G.R. No.

L-41767 August 23, 1978

MR. AND MRS. ROMEO FERRER and ANNETTE FERRER, petitioners,
vs.
HON. VICENTE G. ERICTA, in his capacity as Presiding Judge of the Court of First Instance of Rizal,
Quezon City, Branch XVIII, MR. AND MRS. FRANCIS PFLEIDER and DENNIS PFLEIDER, respondents.
Delano F. Villaruz for petitioners.
Porderio C. David for private respondents.

ANTONIO, J:
Mandamus to compel the immediate execution of the Decision of the Court of First Instance of Quezon City, Branch
XVIII, presided over by respondent Judge, in Civil Case No. Q-19647, dated July 21, 1975. The pertinent facts are
as follows:
In a complaint for damages against respondents, dated December 27, 1974 but actually filed on January 6, 1975
(Civil Case No. Q-19647), and assigned to the sala of respondent Judge, it was alleged that defendants Mr. and Mrs.
Francis Pfleider, residents of Bayawan, Negros Oriental, were the owners or operators of a Ford pick-up car; that at
about 5:00 o'clock in the afternoon of December 31, 1970, in the streets of Bayawan, Negros Oriental, their son,
defendant Dennis Pfleider, who was then only sixteen (16) years of age, without proper official authority, drove the
above-described vehicle, without due regard to traffic rules and regulations, and without taking the necessary
precaution to prevent injury to persons or damage to property, and as a consequence the pickup car was overturned,
causing physical injuries to plaintiff Annette Ferrer, who was then a passenger therein, which injuries paralyzed her
and required medical treatment and confinement at different hospitals for more than two (2) years; that as a result of
the physical injuries sustained by Annette, she suffered unimaginable physical pain, mental anguish, and her parents
also suffered mental anguish, moral shock and spent a considerable sum of money for her treatment. They prayed
that defendants be ordered to reimburse them for actual expenses as well as other damages.
In due time, defendants filed their answer, putting up the affirmative defense that defendant Dennis Pfleider
exercised due care and utmost diligence in driving the vehicle aforementioned and alleging that Annette Ferrer and
the other persons aboard said vehicle were not passengers in the strict sense of the term, but were merely joy riders
and that, consequently, defendants had no obligation whatsoever to plaintiffs.
At the pre-trial on May 12, 1975, only plaintiffs-petitioners and their counsel were present. Consequently,
defendants-private respondents were declared in default and the plaintiff petitioners were allowed to present their
evidence ex parte. On May 21, 1975, petitioners moved that they be granted an extension of ten (10) days from May
22, 1975 to present her evidence, which was granted by the court a quo. The presentation of petitioners' evidence
was later continued by the trial court to June 16, 1975, when the deposition of Annette Ferrer was submitted by
petitioners and admitted by the trial court.
On June 26, 1975, private respondents filed a motion to "set aside the order of default and subsequent pleadings" on
the ground that "defendants' failure to appear for pre-trial was due to accident or excusable neglect." This was
opposed by petitioners on the ground that the said pleading was not under oath, contrary to the requirements of Sec.
3, Rule 18 of the Rules, and that it was not accompanied by an affidavit of merit showing that the defendants have a
good defense. In view of this, the motion of private respondents was denied by respondent Judge on July 21, 1975.
On the same date, respondent Judge rendered judgment against private respondents, finding that the minor Dennis
Pfleider, was allowed by his parents to operate a Ford pick-up car and because of his reckless negligence caused the
accident in question, resulting in injuries to Annette, and ordering the defendants, as a result thereof, to pay jointly
and severally the plaintiffs the following amounts: (1) P24,500.00 for actual expenses, hospitalization and medical
expenses; (2) P24,000.00 for actual expenses for the care, medicines of plaintiff Annette for helps from December

31, 1970 to December 31, 1974; (3) P50,000.00 for moral damages; (4) P10,000.00 for exemplary damages; (5)
P5,000.00 for attorney's fees; and (6) costs of suit.
On September 1, 1975, private respondents filed a Motion for Reconsideration 1 of the decision and of the order
denying the motion to set aside order of default, based on the following grounds: (1) the complaint states no cause of
action insofar as Mr. and Mrs. Pfleider are concerned because it does not allege that at the time of the mishap,
defendant Dennis Pfleider was living with them, the fact being that at such time he was living apart from them,
hence, there can be no application of Article 2180 of the Civil Code, upon which parents' liability is premised; and
(2) that tile complaint shows on its face "that it was filed only on January 6, 1975, or after the lapse of MORE
THAN FOUR YEARS from the date of the accident on December 31, 1970", likewise appearing from the complaint
and, therefore, the action has already prescribed under Article 1146 of the Civil Code.
A Supplemental Motion for Reconsideration 2 was subsequently filed by defendants-private respondents on
September 10, 1975, alleging that their defense of prescription has not been waived and may be raised even at such
stage of the proceedings because on the face of the complaint, as well as from the plaintiff's evidence, their cause of
action had already prescribed, citing as authority the decision of this Court in Philippine National Bank v. Pacific
Commission House, 3 as well as the decisions quoted therein. The Opposition 4 to the above supplemental motion
interposed by plaintiffs-petitioners averred that: (a) the defense of prescription had been waived while the defense
that the complaint states no cause of action "is available only at any time not later than the trial and prior to the
decision"; (b) inasmuch as defendants have been declared in default for failure to appear at the pretrial conference,
they have lost their standing in court and cannot be allowed to adduce evidence nor to take part in the trial, in
accordance with Section 2 of Rule 18 of the Rules of Court; and (c) the motion and supplemental motion for
reconsideration are pro forma because the defenses raised therein have been previously raised and passed upon by
respondent court in resolving defendants' motion to set aside order of default. Beingpro forma, said motion and
supplemental motion do not suspend the running of the thirty-day period to appeal, which was from August 5, 1975,
when defendants received a copy of the decision, to September 4, 1975, and hence the decision has already become
final and executory. Plaintiffs-petitioners accordingly prayed that a writ of execution be issued to enforce the
judgment in their favor.
On September 23, 1975, respondent judge, without setting aside the order of default, issued an order absolving
defendants from any liability on the grounds that: (a) the complaint states no cause of action because it does not
allege that Dennis Pfleider was living with his parents at the time of the vehicular accident, considering that under
Article 2180 of the Civil Code, the father and, in case of his death or incapacity the mother, are only responsible for
the damages caused by their minor children who live in their company; and (b) that the defense of prescription is
meritorious, since the complaint was filed more than four (4) years after the date of the accident, and the action to
recover damages based on quasi-delict prescribes in four (4) years. Hence, the instant petition for mandamus.
The basic issue is whether the defense of prescription had been deemed waived by private respondents' failure to
allege the same in their answer.
As early as Chua Lamko v. Dioso, et al., 5 this Court sustained the dismissal of a counterclaim on the ground of
prescription, although such defense was not raised in the answer of the plaintiff. Thus, this Court held that where the
answer does not take issue with the complaint as to dates involved in the defendant's claim of prescription, his
failure to specifically plead prescription in the answer does not constitute a waiver of the defense of prescription. It
was explained that the defense of prescription, even if not raised in a motion to dismiss or in the answer, is not
deemed waived unless such defense raises issues of fact not appearing upon the preceding pleading.
In Philippine National Bank v. Perez, et al., 6 which was an action filed by the Philippine National Bank on March
22, 1961 for revival of a judgment rendered on December 29, 1949 against Amando Perez, Gregorio Pumuntoc and
Virginia de Pumuntoc pursuant to Section 6, Rule 39 of the rules of court the defendants were declared in default for
their failure to file their answer. There upon, the plaintiff submitted its evidence, but when the case was submitted
for decision, the court a quodismissed the complaint on the ground that plaintiff's cause of action had already
prescribed under Articles 1144 and 1152 of the Civil Code. The plaintiff in said case, contending that since
prescription is a defense that can only be set up by defendants, the court could not motu proprio consider it as a basis

for dismissal, moved to reconsider the order, but its motion was denied. When the issue was raised to this Court, We
ruled:
It is true that the defense of prescription can only be considered if the same is invoked as such in
the answer of the defendant and that in this particular instance no such defense was invoked
because the defendants had been declared in default, but such rule does riot obtain when the
evidence shows that the cause of action upon which plaintiff's complaint is based is already barred
by the statute of limitations. (Emphasis supplied.)
Again, in Philippine National Bank v. Pacific Commission House, 7 where the action sought to revive a judgment
rendered by the Court of First Instance of Manila on February 3, 1953 and it was patent from the stamp appearing on
the first page of the complaint that the complaint was actually filed on May 31, 1963, this Court sustained the
dismissal of the complaint on the ground of prescription, although such defense was not raised in the answer,
overruling the appellants' invocation of Section 2 of Rule 9 of the Rules of Court that "defenses and objections not
pleaded either in a motion to dismiss or in tile answer are deemed waived." We held therein that "... the fact that the
plaintiff's own allegation in tile complaint or the evidence it presented shows clearly that the action had prescribed
removes this case from the rule regarding waiver of the defense by failure to plead the same."
In the present case, there is no issue of fact involved in connection with the question of prescription. The complaint
in Civil Case No. Q-19647 alleges that the accident which caused the injuries sustained by plaintiff Annette Ferrer
occured on December 31, 1970. It is undisputed that the action for damages was only filed on January 6, 1975.
Actions for damages arising from physical injuries because of a tort must be filed within four years. 8 The four-year
period begins from the day the quasi-delict is committed or the date of the accident. 9
WHEREFORE, the instant petition for mandamus is hereby DISMISSED, without pronouncement as to costs.
Fernando (Chairman), Barredo, Aquino, Concepcion, Jr.

and Santos, JJ., concur.

[G.R. No. L-48577. September 30, 1980.]
SULPICIO A. GARCIA, Petitioner, v. COLONEL PAUL C. MATHIS, in his capacity as Base Commander,
Clark Air Force Base (CAFB) or his SUCCESSOR, and the HONORABLE COURT OF FIRST INSTANCE
OF PANGASINAN, Branch IV, Dagupan City, Respondents.

DECISION

ABAD SANTOS, J.:

Petition for certiorari to set aside the Order of the respondent judge, dated June 4, 1978, dismissing petitioners
Complaint against the private respondent and another Order, dated, July 7, 1978, denying a motion to reconsider the
aforesaid order.
The factual background can be briefly stated as follows:chanrob1es virtual 1aw library
In Civil Case No. D-4097 of the Court of First Instance of Pangasinan presided by the respondent judge, Sulpicio
Garcia, the petitioner herein, sued Colonel Paul C. Mathis in his capacity as Base Commander, CAFB, acting for
and in behalf of the United States of America. The complaint, which was filed on November 8, 1977, alleged that

Garcia was a civil employee at Clark Air Force Base from May 26, 1949. August 23, 1956, when he was dismissed
for alleged bribery and collusion. He prayed, inter alia, that he be reinstated to his former position, and paid back
wages, moral damage, attorneys fees and costs of the suit.
The defendant Mathis entered a special appearance and a motion for the dismissal of the complaint upon the ground
that the trial court had no jurisdiction over his person because he was being sued as the representative of a foreign
sovereign "which has not consented and does not now consent to the maintenance of the present suit."cralaw
virtua1aw library
On June 7, 1978, the respondent judge issued an Order as aforesaid the text of which reads as follows:chanrobles
law library
"Without considering the issue of jurisdiction raised by the defendant in his motion to dismiss the above entitled
case, the Court finds that the abuse of action has already prescribed, because paragraphs 3 and 5 of the complaint
alleged that the services of the plaintiff has been terminated on August 23, 1956.
WHEREFORE, the above-entitled case is hereby dismissed."cralaw virtua1aw library
The only issue in this case is whether or not the respondent judge committed a grave abuse of discretion amounting
to lack of jurisdiction when he dismissed the complaint on the ground of prescription which the defendant did not
raise in any of his pleadings.
It is true that an action will not be held to have prescribed if prescription is not expressly invoked. However there are
exceptions to this rule and one of them is when the plaintiffs own allegations in his complaint show clearly that the
action has prescribed. (Philippine National Bank v. Pacific Commission House, G.R. No. L-22675, March 28, 1969,
27 SCRA 766). In this case the complaint shows clearly that the plaintiffs action had prescribed for he alleged that
he was removed on August 23, 1956 (par. 5) but the case was filed only on November 18, 1977, after a lapse of
more than 21 years. Prescinding, therefore, the defense of jurisdiction which is apparently meritorious, the complaint
was properly dismissed.
It is not amiss to state here that because of the special appearance which the defendant had entered, he was
constrained to confine himself to showing that the trial court did not have jurisdiction over his person and had to
exclude all other non-jurisdictional grounds in his motion to dismiss otherwise he could be deemed to have
abandoned his special appearance and voluntarily submitted himself to the jurisdiction of the court (Republic v. Ker
& Co., Ltd.; G.R. No. L-21609, Sept. 29, 1966, 18 SCRA 207).
WHEREFORE, finding the petition to be without merit, the same is hereby dismissed without any special
pronouncement as to costs.
SO ORDERED.
Guerrero and De Castro, JJ., concur.
Separate Opinions

BARREDO, J., concurring:chanrob1es virtual 1aw library

I concur, without necessarily agreeing that the ruling in Rep. v. Ku is correct in all instances.
AQUINO, J., concurring:chanrob1es virtual 1aw library
I concur. I wish to add that respondent Base Commander cannot be sued because of the rule that a State may not be
sued without its consent (Sec. 16, Art. XV, Constitution; Baer v. Tizon, L-24294, May 3, 1974, 57 SCRA 1, 70 O.G.
7361).

G.R. No. 104846 November 23, 1995

RODRIGO GABUYA represented by his attorney-in-fact LUCIA PONCE, petitioner,
vs.
ANTONIO LAYUG and HON. FEDERICO NOEL, REGIONAL TRIAL COURT, ILIGAN CITY,
BRANCH 2,respondents.

BELLOSILLO, J.:
This is a petition for certiorari and prohibition under Rule 65 of the Rules of Court seeking to annul the orders dated
16 October 1991 and 11 March 1992 of respondent Judge Federico V. Noel, Regional Trial Court, Lanao del Norte,
Br. 2, in Civil Case No. II-1408, Antonio Layug v. Rodrigo Gabuya, and to annul the proceedings held thereon. The
questioned orders and proceedings are alleged to unduly interfere with the final judgment of this Court in G.R. No.
75364 involving the same parties, the same facts and the same issues. 1
On 4 October 1978 private respondent Antonio Layug entered into a contract with petitioner Rodrigo Gabuya for the
purchase by the former of the latter's twelve (12) lots situated in Iligan City for the price of P120,000.00 payable in
three (3) yearly installments. Respondent Layug paid the first two (2) annual installments totaling P80,000.00 but
failed to pay the last installment of P40,000.00. When formal demands for payment were made by petitioner and
respondent repeatedly failed to pay the former brought suit in the then Court of First Instance of Lanao del Norte
(now Regional Trial Court) for annulment of contract and for recovery of damages against Layug.
After trial judgment was rendered in favor of petitioner. Respondent appealed to the Court of Appeals which on 30
August 1985 affirmed the judgment. The appellate court (1) ordered the rescission of the conditional sale of the
twelve (12) lots described in the contract; (2) declared as rentals for the twelve (12) lots from 1978 to the present (30
August 1985) all payments made by respondent Layug to Gabuya plus the legal interest thereon from the execution
of the contract; (3) ordered respondent Layug to vacate the twelve (12) lots and deliver the possession thereof to
petitioner Gabuya; and, (4) ordered respondent Layug to pay petitioner Gabuya the sum of P5,000.00 as attorney's
fees and to pay the costs.
On appeal to us we affirmed the Court of Appeals particularly insofar as it authorized the cancellation by petitioner
Gabuya of the contract of sale with respondent Layug but modified the same to the affect that the cancellation
should be effective and fully operative only upon payment of the "cash surrender value" of his payments in the sum
of P40,000.00.
On 8 March 1989 our decision became final and executory. Consequently, on 31 May 1989 a writ of execution was
issued by the trial court. On 8 June 1989 a certificate of turnover was issued by Sheriff Elias Anacleto in favor of
petitioner. But the order of execution was elevated by respondent Layug through a petition for certiorari to the
Court of Appeals which subsequently dismissed it.
On 30 September 1991 the sheriff submitted to the trial court a return of the writ of execution with the
recommendation that the buildings of private respondent found in the property be demolished.
Meanwhile, on 27 June 1989 respondent Layug filed a complaint for specific performance with prayer for a
temporary restraining order against petitioner seeking reimbursement for the value of the improvements, buildings
and materials he (Layug) introduced in the premises covered by the contract of sale which by final judgment of this
Court was already ordered rescinded.
His motion to dismiss in the court below having been denied petitioner filed his answer to the complaint.

On 16 October 1991 respondent judge issued an order directing Deputy Provincial Sheriff Salcedo "to refrain from
disposs(ess)ing plaintiff of the possession of the property until ordered by the court." 2 On 22 January 1992 the trial
court on motion of petitioner reconsidered its order. However on 11 March 1992, this time upon motion of
respondent Layug, it again reconsidered its order and reinstated the restraining order of 16 October 1991 against
Deputy Sheriff Salcedo. Hence this petition by Rodrigo Gabuya against respondent judge and Antonio Layug
alleging grave abuse of discretion amounting to lack of jurisdiction on the part of respondent judge in taking
cognizance of Civil Case No. II-1408 and in issuing the questioned orders.
There is obvious merit in the petition. The final judgment of this Court in G.R. No. 75364 promulgated 23
November 1988 involving the same parties, facts and issues constitutes an absolute bar to Civil Case No. II-1408
now pending with the Regional Trial Court of Lanao del Norte, Br. 2. It is final as to all claims and demands of
petitioner Gabuya and respondent Layug with regard to the twelve (12) lots in Iligan City subject matter of the
contract of sale ordered cancelled by this Court. This judgment binds the parties not only as to every matter offered
and received to sustain or defeat their claims or demand but as to any other admissible matter which might have
been offered for that purpose and of all other matters that could have been adjudged in that case.
In the case before us, the claim for reimbursement of the value of improvements introduced by respondent Layug on
the property subject of the contract of sale should have been raised by him as a counterclaim in the complaint for
annulment of contract before the trial court in the first case instituted by petitioner Gabuya. The failure of
respondent Layug to raise these matters therein precludes the re-litigation of the same facts in a separate complaint.
It has been ruled that when defendants are sued for recovery of a tract of land they ought to have presented a
counterclaim for the value of the improvements thereon and the amount of damages suffered by them because the
claim for such improvements and indemnity is necessarily connected with the suit for the restitution or recovery of
land claimed to have been improved, and with the result of the execution of the judgment awarding recovery. 3
On the basis of the foregoing, the questioned orders issued by respondent judge on 16 October 1991 and 11 March
1992 restraining the deputy sheriff from implementing the writ of execution of the final judgment of this Court in
G.R. No. 75364 were issued by respondent judge with grave abuse of discretion amounting to lack of jurisdiction.
WHEREFORE, the petition is GRANTED. The questioned orders of respondent judge dated 16 October 1991 and
11 March 1992, as well as the proceedings in Civil Case No. II-1408 now pending with the Regional Trial Court of
Lanao del Norte, Br. 2, are ANNULLED and SET ASIDE. Respondent judge, or whoever may now be acting in his
behalf or assigned to the case, is directed to pursue immediately the implementation of the writ of execution issued
on 31 May 1989 to satisfy the judgment that has long become final and executory. Costs against private respondent.
SO ORDERED.
Padilla, Davide, Jr., Kapunan and Hermosisima, Jr., JJ., concur.
G.R. No. L-22485

March 13, 1968

CONSUELO V. CALO, doing business under the trade name CVC Lumber Industries, assisted by MARCOS
M. CALO, plaintiffs-appellants,
vs.
AJAX INTERNATIONAL, INCORPORATED, defendant-appellee.
Tranquilino O. Calo, Jr. for plaintiffs-appellants.
Sergio P. Villareal for defendant-appellee.
BENGZON, J.P., J.:

Sometime on May 7, 1959, plaintiff-appellant Calo ordered from defendant-appellee Ajax International, Inc.,
1,200 ft. of John Shaw wire rope at P2.85 per foot. The transaction was evidenced by Charge Order No. 37071, for
P3,420.00.
According to plaintiff Calo, when the wire rope was delivered to Butuan City, the same was found short of
300 ft. Plaintiff then wrote two letters to defendant asking for either completion of delivery or account adjustment of
the alleged undelivered 300 ft. of wire rope.
On November 20, 1961, a complaint docketed as Civil Case No. IV-93062 was filed in the Municipal Court of
Manila by one Adolfo Benavides who claimed to have acquired the outstanding credit account of Calo from
defendant Ajax International, Inc. Charge Order No. 37071 was among those included in the assigned account.
Subsequently, a judgment by default was entered, and a writ of execution issued, against plaintiff Calo. The latter
resorted to this Court on a petition for certiorari, prohibition and mandamus.1 We set aside the judgment of default
and writ of execution issued against plaintiff Calo and remanded the case for further proceedings.
On January 23, 1962, plaintiff Calo, assisted by her husband, Marcos Calo, filed in the Court of First Instance
of Agusan a complaint against defendant asking (1) that the latter either effect complete delivery of Charge Order
No. 37071 or that she be relieved from paying P855.00 and (2) that the latter indemnify her for P12,000 as attorney's
fees, damages and expenses of litigation.2 The case was docketed as Civil Case No. 860.
Instead of filing an answer, defendant moved for the dismissal of Civil Case 860 on the ground, inter alia, that
the subject thereof was involved and intimately related to that in Civil Case No. IV-93062 of the Municipal Court of
Manila. The court a quo sustained the motion and dismissed the case.
Plaintiff-appellant moved for reconsideration and new trial. When this failed, she instituted the present
appeal.1wph1.t
The dismissal of Civil Case No. 860 by the court a quo because of the pendency of Civil Case No. IV-93062
in the municipal court of Manila is predicated on the supposition that plaintiff's claim is a compulsory counter-claim
that should be filed in the latter case. There is no question that it arises out of the same transaction which is the basis
of the complaint in Civil Case No. IV-93062 and does not require the presence of third parties over whom the
municipal court of Manila could not acquire jurisdiction.
However, plaintiff's claim is not a compulsory counterclaim in Civil Case No. IV-93062 for the simple reason
that the amount thereof exceeds the jurisdiction of the municipal court. The rule that a compulsory counterclaim not
set up is barred, when applied to the municipal court, presupposes that the amount involved is within the said court's
jurisdiction. Otherwise, as this Court had already noted in Yu Lay v. Galmes 3 we would come to the absurd situation
where a claim must be filed with the municipal court which it is prohibited from taking cognizance of, being beyond
its jurisdiction.
Besides, the reason underlying the rule, which is to settle all related controversies in one sitting only, does not
obtain. For, even if the counterclaim in excess of the amount cognizable by the inferior court is set up, the defendant
cannot obtain positive relief. The Rules allow this only for the defendant to prevent plaintiff from recovering from
him.4 This means that should the court find both plaintiff's complaint and defendant's counterclaim (for an amount
exceeding said court's jurisdiction) meritorious, it will simply dismiss the complaint on the ground that defendant
has a bigger credit. Since defendant still has to institute a separate action for the remaining balance of his
counterclaim, the previous litigation did not really settle all related controversies.
Plaintiff Calo's claim of P12,000.00 not being a compulsory counterclaim in Civil Case No. VI-93062, it need
not be filed there. The pendency then of said civil case could not be pleaded in abatement of Civil Case No. 860.
Consequently, the lower court erred in dismissing plaintiff's complaint.
WHEREFORE, the order of dismissal appealed from is hereby reversed and the case remanded for further
proceedings. Costs against appellee Ajax International, Inc. So ordered.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
Concepcion, C.J., is on leave.
G.R. No. 73039 October 9, 1987
PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO CAVILI, petitioners,
vs.
HON. TEODORO N. FLORENDO, Presiding Judge, Branch XXXVI, Regional Trial Court of Negros
Oriental, 7th Judicial Region, CLARITA CAVILI, ULPIANO CAVILI, ESTRELLA CAVILI, PLACIDA
CAVILI, ET AL.,respondents.
No. L-68680 October 9, 1987
PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO CAVILI, petitioners,
vs.
HON. TEODORO N. FLORENDO, Presiding Judge, Branch XXXVI, Regional Trial Court, 7th Judicial
Region, CLARITA CAVILI, ULPIANO CAVILI, ESTRELLA CAVILI, PLACIDA CAVILI, GREGORIA
CAVILI, FORTUNATA CAVILI, AMILITA CAVILI, APAD CAVILI, AQUILINA CAVILI, CRESENCIO
CAVILI, ALMA CAVILI, ET AL., respondents.
No. L-57771 October 9, 1987
QUIRINO CAVILI, PRIMITIVO, CAVILI, and PERFECTA CAVILI, petitioners,
vs.
HON. CIPRIANO VAMENTA, JR., as Presiding Judge, Branch III Court of First Instance of Negros
Oriental; ULPIANO CAVILI, CLARITA CAVILI, ESTRELLA CAVILI, RAMONA TAKANG COSME
TAKANG FABIAN TAKANG, LEODEGARIO TAKANG ET AL., respondents.

GUTIERREZ, JR., J.:

This is a petition to review and set aside two orders of the then Court of First Instance of Negros Oriental, namely:
(1) the order dated October 11, 1985, disqualifying Perfects Cavili dela Cruz as a witness in Civil Case No. 6880
entitled "Clarita Cavili, et al. v. Perfecta Cavili, Quirino Cavili, and Primitivo Cavili" and (2) the order dated
November 26, 1985, refusing to reconsider the previous orders of disqualification and resetting the reception of
evidence for the defendants to December 19 and 20, 1985 with a warning that should defendants' witnesses fail to
appear in court on said date, they will be deemed to have waived their right to be witnesses in this case.
The private respondents filed Civil Case No. 6880 with the Court of First Instance of Negros Oriental against herein
petitioners for Partition, Accounting, and Damages. After the case was raffled to Branch I presided over by Judge
Augusto S. Villarin, summons was issued to the three petitioners, all at Bayawan Negros Oriental which was the
address indicated in the complaint.
After trying to effect service, the process server went back to the court with the following return of service to
Quirino and Primitivo Cavili not contacted, according to Perfecta Cavili, subject persons is (sic) staying in
Kabangkalan, Negros Occidental."
Meanwhile, Atty. Jose P. Alamino filed a motion for extension to answer in behalf of the defendants, manifesting
the representation of his client Perfecta Cavili that she will inform her brothers Primitivo and Quirino about the case.

The defendants, however, failed to file their answer within the request period and upon motion of the plaintiffs, the
defendants were declared in default, and on October 5, 1979, a judgment by default was promulgated by Judge
Augusto S. Villarin.
The records of the case, however, show that a Manifestation was filed by Atty. Jose P. Alamino informing the court
that since he never met Primitivo and Quirino Cavili, who are residents of another province, he desisted from further
appearing in the case in their behalf.
On November 7, 1979, Atty. Jose P. Alamillo received a copy of the decision. On December 7, 1979, he filed a
motion for new trial in behalf of the defendants on grounds of lack of jurisdiction and, with a meritorious defense
that the properties sought to be partitioned have already been the subject of a written partition agreement between
the direct heirs of the late Bernardo Cavili who are the predecessors of the parties in this case. In/an order dated
April 23, 1980, the court granted said motion.
The plaintiffs filed a motion for reconsideration of the order granting new trial and at the same time prayed that a
writ of execution be issued but only in so far as defendant Perfecta Cavili was concerned.
In an order dated July 21, 1981, Judge Cipriano Vamenta of Branch III of the Court of First Instance of Negros
Oriental to whom the case had been assigned after a re-raffle, set aside the order of April 23, 1980 and directed the
execution of the October 5, 1979 decision without qualification ruling that the petitioners' remedy should have been
appeal rather than new trial.
Their motion for reconsideration having been denied on August 11, 1981, the defendants, now petitioners, brought
the case to this Court through a petition for certiorari, G.R. No. 57771, entitled "Quirino Cavili, et al., Petitioners vs.
Hon. Cipriano Vamenta, et al., Respondents "
On May 31, 1982, this Court rendered a decision, the dispositive portion of which reads:
WHEREFORE, Our resolution dismissing the petition is hereby reconsidered; the petition is
granted; and the order dated July 21, 1981, is set aside while that of April 23, 1980, is revived.
(No special pronouncement as to costs. Rollo p. 21)
Thereafter, the pre-trial and trial of Civil Case No. 6880 was scheduled on October 9, 10, and 11, 1985 before
Branch XXXVI of the Regional Trial Court, presided by respondent Judge Teodoro N. Florendo. The defendants,
(now petitioners), presented Perfects Cavili dela Cruz as their first witness. The respondents, through counsel moved
for her disqualification as a witness on the ground that having been declared in default, Perfects Cavili has lost her
standing in court and she cannot be allowed to participate in all premise the even as a witness. The court, through the
respondent judge, sustained the respondents' contention and disqualified her from testifying.
The petitioners, through counsel, moved for a reconsideration of the ruling.
On November 26, 1985, the lower court issued an order denying reconsideration of its Order dated October 11, 1985
disqualifying Perfecta Cavili dela Cruz as a witness in Civil Case No. 6880.
Hence, this petition.
Petitioner Perfecta Cavili's competence as a witness is put in issue by the private respondents.
Section 18, Rule 130 of the Revised Rules of Court states who are qualified to be witnesses. It provides:
Section 18. Witnesses; their qualifications. Except as provided in the next succeeding section, all persons who,
having organs of sense, can perceive, and perceiving, can make known their perception to others, may be witnesses.

Neither parties nor other persons interested in the outcome of a case shall be excluded; nor those who have been
convicted of crime; nor any person on account of his opinion on matters of religious belief.
The generosity with which the Rule allows people to testify is apparent. Interest in the outcome of a case, conviction
of a crime unless otherwise provided by law, and religious belief are not grounds for disqualification.
Sections 19 and 20 of Rule 130 provide for specific disqualifications. Section 19 disqualifies those who are mentally
incapacitated and children whose tender age or immaturity renders them incapable of being witnesses. Section 20
provides for disqualification based on conflicts of interest or on relationship. Section 21 provides for
disqualifications based on privileged communications. Section 15 of Rule 132 may not be a rule on disqualification
of witnesses but it states the grounds when a witness may be impeached by the party against whom he was called.
There is no provision of the Rules disqualifying parties declared in default from taking the witness stand for nondisqualified parties. The law does not provide default as an exception. The specific enumeration of disqualified
witnesses excludes the operation of causes of disability other than those mentioned in the Rules. It is a maxim of
recognized utility and merit in the construction of statutes that an express exception, exemption, or saving clause
excludes other exceptions. (In Re Estate of Enriquez, 29 Phil. 167) As a general rule, where there are express
exceptions these comprise the only limitations on the operation of a statute and no other exception will be implied.
(Sutherland on Statutory Construction, Fourth Edition, Vol. 2A, p. 90) The Rules should not be interpreted to
include an exception not embodied therein.
The respondents, however, cite Section 2, Rule 18 on Defaults, to wit:
Section 2. Effect of order of default. Except as provided in section 9 of Rule 13, a party declared in default shall
not be entitled to notice of subsequent proceedings nor to take part in the trial.
They advance the argument that to allow Perfecta Cavili to stand as witness would be to permit a party in default "to
take part in the trial."
An explanation of the Rule is in order.
Loss of standing in court is the consequence of an order of default. Thus, a party declared in default is considered
out of court and cannot appear therein, adduce evidence, and be heard and for that reason he is not entitled to notice.
(Rule 18, Rules of Court; Lim Toco v. Go Fay, 80 Phil. 166) However, "loss of pending" must be understood to
mean only the forfeiture of one's rights as a party litigant, contestant or legal adversary. A party in default loses his
right to present his defense, control the proceedings, and examine or cross-examine witnesses. He has no right to
expect that his pleadings would be acted upon by the court nor may he object to or refute evidence or motions filed
against him. There is nothing in the rule, however, which contemplates a disqualification to be a witness or a
opponent in a case. Default does not make him an incompetent.
As opposed to a party litigant, a witness is merely a beholder, a spectator or onlooker, called upon to testify to what
he has seen, heard, or observed. As such, he takes no active part in the contest of rights between the parties. Cast in
the cited role of witness, a party in default cannot be considered as " a part in the trial." He remains suffering the
effects of an order of default.
A party in default may thus be cited as a witness by his co-defendants who have the standing and the right to present
evidence which the former may provide. The incidental benefit giving the party in default the opportunity to present
evidence which may eventually redound to his advantage or bring about a desired result, through his co-defendants,
is of minor consequence.
Of greater concern or importance in allowing the presence of Perfecta Cavili as a witness in the case at bar, is the
preservation of the right of petitioners Quirino and Primitivo Cavili to secure the attendance of witnesses and the
production of evidence in their behalf. To reject Perfects Cavili's presentation of testimonial evidence would be to

treat Primitivo and Quirino, as if they too were in default. There is no reason why the latter should also be made to
bear the consequences of Perfecta's omission. Moreover, we cannot deprive Quirino and Primitivo of the only
instrument of proof available to them, as Perfecta alone has been in possession and administration of the claim.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the respondent court
disqualifying. Perfects Cavili dela Cruz as a witness in Civil Case No. 6880 is hereby SET ASIDE. The case is
remanded to the court a quo for Wither proceedings. The temporary restraining order issued on January 6, 1986 is
LIFTED.
SO ORDERED.
Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

G.R. No. L-53880 March 17, 1994

ENRICO L. PACETE, CLARITA DE LA CONCEPCION, EMELDA C. PACETE, EVELINA C. PACETE
and EDUARDO C. PACETE, petitioners,
vs.
HON. GLICERIO V. CARRIAGA, JR. and CONCEPCION (CONCHITA) ALANIS PACETE, respondents.
Juan G. Sibug and Rodolfo B. Quiachon for petitioners.
Julio F. Andres, Jr. for private respondent.

VITUG, J.:
The issue in this petition for certiorari is whether or not the Court of First Instance (now Regional Trial Court) of
Cotabato, Branch I, in Cotabato City, gravely abused its discretion in denying petitioners' motion for extension of
time to file their answer in Civil Case No. 2518, in declaring petitioners in default and in rendering its decision of
17 March 1980 which, among other things, decreed the legal separation of petitioner Enrico L. Pacete and private
respondent Concepcion Alanis and held to be null and void ab initio the marriage of Enrico L. Pacete to Clarita de la
Concepcion.
On 29 October 1979, Concepcion Alanis filed with the court below a complaint for the declaration of nullity of the
marriage between her erstwhile husband Enrico L. Pacete and one Clarita de la Concepcion, as well as for legal
separation (between Alanis and Pacete), accounting and separation of property. In her complaint, she averred that
she was married to Pacete on 30 April 1938 before the Justice of the Peace of Cotabato, Cotabato; that they had a
child named Consuelo who was born on 11 March 1943; that Pacete subsequently contracted (in 1948) a second
marriage with Clarita de la Concepcion in Kidapawan, North Cotabato; that she learned of such marriage only on 01
August 1979; that during her marriage to Pacete, the latter acquired vast property consisting of large tracts of land,
fishponds and several motor vehicles; that he fraudulently placed the several pieces of property either in his name
and Clarita or in the names of his children with Clarita and other "dummies;" that Pacete ignored overtures for an
amicable settlement; and that reconciliation between her and Pacete was impossible since he evidently preferred to
continue living with Clarita.
The defendants were each served with summons on 15 November 1979. They filed a motion for an extension of
twenty (20) days from 30 November 1979 within which to file an answer. The court granted the motion. On 18
December 1979, appearing through a new counsel, the defendants filed a second motion for an extension of another
thirty (30) days from 20 December 1979. On 07 January 1980, the lower court granted the motion but only for

twenty (20) days to be counted from 20 December 1979 or until 09 January 1980. The Order of the court was mailed
to defendants' counsel on 11 January 1980. Likely still unaware of the court order, the defendants, on 05 February
1980, again filed another motion (dated 18 January 1980) for an extension of "fifteen (15) days counted from the
expiration of the 30-day period previously sought" within which to file an answer. The following day, or on 06
February 1980, the court denied this last motion on the ground that it was "filed after the original period given . . . as
first extension had expired." 1
The plaintiff thereupon filed a motion to declare the defendants in default, which the court forthwith granted. The
plaintiff was then directed to present her evidence. 2 The court received plaintiff's evidence during the hearings held
on 15, 20, 21 and 22 February 1980.
On 17 March 1980, the court 3 promulgated the herein questioned decision, disposing of the case, thus
WHEREFORE, order is hereby issued ordering:
1. The issuance of a Decree of Legal Separation of the marriage between, the plaintiff, Concepcion
(Conchita) Alanis Pacete and the herein defendants, Enrico L. Pacete, in accordance with the
Philippine laws and with consequences, as provided for by our laws;
2. That the following properties are hereby declared as the conjugal properties of the partnership
of the plaintiff, Concepcion (Conchita) Alanis Pacete and the defendant, Enrico L. Pacete, half and
half, to wit:
1. The parcel of land covered by TCT No. V-815 which is a parcel of land situated in the barrio of
Langcong, Municipality of Matanog (previously of Parang), province of Maguindanao (previously
of Cotabato province) with an area of 45,265 square meters registered in the name of Enrico
Pacete, Filipino, of legal age, married to Conchita Alanis as shown in Exhibits "B" and "B-1" for
the plaintiff.
2. A parcel of land covered by Transfer Certificate of Title No. T-20442, with an area of 538
square meters and covered by Tax Declaration No. 2650 (74) in the name of Enrico Pacete,
situated in the Poblacion of Kidapawan, North Cotabato, together with all its improvements,
which parcel of land, as shown by Exhibits "K-1" was acquired by way of absolute deed of sale
executed by Amrosio Mondog on January 14, 1965.
3. A parcel of land covered by Transfer Certificate of Title No. T-20424 and covered by Tax
Declaration No. 803 (74), with an area of 5.1670 hectares, more or less, as shown by Exhibit "R",
the same was registered in the name of Enrico Pacete and the same was acquired by Enrico Pacete
last February 17, 1967 from Ambag Ampoy, as shown by Exhibit "R-1", situated at Musan,
Kidapawan, North Cotabato.
4. A parcel of land situated at Lanao, Kidapawan, North Cotabato, with an area of 5.0567 hectares,
covered by Tax Declaration No. 4332 (74), as shown by Exhibit "S", and registered in the name of
Enrico Pacete.
5. A parcel of land covered by Transfer Certificate of Title No. T-9750, situated at Lika, Mlang,
North Cotabato, with an area of 4.9841 hectares and the same is covered by Tax Declaration No.
803 (74) and registered in the name of Enrico Pacete and which land was acquired by Enrico
Pacete from Salvador Pacete on September 24, 1962, as shown by Exhibit "Q-1".
6. A parcel of land covered by Transfer Certificate of Title No. T-9944, with an area of 9.9566 and
also covered by Tax Declaration No. 8608 (74) and registered in the name of the defendant Enrico
L. Pacete which Enrico L. Pacete acquired from Sancho Balingcos last October 22, 1962, as

shown by Exhibit "L-1" and which parcel of land is situated at (Kialab), Kiab, Matalam, North
Cotabato.
7. A parcel of land covered by Transfer Certificate of Title No. T-9227, situated at Kiab, Matalam,
North Cotabato, with an area of 12.04339 hectares, more or less, and also covered by Tax
Declaration No. 8607 (74) both in the name of the defendant Enrico L. Pacete which he acquired
last October 15, 1962 from Minda Bernardino, as shown by Exhibit "M-1".
8. A parcel of land covered by Transfer Certificate of Title No. T-9228, situated at Kiab, Matalam,
North Cotabato, with an area of 10.8908 hectares, registered in the name of Enrico Pacete and also
covered by Tax Declaration No. 5781 (74) in the name of Enrico Pacete and which parcel of land
he acquired last September 25, 1962 from Conchita dela Torre, as shown by Exhibit "P-1".
9. A parcel of land covered by Transfer Certificate of Title No. T-10301, situated at Linao,
Matalam, North Cotabato, with an area of 7.2547 hectares, registered in the name of Enrico Pacete
and also covered by Tax Declaration No. 8716 (74) also in the name of Enrico Pacete which
Enrico Pacete acquired from Agustin Bijo last July 16, 1963, as shown by Exhibit "N-1".
10. A parcel of land covered by Transfer Certificate of Title No. 12728 in the name of the
defendant, Enrico L. Pacete, with an area of 10.9006 hectares, situated at Linao, Matalam, North
Cotabato and is also covered by Tax Declaration No. 5745 (74) in the name of Enrico Pacete, as
shown on Exhibit "O" and which Enrico Pacete acquired last December 31, 1963 from Eliseo
Pugni, as shown on Exhibit "0-1".
3. Ordering the Cancellation of Original Certificate of Title No. P-34243 covering Lot No. 1066,
issued in the name of Evelina Pacete, situated at Kiab, Matalam, North Cotabato, and ordering the
registration of the same in the joint name of Concepcion (Conchita) Alanis Pacete and Enrico L.
Pacete as their conjugal property, with address on the part of Concepcion (Conchita) Alanis Pacete
at Parang, Maguindanao and on the part of Enrico L. Pacete at Kidapawan, North Cotabato.
4. Ordering likewise the cancellation of Original Certificate of Title No. V-20101, covering Lot
No. 77, in the name of Eduardo C. Pacete, situated at New Lawaan, Mlang, North Cotabato, and
the issuance of a new Transfer Certificate of Title in the joint name of (half and half) Concepcion
(Conchita) Alanis Pacete and Enrico L. Pacete.
5. Ordering likewise the cancellation of Original Certificate of Title No. P-29890, covering Lot
1068, situated at Kiab, Matalam, North Cotabato, with an area of 12.1031 hectares, in the name of
Emelda C. Pacete and the issuance of a new Transfer Certificate of Title in the joint name (half
and half) of Concepcion (Conchita) Alanis Pacete and Enrico L. Pacete; and declaring that the
fishpond situated at Barrio Tumanan, Bislig, Surigao Del Sur, with an area of 48 hectares and
covered by Fishpond Lease Agreement of Emelda C. Pacete, dated July 29, 1977 be cancelled and
in lieu thereof, the joint name of Concepcion (Conchita) Alanis Pacete and her husband, Enrico L.
Pacete, be registered as their joint property, including the 50 hectares fishpond situated in the same
place, Barrio Timanan, Bislig, Surigao del Sur.
6. Ordering the following motor vehicles to be the joint properties of the conjugal partnership of
Concepcion (Conchita) Alanis Pacete and Enrico L. Pacete, viz:
a. Motor vehicle with Plate No. T-RG-783; Make, Dodge; Motor No. T137-20561; Chassis No.
83920393, and Type, Mcarrier;
b. Motor vehicle with Plate No. T-RG-784; Make, Dodge; Motor No. T214-229547; Chassis No.
10D-1302-C; and Type, Mcarrier;

c. Motor vehicle with Plate No. J-PR-818; Make, Ford; Motor No. GRW-116188; Chassis No.
HOCC-GPW-1161-88-C; Type, Jeep;
d. Motor vehicle with Plate No. TH-5J-583; Make, Ford: Motor No. F70MU5-11111; Chassis No.
HOCC-GPW-1161188-G; Type, Stake;
e. Motor vehicle with Plate No. TH-5J-584; Make, Hino; Motor No. ED300-45758; Chassis No.
KB222-22044; Type, Stake; and
f. Motor vehicle with Plate No. TH-5J-585; Make, Ford: Motor No. LTC-780-Dv; Chassis No.
10F-13582-K; Type, Stake.
7. Ordering the defendant Enrico L. Pacete to pay the plaintiff the sum of P46,950.00 which is the
share of the plaintiff in the unaccounted income of the ricemill and corn sheller for three years
from 1971 to 1973.
8. Ordering the defendant, Enrico L. Pacete, to reimburse the plaintiff the monetary equipment of
30% of whether the plaintiff has recovered as attorney's fees;
9. Declaring the subsequent marriage between defendant Enrico L. Pacete and Clarita de la
Concepcion to be void ab initio; and
10. Ordering the defendants to pay the costs of this suit. 4
Hence, the instant special civil action of certiorari.
Under ordinary circumstances, the petition would have outrightly been dismissed, for, as also pointed out by private
respondents, the proper remedy of petitioners should have instead been either to appeal from the judgment by
default or to file a petition for relief from judgment. 5 This rule, however, is not inflexible; a petition forcertiorari is
allowed when the default order is improperly declared, or even when it is properly declared, where grave abuse of
discretion attended such declaration. 6 In these exceptional instances, the special civil action of certiorari to declare
the nullity of a judgment by default is available. 7 In the case at bench, the default order unquestionably is not legally
sanctioned. The Civil Code provides:
Art. 101. No decree of legal separation shall be promulgated upon a stipulation of facts or by
confession of judgment.
In case of non-appearance of the defendant, the court shall order the prosecuting attorney to
inquire whether or not a collusion between the parties exists. If there is no collusion, the
prosecuting attorney shall intervene for the State in order to take care that the evidence for the
plaintiff is not fabricated.
The provision has been taken from Article 30 of the California Civil Code, 8 and it is, in substance, reproduced in
Article 60 of the Family Code. 9
Article 101 reflects the public policy on marriages, and it should easily explain the mandatory tenor of the law.
InBrown v. Yambao, 10 the Court has observed:
The policy of Article 101 of the new Civil Code, calling for the intervention of the state attorneys
in case of uncontested proceedings for legal separation (and of annulment of marriages, under
Article 88), is to emphasize that marriage is more than a mere contract; that it is a social institution
in which the state is vitally interested, so that its continuation or interruption can not be made to
depend upon the parties themselves (Civil Code, Article 52; Adong vs. Cheong Gee, 43 Phil. 43;

Ramirez v. Gmur, 42 Phil. 855; Goitia v. Campos, 35 Phil. 252). It is consonant with this policy
that the inquiry by the Fiscal should be allowed to focus upon any relevant matter that may
indicate whether the proceedings for separation or annulment are fully justified or not.
Article 103 of the Civil Code, now Article 58 of the Family Code, further mandates that an action for legal
separation must "in no case be tried before six months shall have elapsed since the filing of the petition," obviously
in order to provide the parties a "cooling-off" period. In this interim, the court should take steps toward getting the
parties to reconcile.
The significance of the above substantive provisions of the law is further underscored by the inclusion of the
following provision in Rule 18 of the Rules of Court:
Sec. 6. No defaults in actions for annulments of marriage or for legal separation. If the
defendant in an action for annulment of marriage or for legal separation fails to answer, the court
shall order the prosecuting attorney to investigate whether or not a collusion between the parties
exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence
submitted is not fabricated.
The special prescriptions on actions that can put the integrity of marriage to possible jeopardy are impelled by no
less than the State's interest in the marriage relation and its avowed intention not to leave the matter within the
exclusive domain and the vagaries of the parties to alone dictate.
It is clear that the petitioner did, in fact, specifically pray for legal separation. 11 That other remedies, whether
principal or incidental, have likewise been sought in the same action cannot dispense, nor excuse compliance, with
any of the statutory requirements aforequoted.
WHEREFORE, the petition for certiorari is hereby GRANTED and the proceedings below, including the Decision
of 17 March 1980 appealed from, are NULLIFIED and SET ASIDE. No costs.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ., concur.

G.R. No. 85494

May 7, 1991

CHOITHRAM JETHMAL RAMNANI AND/OR NIRMLA V. RAMNANI and MOTI G.

RAMNANI, petitioners,
vs.
COURT OF APPEALS, SPOUSES ISHWAR JETHMAL RAMNANI, SONYA JETHMAL RAMNANI and
OVERSEAS HOLDING CO., LTD., respondents.
G.R. No. 85496

May 7, 1991

SPOUSES ISHWAR JETHMAL RAMNANI AND SONYA JET RAMNANI, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, ORTIGAS & CO., LTD. PARTNERSHIP, and OVERSEAS
HOLDING CO., LTD., respondents.
Quasha, Asperilla Ancheta, Pea and Nolasco for petitioners Ishwar Jethmal Ramnani & Sonya Ramnani.
Salonga, Andres, Hernandez & Allado for Choithram Jethmal Ramnani, Nirmla Ramnani & Moti Ramnani.

Rama Law Office for private respondents in collaboration with Salonga, Andres, Hernandez & Allado.
Eulogio R. Rodriguez for Ortigas & Co., Ltd.

GANCAYCO, J.:
This case involves the bitter quarrel of two brothers over two (2) parcels of land and its improvements now worth a
fortune. The bone of contention is the apparently conflicting factual findings of the trial court and the appellate
court, the resolution of which will materially affect the result of the contest.
The following facts are not disputed.
Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of the full blood. Ishwar and his
spouse Sonya had their main business based in New York. Realizing the difficulty of managing their investments in
the Philippines they executed a general power of attorney on January 24, 1966 appointing Navalrai and Choithram
as attorneys-in-fact, empowering them to manage and conduct their business concern in the Philippines. 1
On February 1, 1966 and on May 16, 1966, Choithram, in his capacity as aforesaid attorney-in-fact of Ishwar,
entered into two agreements for the purchase of two parcels of land located in Barrio Ugong, Pasig, Rizal, from
Ortigas & Company, Ltd. Partnership (Ortigas for short) with a total area of approximately 10,048 square
meters.2 Per agreement, Choithram paid the down payment and installments on the lot with his personal checks. A
building was constructed thereon by Choithram in 1966 and this was occupied and rented by Jethmal Industries and
a wardrobe shop called Eppie's Creation. Three other buildings were built thereon by Choithram through a loan of
P100,000.00 obtained from the Merchants Bank as well as the income derived from the first building. The buildings
were leased out by Choithram as attorney-in-fact of Ishwar. Two of these buildings were later burned.
Sometime in 1970 Ishwar asked Choithram to account for the income and expenses relative to these properties
during the period 1967 to 1970. Choithram failed and refused to render such accounting. As a consequence, on
February 4, 1971, Ishwar revoked the general power of attorney. Choithram and Ortigas were duly notified of such
revocation on April 1, 1971 and May 24, 1971, respectively. 3 Said notice was also registered with the Securities and
Exchange Commission on March 29, 1971 4 and was published in the April 2, 1971 issue of The Manila Times for
the information of the general public. 5
Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights and interests of Ishwar and Sonya
in favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973. Her husband is Moti, son of Choithram.
Upon complete payment of the lots, Ortigas executed the corresponding deeds of sale in favor of Nirmla. 6 Transfer
Certificates of Title Nos. 403150 and 403152 of the Register of Deeds of Rizal were issued in her favor.
Thus, on October 6, 1982, Ishwar and Sonya (spouses Ishwar for short) filed a complaint in the Court of First
Instance of Rizal against Choithram and/or spouses Nirmla and Moti (Choithram et al. for brevity) and Ortigas for
reconveyance of said properties or payment of its value and damages. An amended complaint for damages was
thereafter filed by said spouses.
After the issues were joined and the trial on the merits, a decision was rendered by the trial court on December 3,
1985 dismissing the complaint and counterclaim. A motion for reconsideration thereof filed by spouses Ishwar was
denied on March 3, 1986.
An appeal therefrom was interposed by spouses Ishwar to the Court of Appeals wherein in due course a decision
was promulgated on March 14, 1988, the dispositive part of which reads as follows:

WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed decision of the lower
court dated December 3, 1985 and the Order dated March 3, 1986 which denied plaintiffs-appellants'
Motion for Reconsideration from aforesaid decision. A new decision is hereby rendered sentencing
defendants- appellees Choithram Jethmal Ramnani, Nirmla V. Ramnani, Moti C. Ramnani, and Ortigas and
Company Limited Partnership to pay, jointly and severally, plaintiffs-appellants the following:
1. Actual or compensatory damages to the extent of the fair market value of the properties in question and
all improvements thereon covered by Transfer Certificate of Title No. 403150 and Transfer Certificate of
Title No. 403152 of the Registry of Deeds of Rizal, prevailing at the time of the satisfaction of the
judgment but in no case shall such damages be less than the value of said properties as appraised by Asian
Appraisal, Inc. in its Appraisal Report dated August 1985 (Exhibits T to T-14, inclusive).
2. All rental incomes paid or ought to be paid for the use and occupancy of the properties in question and
all improvements thereon consisting of buildings, and to be computed as follows:
a) On Building C occupied by Eppie's Creation and Jethmal Industries from 1967 to 1973,
inclusive, based on the 1967 to 1973 monthly rentals paid by Eppie's Creation;
b) Also on Building C above, occupied by Jethmal Industries and Lavine from 1974 to 1978, the
rental incomes based on then rates prevailing as shown under Exhibit "P"; and from 1979 to 1981,
based on then prevailing rates as indicated under Exhibit "Q";
c) On Building A occupied by Transworld Knitting Mills from 1972 to 1978, the rental incomes
based upon then prevailing rates shown under Exhibit "P", and from 1979 to 1981, based on
prevailing rates per Exhibit "Q";
d) On the two Bays Buildings occupied by Sigma-Mariwasa from 1972 to 1978, the rentals based
on the Lease Contract, Exhibit "P", and from 1979 to 1980, the rentals based on the Lease
Contract, Exhibit "Q",
and thereafter commencing 1982, to account for and turn over the rental incomes paid or ought to be paid
for the use and occupancy of the properties and all improvements totalling 10,048 sq. m based on the rate
per square meter prevailing in 1981 as indicated annually cumulative up to 1984. Then, commencing 1985
and up to the satisfaction of the judgment, rentals shall be computed at ten percent (10%) annually of the
fair market values of the properties as appraised by the Asian Appraisal, Inc. in August 1985 (Exhibits T to
T-14, inclusive.)
3. Moral damages in the sum of P200,000.00;
4. Exemplary damages in the sum of P100,000.00;
5. Attorney's fees equivalent to 10% of the award herein made;
6. Legal interest on the total amount awarded computed from first demand in 1967 and until the full amount
is paid and satisfied; and
7. The cost of suit. 7
Acting on a motion for reconsideration filed by Choithram, et al. and Ortigas, the appellate court promulgated an
amended decision on October 17, 1988 granting the motion for reconsideration of Ortigas by affirming the dismissal
of the case by the lower court as against Ortigas but denying the motion for reconsideration of Choithram, et al. 8

Choithram, et al. thereafter filed a petition for review of said judgment of the appellate court alleging the following
grounds:
1. The Court of Appeals gravely abused its discretion in making a factual finding not supported by and
contrary, to the evidence presented at the Trial Court.
2. The Court of Appeals acted in excess of jurisdiction in awarding damages based on the value of the real
properties in question where the cause of action of private respondents is recovery of a sum of money.
ARGUMENTS
I
THE COURT OF APPEALS ACTED IN GRAVE ABUSE OF ITS DISCRETION IN MAKING A
FACTUAL FINDING THAT PRIVATE RESPONDENT ISHWAR REMITTED THE AMOUNT OF US
$150,000.00 TO PETITIONER CHOITHRAM IN THE ABSENCE OF PROOF OF SUCH
REMITTANCE.
II
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AND MANIFEST
PARTIALITY IN DISREGARDING THE TRIAL COURTS FINDINGS BASED ON THE DIRECT
DOCUMENTARY AND TESTIMONIAL EVIDENCE PRESENTED BY CHOITHRAM IN THE TRIAL
COURT ESTABLISHING THAT THE PROPERTIES WERE PURCHASED WITH PERSONAL FUNDS
OF PETITIONER CHOITHRAM AND NOT WITH MONEY ALLEGEDLY REMITTED BY
RESPONDENT ISHWAR.
III
THE COURT OF APPEALS ACTED IN EXCESS OF JURISDICTION IN AWARDING DAMAGES
BASED ON THE VALUE OF THE PROPERTIES AND THE FRUITS OF THE IMPROVEMENTS
THEREON. 9
Similarly, spouses Ishwar filed a petition for review of said amended decision of the appellate court exculpating
Ortigas of liability based on the following assigned errors
I
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR AND HAS
DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND/OR WITH
APPLICABLE DECISIONS OF THIS HONORABLE COURT
A) IN PROMULGATING THE QUESTIONED AMENDED DECISION (ANNEX "A")
RELIEVING RESPONDENT ORTIGAS FROM LIABILITY AND DISMISSING
PETITIONERS' AMENDED COMPLAINT IN CIVIL CASE NO. 534-P, AS AGAINST SAID
RESPONDENT ORTIGAS;
B) IN HOLDING IN SAID AMENDED DECISION THAT AT ANY RATE NO ONE EVER
TESTIFIED THAT ORTIGAS WAS A SUBSCRIBER TO THE MANILA TIMES
PUBLICATION OR THAT ANY OF ITS OFFICERS READ THE NOTICE AS PUBLISHED IN
THE MANILA TIMES, THEREBY ERRONEOUSLY CONCLUDING THAT FOR
RESPONDENT ORTIGAS TO BE CONSTRUCTIVELY BOUND BY THE PUBLISHED
NOTICE OF REVOCATION, ORTIGAS AND/OR ANY OF ITS OFFICERS MUST BE A

SUBSCRIBER AND/OR THAT ANY OF ITS OFFICERS SHOULD READ THE NOTICE AS
ACTUALLY PUBLISHED;
C) IN HOLDING IN SAID AMENDED DECISION THAT ORTIGAS COULD NOT BE HELD
LIABLE JOINTLY AND SEVERALLY WITH THE DEFENDANTS-APPELLEES
CHOITHRAM, MOTI AND NIRMLA RAMNANI, AS ORTIGAS RELIED ON THE WORD
OF CHOITHRAM THAT ALL ALONG HE WAS ACTING FOR AND IN BEHALF OF HIS
BROTHER ISHWAR WHEN IT TRANSFERRED THE RIGHTS OF THE LATTER TO
NIRMLA V. RAMNANI;
D) IN IGNORING THE EVIDENCE DULY PRESENTED AND ADMITTED DURING THE
TRIAL THAT ORTIGAS WAS PROPERLY NOTIFIED OF THE NOTICE OF REVOCATION
OF THE GENERAL POWER OF ATTORNEY GIVEN TO CHOITHRAM, EVIDENCED BY
THE PUBLICATION IN THE MANILA TIMES ISSUE OF APRIL 2, 1971 (EXH. F) WHICH
CONSTITUTES NOTICE TO THE WHOLE WORLD; THE RECEIPT OF THE NOTICE OF
SUCH REVOCATION WHICH WAS SENT TO ORTIGAS ON MAY 22, 1971 BY ATTY.
MARIANO P. MARCOS AND RECEIVED BY ORTIGAS ON MAY 24, 1971 (EXH. G) AND
THE FILING OF THE NOTICE WITH THE SECURITIES AND EXCHANGE COMMISSION
ON MARCH 29,1971 (EXH. H);
E) IN DISCARDING ITS FINDINGS CONTAINED IN ITS DECISION OF 14 MARCH 1988
(ANNEX B) THAT ORTIGAS WAS DULY NOTIFIED OF THE REVOCATION OF THE
POWER OF ATTORNEY OF CHOITHRAM, HENCE ORTIGAS ACTED IN BAD FAITH IN
EXECUTING THE DEED OF SALE TO THE PROPERTIES IN QUESTION IN FAVOR OF
NIRMLA V. RAMNANI;
F) IN SUSTAINING RESPONDENT ORTIGAS VACUOUS REHASHED ARGUMENTS IN
ITS MOTION FOR RECONSIDERATION THAT IT WOULD NOT GAIN ONE CENTAVO
MORE FROM CHOITHRAM FOR THE SALE OF SAID LOTS AND THE SUBSEQUENT
TRANSFER OF THE SAME TO THE MATTER'S DAUGHTER-IN-LAW, AND THAT IT
WAS IN GOOD FAITH WHEN IT TRANSFERRED ISHWAR'S RIGHTS TO THE LOTS IN
QUESTION.
II
THE RESPONDENT HONORABLE COURT OF APPEALS HAS SO FAR DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDING WHEN IT HELD IN THE
QUESTIONED AMENDED DECISION OF 17 NOVEMBER 1988 (ANNEX A) THAT RESPONDENT
ORTIGAS & CO., LTD., IS NOT JOINTLY AND SEVERALLY LIABLE WITH DEFENDANTSAPPELLEES CHOITHRAM, MOTI AND NIRMLA RAMNANI IN SPITE OF ITS ORIGINAL
DECISION OF 14 MARCH 1988 THAT ORTIGAS WAS DULY NOTIFIED OF THE REVOCATION
OF THE POWER OF ATTORNEY OF CHOITHRAM RAMNANI. 10
The center of controversy is the testimony of Ishwar that during the latter part of 1965, he sent the amount of US
$150,000.00 to Choithram in two bank drafts of US$65,000.00 and US$85,000.00 for the purpose of investing the
same in real estate in the Philippines. The trial court considered this lone testimony unworthy of faith and credit. On
the other hand, the appellate court found that the trial court misapprehended the facts in complete disregard of the
evidence, documentary and testimonial.
Another crucial issue is the claim of Choithram that because he was then a British citizen, as a temporary
arrangement, he arranged the purchase of the properties in the name of Ishwar who was an American citizen and
who was then qualified to purchase property in the Philippines under the then Parity Amendment. The trial court
believed this account but it was debunked by the appellate court.

As to the issue of whether of not spouses Ishwar actually sent US$150,000.00 to Choithram precisely to be used in
the real estate business, the trial court made the following disquisition
After a careful, considered and conscientious examination of the evidence adduced in the case at bar,
plaintiff Ishwar Jethmal Ramanani's main evidence, which centers on the alleged payment by sending
through registered mail from New York two (2) US$ drafts of $85,000.00 and $65,000.00 in the latter part
of 1965 (TSN 28 Feb. 1984, p. 10-11). The sending of these moneys were before the execution of that
General Power of Attorney, which was dated in New York, on January 24, 1966. Because of these alleged
remittances of US $150,000.00 and the subsequent acquisition of the properties in question, plaintiffs
averred that they constituted a trust in favor of defendant Choithram Jethmal Ramnani. This Court can be
in full agreement if the plaintiffs were only able to prove preponderantly these remittances. The entire
record of this case is bereft of even a shred of proof to that effect. It is completely barren. His
uncorroborated testimony that he remitted these amounts in the "later part of 1965" does not engender
enough faith and credence. Inadequacy of details of such remittance on the two (2) US dollar drafts in such
big amounts is completely not positive, credible, probable and entirely not in accord with human
experience. This is a classic situation, plaintiffs not exhibiting any commercial document or any document
and/or paper as regard to these alleged remittances. Plaintiff Ishwar Ramnani is not an ordinary
businessman in the strict sense of the word. Remember his main business is based in New York, and he
should know better how to send these alleged remittances. Worst, plaintiffs did not present even a scum of
proof, that defendant Choithram Ramnani received the alleged two US dollar drafts. Significantly, he does
not know even the bank where these two (2) US dollar drafts were purchased. Indeed, plaintiff Ishwar
Ramnani's lone testimony is unworthy of faith and credit and, therefore, deserves scant consideration, and
since the plaintiffs' theory is built or based on such testimony, their cause of action collapses or falls with it.
Further, the rate of exchange that time in 1966 was P4.00 to $1.00. The alleged two US dollar drafts
amounted to $150,000.00 or about P600,000.00. Assuming the cash price of the two (2) lots was only
P530,000.00 (ALTHOUGH he said: "Based on my knowledge I have no evidence," when asked if he even
knows the cash price of the two lots). If he were really the true and bonafide investor and purchaser for
profit as he asserted, he could have paid the price in full in cash directly and obtained the title in his name
and not thru "Contracts To Sell" in installments paying interest and thru an attorney-in fact (TSN of May 2,
1984, pp. 10-11) and, again, plaintiff Ishwar Ramnani told this Court that he does not know whether or not
his late father-in-law borrowed the two US dollar drafts from the Swiss Bank or whether or not his late
father-in-law had any debit memo from the Swiss Bank (TSN of May 2, 1984, pp. 9-10). 11
On the other hand, the appellate court, in giving credence to the version of Ishwar, had this to say
While it is true, that generally the findings of fact of the trial court are binding upon the appellate courts,
said rule admits of exceptions such as when (1) the conclusion is a finding grounded entirely on
speculations, surmises and conjectures; (2) when the inferences made is manifestly mistaken, absurd and
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts and when the court, in making its findings, went beyond the issues of the case and
the same are contrary to the admissions of both appellant and appellee (Ramos vs. Court of Appeals, 63
SCRA 33; Philippine American Life Assurance Co. vs. Santamaria, 31 SCRA 798; Aldaba vs. Court of
Appeals, 24 SCRA 189).
The evidence on record shows that the t court acted under a misapprehension of facts and the inferences
made on the evidence palpably a mistake.
The trial court's observation that "the entire records of the case is bereft of even a shred of proof" that
plaintiff-appellants have remitted to defendant-appellee Choithram Ramnani the amount of US $
150,000.00 for investment in real estate in the Philippines, is not borne by the evidence on record and
shows the trial court's misapprehension of the facts if not a complete disregard of the evidence, both
documentary and testimonial.

Plaintiff-appellant Ishwar Jethmal Ramnani testifying in his own behalf, declared that during the latter part
of 1965, he sent the amount of US $150,000.00 to his brother Choithram in two bank drafts of US
$65,000.00 and US $85,000.00 for the purpose of investing the same in real estate in the Philippines. His
testimony is as follows:
ATTY. MARAPAO:
Mr. Witness, you said that your attorney-in-fact paid in your behalf. Can you tell this Honorable
Court where your attorney-in-fact got the money to pay this property?
ATTY. CRUZ:
Wait. It is now clear it becomes incompetent or hearsay.
COURT:
Witness can answer.
A I paid through my attorney-in-fact. I am the one who gave him the money.
ATTY. MARAPAO:
Q You gave him the money?
A That's right.
Q How much money did you give him?
A US $ 150,000.00.
Q How was it given then?
A Through Bank drafts. US $65,000.00 and US $85,000.00 bank drafts. The total amount which is
$ 150,000.00 (TSN, 28 February 1984, p. 10; Emphasis supplied.)
xxx

xxx

xxx

ATTY. CRUZ:
Q The two bank drafts which you sent I assume you bought that from some banks in New York?
A No, sir.
Q But there is no question those two bank drafts were for the purpose of paying down payment
and installment of the two parcels of land?
A Down payment, installment and to put up the building.
Q I thought you said that the buildings were constructed . . . subject to our continuing objection
from rentals of first building?

ATTY. MARAPAO:
Your Honor, that is misleading.
COURT;
Witness (may) answer.
A Yes, the first building was immediately put up after the purchase of the two parcels of land that
was in 1966 and the finds were used for the construction of the building from the US $150,000.00
(TSN, 7 March 1984, page 14; Emphasis supplied.)
xxx

xxx

xxx

Q These two bank drafts which you mentioned and the use for it you sent them by registered mail,
did you send them from New Your?
A That is right.
Q And the two bank drafts which were put in the registered mail, the registered mail was
addressed to whom?
A Choithram Ramnani. (TSN, 7 March 1984, pp. 14-15).
On cross-examination, the witness reiterated the remittance of the money to his brother Choithram, which
was sent to him by his father-in-law, Rochiram L. Mulchandoni from Switzerland, a man of immense
wealth, which even defendants-appellees' witness Navalrai Ramnani admits to be so (tsn., p. 16, S. Oct. 13,
1985). Thus, on cross-examination, Ishwar testified as follows:
Q How did you receive these two bank drafts from the bank the name of which you cannot
remember?
A I got it from my father-in-law.
Q From where did your father- in-law sent these two bank drafts?
A From Switzerland.
Q He was in Switzerland.
A Probably, they sent out these two drafts from Switzerland.
(TSN, 7 March 1984, pp. 16-17; Emphasis supplied.)
This positive and affirmative testimony of plaintiff-appellant that he sent the two (2) bank drafts totalling
US $ 150,000.00 to his brother, is proof of said remittance. Such positive testimony has greater probative
force than defendant-appellee's denial of receipt of said bank drafts, for a witness who testifies
affirmatively that something did happen should be believed for it is unlikely that a witness will remember
what never happened (Underhill's Cr. Guidance, 5th Ed., Vol. 1, pp. 10-11).
That is not all. Shortly thereafter, plaintiff-appellant Ishwar Ramnani executed a General Power of
Attorney (Exhibit "A") dated January 24, 1966 appointing his brothers, defendants-appellees Navalrai and

Choithram as attorney-in-fact empowering the latter to conduct and manage plaintiffs-appellants' business
affairs in the Philippines and specifically
No. 14. To acquire, purchase for us, real estates and improvements for the purpose of real estate
business anywhere in the Philippines and to develop, subdivide, improve and to resell to buying
public (individual, firm or corporation); to enter in any contract of sale in oar behalf and to enter
mortgages between the vendees and the herein grantors that may be needed to finance the real
estate business being undertaken.
Pursuant thereto, on February 1, 1966 and May 16, 1966, Choithram Jethmal Ramnani entered into
Agreements (Exhibits "B' and "C") with the other defendant. Ortigas and Company, Ltd., for the purchase
of two (2) parcels of land situated at Barrio Ugong, Pasig, Rizal, with said defendant-appellee signing the
Agreements in his capacity as Attorney-in-fact of Ishwar Jethmal Ramnani.
Again, on January 5, 1972, almost seven (7) years after Ishwar sent the US $ 150,000.00 in 1965,
Choithram Ramnani, as attorney-in fact of Ishwar entered into a Contract of Lease with Sigma-Mariwasa
(Exhibit "P") thereby re-affirming the ownership of Ishwar over the disputed property and the trust
relationship between the latter as principal and Choithram as attorney-in-fact of Ishwar.
All of these facts indicate that if plaintiff-appellant Ishwar had not earlier sent the US $ 150,000.00 to his
brother, Choithram, there would be no purpose for him to execute a power of attorney appointing his
brothers as s attorney-in-fact in buying real estate in the Philippines.
As against Choithram's denial that he did not receive the US $150,000.00 remitted by Ishwar and that the
Power of Attorney, as well as the Agreements entered into with Ortigas & Co., were only temporary
arrangements, Ishwar's testimony that he did send the bank drafts to Choithram and was received by the
latter, is the more credible version since it is natural, reasonable and probable. It is in accord with the
common experience, knowledge and observation of ordinary men (Gardner vs. Wentors 18 Iowa 533). And
in determining where the superior weight of the evidence on the issues involved lies, the court may
consider the probability or improbability of the testimony of the witness (Sec. 1, Rule 133, Rules of Court).
Contrary, therefore, to the trial court's sweeping observation that 'the entire records of the case is bereft of
even a shred of proof that Choithram received the alleged bank drafts amounting to US $ 150,000.00, we
have not only testimonial evidence but also documentary and circumstantial evidence proving said
remittance of the money and the fiduciary relationship between the former and Ishwar. 12
The Court agrees. The environmental circumstances of this case buttress the claim of Ishwar that he did entrust the
amount of US $ 150,000.00 to his brother, Choithram, which the latter invested in the real property business subject
of this litigation in his capacity as attorney-in-fact of Ishwar.
True it is that there is no receipt whatever in the possession of Ishwar to evidence the same, but it is not unusual
among brothers and close family members to entrust money and valuables to each other without any formalities or
receipt due to the special relationship of trust between them.
And another proof thereof is the fact that Ishwar, out of frustration when Choithram failed to account for the realty
business despite his demands, revoked the general power of attorney he extended to Choithram and Navalrai.
Thereafter, Choithram wrote a letter to Ishwar pleading that the power of attorney be renewed or another authority to
the same effect be extended, which reads as follows:
June 25,1971
MR. ISHWAR JETHMAL
NEW YORK

(1) Send power of Atty. immediately, because the case has been postponed for two weeks. The
same way as it has been send before in favor of both names. Send it immediately otherwise
everything will be lost unnecessarily, and then it will take us in litigation. Now that we have gone
ahead with a case and would like to end it immediately otherwise squatters will take the entire
land. Therefore, send it immediately.
(2) Ortigas also has sued us because we are holding the installments, because they have refused to
give a rebate of P5.00 per meter which they have to give us as per contract. They have filed the
law suit that since we have not paid the installment they should get back the land. The hearing of
this case is in the month of July. Therefore, please send the power immediately. In one case
DADA (Elder Brother) will represent and in another one, I shall.
(3) In case if you do not want to give power then make one letter in favor of Dada and the other
one in my favor showing that in any litigation we can represent you and your wife, and whatever
the court decide it will be acceptable by me. You can ask any lawyer, he will be able to prepare
these letters. After that you can have these letters ratify before P.I. Consulate. It should be dated
April 15, 1971.
(4) Try to send the power because it will be more useful. Make it in any manner whatever way you
have confident in it. But please send it immediately.
You have cancelled the power. Therefore, you have lost your reputation everywhere. What can I further write you
about it. I have told everybody that due to certain reasons I have written you to do this that is why you have done
this. This way your reputation have been kept intact. Otherwise if I want to do something about it, I can show you
that inspite of the power you have cancelled you can not do anything. You can keep this letter because my
conscience is clear. I do not have anything in my mind.
I should not be writing you this, but because my conscience is clear do you know that if I had predated papers what
could you have done? Or do you know that I have many paper signed by you and if had done anything or do then
what can you do about it? It is not necessary to write further about this. It does not matter if you have cancelled the
power. At that time if I had predated and done something about it what could you have done? You do not know me. I
am not after money. I can earn money anytime. It has been ten months since I have not received a single penny for
expenses from Dada (elder brother). Why there are no expenses? We can not draw a single penny from knitting
(factory). Well I am not going to write you further, nor there is any need for it. This much I am writing you because
of the way you have conducted yourself. But remember, whenever I hale the money I will not keep it myself Right
now I have not got anything at all.
I am not going to write any further.
Keep your business clean with Naru. Otherwise he will discontinue because he likes to keep his business very
clean. 13
The said letter was in Sindhi language. It was translated to English by the First Secretary of the Embassy of
Pakistan, which translation was verified correct by the Chairman, Department of Sindhi, University of Karachi. 14
From the foregoing letter what could be gleaned is that
1. Choithram asked for the issuance of another power of attorney in their favor so they can continue to
represent Ishwar as Ortigas has sued them for unpaid installments. It also appears therefrom that Ortigas
learned of the revocation of the power of attorney so the request to issue another.
2. Choithram reassured Ishwar to have confidence in him as he was not after money, and that he was not
interested in Ishwar's money.

3. To demonstrate that he can be relied upon, he said that he could have ante-dated the sales agreement of
the Ortigas lots before the issuance of the powers of attorney and acquired the same in his name, if he
wanted to, but he did not do so.
4. He said he had not received a single penny for expenses from Dada (their elder brother Navalrai). Thus,
confirming that if he was not given money by Ishwar to buy the Ortigas lots, he could not have
consummated the sale.
5. It is important to note that in said letter Choithram never claimed ownership of the property in question.
He affirmed the fact that he bought the same as mere agent and in behalf of Ishwar. Neither did he mention
the alleged temporary arrangement whereby Ishwar, being an American citizen, shall appear to be the buyer
of the said property, but that after Choithram acquires Philippine citizenship, its ownership shall be
transferred to Choithram.
This brings us to this temporary arrangement theory of Choithram.
The appellate court disposed of this matter in this wise
Choithram's claim that he purchased the two parcels of land for himself in 1966 but placed it in the name of
his younger brother, Ishwar, who is an American citizen, as a temporary arrangement,' because as a British
subject he is disqualified under the 1935 Constitution to acquire real property in the Philippines, which is
not so with respect to American citizens in view of the Ordinance Appended to the Constitution granting
them parity rights, there is nothing in the records showing that Ishwar ever agreed to such a temporary
arrangement.
During the entire period from 1965, when the US $ 150,000. 00 was transmitted to Choithram, and until
Ishwar filed a complaint against him in 1982, or over 16 years, Choithram never mentioned of a temporary
arrangement nor can he present any memorandum or writing evidencing such temporary arrangement,
prompting plaintiff-appellant to observe:
The properties in question which are located in a prime industrial site in Ugong, Pasig, Metro
Manila have a present fair market value of no less than P22,364,000.00 (Exhibits T to T-14,
inclusive), and yet for such valuable pieces of property, Choithram who now belatedly that he
purchased the same for himself did not document in writing or in a memorandum the alleged
temporary arrangement with Ishwar' (pp. 4-41, Appellant's Brief).
Such verbal allegation of a temporary arrangement is simply improbable and inconsistent. It has repeatedly
been held that important contracts made without evidence are highly improbable.
The improbability of such temporary arrangement is brought to fore when we consider that Choithram has
a son (Haresh Jethmal Ramnani) who is an American citizen under whose name the properties in question
could be registered, both during the time the contracts to sell were executed and at the time absolute title
over the same was to be delivered. At the time the Agreements were entered into with defendant Ortigas &
Co. in 1966, Haresh, was already 18 years old and consequently, Choithram could have executed the deeds
in trust for his minor son. But, he did not do this. Three (3) years, thereafter, or in 1968 after Haresh had
attained the age of 21, Choithram should have terminated the temporary arrangement with Ishwar, which
according to him would be effective only pending the acquisition of citizenship papers. Again, he did not
do anything.
Evidence to be believed, said Vice Chancellor Van Fleet of New Jersey, must not only proceed
from the mouth of a credible witness, but it must be credible in itselfsuch as the common
experience and observation of mankind can approve as probable under the circumstances. We
have no test of the truth of human testimony, except its conformity to our knowledge, observation

and experience. Whatever is repugnant to these belongs to the miraculous and is outside of judicial
cognizance. (Daggers vs. Van Dyek 37 M.J. Eq. 130, 132).
Another factor that can be counted against the temporary arrangement excuse is that upon the revocation on
February 4, 1971 of the Power of attorney dated January 24, 1966 in favor of Navalrai and Choithram by
Ishwar, Choithram wrote (tsn, p. 21, S. July 19, 1985) a letter dated June 25, 1971 (Exhibits R, R-1, R-2
and R-3) imploring Ishwar to execute a new power of attorney in their favor. That if he did not want to give
power, then Ishwar could make a letter in favor of Dada and another in his favor so that in any litigation
involving the properties in question, both of them could represent Ishwar and his wife. Choithram tried to
convince Ishwar to issue the power of attorney in whatever manner he may want. In said letter no mention
was made at all of any temporary arrangement.
On the contrary, said letter recognize(s) the existence of principal and attorney-in-fact relationship between
Ishwar and himself. Choithram wrote: . . . do you know that if I had predated papers what could you have
done? Or do you know that I have many papers signed by you and if I had done anything or do then what
can you do about it?' Choithram was saying that he could have repudiated the trust and ran away with the
properties of Ishwar by predating documents and Ishwar would be entirely helpless. He was bitter as a
result of Ishwar's revocation of the power of attorney but no mention was made of any temporary
arrangement or a claim of ownership over the properties in question nor was he able to present any
memorandum or document to prove the existence of such temporary arrangement.
Choithram is also estopped in pais or by deed from claiming an interest over the properties in question
adverse to that of Ishwar. Section 3(a) of Rule 131 of the Rules of Court states that whenever a party has,
by his own declaration, act, or omission intentionally and deliberately led another to believe a particular
thing true and act upon such belief, he cannot in any litigation arising out of such declaration, act or
omission be permitted to falsify it.' While estoppel by deed is a bar which precludes a party to a deed and
his privies from asserting as against the other and his privies any right of title in derogation of the deed,
orfrom denying the truth of any material fact asserted in it (31 C.J.S. 195; 19 Am. Jur. 603).
Thus, defendants-appellees are not permitted to repudiate their admissions and representations or to assert
any right or title in derogation of the deeds or from denying the truth of any material fact asserted in the
(1) power of attorney dated January 24, 1966 (Exhibit A); (2) the Agreements of February 1, 1966 and May
16, 1966 (Exhibits B and C); and (3) the Contract of Lease dated January 5, 1972 (Exhibit P).
. . . The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith
and justice, and its purpose is to forbid one to speak against his own act, representations, or
commitments to the injury of one to whom they were directed and who reasonably relied thereon.
The doctrine of estoppel springs from equitable principles and the equities in the case. It is
designed to aid the law in the administration of justice where without its aid injustice might result.
It has been applied by court wherever and whenever special circumstances of a case so demands'
(Philippine National Bank vs. Court of Appeals, 94 SCRA 357, 368 [1979]).
It was only after the services of counsel has been obtained that Choithram alleged for the first time in his
Answer that the General Power of attorney (Annex A) with the Contracts to Sell (Annexes B and C) were
made only for the sole purpose of assuring defendants' acquisition and ownership of the lots described
thereon in due time under the law; that said instruments do not reflect the true intention of the parties (par.
2, Answer dated May 30, 1983), seventeen (17) long years from the time he received the money transmitted
to him by his brother, Ishwar.
Moreover, Choithram's 'temporary arrangement,' by which he claimed purchasing the two (2) parcels in
question in 1966 and placing them in the name of Ishwar who is an American citizen, to circumvent the
disqualification provision of aliens acquiring real properties in the Philippines under the 1935 Philippine
Constitution, as Choithram was then a British subject, show a palpable disregard of the law of the land and

to sustain the supposed "temporary arrangement" with Ishwar would be sanctioning the perpetration of an
illegal act and culpable violation of the Constitution.
Defendants-appellees likewise violated the Anti-Dummy Law (Commonwealth Act 108, as amended), which
provides in Section 1 thereof that:
In all cases in which any constitutional or legal provision requires Philippine or any other specific
citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege, . . . any
alien or foreigner profiting thereby, shall be punished . . . by imprisonment . . . and of a fine of not
less than the value of the right, franchise or privileges, which is enjoyed or acquired in violation of
the provisions hereof . . .
Having come to court with unclean hands, Choithram must not be permitted foist his 'temporary
arrangement' scheme as a defense before this court. Being in delicto, he does not have any right
whatsoever being shielded from his own wrong-doing, which is not so with respect to Ishwar, who was not
a party to such an arrangement.
The falsity of Choithram's defense is further aggravated by the material inconsistencies and contradictions
in his testimony. While on January 23, 1985 he testified that he purchased the land in question on his own
behalf (tsn, p. 4, S. Jan. 23, 1985), in the July 18, 1985 hearing, forgetting probably what he stated before,
Choithram testified that he was only an attorney-in-fact of Ishwar (tsn, p. 5, S. July 18, 1985). Also in the
hearing of January 23, 1985, Choithram declared that nobody rented the building that was constructed on
the parcels of land in question (tsn, pp. 5 and 6), only to admit in the hearing of October 30, 1985, that he
was in fact renting the building for P12,000. 00 per annum (tsn, p. 3). Again, in the hearing of July 19,
1985, Choithram testified that he had no knowledge of the revocation of the Power of Attorney (tsn, pp. 2021), only to backtrack when confronted with the letter of June 25, 1971 (Exhibits R to R-3), which he
admitted to be in "his own writing," indicating knowledge of the revocation of the Power of Attorney.
These inconsistencies are not minor but go into the entire credibility of the testimony of Choithram and the
rule is that contradictions on a very crucial point by a witness, renders s testimony incredible People vs.
Rafallo, 80 Phil. 22). Not only this the doctrine of falsus in uno, falsus in omnibus is fully applicable as far
as the testimony of Choithram is concerned. The cardinal rule, which has served in all ages, and has been
applied to all conditions of men, is that a witness willfully falsifying the truth in one particular, when upon
oath, ought never to be believed upon the strength of his own testimony, whatever he may assert (U.S. vs.
Osgood 27 Feb. Case No. 15971-a, p. 364); Gonzales vs. Mauricio, 52 Phil, 728), for what ground of
judicial relief can there be left when the party has shown such gross insensibility to the difference between
right and wrong, between truth and falsehood? (The Santisima Trinidad, 7 Wheat, 283, 5 U.S. [L. ed.] 454).
True, that Choithram's testimony finds corroboration from the testimony of his brother, Navalrai, but the
same would not be of much help to Choithram. Not only is Navalrai an interested and biased witness,
having admitted his close relationship with Choithram and that whenever he or Choithram had problems,
they ran to each other (tsn, pp. 17-18, S. Sept. 20, 1985), Navalrai has a pecuniary interest in the success of
Choithram in the case in question. Both he and Choithram are business partners in Jethmal and Sons and/or
Jethmal Industries, wherein he owns 60% of the company and Choithram, 40% (p. 62, Appellant's Brief).
Since the acquisition of the properties in question in 1966, Navalrai was occupying 1,200 square meters
thereof as a factory site plus the fact that his son (Navalrais) was occupying the apartment on top of the
factory with his family rent free except the amount of P l,000.00 a month to pay for taxes on said properties
(tsn, p. 17, S. Oct. 3, 1985).
Inherent contradictions also marked Navalrai testimony. "While the latter was very meticulous in keeping a
receipt for the P 10,000.00 that he paid Ishwar as settlement in Jethmal Industries, yet in the alleged
payment of P 100,000.00 to Ishwar, no receipt or voucher was ever issued by him (tsn, p. 17, S. Oct. 3,
1983). 15

We concur.
The foregoing findings of facts of the Court of Appeals which are supported by the evidence is conclusive on this
Court. The Court finds that Ishwar entrusted US$150,000.00 to Choithram in 1965 for investment in the realty
business. Soon thereafter, a general power of attorney was executed by Ishwar in favor of both Navalrai and
Choithram. If it is true that the purpose only is to enable Choithram to purchase realty temporarily in the name of
Ishwar, why the inclusion of their elder brother Navalrai as an attorney-in-fact?
Then, acting as attorney-in-fact of Ishwar, Choithram purchased two parcels of land located in Barrio Ugong Pasig,
Rizal, from Ortigas in 1966. With the balance of the money of Ishwar, Choithram erected a building on said lot.
Subsequently, with a loan obtained from a bank and the income of the said property, Choithram constructed three
other buildings thereon. He managed the business and collected the rentals. Due to their relationship of confidence it
was only in 1970 when Ishwar demanded for an accounting from Choithram. And even as Ishwar revoked the
general power of attorney on February 4, 1971, of which Choithram was duly notified, Choithram wrote to Ishwar
on June 25, 1971 requesting that he execute a new power of attorney in their favor. 16 When Ishwar did not respond
thereto, Choithram nevertheless proceeded as such attorney-in-fact to assign all the rights and interest of Ishwar to
his daughter-in-law Nirmla in 1973 without the knowledge and consent of Ishwar. Ortigas in turn executed the
corresponding deeds of sale in favor of Nirmla after full payment of the purchase accomplice of the lots.
In the prefatory statement of their petition, Choithram pictured Ishwar to be so motivated by greed and
ungratefulness, who squandered the family business in New York, who had to turn to his wife for support,
accustomed to living in ostentation and who resorted to blackmail in filing several criminal and civil suits against
them. These statements find no support and should be stricken from the records. Indeed, they are irrelevant to the
proceeding.
Moreover, assuming Ishwar is of such a low character as Choithram proposes to make this Court to believe, why is
it that of all persons, under his temporary arrangement theory, Choithram opted to entrust the purchase of valuable
real estate and built four buildings thereon all in the name of Ishwar? Is it not an unconscious emergence of the truth
that this otherwise wayward brother of theirs was on the contrary able to raise enough capital through the generosity
of his father-in-law for the purchase of the very properties in question? As the appellate court aptly observed if truly
this temporary arrangement story is the only motivation, why Ishwar of all people? Why not the own son of
Choithram, Haresh who is also an American citizen and who was already 18 years old at the time of purchase in
1966? The Court agrees with the observation that this theory is an afterthought which surfaced only when
Choithram, Nirmla and Moti filed their answer.
When Ishwar asked for an accounting in 1970 and revoked the general power of attorney in 1971, Choithram had a
total change of heart. He decided to claim the property as his. He caused the transfer of the rights and interest of
Ishwar to Nirmla. On his representation, Ortigas executed the deeds of sale of the properties in favor of Nirmla.
Choithram obviously surmised Ishwar cannot stake a valid claim over the property by so doing.
Clearly, this transfer to Nirmla is fictitious and, as admitted by Choithram, was intended only to place the property
in her name until Choithram acquires Philippine citizenship. 17 What appears certain is that it appears to be a scheme
of Choithram to place the property beyond the reach of Ishwar should he successfully claim the same. Thus, it must
be struck down.
Worse still, on September 27, 1990 spouses Ishwar filed an urgent motion for the issuance of a writ of preliminary
attachment and to require Choithram, et al. to submit certain documents, inviting the attention of this Court to the
following:
a) Donation by Choithram of his 2,500 shares of stock in General Garments Corporation in favor of his
children on December 29, 1989; 18
b) Sale on August 2, 1990 by Choithram of his 100 shares in Biflex (Phils.), Inc., in favor of his
children; 19and

c) Mortgage on June 20, 1989 by Nirmla through her attorney-in-fact, Choithram, of the properties subject
of this litigation, for the amount of $3 Million in favor of Overseas Holding, Co. Ltd., (Overseas for
brevity), a corporation which appears to be organized and existing under and by virtue of the laws of
Cayman Islands, with a capital of only $100.00 divided into 100 shares of $1.00 each, and with address at
P.O. Box 1790, Grand Cayman, Cayman Islands. 20
An opposition thereto was filed by Choithram, et al. but no documents were produced. A manifestation and reply to
the opposition was filed by spouses Ishwar.
All these acts of Choithram, et al. appear to be fraudulent attempts to remove these properties to the detriment of
spouses Ishwar should the latter prevail in this litigation.
On December 10, 1990 the court issued a resolution that substantially reads as follows:
Considering the allegations of petitioners Ishwar Jethmal Ramnani and Sonya Ramnani that respondents
Choithram Jethmal Ramnani, Nirmla Ramnani and Moti G. Ramnani have fraudulently executed a
simulated mortgage of the properties subject of this litigation dated June 20, 1989, in favor of Overseas
Holding Co., Ltd. which appears to be a corporation organized in Cayman Islands, for the amount of $
3,000,000.00, which is much more than the value of the properties in litigation; that said alleged mortgagee
appears to be a "shell" corporation with a capital of only $100.00; and that this alleged transaction appears
to be intended to defraud petitioners Ishwar and Sonya Jethmal Ramnani of any favorable judgment that
this Court may render in this case;
Wherefore the Court Resolved to issue a writ of preliminary injunction enjoining and prohibiting said
respondents Choithram Jethmal Ramnani, Nirmla V. Ramnani, Moti G. Ramnani and the Overseas Holding
Co., Ltd. from encumbering, selling or otherwise disposing of the properties and improvements subject of
this litigation until further orders of the Court. Petitioners Ishwar and Sonya Jethmal Ramnani are hereby
required to post a bond of P 100,000.00 to answer for any damages d respondents may suffer by way of this
injunction if the Court finally decides the said petitioners are not entitled thereto.
The Overseas Holding Co., Ltd. with address at P.O. Box 1790 Grand Cayman, Cayman Islands, is hereby
IMPLEADED as a respondent in these cases, and is hereby required to SUBMIT its comment on the
Urgent Motion for the Issuance of a Writ of Preliminary Attachment and Motion for Production of
Documents, the Manifestation and the Reply to the Opposition filed by said petitioners, within Sixty (60)
days after service by publication on it in accordance with the provisions of Section 17, Rule 14 of the Rules
of Court, at the expense of petitioners Ishwar and Sonya Jethmal Ramnani.
Let copies of this resolution be served on the Register of Deeds of Pasig, Rizal, and the Provincial Assessor
of Pasig, Rizal, both in Metro Manila, for its annotation on the transfer Certificates of Titles Nos. 403150
and 403152 registered in the name of respondent Nirmla V. Ramnani, and on the tax declarations of the
said properties and its improvements subject of this litigation. 21
The required injunction bond in the amount of P 100,000.00 was filed by the spouses Ishwar which was approved by
the Court. The above resolution of the Court was published in the Manila Bulletin issue of December 17, 1990 at the
expense of said spouses. 22 On December 19, 1990 the said resolution and petition for review with annexes in G.R.
Nos. 85494 and 85496 were transmitted to respondent Overseas, Grand Cayman Islands at its address c/o Cayman
Overseas Trust Co. Ltd., through the United Parcel Services Bill of Lading 23 and it was actually delivered to said
company on January 23, 1991. 24
On January 22, 1991, Choithram, et al., filed a motion to dissolve the writ of preliminary injunction alleging that
there is no basis therefor as in the amended complaint what is sought is actual damages and not a reconveyance of
the property, that there is no reason for its issuance, and that acts already executed cannot be enjoined. They also
offered to file a counterbond to dissolve the writ.

A comment/opposition thereto was filed by spouses Ishwar that there is basis for the injunction as the alleged
mortgage of the property is simulated and the other donations of the shares of Choithram to his children are
fraudulent schemes to negate any judgment the Court may render for petitioners.
No comment or answer was filed by Overseas despite due notice, thus it is and must be considered to be in default
and to have lost the right to contest the representations of spouses Ishwar to declare the aforesaid alleged mortgage
nun and void.
This purported mortgage of the subject properties in litigation appears to be fraudulent and simulated. The stated
amount of $3 Million for which it was mortgaged is much more than the value of the mortgaged properties and its
improvements. The alleged mortgagee-company (Overseas) was organized only on June 26,1989 but the mortgage
was executed much earlier, on June 20, 1989, that is six (6) days before Overseas was organized. Overseas is a
"shelf" company worth only $100.00. 25 In the manifestation of spouses Ishwar dated April 1, 1991, the Court was
informed that this matter was brought to the attention of the Central Bank (CB) for investigation, and that in a letter
of March 20, 1991, the CB informed counsel for spouses Ishwar that said alleged foreign loan of Choithram, et al.
from Overseas has not been previously approved/registered with the CB. 26
Obviously, this is another ploy of Choithram, et al. to place these properties beyond the reach of spouses Ishwar
should they obtain a favorable judgment in this case. The Court finds and so declares that this alleged mortgage
should be as it is hereby declared null and void.
All these contemporaneous and subsequent acts of Choithram, et al., betray the weakness of their cause so they had
to take an steps, even as the case was already pending in Court, to render ineffective any judgment that may be
rendered against them.
The problem is compounded in that respondent Ortigas is caught in the web of this bitter fight. It had all the time
been dealing with Choithram as attorney-in-fact of Ishwar. However, evidence had been adduced that notice in
writing had been served not only on Choithram, but also on Ortigas, of the revocation of Choithram's power of
attorney by Ishwar's lawyer, on May 24, 1971. 27 A publication of said notice was made in the April 2, 1971 issue
of The Manila Times for the information of the general public. 28 Such notice of revocation in a newspaper of
general circulation is sufficient warning to third persons including Ortigas. 29 A notice of revocation was also
registered with the Securities and Exchange Commission on March 29, 1 971. 30
Indeed in the letter of Choithram to Ishwar of June 25, 1971, Choithram was pleading that Ishwar execute another
power of attorney to be shown to Ortigas who apparently learned of the revocation of Choithram's power of
attorney. 31 Despite said notices, Ortigas nevertheless acceded to the representation of Choithram, as alleged
attorney-in-fact of Ishwar, to assign the rights of petitioner Ishwar to Nirmla. While the primary blame should be
laid at the doorstep of Choithram, Ortigas is not entirely without fault. It should have required Choithram to secure
another power of attorney from Ishwar. For recklessly believing the pretension of Choithram that his power of
attorney was still good, it must, therefore, share in the latter's liability to Ishwar.
In the original complaint, the spouses Ishwar asked for a reconveyance of the properties and/or payment of its
present value and damages. 32 In the amended complaint they asked, among others, for actual damages of not less
than the present value of the real properties in litigation, moral and exemplary damages, attorneys fees, costs of the
suit and further prayed for "such other reliefs as may be deemed just and equitable in the premises . 33 The amended
complaint contain the following positive allegations:
7. Defendant Choithram Ramnani, in evident bad faith and despite due notice of the revocation of the
General Power of Attorney, Annex 'D" hereof, caused the transfer of the rights over the said parcels of land
to his daughter-in-law, defendant Nirmla Ramnani in connivance with defendant Ortigas & Co., the latter
having agreed to the said transfer despite receiving a letter from plaintiffs' lawyer informing them of the
said revocation; copy of the letter is hereto attached and made an integral part hereof as Annex "H";

8. Defendant Nirmla Ramnani having acquired the aforesaid property by fraud is, by force of law,
considered a trustee of an implied trust for the benefit of plaintiff and is obliged to return the same to the
latter:
9. Several efforts were made to settle the matter within the family but defendants (Choithram Ramnani,
Nirmla Ramnani and Moti Ramnani) refused and up to now fail and still refuse to cooperate and respond to
the same; thus, the present case;
10. In addition to having been deprived of their rights over the properties (described in par. 3 hereof),
plaintiffs, by reason of defendants' fraudulent act, suffered actual damages by way of lost rental on the
property which defendants (Choithram Ramnani, Nirmla Ramnani and Moti Ramnani have collected for
themselves; 34
In said amended complaint, spouses Ishwar, among others, pray for payment of actual damages in an amount no less
than the value of the properties in litigation instead of a reconveyance as sought in the original complaint.
Apparently they opted not to insist on a reconveyance as they are American citizens as alleged in the amended
complaint.
The allegations of the amended complaint above reproduced clearly spelled out that the transfer of the property to
Nirmla was fraudulent and that it should be considered to be held in trust by Nirmla for spouses Ishwar. As abovediscussed, this allegation is well-taken and the transfer of the property to Nirmla should be considered to have
created an implied trust by Nirmla as trustee of the property for the benefit of spouses Ishwar. 35
The motion to dissolve the writ of preliminary injunction filed by Choithram, et al. should be denied. Its issuance by
this Court is proper and warranted under the circumstances of the case. Under Section 3(c) Rule 58 of the Rules of
Court, a writ of preliminary injunction may be granted at any time after commencement of the action and before
judgment when it is established:
(c) that the defendant is doing, threatens, or is about to do, or is procuring or suffering to be done, some act
probably in violation of plaintiffs's rights respecting the subject of the action, and tending to render the
judgment ineffectual.
As above extensively discussed, Choithram, et al. have committed and threaten to commit further acts of disposition
of the properties in litigation as well as the other assets of Choithram, apparently designed to render ineffective any
judgment the Court may render favorable to spouses Ishwar.
The purpose of the provisional remedy of preliminary injunction is to preserve the status quo of the things subject of
the litigation and to protect the rights of the spouses Ishwar respecting the subject of the action during the pendency
of the Suit 36 and not to obstruct the administration of justice or prejudice the adverse party. 37 In this case for
damages, should Choithram, et al. continue to commit acts of disposition of the properties subject of the litigation,
an award of damages to spouses Ishwar would thereby be rendered ineffectual and meaningless. 38
Consequently, if only to protect the interest of spouses Ishwar, the Court hereby finds and holds that the motion for
the issuance of a writ of preliminary attachment filed by spouses Ishwar should be granted covering the properties
subject of this litigation.
Section 1, Rule 57 of the Rules of Court provides that at the commencement of an action or at any time thereafter,
the plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction
of any judgment that may be recovered, in, among others, the following cases:
(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the
obligation upon which the action is brought, or in concealing or disposing of the property for the taking,
detention or conversion of which the action is brought;

(e) In an action against a party who has removed or disposed of his property, or is about to do so, with
intent to defraud his creditors; . . .
Verily, the acts of Choithram, et al. of disposing the properties subject of the litigation disclose a scheme to defraud
spouses Ishwar so they may not be able to recover at all given a judgment in their favor, the requiring the issuance of
the writ of attachment in this instance.
Nevertheless, under the peculiar circumstances of this case and despite the fact that Choithram, et al., have
committed acts which demonstrate their bad faith and scheme to defraud spouses Ishwar and Sonya of their rightful
share in the properties in litigation, the Court cannot ignore the fact that Choithram must have been motivated by a
strong conviction that as the industrial partner in the acquisition of said assets he has as much claim to said
properties as Ishwar, the capitalist partner in the joint venture.
The scenario is clear. Spouses Ishwar supplied the capital of $150,000.00 for the business.1wphi1 They entrusted
the money to Choithram to invest in a profitable business venture in the Philippines. For this purpose they appointed
Choithram as their attorney-in-fact.
Choithram in turn decided to invest in the real estate business. He bought the two (2) parcels of land in question
from Ortigas as attorney-in-fact of Ishwar- Instead of paying for the lots in cash, he paid in installments and used the
balance of the capital entrusted to him, plus a loan, to build two buildings. Although the buildings were burned later,
Choithram was able to build two other buildings on the property. He rented them out and collected the rentals.
Through the industry and genius of Choithram, Ishwar's property was developed and improved into what it is now
a valuable asset worth millions of pesos. As of the last estimate in 1985, while the case was pending before the trial
court, the market value of the properties is no less than P22,304,000.00. 39 It should be worth much more today.
We have a situation where two brothers engaged in a business venture. One furnished the capital, the other
contributed his industry and talent. Justice and equity dictate that the two share equally the fruit of their joint
investment and efforts. Perhaps this Solomonic solution may pave the way towards their reconciliation. Both would
stand to gain. No one would end up the loser. After all, blood is thicker than water.
However, the Court cannot just close its eyes to the devious machinations and schemes that Choithram employed in
attempting to dispose of, if not dissipate, the properties to deprive spouses Ishwar of any possible means to recover
any award the Court may grant in their favor. Since Choithram, et al. acted with evident bad faith and malice, they
should pay moral and exemplary damages as well as attorney's fees to spouses Ishwar.
WHEREFORE, the petition in G.R. No. 85494 is DENIED, while the petition in G.R. No. 85496 is hereby given
due course and GRANTED. The judgment of the Court of Appeals dated October 18, 1988 is hereby modified as
follows:
1. Dividing equally between respondents spouses Ishwar, on the one hand, and petitioner Choithram Ramnani, on
the other, (in G.R. No. 85494) the two parcels of land subject of this litigation, including all the improvements
thereon, presently covered by transfer Certificates of Title Nos. 403150 and 403152 of the Registry of Deeds, as
well as the rental income of the property from 1967 to the present.
2. Petitioner Choithram Jethmal Ramnani, Nirmla V. Ramnani, Moti C. Ramnani and respondent Ortigas and
Company, Limited Partnership (in G.R. No. 85496) are ordered solidarily to pay in cash the value of said one-half
(1/2) share in the said land and improvements pertaining to respondents spouses Ishwar and Sonya at their fair
market value at the time of the satisfaction of this judgment but in no case less than their value as appraised by the
Asian Appraisal, Inc. in its Appraisal Report dated August 1985 (Exhibits T to T-14, inclusive).
3. Petitioners Choithram, Nirmla and Moti Ramnani and respondent Ortigas & Co., Ltd. Partnership shall also be
jointly and severally liable to pay to said respondents spouses Ishwar and Sonya Ramnani one-half (1/2) of the total
rental income of said properties and improvements from 1967 up to the date of satisfaction of the judgment to be
computed as follows:

a. On Building C occupied by Eppie's Creation and Jethmal Industries from 1967 to 1973,
inclusive, based on the 1967 to 1973 monthly rentals paid by Eppie's Creation;
b. Also on Building C above, occupied by Jethmal Industries and Lavine from 1974 to 1978, the
rental incomes based on then rates prevailing as shown under Exhibit "P"; and from 1979 to 1981,
based on then prevailing rates as indicated under Exhibit "Q";
c. On Building A occupied by Transworld Knitting Mills from 1972 to 1978, the rental incomes
based upon then prevailing rates shown under Exhibit "P", and from 1979 to 1981, based on
prevailing rates per Exhibit "Q";
d. On the two Bays Buildings occupied by Sigma-Mariwasa from 1972 to 1978, the rentals based
on the Lease Contract, Exhibit "P", and from 1979 to 1980, the rentals based on the Lease
Contract, Exhibit "Q".
and thereafter commencing 1982, to account for and turn over the rental incomes paid or ought to be paid for the use
and occupancy of the properties and all improvements totalling 10,048 sq. m., based on the rate per square meter
prevailing in 1981 as indicated annually cumulative up to 1984. Then, commencing 1985 and up to the satisfaction
of the judgment, rentals shall be computed at ten percent (10%) annually of the fair market values of the properties
as appraised by the Asian Appraisals, Inc. in August 1985. (Exhibits T to T-14, inclusive.)
4. To determine the market value of the properties at the time of the satisfaction of this judgment and the total rental
incomes thereof, the trial court is hereby directed to hold a hearing with deliberate dispatch for this purpose only and
to have the judgment immediately executed after such determination.
5. Petitioners Choithram, Nirmla and Moti, all surnamed Ramnani, are also jointly and severally liable to pay
respondents Ishwar and Sonya Ramnani the amount of P500,000.00 as moral damages, P200,000.00 as exemplary
damages and attorney's fees equal to 10% of the total award. to said respondents spouses.
6. The motion to dissolve the writ of preliminary injunction dated December 10, 1990 filed by petitioners
Choithram, Nirmla and Moti, all surnamed Ramnani, is hereby DENIED and the said injunction is hereby made
permanent. Let a writ of attachment be issued and levied against the properties and improvements subject of this
litigation to secure the payment of the above awards to spouses Ishwar and Sonya.
7. The mortgage constituted on the subject property dated June 20, 1989 by petitioners Choithram and Nirmla, both
surnamed Ramnani in favor of respondent Overseas Holding, Co. Ltd. (in G.R. No. 85496) for the amount of $3-M
is hereby declared null and void. The Register of Deeds of Pasig, Rizal, is directed to cancel the annotation of d
mortgage on the titles of the properties in question.
8. Should respondent Ortigas Co., Ltd. Partnership pay the awards to Ishwar and Sonya Ramnani under this
judgment, it shall be entitled to reimbursement from petitioners Choithram, Nirmla and Moti, all surnamed
Ramnani.
9. The above awards shag bear legal rate of interest of six percent (6%) per annum from the time this judgment
becomes final until they are fully paid by petitioners Choithram Ramnani, Nirmla V. Ramnani, Moti C. Ramnani
and Ortigas, Co., Ltd. Partnership. Said petitioners Choithram, et al. and respondent Ortigas shall also pay the costs.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.