G.R. No.

149177 November 23, 2007

KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO.,

LTD., Petitioners,
vs.
MINORU KITAMURA, Respondent.

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the April 18, 2001 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July
25, 2001 Resolution2 denying the motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese
consultancy firm providing technical and management support in the infrastructure projects of
foreign governments,3 entered into an Independent Contractor Agreement (ICA) with respondent
Minoru Kitamura, a Japanese national permanently residing in the Philippines.4 The agreement
provides that respondent was to extend professional services to Nippon for a year starting on April
1, 1999.5 Nippon then assigned respondent to work as the project manager of the Southern Tagalog
Access Road (STAR) Project in the Philippines, following the company's consultancy contract
with the Philippine Government.6

When the STAR Project was near completion, the Department of Public Works and Highways
(DPWH) engaged the consultancy services of Nippon, on January 28, 2000, this time for the
detailed engineering and construction supervision of the Bongabon-Baler Road Improvement
(BBRI) Project.7 Respondent was named as the project manager in the contract's Appendix 3.1.8

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its
International Division, informed respondent that the company had no more intention of
automatically renewing his ICA. His services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's expiry.9

Threatened with impending unemployment, respondent, through his lawyer, requested a

negotiation conference and demanded that he be assigned to the BBRI project. Nippon insisted
that respondent’s contract was for a fixed term that had already expired, and refused to negotiate
for the renewal of the ICA.10

As he was not able to generate a positive response from the petitioners, respondent consequently
initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and damages with the
Regional Trial Court of Lipa City.11

For their part, petitioners, contending that the ICA had been perfected in Japan and executed by
and between Japanese nationals, moved to dismiss the complaint for lack of jurisdiction. They
asserted that the claim for improper pre-termination of respondent's ICA could only be heard and
ventilated in the proper courts of Japan following the principles of lex loci celebrationis and lex
contractus.12
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of
Kitamura by a certain Y. Kotake as project manager of the BBRI Project.13

On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank14 that matters
connected with the performance of contracts are regulated by the law prevailing at the place of
performance,15 denied the motion to dismiss.16 The trial court subsequently denied petitioners'
motion for reconsideration,17 prompting them to file with the appellate court, on August 14, 2000,
their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No. 60205].18 On August
23, 2000, the CA resolved to dismiss the petition on procedural grounds—for lack of statement of
material dates and for insufficient verification and certification against forum shopping.19 An Entry
of Judgment was later issued by the appellate court on September 20, 2000.20

Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within
the reglementary period, a second Petition for Certiorari under Rule 65 already stating therein the
material dates and attaching thereto the proper verification and certification. This second petition,
which substantially raised the same issues as those in the first, was docketed as CA-G.R. SP
No. 60827.21

Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001
Decision22finding no grave abuse of discretion in the trial court's denial of the motion to dismiss.
The CA ruled, among others, that the principle of lex loci celebrationis was not applicable to the
case, because nowhere in the pleadings was the validity of the written agreement put in issue. The
CA thus declared that the trial court was correct in applying instead the principle of lex loci
solutionis.23

Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25,
2001 Resolution.24

Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant
Petition for Review on Certiorari25 imputing the following errors to the appellate court:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT

THE TRIAL COURT VALIDLY EXERCISED JURISDICTION OVER THE INSTANT
CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT MATTER
OF THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO
JAPANESE NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE
AND EXECUTED IN TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE PRINCIPLE
OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT DEVELOPMENT[S] IN
PRIVATE INTERNATIONAL LAWS.26

The pivotal question that this Court is called upon to resolve is whether the subject matter
jurisdiction of Philippine courts in civil cases for specific performance and damages involving
contracts executed outside the country by foreign nationals may be assailed on the principles of lex
loci celebrationis, lex contractus, the "state of the most significant relationship rule," or forum non
conveniens.

However, before ruling on this issue, we must first dispose of the procedural matters raised by the
respondent.

Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has
already barred the filing of the second petition docketed as CA-G.R. SP No. 60827 (fundamentally
raising the same issues as those in the first one) and the instant petition for review thereof.

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's
defective certification of non-forum shopping, it was a dismissal without prejudice.27 The same
holds true in the CA's dismissal of the said case due to defects in the formal requirement of
verification28 and in the other requirement in Rule 46 of the Rules of Court on the statement of the
material dates.29 The dismissal being without prejudice, petitioners can re-file the petition, or file
a second petition attaching thereto the appropriate verification and certification—as they, in fact
did—and stating therein the material dates, within the prescribed period30 in Section 4, Rule 65 of
the said Rules.31

The dismissal of a case without prejudice signifies the absence of a decision on the merits and
leaves the parties free to litigate the matter in a subsequent action as though the dismissed action
had not been commenced. In other words, the termination of a case not on the merits does not bar
another action involving the same parties, on the same subject matter and theory.32

Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and
even if petitioners still indicated in the verification and certification of the
second certiorari petition that the first had already been dismissed on procedural
grounds,33 petitioners are no longer required by the Rules to indicate in their certification of non-
forum shopping in the instant petition for review of the second certiorari petition, the status of the
aforesaid first petition before the CA. In any case, an omission in the certificate of non-forum
shopping about any event that will not constitute res judicata and litis pendentia, as in the present
case, is not a fatal defect. It will not warrant the dismissal and nullification of the entire proceedings,
considering that the evils sought to be prevented by the said certificate are no longer present.34

The Court also finds no merit in respondent's contention that petitioner Hasegawa is only
authorized to verify and certify, on behalf of Nippon, the certiorari petition filed with the CA and
not the instant petition. True, the Authorization35 dated September 4, 2000, which is attached to
the second certiorari petition and which is also attached to the instant petition for review, is limited
in scope—its wordings indicate that Hasegawa is given the authority to sign for and act on behalf
of the company only in the petition filed with the appellate court, and that authority cannot extend
to the instant petition for review.36 In a plethora of cases, however, this Court has liberally applied
the Rules or even suspended its application whenever a satisfactory explanation and a subsequent
fulfillment of the requirements have been made.37 Given that petitioners herein sufficiently
explained their misgivings on this point and appended to their Reply38 an updated
Authorization39 for Hasegawa to act on behalf of the company in the instant petition, the Court
finds the same as sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the verification and
certification. As respondent pointed out, and to which we agree, Hasegawa is truly not authorized
to act on behalf of Nippon in this case. The aforesaid September 4, 2000 Authorization and even
the subsequent August 17, 2001 Authorization were issued only by Nippon's president and chief
executive officer, not by the company's board of directors. In not a few cases, we have ruled that
corporate powers are exercised by the board of directors; thus, no person, not even its officers, can
bind the corporation, in the absence of authority from the board.40 Considering that Hasegawa
verified and certified the petition only on his behalf and not on behalf of the other petitioner, the
petition has to be denied pursuant to Loquias v. Office of the Ombudsman.41 Substantial
compliance will not suffice in a matter that demands strict observance of the Rules.42 While
technical rules of procedure are designed not to frustrate the ends of justice, nonetheless, they are
intended to effect the proper and orderly disposition of cases and effectively prevent the clogging
of court dockets.43

Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question the
trial court's denial of their motion to dismiss. It is a well-established rule that an order denying a
motion to dismiss is interlocutory, and cannot be the subject of the extraordinary petition
for certiorari or mandamus. The appropriate recourse is to file an answer and to interpose as
defenses the objections raised in the motion, to proceed to trial, and, in case of an adverse decision,
to elevate the entire case by appeal in due course.44 While there are recognized exceptions to this
rule,45 petitioners' case does not fall among them.

This brings us to the discussion of the substantive issue of the case.

Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction
to hear and resolve the civil case for specific performance and damages filed by the respondent.
The ICA subject of the litigation was entered into and perfected in Tokyo, Japan, by Japanese
nationals, and written wholly in the Japanese language. Thus, petitioners posit that local courts
have no substantial relationship to the parties46 following the [state of the] most significant
relationship rule in Private International Law.47

The Court notes that petitioners adopted an additional but different theory when they elevated the
case to the appellate court. In the Motion to Dismiss48 filed with the trial court, petitioners never
contended that the RTC is an inconvenient forum. They merely argued that the applicable law
which will determine the validity or invalidity of respondent's claim is that of Japan, following the
principles of lex loci celebrationis and lex contractus.49 While not abandoning this stance in their
petition before the appellate court, petitioners on certiorari significantly invoked the defense
of forum non conveniens.50 On petition for review before this Court, petitioners dropped their other
arguments, maintained the forum non conveniens defense, and introduced their new argument that
the applicable principle is the [state of the] most significant relationship rule.51

Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change
in theory, as explained in Philippine Ports Authority v. City of Iloilo.52 We only pointed out
petitioners' inconstancy in their arguments to emphasize their incorrect assertion of conflict of laws
principles.
To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved:
jurisdiction, choice of law, and recognition and enforcement of judgments. Corresponding to these
phases are the following questions: (1) Where can or should litigation be initiated? (2) Which law
will the court apply? and (3) Where can the resulting judgment be enforced?53

Analytically, jurisdiction and choice of law are two distinct concepts.54 Jurisdiction considers
whether it is fair to cause a defendant to travel to this state; choice of law asks the further question
whether the application of a substantive law which will determine the merits of the case is fair to
both parties. The power to exercise jurisdiction does not automatically give a state constitutional
authority to apply forum law. While jurisdiction and the choice of the lex fori will often coincide,
the "minimum contacts" for one do not always provide the necessary "significant contacts" for the
other.55 The question of whether the law of a state can be applied to a transaction is different from
the question of whether the courts of that state have jurisdiction to enter a judgment.56

In this case, only the first phase is at issue—jurisdiction.1âwphi1 Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a controversy, it must have
jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent, over the
subject matter, over the issues of the case and, in cases involving property, over the res or the thing
which is the subject of the litigation.57 In assailing the trial court's jurisdiction herein, petitioners
are actually referring to subject matter jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority
which establishes and organizes the court. It is given only by law and in the manner prescribed by
law.58 It is further determined by the allegations of the complaint irrespective of whether the
plaintiff is entitled to all or some of the claims asserted therein.59 To succeed in its motion for the
dismissal of an action for lack of jurisdiction over the subject matter of the claim, 60 the movant
must show that the court or tribunal cannot act on the matter submitted to it because no law grants
it the power to adjudicate the claims.61

In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not
properly vested by law with jurisdiction to hear the subject controversy for, indeed, Civil Case No.
00-0264 for specific performance and damages is one not capable of pecuniary estimation and is
properly cognizable by the RTC of Lipa City.62 What they rather raise as grounds to question
subject matter jurisdiction are the principles of lex loci celebrationis and lex contractus, and the
"state of the most significant relationship rule."

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the "law of the place of the ceremony"63 or the law of the place
where a contract is made.64 The doctrine of lex contractus or lex loci contractus means the "law of
the place where a contract is executed or to be performed."65 It controls the nature, construction,
and validity of the contract66 and it may pertain to the law voluntarily agreed upon by the parties
or the law intended by them either expressly or implicitly.67 Under the "state of the most significant
relationship rule," to ascertain what state law to apply to a dispute, the court should determine
which state has the most substantial connection to the occurrence and the parties. In a case
involving a contract, the court should consider where the contract was made, was negotiated, was
to be performed, and the domicile, place of business, or place of incorporation of the parties.68 This
rule takes into account several contacts and evaluates them according to their relative importance
with respect to the particular issue to be resolved.69

Since these three principles in conflict of laws make reference to the law applicable to a dispute,
they are rules proper for the second phase, the choice of law.70 They determine which state's law
is to be applied in resolving the substantive issues of a conflicts problem.71 Necessarily, as the only
issue in this case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not
yet called for.

Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they
have not yet pointed out any conflict between the laws of Japan and ours. Before determining
which law should apply, first there should exist a conflict of laws situation requiring the application
of the conflict of laws rules.72 Also, when the law of a foreign country is invoked to provide the
proper rules for the solution of a case, the existence of such law must be pleaded and proved.73

It should be noted that when a conflicts case, one involving a foreign element, is brought before a
court or administrative agency, there are three alternatives open to the latter in disposing of it: (1)
dismiss the case, either because of lack of jurisdiction or refusal to assume jurisdiction over the
case; (2) assume jurisdiction over the case and apply the internal law of the forum; or (3) assume
jurisdiction over the case and take into account or apply the law of some other State or States.74 The
court’s power to hear cases and controversies is derived from the Constitution and the laws. While
it may choose to recognize laws of foreign nations, the court is not limited by foreign sovereign
law short of treaties or other formal agreements, even in matters regarding rights provided by
foreign sovereigns.75

Neither can the other ground raised, forum non conveniens,76 be used to deprive the trial court of
its jurisdiction herein. First, it is not a proper basis for a motion to dismiss because Section 1, Rule
16 of the Rules of Court does not include it as a ground.77 Second, whether a suit should be
entertained or dismissed on the basis of the said doctrine depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court.78 In this case, the RTC
decided to assume jurisdiction. Third, the propriety of dismissing a case based on this principle
requires a factual determination; hence, this conflicts principle is more properly considered a
matter of defense.79

Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case
filed by respondent and the grounds raised by petitioners to assail that jurisdiction are inappropriate,
the trial and appellate courts correctly denied the petitioners’ motion to dismiss.

WHEREFORE, premises considered, the petition for review on certiorari is DENIED.

SO ORDERED.
G.R. No. 162894 February 26, 2008

RAYTHEON INTERNATIONAL, INC., petitioner,

vs.
STOCKTON W. ROUZIE, JR., respondent.

TINGA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure which seeks the reversal of the Decision1 and Resolution2 of the Court of Appeals in
CA-G.R. SP No. 67001 and the dismissal of the civil case filed by respondent against petitioner
with the trial court.

As culled from the records of the case, the following antecedents appear:

Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing
under the laws of the State of Connecticut, United States of America, and respondent Stockton W.
Rouzie, Jr., an American citizen, entered into a contract whereby BMSI hired respondent as its
representative to negotiate the sale of services in several government projects in the Philippines
for an agreed remuneration of 10% of the gross receipts. On 11 March 1992, respondent secured
a service contract with the Republic of the Philippines on behalf of BMSI for the dredging of rivers
affected by the Mt. Pinatubo eruption and mudflows.3

On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert
and Walter G. Browning for alleged nonpayment of commissions, illegal termination and breach
of employment contract.4 On 28 September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered
judgment ordering BMSI and RUST to pay respondent’s money claims.5 Upon appeal by BMSI,
the NLRC reversed the decision of the Labor Arbiter and dismissed respondent’s complaint on the
ground of lack of jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a
Resolution dated 26 November 1997. The Resolution became final and executory on 09 November
1998.

On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages
before the Regional Trial Court (RTC) of Bauang, La Union. The Complaint,7 docketed as Civil
Case No. 1192-BG, named as defendants herein petitioner Raytheon International, Inc. as well as
BMSI and RUST, the two corporations impleaded in the earlier labor case. The complaint
essentially reiterated the allegations in the labor case that BMSI verbally employed respondent to
negotiate the sale of services in government projects and that respondent was not paid the
commissions due him from the Pinatubo dredging project which he secured on behalf of BMSI.
The complaint also averred that BMSI and RUST as well as petitioner itself had combined and
functioned as one company.

In its Answer,8 petitioner alleged that contrary to respondent’s claim, it was a foreign corporation
duly licensed to do business in the Philippines and denied entering into any arrangement with
respondent or paying the latter any sum of money. Petitioner also denied combining with BMSI
and RUST for the purpose of assuming the alleged obligation of the said companies.9 Petitioner
also referred to the NLRC decision which disclosed that per the written agreement between
respondent and BMSI and RUST, denominated as "Special Sales Representative Agreement," the
rights and obligations of the parties shall be governed by the laws of the State of
Connecticut.10 Petitioner sought the dismissal of the complaint on grounds of failure to state a
cause of action and forum non conveniens and prayed for damages by way of compulsory
counterclaim.11

On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on
Affirmative Defenses and for Summary Judgment12 seeking the dismissal of the complaint on
grounds of forum non conveniens and failure to state a cause of action. Respondent opposed the
same. Pending the resolution of the omnibus motion, the deposition of Walter Browning was taken
before the Philippine Consulate General in Chicago.13

In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus motion. The trial
court held that the factual allegations in the complaint, assuming the same to be admitted, were
sufficient for the trial court to render a valid judgment thereon. It also ruled that the principle
of forum non conveniens was inapplicable because the trial court could enforce judgment on
petitioner, it being a foreign corporation licensed to do business in the Philippines.15

Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioner’s motion. Thus, it
filed a Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ of certiorari
and a writ of injunction to set aside the twin orders of the trial court dated 13 September 2000 and
31 July 2001 and to enjoin the trial court from conducting further proceedings.20

On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying the petition for
certiorari for lack of merit. It also denied petitioner’s motion for reconsideration in the assailed
Resolution issued on 10 March 2004.22

The appellate court held that although the trial court should not have confined itself to the
allegations in the complaint and should have also considered evidence aliunde in resolving
petitioner’s omnibus motion, it found the evidence presented by petitioner, that is, the deposition
of Walter Browning, insufficient for purposes of determining whether the complaint failed to state
a cause of action. The appellate court also stated that it could not rule one way or the other on the
issue of whether the corporations, including petitioner, named as defendants in the case had indeed
merged together based solely on the evidence presented by respondent. Thus, it held that the issue
should be threshed out during trial.23 Moreover, the appellate court deferred to the discretion of
the trial court when the latter decided not to desist from assuming jurisdiction on the ground of the
inapplicability of the principle of forum non conveniens.

Hence, this petition raising the following issues:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS

THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST
RAYTHEON INTERNATIONAL, INC.
 WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS
THE COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS.24

Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino Padua
Law Office, counsel on record for respondent, manifested that the lawyer handling the case, Atty.
Rogelio Karagdag, had severed relations with the law firm even before the filing of the instant
petition and that it could no longer find the whereabouts of Atty. Karagdag or of respondent despite
diligent efforts. In a Resolution25 dated 20 November 2006, the Court resolved to dispense with
the filing of a comment.

The instant petition lacks merit.

Petitioner mainly asserts that the written contract between respondent and BMSI included a valid
choice of law clause, that is, that the contract shall be governed by the laws of the State of
Connecticut. It also mentions the presence of foreign elements in the dispute – namely, the parties
and witnesses involved are American corporations and citizens and the evidence to be presented
is located outside the Philippines – that renders our local courts inconvenient forums. Petitioner
theorizes that the foreign elements of the dispute necessitate the immediate application of the
doctrine of forum non conveniens.

Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases involved in
judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice of law, and
recognition and enforcement of judgments. Thus, in the instances27 where the Court held that the
local judicial machinery was adequate to resolve controversies with a foreign element, the
following requisites had to be proved: (1) that the Philippine Court is one to which the parties may
conveniently resort; (2) that the Philippine Court is in a position to make an intelligent decision as
to the law and the facts; and (3) that the Philippine Court has or is likely to have the power to
enforce its decision.28

On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a Philippine
court and where the court has jurisdiction over the subject matter, the parties and the res, it may
or can proceed to try the case even if the rules of conflict-of-laws or the convenience of the parties
point to a foreign forum. This is an exercise of sovereign prerogative of the country where the case
is filed.29

Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and
the law30 and by the material allegations in the complaint, irrespective of whether or not the
plaintiff is entitled to recover all or some of the claims or reliefs sought therein. 31 Civil Case No.
1192-BG is an action for damages arising from an alleged breach of contract. Undoubtedly, the
nature of the action and the amount of damages prayed are within the jurisdiction of the RTC.

As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent
(as party plaintiff) upon the filing of the complaint. On the other hand, jurisdiction over the person
of petitioner (as party defendant) was acquired by its voluntary appearance in court.32
That the subject contract included a stipulation that the same shall be governed by the laws of the
State of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for
that matter, are precluded from hearing the civil action. Jurisdiction and choice of law are two
distinct concepts. Jurisdiction considers whether it is fair to cause a defendant to travel to this state;
choice of law asks the further question whether the application of a substantive law which will
determine the merits of the case is fair to both parties.33 The choice of law stipulation will become
relevant only when the substantive issues of the instant case develop, that is, after hearing on the
merits proceeds before the trial court.

Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse
impositions on its jurisdiction where it is not the most "convenient" or available forum and the
parties are not precluded from seeking remedies elsewhere.34 Petitioner’s averments of the foreign
elements in the instant case are not sufficient to oust the trial court of its jurisdiction over Civil
Case No. No. 1192-BG and the parties involved.

Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a matter of
defense. While it is within the discretion of the trial court to abstain from assuming jurisdiction on
this ground, it should do so only after vital facts are established, to determine whether special
circumstances require the court’s desistance.35

Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign elements. In
the same manner, the Court defers to the sound discretion of the lower courts because their findings
are binding on this Court.

Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of
action against petitioner. Failure to state a cause of action refers to the insufficiency of allegation
in the pleading.36 As a general rule, the elementary test for failure to state a cause of action is
whether the complaint alleges facts which if true would justify the relief demanded.37

The complaint alleged that petitioner had combined with BMSI and RUST to function as one
company. Petitioner contends that the deposition of Walter Browning rebutted this allegation. On
this score, the resolution of the Court of Appeals is instructive, thus:

x x x Our examination of the deposition of Mr. Walter Browning as well as other

documents produced in the hearing shows that these evidence aliunde are not quite
sufficient for us to mete a ruling that the complaint fails to state a cause of action.

Annexes "A" to "E" by themselves are not substantial, convincing and conclusive proofs
that Raytheon Engineers and Constructors, Inc. (REC) assumed the warranty obligations
of defendant Rust International in the Makar Port Project in General Santos City, after Rust
International ceased to exist after being absorbed by REC. Other documents already
submitted in evidence are likewise meager to preponderantly conclude that Raytheon
International, Inc., Rust International[,] Inc. and Brand Marine Service, Inc. have combined
into one company, so much so that Raytheon International, Inc., the surviving company (if
 at all) may be held liable for the obligation of BMSI to respondent Rouzie for unpaid
commissions. Neither these documents clearly speak otherwise.38

As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and
RUST merged together requires the presentation of further evidence, which only a full-blown trial
on the merits can afford.

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs
against petitioner.

SO ORDERED.
G.R. No. 122191 October 8, 1998

SAUDI ARABIAN AIRLINES, petitioner,

vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in
his capacity as Presiding Judge of Branch 89, Regional Trial Court of Quezon
City, respondents.

QUISUMBING, J.:

This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside
the Resolution1dated September 27, 1995 and the Decision2 dated April 10, 1996 of the Court of
Appeals3 in CA-G.R. SP No. 36533,4 and the Orders5 dated August 29, 1994 6 and February 2,
19957 that were issued by the trial court in Civil Case No. Q-93-18394.8

The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned
Decision9, are as follows:

On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for
its airlines based in Jeddah, Saudi Arabia. . .

On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a

disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi,
both Saudi nationals. Because it was almost morning when they returned to their
hotels, they agreed to have breakfast together at the room of Thamer. When they
were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer
attempted to rape plaintiff. Fortunately, a roomboy and several security personnel
heard her cries for help and rescued her. Later, the Indonesian police came and
arrested Thamer and Allah Al-Gazzawi, the latter as an accomplice.

When plaintiff returned to Jeddah a few days later, several SAUDIA officials
interrogated her about the Jakarta incident. They then requested her to go back to
Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA Legal
Officer Sirah Akkad and base manager Baharini negotiated with the police for the
immediate release of the detained crew members but did not succeed because
plaintiff refused to cooperate. She was afraid that she might be tricked into
something she did not want because of her inability to understand the local dialect.
She also declined to sign a blank paper and a document written in the local dialect.
Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred her from the
Jakarta flights.

Plaintiff learned that, through the intercession of the Saudi Arabian government,
the Indonesian authorities agreed to deport Thamer and Allah after two weeks of
detention. Eventually, they were again put in service by defendant SAUDI (sic). In
September 1990, defendant SAUDIA transferred plaintiff to Manila.
 On January 14, 1992, just when plaintiff thought that the Jakarta incident was
already behind her, her superiors requested her to see Mr. Ali Meniewy, Chief
Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he brought
her to the police station where the police took her passport and questioned her about
the Jakarta incident. Miniewy simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and Allah. Not until she agreed
to do so did the police return her passport and allowed her to catch the afternoon
flight out of Jeddah.

One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed to
board the plane and instead ordered to take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of
the SAUDIA office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary to close the case
against Thamer and Allah. As it turned out, plaintiff signed a notice to her to appear
before the court on June 27, 1993. Plaintiff then returned to Manila.

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah

once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff
did so after receiving assurance from SAUDIA's Manila manager, Aslam Saleemi,
that the investigation was routinary and that it posed no danger to her.

In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on
June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane was
about to take off, a SAUDIA officer told her that the airline had forbidden her to
take flight. At the Inflight Service Office where she was told to go, the secretary of
Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at the
crew quarters, until further orders.

On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court
where the judge, to her astonishment and shock, rendered a decision, translated to
her in English, sentencing her to five months imprisonment and to 286 lashes. Only
then did she realize that the Saudi court had tried her, together with Thamer and
Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery;
(2) going to a disco, dancing and listening to the music in violation of Islamic laws;
and (3) socializing with the male crew, in contravention of Islamic tradition. 10

Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA.
Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah
to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the
domestic flight of SAUDIA, while Thamer and Allah continued to serve in the international
flights. 11
Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and
allowed her to leave Saudi Arabia. Shortly before her return to Manila, 12 she was terminated from
the service by SAUDIA, without her being informed of the cause.

On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and Khaled
Al-Balawi ("Al-Balawi"), its country manager.

On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised the following
grounds, to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant
Al-Balawi is not a real party in interest; (3) that the claim or demand set forth in the Complaint
has been waived, abandoned or otherwise extinguished; and (4) that the trial court has no
jurisdiction to try the case.

On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15. Saudia filed a
reply 16 thereto on March 3, 1994.

On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was dropped as
party defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss
Amended Complaint 18.

The trial court issued an Order 19 dated August 29, 1994 denying the Motion to Dismiss Amended
Complaint filed by Saudia.

From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA filed on
September 20, 1994, its Motion for Reconsideration 21 of the Order dated August 29, 1994. It
alleged that the trial court has no jurisdiction to hear and try the case on the basis of Article 21 of
the Civil Code, since the proper law applicable is the law of the Kingdom of Saudi Arabia. On
October 14, 1994, Morada filed her Opposition 22(To Defendant's Motion for Reconsideration).

In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion
for Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule
does not apply, even if that ground is raised for the first time on appeal. Additionally, SAUDIA
alleged that the Philippines does not have any substantial interest in the prosecution of the instant
case, and hence, without jurisdiction to adjudicate the same.

Respondent Judge subsequently issued another Order 24 dated February 2, 1995, denying
SAUDIA's Motion for Reconsideration. The pertinent portion of the assailed Order reads as
follows:

Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed,
thru counsel, on September 20, 1994, and the Opposition thereto of the plaintiff
filed, thru counsel, on October 14, 1994, as well as the Reply therewith of defendant
Saudi Arabian Airlines filed, thru counsel, on October 24, 1994, considering that a
perusal of the plaintiffs Amended Complaint, which is one for the recovery of
actual, moral and exemplary damages plus attorney's fees, upon the basis of the
applicable Philippine law, Article 21 of the New Civil Code of the Philippines, is,
 clearly, within the jurisdiction of this Court as regards the subject matter, and there
being nothing new of substance which might cause the reversal or modification of
the order sought to be reconsidered, the motion for reconsideration of the defendant,
is DENIED.

SO ORDERED. 25

Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition
with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary Restraining
Order 26 with the Court of Appeals.

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining

Order 27 dated February 23, 1995, prohibiting the respondent Judge from further conducting any
proceeding, unless otherwise directed, in the interim.

In another Resolution 28 promulgated on September 27, 1995, now assailed, the appellate court
denied SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction dated February 18,
1995, to wit:

The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED,
after considering the Answer, with Prayer to Deny Writ of Preliminary Injunction
(Rollo, p. 135) the Reply and Rejoinder, it appearing that herein petitioner is not
clearly entitled thereto (Unciano Paramedical College, et. Al., v. Court of Appeals,
et. Al., 100335, April 7, 1993, Second Division).

SO ORDERED.

On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition 29 for Review
with Prayer for Temporary Restraining Order dated October 13, 1995.

However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision 30dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate
forum considering that the Amended Complaint's basis for recovery of damages is Article 21 of
the Civil Code, and thus, clearly within the jurisdiction of respondent Court. It further held
that certiorari is not the proper remedy in a denial of a Motion to Dismiss, inasmuch as the
petitioner should have proceeded to trial, and in case of an adverse ruling, find recourse in an
appeal.

On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary
Restraining Order 31 dated April 30, 1996, given due course by this Court. After both parties
submitted their Memoranda, 32 the instant case is now deemed submitted for decision.

Petitioner SAUDIA raised the following issues:

I
 The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based
on Article 21 of the New Civil Code since the proper law applicable is the law of
the Kingdom of Saudi Arabia inasmuch as this case involves what is known in
private international law as a "conflicts problem". Otherwise, the Republic of the
Philippines will sit in judgment of the acts done by another sovereign state which
is abhorred.

II

Leave of court before filing a supplemental pleading is not a jurisdictional

requirement. Besides, the matter as to absence of leave of court is now moot and
academic when this Honorable Court required the respondents to comment on
petitioner's April 30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order Within Ten (10) Days From Notice Thereof. Further,
the Revised Rules of Court should be construed with liberality pursuant to Section
2, Rule 1 thereof.

III

Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP
NO. 36533 entitled "Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al." and
filed its April 30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15-day
reglementary period as provided for under Section 1, Rule 45 of the Revised Rules
of Court. Therefore, the decision in CA-G.R. SP NO. 36533 has not yet become
final and executory and this Honorable Court can take cognizance of this case. 33

From the foregoing factual and procedural antecedents, the following issues emerge for our
resolution:

I.

WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING

THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS
JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394
ENTITLED "MILAGROS P. MORADA V. SAUDI ARABIAN AIRLINES".

II.

WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT

IN THIS CASE PHILIPPINE LAW SHOULD GOVERN.

Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It
maintains that private respondent's claim for alleged abuse of rights occurred in the Kingdom of
Saudi Arabia. It alleges that the existence of a foreign element qualifies the instant case for the
application of the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti
commissi rule. 34

On the other hand, private respondent contends that since her Amended Complaint is based on
Articles 19 35 and 21 36 of the Civil Code, then the instant case is properly a matter of domestic
law. 37

Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events
occurred in two states, the Philippines and Saudi Arabia.

As stated by private respondent in her Amended Complaint 38 dated June 23, 1994:

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines

corporation doing business in the Philippines. It may be served with summons and
other court processes at Travel Wide Associated Sales (Phils.). Inc., 3rd Floor,
Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.

xxx xxx xxx

6. Plaintiff learned that, through the intercession of the Saudi Arabian government,
the Indonesian authorities agreed to deport Thamer and Allah after two weeks of
detention. Eventually, they were again put in service by defendant SAUDIA. In
September 1990, defendant SAUDIA transferred plaintiff to Manila.

7. On January 14, 1992, just when plaintiff thought that the Jakarta incident was
already behind her, her superiors reauested her to see MR. Ali Meniewy, Chief
Legal Officer of SAUDIA in Jeddah, Saudi Arabia. When she saw him, he brought
her to the police station where the police took her passport and questioned her about
the Jakarta incident. Miniewy simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and Allah. Not until she agreed
to do so did the police return her passport and allowed her to catch the afternoon
flight out of Jeddah.

8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed to
board the plane and instead ordered to take a later flight to Jeddah to see Mr.
Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of
the SAUDIA office brought her to a Saudi court where she was asked to sigh a
document written in Arabic. They told her that this was necessary to close the case
against Thamer and Allah. As it turned out, plaintiff signed a notice to her to appear
before the court on June 27, 1993. Plaintiff then returned to Manila.

9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah

once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff
did so after receiving assurance from SAUDIA's Manila manger, Aslam Saleemi,
that the investigation was routinary and that it posed no danger to her.
 10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on
June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane was
about to take off, a SAUDIA officer told her that the airline had forbidden her to
take that flight. At the Inflight Service Office where she was told to go, the secretary
of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at
the crew quarters, until further orders.

11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five months imprisonment and to 286
lashes. Only then did she realize that the Saudi court had tried her, together with
Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty
of (1) adultery; (2) going to a disco, dancing, and listening to the music in violation
of Islamic laws; (3) socializing with the male crew, in contravention of Islamic
tradition.

12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the
help of the Philippines Embassy in Jeddah. The latter helped her pursue an appeal
from the decision of the court. To pay for her upkeep, she worked on the domestic
flights of defendant SAUDIA while, ironically, Thamer and Allah freely served the
international flights. 39

Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree
with petitioner that the problem herein could present a "conflicts" case.

A factual situation that cuts across territorial lines and is affected by the diverse laws of two or
more states is said to contain a "foreign element". The presence of a foreign element is inevitable
since social and economic affairs of individuals and associations are rarely confined to the
geographic limits of their birth or conception. 40

The forms in which this foreign element may appear are many. 41 The foreign element may simply
consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that
a contract between nationals of one State involves properties situated in another State. In other
cases, the foreign element may assume a complex form. 42

In the instant case, the foreign element consisted in the fact that private respondent Morada is a
resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also,
by virtue of the employment of Morada with the petitioner Saudia as a flight stewardess, events
did transpire during her many occasions of travel across national borders, particularly from Manila,
Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a "conflicts" situation to arise.

We thus find private respondent's assertion that the case is purely domestic, imprecise.
A conflicts problem presents itself here, and the question of jurisdiction 43 confronts the court a
quo.
After a careful study of the private respondent's Amended Complaint, 44 and the Comment thereon,
we note that she aptly predicated her cause of action on Articles 19 and 21 of the New Civil Code.

On one hand, Article 19 of the New Civil Code provides:

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

On the other hand, Article 21 of the New Civil Code provides:

Art. 21. Any person who willfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy shall compensate the latter for
damages.

Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that:

The aforecited provisions on human relations were intended to expand the concept
of torts in this jurisdiction by granting adequate legal remedy for the untold number
of moral wrongs which is impossible for human foresight to specifically provide in
the statutes.

Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions.
Thus, we agree with private respondent's assertion that violations of Articles 19 and 21 are
actionable, with judicially enforceable remedies in the municipal forum.

Based on the allegations 46 in the Amended Complaint, read in the light of the Rules of Court on
jurisdiction 47 we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction
over the subject matter of the suit. 48 Its authority to try and hear the case is provided for under
Section 1 of Republic Act No. 7691, to wit:

Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980", is hereby amended to read as follows:

Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise
exclusive jurisdiction:

xxx xxx xxx

(8) In all other cases in which demand, exclusive of interest,

damages of whatever kind, attorney's fees, litigation expenses, and
cots or the value of the property in controversy exceeds One hundred
thousand pesos (P100,000.00) or, in such other cases in Metro
Manila, where the demand, exclusive of the above-mentioned items
exceeds Two Hundred Thousand pesos (P200,000.00). (Emphasis
ours)
 xxx xxx xxx

And following Section 2 (b), Rule 4 of the Revised Rules of Court — the venue, Quezon City, is
appropriate:

Sec. 2 Venue in Courts of First Instance. — [Now Regional Trial Court]

(a) xxx xxx xxx

(b) Personal actions. — All other actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the plaintiff
or any of the plaintiff resides, at the election of the plaintiff.

Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of
the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the litigant.
Enforceability of a judgment if one is obtained is quite obvious. Relative advantages and obstacles
to a fair trial are equally important. Plaintiff may not, by choice of an inconvenient forum, "vex",
"harass", or "oppress" the defendant, e.g. by inflicting upon him needless expense or disturbance.
But unless the balance is strongly in favor of the defendant, the plaintiffs choice of forum should
rarely be disturbed. 49

Weighing the relative claims of the parties, the court a quo found it best to hear the case in the
Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff (private
respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she
no longer maintains substantial connections. That would have caused a fundamental unfairness to
her.

Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience
have been shown by either of the parties. The choice of forum of the plaintiff (now private
respondent) should be upheld.

Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing
her Complaint and Amended Complaint with the trial court, private respondent has voluntary
submitted herself to the jurisdiction of the court.

The records show that petitioner SAUDIA has filed several motions 50 praying for the dismissal of
Morada's Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated
February 20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed
for other reliefs under the premises. Undeniably, petitioner SAUDIA has effectively submitted to
the trial court's jurisdiction by praying for the dismissal of the Amended Complaint on grounds
other than lack of jurisdiction.

As held by this Court in Republic vs. Ker and Company, Ltd.: 51

We observe that the motion to dismiss filed on April 14, 1962, aside from disputing
the lower court's jurisdiction over defendant's person, prayed for dismissal of the
 complaint on the ground that plaintiff's cause of action has prescribed. By
interposing such second ground in its motion to dismiss, Ker and Co., Ltd. availed
of an affirmative defense on the basis of which it prayed the court to resolve
controversy in its favor. For the court to validly decide the said plea of defendant
Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon the latter's person,
who, being the proponent of the affirmative defense, should be deemed to have
abandoned its special appearance and voluntarily submitted itself to the jurisdiction
of the court.

Similarly, the case of De Midgely vs. Ferandos, held that;

When the appearance is by motion for the purpose of objecting to the jurisdiction
of the court over the person, it must be for the sole and separate purpose of objecting
to the jurisdiction of the court. If his motion is for any other purpose than to object
to the jurisdiction of the court over his person, he thereby submits himself to the
jurisdiction of the court. A special appearance by motion made for the purpose of
objecting to the jurisdiction of the court over the person will be held to be a general
appearance, if the party in said motion should, for example, ask for a dismissal of
the action upon the further ground that the court had no jurisdiction over the subject
matter. 52

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City.
Thus, we find that the trial court has jurisdiction over the case and that its exercise thereof, justified.

As to the choice of applicable law, we note that choice-of-law problems seek to answer two
important questions: (1) What legal system should control a given situation where some of the
significant facts occurred in two or more states; and (2) to what extent should the chosen legal
system regulate the situation. 53

Several theories have been propounded in order to identify the legal system that should ultimately
control. Although ideally, all choice-of-law theories should intrinsically advance both notions of
justice and predictability, they do not always do so. The forum is then faced with the problem of
deciding which of these two important values should be stressed. 54

Before a choice can be made, it is necessary for us to determine under what category a certain set
of facts or rules fall. This process is known as "characterization", or the "doctrine of qualification".
It is the "process of deciding whether or not the facts relate to the kind of question specified in a
conflicts rule." 55The purpose of "characterization" is to enable the forum to select the proper
law. 56

Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative
fact. 57An essential element of conflict rules is the indication of a "test" or "connecting factor" or
"point of contact". Choice-of-law rules invariably consist of a factual relationship (such as property
right, contract claim) and a connecting factor or point of contact, such as the situs of the res, the
place of celebration, the place of performance, or the place of wrongdoing. 58
Note that one or more circumstances may be present to serve as the possible test for the
determination of the applicable law. 59 These "test factors" or "points of contact" or "connecting
factors" could be any of the following:

(1) The nationality of a person, his domicile, his residence, his place of sojourn, or
his origin;

(2) the seat of a legal or juridical person, such as a corporation;

(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated.
In particular, the lex situs is decisive when real rights are involved;

(4) the place where an act has been done, the locus actus, such as the place where
a contract has been made, a marriage celebrated, a will signed or a tort committed.
The lex loci actus is particularly important in contracts and torts;

(5) the place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney is to be
exercised;

(6) the intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis;

(7) the place where judicial or administrative proceedings are instituted or done.
The lex fori — the law of the forum — is particularly important because, as we
have seen earlier, matters of "procedure" not going to the substance of the claim
involved are governed by it; and because the lex fori applies whenever the content
of the otherwise applicable foreign law is excluded from application in a given case
for the reason that it falls under one of the exceptions to the applications of foreign
law; and

(8) the flag of a ship, which in many cases is decisive of practically all legal
relationships of the ship and of its master or owner as such. It also covers
contractual relationships particularly contracts of affreightment. 60 (Emphasis ours.)

After a careful study of the pleadings on record, including allegations in the Amended Complaint
deemed admitted for purposes of the motion to dismiss, we are convinced that there is reasonable
basis for private respondent's assertion that although she was already working in Manila, petitioner
brought her to Jeddah on the pretense that she would merely testify in an investigation of the
charges she made against the two SAUDIA crew members for the attack on her person while they
were in Jakarta. As it turned out, she was the one made to face trial for very serious charges,
including adultery and violation of Islamic laws and tradition.

There is likewise logical basis on record for the claim that the "handing over" or "turning over" of
the person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as
employer. Petitioner's purported act contributed to and amplified or even proximately caused
additional humiliation, misery and suffering of private respondent. Petitioner thereby allegedly
facilitated the arrest, detention and prosecution of private respondent under the guise of petitioner's
authority as employer, taking advantage of the trust, confidence and faith she reposed upon it. As
purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of private
respondent was wrongful. But these capped the injury or harm allegedly inflicted upon her person
and reputation, for which petitioner could be liable as claimed, to provide compensation or redress
for the wrongs done, once duly proven.

Considering that the complaint in the court a quo is one involving torts, the "connecting factor" or
"point of contact" could be the place or places where the tortious conduct or lex loci actus occurred.
And applying the torts principle in a conflicts case, we find that the Philippines could be said as a
situs of the tort (the place where the alleged tortious conduct took place). This is because it is in
the Philippines where petitioner allegedly deceived private respondent, a Filipina residing and
working here. According to her, she had honestly believed that petitioner would, in the exercise of
its rights and in the performance of its duties, "act with justice, give her due and observe honesty
and good faith." Instead, petitioner failed to protect her, she claimed. That certain acts or parts of
the injury allegedly occurred in another country is of no moment. For in our view what is important
here is the place where the over-all harm or the totality of the alleged injury to the person,
reputation, social standing and human rights of complainant, had lodged, according to the plaintiff
below (herein private respondent). All told, it is not without basis to identify the Philippines as the
situs of the alleged tort.

Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern
theories and rules on tort liability 61 have been advanced to offer fresh judicial approaches to arrive
at just results. In keeping abreast with the modern theories on tort liability, we find here an occasion
to apply the "State of the most significant relationship" rule, which in our view should be
appropriate to apply now, given the factual context of this case.

In applying said principle to determine the State which has the most significant relationship, the
following contacts are to be taken into account and evaluated according to their relative importance
with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the
conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation
and place of business of the parties, and (d) the place where the relationship, if any, between the
parties is centered. 62

As already discussed, there is basis for the claim that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private respondent is a resident Filipina national,
working with petitioner, a resident foreign corporation engaged here in the business of
international air carriage. Thus, the "relationship" between the parties was centered here, although
it should be stressed that this suit is not based on mere labor law violations. From the record, the
claim that the Philippines has the most significant contact with the matter in this dispute, 63 raised
by private respondent as plaintiff below against defendant (herein petitioner), in our view, has been
properly established.

Presc inding from this premise that the Philippines is the situs of the tort complained of and the
place "having the most interest in the problem", we find, by way of recapitulation, that the
Philippine law on tort liability should have paramount application to and control in the resolution
of the legal issues arising out of this case. Further, we hold that the respondent Regional Trial
Court has jurisdiction over the parties and the subject matter of the complaint; the appropriate
venue is in Quezon City, which could properly apply Philippine law. Moreover, we find untenable
petitioner's insistence that "[s]ince private respondent instituted this suit, she has the burden of
pleading and proving the applicable Saudi law on the matter." 64As aptly said by private respondent,
she has "no obligation to plead and prove the law of the Kingdom of Saudi Arabia since her cause
of action is based on Articles 19 and 21" of the Civil Code of the Philippines. In her Amended
Complaint and subsequent pleadings, she never alleged that Saudi law should govern this
case. 65 And as correctly held by the respondent appellate court, "considering that it was the
petitioner who was invoking the applicability of the law of Saudi Arabia, then the burden was on
it [petitioner] to plead and to establish what the law of Saudi Arabia is". 66

Lastly, no error could be imputed to the respondent appellate court in upholding the trial court's
denial of defendant's (herein petitioner's) motion to dismiss the case. Not only was jurisdiction in
order and venue properly laid, but appeal after trial was obviously available, and expeditious trial
itself indicated by the nature of the case at hand. Indubitably, the Philippines is the state intimately
concerned with the ultimate outcome of the case below, not just for the benefit of all the litigants,
but also for the vindication of the country's system of law and justice in a transnational setting.
With these guidelines in mind, the trial court must proceed to try and adjudge the case in the light
of relevant Philippine law, with due consideration of the foreign element or elements involved.
Nothing said herein, of course, should be construed as prejudging the results of the case in any
manner whatsoever.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-
18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to
Regional Trial Court of Quezon City, Branch 89 for further proceedings.

SO ORDERED.
G.R. No. 205487 November 12, 2014

ORION SAVINGS BANK, Petitioner,

vs.
SHIGEKANE SUZUKI, Respondent.

BRION, J.:

Before us is the Petition for Review on Certiorari1 filed by petitioner Orion Savings Bank (Orion)
under Rule 45 of the Rules of Court, assailing the decision2 dated August 23, 2012 and the
resolution3 dated January 25, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 94104.

The Factual Antecedents

In the first week of August 2003, respondent Shigekane Suzuki (Suzuki), a Japanese national, met
with Ms. Helen Soneja (Soneja) to inquire about a condominium unit and a parking slot at Cityland
Pioneer, Mandaluyong City, allegedly owned by Yung Sam Kang (Kang), a Korean national and
a Special Resident Retiree's Visa (SRRV) holder.

At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium Certificate
of Title (CCT) No. 18186]4 and Parking Slot No. 42 [covered by CCT No. 9118]5 were for sale
for ₱3,000,000.00. Soneja likewise assured Suzuki that the titles to the unit and the parking slot
were clean. After a brief negotiation, the parties agreed to reduce the price to ₱2,800,000.00. On
August 5, 2003, Suzuki issued Kang a Bank of the Philippine Island (BPI) Check No. 833496 for
One Hundred Thousand Pesos (₱100,000.00) as reservation fee.7 On August 21, 2003, Suzuki
issued Kang another check, BPI Check No. 83350,8 this time for ₱2,700,000.00 representing the
remaining balance of the purchase price. Suzuki and Kang then executed a Deed of Absolute Sale
dated August 26, 20039covering Unit No. 536 and Parking Slot No. 42. Soon after, Suzuki took
possession of the condominium unit and parking lot, and commenced the renovation of the interior
of the condominium unit.

Kang thereafter made several representations with Suzuki to deliver the titles to the properties,
which were then allegedly in possession of Alexander Perez (Perez, Orion’s Loans Officer) for
safekeeping. Despite several verbal demands, Kang failed to deliver the documents. Suzuki later
on learned that Kang had left the country, prompting Suzuki to verify the status of the properties
with the Mandaluyong City Registry of Deeds.

Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No. 42
contained no annotations although it remained under the name of Cityland Pioneer. This
notwithstanding, Cityland Pioneer, through Assistant Vice President Rosario D. Perez, certified
that Kang had fully paid the purchase price of Unit. No. 53610 and Parking Slot No. 42.11 CCT No.
18186 representing the title to the condominium unit had no existing encumbrance, except for an
annotation under Entry No. 73321/C-10186 which provided that any conveyance or encumbrance
of CCT No. 18186 shall be subject to approval by the Philippine Retirement Authority (PRA).
Although CCT No. 18186 contained Entry No. 66432/C-10186 dated February 2, 1999
representing a mortgage in favor of Orion for a ₱1,000,000.00 loan, that annotation was
subsequently cancelled on June 16, 2000 by Entry No. 73232/T. No. 10186. Despite the
cancellation of the mortgage to Orion, the titles to the properties remained in possession of Perez.

To protect his interests, Suzuki then executed an Affidavit of Adverse Claim12 dated September 8,
2003, with the Registry of Deeds of Mandaluyong City, annotated as Entry No. 3292/C-No. 18186
in CCT No. 18186. Suzuki then demanded the delivery of the titles.13 Orion, (through Perez),
however, refused to surrender the titles, and cited the need to consult Orion’s legal counsel as its
reason.

On October 14, 2003, Suzuki received a letter from Orion’s counsel dated October 9, 2003, stating
that Kang obtained another loan in the amount of ₱1,800,000.00. When Kang failed to pay, he
executed a Dacion en Pago dated February 2, 2003, in favor of Orion covering Unit No. 536. Orion,
however, did not register the Dacion en Pago, until October 15, 2003.

On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot No. 42
(covered by CCT No. 9118) and this was annotated as Entry No. 4712/C-No. 9118 in the parking
lot’s title.

On January 27, 2004, Suzuki filed a complaint for specific performance and damages against Kang
and Orion. At the pre-trial, the parties made the following admissions and stipulations:

1. That as of August 26, 2003, Kang was the registered owner of Unit No. 536 and Parking
Slot No. 42;

2. That the mortgage in favor of Orion supposedly executed by Kang, with Entry No.
66432/C-10186 dated February 2, 1999, was subsequently cancelled by Entry No. 73232/T
No. 10186 dated June 16, 2000;

3. That the alleged Dacion en Pago was never annotated in CCT Nos. 18186 and 9118;

4. That Orion only paid the appropriate capital gains tax and the documentary stamp tax
for the alleged Dacion en Pago on October 15, 2003;

5. That Parking Slot No. 42, covered by CCT No. 9118, was never mortgaged to Orion;
and

6. That when Suzuki bought the properties, he went to Orion to obtain possession of the
titles.

The RTC Ruling

In its decision14 dated June 29, 2009, the Regional Trial Court (RTC), Branch 213, Mandaluyong
City ruled in favor of Suzuki and ordered Orion to deliver the CCT Nos. 18186 and 9118 to Suzuki.

The court found that Suzuki was an innocent purchaser for value whose rights over the properties
prevailed over Orion’s. The RTC further noted that Suzuki exerted efforts to verify the status of
the properties but he did not find any existing encumbrance in the titles. Although Orion claims to
have purchased the property by way of a Dacion en Pago, Suzuki only learned about it two (2)
months after he bought the properties because Orion never bothered to register or annotate the
Dacion en Pago in CCT Nos. 18186 and 9116.

The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral damages,
exemplary damages, attorney’s fees, appearance fees, expenses for litigation and cost of suit. Orion
timely appealed the RTC decision with the CA.

The CA Ruling

On August 23, 2012, the CA partially granted Orion’s appeal and sustained the RTC insofar as it
upheld Suzuki’s right over the properties. The CA further noted that Entry No. 73321/C-10186
pertaining to the withdrawal of investment of an SRRV only serves as a warning to an SRRV
holder about the implications of a conveyance of a property investment. It deviated from the RTC
ruling, however, by deleting the award for moral damages, exemplary damages, attorney’s fees,
expenses for litigation and cost of suit.

Orion sought a reconsideration of the CA decision but the CA denied the motion in its January 25,
2013 resolution. Orion then filed a petition for review on certiorari under Rule 45 with this Court.

The Petition and Comment

Orion’s petition is based on the following grounds/arguments:15

1. The Deed of Sale executed by Kang in favor of Suzuki is null and void. Under Korean
law, any conveyance of a conjugal property should be made with the consent of both
spouses;

2. Suzuki is not a buyer in good faith for he failed to check the owner’s duplicate copies of
the CCTs;

3. Knowledge of the PRA restriction under Entry No. 73321/C-10186, which prohibits any
conveyance or encumbrance of the property investment, defeats the alleged claim of good
faith by Suzuki; and

4. Orion should not be faulted for exercising due diligence.

In his Comment,16 Suzuki asserts that the issue on spousal consent was belatedly raised on appeal.
Moreover, proof of acquisition during the marital coverture is a condition sine qua non for the
operation of the presumption of conjugal ownership.17 Suzuki additionally maintains that he is a
purchaser in good faith, and is thus entitled to the protection of the law.

The Court’s Ruling

We deny the petition for lack of merit.

The Court may inquire into conclusions of fact when the inference made is manifestly mistaken

In a Rule 45 petition, the latitude of judicial review generally excludes a factual and evidentiary
re-evaluation, and the Court ordinarily abides by the uniform factual conclusions of the trial court
and the appellate court.18 In the present case, while the courts below both arrived at the same
conclusion, there appears to be an incongruence in their factual findings and the legal principle
they applied to the attendant factual circumstances. Thus, we are compelled to examine certain
factual issues in the exercise of our sound discretion to correct any mistaken inference that may
have been made.19

Philippine Law governs the transfer of real property

Orion believes that the CA erred in not ruling on the issue of spousal consent. We cannot uphold
this position, however, because the issue of spousal consent was only raised on appeal to the CA.
It is a well-settled principle that points of law, theories, issues, and arguments not brought to the
attention of the trial court cannot be raised for the first time on appeal and considered by a
reviewing court.20 To consider these belated arguments would violate basic principles of fairplay,
justice, and due process.

Having said these, we shall nonetheless discuss the issues Orion belatedly raised, if only to put an
end to lingering doubts on the correctness of the denial of the present petition.

It is a universal principle that real or immovable property is exclusively subject to the laws of the
country or state where it is located.21 The reason is found in the very nature of immovable property
— its immobility. Immovable are part of the country and so closely connected to it that all rights
over them have their natural center of gravity there.22

Thus, all matters concerning the title and disposition of real property are determined by what is
known as the lex loci rei sitae, which can alone prescribe the mode by which a title can pass from
one person to another, or by which an interest therein can be gained or lost.23 This general principle
includes all rules governing the descent, alienation and transfer of immovable property and the
validity, effect and construction of wills and other conveyances.24

This principle even governs the capacity of the person making a deed relating to immovable
property, no matter what its nature may be. Thus, an instrument will be ineffective to transfer title
to land if the person making it is incapacitated by the lex loci rei sitae, even though under the law
of his domicile and by the law of the place where the instrument is actually made, his capacity is
undoubted.25

On the other hand, property relations between spouses are governed principally by the national
law of the spouses.26 However, the party invoking the application of a foreign law has the burden
of proving the foreign law. The foreign law is a question of fact to be properly pleaded and proved
as the judge cannot take judicial notice of a foreign law.27 He is presumed to know only domestic
or the law of the forum.28
To prove a foreign law, the party invoking it must present a copy thereof and comply with Sections
24 and 25 of Rule 132 of the Revised Rules of Court which reads:

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

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

Accordingly, matters concerning the title and disposition of real property shall be governed by
Philippine law while issues pertaining to the conjugal nature of the property shall be governed by
South Korean law, provided it is proven as a fact.

In the present case, Orion, unfortunately failed to prove the South Korean law on the conjugal
ownership of property. It merely attached a "Certification from the Embassy of the Republic of
Korea"29 to prove the existence of Korean Law. This certification, does not qualify as sufficient
proof of the conjugal nature of the property for there is no showing that it was properly
authenticated by the seal of his office, as required under Section 24 of Rule 132.30

Accordingly, the International Law doctrine of presumed-identity approach or processual

presumption comes into play, i.e., where a foreign law is not pleaded or, even if pleaded, is not
proven, the presumption is that foreign law is the same as Philippine Law.31

Under Philippine Law, the phrase "Yung Sam Kang ‘married to' Hyun Sook Jung" is merely
descriptive of the civil status of Kang.32 In other words, the import from the certificates of title is
that Kang is the owner of the properties as they are registered in his name alone, and that he is
married to Hyun Sook Jung.

We are not unmindful that in numerous cases we have held that registration of the property in the
name of only one spouse does not negate the possibility of it being conjugal or community
property.33 In those cases, however, there was proof that the properties, though registered in the
name of only one spouse, were indeed either conjugal or community properties.34 Accordingly, we
see no reason to declare as invalid Kang’s conveyance in favor of Suzuki for the supposed lack of
spousal consent.

The petitioner failed to adduce sufficient evidence to prove the due execution of the Dacion en
Pago
Article 1544 of the New Civil Code of the Philippines provides that:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.

The application of Article 1544 of the New Civil Code presupposes the existence of two or more
duly executed contracts of sale. In the present case, the Deed of Sale dated August 26,
200335 between Suzuki and Kang was admitted by Orion36 and was properly identified by Suzuki’s
witness Ms. Mary Jane Samin (Samin).37

It is not disputed, too, that the Deed of Sale dated August 26, 2003 was consummated. In a contract
of sale, the seller obligates himself to transfer the ownership of the determinate thing sold, and to
deliver the same to the buyer, who obligates himself to pay a price certain to the seller. 38 The
execution of the notarized deed of sale and the actual transfer of possession amounted to delivery
that produced the legal effect of transferring ownership to Suzuki.39

On the other hand, although Orion claims priority in right under the principle of prius tempore,
potior jure (i.e., first in time, stronger in right), it failed to prove the existence and due execution
of the Dacion en Pago in its favor.

At the outset, Orion offered the Dacion en Pago as Exhibit "5"with submarkings "5-a" to "5-c" to
prove the existence of the February 6, 2003 transaction in its Formal Offer dated July 20, 2008.
Orion likewise offered in evidence the supposed promissory note dated September 4, 2002 as
Exhibit "12"to prove the existence of the additional ₱800,000.00 loan. The RTC, however, denied
the admission of Exhibits "5" and "12,"among others, in its order dated August 19, 2008 "since the
same [were] not identified in court by any witness."40

Despite the exclusion of its most critical documentary evidence, Orion failed to make a tender of
excluded evidence, as provided under Section 40, Rule 132 of the Rules of Court. For this reason
alone, we are prevented from seriously considering Exhibit "5" and its submarkings and Exhibit
"12" in the present petition.

Moreover, even if we consider Exhibit "5" and its submarkings and Exhibit "12" in the present
petition, the copious inconsistencies and contradictions in the testimonial and documentary
evidence of Orion, militate against the conclusion that the Dacion en Pago was duly executed. First,
there appears to be no due and demandable obligation when the Dacion en Pago was executed,
contrary to the allegations of Orion. Orion’s witness Perez tried to impress upon the RTC that
Kang was in default in his ₱1,800,000.00 loan. During his direct examination, he stated:
 ATTY. CRUZAT:

Q: Okay, so this loan of ₱1.8 million, what happened to this loan, Mr. Witness?

A: Well it became past due, there has been delayed interest payment by Mr. Kang and...

Q: So what did you do after there were defaults[?]

A: We have to secure the money or the investment of the bank through loans and we have
executed a dacion en pago because Mr. Kang said he has no money. So we just execute[d]
the dacion en pago rather than going through the Foreclosure proceedings.

xxxx

Q: Can you tell the court when was this executed?

A: February 6, 2003, your Honor.41

A reading of the supposed promissory note, however, shows that there was no default to speak of
when the supposed Dacion en Pago was executed.

Based on the promissory note, Kang’s loan obligation would mature only on August 27, 2003.
Neither can Orion claim that Kang had been in default in his installment payments because the
wordings of the promissory note provide that "[t]he principal of this loan and its interest and other
charges shall be paid by me/us in accordance hereunder: SINGLE PAYMENT LOANS.42 "There
was thus no due and demandable loan obligation when the alleged Dacion en Pago was executed.

Second, Perez, the supposed person who prepared the Dacion en Pago,appears to only have a vague
idea of the transaction he supposedly prepared. During his cross-examination, he testified:

ATTY. DE CASTRO:

Q: And were you the one who prepared this [dacion en pago] Mr. witness?

A: Yes, sir. I personally prepared this.

xxxx

Q: So this 1.8 million pesos is already inclusive of all the penalties, interest and surcharge
due from Mr. Yung Sam Kang?

A: It’s just the principal, sir.

Q: So you did not state the interest [and] penalties?

 A: In the [dacion en pago], we do not include interest, sir. We may actually include that
but....

Q: Can you read the Second Whereas Clause, Mr. Witness?

A: Whereas the first party failed to pay the said loan to the second party and as of February
10, 2003, the outstanding obligation which is due and demandable principal and interest
and other charges included amounts to ₱1,800,000.00 pesos, sir.

xxxx

Q: You are now changing your answer[.] [I]t now includes interest and other charges, based
on this document?

A: Yes, based on that document, sir.43

Third, the Dacion en Pago,mentioned that the ₱1,800,000.00 loan was secured by a real
estate mortgage. However, no document was ever presented to prove this real estate
mortgage aside from it being mentioned in the Dacion en Pago itself.

ATTY. DE CASTRO:

Q: Would you know if there is any other document like a supplement to that Credit Line
Agreement referring to this 1.8 million peso loan by Mr. Yung Sam Kang which says that
there was a subsequent collateralization or security given by Mr. Yung [Sam]

Kang for the loan?

xxxx

A: The [dacion en pago], sir.44

Fourth,the Dacion en Pago was first mentioned only two (2) months after Suzuki and Samin
demanded the delivery of the titles sometime in August 2003,and after Suzuki caused the
annotation of his affidavit of adverse claim. Records show that it was only on October 9, 2003,
when Orion, through its counsel, Cristobal Balbin Mapile & Associates first spoke of the Dacion
en Pago.45 Not even Perez mentioned any Dacion en Pago on October 1, 2003, when he personally
received a letter demanding the delivery of the titles.Instead, Perez refused to accept the letter and
opted to first consult with his lawyer.46

Notably, even the October 9, 2003 letter contained material inconsistencies in its recital of facts
surrounding the execution of the Dacion en Pago. In particular, it mentioned that "on [September
4, 2002], after paying the original loan, [Kang] applied and was granted a new Credit Line Facility
by [Orion] x x x for ONE MILLION EIGHT HUNDRED THOUSAND PESOS (₱1,800,000.00)."
Perez, however, testified that there was "no cash movement" in the original ₱1,000,000.00 loan.
In his testimony, he said:
 COURT:

xxxx

Q: Would you remember what was the subject matter of that real estate mortgage for that
first ₱1,000,000.00 loan?

A: It’s a condominium Unit in City land, sir.

xxxx

Q: Would you recall if there was any payment by Mr. Yung Sam Kang of this
₱1,000,000.00 loan?

A: None sir.

Q: No payments?

A: None sir.

Q: And from 1999 to 2002, there was no payment, either by way of payment to the principal,
by way of payment of interest, there was no payment by Mr. Yung Sam Kang of this loan?

A: Literally, there was no actual cash movement, sir.

Q: There was no actual cash?

A: Yes, sir.

Q: And yet despite no payment, the bank Orion Savings Bank still extended an ₱800,000.00
additional right?

A: Yes, sir.47

Fifth, it is undisputed that notwithstanding the supposed execution of the Dacion en Pago on
February 2, 2003, Kang remained in possession of the condominium unit. In fact, nothing in the
records shows that Orion even bothered to take possession of the property even six (6) months
after the supposed date of execution of the Dacion en Pago. Kang was even able to transfer
possession of the condominium unit to Suzuki, who then made immediate improvements thereon.
If Orion really purchased the condominium unit on February 2, 2003 and claimed to be its true
owner, why did it not assert its ownership immediately after the alleged sale took place? Why did
it have to assert its ownership only after Suzuki demanded the delivery of the titles? These gaps
have remained unanswered and unfilled.

In Suntay v. CA,48 we held that the most prominent index of simulation is the complete absence
of an attempt on the part of the vendee to assert his rights of ownership over the property in
question. After the sale, the vendee should have entered the land and occupied the premises. The
absence of any attempt on the part of Orion to assert its right of dominion over the property
allegedly sold to it is a clear badge of fraud. That notwithstanding the execution of the Dacion en
Pago, Kang remained in possession of the disputed condominium unit – from the time of the
execution of the Dacion en Pago until the property’s subsequent transfer to Suzuki – unmistakably
strengthens the fictitious nature of the Dacion en Pago.

These circumstances, aside from the glaring inconsistencies in the documents and testimony of
Orion’s witness, indubitably prove the spurious nature of the Dacion en Pago.

The fact that the Dacion en Pago is a notarized document does not support the conclusion that the
sale it embodies is a true conveyance

Public instruments are evidence of the facts that gave rise to their execution and are to be
considered as containing all the terms of the agreement.49 While a notarized document enjoys this
presumption, "the fact that a deed is notarized is not a guarantee of the validity of its
contents."50 The presumption of regularity of notarized documents is not absolute and may be
rebutted by clear and convincing evidence to the contrary.51

In the present case, the presumption cannot apply because the regularity in the execution of the
Dacion en Pago and the loan documents was challenged in the proceedings below where their
prima facievalidity was overthrown by the highly questionable circumstances surrounding their
execution.52

Effect of the PRA restriction on the validity of Suzuki’s title to the property

Orion argues that the PRA restriction in CCT No. 18186 affects the conveyance to Suzuki. In
particular, Orion assails the status of Suzuki as a purchaser in good faith in view of the express
PRA restriction contained in CCT No. 18186.53

We reject this suggested approach outright because, to our mind, the PRA restriction cannot affect
the conveyance in favor of Suzuki. On this particular point, we concur with the following findings
of the CA:

x x x the annotation merely serves as a warning to the owner who holds a Special Resident
Retiree’s Visa(SRRV) that he shall lose his visa if he disposes his property which serves as his
investment in order to qualify for such status. Section 14 of the Implementing Investment
Guidelines under Rule VIII-A of the Rules and Regulations Implementing Executive Order No.
1037, Creating the Philippine Retirement Park System Providing Funds Therefor and for Other
Purpose (otherwise known as the Philippine Retirement Authority) states:

Section 14. Should the retiree-investor withdraw his investment from the Philippines, or transfer
the same to another domestic enterprise, or sell, convey or transfer his condominium unit or units
to another person, natural or juridical without the prior approval of the Authority, the Special
Resident Retiree’s Visa issued to him, and/or unmarried minor child or children[,] may be
cancelled or revoked by the Philippine Government, through the appropriate government
department or agency, upon recommendation of the Authority.54

Moreover, Orion should not be allowed to successfully assail the good faith of Suzuki on the basis
of the PRA restriction. Orion knew of the PRA restriction when it transacted with Kang.
Incidentally, Orion admitted accommodating Kang’s request to cancel the mortgage annotation
despite the lack of payment to circumvent the PRA restriction. Orion, thus, is estopped from
impugning the validity of the conveyance in favor of Suzuki on the basis of the PRA restriction
that Orion itself ignored and "attempted" to circumvent.

With the conclusion that Orion failed to prove the authenticity of the Dacion en Pago, we see no
reason for the application of the rules on double sale under Article 1544 of the New Civil Code.
Suzuki, moreover, successfully adduced sufficient evidence to establish the validity of conveyance
in his favor.

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

SO ORDERED.
[G.R. No. 133876. December 29, 1999]

BANK OF AMERICA, NT and SA, petitioner, vs. AMERICAN REALTY

CORPORATION and COURT OF APPEALS, respondents.

BUENA, J.:
Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage constituted
over a third party mortgagors property situated in the Philippines by filing an action for the
collection of the principal loan before foreign courts?
Sought to be reversed in the instant petition for review on certiorari under Rule 45 of the
Rules of Court are the decision[1] of public respondent Court of Appeals in CA G.R. CV No. 51094,
promulgated on 30 September 1997 and its resolution,[2] dated 22 May 1998, denying petitioners
motion for reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing
institution duly licensed to do business in the Philippines, organized and existing under and by
virtue of the laws of the State of California, United States of America while private respondent
American Realty Corporation (ARC) is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a limited liability
company organized and existing under the laws of England.
As borne by the records, BANTSA and BAIL on several occasions granted three major multi-
million United States (US) Dollar loans to the following corporate borrowers: (1) Liberian
Transport Navigation, S.A.; (2) El Challenger S.A. and (3) Eshley Compania Naviera S.A.
(hereinafter collectively referred to as borrowers), all of which are existing under and by virtue of
the laws of the Republic of Panama and are foreign affiliates of private respondent.[3]
Due to the default in the payment of the loan amortizations, BANTSA and the corporate
borrowers signed and entered into restructuring agreements. As additional security for the
restructured loans, private respondent ARC as third party mortgagor executed two real estate
mortgages,[4]dated 17 February 1983 and 20 July 1984, over its parcels of land including
improvements thereon, located at Barrio Sto. Cristo, San Jose Del Monte, Bulacan, and which are
covered by Transfer Certificate of Title Nos. T-78759, T-78760, T-78761, T-78762 and T-78763.
Eventually, the corporate borrowers defaulted in the payment of the restructured loans
prompting petitioner BANTSA to file civil actions[5] before foreign courts for the collection of the
principal loan, to wit:

a) In England, in its High Court of Justice, Queens Bench Division, Commercial Court (1992-
Folio No. 2098) against Liberian Transport Navigation S.A., Eshley Compania Naviera S.A., El
Challenger S.A., Espriona Shipping Company S.A., Eddie Navigation Corp., S.A., Eduardo
Katipunan Litonjua and Aurelio Katipunan Litonjua on June 17, 1992.

b) In England, in its High Court of Justice, Queens Bench Division, Commercial Court (1992-
Folio No. 2245) against El Challenger S.A., Espriona Shipping Company S.A., Eduardo Katipuan
Litonjua & Aurelio Katipunan Litonjua on July 2, 1992;
c) In Hongkong, in the Supreme Court of Hongkong High Court (Action No. 4039 of 1992) against
Eshley Compania Naviera S.A., El Challenger S.A., Espriona Shipping Company S.A. Pacific
Navigators Corporation, Eddie Navigation Corporation S.A., Litonjua Chartering (Edyship) Co.,
Inc., Aurelio Katipunan Litonjua, Jr. and Eduardo Katipunan Litonjua on November 19, 1992; and

d) In Hongkong, in the Supreme Court of Hongkong High Court (Action No. 4040 of 1992) against
Eshley Compania Naviera S.A., El Challenger S.A., Espriona Shipping Company, S.A., Pacific
Navigators Corporation, Eddie Navigation Corporation S.A., Litonjua Chartering (Edyship) Co.,
Jr. and Eduardo Katipunan Litonjua on November 21, 1992.

In the civil suits instituted before the foreign courts, private respondent ARC, being a third
party mortgagor, was not impleaded as party-defendant.
On 16 December 1992, petitioner BANTSA filed before the Office of the Provincial Sheriff
of Bulacan, Philippines, an application for extrajudicial foreclosure[6] of real estate mortgage.
On 22 January 1993, after due publication and notice, the mortgaged real properties were sold
at public auction in an extrajudicial foreclosure sale, with Integrated Credit and Corporation
Services Co. (ICCS) as the highest bidder for the sum of Twenty Four Million Pesos
(P24,000,000.00).[7]
On 12 February 1993, private respondent filed before the Pasig Regional Trial Court, Branch
159, an action for damages[8] against the petitioner, for the latter’s act of foreclosing extra
judicially the real estate mortgages despite the pendency of civil suits before foreign courts for the
collection of the principal loan.
In its answer[9] petitioner alleged that the rule prohibiting the mortgagee from foreclosing the
mortgage after an ordinary suit for collection has been filed, is not applicable in the present case,
claiming that:

a) The plaintiff, being a mere third party mortgagor and not a party to the principal restructuring
agreements, was never made a party defendant in the civil cases filed in Hongkong and England;

b) There is actually no civil suit for sum of money filed in the Philippines since the civil actions
were filed in Hongkong and England. As such, any decisions (sic) which may be rendered in the
abovementioned courts are not (sic) enforceable in the Philippines unless a separate action to
enforce the foreign judgments is first filed in the Philippines, pursuant to Rule 39, Section 50 of
the Revised Rules of Court.

c) Under English Law, which is the governing law under the principal agreements, the mortgagee
does not lose its security interest by filing civil actions for sums of money.

On 14 December 1993, private respondent filed a motion for suspension[10] of the redemption
period on the ground that it cannot exercise said right of redemption without at the same time
waiving or contradicting its contentions in the case that the foreclosure of the mortgage on its
properties is legally improper and therefore invalid.
 In an order[11] dated 28 January 1994, the trial court granted the private respondents motion
for suspension after which a copy of said order was duly received by the Register of Deeds of
Meycauayan, Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the foreclosure sale,
consolidated its ownership over the real properties, resulting to the issuance of Transfer Certificate
of Title Nos. T-18627, T-186272, T-186273, T-16471 and T-16472 in its name.
On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold the real
properties to Stateland Investment Corporation for the amount of Thirty Nine Million Pesos
(P39,000,000.00).[12] Accordingly, Transfer Certificate of Title Nos. T-187781(m), T-187782(m),
T-187783(m), T-16653P(m) and T-16652P(m) were issued in the latter’s name.
After trial, the lower court rendered a decision[13] in favor of private respondent ARC dated
12 May 1993, the decretal portion of which reads:

WHEREFORE, judgment is hereby rendered declaring that the filing in foreign courts by the
defendant of collection suits against the principal debtors operated as a waiver of the security of
the mortgages. Consequently, the plaintiffs rights as owner and possessor of the properties then
covered by Transfer Certificates of Title Nos. T-78759, T-78762, T-78763, T-78760 and T-78761,
all of the Register of Deeds of Meycauayan, Bulacan, Philippines, were violated when the
defendant caused the extrajudicial foreclosure of the mortgages constituted thereon.

Accordingly, the defendant is hereby ordered to pay the plaintiff the following sums, all with legal
interest thereon from the date of the filing of the complaint up to the date of actual payment:

1) Actual or compensatory damages in the amount of Ninety-Nine Million Pesos (P99,000,000.00);

2) Exemplary damages in the amount of Five Million Pesos (P5,000,000.00); and

3) Costs of suit.

SO ORDERED.

On appeal, the Court of Appeals affirmed the assailed decision of the lower court prompting
petitioner to file a motion for reconsideration which the appellate court denied.
Hence, the instant petition for review[14] on certiorari where herein petitioner BANTSA
ascribes to the Court of Appeals the following assignment of errors:
1. The Honorable Court of Appeals disregarded the doctrines laid down by this Hon.
Supreme Court in the cases of Caltex Philippines, Inc. vs. Intermediate Appellate
Court docketed as G.R. No. 74730 promulgated on August 25, 1989 and Philippine
Commercial International Bank vs. IAC, 196 SCRA 29 (1991 case), although said
cases were duly cited, extensively discussed and specifically mentioned, as one of the
issues in the assignment of errors found on page 5 of the decision dated September 30,
1997.
 2. The Hon. Court of Appeals acted with grave abuse of discretion when it awarded the
private respondent actual and exemplary damages totaling P171,600,000.00, as of July
12, 1998 although such huge amount was not asked nor prayed for in private
respondents complaint, is contrary to law and is totally unsupported by evidence (sic).
In fine, this Court is called upon to resolve two main issues:
1. Whether or not the petitioners act of filing a collection suit against the principal debtors
for the recovery of the loan before foreign courts constituted a waiver of the remedy
of foreclosure.
2. Whether or not the award by the lower court of actual and exemplary damages in favor
of private respondent ARC, as third-party mortgagor, is proper.
The petition is bereft of merit.
First, as to the issue of availability of remedies, petitioner submits that a waiver of the remedy
of foreclosure requires the concurrence of two requisites: an ordinary civil action for collection
should be filed and subsequently a final judgment be correspondingly rendered therein.
According to petitioner, the mere filing of a personal action to collect the principal loan does
not suffice; a final judgment must be secured and obtained in the personal action so that waiver of
the remedy of foreclosure may be appreciated. To put it differently, absent any of the two requisites,
the mortgagee-creditor is deemed not to have waived the remedy of foreclosure.
We do not agree.
Certainly, this Court finds petitioners arguments untenable and upholds the jurisprudence laid
down in Bachrach[15] and similar cases adjudicated thereafter, thus:

In the absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In
other words, he may pursue either of the two remedies, but not both. By such election, his cause
of action can by no means be impaired, for each of the two remedies is complete in itself. Thus,
an election to bring a personal action will leave open to him all the properties of the debtor for
attachment and execution, even including the mortgaged property itself. And, if he waives such
personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment
thereon would still give him the right to sue for a deficiency judgment, in which case, all the
properties of the defendant, other than the mortgaged property, are again open to him for the
satisfaction of the deficiency. In either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely
accidental and are all under his right of election. On the other hand, a rule that would authorize the
plaintiff to bring a personal action against the debtor and simultaneously or successively another
action against the mortgaged property, would result not only in multiplicity of suits so offensive
to justice (Soriano vs. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio vs. San
Agustin, 25 Phil., 404), but also in subjecting the defendant to the vexation of being sued in the
place of his residence or of the residence of the plaintiff, and then again in the place where the
property lies.
 In Danao vs. Court of Appeals,[16] this Court, reiterating jurisprudence enunciated in Manila
Trading and Supply Co. vs. Co Kim[17]and Movido vs. RFC,[18] invariably held:

x x x The rule is now settled that a mortgage creditor may elect to waive his security and bring,
instead, an ordinary action to recover the indebtedness with the right to execute a judgment thereon
on all the properties of the debtor, including the subject matter of the mortgage x x x, subject to
the qualification that if he fails in the remedy by him elected, he cannot pursue further the remedy
he has waived. (Underscoring Ours)

Anent real properties in particular, the Court has laid down the rule that a mortgage creditor
may institute against the mortgage debtor either a personal action for debt or a real action to
foreclose the mortgage.[19]
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and
not cumulative. Notably, an election of one remedy operates as a waiver of the other. For this
purpose, a remedy is deemed chosen upon the filing of the suit for collection or upon the filing of
the complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the
1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by
the mortgage creditor upon filing of the petition not with any court of justice but with the Office
of the Sheriff of the province where the sale is to be made, in accordance with the provisions of
Act No. 3135, as amended by Act No. 4118.
In the case at bench, private respondent ARC constituted real estate mortgages over its
properties as security for the debt of the principal debtors. By doing so, private respondent
subjected itself to the liabilities of a third party mortgagor. Under the law, third persons who are
not parties to a loan may secure the latter by pledging or mortgaging their own property.[20]
Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction which makes
a third person who secures the fulfillment of another’s obligation by mortgaging his own property,
to be solidarily bound with the principal obligor. The signatory to the principal contract loan
remains to be primarily bound. It is only upon default of the latter that the creditor may have
recourse on the mortgagors by foreclosing the mortgaged properties in lieu of an action for the
recovery of the amount of the loan.[21]
In the instant case, petitioners contention that the requisites of filing the action for collection
and rendition of final judgment therein should concur, is untenable.
Thus, in Cerna vs. Court of Appeals,[22] we agreed with the petitioner in said case, that
the filing of a collection suit barred the foreclosure of the mortgage:

A mortgagee who files a suit for collection abandons the remedy of foreclosure of the chattel
mortgage constituted over the personal property as security for the debt or value of the promissory
note when he seeks to recover in the said collection suit.

x x x When the mortgagee elects to file a suit for collection, not foreclosure, thereby abandoning
the chattel mortgage as basis for relief, he clearly manifests his lack of desire and interest to go
after the mortgaged property as security for the promissory note x x x.
 Contrary to petitioners arguments, we therefore reiterate the rule, for clarity and emphasis,
that the mere act of filing of an ordinary action for collection operates as a waiver of the mortgage-
creditors remedy to foreclose the mortgage. By the mere filing of the ordinary action for collection
against the principal debtors, the petitioner in the present case is deemed to have elected a remedy,
as a result of which a waiver of the other necessarily must arise. Corollarily, no final judgment in
the collection suit is required for the rule on waiver to apply.
Hence, in Caltex Philippines, Inc. vs. Intermediate Appellate Court,[23] a case relied upon by
petitioner, supposedly to buttress its contention, this Court had occasion to rule that the mere act
of filing a collection suit for the recovery of a debt secured by a mortgage constitutes waiver of
the other remedy of foreclosure.
In the case at bar, petitioner BANTSA only has one cause of action which is non-payment of
the debt. Nevertheless, alternative remedies are available for its enjoyment and exercise. Petitioner
then may opt to exercise only one of two remedies so as not to violate the rule against splitting a
cause of action.
As elucidated by this Court in the landmark case of Bachrach Motor Co., Inc. vs. Icarangal.[24]

For non-payment of a note secured by mortgage, the creditor has a single cause of action against
the debtor. This single cause of action consists in the recovery of the credit with execution of the
security. In other words, the creditor in his action may make two demands, the payment of the debt
and the foreclosure of his mortgage. But both demands arise from the same cause, the non-payment
of the debt, and for that reason, they constitute a single cause of action. Though the debt and the
mortgage constitute separate agreements, the latter is subsidiary to the former, and both refer to
one and the same obligation. Consequently, there exists only one cause of action for a single breach
of that obligation. Plaintiff, then, by applying the rules above stated, cannot split up his single
cause of action by filing a complaint for payment of the debt, and thereafter another complaint for
foreclosure of the mortgage. If he does so, the filing of the first complaint will bar the subsequent
complaint. By allowing the creditor to file two separate complaints simultaneously or successively,
one to recover his credit and another to foreclose his mortgage, we will, in effect, be authorizing
him plural redress for a single breach of contract at so much cost to the courts and with so much
vexation and oppression to the debtor.

Petitioner further faults the Court of Appeals for allegedly disregarding the doctrine
enunciated in Caltex, wherein this High Court relaxed the application of the general rules to wit:

In the present case, however, we shall not follow this rule to the letter but declare that it is the
collection suit which was waived and/or abandoned. This ruling is more in harmony with the
principles underlying our judicial system. It is of no moment that the collection suit was filed ahead,
what is determinative is the fact that the foreclosure proceedings ended even before the decision
in the collection suit was rendered. x x x

Notably, though, petitioner took the Caltex ruling out of context. We must stress that the
Caltex case was never intended to overrule the well-entrenched doctrine enunciated in Bachrach,
which to our mind still finds applicability in cases of this sort. To reiterate, Bachrach is still good
law.
 We then quote the decision[25]of the trial court, in the present case, thus:

The aforequoted ruling in Caltex is the exception rather than the rule, dictated by the peculiar
circumstances obtaining therein. In the said case, the Supreme Court chastised Caltex for making
x x x a mockery of our judicial system when it initially filed a collection suit then, during the
pendency thereof, foreclosed extrajudicially the mortgaged property which secured the
indebtedness, and still pursued the collection suit to the end. Thus, to prevent a mockery of our
judicial system, the collection suit had to be nullified because the foreclosure proceedings have
already been pursued to their end and can no longer be undone.

xxxxxxxxx

In the case at bar, it has not been shown whether the defendant pursued to the end or are still
pursuing the collection suits filed in foreign courts. There is no occasion, therefore, for this court
to apply the exception laid down by the Supreme Court in Caltex, by nullifying the collection
suits.Quite obviously, too, the aforesaid collection suits are beyond the reach of this Court. Thus
the only way the court may prevent the spector of a creditor having plural redress for a single
breach of contract is by holding, as the Court hereby holds, that the defendant has waived the right
to foreclose the mortgages constituted by the plaintiff on its properties originally covered by
Transfer Certificates of Title Nos. T-78759, T-78762, T-78760 and T-78761. (RTC Decision pp.,
10-11)

In this light, the actuations of Caltex are deserving of severe criticism, to say the least.[26]
Moreover, petitioner attempts to mislead this Court by citing the case of PCIB vs.
IAC.[27] Again, petitioner tried to fit a square peg in a round hole. It must be stressed that far from
overturning the doctrine laid down in Bachrach, this Court in PCIB buttressed its firm stand on
this issue by declaring:

While the law allows a mortgage creditor to either institute a personal action for the debt or a real
action to foreclosure the mortgage, he cannot pursue both remedies simultaneously or successively
as was done by PCIB in this case.

xxxxxxxxx

Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of the 1.3 million promissory
note secured by real estate mortgages and subsequently filed a petition for extrajudicial foreclosure,
it violates the rule against splitting a cause of action.

Accordingly, applying the foregoing rules, we hold that petitioner, by the expediency of filing
four civil suits before foreign courts, necessarily abandoned the remedy to foreclose the real estate
mortgages constituted over the properties of third-party mortgagor and herein private respondent
ARC. Moreover, by filing the four civil actions and by eventually foreclosing extrajudicially the
mortgages, petitioner in effect transgressed the rules against splitting a cause of action well-
enshrined in jurisprudence and our statute books.
 In Bachrach, this Court resolved to deny the creditor the remedy of foreclosure after the
collection suit was filed, considering that the creditor should not be afforded plural redress for a
single breach of contract. For cause of action should not be confused with the remedy created for
its enforcement.[28]
Notably, it is not the nature of the redress which is crucial but the efficacy of the remedy
chosen in addressing the creditors cause. Hence, a suit brought before a foreign court having
competence and jurisdiction to entertain the action is deemed, for this purpose, to be within the
contemplation of the remedy available to the mortgagee-creditor. This pronouncement would best
serve the interest of justice and fair play and further discourage the noxious practice of splitting up
a lone cause of action.
Incidentally, BANTSA alleges that under English Law, which according to petitioner is the
governing law with regard to the principal agreements, the mortgagee does not lose its security
interest by simply filing civil actions for sums of money.[29]
We rule in the negative.
This argument shows desperation on the part of petitioner to rivet its crumbling cause. In the
case at bench, Philippine law shall apply notwithstanding the evidence presented by petitioner to
prove the English law on the matter.
In a long line of decisions, this Court adopted the well-imbedded principle in our jurisdiction
that there is no judicial notice of any foreign law. A foreign law must be properly pleaded and
proved as a fact.[30] Thus, if the foreign law involved is not properly pleaded and proved, our courts
will presume that the foreign law is the same as our local or domestic or internal law. [31] This is
what we refer to as the doctrine of processual presumption.
In the instant case, assuming arguendo that the English Law on the matter were properly
pleaded and proved in accordance with Section 24, Rule 132 of the Rules of Court and the
jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales,[32] said foreign law would still not find
applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established public
policy of the forum, the said foreign law, judgment or order shall not be applied.[33]
Additionally, prohibitive laws concerning persons, their acts or property, and those which
have for their object public order, public policy and good customs shall not be rendered ineffective
by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign
country.[34]
The public policy sought to be protected in the instant case is the principle imbedded in our
jurisdiction proscribing the splitting up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent -

If two or more suits are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal of the others.

Moreover, foreign law should not be applied when its application would work undeniable
injustice to the citizens or residents of the forum. To give justice is the most important function of
law; hence, a law, or judgment or contract that is obviously unjust negates the fundamental
principles of Conflict of Laws.[35]
Clearly then, English Law is not applicable.
As to the second pivotal issue, we hold that the private respondent is entitled to the award of
actual or compensatory damages inasmuch as the act of petitioner BANTSA in extrajudicially
foreclosing the real estate mortgages constituted a clear violation of the rights of herein private
respondent ARC, as third-party mortgagor.
Actual or compensatory damages are those recoverable because of pecuniary loss in business,
trade, property, profession, job or occupation and the same must be proved, otherwise if the proof
is flimsy and non-substantial, no damages will be given.[36] Indeed, the question of the value of
property is always a difficult one to settle as valuation of real property is an imprecise process
since real estate has no inherent value readily ascertainable by an appraiser or by the court.[37] The
opinions of men vary so much concerning the real value of property that the best the courts can do
is hear all of the witnesses which the respective parties desire to present, and then, by carefully
weighing that testimony, arrive at a conclusion which is just and equitable.[38]
In the instant case, petitioner assails the Court of Appeals for relying heavily on the valuation
made by Philippine Appraisal Company. In effect, BANTSA questions the act of the appellate
court in giving due weight to the appraisal report composed of twenty-three pages, signed by Mr.
Lauro Marquez and submitted as evidence by private respondent. The appraisal report, as the
records would readily show, was corroborated by the testimony of Mr. Reynaldo Flores, witness
for private respondent.
On this matter, the trial court observed:

The record herein reveals that plaintiff-appellee formally offered as evidence the appraisal report
dated March 29, 1993 (Exhibit J, Records, p. 409), consisting of twenty three (23) pages which set
out in detail the valuation of the property to determine its fair market value (TSN, April 22, 1994,
p. 4), in the amount of P99,986,592.00 (TSN, ibid., p. 5), together with the corroborative testimony
of one Mr. Reynaldo F. Flores, an appraiser and director of Philippine Appraisal Company, Inc.
(TSN, ibid., p. 3). The latters testimony was subjected to extensive cross-examination by counsel
for defendant-appellant (TSN, April 22, 1994, pp. 6-22).[39]

In the matter of credibility of witnesses, the Court reiterates the familiar and well-entrenched
rule that the factual findings of the trial court should be respected.[40] The time-tested jurisprudence
is that the findings and conclusions of the trial court on the credibility of witnesses enjoy a badge
of respect for the reason that trial courts have the advantage of observing the demeanor of witnesses
as they testify.[41]
This Court will not alter the findings of the trial court on the credibility of witnesses,
principally because they are in a better position to assess the same than the appellate
court.[42] Besides, trial courts are in a better position to examine real evidence as well as observe
the demeanor of witnesses.[43]
Similarly, the appreciation of evidence and the assessment of the credibility of witnesses rest
primarily with the trial court.[44] In the case at bar, we see no reason that would justify this Court
to disturb the factual findings of the trial court, as affirmed by the Court of Appeals, with regard
to the award of actual damages.
In arriving at the amount of actual damages, the trial court justified the award by presenting
the following ratiocination in its assailed decision[45], to wit:

Indeed, the Court has its own mind in the matter of valuation. The size of the subject real properties
are (sic) set forth in their individual titles, and the Court itself has seen the character and nature of
said properties during the ocular inspection it conducted. Based principally on the foregoing, the
Court makes the following observations:

1. The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose del Monte, Bulacan,
which is (sic) not distant from Metro Manila the biggest urban center in the Philippines and are
easily accessible through well-paved roads;

2. The properties are suitable for development into a subdivision for low cost housing, as admitted
by defendants own appraiser (TSN, May 30, 1994, p. 31);

3. The pigpens which used to exist in the property have already been demolished. Houses of strong
materials are found in the vicinity of the property (Exhs. 2, 2-1 to 2-7), and the vicinity is a growing
community. It has even been shown that the house of the Barangay Chairman is located adjacent
to the property in question (Exh. 27), and the only remaining piggery (named Cherry Farm) in the
vicinity is about 2 kilometers away from the western boundary of the property in question (TSN,
November 19, p. 3);

4. It will not be hard to find interested buyers of the property, as indubitably shown by the fact that
on March 18, 1994, ICCS (the buyer during the foreclosure sale) sold the consolidated real estate
properties to Stateland Investment Corporation, in whose favor new titles were issued, i.e., TCT
Nos. T-187781(m); T-187782(m), T-187783(m); T-16653P(m) and T-166521(m) by the Register
of Deeds of Meycauayan (sic), Bulacan;

5. The fact that ICCS was able to sell the subject properties to Stateland Investment Corporation
for Thirty-Nine Million (P39,000,000.00) Pesos, which is more than triple defendants appraisal
(Exh. 2) clearly shows that the Court cannot rely on defendants aforesaid estimate (Decision,
Records, p. 603).

It is a fundamental legal aphorism that the conclusions of the trial judge on the credibility of
witnesses command great respect and consideration especially when the conclusions are supported
by the evidence on record.[46] Applying the foregoing principle, we therefore hold that the trial
court committed no palpable error in giving credence to the testimony of Reynaldo Flores, who
according to the records, is a licensed real estate broker, appraiser and director of Philippine
Appraisal Company, Inc. since 1990.[47] As the records show, Flores had been with the company
for 26 years at the time of his testimony.
Of equal importance is the fact that the trial court did not confine itself to the appraisal report
dated 29 March 1993, and the testimony given by Mr. Reynaldo Flores, in determining the fair
market value of the real property. Above all these, the record would likewise show that the trial
judge in order to appraise himself of the characteristics and condition of the property, conducted
an ocular inspection where the opposing parties appeared and were duly represented.
Based on these considerations and the evidence submitted, we affirm the ruling of the trial
court as regards the valuation of the property

x x x a valuation of Ninety-Nine Million Pesos (P99,000,000.00) for the 39-hectare properties (sic)
translates to just about Two Hundred Fifty Four Pesos (P254.00) per square meter. This appears
to be, as the court so holds, a better approximation of the fair market value of the subject
properties. This is the amount which should be restituted by the defendant to the plaintiff by way
of actual or compensatory damages x x x.[48]

Further, petitioner ascribes error to the lower court for awarding an amount allegedly not asked
nor prayed for in private respondents complaint.
Notwithstanding the fact that the award of actual and compensatory damages by the lower
court exceeded that prayed for in the complaint, the same is nonetheless valid, subject to certain
qualifications.
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:

SEC. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised
by the pleadings are tried with the express or implied consent of the parties, they shall be treated
in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may
be necessary to cause them to conform to the evidence and to raise these issues may be made upon
motion of any party at any time, even after judgement; but failure to amend does not affect the
result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not
within the issues made by the pleadings, the court may allow the pleadings to be amended and
shall do so with liberality if the presentation of the merits of the action and the ends of substantial
justice will be subserved thereby. The court may grant a continuance to enable the amendment to
be made.

The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs. Asociacion de Agricultures
de Talisay-Silay, Inc.[49] citing Northern Cement Corporation vs. Intermediate Appellate
Court [50] is enlightening:

There have been instances where the Court has held that even without the necessary amendment,
the amount proved at the trial may be validly awarded, as in Tuazon v. Bolanos (95 Phil. 106),
where we said that if the facts shown entitled plaintiff to relief other than that asked for, no
amendment to the complaint was necessary, especially where defendant had himself raised the
point on which recovery was based. The appellate court could treat the pleading as amended to
conform to the evidence although the pleadings were actually not amended. Amendment is also
unnecessary when only clerical error or non-substantial matters are involved, as we held in Bank
of the Philippine Islands vs. Laguna (48 Phil. 5). In Co Tiamco vs. Diaz (75 Phil. 672), we stressed
that the rule on amendment need not be applied rigidly, particularly where no surprise or prejudice
is caused the objecting party. And in the recent case of National Power Corporation vs. Court of
Appeals (113 SCRA 556), we held that where there is a variance in the defendants pleadings and
the evidence adduced by it at the trial, the Court may treat the pleading as amended to conform
with the evidence.

It is the view of the Court that pursuant to the above-mentioned rule and in light of the decisions
cited, the trial court should not be precluded from awarding an amount higher than that claimed in
the pleading notwithstanding the absence of the required amendment. But it is upon the condition
that the evidence of such higher amount has been presented properly, with full opportunity on the
part of the opposing parties to support their respective contentions and to refute each other’s
evidence.

The failure of a party to amend a pleading to conform to the evidence adduced during trial does
not preclude an adjudication by the court on the basis of such evidence which may embody new
issues not raised in the pleadings, or serve as a basis for a higher award of damages. Although the
pleading may not have been amended to conform to the evidence submitted during trial, judgment
may nonetheless be rendered, not simply on the basis of the issues alleged but also on the basis of
issues discussed and the assertions of fact proved in the course of trial. The court may treat the
pleading as if it had been amended to conform to the evidence, although it had not been actually
so amended. Former Chief Justice Moran put the matter in this way:

`When evidence is presented by one party, with the expressed or implied consent of the adverse
party, as to issues not alleged in the pleadings, judgment may be rendered validly as regards those
issues, which shall be considered as if they have been raised in the pleadings. There is implied
consent to the evidence thus presented when the adverse party fails to object thereto.

Clearly, a court may rule and render judgment on the basis of the evidence before it even though
the relevant pleading had not been previously amended, so long as no surprise or prejudice is
thereby caused to the adverse party. Put a little differently, so long as the basis requirements of
fair play had been met, as where litigants were given full opportunity to support their respective
contentions and to object to or refute each other’s evidence, the court may validly treat the
pleadings as if they had been amended to conform to the evidence and proceed to adjudicate on
the basis of all the evidence before it.

In the instant case, inasmuch as the petitioner was afforded the opportunity to refute and object
to the evidence, both documentary and testimonial, formally offered by private respondent, the
rudiments of fair play are deemed satisfied. In fact, the testimony of Reynaldo Flores was put under
scrutiny during the course of the cross-examination. Under these circumstances, the court acted
within the bounds of its jurisdiction and committed no reversible error in awarding actual damages
the amount of which is higher than that prayed for. Verily, the lower courts actuations are
sanctioned by the Rules and supported by jurisprudence.
Similarly, we affirm the grant of exemplary damages although the amount of Five Million
Pesos (P5,000,000.00) awarded, being excessive, is subject to reduction. Exemplary or corrective
damages are imposed, by way of example or correction for the public good, in addition to the
moral, temperate, liquidated or compensatory damages.[51] Considering its purpose, it must be fair
and reasonable in every case and should not be awarded to unjustly enrich a prevailing party.[52] In
our view, an award of P50,000.00 as exemplary damages in the present case qualifies the test of
reasonableness.
 WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The
decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION of the amount
awarded as exemplary damages. Accordingly, petitioner is hereby ordered to pay private
respondent the sum of P99,000,000.00 as actual or compensatory damages; P50,000.00 as
exemplary damage and the costs of suit.
SO ORDERED.
G.R. No. 188289 August 20, 2014

DAVID A. NOVERAS, Petitioner,

vs.
LETICIA T. NOVERAS, Respondent.

PEREZ, J.:

Before the Court is a petition for review assailing the 9 May 2008 Decision1 of the Court of
Appeals in CA-G.R .. CV No. 88686, which affirmed in part the 8 December 2006 Decision2 of
the Regional Trial Court (RTC) of Baler, Aurora, Branch 96.

The factual antecedents are as follow:

David A. Noveras (David) and Leticia T. Noveras (Leticia) were married on 3 December 1988 in
Quezon City, Philippines. They resided in California, United States of America (USA) where they
eventually acquired American citizenship. They then begot two children, namely: Jerome T.

Noveras, who was born on 4 November 1990 and JenaT. Noveras, born on 2 May 1993. David
was engaged in courier service business while Leticia worked as a nurse in San Francisco,
California.

During the marriage, they acquired the following properties in the Philippines and in the USA:

PHILIPPINES
PROPERTY FAIR MARKET VALUE
House and Lot with an area of 150 sq. m. ₱1,693,125.00
located at 1085 Norma Street, Sampaloc,
Manila (Sampaloc property)
Agricultural land with an area of 20,742 sq. ₱400,000.00
m. located at Laboy, Dipaculao, Aurora
A parcel of land with an area of 2.5 hectares ₱490,000.00
located at Maria Aurora, Aurora
A parcel of land with an area of 175 sq.m. ₱175,000.00 3

located at Sabang Baler, Aurora

3-has. coconut plantation in San Joaquin ₱750,000.00
Maria Aurora, Aurora
USA
PROPERTY FAIR MARKET VALUE
House and Lot at 1155 Hanover Street, Daly
City, California
 $550,000.00
(unpaid debt of
$285,000.00)
Furniture and furnishings $3,000
Jewelries (ring and watch) $9,000
2000 Nissan Frontier 4x4 pickup truck $13,770.00
Bank of America Checking Account $8,000
Bank of America Cash Deposit
Life Insurance (Cash Value) $100,000.00
4
Retirement, pension, profit-sharing, $56,228.00
annuities

The Sampaloc property used to be owned by David’s parents. The parties herein secured a loan
from a bank and mortgaged the property. When said property was about to be foreclosed, the
couple paid a total of ₱1.5 Million for the redemption of the same.

Due to business reverses, David left the USA and returned to the Philippines in 2001. In December
2002,Leticia executed a Special Power of Attorney (SPA) authorizing David to sell the Sampaloc
property for ₱2.2 Million. According to Leticia, sometime in September 2003, David abandoned
his family and lived with Estrellita Martinez in Aurora province. Leticia claimed that David agreed
to and executed a Joint Affidavit with Leticia in the presence of David’s father, Atty. Isaias
Noveras, on 3 December 2003 stating that: 1) the ₱1.1Million proceeds from the sale of the
Sampaloc property shall be paid to and collected by Leticia; 2) that David shall return and pay to
Leticia ₱750,000.00, which is equivalent to half of the amount of the redemption price of the
Sampaloc property; and 3) that David shall renounce and forfeit all his rights and interest in the
conjugal and real properties situated in the Philippines.5 David was able to collect ₱1,790,000.00
from the sale of the Sampaloc property, leaving an unpaid balance of ₱410,000.00.

Upon learning that David had an extra-marital affair, Leticia filed a petition for divorce with the
Superior Court of California, County of San Mateo, USA. The California court granted the divorce
on 24 June 2005 and judgment was duly entered on 29 June 2005.6 The California court granted
to Leticia the custody of her two children, as well as all the couple’s properties in the USA.7

On 8 August 2005, Leticia filed a petition for Judicial Separation of Conjugal Property before the
RTC of Baler, Aurora. She relied on the 3 December 2003 Joint Affidavit and David’s failure to
comply with his obligation under the same. She prayed for: 1) the power to administer all conjugal
properties in the Philippines; 2) David and his partner to cease and desist from selling the subject
conjugal properties; 3) the declaration that all conjugal properties be forfeited in favor of her
children; 4) David to remit half of the purchase price as share of Leticia from the sale of the
Sampaloc property; and 5) the payment of₱50,000.00 and ₱100,000.00 litigation expenses.8
In his Answer, David stated that a judgment for the dissolution of their marriage was entered on
29 June 2005 by the Superior Court of California, County of San Mateo. He demanded that the
conjugal partnership properties, which also include the USA properties, be liquidated and that all
expenses of liquidation, including attorney’s fees of both parties be charged against the conjugal
partnership.9

The RTC of Baler, Aurora simplified the issues as follow:

1. Whether or not respondent David A. Noveras committed acts of abandonment and

marital infidelity which can result into the forfeiture of the parties’ properties in favor of
the petitioner and their two (2) children.

2. Whether or not the Court has jurisdiction over the properties in California, U.S.A. and
the same can be included in the judicial separation prayed for.

3. Whether or not the "Joint Affidavit" x x x executed by petitioner Leticia T. Noveras and
respondent David A. Noveras will amount to a waiver or forfeiture of the latter’s property
rights over their conjugal properties.

4. Whether or not Leticia T. Noveras is entitled to reimbursement of one half of the ₱2.2
[M]illion sales proceeds of their property in Sampaloc, Manila and one-half of the ₱1.5
[M]illion used to redeem the property of Atty. Isaias Noveras, including interests and
charges.

5. How the absolute community properties should be distributed.

6. Whether or not the attorney’s fees and litigation expenses of the parties were chargeable
against their conjugal properties.

Corollary to the above is the issue of:

Whether or not the two common children of the parties are entitled to support and presumptive
legitimes.10

On 8 December 2006, the RTC rendered judgment as follows:

1. The absolute community of property of the parties is hereby declared DISSOLVED;

2. The net assets of the absolute community of property of the parties in the Philippines are
hereby ordered to be awarded to respondent David A. Noveras only, with the properties in
the United States of America remaining in the sole ownership of petitioner Leticia Noveras
a.k.a. Leticia Tacbiana pursuant to the divorce decree issued by the Superior Court of
California, County of San Mateo, United States of America, dissolving the marriage of the
parties as of June 24, 2005. The titles presently covering said properties shall be cancelled
and new titles be issued in the name of the party to whom said properties are awarded;
 3. One-half of the properties awarded to respondent David A. Noveras in the preceding
paragraph are hereby given to Jerome and Jena, his two minor children with petitioner
Leticia Noveras a.k.a. Leticia Tacbiana as their presumptive legitimes and said legitimes
must be annotated on the titles covering the said properties. Their share in the income from
these properties shall be remitted to them annually by the respondent within the first half
of January of each year, starting January 2008;

4. One-half of the properties in the United States of America awarded to petitioner Leticia
Noveras a.k.a. Leticia Tacbiana in paragraph 2 are hereby given to Jerome and Jena, her
two minor children with respondent David A. Noveras as their presumptive legitimes and
said legitimes must be annotated on the titles/documents covering the said properties. Their
share in the income from these properties, if any, shall be remitted to them annually by the
petitioner within the first half of January of each year, starting January 2008;

5. For the support of their two (2) minor children, Jerome and Jena, respondent David A.
Noveras shall give them US$100.00 as monthly allowance in addition to their income from
their presumptive legitimes, while petitioner Leticia Tacbiana shall take care of their food,
clothing, education and other needs while they are in her custody in the USA. The monthly
allowance due from the respondent shall be increased in the future as the needs of the
children require and his financial capacity can afford;

6. Of the unpaid amount of ₱410,000.00 on the purchase price of the Sampaloc property,
the Paringit Spouses are hereby ordered to pay ₱5,000.00 to respondent David A. Noveras
and ₱405,000.00 to the two children. The share of the respondent may be paid to him
directly but the share of the two children shall be deposited with a local bank in Baler,
Aurora, in a joint account to be taken out in their names, withdrawal from which shall only
be made by them or by their representative duly authorized with a Special Power of
Attorney. Such payment/deposit shall be made within the period of thirty (30) days after
receipt of a copy of this Decision, with the passbook of the joint account to be submitted
to the custody of the Clerk of Court of this Court within the same period. Said passbook
can be withdrawn from the Clerk of Court only by the children or their attorney-in-fact;
and

7. The litigation expenses and attorney’s fees incurred by the parties shall be shouldered
by them individually.11

The trial court recognized that since the parties are US citizens, the laws that cover their legal and
personal status are those of the USA. With respect to their marriage, the parties are divorced by
virtue of the decree of dissolution of their marriage issued by the Superior Court of California,
County of San Mateo on 24June 2005. Under their law, the parties’ marriage had already been
dissolved. Thus, the trial court considered the petition filed by Leticia as one for liquidation of the
absolute community of property regime with the determination of the legitimes, support and
custody of the children, instead of an action for judicial separation of conjugal property.

With respect to their property relations, the trial court first classified their property regime as
absolute community of property because they did not execute any marriage settlement before the
solemnization of their marriage pursuant to Article 75 of the Family Code. Then, the trial court
ruled that in accordance with the doctrine of processual presumption, Philippine law should apply
because the court cannot take judicial notice of the US law since the parties did not submit any
proof of their national law. The trial court held that as the instant petition does not fall under the
provisions of the law for the grant of judicial separation of properties, the absolute community
properties cannot be forfeited in favor of Leticia and her children. Moreover, the trial court
observed that Leticia failed to prove abandonment and infidelity with preponderant evidence.

The trial court however ruled that Leticia is not entitled to the reimbursements she is praying for
considering that she already acquired all of the properties in the USA. Relying still on the principle
of equity, the Court also adjudicated the Philippine properties to David, subject to the payment of
the children’s presumptive legitimes. The trial court held that under Article 89 of the Family Code,
the waiver or renunciation made by David of his property rights in the Joint Affidavit is void.

On appeal, the Court of Appeals modified the trial court’s Decision by directing the equal division
of the Philippine properties between the spouses. Moreover, with respect to the common children’s
presumptive legitime, the appellate court ordered both spouses to each pay their children the
amount of ₱520,000.00, thus:

WHEREFORE, the instant appeal is PARTLY GRANTED. Numbers 2, 4 and 6 of the assailed
Decision dated December 8, 2006 of Branch 96, RTC of Baler, Aurora Province, in Civil Case No.
828 are hereby MODIFIED to read as follows:

2. The net assets of the absolute community of property of the parties in the Philippines are
hereby divided equally between petitioner Leticia Noveras a.k.a. Leticia Tacbiana (sic) and
respondent David A. Noveras;

xxx

4. One-half of the properties awarded to petitioner Leticia Tacbiana (sic) in paragraph 2

shall pertain to her minor children, Jerome and Jena, as their presumptive legitimes which
shall be annotated on the titles/documents covering the said properties. Their share in the
income therefrom, if any, shall be remitted to them by petitioner annually within the first
half of January, starting 2008;

xxx

6. Respondent David A. Noveras and petitioner Leticia Tacbiana (sic) are each ordered to
pay the amount of₱520,000.00 to their two children, Jerome and Jena, as their presumptive
legitimes from the sale of the Sampaloc property inclusive of the receivables therefrom,
which shall be deposited to a local bank of Baler, Aurora, under a joint account in the
latter’s names. The payment/deposit shall be made within a period of thirty (30) days from
receipt ofa copy of this Decision and the corresponding passbook entrusted to the custody
of the Clerk of Court a quo within the same period, withdrawable only by the children or
their attorney-in-fact.
 A number 8 is hereby added, which shall read as follows:

8. Respondent David A. Noveras is hereby ordered to pay petitioner Leticia Tacbiana (sic)
the amount of ₱1,040,000.00 representing her share in the proceeds from the sale of the
Sampaloc property.

The last paragraph shall read as follows:

Send a copy of this Decision to the local civil registry of Baler, Aurora; the local civil registry of
Quezon City; the Civil Registrar General, National Statistics Office, Vibal Building, Times Street
corner EDSA, Quezon City; the Office of the Registry of Deeds for the Province of Aurora; and
to the children, Jerome Noveras and Jena Noveras.

The rest of the Decision is AFFIRMED.12

In the present petition, David insists that the Court of Appeals should have recognized the
California Judgment which awarded the Philippine properties to him because said judgment was
part of the pleading presented and offered in evidence before the trial court. David argues that
allowing Leticia to share in the Philippine properties is tantamount to unjust enrichment in favor
of Leticia considering that the latter was already granted all US properties by the California court.

In summary and review, the basic facts are: David and Leticia are US citizens who own properties
in the USA and in the Philippines. Leticia obtained a decree of divorce from the Superior Court of
California in June 2005 wherein the court awarded all the properties in the USA to Leticia. With
respect to their properties in the Philippines, Leticia filed a petition for judicial separation of
conjugal properties.

At the outset, the trial court erred in recognizing the divorce decree which severed the bond of
marriage between the parties. In Corpuz v. Sto. Tomas,13 we stated that:

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that
our courts do not take judicial notice of foreign judgments and laws. Justice Herrera explained that,
as a rule, "no sovereign is bound to give effect within its dominion to a judgment rendered by a
tribunal of another country." This means that the foreign judgment and its authenticity must be
proven as facts under our rules on evidence, together with the alien’s applicable national law to
show the effect of the judgment on the alien himself or herself. The recognition may be made in
an action instituted specifically for the purpose or in another action where a party invokes the
foreign decree as an integral aspect of his claim or defense.14

The requirements of presenting the foreign divorce decree and the national law of the foreigner
must comply with our Rules of Evidence. Specifically, for Philippine courts to recognize a foreign
judgment relating to the status of a marriage, a copy of the foreign judgment may be admitted in
evidence and proven as a fact under Rule 132, Sections 24 and 25, in relation to Rule 39, Section
48(b) of the Rules of Court.15
Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal
may be proved by: (1) an official publication thereof or (2) a copy attested by the officer having
the legal custody thereof. Such official publication or copy must be accompanied, if the record is
not kept in the Philippines, with a certificate that the attesting officer has the legal custody thereof.
The certificate may be issued by any of the authorized Philippine embassy or consular officials
stationed in the foreign country in which the record is kept, and authenticated by the seal of his
office. The attestation must state, in substance, that the copy is a correct copy of the original, or a
specific part thereof, as the case may be, and must be under the official seal of the attesting officer.

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

Based on the records, only the divorce decree was presented in evidence. The required certificates
to prove its authenticity, as well as the pertinent California law on divorce were not presented.

It may be noted that in Bayot v. Court of Appeals,16 we relaxed the requirement on certification
where we held that "[petitioner therein] was clearly an American citizen when she secured the
divorce and that divorce is recognized and allowed in any of the States of the Union, the
presentation of a copy of foreign divorce decree duly authenticated by the foreign court issuing
said decree is, as here, sufficient." In this case however, it appears that there is no seal from the
office where the divorce decree was obtained.

Even if we apply the doctrine of processual presumption17 as the lower courts did with respect to
the property regime of the parties, the recognition of divorce is entirely a different matter because,
to begin with, divorce is not recognized between Filipino citizens in the Philippines. Absent a valid
recognition of the divorce decree, it follows that the parties are still legally married in the
Philippines. The trial court thus erred in proceeding directly to liquidation.

As a general rule, any modification in the marriage settlements must be made before the celebration
of marriage. An exception to this rule is allowed provided that the modification is judicially
approved and refers only to the instances provided in Articles 66,67, 128, 135 and 136 of the
Family Code.18

Leticia anchored the filing of the instant petition for judicial separation of property on paragraphs
4 and 6 of Article 135 of the Family Code, to wit:

Art. 135. Any of the following shall be considered sufficient cause for judicial separation of
property:

(1) That the spouse of the petitioner has been sentenced to a penalty which carries with it
civil interdiction;

(2) That the spouse of the petitioner has been judicially declared an absentee;
 (3) That loss of parental authority of the spouse of petitioner has been decreed by the court;

(4) That the spouse of the petitioner has abandoned the latter or failed to comply with his
or her obligations to the family as provided for in Article 101;

(5) That the spouse granted the power of administration in the marriage settlements has
abused that power; and

(6) That at the time of the petition, the spouses have been separated in fact for at least one
year and reconciliation is highly improbable.

In the cases provided for in Numbers (1), (2), and (3), the presentation of the final judgment against
the guilty or absent spouse shall be enough basis for the grant of the decree of judicial separation
of property. (Emphasis supplied).

The trial court had categorically ruled that there was no abandonment in this case to necessitate
judicial separation of properties under paragraph 4 of Article 135 of the Family Code. The trial
court ratiocinated:

Moreover, abandonment, under Article 101 of the Family Code quoted above, must be for a valid
cause and the spouse is deemed to have abandoned the other when he/she has left the conjugal
dwelling without intention of returning. The intention of not returning is prima facie presumed if
the allegedly [sic] abandoning spouse failed to give any information as to his or her whereabouts
within the period of three months from such abandonment.

In the instant case, the petitioner knows that the respondent has returned to and stayed at his
hometown in Maria Aurora, Philippines, as she even went several times to visit him there after the
alleged abandonment. Also, the respondent has been going back to the USA to visit her and their
children until the relations between them worsened. The last visit of said respondent was in
October 2004 when he and the petitioner discussed the filing by the latter of a petition for
dissolution of marriage with the California court. Such turn for the worse of their relationship and
the filing of the said petition can also be considered as valid causes for the respondent to stay in
the Philippines.19

Separation in fact for one year as a ground to grant a judicial separation of property was not tackled
in the trial court’s decision because, the trial court erroneously treated the petition as liquidation
of the absolute community of properties.

The records of this case are replete with evidence that Leticia and David had indeed separated for
more than a year and that reconciliation is highly improbable. First, while actual abandonment had
not been proven, it is undisputed that the spouses had been living separately since 2003 when
David decided to go back to the Philippines to set up his own business. Second, Leticia heard from
her friends that David has been cohabiting with Estrellita Martinez, who represented herself as
Estrellita Noveras. Editha Apolonio, who worked in the hospital where David was once confined,
testified that she saw the name of Estrellita listed as the wife of David in the Consent for Operation
form.20Third and more significantly, they had filed for divorce and it was granted by the California
court in June 2005.

Having established that Leticia and David had actually separated for at least one year, the petition
for judicial separation of absolute community of property should be granted.

The grant of the judicial separation of the absolute community property automatically dissolves
the absolute community regime, as stated in the 4th paragraph of Article 99 of the Family Code,
thus:

Art. 99. The absolute community terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled or declared void; or

(4) In case of judicial separation of property during the marriage under Articles 134 to 138.
(Emphasis supplied).

Under Article 102 of the same Code, liquidation follows the dissolution of the absolute community
regime and the following procedure should apply:

Art. 102. Upon dissolution of the absolute community regime, the following procedure shall apply:

(1) An inventory shall be prepared, listing separately all the properties of the absolute
community and the exclusive properties of each spouse.

(2) The debts and obligations of the absolute community shall be paid out of its assets. In
case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid
balance with their separate properties in accordance with the provisions of the second
paragraph of Article 94.

(3) Whatever remains of the exclusive properties of the spouses shall thereafter be
delivered to each of them.

(4) The net remainder of the properties of the absolute community shall constitute its net
assets, which shall be divided equally between husband and wife, unless a different
proportion or division was agreed upon in the marriage settlements, or unless there has
been a voluntary waiver of such share provided in this Code. For purposes of computing
the net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2),
the said profits shall be the increase in value between the market value of the community
property at the time of the celebration of the marriage and the market value at the time of
its dissolution.
 (5) The presumptive legitimes of the common children shall be delivered upon partition,
in accordance with Article 51.

(6) Unless otherwise agreed upon by the parties, in the partition of the properties, the
conjugal dwelling and the lot on which it is situated shall be adjudicated to the spouse with
whom the majority of the common children choose to remain. Children below the age of
seven years are deemed to have chosen the mother, unless the court has decided otherwise.
In case there is no such majority, the court shall decide, taking into consideration the best
interests of said children. At the risk of being repetitious, we will not remand the case to
the trial court. Instead, we shall adopt the modifications made by the Court of Appeals on
the trial court’s Decision with respect to liquidation.

We agree with the appellate court that the Philippine courts did not acquire jurisdiction over the
California properties of David and Leticia. Indeed, Article 16 of the Civil Code clearly states that
real property as well as personal property is subject to the law of the country where it is situated.
Thus, liquidation shall only be limited to the Philippine properties.

We affirm the modification made by the Court of Appeals with respect to the share of the spouses
in the absolute community properties in the Philippines, as well as the payment of their children’s
presumptive legitimes, which the appellate court explained in this wise:

Leticia and David shall likewise have an equal share in the proceeds of the Sampaloc
property.1âwphi1 While both claimed to have contributed to the redemption of the Noveras
property, absent a clear showing where their contributions came from, the same is presumed to
have come from the community property. Thus, Leticia is not entitled to reimbursement of half of
the redemption money.

David's allegation that he used part of the proceeds from the sale of the Sampaloc property for the
benefit of the absolute community cannot be given full credence. Only the amount of ₱120,000.00
incurred in going to and from the U.S.A. may be charged thereto. Election expenses in the amount
of ₱300,000.00 when he ran as municipal councilor cannot be allowed in the absence of receipts
or at least the Statement of Contributions and Expenditures required under Section 14 of Republic
Act No. 7166 duly received by the Commission on Elections. Likewise, expenses incurred to settle
the criminal case of his personal driver is not deductible as the same had not benefited the family.
In sum, Leticia and David shall share equally in the proceeds of the sale net of the amount of
₱120,000.00 or in the respective amounts of ₱1,040,000.00.

xxxx

Under the first paragraph of Article 888 of the Civil Code, "(t)he legitime of legitimate children
and descendants consists of one-half or the hereditary estate of the father and of the mother." The
children arc therefore entitled to half of the share of each spouse in the net assets of the absolute
community, which shall be annotated on the titles/documents covering the same, as well as to their
respective shares in the net proceeds from the sale of the Sampaloc property including the
receivables from Sps. Paringit in the amount of ₱410,000.00. Consequently, David and Leticia
should each pay them the amount of ₱520,000.00 as their presumptive legitimes therefrom.21
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA G.R.
CV No. 88686 is AFFIRMED.

SO ORDERED.
G.R. No. 186571 August 11, 2010

GERBERT R. CORPUZ, Petitioner,

vs.
DAISYLYN TIROL STO. TOMAS and The SOLICITOR GENERAL, Respondents.

BRION, J.:

Before the Court is a direct appeal from the decision1 of the Regional Trial Court (RTC) of Laoag
City, Branch 11, elevated via a petition for review on certiorari2 under Rule 45 of the Rules of
Court (present petition).

Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired Canadian citizenship
through naturalization on November 29, 2000.3 On January 18, 2005, Gerbert married respondent
Daisylyn T. Sto. Tomas, a Filipina, in Pasig City.4 Due to work and other professional
commitments, Gerbert left for Canada soon after the wedding. He returned to the Philippines
sometime in April 2005 to surprise Daisylyn, but was shocked to discover that his wife was having
an affair with another man. Hurt and disappointed, Gerbert returned to Canada and filed a petition
for divorce. The Superior Court of Justice, Windsor, Ontario, Canada granted Gerbert’s petition
for divorce on December 8, 2005. The divorce decree took effect a month later, on January 8,
2006.5

Two years after the divorce, Gerbert has moved on and has found another Filipina to love. Desirous
of marrying his new Filipina fiancée in the Philippines, Gerbert went to the Pasig City Civil
Registry Office and registered the Canadian divorce decree on his and Daisylyn’s marriage
certificate. Despite the registration of the divorce decree, an official of the National Statistics
Office (NSO) informed Gerbert that the marriage between him and Daisylyn still subsists under
Philippine law; to be enforceable, the foreign divorce decree must first be judicially recognized by
a competent Philippine court, pursuant to NSO Circular No. 4, series of 1982.6

Accordingly, Gerbert filed a petition for judicial recognition of foreign divorce and/or declaration
of marriage as dissolved (petition) with the RTC. Although summoned, Daisylyn did not file any
responsive pleading but submitted instead a notarized letter/manifestation to the trial court. She
offered no opposition to Gerbert’s petition and, in fact, alleged her desire to file a similar case
herself but was prevented by financial and personal circumstances. She, thus, requested that she
be considered as a party-in-interest with a similar prayer to Gerbert’s.

In its October 30, 2008 decision,7 the RTC denied Gerbert’s petition. The RTC concluded that
Gerbert was not the proper party to institute the action for judicial recognition of the foreign
divorce decree as he is a naturalized Canadian citizen. It ruled that only the Filipino spouse can
avail of the remedy, under the second paragraph of Article 26 of the Family Code, 8 in order for
him or her to be able to remarry under Philippine law.9 Article 26 of the Family Code reads:

Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in force in
the country where they were solemnized, and valid there as such, shall also be valid in this country,
except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under Philippine law.

This conclusion, the RTC stated, is consistent with the legislative intent behind the enactment of
the second paragraph of Article 26 of the Family Code, as determined by the Court in Republic v.
Orbecido III;10 the provision was enacted to "avoid the absurd situation where the Filipino spouse
remains married to the alien spouse who, after obtaining a divorce, is no longer married to the
Filipino spouse."11

THE PETITION

From the RTC’s ruling,12 Gerbert filed the present petition.13

Gerbert asserts that his petition before the RTC is essentially for declaratory relief, similar to that
filed in Orbecido; he, thus, similarly asks for a determination of his rights under the second
paragraph of Article 26 of the Family Code. Taking into account the rationale behind the second
paragraph of Article 26 of the Family Code, he contends that the provision applies as well to the
benefit of the alien spouse. He claims that the RTC ruling unduly stretched the doctrine in Orbecido
by limiting the standing to file the petition only to the Filipino spouse – an interpretation he claims
to be contrary to the essence of the second paragraph of Article 26 of the Family Code. He
considers himself as a proper party, vested with sufficient legal interest, to institute the case, as
there is a possibility that he might be prosecuted for bigamy if he marries his Filipina fiancée in
the Philippines since two marriage certificates, involving him, would be on file with the Civil
Registry Office. The Office of the Solicitor General and Daisylyn, in their respective
Comments,14 both support Gerbert’s position.

Essentially, the petition raises the issue of whether the second paragraph of Article 26 of the Family
Code extends to aliens the right to petition a court of this jurisdiction for the recognition of a
foreign divorce decree.

THE COURT’S RULING

The alien spouse can claim no right under the second paragraph of Article 26 of the Family Code
as the substantive right it establishes is in favor of the Filipino spouse

The resolution of the issue requires a review of the legislative history and intent behind the second
paragraph of Article 26 of the Family Code.

The Family Code recognizes only two types of defective marriages – void15 and
voidable16 marriages. In both cases, the basis for the judicial declaration of absolute nullity or
annulment of the marriage exists before or at the time of the marriage. Divorce, on the other hand,
contemplates the dissolution of the lawful union for cause arising after the marriage.17 Our family
laws do not recognize absolute divorce between Filipino citizens.18
Recognizing the reality that divorce is a possibility in marriages between a Filipino and an alien,
President Corazon C. Aquino, in the exercise of her legislative powers under the Freedom
Constitution,19 enacted Executive Order No. (EO) 227, amending Article 26 of the Family Code
to its present wording, as follows:

Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in force in
the country where they were solemnized, and valid there as such, shall also be valid in this country,
except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.

Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under Philippine law.

Through the second paragraph of Article 26 of the Family Code, EO 227 effectively incorporated
into the law this Court’s holding in Van Dorn v. Romillo, Jr.20 and Pilapil v. Ibay-Somera.21 In
both cases, the Court refused to acknowledge the alien spouse’s assertion of marital rights after a
foreign court’s divorce decree between the alien and the Filipino. The Court, thus, recognized that
the foreign divorce had already severed the marital bond between the spouses. The Court reasoned
in Van Dorn v. Romillo that:

To maintain x x x that, under our laws, [the Filipino spouse] has to be considered still married to
[the alien spouse] and still subject to a wife's obligations x x x cannot be just. [The Filipino spouse]
should not be obliged to live together with, observe respect and fidelity, and render support to [the
alien spouse]. The latter should not continue to be one of her heirs with possible rights to conjugal
property. She should not be discriminated against in her own country if the ends of justice are to
be served.22

As the RTC correctly stated, the provision was included in the law "to avoid the absurd situation
where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no
longer married to the Filipino spouse."23 The legislative intent is for the benefit of the Filipino
spouse, by clarifying his or her marital status, settling the doubts created by the divorce decree.
Essentially, the second paragraph of Article 26 of the Family Code provided the Filipino spouse a
substantive right to have his or her marriage to the alien spouse considered as dissolved,
capacitating him or her to remarry.24 Without the second paragraph of Article 26 of the Family
Code, the judicial recognition of the foreign decree of divorce, whether in a proceeding instituted
precisely for that purpose or as a related issue in another proceeding, would be of no significance
to the Filipino spouse since our laws do not recognize divorce as a mode of severing the marital
bond;25 Article 17 of the Civil Code provides that the policy against absolute divorces cannot be
subverted by judgments promulgated in a foreign country. The inclusion of the second paragraph
in Article 26 of the Family Code provides the direct exception to this rule and serves as basis for
recognizing the dissolution of the marriage between the Filipino spouse and his or her alien spouse.

Additionally, an action based on the second paragraph of Article 26 of the Family Code is not
limited to the recognition of the foreign divorce decree. If the court finds that the decree capacitated
the alien spouse to remarry, the courts can declare that the Filipino spouse is likewise capacitated
to contract another marriage. No court in this jurisdiction, however, can make a similar declaration
for the alien spouse (other than that already established by the decree), whose status and legal
capacity are generally governed by his national law.26

Given the rationale and intent behind the enactment, and the purpose of the second paragraph of
Article 26 of the Family Code, the RTC was correct in limiting the applicability of the provision
for the benefit of the Filipino spouse. In other words, only the Filipino spouse can invoke the
second paragraph of Article 26 of the Family Code; the alien spouse can claim no right under this
provision.

The foreign divorce decree is presumptive evidence of a right that clothes the party with legal
interest to petition for its recognition in this jurisdiction

We qualify our above conclusion – i.e., that the second paragraph of Article 26 of the Family Code
bestows no rights in favor of aliens – with the complementary statement that this conclusion is not
sufficient basis to dismiss Gerbert’s petition before the RTC. In other words, the unavailability of
the second paragraph of Article 26 of the Family Code to aliens does not necessarily strip Gerbert
of legal interest to petition the RTC for the recognition of his foreign divorce decree. The foreign
divorce decree itself, after its authenticity and conformity with the alien’s national law have been
duly proven according to our rules of evidence, serves as a presumptive evidence of right in favor
of Gerbert, pursuant to Section 48, Rule 39 of the Rules of Court which provides for the effect of
foreign judgments. This Section states:

SEC. 48. Effect of foreign judgments or final orders.—The effect of a judgment or final order of
a tribunal of a foreign country, having jurisdiction to render the judgment or final order is as
follows:

(a) In case of a judgment or final order upon a specific thing, the judgment or final order is
conclusive upon the title of the thing; and

(b) In case of a judgment or final order against a person, the judgment or final order is
presumptive evidence of a right as between the parties and their successors in interest by a
subsequent title.

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact.

To our mind, direct involvement or being the subject of the foreign judgment is sufficient to clothe
a party with the requisite interest to institute an action before our courts for the recognition of the
foreign judgment. In a divorce situation, we have declared, no less, that the divorce obtained by
an alien abroad may be recognized in the Philippines, provided the divorce is valid according to
his or her national law.27

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that
our courts do not take judicial notice of foreign judgments and laws. Justice Herrera explained that,
as a rule, "no sovereign is bound to give effect within its dominion to a judgment rendered by a
tribunal of another country."28 This means that the foreign judgment and its authenticity must be
proven as facts under our rules on evidence, together with the alien’s applicable national law to
show the effect of the judgment on the alien himself or herself.29 The recognition may be made in
an action instituted specifically for the purpose or in another action where a party invokes the
foreign decree as an integral aspect of his claim or defense.

In Gerbert’s case, since both the foreign divorce decree and the national law of the alien,
recognizing his or her capacity to obtain a divorce, purport to be official acts of a sovereign
authority, Section 24, Rule 132 of the Rules of Court comes into play. This Section requires proof,
either by (1) official publications or (2) copies attested by the officer having legal custody of the
documents. If the copies of official records are not kept in the Philippines, these must be (a)
accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine
foreign service stationed in the foreign country in which the record is kept and (b) authenticated
by the seal of his office.

The records show that Gerbert attached to his petition a copy of the divorce decree, as well as the
required certificates proving its authenticity,30 but failed to include a copy of the Canadian law on
divorce.31 Under this situation, we can, at this point, simply dismiss the petition for insufficiency
of supporting evidence, unless we deem it more appropriate to remand the case to the RTC to
determine whether the divorce decree is consistent with the Canadian divorce law.

We deem it more appropriate to take this latter course of action, given the Article 26 interests that
will be served and the Filipina wife’s (Daisylyn’s) obvious conformity with the petition. A remand,
at the same time, will allow other interested parties to oppose the foreign judgment and overcome
a petitioner’s presumptive evidence of a right by proving want of jurisdiction, want of notice to a
party, collusion, fraud, or clear mistake of law or fact. Needless to state, every precaution must be
taken to ensure conformity with our laws before a recognition is made, as the foreign judgment,
once recognized, shall have the effect of res judicata32 between the parties, as provided in Section
48, Rule 39 of the Rules of Court.33

In fact, more than the principle of comity that is served by the practice of reciprocal recognition of
foreign judgments between nations, the res judicata effect of the foreign judgments of divorce
serves as the deeper basis for extending judicial recognition and for considering the alien spouse
bound by its terms. This same effect, as discussed above, will not obtain for the Filipino spouse
were it not for the substantive rule that the second paragraph of Article 26 of the Family Code
provides.

Considerations beyond the recognition of the foreign divorce decree

As a matter of "housekeeping" concern, we note that the Pasig City Civil Registry Office has
already recorded the divorce decree on Gerbert and Daisylyn’s marriage certificate based on the
mere presentation of the decree.34 We consider the recording to be legally improper; hence, the
need to draw attention of the bench and the bar to what had been done.

Article 407 of the Civil Code states that "[a]cts, events and judicial decrees concerning the civil
status of persons shall be recorded in the civil register." The law requires the entry in the civil
registry of judicial decrees that produce legal consequences touching upon a person’s legal
capacity and status, i.e., those affecting "all his personal qualities and relations, more or less
permanent in nature, not ordinarily terminable at his own will, such as his being legitimate or
illegitimate, or his being married or not."35

A judgment of divorce is a judicial decree, although a foreign one, affecting a person’s legal
capacity and status that must be recorded. In fact, Act No. 3753 or the Law on Registry of Civil
Status specifically requires the registration of divorce decrees in the civil registry:

Sec. 1. Civil Register. – A civil register is established for recording the civil status of persons, in
which shall be entered:

(a) births;

(b) deaths;

(c) marriages;

(d) annulments of marriages;

(e) divorces;

(f) legitimations;

(g) adoptions;

(h) acknowledgment of natural children;

(i) naturalization; and

(j) changes of name.

xxxx

Sec. 4. Civil Register Books. — The local registrars shall keep and preserve in their offices the
following books, in which they shall, respectively make the proper entries concerning the civil
status of persons:

(1) Birth and death register;

(2) Marriage register, in which shall be entered not only the marriages solemnized but also
divorces and dissolved marriages.

(3) Legitimation, acknowledgment, adoption, change of name and naturalization register.

But while the law requires the entry of the divorce decree in the civil registry, the law and the
submission of the decree by themselves do not ipso facto authorize the decree’s registration. The
law should be read in relation with the requirement of a judicial recognition of the foreign judgment
before it can be given res judicata effect. In the context of the present case, no judicial order as yet
exists recognizing the foreign divorce decree. Thus, the Pasig City Civil Registry Office acted
totally out of turn and without authority of law when it annotated the Canadian divorce decree on
Gerbert and Daisylyn’s marriage certificate, on the strength alone of the foreign decree presented
by Gerbert.

Evidently, the Pasig City Civil Registry Office was aware of the requirement of a court recognition,
as it cited NSO Circular No. 4, series of 1982,36 and Department of Justice Opinion No. 181, series
of 198237 – both of which required a final order from a competent Philippine court before a foreign
judgment, dissolving a marriage, can be registered in the civil registry, but it, nonetheless, allowed
the registration of the decree. For being contrary to law, the registration of the foreign divorce
decree without the requisite judicial recognition is patently void and cannot produce any legal
effect.1avvphi1

Another point we wish to draw attention to is that the recognition that the RTC may extend to the
Canadian divorce decree does not, by itself, authorize the cancellation of the entry in the civil
registry. A petition for recognition of a foreign judgment is not the proper proceeding,
contemplated under the Rules of Court, for the cancellation of entries in the civil registry.

Article 412 of the Civil Code declares that "no entry in a civil register shall be changed or corrected,
without judicial order." The Rules of Court supplements Article 412 of the Civil Code by
specifically providing for a special remedial proceeding by which entries in the civil registry may
be judicially cancelled or corrected. Rule 108 of the Rules of Court sets in detail the jurisdictional
and procedural requirements that must be complied with before a judgment, authorizing the
cancellation or correction, may be annotated in the civil registry. It also requires, among others,
that the verified petition must be filed with the RTC of the province where the corresponding civil
registry is located;38that the civil registrar and all persons who have or claim any interest must be
made parties to the proceedings;39and that the time and place for hearing must be published in a
newspaper of general circulation.40 As these basic jurisdictional requirements have not been met
in the present case, we cannot consider the petition Gerbert filed with the RTC as one filed under
Rule 108 of the Rules of Court.

We hasten to point out, however, that this ruling should not be construed as requiring two separate
proceedings for the registration of a foreign divorce decree in the civil registry – one for
recognition of the foreign decree and another specifically for cancellation of the entry under Rule
108 of the Rules of Court. The recognition of the foreign divorce decree may be made in a Rule
108 proceeding itself, as the object of special proceedings (such as that in Rule 108 of the Rules
of Court) is precisely to establish the status or right of a party or a particular fact. Moreover, Rule
108 of the Rules of Court can serve as the appropriate adversarial proceeding41 by which the
applicability of the foreign judgment can be measured and tested in terms of jurisdictional
infirmities, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the October 30,
2008 decision of the Regional Trial Court of Laoag City, Branch 11, as well as its February 17,
2009 order. We order the REMAND of the case to the trial court for further proceedings in
accordance with our ruling above. Let a copy of this Decision be furnished the Civil Registrar
General. No costs.

SO ORDERED.
G.R. No. 167109 February 6, 2007

FELICITAS AMOR-CATALAN, Petitioner,

vs.
COURT OF APPEALS, MANILA, ORLANDO B. CATALAN and MEROPE E.
BRAGANZA, Respondents.

YNARES-SANTIAGO, J.:

This petition for review assails the Decision1 of the Court of Appeals in CA-G.R. CV No. 69875
dated August 6, 2004, which reversed the Decision2 of the Regional Trial Court (RTC) of Dagupan
City, Branch 44, in Civil Case No. D-10636, declaring the marriage between respondents Orlando
B. Catalan and Merope E. Braganza void on the ground of bigamy, as well as the Resolution3 dated
January 27, 2005, which denied the motion for reconsideration.

Petitioner Felicitas Amor-Catalan married respondent Orlando on June 4, 1950 in Mabini,

Pangasinan.4 Thereafter, they migrated to the United States of America and allegedly became
naturalized citizens thereof. After 38 years of marriage, Felicitas and Orlando divorced in April
1988.5

Two months after the divorce, or on June 16, 1988, Orlando married respondent Merope in
Calasiao, Pangasinan.6Contending that said marriage was bigamous since Merope had a prior
subsisting marriage with Eusebio Bristol, petitioner filed a petition for declaration of nullity of
marriage with damages in the RTC of Dagupan City7 against Orlando and Merope.

Respondents filed a motion to dismiss8 on the ground of lack of cause of action as petitioner was
allegedly not a real party-in-interest, but it was denied.9 Trial on the merits ensued.

On October 10, 2000, the RTC rendered judgment in favor of the petitioner, the dispositive portion
of which reads:

WHEREFORE, judgment is declared in favor of plaintiff Felicitas Amor Catalan and against
defendants Orlando B. Catalan and Merope E. Braganza, as follows:

1) The subsequent marriage of Merope Braganza with Orlando B. Catalan is declared null
and void ab initio;

2) The defendants are ordered jointly and severally to pay plaintiff by way of moral
damages the amount of P300,000.00, exemplary damages in the amount of P200,000.00
and attorney’s fees in the amount of P50,000.00, including costs of this suit; and

3) The donation in consideration of marriage is ordered revoked and the property donated
is ordered awarded to the heirs of Juliana Braganza.

Furnish copies of this Decision to Atty. Napoleon B. Arenas, Jr. and Atty. Nolan Evangelista.
SO ORDERED.10

Respondents appealed the decision to the Court of Appeals, which reversed the decision of the
RTC, thus:

WHEREFORE, premises considered, we hereby GRANT the appeal and consequently REVERSE
and SET ASIDE the appealed decision. We likewise DISMISS Civil Case No. D-10636, RTC,
Branch 44, Dagupan City. No costs.

SO ORDERED.11

After the motion for reconsideration was denied, petitioner filed the instant petition for review
raising the following issues:

I.

WHETHER PETITIONER HAS THE REQUIRED STANDING IN COURT TO QUESTION

THE NULLITY OF THE MARRIAGE BETWEEN RESPONDENTS;

II.

WHETHER THE FAILURE OF THE COURT OF APPEALS TO DECLARE THE

QUESTIONED MARRIAGE VOID CONSTITUTES REVERSIBLE ERROR.12

Petitioner contends that the bigamous marriage of the respondents, which brought embarrassment
to her and her children, confers upon her an interest to seek judicial remedy to address her
grievances and to protect her family from further embarrassment and humiliation. She claims that
the Court of Appeals committed reversible error in not declaring the marriage void despite
overwhelming evidence and the state policy discouraging illegal and immoral marriages.13

The main issue to be resolved is whether petitioner has the personality to file a petition for the
declaration of nullity of marriage of the respondents on the ground of bigamy. However, this issue
may not be resolved without first determining the corollary factual issues of whether the petitioner
and respondent Orlando had indeed become naturalized American citizens and whether they had
actually been judicially granted a divorce decree.

While it is a settled rule that the Court is not a trier of facts and does not normally undertake the
re-examination of the evidence presented by the contending parties during the trial of the
case,14 there are, however, exceptions to this rule, like when the findings of facts of the RTC and
the Court of Appeals are conflicting, or when the findings are conclusions without citation of
specific evidence on which they are based.15

Both the RTC and the Court of Appeals found that petitioner and respondent Orlando were
naturalized American citizens and that they obtained a divorce decree in April 1988. However,
after a careful review of the records, we note that other than the allegations in the complaint and
the testimony during the trial, the records are bereft of competent evidence to prove their
naturalization and divorce.

The Court of Appeals therefore had no basis when it held:

In light of the allegations of Felicitas’ complaint and the documentary and testimonial evidence
she presented, we deem it undisputed that Orlando and Felicitas are American citizens and had
this citizenship status when they secured their divorce decree in April 1988. We are not therefore
dealing in this case with Filipino citizens whose marital status is governed by the Family Code and
our Civil Code, but with American citizens who secured their divorce in the U.S. and who are
considered by their national law to be free to contract another marriage. x x x16

Further, the Court of Appeals mistakenly considered the failure of the petitioner to refute or contest
the allegation in respondents’ brief, that she and respondent Orlando were American citizens at the
time they secured their divorce in April 1988, as sufficient to establish the fact of naturalization
and divorce.17 We note that it was the petitioner who alleged in her complaint that they acquired
American citizenship and that respondent Orlando obtained a judicial divorce decree.18 It is settled
rule that one who alleges a fact has the burden of proving it and mere allegation is not evidence.19

Divorce means the legal dissolution of a lawful union for a cause arising after marriage. But
divorces are of different types. The two basic ones are (1) absolute divorce or a vinculo
matrimonii and (2) limited divorce or a mensa et thoro. The first kind terminates the marriage,
while the second suspends it and leaves the bond in full force.20 A divorce obtained abroad by an
alien may be recognized in our jurisdiction, provided such decree is valid according to the national
law of the foreigner.21 However, before it can be recognized by our courts, the party pleading it
must prove the divorce as a fact and demonstrate its conformity to the foreign law allowing it,
which must be proved considering that our courts cannot take judicial notice of foreign laws.22

Without the divorce decree and foreign law as part of the evidence, we cannot rule on the issue of
whether petitioner has the personality to file the petition for declaration of nullity of marriage.
After all, she may have the personality to file the petition if the divorce decree obtained was a
limited divorce or a mensa et thoro; or the foreign law may restrict remarriage even after the
divorce decree becomes absolute.23 In such case, the RTC would be correct to declare the marriage
of the respondents void for being bigamous, there being already in evidence two existing marriage
certificates, which were both obtained in the Philippines, one in Mabini, Pangasinan dated
December 21, 1959 between Eusebio Bristol and respondent Merope,24 and the other, in Calasiao,
Pangasinan dated June 16, 1988 between the respondents.25

However, if there was indeed a divorce decree obtained and which, following the national law of
Orlando, does not restrict remarriage, the Court of Appeals would be correct in ruling that
petitioner has no legal personality to file a petition to declare the nullity of marriage, thus:

Freed from their existing marital bond, each of the former spouses no longer has any interest nor
should each have the personality to inquire into the marriage that the other might subsequently
contract. x x x Viewed from another perspective, Felicitas has no existing interest in Orlando’s
subsequent marriage since the validity, as well as any defect or infirmity, of this subsequent
marriage will not affect the divorced status of Orlando and Felicitas. x x x26

True, under the New Civil Code which is the law in force at the time the respondents were married,
or even in the Family Code, there is no specific provision as to who can file a petition to declare
the nullity of marriage; however, only a party who can demonstrate "proper interest" can file the
same. A petition to declare the nullity of marriage, like any other actions, must be prosecuted or
defended in the name of the real party in interest27 and must be based on a cause of action.28 Thus,
in Niñal v. Bayadog,29 the Court held that the children have the personality to file the petition to
declare the nullity of the marriage of their deceased father to their stepmother as it affects their
successional rights.1awphi1.net

Significantly, Section 2(a) of The Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages, which took effect on March 15, 2003, now specifically
provides:

SECTION 2. Petition for declaration of absolute nullity of void marriages. —

(a) Who may file. — A petition for declaration of absolute nullity of void marriage may be filed
solely by the husband or the wife.

xxxx

In fine, petitioner’s personality to file the petition to declare the nullity of marriage cannot be
ascertained because of the absence of the divorce decree and the foreign law allowing it. Hence, a
remand of the case to the trial court for reception of additional evidence is necessary to determine
whether respondent Orlando was granted a divorce decree and whether the foreign law which
granted the same allows or restricts remarriage. If it is proved that a valid divorce decree was
obtained and the same did not allow respondent Orlando’s remarriage, then the trial court should
declare respondents’ marriage as bigamous and void ab initio but reduce the amount of moral
damages from ₱300,000.00 to ₱50,000.00 and exemplary damages from ₱200,000.00 to
₱25,000.00. On the contrary, if it is proved that a valid divorce decree was obtained which allowed
Orlando to remarry, then the trial court must dismiss the instant petition to declare nullity of
marriage on the ground that petitioner Felicitas Amor-Catalan lacks legal personality to file the
same.

WHEREFORE, in view of the foregoing, let this case be REMANDED to the trial court for its
proper disposition. No costs.

SO ORDERED.
G.R. No. L-19671 November 29, 1965

PASTOR B. TENCHAVEZ, plaintiff-appellant,

vs.
VICENTA F. ESCAÑO, ET AL., defendants-appellees.

I. V. Binamira & F. B. Barria for plaintiff-appellant.

Jalandoni & Jarnir for defendants-appellees.

REYES, J.B.L., J.:

Direct appeal, on factual and legal questions, from the judgment of the Court of First Instance of
Cebu, in its Civil Case No. R-4177, denying the claim of the plaintiff-appellant, Pastor B.
Tenchavez, for legal separation and one million pesos in damages against his wife and parents-in-
law, the defendants-appellees, Vicente, Mamerto and Mena,1 all surnamed "Escaño,"
respectively.2

The facts, supported by the evidence of record, are the following:

Missing her late afternoon classes on 24 February 1948 in the University of San Carlos, Cebu City,
where she was then enrolled as a second year student of commerce, Vicenta Escaño, 27 years of
age (scion of a well-to-do and socially prominent Filipino family of Spanish ancestry and a
"sheltered colegiala"), exchanged marriage vows with Pastor Tenchavez, 32 years of age, an
engineer, ex-army officer and of undistinguished stock, without the knowledge of her parents,
before a Catholic chaplain, Lt. Moises Lavares, in the house of one Juan Alburo in the said city.
The marriage was the culmination of a previous love affair and was duly registered with the local
civil register.

Vicenta's letters to Pastor, and his to her, before the marriage, indicate that the couple were deeply
in love. Together with a friend, Pacita Noel, their matchmaker and go-between, they had planned
out their marital future whereby Pacita would be the governess of their first-born; they started
saving money in a piggy bank. A few weeks before their secret marriage, their engagement was
broken; Vicenta returned the engagement ring and accepted another suitor, Joseling Lao. Her love
for Pastor beckoned; she pleaded for his return, and they reconciled. This time they planned to get
married and then elope. To facilitate the elopement, Vicenta had brought some of her clothes to
the room of Pacita Noel in St. Mary's Hall, which was their usual trysting place.

Although planned for the midnight following their marriage, the elopement did not, however,
materialize because when Vicente went back to her classes after the marriage, her mother, who got
wind of the intended nuptials, was already waiting for her at the college. Vicenta was taken home
where she admitted that she had already married Pastor. Mamerto and Mena Escaño were surprised,
because Pastor never asked for the hand of Vicente, and were disgusted because of the great
scandal that the clandestine marriage would provoke (t.s.n., vol. III, pp. 1105-06). The following
morning, the Escaño spouses sought priestly advice. Father Reynes suggested a recelebration to
validate what he believed to be an invalid marriage, from the standpoint of the Church, due to the
lack of authority from the Archbishop or the parish priest for the officiating chaplain to celebrate
the marriage. The recelebration did not take place, because on 26 February 1948 Mamerto Escaño
was handed by a maid, whose name he claims he does not remember, a letter purportedly coming
from San Carlos college students and disclosing an amorous relationship between Pastor
Tenchavez and Pacita Noel; Vicenta translated the letter to her father, and thereafter would not
agree to a new marriage. Vicenta and Pastor met that day in the house of Mrs. Pilar Mendezona.
Thereafter, Vicenta continued living with her parents while Pastor returned to his job in Manila.
Her letter of 22 March 1948 (Exh. "M"), while still solicitous of her husband's welfare, was not as
endearing as her previous letters when their love was aflame.

Vicenta was bred in Catholic ways but is of a changeable disposition, and Pastor knew it. She
fondly accepted her being called a "jellyfish." She was not prevented by her parents from
communicating with Pastor (Exh. "1-Escaño"), but her letters became less frequent as the days
passed. As of June, 1948 the newlyweds were already estranged (Exh. "2-Escaño"). Vicenta had
gone to Jimenez, Misamis Occidental, to escape from the scandal that her marriage stirred in Cebu
society. There, a lawyer filed for her a petition, drafted by then Senator Emmanuel Pelaez, to annul
her marriage. She did not sign the petition (Exh. "B-5"). The case was dismissed without prejudice
because of her non-appearance at the hearing (Exh. "B-4").

On 24 June 1950, without informing her husband, she applied for a passport, indicating in her
application that she was single, that her purpose was to study, and she was domiciled in Cebu City,
and that she intended to return after two years. The application was approved, and she left for the
United States. On 22 August 1950, she filed a verified complaint for divorce against the herein
plaintiff in the Second Judicial District Court of the State of Nevada in and for the County of
Washoe, on the ground of "extreme cruelty, entirely mental in character." On 21 October 1950, a
decree of divorce, "final and absolute", was issued in open court by the said tribunal.

In 1951 Mamerto and Mena Escaño filed a petition with the Archbishop of Cebu to annul their
daughter's marriage to Pastor (Exh. "D"). On 10 September 1954, Vicenta sought papal
dispensation of her marriage (Exh. "D"-2).

On 13 September 1954, Vicenta married an American, Russell Leo Moran, in Nevada. She now
lives with him in California, and, by him, has begotten children. She acquired American citizenship
on 8 August 1958.

But on 30 July 1955, Tenchavez had initiated the proceedings at bar by a complaint in the Court
of First Instance of Cebu, and amended on 31 May 1956, against Vicenta F. Escaño, her parents,
Mamerto and Mena Escaño, whom he charged with having dissuaded and discouraged Vicenta
from joining her husband, and alienating her affections, and against the Roman Catholic Church,
for having, through its Diocesan Tribunal, decreed the annulment of the marriage, and asked for
legal separation and one million pesos in damages. Vicenta claimed a valid divorce from plaintiff
and an equally valid marriage to her present husband, Russell Leo Moran; while her parents denied
that they had in any way influenced their daughter's acts, and counterclaimed for moral damages.

The appealed judgment did not decree a legal separation, but freed the plaintiff from supporting
his wife and to acquire property to the exclusion of his wife. It allowed the counterclaim of
Mamerto Escaño and Mena Escaño for moral and exemplary damages and attorney's fees against
the plaintiff-appellant, to the extent of P45,000.00, and plaintiff resorted directly to this Court.

The appellant ascribes, as errors of the trial court, the following:

1. In not declaring legal separation; in not holding defendant Vicenta F. Escaño liable for
damages and in dismissing the complaint;.

2. In not holding the defendant parents Mamerto Escano and the heirs of Doña Mena
Escaño liable for damages;.

3 In holding the plaintiff liable for and requiring him to pay the damages to the defendant
parents on their counterclaims; and.

4. In dismissing the complaint and in denying the relief sought by the plaintiff.

That on 24 February 1948 the plaintiff-appellant, Pastor Tenchavez, and the defendant-appellee,
Vicenta Escaño, were validly married to each other, from the standpoint of our civil law, is clearly
established by the record before us. Both parties were then above the age of majority, and otherwise
qualified; and both consented to the marriage, which was performed by a Catholic priest (army
chaplain Lavares) in the presence of competent witnesses. It is nowhere shown that said priest was
not duly authorized under civil law to solemnize marriages.

The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the Ordinary,
as required by Canon law, is irrelevant in our civil law, not only because of the separation of
Church and State but also because Act 3613 of the Philippine Legislature (which was the marriage
law in force at the time) expressly provided that —

SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the
contracting parties and consent. (Emphasis supplied)

The actual authority of the solemnizing officer was thus only a formal requirement, and, therefore,
not essential to give the marriage civil effects,3 and this is emphasized by section 27 of said
marriage act, which provided the following:

SEC. 27. Failure to comply with formal requirements. No marriage shall be declared
invalid because of the absence of one or several of the formal requirements of this Act if,
when it was performed, the spouses or one of them believed in good faith that the person
who solemnized the marriage was actually empowered to do so, and that the marriage was
perfectly legal.

The good faith of all the parties to the marriage (and hence the validity of their marriage) will be
presumed until the contrary is positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco
vs. Jason, 60 Phil. 442, 448). It is well to note here that in the case at bar, doubts as to the authority
of the solemnizing priest arose only after the marriage, when Vicenta's parents consulted Father
Reynes and the archbishop of Cebu. Moreover, the very act of Vicenta in abandoning her original
action for annulment and subsequently suing for divorce implies an admission that her marriage
to plaintiff was valid and binding.

Defendant Vicenta Escaño argues that when she contracted the marriage she was under the undue
influence of Pacita Noel, whom she charges to have been in conspiracy with appellant Tenchavez.
Even granting, for argument's sake, the truth of that contention, and assuming that Vicenta's
consent was vitiated by fraud and undue influence, such vices did not render her marriage ab
initio void, but merely voidable, and the marriage remained valid until annulled by a competent
civil court. This was never done, and admittedly, Vicenta's suit for annulment in the Court of First
Instance of Misamis was dismissed for non-prosecution.

It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta
Escaño remained subsisting and undissolved under Philippine law, notwithstanding the decree of
absolute divorce that the wife sought and obtained on 21 October 1950 from the Second Judicial
District Court of Washoe County, State of Nevada, on grounds of "extreme cruelty, entirely mental
in character." At the time the divorce decree was issued, Vicenta Escaño, like her husband, was
still a Filipino citizen.4 She was then subject to Philippine law, and Article 15 of the Civil Code of
the Philippines (Rep. Act No. 386), already in force at the time, expressly provided:

Laws relating to family rights and duties or to the status, condition and legal capacity of
persons are binding upon the citizens of the Philippines, even though living abroad.

The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo
matrimonii; and in fact does not even use that term, to further emphasize its restrictive policy on
the matter, in contrast to the preceding legislation that admitted absolute divorce on grounds of
adultery of the wife or concubinage of the husband (Act 2710). Instead of divorce, the present
Civil Code only provides for legal separation (Title IV, Book 1, Arts. 97 to 108), and, even in that
case, it expressly prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar. 1).

For the Philippine courts to recognize and give recognition or effect to a foreign decree of absolute
divorce betiveen Filipino citizens could be a patent violation of the declared public policy of the
state, specially in view of the third paragraph of Article 17 of the Civil Code that prescribes the
following:

Prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, policy and good customs, shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or conventions agreed upon in a foreign
country.

Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in
effect, give rise to an irritating and scandalous discrimination in favor of wealthy citizens, to the
detriment of those members of our polity whose means do not permit them to sojourn abroad and
obtain absolute divorces outside the Philippines.

From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in
the Nevada divorce court. Primarily because the policy of our law cannot be nullified by acts of
private parties (Civil Code,Art. 17, jam quot.); and additionally, because the mere appearance of a
non-resident consort cannot confer jurisdiction where the court originally had none (Area vs. Javier,
95 Phil. 579).

From the preceding facts and considerations, there flows as a necessary consequence that in this
jurisdiction Vicenta Escaño's divorce and second marriage are not entitled to recognition as valid;
for her previous union to plaintiff Tenchavez must be declared to be existent and undissolved. It
follows, likewise, that her refusal to perform her wifely duties, and her denial of consortium and
her desertion of her husband constitute in law a wrong caused through her fault, for which the
husband is entitled to the corresponding indemnity (Civil Code, Art. 2176). Neither an
unsubstantiated charge of deceit nor an anonymous letter charging immorality against the husband
constitute, contrary to her claim, adequate excuse. Wherefore, her marriage and cohabitation with
Russell Leo Moran is technically "intercourse with a person not her husband" from the standpoint
of Philippine Law, and entitles plaintiff-appellant Tenchavez to a decree of "legal separation under
our law, on the basis of adultery" (Revised Penal Code, Art. 333).

The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in
accord with the previous doctrines and rulings of this court on the subject, particularly those that
were rendered under our laws prior to the approval of the absolute divorce act (Act 2710 of the
Philippine Legislature). As a matter of legal history, our statutes did not recognize divorces a
vinculo before 1917, when Act 2710 became effective; and the present Civil Code of the
Philippines, in disregarding absolute divorces, in effect merely reverted to the policies on the
subject prevailing before Act 2710. The rulings, therefore, under the Civil Code of 1889, prior to
the Act above-mentioned, are now, fully applicable. Of these, the decision in Ramirez vs. Gmur,
42 Phil. 855, is of particular interest. Said this Court in that case:

As the divorce granted by the French Court must be ignored, it results that the marriage of
Dr. Mory and Leona Castro, celebrated in London in 1905, could not legalize their relations;
and the circumstance that they afterwards passed for husband and wife in Switzerland until
her death is wholly without legal significance. The claims of the very children to participate
in the estate of Samuel Bishop must therefore be rejected. The right to inherit is limited to
legitimate, legitimated and acknowledged natural children. The children of adulterous
relations are wholly excluded. The word "descendants" as used in Article 941 of the Civil
Code cannot be interpreted to include illegitimates born of adulterous relations. (Emphasis
supplied)

Except for the fact that the successional rights of the children, begotten from Vicenta's marriage
to Leo Moran after the invalid divorce, are not involved in the case at bar, the Gmur case is
authority for the proposition that such union is adulterous in this jurisdiction, and, therefore,
justifies an action for legal separation on the part of the innocent consort of the first marriage, that
stands undissolved in Philippine law. In not so declaring, the trial court committed error.

True it is that our ruling gives rise to anomalous situations where the status of a person (whether
divorced or not) would depend on the territory where the question arises. Anomalies of this kind
are not new in the Philippines, and the answer to them was given in Barretto vs. Gonzales, 58 Phil.
667:
 The hardship of the existing divorce laws in the Philippine Islands are well known to the
members of the Legislature. It is the duty of the Courts to enforce the laws of divorce as
written by Legislature if they are constitutional. Courts have no right to say that such laws
are too strict or too liberal. (p. 72)

The appellant's first assignment of error is, therefore, sustained.

However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escaño and his wife,
the late Doña Mena Escaño, alienated the affections of their daughter and influenced her conduct
toward her husband are not supported by credible evidence. The testimony of Pastor Tenchavez
about the Escaño's animosity toward him strikes us to be merely conjecture and exaggeration, and
are belied by Pastor's own letters written before this suit was begun (Exh. "2-Escaño" and
"Vicenta," Rec. on App., pp. 270-274). In these letters he expressly apologized to the defendants
for "misjudging them" and for the "great unhappiness" caused by his "impulsive blunders" and
"sinful pride," "effrontery and audacity" [sic]. Plaintiff was admitted to the Escaño house to visit
and court Vicenta, and the record shows nothing to prove that he would not have been accepted to
marry Vicente had he openly asked for her hand, as good manners and breeding demanded. Even
after learning of the clandestine marriage, and despite their shock at such unexpected event, the
parents of Vicenta proposed and arranged that the marriage be recelebrated in strict conformity
with the canons of their religion upon advice that the previous one was canonically defective. If
no recelebration of the marriage ceremony was had it was not due to defendants Mamerto Escaño
and his wife, but to the refusal of Vicenta to proceed with it. That the spouses Escaño did not seek
to compel or induce their daughter to assent to the recelebration but respected her decision, or that
they abided by her resolve, does not constitute in law an alienation of affections. Neither does the
fact that Vicenta's parents sent her money while she was in the United States; for it was natural
that they should not wish their daughter to live in penury even if they did not concur in her decision
to divorce Tenchavez (27 Am. Jur. 130-132).

There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her
original suit for annulment, or her subsequent divorce; she appears to have acted independently,
and being of age, she was entitled to judge what was best for her and ask that her decisions be
respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in the
absence of malice or unworthy motives, which have not been shown, good faith being always
presumed until the contrary is proved.

SEC. 529. Liability of Parents, Guardians or Kin. — The law distinguishes between the
right of a parent to interest himself in the marital affairs of his child and the absence of
rights in a stranger to intermeddle in such affairs. However, such distinction between the
liability of parents and that of strangers is only in regard to what will justify interference.
A parent is liable for alienation of affections resulting from his own malicious conduct, as
where he wrongfully entices his son or daughter to leave his or her spouse, but he is not
liable unless he acts maliciously, without justification and from unworthy motives. He is
not liable where he acts and advises his child in good faith with respect to his child's marital
relations in the interest of his child as he sees it, the marriage of his child not terminating
his right and liberty to interest himself in, and be extremely solicitous for, his child's
welfare and happiness, even where his conduct and advice suggest or result in the
 separation of the spouses or the obtaining of a divorce or annulment, or where he acts under
mistake or misinformation, or where his advice or interference are indiscreet or unfortunate,
although it has been held that the parent is liable for consequences resulting from
recklessness. He may in good faith take his child into his home and afford him or her
protection and support, so long as he has not maliciously enticed his child away, or does
not maliciously entice or cause him or her to stay away, from his or her spouse. This rule
has more frequently been applied in the case of advice given to a married daughter, but it
is equally applicable in the case of advice given to a son.

Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social discrimination
and with having exerted efforts and pressured her to seek annulment and divorce, unquestionably
caused them unrest and anxiety, entitling them to recover damages. While this suit may not have
been impelled by actual malice, the charges were certainly reckless in the face of the proven facts
and circumstances. Court actions are not established for parties to give vent to their prejudices or
spleen.

In the assessment of the moral damages recoverable by appellant Pastor Tenchavez from defendant
Vicente Escaño, it is proper to take into account, against his patently unreasonable claim for a
million pesos in damages, that (a) the marriage was celebrated in secret, and its failure was not
characterized by publicity or undue humiliation on appellant's part; (b) that the parties never lived
together; and (c) that there is evidence that appellant had originally agreed to the annulment of the
marriage, although such a promise was legally invalid, being against public policy (cf. Art. 88,
Civ. Code). While appellant is unable to remarry under our law, this fact is a consequence of the
indissoluble character of the union that appellant entered into voluntarily and with open eyes rather
than of her divorce and her second marriage. All told, we are of the opinion that appellant should
recover P25,000 only by way of moral damages and attorney's fees.

With regard to the P45,000 damages awarded to the defendants, Dr. Mamerto Escaño and Mena
Escaño, by the court below, we opine that the same are excessive. While the filing of this
unfounded suit must have wounded said defendants' feelings and caused them anxiety, the same
could in no way have seriously injured their reputation, or otherwise prejudiced them, lawsuits
having become a common occurrence in present society. What is important, and has been correctly
established in the decision of the court below, is that said defendants were not guilty of any
improper conduct in the whole deplorable affair. This Court, therefore, reduces the damages
awarded to P5,000 only.

Summing up, the Court rules:

(1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the
present Civil Code (Rep. Act 386), is not entitled to recognition as valid in this jurisdiction; and
neither is the marriage contracted with another party by the divorced consort, subsequently to the
foreign decree of divorce, entitled to validity in the country;

(2) That the remarriage of divorced wife and her co-habitation with a person other than the lawful
husband entitle the latter to a decree of legal separation conformably to Philippine law;
(3) That the desertion and securing of an invalid divorce decree by one consort entitles the other
to recover damages;

(4) That an action for alienation of affections against the parents of one consort does not lie in the
absence of proof of malice or unworthy motives on their part.

WHEREFORE, the decision under appeal is hereby modified as follows;

(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from
defendant Vicenta F. Escaño;

(2) Sentencing defendant-appellee Vicenta Escaño to pay plaintiff-appellant Tenchavez the

amount of P25,000 for damages and attorneys' fees;

(3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escaño and the estate of
his wife, the deceased Mena Escaño, P5,000 by way of damages and attorneys' fees.

Neither party to recover costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Dizon, Regala, Makalintal, Bengzon, J.P. and
Zaldivar, JJ., concur.
G.R. No. 142820 June 20, 2003

WOLFGANG O. ROEHR, petitioner,

vs.
MARIA CARMEN D. RODRIGUEZ, HON. JUDGE JOSEFINA GUEVARA-SALONGA,
Presiding Judge of Makati RTC, Branch 149, respondents.

QUISUMBING, J.:

At the core of the present controversy are issues of (a) grave abuse of discretion allegedly
committed by public respondent and (b) lack of jurisdiction of the regional trial court, in matters
that spring from a divorce decree obtained abroad by petitioner.

In this special civil action for certiorari, petitioner assails (a) the order1 dated September 30, 1999
of public respondent Judge Josefina Guevara-Salonga, Presiding Judge of Makati Regional Trial
Court,2 Branch 149, in Civil Case No. 96-1389 for declaration of nullity of marriage, and (b) the
order3 dated March 31, 2000 denying his motion for reconsideration. The assailed orders partially
set aside the trial court’s order dismissing Civil Case No. 96-1389, for the purpose of resolving
issues relating to the property settlement of the spouses and the custody of their children.

Petitioner Wolfgang O. Roehr, a German citizen and resident of Germany, married private
respondent Carmen Rodriguez, a Filipina, on December 11, 1980 in Hamburg, Germany. Their
marriage was subsequently ratified on February 14, 1981 in Tayasan, Negros Oriental. 4 Out of
their union were born Carolynne and Alexandra Kristine on November 18, 1981 and October 25,
1987, respectively.

On August 28, 1996, private respondent filed a petition5 for declaration of nullity of marriage
before the Regional Trial Court (RTC) of Makati City. On February 6, 1997, petitioner filed a
motion to dismiss,6 but it was denied by the trial court in its order7 dated May 28, 1997.

On June 5, 1997, petitioner filed a motion for reconsideration, but was also denied in an
order8 dated August 13, 1997. On September 5, 1997, petitioner filed a petition for certiorari with
the Court of Appeals. On November 27, 1998, the appellate court denied the petition and remanded
the case to the RTC.

Meanwhile, petitioner obtained a decree of divorce from the Court of First Instance of Hamburg-
Blankenese, promulgated on December 16, 1997.

The decree provides in part:

[T]he Court of First Instance, Hamburg-Blankenese, Branch 513, has ruled through Judge
van Buiren of the Court of First Instance on the basis of the oral proceedings held on 4 Nov.
1997:

The marriage of the Parties contracted on 11 December 1980 before the Civil Registrar of
Hamburg-Altona is hereby dissolved.
 The parental custody for the children

Carolynne Roehr, born 18 November 1981

Alexandra Kristine Roehr, born on 25 October 1987

is granted to the father.

The litigation expenses shall be assumed by the Parties.9

In view of said decree, petitioner filed a Second Motion to Dismiss on May 20, 1999 on the ground
that the trial court had no jurisdiction over the subject matter of the action or suit as a decree of
divorce had already been promulgated dissolving the marriage of petitioner and private respondent.

On July 14, 1999, Judge Guevara-Salonga issued an order granting petitioner’s motion to dismiss.
Private respondent filed a Motion for Partial Reconsideration, with a prayer that the case proceed
for the purpose of determining the issues of custody of children and the distribution of the
properties between petitioner and private respondent.

On August 18, 1999, an Opposition to the Motion for Partial Reconsideration was filed by the
petitioner on the ground that there is nothing to be done anymore in the instant case as the marital
tie between petitioner Wolfgang Roehr and respondent Ma. Carmen D. Rodriguez had already
been severed by the decree of divorce promulgated by the Court of First Instance of Hamburg,
Germany on December 16, 1997 and in view of the fact that said decree of divorce had already
been recognized by the RTC in its order of July 14, 1999, through the implementation of the
mandate of Article 26 of the Family Code,10 endowing the petitioner with the capacity to remarry
under the Philippine law.

On September 30, 1999, respondent judge issued the assailed order partially setting aside her order
dated July 14, 1999 for the purpose of tackling the issues of property relations of the spouses as
well as support and custody of their children. The pertinent portion of said order provides:

Acting on the Motion for Partial Reconsideration of the Order dated July 14, 1999 filed by
petitioner thru counsel which was opposed by respondent and considering that the second
paragraph of Article 26 of the Family Code was included as an amendment thru Executive
Order 227, to avoid the absurd situation of a Filipino as being still married to his or her
alien spouse though the latter is no longer married to the Filipino spouse because he/she
had obtained a divorce abroad which is recognized by his/her national law, and considering
further the effects of the termination of the marriage under Article 43 in relation to Article
50 and 52 of the same Code, which include the dissolution of the property relations of the
spouses, and the support and custody of their children, the Order dismissing this case is
partially set aside with respect to these matters which may be ventilated in this Court.

SO ORDERED.11 (Emphasis supplied.)

Petitioner filed a timely motion for reconsideration on October 19, 1999, which was denied by
respondent judge in an order dated March 31, 2000.12

Petitioner ascribes lack of jurisdiction of the trial court and grave abuse of discretion on the part
of respondent judge. He cites as grounds for his petition the following:

1. Partially setting aside the order dated July 14, 1999 dismissing the instant case is not
allowed by 1997 Rules of Civil Procedure.13

2. Respondent Maria Carmen Rodriguez by her motion for Partial Reconsideration had
recognized and admitted the Divorce Decision obtained by her ex-husband in Hamburg,
Germany.14

3. There is nothing left to be tackled by the Honorable Court as there are no conjugal assets
alleged in the Petition for Annulment of Marriage and in the Divorce petition, and the
custody of the children had already been awarded to Petitioner Wolfgang Roehr.15

Pertinent in this case before us are the following issues:

1. Whether or not respondent judge gravely abused her discretion in issuing her order dated
September 30, 1999, which partially modified her order dated July 14, 1999; and

2. Whether or not respondent judge gravely abused her discretion when she assumed and
retained jurisdiction over the present case despite the fact that petitioner has already
obtained a divorce decree from a German court.

On the first issue, petitioner asserts that the assailed order of respondent judge is completely
inconsistent with her previous order and is contrary to Section 3, Rule 16, Rules of Civil Procedure,
which provides:

Sec. 3. Resolution of motion - After the hearing, the court may dismiss the action or claim,
deny the motion, or order the amendment of the pleading.

The court shall not defer the resolution of the motion for the reason that the ground relied
upon is not indubitable.

In every case, the resolution shall state clearly and distinctly the reasons therefor.
(Emphasis supplied.)

Petitioner avers that a court’s action on a motion is limited to dismissing the action or claim,
denying the motion, or ordering the amendment of the pleading.

Private respondent, on her part, argues that the RTC can validly reconsider its order dated July 14,
1999 because it had not yet attained finality, given the timely filing of respondent’s motion for
reconsideration.
Pertinent to this issue is Section 3 in relation to Section 7, Rule 37 of the 1997 Rules of Civil
Procedure, which provides:

Sec. 3. Action upon motion for new trial or reconsideration.—The trial court may set aside
the judgment or final order and grant a new trial, upon such terms as may be just, or may
deny the motion. If the court finds that excessive damages have been awarded or that the
judgment or final order is contrary to the evidence or law, it may amend such judgment or
final order accordingly.

Sec. 7. Partial new trial or reconsideration.—If the grounds for a motion under this Rule
appear to the court to affect the issues as to only a part, or less than all of the matters in
controversy, or only one, or less than all, of the parties to it, the court may order a new
trial or grant reconsideration as to such issues if severable without interfering with the
judgment or final order upon the rest. (Emphasis supplied.)

It is clear from the foregoing rules that a judge can order a partial reconsideration of a case that
has not yet attained finality. Considering that private respondent filed a motion for reconsideration
within the reglementary period, the trial court's decision of July 14, 1999 can still be modified.
Moreover, in Sañado v. Court of Appeals,16 we held that the court could modify or alter a judgment
even after the same has become executory whenever circumstances transpire rendering its decision
unjust and inequitable, as where certain facts and circumstances justifying or requiring such
modification or alteration transpired after the judgment has become final and executory17 and when
it becomes imperative in the higher interest of justice or when supervening events warrant it. 18 In
our view, there are even more compelling reasons to do so when, as in this case, judgment has not
yet attained finality.

Anent the second issue, petitioner claims that respondent judge committed grave abuse of
discretion when she partially set aside her order dated July 14, 1999, despite the fact that petitioner
has already obtained a divorce decree from the Court of First Instance of Hamburg, Germany.

In Garcia v. Recio,19 Van Dorn v. Romillo, Jr.,20 and Llorente v. Court of Appeals,21 we
consistently held that a divorce obtained abroad by an alien may be recognized in our jurisdiction,
provided such decree is valid according to the national law of the foreigner. Relevant to the present
case is Pilapil v. Ibay-Somera,22 where this Court specifically recognized the validity of a divorce
obtained by a German citizen in his country, the Federal Republic of Germany. We held
in Pilapil that a foreign divorce and its legal effects may be recognized in the Philippines insofar
as respondent is concerned in view of the nationality principle in our civil law on the status of
persons.

In this case, the divorce decree issued by the German court dated December 16, 1997 has not been
challenged by either of the parties. In fact, save for the issue of parental custody, even the trial
court recognized said decree to be valid and binding, thereby endowing private respondent the
capacity to remarry. Thus, the present controversy mainly relates to the award of the custody of
their two children, Carolynne and Alexandra Kristine, to petitioner.
As a general rule, divorce decrees obtained by foreigners in other countries are recognizable in our
jurisdiction, but the legal effects thereof, e.g. on custody, care and support of the children, must
still be determined by our courts.23Before our courts can give the effect of res judicata to a foreign
judgment, such as the award of custody to petitioner by the German court, it must be shown that
the parties opposed to the judgment had been given ample opportunity to do so on grounds allowed
under Rule 39, Section 50 of the Rules of Court (now Rule 39, Section 48, 1997 Rules of Civil
Procedure), to wit:

SEC. 50. Effect of foreign judgments. - The effect of a judgment of a tribunal of a foreign
country, having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to
the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right
as between the parties and their successors in interest by a subsequent title; but the
judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.

It is essential that there should be an opportunity to challenge the foreign judgment, in order for
the court in this jurisdiction to properly determine its efficacy. In this jurisdiction, our Rules of
Court clearly provide that with respect to actions in personam, as distinguished from actions in
rem, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of a
party and, as such, is subject to proof to the contrary.24

In the present case, it cannot be said that private respondent was given the opportunity to challenge
the judgment of the German court so that there is basis for declaring that judgment as res
judicata with regard to the rights of petitioner to have parental custody of their two children. The
proceedings in the German court were summary. As to what was the extent of private respondent’s
participation in the proceedings in the German court, the records remain unclear. The divorce
decree itself states that neither has she commented on the proceedings25 nor has she given her
opinion to the Social Services Office.26 Unlike petitioner who was represented by two lawyers,
private respondent had no counsel to assist her in said proceedings.27 More importantly, the
divorce judgment was issued to petitioner by virtue of the German Civil Code provision to the
effect that when a couple lived separately for three years, the marriage is deemed irrefutably
dissolved. The decree did not touch on the issue as to who the offending spouse was. Absent any
finding that private respondent is unfit to obtain custody of the children, the trial court was correct
in setting the issue for hearing to determine the issue of parental custody, care, support and
education mindful of the best interests of the children. This is in consonance with the provision in
the Child and Youth Welfare Code that the child’s welfare is always the paramount consideration
in all questions concerning his care and custody. 28

On the matter of property relations, petitioner asserts that public respondent exceeded the bounds
of her jurisdiction when she claimed cognizance of the issue concerning property relations between
petitioner and private respondent. Private respondent herself has admitted in Par. 14 of her petition
for declaration of nullity of marriage dated August 26, 1996 filed with the RTC of Makati, subject
of this case, that: "[p]etitioner and respondent have not acquired any conjugal or community
property nor have they incurred any debts during their marriage."29 Herein petitioner did not
contest this averment. Basic is the rule that a court shall grant relief warranted by the allegations
and the proof.30Given the factual admission by the parties in their pleadings that there is no
property to be accounted for, respondent judge has no basis to assert jurisdiction in this case to
resolve a matter no longer deemed in controversy.

In sum, we find that respondent judge may proceed to determine the issue regarding the custody
of the two children born of the union between petitioner and private respondent. Private respondent
erred, however, in claiming cognizance to settle the matter of property relations of the parties,
which is not at issue.

WHEREFORE, the orders of the Regional Trial Court of Makati, Branch 149, issued on September
30, 1999 and March 31, 2000 are AFFIRMED with MODIFICATION. We hereby declare that the
trial court has jurisdiction over the issue between the parties as to who has parental custody,
including the care, support and education of the children, namely Carolynne and Alexandra
Kristine Roehr. Let the records of this case be remanded promptly to the trial court for continuation
of appropriate proceedings. No pronouncement as to costs.

SO ORDERED.