JUDICIAL ADMISSIONS

Binarao v. Plus Builders, Inc. 154430

On April 19, 1990, spouses Jose and Preciosisima N. Binarao, petitioners, purchased a house and lot in Bahayang Pag-asa Subdivision for a total price of P327,491.95. Plus Builders, Inc., herein respondent, is in charge of the construction and sale of the houses therein. Petitioner Jose Binarao executed an Affidavit of Undertaking on Equity whereby he agreed to pay respondentP96,791.95 in the following manner: P5,000.00 upon signing of the contract, and the remaining P91,791.95 within 15 days thereafter. However, petitioners failed to comply with their undertaking, prompting respondent’s counsel to send them a demand letter.

On July 6, 1998, petitioners paid respondent P20,000.00, leaving a balance of P65,571.22 payable in three installments. On March 10, 1999, respondent’s counsel sent petitioners another demand letter, but they refused to pay. Consequently, respondent filed with the Metropolitan Trial Court (MTC), Branch 25, Manila a complaint for a sum of money against petitioners.

Petitioners, in their answer, specifically paragraph 1 thereof, stated: “1. Defendants admit paragraphs 1 and 4 of the complaint.”

The MTC rendered a Decision2 in favor of respondent. On appeal, the Regional Trial Court, Branch 7, Manila, rendered a Decision3 dated November 23, 2001, affirming in toto the MTC Decision. The CA rendered a Decision affirming in toto the RTC Decision, holding that: Citing Sec. 10 (Specific denial) and 11, (Allegations not specifically denied deemed admitted) of Rule 8, petitioners did not deny the allegations as stipulated in paragraph 4 of the complaint of herein respondent corporation. In fact, petitioners even admitted the allegations thereon.

While it is true that paragraph 7 of petitioners’ answer to the complaint qualified the fact that they didn’t sign any payment plan, this qualification however neither denies nor negates the other facts, as admitted, that were stated in paragraph 4 of the complaint which actually states three facts: (1) that petitioner paid the amount of P20,000.00 to respondent; (2) that petitioner still has a balance of P65,571.22; and (3) that such unpaid balance is to be paid in three (3) agreed payment plan. What is denied by petitioners in paragraph 7 of their answer, if at all, is the fact that there is no agreed payment plan. But, as to the fact, to repeat, that petitioners still owe P65,571.22, as balance after payment of P20,000.00, is admitted by petitioners as this fact is never denied by them.

Petitioners contend that they did not agree to pay respondent P96,791.95 and that they did not admit in their answer they are liable to respondent. Respondent maintains that petitioners’ admission of liability in their answer binds them.

Sec. 4, Rule 129 of the Revised Rules of Court provides:

"Sec. 4. Judicial admissions. – An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made."

A party may make judicial admissions in (a) the pleadings, (b) during the trial, either by verbal or written manifestations or stipulations, or (c) in other stages of the judicial proceeding.5

Here, petitioners admitted in their answer the allegation in paragraph 4 of respondent’s complaint. As correctly ruled by the Court of Appeals, petitioners admitted that: (a) they paid the amount of P20,000.00; (b) they still have a balance ofP65,571.72; and (c) the unpaid balance is to be paid in three installments. It is well-settled that judicial admissions cannot be contradicted by the admitter who is the party himself6 and binds the person who makes the same, and absent any showing that this was made thru palpable mistake (as in this case) , no amount of rationalization can offset it.

Casent Realty Development Corp. vs. Philbanking Corporation 150731

Petitioner Casent Realty Development Corporation executed two promissory notes in favor of Rare Realty Corporation, which was later assigned to respondent Philbanking. Respondent alleged that despite demands, petitioner failed to pay the promissory notes upon maturity such that its obligation already amounted to PhP 5,673,303.90. Respondent filed a complaint before the Makati City RTC for the collection of said amount.

In its Answer,6 petitioner raised the following as special/affirmative defenses, among others that: On August 27, 1986, the parties executed a Dacion en Pago (Dacion) which ceded and conveyed petitioner’s property in Iloilo City to respondent, with the intention of totally extinguishing petitioner’s outstanding accounts with respondent. Petitioner presented a Confirmation Statement dated April 3, 1989 issued by respondent stating that petitioner had no loans with the bank as of December 31, 1988.

Petitioner then filed a Motion for Judgment on Demurrer to the Evidence,11pointing out that the plaintiff’s failure to

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file a Reply to the Answer which raised the Dacion and Confirmation Statement constituted an admission of the genuineness and execution of said documents; and that since the Dacion obliterated petitioner’s obligation covered by the promissory notes, the bank had no right to collect anymore.

Respondent subsequently filed an Opposition which alleged that: (1) the grounds relied upon by petitioner in its demurrer involved its defense and not insufficiency of evidence; (2) the   Dacion   and Confirmation Statement had yet to be offered in evidence and evaluated; and (3) since respondent failed to file a Reply, then all the new matters alleged in the Answer were deemed controverted.

The questions posed by this case are:

1. Does respondent’s failure to file a Reply and deny the Dacion and Confirmation Statement under oath constitute a judicial admission of the genuineness and due execution of these documents?

2. Should judicial admissions be considered in resolving a demurrer to evidence? If yes, are the judicial admissions in this case sufficient to warrant the dismissal of the complaint?

What should be resolved in a motion to dismiss based on a demurrer to evidence is whether the plaintiff is entitled to the relief based on the facts and the law. The evidence contemplated by the rule on demurrer is that which pertains to the merits of the case, excluding technical aspects such as capacity to sue.22 However, the plaintiff’s evidence should not be the only basis in resolving a demurrer to evidence. The "facts" referred to in Section 8 should include all the means sanctioned by the Rules of Court in ascertaining matters in judicial proceedings. These include judicial admissions, matters of judicial notice, stipulations made during the pre-trial and trial, admissions, and presumptions, the only exclusion being the defendant’s evidence.

Rule 8, Section 8 specifically applies to actions or defenses founded upon a written instrument and provides the manner of denying it. It is more controlling than Rule 6, Section 10 which merely provides the effect of failure to file a Reply. Thus, where the defense in the Answer is based on an actionable document, a Reply specifically denying it under oath must be made; otherwise, the genuineness and due execution of the document will be deemed admitted.23 Since respondent failed

to deny the genuineness and due execution of the Dacion and Confirmation Statement under oath, then these are deemed admitted and must be considered by the court in resolving the demurrer to evidence. We held in Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc. that "[w]hen the due execution and genuineness of an instrument are deemed admitted because of the adverse party’s failure to make a specific verified denial thereof, the instrument need not be presented formally in evidence for it may be considered an admitted fact."

SANTIAGO V. DE LOS SANTOS L-20241

It is an occurrence, not too often repeated, that counsel, either through a display of candor, which is commendable or a failure to appreciate the untoward consequences, which is something else again, submits a pleading, which on its face demonstrates the lack of merit of the action he has filed. It did happen here. Plaintiff, now appellant, applied for registration of a parcel of land. In a motion to set the case for hearing, he attached documents indicative of the land being public in character, thus lending support to the opposition of the Director of Forestry, the Director of Lands, and a certain Pacita V. de los Santos. The then Judge Cecilia Muñoz Palma, now an Associate Justice of this Court, dismissed the suit. Its reversal is sought in this appeal. It is to be admitted that the brief submitted by new counsel, the firm of Luna and Manalo, is both thorough and comprehensive. It does not, however, avail. The infirmity of the case for appellant is incurable.

The pleading that left no choice to the then Judge Muñoz Palma except to dismiss the case reads thus: "[Comes now] the Applicant by the undersigned counsel to this Honorable Court respectfully request that the above-entitled Land Registration Case be calendared for hearing in view of the fact that a portion of the said parcel of land subject of this registration which was claimed as part of the public forest has already been released by the Honorable Secretary of Agriculture and Natural Resources for agricultural purposes as evidenced by its order dated August 10, 1961, ... ." 2Attached to such pleading were the documents, which, in the language of the then Judge Palma, "show that the land object of this registration proceeding is part of the public domain ... ." Former counsel ought to have realized the fatal effect on his client's case of such an admission. If it were his intention to demolish entirely the pretension of plaintiff to the claim that he had been in open, public, uninterrupted, peaceful and adverse possession in the concept of owner from July 26, 1894 up to the

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present, he could not have succeeded any better. What was so categorically therein set forth as to such parcel of land being a part of a public forest, although thereafter released by the Secretary of Agriculture and Natural Resources for agricultural purposes, is conclusive and binding. Our decisions from Irlanda v. Pitargue, 3 announced in a 1912 decision, to De Borja v. Vda. de Borja, 4 promulgated in 1972, speak to that effect. "It is a familiar doctrine," according to Justice J.B.L. Reyes in Joe's Radio & Electrical Supply v. Alto Electronics Corp.,5 "that an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to him, and that all proofs submitted by him contrary thereto or inconsistent therewith, should be ignored, whether objection is interposed by the party or not ... ." 6 Even if there had been a full hearing on the case, therefore, the result would not have been any different. There was no choice then for the lower court except to dismiss the complaint.

ALFELOR V. HALASAN 165987

On January 30, 1998, the children and heirs of the late spouses Telesforo and Cecilia Alfelor filed a Complaint for Partition[3]before 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. Josefina H. Halasan filed a Motion for Intervention, alleging that she is the sole 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 husband’s children. Josefina presented the marriage contract as well as the Reply-in- Intervention[8] 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.

Petitioners limit the issue to the determination of whether or not the CA erred in ordering the admission of private respondent’s intervention. They insist that in setting aside the Orders of the trial court, dated September 13, 2002and 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, Teresita’s 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 Jose’s 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 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 Court’s 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

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party cannot subsequently take a position contrary of or inconsistent with what was pleaded.[26]

REPUBLIC GLASS CORPORATION V. QUA 144413

Petitioners Republic Glass Corporation ("RGC") and Gervel, Inc. ("Gervel") together with respondent Lawrence C. Qua ("Qua") were stockholders of Ladtek, Inc. ("Ladtek"). Ladtek obtained loans from Metropolitan Bank and Trust Company ("Metrobank")5 and Private Development Corporation of the Philippines6 ("PDCP") with RGC, Gervel and Qua as sureties. Among themselves, RGC, Gervel and Qua executed Agreements for Contribution, Indemnity and Pledge of Shares of Stocks ("Agreements").7

The Agreements all state that in case of default in the payment of Ladtek’s loans, the parties would reimburse each other the proportionate share of any sum that any might pay to the creditors

Metrobank filed a collection case against Ladtek, RGC, Gervel and Qua. During the pendency of Collection Case No. 8364, RGC and Gervel paid Metrobank P7 million. Later, Metrobank executed a waiver and quitclaim dated 7 September 1988 in favor of RGC and Gervel. In a letter dated 7 November 1988, RGC and Gervel’s counsel, Atty. Antonio C. Pastelero, demanded that Qua pay P3,860,646, or 42.22% of P8,730,543.55, as reimbursement of the total amount RGC and Gervel paid to Metrobank and PDCP. Qua refused to reimburse the amount to RGC and Gervel. Subsequently, RGC and Gervel furnished Qua with notices of foreclosure of Qua’s pledged shares. RGC and Gervel eventually foreclosed all the pledged shares of stock at public auction.

The appellate court quoted the RTC-Branch 63’s 12 January 1996 Decision:

The liability of each party under the indemnity agreements therefore is premised on the payment by any of them of the entire obligation. Without such payment, there would be no corresponding share to reimburse. Payment of the entire obligation naturally redounds to the benefit of the other solidary debtors who must then reimburse the paying co-debtors to the extent of his corresponding share.

In the case at bar, Republic Glass and Gervel made partial payments only, and so they did not extinguish the entire obligation. But Republic Glass and Gervel nevertheless obtained quitclaims in their favor and so they ceased to be solidarily liable with plaintiff for the balance of the debt (Exhs. "D", "E", and "I"). Plaintiff thus became solely liable for the unpaid portion of the debt even as he is being held liable for reimbursement on the said portion.

The foreclosure and sale of the shares pledged by plaintiff was totally unjustified and without basis because the obligation secured by the underlying pledge had been extinguished by novation.

RGC and Gervel contend that Qua is in estoppel for making conflicting statements in two different and separate cases. Qua cannot now claim that the payment made to Metrobank was not for the entire obligation because of his Motion to Dismiss Collection Case No. 8364 where he stated that RGC and Gervel’s payment was for the entire obligation.

RGC and Gervel invoke Section 4 of Rule 129 of the Rules of Court to support their stance:

Sec. 4. Judicial admissions. – An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.

A party may make judicial admissions in (a) the pleadings filed by the parties, (b) during the trial either by verbal or written manifestations or stipulations, or (c) in other stages of the judicial proceeding.27

The elements of judicial admissions are absent in this case. Qua made conflicting statements in Collection Case No. 8364 and in Foreclosure Case No. 88-2643, and not in the "same case" as required in Section 4 of Rule 129. To constitute judicial admission, the admission must be made in the same case in which it is offered. If made in another case or in another court, the fact of such admission must be proved as in the case of any other fact, although if made in a judicial proceeding it is entitled to greater weight.28

RGC and Gervel introduced Qua’s Motion to Dismiss and the Order dismissing Collection Case No. 8364 to prove Qua’s claim that the payment was for the entire obligation. Qua does not deny making such statement but explained that he "honestly believed and pleaded in the lower court and in CA-G.R. CV No. 58550 that the entire debt was fully extinguished when the petitioners paid P7 million to Metrobank."29

We find Qua’s explanation substantiated by the evidence on record. As stated in the Agreements, Ladtek’s original loan from Metrobank was only

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P6.2 million. Therefore, Qua reasonably believed that RGC and Gervel’s P7 million payment to Metrobank pertained to the entire obligation. However, subsequent facts indisputably show that RGC and Gervel’s payment was not for the entire obligation. RTC-Branch 149 reinstated Collection Case No. 8364 against Qua and ruled in Metrobank’s favor, ordering Qua to pay P6.2 million.

ATLAS CONSOLIDATED MINING V. CIR 134467

While stipulations of facts are normally binding on the declarant or the signatory thereto, a party may nonetheless be allowed to show that an admission made therein was the result of a "palpable mistake" that can be easily verified from the stipulated facts themselves and from other incontrovertible pieces of evidence admitted by the other party. A patently clerical mistake in the stipulation of facts, which would result in falsehood, unfairness and injustice, cannot be countenanced.

Petitioner is engaged in the business of mining, production and sale of various mineral products, consisting principally of copper concentrates and gold and duly registered with the BIR [Bureau of Internal Revenue] as a VAT [Value Added Tax] enterprise per its Registration No. 32-A-6-002224. (p. 250, BIR Records).

Respondent [BIR] duly approved petitioner's application for VAT zero-rating of the following sales:

a. Gold to the Central Bank (CB) [now referred to as the Bangko Sentral ng Pilipinas;]

b. Copper concentrates to the Philippines Smelting and Refining Corp. (PASAR); and

c. Pyrite [concentrated] to Philippine Phosphates, Inc. (Philphos).

On or about July 24, 1990, petitioner filed a claim with respondent for refund/credit of VAT input taxes on its purchase of goods and services for the first quarter of 1990 in the total amount of P40,078,267.81. Petitioner contends that its sales to Philippine Phosphate, Inc. (Philphos) and Philippine Smelting and Refining Corporation (PASAR) should be zero-rated for the first quarter of 1990, and not only as of "August 15, 1990" as held by the CA, which allegedly ignored "clear evidence" that petitioner's VAT registration had been effected earlier, on January 1, 1988.

Respondent commissioner counters that by virtue of the Joint Stipulation of Facts, petitioner is bound by its admission therein that it was registered as a VAT enterprise effective only from August 15, 1990, well beyond the first quarter of 1990, the period for which it is applying for tax credit.

As a rule, a judicial admission, such as that made by petitioner in the Joint Stipulation of Facts, is binding on the declarant. However, such rule does not apply when there is a showing that (1) the admission was made through a "palpable mistake," or that (2) "no such admission was made." Indeed, Section 4 of Rule 129 of the Rules of Court states:

Sec. 4. Judicial Admissions. — An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.

In the present case, we are convinced that a "palpable mistake" was committed. True, petitioner was VAT-registered under Registration No. 32-A-6-00224, as indicated in Item 2 of the Stipulation:

2. Petitioner is engaged in the business of mining, production and sale of various mineral products, consisting principally of copper concentrates and gold duly registered with the BIR as a VAT enterprise per its Registration No. 32-A-6-002224 (p. 250, BIR Records). 9

Moreover, the Registration Certificate, which in the said stipulation is alluded to as appearing on page 250 of the BIR Records, bears the number 32-0-004622 and became effective August 15, 1990. But the actual VAT Registration Certificate, which petitioner mentioned in the stipulation, is numbered 32-A-6-002224 and became effective on January 1, 1988, thereby showing that petitioner had been VAT-registered even prior to the first quarter of 1990. Clearly, there exists a discrepancy, since the VAT registration number stated in the joint stipulation is NOT the one mentioned in the actual Certificate attached to the BIR Records.

The foregoing simply indicates that petitioner made a "palpable mistake" either in referring to the wrong BIR record, which was evident, or in attaching the wrong VAT Registration Certificate. The Court of Appeals should have corrected the unintended clerical oversight. In any event, the indelible fact is: the petitioner was VAT-registered as of January 1, 1988.

Similarly, in Philippine American General Insurance Company v. IAC, 10 this Court accepted the explanation and the subsequent proof of petitioner

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that the latter had made a mistake in stating the date when the Order denying its Motion for Reconsideration was actually received. Thus, the Court ruled that the appeal to the IAC had been filed on time. It explained:

In assailing the decision of the respondent Intermediate Appellate Court, petitioner maintains that it was error for respondent court to refuse to consider petitioner's evidence that the accrual date of receipt by it of the order denying the motion for reconsideration of the lower court's decision was November 15, 1982, not November 12, 1982, as mistakenly stated in the Notice of Appeal. Invoking Section 2 of Rule 129 of the Rules of Court, petitioner contends that a party is allowed to contradict an admission in its pleading if it is shown that the same was made through palpable mistake.

We find merit in the petition. Apart from the showing that notice of the trial court's order denying petitioner's motion for reconsideration was actually received by petitioner on November 15, 1982, the fact that the order was sent to the wrong address was apparently not considered by both the respondent appellate court and the trial court. . .

That herein petitioner's explanation of the discrepancy was made only after the CTA had promulgated its Decision is understandable. It was only when that promulgation was made that petitioner became aware of the clerical error in the Joint Stipulation of Facts. Hence, it explained in its Motion for Reconsideration therein that it had already been VAT-registered as early as the first quarter of 1988 under VAT Registration No. 32-A-6-002224. Petitioner attached to said Motion a copy of the Registration Certificate corresponding to the above number, showing January 1, 1988 as its registration date.

We note that petitioner also had another registration number, 32-0-004622, because sometime during the third quarter of 1990, it moved its principal place of business to a different revenue district. Its second registration as a VAT enterprise on August 15, 1990 was made in compliance with Section 3 of Revenue Memo Circular No. 6-88, which required it to re-register after it moved its principal place of business to another revenue district.

Petitioner presented the two different Registration Certificates corresponding to the two registration numbers assigned to it. The Registration Certificate numbered 32-A-6-002224 listed petitioner's address as 8776 Paseo de Roxas, Makati, and its date of effectivity as January 1, 1988. The Registration Certificate numbered 32-0-004622 showed petitioner's address (head office) to be at the 15th Floor of the Pacific Star Building in Gil Puyat Street corner Makati Avenue, Makati, and its date of effectivity as August 15, 1990.

In view of the foregoing, we believe that petitioner should be taxed only for such amount and under such circumstances as are true, fair and equitable. After all, even the respondent commissioner, as shown in the other provisions of the joint stipulation, has granted it VAT exemption for the period even prior to the first quarter of 1990; that is, as early as January 1, 1988. In view of the foregoing, we stress that a litigation is neither a game of technicalities nor a battle of wits and legalisms. Rather, it is an abiding search for truth, fairness and justice. We believe, and so hold, that substantial justice is on the side of petitioner on this issue.

ATILLO III V. CA 119053

Petitioner Atillo and Michael Lhuillier are owners each of 47% of the stock of AMANCOR. In view of the urgent and immediate need for fresh capital to support the business operations of AMANCOR, petitioner and LHUILLLER executed another Memorandum of Agreement on February 13, 1989 (Annex "B" of the Complaint) by virtue of which LHUILLIER undertook to invest additional capital in AMANCOR. 3 As an addendum to the foregoing, a Supplemental Memorandum of Agreement was entered into by the petitioner and LHUILLIER on March 11, 1989. 4Relevant to the case at bar is a stipulation in the said Supplemental Memorandum of Agreement which provides as follows:

4. F.L. Atillo III may dispose off (sic) his properties at P. del Rosario St., Cebu City which may involve pre-payment of AMANCOR'S mortgage loan to the bank estimated at P300,000.00 and while AMANCOR may not yet be in the position to re-pay said amount to him, it shall pay the interests to him equivalent to prevailing bank rate. 5

Pursuant to this stipulation, petitioner assumed AMANCOR's outstanding loan balance of P300,000.00 with Metropolitan Bank and Trust Company. After offsetting the amount of P300,000.00 with some of the accounts that petitioner had with AMANCOR, the amount which remained due to the petitioner was P199,888.89.

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Because of the failure of AMANCOR to satisfy its obligation to repay petitioner, the latter filed a complaint for collection of a sum of money docketed as Civil Case No. Ceb-9801 against AMANCOR and LHUILLLER before Branch 7 of the Regional Trial Court of Cebu City. The RTC ruled in favor of petitioner but only held AMANCOR liable, and not LHUILLIER. Petitioner contends that the latter should likewise be made liable in view of his admissions of personal liability, thus raising the issue: When a party, by his judicial admissions, has affirmed that he has personal liability in a certain transaction, may a court rule against such an admission despite clear indications that it was not affected by mistakes palpable or otherwise? 11

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

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

xxx xxx xxx

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

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

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

We find petitioner's contention to be without merit and the reliance on the general rule regarding judicial admissions enunciated by the abovementioned provision of law and jurisprudence misplaced.

As provided for in Section 4 of Rule 129 of the Rules of Court, the general rule that a judicial admission is conclusive upon the party making it and does not require proof admits of two exceptions: 1) when it is

shown that the admission was made through palpable mistake, and 2) when it is shown that no such admission was in fact made. 14 The latter exception allows one to contradict an admission by denying that he made such an admission.

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

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

Here, petitioner appears to have taken the admissions made by LHUILLIER in paragraph 3.11 of his Answer " out of context ". Petitioner is seemingly misleading this Court by isolating paragraph 3.11 of the said Answer from the preceding paragraphs. A careful scrutiny of the Answer in its entirety will show that paragraph 3.11 is part of the affirmative allegations recounting how LHUILLIER was persuaded to invest in AMANCOR which was previously owned and managed by petitioner.   16   Paragraph 3.11 has reference to the fact that in all investments made with AMANCOR through stock purchases, only petitioner and LHUILLIER dealt with each other.   17   It is more than obvious that paragraph 3.11 has nothing to do with the obligation of AMANCOR to petitioner which is the subject of the present case. Contrary to petitioner's allegations, LHUILLIER had categorically denied personal liability for AMANCOR's corporate debts, and in the succeeding paragraphs of the said Answer asserted the following:

3.12. As evident in the wordings of par. 12 of the Actionable Memorandum of Agreement dated 13 February 1989 (Annex B) and par. 4 of the actionable Supplemental Memorandum of Agreement dated 11 March 1989 (Annex C), Lhuillier did not engage to personally pay the corporate loans secured by plaintiff's property as to release the property to plaintiff. On the contrary, as explicitly stated in the aforesaid par. 4 of Annex C, ". . . while Amancor may not yet be in the position to repay said amount to him, IT shall pay the interests to him equivalent to prevailing bank rate."

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3.13. At most, therefore, Lhuillier . . . only agreed, for the corporation to repay plaintiff the amount of the pre-terminated corporate loans with the bank and, pending improvement of Amancor's finances, for said corporation to pay interest at prevailing bank rate. . . . 18 (Emphasis supplied.)

Furthermore, petitioner was well aware that LHUILLIER had never admitted personal liability for the said obligation. In fact, in delineating the issues to be resolved by the trial court, both parties submitted for the determination of the court, the question of whether or not LHUILLIER is personally liable for the obligation of AMANCOR to petitioner. 19Moreover, as correctly observed by respondent court, if petitioner really believed that the liability was incurred by LHULLLIER in his personal capacity, then he should not have offset his accounts with those of AMANCOR's. The foregoing act of petitioner is a clear indication that he recognized AMANCOR and not LHUILLIER as the obligor.

Granting arguendo that LHUILLIER had in fact made the alleged admission of personal liability in his Answer, We hold that such admission is not conclusive upon him. Applicable by analogy is our ruling in the case of Gardner vs. Court of Appeals which allowed a party's testimony in open court to override admissions he made in his answer. Thus:

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

Prescinding from the foregoing, it is clear that in spite of the presence of judicial admissions in a party's pleading, the trial court is still given leeway to consider other evidence presented. This rule should apply with more reason when the parties had agreed to submit an issue for resolution of the trial court on the basis of the evidence presented. As distinctly stated in the stipulation of facts entered into during the pre-trial conference, the parties agreed that the determination of LHUILLIER's liability shall be based on the Memoranda of Agreement designated as ANNEXES "A", "B" and "C" of the Complaint. Thus, the trial court correctly relied on the provisions contained in the said Memoranda of Agreement when it absolved LHUILLIER of personal liability for the obligation of AMANCOR to petitioner.

AGUENZA V. METROBANK 74336

On March 21, 1978, private respondents Arrieta and Lilia P. Perez, bookkeeper in the employ of Intertrade, obtained P500,000.00 loan from private respondent Metrobank. Both executed Promissory Note in favor or said bank in the amount of P500,000,00. Under said note, private respondents Arrieta and Perez promised to pay said amount, jointly and severally, in twenty five (25) equal installments of P20,000.00 each starting on April 20, 1979 with interest of 18.704% per annum, and in case of default, a further 8 % per annum.

Private respondents Arrieta and Perez defaulted in the payment of several installments thus resulting in the entire obligation becoming due and demandable. In 1979, private respondent Metrobank instituted suit against Intertrade, Vitaliado Arrieta, Lilia Perez and her husband, Patricio Perez, to collect not only the unpaid principal obligation, but also interests, fees and penalties, exemplary damages, as well as attorney's fees and costs of suit.

More than a year after private respondent Metrobank filed its original complaint, it filed an Amended Complaint dated August 30, 1980 for the sole purpose of impleading petitioner as liable for the loan made by private respondents Arrieta and Perez on March 21, 1978, notwithstanding the fact that such liability is being claimed on account of a Continuing Suretyship Agreement dated March 14, 1977 executed by petitioner and private respondent Arrieta especifically to guarantee the credit line applied for by and granted to, Intertrade, through petitioner and private respondent Arrieta who were specially given authority by Intertrade on February 28, 1977 to open credit lines with private respondent Metrobank. The obligations incurred by Intertrade under such credit lines were completely paid as evidenced by private respondent Metrobank's debit memo in the full amount of P562,443.46. After hearing on the merits, the

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trial court rendered its decision absolving petitioner from liability and dismissing private respondent Metrobank's complaint against him. The CA reversed the RTC and ruled that Intertrade and Aguenza are solidarily liable, absolving Arrieta and Perez from paying the loan, thus:

No dispute exists as to the promissory note and the suretyship agreement. The controversy centers on whether the note was a corporate undertaking and whether the suretyship agreement covered the obligation in the note.

As far as Intertrade is concerned, it seems clear from its answer that the loan evidenced by the note was a corporate liability. Paragraph 1.3 of the answer admits ". . . defendant's obtention of the loan from the plaintiff . . ."; the affirmative defenses admit default, and invoking the defense of usury, plead adjustment of excessive interest which Intertrade refused to make.

On the basis of this admission, it is no longer in point to discuss, as the appealed decision does, the question of the capacity in which Arrieta and Perez signed the promissory note, Intertrade's admission of its corporate liability being admission also that the signatories signed the note in a representative capacity. The Bank itself gave corroboration with its insistence on Intertrade's liability under the note. . .

The principal reason for respondent appellate court's reversal of the trial court's absolution of petitioner is its finding that the loan made by private respondent Arrieta and Lilia Perez were admitted by Intertrade to be its own obligation.

After a careful scrutiny of the records, however, we find and we so rule that there is neither factual nor legal basis for such a finding by respondent Appellate Court.

First, the general rule that "the allegations, statements, or admissions contained in a pleading are conclusive as against the pleader" 6 is not an absolute and inflexible rule 7 and is subject to exceptions. Rule 129, Section 4, of the Rules of Evidence, provides:

Sec. 4. Judicial admissions. — An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made. (Emphasis supplied).

In other words, an admission in a pleading on which a party goes to trial may be contradicted by

showing that it was made by improvidence or mistake or that no such admission was made, i.e., "not in the sense in which the admission was made to appear or the admission was taken out of context." 8

In the case at bench, we find that the respondent Court of Appeals committed an error in appreciating the "Answer" filed by the lawyer of Intertrade as an admission of corporate liability for the subject loan. A careful study of the responsive pleading filed by Atty. Francisco Pangilinan, counsel for Intertrade, would reveal that there was neither express nor implied admission of corporate liability warranting the application of the general rule. Thus, the alleged judicial admission may be contradicted and controverted because it was taken out of context and no admission was made at all.

In any event, assuming arguendo that the responsive pleading did contain the aforesaid admission of corporate liability, the same may not still be given effect at all. As correctly found by the trial court, the alleged admission made in the answer by the counsel for Intertrade was "without any enabling act or attendant ratification of corporate act," 9 as would authorize or even ratify such admission. In the absence of such ratification or authority, such admission does not bind the corporation.

Second, the respondent appellate court likewise adjudged Intertrade liable because of the two letters emanating from the office of Mr. Arrieta which the respondent court considered "as indicating the corporate liability of the corporation."10 These documents and admissions cannot have the effect of a ratification of an unauthorized act. As we elucidated in the case of Vicente v. Geraldez, 11 "ratification can never be made on the part of the corporation by the same persons who wrongfully assume the power to make the contract, but the ratification must be by the officer as governing body having authority to make such contract." In other words, the unauthorized act of respondent Arrieta can only be ratified by the action of the Board of Directors and/or petitioner Aguenza jointly with private respondent Arrieta.

CONAHAP V. REGANA 152021

Sometime in August 1983, the spouses Prosperador and Milagros Regaña, who had first returned to the Philippines from Nigeria, agreed to purchase a parcel of land in Davao City. The property, Lot No. 33, was located at

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Sapphire Street, Block No. 8 (Phase 4), Ecoland Subdivision, Matina, Davao City, and had an area of 331 square meters. It was owned by Ecoland Properties Development Corporation (Ecoland), and the agreed price was P56,270.00, with a down payment of P3,000.00 upon the execution of the contract to sell,1 the balance payable on or before September 30, 1983. Project Engineer Romel Bernardino accompanied Prosperador Regaña to the property which was then unoccupied. Bernardino also showed a sketch plan2 indicating its location; Bernardino’s house was around 100 meters away from the lot;3 adjacent thereto was the house owned by Delfin Yap,4 and behind it, a commercial road.

On August 22, 1983, Ecoland and Prosperador Regaña executed a Contract To Sell over the property. The purchase price was paid, and the Register of Deeds thereafter issued Transfer Certificate of Title (TCT) No. T-101822 under Prosperador’s name. The Regaña spouses then left the Philippines and returned to Nigeria where they were employed.

Upon their return to the Philippines in 1984, the couple visited the property and found it unoccupied. They placed a temporary fence around its perimeter, as well as a "No Trespassing" sign.5 They then left for Surigao where Milagros was then working. Upon their return to Matina, Davao City in March 1988, they were dumbfounded to see that a house already stood on their property – that of Ernesto Conahap who, together with his family, was already residing therein.6Prosperador then filed a complaint for ejectment against Ernesto with the Office of the Barangay Captain, Bucana, Davao City. The parties failed to arrive at a settlement.

Prosperador Regaña then filed a complaint for recovery of possession of the said property with the Regional Trial Court (RTC) of Davao City

In his answer to the complaint, Ernesto alleged that Prosperador had no cause of action against him. He claimed that the subject property was part of a 188,299-square-meter lot owned by Saya V.A. Lim and covered by TCT No. 2341; it was later sold to Ecoland on June 14, 1974 via a deed of absolute sale,8 and, thereafter, to the Regaña spouses. Ernesto further alleged that the property occupied by him was a portion of the property subject of Ponciano Sabroso’s existing application for a free patent with the Bureau of Lands. He presented Feliciano Sabroso, Ponciano’s brother, who declared that Ponciano had allowed Ernesto to construct his house over the property.

During the pre-trial, Ernesto admitted that the spouses Regaña had purchased the property from Ecoland, and that it was titled in their names. For his part, Prosperador admitted that the property was covered by Ponciano’s homestead patent application which was filed with the Bureau of Lands in 1982.

The Court agrees with the contention of the petitioners that the RTC and the CA erred in ruling that the respondents failed to prove that the property subject of Ponciano’s homestead application in the Bureau of Lands includes the lot

subject of the complaint. Nonetheless, the fact is that, as gleaned from the pre-trial order of the trial court, Prosperador, as the plaintiff (the respondents’ predecessor), admitted the following:

1) that the land is covered by the Application of Ponciano Sabroso but with the counter-manifestation that said Application was not approved by the Bureau of Lands and it was filed nine (9) years ago and no action was taken thereon;

2) that there is a survey but with counter-manifestation that said survey was not approved, Exhibit "1."19

On the other hand, Ernesto, the defendant therein and the predecessor of the petitioners, admitted during the pre-trial that the property subject of the complaint was purchased by Prosperador from Ecoland and was covered by TCT No. T-101822 under the name of Prosperador:

1) the land is titled in the name of the plaintiff, Exhibit "A";

2) the land was purchased from the Ecoland Development Corporation;

3) the matter of the area occupied by the defendant was reported by the plaintiff to the Office of the plaintiff’s counsel for settlement and arbitration, Exhibit "C" – Certificate to File Action;

4) the lot is now fully developed with concrete roads and underground drainage.20

The admissions of the parties during the pre-trial as embodied in the pre-trial order of the court are binding and conclusive on them,21 unless there is a clear showing that the admission was entered through palpable mistake.22Such admissions cannot be contradicted by the parties. The petitioners are thus estopped from claiming that the property occupied by them is not the property titled to the respondents, and that the latter failed to prove the identity of the claimed property.

Since the property is titled to the respondents, they are entitled to possess the same.23 It bears stressing that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein.24

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PEOPLE V. HERNANDEZ 108028

Accused-appellant Cristina Hernandez was charged and convicted with the crime of illegal recruitment committed in large scale in violating of Article 38 (a) and (b) in relation to Article 13 (b) and (c) of the New Labor Code.

The first assignment of error is anchored on the contention that the prosecution failed to prove one of the essential elements of the crime of illegal recruitment — that the offender is a non-licensee or non-holder of authority to lawfully engage in the recruitment and placement of workers. 7 The aforementioned element, specifically the fact that neither appellant nor Philippine-Thai was licensed or authorized to recruit workers as shown by the records of the POEA, was the subject of a stipulation proposed by the prosecution and admitted by the defense during trial. Appellant assails as erroneous the reliance placed by the prosecution on the said stipulation of facts in dispensing with the presentation of evidence to prove the said element of the crime of illegal recruitment. Appellant argues that: (1) the stipulation of facts was not tantamount to an admission by the appellant of the fact of non-possession of the requisite authority or license from the POEA, but was merely an admission that the Chief Licensing Officer of the POEA, if presented in court, would testify to this fact, and (2) the stipulation of facts is null and void for being contrary to law and public policy. Appellant posits the foregoing arguments to bolster her contention that the stipulation of facts did not relieve the prosecution of its duty to present evidence to prove all the elements of the crime charged to the end that the guilt of the accused may be proven beyond reasonable doubt.

At the outset, it should be said that the above contention and the arguments are insignificant in view of the fact that records disclose that the prosecution had in fact presented evidence to prove the said element of the crime of illegal recruitment. "EXHIBIT I", a certification issued by the Chief Licensing Branch of the POEA, attesting to the fact that neither appellant nor Philippine-Thai is licensed/authorized to recruit workers for employment abroad, was offered and admitted in evidence without the objection of the appellant. 8

Although appellant's arguments find no significant bearing in the face of the existence of "EXHIBIT I", they nonetheless require deeper scrutiny and a

clear response for future application. Hence, the following discussion.

Appellant correctly distinguishes between an admission that a particular witness if presented in court would testify to certain facts, and an admission of the facts themselves. According to the appellant, what was stipulated on between the prosecution and defense counsel at the hearing on June 6, 1990 was "merely that the testimonyof the Chief Licensing Officer of the POEA would be to the effect that appellant is not licensed nor authorized to recruit workers", 9 Thus:

Prosecutor

. . . Before we call on our first witness, we propose some stipulations regarding the testimony of the Chief Licensing Branch of the POEA — that Cristina Hernandez is not a (sic) licensed nor authorized by the Department of Labor to recruit workers abroad.

Court

Would you agree?

Atty. Ulep (Counsel for the Accused): Agreed, Your Honor. 10

She claims that the foregoing clearly indicate that there was no judicial admission of the fact of non-possession of a license/authority but rather a mere admission that the witness, if presented, would testify to such fact. This being the case, it remained incumbent upon the prosecution to present evidence of such fact. To buttress her position, the following was cited to note the distinction:

Suppose a case is set for trial and one of the parties moves for a continuance because of the absence of W, an important witness. His opponent, who is anxious to go to trial; asks what are the facts to which W would testify. The other attorney tells him, adding: "If I consent to the overruling of my motion, will you stipulate that those are the facts?" The attorney who is pressing for trial says: "No but I will stipulate that if W were called in this case as a witness, he would so testify." What is the difference between the two stipulations?

In the first stipulation proposed there is a judicial admission of the facts, and they

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cannot be contradicted. But the second stipulation proposed will only have the same effect as if the witness had testified to the facts. Such testimony the party is free to contradict. 11

The distinction, though cogent, is unfortunately inapplicable to the case at bar. Conveniently omitted from the appellant's reply chief is the ensuing statement made by the court after counsel for the accused, Atty. Ulep agreed to the stipulation proposed by the prosecution, to wit:

Atty. Ulep (counsel for the accused): Agreed, Your Honor.

Court

The prosecution and the defense agreed to stipulate/admit that from the record of the POEA Licensing and Regulation Office, Dept. of Labor and Employment, accused Cristina Hernandez/Phil. etc., Ass. . . . is neither licensed nor authorized by the office to recruit workers overseas abroad and that if the duly authorized representative from the POEA Administration is to take the witness stand, he will confirm to this fact as borne by the records. 12 (Emphasis supplied.)

From the foregoing, it is evident that the prosecution and the defense counsel stipulated on two things: that ". . . from the record of the POEA, . . . accused Cristina Hernandez, Phil. etc. Ass. . . . is neither licensed nor authorized by that office to recruit workers for overseas abroad and that if the duly authorized representative from the POEA Administration (sic) is to take the witness stand, he will confirm to this fact . . . ." 13 The claim that the lower court mistakenly interpreted defense counsel's acquiescence to the prosecution's proposed stipulation as an admission of non-possession of the requisite POEA license or authority is belied by the fact that after the above enunciation by the court, no objection was interposed by defense counsel.

Appellant further contends that granting arguendo that defense counsel had in fact agreed to the above stipulation of facts, the same is null and void for being contrary to the well-established rule that a stipulation of facts is not allowed in criminal cases. To bolster this contention, appellant cited the consistent ruling of this Court on the matter. Thus, as held in the case of U.S. vs. Donato: 14

Agreements between attorneys for the prosecution and for the defense in criminal cases, by which it is stipulated that certain witnesses, if present, would testify to certain facts prevent a review of the evidence by the Supreme Court and arc in violation of the law. 15

The rule prohibiting the stipulation of facts in criminal cases is grounded on the fundamental right of the accused to be presumed innocent until proven guilty, and corollary duty of the prosecution to prove the guilt of the accused beyond reasonable doubt. It is therefor advanced that the prosecution being duty-bound to prove all the elements of the crime, may not be relieve of this obligation by the mere expedient of stipulating with defense counsel on a matter constitutive of an essential elements of the crime charged.

The rationale behind the proscription against this class of agreements between prosecution and defense was enunciated in the case of U.S. vs. Manlimos: 17

It is not supposed to be within the knowledge or competence of counsel to predict what a proposed witness shall say under the sanction of his oath and the test of cross-examination. A conviction for crime should not rest upon mere conjecture. Nor is it possible for a trial court to weigh with exact nicety the contradictory declaration of witnesses not produced so as to be subjected to its observation and its judgment as to their credibility. 18

However, in the light of recent changes in our rules on criminal procedure, particularly the pre-trial provisions found in Rule 118, the prohibition against a stipulation of facts in criminal cases no longer holds true. Rule 118 provides the following:

Sec. 1. Pre-trial; when proper — To expedite trial, where the accused and counsel agree, the court shall conduct a pre-trial conference on the matters enunciated in Section 2 hereof, without impairing the rights of the accused.

Sec. 2. Pre-trial conference; subjects . . . The pre-trial conference shall consider the following:

(a) Plea bargaining;

(b) Stipulation of facts ;

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xxx xxx xxx (Emphasis supplied)

By virtue of the foregoing rule, a stipulation facts in criminal cases is now expressly sanctioned by law. In further pursuit of the objective of expediting trial by dispensing with the presentation of evidence on matters that the accused is willing to admit, a stipulation of fact should be allowed not only during pre-trial but also and with more reason, during trial proper itself. Parenthetically, although not expressly sanctioned under the old rules of court, a stipulation of facts by the parties in criminal cases has long been allowed and recognized as declarations constituting judicial admissions, hence, binding upon the parties. In the case of People vs. Mapa 19 where the accused was charged with illegal possession of firearms, the prosecution and the defense stipulated on the fact that the accused was found in possession of gun without the requisite permit or license. More at point is the case of People vs. Bocar 20 wherein the fiscal proposed the admission by the accused of the affidavits and other exhibits already presented by the prosecution to dispense with oral testimonies on the matter. Holding that the admissions made by the parties were binding, this Court stated that:

. . . [T]here is nothing unlawful or irregular about the above procedure. The declarations constitute judicial admission, which are binding on the parties, by virtue of which the prosecution dispensed with the introduction of additional evidence and the defense waived the right to contest or dispute the veracity of the statements contained in the exhibits. 21 (Emphasis supplied.)

In view of the foregoing, the stipulation of facts proposed during trial by prosecution and admitted by defense counsel is tantamount to a judicial admission by the appellant of the facts stipulated on. Controlling, therefore, is Section 4, Rule 129 of the Rules of Court which provides that:

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

The collorally issue left for the determination of this Court is whether or not Section 4 of Rule 118—requiring an agreement or admission made or

entered during the pre-trial conference to be reduced in writing and signed by the accused and his counsel before the same may be used in evidence against the accused-equally applies to a stipulation of facts made during trial. We resolved this issue in the negative.

A stipulation of facts entered into by the prosecution and defense counsel during trial in open court is automatically reduced into writing and contained in the official transcript of the proceedings had in court. The conformity of the accused in the form of his signature affixed thereto is unnecessary in view of the fact that: ". . . an attorney who is employed to manage a party's conduct of a lawsuit . . . has   prima facie   authority to make relevant admissions by pleadings,   by oral   or written   stipulation , . . . which unless allowed to be withdrawn are conclusive."   24   (Emphasis supplied.) In fact, "judicial admission are frequently those of counsel or of the attorney of record, who is, for the purpose of the trial, the agent of his client. When such admissions are made . . . for the purpose of dispensing with proof of some fact, . . . they bind the client, whether made during, or even after, the trial."   25

The foregoing find basis in the general rule that a client is bound by the acts of his counsel who represents him.   26   For all intents and purposes, the acts of a lawyer in the defense of a case are the acts of his client. The rule extends even to the mistakes and negligence committed by the lawyer except only when such mistakes would result in serious injustice to the client.   2 7   No cogent reason exists to make such exception in this case. It is worth noting that Atty. Ulep, appellant's counsel in the lower court, agreed to the stipulation of facts proposed by the prosecution not out of mistake nor inadvertence, but obviously because the said stipulation of facts was also in conformity of defense's theory of the case. It may be recalled that throughout the entire duration of the trial, appellant staunchly denied ever having engaged in the recruitment business either in her personal capacity or through Philippine-Thai. Therefore, it was but logical to admit that the POEA records show that neither she nor Philippine-Thai was licensed or authorized to recruit workers.

We now go to appellant's second and third assignment of errors. In her second assignment of error, appellant makes much ado of the "judicial notice" taken by the lower court of the fact that

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appellant had been charged with another illegal recruitment case, 34 and in considering the pendency thereof as evidence of the scheme and strategy adopted by the accused. Appellant cites a violation of Section 3 of Rule 129 of the Rules of Court which provides that before the court may take judicial notice of any matter, the parties shall be heard thereon if such matter is decisive of a material issue in the case. It is claimed that the lower court never announced its intention to take judicial notice of the pendency of the other illegal recruitment case nor did it allow the accused to be heard thereon.

It is true that as a general rule, courts are not authorized to take judicial notice of the contents of the records of other cases, even when such cases have been tried or are pending in the same court, and notwithstanding the fact that both cases may have been tried or are actually pending before the same judge. 35 However, this rule is subject to the exception that:

. . . in the absence of objection and as a matter of convenience to all parties, a court may properly treat all or any part of the original record of the case filed in its archives as read into the records of a case pending before it, when with the knowledge of the opposing party, reference is made to it, by name and number or in some other manner by which it is sufficiently designated, . . . 36 (emphasis supplied.)

The judicial notice taken by the lower court of the pendency of another illegal recruitment case against the appellant falls squarely under the above exception in view of the fact that it was the appellant herself who introduced evidence on the matter when she testified in open court

SILOT V. DE LA ROSA 159240

On January 19, 1996, petitioner Gregorio Silot, Jr. and respondent Estrella de la Rosa entered into a contract for the construction of a dormitory-apartment building on Lot 1-A-9-D, Bagumbayan Sur, Naga City. They expressly agreed that Silot shall supply the labor and de la Rosa shall pay 33% of the total value of the materials purchased for the project. Upon turnover in February 1997 of the completed structure, the total cost of materials actually purchased was P2,504,469.65, 33% of which is P826,474.98. Silot required de la Rosa to pay a total of P1,018,000.00, or P191,525.02 more than the amount due. Through her son-in-law, de la Rosa confronted Silot about the overpayment but the latter refused to return the overpayment. After her repeated

demands fell on deaf ears, de la Rosa filed a suit against Silot.

Silot, in retaliation, sued de la Rosa for insufficient payment, claiming that he was supposed to receive P1,281,872.40[4] but was only paid P1,008,000.00, thus still leaving a balance of P273,872.40.

During trial, however, Atty. San Jose, counsel for Silot, dispensed with the testimony of Ariel Goingo, a witness for de la Rosa. Atty. San Jose admitted Goingo’s proposed testimony to the effect that in consideration of the 33% as mentioned in the contract, all the material supplies during the making of the additional works mentioned were already accounted for; that Silot was paid for all works that were performed as well as all materials supplied; that the total sum was P2,504,469.65, so that 33% of which is only P826,474.98; that de la Rosa paid the amount of P1,018,000.00; hence, there was an excess payment of P191,525.02; and that de la Rosa never received any demand from nor was she confronted by Silot regarding an alleged balance.[5] Consequently, after trial, the RTC ruled in favor of de la Rosa and ordered Silot to return the overpaid amount. On appeal, the Court of Appeals affirmed the decision of the lower court. 

Silot alleged that the RTC and CA erred in construing the admission ma[d]e by Atty. San Jose on the purpose for the testimony of witness Ariel [Goingo] as admission of evidence. Petitioner Silot contends that his counsel Atty. San Jose merely admitted that the subject of Goingo’s testimony was that stated in the offer of testimony, but he did not admit the truth or veracity of the testimony. Silot adds that Atty. San Jose could not and should not have admitted the testimony because he had no special power of attorney to enter into such stipulations or to compromise his client’s right without the latter’s direct intervention.

Well-entrenched is the rule that the client is bound by the mistakes arising from negligence of his own counsel.[16] The only exception to this rule is, as the Court of Appeals itself cited in its decision, when the negligence is so gross that the client is deprived of his day in court.[17]

In our considered view, however, that exception does not find any application in this case. As the records would plainly show, Silot was not deprived of his day in court. Also, as the appellate court observed, he could have introduced evidence, testimonial or otherwise, in order to controvert or correct the admission made by his counsel. Said the appellate court:

…As gleaned from the records, defendant-appellant Silot was not deprived of his day in

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court. He was given every opportunity to be heard through his pleadings and manifestations. He was also presented in open court to testify. As quoted earlier, Atty. Terbio, counsel for plaintiff-appellee de la Rosa, even repeatedly asked Atty. San Jose, defendant-appellant Silot’s counsel, if he would admit the purpose for which the witness Ariel Goingo will testify to dispense with his testimony, and Atty. San Jose repeatedly answered that “We will admit that.†And when asked by the judge if he �will admit it, he answered that they will admit P2,504,000.00.[18]

More importantly, Silot’s counsel clearly made admissions of the content of the testimony of witness Goingo, whose presentation was dispensed with. In People v. Hernandez,[19] we held that admissions made for the purpose of dispensing with proof of some facts are in the nature of judicial admissions, to wit:

A stipulation of facts entered into by the prosecution and defense counsel during trial in open court is automatically reduced into writing and contained in the official transcript of the proceedings had in court. The conformity of the accused in the form of his signature affixed thereto is unnecessary in view of the fact that: “[…] an attorney who is employed to manage a party’s conduct of a lawsuit […] has prima facie authority to make relevant admissions by pleadings, by oralor written stipulation, […] which unless allowed to be withdrawn are conclusive.†�(Italics supplied.) In fact, â€œjudicial admissions are frequently those of counsel or of the attorney of record, who is, for the purpose of the trial, the agent of his client. When such admissions are made […] for the purpose of dispensing with proof of some fact, […] they bind the client, whether made during, or even after, the trial.[20] (Emphasis supplied.)

Worth stressing, in this connection, judicial admissions do not require proof and may not be contradicted in the absence of a prior showing that the admissions had been made through palpable mistake.[21]

Furthermore, in the case of Toh v. Court of Appeals,[22] this Court emphasized the consequence of admitting and dispensing with the testimony of the proposed witness, thus:

The Court sees no cogent reason why the said witness should be examined any further since his testimony as summarized in the offer made by counsel was expressly admitted by opposing counsel.  With the said admission, the testimony of said witness is uncontroverted and even admitted as fact by opposing counsel.

FULE V. CA 79094

 Fule was convicted of Violation of Batas Pambansa Blg. 22 (The Bouncing Checks Law) on the basis of the Stipulation of Facts entered into between the prosecution and the defense during the pre-trial conference in the Trial Court. The facts stipulated upon read:

a) That this Court has jurisdiction over the person and subject matter of this case;

b) That the accused was an agent of the Towers Assurance Corporation on or before January 21, 1981;

c) That on January 21, 1981, the accused issued and made out check No. 26741, dated January 24, 1981 in the sum of P2,541.05;

d) That the said check was drawn in favor of the complaining witness, Roy Nadera;

e) That the check was drawn in favor of the complaining witness in remittance of collection;

f) That the said check was presented for payment on January 24, 1981 but the same was dishonored for the reason that the said checking account was already closed;

g) That the accused Manolo Fule has been properly Identified as the accused party in this case.

At the hearing of August 23, 1985, only the prosecution presented its evidence consisting of Exhibits "A," "B" and "C." At the subsequent hearing on September 17, 1985, petitioner-appellant waived the right to present evidence and, in lieu thereof, submitted a Memorandum confirming the Stipulation of Facts. The Trial Court convicted petitioner-appellant.

Petitioner contended that the CA erred in convicting him of the offense charged, despite the cold fact that the basis of the conviction was based solely on the stipulation of facts made during the pre-trial on August 8, 1985,

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which was not signed by the petitioner, nor by his counsel.

The 1985 Rules on Criminal Procedure, which became effective on January 1, 1985, applicable to this case since the pre-trial was held on August 8, 1985, provides:

SEC. 4. Pre-trial agreements must be signed. — No agreement or admission made or entered during the pre-trial conference shall be used in evidence against the accused unless reduced to writing and signed by him and his counsel. (Rule 118) [Emphasis supplied]

By its very language, the Rule is mandatory. Under the rule of statutory construction, negative words and phrases are to be regarded as mandatory while those in the affirmative are merely directory (McGee vs. Republic, 94 Phil. 820 [1954]). The use of the term "shall" further emphasizes its mandatory character and means that it is imperative, operating to impose a duty which may be enforced (Bersabal vs. Salvador, No. L-35910, July 21, 1978, 84 SCRA 176). And more importantly, penal statutes whether substantive and remedial or procedural are, by consecrated rule, to be strictly applied against the government and liberally in favor of the accused (People vs. Terrado No. L-23625, November 25, 1983, 125 SCRA 648).

The conclusion is inevitable, therefore, that the omission of the signature of the accused and his counsel, as mandatorily required by the Rules, renders the Stipulation of Facts inadmissible in evidence. The fact that the lawyer of the accused, in his memorandum, confirmed the Stipulation of Facts does not cure the defect because Rule 118 requires both the accused and his counsel to sign the Stipulation of Facts. What the prosecution should have done, upon discovering that the accused did not sign the Stipulation of Facts, as required by Rule 118, was to submit evidence to establish the elements of the crime, instead of relying solely on the supposed admission of the accused in the Stipulation of Facts. Without said evidence independent of the admission, the guilt of the accused cannot be deemed established beyond reasonable doubt.

Consequently, under the circumstances obtaining in this case, the ends of justice require that evidence be presented to determine the culpability of the accused. When a judgment has been entered by consent of an attorney without special authority, it

will sometimes be set aside or reopened (Natividad vs. Natividad, 51 Phil. 613 [1928]).

KING V. PEOPLE 131540

On several occasions in January, 1992, at Las Piñas, Metro Manila, petitioner discounted with complainant Ellen Fernandez several Equitable Bank checks postdated from July 23 to 29, 1992 in the total amount of P1,070,000.00 in exchange for cash in the amount of P1,000,000.00. When the checks were deposited for payment, they were dishonored by the drawee bank because they were drawn against an account without sufficient funds. Petitioner failed to make good the checks despite demand. (Memorandum dated April 7, 1993 of Assistant Provincial Prosecutor to the Rizal Provincial Prosecutor)

During the hearing on the merits of this case on September 17, 1998, the prosecution offered in evidence its documentary evidence. Petitioner admitted the genuineness and due execution of the documents presented. petitioner filed a Demurrer to Evidence without leave of court. In doing so, she waived her right to present evidence and submitted the case for judgment on the basis of the documentary exhibits adduced by the prosecution. Petitioner was thereafter convicted.

Petitioner contends that the pieces of documentary evidence presented by the prosecution during pretrial are inadmissible, because she did not sign the pretrial agreement as required under Section 4 of Rule 118 of the Rules of Court. 15 Hence, she argues that there is no basis for her conviction.

True, a pretrial agreement not signed by a party is inadmissible. However, the conviction of petitioner was based not on that agreement but on the documents submitted during the trial, all of which were admitted without any objection from her counsel. During the hearing on September 17, 1993, the prosecution offered as evidence the dishonored checks, the return check tickets addressed to private complainant, the notice from complainant addressed to petitioner that the checks had been dishonored, and the postmaster's letter that the notice had been returned to sender. Petitioner's counsel did not object to their admissibility.

From the foregoing, it is clear that the prosecution evidence consisted of documents offered and admitted during the trial. In view of this, the CA correctly ruled that Fule v. Court of Appeals 17 would not apply to the present controversy. In that case, a hearing was conducted during which the prosecution presented three exhibits. However, Fule's conviction was "based

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solely on the stipulation of facts made during rile pre-trial on August 8, 1985, which was not signed by the petitioner, nor by his counsel." Because the stipulation was inadmissible in evidence under Section 4 of Rule 118, the Court held that there was no proof of his guilt.

In the present case, petitioner's conviction was based on the evidence presented during trial, and not on the stipulations made during the pretrial. Hence, petitioner's admissions during the trial are governed not by the Fule ruling or by Section 4 of Rule 118, but by Section 4 of Rule 129 which reads:

Sec. 4. Judicial Admissions. — An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.

Hence, the trial court and the Court of Appeals did not err in taking cognizance of the said documentary evidence.

SAN PEDRO V. LEE 156522

Petitioner Erlinda San Pedro initiated this suit against the spouses Ruben1 Lee and Lilian Sison on November 23, 1994, praying for: (1) a declaration that the document entitled "Kasulatan ng Ganap na Bilihan ng Lupa" is an equitable mortgage and not a sale; (2) the reconveyance of the property subject of the "Kasulatan ng Ganap na Bilihan ng Lupa"; and (3) damages. Among her grounds was Art. 1602 (2), thus:

Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:

(2) When the vendor remains in possession as lessee or otherwise;

As regards the alleged continuous possession of the property in question, San Pedro presented Federico Santos, who testified that he is a farmer by occupation, currently tilling a farmholding of less than two hectares located at San Juan, Balagtas, Bulacan,76 owned by Erlinda San Pedro, to whom he has been paying lease rentals of 18 cavans a year.77The testimony of the witness was offered to prove that he was the agricultural leasehold tenant of the petitioner on the parcel of land which was described in the complaint.78

However, while the witness may have established that he was, indeed, the agricultural tenant of the petitioner, the identity of the parcel of land which

he tills and the parcel of land described in the complaint was not established. The "Kasunduan sa Buwisan"79 entered into between Federico J. Santos and Lourdes Manalo Vda. De San Pedro dated May 14, 1975 reiterates the tenancy relation between witness Santos and the San Pedro family. The parcel of land described therein has an area of 1.5 hectares,80 while the property subject of the contract in question has an area of 17,235 square meters, or 1.72 hectares. There is therefore no clear indicator that the parcel of land being tilled by Santos is, indeed, the parcel of land subject of the contract between San Pedro and Lee. Although a landowner-tenant relation has been established between San Pedro and Santos, we cannot conclude therefrom that San Pedro was in possession of the property subject of the "Kasulatan ng Ganap na Bilihan ng Lupa" through her tenant Federico Santos.

Petitioner argues that the direct connection between the parcel of land tilled by Santos and the land in question needs no proof, in view of the purported admission by respondents in the course of the proceedings.81 Specifically, petitioner points to (1) an alleged admission made by respondents’ counsel during the cross-examination of witness Federico Santos on July 3, 1995,82 and (2) a statement made in respondents’ Comment/Opposition to Plaintiff’s Formal Offer of Evidence, to the effect that petitioner’s exercise of rights of ownership over the parcel of land in question amounts to a usurpation of respondents’ rights as owner of the property.83 Petitioner relies on Rule 129, Section 4 of the Revised Rules of Court, which provides in part that "[a]n admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof".

An examination of the records of the case, however, will readily disclose that no such admission was made either by respondents or by respondents’ counsel. The question propounded by respondents’ counsel on July 3, 1995, is as follows:

Q Mr. Witness, are you aware of the fact that since 1985 the land you have been cultivating has been transferred in the name of Sps. Ruben Lee and Lilian Sison?

A No, ma’am.84

In the assessment of this Court, said question contains absolutely no admission that the parcel of

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land tilled by Santos is in fact the parcel of land subject of the contract in question.

We likewise find no admission made in respondents’ Comment/Opposition to Plaintiff’s Formal Offer of Evidence. The alleged admission was made in the comment/objection to petitioner’s Exhibits F to F-14, the Receipts of Payments of Rentals by Federico Santos to Erlinda San Pedro, and reads:

These receipts do not prove rights of ownership. The same even show acts of USURPATION of the Rights of Ownership of the defendants by the plaintiff and her alleged tenant since Title to the property in question is now in the name of Defendant spouses as Evidenced by TCT No. T-305595. (Ehx. B of the Plaintiff)85

On the contrary, what the foregoing portion of the Comment/Objection reveals is that: if Santos was indeed tilling the parcel of land covered by TCT No. T-305595 as a tenant of San Pedro, San Pedro would be guilty of usurpation.

Rule 129, Section 4 of the Revised Rules of Court provides that a judicial admission may be contradicted by showing that it was made through palpable mistake, or that no such admission was made. Petitioner’s theory as regards the purported judicial admission is readily contradicted by a perusal of the records, which show that in fact no such admission was made by respondents. We thus find no adequate proof for petitioner’s contention that she was exercising possessory rights over the parcel of land covered by TCT No. T-305595.

PARAYNO V. JOVELLANOS 148408

Petitioner was the owner of a gasoline filling station in Calasiao, Pangasinan. In 1989, some residents of Calasiao petitioned the Sangguniang Bayan (SB) of said municipality for the closure or transfer of the station to another location. The matter was referred to the Municipal Engineer, Chief of Police, Municipal Health Officer and the Bureau of Fire Protection for investigation. Upon their advise, the Sangguniang Bayan recommended to the Mayor the closure or transfer of location of petitioner's gasoline station.

Petitioner moved for the reconsideration of the SB resolution but it was denied. Hence, she filed a special civil action for prohibition and mandamus with the Regional Trial Court (RTC) of Dagupan City, Branch 44 against respondents. The case, docketed as SP Civil Case No. 99-03010-D, was raffled to the sala of Judge Crispin Laron.

Petitioner claimed that her gasoline station was not covered by Section 44 of the Official Zoning Code since it was not a "gasoline service station" but a "gasoline filling station" governed by Section 21 thereof.

We hold that the zoning ordinance of respondent municipality made a clear distinction between "gasoline service station" and "gasoline filling station." The pertinent provisions read:

xxx       xxx       xxx

Section 21. Filling Station. A retail station servicing automobiles and other motor vehicles with gasoline and oil only.7

xxx       xxx       xxx

Section 42. Service Station. A building and its premises where gasoline oil, grease, batteries, tires and car accessories may be supplied and dispensed at retail and where, in addition, the following services may be rendered and sales and no other.

a. Sale and servicing of spark plugs, batteries, and distributor parts;

b. Tire servicing and repair, but not recapping or regrooving;

c. Replacement of mufflers and tail pipes, water hose, fan belts, brake fluids, light bulbs, fuses, floor mats, seat covers, windshield wipers and wiper blades, grease retainers, wheel, bearing, mirrors and the like;

d. Radiator cleaning and flushing;

e. Washing and polishing, and sale of automobile washing and polishing materials;

f. Grease and lubricating;

g. Emergency wiring repairs;

h. Minor servicing of carburators;

i. Adjusting and repairing brakes;

j. Minor motor adjustments not involving removal of the head or crankcase, or raising the motor.8

xxx       xxx       xxx

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It is evident from the foregoing that the ordinance intended these two terms to be separate and distinct from each other. Even respondent municipality's counsel admitted this dissimilarity during the hearing on the application for the issuance of a writ of preliminary prohibitory and mandatory injunction. Counsel in fact admitted:

1. That there exist[ed] an official zoning code of Calasiao, Pangasinan which [was] not yet amended;

2. That under Article III of said official zoning code there [were] certain distinctions made by said municipality about the designation of the gasoline filling station and that of the gasoline service station as appearing in Article III, Nos. 21 and 42, [respectively];

3. That the business of the petitioner [was] one of a gasoline filling station as defined in Article III, Section 21 of the zoning code and not as a service station as differently defined under Article 42 of the said official zoning code;

4. That under Section 44 of the official zoning code of Calasiao, the term filling station as clearly defined under Article III, Section 21, [did] not appear in the wordings thereof;9(emphasis supplied)

The foregoing were judicial admissions which were conclusive on the municipality, the party making them.10 Respondent municipality thus could not find solace in the legal maxim of ejusdem generis11 which means "of the same kind, class or nature." Under this maxim, where general words follow the enumeration of particular classes of persons or things, the general words will apply only to persons or things of the same general nature or class as those enumerated.12 Instead, what applied in this case was the legal maxim expressio unius est exclusio alterius which means that the express mention of one thing implies the exclusion of others.13 Hence, because of the distinct and definite meanings alluded to the two terms by the zoning ordinance, respondents could not insist that "gasoline service station" under Section 44 necessarily included "gasoline filling station" under Section 21. Indeed, the activities undertaken in a "gas service station" did not automatically embrace those in a "gas filling station."

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