which
the debtor could have set up against the original assignor before notice of the assignment was given to
the debtor. Article 1285 of the Civil Code provides that:

Art. 1285. The debtor who has consented to the assignment of rights made by a creditor
in favor of a third person, cannot set up against the assignee the compensation which
would pertain to him against the assignor, unless the assignor was notified by the debtor
at the time he gave his consent, that he reserved his right to the compensation.

If the creditor communicated the cession to him but the debtor did not consent thereto,
the latter may set up the compensation of debts previous to the cession, but not of
subsequent ones.

152
 If the assignment is made without the knowledge of the debtor, he may set up the
compensation of all credits prior to the same and also later ones until he had knowledge
of the assignment. (Emphasis supplied)

Article 1626 of the same code states that: "the debtor who, before having knowledge of the assignment,
pays his creditor shall be released from the obligation." In Sison v. Yap-Tico, 21 the Court explained that:

[n]o man is bound to remain a debtor; he may pay to him with whom he contacted to pay;
and if he pay before notice that his debt has been assigned, the law holds him
exonerated, for the reason that it is the duty of the person who has acquired a title by
transfer to demand payment of the debt, to give his debt or notice. 22

At the time that Delta was first put to notice of the assignment in petitioner's favor on 14 July 1981, DMC
PN No. 2731 had already been discharged by compensation. Since the assignor Philfinance could not
have then compelled payment anew by Delta of DMC PN No. 2731, petitioner, as assignee of Philfinance,
is similarly disabled from collecting from Delta the portion of the Note assigned to him.

It bears some emphasis that petitioner could have notified Delta of the assignment or sale was effected
on 9 February 1981. He could have notified Delta as soon as his money market placement matured on 13
March 1981 without payment thereof being made by Philfinance; at that time, compensation had yet to
set in and discharge DMC PN No. 2731. Again petitioner could have notified Delta on 26 March 1981
when petitioner received from Philfinance the Denominated Custodianship Receipt ("DCR") No. 10805
issued by private respondent Pilipinas in favor of petitioner. Petitioner could, in fine, have notified Delta at
any time before the maturity date of DMC PN No. 2731. Because petitioner failed to do so, and because
the record is bare of any indication that Philfinance had itself notified Delta of the assignment to petitioner,
the Court is compelled to uphold the defense of compensation raised by private respondent Delta. Of
course, Philfinance remains liable to petitioner under the terms of the assignment made by Philfinance to
petitioner.

II.

We turn now to the relationship between petitioner and private respondent Pilipinas. Petitioner contends
that Pilipinas became solidarily liable with Philfinance and Delta when Pilipinas issued DCR No. 10805
with the following words:

Upon your written instruction, we [Pilipinas] shall undertake physical delivery of the above
securities fully assigned to you . 23

The Court is not persuaded. We find nothing in the DCR that establishes an obligation on the part of
Pilipinas to pay petitioner the amount of P307,933.33 nor any assumption of liability in solidum with
Philfinance and Delta under DMC PN No. 2731. We read the DCR as a confirmation on the part of
Pilipinas that:

(1) it has in its custody, as duly constituted custodian bank, DMC PN No. 2731 of a
certain face value, to mature on 6 April 1981 and payable to the order of Philfinance;

(2) Pilipinas was, from and after said date of the assignment by Philfinance to petitioner
(9 February 1981), holding that Note on behalf and for the benefit of petitioner, at least to
the extent it had been assigned to petitioner by payee Philfinance; 24

(3) petitioner may inspect the Note either "personally or by authorized representative", at
any time during regular bank hours; and

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 (4) upon written instructions of petitioner, Pilipinas would physically deliver the DMC PN
No. 2731 (or a participation therein to the extent of P307,933.33) "should this
Denominated Custodianship receipt remain outstanding in [petitioner's] favor thirty (30)
days after its maturity."

Thus, we find nothing written in printers ink on the DCR which could reasonably be read as converting
Pilipinas into an obligor under the terms of DMC PN No. 2731 assigned to petitioner, either upon maturity
thereof or any other time. We note that both in his complaint and in his testimony before the trial court,
petitioner referred merely to the obligation of private respondent Pilipinas to effect the physical delivery to
him of DMC PN No. 2731. 25 Accordingly, petitioner's theory that Pilipinas had assumed a solidary
obligation to pay the amount represented by a portion of the Note assigned to him by Philfinance,
appears to be a new theory constructed only after the trial court had ruled against him. The solidary
liability that petitioner seeks to impute Pilipinas cannot, however, be lightly inferred. Under article 1207 of
the Civil Code, "there is a solidary liability only when the law or the nature of the obligation requires
solidarity," The record here exhibits no express assumption of solidary liability vis-a-vis petitioner, on the
part of Pilipinas. Petitioner has not pointed to us to any law which imposed such liability upon Pilipinas nor
has petitioner argued that the very nature of the custodianship assumed by private respondent Pilipinas
necessarily implies solidary liability under the securities, custody of which was taken by Pilipinas.
Accordingly, we are unable to hold Pilipinas solidarily liable with Philfinance and private respondent Delta
under DMC PN No. 2731.

We do not, however, mean to suggest that Pilipinas has no responsibility and liability in respect of
petitioner under the terms of the DCR. To the contrary, we find, after prolonged analysis and deliberation,
that private respondent Pilipinas had breached its undertaking under the DCR to petitioner Sesbreo.

We believe and so hold that a contract of deposit was constituted by the act of Philfinance in designating
Pilipinas as custodian or depositary bank. The depositor was initially Philfinance; the obligation of the
depository was owed, however, to petitioner Sesbreo as beneficiary of the custodianship or depository
agreement. We do not consider that this is a simple case of a stipulation pour autri. The custodianship or
depositary agreement was established as an integral part of the money market transaction entered into
by petitioner with Philfinance. Petitioner bought a portion of DMC PN No. 2731; Philfinance as assignor-
vendor deposited that Note with Pilipinas in order that the thing sold would be placed outside the control
of the vendor. Indeed, the constituting of the depositary or custodianship agreement was equivalent to
constructive delivery of the Note (to the extent it had been sold or assigned to petitioner) to petitioner. It
will be seen that custodianship agreements are designed to facilitate transactions in the money market by
providing a basis for confidence on the part of the investors or placers that the instruments bought by
them are effectively taken out of the pocket, as it were, of the vendors and placed safely beyond their
reach, that those instruments will be there available to the placers of funds should they have need of
them. The depositary in a contract of deposit is obliged to return the security or the thing deposited upon
demand of the depositor (or, in the presented case, of the beneficiary) of the contract, even though a term
for such return may have been established in the said contract. 26 Accordingly, any stipulation in the
contract of deposit or custodianship that runs counter to the fundamental purpose of that agreement or
which was not brought to the notice of and accepted by the placer-beneficiary, cannot be enforced as
against such beneficiary-placer.

We believe that the position taken above is supported by considerations of public policy. If there is any
party that needs the equalizing protection of the law in money market transactions, it is the members of
the general public whom place their savings in such market for the purpose of generating interest
revenues. 27 The custodian bank, if it is not related either in terms of equity ownership or management
control to the borrower of the funds, or the commercial paper dealer, is normally a preferred or traditional
banker of such borrower or dealer (here, Philfinance). The custodian bank would have every incentive to
protect the interest of its client the borrower or dealer as against the placer of funds. The providers of
such funds must be safeguarded from the impact of stipulations privately made between the borrowers or
dealers and the custodian banks, and disclosed to fund-providers only after trouble has erupted.

154
In the case at bar, the custodian-depositary bank Pilipinas refused to deliver the security deposited with it
when petitioner first demanded physical delivery thereof on 2 April 1981. We must again note, in this
connection, that on 2 April 1981, DMC PN No. 2731 had not yet matured and therefore, compensation or
offsetting against Philfinance PN No. 143-A had not yet taken place. Instead of complying with the
demand of the petitioner, Pilipinas purported to require and await the instructions of Philfinance, in
obvious contravention of its undertaking under the DCR to effect physical delivery of the Note upon
receipt of "written instructions" from petitioner Sesbreo. The ostensible term written into the DCR (i.e.,
"should this [DCR] remain outstanding in your favor thirty [30] days after its maturity") was not a defense
against petitioner's demand for physical surrender of the Note on at least three grounds: firstly, such term
was never brought to the attention of petitioner Sesbreo at the time the money market placement with
Philfinance was made; secondly, such term runs counter to the very purpose of the custodianship or
depositary agreement as an integral part of a money market transaction; and thirdly, it is inconsistent with
the provisions of Article 1988 of the Civil Code noted above. Indeed, in principle, petitioner became
entitled to demand physical delivery of the Note held by Pilipinas as soon as petitioner's money market
placement matured on 13 March 1981 without payment from Philfinance.

We conclude, therefore, that private respondent Pilipinas must respond to petitioner for damages
sustained by arising out of its breach of duty. By failing to deliver the Note to the petitioner as depositor-
beneficiary of the thing deposited, Pilipinas effectively and unlawfully deprived petitioner of the Note
deposited with it. Whether or not Pilipinas itself benefitted from such conversion or unlawful deprivation
inflicted upon petitioner, is of no moment for present purposes. Prima facie, the damages suffered by
petitioner consisted of P304,533.33, the portion of the DMC PN No. 2731 assigned to petitioner but lost
by him by reason of discharge of the Note by compensation, plus legal interest of six percent (6%) per
annum containing from 14 March 1981.

The conclusion we have reached is, of course, without prejudice to such right of reimbursement as
Pilipinas may have vis-a-vis Philfinance.

III.

The third principal contention of petitioner that Philfinance and private respondents Delta and Pilipinas
should be treated as one corporate entity need not detain us for long.

In the first place, as already noted, jurisdiction over the person of Philfinance was never acquired either
by the trial court nor by the respondent Court of Appeals. Petitioner similarly did not seek to implead
Philfinance in the Petition before us.

Secondly, it is not disputed that Philfinance and private respondents Delta and Pilipinas have been
organized as separate corporate entities. Petitioner asks us to pierce their separate corporate entities, but
has been able only to cite the presence of a common Director Mr. Ricardo Silverio, Sr., sitting on the
Board of Directors of all three (3) companies. Petitioner has neither alleged nor proved that one or
another of the three (3) concededly related companies used the other two (2) as mere alter egos or that
the corporate affairs of the other two (2) were administered and managed for the benefit of one. There is
simply not enough evidence of record to justify disregarding the separate corporate personalities of delta
and Pilipinas and to hold them liable for any assumed or undetermined liability of Philfinance to
petitioner. 28

WHEREFORE, for all the foregoing, the Decision and Resolution of the Court of Appeals in C.A.-G.R. CV
No. 15195 dated 21 march 1989 and 17 July 1989, respectively, are hereby MODIFIED and SET ASIDE,
to the extent that such Decision and Resolution had dismissed petitioner's complaint against Pilipinas
Bank. Private respondent Pilipinas bank is hereby ORDERED to indemnify petitioner for damages in the
amount of P304,533.33, plus legal interest thereon at the rate of six percent (6%) per annum counted
from 2 April 1981. As so modified, the Decision and Resolution of the Court of Appeals are hereby
AFFIRMED. No pronouncement as to costs.

155
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.C. No. 4697 November 25, 2014

FLORENCIO A. SALADAGA, Complainant,

vs.
ATTY. ARTURO B. ASTORGA, Respondent.

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

A.C. No. 4728

FLORENCIO A. SALADAGA, Complainant,

vs.
ATTY. ARTURO B. ASTORGA, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Membership in the legal profession is a high personal privilege burdened with conditions, 1 including
continuing fidelity to the law and constant possession of moral fitness. Lawyers, as guardians of the law,
play a vital role in the preservation of society, and a consequent obligation of lawyers is to maintain the
highest standards of ethical conduct.2 Failure to live by the standards of the legal profession and to
discharge the burden of the privilege conferred on one as a member of the bar warrant the suspension or
revocation of that privilege.

The Factual Antecedents

Complainant Florencio A. Saladaga and respondent Atty. Arturo B. Astorga entered into a "Deed of Sale
with Right to Repurchase" on December 2, 1981 where respondent sold (with rightof repurchase) to
complainant a parcel of coconut land located at Barangay Bunga, Baybay, Leyte covered by Transfer
Certificate of Title (TCT) No. T-662 for P15,000.00. Under the said deed, respondent represented that he
has "the perfect right to dispose as owner in fee simple" the subject property and that the said property is
"free from all liens and encumbrances."3The deed also provided that respondent, as vendor a retro, had
two years within which to repurchase the property, and if not repurchased within the said period, "the
parties shall renew [the] instrument/agreement."4

Respondent failed to exercise his right of repurchase within the period provided in the deed, and no
renewal of the contract was made even after complainant sent respondent a final demand dated May 10,
1984 for the latter to repurchase the property. Complainant remained in peaceful possession of the
property until December 1989 when he received letters from the Rural Bank of Albuera (Leyte), Inc.
(RBAI) informing him that the property was mortgaged by respondent to RBAI, that the bank had
subsequently foreclosed on the property, and that complainant should therefore vacate the property. 5

156
Complainant was alarmed and made aninvestigation. He learned the following:

(1) TCT No. T-662 was already cancelled by TCT No. T-3211 in the name of Philippine National
Bank (PNB) as early as November 17, 1972 after foreclosure proceedings;

(2) TCT No. T-3211 was cancelled by TCT No. T-7235 in the names of respondent and his wife
on January 4, 1982 pursuant to a deed of sale dated March 27,1979 between PNB and
respondent;

(3) Respondent mortgaged the subject property to RBAI on March 14, 1984, RBAI foreclosed on
the property, and subsequently obtained TCT No. TP-10635 on March 27, 1991.6 Complainant
was subsequently dispossessed of the property by RBAI. 7

Aggrieved, complainant instituted a criminal complaint for estafa against respondent with the Office of the
Provincial Prosecutor of Leyte, docketed as I.S. No. 95-144. The Provincial Prosecutor of Leyte approved
the Resolution8 dated April 21, 1995 in I.S. No. 95-144 finding that "[t]he facts of [the] case are sufficient
to engender a well-founded belief that Estafa x x x has been committed and that respondent herein is
probably guilty thereof."9Accordingly, an Information10 dated January 8,1996 was filed before the
Municipal Trial Court (MTC) of Baybay, Leyte, formally charging respondent with the crime of estafa
under Article 316, paragraphs 1 and 2 of the Revised Penal Code,11 committed as follows:

On March 14, 1984, accused representing himself as the owner of a parcel of land known as Lot No.
7661 of the Baybay Cadastre, mortgaged the same to the Rural Bank of Albuera, Albuera, Leyte, within
the jurisdiction of this Honorable Court, knowing fully well that the possessor and owner at that time was
private complainant Florencio Saladaga by virtue of a Pacto de Retro Sale which accused executed in
favor of private complainant on 2nd December, 1981, without first redeeming/repurchasing the same.
[P]rivate complainant knowing of accused[s] unlawful act only on or about the last week of February,
1991 when the rural bank dispossessed him of the property, the mortgage having been foreclosed,
private complainant thereby suffered damages and was prejudiced by accused[s] unlawful transaction
and misrepresentation.

The aforementioned estafa case against respondent was docketed as Criminal Case No. 3112-A.

Complainant likewise instituted the instant administrative cases against respondent by filing before this
Court an Affidavit-Complaint12 dated January 28, 1997 and Supplemental Complaint13 dated February 27,
1997, which were docketed as A.C. No. 4697 and A.C. No. 4728, respectively. In both complaints,
complainant sought the disbarment of respondent.

The administrative cases were referred to the Integrated Bar of the Philippines (IBP) for investigation,
report and recommendation.14

In his Consolidated Answer15 dated August 16, 2003 filed before the IBP, respondent denied that his
agreement with complainant was a pacto de retrosale. He claimed that it was an equitable mortgage and
that, if only complainant rendered an accounting of his benefits from the produce of the land, the total
amount would have exceeded P15,000.00.

Report and Recommendation of the Investigating Commissioner and Resolution of the IBP Board of
Governors

In a Report and Recommendation16 dated April 29, 2005, the Investigating Commissioner of the IBPs
Commission on Bar Discipline found that respondent was in bad faith when he dealt with complainant and
executed the "Deed of Sale with Right to Repurchase" but later on claimed that the agreement was one of
equitable mortgage. Respondent was also guilty of deceit or fraud when he represented in the "Deed of

157
Sale with Right to Repurchase" dated December 2, 1981 that the property was covered by TCT No. T-
662, even giving complainant the owners copy of the said certificate of title, when the said TCT had
already been cancelled on November 17, 1972 by TCT No. T-3211 in the name of Philippine National
Bank (PNB). Respondent made matters even worse, when he had TCT No. T-3211 cancelled with the
issuance of TCT No. T-7235 under his and his wifes name on January 4,1982 without informing
complainant. This was compounded by respondents subsequent mortgage of the property to RBAI,
which led to the acquisition of the property by RBAI and the dispossession thereof of complainant. Thus,
the Investigating Commissioner recommended that respondent be (1) suspended from the practice of law
for one year, with warning that a similar misdeed in the future shall be dealt with more severity, and (2)
ordered to return the sum of P15,000.00, the amount he received as consideration for the pacto de
retrosale, with interest at the legal rate.

Considering respondents "commission of unlawful acts, especially crimes involving moral turpitude,
actsof dishonesty, grossly immoral conduct and deceit," the IBP Board of Governors adopted and
approved the Investigating Commissioners Report and Recommendation with modification as follows:
respondent is(1) suspended from the practice of law for two years, with warning that a similar misdeed in
the future shall be dealt with more severity, and (2) ordered to return the sum of P15,000.00 received in
consideration of the pacto de retrosale, with legal interest.17

The Courts Ruling

The Court agrees with the recommendation of the IBP Board of Governors to suspend respondent from
the practice of law for two years, but it refrains from ordering respondent to return the P15,000.00
consideration, plus interest.

Respondent does not deny executing the "Deed of Sale with Right to Repurchase" dated December 2,
1981 in favor of complainant. However, respondent insists that the deed is not one of sale with pacto de
retro, but one of equitable mortgage. Thus, respondent argues that he still had the legal right to mortgage
the subject property to other persons. Respondent additionally asserts that complainant should render an
accounting of the produce the latter had collected from the said property, which would already exceed
the P15,000.00 consideration stated in the deed.

There is no merit in respondents defense.

Regardless of whether the written contract between respondent and complainant is actually one of sale
with pacto de retroor of equitable mortgage, respondents actuations in his transaction with complainant,
as well as in the present administrative cases, clearly show a disregard for the highest standards of legal
proficiency, morality, honesty, integrity, and fair dealing required from lawyers, for which respondent
should be held administratively liable.

When respondent was admitted to the legal profession, he took an oath where he undertook to "obey the
laws," "do no falsehood," and "conduct [him]self as a lawyer according to the best of [his] knowledge and
discretion."18He gravely violated his oath.

The Investigating Commissioner correctly found, and the IBP Board of Governors rightly agreed, that
respondent caused the ambiguity or vagueness in the "Deed of Sale with Right to Repurchase" as he was
the one who prepared or drafted the said instrument. Respondent could have simply denominated the
instrument as a deed of mortgage and referred to himself and complainant as "mortgagor" and
"mortgagee," respectively, rather than as "vendor a retro" and "vendee a retro." If only respondent had
been more circumspect and careful in the drafting and preparation of the deed, then the controversy
between him and complainant could havebeen avoided or, at the very least, easily resolved. His
imprecise and misleading wording of the said deed on its face betrayed lack oflegal competence on his
part. He thereby fell short of his oath to "conduct [him]self as a lawyer according to the best of [his]
knowledge and discretion."

158
More significantly, respondent transgressed the laws and the fundamental tenet of human relations
asembodied in Article 19 of the Civil Code:

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.

Respondent, as owner of the property, had the right to mortgage it to complainant but, as a lawyer, he
should have seen to it that his agreement with complainant is embodied in an instrument that clearly
expresses the intent of the contracting parties. A lawyer who drafts a contract must see to it that the
agreement faithfully and clearly reflects the intention of the contracting parties. Otherwise, the respective
rights and obligations of the contracting parties will be uncertain, which opens the door to legal disputes
between the said parties. Indeed, the uncertainty caused by respondents poor formulation of the "Deed
of Sale with Right to Repurchase" was a significant factor in the legal controversy between respondent
and complainant. Such poor formulation reflects at the very least negatively on the legal competence of
respondent.

Under Section 63 of the Land Registration Act,19 the law in effect at the time the PNB acquired the subject
property and obtained TCT No. T-3211 in its name in 1972, where a decree in favor of a purchaser who
acquires mortgaged property in foreclosure proceedings becomes final, such purchaser becomes entitled
to the issuance of a new certificate of title in his name and a memorandum thereof shall be "indorsed
upon the mortgagors original certificate."20 TCT No. T-662, which respondent gave complainant when
they entered into the "Deed of Sale with Right to Repurchase" dated December 2, 1981, does not
bearsuch memorandum but only a memorandum on the mortgage of the property to PNB in 1963 and the
subsequent amendment of the mortgage.

Respondent dealt with complainant with bad faith, falsehood, and deceit when he entered into the "Deed
of Sale with Right to Repurchase" dated December 2, 1981 with the latter. He made it appear that the
property was covered by TCT No. T-662 under his name, even giving complainant the owners copy of
the said certificate oftitle, when the truth is that the said TCT had already been cancelled some nine years
earlier by TCT No. T-3211 in the name of PNB. He did not evencare to correct the wrong statement in the
deed when he was subsequently issued a new copy of TCT No. T-7235 on January 4, 1982,21 or barely a
month after the execution of the said deed. All told, respondent clearly committed an act of gross
dishonesty and deceit against complainant.

Canon 1 and Rule 1.01 of the Codeof Professional Responsibility provide:

CANON 1 A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law
and legal processes.

Rule 1.01 A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct. Under Canon
1, a lawyer is not only mandated to personally obey the laws and the legal processes, he is moreover
expected to inspire respect and obedience thereto. On the other hand, Rule 1.01 states the norm of
conduct that is expected of all lawyers.22

Any act or omission that is contrary to, prohibited or unauthorized by, in defiance of, disobedient to, or
disregards the law is "unlawful." "Unlawful" conduct does not necessarily imply the element of criminality
although the concept is broad enough to include such element.23

To be "dishonest" means the disposition to lie, cheat, deceive, defraud or betray; be untrustworthy;
lacking inintegrity, honesty, probity, integrity in principle, fairness and straightforwardness. On the other
hand, conduct that is "deceitful" means as follows:

[Having] the proclivity for fraudulent and deceptive misrepresentation, artifice or device that is used upon
another who is ignorant of the true facts, to the prejudice and damage of the party imposed upon. In order

159
to be deceitful, the person must either have knowledge of the falsity or acted in reckless and conscious
ignorance thereof, especially if the parties are not on equal terms, and was done with the intent that the
aggrieved party act thereon, and the latter indeed acted in reliance of the false statement or deed in the
manner contemplated to his injury.24The actions of respondent in connection with the execution of the
"Deed of Sale with Right to Repurchase" clearly fall within the concept of unlawful, dishonest, and
deceitful conduct. They violate Article 19 of the Civil Code. They show a disregard for Section 63 of the
Land Registration Act. They also reflect bad faith, dishonesty, and deceit on respondents part. Thus,
respondent deserves to be sanctioned.

Respondents breach of his oath, violation of the laws, lack of good faith, and dishonesty are
compounded by his gross disregard of this Courts directives, as well as the orders of the IBPs
Investigating Commissioner (who was acting as an agent of this Court pursuant to the Courts referral of
these cases to the IBP for investigation, report and recommendation), which caused delay in the
resolution of these administrative cases.

In particular, the Court required respondent to comment on complainants Affidavit-Complaint in A.C. No.
4697 and Supplemental Complaint in A.C. No. 4728 on March 12, 1997 and June 25, 1997,
respectively.25 While he requested for several extensions of time within which to submit his comment, no
such comment was submitted prompting the Court to require him in a Resolution dated February 4,1998
to (1) show cause why he should not be disciplinarily dealt with or held in contempt for such failure, and
(2) submit the consolidated comment.26Respondent neither showed cause why he should not be
disciplinarily dealt with or held in contempt for such failure, nor submitted the consolidated comment.

When these cases were referred to the IBP and during the proceedings before the IBPs Investigating
Commissioner, respondent was again required several times to submit his consolidated answer. He only
complied on August 28, 2003, or more than six years after this Court originally required him to do so. The
Investigating Commissioner also directed the parties to submit their respective position papers. Despite
having been given several opportunities to submit the same, respondent did not file any position paper. 27

Respondents disregard of the directives of this Court and of the Investigating Commissioner, which
caused undue delay in these administrative cases, contravenes the following provisions of the Code of
Professional Responsibility:

CANON 11 A lawyer shall observe and maintain the respect due to the courts and to judicial officers
and should insist on similar conduct by others.

xxxx

CANON 12 A lawyer shall exert every effort and consider it his duty to assist in the speedy and efficient
administration of justice.

xxxx

Rule 12.03 A lawyer shall not, after obtaining extensions of time to file pleadings, memoranda or briefs,
let the period lapse without submitting the same or offering an explanation for his failure to do so.

Rule 12.04 A lawyer shall not unduly delay a case, impede the execution of a judgment or misuse court
processes.

Respondents infractions are aggravated by the fact that he has already been imposed a disciplinary
sanction before.1wphi1 In Nuez v. Atty. Astorga,28 respondent was held liable for conduct unbecoming
an attorney for which he was fined P2,000.00.

160
Given the foregoing, the suspension of respondent from the practice of law for two years, as
recommended by the IBP Board of Governors, is proper.

The Court, however, will not adopt the recommendation of the IBP to order respondent to return the sum
of P15,000.00 he received from complainant under the "Deed of Sale with Right to Repurchase." This is a
civil liability best determined and awarded in a civil case rather than the present administrative cases.

In Roa v. Moreno,29 the Court pronounced that "[i]n disciplinary proceedings against lawyers, the only
issue is whether the officer of the court is still fit to be allowed to continue as a member of the Bar. Our
only concern is the determination of respondents administrative liability. Our findings have no material
bearing on other judicial action which the parties may choose to file against each other."While the
respondent lawyers wrongful actuations may give rise at the same time to criminal, civil, and
administrative liabilities, each must be determined in the appropriate case; and every case must be
resolved in accordance with the facts and the law applicable and the quantum of proof required in each.
Section 5,30 in relation to Sections 131 and 2,32 Rule 133 of the Rules of Court states that in administrative
cases, such as the ones atbar, only substantial evidence is required, not proof beyond reasonable doubt
as in criminal cases, or preponderance of evidence asin civil cases. Substantial evidence is that amount
of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 33

The Court notes that based on the same factual antecedents as the present administrative cases,
complainant instituted a criminal case for estafa against respondent, docketed as Criminal Case No.
3112-A, before the MTC. When a criminal action is instituted, the civil action for the recovery of civil
liability arising from the offense charged shall be deemed instituted with the criminal action unless the
offended party waives the civil action, reserves the right to institute it separately or institutes the civil
action prior to the criminal action.34 Unless the complainant waived the civil action, reserved the right to
institute it separately, or instituted the civil action prior to the criminal action, then his civil action for the
recovery of civil liability arising from the estafa committed by respondent is deemed instituted with
Criminal Case No. 3112-A. The civil liability that complainant may recover in Criminal Case No. 3112-A
includes restitution; reparation of the damage caused him; and/or indemnification for consequential
damages,35 which may already cover the P15,000.00 consideration complainant had paid for the subject
property.

WHEREFORE, respondent is hereby found GUILTY of the following: breach of the Lawyers Oath;
unlawful, dishonest, and deceitful conduct; and disrespect for the Court and causing undue delay of these
cases, for which he is SUSPENDED from the practice of law for a period of two (2) years, reckoned from
receipt of this Decision, with WARNING that a similar misconduct in the future shall be dealt with more
severely.

Let a copy of this Decision be furnished the Office of the Bar Confidant and the Integrated Bar of the
Philippines for their information and guidance. The Court Administrator is directed to circulate this
Decision to all courts in the country.

SO ORDERED.

N.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

161
G.R. No. 127358 March 31, 2005

NOEL BUENAVENTURA, Petitioner,

vs.
COURT OF APPEALS and ISABEL LUCIA SINGH BUENAVENTURA, respondents.

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

G.R. No. 127449 March 31, 2005

NOEL BUENAVENTURA, Petitioner,

vs.
COURT OF APPEALS and ISABEL LUCIA SINGH BUENAVENTURA, Respondents.

DECISION

AZCUNA, J.:

These cases involve a petition for the declaration of nullity of marriage, which was filed by petitioner Noel
Buenaventura on July 12, 1992, on the ground of the alleged psychological incapacity of his wife, Isabel
Singh Buenaventura, herein respondent. After respondent filed her answer, petitioner, with leave of court,
amended his petition by stating that both he and his wife were psychologically incapacitated to comply
with the essential obligations of marriage. In response, respondent filed an amended answer denying the
allegation that she was psychologically incapacitated.1

On July 31, 1995, the Regional Trial Court promulgated a Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1) Declaring and decreeing the marriage entered into between plaintiff Noel A. Buenaventura and
defendant Isabel Lucia Singh Buenaventura on July 4, 1979, null and void ab initio;

2) Ordering the plaintiff to pay defendant moral damages in the amount of 2.5 million pesos and
exemplary damages of 1 million pesos with 6% interest from the date of this decision plus
attorneys fees of P100,000.00;

3) Ordering the plaintiff to pay the defendant expenses of litigation of P50,000.00, plus costs;

4) Ordering the liquidation of the assets of the conjugal partnership property[,] particularly the
plaintiffs separation/retirement benefits received from the Far East Bank [and] Trust Company[,]
by ceding, giving and paying to her fifty percent (50%) of the net amount of P3,675,335.79
or P1,837,667.89 together with 12% interest per annum from the date of this decision and one-
half (1/2) of his outstanding shares of stock with Manila Memorial Park and Provident Group of
Companies;

5) Ordering him to give a regular support in favor of his son Javy Singh Buenaventura in the
amount of P15,000.00 monthly, subject to modification as the necessity arises;

6) Awarding the care and custody of the minor Javy Singh Buenaventura to his mother, the herein
defendant; and

7) Hereby authorizing the defendant to revert back to the use of her maiden family name Singh.

162
 Let copies of this decision be furnished the appropriate civil registry and registries of properties.

SO ORDERED.2

Petitioner appealed the above decision to the Court of Appeals. While the case was pending in the
appellate court, respondent filed a motion to increase the P15,000 monthly support pendente lite of their
son Javy Singh Buenaventura. Petitioner filed an opposition thereto, praying that it be denied or that such
incident be set for oral argument.3

On September 2, 1996, the Court of Appeals issued a Resolution increasing the support pendente
lite to P20,000.4 Petitioner filed a motion for reconsideration questioning the said Resolution. 5

On October 8, 1996, the appellate court promulgated a Decision dismissing petitioners appeal for lack of
merit and affirming in toto the trial courts decision.6 Petitioner filed a motion for reconsideration which
was denied. From the abovementioned Decision, petitioner filed the instant Petition for Review
on Certiorari.

On November 13, 1996, through another Resolution, the Court of Appeals denied petitioners motion for
reconsideration of the September 2, 1996 Resolution, which increased the monthly support for the
son.7Petitioner filed a Petition for Certiorari to question these two Resolutions.

On July 9, 1997, the Petition for Review on Certiorari8 and the Petition for Certiorari9 were ordered
consolidated by this Court.10

In the Petition for Review on Certiorari petitioner claims that the Court of Appeals decided the case not in
accord with law and jurisprudence, thus:

1. WHEN IT AWARDED DEFENDANT-APPELLEE MORAL DAMAGES IN THE AMOUNT OF

P2.5 MILLION AND EXEMPLARY DAMAGES OF P1 MILLION, WITH 6% INTEREST FROM
THE DATE OF ITS DECISION, WITHOUT ANY LEGAL AND MORAL BASIS;

2. WHEN IT AWARDED P100,000.00 ATTORNEYS FEES AND P50,000.00 EXPENSES OF

LITIGATION, PLUS COSTS, TO DEFENDANT-APPELLEE, WITHOUT FACTUAL AND LEGAL
BASIS;

3. WHEN IT ORDERED PLAINTIFF-APPELLANT NOEL TO PAY DEFENDANT-APPELLEE

ONE-HALF OR P1,837,667.89 OUT OF HIS RETIREMENT BENEFITS RECEIVED FROM THE
FAR EAST BANK AND TRUST CO., WITH 12% INTEREST THEREON FROM THE DATE OF
ITS DECISION, NOTWITHSTANDING THAT SAID RETIREMENT BENEFITS ARE
GRATUITOUS AND EXCLUSIVE PROPERTY OF NOEL, AND ALSO TO DELIVER TO
DEFENDANT-APPELLEE ONE-HALF OF HIS SHARES OF STOCK WITH THE MANILA
MEMORIAL PARK AND THE PROVIDENT GROUP OF COMPANIES, ALTHOUGH SAID
SHARES OF STOCK WERE ACQUIRED BY NOEL BEFORE HIS MARRIAGE TO
RESPONDENT ISABEL AND ARE, THEREFORE, AGAIN HIS EXCLUSIVE PROPERTIES; AND

4. WHEN IT AWARDED EXCLUSIVE CARE AND CUSTODY OVER THE PARTIES MINOR
CHILD TO DEFENDANT-APPELLEE WITHOUT ASKING THE CHILD (WHO WAS ALREADY 13
YEARS OLD AT THAT TIME) HIS CHOICE AS TO WHOM, BETWEEN HIS TWO PARENTS, HE
WOULD LIKE TO HAVE CUSTODY OVER HIS PERSON.11

In the Petition for Certiorari, petitioner advances the following contentions:

163
 THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT REFUSED TO
SET RESPONDENTS MOTION FOR INCREASED SUPPORT FOR THE PARTIES SON FOR
HEARING.12

THERE WAS NO NEED FOR THE COURT OF APPEALS TO INCREASE JAVYS MONTHLY
SUPPORT OF P15,000.00 BEING GIVEN BY PETITIONER EVEN AT PRESENT PRICES. 13

IN RESOLVING RESPONDENTS MOTION FOR THE INCREASE OF JAVYS SUPPORT, THE

COURT OF APPEALS SHOULD HAVE EXAMINED THE LIST OF EXPENSES SUBMITTED BY
RESPONDENT IN THE LIGHT OF PETITIONERS OBJECTIONS THERETO, INSTEAD OF
MERELY ASSUMING THAT JAVY IS ENTITLED TO A P5,000 INCREASE IN SUPPORT AS
SAID AMOUNT IS "TOO MINIMAL."14

LIKEWISE, THE COURT OF APPEALS SHOULD HAVE GIVEN PETITIONER AN

OPPORTUNITY TO PROVE HIS PRESENT INCOME TO SHOW THAT HE CANNOT AFFORD
TO INCREASE JAVYS SUPPORT.15

With regard to the first issue in the main case, the Court of Appeals articulated:

On Assignment of Error C, the trial court, after findings of fact ascertained from the testimonies
not only of the parties particularly the defendant-appellee but likewise, those of the two
psychologists, awarded damages on the basis of Articles 21, 2217 and 2229 of the Civil Code of
the Philippines.

Thus, the lower court found that plaintiff-appellant deceived the defendant-appellee into marrying
him by professing true love instead of revealing to her that he was under heavy parental pressure
to marry and that because of pride he married defendant-appellee; that he was not ready to enter
into marriage as in fact his career was and always would be his first priority; that he was unable to
relate not only to defendant-appellee as a husband but also to his son, Javy, as a father; that he
had no inclination to make the marriage work such that in times of trouble, he chose the easiest
way out, that of leaving defendantappellee and their son; that he had no desire to keep
defendant-appellee and their son as proved by his reluctance and later, refusal to reconcile after
their separation; that the aforementioned caused defendant-appellee to suffer mental anguish,
anxiety, besmirched reputation, sleepless nights not only in those years the parties were together
but also after and throughout their separation.

Plaintiff-appellant assails the trial courts decision on the ground that unlike those arising from a
breach in ordinary contracts, damages arising as a consequence of marriage may not be
awarded. While it is correct that there is, as yet, no decided case by the Supreme Court where
damages by reason of the performance or non-performance of marital obligations were awarded,
it does not follow that no such award for damages may be made.

Defendant-appellee, in her amended answer, specifically prayed for moral and exemplary
damages in the total amount of 7 million pesos. The lower court, in the exercise of its discretion,
found full justification of awarding at least half of what was originally prayed for. We find no
reason to disturb the ruling of the trial court.16

The award by the trial court of moral damages is based on Articles 2217 and 21 of the Civil Code, which
read as follows:

ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendants wrongful act or omission.

164
 ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

The trial court referred to Article 21 because Article 221917 of the Civil Code enumerates the cases in
which moral damages may be recovered and it mentions Article 21 as one of the instances. It must be
noted that Article 21 states that the individual must willfully cause loss or injury to another. There is a
need that the act is willful and hence done in complete freedom. In granting moral damages, therefore,
the trial court and the Court of Appeals could not but have assumed that the acts on which the moral
damages were based were done willfully and freely, otherwise the grant of moral damages would have no
leg to stand on.

On the other hand, the trial court declared the marriage of the parties null and void based on Article 36 of
the Family Code, due to psychological incapacity of the petitioner, Noel Buenaventura. Article 36 of the
Family Code states:

A marriage contracted by any party who, at the time of the celebration, was psychologically
incapacitated to comply with the essential marital obligations of marriage, shall likewise be void
even if such incapacity becomes manifest only after its solemnization.

Psychological incapacity has been defined, thus:

. . . no less than a mental (not physical) incapacity that causes a party to be truly incognitive of
the basic marital covenants that concomitantly must be assumed and discharged by the
parties to the marriage which, as so expressed by Article 68 of the Family Code, include their
mutual obligations to live together, observe love, respect and fidelity and render help and support.
There is hardly any doubt that the intendment of the law has been to confine the meaning of
"psychological incapacity" to the most serious cases of personality disorders clearly
demonstrative of an utter insensitivity or inability to give meaning and significance to the
marriage. . . .18

The Court of Appeals and the trial court considered the acts of the petitioner after the marriage as proof of
his psychological incapacity, and therefore a product of his incapacity or inability to comply with the
essential obligations of marriage. Nevertheless, said courts considered these acts as willful and hence as
grounds for granting moral damages. It is contradictory to characterize acts as a product of psychological
incapacity, and hence beyond the control of the party because of an innate inability, while at the same
time considering the same set of acts as willful. By declaring the petitioner as psychologically
incapacitated, the possibility of awarding moral damages on the same set of facts was negated. The
award of moral damages should be predicated, not on the mere act of entering into the marriage, but on
specific evidence that it was done deliberately and with malice by a party who had knowledge of his or
her disability and yet willfully concealed the same. No such evidence appears to have been adduced in
this case.

For the same reason, since psychological incapacity means that one is truly incognitive of the basic
marital covenants that one must assume and discharge as a consequence of marriage, it removes the
basis for the contention that the petitioner purposely deceived the private respondent. If the private
respondent was deceived, it was not due to a willful act on the part of the petitioner. Therefore, the award
of moral damages was without basis in law and in fact.

Since the grant of moral damages was not proper, it follows that the grant of exemplary damages cannot
stand since the Civil Code provides that exemplary damages are imposed in addition to moral,
temperate, liquidated or compensatory damages.19

With respect to the grant of attorneys fees and expenses of litigation the trial court explained, thus:

165
 Regarding Attorneys fees, Art. 2208 of the Civil Code authorizes an award of attorneys fees and
expenses of litigation, other than judicial costs, when as in this case the plaintiffs act or omission
has compelled the defendant to litigate and to incur expenses of litigation to protect her interest
(par. 2), and where the Court deems it just and equitable that attorneys fees and expenses of
litigation should be recovered. (par. 11)20

The Court of Appeals reasoned as follows:

On Assignment of Error D, as the award of moral and exemplary damages is fully justified, the
award of attorneys fees and costs of litigation by the trial court is likewise fully justified. 21

The acts or omissions of petitioner which led the lower court to deduce his psychological incapacity, and
his act in filing the complaint for the annulment of his marriage cannot be considered as unduly
compelling the private respondent to litigate, since both are grounded on petitioners psychological
incapacity, which as explained above is a mental incapacity causing an utter inability to comply with the
obligations of marriage. Hence, neither can be a ground for attorneys fees and litigation expenses.
Furthermore, since the award of moral and exemplary damages is no longer justified, the award of
attorneys fees and expenses of litigation is left without basis.

Anent the retirement benefits received from the Far East Bank and Trust Co. and the shares of stock in
the Manila Memorial Park and the Provident Group of Companies, the trial court said:

The third issue that must be resolved by the Court is what to do with the assets of the conjugal
partnership in the event of declaration of annulment of the marriage. The Honorable Supreme
Court has held that the declaration of nullity of marriage carries ipso facto a judgment for the
liquidation of property (Domingo v. Court of Appeals, et al., G.R. No. 104818, Sept. 17, 1993, 226
SCRA, pp. 572 573, 586). Thus, speaking through Justice Flerida Ruth P. Romero, it was ruled
in this case:

When a marriage is declared void ab initio, the law states that the final judgment therein
shall provide for the liquidation, partition and distribution of the properties of the spouses,
the custody and support of the common children and the delivery of their presumptive
legitimes, unless such matters had been adjudicated in the previous proceedings.

The parties here were legally married on July 4, 1979, and therefore, all property acquired during
the marriage, whether the acquisition appears to have been made, contracted or registered in the
name of one or both spouses, is presumed to be conjugal unless the contrary is proved (Art. 116,
New Family Code; Art. 160, Civil Code). Art. 117 of the Family Code enumerates what are
conjugal partnership properties. Among others they are the following:

1) Those acquired by onerous title during the marriage at the expense of the common
fund, whether the acquisition be for the partnership, or for only one of the spouses;

2) Those obtained from the labor, industry, work or profession of either or both of the
spouses;

3) The fruits, natural, industrial, or civil, due or received during the marriage from the
common property, as well as the net fruits from the exclusive property of each spouse. . .
.

Applying the foregoing legal provisions, and without prejudice to requiring an inventory of what
are the parties conjugal properties and what are the exclusive properties of each spouse, it was
disclosed during the proceedings in this case that the plaintiff who worked first as Branch

166
 Manager and later as Vice-President of Far East Bank & Trust Co. received separation/retirement
package from the said bank in the amount of P3,701,500.00 which after certain deductions
amounting to P26,164.21 gave him a net amount of P3,675,335.79 and actually paid to him on
January 9, 1995 (Exhs. 6, 7, 8, 9, 10, 11). Not having shown debts or obligations other than those
deducted from the said retirement/separation pay, under Art. 129 of the Family Code "The net
remainder of the conjugal partnership properties shall constitute the profits, which shall be divided
equally between husband and wife, unless a different proportion or division was agreed upon in
the marriage settlement or unless there has been a voluntary waiver or forfeiture of such share as
provided in this Code." In this particular case, however, there had been no marriage settlement
between the parties, nor had there been any voluntary waiver or valid forfeiture of the defendant
wifes share in the conjugal partnership properties. The previous cession and transfer by the
plaintiff of his one-half (1/2) share in their residential house and lot covered by T.C.T. No. S-
35680 of the Registry of Deeds of Paraaque, Metro Manila, in favor of the defendant as
stipulated in their Compromise Agreement dated July 12, 1993, and approved by the Court in its
Partial Decision dated August 6, 1993, was actually intended to be in full settlement of any and all
demands for past support. In reality, the defendant wife had allowed some concession in favor of
the plaintiff husband, for were the law strictly to be followed, in the process of liquidation of the
conjugal assets, the conjugal dwelling and the lot on which it is situated shall, unless otherwise
agreed upon by the parties, be adjudicated to the spouse with whom their only child has chosen
to remain (Art. 129, par. 9). Here, what was done was one-half (1/2) portion of the house was
ceded to defendant so that she will not claim anymore for past unpaid support, while the other
half was transferred to their only child as his presumptive legitime.

Consequently, nothing yet has been given to the defendant wife by way of her share in the
conjugal properties, and it is but just, lawful and fair, that she be given one-half (1/2) share of the
separation/retirement benefits received by the plaintiff the same being part of their conjugal
partnership properties having been obtained or derived from the labor, industry, work or
profession of said defendant husband in accordance with Art. 117, par. 2 of the Family Code. For
the same reason, she is entitled to one-half (1/2) of the outstanding shares of stock of the plaintiff
husband with the Manila Memorial Park and the Provident Group of Companies. 22

The Court of Appeals articulated on this matter as follows:

On Assignment of Error E, plaintiff-appellant assails the order of the trial court for him to give one-
half of his separation/retirement benefits from Far East Bank & Trust Company and half of his
outstanding shares in Manila Memorial Park and Provident Group of Companies to the
defendant-appellee as the latters share in the conjugal partnership.

On August 6, 1993, the trial court rendered a Partial Decision approving the Compromise
Agreement entered into by the parties. In the same Compromise Agreement, the parties had
agreed that henceforth, their conjugal partnership is dissolved. Thereafter, no steps were taken
for the liquidation of the conjugal partnership.

Finding that defendant-appellee is entitled to at least half of the separation/retirement benefits

which plaintiff-appellant received from Far East Bank & Trust Company upon his retirement as
Vice-President of said company for the reason that the benefits accrued from plaintiffappellants
service for the bank for a number of years, most of which while he was married to defendant-
appellee, the trial court adjudicated the same. The same is true with the outstanding shares of
plaintiff-appellant in Manila Memorial Park and Provident Group of Companies. As these were
acquired by the plaintiff-appellant at the time he was married to defendant-appellee, the latter is
entitled to one-half thereof as her share in the conjugal partnership. We find no reason to disturb
the ruling of the trial court.23

Since the present case does not involve the annulment of a bigamous marriage, the provisions of Article
50 in relation to Articles 41, 42 and 43 of the Family Code, providing for the dissolution of the absolute

167
community or conjugal partnership of gains, as the case may be, do not apply. Rather, the general rule
applies, which is that in case a marriage is declared void ab initio, the property regime applicable and to
be liquidated, partitioned and distributed is that of equal co-ownership.

In Valdes v. Regional Trial Court, Branch 102, Quezon City,24 this Court expounded on the consequences
of a void marriage on the property relations of the spouses and specified the applicable provisions of law:

The trial court correctly applied the law. In a void marriage, regardless of the cause thereof, the
property relations of the parties during the period of cohabitation is governed by the provisions of
Article 147 or Article 148, such as the case may be, of the Family Code. Article 147 is a remake
of Article 144 of the Civil Code as interpreted and so applied in previous cases; it provides:

ART. 147. When a man and a woman who are capacitated to marry each other, live
exclusively with each other as husband and wife without the benefit of marriage or under
a void marriage, their wages and salaries shall be owned by them in equal shares and
the property acquired by both of them through their work or industry shall be governed by
the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall
be presumed to have been obtained by their joint efforts, work or industry, and shall be
owned by them in equal shares. For purposes of this Article, a party who did not
participate in the acquisition by the other party of any property shall be deemed to have
contributed jointly in the acquisition thereof if the former's efforts consisted in the care
and maintenance of the family and of the household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the
property acquired during cohabitation and owned in common, without the consent of the
other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in
bad faith in the co-ownership shall be forfeited in favor of their common children. In case
of default of or waiver by any or all of the common children or their descendants, each
vacant share shall belong to the respective surviving descendants. In the absence of
descendants, such share shall belong to the innocent party. In all cases, the forfeiture
shall take place upon termination of the cohabitation.

This peculiar kind of co-ownership applies when a man and a woman, suffering no legal
impediment to marry each other, so exclusively live together as husband and wife under a void
marriage or without the benefit of marriage. The term "capacitated" in the provision (in the first
paragraph of the law) refers to the legal capacity of a party to contract marriage, i.e., any "male or
female of the age of eighteen years or upwards not under any of the impediments mentioned in
Articles 37 and 38" of the Code.

Under this property regime, property acquired by both spouses through

their work and industry shall be governed by the rules on equal co-ownership. Any property
acquired during the union is prima facie presumed to have been obtained through their joint
efforts. A party who did not participate in the acquisition of the property shall still be considered as
having contributed thereto jointly if said party's "efforts consisted in the care and maintenance of
the family household." Unlike the conjugal partnership of gains, the fruits of the couple's separate
property are not included in the co-ownership.

Article 147 of the Family Code, in substance and to the above extent, has clarified Article 144 of
the Civil Code; in addition, the law now expressly provides that

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 (a) Neither party can dispose or encumber by act[s] inter vivos [of] his or her share in co-
ownership property, without the consent of the other, during the period of cohabitation; and

(b) In the case of a void marriage, any party in bad faith shall forfeit his or her share in the co-
ownership in favor of their common children; in default thereof or waiver by any or all of the
common children, each vacant share shall belong to the respective surviving descendants, or still
in default thereof, to the innocent party. The forfeiture shall take place upon the termination of the
cohabitation or declaration of nullity of the marriage.

In deciding to take further cognizance of the issue on the settlement of the parties' common
property, the trial court acted neither imprudently nor precipitately; a court which had jurisdiction
to declare the marriage a nullity must be deemed likewise clothed with authority to resolve
incidental and consequential matters. Nor did it commit a reversible error in ruling that petitioner
and private respondent own the "family home" and all their common property in equal shares, as
well as in concluding that, in the liquidation and partition of the property owned in common by
them, the provisions on co-ownership under the Civil Code, not Articles 50, 51 and 52, in relation
to Articles 102 and 129, of the Family Code, should aptly prevail. The rules set up to govern the
liquidation of either the absolute community or the conjugal partnership of gains, the property
regimes recognized for valid and voidable marriages (in the latter case until the contract is
annulled), are irrelevant to the liquidation of the co-ownership that exists between common-law
spouses. The first paragraph of Article 50 of the Family Code, applying paragraphs (2), (3), (4)
and (5) of Article 43, relates only, by its explicit terms, to voidable marriages and, exceptionally,
to void marriages under Article 40 of the Code, i.e., the declaration of nullity of a subsequent
marriage contracted by a spouse of a prior void marriage before the latter is judicially declared
void. The latter is a special rule that somehow recognizes the philosophy and an old doctrine that
void marriages are inexistent from the very beginning and no judicial decree is necessary to
establish their nullity. In now requiring for purposes of remarriage, the declaration of nullity by
final judgment of the previously contracted void marriage, the present law aims to do away with
any continuing uncertainty on the status of the second marriage. It is not then illogical for the
provisions of Article 43, in relation to Articles 41 and 42, of the Family Code, on the effects of the
termination of a subsequent marriage contracted during the subsistence of a previous marriage to
be made applicable pro hac vice. In all other cases, it is not to be assumed that the law has also
meant to have coincident property relations, on the one hand, between spouses in valid and
voidable marriages (before annulment) and, on the other, between common-law spouses or
spouses of void marriages, leaving to ordain, in the latter case, the ordinary rules on co-
ownership subject to the provision of Article 147 and Article 148 of the Family Code. It must be
stressed, nevertheless, even as it may merely state the obvious, that the provisions of the Family
Code on the "family home," i.e., the provisions found in Title V, Chapter 2, of the Family Code,
remain in force and effect regardless of the property regime of the spouses.25

Since the properties ordered to be distributed by the court a quo were found, both by the trial court and
the Court of Appeals, to have been acquired during the union of the parties, the same would be covered
by the co-ownership. No fruits of a separate property of one of the parties appear to have been included
or involved in said distribution. The liquidation, partition and distribution of the properties owned in
common by the parties herein as ordered by the court a quo should, therefore, be sustained, but on the
basis of co-ownership and not of the regime of conjugal partnership of gains.

As to the issue on custody of the parties over their only child, Javy Singh Buenaventura, it is now moot
since he is about to turn twenty-five years of age on May 27, 200526 and has, therefore, attained the age
of majority.

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With regard to the issues on support raised in the Petition for Certiorari, these would also now be moot,
owing to the fact that the son, Javy Singh Buenaventura, as previously stated, has attained the age of
majority.

WHEREFORE, the Decision of the Court of Appeals dated October 8, 1996 and its Resolution dated
December 10, 1996 which are contested in the Petition for Review (G.R. No. 127449), are hereby
MODIFIED, in that the award of moral and exemplary damages, attorneys fees, expenses of litigation
and costs are deleted. The order giving respondent one-half of the retirement benefits of petitioner from
Far East Bank and Trust Co. and one-half of petitioners shares of stock in Manila Memorial Park and in
the Provident Group of Companies is sustained but on the basis of the liquidation, partition and
distribution of the co-ownership and not of the regime of conjugal partnership of gains. The rest of
said Decision and Resolution are AFFIRMED.

The Petition for Review on Certiorari (G.R. No. 127358) contesting the Court of Appeals Resolutions of
September 2, 1996 and November 13, 1996 which increased the support pendente lite in favor of the
parties son, Javy Singh Buenaventura, is now MOOT and ACADEMIC and is, accordingly, DISMISSED.

No costs.

SO ORDERED.

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