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Evidence Part II

II. WHAT NEED NOT BE PROVED

A. RULE 129, SECTIONS 1-4;

RULE 129

WHAT NEED NOT BE PROVED

SECTION 1. Judicial notice, when mandatory. A court shall take


judicial notice, without the introduction of evidence, of the existence
and territorial extent of states, their political history, forms of
government and symbols of nationality, the law of nations, the admiralty
and maritime courts of the world and their seals, the political
constitution and history of the Philippines, the official acts of the
legislative, executive and judicial departments of the Philippines, the
laws of nature, the measure of time, and the geographical divisions.
(1a)

SECTION 2. Judicial notice, when discretionary. A court may take


judicial notice of matters which are of public knowledge, or are capable
of unquestionable demonstration, or ought to be known to judges
because of their judicial functions. (1a)

SECTION 3. Judicial notice, when hearing necessary. During the


trial, the court, on its own initiative, or on the request of a party, may
announce its intention to take judicial notice of any matter and allow the
parties to be heard thereon.

After trial, and before judgment or on appeal, the proper court, on its
own initiative or on request of a party, may take judicial notice of any
matter and allow the parties to be heard thereon if such matter is
decisive of a material issue in the case. (n)

SECTION 4. Judicial Admissions. An admission, verbal or written,


made by a party in the course of the proceedings in the same case,
does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such
admission was made. (2a)

RULE 10, SECTION 8

SECTION 8. Effect of amended pleadings. An amended pleading


supersedes the pleading that it amends. However, admissions in
superseded pleadings may be received in evidence against the
pleader; and claims or defenses alleged therein not incorporated in the
amended pleading shall be deemed waived.

CASES:

1. JUDICIAL NOTICE

City of Manila vs. Garcia

19 SCRA 413 (1967)

Judicial Notice

FACTS:
Finding that it was necessary to expand the school grounds of Epifanio de los
Santos Elementary School, Manilas City Engineer, pursuant to the Mayors
directive, ordered the illegal occupants/squatters (defendants) to vacate the property
contiguous to the school. The defendants refused to vacate, thus, prompting the
City of Manila to file a suit to recover possession over the land. The Court of First
Instance (CFI) of Manila favored the plaintiff. Consequently, the squatters appealed
and questioned the lower courts finding that the city needs the premises for school
purposes. The citys evidence on this point was the certification of the Chairman
Committee on Appropriations of the Municipal Board. The certification recites that
the amount of P100,000 had been set aside in Ordinance 4566, the 1962-63 Manila
City Budget, for the construction of an additional building of the elementary school.
The said document was originally deemed inadmissible, but was, subsequently,
admitted into evidence by the lower court. Hence, the defendants appealed.

ISSUE:
Whether or not the CFI of Manila had properly found that the City of Manila
needs the premises for school purposes (considering that it had a contradictory
stance regarding the admissibility of the evidence of the City on this point).
RULING:
The CFI of Manila properly found that the city needs the premises for school
purposes. It is beyond debate that a court of justice may alter its ruling while the
case is within its power, to make it conformable to law and justice. Such was done
here. The defendants remedy was to bring the attention of the court to its
contradictory stance. Not having done so, the Supreme Court will not reopen the
case solely for this purpose. Anyway, elimination of the certification as
evidence would not benefit the defendants. For in reversing his stand, the trial judge
could have well taken because he was duty bound to take judicial notice of
Ordinance 4566. The reason being that the city charter of Manila requires that all
courts sitting therein to take judicial notice of all ordinances passed by the municipal
board of Manila.

By: Aaron Roi B Riturban


Baguio vs. . Vda de Jalagat

42 SCRA 337 (1971)

Judicial Notice

FACTS:

GABRIEL BAGUIO filed for the quieting of title to real property against
TEOFILA JALAGAT and her minor children with the Court of First Instance (CFI) of
Misamis Oriental. The Jalagats filed a motion to dismiss on the ground that the
present complaint is barred by a previous judgment rendered by the same court.
The previous case involved practically the same property, the same cause of action,
and the same parties, with Melecio Jalagat (Teofilas deceased husband and
predecessor in interest) as the defendant. The previous case was terminated with
the court dismissing Baguios complaint.

Acting on the motion and taking judicial notice of its previous judgment, the
lower court dismissed the present complaint on the ground of res judicata.
Consequently, Baguio appealed the order of dismissal. He claimed that for the
ground of res judicata to suffice as a basis for dismissal it must be apparent on the
face of the complaint.

ISSUE:

Whether or not the CFI of Misamis Oriental was correct in finding that there
was res judicata by taking judicial notice of its previous judgment.

RULING:

THE CFI OF MISAMIS ORIENTAL WAS CORRECT IN TAKING JUDICIAL


OF ITS PREVIOUS JUDGMENT. It ought to be clear even to the appellant that
under the circumstances, the lower court certainly could take judicial notice of the
finality of judgment in a case that was previously pending and thereafter decided by
it. That was all that was done by the lower court in decreeing the dismissal.
Certainly, such an order is not contrary to law. The Supreme Court quoted Chief
Justice Morgan, who said: Courts have also taken judicial notice of previous cases
to determine whether or not the case pending is a moot one or whether or not the
previous ruling is applicable in the case under consideration.

By: Aaron Roi B Riturban

Prieto vs. Arroyo

14 SCRA 549 (1965)

Judicial Notice

FACTS:

ZEFERINO ARROYO and GABRIEL PRIETO were registered owners of


adjoining lots in Camarines Sur. After Zeferino died, his heirs had a new certificate
of title registered in their names. Subsequently, the heirs discovered that the
technical description set forth in their transfer certificate of title and in the original
certificate of title did not conform with that embodied in the decision of the land
registration court (which registered the land in Zeferinos name), and was less in
area by 157 square meters. They, therefore, filed a petition for the correction of the
said description in their titles. Thereafter, the court issued an order directing the
correction of the technical description of the land covered by their title.

Gabriel filed a petition to annul the order granting the correction claiming that
the 157 square meters were unduly taken from his lot. However, his petition was
dismissed for failure to prosecute. Thus, Gabriel filed a second petition containing
similar allegations. As expected, the court dismissed his second petition on the
ground of res judicata.

Hence, Gabriel appealed to the Supreme Court to question the dismissal of


his second petition. He insisted that there was no res judicata since the dismissal of
his first petition was erroneous. He claimed that the lower court should have not
dismissed his first petition for failure to prosecute because no parole evidence
need be taken to support it, the matters therein alleged being part of the records
land registration proceedings, which were well within the judicial notice and
cognizance of the court.
ISSUE:

Whether or not the Court of First Instance (CFI) of Camarines Sur (in
dismissing the first petition of Gabriel) erred in not taking judicial notice of the parts
of the records of the land registration proceedings that would have supported
Gabriels allegations, thus, making the dismissal for failure to prosecute erroneous.

RULING:

THE CFI OF CAMARINES SUR WAS CORRECT IN NOT TAKING JUDICIAL


NOTICE OF THE RECORDS THE LAND REGISTRATION PROCEEDINGS. As a
general rule, courts are not authorized to take judicial notice, in the adjudication of
the cases pending before them, of the contents of other cases, even when such
cases have been tried or are pending in the same court, and notwithstanding the
fact that both cases may have been tried or actually pending before the same judge.
Besides, if Gabriel really wanted the court to take judicial notice of such records, he
should have presented the proper request or manifestation to that effect. For failing
to do so in the appropriate time, the dismissal of the first petition is now valid and
binding on him. Thus, the dismissal on the ground of res judicata must be
sustained.

By: Aaron Roi B Riturban

Yao-Kee vs. Sy-Gonzales

167 SCRA 736 (1988)

Judicial Notice

FACTS:

Sy Kiat, a Chinese national, died intestate, leaving real and personal


properties in the Philippines. AIDA SY-GONZALES and the other children of Sy with
Asuncion Gillego filed a petition for the settlement of his estate. YAO KEE filed her
opposition to the petition claiming that she is the legitimate wife of Sy. The probate
court sustained the validity of Yaos marriage to Sy, but the Court of Appeals (CA)
reversed the lower courts decision and held that the petitioners and Yaos children
were all of illegitimate status. The CA ruled that the marriage between Yao and Sy
was not proven to be valid under the Chinese laws.

Hence, Yao filed a petition for review with the Supreme Court claiming that the
CA erred in holding that the validity of the foreign marriage between Yao and Sy had
not been proven. To support this contention, Yao claimed that the CA should have
taken judicial notice of the Chinese laws on marriage which show the validity of her
marriage to Sy.
ISSUE:
Whether or not the CA should take judicial notice of foreign laws (i.e. Chinese
laws on marriage), thus, relieving Yao of her duty of proving the validity of her
marriage under Chinese laws.
RULING:
COURTS CANNOT TAKE JUDICIAL NOTICE OF FOREIGN LAWS. Under
the Philippine jurisprudence, to establish a valid foreign marriage two things must be
proven: (1) the existence of the foreign law as a question of fact; and (2) the alleged
foreign marriage by convincing evidence. Though Yao may have established the
fact of marriage, she has failed to prove the Chinese laws on marriage that would
show the validity of her marriage to Sy. Well-established is the rule that
Philippine courts cannot take judicial notice of foreign laws or customs. They must
be alleged and proved as any other fact. On this point, Yao cannot rely on a the
case of Sy Joc Lieng v. Sy Quia (16 Phil. 137 (1910)) to prove her case. The ruling
that case did not show that the court took judicial notice of Chinese laws on
marriages. Even assuming for the sake of argument that the court did take judicial
notice of Chinese laws or customs on foreign marriages in that case, Yao still failed
to show that the law assumed to recognized in Sy Joc Lieng case (wherein the
marriage was celebrated in 1847) was still applicable during the time of her marriage
to Sy, which took place 84 years later. Hence, the CA was correct in considering that
the validity of the marriage between Yao and Sy has not been established.

By: Aaron Roi B Riturban

Tabuena vs. Court of Appeals

196 SCRA 650 (1991)

Judicial Notice
FACTS:

The subject of the dispute is a parcel of residential land of about 440 sq.
meters in Makato, Aklan. In 1973, an action for recovery of ownership was filed by
the estate of Alfredo Tabernilla against Jose Tabuena. After trial, the court ordered
Tabuena to return the property to Tabernilla.
At the trial, it was found that the lot was sold by Juan Peralta, Jr. in 1926 to
Tabernilla while they were in the United States. Upon Tabernillas return to the
Philippines in 1934, Damasa Timtiman, mother of Juan Peralta acting upon Juans
instructions conveyed the land to Tabernilla. Upon her request, she was supposedly
allowed by Tabernilla to remain in the said lot provided she paid the realty taxes on
the property which she did do so. She remained on the lot until her death and,
thereafter, the property was taken possession by Tabuena. This complaint was filed
after a demand for Tabuena to vacate was made.

The trial court rejected his defense that the subject of the sale was a different
lot and that he was the absolute owner of the said property by virtue of the
inheritance he acquired from his deceased parent. The Court of Appeals affirmed
the decision of the trial court, rejecting therein his claim that the trial court erred in
taking cognizance of Exhibits A, B, & C which had been marked but not formally
offered in evidence by Tabernilla.

ISSUE(S):

(1) Whether or not it was proper for the CA and trial court properly took
cognizance of the exhibits even if they were not formally offered during trial?
(2) Whether or not the trial court erred in taking judicial notice of Tabuenas
testimony in a case it had previously heard which was closely connected with
the case before it?

RULING:

The SC reversed the decision and ruled in favor of Tabuena.

(1) No. The mere fact that a particular document is marked as an exhibit does
not mean it has thereby already been offered as part of the evidence of a party. It is
true that Exhibits A, B, and C were marked at pre-trial but this was only for
identifying them and not for making a formal offer. It is during the trial that the party
presenting the marked evidence decides whether to offer the evidence or not. In
case they dont, such documents cannot be considered evidence, nor can they be
given any evidentiary value.

An exception was given in People vs. Napat-a, wherein the court ruled that
evidence even if not offered can be admitted against the adverse party if: first, it has
been duly identified by testimony duly recorded and second, it has itself been
incorporated in the records of the case. In this case, these requirements had not
been satisfied. The documents were indeed testified to but there was no recital of
its contents having been read into the records.

(2) Yes. The Court of Appeals conceded that as a general rule, courts are
not authorized to take judicial notice in the adjudication of cases pending before
them of the contents of the records of other cases, even when such events have
been tried or are pending in the same court, and notwithstanding the fact that both
cases may have been heard or are actually pending before the same judge.
Nevertheless, it applied the exception that in the absence of objection, with the
knowledge of the opposing party, or at the request or with the consent of the
parties, the case is clearly referred to or the original or part of the records of the
case are actually withdrawn from the archives and admitted as part of the record of
the case then pending. These conditions however, were not established in this
case. Tabuena was completely unaware that the court had taken judicial notice of
Civil Case no. 1327. Thus, the said act by the trial court was improper.

By: Frank John Abdon


People vs. Godoy
250 SCRA 676 (1995)

Judicial Notice

FACTS:

This is an automatic review of the decision of the RTC in view of the death
sentence imposed upon Danny Godoy, who was charged in two separate
informations with rape and another for kidnapping with serious illegal detention.

Complainant Mia Taha alleged that Godoy, her Physics Teacher and a married
man raped her first on Jan. 21, 1994 in her cousins boarding house wherein upon
entering the back door, Godoy pointed a knife at her. As Godoy removed her
panties and brought out his penis to rape her, a knife was pointed at her neck. As
such, she was not able to resist. The next day, Godoy came by their house and
asked the permission of her parents if she can join him in soliciting funds, since Mia
was a candidate for Ms. Palawan National School (PNS). Mias parents allowed her
to go with Godoy and she was allegedly brought to the Sunset Garden Motel where
she was repeatedly raped again. After three days, they transferred to Edwards
subdivision where she was kept in a lodging house and was again raped.

During this time, a police blotter had already been placed for the missing Mia.
She was later released by Godoy after a certain Naem interceded and only after her
parents agreed to settle the case. It was after Mias return that her parents
accompanied her to a medico-legal which found lacerations in her vagina concluding
that she just had sexual intercourse. She and her mother Helen went to the police
and executed sworn statements stating that the accused Godoy had raped and
abducted Mia.

Godoy denied that he raped Mia Taha. He admitted having had sex with her
and that they indeed stayed in Sunset Gardens and in Edwards Subdivision, but it
was because they were lovers and that Mia had consented to their having sex. To
support his claim that they were lovers, he presented two letters supposedly
delivered to him in the provincial jail while he was detained by Mias cousin Lorna.
There Mia explained that it was her parents who forced her to testify against him.

The delivery of the letter was denied by Lorna but the defense presented the
provincial jail guard on duty on the supposed date of the delivery and testified that
indeed Lorna had visited Godoy on said date. Several witnesses were also
presented including two former teachers of Mia who knew the handwriting on the
two said letters as belonging to Mia having been their former student and where thus
familiar with her handwriting particularly those made in her test papers. Other
witnesses were presented by the defense attesting that they saw the two together in
a manner that was affectionate and cordial, prior to the said kidnapping and even
during such.

ISSUE:

Whether or not the prosecution was able to prove beyond reasonable doubt
the guilt of the accused

RULING:

The Supreme Court acquitted Danny Godoy .

Three guiding principles in the appellate review of the evidence of the


prosecution for the crime of rape, namely: a) while rape is a most detestable crime, it
must be borne in mind that it is an accusation easy to be made, hard to be proved,
but harder to be defended by the party accused, though innocent; b) the testimony
of the complainant must be scrutinized with extreme caution; and c) that the
evidence for the prosecution must stand or fall on its own merits and cannot be
allowed to draw strength from the weakness of the evidence for the defense.

Mia claimed that the appellant always carried a knife but it was never
explained how she was threatened with the same in such a manner that she was
allegedly always cowed into giving in to his innumerable sexual demands. In taking
judicial notice, the Supreme Court said that it is not unaware that in rape cases, the
claim of the complainant of having been threatened appears to be a common
testimonial expedient and face-saving subterfuge. But it had not been duly
corroborated by other evidence nor proved that the accused indeed always carried a
knife.

The SC also takes judicial cognizance of the fact that in rural areas (such as
in Palawan) young ladies are strictly required to act with circumspection and
prudence. Great caution is observed so that their reputations shall remain
untainted. Any breath of scandal which brings dishonor to their character humiliates
their entire families. It could precisely be that complainants mother wanted to save
face in the community where everybody knows everybody else, and in an effort to
conceal her daughters indiscretion and escape wagging tongues of their small rural
community, she had to weave the scenario of this rape drama.

By: Frank John Abdon

BPI-Savings vs. Court of Tax Appeals

330 SCRA 507 (2000)

Judicial Notice

FACTS:

This case involves a claim for tax refund in the amount of P112,491.00
representing BPIs tax withheld for the year 1989. BPIs 1989 Income Tax Return
(ITR) shows that it had a total refundable amount of P297,492 inclusive of the
P112,491.00 being claimed as tax refund in this present controversy. However, BPI
declared in the same 1989 ITR that the said total refundable amount of P297,492.00
will be applied as tax credit to the succeeding taxable year.

On October 11, 1990, BPI filed a written claim for refund in the amount of
P112,491.00 with the Commissioner of Internal Revenue (CIR) alleging that it did not
apply the 1989 refundable amount to its 1990 Annual ITR or other tax liabilities due
to the alleged business losses it incurred for the same year. Without waiting for the
CIR to act on the claim for refund, BPI filed a petition for review with the CTA,
seeking the refund of the amount of P112,491.00.

The CTA dismissed BPIs petition on the ground that petitioner failed to
present as evidence its Corporate Annual ITR for 1990 to establish the fact that BPI
had not yet credited the amount of P297,492.00 to its 1990 income tax liability. BPI
filed a Motion for Reconsideration which was denied by the CTA. The CA affirmed
the CTA. Hence, this Petition.

Before the Supreme Court, the petitioner called the attention of the Court to a
Decision rendered by the Tax Court in CTA Case No. 4897 involving its claim for
refund for the year 1990 wherein the Tax Court held that petitioner suffered a net
loss for the taxable year 1990. Respondent, however, urges the Supreme Court not
to do so.

ISSUE: Whether or not the Court may take judicial notice of the Decision by the
CTA in deciding the present case?

RULING:
AS A RULE, "courts are not authorized to take judicial notice of the contents
of the records of other cases, even when such cases have been tried or are pending
in the same court, and notwithstanding the fact that both cases may have been
heard or are actually pending before the same judge." Be that as it may, Section 2,
Rule 129 provides that courts may take judicial notice of matters ought to be known
to judges because of their judicial functions. In this case, the Court notes that a copy
of the Decision in CTA Case No. 4897 was attached to the Petition for Review filed
before this Court. Significantly, respondents do not claim at all that the said Decision
was fraudulent or nonexistent. Indeed, they do not even dispute the contents of the
said Decision, claiming merely that the Court cannot take judicial notice thereof.
This merely showed the weakness of the respondents case
because they did not take steps to prove that BPI did not suffer any loss in 1990.
Respondents opted not to assail the fact appearing therein - that petitioner suffered
a net loss in 1990 the same way that it refused to controvert the same fact
established by petitioners other documentary exhibits. The Decision in CTA Case
No. 4897 is not the sole basis of petitioners case. It is merely one more bit of
information showing that the petitioner did not use its 1989 refund to pay its taxes for
1990.

MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL BANK vs.


RAFAEL MA. GUERRERO

FACTS:

- On May 17, 1994, respondent Guerrero filed a complaint for damages against
petitioner Bank with the RTC of Manila. Guerrero sought payment of damages
allegedly for (1) illegally withheld taxes charged against interests on his
checking account with the Bank; (2) a returned check worth US$18,000.00
due to signature verification problems; and (3) unauthorized conversion of his
account.
- Guerrero amended his complaint on April 18, 1995.

- On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by
stipulation Guerreros account is governed by New York law and this law
does not permit any of Guerreros claims except actual damages.

- Subsequently, the Bank filed a Motion for Partial Summary Judgment seeking
the dismissal of Guerreros claims for consequential, nominal, temperate,
moral and exemplary damages as well as attorneys fees on the same ground
alleged in its Answer.

- The Bank contended that the trial should be limited to the issue of
actual damages. Guerrero opposed the motion.

- The affidavit of Alyssa Walden, a New York attorney, supported the


Banks Motion for Partial Summary Judgment. Alyssa Waldens affidavit
("Walden affidavit" for brevity) stated that Guerreros New York bank
account stipulated that the governing law is New York law and that this
law bars all of Guerreros claims except actual damages. The Philippine
Consular Office in New York authenticated the Walden affidavit.

- The RTC denied the Banks Motion for Partial Summary Judgment and its
motion for reconsideration.

- The Bank filed a petition for certiorari and prohibition with the Court of
Appeals assailing the RTC Orders.

- The Court of Appeals dismissed the petition and the MR was also denied. CA
ruled that the Walden affidavit does not serve as proof of the New York
law and jurisprudence relied on by the Bank to support its motion. The
Court of Appeals considered the New York law and jurisprudence as public
documents defined in Section 19, Rule 132 of the Rules on Evidence.

- Hence, the instant petition.

ISSUE:
WON CA erred in HOLDING THAT [THE BANKS] AFFIDAVIT, WHICH PROVES
FOREIGN LAW AS A FACT, IS "HEARSAY" AND THEREBY CANNOT SERVE
AS PROOF OF THE NEW YORK LAW RELIED UPON BY PETITIONERS IN
THEIR MOTION FOR SUMMARY JUDGMENT.

Arguments:

- The Bank argues that in moving for partial summary judgment, it was entitled
to use the Walden affidavit to prove that the stipulated foreign law bars the
claims for consequential, moral, temperate, nominal and exemplary damages
and attorneys fees. Consequently, outright dismissal by summary judgment of
these claims is warranted.

- It also argues that since Guerrero did not submit any opposing affidavit to
refute the facts contained in the Walden affidavit, he failed to show the need
for a trial on his claims for damages other than actual.

RULING:

The petition is devoid of merit.

- The Bank filed its motion for partial summary judgment pursuant to
Section 2, Rule 34 of the old Rules of Court

- A court may grant a summary judgment to settle expeditiously a case if, on


motion of either party, there appears from the pleadings, depositions,
admissions, and affidavits that no important issues of fact are involved, except
the amount of damages. In such event, the moving party is entitled to a
judgment as a matter of law.

- In a motion for summary judgment, the crucial question is: are the issues
raised in the pleadings genuine, sham or fictitious, as shown by affidavits,
depositions or admissions accompanying the motion?

- A genuine issue means an issue of fact which calls for the presentation of
evidence as distinguished from an issue which is fictitious or contrived so as
not to constitute a genuine issue for trial.

- A perusal of the parties respective pleadings would show that there are
genuine issues of fact that necessitate formal trial.
- Guerreros complaint before the RTC contains a statement of the
ultimate facts on which he relies for his claim for damages.

- He is seeking damages for what he asserts as "illegally withheld taxes


charged against interests on his checking account with the Bank, a
returned check worth US$18,000.00 due to signature verification
problems, and unauthorized conversion of his account."

- In its Answer, the Bank set up its defense that the agreed foreign law to
govern their contractual relation bars the recovery of damages other
than actual.

- Apparently, facts are asserted in Guerreros complaint while specific


denials and affirmative defenses are set out in the Banks answer.

- True, the court can determine whether there are genuine issues in a case
based merely on the affidavits or counter-affidavits submitted by the parties to
the court. However, as correctly ruled by the Court of Appeals, the Banks
motion for partial summary judgment as supported by the Walden affidavit
does not demonstrate that Guerreros claims are sham, fictitious or contrived.

- On the contrary, the Walden affidavit shows that the facts and material
allegations as pleaded by the parties are disputed and there are substantial
triable issues necessitating a formal trial.

- There can be no summary judgment where questions of fact are in issue or


where material allegations of the pleadings are in dispute.

- The resolution of whether a foreign law allows only the recovery of actual
damages is a question of fact as far as the trial court is concerned since
foreign laws do not prove themselves in our courts.

- Foreign laws are not a matter of judicial notice. Like any other fact, they
must be alleged and proven. Certainly, the conflicting allegations as to
whether New York law or Philippine law applies to Guerreros claims
present a clear dispute on material allegations which can be resolved
only by a trial on the merits.

- Under Section 24 of Rule 132, the record of public documents of a


sovereign authority or tribunal may be proved by
(1) an official publication thereof or

(2) a copy attested by the officer having the legal custody thereof. Such
official publication or copy must be accompanied, if the record is not
kept in the Philippines, with a certificate that the attesting officer has the
legal custody thereof. The certificate may be issued by any of the
authorized Philippine embassy or consular officials stationed in the
foreign country in which the record is kept, and authenticated by the
seal of his office. The attestation must state, in substance, that the copy
is a correct copy of the original, or a specific part thereof, as the case
may be, and must be under the official seal of the attesting officer.

- Certain exceptions to this rule were recognized in some cases. Yet, SC


held that The Bank cannot rely on these cases to support its cause.
These cases involved attorneys testifying in open court during the trial in the
Philippines and quoting the particular foreign laws sought to be established.

- On the other hand, the Walden affidavit was taken abroad ex parte and
the affiant never testified in open court. The Walden affidavit cannot be
considered as proof of New York law on damages not only because it is
self-serving but also because it does not state the specific New York law
on damages.

- The Walden affidavit states conclusions from the affiants personal


interpretation and opinion of the facts of the case vis a vis the alleged laws
and jurisprudence without citing any law in particular. The citations in the
Walden affidavit of various U.S. court decisions do not constitute proof of the
official records or decisions of the U.S. courts. While the Bank attached
copies of some of the U.S. court decisions cited in the Walden affidavit, these
copies do not comply with Section 24 of Rule 132 on proof of official records
or decisions of foreign courts.

- The Banks intention in presenting the Walden affidavit is to prove New York
law and jurisprudence. However, because of the failure to comply with Section
24 of Rule 132 on how to prove a foreign law and decisions of foreign courts,
the Walden affidavit did not prove the current state of New York law and
jurisprudence. Thus, the Bank has only alleged, but has not proved, what New
York law and jurisprudence are on the matters at issue.
- Next, the Bank makes much of Guerreros failure to submit an opposing
affidavit to the Walden affidavit. However, the pertinent provision of Section 3,
Rule 35 of the old Rules of Court did not make the submission of an opposing
affidavit mandatory. It is axiomatic that the term "may" as used in
remedial law, is only permissive and not mandatory.

- Guerrero cannot be said to have admitted the averments in the Banks


motion for partial summary judgment and the Walden affidavit just because he
failed to file an opposing affidavit. Guerrero opposed the motion for partial
summary judgment, although he did not present an opposing affidavit.
Guerrero may not have presented an opposing affidavit, as there was no need
for one, because the Walden affidavit did not establish what the Bank
intended to prove.

- Certainly, Guerrero did not admit, expressly or impliedly, the veracity of the
statements in the Walden affidavit. The Bank still had the burden of proving
New York law and jurisprudence even if Guerrero did not present an opposing
affidavit. As the party moving for summary judgment, the Bank has the burden
of clearly demonstrating the absence of any genuine issue of fact and that
any doubt as to the existence of such issue is resolved against the movant.

- Moreover, it would have been redundant and pointless for Guerrero to


submit an opposing affidavit considering that what the Bank seeks to be
opposed is the very subject matter of the complaint.

- Guerrero need not file an opposing affidavit to the Walden affidavit because
his complaint itself controverts the matters set forth in the Banks motion and
the Walden affidavit.

- A party should not be made to deny matters already averred in his


complaint.

- There being substantial triable issues between the parties, the courts a quo
correctly denied the Banks motion for partial summary judgment. There is a
need to determine by presentation of evidence in a regular trial if the Bank is
guilty of any wrongdoing and if it is liable for damages under the applicable
laws.
FIRST DIVISION

[G.R. No. 136804. February 19, 2003]

MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL


BANK, petitioners, vs. RAFAEL MA. GUERRERO, respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review under Rule 45 of the Rules of Court to set aside the
Court of Appeals[1] Decision of August 24, 1998 and Resolution of December 14,
1998 in CA-G.R. SP No. 42310[2] affirming the trial courts denial of petitioners
motion for partial summary judgment.

The Antecedents

On May 17, 1994, respondent Rafael Ma. Guerrero (Guerrero for brevity) filed
a complaint for damages against petitioner Manufacturers Hanover Trust Co. and/or
Chemical Bank (the Bank for brevity) with the Regional Trial Court of Manila (RTC
for brevity). Guerrero sought payment of damages allegedly for (1) illegally
withheld taxes charged against interests on his checking account with the Bank; (2)
a returned check worth US$18,000.00 due to signature verification problems; and
(3) unauthorized conversion of his account. Guerrero amended his complaint on
April 18, 1995.

On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by
stipulation Guerreros account is governed by New York law and this law does not
permit any of Guerreros claims except actual damages. Subsequently, the Bank
filed a Motion for Partial Summary Judgment seeking the dismissal of Guerreros
claims for consequential, nominal, temperate, moral and exemplary damages as
well as attorneys fees on the same ground alleged in its Answer. The Bank
contended that the trial should be limited to the issue of actual damages. Guerrero
opposed the motion.
The affidavit of Alyssa Walden, a New York attorney, supported the Banks
Motion for Partial Summary Judgment. Alyssa Waldens affidavit (Walden affidavit
for brevity) stated that Guerreros New York bank account stipulated that the
governing law is New York law and that this law bars all of Guerreros claims except
actual damages. The Philippine Consular Office in New York authenticated the
Walden affidavit.

The RTC denied the Banks Motion for Partial Summary Judgment and its
motion for reconsideration on March 6, 1996 and July 17, 1996, respectively. The
Bank filed a petition for certiorari and prohibition with the Court of Appeals assailing
the RTC Orders. In its Decision dated August 24, 1998, the Court of Appeals
dismissed the petition. On December 14, 1998, the Court of Appeals denied the
Banks motion for reconsideration.

Hence, the instant petition.

The Ruling of the Court of Appeals

The Court of Appeals sustained the RTC orders denying the motion for partial
summary judgment. The Court of Appeals ruled that the Walden affidavit does not
serve as proof of the New York law and jurisprudence relied on by the Bank to
support its motion. The Court of Appeals considered the New York law and
jurisprudence as public documents defined in Section 19, Rule 132 of the Rules on
Evidence, as follows:

SEC. 19. Classes of Documents. For the purpose of their presentation in


evidence, documents are either public or private.

Public documents are:

(a) The written official acts, or records of the official acts of the sovereign
authority, official bodies and tribunals, and public officers, whether of the
Philippines, or of a foreign country;

x x x.

The Court of Appeals opined that the following procedure outlined in Section 24,
Rule 132 should be followed in proving foreign law:
SEC. 24. Proof of official record. The record of public documents referred to in
paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by
an official publication thereof or by a copy attested by the officer having the legal
custody of the record, or by his deputy, and accompanied, if the record is not kept in
the Philippines, with a certificate that such officer has the custody. If the office in
which the record is kept is in a foreign country, the certificate may be made by a
secretary of the embassy or legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his
office.

The Court of Appeals likewise rejected the Banks argument that Section 2, Rule
34 of the old Rules of Court allows the Bank to move with the supporting Walden
affidavit for partial summary judgment in its favor. The Court of Appeals clarified that
the Walden affidavit is not the supporting affidavit referred to in Section 2, Rule 34
that would prove the lack of genuine issue between the parties. The Court of
Appeals concluded that even if the Walden affidavit is used for purposes of summary
judgment, the Bank must still comply with the procedure prescribed by the Rules to
prove the foreign law.

The Issues

The Bank contends that the Court of Appeals committed reversible error in -

x x x HOLDING THAT [THE BANKS] PROOF OF FACTS TO SUPPORT ITS


MOTION FOR SUMMARY JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT;

x x x HOLDING THAT [THE BANKS] AFFIDAVIT, WHICH PROVES FOREIGN


LAW AS A FACT, IS HEARSAY AND THEREBY CANNOT SERVE AS PROOF OF
THE NEW YORK LAW RELIED UPON BY PETITIONERS IN THEIR MOTION FOR
SUMMARY JUDGMENT x x x.[3]

First, the Bank argues that in moving for partial summary judgment, it was
entitled to use the Walden affidavit to prove that the stipulated foreign law bars the
claims for consequential, moral, temperate, nominal and exemplary damages and
attorneys fees. Consequently, outright dismissal by summary judgment of these
claims is warranted.

Second, the Bank claims that the Court of Appeals mixed up the requirements of
Rule 35 on summary judgments and those of a trial on the merits in considering the
Walden affidavit as hearsay. The Bank points out that the Walden affidavit is not
hearsay since Rule 35 expressly permits the use of affidavits.

Lastly, the Bank argues that since Guerrero did not submit any opposing affidavit
to refute the facts contained in the Walden affidavit, he failed to show the need for a
trial on his claims for damages other than actual.

The Courts Ruling

The petition is devoid of merit.

The Bank filed its motion for partial summary judgment pursuant to Section 2,
Rule 34 of the old Rules of Court which reads:

Section 2. Summary judgment for defending party. A party against whom a


claim, counterclaim, or cross-claim is asserted or a declaratory relief is sought may,
at any time, move with supporting affidavits for a summary judgment in his favor as
to all or any part thereof.

A court may grant a summary judgment to settle expeditiously a case if, on


motion of either party, there appears from the pleadings, depositions, admissions,
and affidavits that no important issues of fact are involved, except the amount of
damages. In such event, the moving party is entitled to a judgment as a matter of
law.[4]

In a motion for summary judgment, the crucial question is: are the issues raised
in the pleadings genuine, sham or fictitious, as shown by affidavits, depositions or
admissions accompanying the motion?[5]

A genuine issue means an issue of fact which calls for the presentation of
evidence as distinguished from an issue which is fictitious or contrived so as not to
constitute a genuine issue for trial.[6]

A perusal of the parties respective pleadings would show that there are genuine
issues of fact that necessitate formal trial. Guerreros complaint before the RTC
contains a statement of the ultimate facts on which he relies for his claim for
damages. He is seeking damages for what he asserts as illegally withheld taxes
charged against interests on his checking account with the Bank, a returned check
worth US$18,000.00 due to signature verification problems, and unauthorized
conversion of his account. In its Answer, the Bank set up its defense that the
agreed foreign law to govern their contractual relation bars the recovery of damages
other than actual. Apparently, facts are asserted in Guerreros complaint while
specific denials and affirmative defenses are set out in the Banks answer.

True, the court can determine whether there are genuine issues in a case based
merely on the affidavits or counter-affidavits submitted by the parties to the
court. However, as correctly ruled by the Court of Appeals, the Banks motion for
partial summary judgment as supported by the Walden affidavit does not
demonstrate that Guerreros claims are sham, fictitious or contrived. On the
contrary, the Walden affidavit shows that the facts and material allegations as
pleaded by the parties are disputed and there are substantial triable issues
necessitating a formal trial.

There can be no summary judgment where questions of fact are in issue or


where material allegations of the pleadings are in dispute. [7] The resolution of
whether a foreign law allows only the recovery of actual damages is a question of
fact as far as the trial court is concerned since foreign laws do not prove themselves
in our courts.[8] Foreign laws are not a matter of judicial notice. [9] Like any other fact,
they must be alleged and proven. Certainly, the conflicting allegations as to whether
New York law or Philippine law applies to Guerreros claims present a clear dispute
on material allegations which can be resolved only by a trial on the merits.

Under Section 24 of Rule 132, the record of public documents of a sovereign


authority or tribunal may be proved by (1) an official publication thereof or (2)
a copy attested by the officer having the legal custody thereof. Such official
publication or copy must be accompanied, if the record is not kept in the Philippines,
with a certificate that the attesting officer has the legal custody thereof. The
certificate may be issued by any of the authorized Philippine embassy or consular
officials stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. The attestation must state, in substance, that
the copy is a correct copy of the original, or a specific part thereof, as the case may
be, and must be under the official seal of the attesting officer.

Certain exceptions to this rule were recognized in Asiavest Limited v. Court of


Appeals[10] which held that:

x x x:

Although it is desirable that foreign law be proved in accordance with the above rule,
however, the Supreme Court held in the case of Willamette Iron and Steel Works v.
Muzzal, that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of
Court) does not exclude the presentation of other competent evidence to prove the
existence of a foreign law. In that case, the Supreme Court considered the
testimony under oath of an attorney-at-law of San Francisco, California, who quoted
verbatim a section of California Civil Code and who stated that the same was in
force at the time the obligations were contracted, as sufficient evidence to establish
the existence of said law. Accordingly, in line with this view, the Supreme Court in
the Collector of Internal Revenue v. Fisher et al., upheld the Tax Court in considering
the pertinent law of California as proved by the respondents witness. In that
case, the counsel for respondent testified that as an active member of the California
Bar since 1951, he is familiar with the revenue and taxation laws of the State of
California. When asked by the lower court to state the pertinent California law as
regards exemption of intangible personal properties, the witness cited Article 4, Sec.
13851 (a) & (b) of the California Internal and Revenue Code as published in
Derrings California Code, a publication of Bancroft-Whitney Co., Inc. And as part of
his testimony, a full quotation of the cited section was offered in evidence by
respondents. Likewise, in several naturalization cases, it was held by the Court
that evidence of the law of a foreign country on reciprocity regarding the acquisition
of citizenship, although not meeting the prescribed rule of practice, may be allowed
and used as basis for favorable action, if, in the light of all the circumstances, the
Court is satisfied of the authenticity of the written proof offered. Thus, in a number
of decisions, mere authentication of the Chinese Naturalization Law by the Chinese
Consulate General of Manila was held to be competent proof of that law. (Emphasis
supplied)

The Bank, however, cannot rely on Willamette Iron and Steel Works v.
Muzzal or Collector of Internal Revenue v. Fisher to support its cause. These
cases involved attorneys testifying in open court during the trial in the Philippines
and quoting the particular foreign laws sought to be established. On the other hand,
the Walden affidavit was taken abroad ex parte and the affiant never testified in
open court. The Walden affidavit cannot be considered as proof of New York law on
damages not only because it is self-serving but also because it does not state the
specific New York law on damages. We reproduce portions of the Walden affidavit
as follows:

3. In New York, [n]ominal damages are damages in name only, trivial sums such
as six cents or $1. Such damages are awarded both in tort and contract cases
when the plaintiff establishes a cause of action against the defendant, but is unable
to prove actual damages. Dobbs, Law of Remedies, 3.32 at 294 (1993). Since
Guerrero is claiming for actual damages, he cannot ask for nominal damages.

4. There is no concept of temperate damages in New York law. I have reviewed


Dobbs, a well-respected treatise, which does not use the phrase temperate
damages in its index. I have also done a computerized search for the phrase in all
published New York cases, and have found no cases that use it. I have never heard
the phrase used in American law.

5. The Uniform Commercial Code (UCC) governs many aspects of a Banks


relationship with its depositors. In this case, it governs Guerreros claim arising out
of the non-payment of the $18,000 check. Guerrero claims that this was a wrongful
dishonor. However, the UCC states that justifiable refusal to pay or accept as
opposed to dishonor, occurs when a bank refuses to pay a check for reasons such
as a missing indorsement, a missing or illegible signature or a forgery, 3-510,
Official Comment 2. .. to the Complaint, MHT returned the check because it had
no signature card on . and could not verify Guerreros signature. In my opinion,
consistent with the UCC, that is a legitimate and justifiable reason not to pay.

6. Consequential damages are not available in the ordinary case of a justifiable


refusal to pay. UCC 1-106 provides that neither consequential or special or punitive
damages may be had except as specifically provided in the Act or by other rule of
law. UCC 4-103 further provides that consequential damages can be recovered
only where there is bad faith. This is more restrictive than the New York common
law, which may allow consequential damages in a breach of contract case (as does
the UCC where there is a wrongful dishonor).

7. Under New York law, requests for lost profits, damage to reputation and mental
distress are considered consequential damages. Kenford Co., Inc. v. Country of
Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif Construction
Corp. v. Buffalo Savings Bank, 50 A.D.2d 718, 374 N.Y.S..2d 868, 869-70 (4th Dept
1975) damage to reputation); Dobbs, Law of Remedies 12.4(1) at 63 (emotional
distress).

8. As a matter of New York law, a claim for emotional distress cannot be recovered
for a breach of contract. Geler v. National Westminster Bank U.S.A., 770 F. Supp.
210, 215 (S.D.N.Y. 1991); Pitcherello v. Moray Homes, Ltd., 150 A.D.2d 860,540
N.Y.S.2d 387, 390 (3d Dept 1989) Martin v. Donald Park Acres, 54 A.D.2d 975, 389
N.Y.S..2d 31, 32 (2nd Dept 1976). Damage to reputation is also not recoverable for
a contract. Motif Construction Corp. v. Buffalo Savings Bank, 374 N.Y.S.2d at 869-
70.

9. In cases where the issue is the breach of a contract to purchase stock, New York
courts will not take into consideration the performance of the stock after the
breach. Rather, damages will be based on the value of the stock at the time of the
breach, Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559 (4th Dept
1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d 1023 (1983).

10. Under New York law, a party can only get consequential damages if they were
the type that would naturally arise from the breach and if they were brought within
the contemplation of parties as the probable result of the breach at the time of or
prior to contracting. Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540
N.Y.S.2d 1, 3 (1989), (quoting Chapman v. Fargo, 223 N.Y. 32, 36 (1918).

11. Under New York law, a plaintiff is not entitled to attorneys fees unless they are
provided by contract or statute. E.g., Geler v. National Westminster Bank, 770 F.
Supp. 210, 213 (S.D.N.Y. 1991); Camatron Sewing Mach, Inc. v. F.M. Ring Assocs.,
Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dept 1992); Stanisic v. Soho Landmark
Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281 (1st Dept 1991). There is no statute
that permits attorneys fees in a case of this type.

12. Exemplary, or punitive damages are not allowed for a breach of contract, even
where the plaintiff claims the defendant acted with malice. Geler v. National
Westminster Bank, 770 F.Supp. 210, 215 (S.D.N.Y. 1991);Catalogue Service of
chester[11]_v. Insurance Co. of North America, 74 A.D.2d 837, 838, 425 N.Y.S.2d 635,
637 (2d Dept 1980); Senior v. Manufacturers Hanover Trust Co., 110 A.D.2d 833,
488 N.Y.S.2d 241, 242 (2d Dept 1985).

13. Exemplary or punitive damages may be recovered only where it is alleged and
proven that the wrong supposedly committed by defendant amounts to a fraud
aimed at the public generally and involves a high moral culpability. Walker v.
Sheldon, 10 N.Y.2d 401, 179 N.E.2d 497, 223 N.Y.S.2d 488 (1961).

14. Furthermore, it has been consistently held under New York law that exemplary
damages are not available for a mere breach of contract for in such a case, as a
matter of law, only a private wrong and not a public right is involved. Thaler v. The
North Insurance Company, 63 A.D.2d 921, 406 N.Y.S.2d 66 (1st Dept 1978).[12]
The Walden affidavit states conclusions from the affiants personal interpretation
and opinion of the facts of the case vis a vis the alleged laws and jurisprudence
without citing any law in particular. The citations in the Walden affidavit of various
U.S. court decisions do not constitute proof of the official records or decisions of the
U.S. courts. While the Bank attached copies of some of the U.S. court decisions
cited in the Walden affidavit, these copies do not comply with Section 24 of Rule 132
on proof of official records or decisions of foreign courts.

The Banks intention in presenting the Walden affidavit is to prove New York law
and jurisprudence. However, because of the failure to comply with Section 24 of
Rule 132 on how to prove a foreign law and decisions of foreign courts, the Walden
affidavit did not prove the current state of New York law and jurisprudence. Thus,
the Bank has only alleged, but has not proved, what New York law and
jurisprudence are on the matters at issue.

Next, the Bank makes much of Guerreros failure to submit an opposing affidavit
to the Walden affidavit. However, the pertinent provision of Section 3, Rule 35 of the
old Rules of Court did not make the submission of an opposing affidavit mandatory,
thus:

SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten
(10) days before the time specified for the hearing. The adverse party prior to the
day of hearing may serve opposing affidavits. After the hearing, the judgment
sought shall be rendered forthwith if the pleadings, depositions and admissions on
file, together with the affidavits, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law. (Emphasis supplied)

It is axiomatic that the term may as used in remedial law, is only permissive and
not mandatory.[13]

Guerrero cannot be said to have admitted the averments in the Banks motion
for partial summary judgment and the Walden affidavit just because he failed to file
an opposing affidavit. Guerrero opposed the motion for partial summary judgment,
although he did not present an opposing affidavit. Guerrero may not have presented
an opposing affidavit, as there was no need for one, because the Walden affidavit
did not establish what the Bank intended to prove. Certainly, Guerrero did not admit,
expressly or impliedly, the veracity of the statements in the Walden affidavit. The
Bank still had the burden of proving New York law and jurisprudence even if
Guerrero did not present an opposing affidavit. As the party moving for summary
judgment, the Bank has the burden of clearly demonstrating the absence of any
genuine issue of fact and that any doubt as to the existence of such issue is
resolved against the movant.[14]

Moreover, it would have been redundant and pointless for Guerrero to submit an
opposing affidavit considering that what the Bank seeks to be opposed is the very
subject matter of the complaint. Guerrero need not file an opposing affidavit to the
Walden affidavit because his complaint itself controverts the matters set forth in the
Banks motion and the Walden affidavit. A party should not be made to deny matters
already averred in his complaint.

There being substantial triable issues between the parties, the courts a
quo correctly denied the Banks motion for partial summary judgment. There is a
need to determine by presentation of evidence in a regular trial if the Bank is guilty
of any wrongdoing and if it is liable for damages under the applicable laws.

This case has been delayed long enough by the Banks resort to a motion for
partial summary judgment. Ironically, the Bank has successfully defeated the very
purpose for which summary judgments were devised in our rules, which is, to aid
parties in avoiding the expense and loss of time involved in a trial.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated
August 24, 1998 and the Resolution dated December 14, 1998 of the Court of
Appeals in CA-G.R. SP No. 42310 is AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug and Azcuna, JJ., concur.

Ynares-Santiago, J., no part.

Digest People v. Rullepa

Nature: Automatic Review of a decision of RTC QC.


FACTS: In Nov 1995, while her mother Gloria Buenafe was about to set the table, 3
yr old daughter Cyra May said, Mama, si Kuya Ronnie lagay niya titi niya at
sinaksak sa pepe, puwit at sa bibig ko. Kuya Ronnie is accused-appellant Ronnie
Rullepa, the Buenafes houseboy. Cyra May said she was raped twice in Ronnies
room.
Gloria waited for her H to arrive that night. Sps verified from Ronnie if what Cyra
May told her was true. Ronnie readily admitted doing those things but only once at
4PM of Nov 17 95, 3 days earlier. Unable to contain her anger, Gloria slapped him
many times. They waited till morning to take him to Camp Karingal where he
admitted the imputations against him & where he was detained thereafter.
Medico-legal Officer Dr Preyra testified that Cyra May is in virgin state physically and
the presence of abrasions in her female organ. She further stated that it was
caused by friction w/ an object, perhaps an erect penis and doubted if riding on a
bicycle had caused such injuries.
Ronnie however later denied having anything to do w/ the abrasions found in Cyra
Mays genitalia. He opined that it was because Mrs Gloria Buenafe was against him
for not answering her queries about her Hs whereabouts thats why she found fault
against him.
RTC found Rullepa guilt beyond reasonable doubt of rape and sentenced him to
death.
HELD: Rullepa guilty of statutory rape. His prior admission became conclusive
upon him. Moreover, even if such admission, as well as the implication of his failure
to deny the same, were disregarded, the evidence suffices to establish his guilt
beyond reasonable doubt.
In addition, Cyra Mays account of the event could not possibly be a mere product of
her imagination for it is hardly the stuff of romance or fairy tales. Neither is it normal
tv fare. Besides, her testimony was corroborated by the findings of Dr. Preyra that
there were abrasions in her labia minora. Her very tender age still made her
possess the necessary intelligence and perceptiveness sufficient to invest her w/ the
competence to testify about her experience.
Rullepa prays that he be held liable for acts of lasciviousness instead or rape since
Cyra May testified that he merely scrubbed his penis against her vagina. However,
it was proven that there was indeed penetration.
2 Elements of Statutory Rape:
1. Accused had carnal knowledge of a woman
2. Woman is below 12 yrs of age
Cyra Mays age is relevant in this case of rape since it may constitute an element of
the offense as per RA 7659. Furthermore, the victims age may constitute a
qualifying circumstance, warranting the imposition of the death sentence as per the
same Article .
Although no document was offered as evidence to prove Cyra Mays age a persons
appearance is relevant as evidence of age so the tribunal may properly observe the
person brought before it . Moreover, the testimony of a member of the family may
be accepted as regards the exact age or date of birth of the offended party pursuant
to Sec 40, Rule 130 of the Rules of Evidence.
Because of the vast disparity between the alleged age (3 yrs old) and the age
sought to be proved (below 12 yrs old ), there is no doubt as regards the existence
of the 2nd element of statutory rape, i.e. that the victim was below 12 yrs old at the
time of the commission of the offense.
Wherefore, Rullepa is sentenced to suffer the penalty of reclusion perpetua and not
the death penalty. Judgment affirmed w/ modification.

EN BANC

[G.R. No. 131516. March 5, 2003]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. RONNIE RULLEPA y


GUINTO, accused-appellant.

DECISION
CARPIO-MORALES, J.:

On complaint of Cyra May Francisco Buenafe, accused-appellant Ronnie


Rullepa y Guinto was charged with Rape before the Regional Trial Court (RTC) of
Quezon City allegedly committed as follows:

That on or about the 17th day of November, 1995, in Quezon City, Philippines, the said
accused, by means of force and intimidation, to wit: by then and there willfully, unlawfully
and feloniously removing her panty, kissing her lips and vagina and thereafter rubbing his
penis and inserting the same to the inner portion of the vagina of the undersigned
complainant, 3 years of age, a minor, against her will and without her consent. [1]

Arraigned on January 15, 1996, accused-appellant pleaded not guilty.[2]


From the testimonies of its witnesses, namely Cyra May, [3] her mother Gloria
Francisco Buenafe, Dr. Cristina V. Preyra, and SPO4 Catherine Borda, the
prosecution established the following facts:
On November 20, 1995, as Gloria was about to set the table for dinner at her
house in Quezon City, Cyra May, then only three and a half years old, told her,
Mama, si kuya Ronnie lagay niya titi niya at sinaksak sa puwit at sa bibig ko.
Kuya Ronnie is accused-appellant Ronnie Rullepa, the Buenafes house boy,
who was sometimes left with Cyra May at home.
Gloria asked Cyra May how many times accused-appellant did those things to
her, to which she answered many times. Pursuing, Gloria asked Cyra May what
else he did to her, and Cyra May indicated the room where accused-appellant slept
and pointed at his pillow.
As on the night of November 20, 1995 accused-appellant was out with Glorias
husband Col. Buenafe,[4] she waited until their arrival at past 11:00 p.m. Gloria then
sent accused-appellant out on an errand and informed her husband about their
daughters plaint. Buenafe thereupon talked to Cyra May who repeated what she
had earlier told her mother Gloria.
When accused-appellant returned, Buenafe and Gloria verified from him whether
what Cyra May had told them was true. Ronnie readily admitted doing those things
but only once, at 4:00 p.m. of November 17, 1995 or three days earlier. Unable to
contain her anger, Gloria slapped accused-appellant several times.
Since it was already midnight, the spouses waited until the following morning to
bring accused-appellant to Camp Karingal where he admitted the imputations
against him, on account of which he was detained. Glorias sworn statement[5] was
then taken.[6]
Recalling what accused-appellant did to her, Cyra May declared at the witness
stand: Sinaksak nya ang titi sa pepe ko, sa puwit ko, at sa bunganga, thus causing
her pain and drawing her to cry. She added that accused-appellant did these to her
twice in his bedroom.
Dr. Ma. Cristina V. Preyra, the Medico-Legal Officer and Chief of the Biological
Science Branch of the Philippine National Police Crime Laboratory who examined
Crya May, came up with her report dated November 21, 1995, [7] containing the
following findings and conclusions:

FINDINGS:

GENERAL AND EXTRA GENITAL:

Fairly developed, fairly nourished and coherent female child subject. Breasts are
undeveloped. Abdomen is flat and soft.

GENITAL:

There is absence of pubic hair. Labia majora are full, convex and coaptated with congested
and abraded labia minora presenting in between. On separating the same is disclosed an
abraded posterior fourchette and an elastic, fleshy type intact hymen. External vaginal
orifice does not admit the tip of the examining index finger.

xxx

CONCLUSION:
Subject is in virgin state physically.

There are no external signs of recent application of any form of trauma at the
time of examination. (Emphasis supplied.)
By Dr. Preyras explanation, the abrasions on the labia minora could have been
caused by friction with an object, perhaps an erect penis. She doubted if riding on a
bicycle had caused the injuries.[8]
The defenses sole witness was accused-appellant, who was 28 and single at
the time he took the witness stand on June 9, 1997. He denied having anything to
do with the abrasions found in Cyra Mays genitalia, and claimed that prior to the
alleged incident, he used to be ordered to buy medicine for Cyra May who had
difficulty urinating. He further alleged that after he refused to answer Glorias
queries if her husband Buenafe, whom he usually accompanied whenever he went
out of the house, was womanizing, Gloria would always find fault in him. He
suggested that Gloria was behind the filing of the complaint. Thus:
q- According to them you caused the abrasions found in her genital?
a- That is not true, sir.
q- If that is not true, what is the truth?
a- As I have mentioned earlier that before I started working with the family
I was sent to Crame to buy medicine for the daughter because she had
difficulty in urinating.
q- Did you know why the child has difficulty in urinating?
a- No, I do not know, sir.
q- And how about the present complaint filed against you, the complaint
filed by the mother of the victim?
a- I did not do it, sir.
q- What is the truth, what can you say about this present complaint filed
against you?
a- As I said Mrs. Buenafe got mad at me because after I explained to her
that I was going with her gusband (sic) to the children of the husband
with a former marriage.[9]
Finding for the prosecution, Branch 96 of the Quezon City RTC rendered
judgment, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered finding accused RONNIE


RULLEPA y GUINTO guilty beyond reasonable doubt of rape, and he is accordingly
sentenced to death.
The accused is ordered to pay CYRA MAE BUENAFE the amount of P40,000.00 as civil
indemnity.

Costs to be paid by the accused.[10] (Italics in the original.)

Hence, this automatic review, accused-appellant assigning the following errors


to the trial court:
I

THE COURT A QUO ERRED IN CONSIDERING AS ADMISSIBLE IN EVIDENCE THE


ACCUSED-APPELLANTS ADMISSION.

II

THE COURT A QUO ERRED ON (sic) RULING THAT THE ACCUSED-APPELLANTS


SILENCE DURING TRIAL AMOUNTED TO AN IMPLIED ADMISSION OF GUILT.

III

THE COURT A QUO ERRED IN FINDING THAT THE GUILT OF THE ACCUSED-
APPELLANT FOR THE CRIME CHARGED HAS BEEN PROVEN BEYOND
REASONABLE DOUBT.

IV

THE COURT A QUO GRAVELY ERRED IN IMPOSING THE SUPREME PENALTY OF


DEATH UPON THE ACCUSED-APPELLANT.[11] (Emphasis supplied.)

Accused-appellant assails the crediting by the trial court, as the following portion
of its decision shows, of his admission to Gloria of having sexually assaulted Cyra
May:

In addition, the mother asserted that Rullepa had admitted Cyra Ma[y]s complaint during
the confrontation in the house. Indeed, according to the mother, the admission was even
expressly qualified by Rullepas insistence that he had committed the sexual assault only
once, specifying the time thereof as 4:00 pm of November 17, 1995. That qualification
proved that the admission was voluntary and true. An uncoerced and truthful admission like
this should be absolutely admissible and competent.

xxx

Remarkably, the admission was not denied by the accused during trial despite his freedom to
deny it if untrue. Hence, the admission became conclusive upon him.[12] (Emphasis
supplied.)
To accused-appellant, the statements attributed to him are inadmissible since
they were made out of fear, having been elicited only after Cyra Mays parents
bullied and questioned him. He thus submits that it was error for the trial court to
take his failure to deny the statements during the trial as an admission of guilt.
Accused-appellants submission does not persuade. The trial court considered
his admission merely as an additional ground to convince itself of his
culpability. Even if such admission, as well as the implication of his failure to deny
the same, were disregarded, the evidence suffices to establish his guilt beyond
reasonable doubt.
The plain, matter-of-fact manner by which Cyra May described her abuse in the
hands of her Kuya Ronnie is an eloquent testament to the truth of her
accusations. Thus she testified on direct examination:
q- Do you recall if Ronnie Rullepa did anything to you?
a- Yes, sir.
q- What did he do to you?
a- Sinaksak nya ang titi sa pepe ko, sa puwit ko, at sa bunganga
q- How many times did he do that to you?
a- Twice, sir.
xxx
q- Do you remember when he did these things to you?
a- Opo.
q- When was that?
a- When my mother was asleep, he put he removed my panty and
inserted his penis inside my vagina, my anus and my mouth, sir.
xxx
q- After your Kuya Ronnie did those things to you what did you feel?
a- Sabi nya ganito (Witness putting her finger in her lips) Nasaktan po ako
at umiyak po ako.
q- Did you cry because of hurt?
a- Yes.
q- What part of your body hurt?
a- Pepe ko po. When I went to the bathroom to urinate, I felt pain in my
organ, sir.[13]
Cyra May reiterated her testimony during cross-examination, providing more
revolting details of her ordeal:
q- So, you said that Kuya Ronnie did something to you what did he do to
you on November 17, 1995?
a- Sinaksak nga yong titi nya. He inserted his penis to my organ and to
my mouth, sir.
xxx
q- When you said that your kuya Ronnie inserted his penis into your organ,
into your mouth, and into your anus, would you describe what his
penis?
a- It is a round object, sir.
C o u r t:
Is this titi of your kuya Ronnie a part of his body?
a- Opo.
q- Was that in the head of kuya Ronnie?
a- No, sir.
q- Which part of his body that titi located?
(Witness pointing to her groin area)
C o u r t:
Continue
xxx
q- Why were you in that room?
a- Gusto nya po matulog ako sa kuwarto niya.
q- When you were in that room, what did Kuya Ronnie do to you?
a- Hinubo po niya ang panty ko.
q- And after he remove your panty, what did Kuya Ronnie do, what did he
do to you?
a- He inserted his penis to my organ, sir.
q- Why did kuya Ronnie, was kuya Ronnie already naked or he was
already wearing any clothing?
a- Still had his clothing on, sir.
q- So, where did his penis, saan lumabas ang penis ni Kuya Ronnie?
a- Dito po, (Witness referring or pointing to her groin area)
xxx
q- So, thats the and at the time, you did not cry and you did not shout for
help?
a- Sabi nya po, not to make any noise because my mother might be
roused from sleep.
q- How long was kuya Ronnie did that to you?
a- Matagal po.
q- After kuya Ronnie scrub his penis to your vagina, what other things did
he do?
a- After that he inserted his penis to my mouth, and to my anus, sir.
q- You did not complain and you did not shout?
a- I cried, sir.[14]
Accused-appellant draws attention to the statement of Cyra May that he was not
in the house on November 17 (1995), as reflected in the following transcript of her
testimony:
q- Is it not a fact that you said a while ago that when your father leaves the
house, he [was] usually accompanied by your kuya Ronnie?
a- Opo.
q- Why is it that Kuya Ronnie was in the house when you father left the
house at that time, on November 17?
a- He was with Kuya Ronnie, sir.
q- So, it is not correct that kuya Ronnie did something to you because your
kuya Ronnie [was] always with your Papa?
a- Yes, sir.[15]
The above-quoted testimony of Cyra May does not indicate the time when her
father Col. Buenafe left their house on November 17, 1995 with accused-appellant
and, thus, does not preclude accused-appellants commission of rape on the same
date. In any event, a young child is vulnerable to suggestion, hence, her affirmative
response to the defense counsels above-quoted leadingquestions.
As for the variance in the claim regarding when Gloria was informed of the rape,
Gloria having testified that she learned of it on November 20, 1995 [16] while Cyra
May said that immediately after the incident, she awakened her mother who was in
the adjacent room and reported it: [17] This is a minor matter that does not detract
from Cyra Mays categorical, material testimony that accused-appellant inserted his
penis into her vagina.
Accused-appellant goes on to contend that Cyra May was coached, citing the
following portion of her testimony:
q- Yong sinabi mong sinira nya ang buhay mo, where did you get that
phrase?
a- It was the word of my Mama, sir.[18]
On the contrary, the foregoing testimony indicates that Cyra May was really
narrating the truth, that of hearing her mother utter sinira niya ang buhay mo.
Accused-appellants suggestion that Cyra May merely imagined the things of
which he is accused, perhaps getting the idea from television programs, is
preposterous. It is true that the ordinary child is a great weaver of romances, and
her imagination may induce (her) to relate something she has heard or read in a
story as personal experience. [19] But Cyra Mays account is hardly the stuff of
romance or fairy tales. Neither is it normal TV fare, if at all.
This Court cannot believe that a victim of Cyra Mays age could concoct a tale of
defloration, allow the examination of her private parts, and undergo the expense,
trouble, inconvenience, not to mention the trauma of public trial. [20]
Besides, her testimony is corroborated by the findings of Dr. Preyra that there
were abrasions in her labia minora, which she opined, could have been caused by
friction with an erect penis.
This Court thus accords great weight to the following assessment of the trial
court regarding the competency and credibility of Cyra May as a witness:

Her very tender age notwithstanding, Cyra Ma(y) nonetheless appeared to possess the
necessary intelligence and perceptiveness sufficient to invest her with the competence to
testify about her experience. She might have been an impressionable child as all others of
her age are but her narration of Kuya Ronnies placing his titi in her pepe was certainly
one which could not be considered as a common childs tale. Her responses during the
examination of counsel and of the Court established her consciousness of
the distinction between good and bad, which rendered inconceivable for her to describe a
bad act of the accused unless it really happened to her. Needless to state, she described the
act of the accused as bad. Her demeanor as a witness manifested during trial by her
unhesitant, spontaneous, and plain responses to questions further enhanced her claim to
credit and trustworthiness.[21] (Italics in the original.)

In a futile attempt at exculpation, accused-appellant claims that even before the


alleged incident Cyra May was already suffering from pain in urinating. He surmises
that she could have scratched herself which caused the abrasions. Dr. Preyra,
however, was quick to rule out this possibility. She stated categorically that that part
of the female organ is very sensitive and rubbing or scratching it is painful. [22] The
abrasions could not, therefore, have been self-inflicted.
That the Medical-Legal Officer found no external signs of recent application of
any form of trauma at the time of the examination does not preclude accused-
appellants conviction since the infliction of force is immaterial in statutory rape. [23]
More. That Cyra May suffered pain in her vagina but not in her anus despite her
testimony that accused-appellant inserted his penis in both orifices does not
diminish her credibility. It is possible that accused-appellants penis failed to
penetrate her anus as deeply as it did her vagina, the former being more resistant to
extreme forces than the latter.
Accused-appellants imputation of ill motive on the part of Gloria is puerile. No
mother in her right mind would subject her child to the humiliation, disgrace and
trauma attendant to a prosecution for rape if she were not motivated solely by the
desire to incarcerate the person responsible for the childs defilement. [24] Courts are
seldom, if at all, convinced that a mother would stoop so low as to subject her
daughter to physical hardship and shame concomitant to a rape prosecution just to
assuage her own hurt feelings.[25]
Alternatively, accused-appellant prays that he be held liable for acts of
lasciviousness instead of rape, apparently on the basis of the following testimony of
Cyra May, quoted verbatim, that he merely scrubbed his penis against her vagina:
q- Is it not a fact that kuya Ronnie just made some scrubbed his penis into
your vagina?
a- Yes, sir.
q- And when he did not actually penetrated your vagina?
a- Yes, sir.[26]
Dr. Preya, however, found abrasions in the labia minora, which is directly beneath
the labia majora,[27] proving that there was indeed penetration of the vagina, not just
a mere rubbing or scrubbing of the penis against its surface.
In fine, the crime committed by accused-appellant is not merely acts of
lasciviousness but statutory rape.
The two elements of statutory rape are (1) that the accused had carnal
knowledge of a woman, and (2) that the woman is below twelve years of age. [28] As
shown in the previous discussion, the first element, carnal knowledge, had been
established beyond reasonable doubt. The same is true with respect to the second
element.
The victims age is relevant in rape cases since it may constitute an element of
the offense. Article 335 of the Revised Penal Code, as amended by Republic Act No.
7659,[29] provides:

Art. 335. When and how rape is committed. Rape is committed by having carnal
knowledge of a woman under any of the following circumstances:
x x x.

3. When the woman is under twelve years of age x x x.

x x x.

The crime of rape shall be punished by reclusion perpetua.

x x x.

Furthermore, the victims age may constitute a qualifying circumstance,


warranting the imposition of the death sentence. The same Article states:

The death penalty shall also be imposed if the crime of rape is committed with any of the
following attendant circumstances:

1. when the victim is under eighteen (18) years of age and the offender is a parent,
ascendant, step-parent, guardian, relative by consanguinity or affinity with the third civil
degree, or the common-law spouse of the parent of the victim.

x x x.

4. when the victim is x x x a child below seven (7) years old.

x x x.

Because of the seemingly conflicting decisions regarding the sufficiency of


evidence of the victims age in rape cases, this Court, in the recently decided case
of People v. Pruna,[30]established a set of guidelines in appreciating age as an
element of the crime or as a qualifying circumstance, to wit:

1. The best evidence to prove the age of the offended party is an original or certified true
copy of the certificate of live birth of such party.

2. In the absence of a certificate of live birth, similar authentic documents such as baptismal
certificate and school records which show the date of birth of the victim would suffice to
prove age.

3. If the certificate of live birth or authentic document is shown to have been lost or
destroyed or otherwise unavailable, the testimony, if clear and credible, of the victims
mother or a member of the family either by affinity or consanguinity who is qualified to
testify on matters respecting pedigree such as the exact age or date of birth of the offended
party pursuant to Section 40, Rule 130 of the Rules on Evidence shall be sufficient under the
following circumstances:
a. If the victim is alleged to be below 3 years of age and what is sought to be proved is that
she is less than 7 years old;

b. If the victim is alleged to be below 7 years of age and what is sought to be proved is that
she is less than 12 years old;

c. If the victim is alleged to be below 12 years of age and what is sought to be proved is that
she is less than 18 years old.

4. In the absence of a certificate of live birth, authentic document, or the testimony of the
victims mother or relatives concerning the victims age, the complainants testimony will
suffice provided that it is expressly and clearly admitted by the accused.

5. It is the prosecution that has the burden of proving the age of the offended party. The
failure of the accused to object to the testimonial evidence regarding age shall not be taken
against him.

6. The trial court should always make a categorical finding as to the age of the victim.

Applying the foregoing guidelines, this Court in the Pruna case held that the
therein accused-appellant could only be sentenced to suffer the penalty of reclusion
perpetua since:

x x x no birth certificate or any similar authentic document, such as a baptismal certificate of


LIZETTE, was presented to prove her age. x x x.

x x x.

However, the Medico-Legal Report relied upon by the trial court does not in any way prove
the age of LIZETTE, for there is nothing therein which even mentions her age. Only
testimonial evidence was presented to establish LIZETTEs age. Her mother, Jacqueline,
testified (that the victim was three years old at the time of the commission of the crime).

xxx

Likewise, LIZETTE testified on 20 November 1996, or almost two years after the incident,
that she was 5 years old. However, when the defense counsel asked her how old she was on
3 January 1995, or at the time of the rape, she replied that she was 5 years old. Upon further
question as to the date she was born, she could not answer.

For PRUNA to be convicted of rape in its qualified form and meted the supreme penalty of
death, it must be established with certainty that LIZETTE was below 7 years old at the time
of the commission of the crime. It must be stressed that the severity of the death penalty,
especially its irreversible and final nature once carried out, makes the decision-making
process in capital offenses aptly subject to the most exacting rules of procedure and
evidence.

In view of the uncertainty of LIZETTEs exact age, corroborative evidence such as her birth
certificate, baptismal certificate or any other authentic document should be introduced in
evidence in order that the qualifying circumstance of below seven (7) years old is
appreciated against the appellant. The lack of objection on the part of the defense as to her
age did not excuse the prosecution from discharging its burden. That the defense invoked
LIZETTEs tender age for purposes of questioning her competency to testify is not
necessarily an admission that she was below 7 years of age when PRUNA raped her on 3
January 1995. Such being the case, PRUNA cannot be convicted of qualified rape, and
hence the death penalty cannot be imposed on him.

However, conformably with no. 3 (b) of the foregoing guidelines, the testimony of
LIZETTEs mother that she was 3 years old at the time of the commission of the crime is
sufficient for purposes of holding PRUNA liable for statutory rape, or rape of a girl below 12
years of age. Under the second paragraph of Article 335, as amended by R.A. No. 7659, in
relation to no. 3 of the first paragraph thereof, having carnal knowledge of a woman under 12
years of age is punishable by reclusion perpetua. Thus, the penalty to be imposed on
PRUNA should be reclusion perpetua, and not death penalty. (Italics in the original.)

Several cases[31] suggest that courts may take judicial notice of the appearance
of the victim in determining her age. For example, the Court, in People v. Tipay,
[32]
qualified the ruling inPeople v. Javier,[33] which required the presentation of the
birth certificate to prove the rape victims age, with the following pronouncement:

This does not mean, however, that the presentation of the certificate of birth is at all times
necessary to prove minority. The minority of a victim of tender age who may be below the
age of ten is quite manifest and the court can take judicial notice thereof. The crucial years
pertain to the ages of fifteen to seventeen where minority may seem to be dubitable due to
ones physical appearance. In this situation, the prosecution has the burden of proving with
certainty the fact that the victim was under 18 years of age when the rape was committed in
order to justify the imposition of the death penalty under the above-cited provision.
(Emphasis supplied.)

On the other hand, a handful of cases [34] holds that courts, without the requisite
hearing prescribed by Section 3, Rule 129 of the Rules of Court, [35] cannot take
judicial notice of the victims age.
Judicial notice signifies that there are certain facta probanda, or propositions in
a partys case, as to which he will not be required to offer evidence; these will be
taken for true by the tribunal without the need of evidence. [36] Judicial notice,
however, is a phrase sometimes used in a loose way to cover some other judicial
action. Certain rules of Evidence, usually known under other names, are frequently
referred to in terms of judicial notice.[37]
The process by which the trier of facts judges a persons age from his or her
appearance cannot be categorized as judicial notice. Judicial notice is based upon
convenience and expediency for it would certainly be superfluous, inconvenient, and
expensive both to parties and the court to require proof, in the ordinary way, of facts
which are already known to courts. [38] As Tundag puts it, it is the cognizance of
certain facts which judges may properly take and act on without proof because
they already know them. Rule 129 of the Rules of Court, where the provisions
governing judicial notice are found, is entitled What Need Not Be Proved. When
the trier of facts observes the appearance of a person to ascertain his or her age, he
is not taking judicial notice of such fact; rather, he is conducting an examination of
the evidence, the evidence being the appearance of the person. Such a process
militates against the very concept of judicial notice, the object of which is to do away
with the presentation of evidence.
This is not to say that the process is not sanctioned by the Rules of Court; on the
contrary, it does. A persons appearance, where relevant, is admissible as object
evidence, the same being addressed to the senses of the court. Section 1, Rule 130
provides:

SECTION 1. Object as evidence. Objects as evidence are those addressed to the senses of
the court. When an object is relevant to the fact in issue, it may be exhibited to, examined or
viewed by the court.

To be sure, one author writes, this practice of inspection by the court of


objects, things or persons relevant to the fact in dispute, has its roots in ancient
judicial procedure.[39] The author proceeds to quote from another authority:

Nothing is older or commoner in the administration of law in all countries than the
submission to the senses of the tribunal itself, whether judge or jury, of objects which furnish
evidence. The view of the land by the jury, in real actions, of a wound by the judge where
mayhem was alleged, and of the person of one alleged to be an infant, in order to fix his
age, the inspection and comparison of seals, the examination of writings, to determine
whether they are ()blemished,() the implements with which a crime was committed or of a
person alleged, in a bastardy proceeding, to be the child of another, are few illustrations of
what may be found abundantly in our own legal records and textbooks for seven centuries
past.[40] (Emphasis supplied.)

A persons appearance, as evidence of age (for example, of infancy, or of being


under the age of consent to intercourse), is usually regarded as relevant; and, if
so, the tribunal may properly observe the person brought before it. [41] Experience
teaches that corporal appearances are approximately an index of the age of their
bearer, particularly for the marked extremes of old age and youth. In every case
such evidence should be accepted and weighed for what it may be in each case
worth. In particular, the outward physical appearance of an alleged minor may be
considered in judging his age; a contrary rule would for such an inference be
pedantically over-cautious.[42] Consequently, the jury or the court trying an issue of
fact may be allowed to judge the age of persons in court by observation of such
persons.[43] The formal offer of the person as evidence is not necessary. The
examination and cross-examination of a party before the jury are equivalent to
exhibiting him before the jury and an offer of such person as an exhibit is properly
refused. [44]
This Court itself has sanctioned the determination of an aliens age from his
appearance. In Braca v. Collector of Customs,[45] this Court ruled that:

The customs authorities may also determine from the personal appearance of the immigrant
what his age is. The person of a Chinese alien seeking admission into the Philippine Islands
is evidence in an investigation by the board of special inquiry to determine his right to enter;
and such body may take into consideration his appearance to determine or assist in
determining his age and a finding that the applicant is not a minor based upon such
appearance is not without evidence to support it.

This Court has also implicitly recognized the same process in a criminal
case. Thus, in United States v. Agadas,[46] this Court held:

Rosario Sabacahan testified that he was 17 years of age; that he had never purchased a
cedula; and that he was going to purchase a cedula the following january. Thereupon the
court asked this defendant these questions: You are a pretty big boy for
seventeen. Answer: I cannot tell exactly because I do not remember when I was born, but
17 years is my guess. Court: If you are going to take advantage of that excuse, you had
better get some positive evidence to that effect. Answer: I do not remember, as I already
stated on what date and in what year I was born. The court, in determining the question of
the age of the defendant, Rosario Sabacahan, said:

The defendant, Rosario Sabacahan, testified that he thought that he was about 17 years of
age, but judging by his appearance he is a youth 18 or 19 years old. He has shown that he
has no positive information on the subject and no effort was made by the defense to prove
the fact that he is entitled to the mitigating circumstance of article 9, paragraph 2, of the
Penal code, which fact it is held to be incumbent upon the defense to establish by satisfactory
evidence in order to enable the court to give an accused person the benefit of the mitigating
circumstance.

In United States vs. Estavillo and Perez (10 Off. Gaz., 1984) Estavillo testified, when the
case was tried in the court below, that he then was only 16 years of age. There was no other
testimony in the record with reference to his age. But the trial judge said: The accused
Estavillo, notwithstanding his testimony giving his age as 16 years, is, as a matter of fact, not
less than 20. This court, in passing upon the age of Estavillo, held:

We presume that the trial court reached this conclusion with reference to the age of
Estavillo from the latters personal appearance. There is no proof in the record, as we have
said, which even tends to establish the assertion that this appellant understated his age. * * *
It is true that the trial court had an opportunity to note the personal appearance of Estavillo
for the purpose of determining his age, and by so doing reached the conclusion that he was at
least 20, just two years over 18. This appellant testified that he was only 16, and this
testimony stands uncontradicted. Taking into consideration the marked difference in the
penalties to be imposed upon that age, we must, therefore, conclude (resolving all doubts in
favor of the appellants) that the appellants ages were 16 and 14 respectively.

While it is true that in the instant case Rosario testified that he was 17 years of age, yet the
trial court reached the conclusion, judging from the personal appearance of Rosario, that he
is a youth 18 or 19 years old. Applying the rule enunciated in the case just cited, we must
conclude that there exists a reasonable doubt, at least, with reference to the question whether
Rosario was, in fact 18 years of age at the time the robbery was committed. This doubt must
be resolved in favor of the defendant, and he is, therefore, sentenced to six months of arresto
mayor in lieu of six years ten months and one day of presidio mayor. x x x.

There can be no question, therefore, as to the admissibility of a persons


appearance in determining his or her age. As to the weight to accord such
appearance, especially in rape cases,Pruna laid down guideline no. 3, which is
again reproduced hereunder:

3. If the certificate of live birth or authentic document is shown to have been lost or
destroyed or otherwise unavailable, the testimony, if clear and credible, of the victims
mother or a member of the family either by affinity or consanguinity who is qualified to
testify on matters respecting pedigree such as the exact age or date of birth of the offended
party pursuant to Section 40, Rule 130 of the Rules on Evidence shall be sufficient under the
following circumstances:

a. If the victim is alleged to be below 3 years of age and what is sought to be proved is that
she is less than 7 years old;

b. If the victim is alleged to be below 7 years of age and what is sought to be proved is that
she is less than 12 years old;

c. If the victim is alleged to be below 12 years of age and what is sought to be proved is that
she is less than 18 years old.

Under the above guideline, the testimony of a relative with respect to the age of
the victim is sufficient to constitute proof beyond reasonable doubt in cases (a), (b)
and (c) above. In such cases, the disparity between the allegation and the proof of
age is so great that the court can easily determine from the appearance of the victim
the veracity of the testimony. The appearance corroborates the relatives testimony.
As the alleged age approaches the age sought to be proved, the persons
appearance, as object evidence of her age, loses probative value. Doubt as to her
true age becomes greater and, following Agadas, supra, such doubt must be
resolved in favor of the accused.

This is because in the era of modernism and rapid growth, the victims mere physical
appearance is not enough to gauge her exact age. For the extreme penalty of death to be
upheld, nothing but proof beyond reasonable doubt of every fact necessary to constitute the
crime must be substantiated. Verily, the minority of the victim should be not only alleged but
likewise proved with equal certainty and clearness as the crime itself. Be it remembered that
the proof of the victims age in the present case spells the difference between life and death.
[47]

In the present case, the prosecution did not offer the victims certificate of live
birth or similar authentic documents in evidence. The victim and her mother,
however, testified that she was only three years old at the time of the rape. Cyra
Mays testimony goes:
q- Your name is Cyra Mae is that correct?
a- Yes, sir.
q- And you are 3 years old?
a- Yes, sir.[48]
That of her mother goes:
Q How old was your daughter when there things happened?
A 3 and years old.
Q When was she born?
A In Manila, May 10, 1992.[49]
Because of the vast disparity between the alleged age (three years old) and the
age sought to be proved (below twelve years), the trial court would have had no
difficulty ascertaining the victims age from her appearance. No reasonable doubt,
therefore, exists that the second element of statutory rape, i.e., that the victim was
below twelve years of age at the time of the commission of the offense, is present.
Whether the victim was below seven years old, however, is another
matter. Here, reasonable doubt exists. A mature three and a half-year old can
easily be mistaken for an underdeveloped seven-year old. The appearance of the
victim, as object evidence, cannot be accorded much weight and, following Pruna,
the testimony of the mother is, by itself, insufficient.
As it has not been established with moral certainty that Cyra May was below
seven years old at the time of the commission of the offense, accused-appellant
cannot be sentenced to suffer the death penalty. Only the penalty of reclusion
perpetua can be imposed upon him.
In line with settled jurisprudence, the civil indemnity awarded by the trial court is
increased to P50,000.00. In addition, Cyra May is entitled to an award of moral
damages in the amount ofP50,000.00.[50]
WHEREFORE, the Decision of the Regional Trial Court of Quezon City, Branch
96, is AFFIRMED with MODIFICATION. Accused-appellant Ronnie
Rullepa y Guinto is found GUILTY of Statutory Rape, defined and punished by
Article 335 (3) of the Revised Penal Code, as amended, and is sentenced to suffer
the penalty of reclusion perpetua. He is ordered to pay private complainant, Cyra
May Buenafe y Francisco, the amount of P50,000.00 as civil indemnity
and P50,000.00 as moral damages.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing,
Sandoval-Gutierrez, Carpio, Austria-Martinez, Callejo, Sr., and Azcuna, JJ., concur.
Ynares-Santiago, and Corona, JJ., on leave.

THIRD DIVISION

[G.R. No. 143276. July 20, 2004]

LANDBANK OF THE PHILIPPINES, petitioner, vs. SPOUSES VICENTE


BANAL and LEONIDAS ARENAS-BANAL, respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:

Spouses Vicente and Leonidas Banal, respondents, are the registered owners of
19.3422 hectares of agricultural land situated in San Felipe, Basud, Camarines Norte
covered by Transfer Certificate of Title No. T-6296. A portion of the land consisting of
6.2330 hectares (5.4730 of which is planted to coconut and 0.7600 planted to palay)
was compulsorily acquired by the Department of Agrarian Reform (DAR) pursuant to
Republic Act (R.A.) No. 6657, as amended, otherwise known as the Comprehensive
[1]

Agrarian Reform Law of 1988.


In accordance with the formula prescribed in DAR Administrative Order No. 6,
Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994,
[2]
[3]
the Land Bank of thePhilippines (Landbank), petitioner, made the following valuation
[4]

of the property:

Acquired property Area in hectares Value


Coconut land 5.4730 P148,675.19
Riceland 0.7600 25,243.36
==========
P173,918.55

Respondents rejected the above valuation. Thus, pursuant to Section 16(d) of R.A.
6657, as amended, a summary administrative proceeding was conducted before the
Provincial Agrarian Reform Adjudicator (PARAD) to determine the valuation of the
land. Eventually, the PARAD rendered its Decision affirming the Landbanks valuation.
Dissatisfied with the Decision of the PARAD, respondents filed with the Regional
Trial Court (RTC), Branch 40, Daet, Camarines Norte, designated as a Special Agrarian
Court, a petition for determination of just compensation, docketed as Civil Case No.
6806. Impleaded as respondents were the DAR and the Landbank. Petitioners therein
prayed for a compensation ofP100,000.00 per hectare for both coconut land and
riceland, or an aggregate amount of P623,000.00.
During the pre-trial on September 23, 1998, the parties submitted to the RTC the
following admissions of facts: (1) the subject property is governed by the provisions of
R.A. 6657, as amended; (2) it was distributed to the farmers-beneficiaries; and (3) the
Landbank deposited the provisional compensation based on the valuation made by the
DAR. [5]

On the same day after the pre-trial, the court issued an Order dispensing with the
hearing and directing the parties to submit their respective memoranda. [6]

In its Decision dated February 5, 1999, the trial court computed the just
compensation for the coconut land at P657,137.00 and for the riceland at P46,000.00,
or a total of P703,137.00, which is beyond respondents valuation of P623,000.00. The
court further awarded compounded interest at P79,732.00 in cash. The dispositive
portion of the Decision reads:

WHEREFORE, judgment is hereby rendered as follows:

1. Ordering respondent Landbank to pay the petitioners, the spouses Dr.


Vicente Banal and Leonidas Arenas-Banal, for the 5.4730 hectares of
coconut land the sum of SIX HUNDRED FIFTY-SEVEN THOUSAND
ONE HUNDRED THIRTY-SEVEN PESOS (P657,137.00) in cash and
in bonds in the proportion provided by law;

2. Ordering respondent Landbank to pay the petitioners for the .7600


hectares of riceland the sum of FORTY-SIX THOUSAND PESOS
(P46,000.00) in cash and in bonds in the proportion provided by law;
and

3. Ordering respondent Landbank to pay the petitioners the sum of


SEVENTY-NINE THOUSAND SEVEN HUNDRED THIRTY-TWO
PESOS (P79,732.00) as the compounded interest in cash.

IT IS SO ORDERED. [7]

In determining the valuation of the land, the trial court based the same on the facts
established in another case pending before it (Civil Case No. 6679, Luz Rodriguez vs.
DAR, et al.), using the following formula:

For the coconut land

1. Average Gross Production (AGP) x .70 x 9.70 (price per kilo of


coconut) = Net Income (NI)

2. NI / 6% = Price Per Hectare (PPH) (applying the capitalization formula


under Republic Act No. 3844 ) [8]

For the riceland

1. 2.5 x AGP x Government Support Price (GSP) = Land Value (LV) or


PPH (using the formula under Executive Order No. 228 ) [9]

2. AGP x 6% compounded annually for 26 years x GSP = Interest


(pursuant to DAR AO No. 13, Series of 1994)

Forthwith, the Landbank filed with the Court of Appeals a petition for review,
docketed as CA-G.R. SP No. 52163.
On March 20, 2000, the Appellate Court rendered a Decision affirming in toto the
[10]

judgment of the trial court. The Landbanks motion for reconsideration was likewise
denied.[11]

Hence, this petition for review on certiorari.


The fundamental issue for our resolution is whether the Court of Appeals erred in
sustaining the trial courts valuation of the land. As earlier mentioned, there was no trial
on the merits.
To begin with, under Section 1 of Executive Order No. 405 (1990), the Landbank is
charged primarily with the determination of the land valuation and compensation for
all private lands suitable for agriculture under the Voluntary Offer to Sell or Compulsory
Acquisition arrangement For its part, the DAR relies on the determination of the land
valuation and compensation by the Landbank. [12]

Based on the Landbanks valuation of the land, the DAR makes an offer to the
landowner. If the landowner accepts the offer, the Landbank shall pay him the
[13]

purchase price of the land after he executes and delivers a deed of transfer and
surrenders the certificate of title in favor of the government. In case the landowner
[14]

rejects the offer or fails to reply thereto, the DAR adjudicator conducts summary
[15]

administrative proceedings to determine the compensation for the land by requiring the
landowner, the Landbank and other interested parties to submit evidence as to the just
compensation for the land. These functions by the DAR are in accordance with its
[16]

quasi-judicial powers under Section 50 of R.A. 6657, as amended, which provides:

SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with
primary jurisdiction to determine and adjudicate agrarian reform matters and shall
have exclusive original jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive jurisdiction of the
Department of Agriculture (DA) and the Department of Environment and Natural
Resources (DENR).

x x x.

A party who disagrees with the decision of the DAR adjudicator may bring the
matter to the RTC designated as a Special Agrarian Court for final determination of
[17]

just compensation. [18]

In the proceedings before the RTC, it is mandated to apply the Rules of


Court and, on its own initiative or at the instance of any of the parties, appoint one or
[19]

more commissioners to examine, investigate and ascertain facts relevant to the dispute,
including the valuation of properties, and to file a written report thereof x x x. In
[20]

determining just compensation, the RTC is required to consider several factors


enumerated in Section 17 of R.A. 6657, as amended, thus:

Sec. 17. Determination of Just Compensation. In determining just compensation,


the cost of acquisition of the land, the current value of like properties, its nature,
actual use and income, the sworn valuation by the owner, the tax declarations, and the
assessment made by government assessors shall be considered. The social and
economic benefits contributed by the farmers and the farmworkers and by the
Government to the property, as well as the non-payment of taxes or loans secured
from any government financing institution on the said land, shall be considered as
additional factors to determine its valuation.

These factors have been translated into a basic formula in DAR Administrative
Order No. 6, Series of 1992, as amended by DAR Administrative Order No. 11, Series
of 1994, issued pursuant to the DARs rule-making power to carry out the object and
purposes of R.A. 6657, as amended. [21]

The formula stated in DAR Administrative Order No. 6, as amended, is as follows:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

The above formula shall be used if all the three factors are present, relevant and
applicable.

A.1 When the CS factor is not present and CNI and MV are applicable, the formula
shall be:
LV = (CNI x 0.9) + (MV x 0.1)

A.2 When the CNI factor is not present, and CS and MV are applicable, the formula
shall be:
LV = (CS x 0.9) + (MV x 0.1)

A.3 When both the CS and CNI are not present and only MV is applicable, the
formula shall be:
LV = MV x 2

Here, the RTC failed to observe the basic rules of procedure and the fundamental
requirements in determining just compensation for the property. Firstly, it dispensed
with the hearing and merely ordered the parties to submit their respective
memoranda. Such action is grossly erroneous since the determination of just
compensation involves the examination of the following factors specified in Section 17
of R.A. 6657, as amended:

1. the cost of the acquisition of the land;

2. the current value of like properties;

3. its nature, actual use and income;

4. the sworn valuation by the owner; the tax declarations;

5. the assessment made by government assessors;


6. the social and economic benefits contributed by the farmers and the
farmworkers and by the government to the property; and

7. the non-payment of taxes or loans secured from any government


financing institution on the said land, if any.

Obviously, these factors involve factual matters which can be established only
during a hearing wherein the contending parties present their respective evidence. In
fact, to underscore the intricate nature of determining the valuation of the land, Section
58 of the same law even authorizes the Special Agrarian Courts to appoint
commissioners for such purpose.
Secondly, the RTC, in concluding that the valuation of respondents property
is P703,137.00, merely took judicial notice of the average production figures in
the Rodriguez case pending before it and applied the same to this case without
conducting a hearing and worse, without the knowledge or consent of the parties, thus:

x x x. In the case x x x of the coconut portion of the land 5.4730 hectares,


defendants determined the average gross production per year at 506.95 kilos only, but
in the very recent case of Luz Rodriguez vs. DAR, et al., filed and decided by this
court in Civil Case No. 6679 also for just compensation for coconut lands and
Riceland situated at Basud, Camarines Norte wherein also the lands in the above-
entitled case are situated,the value fixed therein was 1,061.52 kilos per annum per
hectare for coconut land and the price per kilo is P8.82, but in the instant case
the price per kilo is P9.70. In the present case, we consider 506.95 kilos average
gross production per year per hectare to be very low considering that farm practice for
coconut lands is harvest every forty-five days. We cannot also comprehended why in
the Rodriguez case and in this case there is a great variance in average production per
year when in the two cases the lands are both coconut lands and in the same place of
Basud, Camarines Norte. We believe that it is more fair to adapt the 1,061.52 kilos
per hectare per year as average gross production. In the Rodriguez case, the
defendants fixed the average gross production of palay at 3,000 kilos or 60 cavans per
year. The court is also constrained to apply this yearly palay production in
the Rodriguez case to the case at bar.

xxx xxx xxx

As shown in the Memorandum of Landbank in this case, the area of the coconut land
taken under CARP is 5.4730 hectares. But as already noted, the average gross
production a year of 506.96 kilos per hectare fixed by Landbank is too low as
compared to the Rodriguez case which was 1,061 kilos when the coconut land in
both cases are in the same town of Basud, Camarines Norte, compelling this
court then to adapt 1,061 kilos as the average gross production a year of the
coconut land in this case. We have to apply also the price of P9.70 per kilo as this is
the value that Landbank fixed for this case.

The net income of the coconut land is equal to 70% of the gross income. So, the net
income of the coconut land is 1,061 x .70 x 9.70 equals P7,204.19 per
hectare. Applying the capitalization formula of R.A. 3844 to the net income
of P7,204.19 divided by 6%, the legal rate of interest, equals P120,069.00 per
hectare. Therefore, the just compensation for the 5.4730 hectares is P657,137.00.

The Riceland taken under Presidential Decree No. 27 as of October 21, 1972 has an
area of .7600 hectare. If in the Rodriguez case the Landbank fixed the average gross
production of 3000 kilos or 60 cavans of palay per year, then the .7600 hectare in this
case would be 46 cavans. The value of the riceland therefore in this case is 46 cavans
x 2.5 x P400.00 equals P46,000.00. [22]

PARC Resolution 94-24-1 of 25 October 1994, implemented by DAR AO 13,


granted interest on the compensation at 6% compounded annually. The compounded
interest on the 46 cavans for 26 years is 199.33 cavans. At P400.00 per cavan, the
value of the compounded interest is P79,732.00. (emphasis added)
[23]

Well-settled is the rule that courts are not authorized to take judicial notice of the
contents of the records of other cases even when said cases have been tried or are
pending in the same court or before the same judge. They may only do so in the
[24]

absence of objection and with the knowledge of the opposing party, which are not
[25]

obtaining here.
Furthermore, as earlier stated, the Rules of Court shall apply to all proceedings
before the Special Agrarian Courts. In this regard, Section 3, Rule 129 of the Revised
Rules on Evidence is explicit on the necessity of a hearing before a court takes judicial
notice of a certain matter, thus:

SEC. 3. Judicial notice, when hearing necessary. During the trial, the court, on its
own initiative, or on request of a party, may announce its intention to take judicial
notice of any matter and allow the parties to be heard thereon.

After the trial, and before judgment or on appeal, the proper court, on its own
initiative or on request of a party, may take judicial notice of any matter and allow
the parties to be heard thereon if such matter is decisive of a material issue in the
case. (emphasis added)

The RTC failed to observe the above provisions.


Lastly, the RTC erred in applying the formula prescribed under Executive Order
(EO) No. 228 and R.A. No. 3844, as amended, in determining the valuation of the
[26] [27]
property; and in granting compounded interest pursuant to DAR Administrative Order
No. 13, Series of 1994. It must be stressed that EO No. 228 covers private agricultural
[28]

lands primarily devoted to rice and corn, while R.A. 3844 governs agricultural
leasehold relation between the person who furnishes the landholding, either as
owner, civil law lessee, usufructuary, or legal possessor, and the person who personally
cultivates the same. Here, the land is planted to coconut and rice and does not
[29]

involve agricultural leasehold relation. What the trial court should have applied is the
formula in DAR Administrative Order No. 6, as amended by DAR Administrative Order
No. 11 discussed earlier.
As regards the award of compounded interest, suffice it to state that DAR
Administrative Order No. 13, Series of 1994 does not apply to the subject land but to
those lands taken under Presidential Decree No. 27 and Executive Order No. 228
[30]

whose owners have not been compensated. In this case, the property is covered by
R.A. 6657, as amended, and respondents have been paid the provisional compensation
thereof, as stipulated during the pre-trial.
While the determination of just compensation involves the exercise of judicial
discretion, however, such discretion must be discharged within the bounds of the
law. Here, the RTC wantonly disregarded R.A. 6657, as amended, and its
implementing rules and regulations. (DAR Administrative Order No. 6, as amended by
DAR Administrative Order No.11).
In sum, we find that the Court of Appeals and the RTC erred in determining the
valuation of the subject land. Thus, we deem it proper to remand this case to the RTC
for trial on the merits wherein the parties may present their respective evidence. In
determining the valuation of the subject property, the trial court shall consider the factors
provided under Section 17 of R.A. 6657, as amended, mentioned earlier. The formula
prescribed by the DAR in Administrative Order No. 6, Series of 1992, as amended by
DAR Administrative Order No. 11, Series of 1994, shall be used in the valuation of the
land. Furthermore, upon its own initiative, or at the instance of any of the parties, the
trial court may appoint one or more commissioners to examine, investigate and
ascertain facts relevant to the dispute.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of
Appeals dated March 20, 2000 in CA-G.R. SP No. 52163 is REVERSED. Civil Case
No. 6806 is REMANDED to the RTC, Branch 40, Daet, Camarines Norte, for trial on the
merits with dispatch. The trial judge is directed to observe strictly the procedures
specified above in determining the proper valuation of the subject property.
SO ORDERED.
Panganiban, (Chairman), and Carpio-Morales, JJ., concur.
Corona, J., on leave.

ESTRELLA PIGAO, et. al. vs.SAMUEL RABANILLO


G.R. No. 150712 May 2, 2006
FACTS: In 1947, the late Eusebio Pigao and his family, settled on a government lot
owned by the Peoples Homesite and Housing Corporation (PHHC). A contract to sell
was entered into by Eusebio and PHHC. In 1959, Eusebio executed a deed of
assignment of rights over one-half of the property in favor of respondent who
proceeded to occupy the front half portion. In 1970, Eusebio executed a deed of
mortgage over the same half-portion of the property in favor of respondent. In 1973,
title was issued in Eusebios name over the entire property. In 1978, respondent
executed an affidavit of adverse claim over the front half portion of the lot
registered in Eusebios name. This affidavit was duly annotated on said title. On
June 17, 1979, Eusebio died.and was survived by his children, herein petitioners.

In 1988, after the Office of the Register of Deeds of Quezon City was gutted
by fire, petitioners were issued a reconstituted title in the name of Eusebio which no
longer carried the annotation of the adverse claim of respondent. In 1992, the
subject lot was included in the extrajudicial settlement of Eusebios estate and a
new title was issued for the entire lot in the name of petitioners. Respondent
continued to occupy the front half portion through his tenant, Gil Ymata. On January
29, 1996, petitioners filed a case in the RTC of Quezon City against respondent and
Ymata wherein they sought to quiet their title over the entire lot and to recover
possession of the front half portion. They averred that Eusebios deed of assignment
and deed of mortgage were clouds on their title which should be nullified. The RTC
ruled in favor of petitioners: CA reversed the RTC decision in favor of respondent.

Petitioners contend that when the final deed of sale was issued by PHHC in
favor of Eusebio in 1973, this deed contained a prohibition against the alienation of
the lot that the applicant agree (d) not to sell, assign, encumber, mortgage, lease,
sublet or in any other manner affect his right under this contract, at any time, in
any manner whatsoever, in whole or in part, without first obtaining the written
consent of the Corporation." To support their claim, they request this Court to take
judicial notice of the fact that the pro-forma conditional contracts-to- sell between
PHHC and applicants. Petitioners failed to present during the trial the conditional
contract to sell between Eusebio and PHHC which they claimed that they did not
have a copy thereof. What they submitted to this Court was a copy of a conditional
contract to sell between a certain Armando Bernabe and the PHHC pertaining to a
lot located at 94 K-5th St., Kamuning, Quezon City to prove the existence of the
aforementioned condition.

Respondent objects to this attempt of petitioners to seek admission of


evidence which was presented neither during trial nor on appeal.

ISSUES: WON the said conditional contract to sell between Armando Bernabe
and PHHC may be given judicial notice
HELD: NO. We cannot take cognizance of this document the conditional contract to
sell between Bernabe and the PHHC alleged to be the pro-forma contract used by
PHHC with its applicants - which petitioners are presenting for the first time. This
document is not among the matters the law mandatorily requires us to take judicial
notice of. Neither can we consider it of public knowledge nor capable of
unquestionable demonstration nor ought to be known to judges because of their
judicial functions. We have held that:

Matters of judicial notice have three material requisites: (1) the matter
must be one of common and general knowledge; (2) it must be well and
authoritatively settled and not doubtful or uncertain; and (3) it must be known to
be within the limits of jurisdiction of the court. The power of taking judicial notice is
to be exercised by courts with caution. Care must be taken that the requisite
notoriety exists and every reasonable doubt on the subject should be
promptly resolved in the negative. (emphasis supplied)

Consequently, for this document to be properly considered by us, it should have


been presented during trial and formally offered as evidence. Otherwise, we would
be denying due process of law to respondent.

A document, or any article for that matter, is not evidence when it is simply marked
for identification; it must be formally offered, and the opposing counsel given an
opportunity to object to it or cross-examine the witness called upon to prove or
identify it. A formal offer is necessary since judges are required to base their
findings of fact and judgment only and strictly upon the evidence offered by
the parties at the trial. To allow a party to attach any document to his pleading and
then expect the court to consider it as evidence may draw unwarranted
consequences. The opposing party will be deprived of his chance to examine the
document and object to its admissibility. The appellate court will have difficulty
reviewing documents not previously scrutinized by the court below. The pertinent
provisions of the Revised Rules of Court on the inclusion on appeal of documentary
evidence or exhibits in the records cannot be stretched as to include such pleadings
or documents not offered at the hearing of the case.

Besides, this document does not even pertain to the lot and parties involved here.
Accordingly, it is neither relevant nor material evidence. But even assuming that it
were, then it would substantially affect the outcome of the case so respondent
should have been given the chance to scrutinize the document and object to it
during the trial of the case. It is too late to present it now when nothing prevented
petitioners from introducing it before.

DEED OF ASSIGNMENT: NULL AND VOID for being contrary to public policy.
Under PHHC rules, preference for the purchase of residential lots from the PHHC was
accorded to bona fide occupants of such lots.
Eusebio, as a bona fide occupant of the subject lot, had a vested right to buy the
property. This did not, however, give him the unbridled freedom to transfer his right
to a third party, specially one who was unqualified to avail of it. Undoubtedly, the
PHHC was clothed with authority to determine if a person was qualified to purchase
a residential lot from it. The right to purchase was a personal right that the qualified
applicant, as determined by PHHC, must personally exercise. As a personal right, it
could not be transferred to just another person.

Any transfer of rights, to be valid, must be in line with the policy of PHHC which was
to provide "decent housing for those who may be found unable otherwise to provide
themselves therewith." Thus, any transfer of an applicants right to buy a lot was
invalid if done without the consent of PHHC. The same policy was enunciated by the
terms of the deed of sale.25 There is no showing that the PHHCs approval for the
assignment of half of the lot to respondent was ever obtained. Stated otherwise,
there is no proof that respondent would have been allowed to avail of the
preferential rights exclusively granted to bona fide occupants of PHHC-owned lots
like Eusebio. Thus, the assignment of rights by Eusebio to respondent, who was not
a bona fide occupant of the lot, frustrated the public policy of the government. It
should therefore be struck down as null and void.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 150712 May 2, 2006

ESTRELLA PIGAO, ROMEO PIGAO, EMMANUEL PIGAO, ISABELITA ABAD, PURITA SARTIGA,
CESAR PIGAO, TERESITA PIGAO, VIRGILIO PIGAO and EVANGELINE
KIUNISALA, Petitioners,
vs.
SAMUEL RABANILLO, Respondent.

DECISION

CORONA, J.:

This petition for review seeks the reversal of the decision 1 of the Court of Appeals (CA) dated
October 29, 2001 in CA-G.R. CV No. 60069, the dispositive portion of which read:

WHEREFORE, the decision rendered in Civil Case No. Q-96-26270 on February 27, 1998 is hereby
REVERSED and SET ASIDE. As prayed for in the answer, Transfer Certificate of Title No. 56210
over the 240 square-meter lot located at 92 (now 102) K-5th Street, Kamuning, Quezon City issued
in the name of Eusebio Pigaos children is hereby ordered CANCELLED and the Register of Deeds
of Quezon City is hereby ordered to ISSUE a new one in lieu thereof in the names of both Eusebio
Pigaos children and Samuel Rabanillo, with the front half portion of the lot pertaining to the latter
and the back half portion pertaining to the former.

Let a copy of this decision be furnished the Register of Deeds of Quezon City for proper action.

SO ORDERED.2

The antecedent facts follow.

Sometime in 1947, the late Eusebio Pigao, petitioners father, together with his family, settled on a
240 square meter lot located at 92 (now 102) K-5th Street, Kamuning, Quezon City. The parcel of
land used to be government property owned by the Peoples Homesite and Housing Corporation
(PHHC),3 under Transfer Certificate of Title (TCT) No. 27287.4 Eusebio applied for the purchase of
the subject lot and a contract to sell for a consideration ofP1,022.19 was thereafter entered into by
Eusebio and PHHC.

In 1959, Eusebio executed a deed of assignment of rights over one-half of the property in favor of
respondent, for a consideration of P1,000. Respondent proceeded to occupy the front half portion,
established a residential building thereon, and paid the amortizations for the said portion.

In 1970, Eusebio executed a deed of mortgage over the same half-portion of the property in favor of
respondent. After the amortizations on the subject lot were fully paid in 1973, the PHHC issued a
deed of sale over the entire lot in favor of Eusebio. Consequently, TCT No. 197941 was issued in
Eusebios name. In 1978, respondent executed an affidavit of adverse claim over the front half
portion of the lot registered in Eusebios name. This affidavit was duly annotated on TCT No.
197941. On June 17, 1979, Eusebio died and was survived by his children, herein petitioners.

In 1988, after the Office of the Register of Deeds of Quezon City was gutted by fire, petitioner
Estrella Pigao applied for the reconstitution of the original of TCT No. 197941 that was burned. This
was approved in 1990 and TCT No. RT-11374 was issued, still in the name of Eusebio. This
reconstituted title no longer carried the annotation of the adverse claim of respondent.

In 1992, petitioners executed an extrajudicial settlement of Eusebios estate among themselves,


including the entire subject lot. As a consequence, TCT No. 56210 was issued for the entire lot in the
name of petitioners. Respondent continued to occupy the front half portion through his tenant, Gil
Ymata. On January 29, 1996, petitioners instituted civil case no. Q-96-26270 in the Regional Trial
Court (RTC) of Quezon City, Branch 95, against respondent and Ymata wherein they sought to quiet
their title over the entire lot and to recover possession of the front half portion. They averred that
Eusebios deed of assignment and deed of mortgage were clouds on their title which should be
nullified.5 The RTC ruled in favor of petitioners:

WHEREFORE, judgment is hereby rendered in the following:

1. Declaring [petitioners] the absolute owners of the entire land described in TCT No. 56210
and declaring the deed of assignment issued by the late Eusebio Pigao in favor of
[respondent] null and void.

2. Ordering [petitioners] to pay [respondent] the value of the house and improvements
thereon in the event that they choose to appropriate the same in which case [respondent] is
given the right of retention until he has been reimbursed by [petitioners]; or to compel
[respondent] to buy the land in case they choose not to. In the latter case, [respondent]
cannot be compelled to buy the land if the value thereof is higher than the value of the
improvements.

3. Dismissing the case against defendant Gil Ymata for lack of cause of action there being
no privity of contract between him and [petitioners];

4. Dismissing both [petitioners] and [respondents] claims for damages and attorneys fees
there being no satisfactory warrant thereto; and

5. No pronouncements as to costs.

IT IS SO ORDERED.6

As stated earlier, the CA reversed the RTC decision and ruled in favor of respondent.

Petitioners filed this petition on the following grounds:

I.

THE [CA] ERRED IN DECLARING THAT THE SUBJECT DEED OF ASSIGNMENT IS VALID AND
THAT THERE IS NO PROHIBITION [AGAINST] THE SALE [OF] RIGHTS OVER THE AWARDED
LOT MADE BY EUSEBIO PIGAO.

II.

THE [CA] ERRED IN DECLARING THAT A RELATIONSHIP OF IMPLIED TRUST OVER THE [ONE-
HALF] (1/2) PORTION OF THE SUBJECT LOT WAS CREATED BETWEEN EUSEBIO PIGAO AND
[RESPONDENT].7

The first issue before us is the validity of the deed of assignment whereby Eusebio assigned to
respondent his rights to half of the lot. Petitioners argue that the lot subject of this case was public
land granted by the PHHC to their predecessor, Eusebio. Hence, they contend that Section 118 of
Commonwealth Act No. 141 (CA 141)8otherwise known as the Public Land Act, was applicable:

Sec. 118. Except in favor of the Government or any of its branches, units, or institutions, lands
acquired under free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of five years from
and after the date of issuance of the patent or grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said period, but the improvements or
crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.
(emphasis supplied)

xxx xxx xxx

Petitioners assert that the deed of assignment was null and void because it was entered into during
the prohibited period,9 i.e., the entire period from the date of approval of Eusebios application to
purchase up to five years from and after the date of issuance of the patent to him in 1973.
Respondent counters that CA 141 did not apply because it covered only homestead or sales
patents.10
We agree that CA 141 was inapplicable. The proscription under CA 141 on re-sale within the five-
year restricted period referred to free patents and homestead lands only.11 Here, the lot in dispute
was neither homestead land nor one acquired through patent. It was owned by PHHC, a government
corporation,12 under TCT No. 27287.13 1avvphil.net

It was not disputed that Eusebio and respondent entered into a deed of assignment in 1959, long
before PHHC executed a (final) deed of sale in favor of Eusebio in 1973. At that time, title to the lot
was still in the name of PHHC. The deed of assignment itself explicitly stated that the property was
"owned by the PHHC."14 And when the (final) deed of sale was issued by PHHC in favor of Eusebio
in 1973, this deed contained a prohibition against the alienation of the lot:

(2) Within a period of one year from the issuance of the Certificate of Title by virtue of this deed, no
transfer or alienation whatsoever of the property subject hereof, in whole or in part, shall be made or
registered without the written consent of the Vendor, and such transfer or alienation may be made
only in favor of persons qualified to acquire residential lands under the laws of the Philippines. 15

The CA, however, held that what was assigned by Eusebio in 1959 was his right to buy, own and
occupy the front half portion of the lot and not the lot itself. It went on to conclude that the deed of
assignment was perfectly valid since Eusebio was under no prohibition to sell such right.

Petitioners insist there was such a prohibition. To support their claim, they request this Court to take
judicial notice of the fact that the pro-forma conditional contracts-to- sell between PHHC and
applicants for the purchase of its lots contained a condition stating that "the applicant agree(d) not to
sell, assign, encumber, mortgage, lease, sublet or in any other manner affect his right under this
contract, at any time, in any manner whatsoever, in whole or in part, without first obtaining the written
consent of the Corporation." Although they admitted that they failed to present during the trial the
conditional contract to sell between Eusebio and PHHC, they claimed that they did not have a copy
thereof.16 In fact, what they submitted to this Court was a copy of a conditional contract to sell
between a certain Armando Bernabe and the PHHC pertaining to a lot located at 94 K-5th St.,
Kamuning, Quezon City17 to prove the existence of the aforementioned condition. Respondent
objects to this attempt of petitioners to seek admission of evidence which was presented neither
during trial nor on appeal.18

We agree with respondent. We cannot take cognizance of this document the conditional contract
to sell between Bernabe and the PHHC alleged to be the pro-forma contract used by PHHC with its
applicants - which petitioners are presenting for the first time. This document is not among the
matters the law mandatorily requires us to take judicial notice of.19 Neither can we consider it of
public knowledge nor capable of unquestionable demonstration nor ought to be known to judges
because of their judicial functions.20 We have held that:

Matters of judicial notice have three material requisites: (1) the matter must be one of common and
general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and
(3) it must be known to be within the limits of jurisdiction of the court. The power of taking judicial
notice is to be exercised by courts with caution. Care must be taken that the requisite notoriety
exists and every reasonable doubt on the subject should be promptly resolved in the
negative.21 (emphasis supplied)

Consequently, for this document to be properly considered by us, it should have been presented
during trial and formally offered as evidence. Otherwise, we would be denying due process of law to
respondent:
It is settled that courts will only consider as evidence that which has been formally offered. xxx If
[petitioners] neglected to offer [any document] in evidence, however vital [it] may be, [they] only have
themselves to blame, not respondent who was not even given a chance to object as the documents
were never offered in evidence.

A document, or any article for that matter, is not evidence when it is simply marked for identification;
it must be formally offered, and the opposing counsel given an opportunity to object to it or cross-
examine the witness called upon to prove or identify it. A formal offer is necessary since judges are
required to base their findings of fact and judgment only and strictly upon the evidence offered
by the parties at the trial. To allow a party to attach any document to his pleading and then expect
the court to consider it as evidence may draw unwarranted consequences. The opposing party will
be deprived of his chance to examine the document and object to its admissibility. The appellate
court will have difficulty reviewing documents not previously scrutinized by the court below. The
pertinent provisions of the Revised Rules of Court on the inclusion on appeal of documentary
evidence or exhibits in the records cannot be stretched as to include such pleadings or documents
not offered at the hearing of the case.22

Besides, this document does not even pertain to the lot and parties involved here. Accordingly, it is
neither relevant nor material evidence. But even assuming that it were, then it would substantially
affect the outcome of the case so respondent should have been given the chance to scrutinize the
document and object to it during the trial of the case. It is too late to present it now when nothing
prevented petitioners from introducing it before.

Nevertheless, we hold that the deed of assignment between Eusebio and respondent is null and void
for being contrary to public policy. Under PHHC rules, preference for the purchase of residential lots
from the PHHC was accorded to bona fide occupants of such lots.23 This policy was supported by the
PHHC charter given that one of the purposes of the PHHC was:

to acquire, develop, improve, subdivide, lease and sell lands and construct, lease and sell buildings
or any interest therein in the cities and populous towns in the Philippines with the object of
providing decent housing for those who may be found unable otherwise to provide
themselves therewith.24 (emphasis supplied)

Eusebio, as a bona fide occupant of the subject lot, had a vested right to buy the property. This did
not, however, give him the unbridled freedom to transfer his right to a third party, specially one who
was unqualified to avail of it. Undoubtedly, the PHHC was clothed with authority to determine if a
person was qualified to purchase a residential lot from it. The right to purchase was a personal right
that the qualified applicant, as determined by PHHC, must personally exercise. As a personal right, it
could not be transferred to just another person.

Any transfer of rights, to be valid, must be in line with the policy of PHHC which was to provide
"decent housing for those who may be found unable otherwise to provide themselves therewith."
Thus, any transfer of an applicants right to buy a lot was invalid if done without the consent of
PHHC. The same policy was enunciated by the terms of the deed of sale. 25 There is no showing that
the PHHCs approval for the assignment of half of the lot to respondent was ever obtained. Stated
otherwise, there is no proof that respondent would have been allowed to avail of the preferential
rights exclusively granted to bona fide occupants of PHHC-owned lots like Eusebio. Thus, the
assignment of rights by Eusebio to respondent, who was not a bona fide occupant of the lot,
frustrated the public policy of the government. It should therefore be struck down as null and void.
It follows that the second issue of whether an implied trust relationship was created between
Eusebio and his heirs as trustees and respondent as beneficiary must also be resolved against
respondent. We do not agree with the reasoning of the CA:

xxx [A]fter the execution of the deed of assignment, [respondent] proceeded to buy the front half
portion from PHHC by paying the amortizations due thereon in exercise of the right which he
purchased by way of deed of assignment. He also established his residence on this portion since he
was then secure in the knowledge that he eventually will own the same portion having also
purchased this right to own in the deed of assignment. Therefore, when the purchase price for the
entire lot was finally paid, the deed of its conveyance was finally executed and the title to the entire
lot was issued in Eusebio Pigaos name, an implied trust relationship was created over the front half
portion between Pigao and [respondent].

Per Article 1448 of the Civil Code, "there is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for the purpose of having the beneficial
interest of the property." The former party is referred to as the trustee, while the latter is referred to
as the beneficiary.

In the case at bench, the trustee is Pigao, who, with the title to the entire lot issued to him, holds the
front half portion thereof in trust for [respondent], who is the beneficiary.

xxx xxx xxx26

The CA declared that Article 1448 of the Civil Code was applicable:

Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party
but the price is paid by another for the purpose of having the beneficial interest of the property. The
former is the trustee, while the latter is the beneficiary.

xxx xxx xxx

In Morales v. Court of Appeals,27 we extensively discussed the concept of "trust:"

A trust is the legal relationship between one person having an equitable ownership in property and
another person owning the legal title to such property, the equitable ownership of the former entitling
him to the performance of certain duties and the exercise of certain powers by the latter.

xxx xxx xxx

Trusts are either express or implied. Express trusts are created by the intention of the trustor or of
the parties, while implied trusts come into being by operation of law, either through implication of an
intention to create a trust as a matter of law or through the imposition of the trust irrespective of, and
even contrary to, any such intention. In turn, implied trusts are either resulting or constructive trusts.
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title
determines the equitable title or interest and are presumed always to have been contemplated by
the parties. They arise from the nature or circumstances of the consideration involved in a
transaction whereby one person thereby becomes invested with legal title but is obligated in equity
to hold his legal title for the benefit of another.

xxx xxx xxx


A resulting trust is exemplified by Article 1448 of the Civil Code xxx

The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase
money resulting trust. The trust is created in order to effectuate what the law presumes to have been
the intention of the parties in the circumstances that the person to whom the land was conveyed
holds it as trustee for the person who supplied the purchase money.

To give rise to a purchase money resulting trust, it is essential that there be:

1. an actual payment of money, property or services, or an equivalent, constituting valuable


consideration;

2. and such consideration must be furnished by the alleged beneficiary of a resulting trust.

There are recognized exceptions to the establishment of an implied resulting trust. The first is stated
in the last part of Article 1448 itself. Thus, where A pays the purchase money and title is conveyed by
absolute deed to A's child or to a person to whom A stands in loco parentis and who makes no
express promise, a trust does not result, the presumption being that a gift was intended. Another
exception is, of course, that in which an actual contrary intention is proved. Also where the purchase
is made in violation of an existing statute and in evasion of its express provision, no trust can result
in favor of the party who is guilty of the fraud.28

Another exception to the establishment of an implied resulting trust under Article 1448 is when its
enforcement contravenes public policy. We have already ruled that the transfer of rights by Eusebio
to respondent was null and void ab initio for being contrary to public policy. As we held in Ramos v.
Court of Appeals:29

Otherwise stated, as an exception to the law on trusts, "[a] trust or a provision in the terms of
a trust is invalid if the enforcement of the trust or provision would be against public policy,
even though its performance does not involve the commission of a criminal or tortious act by the
trustee." The parties must necessarily be subject to the same limitations on allowable stipulations in
ordinary contracts, i.e., their stipulations must not be contrary to law, morals, good customs, public
order, or public policy. What the parties then cannot expressly provide in their contracts for being
contrary to law and public policy, they cannot impliedly or implicitly do so in the guise of a resulting
trust.30 (emphasis supplied)

Admittedly, respondent shouldered half of the amortizations which were received by Eusebios
wife31 and paid to the PHHC for the purchase of the lot. He also paid for the realty taxes for the said
portion.32 However, this was not an implied trust wherein petitioners held the title over the front half
portion in trust for respondent. Otherwise, it would again run against public policy.

WHEREFORE, the instant petition is hereby GRANTED. The Court of Appeals decision dated
October 29, 2001 in CA-G.R. CV No. 60069 is REVERSED and SET ASIDE. The decision of the
Regional Trial Court of Quezon City, Branch 95 in Civil Case No. Q-96-26270 is REINSTATED.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 169606 November 27, 2009

BERNARDO B. JOSE, JR., Petitioner,


vs.
MICHAELMAR PHILS., INC. and MICHAELMAR SHIPPING SERVICES, INC., Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition
challenges the 11 May 2005 Decision2 and 5 August 2005 Resolution3 of the Court of Appeals
in CA-G.R. SP No. 83272. The Court of Appeals set aside the 19 January4 and 22 March5 2004
Resolutions of the National Labor Relations Commission (NLRC) in NLRC NCR CA No.
036666-03 and reinstated the 18 June 2003 Decision6 of the Labor Arbiter in NLRC NCR OFW
Case No. (M)02-12-3137-00.

The Facts

Michaelmar Philippines, Inc. (MPI) is the Philippine agent of Michaelmar Shipping Services, Inc.
(MSSI). In an undertaking7 dated 2 July 2002 and an employment contract8 dated 4 July 2002, MSSI
through MPI engaged the services of Bernardo B. Jose, Jr. (Jose, Jr.) as oiler of M/T Limar. The
employment contract stated:

That the employee shall be employed on board under the following terms and conditions:

1.1 Duration of Contract EIGHT (8) MONTHS


Position OILER
Basic Monthly Salary US$ 450.00 & US$ 39.00 TANKER ALLOWANCE
Hours of Work 48 HOURS/WEEK
Overtime US$ 386.00 FIXED OT. 105 HRS/ MOS.
Vacation Leave with Pay US$ 190.00 & US$ 150 OWNERS BONUS
Point of Hire MANILA, PHILIPPINES9

In connection with the employment contract, Jose, Jr. signed a declaration 10 dated 10 June 2002
stating that:

In order to implement the Drug and Alcohol Policy on board the managed vessels the following with
[sic] apply:
All alcoholic beverages, banned substances and unprescribed drugs including but not limited to the
following: Marijuana Cocaine Phencyclidine Amphetamines Heroin Opiates are banned from Stelmar
Tankers (Management) Ltd. managed vessels.

Disciplinary action up to and including dismissal will be taken against any employee found to be in
possession of or impaired by the use of any of the above mentioned substances.

A system of random testing for any of the above banned substances will be used to enforce this
policy. Any refusal to submit to such tests shall be deemed as a serious breach of the employment
contract and shall result to the seamans dismissal due to his own offense.

Therefore any seaman will be instantly dismissed if:

xxx

They are found to have positive trace of alcohol or any of the banned substances in any random
testing sample.

Jose, Jr. began performing his duties on board the M/T Limar on 21 August 2002. On 8 October
2002, a random drug test was conducted on all officers and crew members of M/T Limar at the port
of Curacao. Jose, Jr. was found positive for marijuana. Jose, Jr. was informed about the result of his
drug test and was asked if he was taking any medication. Jose, Jr. said that he was taking Centrum
vitamins.

Jose, Jr. was allowed to continue performing his duties on board the M/T Limar from 8 October to 29
November 2002. In the Sea Going Staff Appraisal Report 11 on Jose Jr.s work performance for the
period of 1 August to 28 November 2002, Jose, Jr. received a 96% total rating and was described as
very hardworking, trustworthy, and reliable.

On 29 December 2002, M/T Limar reached the next port after the random drug test and Jose, Jr.
was repatriated to the Philippines. When Jose, Jr. arrived in the Philippines, he asked MPI that a
drug test be conducted on him. MPI ignored his request. On his own, Jose, Jr. procured drug tests
from Manila Doctors Hospital,12 S.M. Lazo Medical Clinic, Inc.,13 and Maritime Clinic for International
Services, Inc.14 He was found negative for marijuana.

Jose, Jr. filed with the NLRC a complaint against MPI and MSSI for illegal dismissal with claim for his
salaries for the unexpired portion of the employment contract.

The Labor Arbiters Ruling

In her 18 June 2003 Decision, the Labor Arbiter dismissed the complaint for lack of merit. The Labor
Arbiter held that:

Based from the facts and evidence, this office inclined [sic] to rule in favor of the
respondents: we find that complainants termination from employment was valid and lawful.
It is established that complainant, after an unannounced drug test conducted by the
respondent principal on the officers and crew on board the vessel, was found positive of
marijuana, a prohibited drug. It is a universally known fact the menace that drugs bring on
the user as well as to others who may have got on his way. It is noted too that complainant
worked on board a tanker vessel which carries toxic materials such as fuels, gasoline and
other combustible materials which require delicate and careful handling and being an oiler,
complainant is expected to be in a proper disposition. Thus, we agree with respondents that
immediate repatriation of complainant is warranted for the safety of the vessel as well as to
complainants co-workers on board. It is therefore a risk that should be avoided at all cost.
Moreover, under the POEA Standard Employment Contract as cited by the respondents
(supra), violation of the drug and alcohol policy of the company carries with it the penalty of
dismissal to be effected by the master of the vessel. It is also noted that complainant was
made aware of the results of the drug test as per Drug Test Certificate dated October 29,
2002. He was not dismissed right there and then but it was only on December 29, 2002 that he
was repatriated for cause.

As to the complainants contention that the ship doctors report can not be relied upon in the
absence of other evidence supporting the doctors findings for the simple reason that the ship doctor
is under the control of the principal employer, the same is untenable. On the contrary, the findings of
the doctor on board should be given credence as he would not make a false clarification. Dr. A.R.A
Heath could not be said to have outrageously contrived the results of the complainants drug test.
We are therefore more inclined to believe the original results of the unannounced drug test as it was
officially conducted on board the vessel rather than the subsequent testing procured by complainant
on his own initiative. The result of the original drug test is evidence in itself and does not require
additional supporting evidence except if it was shown that the drug test was conducted not in
accordance with the drug testing procedure which is not obtaining in this particular case. [H]ence,
the first test prevails.

We can not also say that respondents were motivated by ill will against the complainant considering
that he was appraised to be a good worker. For this reason that respondents would not terminate
[sic] the services of complainant were it not for the fact that he violated the drug and alcohol policy of
the company. [T]hus, we find that just cause exist [sic] to justify the termination of complainant. 15

Jose, Jr. appealed the Labor Arbiters 18 June 2003 Decision to the NLRC. Jose, Jr. claimed that the
Labor Arbiter committed grave abuse of discretion in ruling that he was dismissed for just cause.

The NLRCs Ruling

In its 19 January 2004 Resolution, the NLRC set aside the Labor Arbiters 18 June 2003
Decision. The NLRC held that Jose, Jr.s dismissal was illegal and ordered MPI and MSSI to
pay Jose, Jr. his salaries for the unexpired portion of the employment contract. The NLRC
held that:

Here, a copy of the purported drug test result for Complainant indicates, among others, the
following typewritten words "Hoofd: Drs. R.R.L. Petronia Apotheker" and "THC-COOH POS.";
the handwritten word "Marihuana"; and the stamped words "Dr. A.R.A. Heath, MD", "SHIPS
DOCTOR" and "29 OKT. 2002." However, said test result does not contain any signature,
much less the signature of any of the doctors whose names were printed therein (Page 45,
Records). Verily, the veracity of this purported drug test result is questionable, hence, it
cannot be deemed as substantial proof that Complainant violated his employers "no alcohol,
no drug" policy. In fact, in his November 14, 2002 message to Stelmar Tanker Group, the
Master of the vessel where Complainant worked, suggested that another drug test for
complainant should be taken when the vessel arrived [sic] in Curacao next call for final
findings (Page 33, Records), which is an indication that the Master, himself, was in doubt with
the purported drug test result. Indeed there is reason for the Master of the vessel to doubt
that Complainant was taking in the prohibited drug "marihuana." The Sea Going Staff
Appraisal Report signed by Appraiser David A. Amaro, Jr. and reviewed by the Master of the
vessel himself on complainants work performance as Wiper from August 1, 2002 to
November 28, 2002 which included a two-month period after the purported drug test,
indicates that out of a total score of 100% on Safety Consciousness (30%), Ability (30%),
Reliability (20%) and Behavior & Attitude (20%), Complainant was assessed a score of 96%
(Pages 30-31, Records). Truly, a worker who had been taking in prohibited drug could not
have given such an excellent job performance. Significantly, under the category "Behavior &
Attitude (20%)," referring to his personal relationship and his interactions with the rest of the
ships staff and his attitude towards his job and how the rest of the crew regard him,
Complainant was assessed the full score of 20% (Page 31, Records), which belies
Respondents insinuation that his alleged offense directly affected the safety of the vessel, its
officers and crew members. Indeed, if Complainant had been a threat to the safety of the
vessel, officers and crew members, he would not be been [sic] allowed to continue working
almost three (3) months after his alleged offense until his repatriation on December 29, 2002.
Clearly, Respondents failed to present substantial proof that Complainants dismissal was
with just or authorized cause.

Moreover, Respondents failed to accord Complainant due process prior to his dismissal. There is no
showing that Complainants employer furnished him with a written notice apprising him of the
particular act or omission for which his dismissal was sought and a subsequent written notice
informing him of the decision to dismiss him, much less any proof that Complainant was given an
opportunity to answer and rebut the charges against him prior to his dismissal. Worse, Respondents
invoke the provision in the employment contract which allows summary dismissal for cases provided
therein. Consequently, Respondents argue that there was no need for him to be notified of his
dismissal. Such blatant violation of basic labor law principles cannot be permitted by this Office.
Although a contract is law between the parties, the provisions of positive law which regulate such
contracts are deemed included and shall limit and govern the relations between the parties (Asia
World Recruitment, Inc. vs. NLRC, G.R. No. 113363, August 24, 1999).

Relative thereto, it is worth noting Section 10 of Republic Act No. 8042, which provides that "In cases
of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less." 16

MPI and MSSI filed a motion for reconsideration. In its 22 March 2004 Resolution, the NLRC
denied the motion for lack of merit. MPI and MSSI filed with the Court of Appeals a
petition17 for certiorari under Rule 65 of the Rules of Court. MPI and MSSI claimed that the
NLRC gravely abused its discretion when it (1) reversed the Labor Arbiters factual finding
that Jose, Jr. was legally dismissed; (2) awarded Jose, Jr. his salaries for the unexpired
portion of the employment contract; (3) awarded Jose, Jr. $386 overtime pay; and (4) ruled
that Jose, Jr. perfected his appeal within the reglementary period.

The Court of Appeals Ruling

In its 11 May 2005 Decision, the Court of Appeals set aside the 19 January and 22 March 2004
Resolutions of the NLRC and reinstated the 18 June 2003 Decision of the Labor Arbiter. The Court
of Appeals held that:

The POEA standard employment contract adverted to in the labor arbiters decision to which all
seamens contracts must adhere explicitly provides that the failure of a seaman to obey the policy
warrants a penalty of dismissal which may be carried out by the master even without a notice of
dismissal if there is a clear and existing danger to the safety of the vessel or the crew. That the
petitioners were implementing a no-alcohol, no drug policy that was communicated to the
respondent when he embarked is not in question. He had signed a document entitled Drug and
Alcohol Declaration in which he acknowledged that alcohol beverages and unprescribed drugs such
as marijuana were banned on the vessel and that any employee found possessing or using these
substances would be subject to instant dismissal. He undertook to comply with the policy and abide
by all the relevant rules and guidelines, including the system of random testing that would be
employed to enforce it.

We can hardly belabor the reasons and justification for this policy. The safety of the vessel on the
high seas is a matter of supreme and unavoidable concern to all the owners, the crew and the
riding public. In the ultimate analysis, a vessel is only as seaworthy as the men who sail it, so that it
is necessary to maintain at every moment the efficiency and competence of the crew. Without an
effective no alcohol, no drug policy on board the ship, the vessels safety will be seriously
compromised. The policy is, therefore, a reasonable and lawful order or regulation that, once made
known to the employee, must be observed by him, and the failure or refusal of a seaman to comply
with it should constitute serious misconduct or willful disobedience that is a just cause for the
termination of employment under the Labor Code (Aparente vs. National Labor Relations
Commission, 331 SCRA 82). As the labor arbiter has discerned, the seriousness and earnestness in
the enforcement of the ban is highlighted by the provision of the POEA Standard Employment
Contract allowing the ship master to forego the notice of dismissal requirement in effecting the
repatriation of the seaman violating it.

xxxx

Under legal rules of evidence, not all unsigned documents or papers fail the test of admissibility.
There are kinds of evidence known as exceptions to the hearsay rule which need not be invariably
signed by the author if it is clear that it issues from him because of necessity and under
circumstances that safeguard the trustworthiness of the paper. A number of evidence of this sort are
called entries in the course of business, which are transactions made by persons in the regular
course of their duty or business. We agree with the labor arbiter that the drug test result constitutes
entries made in the ordinary or regular course of duty of a responsible officer of the vessel. The tests
administered to the crew were routine measures of the vessel conducted to enforce its stated policy,
and it was a matter of course for medical reports to be issued and released by the medical officer.
The ships physician at Curacao under whom the tests were conducted was admittedly Dr. Heath. It
was under his name and with his handwritten comments that the report on the respondent came out,
and there is no basis to suspect that these results were issued other than in the ordinary course of
his duty. As the labor arbiter points out, the drug test report is evidence in itself and does not require
additional supporting evidence except if it appears that the drug test was conducted not in
accordance with drug testing procedures. Nothing of the sort, he says, has even been suggested in
this particular case.

The regularity of the procedure observed in the administration and reporting of the tests is the very
assurance of the reports admissibility and credibility under the laws of the evidence. We see no
reason why it cannot be considered substantial evidence, which, parenthetically, is the lowest rung in
the ladder of evidence. It is from the fact that a report or entry is a part of the regular routine work of
a business or profession that it derives its value as legal evidence.

Then the respondent was notified of the results and allowed to explain himself. He could not show
any history of medication that could account for the traces of drugs in his system. Despite his lack of
plausible excuses, the ship captain came out in support of him and asked his superiors to give him
another chance. These developments prove that the respondent was afforded due process
consistent with the exigencies of his service at sea. For the NLRC to annul the process because he
was somehow not furnished with written notice is already being pedantic. What is the importance to
the respondent of the difference between a written and verbal notice when he was actually given the
opportunity to be heard? x x x

The working environment in a seagoing vessel is sui generis which amply justifies the difference in
treatment of seamen found guilty of serious infractions at sea. The POEA Standard Employment
Contract allows the ship master to implement a repatriation for just cause without a notice of
dismissal if this is necessary to avoid a clear and existing danger to the vessel. The petitioners have
explained that that [sic] it is usually at the next port of call where the offending crewman is made to
disembark. In this case, a month had passed by after the date of the medical report before they
reached the next port. We may not second-guess the judgment of the master in allowing him to
remain at his post in the meantime. It is still reasonable to believe that the proper safeguards were
taken and proper limitations observed during the period when the respondent remained on board.

Finally, the fact that the respondent obtained negative results in subsequent drug tests in the
Philippines does not negate the findings made of his condition on board the vessel. A drug test can
be negative if the user undergoes a sufficient period of abstinence before taking the test. Unlike the
tests made at his instance, the drug test on the vessel was unannounced. The credibility of the first
test is, therefore, greater than the subsequent ones. 18

Jose, Jr. filed a motion19 for reconsideration. In its 5 August 2005 Resolution, the Court of Appeals
denied the motion for lack of merit. Hence, the present petition.

In a motion20 dated 1 August 2007, MPI and MSSI prayed that they be substituted by OSG Ship
Management Manila, Inc. as respondent in the present case. In a Resolution 21 dated 14 November
2007, the Court noted the motion.

The Issues

In his petition dated 13 September 2005, Jose, Jr. claims that he was illegally dismissed from
employment for two reasons: (1) there is no just cause for his dismissal because the drug test result
is unsigned by the doctor, and (2) he was not afforded due process. He stated that:

2. The purported drug test result conducted to petitioner indicates, among others, the following: [sic]
typwritten words Hool: Drs. R.R.L.. [sic] Petronia Apotheker" [sic] and :THC-COOH POS." [sic]; the
handwritten word "Marihuana"; and the stamped words "Dr. A.R.A Heath, MD", "SHIPS DOCTOR"
and "29 OKT. 2002." However, said test result does not contain any signature, much less the
signature of any of the doctors whose name [sic] were printed therein. This omission is fatal as it
goes to the veracity of the said purported drug test result. Consequently, the purported drug test
result cannot be deemed as substantial proof that petitioner violated his employers "no alcohol, no
drug policy [sic].

xxxx

Even assuming arguendo that there was just cause, respondents miserably failed to show
that the presence of the petitioner in the vessel constitutes a clear and existing danger to the
safety of the crew or the vessel. x x x

xxxx

It is a basic principle in Labor Law that in termination disputes, the burden is on the employer to
show that the dismissal was for a just and valid cause. x x x
xxxx

x x x [T]he Honorable Labor Arbiter as well as the Honorable Court of Appeals clearly erred in ruling
that there was just cause for the termination of petitioners employment. Petitioners employment
was terminated on the basis only of a mere allegation that is unsubstantiated, unfounded and on the
basis of the drug test report that was not even signed by the doctor who purportedly conducted such
test.

5. Moreover, respondents failed to observe due process in terminating petitioners employment.


There is no evidence on record that petitioner was furnished by his employer with a written notice
apprising him of the particular act or omission which is the basis for his dismissal. Furthermore, there
is also no evidence on record that the second notice, informing petitioner of the decision to dismiss,
was served to the petitioner. There is also no proof on record that petitioner was given an
opportunity to answer and rebut the charges against him prior to the dismissal. 22

The Courts Ruling

In its 11 May 2005 Decision, the Court of Appeals held that there was just cause for Jose, Jr.s
dismissal. The Court of Appeals gave credence to the drug test result showing that Jose, Jr. was
positive for marijuana. The Court of Appeals considered the drug test result as part of entries in the
course of business. The Court of Appeals held that:

Under legal rules of evidence, not all unsigned documents or papers fail the test of admissibility.
There are kinds of evidence known as exceptions to the hearsay rule which need not be invariably
signed by the author if it is clear that it issues from him because of necessity and under
circumstances that safeguard the trustworthiness of the paper. A number of evidence of this sort are
called entries in the course of business, which are transactions made by persons in the regular
course of their duty or business. We agree with the labor arbiter that the drug test result constitutes
entries made in the ordinary or regular course of duty of a responsible officer of the vessel. The tests
administered to the crew were routine measures of the vessel conducted to enforce its stated policy,
and it was a matter of course for medical reports to be issued and released by the medical officer.
The ships physician at Curacao under whom the tests were conducted was admittedly Dr. Heath. It
was under his name and with his handwritten comments that the report on the respondent came out,
and there is no basis to suspect that these results were issued other than in the ordinary course of
his duty. As the labor arbiter points out, the drug test report is evidence in itself and does not require
additional supporting evidence except if it appears that the drug test was conducted not in
accordance with drug testing procedures. Nothing of the sort, he says, has even been suggested in
this particular case.23 (Emphasis supplied)

Jose, Jr. claims that the Court of Appeals erred when it ruled that there was just cause for his
dismissal. The Court is not impressed. In a petition for review on certiorari under Rule 45 of the
Rules of Court, a mere statement that the Court of Appeals erred is insufficient. The petition must
state the law or jurisprudence and the particular ruling of the appellate court violative of such law or
jurisprudence. In Encarnacion v. Court of Appeals,24 the Court held that:

Petitioner asserts that there is a question of law involved in this appeal. We do not think so. The
appeal involves an appreciation of facts, i.e., whether the questioned decision is supported by the
evidence and the records of the case. In other words, did the Court of Appeals commit a reversible
error in considering the trouble record of the subject telephone? Or is this within the province of the
appellate court to consider? Absent grave abuse of discretion, this Court will not reverse the
appellate courts findings of fact.
In a petition for review under Rule 45, Rules of Court, invoking the usual reason, i.e., that the Court
of Appeals has decided a question of substance not in accord with law or with applicable decisions
of the Supreme Court, a mere statement of the ceremonial phrase is not sufficient to confer merit on
the petition. The petition must specify the law or prevailing jurisprudence on the matter and the
particular ruling of the appellate court violative of such law or previous doctrine laid down by the
Supreme Court. (Emphasis supplied)

In the present case, Jose, Jr. did not show that the Court of Appeals ruling is violative of any law or
jurisprudence. Section 43, Rule 130, of the Rules of Court states:

SEC. 43. Entries in the course of business. Entries made at, or near the time of the transactions
to which they refer, by a person deceased, or unable to testify, who was in a position to know the
facts therein stated, may be received as prima facie evidence, if such person made the entries in his
professional capacity or in the performance of duty and in the ordinary or regular course of business
or duty.
1avvphi1

In Canque v. Court of Appeals,25 the Court laid down the requisites for admission in evidence of
entries in the course of business: (1) the person who made the entry is dead, outside the country, or
unable to testify; (2) the entries were made at or near the time of the transactions to which they refer;
(3) the person who made the entry was in a position to know the facts stated in the entries; (4) the
entries were made in a professional capacity or in the performance of a duty; and (5) the entries
were made in the ordinary or regular course of business or duty.

Here, all the requisites are present: (1) Dr. Heath is outside the country; (2) the entries were made
near the time the random drug test was conducted; (3) Dr. Heath was in a position to know the facts
made in the entries; (4) Dr. Heath made the entries in his professional capacity and in the
performance of his duty; and (5) the entries were made in the ordinary or regular course of business
or duty.

The fact that the drug test result is unsigned does not necessarily lead to the conclusion that Jose,
Jr. was not found positive for marijuana. In KAR ASIA, Inc. v. Corona, 26 the Court admitted in
evidence unsigned payrolls. In that case, the Court held that:

Entries in the payroll, being entries in the course of business, enjoy the presumption of regularity
under Rule 130, Section 43 of the Rules of Court. It is therefore incumbent upon the respondents to
adduce clear and convincing evidence in support of their claim. Unfortunately, respondents naked
assertions without proof in corroboration will not suffice to overcome the disputable presumption.

In disputing the probative value of the payrolls for December 1994, the appellate court observed that
the same contain only the signatures of Ermina Daray and Celestino Barreto, the paymaster and the
president, respectively. It further opined that the payrolls presented were only copies of the approved
payment, and not copies disclosing actual payment.

The December 1994 payrolls contain a computation of the amounts payable to the employees for
the given period, including a breakdown of the allowances and deductions on the amount due, but
the signatures of the respondents are conspicuously missing. Ideally, the signatures of the
respondents should appear in the payroll as evidence of actual payment. However, the absence of
such signatures does not necessarily lead to the conclusion that the December 1994 COLA was not
received. (Emphasis supplied)

In the present case, the following facts are established (1) random drug tests are regularly
conducted on all officers and crew members of M/T Limar; (2) a random drug test was conducted at
the port of Curacao on 8 October 2002; (3) Dr. Heath was the authorized physician of M/T Limar; (4)
the drug test result of Jose, Jr. showed that he was positive for marijuana; (5) the drug test result
was issued under Dr. Heaths name and contained his handwritten comments. The Court of Appeals
found that:

The tests administered to the crew were routine measures of the vessel conducted to enforce its
stated policy, and it was a matter of course for medical reports to be issued and released by the
medical officer. The ships physician at Curacao under whom the tests were conducted was
admittedly Dr. Heath. It was under his name and with his handwritten comments that the report on
the respondent came out, and there is no basis to suspect that these results were issued other than
in the ordinary course of his duty. As the labor arbiter points out, the drug test report is evidence in
itself and does not require additional supporting evidence except if it appears that the drug test was
conducted not in accordance with drug testing procedures. Nothing of the sort, he says, has even
been suggested in this particular case.27

Factual findings of the Court of Appeals are binding on the Court. Absent grave abuse of discretion,
the Court will not disturb the Court of Appeals factual findings.28 In Encarnacion,29 the Court held
that, "unless there is a clearly grave or whimsical abuse on its part, findings of fact of the appellate
court will not be disturbed. The Supreme Court will only exercise its power of review in known
exceptions such as gross misappreciation of evidence or a total void of evidence." Jose, Jr. failed to
show that the Court of Appeals gravely abused its discretion.

Article 282(a) of the Labor Code states that the employer may terminate an employment for serious
misconduct. Drug use in the premises of the employer constitutes serious misconduct. In Bughaw,
Jr. v. Treasure Island Industrial Corporation,30 the Court held that:

The charge of drug use inside the companys premises and during working hours against petitioner
constitutes serious misconduct, which is one of the just causes for termination. Misconduct is
improper or wrong conduct. It is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not merely an
error in judgment. The misconduct to be serious within the meaning of the Act must be of such a
grave and aggravated character and not merely trivial or unimportant. Such misconduct, however
serious, must nevertheless, in connection with the work of the employee, constitute just cause for his
separation. This Court took judicial notice of scientific findings that drug abuse can damage the
mental faculties of the user. It is beyond question therefore that any employee under the influence of
drugs cannot possibly continue doing his duties without posing a serious threat to the lives and
property of his co-workers and even his employer. (Emphasis supplied)

Jose, Jr. claims that he was not afforded due process. The Court agrees. There are two requisites
for a valid dismissal: (1) there must be just cause, and (2) the employee must be afforded due
process.31 To meet the requirements of due process, the employer must furnish the employee with
two written notices a notice apprising the employee of the particular act or omission for which the
dismissal is sought and another notice informing the employee of the employers decision to dismiss.
In Talidano v. Falcon Maritime & Allied Services, Inc.,32 the Court held that:

[R]espondent failed to comply with the procedural due process required for terminating the
employment of the employee. Such requirement is not a mere formality that may be dispensed with
at will. Its disregard is a matter of serious concern since it constitutes a safeguard of the highest
order in response to mans innate sense of justice. The Labor Code does not, of course, require a
formal or trial type proceeding before an erring employee may be dismissed. This is especially true
in the case of a vessel on the ocean or in a foreign port. The minimum requirement of due process
termination proceedings, which must be complied with even with respect to seamen on board a
vessel, consists of notice to the employees intended to be dismissed and the grant to them of an
opportunity to present their own side of the alleged offense or misconduct, which led to the
managements decision to terminate. To meet the requirements of due process, the employer must
furnish the worker sought to be dismissed with two written notices before termination of employment
can be legally effected, i.e., (1) a notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice after due hearing which
informs the employee of the employers decision to dismiss him. (Emphasis supplied)

In the present case, Jose, Jr. was not given any written notice about his dismissal. However, the
propriety of Jose, Jr.s dismissal is not affected by the lack of written notices. When the dismissal is
for just cause, the lack of due process does not render the dismissal ineffectual but merely gives rise
to the payment of P30,000 in nominal damages.33

WHEREFORE, the petition is DENIED. The 11 May 2005 Decision and 5 August 2005 Resolution of
the Court of Appeals in CA-G.R. SP No. 83272 are AFFIRMED with the MODIFICATION that OSG
Ship Management Manila, Inc. is ordered to pay Bernardo B. Jose, Jr. P30,000 in nominal damages.

SO ORDERED.

1. JUDICIAL ADMISSIONS

Lucido vs. Calupitan

27 Phil. 48 (1914)

Judicial Admissions

FACTS:

The properties of Leonardo Lucido were sold on auction on Feb. 10, 1903 to
Rosales and Zolaivar. On March 30, 1903, Rosales and Zolaivar with the consent of
Lucido, sold the properties to Calupitan via a public document. On the same day,
Calupitan and Lucido executed a document admitting the sale and that their real
agreement was that redemption by Lucido can only be effected 3 years. from the
date of the document. Lucido tendered the redemption price to Calupitan. For
failure of the latter to surrender the properties to Lucido, this case was instituted.
Calupitan claimed that the sale was not one with a right to redeem. The
lower court decided in favor of Lucido.

ISSUE:

Whether or not Calupitans original answer to the complaint may be used as


evidence against him to prove that a sale with a right to redeem was in fact agreed
to by both parties?

RULING:

Yes, Calupitans original answer to the complaint expressly stated that the
transaction was one of sale with right to repurchase. The Court held that its
admission was proper, especially in view of the fact that it was signed by Calupitan
himself, who was acting as his own attorney.

The Court cited Jones on Evidence (sec. 272, 273) which stated that although pleadings
were originally considered as inadmissible as admissions because it contained only pleaders
matter (fiction stated by counsel and sanctioned by the courts), modern tendency was to treat
pleadings as statements of real issues and herein, admissions of the parties.

By: Frank John Abdon

Torres vs. Court of Appeals

11 SCRA 24 (1984)

Judicial Admissions

FACTS:

This is a Petition for Review, treated as a special civil action praying that the
decision of the CA be set aside.
Lot no. 551 was originally owned by Margarita Torres. Margarita was married
to Claro Santillan and out of this union were begotten Vicente and Antonina. Claro
died. Antonina married and had six children, who, together with Vicente are the
private respondents. After Claros death, Margarita cohabited with Leon Arbole, and
out of this, petitioner Macaria Torres was born.

Lot no. 551, an urban lot, was leased to Margarita, who was the actual
occupant of the lot. A Sale Certificate was issued to Margarita by the Director of
Lands. The purchase price was to be paid in installments. According to testimonial
evidence, Leon paid the installments out of his own earnings. Before his death,
Leon sold and transferred all his rights to portion of the lot in favor of petitioner
Macaria. Subsequently, Vicente executed an Affidavit claiming possession of Lot no.
551 and petitioned the Bureau of Lands for the issuance of title in his name. A title
was then issued in the name of the legal heirs of Margarita (private respondents).

On June 3, 1954, respondents filed a complaint against petitioner for forcible


entry alleging that petitioner entered a portion of Lot no. 551 without their consent
and constructed a house therein. The case was decided against the petitioner.

On June 8, 1954, petitioner instituted an action for Partition of Lot. N0. 551
alleging that said lot was conjugal property and the she is the legitimated child of
Margarita and Leon. The ejectment case and the partition case was consolidated.

The trial court ruled that the lot was paraphernal property of Maragarita and adjudicated
2/3 of the lot to respondents and 1/3 to petitioner Macaria. On Motion for Reconsideration, the
decision was amended with Macaria being entitled to 4/6 of the lot. On appeal to the CA, the CA
changed Macarias share to of the lot and declared that she is not a legitimated child.
Petitioner now alleges that although the CA is correct in declaring that she is
not a legitimated child of the spouses, it has overlooked to include in its findings of
facts the admission made by the respondents that she and Vicente and Antonina
are brothers and sisters and they are the legal heirs and nearest of relatives of
Maragarita. The admission adverted to appears in paragraph 3 of respondents
original complaint in the Ejectment Case, which was however subsequently
amended.

ISSUE:

Whether or not said statement in the original complaint must be treated as a


judicial admission despite the fact that the same statements no longer appears in
the amended complaint?

RULING:
No, in the Amended Complaint filed by respondents in the same ejectment
case, the supposed admission was deleted and in fact the statement simply read,
That plaintiffs are the legal heirs and nearest of kin of Margarita. By virtue
thereof, the amended complaint takes the place of the original. The latter is
regarded as abandoned and ceases to perform any further function as a pleading.
The original complaint no longer forms part of the record.

If petitioner had intended to utilize the original complaint, she should have
offered it in evidence. Having been amended, the original complaint lost its
character as a judicial admission, which would have required no proof, and became
merely an extrajudicial admission of which as evidence, required its formal offer.
Contrary to petitioners submission, therefore, there can be no estoppel by
extrajudicial admission in the original complaint, for the failure to offer it in
evidence.

Teehankee, separate opinion:

Such admission did not cease to be a judicial admission simply because


respondents subsequently deleted the same in their amended complaint. The
original complaint, although replaced by an amended complaint, does not cease to
be part of the judicial record, not having been expunged therefrom.

THIRD DIVISION

[G.R. No. 119053. January 23, 1997.]

FLORENTINO ATILLO III, petitioner, vs. COURT OF APPEALS,


AMANCOR, INC., and MICHELL LHUILLIER, respondents.

RESOLUTION
FRANCISCO, J.:

This is a petition for review on certiorari of the decision of the respondent Court of
Appeals in CA-G.R. No. 3677 promulgated on August 4, 1994 affirming in toto the
decision of Branch 7 of the Regional Trial Court of Cebu City in Civil Case No. CEB-
9801 entitled "Florentino L. Atillo III versus Amancor, Inc. and Michell Lhuillier".
The material antecedents are as follows:
On August 15, 1985, respondent Amancor, Inc. (hereinafter referred to as AMANCOR
for brevity), a corporation then owned and controlled by petitioner Florentino L. Atillo
III, contracted a loan in the amount of P1,000,000.00 with Metropolitan Bank and
Trust Company, secured by real estate properties owned by the petitioner. Before the
[1]

said loan could be paid, petitioner entered into a Memorandum of Agreement dated
June 14, 1988 (Annex "A" of the Complaint) with respondent Michell Lhuillier
(hereinafter referred to as LHUILLIER for brevity) whereby the latter bought shares
of stock in AMANCOR. As a consequence of the foregoing transaction, petitioner and
LHUILLIER each became owner of 47% of the outstanding shares of stock of
AMANCOR while the officers of the corporation owned the remaining 6%. [2]

In view of the urgent and immediate need for fresh capital to support the business
operations of AMANCOR, petitioner and LHUILLIER executed another
Memorandum of Agreement on February 13, 1989 (Annex "B" of the Complaint) by
virtue of which LHUILLIER undertook to invest additional capital in AMANCOR.
As an addendum to the foregoing, a Supplemental Memorandum of Agreement was
[3]

entered into by the petitioner and LHUILLIER on March 11, 1989. Relevant to the
[4]

case at bar is a stipulation in the said Supplemental Memorandum of Agreement


which provides as follows:

"4. F.L. Atillo III may dispose off (sic) his properties at P. del Rosario St., Cebu City
which may involve pre-payment of AMANCOR'S mortgage loan to the bank
estimated at 300,000.00 and while AMANCOR may not yet be in the position to re-
pay said amount to him, it shall pay the interests to him equivalent to prevailing bank
rate."[5]

Pursuant to this stipulation, petitioner assumed AMANCOR' s outstanding loan


balance of P300,000.00 with Metropolitan Bank and Trust Company. After offsetting the
amount ofP300,000.00 with some of the accounts that petitioner had with AMANCOR,
the amount which remained due to the petitioner was P199,888.89. Because of the
failure of AMANCOR to satisfy its obligation to repay petitioner, the latter filed a
complaint for collection of a sum of money docketed as Civil Case No. Ceb-9801
against AMANCOR and LHUILLIER before Branch 7 of the Regional Trial Court of Cebu
City.
At the pre-trial conference, petitioner, AMANCOR and LHUILLIER, assisted by their
respective counsels, stipulated on the following:

"1. That the parties admit the due execution and genuineness of the Memorandum of
Agreement dated 14 June 1988 (Annex A), the Memorandum of Agreement dated 13
February 1989 (Annex B) and Supplemental Agreement dated 11 March 1989 (Annex
C);
2. That the defendants admit that the claim of the plaintiff amounted to P199,888.89
as of October 1, 1990;" [6]

and submitted the following issues to be resolved by the trial court:

"a. From the aforesaid Annexes A, B and C, is Michell J. Lhuillier personally liable to
the plaintiff?

b. What rate of interests shall the defendant corporation and Michell J. Lhuillier, if the
latter is liable, pay the plaintiff?" (Underscoring supplied.)
[7]

On the basis of the stipulation of facts and the written arguments of the parties, the
trial court rendered a decision in favor of the petitioner, ordering AMANCOR to pay
petitioner the amount ofP199,888.89 with interest equivalent to the bank rate prevailing
as of March 11, 1989. LHUILLIER was, however, absolved of any personal liability
therefor.
[8]

It is from the trial court's conclusion of non-liability that petitioner appealed to


respondent court, arguing therein that as LHUILLIER signed the Memorandum of
Agreement without the official participation nor ratification of AMANCOR, LHUILLIER
should have been declared jointly and severally liable with AMANCOR. [9]

The respondent court found petitioner's contention bereft of merit and held in part
that:

"Contrary to plaintiffs-appellants (sic) allegation, the indebtedness of P199,888.89


was incurred by defendant AMANCOR, INC., alone. A thorough study of the records
shows that plaintiff's cause of action for collection of a sum of money arose from "his
payment of the defendant corporation's outstanding loan balance of P300,000.00 with
Metropolitan Bank & Trust Company" x x x. Considering the allegations in the
complaint and those contained in the Memorandum of Agreement, the respondent
court properly ruled that the liability was incurred by defendant AMANCOR, INC.,
singly. We grant that if plaintiff really believes that the indebtedness was incurred by
defendant Lhuillier in his personal capacity, he should not have offsetted (sic) some of
his accounts with the defendant corporation, x x x. As it is, plaintiff could have ofted
(sic) to sue defendant Lhuillier in his personal capacity the whole amount of
indebtedness and not implead the defendant corporation as co-defendant.

xxx xxx
xxx

x x x [T]he indebtedness was incurred by the defendant corporation as a legal entity to


pay the mortgage loan. Defendant Lhuillier acted only as an officer/agent of the
corporation by signing the said Memorandum of Agreement." [10]
Aggrieved by the decision of respondent court, petitioner brought this instant
petition submitting the following issue for the resolution of this Court:

"When a party, by his judicial admissions, has affirmed that he has personal liability in
a certain transaction, may a court rule against such an admission despite clear
indications that it was not affected by mistakes palpable or otherwise?" [11]

Petitioner claims that LHUILLIER made a judicial admission of his personal liability
in his Answer wherein he stated that:

"3.11. In all the subject dealings, it was between plaintiff and Lhuillier
personally without the official participation of Amancor, Inc.

xxx xxx
xxx

3.14 . Since the board of Amancor, Inc. did not formally ratify nor acceded (sic) to the
personal agreement between plaintiff and Lhuillier through no fault of the latter, the
corporation is not bound and the actionable documents are, at most, unenforceable
insofar as the subject claim of plaintiff is concerned."
[12]

And on the basis of such admission, petitioner contends that the decision of the
respondent court absolving LHUILLIER of personal liability is manifest error for being
contrary to law, particularly Section 4 of Rule 129 of the Rules of Court which provides
that:

"An admission, verbal or written, made by a party in the course of the proceedings in
the same case, does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such admission was
made."

Petitioner would want to further strengthen his contention by adverting to the


consistent pronouncement of this Court that: "x x x an admission made in the pleadings
cannot be controverted by the party making such admission and are conclusive as to
him, and that all proofs submitted by him contrary thereto or inconsistent therewith,
should be ignored, whether objection is interposed by the party or not x x x." [13]

We find petitioner's contention to be without merit and the reliance on the general
rule regarding judicial admissions enunciated by the abovementioned provision of law
and jurisprudence misplaced.
As provided for in Section 4 of Rule 129 of the Rules of Court, the general rule that
a judicial admission is conclusive upon the party making it and does not require proof
admits of two exceptions: 1) when it is shown that the admission was made through
palpable mistake, and 2) when it is shown that no such admission was in fact made.
The latter exception allows one to contradict an admission by denying that he made
[14]

such an admission.

"For instance, if a party invokes an 'admission' by an adverse party, but cites the
admission 'out of context', then the one making the admission may show that he made
no 'such' admission, or that his admission was taken out of context.

This may be interpreted as to mean 'not in the sense in which the admission is made to
appear.' That is the reason for the modifier 'such'." [Underscoring supplied.]
[15]

Here, petitioner appears to have taken the admissions made by LHUILLIER in


paragraph 3.11 of his Answer "out of context". Petitioner is seemingly misleading this
Court by isolating paragraph 3.11 of the said Answer from the preceding paragraphs. A
careful scrutiny of the Answer in its entirety will show that paragraph 3.11 is part of the
affirmative allegations recounting how LHUILLIER was persuaded to invest in
AMANCOR which was previously owned and managed by petitioner. Paragraph 3.11
[16]

has reference to the fact that in all investments made with AMANCOR through stock
purchases, only petitioner and LHUILLIER dealt with each other. It is more than
[17]

obvious that paragraph 3.11 has nothing to do with the obligation of AMANCOR to
petitioner which is the subject of the present case. Contrary to petitioner's allegations,
LHUILLIER had categorically denied personal liability for AMANCOR's corporate debts,
and in the succeeding paragraphs of the said Answer asserted the following:

"3.12. As evident in the wordings of par. 12 of the Actionable Memorandum of


Agreement dated 13 February 1989 (Annex B) and par. 4 of the actionable
Supplemental Memorandum of Agreement dated 11 March 1989 (Annex C), Lhuillier
did not engage to personally pay the corporate loans secured by plaintiff's property as
to release the property to plaintiff. On the contrary, as explicitly stated in the aforesaid
par. 4 of Annex C, ". . . while Amancor may not yet be in the position to repay said
amount to him, IT shall pay the interests to him equivalent to prevailing bank rate."

"3.13. At most, therefore, Lhuillier x x x only agreed, for the corporation to


repay plaintiff the amount of the pre- terminated corporate loans with the bank and,
pending improvement of Amancor's finances, for said corporation to pay interest at
prevailing bank rate. x x x." (Underscoring supplied.)
[18]

Furthermore, petitioner was well aware that LHUILLIER had never admitted
personal liability for the said obligation. In fact, in delineating the issues to be resolved
by the trial court, both parties submitted for the determination of the court, the question
of whether or not LHUILLIER is personally liable for the obligation of AMANCOR to
petitioner. Moreover, as correctly observed by respondent court, if petitioner really
[19]

believed that the liability was incurred by LHUILLIER in his personal capacity, then he
should not have offset his accounts with those of AMANCOR's. The foregoing act of
petitioner is a clear indication that he recognized AMANCOR and not LHUILLIER as the
obligor.
Granting arguendo that LHUILLIER had in fact made the alleged admission of
personal liability in his Answer, We hold that such admission is not conclusive upon him.
Applicable by analogy is our ruling in the case of Gardner vs. Court of Appeals which
allowed a party's testimony in open court to override admissions he made in his answer.
Thus:

"The fact, however, that the allegations made by Ariosto Santos in his pleadings and
in his declarations in open court differed will not militate against the findings herein
made nor support the reversal by respondent court. As a general rule, facts alleged in a
party's pleading are deemed admissions of that party and are binding upon it, but this
is not an absolute and inflexible rule. An answer is a mere statement of fact which the
party filing it expects to prove, but it is not evidence. As ARIOSTO SANTOS himself,
in open court, had repudiated the defenses he had raised in his ANSWER and against
his own interest, his testimony is deserving of weight and credence. Both the Trial
Court and the Appellate Court believed in his credibility and we find no reason to
overturn their factual findings thereon." (Underscoring supplied.)
[20]

Prescinding from the foregoing, it is clear that in spite of the presence of judicial
admissions in a party's pleading, the trial court is still given leeway to consider other
evidence presented. This rule should apply with more reason when the parties had
agreed to submit an issue for resolution of the trial court on the basis of the evidence
presented. As distinctly stated in the stipulation of facts entered into during the pre-trial
conference, the parties agreed that the determination of LHUILLIER's liability shall be
based on the Memoranda of Agreement designated as ANNEXES "A", "B" and "C" of
the Complaint. Thus, the trial court correctly relied on the provisions contained in the
said Memoranda of Agreement when it absolved LHUILLIER of personal liability for the
obligation of AMANCOR to petitioner.
Furthermore, on the basis of the same evidence abovementioned, respondent court
did not err when it refused to pierce the veil of corporate fiction, thereby absolving
LHUILLIER of liability for corporate obligations and deciding the question in this wise:

"The separate personality of the corporation may be disregarded, or the veil of


corporation fiction may be pierced and the individual shareholder may be personally
liable (sic) to the obligations of the corporation only when the corporation is used as
a cloak or cover for fraud or illegality, or to work an injustice, or where necessary to
achieve equity or when necessary for the protection of the creditors. This situation
does not obtain in this case. In the case at bar, plaintiff-appellant failed to show that
defendant Lhuillier acted otherwise than what is required of him as an agent of a
corporation. It does not appear either that defendant-appellee Michel (sic) Lhuillier is
jointly and severally liable with AMANCOR INC. absent an express stipulation to
that effect and sans clear and convincing evidence as to his personal liability." [21]
The foregoing pronouncement is based on factual findings of the lower court which
were upheld by the respondent court, and which are thus, conclusive upon us pursuant
to the well established rule that factual findings of the Court of Appeals, supported by
substantial evidence on the record, are final and conclusive and may not be reviewed
on appeal. [22]

ACCORDINGLY, finding no reversible error, the decision appealed from is hereby


AFFIRMED and this petition is DENIED.
SO ORDERED.
Narvasa, C.J., (Chairman), Davide, Jr., Melo, and Panganiban, JJ., concur.

EN BANC

[G.R. No. 152154. July 15, 2003]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. HONORABLE


SANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E.
MARCOS (REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R.
MARCOS, MARIA IMELDA [IMEE] MARCOS-MANOTOC,
FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA)
AND IMELDA ROMUALDEZ MARCOS, respondents.

DECISION
CORONA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking to (1) set
aside the Resolution dated January 31, 2002 issued by the Special First Division of the
Sandiganbayan in Civil Case No. 0141 entitled Republic of the Philippines vs.
Ferdinand E. Marcos, et. al., and (2) reinstate its earlier decision dated September 19,
2000 which forfeited in favor of petitioner Republic of the Philippines (Republic) the
amount held in escrow in the Philippine National Bank (PNB) in the aggregate amount
of US$658,175,373.60 as of January 31, 2002.

BACKGROUND OF THE CASE

On December 17, 1991, petitioner Republic, through the Presidential Commission


on Good Government (PCGG), represented by the Office of the Solicitor General
(OSG), filed a petition for forfeiture before the Sandiganbayan, docketed as Civil Case
No. 0141 entitled Republic of the Philippines vs. Ferdinand E. Marcos, represented by
his Estate/Heirs and Imelda R. Marcos,pursuant to RA 1379 in relation to Executive
[1]

Order Nos. 1, 2, 14 and 14-A.


[2] [3] [4] [5]

In said case, petitioner sought the declaration of the aggregate amount of US$356
million (now estimated to be more than US$658 million inclusive of interest) deposited in
escrow in the PNB, as ill-gotten wealth. The funds were previously held by the following
five account groups, using various foreign foundations in certain Swiss banks:

(1) Azio-Verso-Vibur Foundation accounts;

(2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus- Avertina Foundation


accounts;

(3) Trinidad-Rayby-Palmy Foundation accounts;

(4) Rosalys-Aguamina Foundation accounts and

(5) Maler Foundation accounts.

In addition, the petition sought the forfeiture of US$25 million and US$5 million in
treasury notes which exceeded the Marcos couples salaries, other lawful income as
well as income from legitimately acquired property. The treasury
notes are frozen at the Central Bank of the Philippines, now Bangko Sentral ng
Pilipinas, by virtue of the freeze order issued by the PCGG.
On October 18, 1993, respondents Imelda R. Marcos, Maria Imelda M. Manotoc,
Irene M. Araneta and Ferdinand R. Marcos, Jr. filed their answer.
Before the case was set for pre-trial, a General Agreement and the Supplemental
Agreements dated December 28, 1993 were executed by the Marcos children and then
[6]

PCGG Chairman Magtanggol Gunigundo for a global settlement of the assets of the
Marcos family. Subsequently, respondent Marcos children filed a motion dated
December 7, 1995 for the approval of said agreements and for the enforcement thereof.
The General Agreement/Supplemental Agreements sought to identify, collate, cause
the inventory of and distribute all assets presumed to be owned by the Marcos family
under the conditions contained therein. The aforementioned General Agreement
specified in one of its premises or whereas clauses the fact that petitioner obtained a
judgment from the Swiss Federal Tribunal on December 21, 1990, that the Three
Hundred Fifty-six Million U.S. dollars (US$356 million) belongs in principle to the
Republic of the Philippines provided certain conditionalities are met x x x. The said
decision of the Swiss Federal Supreme Court affirmed the decision of Zurich District
Attorney Peter Consandey, granting petitioners request for legal assistance.
Consandey declared the various deposits in the name of the enumerated foundations
[7]

to be of illegal provenance and ordered that they be frozen to await the final verdict in
favor of the parties entitled to restitution.
Hearings were conducted by the Sandiganbayan on the motion to approve the
General/Supplemental Agreements. Respondent Ferdinand, Jr. was presented as
witness for the purpose of establishing the partial implementation of said agreements.
On October 18, 1996, petitioner filed a motion for summary judgment and/or judgment
on the pleadings. Respondent Mrs. Marcos filed her opposition thereto which was later
adopted by respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.
In its resolution dated November 20, 1997, the Sandiganbayan denied petitioners
motion for summary judgment and/or judgment on the pleadings on the ground that the
motion to approve the compromise agreement (took) precedence over the motion for
summary judgment.
Respondent Mrs. Marcos filed a manifestation on May 26, 1998 claiming she was
not a party to the motion for approval of the Compromise Agreement and that she
owned 90% of the funds with the remaining 10% belonging to the Marcos estate.
Meanwhile, on August 10, 1995, petitioner filed with the District Attorney in Zurich,
Switzerland, an additional request for the immediate transfer of the deposits to an
escrow account in the PNB. The request was granted. On appeal by the Marcoses, the
Swiss Federal Supreme Court, in a decision dated December 10, 1997, upheld the
ruling of the District Attorney of Zurich granting the request for the transfer of the
funds. In 1998, the funds were remitted to the Philippines in escrow. Subsequently,
respondent Marcos children moved that the funds be placed incustodia legis because
the deposit in escrow in the PNB was allegedly in danger of dissipation by petitioner.
The Sandiganbayan, in its resolution dated September 8, 1998, granted the motion.
After the pre-trial and the issuance of the pre-trial order and supplemental pre-trial
order dated October 28, 1999 and January 21, 2000, respectively, the case was set for
trial. After several resettings, petitioner, on March 10, 2000, filed another motion for
summary judgment pertaining to the forfeiture of the US$356 million, based on the
following grounds:
I

THE ESSENTIAL FACTS WHICH WARRANT THE FORFEITURE OF THE


FUNDS SUBJECT OF THE PETITION UNDER R.A. NO. 1379 ARE ADMITTED
BY RESPONDENTS IN THEIR PLEADINGS AND OTHER SUBMISSIONS
MADE IN THE COURSE OF THE PROCEEDING.

II

RESPONDENTS ADMISSION MADE DURING THE PRE-TRIAL THAT THEY


DO NOT HAVE ANY INTEREST OR OWNERSHIP OVER THE FUNDS
SUBJECT OF THE ACTION FOR FORFEITURE TENDERS NO GENUINE ISSUE
OR CONTROVERSY AS TO ANY MATERIAL FACT IN THE PRESENT ACTION,
THUS WARRANTING THE RENDITION OF SUMMARY JUDGMENT. [8]
Petitioner contended that, after the pre-trial conference, certain facts were
established, warranting a summary judgment on the funds sought to be forfeited.
Respondent Mrs. Marcos filed her opposition to the petitioners motion for summary
judgment, which opposition was later adopted by her co-respondents Mrs. Manotoc,
Mrs. Araneta and Ferdinand, Jr.
On March 24, 2000, a hearing on the motion for summary judgment was conducted.
In a decision dated September 19, 2000, the Sandiganbayan granted petitioners
[9]

motion for summary judgment:

CONCLUSION

There is no issue of fact which calls for the presentation of evidence.

The Motion for Summary Judgment is hereby granted.

The Swiss deposits which were transmitted to and now held in escrow at the PNB are
deemed unlawfully acquired as ill-gotten wealth.

DISPOSITION

WHEREFORE, judgment is hereby rendered in favor of the Republic of the


Philippines and against the respondents, declaring the Swiss deposits which were
transferred to and now deposited in escrow at the Philippine National Bank in the total
aggregate value equivalent to US$627,608,544.95 as of August 31, 2000 together with
the increments thereof forfeited in favor of the State. [10]

Respondent Mrs. Marcos filed a motion for reconsideration dated September 26,
2000. Likewise, Mrs. Manotoc and Ferdinand, Jr. filed their own motion for
reconsideration dated October 5, 2000. Mrs. Araneta filed a manifestation dated
October 4, 2000 adopting the motion for reconsideration of Mrs. Marcos, Mrs. Manotoc
and Ferdinand, Jr.
Subsequently, petitioner filed its opposition thereto.
In a resolution dated January 31, 2002, the Sandiganbayan reversed its
[11]

September 19, 2000 decision, thus denying petitioners motion for summary judgment:

CONCLUSION

In sum, the evidence offered for summary judgment of the case did not prove that the
money in the Swiss Banks belonged to the Marcos spouses because no legal proof
exists in the record as to the ownership by the Marcoses of the funds in escrow from
the Swiss Banks.
The basis for the forfeiture in favor of the government cannot be deemed to have been
established and our judgment thereon, perforce, must also have been without basis.

WHEREFORE, the decision of this Court dated September 19, 2000 is reconsidered
and set aside, and this case is now being set for further proceedings.
[12]

Hence, the instant petition. In filing the same, petitioner argues that the
Sandiganbayan, in reversing its September 19, 2000 decision, committed grave abuse
of discretion amounting to lack or excess of jurisdiction considering that --
I

PETITIONER WAS ABLE TO PROVE ITS CASE IN ACCORDANCE WITH THE


REQUISITES OF SECTIONS 2 AND 3 OF R.A. NO. 1379:

A. PRIVATE RESPONDENTS CATEGORICALLY ADMITTED NOT


ONLY THE PERSONAL CIRCUMSTANCES OF FERDINAND E.
MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS BUT
ALSO THE EXTENT OF THEIR SALARIES AS SUCH PUBLIC
OFFICIALS, WHO UNDER THE CONSTITUTION, WERE
PROHIBITED FROM ENGAGING IN THE MANAGEMENT OF
FOUNDATIONS.

B. PRIVATE RESPONDENTS ALSO ADMITTED THE EXISTENCE OF


THE SWISS DEPOSITS AND THEIR OWNERSHIP THEREOF:

1. ADMISSIONS IN PRIVATE RESPONDENTS ANSWER;

2. ADMISSION IN THE GENERAL / SUPPLEMENTAL


AGREEMENTS THEY SIGNED AND SOUGHT TO
IMPLEMENT;

3. ADMISSION IN A MANIFESTATION OF PRIVATE


RESPONDENT IMELDA R. MARCOS AND IN THE MOTION
TO PLACE THE RES IN CUSTODIA LEGIS; AND

4. ADMISSION IN THE UNDERTAKING TO PAY THE


HUMAN RIGHTS VICTIMS.

C. PETITIONER HAS PROVED THE EXTENT OF THE LEGITIMATE


INCOME OF FERDINAND E. MARCOS AND IMELDA R. MARCOS
AS PUBLIC OFFICIALS.
D. PETITIONER HAS ESTABLISHED A PRIMA
FACIE PRESUMPTION OF UNLAWFULLY ACQUIRED WEALTH.

II

SUMMARY JUDGMENT IS PROPER SINCE PRIVATE RESPONDENTS HAVE


NOT RAISED ANY GENUINE ISSUE OF FACT CONSIDERING THAT:

A. PRIVATE RESPONDENTS DEFENSE THAT SWISS DEPOSITS


WERE LAWFULLY ACQUIRED DOES NOT ONLY FAIL TO
TENDER AN ISSUE BUT IS CLEARLY A SHAM; AND

B. IN SUBSEQUENTLY DISCLAIMING OWNERSHIP OF THE SWISS


DEPOSITS, PRIVATE RESPONDENTS ABANDONED THEIR SHAM
DEFENSE OF LEGITIMATE ACQUISITION, AND THIS FURTHER
JUSTIFIED THE RENDITION OF A SUMMARY JUDGMENT.

III

THE FOREIGN FOUNDATIONS NEED NOT BE IMPLEADED.

IV

THE HONORABLE PRESIDING JUSTICE COMMITTED GRAVE ABUSE OF


DISCRETION IN REVERSING HIMSELF ON THE GROUND THAT ORIGINAL
COPIES OF THE AUTHENTICATED SWISS DECISIONS AND
THEIR AUTHENTICATED TRANSLATIONS HAVE NOT BEEN SUBMITTED
TO THE COURT, WHEN EARLIER THE SANDIGANBAYAN HAS QUOTED
EXTENSIVELY A PORTION OF THE TRANSLATION OF ONE OF THESE
SWISS DECISIONS IN HIS PONENCIA DATED JULY 29, 1999 WHEN IT
DENIED THE MOTION TO RELEASE ONE HUNDRED FIFTY MILLION US
DOLLARS ($150,000,000.00) TO THE HUMAN RIGHTS VICTIMS.

PRIVATE RESPONDENTS ARE DEEMED TO HAVE WAIVED THEIR


OBJECTION TO THE AUTHENTICITY OF THE SWISS FEDERAL SUPREME
COURT DECISIONS. [13]

Petitioner, in the main, asserts that nowhere in the respondents motions for
reconsideration and supplemental motion for reconsideration were the authenticity,
accuracy and admissibility of the Swiss decisions ever challenged. Otherwise stated, it
was incorrect for the Sandiganbayan to use the issue of lack of authenticated
translations of the decisions of the Swiss Federal Supreme Court as the basis for
reversing itself because respondents themselves never raised this issue in their motions
for reconsideration and supplemental motion for reconsideration. Furthermore, this
particular issue relating to the translation of the Swiss court decisions could not be
resurrected anymore because said decisions had been previously utilized by the
Sandiganbayan itself in resolving a decisive issue before it.
Petitioner faults the Sandiganbayan for questioning the non-production of the
authenticated translations of the Swiss Federal Supreme Court decisions as this was a
marginal and technical matter that did not diminish by any measure the conclusiveness
and strength of what had been proven and admitted before the Sandiganbayan, that is,
that the funds deposited by the Marcoses constituted ill-gotten wealth and thus
belonged to the Filipino people.
In compliance with the order of this Court, Mrs. Marcos filed her comment to the
petition on May 22, 2002. After several motions for extension which were all granted,
the comment of Mrs. Manotoc and Ferdinand, Jr. and the separate comment of Mrs.
Araneta were filed on May 27, 2002.
Mrs. Marcos asserts that the petition should be denied on the following grounds:
A.

PETITIONER HAS A PLAIN, SPEEDY, AND ADEQUATE REMEDY AT THE


SANDIGANBAYAN.

B.

THE SANDIGANBAYAN DID NOT ABUSE ITS DISCRETION IN SETTING THE


CASE FOR FURTHER PROCEEDINGS. [14]

Mrs. Marcos contends that petitioner has a plain, speedy and adequate remedy in
the ordinary course of law in view of the resolution of the Sandiganbayan dated January
31, 2000 directing petitioner to submit the authenticated translations of the Swiss
decisions. Instead of availing of said remedy, petitioner now elevates the matter to this
Court. According to Mrs. Marcos, a petition for certiorari which does not comply with the
requirements of the rules may be dismissed. Since petitioner has a plain, speedy and
adequate remedy, that is, to proceed to trial and submit authenticated translations of the
Swiss decisions, its petition before this Court must be dismissed. Corollarily, the
Sandiganbayans ruling to set the case for further proceedings cannot and should not
be considered a capricious and whimsical exercise of judgment.
Likewise, Mrs. Manotoc and Ferdinand, Jr., in their comment, prayed for the
dismissal of the petition on the grounds that:
(A)

BY THE TIME PETITIONER FILED ITS MOTION FOR SUMMARY JUDGMENT


ON 10 MARCH 2000, IT WAS ALREADY BARRED FROM DOING SO.
(1) The Motion for Summary Judgment was based on private respondents
Answer and other documents that had long been in the records of the
case. Thus, by the time the Motion was filed on 10 March 2000, estoppel
by laches had already set in against petitioner.

(2) By its positive acts and express admissions prior to filing the Motion for
Summary Judgment on 10 March 1990, petitioner had legally bound
itself to go to trial on the basis of existing issues. Thus, it clearly waived
whatever right it had to move for summary judgment.

(B)

EVEN ASSUMING THAT PETITIONER WAS NOT LEGALLY BARRED FROM


FILING THE MOTION FOR SUMMARY JUDGMENT, THE SANDIGANBAYAN
IS CORRECT IN RULING THAT PETITIONER HAS NOT YET ESTABLISHED
A PRIMA FACIE CASE FOR THE FORFEITURE OF THE SWISS FUNDS.

(1) Republic Act No. 1379, the applicable law, is a penal statute. As such,
its provisions, particularly the essential elements stated in section 3
thereof, are mandatory in nature. These should be strictly construed
against petitioner and liberally in favor of private respondents.

(2) Petitioner has failed to establish the third and fourth essential elements
in Section 3 of R.A. 1379 with respect to the identification, ownership,
and approximate amount of the property which the Marcos couple
allegedly acquired during their incumbency.

(a) Petitioner has failed to prove that the Marcos couple acquired
or own the Swiss funds.

(b) Even assuming, for the sake of argument, that the fact of
acquisition has been proven, petitioner has categorically admitted
that it has no evidence showing how much of the Swiss funds was
acquired during the incumbency of the Marcos couple from 31
December 1965 to 25 February 1986.

(3) In contravention of the essential element stated in Section 3 (e) of R.A.


1379, petitioner has failed to establish the other proper earnings and
income from legitimately acquired property of the Marcos couple over
and above their government salaries.
(4) Since petitioner failed to prove the three essential elements provided in
paragraphs (c) (d), and (e) of Section 3, R.A. 1379, the inescapable
[15] [16] [17]

conclusion is that the prima facie presumption of unlawful acquisition of


the Swiss funds has not yet attached. There can, therefore, be no
premature forfeiture of the funds.

(C)

IT WAS ONLY BY ARBITRARILY ISOLATING AND THEN TAKING CERTAIN


STATEMENTS MADE BY PRIVATE RESPONDENTS OUT OF CONTEXT THAT
PETITIONER WAS ABLE TO TREAT THESE AS JUDICIAL ADMISSIONS
SUFFICIENT TO ESTABLISH A PRIMA FACIE AND THEREAFTER A
CONCLUSIVE CASE TO JUSTIFY THE FORFEITURE OF THE SWISS FUNDS.

(1) Under Section 27, Rule 130 of the Rules of Court, the General and
Supplemental Agreements, as well as the other written and testimonial
statements submitted in relation thereto, are expressly barred from being
admissible in evidence against private respondents.

(2) Had petitioner bothered to weigh the alleged admissions together with
the other statements on record, there would be a demonstrable showing
that no such judicial admissions were made by private respondents.

(D)

SINCE PETITIONER HAS NOT (YET) PROVEN ALL THE ESSENTIAL


ELEMENTS TO ESTABLISH A PRIMA FACIE CASE FOR FORFEITURE, AND
PRIVATE RESPONDENTS HAVE NOT MADE ANY JUDICIAL ADMISSION
THAT WOULD HAVE FREED IT FROM ITS BURDEN OF PROOF, THE
SANDIGANBAYAN DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN
DENYING THE MOTION FOR SUMMARY JUDGMENT. CERTIORARI,
THEREFORE, DOES NOT LIE, ESPECIALLY AS THIS COURT IS NOT A TRIER
OF FACTS. [18]

For her part, Mrs. Araneta, in her comment to the petition, claims that obviously
petitioner is unable to comply with a very plain requirement of respondent
Sandiganbayan. The instant petition is allegedly an attempt to elevate to this Court
matters, issues and incidents which should be properly threshed out at the
Sandiganbayan. To respondent Mrs. Araneta, all other matters, save that pertaining to
the authentication of the translated Swiss Court decisions, are irrelevant and impertinent
as far as this Court is concerned. Respondent Mrs. Araneta manifests that she is as
eager as respondent Sandiganbayan or any interested person to have the Swiss Court
decisions officially translated in our known language. She says the authenticated official
English version of the Swiss Court decisions should be presented. This should stop all
speculations on what indeed is contained therein. Thus, respondent Mrs. Araneta prays
that the petition be denied for lack of merit and for raising matters which, in elaborated
fashion, are impertinent and improper before this Court.

PROPRIETY OF PETITIONERS
ACTION FOR CERTIORARI

But before this Court discusses the more relevant issues, the question regarding the
propriety of petitioner Republic's action for certiorari under Rule 65 of the 1997 Rules
[19]

of Civil Procedure assailing the Sandiganbayan Resolution dated January 21, 2002
should be threshed out.
At the outset, we would like to stress that we are treating this case as an exception
to the general rule governing petitions for certiorari. Normally, decisions of the
Sandiganbayan are brought before this Court under Rule 45, not Rule 65.
But where the case is undeniably ingrained with immense public interest, public
[20]

policy and deep historical repercussions, certiorari is allowed notwithstanding the


existence and availability of the remedy of appeal. [21]

One of the foremost concerns of the Aquino Government


in February 1986 was the recovery of the unexplained or ill-gotten wealth reputedly
amassed by former President and Mrs. Ferdinand E. Marcos, their relatives, friends and
business associates. Thus, the very first Executive Order (EO) issued by then President
Corazon Aquino upon her assumption to office after the ouster of the Marcoses was EO
No. 1, issued on February 28, 1986. It created the Presidential Commission on Good
Government (PCGG) and charged it with the task of assisting the President in the
"recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos,
his immediate family, relatives, subordinates and close associates, whether located in
the Philippines or abroad, including the takeover or sequestration of all business
enterprises and entities owned or controlled by them during his administration, directly
or through nominees, by taking undue advantage of their public office and/or using their
powers, authority, influence, connections or relationship." The urgency of this
undertaking was tersely described by this Court in Republic vs. Lobregat : [22]

surely x x x an enterprise "of great pith and moment"; it was attended by "great
expectations"; it was initiated not only out of considerations of simple justice but also
out of sheer necessity - the national coffers were empty, or nearly so.

In all the alleged ill-gotten wealth cases filed by the PCGG, this Court has seen fit to
set aside technicalities and formalities that merely serve to delay or impede judicious
resolution. This Court prefers to have such cases resolved on the merits at the
Sandiganbayan. But substantial justice to the Filipino people and to all parties
concerned, not mere legalisms or perfection of form, should now be relentlessly and
firmly pursued. Almost two decades have passed since the government initiated its
search for and reversion of such ill-gotten wealth. The definitive resolution of such
cases on the merits is thus long overdue. If there is proof of illegal acquisition,
accumulation, misappropriation, fraud or illicit conduct, let it be brought out now. Let the
ownership of these funds and other assets be finally determined and resolved with
dispatch, free from all the delaying technicalities and annoying procedural sidetracks. [23]

We thus take cognizance of this case and settle with finality all the issues therein.

ISSUES BEFORE THIS COURT

The crucial issues which this Court must resolve are: (1) whether or not
respondents raised any genuine issue of fact which would either justify or negate
summary judgment; and (2) whether or not petitioner Republic was able to prove its
case for forfeiture in accordance with Sections 2 and 3 of RA 1379.
(1) THE PROPRIETY OF SUMMARY JUDGMENT
We hold that respondent Marcoses failed to raise any genuine issue of fact in their
pleadings. Thus, on motion of petitioner Republic, summary judgment should take place
as a matter of right.
In the early case of Auman vs. Estenzo , summary judgment was described as a
[24]

judgment which a court may render before trial but after both parties have pleaded. It is
ordered by the court upon application by one party, supported by affidavits, depositions
or other documents, with notice upon the adverse party who may in turn file an
opposition supported also by affidavits, depositions or other documents. This is after the
court summarily hears both parties with their respective proofs and finds that there is no
genuine issue between them. Summary judgment is sanctioned in this jurisdiction by
Section 1, Rule 35 of the 1997 Rules of Civil Procedure:

SECTION 1. Summary judgment for claimant.- A party seeking to recover upon a


claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time
after the pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part
thereof.[25]

Summary judgment is proper when there is clearly no genuine issue as to any


material fact in the action. The theory of summary judgment is that, although an
[26]

answer may on its face appear to tender issues requiring trial, if it is demonstrated by
affidavits, depositions or admissions that those issues are not genuine but sham or
fictitious, the Court is justified in dispensing with the trial and rendering summary
judgment for petitioner Republic.
The Solicitor General made a very thorough presentation of its case for forfeiture:

xxx
4. Respondent Ferdinand E. Marcos (now deceased and represented by his
Estate/Heirs) was a public officer for several decades continuously and without
interruption as Congressman, Senator, Senate President and President of the Republic
of the Philippines from December 31, 1965 up to his ouster by direct action of the
people of EDSA on February 22-25, 1986.

5. Respondent Imelda Romualdez Marcos (Imelda, for short) the former First Lady
who ruled with FM during the 14-year martial law regime, occupied the position of
Minister of Human Settlements from June 1976 up to the peaceful revolution in
February 22-25, 1986. She likewise served once as a member of the Interim Batasang
Pambansa during the early years of martial law from 1978 to 1984 and as Metro
Manila Governor in concurrent capacity as Minister of Human Settlements. x x x

xxx xxx xxx

11. At the outset, however, it must be pointed out that based on the Official Report of
the Minister of Budget, the total salaries of former President Marcos as President form
1966 to 1976 was P60,000 a year and from 1977 to 1985, P100,000 a year; while
that of the former First Lady, Imelda R. Marcos, as Minister of Human Settlements
from June 1976 to February 22-25, 1986 was P75,000 a year xxx.

ANALYSIS OF RESPONDENTS
LEGITIMATE INCOME

xxx

12. Based on available documents, the ITRs of the Marcoses for the years 1965-1975
were filed under Tax Identification No. 1365-055-1. For the years 1976 until 1984, the
returns were filed under Tax Identification No. M 6221-J 1117-A-9.

13. The data contained in the ITRs and Balance Sheet filed by the Marcoses are
summarized and attached to the reports in the following schedules:

Schedule A:

Schedule of Income (Annex T hereof);

Schedule B:

Schedule of Income Tax Paid (Annex T-1 hereof);

Schedule C:
Schedule of Net Disposable Income (Annex T-2 hereof);

Schedule D:

Schedule of Networth Analysis (Annex T-3 hereof).

14. As summarized in Schedule A (Annex T hereof), the Marcoses


reported P16,408,442.00 or US$2,414,484.91 in total income over a period of 20
years from 1965 to 1984. The sources of income are as follows:

Official Salaries - P 2,627,581.00 - 16.01%


Legal Practice - 11,109,836.00 - 67.71%
Farm Income - 149,700.00 - .91%
Others - 2,521,325.00 - 15.37%
Total P16,408,442.00 - 100.00%

15. FMs official salary pertains to his compensation as Senate President in 1965 in
the amount of P15,935.00 and P1,420,000.00 as President of the Philippines during
the period 1966 until 1984. On the other hand, Imelda reported salaries and
allowances only for the years 1979 to 1984 in the amount of P1,191,646.00. The
records indicate that the reported income came from her salary from the Ministry of
Human Settlements and allowances from Food Terminal, Inc., National Home
Mortgage Finance Corporation, National Food Authority Council, Light Rail Transit
Authority and Home Development Mutual Fund.

16. Of the P11,109,836.00 in reported income from legal practice, the amount
of P10,649,836.00 or 96% represents receivables from prior years during the period
1967 up to 1984.

17. In the guise of reporting income using the cash method under Section 38 of the
National Internal Revenue Code, FM made it appear that he had an extremely
profitable legal practice before he became a President (FM being barred by law from
practicing his law profession during his entire presidency) and that, incredibly, he was
still receiving payments almost 20 years after. The only problem is that in his Balance
Sheet attached to his 1965 ITR immediately preceeding his ascendancy to the
presidency he did not show any Receivables from client at all, much less the P10,65-
M that he decided to later recognize as income. There are no documents showing any
withholding tax certificates. Likewise, there is nothing on record that will show any
known Marcos client as he has no known law office. As previously stated, his
networth was a mere P120,000.00 in December, 1965. The joint income tax returns of
FM and Imelda cannot, therefore, conceal the skeletons of their kleptocracy.
18. FM reported a total of P2,521,325.00 as Other Income for the years 1972 up to
1976 which he referred to in his return as Miscellaneous Items and Various
Corporations. There is no indication of any payor of the dividends or earnings.

19. Spouses Ferdinand and Imelda did not declare any income from any deposits and
placements which are subject to a 5% withholding tax. The Bureau of Internal
Revenue attested that after a diligent search of pertinent records on file with the
Records Division, they did not find any records involving the tax transactions of
spouses Ferdinand and Imelda in Revenue Region No. 1, Baguio City, Revenue
Region No.4A, Manila, Revenue Region No. 4B1, Quezon City and Revenue No. 8,
Tacloban, Leyte. Likewise, the Office of the Revenue Collector of Batac. Further,
BIR attested that no records were found on any filing of capital gains tax return
involving spouses FM and Imelda covering the years 1960 to 1965.

20. In Schedule B, the taxable reported income over the twenty-year period
was P14,463,595.00 which represents 88% of the gross income. The Marcoses paid
income taxes totaling P8,233,296.00 or US$1,220,667.59. The business expenses in
the amount of P861,748.00 represent expenses incurred for subscription, postage,
stationeries and contributions while the other deductions in the amount of
P567,097.00 represents interest charges, medicare fees, taxes and licenses. The total
deductions in the amount of P1,994,845.00 represents 12% of the total gross income.

21. In Schedule C, the net cumulative disposable income amounts to P6,756,301.00


or US$980,709.77. This is the amount that represents that portion of the Marcoses
income that is free for consumption, savings and investments. The amount is arrived
at by adding back to the net income after tax the personal and additional exemptions
for the years 1965-1984, as well as the tax-exempt salary of the President for the years
1966 until 1972.

22. Finally, the networth analysis in Schedule D, represents the total accumulated
networth of spouses, Ferdinand and Imelda. Respondents Balance Sheet attached to
their 1965 ITR, covering the year immediately preceding their ascendancy to the
presidency, indicates an ending networth of P120,000.00 which FM declared as
Library and Miscellaneous assets. In computing for the networth, the income
approach was utilized. Under this approach, the beginning capital is increased or
decreased, as the case may be, depending upon the income earned or loss
incurred. Computations establish the total networth of spouses Ferdinand and Imelda,
for the years 1965 until 1984 in the total amount of US$957,487.75, assuming the
income from legal practice is real and valid x x x.

G. THE SECRET MARCOS DEPOSITS


IN SWISS BANKS
23. The following presentation very clearly and overwhelmingly show in detail how
both respondents clandestinely stashed away the countrys wealth to Switzerland and
hid the same under layers upon layers of foundations and other corporate entities to
prevent its detection. Through their dummies/nominees, fronts or agents who formed
those foundations or corporate entities, they opened and maintained numerous bank
accounts. But due to the difficulty if not the impossibility of detecting and
documenting all those secret accounts as well as the enormity of the deposits therein
hidden, the following presentation is confined to five identified accounts groups, with
balances amounting to about $356-M with a reservation for the filing of a
supplemental or separate forfeiture complaint should the need arise.

H. THE AZIO-VERSO-VIBUR

FOUNDATION ACCOUNTS

24. On June 11, 1971, Ferdinand Marcos issued a written order to Dr. Theo Bertheau,
legal counsel of Schweizeresche Kreditanstalt or SKA, also known as Swiss Credit
Bank, for him to establish the AZIO Foundation. On the same date, Marcos executed
a power of attorney in favor of Roberto S. Benedicto empowering him to transact
business in behalf of the said foundation. Pursuant to the said Marcos mandate, AZIO
Foundation was formed on June 21, 1971 in Vaduz. Walter Fessler and Ernst Scheller,
also of SKA Legal Service, and Dr. Helmuth Merling from Schaan were designated as
members of the Board of Trustees of the said foundation. Ferdinand Marcos was
named first beneficiary and the Marcos Foundation, Inc. was second beneficiary. On
November 12, 1971, FM again issued another written order naming Austrahil PTY
Ltd. In Sydney, Australia, as the foundations first and sole beneficiary. This was
recorded on December 14, 1971.

25. In an undated instrument, Marcos changed the first and sole beneficiary to
CHARIS FOUNDATION. This change was recorded on December 4, 1972.

26. On August 29, 1978, the AZIO FOUNDATION was renamed to VERSO
FOUNDATION. The Board of Trustees remained the same. On March 11, 1981,
Marcos issued a written directive to liquidated VERSO FOUNDATION and to
transfer all its assets to account of FIDES TRUST COMPANY at Bank Hofman in
Zurich under the account Reference OSER. The Board of Trustees decided to
dissolve the foundation on June 25, 1981.

27. In an apparent maneuver to bury further the secret deposits beneath the thick
layers of corporate entities, FM effected the establishment of VIBUR FOUNDATION
on May 13, 1981 in Vaduz. Atty. Ivo Beck and Limag Management, a wholly-owned
subsidiary of Fides Trust, were designated as members of the Board of Trustees. The
account was officially opened with SKA on September 10, 1981. The beneficial
owner was not made known to the bank since Fides Trust Company acted as
fiduciary. However, comparison of the listing of the securities in the safe deposit
register of the VERSO FOUNDATION as of February 27, 1981 with that of VIBUR
FOUNDATION as of December 31, 1981 readily reveals that exactly the same
securities were listed.

28. Under the foregoing circumstances, it is certain that the VIBUR FOUNDATION
is the beneficial successor of VERSO FOUNDATION.

29. On March 18, 1986, the Marcos-designated Board of Trustees decided to liquidate
VIBUR FOUNDATION. A notice of such liquidation was sent to the Office of the
Public Register on March 21, 1986. However, the bank accounts and respective
balances of the said VIBUR FOUNDATION remained with SKA. Apparently, the
liquidation was an attempt by the Marcoses to transfer the foundations funds to
another account or bank but this was prevented by the timely freeze order issued by
the Swiss authorities. One of the latest documents obtained by the PCGG from the
Swiss authorities is a declaration signed by Dr. Ivo Beck (the trustee) stating that the
beneficial owner of VIBUR FOUNDATION is Ferdinand E. Marcos. Another
document signed by G. Raber of SKA shows that VIBUR FOUNDATION is owned
by the Marcos Familie

30. As of December 31, 1989, the balance of the bank accounts of VIBUR
FOUNDATION with SKA, Zurich, under the General Account No. 469857 totaled
$3,597,544.00

I. XANDY-WINTROP: CHARIS-SCOLARI-
VALAMO-SPINUS-AVERTINA
FOUNDATION ACCOUNTS

31. This is the most intricate and complicated account group. As the Flow Chart
hereof shows, two (2) groups under the foundation organized by Marcos
dummies/nominees for FMs benefit, eventually joined together and became one (1)
account group under the AVERTINA FOUNDATION for the benefit of both FM and
Imelda. This is the biggest group from where the $50-M investment fund of the
Marcoses was drawn when they bought the Central Banks dollar-denominated
treasury notes with high-yielding interests.

32. On March 20, 1968, after his second year in the presidency, Marcos opened bank
accounts with SKA using an alias or pseudonym WILLIAM SAUNDERS, apparently
to hide his true identity. The next day, March 21, 1968, his First Lady, Mrs. Imelda
Marcos also opened her own bank accounts with the same bank using an American-
sounding alias, JANE RYAN. Found among the voluminous documents in
Malacaang shortly after they fled to Hawaii in haste that fateful night of February 25,
1986, were accomplished forms for Declaration/Specimen Signatures submitted by
the Marcos couple. Under the caption signature(s) Ferdinand and Imelda signed
their real names as well as their respective aliases underneath. These accounts were
actively operated and maintained by the Marcoses for about two (2) years until their
closure sometime in February, 1970 and the balances transferred to XANDY
FOUNDATION.

33. The XANDY FOUNDATION was established on March 3, 1970 in Vaduz. C.W.
Fessler, C. Souviron and E. Scheller were named as members of the Board of
Trustees.

34. FM and Imelda issued the written mandate to establish the foundation to Markus
Geel of SKA on March 3, 1970. In the handwritten Regulations signed by the Marcos
couple as well as in the type-written Regulations signed by Markus Geel both dated
February 13, 1970, the Marcos spouses were named the first beneficiaries, the
surviving spouse as the second beneficiary and the Marcos children Imee,
Ferdinand, Jr. (Bongbong) and Irene as equal third beneficiaries.

35. The XANDY FOUNDATION was renamed WINTROP FOUNDATION on


August 29, 1978. The Board of Trustees remained the same at the outset. However,
on March 27, 1980, Souviron was replaced by Dr. Peter Ritter. On March 10. 1981,
Ferdinand and Imelda Marcos issued a written order to the Board of Wintrop to
liquidate the foundation and transfer all its assets to Bank Hofmann in Zurich in favor
of FIDES TRUST COMPANY. Later, WINTROP FOUNDATION was dissolved.

36. The AVERTINA FOUNDATION was established on May 13, 1981 in Vaduz with
Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of FIDES
TRUST CO., as members of the Board of Trustees. Two (2) account categories,
namely: CAR and NES, were opened on September 10, 1981. The beneficial owner
of AVERTINA was not made known to the bank since the FIDES TRUST CO. acted
as fiduciary. However, the securities listed in the safe deposit register of WINTROP
FOUNDATION Category R as of December 31, 1980 were the same as those listed in
the register of AVERTINA FOUNDATION Category CAR as of December 31, 1981.
Likewise, the securities listed in the safe deposit register of WINTROP
FOUNDATION Category S as of December 31, 1980 were the same as those listed in
the register of Avertina Category NES as of December 31, 1981.Under the
circumstances, it is certain that the beneficial successor of WINTROP FOUNDATION
is AVERTINA FOUNDATION. The balance of Category CAR as of December 31,
1989 amounted to US$231,366,894.00 while that of Category NES as of 12-31-83
was US$8,647,190.00. Latest documents received from Swiss authorities included a
declaration signed by IVO Beck stating that the beneficial owners of AVERTINA
FOUNDATION are FM and Imelda. Another document signed by G. Raber of SKA
indicates that Avertina Foundation is owned by the Marcos Families.

37. The other groups of foundations that eventually joined AVERTINA were also
established by FM through his dummies, which started with the CHARIS
FOUNDATION.

38. The CHARIS FOUNDATION was established in VADUZ on December 27, 1971.
Walter Fessler and Ernst Scheller of SKA and Dr. Peter Ritter were named
as directors. Dr. Theo Bertheau, SKA legal counsel, acted as founding director in
behalf of FM by virtue of the mandate and agreement dated November 12, 1971. FM
himself was named the first beneficiary and Xandy Foundation as second beneficiary
in accordance with the handwritten instructions of FM on November 12, 1971 and the
Regulations. FM gave a power of attorney to Roberto S. Benedicto on February 15,
1972 to act in his behalf with regard to Charis Foundation.

39. On December 13, 1974, Charis Foundation was renamed Scolari Foundation but
the directors remained the same. On March 11, 1981 FM ordered in writing that the
Valamo Foundation be liquidated and all its assets be transferred to Bank Hofmann,
AG in favor of Fides Trust Company under the account Reference OMAL. The
Board of Directors decided on the immediate dissolution of Valamo Foundation on
June 25, 1981.

40 The SPINUS FOUNDATION was established on May 13, 1981 in Vaduz with
Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust
Co., as members of the Foundations Board of Directors. The account was officially
opened with SKA on September 10, 1981. The beneficial owner of the foundation was
not made known to the bank since Fides Trust Co. acted as fiduciary. However, the
list of securities in the safe deposit register of Valamo Foundation as of December 31,
1980 are practically the same with those listed in the safe deposit register of Spinus
Foundation as of December 31, 1981. Under the circumstances, it is certain that the
Spinus Foundation is the beneficial successor of the Valamo Foundation.

41. On September 6, 1982, there was a written instruction from Spinus Foundation to
SKA to close its Swiss Franc account and transfer the balance to Avertina
Foundation. In July/August, 1982, several transfers from the foundations German
marks and US dollar accounts were made to Avertina Category CAR totaling DM
29.5-M and $58-M, respectively. Moreover, a comparison of the list of securities of
the Spinus Foundation as of February 3, 1982 with the safe deposit slips of the
Avertina Foundation Category CAR as of August 19, 1982 shows that all the
securities of Spinus were transferred to Avertina.
J. TRINIDAD-RAYBY-PALMY
FOUNDATION ACCOUNTS

42. The Trinidad Foundation was organized on August 26, 1970 in Vaduz with C.W.
Fessler and E. Scheller of SKA and Dr. Otto Tondury as the foundations
directors. Imelda issued a written mandate to establish the foundation to Markus Geel
on August 26, 1970. The regulations as well as the agreement, both dated August 28,
1970 were likewise signed by Imelda. Imelda was named the first beneficiary and her
children Imelda (Imee), Ferdinand, Jr. (Bongbong) and, Irene were named as equal
second beneficiaries.

43. Rayby Foundation was established on June 22, 1973 in Vaduz with Fessler,
Scheller and Ritter as members of the board of directors. Imelda issued a written
mandate to Dr. Theo Bertheau to establish the foundation with a note that the
foundations capitalization as well as the cost of establishing it be debited against the
account of Trinidad Foundation. Imelda was named the first and only beneficiary of
Rayby foundation. According to written information from SKA dated November 28,
1988, Imelda apparently had the intention in 1973 to transfer part of the assets of
Trinidad Foundation to another foundation, thus the establishment of Rayby
Foundation. However, transfer of assets never took place. On March 10, 1981, Imelda
issued a written order to transfer all the assets of Rayby Foundation to Trinidad
Foundation and to subsequently liquidate Rayby. On the same date, she issued a
written order to the board of Trinidad to dissolve the foundation and transfer all its
assets to Bank Hofmann in favor of Fides Trust Co. Under the account Reference
Dido, Rayby was dissolved on April 6, 1981 and Trinidad was liquidated on August
3, 1981.

44. The PALMY FOUNDATION was established on May 13, 1981 in Vaduz with Dr.
Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co, as
members of the Foundations Board of Directors. The account was officially opened
with the SKA on September 10, 1981. The beneficial owner was not made known to
the bank since Fides Trust Co. acted as fiduciary. However, when one compares the
listing of securities in the safe deposit register of Trinidad Foundation as of December
31,1980 with that of the Palmy Foundation as of December 31, 1980, one can clearly
see that practically the same securities were listed. Under the circumstances, it is
certain that the Palmy Foundation is the beneficial successor of the Trinidad
Foundation.

45. As of December 31, 1989, the ending balance of the bank accounts of Palmy
Foundation under General Account No. 391528 is $17,214,432.00.
46. Latest documents received from Swiss Authorities included a declaration signed
by Dr. Ivo Beck stating that the beneficial owner of Palmy Foundation is Imelda.
Another document signed by Raber shows that the said Palmy Foundation is owned
by Marcos Familie.

K. ROSALYS-AGUAMINA
FOUNDATION ACCOUNTS

47. Rosalys Foundation was established in 1971 with FM as the beneficiary. Its
Articles of Incorporation was executed on September 24, 1971 and its By-Laws on
October 3, 1971. This foundation maintained several accounts with Swiss Bank
Corporation (SBC) under the general account 51960 where most of the bribe monies
from Japanese suppliers were hidden.

48. On December 19, 1985, Rosalys Foundation was liquidated and all its assets were
transferred to Aguamina Corporations (Panama) Account No. 53300 with SBC. The
ownership by Aguamina Corporation of Account No. 53300 is evidenced by an
opening account documents from the bank. J. Christinaz and R.L. Rossier, First Vice-
President and Senior Vice President, respectively, of SBC, Geneva issued a
declaration dated September 3, 1991 stating that the by-laws dated October 3, 1971
governing Rosalys Foundation was the same by-law applied to Aguamina Corporation
Account No. 53300. They further confirmed that no change of beneficial owner was
involved while transferring the assets of Rosalys to Aguamina. Hence, FM remains
the beneficiary of Aguamina Corporation Account No. 53300.

As of August 30, 1991, the ending balance of Account No. 53300 amounted to
$80,566,483.00.

L. MALER FOUNDATION ACCOUNTS

49. Maler was first created as an establishment. A statement of its rules and
regulations was found among Malacaang documents. It stated, among others, that
50% of the Companys assets will be for sole and full right disposal of FM and Imelda
during their lifetime, which the remaining 50% will be divided in equal parts among
their children. Another Malacaang document dated October 19,1968 and signed by
Ferdinand and Imelda pertains to the appointment of Dr. Andre Barbey and Jean Louis
Sunier as attorneys of the company and as administrator and manager of all assets
held by the company. The Marcos couple, also mentioned in the said document that
they bought the Maler Establishment from SBC, Geneva. On the same date, FM and
Imelda issued a letter addressed to Maler Establishment, stating that all instructions to
be transmitted with regard to Maler will be signed with the word JOHN LEWIS.
This word will have the same value as the couples own personal signature. The letter
was signed by FM and Imelda in their signatures and as John Lewis.

50. Maler Establishment opened and maintained bank accounts with SBC, Geneva.
The opening bank documents were signed by Dr. Barbey and Mr. Sunnier as
authorized signatories.

51. On November 17, 1981, it became necessary to transform Maler Establishment


into a foundation. Likewise, the attorneys were changed to Michael Amaudruz, et. al.
However, administration of the assets was left to SBC. The articles of incorporation of
Maler Foundation registered on November 17, 1981 appear to be the same articles
applied to Maler Establishment. On February 28, 1984, Maler Foundation cancelled
the power of attorney for the management of its assets in favor of SBC and transferred
such power to Sustrust Investment Co., S.A.

52. As of June 6, 1991, the ending balance of Maler Foundations Account Nos.
254,508 BT and 98,929 NY amount SF 9,083,567 and SG 16,195,258, respectively,
for a total of SF 25,278,825.00. GM only until December 31, 1980. This account was
opened by Maler when it was still an establishment which was subsequently
transformed into a foundation.

53. All the five (5) group accounts in the over-all flow chart have a total balance of
about Three Hundred Fifty Six Million Dollars ($356,000,000.00) as shown by Annex
R-5 hereto attached as integral part hereof.

x x x x x x. [27]

Respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and


Ferdinand Marcos, Jr., in their answer, stated the following:

xxx xxx xxx

4. Respondents ADMIT paragraphs 3 and 4 of the Petition.

5. Respondents specifically deny paragraph 5 of the Petition in so far as it states


that summons and other court processes may be served on Respondent Imelda R.
Marcos at the stated address the truth of the matter being that Respondent Imelda R.
Marcos may be served with summons and other processes at No. 10-B Bel Air
Condominium 5022 P. Burgos Street, Makati, Metro Manila, and ADMIT the rest.

xxx xxx xxx

10. Respondents ADMIT paragraph 11 of the Petition.


11. Respondents specifically DENY paragraph 12 of the Petition for lack of
knowledge sufficient to form a belief as to the truth of the allegation since
Respondents were not privy to the transactions and that they cannot remember exactly
the truth as to the matters alleged.

12. Respondents specifically DENY paragraph 13 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs
and Balance Sheet.

13. Respondents specifically DENY paragraph 14 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs.

14. Respondents specifically DENY paragraph 15 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs.

15. Respondents specifically DENY paragraph 16 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs.

16. Respondents specifically DENY paragraph 17 of the Petition insofar as it


attributes willful duplicity on the part of the late President Marcos, for being false, the
same being pure conclusions based on pure assumption and not allegations of fact;
and specifically DENY the rest for lack of knowledge or information sufficient to
form a belief as to the truth of the allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs or the attachments thereto.

17. Respondents specifically DENY paragraph 18 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs.

18. Respondents specifically DENY paragraph 19 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs
and that they are not privy to the activities of the BIR.

19. Respondents specifically DENY paragraph 20 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs.
20. Respondents specifically DENY paragraph 21 of the Petition for lack of
knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs.

21. Respondents specifically DENY paragraph 22 of the Petition for lack of


knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents cannot remember with exactitude the contents of the alleged ITRs.

22. Respondents specifically DENY paragraph 23 insofar as it alleges that


Respondents clandestinely stashed the countrys wealth in Switzerland and hid the
same under layers and layers of foundation and corporate entities for being false, the
truth being that Respondents aforesaid properties were lawfully acquired.

23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the
Petition for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents were not privy to the transactions regarding the
alleged Azio-Verso-Vibur Foundation accounts, except that as to Respondent Imelda
R. Marcos she specifically remembers that the funds involved were lawfully acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36,37, 38, 39, 40,
and 41 of the Petition for lack of knowledge or information sufficient to form a belief
as to the truth of the allegations since Respondents are not privy to the transactions
and as to such transaction they were privy to they cannot remember with exactitude
the same having occurred a long time ago, except that as to Respondent Imelda R.
Marcos she specifically remembers that the funds involved were lawfully acquired.

25. Respondents specifically DENY paragraphs 42, 43, 44, 45, and 46, of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth of the
allegations since Respondents were not privy to the transactions and as to such
transaction they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to Respondent Imelda R. Marcos she
specifically remembers that the funds involved were lawfully acquired.

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52, of the Petition for
lack of knowledge or information sufficient to form a belief as to the truth of the
allegations since Respondents were not privy to the transactions and as to such
transaction they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to Respondent Imelda R. Marcos she
specifically remembers that the funds involved were lawfully acquired.

Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos
and the Marcos children indubitably failed to tender genuine issues in their answer to
the petition for forfeiture. A genuine issue is an issue of fact which calls for the
presentation of evidence as distinguished from an issue which is fictitious and contrived,
set up in bad faith or patently lacking in substance so as not to constitute a genuine
issue for trial. Respondents defenses of lack of knowledge for lack of privity or
(inability to) recall because it happened a long time ago or, on the part of Mrs. Marcos,
that the funds were lawfully acquired are fully insufficient to tender genuine issues.
Respondent Marcoses defenses were a sham and evidently calibrated to compound
and confuse the issues.
The following pleadings filed by respondent Marcoses are replete with indications
of a spurious defense:

(a) Respondents' Answer dated October 18, 1993;

(b) Pre-trial Brief dated October 4, 1999 of Mrs. Marcos, Supplemental


Pre-trial Brief dated October 19, 1999 of Ferdinand, Jr. and Mrs. Imee
Marcos-Manotoc adopting the pre-trial brief of Mrs. Marcos, and
Manifestation dated October 19, 1999 of Irene Marcos-Araneta adopting
the pre-trial briefs of her co- respondents;

(c) Opposition to Motion for Summary Judgment dated March 21, 2000,
filed by Mrs. Marcos which the other respondents (Marcos children)
adopted;

(d) Demurrer to Evidence dated May 2, 2000 filed by Mrs. Marcos and
adopted by the Marcos children;

(e) Motion for Reconsideration dated September 26, 2000 filed by Mrs.
Marcos; Motion for Reconsideration dated October 5, 2000 jointly filed
by Mrs. Manotoc and Ferdinand, Jr., and Supplemental Motion for
Reconsideration dated October 9, 2000 likewise jointly filed by Mrs.
Manotoc and Ferdinand, Jr.;

(f) Memorandum dated December 12, 2000 of Mrs. Marcos and


Memorandum dated December 17, 2000 of the Marcos children;

(g) Manifestation dated May 26, 1998; and

(h) General/Supplemental Agreement dated December 23, 1993.

An examination of the foregoing pleadings is in order.


Respondents Answer dated October 18, 1993.
In their answer, respondents failed to specifically deny each and every allegation
contained in the petition for forfeiture in the manner required by the rules. All they gave
were stock answers like they have no sufficient knowledge or they could not recall
because it happened a long time ago, and, as to Mrs. Marcos, the funds were lawfully
acquired, without stating the basis of such assertions.
Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides:

A defendant must specify each material allegation of fact the truth of which he does
not admit and, whenever practicable, shall set forth the substance of the matters upon
which he relies to support his denial. Where a defendant desires to deny only a part of
an averment, he shall specify so much of it as is true and material and shall deny the
remainder. Where a defendant is without knowledge or information sufficient to form
a belief as to the truth of a material averment made in the complaint, he shall so state,
and this shall have the effect of a denial.
[28]

The purpose of requiring respondents to make a specific denial is to make them


disclose facts which will disprove the allegations of petitioner at the trial, together with
the matters they rely upon in support of such denial. Our jurisdiction adheres to this rule
to avoid and prevent unnecessary expenses and waste of time by compelling both
parties to lay their cards on the table, thus reducing the controversy to its true terms. As
explained in Alonso vs. Villamor,[29]

A litigation is not a game of technicalities in which one, more deeply schooled and
skilled in the subtle art of movement and position, entraps and destroys the other. It is
rather a contest in which each contending party fully and fairly lays before the court
the facts in issue and then, brushing aside as wholly trivial and indecisive all
imperfections of form and technicalities of procedure, asks that justice be done upon
the merits. Lawsuits, unlike duels, are not to be won by a rapiers thrust.

On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired.
However, she failed to particularly state the ultimate facts surrounding the lawful manner
or mode of acquisition of the subject funds. Simply put, she merely stated in her answer
with the other respondents that the funds were lawfully acquired without detailing how
exactly these funds were supposedly acquired legally by them. Even in this case before
us, her assertion that the funds were lawfully acquired remains bare and
unaccompanied by any factual support which can prove, by the presentation of
evidence at a hearing, that indeed the funds were acquired legitimately by the Marcos
family.
Respondents denials in their answer at the Sandiganbayan were based on their
alleged lack of knowledge or information sufficient to form a belief as to the truth of the
allegations of the petition.
It is true that one of the modes of specific denial under the rules is a denial through
a statement that the defendant is without knowledge or information sufficient to form a
belief as to the truth of the material averment in the complaint. The question, however,
is whether the kind of denial in respondents answer qualifies as the specific denial
called for by the rules. We do not think so. InMorales vs. Court of Appeals, this Court
[30]

ruled that if an allegation directly and specifically charges a party with having done,
performed or committed a particular act which the latter did not in fact do, perform or
commit, a categorical and express denial must be made.
Here, despite the serious and specific allegations against them, the Marcoses
responded by simply saying that they had no knowledge or information sufficient to form
a belief as to the truth of such allegations. Such a general, self-serving claim of
ignorance of the facts alleged in the petition for forfeiture was insufficient to raise an
issue. Respondent Marcoses should have positively stated how it was that they were
supposedly ignorant of the facts alleged. [31]

To elucidate, the allegation of petitioner Republic in paragraph 23 of the petition for


forfeiture stated:

23. The following presentation very clearly and overwhelmingly show in detail how
both respondents clandestinely stashed away the countrys wealth to Switzerland and
hid the same under layers upon layers of foundations and other corporate entities to
prevent its detection. Through their dummies/nominees, fronts or agents who formed
those foundations or corporate entities, they opened and maintained numerous bank
accounts. But due to the difficulty if not the impossibility of detecting and
documenting all those secret accounts as well as the enormity of the deposits therein
hidden, the following presentation is confined to five identified accounts groups, with
balances amounting to about $356-M with a reservation for the filing of a
supplemental or separate forfeiture complaint should the need arise. [32]

Respondents lame denial of the aforesaid allegation was:

22. Respondents specifically DENY paragraph 23 insofar as it alleges that


Respondents clandestinely stashed the countrys wealth in Switzerland and hid the
same under layers and layers of foundations and corporate entities for being false, the
truth being that Respondents aforesaid properties were lawfully acquired. [33]

Evidently, this particular denial had the earmark of what is called in the law on
pleadings as a negative pregnant, that is, a denial pregnant with the admission of the
substantial facts in the pleading responded to which are not squarely denied. It was in
effect an admission of the averments it was directed at. Stated otherwise, a negative
[34]

pregnant is a form of negative expression which carries with it an affirmation or at least


an implication of some kind favorable to the adverse party. It is a denial pregnant with
an admission of the substantial facts alleged in the pleading. Where a fact is alleged
with qualifying or modifying language and the words of the allegation as so qualified or
modified are literally denied, has been held that the qualifying circumstances alone are
denied while the fact itself is admitted.
[35]
In the instant case, the material allegations in paragraph 23 of the said petition were
not specifically denied by respondents in paragraph 22 of their answer. The denial
contained in paragraph 22 of the answer was focused on the averment in paragraph 23
of the petition for forfeiture that Respondents clandestinely stashed the countrys
wealth in Switzerland and hid the same under layers and layers of foundations and
corporate entities. Paragraph 22 of the respondents answer was thus a denial
pregnant with admissions of the following substantial facts:

(1) the Swiss bank deposits existed and

(2) that the estimated sum thereof was US$356 million as of December,
1990.

Therefore, the allegations in the petition for forfeiture on the existence of the Swiss
bank deposits in the sum of about US$356 million, not having been specifically denied
by respondents in their answer, were deemed admitted by them pursuant to Section 11,
Rule 8 of the 1997 Revised Rules on Civil Procedure:

Material averment in the complaint, xxx shall be deemed admitted when not
specifically denied. xxx.[36]

By the same token, the following unsupported denials of respondents in their


answer were pregnant with admissions of the substantial facts alleged in the Republics
petition for forfeiture:

23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the
Petition for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since respondents were not privy to the transactions regarding the
alleged Azio-Verso-Vibur Foundation accounts, except that, as to respondent Imelda
R. Marcos, she specifically remembers that the funds involved were lawfully
acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36, 37, 38, 39, 40,
41 of the Petition for lack of knowledge or information sufficient to form a belief as to
the truth of the allegations since respondents were not privy to the transactions and as
to such transactions they were privy to, they cannot remember with exactitude the
same having occurred a long time ago, except as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.

25. Respondents specifically DENY paragraphs 42, 43, 45, and 46 of the petition for
lack of knowledge or information sufficient to from a belief as to the truth of the
allegations since respondents were not privy to the transactions and as to such
transaction they were privy to, they cannot remember with exactitude, the same
having occurred a long time ago, except that as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52 of the petition for
lack of knowledge and information sufficient to form a belief as to the truth of the
allegations since respondents were not privy to the transactions and as to such
transaction they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.

The matters referred to in paragraphs 23 to 26 of the respondents answer


pertained to the creation of five groups of accounts as well as their respective ending
balances and attached documents alleged in paragraphs 24 to 52 of the Republics
petition for forfeiture. Respondent Imelda R. Marcos never specifically denied the
existence of the Swiss funds. Her claim that the funds involved were lawfully acquired
was an acknowledgment on her part of the existence of said deposits. This only
reinforced her earlier admission of the allegation in paragraph 23 of the petition for
forfeiture regarding the existence of the US$356 million Swiss bank deposits.
The allegations in paragraphs 47 and 48 of the petition for forfeiture referring to
[37] [38]

the creation and amount of the deposits of the Rosalys-Aguamina Foundation as well as
the averment in paragraph 52-a of the said petition with respect to the sum of the
[39]

Swiss bank deposits estimated to be US$356 million were again not specifically denied
by respondents in their answer. The respondents did not at all respond to the issues
raised in these paragraphs and the existence, nature and amount of the Swiss funds
were therefore deemed admitted by them. As held in Galofa vs. Nee Bon Sing, if a [40]

defendants denial is a negative pregnant, it is equivalent to an admission.


Moreover, respondents denial of the allegations in the petition for forfeiture for lack
of knowledge or information sufficient to form a belief as to the truth of the allegations
since respondents were not privy to the transactions was just a pretense. Mrs. Marcos
privity to the transactions was in fact evident from her signatures on some of the vital
documents attached to the petition for forfeiture which Mrs. Marcos failed to
[41]

specifically deny as required by the rules. [42]

It is worthy to note that the pertinent documents attached to the petition for forfeiture
were even signed personally by respondent Mrs. Marcos and her late husband,
Ferdinand E. Marcos, indicating that said documents were within their knowledge. As
correctly pointed out by Sandiganbayan Justice Francisco Villaruz, Jr. in his dissenting
opinion:

The pattern of: 1) creating foundations, 2) use of pseudonyms and dummies, 3)


approving regulations of the Foundations for the distribution of capital and income of
the Foundations to the First and Second beneficiary (who are no other than FM and
his family), 4) opening of bank accounts for the Foundations, 5) changing the names
of the Foundations, 6) transferring funds and assets of the Foundations to other
Foundations or Fides Trust, 7) liquidation of the Foundations as substantiated by the
Annexes U to U-168, Petition [for forfeiture] strongly indicate that FM and/or Imelda
were the real owners of the assets deposited in the Swiss banks, using the Foundations
as dummies. [43]

How could respondents therefore claim lack of sufficient knowledge or information


regarding the existence of the Swiss bank deposits and the creation of five groups of
accounts when Mrs. Marcos and her late husband personally masterminded and
participated in the formation and control of said foundations? This is a fact respondent
Marcoses were never able to explain.
Not only that. Respondents' answer also technically admitted the genuineness and
due execution of the Income Tax Returns (ITRs) and the balance sheets of the late
Ferdinand E. Marcos and Imelda R. Marcos attached to the petition for forfeiture, as
well as the veracity of the contents thereof.
The answer again premised its denials of said ITRs and balance sheets on the
ground of lack of knowledge or information sufficient to form a belief as to the truth of
the contents thereof. Petitioner correctly points out that respondents' denial was not
really grounded on lack of knowledge or information sufficient to form a belief but was
based on lack of recollection. By reviewing their own records, respondent Marcoses
could have easily determined the genuineness and due execution of the ITRs and the
balance sheets. They also had the means and opportunity of verifying the same from
the records of the BIR and the Office of the President. They did not.
When matters regarding which respondents claim to have no knowledge or
information sufficient to form a belief are plainly and necessarily within their knowledge,
their alleged ignorance or lack of information will not be considered a specific denial.
An unexplained denial of information within the control of the pleader, or is readily
[44]

accessible to him, is evasive and is insufficient to constitute an effective denial.


[45]

The form of denial adopted by respondents must be availed of with sincerity and in
good faith, and certainly not for the purpose of confusing the adverse party as to what
allegations of the petition are really being challenged; nor should it be made for the
purpose of delay. In the instant case, the Marcoses did not only present
[46]

unsubstantiated assertions but in truth attempted to mislead and deceive this Court by
presenting an obviously contrived defense.
Simply put, a profession of ignorance about a fact which is patently and necessarily
within the pleaders knowledge or means of knowing is as ineffective as no denial at all.
Respondents ineffective denial thus failed to properly tender an issue and the
[47]

averments contained in the petition for forfeiture were deemed judicially admitted by
them.
As held in J.P. Juan & Sons, Inc. vs. Lianga Industries, Inc.:

Its specific denial of the material allegation of the petition without setting forth the
substance of the matters relied upon to support its general denial, when such matters
were plainly within its knowledge and it could not logically pretend ignorance as to
the same, therefore, failed to properly tender on issue. [48]

Thus, the general denial of the Marcos children of the allegations in the petition for
forfeiture for lack of knowledge or information sufficient to form a belief as to the truth of
the allegations since they were not privy to the transactions cannot rightfully be
accepted as a defense because they are the legal heirs and successors-in-interest of
Ferdinand E. Marcos and are therefore bound by the acts of their father vis-a-vis the
Swiss funds.
PRE-TRIAL BRIEF DATED OCTOBER 18, 1993
The pre-trial brief of Mrs. Marcos was adopted by the three Marcos children. In said
brief, Mrs. Marcos stressed that the funds involved were lawfully acquired. But, as in
their answer, they failed to state and substantiate how these funds were acquired
lawfully. They failed to present and attach even
a single document that would show and prove the truth of their allegations.
Section 6, Rule 18 of the 1997 Rules of Civil Procedure provides:

The parties shall file with the court and serve on the adverse party, x x x their
respective pre-trial briefs which shall contain, among others:

xxx

(d) the documents or exhibits to be presented, stating the purpose thereof;

xxx

(f) the number and names of the witnesses, and the substance of their respective
testimonies. [49]

It is unquestionably within the courts power to require the parties to submit their
pre-trial briefs and to state the number of witnesses intended to be called to the stand,
and a brief summary of the evidence each of them is expected to give as well as to
disclose the number of documents to be submitted with a description of the nature of
each. The tenor and character of the testimony of the witnesses and of the documents
to be deduced at the trial thus made known, in addition to the particular issues of fact
and law, it becomes apparent if genuine issues are being put forward necessitating the
holding of a trial. Likewise, the parties are obliged not only to make a formal
identification and specification of the issues and their proofs, and to put these matters in
writing and submit them to the court within the specified period for the prompt
disposition of the action.[50]

The pre-trial brief of Mrs. Marcos, as subsequently adopted by respondent Marcos


children, merely stated:

xxx
WITNESSES

4.1 Respondent Imelda will present herself as a witness and reserves the right to
present additional witnesses as may be necessary in the course of the trial.

xxx

DOCUMENTARY EVIDENCE

5.1 Respondent Imelda reserves the right to present and introduce in evidence
documents as may be necessary in the course of the trial.

Mrs. Marcos did not enumerate and describe the documents constituting her
evidence. Neither the names of witnesses nor the nature of their testimony was stated.
What alone appeared certain was the testimony of Mrs. Marcos only who in fact had
previously claimed ignorance and lack of knowledge. And even then, the substance of
her testimony, as required by the rules, was not made known either. Such cunning
tactics of respondents are totally unacceptable to this Court. We hold that, since no
genuine issue was raised, the case became ripe for summary judgment.
OPPOSITION TO MOTION FOR SUMMARY JUDGMENT
DATED MARCH 21, 2000
The opposition filed by Mrs. Marcos to the motion for summary judgment dated
March 21, 2000 of petitioner Republic was merely adopted by the Marcos children as
their own opposition to the said motion. However, it was again not accompanied by
affidavits, depositions or admissions as required by Section 3, Rule 35 of the 1997
Rules on Civil Procedure:

x x x The adverse party may serve opposing affidavits, depositions, or admissions at


least three (3) days before hearing. After hearing, the judgment sought shall be
rendered forthwith if the pleadings, supporting affidavits, depositions, and admissions
on file, show that, except as to the amount of damages, there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of
law.[51]

The absence of opposing affidavits, depositions and admissions to contradict the


sworn declarations in the Republics motion only demonstrated that the averments of
such opposition were not genuine and therefore unworthy of belief.
Demurrer to Evidence dated May 2, 2000; [52]

Motions for Reconsideration; and Memoranda


[53]

of Mrs. Marcos and the Marcos children [54]

All these pleadings again contained no allegations of facts showing their lawful
acquisition of the funds. Once more, respondents merely made general denials without
alleging facts which would have been admissible in evidence at the hearing, thereby
failing to raise genuine issues of fact.
Mrs. Marcos insists in her memorandum dated October 21, 2002 that, during the
pre-trial, her counsel stated that his client was just a beneficiary of the funds, contrary to
petitioner Republics allegation that Mrs. Marcos disclaimed ownership of or interest in
the funds.
This is yet another indication that respondents presented a fictitious defense
because, during the pre-trial, Mrs. Marcos and the Marcos children denied ownership of
or interest in the Swiss funds:

PJ Garchitorena:

Make of record that as far as Imelda Marcos is concerned through the statement of
Atty. Armando M. Marcelo that the US$360 million more or less subject matter of the
instant lawsuit as allegedly obtained from the various Swiss Foundations do not
belong to the estate of Marcos or to Imelda Marcos herself. Thats your statement of
facts?

Atty. MARCELO:

Yes, Your Honor.

PJ Garchitorena:

Thats it. Okay. Counsel for Manotoc and Manotoc, Jr. What is your point
here? Does the estate of Marcos own anything of the $360 million subject of this
case.

Atty. TECSON:

We joined the Manifestation of Counsel.

PJ Garchitorena:

You do not own anything?

Atty. TECSON:

Yes, Your Honor.

PJ Garchitorena:

Counsel for Irene Araneta?


Atty. SISON:

I join the position taken by my other compaeros here, Your Honor.

xxx

Atty. SISON:

Irene Araneta as heir do (sic) not own any of the amount, Your Honor. [55]

We are convinced that the strategy of respondent Marcoses was to confuse


petitioner Republic as to what facts they would prove or what issues they intended to
pose for the court's resolution. There is no doubt in our mind that they were leading
petitioner Republic, and now this Court, to perplexity, if not trying to drag this forfeiture
case to eternity.
Manifestation dated May 26, 1998 filed by MRS.
Marcos; General/Supplemental Compromise
Agreement dated December 28, 1993
These pleadings of respondent Marcoses presented nothing but feigned defenses.
In their earlier pleadings, respondents alleged either that they had no knowledge of the
existence of the Swiss deposits or that they could no longer remember anything as it
happened a long time ago. As to Mrs. Marcos, she remembered that it was lawfully
acquired.
In her Manifestation dated May 26, 1998, Mrs. Marcos stated that:

COMES NOW undersigned counsel for respondent Imelda R. Marcos, and before this
Honorable Court, most respectfully manifests:

That respondent Imelda R, Marcos owns 90% of the subject matter of the above-
entitled case, being the sole beneficiary of the dollar deposits in the name of the
various foundations alleged in the case;

That in fact only 10% of the subject matter in the above-entitled case belongs to the
estate of the late President Ferdinand E. Marcos.

In the Compromise/Supplemental Agreements, respondent Marcoses sought to


implement the agreed distribution of the Marcos assets, including the Swiss
deposits. This was, to us, an unequivocal admission of ownership by the Marcoses of
the said deposits.
But, as already pointed out, during the pre-trial conference, respondent Marcoses
denied knowledge as well as ownership of the Swiss funds.
Anyway we look at it, respondent Marcoses have put forth no real defense. The
facts pleaded by respondents, while ostensibly raising important questions or issues of
fact, in reality comprised mere verbiage that was evidently wanting in substance and
constituted no genuine issues for trial.
We therefore rule that, under the circumstances, summary judgment is proper.
In fact, it is the law itself which determines when summary judgment is called for.
Under the rules, summary judgment is appropriate when there are no genuine issues of
fact requiring the presentation of evidence in a full-blown trial. Even if on their face the
pleadings appear to raise issue, if the affidavits, depositions and admissions show that
such issues are not genuine, then summary judgment as prescribed by the rules must
ensue as a matter of law. [56]

In sum, mere denials, if unaccompanied by any fact which will be admissible in


evidence at a hearing, are not sufficient to raise genuine issues of fact and will not
defeat a motion for summary judgment. A summary judgment is one granted upon
[57]

motion of a party for an expeditious settlement of the case, it appearing from the
pleadings, depositions, admissions and affidavits that there are no important questions
or issues of fact posed and, therefore, the movant is entitled to a judgment as a matter
of law. A motion for summary judgment is premised on the assumption that the issues
presented need not be tried either because these are patently devoid of substance or
that there is no genuine issue as to any pertinent fact. It is a method sanctioned by the
Rules of Court for the prompt disposition of a civil action where there exists no serious
controversy. Summary judgment is a procedural device for the prompt disposition of
[58]

actions in which the pleadings raise only a legal issue, not a genuine issue as to any
material fact. The theory of summary judgment is that, although an answer may on its
face appear to tender issues requiring trial, if it is established by affidavits, depositions
or admissions that those issues are not genuine but fictitious, the Court is justified in
dispensing with the trial and rendering summary judgment for petitioner. [59]

In the various annexes to the petition for forfeiture, petitioner Republic attached
sworn statements of witnesses who had personal knowledge of the Marcoses'
participation in the illegal acquisition of funds deposited in the Swiss accounts under the
names of five groups or foundations. These sworn statements substantiated the ill-
gotten nature of the Swiss bank deposits. In their answer and other subsequent
pleadings, however, the Marcoses merely made general denials of the allegations
against them without stating facts admissible in evidence at the hearing, thereby failing
to raise any genuine issues of fact.
Under these circumstances, a trial would have served no purpose at all and would
have been totally unnecessary, thus justifying a summary judgment on the petition for
forfeiture. There were no opposing affidavits to contradict the sworn declarations of the
witnesses of petitioner Republic, leading to the inescapable conclusion that the matters
raised in the Marcoses answer were false.
Time and again, this Court has encountered cases like this which are either only
half-heartedly defended or, if the semblance of a defense is interposed at all, it is only to
delay disposition and gain time. It is certainly not in the interest of justice to allow
respondent Marcoses to avail of the appellate remedies accorded by the Rules of Court
to litigants in good faith, to the prejudice of the Republic and ultimately of the Filipino
people. From the beginning, a candid demonstration of respondents good faith should
have been made to the court below. Without the deceptive reasoning and
argumentation, this protracted litigation could have ended a long time ago.
Since 1991, when the petition for forfeiture was first filed, up to the present, all
respondents have offered are foxy responses like lack of sufficient knowledge or lack of
privity or they cannot recall because it happened a long time ago or, as to Mrs.
Marcos, the funds were lawfully acquired. But, whenever it suits them, they also claim
ownership of 90% of the funds and allege that only 10% belongs to the Marcos
estate. It has been an incredible charade from beginning to end.
In the hope of convincing this Court to rule otherwise, respondents Maria Imelda
Marcos-Manotoc and Ferdinand R. Marcos Jr. contend that "by its positive acts and
express admissions prior to filing the motion for summary judgment on March 10, 2000,
petitioner Republic had bound itself to go to trial on the basis of existing issues. Thus, it
had legally waived whatever right it had to move for summary judgment." [60]

We do not think so. The alleged positive acts and express admissions of the
petitioner did not preclude it from filing a motion for summary judgment.
Rule 35 of the 1997 Rules of Civil Procedure provides:

Rule 35

Summary Judgment

Section 1. Summary judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after
the pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part
thereof.

Section 2. Summary judgment for defending party. - A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any
time, move with supporting affidavits, depositions or admissions for a summary
judgment in his favor as to all or any part thereof. (Emphasis ours) [61]

Under the rule, the plaintiff can move for summary judgment at any time after the
pleading in answer thereto (i.e., in answer to the claim, counterclaim or cross-claim) has
been served." No fixed reglementary period is provided by the Rules. How else does
one construe the phrase "any time after the answer has been served?
This issue is actually one of first impression. No local jurisprudence or authoritative
work has touched upon this matter. This being so, an examination of foreign laws and
jurisprudence, particularly those of the United States where many of our laws and rules
were copied, is in order.
Rule 56 of the Federal Rules of Civil Procedure provides that a party seeking to
recover upon a claim, counterclaim or cross-claim may move for summary judgment
at any time after the expiration of 20 days from the commencement of the action or after
service of a motion for summary judgment by the adverse party, and that a party against
whom a claim, counterclaim or cross-claim is asserted may move for summary
judgment at any time.
However, some rules, particularly Rule 113 of the Rules of Civil Practice of New
York, specifically provide that a motion for summary judgment may not be made until
issues have been joined, that is, only after an answer has been served. Under said
[62]

rule, after issues have been joined, the motion for summary judgment may be made at
any stage of the litigation. No fixed prescriptive period is provided.
[63]

Like Rule 113 of the Rules of Civil Practice of New York, our rules also provide that
a motion for summary judgment may not be made until issues have been joined,
meaning, the plaintiff has to wait for the answer before he can move for summary
judgment. And like the New York rules, ours do not provide for a fixed reglementary
[64]

period within which to move for summary judgment.


This being so, the New York Supreme Court's interpretation of Rule 113 of the Rules
of Civil Practice can be applied by analogy to the interpretation of Section 1, Rule 35, of
our 1997 Rules of Civil Procedure.
Under the New York rule, after the issues have been joined, the motion for summary
judgment may be made at any stage of the litigation. And what exactly does the phrase
"at any stage of the litigation" mean? In Ecker vs. Muzysh, the New York Supreme
[65]

Court ruled:

"PER CURIAM.

Plaintiff introduced her evidence and the defendants rested on the case made by the
plaintiff. The case was submitted. Owing to the serious illness of the trial justice, a
decision was not rendered within sixty days after the final adjournment of the term at
which the case was tried. With the approval of the trial justice, the plaintiff moved for
a new trial under Section 442 of the Civil Practice Act. The plaintiff also moved for
summary judgment under Rule 113 of the Rules of Civil Practice. The motion was
opposed mainly on the ground that, by proceeding to trial, the plaintiff had waived
her right to summary judgment and that the answer and the opposing affidavits raised
triable issues. The amount due and unpaid under the contract is not in dispute. The
Special Term granted both motions and the defendants have appealed.

The Special Term properly held that the answer and the opposing affidavits raised no
triable issue. Rule 113 of the Rules of Civil Practice and the Civil Practice Act
prescribe no limitation as to the time when a motion for summary judgment must be
made. The object of Rule 113 is to empower the court to summarily determine
whether or not a bona fide issue exists between the parties, and there is no
limitation on the power of the court to make such a determination at any stage of
the litigation." (emphasis ours)

On the basis of the aforequoted disquisition, "any stage of the litigation" means that
"even if the plaintiff has proceeded to trial, this does not preclude him from thereafter
moving for summary judgment." [66]

In the case at bar, petitioner moved for summary judgment after pre-trial and before
its scheduled date for presentation of evidence. Respondent Marcoses argue that, by
agreeing to proceed to trial during the pre-trial conference, petitioner "waived" its right to
summary judgment.
This argument must fail in the light of the New York Supreme Court ruling which we
apply by analogy to this case. In Ecker, the defendant opposed the motion for
[67]

summary judgment on a ground similar to that raised by the Marcoses, that is, "that
plaintiff had waived her right to summary judgment" by her act of proceeding to trial. If,
as correctly ruled by the New York court, plaintiff was allowed to move for summary
judgment even after trial and submission of the case for resolution, more so should we
permit it in the present case where petitioner moved for summary judgment before trial.
Therefore, the phrase "anytime after the pleading in answer thereto has been
served" in Section 1, Rule 35 of our Rules of Civil Procedure means "at any stage of the
litigation." Whenever it becomes evident at any stage of the litigation that no triable
issue exists, or that the defenses raised by the defendant(s) are sham or frivolous,
plaintiff may move for summary judgment. A contrary interpretation would go against the
very objective of the Rule on Summary Judgment which is to "weed out sham claims or
defenses thereby avoiding the expense and loss of time involved in a trial." [68]

In cases with political undertones like the one at bar, adverse parties will often do
almost anything to delay the proceedings in the hope that a future administration
sympathetic to them might be able to influence the outcome of the case in their favor.
This is rank injustice we cannot tolerate.
The law looks with disfavor on long, protracted and expensive litigation and
encourages the speedy and prompt disposition of cases. That is why the law and the
rules provide for a number of devices to ensure the speedy disposition of cases.
Summary judgment is one of them.
Faithful therefore to the spirit of the law on summary judgment which seeks to avoid
unnecessary expense and loss of time in a trial, we hereby rule that petitioner Republic
could validly move for summary judgment any time after the respondents answer was
filed or, for that matter, at any subsequent stage of the litigation. The fact that petitioner
agreed to proceed to trial did not in any way prevent it from moving for summary
judgment, as indeed no genuine issue of fact was ever validly raised by respondent
Marcoses.
This interpretation conforms with the guiding principle enshrined in Section 6, Rule
1 of the 1997 Rules of Civil Procedure that the "[r]ules should be liberally construed in
order to promote their objective of securing a just, speedy and inexpensive disposition
of every action and proceeding." [69]

Respondents further allege that the motion for summary judgment was based on
respondents' answer and other documents that had long been in the records of the
case. Thus, by the time the motion was filed on March 10, 2000, estoppel by laches had
already set in against petitioner.
We disagree. Estoppel by laches is the failure or neglect for an unreasonable or
unexplained length of time to do that which, by exercising due diligence, could or should
have been done earlier, warranting a presumption that the person has abandoned his
right or declined to assert it. In effect, therefore, the principle of laches is one of
[70]

estoppel because "it prevents people who have slept on their rights from prejudicing the
rights of third parties who have placed reliance on the inaction of the original parties and
their successors-in-interest". [71]

A careful examination of the records, however, reveals that petitioner was in fact
never remiss in pursuing its case against respondent Marcoses through every remedy
available to it, including the motion for summary judgment.
Petitioner Republic initially filed its motion for summary judgment on October 18,
1996. The motion was denied because of the pending compromise agreement between
the Marcoses and petitioner. But during the pre-trial conference, the Marcoses denied
ownership of the Swiss funds, prompting petitioner to file another motion for summary
judgment now under consideration by this Court. It was the subsequent events that
transpired after the answer was filed, therefore, which prevented petitioner from filing
the questioned motion. It was definitely not because of neglect or inaction that petitioner
filed the (second) motion for summary judgment years after respondents' answer to the
petition for forfeiture.
In invoking the doctrine of estoppel by laches, respondents must show not only
unjustified inaction but also that some unfair injury to them might result unless the action
is barred.
[72]

This, respondents failed to bear out. In fact, during the pre-trial conference, the
Marcoses disclaimed ownership of the Swiss deposits. Not being the owners, as they
claimed, respondents did not have any vested right or interest which could be adversely
affected by petitioner's alleged inaction.
But even assuming for the sake of argument that laches had already set in, the
doctrine of estoppel or laches does not apply when the government sues as a sovereign
or asserts governmental rights. Nor can estoppel validate an act that contravenes law
[73]

or public policy.
[74]

As a final point, it must be emphasized that laches is not a mere question of time
but is principally a question of the inequity or unfairness of permitting a right or claim to
be enforced or asserted. Equity demands that petitioner Republic should not be
[75]

barred from pursuing the people's case against the Marcoses.


(2) The Propriety of Forfeiture
The matter of summary judgment having been thus settled, the issue of whether or
not petitioner Republic was able to prove its case for forfeiture in accordance with the
requisites of Sections 2 and 3 of RA 1379 now takes center stage.
The law raises the prima facie presumption that a property is unlawfully acquired,
hence subject to forfeiture, if its amount or value is manifestly disproportionate to the
official salary and other lawful income of the public officer who owns it. Hence, Sections
2 and 6 of RA 1379 provide:
[76]

xxx xxx

Section 2. Filing of petition. Whenever any public officer or employee has acquired
during his incumbency an amount or property which is manifestly out of proportion to
his salary as such public officer or employee and to his other lawful income and the
income from legitimately acquired property, said property shall be presumed prima
facie to have been unlawfully acquired.

xxx xxx

Sec. 6. Judgment If the respondent is unable to show to the satisfaction of the court
that he has lawfully acquired the property in question, then the court shall declare
such property in question, forfeited in favor of the State, and by virtue of such
judgment the property aforesaid shall become the property of the
State. Provided, That no judgment shall be rendered within six months before any
general election or within three months before any special election. The Court may, in
addition, refer this case to the corresponding Executive Department for administrative
or criminal action, or both.

From the above-quoted provisions of the law, the following facts must be
established in order that forfeiture or seizure of the Swiss deposits may be effected:

(1) ownership by the public officer of money or property acquired during


his incumbency, whether it be in his name or otherwise, and

(2) the extent to which the amount of that money or property exceeds, i. e.,
is grossly disproportionate to, the legitimate income of the public officer.

That spouses Ferdinand and Imelda Marcos were public officials during the time
material to the instant case was never in dispute. Paragraph 4 of respondent Marcoses'
answer categorically admitted the allegations in paragraph 4 of the petition for forfeiture
as to the personal circumstances of Ferdinand E. Marcos as a public official who served
without interruption as Congressman, Senator, Senate President and President of the
Republic of the Philippines from December 1, 1965 to February 25, 1986. Likewise,
[77]
respondents admitted in their answer the contents of paragraph 5 of the petition as to
the personal circumstances of Imelda R. Marcos who once served as a member of
the Interim Batasang Pambansa from 1978 to 1984 and as Metro Manila Governor,
concurrently Minister of Human Settlements, from June 1976 to February 1986. [78]

Respondent Mrs. Marcos also admitted in paragraph 10 of her answer the


allegations of paragraph 11 of the petition for forfeiture which referred to the
accumulated salaries of respondents Ferdinand E. Marcos and Imelda R. Marcos. The [79]

combined accumulated salaries of the Marcos couple were reflected in the Certification
dated May 27, 1986 issued by then Minister of Budget and Management Alberto
Romulo. The Certification showed that, from 1966 to 1985, Ferdinand E. Marcos and
[80]

Imelda R. Marcos had accumulated salaries in the amount of P1,570,000 andP718,750,


respectively, or a total of P2,288,750:

Ferdinand E. Marcos, as President

1966-1976 at P60,000/year P660,000

1977-1984 at P100,000/year 800,000

1985 at P110,000/year 110,000

P1,570,00

Imelda R. Marcos, as Minister

June 1976-1985 at P75,000/year P718,000

In addition to their accumulated salaries from 1966 to 1985 are the Marcos couples
combined salaries from January to February 1986 in the amount of P30,833.33. Hence,
their total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars
on the basis of the corresponding peso-dollar exchange rates prevailing during the
applicable period when said salaries were received, the total amount had an equivalent
value of $304,372.43.
The dollar equivalent was arrived at by using the official annual rates of exchange of
the Philippine peso and the US dollar from 1965 to 1985 as well as the official monthly
rates of exchange in January and February 1986 issued by the Center for Statistical
Information of the Bangko Sentral ng Pilipinas.
Prescinding from the aforesaid admissions, Section 4, Rule 129 of the Rules of
Court provides that:

Section 4. Judicial admissions An admission, verbal or written, made by a party in


the course of the proceedings in the same case does not require proof. The admission
may be contradicted only by showing that it was made through palpable mistake or
that no such admission was made. [81]

It is settled that judicial admissions may be made: (a) in the pleadings filed by the
parties; (b) in the course of the trial either by verbal or written manifestations or
stipulations; or (c) in other stages of judicial proceedings, as in the pre-trial of the case.
Thus, facts pleaded in the petition and answer, as in the case at bar, are deemed
[82]

admissions of petitioner and respondents, respectively, who are not permitted to


contradict them or subsequently take a position contrary to or inconsistent with such
admissions. [83]

The sum of $304,372.43 should be held as the only known lawful income of
respondents since they did not file any Statement of Assets and Liabilities (SAL), as
required by law, from which their net worth could be determined. Besides, under the
1935 Constitution, Ferdinand E. Marcos as President could not receive any other
emolument from the Government or any of its subdivisions and instrumentalities.
Likewise, under the 1973 Constitution, Ferdinand E. Marcos as President could not
[84]

receive during his tenure any other emolument from the Government or any other
source. In fact, his management of businesses, like the administration of foundations
[85]

to accumulate funds, was expressly prohibited under the 1973 Constitution:

Article VII, Sec. 4(2) The President and the Vice-President shall not, during their
tenure, hold any other office except when otherwise provided in this Constitution, nor
may they practice any profession, participate directly or indirectly in the management
of any business, or be financially interested directly or indirectly in any contract with,
or in any franchise or special privilege granted by the Government or any other
subdivision, agency, or instrumentality thereof, including any government owned or
controlled corporation.

Article VII, Sec. 11 No Member of the National Assembly shall appear as counsel
before any court inferior to a court with appellate jurisdiction, x x x. Neither shall he,
directly or indirectly, be interested financially in any contract with, or in any franchise
or special privilege granted by the Government, or any subdivision, agency, or
instrumentality thereof including any government owned or controlled corporation
during his term of office. He shall not intervene in any matter before any office of
the government for his pecuniary benefit.

Article IX, Sec. 7 The Prime Minister and Members of the Cabinet shall be subject
to the provision of Section 11, Article VIII hereof and may not appear as counsel
before any court or administrative body, or manage any business, or practice any
profession, and shall also be subject to such other disqualification as may be provided
by law.
Their only known lawful income of $304,372.43 can therefore legally and fairly serve
as basis for determining the existence of a prima facie case of forfeiture of the Swiss
funds.
Respondents argue that petitioner was not able to establish a prima facie case for
the forfeiture of the Swiss funds since it failed to prove the essential elements under
Section 3, paragraphs (c), (d) and (e) of RA 1379. As the Act is a penal statute, its
provisions are mandatory and should thus be construed strictly against the petitioner
and liberally in favor of respondent Marcoses.
We hold that it was not for petitioner to establish the Marcoses other lawful income
or income from legitimately acquired property for the presumption to apply because, as
between petitioner and respondents, the latter were in a better position to know if there
were such other sources of lawful income. And if indeed there was such other lawful
income, respondents should have specifically stated the same in their answer. Insofar
as petitioner Republic was concerned, it was enough to specify the known lawful
income of respondents.
Section 9 of the PCGG Rules and Regulations provides that, in determining prima
facie evidence of ill-gotten wealth, the value of the accumulated assets, properties and
other material possessions of those covered by Executive Order Nos. 1 and 2
must be out of proportion to the known lawful income of such persons. The
respondent Marcos couple did not file any Statement of Assets and Liabilities (SAL)
from which their net worth could be determined. Their failure to file their SAL was in
itself a violation of law and to allow them to successfully assail the Republic for not
presenting their SAL would reward them for their violation of the law.
Further, contrary to the claim of respondents, the admissions made by them in their
various pleadings and documents were valid. It is of record that respondents judicially
admitted that the money deposited with the Swiss banks belonged to them.
We agree with petitioner that respondent Marcoses made judicial admissions of
their ownership of the subject Swiss bank deposits in their answer, the
General/Supplemental Agreements, Mrs. Marcos' Manifestation and Constancia dated
May 5, 1999, and the Undertaking dated February 10, 1999. We take note of the fact
that the Associate Justices of the Sandiganbayan were unanimous in holding that
respondents had made judicial admissions of their ownership of the Swiss funds.
In their answer, aside from admitting the existence of the subject funds,
respondents likewise admitted ownership thereof. Paragraph 22 of respondents'
answer stated:

22. Respondents specifically DENY PARAGRAPH 23 insofar as it alleges that


respondents clandestinely stashed the country's wealth in Switzerland and hid the
same under layers and layers of foundations and corporate entities for being false, the
truth being that respondents' aforesaid properties were lawfully
acquired. (emphasis supplied)
By qualifying their acquisition of the Swiss bank deposits as lawful, respondents
unwittingly admitted their ownership thereof.
Respondent Mrs. Marcos also admitted ownership of the Swiss bank deposits by
failing to deny under oath the genuineness and due execution of certain actionable
documents bearing her signature attached to the petition. As discussed earlier, Section
11, Rule 8 of the 1997 Rules of Civil Procedure provides that material averments in the
[86]

complaint shall be deemed admitted when not specifically denied.


The General and Supplemental Agreements executed by petitioner and
[87] [88]

respondents on December 28, 1993 further bolstered the claim of petitioner Republic
that its case for forfeiture was proven in accordance with the requisites of Sections 2
and 3 of RA 1379. The whereas clause in the General Agreement declared that:

WHEREAS, the FIRST PARTY has obtained a judgment from the Swiss Federal
Tribunal on December 21, 1990, that the $356 million belongs in principle to the
Republic of the Philippines provided certain conditionalities are met, but even after 7
years, the FIRST PARTY has not been able to procure a final judgment of conviction
against the PRIVATE PARTY.

While the Supplemental Agreement warranted, inter alia, that:

In consideration of the foregoing, the parties hereby agree that the PRIVATE PARTY
shall be entitled to the equivalent of 25% of the amount that may be eventually
withdrawn from said $356 million Swiss deposits.

The stipulations set forth in the General and Supplemental Agreements undeniably
indicated the manifest intent of respondents to enter into a compromise with petitioner.
Corollarily, respondents willingness to agree to an amicable settlement with the
Republic only affirmed their ownership of the Swiss deposits for the simple reason that
no person would acquiesce to any concession over such huge dollar deposits if he did
not in fact own them.
Respondents make much capital of the pronouncement by this Court that the
General and Supplemental Agreements were null and void. They insist that nothing in
[89]

those agreements could thus be admitted in evidence against them because they stood
on the same ground as an accepted offer which, under Section 27, Rule 130 of the[90]

1997 Rules of Civil Procedure, provides that in civil cases, an offer of compromise is
not an admission of any liability and is not admissible in evidence against the offeror.
We find no merit in this contention. The declaration of nullity of said agreements
was premised on the following constitutional and statutory infirmities: (1) the grant of
criminal immunity to the Marcos heirs was against the law; (2) the PCGGs
commitment to exempt from all forms of taxes the properties to be retained by
the Marcos heirs was against the Constitution; and (3) the governments undertaking to
cause the dismissal of all cases filed against the Marcoses pending before the
Sandiganbayan and other courts encroached on the powers of the judiciary. The
reasons relied upon by the Court never in the least bit even touched on the veracity and
truthfulness of respondents admission with respect to their ownership of the Swiss
funds. Besides, having made certain admissions in those agreements, respondents
cannot now deny that they voluntarily admitted owning the subject Swiss funds,
notwithstanding the fact that the agreements themselves were later declared null and
void.
The following observation of Sandiganbayan Justice Catalino Castaeda, Jr. in the
decision dated September 19, 2000 could not have been better said:

x x x The declaration of nullity of the two agreements rendered the same without legal
effects but it did not detract from the admissions of the respondents contained
therein. Otherwise stated, the admissions made in said agreements, as quoted above,
remain binding on the respondents. [91]

A written statement is nonetheless competent as an admission even if it is


contained in a document which is not itself effective for the purpose for which it is made,
either by reason of illegality, or incompetency of a party thereto, or by reason of not
being signed, executed or delivered. Accordingly, contracts have been held as
competent evidence of admissions, although they may be unenforceable. [92]

The testimony of respondent Ferdinand Marcos, Jr. during the hearing on the
motion for the approval of the Compromise Agreement on April 29,
1998 also lent credence to the allegations of petitioner Republic that respondents
admitted ownership of the Swiss bank accounts. We quote the salient portions of
Ferdinand Jr.s formal declarations in open court:
ATTY. FERNANDO:
Mr. Marcos, did you ever have any meetings with PCGG Chairman
Magtanggol C. Gunigundo?
F. MARCOS, JR.:
Yes. I have had very many meetings in fact with Chairman.
ATTY. FERNANDO:
Would you recall when the first meeting occurred?
PJ GARCHITORENA:
In connection with what?
ATTY. FERNANDO:
In connection with the ongoing talks to compromise the various cases
initiated by PCGG against your family?
F. MARCOS, JR.:
The nature of our meetings was solely concerned with negotiations towards
achieving some kind of agreement between the Philippine government and the
Marcos family. The discussions that led up to the compromise agreement were
initiated by our then counsel Atty. Simeon Mesina x x x.[93]
xxx xxx xxx
ATTY. FERNANDO:
What was your reaction when Atty. Mesina informed you of this possibility?
F. MARCOS, JR.:
My reaction to all of these approaches is that I am always open, we are
always open, we are very much always in search of resolution to the problem of
the family and any approach that has been made us, we have entertained. And so
my reaction was the same as what I have always why not? Maybe this is the
one that will finally put an end to this problem.[94]
xxx xxx xxx
ATTY. FERNANDO:
Basically, what were the true amounts of the assets in the bank?
PJ GARCHITORENA:
So, we are talking about liquid assets here? Just Cash?
F. MARCOS, JR.:
Well, basically, any assets. Anything that was under the Marcos name in
any of the banks in Switzerland which may necessarily be not cash.[95]
xxx xxx xxx
PJ GARCHITORENA:
x x x What did you do in other words, after being apprised of this contract in
connection herewith?
F. MARCOS, JR.:
I assumed that we are beginning to implement the agreement because this
was forwarded through the Philippine government lawyers through our lawyers
and then, subsequently, to me. I was a little surprised because we hadnt really
discussed the details of the transfer of the funds, what the bank accounts, what the
mechanism would be. But nevertheless, I was happy to see that as far as the
PCGG is concerned, that the agreement was perfected and that we were
beginning to implement it and that was a source of satisfaction to me because I
thought that finally it will be the end.[96]
Ferdinand Jr.'s pronouncements, taken in context and in their entirety, were a
confirmation of respondents recognition of their ownership of the Swiss bank
deposits. Admissions of a party in his testimony are receivable against him. If a
party, as a witness, deliberately concedes a fact, such concession has the force of a
judicial admission. It is apparent from Ferdinand Jr.s testimony that the Marcos family
[97]

agreed to negotiate with the Philippine government in the hope of finally putting an
end to the problems besetting the Marcos family regarding the Swiss accounts. This
was doubtlessly an acknowledgment of ownership on their part. The rule is that the
testimony on the witness stand partakes of the nature of a formal judicial admission
when a party testifies clearly and unequivocally to a fact which is peculiarly within his
own knowledge. [98]

In her Manifestation dated May 26, 1998, respondent Imelda Marcos furthermore
[99]

revealed the following:

That respondent Imelda R. Marcos owns 90% of the subject matter of the above-
entitled case, being the sole beneficiary of the dollar deposits in the name of the
various foundations alleged in the case;

That in fact only 10% of the subject matter in the above-entitled case belongs to the
estate of the late President Ferdinand E. Marcos;

xxx xxx xxx

Respondents ownership of the Swiss bank accounts as borne out by Mrs. Marcos'
manifestation is as bright as sunlight. And her claim that she is merely a beneficiary of
the Swiss deposits is belied by her own signatures on the appended copies of the
documents substantiating her ownership of the funds in the name of the
foundations. As already mentioned, she failed to specifically deny under oath the
authenticity of such documents, especially those involving William Saunders and
Jane Ryan which actually referred to Ferdinand Marcos and Imelda Marcos,
respectively. That failure of Imelda Marcos to specifically deny the existence, much less
the genuineness and due execution, of the instruments bearing her signature, was
tantamount to a judicial admission of the genuineness and due execution of said
instruments, in accordance with Section 8, Rule 8 of the 1997 Rules of Civil
[100]

Procedure.
Likewise, in her Constancia dated May 6, 1999, Imelda Marcos prayed for the
[101]

approval of the Compromise Agreement and the subsequent release and transfer of the
$150 million to the rightful owner. She further made the following manifestations:

xxx xxx xxx

2. The Republics cause of action over the full amount is its forfeiture in favor of the
government if found to be ill-gotten. On the other hand, the Marcoses defend that it
is a legitimate asset. Therefore, both parties have an inchoate right of ownership
over the account. If it turns out that the account is of lawful origin, the Republic may
yield to the Marcoses. Conversely, the Marcoses must yield to the Republic.
(underscoring supplied)

xxx xxx xxx


3. Consistent with the foregoing, and the Marcoses having committed themselves to
helping the less fortunate, in the interest of peace, reconciliation and unity, defendant
MADAM IMELDA ROMUALDEZ MARCOS, in firm abidance thereby, hereby
affirms her agreement with the Republic for the release and transfer of the US Dollar
150 million for proper disposition, without prejudice to the final outcome of the
litigation respecting the ownership of the remainder.

Again, the above statements were indicative of Imeldas admission of the Marcoses
ownership of the Swiss deposits as in fact the Marcoses defend that it (Swiss deposits)
is a legitimate (Marcos) asset.
On the other hand, respondents Maria Imelda Marcos-Manotoc, Ferdinand Marcos,
Jr. and Maria Irene Marcos-Araneta filed a motion on May 4, 1998 asking the
[102]

Sandiganbayan to place the res (Swiss deposits) in custodia legis:

7. Indeed, the prevailing situation is fraught with danger! Unless the aforesaid Swiss
deposits are placed in custodia legis or within the Courts protective mantle, its
dissipation or misappropriation by the petitioner looms as a distinct possibility.

Such display of deep, personal interest can only come from someone who believes
that he has a marked and intimate right over the considerable dollar deposits. Truly, by
filing said motion, the Marcos children revealed their ownership of the said deposits.
Lastly, the Undertaking entered into by the PCGG, the PNB and the Marcos
[103]

foundations on February 10, 1999, confirmed the Marcoses ownership of the Swiss
bank deposits. The subject Undertaking brought to light their readiness to pay the
human rights victims out of the funds held in escrow in the PNB. It stated:

WHEREAS, the Republic of the Philippines sympathizes with the plight of the human
rights victims-plaintiffs in the aforementioned litigation through the Second Party,
desires to assist in the satisfaction of the judgment awards of said human rights
victims-plaintiffs, by releasing, assigning and or waiving US$150 million of the funds
held in escrow under the Escrow Agreements dated August 14, 1995, although the
Republic is not obligated to do so under final judgments of the Swiss courts dated
December 10 and 19, 1997, and January 8, 1998;

WHEREAS, the Third Party is likewise willing to release, assign and/or waive all its
rights and interests over said US$150 million to the aforementioned human rights
victims-plaintiffs.

All told, the foregoing disquisition negates the claim of respondents that petitioner
failed to prove that they acquired or own the Swiss funds and that it was only by
arbitrarily isolating and taking certain statements made by private respondents out of
context that petitioner was able to treat these as judicial admissions. The Court is fully
aware of the relevance, materiality and implications of every pleading and document
submitted in this case. This Court carefully scrutinized the proofs presented by the
parties. We analyzed, assessed and weighed them to ascertain if each piece of
evidence rightfully qualified as an admission. Owing to the far-reaching historical and
political implications of this case, we considered and examined, individually and totally,
the evidence of the parties, even if it might have bordered on factual adjudication which,
by authority of the rules and jurisprudence, is not usually done by this Court. There is
no doubt in our mind that respondent Marcoses admitted ownership of the Swiss bank
deposits.
We have always adhered to the familiar doctrine that an admission made in the
pleadings cannot be controverted by the party making such admission and becomes
conclusive on him, and that all proofs submitted by him contrary thereto or inconsistent
therewith should be ignored, whether an objection is interposed by the adverse party or
not. This doctrine is embodied in Section 4, Rule 129 of the Rules of Court:
[104]

SEC. 4. Judicial admissions. An admission, verbal or written, made by a party in


the course of the proceedings in the same case, does not require proof. The admission
may be contradicted only by showing that it was made through palpable mistake or
that no such admission was made. [105]

In the absence of a compelling reason to the contrary, respondents judicial


admission of ownership of the Swiss deposits is definitely binding on them.
The individual and separate admissions of each respondent bind all of them
pursuant to Sections 29 and 31, Rule 130 of the Rules of Court:

SEC. 29. Admission by co-partner or agent. The act or declaration of a partner or


agent of the party within the scope of his authority and during the existence of the
partnership or agency, may be given in evidence against such party after the
partnership or agency is shown by evidence other than such act or declaration. The
same rule applies to the act or declaration of a joint owner, joint debtor, or other
person jointly interested with the party. [106]

SEC. 31. Admission by privies. Where one derives title to property from another,
the act, declaration, or omission of the latter, while holding the title, in relation to the
property, is evidence against the former. [107]

The declarations of a person are admissible against a party whenever a privity of


estate exists between the declarant and the party, the term privity of estate generally
denoting a succession in rights. Consequently, an admission of one in privity with a
[108]

party to the record is competent. Without doubt, privity exists among the respondents
[109]

in this case. And where several co-parties to the record are jointly interested in the
subject matter of the controversy, the admission of one is competent against all. [110]
Respondents insist that the Sandiganbayan is correct in ruling that petitioner
Republic has failed to establish a prima facie case for the forfeiture of the Swiss
deposits.
We disagree. The sudden turn-around of the Sandiganbayan was really strange, to
say the least, as its findings and conclusions were not borne out by the voluminous
records of this case.
Section 2 of RA 1379 explicitly states that whenever any public officer or employee
has acquired during his incumbency an amount of property which is manifestly out of
proportion to his salary as such public officer or employee and to his other lawful
income and the income from legitimately acquired property, said property shall be
presumed prima facie to have been unlawfully acquired. x x x
The elements which must concur for this prima facie presumption to apply are:
(1) the offender is a public officer or employee;
(2) he must have acquired a considerable amount of money or property
during his incumbency; and
(3) said amount is manifestly out of proportion to his salary as such public
officer or employee and to his other lawful income and the income from
legitimately acquired property.
It is undisputed that spouses Ferdinand and Imelda Marcos were former public
officers. Hence, the first element is clearly extant.
The second element deals with the amount of money or property acquired by the
public officer during his incumbency. The Marcos couple indubitably acquired and
owned properties during their term of office. In fact, the five groups of Swiss accounts
were admittedly owned by them. There is proof of the existence and ownership of these
assets and properties and it suffices to comply with the second element.
The third requirement is met if it can be shown that such assets, money or property
is manifestly out of proportion to the public officers salary and his other lawful
income. It is the proof of this third element that is crucial in determining whether
a prima facie presumption has been established in this case.
Petitioner Republic presented not only a schedule indicating the lawful income of
the Marcos spouses during their incumbency but also evidence that they had huge
deposits beyond such lawful income in Swiss banks under the names of five different
foundations. We believe petitioner was able to establish the prima facie presumption
that the assets and properties acquired by the Marcoses were manifestly and
patently disproportionate to their aggregate salaries as public officials. Otherwise
stated, petitioner presented enough evidence to convince us that the Marcoses had
dollar deposits amounting to US $356 million representing the balance of the Swiss
accounts of the five foundations, an amount way, way beyond their aggregate legitimate
income of only US$304,372.43 during their incumbency as government officials.
Considering, therefore, that the total amount of the Swiss deposits was considerably
out of proportion to the known lawful income of the Marcoses, the presumption that said
dollar deposits were unlawfully acquired was duly established. It was sufficient for the
petition for forfeiture to state the approximate amount of money and property acquired
by the respondents, and their total government salaries. Section 9 of the PCGG Rules
and Regulations states:

Prima Facie Evidence. Any accumulation of assets, properties, and other material
possessions of those persons covered by Executive Orders No. 1 and No. 2, whose
value is out of proportion to their known lawful income is prima facie deemed ill-
gotten wealth.

Indeed, the burden of proof was on the respondents to dispute this presumption and
show by clear and convincing evidence that the Swiss deposits were lawfully acquired
and that they had other legitimate sources of income. A presumption is prima facie proof
of the fact presumed and, unless the fact thus prima facie established by legal
presumption is disproved, it must stand as proved. [111]

Respondent Mrs. Marcos argues that the foreign foundations should have been
impleaded as they were indispensable parties without whom no complete determination
of the issues could be made. She asserts that the failure of petitioner Republic to
implead the foundations rendered the judgment void as the joinder of indispensable
parties was a sine qua non exercise of judicial power. Furthermore, the non-inclusion of
the foreign foundations violated the conditions prescribed by the Swiss government
regarding the deposit of the funds in escrow, deprived them of their day in court and
denied them their rights under the Swiss constitution and international law. [112]

The Court finds that petitioner Republic did not err in not impleading the foreign
foundations. Section 7, Rule 3 of the 1997 Rules of Civil Procedure, taken from Rule
[113]

19b of the American Federal Rules of Civil Procedure, provides for the compulsory
joinder of indispensable parties. Generally, an indispensable party must be impleaded
for the complete determination of the suit. However, failure to join an indispensable
party does not divest the court of jurisdiction since the rule regarding indispensable
parties is founded on equitable considerations and is not jurisdictional. Thus, the court is
not divested of its power to render a decision even in the absence of indispensable
parties, though such judgment is not binding on the non-joined party. [114]

An indispensable party [115]


has been defined as one:

[who] must have a direct interest in the litigation; and if this interest is such that it
cannot be separated from that of the parties to the suit, if the court cannot render
justice between the parties in his absence, if the decree will have an injurious effect
upon his interest, or if the final determination of the controversy in his absence will be
inconsistent with equity and good conscience.

There are two essential tests of an indispensable party: (1) can relief be afforded
the plaintiff without the presence of the other party? and (2) can the case be decided on
its merits without prejudicing the rights of the other party? There is, however, no fixed
[116]
formula for determining who is an indispensable party; this can only be determined in
the context and by the facts of the particular suit or litigation.
In the present case, there was an admission by respondent Imelda Marcos in her
May 26, 1998 Manifestation before the Sandiganbayan that she was the sole
beneficiary of 90% of the subject matter in controversy with the remaining 10%
belonging to the estate of Ferdinand Marcos. Viewed against this admission, the
[117]

foreign foundations were not indispensable parties. Their non-participation in the


proceedings did not prevent the court from deciding the case on its merits and
according full relief to petitioner Republic. The judgment ordering the return of the $356
million was neither inimical to the foundations interests nor inconsistent with equity and
good conscience. The admission of respondent Imelda Marcos only confirmed what
was already generally known: that the foundations were established precisely to hide
the money stolen by the Marcos spouses from petitioner Republic. It negated whatever
illusion there was, if any, that the foreign foundations owned even a nominal part of the
assets in question.
The rulings of the Swiss court that the foundations, as formal owners, must be given
an opportunity to participate in the proceedings hinged on the assumption that they
owned a nominal share of the assets. But this was already refuted by no less than
[118]

Mrs. Marcos herself. Thus, she cannot now argue that the ruling of the Sandiganbayan
violated the conditions set by the Swiss court. The directive given by the Swiss court for
the foundations to participate in the proceedings was for the purpose of protecting
whatever nominal interest they might have had in the assets as formal owners. But
inasmuch as their ownership was subsequently repudiated by Imelda Marcos, they
could no longer be considered as indispensable parties and their participation in the
proceedings became unnecessary.
In Republic vs. Sandiganbayan, this Court ruled that impleading the firms which
[119]

are the res of the action was unnecessary:

And as to corporations organized with ill-gotten wealth, but are not themselves guilty
of misappropriation, fraud or other illicit conduct in other words, the companies
themselves are not the object or thing involved in the action, the res thereof there is
no need to implead them either. Indeed, their impleading is not proper on the strength
alone of their having been formed with ill-gotten funds, absent any other particular
wrongdoing on their part

Such showing of having been formed with, or having received ill-gotten funds,
however strong or convincing, does not, without more, warrant identifying the
corporations in question with the person who formed or made use of them to give the
color or appearance of lawful, innocent acquisition to illegally amassed wealth at the
least, not so as place on the Government the onus of impleading the former with the
latter in actions to recover such wealth. Distinguished in terms of juridical personality
and legal culpability from their erring members or stockholders, said corporations are
not themselves guilty of the sins of the latter, of the embezzlement, asportation, etc.,
that gave rise to the Governments cause of action for recovery; their creation or
organization was merely the result of their members (or stockholders) manipulations
and maneuvers to conceal the illegal origins of the assets or monies invested therein.
In this light, they are simply the res in the actions for the recovery of illegally
acquired wealth, and there is, in principle, no cause of action against them and no
ground to implead them as defendants in said actions.

Just like the corporations in the aforementioned case, the foreign foundations here
were set up to conceal the illegally acquired funds of the Marcos spouses. Thus, they
were simply the res in the action for recovery of ill-gotten wealth and did not have to be
impleaded for lack of cause of action or ground to implead them.
Assuming arguendo, however, that the foundations were indispensable parties, the
failure of petitioner to implead them was a curable error, as held in the previously cited
case of Republic vs. Sandiganbayan: [120]

Even in those cases where it might reasonably be argued that the failure of the
Government to implead the sequestered corporations as defendants is indeed a
procedural abberation, as where said firms were allegedly used, and actively
cooperated with the defendants, as instruments or conduits for conversion of public
funds and property or illicit or fraudulent obtention of favored government contracts,
etc., slight reflection would nevertheless lead to the conclusion that the defect is not
fatal, but one correctible under applicable adjective rules e.g., Section 10, Rule 5 of
the Rules of Court [specifying the remedy of amendment during trial to authorize or to
conform to the evidence]; Section 1, Rule 20 [governing amendments before trial], in
relation to the rule respecting omission of so-called necessary or indispensable parties,
set out in Section 11, Rule 3 of the Rules of Court. It is relevant in this context to
advert to the old familiar doctrines that the omission to implead such parties is a
mere technical defect which can be cured at any stage of the proceedings even after
judgment; and that, particularly in the case of indispensable parties, since their
presence and participation is essential to the very life of the action, for without them
no judgment may be rendered, amendments of the complaint in order to implead them
should be freely allowed, even on appeal, in fact even after rendition of judgment by
this Court, where it appears that the complaint otherwise indicates their identity and
character as such indispensable parties. [121]

Although there are decided cases wherein the non-joinder of indispensable parties
in fact led to the dismissal of the suit or the annulment of judgment, such cases do not
jibe with the matter at hand. The better view is that non-joinder is not a ground to
dismiss the suit or annul the judgment. The rule on joinder of indispensable parties is
founded on equity. And the spirit of the law is reflected in Section 11, Rule 3 of the
[122]

1997 Rules of Civil Procedure. It prohibits the dismissal of a suit on the ground of non-
joinder or misjoinder of parties and allows the amendment of the complaint at any stage
of the proceedings, through motion or on order of the court on its own initiative.
[123]
Likewise, jurisprudence on the Federal Rules of Procedure, from which our Section
7, Rule 3 on indispensable parties was copied, allows the joinder of indispensable
[124]

parties even after judgment has been entered if such is needed to afford the moving
party full relief. Mere delay in filing the joinder motion does not necessarily result in
[125]

the waiver of the right as long as the delay is excusable. Thus, respondent Mrs.
[126]

Marcos cannot correctly argue that the judgment rendered by the Sandiganbayan was
void due to the non-joinder of the foreign foundations. The court had jurisdiction to
render judgment which, even in the absence of indispensable parties, was binding on all
the parties before it though not on the absent party. If she really felt that she could not
[127]

be granted full relief due to the absence of the foreign foundations, she should have
moved for their inclusion, which was allowable at any stage of the proceedings. She
never did. Instead she assailed the judgment rendered.
In the face of undeniable circumstances and the avalanche of documentary
evidence against them, respondent Marcoses failed to justify the lawful nature of their
acquisition of the said assets. Hence, the Swiss deposits should be considered ill-
gotten wealth and forfeited in favor of the State in accordance with Section 6 of RA
1379:

SEC. 6. Judgment. If the respondent is unable to show to the satisfaction of the court
that he has lawfully acquired the property in question, then the court shall declare
such property forfeited in favor of the State, and by virtue of such judgment the
property aforesaid shall become property of the State x x x.

THE FAILURE TO PRESENT AUTHENTICATED


TRANSLATIONS OF THE SWISS DECISIONS

Finally, petitioner Republic contends that the Honorable Sandiganbayan Presiding


Justice Francis Garchitorena committed grave abuse of discretion in reversing himself
on the ground that the original copies of the authenticated Swiss decisions and their
authenticated translations were not submitted to the court a quo. Earlier PJ
Garchitorena had quoted extensively from the unofficial translation of one of these
Swiss decisions in his ponencia dated July 29, 1999 when he denied the motion to
release US$150 Million to the human rights victims.
While we are in reality perplexed by such an incomprehensible change of heart,
there might nevertheless not be any real need to belabor the issue. The presentation of
the authenticated translations of the original copies of the Swiss decision was not de
rigueur for the public respondent to make findings of fact and reach its conclusions. In
short, the Sandiganbayans decision was not dependent on the determination of the
Swiss courts. For that matter, neither is this Courts.
The release of the Swiss funds held in escrow in the PNB is dependent solely on
the decision of this jurisdiction that said funds belong to the petitioner Republic. What is
important is our own assessment of the sufficiency of the evidence to rule in favor of
either petitioner Republic or respondent Marcoses. In this instance, despite the absence
of the authenticated translations of the Swiss decisions, the evidence on hand tilts
convincingly in favor of petitioner Republic.

WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of the


Sandiganbayan dated January 31, 2002 is SET ASIDE. The Swiss deposits which
were transferred to and are now deposited in escrow at the Philippine National Bank
in the estimated aggregate amount of US$658,175,373.60 as of January 31, 2002, plus
interest, are hereby forfeited in favor of petitioner Republic of the Philippines.

SO ORDERED.
Davide, Jr., C.J., Bellosillo, Panganiban, Ynares-Santiago, Austria-Martinez,
Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
Puno, and Vitug, JJ., in the result
Quisumbing, Sandoval-Gutierrez, J., on official leave.
Carpio, J., no part.

EN BANC

[G.R. No. 149453. April 1, 2003]

PEOPLE OF THE PHILIPPINES, THE SECRETARY OF JUSTICE,


DIRECTOR GENERAL OF THE PHILIPPINE NATIONAL POLICE,
CHIEF STATE PROSECUTOR JOVENCITO ZUO, STATE
PROSECUTORS PETER L. ONG and RUBEN A. ZACARIAS; 2ND
ASSISTANT CITY PROSECUTOR CONRADO M. JAMOLIN and
CITY PROSECUTOR OF QUEZON CITY CLARO
ARELLANO, petitioners, vs. PANFILO M. LACSON, respondent.

RESOLUTION
CALLEJO, SR., J.:

Before the Court is the petitioners Motion for Reconsideration of the [1]

Resolution dated May 28, 2002, remanding this case to the Regional Trial
[2]

Court (RTC) of Quezon City, Branch 81, for the determination of several
factual issues relative to the application of Section 8 of Rule 117 of the
Revised Rules of Criminal Procedure on the dismissal of Criminal Cases Nos.
Q-99-81679 to Q-99-81689 filed against the respondent and his co-accused
with the said court. In the aforesaid criminal cases, the respondent and his
co-accused were charged with multiple murder for the shooting and killing of
eleven male persons identified as Manuel Montero, a former Corporal of the
Philippine Army, Rolando Siplon, Sherwin Abalora, who was 16 years old, Ray
Abalora, who was 19 years old, Joel Amora, Jevy Redillas, Meleubren
Sorronda, who was 14 years old, Pacifico Montero, Jr., of the 44th Infantry
[3]

Batallion of the Philippine Army, Welbor Elcamel, SPO1 Carlito Alap-ap of the
Zamboanga PNP, and Alex Neri, former Corporal of the 44th Infantry Batallion
of the Philippine Army, bandied as members of the Kuratong
Baleleng Gang. The respondent opposed petitioners motion for
reconsideration. [4]

The Court ruled in the Resolution sought to be reconsidered that the


provisional dismissal of Criminal Cases Nos. Q-99-81679 to Q-99-81689 were
with the express consent of the respondent as he himself moved for said
provisional dismissal when he filed his motion for judicial determination of
probable cause and for examination of witnesses. The Court also held therein
that although Section 8, Rule 117 of the Revised Rules of Criminal Procedure
could be given retroactive effect, there is still a need to determine whether the
requirements for its application are attendant. The trial court was thus
directed to resolve the following:

... (1) whether the provisional dismissal of the cases had the express consent of the
accused; (2) whether it was ordered by the court after notice to the offended party; (3)
whether the 2-year period to revive it has already lapsed; (4) whether there is any
justification for the filing of the cases beyond the 2-year period; (5) whether notices to
the offended parties were given before the cases of respondent Lacson were dismissed
by then Judge Agnir; (6) whether there were affidavits of desistance executed by the
relatives of the three (3) other victims; (7) whether the multiple murder cases against
respondent Lacson are being revived within or beyond the 2-year bar.

The Court further held that the reckoning date of the two-year bar had to
be first determined whether it shall be from the date of the order of then Judge
Agnir, Jr. dismissing the cases, or from the dates of receipt thereof by the
various offended parties, or from the date of effectivity of the new
rule. According to the Court, if the cases were revived only after the two-year
bar, the State must be given the opportunity to justify its failure to comply with
the said time-bar. It emphasized that the new rule fixes a time-bar to penalize
the State for its inexcusable delay in prosecuting cases already filed in
court. However, the State is not precluded from presenting compelling
reasons to justify the revival of cases beyond the two-year bar.
In support of their Motion for Reconsideration, the petitioners contend that
(a) Section 8, Rule 117 of the Revised Rules of Criminal Procedure is not
applicable to Criminal Cases Nos. Q-99-81679 to Q-99-81689; and (b) the
time-bar in said rule should not be applied retroactively.
The Court shall resolve the issues seriatim.

I. SECTION 8, RULE 117 OF THE REVISED RULES OF CRIMINAL


PROCEDURE IS NOT APPLICABLE TO CRIMINAL CASES NOS. Q-99-81679
TO Q-99-81689.
The petitioners aver that Section 8, Rule 117 of the Revised Rules of
Criminal Procedure is not applicable to Criminal Cases Nos. Q-99-81679 to Q-
99-81689 because the essential requirements for its application were not
present when Judge Agnir, Jr., issued his resolution of March 29,
1999. Disagreeing with the ruling of the Court, the petitioners maintain that
the respondent did not give his express consent to the dismissal by Judge
Agnir, Jr., of Criminal Cases Nos. Q-99-81679 to Q-99-81689. The
respondent allegedly admitted in his pleadings filed with the Court of Appeals
and during the hearing thereat that he did not file any motion to dismiss said
cases, or even agree to a provisional dismissal thereof. Moreover, the heirs of
the victims were allegedly not given prior notices of the dismissal of the said
cases by Judge Agnir, Jr. According to the petitioners, the respondents
express consent to the provisional dismissal of the cases and the notice to all
the heirs of the victims of the respondents motion and the hearing thereon are
conditions sine qua non to the application of the time-bar in the second
paragraph of the new rule.
The petitioners further submit that it is not necessary that the case be
remanded to the RTC to determine whether private complainants were notified
of the March 22, 1999 hearing on the respondents motion for judicial
determination of the existence of probable cause. The records allegedly
indicate clearly that only the handling city prosecutor was furnished a copy of
the notice of hearing on said motion. There is allegedly no evidence that
private prosecutor Atty. Godwin Valdez was properly retained and authorized
by all the private complainants to represent them at said hearing. It is their
contention that Atty. Valdez merely identified the purported affidavits of
desistance and that he did not confirm the truth of the allegations therein.
The respondent, on the other hand, insists that, as found by the Court in
its Resolution and Judge Agnir, Jr. in his resolution, the respondent himself
moved for the provisional dismissal of the criminal cases. He cites the
resolution of Judge Agnir, Jr. stating that the respondent and the other
accused filed separate but identical motions for the dismissal of the criminal
cases should the trial court find no probable cause for the issuance of
warrants of arrest against them.
The respondent further asserts that the heirs of the victims, through the
public and private prosecutors, were duly notified of said motion and the
hearing thereof. He contends that it was sufficient that the public prosecutor
was present during the March 22, 1999 hearing on the motion for judicial
determination of the existence of probable cause because criminal actions are
always prosecuted in the name of the People, and the private complainants
merely prosecute the civil aspect thereof.
The Court has reviewed the records and has found the contention of the
petitioners meritorious.
Section 8, Rule 117 of the Revised Rules of Criminal Procedure reads:

Sec. 8. Provisional dismissal. A case shall not be provisionally dismissed except


with the express consent of the accused and with notice to the offended party.

The provisional dismissal of offenses punishable by imprisonment not exceeding six


(6) years or a fine of any amount, or both, shall become permanent one (1) year after
issuance of the order without the case having been revived. With respect to offenses
punishable by imprisonment of more than six (6) years, their provisional dismissal
shall become permanent two (2) years after issuance of the order without the case
having been revived.

Having invoked said rule before the petitioners-panel of prosecutors and


before the Court of Appeals, the respondent is burdened to establish the
essential requisites of the first paragraph thereof, namely:

1. the prosecution with the express conformity of the accused or the accused
moves for a provisional (sin perjuicio) dismissal of the case; or both the prosecution
and the accused move for a provisional dismissal of the case;

2. the offended party is notified of the motion for a provisional dismissal of the
case;

3. the court issues an order granting the motion and dismissing the case
provisionally;

4. the public prosecutor is served with a copy of the order of provisional dismissal
of the case.
The foregoing requirements are conditions sine qua non to the application
of the time-bar in the second paragraph of the new rule. The raison d etre for
the requirement of the express consent of the accused to a provisional
dismissal of a criminal case is to bar him from subsequently asserting that the
revival of the criminal case will place him in double jeopardy for the same
offense or for an offense necessarily included therein. [5]

Although the second paragraph of the new rule states that the order of
dismissal shall become permanent one year after the issuance thereof without
the case having been revived, the provision should be construed to mean that
the order of dismissal shall become permanent one year after service of the
order of dismissal on the public prosecutor who has control of the
prosecution without the criminal case having been revived. The public
[6]

prosecutor cannot be expected to comply with the timeline unless he is served


with a copy of the order of dismissal.
Express consent to a provisional dismissal is given either viva voce or in
writing. It is a positive, direct, unequivocal consent requiring no inference or
implication to supply its meaning. Where the accused writes on the motion of
[7]

a prosecutor for a provisional dismissal of the case No objection or With my


conformity, the writing amounts to express consent of the accused to a
provisional dismissal of the case. The mere inaction or silence of the
[8]

accused to a motion for a provisional dismissal of the case or his failure to [9]

object to a provisional dismissal does not amount to express consent.


[10]

A motion of the accused for a provisional dismissal of a case is an express


consent to such provisional dismissal. If a criminal case is provisionally
[11]

dismissed with the express consent of the accused, the case may be revived
only within the periods provided in the new rule. On the other hand, if a
criminal case is provisionally dismissed without the express consent of the
accused or over his objection, the new rule would not apply. The case may be
revived or refiled even beyond the prescribed periods subject to the right of
the accused to oppose the same on the ground of double jeopardy or that [12]

such revival or refiling is barred by the statute of limitations. [13]

The case may be revived by the State within the time-bar either by the
refiling of the Information or by the filing of a new Information for the same
offense or an offense necessarily included therein. There would be no need
of a new preliminary investigation. However, in a case wherein after the
[14]

provisional dismissal of a criminal case, the original witnesses of the


prosecution or some of them may have recanted their testimonies or may
have died or may no longer be available and new witnesses for the State have
emerged, a new preliminary investigation must be conducted before an
[15]
Information is refiled or a new Information is filed. A new preliminary
investigation is also required if aside from the original accused, other persons
are charged under a new criminal complaint for the same offense or
necessarily included therein; or if under a new criminal complaint, the original
charge has been upgraded; or if under a new criminal complaint, the criminal
liability of the accused is upgraded from that as an accessory to that as a
principal. The accused must be accorded the right to submit counter-affidavits
and evidence. After all, the fiscal is not called by the Rules of Court to wait in
ambush; the role of a fiscal is not mainly to prosecute but essentially to do
justice to every man and to assist the court in dispensing that justice. [16]

In this case, the respondent has failed to prove that the first and second
requisites of the first paragraph of the new rule were present when Judge
Agnir, Jr. dismissed Criminal Cases Nos. Q-99-81679 to Q-99-
81689. Irrefragably, the prosecution did not file any motion for the provisional
dismissal of the said criminal cases. For his part, the respondent merely filed
a motion for judicial determination of probable cause and for examination of
prosecution witnesses alleging that under Article III, Section 2 of the
Constitution and the decision of this Court in Allado v. Diokno, among other
[17]

cases, there was a need for the trial court to conduct a personal determination
of probable cause for the issuance of a warrant of arrest against respondent
and to have the prosecutions witnesses summoned before the court for its
examination. The respondent contended therein that until after the trial court
shall have personally determined the presence of probable cause, no warrant
of arrest should be issued against the respondent and if one had already been
issued, the warrant should be recalled by the trial court. He then prayed
therein that:

1) a judicial determination of probable cause pursuant to Section 2, Article III of


the Constitution be conducted by this Honorable Court, and for this purpose, an order
be issued directing the prosecution to present the private complainants and their
witnesses at a hearing scheduled therefor; and

2) warrants for the arrest of the accused-movants be withheld, or, if issued, recalled
in the meantime until the resolution of this incident.

Other equitable reliefs are also prayed for. [18]

The respondent did not pray for the dismissal, provisional or otherwise, of
Criminal Cases Nos. Q-99-81679 to Q-99-81689. Neither did he ever agree,
impliedly or expressly, to a mere provisional dismissal of the cases. In fact, in
his reply filed with the Court of Appeals, respondent emphasized that:
... An examination of the Motion for Judicial Determination of Probable Cause and for
Examination of Prosecution Witnesses filed by the petitioner and his other co-accused
in the said criminal cases would show that the petitioner did not pray for the dismissal
of the case. On the contrary, the reliefs prayed for therein by the petitioner are: (1) a
judicial determination of probable cause pursuant to Section 2, Article III of the
Constitution; and (2) that warrants for the arrest of the accused be withheld, or if
issued, recalled in the meantime until the resolution of the motion. It cannot be said,
therefore, that the dismissal of the case was made with the consent of the petitioner. A
copy of the aforesaid motion is hereto attached and made integral part hereof as
Annex A. [19]

During the hearing in the Court of Appeals on July 31, 2001, the
respondent, through counsel, categorically, unequivocally, and definitely
declared that he did not file any motion to dismiss the criminal cases nor did
he agree to a provisional dismissal thereof, thus:
JUSTICE SALONGA:
And it is your stand that the dismissal made by the Court was provisional in nature?
ATTY. FORTUN:
It was in (sic) that the accused did not ask for it. What they wanted at the onset
was simply a judicial determination of probable cause for warrants of arrest
issued. Then Judge Agnir, upon the presentation by the parties of their
witnesses, particularly those who had withdrawn their affidavits, made one further
conclusion that not only was this case lacking in probable cause for purposes of
the issuance of an arrest warrant but also it did not justify proceeding to trial.
JUSTICE SALONGA:
And it is expressly provided under Section 8 that a case shall not be provisionally
dismissed except when it is with the express conformity of the accused.
ATTY. FORTUN:
That is correct, Your Honor.
JUSTICE SALONGA:
And with notice to the offended party.
ATTY. FORTUN:
That is correct, Your Honor.
JUSTICE SALONGA:
Was there an express conformity on the part of the accused?
ATTY. FORTUN:
There was none, Your Honor. We were not asked to sign any order, or any
statement, which would normally be required by the Court on pre-trial or on
other matters, including other provisional dismissal. My very limited practice
in criminal courts, Your Honor, had taught me that a judge must be very careful on
this matter of provisional dismissal. In fact they ask the accused to come
forward, and the judge himself or herself explains the implications of a provisional
dismissal. Pumapayag ka ba dito. Puwede bang pumirma ka?
JUSTICE ROSARIO:
You were present during the proceedings?
ATTY. FORTUN:
Yes, Your Honor.
JUSTICE ROSARIO:
You represented the petitioner in this case?
ATTY. FORTUN:
That is correct, Your Honor. And there was nothing of that sort which the good
Judge Agnir, who is most knowledgeable in criminal law, had done in
respect of provisional dismissal or the matter of Mr. Lacson agreeing to the
provisional dismissal of the case.
JUSTICE GUERRERO:
Now, you filed a motion, the other accused then filed a motion for a judicial
determination of probable cause?
ATTY. FORTUN:
Yes, Your Honor.
JUSTICE GUERRERO:
Did you make any alternative prayer in your motion that if there is no probable cause
what should the Court do?
ATTY. FORTUN:
That the arrest warrants only be withheld. That was the only prayer that we
asked. In fact, I have a copy of that particular motion, and if I may read my
prayer before the Court, it said: Wherefore, it is respectfully prayed that (1) a
judicial determination of probable cause pursuant to Section 2, Article III of the
Constitution be conducted, and for this purpose, an order be issued directing the
prosecution to present the private complainants and their witnesses at the
scheduled hearing for that purpose; and (2) the warrants for the arrest of the
accused be withheld, or, if issued, recalled in the meantime until resolution of this
incident.
JUSTICE GUERRERO:
There is no general prayer for any further relief?
ATTY. FORTUN:
There is but it simply says other equitable reliefs are prayed for.
JUSTICE GUERRERO:
Dont you surmise Judge Agnir, now a member of this Court, precisely addressed your
prayer for just and equitable relief to dismiss the case because what would be the
net effect of a situation where there is no warrant of arrest being issued without
dismissing the case?
ATTY. FORTUN:
Yes, Your Honor. I will not second say (sic) yes the Good Justice, but what is
plain is we did not agree to the provisional dismissal, neither were we
asked to sign any assent to the provisional dismissal.
JUSTICE GUERRERO:
If you did not agree to the provisional dismissal did you not file any motion for
reconsideration of the order of Judge Agnir that the case should be dismissed?
ATTY. FORTUN:
I did not, Your Honor, because I knew fully well at that time that my client had
already been arraigned, and the arraignment was valid as far as I was
concerned. So, the dismissal, Your Honor, by Judge Agnir operated to
benefit me, and therefore I did not take any further step in addition to
rocking the boat or clarifying the matter further because it probably could
prejudice the interest of my client.
JUSTICE GUERRERO:
Continue.[20]

In his memorandum in lieu of the oral argument filed with the Court of
Appeals, the respondent declared in no uncertain terms that:

Soon thereafter, the SC in early 1999 rendered a decision declaring the Sandiganbayan
without jurisdiction over the cases. The records were remanded to the QC
RTC: Upon raffle, the case was assigned to Branch 81. Petitioner and the others
promptly filed a motion for judicial determination of probable cause (Annex B). He
asked that warrants for his arrest not be issued. He did not move for the dismissal of
the Informations, contrary to respondent OSGs claim. [21]

The respondents admissions made in the course of the proceedings in the


Court of Appeals are binding and conclusive on him. The respondent is
barred from repudiating his admissions absent evidence of palpable mistake
in making such admissions. [22]

To apply the new rule in Criminal Cases Nos. Q-99-81679 to Q-99-81689


would be to add to or make exceptions from the new rule which are not
expressly or impliedly included therein. This the Court cannot and should not
do.[23]

The Court also agrees with the petitioners contention that no notice of any
motion for the provisional dismissal of Criminal Cases Nos. Q-99-81679 to Q-
99-81689 or of the hearing thereon was served on the heirs of the victims at
least three days before said hearing as mandated by Rule 15, Section 4 of the
Rules of Court. It must be borne in mind that in crimes involving private
interests, the new rule requires that the offended party or parties or the heirs
of the victims must be given adequate a priori notice of any motion for the
provisional dismissal of the criminal case. Such notice may be served on the
offended party or the heirs of the victim through the private prosecutor, if there
is one, or through the public prosecutor who in turn must relay the notice to
the offended party or the heirs of the victim to enable them to confer with him
before the hearing or appear in court during the hearing. The proof of such
service must be shown during the hearing on the motion, otherwise, the
requirement of the new rule will become illusory. Such notice will enable the
offended party or the heirs of the victim the opportunity to seasonably and
effectively comment on or object to the motion on valid grounds, including: (a)
the collusion between the prosecution and the accused for the provisional
dismissal of a criminal case thereby depriving the State of its right to due
process; (b) attempts to make witnesses unavailable; or (c) the provisional
dismissal of the case with the consequent release of the accused from
detention would enable him to threaten and kill the offended party or the other
prosecution witnesses or flee from Philippine jurisdiction, provide opportunity
for the destruction or loss of the prosecutions physical and other evidence
and prejudice the rights of the offended party to recover on the civil liability of
the accused by his concealment or furtive disposition of his property or the
consequent lifting of the writ of preliminary attachment against his property.
In the case at bar, even if the respondents motion for a determination of
probable cause and examination of witnesses may be considered for the
nonce as his motion for a provisional dismissal of Criminal Cases Nos. Q-99-
81679 to Q-99-81689, however, the heirs of the victims were not notified
thereof prior to the hearing on said motion on March 22, 1999. It must be
stressed that the respondent filed his motion only on March 17, 1999 and set
it for hearing on March 22, 1999 or barely five days from the filing thereof.
Although the public prosecutor was served with a copy of the motion, the
records do not show that notices thereof were separately given to the heirs of
the victims or that subpoenae were issued to and received by them, including
those who executed their affidavits of desistance who were residents of
Dipolog City or Pian, Zamboanga del Norte or Palompon, Leyte. There is as
[24]

well no proof in the records that the public prosecutor notified the heirs of the
victims of said motion or of the hearing thereof on March 22, 1999. Although
Atty. Valdez entered his appearance as private prosecutor, he did so only for
[25]

some but not all the close kins of the victims, namely, Nenita Alap-ap, Imelda
Montero, Margarita Redillas, Rufino Siplon, Carmelita Elcamel, Myrna
Abalora, and Leonora Amora who (except for Rufino Siplon) executed their
[26]

respective affidavits of desistance. There was no appearance for the heirs of


[27]

Alex Neri, Pacifico Montero, Jr., and Meleubren Sorronda. There is no proof
on record that all the heirs of the victims were served with copies of the
resolution of Judge Agnir, Jr. dismissing the said cases. In fine, there never
was any attempt on the part of the trial court, the public prosecutor and/or the
private prosecutor to notify all the heirs of the victims of the respondents
motion and the hearing thereon and of the resolution of Judge Agnir, Jr.
dismissing said cases. The said heirs were thus deprived of their right to be
heard on the respondents motion and to protect their interests either in the
trial court or in the appellate court.
Since the conditions sine qua non for the application of the new rule were
not present when Judge Agnir, Jr. issued his resolution, the State is not barred
by the time limit set forth in the second paragraph of Section 8 of Rule 117 of
the Revised Rules of Criminal Procedure. The State can thus revive or refile
Criminal Cases Nos. Q-99-81679 to Q-99-81689 or file new Informations for
multiple murder against the respondent.
II. THE TIME-BAR IN SECTION 8, RULE 117 OF THE REVISED
RULES OF CRIMINAL PROCEDURE SHOULD NOT BE APPLIED
RETROACTIVELY.
The petitioners contend that even on the assumption that the respondent
expressly consented to a provisional dismissal of Criminal Cases Nos. Q-99-
81679 to Q-99-81689 and all the heirs of the victims were notified of the
respondents motion before the hearing thereon and were served with copies
of the resolution of Judge Agnir, Jr. dismissing the eleven cases, the two-year
bar in Section 8 of Rule 117 of the Revised Rules of Criminal Procedure
should be applied prospectively and not retroactively against the State. To
apply the time limit retroactively to the criminal cases against the respondent
and his co-accused would violate the right of the People to due process, and
unduly impair, reduce, and diminish the States substantive right to prosecute
the accused for multiple murder. They posit that under Article 90 of the
Revised Penal Code, the State had twenty years within which to file the
criminal complaints against the accused. However, under the new rule, the
State only had two years from notice of the public prosecutor of the order of
dismissal of Criminal Cases Nos. Q-99-81679 to Q-99-81689 within which to
revive the said cases. When the new rule took effect on December 1, 2000,
the State only had one year and three months within which to revive the cases
or refile the Informations. The period for the State to charge respondent for
multiple murder under Article 90 of the Revised Penal Code was considerably
and arbitrarily reduced. They submit that in case of conflict between the
Revised Penal Code and the new rule, the former should prevail. They also
insist that the State had consistently relied on the prescriptive periods under
Article 90 of the Revised Penal Code. It was not accorded afair warning that it
would forever be barred beyond the two-year period by a retroactive
application of the new rule. Petitioners thus pray to the Court to set aside its
[28]

Resolution of May 28, 2002.


For his part, the respondent asserts that the new rule under Section 8 of
Rule 117 of the Revised Rules of Criminal Procedure may be applied
retroactively since there is no substantive right of the State that may be
impaired by its application to the criminal cases in question since [t]he States
witnesses were ready, willing and able to provide their testimony but the
prosecution failed to act on these cases until it became politically expedient in
April 2001 for them to do so. According to the respondent, penal laws, either
[29]

procedural or substantive, may be retroactively applied so long as they favor


the accused. He asserts that the two-year period commenced to run on
[30]

March 29, 1999 and lapsed two years thereafter was more than reasonable
opportunity for the State to fairly indict him. In any event, the State is given
[31]

the right under the Courts assailed Resolution to justify the filing of the
Information in Criminal Cases Nos. 01-101102 to 01-101112 beyond the time-
bar under the new rule.
The respondent insists that Section 8 of Rule 117 of the Revised Rules of
Criminal Procedure does not broaden the substantive right of double jeopardy
to the prejudice of the State because the prohibition against the revival of the
cases within the one-year or two-year periods provided therein is a legal
concept distinct from the prohibition against the revival of a provisionally
dismissed case within the periods stated in Section 8 of Rule 117. Moreover,
he claims that the effects of a provisional dismissal under said rule do not
modify or negate the operation of the prescriptive period under Article 90 of
the Revised Penal Code. Prescription under the Revised Penal Code simply
becomes irrelevant upon the application of Section 8, Rule 117 because a
complaint or information has already been filed against the accused, which
filing tolls the running of the prescriptive period under Article 90.
[32]

The Court agrees with the respondent that the new rule is not a statute of
limitations. Statutes of limitations are construed as acts of grace, and a
surrender by the sovereign of its right to prosecute or of its right to prosecute
at its discretion. Such statutes are considered as equivalent to acts of
amnesty founded on the liberal theory that prosecutions should not be allowed
to ferment endlessly in the files of the government to explode only after
witnesses and proofs necessary for the protection of the accused have by
sheer lapse of time passed beyond availability. The periods fixed under such
[33]
statutes are jurisdictional and are essential elements of the offenses covered.
[34]

On the other hand, the time-bar under Section 8 of Rule 117 is akin to a
special procedural limitation qualifying the right of the State to prosecute
making the time-bar an essence of the given right or as an inherent part
thereof, so that the lapse of the time-bar operates to extinguish the right of the
State to prosecute the accused. [35]

The time-bar under the new rule does not reduce the periods under Article
90 of the Revised Penal Code, a substantive law. It is but a limitation of the
[36]

right of the State to revive a criminal case against the accused after the
Information had been filed but subsequently provisionally dismissed with the
express consent of the accused. Upon the lapse of the timeline under the
new rule, the State is presumed, albeit disputably, to have abandoned or
waived its right to revive the case and prosecute the accused. The dismissal
becomes ipso facto permanent. He can no longer be charged anew for the
same crime or another crime necessarily included therein. He is spared from
[37]

the anguish and anxiety as well as the expenses in any new indictments.
The State may revive a criminal case beyond the one-year or two-year
[38]

periods provided that there is a justifiable necessity for the delay. By the [39]

same token, if a criminal case is dismissed on motion of the accused because


the trial is not concluded within the period therefor, the prescriptive periods
under the Revised Penal Code are not thereby diminished. But whether or [40]

not the prosecution of the accused is barred by the statute of limitations or by


the lapse of the time-line under the new rule, the effect is basically the
same. As the State Supreme Court of Illinois held:

This, in effect, enacts that when the specified period shall have arrived, the right of
the state to prosecute shall be gone, and the liability of the offender to be punished
to be deprived of his libertyshall cease. Its terms not only strike down the right of
action which the state had acquired by the offense, but also remove the flaw which the
crime had created in the offenders title to liberty. In this respect, its language goes
deeper than statutes barring civil remedies usually do. They expressly take away only
the remedy by suit, and that inferentially is held to abate the right which such remedy
would enforce, and perfect the title which such remedy would invade; but this statute
is aimed directly at the very right which the state has against the offenderthe right to
punish, as the only liability which the offender has incurred, and declares that this
right and this liability are at an end. [41]

The Court agrees with the respondent that procedural laws may be
applied retroactively. As applied to criminal law, procedural law provides or
regulates the steps by which one who has committed a crime is to be
punished. In Tan, Jr. v. Court of Appeals, this Court held that:
[42]

Statutes regulating the procedure of the courts will be construed as applicable to


actions pending and undetermined at the time of their passage. Procedural laws are
retroactive in that sense and to that extent. The fact that procedural statutes may
somehow affect the litigants rights may not preclude their retroactive application to
pending actions. The retroactive application of procedural laws is not violative of any
right of a person who may feel that he is adversely affected. Nor is the retroactive
application of procedural statutes constitutionally objectionable. The reason is that as
a general rule no vested right may attach to, nor arise from, procedural laws. It has
been held that a person has no vested right in any particular remedy, and a litigant
cannot insist on the application to the trial of his case, whether civil or criminal, of
any other than the existing rules of procedure.

It further ruled therein that a procedural law may not be applied


retroactively if to do so would work injustice or would involve intricate
problems of due process or impair the independence of the Court. In a per
curiam decision in Cipriano v. City of Houma, the United States Supreme
[43]

Court ruled that where a decision of the court would produce substantial
inequitable results if applied retroactively, there is ample basis for avoiding
the injustice of hardship by a holding of nonretroactivity. A construction of
[44]

which a statute is fairly susceptible is favored, which will avoid all


objectionable, mischievous, indefensible, wrongful, and injurious
consequences. This Court should not adopt an interpretation of a statute
[45]

which produces absurd, unreasonable, unjust, or oppressive results if such


interpretation could be avoided. Time and again, this Court has decreed that
[46]

statutes are to be construed in light of the purposes to be achieved and the


evils sought to be remedied. In construing a statute, the reason for the
enactment should be kept in mind and the statute should be construed with
reference to the intended scope and purpose. [47]

Remedial legislation, or procedural rule, or doctrine of the Court designed


to enhance and implement the constitutional rights of parties in criminal
proceedings may be applied retroactively or prospectively depending upon
several factors, such as the history of the new rule, its purpose and effect, and
whether the retrospective application will further its operation, the particular
conduct sought to be remedied and the effect thereon in the administration of
justice and of criminal laws in particular. In a per curiam decision in Stefano
[48]

v. Woods, the United States Supreme Court catalogued the factors in


[49]

determining whether a new rule or doctrine enunciated by the High Court


should be given retrospective or prospective effect:
(a) the purpose to be served by the new standards, (b) the extent of the reliance by
law enforcement authorities on the old standards, and (c) the effect on the
administration of justice of a retroactive application of the new standards.

In this case, the Court agrees with the petitioners that the time-bar of two
years under the new rule should not be applied retroactively against the State.
In the new rule in question, as now construed by the Court, it has fixed a
time-bar of one year or two years for the revival of criminal cases provisionally
dismissed with the express consent of the accused and with a priori notice to
the offended party. The time-bar may appear, on first impression,
unreasonable compared to the periods under Article 90 of the Revised Penal
Code. However, in fixing the time-bar, the Court balanced the societal
interests and those of the accused for the orderly and speedy disposition of
criminal cases with minimum prejudice to the State and the accused. It took
into account the substantial rights of both the State and of the accused to due
process. The Court believed that the time limit is a reasonable period for the
State to revive provisionally dismissed cases with the consent of the accused
and notice to the offended parties. The time-bar fixed by the Court must be
respected unless it is shown that the period is manifestly short or insufficient
that the rule becomes a denial of justice. The petitioners failed to show a
[50]

manifest shortness or insufficiency of the time-bar.


The new rule was conceptualized by the Committee on the Revision of the
Rules and approved by the Court en banc primarily to enhance the
administration of the criminal justice system and the rights to due process of
the State and the accused by eliminating the deleterious practice of trial courts
of provisionally dismissing criminal cases on motion of either the prosecution
or the accused or jointly, either with no time-bar for the revival thereof or with a
specific or definite period for such revival by the public prosecutor. There
were times when such criminal cases were no longer revived or refiled due to
causes beyond the control of the public prosecutor or because of the
indolence, apathy or the lackadaisical attitude of public prosecutors to the
prejudice of the State and the accused despite the mandate to public
prosecutors and trial judges to expedite criminal proceedings. [51]

It is almost a universal experience that the accused welcomes delay as it


usually operates in his favor, especially if he greatly fears the consequences
[52]

of his trial and conviction. He is hesitant to disturb the hushed inaction by


which dominant cases have been known to expire. [53]

The inordinate delay in the revival or refiling of criminal cases may impair
or reduce the capacity of the State to prove its case with the disappearance or
nonavailability of its witnesses. Physical evidence may have been
lost. Memories of witnesses may have grown dim or have faded. Passage of
time makes proof of any fact more difficult. The accused may become a
[54]

fugitive from justice or commit another crime. The longer the lapse of time
from the dismissal of the case to the revival thereof, the more difficult it is to
prove the crime.
On the other side of the fulcrum, a mere provisional dismissal of a criminal
case does not terminate a criminal case. The possibility that the case may be
revived at any time may disrupt or reduce, if not derail, the chances of the
accused for employment, curtail his association, subject him to public obloquy
and create anxiety in him and his family. He is unable to lead a normal life
because of community suspicion and his own anxiety. He continues to suffer
those penalties and disabilities incompatible with the presumption of
innocence. He may also lose his witnesses or their memories may fade with
[55]

the passage of time. In the long run, it may diminish his capacity to defend
himself and thus eschew the fairness of the entire criminal justice system. [56]

The time-bar under the new rule was fixed by the Court to excise the
malaise that plagued the administration of the criminal justice system for
the benefit of the State and the accused; not for the accused only.
The Court agrees with the petitioners that to apply the time-bar
retroactively so that the two-year period commenced to run on March 31,
1999 when the public prosecutor received his copy of the resolution of Judge
Agnir, Jr. dismissing the criminal cases is inconsistent with the intendment of
the new rule. Instead of giving the State two years to revive provisionally
dismissed cases, the State had considerably less than two years to do
so. Thus, Judge Agnir, Jr. dismissed Criminal Cases Nos. Q-99-81679 to Q-
99-81689 on March 29, 1999. The new rule took effect on December 1, 2000.
If the Court applied the new time-bar retroactively, the State would have only
one year and three months or until March 31, 2001 within which to revive
these criminal cases. The period is short of the two-year period fixed under
the new rule. On the other hand, if the time limit is applied prospectively, the
State would have two years from December 1, 2000 or until December 1,
2002 within which to revive the cases. This is in consonance with the
intendment of the new rule in fixing the time-bar and thus prevent injustice to
the State and avoid absurd, unreasonable, oppressive, injurious, and wrongful
results in the administration of justice.
The period from April 1, 1999 to November 30, 1999 should be excluded in
the computation of the two-year period because the rule prescribing it was not
yet in effect at the time and the State could not be expected to comply with the
time-bar. It cannot even be argued that the State waived its right to revive the
criminal cases against respondent or that it was negligent for not reviving
them within the two-year period under the new rule. As the United States
Supreme Court said, per Justice Felix Frankfurter, in Griffin v. People: [57]

We should not indulge in the fiction that the law now announced has always been the
law and, therefore, that those who did not avail themselves of it waived their rights .

The two-year period fixed in the new rule is for the benefit of both the
State and the accused. It should not be emasculated and reduced by an
inordinate retroactive application of the time-bar therein provided merely to
benefit the accused. For to do so would cause an injustice of hardship to the
State and adversely affect the administration of justice in general and of
criminal laws in particular.
To require the State to give a valid justification as a condition sine qua
non to the revival of a case provisionally dismissed with the express consent
of the accused before the effective date of the new rule is to assume that the
State is obliged to comply with the time-bar under the new rule before it took
effect. This would be a rank denial of justice. The State must be given a
period of one year or two years as the case may be from December 1, 2000 to
revive the criminal case without requiring the State to make a valid justification
for not reviving the case before the effective date of the new rule. Although in
criminal cases, the accused is entitled to justice and fairness, so is the
State. As the United States Supreme Court said, per Mr. Justice Benjamin
Cardozo, inSnyder v. State of Massachussetts, the concept of fairness must
[58]

not be strained till it is narrowed to a filament. We are to keep the balance


true. In Dimatulac v. Villon, this Court emphasized that the judges action
[59]

must not impair the substantial rights of the accused nor the right of the State
and offended party to due process of law. This Court further said:

Indeed, for justice to prevail, the scales must balance; justice is not to be dispensed for
the accused alone. The interests of society and the offended parties which have been
wronged must be equally considered. Verily, a verdict of conviction is not necessarily
a denial of justice; and an acquittal is not necessarily a triumph of justice, for, to the
society offended and the party wronged, it could also mean injustice. Justice then
must be rendered even-handedly to both the accused, on one hand, and the State and
offended party, on the other.

In this case, the eleven Informations in Criminal Cases Nos. 01-101102 to


01-101112 were filed with the Regional Trial Court on June 6, 2001 well within
the two-year period.
In sum, this Court finds the motion for reconsideration of petitioners
meritorious.
IN THE LIGHT OF ALL THE FOREGOING, the petitioners Motion for
Reconsideration is GRANTED. The Resolution of this Court, dated May 28,
2002, is SET ASIDE. The Decision of the Court of Appeals, dated August 24,
2001, in CA-G.R. SP No. 65034 is REVERSED. The Petition of the
Respondent with the Regional Trial Court in Civil Case No. 01-100933 is
DISMISSED for being moot and academic. The Regional Trial Court of
Quezon City, Branch 81, is DIRECTED to forthwith proceed with Criminal
Cases Nos. 01-101102 to 01-101112 with deliberate dispatch.
No pronouncements as to costs.
SO ORDERED.

SECOND DIVISION

[G.R. No. 143736. August 11, 2004]

OFELIA HERRERA-FELIX, Represented by JOVITA HERRERA-


SEA, petitioner, vs. COURT OF APPEALS, and ST. JOSEPH
RESOURCES DEVELOPMENT, INC., respondents.

RESOLUTION
CALLEJO, SR., J.:

This is a petition for review on certiorari assailing the Decision[1]of the Court of
Appeals which dismissed the petition to annul the Decision [2] of the Regional Trial Court
of Malabon, Metro Manila, Branch 73, in Civil Case No. 1967, on the ground of lack of
jurisdiction over the person of herein petitioner Ofelia Herrera-Felix.

The Antecedents

On March 11, 1993, respondent St. Joseph Resource Development, Inc. filed a
complaint for sum of money against the Spouses Restituto and Ofelia Felix with a
prayer for a writ of preliminary attachment. It was alleged therein that, during the period
from November 16, 1992 to December 14, 1992, the Felix Spouses purchased from the
respondent tubs of assorted fish, as follows:
Date of Purchase Amount of Fish Purchased

November 16, 1992 P 183,360.00


November 17, 1992 114,380.00
November 19, 1992 56,014.00
November 20, 1992 183,400.00
December 2, 1992 70,000.00
December 3, 1992 159,100.00
December 5, 1992 73,500.00
December 8, 1992 79,025.50
December 9, 1992 275,190.00
December 11, 1992 102,840.00
December 12, 1992 78,300.00
December 13, 1992 108,692.00
December 14, 1992 32,379.50
-----------------
Total ..... P 1,516,181.00
It was also alleged that the Felix Spouses still had an outstanding obligation
amounting to P1,132,065.50, after deducting their total payment of P438,615.50 from
their aggregate purchases. The respondent prayed that, after due proceedings,
judgment be rendered in its favor, thus:

WHEREFORE, it is respectfully prayed that judgment be rendered in favor of plaintiff


and against defendants, ordering the latter to pay the former the following:

1. P1,132,065.50, representing their unpaid obligation, including unpaid tubs, plus


legal interest from the date of filing of the complaint;

2. Attorneys fees equivalent to 25% of the foregoing amount; and

3. Costs of suit.

Plaintiff likewise prays that a writ of preliminary attachment be issued ex


parte against the properties of defendants as security for the satisfaction of any
judgment that may be recovered.

Other just and equitable relief is also prayed for.[3]

The case was docketed as Civil Case No. 1967.


The trial court granted the respondents prayer for a writ of preliminary attachment
on a bond of P1,132,065.50 which was posted on March 26, 1993. The Sheriff levied
and took custody of some of the personal properties of the Felix Spouses. On March
26, 1993, a copy of the writ of preliminary attachment, summons and complaint were
served on them at their residence, through the sister of Ofelia Herrera-Felix, Ma. Luisa
Herrera.[4] According to the Sheriffs Return, Ofelia Herrera-Felix was out of the country,
as per the information relayed to him by Ma. Luisa Herrera. OnApril 5, 1993, the Felix
Spouses, through Atty. Celestino C. Juan, filed a motion praying for an extension of time
to file their answer to the complaint. [5] On April 6, 1993, the trial court issued an Order
granting the motion. However, the Felix Spouses failed to file their answer to the
complaint. The respondent then filed a Motion dated April 23, 1993 to declare the said
spouses in default,[6] which motion was granted by the court in its
Resolution[7] dated May 13, 1993. A copy of the said resolution was sent to and
received by the counsel of the Felix Spouses through registered mail.
On August 11, 1993, the court a quo rendered a decision in favor of the respondent,
the decretal portion of which reads:

WHEREFORE, judgment is hereby rendered ordering:

1. The defendants to pay, jointly and severally, the plaintiffs the amount of ONE
MILLION SEVENTY-SEVEN THOUSAND FIVE HUNDRED SIXTY-FIVE
PESOS AND FIFTY CENTAVOS(P1,077,565.50) plus legal rate of interest from the
date of the filing of the complaint;

2. The defendants to pay, jointly and severally, the amount of TWENTY-FIVE


THOUSAND PESOS (P25,000.00) as/for reasonable Attorneys fees;

3. The defendants to pay the costs of this suit.

SO ORDERED.[8]

Copies of the said decision were mailed to the Felix Spouses and their counsel,
Atty. Celestino C. Juan, by registered mail. The copy of the decision addressed to the
spouses was returned to the court after two notices for having been Unclaimed.
However, then counsel for the Felix Spouses received his copy of the decision.
The decision of the trial court became final and executory after the Felix Spouses
failed to appeal the same. The respondent filed a motion for a writ of execution. A copy
thereof was served on the said spouses by registered mail, but they failed to oppose the
motion. The court thereafter issued an order granting the motion and directing the
issuance of a writ of execution. The counsel for the Felix Spouses received a copy of
the said order. Thereafter, the following personal properties of the latter were levied
upon and sold by the sheriff at public auction for P83,200.00 to the respondent as the
winning bidder:
(1) unit Jeep-semi stainless
(1) unit Jeep-stainless
(1) Victor-Radio/TV/Cassette Recorder
(1) Sony 17 TV w/ remote control
(1) Kawai Electric Organ
(3) Hitachi Stand Fan
(1) Standard Desk Fan
(1) 6 pieces Sala Set.[9]
On August 14, 1995, the Sheriff executed a Certificate of Sale of personal
properties.[10]
On September 13, 1996, petitioner Ofelia Herrera-Felix, represented by another
sister, Jovita Herrera-Sea, filed a petition with the Court of Appeals under Rule 47 of
the Rules of Court for the nullification of the trial courts judgment by default, the writ of
execution issued by the said court, and the sale of her properties at public auction. The
petitioner alleged, inter alia, that the complaint and summons were handed over to her
sister, Ma. Luisa Herrera, who was merely a visitor in her house and, as such, was not a
valid substituted service under Rule 14, Section 7 of the Rules of Court. She also
alleged that her husband Restituto Felix had died as early as April 23, 1988, as
evidenced by his Certificate of Death.[11]
In its comment on the petition, the respondent alleged that the substituted service of
the complaint and summons on the petitioner, who was then temporarily outside
the Philippines, through her sister Ma. Luisa Herrera, was valid and effective. The
respondent, likewise, averred that even if such substituted service on the petitioner was
defective, the defect was cured when the latter, through her counsel, Atty. Celestino C.
Juan, appeared in court and moved for an extension of time to file her responsive
pleading. The respondent also maintained that the petitioner and her counsel were
served with copies of the decision of the court a quo, but that the petitioner failed to
appeal the decision.
In her reply to the comment of the respondent, the petitioner alleged that since she
failed to file a responsive pleading to the complaint, the appearance of Atty. Celestino C.
Juan, as her counsel, did not constitute as a voluntary submission to the jurisdiction of
the court.
On June 7, 2000, the CA rendered a decision, the dispositive portion of which
reads:

WHEREFORE, premises considered, finding that the court a quo validly acquired
jurisdiction over the action and absent any ground warranting the annulment of its
judgment, this petition is hereby DISMISSED for lack of merit

SO ORDERED.[12]

The petitioner, through her sister, Jovita Herrera-Sea, now comes to this
Court via a petition for review on certiorari praying for the reversal of the decision of the
Court of Appeals. She alleges that the trial court did not acquire jurisdiction over her
person through the service of the complaint and summons on her sister, Ma. Luisa
Herrera. She maintains that the latter was a mere visitor in her house, not a resident
therein; hence, the decision of the trial court is null and void. She further alleges that
even assuming the validity of the trial courts decision, such decision never became final
and executory since she was not served a copy of the same. As such, the writ of
execution issued by the trial court, the sale of her personal properties at public auction,
as well as the issuance of the Certificate of Sale, are null and void. She asserts that the
actuations of both the trial court and the Sheriff deprived her of her right to due process.
The contentions of the petitioner have no merit.
The court acquires jurisdiction over the person of the defendant by service of the
complaint and summons on him, either by personal service or by substituted service or
by extra-territorial service thereof or by his voluntary personal appearance before the
court or through counsel. In this case, the petitioner appeared before the court, through
counsel, and filed a motion for extension of time to file her answer to the complaint
which the trial court granted. She even admitted in the said motion that she was served
with a copy of the complaint as well as the summons. The admissions made in a
motion are judicial admissions which are binding on the party who made them. Such
party is precluded from denying the same unless there is proof of palpable mistake or
that no such admission was made.[13]
By filing the said motion, through counsel, the petitioner thereby submitted herself to
the jurisdiction of the trial court. Indeed, in Busuego vs. Court of Appeals,[14] we ruled
that:

A voluntary appearance is a waiver of the necessity of a formal notice. An


appearance in whatever form, without explicitly objecting to the jurisdiction of the
court over the person, is a submission to the jurisdiction of the court over the
person. While the formal method of entering an appearance in a cause pending in the
courts is to deliver to the clerk a written direction ordering him to enter the
appearance of the person who subscribes it, an appearance may be made by simply
filing a formal motion, or plea or answer. This formal method of appearance is not
necessary. He may appear without such formal appearance and thus submit himself to
the jurisdiction of the court. He may appear by presenting a motion, for example, and
unless by such appearance he specifically objects to the jurisdiction of the court, he
thereby gives his assent to the jurisdiction of the court over his person. When the
appearance is by motion objecting to the jurisdiction of the court over his person, it
must be for the sole and separate purpose of objecting to the jurisdiction of the
court. If his motion is for any other purpose than to object to the jurisdiction of the
court over his person, he thereby submits himself to the jurisdiction of the court. [15]

Equally barren of factual basis is the claim of the petitioner that she was not served
with a copy of the decision of the trial court. The records show that aside from the copy
of the decision sent to her by the Branch Clerk of Court by registered mail, another copy
of the decision was served on her through her counsel, Atty. Celestino C. Juan, who
received the same. The service of the decision on the petitioner, through counsel, is
binding on her, conformably to Rule 13, Section 2 of the Rules of Court. [16]
We reject the petitioners plaint of having been deprived of her right to due process.
The essence of due process is a reasonable opportunity to be heard and submit
evidence in support of ones defense. What the law proscribes, therefore, is the lack of
opportunity to be heard.[17] A party who opts not to avail of the opportunity to answer
cannot complain of procedural due process. There can be no denial of due process
where a party had the opportunity to participate in the proceedings but failed to do so
through his own fault.
WHEREFORE, the petition is DENIED DUE COURSE. The assailed decision of the
Court of Appeals dated June 7, 2000 is hereby AFFIRMED. Costs against the
petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

SECOND DIVISION

HEIRS OF PEDRO CLEMEA Y G.R. No. 155508

ZURBANO,

Petitioners, Present:

PUNO, J., Chairpers


on,

SANDOVAL-GUTIERREZ,

- versus - CORONA,

AZCUNA and

GARCIA, JJ.
HEIRS OF IRENE B. BIEN,

Respondents. Promulgated:

September 11, 2006

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

DECISION

CORONA, J.:

The only question presented in this petition for review on


certiorari[1] is whether petitioners, the heirs of
Pedro Clemea y Zurbano, should be made to pay respondents,
the heirs of Irene B. Bien, compensatory damages for depriving
them of the owners share of the harvest from a tract
of riceland in Bolo, Municipality of Tiwi, Albay.

This piece of land, described in Tax Declaration No. 5299 (TD


5299) as having a surface area of more or less 20,644 square
meters, was one of three lots[2] involved in two consolidated
cases[3] for recovery of possession and ownership filed in the
1940s by respondents predecessor Irene Bien (through her
attorney-in-fact Gregorio Clemea) against petitioners
predecessor Pedro Clemea y Zurbano. The pertinent averments
in Irene Biens complaint read:

[T]he plaintiff is x x x the absolute owner of a parcel of land situated in


the province of Albay described and limited as follows:

Una parcela de terreno arrozal en el sitio de Bolo, Municipio de


Tiwi, Provincia de Albay, con una extension superficial de 20,644
metros cuadrados poco mas o menos, lindante al Norte - Eulalio
Copino y Esteban Bobis; al Este Pedro Clemea y Conde; al Sur
Canal de Ragadio y Valentina Conde; y al Oeste Marcial Copino,
Pedro Clemea y Valentina Conde.

Declared as Tax No. 5299 and assessed at P310.00

[T]he plaintiff acquired the above parcel of land by purchase


from Victoriano Napa as per deed of sale in her favor x x x; and the
said Victoriano Napa in turn acquired the same by purchase from
FranciscoBarrameda who also bought the said land from the
administrator of the estate of Pedro Clemea y Conde which sale had
been duly authorized and approved by this Honorable Court in Civil
Case No. 3410-In re The Estate of Pedro Clemea y Conde x x x;

[T]he defendant ever since he was removed as administrator of the


Estate of Pedro Clemea y Conde in the year 1939 deliberately
continued to occupy and usurp the possession and use of the above
described parcel of land x x x, and has ever since refused to relinquish
the possession of the same to the lawful owner thereof
notwithstanding the fact that he has no right or any color of title over
the said land;
[B]y reason of this unlawful occupation and usurpation by the
defendant, the plaintiff will suffer damages and in fact has suffered
damages beginning this October 1943 harvest at the rate of
25 cavans ofpalay per harvest or 50 cavans yearly x x x[4]

In his answer, Pedro Clemea y Zurbano alleged that the land


was his and that it was in his exclusive possession. [5] His claim of
ownership was similarly based on a sale by the estate of the late
Pedro Clemea y Conde to his predecessor-in-interest.

Neither one of the original parties lived to see the end of the
trial. The plaintiff,
Irene Bien, passed away in 1953 and was substituted by

respondents.[6] Not long after that, petitioners succeeded the


defendant Pedro Clemea y Zurbano who died in 1955.[7] The trial
lasted decades. Eventually, the cases were re-raffled to Branch
2[8] of the Regional Trial Court (RTC) of Legaspi City in November of
1994.

On August 10, 1995, the RTC rendered a decision [9] declaring


petitioners to be the absolute owners of the land described in TD
5299 and directing respondents to respect petitioners possession
thereof.[10] Subsequently, however, the RTC reconsidered its
findings with respect to ownership. This time, it ruled that the
contending parties had failed to prove their respective claims of
ownership and therefore the land in question still belonged to its
original owner, the estate of the late
Pedro Clemea y Conde. Thus, in an order dated November 13,
1995,[11] the RTC modified the dispositive portion of its decision to
read:

1. Considering that the parcel covered by [TD] No. 5299, the


other parcel subject matter of Civil Case No. 115, is not included
among those parcels sold by the estate of the late
Pedro Clemea yConde to Francisco Barameda, the predecessor of the
original plaintiff Irene Bien and neither

was it included in the sale executed by Special


Administrator Salustiano Zubeldia in favor of Jesus Salazar, the
predecessor-in-interest of the defendants [petitioners], the same still
forms part of the estate of the late Pedro Clemea y Conde. Neither the
plaintiffs [respondents] nor the defendants [petitioners] own the same.

2. Considering that the defendants [petitioners,] in their


opposition to the motion for reconsideration, no longer disputes (sic)
the ownership of the plaintiffs [respondents] as regards the parcel
covered by [TD] No. 5681, subject matter of Civil Case No. 74, plaintiffs
[respondents] are declared the owners thereof, as stated in the
decision. As regards the claim for damages by the plaintiffs
[respondents], since it was not duly established that the defendants
[petitioners] entered and occupied a portion of said property, no
damage is just the same awarded.

3. Considering that the parcel of land covered by [TD] No. 5685


is included in the sale executed by Special
Administrator Salustiano Zubeldia to Jesus Salazar, and further
considering that said deed of sale is earlier than the sale executed in
favor of Mr. Francisco Barameda, the defendants [petitioners] are
declared the owners thereof and therefore entitled to its possession.
No damages having been proved, no award concerning is awarded
(sic).

SO ORDERED.[12]
From that order, respondents appealed to the Court of
Appeals (CA). It was docketed as CA-G.R. CV No. 50912. In a
decision dated April 4, 2002,[13] the CA affirmed
the RTCs resolution of the issues relating to the other two parcels
of land but reversed the ruling on the ownership of the land
covered by TD 5299. It proceeded to award
respondents P118,000 in damages as compensation for their
having been deprived of possession and the owners share in the
harvest. The findings on which this award was based were stated
in the appellate courts decision:

[T]he recovered exhibits of the appellants [respondents] clearly


indicate that ownership thereof belongs to [them] by virtue of the
following documents of sale x x x. Hence, the appellants [respondents]
are the owners of the property covered by Tax Declaration No.
5299. The remaining issue to be determined is the amount of
damages sustained by appellants [respondents] from appellees
[petitioners] retention of possession thereof.

Gregorio Clemea testified on the damages incurred from


the appellees occupation of the property in the form of deprivation of
the owners share of the harvest, to wit:

Q This second parcel of land described in the


SECOND cause of action which is Tax No. 5299,
what kind of land is this?

A Riceland.

Q How big is this parcel of land?


A More or less, two (2) hectares.

Q What is the average owners share of the harvest?

A About fifty cavans of palay.

xxx xxx xxx

Q From the time you filed this case in the year 1943,
who had been receiving the owners share from this
property, known as Tax No. 5299?

A The late Pedro Clemea y Zurbano when he was


still alive and then his children after his
death.

He likewise testified on the changes in the price of


a cavan of palay over the years, thus:

Q What was the current average price of palay after


liberation, starting from the year 1945 up to 1950?

A About Fifteen (P15.00) Pesos a sack.

Q How about after 1950 to 1960?

A The same.

Q How about from 1960 to 1970?

A At present, it is Twenty Five (P25.00) Pesos


per cavan.

xxx xxx xxx


We believe, in the exercise of discretion, that the [respondents]
are entitled to an award of damages in the amount
of P118,000 computed in the following manner: P1,500.00
(50 cavans multiplied by two [the number of harvests in a year]
multiplied by P15.00) multiplied by 27 years (1943 to 1970)
and P2,700.00 (50 cavans multiplied by two [the number of harvests in
a year] multiplied byP25.00) multiplied by 31 years (1971-2001).

WHEREFORE, the appeal is partly granted in that the Order,


dated November 13, 1995, of the Regional Trial Court of Legazpi City,
Branch II, in two consolidated cases, docketed as Civil Case Nos. 74
and 155, is affirmed with the modification that paragraph 1 is deleted
and replaced with the following:

1. Appellants [respondents] are hereby DECLARED


entitled to the ownership of the property covered by Tax

Declaration No. 5299. The appellees [petitioners] and all


persons claiming under them are hereby ORDERED to
vacate this tract of land immediately and to turn over the
possession of such land together with all improvements
thereon to appellants. Appellees [petitioners] are further
directed to pay to appellants [respondents] the amount of
one hundred and eighteen thousand pesos (P118,000.00),
by way of actual and compensatory damages, with legal
interest thereon from the date of finality of this decision
until actual payment thereof. [14]

Petitioners motion for reconsideration was denied in a


resolution dated October 1, 2002.[15] Hence, this petition.
Petitioners no longer dispute respondents ownership of the
property covered by TD 5299. They insist, however, that they
cannot be held liable to respondents for the harvest because (1)
they never took possession of the property declared in TD 5299
and (2) the evidence the CA relied on to determine the amount of
damages, proceeding as it did from one of the plaintiffs, was self-
serving and therefore could not have been a proper basis for such
an award.

The petition is devoid of merit.

Petitioners contention that the land was never in their


possession should be dismissed outright for two reasons, both of
them simple and rather obvious.

First, petitioners predecessor


Pedro Clemea y Zurbano alleged in his answer that the land
declared in TD 5299 was in his exclusive possession. [16] That
statement, insofar as it confirmed the allegation in the complaint
that petitioners predecessor had retained possession of the land
in question,[17] took on the character of a judicial admission
contemplated in Section 4, Rule 129 of the Rules of Court:

An admission, verbal or written, made by a party in the course of


proceedings in the same case, does not require proof. The admission
may be contradicted only by showing that it was made through
palpable mistake or that no such admission was made. [18]

A judicial admission conclusively binds the party making it. He


cannot thereafter contradict it. The exception is found only in
those rare instances when the trial court, in the exercise of its
discretion and because of strong reasons to support its stand,
may relieve a party from the consequences of his admission. [19]

The rule on judicial admissions found its way into black-letter


law only in 1964[20] but its content is supplied by case law much
older and in many instances more explicit than the
present codal expression. In the early case of Irlanda v. Pitargue,
[21]
this Court laid down the doctrine that acts or facts admitted do
not require proof and cannot be contradicted unless it can be
shown that the admission was made through palpable
mistake. The rule was more forcibly stated by Mr. Justice Street in
the 1918 decision Ramirez v. Orientalist Co.:[22]

An admission made in a pleading can not be controverted by the party


making such admission; and all proof submitted by him contrary
thereto or inconsistent therewith should simply be ignored by the
court, whether objection is interposed by the opposite party or not. [23]

And in Cunanan v. Amparo,[24] the Court declared that:

the allegations, statements, or admissions contained in a pleading are


conclusive as against the pleader. A party cannot subsequently take a
position contrary to, or inconsistent with, his pleadings. [25]

Petitioners newly-contrived assertion that they were never


in possession of the land cannot hold up against these
pronouncements. As substituting defendants, they were bound by
the admission of Pedro Clemea y Zurbano, their predecessor in
the litigation.[26] Without any showing that the admission was
made through palpable mistake or that no such admission was
made, petitioners cannot now contradict it.

Second, the issue of whether petitioners ever had possession


of the land is undeniably a question of fact. Questions of this
nature cannot be raised in a petition for review on certiorari as
the remedy is confined to pure questions of law. [27]

The Court is well aware, of course, that this rule has been
watered down by a slew of exceptions. Hoping to convince the
Court to reverse the CAs findings, petitioners invoke a number of
these exceptions, namely: (1) the factual findings of the trial court
and the CA are contradictory; (2) the decision sought to be
reviewed is against the law and in complete disregard of the rules
on evidence; (3) there was grave abuse of discretion in the
appreciation of facts; and (4) the CA failed to notice relevant facts
and evidence which if properly considered would justify a different
conclusion.[28] But this case does not fall within any of these. For
one, petitioners have shown no contradiction between the
findings of the CA and the RTC on the matter. And for obvious
reasons, our preceding disquisition on the conclusiveness of
Pedro Clemea y Zurbanos admission of the fact of possession
makes the rest of the grounds invoked by petitioners undeserving
of even passing consideration.
Petitioners next proposition, i.e., that
Gregorio Clemeas testimony was self-serving and therefore an
improper basis for the damages awarded to respondents, is just
as unworthy of this Courts favorable consideration.

Self-serving evidence, perhaps owing to its descriptive


formulation, is a concept much misunderstood. Not infrequently,
the term is employed as a weapon to devalue and discredit a
partys testimony favorable to his cause. That, it seems, is the
sense in which petitioners are using it now. This is a grave
error. Self-serving evidence is not to be taken literally to mean
any evidence that serves its proponents interest. [29] The term, if
used with any legal sense, refers only to acts or declarations
made by a party in his own interest at some place and time out of
court, and it does not include testimony that he gives as a witness
in court.[30] Evidence of this sort is excluded on the same ground
as any hearsay evidence, that is, lack of opportunity for cross-
examination by the adverse party and on the consideration that
its admission would open the door to fraud and fabrication. [31] In
contrast, a partys testimony in court is sworn and subject to
cross-examination by the other party, [32] and therefore, not
susceptible to an objection on the ground that it is self-serving.

At any rate, for all their protestations against the use of


Gregorio Clemeas testimony, petitioners never once alleged,
much less tried to show, that his testimony was inaccurate or
untrue. As already observed, petitioners objection is founded
solely on the mere fact that he, being a plaintiff, was a witness
interested in the outcome of the case. Now, it is true that a
partys interest may to some extent affect his credibility as a
witness.[33] To insist otherwise would be the height of naivet.
Nonetheless, the Court cannot subscribe to the view, implicit in
petitioners argument, that a partys
testimony favorable to himself must be disregarded on account
solely of his interest in the case. Our justice system will not
survive such a rule for obdurate cynicism on the part of a court is
just as odious to the administration of justice as utter gullibility.

Moreover, this Court held in National Development Company


v. Workmens Compensation Commission[34] that interest alone is
not a ground for disregarding a partys testimony. [35] Elsewhere it
has been said that the interest of a witness does not ipso
facto deprive his testimony of probative force or require it to be
disregarded, and the trier of facts is entitled to accept as much of
the witness testimony as he finds credible and to reject the rest.
[36]
To these dicta we give our complete assent. Petitioners
arguments to the contrary must be rejected.

In view of the foregoing, we hold that the appellate court


committed no reversible error in relying on
Gregorio Clemeas testimony. The award of damages must
stand.

WHEREFORE, the petition is hereby DENIED. The April 4,


2002 decision and October 1, 2002 resolution of the Court of
Appeals in CA-G.R. CV No. 50912 areAFFIRMED.

SO ORDERED.
FIRST DIVISION

LUCIANO TAN,
G. R. No. 168071
Petition Present:
er,

PANGANIBAN, CJ,*
YNARES-SANTIAGO,

(Working Chairman)

AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR., and

CHICO-NAZARIO, JJ.

Promulgated:

RODIL ENTERPRISES, December 18, 2006


Respon
dent.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CHICO-NAZARIO, J.:

The instant Petition for Review on Certiorari assails the


Decision[1] dated 21 October 2002 and the Resolution[2] dated 12
May 2005 of the Court of Appeals in CA-G.R. SP No. 67201, which
set aside the 18 June 2001 Decision[3] of the Regional Trial Court
(RTC) of Manila, Branch 26 in Civil Case No. 01-99797. The RTC
reversed the 6 October 2000 Decision[4] of the Metropolitan Trial
Court (MeTC) of Manila, Branch 13 in Civil Case No. 166584, and
dismissed the Complaint filed by respondent RodilEnterprises
against petitioner Luciano Tan for utter lack of merit.

This case has its origin from the Complaint [5] for Unlawful
Detainer filed on 13 March 2000 by Rodil Enterprises
against Luciano Tan with the MeTC of Manila, Branch 13, docketed
as Civil Case No. 166584.

The factual antecedents to the filing of the Complaint show


that Rodil Enterprises is a lessee of the subject premises, the
Ides ORacca Building since 1959. The IdesORacca Building,
located at the corner of M. de Santos and Folgueras Streets
in Binondo, Manila, is owned by the Republic of
the Philippines. On 18 May 1992, RodilEnterprises and the
Republic, through the Department of Environment and Natural
Resources (DENR), entered into a Renewal of a Contract of Lease
over the Ides ORaccaBuilding. A subsequent Supplementary
Contract dated 25 May 1992 was similarly entered into, thus,
extending the lease agreement until 1 September 1997.

The validity of the 18 May 1992 and the 25 May


1992 contracts was placed in question in several actions
involving Rodil Enterprises, the Ides ORacca Building Tenants
Association, Inc., and other tenants. This Court upheld the
validity of the aforesaid contracts in a Decision rendered on 29
November 2001, in the consolidated cases of RodilEnterprises,
Inc. v. Court of Appeals, Carmen Bondoc, Teresita Bondoc-
Esto, Divisoria Footwear and Chua Huay Soon (G.R. No.
129609) and Rodil Enterprises, Inc. v. IdesORacca Building
Tenants Association, Inc. (G.R. No. 135537).[6]

Prior thereto, the Office of the President in OP Case No.


4968 entitled, Spouses Saturnino B. Alvarez
and Epifania Binay Alvarez v. Rodil Enterprises Company,
Inc.rendered a Decision dated 8 February 1994, declaring the
[7]

Renewal of Contract of Lease and the Supplementary Contract,


dated 18 May 1992 and 25 May 1992, respectively, of no force
and effect.

It appears that Rodil Enterprises appealed the 8 February


1994 Decision to the Court of Appeals, docketed as CA-G.R. SP
No. 34586 which was dismissed by the appellate court for non-
compliance with procedural requirements. The dismissal was
appealed by Rodil Enterprises to the Supreme Court, docketed
as G.R. No. 119711 which was also dismissed. Subsequently,
the Office of the President issued an Order of Execution of its 8
February 1994 Decision in OP Case No.
4968. Thereafter, Rodil Enterprises filed a Petition for Review
on Certiorari with the Court of Appeals on the Order of Execution,
docketed as CA-G.R. SP No 79157. The Court of Appeals
rendered a Decision therein dated 28 March 2005 which annulled
the Order of Execution, and enjoined the Office of the President
from enforcing its 8 February 1994 Decision in OP Case No.
4968. Likewise, the Court of Appeals ordered the Office of the
President to abide by the 29 November 2001 Decision of the
Supreme Court in the consolidated cases of G.R. No. 129609 and
G.R. No. 135537, upholding the validity of the Renewal of Contract
of Lease and the Supplemental Contract, dated 18 May 1992 and
the 25 May 1992, respectively. Finally, the Decision of the Court of
Appeals in CA-G.R. SP No. 79157 was brought on certiorari by the
Ides ORacca Building Tenants Association, Inc. to the Supreme
Court, and docketed as G.R. No. 169892. On 25 January 2006,
the Court, in G.R. No. 169892, issued a Resolution denying the
Petition. On 20 March 2006, a Resolution was rendered in the
same case denying with finality the amended Motion for
Reconsideration.

Meanwhile, during the pendency of the preceding cases, on


18 October 1999, a subsequent Contract of Lease was drawn
between Rodil Enterprises and the Republic, the same to be
effective retroactively from 1 September 1997 to 21 August 2012
at a monthly rental of P65,206.67, subject to adjustment upon the
approval of a new appraisal covering the
Ides ORacca Building. Rodil Enterprises subleased various units
of the property to members of the Ides ORacca Building Tenants
Association, Inc. A space thereof, known as Botica Divisoria was
subleased to herein petitioner, Luciano Tan.

In Rodil Enterprises Complaint for Unlawful Detainer filed


against Luciano Tan, the former alleged that Luciano Tan bound
himself to pay under a Contract of Sublease, the amount
of P13,750.00 as monthly rentals, representing the reasonable
use and occupancy of the said premises. However, Luciano Tan
unjustifiably and unreasonably refused to pay the rentals from
September 1997 up to the time of the filing of the Complaint, and
despite repeated oral and written demands, refused to vacate the
premises and to pay the rents due. Rodil Enterprises prayed
that Luciano Tan and those claiming rights under him be ordered
to vacate the leased premises. A payment of rentals in arrears,
amounting toP385,000.00 was similarly sought, including
attorneys fees and litigation costs, as well as, subsequent
monthly rentals in the amount of P13,750.00 until Luciano Tan
vacatesBotica Divisoria.

In his Answer, Luciano Tan insists that he is a legitimate


tenant of the government who owns the Ides ORacca Building
and not of Rodil Enterprises. As such, he has the right to lease
the said premises pending the disposition and sale of the
building. He based his claim on the fact that on 8 February 1994,
the Office of the President in OP Case No. 4968, had declared the
Renewal of Contract of Lease dated 18 May 1992 and the
Supplemental Contract dated 25 May
1992 between Rodil Enterprises and the Republic to be without
force and effect. Accordingly, the DENR was directed to award
the lease contract in favor of the Ides ORacca Building Tenants
Association, Inc. of which LucianoTan is a member. He, thus,
prayed for the dismissal of the Complaint, and for the return of
whatever amount Rodil Enterprises had collected from 1987 to
1997, or during such time when he was still paying rentals to the
latter.

On 27 June 2000, the MeTC issued an Order, recognizing an


agreement entered into in open court by Luciano Tan
and Rodil Enterprises. The Order, inter alia, declared, thus:
On second call, the parties and counsel agreed in principle in
open court to the following terms to put an end to this civil case for
ejectment between them:

1.) that [Luciano Tan] will pay P440,000.00 representing rentals


from September, 1997 up to the present, which is the
outstanding obligation of [Luciano Tan] as of June, 2000, on or
before June 30, 2000; and

2.) [Luciano Tan] will pay the monthly rentals computed


at P13,750.00 on or before the 5th day of each month after June
30, 2000.[8]

On 14 August 2000, Luciano Tan filed a Motion to Allow


Defendant to Deposit Rentals, [9] averring therein that he had
agreed to pay all the rentals due on the subject premises and to
pay the subsequent monthly rentals as they fall due; that the
rentals in arrears from September 1997 amounted
to P467,500.00; and in line with his good faith in dealing
with Rodil Enterprises, he would like to deposit the aforesaid
amount, and the subsequent monthly rentals as they fall due. He
prayed that he be allowed to deposit the Managers Check for the
amount of P467,500.00, made payable to the City Treasurer of
Manila. However, on 15 August 2000, the MeTC denied the
Motion on the rationalization that Luciano Tans prayer to deposit
the specified sum with the City Treasurer of Manila contravenes
Section 19,[10] Rule 70 of the 1997 Rules of Civil Procedure.

Subsequently, the issues for the resolution of the MeTC were


synthesized by the court in its Order, dated 25 July 2000, to wit:
[T]he issue insofar as [Rodil Enterprises], revolved on:

Whether [Rodil Enterprises] is legally entitled to collect


from [Luciano Tan] the amount of rentals and interest thereon as
prayed for in the complaint and to ask for the ejectment of the
defendant from the leased premises.

On the other hand, [Luciano Tan]s counsel formulated the issues


of the case in the following manner[,] to wit:

1) Whether or not under the circumstances[,][Luciano Tan]


could be ejected from the premises in question;

2) Whether or not under the circumstances[,]


[Rodil Enterprises] should be made to return the amounts
collected from [Luciano Tan] from 1987 to 1997
amounting to P988,650.00.[11]

On 6 October 2000, the MeTC rendered a Decision in favor


of Rodil Enterprises. The court said that Luciano Tan did not
contest the sublease on a monthly basis, and in fact
admitted in judicio, viz:

1.) That [Luciano Tan] will pay P440,000.00


representing rentals from September 1997 up to the present, which is
the outstanding obligation of the defendant as of June, 2000, on or
before June 30, 2000; and

2) [[Luciano Tan] will pay the monthly rentals computed


at P13,750.00, on or before the 5 th day of each month after June 30,
2000.

(Order dated June 27, 2000)[12]


According to the MeTC, notwithstanding the evidentiary
norm in civil cases that an offer of compromise is not an
admission of any liability, and is not admissible in evidence
against the offeror, the court cannot overlook the frank
representations by Luciano Tans counsel of the formers liability
in the form of rentals, coupled with a proposal to liquidate. [13] The
foregoing gestures, as appreciated by the MeTC, were akin to an
admission of a fact, like the existence of a debt which can serve
as proof of the loan, and was thus, admissible. [14] The court
pronounced that Luciano Tan had explicitly acknowledged his
liability for the periodic consideration for the use of the subleased
property. Estoppel, thus, precludes him from disavowing the fact
of lease implied from the tender of payment for the rentals in
arrears.[15] The MeTC, explained further:

Prescinding from the foregoing discourse, it ineluctably follows


that [Luciano Tan]s indifference to heed the two demand letters, the
cognition of which were recognized (paragraphs VII and IX, Complaint;
paragraph 2, Answer), rendered him a deforciant (1 Regalado,
Remedial Law Compendium, 6th Revised Edition, 1997, page 770,
citing Dikit vs. Ycasiano, 89 Phil. 44), and was thus vulnerable to the
special civil action under Section 1, Rule 70 of the 1997 Rules of Civil
Procedure, especially so when non-payment of rentals is an accepted
prelude to, and a secondary matrix for, a tenants eviction (Article
1673 (2), New Civil Code).

From a different plane, [Luciano Tan]s quest at this juncture for


recovery of the rentals he paid to the plaintiff from 1987 to 1997 will
not merit the desired result since, in a manner of speaking, it will place
the cart ahead of the horse, when juxtaposed with another pending
controversy between the parties before the Supreme Court (Annex 1,
Position Paper for the Defendant; Annex B, Answer to Counterclaim).
The decretal portion of the Decision, states, viz:

WHEREFORE, in view of the foregoing premises, judgment is


hereby rendered in favor of [Rodil Enterprises], ordering:

1. Defendant Luciano Tan, and all persons claiming rights under


him, to vacate the subject realty, and to peacefully deliver
possession to the plaintiffs representative;

2. Defendant [Luciano Tan] to pay the sum of FOUR HUNDRED


FORTY THOUSAND PESOS (P440,000.00) as recognized unpaid
rentals from September, 1997 up to June 30, 2000;

3. Defendant [Luciano Tan] to pay the sum of THIRTEEN


THOUSAND SEVEN HUNDRED FIFTY PESOS (P13,750.00) as
agreed rental per month, starting July, 2000, and every month
thereafter, until possession is delivered to the plaintiffs
representative;

4. Defendant [Luciano Tan] to pay the sum of FIVE THOUSAND


PESOS (P5,000.00) as reasonable attorneys fees; and

5. Defendant [Luciano Tan] to pay the cost of suit.

For want of merit, defendants counterclaim is hereby DISMISSED.

IT IS SO ORDERED.[16]

Aggrieved thereby, Luciano Tan appealed the Decision to


the RTC. Meanwhile, Rodil Enterprises filed a Motion for Issuance
of Writ of Execution,[17] which was subsequently denied by the
MeTC in the Order[18] of 15 December 2000.

On 18 June 2001, the RTC rendered a Decision reversing the


judgment appealed from and dismissing the Complaint. It found
that the MeTC erred in holding that the offer to compromise
by Luciano Tans counsel was akin to an admission of fact, the
same being contrary to Section 27, [19] Rule 130 of the 1997 Rules
of Civil Procedure. As reasoned by the RTC:

During the pre-trial conference held in the lower court, proposals


and counter-proposals emanated from the parties counsels, which was
normally inspired by the desire to buy peace, nay, to put an end to
the troubles of litigation, and to promote settlement of disputes as a
matter of public policy. The act of defendant/appellants (sic) in the
midst of pre-trial is not an admission of any liability and therefore,
should not be considered admissible evidence against him. [20]

Proceeding to the issue of the right of Rodil Enterprises to


collect rentals and eject Luciano Tan based on the contracts,
dated 18 May 1992 and 25 May 1992, the RTC ruled that the
controversy is still pending before the Supreme Court. It, thus,
held that the prayer for recovery of rentals from 1987 to 1997 is
premature.

The RTC, disposed, as follows:

IN VIEW OF THE FOREGOING, the judgment appealed from is


hereby REVERSED, and a new judgment is hereby entered DISMISSING
the complaint in Civil Case No. 166584 for utter lack of merit. [21]

Subsequently, Rodil Enterprises filed a Petition for Review


with the appellate court, which, in a Decision dated 21 October
2002 set aside the judgment of the RTC, and affirmed and
reinstated the 6 October 2000 Decision of the MeTC.
According to the appellate court, there is,
between Rodil Enterprises and the Republic of the Philippines, a
valid and subsisting Contract of Lease executed on 18 October
1999, the same for a period of fifteen (15) years. [22] The period of
the lease, under the 18 October 1999 contract is from 1
September 1997 to 31 August 2012. The Court of Appeals gave
credence to the fact that the existence of the aforesaid contract
was not denied
nor controverted by Luciano Tan. What Luciano Tan, instead,
impugned was the validity of the contracts dated 18 and 25 May
1992, which was upheld by this Court in the consolidated cases
of Rodil Enterprises, Inc. v. Court of Appeals, Carmen Bondoc,
Teresita Bondoc-Esto, Divisoria Footwear and
Chua Huay Soon (G.R. No. 129609) and Rodil Enterprises, Inc. v.
Ides ORacca Building Tenants Association, Inc. (G.R. No. 135537).
[23]

Ruling on the more important question of


whether Luciano Tan made a judicial admission anent his liability
as a sublessee of Rodil Enterprises, the Court of Appeals held that
the former made an implied admission of the existence of a
contract of sublease between him and Rodil Enterprises on the
subject premises; and that he had reneged in the payment of
rentals since 1 September 1997. Moreover, it
deemed Luciano Tans Motion to Allow Defendant to Deposit
Rentals as another admission in favor of RodilEnterprises. The
appellate court elucidated, thus:

The evidence on record indubitably shows that respondent


[Luciano Tan] is a sublessee of petitioner [Rodil Enterprises] who failed
to pay rentals from 01 September 1997 and even until the case was
filed before the [M]etropolitan [T]rial [C]ourt, when respondent
[Luciano Tan] agreed in principle in open court to the following terms:
1) that the defendant [Luciano Tan] will pay P440,000.00
representing rentals from September, 1997 up to the
present, which is the outstanding obligation of the
defendant as of June, 2000, on or before June 30, 2000;
and

2) defendant [Luciano Tan] will pay the monthly rentals


computed at P13,750.00 on or before the 5 th day of each
month after June 30, 2000.

at the hearing on 27 June 2000 though no settlement was eventually


reached between the parties, respondent [Luciano Tan] in effect made
an implied judicial admission that there was a subsisting contract of
sublease between him and petitioner, and that he was remiss in the
payment of rentals from 01 September 1997 up to that day (Rollo,
Annex 9 of petition). Respondent [Luciano Tan]s admission was
further bolstered by the fact that he filed a Motion to Allow Defendant
to Deposit Rentals (Rollo, p. 3 of Annex 15 of petition). By such
acts, respondent [Luciano Tan] accepted the truth of petitioner
[Rodil Enterprises] allegation of the existence of a contract of sublease
between them and of his non-payment of the rentals from 01
September 1997. A judicial admission is an admission made in the
course of the proceedings in the same case, verbal or written, by a
party accepting for the purposes of the suit the truth of some alleged
fact, which said party cannot thereafter disprove (Remedial Law by
Herrera, Oscar M. citing Section 4, Rule 129 of the Revised Rules on
Evidence and Evidence by Salonga).[24]

The decretal portion of the 21 October 2002 Court of


Appeals Decision, states, thus:

WHEREFORE, in the light of the foregoing, the petition for


review is GIVEN DUE COURSE. The Decision dated 18 June 2001 of the
Regional Trial Court of Manila, Branch 26 is hereby SET ASIDE. The
Decision dated 06 October 2000 of the Metropolitan Trial Court of
Manila, Branch 13 is AFFIRMED and REINSTATED. [25]

The appellate court denied Luciano Tans Motion for


Reconsideration thereon, in a Resolution, [26] dated 12 May 2005.

Thus, petitioner comes before us, raising the following


grounds, to wit:

THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE


REVERSIBLE ERROR WHEN IT ISSUED ITS RESOLUTION DENYING
PETITIONERS MOTION FOR RECONSIDERATION OF ITS DECISION BY
RELYING SOLELY AND EXCLUSIVELY ON THE MARCH 28, 2005 DECISION
OF THE COURT OF APPEALS AND DESPITE THE FACT THAT THE SAID
DECISION HAS NOT YET BECOME FINAL AND EXECUTORY.

II

RESPONDENT RODIL ENTERPRISES IS GUILTY OF FORUM SHOPPING


WHEN IT FILED THE PETITION FOR CERTIORARI WITH THE COURT OF
APPEALS DOCKETED AS CA-G.R. SP. NO. 79517 SEEKING TO NULLIFY
THE ORDER OF EXECUTION BY THE OFFICE OF THE PRESIDENT OF ITS 8
FEBRUARY 1994 DECISION IN OP CASE NO. 4968, DESPITE THE FACT
THAT ITS PREVIOUS PETITION FOR REVIEW FILED WITH THE COURT OF
APPEALS OF THE SAME DECISION OF THE OFFICE OF THE PRESIDENT
DATED 8 FEBRUARY 1994 HAD BEEN DISMISSED BY THE COURT OF
APPEALS IN ITS RESOLUTION DATED NOVEMBER 17, 1994 DUE TO NON-
COMPLIANCE WITH PROCEDURAL RULES.

III

THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS


REVERSIBLE ERROR AND A GRAVE MISAPPREHENSION OF THE FACTS
AND MISAPPRECIATION OF THE EVIDENCE WHEN IT RULED THAT
PETITIONER IS A SUBLESSEE OF RESPONDENT AND THAT PETITIONER
WAS REMISS IN THE PAYMENT OF HIS RENTALS OVER THE PREMISES. [27]

The Petition is without merit.

We shall address the first ground raised by petitioner with


regard to the alleged reliance of the Court of Appeals on the
Decision of the Tenth Division of the same court, dated 28 March
2005 in CA-G.R. SP No. 79157, entitled, Rodil Enterprises, Inc. v.
The Office of the President and Ides ORacca Building Tenants
Association, Inc.[28]

Contrary to petitioners contention, we do not find that the


Court of Appeals was in error when it took notice of the ruling in
CA-G.R. SP No. 79157 in resolving petitioners Motion for
Reconsideration. As respondent Rodil Enterprises asseverated,
for the appellate court to ignore a decision rendered by a division
thereof would be to turn a blind eye on a valid judgment rendered
by the same appellate body. Neither can we give merit to
petitioners submission that the reliance by the Court of Appeals
on its Decision in CA-G.R. SP No. 79517 is premature and
misplaced. More significantly, the contention of the petitioner
that the Decision in CA-G.R. SP No. 79517 has not attained finality
has become mute when viewed within recent factual
developments. The ruling in CA-G.R. SP No. 79517 has long
reached finality. This Court in a Resolution[29] dated 25 January
2006 denied the Petition for Review on Certiorari filed by the
Ides ORacca Building Tenants Association, Inc. thereon. On 20
March 2006, this Court denied with finality the Motion for
Reconsideration of the 25 January 2006 Resolution for lack of
compelling reason or substantial argument. [30]

Moreover, on 12 April 2004, the appellate court issued a


Resolution,[31] granting petitioner a hearing on its Motion for
Reconsideration as the grounds cited therein needed further
clarification. This belies petitioners claim that the resolution on
the Motion for Reconsideration was based solely on the ruling of
the Court of Appeals in CA-G.R. SP No. 79517.

We come to the second ground raised by the


petitioner. Petitioner argues that Rodil Enterprises is guilty of
forum shopping when it filed the Petition for Certiorari with the
Court of Appeals, docketed as CA-G.R. SP No. 79157, [32] after it
filed an Appeal with the appellate court in CA-G.R. SP No. 34586.
[33]
Forum shopping is the act of a party against whom an adverse
judgment has been rendered in one forum, seeking another and
possibly favorable opinion in another forum other than by appeal
or special civil action ofcertiorari.[34]

The question of forum shopping is not even material to the


instant petition.

It must be emphasized that neither CA-G.R. SP No. 79157


nor CA-G.R. SP No. 34586 is before this Court for
consideration. These cases are separate and distinct from CA-
G.R. SP No. 67201 now before us.

What are assailed in the instant Petition are the Decision of


the Court of Appeals, dated 21 October 2002 and the Resolution,
dated 12 May 2005 in CA G.R. SP No. 67201, which reversed the
ruling of the RTC, and affirmed the MeTC, ordering Luciano Tan to
vacate the premises and peacefully deliver possession
to Rodil Enterprises. The matter in controversy is the refusal
of Luciano Tan to pay the monthly rentals
over Botica Divisoria under the contract of sublease between the
parties.

On the other hand, CA-G.R. SP No. 79157 was a Petition for


Review on Certiorari seeking to nullify the Order of Execution of
the Office of the President of its 8 February 1994 Decision in OP
Case No. 4968 finding the Renewal of Contract of Lease, and the
Supplemental Contract of no force and effect. CA-G.R. SP No.
34586 was an appeal on the Decision in O.P. Case No. 4968, which
was the basis of the Order of Execution. If there has indeed been
forum shopping when CA-G.R. SP No. 79517 was instituted during
the pendency of CA-G.R. SP No. 34586, such question should have
been raised by petitioner, at first instance, before the Court of
Appeals in CA-G.R. SP No. 79517. It should be noted that the
petition in CA-G.R. SP No. 79517 was already given due course by
the Court of Appeals and its ruling therein has long
attained finality when, on appeal to this Court, docketed as G.R.
No. 169892, we denied the said appeal with finality in our
Resolutions dated 25 January 2000 and dated 20 March
2006. Whatever matters concerning the said case is now beyond
the jurisdiction of this Court to resolve.

We proceed to the final ground raised by the petitioner for


the allowance of the instant Petition. Petitioner assails the factual
findings of the Court of Appeals when it ruled that there was a
judicial admission as to petitioners liability under a contract of
sublease between him and Rodil Enterprises.
To resolve this issue, a reading of the significant orders of
the MeTC and the pleadings filed by petitioner is warranted.

The MeTC issued an Order, dated 27 June 2000 of the


following import, to wit:

On second call, the parties and counsel agreed in principle in


open court to the following terms to put an end to this civil case for
ejectment between them:

1.) that the defendant [Luciano Tan] will pay


P440,000.00 representing rentals from September,
1997 up to the present, which is the outstanding
obligation of the defendant as of June, 2000 on or
before June 30, 2000; and

2.) the defendant [Luciano Tan] will pay the


monthly rentals computed at P13,750.00 on or
before the 5th day of each month after June 30,
2000.[35]

On 14 August 2000, petitioner filed a Motion to Allow


Defendant to Deposit Rentals with the MeTC, praying that he be
allowed to deposit the rentals due as of August 2000, in the
amount of P467,500.00, and the subsequent monthly rentals as it
falls due.

Petitioner posits that the aforesaid admission, made in open


court, and then, reiterated in his Motion to Allow Defendant to
Deposit Rentals, cannot be taken as an admission of his liability,
citing Section 27, Rule 130 of the Rules of Court, [36] which
states, inter alia, that an offer of compromise in a civil case is not
a tacit admission of liability.

The general rule is an offer of compromise in a civil case is


not an admission of liability. It is not admissible in evidence
against the offeror.

The rule, however, is not iron-clad. This much was elucidated


by this Court in Trans-Pacific Industrial Supplies, Inc. v. Court of
Appeals,[37] to wit:
To determine the admissibility or non-admissibility of an offer
to compromise, the circumstances of the case and the intent of the
party making the offer should be considered. Thus, if a party denies
the existence of a debt but offers to pay the same for the purpose of
buying peace and avoiding litigation, the offer of settlement is
inadmissible. If in the course thereof, the party making the
offer admits the existence of an indebtedness combined with a
proposal to settle the claim amicably, then, the admission is admissible
to prove such indebtedness (Moran, Comments on the Rules of Court,
Vol. 5, p. 233 [1980 ed.]); Francisco, Rules of Court, Vol. VII, p. 325
[1973 ed.] citing McNiel v. Holbrook, 12 Pac. (US) 84, 9 L. ed.,
1009). Indeed, an offer of settlement is an effective admission of a
borrowers loan balance (L.M. Handicraft Manufacturing Corp. v. Court
of Appeals, 186 SCRA 640 [1990]. x x x.[38]

Similarly, in the case of Varadero de Manila v. Insular Lumber


Co.[39]
the Court applied the exception to the general
rule. In Varadero there was neither an expressed nor implied
denial of liability, but during the course of the abortive
negotiations therein, the defendant expressed a willingness to
pay the plaintiff. Finding that there was no denial of liability, and
considering that the only question discussed was the amount to
be paid, the Court did not apply the rule of exclusion of
compromise negotiations.

In the case at bar, the MeTC and the Court of Appeals


properly appreciated petitioners admission as an exception to the
general rule of inadmissibility. The MeTC found that petitioner did
not contest the existence of the sublease, and his counsel made
frank representations anent the formers liability in the form of
rentals. This expressed admission was coupled with a proposal to
liquidate. The Motion to Allow Defendant to Deposit Rentals was
deemed by the MeTC as an explicit acknowledgment of
petitioners liability on the subleased premises. The Court of
Appeals agreed with the MeTC. Indeed, the existence of the
Contract of Lease, dated 18 October 1999 was not denied by
petitioner. The contracts that were assailed by petitioner are the
contracts dated 18 and 25 May 1992, the validity of which has
been upheld by this Court in the consolidated cases of G.R. No.
129609 and G.R. No. 135537.

Finally, we find a categorical admission on the part of


petitioner, not only as to his liability, but also, as to the amount of
indebtedness in the form of rentals due. The Order of the MeTC
dated 27 June 2000 was clear that the petitioner agreed in open
court to pay the amount of P440,000.00, representing petitioners
unpaid rentals from September 1997 to June 2000; and that
petitioner will pay the monthly rentals computed at P13,750.00 on
or before the 5th day of each month after 30 June 2000. The
petitioners judicial admission in open court, as found by the
MeTC, and affirmed by the Court of Appeals finds particular
significance when viewed together with his Motion to Allow
Defendant to Deposit Rentals, wherein petitioner stated that the
rentals due on the premises in question from September 1997 up
to the present amounted to P467,500.00, as of the date of filing
the Motion. Petitioner cannot now be allowed to reject the
same. An admission made in the pleading cannot
be controverted by the party making such admission and are
conclusive as to him, and that all proofs submitted by him
contrary thereto or inconsistent therewith should be ignored
whether objection is interposed by a party or not. [40] A judicial
admission is an admission made by a party in the course of the
proceedings in the same case, for purposes of the truth of some
alleged fact, which said party cannot thereafter disprove. [41]

WHEREFORE, the Petition is DENIED. The Decision


dated 21 October 2002 and the Resolution dated 12 May 2005 in
CA-G.R. SP No. 67201, affirming and reinstating the 6 October
2000 Decision of the MeTC in Civil Case No. 166584
are AFFIRMED. Costs against petitioners.

SO ORDERED.

SECOND DIVISION

RUSTICO ABAY, JR. and G.R. No. 165896


REYNALDO DARILAG,

Petitioner Present:
s,

QUISUMBING, J.,
Chairperson,

CARPIO MORALES,

- versus - TINGA,

VELASCO, JR., and

BRION, JJ.

PEOPLE OF Promulgated:
THEPHILIPPINES,
Respond
ent.
September 19, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - -x

DECISION
QUISUMBING, J.:

This petition for review assails the Decision[1] dated October


27, 2003 and the Resolution[2] dated October 14, 2004 of the Court
of Appeals in CA G.R. CR No. 25212. The Court of Appeals had
affirmed the Decision[3] of the Regional Trial Court (RTC) of San
Pedro, Laguna, Branch 31, finding petitioners guilty of the crime of
Highway Robbery in Criminal Case No. 9045-B.

The facts are as follows:

On January 13, 1995, an Information was filed charging


Rustico Abay, Jr., Reynaldo Darilag, Ramoncito Aban, Ernesto
Ricalde, Ramon Punzalan, Ariston Reyes, Isagani Espeleta, Cesar
Camacho, Leonardo Perello and Danilo Pascual with the crime of
Highway Robbery/Brigandage. Said information reads:
xxxx

That on or about 7:30 oclock in the evening of February 17,


1994, at the South Luzon Expressway, Municipality of Bian, Province
of Laguna, and within the jurisdiction of this Honorable Court, accused
Ramoncito Aban y Casiano, Ernesto Ricalde y Jovillano, Rustico Abay, Jr.
y Serafico, Ramon Punzalan y Carpena, Reynaldo Darilag y Apolinario,
Leonardo Perello y Esguerra and Danilo Pascual y Lagata, who are
principals by direct participation, conspiring and confederating
together with Ariston Reyes y Plaza, Isagani Espeleta y Arguelles and
Cesar Camacho y Deolazo, who are principals by indispensable
cooperation and mutually helping each other, form themselves as band
of robbers and conveniently armed with handguns and deadly bladed
weapons, and while on board a Kapalaran Bus Line with plate number
DVT-527 bound for Sta. Cruz, Laguna and a semi stainless owner type
jeep with plate number PJD-599 as backup vehicle, accused with the
use of the aforesaid handguns and bladed weapons with intent to gain
and taking the passengers of the bus by surprise, did then and
there wilfully, unlawfully and feloniously divest and take
away personalties of the passengers and/or occupants therein, among
them were:

a) Thelma Andrade y Lorenzana, P3,500.00 cash;

b) Gloria Tolentino y Pamatmat, P30,000.00 cash, $2,000.00 dollars


and eyeglasses (Perare) worth P5,000.00;

c) Lilian Ojeda y Canta, P120.00 cash;

d) Paul Masilang y Reyes, assorted used clothes of undetermined


amount;

and by reason or on occasion of the said robbery, accused shot


passenger Rogelio Ronillo y Lumboy, inflicting upon him gunshot
wounds on the neck, thus, accused performed all the acts of execution
that would produce the crime of homicide, but nevertheless, did not
produce by reason of causes independent of the will of the accused,
that is by the timely medical assistance rendered to Rogelio Ronillo y
Lumboy, and to his damage and prejudice and to the damages and
prejudices of the following:

a) Thelma Andrade y Lorenzana in the sum of P3,500.00;


b) Gloria Tolentino y Pamatmat in the sum of P30,000.00;

c) Lilian Ojeda y Canta in the sum of P120.00

That the commission of the offense was attended with the


aggravating circumstances of nighttime, by a band and with the use of
motor vehicle.

With the additional aggravating circumstance that accused


Isagani Espeleta y Arguelles and Cesar Camacho y Deolazo, being
prison guards, have taken advantage of their public position by
bringing out prison inmates and equipped them with deadly weapons
and were utilized in the commission of robbery:

With the further additional aggravating circumstance on the


following accused/inmates, as follows:

1) Ramoncito Aban y Casiano with prison number 121577


as recidivist, having been convicted by final judgment on
June 15, 1984 by the RTC, Branch VI, Malolos, Bulacan, in
Criminal Case No. 3874-M for Robbery with Homicide;

2) Ariston Reyes y Plaza with prison number 115906-P, as


recidivist, having been convicted by final judgment on
March 11, 1982 by the CFI, Manila in Criminal Case No.
82-3001 for Robbery; having been convicted by final
judgment on September 2, 1987 by the RTC Branch 94,
Quezon City, in Criminal Case No. 37432 for Robbery; and
for Reiteracion or habituality for having served sentence
for Homicide, convicted on March 25, 1991 by the RTC,
Branch 34, Quezon City;

3) Reynaldo Darilag y Apolinario with prison number


129552-P for reiteracion or habituality for having been
previously punished for an offense of murder in Criminal
Case No. 039 by the RTC, Branch 5, Tuguegarao, Cagayan
and as a recidivist for having been previously convicted
by final judgment on July 8, 1987 by the same Court in
Criminal Case No. 040 for Robbery;

4) Rustico Abay, Jr. y Serafico with prison number 132566-P


as a recidivist for having been previously convicted by
final judgment on August 31, 1988 by the RTC, Branch
163 Manila, in Criminal Case No. 71060 for Theft;
5) Ramon Punzalan y Carpena with prison number 113605-
P as recidivist for having been previously convicted by
final judgment by the RTC, Branch 111, San Pablo City on
the following dates, to wit:

January 8, 1981 in Criminal Case No. 2454-SP, for Robbery


in Band;

December 8, 1981, in Criminal Case No. 2549 for Theft;

October 7, 1983 in Criminal Case No. 2550-SP for


Carnapping; and

Having been previously convicted by final judgment by


the City Court of San Pablo City on March 30,
1981 in Criminal Case No. 17738 for simple theft;

6) Ernesto R[i]calde y Jov[i]llano with prison number N92P-


2735, as a recidivist for having been previously convicted
by final judgment on August 2, 1992 by the RTC, Branch
54, Lucena City in Criminal Case No. 91-679 for simple
theft.

CONTRARY TO LAW.[4]

When arraigned, all the accused pleaded not


guilty. However, upon motion filed by accused Ramoncito Aban,
with the conformity of the public prosecutor and private
complainants Thelma Andrade and Gloria Tolentino, he was allowed
to withdraw his earlier plea of not guilty. Thus, on September 11,
1997, Ramoncito Aban, with the assistance of his counsel, pleaded
guilty to the crime of simple robbery and on even date, the trial
court sentenced him. Meanwhile, trial proceeded with respect to the
other accused.

The prosecution presented the following witnesses: Thelma


Andrade, Gloria Tolentino and Ramoncito Aban.

Thelma Andrade, a conductress of the Kapalaran Bus Line,


testified that in the evening of February 17, 1994, the bus she
was on was held-up. She said that Ramoncito Aban took from
her, at gunpoint, the fares she collected from the passengers of
the bus. She also identified Rustico Abay, Jr. and Ernesto Ricalde
as two of the other companions of Aban. [5]

Gloria Tolentino, a passenger of the bus, testified that


someone shouted hold-up and ordered them to bow their
heads. She obeyed the order but once in a while she would raise
her head. According to Tolentino, the man seated beside her,
Ariston Reyes, took her money and pieces of jewelry and handed
them over to Reynaldo Darilag. She also identified Rustico Abay,
Jr. as one of the companions of the robbers. [6]

Ramoncito Aban, the last witness, testified that on February


22, 1994, Camacho and Espeleta, who were both prison guards of
the New Bilibid Prison (NBP), took him and his companions,
Ricalde, Abay, Jr., Punzalan, Darilag, Reyes, Perello and Pascual,
on board the owner-type jeepney of Camacho to stage a hold-up.
He said they held-up a Kapalaran bus and it was Punzalan and
Darilag who took the money and other belongings of the
passengers in the bus. He further testified that the February 22,
1994 hold-up was the fourth staged by their group. According
to Aban, the other hold-ups were carried out on February 11, 13
and 17, and all four hold-ups were staged by the same persons. [7]

The defense, for its part, presented the testimony of


petitioners Rustico Abay, Jr., and Reynaldo Darilag, the other co-
accused, and Genaro Alberto.

All the accused denied participation in the robbery that


happened on February 17, 1994. Abay, Jr., Darilag, Reyes and
Ricalde, who were detention prisoners, testified that they were
confined in the NBP at the time the incident happened.
[8]
Pascual and Perello, both civilians, testified that they were at
home then.[9] Genaro Alberto, a prison guard at the Bureau of
Corrections, testified that during the headcount of the inmates
conducted at 5:00 p.m. and 8:00 p.m. on February 17, 1994, no
inmate was found to be missing.[10]

In a Decision dated November 29, 2000, the RTC of San


Pedro, Laguna, Branch 31 found petitioners Abay, Jr. and Darilag,
as well as the other accused guilty of the crime charged. The trial
court decreed as follows:
WHEREFORE, this Court hereby renders judgment convicting
accused Ernesto Ricalde y Jovillano, Rustico Abay, Jr. y Serafico,
Ramon Punzalan y Carpena,
Reynaldo Darilag y Apolicario,Ariston Reyes y Plaza, Isagani Espeleta y
Arguelles, Cesar Camacho y Deolazo,
Leonardo Perello y Esguerra and Danilo Pascual y Lagata of the crime
of highway robbery/holdup attended by the aggravating circumstance
of a band only and hereby sentences each of them:

1) to suffer an indeterminate penalty of imprisonment [of]


twelve (12) years and one (1) day as minimum to thirteen
(13) years, nine (9) months and eleven (11) days as
maximum, both of reclusion temporal in its minimum period;

2) to indemnify Thelma Andrade, the amount of P3,500 and


Gloria Tolentino, the amount of P30,000 and US$2,000; and

3) to pay the costs.

SO ORDERED.[11]

The Court of Appeals on appeal acquitted Espeleta, Camacho


and Punzalan of the crime charged but affirmed the conviction of
petitioners Abay, Jr. and Darilag, Ricalde and Reyes. The
dispositive portion of the Decision dated October 27, 2003 states:
WHEREFORE, the assailed decision of the Regional Trial Court
of San Pedro, Laguna, Branch 31, in Criminal Case No. 9045-B,
is REVERSED and SET ASIDE, but only insofar as accused-appellants
Isagani Espeleta, Cesar Camacho and Ramon Punzalan, are concerned,
for insufficiency of evidence. Isagani Espeleta, Cesar Camacho and
Ramon Punzalan are hereby ACQUITTED. Unless held for any other
charge/charges their immediate release is hereby ordered.
With respect to accused-appellants Rustico Abay, Jr., Ernesto
Ricalde, Reynaldo Darilag and Ariston Reyes, the said decision of the
Regional Trial Court of San Pedro, Laguna, Branch 31, inCriminal Case
No. 9045-B, finding them guilty beyond reasonable doubt of the crime
of highway robbery/hold-up is hereby AFFIRMED IN TOTO.

SO ORDERED.[12]

Petitioners Abay, Jr. and Darilag moved for a


reconsideration of the aforesaid decision, but their motion was
denied. Hence, they filed the instant petition raising a single
issue:
WHETHER OR NOT PETITIONERS MAY BE CONVICTED ON THE BASIS OF
THE TESTIMONIES OF RAMONCITO ABAN, THELMA ANDRADE AND
GLORIA TOLENTINO.[13]

Stated simply, did the Court of Appeals err in affirming on


the basis of the testimonies of said three witnesses the conviction
of petitioners Abay, Jr. and Darilag?

In their petition,[14] petitioners Abay, Jr. and Darilag assert


that their guilt has not been proven beyond reasonable doubt.
They argue that Ramoncito Aban is not a credible witness and
that he testified on an incident which happened on February 22,
1994 and not on February 17, 1994 as alleged in the information.
Petitioners also claim that no physical evidence linking petitioners
to the crime was presented. They likewise point to a related case
filed against them wherein they were acquitted. They fault the
trial court and Court of Appeals for disregarding their defense of
alibi and in giving credence to the testimonies of Andrade
and Tolentino, contending that these testimonies were incredible
and unsubstantiated. They likewise contend that the lower courts
erred in relying on Abans extrajudicial confession which was
coerced.
The Office of the Solicitor General (OSG) challenges the
petition on the ground that the petition raises a question of
fact. It also maintains that Aban is a credible witness and that
petitioners defense of alibi cannot prevail over the positive
testimonies of the prosecution witnesses. [15]

After a thorough examination of the evidence presented,


we are in agreement that the appeal lacks merit.

At the outset, we note that it was not Abans extrajudicial


confession but his court testimony reiterating his declarations in
his extrajudicial admission, pointing to petitioners as his co-
participants, which was instrumental in convicting petitioners of
the crime charged. Settled is the rule that when the extrajudicial
admission of a conspirator is confirmed at the trial, it ceases to be
hearsay. It becomes instead a judicial admission, being a
testimony of an eyewitness admissible in evidence against those
it implicates.[16] Here, the extrajudicial confession of Aban was
affirmed by him in open court during the trial. Thus, such
confession already partook of judicial testimony which is
admissible in evidence against the petitioners.

We likewise agree in finding without merit the petitioners


argument that, since Abans testimony is not credible as
to Espeleta, Camacho and Punzalan who were acquitted, then it
should also be held not credible as to them. But in our considered
view, the petitioners are not similarly situated as their
aforementioned co-accused. Other than the testimony of Aban,
there were no other witnesses who testified on the participation of
Espeleta, Camacho and Punzalan. In contrast, anent the herein
petitioners participation in the crime, not only is their conviction
based on the testimony of Aban, but it was also established by
the eyewitness testimony of Andrade and Tolentino who identified
positively the petitioners in open court.
Petitioners further aver that Aban testified on a robbery which
took place on February 22, 1994, not February 17, 1994. Granted
that Ramoncito Aban in fact testified on the details of the robbery
which happened on February 22, 1994. However, it is also worth
stressing as part of the prosecution evidence that Aban testified
that malefactors used the same route and strategy in the
perpetration of the robberies which happened on four occasions --
February 11, 13, 17 and 22, 1994. What happened on February 22
was but a replication, so to speak, of the robbery scenarios earlier
perpetrated by the same gang on three previous dates. It is very
clear, however, that Aban, on the witness stand was testifying
specifically also about the offense that took place on February 17 in
the Expressway, Bian, Laguna.

Petitioners claim that no physical evidence was presented by


the prosecution linking the petitioners to the crime charged. But in
this case, the alleged failure of the prosecution to present physical
evidence does not adversely affect the over-all weight of the
evidence actually presented. Physical evidence would be merely
corroborative because there are credible witnesses who testified
on the complicity of petitioners in the crime charged.[17]

Further, petitioners assert that in a similar case filed against


them, they were acquitted by the trial court of Imus, Cavite. As
correctly observed by the OSG, there is no showing that the
amount and quality of evidence in the present case and those in
the case where petitioners were allegedly acquitted are the
same. Indeed, if petitioners truly believed that the prosecution
evidence is deficient to establish their guilt, their defense could
have earlier filed a demurrer to evidence in this case. But, they
did not.[18]

Additionally, petitioners claim that the trial court and the


Court of Appeals erred in disregarding their defense of alibi.
[19]
However, we are in agreement with the OSG that the defense
of alibi cannot prevail over the positive identification of the
accused in this case.

Worth stressing, this Court has consistently ruled that the


defense of alibi must be received with suspicion and caution, not
only because it is inherently weak and unreliable, but also
because it can be easily fabricated. [20] Alibi is a weak defense
that becomes even weaker in the face of the positive
identification of the accused. An alibi cannot prevail over the
positive identification of the petitioners by credible witnesses who
have no motive to testify falsely.[21]

In this case, petitioners defense of alibi rested solely upon


their own self-serving testimonies. For their defense of alibi to
prosper, it should have been clearly and indisputably
demonstrated by them that it was physically impossible for them
to have been at, or near, the scene of the crime at the time of its
commission. But as the trial court correctly ruled, it was not
impossible for the petitioners to be at the scene of the crime since
petitioners place of detention is less than an hour ride from the
crime scene. Moreover, no dubious reason or improper motive was
established to render the testimonies of Andrade, Tolentino and
Aban false and unbelievable. Absent the most compelling reason,
it is highly inconceivable why Andrade, Tolentino and Aban would
openly concoct a story that would send innocent men to jail.[22]

Similarly, petitioners assert that the testimonies of Andrade


and Tolentino are incredible and unsubstantiated. They question
the failure of Tolentino to identify Punzalan in court, and stress
that Andrade and Tolentino were not able to identify all the
accused. The OSG, on the other hand, maintains that the
testimonies of Andrade and Tolentino are credible since the facts
testified to by them and Aban support each other.

We find petitioners allegations untenable. The testimonies given by


Andrade, Tolentino and Aban corroborate each other. Their testimonies agree on
the essential facts and substantially corroborate a consistent and coherent
whole. The failure of Tolentino to point to Punzalan in court does not dent her
credibility as a witness. It must be noted that it took years before Tolentino was
placed on the witness stand. As to the allegation that the testimony of Andrade and
Tolentino are incredible because they were not able to identify all the accused
deserves scant consideration. During the robbery, they were told to bow their
heads and hence, they were only able to raise their heads from time to time. It is
but logical that the witnesses would not be able to identify all of the accused.

Considering the testimonies of witnesses and the evidence presented by the


parties, we are in agreement that the crime of Highway Robbery/Brigandage was
duly proven in this case. As defined under Section 2(e) of Presidential Decree No.
532,[23] Highway Robbery/Brigandage is the seizure of any person for ransom,
extortion or other unlawful purposes, or the taking away of the property of another
by means of violence against or intimidation of person or force upon things or
other unlawful means, committed by any person on any Philippine highway. Also,
as held in People v. Puno:[24]

In fine, the purpose of brigandage is, inter alia, indiscriminate highway


robbery. If the purpose is only a particular robbery, the crime is only robbery, or
robbery in band if there are at least four armed participants

Further, that Presidential Decree No. 532 punishes as highway robbery or


brigandage only acts of robbery perpetrated by outlaws indiscriminately
against any person or persons on Philippine highways as defined therein, and
not acts of robbery committed against only a predetermined or particular victim
[Emphasis supplied.]

The elements of the crime of Highway Robbery/Brigandage have been clearly


established in this case. First, the prosecution evidence demonstrated with clarity
that the petitioners group was organized for the purpose of committing robbery in
a highway. Next, there is no predetermined victim. The Kapalaran bus was chosen
indiscriminately by the accused upon reaching their agreed destination
-- Alabang, Muntinlupa.
All told, we rule that petitioners Rustico Abay, Jr. and
Reynaldo Darilag are guilty beyond reasonable doubt of the crime
of Highway Robbery/Brigandage.

WHEREFORE, the Decision dated October 27, 2003 and the


Resolution dated October 14, 2004 of the Court of Appeals in CA
G.R. CR No. 25212, affirming the Decision dated November 29,
2000 of the Regional Trial Court of San Pedro, Laguna, Branch 31
in Criminal Case No. 9045-B, are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

THIRD DIVISION

PHILIPPINE HEALTH-CARE G.R. No. 171052


PROVIDERS, INC. (MAXICARE),

Petitioner, Present:

YNARES-SANTIAGO, J.,

Chairperson,

- versus - AUSTRIA-MARTINEZ,

CORONA,*

NACHURA, and

REYES, JJ.
CARMELA ESTRADA/CARA Promulgated:
HEALTH SERVICES,

Respondent.
January 28, 2008

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

DECISION

NACHURA, J.:

This petition for review on certiorari assails the


Decision dated June 16, 2005 of the Court of Appeals (CA) in CA-
[1]

G.R. CV No. 66040 which affirmed in toto the Decision[2] dated


October 8, 1999 of the Regional Trial Court (RTC), Branch 135, of
Makati City in an action for breach of contract and damages filed
by respondent Carmela Estrada, sole proprietor of Cara Health
Services, against Philippine Health-Care Providers, Inc. (Maxicare).

The facts, as found by the CA and adopted by Maxicare in


its petition, follow:
[Maxicare] is a domestic corporation engaged in selling health
insurance plans whose Chairman Dr. Roberto K. Macasaet, Chief
Operating Officer Virgilio del Valle, and Sales/Marketing Manager
Josephine Cabrera were impleaded as defendants-appellants.

On September 15, 1990, [Maxicare] allegedly engaged the


services of Carmela Estrada who was doing business under the name
of CARA HEALTH [SERVICES] to promote and sell the prepaid group
practice health care delivery program called MAXICARE Plan with the
position of Independent Account Executive. [Maxicare] formally
appointed [Estrada] as its General Agent, evidenced by a letter-
agreement dated February 16, 1991. The letter agreement provided
for plaintiff-appellees [Estradas] compensation in the form of
commission, viz.:

Commission

In consideration of the performance of your functions and


duties as specified in this letter-agreement, [Maxicare]
shall pay you a commission equivalent to 15 to 18% from
individual, family, group accounts; 2.5 to 10% on tailored
fit plans; and 10% on standard plans of commissionable
amount on corporate accounts from all membership dues
collected and remitted by you to [Maxicare].

[Maxicare] alleged that it followed a franchising system in


dealing with its agents whereby an agent had to first secure permission
from [Maxicare] to list a prospective company as client. [Estrada]
alleged that it did apply with [Maxicare] for the MERALCO account and
other accounts, and in fact, its franchise to solicit corporate accounts,
MERALCO account included, was renewed on February 11, 1991.

Plaintiff-appellee [Estrada] submitted proposals and made


representations to the officers of MERALCO regarding the MAXICARE
Plan but when MERALCO decided to subscribe to the MAXICARE Plan,
[Maxicare] directly negotiated with MERALCO regarding the terms and
conditions of the agreement and left plaintiff-appellee [Estrada] out of
the discussions on the terms and conditions.

On November 28, 1991, MERALCO eventually subscribed to the


MAXICARE Plan and signed a Service Agreement directly with
[Maxicare] for medical coverage of its qualified members, i.e.: 1) the
enrolled dependent/s of regular MERALCO executives; 2) retired
executives and their dependents who have opted to enroll and/or
continue their MAXICARE membership up to age 65; and 3) regular
MERALCO female executives (exclusively for maternity benefits). Its
duration was for one (1) year from December 1, 1991 to November 30,
1992. The contract was renewed twice for a term of three (3) years
each, the first started on December 1, 1992 while the second took
effect on December 1, 1995.

The premium amounts paid by MERALCO to [Maxicare] were


alleged to be the following: a) P215,788.00 in December 1991;
b) P3,450,564.00 in 1992; c) P4,223,710.00 in 1993; d)P4,782,873.00
in 1994; e) P5,102,108.00 in 1995; and P2,394,292.00 in May 1996. As
of May 1996, the total amount of premium paid by MERALCO to
[Maxicare] was P20,169,335.00.

On March 24, 1992, plaintiff-appellee [Estrada], through


counsel, demanded from [Maxicare] that it be paid commissions for the
MERALCO account and nine (9) other accounts. In reply, [Maxicare],
through counsel, denied [Estradas] claims for commission for the
MERALCO and other accounts because [Maxicare] directly negotiated
with MERALCO and the other accounts(,) and that no agent was given
the go signal to intervene in the negotiations for the terms and
conditions and the signing of the service agreement with MERALCO
and the other accounts so that if ever [Maxicare] was indebted to
[Estrada], it was only for P1,555.00 and P43.l2 as commissions on the
accounts of Overseas Freighters Co. and Mr. Enrique Acosta,
respectively.

[Estrada] filed a complaint on March 18, 1993 against


[Maxicare] and its officers with the Regional Trial Court (RTC)
of Makati City, docketed as Civil Case No. 93-935, raffled to Branch
135.

Defendants-appellants [Maxicare] and its officers filed their


Answer with Counterclaim on September 13, 1993 and their Amended
Answer with Counterclaim on September 28, 1993, alleging that:
plaintiff-appellee [Estrada] had no cause of action; the cause of action,
if any, should be is against [Maxicare] only and not against its officers;
CARA HEALTHs appointment as agent under the February 16, 1991
letter-agreement to promote the MAXICARE Plan was for a period of
one (1) year only; said agency was not renewed after the expiration of
the one (1) year period; [Estrada] did not intervene in the negotiations
of the contract with MERALCO which was directly negotiated by
MERALCO with [Maxicare]; and [Estradas] alleged other
clients/accounts were not accredited with [Maxicare] as required, since
the agency contract on the MAXICARE health plans were not
renewed. By way of counterclaim, defendants-appellants [Maxicare]
and its officers claimed P100,000.00 in moral damages for each of the
officers of [Maxicare] impleaded as defendant, P100,000.00 in
exemplary damages, P100,000.00 in attorneys fees, and P10,000.00 in
litigation expenses.[3]

After trial, the RTC found Maxicare liable for breach of


contract and ordered it to pay Estrada actual damages in the
amount equivalent to 10% of P20,169,335.00, representing her
commission for the total premiums paid by Meralco to Maxicare
from the year 1991 to 1996, plus legal interest computed from
the filing of the complaint on March 18, 1993, and attorneys fees
in the amount of P100,000.00.

On appeal, the CA affirmed in toto the RTCs decision. In


ruling for Estrada, both the trial and appellate courts held that
Estrada was the efficient procuring cause in the execution of the
service agreement between Meralco and Maxicare consistent with
our ruling in Manotok Brothers, Inc. v. Court of Appeals.[4]
Undaunted, Maxicare comes to this Court and insists on the
reversal of the RTC Decision as affirmed by the CA, raising the
following issues, to wit:

1. Whether the Court of Appeals committed serious error in


affirming Estradas entitlement to commissions for the execution of the
service agreement between Meralco and Maxicare.

2. Corollarily, whether Estrada is entitled to commissions for the


two (2) consecutive renewals of the service agreement effective
on December 1, 1992[5] and December 1, 1995.[6]

We are in complete accord with the trial and appellate


courts ruling. Estrada is entitled to commissions for the
premiums paid under the service agreement between Meralco
and Maxicare from 1991 to 1996.

Well-entrenched in jurisprudence is the rule that factual


findings of the trial court, especially when affirmed by the
appellate court, are accorded the highest degree of respect and
are considered conclusive between the parties. [7] A review of such
findings by this Court is not warranted except upon a showing of
highly meritorious circumstances, such as: (1) when the findings
of a trial court are grounded entirely on speculation, surmises or
conjectures; (2) when a lower courts inference from its factual
findings is manifestly mistaken, absurd or impossible; (3) when
there is grave abuse of discretion in the appreciation of facts; (4)
when the findings of the appellate court go beyond the issues of
the case, or fail to notice certain relevant facts which, if properly
considered, will justify a different conclusion; (5) when there is a
misappreciation of facts; (6) when the findings of fact are
conclusions without mention of the specific evidence on which
they are based, are premised on the absence of evidence, or are
contradicted by evidence on record.[8]None of the foregoing
exceptions which would warrant a reversal of the assailed
decision obtains in this instance.

Maxicare urges us that both the RTC and CA failed to take


into account the stipulations contained in the February 19,
1991 letter agreement authorizing the payment of commissions
only upon satisfaction of twin conditions, i.e., collection and
contemporaneous remittance of premium dues by Estrada to
Maxicare. Allegedly, the lower courts disregarded Estradas
admission that the negotiations with Meralco failed. Thus, the
flawed application of the efficient procuring cause doctrine
enunciated in Manotok Brothers, Inc. v. Court of Appeals,[9] and
the erroneous conclusion upholding Estradas entitlement to
commissions on contracts completed without her participation.

We are not persuaded.

Contrary to Maxicares assertion, the trial and the appellate


courts carefully considered the factual backdrop of the case as
borne out by the records. Both courts were one in the conclusion
that Maxicare successfully landed the Meralco account for the
sale of healthcare plans only by virtue of Estradas involvement
and participation in the negotiations. The assailed Decision aptly
states:

There is no dispute as to the role that plaintiff-appellee


[Estrada] played in selling [Maxicares] health insurance plan to
Meralco. Plaintiff-appellee [Estradas] efforts consisted in being the first
to offer the Maxicare plan to Meralco, using her connections with some
of Meralco Executives, inviting said executives to dinner meetings,
making submissions and representations regarding the health plan,
sending follow-up letters, etc.

These efforts were recognized by Meralco as shown by the


certification issued by its Manpower Planning and Research Staff Head
Ruben A. Sapitula on September 5, 1991, to wit:

This is to certify that Ms. Carmela Estrada has


initiated talks with us since November 1990 with regards
(sic) to the HMO requirements of both our rank and file
employees, managers and executives, and that it was
favorably recommended and the same be approved by
the Meralco Management Committee.

xxxx

This Court finds that plaintiff-appellee [Estradas] efforts were


instrumental in introducing the Meralco account to [Maxicare] in regard
to the latters Maxicare health insurance plans. Plaintiff-appellee
[Estrada] was the efficient intervening cause in bringing about the
service agreement with Meralco. As pointed out by the trial court in
its October 8, 1999 Decision, to wit:

xxx Had not [Estrada] introduced Maxicare


Plans to her bosom friends, Messrs. Lopez and Guingona
of Meralco, PHPI would still be an anonymity. xxx [10]

Under the foregoing circumstances, we are hard pressed to


disturb the findings of the RTC, which the CA affirmed.
We cannot overemphasize the principle that in petitions for
review on certiorari under Rules 45 of the Rules of Court, only
questions of law may be put into issue. Questions of fact are not
cognizable by this Court. The finding of efficient procuring cause
by the CA is a question of fact which we desist from passing upon
as it would entail delving into factual matters on which such
finding was based. To reiterate, the rule is that factual findings of
the trial court, especially those affirmed by the CA, are conclusive
on this Court when supported by the evidence on record. [11]

The jettisoning of the petition is inevitable even upon a


close perusal of the merits of the case.

First. Maxicares contention that Estrada may only claim


commissions from membership dues which she has collected and
remitted to Maxicare as expressly provided for in the letter-
agreement does not convince us. It is readily apparent that
Maxicare is attempting to evade payment of the commission
which rightfully belongs to Estrada as the broker who brought the
parties together. In fact, Maxicares former Chairman Roberto K.
Macasaet testified that Maxicare had been trying to land the
Meralco account for two (2) years prior to Estradas entry in 1990.
[12]
Even without that admission, we note that Meralcos Assistant
Vice-President, Donatila San Juan, in a letter [13] dated January 21,
1992to then Maxicare President Pedro R. Sen, categorically
acknowledged Estradas efforts relative to the sale of Maxicare
health plans to Meralco, thus:

Sometime in 1989, Meralco received a proposal from Philippine


Health-Care Providers, Inc. (Maxicare) through the initiative and efforts
of Ms. Carmela Estrada, who introduced Maxicare to Meralco. Prior to
this time, we did not know that Maxicare is a major health care
provider in the country. We have since negotiated and signed up with
Maxicare to provide a health maintenance plan for dependents of
Meralco executives, effective December 1, 1991 to November 30,
1992.

At the very least, Estrada penetrated the Meralco market, initially


closed to Maxicare, and laid the groundwork for a business
relationship. The only reason Estrada was not able to participate
in the collection and remittance of premium dues to Maxicare was
because she was prevented from doing so by the acts of
Maxicare, its officers, and employees.

In Tan v. Gullas,[14] we had occasion to define a broker and


distinguish it from an agent, thus:

[O]ne who is engaged, for others, on a commission, negotiating


contracts relative to property with the custody of which he has no
concern; the negotiator between the other parties, never acting in his
own name but in the name of those who employed him. [A] broker is
one whose occupation is to bring the parties together, in matter of
trade, commerce or navigation.[15]

An agent receives a commission upon the successful conclusion of a


sale. On the other hand, a broker earns his pay merely by bringing the
buyer and the seller together, even if no sale is eventually made.[16]

In relation thereto, we have held that the term procuring


cause in describing a brokers activity, refers to a
cause originating a series of events which, without break in their
continuity, result in the accomplishment of the prime objective of
the employment of the brokerproducing a purchaser ready,
willing and able to buy on the owners terms. [17] To be regarded as
the procuring cause of a sale as to be entitled to a commission,
a brokers efforts must have been the foundation on which the
negotiations resulting in a sale began. [18] Verily, Estrada was
instrumental in the sale of the Maxicare health plans to Meralco.
Without her intervention, no sale could have been consummated.

Second. Maxicare next contends that Estrada herself


admitted that her negotiations with Meralco failed as shown in
Annex F of the Complaint.

The chicanery and disingenuousness of Maxicares counsel is


not lost on this Court. We observe that this Annex F is, in fact,
Maxicares counsels letter dated April 10, 1992 addressed to
Estrada. The letter contains a unilateral declaration by Maxicare
that the efforts initiated and negotiations undertaken by Estrada
failed, such that the service agreement with Meralco was
supposedly directly negotiated by Maxicare. Thus, the latter
effectively declares that Estrada is not the efficient procuring
cause of the sale, and as such, is not entitled to commissions.

Our holding in Atillo III v. Court of Appeals, [19] ironically the


case cited by Maxicare to bolster its position that the statement in
Annex F amounted to an admission, provides a contrary answer
to Maxicares ridiculous contention. We intoned therein that in
spite of the presence of judicial admissions in a partys pleading,
the trial court is still given leeway to consider other evidence
presented.[20] We ruled, thus:

As provided for in Section 4 of Rule 129 of the Rules of Court,


the general rule that a judicial admission is conclusive upon the party
making it and does not require proof admits of two exceptions: 1) when
it is shown that the admission was made through palpable mistake,
and 2) when it is shown that no such admission was in fact made. The
latter exception allows one to contradict an admission by denying that
he made such an admission.

For instance, if a party invokes an admission by


an adverse party, but cites the admission out of context,
then the one making the admission may show that he
made no such admission, or that his admission was
taken out of context.

This may be interpreted as to mean not in the


sense in which the admission is made to appear. That is
the reason for the modifier such. [21]

In this case, the letter, although part of Estradas Complaint,


is not, ipso facto, an admission of the statements contained
therein, especially since the bone of contention relates to
Estradas entitlement to commissions for the sale of health plans
she claims to have brokered. It is more than obvious from the
entirety of the records that Estrada has unequivocally and
consistently declared that her involvement as broker is the
proximate cause which consummated the sale between Meralco
and Maxicare.

Moreover, Section 34,[22] Rule 132 of the Rules of Court


requires the purpose for which the evidence is offered to be
specified. Undeniably, the letter was attached to the Complaint,
and offered in evidence, to demonstrate Maxicares bad faith and
ill will towards Estrada.[23]
Even a cursory reading of the Complaint and all the
pleadings filed thereafter before the RTC, CA, and this Court,
readily show that Estrada does not concede, at any point, that her
negotiations with Meralco failed. Clearly, Maxicares assertion that
Estrada herself does not pretend to be the efficient procuring
cause in the execution of the service agreement between
Meralco and Maxicare is baseless and an outright falsehood.

After muddling the issues and representing that Estrada


made an admission that her negotiations with Meralco failed,
Maxicares counsel then proceeds to cite a case which does not,
by any stretch of the imagination, bolster the flawed contention.

We, therefore, ADMONISH Maxicares counsel, and, in turn,


remind every member of the Bar that the practice of law carries
with it responsibilities which are not to be trifled with. Maxicares
counsel ought to be reacquainted with Canon 10 [24] of the Code of
Professional Responsibility, specifically, Rule 10.02, to wit:

Rule 10.02 A lawyer shall not knowingly misquote or


misrepresent the contents of a paper, the language or the argument of
opposing counsel, or the text of a decision or authority, or knowingly
cite as law a provision already rendered inoperative by repeal or
amendment, or assert as a fact that which has not been proved.

Third. Finally, we likewise affirm the uniform ruling of the


RTC and CA that Estrada is entitled to 10% of the total amount of
premiums paid[25] by Meralco to Maxicare as of May 1996.
Maxicares argument that assuming Estrada is entitled to
commissions, such entitlement only covers the initial year of the
service agreement and should not include the premiums paid for
the succeeding renewals thereof, fails to impress. Considering
that we have sustained the lower courts factual finding of
Estradas close, proximate and causal connection to the sale of
health plans, we are not wont to disturb Estradas complete
entitlement to commission for the total premiums paid until May
1996 in the amount ofP20,169,335.00.

WHEREFORE, premises considered and finding no


reversible error committed by the Court of Appeals, the petition is
hereby DENIED. Costs against the petitioner.

SO ORDERED.