[G.R. No. 120820.

August 1, 2000]

3. No pronouncement as to costs.

SPS. FORTUNATO SANTOS and ROSALINDA R. SANTOS, petitioners, vs. COURT OF

APPEALS, SPS. MARIANO R. CASEDA and CARMEN CASEDA, respondents.
SO ORDERED.[1]

DECISION
The undisputed facts of this case are as follows:

QUISUMBING, J.:
The spouses Fortunato and Rosalinda Santos owned the house and lot consisting of 350
square meters located at Lot 7, Block 8, Better Living Subdivision, Paranaque, Metro
Manila, as evidenced by TCT (S-11029) 28005 of the Register of Deeds of Paranaque. The
For review on certiorari is the decision of the Court of Appeals, dated March 28, 1995, in land together with the house, was mortgaged with the Rural Bank of Salinas, Inc., to
CA-G.R. CV No. 30955, which reversed and set aside the judgment of the Regional Trial secure a loan of P150,000.00 maturing on June 16, 1987.
Court of Makati, Branch 133, in Civil Case No. 89-4759. Petitioners (the Santoses) were
the owners of a house and lot informally sold, with conditions, to herein private
respondents (the Casedas). In the trial court, the Casedas had complained that the
Santoses refused to deliver said house and lot despite repeated demands. The trial court Sometime in 1984, Rosalinda Santos met Carmen Caseda, a fellow market vendor of hers
dismissed the complaint for specific performance and damages, but in the Court of in Pasay City and soon became very good friends with her. The duo even became
Appeals, the dismissal was reversed, as follows: kumadres when Carmen stood as a wedding sponsor of Rosalinda's nephew.

WHEREFORE, in view of the foregoing, the decision appealed from is hereby REVERSED On June 16, 1984, the bank sent Rosalinda Santos a letter demanding payment of
and SET ASIDE and a new one entered: P16,915.84 in unpaid interest and other charges. Since the Santos couple had no funds,
Rosalinda offered to sell the house and lot to Carmen. After inspecting the real property,
Carmen and her husband agreed.

1. GRANTING plaintiffs-appellants a period of NINETY (90) DAYS from the date of the
finality of judgment within which to pay the balance of the obligation in accordance with
their agreement; Sometime that month of June, Carmen and Rosalinda signed a document, which reads:

2. Ordering appellees to restore possession of the subject house and lot to the appellants Received the amount of P54,100.00 as a partial payment of Mrs. Carmen Caseda to the
upon receipt of the full amount of the balance due on the purchase price; and (total) amount of 350,000.00 (house and lot) that is own (sic) by Mrs. Rosalinda R. Santos.
 of the cash price to be paid not later than June 16, 1987, which was the maturity date of
the loan.[3]
(Mrs.) (Sgd.) Carmen Caseda

The Casedas gave an initial payment of P54,100.00 and immediately took possession of
direct buyer the property, which they then leased out. They also paid in installments, P81,696.84 of
the mortgage loan. The Casedas, however, in 1987. Notwithstanding the state of their
finances, Carmen nonetheless paid in March 1990, the real estate taxes on the property
Mrs. Carmen Caseda for 1981-1984. She also settled the electric bills from December 12, 1988 to July 12, 1989.
All these payments were made in the name of Rosalinda Santos.

(Sgd.) Rosalinda Del R. Santos

In January 1989, the Santoses, seeing that the Casedas lacked the means to pay the
remaining installments and/or amortization of the loan, repossessed the property. The
Santoses then collected the rentals from the tenants.
Owner

In February 1989, Carmen Caseda sold her fishpond in Batangas. She then approached
Mrs. Rosalinda R. Santos
petitioners and offered to pay the balance of the purchase price for the house and lot.
The parties, however, could not agree, and the deal could not push through because the
Santoses wanted a higher price. For understandably, the real estate boom in Metro
House and Lot Manila at this time, had considerably jacked up realty values.

Better Living Subd. Paraaque, Metro Manila On August 11, 1989, the Casedas filed Civil Case No. 89-4759, with the RTC of Makati, to
have the Santoses execute the final deed of conveyance over the property, or in default
thereof, to reimburse the amount of P180,000.00 paid in cash and P249,900.00 paid to
the rural bank, plus interest; as well as rentals for eight months amounting to P32,000.00,
Section V Don Bosco St."[2]
plus damages and costs of suit.

The other terms and conditions that the parties agreed upon were for the Caseda spouses
After trial on the merits, the lower court disposed of the case as follows:
to pay: (1) the balance of the mortgage loan with the Rural bank amounting to
P135,385.18; (2) the real estate taxes; (3) the electric and water bills; and (4) the balance
WHEREFORE, judgment is hereby ordered: the property by renting it to others. The amount of P2,000.00 a month would be
reasonable based on the average of P750.00, P2,000.00, P4,000.00 lease-rentals charged.
Multiply P2,000.00 by 55 months, the plaintiffs must pay defendants P110,000.00 for the
use of the property. Deducting this amount from the P135,794.64 payment of the
(a) dismissing plaintiff's (Casedas') complaint; and
plaintiffs on the property, the difference is P25,794.64. Should the plaintiffs be entitled to
a reimbursement of this amount? The answer is in the negative. Because of failure of
plaintiffs to liquidated the mortgage loan on time, it had ballooned from its original figure
(b) declaring the agreement marked as Annex "C" of the complaint rescinded. Costs of P135,384.18 as of June 1984 to P337,280.78 as of December 31, 1988. Defendants
against plaintiffs. [Santoses] had to pay the last amount to the bank to save the property from foreclosure.
Logically, plaintiffs must share in the burden arising from their failure to liquidate the loan
per their contractual commitment. Hence, the amount of P25,794.64 as their share in the
SO ORDERED.[4] defendants' damages in the form of increased loan-amount, is reasonable.[6]

Said judgment of dismissal is mainly based on the trial court's finding that: On appeal, the appellate court, as earlier noted, reversed the lower court. The appellate
court held that rescission was not justified under the circumstances and allowed the
Caseda spouses a period of ninety days within which to pay the balance of the agreed
purchase price.
Admittedly, the purchase price of the house and lot was P485,385.18, i.e. P350,000.00 as
cash payment and P135,385.18, assumption of mortgage. Of it plaintiffs [Casedas] paid
the following: (1) P54,100.00 down payment; and (2) P81,694.64 installment payments to
the bank on the loan (Exhs. E to E-19) or a total of P135,794.64. Thus, plaintiffs were short Hence, this instant petition for review on certiorari filed by the Santoses.
of the purchase price. They cannot, therefore, demand specific performance.[5]

Petitioners now submit the following issues for our consideration:

The trial court further held that the Casedas were not entitled to reimbursement of
payments already made, reasoning that:
WHETHER OR NOT THE COURT OF APPEALS HAS JURISDICTION TO DECIDE PRIVATE
RESPONDENT'S APPEAL INTERPOSING PURELY QUESTIONS OF LAW.
As, earlier mentioned, plaintiffs made a total payment of P135,794.64 out of the purchase
price of P485,385.18. The property was in plaintiffs' possession from June 1984 to January
1989 or a period of fifty-five months. During that time, plaintiffs leased the property. WHETHER THE SUBJECT TRANSACTION IS NOT A CONTRACT OF ABSOLUTE SALE BUT A
Carmen said the property was rented for P25.00 a day or P750.00 a month at the start MERE ORAL CONTRACT TO SELL IN WHICH CASE JUDICIAL DEMAND FOR RESCISSION (ART.
and in 1987 it was increased to P2,000.00 and P4,000.00 a month. But the evidence is not 1592,[7] CIVIL CODE) IS NOT APPLICABLE.
precise when the different amounts of rental took place. Be that as it may, fairness
demands that plaintiffs must pay defendants for their exercise of dominical rights over
ASSUMING ARGUENDO THAT A JUDICIAL DEMAND FOR RESCISSION IS REQUIRED, ought not to later on attack the court's decision for want of jurisdiction because the
WHETHER PETITIONERS' DEMAND AND PRAYER FOR RESCISSION CONTAINED IN THEIR decision turns out to be adverse to him.[13]
ANSWER FILED BEFORE THE TRIAL SATISFIED THE SAID REQUIREMENT.

The second and third issues deal with the question: Did the Court of Appeals err in holding
WHETHER OR NOT THE NON-PAYMENT OF MORE THAN HALF OF THE ENTIRE PURCHASE that a judicial rescission of the agreement was necessary? In resolving both issues, we
PRICE INCLUDING THE NON-COMPLIANCE WITH THE STIPULATION TO LIQUIDATE THE must first make a preliminary determination of the nature of the contract in question:
MORTGAGE LOAN ON TIME WHICH CAUSED GRAVE DAMAGE AND PREJUDICE TO Was it a contract of sale, as insisted by respondents or a mere contract to sell, as
PETITIONERS, CONSTITUTE SUBSTANTIAL BREACH TO JUSTIFY RESCISSION OF A contended by petitioners?
CONTRACT TO SELL UNDER ARTICLE 1191[8] (CIVIL CODE).

Petitioners argue that the transaction between them and respondents was a mere
On the first issue, petitioners argue that, since both the parties and the appellate court contract to sell, and not a contract of sale, since the sole documentary evidence (Exh. D,
adopted the findings of trial court,[9] no questions of fact were raised before the Court of receipt) referring to their agreement clearly showed that they did not transfer ownership
Appeals. According to petitioners, CA-G.R. CV No. 30955, involved only pure questions of of the property in question simultaneous with its delivery and hence remained its owners,
law. They aver that the court a quo had no jurisdiction to hear, much less decide, CA-G.R. pending fulfillment of the other suspensive conditions, i.e., full payment of the balance of
CV No. 30955, without running afoul of Supreme Court Circular No. 2-90 (4) [c].[10] the purchase price and the loan amortizations. Petitioners point to Manuel v. Rodriguez,
109 Phil. 1 (1960) and Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 43 SCRA 93
(1972), where we held that Article 1592 of the Civil Code is inapplicable to a contract to
sell. They charge the court a quo with reversible error in holding that petitioners should
There is a question of law in a given case when the doubt or difference arises as to what
have judicially rescinded the agreement with respondents when the latter failed to pay
the law is on a certain set of facts, and there is a question of fact when the doubt or
the amortizations on the bank loan.
difference arises as to the truth or falsehood of the alleged facts.[11] But we note that the
first assignment of error submitted by respondents for consideration by the appellate
court dealt with the trial court's finding that herein petitioners got back the property in
question because respondents did not have the means to pay the installments and/or Respondents insist that there was a perfected contract of sale, since upon their partial
amortization of the loan.[12] The resolution of this question involved an evaluation of payment of the purchase price, they immediately took possession of the property as
proof, and not only a consideration of the applicable statutory and case laws. Clearly, CA- vendees, and subsequently leased it, thus exercising all the rights of ownership over the
G.R. CV No. 30955 did not involve pure questions of law, hence the Court of Appeals had property. This showed that transfer of ownership was simultaneous with the delivery of
jurisdiction and there was no violation of our Circular No. 2-90. the realty sold, according to respondents.

Moreover, we find that petitioners took an active part in the proceedings before the It must be emphasized from the outset that a contract is what the law defines it to be,
Court of Appeals, yet they did not raise there the issue of jurisdiction. They should have taking into consideration its essential elements, and not what the contracting parties call
raised this issue at the earliest opportunity before the Court of Appeals. A party taking it.[14] Article 1458[15] of the Civil Code defines a contract of sale. Note that the said
part in the proceedings before the appellate court and submitting his case for as decision article expressly obliges the vendor to transfer ownership of the thing sold as an essential
element of a contract of sale. This is because the transfer of ownership in exchange for a complied fully with the condition of paying the purchase price. If the vendor should eject
price paid or promised is the very essence of a contract of sale.[16] We have carefully the vendee for failure to meet the condition precedent, he is enforcing the contract and
examined the contents of the unofficial receipt, Exh. D, with the terms and conditions not rescinding it. When the petitioners in the instant case repossessed the disputed house
informally agreed upon by the parties, as well as the proofs submitted to support their and lot for failure of private respondents to pay the purchase price in full, they were
respective contentions. We are far from persuaded that there was a transfer of ownership merely enforcing the contract and not rescinding it. As petitioners correctly point out, the
simultaneously with the delivery of the property purportedly sold. The records clearly Court of Appeals erred when it ruled that petitioners should have judicially rescinded the
show that, notwithstanding the fact that the Casedas first took then lost possession of the contract pursuant to Articles 1592 and 1191 of the Civil Code. Article 1592 speaks of non-
disputed house and lot, the title to the property, TCT No. 28005 (S-11029) issued by the payment of the purchase price as a resolutory condition. It does not apply to a contract to
Register of Deeds of Paraaque, has remained always in the name of Rosalinda Santos.[17] sell.[22] As to Article 1191, it is subordinated to the provisions of Article 1592 when
Note further that although the parties had agreed that the Casedas would assume the applied to sales of immovable property.[23] Neither provision is applicable in the present
mortgage, all amortization payments made by Carmen Caseda to the bank were in the case.
name of Rosalinda Santos.[18] We likewise find that the bank's cancellation and discharge
of mortgage dated January 20, 1990, was made in favor of Rosalinda Santos.[19] The
foregoing circumstances categorically and clearly show that no valid transfer of ownership
As to the last issue, we need not tarry to make a determination of whether the breach of
was made by the Santoses to the Casedas. Absent this essential element, their agreement
contract by private respondents is so substantial as to defeat the purpose of the parties in
cannot be deemed a contract of sale. We agree with petitioners' averment that the
entering into the agreement and thus entitle petitioners to rescission. Having ruled that
agreement between Rosalinda Santos and Carmen Caseda is a contract to sell. In
there is no rescission to speak of in this case, the question is moot.
contracts to sell, ownership is reserved by the vendor and is not to pass until full payment
of the purchase price. This we find fully applicable and understandable in this case, given
that the property involved is a titled realty under mortgage to a bank and would require
notarial and other formalities of law before transfer thereof could be validly effected. WHEREFORE, the instant petition is GRANTED and the assailed decision of the Court of
Appeals in CA-G.R. CV No. 30955 is REVERSED and SET ASIDE. The judgment of the
Regional Trial Court of Makati, Branch 133, with respect to the DISMISSAL of the
complaint in Civil Case No. 89-4759, is hereby REINSTATED. No pronouncement as to
In view of our finding in the present case that the agreement between the parties is a
costs.
contract to sell, it follows that the appellate court erred when it decreed that a judicial
rescission of said agreement was necessary. This is because there was no rescission to
speak of in the first place. As we earlier pointed out, in a contract to sell, title remains
with the vendor and does not pass on to the vendee until the purchase price is paid in full. SO ORDERED.
Thus, in a contract to sell, the payment of the purchase price is a positive suspensive
condition. Failure to pay the price agreed upon is not a mere breach, casual or serious,
but a situation that prevents the obligation of the vendor to convey title from acquiring an
obligatory force.[20] This is entirely different from the situation in a contract of sale,
where non-payment of the price is a negative resolutory condition. The effects in law are
not identical. In a contract of sale, the vendor has lost ownership of the thing sold and
cannot recover it, unless the contract of sale is rescinded and set aside.[21] In a contract
to sell, however, the vendor remains the owner for as long as the vendee has not
 Republic of the Philippines Bulacan. The three were herded onto a jeep bearing license plate RTF 597 that sped
SUPREME COURT towards an undisclosed location.
Manila
Having thereafter heard nothing from Sherlyn, Karen and Merino, their respective families
EN BANC scoured nearby police precincts and military camps in the hope of finding them but the
same yielded nothing.
G.R. Nos. 184461-62 May 31, 2011
On July 17, 2006, spouses Asher and Erlinda Cadapan and Concepcion Empeo filed a
LT. COL. ROGELIO BOAC, LT. COL. FELIPE ANOTADO AND LT. FRANCIS MIRABELLE petition for habeas corpus1 before the Court, docketed as G.R. No. 173228, impleading
SAMSON, Petitioners, then Generals Romeo Tolentino and Jovito Palparan (Gen. Palparan), Lt. Col. Rogelio Boac
vs. (Lt. Col. Boac), Arnel Enriquez and Lt. Francis Mirabelle Samson (Lt. Mirabelle) as
ERLINDA T. CADAPAN AND CONCEPCION E. EMPEO, Respondents. respondents. By Resolution of July 19, 2006,2 the Court issued a writ of habeas corpus,
returnable to the Presiding Justice of the Court of Appeals.
x - - - - - - - - - - - - - - - - - - - - - - -x
The habeas corpus petition was docketed at the appellate court as CA-G.R. SP No. 95303.
G.R. No. 184495
By Return of the Writ dated July 21, 2006,3 the respondents in the habeas corpus petition
ERLINDA T. CADAPAN AND CONCEPCION E. EMPEO, Petitioners, denied that Sherlyn, Karen and Merino are in the custody of the military. To the Return
vs. were attached affidavits from the respondents, except Enriquez, who all attested that
GEN. HERMOGENES ESPERON, P/DIR.GEN. AVELINO RAZON, (RET.) GEN. ROMEO they do not know Sherlyn, Karen and Merino; that they had inquired from their
TOLENTINO, (RET.) GEN. JOVITO PALPARAN, LT. COL. ROGELIO BOAC, LT. COL. FELIPE subordinates about the reported abduction and disappearance of the three but their
ANOTADO, ET AL., Respondents. inquiry yielded nothing; and that the military does not own nor possess a stainless steel
jeep with plate number RTF 597. Also appended to the Return was a certification from the
Land Transportation Office (LTO) that plate number RTF 597 had not yet been
x - - - - - - - - - - - - - - - - - - - - - - -x
manufactured as of July 26, 2006.
G.R. No. 187109
Trial thereupon ensued at the appellate court.
ERLINDA T. CADAPAN AND CONCEPCION E. EMPEO, Petitioners,
Witness Wilfredo Ramos, owner of the house where the three were abducted, recounted
vs.
that on June 26, 2006, while he was inside his house in Hagonoy, he witnessed armed
GLORIA MACAPAGAL-ARROYO, GEN. HERMOGENES ESPERON, P/DIR.GEN. AVELINO
men wearing bonnets abduct Sherlyn and Karen from his house and also abduct Merino
RAZON, (RET.) GEN. ROMEO TOLENTINO, (RET.) GEN. JOVITO PALPARAN, LT. COL.
on their way out; and that tied and blindfolded, the three were boarded on a jeep and
ROGELIO BOAC, LT. COL. FELIPE ANOTADO, DONALD CAIGAS, A.K.A. ALAN OR ALVIN,
taken towards Iba in Hagonoy.4
ARNEL ENRIQUEZ AND LT. FRANCIS MIRABELLE SAMSON, Respondents.

Witness Alberto Ramirez (Ramirez) recalled that on June 28, 2006, while he was sleeping
DECISION
in his house, he was awakened by Merino who, in the company of a group of unidentified
armed men, repaired to his house; that onboard a stainless jeep bearing plate number
CARPIO MORALES, J.:
RTF 597, he (Ramirez) was taken to a place in Mercado, Hagonoy and was asked by one
Enriquez if he knew "Sierra," "Tanya," "Vincent" and "Lisa"; and that Enriquez described
At 2:00 a.m. of June 26, 2006, armed men abducted Sherlyn Cadapan (Sherlyn), Karen the appearance of two ladies which matched those of Sherlyn and Karen, whom he was
Empeo (Karen) and Manuel Merino (Merino) from a house in San Miguel, Hagonoy, familiar with as the two had previously slept in his house.5
Another witness, Oscar Leuterio, who was himself previously abducted by armed men and of the habeas corpus is to inquire into the legality of ones detention which presupposes
detained for five months, testified that when he was detained in Fort Magsaysay in Nueva that respondents have actual custody of the persons subject of the petition. The reason
Ecija, he saw two women fitting the descriptions of Sherlyn and Karen, and also saw therefor is that the courts have limited powers, means and resources to conduct an
Merino, his kumpare.6 investigation. x x x.

Lt. Col. Boac, the then commander of Task Force Malolos, a special operations team It being the situation, the proper remedy is not a habeas corpus proceeding but criminal
tasked to neutralize the intelligence network of communists and other armed groups, proceedings by initiating criminal suit for abduction or kidnapping as a crime punishable
declared that he conducted an inquiry on the abduction of Sherlyn, Karen and Merino but by law. In the case of Martinez v. Mendoza, supra, the Supreme Court restated the
his subordinates denied knowledge thereof.7 doctrine that habeas corpus may not be used as a means of obtaining evidence on the
whereabouts of a person, or as a means of finding out who has specifically abducted or
While he denied having received any order from Gen. Palparan to investigate the caused the disappearance of a certain person. (emphasis and underscoring supplied)
disappearance of Sherlyn, Karen and Merino, his assistance in locating the missing
persons was sought by the mayor of Hagonoy. Thus the appellate court disposed:

Major Dominador Dingle, the then division adjutant of the Philippine Armys 7th Infantry WHEREFORE, the petition for habeas corpus is hereby DISMISSED, there being no strong
Division in Fort Magsaysay, denied that a certain Arnel Enriquez is a member of his evidence that the missing persons are in the custody of the respondents.
infantry as in fact his name did not appear in the roster of troops. 8
The Court, however, further resolves to refer the case to the Commission on Human
Roberto Se, a supervisor of the Equipment, Plate Number and Supply Units of the LTO, Rights, the National Bureau of Investigation and the Philippine National Police for
denied that his office manufactured and issued a plate number bearing number RTF 597. 9 separate investigations and appropriate actions as may be warranted by their findings and
to furnish the Court with their separate reports on the outcome of their investigations
On rebuttal, Lt. Mirabelle, Lt. Col. Boac and Gen. Palparan took the witness stand as and the actions taken thereon.
hostile witnesses.
Let copies of this decision be furnished the Commission on Human Rights, the National
Lt. Mirabelle testified that she did not receive any report on the abduction of Sherlyn, Bureau of Investigation and the Philippine National Police for their appropriate actions.
Karen and Merino nor any order to investigate the matter. And she denied knowing
anything about the abduction of Ramirez nor who were Ka Tanya or Ka Lisa. 10 SO ORDERED. (emphasis and underscoring supplied)

Gen. Palparan testified that during a debate in a televised program, he mentioned the Petitioners in CA-G.R. SP No. 95303 moved for a reconsideration of the appellate courts
names of Ka Lisa and Ka Tanya as the ones involved in revolutionary tax activities; and decision. They also moved to present newly discovered evidence consisting of the
that he ordered Lt. Col. Boac to conduct an investigation on the disappearance of Sherlyn, testimonies of Adoracion Paulino, Sherlyns mother-in-law who was allegedly threatened
Karen and Merino.11 When pressed to elaborate, he stated: "I said that I got the report by soldiers; and Raymond Manalo who allegedly met Sherlyn, Karen and Merino in the
that it stated that it was Ka Tanya and Ka Lisa that, I mean, that incident happened in course of his detention at a military camp.
Hagonoy, Bulacan was the abduction of Ka Lisa and Ka Tanya, Your Honor, and another
one. That was the report coming from the people in the area."12 During the pendency of the motion for reconsideration in CA-G.R. SP No. 95303, Erlinda
Cadapan and Concepcion Empeo filed before this Court a Petition for Writ of Amparo 14
By Decision of March 29, 2007,13 the Court of Appeals dismissed the habeas corpus With Prayers for Inspection of Place and Production of Documents dated October 24,
petition in this wise: 2007, docketed as G.R. No. 179994. The petition impleaded the same respondents in the
habeas corpus petition, with the addition of then President Gloria Macapagal-Arroyo,
As Sherlyn Cadapan, Karen Empeo and Manuel Merino are indeed missing, the present then Armed Forces of the Phil. (AFP) Chief of Staff Hermogenes Esperon Jr., then Phil.
petition for habeas corpus is not the appropriate remedy since the main office or function
National Police (PNP) Chief Gen. Avelino Razon (Gen. Razon), Lt. Col. Felipe Anotado (Lt. Lt. Col. Felipe Anotado, the then battalion commander of the 24th Infantry Battalion
Col. Anotado) and Donald Caigas. based in Balanga City, Bataan, denied any involvement in the abduction. While the 24th
Infantry Battalion detachment was reported to be a detention site of the missing persons,
Then President Arroyo was eventually dropped as respondent in light of her immunity Lt. Col. Anotado claimed that he found no untoward incident when he visited said
from suit while in office. detachment. He also claimed that there was no report of the death of Merino per his
inquiry with the local police.17
Petitioners in G.R. No. 179994 also prayed that they be allowed to inspect the detention
areas of the following places: Police Director General Avelino Razon narrated that he ordered the compilation of
pertinent records, papers and other documents of the PNP on the abduction of the three,
1. 7th Infantry Division at Fort Magsaysay, Laur, Nueva Ecija and that the police exhausted all possible actions available under the circumstances. 18

2. 24th Infantry Batallion at Limay, Bataan In addition to the witnesses already presented in the habeas corpus case, petitioners
called on Adoracion Paulino and Raymond Manalo to testify during the trial.
3. Army Detachment inside Valmocina Farm, Pinaod, San Ildefonso, Bulacan
Adoracion Paulino recalled that her daughter-in-law Sherlyn showed up at home on April
11, 2007, accompanied by two men and three women whom she believed were soldiers.
4. Camp Tecson, San Miguel, Bulacan
She averred that she did not report the incident to the police nor inform Sherlyns mother
about the visit.19
5. The Resthouse of Donald Caigas alias Allan or Alvin of the 24th Infantry
Batallion at Barangay Banog, Bolinao, Pangasinan
Raymond Manalo (Manalo) claimed that he met the three abducted persons when he was
illegally detained by military men in Camp Tecson in San Miguel, Bulacan. His group was
6. 56th Infantry Batallion Headquarters at Iba, Hagonoy, Bulacan
later taken to a camp in Limay, Bataan. He recalled that Lt. Col. Anotado was the one who
interrogated him while in detention.20
7. Army Detachment at Barangay Mercado, Hagonoy, Bulacan
In his Sinumpaang Salaysay,21 Manalo recounted:
8. Beach House [at] Iba, Zambales used as a safehouse with a retired military
personnel as a caretaker;
xxxx

By Resolution of October 25, 2007, the Court issued in G.R. No. 179994 a writ of amparo
59. Saan ka dinala mula sa Sapang?
returnable to the Special Former Eleventh Division of the appellate court, and ordered the
consolidation of the amparo petition with the pending habeas corpus petition.
Pagkalipas ng humigit kumulang 3 buwan sa Sapang, dinala ako sa Camp Tecson sa ilalim
ng 24th IB.
Docketed as CA-G.R. SP No. 002, respondents in the amparo case, through the Solicitor
General, filed their Return of the Writ on November 6, 2007. 15 In the Return, Gen.
xxxx
Palparan, Lt. Col. Boac and Lt. Mirabelle reiterated their earlier narrations in the habeas
corpus case.
Sa loob ng barracks ko nakilala si Sherlyn Cadapan, isang estudyante ng UP.
Gen. Hermogenes Esperon Jr. stated in the Return that he immediately caused to
investigate and verify the identities of the missing persons and was aware of the earlier Ipinapalinis din sa akin ang loob ng barracks. Sa isang kwarto sa loob ng barracks, may
decision of the appellate court ordering the police, the Commission on Human Rights and nakita akong babae na nakakadena[.] Noong una, pinagbawalan akong makipag-usap sa
the National Bureau of Investigation to take further action on the matter. 16 kanya. Sa ikatlo o ikaapat na araw, nakausap ko yung babaeng nagngangalang Sherlyn.
Binigyan ko siya ng pagkain. Sinabi niya sa akin na dinukot si[ya] sa Hagonoy, Bulacan at
matindi ang tortyur na dinaranas niya. Sabi niya gusto niyang umuwi at makasama ang Mula sa Limay, kaming 5 (ako, si Reynaldo, si Sherlyn, Si Karen at si Manuel) ay dinala sa
kanyang magulang. Umiiyak siya. Sabi niya sa akin ang buong pangalan niya ay Sherlyn isang safehouse sa Zambales, tabi ng dagat. x x x x (underscoring supplied; italics and
Cadapan, mula sa Laguna. Sa araw tinatanggal ang kanyang kadena at inuutusan si Sherlyn emphasis in the original)
na maglaba.
On rebuttal, Lt. Col. Anotado and Col. Eduardo Boyles Davalan were called to the witness
x x x x. stand.

61. Sino ang mga nakilala mo sa Camp Tecson? Lt. Col. Anotado denied seeing or meeting Manalo. He posited that Manalo recognized
him because he was very active in conducting lectures in Bataan and even appeared on
Dito sa Camp Tecson naming nakilala si Allan Alvin (maya-maya nalaman naming na siya television regarding an incident involving the 24th Infantry Batallion. He contended that it
pala si Donald Caigas), ng 24th IB, na tinatawag na master o commander ng kanyang was impossible for Manalo, Sherlyn, Karen and Merino to be detained in the Limay
mga tauhan. detachment which had no detention area.

Pagkalipas ng 2 araw matapos dalhin si Reynaldo sa Camp Tecson dumating sina Karen Col. Eduardo Boyles Davalan, the then chief of staff of the First Scout Ranger Regiment in
Empeo at Manuel Merino na mga bihag din. Inilagay si Karen at Manuel sa kwarto ni Camp Tecson, testified that the camp is not a detention facility, nor does it conduct
Allan[.] Kami naman ni Reynaldo ay nasa katabing kwarto, kasama si Sherlyn. military operations as it only serves as a training facility for scout rangers. He averred that
his regiment does not have any command relation with either the 7th Infantry Division or
xxxx the 24th Infantry Battalion.22

62. x x x x By Decision of September 17, 2008,23 the appellate court granted the Motion for
Reconsideration in CA-G.R. SP No. 95303 (the habeas corpus case) and ordered the
immediate release of Sherlyn, Karen and Merino in CA-G.R. SP No. 00002 (the amparo
Kaming mga lalake (ako, si Reynaldo at si Manuel) ay ginawang utusan, habang sina
case). Thus it disposed:
Sherlyn at Karen ay ginawang labandera.

WHEREFORE, in CA-G.R. SP NO. 95303 (Habeas Corpus case), the Motion for
Si Sherlyn ang pinahirapan nina Mickey, Donald at Billy. Sabi ni Sherlyn sa akin na siyay
Reconsideration is GRANTED.
ginahasa.

Accordingly, in both CA-G.R. SP NO. 95303 (Habeas Corpus case) and in CA-G.R. SP NO.
xxxx
00002 (Amparo case), the respondents are thereby ordered to immediately RELEASE, or
cause the release, from detention the persons of Sher[lyn] Cadapan, Karen Empeo and
63. x x x x
Manuel Merino.

xxxx
Respondent Director General Avelino Razon is hereby ordered to resume [the] PNPs
unfinished investigation so that the truth will be fully ascertained and appropriate charges
Kaming lima (ako, si Reynaldo, si Sherlyn, si Karen at si [Merino]) ang dinala sa Limay. filed against those truly responsible.
Sinakay ako, si Reynaldo, si Sherlyn at si [Merino] sa isang stainless na jeep. Si Karen ay
isinakay sa itim na sasakyan ni Donald Caigas. x x x x
SO ORDERED.

xxxx
In reconsidering its earlier Decision in the habeas corpus case, the appellate court relied
heavily on the testimony of Manalo in this wise:
66. Saan pa kayo dinala mula sa Limay, Bataan?
With the additional testimony of Raymond Manalo, the petitioners have been able to was being violated, hence, the need to immediately release them, or cause their release.
convincingly prove the fact of their detention by some elements in the military. His The appellate court went on to direct the PNP to proceed further with its investigation
testimony is a first hand account that military and civilian personnel under the 7th since there were enough leads as indicated in the records to ascertain the truth and file
Infantry Division were responsible for the abduction of Sherlyn Cadapan, Karen Empeo the appropriate charges against those responsible for the abduction and detention of the
and Manuel Merino. He also confirmed the claim of Oscar Leuterio that the latter was three.
detained in Fort Magsaysay. It was there where he (Leuterio) saw Manuel Merino.
Lt. Col. Rogelio Boac, et al. challenged before this Court, via petition for review, the
His testimony that Leuterio saw Manuel Merino in Fort Magsaysay may be hearsay but September 17, 2008 Decision of the appellate court. This was docketed as G.R. Nos.
not with respect to his meeting with, and talking to, the three desaparecidos. His 184461-62, the first above-captioned case- subject of the present Decision.
testimony on those points was no hearsay. Raymond Manalo saw the three with his very
own eyes as they were detained and tortured together. In fact, he claimed to be a witness Erlinda Cadapan and Concepcion Empeo, on the other hand, filed their own petition for
to the burning of Manuel Merino. In the absence of confirmatory proof, however, the review also challenging the same September 17, 2008 Decision of the appellate court only
Court will presume that he is still alive. insofar as the amparo aspect is concerned. Their petition, docketed as G.R. No. 179994,
was redocketed as G.R. No. 184495, the second above-captioned case.
The testimony of Raymond Manalo can no longer be ignored and brushed aside. His
narration and those of the earlier witnesses, taken together, constitute more than By Resolution of June 15, 2010, the Court ordered the consolidation of G.R. No. 184495
substantial evidence warranting an order that the three be released from detention if with G.R. Nos. 1844461-62.24
they are not being held for a lawful cause. They may be moved from place to place but
still they are considered under detention and custody of the respondents. Meanwhile, Erlinda Cadapan and Concepcion Empeo filed before the appellate court a
Motion to Cite Respondents in Contempt of Court for failure of the respondents in the
His testimony was clear, consistent and convincing. x x x. amparo and habeas corpus cases to comply with the directive of the appellate court to
immediately release the three missing persons. By Resolution of March 5, 2009, 25 the
xxxx appellate court denied the motion, ratiocinating thus:

The additional testimonies of Lt. Col. Felipe Anotado and Col. Eduardo Boyles Davalan While the Court, in the dispositive portion, ordered the respondents "to immediately
were of no help either. Again, their averments were the same negative ones which cannot RELEASE, or cause the release, from detention the persons of Sherlyn Cadapan, Karen
prevail over those of Raymond Manalo. Indeed, Camp Tecson has been utilized as a Empeo and Manuel Merino," the decision is not ipso facto executory. The use of the
training camp for army scout rangers. Even Raymond Manalo noticed it but the camps term "immediately" does not mean that that it is automatically executory. There is
use for purposes other than training cannot be discounted. nothing in the Rule on the Writ of Amparo which states that a decision rendered is
immediately executory. x x x.
xxxx
Neither did the decision become final and executory considering that both parties
In view of the foregoing, there is now a clear and credible evidence that the three missing questioned the Decision/Resolution before the Supreme Court. x x x.
persons, [Sherlyn, Karen and Merino], are being detained in military camps and bases
under the 7th Infantry Division. Being not held for a lawful cause, they should be Besides, the Court has no basis. The petitioners did not file a motion for execution
immediately released from detention. (italic in the original; emphasis and underscoring pending appeal under Section 2 of Rule 39. There being no motion, the Court could not
supplied) have issued, and did not issue, a writ of execution. x x x. (underscoring supplied)

Meanwhile, in the amparo case, the appellate court deemed it a superfluity to issue any Via a petition for certiorari filed on March 30, 2009 before this Court, Erlinda Cadapan and
inspection order or production order in light of the release order. As it earlier ruled in the Concepcion Empeo challenged the appellate courts March 5, 2009 Resolution denying
habeas corpus case, it found that the three detainees right to life, liberty and security
their motion to cite respondents in contempt. The petition was docketed as G.R. No. 5. The Court of Appeals erred in not granting the Interim Relief for Inspection of
187109, the last above-captioned case subject of the present Decision. Places;

Only Lt. Col. Anotado and Lt. Mirabelle remained of the original respondents in the 6. The Court of Appeals erred in not granting the Interim Relief for Production of
amparo and habeas corpus cases as the other respondents had retired from government Documents;
service.26 The AFP has denied that Arnel Enriquez was a member of the Philippine Army. 27
The whereabouts of Donald Caigas remain unknown.28 7. The Court of Appeals erred in not finding that the Police Director Gen. Avelino
Razon did not make extraordinary diligence in investigating the enforced
In G.R. Nos. 184461-62, petitioners posit as follows: disappearance of the aggrieved parties

I 8. The Court of Appeals erred in not finding that this was not the command
coming from the highest echelon of powers of the Armed Forces of the
THE COURT OF APPEALS GROSSLY MISAPPRECIATED THE VALUE OF THE Philippines, Philippine Army and the Seventh Infantry Division of the Philippine
TESTIMONY OF RAYMOND MANALO. Army to enforcibly disappear [sic] the aggrieved parties

II 9. The Court of Appeals erred in dropping President Gloria Macapagal Arroyo as

party respondent in this case;
THE PETITION[S] FOR HABEAS CORPUS AND WRIT OF AMPARO SHOULD BE
DISMISSED BECAUSE RESPONDENTS FAILED TO PROVE BY THE REQUIRED 10. The Court of Appeals erred in not finding that President Gloria Macapagal
QUANTUM OF EVIDENCE THAT PETITIONERS HAVE SHERLYN CADAPAN, KAREN Arroyo had command responsibility in the enforced disappearance and
EMPEO AND MANUEL MERINO ARE IN THEIR CUSTODY. continued detention of the three aggrieved parties

III 11. The Court of Appeals erred in not finding that the Armed Forces Chief of Staff
then Hermogenes Esperon and the Present Chief of Staff as having command
PETITIONERS DENIALS PER SE SHOULD NOT HAVE BEEN TAKEN AGAINST THEM responsibility in the enforced disappearance and continued detention of the
BECAUSE THEY DID NOT REALLY HAVE ANY INVOLVEMENT IN THE ALLEGED three aggrieved parties30
ABDUCTION; MOREOVER, THE SUPPOSED INCONSISTENCIES IN THEIR
TESTIMONIES ARE ON POINTS IRRELEVANT TO THE PETITION. In G.R. No. 187109, petitioners raise the following issues:

IV [1] Whether the decision in the Court of Appeals has become final and
executory[.]
THE DISPOSITIVE PORTION OF THE ASSAILED DECISION IS VAGUE AND
INCONGRUENT WITH THE FINDINGS OF THE COURT OF APPEALS. [2] Whetherthere is a need to file a motion for execution in a Habeas Corpus
decision or in an Amparo decision[.]
V
[3] Whetheran appeal can stay the decision of a Habeas Corpus [case] [or] an
THE COURT OF APPEALS IGNORED AND FAILED TO RULE UPON THE FATAL Amparo case[.]31
PROCEDURAL INFIRMITIES IN THE PETITION FOR WRIT OF AMPARO.29
Essentially, the consolidated petitions present three primary issues, viz: a) whether the
In G.R. No. 184495, petitioners posit as follows: testimony of Raymond Manalo is credible; b) whether the chief of the AFP, the
commanding general of the Philippine Army, as well as the heads of the concerned units
had command responsibility over the abduction and detention of Sherlyn, Karen and barracks. In one of the rooms therein, he met Sherlyn Cadapan from Laguna. She told him
Merino; and c) whether there is a need to file a motion for execution to cause the release that she was a student of the University of the Philippines and was abducted in Hagonoy,
of the aggrieved parties. Bulacan. She confided that she had been subjected to severe torture and raped. She was
crying and longing to go home and be with her parents. During the day, her chains were
G.R. Nos. 184461-62 removed and she was made to do the laundry.

Petitioners Lt. Col. Boac, et al. contend that the appellate court erred in giving full After a week, Reynaldo was also brought to Camp Tecson. Two days from his arrival, two
credence to the testimony of Manalo who could not even accurately describe the other captives, Karen Empeo and Manuel Merino, arrived. Karen and Manuel were put
structures of Camp Tecson where he claimed to have been detained along with Sherlyn, in the room with "Allan" whose name they later came to know as Donald Caigas, called
Karen and Merino. They underscore that Camp Tecson is not under the jurisdiction of the "master" or "commander" by his men in the 24th Infantry Battalion. Raymond and
24th Infantry Batallion and that Manalos testimony is incredible and full of Reynaldo were put in the adjoining room. At times, Raymond and Reynaldo were
inconsistencies.32 threatened, and Reynaldo was beaten up. In the daytime, their chains were removed, but
were put back on at night. They were threatened that if they escaped, their families
In Secretary of National Defense v. Manalo,33 an original petition for Prohibition, would all be killed.
Injunction and Temporary Restraining Order which was treated as a petition under the
Amparo Rule, said Rule having taken effect during the pendency of the petition, the Court On or about October 6, 2006, Hilario arrived in Camp Tecson. He told the detainees that
ruled on the truthfulness and veracity of the personal account of Manalo which included they should be thankful they were still alive and should continue along their "renewed
his encounter with Sherlyn, Kara and Merino while on detention. Thus it held: life." Before the hearing of November 6 or 8, 2006, respondents were brought to their
parents to instruct them not to attend the hearing. However, their parents had already
We affirm the factual findings of the appellate court, largely based on respondent left for Manila. Respondents were brought back to Camp Tecson. They stayed in that
Raymond Manalos affidavit and testimony, viz: camp from September 2006 to November 2006, and Raymond was instructed to continue
using the name "Oscar" and holding himself out as a military trainee. He got acquainted
with soldiers of the 24th Infantry Battalion whose names and descriptions he stated in his
x x x x.
affidavit.
We reject the claim of petitioners that respondent Raymond Manalos statements were
On November 22, 2006, respondents, along with Sherlyn, Karen, and Manuel, were
not corroborated by other independent and credible pieces of evidence. Raymonds
transferred to a camp of the 24th Infantry Battalion in Limay, Bataan. There were many
affidavit and testimony were corroborated by the affidavit of respondent Reynaldo
huts in the camp. They stayed in that camp until May 8, 2007. Some soldiers of the
Manalo. The testimony and medical reports prepared by forensic specialist Dr. Molino,
battalion stayed with them. While there, battalion soldiers whom Raymond knew as
and the pictures of the scars left by the physical injuries inflicted on respondents, also
"Mar" and "Billy" beat him up and hit him in the stomach with their guns. Sherlyn and
corroborate respondents accounts of the torture they endured while in detention.
Karen also suffered enormous torture in the camp. They were all made to clean, cook, and
Respondent Raymond Manalos familiarity with the facilities in Fort Magsaysay such as
help in raising livestock.
the "DTU," as shown in his testimony and confirmed by Lt. Col. Jimenez to be the "Division
Training Unit," firms up respondents story that they were detained for some time in said
military facility. (citations omitted; emphasis and underscoring supplied) Raymond recalled that when "Operation Lubog" was launched, Caigas and some other
soldiers brought him and Manuel with them to take and kill all sympathizers of the NPA.
They were brought to Barangay Bayan-bayanan, Bataan where he witnessed the killing of
On Manalos having allegedly encountered Sherlyn, Karen and Merino while on detention,
an old man doing kaingin. The soldiers said he was killed because he had a son who was a
the Court in the immediately cited case synthesized his tale as follows:
member of the NPA and he coddled NPA members in his house. Another time, in another
"Operation Lubog," Raymond was brought to Barangay Orion in a house where NPA men
The next day, Raymonds chains were removed and he was ordered to clean outside the
stayed. When they arrived, only the old man of the house who was sick was there. They
barracks. It was then he learned that he was in a detachment of the Rangers. There were
spared him and killed only his son right before Raymonds eyes.
many soldiers, hundreds of them were training. He was also ordered to clean inside the
From Limay, Raymond, Reynaldo, Sherlyn, Karen, and Manuel were transferred to Section 2 of the Rule on the Writ of Amparo38 provides:
Zambales, in a safehouse near the sea. Caigas and some of his men stayed with them. A
retired army soldier was in charge of the house. Like in Limay, the five detainees were The petition may be filed by the aggrieved party or by any qualified person or entity in the
made to do errands and chores. They stayed in Zambales from May 8 or 9, 2007 until June following order:
2007.
(a) Any member of the immediate family, namely: the spouse, children and
In June 2007, Caigas brought the five back to the camp in Limay. Raymond, Reynaldo, and parents of the aggrieved party;
Manuel were tasked to bring food to detainees brought to the camp. Raymond narrated
what he witnessed and experienced in the camp, viz: (b) Any ascendant, descendant or collateral relative of the aggrieved party within
the fourth civil degree of consanguinity or affinity, in default of those mentioned
x x x x.34 (emphasis and underscoring supplied) in the preceding paragraph; or

The Court takes judicial notice of its Decision in the just cited Secretary of National (c) Any concerned citizen, organization, association or institution, if there is no
Defense v. Manalo35 which assessed the account of Manalo to be a candid and forthright known member of the immediate family or relative of the aggrieved party.
narrative of his and his brother Reynaldos abduction by the military in 2006; and of the
corroborative testimonies, in the same case, of Manalos brother Reynaldo and a forensic Indeed, the parents of Sherlyn and Karen failed to allege that there were no known
specialist, as well as Manalos graphic description of the detention area. There is thus no members of the immediate family or relatives of Merino. The exclusive and successive
compelling reason for the Court, in the present case, to disturb its appreciation in order mandated by the above-quoted provision must be followed. The order of priority is
Manalos testimony. The outright denial of petitioners Lt. Col. Boac, et al. thus crumbles. not without reason"to prevent the indiscriminate and groundless filing of petitions for
amparo which may even prejudice the right to life, liberty or security of the aggrieved
Petitioners go on to point out that the assailed Decision of the appellate court is "vague party."39
and incongruent with [its] findings" for, so they contend, while the appellate court
referred to the perpetrators as "misguided and self-righteous civilian and military The Court notes that the parents of Sherlyn and Karen also filed the petition for habeas
elements of the 7th Infantry Division," it failed to identify who these perpetrators are. corpus on Merinos behalf. No objection was raised therein for, in a habeas corpus
Moreover, petitioners assert that Donald Caigas and Arnel Enriquez are not members of proceeding, any person may apply for the writ on behalf of the aggrieved party. 40
the AFP. They furthermore point out that their co-petitioners Generals Esperon, Tolentino
and Palparan have already retired from the service and thus have no more control of any
It is thus only with respect to the amparo petition that the parents of Sherlyn and Karen
military camp or base in the country.36
are precluded from filing the application on Merinos behalf as they are not authorized
parties under the Rule.
There is nothing vague and/or incongruent about the categorical order of the appellate
court for petitioners to release Sherlyn, Karen and Merino. In its discourse, the appellate
G.R. No. 184495
court merely referred to "a few misguided self-righteous people who resort to the
extrajudicial process of neutralizing those who disagree with the countrys democratic
Preliminarily, the Court finds the appellate courts dismissal of the petitions against then
system of government." Nowhere did it specifically refer to the members of the 7th
President Arroyo well-taken, owing to her immunity from suit at the time the habeas
Infantry Division as the "misguided self-righteous" ones.
corpus and amparo petitions were filed.41
Petitioners finally point out that the parents of Sherlyn and Karen do not have the
requisite standing to file the amparo petition on behalf of Merino. They call attention to Settled is the doctrine that the President, during his tenure of office or actual
incumbency, may not be sued in any civil or criminal case, and there is no need to provide
the fact that in the amparo petition, the parents of Sherlyn and Karen merely indicated
for it in the Constitution or law. It will degrade the dignity of the high office of the
that they were "concerned with Manuel Merino" as basis for filing the petition on his
President, the Head of State, if he can be dragged into court litigations while serving as
behalf.37
such. Furthermore, it is important that he be freed from any form of harassment,
hindrance or distraction to enable him to fully attend to the performance of his official [An amparo proceeding] does nor determine guilt nor pinpoint criminal culpability for the
duties and functions. Unlike the legislative and judicial branch, only one constitutes the disappearance [threats thereof or extrajudicial killings]; it determines responsibility, or at
executive branch and anything which impairs his usefulness in the discharge of the many least accountability, for the enforced disappearancefor purposes of imposing the
great and important duties imposed upon him by the Constitution necessarily impairs the appropriate remedies to address the disappearance49 (emphasis and underscoring
operation of the Government. x x x 42 supplied)

Parenthetically, the petitions are bereft of any allegation that then President Arroyo Further, Tagitis defines what constitutes "responsibility" and "accountability," viz:
permitted, condoned or performed any wrongdoing against the three missing persons.
x x x. Responsibility refers to the extent the actors have been established by substantial
On the issue of whether a military commander may be held liable for the acts of his evidence to have participated in whatever way, by action or omission, in an enforced
subordinates in an amparo proceeding, a brief discussion of the concept of command disappearance, as a measure of the remedies this Court shall craft, among them, the
responsibility and its application insofar as amparo cases already decided by the Court is directive to file the appropriate criminal and civil cases against the responsible parties in
in order. the proper courts. Accountability, on the other hand, refers to the measure of remedies
that should be addressed to those who exhibited involvement in the enforced
Rubrico v. Macapagal Arroyo43 expounded on the concept of command responsibility as disappearance without bringing the level of their complicity to the level of responsibility
follows: defined above; or who are imputed with knowledge relating to the enforced
disappearance and who carry the burden of disclosure; or those who carry, but have
The evolution of the command responsibility doctrine finds its context in the failed to discharge, the burden of extraordinary diligence in the investigation of the
development of laws of war and armed combats. According to Fr. Bernas, "command enforced disappearance. In all these cases, the issuance of the Writ of Amparo is justified
responsibility," in its simplest terms, means the "responsibility of commanders for crimes by our primary goal of addressing the disappearance, so that the life of the victim is
committed by subordinate members of the armed forces or other persons subject to their preserved and his liberty and security are restored.50 (emphasis in the original;
control in international wars or domestic conflict." In this sense, command responsibility underscoring supplied)
is properly a form of criminal complicity. The Hague Conventions of 1907 adopted the
doctrine of command responsibility, foreshadowing the present-day precept of holding a Rubrico categorically denies the application of command responsibility in amparo cases to
superior accountable for the atrocities committed by his subordinates should he be determine criminal liability.51 The Court maintains its adherence to this pronouncement
remiss in his duty of control over them. As then formulated, command responsibility is as far as amparo cases are concerned.
"an omission mode of individual criminal liability," whereby the superior is made
responsible for crimes committed by his subordinates for failing to prevent or punish the Rubrico, however, recognizes a preliminary yet limited application of command
perpetrators (as opposed to crimes he ordered). (citations omitted; emphasis in the responsibility in amparo cases to instances of determining the responsible or accountable
original; underscoring supplied)44 individuals or entities that are duty-bound to abate any transgression on the life, liberty
or security of the aggrieved party.
It bears stressing that command responsibility is properly a form of criminal complicity, 45
and thus a substantive rule that points to criminal or administrative liability. If command responsibility were to be invoked and applied to these proceedings, it should,
at most, be only to determine the author who, at the first instance, is accountable for,
An amparo proceeding is not criminal in nature nor does it ascertain the criminal liability and has the duty to address, the disappearance and harassments complained of, so as to
of individuals or entities involved. Neither does it partake of a civil or administrative suit.46 enable the Court to devise remedial measures that may be appropriate under the
Rather, it is a remedial measure designed to direct specified courses of action to premises to protect rights covered by the writ of amparo. As intimated earlier, however,
government agencies to safeguard the constitutional right to life, liberty and security of the determination should not be pursued to fix criminal liability on respondents
aggrieved individuals.47 preparatory to criminal prosecution, or as a prelude to administrative disciplinary
proceedings under existing administrative issuances, if there be any.52 (emphasis and
Thus Razon Jr. v. Tagitis 48 enlightens: underscoring supplied)
In other words, command responsibility may be loosely applied in amparo cases in order writ. As it is, the Rule dispenses with dilatory motions in view of the urgency in securing
to identify those accountable individuals that have the power to effectively implement the life, liberty or security of the aggrieved party. Suffice it to state that a motion for
whatever processes an amparo court would issue. 53 In such application, the amparo court execution is inconsistent with the extraordinary and expeditious remedy being offered by
does not impute criminal responsibility but merely pinpoint the superiors it considers to an amparo proceeding.
be in the best position to protect the rights of the aggrieved party.
In fine, the appellate court erred in ruling that its directive to immediately release
Such identification of the responsible and accountable superiors may well be a Sherlyn, Karen and Merino was not automatically executory. For that would defeat the
preliminary determination of criminal liability which, of course, is still subject to further very purpose of having summary proceedings56 in amparo petitions. Summary
investigation by the appropriate government agency. proceedings, it bears emphasis, are immediately executory without prejudice to further
appeals that may be taken therefrom.57
Relatedly, the legislature came up with Republic Act No. 985154 (RA 9851) to include
command responsibility as a form of criminal complicity in crimes against international WHEREFORE, in light of the foregoing discussions, the Court renders the following
humanitarian law, genocide and other crimes.55 RA 9851 is thus the substantive law that judgment:
definitively imputes criminal liability to those superiors who, despite their position, still
fail to take all necessary and reasonable measures within their power to prevent or 1. The Petitions in G.R. Nos. 184461-62 and G.R. No. 184495 are DISMISSED. The
repress the commission of illegal acts or to submit these matters to the competent Decision of the Court of Appeals dated September 17, 2008 is AFFIRMED with
authorities for investigation and prosecution. modification in that respondents in G.R. No. 184495, namely Lt. Col. Felipe
Anotado, Lt. Francis Mirabelle Samson, Gen. Jovito Palparan, Lt. Col. Rogelio
The Court finds that the appellate court erred when it did not specifically name the Boac, Arnel Enriquez and Donald Caigas are ordered to immediately release
respondents that it found to be responsible for the abduction and continued detention of Sherlyn Cadapan, Karen Empeo and Manuel Merino from detention.
Sherlyn, Karen and Merino. For, from the records, it appears that the responsible and
accountable individuals are Lt. Col. Anotado, Lt. Mirabelle, Gen. Palparan, Lt. Col. Boac, The petitions against Generals Esperon, Razon and Tolentino are DISMISSED.
Arnel Enriquez and Donald Caigas. They should thus be made to comply with the
September 17, 2008 Decision of the appellate court to IMMEDIATELY RELEASE Sherlyn, 2. The petition in G.R. No. 187109 is GRANTED. The named respondents are
Karen and Merino. directed to forthwith comply with the September 17, 2008 Decision of the
appellate court. Owing to the retirement and/or reassignment to other places of
The petitions against Generals Esperon, Razon and Tolentino should be dismissed for lack assignment of some of the respondents herein and in G.R. No. 184495, the
of merit as there is no showing that they were even remotely accountable and incumbent commanding general of the 7th Infantry Division and the incumbent
responsible for the abduction and continued detention of Sherlyn, Karen and Merino. battalion commander of the 24th Infantry Battalion, both of the Philippine Army,
are enjoined to fully ensure the release of Sherlyn Cadapan, Karen Empeo and
G.R. No. 187109. Manuel Merino from detention.1awphi1

Contrary to the ruling of the appellate court, there is no need to file a motion for Respondents Lt. Col. Felipe Anotado, Lt. Francis Mirabelle Samson, Gen. Jovito
execution for an amparo or habeas corpus decision. Since the right to life, liberty and Palparan, Lt. Col. Rogelio Boac, Arnel Enriquez and Donald Caigas shall remain
security of a person is at stake, the proceedings should not be delayed and execution of personally impleaded in the petitions to answer for any responsibilities and/or
any decision thereon must be expedited as soon as possible since any form of delay, even accountabilities they may have incurred during their incumbencies.
for a day, may jeopardize the very rights that these writs seek to immediately protect.
Let copies of this Decision and the records of these cases be furnished the Department of
The Solicitor Generals argument that the Rules of Court supplement the Rule on the Writ Justice (DOJ), the Philippine National Police (PNP) and the Armed Forces of the Philippines
of Amparo is misplaced. The Rules of Court only find suppletory application in an amparo (AFP) for further investigation to determine the respective criminal and administrative
proceeding if the Rules strengthen, rather than weaken, the procedural efficacy of the liabilities of respondents.
All the present petitions are REMANDED to the Court of Appeals for appropriate action,
directed at monitoring of the DOJ, PNP and AFP investigations and the validation of their
results.

SO ORDERED.
 FIRST DIVISION Since the BIR took no action on petitioners claim for refund, petitioner sought judicial
recourse and filed on June 27, 2002, a petition for review with the CTA (docketed as CTA
G.R. No. 184398 February 25, 2010 Case No. 6491), to prevent the lapse of the two-year prescriptive period within which to
judicially claim a refund under Section 229 4 of the NIRC. Petitioner invoked its exemption
SILKAIR (SINGAPORE) PTE. LTD., Petitioner, from payment of excise taxes in accordance with the provisions of Section 135(b) of the
vs. NIRC, which exempts from excise taxes the entities covered by tax treaties, conventions
COMMISSIONER OF INTERNAL REVENUE, Respondent. and other international agreements; provided that the country of said carrier or exempt
entity likewise exempts from similar taxes the petroleum products sold to Philippine
carriers or entities. In this regard, petitioner relied on the reciprocity clause under Article
DECISION
4(2) of the Air Transport Agreement entered between the Republic of the Philippines and
the Republic of Singapore.
LEONARDO-DE CASTRO, J.:
Section 135(b) of the NIRC provides:
Before the Court is a Petition for Review on Certiorari, assailing the May 27, 2008
Decision1 and the subsequent September 5, 2008 Resolution2 of the Court of Tax Appeals
SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or
(CTA) En Banc in C.T.A. E.B. No. 267. The decision dated May 27, 2008 denied the petition
Agencies. Petroleum products sold to the following are exempt from excise tax:
for review filed by petitioner Silkair (Singapore) Pte. Ltd., on the ground, among others, of
failure to prove that it was authorized to operate in the Philippines for the period June to
December 2000, while the Resolution dated September 5, 2008 denied petitioners xxxx
motion for reconsideration for lack of merit.
(b) Exempt entities or agencies covered by tax treaties, conventions and other
The antecedent facts are as follows: international agreements for their use or consumption: Provided, however, That the
country of said foreign international carrier or exempt entities or agencies exempts from
similar taxes petroleum products sold to Philippine carriers, entities or agencies; x x x.
Petitioner, a foreign corporation organized under the laws of Singapore with a Philippine
representative office in Cebu City, is an online international carrier plying the Singapore-
Cebu-Singapore and Singapore-Cebu-Davao-Singapore routes. Article 4(2) of the Air Transport Agreement between the Philippines and Singapore, in
turn, provides:
Respondent Commissioner of Internal Revenue is impleaded herein in his official capacity
as head of the Bureau of Internal Revenue (BIR), an attached agency of the Department of ART. 4. x x x.
Finance which is duly authorized to decide, approve, and grant refunds and/or tax credits
of erroneously paid or illegally collected internal revenue taxes.3 xxxx

On June 24, 2002, petitioner filed with the BIR an administrative claim for the refund of (2) Fuel, lubricants, spare parts, regular equipment and aircraft stores introduced into, or
Three Million Nine Hundred Eighty-Three Thousand Five Hundred Ninety Pesos and Forty- taken on board aircraft in the territory of one Contracting Party by, or on behalf of, a
Nine Centavos (P3,983,590.49) in excise taxes which it allegedly erroneously paid on its designated airline of the other Contracting Party and intended solely for use in the
purchases of aviation jet fuel from Petron Corporation (Petron) from June to December operation of the agreed services shall, with the exception of charges corresponding to the
2000. Petitioner used as basis therefor BIR Ruling No. 339-92 dated December 1, 1992, service performed, be exempt from the same customs duties, inspection fees and other
which declared that the petitioners Singapore-Cebu-Singapore route is an international duties or taxes imposed in the territory of the first Contracting Party, even when these
flight by an international carrier and that the petroleum products purchased by the supplies are to be used on the parts of the journey performed over the territory of the
petitioner should not be subject to excise taxes under Section 135 of Republic Act No. Contracting Party in which they are introduced into or taken on board. The materials
8424 or the 1997 National Internal Revenue Code (NIRC). referred to above may be required to be kept under customs supervision and control.
In a Decision5 dated July 27, 2006, the CTA First Division found that petitioner was Petitioner again filed a motion for reconsideration which was denied in the Resolution
qualified for tax exemption under Section 135(b) of the NIRC, as long as the Republic of dated September 5, 2008. Hence, the instant petition for review on certiorari, which
Singapore exempts from similar taxes petroleum products sold to Philippine carriers, raises the following issues:
entities or agencies under Article 4(2) of the Air Transport Agreement quoted above.
However, it ruled that petitioner was not entitled to the excise tax exemption for failure I
to present proof that it was authorized to operate in the Philippines during the period
material to the case due to the non-admission of some of its exhibits, which were merely Whether or not petitioner has substantially proven its authority to operate in the
photocopies, including Exhibit "A" which was petitioners Certificate of Registration with Philippines.
the Securities and Exchange Commission (SEC) and Exhibits "P," "Q" and "R" which were
its operating permits issued by the Civil Aeronautics Board (CAB) to fly the Singapore-
II
Cebu-Singapore and Singapore-Cebu-Davao-Singapore routes for the period October 1999
to October 2000.
Whether or not petitioner is the proper party to claim for the refund/tax credit of excise
taxes paid on aviation fuel.
Petitioner filed a motion for reconsideration but the CTA First Division denied the same in
a Resolution6 dated January 17, 2007.
Petitioner maintains that it has proven its authority to operate in the Philippines with the
admission of its Foreign Air Carriers Permit (FACP) as Exhibit "B" before the CTA, which, in
Thereafter, petitioner elevated the case before the CTA En Banc via a petition for review,
part, reads:
which was initially denied in a Resolution7 dated May 17, 2007 for failure of petitioner to
establish its legal authority to appeal the Decision dated July 27, 2006 and the Resolution
[T]his Board RESOLVED, as it hereby resolves to APPROVE the petition of SILKAIR
dated January 17, 2007 of the CTA First Division.
(SINGAPORE) PTE LTD., for issuance of a regular operating permit (Foreign Air Carriers
Permit), subject to the approval of the President, pursuant to Sec. 10 of R.A. 776, as
Undaunted, petitioner moved for reconsideration. In the Resolution8 dated September 19,
amended by P.D. 1462.11
2007, the CTA En Banc set aside its earlier resolution dismissing the petition for review
and reinstated the same. It also required respondent to file his comment thereon.
Moreover, petitioner argues that Exhibits "P," "Q" and "R," which it previously filed with
the CTA, were merely flight schedules submitted to the CAB, and were not its operating
On May 27, 2008, the CTA En Banc promulgated the assailed Decision and denied the
permits. Petitioner adds that it was through inadvertence that only photocopies of these
petition for review, thus:
exhibits were introduced during the hearing.

WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit.
Petitioner also asserts that despite its failure to present the original copy of its SEC
The assailed Decision dated July 27, 2006 dismissing the instant petition on ground of
Registration during the hearings, the CTA should take judicial notice of its SEC Registration
failure of petitioner to prove that it was authorized to operate in the Philippines for the
since the same was already offered and admitted in evidence in similar cases pending
period from June to December 2000, is hereby AFFIRMED WITH MODIFICATION that
before the CTA.
petitioner is further not found to be the proper party to file the instant claim for refund. 9
Petitioner further claims that the instant case involves a clear grant of tax exemption to it
In a separate Concurring and Dissenting Opinion,10 CTA Presiding Justice Ernesto D. Acosta
by law and by virtue of an international agreement between two governments.
opined that petitioner was exempt from the payment of excise taxes based on Section
Consequently, being the entity which was granted the tax exemption and which made the
135 of the NIRC and Article 4 of the Air Transport Agreement between the Philippines and
erroneous tax payment of the excise tax, it is the proper party to file the claim for refund.
Singapore. However, despite said exemption, petitioners claim for refund cannot be
granted since it failed to establish its authority to operate in the Philippines during the
In his Comment12 dated March 26, 2009, respondent states that the admission in
period subject of the claim. In other words, Presiding Justice Acosta voted to uphold in
evidence of petitioners FACP does not change the fact that petitioner failed to formally
toto the Decision of the CTA First Division.
offer in evidence the original copies or certified true copies of Exhibit "A," its SEC
Registration; and Exhibits "P," "Q" and "R," its operating permits issued by the CAB to fly words, the evidence presented in the previous cases cannot be considered in this instant
its Singapore-Cebu-Singapore and Singapore-Cebu-Davao-Singapore routes for the period case without being offered in evidence.
October 1999 to October 2000. Respondent emphasizes that petitioners failure to
present these pieces of evidence amounts to its failure to prove its authority to operate in Moreover, Section 3 of Rule 129 of the Revised Rules of Court provides that hearing is
the Philippines. necessary before judicial notice may be taken by the courts. To quote said section:

Likewise, respondent maintains that an excise tax, being an indirect tax, is the direct Sec. 3. Judicial notice, when hearing necessary. During the trial, the court, on its own
liability of the manufacturer or producer. Respondent reiterates that when an excise tax initiative, or on request of a party, may announce its intention to take judicial notice of
on petroleum products is added to the cost of goods sold to the buyer, it is no longer a tax any matter and allow the parties to be heard thereon.
but becomes part of the price which the buyer has to pay to obtain the article. According
to respondent, petitioner cannot seek reimbursement for its alleged erroneous payment After the trial, and before judgment or on appeal, the proper court, on its own initiative
of the excise tax since it is neither the entity required by law nor the entity statutorily or on request of a party, may take judicial notice of any matter and allow the parties to be
liable to pay the said tax. heard thereon if such matter is decisive of a material issue in the case.

After careful examination of the records, we resolve to deny the petition. Furthermore, petitioner admitted that Exhibit A have (sic) been offered and admitted in
evidence in similar cases involving the same subject matter filed before this Court. Thus,
Petitioners assertion that the CTA may take judicial notice of its SEC Registration, petitioner is and should have been aware of the rules regarding the offering of any
previously offered and admitted in evidence in similar cases before the CTA, is untenable. documentary evidence before the same can be admitted in court.

We quote with approval the disquisition of the CTA En Banc in its Decision dated May 27, As regards Exhibit[s] P, Q and R, the original copies of these documents were not
2008 on the non-admission of petitioners Exhibits "A," "P," "Q" and "R," to wit: presented for comparison and verification in violation of Section 3 of Rule 130 of the 1997
Revised Rules of Court. The said section specifically provides that when the subject of
Anent petitioners argument that the Court in Division should have taken judicial notice of inquiry is the contents of a document, no evidence shall be admissible other than the
the existence of Exhibit "A" (petitioners SEC Certificate of Registration), although not original document itself x x x. It is an elementary rule in law that documents shall not be
properly identified during trial as this has previously been offered and admitted in admissible in evidence unless and until the original copies itself are offered or presented
evidence in similar cases involving the subject matter between the same parties before for verification in cases where mere copies are offered, save for the exceptions provided
this Court, We are in agreement with the ruling of the Court in Division, as discussed in its for by law. Petitioner thus cannot hide behind the veil of judicial notice so as to evade its
Resolution dated April 12, 2005 resolving petitioners Motion for Reconsideration on the responsibility of properly complying with the rules of evidence. For failure of herein
courts non-admission of Exhibits "A", "P", "Q" and "R", wherein it said that: petitioner to compare the subject documents with its originals, the same may not be
admitted." (Emphasis Ours)
"Each and every case is distinct and separate in character and matter although similar
parties may have been involved. Thus, in a pending case, it is not mandatory upon the Likewise, in the Resolution dated July 15, 2005 of the Court in Division denying
courts to take judicial notice of pieces of evidence which have been offered in other cases petitioners Omnibus Motion seeking allowance to compare the denied exhibits with their
even when such cases have been tried or pending in the same court. Evidence already certified true copies, the court a quo explained that:
presented and admitted by the court in a previous case cannot be adopted in a separate
case pending before the same court without the same being offered and identified anew. "Petitioner was already given enough time and opportunity to present the originals or
certified true copies of the denied documents for comparison. When petitioner received
The cases cited by petitioner concerned similar parties before the same court but do not the resolution denying admission of the provisionally marked exhibits, it should have
cover the same claim. A court is not compelled to take judicial notice of pieces of submitted the originals or certified true copies for comparison, considering that these
evidence offered and admitted in a previous case unless the same are properly offered or documents were accordingly available. But instead of presenting these documents,
have accordingly complied with the requirements on the rules of evidence. In other petitioner, in its Motion for Reconsideration, tried to hide behind the veil of judicial notice
so as to evade its responsibility of properly applying the rules on evidence. It was even Moreover, Section 3 of the same Rule16 provides that a hearing is necessary before
submitted by petitioner that these documents should be admitted for they were judicial notice of any matter may be taken by the court. This requirement of a hearing is
previously offered and admitted in similar cases involving the same subject matter and needed so that the parties can be heard thereon if such matter is decisive of a material
parties. If this was the case, then, there should have been no reason for petitioner to issue in the case.
seasonably present the originals or certified true copies for comparison, or even, marking.
x x x." Given the above rules, it is clear that the CTA En Banc correctly did not admit petitioners
SEC Registration and operating permits from the CAB which were merely photocopies,
In view of the foregoing discussion, the Court en banc finds that indeed, petitioner without the presentation of the original copies for comparison and verification. As aptly
indubitably failed to establish its authority to operate in the Philippines for the period held by the CTA En Banc, petitioner cannot rely on the principle of judicial notice so as to
beginning June to December 2000.13 evade its responsibility of properly complying with the rules of evidence. Indeed,
petitioners contention that the said documents were previously marked in other cases
This Court finds no reason to depart from the foregoing findings of the CTA En Banc as before the CTA tended to confirm that the originals of these documents were readily
petitioner itself admitted on page 914 of its petition for review that "[i]t was through available and their non-presentation in these proceedings was unjustified. Consequently,
inadvertence that only photocopies of Exhibits P, Q and R were introduced during the petitioners failure to compare the photocopied documents with their original renders the
hearing" and that it was "rather unfortunate that petitioner failed to produce the original subject exhibits inadmissible in evidence.
copy of its SEC Registration (Exhibit A) for purposes of comparison with the photocopy
that was originally presented." Going to the second issue, petitioner maintains that it is the proper party to claim for
refund or tax credit of excise taxes since it is the entity which was granted the tax
Evidently, said documents cannot be admitted in evidence by the court as the original exemption and which made the erroneous tax payment. Petitioner anchors its claim on
copies were neither offered nor presented for comparison and verification during the Section 135(b) of the NIRC and Article 4(2) of the Air Transport Agreement between the
trial. Mere identification of the documents and the markings thereof as exhibits do not Philippines and Singapore. Petitioner also asserts that the tax exemption, granted to it as
confer any evidentiary weight on them as said documents have not been formally offered a buyer of a certain product, is a personal privilege which may not be claimed or availed
by petitioner and have been denied admission in evidence by the CTA. of by the seller. Petitioner submits that since it is the entity which actually paid the excise
taxes, then it should be allowed to claim for refund or tax credit.
Furthermore, the documents are not among the matters which the law mandatorily
requires the Court to take judicial notice of, without any introduction of evidence, as At the outset, it is important to note that on two separate occasions, this Court has
petitioner would have the CTA do. Section 1, Rule 129 of the Rules of Court reads: already put to rest the issue of whether or not petitioner is the proper party to claim for
the refund or tax credit of excise taxes it allegedly paid on its aviation fuel purchases. 17 In
SECTION 1. Judicial notice, when mandatory. A court shall take judicial notice, without the earlier case of Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue,18
the introduction of evidence, of the existence and territorial extent of states, their involving the same parties and the same cause of action but pertaining to different
political history, forms of government and symbols of nationality, the law of nations, the periods of taxation, we have categorically held that Petron, not petitioner, is the proper
admiralty and maritime courts of the world and their seals, the political constitution and party to question, or seek a refund of, an indirect tax, to wit:
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 The proper party to question, or seek a refund of, an indirect tax is the statutory taxpayer,
geographical divisions. the person on whom the tax is imposed by law and who paid the same even if he shifts
the burden thereof to another. Section 130 (A) (2) of the NIRC provides that "[u]nless
Neither could it be said that petitioners SEC Registration and operating permits from the otherwise specifically allowed, the return shall be filed and the excise tax paid by the
CAB are documents which are of public knowledge, capable of unquestionable manufacturer or producer before removal of domestic products from place of
demonstration, or ought to be known to the judges because of their judicial functions, in production." Thus, Petron Corporation, not Silkair, is the statutory taxpayer which is
order to allow the CTA to take discretionary judicial notice of the said documents. 15 entitled to claim a refund based on Section 135 of the NIRC of 1997 and Article 4(2) of the
Air Transport Agreement between RP and Singapore.
Even if Petron Corporation passed on to Silkair the burden of the tax, the additional SEC. 129. Goods Subject to Excise Taxes. Excise taxes apply to goods manufactured or
amount billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to produced in the Philippines for domestic sale or consumption or for any other disposition
pay as a purchaser. and to things imported. x x x.

In the second Silkair19 case, the Court explained that an excise tax is an indirect tax where As used in the NIRC, therefore, excise taxes refer to taxes applicable to certain specified
the burden can be shifted or passed on to the consumer but the tax liability remains with or selected goods or articles manufactured or produced in the Philippines for domestic
the manufacturer or seller. Thus, the manufacturer or seller has the option of shifting or sale or consumption or for any other disposition and to things imported into the
passing on the burden of the tax to the buyer. However, where the burden of the tax is Philippines. These excise taxes may be considered taxes on production as they are
shifted, the amount passed on to the buyer is no longer a tax but a part of the purchase collected only from manufacturers and producers. Basically an indirect tax, excise taxes
price of the goods sold. are directly levied upon the manufacturer or importer upon removal of the taxable goods
from its place of production or from the customs custody. These taxes, however, may be
Petitioner contends that the clear intent of the provisions of the NIRC and the Air actually passed on to the end consumer as part of the transfer value or selling price of the
Transport Agreement is to exempt aviation fuel purchased by petitioner as an exempt goods sold, bartered or exchanged.21
entity from the payment of excise tax, whether such is a direct or an indirect tax.
According to petitioner, the excise tax on aviation fuel, though initially payable by the In Maceda v. Macaraig, Jr.,22 this Court declared:
manufacturer or producer, attaches to the goods and becomes the liability of the person
having possession thereof. "[I]ndirect taxes are taxes primarily paid by persons who can shift the burden upon
someone else." For example, the excise and ad valorem taxes that oil companies pay to
We do not agree. The distinction between a direct tax and an indirect tax is relevant to the Bureau of Internal Revenue upon removal of petroleum products from its refinery can
this issue. In Commissioner of Internal Revenue v. Philippine Long Distance Telephone be shifted to its buyer, like the NPC, by adding them to the "cash" and/or "selling price."
Company,20 this Court explained:
And as noted by us in the second Silkair23 case mentioned above:
Based on the possibility of shifting the incidence of taxation, or as to who shall bear the
burden of taxation, taxes may be classified into either direct tax or indirect tax. When Petron removes its petroleum products from its refinery in Limay, Bataan, it pays
the excise tax due on the petroleum products thus removed. Petron, as manufacturer or
In context, direct taxes are those that are exacted from the very person who, it is producer, is the person liable for the payment of the excise tax as shown in the Excise Tax
intended or desired, should pay them; they are impositions for which a taxpayer is Returns filed with the BIR. Stated otherwise, Petron is the taxpayer that is primarily,
directly liable on the transaction or business he is engaged in. directly and legally liable for the payment of the excise taxes. However, since an excise tax
is an indirect tax, Petron can transfer to its customers the amount of the excise tax paid
On the other hand, indirect taxes are those that are demanded, in the first instance, from, by treating it as part of the cost of the goods and tacking it on the selling price.
or are paid by, one person in the expectation and intention that he can shift the burden to
someone else. Stated elsewise, indirect taxes are taxes wherein the liability for the As correctly observed by the CTA, this Court held in Philippine Acetylene Co., Inc. v.
payment of the tax falls on one person but the burden thereof can be shifted or passed on Commissioner of Internal Revenue:
to another person, such as when the tax is imposed upon goods before reaching the
consumer who ultimately pays for it. When the seller passes on the tax to his buyer, he, in "It may indeed be that the economic burden of the tax finally falls on the purchaser; when
effect, shifts the tax burden, not the liability to pay it, to the purchaser as part of the it does the tax becomes part of the price which the purchaser must pay."
purchase price of goods sold or services rendered.
Even if the consumers or purchasers ultimately pay for the tax, they are not considered
Title VI of the NIRC deals with excise taxes on certain goods. Section 129 reads as follows: the taxpayers. The fact that Petron, on whom the excise tax is imposed, can shift the tax
burden to its purchasers does not make the latter the taxpayers and the former the
withholding agent.
Petitioner, as the purchaser and end-consumer, ultimately bears the tax burden, but this even if the burden thereof was shifted or passed on to another. It bears stressing that
does not transform petitioners status into a statutory taxpayer. even if Petron shifted or passed on to petitioner the burden of the tax, the additional
amount which petitioner paid is not a tax but a part of the purchase price which it had to
Thus, under Section 130(A)(2) of the NIRC, it is Petron, the taxpayer, which has the legal pay to obtain the goods.
personality to claim the refund or tax credit of any erroneous payment of excise taxes.
Section 130(A)(2) states: Time and again, we have held that tax refunds are in the nature of tax exemptions which
represent a loss of revenue to the government. These exemptions, therefore, must not
SEC. 130. Filing of Return and Payment of Excise Tax on Domestic Products. rest on vague, uncertain or indefinite inference, but should be granted only by a clear and
unequivocal provision of law on the basis of language too plain to be mistaken. 24 Such
(A) Persons Liable to File a Return, Filing of Return on Removal and Payment of exemptions must be strictly construed against the taxpayer, as taxes are the lifeblood of
Tax. the government.

(1) Persons Liable to File a Return. x x x In fine, we quote from our ruling in the earlier Silkair 25 case:

(2) Time for Filing of Return and Payment of the Tax. Unless otherwise The exemption granted under Section 135 (b) of the NIRC of 1997 and Article 4(2) of the
specifically allowed, the return shall be filed and the excise tax paid by Air Transport Agreement between RP and Singapore cannot, without a clear showing of
the manufacturer or producer before removal of domestic products legislative intent, be construed as including indirect taxes. Statutes granting tax
from place of production: x x x. (Emphasis supplied.) exemptions must be construed in strictissimi juris against the taxpayer and liberally in
favor of the taxing authority, and if an exemption is found to exist, it must not be enlarged
by construction.
Furthermore, Section 204(C) of the NIRC provides a two-year prescriptive period
within which a taxpayer may file an administrative claim for refund or tax credit,
to wit: This calls for the application of the doctrine, stare decisis et non quieta movere.1avvphi1
Follow past precedents and do not disturb what has been settled. Once a case has been
decided one way, any other case involving exactly the same point at issue, as in the case
SEC. 204. Authority of the Commissioner to Compromise, Abate, and Refund or
at bar, should be decided in the same manner. 26
Credit Taxes. The Commissioner may

WHEREFORE, the instant petition for review is DENIED. We affirm the assailed Decision
xxxx
dated May 27, 2008 and the Resolution dated September 5, 2008 of the Court of Tax
Appeals En Banc in C.T.A. E.B. No. 267. No pronouncement as to costs.
(C) Credit or refund taxes erroneously or illegally received or penalties imposed
without authority, refund the value of internal revenue stamps when they are
SO ORDERED.
returned in good condition by the purchaser, and, in his discretion, redeem or
change unused stamps that have been rendered unfit for use and refund their
value upon proof of destruction. No credit or refund of taxes or penalties shall be
allowed unless the taxpayer files in writing with the Commissioner a claim for
credit or refund within two (2) years after the payment of the tax or penalty:
Provided, however, That a return filed showing an overpayment shall be
considered as a written claim for credit or refund. (Emphasis supplied.)

From the foregoing discussion, it is clear that the proper party to question, or claim a
refund or tax credit of an indirect tax is the statutory taxpayer, which is Petron in this
case, as it is the company on which the tax is imposed by law and which paid the same
 THIRD DIVISION immune from suit and, as such, the immunity extended to them; and that respondent was
validly dismissed for her failure to meet the performance rating within the one-year
G.R. No. 178551 October 11, 2010 period as required under Kuwaits Civil Service Laws. Petitioners further contended that
Ikdal should not be liable as an officer of petitioner ATCI.
ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF PUBLIC HEALTH-
KUWAIT Petitioners, By Decision6 of March 30, 2007, the appellate court affirmed the NLRC Resolution.
vs.
MA. JOSEFA ECHIN, Respondent. In brushing aside petitioners contention that they only acted as agent of the Ministry and
that they cannot be held jointly and solidarily liable with it, the appellate court noted that
DECISION under the law, a private employment agency shall assume all responsibilities for the
implementation of the contract of employment of an overseas worker, hence, it can be
CARPIO MORALES, J.: sued jointly and severally with the foreign principal for any violation of the recruitment
agreement or contract of employment.
Josefina Echin (respondent) was hired by petitioner ATCI Overseas Corporation in behalf
of its principal-co-petitioner, the Ministry of Public Health of Kuwait (the Ministry), for the As to Ikdals liability, the appellate court held that under Sec. 10 of Republic Act No. 8042,
position of medical technologist under a two-year contract, denominated as a the "Migrant and Overseas Filipinos Act of 1995," corporate officers, directors and
Memorandum of Agreement (MOA), with a monthly salary of US$1,200.00. partners of a recruitment agency may themselves be jointly and solidarily liable with the
recruitment agency for money claims and damages awarded to overseas workers.
Under the MOA,1 all newly-hired employees undergo a probationary period of one (1)
year and are covered by Kuwaits Civil Service Board Employment Contract No. 2. Petitioners motion for reconsideration having been denied by the appellate court by
Resolution7 of June 27, 2007, the present petition for review on certiorari was filed.
Respondent was deployed on February 17, 2000 but was terminated from employment
on February 11, 2001, she not having allegedly passed the probationary period. Petitioners maintain that they should not be held liable because respondents
employment contract specifically stipulates that her employment shall be governed by
the Civil Service Law and Regulations of Kuwait. They thus conclude that it was patent
As the Ministry denied respondents request for reconsideration, she returned to the
error for the labor tribunals and the appellate court to apply the Labor Code provisions
Philippines on March 17, 2001, shouldering her own air fare.
governing probationary employment in deciding the present case.
On July 27, 2001, respondent filed with the National Labor Relations Commission (NLRC) a
Further, petitioners argue that even the Philippine Overseas Employment Act (POEA)
complaint2 for illegal dismissal against petitioner ATCI as the local recruitment agency,
Rules relative to master employment contracts (Part III, Sec. 2 of the POEA Rules and
represented by petitioner, Amalia Ikdal (Ikdal), and the Ministry, as the foreign principal.
Regulations) accord respect to the "customs, practices, company policies and labor laws
and legislation of the host country."
By Decision3 of November 29, 2002, the Labor Arbiter, finding that petitioners neither
showed that there was just cause to warrant respondents dismissal nor that she failed to
Finally, petitioners posit that assuming arguendo that Philippine labor laws are applicable,
qualify as a regular employee, held that respondent was illegally dismissed and
given that the foreign principal is a government agency which is immune from suit, as in
accordingly ordered petitioners to pay her US$3,600.00, representing her salary for the
fact it did not sign any document agreeing to be held jointly and solidarily liable,
three months unexpired portion of her contract.
petitioner ATCI cannot likewise be held liable, more so since the Ministrys liability had
not been judicially determined as jurisdiction was not acquired over it.
On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor Arbiters decision by
Resolution4 of January 26, 2004. Petitioners motion for reconsideration having been
The petition fails.
denied by Resolution5 of April 22, 2004, they appealed to the Court of Appeals,
contending that their principal, the Ministry, being a foreign government agency, is
Petitioner ATCI, as a private recruitment agency, cannot evade responsibility for the in this case, petitioners failed to discharge. The Courts ruling in EDI-Staffbuilders Intl., v.
money claims of Overseas Filipino workers (OFWs) which it deploys abroad by the mere NLRC10 illuminates:
expediency of claiming that its foreign principal is a government agency clothed with
immunity from suit, or that such foreign principals liability must first be established In the present case, the employment contract signed by Gran specifically states that Saudi
before it, as agent, can be held jointly and solidarily liable. Labor Laws will govern matters not provided for in the contract (e.g. specific causes for
termination, termination procedures, etc.). Being the law intended by the parties (lex loci
In providing for the joint and solidary liability of private recruitment agencies with their intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating
foreign principals, Republic Act No. 8042 precisely affords the OFWs with a recourse and to the termination of the employment of Gran.
assures them of immediate and sufficient payment of what is due them. Skippers United
Pacific v. Maguad8 explains: In international law, the party who wants to have a foreign law applied to a dispute or
case has the burden of proving the foreign law. The foreign law is treated as a question of
. . . [T]he obligations covenanted in the recruitment agreement entered into by and fact to be properly pleaded and proved as the judge or labor arbiter cannot take judicial
between the local agent and its foreign principal are not coterminous with the term of notice of a foreign law. He is presumed to know only domestic or forum law.
such agreement so that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees under the agreement Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus,
do not at all end, but the same extends up to and until the expiration of the employment the International Law doctrine of presumed-identity approach or processual presumption
contracts of the employees recruited and employed pursuant to the said recruitment comes into play. Where a foreign law is not pleaded or, even if pleaded, is not proved, the
agreement. Otherwise, this will render nugatory the very purpose for which the law presumption is that foreign law is the same as ours. Thus, we apply Philippine labor laws
governing the employment of workers for foreign jobs abroad was enacted. (emphasis in determining the issues presented before us. (emphasis and underscoring supplied)
supplied)
The Philippines does not take judicial notice of foreign laws, hence, they must not only be
The imposition of joint and solidary liability is in line with the policy of the state to protect alleged; they must be proven. To prove a foreign law, the party invoking it must present a
and alleviate the plight of the working class.9 Verily, to allow petitioners to simply invoke copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules of
the immunity from suit of its foreign principal or to wait for the judicial determination of Court which reads:
the foreign principals liability before petitioner can be held liable renders the law on joint
and solidary liability inutile. SEC. 24. Proof of official record. The record of public documents referred to in
paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an
As to petitioners contentions that Philippine labor laws on probationary employment are official publication thereof or by a copy attested by the officer having the legal custody of
not applicable since it was expressly provided in respondents employment contract, the record, or by his deputy, and accompanied, if the record is not kept in the Philippines,
which she voluntarily entered into, that the terms of her engagement shall be governed with a certificate that such officer has the custody. If the office in which the record is kept
by prevailing Kuwaiti Civil Service Laws and Regulations as in fact POEA Rules accord is in a foreign country, the certificate may be made by a secretary of the embassy or
respect to such rules, customs and practices of the host country, the same was not legation, consul general, consul, vice consul, or consular agent or by any officer in the
substantiated. foreign service of the Philippines stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office. (emphasis supplied)
Indeed, a contract freely entered into is considered the law between the parties who can
establish stipulations, clauses, terms and conditions as they may deem convenient, SEC. 25. What attestation of copy must state. Whenever a copy of a document or
including the laws which they wish to govern their respective obligations, as long as they record is attested for the purpose of the evidence, the attestation must state, in
are not contrary to law, morals, good customs, public order or public policy. substance, that the copy is a correct copy of the original, or a specific part thereof, as the
case may be. The attestation must be under the official seal of the attesting officer, if
It is hornbook principle, however, that the party invoking the application of a foreign law there be any, or if he be the clerk of a court having a seal, under the seal of such court.
has the burden of proving the law, under the doctrine of processual presumption which,
To prove the Kuwaiti law, petitioners submitted the following: MOA between respondent The liability of the principal/employer and the recruitment/placement agency for any and
and the Ministry, as represented by ATCI, which provides that the employee is subject to all claims under this section shall be joint and several. This provision shall be incorporated
a probationary period of one (1) year and that the host countrys Civil Service Laws and in the contract for overseas employment and shall be a condition precedent for its
Regulations apply; a translated copy11 (Arabic to English) of the termination letter to approval. The performance bond to be filed by the recruitment/placement agency, as
respondent stating that she did not pass the probation terms, without specifying the provided by law, shall be answerable for all money claims or damages that may be
grounds therefor, and a translated copy of the certificate of termination,12 both of which awarded to the workers. If the recruitment/placement agency is a juridical being, the
documents were certified by Mr. Mustapha Alawi, Head of the Department of Foreign corporate officers and directors and partners as the case may be, shall themselves be
Affairs-Office of Consular Affairs Inslamic Certification and Translation Unit; and jointly and solidarily liable with the corporation or partnership for the aforesaid claims
respondents letter13 of reconsideration to the Ministry, wherein she noted that in her and damages. (emphasis and underscoring supplied)
first eight (8) months of employment, she was given a rating of "Excellent" albeit it
changed due to changes in her shift of work schedule. WHEREFORE, the petition is DENIED.

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

xxxx

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

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

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

SEC. 10. Money Claims.Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing
of the complaint, the claims arising out of an employer-employee relationship or by virtue
of any law or contract involving Filipino workers for overseas deployment including claims
for actual moral, exemplary and other forms of damages.
SECOND DIVISION Before us is a Petition for Review assailing the Court of Appeals (CA) Decision1[1] and
Resolution2[2] regarding the issuance of letters of administration of the intestate estate
of Orlando B. Catalan.

MEROPE ENRIQUEZ VDA. DE CATALAN, G. R. No. 183622 The facts are as follows:

Petitioner, Orlando B. Catalan was a naturalized American citizen. After allegedly obtaining a divorce
in the United States from his first wife, Felicitas Amor, he contracted a second marriage
Present:
with petitioner herein.

On 18 November 2004, Orlando died intestate in the Philippines.

CARPIO, J., Chairperson,
Thereafter, on 28 February 2005, petitioner filed with the Regional Trial Court (RTC) of
BRION, Dagupan City a Petition for the issuance of letters of administration for her appointment
as administratrix of the intestate estate of Orlando. The case was docketed as Special
- versus - PEREZ, Proceedings (Spec. Proc.) No. 228.

SERENO, and On 3 March 2005, while Spec. Proc. No. 228 was pending, respondent Louella A. Catalan-
Lee, one of the children of Orlando from his first marriage, filed a similar petition with the
REYES, JJ.
RTC docketed as Spec. Proc. No. 232.

The two cases were subsequently consolidated.

Petitioner prayed for the dismissal of Spec. Proc. No. 232 on the ground of litis pendentia,
LOUELLA A. CATALAN-LEE, Promulgated: considering that Spec. Proc. No. 228 covering the same estate was already pending.

Respondent. On the other hand, respondent alleged that petitioner was not considered an interested
person qualified to file a petition for the issuance of letters of administration of the estate
February 8, 2012 of Orlando. In support of her contention, respondent alleged that a criminal case for
bigamy was filed against petitioner before Branch 54 of the RTC of Alaminos, Pangasinan,
x--------------------------------------------------x and docketed as Crim. Case No. 2699-A.

RESOLUTION

SERENO, J.:
Apparently, Felicitas Amor filed a Complaint for bigamy, alleging that petitioner Petitioner reiterated before the CA that the Petition filed by respondent should have been
contracted a second marriage to Orlando despite having been married to one Eusebio dismissed on the ground of litis pendentia. She also insisted that, while a petition for
Bristol on 12 December 1959. letters of administration may have been filed by an uninterested person, the defect was
cured by the appearance of a real party-in-interest. Thus, she insisted that, to determine
On 6 August 1998, the RTC had acquitted petitioner of bigamy.3[3] The trial court ruled who has a better right to administer the decedents properties, the RTC should have first
that since the deceased was a divorced American citizen, and since that divorce was not required the parties to present their evidence before it ruled on the matter.
recognized under Philippine jurisdiction, the marriage between him and petitioner was
not valid. On 18 October 2007, the CA promulgated the assailed Decision. First, it held that
petitioner undertook the wrong remedy. She should have instead filed a petition for
Furthermore, it took note of the action for declaration of nullity then pending action with review rather than a petition for certiorari. Nevertheless, since the Petition for Certiorari
the trial court in Dagupan City filed by Felicitas Amor against the deceased and petitioner. was filed within the fifteen-day reglementary period for filing a petition for review under
It considered the pending action to be a prejudicial question in determining the guilt of Sec. 4 of Rule 43, the CA allowed the Petition and continued to decide on the merits of
petitioner for the crime of bigamy. the case. Thus, it ruled in this wise:
Finally, the trial court found that, in the first place, petitioner had never been married to As to the issue of litis pendentia, we find it not applicable in the case. For litis pendentia to
Eusebio Bristol. be a ground for the dismissal of an action, there must be: (a) identity of the parties or at
least such as to represent the same interest in both actions; (b) identity of rights asserted
On 26 June 2006, Branch 70 of the RTC of Burgos, Pangasinan dismissed the Petition for
and relief prayed for, the relief being founded on the same acts, and (c) the identity in the
the issuance of letters of administration filed by petitioner and granted that of private
two cases should be such that the judgment which may be rendered in one would,
respondent. Contrary to its findings in Crim. Case No. 2699-A, the RTC held that the
regardless of which party is successful, amount to res judicata in the other. A petition for
marriage between petitioner and Eusebio Bristol was valid and subsisting when she
letters of administration is a special proceeding. A special proceeding is an application or
married Orlando. Without expounding, it reasoned further that her acquittal in the
proceeding to establish the status or right of a party, or a particular fact. And, in contrast
previous bigamy case was fatal to her cause. Thus, the trial court held that petitioner was
to an ordinary civil action, a special proceeding involves no defendant or respondent. The
not an interested party who may file a petition for the issuance of letters of
only party in this kind of proceeding is the petitioner of the applicant. Considering its
administration.4[4]
nature, a subsequent petition for letters of administration can hardly be barred by a
After the subsequent denial of her Motion for Reconsideration, petitioner elevated the similar pending petition involving the estate of the same decedent unless both petitions
matter to the Court of Appeals (CA) via her Petition for Certiorari, alleging grave abuse of are filed by the same person. In the case at bar, the petitioner was not a party to the
discretion on the part of the RTC in dismissing her Petition for the issuance of letters of petition filed by the private respondent, in the same manner that the latter was not made
administration. a party to the petition filed by the former. The first element of litis pendentia is wanting.
The contention of the petitioner must perforce fail.

Moreover, to yield to the contention of the petitioner would render nugatory the
provision of the Rules requiring a petitioner for letters of administration to be an
interested party, inasmuch as any person, for that matter, regardless of whether he has
valid interest in the estate sought to be administered, could be appointed as
administrator for as long as he files his petition ahead of any other person, in derogation
of the rights of those specifically mentioned in the order of preference in the
appointment of administrator under Rule 78, Section 6 of the Revised Rules of Court, bigamy, while, on the other hand, still holding that her marriage with Orlando was invalid.
which provides: She insists that with her acquittal of the crime of bigamy, the marriage enjoys the
presumption of validity.
xxx xxx xxx
On 20 June 2008, the CA denied her motion.
The petitioner, armed with a marriage certificate, filed her petition for letters of
administration. As a spouse, the petitioner would have been preferred to administer the Hence, this Petition.
estate of Orlando B. Catalan. However, a marriage certificate, like any other public
document, is only prima facie evidence of the facts stated therein. The fact that the At the outset, it seems that the RTC in the special proceedings failed to appreciate the
petitioner had been charged with bigamy and was acquitted has not been disputed by finding of the RTC in Crim. Case No. 2699-A that petitioner was never married to Eusebio
the petitioner. Bigamy is an illegal marriage committed by contracting a second or Bristol. Thus, the trial court concluded that, because petitioner was acquitted of bigamy, it
subsequent marriage before the first marriage has been dissolved or before the absent follows that the first marriage with Bristol still existed and was valid. By failing to take
spouse has been declared presumptively dead by a judgment rendered in a proper note of the findings of fact on the nonexistence of the marriage between petitioner and
proceedings. The deduction of the trial court that the acquittal of the petitioner in the Bristol, both the RTC and CA held that petitioner was not an interested party in the estate
said case negates the validity of her subsequent marriage with Orlando B. Catalan has of Orlando.
not been disproved by her. There was not even an attempt from the petitioner to deny
Second, it is imperative to note that at the time the bigamy case in Crim. Case No. 2699-A
the findings of the trial court. There is therefore no basis for us to make a contrary
was dismissed, we had already ruled that under the principles of comity, our jurisdiction
finding. Thus, not being an interested party and a stranger to the estate of Orlando B.
recognizes a valid divorce obtained by a spouse of foreign nationality. This doctrine was
Catalan, the dismissal of her petition for letters of administration by the trial court is in
established as early as 1985 in Van Dorn v. Romillo, Jr.7[7] wherein we said:
place.
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code,
xxx xxx xxx
only Philippine nationals are covered by the policy against absolute divorces[,] the same
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. No being considered contrary to our concept of public policy and morality. However, aliens
pronouncement as to costs. may obtain divorces abroad, which may be recognized in the Philippines, provided they
are valid according to their national law. In this case, the divorce in Nevada released
SO ORDERED.5[5] (Emphasis supplied) private respondent from the marriage from the standards of American law, under which
divorce dissolves the marriage. xxx
Petitioner moved for a reconsideration of this Decision.6[6] She alleged that the
reasoning of the CA was illogical in stating, on the one hand, that she was acquitted of We reiterated this principle in Llorente v. Court of Appeals,8[8] to wit:
In Van Dorn v. Romillo, Jr. we held that owing to the nationality principle embodied in foreign service stationed in the foreign country in which the record is kept and (b)
Article 15 of the Civil Code, only Philippine nationals are covered by the policy against authenticated by the seal of his office.
absolute divorces, the same being considered contrary to our concept of public policy and
morality. In the same case, the Court ruled that aliens may obtain divorces abroad, The divorce decree between respondent and Editha Samson appears to be an authentic
provided they are valid according to their national law. one issued by an Australian family court. However, appearance is not sufficient;
compliance with the aforementioned rules on evidence must be demonstrated.
Citing this landmark case, the Court held in Quita v. Court of Appeals, that once proven
that respondent was no longer a Filipino citizen when he obtained the divorce from Fortunately for respondent's cause, when the divorce decree of May 18, 1989 was
petitioner, the ruling in Van Dorn would become applicable and petitioner could very submitted in evidence, counsel for petitioner objected, not to its admissibility, but only to
well lose her right to inherit from him. the fact that it had not been registered in the Local Civil Registry of Cabanatuan City. The
trial court ruled that it was admissible, subject to petitioner's qualification. Hence, it was
In Pilapil v. Ibay-Somera, we recognized the divorce obtained by the respondent in his admitted in evidence and accorded weight by the judge. Indeed, petitioner's failure to
country, the Federal Republic of Germany. There, we stated that divorce and its legal object properly rendered the divorce decree admissible as a written act of the Family
effects may be recognized in the Philippines insofar as respondent is concerned in view Court of Sydney, Australia.
of the nationality principle in our civil law on the status of persons.
Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary;
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. respondent was no longer bound by Philippine personal laws after he acquired Australian
We hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was citizenship in 1992. Naturalization is the legal act of adopting an alien and clothing him
valid and recognized in this jurisdiction as a matter of comity. xxx with the political and civil rights belonging to a citizen. Naturalized citizens, freed from the
protective cloak of their former states, don the attires of their adoptive countries. By
Nonetheless, the fact of divorce must still first be proven as we have enunciated in Garcia becoming an Australian, respondent severed his allegiance to the Philippines and the
v. Recio,9[9] to wit: vinculum juris that had tied him to Philippine personal laws.
Respondent is getting ahead of himself. Before a foreign judgment is given presumptive Burden of Proving Australian Law
evidentiary value, the document must first be presented and admitted in evidence. A
divorce obtained abroad is proven by the divorce decree itself. Indeed the best evidence Respondent contends that the burden to prove Australian divorce law falls upon
of a judgment is the judgment itself. The decree purports to be a written act or record of petitioner, because she is the party challenging the validity of a foreign judgment. He
an act of an official body or tribunal of a foreign country. contends that petitioner was satisfied with the original of the divorce decree and was
cognizant of the marital laws of Australia, because she had lived and worked in that
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be country for quite a long time. Besides, the Australian divorce law is allegedly known by
proven as a public or official record of a foreign country by either (1) an official Philippine courts; thus, judges may take judicial notice of foreign laws in the exercise of
publication or (2) a copy thereof attested by the officer having legal custody of the sound discretion.
document. If the record is not kept in the Philippines, such copy must be (a) accompanied
by a certificate issued by the proper diplomatic or consular officer in the Philippine We are not persuaded. The burden of proof lies with the party who alleges the existence
of a fact or thing necessary in the prosecution or defense of an action. In civil cases,
plaintiffs have the burden of proving the material allegations of the complaint when
those are denied by the answer; and defendants have the burden of proving the
material allegations in their answer when they introduce new matters. Since the divorce
was a defense raised by respondent, the burden of proving the pertinent Australian law document. If the record is not kept in the Philippines, such copy must be (a) accompanied
validating it falls squarely upon him. by a certificate issued by the proper diplomatic or consular officer in the Philippine
foreign service stationed in the foreign country in which the record is kept and (b)
It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign authenticated by the seal of his office.
laws. Like any other facts, they must be alleged and proved. Australian marital laws are
not among those matters that judges are supposed to know by reason of their judicial With regard to respondent's marriage to Felicisimo allegedly solemnized in California,
function. The power of judicial notice must be exercised with caution, and every U.S.A., she submitted photocopies of the Marriage Certificate and the annotated text of
reasonable doubt upon the subject should be resolved in the negative. (Emphasis the Family Law Act of California which purportedly show that their marriage was done in
supplied) accordance with the said law. As stated in Garcia, however, the Court cannot take judicial
notice of foreign laws as they must be alleged and proved.
It appears that the trial court no longer required petitioner to prove the validity of
Orlandos divorce under the laws of the United States and the marriage between Therefore, this case should be remanded to the trial court for further reception of
petitioner and the deceased. Thus, there is a need to remand the proceedings to the trial evidence on the divorce decree obtained by Merry Lee and the marriage of respondent
court for further reception of evidence to establish the fact of divorce. and Felicisimo. (Emphasis supplied)

Should petitioner prove the validity of the divorce and the subsequent marriage, she has Thus, it is imperative for the trial court to first determine the validity of the divorce to
the preferential right to be issued the letters of administration over the estate. Otherwise, ascertain the rightful party to be issued the letters of administration over the estate of
letters of administration may be issued to respondent, who is undisputedly the daughter Orlando B. Catalan.
or next of kin of the deceased, in accordance with Sec. 6 of Rule 78 of the Revised Rules of
Court. WHEREFORE, premises considered, the Petition is hereby PARTIALLY GRANTED. The
Decision dated 18 October 2007 and the Resolution dated 20 June 2008 of the Court of
This is consistent with our ruling in San Luis v. San Luis,10[10] in which we said: Appeals are hereby REVERSED and SET ASIDE. Let this case be REMANDED to Branch 70
of the Regional Trial Court of Burgos, Pangasinan for further proceedings in accordance
Applying the above doctrine in the instant case, the divorce decree allegedly obtained by with this Decision.
Merry Lee which absolutely allowed Felicisimo to remarry, would have vested Felicidad
with the legal personality to file the present petition as Felicisimo's surviving spouse. SO ORDERED.
However, the records show that there is insufficient evidence to prove the validity of
the divorce obtained by Merry Lee as well as the marriage of respondent and Felicisimo
under the laws of the U.S.A. In Garcia v. Recio, the Court laid down the specific guidelines
for pleading and proving foreign law and divorce judgments. It held that presentation
solely of the divorce decree is insufficient and that proof of its authenticity and due
execution must be presented. Under Sections 24 and 25 of Rule 132, a writing or
document may be proven as a public or official record of a foreign country by either (1) an
official publication or (2) a copy thereof attested by the officer having legal custody of the
 Before the Court is a petition for review1 assailing the 6 March 2000 Decision2 and the 26
July 2000 Resolution of the Court of Appeals in CA-G.R. CV No. 54737. The Court of
Appeals set aside the Order3 of 3 May 1996 of the Regional Trial Court of Makati, Branch
63 ("RTC-Branch 63"), in Civil Case No. 88-2643 and reinstated the Decision4 of 12 January
1996 in respondents favor.

The Facts

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

The Agreements all state that in case of default in the payment of Ladteks loans, the
parties would reimburse each other the proportionate share of any sum that any might
pay to the creditors.8 Thus, a common provision appears in the Agreements:

RGC, GERVEL and QUA each covenant that each will respectively reimburse the
party made to pay the Lenders to the extent and subject to the limitations set
FIRST DIVISION forth herein, all sums of money which the party made to pay the Lenders shall
pay or become liable to pay by reason of any of the foregoing, and will make
such payments within five (5) days from the date that the party made to pay the
G.R. No. 144413 July 30, 2004
Lenders gives written notice to the parties hereto that it shall have become liable
therefor and has advised the Lenders of its willingness to pay whether or not it
REPUBLIC GLASS CORPORATION and GERVEL, INC, petitioners, shall have already paid out such sum or any part thereof to the Lenders or to the
vs. persons entitled thereto. (Emphasis supplied)
LAWRENCE C. QUA, respondent.
Under the same Agreements, Qua pledged 1,892,360 common shares of stock of General
Milling Corporation ("GMC") in favor of RGC and Gervel. The pledged shares of stock
served as security for the payment of any sum which RGC and Gervel may be held liable
DECISION under the Agreements.

Ladtek defaulted on its loan obligations to Metrobank and PDCP. Hence, Metrobank filed
a collection case against Ladtek, RGC, Gervel and Qua docketed as Civil Case No. 8364
CARPIO, J.: ("Collection Case No. 8364") which was raffled to the Regional Trial Court of Makati,
Branch 149 ("RTC-Branch 149"). During the pendency of Collection Case No. 8364, RGC
The Case and Gervel paid Metrobank P7 million. Later, Metrobank executed a waiver and quitclaim
dated 7 September 1988 in favor of RGC and Gervel. Based on this waiver and quitclaim, 9
Metrobank, RGC and Gervel filed on 16 September 1988 a joint motion to dismiss
Collection Case No. 8364 against RGC and Gervel. Accordingly, RTC-Branch 149 dismissed On 12 January 1996, RTC-Branch 63 rendered a Decision in Foreclosure Case No. 88-2643
the case against RGC and Gervel, leaving Ladtek and Qua as defendants.10 ("12 January 1996 Decision") ordering RGC and Gervel to return the foreclosed shares of
stock to Qua. The dispositive portion of the 12 January 1996 Decision reads:
In a letter dated 7 November 1988, RGC and Gervels counsel, Atty. Antonio C. Pastelero,
demanded that Qua pay P3,860,646, or 42.22% of P8,730,543.55,11 as reimbursement of WHEREFORE, premises considered, this Court hereby renders judgment ordering
the total amount RGC and Gervel paid to Metrobank and PDCP. Qua refused to reimburse defendants jointly and severally liable to return to plaintiff the 1,892,360 shares
the amount to RGC and Gervel. Subsequently, RGC and Gervel furnished Qua with notices of common stock of General Milling Corporation which they foreclosed on
of foreclosure of Quas pledged shares. December 9, 1988, or should the return of these shares be no longer possible
then to pay to plaintiff the amount of P3,860,646.00 with interest at 6% per
Qua filed a complaint for injunction and damages with application for a temporary annum from December 9, 1988 until fully paid and to pay plaintiff P100,000.00 as
restraining order, docketed as Civil Case No. 88-2643 ("Foreclosure Case No. 88-2643"), and for attorneys fees. The costs will be for defendants account.
with RTC-Branch 63 to prevent RGC and Gervel from foreclosing the pledged shares.
Although it issued a temporary restraining order on 9 December 1988, RTC-Branch 63 SO ORDERED.15
denied on 2 January 1989 Quas "Urgent Petition to Suspend Foreclosure Sale." RGC and
Gervel eventually foreclosed all the pledged shares of stock at public auction. Thus, Quas However, on RGC and Gervels Motion for Reconsideration, RTC-Branch 63 issued its
application for the issuance of a preliminary injunction became moot. 12 Order of 3 May 1996 ("3 May 1996 Order") reconsidering and setting aside the 12 January
1996 Decision. The 3 May 1996 Order states:
Trial in Foreclosure Case No. 88-2643 ensued. RGC and Gervel offered Quas Motion to
Dismiss13 in Collection Case No. 8364 as basis for the foreclosure of Quas pledged shares. After a thorough review of the records of the case, and an evaluation of the
Quas Motion to Dismiss states: evidence adduced by the parties as well as their contentions, the issues to be
resolved boil down to the following:
8. The foregoing facts show that the payment of defendants Republic Glass
Corporation and Gervel, Inc. was for the entire obligation covered by the 1. Whether or not the parties obligation to reimburse, under the
Continuing Surety Agreements which were Annexes "B" and "C" of the Indemnity Agreements was premised on the payment by any of them of
Complaint, and that the same naturally redound[ed] to the benefit of defendant the entire obligation;
Qua herein, as provided for by law, specifically Article 1217 of the Civil Code,
which states that: 2. Whether or not there is basis to plaintiffs apprehension that he
would be made to pay twice for the single obligation; and
xxx
3. Whether or not plaintiff was benefited by the payments made by
10. It is very clear that the payment of defendants Republic Glass Corporation defendants.
and Gervel, Inc. was much more than the amount stipulated in the Continuing
Surety Agreement which is the basis for the action against them and defendant Regarding the first issue, a closer scrutiny of the pertinent provisions of the
Qua, which was just SIX MILLION TWO HUNDRED [THOUSAND] PESOS Indemnity Agreements executed by the parties would not reveal any significant
(P6,200,000.00), hence, logically the said alleged obligation must now be indication that the parties liabilities are indeed premised on the payment by any
considered as fully paid and extinguished. of them of the entire obligation. These agreements clearly provide that the
parties obligation to reimburse accrues upon mere advice that one of them has
RGC and Gervel likewise offered as evidence in Foreclosure Case No. 88-2643 the Order paid or will so pay the obligation. It is not specified whether the payment is for
dismissing Collection Case No. 8364,14 which RTC-Branch 149 subsequently reversed on the entire obligation or not.
Metrobanks motion for reconsideration. Thus, RTC-Branch 149 reinstated Collection Case
No. 8364 against Qua.
Accordingly, the Court stands corrected in this regard. The obvious conclusion SO ORDERED.16 (Emphasis supplied)
that can be seen now is that payment of the entire obligation is not a condition
sine qua non for the paying party to demand reimbursement. The parties have Qua filed a motion for reconsideration of the 3 May 1996 Order which RTC-Branch 63
expressly contracted that each will reimburse whoever is made to pay the denied.
obligation whether entirely or just a portion thereof.
Aggrieved, Qua appealed to the Court of Appeals. During the pendency of the appeal, Qua
On the second issue, plaintiffs apprehension that he would be made to pay filed a Manifestation17 with the Court of Appeals attaching the Decision18 of 21 November
twice for the single obligation is unfounded. Under the above-mentioned 1996 rendered in Collection Case No. 8364. The dispositive portion of the decision reads:
Indemnity Agreements, in the event that the creditors are able to collect from
him, he has the right to ask defendants to pay their proportionate share, in the WHEREFORE, premises considered, judgment is hereby rendered ordering
same way defendants had collected from the plaintiff, by foreclosing his pledged defendants Ladtek, Inc. and Lawrence C. Qua:
shares of stock, his proportionate share, after they had made payments. From all
indications, the provisions of the Indemnity Agreements have remained binding
1. To pay, jointly and severally, the plaintiff the amount of P44,552,738.34 as of
between the parties.
October 31, 1987 plus the stipulated interest of 30.73% per annum and penalty
charges of 12% per annum from November 1, 1987 until the whole amount is
On the third issue, there is merit to defendants assertion that plaintiff has fully paid, less P7,000,000.00 paid by defendants Republic Glass Corporation and
benefited from the payments made by defendants. As alleged by defendants, Gervel, Inc., but the liability of defendant Lawrence C. Qua should be limited
and this has not been denied by plaintiff, in Civil Case No. 8364 filed before only to P5,000,000.00 and P1,200,000.00, the amount stated in the Continuing
Branch 149 of this Court, where the creditors were enforcing the parties Suretyship dated June 15, 1983, Exh. "D" and Continuing Suretyship dated
liabilities as sureties, plaintiff succeeded in having the case dismissed by December 14, 1981, Exh. "D-1", respectively, plus the stipulated interest and
arguing that defendants payments [were] for the entire obligation, hence, the expenses incurred by the plaintiff.
obligation should be considered fully paid and extinguished. With the dismissal
of the case, the indications are that the creditors are no longer running after
2. To pay, jointly and severally, the plaintiff an amount equivalent to ten (10%)
plaintiff to enforce his liabilities as surety of Ladtek.
percent of the total amount due as and by way of attorneys fees;

Whether or not the surety agreements signed by the parties and the creditors
3. To pay the cost of suit.
were novated is not material in this controversy. The fact is that there was
payment of the obligation. Hence, the Indemnity Agreements govern.
The Counterclaims of the defendants Ladtek, Inc. and Lawrence C. Qua against
the plaintiff are hereby dismissed.
In the final analysis, defendants payments gave rise to plaintiffs obligation to
reimburse the former. Having failed to do so, upon demand, defendants were
Likewise, the cross-claims of the defendants are dismissed.
justified in foreclosing the pledged shares of stocks.

SO ORDERED.19 (Emphasis supplied)

xxx

On 6 March 2000, the Court of Appeals rendered the questioned Decision setting aside
WHEREFORE, premises considered, the decision dated January 12, 1996 is
the 3 May 1996 Order of RTC-Branch 63 and reinstating the 12 January 1996 Decision
reconsidered and set aside. The above-entitled complaint against defendants is
DISMISSED. ordering RGC and Gervel to return the foreclosed shares of stock to Qua. 20

Hence, this petition.

Likewise, defendants counterclaim is also dismissed.

The Ruling of the Court of Appeals

In reversing the 3 May 1996 Order and reinstating the 12 January 1996 Decision, the The letter of the Republic to the appellant, Exhibit "G", dated June 25, 1987,
appellate court quoted the RTC-Branch 63s 12 January 1996 Decision: which mentioned the letter from PDCP confirming its willingness to release the
joint and solidary obligation of the Republic and Gervel subject to some terms
The liability of each party under the indemnity agreements therefore is premised and conditions, one of which is the appellants acceptable repayment plan of his
on the payment by any of them of the entire obligation. Without such payment, "pro-rata share"; and the letter of PDCP to the Republic, Exhibit "H", mentioning
there would be no corresponding share to reimburse. Payment of the entire full payment of the "pro rata share" of the Republic and Gervel, and the need of
obligation naturally redounds to the benefit of the other solidary debtors who the appellant to submit an acceptable repayment plan covering his "pro-rata
must then reimburse the paying co-debtors to the extent of his corresponding share", the release from solidary liability by PDCP, Exhibit "J", mentioning full
share. payment by the Republic and Gervel of their "pro rata share" in the loan, as
solidary obligors, subject however to the terms and conditions of the hold out
In the case at bar, Republic Glass and Gervel made partial payments only, and so agreement; and the non-payment in full of the loan, subject of the May 10, 1984
they did not extinguish the entire obligation. But Republic Glass and Gervel Promissory Note, except the 7 million payment by both Republic and Gervel, as
nevertheless obtained quitclaims in their favor and so they ceased to be mentioned in the Decision (Case No. 8364, Metrobank vs. Ladtek, et al).
solidarily liable with plaintiff for the balance of the debt (Exhs. "D", "E", and "I"). Precisely, Ladtek and the appellant, in said Decision were directed to pay
Plaintiff thus became solely liable for the unpaid portion of the debt even as he is Metrobank the balance of P9,560,798, supposedly due and unpaid.
being held liable for reimbursement on the said portion.
Thus, the payment did not extinguish the entire obligation and did not benefit Qua.
What happened therefore, was that Metrobank and PDCP in effect enforced the Accordingly, RGC and Gervel cannot demand reimbursement. The Court of Appeals also
Suretyship Agreements jointly as against plaintiff and defendants. Consequently, held that Qua even became solely answerable for the unpaid balance of the obligations by
the solidary obligation under the Suretyship Agreements was novated by the virtue of the quitclaims executed by Metrobank and PDCP in favor of RGC and Gervel. RGC
substantial modification of its principal conditions. xxx The resulting change was and Gervel ceased to be solidarily liable for Ladteks loan obligations.22
from one with three solidary debtors to one in which Lawrence Qua became the
sole solidary co-debtor of Ladtek. The Issues

Defendants cannot simply pay off a portion of the debt and then absolve RGC and Gervel raise the following issues for resolution:
themselves from any further liability when the obligation has not been totally
extinguished. I.

xxx WHETHER THE PRINCIPLE OF ESTOPPEL APPLIES TO QUAS JUDICIAL

STATEMENTS THAT RGC AND GERVEL PAID THE ENTIRE OBLIGATION.
In the final reckoning, this Court finds that the foreclosure and sale of the shares
pledged by plaintiff was totally unjustified and without basis because the II.
obligation secured by the underlying pledge had been extinguished by novation.
xxx21 WHETHER PAYMENT OF THE ENTIRE OBLIGATION IS A CONDITION SINE QUA
NON FOR RGC AND GERVEL TO DEMAND REIMBURSEMENT FROM QUA UNDER
The Court of Appeals further held that there was an implied novation or substantial THE INDEMNITY AGREEMENTS EXECUTED BY THEM AFTER RGC AND GERVEL
incompatibility in the suretys mode or manner of payment from one for the entire PAID METROBANK UNDER THE SURETY AGREEMENT.
obligation to one merely of proportionate share. The appellate court ruled that RGC and
Gervels payment to the creditors only amounted to their proportionate shares of the III.
obligation, considering the following evidence:
 ASSUMING ARGUENDO THAT THERE WAS NOVATION OF THE SURETY their payment to Metrobank was for the entire obligation. As a result, the presiding judge
AGREEMENTS SIGNED BY THE PARTIES AND THE CREDITORS, WHETHER THE ordered the dismissal of Collection Case No. 8364 against Qua. 26
NOVATION IS MATERIAL IN THIS CASE.23
RGC and Gervel further invoke Section 4 of Rule 129 of the Rules of Court to support their
The Courts Ruling stance:

We deny the petition. 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
Whether Qua was in estoppel admission may be contradicted only by showing that it was made through
palpable mistake or that no such admission was made.
RGC and Gervel contend that Qua is in estoppel for making conflicting statements in two
different and separate cases. Qua cannot now claim that the payment made to A party may make judicial admissions in (a) the pleadings filed by the parties, (b) during
Metrobank was not for the entire obligation because of his Motion to Dismiss Collection the trial either by verbal or written manifestations or stipulations, or (c) in other stages of
Case No. 8364 where he stated that RGC and Gervels payment was for the entire the judicial proceeding.27
obligation.
The elements of judicial admissions are absent in this case. Qua made conflicting
The essential elements of estoppel in pais are considered in relation to the party to be statements in Collection Case No. 8364 and in Foreclosure Case No. 88-2643, and not in
estopped, and to the party invoking the estoppel in his favor. On the party to be the "same case" as required in Section 4 of Rule 129. To constitute judicial admission, the
estopped, such party (1) commits conduct amounting to false representation or admission must be made in the same case in which it is offered. If made in another case
concealment of material facts or at least calculated to convey the impression that the or in another court, the fact of such admission must be proved as in the case of any other
facts are inconsistent with those which the party subsequently attempts to assert; (2) has fact, although if made in a judicial proceeding it is entitled to greater weight. 28
the intent, or at least expectation that his conduct shall at least influence the other party;
and (3) has knowledge, actual or constructive, of the real facts. On the party claiming the RGC and Gervel introduced Quas Motion to Dismiss and the Order dismissing Collection
estoppel, such party (1) has lack of knowledge and of the means of knowledge of the truth Case No. 8364 to prove Quas claim that the payment was for the entire obligation. Qua
on the facts in question; (2) has relied, in good faith, on the conduct or statements of the does not deny making such statement but explained that he "honestly believed and
party to be estopped; (3) has acted or refrained from acting based on such conduct or pleaded in the lower court and in CA-G.R. CV No. 58550 that the entire debt was fully
statements as to change the position or status of the party claiming the estoppel, to his extinguished when the petitioners paid P7 million to Metrobank."29
injury, detriment or prejudice.24
We find Quas explanation substantiated by the evidence on record. As stated in the
In this case, the essential elements of estoppel are inexistent. Agreements, Ladteks original loan from Metrobank was only P6.2 million. Therefore, Qua
reasonably believed that RGC and Gervels P7 million payment to Metrobank pertained to
While Quas statements in Collection Case No. 8364 conflict with his statements in the entire obligation. However, subsequent facts indisputably show that RGC and Gervels
Foreclosure Case No. 88-2643, RGC and Gervel miserably failed to show that Qua, in payment was not for the entire obligation. RTC-Branch 149 reinstated Collection Case No.
making those statements, intended to falsely represent or conceal the material facts. 8364 against Qua and ruled in Metrobanks favor, ordering Qua to pay P6.2 million.
Both parties undeniably know the real facts.
Whether payment of the entire obligation is an essential condition for reimbursement
Nothing in the records shows that RGC and Gervel relied on Quas statements in
Collection Case No. 8364 such that they changed their position or status, to their injury, RGC and Gervel assail the Court of Appeals ruling that the parties liabilities under the
detriment or prejudice. RGC and Gervel repeatedly point out that it was the presiding Agreements depend on the full payment of the obligation. RGC and Gervel insist that it is
judge25 in Collection Case No. 8364 who relied on Quas statements in Collection Case No. not an essential condition that the entire obligation must first be paid before they can
8364. RGC and Gervel claim that Qua "deliberately led the Presiding Judge to believe" that
seek reimbursement from Qua. RGC and Gervel contend that Qua should pay 42.22% of If we allow RGC and Gervel to collect from Qua his proportionate share, then Qua would
any amount which they paid or would pay Metrobank and PDCP. pay much more than his stipulated liability under the Agreements. In addition to the
P3,860,646 claimed by RGC and Gervel, Qua would have to pay his liability of P6.2 million
RGC and Gervels contention is partly meritorious. to Metrobank and more than P1 million to PDCP. Since Qua would surely exceed his
proportionate share, he would then recover from RGC and Gervel the excess payment.
Payment of the entire obligation by one or some of the solidary debtors results in a This situation is absurd and circuitous.
corresponding obligation of the other debtors to reimburse the paying debtor. 30 However,
we agree with RGC and Gervels contention that in this case payment of the entire Contrary to RGC and Gervels claim, payment of any amount will not automatically result
obligation is not an essential condition before they can seek reimbursement from Qua. in reimbursement. If a solidary debtor pays the obligation in part, he can recover
The words of the Agreements are clear. reimbursement from the co-debtors only in so far as his payment exceeded his share in
the obligation.33 This is precisely because if a solidary debtor pays an amount equal to his
RGC, GERVEL and QUA each covenant that each will respectively reimburse the proportionate share in the obligation, then he in effect pays only what is due from him. If
party made to pay the Lenders to the extent and subject to the limitations set the debtor pays less than his share in the obligation, he cannot demand reimbursement
forth herein, all sums of money which the party made to pay the Lenders shall because his payment is less than his actual debt.
pay or become liable to pay by reason of any of the foregoing, and will make
such payments within five (5) days from the date that the party made to pay the To determine whether RGC and Gervel have a right to reimbursement, it is indispensable
Lenders gives written notice to the parties hereto that it shall have become liable to ascertain the total obligation of the parties. At this point, it becomes necessary to
therefor and has advised the Lenders of its willingness to pay whether or not it consider the decision in Collection Case No. 8364 on the parties obligation to Metrobank.
shall have already paid out such sum or any part thereof to the Lenders or to the To repeat, Metrobank filed Collection Case No. 8364 against Ladtek, RGC, Gervel and Qua
persons entitled thereto. (Emphasis supplied) to collect Ladteks unpaid loan.

The Agreements are contracts of indemnity not only against actual loss but against RGC and Gervel assail the Court of Appeals consideration of the decision in Collection
liability as well. In Associated Insurance & Surety Co., Inc. v. Chua,31 we distinguished Case No. 836434 because Qua did not offer the decision in evidence during the trial in
between a contract of indemnity against loss and a contract of indemnity against liability, Foreclosure Case No. 88-2643 subject of this petition. RTC-Branch 6235 rendered the
thus:32 decision in Collection Case No. 8364 on 21 November 1996 while Qua filed his Notice of
Appeal of the 3 May 1996 Order on 19 June 1996. Qua could not have possibly offered in
The agreement here sued upon is not only one of indemnity against loss but of evidence the decision in Collection Case No. 8364 because RTC-Branch 62 rendered the
indemnity against liability. While the first does not render the indemnitor liable decision only after Qua elevated the present case to the Court of Appeals. Hence, Qua
until the person to be indemnified makes payment or sustains loss, the second submitted the decision in Collection Case No. 8364 during the pendency of the appeal of
becomes operative as soon as the liability of the person indemnified arises Foreclosure Case No. 88-2643 in the Court of Appeals.
irrespective of whether or not he has suffered actual loss. (Emphasis supplied)
As found by RTC-Branch 62, RGC, Gervel and Quas total obligation was P14,200,854.37 as
Therefore, whether the solidary debtor has paid the creditor, the other solidary debtors of 31 October 1987.36 During the pendency of Collection Case No. 8364, RGC and Gervel
should indemnify the former once his liability becomes absolute. However, in this case, paid Metrobank P7 million. Because of the payment, Metrobank executed a quitclaim 37 in
the liability of RGC, Gervel and Qua became absolute simultaneously when Ladtek favor of RGC and Gervel. By virtue of Metrobanks quitclaim, RTC-Branch 62 dismissed
defaulted in its loan payment. As a result, RGC, Gervel and Qua all became directly liable Collection Case No. 8364 against RGC and Gervel, leaving Ladtek and Qua as defendants.
at the same time to Metrobank and PDCP. Thus, RGC and Gervel cannot automatically Considering that RGC and Gervel paid only P7 million out of the total obligation of
claim for indemnity from Qua because Qua himself is liable directly to Metrobank and P14,200,854.37, which payment was less than RGC and Gervels combined shares in the
PDCP. obligation,38 it was clearly partial payment. Moreover, if it were full payment, then the
obligation would have been extinguished. Metrobank would have also released Qua from
his obligation.
RGC and Gervel also made partial payment to PDCP. Proof of this is the Release from entire obligation to one merely of proportionate share. The creditors, namely Metrobank
Solidary Liability that PDCP executed in RGC and Gervels favor which stated that their and PDCP, merely proceeded against RGC and Gervel for their proportionate shares
payment of P1,730,543.55 served as "full payment of their corresponding proportionate only.43 This preference is within the creditors discretion which did not necessarily affect
share" in Ladteks foreign currency loan.39 Moreover, PDCP filed a collection case against the nature of the obligations as well as the terms and conditions of the Agreements. A
Qua alone, docketed as Civil Case No. 2259, in the Regional Trial Court of Makati, Branch creditor may choose to proceed only against some and not all of the solidary debtors. The
150.40 creditor may also choose to collect part of the debt from some of the solidary debtors,
and the remaining debt from the other solidary debtors.
Since they only made partial payments, RGC and Gervel should clearly and convincingly
show that their payments to Metrobank and PDCP exceeded their proportionate shares in In sum, RGC and Gervel have no legal basis to seek reimbursement from Qua.
the obligations before they can seek reimbursement from Qua. This RGC and Gervel failed Consequently, RGC and Gervel cannot validly foreclose the pledge of Quas GMC shares of
to do. RGC and Gervel, in fact, never claimed that their payments exceeded their shares in stock which secured his obligation to reimburse. 44 Therefore, the foreclosure of the
the obligations. Consequently, RGC and Gervel cannot validly seek reimbursement from pledged shares of stock has no leg to stand on.
Qua.
WHEREFORE, we DENY the petition. The Decision dated 6 March 2000 of the Court of
Whether there was novation of the Agreements Appeals in CA-G.R. CV No. 54737 is AFFIRMED. Costs against petitioners.

RGC and Gervel contend that there was no novation of the Agreements. RGC and Gervel SO ORDERED.
further contend that any novation of the Agreements is immaterial to this case. RGC and
Gervel disagreed with the Court of Appeals on the effect of the "implied novation" which
supposedly transpired in this case. The Court of Appeals found that "there was an implied
novation or substantial incompatibility in the mode or manner of payment by the surety
from the entire obligation, to one merely of proportionate share." RGC and Gervel claim
that if it is true that an implied novation occurred, then the effect "would be to release
respondent (Qua) as the entire obligation is considered extinguished by operation of law."
Thus, Qua should now reimburse RGC and Gervel his proportionate share under the
surety agreements.

Novation extinguishes an obligation by (1) changing its object or principal conditions; (2)
substituting the person of the debtor; and (3) subrogating a third person in the rights of
the creditor. Article 1292 of the Civil Code clearly provides that in order that an obligation
may be extinguished by another which substitutes the same, it should be declared in
unequivocal terms, or that the old and new obligations be on every point incompatible
with each other.41 Novation may either be extinctive or modificatory. Novation is
extinctive when an old obligation is terminated by the creation of a new obligation that
takes the place of the former. Novation is merely modificatory when the old obligation
subsists to the extent it remains compatible with the amendatory agreement. 42

We find that there was no novation of the Agreements. The parties did not constitute a
new obligation to substitute the Agreements. The terms and conditions of the
Agreements remain the same. There was also no showing of complete incompatibility in
the manner of payment of the parties obligations. Contrary to the Court of Appeals
ruling, the mode or manner of payment by the parties did not change from one for the
 Petitioner Alfredo Ching challenges before us the decision 1 of the Court of Appeals
promulgated on 27 January 1993 in CA G.R. SP No. 28912, dismissing his "Petition for
Certiorari and Prohibition with Prayer for Issuance of Temporary Restraining Order/
Preliminary Injunction", on the ground of lack of merit.

Assailed similarly is the resolution2 of the Court of Appeals dated 28 June 1993 denying
petitioner's motion for reconsideration.

As borne by the records, the controversy arose from the following facts:

On 04 February 1992,3 petitioner was charged before the Regional Trial Court of Makati
(RTC-Makati), Branch 58, with four counts of estafa punishable under Article 315 par. 1(b)
of the Revised Penal Code, in relation to Presidential Decree 115, otherwise known as the
"Trust Receipts Law".

The four separate informations4 which were couched in similar language except for the
date, subject goods and amount thereof, charged herein petitioner in this wise:

SECOND DIVISION
That on or about the (18th day of May 1981; 3rd day of June 1981; 24th day of
June 1981 and 24th day of June 1981), in the Municipality of Makati, Metro
Manila, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused having executed a trust receipt agreement in favor of
G.R. No. 110844 April 27, 2000 Allied Banking Corporation in consideration of the receipt by the said accused of
goods described as "12 Containers (200 M/T) Magtar Brand Dolomites"; "18
ALFREDO CHING, petitioner, Containers (Zoom M/T) Magtar Brand Dolomites"; "High Fired Refractory Sliding
vs. Nozzle Bricks"; and "High Fired Refractory Sliding Nozzle Bricks" for which there
HON. COURT OF APPEALS, HON. ZOSIMO Z. ANGELES, RTC- BR. 58, MAKATI, METRO is now due the sum of (P278, 917.80; P419,719.20; P387, 551. 95; and
MANILA, PEOPLE OF THE PHILIPPINES AND ALLIED BANKING CORPORATION, P389,085.14 respectively) under the terms of which the accused agreed to sell
respondents. the same for cash with the express obligation to remit to the complainant bank
the proceeds of the sale and/or to turn over the goods, if not sold, on demand,
but the accused, once in possession of said goods, far from complying with his
obligation and with grave abuse of confidence, did then and there, willfully,
BUENA, J.: unlawfully and feloniously misappropriate, misapply and convert to his own
personal use and benefit the said goods and/or the proceeds of the sale thereof,
Confronting the Court in this instant petition for review on certiorari under Rule 45 is the and despite repeated demands, failed and refused and still fails and refuses, to
task of resolving the issue of whether the pendency of a civil action for damages and account for and/or remit the proceeds of sale thereof to the Allied Banking
declaration of nullity of documents, specifically trust receipts, warrants the suspension of Corporation to the damage and prejudice of the said complainant bank in the
criminal proceedings instituted for violation of Article 315 1(b) of the Revised Penal Code, aforementioned amount of (P278,917.80; P419,719.20; P387,551.95; and
in relation to P.D. 115, otherwise known as the "Trust Receipts Law". P389,085.14).
On 10 February 1992, an "Omnibus Motion 5 to Strike Out Information, or in the Consequently, petitioner filed a motion for reconsideration of the decision which the
Alternative to Require Public Prosecutor to Conduct Preliminary Investigation, and to appellate court denied for lack of merit, via a resolution 14 dated 28 June 1993.
Suspend in the Meantime Further Proceedings in these Cases," was filed by the petitioner.
Notwithstanding the decision rendered by the Court of Appeals, the RTC-Manila, Branch
In an order dated 13 February 1992, the Regional Trial Court of Makati, Branch 58, acting 53 in an order dated 19 November 1993 in Civil Case No. 92-60600, admitted petitioner's
on the omnibus motion, required the prosecutor's office to conduct a preliminary amended complaint15 which, inter alia, prayed the court for a judgment:
investigation and suspended further proceedings in the criminal cases.
xxx xxx xxx
On 05 March 1992, petitioner Ching, together with Philippine Blooming Mills Co. Inc., filed
a case6 before the Regional Trial Court of Manila (RTC-Manila), Branch 53, for declaration 1. Declaring the 'Trust Receipts," annexes D, F, H and J hereof, null and void, or
of nullity of documents and for damages docketed as Civil Case No. 92-60600, entitled otherwise annulling the same, for failure to express the true intent and
"Philippine Blooming Mills, Inc. et. al. vs. Allied Banking Corporation. agreement of the parties;

On 07 August 1992, Ching filed a petition7 before the RTC-Makati, Branch 58, for the 2. Declaring the transaction subject hereof as one of pure and simple loan
suspension of the criminal proceedings on the ground of prejudicial question in a civil without any trust receipt agreement and/or not one involving a trust receipt, and
action. accordingly declaring all the documents annexed hereto as mere loan documents
. . . (emphasis ours).
The prosecution then filed an opposition to the petition for suspension, against which
opposition, herein petitioner filed a reply.8 In its amended answer,16 herein private respondent Allied Banking Corporation submitted
in riposte that the transaction applied for was a "letter of credit/trust receipt
On 26 August 1992, the RTC-Makati issued an order9 which denied the petition for accommodation" and not a "pure and simple loan with the trust receipts as mere
suspension and scheduled the arraignment and pre-trial of the criminal cases. As a result, additional or side documents", as asserted by herein petitioner in its amended
petitioner moved to reconsider10 the order to which the prosecution filed an opposition. complaint.17

In an order11 dated 04 September 1992, the RTC-Makati, before which the criminal cases Through the expediency of Rule 45, petitioner seeks the intervention of this Court and
are pending, denied petitioner's motion for reconsideration and set the criminal cases for prays:
arraignment and pre-trial.
After due consideration, to render judgment reversing the decision and
Aggrieved by these orders12 of the lower court in the criminal cases, petitioner brought resolution, Annexes A and B hereof, respectively, and ordering the suspension of
before the Court of Appeals a petition for certiorari and prohibition which sought to Criminal Cases (sic) Nos. 92-0934 to 92-0937, inclusive, entitled "People of the
declare the nullity of the aforementioned orders and to prohibit the RTC-Makati from Philippines vs. Alfredo Ching" pending before Branch 58 of the Regional Trial
conducting further proceedings in the criminal cases. Court of Makati, Metro Manila, until final determination of Civil Case No. 92-600
entitled Philippine Blooming Mills Co. Inc. and Alfredo Ching vs. Allied Banking
In denying the petition,13 the Court of Appeals, in CA G.R. SP No. 28912, ruled: Corporation" pending before Branch 53 of the Regional Trial Court of Manila.

. . . Civil Case No. 90-60600 pending before the Manila Regional Trial Court The instant petition is bereft of merit.
seeking (sic) the declaration of nullity of the trust receipts in question is not a
prejudicial question to Criminal Case Nos. 92-0934 to 37 pending before the We agree with the findings of the trial court, as affirmed by the Court of Appeals, that no
respondent court charging the petitioner with four counts of violation of Article prejudicial question exists in the present case.
315, par. 1(b), RPC, in relation to PD 115 as to warrant the suspension of the
proceedings in the latter . . . .
As defined, a prejudicial question is one that arises in a case the resolution of which is a . . . (b) By misappropriating or converting, to the prejudice of another, money;
logical antecedent of the issue involved therein, and the cognizance of which pertains to goods, or any other personal property received by the offender in trust or on
another tribunal. The prejudicial question must be determinative of the case before the commission, or for administration, or any other obligation involving the duty to
court but the jurisdiction to try and resolve the question must be lodged in another court make delivery of or to return the same, even though such obligation be totally or
or tribunal.18 partially guaranteed by a bond; or by denying having received such money,
goods, or other property.
It is a question based on a fact distinct and separate from the crime but so intimately
connected with it that it determines the guilt or innocence of the accused, and for it to Applying the foregoing principles, the criminal liability of the accused for violation of
suspend the criminal action, it must appear not only that said case involves facts Article 315 1(b) of the Revised Penal Code, may still be shown through the presentation of
intimately related to those upon which the criminal prosecution would be based but also evidence to the effect that: (a) the accused received the subject goods in trust or under
that in the resolution of the issue or issues raised in the civil case, the guilt or innocence the obligation to sell the same and to remit the proceeds thereof to Allied Banking
of the accused would necessarily be determined.19 It comes into play generally in a Corporation, or to return the goods, if not sold; (b) that accused Ching misappropriated or
situation where a civil action and a criminal action are both pending and there exists in converted the goods and/or the proceeds of the sale; (c) that accused Ching performed
the former an issue which must be preemptively resolved before the criminal action may such acts with abuse of confidence to the damage and prejudice of Allied Banking
proceed, because howsoever the issue raised in the civil action is resolved would be Corporation; and (d) that demand was made by the bank to herein petitioner.
determinative juris et de jure of the guilt or innocence of the accused in the criminal
case.20 Presidential Decree 115, otherwise known as the "Trust Receipts Law", specifically Section
13 thereof, provides:
More simply, for the court to appreciate the pendency of a prejudicial question, the law,21
in no uncertain terms, requires the concurrence of two essential requisites, to wit: The failure of an entrustee to turn over the proceeds of the sale of the goods,
documents or instruments covered by a trust receipt to the extent of the amount
a) The civil action involves an issue similar or intimately related to the issue owing to the entruster or as appears in the trust receipt or to return said goods,
raised in the criminal action; and documents or instruments if they were not sold or disposed of in accordance
with the terms of the trust receipt shall constitute the crime of estafa,
b) The resolution of such issue determines whether or not the criminal action punishable under the provisions of Article Three hundred fifteen, paragraph one
may proceed. (b) of Act Numbered Three thousand eight hundred and fifteen, as amended,
otherwise known as the Revised Penal Code.
Verily, under the prevailing circumstances, the alleged prejudicial question in the civil case
for declaration of nullity of documents and for damages, does not juris et de jure We must stress though, that an act violative of a trust receipt agreement is only one
determine the guilt or innocence of the accused in the criminal action for estafa. mode of committing estafa under the abovementioned provision of the Revised Penal
Assuming arguendo that the court hearing the civil aspect of the case adjudicates that the Code. Stated differently, a violation of a trust receipt arrangement is not the sole basis for
transaction entered into between the parties was not a trust receipt agreement, incurring liability under Article 315 1 (b) of the Code.
nonetheless the guilt of the accused could still be established and his culpability under
penal laws determined by other evidence. To put it differently, even on the assumption In Jimenez vs. Averia,22 where the accused was likewise charged with estafa, this Court
that the documents are declared of null, it does not ipso facto follow that such had occasion to rule that a civil case contesting the validity of a certain receipt is not a
declaration of nullity shall exonerate the accused from criminal prosecution and liability. prejudicial question that would warrant the suspension of criminal proceedings for
estafa.1wphi1.nt
Accordingly, the prosecution may adduce evidence to prove the criminal liability of the
accused for estafa, specifically under Article 315 1(b) of the Revised Penal Code which In the abovementioned case, a criminal charge for estafa was filed in the Court of First
explicitly provides that said crime is committed: Instance of Cavite against the two accused. The information alleged that the accused,
having received the amount of P20,000.00 from Manuel Jimenez for the purchase of a
fishing boat, with the obligation on the part of the former to return the money in case the of Commissioners vs. Judge Joselito de la Rosa and Judge Capulong, G.R. Nos.
boat was not purchased, misappropriated the said amount to the damage and prejudice 95122-23).
of Jimenez.23
We have laid down the rule that the remand of the case or of an issue to the
Before arraignment, the accused filed a civil case contesting the validity of a certain lower court for further reception of evidence is not necessary where the Court is
receipt signed by them. In the receipt, the accused acknowledged having received the in position to resolve the dispute based on the records before it and particularly
aforesaid sum, in addition to the amount of P240.00 as agent's commission. The where the ends of justice would not be subserved by the remand thereof
complaint, however, alleged that the accused never received any amount from Jimenez (Escudero vs. Dulay, 158 SCRA 69). Moreover, the Supreme Court is clothed with
and that the signatures on the questioned receipt were secured by means of fraud, deceit ample authority to review matters, even those not raised on appeal if it finds
and intimidation. that their consideration is necessary in arriving at a just disposition of the case. 24

In ruling out the existence of prejudicial question, we declared: On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of remanding them to
. . . It will be readily seen that the alleged prejudicial question is not the trial court for further proceedings, such as where the ends of justice would not be
determinative of the guilt or innocence of the parties charged with estafa, subserved by the remand of the case.25
because even on the assumption that the execution of the receipt whose
annulment they sought in the civil case was vitiated by fraud, duress or Inexorably, the records would show that petitioner signed and executed an application
intimidation, their guilt could still be established by other evidence showing, to and agreement for a commercial letter of credit to finance the purchase of imported
the degree required by law, that they had actually received from the goods. Likewise, it is undisputed that petitioner signed and executed trust receipt
complainant the sum of P20,000,00 with which to buy for him a fishing boat, and documents in favor of private respondent Allied Banking Corporation.
that, instead of doing so, they misappropriated the money and refused or
otherwise failed to return it to him upon demand. . . . In its amended complaint, however, which notably was filed only after the Court of
Appeals rendered its assailed decision, petitioner urges that the transaction entered into
Furthermore, petitioner submits that the truth or falsity of the parties' respective claims between the parties was one of "pure loan without any trust receipt agreement".
as regards the true nature of the transactions and of the documents, shall have to be first According to petitioner, the trust receipt documents were intended merely as "additional
determined by the Regional Trial Court of Manila, which is the court hearing the civil case. or side documents covering the said loan" contrary to petitioner's allegation in his original
complaint that the trust receipts were executed as collateral or security.
While this may be true, it is no less true that the Supreme Court may, on certain
exceptional instances, resolve the merits of a case on the basis of the records and other We do not agree. As Mr. Justice Story succinctly puts it: "Naked statements must be
evidence before it, most especially when the resolution of these issues would best serve entitled to little weight when the parties hold better evidence behind the scenes. 26
the ends of justice and promote the speedy disposition of cases.
Hence, with affirmance, we quote the findings of the Court of Appeals:
Thus, considering the peculiar circumstances attendant in the instant case, this Court sees
the cogency to exercise its plenary power: The concept in which petitioner signed the trust receipts, that is whether he
signed the trust receipts as such trust receipts or as a mere evidence of a pure
It is a rule of procedure for the Supreme Court to strive to settle the entire and simple loan transaction is not decisive because precisely, a trust receipt is a
controversy in a single proceeding leaving no root or branch to bear the seeds of security agreement of an indebtedness.
future litigation. No useful purpose will be served if a case or the determination
of an issue in a case is remanded to the trial court only to have its decision raised Contrary to petitioner's assertions and in view of jurisprudence established in this
again to the Court of Appeals and from there to the Supreme Court (citing Board jurisdiction, a trust receipt is not merely an additional or side document to a principal
contract, which in the instant case is alleged by petitioner to be a pure and simple loan.
As elucidated in Samo vs. People,27 a trust receipt is considered a security transaction alleged that the trust receipts stood as additional or side documents, the real transaction
intended to aid in financing importers and retail dealers who do not have sufficient funds between the parties being that of a pure loan without any trust receipt agreement.
or resources to finance the importation or purchase of merchandise, and who may not be
able to acquire credit except through utilization, as collateral, of the merchandise In an order dated 19 November 1993, the RTC-Manila, Branch 53, admitted the amended
imported or purchased. complaint. Accordingly, with the lower court's admission of the amended complaint, the
judicial admission made in the original complaint was, in effect, superseded.
Further, a trust receipt is a document in which is expressed a security transaction
whereunder the lender, having no prior title in the goods on which the lien is to be given Under the Rules, pleadings superseded or amended disappear from the record, lose their
and not having possession which remains in the borrower, lends his money to the status as pleadings and cease to be judicial admissions. While they may nonetheless be
borrower on security of the goods which the borrower is privileged to sell clear of the lien utilized against the pleader as extrajudicial admissions, they must, in order to have such
with an agreement to pay all or part of the proceeds of the sale to the lender. 28 It is a effect, be formally offered in evidence. If not offered in evidence, the admission
security agreement pursuant to which a bank acquires a "security interest" in the goods. It contained therein will not be considered. 30
secures an indebtedness and there can be no such thing as security interest that secures
no obligation.29 Consequently, the original complaint, having been amended, lost its character as a judicial
admission, which would have required no proof, and became merely an extrajudicial
Clearly, a trust receipt partakes the nature of a security transaction. It could never be a admission, the admissibility of which, as evidence, required its formal offer.31
mere additional or side document as alleged by petitioner. Otherwise, a party to a trust
receipt agreement could easily renege on its obligations thereunder, thus undermining In virtue thereof, the amended complaint takes the place of the original. The latter is
the importance and defeating with impunity the purpose of such an indispensable tool in regarded as abandoned and ceases to perform any further function as a pleading. The
commercial transactions. original complaint no longer forms part of the record. 32

Of equal importance is the fact that in his complaint in Civil Case No. 92-60600, dated 05 Thus, in the instant case, the original complaint is deemed superseded by the amended
March 1992, petitioner alleged that the trust receipts were executed and intended as complaint. Corollarily, the judicial admissions in the original complaint are considered
collateral or security. Pursuant to the rules, such particular allegation in the complaint is abandoned. Nonetheless, we must stress that the actuations of petitioner, as sanctioned
tantamount to a judicial admission on the part of petitioner Ching to which he must be by the RTC-Manila, Branch 53 through its order admitting the amended complaint,
bound. demands stern rebuke from this Court.

Thus, the Court of Appeals in its resolution dated 28 June 1993, correctly observed: Certainly, this Court is not unwary of the tactics employed by the petitioner specifically in
filing the amended complaint only after the promulgation of the assailed decision of the
It was petitioner himself who acknowledged the trust receipts as mere collateral Court of Appeals. It bears noting that a lapse of almost eighteen months (from March
and security for the payment of the loan but kept on insisting that the real and 1992 to September 1993), from the filing of the original complaint to the filing of the
true transaction was one of pure loan. . . . amended complaint, is too lengthy a time sufficient to enkindle suspicion and enflame
doubts as to the true intentions of petitioner regarding the early disposition of the
In his present motion, the petitioner alleges that the trust receipts are evidence pending cases.
of a pure loan or that the same were additional or side documents that actually
stood as promissory notes and not a collateral or security agreement. He cannot Although the granting of leave to file amended pleadings is a matter peculiarly within the
assume a position inconsistent with his previous allegations in his civil complaint sound discretion of the trial court and such discretion would not normally be disturbed on
that the trust receipts were intended as mere collateral or security . . . . appeal, it is also well to mention that this rule is relaxed when evident abuse thereof is
apparent. 33
Perhaps, realizing such flaw, petitioner, in a complete turn around, filed a motion to admit
amended complaint before the RTC-Manila. Among others, the amended complaint
Hence, in certain instances we ruled that amendments are not proper and should be The Court takes judicial notice of customary banking and business practices
denied when delay would arise,34 or when the amendments would result in a change of where trust receipts are used for importation of heavy equipment, machineries
cause of action or defense or change the theory of the case, 35 or would be inconsistent and supplies used in manufacturing operations. We are perplexed by the
with the allegations in the original complaint.36 statements in the assailed DOJ resolution that the goods subject of the instant
case are outside the ambit of the provisions of PD 115 albeit covered by trust
Applying the foregoing rules, petitioner, by filing the amended complaint, in effect, receipt agreements (17 February 1988 resolution) and that not all transactions
altered the theory of his case. Likewise, the allegations embodied in the amended covered by trust receipts may be considered as trust receipt transactions defined
complaint are inconsistent with that of the original complaint inasmuch as in the latter, and penalized under P.D. 115 (11 January 1988 resolution). A construction should
petitioner alleged that the trust receipts were intended as mere collateral or security, the be avoided when it affords an opportunity to defeat compliance with the terms
principal transaction being one of pure loan. of a statute.

Yet, in the amended complaint, petitioner argued that the said trust receipts were xxx xxx xxx
executed as additional or side documents, the transaction being strictly one of pure loan
without any trust receipt arrangement. Obviously these allegations are in discord in The penal provision of P.D. 115 encompasses any act violative of an obligation
relation to each other and therefore cannot stand in harmony. covered by the trust receipt; it is not limited to transactions in goods which are
to be sold (retailed), reshipped, stored or processed as a component of a product
These circumstances, taken as a whole, lead this Court to doubt the genuine purpose of ultimately sold.
petitioner in filing the amended complaint.1wphi1 Again, we view petitioner's actuations
with abhorrence and displeasure. An examination of P.D. 115 shows the growing importance of trust receipts in Philippine
business, the need to provide for the rights and obligations of parties to a trust receipt
Moreover, petitioner contends that the transaction between Philippine Blooming Mills transaction, the study of the problems involved and the action by monetary authorities,
(PBM) and private respondent Allied Banking Corporation does not fall under the category and the necessity of regulating the enforcement of rights arising from default or violations
of a trust receipt arrangement claiming that the goods were not to be sold but were to be of trust receipt agreements. The legislative intent to meet a pressing need is clearly
used, consumed and destroyed by the importer PBM. expressed. 38

To our mind, petitioner's contention is a stealthy attempt to circumvent the principle In fine, we reiterate that the civil action for declaration of nullity of documents and for
enunciated in the case of Alied Banking Corporation vs. Ordonez, 37 thus: damages does not constitute a prejudicial question to the criminal cases for estafa filed
against petitioner Ching.
. . . In an attempt to escape criminal liability, private respondent claims P.D. 115
covers goods which are ultimately destined for sale and not goods for use in WHEREFORE, premises considered, the assailed decision and resolution of the Court of
manufacture. But the wording of Section 13 covers failure to turn over the Appeals are hereby AFFIRMED and the instant petition is DISMISSED for lack of merit.
proceeds of the sale of the entrusted goods, or to return said goods if unsold or Accordingly, the Regional Trial Court of Makati, Branch 58, is hereby directed to proceed
disposed of in accordance with the terms of the trust receipts. Private with the hearing and trial on the merits of Criminal Case Nos. 92-0934 to 92-0937,
respondent claims that at the time of PBM's application for the issuance of the inclusive, and to expedite proceedings therein, without prejudice to the right of the
LC's, it was not represented to the petitioner that the items were intended for accused to due process.1wphi1.nt
sale, hence, there was no deceit resulting in a violation of the trust receipts
which would constitute a criminal liability. Again we cannot uphold this SO ORDERED.
contention. The non-payment of the amount covered by a trust receipt is an act
violative of the entrustee's obligation to pay. There is no reason why the law
should not apply to all transactions covered by trust receipts, except those
expressly excluded (68 Am. Jur. 125).
 There is no dispute as to the amounts involved; that they represent the balances they
represent the balances due and unpaid on sugar crop loans applied from and granted by
the PNB to Dolores, Estrella, 1 Feliza, and Corazon, all surnamed Granada; that said loans
were personally received by the petitioners for which the corresponding promissory notes
were principally executed and signed by them, uniformly worded as follows:

On demand after date, for value received, I promise to pay to the order of the
Philippine National Bank at its office in Bacolod or Manila, the sum of (amount in
pesos stated), Philippine currency, with interest at the rate of 5% per annum
from date until paid.

In case of judicial execution of this obligation or any part of it, the debtor waives
his right under the provisions of Rule 39, Section 12 of the Rules of Court.

In case it is necessary to collect this note by or through an attorney-at-law, the

makers and indorsers shall pay, 10% of the amount due on the notes as
attorney's fee. Demand and dishonor waived. Holder may accept partial payment
reserving his right of recourse against each and all indorsers.

The only issue raised by petitioners emanated from an amended complaint filed by the
EN BANC attorney of the PNB branch in Bacolod, Occidental Negros, wherein it was alleged that

G.R. No. L-20745 September 2, 1966 defendants Dolores Granada and Estrella Granada, together with their sisters
Feliza Granada and Corazon Granada, who are now dead, as representative of
DOLORES GRANADA and ESTRELLA GRANADA, ET AL., petitioners, their parents, Cristeta Granada and Matias Granada, borrowed from and were
vs. granted by, the plaintiff ... sugar crop loan .. for the cultivation and production of
PHILIPPINE NATIONAL BANK, ET AL., respondents. sugar canes in hacienda Cristeta.

G. Occeno, Sr. for petitioner. that said ... loan ... was released to, and received by, defendants Dolores
Tomas Besa and J.C. Jimenez for respondents. Granada and Estrella Granada and their sisters Feliza Granada and Corazon
Granada, as representatives of their parents Cristeta Granada and Matias
Granada, as evidenced by promissory notes hereto attached as Exhibit A, B,C, ...
etc., and made integral parts hereof.
BARRERA, J.:
Solely on the strength of the phrase "as representatives of their parents, etc." inserted in
Petitioners herein seek to review the decision of the Court of Appeals reversing that of the amended complaint, the petitioners contended, and that trial court sustained the
the Court of First Instance of Negros Occidental, and sentencing petitioners to pay the contention, that they are not liable personally as they merely acted as agents of a
respondent Philippine National Bank the of P1,982.24 with interest thereon at 5% per disclosed principal.
annum from August 20, 1940 and 10% on the principal as attorneys' fees; and the sum of
P1,349.90 with interest at 5% per annum, from September 20, 1941, and 10% on the The Court of Appeals, however, reversed the decision of the court a quo after reviewing
principal as attorneys' fees, and costs. the facts and antecedents of the case.
It appears that in the original complaint filed by the plaintiff bank, it was alleged that the Cristeta Granada to pay the plaintiff the amounts claimed in the complaint, and granting
defendants Dolores, Estrella, Feliza, and Corazon, all surnamed Granada, secured sugar such other relief as the court may deem just and equitable.1awphl.nt
crop loans for the crop year 1940-41 and 1941-42 from the plaintiff and received the
money as evidenced by various promissory notes attached to said original complaint In their answer to the amended complaint, defendants Dolores and Estrella Granada
marked as Exhibits "A" to "F" and "G" to "P" that the balances of said crop loans in the reproduced and reiterated their allegations in their answer to the original complaint.
sum of P1,982.24 and P1,349.90 were not paid; hence, it was prayed that the defendants
be sentenced to pay the same, plus interest and costs.2 Cristeta Granada, in his answer under oath, significantly denied that she has given or
granted any authority to Dolores, Estrella, Feliza and Corazon, or to any of them, to
A motion to dismiss the complaint was filed by the defendants alleging prescription and borrow money or secure a loan in her behalf from the bank.
that the signers of the promissory notes have secured and received the amounts of the
loans as "mere representatives of the parents Matias and Cristeta Granada," who were Replying to the answer to the amended complaint of the defendants Dolores and Estrella
the owners of Hda. Cristeta, and that the money was used for maintenance and support Granada, the plaintiff again averred that as alleged in the original complaint, Dolores,
of the said spouses and their children Dolores, Estrella, Feliza and Corazon, who were Estrella, Feliza and Corazon were personally, jointly and severally liable to the plaintiff for
then still single and living with their parents. the payment of the amount of the loans, as that is what appears in the promissory notes
and the borrowers did not inform the bank when they applied for and secured the loan
In answer to the motion, plaintiff reiterated that the documents covering that loans were that they were acting as agents for and in behalf of their parents, and the filing of the
signed and executed by Dolores Granada, for herself and as attorney-in-fact of Estrella, amended complaint joining Cristeta Granada as a party defendant was in obedience to
Feliza and Corazon, by virtue of a duly notarized power of attorney, and that plaintiff has the order of the court issued upon motion of the original defendants, and "in order to be
no documents or evidence in its possession to hold the spouses Matias and Cristeta relieved of any liability it is incumbent upon defendants Dolores and Estrella to prove or
Granada liable for the payment of the accounts. The motion to dismiss was denied. help the plaintiff prove that they acted as representatives of their parents."

Thereafter, the defendants filed their answer, again alleging that the promissory notes Thereafter, trial was held and plaintiff presented the promissory notes whose
were signed by them as mere representatives and administrators of their parents and that genuineness and due execution were unquestioned; proof of the receipt of the loans by
the plaintiff has been informed by Cristeta Granada and her attorney-in-fact, Jose defendants and the amounts still unpaid thereon in spite of demands. All this evidence
Granada that the so-called accounts of "Granada Hermanas" were the accounts of the was admitted without objection on the part of the defendants.
spouses Matias and Cristeta and could be charged against their properties known as Hda.
Cristeta. Upon these facts, the Court of Appeals, as already stated, reversed the decision of the
court a quo and rendered judgment in favor of the plaintiff, reasoning thus:
Subsequently, the defendants filed another motion calling attention to their defense
alleged in their answer and praying that in view thereof "the plaintiff be given leave of As a general rule, facts alleged in a party's pleading are deemed admissions of
court to amend the complaint and include as principal party defendants Cristeta Granada, that party and binding upon it. However, that is not an absolute and inflexible
and the defendants be allowed to file their answer, if they so desire." The motion was rule. Every admission is to be taken as an entirety of the fact which makes for the
granted in an order of the following tenor, "... por el presente si les concede a ambas one side with the qualifications which limit, modify or destroy its effect on the
partes autorizacion para presentar los escritos enmendados que deseen presentar dentro other side. The reason for this is that, where part of a statement of a party is
del plazo reglamentario." used against him as an admission, the court should consider and weigh any other
portions connected with the statement which tend to neutralize or explain the
Accordingly, the plaintiff filed an amended complaint, this time impleading Cristeta portion which is against interest. In other words, while the admission is
Granada, together with the original defendants, and it was in this amended complaint admissible in evidence, its probative value is to be determined from the whole
that for the first time, the phrase "as representatives of their parents" was inserted. There statement and others intimately related or connected therewith as an integrated
was no other amendment in the complaint, and in the prayer, the plaintiff insisted that unit for, as said by the Supreme Court, although acts or facts admitted do not
judgment be rendered ordering defendants Dolores Granada, Estrella Granada and require proof and cannot be contradicted, however, evidence aliunde can be
presented to show that the admission was made through palpable mistake. the said complaint from a liberal standpoint as ordained by the Rules and
(Irlanda vs. Pitargue, 22 Phil. 383.) considering that in the prayer judgment is asked against all the defendants,
Dolores Granada, Estrella Granada and Cristeta Granada, it is within the
From the pleadings filed by the parties it clearly appears that the cause of action jurisdiction of the court to render such judgment as the facts warrant against all
stated in the original complaint was against Dolores, Estrella, Felisa and Corazon, or some of the defendants for the payment of the amount claimed by the
surnamed Granada, for the payment of the loans which they obtained from the plaintiff.
bank in their individual and personal capacity, as evidenced by the promissory
notes in question.1awphl.nt Taking into account the circumstances of this case, we find no error committed by the
Court of Appeals, both in the assessment of the facts and the application of the law on the
The foregoing facts called from the pleadings of the parties have persuaded us to matter in dispute. It is evident that the plaintiff bank, in amending the complaint
believe, and we so hold, that in filing the amended complaint containing the conformably with the order of the trial court, never intended to change the cause of
allegation which has become the bone of contention on this appeal, the plaintiff action which was embodied in the original complaint.
had acted through a mistaken belief that the adverted allegation in the amended
complaint did not constitute an amendment of its cause of action, and this WHEREFORE, this petition is hereby dismissed, with costs against the petitioners. So
matter was made known to the court and the defendants when in its reply to the ordered.
motion to dismiss it stated that it has no document or evidence in its possession
to hold the spouses Matias and Cristeta Granada liable to the payment of the
account; and it honestly relied on the belief that the defendants, Dolores and
Estrella, surnamed Granada, had the necessary evidence to establish the fact. At
any rate, guided by the provisions of the rules of court that "These rules shall be
liberally construed in order to promote their object and to assist the parties in
obtaining just, speedy, and inexpensive determination of every action and
proceeding"; the amended complaint may be treated as stating two or more
statements of a claim in a single cause of action, which is permitted under
Section 9, Rule 15, or it may be considered as including several defendants in the
alternative against any of which plaintiff may be entitled to relief, a course of
action sanctioned by Section 13, Rule 3. There are cases where the facts essential
to the party's claim or defense are within the knowledge of the adverse party, as
to be unable to state them with certainty. He may, however, know that one out
of two or more sets of facts is true, without knowing which. In such a case,
plaintiff is allowed to make alternative statements of his claim under Section 9,
Rule 15. (Everett vs. Asia Banking Corporation, 59 Phil. 512, 526, cited in 1 Moran
235, 1957 ed.) On the other hand, Section 13 of Rule 3 "gives the plaintiff the
right to include alternatively several possible defendants when he is uncertain
against which of them he is entitled to relief, as ... where a defendant may have
been acting either as an agent or a principal." ... And the above provision is
applicable, although the right to relief alleged to exist against one of the
defendants may be inconsistent with the right to relief against the other, as
where A is sued as principal and B is joined in the alternative, if A should be
found to have been B's agents. (1 Moran 71, 1957 ed.) The amended complaint
in the instant case may not be a model pleading for an alternative statements of
the claim or against two or more defendants in the alternative; however, judging