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click here for freelancing tutoring sitesG.R. No. L-38230             November 21, 1933THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs.BITDU, defendant-appellant.

VICKERS, J.:          This is an appeal from the following decision of Judge A. Horilleno in the Court of First Instance of Zamboanga:

          There is no dispute between the prosecution and the defense as to the fact Mora Bitdu was married to Moro Halid before an Imam in Lamitan of this Province of Zamboanga in accordance with Mohammedan rites more than twelve years ago, and that about seven months ago she was also married to Moro Hajirol before a Hadji in accordance with Mohammedan customs.          It is therefore a fact admitted by both the prosecution and the defense that the accused contracted two marriages, one with Halid and another with Hajirol. She claims, however, that the second marriage contracted by her with Hajirol took place after she had been divorced from her first husband Halid in accordance with Mohammedan customs, said divorce having taken place before Datu Gavino Cuevas, of Isabela de Basilan.          With this defense, two very important questions are raised before this court: first whether or not the alleged divorce took place in accordance with Mohammedan customs, and second, assuming that the divorce took place in accordance with such customs, is such divorce legal?          With reference to the first question, two witnesses testified, one for the prosecution and the other for the defense. The first witness testified that the divorce between Mohammedans in Mindanao may be obtained before any person designated and agreed upon by the parties. The second testified that divorce, like any other act relative to marriage and separation of Mohammedan spouses, is obtained under certain conditions, to wit, the interested parties or the spouses intending to secure a divorce select the person before whom the divorce is to take place, and both parties are represented by persons designated by them:          Chapter IV, section 35 of the Koran says:

          "35. And if you fear a breach between the two, then appoint a judge from his people and judge from her people; if they both desire agreement, Allah will effect harmony between them; surely Allah is knowing; Aware."

          The court is inclined to believe that the testimony of the witness for the defense on this question is more in harmony with the doctrines of the Koran than that of the witness for the prosecution.          Now, has the defense established that the divorce took place in accordance with the commandments of the Koran? The defense presented no evidence to show that the conditions prescribed by the Koran had been complied with by the parties when they obtained their divorce before Datu Cuevas. Said divorce therefore between the defendant and Halid does not satisfy the conditions prescribed by the Koran and consequently said divorce seems to be of doubtful religious validity.          However, even admitting that this divorce was secured in accordance with the conditions prescribed by Mohammedan doctrines, is such divorce legal? The laws governing marriage and its incidents are moral in nature and as such they are laws relating to public policy. In the Philippine Islands we have a law (Act No.

2710) enumerating the causes and the conditions under which divorce may be secured and granted. Any divorce obtained in the Philippine Islands of causes and under conditions other than those enumerated in said law, would have no legal effect. The habits and customs of a people, the dogmas and doctrines of a religion cannot be superior to or have precedence over laws relating to public policy, because as stated above laws relating to marriage and its incidents are normal in nature and as such they affect public policy.          The court therefore is of the opinion that even if the divorce alleged by the defense was secured in conformity with Mohammedan doctrines, such divorce cannot prevail against the Divorce Law of the Philippine Islands prescribing the causes and conditions under which divorce may be obtained. In this case, as above demonstrated, the divorce in question has not been obtained in accordance with the law.          Examined from whatever angle, the divorce alleged by the defense cannot be accepted by this court for the reasons above set forth.          In view of the foregoing facts and considerations, we cannot escape the conclusion that the defendant herein contracted a second marriage without her former marriage having been first dissolved.          In the consideration of this case, however, the court cannot but take into account that the defendant is a Mohammedan woman; and being a follower of Mohammedan doctrines she no doubt contracted the second marriage honestly believing that in doing so she was not committing any violation of the law, although of course her belief does not justify her act.          In view of the foregoing, and it appearing that the defendant is only seventeen years of age and therefore in the opinion of the court it would be more convenient for her to be sent to the Philippine Training School in Mandaluyong, Manila, (Rizal), it is ordered that the accused be sent to said institution, to be kept there until she reaches the age of majority, all the proceedings in this case being hereby suspended.

          The attorney for the defendant alleges that the lower court erred in finding that the accused committed the crime of bigamy, and in ordering her to be sent to the Philippine Training School in Mandaluyong, Rizal.          Appellant's attorney admits that the appellant was twice married as alleged in the information, but contends that she was divorced from first husband in accordance with Mohammedan religious practices, and that said divorce was valid; that if it be true that said divorce is not in accordance with Act No. 2710 of the Philippine Legislature, the appellant is nevertheless not guilty of bigamy, because she believed that she had been validly divorced and had no criminal intent when contracted the second marriage.          The Solicitor-General agrees with the attorney for the appellant, and is of the opinion that the divorce was granted in accordance with the precepts of the Koran and Moro customs and traditions; that fraudulent or criminal intent is an essential element of the crime of bigamy, and that since the appellant believed that her first marriage had been legally dissolved because she had been granted a divorce under the Mohammedan laws, she cannot be considered guilty of the crime with which she is charged.          The Solicitor-General further argues that since it is the practice of the Government not to interfere with the customs of the Moros, especially their religious customs, divorces among them granted in accordance with the Koran ought to be recognized as a matter of public policy.          There is little to add to the well considered decision of the trial judge. It seems to us unnecessary to determine whether or not the divorce in question was granted in accordance with the Mohammedan religious practices, as to which there seems to exist considerable uncertainty, because in our view of the case a valid divorce can be granted only by the courts and for the reasons specified in Act No. 2710. It is not claimed that the appellant was divorced from her first husband in accordance with said Act.lawphil.net          In the case of Francisco vs. Tayao (50 Phil., 42), it was held that in the Philippines the causes for divorce are prescribed by statute or Act No. 2710 and that of the wife or concubinage on the part of the husband.          In the recent decision of People vs. Bituanan (Moro), (56 Phil., 23), where the defendant and a Moro woman were married by a datu according to Moro customs and usages and afterwards divorced by the datu according to the same customs and usages, it was held that the marriage performed according to the rites of the Mohammedan religion was valid, and assumed, for the purpose of that case, that the defendant and his wife were not legally divorced.          Section 25 of the Marriage Law (Act No. 3613) provides that marriages between Mohammedans may be performed in accordance with the rites or practice of their religion, but there is no provision of law which authorizes the granting of divorces in accordance with the rites or practices of their religion.          A divorce cannot be had except in that court upon which the state has conferred jurisdiction, and then only for those causes and with those formalities which the state has by statute prescribed (19 C.J., 19).          It is conceded in all jurisdictions that public policy, good morals, and the interests of society require that the marriage relation should be sounded with every safeguard and its severance allowed only in the manner prescribed and for the causes specified by law. And the parties can waive nothing essential to the validity of the proceedings (19 C.J., 20).          With respect to the contention that the appellant acted in good faith in contracting second marriage, believing that she had been validly divorced from her first husband, it is sufficient to say that every one is presumed to know the law, and the fact that one does not know that is act constitutes a violation of the law does not exempt him from the consequences thereof. The case of the United States vs. Enriquez (32 Phil., 202), cited by the Solicitor-General is not in point. In that case the defendant left his wife in the municipality of Orion, Province of Bataan, in the year 1895, going to the Province of Laguna as a postal employee. When he returned in 1901, after the revolution, he could not find his wife or obtain the slightest information as to her whereabouts notwithstanding his persistent and diligent search. Believing her to be dead, he contracted a second marriage in Orion on February 1st, 1905. In December, 1913, his first wife made her appearance in Orion. She had been in Manila, Tarlac, and Victoria from 1895 to 1913. The defendant was acquitted on appeal to this court because no fraudulent intent could be charged to him. He believed that his first wife was dead, and that was a well-founded belief, although it was subsequently to be erroneous. It was a mistake of fact and not of law.

          The decisions of American courts, cited by the Solicitor- General, sustaining the validity of divorces granted to members of Indian tribes according to the customs and usages thereof, are likewise not in point. The various Indian tribes in the United States were dealt with by the Government of the United States as independent nations and treaties were made with them.          As to the suggestion of the Solicitor-General that divorces among the Moros according to their religious practices should be recognized as valid as a matter of public policy, because in the contrary case, "there would be no end of criminal prosecutions, for polygamy still abounds among them, and the remarriages of people divorced under the Koran are the order of the day," that is a matter for the consideration of the Legislature and the Governor-General.          The decision appealed from is affirmed, with the costs against the appellant.Street, Malcolm, Abad Santos, and Butte, JJ., concur.

G.R. No. L-15645             January 31, 1964PAZ P. ARRIETA and VITALIADO ARRIETA, plaintiffs-appellees, vs.NATIONAL RICE AND CORN CORPORATION, defendant-appellant, MANILA UNDERWRITERS INSURANCE CO., INC., defendant-appellee.

REGALA, J.:This is an appeal of the defendant-appellant NARIC from the decision of the trial court dated February 20, 1958, awarding to the plaintiffs-appellees the amount of $286,000.00 as damages for breach of contract and dismissing the counterclaim and third party complaint of the defendant-appellant NARIC.In accordance with Section 13 of Republic Act No. 3452, "the National Rice and Corn Administration (NARIC) is hereby abolished and all its assets, liabilities, functions, powers which are not inconsistent with the provisions of this Act, and all personnel are transferred "to the Rice and Corn Administration (RCA).All references, therefore, to the NARIC in this decision must accordingly be adjusted and read as RCA pursuant to the aforementioned law. On May 19, 1952, plaintiff-appellee participated in the public bidding called by the NARIC for the supply of 20,000 metric tons of Burmese rice. As her bid of $203.00 per metric ton was the lowest, she was awarded the contract for the same. Accordingly, on July 1, 1952, plaintiff-appellee Paz P. Arrieta and the appellant corporation entered into a Contract of Sale of Rice, under the terms of which the former obligated herself to deliver to the latter 20,000 metric tons of Burmess Rice at $203.00 per metric ton, CIF Manila. In turn, the defendant corporation committed itself to pay for the imported rice "by means of an irrevocable, confirmed and assignable letter of credit in U.S. currency in favor of the plaintiff-appellee and/or supplier in Burma, immediately." Despite the commitment to pay immediately "by means of an irrevocable, confirmed and assignable Letter of Credit," however, it was only on July 30, 1952, or a full month from the execution of the contract, that the defendant corporation, thru its general manager, took the first to open a letter of credit by forwarding to the Philippine National Bank its Application for Commercial Letter Credit. The application was accompanied by a transmittal letter, the relevant paragraphs of which read:

In view of the fact that we do not have sufficient deposit with your institution with which to cover the amount required to be deposited as a condition for the opening of letters of credit, we will appreciate it if this application could be considered special case.We understand that our supplier, Mrs. Paz P. Arrieta, has a deadline to meet which is August 4, 1952, and in order to comply therewith, it is imperative that the L/C be opened prior to that date. We would therefore request your full cooperation on this matter.

On the same day, July 30, 1952, Mrs. Paz P. Arrieta thru counsel, advised the appellant corporation of the extreme necessity for the immediate opening of the letter credit since she had by then made a tender to her supplier in Rangoon, Burma, "equivalent to 5% of the F.O.B. price of 20,000 tons at $180.70 and in compliance with the regulations in Rangoon this 5% will be confiscated if the required letter of credit is not received by them before August 4, 1952." On August 4, 1952, the Philippine National Bank informed the appellant corporation that its application, "for a letter of credit for $3,614,000.00 in favor of Thiri Setkya has been approved by the Board of Directors with the condition that marginal cash deposit be paid and that drafts are to be paid upon presentment." (Exh. J-pl.; Exh. 10-def., p. 19, Folder of Exhibits). Furthermore, the Bank represented that it "will hold your application in abeyance pending compliance with the above stated requirement."As it turned out, however, the appellant corporation not in any financial position to meet the condition. As matter of fact, in a letter dated August 2, 1952, the NARIC bluntly confessed to the appellee its dilemma: "In this connection, please be advised that our application for opening of the letter of credit has been presented to the bank since July 30th but the latter requires that we first deposit 50% of the value of the letter amounting to aproximately $3,614,000.00 which we are not in a position to meet." (Emphasis supplied. Exh. 9-Def.; Exh. 1-Pe., p. 18, Folder of Exhibits)Consequently, the credit instrument applied for was opened only on September 8, 1952 "in favor of Thiri Setkya, Rangoon, Burma, and/or assignee for $3,614,000.00," (which is more than two months from the execution of the contract) the party named by the appellee as beneficiary of the letter of credit.1äwphï1.ñëtAs a result of the delay, the allocation of appellee's supplier in Rangoon was cancelled and the 5% deposit, amounting to 524,000 kyats or approximately P200,000.00 was forfeited. In this connection, it must be made of record that although the Burmese authorities had set August 4, 1952, as the deadline for the remittance of the required letter of credit, the cancellation of the allocation and the confiscation of the 5% deposit were not effected until August 20, 1952, or, a full half month after the expiration of the deadline. And yet, even with the 15-day grace, appellant corporation was unable to make good its commitment to open the disputed letter of credit.

The appellee endeavored, but failed, to restore the cancelled Burmese rice allocation. When the futility of reinstating the same became apparent, she offered to substitute Thailand rice instead to the defendant NARIC, communicating at the same time that the offer was "a solution which should be beneficial to the NARIC and to us at the same time." (Exh. X-Pe., Exh. 25—Def., p. 38, Folder of Exhibits). This offer for substitution, however, was rejected by the appellant in a resolution dated November 15, 1952.On the foregoing, the appellee sent a letter to the appellant, demanding compensation for the damages caused her in the sum of $286,000.00, U.S. currency, representing unrealized profit. The demand having been rejected she instituted this case now on appeal.At the instance of the NARIC, a counterclaim was filed and the Manila Underwriters Insurance Company was brought to the suit as a third party defendant to hold it liable on the performance bond it executed in favor of the plaintiff-appellee.We find for the appellee.It is clear upon the records that the sole and principal reason for the cancellation of the allocation contracted by the appellee herein in Rangoon, Burma, was the failure of the letter of credit to be opened with the contemplated period. This failure must, therefore, be taken as the immediate cause for the consequent damage which resulted. As it is then, the disposition of this case depends on a determination of who was responsible for such failure. Stated differently, the issue is whether appellant's failure to open immediately the letter of credit in dispute amounted to a breach of the contract of July 1, 1952 for which it may be held liable in damages.Appellant corporation disclaims responsibility for the delay in the opening of the letter of credit. On the contrary, it insists that the fault lies with the appellee. Appellant contends that the disputed negotiable instrument was not promptly secured because the appellee , failed to seasonably furnish data necessary and required for opening the same, namely, "(1) the amount of the letter of credit, (2) the person, company or corporation in whose favor it is to be opened, and (3) the place and bank where it may be negotiated." Appellant would have this Court believe, therefore, that had these informations been forthwith furnished it, there would have been no delay in securing the instrument.Appellant's explanation has neither force nor merit. In the first place, the explanation reaches into an area of the proceedings into which We are not at liberty to encroach. The explanation refers to a question of fact. Nothing in the record suggests any arbitrary or abusive conduct on the part of the trial judge in the formulation of the ruling. His conclusion on the matter is sufficiently borne out by the evidence presented. We are denied, therefore, the prerogative to disturb that finding, consonant to the time-honored tradition of this Tribunal to hold trial judges better situated to make conclusions on questions of fact. For the record, We quote hereunder the lower court's ruling on the point:

The defense that the delay, if any in opening the letter of credit was due to the failure of plaintiff to name the supplier, the amount and the bank is not tenable. Plaintiff stated in Court that these facts were known to defendant even before the contract was executed because these facts were necessarily revealed to the defendant before she could qualify as a bidder. She stated too that she had given the necessary data immediately after the execution of Exh. "A" (the contract of July 1, 1952) to Mr. GABRIEL BELMONTE, General Manager of the NARIC, both orally and in writing and that she also pressed for the opening of the letter of credit on these occasions. These statements have not been controverted and defendant NARIC, notwithstanding its previous intention to do so, failed to present Mr. Belmonte to testify or refute this. ...

Secondly, from the correspondence and communications which form part of the record of this case, it is clear that what singularly delayed the opening of the stipulated letter of credit and which, in turn, caused the cancellation of the allocation in Burma, was the inability of the appellant corporation to meet the condition importation by the Bank for granting the same. We do not think the appellant corporation can refute the fact that had it been able to put up the 50% marginal cash deposit demanded by the bank, then the letter of credit would have been approved, opened and released as early as August 4, 1952. The letter of the Philippine National Bank to the NARIC was plain and explicit that as of the said date, appellant's "application for a letter of credit ... has been approved by the Board of Directors with the condition that 50% marginal cash deposit be paid and that drafts are to be paid upon presentment." (Emphasis supplied) The liability of the appellant, however, stems not alone from this failure or inability to satisfy the requirements of the bank. Its culpability arises from its willful and deliberate assumption of contractual obligations even as it was well aware of its financial incapacity to undertake the prestation. We base this judgment upon the letter which accompanied the application filed by the appellant with the bank, a part of which letter was quoted earlier in this decision. In the said accompanying correspondence, appellant admitted and owned that it did "not have sufficient deposit with your institution (the PNB) with which to cover the amount required to be deposited as a condition for the opening of letters of credit. ... .A number of logical inferences may be drawn from the aforementioned admission. First, that the appellant knew the bank requirements for opening letters of credit; second, that appellant also knew it could not meet those requirement. When, therefore, despite this awareness that was financially incompetent to open a letter of credit immediately, appellant agreed in paragraph 8 of the contract to pay immediately "by means of an irrevocable, confirm and assignable letter of credit," it must be similarly held to have bound itself to answer for all and every consequences that would result from the representation. aptly observed by the trial court:

... Having called for bids for the importation of rice involving millions, $4,260,000.00 to be exact, it should have a certained its ability and capacity to comply with the inevitably requirements in cash to pay for such importation. Having announced the bid, it must be deemed to have impliedly assured suppliers of its capacity and facility to finance the importation within the required period, especially since it had imposed the supplier the 90-day period within which the shipment of the rice must be brought into the Philippines. Having entered in the contract, it should have taken steps immediately to arrange for the letter of credit for the large amount involved and inquired into the possibility of its issuance.

In relation to the aforequoted observation of the trial court, We would like to make reference also to Article 11 of the Civil Code which provides:

Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable in damages.

Under this provision, not only debtors guilty of fraud, negligence or default in the performance of obligations a decreed liable; in general, every debtor who fails in performance of his obligations is bound to indemnify for the losses and damages caused thereby (De la Cruz Seminary of Manila, 18 Phil. 330; Municipality of Moncada v. Cajuigan, 21 Phil. 184; De la Cavada v. Diaz, 37 Phil. 982; Maluenda & Co. v. Enriquez, 46 Phil. 916; Pasumil v. Chong, 49 Phil. 1003; Pando v. Gimenez, 54 Phil. 459; Acme Films v. Theaters Supply, 63 Phil. 657). The phrase "any manner contravene the tenor" of the obligation includes any illicit act which impairs the strict and faithful fulfillment of the obligation or every kind or defective performance. (IV Tolentino, Civil Code of the Philippines, citing authorities, p. 103.) The NARIC would also have this Court hold that the subsequent offer to substitute Thailand rice for the originally contracted Burmese rice amounted to a waiver by the appellee of whatever rights she might have derived from the breach of the contract. We disagree. Waivers are not presumed, but must be clearly and convincingly shown, either by express stipulation or acts admitting no other reasonable explanation. (Ramirez v. Court of Appeals, 52 O.G. 779.) In the case at bar, no such intent to waive has been established.We have carefully examined and studied the oral and documentary evidence presented in this case and upon which the lower court based its award. Under the contract, the NARIC bound itself to buy 20,000 metric tons of Burmese rice at "$203.00 U.S. Dollars per metric ton, all net shipped weight, and all in U.S. currency, C.I.F. Manila ..." On the other hand, documentary and other evidence establish with equal certainty that the plaintiff-appellee was able to secure the contracted commodity at the cost price of $180.70 per metric ton from her supplier in Burma. Considering freights, insurance and charges incident to its shipment here and the forfeiture of the 5% deposit, the award granted by the lower court is fair and equitable. For a clearer view of the equity of the damages awarded, We reproduce below the testimony of the appellee, adequately supported by the evidence and record:

Q. Will you please tell the court, how much is the damage you suffered?A. Because the selling price of my rice is $203.00 per metric ton, and the cost price of my rice is $180.00 We had to pay also $6.25 for shipping and about $164 for insurance. So adding the cost of the rice, the freight, the insurance, the total would be about $187.99 that would be $15.01 gross profit per metric ton, multiply by 20,000 equals $300,200, that is my supposed profit if I went through the contract.

The above testimony of the plaintiff was a general approximation of the actual figures involved in the transaction. A precise and more exact demonstration of the equity of the award herein is provided by Exhibit HH of the plaintiff and Exhibit 34 of the defendant, hereunder quoted so far as germane.

It is equally of record now that as shown in her request dated July 29, 1959, and other communications subsequent thereto for the opening by your corporation of the required letter of credit, Mrs. Arrieta was supposed to pay her supplier in Burma at the rate of One Hundred Eighty Dollars and Seventy Cents ($180.70) in U.S. Currency, per ton plus Eight Dollars ($8.00) in the same currency per ton for shipping and other handling expenses, so that she is already assured of a net profit of Fourteen Dollars and Thirty Cents ($14.30), U.S., Currency, per ton or a total of Two Hundred and Eighty Six Thousand Dollars ($286,000.00), U.S. Currency, in the aforesaid transaction. ...

Lastly, herein appellant filed a counterclaim asserting that it has suffered, likewise by way of unrealized profit damages in the total sum of $406,000.00 from the failure of the projected contract to materialize. This counterclaim was supported by a cost study made and submitted by the appellant itself and wherein it was illustrated how indeed had the importation pushed thru, NARIC would have realized in profit the amount asserted in the counterclaim. And yet, the said amount of P406,000.00 was realizable by appellant despite a number of expenses which the appellee under the contract, did not have to incur. Thus, under the cost study submitted by the appellant, banking and unloading charges were to be shouldered by it, including an Import License Fee of 2% and superintendence fee of $0.25 per metric ton. If the NARIC stood to profit over P400 000.00 from the disputed transaction inspite of the extra expenditures from which the herein appellee was exempt, we are convicted of the fairness of the judgment presently under appeal. In the premises, however, a minor modification must be effected in the dispositive portion of the decision appeal from insofar as it expresses the amount of damages in U.S. currency and not in Philippine Peso. Republic Act 529 specifically requires the discharge of obligations only "in any coin or currency which at the time of payment is legal tender for public and private debts." In view of that law, therefore, the award should be converted into and expressed in Philippine Peso. This brings us to a consideration of what rate of exchange should apply in the conversion here decreed. Should it be at the time of the breach, at the time the obligation was incurred or at the rate of exchange prevailing on the promulgation of this decision.In the case of Engel v. Velasco & Co., 47 Phil. 115, We ruled that in an action for recovery of damages for breach of contract, even if the obligation assumed by the defendant was to pay the plaintiff a sum of money expressed in American currency, the indemnity to be allowed should be expressed in Philippine currency at the rate of exchange at the time of the judgment rather than at the rate of exchange prevailing on the date of defendant's breach. This ruling, however, can neither be applied nor extended to the case at bar for the same was laid down when there was no law against stipulating foreign currencies in Philippine contracts. But now we have Republic Act No. 529 which expressly declares such stipulations as contrary to public policy, void and of no effect. And, as We already pronounced in the case of Eastboard Navigation, Ltd. v. Juan Ysmael & Co., Inc., G.R. No. L-9090, September 10, 1957, if there is any agreement to pay an obligation in a currency other than Philippine legal tender, the same is null and void as contrary to public policy (Republic Act 529), and the most that could be demanded is to pay said obligation in Philippine currency "to be measured in the prevailing rate of exchange at the time the obligation was incurred (Sec. 1, idem)."

UPON ALL THE FOREGOING, the decision appealed from is hereby affirmed, with the sole modification that the award should be converted into the Philippine peso at the rate of exchange prevailing at the time the obligation was incurred or on July 1, 1952 when the contract was executed. The appellee insurance company, in the light of this judgment, is relieved of any liability under this suit. No pronouncement as to costs.

G.R. No. 108947 September 29, 1997ROLANDO SANCHEZ, FLORIDA MIERLY SANCHEZ, ALFREDO T. SANCHEZ and MYRNA T. SANCHEZ, petitioners, vs.THE HONORABLE COURT OF APPEALS, ROSALIA S. LUGOD, ARTURO S. LUGOD, EVELYN LUGOD-RANISES and ROBERTO S. LUGOD, respondents. PANGANIBAN, J.:Is a petition for certiorari, in lieu of appeal, the proper remedy to correct orders of a probate court nullifying certain deeds of sale and, thus, effectively passing upon title to the properties subject of such deeds? Is a compromise agreement partitioning inherited properties valid even without the approval of the trial court hearing the intestate estate of the deceased owner?

The CaseThese questions are answered by this Court as it resolves the petition for review on certiorari before us assailing the November 23, 1992 Decision 1 of the Court of Appeals 2 in CA-G.R. SP No. 28761 which annulled the decision 3 of the trial court 4 and which declared the compromise agreement among the parties valid and binding even without the said trial court's approval. The dispositive portion of the assailed Decision reads:

WHEREFORE, for the reasons hereinabove set forth and discussed, the instant petition is GRANTED and the challenged decision as well as the subsequent orders of the respondent court are ANNULLED and SET ASIDE. The temporary restraining order issued by this Court on October 14, 1992 is made PERMANENT. The compromise agreement dated October 30, 1969 as modified by the memorandum of agreement of April 13, 1970 is DECLARED valid and binding upon herein parties. And Special Proceedings No. 44-M and 1022 are deemed CLOSED and TERMINATED.SO ORDERED. 5

The Antecedent FactsThe facts are narrated by the Court of Appeals as follows:

[Herein private respondent] Rosalia S. Lugod is the only child of spouses Juan C. Sanchez and Maria Villafranca while [herein private respondents] Arturo S. Lugod, Evelyn L. Ranises and Roberto S. Lugod are the legitimate children of [herein private respondent] Rosalia.[Herein petitioners] Rolando, Florida Mierly, Alfredo and Myrna, all surnamed Sanchez, are the illegitimate children of Juan C. Sanchez.Following the death of her mother, Maria Villafranca, on September 29, 1967, [herein private respondent] Rosalia filed on January 22, 1968, thru counsel, a petition for letters of administration over the estate of her mother and the estate of her father, Juan C. Sanchez, who was at the time in state of senility (Annex "B", Petition).On September 30, 1968, [herein private respondent] Rosalia, as administratrix of the intestate estate of her mother, submitted an inventory and appraisal of the real and personal estate of her late mother (Annex "C", Petition).Before the administration proceedings Special in Proceedings No. 44-M could formally be terminated and closed, Juan C. Sanchez, [herein private respondent] Rosalia's father, died on October 21, 1968.On January 14, 1969, [herein petitioners] as heirs of Juan C. Sanchez, filed a petition for letters of administration (Special Proceedings No. 1022) over the intestate estate of Juan C. Sanchez, which petition was opposed by (herein private respondent) Rosalia. 6

On October 30, 1969, however, [herein private respondent] Rosalia and [herein petitioners] assisted by their respective counsels executed a compromise agreement (Annex "D", Petition) wherein they agreed to divide the properties enumerated therein of the late Juan C. Sanchez.On November 3, 1969, petitioner Rosalia was appointed by [the trial court], and took her oath as the administratrix of her father's intestate estate.On January 19, 1970, [herein petitioners] filed a motion to require administratrix, [herein private respondent] Rosalia, to deliver deficiency of 24 hectares and or to set aside compromise agreement (Annex "E", Petition).Under date of April 13, 1970, (herein private respondent) Rosalia and [herein petitioners] entered into and executed a memorandum of agreement which modified the compromise agreement (Annex "F". Petition)On October 25, 1979, or nine years later, [herein petitioners] filed, thru counsel, a motion to require [herein private respondent] Rosalia to submit a new inventory and to render an accounting over properties not included in the compromise agreement (Annex "G", Petition). They likewise filed a motion to defer the approval of the compromise agreement (Annex "H", Ibid), in which they prayed for the annulment of the compromise agreement on the ground of fraud.On February 4, 1980, however, counsel for [herein petitioners] moved to withdraw his appearance and the two motions he flied, Annex "G" and "H" (Annex "I", Petition).

On February 28, 1980, the [trial] court issued an order directing [herein private respondent] Rosalia to submit a new inventory of properties under her administration and an accounting of the fruits thereof, which prompted [herein private respondent] Rosalia to file a rejoinder on March 31, 1980 (Annex "K", Petition).On May 12, 1980, [herein petitioners], thru new counsel, filed a motion to change administratrix (Annex "L", Petition) to which [herein private respondent] Rosalia filed an opposition (Annex "M", Ibid).The parties were subsequently ordered to submit their respective position papers, which they did (Annexes "N" and "O", Petition). On September 14, 1989, former counsel of (herein petitioners) entered his re-appearance as counsel for (herein petitioners).On the bases of memoranda submitted by the parties, the [trial court], this time presided by Judge Vivencio A. Galon, promulgated its decision on June 26, 1991, the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered as follows by declaring and ordering:1. That the entire intestate estate of Maria Villafranca Sanchez under Special Proceedings No. 44-M consists of all her paraphernal properties and one-half (1/2) of the conjugal properties which must be divided equally between Rosalia Sanchez de Lugod and Juan C. Sanchez;2. That the entire intestate estate of Juan C. Sanchez under Special Proceedings No. 1022 consists of all his capital properties, one-half (1/2) from the conjugal partnership of gains and one-half (1/2) of the intestate estate of Maria Villafranca under Special Proceedings No. 44-M;3. That one-half (1/2) of the entire intestate estate of Juan C. Sanchez shall be inherited by his only legitimate daughter, Rosalia V. Sanchez de Lugod while the other one-half (1/2) shall be inherited and be divided equally by, between and among the six (6) illegitimate children, namely: Patricia Alburo, Maria Ramuso Sanchez, Rolando Pedro T. Sanchez, Florida Mierly T. Sanchez, Alfredo T. Sanchez and Myrna T. Sanchez;4. That all the Deed (sic) of Absolute Sales executed by Juan C. Sanchez and Maria Villafranca in favor of Rosalia Sanchez Lugod, Arturo S. Lugod, Evelyn S. Lugod and Roberto S. Lugod on July 26, 1963 and June 26, 1967 are all declared simulated and fictitious and must be subject to collation and partition among all heirs;5. That within thirty (30) days from finality of this decision, Rosalia Sanchez Lugod is hereby ordered to prepare a project of partition of the intestate estate of Juan C. Sanchez under Special Proceedings No. 1022 and distribute and deliver to all heirs their corresponding shares. If she fails to do so within the said thirty (30) days, then a Board of Commissioners is hereby constituted, who are all entitled to honorarium and per diems and other necessary expenses chargeable to the estate to be paid by Administratrix Rosalia S. Lugod, appointing the Community Environment and Natural Resources Officer (CENRO) of Gingoog City as members thereof, with the task to prepare the project of partition and deliver to all heirs their respective shares within ninety (90) days from the finality of said decision;6. That within thirty (30) days from receipt of this decision, Administratrix Rosalia Sanchez Vda. de Lugod is hereby ordered to submit two (2) separate certified true and correct accounting, one for the income of all the properties of the entire intestate estate of Maria Villafranca under Special Proceedings No. 44-M, and another for the properties of the entire intestate estate of Juan C. Sanchez under Special Proceedings No. 1022 duly both signed by her and both verified by a Certified Public Accountant and distribute and deliver to her six (6) illegitimate brothers and sisters in equal shares, one-half (1/2) of the net income of the estate of Juan C. Sanchez from October 21, 1968 up to the finality of this decision;7. For failure to render an accounting report and failure to give cash advances to the illegitimate children of Juan C. Sanchez during their minority and hour of need from the net income of the estate of Juan C. Sanchez, which adversely prejudiced their social standing and pursuit of college education, (the trial court) hereby orders Rosalia Sanchez Vda. de Lugod to pay her six (6) illegitimate brothers and sisters the sum of Five Hundred Thousand (P500,000.00) Pesos, as exemplary damages, and also the sum of One Hundred Fifty Thousand (P150,000.00) Pesos for attorney's fees;8. Upon release of this decision and during its pendency, should appeal be made, the Register of Deeds and Assessors of the Provinces and Cities where the properties of Juan C. Sanchez and Maria Villafranca are located, are all ordered to register and annotate in the title and/or tax declarations, the dispositive portion of this decision for the protection of all heirs and all those who may be concerned.SO ORDERED.

[Herein private respondent] Rosalia filed a motion for reconsideration dated July 17, 1991 (Annex "P", Petition) on August 6, 1991.On August 13, 1991, [herein petitioners] filed a motion for execution and opposition to [herein private respondent] Rosalia's motion for reconsideration (Annex "Q", Petition).On September 3, 1991, [the trial court] issued an Omnibus Order (Annex "S", Petition) declaring, among other things, that the decision at issue had become final and executory.

[Herein private respondent] Rosalia then filed a motion for reconsideration of said Omnibus Order (Annex "T", Petition). Said [herein private respondent] was allowed to file a memorandum in support of her motion (Annex "V", Petition).On June 26, 1991, [the trial court] issued and Order denying petitioner Rosalia's motion for reconsideration (Annex "W", Petition). 7

Thereafter, private respondents elevated the case to the Court of Appeals via a petition for certiorari and contended:I

The [trial court] has no authority to disturb the compromise agreement.II

The [trial court] has arbitrarily faulted [herein private respondent] Rosalia S. Lugod for alleged failure to render an accounting which was impossible.

IIIThe [trial court] acted without jurisdiction in derogation of the constitutional rights of [herein private respondents] Arturo S. Lugod, Evelyn L. Ranises and Roberto S. Lugod when [the trial court] decided to annul the deed of sale between the said [herein private respondents] and Juan C. Sanchez without affording them their day in court.

IV[The trial court judge] defied without rhyme or reason well-established and entrenched jurisprudence when he determined facts sans any evidence thereon.

V[The trial court] grossly misinterpreted [herein private respondent] Rosalia S. Lugod's right to appeal. 8

For clarity's sake, this Court hereby reproduces verbatim the compromise agreement 9 of the parties:COMPROMISE AGREEMENT

COME NOW, the parties in the above-entitled case, motivated by their mutual desire to preserve and maintain harmonious relations between and among themselves, for mutual valuable considerations and in the spirit of good will and fair play, and, for the purpose of this Compromise Agreement, agree to the following:1. That the deceased Juan C. Sanchez who died intestate on October 21, 1968 was legally married to Maria Villafranca de Sanchez, who predeceased her on September 29, 1967, out of whose wedlock Rosalia Sanchez Lugod, Oppositor herein, was born, thus making her the sole and only surviving legitimate heir of her deceased parents;2. That the said deceased Juan C. Sanchez, left illegitimate children, Intervenors-Oppositors and Petitioners, respectively, herein namely;

(1) Patricio Alburo, born out of wedlock on March 17, 1926 at Cebu City, Philippines, to Emilia Alburo;(2) Maria Ramoso Sanchez, born out of wedlock on May 9, 1937 at Gingoog, Misamis Oriental, now, Gingoog City, to Alberta Ramoso;(3) (a) Rolando Pedro Sanchez, born on May 19, 1947,(b) Florida Mierly Sanchez, born on February 16, 1949,(c) Alfredo Sanchez, born on July 21, 1950, and(d) Myrna Sanchez, born on June 16, 1952, all born out of wedlock to Laureta Tampus in Gingoog City, Philippines.

3. That the deceased Juan C. Sanchez left the following properties, to wit:I. SEPARATE CAPITAL OF JUAN C. SANCHEZ

NATURE, DESCRIPTION AND AREA ASSESSED VALUE(1) Agricultural Land. Covered by Tax. Decl. No. 06458, Cad. Lot No. 1041 C-2, located at Murallon, Gingoog City and bounded on the North by Lot Nos. 1033, 1035, 1036, 1037, 1039, 1040, 1042 & 1043; South by Lot No. 1080, 1088, 1087 & 1084; East by Lot Nos. 1089, 1061 & 2319; West by Lot Nos. 954, 1038, 1057 & 1056, containing an area of ONE HUNDRED EIGHTY THREE THOUSAND SIX HUNDRED SEVENTY TWO (183, 672) sq. ms. more or less.

P21,690.00II. CONJUGAL PROPERTY OF JUAN C. SANCHEZ AND MARIA VILLAFRANCA DE SANCHEZ(1) Agricultural Land. Covered by Tax Decl. No. 06447, Cad. Lot No. 2745, C-7 located at Agay-ayan, Gingoog City and bounded on the North by Lot Nos. 2744, 2742, 2748; South by Lot No. 2739; East by Lot No. 2746; West by Lot No. 2741, containing an area of FOURTEEN THOUSAND SEVEN HUNDRED (14,700) sq. ms. more or less.

P1,900.00(2) Agricultural Land. Covered by Tax Decl. No. 06449, Cad, Lot No. 3271 C-7 located at Panyangan, Lanao, Gingoog City and bounded on the North by Lot No. 3270; South by Lot Nos. 2900 & 3462; East by Panyangan River & F. Lumanao; and Part of Lot 3272; and West by Samay Creek, containing an area of ONE HUNDRED FOUR THOUSAND SIX HUNDRED (104,600) sq. ms. more or less.

P11,580.00(3) Agricultural Land. Covered by Tax Decl. No. 06449, Cad. Lot No. 2319, Case 2, located at Murallon, Gingoog City and bounded on the North by Lot No. 1061; South by Hinopolan Creek; East by Lot No. 1044; and West by Lot No. 1041, containing an area of THREE THOUSAND TWO HUNDRED TWENTY FIVE (3,225) sq. ms. more or less.(4) Agricultural Land. Covered by Tax Decl. No. 06452, Cad. Lot No. 3272, C-7 Part 4 located at Panyangan, Lunao, Gingoog City and bounded on the North by Lot Nos. 3270 & 3273; East by

Panyangan River; South by Panyangan River; and West by Lot Nos. 3270 & 3271, containing an area of FIFTY FIVE THOUSAND SIX HUNDRED (55,600) sq. ms. more or less, being claimed by Damian Querubin.

P2,370.00(5) Agricultural Land. Covered by Tax Decl. No. 06453, Cad. Lot No. 3270 Case 7, located at Sunog, Lunao, Gingoog City and bounded on the North by Samay Creek & Lot 3267; South by Lot Nos. 3271 & 3272; East by Lot Nos. 3269 & 3273; and West by Samay Creek, containing an area of FOUR HUNDRED EIGHT THREE THOUSAND SIX HUNDRED (483,600) sq. ms. more or less.

P61,680.00(6) Agricultural Land. Covered by Tax Decl. No. 06457, Cad. Lot No. 3273, C-7 Part 2 located at Panyangan, Lunao, Gingoog City and bounded on the North by Lot No. 3269; South by Lot No. 3272; East by Panyangan River; and West by Lot No. 3270, containing an area of THIRTY FOUR THOUSAND THREE HUNDRED (34,300) sq. ms. more or less, being claimed by Miguel Tuto.

P3,880.00(7) Agricultural Land. Covered by Tax Decl. No. 12000, Cad. Lot No. 2806, Case 7 located at Agayayan, Gingoog City and bounded on the North by Agayayan River; South by Victoriano Barbac; East by Isabelo Ramoso; and West by Restituto Baol, containing an area of SIX THOUSAND SIX HUNDRED SEVENTY SIX (6,676) sq. ms. more or less.

P380.00(8) Agricultural Land. Covered by Tax Decl. No. 12924, Cad. Lot No. 1206 C-1 located at Cahulogan, Gingoog City and bounded on the NW., by Lot No. 1209; SW., by Lot No. 1207; Eastby National Highway; and West by Lot No. 1207; containing an area of FOUR THOUSAND FIVE HUNDRED THIRTEEN (4,513) sq. ms. more or less.

P740.00(9) Agricultural Land. Covered by Tax Decl. No. 12925, Cad. Lot No. 5554, located at Tinaytayan, Pigsalohan, Gingoog City and bounded on the North by Lot Nos. 5559 & 5558; South by Lot No. 3486; East by Lot No. 5555; and West by Lot No. 5355, containing an area of EIGHTEEN THOUSAND FIVE HUNDRED TWENTY EIGHT (18,528) sq. ms. more or less.

P320.00(10) Agricultural Land. Covered by Tax Decl. No. 12926, Cad. Lot No. 5555 C-7 located at Tinaytayan, Pigsalojan, Gingoog City and bounded on the North by Tinaytayan Creek & Lot Nos. 5557 & 5558; South by Lot Nos. 3486, 3487, 3488, 3491 & 3496; East by Cr. & Lot No. 3496; and West by Lot No. 5554, containing an area of SEVENTY SEVEN THOUSAND SEVEN HUNDRED SEVENTY SIX (77,776) sq. ms. more or less.

P1,350.00(11) A Commercial Land. Covered by Tax Decl. No. 06454, Cad. Lot No. 61-C-1 located at Guno-Condeza Sts., Gingoog City and bounded on the North by Lot 64; South by Road-Lot 613 Condeza St; East by Lot Nos. 63, and 62; West by Road-Lot 614-Guno St., containing an area of ONE THOUSAND FORTY TWO (1,042) sq. ms. more or less.

P9,320.00(12) A Commercial Land. Covered by Tax Decl. No. 06484, Lot No. 5, Block 2, located at Cabuyoan, Gingoog City and bounded on the North by Lot No. 4, block 2; South by Lot No. 8, block 2; East by Lot No. 6, block 2, West by Subdivision Road, containing an area of FOUR HUNDRED (400) sq. ms. more or less.

P12,240.00(13) A Commercial Land. Covered by Tax Decl. No. 15798, Block No. 7-A-16-0 located at Cabuyoan, Gingoog City and bounded on the North by Lot No. 7-A-16-0; South by Lot No. 7-16-0; East by Lot No. 7-A-18-Road; West by Lot No. 8, PSU-120704-Julito Arengo vs. Restituto Baol, containing an area of TWO HUNDRED SIXTEEN (216) sq. ms. more or less.

P1,050.00(14) Agricultural Land. Covered by Tax, Decl. No. 06789, Cad. Lot No. 5157-C-7, located at Kiogat, Agayayan, Gingoog City and bounded on the North by Lot No. 5158, 5159, 5156; South by SE-Steep Bank; East by NW, by Lot No. 5158, Villafranca, containing an area of NINETY SIX THOUSAND TWO HUNDRED (96,200) sq. ms. more or less.

P3,370.00III. PERSONAL ESTATE (CONJUGAL)

NATURE AND DESCRIPTION LOCATION APPRAISAL1. Fifty (50) shares of stockRural Bank of Gingoog, Inc.at P100.00 per share P5,000.002. Four (4) shares of Preferred Stockwith San Miguel Corporation 400.00

4. That, the parties hereto have agreed to divide the above-enumerated properties in the following manner, to wit:

(a) To Patricio Alburo, Maria Ramoso Sanchez, Roland Pedro T. Sanchez, Florida Mierly Sanchez, Alfredo T. Sanchez and Myrna T. Sanchez, in equal pro-indiviso shares, considering not only their respective areas but also the improvements existing thereon, to wit:

Agricultural Land. Covered by Tax Decl. No. 06453, Cad. Lot No. 3270 Case 7, located at Sunog, Lunao, Gingoog City and bounded on the North by Samay Creek & Lot 3267; South by Lot Nos. 3271 and 3272; East by Lot Nos. 3269 & 3273; and West by Samay Creek, containing an area of FOUR HUNDRED EIGHTY THREE THOUSAND SIX HUNDRED (483,600) sq. ms. and assessed in the sum of P61,680.00.(b) To Rosalia Sanchez Lugod all the rest of the properties, both real and personal, enumerated above with the exception of the following:

(1) Two Preferred Shares of Stock in the San Miguel Corporation, indicated in San Miguel Corporation Stock Certificate No. 30217, which two shares she is ceding in favor of Patricio Alburo;(2) The house and lot designated as Lot No. 5, Block 2 together with the improvements thereon and identified as parcel No. II-12, lot covered by Tax Decl. No. 15798 identified as Parcel No. II-13 in the above enumerated, and Cad. Lot No. 5157-C-7 together with the improvements thereon, which is identified as parcel No. II-14 of the above-enumeration of properties, which said Rosalia S. Lugod is likewise ceding and renouncing in favor of Rolando Pedro, Florida Mierly, Alfredo and Myrna, all surnamed Sanchez, in equal pro-indiviso shares;

5. That Rolando Pedro, Florida Mierly, Alfredo and Myrna, all surnamed Sanchez hereby acknowledge to have received jointly and severally in form of advances after October 21, 1968 the aggregate sum of EIGHT THOUSAND FIVE HUNDRED THIRTY-THREE PESOS (P8,533.94) and NINETY-FOUR CENTAVOS; 6. That the parties hereto likewise acknowledge and recognize in the indebtedness of the deceased Juan G. Sanchez and his deceased wife Maria Villafranca Sanchez to the Lugod Enterprises, Inc., in the sum of P43,064.99;7. That the parties hereto shall be responsible for the payment of the estate and inheritance taxes proportionate to the value of their respective shares as may be determined by the Bureau of Internal Revenue and shall likewise be responsible for the expenses of survey and segregation of their respective shares;8. That Patricio Alburo, Maria Ramoso Sanchez, Roland Pedro Sanchez, Florida Mierly Sanchez, Alfredo Sanchez and Myrna Sanchez hereby waive, relinquish and renounce, jointly and individually, in a manner that is absolute and irrevocable, all their rights and interests, share and participation which they have or might have in all the properties, both real and personal, known or unknown and/or which may not be listed herein, or in excess of the areas listed or mentioned herein, and/or which might have been, at one time or another, owned by, registered or placed in the name of either of the spouses Juan C. Sanchez or Maria Villafranca de Sanchez or both, and which either one or both might have sold, ceded, transferred, or donated to any person or persons or entity and which parties hereto do hereby confirm and ratify together with all the improvements thereon, as well as all the produce and proceeds thereof, and particularly of the properties, real and personal listed herein, as well as demandable obligations due to the deceased spouses Juan C. Sanchez, before and after the death of the aforementioned spouses Juan C. Sanchez and Maria Villafranca de Sanchez, in favor of oppositor Rosalia S. Lugod;9. That the expenses of this litigation including attorney's fees shall be borne respectively by the parties hereto;10. That Laureta Tampus for herself and guardian ad-litem of her minor children, namely: Florida Mierly, Alfredo, and Myrna, all surnamed Sanchez, hereby declare that she has no right, interest, share and participation whatsoever in the estate left by Juan C. Sanchez and/or Maria Villafranca de Sanchez, or both, and that she likewise waives, renounces, and relinquishes whatever rigid, share, participation or interest therein which she has or might have in favor of Rosalia S. Lugod;11. That, the parties hereto mutually waive and renounce in favor of each other any whatever claims or actions, arising from, connected with, and as a result of Special Proceedings Nos. 44-M and 1022 of the Court of First Instance of Misamis Oriental, Rosalia S. Lugod, warranting that the parcel of land ceded to the other parties herein contains 48 hectares and 36 ares.12. That, Rosalia S. Lugod shall assume as she hereby assumes the payment to Lugod Enterprises, Inc., of the sum of P51,598.93 representing the indebtedness of the estate of Juan C. Sanchez and Maria Villafranca de Sanchez and the advances made to Rolando Pedro, Mierly, Alfredo, and Myna all surnamed Sanchez, mentioned in paragraphs 5 hereto agree to have letters of administration issued in favor of Rosalia S. Lugod without any bond.That Rosalia S. Lugod likewise agrees to deliver possession and enjoyment of the parcel of land herein ceded to petitioners and intervenors immediately after the signing of this agreement and that the latter also mutually agree among themselves to have the said lot subdivided and partitioned immediately in accordance with the proportion of one sixth (1/6) part for every petitioner and intervenor and that in the meantime that the partition and subdivision is not yet effected, the administrations of said parcel of land shall be vested jointly with Laureta Tampos, guardian ad litem of

petitioners and Maria Ramoso, one of the intervenors who shall see to it that each petitioner and intervenor is given one sixth (1/6) of the net proceeds of all agricultural harvest made thereon.WHEREFORE, it is most respectfully prayed that the foregoing compromise agreement be approved.Medina, Misamis Oriental, October 30, 1969.(Sgd.) (Sgd.)PATRICIO ALBURO ROSALIA S. LUGODIntervenor-Oppositor Oppositor(Sgd.)MARIA RAMOSO SANCHEZ ASSISTED BY:Intervenor-Oppositor(Sgd.)ASSISTED BY: PABLO S. REYESR-101-Navarro Bldg.(Sgd.) Don A. Velez St.REYNALDO L. FERNANDEZ Cagayan de Oro CityGingoong City(Sgd.) (Sgd.)ROLANDO PEDRO T. SANCHEZ ALFREDO T. SANCHEZPetitioner Petitioner(Sgd.) (Sgd.)FLORIDA MIERLY T. SANCHEZ MYRNA T. SANCHEZPetitioner Petitioner(Sgd.)LAURETA TAMPUSFor herself and as GuardianAd-Litem of the minorsFlorida Mierly, Alfredo, andMyrna, all surnamed SanchezASSISTED BY:TEOGENES VELEZ, JR.Counsel for PetitionersCagayan de Oro CityThe Clerk of CourtCourt of First InstanceBranch III, Medina, Mis. Or.Greetings:Please set the foregoing compromise agreement for the approval of the Honorable Court today, Oct. 30, 1969.(Sgd.) (Sgd.) (Sgd.)PABLO S. REYES TEOGENES VELEZ, JR. REYNALDO L. FERNANDEZ

The Memorandum of Agreement dated April 13, 1970, which the parties entered into with the assistance of their counsel, amended the above compromise. (It will be reproduced later in our discussion of the second issue raised by the petitioners.)The Court of Appeals, in a Resolution 10 dated September 4, 1992, initially dismissed private respondents' petition. Acting, however, on a motion for reconsideration and a supplemental motion for reconsideration dated September 14, 1992 and September 25, 1992, respectively, 11 Respondent Court thereafter reinstated private respondents' petition in a resolution 12 dated October 14, 1992.In due course, the Court of Appeals, as earlier stated, rendered its assailed Decision granting the petition, setting aside the trial court's decision and declaring the modified compromise agreement valid and binding.Hence, this appeal to this Court under Rule 45 of the Rules of Court.

The IssuesIn this appeal, petitioners invite the Court's attention to the following issues:

IThe respondent court grossly erred in granting the petition for certiorari under Rule 65 considering that the special civil action of certiorari may not be availed of as a substitute for an appeal and that, in any event, the grounds invoked in the petition are merely alleged errors of judgment which can no longer be done in view of the fact that the decision of the lower court had long become final and executory.

IIPrescinding from the foregoing, the respondent court erred in annulling the decision of the lower court for the reason that a compromise agreement or partition as the court construed the same to be, executed by the parties on October 30, 1969 was void and unenforceable the same not having been approved by the intestate court and that the same having been seasonably repudiated by petitioners on the ground of fraud.

IIIThe respondent court grossly erred in ignoring and disregarding findings of facts of the lower court that the alleged conveyances of real properties made by the spouses Juan C. Sanchez and Maria Villafranca just before their death in favor of their daughter and grandchildren, private respondents herein, are tainted with fraud or made in contemplation of death, hence, collationable.

IVIn any event, the respondent court grossly erred in treating the lower court's declaration of fictitiousness of the deeds of sale as a final adjudication of annulment.

VThe respondent court grossly erred in declaring the termination of the intestate proceedings even as the lower court had not made a final and enforceable distribution of the estate of the deceased Juan C. Sanchez.

VIPrescinding from the foregoing, the respondent court grossly erred in not at least directing respondent Rosalia S. Lugod to deliver the deficiency of eight (8) hectares due petitioners under the compromise agreement and memorandum of agreement, and in not further directing her to include in the inventory properties conveyed under the deeds of sale found by the lower court to be part of the estate of Juan C. Sanchez. 13

The salient aspects of some issues are closely intertwined; hence, they are hereby consolidated into three main issues specifically dealing with the following subjects: (1) the propriety of certiorari as a remedy before the Court of Appeals, (2) the validity of the compromise agreement, and (3) the presence of fraud in the execution of the compromise and/or collation of the properties sold.

The Court's RulingThe petition is not meritorious.

First Issue: Propriety of CertiorariBefore the Court of Appeals

Since private respondents had neglected or failed to file an ordinary appeal within the reglementary period, petitioners allege that the Court of Appeals erred in allowing private respondent's recourse to Rule 65 of the Rules of Court. They contend that private respondents' invocation of certiorari was "procedurally defective." 14 They further argue that private respondents, in their petition before the Court of Appeals, alleged errors of the trial court which, being merely errors of judgment and not errors of jurisdiction, were not correctable by certiorari. 15 This Court disagrees.Doctrinally entrenched is the general rule that certiorari is not a substitute for a lost appeal. However, Justice Florenz D. Regalado lists several exceptions to this rule, viz.: "(1) where the appeal does not constitute a speedy and adequate remedy (Salvadades vs. Pajarillo, et al., 78 Phil. 77), as where 33 appeals were involved from orders issued in a single proceeding which will inevitably result in a proliferation of more appeals (PCIB vs. Escolin, et al., L-27860 and 27896, Mar. 29, 1974); (2) where the orders were also issued either in excess of or without jurisdiction (Aguilar vs. Tan, L-23600, Jun 30, 1970, Cf. Bautista, et al. vs. Sarmiento, et al., L-45137, Sept. 231985); (3) for certain special consideration, as public welfare or public policy (See Jose vs. Zulueta, et al. 16598, May 31, 1961 and the cases cited therein); (4) where in criminal actions, the court rejects rebuttal evidence for the prosecution as, in case of acquittal, there could be no remedy (People vs. Abalos, L029039, Nov. 28, 1968); (5) where the order is a patent nullity (Marcelo vs. De Guzman, et al., L-29077, June 29, 1982); and (6) where the decision in the certiorari case will avoid future litigations (St. Peter Memorial Park, Inc. vs. Campos, et al., L-38280, Mar. 21, 1975)." 16 Even in a case where the remedy of appeal was lost, the Court has issued the writ of certiorari where the lower court patently acted in excess of or outside its jurisdiction, 17 as in the present case.A petition for certiorari under Rule 65 of the Rules of Court is appropriate and allowable when the following requisites concur: (1) the writ is directed against a tribunal, board or officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law. 18 After a thorough review of the case at bar, we are convinced that all these requirements were met.As a probate court, the trial court was exercising judicial functions when it issued its assailed resolution. The said court had jurisdiction to act in the intestate proceedings involved in this case with the caveat that, due to its limited jurisdiction, it could resolve questions of title only provisionally. 19 It is hornbook doctrine that "in a special proceeding for the probate of a will, the question of ownership is an extraneous matter which the probate court cannot resolve with finality. This pronouncement no doubt applies with equal force to an intestate proceeding as in the case at bar." 20

In the instant case, the trial court rendered a decision declaring as simulated and fictitious all the deeds of absolute sale which, on July 26, 1963 and June 26, 1967, Juan C. Sanchez and Maria Villafranca executed in favor of their daughter, Rosalia Sanchez Lugod; and grandchildren, namely, Arturo S. Lugod, Evelyn S. Lugod and Roberto S. Lugod. The trial court ruled further that the properties covered by the said sales must be subject to collation. Citing Article 1409 (2) of the Civil Code, the lower court nullified said deeds of sale and determined with finality the ownership of the properties subject thereof . In doing so, it clearly overstepped its jurisdiction as a probate court. Jurisprudence teaches:

[A] probate court or one in charge of proceedings whether testate or intestate cannot adjudicate or determine title to properties claimed to be a part of the estate and which are claimed to belong to outside parties. All that the said court could do as regards said properties is to determine whether they should or should not be included in the inventory or list of properties to be administered by the administrator. If there is not dispute, well and good, but if there is, then the parties, the administrator, and the opposing parties have to resort to an ordinary action for a final determination of the conflicting claims of title because the probate court cannot do so. 21

Furthermore, the trial court committed grave abuse of discretion when it rendered its decision in disregard of the parties' compromise agreement. 22 Such disregard, on the ground that the compromise agreement "was nor approved by the court," 23 is tantamount to "an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act in contemplation and within the bounds of law. " 24

The foregoing issues clearly involve not only the correctness of the trial court's decision but also the latter's jurisdiction. They encompass plain errors of jurisdiction and grave abuse of discretion, not merely errors of judgment.

25 Since the trial court exceeded its jurisdiction, a petition for certiorari is certainly a proper remedy. Indeed, it is well-settled that "(a)n act done by a probate court in excess of its jurisdiction may be corrected by certiorari." 26

Consistent with the foregoing, the following disquisition by respondent appellate court is apt:As a general proposition, appeal is the proper remedy of petitioner Rosalia here under Rule 109 of the Revised Rules of Court. But the availability of the ordinary course of appeal does not constitute sufficient ground to [prevent] a party from making use of the extraordinary remedy of certiorari where appeal is not an adequate remedy or equally beneficial, speedy and sufficient (Echauz vs. Court of Appeals, 199 SCRA 381). Here, considering that the respondent court has disregarded the compromise agreement which has long been executed as early as October, 1969 and declared null and void the deeds of sale with finality, which, as a probate court, it has no jurisdiction to do, We deem ordinary appeal is inadequate. Considering further the [trial court's] granting of [herein petitioners') motion for execution of the assailed decision, 27 [herein private respondent] Rosalia's resort to the instant petition [for review on certiorari] is all the more warranted under the circumstances. 28

We thus hold that the questioned decision and resolutions of the trial court may be challenged through a special civil action for certiorari under Rule 65 of the Rules of Court. At the very least, this case is a clear exception to the general rule that certiorari is not a substitute for a lost appeal because the trial court's decision and resolutions were issued without or in excess of jurisdiction, which may thus be challenged or attacked at any time. "A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect. Hence, it can never become final and any writ of execution based on it is void; ' . . . it may be said to be a lawless thing which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.' " 29

Second Issue: Validity of Compromise AgreementPetitioners contend that, because the compromise agreement was executed during the pendency of the probate proceedings, judicial approval is necessary to shroud it with validity. They stress that the probate court had jurisdiction over the properties covered by said agreement. They add that Petitioners Florida Mierly, Alfredo and Myrna were all miners represented only by their mother/natural guardian, Laureta Tampus. 30

These contentions lack merit. Article 2028 of the Civil Code defines a compromise agreement as "a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced." Being a consensual contract, it is perfected upon the meeting of the minds of the parties. Judicial approval is not required for its perfection. 31 Petitioners' argument that the compromise was not valid for lack of judicial approval is not novel; the same was raised in Mayuga vs. Court of Appeals, 32 where the Court, through Justice Irene R. Cortes, ruled:

It is alleged that the lack of judicial approval is fatal to the compromise. A compromise is a consensual contract. As such, it is perfected upon the meeting of the minds of the parties to the contract. (Hernandez v. Barcelon, 23 Phil. 599 [1912]; see also De los Reyes v. de Ugarte, 75 Phil. 505 [1945].) And from that moment not only does it become binding upon the parties (De los Reyes v. De Ugarte, supra ), it also has upon them the effect and authority of res judicata (Civil Code, Art. 2037), even if not judicially approved (Meneses v. De la Rosa, 77 Phil. 34 [1946]; Vda. De Guilas v. David, 132 Phil. 241, L-24280, 23 SCRA 762 [May 27, 1968]; Cochingyan v. Cloribel, L-27070-71 [April 22, 1977], 76 SCRA 361). (Emphasis found in the original.)

In the case before us, it is ineludible that the parties knowingly and freely entered into a valid compromise agreement. Adequately assisted by their respective counsels, they each negotiated its terms and provisions for four months; in fact, said agreement was executed only after the fourth draft. As noted by the trial court itself, the first and second drafts were prepared successively in July, 1969; the third draft on September 25, 1969; and the fourth draft, which was finally signed by the parties on October 30, 1969, 33 followed. Since this compromise agreement was the result of a long drawn out process, with all the parties ably striving to protect their respective interests and to come out with the best they could, there can be no doubt that the parties entered into it freely and voluntarily. Accordingly, they should be bound thereby. 34 To be valid, it is merely required under the law to be based on real claims and actually agreed upon in good faith by the parties thereto. 35

Indeed, compromise is a form of amicable settlement that is not only allowed but also encouraged in civil cases. 36 Article 2029 of the Civil Code mandates that a "court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise."In opposing the validity and enforcement of the compromise agreement, petitioners harp on the minority of Florida Mierly, Alfredo and Myna. Citing Article 2032 of the Civil Code, they contend that the court's approval is necessary in compromises entered into by guardians and parents in behalf of their wards or children. 37

However, we observe that although denominated a compromise agreement, the document in this case is essentially a deed of partition, pursuant to Article 1082 of the Civil Code which provides that "[e]very act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition, although it should purport to be a sale, an exchange, a compromise, or any other transaction."For a partition to be valid, Section 1, Rule 74 of the Rules of Court, requires the concurrence of the following conditions: (1) the decedent left no will; (2) the decedent left no debts, or if there were debts left, all had been paid; (3) the heirs and liquidators are all of age, or if they are minors, the latter are represented by their judicial guardian or legal representatives; and (4) the partition was made by means of a public instrument or affidavit duly filed with the Register of Deeds. 38 We find that all the foregoing requisites are present in this case. We therefore affirm the validity of the parties' compromise agreement/partition in this case.In any event, petitioners neither raised nor ventilated this issue in the trial court. This new question or matter was manifestly beyond the pale of the issues or questions submitted and threshed out before the lower court which are reproduced below, viz.:

I Are the properties which are the object of the sale by the deceased spouses to their grandchildren collationable?II Are the properties which are the object of the sale by the deceased spouses to their legitimate daughter also collationable?III The first and second issues being resolved, how much then is the rightful share of the four (4) recognized illegitimate children? 39

Furthermore, the 27-page Memorandum dated February 17, 1990 filed by petitioners before the Regional Trial Court 40 readily reveals that they never questioned the validity of the compromise. In their comment before the Court of Appeals, 41 petitioners based their objection to sad compromise agreement on the solitary "reason that it was tainted with fraud and deception," zeroing specifically on the alleged fraud committed by private respondent Rosalia S. Lugod. 42 The issue of minority was first raised only in petitioners' Motion for Reconsideration of the Court of Appeals' Decision; 43 thus, it "is as if it was never duly raised in that court at all." 44 Hence, this Court cannot now, for the first time on appeal, entertain this issue, for to do so would plainly violate the basic rule of fair play, justice and due process. 45 We take this opportunity to reiterate and emphasize the well-settled rule that "(a)n issue raised for the first time on appeal and not raised timely in the proceedings in the lower court is barred by estoppel. Questions raised on appeal must be within the issues framed by the parties and, consequently, issues not raised in the trial court cannot be raised for the first time on appeal." 46

The petitioners likewise assail as void the provision on waiver contained in No. 8 of the aforequoted compromise, because it allegedly constitutes a relinquishment by petitioners of "a right to properties which were not known." 47 They argue that such waiver is contrary to law, public policy, morals or good custom. The Court disagrees. The assailed waiver pertained to their hereditary right to properties belonging to the decedent's estate which were not included in the inventory of the estate's properties. It also covered their right to other properties originally belonging to the spouses Juan Sanchez and Maria Villafranca de Sanchez which have been transferred to other persons. In addition, the parties agreed in the compromise to confirm and ratify said transfers. The waiver is valid because, contrary to petitioners' protestation, the parties waived a known and existing interest — their hereditary right which was already vested in them by reason of the death of their father. Article 777 of the Civil Code provides that "(t)he rights to the succession are transmitted from the moment of death of the decedent." Hence, there is no legal obstacle to an heir's waiver of his/her hereditary share "even if the actual extent of such share is not determined until the subsequent liquidation of the estate." 48 At any rate, such waiver is consistent with the intent and letter of the law advocating compromise as a vehicle for the settlement of civil disputes. 49

Finally, petitioners contend that Private Respondent Rosalia T. Lugod's alleged fraudulent acts, specifically her concealment of some of the decedent's properties, attended the actual execution of the compromise agreement. 50 This argument is debunked by the absence of any substantial and convincing evidence on record showing fraud on her part. As aptly observed by the appellate court:

[Herein petitioners] accuse [herein private respondent] Rosalia of fraud or deception by alleging, inter alia, that the parcel of land given to them never conformed to the stated area, i.e., forty-eight (48) hectares, as stated in the compromise agreement. We find this argument unconvincing and unmeritorious. [Herein petitioners'] averment of fraud on the part of [herein private respondent] Rosalia becomes untenable when We consider the memorandum of agreement they later executed with [herein private respondent] Rosalia wherein said compromise agreement was modified by correcting the actual area given to [herein petitioners] from forty-eight (48) hectares to thirty-six (36) hectares only. If the actual area allotted to them did not conform to the 48 hectare area stated in the compromise agreement, then why did they agree to the memorandum of agreement whereby their share in the estate of their father was even reduced to just 36 hectares? Where is fraud or deception there? Considering that [herein petitioners] were ably represented by their lawyers in executing these documents and who presumably had explained to them the import and consequences thereof, it is hard to believe their charge that they were defrauded and deceived by [herein private respondent] Rosalia.If the parcel of land given to [herein petitioners], when actually surveyed, happened to be different in area to the stated area of 48 hectares in the compromise agreement, this circumstance is not enough proof of fraud or deception on [herein private respondent] Rosalia's part. Note that Tax Declaration No. 06453 plainly discloses that the land transferred to [herein petitioners] pursuant to the compromise agreement contained an area of 48 hectares (Annex "A", Supplemental Reply). And when [herein petitioners] discovered that the land allotted to them actually contained only 24 hectares, a conference between the parties took place which led to the execution and signing of the memorandum of agreement wherein [herein petitioners'] distributive share was even reduced to 36 hectares. In the absence of convincing and clear evidence to the contrary, the allegation of fraud and deception cannot be successfully imputed to [herein private respondent] Rosalia who must be presumed to have acted in good faith. 51

The memorandum of agreement freely and validly entered into by the parties on April 13, 1970 and referred to above reads:

MEMORANDUM OF AGREEMENTThe parties assisted by their respective counsel have agreed as they hereby agree:1. To amend the compromise agreement executed by them on October 30, 1969 so as to include the following:

a. Correction of the actual area being given to the petitioners and intervenors, all illegitimate children of the late Juan C. Sanchez, forty-eight (48) hectares, thirty-six

(36) ares as embodied in the aforementioned compromise agreement to thirty-six (36) hectares only, thus enabling each of them to get six (6) hectares each.b. That the said 36-hectare area shall be taken from that parcel of land which is now covered by O.C.T. No. 146 (Patent No. 30012) and the adjoining areas thereof designated as Lot A and Lot C as reflected on the sketch plan attached to the record of this case prepared by Geodetic Engineer Olegario E. Zalles pursuant to the Court's commission of March 10, 1970 provided, however, that if the said 36-hectare area could not be found after adding thereto the areas of said lots A and C, then the additional area shall be taken from what is designated as Lot B, likewise also reflected in the said sketch plan attached to the records;c. That the partition among the six illegitimate children of the late Juan C. Sanchez (petitioners and intervenors) shall be effective among themselves in such a manner to be agreed upon by them, each undertaking to assume redemption of whatever plants found in their respective shares which need redemption from the tenants thereof as well as the continuity of the tenancy agreements now existing and covering the said shares or areas.d. The subdivision survey shall be at the expense of the said petitioners and intervenors prorata.e. That the administratrix agrees to deliver temporary administration of the area designated as Lot 5 of the Valles Sketch Plan pending final survey of the said 36-hectare area.

Cagayan de Oro City, April 13, 1970.(Sgd.)LAURETA TAMPOSFor herself and as Guardianad-litem of Rolando, Mierly,Alfredo and Myrna, allsurnamed SanchezAssisted by:

(Sgd.)TEOGENES VELEZ, Jr.Counsel for Petitioners(Sgd.)ROSALIA S. LUGODAdministratrix

Assisted by:(Sgd.)PABLO S. REYESCounsel for Administratrix(Sgd.)MARIA RABOSO SANCHEZIntervenor 52

Not only did the parties knowingly enter into a valid compromise agreement; they even amended it when they realized some errors in the original. Such correction emphasizes the voluntariness of said deed.It is also significant that all the parties, including the then minors, had already consummated and availed themselves of the benefits of their compromise. 53 This Court has consistently ruled that "a party to a compromise cannot ask for a rescission after it has enjoyed its benefits." 54 By their acts, the parties are ineludibly estopped from questioning the validity of their compromise agreement. Bolstering this conclusion is the fact that petitioners questioned the compromise only nine years after its execution, when they filed with the trial court their Motion to Defer Approval of Compromise Agreement, dated October 26, 1979. 55 In hindsight, it is not at all farfetched that petitioners filed said motion for the sole reason that they may have felt shortchanged in their compromise agreement or partition with private respondents, which in their view was unwise and unfair. While we may sympathize with this rueful sentiment of petitioners, we can only stress that this alone is not sufficient to nullify or disregard the legal effects of said compromise which, by its very nature as a perfected contract, is binding on the parties. Moreover, courts have no jurisdiction to look into the wisdom of a compromise or to render a decision different therefrom. 56 It is a well-entrenched doctrine that "the law does not relieve a party from the effects of an unwise, foolish, or disastrous contract, entered into with all the required formalities and with full awareness of what he was doing" 57 and "a compromise entered into and carried out in good faith will not be discarded even if there was a mistake of law or fact, (McCarthy vs. Barber Steamship Lines, 45 Phil. 488) because courts have no power to relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be disastrous deals or unwise investments." 58 Volenti non fit injuria.Corollarily, the petitioners contend that the Court of Appeals gravely abused its discretion in deeming Special Proceedings Nos. 44-M and 1022 "CLOSED and TERMINATED," arguing that there was as yet no order of distribution of the estate pursuant to Rule 90 of the Rules of Court. They add that they had not received their full share thereto. 59 We disagree. Under Section 1, Rule 90 of the Rules of Court, an order for the distribution of the estate may be made when the "debts, funeral charges, and expenses of administration, the allowance to the widow, and inheritance tax, if any," had been paid. This order for the distribution of the estate's residue must contain the names and shares of the persons entitled thereto. A perusal of the whole record, particularly the trial court's conclusion, 60 reveals that all the foregoing

requirements already concurred in this case. The payment of the indebtedness of the estates of Juan C. Sanchez and Maria Villafranca in the amount of P51,598.93 was shouldered by Private Respondent Rosalia, who also absorbed or charged against her share the advances of Rolando T. Lugod in the sum of P8,533.94, in compliance with Article 1061 of the Civil Code on collation. 61 Furthermore, the compromise of the parties, which is the law between them, already contains the names and shares of the heirs to the residual estate, which shares had also been delivered. On this point, we agree with the following discussion of the Court of Appeals:

But what the (trial court) obviously overlooked in its appreciation of the facts of this case are the uncontroverted facts that (herein petitioners) have been in possession and ownership of their respective distributive shares as early as October 30, 1969 and they have received other properties in addition to their distributive shares in consideration of the compromise agreement which they now assail. Proofs thereof are Tax Declarations No. 20984, 20985, 20986, 20987, 20988, 20989 and 20990 (Annexes "B" to "H", Supplemental Reply) in the respective names of (herein petitioners), all for the year 1972. (Herein petitioners) also retained a house and lot, a residential lot and a parcel of agricultural land (Annexes "I", "J" and "K", Ibid.) all of which were not considered in the compromise agreement between the parties. Moreover, in the compromise agreement per se, it is undoubtedly stated therein that cash advances in the aggregate sum of P8,533.94 were received by (herein petitioners) after October 21, 1968 (Compromise Agreement, par. 5) 62

All the foregoing show clearly that the probate court had essentially finished said intestate proceedings which, consequently, should be deemed closed and terminated. In view of the above discussion, the Court sees no reversible error on the part of the Court of Appeals.

Third Issue: Fraud and CollationPetitioners fault Respondent Court for not ordering Private Respondent Rosalia T. Lugod to deliver to them the deficiency as allegedly provided under the compromise agreement. They further contend that said court erred in not directing the provisional inclusion of the alleged deficiency in the inventory for purposes of collating the properties subject of the questioned deeds of sale. 63 We see no such error. In the trial court, there was only one hearing conducted, and it was held only for the reception of the evidence of Rosalia S. Lugod to install her as administratrix of the estate of Maria Villafranca. There was no other evidence, whether testimonial or otherwise, "received, formally offered to, and subsequently admitted by the probate court below"; nor was there "a trial on the merits of the parries' conflicting claims." 64 In fact, the petitioners "moved for the deferment of the compromise agreement on the basis of alleged fraudulent concealment of properties — NOT because of any deficiency in the land conveyed to them under the agreements." 65 Hence, there is no hard evidence on record to back up petitioners' claims.In any case, the trial court noted Private Respondent Rosalia's willingness to reimburse any deficiency actually proven to exist. It subsequently ordered the geodetic engineer who prepared the certification and the sketch of the lot in question, and who could have provided evidence for the petitioners, "to bring records of his relocation survey." 66 However, Geodetic Engineer Idulsa did not comply with the court's subpoena duces tecum and ad testificandum. Neither did he furnish the required relocation survey. 67 No wonder, even after a thorough scrutiny of the records, this Court cannot find any evidence to support petitioners' allegations of fraud against Private Respondent Rosalia.Similarly, petitioners' allegations of fraud in the execution of the questioned deeds of sale are bereft of substance, in view of the palpable absence of evidence to support them. The legal presumption of validity of the questioned deeds of absolute sale, being duly notarized public documents, has not been overcome. 68 On the other hand, fraud is not presumed. It must be proved by clear and convincing evidence, and not by mere conjectures or speculations. We stress that these deeds of sale did not involve gratuitous transfers of future inheritance; these were contracts of sale perfected by the decedents during their lifetime. 69 Hence, the properties conveyed thereby are not collationable because, essentially, collation mandated under Article 1061 of the Civil Code contemplates properties conveyed inter vivos by the decedent to an heir by way of donation or other gratuitous title.In any event, these alleged errors and deficiencies regarding the delivery of shares provided in the compromise, concealment of properties and fraud in the deeds of sale are factual in nature which, as a rule, are not reviewable by this Court in petitions under Rule 45. 70 Petitioners have failed to convince us that this case constitutes an exception to such rule. All in all, we find that the Court of Appeals has sufficiently addressed the issues raised by them. Indeed, they have not persuaded us that said Court committed any reversible error to warrant a grant of their petition.WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals is AFFIRMED.SO ORDERED.

GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner, vs. REDERICK A. RECIO, respondent.D E C I S I O NPANGANIBAN, J.:A divorce obtained abroad by an alien may be recognized in our jurisdiction, provided such decree is valid according to the national law of the foreigner.  However, the divorce decree and the governing personal law of the alien spouse who obtained the divorce must be proven.  Our courts do not take judicial notice of foreign laws and judgments; hence, like any other facts, both the divorce decree and the national law of the alien must be alleged and proven according to our law on evidence.The CaseBefore us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the January 7, 1999 Decision and the March 24, 1999 Order of the Regional Trial Court of Cabanatuan City, Branch 28, in Civil Case No. 3026–AF.  The assailed Decision disposed as follows:“WHEREFORE, this Court declares the marriage between Grace J. Garcia and Rederick A. Recio solemnized on January 12, 1994 at Cabanatuan City as dissolved and both parties can now remarry under existing and applicable laws to any and/or both parties.”

The assailed Order denied reconsideration of the above-quoted Decision.The FactsRederick A. Recio, a Filipino, was married to Editha Samson, an Australian citizen, in Malabon, Rizal, on March 1, 1987. They lived together as husband and wife in Australia.  On May 18, 1989, a decree of divorce, purportedly dissolving the marriage, was issued by an Australian family court.On June 26, 1992, respondent became an Australian citizen, as shown by a “Certificate of Australian Citizenship” issued by the Australian government. Petitioner -- a Filipina -- and respondent were married on January 12, 1994 in Our Lady of Perpetual Help Church in Cabanatuan City. In their application for a marriage license, respondent was declared as “single” and “Filipino.”Starting October 22, 1995, petitioner and respondent lived separately without prior judicial dissolution of their marriage.  While the two were still in Australia, their conjugal assets were divided on May 16, 1996, in accordance with their Statutory Declarations secured in Australia.On March 3, 1998, petitioner filed a Complaint for Declaration of Nullity of Marriage in the court a quo, on the ground of bigamy -- respondent allegedly had a prior subsisting marriage at the time he married her on January 12, 1994.  She claimed that she learned of respondent’s marriage to Editha Samson only in November, 1997.In his Answer, respondent averred that, as far back as 1993, he had revealed to petitioner his prior marriage and its subsequent dissolution. He contended that his first marriage to an Australian citizen had been validly dissolved by a divorce decree obtained in Australia in 1989; thus, he was legally capacitated to marry petitioner in 1994.On July 7, 1998 -- or about five years after the couple’s wedding and while the suit for the declaration of nullity was pending -- respondent was able to secure a divorce decree from a family court in Sydney, Australia because the “marriage ha[d] irretrievably broken down.”Respondent prayed in his Answer that the Complaint be dismissed on the ground that it stated no cause of action. The Office of the Solicitor General agreed with respondent. The court marked and admitted the documentary evidence of both parties. After they submitted their respective memoranda, the case was submitted for resolution.Thereafter, the trial court rendered the assailed Decision and Order.Ruling of the Trial CourtThe trial court declared the marriage dissolved on the ground that the divorce issued in Australia was valid and recognized in the Philippines.  It deemed the marriage ended, but not on the basis of any defect in an essential element of the marriage; that is, respondent’s alleged lack of legal capacity to remarry.  Rather, it based its Decision on the divorce decree obtained by respondent.  The Australian divorce had ended the marriage; thus, there was no more marital union to nullify or annul.Hence, this Petition.IssuesPetitioner submits the following issues for our consideration:“1The trial court gravely erred in finding that the divorce decree obtained in Australia by the respondent ipso facto terminated his first marriage to Editha Samson thereby capacitating him to contract a second marriage with the petitioner.“2The failure of the respondent, who is now a naturalized Australian, to present a certificate of legal capacity to marry constitutes absence of a substantial requisite voiding the petitioner’s marriage to the respondent“3The trial court seriously erred in the application of Art. 26 of the Family Code in this case.“4The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35, 40, 52 and 53 of the Family Code as the applicable provisions in this case.“5The trial court gravely erred in pronouncing that the divorce decree obtained by the respondent in Australia ipso facto capacitated the parties to remarry, without first securing a recognition of the judgment granting the divorce decree before our courts.”The Petition raises five issues, but for purposes of this Decision, we shall concentrate on two pivotal ones: (1) whether the divorce between respondent and Editha Samson was proven, and (2) whether respondent was proven to be legally capacitated to marry petitioner.  Because of our ruling on these two, there is no more necessity to take up the rest.The Court’s RulingThe Petition is partly meritorious.First Issue:Proving the Divorce Between Respondent and Editha SamsonPetitioner assails the trial court’s recognition of the divorce between respondent and Editha Samson.  Citing Adong v. Cheong Seng Gee, petitioner argues that the divorce decree, like any other foreign judgment, may be given recognition in this jurisdiction only upon proof of the existence of (1) the foreign law allowing absolute divorce and (2) the alleged divorce decree itself.  She adds that respondent miserably failed to establish these elements.Petitioner adds that, based on the first paragraph of Article 26 of the Family Code, marriages solemnized abroad are governed by the law of the place where they were celebrated (the lex loci celebrationis).  In effect, the Code requires the presentation of the foreign law to show the conformity of the marriage in question to the legal requirements of the place where the marriage was performed.At the outset, we lay the following basic legal principles as the take-off points for our discussion.  Philippine law does not provide for absolute divorce; hence, our courts cannot grant it. A marriage between two Filipinos cannot be dissolved even by a divorce obtained abroad, because of Articles 15 and 17 of the Civil Code. In mixed marriages

involving a Filipino and a foreigner, Article 26 of the Family Code allows the former to contract a subsequent marriage in case the divorce is “validly obtained abroad by the alien spouse capacitating him or her to remarry.” A divorce obtained abroad by a couple, who are both aliens, may be recognized in the Philippines, provided it is consistent with their respective national laws.A comparison between marriage and divorce, as far as pleading and proof are concerned, can be made.  Van Dorn v. Romillo Jr. decrees that “aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law.” Therefore, before a foreign divorce decree can be recognized by our courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign law allowing it. Presentation solely of the divorce decree is insufficient.Divorce as a Question of FactPetitioner insists that before a divorce decree can be admitted in evidence, it must first comply with the registration requirements under Articles 11, 13 and 52 of the Family Code.  These articles read as follows:“ART. 11.  Where a marriage license is required, each of the contracting parties shall file separately a sworn application for such license with the proper local civil registrar which shall specify the following:x x x                                                x x x                                        x x x“(5)             If previously married, how, when and where the previous marriage was dissolved or annulled;x x x                                                x x x                                        x x x”“ART. 13.  In case either of the contracting parties has been previously married, the applicant shall be required to“ART. 13.  In case either of the contracting parties has been previously married, the applicant shall be required to furnish, instead of the birth or baptismal certificate required in the last preceding article, the death certificate of the deceased spouse or the judicial decree of the absolute divorce, or the judicial decree of annulment or declaration of nullity of his or her previous marriage.  x x x.“ART. 52.  The judgment of annulment or of absolute nullity of the marriage, the partition and distribution of the properties of the spouses, and the delivery of the children’s presumptive legitimes shall be recorded in the appropriate civil registry and registries of property; otherwise, the same shall not affect their persons.”Respondent, on the other hand, argues that the Australian divorce decree is a public document -- a written official act of an Australian family court.  Therefore, it requires no further proof of its authenticity and due execution.Respondent is getting ahead of himself.  Before a foreign judgment is given presumptive evidentiary value, the document must first be presented and admitted in evidence. A divorce obtained abroad is proven by the divorce decree itself.  Indeed the best evidence of a judgment is the judgment itself. The decree purports to be a written act or record of an act of an official body or tribunal of a foreign country.Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be proven as a public or official record of a foreign country by either (1) an official publication or (2) a copy thereof attested by the officer having legal custody of the document.  If the record is not kept in the Philippines, such copy must be (a) accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his office.

The divorce decree between respondent and Editha Samson appears to be an authentic one issued by an Australian family court. However, appearance is not sufficient; compliance with the aforementioned rules on evidence must be demonstrated.Fortunately for respondent’s cause, when the divorce decree of May 18, 1989 was submitted in evidence, counsel for petitioner objected, not to its admissibility, but only to the fact that it had not been registered in the Local Civil Registry of Cabanatuan City. The trial court ruled that it was admissible, subject to petitioner’s qualification. Hence, it was admitted in evidence and accorded weight by the judge.  Indeed, petitioner’s failure to object properly rendered the divorce decree admissible as a written act of the Family Court of Sydney, Australia.Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary; respondent was no longer bound by Philippine personal laws after he acquired Australian citizenship in 1992. Naturalization is the legal act of adopting an alien and clothing him with the political and civil rights belonging to a citizen. Naturalized citizens, freed from the protective cloak of their former states, don the attires of their adoptive countries.  By becoming an Australian, respondent severed his allegiance to the Philippines and the vinculum juris that had tied him to Philippine personal laws.Burden of Proving Australian LawRespondent contends that the burden to prove Australian divorce law falls upon petitioner, because she is the party challenging the validity of a foreign judgment.  He contends that petitioner was satisfied with the original of the divorce decree and was cognizant of the marital laws of Australia, because she had lived and worked in that country for quite a long time.  Besides, the Australian divorce law is allegedly known by Philippine courts; thus, judges may take judicial notice of foreign laws in the exercise of sound discretion.We are not persuaded.  The burden of proof lies with “the party who alleges the existence of a fact or thing necessary in the prosecution or defense of an action.” In civil cases, plaintiffs have the burden of proving the material allegations of the complaint when those are denied by the answer; and defendants have the burden of proving the material allegations in their answer when they introduce new matters. Since the divorce was a defense raised by respondent, the burden of proving the pertinent Australian law validating it falls squarely upon him.It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign laws. Like any other facts, they must be alleged and proved.  Australian marital laws are not among those matters that judges are supposed to know by reason of their judicial function. The power of judicial notice must be exercised with caution, and every reasonable doubt upon the subject should be resolved in the negative.Second Issue: Respondent’s Legal Capacity to Remarry Petitioner contends that, in view of the insufficient proof of the divorce, respondent was legally incapacitated to marry her in 1994.  Hence, she concludes that their marriage was void ab initio.

Respondent replies that the Australian divorce decree, which was validly admitted in evidence, adequately established his legal capacity to marry under Australian law.Respondent’s contention is untenable.  In its strict legal sense, divorce means the legal dissolution of a lawful union for a cause arising after marriage.  But divorces are of different types.  The two basic ones are (1) absolute divorce or a vinculo matrimonii and (2) limited divorce or a mensa et thoro.  The first kind terminates the marriage, while the second suspends it and leaves the bond in full force. There is no showing in the case at bar which type of divorce was procured by respondent.Respondent presented a decree nisi or an interlocutory decree -- a conditional or provisional judgment of divorce.  It is in effect the same as a separation from bed and board, although an absolute divorce may follow after the lapse of the prescribed period during which no reconciliation is effected.Even after the divorce becomes absolute, the court may under some foreign statutes and practices, still restrict remarriage.  Under some other jurisdictions, remarriage may be limited by statute; thus, the guilty party in a divorce which was granted on the ground of adultery may be prohibited from marrying again.  The court may allow a remarriage only after proof of good behavior.On its face, the herein Australian divorce decree contains a restriction that reads:“1.               A party to a marriage who marries again before this decree becomes absolute (unless the other party has died) commits the offence of bigamy.”This quotation bolsters our contention that the divorce obtained by respondent may have been restricted.  It did not absolutely establish his legal capacity to remarry according to his national law.  Hence, we find no basis for the ruling of the trial court, which erroneously assumed that the Australian divorce ipso facto restored respondent’s capacity to remarry despite the paucity of evidence on this matter.We also reject the claim of respondent that the divorce decree raises a disputable presumption or presumptive evidence as to his civil status based on Section 48, Rule 39 of the Rules of Court, for the simple reason that no proof has been presented on the legal effects of the divorce decree obtained under Australian laws.Significance of the Certificate of Legal CapacityPetitioner argues that the certificate of legal capacity required by Article 21 of the Family Code was not submitted together with the application for a marriage license.  According to her, its absence is proof that respondent did not have legal capacity to remarry.We clarify.  To repeat, the legal capacity to contract marriage is determined by the national law of the party concerned.  The certificate mentioned in Article 21 of the Family Code would have been sufficient to establish the legal capacity of respondent, had he duly presented it in court.  A duly authenticated and admitted certificate is prima facie evidence of legal capacity to marry on the part of the alien applicant for a marriage license.As it is, however, there is absolutely no evidence that proves respondent’s legal capacity to marry petitioner.  A review of the records before this Court shows that only the following exhibits were presented before the lower court: (1) for petitioner: (a) Exhibit “A” – Complaint; (b) Exhibit “B” – Certificate of Marriage Between Rederick A. Recio (Filipino-Australian) and Grace J. Garcia (Filipino) on January 12, 1994 in Cabanatuan City, Nueva Ecija; (c) Exhibit “C” – Certificate of Marriage Between Rederick A. Recio (Filipino) and Editha D. Samson (Australian) on March 1, 1987 in Malabon, Metro Manila; (d) Exhibit “D” – Office of the City Registrar of Cabanatuan City Certification that no information of annulment between Rederick A. Recio and Editha D. Samson was in its records; and (e) Exhibit “E” – Certificate of Australian Citizenship of Rederick A. Recio; (2) for respondent: (a) Exhibit “1” -- Amended Answer; (b) Exhibit “2” – Family Law Act 1975 Decree Nisi of Dissolution of Marriage in the Family Court of Australia; (c) Exhibit “3” – Certificate of Australian Citizenship of Rederick A. Recio; (d) Exhibit “4” – Decree Nisi of Dissolution of Marriage in the Family Court of Australia Certificate; and Exhibit “5” -- Statutory Declaration of the Legal Separation Between Rederick A. Recio and Grace J. Garcia Recio since October 22, 1995.Based on the above records, we cannot conclude that respondent, who was then a naturalized Australian citizen, was legally capacitated to marry petitioner on January 12, 1994.  We agree with petitioner’s contention that the court a quo erred in finding that the divorce decree ipso facto clothed respondent with the legal capacity to remarry without requiring him to adduce sufficient evidence to show the Australian personal law governing his status; or at the very least, to prove his legal capacity to contract the second marriage.Neither can we grant petitioner’s prayer to declare her marriage to respondent null and void on the ground of bigamy.  After all, it may turn out that under Australian law, he was really capacitated to marry petitioner as a direct result of the divorce decree.  Hence, we believe that the most judicious course is to remand this case to the trial court to receive evidence, if any, which show petitioner’s legal capacity to marry petitioner.  Failing in that, then the court a quo may declare a nullity of the parties’ marriage on the ground of bigamy, there being already in evidence two existing marriage certificates, which were both obtained in the Philippines, one in Malabon, Metro Manila dated March 1, 1987 and the other, in Cabanatuan City dated January 12, 1994.WHEREFORE, in the interest of orderly procedure and substantial justice, we REMAND the case to the court a quo for the purpose of receiving evidence which conclusively show respondent’s legal capacity to marry petitioner; and failing in that, of declaring the parties’ marriage void on the ground of bigamy, as above discussed.  No costs.SO ORDERED.

[G.R. No. 124371.  November 23, 2000]PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F. LLORENTE, respondents.The CaseThe case raises a conflict of laws issue.What is before us is an appeal from the decision of the Court of Appeals modifying that of the Regional Trial Court, Camarines Sur, Branch 35, Iriga City declaring respondent Alicia F. Llorente (herinafter referred to as “Alicia”), as co-

owners of whatever property she and the deceased Lorenzo N. Llorente (hereinafter referred to as “Lorenzo”) may have acquired during the twenty-five (25) years that they lived together as husband and wife.The FactsThe deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from March 10, 1927 to September 30, 1957.On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as “Paula”) were married before a parish priest, Roman Catholic Church, in Nabua, Camarines Sur.Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur.On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of Naturalization No. 5579816 was issued in his favor by the United States District Court, Southern District of New York.Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo  was granted an accrued leave by the U. S. Navy, to visit his wife and he visited the Philippines. He discovered that his wife Paula was pregnant and was “living in” and having an adulterous relationship with his brother, Ceferino Llorente.On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of Nabua as “Crisologo Llorente,” with the certificate stating that the child was not legitimate and the line for the father’s name was left blank.Lorenzo refused to forgive Paula and live with her.  In fact, on February 2, 1946, the couple drew a written agreement to the effect that (1) all the family allowances allotted by the United States Navy as part of Lorenzo’s salary and all other obligations for Paula’s daily maintenance and support would be suspended; (2) they would dissolve their marital union in accordance with judicial proceedings; (3) they would make a separate agreement regarding their conjugal property acquired during their marital life; and (4) Lorenzo would not prosecute Paula for her adulterous act since she voluntarily admitted her fault and agreed to separate from Lorenzo peacefully.  The agreement was signed by both Lorenzo and Paula and was witnessed by Paula’s father and stepmother.  The agreement was notarized by Notary Public Pedro Osabel.Lorenzo returned to the United States and on November 16, 1951 filed for divorce  with  the  Superior Court of the State of California in and for the County of San Diego.  Paula was represented by counsel, John Riley, and actively participated in the proceedings.  On November 27, 1951, the Superior Court of the State of California, for the County of San Diego found all factual allegations to be true and issued an interlocutory judgment of divorce.On December 4, 1952, the divorce decree became final.In the meantime, Lorenzo returned to the Philippines.On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila. Apparently, Alicia had no knowledge of the first marriage even if they resided in the same town as Paula, who did not oppose the marriage or cohabitation.From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife. Their twenty-five (25) year union produced three children, Raul, Luz and Beverly, all surnamed Llorente.On March 13, 1981, Lorenzo executed a Last Will and Testament.  The will was notarized by Notary Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses Francisco Hugo, Francisco Neibres and Tito Trajano.  In the will, Lorenzo bequeathed all his property to Alicia and their three children, to wit:“(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential house and lot, located at San Francisco, Nabua, Camarines Sur, Philippines, including ALL the personal properties and other movables or belongings that may be found or existing therein;“(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, all my real properties whatsoever and wheresoever located, specifically my real properties located at Barangay Aro-Aldao, Nabua, Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras, Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong, Nabua, Camarines Sur;“(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, my real properties located in Quezon City Philippines, and covered by Transfer Certificate of Title No. 188652; and my lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title Nos. 124196 and 165188, both of the Registry of Deeds of the province of Rizal, Philippines;“(4) That their respective shares in the above-mentioned properties, whether real or personal properties, shall not be disposed of, ceded, sold and conveyed to any other persons, but could only be sold, ceded, conveyed and disposed of by and among themselves;“(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last Will and Testament, and in her default or incapacity of the latter to act, any of my children in the order of age, if of age;“(6) I hereby direct that the executor named herein or her lawful substitute should served (sic) without bond; “(7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions heretofore executed, signed, or published, by me;“(8) It is my final wish and desire that if I die, no relatives of mine in any degree in the Llorente’s Side should ever bother and disturb in any manner whatsoever my wife Alicia R. Fortunato and my children with respect to any real or personal properties I gave and bequeathed respectively to each one of them by virtue of this Last Will and Testament.”On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a petition for the probate and allowance of his last will and testament wherein Lorenzo moved that Alicia be appointed Special Administratrix of his estate.On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo was still alive.On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to probate.On June 11, 1985, before the proceedings could be terminated, Lorenzo died.On September 4, 1985, Paula filed with the same court a petition for letters of administration over Lorenzo’s estate in her favor.  Paula contended (1) that she was Lorenzo’s surviving spouse, (2) that the various property were acquired

during their marriage, (3) that Lorenzo’s will disposed of all his property in favor of Alicia and her children, encroaching on her legitime and 1/2 share in the conjugal property.On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition for the issuance of letters testamentary.On October 14, 1985, without terminating the testate proceedings, the trial court gave due course to Paula’s petition in Sp. Proc. No. IR-888.On November 6, 13 and 20, 1985, the order was published in the newspaper “Bicol Star”.On May 18, 1987, the Regional Trial Court issued a joint decision, thus:“Wherefore, considering that this court has so found that the divorce decree granted to the late Lorenzo Llorente is void and inapplicable in the Philippines, therefore the marriage he contracted with Alicia Fortunato on January 16, 1958 at Manila is likewise void.  This being so the petition of Alicia F. Llorente for the issuance of letters testamentary is denied.  Likewise, she is not entitled to receive any share from the estate even if the will especially said so her relationship with Lorenzo having gained the status of paramour which is under Art. 739 (1).“On the other hand, the court finds the petition of Paula Titular Llorente, meritorious, and so declares the intrinsic disposition of the will of Lorenzo Llorente dated March 13, 1981 as void and declares her entitled as conjugal partner and entitled to one-half of their conjugal properties, and as primary compulsory heir, Paula T. Llorente is also entitled to one-third of the estate and then one-third should go to the illegitimate children, Raul, Luz and Beverly, all surname (sic) Llorente, for them to partition in equal shares and also entitled to the remaining free portion in equal shares.“Petitioner, Paula Llorente is appointed legal administrator of the estate of the deceased, Lorenzo Llorente.  As such let the corresponding letters of administration issue in her favor upon her filing a bond in the amount (sic) of P100,000.00 conditioned for her to make a return to the court within three (3) months a true and complete inventory of all goods, chattels, rights, and credits, and estate which shall at any time come to her possession or to the possession of any other person for her, and from the proceeds to pay and discharge all debts, legacies and charges on the same, or such dividends thereon as shall be decreed or required by this court; to render a true and just account of her administration to the court within one (1) year, and at any other time when required by the court and to perform all orders of this court by her to be performed.“On the other matters prayed for in respective petitions for want of evidence could not be granted.“SO ORDERED.”In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted decision.On September 14, 1987, the trial court denied Alicia’s motion for reconsideration but modified its earlier decision, stating that Raul and Luz Llorente are not children “legitimate or otherwise” of Lorenzo since they were not legally adopted by him. Amending its decision of May 18, 1987, the trial court declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to one-third (1/3) of the estate and one-third (1/3) of the free portion of the estate.On September 28, 1987, respondent appealed to the Court of Appeals.On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification the decision of the trial court in this wise:“WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that Alicia is declared as co-owner of whatever properties she and the deceased may have acquired during the twenty-five (25) years of cohabitation.“SO ORDERED.”On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration of the decision.On March 21, 1996, the Court of Appeals, denied the motion for lack of merit.Hence, this petition.The IssueStripping the petition of its legalese and sorting through the various arguments raised, the issue is simple.  Who are entitled to inherit from the late Lorenzo N. Llorente?We do not agree with the decision of the Court of Appeals.  We remand the case to the trial court for ruling on the intrinsic validity of the will of the deceased.The Applicable LawThe fact that the late Lorenzo N. Llorente became an American citizen long before and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4) death, is duly established, admitted and undisputed.Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.The Civil Code clearly provides:“Art. 15.  Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad.“Art. 16.  Real property as well as personal property is subject to the law of the country where it is situated.“However, intestate and testamentary succession, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found.” (emphasis ours)True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them.  Like any other fact, they must be alleged and proved.While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign law.  The Court of Appeals and the trial court called to the fore the renvoi doctrine, where the case was “referred back” to the law of the decedent’s domicile, in this case, Philippine law.

We note that while the trial court stated that the law of New York was not sufficiently proven, in the same breath it made the categorical, albeit equally unproven statement that “American law follows the ‘domiciliary theory’ hence, Philippine law applies when determining the validity of Lorenzo’s will.First, there is no such thing as one American law.  The "national law" indicated in Article 16 of the Civil Code cannot possibly apply to general American law.  There is no such law governing the validity of testamentary provisions in the United States.  Each State of the union has its own law applicable to its citizens and in force only within the State.  It can therefore refer to no other than the law of the State of which the decedent was a resident. Second, there is no showing that the application of the renvoi doctrine is called for or required by New York State law.The trial court held that the will was intrinsically invalid since it contained dispositions in favor of Alice, who in the trial court’s opinion was a mere paramour.  The trial court threw the will out, leaving Alice, and her two children, Raul and Luz, with nothing.The Court of Appeals also disregarded the will.  It declared Alice entitled to one half (1/2) of whatever property she and Lorenzo acquired during their cohabitation, applying Article 144 of the Civil Code of the Philippines.The hasty application of Philippine law and the complete disregard of the will, already probated as duly executed in accordance with the formalities of Philippine law, is fatal, especially in light of the factual and legal circumstances here obtaining.Validity of the Foreign DivorceIn Van Dorn v. Romillo, Jr. we held that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces, the same being considered contrary to our concept of public policy and morality.  In the same case, the Court ruled that aliens may obtain divorces abroad, provided they are valid according to their national law.Citing this landmark case, the Court held in Quita v. Court of Appeals, that once proven that respondent was no longer a Filipino citizen when he obtained the divorce from petitioner, the ruling in Van Dorn would become applicable and petitioner could “very well lose her right to inherit” from him.In Pilapil v. Ibay-Somera, we recognized the divorce obtained by the respondent in his country, the Federal Republic of Germany.  There, we stated that divorce and its legal effects may be recognized in the Philippines insofar as respondent is concerned in view of the nationality principle in our civil law on the status of persons.For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. We hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid and recognized in this jurisdiction as a matter of comity.  Now, the effects of this divorce (as to the succession to the estate of the decedent) are matters best left to the determination of the trial court.Validity of the WillThe Civil Code provides:“Art. 17.  The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed.“When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign country, the solemnities established by Philippine laws shall be observed in their execution.” (underscoring ours)The clear intent of Lorenzo to bequeath his property to his second wife and children by her is glaringly shown in the will he executed.  We do not wish to frustrate his wishes, since he was a foreigner, not covered by our laws on “family rights and duties, status, condition and legal capacity.”Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved by foreign law which must be pleaded and proved.  Whether the will was executed in accordance with the formalities required is answered by referring to Philippine law.  In fact, the will was duly probated.As a guide however, the trial court should note that whatever public policy or good customs may be involved in our system of legitimes, Congress did not intend to extend the same to the succession of foreign nationals.  Congress specifically left the amount of successional rights to the decedent's national law.Having thus ruled, we find it unnecessary to pass upon the other issues raised.The FalloWHEREFORE, the petition is GRANTED.  The decision of the Court of Appeals in CA-G. R. SP No. 17446 promulgated on July 31, 1995 is SET ASIDE.In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and RECOGNIZES as VALID the decree of divorce granted in favor of the deceased Lorenzo N. Llorente by the Superior Court of the State of California in and for the County of San Diego, made final on December 4, 1952.Further, the Court REMANDS the cases to the court of origin for determination of the intrinsic validity of Lorenzo N. Llorente’s will and determination of the parties’ successional rights allowing proof of foreign law with instructions that the trial court shall proceed with all deliberate dispatch to settle the estate of the deceased within the framework of the Rules of Court.No costs.SO ORDERED.

G.R. No. 120639 September 25, 1998BPI EXPRESS CARD CORPORATION, petitioner, vs.COURT OF APPEALS and RICARDO J. MARASIGAN, respondents. KAPUNAN, J.:

The question before this Court is whether private respondent can recover moral damages arising from the cancellation of his credit card by petitioner credit card corporation.The facts of the case are as stated in the decision of the respondent court, 1 to wit:

The case arose from the dishonor of the credit card of the plaintiff Atty. Ricardo J. Marasigan by Café Adriatico, a business establishment accredited with the defendant-appellate BPI Express Card Corporation (BECC for brevity), on December 8, 1989 when the plaintiff entertained some guests thereat.The records of this case show that plaintiff, who is a lawyer by profession, was a complimentary member of BECC from February 1988 to February 1989 and was issued Credit Card No. 100-012-5534 with a credit limit of P3,000.00 and with a monthly billing every 27th of the month (Exh. N), subject to the terms and conditions stipulated in the contract (Exh. 1-b). His membership was renewed for another year or until February 1990 and the credit limit was increased to P5,000.00 (Exh. A). The plaintiffs oftentimes exceeded his credit limits (Exhs. I, I-1 to I-12) but this was never taken against him by the defendant and even his mode of paying his monthly bills in check was tolerated. Their contractual relations went on smoothly until his statement of account for October 1989 amounting to P8,987.84 was not paid in due time. The plaintiff admitted having inadvertently failed to pay his account for the said month because he was in Quezon province attending to some professional and personal commitments. He was informed by his secretary that defendant was demanding immediate payment of his outstanding account, was requiring him to issue a check for P15,000.00 which would include his future bills, and was threatening to suspend his credit card. Plaintiff issued Far East Bank and Trust Co. Check No. 494675 in the amount of P15,000.00, postdated December 15, 1989 which was received on November 23, 1989 by Tess Lorenzo, an employee of the defendant (Exhs. J and J-1), who in turn gave the said check to Jeng Angeles, a co-employee who handles the account of the plaintiff. The check remained in the custody of Jeng Angeles. Mr. Roberto Maniquiz, head of the collection department of defendant was formally informed of the postdated check about a week later. On November 28, 2989, defendant served plaintiff a letter by ordinary mail informing him of the temporary suspension of the privileges of his credit card and the inclusion of his account number in their Caution List. He was also told to refrain from further use of his credit card to avoid any inconvenience/embarrassment and that unless he settles his outstanding account with the defendant within 5 days from receipt of the letter, his membership will be permanently cancelled (Exh. 3). There is no showing that the plaintiff received this letter before December 8, 1989. Confidential that he had settled his account with the issuance of the postdated check, plaintiff invited some guests on December 8, 1989 and entertained them at Café Adriatico. When he presented his credit card to Café Adriatico for the bill amounting to P735.32, said card was dishonored. One of his guests, Mary Ellen Ringler, paid the bill by using her own credit card a Unibankard (Exhs. M, M-1 and M-2).In a letter addressed to the defendant dated December 12, 1989, plaintiff requested that he be sent the exact billing due him as of December 15, 1989, to withhold the deposit of his postdated check and that said check be returned to him because he had already instructed his bank to stop the payment thereof as the defendant violated their agreement that the plaintiff issue the check to the defendant to cover his account amounting to only P8,987.84 on the condition that the defendant will not suspend the effectivity of the card (Exh. D). A letter dated December 16, 1989 was sent by the plaintiff to the manager of FEBTC, Ramada Branch, Manila requesting the bank to stop the payment of the check (Exhs. E, E-1). No reply was received by plaintiff from the defendant to his letter dated December 12, 1989. Plaintiff sent defendant another letter dated March 12, 1990 reminding the latter that he had long rescinded and cancelled whatever arrangement he entered into with defendant and requesting for his correct billing, less the improper charges and penalties, and for an explanation within five (5) days from receipt thereof why his card was dishonored on December 8, 1989 despite assurance to the contrary by defendant's personnel-in-charge, otherwise the necessary court action shall be filed to hold defendant responsible for the humiliation and embarrassment suffered by him (Exh. F). Plaintiff alleged further that after a few days, a certain Atty. Albano, representing himself to be working with the office of Atty. Lopez, called him inquiring as to how the matter can be threshed out extrajudicially but the latter said that such is a serious matter cannot be discussed over the phone. The defendant served its final demand to the plaintiff dated March 21, 1990 requiring him to pay in full his overdue account, including stipulated fees and charges, within 5 days from receipt thereof or face court action and also to replace the postdated check with cash within the same period or face criminal suit for violation of Bouncing Check Law (Exh. G/Exh. 13). The plaintiff in a reply letter dated April 5, 1990 (Exh. H), demanded defendant's compliance with his request in his first letter dated March 12, 1990 within three (3) days from receipt, otherwise the plaintiff will file a case against them, . . . . 2

Thus, on May 7, 1990 private respondent filed a complaint for damages against petitioner before the Regional Trial Court of Makati, Branch 150, docketed as Civil Case No. 90-1174.After trial the trial court ruled for private respondent, finding that herein petitioner abused its right in contravention of Article 19 of the Civil Code. 3 The dispositive portion of the decision reads:

Wherefore, judgment is hereby rendered ordering the defendant to pay plaintiff the following:1. P 100,000.00 as moral damages;2. P 50,000.00 as exemplary damages; and3. P 20,000.00 by way of attorney's fees.

On the other hand, plaintiff is ordered to pay defendant its outstanding obligation in the amount of P14,439.41, amount due as of December 15, 1989. 4

The trial court's ruling was based on its findings and conclusions, to wit:There is no question that plaintiff had been in default in the payment of his billings for more than two months, prompting defendant to call him and reminded him of his obligation. Unable to personally talk with him, this Court is convinced that somehow one or another employee of defendant called him up more that once.However, while it is true that as indicated in the terms and conditions of the application for BPI credit card upon failure of the cardholder to pay his outstanding obligation for more that thirty (30) days, the defendant can automatically suspend or cancel the credit card, that reserved right should not have been abused as it was in fact abused, in plaintiff's case. What is more peculiar here is that there have been admitted communications between plaintiff and defendant prior to the suspension or cancellation of plaintiff's credit card and his inclusion in the cautions list. However, nowhere in any of these communications was there ever a hint given to plaintiff that his card had already been suspended or cancelled. In fact, the Court observed that while defendant was trying its best to persuade plaintiff to update its account and pay its obligation, it had already taken steps to suspend/cancel plaintiff's card and include him in the caution list. While the Court admires defendant's diplomacy in dealing with its clients, it cannot help but frown upon the backhanded way defendant deal with plaintiff's case. For despite Tess Lorenzo's denial, there is reason to believe that plaintiff was indeed assured by defendant of the continued honoring of his credit card so long as he pays his obligation of P15,000.00. Worst, upon receipt of the postdated check, defendant kept the same until a few days before it became due and said check was presented to the head of the collection department, Mr. Maniquiz, to take steps thereon, resulting to the embarrassing situations plaintiff found himself in on December 8, 1989. Moreover, Mr. Maniquiz himself admitted that his request for plaintiff to replace the check with cash was not because it was a postdated check but merely to tally the payment with the account due.Likewise, the Court is not persuaded by the sweeping denials made by Tess Lorenzo and her claim that her only participation was to receive the subject check. Her immediate superior, Mr. Maniquiz testified that he had instructed Lorenzo to communicate with plaintiff once or twice to request the latter to replace the questioned check with cash, thus giving support to the testimony of plaintiff's witness, Dolores Quizon, that it was one Tess Lorenzo whom she had talked over the phone regarding plaintiff's account and plaintiff's own statement that it was this woman who assured him that his card has not yet been and will not be cancelled/suspended if he would pay defendant the sum of P15,000.00.Now, on the issue of whether or not upon receipt of the subject check defendant had agreed that the card shall remain effective the Court takes note of the following:1. An employee of defendant corporation unconditionally accepted the subject check upon its delivery despite its being a postdated one; and the amount did not tally with plaintiff's obligation;2. Defendant did not deny nor controvert plaintiff's claim that all of his payments were made in checks;3. Defendant's main witness, Mr. Maniquiz, categorically stated that the request for plaintiff to replace his postdated check with a cash was merely for the purpose of tallying plaintiff's outstanding obligation with his payment and not to question the postdated check;4. That the card was suspended almost a week after receipt of the postdated check;5. That despite the many instances that defendant could have informed plaintiff over the phone of the cancellation or suspension of his credit card, it did not do so, which could have prevented the incident of December 8, 1989, the notice allegedly sent thru ordinary mail is not only unreliable but takes a long time. Such action as suspension of credit card must be immediately relayed to the person affected so as to avoid embarrassing situations.6. And that the postdated check was deposited on December 20, 1989.In view of the foregoing observations, it is needless to say that there was indeed an arrangement between plaintiff and the defendant, as can be inferred from the acts of the defendant's employees, that the subject credit card is still good and could still be used by the plaintiff as it would be honored by the duly accredited establishment of defendant.

Not satisfied with the Regional Trial Court's decision, petitioner appealed to the Court of Appeals, which in a decision promulgated on March 9, 1995 ruled in its dispositive portion.

WHEREFORE, premises considered the decision appealed from is hereby AFFIRMED with the MODIFICATION that the defendant-appellant shall pay the plaintiff-appellee the following: P50,000.00 as moral damages: P25,000.00 as exemplary damages; and P10,000.00 by way of attorney's fees.SO ORDERED. 6

Hence, the present petition on the following assignment of errors:I

THE LOWER COURT ERRED IN DECLARING THAT THERE WAS INDEED AN AGREEMENT OR ARRANGEMENT ENTERED INTO BETWEEN THE PARTIES WHEREIN THE DEFENDANT REQUIRED THE PLAINTIFF TO ISSUE A POSTDATED CHECK IN ITS FAVOR IN THE AMOUNT OF P15,000.00 AS PAYMENT FOR HIS OVERDUE ACCOUNTS, WITH THE CONDITION THAT THE PLAINTIFF'S CREDIT CARD WILL NOT BE SUSPENDED OR CANCELLED.

IITHE LOWER COURT ERRED IN HOLDING DEFENDANT LIABLE FOR DAMAGES AND ATTORNEY'S FEES ARISING OUT FROM THE DISHONOR OF THE PLAINTIFF'S CREDIT CARD. 7

We find the petition meritorious.The first issue to be resolved is whether petitioner had the right to suspend the credit card of the private respondent.

Under the terms and conditions of the credit card, signed by the private respondent, any card with outstanding balances after thirty (30) days from original billing/statement shall automatically be suspended, thus:

PAYMENT OF CHARGES — BECC shall furnish the Cardholder a monthly statement of account made through the use of the CARD and the Cardholder agrees that all charges made through the use of the CARD shall be paid by the Cardholder on or before the last day for payment, which is twenty (20) days from the date of the said statement of account; and such payment due date may be changed to an earlier date if the Cardholder's account is considered overdue and/or with balances in excess of the approved credit limit; or to such other date as may be deemed proper by the CARD issuer with notice to the Cardholder on the same monthly statement of account. If the last day for payment falls on a Saturday, Sunday or Holiday, the last day for payment automatically becomes the last working day prior to the said payment date. However, notwithstanding the absence or lack of proof of service of the statement of charges to the Cardholder, the latter shall pay any or all charges made through the use of the CARD within thirty (30) days from the date or dates thereof. Failure of Cardholder to pay any and all charges made through the CARD within the payment period as stated in the statement of charges or with in thirty (30) days from actual date or dates whichever occur earlier, shall render him in default without the necessity of demand from BECC, which the Cardholder expressly waives. These charges or balance thereof remaining unpaid after the payment due date indicated on the monthly statement of account shall bear interest of 3% per month and an additional penalty fee equivalent to another 3% of the amount due for every month or a fraction of a month's delay. PROVIDED, that if there occurs any changes on the prevailing market rates BECC shall have the option to adjust the rate of interest and/or penalty fee due on the outstanding obligation with prior notice to the Cardholder.

xxx xxx xxxAny CARD with outstanding balances unpaid after thirty (30) days from original billing/statement date shall automatically be suspended and those with accounts unpaid after sixty (60) days from said original billing/statement date shall automatically be cancelled without prejudice to BECC's right to suspend or cancel any CARD any time and for whatever reason. In case of default in his obligation as provided for in the preceding paragraph, Cardholder shall surrender his CARD to BECC and shall in addition to the interest and penalty charges aforementioned, pay the following liquidated damages and/or fees (a) a collection fee of 25% of the amount due if the account is referred to a collection agency or attorney; (b) a service fee of P100 for every dishonored check issued by the Cardholder's in payment of his account, without prejudice; however to BECC's right of considering Cardholder's obligation unpaid; cable cost for demanding payment or advising cancellation of membership shall also be for Cardholder's account; and (c) a final fee equivalent to 25% of the unpaid balance, exclusive of litigation expenses and judicial costs, if the payment of the account is enforced through court action. 8

The aforequoted provision of the card cannot be any clearer. By his own admission private respondent no payment within thirty days for his billing/statement dated 27 September 1989. Neither did he make payment for his original billing/statement dated 27 October 1989. Consequently as early as 28 October 1989 thirty days from the non-payment of his billing dated 27 September 1989, petitioner corporation could automatically suspend his credit card.The next issue is whether prior to the suspension of private respondent's credit card on 28 November 1989 the parties entered into an agreement whereby the card could still be used and would be duly honored by duly accredited establishments.We agree with the findings of the respondent court, that there was an arrangement between the parties, wherein the petitioner required the private respondent to issue a check worth P15,000.00 as payment for the latter's billings. However we find that the private respondent was not able to comply with this obligation.As the testimony of private respondent himself bears out, the agreement was for the immediate payment of the outstanding account:

Q In said statement of account that you are supposed to pay the P8,974.84 the charge of interest and penalties, did you note that?A Yes, sir I noted the date.Q When?A When I returned from the Quezon province, sirQ When?A I think November 22, sir.Q So that before you used again the credit card you were not able to pay immediately this P8,987.84 in cash?A I paid P15,000.00, sir.Q My question Mr. witness is, did you pay this P8,987.84 in charge of interest and penalties immediately in cash?A In cash no, but in check, sir.Q You said that you noted the word "immediately" in bold letters in your statement of accounts, why did not pay immediately?A Because I received that late, sir.Q Yes, on November 22 when you received from the secretary of the defendant telling you to pay the principal amount of P8,987.84, why did you not pay?A There was a communication between me and the defendant, I was required to pay P8,000.00 but I paid in check for P15,000.00, sir.Q Do you have any evidence to show that the defendant required you to pay in check for P15,000.00?

A Yes, sir.Q Where is it?A It was telecommunication, sir.Q So there is no written communication between you and the defendant?A There was none, sir.Q There is no written agreement which says that P8,987.84 should be paid for P15,000.00 in check, there is none?A Yes, no written agreement, sir.Q And you as a lawyer you know that a check is not considered as cash specially when it is postdated sent to the defendant?A That is correct, sir.

Clearly the purpose of the arrangement between the parties on November 22, 1989, was for the immediate payment of the private respondent's outstanding account, in order that his credit card would not be suspended.As agreed upon by the parties, on the following day, private respondent did issue a check for P15,000.00. However, the check was postdated 15 December 1989. Settled is the doctrine that a check is only a substitute for money and not money, the delivery of such an instrument does not, by itself operate as payment. 9 This is especially true in the case of a postdated check.Thus, the issuance by the private respondent of the postdated check was not effective payment. It did not comply with his obligation under the arrangement with Miss Lorenzo. Petitioner corporation was therefore justified in suspending his credit card.Finally, we find no legal and factual basis for private respondent's assertion that in canceling the credit card of the private respondent, petitioner abused its right under the terms and conditions of the contract.To find the existence of an abuse of right Article 19 the following elements must be present (1) There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. 10

Time and again this Court has held that good faith is presumed and the burden of proving bad faith is on the party alleging it. 11 This private respondent failed to do. In fact, the action of the petitioner belies the existence of bad faith. As early as 28 October 1989, petitioner could have suspended private respondent's card outright. Instead, petitioner allowed private respondent to use his card for several weeks. Petitioner had even notified private respondent of the impending suspension of his credit card and made special accommodations for him for setting his outstanding account. As such, petitioner cannot be said to have capriciously and arbitrarily canceled the private respondent's credit card.We do not dispute the findings of the lower court that private respondent suffered damages as a result of the cancellation of his credit card. However, there is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not the results of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone, the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum absqueinjuria. 12

In other words, in order that the plaintiff may maintain an action for the injuries of which he complaints, he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff a concurrence of injury to the plaintiff and legal responsibility by the person causing it. The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law. Thus, there must first be a breach of some duty and the imposition of liability for that breach before damages may be awarded; 13 and the breach of such duty should be the proximate cause of the injury.We therefore disagree with the ruling of the respondent court that the dishonor of the credit card of the private respondent by Café Adriatico is attributable to petitioner for its willful or gross neglect to inform the private respondent of the suspension of his credit card, the unfortunate consequence of which brought social humiliation and embarrassment to the private respondent. 14

It was petitioner's failure to settle his obligation which caused the suspension of his credit card and subsequent dishonor at Café Adriatico. He can not now pass the blame to the petitioner for not notifying him of the suspension of his card. As quoted earlier, the application contained the stipulation that the petitioner could automatically suspend a card whose billing has not been paid for more than thirty days. Nowhere is it stated in the terms and conditions of the application that there is a need of notice before suspension may be affected as private respondent claims. 15

This notwithstanding on November 28, 1989, the day of the suspension of private respondent's card, petitioner sent a letter by ordinary mail notifying private respondent that his card had been temporarily suspended. Under the Rules on Evidence, there is a disputable presumption that letters duly directed and mailed were received on the regular course of mail. 16 Aside from the private respondent's bare denial he failed to present evidence to rebut the presumption that he received said notice. In fact upon cross examination private respondent admitted that he did receive the letter notifying him of the cancellation:

Q Now you were saying that there was a first letter sent to you by the defendant?A Your letter, sir.Q Was that the first letter that you received?A Yes, sir.Q It is that there was a communication first between you and the defendant?A There was none, sir. I received a cancellation notice but that was after November 27. 17

As it was private respondent's own negligence which was the proximate cause of his embarrassing and humiliating experience, we find the award of damages by the respondent court clearly unjustified. We take note of the fact that private respondent has not yet paid his outstanding account with petitioner.IN VIEW OF THE FOREGOING, the decision of the Court of Appeals ordering petitioner to pay private respondent P100,000.00 as moral damages P50,000.00 as exemplary damages and P20,000.00 as attorney's fees, is SET ASIDE. Private respondent is DIRECTED to pay his outstanding obligation with the petitioner in the amount of P14,439.41.SO ORDERED.

G.R. No. L-32570 February 28, 1977ALBETZ INVESTMENTS, INC., petitioner, vs.COURT OF APPEALS, HON. JOSE N. LEUTERIO, as Judge of the Court of First Instance of Manila, Branch II, and SPOUSES RICARDO CALMA AND VICENTA D. CALMA, and SPOUSES FRANCISCO UMENGAN and MARIA R. UMENGAN, respondents. ANTONIO, J.:Appeal by certiorari from the decision of the Court of Appeals in CA-G. R. No. 39253-R, entitled "Spouses Ricardo Calma and Vicenta D. Calma, and Spouses Francisco Umengan and Maria R. Umengan, Plaintiffs-Appellees, versus Albetz Investments, Inc., Defendant-Appellant", promulgated on May 26, 1970, affirming the judgment of the Court of First Instance of Manila, Branch II, whereby Albetz Investments, Inc. was ordered to pay damages and attorney's fees to the plaintiffs. The facts, as found by the trial court, and adopted by the Court of Appeals, are as follows:

This is an action for damages caused to the plaintiffs' properties due to the alleged indiscriminate, negligent, and wanton demolition of the house of the plaintiffs when the sheriff served the writ of execution issued by the Municipal Court. The Calma spouses were the lessees of that lot describe as Lot No. 27 pt., Block No. BP-52 of a subdivision plan and located No. 816 Prudencio Street, Sampaloc, Manila. The defendant Albetz Investments, Inc., the lessor, needing the premises in order to construct a new building, demanded delivery of the lot to it and upon refusal of of the Calma Spouses, Albetz Investments, Inc. brought an action of unlawful detainer against Vicenta Calma, Civil Case No. 119712 (Exh. C). Judgment by default was rendered by the Municipal Court on March 30, 1964, ordering Vicenta Calma and all persons claiming under her to vacate the premises and to pay the corresponding rentals (Exh. 7). The judgment having become final, Atty. Macario S. Meneses, director and lawyer of Albetz Investments, Inc., filed a motion for execution (Exh. 10). The motion was granted and the Municipal Court issued the writ of execution, Exh. 2, on July 1, 1964, commanding the Sheriff to remove the defendants in the premises and to collect the damages. The Sheriff submitted his return of September 12, 1964, Exh. 12, informing the Court that or the date of the return the defendant has not yet demolished her house and improvements or vacated the lot. Vicenta Calma and others filed a petition for certiorari with preliminary injunction on September 7, 1964 in the Court of First Instance of Manila, Civil Case No. 58246, entitled Narciso Nakpil, et al. vs. Hon. Crisanto Aragon, etc. and Albetz Investments, Inc. (Exh. C). Upon the filing of this petition, counsel for Vicenta Calma filed a motion on September 8, 1964, in the unlawful detainer case, Exh. D, praying that all proceedings be suspended until the termination of the petition for certiorari with prohibition, Special Civil Action No. 58246. The Municipal Judge, acting upon the said motion for suspension, issued on September 17, 1,964, the following order (Exh. E):

In view of the special civil action for Certiorari and Prohibition with preliminary and mandatory injuction filed by defendant in the Court of First Instance of Manila bearing No. 58246, all the proceedings in the above-entitled cases are hereby suspended until after the said special action shall have been finally resolved.

The petition for certiorari with prohibition was denied by the Court of First Instance. From the order of dismissal, Vicenta Calma appealed to the Supreme Court on December 19, 1964. Atty. Meneses then filed a motion for demolition on February 9, 1965, Exh. 13, which was duly opposed by defendant Vicenta Calma, Exh. 14. Acting upon the said motion, the Municipal Judge entered an order on April 29, 1965, Exh. 15, granting the defendant 30 days from the receipt thereof to vacate and remove her house on the premises, otherwise a demolition order would issue. Vicenta Calma having failed to remove the house within the 30 day period, upon motion of Albetz investments, Inc., the Court issued an order on June 21, 1965, Exh. 17, authorizing and ordering the Sheriff to destroy, demolish or remove the house which had been constructed by the defendants. The appeal of the Calmas in the certiorari case was dimissed by the Supreme Court. Thereafter, the spouses Calma filed an action for specific performance with injuction against Albetz Investments, Inc., civil Case No. 63549, on December 2, 1965, praying that Albetz Investments, Inc. be ordered to sell the lot in question to the plaintiffs at a reasonable price. This complaint, Exh. N, was dismiss on February 15, 1966, Exh. 0, and on February 19, or four days thereafter the Sheriff, at the instance of defendant Albetz Investments, Inc., thru its lawyer, Atty. Meneses, demolished the house of' the spouses Calma without any new writ or order for demolition leaving been issued by the Municipal Court and only on the strength of the order of June 21, 1965.

Alleging that the demolition was illegal because it was made eight (8) months after issuance of the demolition order, and that the manner it was carried out was indiscriminate, causing damage to their personal properties, the spouses Calma, owners of the house, and the spouses Umengan, occupants of its ground floor, commenced the instant action in the Court of First Instance of Manila.

On the principal grounds that the order of demolition was no longer in force, having been issued eight (8) months before its enforcement, and that the said spouses were not notified of the order of demolition, and they demolished the house indiscrimately and the personal properties were carelessly placed, resulting in their being damaged, the Court of First Instance rendered judgment in favor of the plaintiffs and against the defendant, awarding them damages in specified amounts, as well as attorney's fees and costs of suit. Defendant appealed to the Court of Appeals. The Court of Appeals affirmed en toto the decision of the Court of First Instance, saying that "it is not disputed that plaintiffs were only notified of the order of demolition on the day the Sheriff appeared at the place of plaintiffs in the morning of February 19, 1966, with about 35 laborers to carry out the demolition of plaintiffs' house", it further appearing that they had not as yet been notified of the dismissal of their complaint for specific performance with injunction, Civil Case No. 63549. Alleging that both the Appellate Court and the trial court erred in declaring that an order of demolition, issued under section 13 (now section 14) of Rule 39 of the Rules, which is not implemented within sixty (60) days becomes a nullity, petitioner has filed the present petition. It is very clear from the records that this case arose out of a judgment in favor of the petitioner in an unlawful detainer case, which judgment had long been final and executory. Writ of execution was not satisfied because defendants Calma spouses refused to vacate the premises subject matter of the action and to remove their house therefrom. From then on, a series of delays in the execution was occasioned by the moves of the Calma spouses to forestall the enforcement of the judgment. We find, on the basis of the records, that the Calma spouses could not have been unaware of the order of demolition prior to the date when their house was actually demolished. The motion of Albetz Investments, Inc. for demolition which was filed on February 9, 1965 was duly opposed by the Calma spouses. On April 29, 1965, the Municipal Judge granted the said spouses a period of thirty (30) days within which to vacate the premises and remove their house therefrom, otherwise an order of demolition would issue. The order of demolition of June 21, 1965 was issued only after the certiorari case in the Court of First Instance was dismissed and after the Calma spouses failed to remove their house within the period granted to them by the court. It must also be noted that even after the Municipal Court issued its order of June 21, 1965, authorizing the Sheriff to demolish and remove the house constructed thereon by the Calma spouses, the Latter sought to forestall the implementation of said order by filing another action, this time for specific performance on December 2, 1965, after 'the dismissal of their certiorari case by this Court, was later action was ultimately dismissed by the Court of First Instance on February 15, 1966. It is also important to- note that, by order of the Municipal Court in the unlawful detainer case, the proceedings therein, specifically, the execution of the judgment, were suspended only until after the special civil action for certiorari was finally resolved, and the final resolution took place when the Supreme Court dismissed the appeal of the Calma spouses thereon. It is apparent, therefore, that the Calma spouses were given more than sufficient time to comply with the order of the Municipal Court to remove voluntarily their house from the premises. It is not even necessary to await the order of demolition to be served upon the said spouses before carrying out the writ of demolition. As stated in Acibo vs. Macadaeg 1 "Since the order of demolition was not appealable, there was no point in waiting until that order could be served on the adverse party before issuing the corresponding writ of demolition." The nature of forcible entry or unlawful detainer proceedings is that they are summary in character, "intended to provide an expeditious means of protecting actual possession or the right to possession of property." 2

As aptly explained by Chief Justice Moran in Co Tiamco v. Diaz. 3... Cases of forcible entry and detainer are summary in nature for they involve perturbation of social order which must be restored as promptly as possible and, accordingly, technicalities or details of procedure which may cause unnecessary delays should carefully be avoided.

It is for this reason that when judgment is in favor of the plaintiff, it should be executed immediately in order to prevent further damages to him caused by the loss of his possession. 4 The theory of private respondents is inconsistent with the special, summary character and purposes of an unlawful detainer proceedings. There is no question that the Municipal Court had full authority to order the demolition of the Calma's house by the Sheriff in order to give effect to its judgment in the unlawful detainer case. It is not enough for the Sheriff, in the enforcement of a judgment for delivery or restitution of property, to direct the defeated party to make such delivery or restitution. It is the duty of the Sheriff to oust the defeated party from the property and make the restitution by placing the winning party in possession of said property. If to accomplish this he has to remove an improvement constructed by the defeated party, he cannot effect such removal without special order of the court, which order can only be issued upon motion of the prevailing party with notice and after hearing, and upon the defeated party's failure to remove the improvement within the reasonable time given to him by the court. 5

Thus, Section 14, Rule 39, of the Revised Rules of Court, specifically provides: SEC. 14 Removal of improvements on property object of execution.—When the property subject of the execution contains improvements constructed or planted by the judgment debtor or his agent, the officer shall not destroy, demolish or remove said improvements except upon special order of the court, issued upon petition of the judgment creditor after due hearing and after the former has failed to remove the same within a reasonable time fixed by the court.

This provision has been taken from section 1 of Commonwealth Act No. 39, which states that: "The Provincial Sheriff, in executing the decision of a competent court in ejectment cases, shall not destroy, demolish, or remove the improvements constructed or planted by the defendant or his agent or servant on the premises, unless expressly authorized by the Court. The court may authorize the Provincial Sheriff to do so, upon petition of the plaintiff or his attorney, after due hearing, and upon failure of the defendant to remove the after-mentioned improvements within a reasonable time after being so ordered by the Court."

Evident from the foregoing is the statutory purpose which is to grant to the defeated party a reasonable time to remove his improvement from the premises. Therefore, any delay in the implementation of the order of demolition accrues to the benefit of the deforciant. The grant of such a reasonable period to remove the improvements is predicated upon reasons of fairness and justice to enable the defeated party to look for another place wherein he can transfer his improvements and personal effects. The law does not specify the period within which the order of demolition should be carried out. The reason is obvious. There may be factors and circumstances which would justify deferment of the implementation of the order of demolition. Anent the manner in which the demolition was carried out, however, We affirm the finding of the trial court and the Court of Appeals that the same was indiscriminate, without due regard to the safety of the personal properties belonging to the Calma and Umengan spouses, resulting in their destruction. AS found by the trial court and the Court of Appeals:

In the course of the demolition, which was, according to the evidence for the the plaintiffs, indiscriminate, the personal properties were just carelessly placed between the house and the fence, and the were left in the house and they were damaged by falling debris. As here was no one to take care (of them), many of the properties ere lost.

While it is true that Albetz Investments, Inc. had the legal right to the surrender to them of the parcel of land leased by the Calma spouses, which could only be achieved thru the demolition of the house standing thereon, nevertheless, such right should not have been exercised in such a manner as to unduly prejudice its owners. Urged by the lawyer of petitioner, the Sheriff, aided with petitioner's laborers, wantonly, maliciously and indiscriminately demolished the house, destroying in the process many of the personal properties therein which belonged to the spouses Calma and Umengan. The extent of the damage has been determined by the trial court and affirmed by the Court of Appeals, upon a finding that the same was not contested by petitioner. We find that the provisions of the Civil Code on Human Relations (Chapter 2) are applicable, specifically Article 19 which provides, thus:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

Certainly, the demolition complained of in the case at bar was not carried out in a manner consistent with justice and good faith. At the instance of petitioner, it was done in a swift, unconscionable manner, giving the occupants of the house no time at all to remove their belongings therefrom. No damage worth mentioning would have been sustained by petitioner Albetz Investments, Inc. if their men, led by the Sheriff, had been instructed to allow said occupants to remove their personal properties, considering that this would not have taken a considerable length of time. WHEREFORE, with the foregoing modifications, the appealed decision is hereby AFFIRMED, without pronouncement as to costs. Fernando, (Chairman), Barredo, Muñoz Palma, and Aquino, JJ., concur. Concepcion Jr., J., took no part. Muñoz Palma J, was designated to sit in the Second division.  .R. No. 79578 March 13, 1991RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI), petitioner, vs.HON. COURT OF APPEALS, and SPOUSES MINERVA TIMAN and FLORES TIMAN, respondents.SARMIENTO, J.:pA social condolence telegram sent through the facilities of the petitioner gave rise to the present petition for review on certiorari assailing the decision 1 of the respondent Court of Appeals which affirmed in toto the judgment 2 of the trial court, dated February 14, 1985, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:1. Ordering the defendant RCPI to pay plaintiff the amount of P30,848.05 representing actual and compensatory damages; P10,000.00 as moral damages and P5,000.00 as exemplary damages.2. Awarding of attorney's fees in the sum of P5,000.00. Costs against the defendant.SO ORDERED. 3

The facts as gleaned from the records of the case are as follows:On January 24, 1983, private respondents-spouses Minerva Timan and Flores Timan sent a telegram of condolence to their cousins, Mr. and Mrs. Hilario Midoranda, at Trinidad, Calbayog City, through petitioner Radio Communications of the Philippines, Inc. (RCPI, hereinafter) at Cubao, Quezon City, to convey their deepest sympathy for the recent death of the mother-in-law of Hilario Midoranda 4 to wit:

MR. & MRS. HILARIO MIDORANDATRINIDAD, CALBAYOG CITY

MAY GOD GIVE YOU COURAGE AND STRENGTH TO BEAR YOUR LOSS. OUR DEEPEST SYMPATHY TO YOU AND MEMBERS OF THE FAMILY.

MINER &

FLORY. 5

The condolence telegram was correctly transmitted as far as the written text was concerned. However, the condolence message as communicated and delivered to the addressees was typewritten on a "Happy Birthday" card and placed inside a "Christmasgram" envelope. Believing that the transmittal to the addressees of the aforesaid telegram in that nonsuch manner was done intentionally and with gross breach of contract resulting to ridicule, contempt, and humiliation of the private respondents and the addressees, including their friends and relatives, the spouses Timan

demanded an explanation. Unsatisfied with RCPI's explanations in its letters, dated March 9 and April 20, 1983, the Timans filed a complaint for damages. 6

The parties stipulated at the pre-trial that the issue to be resolved by the trial court was:WHETHER or not the act of delivering the condolence message in a Happy Birthday" card with a "Christmasgram" envelope constitutes a breach of contract on the part of the defendant. If in the affirmative, whether or not plaintiff is entitled to damages. 7

The trial court rendered judgment in favor of the respondents Timans which was affirmed in toto by the Court of Appeals. RCPI now submits the following assignment of errors:

ITHE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY ACTUAL AND COMPENSATORY DAMAGES IN THE AMOUNT OF P30,848.05.

IITHE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY MORAL DAMAGES IN THE AMOUNT OF P10,000.00.

IIITHE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY EXEMPLARY DAMAGES IN THE AMOUNT OF P5,000.00.

IVTHE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY ATTORNEYS FEES IN THE AMOUNT OF P5,000.00 PLUS COSTS OF SUIT. 8

The four assigned errors are going to be discussed jointly because they are all based on the same findings of fact.We fully agree with the appellate court's endorsement of the trial court's conclusion that RCPI, a corporation dealing in telecommunications and offering its services to the public, is engaged in a business affected with public interest. As such, it is bound to exercise that degree of diligence expected of it in the performance of its obligation. 9

One of RCPI's main arguments is that it still correctly transmitted the text of the telegram and was received by the addressees on time despite the fact that there was "error" in the social form and envelope used. 10 RCPI asserts that there was no showing that it has any motive to cause harm or damage on private respondents:

Petitioner humbly submits that the "error" in the social form used does not come within the ambit of fraud, malice or bad faith as understood/defined under the law. 11

We do not agree.In a distinctly similar case, 12 and oddly also involving the herein petitioner as the same culprit, we held:

Petitioner is a domestic corporation engaged in the business of receiving and transmitting messages. Everytime a person transmits a message through the facilities of the petitioner, a contract is entered into. Upon receipt of the rate or fee fixed, the petitioner undertakes to transmit the message accurately . . . As a corporation, the petitioner can act only through its employees. Hence the acts of its employees in receiving and transmitting messages are the acts of the petitioner. To hold that the petitioner is not liable directly for the acts of its employees in the pursuit of petitioner's business is to deprive the general public availing of the services of the petitioner of an effective and adequate remedy. 13

Now, in the present case, it is self-evident that a telegram of condolence is intended and meant to convey a message of sorrow and sympathy. Precisely, it is denominated "telegram of condolence" because it tenders sympathy and offers to share another's grief. It seems out of this world, therefore, to place that message of condolence in a birthday card and deliver the same in a Christmas envelope for such acts of carelessness and incompetence not only render violence to good taste and common sense, they depict a bizarre presentation of the sender's feelings. They ridicule the deceased's loved ones and destroy the atmosphere of grief and respect for the departed.Anyone who avails of the facilities of a telegram company like RCPI can choose to send his message in the ordinary form or in a social form. In the ordinary form, the text of the message is typed on plain newsprint paper. On the other hand, a social telegram is placed in a special form with the proper decorations and embellishments to suit the occasion and the message and delivered in an envelope matching the purpose of the occasion and the words and intent of the message. The sender pays a higher amount for the social telegram than for one in the ordinary form. It is clear, therefore, that when RCPI typed the private respondents' message of condolence in a birthday card and delivered the same in a colorful Christmasgram envelope, it committed a breach of contract as well as gross negligence. Its excuse that it had run out of social condolence cards and envelopes 14 is flimsy and unacceptable. It could not have been faulted had it delivered the message in the ordinary form and reimbursed the difference in the cost to the private respondents. But by transmitting it unfittingly—through other special forms clearly, albeit outwardly, portraying the opposite feelings of joy and happiness and thanksgiving—RCPI only exacerbated the sorrowful situation of the addressees and the senders. It bears stress that this botchery exposed not only the petitioner's gross negligence but also its callousness and disregard for the sentiments of its clientele, which tantamount to wanton misconduct, for which it must be held liable for damages.It is not surprising that when the Timans' telegraphic message reached their cousin, it became the joke of the Midorandas' friends, relatives, and associates who thought, and rightly so, that the unpardonable mix-up was a mockery of the death of the mother-in-law of the senders' cousin. Thus it was not unexpected that because of this unusual incident, which caused much embarrassment and distress to respondent Minerva Timan, he suffered nervousness and hypertension resulting in his confinement for three days starting from April 4, 1983 at the Capitol Medical Center in Quezon City. 15

The petitioner argues that "a court cannot rely on speculation, conjectures or guess work as to the fact and amount of damages, but must depend on the actual proof that damages had been suffered and evidence of the actualamount. 16 In other words, RCPI insists that there is no causal relation of the illness suffered by Mr. Timan with the foul-

up caused by the petitioner. But that is a question of fact. The findings of fact of the trial court and the respondent court concur in favor of the private respondents. We are bound by such findings—that is the general rule well-established by a long line of cases. Nothing has been shown to convince us to justify the relaxation of this rule in the petitioner's favor. On the contrary, these factual findings are supported by substantial evidence on record.Anent the award of moral and exemplary damages assigned as errors, the findings of the respondent court are persuasive.

. . . When plaintiffs placed an order for transmission of their social condolence telegram, defendant did not inform the plaintiff of the exhaustion of such social condolence forms. Defendant-appellant accepted through its authorized agent or agency the order and received the corresponding compensation therefor. Defendant did not comply with its contract as intended by the parties and instead of transmitting the condolence message in an ordinary form, in accordance with its guidelines, placed the condolence message expressing sadness and sorrow in forms conveying joy and happiness. Under the circumstances, We cannot accept the defendant's plea of good faith predicated on such exhaustion of social condolence forms. Gross negligence or carelessness can be attributed to defendant-appellant in not supplying its various stations with such sufficient and adequate social condolence forms when it held out to the public sometime in January, 1983, the availability of such social condolence forms and accepted for a fee the transmission of messages on said forms. Knowing that there are no such forms as testified to by its Material Control Manager Mateo Atienza, and entering into a contract for the transmission of messages in such forms, defendant-appellant committed acts of bad faith, fraud or malice. . . . 17

RCPI's argument that it can not be held liable for exemplary damages, being penal or punitive in character, 18 is without merit. We have so held in many cases, and oddly, quite a number of them likewise involved the herein petitioner as the transgressor.

xxx xxx xxx. . . In contracts and quasi-contracts, exemplary damages may be awarded if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. There was gross negligence on the part of RCPI personnel in transmitting the wrong telegram, of which RCPI must be held liable. Gross carelessness or negligence constitutes wanton misconduct.

xxx xxx xxx. . . punitive damages may be recovered for wilful or wantonly negligent acts in respect of messages, even though those acts are neither authorized nor ratified (Arkansas & L.R. Co. vs. Stroude 91 SW 18; West vs. Western U. Tel. Co., 17 P807; Peterson vs. Western U. Tel. Co., 77 NW 985; Brown vs. Western U. Tel. Co., 6 SE 146). Thus, punitive damages have been recovered for mistakes in the transmission of telegrams (Pittman vs. Western Union Tel. Co., 66 SO 977; Painter vs. Western Union Tel. Co., 84 SE 293) (emphasis supplied). 19

We wish to add a little footnote to this Decision. By merely reviewing the number of cases that has reached this Court in which the petitioner was time and again held liable for the same causes as in the present case breach of contract and gross negligence—the ineluctable conclusion is that it has not in any way reformed nor improved its services to the public. It must do so now or else next time the Court may be constrained to adjudge stricter sanctions.WHEREFORE, premises considered, the decision appealed from is AFFIRMED in toto.Costs against the petitioner.SO ORDERED.

Philippine National Bank vs. Court of Appeals, 83 SCRA 237, May 18, 1978G.R. No. L-27155 May 18, 1978PHILIPPINE NATIONAL BANK, petitioner, vs.THE COURT OF APPEALS, RITA GUECO TAPNIO, CECILIO GUECO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., respondents. ANTONIO, J.:Certiorari to review the decision of the Court of Appeals which affirmed the judgment of the Court of First Instance of Manila in Civil Case No. 34185, ordering petitioner, as third-party defendant, to pay respondent Rita Gueco Tapnio, as third-party plaintiff, the sum of P2,379.71, plus 12% interest per annum from September 19, 1957 until the same is fully paid, P200.00 attorney's fees and costs, the same amounts which Rita Gueco Tapnio was ordered to pay the Philippine American General Insurance Co., Inc., to be paid directly to the Philippine American General Insurance Co., Inc. in full satisfaction of the judgment rendered against Rita Gueco Tapnio in favor of the former; plus P500.00 attorney's fees for Rita Gueco Tapnio and costs. The basic action is the complaint filed by Philamgen (Philippine American General Insurance Co., Inc.) as surety against Rita Gueco Tapnio and Cecilio Gueco, for the recovery of the sum of P2,379.71 paid by Philamgen to the Philippine National Bank on behalf of respondents Tapnio and Gueco, pursuant to an indemnity agreement. Petitioner Bank was made third-party defendant by Tapnio and Gueco on the theory that their failure to pay the debt was due to the fault or negligence of petitioner. The facts as found by the respondent Court of Appeals, in affirming the decision of the Court of First Instance of Manila, are quoted hereunder: Plaintiff executed its Bond, Exh. A, with defendant Rita Gueco Tapnio as principal, in favor of the Philippine National Bank Branch at San Fernando, Pampanga, to guarantee the payment of defendant Rita Gueco Tapnio's account with said Bank. In turn, to guarantee the payment of whatever amount the bonding company would pay to the Philippine National Bank, both defendants executed the indemnity agreement, Exh. B. Under the terms and conditions of this

indemnity agreement, whatever amount the plaintiff would pay would earn interest at the rate of 12% per annum, plus attorney's fees in the amount of 15 % of the whole amount due in case of court litigation. The original amount of the bond was for P4,000.00; but the amount was later reduced to P2,000.00. It is not disputed that defendant Rita Gueco Tapnio was indebted to the bank in the sum of P2,000.00, plus accumulated interests unpaid, which she failed to pay despite demands. The Bank wrote a letter of demand to plaintiff, as per Exh. C; whereupon, plaintiff paid the bank on September 18, 1957, the full amount due and owing in the sum of P2,379.91, for and on account of defendant Rita Gueco's obligation (Exhs. D and D-1). Plaintiff, in turn, made several demands, both verbal and written, upon defendants (Exhs. E and F), but to no avail. Defendant Rita Gueco Tapnio admitted all the foregoing facts. She claims, however, when demand was made upon her by plaintiff for her to pay her debt to the Bank, that she told the Plaintiff that she did not consider herself to be indebted to the Bank at all because she had an agreement with one Jacobo-Nazon whereby she had leased to the latter her unused export sugar quota for the 1956-1957 agricultural year, consisting of 1,000 piculs at the rate of P2.80 per picul, or for a total of P2,800.00, which was already in excess of her obligation guaranteed by plaintiff's bond, Exh. A. This lease agreement, according to her, was with the knowledge of the bank. But the Bank has placed obstacles to the consummation of the lease, and the delay caused by said obstacles forced 'Nazon to rescind the lease contract. Thus, Rita Gueco Tapnio filed her third-party complaint against the Bank to recover from the latter any and all sums of money which may be adjudged against her and in favor of the plaitiff plus moral damages, attorney's fees and costs. Insofar as the contentions of the parties herein are concerned, we quote with approval the following findings of the lower court based on the evidence presented at the trial of the case: It has been established during the trial that Mrs. Tapnio had an export sugar quota of 1,000 piculs for the agricultural year 1956-1957 which she did not need. She agreed to allow Mr. Jacobo C. Tuazon to use said quota for the consideration of P2,500.00 (Exh. "4"-Gueco). This agreement was called a contract of lease of sugar allotment. At the time of the agreement, Mrs. Tapnio was indebted to the Philippine National Bank at San Fernando, Pampanga. Her indebtedness was known as a crop loan and was secured by a mortgage on her standing crop including her sugar quota allocation for the agricultural year corresponding to said standing crop. This arrangement was necessary in order that when Mrs. Tapnio harvests, the P.N.B., having a lien on the crop, may effectively enforce collection against her. Her sugar cannot be exported without sugar quota allotment Sometimes, however, a planter harvest less sugar than her quota, so her excess quota is utilized by another who pays her for its use. This is the arrangement entered into between Mrs. Tapnio and Mr. Tuazon regarding the former's excess quota for 1956-1957 (Exh. "4"-Gueco). Since the quota was mortgaged to the P.N.B., the contract of lease had to be approved by said Bank, The same was submitted to the branch manager at San Fernando, Pampanga. The latter required the parties to raise the consideration of P2.80 per picul or a total of P2,800.00 (Exh. "2-Gueco") informing them that "the minimum lease rental acceptable to the Bank, is P2.80 per picul." In a letter addressed to the branch manager on August 10, 1956, Mr. Tuazon informed the manager that he was agreeable to raising the consideration to P2.80 per picul. He further informed the manager that he was ready to pay said amount as the funds were in his folder which was kept in the bank. Explaining the meaning of Tuazon's statement as to the funds, it was stated by him that he had an approved loan from the bank but he had not yet utilized it as he was intending to use it to pay for the quota. Hence, when he said the amount needed to pay Mrs. Tapnio was in his folder which was in the bank, he meant and the manager understood and knew he had an approved loan available to be used in payment of the quota. In said Exh. "6-Gueco", Tuazon also informed the manager that he would want for a notice from the manager as to the time when the bank needed the money so that Tuazon could sign the corresponding promissory note.Further Consideration of the evidence discloses that when the branch manager of the Philippine National Bank at San Fernando recommended the approval of the contract of lease at the price of P2.80 per picul (Exh. 1 1-Bank), whose recommendation was concurred in by the Vice-president of said Bank, J. V. Buenaventura, the board of directors required that the amount be raised to 13.00 per picul. This act of the board of directors was communicated to Tuazon, who in turn asked for a reconsideration thereof. On November 19, 1956, the branch manager submitted Tuazon's request for reconsideration to the board of directors with another recommendation for the approval of the lease at P2.80 per picul, but the board returned the recommendation unacted upon, considering that the current price prevailing at the time was P3.00 per picul (Exh. 9-Bank). The parties were notified of the refusal on the part of the board of directors of the Bank to grant the motion for reconsideration. The matter stood as it was until February 22, 1957, when Tuazon wrote a letter (Exh. 10-Bank informing the Bank that he was no longer interested to continue the deal, referring to the lease of sugar quota allotment in favor of defendant Rita Gueco Tapnio. The result is that the latter lost the sum of P2,800.00 which she should have received from Tuazon and which she could have paid the Bank to cancel off her indebtedness, The court below held, and in this holding we concur that failure of the negotiation for the lease of the sugar quota allocation of Rita Gueco Tapnio to Tuazon was due to the fault of the directors of the Philippine National Bank, The refusal on the part of the bank to approve the lease at the rate of P2.80 per picul which, as stated above, would have enabled Rita Gueco Tapnio to realize the amount of P2,800.00 which was more than sufficient to pay off her indebtedness to the Bank, and its insistence on the rental price of P3.00 per picul thus unnecessarily increasing the value by only a difference of P200.00. inevitably brought about the rescission of the lease contract to the damage and prejudice of Rita Gueco Tapnio in the aforesaid sum of P2,800.00. The unreasonableness of the position adopted by the board of directors of the Philippine National Bank in refusing to approve the lease at the rate of P2.80 per picul and insisting on the rate of P3.00 per picul, if only to increase the retail value by only P200.00 is shown by the fact that all the accounts of Rita Gueco Tapnio with the Bank were secured by chattel mortgage on standing crops, assignment of leasehold rights and interests on her properties, and surety bonds, aside from the fact that from Exh. 8-Bank, it appears that she was offering to execute a real estate mortgage in favor of the Bank to replace the surety bond This

statement is further bolstered by the fact that Rita Gueco Tapnio apparently had the means to pay her obligation fact that she has been granted several value of almost P80,000.00 for the agricultural years from 1952 to 56. 1 Its motion for the reconsideration of the decision of the Court of Appeals having been denied, petitioner filed the present petition. The petitioner contends that the Court of Appeals erred: (1) In finding that the rescission of the lease contract of the 1,000 piculs of sugar quota allocation of respondent Rita Gueco Tapnio by Jacobo C. Tuazon was due to the unjustified refusal of petitioner to approve said lease contract, and its unreasonable insistence on the rental price of P3.00 instead of P2.80 per picul; and (2) In not holding that based on the statistics of sugar price and prices of sugar quota in the possession of the petitioner, the latter's Board of Directors correctly fixed the rental of price per picul of 1,000 piculs of sugar quota leased by respondent Rita Gueco Tapnio to Jacobo C. Tuazon at P3.00 per picul. Petitioner argued that as an assignee of the sugar quota of Tapnio, it has the right, both under its own Charter and under the Corporation Law, to safeguard and protect its rights and interests under the deed of assignment, which include the right to approve or disapprove the said lease of sugar quota and in the exercise of that authority, its Board of Directors necessarily had authority to determine and fix the rental price per picul of the sugar quota subject of the lease between private respondents and Jacobo C. Tuazon. It argued further that both under its Charter and the Corporation Law, petitioner, acting thru its Board of Directors, has the perfect right to adopt a policy with respect to fixing of rental prices of export sugar quota allocations, and in fixing the rentals at P3.00 per picul, it did not act arbitrarily since the said Board was guided by statistics of sugar price and prices of sugar quotas prevailing at the time. Since the fixing of the rental of the sugar quota is a function lodged with petitioner's Board of Directors and is a matter of policy, the respondent Court of Appeals could not substitute its own judgment for that of said Board of Directors, which acted in good faith, making as its basis therefore the prevailing market price as shown by statistics which were then in their possession. Finally, petitioner emphasized that under the appealed judgment, it shall suffer a great injustice because as a creditor, it shall be deprived of a just claim against its debtor (respondent Rita Gueco Tapnio) as it would be required to return to respondent Philamgen the sum of P2,379.71, plus interest, which amount had been previously paid to petitioner by said insurance company in behalf of the principal debtor, herein respondent Rita Gueco Tapnio, and without recourse against respondent Rita Gueco Tapnio. We must advert to the rule that this Court's appellate jurisdiction in proceedings of this nature is limited to reviewing only errors of law, accepting as conclusive the factual fin dings of the Court of Appeals upon its own assessment of the evidence. 2The contract of lease of sugar quota allotment at P2.50 per picul between Rita Gueco Tapnio and Jacobo C. Tuazon was executed on April 17, 1956. This contract was submitted to the Branch Manager of the Philippine National Bank at San Fernando, Pampanga. This arrangement was necessary because Tapnio's indebtedness to petitioner was secured by a mortgage on her standing crop including her sugar quota allocation for the agricultural year corresponding to said standing crop. The latter required the parties to raise the consideration to P2.80 per picul, the minimum lease rental acceptable to the Bank, or a total of P2,800.00. Tuazon informed the Branch Manager, thru a letter dated August 10, 1956, that he was agreeable to raising the consideration to P2.80 per picul. He further informed the manager that he was ready to pay the said sum of P2,800.00 as the funds were in his folder which was kept in the said Bank. This referred to the approved loan of Tuazon from the Bank which he intended to use in paying for the use of the sugar quota. The Branch Manager submitted the contract of lease of sugar quota allocation to the Head Office on September 7, 1956, with a recommendation for approval, which recommendation was concurred in by the Vice-President of the Bank, Mr. J. V. Buenaventura. This notwithstanding, the Board of Directors of petitioner required that the consideration be raised to P3.00 per picul. Tuazon, after being informed of the action of the Board of Directors, asked for a reconsideration thereof. On November 19, 1956, the Branch Manager submitted the request for reconsideration and again recommended the approval of the lease at P2.80 per picul, but the Board returned the recommendation unacted, stating that the current price prevailing at that time was P3.00 per picul. On February 22, 1957, Tuazon wrote a letter, informing the Bank that he was no longer interested in continuing the lease of sugar quota allotment. The crop year 1956-1957 ended and Mrs. Tapnio failed to utilize her sugar quota, resulting in her loss in the sum of P2,800.00 which she should have received had the lease in favor of Tuazon been implemented. It has been clearly shown that when the Branch Manager of petitioner required the parties to raise the consideration of the lease from P2.50 to P2.80 per picul, or a total of P2,800-00, they readily agreed. Hence, in his letter to the Branch Manager of the Bank on August 10, 1956, Tuazon informed him that the minimum lease rental of P2.80 per picul was acceptable to him and that he even offered to use the loan secured by him from petitioner to pay in full the sum of P2,800.00 which was the total consideration of the lease. This arrangement was not only satisfactory to the Branch Manager but it was also approves by Vice-President J. V. Buenaventura of the PNB. Under that arrangement, Rita Gueco Tapnio could have realized the amount of P2,800.00, which was more than enough to pay the balance of her indebtedness to the Bank which was secured by the bond of Philamgen. There is no question that Tapnio's failure to utilize her sugar quota for the crop year 1956-1957 was due to the disapproval of the lease by the Board of Directors of petitioner. The issue, therefore, is whether or not petitioner is liable for the damage caused. As observed by the trial court, time is of the essence in the approval of the lease of sugar quota allotments, since the same must be utilized during the milling season, because any allotment which is not filled during such milling season may be reallocated by the Sugar Quota Administration to other holders of allotments. 3 There was no proof that there was any other person at that time willing to lease the sugar quota allotment of private respondents for a price higher than P2.80 per picul. "The fact that there were isolated transactions wherein the consideration for the lease was P3.00

a picul", according to the trial court, "does not necessarily mean that there are always ready takers of said price. " The unreasonableness of the position adopted by the petitioner's Board of Directors is shown by the fact that the difference between the amount of P2.80 per picul offered by Tuazon and the P3.00 per picul demanded by the Board amounted only to a total sum of P200.00. Considering that all the accounts of Rita Gueco Tapnio with the Bank were secured by chattel mortgage on standing crops, assignment of leasehold rights and interests on her properties, and surety bonds and that she had apparently "the means to pay her obligation to the Bank, as shown by the fact that she has been granted several sugar crop loans of the total value of almost P80,000.00 for the agricultural years from 1952 to 1956", there was no reasonable basis for the Board of Directors of petitioner to have rejected the lease agreement because of a measly sum of P200.00. While petitioner had the ultimate authority of approving or disapproving the proposed lease since the quota was mortgaged to the Bank, the latter certainly cannot escape its responsibility of observing, for the protection of the interest of private respondents, that degree of care, precaution and vigilance which the circumstances justly demand in approving or disapproving the lease of said sugar quota. The law makes it imperative that every person "must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith, 4 This petitioner failed to do. Certainly, it knew that the agricultural year was about to expire, that by its disapproval of the lease private respondents would be unable to utilize the sugar quota in question. In failing to observe the reasonable degree of care and vigilance which the surrounding circumstances reasonably impose, petitioner is consequently liable for the damages caused on private respondents. Under Article 21 of the New Civil Code, "any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage." The afore-cited provisions on human relations were intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes. 5 A corporation is civilly liable in the same manner as natural persons for torts, because "generally speaking, the rules governing the liability of a principal or master for a tort committed by an agent or servant are the same whether the principal or master be a natural person or a corporation, and whether the servant or agent be a natural or artificial person. All of the authorities agree that a principal or master is liable for every tort which he expressly directs or authorizes, and this is just as true of a corporation as of a natural person, A corporation is liable, therefore, whenever a tortious act is committed by an officer or agent under express direction or authority from the stockholders or members acting as a body, or, generally, from the directors as the governing body." 6 WHEREFORE, in view of the foregoing, the decision of the Court of Appeals is hereby AFFIRMED. Fernando, Aquino, Concepcion, Jr., and Santos, JJ., concur. Separate OpinionsBARREDO, J., concurring:concurs on the basis of Article 19 of the Civil Code, or at least, of equity. He reserves his opinion on the matter of torts relied upon in the main opinion.

[G. R. No. 116320. November 29, 1999]ADALIA FRANCISCO, Petitioner, vs. COURT OF APPEALS , HERBY COMMERCIAL & CONSTRUCTION CORPORATION AND JAIME C. ONG, Respondents.

D E C I S I O NGONZAGA_REYES, J.:Assailed in this petition for review on certiorari is the decision[1 of the Court of Appeals affirming the decision[2 rendered by Branch 168 of the Regional Trial Court of Pasig in Civil Case No. 35231 in favor of private respondents.The controversy before this Court finds its origins in a Land Development and Construction Contract which was entered into on June 23, 1977 by A. Francisco Realty & Development Corporation (AFRDC), of which petitioner Adalia Francisco (Francisco) is the president, and private respondent Herby Commercial & Construction Corporation (HCCC), represented by its President and General Manager private respondent Jaime C. Ong (Ong), pursuant to a housing project of AFRDC at San Jose del Monte, Bulacan, financed by the Government Service Insurance System (GSIS). Under the contract, HCCC agreed to undertake the construction of 35 housing units and the development of 35 hectares of land. The payment of HCCC for its services was on a turn-key basis, that is, HCCC was to be paid on the basis of the completed houses and developed lands delivered to and accepted by AFRDC and the GSIS. To facilitate payment, AFRDC executed a Deed of Assignment in favor of HCCC to enable the latter to collect payments directly from the GSIS. Furthermore, the GSIS and AFRDC put up an Executive Committee Account with the Insular Bank of Asia & America (IBAA) in the amount of P4,000,000.00 from which checks would be issued and co-signed by petitioner Francisco and the GSIS Vice-President Armando Diaz (Diaz).On February 10, 1978, HCCC filed a complaint[3 with the Regional Trial Court of Quezon City against Francisco, AFRDC and the GSIS for the collection of the unpaid balance under the Land Development and Construction Contract in the amount of P515,493.89 for completed and delivered housing units and land development. However, the parties eventually arrived at an amicable settlement of their differences, which was embodied in a Memorandum Agreement executed by HCCC and AFRDC on July 21, 1978. Under the agreement, the parties stipulated that HCCC had turned over 83 housing units which have been accepted and paid for by the GSIS. The GSIS acknowledged that it still owed HCCC P520,177.50 representing incomplete construction of housing units, incomplete land development and 5% retention, which amount will be discharged when the defects and deficiencies are finally completed by HCCC. It was also provided that HCCC was indebted to AFRDC in the amount of P180,234.91 which the former agreed would be paid out of the proceeds from the 40 housing units still to be turned over by HCCC or from any amount due to HCCC from the GSIS. Consequently, the trial court dismissed the case upon the filing by the parties of a joint motion to dismiss.Sometime in 1979, after an examination of the records of the GSIS, Ong discovered that Diaz and Francisco had executed and signed seven checks[4, of various dates and amounts, drawn against the IBAA and payable to HCCC for

completed and delivered work under the contract. Ong, however, claims that these checks were never delivered to HCCC. Upon inquiry with Diaz, Ong learned that the GSIS gave Francisco custody of the checks since she promised that she would deliver the same to HCCC. Instead, Francisco forged the signature of Ong, without his knowledge or consent, at the dorsal portion of the said checks to make it appear that HCCC had indorsed the checks; Francisco then indorsed the checks for a second time by signing her name at the back of the checks and deposited the checks in her IBAA savings account. IBAA credited Franciscos account with the amount of the checks and the latter withdrew the amount so credited.On June 7, 1979, Ong filed complaints with the office of the city fiscal of Quezon City, charging Francisco with estafa thru falsification of commercial documents. Francisco denied having forged Ongs signature on the checks, claiming that Ong himself indorsed the seven checks in behalf of HCCC and delivered the same to Francisco in payment of the loans extended by Francisco to HCCC. According to Francisco, she agreed to grant HCCC the loans in the total amount of P585,000.00 and covered by eighteen promissory notes in order to obviate the risk of the non-completion of the project. As a means of repayment, Ong allegedly issued a Certification authorizing Francisco to collect HCCCs receivables from the GSIS. Assistant City Fiscal Ramon M. Gerona gave credence to Franciscos claims and accordingly, dismissed the complaints, which dismissal was affirmed by the Minister of Justice in a resolution issued on June 5, 1981.The present case was brought by private respondents on November 19, 1979 against Francisco and IBAA for the recovery of P370,475.00, representing the total value of the seven checks, and for damages, attorneys fees, expenses of litigation and costs. After trial on the merits, the trial court rendered its decision in favor of private respondents, the dispositive portion of which provides -WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants INSULAR BANK OF ASIA & AMERICA and ATTY. ADALIA FRANCISCO, to jointly and severally pay the plaintiffs the amount of P370.475.00 plus interest thereon at the rate of 12% per annum from the date of the filing of the complaint until the full amount is paid; moral damages to plaintiff Jaime Ong in the sum of P50,000.00; exemplary damages of P50,000.00; litigation expenses of P5,000.00; and attorneys fees of P50,000.00.With respect to the cross-claim of the defendant IBAA against its co-defendant Atty. Adalia Francisco, the latter is ordered to reimburse the former for the sums that the Bank shall pay to the plaintiff on the forged checks including the interests paid thereon.Further, the defendants are ordered to pay the costs.Based upon the findings of handwriting experts from the National Bureau of Investigation (NBI), the trial court held that Francisco had indeed forged the signature of Ong to make it appear that he had indorsed the checks. Also, the court ruled that there were no loans extended, reasoning that it was unbelievable that HCCC was experiencing financial difficulties so as to compel it to obtain the loans from AFRDC in view of the fact that the GSIS had issued checks in favor of HCCC at about the same time that the alleged advances were made. The trial court stated that it was plausible that Francisco concealed the fact of issuance of the checks from private respondents in order to make it appear as if she were accommodating private respondents, when in truth she was lending HCCC its own money.With regards to the Memorandum Agreement entered into between AFRDC and HCCC in Civil Case No. Q-24628, the trial court held that the same did not make any mention of the forged checks since private respondents were as of yet unaware of their existence, that fact having been effectively concealed by Francisco, until private respondents acquired knowledge of Franciscos misdeeds in 1979.IBAA was held liable to private respondents for having honored the checks despite such obvious irregularities as the lack of initials to validate the alterations made on the check, the absence of the signature of a co-signatory in the corporate checks of HCCC and the deposit of the checks on a second indorsement in the savings account of Francisco. However, the trial court allowed IBAA recourse against Francisco, who was ordered to reimburse the IBAA for any sums it shall have to pay to private respondents.[5Both Francisco and IBAA appealed the trial courts decision, but the Court of Appeals dismissed IBAAs appeal for its failure to file its brief within the 45-day extension granted by the appellate court. IBAAs motion for reconsideration and petition for review on certiorari filed with this Court were also similarly denied. On November 21, 1989, IBAA and HCCC entered into a Compromise Agreement which was approved by the trial court, wherein HCCC acknowledged receipt of the amount of P370,475.00 in full satisfaction of its claims against IBAA, without prejudice to the right of the latter to pursue its claims against Francisco.On June 29, 1992, the Court of Appeals affirmed the trial courts ruling, hence this petition for review on certiorari filed by petitioner, assigning the following errors to the appealed decision 1. The respondent Court of Appeals erred in concluding that private respondents did not owe Petitioner the sum covered by the Promissory Notes Exh.2-2-A-2-P (FRANCISCO). Such conclusion was based mainly on conjectures, surmises and speculation contrary to the unrebutted pleadings and evidence presented by petitioner.2. The respondent Court of Appeals erred in holding that Petitioner falsified the signature of private respondent ONG on the checks in question without any authority therefor which is patently contradictory to the unrebutted pleading and evidence that petitioner was expressly authorized by respondent HERBY thru ONG to collect all receivables of HERBY from GSIS to pay the loans extended to them. (Exhibit 3).3. That respondent Court of Appeals erred in holding that the seven checks in question were not taken up in the liquidation and reconciliation of all outstanding account between AFRDC and HERBY as acknowledged by the parties in Memorandum Agreement (Exh. 5) is a pure conjecture, surmise and speculation contrary to the unrebutted evidence presented by petitioners. It is an inference made which is manifestly mistaken.4. The respondent Court of Appeals erred in affirming the decision of the lower court and dismissing the appeal.[6 The pivotal issue in this case is whether or not Francisco forged the signature of Ong on the seven checks. In this connection, we uphold the lower courts finding that the subject matter of the present case, specifically the seven checks, drawn by GSIS and AFRDC, dated between October to November 1977, in the total amount of P370,475.00 and

payable to HCCC, was not included in the Memorandum Agreement executed by HCCC and AFRDC in Civil Case No. Q-24628. As observed by the trial court, aside from there being absolutely no mention of the checks in the said agreement, the amounts represented by said checks could not have been included in the Memorandum Agreement executed in 1978 because private respondents only discovered Franciscos acts of forgery in 1979. The lower courts found that Francisco was able to easily conceal from private respondents even the fact of the issuance of the checks since she was a co-signatory thereof.[7 We also note that Francisco had custody of the checks, as proven by the check vouchers bearing her uncontested signature,[8 by which she, in effect, acknowledged having received the checks intended for HCCC. This contradicts Franciscos claims that the checks were issued to Ong who delivered them to Francisco already indorsed.[9As regards the forgery, we concur with the lower courts finding that Francisco forged the signature of Ong on the checks to make it appear as if Ong had indorsed said checks and that, after indorsing the checks for a second time by signing her name at the back of the checks, Francisco deposited said checks in her savings account with IBAA. The forgery was satisfactorily established in the trial court upon the strength of the findings of the NBI handwriting expert.[10 Other than petitioners self-serving denials, there is nothing in the records to rebut the NBIs findings. Well-entrenched is the rule that findings of trial courts which are factual in nature, especially when affirmed by the Court of Appeals, deserve to be respected and affirmed by the Supreme Court, provided it is supported by substantial evidence on record,[11 as it is in the case at bench.Petitioner claims that she was, in any event, authorized to sign Ongs name on the checks by virtue of the Certification executed by Ong in her favor giving her the authority to collect all the receivables of HCCC from the GSIS, including the questioned checks.[12 Petitioners alternative defense must similarly fail. The Negotiable Instruments Law provides that where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability.[13 An agent, when so signing, should indicate that he is merely signing in behalf of the principal and must disclose the name of his principal; otherwise he shall be held personally liable.[14 Even assuming that Francisco was authorized by HCCC to sign Ongs name, still, Francisco did not indorse the instrument in accordance with law. Instead of signing Ongs name, Francisco should have signed her own name and expressly indicated that she was signing as an agent of HCCC. Thus, the Certification cannot be used by Francisco to validate her act of forgery.Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.[15 Due to her forgery of Ongs signature which enabled her to deposit the checks in her own account, Francisco deprived HCCC of the money due it from the GSIS pursuant to the Land Development and Construction Contract. Thus, we affirm respondent courts award of compensatory damages in the amount of P370,475.00, but with a modification as to the interest rate which shall be six percent (6%) per annum, to be computed from the date of the filing of the complaint since the amount of damages was alleged in the complaint;[16 however, the rate of interest shall be twelve percent (12%) per annum from the time the judgment in this case becomes final and executory until its satisfaction and the basis for the computation of this twelve percent (12%) rate of interest shall be the amount of P370,475.00. This is in accordance with the doctrine enunciated in Eastern Shipping Lines, Inc. vs. Court of Appeals, et al.,[17 which was reiterated in Philippine National Bank vs. Court of Appeals,[18 Philippine Airlines, Inc. vs. Court of Appeals[19and in Keng Hua Paper Products Co., Inc. vs. Court of Appeals,[20 which provides that -1. When an obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of six percent (6%) per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be twelve percent (12%) per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.We also sustain the award of exemplary damages in the amount of P50,000.00. Under Article 2229 of the Civil Code, exemplary damages are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Considering petitioners fraudulent act, we hold that an award of P50,000.00 would be adequate, fair and reasonable. The grant of exemplary damages justifies the award of attorneys fees in the amount of P50,000.00, and the award of P5,000.00 for litigation expenses.[21The appellate courts award of P50,000.00 in moral damages is warranted. Under Article 2217 of the Civil Code, moral damages may be granted upon proof of physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury.[22 Ong testitified that he suffered sleepless nights, embarrassment, humiliation and anxiety upon discovering that the checks due his company were forged by petitioner and that petitioner had filed baseless criminal complaints against him before the fiscals office of Quezon City which disrupted HCCCs business operations.[23WHEREFORE, we AFFIRM the respondent courts decision promulgated on June 29, 1992, upholding the February 16, 1988 decision of the trial court in favor of private respondents, with the modification that the interest upon the actual

damages awarded shall be at six percent (6%) per annum, which interest rate shall be computed from the time of the filing of the complaint on November 19, 1979. However, the interest rate shall be twelve percent (12%) per annum from the time the judgment in this case becomes final and executory and until such amount is fully paid. The basis for computation of the six percent and twelve percent rates of interest shall be the amount of P370,475.00. No pronouncement as to costs.SO ORDERED.

G.R. No. 94143 September 24, 1991EDGAR SADIO, petitioner, vs.Hon. REGIONAL TRIAL COURT OF ANTIQUE, BRANCH 10, SIXTH JUDICIAL REGION, San Jose, Antique, and BONIFACIO SANZ MACEDA, respondents. CRUZ, J.:pActing on a complaint to enjoin the operation of the small town lottery by the Province of Antique, the Philippine Charity Sweepstakes (PCSO), the Molitor Management Corporation and herein petitioner Edgar Sadio, Judge Bonifacio Sanz Maceda of the Regional Trial Court of Antique, after hearing, declared such lottery illegal and ordered MOLITOR and Sadio in solidum to pay PCSO and the Province of Antique damages in the amount of P25,000,000.00. 1 On the basis of this order, Sadio flied before the Municipal TriaI Court of San Jose, Antique, a criminal complaint against Judge Maceda for issuance of an unjust interlocutory order in violation of Article 206 of the Revised Penal Code. 2 On March 27, Judge Ma. Monina Misajon of that court dismissed the complaint, holding that the challenged order of March 16, 1990, clearly showed, contrary to the allegations of the complainant, that he was accorded every opportunity to present his side before the order was issued. 3 His motion for reconsideration having been denied, Sadio filed a notice of appeal, which was approved by Judge Misajon on May 15, 1990. 4 On May 16, 1990, however, she issued an amendatory order recalling the original order and withdrawing her earlier approval of the notice of appeal. 5 Her reason was that the offended party had no standing to appeal from the dismissal of a criminal complaint, this being the prerogative of the prosecutor. Sadio's reaction was to file a petition for certiorari and mandamus to reverse Judge Misajons order of May 16, 1990. This was dismiss by Judge Marvie R. Abraham-Singson of the Regional Trial Court of Antique, Branch 10, for insufficiency in form and substance. 6 His motion for reconsideration was also denied. The petitioner now comes to this Court on certiorari, alleging that:

1. Judge Abraham-Singson could not motu proprio dismiss the petition for certiorari and mandamus; 2. Under the rule on summary procedure, Judge Misajon could not legally dismiss the criminal complaint without the counter-affidavit of the accused, 3. The offended party in a criminal case has a right to appeal if the case is dismissed; and 4. An order approving a notice of appeal can no longer be withdrawn.

The petition must fail on all counts. On the first issue, the pertinent provision is Section 6, Rule 65 of the Rules of Court, which reads:

Sec. 6. Order to answer. — If the petition is sufficient in form and substance to justify such process, the court in which it is filed, or a judge thereof, shall issue an order requiring the defendant or defendants to answer the petition within ten (10) days from the receipt of a copy thereof. Such order shall be served on the defendants in such manner as the court may direct, together with a copy of the petition, and to that effect the petitioner shag file sufficient copies thereof.

The very first clause of this section requires that the petition be sufficient in form and substance before further action may be taken thereon by the court. Lacking such sufficiency, as determined by the court itself, the petition may be dismissed outright. It cannot be overstressed that the court is not obliged to waste its time on inadequate pleadings that can only burden its docket and impair the orderly administration of justice. We ourselves have given short shrift to many a petition for non-compliance with the procedural requisites, for being uninteligible or clearly without legal basis, or for some other similar shortcoming. As correctly noted by Judge Abraham-Singson, a certified true copy of the order of May 16, 1990, was not attached to the petition, in disregard of the express requirement of Rule 65, Section 1, of the Rules of Court. That deficiency was by itself alone adequate ground for dismissal. Additionally, the petition merely confined itself to a recital of the material facts and dates, followed by the legal conclusion that Judge Misajon committed grave abuse of discretion in issuing the said order. No argument was adduced, no jurisprudence cited, no law or Rule of Court invoked to support that conclusion. It is clear that the petition was also insufficient in substance and for that additional if no less important reason deserved to be dismissed. On the second issue, the applicable rule is Section 10 of the Rule on Summary Procedure, reading as follows:

Sec. 10. Duty of the court. — On the basis of the complaint or information and the affidavits accompanying the same, the court shall make a preliminary determination whether to dismiss the case outright for being patently without basis or merit, or to require further proceeding to be taken. In the latter case, the court may set the case for immediate arraignment of an accused under custody, and if he pleads, may render judgment forthwith. If he pleads not guilty, and in all other cases, the court shall issue an order accompanied by copies of all affidavits submitted by complainant, directing the defendants to appear and submit his counter-affidavits and those of his witnesses at a specified date not later than ten (10) days from receipt thereof.

While it is true that Judge Maceda did not submit his counter-affidavit as required in the order of Judge Misajon dated March 23, 1990, Judge Misajon declared in her order dismissing the criminal complaint that she had received and considered the order of Judge Maceda dated March 23, 1990, in Civil Case No. 2405, entitled "Rolly R. Mijares v. Province of Antique, et al." She treated this as the respondent judge's counter-affidavit required in the aforecited rule.

We agree that this was sufficient compliance with the said rule. Judge Maceda's defense against the criminal charge was after all embodied in that order and it would have been a useless formality to simply reproduce it as a counter-affidavit. On the third issue, the petitioner's contention is that since he had not waived or reserved his right to file the civil action arising from the criminal charge, his right to appeal from the civil aspect of the case was not extinguished with the dismissal of the criminal charge. This averment is subject to qualification. The Court has held that acquittal in a criminal case does not bar continuation of the civil case connected therewith where: (1) the acquittal is based on reasonable doubt; 7 (2) the decision contains a declaration that the liability of the accused is not criminal but only civil; 8 or (3) the civil liability is not derived from or based on the criminal act of which the accused is acquitted. 9 The case at bar does not come under any of the above exceptions. The petitioner's criminal complaint alleged that Judge Maceda had issued the interlocutory order in violation of Sadio's right to due process under Article III, Section 1, of the Constitution. Judge Misajon declared in her order dismissing the charge that Sadio was in fact given the opportunity to be heard and offered testimonial and documentary evidence on February 26 and 28, 1990, "which (Judge Maceda) considered in issuing his order of March 16, 1990." In finding that the petitioner had not been denied due process, Judge Misajon in effect completely exonerated Judge Maceda and thus also extinguished the civil action connected with the criminal case. In this situation, the petitioner could not have, as a mere complaining witness, appealed the dismissal of the criminal action even on its civil aspect only. The civil action was deemed dismissed with the criminal action. The criminal aspect of the order could have been appealed since double jeopardy had not yet attached because the accused had not yet been arraigned. But only the prosecutor could have done this because he had complete direction and control of the prosecution of the case, as we have held in several cases. 10 No appeal having been filed by him, the order of dismissal became final and unappealable after the lapse of the reglementary 15-day period. The above ruling renders the fourth issue irrelevant or moot. Not having the right to appeal, the petitioner cannot invoke his notice of appeal on April 27, 1990, or protest the withdrawal of its approval by Judge Misajon on May 16, 1990. The notice of appeal should not have been approved in the first place, and the recall of the order of May 16, 1990, was issued only to rectify the error. The rectification was a valid act. In any event, neither the notice of appeal nor its initial approval would have been effectual because of the petitioner's lack of legal standing to prosecute the appeal.We do not deal here with the merits of the order of Judge Maceda dated March 16, 1990, declaring the small town lottery conducted in the Province of Antique illegal and enjoining its continued operation. That order is still under motions for reconsideration that remain unresolved to date. It is not challenged in this petition. We here limit ourselves to the issues raised in the proceedings at bar as above discussed and resolved, and only to those issues. WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered. Narvasa (Chairman), Griño-Aquino and Medialdea, JJ., concur. SECOND DIVISION[G.R. No. 128927.  September 14, 1999]REMEDIOS NOTA SAPIERA, petitioner, vs. COURT OF APPEALS and RAMON SUA, respondents.

REMEDIOS NOTA SAPIERA appeals to us through this petition for review the Decision of the Court of Appeals which acquitted her of the crime of estafa but held her liable nonetheless for the value of the checks she indorsed in favor of private respondent Ramon Sua.On several occasions petitioner Remedios Nota Sapiera, a sari-sari store owner, purchased from Monrico Mart certain grocery items, mostly cigarettes, and paid for them with checks issued by one Arturo de Guzman:  (a) PCIB Check No. 157059 dated 26 February 1987 for P140,000.00;  (b) PCIB Check No. 157073 dated 26 February 1987 for P28,000.00; (c) PCIB Check No. 157057 dated 27 February 1987 for P42,150.00; and, d) Metrobank Check No. DAG - 045104758 PA dated 2 March 1987 for P125,000.00.  These checks were signed at the back by petitioner.  When presented for payment the checks were dishonored because the drawer’s account was already closed.  Private respondent Ramon Sua informed Arturo de Guzman and petitioner about the dishonor but both failed to pay the value of the checks.  Hence, four (4) charges of estafa were filed against petitioner with the Regional Trial Court of Dagupan City, docketed as Crim. Cases Nos. D-8728, D-8729, D-8730 and D-8731.  Arturo de Guzman was charged with two (2) counts of violation of B.P. Blg. 22, docketed as Crim. Cases Nos. D-8733 and D-8734.  These cases against petitioner and de Guzman were consolidated and tried jointly.On 27 December 1989 the court a quo acquitted petitioner of all the charges of estafa but did not rule on whether she could be held civilly liable for the checks she indorsed to private respondent.  The trial court found Arturo de Guzman guilty of Violation of B.P. Blg. 22 on two (2) counts and sentenced him to suffer imprisonment of six (6) months and one (1) day in each of the cases, and to pay private respondent P167,150.00 as civil indemnity.Private respondent filed a notice of appeal with the trial court with regard to the civil aspect but the court refused to give due course to the appeal on the ground that the acquittal of petitioner was absolute.  Private respondent then filed a petition for mandamus with the Court of Appeals, docketed as CA-GR SP No. 24626, praying that the court a quo be ordered to give due course to the appeal on the civil aspect of the decision.  The Court of Appeals granted the petition and ruled that private respondent could appeal with respect to the civil aspect the judgment of acquittal by the trial court.On 22 January 1996, the Court of Appeals in CA-GR CV No. 36376 rendered the assailed Decision insofar as it sustained the appeal of private respondent on the civil aspect and ordering petitioner to pay private respondent P335,000.00 representing the aggregate face value of the four (4) checks indorsed by petitioner plus legal interest from the notice of dishonor.

Petitioner filed a motion for reconsideration of the Decision.  On 19 March 1997 the Court of Appeals issued a Resolution noting the admission of both parties that private respondent had already collected the amount of P125,000.00 from Arturo de Guzman with regard to his civil liability in Crim. Cases Nos. 8733 and 8734.  The appellate court noted that private respondent was the same offended party in the criminal cases against petitioner and against de Guzman.  Criminal Cases Nos. 8733 and 8734 against De Guzman, and Crim. Cases Nos. 8730 and 8729 against petitioner, involved the same checks, to wit:  PCIB Checks Nos. 157057 for P42,150.00 and Metrobank Check No. DAG-045104758 PA for P125,000.00.Thus, the Court of Appeals ruled that private respondent could not recover twice on the same checks.  Since he had collected P125,000.00 as civil indemnity in Crim. Cases Nos. 8733 and 8734, this amount should be deducted from the sum total of the civil indemnity due him arising from the estafa cases against petitioner.  The appellate court then corrected its previous award, which was erroneously placed at P335,000.00, to P335,150.00 as the sum total of the amounts of the four (4) checks involved.  Deducting the amount of P125,000.00 already collected by private respondent, petitioner was adjudged to pay P210,150.00 as civil liability to private respondent.  Hence, this petition alleging that respondent Court of Appeals erred in holding petitioner civilly liable to private respondent because her acquittal by the trial court from charges of estafa in Crim. Cases Nos. D-8728, D-8729, D-8730 and D-8731 was absolute, the trial court having declared in its decision that the fact from which the civil liability might have arisen did not exist.We cannot sustain petitioner.  The issue is whether respondent Court of Appeals committed reversible error in requiring petitioner to pay civil indemnity to private respondent after the trial court had acquitted her of the criminal charges.  Section 2, par. (b), of Rule 111 of the Rules of Court, as amended, specifically provides:  "Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist.The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the fact from which the civil liability might arise did not exist.  Thus, the civil liability is not extinguished by acquittal where:  (a) the acquittal is based on reasonable doubt; (b) where the court expressly declares that the liability of the accused is not criminal but only civil in nature; and, (c) where the civil liability is not derived from or based on the criminal act of which the accused is acquitted. Thus, under Art. 29 of the Civil Code  - When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted.  Such action requires only a preponderance of evidence.  Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should be found to be malicious.In a criminal case where the judgment of acquittal is based upon reasonable doubt, the court shall so declare.  In the absence of any declaration to that effect, it may be inferred from the text of the decision whether or not acquittal is due to that ground.An examination of the decision in the criminal cases reveals these findings of the trial court - Evidence for the prosecution tends to show that on various occasions, Remedios Nota Sapiera purchased from Monrico Mart grocery items (mostly cigarettes) which purchases were paid with checks issued by Arturo de Guzman; that those purchases and payments with checks were as follows:(a)  Sales Invoice No. 20104 dated February 26, 1987 in the amount of P28,000.00; that said items purchased were paid with PCIBank Check No. 157073 dated February 26, 1987;(b)  Sales Invoice No. 20108 dated February 26, 1987 in the amount of P140,000.00; that said items purchased were paid with PCIBank No. 157059 dated February 26, 1987;(c)  Sales Invoice No. 20120 dated February 27, 1987 in the amount of P42,150.00; that said items were paid with PCIBank Check No. 157057 dated February 27, 1987;(d)  Sales Invoice No. 20148 and 20149 both dated March 2, 1987 in the amount of P120,103.75; said items were paid with Metrobank Check No. 045104758 dated March 2, 1987 in the amount of P125,000.00.That all these checks were deposited with the Consolidated Bank and Trust Company, Dagupan Branch, for collection from the drawee bank;That when presented for payment by the collecting bank to the drawee bank, said checks were dishonored due to account closed, as evidenced by check return slips; x x x x.From the evidence, the Court finds that accused Remedios Nota Sapiera is the owner of a sari-sari store inside the public market; that she sells can(ned) goods, candies and assorted grocery items; that she knows accused Arturo De Guzman, a customer since February 1987; that de Guzman purchases from her grocery items including cigarettes; that she knows Ramon Sua; that she has business dealings with him for 5 years; that her purchase orders were in clean sheets of paper; that she never pays in check; that Ramon Sua asked her to sign subject checks as identification of the signature of Arturo de Guzman; that she pays in cash; sometimes delayed by several days; that she signed the four (4) checks on the reverse side; that she did not know the subject invoices; that de Guzman made the purchases and he issued the checks; that the goods were delivered to de Guzman; that she was not informed of dishonored checks; and that counsel for Ramon Sua informed de Guzman and told him to pay x x x xIn the case of accused Remedios Nota Sapiera, the prosecution failed to prove conspiracy.Based on the above findings of the trial court, the exoneration of petitioner of the charges of estafa was based on the failure of the prosecution to present sufficient evidence showing conspiracy between her and the other accused Arturo de Guzman in defrauding private respondent.  However, by her own testimony, petitioner admitted having signed the four (4) checks in question on the reverse side.  The evidence of the prosecution shows that petitioner purchased goods from the grocery store of private respondent as shown by the sales invoices issued by private respondent; that these purchases were paid with the four (4) subject checks issued by de Guzman; that petitioner signed the same checks on the reverse side; and when presented for payment, the checks were dishonored by the drawee bank due to the closure of the drawer’s account; and, petitioner was informed of the dishonor.

We affirm the findings of the Court of Appeals that despite the conflicting versions of the parties, it is undisputed that the four (4) checks issued by de Guzman were signed by petitioner at the back without any indication as to how she should be bound thereby and, therefore, she is deemed to be an indorser thereof.  The Negotiable Instruments Law clearly provides - Sec. 17.  Construction where instrument is ambiguous. - Where the language of the instrument is ambiguous, or there are admissions therein, the following rules of construction apply: x x x x (f) Where a signature is so placed upon the instrument that it is not clear in what capacity the person making the same intended to sign, he is deemed an indorser. x x x xSec. 63.   When   person deemed indorser . - A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor, is deemed to be an indorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity.Sec. 66.  Liability of general indorser. - Every indorser who indorses without qualification, warrants to all subsequent holders in due course: (a)  The matters and things mentioned in subdivisions (a), (b) and (c) of the next preceding section; and (b)  That the instrument is, at the time of the indorsement, valid and subsisting;And, in addition, he engages that, on due presentment, it shall be accepted or paid or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it.The dismissal of the criminal cases against petitioner did not erase her civil liability since the dismissal was due to insufficiency of evidence and not from a declaration from the court that the fact from which the civil action might arise did not exist. An accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence so warrant.  The accused should be adjudged liable for the unpaid value of the checks signed by her in favor of the complainant.The rationale behind the award of civil indemnity despite a judgment of acquittal when evidence is sufficient to sustain the award was explained by the Code Commission in connection with Art. 29 of the Civil Code, to wit:The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is one of the most serious flaws in the Philippine legal system.  It has given rise to numberless instances of miscarriage of justice, where the acquittal was due to a reasonable doubt in the mind of the court as to the guilt of the accused.  The reasoning followed is that inasmuch as the civil responsibility is derived from the criminal offense, when the latter is not proved, civil liability cannot be demanded.This is one of those cases where confused thinking leads to unfortunate and deplorable consequences.  Such reasoning fails to draw a clear line of demarcation between criminal liability and civil responsibility, and to determine the logical result of the distinction.  The two liabilities are separate and distinct from each other.  One affects the social order and the other private rights.  One is for punishment or correction of the offender while the other is for reparation of damages suffered by the aggrieved party x x x x  It is just and proper that for the purposes of imprisonment of or fine upon the accused, the offense should be proved beyond reasonable doubt.  But for the purpose of indemnifying the complaining party, why should the offense also be proved beyond reasonable doubt?  Is not the invasion or violation of every private right to be proved only by preponderance of evidence?  Is the right of the aggrieved person any less private because the wrongful act is also punishable by the criminal law?Finally, with regard to the computation of the civil liability of petitioner, the finding of the Court of Appeals that petitioner is civilly liable for the aggregate value of the unpaid four (4) checks subject of the criminal cases in the sum of P335,150.00, less the amount of P125,000.00 already collected by private respondent pending appeal, resulting in the amount of P210,150.00 still due private respondent, is a factual matter which is binding and conclusive upon this Court.WHEREFORE, the petition is DENIED.  The Decision of the Court of Appeals dated 22 January 1996 as amended by its Resolution dated 19 March 1997 ordering petitioner Remedios Nota Sapiera to pay private respondent Ramon Sua the remaining amount of P210,150.00 as civil liability, is AFFIRMED.  Costs against petitioners.SO ORDERED.

April 13, 1956G.R. No. L-7801Testate Estate of Dña. Perpetua A. Vda. de Soriano. DOLORES ALBORNOZ, peitioner. ELIAS RACELA, claimant-appellant,vs.DOLORES ALBORNOZ and JOSE ALBORNOZ, co-special administrators oppositors-appellees.Labrador, J.:The present appeal refers to two claims presented by Elias Racela against the estate of the deceased Perpetua Vda. de Soriano and which were dismissed by the trial court. The first claim is based on a supposed sale of one hectare of land for P1,000 executed by the decedent on July 18, 1933 in favor of the claimant. The second is based on another supposed sale of another part of the defendant’s land for P1,000 also, in favor of the claimant, made on September 23, 1933. The supposed sales appear in two deeds marked Exhibits “A” and “B”. After the supposed sales were made, the decedent sold the same parcels of land in 1934 to one Soriano Ballesteros, who succeeded in registering the deed of sale in his favor. Claimant attempted to register the deeds executed in his favor but the decedent opposed registration. So claimant brought a criminal action against the decedent for estafa (Criminal Case No. 6406 of the Court of First Instance of Ilocos Norte). The court acquitted the decedent of the charge, a portion of the decision and the dispositive part thereof is as follows:Analizados estos hechos, el Juzgado se inclina a creer como asi cree que Elias Racela no ha entregado ninguna cantidad de dinero a la acusada como pago de la venta, alegada por la acusacion . . .

Es digna credito la pretension de la acusada de que los dos escrituras marcadas Exhibitos ‘A’ y ‘B’ han sido otorgadas por ellasolamente para que Elias Racela pudiera convencer a los vecinos del barrio de Biding, Dingras, Ilocos Norte, que la acusada podia disponer librement de sus bienes? El Juzgado fundandose en los hechos arriba expuestos, es de opinion que si. . . Este acto de la acusada a juicio del Juzgado, es compatible con su crecencia de que en ninguna ocasion habia vendido terrenos a Elias Racela . . .x x x x x x x x xA la luz de las consideraciones de hechos arriba apuntadas el Juzgado duda de la verdad de la teoria de la acusacion y, por ende, la acusada tiene derecho a los beneficios de esta duda. Pero esta conclusion del Juzgado no priva a Elias Racela de su derecho de presentar una accion civil contra la aqui acusada, si se que todavia no estan pagados honorarios por los servicios prestados a la misma.After the presentation of the plaintiff in the court below, the Judge, upon motion of counsel for the defendant, dismissed the action in the following words:It is seen from Ehibit ’1′ that the criminal action for estafa against the deceased Perpetua A. Vda. de Soriano was founded on Exhibits ‘A’ and ‘B’ and ‘C’, the deeds of sale, and the present claim of the claimant is also founded on the same exhibits with the exception of Exhibit ‘C’ which was not presented by the said claimant, having been substituted by him with his own oral testimony. Therefore, the inevitable conclusion is that the acquittal of the deceasd-accused, Perpetua Vda. de Soriano, produces the effect of exemption of her estafa from any civil liability.FOR THE FOREGOING, the motion to dismiss is GRANTED, and the claim of Elias Racela is DISMISSED.WITHOUT COSTS.It is against the above judgment that this appeal has been prosecuted. Claimant-appellant argues that the judgment of acquittal in the criminal action was based on reasonable doubt and therefore it cannot amount to a judicial declaration “that the fact from which the civil might arise did not exist.” A study of the judgment of acquittal in the said criminal action readily discloses that the decedent did not sell any land to Elias Racela and that the deeds of sale Exhibits “A” and “B” were executed by the decedent in order to enable Elias Racela to convince the residents of a barrio that the decedent could freely dispose of his properties. Witness the following portions of the judgment, Exhibits “1.La unica cuestion a resolverse en esta causa es la de si la acusada habia vendido a Elias Racela las dos parcelas de terreno que se describen los exhibitos ‘A’ y ‘B’ respectivamente. Para resolver esta cuestion el Juzgado entiende que no debe atenerse solamente a los mencionados exhibitos sino tambien a la version de los testigos de la defensa y el estado finaciero de la acusada.Analizados estos hechos, el Juzgado se inclina a creer como asi cree que Elias Racela no ha entregado ninguna cantidad de dinero a la acusada como pago de la venta alegada por la acusacion; porque si fuese cierto el hecho de que Elias Racela habia entregado el dinero importe de cada uno de los terrenos descritos en los exhibitos ‘A’ y ‘B’, respectivamente, no se coomprende como y porquese habian puesto en el Exhibito ‘B’ las palabras ‘and services rendered”: En opinion del Juzgado estas palabras ‘and services rendered’ puestas despues de las palabras ‘One Thousand Pesos Philippine Currency to me’ revelan que Elias Racela en la ocasion en que se redacto la escritura daba a entender que lo que el habia pagado a la acusada era el valor de sus servicios. Si esto es el caso, Elias Racela al afirmar en el dia de la vista de este causa que el habia entregado dinero a la acusada no ha dicho la verdad; y por tanto debe estimarse por buena la teoria de la acusada al efecto de que ella no habia vendido ningun terreno a Elias Racela.The theory upon which the present claim of Elias Racela is based that the deceased sold the parcels of land to Elias Racela and the latter paid the deceased the price therefor or P2,000. The above-quoted portions of the decision clearly indicate that no actual sale was made and that the deeds Exhibits “A” and “B” were executed for another purpose and were, therefore, simulated sales. The judgment in the criminal action, therefore, contains an express declaration that the basis of claimant’s action for P2,000, or the sales of said parcels of land to the claimant and the receipt by the decedent therefor for P2,000, did not exist. Claimant’s action is barred under section 1 (d), Rule 107, which provide:(d) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. . .In view of the above conclusion, it is unnecessary to consider the claim of the claimant-appellant that he had submitted sufficient evidence to sustain defendant’s liability. The judgment appealed from is hereby affirmed, with costs against the claimant.Paras, C.J. Bengzon, Montemayor, Reyes, A., Jugo, Bautista Angelo, Concepcion, Reyes, J. B. L., and Endencia, JJ., concur.

G.R. No. 112381 March 20, 1995ISABELO APA, MANUEL APA and LEONILO JACALAN, Petitioners, vs. HON. RUMOLDO R. FERNANDEZ, HON. CELSO V. ESPINOSA, and SPS. FELIXBERTO TIGOL, JR. and ROSITA TAGHOY TIGOL, Respondents. MENDOZA, J.: This is a special civil action of certiorari to set aside orders of respondent Judge Rumoldo R. Fernandez of the Regional Trial Court, Branch 54, at Lapu-Lapu City, denying petitioners oral motion for the suspension of their arraignment in Criminal Case No. 012489, entitled: "People of the Philippines v. Isabelo Apa; Manuel Apa and Leonilo Jacalan," as well as their motion for reconsideration.chanroblesvirtualawlibrary chanrobles virtual law libraryCriminal Case No. 012489 is a prosecution for violation of P.D. 772 otherwise known as the Anti-Squatting Law. The information alleges:That on February 1990, or prior thereto, in Agus, Lapulapu City, Philippines and within the jurisdiction of this Honorable Court, the above-named accused [herein petitioners Isabelo Apa, Manuel Apa and Dionisio Jacalan], conspiring, confederating and mutually helping with one another, without the knowledge and consent of the owner, ROSITA TIGOL, did then and there wilfully, unlawfully and feloniously take advantage of the absence or tolerance of the said owner by occupying or possessing a portion of her real property, Lot No. 3635-B of Opon Cadastre, covered by Transfer

Certificate of Title No. 13250, situated in Agus Lapulapu City, whereon they constructed their respective residential houses against the will of Rosita Tigol, which acts of the said accused have deprived the latter of the use of a portion of her land, to her damage and prejudice because despite repeated demands the said accused failed and refused, as they still fail and refuse to vacate the premises above-mentioned.Petitioners moved for the suspension of their arraignment on the ground that there was a prejudicial question pending resolution in another case being tried in Branch 27 of the same court. The case, docketed as Civil Case No. 2247-L and entitled "Anselmo Taghoy and Vicente Apa versus Felixberto Tigol, Jr. and Rosita T. Tigol, et al.," concerns the ownership of Lot No. 3635-B. 1In that case, petitioners seek a declaration of the nullity of TCT No. 13250 of Rosita T. Tigol and the partition of the lot in question among them and private respondent Rosita T. Tigol as heirs of Filomeno and Rita Taghoy. The case had been filed in 1990 by petitioners, three years before May 27, 1993 when the criminal case for squatting was filed against them.chanroblesvirtualawlibrary chanrobles virtual law libraryOn August 25, 1993, the trial court denied the petitioners' motion and proceeded with their arraignment. Petitioners, therefore, had to enter their plea (not guilty) to the charge.chanroblesvirtualawlibrary chanrobles virtual law libraryOn September 2, 1993, petitioners filed a motion for reconsideration but their motion was denied by the court in its order dated September 21, 1993. Hence, this petition.chanroblesvirtualawlibrary chanrobles virtual law libraryThe only issue in this case is whether the question of ownership of Lot No. 3635-B, which was pending, in Civil Case No. 2247-L, is a prejudicial question justifying suspension of the proceedings in the criminal case against petitioners.chanroblesvirtualawlibrary chanrobles virtual law libraryWe hold that it is.chanroblesvirtualawlibrary chanrobles virtual law libraryA prejudicial question is a question which is based on a fact distinct and separate from the crime but so intimately connected with it that its resolution is determinative of the guilt or innocence of the accused. To justify suspension of the criminal action, it must appear not only that the civil case involves facts intimately related to those upon which the criminal prosecution is based but also that the decision of the issue or issues raised in the civil case would be decisive of the guilt or innocence of the accused. 2 Rule 111, �5 provides:Sec. 6. Elements of prejudicial question. - The two (2) essential elements of a prejudicial questions are: (a) the civil action involves an issue similar or intimately related to the issue raised in the criminal action; and (b) the resolution of such issue determines whether or not the criminal action may proceed.In the criminal case, the question is whether petitioners occupied a piece of land not belonging to them but to private respondent and against the latter's will. As already noted, the information alleges that "without the knowledge and consent of the owner, ROSITA TIGOL" petitioners occupied or took possession of a portion of "her property" by building their houses thereon and "deprived [her] of the use of portion of her land to her damage and prejudice.chanroblesvirtualawlibrary chanrobles virtual law libraryNow the ownership of the land in question, known as Lot 3635-B of the Opon cadastre covered by TCT No. 13250, is the issue in Civil Case 2247-L now pending in Branch 27 of the RTC at Lapulapu City. The resolution, therefore, of this question would necessarily be determinative of petitioners criminal liability for squatting.chanroblesvirtualawlibrary chanrobles virtual law libraryIn fact it appears that on February 23, 1994, the court trying the civil case rendered a decision nullifying TCT No. 13250 of private respondent and her husband and declared the lot in question to be owned in common by the spouses and the petitioners as inheritance from their parents Filomeno and Rita Taghoy. While private respondents claim that the decision in that case is not yet final because they have filed a motion for new trial, the point is that whatever may be the ultimate resolution of the question of ownership, such resolution will be determinative of the guilt or innocence of petitioners in the criminal case. Surely, if petitioners are co-owners of the lot in question, they cannot be found guilty of squatting because they are as much entitled to the use and occupation of the land as are the private respondent Rosita T. Tigol and her family. 3 Private respondents argues that even the owner of a piece of a land can be ejected from his property since the only issue in such a case is the right to its physical possession. Consequently, they contend, he can also be prosecuted under the Anti-Squatting Law.chanroblesvirtualawlibrary chanrobles virtual law libraryThe contention misses the case is the essential point that the owner of a piece of land can be ejected only if for some reason, e.g., he has let his property to the plaintiff, he has given up its temporary possession. But in the case at bar, no such agreement is asserted by private respondent. Rather private respondent claims the right to possession based on her claim of ownership. Ownership is thus the pivotal question. Since this is the question in the civil case, the proceedings in the criminal case must in the meantime be suspended.chanroblesvirtualawlibrary chanrobles virtual law libraryWHEREFORE, the petition is GRANTED and respondent judge is ordered to SUSPEND the proceedings in Criminal Case No. 012489 until the question of ownership in Civil Case No. 2247-L has been resolved with finality and thereafter proceed with the trial of the criminal case if the civil case is decided and terminated adversely against petitioners. Otherwise he should dismiss the criminal SO ORDERED.

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