G.R. Nos. 119987-88 October 12, 1995 Aberin, a.k.a. "Joel," of 1282 Lualhati St.
Aberin, a.k.a. "Joel," of 1282 Lualhati St., Tondo, Manila were accused of the same crime of Rape with
THE PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. LORENZO B. VENERACION, Presiding
Judge of the Regional Trial Court, National Capital Judicial Region, Branch 47, Manila, HENRY
LAGARTO y PETILLA and ERNESTO CORDERO, respondents.
KAPUNAN, J.:
The sole issue in the case at bench involves a question of law. After finding that an accused individual
in a criminal case has, on the occasion of Rape, committed Homicide, is the judge allowed any
discretion in imposing either the penalty of Reclusion Perpetua or Death?
The facts antecedent to the case before this Court, as narrated by petitioner,1 involve the perpetration
of acts so bizarre and devoid of humanity as to horrify and numb the senses of all civilized men:
On August 2, 1994, the cadaver of a young girl, later identified as Angel Alquiza wrapped in a sack and
yellow table cloth tied with a nylon cord with both feet and left hand protruding from it was seen floating
along Del Pan St. near the corner of Lavesares St., Binondo, Manila.
When untied and removed from its cover, the lifeless body of the victim was seen clad only in a light
colored duster without her panties, with gaping wounds on the left side of the face, the left chin, left ear,
lacerations on her genitalia, and with her head bashed in.
On the basis of sworn statements of witnesses, booking sheets, arrest reports and the necropsy report
of the victim, Abundio Lagunday, a.k.a. Jr. Jeofrey of no fixed address, and Henry Lagarto y Petilla, of
288 Area H. Parola Compound, Tondo, Manila were later charged with the crime of Rape with Homicide
in an Information dated August 8, 1994 filed with the Regional Trial Court of Manila, National Capital
Judicial Region. Said Information, docketed as Criminal Case No. 94-138071, reads:
That on or about August 2, 1994, in the City of Manila, Philippines, the said accused, conspiring and
confederating together with one alias "LANDO" and other persons whose true names, identifies and
present whereabouts are still unknown and helping one another, with treachery, taking advantage of
their superior strength and nocturnity, and ignominy, and with the use of force and violence, that is, by
taking ANGEL ALQUIZA y LAGMAN into a warehouse, covering her mouth, slashing her vagina, hitting
her head with a thick piece of wood and stabbing her neck did then and there wilfully, unlawfully and
feloniously have carnal knowledge of the person of said ANGEL ALQUIZA y LAGMAN, a minor, seven
(7) years of age, against the latter's will and consent and on said occasion the said ABUNDIO
LAGUNDAY, a.k.a. "LANDO" and others, caused her fatal injuries which were the direct cause of her
death immediately thereafter.
CONTRARY TO LAW.
Subsequently thereafter, Ernesto Cordero y Maristela, a.k.a. "Booster," of 1198 Sunflower St., Tondo,
Manila, Rolando Manlangit y Mamerta, a.k.a. "Lando," of 1274 Kagitingan St., Tondo, Manila, Richard
Baltazar y Alino, a.k.a. "Curimao," also of 1274 Kagitingan St., Tondo, Manila, and Catalino Yaon y
Homicide in an Information dated August 11, 1994, docketed as Criminal Case No. 94-138138,
allegedly committed as follows:
That on or about the 2nd day of August, 1994, in the City of Manila, Philippines, the said accused
conspiring and confederating with ABUNDIO LAGUNDAY Alias "JR," JEOFREY and HENRY
LAGARTO y PETILLA who have already been charged in the Regional Trial Court of Manila of the
same offense under Criminal Case No. 94-138071, and helping one another, with treachery, taking
advantage of their superior strength and nocturnity and ignominy, and with the use of force and violence,
that is, by taking ANGEL ALQUIZA y LAGMAN into a pedicab, and once helpless, forcibly bringing her
to a nearby warehouse, covering her mouth, slashing her vagina, hitting her head with a thick piece of
wood and stabbing her neck, did then and there wilfully, unlawfully and feloniously have carnal
knowledge of the person of said ANGEL ALQUIZA y LAGMAN, a minor, seven (7) years of age, against
the latter's will and consent and on said occasion the said accused together with their confederates
ABUNDIO LAGARTO y PETILLA caused her fatal injuries which were the direct cause of her death
immediately thereafter.
CONTRARY TO LAW.
The two criminal cases were consolidated to Branch 47 of the Regional Trial Court of Manila, presided
over by respondent Judge.
Duly arraigned, all the accused, except Abundio Lagunday who was already dead, (allegedly shot by
police escorts after attempting to fire a gun he was able to grab from SPO1 D. Vidad on August 12,
1994), pleaded "Not Guilty." Abundio Lagunday was dropped from the Information.
After trial and presentation of the evidence of the prosecution and the defense, the trial court rendered a
decision2 on January 31, 1995 finding the defendants Henry Lagarto y Petilla and Ernesto Cordero y
Maristela guilty beyond reasonable doubt of the crime of Rape with Homicide and sentenced both
accused with the "penalty of reclusion perpetua with all the accessories provided for by law."3
Disagreeing with the sentence imposed, the City Prosecutor of Manila on February 8, 1995, filed a
Motion for Reconsideration, praying that the Decision be "modified in that the penalty of death be
imposed" against respondents Lagarto and Cordero, in place of the original penalty (reclusion perpetua).
Refusing to act on the merits of the said Motion for Reconsideration, respondent Judge, on February 10,
1995, issued an Order denying the same for lack of jurisdiction. The pertinent portion reads:
The Court believes that in the above-entitled cases, the accused Lagarto and Cordero have complied
with the legal requirements for the perfection of an appeal. Consequently, for lack of jurisdiction, this
Court cannot take cognizance of the Motion for Reconsideration of the Public Prosecutor of Manila.
WHEREFORE, the order earlier issued by this Court regarding the Notices of Appeal filed by both
herein accused is hereby reiterated.
The Clerk of this Court is hereby directed to transmit the complete records of these cases, together with
the notices of appeal, to the Honorable Supreme Court, in accordance with Sec. 8, Rule 122 of the
Revised Rules of Criminal Procedure. SO ORDERED.

Hence, the instant petition.
The trial court's finding of guilt is not at issue in the case at bench. The basis of the trial court's
determination of guilt and its conclusions will only be subject to our scrutiny at an appropriate time on
appeal. We have thus clinically limited our narration of events to those cold facts antecedent to the
instant case relevant to the determination of the legal question at hand, i.e., whether or not the
respondent judge acted with grave abuse of discretion and in excess of jurisdiction when he failed
and/or refused to impose the mandatory penalty of death under Republic Act No. 7659, after finding the
accused guilty of the crime of Rape with Homicide.
We find for petitioner.
Obedience to the rule of law forms the bedrock of our system of justice. If judges, under the guise of
religious or political beliefs were allowed to roam unrestricted beyond boundaries within which they are
required by law to exercise the duties of their office, then law becomes meaningless. A government of
laws, not of men excludes the exercise of broad discretionary powers by those acting under its authority.
Under this system, judges are guided by the Rule of Law, and ought "to protect and enforce it without
fear or favor,"4 resist encroachments by governments, political parties,5 or even the interference of their
own personal beliefs.
In the case at bench, respondent judge, after weighing the evidence of the prosecution and the
defendant at trial found the accused guilty beyond reasonable doubt of the crime of Rape with Homicide.
Since the law in force at the time of the commission of the crime for which respondent judge found the
accused guilty was Republic Act No. 7659, he was bound by its provisions.
Section 11 of R.A. No. 7659 provides:
Sec. 11. Article 335 of the same Code is hereby amended to read as follows:
Art. 335. When and how rape is committed. — Rape is committed by having carnal knowledge of a
woman under any of the following circumstances:
1. By using force or intimidation.
2. When the woman is deprived of reason or otherwise unconscious; and
3. When the woman is under twelve years of age or is demented.
The crime of rape shall be punished by reclusion perpetua.
Whenever the crime of rape is committed with the use of a deadly weapon or by two or more persons,
the penalty shall be reclusion perpetua to death.
When by reason or on the occasion of the rape, the victim has become insane, the penalty shall be
death. When the rape is attempted or frustrated and a homicide is committed by reason or on the
occasion thereof, the penalty shall be reclusion perpetua to death. When by reason or on the occasion
of the rape, a homicide is committed, the penalty shall be death. . . .6
Clearly, under the law, the penalty imposable for the crime of Rape with Homicide is not Reclusion
Perpetua but Death. While Republic Act 7659 punishes cases of ordinary rape with the penalty of
Reclusion Perpetua, it allows judges the discretion — depending on the existence of circumstances
modifying the offense committed — to impose the penalty of either Reclusion Perpetua only in the three
instances mentioned therein. Rape with homicide is not one of these three instances. The law plainly
and unequivocably provides that "[w]hen by reason or on the occasion of rape, a homicide is committed,
the penalty shall be death." The provision leaves no room for the exercise of discretion on the part of
the trial judge to impose a penalty under the circumstances described, other than a sentence of death.
We are aware of the trial judge's misgivings in imposing the death sentence because of his religious
convictions. While this Court sympathizes with his predicament, it is its bounden duty to emphasize that
a court of law is no place for a protracted debate on the morality or propriety of the sentence, where the
law itself provides for the sentence of death as a penalty in specific and well-defined instances. The
discomfort faced by those forced by law to impose the death penalty is an ancient one, but it is a matter
upon which judges have no choice. Courts are not concerned with the wisdom, efficacy or morality of
laws. In People vs. Limaco 7 we held that:
[W]hen . . . private opinions not only form part of their decision but constitute a decisive factor in arriving
at a conclusion and determination of a case or the penalty imposed, resulting in an illegality and
reversible error, then we are constrained to state our opinion, not only to correct the error but for the
guidance of the courts. We have no quarrel with the trial judge or with anyone else, layman or jurist as
to the wisdom or folly of the death penalty. Today there are quite a number of people who honestly
believe that the supreme penalty is either morally wrong or unwise or ineffective. However, as long as
that penalty remains in the statute books, and as long as our criminal law provides for its imposition in
certain cases, it is the duty of judicial officers to respect and apply the law regardless of their private
opinions. It is a well settled rule that the courts are not concerned with the wisdom, efficacy or morality
of laws. That question falls exclusively within the province of the Legislature which enacts them and the
Chief Executive who approves or vetoes them. The only function of the judiciary is to interpret the laws
and, if not in disharmony with the Constitution, to apply them. And for the guidance of the members of
the judiciary we feel it incumbent upon us to state that while they as citizens or as judges may regard a
certain law as harsh, unwise or morally wrong, and may recommend to the authority or department
concerned, its amendment, modification, or repeal, still, as long as said law is in force, they must apply
it and give it effect as decreed by the law-making body.8
Finally, the Rules of Court mandates that after an adjudication of guilt, the judge should impose "the
proper penalty and civil liability provided for by the law on the accused."9 This is not a case of a
magistrate ignorant of the law. This is a case in which a judge, fully aware of the appropriate provisions
of the law, refuses to impose a penalty to which he disagrees. In so doing, respondent judge acted
without or in excess of his jurisdiction or with grave abuse of discretion amounting to a lack of
jurisdiction in imposing the penalty of Reclusion Perpetua where the law clearly imposes the penalty of
Death.
WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED. The case is hereby
REMANDED to the Regional Trial Court for the imposition of the penalty of death upon private
respondents in consonance with respondent judge's finding that the private respondents in the instant
case had committed the crime of Rape with Homicide under Article 335 of the Revised Penal Code, as
amended by Section 11 of Republic Act No. 7659, subject to automatic review by this Court of the
decision imposing the death penalty. SO ORDERED.

G.R. No. L-55960 November 24, 1988
YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN YEN, petitioners,
vs.
AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE, RODOLFO SY, and HONORABLE
COURT OF APPEALS, respondents.
Montesa, Albon, & Associates for petitioners.
De Lapa, Salonga, Fulgencio & De Lunas for respondents.
CORTES, J.:
Sy Kiat, a Chinese national. died on January 17, 1977 in Caloocan City where he was then residing,
leaving behind real and personal properties here in the Philippines worth P300,000.00 more or less.
Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy filed a petition for the
grant of letters of administration docketed as Special Proceedings Case No. C-699 of the then Court of
First Instance of Rizal Branch XXXIII, Caloocan City. In said petition they alleged among others that (a)
they are the children of the deceased with Asuncion Gillego; (b) to their knowledge Sy Mat died
intestate; (c) they do not recognize Sy Kiat's marriage to Yao Kee nor the filiation of her children to him;
and, (d) they nominate Aida Sy-Gonzales for appointment as administratrix of the intestate estate of the
deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.]
The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun Chen who alleged that:
(a) Yao Kee is the lawful wife of Sy Kiat whom he married on January 19, 1931 in China; (b) the other
oppositors are the legitimate children of the deceased with Yao Kee; and, (c) Sze Sook Wah is the
eldest among them and is competent, willing and desirous to become the administratrix of the estate of
Sy Kiat [Record on Appeal, pp. 12-13; Rollo, p. 107.] After hearing, the probate court, finding among
others that:
(1) Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27; Rollo, pp. 49-64;]
(2) Sze Sook Wah, Sze Lai Cho and Sze Chun Yen are the legitimate children of Yao Kee with Sy
Mat [CFI decision, pp. 28-31; Rollo. pp. 65-68;] and,
(3) Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy are the acknowledged
illegitimate offsprings of Sy Kiat with Asuncion Gillego [CFI decision, pp. 27-28; Rollo, pp. 64- 65.]
held if favor of the oppositors (petitioners herein) and appointed Sze Sook Wah as the administratrix of
the intestate estate of the deceased [CFI decision, pp. 68-69; Rollo, pp. 105-106.]
On appeal the Court of Appeals rendered a decision modifying that of the probate court, the dispositive
portion of which reads:
IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby MODIFIED and SET ASIDE
and a new judgment rendered as follows:
(1) Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita Sy- Bernabe and Rodolfo Sy
acknowledged natural children of the deceased Sy Kiat with Asuncion Gillego, an unmarried woman
with whom he lived as husband and wife without benefit of marriage for many years:
(2) Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen, the acknowledged
natural children of the deceased Sy Kiat with his Chinese wife Yao Kee, also known as Yui Yip, since
the legality of the alleged marriage of Sy Mat to Yao Kee in China had not been proven to be valid to
the laws of the Chinese People's Republic of China (sic);
(3) Declaring the deed of sale executed by Sy Kiat on December 7, 1976 in favor of Tomas Sy
(Exhibit "G-1", English translation of Exhibit "G") of the Avenue Tractor and Diesel Parts Supply to be
valid and accordingly, said property should be excluded from the estate of the deceased Sy Kiat; and
(4) Affirming the appointment by the lower court of Sze Sook Wah as judicial administratrix of the
estate of the deceased. [CA decision, pp. 11-12; Rollo, pp. 36- 37.]
From said decision both parties moved for partial reconsideration, which was however denied by
respondent court. They thus interposed their respective appeals to this Court.
Private respondents filed a petition with this Court docketed as G.R. No. 56045 entitled "Aida Sy-
Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy v. Court of Appeals, Yao Kee, Sze Sook
Wah, Sze Lai Cho and Sy Chun Yen" questioning paragraphs (3) and (4) of the dispositive portion of
the Court of Appeals' decision. The Supreme Court however resolved to deny the petition and the
motion for reconsideration. Thus on March 8, 1982 entry of judgment was made in G.R. No. 56045. **
The instant petition, on the other hand, questions paragraphs (1) and (2) of the dispositive portion of the
decision of the Court of Appeals. This petition was initially denied by the Supreme Court on June 22,
1981. Upon motion of the petitioners the Court in a resolution dated September 16, 1981 reconsidered
the denial and decided to give due course to this petition. Herein petitioners assign the following as
errors:
I. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THE
MARRIAGE OF SY KIAT TO YAO YEE AS NOT HAVE (sic) BEEN PROVEN VALID IN ACCORDANCE
WITH LAWS OF THE PEOPLE'S REPUBLIC OF CHINA.
II. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING AIDA SY-
GONZALES, MANUEL SY, TERESITA SY-BERNABE AND RODOLFO SY AS NATURAL CHILDREN
OF SY KIAT WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p. 6.]
I. Petitioners argue that the marriage of Sy Kiat to Yao Kee in accordance with Chinese law and
custom was conclusively proven. To buttress this argument they rely on the following testimonial and
documentary evidence.
First, the testimony of Yao Kee summarized by the trial court as follows:
Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in Fookien, China; that she does
not have a marriage certificate because the practice during that time was for elders to agree upon the
betrothal of their children, and in her case, her elder brother was the one who contracted or entered into
[an] agreement with the parents of her husband; that the agreement was that she and Sy Mat would be
married, the wedding date was set, and invitations were sent out; that the said agreement was complied
with; that she has five children with Sy Kiat, but two of them died; that those who are alive are Sze Sook
Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being Sze Sook Wah who is already 38 years old;
that Sze Sook Wah was born on November 7, 1939; that she and her husband, Sy Mat, have been
living in FooKien, China before he went to the Philippines on several occasions; that the practice during
the time of her marriage was a written document [is exchanged] just between the parents of the bride
and the parents of the groom, or any elder for that matter; that in China, the custom is that there is a go-
between, a sort of marriage broker who is known to both parties who would talk to the parents of the
bride-to-be; that if the parents of the bride-to-be agree to have the groom-to-be their son in-law, then
they agree on a date as an engagement day; that on engagement day, the parents of the groom would
bring some pieces of jewelry to the parents of the bride-to-be, and then one month after that, a date
would be set for the wedding, which in her case, the wedding date to Sy Kiat was set on January 19,
1931; that during the wedding the bridegroom brings with him a couch (sic) where the bride would ride
and on that same day, the parents of the bride would give the dowry for her daughter and then the
document would be signed by the parties but there is no solemnizing officer as is known in the
Philippines; that during the wedding day, the document is signed only by the parents of the bridegroom
as well as by the parents of the bride; that the parties themselves do not sign the document; that the
bride would then be placed in a carriage where she would be brought to the town of the bridegroom and
before departure the bride would be covered with a sort of a veil; that upon reaching the town of the
bridegroom, the bridegroom takes away the veil; that during her wedding to Sy Kiat (according to said
Chinese custom), there were many persons present; that after Sy Kiat opened the door of the carriage,
two old ladies helped her go down the carriage and brought her inside the house of Sy Mat; that during
her wedding, Sy Chick, the eldest brother of Sy Kiat, signed the document with her mother; that as to
the whereabouts of that document, she and Sy Mat were married for 46 years already and the
document was left in China and she doubt if that document can still be found now; that it was left in the
possession of Sy Kiat's family; that right now, she does not know the whereabouts of that document
because of the lapse of many years and because they left it in a certain place and it was already eaten
by the termites; that after her wedding with Sy Kiat, they lived immediately together as husband and
wife, and from then on, they lived together; that Sy Kiat went to the Philippines sometime in March or
April in the same year they were married; that she went to the Philippines in 1970, and then came back
to China; that again she went back to the Philippines and lived with Sy Mat as husband and wife; that
she begot her children with Sy Kiat during the several trips by Sy Kiat made back to China. [CFI
decision, pp. 13-15; Rollo, pp. 50-52.]
Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated that he was among the
many people who attended the wedding of his sister with Sy Kiat and that no marriage certificate is
issued by the Chinese government, a document signed by the parents or elders of the parties being
sufficient [CFI decision, pp. 15-16; Rollo, pp.
52-53.]
Third, the statements made by Asuncion Gillego when she testified before the trial court to the effect
that (a) Sy Mat was married to Yao Kee according to Chinese custom; and, (b) Sy Kiat's admission to
her that he has a Chinese wife whom he married according to Chinese custom [CFI decision, p. 17;
Rollo, p. 54.]
Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan City on October 3, 1972 where
the following entries are found: "Marital status—Married"; "If married give name of spouses—Yao Kee";
"Address-China; "Date of marriage—1931"; and "Place of marriage—China" [Exhibit "SS-1".]
Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on January 12, 1968 where the
following entries are likewise found: "Civil status—Married"; and, 'If married, state name and address of
spouse—Yao Kee Chingkang, China" [Exhibit "4".]
And lastly, the certification issued in Manila on October 28, 1977 by the Embassy of the People's
Republic of China to the effect that "according to the information available at the Embassy Mr. Sy Kiat a
Chinese national and Mrs. Yao Kee alias Yui Yip also Chinese were married on January 19, 1931 in
Fukien, the People's Republic of China" [Exhibit "5".]
These evidence may very well prove the fact of marriage between Yao Kee and Sy Kiat. However, the
same do not suffice to establish the validity of said marriage in accordance with Chinese law or custom.
Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed (practiced) as a
social rule, legally binding and obligatory" [In the Matter of the Petition for Authority to Continue Use of
the Firm Name "Ozaeta, Romulo, de Leon, Mabanta and Reyes", July 30, 1979, SCRA 3, 12 citing JBL
Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed., Vol. 1, p. 7.] The law requires that "a custom
must be proved as a fact, according to the rules of evidence" [Article 12, Civil Code.] On this score the
Court had occasion to state that "a local custom as a source of right can not be considered by a court of
justice unless such custom is properly established by competent evidence like any other fact" [Patriarca
v. Orate, 7 Phil. 390, 395 (1907).] The same evidence, if not one of a higher degree, should be required
of a foreign custom.
The law on foreign marriages is provided by Article 71 of the Civil Code which states that:
Art. 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. (Emphasis supplied.)
***
Construing this provision of law the Court has held that to establish a valid foreign marriage two things
must be proven, namely: (1) the existence of the foreign law as a question of fact; and (2) the alleged
foreign marriage by convincing evidence [Adong v. Cheong Seng Gee, 43 Phil. 43, 49 (1922).]
In proving a foreign law the procedure is provided in the Rules of Court. With respect to an unwritten
foreign law, Rule 130 section 45 states that:
SEC. 45. Unwritten law.—The oral testimony of witnesses, skilled therein, is admissible as
evidence of the unwritten law of a foreign country, as are also printed and published books of reports of
decisions of the courts of the foreign country, if proved to be commonly admitted in such courts.
Proof of a written foreign law, on the other hand, is provided for under Rule 132 section 25, thus:
SEC. 25. Proof of public or official record.—An official record or an entry therein, when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by
the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not
kept in the Philippines, with a certificate that such officer has the custody. If the office in which the
record is kept is in a foreign country, the certificate may be made by a secretary of embassy or legation,
consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the
Philippines stationed in the foreign country in which the record is kept and authenticated by the seal of
his office.
The Court has interpreted section 25 to include competent evidence like the testimony of a witness to
prove the existence of a written foreign law [Collector of Internal Revenue v. Fisher 110 Phil. 686, 700-
701 (1961) citing Willamette Iron and Steel Works v. Muzzal, 61 Phil. 471 (1935).]
In the case at bar petitioners did not present any competent evidence relative to the law and custom of
China on marriage. The testimonies of Yao and Gan Ching cannot be considered as proof of China's
law or custom on marriage not only because they are
self-serving evidence, but more importantly, there is no showing that they are competent to testify on
the subject matter. For failure to prove the foreign law or custom, and consequently, the validity of the
marriage in accordance with said law or custom, the marriage between Yao Kee and Sy Kiat cannot be
recognized in this jurisdiction.
Petitioners contend that contrary to the Court of Appeals' ruling they are not duty bound to prove the
Chinese law on marriage as judicial notice thereof had been taken by this Court in the case of Sy Joc
Lieng v. Sy Quia [16 Phil. 137 (1910).]
This contention is erroneous. Well-established in this jurisdiction is the principle that Philippine courts
cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact [Yam Ka
Lim v. Collector of Customs, 30 Phil. 46, 48 (1915); Fluemer v. Hix, 54 Phil. 610 (1930).]
Moreover a reading of said case would show that the party alleging the foreign marriage presented a
witness, one Li Ung Bieng, to prove that matrimonial letters mutually exchanged by the contracting
parties constitute the essential requisite for a marriage to be considered duly solemnized in China.
Based on his testimony, which as found by the Court is uniformly corroborated by authors on the
subject of Chinese marriage, what was left to be decided was the issue of whether or not the fact of
marriage in accordance with Chinese law was duly proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.]
Further, even assuming for the sake of argument that the Court has indeed taken judicial notice of the
law of China on marriage in the aforecited case, petitioners however have not shown any proof that the
Chinese law or custom obtaining at the time the Sy Joc Lieng marriage was celebrated in 1847 was still
the law when the alleged marriage of Sy Kiat to Yao Kee took place in 1931 or eighty-four (84) years
later.
Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633 (1916)] as being applicable to
the instant case. They aver that the judicial pronouncement in the Memoracion case, that the testimony
of one of the contracting parties is competent evidence to show the fact of marriage, holds true in this
case.
The Memoracion case however is not applicable to the case at bar as said case did not concern a
foreign marriage and the issue posed was whether or not the oral testimony of a spouse is competent
evidence to prove the fact of marriage in a complaint for adultery.
Accordingly, in the absence of proof of the Chinese law on marriage, it should be presumed that it is the
same as ours *** [Wong Woo Yiu v. Vivo, G.R. No. L-21076, March 31, 1965, 13 SCRA 552, 555.]
Since Yao Kee admitted in her testimony that there was no solemnizing officer as is known here in the
Philippines [See Article 56, Civil Code] when her alleged marriage to Sy Mat was celebrated [CFI
decision, p. 14; Rollo, p. 51], it therefore follows that her marriage to Sy Kiat, even if true, cannot be
recognized in this jurisdiction [Wong Woo Yiu v. Vivo, supra., pp. 555-556.]
II. The second issue raised by petitioners concerns the status of private respondents.
Respondent court found the following evidence of petitioners' filiation:
(1) Sy Kiat's Master Card of Registered Alien where the following are entered: "Children if any:
give number of children—Four"; and, "Name—All living in China" [Exhibit "SS-1";]
(2) the testimony of their mother Yao Kee who stated that she had five children with Sy Kiat, only
three of whom are alive namely, Sze Sook Wah, Sze Lai Chu and Sze Chin Yan [TSN, December 12,
1977, pp. 9-11;] and,
(3) an affidavit executed on March 22,1961 by Sy Kiat for presentation to the Local Civil Registrar
of Manila to support Sze Sook Wah's application for a marriage license, wherein Sy Kiat expressly
stated that she is his daughter [Exhibit "3".]
Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her he has three daughters
with his Chinese wife, two of whom—Sook Wah and Sze Kai Cho—she knows, and one adopted son
[TSN, December 6,1977, pp. 87-88.]
However, as petitioners failed to establish the marriage of Yao Kee with Sy Mat according to the laws of
China, they cannot be accorded the status of legitimate children but only that of acknowledged natural
children. Petitioners are natural children, it appearing that at the time of their conception Yao Kee and
Sy Kiat were not disqualified by any impediment to marry one another [See Art. 269, Civil Code.] And
they are acknowledged children of the deceased because of Sy Kiat's recognition of Sze Sook Wah
[Exhibit "3"] and its extension to Sze Lai Cho and Sy Chun Yen who are her sisters of the full blood [See
Art. 271, Civil Code.]
Private respondents on the other hand are also the deceased's acknowledged natural children with
Asuncion Gillego, a Filipina with whom he lived for twenty-five (25) years without the benefit of marriage.
They have in their favor their father's acknowledgment, evidenced by a compromise agreement entered
into by and between their parents and approved by the Court of First Instance on February 12, 1974
wherein Sy Kiat not only acknowleged them as his children by Asuncion Gillego but likewise made
provisions for their support and future inheritance, thus:
2. The parties also acknowledge that they are common-law husband and wife and that out of
such relationship, which they have likewise decided to definitely and finally terminate effective
immediately, they begot five children, namely: Aida Sy, born on May 30, 1950; Manuel Sy, born on July
1, 1953; Teresita Sy, born on January 28, 1955; Ricardo Sy now deceased, born on December 14,
1956; and Rodolfo Sy, born on May 7, 1958.

3. With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY ... , the parties
mutually agree and covenant that—
(a) The stocks and merchandize and the furniture and equipments ..., shall be divided into two
equal shares between, and distributed to, Sy Kiat who shall own
one-half of the total and the other half to Asuncion Gillego who shall transfer the same to their children,
namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy.
(b) the business name and premises ... shall be retained by Sy Kiat. However, it shall be his
obligation to give to the aforenamed children an amount of One Thousand Pesos ( Pl,000.00 ) monthly
out of the rental of the two doors of the same building now occupied by Everett Construction.
(5) With respect to the acquisition, during the existence of the
common-law husband-and-wife relationship between the parties, of the real estates and properties
registered and/or appearing in the name of Asuncion Gillego ... , the parties mutually agree and
covenant that the said real estates and properties shall be transferred in equal shares to their children,
namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy, but to be administered by Asuncion Gillego
during her lifetime ... [Exhibit "D".] (Emphasis supplied.)
This compromise agreement constitutes a statement before a court of record by which a child may be
voluntarily acknowledged [See Art. 278, Civil Code.]
Petitioners further argue that the questions on the validity of Sy Mat's marriage to Yao Kee and the
paternity and filiation of the parties should have been ventilated in the Juvenile and Domestic Relations
Court.
Specifically, petitioners rely on the following provision of Republic Act No. 5502, entitled "An Act
Revising Rep. Act No. 3278, otherwise known as the Charter of the City of Caloocan', with regard to the
Juvenile and Domestic Relations Court:
With the enactment of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act
of 1980, the Juvenile and Domestic Relations Courts were abolished. Their functions and jurisdiction
are now vested with the Regional Trial Courts [See Section 19 (7), B.P. Blg. 129 and Divinagracia v.
Belosillo, G.R. No. L-47407, August 12, 1986, 143 SCRA 356, 360] hence it is no longer necessary to
pass upon the issue of jurisdiction raised by petitioners.
Moreover, even without the exactment of Batas Pambansa Blg. 129 we find in Rep. Act No. 5502 sec.
91-A last paragraph that:
If any question involving any of the above matters should arise as an incident in any case pending in the
ordinary court, said incident shall be determined in the main case.
As held in the case of Divinagracia v. Rovira [G.R. No. L42615. August 10, 1976, 72 SCRA 307]:
It is true that under the aforequoted section 1 of Republic Act No. 4834 **** a case involving paternity
and acknowledgment may be ventilated as an incident in the intestate or testate proceeding (See
Baluyot vs. Ines Luciano, L-42215, July 13, 1976). But that legal provision presupposes that such an
administration proceeding is pending or existing and has not been terminated. [at pp. 313-314.]
(Emphasis supplied.)
The reason for ths rule is not only "to obviate the rendition of conflicting rulings on the same issue by
the Court of First Instance and the Juvenile and Domestic Relations Court" [Vda. de Baluyut v. Luciano,
G.R. No. L-42215, July 13, 1976, 72 SCRA 52, 63] but more importantly to prevent multiplicity of suits.
Accordingly, this Court finds no reversible error committed by respondent court.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.

SEC. 91-A. Creation and Jurisdiction of the Court.— SO ORDERED.

The provisions of the Judiciary Act to the contrary notwithstanding, the court shall have exclusive
original jurisdiction to hear and decide the following cases:

(2) Cases involving custody, guardianship, adoption, revocation of adoption, paternity and
acknowledgment;

(3) Annulment of marriages, relief from marital obligations, legal separation of spouses, and
actions for support;

(4) Proceedings brought under the provisions of title six and title seven, chapters one to three of
the civil code;

and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-23661, 21 SCRA 1324] reiterated in
Divinagracia v. Rovira [G.R. No. L-42615, 72 SCRA 307.]
G.R. No. 112170 April 10, 1996
CESARIO URSUA, petitioner,
vs.
COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents.
BELLOSILLO, J.:p
This is a petition for review of the decision of the Court of Appeals which affirmed the conviction of
petitioner by the Regional Trial Court of Davao City for violation of Sec. 1 of C.A. No. 142, as amended
by R.A. No. 6085, otherwise known as "An Act to Regulate the Use of Aliases". 1
Petitioner Cesario Ursua was a Community Environment and Natural Resources Officer assigned in
Kidapawan, Cotabato. On 9 May 1989 the Provincial Governor of Cotabato requested the Office of the
Ombudsman in Manila to conduct an investigation on a complaint for bribery, dishonesty, abuse of
authority and giving of unwarranted benefits by petitioner and other officials of the Department of
Environment and Natural Resources. The complaint was initiated by the Sangguniang Panlalawigan of
Cotabato through a resolution advising the Governor to report the involvement of petitioner and others
in the illegal cutting of mahogany trees and hauling of illegally-cut logs in the area.2
On 1 August 1989 Atty. Francis Palmones, counsel for petitioner, wrote the Office of the Ombudsman in
Davao City requesting that he be furnished copy of the complaint against petitioner. Atty. Palmones
then asked his client Ursua to take his letter-request to the Office of the Ombudsman because his law
firm's messenger, Oscar Perez, had to attend to some personal matters. Before proceeding to the
Office of the Ombudsman petitioner talked to Oscar Perez and told him that he was reluctant to
personally ask for the document since he was one of the respondents before the Ombudsman.
However, Perez advised him not to worry as he could just sign his (Perez) name if ever he would be
required to acknowledge receipt of the complaint. 3
When petitioner arrived at the Office of the Ombudsman in Davao City he was instructed by the security
officer to register in the visitors' logbook. Instead of writing down his name petitioner wrote the name
"Oscar Perez" after which he was told to proceed to the Administrative Division for the copy of the
complaint he needed. He handed the letter of Atty. Palmones to the Chief of the Administrative Division,
Ms. Loida Kahulugan, who then gave him a copy of the complaint, receipt of which he acknowledged by
writing the name "Oscar Perez."4
Before petitioner could leave the premises he was greeted by an acquaintance, Josefa Amparo, who
also worked in the same office. They conversed for a while then he left. When Loida learned that the
person who introduced himself as "Oscar Perez" was actually petitioner Cesario Ursua, a customer of
Josefa Amparo in her gasoline station, Loida reported the matter to the Deputy Ombudsman who
recommended that petitioner be accordingly charged.
On 18 December 1990, after the prosecution had completed the presentation of its evidence, petitioner
without leave of court filed a demurrer to evidence alleging that the failure of the prosecution to prove
that his supposed alias was different from his registered name in the local civil registry was fatal to its
cause. Petitioner argued that no document from the local civil registry was presented to show the
registered name of accused which according to him was a condition sine qua non for the validity of his
conviction.
The trial court rejected his contentions and found him guilty of violating Sec. 1 of C.A. No. 142 as
amended by R.A. No. 6085. He was sentenced to suffer a prison term of one (1) year and one (1) day
of prision correccional minimum as minimum, to four (4) years of prision correccional medium as
maximum, with all the accessory penalties provided for by law, and to pay a fine of P4,000.00 plus costs.
Petitioner appealed to the Court of Appeals.
On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner but modified the penalty by
imposing an indeterminate term of one (1) year as minimum to three (3) years as maximum and a fine
of P5,000.00.
Petitioner now comes to us for review of his conviction as he reasserts his innocence. He contends that
he has not violated C.A. No. 142 as amended by R.A. No. 6085 as he never used any alias name;
neither is "Oscar Perez" his alias. An alias, according to him, is a term which connotes the habitual use
of another name by which a person is also known. He claims that he has never been known as "Oscar
Perez" and that he only used such name on one occasion and it was with the express consent of Oscar
Perez himself. It is his position that an essential requirement for a conviction under C.A. No. 142 as
amended by R.A. No. 6085 has not been complied with when the prosecution failed to prove that his
supposed alias was different from his registered name in the Registry of Births. He further argues that
the Court of Appeals erred in not considering the defense theory that he was charged under the wrong
law.5
Time and again we have decreed that statutes are to be construed in the light of the purposes to be
achieved and the evils sought to be remedied. Thus in construing a statute the reason for its enactment
should be kept in mind and the statute should be construed with reference to the intended scope and
purpose.6 The court may consider the spirit and reason of the statute, where a literal meaning would
lead to absurdity, contradiction, injustice, or would defeat the clear purpose of the lawmakers.7
For a clear understanding of the purpose of C.A. No. 142 as amended, which was allegedly violated by
petitioner, and the surrounding circumstances under which the law was enacted, the pertinent
provisions thereof, its amendments and related statutes are herein cited. C.A. No. 142, which was
approved on 7 November 1936, and before its amendment by R.A. No. 6085, is entitled An Act to
Regulate the Use of Aliases. It provides as follows:
Sec. 1. Except as a pseudonym for literary purposes, no person shall use any name different from the
one with which he was christened or by which he has been known since his childhood, or such
substitute name as may have been authorized by a competent court. The name shall comprise the
patronymic name and one or two surnames.
Sec. 2. Any person desiring to use an alias or aliases shall apply for authority therefor in proceedings
like those legally provided to obtain judicial authority for a change of name. Separate proceedings shall
be had for each alias, and each new petition shall set forth the original name and the alias or aliases for
the use of which judicial authority has been, obtained, specifying the proceedings and the date on which
such authority was granted. Judicial authorities for the use of aliases shall be recorded in the proper
civil register . . . .
The above law was subsequently amended by R.A. No. 6085, approved on 4 August 1969. As
amended, C.A. No. 142 now reads:
Sec. 1. Except as a pseudonym solely for literary, cinema, television, radio or other entertainment
purposes and in athletic events where the use of pseudonym is a normally accepted practice, no person
shall use any name different from the one with which he was registered at birth in the office of the local
civil registry or with which he was baptized for the first time, or in case of all alien, with which he was
registered in the bureau of immigration upon entry; or such substitute name as may have been
authorized by a competent court: Provided, That persons whose births have not been registered in any
local civil registry and who have not been baptized, have one year from the approval of this act within
which to register their names in the civil registry of their residence. The name shall comprise the
patronymic name and one or two surnames.
Sec. 2. Any person desiring to use an alias shall apply for authority therefor in proceedings like those
legally provided to obtain judicial authority for a change of name and no person shall be allowed to
secure such judicial authority for more than one alias. The petition for an alias shall set forth the
person's baptismal and family name and the name recorded in the civil registry, if different, his
immigrant's name, if an alien, and his pseudonym, if he has such names other than his original or real
name, specifying the reason or reasons for the desired alias. The judicial authority for the use of alias,
the Christian name and the alien immigrant's name shall be recorded in the proper local civil registry,
and no person shall use any name or names other than his original or real name unless the same is or
are duly recorded in the proper local civil registry.
The objective and purpose of C.A. No. 142 have their origin and basis in Act No. 3883, An Act to
Regulate the Use in Business Transactions of Names other than True Names, Prescribing the Duties of
the Director of the Bureau of Commerce and Industry in its Enforcement, Providing Penalties for
Violations thereof, and for other purposes, which was approved on 14 November 1931 and amended by
Act No. 4147, approved on 28 November 1934.8 The pertinent provisions of Act No. 3883 as amended
follow —
Sec. 1. It shall be unlawful for any person to use or sign, on any written or printed receipt including
receipt for tax or business or any written or printed contract not verified by a notary public or on any
written or printed evidence of any agreement or business transactions, any name used in connection
with his business other than his true name, or keep conspicuously exhibited in plain view in or at the
place where his business is conducted, if he is engaged in a business, any sign announcing a firm
name or business name or style without first registering such other name, or such firm name, or
business name or style in the Bureau of Commerce together with his true name and that of any other
person having a joint or common interest with him in such contract, agreement, business transaction, or
business . . . .
For a bit of history, the enactment of C.A. No. 142 as amended was made primarily to curb the common
practice among the Chinese of adopting scores of different names and aliases which created
tremendous confusion in the field of trade. Such a practice almost bordered on the crime of using
fictitious names which for obvious reasons could not be successfully maintained against the Chinese
who, rightly or wrongly, claimed they possessed a thousand and one names. C.A. No. 142 thus
penalized the act of using an alias name, unless such alias was duly authorized by proper judicial
proceedings and recorded in the civil register.9
In Yu Kheng Chiau v. Republic 10 the Court had occasion to explain the meaning, concept and ill
effects of the use of an alias within the purview of C.A. No. 142 when we ruled —
There can hardly be any doubt that petitioner's use of alias "Kheng Chiau Young" in addition to his real
name "Yu Cheng Chiau" would add to more confusion. That he is known in his business, as manager of
the Robert Reid, Inc., by the former name, is not sufficient reason to allow him its use. After all,
petitioner admitted that he is known to his associates by both names. In fact, the Anselmo Trinidad, Inc.,
of which he is a customer, knows him by his real name. Neither would the fact that he had encountered
certain difficulties in his transactions with government offices which required him to explain why he bore
two names, justify the grant of his petition, for petitioner could easily avoid said difficulties by simply
using and sticking only to his real name "Yu Kheng Chiau."
The fact that petitioner intends to reside permanently in the Philippines, as shown by his having filed a
petition for naturalization in Branch V of the above-mentioned court, argues the more against the grant
of his petition, because if naturalized as a Filipino citizen, there would then be no necessity for his
further using said alias, as it would be contrary to the usual Filipino way and practice of using only one
name in ordinary as well as business transactions. And, as the lower court correctly observed, if he
believes (after he is naturalized) that it would be better for him to write his name following the
Occidental method, "he can easily file a petition for change of name, so that in lieu of the name "Yu
Kheng Chian," he can, abandoning the same, ask for authority to adopt the name Kheng Chiau Young."
All things considered, we are of the opinion and so hold, that petitioner has not shown satisfactory
proper and reasonable grounds under the aforequoted provisions of Commonwealth Act No. 142 and
the Rules of Court, to warrant the grant of his petition for the use of an alias name.
Clearly therefore an alias is a name or names used by a person or intended to be used by him publicly
and habitually usually in business transactions in addition to his real name by which he is registered at
birth or baptized the first time or substitute name authorized by a competent authority. A man's name is
simply the sound or sounds by which he is commonly designated by his fellows and by which they
distinguish him but sometimes a man is known by several different names and these are known as
aliases. 11 Hence, the use of a fictitious name or a different name belonging to another person in a
single instance without any sign or indication that the user intends to be known by this name in addition
to his real name from that day forth does not fall within the prohibition contained in C.A. No. 142 as
amended. This is so in the case at bench.
It is not disputed that petitioner introduced himself in the Office of the Ombudsman as "Oscar Perez,"
which was the name of the messenger of his lawyer who should have brought the letter to that office in
the first place instead of petitioner. He did so while merely serving the request of his lawyer to obtain a
copy of the complaint in which petitioner was a respondent. There is no question then that "Oscar
Perez" is not an alias name of petitioner. There is no evidence showing that he had used or was
intending to use that name as his second name in addition to his real name. The use of the name
"Oscar Perez" was made by petitioner in an isolated transaction where he was not even legally required
to expose his real identity. For, even if he had identified himself properly at the Office of the
Ombudsman, petitioner would still be able to get a copy of the complaint as a matter of right, and the
Office of the Ombudsman could not refuse him because the complaint was part of public records hence
open to inspection and examination by anyone under the proper circumstances.
While the act of petitioner may be covered by other provisions of law, such does not constitute an
offense within the concept of C.A. No. 142 as amended under which he is prosecuted. The confusion
and fraud in business transactions which the anti-alias law and its related statutes seek to prevent are
not present here as the circumstances are peculiar and distinct from those contemplated by the
legislature in enacting C.A. No. 142 as amended. There exists a valid presumption that undesirable
consequences were never intended by a legislative measure and that a construction of which the
statute is fairly susceptible is favored, which will avoid all objectionable, mischievous, indefensible,
wrongful, evil and injurious consequences. 12 Moreover, as C.A. No. 142 is a penal statute, it should be
construed strictly against the State and in favor of the accused. 13 The reason for this principle is the
tenderness of the law for the rights of individuals and the object is to establish a certain rule by
conformity to which mankind would be safe, and the discretion of the court limited. 14 Indeed, our mind
cannot rest easy on the proposition that petitioner should be convicted on a law that does not clearly
penalize the act done by him.
WHEREFORE, the questioned decision of the Court of Appeals affirming that of the Regional Trial
Court of Davao City is REVERSED and SET ASIDE and petitioner CESARIO URSUA is ACQUITTED
of the crime charged.
SO ORDERED.
G.R. No. L-24170 December 16, 1968
ILLUH ASAALI, HATIB ABDURASID, INGKOH BANTALA, BASOK INGKIN, and MOHAMMAD
BANTALLA, petitioners, vs.THE COMMISSIONER OF CUSTOMS, respondent.
FERNANDO, J.:
The policy relentlessly adhered to and unhesitatingly pursued to minimize, if not to do away entirely,
with the evil and corruption that smuggling brings in its wake would be frustrated and set at naught if the
action taken by respondent Commissioner of Customs in this case, as affirmed by the Court of Tax
Appeals, were to be set aside and this appeal from the decision of the latter were to succeed.
Fortunately, the controlling principles of law do not call for a contrary conclusion. It cannot be otherwise
if the legitimate authority vested in the government were not to be reduced to futility and impotence in
the face of an admittedly serious malady, that at times has assumed epidemic proportions.
The principal question raised by petitioners, owners of five sailing vessels and the cargo loaded therein
declared forfeited by respondent Commissioner of Customs for smuggling, is the validity of their
interception and seizure by customs officials on the high seas, the contention being raised that
importation had not yet begun and that the seizure was effected outside our territorial waters..
Why such a plea could not be given the least credence without doing violence to common sense and
placing the law in disrepute would be apparent from a statement of the case and the findings of facts as
set forth in the decision now under review, of the Court of Tax Appeals, dated November 19, 1964, the
opinion being penned by the late Associate Judge Augusto M. Luciano.
His opinion starts thus: "This is an appeal from the decision of the Acting Commissioner of Customs in
Customs Case No. 113, dated September 26, 1961, (Jolo Seizure Identification Cases Nos. 38, 39, 40,
41 & 42) decreeing the forfeiture of five (5) sailing vessels (kumpits) named 'Iroc-Iroc,' 'Lahat-lahat,'
'Liberal Wing III,' 'Sulu Area Command,' and 'Business,' with their respective cargoes of blue seal
cigarettes and rattan chairs for violation of Section 1363(a) of the Revised Administrative Code and
Section 20 of Republic Act No. 426 in relation with Section 1363(f) of the Revised Administrative
Code."1
The facts according to the above opinion "are not controverted." Thus: "It appears that on September 10,
1950, at about noon time, a customs patrol team on board Patrol Boat ST-23 intercepted the five (5)
sailing vessels in question on the high seas, between British North Borneo and Sulu while they were
heading towards Tawi-tawi, Sulu. After ordering the vessels to stop, the customs officers boarded and
found on board, 181 cases of 'Herald' cigarettes, 9 cases of 'Camel' cigarettes, and some pieces of
rattan chairs. The sailing vessels are all of Philippine registry, owned and manned by Filipino residents
of Sulu, and of less than thirty (30) tons burden. They came from Sandakan, British North Borneo, but
did not possess any permit from the Commissioner of Customs to engage in the importation of
merchandise into any port of the Sulu sea, as required by Section 1363(a) of the Revised Administrative
Code. Their cargoes were not covered by the required import license under Republic Act No. 426,
otherwise known as the Import Control Law."2
Respondent Commissioner of Customs, as noted at the outset, affirmed the decision rendered by the
Collector of Customs of Jolo, who found cause for forfeiture under the law of the vessels and the cargo
contained therein. He was, as also already made known, sustained by the Court of Tax Appeals. Hence
this petition for review.
The first two errors assigned by petitioners would impugn the jurisdiction of the Bureau of Customs to
institute seizure proceedings and thereafter to declare the forfeiture of the vessels in question and their
cargo. They would justify their stand thus: "In the light of the fact that the vessels involved with the
articles laden therein were apprehended and seized on the high seas, beyond the territorial waters of
the Philippines, the said vessels could not have touched any place or port in the Philippines, whether a
port or place of entry or not, consequently, the said vessels could not have been engaged in the
importation of the articles laden therein into any Philippine port or place, whether a port or place of entry
or not, to have incurred the liability of forfeiture under Section 1363(a) of the Revised Administrative
Code."3
Such a contention was advanced by petitioners before the Court of Tax Appeals. It met the repudiation
that it deserved. Thus: "We perfectly see the point of the petitioners but considering the circumstances
surrounding the apprehension of the vessels in question, we believe that Section 1363(a) of the
Revised Administrative Code should be applied to the case at bar. It has been established that the five
vessels came from Sandakan, British North Borneo, a foreign port, and when intercepted, all of them
were heading towards Tawi-tawi, a domestic port within the Sulu sea. Laden with foreign manufactured
cigarettes, they did not possess the import license required by Republic Act No. 426, nor did they carry
a permit from the Commissioner of Customs to engage in importation into any port in the Sulu sea.
Their course announced loudly their intention not merely to skirt along the territorial boundary of the
Philippines but to come within our limits and land somewhere in Tawi-tawi towards which their prows
were pointed. As a matter of fact, they were about to cross our aquatic boundary but for the intervention
of a customs patrol which, from all appearances, was more than eager to accomplish its mission."4
The sense of realism and the vigorous language employed by the late Judge Luciano in rejecting such a
plea deserve to be quoted. Thus: "To entertain even for a moment the thought that these vessels were
probably not bound for a Philippine port would be too much a concession even for a simpleton or a
perennial optimist. It is quite irrational for Filipino sailors manning five Philippine vessels to sneak out of
the Philippines and go to British North Borneo, and come a long way back laden with highly taxable
goods only to turn about upon reaching the brink of our territorial waters and head for another foreign
port."5
1. We find no plausible reason not to accept in its entirety such a conclusion reached by the Court of
Tax Appeals. Nor, even if the persuasive element in the above view were not so overwhelming, could
we alter the decisive facts as found by it. For it is now beyond question that its finding, if supported by
substantial evidence, binds us, only questions of law being for us to resolve. Where the issue raised
belongs to the former category, we lack the power of review.6
Moreover, for understandable reasons, we feel extreme reluctance to substitute our own discretion for
that of the Court of Tax Appeals in its appreciation of the relevant facts and its appraisal of their
significance. As we had occasion to state in a relatively recent decision: "Nor as a matter of principle is
it advisable for this Court to set aside the conclusion reached by an agency such as the Court of Tax
Appeals which is, by the very nature of its function, dedicated exclusively to the study and consideration
of tax problems and has necessarily developed an expertise on the subject, ..., there has been an
abuse or improvident exercise of its authority."7
2. We thus could rest our decision affirming that of the Court of Tax Appeals on the above consideration.
It might not be amiss however to devote some degree of attention to the legal points raised in the above
two assignment of errors, discussed jointly by petitioners-appellants, alleging the absence of jurisdiction,
the deprivation of property without due process of law and the abatement of liability consequent upon
the repeal of Republic Act No. 426. Not one of the principles of law relied upon suffices to call for
reversal of the action taken by the respondent Commissioner of Customs, even if the facts presented a
situation less conclusive against the pretension of petitioners-appellants.
From the apprehension and seizure of the vessels in question on the high seas beyond the territorial
waters of the Philippines, the absence of jurisdiction of Commissioner of Customs is predicated. Such
contention of petitioners-appellants is without merit.
It is unquestioned that all vessels seized are of Philippine registry. The Revised Penal Code leaves no
doubt as to its applicability and enforceability not only within the Philippines, its interior waters and
maritime zone, but also outside of its jurisdiction against those committing offense while on a Philippine
ship ...8 The principle of law that sustains the validity of such a provision equally supplies a firm
foundation for the seizure of the five sailing vessels found thereafter to have violated the applicable
provisions of the Revised Administrative Code.9
Moreover, it is a well settled doctrine of International Law that goes back to Chief Justice Marshall's
opinion in Church v. Hubbart,10 an 1804 decision, that a state has the right to protect itself and its
revenues, a right not limited to its own territory but extending to the high seas. In the language of Chief
Justice Marshall: "The authority of a nation within its own territory is absolute and exclusive. The seizure
of a vessel within the range of its cannon by a foreign force is an invasion of that territory, and is a
hostile act which it is its duty to repel. But its power to secure itself from injury may certainly be
exercised beyond the limits of its territory."
The question asked in the brief of petitioners-appellants as to whether the seizure of the vessels in
question and the cargoes on the high seas and thus beyond the territorial waters of the Philippines was
legal must be answered in the affirmative.
4. The next question raised is the alleged denial of due process arising from such forfeiture and seizure.
The argument on the alleged lack of validity of the action taken by the Commissioner of Customs is
made to rest on the fact that the alleged offense imputed to petitioners-appellants is a violation of
Section 1363(a) and not Section 1363(f). The title of Section 1363 is clear, "Property subject to forfeiture
under customs laws." The first subsection thereof, (a) cover any vessel including cargo unlawfully
engaged in the importation of merchandise except a port of entry. Subsection (f) speaks of any
merchandise of any prohibited importation, the importation of which is effected or attempted contrary to
law and all other merchandise which in the opinion of the Collector of Customs have been used are or
were intended to be used as instrument in the importation or exportation of the former.
From the above recital of the legal provisions relied upon, it would appear most clearly that the due
process question raised is insubstantial. Certainly, the facts on which the seizure was based were not
unknown to petitioners-appellants. On those facts the liability of the vessels and merchandise under the
above terms of the statute would appear to be undeniable. The action taken then by the Commissioner
of Customs was in accordance with law.
How could there be a denial of due process? There was nothing arbitrary about the manner in which
such seizure and forfeiture were effected. The right to a hearing of petitioners-appellants was respected.
They could not have been unaware of what they were doing. It would be an affront to reason if under
the above circumstances they could be allowed to raise in all seriousness a due process question. Such
a constitutional guaranty, basic and fundamental, certainly should not be allowed to lend itself as an
instrument for escaping a liability arising from one's own nefarious acts.
It is thus most evident that the Court of Tax Appeals had not in any wise refused to adhere faithfully to
controlling legal principles when it sustained the action taken by respondent Commissioner of Customs.
It would be a reproach and a reflection on the law if on the facts as they had been shown to exist, the
seizure and forfeiture of the vessels and cargo in question were to be characterized as outside the legal
competence of our government and violative of the constitutional rights of petitioners-appellants.
Fortunately, as had been made clear above, that would be an undeserved reflection and an
unwarranted reproach. The vigor of the war against smuggling must not be hampered by a misreading
of international law concepts and a misplaced reliance on a constitutional guaranty that has not in any
wise been infringed.
WHEREFORE, the decision of respondent Court of Tax Appeals of November 19, 1964, is affirmed.
With costs against petitioners-appellants.

5. Petitioners-appellants would further assail the validity of the action taken by the respondent
Commissioner of Customs by the plea that the repeal of Republic Act No. 426 abated whatever liability
could have been incurred thereunder. This argument raised before the Court of Tax Appeals was
correctly held devoid of any persuasive force. The decision under review cited our opinion in Golay-
Buchel & Cie v. Commissioner of Customs11 to the effect that the expiration of the Import Control Law
"did not produce the effect of declaring legal the importation of goods which were illegally imported and
the seizure and forfeiture thereof as ordered by the Collector of Customs illegal or null and void."

Roxas v. Sayoc 12 announced that principle earlier. Thus: "Herein, we are concerned with the effect of
the expiration of a law, not with the abrogation of a law, and we hold the view that once the
Commissioner of Customs has acquired jurisdiction over the case, the mere expiration of Republic Act
No. 650 will not divest him of his jurisdiction thereon duly acquired while said law was still in force. In
other words, we believe that despite the expiration of Republic Act No. 650 the Commissioner of
Customs retained his jurisdiction over the case and could continue to take cognizance thereof until its
final determination, for the main question brought in by the appeal from the decision of the Collector of
Customs was the legality or illegality of the decision of the Collector of Customs, and that question
could not have been abated by the mere expiration of Republic Act No. 650. We firmly believe that the
expiration of Republic Act No. 650 could not have produced the effect (1) of declaring legal the
importation of the cotton counterpanes which were illegally imported, and (2) of declaring the seizure
and forfeiture ordered by the Collector of Customs illegal or null and void; in other words it could not
have the effect of annulling or setting aside the decision of the Collector of Customs which was
rendered while the law was in force and which should stand until it is revoked by the appellate tribunal."

As late as 1965, in Bombay Dept. Store v. Commissioner of Customs,13 we had occasion to reaffirm
the doctrine in the above two decisions, the present Chief Justice, speaking for the Court, stating that
such expiration of the period of effectivity of Republic Act No. 650 "did not have the effect of depriving
the Commissioner of Customs of the jurisdiction, acquired by him prior thereto, to act on cases of
forfeiture pending before him, which are in the nature of proceeding in rem...."
G.R. No. 124371 November 23, 2000
PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F. LLORENTE, respondents.
DECISION
PARDO, J.:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of Appeals1 modifying that of the Regional
Trial Court, Camarines Sur, Branch 35, Iriga City2 declaring respondent Alicia F. Llorente (herinafter
referred to as "Alicia"), as co-owners of whatever property she and the deceased Lorenzo N. Llorente
(hereinafter referred to as "Lorenzo") may have acquired during the twenty-five (25) years that they
lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from March
10, 1927 to September 30, 1957.3
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as "Paula") were
married before a parish priest, Roman Catholic Church, in Nabua, Camarines Sur.4
Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula stayed in the
conjugal home in barrio Antipolo, Nabua, Camarines Sur.5
On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of
Naturalization No. 5579816 was issued in his favor by the United States District Court, Southern District
of New York.6
Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was granted an accrued
leave by the U. S. Navy, to visit his wife and he visited the Philippines.7 He discovered that his wife
Paula was pregnant and was "living in" and having an adulterous relationship with his brother, Ceferino
Llorente.8
On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of Nabua as
"Crisologo Llorente," with the certificate stating that the child was not legitimate and the line for the
father’s name was left blank.9
Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the couple drew a
written agreement to the effect that (1) all the family allowances allotted by the United States Navy as
part of Lorenzo’s salary and all other obligations for Paula’s daily maintenance and support would be
suspended; (2) they would dissolve their marital union in accordance with judicial proceedings; (3) they
would make a separate agreement regarding their conjugal property acquired during their marital life;
and (4) Lorenzo would not prosecute Paula for her adulterous act since she voluntarily admitted her
fault and agreed to separate from Lorenzo peacefully. The agreement was signed by both Lorenzo and
Paula and was witnessed by Paula’s father and stepmother. The agreement was notarized by Notary
Public Pedro Osabel.10
Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the Superior
Court of the State of California in and for the County of San Diego. Paula was represented by counsel,
John Riley, and actively participated in the proceedings. On November 27, 1951, the Superior Court of
the State of California, for the County of San Diego found all factual allegations to be true and issued an
interlocutory judgment of divorce.11
On December 4, 1952, the divorce decree became final.12
In the meantime, Lorenzo returned to the Philippines.
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.13 Apparently, Alicia had no
knowledge of the first marriage even if they resided in the same town as Paula, who did not oppose the
marriage or cohabitation.14
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife.15 Their twenty-five (25)
year union produced three children, Raul, Luz and Beverly, all surnamed Llorente.16
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized by Notary
Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses Francisco Hugo,
Francisco Neibres and Tito Trajano. In the will, Lorenzo bequeathed all his property to Alicia and their
three children, to wit:
"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential house and lot,
located at San Francisco, Nabua, Camarines Sur, Philippines, including ALL the personal properties
and other movables or belongings that may be found or existing therein;
"(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F. Llorente,
Luz F. Llorente and Beverly F. Llorente, in equal shares, all my real properties whatsoever and
wheresoever located, specifically my real properties located at Barangay Aro-Aldao, Nabua, Camarines
Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras, Sitio Puga, Nabua, Camarines Sur;
and Barangay Paloyon, Sitio Nalilidong, Nabua, Camarines Sur;
"(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my children, Raul
F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, my real properties located in
Quezon City Philippines, and covered by Transfer Certificate of Title No. 188652; and my lands in
Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title Nos. 124196 and 165188, both of
the Registry of Deeds of the province of Rizal, Philippines;
"(4) That their respective shares in the above-mentioned properties, whether real or personal properties,
shall not be disposed of, ceded, sold and conveyed to any other persons, but could only be sold, ceded,
conveyed and disposed of by and among themselves;
"(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last Will and
Testament, and in her default or incapacity of the latter to act, any of my children in the order of age, if
of age;
"(6) I hereby direct that the executor named herein or her lawful substitute should served (sic) without
bond;
"(7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions heretofore
executed, signed, or published, by me;
"(8) It is my final wish and desire that if I die, no relatives of mine in any degree in the Llorente’s Side
should ever bother and disturb in any manner whatsoever my wife Alicia R. Fortunato and my children
with respect to any real or personal properties I gave and bequeathed respectively to each one of them
by virtue of this Last Will and Testament."17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a petition for
the probate and allowance of his last will and testament wherein Lorenzo moved that Alicia be
appointed Special Administratrix of his estate.18
On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo was still
alive.19
On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to
probate.20
On June 11, 1985, before the proceedings could be terminated, Lorenzo died.21
On September 4, 1985, Paula filed with the same court a petition22 for letters of administration over
Lorenzo’s estate in her favor. Paula contended (1) that she was Lorenzo’s surviving spouse, (2) that the
various property were acquired during their marriage, (3) that Lorenzo’s will disposed of all his property
in favor of Alicia and her children, encroaching on her legitime and 1/2 share in the conjugal property.23
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition for the
issuance of letters testamentary.24
On October 14, 1985, without terminating the testate proceedings, the trial court gave due course to
Paula’s petition in Sp. Proc. No. IR-888.25
On November 6, 13 and 20, 1985, the order was published in the newspaper "Bicol Star".26
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:
"Wherefore, considering that this court has so found that the divorce decree granted to the late Lorenzo
Llorente is void and inapplicable in the Philippines, therefore the marriage he contracted with Alicia
Fortunato on January 16, 1958 at Manila is likewise void. This being so the petition of Alicia F. Llorente
for the issuance of letters testamentary is denied. Likewise, she is not entitled to receive any share from
the estate even if the will especially said so her relationship with Lorenzo having gained the status of
paramour which is under Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular Llorente, meritorious, and so declares
the intrinsic disposition of the will of Lorenzo Llorente dated March 13, 1981 as void and declares her
entitled as conjugal partner and entitled to one-half of their conjugal properties, and as primary
compulsory heir, Paula T. Llorente is also entitled to one-third of the estate and then one-third should go
to the illegitimate children, Raul, Luz and Beverly, all surname (sic) Llorente, for them to partition in
equal shares and also entitled to the remaining free portion in equal shares.
"Petitioner, Paula Llorente is appointed legal administrator of the estate of the deceased, Lorenzo
Llorente. As such let the corresponding letters of administration issue in her favor upon her filing a bond
in the amount (sic) of P100,000.00 conditioned for her to make a return to the court within three (3)
months a true and complete inventory of all goods, chattels, rights, and credits, and estate which shall
at any time come to her possession or to the possession of any other person for her, and from the
proceeds to pay and discharge all debts, legacies and charges on the same, or such dividends thereon
as shall be decreed or required by this court; to render a true and just account of her administration to
the court within one (1) year, and at any other time when required by the court and to perform all orders
of this court by her to be performed.
"On the other matters prayed for in respective petitions for want of evidence could not be granted.
"SO ORDERED."27
In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted decision.28
On September 14, 1987, the trial court denied Alicia’s motion for reconsideration but modified its earlier
decision, stating that Raul and Luz Llorente are not children "legitimate or otherwise" of Lorenzo since
they were not legally adopted by him.29 Amending its decision of May 18, 1987, the trial court declared
Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to one-third (1/3) of the estate and
one-third (1/3) of the free portion of the estate.30
On September 28, 1987, respondent appealed to the Court of Appeals.31
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification the decision
of the trial court in this wise:
"WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that Alicia
is declared as co-owner of whatever properties she and the deceased may have acquired during the
twenty-five (25) years of cohabitation.

"SO ORDERED."32
On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration of the
decision.33
On March 21, 1996, the Court of Appeals,34 denied the motion for lack of merit.
Hence, this petition.35
The Issue
Stripping the petition of its legalese and sorting through the various arguments raised,36 the issue is
simple. Who are entitled to inherit from the late Lorenzo N. Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case to the trial court for
ruling on the intrinsic validity of the will of the deceased.
The Applicable Law
The fact that the late Lorenzo N. Llorente became an American citizen long before and at the time of: (1)
his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4) death, is duly established,
admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.
The Civil Code clearly provides:
"Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of
persons are binding upon citizens of the Philippines, even though living abroad.
"Art. 16. Real property as well as personal property is subject to the law of the country where it is
situated.
"However, intestate and testamentary succession, both with respect to the order of succession and to
the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration, whatever may be
the nature of the property and regardless of the country wherein said property may be found."
(emphasis ours)
True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take
judicial notice of them. Like any other fact, they must be alleged and proved.37
While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign law.
The Court of Appeals and the trial court called to the fore the renvoi doctrine, where the case was
"referred back" to the law of the decedent’s domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York was not sufficiently proven, in the
same breath it made the categorical, albeit equally unproven statement that "American law follows the
‘domiciliary theory’ hence, Philippine law applies when determining the validity of Lorenzo’s will.38
First, there is no such thing as one American law.1ªwph!1 The "national law" indicated in Article 16 of
the Civil Code cannot possibly apply to general American law. There is no such law governing the
validity of testamentary provisions in the United States. Each State of the union has its own law
applicable to its citizens and in force only within the State. It can therefore refer to no other than the law
of the State of which the decedent was a resident.39 Second, there is no showing that the application of
the renvoi doctrine is called for or required by New York State law.
The trial court held that the will was intrinsically invalid since it contained dispositions in favor of Alice,
who in the trial court’s opinion was a mere paramour. The trial court threw the will out, leaving Alice, and
her two children, Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2) of whatever
property she and Lorenzo acquired during their cohabitation, applying Article 144 of the Civil Code of
the Philippines.
The hasty application of Philippine law and the complete disregard of the will, already probated as duly
executed in accordance with the formalities of Philippine law, is fatal, especially in light of the factual
and legal circumstances here obtaining.
Validity of the Foreign Divorce
In Van Dorn v. Romillo, Jr.40 we held that owing to the nationality principle embodied in Article 15 of the
Civil Code, only Philippine nationals are covered by the policy against absolute divorces, the same
being considered contrary to our concept of public policy and morality. In the same case, the Court
ruled that aliens may obtain divorces abroad, provided they are valid according to their national law.
Citing this landmark case, the Court held in Quita v. Court of Appeals,41 that once proven that
respondent was no longer a Filipino citizen when he obtained the divorce from petitioner, the ruling in
Van Dorn would become applicable and petitioner could "very well lose her right to inherit" from him.
In Pilapil v. Ibay-Somera,42 we recognized the divorce obtained by the respondent in his country, the
Federal Republic of Germany. There, we stated that divorce and its legal effects may be recognized in
the Philippines insofar as respondent is concerned in view of the nationality principle in our civil law on
the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed.43 We hold
that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid and recognized in
this jurisdiction as a matter of comity. Now, the effects of this divorce (as to the succession to the estate
of the decedent) are matters best left to the determination of the trial court.
Validity of the Will
The Civil Code provides:
"Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed
by the laws of the country in which they are executed.
"When the acts referred to are executed before the diplomatic or consular officials of the Republic of the
Philippines in a foreign country, the solemnities established by Philippine laws shall be observed in their
execution." (underscoring ours)
The clear intent of Lorenzo to bequeath his property to his second wife and children by her is glaringly
shown in the will he executed. We do not wish to frustrate his wishes, since he was a foreigner, not
covered by our laws on "family rights and duties, status, condition and legal capacity."44
Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved by
foreign law which must be pleaded and proved. Whether the will was executed in accordance with the
formalities required is answered by referring to Philippine law. In fact, the will was duly probated.
As a guide however, the trial court should note that whatever public policy or good customs may be
involved in our system of legitimes, Congress did not intend to extend the same to the succession of
foreign nationals. Congress specifically left the amount of successional rights to the decedent's national
law.45
Having thus ruled, we find it unnecessary to pass upon the other issues raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G. R. SP No.
17446 promulgated on July 31, 1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and RECOGNIZES as
VALID the decree of divorce granted in favor of the deceased Lorenzo N. Llorente by the Superior Court
of the State of California in and for the County of San Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination of the intrinsic validity of
Lorenzo N. Llorente’s will and determination of the parties’ successional rights allowing proof of foreign
law with instructions that the trial court shall proceed with all deliberate dispatch to settle the estate of
the deceased within the framework of the Rules of Court.
No costs.
SO ORDERED.
G.R. No. L-68470 October 8, 1985
ALICE REYES VAN DORN, petitioner,
vs.
HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court of the
National Capital Region Pasay City and RICHARD UPTON respondents.
MELENCIO-HERRERA, J.:\
In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the
Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by respondent
Judge, which denied her Motion to Dismiss said case, and her Motion for Reconsideration of the
Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines while private respondent is
a citizen of the United States; that they were married in Hongkong in 1972; that, after the marriage, they
established their residence in the Philippines; that they begot two children born on April 4, 1973 and
December 18, 1975, respectively; that the parties were divorced in Nevada, United States, in 1982; and
that petitioner has re-married also in Nevada, this time to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the
Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita, Manila,
(the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner be ordered to
render an accounting of that business, and that private respondent be declared with right to manage the
conjugal property. Petitioner moved to dismiss the case on the ground that the cause of action is barred
by previous judgment in the divorce proceedings before the Nevada Court wherein respondent had
acknowledged that he and petitioner had "no community property" as of June 11, 1982. The Court
below denied the Motion to Dismiss in the mentioned case on the ground that the property involved is
located in the Philippines so that the Divorce Decree has no bearing in the case. The denial is now the
subject of this certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to appeal.
certiorari and Prohibition are neither the remedies to question the propriety of an interlocutory order of
the trial Court. However, when a grave abuse of discretion was patently committed, or the lower Court
acted capriciously and whimsically, then it devolves upon this Court in a certiorari proceeding to
exercise its supervisory authority and to correct the error committed which, in such a case, is equivalent
to lack of jurisdiction. 1 Prohibition would then lie since it would be useless and a waste of time to go
ahead with the proceedings. 2 Weconsider the petition filed in this case within the exception, and we
have given it due course.
For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in the
Philippines.
Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property
because of the representation he made in the divorce proceedings before the American Court that they
had no community of property; that the Galleon Shop was not established through conjugal funds, and
that respondent's claim is barred by prior judgment.
For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail over
the prohibitive laws of the Philippines and its declared national policy; that the acts and declaration of a
foreign Court cannot, especially if the same is contrary to public policy, divest Philippine Courts of
jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the property relations between
petitioner and private respondent, after their marriage, were upon absolute or relative community
property, upon complete separation of property, or upon any other regime. The pivotal fact in this case
is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who
appeared in person before the Court during the trial of the case. It also obtained jurisdiction over private
respondent who, giving his address as No. 381 Bush Street, San Francisco, California, authorized his
attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the ground of incompatibility
in the understanding that there were neither community property nor community obligations. 3 As
explicitly stated in the Power of Attorney he executed in favor of the law firm of KARP & GRAD LTD.,
336 W. Liberty, Reno, Nevada, to represent him in the divorce proceedings:
You are hereby authorized to accept service of Summons, to file an Answer, appear on my behalf and
do an things necessary and proper to represent me, without further contesting, subject to the following:
The purpose and effect of a decree of divorce from the bond of matrimony by a court of 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 petitioner's husband entitled to exercise control over
conjugal assets. As he is bound by the Decision of his own country's 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.
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.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the
Complaint filed in Civil Case No. 1075-P of his Court.
Without costs.

1. That my spouse seeks a divorce on the ground of incompatibility. SO ORDERED.

2. That there is no community of property to be adjudicated by the Court.

3. 'I'hat there are no community obligations to be adjudicated by the court.

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. What he is contending in
this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to local
law and public policy.

It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only Philippine
nationals are covered by the policy against absolute divorces the same being considered contrary to our
concept of public police and morality. However, aliens may obtain divorces abroad, which may be
recognized in the Philippines, provided they are valid according to their national law. 6 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:
G.R. No. 133876 December 29, 1999
BANK OF AMERICA, NT and SA, petitioner, vs.
AMERICAN REALTY CORPORATION and COURT OF APPEALS, respondents.
BUENA, J.:
Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage constituted over a
third party mortgagor's property situated in the Philippines by filing an action for the collection of the
principal loan before foreign courts?
Sought to be reversed in the instant petition for review on certiorari under Rule 45 of the Rules of Court
are the decision 1 of public respondent Court of Appeals in CA G.R. CV No. 51094, promulgated on 30
September 1997 and its resolution, 2 dated 22 May 1998, denying petitioner's motion for
reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing institution duly
licensed to do business in the Philippines, organized and existing under and by virtue of the laws of the
State of California, United States of America while private respondent American Realty Corporation
(ARC) is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a limited liability company organized
and existing under the laws of England.
As borne by the records, BANTSA and BAIL on several occasions granted three major multi-million
United States (US) Dollar loans to the following corporate borrowers: (1) Liberian Transport Navigation,
S.A.; (2) El Challenger S.A. and (3) Eshley Compania Naviera S.A. (hereinafter collectively referred to
as "borrowers"), all of which are existing under and by virtue of the laws of the Republic of Panama and
are foreign affiliates of private
respondent. 3
Due to the default in the payment of the loan amortizations, BANTSA and the corporate borrowers
signed and entered into restructuring agreements. As additional security for the restructured loans,
private respondent ARC as third party mortgagor executed two real estate mortgages, 4 dated 17
February 1983 and 20 July 1984, over its parcels of land including improvements thereon, located at
Barrio Sto. Cristo, San Jose Del Monte, Bulacan, and which are covered by Transfer Certificate of Title
Nos. T-78759, T-78760, T-78761, T-78762 and T-78763.
Eventually, the corporate borrowers defaulted in the payment of the restructured loans prompting
petitioner BANTSA to file civil actions 5 before foreign courts for the collection of the principal loan, to
wit:
a) In England, in its High Court of Justice, Queen's Bench Division, Commercial Court (1992-
Folio No 2098) against Liberian Transport Navigation S.A., Eshley Compania Naviera S.A., El
Challenger S.A., Espriona Shipping Company S.A., Eddie Navigation Corp., S.A., Eduardo Katipunan
Litonjua and Aurelio Katipunan Litonjua on June 17, 1992.
b) In England, in its High Court of Justice, Queen's Bench Division, Commercial Court (1992-
Folio No. 2245) against El Challenger S.A., Espriona Shipping Company S.A., Eduardo Katipuan
Litonjua & Aurelio Katipunan Litonjua on July 2, 1992;
c) In Hongkong, in the Supreme Court of Hongkong High Court (Action No. 4039 of 1992) against
Eshley Compania Naviera S.A., El Challenger S.A., Espriona Shipping Company S.A. Pacific
Navigators Corporation, Eddie Navigation Corporation S.A., Litonjua Chartering (Edyship) Co., Inc.,
Aurelio Katipunan Litonjua, Jr. and Eduardo Katipunan Litonjua on November 19, 1992; and
d) In Hongkong, in the Supreme Court of Hongkong High Court (Action No. 4040 of 1992) against
Eshley Compania Naviera S.A., El Challenger S.A., Espriona Shipping Company, S.A., Pacific
Navigators Corporation, Eddie Navigation Corporation S.A., Litonjua Chartering (Edyship) Co., Jr. and
Eduardo Katipunan Litonjua on November 21, 1992.
In the civil suits instituted before the foreign courts, private respondent ARC, being a third party
mortgagor, was private not impleaded as party-defendant.
On 16 December 1992, petitioner BANTSA filed before the Office of the Provincial Sheriff of Bulacan,
Philippines an application for extrajudicial foreclosure 6 of real estate mortgage.
On 22 January 1993, after due publication and notice, the mortgaged real properties were sold at public
auction in an extrajudicial foreclosure sale, with Integrated Credit and Corporation Services Co (ICCS)
as the highest bidder for the sum of Twenty four Million Pesos (P24,000.000.00). 7
On 12 February 1993, private respondent filed before the Pasig Regional Trial Court, Branch 159, an
action for damages 8 against the petitioner, for the latter's act of foreclosing extrajudicially the real
estate mortgages despite the pendency of civil suits before foreign courts for the collection of the
principal loan.
In its answer 9 petitioner alleged that the rule prohibiting the mortgagee from foreclosing the mortgage
after an ordinary suit for collection has been filed, is not applicable in the present case, claiming that:
a) The plaintiff, being a mere third party mortgagor and not a party to the principal restructuring
agreements, was never made a party defendant in the civil cases filed in Hongkong and England;
b) There is actually no civil suit for sum of money filed in the Philippines since the civil actions
were filed in Hongkong and England. As such, any decisions (sic) which may be rendered in the
abovementioned courts are not (sic) enforceable in the Philippines unless a separate action to enforce
the foreign judgments is first filed in the Philippines, pursuant to Rule 39, Section 50 of the Revised
Rules of Court.
c) Under English Law, which is the governing law under the principal agreements, the mortgagee
does not lose its security interest by filing civil actions for sums of money.
On 14 December 1993, private respondent filed a motion for
suspension 10 of the redemption period on the ground that "it cannot exercise said right of redemption
without at the same time waiving or contradicting its contentions in the case that the foreclosure of the
mortgage on its properties is legally improper and therefore invalid."
In an order 11 dated 28 January 1994, the trial court granted the private respondent's motion for
suspension after which a copy of said order was duly received by the Register of Deeds of Meycauayan,
Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the foreclosure sale,
consolidated its ownership over the real properties, resulting to the issuance of Transfer Certificate of
Title Nos. T-18627, T-186272, T-186273, T-16471 and T-16472 in its name.
On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold the real properties to
Stateland Investment Corporation for the amount of Thirty Nine Million Pesos (P39,000,000.00). 12
Accordingly, Transfer Certificate of Title Nos. T-187781(m), T-187782(m), T-187783(m), T-16653P(m)
and T-16652P(m) were issued in the latter's name.
After trial, the lower court rendered a decision 13 in favor of private respondent ARC dated 12 May
1993, the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered declaring that the filing in foreign courts by the defendant
of collection suits against the principal debtors operated as a waiver of the security of the mortgages.
Consequently, the plaintiff's rights as owner and possessor of the properties then covered by Transfer
Certificates of Title Nos. T-78759, T-78762, T-78763, T-78760 and T-78761, all of the Register of
Deeds of Meycauayan, Bulacan, Philippines, were violated when the defendant caused the extrajudicial
foreclosure of the mortgages constituted thereon.
Accordingly, the defendant is hereby ordered to pay the plaintiff the following sums, all with legal
interest thereon from the date of the filing of the complaint up to the date of actual payment:
1) Actual or compensatory damages in the amount of Ninety Nine Million Pesos (P99,000,000.00);
2) Exemplary damages in the amount of Five Million Pesos (P5,000,000.00); and
3) Costs of suit.
SO ORDERED.
On appeal, the Court of Appeals affirmed the assailed decision of the lower court prompting petitioner to
file a motion for reconsideration which the appellate court denied.
Hence, the instant petition for review 14 on certiorari where herein petitioner BANTSA ascribes to the
Court of Appeals the following assignment of errors:
1. The Honorable Court of Appeals disregarded the doctrines laid down by this Hon. Supreme
Court in the cases of Caltex Philippines, Inc. vs. Intermediate Appellate Court docketed as G.R. No.
74730 promulgated on August 25, 1989 and Philippine Commercial International Bank vs. IAC, 196
SCRA 29 (1991 case), although said cases were duly cited, extensively discussed and specifically
mentioned, as one of the issues in the assignment of errors found on page 5 of the decision dated
September 30, 1997.
2. The Hon. Court of Appeals acted with grave abuse of discretion when it awarded the private
respondent actual and exemplary damages totalling P171,600,000.00, as of July 12, 1998 although
such huge amount was not asked nor prayed for in private respondent's complaint, is contrary to law
and is totally unsupported by evidence (sic).
In fine, this Court is called upon to resolve two main issues:
1. Whether or not the petitioner's act of filing a collection suit against the principal debtors for the
recovery of the loan before foreign courts constituted a waiver of the remedy of foreclosure.
2. Whether or not the award by the lower court of actual and exemplary damages in favor of
private respondent ARC, as third-party mortgagor, is proper.
The petition is bereft of merit.
First, as to the issue of availability of remedies, petitioner submits that a waiver of the remedy of
foreclosure requires the concurrence of two requisites: an ordinary civil action for collection should be
filed and subsequently a final judgment be correspondingly rendered therein.
According to petitioner, the mere filing of a personal action to collect the principal loan does not suffice;
a final judgment must be secured and obtained in the personal action so that waiver of the remedy of
foreclosure may be appreciated. To put it differently, absent any of the two requisites, the mortgagee-
creditor is deemed not to have waived the remedy of foreclosure.
We do not agree.
Certainly, this Court finds petitioner's arguments untenable and upholds the jurisprudence laid down in
Bachrach 15 and similar cases adjudicated thereafter, thus:
In the absence of express statutory provisions, a mortgage creditor may institute against the mortgage
debtor either a personal action or debt or a real action to foreclose the mortgage. In other words, he
may he may pursue either of the two remedies, but not both. By such election, his cause of action can
by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a
personal action will leave open to him all the properties of the debtor for attachment and execution,
even including the mortgaged property itself. And, if he waives such personal action and pursues his
remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right to
sue for a deficiency judgment, in which case, all the properties of the defendant, other than the
mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his
remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of
one or the other remedy are purely accidental and are all under his right of election. On the other hand,
a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously
or successively another action against the mortgaged property, would result not only in multiplicity of
suits so offensive to justice (Soriano vs. Enriques, 24 Phil. 584) and obnoxious to law and equity
(Osorio vs. San Agustin, 25 Phil., 404), but also in subjecting the defendant to the vexation of being
sued in the place of his residence or of the residence of the plaintiff, and then again in the place where
the property lies.
In Danao vs. Court of Appeals, 16 this Court, reiterating jurisprudence enunciated in Manila Trading and
Supply Co vs. Co Kim 17 and Movido vs.
RFC, 18 invariably held:
. . . The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead,
an ordinary action to recover the indebtedness with the right to execute a judgment thereon on all the
properties of the debtor, including the subject matter of the mortgage . . . , subject to the qualification
that if he fails in the remedy by him elected, he cannot pursue further the remedy he has waived.
(Emphasis Ours)
Anent real properties in particular, the Court has laid down the rule that a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a real action to foreclose the
mortgage. 19
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and not
cumulative. Notably, an election of one remedy operates as a waiver of the other. For this purpose, a
remedy is deemed chosen upon the filing of the suit for collection or upon the filing of the complaint in
an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the of the 1997 Rules of
Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage
creditor upon filing of the petition not with any court of justice but with the Office of the Sheriff of the
province where the sale is to be made, in accordance with the provisions of Act No. 3135, as amended
by Act No. 4118.
In the case at bench, private respondent ARC constituted real estate mortgages over its properties as
security for the debt of the principal debtors. By doing so, private respondent subjected itself to the
liabilities of a third party mortgagor. Under the law, third persons who are not parties to a loan may
secure the latter by pledging or mortgaging their own property. 20
Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction which makes a third
person who secures the fulfillment of another's obligation by mortgaging his own property, to be
solidarily bound with the principal obligor. The signatory to the principal contract—loan—remains to be
primarily bound. It is only upon default of the latter that the creditor may have recourse on the
mortgagors by foreclosing the mortgaged properties in lieu of an action for the recovery of the amount
of the loan. 21
In the instant case, petitioner's contention that the requisites of filing the action for collection and
rendition of final judgment therein should concur, is untenable.
Thus, in Cerna vs. Court of Appeals, 22 we agreed with the petitioner in said case, that the filing of a
collection suit barred the foreclosure of the mortgage:
A mortgagee who files a suit for collection abandons the remedy of foreclosure of the chattel mortgage
constituted over the personal property as security for the debt or value of the promissory note when he
seeks to recover in the said collection suit.
. . . When the mortgagee elects to file a suit for collection, not foreclosure, thereby abandoning the
chattel mortgage as basis for relief, he clearly manifests his lack of desire and interest to go after the
mortgaged property as security for the promissory note . . . .
Contrary to petitioner's arguments, we therefore reiterate the rule, for clarity and emphasis, that the
mere act of filing of an ordinary action for collection operates as a waiver of the mortgage-creditor's
remedy to foreclose the mortgage. By the mere filing of the ordinary action for collection against the
principal debtors, the petitioner in the present case is deemed to have elected a remedy, as a result of
which a waiver of the other necessarily must arise. Corollarily, no final judgment in the collection suit is
required for the rule on waiver to apply.
Hence, in Caltex Philippines, Inc. vs. Intermediate-Appellate Court, 23 a case relied upon by petitioner,
supposedly to buttress its contention, this Court had occasion to rule that the mere act of filing a
collection suit for the recovery of a debt secured by a mortgage constitutes waiver of the other remedy
of foreclosure.
In the case at bar, petitioner BANTSA only has one cause of action which is non-payment of the debt.
Nevertheless, alternative remedies are available for its enjoyment and exercise. Petitioner then may opt
to exercise only one of two remedies so as not to violate the rule against splitting a cause of action.
As elucidated by this Court in the landmark case of Bachrach Motor Co., Inc, vs. Icarangal. 24
For non-payment of a note secured by mortgage, the creditor has a single cause of action against the
debtor. This single cause of action consists in the recovery of the credit with execution of the security. In
other words, the creditor in his action may make two demands, the payment of the debt and the
foreclosure of his mortgage. But both demands arise from the same cause, the non-payment of the debt,
and for that reason, they constitute a single cause of action. Though the debt and the mortgage
constitute separate agreements, the latter is subsidiary to the former, and both refer to one and the
same obligation. Consequently, there exists only one cause of action for a single breach of that
obligation. Plaintiff, then, by applying the rules above stated, cannot split up his single cause of action
by filing a complaint for payment of the debt, and thereafter another complaint for foreclosure of the
mortgage. If he does so, the filing of the first complaint will bar the subsequent complaint. By allowing
the creditor to file two separate complaints simultaneously or successively, one to recover his credit and
another to foreclose his mortgage, we will, in effect, be authorizing him plural redress for a single
breach of contract at so much cost to the courts and with so much vexation and oppression to the
debtor.
Petitioner further faults the Court of Appeals for allegedly disregarding the doctrine enunciated in Caltex
wherein this High Court relaxed the application of the general rules to wit:
In the present case, however, we shall not follow this rule to the letter but declare that it is the collection
suit which was waived and/or abandoned. This ruling is more in harmony with the principles underlying
our judicial system. It is of no moment that the collection suit was filed ahead, what is determinative is
the fact that the foreclosure proceedings ended even before the decision in the collection suit was
rendered. . . .
Notably, though, petitioner took the Caltex ruling out of context. We must stress that the Caltex case
was never intended to overrule the well-entrenched doctrine enunciated Bachrach, which to our mind
still finds applicability in cases of this sort. To reiterate, Bachrach is still good law.
We then quote the decision 25 of the trial court, in the present case, thus:
The aforequoted ruling in Caltex is the exception rather than the rule, dictated by the peculiar
circumstances obtaining therein. In the said case, the Supreme Court chastised Caltex for making ". . .
a mockery of our judicial system when it initially filed a collection suit then, during the pendency thereof,
foreclosed extrajudicially the mortgaged property which secured the indebtedness, and still pursued the
collection suit to the end." Thus, to prevent a mockery of our judicial system", the collection suit had to
be nullified because the foreclosure proceedings have already been pursued to their end and can no
longer be undone.
In the case at bar, it has not been shown whether the defendant pursued to the end or are still pursuing
the collection suits filed in foreign courts. There is no occasion, therefore, for this court to apply the
exception laid down by the Supreme Court in Caltex by nullifying the collection suits. Quite obviously,
too, the aforesaid collection suits are beyond the reach of this Court. Thus the only way the court may
prevent the spector of a creditor having "plural redress for a single breach of contract" is by holding, as
the Court hereby holds, that the defendant has waived the right to foreclose the mortgages constituted
by the plaintiff on its properties originally covered by Transfer Certificates of Title Nos. T-78759, T-
78762, T-78760 and T-78761. (RTC Decision pp., 10-11)
In this light, the actuations of Caltex are deserving of severe criticism, to say the least. 26
Moreover, petitioner attempts to mislead this Court by citing the case of PCIB vs. IAC. 27 Again,
petitioner tried to fit a square peg in a round hole. It must be stressed that far from overturning the
doctrine laid down in Bachrach, this Court in PCIB buttressed its firm stand on this issue by declaring:
While the law allows a mortgage creditor to either institute a personal action for the debt or a real action
to foreclosure the mortgage, he cannot pursue both remedies simultaneously or successively as was
done by PCIB in this case.
Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of the 1.3 million promissory note
secured by real estate mortgages and subsequently filed a petition for extrajudicial foreclosure, it
violates the rule against splitting a cause of action.
Accordingly, applying the foregoing rules, we hold that petitioner, by the expediency of filing four civil
suits before foreign courts, necessarily abandoned the remedy to foreclose the real estate mortgages
constituted over the properties of third-party mortgagor and herein private respondent ARC. Moreover,
by filing the four civil actions and by eventually foreclosing extrajudicially the mortgages, petitioner in
effect transgressed the rules against splitting a cause of action well-enshrined in jurisprudence and our
statute books.
In Bachrach, this Court resolved to deny the creditor the remedy of foreclosure after the collection suit
was filed, considering that the creditor should not be afforded "plural redress for a single breach of
contract." For cause of action should not be confused with the remedy created for its enforcement. 28
Notably, it is not the nature of the redress which is crucial but the efficacy of the remedy chosen in
addressing the creditor's cause. Hence, a suit brought before a foreign court having competence and
jurisdiction to entertain the action is deemed, for this purpose, to be within the contemplation of the
remedy available to the mortgagee-creditor. This pronouncement would best serve the interest of justice
and fair play and further discourage the noxious practice of splitting up a lone cause of action.
Incidentally, BANTSA alleges that under English Law, which according to petitioner is the governing law
with regard to the principal agreements, the mortgagee does not lose its security interest by simply filing
civil actions for sums of money. 29
We rule in the negative.
This argument shows desperation on the part of petitioner to rivet its crumbling cause. In the case at
bench, Philippine law shall apply notwithstanding the evidence presented by petitioner to prove the
English law on the matter.
In a long line of decisions, this Court adopted the well-imbedded principle in our jurisdiction that there is
no judicial notice of any foreign law. A foreign law must be properly pleaded and proved as a fact. 30
Thus, if the foreign law involved is not properly pleaded and proved, our courts will presume that the
foreign law is the same as our local or domestic or internal
law. 31 This is what we refer to as the doctrine of processual presumption.
In the instant case, assuming arguendo that the English Law on the matter were properly pleaded and
proved in accordance with Section 24, Rule 132 of the Rules of Court and the jurisprudence laid down
in Yao Kee, et al. vs.
Sy-Gonzales, 32 said foreign law would still not find applicability.

Thus, when the foreign law, judgment or contract is contrary to a sound and established public policy of
the forum, the said foreign law, judgment or order shall not be applied. 33
Additionally, 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. 34
The public policy sought to be protected in the instant case is the principle imbedded in our jurisdiction
proscribing the splitting up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent —
If two or more suits are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal of the others.
Moreover, foreign law should not be applied when its application would work undeniable injustice to the
citizens or residents of the forum. To give justice is the most important function of law; hence, a law, or
judgment or contract that is obviously unjust negates the fundamental principles of Conflict of Laws. 35
Clearly then, English Law is not applicable.
As to the second pivotal issue, we hold that the private respondent is entitled to the award of actual or
compensatory damages inasmuch as the act of petitioner BANTSA in extrajudicially foreclosing the real
estate mortgages constituted a clear violation of the rights of herein private respondent ARC, as third-
party mortgagor.
Actual or compensatory damages are those recoverable because of pecuniary loss in business, trade,
property, profession, job or occupation and the same must be proved, otherwise if the proof is flimsy
and non-substantial, no damages will be given. 36 Indeed, the question of the value of property is
always a difficult one to settle as valuation of real property is an imprecise process since real estate has
no inherent value readily ascertainable by an appraiser or by the court. 37 The opinions of men vary so
much concerning the real value of property that the best the courts can do is hear all of the witnesses
which the respective parties desire to present, and then, by carefully weighing that testimony, arrive at a
conclusion which is just and equitable. 38
In the instant case, petitioner assails the Court of Appeals for relying heavily on the valuation made by
Philippine Appraisal Company. In effect, BANTSA questions the act of the appellate court in giving due
weight to the appraisal report composed of twenty three pages, signed by Mr. Lauro Marquez and
submitted as evidence by private respondent. The appraisal report, as the records would readily show,
was corroborated by the testimony of Mr. Reynaldo Flores, witness for private respondent.
On this matter, the trial court observed:
The record herein reveals that plaintiff-appellee formally offered as evidence the appraisal report dated
March 29, 1993 (Exhibit J, Records, p. 409), consisting of twenty three (23) pages which set out in
detail the valuation of the property to determine its fair market value (TSN, April 22, 1994, p. 4), in the
amount of P99,986,592.00 (TSN, ibid., p. 5), together with the corroborative testimony of one Mr.
Reynaldo F. Flores, an appraiser and director of Philippine Appraisal Company, Inc. (TSN, ibid., p. 3).
The latter's testimony was subjected to extensive cross-examination by counsel for defendant-appellant
(TSN, April 22, 1994, pp. 6-22). 39
In the matter of credibility of witnesses, the Court reiterates the familiar and well-entrenched rule that
the factual findings of the trial court should be respected. 40 The time-tested jurisprudence is that the
findings and conclusions of the trial court on the credibility of witnesses enjoy a badge of respect for the
reason that trial courts have the advantage of observing the demeanor of witnesses as they testify. 41
This Court will not alter the findings of the trial court on the credibility of witnesses, principally because
they are in a better position to assess the same than the appellate court. 42 Besides, trial courts are in a
better position to examine real evidence as well as observe the demeanor of witnesses. 43
Similarly, the appreciation of evidence and the assessment of the credibility of witnesses rest primarily
with the trial court. 44 In the case at bar, we see no reason that would justify this Court to disturb the
factual findings of the trial court, as affirmed by the Court of Appeals, with regard to the award of actual
damages.
In arriving at the amount of actual damages, the trial court justified the award by presenting the
following ratiocination in its assailed decision 45, to wit:
Indeed, the Court has its own mind in the matter of valuation. The size of the subject real properties are
(sic) set forth in their individuals titles, and the Court itself has seen the character and nature of said
properties during the ocular inspection it conducted. Based principally on the foregoing, the Court
makes the following observations:
1. The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose del Monte, Bulacan,
which is (sic) not distant from Metro Manila — the biggest urban center in the Philippines — and are
easily accessible through well-paved roads;
2. The properties are suitable for development into a subdivision for low cost housing, as
admitted by defendant's own appraiser (TSN, May 30, 1994, p. 31);
3. The pigpens which used to exist in the property have already been demolished. Houses of
strong materials are found in the vicinity of the property (Exhs. 2, 2-1 to 2-7), and the vicinity is a
growing community. It has even been shown that the house of the Barangay Chairman is located
adjacent to the property in question (Exh. 27), and the only remaining piggery (named Cherry Farm) in
the vicinity is about 2 kilometers away from the western boundary of the property in question (TSN,
November 19, p. 3);
4. It will not be hard to find interested buyers of the property, as indubitably shown by the fact that
on March 18, 1994, ICCS (the buyer during the foreclosure sale) sold the consolidated real estate
properties to Stateland Investment Corporation, in whose favor new titles were issued, i.e., TCT Nos. T-
187781(m); T-187782(m), T-187783(m); T-16653P(m) and T-166521(m) by the Register of Deeds of
Meycauayan (sic), Bulacan;
5. The fact that ICCS was able to sell the subject properties to Stateland Investment Corporation
for Thirty Nine Million (P39,000,000.00) Pesos, which is more than triple defendant's appraisal (Exh. 2)
clearly shows that the Court cannot rely on defendant's aforesaid estimate (Decision, Records, p. 603).
It is a fundamental legal aphorism that the conclusions of the trial judge on the credibility of witnesses
command great respect and consideration especially when the conclusions are supported by the
evidence on record. 46 Applying the foregoing principle, we therefore hold that the trial court committed
no palpable error in giving credence to the testimony of Reynaldo Flores, who according to the records,
is a licensed real estate broker, appraiser and director of Philippine Appraisal Company, Inc. since 1990.
47 As the records show, Flores had been with the company for 26 years at the time of his testimony.
Of equal importance is the fact that the trial court did not confine itself to the appraisal report dated 29
March 1993, and the testimony given by Mr. Reynaldo Flores, in determining the fair market value of the
real property. Above all these, the record would likewise show that the trial judge in order to appraise
himself of the characteristics and condition of the property, conducted an ocular inspection where the
opposing parties appeared and were duly represented.
Based on these considerations and the evidence submitted, we affirm the ruling of the trial court as
regards the valuation of the property —
. . . a valuation of Ninety Nine Million Pesos (P99,000,000.00) for the 39-hectare properties (sic)
translates to just about Two Hundred Fifty Four Pesos (P254.00) per square meter. This appears to be,
as the court so holds, a better approximation of the fair market value of the subject properties. This is
the amount which should be restituted by the defendant to the plaintiff by way of actual or compensatory
damages . . . . 48
Further, petitioner ascribes error to the lower court awarding an amount allegedly not asked nor prayed
for in private respondent's complaint.
Notwithstanding the fact that the award of actual and compensatory damages by the lower court
exceeded that prayed for in the complaint, the same is nonetheless valid, subject to certain
qualifications.
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:
Sec. 5. Amendment to conform to or authorize presentation of evidence. — When issues not raised by
the pleadings are tried with the express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues may be made upon
motion of any party at any time, even after judgement; but failure to amend does not affect the result of
the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues
made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality
if the presentation of the merits of the action and the ends of substantial justice will be subserved
thereby. The court may grant a continuance to enable the amendment to be made.
The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs. Asociacion de Agricultures de
Talisay-Silay, Inc. 49 citing Northern Cement Corporation vs. Intermediate Appellate Court 50 is
enlightening:
There have been instances where the Court has held that even without the necessary amendment, the
amount proved at the trial may be validly awarded, as in Tuazon v. Bolanos (95 Phil. 106), where we
said that if the facts shown entitled plaintiff to relief other than that asked for, no amendment to the
complaint was necessary, especially where defendant had himself raised the point on which recovery
was based. The appellate court could treat the pleading as amended to conform to the evidence
although the pleadings were actually not amended. Amendment is also unnecessary when only clerical
error or non substantial matters are involved, as we held in Bank of the Philippine Islands vs. Laguna
(48 Phil. 5). In Co Tiamco vs. Diaz (75 Phil. 672), we stressed that the rule on amendment need not be
applied rigidly, particularly where no surprise or prejudice is caused the objecting party. And in the
recent case of National Power Corporation vs. Court of Appeals (113 SCRA 556), we held that where
there is a variance in the defendant's pleadings and the evidence adduced by it at the trial, the Court
may treat the pleading as amended to conform with the evidence.
It is the view of the Court that pursuant to the above-mentioned rule and in light of the decisions cited,
the trial court should not be precluded from awarding an amount higher than that claimed in the
pleading notwithstanding the absence of the required amendment. But it is upon the condition that the
evidence of such higher amount has been presented properly, with full opportunity on the part of the
opposing parties to support their respective contentions and to refute each other's evidence.
The failure of a party to amend a pleading to conform to the evidence adduced during trial does not
preclude an adjudication by the court on the basis of such evidence which may embody new issues not
raised in the pleadings, or serve as a basis for a higher award of damages. Although the pleading may
not have been amended to conform to the evidence submitted during trial, judgment may nonetheless
be rendered, not simply on the basis of the issues alleged but also the basis of issues discussed and
the assertions of fact proved in the course of trial. The court may treat the pleading as if it had been
amended to conform to the evidence, although it had not been actually so amended. Former Chief
Justice Moran put the matter in this way:
When evidence is presented by one party, with the expressed or implied consent of the adverse party,
as to issues not alleged in the pleadings, judgment may be rendered validly as regards those issues,
which shall be considered as if they have been raised in the pleadings. There is implied consent to the
evidence thus presented when the adverse party fails to object thereto.
Clearly, a court may rule and render judgment on the basis of the evidence before it even though the
relevant pleading had not been previously amended, so long as no surprise or prejudice is thereby
caused to the adverse party. Put a little differently, so long as the basis requirements of fair play had
been met, as where litigants were given full opportunity to support their respective contentions and to
object to or refute each other's evidence, the court may validly treat the pleadings as if they had been
amended to conform to the evidence and proceed to adjudicate on the basis of all the evidence before it.
In the instant case, inasmuch as the petitioner was afforded the opportunity to refute and object to the
evidence, both documentary and testimonial, formally offered by private respondent, the rudiments of
fair play are deemed satisfied. In fact, the testimony of Reynaldo Flores was put under scrutiny during
the course of the cross-examination. Under these circumstances, the court acted within the bounds of
its jurisdiction and committed no reversible error in awarding actual damages the amount of which is
higher than that prayed for. Verily, the lower court's actuations are sanctioned by the Rules and
supported by jurisprudence.
Similarly, we affirm the grant of exemplary damages although the amount of Five Million Pesos
(P5,000,000.00) awarded, being excessive, is subject to reduction. Exemplary or corrective damages
are imposed, by way of example or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages. 51 Considering its purpose, it must be fair and reasonable in
every case and should not be awarded to unjustly enrich a prevailing party. 52 In our view, an award of
P50,000.00 as exemplary damages in the present case qualifies the test of reasonableness.
WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The decision of
the Court of Appeals is hereby AFFIRMED with MODIFICATION of the amount awarded as exemplary
damages. According, petitioner is hereby ordered to pay private respondent the sum of P99,000,000.00
as actual or compensatory damages; P50,000.00 as exemplary damage and the costs of suit.
SO ORDERED.
G.R. No. L-22595 November 1, 1927
Testate Estate of Joseph G. Brimo, JUAN MICIANO, administrator, petitioner-appellee,
vs. ANDRE BRIMO, opponent-appellant.
Ross, Lawrence and Selph for appellant.
Camus and Delgado for appellee.
ROMUALDEZ, J.:
The partition of the estate left by the deceased Joseph G. Brimo is in question in this case.
The judicial administrator of this estate filed a scheme of partition. Andre Brimo, one of the brothers of
the deceased, opposed it. The court, however, approved it.
The errors which the oppositor-appellant assigns are:
(1) The approval of said scheme of partition; (2) denial of his participation in the inheritance; (3) the
denial of the motion for reconsideration of the order approving the partition; (4) the approval of the
purchase made by the Pietro Lana of the deceased's business and the deed of transfer of said business;
and (5) the declaration that the Turkish laws are impertinent to this cause, and the failure not to
postpone the approval of the scheme of partition and the delivery of the deceased's business to Pietro
Lanza until the receipt of the depositions requested in reference to the Turkish laws.
The appellant's opposition is based on the fact that the partition in question puts into effect the
provisions of Joseph G. Brimo's will which are not in accordance with the laws of his Turkish nationality,
for which reason they are void as being in violation or article 10 of the Civil Code which, among other
things, provides the following:
Nevertheless, legal and testamentary successions, in respect to the order of succession as well as to
the amount of the successional rights and the intrinsic validity of their provisions, shall be regulated by
the national law of the person whose succession is in question, whatever may be the nature of the
property or the country in which it may be situated.
But the fact is that the oppositor did not prove that said testimentary dispositions are not in accordance
with the Turkish laws, inasmuch as he did not present any evidence showing what the Turkish laws are
on the matter, and in the absence of evidence on such laws, they are presumed to be the same as
those of the Philippines. (Lim and Lim vs. Collector of Customs, 36 Phil., 472.)
It has not been proved in these proceedings what the Turkish laws are. He, himself, acknowledges it
when he desires to be given an opportunity to present evidence on this point; so much so that he
assigns as an error of the court in not having deferred the approval of the scheme of partition until the
receipt of certain testimony requested regarding the Turkish laws on the matter.
The refusal to give the oppositor another opportunity to prove such laws does not constitute an error. It
is discretionary with the trial court, and, taking into consideration that the oppositor was granted ample
opportunity to introduce competent evidence, we find no abuse of discretion on the part of the court in
this particular. There is, therefore, no evidence in the record that the national law of the testator Joseph
G. Brimo was violated in the testamentary dispositions in question which, not being contrary to our laws
in force, must be complied with and executed. lawphil.net
Therefore, the approval of the scheme of partition in this respect was not erroneous.
In regard to the first assignment of error which deals with the exclusion of the herein appellant as a
legatee, inasmuch as he is one of the persons designated as such in will, it must be taken into
consideration that such exclusion is based on the last part of the second clause of the will, which says:
All of the remaining clauses of said will with all their dispositions and requests are perfectly valid and
effective it not appearing that said clauses are contrary to the testator's national law.
Therefore, the orders appealed from are modified and it is directed that the distribution of this estate be
made in such a manner as to include the herein appellant Andre Brimo as one of the legatees, and the
scheme of partition submitted by the judicial administrator is approved in all other respects, without any
pronouncement as to costs.
So ordered.

Second. I like desire to state that although by law, I am a Turkish citizen, this citizenship having been
conferred upon me by conquest and not by free choice, nor by nationality and, on the other hand,
having resided for a considerable length of time in the Philippine Islands where I succeeded in acquiring
all of the property that I now possess, it is my wish that the distribution of my property and everything in
connection with this, my will, be made and disposed of in accordance with the laws in force in the
Philippine islands, requesting all of my relatives to respect this wish, otherwise, I annul and cancel
beforehand whatever disposition found in this will favorable to the person or persons who fail to comply
with this request.

The institution of legatees in this will is conditional, and the condition is that the instituted legatees must
respect the testator's will to distribute his property, not in accordance with the laws of his nationality, but
in accordance with the laws of the Philippines.

If this condition as it is expressed were legal and valid, any legatee who fails to comply with it, as the
herein oppositor who, by his attitude in these proceedings has not respected the will of the testator, as
expressed, is prevented from receiving his legacy.

The fact is, however, that the said condition is void, being contrary to law, for article 792 of the civil
Code provides the following:

Impossible conditions and those contrary to law or good morals shall be considered as not imposed and
shall not prejudice the heir or legatee in any manner whatsoever, even should the testator otherwise
provide.

And said condition is contrary to law because it expressly ignores the testator's national law when,
according to article 10 of the civil Code above quoted, such national law of the testator is the one to
govern his testamentary dispositions.

Said condition then, in the light of the legal provisions above cited, is considered unwritten, and the
institution of legatees in said will is unconditional and consequently valid and effective even as to the
herein oppositor.

It results from all this that the second clause of the will regarding the law which shall govern it, and to
the condition imposed upon the legatees, is null and void, being contrary to law.
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased, Executor and Heir-
appellees,
vs. HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi, Jr.,
presiding, in Special Proceeding No. 622 of said court, dated September 14, 1949, approving among
things the final accounts of the executor, directing the executor to reimburse Maria Lucy Christensen
the amount of P3,600 paid by her to Helen Christensen Garcia as her legacy, and declaring Maria Lucy
Christensen entitled to the residue of the property to be enjoyed during her lifetime, and in case of death
without issue, one-half of said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in
accordance with the provisions of the will of the testator Edward E. Christensen. The will was executed
in Manila on March 5, 1951 and contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN (now Mrs. Bernard
Daney), who was born in the Philippines about twenty-eight years ago, and who is now residing at No.
665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants except my above named
daughter, MARIA LUCY CHRISTENSEN DANEY.
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to Eduardo Garcia,
about eighteen years of age and who, notwithstanding the fact that she was baptized Christensen, is
not in any way related to me, nor has she been at any time adopted by me, and who, from all
information I have now resides in Egpit, Digos, Davao, Philippines, the sum of THREE THOUSAND SIX
HUNDRED PESOS (P3,600.00), Philippine Currency the same to be deposited in trust for the said
Maria Helen Christensen with the Davao Branch of the Philippine National Bank, and paid to her at the
rate of One Hundred Pesos (P100.00), Philippine Currency per month until the principal thereof as well
as any interest which may have accrued thereon, is exhausted..
12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said MARIA LUCY
CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as aforesaid at No. 665 Rodger Young
Village, Los Angeles, California, U.S.A., all the income from the rest, remainder, and residue of my
property and estate, real, personal and/or mixed, of whatsoever kind or character, and wheresoever
situated, of which I may be possessed at my death and which may have come to me from any source
whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account and project of
partition ratified the payment of only P3,600 to Helen Christensen Garcia and proposed that the residue
of the estate be transferred to his daughter, Maria Lucy Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen Garcia, insofar as it
deprives her (Helen) of her legitime as an acknowledged natural child, she having been declared by Us
in G.R. Nos. L-11483-84 an acknowledged natural child of the deceased Edward E. Christensen. The
legal grounds of opposition are (a) that the distribution should be governed by the laws of the
Philippines, and (b) that said order of distribution is contrary thereto insofar as it denies to Helen
Christensen, one of two acknowledged natural children, one-half of the estate in full ownership. In
amplification of the above grounds it was alleged that the law that should govern the estate of the
deceased Christensen should not be the internal law of California alone, but the entire law thereof
because several foreign elements are involved, that the forum is the Philippines and even if the case
were decided in California, Section 946 of the California Civil Code, which requires that the domicile of
the decedent should apply, should be applicable. It was also alleged that Maria Helen Christensen
having been declared an acknowledged natural child of the decedent, she is deemed for all purposes
legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States and of the State
of California at the time of his death, the successional rights and intrinsic validity of the provisions in his
will are to be governed by the law of California, in accordance with which a testator has the right to
dispose of his property in the way he desires, because the right of absolute dominion over his property
is sacred and inviolable (In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re
Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen
Christensen, through counsel, filed various motions for reconsideration, but these were denied. Hence,
this appeal.
The most important assignments of error are as follows:
I THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME
COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN
AND, CONSEQUENTLY, IN DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.
II THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE
EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE
APPLICATION OF INTERNAL LAW.
III THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW,
PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE
TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE DECEASED
EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION
SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS.
V THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS HELEN
CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of the State of
California at the time of his death. But there is also no question that at the time of his death he was
domiciled in the Philippines, as witness the following facts admitted by the executor himself in appellee's
brief:
In the proceedings for admission of the will to probate, the facts of record show that the deceased
Edward E. Christensen was born on November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival
in the Philippines, as an appointed school teacher, was on July 1, 1901, on board the U.S. Army
Transport "Sheridan" with Port of Embarkation as the City of San Francisco, in the State of California,
U.S.A. He stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and stayed there for the following
nine years until 1913, during which time he resided in, and was teaching school in Sacramento,
California.
Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in 1928, he
again departed the Philippines for the United States and came back here the following year, 1929.
Some nine years later, in 1938, he again returned to his own country, and came back to the Philippines
the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved
by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not
covered by this stipulation of facts. 1äwphï1.ñët
Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces in the
Philippines during World War II. Upon liberation, in April 1945, he left for the United States but returned
to the Philippines in December, 1945. Appellees Collective Exhibits "6", CFI Davao, Sp. Proc. 622, as
Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473, t.s.n., July 21,
1953.)
In April, 1951, Edward E. Christensen returned once more to California shortly after the making of his
last will and testament (now in question herein) which he executed at his lawyers' offices in Manila on
March 5, 1951. He died at the St. Luke's Hospital in the City of Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are persuaded by
the fact that he was born in New York, migrated to California and resided there for nine years, and since
he came to the Philippines in 1913 he returned to California very rarely and only for short visits (perhaps
to relatives), and considering that he appears never to have owned or acquired a home or properties in
that state, which would indicate that he would ultimately abandon the Philippines and make home in the
State of California.
Sec. 16. Residence is a term used with many shades of meaning from mere temporary presence to the
most permanent abode. Generally, however, it is used to denote something more than mere physical
presence. (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California when he
resided in Sacramento, California from 1904 to 1913, was never lost by his stay in the Philippines, for
the latter was a territory of the United States (not a state) until 1946 and the deceased appears to have
considered himself as a citizen of California by the fact that when he executed his will in 1951 he
declared that he was a citizen of that State; so that he appears never to have intended to abandon his
California citizenship by acquiring another. This conclusion is in accordance with the following principle
expounded by Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean the same thing, a place of
permanent abode. But domicile, as has been shown, has acquired a technical meaning. Thus one may
be domiciled in a place where he has never been. And he may reside in a place where he has no
domicile. The man with two homes, between which he divides his time, certainly resides in each one,
while living in it. But if he went on business which would require his presence for several weeks or
months, he might properly be said to have sufficient connection with the place to be called a resident. It
is clear, however, that, if he treated his settlement as continuing only for the particular business in hand,
not giving up his former "home," he could not be a domiciled New Yorker. Acquisition of a domicile of
choice requires the exercise of intention as well as physical presence. "Residence simply requires
bodily presence of an inhabitant in a given place, while domicile requires bodily presence in that place
and also an intention to make it one's domicile." Residence, however, is a term used with many shades
of meaning, from the merest temporary presence to the most permanent abode, and it is not safe to
insist that any one use et the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16 of the Civil
Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the law of the country where it is
situated.
However, intestate and testamentary successions, both with respect to the order of succession and to
the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration, whatever may be
the nature of the property and regardless of the country where said property may be found.
The application of this article in the case at bar requires the determination of the meaning of the term
"national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the United States,
each state of the Union having its own private law applicable to its citizens only and in force only within
the state. The "national law" indicated in Article 16 of the Civil Code above quoted can not, therefore,
possibly mean or apply to any general American law. So it can refer to no other than the private law of
the State of California.
The next question is: What is the law in California governing the disposition of personal property? The
decision of the court below, sustains the contention of the executor-appellee that under the California
Probate Code, a testator may dispose of his property by will in the form and manner he desires, citing
the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant invokes the
provisions of Article 946 of the Civil Code of California, which is as follows:
If there is no law to the contrary, in the place where personal property is situated, it is deemed to follow
the person of its owner, and is governed by the law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not denied. We have checked
it in the California Civil Code and it is there. Appellee, on the other hand, relies on the case cited in the
decision and testified to by a witness. (Only the case of Kaufman is correctly cited.) It is argued on
executor's behalf that as the deceased Christensen was a citizen of the State of California, the internal
law thereof, which is that given in the abovecited case, should govern the determination of the validity of
the testamentary provisions of Christensen's will, such law being in force in the State of California of
which Christensen was a citizen. Appellant, on the other hand, insists that Article 946 should be
applicable, and in accordance therewith and following the doctrine of the renvoi, the question of the
validity of the testamentary provision in question should be referred back to the law of the decedent's
domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the forum refers a jural
matter to a foreign law for decision, is the reference to the purely internal rules of law of the foreign
system; i.e., to the totality of the foreign law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to accept the renvoi, that is, applied
the Conflict of Laws rule of Illinois which referred the matter back to Michigan law. But once having
determined the the Conflict of Laws principle is the rule looked to, it is difficult to see why the reference
back should not have been to Michigan Conflict of Laws. This would have resulted in the "endless chain
of references" which has so often been criticized be legal writers. The opponents of the renvoi would
have looked merely to the internal law of Illinois, thus rejecting the renvoi or the reference back. Yet
there seems no compelling logical reason why the original reference should be the internal law rather
than to the Conflict of Laws rule. It is true that such a solution avoids going on a merry-go-round, but
those who have accepted the renvoi theory avoid this inextricabilis circulas by getting off at the second
reference and at that point applying internal law. Perhaps the opponents of the renvoi are a bit more
consistent for they look always to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead that greater uniformity
will result from adoption of their respective views. And still more strange is the fact that the only way to
achieve uniformity in this choice-of-law problem is if in the dispute the two states whose laws form the
legal basis of the litigation disagree as to whether the renvoi should be accepted. If both reject, or both
accept the doctrine, the result of the litigation will vary with the choice of the forum. In the case stated
above, had the Michigan court rejected the renvoi, judgment would have been against the woman; if the
suit had been brought in the Illinois courts, and they too rejected the renvoi, judgment would be for the
woman. The same result would happen, though the courts would switch with respect to which would
hold liability, if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to land is in question, and
where the validity of a decree of divorce is challenged. In these cases the Conflict of Laws rule of the
situs of the land, or the domicile of the parties in the divorce case, is applied by the forum, but any
further reference goes only to the internal law. Thus, a person's title to land, recognized by the situs, will
be recognized by every court; and every divorce, valid by the domicile of the parties, will be valid
everywhere. (Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable property in
Massachusetts, England, and France. The question arises as to how this property is to be distributed
among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of the conflict of laws as
to intestate succession to movables calls for an application of the law of the deceased's last domicile.
Since by hypothesis X's last domicile was France, the natural thing for the Massachusetts court to do
would be to turn to French statute of distributions, or whatever corresponds thereto in French law, and
decree a distribution accordingly. An examination of French law, however, would show that if a French
court were called upon to determine how this property should be distributed, it would refer the
distribution to the national law of the deceased, thus applying the Massachusetts statute of distributions.
So on the surface of things the Massachusetts court has open to it alternative course of action: (a)
either to apply the French law is to intestate succession, or (b) to resolve itself into a French court and
apply the Massachusetts statute of distributions, on the assumption that this is what a French court
would do. If it accepts the so-called renvoi doctrine, it will follow the latter course, thus applying its own
law.
This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the forum refers
to a foreign law, the conflict-of-laws rule of which, in turn, refers the matter back again to the law of the
forum. This is renvoi in the narrower sense. The German term for this judicial process is
'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be resorted to as governing a particular case,
the further question may arise: Are the rules as to the conflict of laws contained in such foreign law also
to be resorted to? This is a question which, while it has been considered by the courts in but a few
instances, has been the subject of frequent discussion by textwriters and essayists; and the doctrine
involved has been descriptively designated by them as the "Renvoyer" to send back, or the
"Ruchversweisung", or the "Weiterverweisung", since an affirmative answer to the question postulated
and the operation of the adoption of the foreign law in toto would in many cases result in returning the
main controversy to be decided according to the law of the forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The theory of the doctrine of
renvoi is that the court of the forum, in determining the question before it, must take into account the
whole law of the other jurisdiction, but also its rules as to conflict of laws, and then apply the law to the
actual question which the rules of the other jurisdiction prescribe. This may be the law of the forum. The
doctrine of the renvoi has generally been repudiated by the American authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for its application in a country
explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-1918, pp. 529-531. The
pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of laws are to be understood as
incorporating not only the ordinary or internal law of the foreign state or country, but its rules of the
conflict of laws as well. According to this theory 'the law of a country' means the whole of its law.
Von Bar presented his views at the meeting of the Institute of International Law, at Neuchatel, in 1900,
in the form of the following theses:
(1) Every court shall observe the law of its country as regards the application of foreign laws.
(2) Provided that no express provision to the contrary exists, the court shall respect:
(a) The provisions of a foreign law which disclaims the right to bind its nationals abroad as regards their
personal statute, and desires that said personal statute shall be determined by the law of the domicile,
or even by the law of the place where the act in question occurred.
(b) The decision of two or more foreign systems of law, provided it be certain that one of them is
necessarily competent, which agree in attributing the determination of a question to the same system of
law.
If, for example, the English law directs its judge to distribute the personal estate of an Englishman who
has died domiciled in Belgium in accordance with the law of his domicile, he must first inquire whether
the law of Belgium would distribute personal property upon death in accordance with the law of domicile,
and if he finds that the Belgian law would make the distribution in accordance with the law of nationality
— that is the English law — he must accept this reference back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied in In
re Kaufman, Supra, its internal law. If the law on succession and the conflict of laws rules of California
are to be enforced jointly, each in its own intended and appropriate sphere, the principle cited In re
Kaufman should apply to citizens living in the State, but Article 946 should apply to such of its citizens
as are not domiciled in California but in other jurisdictions. The rule laid down of resorting to the law of
the domicile in the determination of matters with foreign element involved is in accord with the general
principle of American law that the domiciliary law should govern in most matters or rights which follow
the person of the owner.
When a man dies leaving personal property in one or more states, and leaves a will directing the
manner of distribution of the property, the law of the state where he was domiciled at the time of his
death will be looked to in deciding legal questions about the will, almost as completely as the law of
situs is consulted in questions about the devise of land. It is logical that, since the domiciliary rules
control devolution of the personal estate in case of intestate succession, the same rules should
determine the validity of an attempted testamentary dispostion of the property. Here, also, it is not that
the domiciliary has effect beyond the borders of the domiciliary state. The rules of the domicile are
recognized as controlling by the Conflict of Laws rules at the situs property, and the reason for the
recognition as in the case of intestate succession, is the general convenience of the doctrine. The New
York court has said on the point: 'The general principle that a dispostiton of a personal property, valid at
the domicile of the owner, is valid anywhere, is one of the universal application. It had its origin in that
international comity which was one of the first fruits of civilization, and it this age, when business
intercourse and the process of accumulating property take but little notice of boundary lines, the
practical wisdom and justice of the rule is more apparent than ever. (Goodrich, Conflict of Laws, Sec.
164, pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national law
is the internal law of California. But as above explained the laws of California have prescribed two sets
of laws for its citizens, one for residents therein and another for those domiciled in other jurisdictions.
Reason demands that We should enforce the California internal law prescribed for its citizens residing
therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If we must enforce the
law of California as in comity we are bound to go, as so declared in Article 16 of our Civil Code, then we
must enforce the law of California in accordance with the express mandate thereof and as above
explained, i.e., apply the internal law for residents therein, and its conflict-of-laws rule for those
domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place where the
property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of the Civil Code of the
Philippines and that the law to the contrary in the Philippines is the provision in said Article 16 that the
national law of the deceased should govern. This contention can not be sustained. As explained in the
various authorities cited above the national law mentioned in Article 16 of our Civil Code is the law on
conflict of laws in the California Civil Code, i.e., Article 946, which authorizes the reference or return of
the question to the law of the testator's domicile. The conflict of laws rule in California, Article 946, Civil
Code, precisely refers back the case, when a decedent is not domiciled in California, to the law of his
domicile, the Philippines in the case at bar. The court of the domicile can not and should not refer the
case back to California; such action would leave the issue incapable of determination because the case
will then be like a football, tossed back and forth between the two states, between the country of which
the decedent was a citizen and the country of his domicile. The Philippine court must apply its own law
as directed in the conflict of laws rule of the state of the decedent, if the question has to be decided,
especially as the application of the internal law of California provides no legitime for children while the
Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children legally
acknowledged forced heirs of the parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105; Miciano
vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs.
Government, 59 Phil. 293.) cited by appellees to support the decision can not possibly apply in the case
at bar, for two important reasons, i.e., the subject in each case does not appear to be a citizen of a state
in the United States but with domicile in the Philippines, and it does not appear in each case that there
exists in the state of which the subject is a citizen, a law similar to or identical with Art. 946 of the
California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is the G.R. No. L-23678 June 6, 1967
Philippines, the validity of the provisions of his will depriving his acknowledged natural child, the
appellant, should be governed by the Philippine Law, the domicile, pursuant to Art. 946 of the Civil Code TESTATE ESTATE OF AMOS G. BELLIS, deceased.
of California, not by the internal law of California.. PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
WHEREFORE, the decision appealed from is hereby reversed and the case returned to the lower court vs. EDWARD A. BELLIS, ET AL., heirs-appellees.
with instructions that the partition be made as the Philippine law on succession provides. Judgment
reversed, with costs against 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.1äwphï1.ñët

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 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.1äwphï1.ñët

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 arise, since the properties here involved are found in the Philippines. In the absence,
however, of proof as to the conflict of law rule of Texas, it should not be presumed different from ours.3
Appellants' position is therefore not rested on the doctrine of renvoi. As stated, they never invoked nor
even mentioned it in their arguments. Rather, they argue that their case falls under the circumstances
mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent, in
intestate or testamentary successions, with regard to four items: (a) the order of succession; (b) the
amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the capacity
to succeed. They provide that —
ART. 16. Real property as well as personal property is subject to the law of the country where it is
situated.
However, intestate and testamentary successions, both with respect to the order of succession and to
the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration, whatever may he
the nature of the property and regardless of the country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that —
Prohibitive laws concerning persons, their acts or property, and those which have for their object public
order, public policy and good customs shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions agreed upon in a foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct. Precisely,
Congress deleted the phrase, "notwithstanding the provisions of this and the next preceding article"
when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing
without substantial change the second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It
must have been their purpose to make the second paragraph of Art. 16 a specific provision in itself
which must be applied in testate and intestate succession. As further indication of this legislative intent,
Congress added a new provision, under Art. 1039, which decrees that capacity to succeed is to be
governed by the national law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved in our System of
legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it
has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national
law. Specific provisions must prevail over general ones.
Appellants would also point out that the decedent executed two wills — one to govern his Texas estate
and the other his Philippine estate — arguing from this that he intended Philippine law to govern his
Philippine estate. Assuming that such was the decedent's intention in executing a separate Philippine
will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision
in a foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law
and not with his national law, is illegal and void, for his national law cannot be ignored in regard to those
matters that Article 10 — now Article 16 — of the Civil Code states said national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and
that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic
validity of the provision of the will and the amount of successional rights are to be determined under
Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So
ordered.
G.R. No. 140047 July 13, 2004
PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, petitioner,
vs.
V.P. EUSEBIO CONSTRUCTION, INC.; 3-PLEX INTERNATIONAL, INC.; VICENTE P. EUSEBIO;
SOLEDAD C. EUSEBIO; EDUARDO E. SANTOS; ILUMINADA SANTOS; AND FIRST INTEGRATED
BONDING AND INSURANCE COMPANY, INC., respondents.
DECISION
DAVIDE, JR., C.J.:
This case is an offshoot of a service contract entered into by a Filipino construction firm with the Iraqi
Government for the construction of the Institute of Physical Therapy-Medical Center, Phase II, in
Baghdad, Iraq, at a time when the Iran-Iraq war was ongoing.
In a complaint filed with the Regional Trial Court of Makati City, docketed as Civil Case No. 91-1906
and assigned to Branch 58, petitioner Philippine Export and Foreign Loan Guarantee Corporation1
(hereinafter Philguarantee) sought reimbursement from the respondents of the sum of money it paid to
Al Ahli Bank of Kuwait pursuant to a guarantee it issued for respondent V.P. Eusebio Construction, Inc.
(VPECI).
The factual and procedural antecedents in this case are as follows:
On 8 November 1980, the State Organization of Buildings (SOB), Ministry of Housing and Construction,
Baghdad, Iraq, awarded the construction of the Institute of Physical Therapy–Medical Rehabilitation
Center, Phase II, in Baghdad, Iraq, (hereinafter the Project) to Ajyal Trading and Contracting Company
(hereinafter Ajyal), a firm duly licensed with the Kuwait Chamber of Commerce for a total contract price
of ID5,416,089/046 (or about US$18,739,668).2
On 7 March 1981, respondent spouses Eduardo and Iluminada Santos, in behalf of respondent 3-Plex
International, Inc. (hereinafter 3-Plex), a local contractor engaged in construction business, entered into
a joint venture agreement with Ajyal wherein the former undertook the execution of the entire Project,
while the latter would be entitled to a commission of 4% of the contract price.3 Later, or on 8 April 1981,
respondent 3-Plex, not being accredited by or registered with the Philippine Overseas Construction
Board (POCB), assigned and transferred all its rights and interests under the joint venture agreement to
VPECI, a construction and engineering firm duly registered with the POCB.4 However, on 2 May 1981,
3-Plex and VPECI entered into an agreement that the execution of the Project would be under their joint
management.5
The SOB required the contractors to submit (1) a performance bond of ID271,808/610 representing 5%
of the total contract price and (2) an advance payment bond of ID541,608/901 representing 10% of the
advance payment to be released upon signing of the contract.6 To comply with these requirements,
respondents 3-Plex and VPECI applied for the issuance of a guarantee with petitioner Philguarantee, a
government financial institution empowered to issue guarantees for qualified Filipino contractors to
secure the performance of approved service contracts abroad.7
Petitioner Philguarantee approved respondents' application. Subsequently, letters of guarantee8 were
issued by Philguarantee to the Rafidain Bank of Baghdad covering 100% of the performance and
advance payment bonds, but they were not accepted by SOB. What SOB required was a letter-
guarantee from Rafidain Bank, the government bank of Iraq. Rafidain Bank then issued a performance
bond in favor of SOB on the condition that another foreign bank, not Philguarantee, would issue a
counter-guarantee to cover its exposure. Al Ahli Bank of Kuwait was, therefore, engaged to provide a
counter-guarantee to Rafidain Bank, but it required a similar counter-guarantee in its favor from the
petitioner. Thus, three layers of guarantees had to be arranged.9
Upon the application of respondents 3-Plex and VPECI, petitioner Philguarantee issued in favor of Al
Ahli Bank of Kuwait Letter of Guarantee No. 81-194-F 10 (Performance Bond Guarantee) in the amount
of ID271,808/610 and Letter of Guarantee No. 81-195-F11 (Advance Payment Guarantee) in the
amount of ID541,608/901, both for a term of eighteen months from 25 May 1981. These letters of
guarantee were secured by (1) a Deed of Undertaking12 executed by respondents VPECI, Spouses
Vicente P. Eusebio and Soledad C. Eusebio, 3-Plex, and Spouses Eduardo E. Santos and Iluminada
Santos; and (2) a surety bond13 issued by respondent First Integrated Bonding and Insurance
Company, Inc. (FIBICI). The Surety Bond was later amended on 23 June 1981 to increase the amount
of coverage from P6.4 million to P6.967 million and to change the bank in whose favor the petitioner's
guarantee was issued, from Rafidain Bank to Al Ahli Bank of Kuwait.14
On 11 June 1981, SOB and the joint venture VPECI and Ajyal executed the service contract15 for the
construction of the Institute of Physical Therapy – Medical Rehabilitation Center, Phase II, in Baghdad,
Iraq, wherein the joint venture contractor undertook to complete the Project within a period of 547 days
or 18 months. Under the Contract, the Joint Venture would supply manpower and materials, and SOB
would refund to the former 25% of the project cost in Iraqi Dinar and the 75% in US dollars at the
exchange rate of 1 Dinar to 3.37777 US Dollars.16
The construction, which was supposed to start on 2 June 1981, commenced only on the last week of
August 1981. Because of this delay and the slow progress of the construction work due to some
setbacks and difficulties, the Project was not completed on 15 November 1982 as scheduled. But in
October 1982, upon foreseeing the impossibility of meeting the deadline and upon the request of Al Ahli
Bank, the joint venture contractor worked for the renewal or extension of the Performance Bond and
Advance Payment Guarantee. Petitioner's Letters of Guarantee Nos. 81-194-F (Performance Bond) and
81-195-F (Advance Payment Bond) with expiry date of 25 November 1982 were then renewed or
extended to 9 February 1983 and 9 March 1983, respectively.17 The surety bond was also extended for
another period of one year, from 12 May 1982 to 12 May 1983.18 The Performance Bond was further
extended twelve times with validity of up to 8 December 1986,19 while the Advance Payment
Guarantee was extended three times more up to 24 May 1984 when the latter was cancelled after full
refund or reimbursement by the joint venture contractor.20 The surety bond was likewise extended to 8
May 1987.21
As of March 1986, the status of the Project was 51% accomplished, meaning the structures were
already finished. The remaining 47% consisted in electro-mechanical works and the 2%, sanitary works,
which both required importation of equipment and materials.22
On 26 October 1986, Al Ahli Bank of Kuwait sent a telex call to the petitioner demanding full payment of
its performance bond counter-guarantee.
Upon receiving a copy of that telex message on 27 October 1986, respondent VPECI requested Iraq
Trade and Economic Development Minister Mohammad Fadhi Hussein to recall the telex call on the
performance guarantee for being a drastic action in contravention of its mutual agreement with the latter
that (1) the imposition of penalty would be held in abeyance until the completion of the project; and (2)
the time extension would be open, depending on the developments on the negotiations for a foreign
loan to finance the completion of the project.23 It also wrote SOB protesting the call for lack of factual or
legal basis, since the failure to complete the Project was due to (1) the Iraqi government's lack of
foreign exchange with which to pay its (VPECI's) accomplishments and (2) SOB's noncompliance for
the past several years with the provision in the contract that 75% of the billings would be paid in US
dollars.24 Subsequently, or on 19 November 1986, respondent VPECI advised the petitioner not to pay
yet Al Ahli Bank because efforts were being exerted for the amicable settlement of the Project.25
On 14 April 1987, the petitioner received another telex message from Al Ahli Bank stating that it had
already paid to Rafidain Bank the sum of US$876,564 under its letter of guarantee, and demanding
reimbursement by the petitioner of what it paid to the latter bank plus interest thereon and related
expenses.26
Both petitioner Philguarantee and respondent VPECI sought the assistance of some government
agencies of the Philippines. On 10 August 1987, VPECI requested the Central Bank to hold in
abeyance the payment by the petitioner "to allow the diplomatic machinery to take its course, for
otherwise, the Philippine government , through the Philguarantee and the Central Bank, would become
instruments of the Iraqi Government in consummating a clear act of injustice and inequity committed
against a Filipino contractor."27
On 27 August 1987, the Central Bank authorized the remittance for its account of the amount of
US$876,564 (equivalent to ID271, 808/610) to Al Ahli Bank representing full payment of the
performance counter-guarantee for VPECI's project in Iraq. 28
On 6 November 1987, Philguarantee informed VPECI that it would remit US$876,564 to Al Ahli Bank,
and reiterated the joint and solidary obligation of the respondents to reimburse the petitioner for the
advances made on its counter-guarantee.29
The petitioner thus paid the amount of US$876,564 to Al Ahli Bank of Kuwait on 21 January 1988.30
Then, on 6 May 1988, the petitioner paid to Al Ahli Bank of Kuwait US$59,129.83 representing interest
and penalty charges demanded by the latter bank.31
On 19 June 1991, the petitioner sent to the respondents separate letters demanding full payment of the
amount of P47,872,373.98 plus accruing interest, penalty charges, and 10% attorney's fees pursuant to
their joint and solidary obligations under the deed of undertaking and surety bond.32 When the
respondents failed to pay, the petitioner filed on 9 July 1991 a civil case for collection of a sum of money
against the respondents before the RTC of Makati City.
After due trial, the trial court ruled against Philguarantee and held that the latter had no valid cause of
action against the respondents. It opined that at the time the call was made on the guarantee which was
executed for a specific period, the guarantee had already lapsed or expired. There was no valid renewal
or extension of the guarantee for failure of the petitioner to secure respondents' express consent thereto.
The trial court also found that the joint venture contractor incurred no delay in the execution of the
Project. Considering the Project owner's violations of the contract which rendered impossible the joint
venture contractor's performance of its undertaking, no valid call on the guarantee could be made.
Furthermore, the trial court held that no valid notice was first made by the Project owner SOB to the
joint venture contractor before the call on the guarantee. Accordingly, it dismissed the complaint, as well
as the counterclaims and cross-claim, and ordered the petitioner to pay attorney's fees of P100,000 to
respondents VPECI and Eusebio Spouses and P100,000 to 3-Plex and the Santos Spouses, plus costs.
33
In its 14 June 1999 Decision,34 the Court of Appeals affirmed the trial court's decision, ratiocinating as
follows:
First, appellant cannot deny the fact that it was fully aware of the status of project implementation as
well as the problems besetting the contractors, between 1982 to 1985, having sent some of its people to
Baghdad during that period. The successive renewals/extensions of the guarantees in fact, was
prompted by delays, not solely attributable to the contractors, and such extension understandably
allowed by the SOB (project owner) which had not anyway complied with its contractual commitment to
tender 75% of payment in US Dollars, and which still retained overdue amounts collectible by VPECI.
Second, appellant was very much aware of the violations committed by the SOB of its contractual
undertakings with VPECI, principally, the payment of foreign currency (US$) for 75% of the total
contract price, as well as of the complications and injustice that will result from its payment of the full
amount of the performance guarantee, as evident in PHILGUARANTEE's letter dated 13 May 1987 ….
Third, appellant was fully aware that SOB was in fact still obligated to the Joint Venture and there was
still an amount collectible from and still being retained by the project owner, which amount can be set-
off with the sum covered by the performance guarantee.
Fourth, well-apprised of the above conditions obtaining at the Project site and cognizant of the war
situation at the time in Iraq, appellant, though earlier has made representations with the SOB regarding
a possible amicable termination of the Project as suggested by VPECI, made a complete turn-around
and insisted on acting in favor of the unjustified "call" by the foreign banks.35
The petitioner then came to this Court via Rule 45 of the Rules of Court claiming that the Court of
Appeals erred in affirming the trial court's ruling that
I…RESPONDENTS ARE NOT LIABLE UNDER THE DEED OF UNDERTAKING THEY EXECUTED IN
FAVOR OF PETITIONER IN CONSIDERATION FOR THE ISSUANCE OF ITS COUNTER-
GUARANTEE AND THAT PETITIONER CANNOT PASS ON TO RESPONDENTS WHAT IT HAD PAID
UNDER THE SAID COUNTER-GUARANTEE.
II…PETITIONER CANNOT CLAIM SUBROGATION.
III…IT IS INIQUITOUS AND UNJUST FOR PETITIONER TO HOLD RESPONDENTS LIABLE UNDER
THEIR DEED OF UNDERTAKING.36
The main issue in this case is whether the petitioner is entitled to reimbursement of what it paid under
Letter of Guarantee No. 81-194-F it issued to Al Ahli Bank of Kuwait based on the deed of undertaking
and surety bond from the respondents.
The petitioner asserts that since the guarantee it issued was absolute, unconditional, and irrevocable
the nature and extent of its liability are analogous to those of suretyship. Its liability accrued upon the
failure of the respondents to finish the construction of the Institute of Physical Therapy Buildings in
Baghdad.
By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do so. If a person binds himself solidarily with the
principal debtor, the contract is called suretyship. 37
Strictly speaking, guaranty and surety are nearly related, and many of the principles are common to
both. In both contracts, there is a promise to answer for the debt or default of another. However, in this
jurisdiction, they may be distinguished thus:
1. A surety is usually bound with his principal by the same instrument executed at the same time and on
the same consideration. On the other hand, the contract of guaranty is the guarantor's own separate
undertaking often supported by a consideration separate from that supporting the contract of the
principal; the original contract of his principal is not his contract.
2. A surety assumes liability as a regular party to the undertaking; while the liability of a guarantor is
conditional depending on the failure of the primary debtor to pay the obligation.
3. The obligation of a surety is primary, while that of a guarantor is secondary.
4. A surety is an original promissor and debtor from the beginning, while a guarantor is charged on his
own undertaking.
5. A surety is, ordinarily, held to know every default of his principal; whereas a guarantor is not bound to
take notice of the non-performance of his principal.
6. Usually, a surety will not be discharged either by the mere indulgence of the creditor to the principal
or by want of notice of the default of the principal, no matter how much he may be injured thereby. A
guarantor is often discharged by the mere indulgence of the creditor to the principal, and is usually not
liable unless notified of the default of the principal. 38
In determining petitioner's status, it is necessary to read Letter of Guarantee No. 81-194-F, which
provides in part as follows:
In consideration of your issuing the above performance guarantee/counter-guarantee, we hereby
unconditionally and irrevocably guarantee, under our Ref. No. LG-81-194 F to pay you on your first
written or telex demand Iraq Dinars Two Hundred Seventy One Thousand Eight Hundred Eight and fils
six hundred ten (ID271,808/610) representing 100% of the performance bond required of V.P.
EUSEBIO for the construction of the Physical Therapy Institute, Phase II, Baghdad, Iraq, plus interest
and other incidental expenses related thereto.
In the event of default by V.P. EUSEBIO, we shall pay you 100% of the obligation unpaid but in no case
shall such amount exceed Iraq Dinars (ID) 271,808/610 plus interest and other incidental expenses….
(Emphasis supplied)39
Guided by the abovementioned distinctions between a surety and a guaranty, as well as the factual
milieu of this case, we find that the Court of Appeals and the trial court were correct in ruling that the
petitioner is a guarantor and not a surety. That the guarantee issued by the petitioner is unconditional
and irrevocable does not make the petitioner a surety. As a guaranty, it is still characterized by its
subsidiary and conditional quality because it does not take effect until the fulfillment of the condition,
namely, that the principal obligor should fail in his obligation at the time and in the form he bound
himself.40 In other words, an unconditional guarantee is still subject to the condition that the principal
debtor should default in his obligation first before resort to the guarantor could be had. A conditional
guaranty, as opposed to an unconditional guaranty, is one which depends upon some extraneous event,
beyond the mere default of the principal, and generally upon notice of the principal's default and
reasonable diligence in exhausting proper remedies against the principal.41
It appearing that Letter of Guarantee No. 81-194-F merely stated that in the event of default by
respondent VPECI the petitioner shall pay, the obligation assumed by the petitioner was simply that of
an unconditional guaranty, not conditional guaranty. But as earlier ruled the fact that petitioner's
guaranty is unconditional does not make it a surety. Besides, surety is never presumed. A party should
not be considered a surety where the contract itself stipulates that he is acting only as a guarantor. It is
only when the guarantor binds himself solidarily with the principal debtor that the contract becomes one
of suretyship.42
Having determined petitioner's liability as guarantor, the next question we have to grapple with is
whether the respondent contractor has defaulted in its obligations that would justify resort to the
guaranty. This is a mixed question of fact and law that is better addressed by the lower courts, since
this Court is not a trier of facts.
It is a fundamental and settled rule that the findings of fact of the trial court and the Court of Appeals are
binding or conclusive upon this Court unless they are not supported by the evidence or unless strong
and cogent reasons dictate otherwise.43 The factual findings of the Court of Appeals are normally not
reviewable by us under Rule 45 of the Rules of Court except when they are at variance with those of the
trial court. 44 The trial court and the Court of Appeals were in unison that the respondent contractor
cannot be considered to have defaulted in its obligations because the cause of the delay was not
primarily attributable to it.
A corollary issue is what law should be applied in determining whether the respondent contractor has
defaulted in the performance of its obligations under the service contract. The question of whether there
is a breach of an agreement, which includes default or mora,45 pertains to the essential or intrinsic
validity of a contract. 46
No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule followed
by most legal systems, however, is that the intrinsic validity of a contract must be governed by the lex
contractus or "proper law of the contract." This is the law voluntarily agreed upon by the parties (the lex
loci voluntatis) or the law intended by them either expressly or implicitly (the lex loci intentionis). The law
selected may be implied from such factors as substantial connection with the transaction, or the
nationality or domicile of the parties.47 Philippine courts would do well to adopt the first and most basic
rule in most legal systems, namely, to allow the parties to select the law applicable to their contract,
subject to the limitation that it is not against the law, morals, or public policy of the forum and that the
chosen law must bear a substantive relationship to the transaction. 48
It must be noted that the service contract between SOB and VPECI contains no express choice of the
law that would govern it. In the United States and Europe, the two rules that now seem to have
emerged as "kings of the hill" are (1) the parties may choose the governing law; and (2) in the absence
of such a choice, the applicable law is that of the State that "has the most significant relationship to the
transaction and the parties."49 Another authority proposed that all matters relating to the time, place,
and manner of performance and valid excuses for non-performance are determined by the law of the
place of performance or lex loci solutionis, which is useful because it is undoubtedly always connected
to the contract in a significant way.50
In this case, the laws of Iraq bear substantial connection to the transaction, since one of the parties is
the Iraqi Government and the place of performance is in Iraq. Hence, the issue of whether respondent
VPECI defaulted in its obligations may be determined by the laws of Iraq. However, since that foreign
law was not properly pleaded or proved, the presumption of identity or similarity, otherwise known as
the processual presumption, comes into play. Where foreign law is not pleaded or, even if pleaded, is
not proved, the presumption is that foreign law is the same as ours.51
Our law, specifically Article 1169, last paragraph, of the Civil Code, provides: "In reciprocal obligations,
neither party incurs in delay if the other party does not comply or is not ready to comply in a proper
manner with what is incumbent upon him."
Default or mora on the part of the debtor is the delay in the fulfillment of the prestation by reason of a
cause imputable to the former. 52 It is the non-fulfillment of an obligation with respect to time.53
It is undisputed that only 51.7% of the total work had been accomplished. The 48.3% unfinished portion
consisted in the purchase and installation of electro-mechanical equipment and materials, which were
available from foreign suppliers, thus requiring US Dollars for their importation. The monthly billings and
payments made by SOB54 reveal that the agreement between the parties was a periodic payment by
the Project owner to the contractor depending on the percentage of accomplishment within the period.
55 The payments were, in turn, to be used by the contractor to finance the subsequent phase of the
work. 56 However, as explained by VPECI in its letter to the Department of Foreign Affairs (DFA), the
payment by SOB purely in Dinars adversely affected the completion of the project; thus:
4. Despite protests from the plaintiff, SOB continued paying the accomplishment billings of the
Contractor purely in Iraqi Dinars and which payment came only after some delays.
5. SOB is fully aware of the following:
5.2 That Plaintiff is a foreign contractor in Iraq and as such, would need foreign currency (US$), to
finance the purchase of various equipment, materials, supplies, tools and to pay for the cost of project
management, supervision and skilled labor not available in Iraq and therefore have to be imported and
or obtained from the Philippines and other sources outside Iraq.
5.3 That the Ministry of Labor and Employment of the Philippines requires the remittance into the
Philippines of 70% of the salaries of Filipino workers working abroad in US Dollars;
5.5 That the Iraqi Dinar is not a freely convertible currency such that the same cannot be used to
purchase equipment, materials, supplies, etc. outside of Iraq;
5.6 That most of the materials specified by SOB in the CONTRACT are not available in Iraq and
therefore have to be imported;
5.7 That the government of Iraq prohibits the bringing of local currency (Iraqui Dinars) out of Iraq and
hence, imported materials, equipment, etc., cannot be purchased or obtained using Iraqui Dinars as
medium of acquisition.
8. Following the approved construction program of the CONTRACT, upon completion of the civil works
portion of the installation of equipment for the building, should immediately follow, however, the
CONTRACT specified that these equipment which are to be installed and to form part of the PROJECT
have to be procured outside Iraq since these are not being locally manufactured. Copy f the relevant
portion of the Technical Specification is hereto attached as Annex "C" and made an integral part hereof;
10. Due to the lack of Foreign currency in Iraq for this purpose, and if only to assist the Iraqi government
in completing the PROJECT, the Contractor without any obligation on its part to do so but with the
knowledge and consent of SOB and the Ministry of Housing & Construction of Iraq, offered to arrange
on behalf of SOB, a foreign currency loan, through the facilities of Circle International S.A., the
Contractor's Sub-contractor and SACE MEDIO CREDITO which will act as the guarantor for this foreign
currency loan.
Arrangements were first made with Banco di Roma. Negotiation started in June 1985. SOB is informed
of the developments of this negotiation, attached is a copy of the draft of the loan Agreement between
SOB as the Borrower and Agent. The Several Banks, as Lender, and counter-guaranteed by Istituto
Centrale Per II Credito A Medio Termine (Mediocredito) Sezione Speciale Per L'Assicurazione Del
Credito All'Exportazione (Sace). Negotiations went on and continued until it suddenly collapsed due to
the reported default by Iraq in the payment of its obligations with Italian government, copy of the news
clipping dated June 18, 1986 is hereto attached as Annex "D" to form an integral part hereof;
15. On September 15, 1986, Contractor received information from Circle International S.A. that because
of the news report that Iraq defaulted in its obligations with European banks, the approval by Banco di
Roma of the loan to SOB shall be deferred indefinitely, a copy of the letter of Circle International
together with the news clippings are hereto attached as Annexes "F" and "F-1", respectively.57
As found by both the Court of Appeals and the trial court, the delay or the non-completion of the Project
was caused by factors not imputable to the respondent contractor. It was rather due mainly to the
persistent violations by SOB of the terms and conditions of the contract, particularly its failure to pay
75% of the accomplished work in US Dollars. Indeed, where one of the parties to a contract does not
perform in a proper manner the prestation which he is bound to perform under the contract, he is not
entitled to demand the performance of the other party. A party does not incur in delay if the other party
fails to perform the obligation incumbent upon him.
The petitioner, however, maintains that the payments by SOB of the monthly billings in purely Iraqi
Dinars did not render impossible the performance of the Project by VPECI. Such posture is quite
contrary to its previous representations. In his 26 March 1987 letter to the Office of the Middle Eastern
and African Affairs (OMEAA), DFA, Manila, petitioner's Executive Vice-President Jesus M. Tañedo
stated that while VPECI had taken every possible measure to complete the Project, the war situation in
Iraq, particularly the lack of foreign exchange, was proving to be a great obstacle; thus:
VPECI has taken every possible measure for the completion of the project but the war situation in Iraq
particularly the lack of foreign exchange is proving to be a great obstacle. Our performance
counterguarantee was called last 26 October 1986 when the negotiations for a foreign currency loan
with the Italian government through Banco de Roma bogged down following news report that Iraq has
defaulted in its obligation with major European banks. Unless the situation in Iraq is improved as to allay
the bank's apprehension, there is no assurance that the project will ever be completed. 58
In order that the debtor may be in default it is necessary that the following requisites be present: (1) that
the obligation be demandable and already liquidated; (2) that the debtor delays performance; and (3)
that the creditor requires the performance because it must appear that the tolerance or benevolence of
the creditor must have ended. 59
As stated earlier, SOB cannot yet demand complete performance from VPECI because it has not yet
itself performed its obligation in a proper manner, particularly the payment of the 75% of the cost of the
Project in US Dollars. The VPECI cannot yet be said to have incurred in delay. Even assuming that
there was delay and that the delay was attributable to VPECI, still the effects of that delay ceased upon
the renunciation by the creditor, SOB, which could be implied when the latter granted several
extensions of time to the former. 60 Besides, no demand has yet been made by SOB against the
respondent contractor. Demand is generally necessary even if a period has been fixed in the obligation.
And default generally begins from the moment the creditor demands judicially or extra-judicially the
performance of the obligation. Without such demand, the effects of default will not arise.61
Moreover, the petitioner as a guarantor is entitled to the benefit of excussion, that is, it cannot be
compelled to pay the creditor SOB unless the property of the debtor VPECI has been exhausted and all
legal remedies against the said debtor have been resorted to by the creditor.62 It could also set up
compensation as regards what the creditor SOB may owe the principal debtor VPECI.63 In this case,
however, the petitioner has clearly waived these rights and remedies by making the payment of an
obligation that was yet to be shown to be rightfully due the creditor and demandable of the principal
debtor.
As found by the Court of Appeals, the petitioner fully knew that the joint venture contractor had
collectibles from SOB which could be set off with the amount covered by the performance guarantee. In
February 1987, the OMEAA transmitted to the petitioner a copy of a telex dated 10 February 1987 of
the Philippine Ambassador in Baghdad, Iraq, informing it of the note verbale sent by the Iraqi Ministry of
Foreign Affairs stating that the past due obligations of the joint venture contractor from the petitioner
would "be deducted from the dues of the two contractors."64
Also, in the project situationer attached to the letter to the OMEAA dated 26 March 1987, the petitioner
raised as among the arguments to be presented in support of the cancellation of the counter-guarantee
the fact that the amount of ID281,414/066 retained by SOB from the Project was more than enough to
cover the counter-guarantee of ID271,808/610; thus:
6.1 Present the following arguments in cancelling the counterguarantee:
· The Iraqi Government does not have the foreign exchange to fulfill its contractual obligations of paying
75% of progress billings in US dollars.
· It could also be argued that the amount of ID281,414/066 retained by SOB from the proposed project
is more than the amount of the outstanding counterguarantee.65
In a nutshell, since the petitioner was aware of the contractor's outstanding receivables from SOB, it
should have set up compensation as was proposed in its project situationer.
Moreover, the petitioner was very much aware of the predicament of the respondents. In fact, in its 13
May 1987 letter to the OMEAA, DFA, Manila, it stated:
VPECI also maintains that the delay in the completion of the project was mainly due to SOB's violation
of contract terms and as such, call on the guarantee has no basis.
While PHILGUARANTEE is prepared to honor its commitment under the guarantee, PHILGUARANTEE
does not want to be an instrument in any case of inequity committed against a Filipino contractor. It is
for this reason that we are constrained to seek your assistance not only in ascertaining the veracity of Al
Ahli Bank's claim that it has paid Rafidain Bank but possibly averting such an event. As any payment
effected by the banks will complicate matters, we cannot help underscore the urgency of VPECI's bid
for government intervention for the amicable termination of the contract and release of the performance
guarantee. 66
But surprisingly, though fully cognizant of SOB's violations of the service contract and VPECI's
outstanding receivables from SOB, as well as the situation obtaining in the Project site compounded by
the Iran-Iraq war, the petitioner opted to pay the second layer guarantor not only the full amount of the
performance bond counter-guarantee but also interests and penalty charges.

This brings us to the next question: May the petitioner as a guarantor secure reimbursement from the
respondents for what it has paid under Letter of Guarantee No. 81-194-F?

As a rule, a guarantor who pays for a debtor should be indemnified by the latter67 and would be legally
subrogated to the rights which the creditor has against the debtor.68 However, a person who makes
payment without the knowledge or against the will of the debtor has the right to recover only insofar as
the payment has been beneficial to the debtor.69 If the obligation was subject to defenses on the part of
the debtor, the same defenses which could have been set up against the creditor can be set up against
the paying guarantor.70

From the findings of the Court of Appeals and the trial court, it is clear that the payment made by the
petitioner guarantor did not in any way benefit the principal debtor, given the project status and the
conditions obtaining at the Project site at that time. Moreover, the respondent contractor was found to
have valid defenses against SOB, which are fully supported by evidence and which have been
meritoriously set up against the paying guarantor, the petitioner in this case. And even if the deed of
undertaking and the surety bond secured petitioner's guaranty, the petitioner is precluded from
enforcing the same by reason of the petitioner's undue payment on the guaranty. Rights under the deed
of undertaking and the surety bond do not arise because these contracts depend on the validity of the
enforcement of the guaranty.

The petitioner guarantor should have waited for the natural course of guaranty: the debtor VPECI
should have, in the first place, defaulted in its obligation and that the creditor SOB should have first
made a demand from the principal debtor. It is only when the debtor does not or cannot pay, in whole or
in part, that the guarantor should pay.71 When the petitioner guarantor in this case paid against the will
of the debtor VPECI, the debtor VPECI may set up against it defenses available against the creditor
SOB at the time of payment. This is the hard lesson that the petitioner must learn.

As the government arm in pursuing its objective of providing "the necessary support and assistance in
order to enable … [Filipino exporters and contractors to operate viably under the prevailing economic
and business conditions,"72 the petitioner should have exercised prudence and caution under the
circumstances. As aptly put by the Court of Appeals, it would be the height of inequity to allow the
petitioner to pass on its losses to the Filipino contractor VPECI which had sternly warned against paying
the Al Ahli Bank and constantly apprised it of the developments in the Project implementation.

WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit, and the decision
of the Court of appeals in CA-G.R. CV No. 39302 is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.