G.R. No. 159467 December 9, 2005

SPOUSES NORA SAGUID and ROLANDO P. SAGUID, Petitioners, vs. SECURITY FINANCE, INC., Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Assailed in a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure are the decision1 of the Court of Appeals in CA-G.R. CV No. 68129 dated 31 January 2003 reversing the decision of the Regional Trial Court (RTC) of Makati City, Branch 135, in Civil Case No. 98-1803, dated 07 July 2000, ordering respondent Security Finance, Inc. to pay petitioner Spouses Nora and Rolando Saguid the daily earnings of the seized motor vehicle as well as damages, attorneys fees and costs of suit, and its Resolution2 dated 10 June 2003 denying petitioners motion for reconsideration.

On 30 July 1998, respondent filed a case for Recovery of Possession with Replevin with Alternative Prayer for Sum of Money and Damages against petitioners and one John Doe in whose possession and custody the mortgaged property may be found.3 It alleged that petitioners, for value, jointly and severally executed in its favor a Promissory Note4 in the amount of P508,248.00, payable in monthly installments per schedule indicated therein. To secure payment of the Promissory Note, petitioners executed a Chattel Mortgage5 over a motor vehicle particularly described as follows:

MAKE : TOYOTA COROLLA XL

MODEL : 1996

ENGINE NO. : 2E-2895512

SERIAL NO. : EE100-9555787

Respondent alleged that petitioners defaulted in complying with the terms and conditions of the Promissory Note and Chattel Mortgage by failing to pay several monthly installments on the Promissory Note. As provided for in the Promissory Note and Chattel Mortgage, the failure of the petitioners to pay any installment when due shall make the entire balance of the obligation immediately due and payable. The total obligation of petitioners amounted to P756,634.64 as of 15 May 1998.6

Despite demand7 for payment or the surrender, if in good order and condition, of the mortgaged motor vehicle, petitioners failed and refused to comply with the demand. Thus, respondent was constrained to file the instant case praying that (1) a Writ of Replevin be issued ordering the seizure of the afore-described vehicle, complete with all its accessories, and that same be delivered to it; or (2) in the event that manual delivery thereof cannot be effected, order the petitioners to pay the amount of P756,634.64 exclusive of accruing interest and penalty charges thereon at the rate of five percent (5%) per month until fully

paid. In either case, to order petitioners to pay respondent the amount of P189,158.66 as and for attorneys fees, replevin bond premium and other expenses incurred in the seizure of the motor vehicle, and costs of suit.

On 03 August 1998, the Hon. Francisco B. Ibay, Presiding Judge, Branch 135, RTC, Makati City, issued an Order directing the branch sheriff to seize the aforementioned vehicle upon filing of a bond in the amount of P1,513,270.00 which is double the value of the property to be seized, and to take it into his custody upon further orders from the court.8

Upon being informed by respondent in a Motion for Clarification9 that the reasonable estimated value of the vehicle involved is P150,000.00, the RTC lowered the Replevin Bond to be filed to P300,000.0010 which respondent filed on 12 August 1998.

On 12 October 1998, the RTC issued a Writ of Seizure ordering the Branch Sheriff to seize the vehicle, to keep it in his possession for five (5) days, and then to deliver it to respondent.11

On 13 October 1998, after service upon petitioners of the copy of the summons with the complaint and annexes, affidavit, writ of seizure and bond, the vehicle subject of this case was repossessed by the sheriff upon issuance of the corresponding receipt. On 20 October 1998, the vehicle was delivered to respondent.12

In their Answer with Compulsory Counterclaim,13 petitioners specifically denied the allegations in the Complaint. They maintained they, whether individually or as spouses, did not and never executed a Promissory Note and Chattel Mortgage in favor of respondent. They claimed they bought the car subject of the case in cash as evidenced by the Vehicle Sales Invoice14 of Toyota Balintawak, Inc. dated 15 March 1996. Petitioner Nora Saguid alleged that she could not have physically executed the Promissory Note on 23 April 1996 as she was in Australia when the same was supposedly executed. On the part of petitioner Rolando Saguid, he admitted that he signed the promissory note in preparation for an application for loan upon the request of one Sonny Quijano who promised to facilitate the same for the purchase of another motor vehicle to be converted into a taxicab, but not with respondent. As compulsory counterclaim, they ask that respondent be ordered to pay moral, exemplary and actual damages, as well as attorneys fees and costs of suit.

After pre-trial, the RTC issued a Pre-Trial Order containing the following stipulation of facts:

1. The personal and corporate personalities of the parties;

2. That the promissory note dated April 23, 1996 in the amount of P508,248.00 in favor of plaintiff was signed by defendant Rolando Saguid; and

3. That the chattel mortgage was signed by defendant Rolando Saguid; . . .15

Trial ensued. The respective evidence of the parties are substantially summarized in the decision of the RTC.

Evidence of the Petitioners:

The plaintiff presented two (2) witnesses: 1] Rosauro G. Maghirang, Jr., 43 years of age, married, Assistant Vice-President for Marketing of the plaintiff, and a resident of No. 140 J. Molina Street, Marikina City; and 2] Antonio B. Placido, 37 years of age, married, an employee of the plaintiff, and a resident of 263 Santo Cristo Street, Angat, Bulacan.

It can be culled from plaintiffs evidence that an application [Exhibit A] for a loan to finance the purchases [of] a new car was filed with the plaintiff. The application was not signed by any of the defendants. The signature appearing on the application [Exhibit A] belongs to one David Garcia, a Marketing Assistant of the plaintiff. The application was evaluated and investigated and was approved. The Promissory Note No. 96-01447 dated April 23, 1996 [Exhibit B] and the Chattel Mortgage Contract dated September 3, 1996 [Exhibit D] were signed. Submitted to the plaintiff were postdated checks [Exhibits E, E-1 to E-12]. When deposited these checks were dishonored for the reason that the account was already closed. The dishonored checks were replaced with P27,137.67 cash for which O.R. No. 12467 dated June 27, 1996 [Exhibit F]. After the payment made on June 27, 1996, the checks that subsequently bounced were not replaced. The case was referred to counsel for collection. A demand letter was delivered by witness Placido to the residence of the defendants. There being no response from the defendants this case was filed against them. Placido conducted a surveillance of the place where the vehicle could possibly be found. He accompanied the sheriff in implementing the writ of seizure. After seizure of the vehicle it was stowed at the warehouse of plaintiff in Las Pinas.

On cross-examination of Rosauro G. Maghirang, Jr., Assistant Vice-President for Marketing of the plaintiff, it was established that the mortgage of subject motor vehicle was not registered with the LTO because the dealer did not submit to plaintiff the certificate of registration. In transactions of this nature, loan applicants are required to submit the original certificate of registration and the official receipt. The dealer, Toyota Balintawak, did not send to the plaintiff these documents.16

Evidence of the Respondent:

Defendants testified for and in their behalf. Zenaida Marquinez Maralit, 33 years of age, single, a resident of Orlon Street, Litex Village, San Jose, Rodriguez, Rizal, and the Credit and Collection Head of Toyota Balintawak testified for the defendants. Defendant Rolando bought in cash the subject motor vehicle from Toyota Balintawak. He was issued Vehicle Delivery Invoice No. 7104 [Exhibit1] and Vehicle Delivery Note No. 7104 [Exhibit 2]. The same vehicle was registered [Exhibit 3]. He identified his signatures in the promissory note [Exhibit B] and in the chattel mortgage [Exhibit D]. He was asked by one Sonny Quijano to sign these documents in blank on the representation of the latter that he will help him secure additional capital to enable him to purchase another taxi.

Rolando met for the first time Sonny Quijano sometime in January 1996 at Toyota Quezon Avenue. Rolando was then planning to purchase two units of taxi colored white. But at that time there was only one available unit at Toyota Quezon Avenue. Quijano approached Rolando informing him that there are units colored white available at Toyota Balintawak and that he will help him secure one. Rolando was able to secure one. In the month of May, Quijano went to the house of defendants and asked Rolando if he is still interested in getting additional capital to purchase a taxi. Rolando was asked to sign documents in blank.

The name of the plaintiff does not appear in these documents. When Rolando asked Quijano why the documents are in blank, Quijano told him just to sign and that he will take care of everything. Nora did not sign the documents because at that time she was in Australia. Rolando do (sic) not know what happened to the documents he signed. He read from the papers that Quijano was shot. He denied the issuance of the checks [Exhibits E, E-1 to E-12]. Defendants received a letter [Exhibit 8] dated February 21, 1997 from De Castro Law Office. Rolando went to this Law Office and presented his documents evidencing payment of the subject motor vehicle. He was told by Atty. De Castro that everything is okay and that he will take care of everything.

On October 28, 1998 at about 7:00 in the morning two [2] units of taxi including subject motor vehicle were seized by the sheriff assisted by three [3] SWAT members. The boundary of the subject motor vehicle, which is a taxi, is P750.00 for every 24 hours. From October 28, 1998 to October 1999 defendants lost P180,000 in income. Defendants retained the services of counsel for P100,000 plus P1,500 per appearance. With this incident on October 28, 1998, Rolando was embarrassed in front of his neighbors. For his sufferings Rolando is praying for P1 Million in damages plus P3 Million in exemplary damages.

Witness Maralit corroborated that testimony of Rolando that the subject motor vehicle was purchased in cash and not through financing. Had subject vehicle been purchased through financing the original Certificate of Registration and Certificate of Registration would have been transmitted to the financing company marked by the LTO "encumbered". This did not happen in this case. Security Finance, the plaintiff in this case was not accredited by Toyota Balintawak not even in one transaction. The appearance in both Exhibits 1 and 2 of "SPQ Center/Nora Saguid" as purchaser of the subject motor vehicle was satisfactorily explained by witness Maralit. The subject motor vehicle was initially reserved by SPQ Center but later on it waived its right in favor of Nora. It is for this reason that "SPQ Center/Nora Saguid" appears as the purchaser of the vehicle.17

In its decision18 dated 07 July 2000, the RTC ruled in favor of petitioners, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering plaintiff SECURITY FINANCE, INCORPORATED to pay defendant-spouses ROLANDO and NORA SAGUID:

1. The total amount of the daily earnings of the seized motor vehicle computed from the date of its seizure on October 28, 1998 up to its return to the defendants, at the rate of P750.00 daily;

2. The amount of P500,000 for moral damages;

3. The amount of P1,000,000 for exemplary damages;

4. The amount P200,000 for and as attorneys fees; and

5. The Costs.

In reaching its verdict, the RTC ruled that the promissory note and the deed of mortgage were not valid contracts and were not binding on petitioners. It explained that respondent failed to show with convincing evidence that it loaned to petitioners the money used in the purchase of the subject motor vehicle. On the contrary, it found that there was preponderance of evidence showing that the motor vehicle was purchased in cash by petitioners from Toyota Balintawak, Inc.

Respondent appealed the decision to the Court of Appeals via a Notice of Appeal.19

On 31 January 2003, the Court of Appeals rendered the assailed decision. It reversed and set aside the decision of the RTC and ruled in favor of respondent. It disposed of the case as follows:

WHEREFORE, premises considered, the assailed decision of the trial court is hereby REVERSED and SET ASIDE, and another one is rendered in favor of the plaintiff-appellant. Costs against the defendants-appellees.20

The Court of Appeals found the ruling of the trial court that there was no valid contract entered into between the parties on the ground there was no cause or consideration when they executed the same, and that respondent failed to show with convincing evidence that it loaned the money to petitioners which was used to purchase the subject motor vehicle, to be bereft of factual and legal basis. It relied heavily on the admission of petitioner Rolando Saguid during pre-trial and during his direct-examination that he signed the promissory note dated 23 April 1996 and the chattel mortgage dated 03 September 1996. It did not give weight to petitioners bare denial that they never transacted with respondent for the subject loan and that they never executed the promissory note and the deed of chattel mortgage because it belied the admission made by petitioner Rolando Saguid.

Petitioners filed a Motion for Reconsideration21 dated 24 February 2003 while respondent filed a Motion for Clarificatory Judgment22 dated 17 February 2003.

In a resolution dated 10 June 2003, the Court of Appeals denied the Motion for Reconsideration and granted the Motion for Clarificatory Judgment. It amended the dispostive portion of its 31 January 2003 decision as follows:

WHEREFORE, premises considered, the assailed decision of the trial court is hereby REVERSED and SET ASIDE, and another one is rendered in favor of the plaintiff-appellant ordering the defendants-appellees:

1) To deliver to the plaintiff-appellant the motor vehicle described as follows:

MAKE : Toyota Corolla XL

MODEL : 1996

ENGINE NO. : 2E-2895512

SERIAL NO. : EE100-9555787

2) In the event the manual delivery of the above-described motor vehicle is not feasible, to pay the plaintiff appellant the amount of P508,248.00 plus interest and penalty charges at the legal rate per annum until fully paid, in line with the decision of the Supreme Court in the case of Medel vs. Court of Appeals, 299 SCRA 481; and

3) To pay the costs of suit.23

Hence, the instant petition, contending that:

I

THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN HOLDING THAT PETITIONERS ENTERED INTO A TRANSACTION WITH RESPONDENT CONCERNING THE SUBJECT MOTOR VEHICLE BASED ON THE PROMISSORY NOTE AND CHATTEL MORTGAGE, DESPITE THE FACT THAT PETITIONER ROLANDO SAGUIDS ADMISSION OF HAVING SIGNED THE DOCUMENTS WAS MERELY IN PREPARATION FOR A LOAN APPLICATION PRESENTED TO HIM BY THE LATE SONNY QUIJANO, A CAR SALES AGENT.

II

THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS REVERSIBLE ERROR IN NOT HOLDING THAT THE PROMISSORY NOTE AND THE DEED OF MORTGAGE ARE NOT VALID AND NOT BINDING ON THE PETITIONERS CONSIDERING PETITIONER ROLANDO SAGUIDS EXPLANATION REGARDING HIS ADMISSION AND THE SOLID AND COMPETENT EVIDENCE THAT PETITIONER WIFE WAS NOT IN THE PHILIPPINES AT THE TIME OF THE EXECUTION OF THE SAID DOCUMENTS BUT WAS IN AUSTRALIA.

III

THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE MISAPPREHENSION OF FACTS AND THE EVIDENCE WHEN IT GRANTED RESPONDENTS MOTION FOR CLARIFICATORY JUDGMENT AND ORDERED PETITIONER TO DELIVER THE SUBJECT MOTOR VEHICLE TO RESPONDENT AND TO PAY RESPONDENT THE AMOUNT OF P508,248.00 PLUS INTEREST AND PENALTY CHARGES IN CASE MANUAL DELIVERY OF THE VEHICLE WAS NOT FEASIBLE, OVERLOOKING THE FACT THAT THE SUBJECT MOTOR VEHICLE WAS ALREADY FORCIBLY CONFISCATED AND SEIZED BY THE SHERIFF BY VIRTUE OF THE WRIT OF SEIZURE ISSUED BY THE TRIAL COURT AND DULY ACKNOWLEDGED TO HAVE BEEN RECEIVED BY THE SHERIFF FROM THE PETITIONERS.

Respondent would like to impress on the Court that there is a valid Contract of Loan between it and petitioners, and that the proceeds of the loan were used to buy the vehicle involved in this case. In support thereof, it offered, among other things, a Promissory Note24 dated 23 April 1996 and Chattel Mortgage25 dated 03 September 1996 over the subject vehicle which served as security for the payment of the amount indicated in the former. On the other hand, petitioners contend that they neither entered into any contract

with respondent nor did they receive any money from it that was used to buy the subject car. Though petitioner Rolando Saguid admitted that the signatures in the Promissory Note and Chattel Mortgage are his, he clarified that when he signed said documents upon the prodding of Sonny Quijano, he signed them in blank. Petitioner Nora Saguid, on her part, denied signing said documents. She claimed that the signatures purporting to be hers are forgeries since she was in Australia when said documents were executed.

Petitioners maintained that the Court of Appeals erred in holding that they entered into a transaction with respondent based on the promissory note and chattel mortgage despite petitioner Rolando Saguids explanation of the circumstances surrounding his signing thereof, and in not holding that these documents are not valid and binding on them.

To ascertain whether or not petitioners are bound by the promissory note and chattel mortgage, it must be established that all the elements of a contract of loan are present. Like any other contract, a contract of loan is governed by the rules as to the requisites and validity of contracts in general. It is basic and elementary in this jurisdiction that what determines the validity of a contract, in general, is the presence of the elements constituting the same, namely: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established.26 In this case, petitioners insist the third element is lacking since they never transacted with respondent for the proceeds of the loan which were used in purchasing the subject motor vehicle.

The Court of Appeals ruled that petitioners transacted with respondent and are bound by the promissory note and chattel mortgage they signed. It anchored its ruling on the admission of petitioner Rolando Saguid that he signed said documents. Citing Section 4, Rule 12927 of the Rules of Court, it reasoned out that petitioner Rolando Saguids bare denial cannot qualify the admission he made during pre-trial and during trial that they transacted with respondent and executed the aforesaid documents. It brushed aside the explanation made by petitioner Rolando Saguid that he signed the same in blank and only as preparation for a loan application presented to him by Sonny Quijano.

From the record, it is clear that what petitioner Rolando Saguid admitted was only his signatures in the aforementioned documents and not the contents thereof. In petitioners Answer, Rolando Saguid admitted signing the promissory note in preparation for an application for loan upon the request of Sonny Quijano who promised to facilitate the same for the purchase of another motor vehicle to be converted into a taxicab, but not with respondent. During trial, Rolando Saguid explained the circumstances under which he signed the documents with emphasis that he signed them in blank.

We find that the Court of Appeals committed an error when it closed its eyes to the clarification made by petitioner Rolando Saguid on the ground that same belied his admission. The rule that an admission cannot be contradicted unless it can be shown that it was made through palpable mistake or that no such admission was made will not apply under the circumstances obtaining in this case. It does not follow that the admission of the signatures carries with it the admission of the contents of the documents especially when the person who affixed his signatures thereon questions its execution and the veracity of the details embodied therein. Petitioners could have been bound by the terms and conditions of

the promissory note and chattel mortgage if petitioner Rolando Saguid admitted not only his signatures but also as to what are contained therein. This is not to be in the case before us. Petitioners can therefore adduce evidence that would nullify or invalidate both the promissory note and the chattel mortgage. In other words, they can show that the elements of the contract of loan are wanting.

The Court of Appeals held that it was not in a proper position to entangle itself in resolving the matter as regards the qualification made by petitioner Rolando Saguid on his admission because whatever the documents he signed in favor of Mr. Quijano is not the concern of the court as the same is not one of the issues presented before it, and that Mr. Quijano is not a party in the case. Petitioners claim that if only the Court of Appeals ruled on the matter, it could have ruled in their favor and sustained the decision of the trial court.

The Court of Appeals should have ruled on the same it being the primal defense of petitioners. It should not have wholly disregarded the qualification made by petitioner Rolando Saguid considering that said defense can easily be supported by other competent evidence. Instead of relying heavily on the admitted signatures, it should have evaluated other evidence that could have either bolstered or disproved the defense of petitioners.

This did not happen in this case. The Court of Appeals conveniently did not mention in its decision the testimony of Zenaida M. Maralit, an employee of Toyota Balintawak, Inc., who testified as to the circumstances on how the subject car was bought, and the documentary evidence that originated from Toyota Balintawak, Inc. We consider her to be an impartial witness whose testimony is vital in the proper resolution of this case.

Petitioners contend that the Court of Appeals erred in reversing the ruling of the trial court that the promissory note and the deed of chattel mortgage are not valid contracts and are not binding on them on the ground that the contracts did not contain the essential element of cause. The Court of Appeals said the trial court did not clearly declare in categorical terms the absence of cause in the aforesaid contracts and that petitioners failed to disprove that they are debtors of respondent since it is presumed that the cause exists in the contract.

Under Article 1354 of the Civil Code, it is presumed that consideration28 exists and is lawful unless the debtor proves the contrary.29 Moreover, under Section 3(r) of Rule 131 of the Rules of Court, it is presumed that there is a sufficient consideration for a contract. The presumption that a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no consideration.30 To overcome the presumption of consideration, the alleged lack of consideration must be shown by preponderance of evidence.31

In proving that there is no consideration for the aforementioned documents, petitioners proffered in evidence the following documents that showed that they bought the subject vehicle in cash and not in installment basis: (a) Vehicle Sales Invoice No. 7104;32 (b) Vehicle Delivery Note;33 (c) Official Receipts No. 20864634 and No. 208648;35 (d) Certificate of Registration No. 32862328;36 and (e) Official Receipt No. 40459605.37 In addition, Ms. Zenaida Maralit of Toyota Balintawak, Inc. confirmed that the subject car was indeed paid in cash and not through financing for the reasons that the originals of the Certificate of Registration and the Official Receipt of the subject vehicle have not been marked as

encumbered by the Land Transportation Office and are in the possession of the buyer. She added that respondent is not accredited in Toyota Balintawak, Inc. She testified:

Q: Madam Witness, do you know if this vehicle was purchased in cash or through financing?

A: It was purchased in cash.

Q: What proof do you have to show that it was purchased in cash?

A: There was an invoice cash return.

Q: By the way, being the head of the Credit and Collection, what are your duties and functions?

A: We are in-charge of collection, we are in-charge of the documentation with LTO, insurance and financing documents.

Q: As far as the purchase of vehicle through financing, what is your specific duty?

A: We are the one who asked the client to sign the documents.

Q: Will you tell the Honorable Court what is the procedure in case the vehicle is purchased from your office through financing?

A: After the client signed the documents, we get all the requirements based on the credit advice issued by the financing company. So together with the documents and all the requirements, valid ID, post dated checks, we are the one transmitting them to the financing company and after processing, the financing company gave us the proceed two to four days after the release of the vehicle.

Q: As far as the Certificate of Registration and Official Receipt are concerned, what did you do with them if the vehicle was purchased through financing?

A: If it was through financing, the original Official Receipt and Certificate of Registration goes to the financing company. We are the one transmitting them. Only the xerox copies of the Official Receipt and Certificate of Registration go to the client through financing transaction.

Q: As far as the security of the financing company, when it comes to purchase of vehicle through financing, what do you do with the Official Receipt and Certificate of Registration?

A: The LTO marked there encumbered. It means it was mortgaged to that particular financing company.

Q: Where it was marked?

A: At the Certificate of Registration, it was marked encumbered.

Q: On the face?

A: On the face.

Q: Do you have any policy as far as your company is concerned with regards to the purchase of vehicle through financing?

A: We have only the accredited financing companies.

Q: Is the plaintiff herein, Security Finance, accredited in your company?

A: No, not even in one transaction.

Q: What would be the significance if the original copy of the Certificate of Registration and the corresponding Official Receipt is in the possession of the buyer?

A: That means it was on cash transaction.38

On the other hand, respondent, through Rosauro G. Maghirang, Jr., Vice-President for Marketing, said that it paid the dealer in checks and that they have proof of payment. He testified:

Q: Mr. witness, you said you paid the dealer. In what form did you pay the dealer?

A: In checks, sir.

Q: Do you have any proof of your payment?

A: Yes, sir. 39

It is thus clear that the subject car was bought in cash and not through financing via respondent. We find the evidence presented by respondent to be unreliable and erratic. The testimony of Rosauro Maghirang, Jr. that respondent paid Toyota Balintawak, Inc. is simply unsubstantiated by competent evidence. If respondent truly paid the dealer how come it never presented the checks it used to pay Toyota Balintawak, Inc.? Even assuming arguendo that respondent released the loan proceeds to petitioners, the same would be inconsistent with its allegation that it was the one that paid the dealer. Furthermore, another telltale sign that strengthens the claim of petitioners that they did not transact with respondent for a loan was the fact that the alleged loan/credit application40 was not signed by any or both of them.

Respondents contention that petitioners did not deny drawing postdated checks in its favor is untenable. Petitioner Rolando Saguid categorically denied issuing the check and claimed that the signatures appearing thereon were not his.41

As to the alleged signature of petitioner Nora Saguid in the promissory note, evidence points that she could not have signed the document she being in Australia when she allegedly executed said document on 23 April 1996 as established by a certification42 from

the Bureau of Immigration that she left for Sydney, Australia, on 30 September 1995 and returned to the country on 15 June 1996.

From the foregoing, the Court is convinced that petitioners allegation of absence of consideration has been substantiated and the presumption of consideration disproved and overcome. We are of the mind that petitioners bought the car with their own money. There being no cause or consideration in the contract of loan allegedly entered into by the parties, the promissory note is not binding on the petitioners.

As regards the chattel mortgage, it is settled that a mortgage is a mere accessory contract and its validity would depend on the validity of the loan secured by it.43 The chattel mortgage constituted over the subject vehicle is an accessory contract to the loan obligation as embodied in the promissory note. It cannot exist as an independent contract since its consideration is the same as that of the principal contract. A principal obligation is an indispensable condition for the existence of an accessory contract.44 Since it has been sufficiently established that there was no cause or consideration for the promissory note, it follows that the chattel mortgage has no leg to stand on. Hence, it must be extinguished and cannot have any legal effect on petitioners.

Having ruled that both promissory note and chattel mortgage are not binding on petitioners, the return of the subject vehicle to petitioners is in order. In case the vehicle can no longer be delivered in the condition when it was seized, respondent shall pay petitioners the amount of P150,000.0045 plus interest of 6% per annum to be computed from 13 October 1998,46the date when said vehicle was seized, until finality of judgment after which interest rate shall become 12% per annum until actual payment.

We now go to the award of damages.

It is well-settled that actual or compensatory damages must be proved and proved with reasonable degree of certainty. A party is entitled only up to such compensation for the pecuniary loss that he has duly proven.47 It cannot be presumed.48Absent proof of the amount of actual damages sustained, the Court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual amount thereof.49

In the instant case, the trial court awarded as actual damages the amount of P750.00 per day as daily earnings of the seized vehicle from 28 October 1998 until its return. Same should be deleted for lack of competent proof. The bare assertion of petitioner Rolando Saguid that the subject vehicle was earning P750.00 a day before it was seized is inadequate, if not speculative, and should not be accepted because it is not supported by independent evidence. Petitioners should have at least presented a record or journal that would clearly show how much the vehicle earned in a specific period. This, petitioners failed to do. Instead, they relied on mere allegations that do not prove anything.

Petitioners are entitled to moral damages having suffered undue embarrassment when the subject vehicle was seized from their home. There is no hard-and-fast rule in the determination of what would be a fair amount of moral damages since each case must be

governed by its own peculiar facts. The yardstick should be that it is not palpably and scandalously excessive.50 We find the amount of P500,000.00 awarded by the lower court to be excessive. In our view, the award of P50,000.00 as moral damages is reasonable under the facts obtaining in this case.

Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.51 When moral damages are awarded, exemplary damages may also be granted.52 We, however, find the P1,000,000.00 awarded by the lower court to be excessive and should accordingly be reduced to P50,000.00.

Moreover, attorneys fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest by reason of an unjustified act of the other party.53 Petitioners are entitled thereto because they were compelled to litigate in order to protect their interest. Moreover, there being an award for exemplary damages,54 it follows that there should be an award thereof. An award of P20,000.00 will be sufficient as the award of P200,000.00 by the RTC is too much.

WHEREFORE, premises considered, the decision of the Court of Appeals in CA-G.R. CV No. 68129 is REVERSED and SET ASIDE. Respondent Security Finance, Inc. is ordered to deliver the possession of the subject vehicle to petitioners, or, in the alternative if such delivery can no longer be made, to pay petitioners the amount of P150,000.00 plus interest of 6% per annum to be computed from 13 October 1998 until finality of judgment after which interest rate shall become 12% per annum until actual payment. Respondent is also ordered to pay petitioners P50,000.00 as moral

damages, P50,000.00 as exemplary damages and P20,000.00 by way of attorneys fees.

No pronouncement as to costs.

SO ORDERED.

G.R. NO. 148273 April 19, 2006

MILAGROS SIMON and LIBORIO BALATICO, Petitioners, vs. GUIA W. CANLAS, Respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) dated May 23, 2001 in CA-G.R. CV No. 62789 which affirmed the Decision of the Regional Trial Court (RTC), Branch 65, Tarlac City dated July 31, 1998 in Civil Case No. 7384.

The factual background of the case is as follows:

On February 11, 1991, Edgar H. Canlas (Edgar) filed a complaint for judicial foreclosure of real estate mortgage against Milagros Simon (Milagros) and her husband, Liborio Balatico (petitioners). In the complaint, Edgar alleges that: on September 10, 1987, Milagros obtained a loan from him in the amount of P220,000.00 secured by a real estate mortgage2over her paraphernal property, a 748-square meter parcel of land located at San Nicolas, Victoria, Tarlac, covered by Transfer Certificate of Title (TCT) No. 139884; the loan was payable within a period of three years or until September 18, 1990; Milagros defaulted in the payment of the loan and repeated demands for payment went unheeded, prompting the filing of a case in court.3

On March 25, 1991, petitioners filed their Answer with Counterclaim, alleging that Milagros never transacted any business with Edgar and she did not receive the consideration of the alleged mortgage.4

On March 26, 1991, Edgar filed his Reply and Answer to Counterclaim, reiterating validity and due execution of the real estate mortgage.5

On November 12, 1991, with leave of court,6 petitioners filed a Third-Party Complaint against Virginia Canlas (Virginia) and Aurelia Delos Reyes (Aurelia), claiming that they duped Milagros to part with her title and sign the mortgage documents without giving her the consideration and refusing to return her title when demanded.7

On November 18, 1991, Virginia and Aurelia filed their Answer with Counterclaim to Third-Party Complaint, alleging that the complaint states no cause of action against them since they are not privies to the real estate mortgage and Aurelia is only a witness to the mortgage document.8

On November 28, 1991, petitioners filed their Reply and Answer to Counterclaim, reiterating their claims in the third-party complaint.9

Edgar died during the pendency of the case. On December 4, 1991, upon proper motion,10 the RTC ordered that Edgar be substituted by his wife, Guia W. Canlas (respondent), as plaintiff.11

On August 12, 1996, the RTC issued a pre-trial order stating that the parties failed to arrive at a settlement. However, they agreed to stipulate on the following: "[t]hat the defendant executed a deed of real estate mortgage in favor of the plaintiff involving a parcel of land covered by TCT No. 139884 located at San Nicolas, Victoria, Tarlac."12

Thereafter, trial on the merits ensued with respondent presenting her witnesses, namely: Nelson Nulud, the records custodian of the Registry of Deeds of Tarlac; Aurelia, the third-party defendant and one of the instrumental witnesses to the real estate mortgage; and respondent herself. When petitioners turn came, they presented Crisostomo Astrero, the other instrumental witness to the real estate mortgage. 1avvphil.net

On April 15, 1998, petitioners counsel, Atty. Norberto De Jesus, filed an Ex-Parte Urgent Motion for Postponement since he is busy campaigning as a candidate in the coming elections.13 There being no objection from respondent, the RTC reset the hearing to May 28, 1998.14

On May 28, 1998, Atty. De Jesus and petitioners failed to appear in court. The RTC reset the hearing on June 17, 1998 with a warning that if the petitioners will still fail to appear on said date, they will be considered to have waived their right to present further evidence.15

On June 17, 1998, Atty. De Jesus failed to appear in court but petitioners were present. Milagros informed the RTC that Atty. De Jesus withdrew his appearance as their counsel. In view thereof, the RTC directed petitioners to secure the services of another counsel and the hearing was reset to June 24, 1998 with a warning that should petitioners still fail to present evidence at said hearing, they will be considered to have waived their right to present further evidence.16 On June 23, 1998, Atty. De Jesus filed his Withdrawal of Appearance as Counsel for the Defendants with the conformity of Milagros.17

On June 24, 1998, Milagros informed the RTC that they have retained Atty. Alejo Y. Sedico18 as new counsel. The hearing was again reset to July 2, 1998 with the final warning that should petitioners witnesses fail to appear at the said hearing, they would be considered to have waived their right to present further evidence.19

On July 1, 1998, Atty. Sedico formally filed his Entry of Appearance with Urgent Ex-Parte Motion to Reset, praying that the hearing scheduled on July 2, 1998 be reset to August 12, 1998 due to conflict of schedule and his trial calendar for July is fully occupied, as well as to give him more time to study the case since he had just been retained.20

On July 2, 1998, the RTC allowed, in the interest of justice, the resetting of the hearing for presentation of petitioners evidence for the last time on July 15, 1998. The RTC directed petitioners to secure the services of a counsel of their choice to represent them in the said hearing considering that it postponed motu propio the hearing in the interest of justice over the vigorous objection of the respondent due to failure of petitioners counsel to appear for three successive times. It warned petitioners that in case they would be unable to present

evidence in the next scheduled hearing, they would be deemed to have waived their right to present further evidence.21

On July 9, 1998, Atty. Sedico filed an Urgent Motion to Reset the scheduled hearing on July 15, 1998 due to a previously scheduled hearing on the same date of Criminal Case Nos. 6463 to 6510 for Estafa entitled "People of the Philippines v. Eddie Sentero" before the Regional Trial Court, Branch 172, Valenzuela. He reiterated that his trial calendar for the whole month of July is fully occupied and requested the hearing be reset to August 10 or 19, 1998.22

At the scheduled hearing on July 15, 1998, the RTC was apprised of the Urgent Motion to Reset filed by petitioners counsel. In view of the vigorous objection of respondents counsel on the ground that the case has been postponed several times at petitioners instance, the RTC denied the motion to reset and petitioners were deemed to have waived their right to present evidence. The case was then considered submitted for decision.23

Sixteen days later, on July 31, 1998, the RTC rendered its decision, the dispositive portion of which reads:

WHEREFORE, the plaintiff having substantiated her claim by a preponderance of evidence, this Court hereby renders judgment in her favor, ordering the defendants to pay the plaintiff within a period of ninety (90) days from the entry of judgment hereof, the following sums of:

(1) P220,000.00, representing the principal obligation plus interest thereof of 12% per annum from the filing of the complaint until fully paid;

(2) P30,000.00 as attorneys fees; and

(3) The costs of suit.

It is further adjudged that in the event defendants default in the payment of the above determined amounts, Lot No. 2763, with an area of 748 square meters situated in San Nicolas, Victoria, Tarlac and covered by Transfer Certificate of Title No. 13984 Tarlac Registry, particularly identified and described in the Real Estate Mortgage contract (Exhibit "A"), shall be sold at public auction to satisfy this judgment.

SO ORDERED.24

The RTC held that Milagros executed a deed of real estate mortgage in favor of Edgar and she received the consideration for the mortgage in the amount of P220,000.00; that petitioners inaction for three years before the filing of the complaint against them to protest the alleged non-receipt of the consideration for the mortgage casts serious doubts on their claim; and that the deed of real estate mortgage was duly notarized and assumed the character of a public instrument.

On September 2, 1998, petitioners filed a Motion for Reconsideration, claiming that they were denied due process when the RTC decided the case without petitioners evidence.25 On October 16, 1998, the RTC denied the motion for reconsideration, holding

that petitioners were given ample opportunity to hire a counsel, prepare for trial and adduce evidence, which they took for granted and they should bear the fault.26

Dissatisfied, petitioners filed an appeal with the CA. On May 23, 2001, the CA affirmed the decision of the RTC.27 The CA ruled that petitioners were not denied due process since they were duly accorded all the opportunities to be heard and present evidence to substantiate their defense but they forfeited their right for not appearing in court together with their counsel at the scheduled hearings; that since Milagros admitted the existence, due execution, authenticity and validity of the Deed of Real Estate Mortgage during the Pre-Trial Conference on June 7, 1995, absence of consideration is no longer an issue; that, in any case, the amount of P220,000.00 was actually received by Milagros per the testimony of Aurelia; that petitioners slept on their rights, if they had any, since they never lifted a finger to protect and preserve their alleged rights and interests; and that the mortgaged property is not conjugal property but the exclusive property of Milagros which she could validly dispose of or encumber without her husbands consent.

The CA merely noted that the RTC failed to dispose of petitioners third-party complaint and without any further discussion, dismissed the third-party complaint in the dispositive portion of its decision, to wit:

WHEREFORE, the Decision appealed from is hereby AFFIRMED in toto as to the main case. The third-party complaint is hereby DISMISSED.

SO ORDERED.28

Hence, the present petition for review on certiorari anchored on the following Assignment of Errors:

1. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT UPHELD THE VALIDITY OF THE QUESTIONED REAL ESTATE MORTAGE EVEN AS THERE WAS LACK OF CONSIDERATION AND THAT THE SAME WAS EXECUTED THROUGH FRAUDULENTLY [sic] SCHEME;

2. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THE DUE EXECUTION OF THE REAL ESTATE MORTGAGE WAS ADMITTED WHILE WHAT WAS ADMITTED ONLY IS ITS EXECUTION;

3. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THE SUBJECT REAL PROPERTY IS PARAPHERNAL EVEN AS EXISTING LAW AND JURISPRUDENCE HAD CONSIDERED IT CONJUGAL OR ABSOLUTE COMMUNITY OF PROPERTY;

4. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT DESPITE OF [sic] HAVING DENIED PETITIONER TO BE REPRESENT [sic] BY A COUNSEL OF CHOICE DUE PROCESS IS SATISFIED.29

Petitioners contend that the real estate mortgage was fraudulently executed and there was lack of consideration but material facts relating thereto were not fully ventilated because the RTC denied petitioners motion to reset the hearing. They maintain that they never admitted the due execution of the real estate mortgage, but only its execution or existence. They further insist that the mortgaged property is conjugal, not paraphernal, and therefore, Milagros could not dispose of or encumber without her husbands consent; and the CA disregarded Article 9930 of the Family Code which provides that all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter forms part of the community property. Lastly, they submit that while they were given the opportunity to secure the services of a new counsel to defend them, the RTCs apathy to the plight of petitioners counsel on the latters conflict of schedule amounted to stripping such right to counsel and denial of due process.

For her part, respondent contends that the petition should be dismissed outright for impleading the CA as respondent, despite the clear directive of the 1997 Rules of Civil Procedure against it. She further points out that the petition lacks verification, a certification against forum shopping, a copy of the assailed CA decision, and it fails to raise any specific question of law but only presents and discusses an "assignment of errors."

In any event, even if these procedural defects are disregarded, respondent argues that petitioners were not denied due process when the RTC denied their motion for postponement since they were duly accorded all the opportunities to be heard and to present their evidence to substantiate their defense but they forfeited this right for not appearing in court together with their counsel at the scheduled hearings. They also aver that the real estate mortgage is valid and duly executed and the mortgaged property is the paraphernal property of Milagros such that she can validly dispose of or encumber it without her husbands consent.

Anent the procedural defects raised by respondent, the Court agrees that the correct procedure, as mandated by Section 4, Rule 45 of the 1997 Rules of Civil Procedure, is not to implead the lower court which rendered the assailed decision.31However, impleading the lower court as respondent in the petition for review on certiorari does not automatically mean the dismissal of the appeal but merely authorizes the dismissal of the petition.32 Besides, formal defects in petitions are not uncommon. The Court has encountered previous petitions for review on certiorari that erroneously impleaded the CA. In those cases, the Court merely called the petitioners attention to the defects and proceeded to resolve the case on their merits.33

The Court finds no reason why it should not afford the same liberal treatment in this case. While unquestionably, the Court has the discretion to dismiss the appeal for being defective, sound policy dictates that it is far better to dispose of cases on the merits, rather than on technicality as the latter approach may result in injustice.34 This is in accordance with

Section 6, Rule 1 of the 1997 Rules of Civil Procedure35 which encourages a reading of the procedural requirements in a manner that will help secure and not defeat justice.36

As to respondents claim that the petition lacks verification, a certification against forum shopping and a copy of the assailed CA decision, the Court has carefully examined the rollo of the case and found them to be attached to the petition.37

Anent respondents submission that the petition failed to raise a question of law, the Court disagrees. For a question to be one of law, it must not involve an examination of the probative value of the evidence presented by the litigants or any of them.38 Petitioners contention that they were denied substantive due process is a pure question of law.39

As a rule, the grant or denial of a motion for postponement is addressed to the sound discretion of the court, which should always be predicated on the consideration that more than the mere convenience of the courts or of the parties in the case, the ends of justice and fairness should be served thereby. After all, postponements and continuances are part and parcel of our procedural system of dispensing justice."40 When no substantial rights are affected and the intention to delay is not manifest with the corresponding motion to transfer the hearing having been filed accordingly, it is sound judicial discretion to allow the same to the end that the merits of the case may be fully ventilated.41 Thus, in considering motions for postponements, two things must be borne in mind: (1) the reason for the postponement, and (2) the merits of the case of the movant.42 Unless grave abuse of discretion is shown, such discretion will not be interfered with either by mandamus or appeal.43

In the present case, there are circumstances that justify postponement of the July 15, 1998 hearing. Atty. Sedico had only been formally retained as petitioners new counsel as of July 1, 1998, or merely two weeks before July 15, 1998. Atty. Sedico also had a previously intransferable hearing in a criminal case before the Regional Trial Court, Branch 172, Valenzuela scheduled on the same date of July 15, 1998. The distance factor, from Valenzuela to Tarlac, is enough consideration to call for postponement. Moreover, Atty. Sedico twice informed the RTC that his entire calendar for July is already full such that he requested specific dates in August for the hearing.44 The motion to reset the hearing has not been shown to be manifestly dilatory. Besides, except for the May 28, 1998 scheduled hearing,45 petitioners have always been present in court. They cannot be said to have lost interest in fighting the civil case to the end; only that Atty. De Jesus withdrew his appearance as their counsel and petitioners had to look for new counsel to take their case on short notice. Absolutely wanting from the records is any evidence that the change of counsel was intended to delay the proceedings. In fact, only 48 days have lapsed from the time Atty. De Jesus failed to appear on May 28, 199846 to the time when Atty. Sedicos motion to reset was denied on July 15, 1998.47 Such intervening time cannot be said to have greatly impaired the substantial rights of respondent. Thus, absent unreasonable delay and manifest intent to employ dilatory tactic prejudicial to the respondent and trifling court processes, Atty. Sedicos request for resetting should have been granted.

It cannot be disputed that the case has been pending since February 11 1991,48 or more than seven years until petitioners were able to start their presentation of their evidence on March 11, 1998.49

The Court is as aware as anyone of the need for the speedy disposition of cases. However, it must be emphasized that speed alone is not the chief objective of a trial. It is the careful and deliberate consideration for the administration of justice, a genuine respect for the rights of all parties and the requirements of procedural due process, and an adherence to this Courts standing admonition that the disposition of cases should always be predicated on the consideration that more than the mere convenience of the courts and of the parties in the case, the ends of justice and fairness would be served thereby. These are more important than a race to end the trial.50 Indeed, court litigations are primarily for the search for truth, and a liberal interpretation of the rules by which both parties are given the fullest opportunity to adduce proofs is the best way to ferret out such truth.51

Ironically, the precipitate action of the RTC prolonged the litigation and unnecessarily delayed the case, in the process, causing the very evil it apparently sought to avoid. Instead of unclogging dockets, it has actually increased the workload of the justice system as a whole. Such action does not inspire public confidence in the administration of justice.

Moreover, it is noted that petitioners filed a third-party complaint which the RTC simply disregarded. On the other hand, the CA, while stating in its Decision that "[a]ll thus told, we find no reversible error in the judgment of the trial court, except that it failed to dispose of the third-party complaint,"52 it simply proceeded to dismiss the third-party complaint in the dispositive portion of herein assailed decision, without giving any reason or justification therefor.

As to the effect of petitioners admission of the due execution of the real estate mortgage during the pre-trial conference, it must be noted that in Benguet Exploration, Inc. v. Court of Appeals, 53 this Court ruled that the admission of the genuineness and due execution of a document simply means that the party whose signature it bears admits that he voluntarily signed the document or it was signed by another for him and with his authority; that at the time it was signed it was in words and figures exactly as set out in the pleading of the party relying upon it; that the document was delivered; and that any formalities required by law, such as a seal, an acknowledgment, or revenue stamp, which it lacks, are waived by him. However, it does not preclude a party from arguing against it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel and want of consideration. Petitioners therefore are not barred from presenting evidence regarding their claim of want of consideration.

It bears stressing that the matter of absence of consideration and alleged fraudulent scheme perpetuated by third-party defendants, being evidentiary, should be threshed out in a proper trial. To deny petitioners their right to present evidence constitutes a denial of due process, since there are issues that cannot be decided without a trial of the case on the merits.

Ordinarily, when there is sufficient evidence before the Court to enable it to resolve the fundamental issues, the Court will dispense with the regular procedure of remanding the case to the lower court, in order to avoid further delays in the resolution of the case.54 However, a remand in this case, while time-consuming, is necessary, because the proceedings had in the RTC are grossly inadequate to settle factual issues. Petitioners were

unduly deprived of the full opportunity to present evidence on the merits of their defense and third-party complaint.

Considering the foregoing, the Court need not delve on the other issues raised by petitioners. Suffice it to say that such matters are best decided by the RTC only after full reception of petitioners evidence.

WHEREFORE, the present petition is GRANTED. The assailed Decision dated May 23, 2001 of the Court of Appeals and the Decision dated July 31, 1998 of the Regional Trial Court, Branch 65, Tarlac City in Civil Case No. 7384, areREVERSED and SET ASIDE. The case is REMANDED to the said Regional Trial Court for reception of petitioners evidence and further proceedings.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 165987 March 31, 2006

JOSHUA S. ALFELOR and MARIA KATRINA S. ALFELOR, Petitioners, vs. JOSEFINA M. HALASAN, and THE COURT OF APPEALS, Respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a Petition for Review on Certiorari seeking to nullify the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 74757, as well as the Resolution2 dated June 28, 2004 denying the motion for reconsideration thereof.

On January 30, 1998, the children and heirs of the late spouses Telesforo and Cecilia Alfelor filed a Complaint for Partition3before the Regional Trial Court (RTC) of Davao City. Among the plaintiffs were Teresita Sorongon and her two children, Joshua and Maria Katrina, who claimed to be the surviving spouse of Jose Alfelor, one of the children of the deceased Alfelor Spouses. The case, docketed as Civil Case No. 26,047-98, was raffled to Branch 17 of said court.

On October 20, 1998, respondent Josefina H. Halasan filed a Motion for Intervention,4 alleging as follows:

1. That she has legal interest in the matter of litigation in the above-entitled case for partition between plaintiffs and defendants;

2. That she is the surviving spouse and primary compulsory heir of Jose K. Alfelor, one of the children and compulsory heirs of Telesforo I. Alfelor whose intestate estate is subject to herein special proceedings for partition;

3. That herein intervenor had not received even a single centavo from the share of her late husband Jose K. Alfelor to the intestate estate of Telesforo K. Alfelor.

WHEREFORE, movant prays that she be allowed to intervene in this case and to submit attached Answer in Intervention.5

Josefina attached to said motion her Answer in Intervention,6 claiming that she was the surviving spouse of Jose. Thus, the alleged second marriage to Teresita was void ab initio for having been contracted during the subsistence of a previous marriage. Josefina further alleged that Joshua and Maria Katrina were not her husbands children. Josefina prayed, among others, for the appointment of a special administrator to take charge of the estate. Josefina attached to her pleading a copy of the marriage contract7 which indicated that she and Jose were married on February 1, 1956.

Since petitioners opposed the motion, the judge set the motion for hearing. Josefina presented the marriage contract as well as the Reply-in- Intervention8 filed by the heirs of the deceased, where Teresita declared that she knew "of the previous marriage of the late

Jose K. Alfelor with that of the herein intervenor" on February 1, 1956.9 However, Josefina did not appear in court.

Teresita testified before the RTC on February 13, 2002.10 She narrated that she and the deceased were married in civil rites at Tagum City, Davao Province on February 12, 1966, and that they were subsequently married in religious rites at the Assumption Church on April 30, 1966. Among those listed as secondary sponsors were Josefinas own relativesAtty. Margarito Halasan, her brother, and Valentino Halasan, her father.11 While she did not know Josefina personally, she knew that her husband had been previously married to Josefina and that the two did not live together as husband and wife. She knew that Josefina left Jose in 1959. Joses relatives consented to her (Teresitas) marriage with Jose because there had been no news of Josefina for almost ten years. In fact, a few months after the marriage, Josefina disappeared, and Jose even looked for her in Cebu, Bohol, and Manila. Despite his efforts, Jose failed to locate Josefina and her whereabouts remained unknown.

Teresita further revealed that Jose told her that he did not have his marriage to Josefina annulled because he believed in good faith that he had the right to remarry, not having seen her for more than seven years. This opinion was shared by Joses sister who was a judge. Teresita also declared that she met Josefina in 2001, and that the latter narrated that she had been married three times, was now happily married to an Englishman and residing in the United States.

On September 13, 2002, Judge Renato A. Fuentes issued an Order12 denying the motion and dismissed her complaint, ruling that respondent was not able to prove her claim. The trial court pointed out that the intervenor failed to appear to testify in court to substantiate her claim. Moreover, no witness was presented to identify the marriage contract as to the existence of an original copy of the document or any public officer who had custody thereof. According to the court, the determinative factor in this case was the good faith of Teresita in contracting the second marriage with the late Jose Alfelor, as she had no knowledge that Jose had been previously married. Thus, the evidence of the intervenor did not satisfy the quantum of proof required to allow the intervention. Citing Sarmiento v. Court of Appeals,13 the RTC ruled that while Josefina submitted a machine copy of the marriage contract, the lack of its identification and the accompanying testimony on its execution and ceremonial manifestation or formalities required by law could not be equated to proof of its validity and legality.

The trial court likewise declared that Teresita and her children, Joshua and Maria Katrina, were the legal and legitimate heirs of the late Jose K. Alfelor, considering that the latter referred to them as his children in his Statement of Assets and Liabilities, among others. Moreover, the oppositor did not present evidence to dispute the same. The dispositive portion of the Order reads:

WHEREFORE, finding the evidence of intervenor, Josephina (sic) Halasan through counsel, not sufficient to prove a preponderance of evidence and compliance with the basic rules of evidence to proved (sic) the competent and relevant issues of the complaint-in-intervention, as legal heir of the deceased Jose K. Alfelor, the complaint (sic) of intervention is ordered dismiss (sic) with cost[s] de oficio.

On the other hand, finding the evidence by Teresita Sorongon Aleflor, oppositor through counsel sufficient to proved (sic) the requirement of the Rules of Evidence, in accordance with duly supporting and prevailing jurisprudence, oppositor, Teresita Sorongon Alfelor and her children, Joshua S. Alfelor and Maria Katrina S. Alfelor, are declared legal and legitimate Heirs of the late Jose K. Alfelor, for all purposes, to entitled (sic) them, in the intestate estate of the latter in accordance to (sic) law, of all properties in his name and/or maybe entitled to any testate or intestate proceedings of his predecessor-[in]-interest, and to receive such inheritance, they are legally entitled, along with the other heirs, as the case maybe (sic).13

Josefina filed a Motion for Reconsideration,15 insisting that under Section 4, Rule 129 of the Revised Rules of Court, an admission need not be proved. She pointed out that Teresita admitted in her Reply in Intervention dated February 22, 1999 that she (Teresita) knew of Joses previous marriage to her. Teresita also admitted in her testimony that she knew of the previous marriage.16 Since the existence of the first marriage was proven in accordance with the basic rules of evidence, pursuant to paragraph 4, Article 80 of the New Civil Code, the second marriage was void from the beginning. Moreover, contrary to the ruling of the trial court, Article 83 of the Civil Code provides that the person entitled to claim good faith is the "spouse present" (thus, the deceased Jose and not Teresita). Josefina concluded that if the validity of the second marriage were to be upheld, and at the same time admit the existence of the second marriage, an absurd situation would arise: the late Jose Alfelor would then be survived by two legitimate spouses.

The trial court denied the motion in its Order17 dated October 30, 2002.

Aggrieved, Josefina filed a Petition for Certiorari under Rule 65 before the CA, alleging that the RTC acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in declaring that she failed to prove the fact of her marriage to Jose, in considering the bigamous marriage valid and declaring the second wife as legal heir of the deceased. Josefina also stressed that Articles 80 and 83 of the New Civil Code provide for a presumption of law that any subsequent marriage is null and void. She insisted that no evidence was presented to prove that she had been absent for seven consecutive years before the second marriage.

In their comment, Teresita and her children countered that anyone who claims to be the legal wife must show proof thereof. They pointed out that Josefina failed to present any of the following to prove the fact of the previous marriage: the testimony of a witness to the matrimony, the couples public and open cohabitation as husband and wife after the alleged wedding; the birth and the baptismal certificates of children during such union, and other subsequent documents mentioning such union. Regarding Teresitas alleged admission of the first marriage in her Reply in Intervention dated February 22, 1999, petitioners claim that it was mere hearsay, without probative value, as she heard of the alleged prior marriage of decedent Jose Alfelor to Josefina only from other persons, not based on her own personal knowledge. They also pointed out that Josefina did not dispute the fact of having left and abandoned Jose after their alleged marriage in 1956, and only appeared for the first time in 1988 during the filing of the case for partition of the latters share in his parents estate. They further pointed out that Josefina does not even use the surname of the deceased Alfelor. Contrary to the allegations of Josefina, paragraph 2, Article 83 of the Civil Code,

now Article 41 of the Family Code, is applicable. Moreover, her inaction all this time brought to question her claim that she had not been heard of for more than seven years.

In its Decision dated November 5, 2003, the CA reversed the ruling of the trial court. It held that Teresita had already admitted (both verbally and in writing) that Josefina had been married to the deceased, and under Section 4, Rule 129 of the Revised Rules of Evidence, a judicial admission no longer requires proof. Consequently, there was no need to prove and establish the fact that Josefa was married to the decedent. Citing Santiago v. De los Santos,18 the appellate court ruled that an admission made in a pleading cannot be controverted by the party making such admission, and is conclusive as to such party; and all contrary or inconsistent proofs submitted by the party who made the admission should be ignored whether objection is interposed by the other party or not. The CA concluded that the trial court thus gravely abused its discretion in ordering the dismissal of Josefinas Complaint-in-Intervention. The dispositive portion of the decision reads:

WHEREFORE, foregoing premises considered, the assailed orders, having been issued with grave abuse of discretion are hereby ANNULLED and SET ASIDE. Resultantly, the Regional Trial Court, Branch 17, Davao City, is ordered to admit petitioners complaint in intervention and to forthwith conduct the proper proceeding with dispatch. No costs.

SO ORDERED.19

Thus, Joshua and Maria Katrina Alfelor filed the instant petition, assailing the ruling of the appellate court.

Petitioners limit the issue to the determination of whether or not the CA erred in ordering the admission of private respondents intervention in S.P. Civil Case No. 26,047-98. They insist that in setting aside the Orders of the trial court, dated September 13, 2002 and October 30, 2002, the CA completely disregarded the hearsay rule. They aver that while Section 4 of Rule 129 of the Revised Rules of Evidence provides that an admission does not require proof, such admission may be contradicted by showing that it was made through palpable mistake. Moreover, Teresitas statement in the Reply-in-Intervention dated February 22, 1999, admitting knowledge of the alleged first marriage, is without probative value for being hearsay.

Private respondent, for her part, reiterates that the matters involved in this case fall under Section 4, Rule 129 of the Revised Rules of Evidence, and thus qualify as a judicial admission which does not require proof. Consequently, the CA did not commit any palpable error when it ruled in her favor.

Petitioners counter that while Teresita initially admitted knowledge of Joses previous marriage to private respondent in the said Reply-in- Intervention, Teresita also testified during the hearing, for the purpose, that the matter was merely "told" to her by the latter, and thus should be considered hearsay. They also point out that private respondent failed to appear and substantiate her Complaint-in-Intervention before the RTC, and only submitted a machine copy of a purported marriage contract with the deceased Jose Alfelor.

The issue in this case is whether or not the first wife of a decedent, a fact admitted by the other party who claims to be the second wife, should be allowed to intervene in an action for partition involving the share of the deceased "husband" in the estate of his parents.

The petition is dismissed.

The fact of the matter is that Teresita Alfelor and her co-heirs, petitioners herein, admitted the existence of the first marriage in their Reply- in-Intervention filed in the RTC, to wit:

1.1. Plaintiff Teresita S. Alfelor admits knowledge of the previous marriage of the late Jose K. Alfelor, with that of the herein intervenor were married on February 1, 1956;20

Likewise, when called to testify, Teresita admitted several times that she knew that her late husband had been previously married to another. To the Courts mind, this admission constitutes a "deliberate, clear and unequivocal" statement; made as it was in the course of judicial proceedings, such statement qualifies as a judicial admission.21 A party who judicially admits a fact cannot later challenge that fact as judicial admissions are a waiver of proof;22 production of evidence is dispensed with.23 A judicial admission also removes an admitted fact from the field of controversy.24 Consequently, an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to such party, and all proofs to the contrary or inconsistent therewith should be ignored, whether objection is interposed by the party or not.25 The allegations, statements or admissions contained in a pleading are conclusive as against the pleader. A party cannot subsequently take a position contrary of or inconsistent with what was pleaded.26

On the matter of the propriety of allowing her motion for intervention, the pertinent provision of the Revised Rules of Court is Section 1, Rule 19, which provides:

SEC. 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenors rights may be fully protected in a separate proceeding.

Under this Rule, intervention shall be allowed when a person has (1) a legal interest in the matter in litigation; (2) or in the success of any of the parties; (3) or an interest against the parties; (4) or when he is so situated as to be adversely affected by a distribution or disposition of property in the custody of the court or an officer thereof.27 Intervention is "a proceeding in a suit or action by which a third person is permitted by the court to make himself a party, either joining plaintiff in claiming what is sought by the complaint, or uniting with defendant in resisting the claims of plaintiff, or demanding something adversely to both of them; the act or proceeding by which a third person becomes a party in a suit pending between others; the admission, by leave of court, of a person not an original party to pending legal proceedings, by which such person becomes a party thereto for the protection of some right of interest alleged by him to be affected by such proceedings."28

Considering this admission of Teresita, petitioners mother, the Court rules that respondent Josefina Halasan sufficiently established her right to intervene in the partition case. She has shown that she has legal interest in the matter in litigation. As the Court ruled in Nordic Asia Ltd. v. Court of Appeals:29

x x x [T]he interest which entitles a person to intervene in a suit between other parties must be in the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by direct legal operation and effect of the judgment. Otherwise, if persons not parties to the action were allowed to intervene, proceedings would become unnecessarily complicated, expensive and interminable. And this would be against the policy of the law. The words "an interest in the subject" means a direct interest in the cause of action as pleaded, one that would put the intervenor in a legal position to litigate a fact alleged in the complaint without the establishment of which plaintiff could not recover.30

In Uy v. Court of Appeals,31 the Court allowed petitioners (who claimed to be the surviving legal spouse and the legitimate child of the decedent) to intervene in the intestate proceedings even after the parties had already submitted a compromise agreement involving the properties of the decedent, upon which the intestate court had issued a writ of execution. In setting aside the compromise agreement, the Court held that petitioners were indispensable parties and that "in the interest of adjudicating the whole controversy, petitioners inclusion in the action for partition, given the circumstances, not only is preferable but rightly essential in the proper disposition of the case."32

Contrary to petitioners argument, the case of Sarmiento v. Court of Appeals33 is not in point, as the Court therein did not discuss the propriety of allowing a motion for intervention, but resolved the validity of a marriage. In relying on the merits of the complaint for partition, the Court ultimately determined the legitimacy of one of the petitioners therein and her entitlement to a share in the subject properties.

CONSIDERING THE FOREGOING, the Decision of the Court of Appeals in CA-G.R. SP No. 74757 is AFFIRMED. The Regional Trial Court, Branch 17, Davao City, is ORDERED to admit respondent Josefina Halasans Complaint-in-Intervention and forthwith conduct the proper proceedings with dispatch.

SO ORDERED.

G.R. No. 178551 October 11, 2010

ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF PUBLIC HEALTH-KUWAIT Petitioners, vs. MA. JOSEFA ECHIN, Respondent.

D E C I S I O N

CARPIO MORALES, J.:

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

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

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

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

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

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

On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor Arbiters decision by Resolution4 of January 26, 2004. Petitioners motion for reconsideration having been denied by Resolution5 of April 22, 2004, they appealed to the Court of Appeals, contending that their principal, the Ministry, being a foreign government agency, is immune from suit and, as such, the immunity extended to them; and that respondent was validly dismissed for her failure to meet the performance rating within the one-year period as required under Kuwaits Civil Service Laws. Petitioners further contended that Ikdal should not be liable as an officer of petitioner ATCI.

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

In brushing aside petitioners contention that they only acted as agent of the Ministry and that they cannot be held jointly and solidarily liable with it, the appellate court noted that

under the law, a private employment agency shall assume all responsibilities for the implementation of the contract of employment of an overseas worker, hence, it can be sued jointly and severally with the foreign principal for any violation of the recruitment agreement or contract of employment.

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

Petitioners motion for reconsideration having been denied by the appellate court by Resolution7 of June 27, 2007, the present petition for review on certiorari was filed.

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

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

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

The petition fails.

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

In providing for the joint and solidary liability of private recruitment agencies with their foreign principals, Republic Act No. 8042 precisely affords the OFWs with a recourse and assures them of immediate and sufficient payment of what is due them. Skippers United Pacific v. Maguad8 explains:

. . . [T]he obligations covenanted in the recruitment agreement entered into by and between the local agent and its foreign principal are not coterminous with the term of such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment

contracts of the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted. (emphasis supplied)

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

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

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

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

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

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

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

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

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

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

To prove the Kuwaiti law, petitioners submitted the following: MOA between respondent and the Ministry, as represented by ATCI, which provides that the employee is subject to a probationary period of one (1) year and that the host countrys Civil Service Laws and Regulations apply; a translated copy11 (Arabic to English) of the termination letter to respondent stating that she did not pass the probation terms, without specifying the grounds therefor, and a translated copy of the certificate of termination,12 both of which documents were certified by Mr. Mustapha Alawi, Head of the Department of Foreign Affairs-Office of Consular Affairs Inslamic Certification and Translation Unit; and respondents letter13 of reconsideration to the Ministry, wherein she noted that in her first eight (8) months of employment, she was given a rating of "Excellent" albeit it changed due to changes in her shift of work schedule.

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

x x x x

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

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

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

SEC. 10. Money Claims.Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by vir