G.R. No.
215933 Respondent then filed an urgent motion for issuance of a Break Open
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT
CORPORATION (PSALM), Petitioner
vs.
MAUNLAD HOMES, INC., Respondent
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari are the Decision dated
1 certainty as they are in the process of determining what properties may
July 30, 2012 and the Resolution dated December 10, 2014 issued by
2 be retained by the latter.
the Court of Appeals (CA) in CA-G.R. SP No. 118302.
The antecedent facts are as follows:
Respondent Maunlad Homes, Inc. filed with the Municipal Trial Court in
Cities (MTCC), Malolos City, Bulacan, an unlawful detainer case with
damages against National Power Corporation (NPC), raffled-off to
Branch 1. After trial, the MTCC issued its Decision dated October 26,
3 pending appeal of personal properties/sale of seven (7) units
2009, ordering NPC to vacate the subject premises and surrender
physical possession thereof to respondent; to pay reasonable
compensation equivalent to Php20.00 per square meter per month of
respondent's 25,896-sq. m. properties, reckoned from the date of
demand on October 6, 2008, until complete vacation and surrender of
the subject premises; and to pay Php20,000.00 as and for attorney's
fees and cost of suit.
The NPC appealed the decision to the Regional Trial Court (RTC) of
Malolos City, Bulacan, and was raffled-off to Branch 78. The RTC
rendered its Decision dated May 18, 2010 affirming in toto the MTCC
4
decision.
Respondent filed a Motion for Execution which was opposed by the
NPC. The NPC also filed a motion for reconsideration of the RTC
decision. In an Order dated August 5, 2010, the RTC denied the NPC's
motion for reconsideration and granted respondent's motion for
execution. On August 25, 2010, a Writ of Execution pending appeal was
issued. And on September 6, 2010, the sheriff served a Notice of
5
Demand of payment to the NPC.
6
Order since the sheriff who tried to implement the writ of execution, by
serving the notice of levy on the NPC Warehouse at Barangay Lagundi,
Mexico, Pampanga, was prevented by the security guards assigned
therein. The NPC argued that the warehouse is being used both by it
and the Power Sector Assets and Liabilities Management Corporation
(herein petitioner PSALM), an entity created and existing by virtue of
Republic Act No. 9136, the Electric Power Industry Reform Act of 2001
(EPIRA Law); that the said law provides that the ownership and all
generation assets, IPP contracts and other NPC disposable assets are
transferred to PSALM; and that as of the moment, the ownership of the
said items stored in the said warehouse cannot be established with
On October 26, 2010, the RTC issued a Break Open Order authorizing
7
the sheriff and his deputies, police officers/escorts, representatives from
both parties to enter/break open into the NPC's warehouse facilities
located at Barangay Lagundi, Mexico, Pampanga.
On November 4, 2010, the sheriff issued a Notice of Levy on execution
8
transformer radiator fins, one (1) unit power transformer with Serial No.
77740395, and four (4) pieces angle bars.
The fallo of the notice states:
NOW WHEREFORE, by virtue of said writ of execution pending appeal
and in accordance with Rule 39, Section 9 of the Rules of Court, the
undersigned sheriff IV will sell at public auction to the highest bidder for
CASH and in Philippine Currency, on November 12, 2010 at 10:00 in the
morning or soon thereafter, at No. 120 Gapan Olongapo Road,
Barangay Lagundi, Mexico, Pampanga, the above- described properties
to satisfy the said Writ of Execution pending Appeal. 9
On November 9, 2010, petitioner filed an Affidavit of third-party claim
10
with the sheriff pursuant to Section 16, Rule 39 of the Rules of Court,
and alleging that it is the owner of the levied properties pursuant to the
EPIRA Law. On November 10, 2010, petitioner filed a
Manifestation with Urgent Ex Parte Motion for Issuance of Status
11
Quo Order with the RTC arguing that it is the owner of the subject
properties pulled out by the sheriff by operation of law; that it is not a
party to the instant case and therefore cannot be bound by the judgment
therein; that the obligation to pay respondent had not been transferred to
it. Petitioner also prayed for the nullification of the levy of its properties
and restoring their immediate possession to it.
On November 11, 2010, the RTC issued an Order holding in abeyance
12
the public sale of the subject levied properties until further orders.
On February 1, 2011, the RTC issued an Order, the dispositive portion
13
of which reads:
WHEREFORE, the foregoing considered, the motion for issuance of
Status Quo Order is hereby DENIED. The third-party claim filed by
PSALM is likewise denied.
Further PSALM's prayer to nullify the levy of seven units transformers
radiator fins, one unit power transformer with serial number E-77740395
and four pieces of angle bars and restoring its immediate possession to
the same is DENIED.
Accordingly, the Sheriff of this Court is DIRECTED to proceed with the
implementation of the writ of execution issued in this case in accordance
with law and without further delay.
SO ORDERED. 14
On February 21, 2011, the sheriff issued a notice of sale on execution
15
of personal properties.
Petitioner filed with the CA a petition for certiorari assailing the October
26, 2010 Break Open Order, the November 4, 2010 notice of levy on
execution pending appeal, the Order dated February 1, 2011 denying
the motion for issuance of Status Quo Order and the third-party claim,
and the February 21, 2011 notice of sale on execution of personal
properties. It alleged that it has no adequate remedy available from the
writs and processes issued by the RTC, and that it acted without or in
excess of jurisdiction in issuing the assailed orders despite the fact that
petitioner is the owner of the subject properties.
On July 30, 2012, the CA issued its assailed Decision dismissing the
petition for certiorari for being an incorrect remedy.
The CA found, among others, that contrary to the allegation of petitioner
that there exists no plain, speedy and adequate remedy obtaining under
the circumstances, Section 16, Rule 3 9 of the Rules of Court provides a
more expeditious and encompassing recourse in case a property
belonging to a third person is placed under the coverage of the writ of
execution and, thereafter, sold at public auction.
Petitioner filed a motion for reconsideration, which was denied by the CA
in a Resolution dated December 10, 2014.
Petitioner filed the instant petition for review on certiorari alleging the
following:
I
THE CA, IN DISMISSING PSALM'S PETITION ON PROCEDURAL
GROUNDS, OVERLOOKED PSALM'S PREVIOUSLY FILED THIRD
PARTY CLAIM.
II
PSALM OWNS THE PROPERTIES SUBJECT MATTER OF THE
ORDERS OF JUDGE SAMPAGA ISSUED AND THE PROCESSES
SHERIFF ESGUERRA ISSUED.
III
THE JUDGMENT OBLIGATION IS NOT AMONG THE OBLIGATIONS
PSALM ASSUMED.
IV
PSALM WAS NOT A PARTY TO THE CASE IN WHICH THE DECISION
THEREIN IS THE SUBJECT OF THE EXECUTION PROCEEDINGS. 16
Petitioner claims that the CA erred in overlooking the fact that it filed a
third party claim as provided under Section 16 of Rule 39 of the 1997
Rules of Civil Procedure. Petitioner contends that the CA should have
taken consideration of the substantive issues raised in its petition
reiterating its ownership of the levied properties. It claims that upon the
effectivity of the EPIRA law on June 26, 2001, the ownership of all
existing generation assets, IPP contracts, real estate and all other
disposable assets of NPC were transferred to it; and that all existing
liabilities and outstanding financial obligations of NPC as of June 26, 200
I arising from loans, issuance of bonds, securities and other instrument
of indebtedness were then and there likewise legally transferred and
assumed by it. However, since respondent's claim is not among those
existing obligations that were transferred to it upon the effectivity of the
EPIRA law, it cannot be held liable for the claim even if it were made a
party in the case. It contends that there is sufficient ground to annul the
levy and sale made by the sheriff since it is not a party in the case, and
therefore, not bound by the judgment rendered.
The pivotal issue for resolution is whether the CA erred in dismissing
petitioner's petition for certiorari assailing the denial of the latter's third
party claim for being a wrong remedy.
We find no merit in the petition.
The power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone. An 17
execution can be issued only against a party and not against one who
did not have his day in court. The duty of the sheriff is to levy the
18
property of the judgment debtor not that of a third person. For, as the
saying goes, one man's goods shall not be sold for another man's
debts. Thus, if the property levied by virtue of a writ of execution is
19
claimed by a third person who is not the judgment obligor, Section 16 of
Rule 39 of the 1997 Rules of Civil Procedure provides for the remedy of
such third party claimant, to wit:
Sec. 16. Proceedings where property claimed by third person. - If the
property levied on is claimed by any person other than the judgment
obligor or his agent, and such person makes an affidavit of his title
thereto or right to the possession thereof, stating the grounds of such
right or title, and serves the same upon the officer making the levy and a
copy thereof upon the judgment obligee, the officer shall not be bound to
keep the property, unless such judgment obligee, on demand of the
officer, files a bond approved by the court to indemnify the third-party
claimant in a sum not less than the value of the property levied on. In
case of disagreement as to such value, the same shall be determined by
the court issuing the writ of execution. No claim for damages for the
taking or keeping of the property may be enforced against the bond
unless the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of
the property, to any third-party claimant if such bond is filed. Nothing
herein contained shall prevent such claimant or any third person from
vindicating his claim to the property in a separate action, or prevent the
judgment obligee from claiming damages in the same or a separate
action against a third-party claimant who filed a frivolous or plainly
spurious claim.
When the writ of execution is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond
shall not be required, and in case the sheriff or levying officer is sued for
damages as a result of the levy, he shall be represented by the Solicitor
General and if held liable therefor, the actual damages adjudged by the
court shall be paid by the National Treasurer out of such funds as may
be appropriated for the purpose.
Under the above-quoted provision, the third-party claimant may execute
an affidavit of his title or right to the possession of the property levied,
and serve the same to the officer making the levy and a copy thereof to
the judgment creditor. This remedy is known as terceria. The officer
20
shall not be bound to keep the property, unless the judgment creditor
files a bond approved by the court to indemnify the third-party claimant
in a sum not less than the value of the property levied on. An action for
damages may be brought against the officer within one hundred twenty
(120) days from the date of the filing of the bond. The same section also
provides that a third-party claimant may file a proper action to vindicate
his claim to the levied property. The proper action mentioned in Section
16 would have for its object the recovery of ownership or possession of
the property seized by the sheriff, as well as damages resulting from the
allegedly wrongful seizure and detention thereof despite the third party
claim and it may be brought against the sheriff and such other parties as
may be alleged to have colluded with him in the supposedly wrongful
execution proceedings, such as the judgment creditor himself. If
instituted by a stranger to the suit in which execution has issued, such
proper action should be a totally separate and distinct action from the
former suit.21
In this case, petitioner had filed an affidavit of third-party claim with the
sheriff and a motion for issuance of status quo order with the RTC to
prevent the sale of the levied properties at public auction, nullification of
the levy and restoration of the subject properties to it, which were denied
by the RTC and, consequently, the sheriff was directed to proceed with
the implementation of the issued writ of execution.
The RTC denied the third-party claim as follows:
As to the third-party claim by movant PSALM, this Court also resolves to
deny the same for lack of merit.
Section 16 of Rule 39 of the Rules of Court provides:
xxx
In this present case, aside from serving said affidavit of third-party claim
to the Sheriff of this Court, claimant PSALM also filed this instant motion
for issuance of status quo order to prevent the sale of the levied
properties at public auction, nullification of the levy and restoration of the
subject properties in the possession of PSALM. In effect, instead of the
Sheriff requiring the plaintiff-obligee to file an indemnity bond, the Court
is constrained to resolve the merit of the third-party claim filed by
PSALM.
However, it must be emphasized that the resolution of this Court is
limited only to a determination of whether the Sheriff acted correctly in
the performance of his duties. It cannot pass upon the question of title to
the property, with any character of finality. It only treats of that matter in
so far as may be necessary to decide if the sheriff acted correctly or not.
After giving an opportunity to vindicate their claim and after a judicious
examination of the arguments posed by all of the parties, this Court finds
that PSALM has not been able to satisfactorily establish their claim of
ownership over the subject properties.
First, claimant PSALM has not presented sufficient proof of ownership
over the said levied properties. It merely claimed that the subject
1âwphi1
properties were transferred by operation of law in view of the passage of
EPIRA in 2001. It did not submit any document evidencing ownership. It
even failed to present any document that the levied property is among
those included in the inventoried property of PSALM. The doctrine of "Ei
incumbit probatio qui dicit, non qui negat" or "He who asserts, not he
who denies, must prove" is applicable in this present case.
Second, a careful perusal of EPIRA, particularly Sections 49, 50, 51 and
56, in relation to Section 1 of Rule 21 of its Implementing Rules and
Regulations, would show that ownership of NPC's assets, herein levied
properties included, is not ipso jure or by operation of law as there is the
need to execute certain documents evidencing transfer of ownership and
possession. This Court agrees with the plaintiff-appellee that these
documents are conditions precedent that are needed to be performed
and executed in order to have a valid transfer.
Section 1, Rule 21 of the IRR provides:
NPC and PSALM shall take such measures and execute such
documents to effect the transfer of ownership and possession of all
assets, rights and privileges, liabilities required by the Act to be
transferred by NPC to PSALM.
Third, even if the transfer is by operation of law, it would be an injustice
and inequitable, to say the least, to interpret the aforesaid provision as to
effect the transfer only of the assets and properties of NPC but not its
obligation and liabilities. The assets and properties transferred should
also account for the liabilities and obligations incurred by NPC. In fact,
Section 49 of the said law explicitly states that PSALM should not only
assume and take ownership of all existing NPC generations assets,
liabilities and IPP contracts, real estate and other disposable assets.
In the instant case, plaintiff Maunlad Homes, Inc. is already on the stage
of reaping the fruits of its labor after it had judiciously battled the case
with the court a quo and this Court. Injustice is manifest if they would not
be awarded what is due them merely on the ground of technicalities and
evasive measures undertaken by its adversary. 22
In Spouses Sy v. Hon. Discaya, We held that for the remedy of terceria
23
to prosper, the claim of ownership or right of possession to the levied
property by the third-party claimant must first be unmistakably
established, thus:
x x x A third person whose property was seized by a sheriff to answer for
the obligation of the judgment debtor may invoke the supervisory power
of the court which authorized such execution. Upon due application by
the third person and after summary hearing, the court may command
that the property be released from the mistaken levy and restored to the
rightful owner or possessor. What said court can do in these instances,
however, is limited to a determination of whether the sheriff has acted
rightly or wrongly in the performance of his duties in the execution of
judgment, more specifically, if he has indeed taken hold of property not
belonging to the judgment debtor. The court does not and cannot pass
upon the question of title to the property, with any character of finality. It
1âwphi1
can treat of the matter only insofar as may be necessary to decide if the
sheriff has acted correctly or not. It can require the sheriff to restore the
property to the claimant's possession if warranted by the evidence.
However, if the claimant's proofs do not persuade the court of the
validity of his title or right of possession thereto, the claim will be
denied.24
Independent of the above-stated recourse, a third-party claimant may
also avail of the remedy known as "terceria, " provided in Section 17,
Rule 39, by serving on the officer making the levy an affidavit of his title
and a copy thereof upon the judgment creditor. The officer shall not be
bound to keep the property, unless such judgment creditor or his agent,
on demand of the officer, indemnifies the officer against such claim by a
bond in a sum not greater than the value of the property levied on. An
action for damages may be brought against the sheriff within one
hundred twenty (120) days from the filing of the bond.
The aforesaid remedies are nevertheless without prejudice to "any
proper action" that a third-party claimant may deem suitable to vindicate
"his claim to the property." Such a "proper action" is, obviously, entirely
distinct from that explicitly prescribed in Section 17 of Rule 39, which is
an action for damages brought by a third-party claimant against the
officer within one hundred twenty (120) days from the date of the filing of
the bond for the taking or keeping of the property subject of
the "terceria."
Since the RTC denied the third-party claim for failure of petitioner to
satisfactorily establish its claim of ownership over the subject properties,
the latter filed with the CA a petition for certiorari assailing such denial
and claimed that there is no plain, speedy and adequate remedy in the
ordinary course of law. The petition for certiorari was dismissed by the
CA for being a wrong remedy.
We affirm the dismissal.
A petition for certiorari under Rule 65 of the Rules of Court may be filed
when any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law. An adequate remedy has been defined as a
remedy which is equally beneficial, speedy and sufficient, not merely a
remedy which at some time in the future will bring about a revival of the
judgment of the lower court complained of in the certiorari proceeding,
but a remedy which will promptly relieve the petitioner from the injurious
effects of that judgment and the acts of the inferior court or tribunal.25
Notably, petitioner cannot appeal from the denial of its third-party claim
since it is not one of the parties in the action where the writ of execution
was issued, as the unlawful detainer case was between respondent
26
and the NPC. Also, the denial of the third-party claim is not appealable
as provided under the above-quoted Section 16, Rule 39 of the Rules of
Court since the remedy of a third party claimant is to file a separate and
independent action to vindicate his claim of ownership or right of
possession of the levied properties against the judgment creditor or the
purchaser of the property at the public auction sale. It is in this separate
and independent action that the issue of the third-party claimant's title to
the levied properties can be resolved with finality.
In Queblar v. Garduno, we declared:
27
The appeal interposed by the third-party claimant-appellant is improper,
because she was not one of the parties in the action who were
exclusively Venancio Queblar as plaintiff and Leonardo Garduno as
defendant. Considering the provisions of said section 451 of the Code of
Civil Procedure, as amended by Act No. 4108, the appealed order was
28
not appealable. The appeal that should have been interposed by her, if
the term "appeal" may properly be employed, is a separate reinvidicatory
action against the execution creditor or the purchaser of her property
after the sale at public auction, or a complaint for damages to be
charged against the bond filed by the judgment creditor in favor of the
sheriff.
29
Hence, petitioner's claim in their jurisdictional allegations in its petition
for certiorari filed with the CA that it was constrained to file the petition
for certiorari under Rule 65 to protect its rights and interest over the
subject properties because of the absence of a plain, speedy and
adequate remedy, is contradicted by the procedure laid down under
Section 16 of Rule 39, i.e., the third-party claimant may file an
independent action to vindicate its claim of ownership to the levied
property. Where a specific remedy has been laid down by our rules for
the protection or enforcement of rights, the same should be resorted to.
In Solidum v. CA, We held:
30
We have held that neither an appeal nor a petition for certiorari is the
proper remedy from the denial of a third-party claim. In the case of
Northern Motors, Inc. v. Coquia, the petitioner filed, among others, a
third-party claim which was denied by the respondent judge in the
disputed resolution. Northern Motors, Inc. thereafter filed a petition
for certiorari to nullify the resolution and order of the respondent judge.
In resolving whether the respondent judge acted with grave abuse of
discretion in denying petitioner's third-party claim, the Court held:
Pursuant to [Section 17, Rule 39 of the Revised Rules of Court], a third-
party claimant has two remedies, such as, an action for damages
against the sheriff to be brought within 120 days from the filing of the
bond, and a separate and independent action to vindicate his claim to
the property. In the case at bar, petitioner's and intervenor's remedy
against the bond proved to be unavailing because of the disputed order
of the respondent Judge canceling the indemnity bond. Such an order as
well as the order denying a motion to reconsider the same in effect
discarded or quashed the third-party claims. What then would the
remedy be of the third-party claimants?
In the recent case of Serra vs. Rodriguez, xxx this Court (First Division),
thru Mr. Justice Makasiar, ruled:
From the denial of a third-party claim to defeat the attachment caused to
be levied by a creditor, neither an appeal nor a petition for certiorari is
the proper remedy. The remedy of petitioner would be to file a separate
and independent action to determine the ownership of the attached
property or to file a complaint for damages chargeable against the bond
filed by the judgment creditor in favor of the provincial sheriff.
In Lara vs. Bayona, L-7920, May 10, 1955, this Court, thru Mr. Justice
Concepcion, later Chief Justice, in denying the petition for certiorari to
set aside the order of the lower court quashing the third-party claim of a
chattel mortgagee, held:
Pursuant to this provision, nothing contained therein shall prevent
petitioner "from vindicating his claim to the property by any proper
action." Neither does the order complained of deprive petitioner herein of
the opportunity to enforce his alleged rights by appropriate proceedings.
In short, he has another "plain, speedy and adequate remedy in the
ordinary course of law," and, hence is not entitled either to a writ
of certiorari or to a writ of prohibition.
The Court further held that since the third-party claimant is not one of the
parties to the action, he could not, strictly speaking, appeal from the
order denying its claim, but should file a separate reinvidicatory action
against the execution creditor or a complaint for damages against the
bond filed by the judgment creditor in favor of the sheriff. The rights of a
third-party claimant should be decided in a separate action to be
instituted by the third person. In fine, the appeal that should be
interposed, if the term appeal may be properly employed, is a separate
reinvidicatory action against the execution creditor or complaint for
damages to be charged against the bond filed by the judgment creditor
in favor of the sheriff.
31
And in such separate action, the court may issue a writ of preliminary
injunction against the sheriff enjoining him from proceeding with the
execution sale, which is a speedy and adequate remedy to immediately
32
relieve petitioner from the adverse effects of the lower court's judgment.
Thus, the CA did not err in saying that Section 16 of Rule 39 provides a
more expeditious and encompassing recourse from the denial of its
third-party claim.
Considering our foregoing discussions, We need not address the other
issues raised by petitioner regarding its right to ownership and
possession of the levied properties.
WHEREFORE, the petition is DENIED. The Decision dated July 30,
2012 and the Resolution dated December 10, 2014 issued by the Court
of Appeals in CA-G.R. SP No. 118302 are hereby AFFIRMED.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
JOSE CATRAL MENDOZA MARVIC M.V.F. LEONEN
 Associate Justice Associate Justice Power Sector Assets and Liabilities Management Corporation
(PSALM) Vs. Maunlad Homes, Inc.
FRANCIS H. JARDELEZA *

Associate Justice
G.R. No. 215933

ATTESTATION February 8, 2017

I attest that the conclusions in the above Decision had been reached in FACTS:
consultation before the case was assigned to the writer of the opinion of
the Court’s Division. National Power Corporation (NPC) set a public bidding for the
security package in NPC MinGen. Among the participating bidders
ANTONIO T. CARPIO
Associate Justice
was San Miguel Protective Security Agency (SMPSA), represented
Chairperson, Second Division by Labao. However, NPC's Bids and Awards Committee (BAC)
disqualified SMPSA for its alleged failure to meet the equipage
CERTIFICATION
requirements. The disqualification prompted Labao, as the general
Pursuant to the Section 13, Article VIII of the Constitution and the manager of SMPSA, to bring a petition for certiorari against NPC
Division Chairperson’s Attestation, I certify that the conclusions in the and its officials in the Regional Trial Court (RTC) in Lanao del Norte.
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division. On January 30, 2009, the RTC issued a temporary restraining order
MARIA LOURDES P.A. SERENO
(TRO) directing NPC and its officials to desist from awarding the
Chief Justice security package, as well as from declaring a failure of bidding.
Then, on February 17, 2009, the RTC issued the writ of preliminary
injunction enjoining NPC and its officials from committing said
acts. And on August 17, 2009, the RTC, ruling in favor of SMPSA,
made the injunction permanent, and granted other reliefs to
SMPSA. In due course, NPC appealed to the CA.

CASE DIGEST In the meantime, on March 9, 2009, NPC and Power Sector Assets
and Liabilities Management Corporation (PSALM) entered into an
PSALM v. MAUNLAD HOMES operation and maintenance agreement (OMA) whereby the latter,
as the owner of all assets of NPC by virtue of Republic Act No.
9136, otherwise known as the Electric Power Industry Reform Act
of 2001 (EPIRA), had the obligation to provide for the security of
all the plants, assets and other facilities.
On April 7, 2010, PSALM received the TRO issued by the CA on
April 5, 2010. It is noted, however, that Labao did not furnish
PSALM a copy of SMPSA's Urgent Motion for the Issuance of a TRO
and/or Preliminary Prohibitory Injunction. Notwithstanding the
fact that PSALM was not a party in the case brought by Labao
against NPC, and the fact that PSALM was not furnished a copy of
Labao 's Urgent Motion for the Issuance of a TRO and/or
Preliminary Prohibitory Injunction, the CA issued the assailed
resolution granting the TRO in order to maintain the status quo,
and expressly included PSALM as subject of the writ. Hence,
PSALM has come to the Court by petition for certiorari, insisting
that the CA thereby acted without or in excess of jurisdiction, or
gravely abused its discretion amounting to lack or excess of
jurisdiction by subjecting its company to the injunctive writ issued
to NPC.
ISSUE:
Whether or not a non-party to a suit may be subjected to the
injunctive writ issued against one of the parties.
HELD:
No. A non-party to a suit cannot be subjected to the injunctive writ
issued against one of the parties. We cannot uphold the
resolutions of the CA. First of all, Section 49 of Republic Act No.
9136, or EPIRA, expressly created PSALM as a corporate entity
separate and distinct from NPC, to wit:
Section 49. Creation of Power Sector Assets and Liabilities
Management Corporation. - There is hereby created a government
owned and controlled corporation to be known as the "Power
Sector Assets and Liabilities Management Corporation",
hereinafter referred to as the "PSALM Corp.", which shall take
ownership of all existing NPC generation assets, liabilities, IPP
contracts, real estate and all other disposable assets. All
outstanding obligations of the National Power Corporation arising
from loans, issuances of bonds, securities and other instruments of
indebtedness shall be transferred to and assumed by the PSALM
Corp. within ninety (90) days from the approval of this Act.
Accordingly, the CA blatantly erred in holding that PSALM, without
being made a party itself, was subject of the writ of injunction
issued against NPC. PSALM and NPC, despite being unquestionably
invested by Jaw with distinct and separate personalities, were
intolerably confused with each other. Lastly, Labao was quite
aware that under EPIRA, PSALM became the owner as early as in
mid-2001 of all of NPC's existing generation assets, liabilities, IPP
contracts, real estate and all other disposable assets, as well as all
facilities of NPC. NPC MinGen was among the assets or properties
coming under the ownership of PSALM. As such owner, PSALM
was an indispensible party without whom no final determination
could be had if it was not joined. An indispensable party is one
who has such an interest in the controversy or subject matter that
a final adjudication cannot be made in its absence without injuring
or affecting that interest. As such, Labao should have impleaded
PSALM in the proceedings in the RTC, or the RTC should have itself
seen to PSALM 's inclusion as an indispensable party.
In fine, the CA unquestionably exceeded its jurisdiction in
including PSALM within the coverage of the TRO and the writ of
injunction issued against NPC. There is no question that as a
provisional remedy to prevent irreparable injury pending the final
determination of the action, injunction can bind only the parties in
the action, or their privies or successors in interest. No person who
has not been impleaded and duly served with the summons
should be adversely affected by the outcome of the action. The
principle that a person cannot be prejudiced by a ruling rendered
in an action or proceeding in which it has not been made a party
conforms to the constitutional guarantee of due process of law.
Republic of the Philippines
SUPREME COURT
Baguio City
FIRST DIVISION
G.R. No. 183628 April 7, 2010
DANIEL T. SO, Petitioner,
vs.
FOOD FEST LAND, INC. Respondent
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 183670
FOOD FEST LAND, INC., Petitioner,
vs.
DANIEL T. SO, Respondent.
DECISION
CARPIO MORALES, J.:
Food Fest Land Inc. (Food Fest) entered into a September 14, 1999
Contract of Lease1 with Daniel T. So (So) over a commercial space in
San Antonio Village, Makati City for a period of three years (1999-2002)
on which Food Fest intended to operate a Kentucky Fried Chicken carry
out branch.
Before forging the lease contract, the parties entered into a preliminary
agreement dated July 1, 1999, the pertinent portion of which stated:
The lease shall not become binding upon us unless and until the
government agencies concerned shall authorize, permit or license us to
open and maintain our business at the proposed Lease Premises. We
shall promptly make an application for permits, licenses and authority for
our business and shall exercise due diligence to obtain it, provided,
however, that you shall assist us by submitting such documents and
papers and comply with such other requirements as the governmental
agencies may impose. We shall give notice to you when the permits,
license and authorities have been obtained. We shall also notify you if
any of the required permits, licenses and authorities shall not be be (sic)
given or granted within fifteen days (15) from your conform
(sic)hereto. In such case, the agreement may be canceled and all rights
and obligations hereunder shall cease.2 (underscoring supplied)
While Food Fest was able to secure the necessary licenses and permits
for the year 1999, it failed to commence business operations. For the
year 2000, Food Fest’s application for renewal of barangay business
clearance was "held in abeyance until further study of [its] kitchen
facilities."3
1avvphi1
As the barangay business clearance is a prerequisite to the processing
of other permits, licenses and authority by the city government, Food
Fest was unable to operate. Fearing further business losses, Food Fest,
by its claim, communicated its intent to terminate the lease contract to
So who, however, did not accede and instead offered to help Food Fest
secure authorization from the barangay. On So’s advice, Food Fest
wrote requests addressed to city officials for assistance to facilitate
renewal.
In August 2000, Food Fest, for the second time, purportedly informed So
of its intent to terminate the lease, and it in fact stopped paying rent.
So later sent a November 22, 2000 demand letter to Food Fest for the
payment of rental arrearages and reiterated his offer to help it secure
clearance from the barangay. Thus So wrote: "With regard to securing
permits from the barangay & the City Hall, [with] which I am trying to
help you, some form of representation, maybe not in cash, would
definitely help in forging a longer term relationship."4 Food Fest
demurred to the offer.1avvphi1
By letter of March 26, 2001,5 So again demanded payment of rentals
from Food Fest from September 2000 to March 2001 amounting to
₱123,200.00. Food Fest denied any liability, however, and started to
remove its fixtures and equipment from the premises.
On April 2, 2001, So sent Food Fest a Final Notice of Termination with
demand to pay and to vacate.6
On April 26, 2001, So filed a complaint for ejectment and damages
against Food Fest before the Metropolitan Trial Court (MeTC) of Makati
City.
Branch 64 of the MeTC, by Decision of July 4, 2005,7 rendered judgment
in favor of So, disposing as follows:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiff and against defendant, Food Fest Land, Inc., as
follows:
a. Ordering the defendant to pay the unpaid rentals from August
2000 until March 2001 with penalties accrued thereon. The
security deposit in the sum of Sixty Four Thousand Pesos
(Php64,000.00) is forfeited in favor of the plaintiff;
b. Ordering the defendant to pay liquidated damages in a sum
equivalent to 25% of the total sum due and demandable;
c. Ordering the defendant to pay the plaintiff a sum equivalent to
25% of the total claim as and for attorney’s fees; and
d. The costs of suit.
SO ORDERED.8
On appeal, Branch 143 of the Regional Trial Court (RTC), by Decision of
November 30, 2006,9 reversed the MeTC Decision, disposing as
follows:
WHEREFORE, premises considered, the judgment of the lower court
dated 04 July 2005 is hereby REVERSED and SET ASIDE, ordering
plaintiff Daniel T. So to pay defendant Food Fest the amount of Thirty
Two Thousand Pesos (₱32,000.00) as reimbursement for rentals paid
for the months of July and August 2000; Twenty Thousand Pesos
(₱20,000.00) as exemplary damages; Twenty Thousand Pesos
(₱20,000.00) as attorney’s fees and costs of suit.
SO ORDERED.10
In reversing the MeTC, the RTC found that Food Fest already vacated
the leased premises before So filed the complaint for ejectment; and
whereas possession is the only issue for resolution in an ejectment
case, So’s cause of action only pertained to collection of the rental
arrears.
As to So’s claim for payment of arrears, the RTC noted that since the
claim exceeded the jurisdictional amount over which it can cognize, the
RTC, applying Sec. 8, Rule 40 of the Rules of Court,11 treated the case
as if it was originally filed with it.
On the merits, the RTC held that Food Fest’s failure to secure the
authority to commence business operations resulted in the termination of
its contractual obligations to So, including the obligation to pay rent.
On petition for review, the Court of Appeals, by Decision of April 18,
2008,12 upheld the RTC’s jurisdiction over the complaint. It, however,
declared that Food Fest’s obligation to pay rent was not extinguished
upon its failure to secure permits to operate. Thus, it disposed:
WHEREFORE, premises considered, the assailed decision dated
November 30, 2006 of the RTC, Branch 143, Makati City is hereby
REVERSED and SET ASIDE, ordering respondent FFLI to pay petitioner
Daniel T. So the following:
1. Unpaid rentals from August 2000 until March 31, 2001 with
penalties accrued thereon. The security deposit is forfeited in
favor of petitioner So;
2. Temperate damages in the amount of P50,000.00;
3. P20,000.00 as attorney’s fees; and
4. Costs of suit.
SO ORDERED.13
The parties’ respective motions for reconsideration having been denied,
they filed their respective petitions before this Court which, by Resolution
of October 6, 2008, resolved to consolidate G.R. No. 183628 (Daniel T.
So vs. Food Fest Land, Inc.) with G.R. No. 183670 (Food Fest Land,
Inc. vs. Daniel T. So).
So maintains that the MeTC had jurisdiction over his complaint for
ejectment. For, So contends, Food Fest did not vacate the leased
premises before his filing (on April 26, 2001) of the complaint.
So admitted in his Complaint, however, that Food Fest started pulling
out equipment and other machineries from the premises even before the
final notice was received by it on April 2, 2001.
13. In or the last few days of March 2001, defendant FOOD FEST
LAND, INC. started to remove and pull out its equipment, appliances,
fittings, furnishings, movable articles and other accessories and facilities
that it had earlier placed and installed in the leased premises, but due to
its wanton lack of care in doing so, so much damage and destruction
was caused to the leased premises, resulting in the breakage of and
damage to the concrete walls and partition in the building as well as the
steel gate leading to the leased premises and other parts of the building
and its premises.14 (emphasis and underscoring supplied)
Two elements are paramount in possession – there must be occupancy,
apprehension or taking, and there must be intent to possess.15 In the
present case, given the immediately quoted allegation-admission of So,
intent to possess was not present on Food Fest’s part.
In another vein, So claims that Food Fest did not exercise care in
removing the installations and fixtures, thereby causing destruction to
the premises to thus entitle him to damages, as well as to damages
corresponding to unrealized profits (lucrum cessans) to answer for the
period during which the unit was not rented out.
Unrealized profits fall under the category of actual or compensatory
damages. If there exists a basis for a reasonable expectation that profits
would have continued to be generated had there been no breach of
contract, indemnification for damages based on such expected profits is
proper. This is, however, subject to the rule that a party is entitled to an
adequate compensation only for such pecuniary loss suffered by him as
he has duly proved.16
Other than the photographs evincing damage to the premises, no
evidence was proffered to show So’s entitlement to unrealized profits.
That the leased unit was not subsequently leased is not solely
attributable to Food Fest. As borne by the records, no renovation was
undertaken by So for almost three years following Food Fest’s vacation
of the premises in 2001. The quotations issued by construction
companies for purposes of renovation were issued only in 2004.
So is not without recourse under the lease contract, however. Thus the
pertinent provisions of the lease contract provide:
7. LIABILITY OF LESSEE FOR DAMAGES- LESSEE hereby agrees
that any damage to the leased premises or its appurtenances caused by
said LESSEE or its agents, employees, customers, guests or any other
person without the fault of LESSOR shall be LESSEE’s sole
responsibility and liability, which damage shall, upon demand by
LESSOR be repaired promptly at its expense.
16. TERMINATION OF THE LEASE- LESSEE agrees to return and
surrender the leased premises at the expiration of the term of this lease
in as good condition as reasonable wear and tear will permit and without
delay whatsoever, devoid of all occupants, furniture, machinery,
equipment and signages, articles and effects of any kind, other than
such alterations or improvements which cannot be removed without
damaging the leased premises.
23. PENALTY CLAUSE – Any and all accounts payable by LESSEE
under this Contract of Lease and other charges which may be claimed
against LESSEE, but not paid by LESSEE to LESSOR within fifteen (15)
days from due date shall be subject to penalty charges of ONE
PERCENT (1%) per month from due date until the account is paid in full.
23.1. Should LESSOR be compelled to seek judicial relief against
LESSEE the latter shall, in addition to any other claim for damages pay
as liquidated damages to LESSOR an amount equivalent to twenty-five
percent (25%) of the amount due, but in no case less than P500.00: and
an attorney’s fee in the amount equivalent to 25% of the amount claimed
but in no case less than P3,000.00 as well as all expenses of litigation.17
Respecting So’s claim for renovation expenses, the same must be
denied absent proof as to the actual cost of renovation. Only firm offers
or quotations from construction companies are in the records. Following
Article 2224 of the Civil Code,18 however, the appellate court’s award of
temperate damages is in order.
This Court notes that the appellate court did not award liquidated
damages in contravention of the contract. As for the appellate court’s
award of ₱20,000.00 as attorney’s fees, the contractual stipulation
should prevail.
As for Food Fest’s invocation of the principle of rebus sic stantibus as
enunciated in Article 1267 of the Civil Code to render the lease
contract functus officio, and consequently release it from responsibility to
pay rentals, the Court is not persuaded. Article 1267 provides:
Article 1267. When the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may also
be released therefrom, in whole or in part.
This article, which enunciates the doctrine of unforeseen events, is
not, however, an absolute application of the principle of rebus sic
stantibus, which would endanger the security of contractual relations.
The parties to the contract must be presumed to have assumed the risks
of unfavorable developments. It is, therefore, only in absolutely
exceptional changes of circumstances that equity demands assistance
for the debtor.19
Food Fest claims that its failure to secure the necessary business
permits and licenses rendered the impossibility and non-materialization
of its purpose in entering into the contract of lease, in support of which it
cites the earlier-quoted portion of the preliminary agreement dated July
1, 1999 of the parties.20
The cause or essential purpose in a contract of lease is the use or
enjoyment of a thing.21 A party’s motive or particular purpose in entering
into a contract does not affect the validity or existence of the contract; an
exception is when the realization of such motive or particular purpose
has been made a condition upon which the contract is made to depend.
The exception does not apply here.
It is clear that the condition set forth in the preliminary agreement
pertains to the initial application of Food Fest for the permits, licenses
and authority to operate. It should not be construed to apply to Food
Fest’s subsequent applications. Consider the following qualification in
the preliminary agreement:
xxx We shall also notify you if any of the required permits, licenses and
authorities shall not be be (sic) given or granted within fifteen days (15)
from your conform (sic) hereto. In such case, the agreement may be
canceled and all rights and obligations hereunder shall
cease.22 (underscoring supplied)
Food Fest was able to secure the permits, licenses and authority to Pursuant to Section 13, Article VIII of the Constitution, I certify that the
operate when the lease contract was executed. Its failure to renew these conclusions in the above decision had been reached in consultation
permits, licenses and authority for the succeeding year, does not, before the case was assigned to the writer of the opinion of the Court’s
however, suffice to declare the lease functus officio, nor can it be Division.
construed as an unforeseen event to warrant the application of Article
1267. REYNATO S. PUNO
Chief Justice
Contracts, once perfected, are binding between the contracting parties.
Obligations arising therefrom have the force of law and should be
CASE DIGEST
complied with in good faith. Food Fest cannot renege from the
obligations it has freely assumed when it signed the lease contract.
So vs FoodFest, G.R. 183268, April 7, 2010 Applicable Provision of
WHEREFORE, the Court of Appeals Decision of April 18, 2008 is the Civil Code: Article 1181
AFFIRMED with MODIFICATION.
CARPIO MORALES, J.
Food Fest is ORDERED to pay So liquidated damages in the amount
equivalent to 25% of the total sum due and demandable. Further, So is Facts:
ORDERED to pay attorney’s fees in the amount equivalent to 25% of the
total sum due and demandable. In all other respects, the decision
is AFFIRMED. Food Fest Land Inc. (Food Fest) entered into a Contract of Lease
with Daniel T. So (So) over a commercial space in San Antonio
SO ORDERED. Village, Makati City for a period of three years on which Food Fest
intended to operate a Kentucky Fried Chicken carry out branch.
CONCHITA CARPIO MORALES
Associate Justice The parties entered into a preliminary agreement, the pertinent
portion of which stated: The lease shall not become binding upon
WE CONCUR: us unless and until the government agencies concerned shall
authorize, permit or license us to open and maintain our business
REYNATO S. PUNO
Chief Justice at the proposed Lease Premise. In such case, the agreement may
Chairperson be canceled and all rights and obligations hereunder shall cease.
While Food Fest was able to secure the necessary licenses and
TERESITA J. LEONARDO-DE
LUCAS P. BERSAMIN permits for the first year(1999), it failed to commence business
CASTRO
Associate Justice
Associate Justice operations. For the year 2000, Food Fest’s application for renewal
of barangay business clearance was held in abeyance. Food Fest
MARTIN S. VILLARAMA, JR.
Associate Justice communicated its intent to terminate the lease contract to So
who, however, did not accede and instead offered to help Food
CERTIFICATION Fest secure authorization from the barangay. In August 2000, Food
Fest, for the second time, purportedly informed So of its intent to
terminate the lease, and it in fact stopped paying rent. So
reiterated his offer to help it secure clearance from the barangay.
Food Fest demurred to the offer. So demanded payment of rentals
from Food Fest from September 2000 to March 2001. Food Fest
denied any liability, however, and started to remove its fixtures
and equipment from the premises. On April 2, 2001, So sent Food
Fest a Final Notice of Termination with demand to pay and to
vacate On April 26, 2001, So filed a complaint for ejectment and
damages against Food Fest before the (MeTC) of MakatiCity.
Ruling of the Court: MeTC rendered judgment in favor of So. On
appeal, the Regional Trial Court (RTC) reversed the MeTC Decision.
On petition for review, the Court of Appeals declared that Food
Fest’s obligation to pay rent was not extinguished upon its failure
to secure permits to operate.
Issue:
Whether or not the acquisition of subsequent business permits
etc. is a suspensive condition to the lease contract making the
obligation not binding to the parties upon not acquiring such
documents?
Held:
Food Fest claims that its failure to secure the necessary business
permits and licenses rendered the impossibility and non-
materialization of its purpose in entering into the contract of
lease, in support of which it cites the earlier-quoted portion of the
preliminary agreement of the parties. It is clear that the condition
set forth in the preliminary agreement pertains to the initial
application of Food Fest for the permits, licenses and authority to
operate. It should not be construed to apply to Food Fest’s
subsequent applications. The cause or essential purpose in a
contract of lease is the use or enjoyment of a thing. A party’s
motive or particular purpose in entering into a contract does not
affect the validity or existence of the contract; an exception is
when the realization of such motive or particular purpose has
been made a condition upon which the contract is made to
depend. The exception does not apply here.
Food Fest was able to secure the permits, licenses and authority to
operate when the lease contract was executed. Its failure to renew
these permits, licenses and authority for the succeeding year, does
not, however, suffice to declare the lease functus officio, nor can it
be construed as an unforeseen event to warrant the application of
Article 1267. Contracts, once perfected, are binding between the
contracting parties. Obligations arising there from have the force
of law and should be complied with in good faith. Food Fest
cannot renege from the obligations it has freely assumed when it
signed the lease contract.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 186571 August 11, 2010
GERBERT R. CORPUZ, Petitioner,
vs.
DAISYLYN TIROL STO. TOMAS and The SOLICITOR
GENERAL, Respondents.
DECISION
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 A judgment of divorce is a judicial decree, although a foreign one,
divorce.31 Under this situation, we can, at this point, simply dismiss the affecting a person’s legal capacity and status that must be recorded. In
petition for insufficiency of supporting evidence, unless we deem it more fact, Act No. 3753 or the Law on Registry of Civil Status specifically
appropriate to remand the case to the RTC to determine whether the requires the registration of divorce decrees in the civil registry:
divorce decree is consistent with the Canadian divorce law.
Sec. 1. Civil Register. – A civil register is established for recording the
We deem it more appropriate to take this latter course of action, given civil status of persons, in which shall be entered:
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 (a) births;
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 (b) deaths;
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 (c) marriages;
foreign judgment, once recognized, shall have the effect of res
judicata32 between the parties, as provided in Section 48, Rule 39 of the (d) annulments of marriages;
Rules of Court.33
(e) divorces;
In fact, more than the principle of comity that is served by the practice of
reciprocal recognition of foreign judgments between nations, the res (f) legitimations;
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 (g) adoptions;
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. (h) acknowledgment of natural children;

Considerations beyond the recognition of the foreign divorce decree (i) naturalization; and

As a matter of "housekeeping" concern, we note that the Pasig City Civil (j) changes of name.
Registry Office has already recorded the divorce decree on Gerbert and
Daisylyn’s marriage certificate based on the mere presentation of the xxxx
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.
Sec. 4. Civil Register Books. — The local registrars shall keep and
preserve in their offices the following books, in which they shall,
Article 407 of the Civil Code states that "[a]cts, events and judicial respectively make the proper entries concerning the civil status of
decrees concerning the civil status of persons shall be recorded in the persons:
civil register." The law requires the entry in the civil registry of judicial
decrees that produce legal consequences touching upon a person’s
(1) Birth and death register;
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
 (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;38 that the civil
registrar and all persons who have or claim any interest must be made
parties to the proceedings;39 and 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.
ARTURO D. BRION
Associate Justice
WE CONCUR:
CONCHITA CARPIO MORALES
Associate Justice
LUCAS P. BERSAMIN ROBERTO A. ABAD
Associate Justice Associate Justice
 MARTIN S. VILLARAMA, JR.
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of
the Court’s Division.
CONCHITA CARPIO MORALES
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, it is hereby certified that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice
CASE DIGEST
Corpuz vs. Sto. Tomas Case Digest
Facts:
Petitioner Gerbert R. Corpuz was a former Filipino citizen
who acquired Canadian citizenship through naturalization in 2000.
In 2005, he married respondent Daisylyn T. Sto. Tomas, a Filipina,
in Pasig City. He went to Canada soon after the wedding. When
he returned to the Philippines four months later, he discovered
that his wife was having an affair with another man. Hurt and
disappointed, Gerbert returned to Canada and filed a petition for
divorce which was granted.
Two years after the divorce, Gerbert found another Filipina to
love. Desirous of marrying his new Filipina fiance 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, an official of the
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.
Accordingly, Gerbert filed a petition for judicial recognition of
foreign divorce and/or declaration of marriage as dissolved with
the RTC. Daisylyn offered no opposition to Gerbert's petition.
The RTC denied the petition, ruling 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, in order
for him or her to be able to remarry under Philippine law
Issues:
1. Does 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?
2. Does the unavailability of the second paragraph of Article 26 of
the Family Code to aliens necessarily strip Gerbert of legal interest
to petition the RTC for the recognition of his foreign divorce
decree?
Corpuz vs. Sto. Tomas Case Digest
 Divorce0 Comments
foreign divorce decree must first be judicially recognized by a

 competent Philippine court.




Accordingly, Gerbert filed a petition for judicial recognition of
foreign divorce and/or declaration of marriage as dissolved with
Facts:
the RTC. Daisylyn offered no opposition to Gerbert's petition.

Petitioner Gerbert R. Corpuz was a former Filipino citizen

The RTC denied the petition, ruling that Gerbert was not the
who acquired Canadian citizenship through naturalization in 2000.
proper party to institute the action for judicial recognition of the
In 2005, he married respondent Daisylyn T. Sto. Tomas, a Filipina,
foreign divorce decree as he is a naturalized Canadian citizen. It
in Pasig City. He went to Canada soon after the wedding. When
ruled that only the Filipino spouse can avail of the remedy under
he returned to the Philippines four months later, he discovered
the second paragraph of Article 26 of the Family Code, in order
that his wife was having an affair with another man. Hurt and
for him or her to be able to remarry under Philippine law
disappointed, Gerbert returned to Canada and filed a petition for
divorce which was granted.
Issues:
Two years after the divorce, Gerbert found another Filipina to
love. Desirous of marrying his new Filipina fiance in the 1. Does the second paragraph of Article 26 of the
Philippines, Gerbert went to the Pasig City Civil Registry Office Family Code extends to aliens the right to petition a court of this
and registered the Canadian divorce decree on his and Daisylyn's jurisdiction for the recognition of a foreign divorce decree?
marriage certificate. Despite the registration, an official of the
NSO informed Gerbert that the marriage between him and 2. Does the unavailability of the second paragraph of Article 26 of
Daisylyn still subsists under Philippine law; to be enforceable, the the Family Code to aliens necessarily strip Gerbert of legal interest
to petition the RTC for the recognition of his foreign divorce issue in another proceeding, would be of no significance to the
decree? Filipino spouse since our laws do not recognize divorce as a mode
of severing the marital bond; Article 17 of the Civil Code provides
that the policy against absolute divorces cannot be subverted by
3. Does the recording of the divorce decree on Corpuz and Sto. judgments promulgated in a foreign country. The inclusion of the
Tomas' marriage certificate proper? 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
Held: 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
1.) No. 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
The provision was included in the law to avoid
marriage. No court in this jurisdiction, however, can make a
the absurd situation where the Filipino spouse remains married to similar declaration for the alien spouse (other than that already
the alien spouse who, after obtaining a divorce, is no longer established by the decree), whose status and legal capacity are
generally governed by his national law.
married to the Filipino spouse. The legislative intent is for the
benefit of the Filipino spouse, by clarifying his or her marital Given the rationale and intent behind the enactment, and the
purpose of the second paragraph of Article 26 of the Family Code,
status, settling the doubts created by the divorce decree.
the RTC was correct in limiting the applicability of the provision
Essentially, the second paragraph of Article 26 of the for the benefit of the Filipino spouse. Only the Filipino spouse can
Family Code provided the Filipino spouse a substantive right to invoke the second paragraph of Article 26 of the Family Code; the
alien spouse can claim no right under this provision.
have his or her marriage to the alien spouse considered as
dissolved, capacitating him or her to remarry. Without the second
paragraph of Article 26 of the Family Code, the judicial 2.) No. The foreign divorce decree itself, after its authenticity and
conformity with the aliens national law have been duly proven
recognition of the foreign decree of divorce, whether in a according to our rules of evidence, serves as a presumptive
proceeding instituted precisely for that purpose or as a related 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 acted totally out of turn and without authority of law when it
judgments. annotated the Canadian divorce decree on Gerbert and Daisylyns
marriage certificate, on the strength alone of the foreign decree
presented by Gerbert. The registration of the foreign divorce
In Gerberts case, since both the foreign divorce decree and the
decree without the requisite judicial recognition is patently void
national law of the alien, recognizing his or her capacity to obtain
and cannot produce any legal effect. (Corpuz vs. Sto. Tomas, G.R.
a divorce, purport to be official acts of a sovereign authority,
No. 186571, August 11, 2010)
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, but failed to include a copy of the Canadian law on
divorce. 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.

3.) No. There is no judicial order as yet exists recognizing the

foreign divorce decree. Thus, the Pasig City Civil Registry Office