RULE 129 JUDICIAL NOTICE

EN BANC

[G.R. No. 210303. April 21, 2015.]

BERTRAND A. BATERINA, petitioner, vs. HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL,

COMMISSION ON ELECTIONS, and RONALD SINGSON, respondents.

NOTICE

Sirs/Mesdames :
Please take notice that the Court en banc issued a Resolution dated

APRIL 21, 2015, which reads as follows:

"G.R. No. 210303 —BERTRAND A. BATERINA, Petitioner, v. HOUSE OF REPRESENTATIVES

ELECTORAL TRIBUNAL, COMMISSION ON ELECTIONS, and RONALD SINGSON, Respondents.

In this Petition for Certiorari, petitioner Bertrand A. Baterina assails the August 15, 2013 and October 24,
2013 Resolutions of the House of R e p r e s e n t a t i v e s E l e c t o r a l Tr i b u n a l ( H R E T ) w h i c
h r e s p e c t i v e l y d i s m i s s e d Baterina's petition for Quo Warranto for having been filed out of time
and denied his subsequent Motion for Reconsideration. Baterina likewise assails the August 13, 2013
Resolution of the Commission on Elections (COMELEC) dismissing the Petition for Disqualification he
filed against private respondent Ronald V. Singson.

In the May 13, 2013 local elections, petitioner Baterina and Singson contended for the position of
Representative of the First District of Ilocos Sur. However, shortly before the election, on April 24, 2013,
Baterina filed with the COMELEC a Petition for Disqualification with Motion to Suspend Proclamation Ad
Cautelam against Singson on the ground that the latter was disqualified as a candidate for having been
convicted by final judgment of drug trafficking, which is allegedly an offense involving moral turpitude.

The day after the elections, on May 14, 2013, with Singson garnering 83,910 votes as against 40,135 for
Baterina, the former was proclaimed the winning candidate.

On June 27, 2013, while Baterina's Petition for Disqualification was pending with the COMELEC, he filed
a Petition for Quo Warranto Ad Cautelam (On the Eligibility of Ronald V. Singson as Member of the
House of Representatives) with the HRET, wherein he again alleged that Singson was disqualified to run
for public office on account of his final conviction of a crime involving moral turpitude.

On August 13, 2013, the COMELEC issued the first assailed Resolution dismissing the disqualification
case for lack of jurisdiction. The pertinent portions of the resolution read:

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However, the instant case has been overtaken by the 13 May 2013 Elections wherein Respondent was
proclaimed as the winning candidate for Member of the House of Representatives for the First District of
Ilocos Sur. For lack of jurisdiction, the Commission is precluded from taking cognizance of the instant
case.

In view of the fact that Respondent is now a bona fide Member of the House of Representatives, the
jurisdiction to try this electoral case is not anymore with the Commission but with the HRET. 1
On August 27, 2013, Baterina, claiming that "to date, and despite the lapse of the period to decide, this
Honorable Commission has yet to issue a Decision/Resolution on the Petition filed by the Petitioner," 2
withdrew his Petition for Disqualification with the COMELEC. Baterina received the assailed Resolution by
the COMELEC on August 28, 2013.

In the meantime, on August 15, 2013, the HRET issued the second assailed Resolution dismissing
Baterina's petition for quo warranto. The HRET, noting that Singson was proclaimed on May 14, 2013,
ruled that the filing of the petition on June 27, 2013 was beyond the reglementary period of 15 days from
the proclamation of the winner.

On September 19, 2013, Baterina filed a Motion for Reconsideration, alleging that there is a need to
revisit the HRET Rules with respect to the period for filing a petition for quo warranto in light of the
pronouncement of this Court in Reyes v. COMELEC 3 that the jurisdiction of the HRET begins once the
winning candidate has been proclaimed, taken his oath, and assumed offi ce.

On October 24, 2013, the HRET issued the third assailed Resolution denying Baterina's Motion for
Reconsideration. According to the HRET, the argument of Baterina that the jurisdiction of the HRET
began only at noon of June 30, 2013 is inconsistent with his filing of the petition for quo warranto on June
27, 2013.

On December 26, 2013, Baterina filed the present petition for Certiorari assailing the August 13, 2013
Resolution of the COMELEC and the August 15, 2013 and October 24, 2013 Resolutions of the HRET on
the following grounds:

I.

THE HONORABLE COMELEC AND THE HONORABLE HRET ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN THEY DID NOT TAKE JUDICIAL NOTICE OF THE CONVICTION OF
RESPONDENT SINGSON FOR DRUG TRAFFICKING IN HONG KONG, WHICH WOULD WARRANT
HIS DISQUALIFICATION AND/OR INELIGIBILITY AS MEMBER OF THE HOUSE OF
REPRESENTATIVES OF THE FIRST DISTRICT OF ILOCOS SUR.

II.

THE HONORABLE COMELEC AND THE HONORABLE HRET ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN UPHOLDING THE CANDIDACY OF RESPONDENT SINGSON AS A MEMBER OF
THE HOUSE OF REPRESENTATIVES OF THE FIRST DISTRICT OF ILOCOS SUR IN THE 13 MAY
2013 ELECTIONS.

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III.

THE HONORABLE COMELEC AND THE HONORABLE HRET ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN NOT PROCLAIMING THE PETITIONER AS THE LONE AND WINNING CANDIDATE
FOR MEMBER OF THE HOUSE OF REPRESENTATIVES OF THE FIRST DISTRICT OF ILOCOS SUR
IN THE 13 MAY 2013 ELECTIONS DUE TO THE APPARENT DISQUALIFICATION OF RESPONDENT
SINGSON.

IV.
THE HONORABLE COMELEC AND HONORABLE HRET ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN DISREGARDING THE FACT THAT RESPONDENT SINGSON FILED AN INVALID
"COC" AND WAS THEREFORE NOT A CANDIDATE FOR MEMBER OF THE HOUSE OF
REPRESENTATIVES OF THE FIRST DISTRICT OF ILOCOS SUR FOR THE 13 MAY 2013
ELECTIONS.

V.

THE HONORABLE COMELEC ACTED WITHOUT OR IN EXCESS OF JURISDICTION, OR WITH

GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
DID NOT RESOLVE THE PETITION FOR DISQUALIFICATION OF THE PETITIONER WITHIN THE
MANDATORY PERIOD OF RESOLVING IT FROM THE TIME IT WAS SUBMITTED FOR
RESOLUTION.

VI.

THE HONORABLE HRET ACTED WITHOUT OR IN EXCESS OF JURISDICTION, OR WITH GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
DISMISSED THE PETITION FOR QUO WARRANTO DESPITE HAVING BEEN TIMELY FILED. 4

Whether there was grave abuse of discretion in the August 13, 2013 resolution of the Comelec

As previously discussed, Baterina moved to withdraw the Petition for Disqualification he filed with the
COMELEC in a Manifestation filed on August 27, 2013. Baterina, who received the assailed August 13,
2013 Resolution on August 28, 2013, claimed in his Manifestation that "to date, and despite the lapse of
the period to decide, this Honorable Commission has yet to issue a Decision/Resolution on the Petition
filed by the Petitioner."5 With his withdrawal of the petition for disqualification, Baterina is deemed to have
waived his right to assail the same.

Baterina may have also overlooked that it is Rule 64 of the Rules of Court, in relation to Rule 65 thereof,
which governs the review of judgments and final orders or resolutions of the COMELEC. Under said rule,
particularly Section 3 thereof, the period within which to file a petition for certiorari is 30 days, starting
from notice of the judgment and final order or resolution sought to be reviewed. In this case, the Petition
for Certiorari was filed on December 26, 2013, or 120 days after notice, thus, way beyond the
reglementary period of just 30 days, and should be dismissed with respect to its prayer to declare

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the COMELEC Resolution void.

Whether there was grave abuse of discretion in the resolutions of the HRET

Singson was proclaimed on May 14, 2013. Baterina filed with the HRET his Petition for Quo Warranto Ad
Cautelam on June 27, 2013, way beyond the period provided for in Rule 17 of the 2011 Rules of the
HRET, which provides:

RULE 17. Quo Warranto. — A verified petition for quo warranto contesting the election of a Member of
the House of Representatives on the ground of ineligibility or of disloyalty to the Republic of the
Philippines shall be filed by any registered voter of the district concerned within fifteen (15) days from the
date of the proclamation of the winner. The party filing the petition shall be designated as the petitioner
while the adverse party shall be known as the respondent.
On Motion for Reconsideration, Baterina alleged that there is a need to revisit the HRET Rules with
respect to the period for filing a petition for quo warranto in light with the pronouncement of this Court in
Reyes v. COMELEC 6 that the jurisdiction of the HRET begins once the winning candidate has been
proclaimed, taken his oath, and assumed offi ce. How ever, as correctly discussed in the assailed
resolution, the argument of Baterina that the jurisdiction of the HRET began only at noon of June 30, 2013
is inconsistent with his invocation of the jurisdiction of the HRET on June 27, 2013.

The HRET, therefore, was not in error, much less in grave abuse of discretion, when it dismissed
Baterina's Petition for Quo Warranto.

Nevertheless, even if we assume for the sake of argument that the HRET had jurisdiction over the
petition, the same would still fail even when adjudged on the merits.

Baterina claims that Singson's alleged conviction in Hong Kong, which he asserts to be a crime involving
moral turpitude, warrants Singson's disqualification and ineligibility as a Member of the House of
Representatives. Baterina contends that the fact of his conviction is of notorious public know ledge and
subject to mandatory judicial notice on account of the extensive media coverage.

Contrary to Baterina's argument, it is well-settled that our courts do not take judicial notice of foreign laws
and judgments; hence, foreign judgments must be alleged and proven according to our law on evidence.
The printout of the downloaded copy of the Hong Kong decision from an unverified website cannot
therefore be considered in evidence.

However, even if we assume for the sake of argument that the HRET can take judicial notice of the
conviction of Singson in a Hong Kong court, and consider the printout submitted by Baterina as authentic,
we nevertheless find that such judgment would not warrant his disqualification based on Section 12 of the
Omnibus Election Code, which provides:

Section 12. Disqualifications. — Any person who has been declared by competent authority insane or
incompetent, or has been sentenced by final judgment for subversion, insurrection, rebellion or for any
offense for which he has been sentenced to a penalty of more

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than eighteen months or for a crime involving moral turpitude, shall be disqualified to be a candidate and
to hold any office, unless he has been given plenary pardon or granted amnesty.

These disqualifications to be a candidate herein provided shall be deemed removed upon the declaration
by competent authority that said insanity or incompetence had been removed or after the expiration of a
period of five years from his service of sentence, unless within the same period he again becomes
disqualified.

the printout of the Hong Kong judgment provides that Singson, while charged for the offense of trafficking
in dangerous drugs, pleaded guilty to and was found to have merely possessed the illegal drugs for his
own consumption.

We have held that moral turpitude implies something "immoral in itself, regardless of the fact that it is
punishable by law or not. It must not merely be mala prohibita, but the act itself must be inherently
immoral. The doing of the act itself, and not its prohibition by statute fixes the moral turpitude. Moral
turpitude does not, however, include such acts as are not of themselves immoral but whose illegality lies
in the fact of their being positively prohibited." 10 Mere possession of a prohibited drug cannot be
considered immoral by itself if it were not punishable by law, much like illegal possession of a deadly
weapon 11 and incidental participation in illegal recruitment. 12 This, however, should be distinguished
from the act of pushing said prohibited drugs. In Office of the Court Administrator v. Librado, 13 the case
cited by Baterina in order to prove that possession of a prohibited drug is a crime involving moral
turpitude, the respondent therein was held guilty of both selling and possession of said drugs. A careful
examination of the discussion by this Court shows that it is the pushing or selling of said prohibited drugs,
and not the mere possession thereof, that is considered a crime involving moral turpitude:

This case involves a conviction of a crime involving moral turpitude as a ground for disciplinary action
under the Civil Service Law. Under the rules of the Civil Service Commission, conviction of a crime
involving moral turpitude is considered a grave offense punishable, upon first commission, by dismissal.
As this Court has held, it alone suffices as a ground for the dismissal of a civil service employee.

Drug-pushing, as a crime, has been variously condemned as "an especially vicious crime," "one of the
most pernicious evils that has ever crept into our society." For those who become addicted to it "not only
slide into the ranks of the living dead, what is worse, they become a grave menace to the safety of law-
abiding members of society," while "peddlers of drugs are actually agents of destruction. They deserve no
less than the maximum penalty [of death]."

There is no doubt that drug-pushing is a crime which involves moral turpitude and implies "everything
which is done contrary to justice, honesty, modesty or good morals" including "acts of baseness, vileness,
or depravity in the private and social duties which a man owes to his fellowmen or to society in general,
contrary to the accepted rule of right and duty between man and man." Indeed nothing is more depraved
than for anyone to be a merchant of death by selling prohibited drugs, an act which, as this Court said in
one case, often

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breeds other crimes. It is not what we might call a 'contained' crime whose consequences are limited to
that crime alone, like swindling and bigamy. Court and police records show that a significant number of
murders, rapes, and similar offenses have been committed by persons under the influence of dangerous
drugs, or while they are 'high.' While spreading such drugs, the drug-pusher is also abetting, through his
greed and irresponsibility, the commission of other crimes.

In all, we find that Baterina has presented insufficient basis for his charge that the COMELEC and the
HRET committed grave abuse of discretion in dismissing his Petitions for Disqualification and Quo
Warranto, respectively.

WHEREFORE, the Petition for Certiorari is hereby DISMISSED." Velasco, Jr., Peralta and Bersamin, JJ.,
no part. (adv52)

Footnotes

1. Rollo (Vol. I), p. 60.

2. Id. at 291.
3. G.R. No. 207264, June 25, 2013, 699 SCRA 522, 533-534. 4. Rollo (Vol. I), pp. 19-21.
5. Id. at 290-291.
6. Supra note 3.

7. Noveras v. Noveras, G.R. No. 188289, August 20, 2014; Corpuz v. Sto. Tomas, G.R. No. 186571,
August 11, 2010, 628 SCRA 266, 281; Garcia v. Recio, 418 Phil. 723, 732 (2001).

8. Rollo (Vol. I), pp. 347-352.

9. Id. at 352.
10. Zari v. Flores, 183 Phil. 27, 33 (1979).
11. People v. Yambot, 397 Phil. 23, 38 (2000).
12. The Court Administrator v. San Andres, 274 Phil. 990, 997 (1991). 13. 329 Phil. 432, 435-436 (1996).

Very truly yours,

(SGD.) ENRIQUETA E. VIDAL

Clerk of Court

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G.R. Nos. 173148               April 6, 2015

ELSA DEGAYO, Petitioner, 
vs.
CECILIA MAGBANUA-DINGLASAN, JOHNNY DINGLASAN, ASUNCION MAGBANUA-PORRAS,
MARIANO P ASCUALITO and AMADO JR., all surnamed MAGBANUA, Respondents.

DECISION

BRION, J.:

Before us is the Petition for Review on Certiorari filed by the petitioner Elsa Degayo (Degayo) under Rule
45 of the Rules of Court, assailing the Decision1 dated November 7, 2005 and the Resolution2 dated May
19, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 62070.

The Factual Antecedents

The present case involves a property dispute, which gave rise to two civil cases for ownership and
damages between conflicting claimants over a parcel of land located on the northeastern bank of Jalaud
River. The respondents Cecilia Magbanua-Dinglasan, Johnny Dinglasan, Pascualito Magbanua, Mariano
Magbanua, Asuncion Magbanua-Porras, Amado Magbanua Jr. (respondents) initiated the first civil case
against Nicolas Jarencio, Cesar Jarencio, Myrna Olmo, Fredercio Sumvilla, Herminio Sumvilla, Perpetuo
Larano and Angelo Larano, the tenants (tenants) of Lot No. 861. Degayo, on the other hand, initiated the
second civil case, which eventually reached this Court via the present petition.

Records show that Lot No. 861 isa 36,864 sqm. parcel in the Cadastral Survey of Dingle, Iloilo, covered
by Transfer Certificate of Title (TCT) No. T-2804, registered in the name of Degayo’s deceased parents,
spouses Marcelo Olmo and Rosalia Labana. Lot No. 861 used to be bounded on the southwest by the
Jalaud River that serves to separate Dingle from Pototan Iloilo.

On the other side of Jalaud River, opposite Lot No. 861, lies a 153,028 square meter parcel of land,
designated as Lot No. 7328 of the Cadastre of Pototan, Iloilo, collectively owned by the respondents,
covered under TCT No. T-84829. The Jalaud River, which separates these parcels of land, thus flows
along the northeast side of Lot 861 and the southwest side of Lot No. 7328. Sometime in the 1970’s the
Jalauad River steadily changed its course and moved southwards towards the banks of Pototan, where
Lot No. 7328 lies, leaving its old riverbed dry. Eventually, the course of the Jalaud River encroached on
Lot No. 7328. As a result, Lot No. 7328 progressively decreased in size while the banks adjacent to Lot
No. 861 gradually increased in land area.

Degayo and the tenants believed that the area was an accretion to Lot No. 861. As a result, her tenants,
commenced cultivating and tilling that disputed area with corn and tobacco. The area allegedly added to
Lot No. 861 contains 52,528 sqm, broken down as follows:
 1. 26,106 sqm. Original abandoned river bed;

2. 26,419 sqm. resurfaced area of Lot No. 7328

The respondents, on the other hand, argued that the disputed property was an abandoned riverbed,
which should rightfully belong to them to compensate for the erstwhile portion of Lot No. 7328, over which
the Jalaud River presently runs.

On October 2, 1984, the respondents filed a complaint for ownership and damages against the tenants,
with the Regional Trial Court (RTC) of Iloilo, Branch 27, entitled Cecilia Magbanua Dinglasan, et al. v.
Nicolas Jarencio, et al., docketed as Civil Case No. 16047. Degayo sought to intervene in Civil Case No.
16047 but her motion was denied. Notably, Degayo never bothered to question the interlocutory order
denying her motion for intervention by filing a petition for certiorari. Instead, Degayo initiated the present
suit against the respondents for declaration of ownership with damages, also with the RTC of Iloilo,
Branch 22, docketed as Civil Case No. 18328, involving the disputed parcel of land.

In her complaint, Degayo alleged to have acquired Lot No. 861 by inheritance by virtue of a Quitclaim
Deed and that she had been in possession of that land since 1954. She likewise stressed that the area in
dispute was an accretion to Lot No. 861.

Meanwhile, notwithstanding the previous denial of her motion to intervene in Civil Case No. 16047,
Degayo was able to participate in the proceedings therein as a witness for the defense. In particular,
during her direct examination, Degayo testified on the same matters and raised the same arguments she
alleged in her complaint in Civil Case No. 18328, those are: that she acquired Lot No. 861 by inheritance
by virtue of a Quitclaim Deed; that she had been in possession of that land since 1954; and that the area
in dispute was an accretion to Lot No. 861 On May 7, 1996, the RTC of Iloilo, Branch 27, rendered its
decision in Civil Case No. 16047, in favor of the respondents. The tenants promptly filed an appeal but
they failed to file an appeal brief, resulting to a dismissal of their appeal per resolution dated June 20,
1999.3 The decision in Civil Case No. 16047 became final and executory on August 6, 1999. 4

Meanwhile, in Civil Case No. 18328, the court, a quo, found in favor of Degayo and declared the property
in question as an accretion to Lot No. 861. The respondents filed a motion for reconsideration but their
motion was denied. Hence, the respondents filed an appeal with the CA.

The CA Ruling

On November 7, 2005, the CA granted the respondents’ appeal and reversed and set aside the decision
of the RTC Branch 22 in Civil Case No. 18328. In granting the appeal the CA noted that the disputed
properties are abandoned riverbeds. Being abandoned riverbeds, the property in question rightfully
belongs to the respondents as the owners of the land now occupied by the Jalaud River. 5 The CA likewise
noted that the previous RTC Branch decision in Civil Case No. 16047 is conclusive to the title of the thing,
being an aspect of the rule on conclusiveness of judgment. 6

Degayo sought a reconsideration of the CA Decision but the CA denied her motion in its May 19, 2006
Resolution.7Aggrieved, Degayo filed the preset petition for review on certiorari under Rule 45 with this
Court.

The Petition and Comment

Degayo’s petition is based on the following grounds/arguments: 8

1. That the CA erred in declaring the disputed property as an abandoned riverbed and not an
accretion to Lot 861;
 2. The CA erred in taking judicial notice of the RTC decision in Civil Case No. 16047, which was
not even presented during the hearing of the present case;

3. The CA erred in declaring the RTC Branch 27 decision in Civil Case No. 16047 conclusive
upon Degayo when she was not even a party in the said Civil Case.

In his Comment,9 the respondents assert that the petition raised questions of fact which are not proper
issues to be raised in a petition for review on certiorari. 10 They also claim that the essential requisites of
accretion are not present.11 Finally, the respondents claim that the decision in Civil Case No. 16047
constitutes res judicata.12

THE COURT'S RULING

We deny the petition for lack of merit.

The Decision in Civil Case No. 16047 constitutes res judicata.

Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter
settled by judgment." It also refers to the "rule that a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on points
and matters determined in the former suit.13 It rests on the principle that parties should not to be permitted
to litigate the same issue more than once; that, when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, or an opportunity for such trial has been given, the
judgment of the court, so long as it remains unreversed, should be conclusive upon the parties and those
in privity with them in law or estate.14

This judicially created doctrine exists as an obvious rule of reason, justice, fairness, expediency, practical
necessity, and public tranquillity.15 Moreover, public policy, judicial orderliness, economy of judicial time,
and the interest of litigants, as well as the peace and order of society, all require that stability should be
accorded judgments, that controversies once decided on their merits shall remain in repose, that
inconsistent judicial decision shall not be made on the same set of facts, and that there be an end to
litigation which, without the doctrine of res judicata, would be endless. 16

This principle cannot be overemphasized in light of our clogged dockets. As this Court has aptly observed
in Salud v. Court of Appeals:17

"The interest of the judicial system in preventing relitigation of the same dispute recognizes that
judicialresources are finite and the number of cases that can be heard by the court is limited. Every
dispute that is reheard means that another will be delayed. In modern times when court dockets are filled
to overflowing, this concern is of critical importance. Res judicata thus conserves scarce judicial
resources and promotes efficiency in the interest of the public at large. Once a final judgment has been
rendered, the prevailing party also has an interest in the stability of that judgment. Parties come to the
courts in order to resolve controversies; a judgment would be of little use in resolving disputes if the
parties were free to ignore it and to litigate the same claims again and again. Although judicial
determinations are not infallible, judicial error should be corrected through appeals procedures, not
through repeated suits on the same claim. Further, to allow relitigation creates the risk of inconsistent
results and presents the embarrassing problem of determining which of two conflicting decisions is to be
preferred. Since there is no reason to suppose that the second or third determination of a claim
necessarily is more accurate than the first, the first should be left undisturbed.

In some cases the public at large also has an interest in seeing that rights and liabilities once established
remain fixed. If a court quiets title to land, for example, everyone should be able to rely on the finality of
that determination. Otherwise, many business transactions would be clouded by uncertainty. Thus, the
most important purpose of res judicata is to provide repose for both the party litigants and the public. As
the Supreme Court has observed, "res judicata thus encourages reliance on judicial decision, bars
vexatious litigation, and frees the courts to resolve other disputes."

The doctrine of res judicata is set forth in Section 47 of Rule 39 of the Rules of Court, which in its relevant
part reads:

Sec. 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered by a court
of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

xxxx

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as
to any other matter that could have been raised in relation thereto, conclusive between the parties
and their successors in interest by title subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title and in the same capacity; and

(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its face to
have been so adjudged, or which was actually and necessarily included therein or necessary
thereto.

This provision comprehends two distinct concepts of res judicata: (1) bar by former judgment and (2)
conclusiveness of judgment.

The first aspect is the effect of a judgment as a bar to the prosecution of a second action upon the same
claim, demand or cause of action.18 In traditional terminology, this aspect is known as merger or bar; in
modern terminology, it is called claim preclusion.19

The second aspect precludes the relitigation of a particular fact of issue in another action between the
same parties on a different claim or cause of action. This is traditionally known as collateral estoppel; in
modern terminology, it is called issue preclusion.20

Conclusiveness of judgment finds application when a fact or question has been squarely put in issue,
judicially passed upon, and adjudged in a former suit by a court of competent jurisdiction. The fact or
question settled by final judgment or order binds the parties to that action (and persons in privity with
them or their successors-in-interest), and continues to bind them while the judgment or order remains
standing and unreversed by proper authority on a timely motion or petition; the conclusively settled fact or
question furthermore cannot again be litigated in any future or other action between the same parties or
their privies and successors-in-interest, in the same or in any other court of concurrent jurisdiction, either
for the same or for a different cause of action.21 Thus, only the identities of parties and issues are required
for the operation of the principle of conclusiveness of judgment. 22

While conclusiveness of judgment does not have the same barring effect as that of a bar by former
judgment that proscribes subsequent actions, the former nonetheless estops the parties from raising in a
later case the issues or points that were raised and controverted, and were determinative of the ruling in
the earlier case.23 In other words, the dictum laid down in the earlier final judgment or order becomes
conclusive and continues to be binding between the same parties, their privies and successors-in-interest,
as long as the facts on which that judgment was predicated continue to be the facts of the case or
incident before the court in a later case; the binding effect and enforceability of that earlier dictum can no
longer be re-litigated in a later case since the issue has already been resolved and finally laid to rest in
the earlier case.24
In the present case, it is beyond dispute that the judgment in Civil Case No. 16047 has attained finality in
view of the tenant’s abandonment of their appeal to the CA. Moreover, records show that that decision
was adjudicated on the merits, i.e., it was rendered after a consideration of the evidence or stipulations
submitted by the parties at the trial of the case 25 by a court which had jurisdiction over the subject matter
and the parties.

We likewise find that there is an identity of parties in Civil Case No. 16047 and the present case. There is
identity of parties where the parties in both actions are the same, or there is privity between them, or they
are "successors-in-interest by title subsequent to the commencement of the action, litigating for the same
thing and under the same title and in the same capacity. 26 Absolute identity of parties is not required,
shared identity of interest is sufficient to invoke the coverage of this principle. 27 Thus, it is enough that
there is a community of interest between a party in the first case and a party in the second case even if
the latter was not impleaded in the first case.28

It is not disputed that respondents were the plaintiffs in Civil Case No. 16047. Degayo, however insists
that she is not bound by the decision in Civil Case No. 16047 as she was not made a party in that case.
We, however, refuse to subscribe to this technical interpretation of the Rules. In Torres v. Caluag, 29 we
held that a real litigant may be held bound as a party even if not formally impleaded because he had his
day in court and because her substantial rights were not prejudiced. In that case, J. M. Tuazon & Co., Inc.
(Tuason) commenced Civil Case No Q-3674 in the Court of First Instance of Quezon City against Isidro
Conisido to recover from him the possession of a parcel of land. Conisido answered the complaint
alleging, that he was occupying the land in question as a mere tenant of Dominga Torres (Torres), who
owned both the land and the house thereon. Torres was not impleaded in the said case but she
nonetheless appeared as witness for Conisido and asserted her ownership over the disputed property
because she had purchased it from Eustaquio Alquiroz on October 20, 1951 and constructed a house
thereon worth ₱500.00, which she had leased to Conisido for a rental of ₱20.00 a month. The CFI
eventually decided in favor of Tuason and that decision became final and executory. Subsequently,
Torres filed a petition for certiorari with the Court to set aside the decision of the CFI. Indismissing the
petition, we ruled:

"x x x, it appears that DomingaTorres who, according to the defendant Conisido was the true owner ofthe
land in question, testified as his witness and asserted on the witness stand that she was really the owner
thereof because she had purchased it from Eustaquio Alquiroz on October 20, 1951 and constructed a
house thereon worth ₱500.00 which she had leased to Conisido for a rental of ₱20.00 a month. In other
words, petitioner herein had really had her day in court and had laid squarely before the latter the issue of
ownership as between her, on one hand, and respondent Tuason, on the other.

xxx

In the present case, assisted heretofore, petitioner had the fullest opportunity to lay before the court her
claim but the same was overruled. The fact that she was not formally made a party defendant in the case
would appear therefore to be a mere technicality that would not serve the interest of the administration of
justice. As we have repeatedly held, technicalities should be ignored when they do not serve the purpose
of the law.

x x x"

In the present case, Degayo had the fullest opportunity to ventilate her accretion claim Civil Case No.
16047. In her testimony, she asserted that she inherited Lot No. 861 from her parents and that she has
been in possession of that parcel of land since 1954. 30 She further stressed that the disputed parcel of
land has been occupied and tilled by her tenants and that it was the result of the gradual and continuous
deposit of the river.31 Notably, these are the same allegations that Degayo asserted in the present case,
which have been previously considered and evaluated by the RTC Branch 27 in Civil Case No. 16047.
Likewise, there exists a community of interest between Degayo and her tenants, who were respondents in
Civil Case No. 16047. One test to determine substantial identity of interest would be to see whether the
success or failure of one party materially affects the other. 32 In the present case, Degayo is suing for the
ownership of the disputed land. Degayo’s rights over the disputed land is predicated on the same
defenses that his alleged tenants interposed in Civil Case No. 16047, that is, their perceived rights which
emanated from the disputed accretion to Lot No. 861. The interests of Degayo and the tenants in relation
to the two cases are inextricably intertwined in that both their claims emanate from a singular fundamental
allegation of accretion. Moreover, Degayo and the respondents are litigating the same properties subject
of the antecedent cases inasmuch as they claim better right of ownership. Degayo even admitted this in
her petition wherein she stated that "the land subject of Civil Case No. 16047 is the same property subject
of the case at bench.33 "

Notably, the ownership of the disputed parcel of land has been unequivocally settled in Civil Case No.
16047.In ruling that the subject parcels of land belong to the respondents, the RTC Branch 27 in Civil
Case No. 16047 opined that the claim of accretion has no valid basis. 34 What really happened was that
the Jalaud River naturally changed its course and moved southward. As a result, it abandoned its
previous bed and encroached upon a portion of Lot No. 7328. It further held that the claim of accretion
could not be sustained because the 26,419 sqm. portion is ostensibly within the metes and bounds of Lot
No. 7328, owned and registered in the name of the respondents. 35 On the other hand, the 26,106 sqm.
portion refers to an abandoned river bed, and is thus governed by Article 461 of the Civil Code, which
states that River beds which are abandoned through the natural change in the course of the waters ipso
facto belong to the owners whose lands are occupied by the new course in proportion to the area lost.

The fact that the present cause of action is based on an accretion claim does not prevent the application
of res judicata. For, res judicata, under the concept of conclusiveness of judgment, operates even if no
absolute identity of causes of action exists. Res judicata, in its conclusiveness of judgment concept,
merely requires identity of issues. We thus agree with the uniform view of the CA – on the application of
conclusiveness of judgment to the present case. The CA may take judicial notice of

Civil Case No. 16047.

The taking of judicial notice is a matter of expediency and convenience for it fulfills the purpose that the
evidence is intended to achieve, and in this sense, it is equivalent to proof. Generally, courts are not
authorized to "take judicial notice of the contents of the records of other cases even when said cases
have been tried or are pending in the same court or before the same judge. " While the principle invoked
is considered to be the general rule, this rule is not absolute. There are exceptions to this rule. In the case
of Tiburcio v PHHC,38 this Court, citing Justice Moran, stated:

"In some instance, courts have taken judicial notice of proceedings in other causes, because of their
close connection with the matter in the controversy. Thus, in a separate civil action against the
administrator of an estate arising from an appeal against the report of the committee on claims appointed
in the administration proceedings of the said estate, to determine whether or not the appeal was taken on
time, the court took judicial notice of the record of the administration proceedings. Courts have also taken
judicial notice of previous cases to determine whether or not the case pending is a moot one or whether
or not a previous ruling is applicable in the case under consideration."

Moreover, Degayo’s objection to the action of CA on this matter is merely technical because Degayo
herself repeatedly referred to the Civil Case No. 16047 in her pleadings in Civil Case No. 18328and even
in her appellee’s brief before the CA and her petition for review before this Court. In particular, in her
complaint, she stated that her motion to intervene in Civil Case No. 16047, which was denied by the
Court.39 The existence of that case was likewise jointly stipulated by that parties in Civil Case No.
1832840 and mentioned by the court a quoin its decision.41In her appellee’s brief as well, Degayo
expressly referred to Civil Case No. 16047. In particular, she stated:
"The said Civil Case No. 16047 was for recovery of ownership and possession with damages over the
property subject of the instant case filed by the herein defendants-appellants against [the tenants]"

She also referred to the decision in Civil Case No. 16047 in her appellee’s brief. She mentioned: "In Civil
Case No. 16047, the Court had ordered the deposit of 50% of the net produce of the disputed portion that
pertains to the owner, thus depriving the plaintiff of her share of not less than Php 4,000.00 a year starting
1986, to the damage of plaintiff."

There was thus no denial of the existence and the decision in Civil Case No. 16047.1âwphi1 In fact,
Degayo stated on record her full knowledge of Civil Case No. 16047 and clearly and frequently referred to
it in her pleadings, and sufficiently designated it by name, parties, cause of action and docket number
from the court a quo, to the CA and even before this Court. Under the circumstances, the CA could
certainly take judicial notice of the finality of a judgment in Civil Case No. 16047. There was no sense in
relitigating issues that have already been passed upon in a previous civil case. That was all that was done
by the CA in decreeing the dismissal. Certainly such an order is not contrary to law. As we aptly stated in
Republic v. CA,42 citing Justice Edgardo L. Paras:

"A court will take judicial notice of its own acts and records in the same case, of facts established in prior
proceedings in the same case, of the authenticity of its own records of another case between the same
parties, of the files of related cases in the same court, and of public records on file in the same court. In
addition judicial notice will be taken of the record, pleadings or judgment of a case in another court
between the same parties or involving one of the same parties, as well as of the record of another case
between different parties in the same court. " Lastly, there is another equally compelling consideration.
Degayo undoubtedly had recourse to a remedy which under the law then in force could be availed of,
which is to file a petition for certiorari with the CA. It would have served the cause of justice better, not to
mention the avoidance of needless expense on her part and the vexation to which the respondents were
subjected if she did reflect a little more on the matter.

With the conclusion that Civil Case No. 16047 constitutes resjudicata on the present case, we see no
reason to engage in a discussion on the factual issues raised by the petitioner for they have been passed
upon and considered in Civil Case No. 16047.

WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against the petitioner.

SO ORDERED.

G.R. No. 170422             March 7, 2008

SPS. EDMOND LEE and HELEN HUANG, petitioner, 

vs.
LAND BANK OF THE PHILIPPINES, respondents.

DECISION

TINGA, J.:

For our consideration is a Petition1 assailing the 18 August 2005 Decision2 of the Court of Appeals in CA-
G.R. SP No. 84249, entitled Land Bank of the Philippines v. Sps. Edmond Lee and Helen Huang.

The antecedents follow.

On 7 August 2001, petitioners received a notice of coverage informing them that their landholding 3 is
covered by the government’s compulsory acquisition scheme pursuant to the Comprehensive Agrarian
Reform Law (R.A. No. 6657). On 1 June 2001, they received from the Department of Agrarian Reform
(DAR) a copy of the notice of land valuation and acquisition which contains an offer of P315,307.874 as
compensation for 3.195 hectares of the property. Petitioners rejected the offer.

Subsequently, a summary administrative proceeding was conducted by the Department of Agrarian

Reform Adjudication Board (DARAB) to determine the valuation and compensation of the subject
property. On 27 September 2001, the DARAB issued a decision 5 declaring that the Land Bank of the
Philippines (LBP) fully complied with the criteria set forth in R.A. No. 6657 in determining the value of the
land, and ordered the LBP to pay petitioners the original amount offered by DAR. Petitioners sought
reconsideration of the decision, but their motion was denied by the Provincial Adjudicator on 6 December
2001.6

Aggrieved, petitioners filed an original petition7 for the determination of just compensation before the
Regional Trial Court of Balanga City, Bataan.8 They offered the same exhibits and transcript of the oral
testimonies and the appraisal report presented in Civil Case No. 7171, 9 a prior just compensation case
involving a parcel of land adjacent to the property subject of this case, where the special agrarian court
(SAC) pegged the value of the property at P250.00 per square meter. LBP, for its part, presented the
testimony of one Theresie P. Garcia, an agrarian affairs specialist. The SAC, citing the appraisal report
and its decision in Civil Case No. 7171, decided in favor of petitioners and ordered LBP to pay
them P7,978,750.00 as just compensation.10

LBP filed a Petition for Review11 before the Court of Appeals and argued that the SAC erred in giving
considerable weight on the appraisal report of the private appraisal firm thereby disregarding the
provisions of R.A. No. 6657 and its implementing regulations. The Court of Appeals ruled that the SAC
should have refrained from taking judicial notice of its own decision in Civil Case No. 7171 in resolving
just compensation in the present case, especially because the values rendered in the previous decision
had not yet attained a final and executory character at the time. 12 It found that the SAC made a wholesale
adoption of the valuation of the appraisal company and did not consider the other factors set forth in R.A.
No. 6657 even though the appraisal company admitted that it did not consider as applicable the CARP
valuation of the property.13

The Court of Appeals likewise found the value proposed by LBP to be extremely low considering the
disparity between the said amount and that suggested by the appraisal company. According to the Court
of Appeals, the SAC should have judiciously made an independent finding of fact and explained the legal
basis thereof.14

The Court of Appeals held that since the taking of private lands under the agrarian reform program
partakes of the nature of an expropriation proceeding, the SAC should have appointed competent and
disinterested commissioners to assist it in valuating the property in question, following Section 5, Rule 67
of the 1997 Rules of Civil Procedure.15It remanded the case to the trial court "for proper and judicious
determination of just compensation, appointing for that purpose a set of commissioners." 16

Before us, petitioners allege that it is no longer necessary to remand the case to the lower court because
the parties already had the chance before the SAC to present evidence on the valuation of the subject
landholding. Petitioners believe that the remand of the case would give LBP undue opportunity which it
already had during the proceedings a quo, and which opportunity it failed to take advantage of. 17

Petitioners also argue that the SAC may validly take judicial notice of its decision in the other just
compensation cases. They point out that they had offered in the present case both testimonial and
documentary evidence adduced in the previous case. Thus, the SAC’s decision in this case was based on
the evidence presented during trial.18
Finally, relying on the presumption of regularity, petitioners claim that the SAC had considered the criteria
set forth in the law for the determination of just compensation in computing the value of the subject
landholding. In any case, according to them, R.A. No. 6657 does not at all require the SAC to consider all
the seven factors enumerated therein in its determination of just compensation. 19

In its Comment,20 LBP argues that the Supreme Court is not a trier of facts, and is not duty-bound to
determine the veracity of the factual allegations of petitioners. 21 Anent the issue of judicial notice, LBP
posits that the reliance by the SAC and petitioners on the valuation in Civil Case No. 7171 is misplaced
because the said case is still on appeal and has not yet attained finality. 22 Even if the evidence in the
aforesaid case is presented in this case, the fact remains that the valuation reached by the SAC is not in
accord with R.A. No. 6657 as translated into a basic formula in DAR Administrative Order No. 5, series of
1998 (AO No. 5).23 In addition, LBP posits that the factors in determining just compensation, as spelled
out in Land Bank of the Philippines v. Spouses Banal24 were not observed by the SAC in the instant case
since it relied merely on the alleged selling price of the adjoining lands in fixing the just compensation of
the subject property instead of following the formula under AO No. 5. 25 LBP adds that the subject property
is being acquired by the government pursuant to its land reform program, and thus its potential for
commercial, industrial or residential uses will not affect the compensation to be paid by the State as its
value is determined at the time of the taking.26

There is no merit in the petition.

Judicial cognizance is based on considerations of expediency and convenience. It displaces evidence

since, being equivalent to proof, it fulfills the object which the evidence is intended to achieve. 27

The SAC may take judicial notice of its own decision in Civil Case No. 7171. It has been said that courts
may take judicial notice of a decision or the facts involved in another case tried by the same court if the
parties introduce the same in evidence or the court, as a matter of convenience, decides to do
so. Petitioners presented the same appraisal report offered in Civil Case No. 7171, and there seems to be
no objection on the part of LBP when they did so.

We note, however, that the SAC’s cognizance of its findings in Civil Case No. 7171 was not the sole
reason for its decision. A reading of its decision shows that the SAC considered the evidence presented
by both petitioners and LBP, i.e., the testimonies and report used in Civil Case No. 7171 proffered by
petitioners, and the testimony of LBP’s agrarian affairs specialist. The SAC evidently found the testimony
of the LBP officer unsatisfactory and LBP’s valuation improper, and thus relied on the evidence presented
by petitioners. As the Court sees it, the decision in Civil Case No. 7171 merely strengthened the case for
petitioners.

Be that as it may, the SAC’s reliance on the valuation made by the appraisal company is misplaced, since
the valuation was not arrived at using the factors required by the law and prescribed by the AO No. 5.

Section 17 of R.A. No. 6657 which enumerates the factors to be considered in determining just
compensation reads:

SECTION 17. Determination of Just Compensation.—In determining just compensation, the cost

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

These factors have already been incorporated in a basic formula by the DAR pursuant to its rule-making
power under Section 49 of R.A. No. 6657. AO No. 5 precisely filled in the details of Section 17, R. A. No.
6657 by providing a basic formula by which the factors mentioned therein may be taken into
account.29 This formula has to be considered by the SAC in tandem with all the factors referred to in
Section 17 of the law. The administrative order provides:

A. There shall be one basic formula for the valuation of lands covered by VOS or CA:

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

Where:

LV = Land Value

CNI = Capitalized Net Income

CS = Comparable Sales

MV = Market Value per Tax Declaration

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

A1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:

LV = (CNI x 0.9) + (MV x 0.1)

A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:

LV = (CS x 0.9) + (MV x 0.1)

A3. When both the CS and CNI are not present and only MV is applicable, the formula shall be:

LV = MV x 2

In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land
within the same estate under consideration or within the same barangay or municipality (in that
order) approved by LBP within one (1) year from receipt of claimfolder.

---

Where:

CNI= (AGPxSP) - CO

.12

AGP= Average Gross Production corresponding to the latest available 12 months’ gross
production immediately preceding the date of FI (field investigation)

SP= Selling Price (the average of the latest available 12 months selling prices prior to the date of
receipt of the CF (claim folder) by LBP for processing, such prices to be secured from the
Department of Agriculture (DA) and other appropriate regulatory bodies or, in their absence, from
 the Bureau of Agricultural Statistics. If possible, SP data shall be gathered for the barangay or
municipality where the property is located. In the absence thereof, SP may be secured within the
province or region.

CO = Cost of Operations

Whenever the cost of operations could not be obtained or verified, an assumed net income rate
(NIR) of 20% shall be used. Landholdings planted to coconut which are productive at the time of
FI shall continue to use the assumed NIR of 70 %. DAR and LBP shall continue to conduct joint
industry studies to establish the applicable NIR for each crop covered under CARP.

0.12 = Capitalization rate

We find that the factors required by the law and enforced by the DAR Administrative Order were not
observed by the SAC when it adopted wholeheartedly the valuation arrived at in the appraisal report.
According to the appraisal company, it "personally inspected the property, investigated local market
conditions, and have given consideration to the extent, character and utility of the property; sales and
holding prices of similar land; and highest and best use of the property." 30 The value of the land was
arrived at using the market data approach, which bases the value of the land on sales and listings of
comparable property registered within the vicinity.31 In fact, as noted by the Court of Appeals, a
representative of the company admitted that it did not consider the CARP valuation to be applicable. 32

This is not to say that the Court favors the valuation given by LBP. While it presented a land valuation
worksheet33and a claims valuation and processing form, 34 which both value the land at P315, 307.87, we
find that LBP’s valuation is too low vis-á-vis the value suggested by the appraisal company. Moreover, we
observe that the valuation was not arrived at based on all the factors provided in the law. As admitted by
its agrarian affairs specialist, she had not gone over the property before she made the valuation, nor was
she aware of adjacent properties/structures.35 The LBP was not thorough in its valuation of the subject
property.

All told, we find that the remand of the case is in order to better determine the proper valuation of the
subject property.

We clarify, however, that we are not in accord with the declaration of the Court of Appeals on the
appointment of commissioners in the instant case. According to the appellate court:

x x x Consequently, when the Regional Trial Court acting as a Special Agrarian Court determines
just compensation, it is mandated to apply the Rules of Court. 36 The rules on expropriation, on the
other hand, specifically under Section 5 of Rule 67 of the 1997 Rules on Civil Procedure provides
to wit:

SEC.5. Ascertainment of compensation.— Upon the rendition of the order of

expropriation, the court shall appoint not more than three (3) competent and disinterested
persons as commissioners to ascertain and report to the court the just compensation for
the property sought to be taken. The order of appointment shall designate the time and
place of the first session of the hearing to be held by the commissioners and specify the
time within which their report is to be filed with the court.

xxx

Under the afore-quoted provision, it is clear that the SAC should have appointed
competent and disinterested commissioners to assist it in valuating the property in
question. (Emphasis supplied) x x x.37
The Court of Appeals seems to imply that the appointment of commissioners is mandatory in agrarian
reform cases. We do not agree. While the Rules of Court provisions apply to proceedings in special
agrarian courts,38 it is clear that unlike in expropriation proceedings under the Rules of Court the
appointment of a commissioner or commissioners is discretionary on the part of the court or upon the
instance of one of the parties. And when the court does resort to the commissioners-type of appraisal, it is
not circumscribed to appoint three commissioners, unlike the modality under Rule 67. Section 58 of R.A.
No. 6657 provides:

Sec. 58. Appointment of Commissioners.—The Special Agrarian Courts, upon their own initiative
or at the instance of any of the parties, may appoint one or more commissioners to examine,
investigate and ascertain facts relevant to the dispute, including the valuation of properties, and to
file a written report thereof with the court.

With the remand of the case, it is now up to the SAC, or to the parties, to determine if there is a need to
avail of commissioners to arrive at the proper valuation of the subject land.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with
MODIFICATION as above indicated. The case is REMANDED to the Regional Trial Court of Balanga,
Bataan acting as a Special Agrarian Court for the determination of just compensation in accordance with
Section 17 of Republic Act No. 6657.

SO ORDERED.

A.M. No. RTJ-92-876 September 19, 1994

STATE PROSECUTORS, complainants, 
vs.
JUDGE MANUEL T. MURO, Regional Trial Court, Branch 54, Manila, respondent.

PER CURIAM: 

In assaying the requisite norms for qualifications and eminence of a magistrate, legal authorities place a
premium on how he has complied with his continuing duty to know the law. A quality thus considered
essential to the judicial character is that of "a man of learning who spends tirelessly the weary hours after
midnight acquainting himself with the great body of traditions and the learning of the law; is profoundly
learned in all the learning of the law; and knows how to use that learning." 1

Obviously, it is the primary duty of a judge, which he owes to the public and to the legal profession, to
know the very law he is supposed to apply to a given controversy. He is called upon to exhibit more than
just a cursory acquaintance with the statutes and procedural rules. Party litigants will have great faith in
the administration of justice if judges cannot justly be accused of apparent deficiency in their grasp of the
legal principles. For, service in the judiciary means a continuous study and research on the law from
beginning to end. 2

In a letter-complaint 3 dated August 19, 1992, respondent Judge Manuel T. Muro of the Regional Trial
Court (RTC) of Manila, Branch 54, was charged by State Prosecutors Nilo C. Mariano, George C. Dee
and Paterno V. Tac-an with ignorance of the law, grave misconduct and violations of Rules 2.01, 3.01 and
3.02 of the Code of Judicial Conduct, committed as follows:
1. That on August 13, 1992, respondent judge issued an Order dismissing eleven (11)
cases (docketed as Crim. Cases Nos. 92-101959 to 92- 101969, inclusive) filed by the
undersigned complainant prosecutors (members of the DOJ Panel of Prosecutors)
against the accused Mrs. Imelda Romualdez Marcos, for Violation of Central Bank
Foreign Exchange Restrictions, as consolidated in CB Circular No. 960, in relation to the
penal provisions of Sec. 34 of R.A. 265, as amended, . . .;

2. That respondent Judge issued his Order solely on the basis of newspaper reports
(August 11, 1992 issues of the Philippine Daily Inquirer and the Daily Globe) concerning
the announcement on August 10, 1992 by the President of the Philippines of the lifting by
the government of all foreign exchange restrictions and the arrival at such decision by the
Monetary Board as per statement of Central Bank Governor Jose Cuisia;

3. That claiming that the reported announcement of the Executive Department on the
lifting of foreign exchange restrictions by two newspapers which are reputable and of
national circulation had the effect of repealing Central Bank Circular No. 960, as allegedly
supported by Supreme Court decisions . . ., the Court contended that it was deprived of
jurisdiction, and, therefore, motu, prop(r)io had to dismiss all the eleven cases
aforementioned "for not to do so opens this Court to charges of trying cases over which it
has no more jurisdiction;"

4. That in dismissing aforecited cases on August 13, 1992 on the basis of a Central Bank
Circular or Monetary Board Resolution which as of date hereof, has not even been
officially issued, and basing his Order/decision on a mere newspaper account of the
advance announcement made by the President of the said fact of lifting or liberalizing
foreign exchange controls, respondent judge acted prematurely and in indecent haste, as
he had no way of determining the full intent of the new CB Circular or Monetary Board
resolution, and whether the same provided for exception, as in the case of persons who
had pending criminal cases before the courts for violations of Central Bank Circulars
and/or regulations previously issued on the matter;

5. That respondent Judge's arrogant and cavalier posture in taking judicial notice
purportedly as a matter of public knowledge a mere newspaper account that the
President had announced the lifting of foreign exchange restrictions as basis for his
assailed order of dismissal is highly irregular, erroneous and misplaced. For the
respondent judge to take judicial notice thereof even before it is officially released by the
Central Bank and its full text published as required by law to be effective shows his
precipitate action in utter disregard of the fundamental precept of due process which the
People is also entitled to and exposes his gross ignorance of the law, thereby tarnishing
public confidence in the integrity of the judiciary. How can the Honorable Judge take
judicial notice of something which has not yet come into force and the contents, shape
and tenor of which have not yet been published and ascertained to be the basis of judicial
action? The Honorable Judge had miserably failed to "endeavor diligently to ascertain the
facts" in the case at bar contrary to Rule 3.02 of the Code of Judicial Conduct constituting
Grave Misconduct;

6. That respondent Judge did not even ha(ve) the prudence of requiring first the comment
of the prosecution on the effect of aforesaid Central Bank Circular/Monetary Board
resolution on the pending cases before dismissing the same, thereby denying the
Government of its right to due process;

7. That the lightning speed with which respondent Judge acted to dismiss the cases may
be gleaned from the fact that such precipitate action was undertaken despite already
scheduled continuation of trial dates set in the order of the court (the prosecution having
started presenting its evidence . . .) dated August 11, 1992 to wit: August 31, September
 3, 10, 21, & 23 and October 1, 1992, all at 9:30 o'clock in the morning, in brazen
disregard of all notions of fair play, thereby depriving the Government of its right to be
heard, and clearly exposing his bias and partiality; and

8. That, in fact, the motive of respondent Judge in dismissing the case without even
waiting for a motion to quash filed by the counsel for accused has even placed his
dismissal Order suspect.

Pursuant to a resolution of this Court dated September 8, 1992, respondent judge filed his
comment, 4 contending, inter alia, that there was no need to await publication of the Central Bank (CB)
circular repealing the existing law on foreign exchange controls for the simple reason that the public
announcement made by the President in several newspapers of general circulation lifting foreign
exchange controls was total, absolute, without qualification, and was immediately effective; that having
acted only on the basis of such announcement, he cannot be blamed for relying on the erroneous
statement of the President that the new foreign exchange rules rendered moot and academic the cases
filed against Mrs. Marcos, and which was corrected only on August 17, 1992 but published in the
newspapers on August 18, 1992, and only after respondent judge had issued his order of dismissal dated
August 13, 1992; that the President was ill-advised by his advisers and, instead of rescuing the Chief
Executive from embarrassment by assuming responsibility for errors in the latter's announcement, they
chose to toss the blame for the consequence of their failures to respondent judge who merely acted on
the basis of the announcements of the President which had become of public knowledge; that the "saving
clause" under CB Circular No. 1353 specifically refers only to pending actions or investigations involving
violations of CB Circular No. 1318, whereas the eleven cases dismissed involved charges for violations of
CB Circular No. 960, hence the accused cannot be tried and convicted under a law different from that
under which she was charged; that assuming that respondent judge erred in issuing the order of
dismissal, the proper remedy should have been an appeal therefrom but definitely not an administrative
complaint for his dismissal; that a mistake committed by a judge should not necessarily be imputed as
ignorance of the law; and that a "court can reverse or modify a doctrine but it does not show ignorance of
the justices or judges whose decisions were reversed or modified" because "even doctrines initiated by
the Supreme Court are later reversed, so how much more for the lower courts?"

He further argued that no hearing was necessary since the prosecution had nothing to explain because,
as he theorized, "What explanation could have been given? That the President was talking 'through his
hat' (to use a colloquialism) and should not be believed? That I should wait for the publication (as now
alleged by complainants), of a still then non-existent CB circular? . . . As it turned out, CB Circular No.
3153 (sic) does not affect my dismissal order because the said circular's so-called saving clause does not
refer to CB Circular 960 under which the charges in the dismissed cases were based;" that it was
discretionary on him to take judicial notice of the facts which are of public knowledge, pursuant to Section
2 of Rule 129; that the contention of complainants that he acted prematurely and in indecent haste for
basing his order of dismissal on a mere newspaper account is contrary to the wordings of the newspaper
report wherein the President announced the lifting of controls as an accomplished fact, not as an intention
to be effected in the future, because of the use of the present perfect tense or past tense "has lifted," not
that he "intends to lift," foreign exchange controls.

Finally, respondent judge asseverates that complainants who are officers of the Department of Justice,
violated Section 6, Rule 140 of the Rules of Court which provides that "proceedings against judges of first
instance shall be private and confidential" when they caused to be published in the newspapers the filing
of the present administrative case against him; and he emphasizes the fact that he had to immediately
resolve a simple and pure legal matter in consonance with the admonition of the Supreme Court for
speedy disposition of cases.

In their reply 5 and supplemental reply, 6 complainants aver that although the saving clause under Section
16 of CB Circular No. 1353 made specific reference to CB Circular No. 1318, it will be noted that Section
111 of Circular No. 1318, which contains a saving clause substantially similar to that of the new circular,
in turn refers to and includes Circular No. 960. Hence, whether under Circular No. 1318 or Circular No.
1353, pending cases involving violations of Circular No. 960 are excepted from the coverage thereof.
Further, it is alleged that the precipitate dismissal of the eleven cases, without according the prosecution
the opportunity to file a motion to quash or a comment, or even to show cause why the cases against
accused Imelda R. Marcos should not be dismissed, is clearly reflective of respondent's partiality and bad
faith. In effect, respondent judge acted as if he were the advocate of the accused.

On December 9, 1993, this Court issued a resolution referring the complaint to the Office of the Court
Administrator for evaluation, report and recommendation, pursuant to Section 7, Rule 140 of the Rules of
Court, as revised, there being no factual issues involved. The corresponding report and
recommendation, 7 dated February 14, 1994, was submitted by Deputy Court Administrator Juanito A.
Bernad, with the approval of Court Administrator Ernani Cruz-Paño.

The questioned order 8 of respondent judge reads as follows:

These eleven (11) cases are for Violation of Central Bank Foreign Exchange Restrictions
as consolidated in CB Circular No. 960 in relation to the penal provision of Sec. 34 of
R.A. 265, as amended.

The accused Mrs. Imelda R. Marcos pleaded not guilty to all these cases; apparently the
other accused in some of these cases, Roberto S. Benedicto, was not arrested and
therefore the Court did not acquire jurisdiction over his person; trial was commenced as
against Mrs. Marcos.

His Excellency, the President of the Philippines, announced on August 10, 1992 that the
government has lifted all foreign exchange restrictions and it is also reported that Central
Bank Governor Jose Cuisia said that the Monetary Board arrived at such decision (issue
of the Philippine Daily Inquirer, August 11, 1992 and issue of the Daily Globe of the same
date). The Court has to give full confidence and credit to the reported announcement of
the Executive Department, specially from the highest official of that department; the
Courts are charged with judicial notice of matters which are of public knowledge, without
introduction of proof, the announcement published in at least the two newspapers cited
above which are reputable and of national circulation.

Per several cases decided by the Supreme Court (People vs. Alcaras, 56 Phil. 520,
People vs. Francisco, 56 Phil. 572, People vs. Pastor, 77 Phil. 1000, People vs. Crisanto
Tamayo, 61 Phil. 225), among others, it was held that the repeal of a penal law without
re-enactment extinguishes the right to prosecute or punish the offense committed under
the old law and if the law repealing the prior penal law fails to penalize the acts which
constituted the offense defined and penalized in the repealed law, the repealed law
carries with it the deprivation of the courts of jurisdiction to try, convict and sentence
persons charged with violations of the old law prior to its repeal. Under the aforecited
decisions this doctrine applies to special laws and not only to the crimes punishable in
the Revised Penal Code, such as the Import Control Law. The Central Bank Circular No.
960 under which the accused Mrs. Marcos is charged is considered as a penal law
because violation thereof is penalized with specific reference to the provision of Section
34 of Republic Act 265, which penalizes violations of Central Bank Circular No. 960,
produces the effect cited in the Supreme Court decisions and since according to the
decisions that repeal deprives the Court of jurisdiction, this Court motu proprio dismisses
all the eleven (11) cases as a forestated in the caption, for not to do so opens this Court
to charges of trying cases over which it has no more jurisdiction.

This order was subsequently assailed in a petition for certiorari filed with the Court of Appeals, entitled
"People of the Philippines vs. Hon. Manuel T. Muro, Judge, RTC of Manila, Br. 54 and Imelda R. Marcos,"
docketed as CA-G.R. SP No. 29349. When required to file her comment, private respondent Marcos
failed to file any. Likewise, after the appellate court gave due course to the petition, private respondent
was ordered, but again failed despite notice, to file an answer to the petition and to show cause why no
writ of preliminary injunction should issue. Eventually, on April 29, 1993, the Court of Appeals rendered a
decision 9 setting aside the order of August 13, 1992, and reinstating Criminal Cases Nos. 92-101959 to
92-101969.

In finding that respondent judge acted in excess of jurisdiction and with grave abuse of discretion in
issuing the order of dismissal, the appellate court held that:

The order was issued motu proprio, i.e., without any motion to dismiss filed by counsel for
the accused, without giving an opportunity for the prosecution to be heard, and solely on
the basis of newspaper reports announcing that the President has lifted all foreign
exchange restrictions.

The newspaper report is not the publication required by law in order that the enactment
can become effective and binding. Laws take effect after fifteen days following the
completion of their publication in the Official Gazette or in a newspaper of general
circulation unless it is otherwise provided (Section 1, Executive Order No. 200). The full
text of CB Circular 1353, series of 1992, entitled "Further Liberalizing Foreign Exchange
Regulation" was published in the August 27, 1992 issue of the Manila Chronicle, the
Philippine Star and the Manila Bulletin. Per certification of the CB Corporate Affairs
Office, CB Circular No. 1353 took effect on September 2 . . . .

Considering that respondent judge admittedly had not seen the official text of CB Circular
No. 1353, he was in no position to rule judiciously on whether CB Circular No. 960, under
which the accused Mrs. Marcos is charged, was already repealed by CB Circular No.
1353. . . .

xxx xxx xxx

A cursory reading of the . . . provision would have readily shown that the repeal of the
regulations on non-trade foreign exchange transactions is not absolute, as there is a
provision that with respect to violations of former regulations that are the subject of
pending actions or investigations, they shall be governed by the regulations existing at
the time the cause of action (arose). Thus his conclusion that he has lost jurisdiction over
the criminal cases is precipitate and hasty. Had he awaited the filing of a motion to
dismiss by the accused, and given opportunity for the prosecution to comment/oppose
the same, his resolution would have been the result of deliberation, not speculation.

I. The doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to take
judicial notice is to be exercised by courts with caution; care must be taken that the requisite notoriety
exists; and every reasonable doubt on the subject should be promptly resolved in the negative. 10

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of
common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. 11 The provincial
guide in determining what facts may be assumed to be judicially known is that of notoriety. 12 Hence, it
can be said that judicial notice is limited to facts evidenced by public records and facts of general
notoriety. 13

To say that a court will take judicial notice of a fact is merely another way of saying that the usual form of
evidence will be dispensed with if knowledge of the fact can be otherwise acquired. 14 This is because the
court assumes that the matter is so notorious that it will not be disputed. 15 But judicial notice is not judicial
knowledge. The mere personal knowledge of the judge is not the judicial knowledge of the court, and he
is not authorized to make his individual knowledge of a fact, not generally or professionally known, the
basis of his action. Judicial cognizance is taken only of those matters which are "commonly" known. 16

Things of "common knowledge," of which courts take judicial notice, may be matters coming to the
knowledge of men generally in the course of the ordinary experiences of life, or they may be matters
which are generally accepted by mankind as true and are capable of ready and unquestioned
demonstration. 17 Thus, facts which are universally known, and which may be found in encyclopedias,
dictionaries or other publications, are judicially noticed, provided they are of such universal notoriety and
so generally understood that they may be regarded as forming part of the common knowledge of every
person. 18

Respondent judge, in the guise of exercising discretion and on the basis of a mere newspaper account
which is sometimes even referred to as hearsay evidence twice removed, took judicial notice of the
supposed lifting of foreign exchange controls, a matter which was not and cannot be considered of
common knowledge or of general notoriety. Worse, he took cognizance of an administrative regulation
which was not yet in force when the order of dismissal was issued. Jurisprudence dictates that judicial
notice cannot be taken of a statute before it becomes effective. 19 The reason is simple. A law which is not
yet in force and hence, still inexistent, cannot be of common knowledge capable of ready and
unquestionable demonstration, which is one of the requirements before a court can take judicial notice of
a fact.

Evidently, it was impossible for respondent judge, and it was definitely not proper for him, to have taken
cognizance of CB Circular No. 1353, when the same was not yet in force at the time the improvident order
of dismissal was issued.

II. Central Bank Circular No. 1353, which took effect on September 1, 1992, further liberalized the foreign
exchange regulations on receipts and disbursements of residents arising from non-trade and trade
transactions. Section 16 thereof provides for a saving clause, thus:

Sec. 16. Final Provisions of CB Circular No. 1318. - All the provisions in Chapter X of CB
Circular No. 1318 insofar as they are not inconsistent with, or contrary to the provisions of
this Circular, shall remain in full force and effect: Provided, however, that any regulation
on non-trade foreign exchange transactions which has been repealed, amended or
modified by this Circular, violations of which are the subject of pending actions or
investigations, shall not be considered repealed insofar as such pending actions or
investigations are concerned, it being understood that as to such pending actions or
investigations, the regulations existing at the time the cause of action accrued shall
govern.

Respondent judge contends that the saving clause refers only to the provisions of Circular No. 1318,
whereas the eleven criminal cases he dismissed involve a violation of CB Circular No. 960. Hence, he
insists, Circular No. 960 is deemed repealed by the new circular and since the former is not covered by
the saving clause in the latter, there is no more basis for the charges involved in the criminal cases which
therefore warrant a dismissal of the same. The contention is patently unmeritorious.

Firstly, the second part of the saving clause in Circular No. 1353 explicitly provides that "any  regulation on
non-trade foreign transactions which has been repealed, amended or modified by this Circular, violations
of which are the subject of pending actions or investigations,  shall not be considered repealed insofar as
such pending actions or investigations are concerned, it being understood that as to such pending actions
or investigations, the regulations existing at the time the cause of action accrued shall govern." The terms
of the circular are clear and unambiguous and leave no room for interpretation. In the case at bar, the
accused in the eleven cases had already been arraigned, had pleaded not guilty to the charges of
violations of Circular No. 960, and said cases had already been set for trial when Circular No. 1353 took
effect. Consequently, the trial court was and is supposed to proceed with the hearing of the cases in spite
of the existence of Circular No. 1353.

Secondly, had respondent judge only bothered to read a little more carefully the texts of the circulars
involved, he would have readily perceived and known that Circular No. 1318 also contains a substantially
similar saving clause as that found in Circular No. 1353, since Section 111 of the former provides:

Sec. 111. Repealing clause. - All existing provisions of Circulars 365, 960 and 1028,
including amendments thereto, with the exception of the second paragraph of Section 68
of Circular 1028, as well as all other existing Central Bank rules and regulations or parts
thereof, which are inconsistent with or contrary to the provisions of this Circular, are
hereby repealed or modified accordingly: Provided, however, that regulations, violations
of which are the subject of pending actions or investigations, shall be considered
repealed insofar as such pending actions or investigations are concerned, it being
understood that as to such pending actions or investigations, the regulations existing at
the time the cause of action accrued shall govern.

It unequivocally appears from the section above quoted that although Circular No. 1318 repealed Circular
No. 960, the former specifically excepted from its purview all cases covered by the old regulations which
were then pending at the time of the passage of the new regulations. Thus, any reference made to
Circular No. 1318 necessarily involves and affects Circular No. 960.

III. It has been said that next in importance to the duty of rendering a righteous judgment is that of doing it
in such a manner as will beget no suspicion of the fairness and integrity of the judge. 20 This means that a
judge should not only render a just, correct and impartial decision but should do so in such a manner as
to be free from any suspicion as to its fairness and impartiality and as to his integrity. While a judge
should possess proficiency in law in order that he can competently construe and enforce the law, it is
more important that he should act and behave in such a manner that the parties before him should have
confidence in his impartiality. Thus, it is not enough that he decides cases without bias and favoritism. Nor
is it sufficient that he in fact rids himself of prepossessions. His actuations should moreover inspire that
belief. Like Caesar's wife, a judge must not only be pure but beyond suspicion. 21

Moreover, it has always heretofore been the rule that in disposing of controverted cases, judges should
show their full understanding of the case, avoid the suspicion of arbitrary conclusion, promote confidence
in their intellectual integrity and contribute useful precedents to the growth of the law. 22 A judge should be
mindful that his duty is the application of general law to particular instances, that ours is a government of
laws and not of men, and that he violates his duty as a minister of justice under such a system if he seeks
to do what he may personally consider substantial justice in a particular case and disregards the general
law as he knows it to be binding on him. Such action may have detrimental consequences beyond the
immediate controversy. He should administer his office with due regard to the integrity of the system of
the law itself, remembering that he is not a depository of arbitrary power, but a judge under the sanction
of the law. 23 These are immutable principles that go into the very essence of the task of dispensing
justice and we see no reason why they should not be duly considered in the present case.

The assertion of respondent judge that there was no need to await publication of Circular No. 1353 for the
reason that the public announcement made by the President in several newspapers of general circulation
lifting foreign exchange controls is total, absolute, without qualification, and immediately effective, is
beyond comprehension. As a judge of the Regional Trial Court of Manila, respondent is supposed to be
well-versed in the elementary legal mandates on the publication of laws before they take effect. It is
inconceivable that respondent should insist on an altogether different and illogical interpretation of an
established and well-entrenched rule if only to suit his own personal opinion and, as it were, to defend his
indefensible action. It was not for him to indulge or even to give the appearance of catering to the at-times
human failing of yielding to first impressions. 24 He having done so, in the face of the foregoing premises,
this Court is hard put to believe that he indeed acted in good faith.
IV. This is not a simple case of a misapplication or erroneous interpretation of the law. The very act of
respondent judge in altogether dismissing sua sponte  the eleven criminal cases without even a motion to
quash having been filed by the accused, and without at least giving the prosecution the basic opportunity
to be heard on the matter by way of a written comment or on oral argument, is not only a blatant denial of
elementary due process to the Government but is palpably indicative of bad faith and partiality.

The avowed desire of respondent judge to speedily dispose of the cases as early as possible is no
license for abuse of judicial power and discretion, 25 nor does such professed objective, even if true, justify
a deprivation of the prosecution's right to be heard and a violation of its right to due process of
law. 26

The lightning speed, to borrow the words of complainants, with which respondent judge resolved to
dismiss the cases without the benefit of a hearing and without reasonable notice to the prosecution
inevitably opened him to suspicion of having acted out of partiality for the accused. Regardless of how
carefully he may have evaluated changes in the factual situation and legal standing of the cases, as a
result of the newspaper report, the fact remains that he gave the prosecution no chance whatsoever to
show or prove that it had strong evidence of the guilt of the accused. To repeat, he thereby effectively
deprived the prosecution of its right to due process. 27 More importantly, notwithstanding the fact that
respondent was not sure of the effects and implications of the President's announcement, as by his own
admission he was in doubt whether or not he should dismiss the cases, 28 he nonetheless deliberately
refrained from requiring the prosecution to comment thereon. In a puerile defense of his action,
respondent judge can but rhetorically ask: "What explanation could have been given? That the President
was talking 'through his hat' and should not be believed? That I should wait for the publication of a still
then non- existent CB Circular?" The pretended cogency of this ratiocination cannot stand even the
minutest legal scrutiny.

In order that bias may not be imputed to a judge, he should have the patience and circumspection to give
the opposing party a chance to present his evidence even if he thinks that the oppositor's proofs might not
be adequate to overthrow the case for the other party. A display of petulance and impatience in the
conduct of the trial is a norm of conduct which is inconsistent with the "cold neutrality of an impartial
judge." 29 At the very least, respondent judge acted injudiciously and with unjustified haste in the outright
dismissal of the eleven cases, and thereby rendered his actuation highly dubious.

V. It bears stressing that the questioned order of respondent judge could have seriously and substantially
affected the rights of the prosecution had the accused invoked the defense of double jeopardy,
considering that the dismissal was ordered after arraignment and without the consent of said accused.
This could have spawned legal complications and inevitable delay in the criminal proceedings, were it not
for the holding of the Court of Appeals that respondent judge acted with grave abuse of discretion
amounting to lack of jurisdiction. This saved the day for the People since in the absence of jurisdiction,
double jeopardy will not set in. To stress this point, and as a caveat to trial courts against falling into the
same judicial error, we reiterate what we have heretofore declared:

It is settled doctrine that double jeopardy cannot be invoked against this Court's setting
aside of the trial court's judgment of dismissal or acquittal where the prosecution which
represents the sovereign people in criminal cases is denied due process. . . . .

Where the prosecution is deprived of a fair opportunity to prosecute and prove its case,
its right to due process is thereby violated.

The cardinal precept is that where there is a violation of basic constitutional rights, courts
are ousted of their jurisdiction. Thus, the violation of the State's right to due process
raises a serious jurisdictional issue . . . which cannot be glossed over or disregarded at
will. Where the denial of the fundamental right of due process is apparent, a decision
rendered in disregard of that right is void for lack of jurisdiction . . . . 30
It is also significant that accused Marcos, despite due notice, never submitted either her comment on or
an answer to the petition for certiorari as required by the Court of Appeals, nor was double jeopardy
invoked in her defense. This serves to further underscore the fact that the order of dismissal was clearly
unjustified and erroneous. Furthermore, considering that the accused is a prominent public figure with a
record of influence and power, it is not easy to allay public skepticism and suspicions on how said
dismissal order came to be, to the consequent although undeserved discredit of the entire judiciary.

VI. To hold a judge liable for rendering a manifestly unjust order through inexcusable negligence or
ignorance, it must be clearly shown that although he has acted without malice, he failed to observe in the
performance of his duty that diligence, prudence and care which the law is entitled to exact in the
rendering of any public service. Negligence and ignorance are inexcusable if they imply a manifest
injustice which cannot be explained by a reasonable interpretation, and even though there is a
misunderstanding or error of the law applied, it nevertheless results logically and reasonably, and in a
very clear and indisputable manner, in the notorious violation of the legal precept. 31

In the present case, a cursory perusal of the comment filed by respondent judge reveals that no
substantial argument has been advanced in plausible justification of his act. He utterly failed to show any
legal, factual, or even equitable justification for the dismissal of the eleven criminal cases. The
explanation given is no explanation at all. The strained and fallacious submissions therein do not speak
well of respondent and cannot but further depreciate his probity as a judge. On this point, it is best that
pertinent unedited excerpts from his comment 32 be quoted by way of graphic illustration and emphasis:

On the alleged ignorance of the law imputed to me, it is said that I issued the Order
dismissing the eleven (11) cases against Mrs. Imelda R. Marcos on the basis of
newspaper reports referred to in paragraph 2 of the letter complaint without awaiting the
official publication of the Central Bank Circular. Ordinarily a Central Bank
Circular/Resolution must be published in the Official Gazette or in a newspaper of
general circulation, but the lifting of "all foreign exchange controls" was announced by the
President of the Philippines WITHOUT QUALIFICATIONS; as published in the Daily
Globe, August 11, 1992" the government has lifted ALL foreign exchange controls," and
in the words of the Philippine Daily Inquirer report of the same date "The government
yesterday LIFTED the LAST remaining restrictions on foreign exchange transactions, . . ."
(emphasis in both quotations supplied) not only the President made the announcement
but also the Central Bank Governor Jose Cuisia joined in the announcement by saying
that "the Monetary Board arrived at the decision after noting how the "partial
liberalization" initiated early this year worked."

Therefore, because of the ABSOLUTE lifting of ALL restrictions on foreign exchange

transactions, there was no need to await the publication of the repealing circular of the
Central Bank. The purpose of requiring publication of laws and administrative rules
affecting the public is to inform the latter as to how they will conduct their affairs and how
they will conform to the laws or the rules. In this particular case, with the total lifting of the
controls, there is no need to await publication. It would have been different if the circular
that in effect repealed Central Bank Circular No. 960, under which the accused was
charged in the cases dismissed by me, had provided for penalties and/or modified the
provisions of said Circular No. 960.

The Complainants state that the lifting of controls was not yet in force when I dismissed
the cases but it should be noted that in the report of the two (2) newspapers aforequoted,
the President's announcement of the lifting of controls was stated in the present perfect
tense (Globe) or past tense (Inquirer). In other words, it has already been lifted; the
announcement did not say that the government INTENDS to lift all foreign exchange
restrictions but instead says that the government "has LIFTED all foreign exchange
controls," and in the other newspaper cited above, that "The government yesterday lifted
 the last remaining restrictions on foreign exchange transactions". The lifting of the last
remaining exchange regulations effectively cancelled or repealed Circular No. 960.

The President, who is the Chief Executive, publicly announced the lifting of all foreign
exchange regulations. The President has within his control directly or indirectly the
Central Bank of the Philippines, the Secretary of Finance being the Chairman of the
Monetary Board which decides the policies of the Central Bank.

No official bothered to correct or qualify the President's announcement of August 10,

published the following day, nor made an announcement that the lifting of the controls do
not apply to cases already pending, not until August 17 (the fourth day after my Order,
and the third day after report of said order was published) and after the President said on
August 17, reported in the INQUIRER's issue of August 18, 1992, that the "new foreign
exchange rules have nullified government cases against Imelda R. Marcos, telling
reporters that the charges against the widow of former President Marcos "have become
moot and academic" because of new ruling(s) which allow free flow of currency in and out
of the country" (Note, parenthetically, the reference to "new rules" not to "rules still to be
drafted"). The INQUIRER report continues: "A few hours later, presidential spokeswoman
Annabelle Abaya said, RAMOS (sic) had "corrected himself'." "He had been belatedly
advised by the Central Bank Governor Jose Cuisia and Justice Secretary Franklin Drilon
that the Monetary Board Regulation excluded from its coverage all criminal cases
pending in court and such a position shall stand legal scrutiny', Mrs. Abaya, said."

I will elaborate on two points:

1. If the President was wrong in making the August 10 announcement (published in

August 11, 1992, newspapers) and in the August 17 announcement, SUPRA, and thus I
should have relied on the Presidential announcements, and there is basis to conclude
that the President was at the very least ILL-SERVED by his financial and legal advisers,
because no one bothered to advise the President to correct his announcements, not until
August 17, 1992, a few hours after the President had made another announcement as to
the charges against Imelda Marcos having been rendered moot and academic. The
President has a lot of work to do, and is not, to my knowledge, a financier, economist,
banker or lawyer. It therefore behooved his subalterns to give him timely (not "belated")
advice, and brief him on matters of immediate and far-reaching concerns (such as the
lifting of foreign exchange controls, designed, among others to encourage the entry of
foreign investments). Instead of rescuing the Chief Executive from embarrassment by
assuming responsibility for errors in the latter's announcement, these advisers have
chosen to toss the blame for the consequence of their failing to me, who only acted on
the basis of announcements of their Chief, which had become of public knowledge.

x x x           x x x          x x x

The Court strongly feels that it has every right to assume and expect that respondent judge is possessed
with more than ordinary credentials and qualifications to merit his appointment as a presiding judge in the
Regional Trial Court of the National Capital Judicial Region, stationed in the City of Manila itself. It is,
accordingly, disheartening and regrettable to note the nature of the arguments and the kind of logic that
respondent judge would want to impose on this Court notwithstanding the manifest lack of cogency
thereof. This calls to mind similar scenarios and how this Court reacted thereto.

In one case, an RTC Judge was administratively charged for acquitting the accused of a violation of CB
Circular No. 960 despite the fact that the accused was apprehended with US$355,349.00 while boarding
a plane for Hongkong, erroneously ruling that the State must first prove criminal intent to violate the law
and benefit from the illegal act, and further ordering the return of US$3,000.00 out of the total amount
seized, on the mistaken interpretation that the CB circular exempts such amount from seizure.
Respondent judge therein was ordered dismissed from the government service for gross incompetence
and ignorance of the law. 33

Subsequently, the Court dismissed another RTC judge, with forfeiture of retirement benefits, for gross
ignorance of the law and for knowingly rendering an unjust order or judgment when he granted bail to an
accused charged with raping an 11-year old girl, despite the contrary recommendation of the investigating
judge, and thereafter granted the motion to dismiss the case allegedly executed by the complainant. 34

Similarly, an RTC judge who was described by this Court as one "who is ignorant of fairly elementary and
quite familiar legal principles and administrative regulations, has a marked penchant for applying
unorthodox, even strange theories and concepts in the adjudication of controversies, exhibits indifference
to and even disdain for due process and the rule of law, applies the law whimsically, capriciously and
oppressively, and displays bias and impartiality," was dismissed from the service with forfeiture of all
retirement benefits and with prejudice to reinstatement in any branch of the government or any of its
agencies or instrumentalities. 35

Still in another administrative case, an RTJ judge was also dismissed by this Court for gross ignorance of
the law after she ordered, in a probate proceeding, the cancellation of the certificates of title issued in the
name of the complainant, without affording due process to the latter and other interested parties. 36

Only recently, an RTC judge who had been reinstated in the service was dismissed after he acquitted all
the accused in four criminal cases for illegal possession of firearms, on the ground that there was no
proof of malice or deliberate intent on the part of the accused to violate the law. The Court found him
guilty of gross ignorance of the law, his error of judgment being almost deliberate and tantamount to
knowingly rendering an incorrect and unjust judgment. 37

ACCORDINGLY, on the foregoing premises and considerations, the Court finds respondent Judge
Manuel T. Muro guilty of gross ignorance of the law. He is hereby DISMISSED from the service, such
dismissal to carry with it cancellation of eligibility, forfeiture of leave credits and retirement benefits, and
disqualification from reemployment in the government service. 38

Respondent is hereby ordered to CEASE and DESIST immediately from rendering any judgment or order,
or continuing any judicial action or proceeding whatsoever, effective upon receipt of this decision.

SO ORDERED.

G.R. No. 177809               October 16, 2009

SPOUSES OMAR and MOSHIERA LATIP, Petitioners, 

vs.
ROSALIE PALAÑA CHUA, Respondent.

DECISION

NACHURA, J.:

Challenged in this petition for review on certiorari is the Court of Appeals (CA) Decision in CA-G.R. SP
No. 89300:1(1) reversing the decision of the Regional Trial Court (RTC), Branch 274, Parañaque City in
Civil Case No. 04-0052;2 and (2) reinstating and affirming in toto the decision of the Metropolitan Trial
Court (MeTC), Branch 78, of the same city in Civil Case No. 2001-315. 3

First, we sift through the varying facts found by the different lower courts.
The facts parleyed by the MeTC show that respondent Rosalie Chua (Rosalie) is the owner of Roferxane
Building, a commercial building, located at No. 158 Quirino Avenue corner Redemptorist Road, Barangay
Baclaran, Parañaque City. 

On July 6, 2001, Rosalie filed a complaint for unlawful detainer plus damages against petitioners,
Spouses Omar and Moshiera Latip (Spouses Latip). Rosalie attached to the complaint a contract of lease
over two cubicles in Roferxane Bldg., signed by Rosalie, as lessor, and by Spouses Latip, as lessees
thereof.1 a vv p h ! 1

The contract of lease reads:

CONTRACT OF LEASE

KNOW ALL MEN BY THESE PRESENTS:

This Contract of Lease is entered into by and between:

ROSALIE PALAÑA CHUA, Filipino, of legal age, married with office at 2/F JOFERXAN Building, F.B.
Harrison St., Brgy. Baclaran, Parañaque City, and hereinafter referred to as the LESSOR,

- and -

OMAR LATIEF marriage to MOSHIERA LATIEF, also both Filipino, of legal age with address at 24
Anahan St. RGV Homes Parañaque City, and hereinafter referred to as the LESSEES.

WITNESSETH

1. That the LESSOR is the owner of the commercial building erected at the lot of the Toribio G. Reyes
Realty, Inc. situated at 158 Quirino Ave. corner Redemptorist Road, Barangay Baclaran in Parañaque
Ctiy;

2. That LESSOR hereby leases two (2) cubicles located at the 1st & 2nd Floor, of said building with an
area of 56 square meters under the following terms and conditions, to wit:

a. That the monthly rental of the two (2) cubicles in PESOS, SIXTY THOUSAND
(₱60,000.00), Philippine Currency. However, due to unstable power of the peso
LESSEES agrees to a yearly increase of ten (10%) percent of the monthly rental;

b. That any rental in-arrears shall be paid before the expiration of the contract to the
LESSOR;

c. That LESSEES agree to pay their own water and electric consumptions in the said
premises;

d. That the LESSEES shall not sub-let or make any alteration in the cubicles without a
written permission from the LESSOR. Provided, however, that at the termination of the
Contract, the lessee shall return the two cubicles in its original conditions at their
expenses;

e. That the LESSEES agree to keep the cubicles in a safe and sanitary conditions, and
shall not keep any kinds of flammable or combustible materials.
 f. That in case the LESSEES fail to pay the monthly rental every time it falls due or violate
any of the above conditions shall be enough ground to terminate this Contract of Lease.
Provided, further, that, if the LESSEES pre-terminate this Contract they shall pay the
rentals for the unused month or period by way of liquidated damages in favor of the
LESSOR.

3. That this Contract of Lease is for six (6) yrs. only starting from December _____, 1999 or up to
December ______, 2005.

IN WITNESS WHEREOF, the parties have hereunto affixed their hands this ___th day of December,
1999 at City of Manila, Philippines.

(sgd.) (sgd.)
ROSALIE PALAÑA-CHUA MOSHIERA LATIEF
LESSOR LESSEE

(sgd.)
OMAR LATIEF
LESSEE

SIGNED IN THE PRESENCE OF:

(sgd.) (sgd.)
1. Daisy C. Ramos 2. Ferdinand C. Chua

Republic of the Philippines)

City of Manila)s.s. 

ACKNOWLEDGMENT

BEFORE ME, a Notary Public for and in the City of Manila personally appeared the following persons:

Rosalie P. Chua with CTC No. 05769706 at Parañaque City on 2/1/99; Moshiera Latief with CTC No.
12885654 at Parañaque City on 11/11/99; Omar Latief with CTC No. 12885653 Parañaque City on Nov.
11, 1999.

known to me and to me known to be the same persons who executed this instrument consisting of two (2)
pages duly signed by them and the two (2) instrumental witnesses and acknowledged to me that the
same is their free and voluntarily acts and deeds.

IN FAITH AND TESTIMONY WHEREOF, I have hereunto affixed my hand and Notarial Seal this ____th
day of December, 1999 at the City of Manila, Philippines.

Doc. No. _____ ATTY. CALIXTRO B. RAMOS

Page No. _____ NOTARY PUBLIC
Book No. LXV Until December 31, 2000
Series of 1999 PTR # 374145-1/11/99/-Mla.
IBP # 00262-Life Member4

A year after the commencement of the lease and with Spouses Latip already occupying the leased
cubicles, Rosalie, through counsel, sent the spouses a letter demanding payment of back rentals and
should they fail to do so, to vacate the leased cubicles. When Spouses Latip did not heed Rosalie’s
demand, she instituted the aforesaid complaint.

In their Answer, Spouses Latip refuted Rosalie’s claims. They averred that the lease of the two (2)
cubicles had already been paid in full as evidenced by receipts showing payment to Rosalie of the total
amount of ₱2,570,000.00. The three (3) receipts, in Rosalie’s handwriting, read:

1. I received the amount of ₱2,000,000.00 (two million pesos) from [O]mar Latip &
Moshi[e]ra Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner
Redemptorist Rd.[,] Baclaran P[arañ]aque City. ROFERLAND 5 Bldg. with the terms 6 yrs.
Contract.

₱2,000,000.00 (sgd.)
CHECK # 3767924 ____________________
FAR EAST BANK Rosalie Chua

(sgd.)
____________________
Ferdinand Chua

2. Received cash
₱500,000.00
From Moshiera Latip

(sgd.)
Rosalie Chua
12/10/99
____________________
Received by

3. Received cash
₱70,000.00 from
Moshiera Latip

(sgd.)
12-11-99 ____________________
Received by:6

Spouses Latip asseverated that sometime in October 1999, Rosalie offered for sale lease rights over two
(2) cubicles in Roferxane Bldg. Having in mind the brisk sale of goods during the Christmas season, they
readily accepted Rosalie’s offer to purchase lease rights in Roferxane Bldg., which was still under
construction at the time. According to Spouses Latip, the immediate payment of ₱2,570,000.00 would be
used to finish construction of the building giving them first priority in the occupation of the finished
cubicles.

Thereafter, in December 1999, as soon as two (2) cubicles were finished, Spouses Latip occupied them
without waiting for the completion of five (5) other stalls. Spouses Latip averred that the contract of lease
they signed had been novated by their purchase of lease rights of the subject cubicles. Thus, they were
surprised to receive a demand letter from Rosalie’s counsel and the subsequent filing of a complaint
against them.

The MeTC ruled in favor of Rosalie, viz.:

WHEREFORE, premises considered, the [Spouses Latip] and all persons claiming rights under them are
hereby ordered to VACATE the property subject of this case located at the 1st and 2nd floors of a
Roferxane Building situated at No. 158 Quirino Avenue corner Redemptorist Road, Barangay Baclaran,
Parañaque City. The [Spouses Latip] are also ordered to PAY [Rosalie] the amount of SEVEN HUNDRED
TWENTY THOUSAND PESOS (₱720,000.00) as rent arrearages for the period of December 1999 to
December 2000 and thereafter to PAY [Rosalie] the amount of SEVENTY TWO THOUSAND PESOS
(₱72,000.00) per month from January 2001 to December 2002, plus ten percent (10%) increase for each
and every succeeding years thereafter as stipulated in paragraph 2(a) of the Contract of Lease x x x, until
the [Spouses Latip] have completely vacated the leased premises subject of this lease. Finally[,] the
[Spouses Latip] are hereby ordered to PAY [Rosalie] the amount of TWENTY THOUSAND PESOS
(₱20,000.00) as attorney’s fees and TWO THOUSAND PESOS (₱2,000.00) per [Rosalie’s] appearance in
Court as appearance fee and to PAY the cost of this suit.

[Spouses Latip’s] counterclaim is hereby DISMISSED for lack of merit.

SO ORDERED.7

In stark contrast, the RTC reversed the MeTC and ruled in favor of Spouses Latip. The RTC did not give
credence to the contract of lease, ruling that it was not notarized and, in all other substantial aspects,
incomplete. Further on this point, the RTC noted that the contract of lease lacked: (1) the signature of
Ferdinand Chua, Rosalie’s husband; (2) the signatures of Spouses Latip on the first page thereof; (3) the
specific dates for the term of the contract which only stated that the lease is for "six (6) y[ea]rs only
starting from December 1999 or up to December 2005"; (4) the exact date of execution of the document,
albeit the month of December and year 1999 are indicated therein; and (5) the provision for payment of
deposit or advance rental which is supposedly uncommon in big commercial lease contracts.

The RTC believed the claim of Spouses Latip that the contract of lease was modified and supplemented;
and the entire lease rentals for the two (2) cubicles for six (6) years had already been paid by Spouses
Latip in the amount of ₱2,570,000.00. As to Rosalie’s claim that her receipt of ₱2,570,000.00 was simply
goodwill payment by prospective lessees to their lessor, and not payment for the purchase of lease rights,
the RTC shot this down and pointed out that, apart from her bare allegations, Rosalie did not adduce
evidence to substantiate this claim. On the whole, the RTC declared an existent lease between the
parties for a period of six (6) years, and already fully paid for by Spouses Latip. Thus, Spouses Latip
could not be ejected from the leased premises until expiration of the lease period.

The RTC disposed of the appeal, viz.:

WHEREFORE, all the foregoing considered, the appealed decision of the [MeTC] dated January 13, 2004
is reversed as judgment is hereby rendered for the [Spouses Latip] and against [Rosalie], ordering the
latter to pay the former –

(1) the sum of PhP1,000,000.00 as moral damages;

(2) the sum of PhP500,000.00 as exemplary damages;

(3) the sum of PhP250,000.00 plus PhP3,000.00 per court appearance as and for attorney’s fees;
and

(4) costs of suit.

SO ORDERED.8
In yet another turn of events, the CA, as previously mentioned, reversed the RTC and reinstated the
decision of the MeTC. The CA ruled that the contract of lease, albeit lacking the signature of Ferdinand
and not notarized, remained a complete and valid contract. As the MeTC had, the CA likewise found that
the alleged defects in the contract of lease did not render the contract ineffective. On the issue of whether
the amount of ₱2,570,000.00 merely constituted payment of goodwill money, the CA took judicial notice
of this common practice in the area of Baclaran, especially around the Redemptorist Church. According to
the appellate court, this judicial notice was bolstered by the Joint Sworn Declaration of the stallholders at
Roferxane Bldg. that they all had paid goodwill money to Rosalie prior to occupying the stalls thereat.
Thus, ruling on Rosalie’s appeal, the CA disposed of the case:

WHEREFORE, in view of the foregoing, the Petition for Review is hereby GRANTED. The assailed
decision of RTC Parañaque City Branch 274 dated September 24, 2004 is hereby REVERSED and SET
ASIDE, and the January 13, 2004 decision of the MeTC is REINSTATED and AFFIRMED en toto.

SO ORDERED.9

Not surprisingly, Spouses Latip filed the present appeal.

The singular issue for our resolution is whether Spouses Latip should be ejected from the leased cubicles.

As previously adverted to, the CA, in ruling for Rosalie and upholding the ejectment of Spouses Latip,
took judicial notice of the alleged practice of prospective lessees in the Baclaran area to pay goodwill
money to the lessor. 

We disagree.

Sections 1 and 2 of Rule 129 of the Rules of Court declare when the taking of judicial notice is mandatory
or discretionary on the courts, thus:

SECTION 1. Judicial notice, when mandatory. – A court shall take judicial notice, without the introduction
of evidence, of the existence and territorial extent of states, their political history, forms of government
and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their
seals, the political constitution and history of the Philippines, the official acts of the legislative, executive
and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical
divisions.

SEC. 2. Judicial notice, when discretionary. – A court may take judicial notice of matters which are of
public knowledge, or are capable of unquestionable demonstration or ought to be known to judges
because of their judicial functions.

On this point, State Prosecutors v. Muro10 is instructive:

I. The doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to take
judicial notice is to be exercised by courts with caution; care must be taken that the requisite notoriety
exists; and every reasonable doubt on the subject should be promptly resolved in the negative.

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of
common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal
guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can
be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety.
To say that a court will take judicial notice of a fact is merely another way of saying that the usual form of
evidence will be dispensed with if knowledge of the fact can be otherwise acquired. This is because the
court assumes that the matter is so notorious that it will not be disputed. But judicial notice is not judicial
knowledge. The mere personal knowledge of the judge is not the judicial knowledge of the court, and he
is not authorized to make his individual knowledge of a fact, not generally or professionally known, the
basis of his action. Judicial cognizance is taken only of those matters which are "commonly" known.

Things of "common knowledge," of which courts take judicial notice, may be matters coming to the
knowledge of men generally in the course of the ordinary experiences of life, or they may be matters
which are generally accepted by mankind as true and are capable of ready and unquestioned
demonstration. Thus, facts which are universally known, and which may be found in encyclopedias,
dictionaries or other publications, are judicially noticed, provided they are of such universal notoriety and
so generally understood that they may be regarded as forming part of the common knowledge of every
person.11

We reiterated the requisite of notoriety for the taking of judicial notice in the recent case of Expertravel &
Tours, Inc. v. Court of Appeals,12 which cited State Prosecutors:

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of
common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal
guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can
be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety.
Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1)
generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready
determination by resorting to sources whose accuracy cannot reasonably be questionable.

Things of "common knowledge," of which courts take judicial notice, may be matters coming to the
knowledge of men generally in the course of the ordinary experiences of life, or they may be matters
which are generally accepted by mankind as true and are capable of ready and unquestioned
demonstration. Thus, facts which are universally known, and which may be found in encyclopedias,
dictionaries or other publications, are judicially noticed, provided, they are such of universal notoriety and
so generally understood that they may be regarded as forming part of the common knowledge of every
person. As the common knowledge of man ranges far and wide, a wide variety of particular facts have
been judicially noticed as being matters of common knowledge. But a court cannot take judicial notice of
any fact which, in part, is dependent on the existence or non-existence of a fact of which the court has no
constructive knowledge.1avvphi1

From the foregoing provisions of law and our holdings thereon, it is apparent that the matter which the
appellate court took judicial notice of does not meet the requisite of notoriety. To begin with, only the CA
took judicial notice of this supposed practice to pay goodwill money to the lessor in the Baclaran area.
Neither the MeTC nor the RTC, with the former even ruling in favor of Rosalie, found that the practice was
of "common knowledge" or notoriously known. 

We note that the RTC specifically ruled that Rosalie, apart from her bare allegation, adduced no evidence
to prove her claim that the amount of ₱2,570,000.00 simply constituted the payment of goodwill money.
Subsequently, Rosalie attached an annex to her petition for review before the CA, containing a joint
declaration under oath by other stallholders in Roferxane Bldg. that they had paid goodwill money to
Rosalie as their lessor. On this score, we emphasize that the reason why our rules on evidence provide
for matters that need not be proved under Rule 129, specifically on judicial notice, is to dispense with the
taking of the usual form of evidence on a certain matter so notoriously known, it will not be disputed by
the parties.
However, in this case, the requisite of notoriety is belied by the necessity of attaching documentary
evidence, i.e., the Joint Affidavit of the stallholders, to Rosalie’s appeal before the CA. In short, the
alleged practice still had to be proven by Rosalie; contravening the title itself of Rule 129 of the Rules of
Court – What need not be proved.

Apparently, only that particular division of the CA had knowledge of the practice to pay goodwill money in
the Baclaran area. As was held in State Prosecutors, justices and judges alike ought to be reminded that
the power to take judicial notice must be exercised with caution and every reasonable doubt on the
subject should be ample reason for the claim of judicial notice to be promptly resolved in the negative.

Ultimately, on the issue of whether Spouses Latip ought to be ejected from the leased cubicles, what
remains in evidence is the documentary evidence signed by both parties – the contract of lease and the
receipts evidencing payment of ₱2,570,000.00.

We need not be unduly detained by the issue of which documents were executed first or if there was a
novation of the contract of lease. As had been found by the RTC, the lease contract and the receipts for
the amount of ₱2,570,000.00 can be reconciled or harmonized. The RTC declared:

Definitely, the parties entered into a lease agreement over two (2) cubicles of the 1st and 2nd floors of
Roferxane (Roferland) Building, a commercial building located at 158 Quirino Avenue, corner
Redemptorist Road, Baclaran, Parañaque City and belonging to [Rosalie]. The lease agreement is for a
term of six (6) years commencing in December 1999 up to December 2005. This agreement was
embodied in a Contract of Lease x x x. The terms of this lease contract, however, are modified or
supplemented by another agreement between the parties executed and or entered into in or about the
time of execution of the lease contract, which exact date of execution of the latter is unclear. 13

We agree with the RTC’s holding only up to that point. There exists a lease agreement between the
parties as set forth in the contract of lease which is a complete document. It need not be signed by
Ferdinand Chua as he likewise did not sign the other two receipts for ₱500,000.00 and ₱70,000.00,
respectively, which contained only the signature of Rosalie. Besides, it is undisputed that Rosalie owns
and leases the stalls in Roferxane Bldg.; thus, doing away with the need for her husband’s consent. The
findings of the three lower courts concur on this fact.

The contract of lease has a period of six (6) years commencing in December 1999. This fact is again
buttressed by Spouses Latip’s admission that they occupied the property forthwith in December 1999,
bearing in mind the brisk sales during the holiday season.

On the conflicting interpretations by the lower courts of the receipts amounting to ₱2,570,000.00, we hold
that the practice of payment of goodwill money in the Baclaran area is an inadequate subject of judicial
notice. Neither was Rosalie able to provide sufficient evidence that, apart from the belatedly submitted
Joint Affidavit of the stallholders of Roferxane Bldg., the said amount was simply for the payment of
goodwill money, and not payment for advance rentals by Spouses Latip.

In interpreting the evidence before us, we are guided by the Civil Code provisions on interpretation of
contracts, to wit:

Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.

Art. 1372. However general the terms of a contract may be, they shall not be understood to comprehend
things that are distinct and cases that are different from those which the parties intended to agree.
Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be understood as
bearing that import which is most adequate to render it effectual.

The RTC was already on the right track when it declared that the receipts for ₱2,570,000.00 modified or
supplemented the contract of lease. However, it made a quantum leap when it ruled that the amount was
payment for rentals of the two (2) cubicles for the entire six-year period. We cannot subscribe to this
finding. To obviate confusion and for clarity, the contents of the receipts, already set forth above, are
again reproduced:

1. I received the amount of ₱2,000,000.00 (two million pesos) from [O]mar Latip & Moshi[e]ra
Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner Redemptorist Rd.[,]
Baclaran P[arañ]que City. ROFERLAND Bldg. with the terms 6 yrs. Contract.

₱2,000,000.00 (sgd.)
CHECK # 3767924 ____________________
FAR EAST BANK Rosalie Chua

(sgd.)
____________________
Ferdinand Chua

2. Received cash
₱500,000.00
From Moshiera Latip

(sgd.)
Rosalie Chua
12/10/99
____________________
Received by

3. Received cash
₱70,000.00 from
Moshiera Latip

(sgd.)
12-11-99 ____________________
Received by:14

There is nothing on the receipts and on record that the payment and receipt of ₱2,570,000.00 referred to
full payment of rentals for the whole period of the lease. All three receipts state Rosalie’s receipt of cash
in varying amounts. The first receipt for ₱2,000,000.00 did state payment for two (2) cubicles, but this
cannot mean full payment of rentals for the entire lease period when there are no words to that effect.
Further, two receipts were subsequently executed pointing to the obvious fact that the ₱2,000,000.00 is
not for full payment of rentals. Thus, since the contract of lease remained operative, we find that Rosalie’s
receipt of the monies should be considered as advanced rentals on the leased cubicles. This conclusion
is bolstered by the fact that Rosalie demanded payment of the lease rentals only in 2000, a full year after
the commencement of the lease.

Finally, we note that the lease ended in 2005. Consequently, Spouses Latip can be ejected from the
leased premises. They are liable to Rosalie for unpaid rentals on the lease of the two (2) cubicles in
accordance with the stipulations on rentals in the Contract of Lease. However, the amount of
₱2,570,000.00, covering advance rentals, must be deducted from this liability of Spouses Latip to Rosalie.
WHEREFORE, premises considered, the petition is hereby GRANTED. The decision of the Court of
Appeals in CA-G.R. SP No. 89300 is REVERSED. The petitioners, spouses Omar and Moshiera Latip,
are liable to respondent Rosalie Chua for unpaid rentals minus the amount of ₱2,570,000.00 already
received by her as advance rentals. No costs.

SO ORDERED.

EN BANC

[G.R. No. 130656. June 29, 2000.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ARMANDO REANZARES * also known as

ARMANDO RIANZARES, accused- appellant.

The Solicitor General for plaintiff-appellee. Public Attorney's Office for accused-appellant.

SYNOPSIS

Two informations were 􏰀led against accused Armando Reanzares and three other John Does. The 􏰀rst
was for Violation of PD 532 (Anti-Piracy and Anti-Highway Robbery Law of 1974) for allegedly conspiring
with intent to gain and armed with bladed weapons and a revolver, to rob and carry away a Seiko watch
owned by Gregorio Tactacan and P1000.00 cash of Lilia Tactacan, and on that occasion she was killed.
The second charge was for violation of RA 6539 (An Act Preventing and Penalizing Carnapping) for
taking away by means of violence and intimidation of persons a passenger jeepney owned and driven by
Gregorio Tactacan. Only accused Reanzares was arrested, the other three had remained unidenti􏰀ed
and at large. The trial court found the prosecution's evidence credible and ruled that the alibi of the
accused could not prevail over his positive identi􏰀cation by the complaining witness Gregorio Tactacan.
The trial court found him guilty of highway robbery with homicide and sentenced him to death, but
exonerated him from the charge of carnapping for insu􏰁ciency of evidence. Thus, this automatic review
of the decision.

The trial court was correct in disregarding the alibi of the accused not only because he was positively
identified by Gregorio Tactacan but also because it was not shown that it was physically impossible for
him to be at the crime scene on the date and time of the incident. However, the accused should be held
liable for the special complex crime of robbery with homicide, as the allegations in the information were
enough to convict him therefore. In the interpretation of information, what controls is the description of the
offense charged and not merely its designation. The accused cannot be held guilty of highway robbery
with homicide because there was no proof that the accused and his cohorts organized themselves to
commit highway robbery. On the other hand, what the prosecution established was only a single act of
robbery against the particular persons of the Tactacan spouses. The decision appealed from was
modi􏰀ed and the accused was found guilty of Robbery with Homicide and sentenced to reclusion
perpetua.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; PROOF OF GUILT; ASCERTAINING TRUTH BY MEANS OF LIE

DETECTOR TEST, NOT ACCEPTABLE. — The procedure of ascertaining the truth by means of a lie
detector test has never been accepted in our jurisdiction; thus, any findings based thereon cannot be
considered conclusive.
CD Technologies Asia, Inc. 2018 cdasiaonline.com

2. ID.; ID.; ALIBI, AS DEFENSE; ELEMENTS. — For alibi to be believed it must be shown that (a) the
accused was in another place at the time of the commission of the offense, and (b) it was physically
impossible for him to be at the crime scene.

3. CRIMINAL LAW; VIOLATION OF PD 532 (ANTI-PIRACY AND ANTI-HIGHWAY ROBBERY LAW OF

1974); WHEN COMMITTED; NOT PRESENT IN CASE AT BAR. — As held in a number of cases,
conviction for highway robbery requires proof that several accused were organized for the purpose of
committing it indiscriminately. There is no proof in the instant case that the accused and his cohorts
organized themselves to commit highway robbery. Neither is there proof that they attempted to commit
similar robberies to show the "indiscriminate" perpetration thereof. On the other hand, what the
prosecution established was only a single act of robbery against the particular persons of the Tactacan
spouses. Clearly, this single act of depredation is not what is contemplated under PD 532 as its objective
is to deter and punish lawless elements who commit acts of depredation upon persons and properties of
innocent and defenseless inhabitants who travel from one place to another thereby disturbing the peace
and tranquillity of the nation and stunting the economic and social progress of the people. aITECD

4. ID.; ROBBERY WITH HOMICIDE; IMPOSABLE PENALTY; CASE AT BAR. — The accused should be
held liable for the special complex crime of robbery with homicide under Art. 294 of the Revised Penal
Code as amended by RA 7659 as the allegations in the Information are enough to convict him therefor. In
the interpretation of an information, what controls is the description of the offense charged and not merely
its designation. Article 294, par. (1), of the Revised Penal Code as amended punishes the crime of
robbery with homicide by reclusion perpetua to death. Applying Art. 63, second par., subpar. 2, of the
Revised Penal Code which provides that "[i]n all cases in which the law prescribes a penalty composed of
two indivisible penalties, the following rules shall be observed in the application thereof: . . .2. [w]hen
there are neither mitigating nor aggravating circumstances in the commission of the deed, the lesser
penalty shall be applied," the lesser penalty ofreclusion perpetua is imposed in the absence of any
modifying circumstance.

DECISION

BELLOSILLO, J p:

This case is with us on automatic review of the 26 May 1997 Decision 1 of the Regional Trial Court of
Tanauan, Batangas, 􏰀nding accused ARMANDO REANZARES also known as "Armando Rianzares"
guilty of Highway Robbery with Homicide under PD 532 2 and sentencing him to the extreme penalty of
death. He was also ordered to pay the heirs of his victim Lilia Tactacan P172,000.00 for funeral, burial
and related expenses, P50,000.00 as indemnity for death, P1,000.00 for the cash taken from her bag,
and to reimburse Gregorio Tactacan P2,500.00 for the Seiko wristwatch taken from him. LLpr

The facts, except as to the identity of accused Armando Reanzares, are undisputed. Spouses Gregorio
Tactacan and Lilia Tactacan owned a sari-sari store in San Miguel, Sto. Tomas, Batangas. On 10 May
1994 at around 8:10 in the evening, the Tactacan spouses closed their store and left for home in
Barangay San Roque, Sto. Tomas, Batangas on board their passenger-type jeepney. As Gregorio was
maneuvering his jeep backwards from where it was parked two (2) unidenti􏰀ed men suddenly climbed on
board. His wife

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Lilia immediately asked them where they were going and they answered that they were bound for the
town proper. When Lilia informed them that they were not going to pass through the town proper, the two
(2) said they would just get off at the nearest intersection. After negotiating some 500 meters, one of the
hitchhikers pointed a .38 caliber revolver at Gregorio while the other poked a balisong at Lilia's neck and
ordered Gregorio to stop the vehicle. Two (2) other persons, one of whom was later identi􏰀ed as accused
Armando Reanzares, were seen waiting for them at a distance. As soon as the vehicle stopped, the
accused and his companion approached the vehicle. Gregorio was then pulled from the driver's seat to
the back of the vehicle. They gagged and blindfolded him and tied his hands and feet. They also took his
Seiko wristwatch worth P2,500.00. The accused then drove the vehicle after being told by one of them,
"Sige i-drive mo na." 3

Gregorio did not know where they were headed for as he was blindfolded. After several minutes, he felt
the vehicle making a u-turn and stopped after ten (10) minutes. During the entire trip, his wife kept
uttering, "Maawa kayo sa amin, marami kaming anak, kunin nyo na lahat ng gusto ninyo. Immediately
after the last time she uttered these words a commotion ensued and Lilia was heard saying, "aray!"
Gregorio heard her but could not do anything. After three (3) minutes the commotion ceased. Then he
heard someone tell him, "Huwag kang kikilos diyan, ha," and left. Gregorio then untied his hands and feet,
removed his gag and blindfold and jumped out of the vehicle. The culprits were all gone, including his
wife. He ran to San Roque East shouting for help. 4

When Gregorio returned to the crime scene, the jeepney was still there. He went to the driver's seat.
There he saw his wife lying on the 􏰂oor of the jeepney with blood splattered all over her body. Her bag
containing P1,200.00 was missing. He brought her immediately to the C. P. Reyes Hospital where she
was pronounced dead on arrival. 5

At the time of her death Lilia Tactacan was forty-eight (48) years old. According to Gregorio, he was
deeply depressed by her death; that he incurred funeral, burial and other related expenses, and that his
wife was earning P3,430.00 a month as a teacher. 6

Dr. Lily D. Nunes, Medical Health O􏰁cer of Sto. Tomas, Batangas, conducted a post- mortem
examination on the body of the victim. Her medical report disclosed that the victim sustained eight (8)
stab wounds on the chest and abdominal region of the body. She testi􏰀ed that a sharp pointed object like
a long knife could have caused those wounds which must have been in􏰂icted by more than one (1)
person, and that all those wounds except the non-penetrating one caused the immediate death of the
victim. 7

Subsequently, two (2) Informations were 􏰀led against accused Armando Reanzares and three (3) John
Does in relation to the incident. The 􏰀rst was for violation of PD 532 otherwise known as the Anti-Piracy
and Anti-Highway Robbery Law of 1974 for allegedly conspiring, with intent to gain and armed with
bladed weapons and a .38 caliber revolver, to rob and carry away one (1) Seiko wristwatch owned by
Gregorio Tactacan and P1,000.00 cash of Lilia Tactacan, and on the occasion thereof, killed her. The
second was for violation of RA 6539, An Act Preventing and Penalizing Carnapping, for taking away by
means of violence and intimidation of persons one (1) passenger-type jeepney with Plate No. DBP 235
owned and driven by Gregorio Tactacan and valued at P110,000.00. Only the accused Armando
Reanzares was arrested. The other three (3) have remained unidenti􏰀ed and at large. prcd

The accused testi􏰀ed in his defense and claimed that he could not have perpetrated the crimes imputed
to him with three (3) others as he was in Barangay Tagnipa, Garchitorena, Camarines Sur, for the
baptism of his daughter Jessica when the incident

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happened.8 His father, Jose Reanzares, corroborated his story. Jose claimed that the accused borrowed
P500.00 from him for the latter's trip to Bicol although he could not say that he actually saw the accused
leave for his intended destination. 9 To bolster the alibi of the accused, his brother Romeo Reanzares
also took the witness stand and alleged that he saw the accused off on 9 May 1994, the day before the
incident. Romeo maintained that he accompanied the accused to the bus stop that day and even helped
the latter carry his things to the bus. He however could not categorically state where and when the
accused alighted or that he in fact reached Bicol. 10

On 26 May 1997 the trial court found the prosecution's evidence credible and ruled that the alibi of the
accused could not prevail over his positive identi􏰀cation by complaining witness Gregorio Tactacan. The
court a quo declared him guilty of Highway Robbery with Homicide under PD 532 and sentenced him to
death. It further ordered him to pay the heirs of Lilia Tactacan P50,000.00 as indemnity for death,
P172,000.00 for funeral, burial and related expenses, and P1,000.00 for the cash taken from her bag. The
accused was also ordered to reimburse Gregorio Tactacan P2,500.00 for the Seiko wristwatch taken from
him. 11 But the trial court exonerated the accused from the charge of carnapping under RA 6539 for
insufficiency of evidence. LibLex

The accused insists before us that his conviction for Highway Robbery with Homicide under PD 532 is
erroneous as his guilt was not proved beyond reasonable doubt. He claims that the testimony of private
complainant Gregorio Tactacan, who implicated him as one of the perpetrators of the crime, is incredible.
He maintains that Gregorio failed to identify him because when the latter was questioned he stated that
he did not know any of the culprits. He also claims that in the publication of Hotline by Tony Calvento
inPeople's Tonight, Gregorio even asked the readers to help him identify the malefactors.

The trial court observed that Gregorio Tactacan testi􏰀ed in a categorical, straightforward, spontaneous
and frank manner, and was consistent on cross- examination. Indeed, Gregorio might not have
immediately revealed the name of accused Armando Reanzares to the police authorities when he was
􏰀rst investigated but the delay was not an indication of a fabricated charge and should not undermine his
credibility considering that he satisfactorily explained his reasons therefor. According to him, he did not
immediately tell the police about the accused because he feared for the safety of his family as his
neighbors told him that they saw some people lurking around his house on the day of the incident.
Moreover, he was advised not to mention any names until after the burial of his wife. No ill motive could
be attributed to him for implicating the accused. If at all, the fact that his wife died by reason of the
incident even lends credence to his testimony since his natural interest in securing the conviction of the
guilty would deter him from implicating persons other than the real culprits, otherwise, those responsible
for the perpetration of the crime would escape prosecution.

To further undermine the credibility of Gregorio, the accused underscores Gregorio's refusal to be
subjected to a lie detector test. We cannot subscribe to this contention as the procedure of ascertaining
the truth by means of a lie detector test has never been accepted in our jurisdiction; thus, any 􏰀ndings
based thereon cannot be considered conclusive.

Finally, the accused chides Gregorio for supposedly suppressing a very material piece of evidence, i.e.,
the latter failed to present as witnesses a certain Renato and his wife who allegedly saw the holduppers
running away from the crime scene. But this is only

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a disputable presumption under Sec. 3, par. (e), Rule 131, of the Rules of Court on evidence, which does
not apply in the present case as the evidence allegedly omitted is equally accessible and available to the
defense.

These attempts of the accused to discredit Gregorio obviously cannot hold ground. Neither can they
bolster his alibi. For alibi to be believed it must be shown that (a) the accused was in another place at the
time of the commission of the offense, and (b) it was physically impossible for him to be at the crime
scene. 12
In this case, the accused claims to have left for Bicol the day before the incident. To prove this, he
presented his father and brother but their testimonies did not meet the requisite quantum to establish his
alibi. While his father testi􏰀ed that the accused borrowed money from him for his fare to Bicol for the
baptism of a daughter, he could not say whether the accused actually went to Bicol. As regards the claim
of Romeo, brother of the accused, that he accompanied the accused to the bus stop on 9 May 1994 and
even helped him with his things, seeing the accused off is not the same as seeing him actually get off at
his destination. Given the circumstances of this case, it is possible for the accused to have alighted from
the bus before reaching Bicol, perpetrated the crime in the evening of 10 May 2000, proceeded to Bicol
and arrived there on 12 May 2000 for his daughter's baptism.

Thus the trial court was correct in disregarding the alibi of the accused not only because he was positively
identi􏰀ed by Gregorio Tactacan but also because it was not shown that it was physically impossible for
him to be at the crime scene on the date and time of the incident.

Indeed the accused is guilty. But that the accused was guilty of Highway Robbery with Homicide under
PD 532 was erroneous. As held in a number of cases, conviction for highway robbery requires proof that
several accused were organized for the purpose of committing it indiscriminately. 13 There is no proof in
the instant case that the accused and his cohorts organized themselves to commit highway robbery.
Neither is there proof that they attempted to commit similar robberies to show the "indiscriminate"
perpetration thereof. On the other hand, what the prosecution established was only a single act of robbery
against the particular persons of the Tactacan spouses. Clearly, this single act of depredation is not what
is contemplated under PD 532 as its objective is to deter and punish lawless elements who commit acts
of depredation upon persons and properties of innocent and defenseless inhabitants who travel from one
place to another thereby disturbing the peace and tranquillity of the nation and stunting the economic and
social progress of the people.

Consequently, the accused should be held liable for the special complex crime of robbery with homicide
under Art. 294 of the Revised Penal Code as amended by RA 7659 14 as the allegations in the
Information are enough to convict him therefor. In the interpretation of an information, what controls is the
description of the offense charged and not merely its designation. 15

Article 294, par. (1), of the Revised Penal Code as amended punishes the crime of robbery with homicide
by reclusion perpetua to death. Applying Art. 63, second par., subpar. 2, of the Revised Penal Code
which provides that "[i]n all cases in which the law prescribes a penalty composed of two indivisible
penalties, the following rules shall be observed in the application thereof: . . .2. [w]hen there are neither
mitigating nor aggravating circumstances in the commission of the deed, the lesser penalty shall be
applied," the lesser penalty of reclusion perpetua is imposed in the absence of any

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modifying circumstance.

As to the damages awarded by the trial court to the heirs of the victim, we sustain the award of
P50,000.00 as civil indemnity for the wrongful death of Lilia Tactacan. In addition, the amount of
P50,000.00 as moral damages is ordered. Also, damages for loss of earning capacity of Lilia Tactacan
must be granted to her heirs. The testimony of Gregorio Tactacan, the victim's husband, on the earning
capacity of his wife, together with a copy of his wife's payroll, is enough to establish the basis for the
award. The formula for determining the life expectancy of Lilia Tactacan, applying the American
Expectancy Table of Mortality, is as follows: 2/3 multiplied by (80 minus the age of the deceased). 16
Since Lilia was 48 years of age at the time of her death, 17 then her life expectancy was 21.33 years.

At the time of her death, Lilia was earning P3,430.00 a month as a teacher at the San Roque Elementary
School so that her annual income was P41,160.00. From this amount, 50% should be deducted as
reasonable and necessary living expenses to arrive at her net earnings. Thus, her net earning capacity
was P438,971.40 computed as follows: Net earning capacity equals life expectancy times gross annual
income less reasonable and necessary living expenses —

Net earning = capacity (x)

life x gross - reasonable & expectancy annual necessary

income living expenses x= 2 (80-48) x [P41,160.00 – P20,580.00]

————

 =  21.33 x P20,580.00
 =  P438,971.40

However, the award of P1,000.00 representing the cash taken from Lilia Tactacan must be
increased to P1,200.00 as this was the amount established by the prosecution without objection
from the defense. The award of P172,000.00 for funeral, burial and related expenses must be
reduced to P22,000.00 as this was the only amount su􏰁ciently substantiated.18 There was no
other competent evidence presented to support the original award.

The amount of P2,500.00 as reimbursement for the Seiko wristwatch taken from Gregorio
Tactacan must be deleted in the absence of receipts or any other competent evidence aside from
the self-serving valuation made by the prosecution. An ordinary witness cannot establish the
value of jewelry and the trial court can only take judicial notice of the value of goods which is a
matter of public knowledge or is capable of unquestionable demonstration. The value of jewelry
therefore does not fall under either category of which the court can take judicial notice. 19

WHEREFORE, the Decision appealed from is MODIFIED. Accused ARMANDO REANZARES

also known as "Armando Rianzares" is found GUILTY beyond reasonable doubt of Robbery with
Homicide under Art. 294 of the Revised Penal Code as amended and is sentenced to reclusion
perpetua. He is ordered to pay the heirs of the victim P50,000.00 as indemnity for death, another
P50,000.00 for moral damages, P1,200.00 for actual damages, P438,971.40 for loss of earning
capacity, and P22,000.00 for funeral, burial and related expenses. Costs de oficio. Cdpr

SO ORDERED.

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EN BANC

[G.R. Nos. 135695-96. October 12, 2000.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. TOMAS

TUNDAG, accused-appellant.
The Solicitor General for plaintiff-appellant.

Public Attorney's Office for accused-appellant.

SYNOPSIS
This is an automatic review of the judgment of the Regional Trial Court of Mandaue City in Criminal
Cases Nos. DU-6186 and DU-6203 finding Tomas Tundag guilty of two counts of incestuous rape and
sentencing him to death twice. The complaints filed by Tundag's daughter Mary Ann alleged that the rape
incidents happened twice. The first took place on September 5, 1997 and the second, on November 7,
1997. Appellant's defense was bare denial.

Against the testimony of private complainant who testified an affirmative matters, appellant's denial is not
only trite but pathetic. Private complainant was unequivocal in charging appellant with ravishing her. The
victim's account of the rapes complained of was straightforward, detailed and consistent. However,
appellant can only be convicted of simple rape because of the failure of the prosecution to prove the
minority of the victim. The prosecution must present independent proof of the age the victim, even though
it is not contested by the defense. The minority of the victim must be proved with equal certainty and
clearness as the crime itself.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; DENIAL AND ALIBI; WEAK IN THE FACE OF POSITIVE
IDENTIFICATION. — Appellant's defense of alibi and denial is negative and self-serving. It hardly counts
as a worthy and weighty ground for exculpation in a trial involving his freedom and his life. Against the
testimony of private complainant who testified on affirmative matters, such defense is not only trite but
pathetic. Denial is an inherently weak defense, which becomes even weaker in the face of the positive
identification by the victim of the appellant as the violator of her honor.

2. ID.; ID.; CREDIBILITY OF WITNESS; ASSESSMENT THEREOF IS PRIMARILY THE FUNCTION OF

THE TRIAL COURT. — In a prosecution for rape, the complainant's credibility is the single most
important issue. The determination of the credibility of witnesses is primarily the function of the trial court.
The rationale for this is that the trial court has the advantage of having observed at first hand the
demeanor of the witnesses on the stand and,

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therefore, is in a better position to form an accurate impression and conclusion. Absent any showing that
certain facts of value have clearly been overlooked, which if considered could affect the result of the case,
or that the trial court's finding are clearly arbitrary, the conclusions reached by the court of origin must be
respected and the judgment rendered affirmed.

3. ID.; ID.; ID.; A GIRL WOULD NOT FILE A CASE FOR INCESTUOUS RAPE UNLESS THAT IS THE
TRUTH. — Filing a case for incestuous rape is of such a nature that a daughter's accusation must be
taken seriously. It goes against human experience that a girl would fabricate a story which would drag
herself as well as her family to a lifetime of dishonor, unless that is the truth, for it is her natural instinct to
protect her honor.

4. ID.; ID.; ID.; A LOW I.Q. DOES NOT AFFECT THE CREDIBILITY OF A VICTIM WHO
UNDERSTANDS THE CONSEQUENCES OF HER RAPE CHARGES. — Nor does appellant's assertion
that private complainant has some psychological problems and a low IQ of 76 in any way favor his
defense. These matters did not affect the credibility of her testimony that appellant raped her twice. We
note that the victim understood the consequences of prosecuting the rape charges against her own
father.

5. ID.; ID.; JUDICIAL NOTICE; DEFINITION AND CLASSIFICATION. — Judicial notice is the cognizance
of certain facts which judges may properly take and act on without proof because they already know
them. Under the Rules of Court, judicial notice may either be mandatory or discretionary.
6. ID.; ID.; ID.; MATTERS NOT FALLING UNDER MANDATORY OR DISCRETIONARY JUDICIAL
NOTICE; DEFINITION. — With respect to other matters not falling within the mandatory or discretionary
judicial notice, the court can take judicial notice of a fact pursuant to the procedure in Section 3 of Rule
129 of the Rules of Court which requires that — SEC. 3. Judicial notice, when hearing necessary. —
During the trial, the court, on its own initiative, or on request of a party, may announce its intention to take
judicial notice of any matter and allow the parties to be heard thereon. After the trial, and before judgment
or on appeal, the proper court, on its own initiative or on request of a party, may take judicial notice of any
matter and allow the parties to be heard thereon if such matter is decisive of a material issue in the case.

7. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — In this case, judicial notice of the age of the victim is improper,
despite the defense counsel's admission thereof, acceding to the prosecution's motion. As required by
Section 3 of Rule 129, as to any other matters such as age, a hearing is required before courts can take
judicial notice of such fact. Generally, the age of the victim may be proven by the birth or baptismal
certificate of the victim, or in the absence thereof, upon showing that said documents were lost or
destroyed, by other documentary or oral evidence sufficient for the purpose.

8. CRIMINAL LAW; QUALIFIED RAPE; RAPE OF A MINOR DAUGHTER BY HER FATHER PENALIZED
AS SUCH. — Section 335 of the Revised Penal Code, as amended by Section 11 of R.A. No. 7659,
penalizes rape of a minor daughter by

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her father as qualified rape and a heinous crime.

9. ID.; ID.; MINORITY OF THE VICTIM MUST BE ESTABLISHED BY PROOF INDEPENDENT OF

VICTIM'S TESTIMONIAL EVIDENCE. — The victim's age was not properly and sufficiently proved
beyond reasonable doubt. She testified that she was thirteen years old at the time of the rapes. However,
she admitted that she did not know exactly when she was born because her mother did not tell her. She
further said that her birth certificate was likewise with her mother. In several recent cases, we have
emphasized the need for independent proof of the age of the victim, aside from testimonial evidence from
the victim or her relatives. In People v. Javier, we stressed that the prosecution must present independent
proof of the age of the victim, even though it is not contested by the defense. The minority of the victim
must be proved with equal certainty and clearness as the crime itself.

10. ID.; SIMPLE RAPE; PENALTY. — In this case, the first rape was committed on September 5, 1997
and is therefore governed by the death penalty law, R.A. 7659. The penalty for the crime of simple rape or
rape in its unqualified form under Art. 335 of the Revised Penal Code, as amended by Sec. 11 of R.A.
7659, is reclusion perpetua. The second rape was committed on November 7, 1997, after the effectivity of
R.A. 8353, also known as the Anti- Rape Law of 1997, which took effect on October 22, 1997. The
penalty for rape in its unqualified form remains the same. ADaECI

11. ID.; ID.; GUIDING PRINCIPLES IN THE AWARD OF CIVIL LIABILITY ARISING THEREFROM. — As
to civil indemnity, the trial court correctly awarded P50,000.00 for each count of rape as civil indemnity.
However, the award of another P50,000.00 as "moral and exemplary damages under Article 2219 in
relation to Articles 2217 and 2230 of the Civil Code" for each count is imprecise. In rape cases, the
prevailing jurisprudence permits the award of moral damages without need for pleading or proof as to the
basis thereof. Thus, pursuant to current jurisprudence, we award the amount of P50,000.00 as moral
damages for each count of rape. The award of exemplary damages separately is also in order, but on a
different basis and for a different amount. Appellant being the father of the victim, a fact duly proved
during trial, we find that the alternative circumstance of relationship should be appreciated here as an
aggravating circumstance. Under Article 2230 of the New Civil Code, exemplary damages may be
imposed when the crime was committed with one or more aggravating circumstances. Hence, we find an
award of exemplary damages in the amount of P25,000.00 proper. Note that generally, in rape cases
imposing the death penalty, the rule is that relationship is no longer appreciated as a generic aggravating
circumstance in view of the amendments introduced by R.A. Nos. 7659 and 8353. The father-daughter
relationship has been treated by Congress in the nature of a special circumstance which makes the
imposition of the death penalty mandatory. However, in this case, the special qualifying circumstance of
relationship was proved but not the minority of the victim, taking the case out of the ambit of mandatory
death sentence. Hence, relationship can be appreciated as a generic aggravating circumstance in this
instance so that exemplary damages are called for.

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DECISION

QUISUMBING, J p:

For automatic review is the judgment of the Regional Trial Court of Mandaue City, Branch 28, in Criminal
Cases Nos. DU-6186 and DU-6203, finding appellant Tomas Tundag guilty of two counts of incestuous
rape and sentencing him to death twice. HAICTD

On November 18, 1997, private complainant Mary Ann Tundag filed with the Mandaue City Prosecutor's
Office two separate complaints for incestuous rape. The first complaint, docketed as Criminal Case No.
DU-6186, alleged:

That on or about the 5th day of September, 1997, in the City of Mandaue, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, being the father of complainant MARY
ANN TUNDAG, who is a 13-year-old girl, with deliberate intent, did then and there willfully, unlawfully and
feloniously have sexual intercourse with the said offended party against the latter's will.

CONTRARY TO LAW. 1
The other, docketed as Criminal Case No. DU-6203, averred:

That on or about the 7th day of November, 1997, in the City of Mandaue, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, being the father of complainant MARY
ANN TUNDAG, who is a 13-year-old girl, with deliberate intent, did then and there wilfully, unlawfully and
feloniously have sexual intercourse with the said offended party against the latter's will.

CONTRARY TO LAW. 2
Upon arraignment appellant, assisted by counselde parte, pleaded "Not

Guilty" to the charges.

The two cases were consolidated and a joint trial ensued.

Appellant's defense was bare denial. He claimed that private complainant had fabricated the rape
charges against him since he and his daughter, "had a quarrel when he accordingly reprimanded her for
going out whenever he was not at home." 3

Appellant did not present any witness to reinforce his testimony. On August 31, 1998, the trial court
rendered its decision, thus:

WHEREFORE, foregoing premises considered, Joint Judgment is hereby rendered, to wit:

I. In Criminal Case No. DU-6186 —

a) Finding the herein accused TOMAS TUNDAG guilty beyond reasonable doubt for the crime of rape,
said accused is hereby sentenced to the penalty of death;

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b) To indemnify the offended party Mary Ann Tundag the following amounts:

II.

(1) P50,000.00 by reason of the commission of the offense of rape upon her; and

(2) Another P50,000.00 as moral and exemplary damages under Article 2219 in relation to Articles 2217
and 2230 of the New Civil Code for the pain and moral shock suffered by her and for the commission of
the crime of rape with one qualifying aggravating circumstance; and

c)
In Criminal Case No. DU-6203 —

To pay the costs.

a) Finding the herein accused TOMAS TUNDAG guilty beyond reasonable doubt for the crime of rape,
said accused is hereby sentenced to the penalty of death;

b) To indemnify the offended party Mary Ann Tundag the following amounts:

(1) P50,000.00 by reason of the commission of the offense of rape upon her; and

(2) Another P50,000.00 as moral and exemplary damages under Article 2219 in relation to Articles 2217
and 2230 of the New Civil Code for the pain and moral shock suffered by her and for the commission of
the crime of rape with one qualifying aggravating circumstance; and

(3) To pay the costs. SO ORDERED. 4

In its judgment, the court below gave credence to complainant's version of what accused did to her.

The evidence for the prosecution as adduced during the trial on the merits clearly shows that private
complainant Mary Ann Tundag is a 13 year old girl who does not know how to read and write and has an
IQ of 76% which is a very low general mental ability and was living with her father, the herein accused, at
Galaxy Compound, Mandaue City.

xxx xxx xxx

That on September 5, 1997 at about 10:00 o'clock in the evening, she was in the house together with her
father. But before she went to sleep, her father was already lying down on the mat while herself (sic) just
lied down at his head side which was not necessarily beside him. However, when she was already
sleeping, she noticed that her father who was already undressed was beside her and was embracing her.
Then, he undressed her which she resisted but her father used a knife and told her that he would kill her if
she shouts and after that, he inserted his penis into her vagina and told her not to shout or tell anyone. In
effect, his penis penetrated her genital, which made her vagina bleed and was very painful.

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That when the penis of her father was already inserted in her vagina, her father was all the time asking by
saying (sic): 'Does it feel good?' And at the same time, he was laughing and further, told her that a
woman who does not marry can never enter heaven and he got angry with her when she contradicted his
statement. CIAacS

That while the penis of her father was inside her vagina and (he) was humping over her, she felt intense
pain that she cried and told him to pull it out but did not accede and in fact, said: 'Why will I pull it out
when it feels so good(?)'

That after removing his penis from her vagina and after telling her that she could not go to heaven if she
did not get married, her father just stayed there and continued smoking while she cried.

That in the evening of November 7, 1997, she was at home washing the dishes while her father was just
smoking and squatting. That after she finished washing the dishes, she lied (sic) down to sleep when her
father embraced her and since she does not like what he did to her, she placed a stool between them but
he just brushed it aside and laid down with her and was able to take her womanhood again by using a
very sharp knife which he was holding and was pointing it at the right side of her neck which made her
afraid.

That in the early morning of the following day, she left her father's place and went to her neighbor by the
name of Bebie Cabahug and told her what had happened to her, who, in turn, advised her to report the
matter to the police, which she did and accompanied by the policemen, she went to the Southern Islands
Hospital where she was examined and after her medical examination, she was brought back by the police
and was investigated by them." 5

Appellant's claim that the complainant's charges were manufactured did not impress the trial court, which
found him twice guilty of rape. Now before us, appellant assails his double conviction, simply contending
that: 6

THE TRIAL COURT HAS COMMITTED AN ERROR IN NOT ABSOLVING THE ACCUSED-APPELLANT
OF THE CRIMES CHARGED IN THE INFORMATIONS DESPITE THE PRESENCE OF REASONABLE
DOUBT TO EXCULPATE HIM OF THE SAME.

Appellant flatly denies that the incidents complained of ever took place. He contends that on September
5, 1997, he was working as a watch repairman near Gal's Bakery in Mandaue City Market and went home
tired and sleepy at around 11:00 o'clock that evening. On November 7, 1997, he claims he was at work.
In his brief, he argues that it was impossible for him to have raped his daughter because when the
incidents allegedly transpired, "he went to work and naturally, being exhausted and tired, it is impossible
for him to do such wrongdoings." 7

The Office of the Solicitor General disagrees with appellant and urges the Court to affirm the trial court's
decision, with the recommendation that the award of damages and indemnityex delicto be modified to
conform to prevailing jurisprudence.

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Considering the gravity of the offense charged as a heinous crime and the irreversibility of the penalty of
death imposed in each of these cases before us, the Court leaves no stone unturned in its review of the
records, including the evidence presented by both the prosecution and the defense. Conviction must rest
on nothing less than a moral certainty of guilt. 8 But here we find no room to disturb the trial court's
judgment concerning appellant's guilt, because his defense is utterly untenable. ASETHC
Appellant's defense of alibi and denial is negative and self-serving. It hardly counts as a worthy and
weighty ground for exculpation in a trial involving his freedom and his life. Against the testimony of private
complainant who testified on affirmative matters, 9 such defense is not only trite but pathetic. Denial is an
inherently weak defense, which becomes even weaker in the face of the positive identification by the
victim of the appellant as the violator of her honor. 10 Indeed, we find that private complainant was
unequivocal in charging appellant with ravishing her. The victim's account of the rapes complained of was
straightforward, detailed, and consistent. 11 Her testimony never wavered even after it had been
explained to her that her father could be meted out the death penalty if found guilty by the court. 12

In a prosecution for rape, the complainant's credibility is the single most important issue. 13 The
determination of the credibility of witnesses is primarily the function of the trial court. The rationale for this
is that the trial court has the advantage of having observed at first hand the demeanor of the witnesses on
the stand and, therefore, is in a better position to form an accurate impression and conclusion. 14 Absent
any showing that certain facts of value have clearly been overlooked, which if considered could affect the
result of the case, or that the trial court's finding are clearly arbitrary, the conclusions reached by the court
of origin must be respected and the judgment rendered affirmed. 15

Moreover, we note here that private complainant's testimony is corroborated by medical findings that
lacerations were present in her hymen. The examination conducted by Dr. Bessie Acebes upon the
private complainant yielded the following results:

Genitalia: grossly female Pubic Hairs: scanty Labia Majora: coaptated Labia Minora: -do- Fourchette: U-
shaped Vestibule: pinkish

Hymen: + old healed laceration at 3 and 9 o'clock position(s). Orifice: admits 2 fingers with ease
Vagina:

Walls: pinkish

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Ruganities: prominent Uterus: small

Cervix: closed
Discharges: Mucoid, minimal
Smears:
Conclusions: sperm identification (-)

Gram staining of vaginal disc. 16

Dr. Acebes testified that her findings of healed hymenal lacerations in the complainant's private parts
meant a history of sexual congress on her part. 17 According to her, the lacerations may have been
caused by the entry of an erect male organ into complainant's genitals. The examining physician likewise
pointed out that previous coitus may be inferred from complainant's U-shaped fourchette since the
fourchette of a female who has not yet experienced sexual intercourse is V-shaped. 18 While Dr. Acebes
conceded under cross- examination, that the existence of the datum "U-shape(d) fourchette does not
conclusively and absolutely mean that there was sexual intercourse or contact because it can be caused
by masturbation of fingers or other things," 19 nonetheless, the presence of the hymenal lacerations
tends to support private complainant's claim that she was raped by appellant.
Appellant next contends that his daughter pressed the rape charges against him because she had
quarreled with him after he had castigated her for misbehavior. He stresses that the prosecution did not
rebut his testimony regarding his quarrel or misunderstanding with private complainant. He urges us to
consider the charges filed against him as the result of his frequent castigation of her delinquent behavior.
20

Such allegation of a family feud, however, does not explain the charges away. Filing a case for
incestuous rape is of such a nature that a daughter's accusation must be taken seriously. It goes against
human experience that a girl would fabricate a story which would drag herself as well as her family to a
lifetime of dishonor, unless that is the truth, for it is her natural instinct to protect her honor. 21 More so,
where her charges could mean the death of her own father, as in this case.

Appellant likewise points out that it was very unlikely for him to have committed the crimes imputed to him
considering that he and his wife had ten children to attend to and care for. This argument, however, is
impertinent and immaterial. Appellant was estranged from his wife, and private complainant was the only
child who lived with him. 22 As pointed out by the Solicitor General, appellant was thus "free to do as he
wished to satisfy his bestial lust on his daughter." 23

Nor does appellant's assertion that private complainant has some psychological problems and a low IQ of
76 in any way favor his defense. These matters did not affect the credibility of her testimony that appellant
raped her

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twice. We note that the victim understood the consequences of prosecuting the rape charges against her
own father, as shown by the following testimony of the victim on cross-examination:

Q:

A: Q:

A Q:

A: Q: A:

correct?

Section 335 of the Revised Penal Code, as amended by Section 11 of R.A. No. 7659, 25 penalizes rape
of a minor daughter by her father as qualified rape 26 and a heinous crime. In proving such felony, the
prosecution must allege and prove the elements of rape: (1) sexual congress; (2) with woman; (3) by
force or without her consent 27 and, in order to warrant the imposition of capital punishment, the
additional elements that: (4) the victim is under 18 years of age at the time of the rape and (5) the
offender is a parent of the victim. 28

In this case, it was sufficiently alleged and proven that the offender was the victim's father. 29 But the
victim's age was not properly and sufficiently proved beyond reasonable doubt. She testified that she was
thirteen years old at the time of the rapes. However, she admitted that she did not know exactly when she
was born because her mother did not tell her. She further said that her birth certificate was likewise with
her mother. In her own words, the victim testified — 30

COURT TO WITNESS
Were you informed that if, and when your father will be found guilty, your father will be sentenced to
death?

Yes.

Until now you wanted that your father will be sentenced by death?

(Witness nodding.)

xxx xxx xxx

I will inform you, Miss Witness, that you have filed two cases against your father and in case your father
would be found guilty, two death sentences will be imposed against him?

Yes.
With that information, do you still want this case would proceed?

I want this to proceed. 24

Indeed, appellant is guilty. But is the penalty of death imposed on him

Q:
A:
Q:
A: COURT:

When were you born? — I do not know.

You do not know your birthday?

My mama did not tell me exactly when I asked her.

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Proceed. FISCAL PEREZ:

For our failure to secure the Birth Certificate Your Honor, may we just request for judicial notice that the
victim here is below 18 years old.

ATTY. SURALTA: Admitted . . .

Judicial notice is the cognizance of certain facts which judges may properly take and act on without proof
because they already know them. 31 Under the Rules of Court, judicial notice may either be mandatory or
discretionary. Section 1 of Rule 129 of the Rules of Court provides when court shall take mandatory
judicial notice of facts —

SECTION 1. Judicial notice, when mandatory. — A court shall take judicial notice without the introduction
of evidence, of the existence and territorial extent of states, their political history, forms of government
and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their
seals, the political constitution and history of the Philippines, the official acts of the legislative, executive
and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical
divisions. cSCTEH
Section 2 of Rule 129 enumerates the instances when courts may take discretionary judicial notice of
facts —

SEC. 2. Judicial notice, when discretionary. — A court may take judicial notice of matters which are of
public knowledge, or are capable of unquestionable demonstration or ought to be known to judges
because of their judicial functions.

Thus, it can be considered of public knowledge and judicially noticed that the scene of the rape is not
always nor necessarily isolated or secluded for lust is no respecter of time or place. The offense of rape
can and has been committed in places where people congregate, e.g. inside a house where there are
occupants, a five (5) meter room with five (5) people inside, or even in the same room which the victim is
sharing with the accused's sister. 32

The Court has likewise taken judicial notice of the Filipina's inbred modesty and shyness and her
antipathy in publicly airing acts which blemish her honor and virtue. 33

On the other hand, matters which are capable of unquestionable demonstration pertain to fields of
professional and scientific knowledge. For example, in People v. Alicante, 34 the trial court took judicial
notice of the clinical records of the attending physicians concerning the birth of twin baby boys as
"premature" since one of the alleged rapes had occurred 6 to 7 months earlier.

As to matters which ought to be known to judges because of their judicial functions, an example would be
facts which are ascertainable from the record of court proceedings, e.g. as to when court notices were
received by a party.

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With respect to other matters not falling within the mandatory or discretionary judicial notice, the court can
take judicial notice of a fact pursuant to the procedure in Section 3 of Rule 129 of the Rules of Court
which requires that:

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

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

In this case, judicial notice of the age of the victim is improper, despite the defense counsel's admission,
thereof acceding to the prosecution's motion. As required by Section 3 of Rule 129, as to any other
matters such as age, a hearing is required before courts can take judicial notice of such fact. Generally,
the age of the victim may be proven by the birth or baptismal certificate of the victim, or in the absence
thereof, upon showing that said documents were lost or destroyed, by other documentary or oral evidence
sufficient for the purpose.

Thus, in People v. Rebancos, 172 SCRA 426 (1989), the victim was below 12 and we found that the rape
committed was statutory rape. The mother testified that her daughter was born on October 26, 1974, and
so was only 9 years old at the time of the rape on February 12, 1984. Although no birth certificate was
presented because the victim's birth had allegedly not been registered, her baptismal certificate was duly
presented. Hence, we ruled that the mother's testimony coupled with the presentation of the baptismal
certificate was sufficient to establish that the victim was below 12 at the time of the rape.
However, inPeople v. Vargas, 257 SCRA 603 (1996), we ruled that appellant can only be convicted of
simple rape, and not statutory rape, because of failure of the prosecution to prove the minority of the
victim, who was allegedly 10 years old at the time of the rape. The prosecution failed to present either the
birth or baptismal certificate of the victim. Also there was no showing that the said documents were lost or
destroyed to justify their non-presentation. We held that testimony of the victim and her aunt were
hearsay, and that it was not correct for the trial court to judge the age of the victim by her appearance.
cETDIA

In several recent cases, we have emphasized the need for independent proof of the age of the victim,
aside from testimonial evidence from the victim or her relatives. In People v. Javier, 35 we stressed that
the prosecution must present independent proof of the age of the victim, even though it is not contested
by the defense. The minority of the victim must be proved with equal certainty and clearness as the crime
itself. In People v. Cula, 36 we reiterated that it is the burden of the prosecution to prove with certainty the
fact that the

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victim was below 18 when the rape was committed in order to justify the imposition of the death penalty.
Since the record of the case was bereft of any independent evidence thereon, such as the victim's duly
certified Certificate of Live Birth, accurately showing private complainant's age, appellant could not be
convicted of rape in its qualified form. In People v. Veloso, 37 the victim was alleged to have been only 9
years of age at the time of the rape. It held that the trial court was correct when it ruled that the
prosecution failed to prove the victim's age other than through the testimony of her father and herself.

Considering the statutory requirement in Section 335 of the Revised Penal Code as amended by R.A. No.
7659 and R.A. No. 8353, we reiterate here what the Court has held in Javier without any dissent, that the
failure to sufficiently establish victim's age by independent proof is a bar to conviction for rape in its
qualified form. For, in the words of Melo, J., "independent proof of the actual age of a rape victim
becomes vital and essential so as to remove an 'iota of doubt' that the case falls under the qualifying
circumstances" for the imposition of the death penalty set by the law.

In this case, the first rape was committed on September 5, 1997 and is therefore governed by the death
penalty law, R.A. 7659. The penalty for the crime of simple rape or rape in its unqualified form under Art.
335 of the Revised Penal Code, as amended by Sec. 11 of R.A. 7659, is reclusion perpetua. The second
rape was committed on November 7, 1997, after the effectivity of R.A. 8353, also known as the Anti-Rape
Law of 1997, which took effect on October 22, 1997. The penalty for rape in its unqualified form remains
the same.

As to civil indemnity, the trial court correctly awarded P50,000.00 for each count of rape as civil indemnity.
However, the award of another P50,000.00 as "moral and exemplary damages under Article 2219 in
relation to Articles 2217 and 2230 of the Civil Code" for each count is imprecise. In rape cases, the
prevailing jurisprudence permits the award of moral damages without need for pleading or proof as to the
basis thereof. 38 Thus, pursuant to current jurisprudence, we award the amount of P50,000.00 as moral
damages for each count of rape. TCcDaE

The award of exemplary damages separately is also in order, but on a different basis and for a different
amount. Appellant being the father of the victim, a fact duly proved during trial, we find that the alternative
circumstance of relationship should be appreciated here as an aggravating circumstance. Under Article
2230 of the New Civil Code, exemplary damages may be imposed when the crime was committed with
one or more aggravating circumstances. Hence, we find an award of exemplary damages in the amount
of P25,000.00 proper. Note that generally, in rape cases imposing the death penalty, the rule is that
relationship is no longer appreciated as a generic aggravating circumstance in view of the amendments
introduced by R.A. Nos. 7659 and 8353. The father-daughter relationship has been treated by Congress
in the nature of a special circumstance which makes the imposition of the death penalty mandatory. 39
However, in this case, the special qualifying circumstance of relationship was proved but not the minority
of the victim,

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taking the case out of the ambit of mandatory death sentence. Hence, relationship can be appreciated as
a generic aggravating circumstance in this instance so that exemplary damages are called for. In rapes
committed by fathers on their own daughters, exemplary damages may be imposed to deter other fathers
with perverse tendency or aberrant sexual behavior from sexually abusing their own daughters. 40

WHEREFORE, the judgment of the Regional Trial Court of Mandaue City, Branch 28, in Criminal Case
Nos. DU-6186 and DU-6203, is hereby MODIFIED as follows: appellant Tomas Tundag is found guilty of
two (2) counts of simple rape; and for each count, sentenced to reclusion perpetua and ordered to pay the
victim the amount of P50,000.00 as indemnity, P50,000.00 as moral damages, and P25,000.00 as
exemplary damages.

No pronouncement as to costs.

SO ORDERED.

SECTION 4

G.R. No. 201193, June 10, 2019

TRANQUILINO AGBAYANI, PETITIONER, v. LUPA REALTY HOLDING CORPORATION,

RESPONDENT.

RESOLUTION

CAGUIOA, J.:

Before the Court is a Petition for Review on Certiorari1(Petition) under Rule 45 of the Rules of Court
assailing the Decision2 dated September 14, 2011 (CA Decision) and the Resolution 3 dated March 9,
2012 (CA Resolution) of the Court of Appeals4 (CA) in CA-G.R. CV No. 93912. The CA Decision reversed
and set aside the Decision5 dated June 15, 2009 rendered by the Regional Trial Court, Branch 7, Aparri,
Cagayan (RTC) in Civil Case No. 07-532. The CA Decision also dismissed the complaint of petitioner
Tranquilino Agbayani (Tranquilino) as well as the third-party complaint of respondent Lupa Realty Holding
Corporation (Lupa Realty), fourth-party complaint of Moriel Urdas (Moriel) and the counterclaims. The CA
Resolution denied the motion for reconsideration filed by Tranquilino. 

The Facts and Antecedent Proceedings

The CA Decision narrates the factual antecedents as follows:cralawred

The property subject of the instant case is a 91,899-square meter parcel of land, situated in Barrio
Sinungan, Sta. Ana, Cagayan, originally registered under OCT No. P-46041 in the name of x x x
Tranquilino Agbayani (Tranquilino), pursuant to Free Patent No. 587747 on 7 June 1979.

On 11 October 1999, Tranquilino, who was by then already residing in America, filed a Complaint for
Reivindicacion, Cancellation of Title and Document with Damages against Lupa Realty Holding
Corporation (Lupa Realty), through his brother, Kennedy Agbayani, and his nephew, Vernold Malapira
(Vernold). We note that Vernold is also written as "Bernold" in other parts of the record, and is admitted
to be the same "Bernard" referred to in the Complaint and in the Special Power of Attorney as having
been authorized by Tranquilino to file the instant case. 

The Complaint alleged that sometime in April 1999, [Vernold] went to the Office of the Municipal
Treasurer of Sta. Ana, Cagayan to pay the real estate taxes on the subject property, but was told that
Lupa Realty was already the new owner thereof and that the tax declaration had already been transferred
to its name. Tranquilino further alleged that upon verifying with the Registry of Deeds for Cagayan,
[Vernold] discovered that the subject property was already registered in the name of Lupa Realty under
TCT No. T-109129 pursuant to a Deed of Absolute Sale purportedly executed by Tranquilino on 29
October 1997 in favor of Lupa Realty, in consideration of the sum of P425,500.00. 

In his complaint, Tranquilino denied having executed said Deed of Absolute Sale, insisting that his
signature thereon must be a forgery because he was in America on 29 October 1997. Accordingly, [he]
prayed for the cancellation of Lupa Realty's TCT No. T-109129 and the reinstatement of OCT No. P-
46041 in his name, plus damages.

In its Answer, Lupa Realty countered that contrary to the allegation of Tranquilino that he never sold the
subject property, he sold the same to his brother, Nonito Agbayani (Nonito), as shown by a
notarized Deed of Absolute Sale executed on 21 January 1992. In turn, Nonito sold the subject property
to Moriel Urdas (Moriel) in a notarized Deed of Absolute Sale, dated 30 May 1997. According to Lupa
Realty, it acquired the subject property not from Tranquilino but from Moriel by way of a notarized Deed of
Absolute Sale, dated 29 October 1997. 

Lupa Realty further insisted that it was an innocent purchaser for value and in good faith. Lupa Realty
explained that it was Moriel and his mother who registered the sale in the Registry of Deeds, as shown by
the Affidavit executed by Moriel's mother. According to Lupa Realty, it had no idea that Moriel and his
mother had used a falsified deed of sale with Tranquilino's forged signature in registering the sale. Thus,
Lupa Realty filed a third-party complaint against Moriel to enforce the latter's warranty of a valid title and
peaceful possession against the claims of third persons. 

In his Answer to the Third-Party Complaint, Moriel denied having caused the registration of the sale to
Lupa Realty, and denied having prepared the falsified deed of sale that was used in transferring the title
to Lupa Realty. Moriel insisted that contrary to Lupa Realty's assertions, it was actually the latter's
personnel who registered the sale. 

Moriel laid the blame squarely on Tranquilino for having entrusted his original certificate of title to his
brother Nonito, thereby making it possible for the latter to fraudulently transfer the property to an innocent
third person like Moriel. Thus, Moriel filed a Fourth-Party Complaint against Nonito, praying that if it turns
out that Tranquilino really did not sell the subject property to Nonito, the latter should be made liable for
whatever liability may be adjudged against [Moriel]. 

In his Answer (to the Fourth-Party Complaint), Nonito admitted to having signed the Deed of Absolute
Sale in favor of Moriel, but qualified that the execution of the same was "attended by undue pressure
considering that at that time, [Nonito] was of confused state of mind brought about by the numerous
unfortunate events that beset his family." According to Nonito, it was Moriel who prepared the Deed of
Absolute Sale, which [Nonito] mistakenly believed to be merely one of mortgage to secure a loan that he
had obtained from Moriel. Accordingly, Nonito prayed that the fourth-party complaint against him be
dismissed and that the Deed of Absolute Sale in favor of Moriel be nullified. 

Curiously, during trial, despite Tranquilino's insistence that his signature on the deed of sale in favor of
Lupa Realty was forged, he did not present a handwriting expert to prove the alleged forgery. Neither did
Tranquilino present any evidence controverting Lupa Realty's allegations that he had sold the property to
his brother Nonito, who, in turn, transferred the property to Moriel, and the latter eventually transferred the
same to Lupa Realty. 

Instead, Tranquilino presented only his nephew, Vernold, and his tenants, Felino Rizaldo (Felino) and
Florante Ruiz (Florante). [Vernold] testified on the matters contained in the Complaint; i.e., about how he
discovered that the land is now registered in the name of Lupa Realty. While Felino and Florante both
testified that they were instituted as tenants in the property by the family of Tranquilino since 1992 and no
one has ever disturbed them in their possession thereof. 

On the other hand, Lupa Realty presented its former employee, Demetria Balisi [(Demetria)], who testified
that she was one of the two witnesses to the deed of sale between Lupa Realty and Moriel. 

Demetria further testified that because the OCT was in the name of Tranquilino and not Moriel, Lupa
Realty had asked for proof of Moriel's ownership thereof, and the latter submitted to them the deed of sale
between Tranquilino and Nonito, and the deed of sale between Nonito and Moriel. We note that
Tranquilino's counsel admitted in open court the existence of the deed of sale between Tranquilino and
Nonito. 

Demetria acknowledged that none of the deeds of conveyances between Tranquilino and Nonito;
between Nonito and Moriel; and between Moriel and Lupa Realty - was used in registering the transfer of
the subject property to Lupa Realty. According to Demetria, it was Moriel's mother who processed the
registration, and this was further confirmed by Moriel's mother in an affidavit stating that they "were able
to secure at (their) own ways and means a new Title of the subject property in favor of [Lupa Realty]." 

To prove that Nonito really sold the subject property to him, Moriel presented Onorio Rumbaoa [(Onorio)],
who testified that he was the agent of the sale between Nonito and Moriel. Onorio testified that both
Nonito and Moriel are his townmates and he arranged for the two to meet when Nonito wanted to sell the
subject property. According to Onorio, when he remarked to Nonito that the OCT was not in his name,
Nonito showed him the deed of sale executed by Tranquilino to prove that he (Nonito) already own[ed]
the subject property. Onorio testified that after Moriel agreed to purchase the property, the three of them
(Nonito, Moriel and Onorio) went to the notary public where they signed the deed of sale, with Onorio as
witness. Moriel corroborated the testimony of Onorio with regard to the details of the sale to him of the
subject property by Nonito. 

Finally, Nonito testified that he only borrowed money from Moriel and denied having sold the subject
property to him. According to Nonito, he gave Moriel a collateral for the purported loan but it was not the
subject property. When asked on cross-examination what the collateral was, Nonito could not say. When
asked how Moriel came into possession of the OCT in Tranquilino's name, Nonito also could not say. 

After due proceedings, the trial court rendered a decision with the following disposition:cralawred

"WHEREFORE, premises considered, the Court declares and Orders that:cralawred

1. OCT (sic) No. P-109129 in the name of Lupa Realty is null and void, hence, the Register of Deeds,
Tuguegarao, Cagayan is ordered to immediately cancel the same; 

2. TCT (sic) No. T-46041 in the name of the plaintiff is reinstated and the property subject of the same is
reconveyed to the plaintiff; 

3. Defendant shall pay plaintiff attorney's fees in the amount of P30,000.00; 

4. Third Party Defendant Moriel Urdas shall pay Defendant/Third Party Plaintiff Lupa Realty the amount of
P551,394 plus legal interest from the time the Third Party complaint was filed until full satisfaction of this
judgment;

5. Fourth Party Defendant Nonito Agbayani pays Third Party Defendant/Fourth Party Plaintiff Moriel
Urdas the amount of P286,698.32 plus legal interest from the time the Fourth Party complaint was filed up
to full satisfaction of this judgment;

6. For the same reason that the Court allows the plaintiff to collect attorney's fees from the Defendant, the
3rdparty defendant is likewise adjudged to pay the Third Party plaintiff reasonable attorney's fees in the
amount of P30,000.00. Likewise 4thparty plaintiff is entitled to collect from the 4 th party defendant the
amount of P30,000.00 by way of attorney's fees. 

The other damages sought in the 3rdparty and 4th party complaints as well as the parties' respective
counter claims are denied for lack of merit. 

SO ORDERED."

Hence, [the] appeal by [Lupa Realty to the CA.] 6

chanRoblesvirtualLaw1ibrary

Ruling of the CA

The CA in its Decision dated September 14, 2011 granted the appeal. The CA held that the conclusions
reached by the RTC are not in accord with law and the evidence on record; therefore, the reversal of the
trial court's decision is warranted.7

The CA ruled that Tranquilino failed to discharge his burden to present clear and convincing evidence to
overthrow the presumption of regularity in the execution on January 21, 1992 of the Deed of Absolute
Sale (1992 DAS) in favor of his brother Nonito and to prove his allegation of forgery regarding his
signature.8 According to the CA, Tranquilino's insistence that he could not have signed the 1992 DAS
because he was in America at that time9 was insufficient.10 Further, the CA stated that the fact that there
is a Deed of Absolute Sale (1997 DAS) purportedly executed by Tranquilino on October 29, 1997 in favor
of Lupa Realty, which Moriel and his mother used in registering the sale to Lupa Realty, is not sufficient in
itself to invalidate Transfer Certificate of Title (TCT) No. T-109129 in the name of Lupa Realty. 11

In fine, the CA ruled in favor of the dismissal of Tranquilino's complaint based on the lack of evidence
regarding his forgery allegation and its postulation that his action for declaration of nullity of the 1997 DAS
is not the direct proceeding required by law to attack a Torrens certificate of title since it cannot be
collaterally attacked.12

The dispositive portion of the CA Decision states:cralawred

WHEREFORE, the Decision, dated 15 June 2009, of the Regional Trial Court, Branch 7, Aparri,
Cagayan, in Civil Case No. 07-532 is REVERSEDand SET ASIDE. Tranquilino Agbayani's complaint, as
well as Lupa Realty's third-party complaint, Moriel Urdas' fourth-party complaint, and all parties'
counterclaims, are DISMISSED. 

SO ORDERED.13

chanRoblesvirtualLaw1ibrary
Tranquilino filed a motion for reconsideration, which was denied by the CA in its Resolution 14 dated March
9, 2012. 

Hence, the instant Rule 45 Petition. Lupa Realty filed its Comment 15 dated October 8, 2012. Tranquilino
filed a Reply16dated June 28, 2013. 

The Issues

The Petition raises the following issues:cralawred

1. whether the CA erred in reversing the RTC Decision that declared the nullity of TCT No. T-109129 in
the name of Lupa Realty; 

2. whether the CA erred in reversing the RTC Decision on the ground that the RTC erred in ordering the
cancellation of the TCT under Lupa Realty's name because the action filed by Tranquilino constitutes a
collateral attack on a Torrens title; and 

3. whether the CA erred in recognizing and protecting Lupa Realty's right as an innocent purchaser for
value (IPV). 

The Court's Ruling

The Petition is meritorious. 

Rule 45 of the Rules of Court on Appeal by Certiorari to the Supreme Court mandates that: the petition
shall raise only questions of law;17 this mode of review is not a matter of right, but of sound judicial
discretion; and it will be granted only when there are special and important reasons therefor. 18A Rule 45
review is warranted when there is finding by the Court that the court a quo has decided a question of
substance in a way probably not in accord with law or with the applicable decisions of the Court. 19

While only questions of law may be raised in a Rule 45 certiorari petition, there are admitted exceptions,
which includes the instance when there is conflict in the findings of fact of the trial court and the CA. The
instant case falls under this exception. 

The RTC found that the 1992 DAS between Tranquilino and Nonito was established by preponderance of
evidence to be a falsified document;20 the 1997 DAS between Tranquilino and Lupa Realty was also
falsified;21 and Lupa Realty was not an IPV.22 On the other hand, the CA ruled that the 1992 DAS was
valid because Tranquilino was unable to prove that his signature therein was forged. 23 The CA did not,
however, rule squarely on whether the 1997 DAS was falsified 24 and whether Lupa Realty was an IPV.25

Given the conflict in the findings of the RTC and the CA, a review of the facts is justified. 

Tranquilino posits that both the 1992 DAS in favor of Nonito and the 1997 DAS in favor of Lupa Realty,
which Tranquilino purportedly executed, are spurious and false. 

As to the 1997 DAS (Exh. "F"26), which is purportedly a unilateral sale in favor of Lupa Realty and signed
only by Tranquilino, he reproduces the following portion of the RTC Decision in support of his argument
regarding its falsity:cralawred

"What really boggles the mind of the court is the existence of the Deed of Sale (Exh. "F") dated Oct. 29,
1997 allegedly executed between Tranquilino Agbayani and LUpa Relaty (sic) and which was registered
and instrumental for the cancellation of OCT No. P-4601 [sic] and the issuance of TCT No. T-109129.
Worst, a careful study of said deed of sale and the Deed of Sale executed by and between Moriel Urdas
and Lupa Realty would reveal that the two deeds, although allegedly executed and notarized on different
dates, have the same Doc. No., Book No., Page No., and series. The defendant [Lupa Realty] cannot
feign ignorance and innocence on the existence of the Deed of Sale (Exh. "F"). It is a corporation whose
business is, as apparent in its business name, mainly concerns real estate, thus, it is incredible that it
would entirely leave the transfer of the title into the hands of Moriel Urdas and his mother. It is expected
that it would exert due diligence in its transactions, it being in the realty business. Defendant having
uttered a Deed of Sale (Exh. "F"), which plaintiff has established by preponderance of evidence to have
been falsified and which Defendant impliedly admitted in its Answer and Third Party Complaint as indeed
falsified when it claimed that its title was derived from the Deed of Sale executed in its favor by Third
Party Defendant Moriel Urdas, Defendant cannot [n]ow claim it was an innocent purchaser for value. 

The operative act in the cancellation of TCT [sic] No. 4604 [sic] and the issuance of the TCT No. 109129
in favor of the defendant was the presentation with the Register of Deeds of falsified Deed of Sale
allegedly executed by Tranquilino Agbayani in favor of Lupa Realty." 27

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The CA justified the validity of the sale to Lupa Realty and its TCT in this wise:cralawred

On the other hand, Lupa Realty presented sufficient proof of its lawful acquisition of the subject property.
The deeds of sale between Tranquilino and Nonito; between Nonito and Moriel; and between Moriel and
Lupa Realty show the legal tie that bind the parties and legally conveyed the subject property to Lupa
Realty. 

The fact that there is a Deed of Sale between Tranquilino and Lupa Realty that Moriel and his mother
used in registering the sale is not sufficient in itself to invalidate TCT No. T-109129 in the name of Lupa
Realty.28

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The "DEED ABSOLUTE SALE" (DAS Moriel-Lupa Realty; Exh. 2 Lupa" 29) by and between Moriel and
Lupa Realty with "29 day of Oct 1997'' as date of execution, which bears both the signatures of "Roberto
P. Alingog" with "CTC No. 7968352, Issued at Cauayan, Isa[bela], Issued on 01/22/97" and "Moriel C.
Urdas" (but the acknowledgment does not reflect Moriel's name but the name of "Luzviminda Urdas"
(Moriel's spouse) without the specifics of her CTC information) bears the following notarial information:
"Doc. No. 47; Page No. 10, Book No. 11; Series of 1997." 30

On the other hand, the "DEED ABSOLUTE SALE" (1997 DAS; Exh. "F" 31) also bears "29 day
of Oct  1997" as date of execution; the name of "Roberto P. Alingog" with "CTC No. 7968352, Issued at
Cauayan, Isa[bela], Issued on 01/22/97" in the acknowledgment portion, together with Tranquilino
Agbayani and the specifics of his CTC, but Roberto P. Alingog is not a signatory thereto; and the following
notarial information: "Doc. No. 47; Page No. 10, Book No. 11; Series of 1997." 32

The Court notes that the 1997 DAS contains this recital: "Their right thereto being duly registered in
accordance with the Land Registration Act and evidenced by Original Certificate of Title No. P-26619
with Homestead Patent No. 119163."33 It must be noted that Tranquilino's title is Original Certificate of
Title (OCT) No. P-46041 with Free Patent No. 587747. 34

In both documents, the Notary Public's name is illegible. However, the following entries below the
signature of the Notary Public are almost identical:cralawred

DAS Moriel-Lupa Realty:35 1997 DAS36

    

Notary Public Notary Public

   

Until Dec. 31. 1997 Until Dec. 31, 1997

PTR No. 5445937 S  PTR No. 5445937- S
Issued at Ilagan, Isabela Issued at ILAGAN, ISABELA
Issued on January 8, 1997 Issued on JAN. 8, 1997

The Court agrees with the RTC that it is indeed mind boggling how two distinct documents which were
supposedly notarized on the same date by one Notary Public have identical notarial details, i.e.,
document number, page number, book number and year series. Indeed, one of them must be fake or
false. 

Based on all the facts narrated, it is the 1997 DAS which is sham or spurious. As noted above, these are:
(1) the similarity of its notarial details' with those of the DAS Moriel-Lupa Realty; (2) the recital that it
pertained to the land covered by "Original Certificate of Title No. P-26619 with Homestead Patent No.
119163" and not to Tranquilino's OCT No. P-46041 with Free Patent No. 587747; (3) the inclusion of
Lupa Realty, represented by its President, Roberto P. Alingog, as a party and the CTC details of Roberto
P. Alingog, but who is not made a signatory thereto; (4) the identity of its date of execution with that of the
DAS Moriel-Lupa Realty; and (5) the identity of the notary public's details in both 1997 DAS and the DAS
Moriel-Lupa Realty. 

In addition, the Court does not lose sight of the fact that there is uncontested evidence that Tranquilino
could not have signed the 1997 DAS because he had left for California, U.S.A. in April, 1989. 37

It is likewise significant to note the fact that Lupa Realty did not even have the 1997 DAS marked and
offered as its evidence is a very strong indication of its falsity. In the Formal Offer of Documentary
Exhibits of Lupa Realty, the 1997 DAS was not marked and offered as one of its exhibits. 38 If the 1997
DAS was truly executed by Tranquilino and is genuine, why did not Lupa Realty have it marked and
offered as its documentary exhibit? The answer is obvious: because Lupa Realty wanted to distance itself
therefrom because it might be accused as being complicit with Moriel and/or his mother in falsifying the
1997 DAS. 

In People v. Sendaydiego,39 the Court stated the rule that if a person had in his possession a falsified
document and he made use of it (uttered it), taking advantage of it and profiting therefrom, the
presumption is that he is the material author of the falsification. 40 Pursuant to Re: Fake Decision Allegedly
in G.R. No. 75242,41 the simulation of a public or official document, done in a manner as to easily lead to
error as to its authenticity, constitutes the crime of falsification. 42 Under Rule 132, Section 19(b),
documents acknowledged before a notary public except last wills and testaments are public documents.
Further, it is presumed that "evidence willfully suppressed would be adverse if produced." 43

Article 1409(2) of the Civil Code provides that contracts "which are absolutely simulated or fictitious" are
inexistent and void from the beginning. It is also provided in Article 1346 that "[a]n absolutely simulated or
fictitious contract is void." 

Justice Eduardo P. Caguioa discusses the concept and requisites of simulation in the following
manner:cralawred

x x x Simulation is the declaration of a fictitious intent manifested deliberately and in accordance with the
agreement of the parties in order to produce for the purpose of deceiving others the appearance of a
transaction which does not exist or which is different from their true agreement. 44Simulation involves a
defect in the declaration of the will. x x x Simulation requires the following: (1) A deliberate declaration
contrary to the will of the parties; (2) Agreement of the parties to the apparently valid act; and (3) The
purpose is to deceive or to hide from third persons although it is not necessary that the purpose be illicit
or for purposes of fraud. The above three requisites must concur in order that simulation may exist. x x x 45

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The three requisites are present in the 1997 DAS. There is a deliberate declaration that Tranquilino sold
the subject land to Lupa Realty, which is contrary to their will. The agreement appears on its face to be a
valid act. The purpose is to deceive third persons into believing that there was such a sale between
Tranquilino and Lupa Realty. The purpose, in this case, is evidently tainted with fraud. 

Since the 1997 DAS is void, its registration is likewise void pursuant to Section 53 of Presidential Decree
No. (PD) 1529 (the Property Registration Decree), which provides that "any subsequent registration
procured by the presentation of a forged duplicate certificate of title, or a forged deed or other instrument,
shall be null and void." The registration of the 1997 DAS being null and void, it follows that TCT T-109129
in the name of Lupa Realty is also null and void. Being null and void, it should be cancelled. 

Moreover, the Court is perplexed why the Registry of Deeds for the Province of Cagayan allowed the
registration of the 1997 DAS. 

While the Court has held that registration is a mere ministerial act by which a deed, contract or instrument
is sought to be inscribed in the records of the Office of the Register of Deeds and annotated at the back of
the certificate of title covering the land subject of the deed, contract or instrument and is not a declaration
by the state that such an instrument is a valid and subsisting interest in land; it is merely a declaration that
the record of the title appears to be burdened with such instrument, according to the priority set forth in
the certificate,46 and that no valid objection can be interposed to the registration of a document by the
Register of Deeds who finds nothing defective or irregular on its face upon an examination thereof, 47 the
fact of the matter is that the 1997 DAS is not regular on its face because, as duly noted above, it
pertained to the land covered by OCT No. P-26619 with Homestead Patent No. 119163. Presented with
the 1997 DAS that has reference to an OCT different from that of Tranquilino's title and to a Homestead
Patent instead of a Free Patent, the Register of Deeds concerned should not have allowed its registration
because of the obvious or patent irregularity appearing on the face of the 1997 DAS. 

From the foregoing, the CA erred when it ruled that the TCT of Lupa Realty is valid. 

With the declaration by the Court that the 1997 DAS is sham or spurious and the TCT in the name of
Lupa Realty is null and void, does it follow that the sale of the subject land to Lupa Realty is also null and
void? In other words, can Lupa Realty be nonetheless declared as the lawful owner of the subject land
despite the finding that the TCT issued in his favor is void? 

The resolution of this issue hinges on the validity of the 1992 DAS. If the 1992 DAS between Tranquilino
and Nonito is valid, then Nonito could have validly sold the subject land to Moriel and Moriel could have
thereafter validly sold it to Lupa Realty. The invalidity of Lupa Realty's TCT does not necessarily render
invalid its right of ownership over the subject land if the sales preceding the sale to it by Moriel are valid. 

As to the 1992 DAS, Tranquilino argues that the unqualified admission made during the pre-trial
proceedings in the RTC by Nonito, through his counsel on record, Atty. Frederick Aquino, that there was
no such sale between Tranquilino and Nonito is a judicial admission that it is spurious, which dispenses
with the need to present proof of the matter of fact already admitted. 48 The Pre-Trial Order dated April 22,
2003 states: "Atty. Aquino denied that Tranquilino Agbayani executed a Deed of Absolute Sale in favor of
Nonito Agbayani. According to Atty. Aquino there was no such sale." 49
Regarding admissions by counsel of a party during the preliminary conference, Camitan v. Fidelity
Investment Corporation50 is instructive:cralawred

x x x Unfortunately for petitioners, their counsel admitted the genuineness of the owner's duplicate copy
of the TCT presented by Fidelity during the preliminary conference at the CA. The following exchange is
revealing:cralawred

J. MARTIN:cralawred

Counsel for the private respondent, will you go over the owner's copy and manifest to the court
whether that is a genuine owner's copy?

ATTY. MENDOZA:cralawred

Yes, Your Honor.

J. MARTIN:cralawred

Alright. Make it of record that after examining the owner's copy of TCT NO. (T-12110) T-4342,
counsel for the private respondent admitted that the same appears to be a genuine owner's copy
of the transfer certificate of title. x x x 

xxxx

The foregoing transcript of the preliminary conference indubitably shows that counsel for petitioners made
a judicial admission and failed to refute that admission during the said proceedings despite the
opportunity to do so. A judicial admission is an admission, verbal or written, made by a party in the course
of the proceedings in the same case, which dispenses with the need for proof with respect to the matter
or fact admitted. It may be contradicted only by a showing that it was made through palpable mistake or
that no such admission was made.51

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On the other hand, American jurisprudence sets the following parameters on judicial
admissions:cralawred

A judicial admission is a formal statement, either by party or his or her attorney, in course of judicial
proceeding which removes an admitted fact from field of controversy. It is a voluntary concession of fact
by a party or a party's attorney during judicial proceedings.

Judicial admissions are used as a substitute for legal evidence at trial. Admissions made in the course of
judicial proceedings or judicial admissions waive or dispense with, the production of evidence, and the
actual proof of facts by conceding for the purpose of litigation that the proposition of the fact alleged by
the opponent is true. x x x

A judicial admission is a deliberate, clear, unequivocal statement of a party about a concrete fact within
that party's peculiar knowledge, not a matter of law. x x x In order to constitute a judicial admission, the
statement must be one of fact, not opinion. To be a judicial admission, a statement must be contrary to an
essential fact or defense asserted by the person giving the testimony; it must be deliberate, clear and
unequivocal x x x. 
Judicial admissions are evidence against the party who made them, and are considered conclusive and
binding as to the party making the judicial admission. A judicial admission bars the admitting party from
disputing it. x x x

A judicial admission of fact may carry with it an admission of other facts necessarily implied from it. 

xxxx

Judicial admissions may occur at any point during the litigation process. An admission in open court is a
judicial admission. x x x 52

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The admission by Nonito's counsel during the pre-trial proceedings before the RTC that there was no sale
between Tranquilino and Nonito qualifies as a judicial admission because the statement is a deliberate,
clear, unequivocal statement of a party's attorney during judicial proceedings in open court about a
concrete or essential fact within that party's peculiar knowledge. Since such statement is a judicial
admission, it does not require proof according to Section 4, Rule 129 of the Rules of Court, which
provides:cralawred

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. 

Moreover, there was no palpable mistake on the part of Nonito's counsel in making the admission
because in the offer of Nonito's testimony on December 2, 2008, he stated that "the land was the property
in suit was never sold to him [Nonito] by his brother Tranquilino Agbayani." 53 That is not all. The
admission by Nonito himself, on cross-examination by Tranquilino's counsel, that Tranquilino was in the
United States at the time of the purported transaction 54 supports the statement of the counsel of Nonito
that there was no sale between Tranquilino and Nonito. 

Since there is judicial admission that there was no sale of the subject land between Tranquilino and
Nonito, affirmed anew during oral testimony by Nonito himself, then there is no question that the 1992
DAS is void. The three requisites of a simulated contract are existent. There is a deliberate declaration
that Tranquilino sold the subject land to Nonito, which is contrary to their will because there was no sale
between them. The agreement appears on its face to be a valid act. The purpose is to deceive third
persons into believing that there was such a sale between them. 

Consequently, the CA committed egregious error when it made the finding that the 1992 DAS is valid.
Given that Tranquilino did not sell the subject land to Nonito, it could not have been sold by Nonito to
Moriel and Moriel could not, in turn, have sold it to Lupa Realty. 

Lupa Realty's argument that Tranquilino's action for declaration of nullity of the 1997 DAS is not the direct
proceeding required by law to attack a Torrens certificate of title since it cannot be collaterally attacked,
upheld by the CA, is untenable. 

In deference to the conclusiveness and indefeasibility of Torrens titles, a certificate of title shall not be
subject to collateral attack pursuant to Section 48 of PD 1529. 

As to what constitutes a direct attack on a Torrens title, the Court observed in Firaza, Sr. v. Spouses
Ugay:55
The attack is considered direct when the object of an action is to annul or set aside such proceeding, or
enjoin its enforcement. Conversely, an attack is indirect or collateral when, in an action to obtain a
different relief an attack on the proceeding is nevertheless made as an incident thereof. Such action to
attack a certificate of title may be an original action or a counterclaim, in which a certificate of title
is assailed as void. x x x56

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Here, there is a direct attack on Lupa Realty's TCT.

Firstly, the Complaint filed by Tranquilino before the RTC is captioned: "For: Reivindicacion, Cancellation
of Title and Document with Damages."57

Secondly, the Complaint alleged:cralawred

7. That the "Deed Absolute Sale" [or 1997 DAS] (Annex "B") is a falsified document and the signature
purporting to be that of the plaintiff in said document is a forgery for the reason that he never sold the land
in suit to anybody; that he never signed said document; that he never received P425,500.00 from the
defendant; that he never appeared before Notary Public Agustin Ladera in Cauayan, Isabela on October
29, 1997 because on that date he was in the United States of America. 

8. That as a consequence, the ''Deed Absolute Sale" (Annex "B") should be declared null and void and
that Transfer Certificate of Title No. T-109129 (in the name of the defendant) should also be declared null
and void, and cancelled and that Original Certificate of Title No. P-46041 in the name of the plaintiff
should be revived and reinstated.58

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Thirdly, the Complaint prayed that judgment be rendered for Tranquilino declaring, among others, the
nullity and ordering the cancellation of TCT No. T-109129 (in the name of Lupa Realty) and ordering the
revival and reinstatement of OCT No. P-46041 in the name of Tranquilino. 59

The foregoing clearly show that the Complaint purposefully sought the cancellation of Lupa Realty's TCT,
which is a direct attack thereon. 

With the pronouncement that there could not have been a valid sale of the subject land to Lupa Realty,
the latter cannot qualify as an IPV. Also, the Court totally agrees with the RTC that:cralawred

x x x [Lupa Realty] is a corporation whose business is, as apparent in its business name, mainly
concern[ed with] real estate, thus, it is incredible that it would entirely leave the transfer of the title into the
hands of Moriel x x x and his mother. It is expected that it would exert due diligence in its transactions, it
being in the realty business. x x x60

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Evidently, in allowing the falsified 1997 DAS to cause the cancellation of Tranquilino's OCT and the
issuance of a TCT in its name, Lupa Realty acted in bad faith. 

WHEREFORE, the Petition is hereby GRANTED. The Decision dated September 14, 2011 and the
Resolution dated March 9, 2012 of the Court of Appeals in CA-G.R. CV No. 93912
are REVERSED and SET ASIDE. The Decision dated June 15, 2009 rendered by the Regional Trial
Court, Branch 7, Aparri, Cagayan in Civil Case No. 07-532 is REINSTATED with modifications: with
respect to no. 1: "OCT No. P-109129 in the name of Lupa Realty ..." should instead read "TCT No. T-
109129 in the name of Lupa Realty ..." and no. 2: "TCT No. T-46041 in the name of the plaintiff ..." should
instead read "OCT No. P-46041 in the name of the plaintiff ..." 

SO ORDERED.

G.R. No. 163684             April 16, 2008

FAUSTINA CAMITAN and DAMASO LOPEZ, petitioners, 

vs.
FIDELITY INVESTMENT CORPORATION, respondent.

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision 1 dated
November 28, 2003 and of the Resolution2 dated May 12, 2004, both of the Court of Appeals (CA) in CA-
G.R. SP No. 37291 entitled Fidelity Investment Corporation v. Alipio Camitan, Faustina Camitan, Damaso
Lopez, the Regional Trial Court of Calamba, Laguna (Branch 37) and the Register of Deeds of Calamba,
Laguna.

The case arose from the Petition3 for the issuance of another duplicate copy of Certificate of Title No. T-
(12110) T-4342 (TCT) filed in 1993 by herein petitioners, together with Alipio Camitan, before the
Regional Trial Court (RTC) of Calamba, Laguna. The case was raffled to Branch 37 of the said court and
was docketed as SLRC Case No. 1198-93-C.

The petition contained, among others, the allegations that: (1) the petitioners are the true and lawful
registered co-owners of a parcel of land located at Maunong, Calamba, Laguna, consisting of 30,000
square meters covered by the TCT; (2) the lot is declared for tax purposes under Tax Declaration No.
14187; (3) petitioners paid the realty taxes on the said property until 1993; (4) the owner’s duplicate copy
was lost and could not be found despite diligent efforts to locate it; (5) per Certification 4 dated June 21,
1993 of the Register of Deeds of Calamba, Laguna, there were no legal claims annotated at the back of
the TCT filed with that office; (6) petitioners filed with the Register of Deeds an affidavit of loss of the said
owner’s duplicate copy; (7) they secured a certified true copy of the original TCT from the Register of
Deeds with the affidavit of loss annotated at the back thereof; (8) at the last page of the original certificate
of title, a mortgage was annotated, which upon verification was found to have already been paid; (9) the
Register of Deeds of Calamba could not cancel the mortgage from the original copy of the title until
presentation of the owner’s duplicate copy to the bank; and (10) petitioners were in possession of the
subject property.

After due proceedings, the RTC, in its Order5 dated April 8, 1994, granted the petition, directed the
Register of Deeds of Calamba, Laguna to issue a second owner’s duplicate copy of the TCT, and
declared void the first owner’s duplicate copy thereof.

Later, on May 25, 1995, herein respondent Fidelity Investment Corporation (Fidelity) filed a Petition 6 for
annulment of judgment and cancellation of title before the CA. According to Fidelity, on December 16,
1967, it purchased the property covered by the subject certificate of title from the registered owners
thereof pursuant to a Deed of Absolute Sale7 of the same date. It said that upon execution of the Deed of
Absolute Sale and the payment in full of the purchase price, the vendors delivered to Fidelity their owner’s
duplicate copy of the TCT, which has been in its possession since. It also alleged that it had been in
actual physical possession and continuous occupation of the subject property and that it had been paying
the real estate taxes due thereon. 
It further said that, sometime in March 1995, upon verification with the Register of Deeds of Calamba,
Laguna, it learned for the first time of the issuance of a second owner’s duplicate copy as recorded under
Entry No. 357701 dated May 26, 1994 and annotated on the TCT. Thus, it caused the sale of the property
in its favor to be annotated on the TCT. The notice of the sale was annotated on March 28, 1995 as Entry
No. 384954. Fidelity then filed, on April 26, 1995, a Notice of Adverse Claim with the concerned Register
of Deeds, which was annotated on the TCT as Entry No. 387483. 

In fine, Fidelity argued that the Order dated April 18, 1994 is null and void, the RTC having no jurisdiction
to issue the same as the owner’s duplicate copy of the TCT was in its possession all along and the
respondents therein had no standing to file the petition on account of the Deed of Absolute Sale they
executed in its favor. It claimed that the petitioners perjured themselves before the RTC when they stated
that the duplicate copy of the TCT was lost and that they gave notice to all who had interest in the
property, because they failed to notify Fidelity despite knowledge of the latter’s possession of the
property.

In their Comment,8 private respondents [herein petitioners] Faustina Camitan, Damaso Lopez, and the
surviving heirs of deceased Alipio Camitan, denied having committed falsehoods in their petition before
the trial court, which they claimed had jurisdiction over the case. They submitted that the long,
unexplained, and questionable silence of Fidelity on its alleged possession of the owner’s duplicate copy
of the TCT and the Deed of Absolute Sale over the property and the non-registration and titling thereof in
its name for about 27 years since the purported sale, was tainted with malice and bad faith, thus,
subjecting it to estoppel and laches. 

By its Resolution dated May 27, 1997, the CA gave due course to the petition for annulment of judgment,
and a preliminary conference was set, directing Fidelity to bring the owner’s duplicate copy of the TCT. At
the preliminary conference, Fidelity’s counsel presented what was claimed to be the owner’s duplicate
copy of the TCT. Counsel for private respondents examined the certificate of title and admitted that it is
the genuine owner’s copy thereof. Thereafter, counsel for Fidelity manifested that they were no longer
presenting other evidence. On the other hand, counsel for private respondents prayed that an additional
issue, the question of the validity of the deed of sale in favor of Fidelity, be likewise resolved. Fidelity’s
counsel objected on the ground of irrelevancy. However, in order to expedite the proceedings, he agreed
to have private respondents amplify their position in their memorandum.

In their Memorandum, private respondents retracted their counsel’s admission on the genuineness of the
owner’s duplicate copy of the TCT presented by Fidelity, citing honest mistake and negligence owing to
his excitement and nervousness in appearing before the CA. They pointed to some allegedly
irreconcilable discrepancies between the copy annexed to the petition and the exhibit presented by
Fidelity during the preliminary conference. They also reiterated the issue on the validity of the purported
deed of sale of the property in favor of Fidelity.

In its Comment to the Memorandum, Fidelity countered that there were no discrepancies between the
owner’s duplicate copy it presented and the original copy on file with the Registry of Deeds of Calamba,
Laguna. It argued that private respondents are bound by the judicial admission made by their counsel
during the preliminary conference. It, likewise, objected to the inclusion of the issue on the validity of the
deed of sale over the property.

In the Decision dated November 28, 2003, the CA ruled in favor of Fidelity. It declared that the RTC was
without jurisdiction to issue a second owner’s duplicate copy of the title in light of the existence of the
genuine owner’s duplicate copy in the possession of petitioner, as admitted by private respondents
through counsel. According to the CA, a judicial admission is conclusive upon the party making it and
cannot be contradicted unless previously shown to have been made through palpable mistake or that no
such admission was made. It said that honest mistake and negligence, as raised by private respondents
in retracting their counsel’s admission, are not sufficient grounds to invalidate the admission.
Hence, this petition, raising the sole issue of –

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DID NOT CONSIDER THAT
THE JUDICIAL ADMISSION OF THE COUNSEL OF THE PETITIONERS DURING THE
HEARING IN C.A.-G.R. SP. NO. 37291 WAS A PALPABLE MISTAKE.

Herein petitioners argue that despite the existence of a judicial admission, there is still some leeway for
the court to consider other evidence presented. They point out that, even as early as in their
Memorandum before the CA, they had already retracted their counsel’s admission on the genuineness of
the owner’s duplicate copy of the TCT presented by Fidelity, and claim that their counsel was honestly
mistaken and negligent in his admission owing to his excitement and nervousness in appearing before the
CA. Petitioners likewise cite, in support of their position, the circumstances they alleged in their petition
before the RTC which convinced the latter to issue them a new owner’s duplicate copy of the TCT.
Further, petitioners raise in issue the discrepancies between the certificate of title on file with the Register
of Deeds of Calamba, Laguna and that submitted by Fidelity during the preliminary conference before the
CA.

In its Comment,9 Fidelity reiterate the arguments it presented before the CA.

We find for the respondent.

At the outset, we emphasize that the core issue in this case is the validity of the issuance by the RTC of a
new owner’s duplicate copy of the TCT in favor of petitioners. The applicable law is Section 109 of
Presidential Decree (P.D.) No. 1529 (Property Registration Decree), which states:

SEC. 109. Notice and replacement of lost duplicate certificate. – In case of loss or theft of an
owner’s duplicate certificate of title, due notice under oath shall be sent by the owner or by
someone in his behalf to the Register of Deeds of the province or city where the land lies as soon
as the loss or theft is discovered. If a duplicate certificate is lost or destroyed, or cannot be
produced by a person applying for the entry of a new certificate to him or for the registration of
any instrument, a sworn statement of the fact of such loss or destruction may be filed by the
registered owner or other person in interest and registered.

Upon the petition of the registered owner or other person in interest, the court may, after notice
and due hearing, direct the issuance of a new duplicate certificate, which shall contain a
memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all
respects be entitled to like faith and credit as the original duplicate, and shall thereafter be
regarded as such for all purposes of this decree.

Petitioners were able to convince the RTC that their owner’s duplicate copy had indeed been lost. They
appeared to have complied with the requirements of the law. This led the RTC to grant their petition. 

Upon discovery of the issuance of a new owner’s duplicate copy of the TCT, Fidelity went to the CA
seeking to annul the judgment of the RTC. Unfortunately for petitioners, their counsel admitted the
genuineness of the owner’s duplicate copy of the TCT presented by Fidelity during the preliminary
conference at the CA. The following exchange is revealing:

J. MARTIN:

Counsel for the private respondent, will you go over the owner’s copy and
manifest to the court whether that is a genuine owner’s copy?

ATTY. MENDOZA:
 Yes, Your Honor.

J. MARTIN:

Alright. Make it of record that after examining the owner’s copy of TCT NO. (T-
12110) T-4342, counsel for the private respondent admitted that the same appears
to be a genuine owner’s copy of the transfer certificate of title. Do you have a
certified true copy of this or any machine copy that you can compare?

ATTY. QUINTOS:

Yes, Your Honor.

J. REYES:

Including all the entries at the back page.

ATTY. QUINTOS:

Yes, Your Honor.

J. MARTIN:

Does it include all the list of the encumbrances?

ATTY. QUINTOS:

Yes, Your Honor.

ATTY. MENDOZA:

We do not admit, Your Honor this being only a xerox copy and not certified . . .

J. MARTIN:

It is only for purposes of substitution. Will you compare that with the other copy which
you already admitted to be a genuine owner’s copy.

ATTY. MENDOZA:

Yes, Your Honor.

J. MARTIN:

Alright. Counsel, are you marking that?

ATTY. QUINTOS:

Your Honor, we request that this copy of the transfer certificate of title No. T-12110, T-
4342 be marked as Exhibit A to A-3 for the petitioner?
 J. MARTIN:

Preliminary conference.

Alright, after examining the machine copy consisting of three pages and comparing
the same with the admittedly genuine owner’s copy of the transfer certificate of
title, counsel prayed for the substitution of the machine copy – after marking them
as Exhibits A-A-3 inclusive. We will return the owner’s copy to you so that you can
submit this already in lieu thereof.

This is a preliminary conference. Unless you have other incidents to thresh out, I think
that we can terminate the conference this morning. Counsel for the private respondents?
10

The foregoing transcript of the preliminary conference indubitably shows that counsel for petitioners made
a judicial admission and failed to refute that admission during the said proceedings despite the
opportunity to do so. A judicial admission is an admission, verbal or written, made by a party in the course
of the proceedings in the same case, which dispenses with the need for proof with respect to the matter
or fact admitted. It may be contradicted only by a showing that it was made through palpable mistake or
that no such admission was made.11

Petitioners, in their Memorandum before the CA, attempted to retract their counsel’s judicial admission on
the authenticity of the owner’s duplicate copy of TCT in the possession of Fidelity. Petitioners explicate
that the wrong admission was an honest mistake and negligence attributable to the counsel’s
nervousness and excitement in appearing for the first time before the CA. However, as correctly pointed
out by the CA, such an admission may only be refuted upon a proper showing of palpable mistake or that
no such admission was made. Thus, the claim of "honest mistake and negligence" on the part of the
counsel due to his excitement and nervousness in appearing before the CA did not suffice.

Petitioners now claim that the "honest mistake and negligence" of their counsel amount to palpable
mistake. They also enumerate observed discrepancies between the original TCT on file with the Register
of Deeds of Calamba, Laguna and the owner’s duplicate copy presented by Fidelity, to wit:

1. On the above left margin of the xerox copy of the ORIGINAL COPY of TCT No. (T-12110) T-
4342 on file with the Register of Deeds, Calamba, Laguna in question, (Annex A, Respondent’s
Petition in question before the Court of Appeals) Annex C, supra, the PRINTED WORDS were:

"(JUDICIAL FORM NO. 109)

(Revised September, 1954.)

However, in the belated submission of the alleged xerox copy of the alleged duplicate copy of the
title in question by the respondent to the Court of Appeals (Exh. A; Annex "H", supra,) the
following PRINTED WORDS appeared:

"(JUDICIAL FORM NO. 109-D)

(Revised September, 1954.)" (Emphasis supplied)

xxxx

[2.] The Serial Number of the Xerox copy of the original copy of the title in question on file with the
Register of Deeds of Calamba City was written in handwriting as "158640". 
However, the Serial Number of the purported duplicate copy of the original title in question of the
respondent was PRINTED in letters and in figures: "No. 158640". 

3. The typewritten words "PROVINCE OF LAGUNA" on the heading of the xerox copy of the
original copy of the said title on file with the said Register of Deeds were written in big type of
letters.

However, in Exh. "A", Annex H, supra, of the respondent, it was typewritten with small type of
letters.

4. In the FIGURES of the xerox copy of the original copy of the said title: NO. (T-12110) T-4342 in
question, they were written in a big type of letters. The same is true in the letters "T" and DASH
after the letter "T". The figures "4342" were printed in big letters. 

However, the printed and handwritten figures and words in Exh. A, Annex C, supra, were small.
The figures 4342 were in handwriting.

5. In the xerox copy of the original copy of title of the property in question covered by TCT No. (T-
12110) T-4342, which cancelled TCT No. T-10700, the type of letter "T", figures, 10700 and dash
thereof were in big letters. 

However, the purported duplicate copy of the original copy of the title in question submitted to the
Court of Appeals by the respondent, the type of the letter, dash and figures thereof were in small
letters.

6. The type of the printed words, dashes, and figures in the body of the Xerox copy of the original
title in question, it was typewritten with big letters and figures. 

The purported duplicate copy of the original title of the property in question submitted to the Court
of Appeals by the respondent, the letters, dashes and figures there of were typewritten in small
letters.

7. The letters, dashes, and figures of the xerox copy of the original title in question
were typewritten in a manual typewriter with big letters. 

In Exh. "A", Annex H, supra, the purported duplicate copy of the original title in question
submitted to the Court of Appeals by the respondent, they were typewritten in a manual typewriter
with small letters and figures.

8. The signatures of the Registrar of Deeds in the xerox of the original copy of the title in
question; had loop in small letter "d" and the rest had no loops. 

In Exh. A, Annex H, supra, of the purported duplicate copy of the title in question submitted by the
respondent to the Court of Appeals, there was no loop, except there were two (2) open vertical
lines below thereof after four letters.

9. The xerox copy of the original copy of the title in question after TCT No. T-10700 was
cancelled, it was entered in the Register of Deeds of Sta. Cruz, Laguna since September 24,
1957 at 9:10 a.m. 

10. In view thereof, it is but NATURAL that the judicial forms and descriptions of letters and
figures of the original copy of title in question and file with the Register of Deeds its duplicate copy
since September 24, 1954, were the SAME and already OLD.
 11. However, in Exh. "A", Annex H, supra, the purported duplicate copy of the title in question
submitted by the respondent to the Court of Appeals, the judicial form thereof was already small
and it clearly appeared that it might have been NEWLY ISSUED NEW COPY OF TITLE. It might
be the revised new form in 1988 that is presently used in the Register of Deeds. 12

Upon examination of the said exhibits on record, it appears that the alleged discrepancies are more
imagined than real. Had these purported discrepancies been that evident during the preliminary
conference, it would have been easy for petitioners’ counsel to object to the authenticity of the owner’s
duplicate copy of the TCT presented by Fidelity. As shown in the transcript of the proceedings, there was
ample opportunity for petitioners’ counsel to examine the document, retract his admission, and point out
the alleged discrepancies. But he chose not to contest the document. Thus, it cannot be said that the
admission of the petitioners’ counsel was made through palpable mistake.

Every counsel has the implied authority to do all acts which are necessary or incidental to the prosecution
and management of the suit in behalf of his client. Any act performed by counsel within the scope of his
general and implied authority is, in the eyes of the law, regarded as the act of the client himself.
Consequently, the mistake or negligence of the client’s counsel, which may result in the rendition of an
unfavorable judgment, generally binds the client. To rule otherwise would encourage every defeated
party, in order to salvage his case, to claim neglect or mistake on the part of his counsel. Then, there
would be no end to litigation, as every shortcoming of counsel could be the subject of challenge by his
client through another counsel who, if he is also found wanting, would likewise be disowned by the same
client through another counsel, and so on, ad infinitum.

This rule admits of exceptions, i.e., where the counsel’s mistake is so great and serious that the client is
deprived of his day in court or of his property without due process of law. In these cases, the client is not
bound by his counsel’s mistakes and the case may even be reopened in order to give the client another
chance to present his case.13 In the case at bar, however, these exceptional circumstances do not obtain. 

With proof that the owner’s duplicate copy of the TCT was in the possession of Fidelity, the RTC Decision
dated April 8, 1994 was properly annulled. In a catena of cases, we have consistently ruled that if an
owner’s duplicate copy of a certificate of title has not been lost but is in fact in the possession of another
person, the reconstituted title is void, as the court rendering the decision never acquires jurisdiction.
Consequently, the decision may be attacked at any time. 14

The circumstances cited by petitioners in support of their petition, i.e., the TCT is still in their names; the
property in question is declared for tax purposes in their names; they were the persons informed by the
Municipal Treasurer of Calamba, Laguna for the non-payment of real estate taxes for the years 1990-
1993; they paid the real estate taxes due on the property; no one was claiming the property per the
certification of the 

Register of Deeds of Calamba, Laguna; the questionable delay of Fidelity in registering its claim over the
property under the purported sale of December 13, 1967; and the validity of the Absolute Deed of Sale, all
pertain to the issue of ownership over the property covered by the TCT.

In a petition for the issuance of a new owner’s duplicate copy of a certificate of title in lieu of one allegedly
lost, on which this case is rooted, the RTC, acting only as a land registration court with limited jurisdiction,
has no jurisdiction to pass upon the question of actual ownership of the land covered by the lost owner’s
duplicate copy of the certificate of title.15 Consequently, any question involving the issue of ownership
must be threshed out in a separate suit where the trial court will conduct a full-blown hearing with the
parties presenting their respective evidence to prove ownership over the subject realty. 16

At this point, we reiterate the principle that possession of a lost owner’s duplicate copy of a certificate of
title is not necessarily equivalent to ownership of the land covered by it. Registration of real property
under the Torrens System does not create or vest title because it is not a mode of acquiring ownership.
The certificate of title, by itself, does not vest ownership; it is merely an evidence of title over the particular
property described therein.17

WHEREFORE, the petition is DENIED. The Decision dated November 28, 2003 and the Resolution dated
May 12, 2004 of the Court of Appeals in CA-G.R. SP No. 37291 are AFFIRMED. No pronouncement as
to costs.

SO ORDERED.

G.R. No. 159240             February 4, 2008

GREGORIO SILOT, JR., petitioner, 

vs.
ESTRELLA DE LA ROSA, respondent.

DECISION

QUISUMBING, J.:

This is a petition for review of the Decision1 dated July 9, 2003 of the Court of Appeals in CA-G.R. CV No.
68062 entitled "Estrella de la Rosa v. Gregorio Silot, Jr." The appellate court had affirmed with
modification the Joint Decision2 dated May 24, 2000 of the Regional Trial Court (RTC), Branch 61, Naga
City, in Civil Case Nos. 97-3736 and 97-3750, and decreed as follows: 

WHEREFORE, premises considered, the assailed Joint Decision dated May 24, 2000 of the RTC,
Branch 61, Naga City in Civil Cases Nos. 97-3736 and 97-3750 is hereby AFFIRMED WITH
MODIFICATION, deleting the award for nominal damages and reducing the award of attorney's
fees to Twenty Thousand (P20,000.00) Pesos.

Other awards not otherwise modified or deleted stand.

SO ORDERED.3

As culled from the records by the Court of Appeals, the antecedent facts of this case are as follows:

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 P1,281,872.404 but was only paid P1,008,000.00, thus still leaving a balance of P273,872.40.

The two cases were consolidated by the trial court.

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, decreeing as follows:

Wherefore, premises considered, Civil Case No. 3736 is hereby ordered DISMISSED for lack of
merit; while in Civil Case No. 97-3750, defendant Gregorio Silot is hereby ordered to return the
amount of P191,525.02 to the plaintiff, Estrella de la Rosa; to pay P100,000.00 for [a]ttorney's
fees and P50,000.00 as nominal damages.

SO ORDERED.6

On appeal, the Court of Appeals affirmed the decision of the lower court. Hence, the instant petition
wherein Silot assigned the following errors:

I.

The Honorable Court of Appeals 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.

II.

The Honorable Court of Appeals erred in deciding and ordering petitioner-appellant to return the
amount of P191,525.02 to respondent appellee and also to pay P20,000.00 attorney[']s fees.7

Simply stated, petitioner is raising the following issues to be resolved: (1) whether the admission by Atty.
San Jose, counsel of petitioner Silot, constituted judicial admission of respondent's evidence; and (2)
whether the appellate court erred in ruling that Silot should return the claimed amount of P191,525.02 to
de la Rosa.

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.8

Respondent de la Rosa counters that clients are bound by the admissions as well as the negligence of
their counsel. She enumerates several Court decisions to support her contention, among them the
following cases:

(1) Ongson v. People,9 where petitioner was held bound by his unqualified admission that he received
private complainant's demand letter with notice of dishonor. The admission binds him considering that he
never denied receipt of the notice of dishonor.

(2) Republic v. Sarabia,10 where the Court held that an admission made in the pleading cannot be
controverted by the party making such admission and are conclusive as to him.
(3) People v. Genosa,11 Arroyo, Jr. v. Taduran,12 Carandang v. Court of Appeals,13 in which cases the
Court held that judicial admissions are conclusive upon the party making it and may not be contradicted in
the absence of prior showing that the admission had been made through palpable mistake, or no
admission was in fact made.

(4) People v. Razul14 and Lim v. Jabalde,15 where it was held that stipulations are recognized as

declarations constituting judicial admissions, hence, binding upon the parties.

Moreover, 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 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 oral or written stipulation, […] which unless allowed to be withdrawn are
conclusive." (Italics supplied.) In fact, "judicial 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.…23
On the issue of insufficient payment, Silot avers that he has rendered or provided labor for the total
amount of P1,281,872.40, and that de la Rosa has benefited and profited from these labors. 24 Without the
labors provided by Silot, the constructed building would not have been painted, provided with electrical
works and other works which were additional works on the building, and that to sanction de la Rosa's
claim would be to allow unjust enrichment on the part of de la Rosa. 25 However, this claim has been
belied by the admission made by his own counsel, as plainly manifest in the transcript:

Atty. Terbio

The purpose for which this witness will testify are the following: If admitted, we are willing
to dispense the testimony. He will testify that in consideration of the 33% as
mentioned in the contract, all the material supplies during the making of the
additional works mentioned were all considered; he will testify that Silot was paid
of all works that was performed as well as all materials supplied were considered,
and that the sum total of which is P2,504,469.65 and 33% of which is P826,474.98,
and that De la Rosa paid the total amount of P1,018,000.00, and therefore, there is
an excess payment of P191,525.00; he will testify that De la Rosa never received
the demand or was confronted by Silot regarding an alleged balance, now, if the
counsel wish to admit this.

ATTY. SAN JOSE

We admit that.

ATTY. TERBIO

Because these are all evidentiary and this has not been adequately covered.

ATTY. SAN JOSE

We will admit that.26 (Emphasis supplied.)

Clearly, given the circumstances of this case, the Court of Appeals did not err in ordering petitioner to
return to respondent the amount of P191,525.02 overpayment.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated July 9, 2003 of the
Court of Appeals in CA-G.R. CV No. 68062 is AFFIRMED. Petitioner Gregorio Silot, Jr. is hereby ordered
to return the amount of P191,525.02 to respondent Estrella de la Rosa, and to pay P20,000.00 as
attorney's fees. Costs against petitioner.

SO ORDERED.

G.R. No. 152492             October 16, 2003

PALMA DEVELOPMENT CORPORATION, petitioner, 

vs.
MUNICIPALITY OF MALANGAS, ZAMBOANGA DEL SUR, respondent.

DECISION
PANGANIBAN, J.:

In accordance with the Local Government Code of 1991, a municipal ordinance imposing fees on goods
that pass through the issuing municipality’s territory is null and void.

The Case

The Petition for Review1 before us assails the August 31, 2001 Decision2 and the February 6, 2002
Resolution3 of the Court of Appeals (CA) in CA-GR CV No. 56477. The dispositive portion of the
challenged Decision reads as follows:

"UPON THE VIEW WE TAKE OF THIS CASE, THUS, the assailed Decision is VACATED and SET
ASIDE, and this case is ordered REMANDED to the court a quo for the reception of evidence of the
parties on the matter or point delineated in the final sentence above-stated." 4 

The assailed Resolution denied petitioner’s Motion for Reconsideration.

The Facts

The facts are undisputed. Petitioner Palma Development Corporation is engaged in milling and selling
rice and corn to wholesalers in Zamboanga City. It uses the municipal port of Malangas, Zamboanga del
Sur as transshipment point for its goods. The port, as well as the surrounding roads leading to it, belong
to and are maintained by the Municipality of Malangas, Zamboanga del Sur.

On January 16, 1994, the municipality passed Municipal Revenue Code No. 09, Series of 1993, which
was subsequently approved by the Sangguniang Panlalawigan of Zamboanga del Sur in Resolution No.
1330 dated August 4, 1994. Section 5G.01 of the ordinance reads:

"Section 5G.01. Imposition of fees. There shall be collected service fee for its use of the municipal road[s]
or streets leading to the wharf and to any point along the shorelines within the jurisdiction of the
municipality and for police surveillance on all goods and all equipment harbored or sheltered in the
premises of the wharf and other within the jurisdiction of this municipality in the following schedule:

a) Vehicles and Equipment: rate of fee

1. Automatic per unit ₱10.00

2. Ford Fiera ₱10.00

3. Trucks ₱10.00

xxxxxxxxx

b) Other Goods, Construction Material products:

1. Bamboo craft ₱20.00

2. Bangus/Kilo 0.30

xxxxxxxxx

41. Rice and corn grits/sack 0.50"5 

Accordingly, the service fees imposed by Section 5G.01 of the ordinance was paid by petitioner under
protest. It contended that under Republic Act No. 7160, otherwise known as the Local Government Code
of 1991, municipal governments did not have the authority to tax goods and vehicles that passed through
their jurisdictions. Thereafter, before the Regional Trial Court (RTC) of Pagadian City, petitioner filed
against the Municipality of Malangas on November 20, 1995, an action for declaratory relief assailing the
validity of Section 5G.01 of the municipal ordinance.

On the premise that the case involved the validity of a municipal ordinance, the RTC directed respondent
to secure the opinion of the Office of the Solicitor General. The trial court likewise ordered that the
opinions of the Departments of Finance and of Justice be sought. As these opinions were still unavailable
as of October 17, 1996, petitioner’s counsel filed, without objection from respondent, a Manifestation
seeking the submission of the case for the RTC’s decision on a pure question of law. 

In due time, the trial court rendered its November 13, 1996 Decision declaring the entire Municipal
Revenue Code No. 09 as ultra vires and, hence, null and void. 

Ruling of the Court of Appeals

The CA held that local government units already had revenue-raising powers as provided for under
Sections 153 and 155 of RA No. 7160. It ruled as well that within the purview of these provisions -- and
therefore valid -- is Section 5G.01, which provides for a "service fee for the use of the municipal road or
streets leading to the wharf and to any point along the shorelines within the jurisdiction of the municipality"
and "for police surveillance on all goods and all equipment harbored or sheltered in the premises of the
wharf and other within the jurisdiction of this municipality." 

However, since both parties had submitted the case to the trial court for decision on a pure question of
law without a full-blown trial on the merits, the CA could not determine whether the facts of the case were
within the ambit of the aforecited sections of RA No. 7160. The appellate court ruled that petitioner still
had to adduce evidence to substantiate its allegations that the assailed ordinance had imposed fees on
the movement of goods within the Municipality of Malangas in the guise of a toll fee for the use of
municipal roads and a service fee for police surveillance. Thus, the CA held that the absence of such
evidence necessitated the remand of the case to the trial court.

Hence, this Petition.6 

Issues

Petitioner raises the following issues for our consideration:

"1. Whether or not the Court of Appeals erred when it ordered that the extant case be remanded
to the lower court for reception of evidence.

"2. Whether or not the Court of Appeals erred when it ruled that a full blown trial on the merits is
necessary and that plaintiff-appellee, now petitioner, ‘has to adduce evidence to substantiate its
thesis that the assailed municipal ordinance, in fact, imposes fees on the movement of goods
within the jurisdiction of the defendant and that this imposition is merely in the guise of a toll fee
for the use of municipal roads and service fee for police surveillance.’

"3. Whether or not the Court of Appeals erred when it did not rule that the questioned municipal
ordinance is contrary to the provisions of R.A. No. 7160 or the Local Government Code of the
Philippines."7 
In brief, the issues boil down to the following: 1) whether Section 5G.01 of Municipal Revenue Code No.
09 is valid; and 2) whether the remand of the case to the trial court is necessary.

The Court’s Ruling

The Petition is meritorious.

First Issue:

Validity of the Imposed Fees

Petitioner argues that while respondent has the power to tax or impose fees on vehicles using its roads, it
cannot tax the goods that are transported by the vehicles. The provision of the ordinance imposing a
service fee for police surveillance on goods is allegedly contrary to Section 133(e) of RA No. 7160, which
reads:

"Section 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall
not extend to the levy of the following:

xxxxxxxxx

e) Taxes, fees and charges and other impositions upon goods carried into and out of, or passing through,
the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges
or otherwise, or other taxes, fees or charges in any form whatsoever upon such goods or merchandise;"

On the other hand, respondent maintains that the subject fees are intended for services rendered, the use
of municipal roads and police surveillance. The fees are supposedly not covered by the prohibited
impositions under Section 133(e) of RA No. 7160. 8 It further contends that it was empowered by the
express mandate of Sections 153 and 155 of RA No. 7160 to enact Section 5G.01 of the ordinance. The
pertinent provisions of this statute read as follows:

"Section 153. Service Fees and Charges. -- Local government units may impose and collect such
reasonable fees and charges for services rendered.

xxxxxxxxx

"Section 155. Toll Fees or Charges. -- The sanggunian concerned may prescribe the terms and
conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier or
wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local
government unit concerned: Provided, That no such toll fees or charges shall be collected from officers
and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police
on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are
sixty-five (65) years or older.1a\^/phi1.net

"When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of
the tolls, and thereafter the said facility shall be free and open for public use."

Respondent claims that there is no proof that the ₱0.50 fee for every sack of rice or corn is a fraudulent
legislation enacted to subvert the limitation imposed by Section 133(e) of RA No. 7160. Moreover, it
argues that allowing petitioner to use its roads without paying the ₱0.50 fee for every sack of rice or corn
would contravene the principle of unjust enrichment.
By express language of Sections 153 and 155 of RA No. 7160, local government units, through their
Sanggunian, may prescribe the terms and conditions for the imposition of toll fees or charges for the use
of any public road, pier or wharf funded and constructed by them. A service fee imposed on vehicles
using municipal roads leading to the wharf is thus valid. However, Section 133(e) of RA No. 7160
prohibits the imposition, in the guise of wharfage, of fees -- as well as all other taxes or charges in any
form whatsoever -- on goods or merchandise. It is therefore irrelevant if the fees imposed are actually for
police surveillance on the goods, because any other form of imposition on goods passing through the
territorial jurisdiction of the municipality is clearly prohibited by Section 133(e).

Under Section 131(y) of RA No. 7160, wharfage is defined as "a fee assessed against the cargo of a
vessel engaged in foreign or domestic trade based on quantity, weight, or measure received and/or
discharged by vessel." It is apparent that a wharfage does not lose its basic character by being labeled as
a service fee "for police surveillance on all goods."

Unpersuasive is the contention of respondent that petitioner would unjustly be enriched at the former’s
expense. Though the rules thereon apply equally well to the government, 9 for unjust enrichment to be
deemed present, two conditions must generally concur: (a) a person is unjustly benefited, and (b) such
benefit is derived at another’s expense or damage. 10 

In the instant case, the benefits from the use of the municipal roads and the wharf were not unjustly
derived by petitioner. Those benefits resulted from the infrastructure that the municipality was mandated
by law to provide.11 There is no unjust enrichment where the one receiving the benefit has a legal right or
entitlement thereto, or when there is no causal relation between one’s enrichment and the other’s
impoverishment.12 

Second Issue:

Remand of the Case

Petitioner asserts that the remand of the case to the trial court for further reception of evidence is
unnecessary, because the facts are undisputed by both parties. It has already been clearly established,
without need for further evidence, that petitioner transports rice and corn on board trucks that pass
through the municipal roads leading to the wharf. Under protest, it paid the service fees, a fact that
respondent has readily admitted without qualification.

Respondent, on the other hand, is silent on the issue of the remand of the case to the trial court. The
former merely defends the validity of the ordinance, arguing neither for nor against the remand.

We rule against the remand. Not only is it frowned upon by the Rules of Court; 13 it is also unnecessary on
the basis of the facts established by the admissions of the parties. Besides, the fact sought to be
established with the reception of additional evidence is irrelevant to the due settlement of the case.

The pertinent portion of the assailed CA Decision reads:

"To be stressed is the fact that local government units now have the following common revenue raising
powers under the Local Government Code:

‘Section 153. Service Fees and Charges. -- Local government units may impose and collect such
reasonable fees and charges for services rendered.

xxxxxxxxx
‘Section 155. Toll Fees or Charges. -- The Sanggunian concerned may prescribe the terms and
conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier or
wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local
government unit concerned: Provided, That no such toll fees or charges shall be collected from officers
and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police
on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are
sixty-five (65) years or older.

‘When public safety and welfare so requires, the Sanggunian concerned may discontinue the collection of
the tolls, and thereafter the said facility shall be free and open for public use. x x x’

"As we see it, the disputed municipal ordinance, which provides for a service fee for the use of the
municipal road or streets leading to the wharf and to any point along the shorelines within the jurisdiction
of the municipality and for police surveillance on all goods and all equipment harbored or sheltered in the
premises of the wharf and other within the jurisdiction of this municipality, seems to fall within the
compass of the above cited provisions of R.A. No. 7160. As elsewhere indicated, the parties in this case,
nonetheless, chose to submit the issue to the Trial Court on a ‘pure question of law,’ without a full-blown
trial on the merits: consequently, we are not prepared to say, at this juncture, that the facts of the case
inevitably call for the application, and/or that these make out a clear-cut case within the ambit and
purview, of the aforecited section. The plaintiff, thus, has to adduce evidence to substantiate its thesis that
the assailed municipal ordinance, in fact, imposes fees on the movement of goods within the jurisdiction
of the defendant, and that this imposition is merely in the guise of a toll fee for the use of municipal roads
and service fee for police surveillance. Competent evidence upon this score must, thus, be presented." 14 

We note that Section 5G.01 imposes two types of service fees: 1) one for the use of the municipal roads
and 2) another for police surveillance on all goods and equipment sheltered in the premises of the wharf.
The amount of service fees, however, is based on the type of vehicle that passes through the road and
the type of goods being transported.1a\^/phi1.net

While both parties admit that the service fees imposed are for the use of the municipal roads, petitioner
maintains that the service fee for police surveillance on goods harbored on the wharf is in the guise of a
wharfage,15 a prohibited imposition under Section 133(e) of RA No. 7160.

Thus, the CA held that the case should be remanded to the trial court in order to resolve this factual
dispute. The appellate court noted that under Section 155 of RA No. 7160, municipalities apparently now
have the power to impose fees for the use of municipal roads.

Nevertheless, a remand is still unnecessary even if the service fee charged against the goods are for
police surveillance, because Section 133(e) of RA No. 7160 expressly prohibits the imposition of all other
taxes, fees or charges in any form whatsoever upon the merchandise or goods that pass through the
territorial jurisdiction of local government units. It is therefore immaterial to the instant case whether the
service fee on the goods is for police surveillance or not, since the subject provision of the revenue
ordinance is invalid. Reception of further evidence to establish this fact would not legalize the imposition
of such fee in any way.

Furthermore, neither party disputes any of the other material facts of the case. From their respective
Briefs before the CA and their Memoranda before this Court, they do not dispute the fact that petitioner,
from its principal place of business, transports rice and corn on board trucks bound for respondent’s
wharf. The trucks traverse the municipal roads en route to the wharf, where the sacks of rice and corn are
manually loaded into marine vessels bound for Zamboanga City. Likewise undisputed is the fact that
respondent imposed and collected fees under the ordinance from petitioner. The former admits that it has
been collecting, in addition to the fees on vehicles, ₱0.50 for every sack of rice or corn that the latter has
been shipping through the wharf.16 
The foregoing allegations are formal judicial admissions that are conclusive upon the parties making
them. They require no further proof in accordance with Section 4 of Rule 129 of the Rules of Court, 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."

Judicial admissions made by parties in the pleadings, in the course of the trial, or in other proceedings in
the same case are conclusive. No further evidence is required to prove them. Moreover, they cannot be
contradicted unless it is shown that they have been made through palpable mistake, or that they have not
been made at all.17 

WHEREFORE, the Petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals
are hereby SET ASIDE. The imposition of a service fee for police surveillance on all goods harbored or
sheltered in the premises of the municipal port of Malangas under Sec. 5G.01 of the Malangas Municipal
Revenue Code No. 09, series of 1993, is declared NULL AND VOID for being violative of Republic Act
No. 7160.

SO ORDERED.

G.R. No. 150731             September 14, 2007

CASENT REALTY DEVELOPMENT CORP., petitioner, 

vs.
PHILBANKING CORPORATION, respondent.

DECISION

VELASCO, JR., J.:

On appeal to this Court through Rule 45 of the Rules of Court is the March 29, 2001 Decision 1 and
November 7, 2001 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 63979
entitled Philbanking Corporation v. Casent Realty Development Corporation. The CA reversed the May
12, 1999 Order3 of the Makati City Regional Trial Court (RTC), Branch 145 in Civil Case No. 93-2612,
which granted petitioner’s demurrer to evidence and dismissed the complaint filed by respondent.

The Facts

The facts according to the appellate court are as follows:

In 1984, petitioner Casent Realty Development Corporation executed two promissory notes in favor of
Rare Realty Corporation (Rare Realty) involving the amounts of PhP 300,000 (PN No. 84-04) and PhP
681,500 (PN No. 84-05). It was agreed in PN No. 84-04 that the loan it covered would earn an interest of
36% per annum and a penalty of 12% in case of non-payment by June 27, 1985, while the loan covered
by PN No. 84-05 would earn an interest of 18% per annum and 12% penalty if not paid by June 25,
1985.4 On August 8, 1986, these promissory notes were assigned to respondent Philbanking Corporation
through a Deed of Assignment.5

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 as of July 15, 1993. Respondent filed on
July 20, 1993 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:
 1. The complaint stated no cause of action or if there was any, the same was barred by estoppel,
statute of frauds, statute of limitations, laches, prescription, payment, and/or release;

2. On August 27, 1986, the parties executed a Dacion en Pago7 (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 Statement8 dated April 3, 1989 issued by respondent stating that petitioner had no
loans with the bank as of December 31, 1988.

3. Petitioner complied with the condition in the Dacion regarding the repurchase of the property
since the obligation was fully paid. Respondent sent confirmation statements in the latter months
of 1989, which showed that petitioner had no more outstanding loan; and

4. Assuming that petitioner still owed respondent, the latter was already estopped since in
October 1988, it reduced its authorized capital stock by 50% to wipe out a deficit of PhP
41,265,325.12.9

Thus, petitioner, by way of compulsory counterclaim, alleged that it made an overpayment of

approximately PhP 4 million inclusive of interest based on Central Bank Reference Lending Rates on
dates of overpayment. Petitioner further claimed moral and exemplary damages and attorney’s fee,
amounting to PhP 4.5 million plus the costs of suit as a consequence of respondent’s insistence on
collecting.10

The parties failed to reach an amicable settlement during the pre-trial conference. Thereafter, respondent
presented its evidence and formally offered its exhibits. Petitioner then filed a Motion for Judgment on
Demurrer to the Evidence,11 pointing out that the plaintiff’s failure to 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 Opposition12 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. 13

The trial court ruled in favor of petitioner and dismissed the complaint through the May 12, 1999 Order,
the dispositive portion of which reads:

WHEREFORE, premises considered[,] finding defendant’s Motion For Judgment On Demurrer To

The Evidence to be meritorious[,] the same is hereby GRANTED. Consequently, considering that
the obligation of the defendant to the plaintiff having been extinguish[ed] by a Dacion en Pago
duly executed by said parties, the instant complaint is hereby DISMISSED, with prejudice.
Without Cost.14

The Ruling of the Court of Appeals

On appeal, respondent alleged that the trial court gravely erred because the promissory notes were not
covered by the Dacion, and that respondent was able to prove its causes of action and right to relief by
overwhelming preponderance of evidence. It explained that at the time of execution of the Dacion, the
subject of the promissory notes was the indebtedness of petitioner to Rare Realty and not to the "Bank"––
the party to the Dacion. It was only in 1989 after Rare Realty defaulted in its obligation to respondent
when the latter enforced the security provided under the Deed of Assignment by trying to collect from
petitioner, because it was only then that petitioner became directly liable to respondent. It was also for this
reason that the April 3, 1989 Confirmation Statement stated that petitioner had no obligations to
repondent as of December 31, 1988. On the other hand, petitioner claimed that the Deed of Assignment
provided that Rare Realty lost its rights, title, and interest to directly proceed against petitioner on the
promissory notes since these were transferred to respondent. Petitioner reiterated that
the Dacion covered all conceivable amounts including the promissory notes. 15

The appellate court ruled that under the Rules of Civil Procedure, the only issue to be resolved in a
demurrer is whether the plaintiff has shown any right to relief under the facts presented and the law. Thus,
it held that the trial court erred when it considered the Answer which alleged the Dacion, and that its
genuineness and due execution were not at issue. It added that the court a quo should have resolved
whether the two promissory notes were covered by the Dacion, and that since petitioner’s demurrer was
granted, it had already lost its right to present its evidence. 16

The CA found that under the Deed of Assignment, respondent clearly had the right to proceed against the
promissory notes assigned by Rare Realty. Thus, the CA ruled, as follows:

WHEREFORE, premises considered, the Order dated May 12, 1999 of the Regional Trial Court,
National Capital Judicial Region, Branch 145, Makati City is hereby REVERSED and SET ASIDE.

Judgment is hereby entered ORDERING [petitioner] Casent Realty [Development] Corporation to:

1. pay [respondent] Philbanking Corporation the amount of P300,000.00 with an interest

of 36% per annum and a penalty of 12% for failure to pay the same on its maturity date,
June 27, 1985 as stipulated in Promissory Note No. 84-04;

2. pay [respondent] Philbanking Corporation the amount of P681,500.00 with an interest

of 18% per annum and a penalty of 12% for failure to pay the same on its maturity date,
June 25, 1985 as stipulated in Promissory Note No. 84-05; and

3. pay [respondent] Philbanking Corporation, the amount representing 25% of total

amount due as attorney’s fee as stipulated in the promissory notes.

SO ORDERED.17

Petitioner filed a Motion for Reconsideration18 which was denied by the CA in its November 7, 2001
Resolution.19

The Issues

WHETHER OR NOT THE COURT OF APPEALS ERRED IN EXCLUDING THE PETITIONER’S

AFFIRMATIVE DEFENSES IN ITS ANSWER IN RESOLVING A DEMURRER TO EVIDENCE;
AND

WHETHER OR NOT PETITIONER IS LIABLE TO PAY THE RESPONDENT

In other words, 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?
Petitioner asserts that its obligation to pay under the promissory notes was already extinguished as
evidenced by the Dacion and Confirmation Statement. Petitioner submits that when it presented these
documents in its Answer, respondent should have denied the same under oath. Since respondent failed
to file a Reply, the genuineness and due execution of said documents were deemed admitted, thus also
admitting that the loan was already paid. On the other hand, respondent states that while it failed to file a
Reply, all the new matters were deemed controverted pursuant to Section 10, Rule 6 of the Rules of
Court. Also, the loan which was covered by the Dacion refers to another loan of petitioner amounting to
PhP 3,921,750 which was obtained directly from the respondent as of August 1986. 20 Furthermore,
petitioner argued that assuming respondent admitted the genuineness and due execution of
the Dacion and Confirmation Statement, said admission was not all-encompassing as to include the
allegations and defenses pleaded in petitioner’s Answer.

The Court’s Ruling

The petition is partly meritorious.

Rule 33, Section 1 of the 1997 Rules of Civil Procedure provides:

Section 1. Demurrer to evidence.––After the plaintiff has completed the presentation of his
evidence, the defendant may move for dismissal on the ground that upon the facts and the law
the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present
evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be
deemed to have waived the right to present evidence.

In Gutib v. Court of Appeals, we defined a demurrer to evidence as "an objection by one of the parties in
an action, to the effect that the evidence which his adversary produced is insufficient in point of law,
whether true or not, to make out a case or sustain the issue." 21

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.

Petitioner points out that the defense of Dacion and Confirmation Statement, which were submitted in the
Answer, should have been specifically denied under oath by respondent in accordance with Rule 8,
Section 8 of the Rules of Court:

Section 8. How to contest such documents.––When an action or defense is founded upon a

written instrument, copied in or attached to the corresponding pleading as provided in the
preceding section, the genuineness and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath, specifically denies them, and sets forth, what he
claims to be the facts; but the requirement of an oath does not apply when the adverse party
does not appear to be a party to the instrument or when compliance with an order for an
inspection of the original instrument is refused.

Since respondent failed to file a Reply, in effect, respondent admitted the genuineness and due execution
of said documents. This judicial admission should have been considered by the appellate court in
resolving the demurrer to evidence. Rule 129, Section 4 of the Rules of Court provides:
 Section 4. Judicial admissions.––An admission, verbal or written, made by a party in the course
of the proceeding 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.

On appeal to the CA, respondent claimed that even though it failed to file a Reply, all the new matters
alleged in the Answer are deemed controverted anyway, pursuant to Rule 6, Section 10:

Section 10. Reply.––A reply is a pleading, the office or function of which is to deny, or allege facts
in denial or avoidance of new matters alleged by way of defense in the answer and thereby join or
make issue as to such new matters. If a party does not file such reply, all the new matters alleged
in the answer are deemed controverted.

We agree with petitioner. 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."24

In any case, the CA found that:

From the facts of the case, the genuineness and due execution of the Dacion en Pago were
never put to issue. Genuineness merely refers to the fact that the signatures were not falsified
and/or whether there was no substantial alteration to the document. While due execution refers to
whether the document was signed by one with authority. 25

The more important issue now is whether the Dacion and Confirmation Statement sufficiently prove that
petitioner’s liability was extinguished. Respondent asserts that the admission of the genuineness and due
execution of the documents in question is not all encompassing as to include admission of the allegations
and defenses pleaded in petitioner’s Answer. In executing the Dacion, the intention of the parties was to
settle only the loans of petitioner with respondent, not the obligation of petitioner arising from the
promissory notes that were assigned by Rare Realty to respondent.

We AGREE.

Admission of the genuineness and due execution of the Dacion and Confirmation Statement does not
prevent the introduction of evidence showing that the Dacion excludes the promissory notes. Petitioner,
by way of defense, should have presented evidence to show that the Dacion includes the promissory
notes.

The promissory notes matured in June 1985, and Rare Realty assigned these promissory notes to
respondent through a Deed of Assignment dated August 8, 1986. The Deed of Assignment provides,
thus:

Rare Realty Corporation, a corporation duly organized and existing in accordance with law, with
office at 8th Floor Philbanking Building, Ayala Ave., Makati, Metro Manila (herein called Assignor)
in consideration of the sum of THREE MILLION SEVEN HUNDRED NINETY THOUSAND &
00/100 pesos [PhP 3,790,000.00] and as security fee or in the payment of the sum, obtained or to
be obtained as loan or credit accommodation of whatever form or nature from the
 [PHILBANKING] CORPORATION, with office at Ayala Ave., Makati, Metro Manila (herein called
Assignee), including renewals or extensions of such loan or credit accommodation, now existing
or hereinafter incurred, due or to become due, whether absolute or contingent, direct or indirect,
and whether incurred by the Assignor as principal, guarantor, surety, co-maker, or in any other
capacity, including interest, charges, penalties, fees, liquidated damage, collection expenses and
attorney’s fee, the Assignor hereby assigns, transfers and conveys to Assignee all its rights, title
and interest in and to: (a) contracts under which monies are or will be due to Assignor, (b)
moneys due or to be due thereunder, or (c) letters of credit and/or proceeds or moneys arising
from negotiations under such credits, all which are herein called moneys or receivables assigned
or assigned moneys or receivables, and are attached, or listed and described in the Attached
Annex A (for contracts) or Annex B (for letters of credit). 26

It is clear from the foregoing deed that the promissory notes were given as security for the loan granted
by respondent to Rare Realty. Through the Deed of Assignment, respondent stepped into the shoes of
Rare Realty as petitioner’s creditor.

Respondent alleged that petitioner obtained a separate loan of PhP 3,921,750. Thus, when petitioner and
respondent executed the Dacion  on August 27, 1986, what was then covered was petitioner’s loan from
the bank. The Dacion provides, thus:

NOW, THEREFORE, in consideration of the foregoing premises, the DEBTOR hereby transfers
and conveys in favor of the BANK by way of Dacion en Pago, the above-described property
in full satisfaction of its outstanding indebtedness in the amount of P3,921,750.00 to the BANK,
subject to x x x terms and conditions.27 (Emphasis supplied.)

The language of the Dacion is unequivocal––the property serves in full satisfaction of petitioner’s own
indebtedness to respondent, referring to the loan of PhP 3,921,750. For this reason, the bank issued a
Confirmation Statement saying that petitioner has no unpaid obligations with the bank as of December 31,
1988.

In 1989, however, Rare Realty defaulted in its payment to respondent. Thus, respondent proceeded
against the security assigned to it, that is, the promissory notes issued by the petitioner. Under these
promissory notes, petitioner is liable for the amount of PhP 300,000 with an interest of 36% per annum
and a penalty of 12% for failure to pay on the maturity date, June 27, 1985; and for the amount of PhP
681,500 with an interest of 18% per annum and a penalty of 12% for failure to pay on the maturity date,
June 25, 1985.

WHEREFORE, the March 29, 2001 Decision and November 7, 2001 Resolution of the CA
are AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 74336 April 7, 1997

J. ANTONIO AGUENZA, petitioner, 
vs.
METROPOLITAN BANK & TRUST CO., VITALIADO P. ARRIETA, LILIA PEREZ, PATRICIO PEREZ
and THE INTERMEDIATE APPELLATE COURT, respondents.

HERMOSISIMA, JR., J.:
Before us is a petition for review on certiorari seeking the reversal of the Decision1 of the Intermediate
Appellate Court (now the Court of Appeals)2 finding petitioner J. Antonio Aguenza liable under a
continuing surety agreement to pay private respondent Metropolitan Bank & Trust Company (hereafter,
Metrobank) a loan jointly obtained by the General Manager and a bookkeeper of Intertrade a corporation
of which petitioner is President and in whose behalf petitioner had, in the past, obtained credit lines.

The following facts are not disputed:

On February 28, 1977, the Board of Directors of Intertrade, through a Board Resolution, authorized and
empowered petitioner and private respondent Vitaliado Arrieta, Intertrade's President and Executive Vice-
President, respectively, to jointly apply for and open credit lines with private respondent Metrobank.
Pursuant to such authority, petitioner and private respondent Arrieta executed several trust receipts from
May to June, 1977, the aggregate value of which amounted to P562,443.46, with Intertrade as the
entrustee and private respondent Metrobank as the entruster.

On March 14, 1977, petitioner and private respondent Arrieta executed a Continuing Suretyship
Agreement whereby both bound themselves jointly and severally with Intertrade to pay private respondent
Metrobank whatever obligation Intertrade incurs, but not exceeding the amount P750,000.00.

In this connection, private respondent Metrobank's Debit Memo to Intertrade dated March 22, 1978
showed full settlement of the letters of credit covered by said trust receipts in the total amount
P562,443.46.

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 trial court rendered its decision absolving petitioner from liability and
dismissing private respondent Metrobank's complaint against him, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1) Declaring that the Promissory Note dated March 21, 1978, marked as Exhibit A is the
responsibility only of defendant Vitaliado P. Arrieta and Lilia P. Perez, in their personal
capacity and to the exclusion of defendant Intertrade and Marketing Co., Inc.;
 2) Ordering defendants Vitaliado P. Arrieta and Lilia P. Perez to pay, jointly and severally,
the plaintiff the sum of P1,062,898.92, due, of September 15, 1982, plus interest, fees
and penalties due from that date pursuant to the stipulations in the promissory note until
the whole obligations shall have been paid and finally settled;

3) Ordering defendants Vitaliado P. Arrieta and Lilia Perez to pay, jointly and severally,
the plaintiff the sum of P44,000.00 by way of attorney's fees and other litigation
expenses, albeit there is no award for exemplary damages;

4) Declaring defendant Patricio Perez, as conjugal partner of defendant Lilia Perez, as

jointly and severally liable with her for what the latter is ordered to pay per this Decision;

5) Dismissing this case insofar as defendants Intertrade and Marketing Co., Inc. and J.
Antonio Aguenza are concerned, although their respective counterclaims against the
plaintiff are also ordered dismissed.

Costs of suit shall be paid, jointly and severally, by defendant Vitaliado Arrieta and Lilia
Perez.

SO ORDERED.3

Private respondents Arrieta and spouses Perez appealed the foregoing decision to the respondent Court
of Appeals.

On February 11, 1986, respondent appellate court promulgated the herein assailed decision, the
dispositive portion of which reads:

WHEREFORE, the appealed decision is SET ASIDE and another one entered ordering
Intertrade & Marketing Co., Inc., and J. Antonio Aguenza, jointly and severally:

1) to pay the Bank the principal of P440,000.00 plus its interest of 18.704% per
annum computed from April 15, 1979 until full payment;

2) to pay the Bank the sum equivalent to 8% of P440,000.00 as penalty, computed from
July 19, 1978 until full payment;

3) to pay the Bank the sum of P15,000.00 as attorney's fees.

The complaint is dismissed as against Lilia Perez, Patricio Perez and Vitaliado P. Arrieta
who are absolved from liability.

All counterclaims are dismissed.

Costs against Intertrade and Aguenza, jointly and severally.

SO ORDERED.

In setting aside the decision of the trial court, respondent Court of Appeals ratiocinated such reversal in
this wise:
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 stated purpose of the note is "operating capital." It cannot be contended that the
words "operating capital" refer to the capital requirements of Perez and Arrieta. In the first
place, it was not shown that they were in business for themselves. Besides, Perez was
only a bookkeeper of Intertrade with a salary of P800.00 a month . . . Their combined
resources would not have been sufficient to justify a business loan of the note's
magnitude. From these follows the only logical conclusion: that Arrieta and the Perez
spouses are not liable on the note.

The surety agreement presents a different problem.

There is no question that Aguenza signed the agreement . . . Its second paragraph
shows, typewritten in bold capitals, that the agreement was executed "for and in
consideration of any existing indebtedness to the Bank of INTERTRADE & MARKETING
COMPANY, INC." Nowhere in its entire text is it shown that its execution was for the
benefit of Perez or Arrieta.

Aguenza feigns ignorance of the promissory note and claims his knowledge of it came
only when he received summons. This is difficult to believe. As Intertrade's first letter to
the Bank . . . shows, the Board of Directors and principal stockholders met to discuss the
obligation. Aguenza was at the time president of Intertrade and acting chairman of its
board . . .

Aguenza also argues that the suretyship was executed to enable Intertrade to avail of
letters of credit to finance importations, which had all been paid in full, and therefore the
agreement was thereby terminated. Again, the agreement shows up the fallacy of this
argument. The document is boldly denominated "CONTINUING SURETYSHIP," and
paragraph VI thereof stipulates it to be a continuing one, "to remain in force until written
notice shall have been received by the Bank that it has been revoked by the surety . . . "
In other words, the option to cancel, in writing, was given to the sureties; the evidence
does not show any written notice of such cancellation. . . .

And, the argument that the agreement was executed as security for letters of credit that
had already been paid is in itself confirmation that the suretyship was meant to benefit
Intertrade. The trust receipts . . . and the bills of exchange . . . are all in the name of
Intertrade.
 The suretyship is both retrospective and prospective in its operation. Its wording covers
all obligations of Intertrade existing as of its date as well as those that may exist
thereafter. Hence, its coverage extends to the promissory note as well. 4

Understandably, petitioner lost no time in bringing this case before us via a petition for review
on certiorari  on the following grounds:

THE RESPONDENT COURT ERRED IN REVERSING AND [SETTING] ASIDE THE

FINDING OF THE TRIAL COURT THAT THE LOAN OF P500,000.00 PROCURED 21
MARCH 1978 BY RESPONDENTS VITALIADO ARRIETA AND LILIA PEREZ IS NOT A
CORPORATE LIABILITY OF RESPONDENT INTERTRADE AND THAT PETITIONER IS
NOT LIABLE THEREON UNDER THE "CONTINUING SURETYSHIP AGREEMENT"
DATED 4 MARCH 1977.

THE CONCLUSION OF THE RESPONDENT COURT THAT THE LOAN OF

P500,000.00 PROCURED 21 MARCH 1978 BY RESPONDENT VITALIADO ARRIETA
AND LILIA PEREZ IS A CORPORATE LIABILITY OF RESPONDENT INTERTRADE
AND CONSEQUENTLY RENDERING PETITIONER LIABLE IN HIS PERSONAL
CAPACITY AS A SURETY UNDER THE "CONTINUING SURETYSHIP" OF 4 MARCH
1977, IS GROSSLY ERRONEOUS AND PREMISED ON A MISAPPREHENSION OF
FACTS.

THE CONCLUSIONS AND CONSTRUCTION REACHED BY RESPONDENT COURT

FROM THE FACTS AND EVIDENCE OF RECORD, ARE INCORRECT RESULTING IN
AN ERRONEOUS DECISION GRAVELY PREJUDICIAL TO THE SUBSTANTIAL
RIGHTS OF PETITIONER.5

The petition has merit,.

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 rule7 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,"9as 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.

We must emphasize that Intertrade has a distinct personality separate from its members. The corporation
transacts its business only through its officers or agents. Whatever authority these officers or agents may
have is derived from the Board of Directors or other governing body unless conferred by the charter of the
corporation. An officer's power as an agent of the corporation must be sought from the statute, charter,
the by-laws, as in a delegation of authority to such officer, or the acts of the Board of Directors formally
expressed or implied from a habit or custom of doing business. 12

Thirdly, we note that the only document to evidence the subject transaction was the promissory note
dated March 21, 1978 signed by private respondents Arrieta and Lilia Perez. There is no indication in said
document as to what capacity the two signatories had in affixing their signatures thereon.

It is noted that the subject transaction is a loan contract for P500,000.00 under terms and conditions
which are stringent, if not onerous. The power to borrow money is one of those cases where even a
special power of attorney is required. 13 In the instant case, them is invariably a need of an enabling act of
the corporation to be approved by its Board of Directors. As round by the trial court, the records of this
case is bereft of any evidence that Intertrade through its Board of Directors, conferred upon Arrieta and
Lilia Perez the authority to contract a loan with Metrobank and execute the promissory note as a security
therefor. Neither a board resolution nor a stockholder's resolution was presented by Metrobank to show
that Arrieta and Lilia Perez were empowered by Intertrade to execute the promissory note. 14

The respondents may argue that the actuation of Arrieta and Liliah Perez was in accordance with the
ordinary course of business usages and practices of Intertrade. However, this contention is devoid of
merit because the prevailing practice in Intertrade was to explicitly authorize an officer to contract loans in
behalf of the corporation. This is evidenced by the fact that previous to the controversy, the Intertrade
Board of Directors, through a board resolution, jointly empowered and authorized petitioner and
respondent Arrieta to negotiate, apply for, and open credit lines with Metrobank's. 15 The participation of
these two was mandated to be joint and not separate and individual.

In the case at bench, only respondent Arrieta, together with a bookkeeper of the corporation, signed the
promissory notes, without the participation and approval of petitioner Aguenza. Moreover, the enabling
corporate act on this particular transaction has not been obtained. Neither has it been shown that any
provision of the charter or any other act of the Board of Directors exists to confer power on the Executive
Vice President acting alone and without the concurrence of its President, to execute the disputed
document. 16
Thus, proceeding from the premise that the subject loan was not the responsibility of Intertrade, it follows
that the undertaking of Arrieta and the bookkeeper was not an undertaking covered by the Continuing
Suretyship Agreement. The rule is that a contract of surety is never presumed; it must be express and
cannot extend to more than what is stipulated, 17 It is strictly construed against the creditor, every doubt
being resolved against enlarging the liability of the surety.

The present obligation incurred in subject contract of loan, as secured by the Arrieta and Perez
promissory note, is not the obligation of the corporation and petitioner Aguenza, but the individual and
personal obligation of private respondents Arrieta and Lilia Perez.

WHEREFORE, the petition is GRANTED, and the questioned decision of the Court of Appeals 18 dated
February 11, 1986 is REVERSED and SET ASIDE. The judgment of the trial court dated February 29,
1984 is hereby REINSTATED.

No Costs.

SO ORDERED.

G.R. No. 87434 August 5, 1992

PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. and TAGUM PLASTICS, INC., petitioners, 
vs.
SWEET LINES, INC., DAVAO VETERANS ARRASTRE AND PORT SERVICES, INC. and HON.
COURT OF APPEALS, respondents.

De Lara, De Lunas & Rosales for petitioners.

Carlo L. Aquino for Sweet Lines, Inc.

REGALADO, J.:

A maritime suit 1 was commenced on May 12, 1978 by herein Petitioner Philippine American General
Insurance Co., Inc. (Philamgen) and Tagum Plastics, Inc. (TPI) against private respondents Sweet Lines,
Inc. (SLI) and Davao Veterans Arrastre and Port Services, Inc. (DVAPSI), along with S.C.I. Line (The
Shipping Corporation of India Limited) and F.E. Zuellig, Inc., as co-defendants in the court a quo, seeking
recovery of the cost of lost or damaged shipment plus exemplary damages, attorney's fees and costs
allegedly due to defendants' negligence, with the following factual backdrop yielded by the findings of the
court below and adopted by respondent court:

It would appear that in or about March 1977, the vessel SS "VISHVA YASH" belonging to
or operated by the foreign common carrier, took on board at Baton Rouge, LA, two (2)
consignments of cargoes for shipment to Manila and later for transhipment to Davao City,
consisting of 600 bags Low Density Polyethylene 631 and another 6,400 bags Low
Density Polyethylene 647, both consigned to the order of Far East Bank and Trust
Company of Manila, with arrival notice to Tagum Plastics, Inc., Madaum, Tagum, Davao
City. Said cargoes were covered, respectively, by Bills of Lading Nos. 6 and 7 issued by
the foreign common carrier (Exhs. E and F). The necessary packing or Weight List (Exhs.
A and B), as well as the Commercial Invoices (Exhs. C and D) accompanied the
shipment. The cargoes were likewise insured by the Tagum Plastics Inc. with plaintiff
Philippine American General Insurance Co., Inc., (Exh. G).
 In the course of time, the said vessel arrived at Manila and discharged its cargoes in the
Port of Manila for transhipment to Davao City. For this purpose, the foreign carrier
awaited and made use of the services of the vessel called M/V "Sweet Love" owned and
operated by defendant interisland carrier.

Subject cargoes were loaded in Holds Nos. 2 and 3 of the interisland carrier. These were
commingled with similar cargoes belonging to Evergreen Plantation and also Standfilco.

On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the
custody of the consignee. A later survey conducted on July 8, 1977, upon the instance of
the plaintiff, shows the following:

Of the cargo covered by Bill of Lading No. 25 or (2)6, supposed to contain 6,400 bags of
Low Density Polyethylene 647 originally inside 160 pallets, there were delivered to the
consignee 5,413 bags in good order condition. The survey shows shortages, damages
and losses to be as follows:

Undelivered/Damaged bags as tallied during discharge from vessel-173

bags; undelivered and damaged as noted and observed whilst stored at
the pier-699 bags; and shortlanded-110 bags (Exhs. P and P-1).

Of the 600 bags of Low Density Polyethylene 631, the survey conducted on the same
day shows an actual delivery to the consignee of only 507 bags in good order condition.
Likewise noted were the following losses, damages and shortages, to wit:

Undelivered/damaged bags and tally sheets during discharge from

vessel-17 bags.

Undelivered and damaged as noted and observed whilst stored at the

pier-66 bags; Shortlanded-10 bags.

Therefore, of said shipment totalling 7,000 bags, originally contained in 175 pallets, only
a total of 5,820 bags were delivered to the consignee in good order condition, leaving a
balance of 1,080 bags. Such loss from this particular shipment is what any or all
defendants may be answerable to (sic).

As already stated, some bags were either shortlanded or were missing, and some of the
1,080 bags were torn, the contents thereof partly spilled or were fully/partially emptied,
but, worse, the contents thereof contaminated with foreign matters and therefore could no
longer serve their intended purpose. The position taken by the consignee was that even
those bags which still had some contents were considered as total losses as the
remaining contents were contaminated with foreign matters and therefore did not (sic)
longer serve the intended purpose of the material. Each bag was valued, taking into
account the customs duties and other taxes paid as well as charges and the conversion
value then of a dollar to the peso, at P110.28 per bag (see Exhs. L and L-1 M and O). 2

Before trial, a compromise agreement was entered into between petitioners, as plaintiffs, and defendants
S.C.I. Line and F.E. Zuellig, upon the latter's payment of P532.65 in settlement of the claim against them.
Whereupon, the trial court in its order of August 12, 1981 3 granted plaintiffs' motion to dismiss grounded
on said amicable settlement and the case as to S.C.I. Line and F.E. Zuellig was consequently "dismissed
with prejudice and without pronouncement as to costs."

The trial court thereafter rendered judgment in favor of herein petitioners on this dispositive portion:
 WHEREFORE, judgment is hereby rendered in favor of the plaintiff Philippine General
American Insurance Company Inc. and against the remaining defendants, Sweet Lines
Inc. and Davao Veterans Arrastre Inc. as follows:

Defendant Sweet Lines, Inc. is ordered to pay said plaintiff the sum of P34,902.00, with
legal interest thereon from date of extrajudicial demand on April 28, 1978 (Exh. M) until
fully paid;

Defendant Sweet Lines Inc. and Davao Veterans Arrastre and (Port) Services Inc. are
directed to pay jointly and severally, the plaintiff the sum of P49,747.55, with legal interest
thereon from April 28, 1978 until fully paid;

Each of said defendants are ordered to pay the plaintiffs the additional sum of P5,000 is
reimbursable attorney's fees and other litigation expenses;

Each of said defendants shall pay one-fourth (1/4) costs. 4

Due to the reversal on appeal by respondent court of the trial court's decision on the ground of
prescription, 5 in effect dismissing the complaint of herein petitioners, and the denial of their motion for
reconsideration, 6 petitioners filed the instant petition for review on certiorari, faulting respondent appellate
court with the following errors: (1) in upholding, without proof, the existence of the so-called prescriptive
period; (2) granting arguendo that the said prescriptive period does exist, in not finding the same to be
null and void; and (3) assuming arguendo that the said prescriptive period is valid and legal, in failing to
conclude that petitioners substantially complied therewith. 7

Parenthetically, we observe that herein petitioners are jointly pursuing this case, considering their
common interest in the shipment subject of the present controversy, to obviate any question as to who the
real party in interest is and to protect their respective rights as insurer and insured. In any case, there is
no impediment to the legal standing of Petitioner Philamgen, even if it alone were to sue herein private
respondents in its own capacity as insurer, it having been subrogated to all rights of recovery for loss of or
damage to the shipment insured under its Marine Risk Note No. 438734 dated March 31, 1977 8 in view
of the full settlement of the claim thereunder as evidenced by the subrogation receipt 9 issued in its favor
by Far East Bank and Trust Co., Davao Branch, for the account of petitioner TPI.

Upon payment of the loss covered by the policy, the insurer's entitlement to subrogation pro tanto, being
of the highest equity, equips it with a cause of action against a third party in case of contractual
breach. 10 Further, the insurer's subrogatory right to sue for recovery under the bill of lading in case of loss
of or damage to the cargo is jurisprudentially upheld. 11 However, if an insurer, in the exercise of its
subrogatory right, may proceed against the erring carrier and for all intents and purposes stands in the
place and in substitution of the consignee, a fortiori such insurer is presumed to know and is just as
bound by the contractual terms under the bill of lading as the insured.

On the first issue, petitioners contend that it was error for the Court of Appeals to reverse the appealed
decision on the supposed ground of prescription when SLI failed to adduce any evidence in support
thereof and that the bills of lading said to contain the shortened periods for filing a claim and for instituting
a court action against the carrier were never offered in evidence. Considering that the existence and tenor
of this stipulation on the aforesaid periods have allegedly not been established, petitioners maintain that it
is inconceivable how they can possibly comply therewith. 12 In refutation, SLI avers that it is standard
practice in its operations to issue bills of lading for shipments entrusted to it for carriage and that it in fact
issued bills of lading numbered MD-25 and MD-26 therefor with proof of their existence manifest in the
records of the case. 13 For its part, DVAPSI insists on the propriety of the dismissal of the complaint as to
it due to petitioners' failure to prove its direct responsibility for the loss of and/or damage to the cargo. 14
On this point, in denying petitioner's motion for reconsideration, the Court of Appeals resolved that
although the bills of lading were not offered in evidence, the litigation obviously revolves on such bills of
lading which are practically the documents or contracts sued upon, hence, they are inevitably involved
and their provisions cannot be disregarded in the determination of the relative rights of the parties
thereto. 15

Respondent court correctly passed upon the matter of prescription, since that defense was so considered
and controverted by the parties. This issue may accordingly be taken cognizance of by the court even if
not inceptively raised as a defense so long as its existence is plainly apparent on the face of relevant
pleadings. 16 In the case at bar, prescription as an affirmative defense was seasonably raised by SLI in its
answer, 17 except that the bills of lading embodying the same were not formally offered in evidence, thus
reducing the bone of contention to whether or not prescription can be maintained as such defense and, as
in this case, consequently upheld on the strength of mere references thereto.

As petitioners are suing upon SLI's contractual obligation under the contract of carriage as contained in
the bills of lading, such bills of lading can be categorized as actionable documents which under the Rules
must be properly pleaded either as causes of action or defenses, 18 and the genuineness and due
execution of which are deemed admitted unless specifically denied under oath by the adverse
party. 19 The rules on actionable documents cover and apply to both a cause of action or defense based
on said documents. 20

In the present case and under the aforestated assumption that the time limit involved is a prescriptive
period, respondent carrier duly raised prescription as an affirmative defense in its answer setting forth
paragraph 5 of the pertinent bills of lading which comprised the stipulation thereon by parties, to wit:

5. Claims for shortage, damage, must be made at the time of delivery to consignee or
agent, if container shows exterior signs of damage or shortage. Claims for non-delivery,
misdelivery, loss or damage must be filed within 30 days from accrual. Suits arising from
shortage, damage or loss, non-delivery or misdelivery shall be instituted within 60 days
from date of accrual of right of action. Failure to file claims or institute judicial proceedings
as herein provided constitutes waiver of claim or right of action. In no case shall carrier
be liable for any delay, non-delivery, misdelivery, loss of damage to cargo while cargo is
not in actual custody of carrier. 21

In their reply thereto, herein petitioners, by their own assertions that —

2. In connection with Pars. 14 and 15 of defendant Sweet Lines, Inc.'s Answer, plaintiffs
state that such agreements are what the Supreme Court considers as contracts of
adhesion (see Sweet Lines, Inc. vs. Hon. Bernardo Teves, et al., G.R. No. L-37750, May
19, 1978) and, consequently, the provisions therein which are contrary to law and public
policy cannot be availed of by answering defendant as valid defenses. 22

thereby failed to controvert the existence of the bills of lading and the aforequoted provisions therein,
hence they impliedly admitted the same when they merely assailed the validity of subject stipulations.

Petitioners' failure to specifically deny the existence, much less the genuineness and due execution, of
the instruments in question amounts to an admission. Judicial admissions, verbal or written, made by the
parties in the pleadings or in the course of the trial or other proceedings in the same case are conclusive,
no evidence being required to prove the same, and cannot be contradicted unless shown to have been
made through palpable mistake or that no such admission was made. 23 Moreover, when 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. 24
Even granting that petitioners' averment in their reply amounts to a denial, it has the procedural earmarks
of what in the law on pleadings is called a negative pregnant, that is, a denial pregnant with the admission
of the substantial facts in the pleading responded to which are not squarely denied. It is in effect an
admission of the averment it is directed to. 25 Thus, while petitioners objected to the validity of such
agreement for being contrary to public policy, the existence of the bills of lading and said stipulations were
nevertheless impliedly admitted by them.

We find merit in respondent court's comments that petitioners failed to touch on the matter of the non-
presentation of the bills of lading in their brief and earlier on in the appellate proceedings in this case,
hence it is too late in the day to now allow the litigation to be overturned on that score, for to do so would
mean an over-indulgence in technicalities. Hence, for the reasons already advanced, the non-inclusion of
the controverted bills of lading in the formal offer of evidence cannot, under the facts of this particular
case, be considered a fatal procedural lapse as would bar respondent carrier from raising the defense of
prescription. Petitioners' feigned ignorance of the provisions of the bills of lading, particularly on the time
limitations for filing a claim and for commencing a suit in court, as their excuse for non-compliance
therewith does not deserve serious attention.

It is to be noted that the carriage of the cargo involved was effected pursuant to an "Application for
Delivery of Cargoes without Original Bill of Lading" issued on May 20, 1977 in Davao City 26 with the
notation therein that said application corresponds to and is subject to the terms of bills of lading MD-25
and MD-26. It would be a safe assessment to interpret this to mean that, sight unseen, petitioners
acknowledged the existence of said bills of lading. By having the cargo shipped on respondent carrier's
vessel and later making a claim for loss on the basis of the bills of lading, petitioners for all intents and
purposes accepted said bills. Having done so they are bound by all stipulations contained
therein. 27 Verily, as petitioners are suing for recovery on the contract, and in fact even went as far as
assailing its validity by categorizing it as a contract of adhesion, then they necessarily admit that there is
such a contract, their knowledge of the existence of which with its attendant stipulations they cannot now
be allowed to deny.

On the issue of the validity of the controverted paragraph 5 of the bills of lading above quoted which
unequivocally prescribes a time frame of thirty (30) days for filing a claim with the carrier in case of loss of
or damage to the cargo and sixty (60) days from accrual of the right of action for instituting an action in
court, which periods must concur, petitioners posit that the alleged shorter prescriptive period which is in
the nature of a limitation on petitioners' right of recovery is unreasonable and that SLI has the burden of
proving otherwise, citing the earlier case of Southern Lines, Inc. vs. Court of Appeals, et al. 28 They
postulate this on the theory that the bills of lading containing the same constitute contracts of adhesion
and are, therefore, void for being contrary to public policy, supposedly pursuant to the dictum in Sweet
Lines, Inc. vs. Teves, et al. 29

Furthermore, they contend, since the liability of private respondents has been clearly established, to bar
petitioners' right of recovery on a mere technicality will pave the way for unjust enrichment. 30 Contrarily,
SLI asserts and defends the reasonableness of the time limitation within which claims should be filed with
the carrier; the necessity for the same, as this condition for the carrier's liability is uniformly adopted by
nearly all shipping companies if they are to survive the concomitant rigors and risks of the shipping
industry; and the countervailing balance afforded by such stipulation to the legal presumption of
negligence under which the carrier labors in the event of loss of or damage to the cargo. 31

It has long been held that Article 366 of the Code of Commerce applies not only to overland and river
transportation but also to maritime 
transportation. 32 Moreover, we agree that in this jurisdiction, as viewed from another angle, it is more
accurate to state that the filing of a claim with the carrier within the time limitation therefor under Article
366 actually constitutes a condition precedent to the accrual of a right of action against a carrier for
damages caused to the merchandise. The shipper or the consignee must allege and prove the fulfillment
of the condition and if he omits such allegations and proof, no right of action against the carrier can
accrue in his favor. As the requirements in Article 366, restated with a slight modification in the assailed
paragraph 5 of the bills of lading, are reasonable conditions precedent, they are not limitations of
action. 33 Being conditions precedent, their performance must precede a suit for enforcement 34and the
vesting of the right to file spit does not take place until the happening of these conditions. 35

Now, before an action can properly be commenced all the essential elements of the cause of action must
be in existence, that is, the cause of action must be complete. All valid conditions precedent to the
institution of the particular action, whether prescribed by statute, fixed by agreement of the parties or
implied by law must be performed or complied with before commencing the action, unless the conduct of
the adverse party has been such as to prevent or waive performance or excuse non-performance of the
condition. 36

It bears restating that a right of action is the right to presently enforce a cause of action, while a cause of
action consists of the operative facts which give rise to such right of action. The right of action does not
arise until the performance of all conditions precedent to the action and may be taken away by the
running of the statute of limitations, through estoppel, or by other circumstances which do not affect the
cause of action. 37 Performance or fulfillment of all conditions precedent upon which a right of action
depends must be sufficiently alleged, 38considering that the burden of proof to show that a party has a
right of action is upon the person initiating the suit. 39

More particularly, where the contract of shipment contains a reasonable requirement of giving notice of
loss of or injury to the goods, the giving of such notice is a condition precedent to the action for loss or
injury or the right to enforce the carrier's liability. Such requirement is not an empty formalism. The
fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but
reasonably to inform it that the shipment has been damaged and that it is charged with liability therefor,
and to give it an opportunity to examine the nature and extent of the injury. This protects the carrier by
affording it an opportunity to make an investigation of a claim while the matter is fresh and easily
investigated so as to safeguard itself from false and fraudulent claims. 40

Stipulations in bills of lading or other contracts of shipment which require notice of claim for loss of or
damage to goods shipped in order to impose liability on the carrier operate to prevent the enforcement of
the contract when not complied with, that is, notice is a condition precedent and the carrier is not liable if
notice is not given in accordance with the stipulation, 41 as the failure to comply with such a stipulation in a
contract of carriage with respect to notice of loss or claim for damage bars recovery for the loss or
damage suffered. 42

On the other hand, the validity of a contractual limitation of time for filing the suit itself against a carrier
shorter than the statutory period therefor has generally been upheld as such stipulation merely affects the
shipper's remedy and does not affect the liability of the carrier. In the absence of any statutory limitation
and subject only to the requirement on the reasonableness of the stipulated limitation period, the parties
to a contract of carriage may fix by agreement a shorter time for the bringing of suit on a claim for the loss
of or damage to the shipment than that provided by the statute of limitations. Such limitation is not
contrary to public policy for it does not in any way defeat the complete vestiture of the right to recover, but
merely requires the assertion of that right by action at an earlier period than would be necessary to defeat
it through the operation of the ordinary statute of limitations. 43

In the case at bar, there is neither any showing of compliance by petitioners with the requirement for the
filing of a notice of claim within the prescribed period nor any allegation to that effect. It may then be said
that while petitioners may possibly have a cause of action, for failure to comply with the above condition
precedent they lost whatever right of action they may have in their favor or, token in another sense, that
remedial right or right to relief had prescribed.44

The shipment in question was discharged into the custody of the consignee on May 15, 1977, and it was
from this date that petitioners' cause of action accrued, with thirty (30) days therefrom within which to file
a claim with the carrier for any loss or damage which may have been suffered by the cargo and thereby
perfect their right of action. The findings of respondent court as supported by petitioners' formal offer of
evidence in the court below show that the claim was filed with SLI only on April 28, 1978, way beyond the
period provided in the bills of lading 45 and violative of the contractual provision, the inevitable
consequence of which is the loss of petitioners' remedy or right to sue. Even the filing of the complaint on
May 12, 1978 is of no remedial or practical consequence, since the time limits for the filing thereof,
whether viewed as a condition precedent or as a prescriptive period, would in this case be productive of
the same result, that is, that petitioners had no right of action to begin with or, at any rate, their claim was
time-barred.

What the court finds rather odd is the fact that petitioner TPI filed a provisional claim with DVAPSI as
early as June 14, 1977 46 and, as found by the trial court, a survey fixing the extent of loss of and/or
damage to the cargo was conducted on July 8, 1977 at the instance of petitioners. 47 If petitioners had the
opportunity and awareness to file such provisional claim and to cause a survey to be conducted soon
after the discharge of the cargo, then they could very easily have filed the necessary formal, or even a
provisional, claim with SLI itself 48 within the stipulated period therefor, instead of doing so only on April
28, 1978 despite the vessel's arrival at the port of destination on May 15, 1977. Their failure to timely act
brings us to no inference other than the fact that petitioners slept on their rights and they must now face
the consequences of such inaction.

The ratiocination of the Court of Appeals on this aspect is worth reproducing:

xxx xxx xxx

It must be noted, at this juncture, that the aforestated time limitation in the presentation of
claim for loss or damage, is but a restatement of the rule prescribed under Art. 366 of the
Code of Commerce which reads as follows:

Art. 366. Within the twenty-four hours following the receipt of the
merchandise, the claim against the carrier for damage or average which
may be found therein upon opening the packages, may be made,
provided that the indications of the damage or average which gives rise
to the claim cannot be ascertained from the outside part of the packages,
in which case the claims shall be admitted only at the time of the receipt.

After the periods mentioned have elapsed, or the transportation charges

have been paid, no claim shall be admitted against the carrier with
regard to the condition in which the goods transported were delivered.

Gleanable therefrom is the fact that subject stipulation even lengthened the period for
presentation of claims thereunder. Such modification has been sanctioned by the
Supreme Court. In the case of Ong Yet (M)ua Hardware Co., Inc. vs. Mitsui Steamship
Co., Ltd., et al., 59 O.G. No. 17, p. 2764, it ruled that Art. 366 of the Code of Commerce
can be modified by a bill of lading prescribing the period of 90 days after arrival of the
ship, for filing of written claim with the carrier or agent, instead of the 24-hour time limit
after delivery provided in the aforecited legal provision.

Tested, too, under paragraph 5 of said Bill of Lading, it is crystal clear that the
commencement of the instant suit on May 12, 1978 was indeed fatally late. In view of the
express provision that "suits arising from
. . . damage or loss shall be instituted within 60 days from date of accrual of right of
action," the present action necessarily fails on ground of prescription.

In the absence of constitutional or statutory prohibition, it is usually held

or recognized that it is competent for the parties to a contract of shipment
 to agree on a limitation of time shorter than the statutory period, within
which action for breach of the contract shall be brought, and such
limitation will be enforced if reasonable . . . (13 C.J.S. 496-497)

A perusal of the pertinent provisions of law on the matter would disclose that there is no
constitutional or statutory prohibition infirming paragraph 5 of subject Bill of Lading. The
stipulated period of 60 days is reasonable enough for appellees to ascertain the facts and
thereafter to sue, if need be, and the 60-day period agreed upon by the parties which
shortened the statutory period within which to bring action for breach of contract is valid
and binding. . . . (Emphasis in the original text.) 49

As explained above, the shortened period for filing suit is not unreasonable and has in fact been generally
recognized to be a valid business practice in the shipping industry. Petitioners' advertence to the Court's
holding in the Southern Lines case, supra, is futile as what was involved was a claim for refund of excess
payment. We ruled therein that non-compliance with the requirement of filing a notice of claim under
Article 366 of the Code of Commerce does not affect the consignee's right of action against the carrier
because said requirement applies only to cases for recovery of damages on account of loss of or damage
to cargo, not to an action for refund of overpayment, and on the further consideration that neither the
Code of Commerce nor the bills of lading therein provided any time limitation for suing for refund of
money paid in excess, except only that it be filed within a reasonable time.

The ruling in Sweet Lines categorizing the stipulated limitation on venue of action provided in the subject
bill of lading as a contract of adhesion and, under the circumstances therein, void for being contrary to
public policy is evidently likewise unavailing in view of the discrete environmental facts involved and the
fact that the restriction therein was unreasonable. In any case, Ong Yiu vs. Court of Appeals, et
al., 50 instructs us that "contracts of adhesion wherein one party imposes a ready-made form of contract
on the other . . . are contracts not entirely prohibited. The one who adheres to the contract is in reality free
to reject it entirely; if he adheres he gives his consent." In the present case, not even an allegation of
ignorance of a party excuses non-compliance with the contractual stipulations since the responsibility for
ensuring full comprehension of the provisions of a contract of carriage devolves not on the carrier but on
the owner, shipper, or consignee as the case may be.

While it is true that substantial compliance with provisions on filing of claim for loss of or damage to cargo
may sometimes suffice, the invocation of such an assumption must be viewed vis-a-vis the object or
purpose which such a provision seeks to attain and that is to afford the carrier a reasonable opportunity to
determine the merits and validity of the claim and to protect itself against unfounded
impositions. 51 Petitioners' would nevertheless adopt an adamant posture hinged on the issuance by SLI
of a "Report on Losses and Damages," dated May 15, 1977, 52 from which petitioners theorize that this
charges private respondents with actual knowledge of the loss and damage involved in the present case
as would obviate the need for or render superfluous the filing of a claim within the stipulated period.

Withal, it has merely to be pointed out that the aforementioned report bears this notation at the lower part
thereof: "Damaged by Mla. labor upon unloading; B/L noted at port of origin," as an explanation for the
cause of loss of and/or damage to the cargo, together with an iterative note stating that "(t)his Copy
should be submitted together with your claim invoice or receipt within 30 days from date of issue
otherwise your claim will not be honored."

Moreover, knowledge on the part of the carrier of the loss of or damage to the goods deducible from the
issuance of said report is not equivalent to nor does it approximate the legal purpose served by the filing
of the requisite claim, that is, to promptly apprise the carrier about a consignee's intention to file a claim
and thus cause the prompt investigation of the veracity and merit thereof for its protection. It would be an
unfair imposition to require the carrier, upon discovery in the process of preparing the report on losses or
damages of any and all such loss or damage, to presume the existence of a claim against it when at that
time the carrier is expectedly concerned merely with accounting for each and every shipment and
assessing its condition. Unless and until a notice of claim is therewith timely filed, the carrier cannot be
expected to presume that for every loss or damage tallied, a corresponding claim therefor has been filed
or is already in existence as would alert it to the urgency for an immediate investigation of the soundness
of the claim. The report on losses and damages is not the claim referred to and required by the bills of
lading for it does not fix responsibility for the loss or damage, but merely states the condition of the goods
shipped. The claim contemplated herein, in whatever form, must be something more than a notice that
the goods have been lost or damaged; it must contain a claim for compensation or indicate an intent to
claim. 53

Thus, to put the legal effect of respondent carrier's report on losses or damages, the preparation of which
is standard procedure upon unloading of cargo at the port of destination, on the same level as that of a
notice of claim by imploring substantial compliance is definitely farfetched. Besides, the cited notation on
the carrier's report itself makes it clear that the filing of a notice of claim in any case is imperative if carrier
is to be held liable at all for the loss of or damage to cargo.

Turning now to respondent DVAPSI and considering that whatever right of action petitioners may have
against respondent carrier was lost due to their failure to seasonably file the requisite claim, it would be
awkward, to say the least, that by some convenient process of elimination DVAPSI should proverbially be
left holding the bag, and it would be pure speculation to assume that DVAPSI is probably responsible for
the loss of or damage to cargo. Unlike a common carrier, an arrastre operator does not labor under a
presumption of negligence in case of loss, destruction or deterioration of goods discharged into its
custody. In other words, to hold an arrastre operator liable for loss of and/or damage to goods entrusted
to it there must be preponderant evidence that it did not exercise due diligence in the handling and care of
the goods.

Petitioners failed to pinpoint liability on any of the original defendants and in this seemingly wild goose-
chase, they cannot quite put their finger down on when, where, how and under whose responsibility the
loss or damage probably occurred, or as stated in paragraph 8 of their basic complaint filed in the court
below, whether "(u)pon discharge of the cargoes from the original carrying vessel, the SS VISHVA
YASH," and/or upon discharge of the cargoes from the interisland vessel the MV "SWEET LOVE," in
Davao City and later while in the custody of defendant arrastre operator. 54

The testimony of petitioners' own witness, Roberto Cabato, Jr., Marine and Aviation Claims Manager of
petitioner Philamgen, was definitely inconclusive and the responsibility for the loss or damage could still
not be ascertained therefrom:

Q In other words, Mr. Cabato, you only computed the loss on the basis of
the figures submitted to you and based on the documents like the survey
certificate and the certificate of the arrastre? 

A Yes, sir. 

Q Therefore, Mr. Cabato, you have no idea how or where these losses
were incurred?

A No, sir.

x x x           x x x          x x x

Q Mr. Witness, you said that you processed and investigated the claim
involving the shipment in question. Is it not a fact that in your processing
and investigation you considered how the shipment was transported?
Where the losses could have occurred and what is the extent of the
respective responsibilities of the bailees and/or carriers involved?
 x x x           x x x          x x x

A With respect to the shipment being transported, we have of course to

get into it in order to check whether the shipment coming in to this port is
in accordance with the policy condition, like in this particular case, the
shipment was transported to Manila and transhipped through an
interisland vessel in accordance with the policy. With respect to the
losses, we have a general view where losses could have occurred. Of
course we will have to consider the different bailees wherein the
shipment must have passed through, like the ocean vessel, the
interisland vessel and the arrastre, but definitely at that point and time
we cannot determine the extent of each liability. We are only interested
at that point and time in the liability as regards the underwriter in
accordance with the policy that we issued.

x x x           x x x          x x x

Q Mr. Witness, from the documents, namely, the survey of Manila

Adjusters and Surveyors Company, the survey of Davao Arrastre
contractor and the bills of lading issued by the defendant Sweet Lines,
will you be able to tell the respective liabilities of the bailees and/or
carriers concerned? 

A No, sir. (Emphasis ours.) 55

Neither did nor could the trial court, much less the Court of Appeals, precisely establish the stage in the
course of the shipment when the goods were lost, destroyed or damaged. What can only be inferred from
the factual findings of the trial court is that by the time the cargo was discharged to DVAPSI, loss or
damage had already occurred and that the same could not have possibly occurred while the same was in
the custody of DVAPSI, as demonstrated by the observations of the trial court quoted at the start of this
opinion.

ACCORDINGLY, on the foregoing premises, the instant petition is DENIED and the dismissal of the
complaint in the court a quo as decreed by respondent Court of Appeals in its challenged judgment is
hereby AFFIRMED.

SO ORDERED.

THIRD DIVISION

[G.R. No. 111244. December 15, 1997]

ARTURO ALANO, Petitioner, v. THE HONORABLE COURT OF APPEALS, HON. ENRICO A.

LANZANAS, Presiding Judge, Regional Trial Court, National Capital Judicial Region, Manila,
Branch 37, and ROBERTO CARLOS, Respondents.

DECISION

ROMERO, J.:

Petitioner Arturo Alano has filed this petition for review of the decision 1 of the Court of Appeals in CA-G.R.
SP No. 28150 which affirmed in toto the order of the Regional Trial Court of Manila, Branch 37 2 denying
petitioners motion for the suspension of proceeding of Criminal Case No. 90-84933, entitled People of the
Philippines vs. Arturo Alano as well as his motion for reconsideration.

Criminal Case No. 90-84933 is a prosecution for the crime of estafa. The information 3alleges:

That on or about June 10, 1986, in the City of Manila, Philippines, the said accused did then and there
wilfully, unlawfully and feloniously defraud Roberto S. Carlos in the following manner, to wit: the said
accused, pretending to be still the owner of a parcel of land with an area of 1,172 square meters, more or
less, located at Bicutan, Taguig, Metro Manila, covered by Tax Declaration No. 120-004-00398, well
knowing that he had previously sold the same to the said Roberto S. Carlos for P30,000.00, sold the
aforesaid property for the second time to one Erlinda B. Dandoy for P87,900.00, thereby depriving the
said Roberto S. Carlos of his rightful ownership/possession of the said parcel of land, to the damage and
prejudice of the said Roberto S. Carlos in the aforesaid amount of P30,000.00, Philippine currency.

Contrary to law.

Petitioner moved for the suspension of the criminal case on the ground that there was a prejudicial
question pending resolution in another case being tried in the Regional Trial Court, National Capital
Region, Pasig, Branch 68. The case, docketed as Civil Case No. 55103 and entitled Roberto Carlos and
Trinidad M. Carlos v. Arturo Alano, et al., concerns the nullity of the sale and recovery of possession and
damages. In the aforementioned Civil Case, private respondent filed a complaint against the petitioner
seeking the annulment of the second sale of said parcel of land made by the petitioner to a certain Erlinda
Dandoy on the premise that the said land was previously sold to them. In his answer, petitioner contends
that he never sold the property to the private respondents and that his signature appearing in the deed of
absolute sale in favor of the latter was a forgery, hence, the alleged sale was fictitious and inexistent. At
this juncture, it is worth mentioning that the civil case was filed on March 1, 1985, five years before June
19, 1990 when the criminal case for estafa was instituted.

On October 3, 1991, the trial court denied the petitioners motion as well as a subsequent motion for
reconsideration.

Aggrieved, petitioner filed a petition for certiorari and prohibition before the Court of Appeals seeking the
nullification of the assailed order.

On July 26, 1993,4 the Court of Appeals dismissed the petition for lack of merit, the decretal portion of
which reads:

WHEREFORE, finding no merit to the petition, the same is hereby DISMISSED, with cost against
petitioner.

Hence, this petition.

The only issue in this petition is whether the pendency of Civil Case No. 55103, is a prejudicial question
justifying the suspension of the proceedings in Criminal Case No. 90-84933 filed against the petitioner.

Petitioner alleges that his signature appearing in the first deed of absolute sale in favor of private
respondent was a forgery, such that there was no second sale covering the said parcel of land. Otherwise
stated, if the Court in the said Civil Case rules that the first sale to herein private respondent was null and
void, due to the forgery of petitioners signature in the first deed of sale, it follows that the criminal case for
estafa would not prosper.

While at first blush there seems to be merit in petitioners claim, we are compelled to affirm the Court of
Appeals findings.
The doctrine of prejudicial question comes into play in a situation where a civil action and a criminal action
are both pending and there exists in the former an issue which must be preemptively resolved before the
criminal action may proceed, because howsoever the issue raised in the civil action is resolved such
resolution would be determinative of the guilt or innocence of the accused in the criminal action. 5 In other
words, if both civil and criminal cases have similar issues or the issue in one is intimately related to the
issues raised in the other, then a prejudicial question would likely exist, provided the other element or
characteristic is satisfied.6cräläwvirtualibräry

On the basis of the foregoing and a perusal of the facts obtaining in the case at bar, the disposition of the
issue raised need not unduly detain us. We have already ruled that a criminal action for estafa (for alleged
double sale of property) is a prejudicial question to a civil action for nullity of the alleged deed of sale and
the defense of the alleged vendor is the forgery of his signature in the deed. 7cräläwvirtualibräry

Notwithstanding the apparent prejudicial question involved, the Court of Appeals still affirmed the Order of
the trial court denying petitioners motion for the suspension of the proceeding on the ground that
petitioner, in the stipulation of facts, had already admitted during the pre-trial order dated October 5, 1990
of the criminal case the validity of his signature in the first deed of sale between him and the private
respondent, as well as his subsequent acknowledgment of his signature in twenty-three (23) cash
vouchers evidencing the payments made by the private respondent. 8 Moreover, it was also noted by the
Court of Appeals that petitioner even wrote to the private respondent offering to refund whatever sum the
latter had paid.9chanroblesvirtuallawlibrary

In this regard, the pre-trial provision on criminal procedure found in Rule 118 of the Rules of Court
provides:

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

(a) Plea bargaining

(b)Stipulation of facts

From the foregoing, there is no question that a stipulation of facts by the parties in a criminal case is
recognized as declarations constituting judicial admissions, hence, binding upon the parties 10 and 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 statement contained in the
exhibit.11cräläwvirtualibräry

Accordingly, the stipulation of facts stated in the pre-trial order amounts to an admission by the petitioner
resulting in the waiver of his right to present evidence on his behalf. While it is true that the right to
present evidence is guaranteed under the Constitution, 12 this right may be waived expressly or
impliedly.13chanroblesvirtuallawlibrary

Since the suspension of the criminal case due to a prejudicial question is only a procedural matter, the
same is subject to a waiver by virtue of the prior acts of the accused. After all, the doctrine of waiver is
made solely for the benefit and protection of the individual in his private capacity, if it can be dispensed
with and relinquished without infringing on any public right and without detriment to the community at
large.14chanroblesvirtuallawlibrary

Accordingly, petitioners admission in the stipulation of facts during the pre-trial of the criminal amounts to
a waiver of his defense of forgery in the civil case. Hence, we have no reason to nullify such waiver, it
being not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third
person with a right recognized by law.15Furthermore, it must be emphasized that the pre-trial order was
signed by the petitioner himself. As such, the rule that no proof need be offered as to any facts admitted
at a pre-trial hearing applies.16cräläwvirtualibräry
WHEREFORE, in view of the foregoing, the appealed decision of the Court of Appeals dated July 26,
1993 is AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 119220 September 20, 1996

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, 

vs.
NILO SOLAYAO, accused-appellant.

ROMERO, J.:

Accused-appellant Nilo Solayao was charged before the Regional Trial Court of Naval, Biliran,
Branch 16, with the crime of illegal possession of firearm and ammunition 1 defined and penalized
under Presidential Decree No. 1866.

The lone prosecution witness, SPO3 Jose Niño, narrated that at about 9:00 o'clock in the evening
of July 9, 1992, with CAFGU members Teofilo Llorad, Jr. and Cecilio Cenining, he went to
Barangay Caulangohan, Caibiran, Biliran. They were to conduct an intelligence patrol as required
of them by their intelligence officer to verify reports on the presence of armed persons roaming
around the barangays of Caibiran. 2

From Barangay Caulangohan, the team of Police Officer Niño proceeded to Barangay Onion
where they met the group of accused-appellant Nilo Solayao numbering five. The former became
suspicious when they observed that the latter were drunk and that accused-appellant himself was
wearing a camouflage uniform or a jungle suit. Accused-appellant's companions, upon seeing the
government agents, fled. 3

Police Officer Niño told accused-appellant not to run away and introduced himself as "PC," after
which he seized the dried coconut leaves which the latter was carrying and found wrapped in it a
49-inch long homemade firearm locally know as "latong." When he asked accused-appellant who
issued him a license to carry said firearm or whether he was connected with the military or any
intelligence group, the latter answered that he had no permission to possess the same.
Thereupon, SPO3 Niño confiscated the firearm and turned him over to the custody of the
policemen of Caibiran who subsequently investigated him and charged him with illegal
possession of firearm. 4

Accused-appellant, in his defense, did not contest the confiscation of the shotgun but averred that
this was only given to him by one of his companions, Hermogenes Cenining, when it was still
wrapped in coconut leaves. He claimed that he was not aware that there was a shotgun
concealed inside the coconut leaves since they were using the coconut leaves as a torch. He
further claimed that this was the third torch handed to him after the others had been used
up. 5 Accused-appellant's claim was corroborated by one Pedro Balano that he indeed received a
torch from Hermogenes Cenining which turned out to be a shotgun wrapped in coconut leaves. 6

On August 25, 1994, the trial court found accused-appellant guilty of illegal possession of firearm
under Section 1 of Presidential Decree No. 1866 and imposed upon him the penalty of
imprisonment ranging from reclusion temporal maximum to reclusion perpetua. The trial court,
having found no mitigating but one aggravating circumstance of nighttime, sentenced accused-
appellant to suffer the prison term of reclusion perpetua with the accessory penalties provided by
law. 7 It found that accused-appellant did not contest the fact that SPO3 Niño confiscated the
firearm from him and that he had no permit or license to possess the same. It hardly found
credible accused-appellant's submission that he was in possession of the firearm only by accident
and that upon reaching Barangay Onion, he followed four persons, namely, Hermogenes
Cenining, Antonio Sevillano, Willie Regir and Jovenito Jaro when he earlier claimed that he did
not know his companions. 8

Accused-appellant comes to this Court on appeal and assigns the following errors:

I. The trial court erred in admitting in evidence the homemade firearm.

II. The trial court erred in appreciating the aggravating circumstance of nighttime in the
imposition of the maximum penalty against the accused-appellant. 9

This court, in the case of People v.  Lualhati10 ruled that in crimes involving illegal possession of
firearm, the prosecution has the burden of proving the elements thereof, viz: (a) the existence of
the subject firearm and (b) the fact that the accused who owned or possessed it does not have
the corresponding license or permit to possess the same.

In assigning the first error, accused-appellant argued that the trial court erred in admitting the
subject firearm in evidence as it was the product of an unlawful warrantless search. He
maintained that the search made on his person violated his constitutional right to be secure in his
person and effects against unreasonable searches and seizures. Not only was the search made
without a warrant but it did not fall under any of the circumstances enumerated under Section 5,
Rule 113 of the 1985 Rules on Criminal Procedure which provides, inter alia:

A peace officer or a private person may, without a warrant, arrest a person when in his
presence, the person to be arrested has committed, is actually committing, or is
attempting to commit an offense.

Hence, the search being unlawful, the homemade firearm confiscated from him is inadmissible in
evidence for being "the fruit of the poisonous
tree." 11 As such, the prosecution's case must necessarily fail and the accused-appellant
acquitted.

Accused-appellant's arguments follow the line of reasoning in People v. Cuizon, et al. 12 where

this Court declared: ". . . emphasis is to be laid on the fact that the law requires that the search be
incident to a lawful arrest, in order that the search itself may likewise be considered legal.
Therefore, it is beyond cavil that a lawful arrest must precede the search of a person and his
belongings. Were a search first undertaken, then an arrest effected based on evidence produced
by the search, both such search and arrest would be unlawful, for being contrary to law."

Under the circumstances obtaining in this case, however, accused-appellant's arguments are
hardy tenable. He and his companions' drunken actuations aroused the suspicion of SPO3 Niño's
group, as well as the fact that he himself was attired in a camouflage uniform or a jungle
suit 13 and that upon espying the peace officers, his companions fled. It should be noted that the
peace officers were precisely on an intelligence mission to verify reports that armed persons were
roaming around the barangays of Caibiran. 14

The circumstances in this case are similar to those obtaining in Posadas v. Court of
Appeals 15 where this Court held that "at the time the peace officers identified themselves and
apprehended the petitioner as he attempted to flee, they did not know that he had committed, or
was actually committing the offense of illegal possession of firearm and ammunitions. They just
suspended that he was hiding something in the buri bag. They did not know what its contents
were. The said circumstances did not justify an arrest without a warrant."

This Court, nevertheless, ruled that the search and seizure in the Posadas case brought about by
the suspicious conduct of Posadas himself can be likened to a "stop and frisk" situation. There
was probable cause to conduct a search even before an arrest could be made.

In the present case, after SPO3 Niño told accused-appellant not to run away, the former identified
himself as a government agents. 16 The peace officers did not know that he had committed, or
was actually committing, the offense of illegal possession of firearm. Tasked with verifying the
report that there were armed men roaming in the barangays surrounding Caibiran, their attention
was understandably drawn to the group that had aroused their suspicion. They could not have
known that the object wrapped in coconut leaves which accused-appellant was carrying hid a
firearm.

As with Posadas, the case at bar constitutes an instance where a search and seizure may be
effected without first making an arrest. There was justifiable cause to "stop and frisk" accused-
appellant when his companions filed upon seeing the government agents. Under the
circumstances, the government agents could not possibly have procured a search warrant first.

Thus, there was no violation of the constitutional guarantee against unreasonable searches and
seizures. Nor was there error on the part of the trial court when it admitted the homemade firearm
as evidence.

As to the question of whether or not the prosecution was able to prove the second element, that
is, the absence of a license or permit to possess the subject firearm, this Court agrees with the
Office of the Solicitor General which pointed out that the prosecution failed to prove that accused-
appellant lacked the necessary permit or license to possess the subject firearm. 17

Undoubtedly, it is the constitutional presumption of innocence that lays such burden upon the
prosecution. The absence of such license and legal authority constitutes an essential ingredient
of the offense of illegal possession of firearm, and every ingredient or essential element of an
offense must be shown by the prosecution by proof beyond reasonable doubt. 18

In People v. Tiozon, 19 this Court said:

It is true that People vs. Lubo, 101 Phil. 179 and People vs. Ramos, 8 SCRA 758 could
be invoked to support the view that it is incumbent upon a person charged with illegal
possession of a firearm to prove the issuance to him of a license to possess the firearm,
but we are of the considered opinion that under the provisions of Section 2, Rule 131 of
the Rules of Court which provide that in criminal cases the burden of proof as to the
offense charged lies on the prosecution and that a negative fact alleged by the
prosecution must be proven if "it is an essential ingredient of the offense charged," the
burden of proof was with the prosecution in this case to prove that the firearm used by
appellant in committing the offense charged was not properly licensed.

It cannot be denied that the lack or absence of a license is an essential ingredient of the
offense of illegal possession of a firearm. The information filed against appellant in
Criminal Case No. 3558 of the lower court (now G.R. No. 27681) specifically alleged that
he had no "license or permit to possess" the .45 caliber pistol mentioned therein. Thus it
seems clear that it was the prosecution's duty not merely to allege that negative fact but
to prove it. This view is supported by similar adjudicated cases. In U.S. vs. Tria, 17 Phil.
 303, the accused was charged with "having criminally inscribed himself as a voter
knowing that he had none of the qualifications required to be a voter. It was there held
that the negative fact of lack of qualification to be a voter was an essential element of the
crime charged and should be proved by the prosecution. In another case (People vs.
Quebral. 68 Phil. 564) where the accused was charged with illegal practice of medicine
because he had diagnosed, treated and prescribed for certain diseases suffered by
certain patients from whom he received monetary compensation, without having
previously obtained the proper certificate of registration from the Board of Medical
Examiners, as provided in Section 770 of the Administrative Code, this Court held that if
the subject of the negative averment like, for instance, the act of voting without the
qualifications provided by law is an essential ingredient of the offense charged, the
prosecution has the burden of proving the same, although in view of the difficulty of
proving a negative allegation, the prosecution, under such circumstance, need only
establish a  prima facie case from the best evidence obtainable. In the case before Us,
both appellant and the Solicitor General agree that there was not even a prima facie case
upon which to hold appellant guilty of the illegal possession of a firearm. Former Chief
Justice Moral upholds this view as follows:

The mere fact that the adverse party has the control of the better means of proof of the
fact alleged, should not relieve the party making the averment of the burden of proving it.
This is so, because a party who alleges a fact must be assumed to have acquired some
knowledge thereof, otherwise he could not have alleged it. Familiar instance of this is the
case of a person prosecuted for doing an act or carrying on a business, such as, the sale
of liquor without a license. How could the prosecution aver the want of a license if it had
acquired no knowledge of that fact? Accordingly, although proof of the existence or non-
existence of such license can, with more facility, be adduced by the defendant, it is
nevertheless, encumber upon the party alleging the want of the license to prove the
allegation. Naturally, as the subject matter of the averment is one which lies peculiarly
within the control or knowledge of the accused prima facie evidence thereof on the part
of the prosecution shall suffice to cast the onus upon him." (6 Moran, Comments on the
Rules of Court, 1963 edition, p. 8).

Finally, the precedents cited above have been crystallized as the present governing case law on
this question. As this Court summed up the doctrine in People v. Macagaling: 20

We cannot see how the rule can be otherwise since it is the inescapable duty of the
prosecution to prove all the ingredients of the offense as alleged against the accused in
an information, which allegations must perforce include any negative element provided by
the law to integrate that offense. We have reiterated quite recently the fundamental
mandate that since the prosecution must allege all the elements of the offense charged,
then it must prove by the requisite quantum of evidence all the elements it has thus
alleged.

In the case at bar, the prosecution was only able to prove by testimonial evidence that accused-
appellant admitted before Police Officer Niño at the time that he was accosted that he did not
have any authority or license to carry the subject firearm when he was asked if he had one. 21 In
other words, the prosecution relied on accused-appellant's admission to prove the second
element.

Is this admission sufficient to prove beyond reasonable doubt the second element of illegal
possession of firearm which is that accused-appellant does not have the corresponding license?
Corollary to the above question is whether an admission by the accused-appellant can take the
place of any evidentiary means establishing beyond reasonable doubt the fact averred in the
negative in the pleading and which forms an essential ingredient of the crime charged.
This Court answers both questions in the negative. By its very nature, an "admission is the mere
acknowledgment of a fact or of circumstance from which guilt may be inferred, tending to
incriminate the speaker, but not sufficient of itself to establish his guilt." 22 In other words, it is a
"statement by defendant of fact or facts pertinent to issues pending, in connection with proof of
other facts or circumstances, to prove guilt, but which is, of itself, insufficient to authorize
conviction." 23 From the above principles, this Court can infer that an admission in criminal cases
is insufficient to prove beyond reasonable doubt the commission of the crime charged.

Moreover, said admission is extra-judicial in nature. As such, it does not fall under Section 4 of
Rule 129 of the Revised Rules of Court which states:

An admission, verbal or written, made by a party in the course of the trial or other
proceedings in the same case does not require proof.

Not being a judicial admission, said statement by accused-appellant does not prove beyond
reasonable doubt the second element of illegal possession of firearm. It does not even establish
a prima facie case. It merely bolsters the case for the prosecution but does not stand as proof of
the fact of absence or lack of a license.

This Court agrees with the argument of the Solicitor General that "while the prosecution was able
to establish the fact that the subject firearm was seized by the police from the possession of
appellant, without the latter being able to present any license or permit to possess the same, such
fact alone is not conclusive proof that he was not lawfully authorized to carry such firearm. In
other words, such fact does not relieve the prosecution from its duty to establish the lack of a
license or permit to carry the firearm by clear and convincing evidence, like a certification from the
government agency concerned." 24

Putting it differently, "when a negative is averred in a pleading, or a plaintiff's case depends upon
the establishment of a negative, and the means of proving the fact are equally within the control
of each party, then the burden of proof is upon the party averring the negative." 25

In this case, a certification from the Firearms and Explosives Unit of the Philippine National Police
that accused-appellant was not a licensee of a firearm of any kind or caliber would have sufficed
for the prosecution to prove beyond reasonable doubt the second element of the crime of illegal
possession of firearm.

In view of the foregoing, this Court sees no need to discuss the second assigned error.

WHEREFORE, the assailed judgment of the court a quo is REVERSED and SET ASIDE.
Accused-appellant Nilo Solayao is hereby ACQUITTED for insufficiency of evidence and ordered
immediately released unless there are other legal grounds for his continued detention, with
cost de oficio.

SO ORDERED.