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Case 71

G.R. No. 112573 February 9, 1995

NORTHWEST ORIENT AIRLINES, INC.petitioner,vs.CO RT OF A!!EALS a"# C.F. SHAR! $ CO%!AN& INC., respondents .

!A'ILLA, (R., J.:

This petition for review on certiorari seeks to set aside the decision of the Court of Appeals affirming thedismissal of the petitioner's complaint to enforce the judgment of a Japanese court. The principal issue here iswhether a Japanese court can acquire jurisdiction over a Philippine corporation doing usiness in Japan !serving summons through diplomatic channels on the Philippine corporation at its principal office in "anilaafter prior attempts to serve summons in Japan had failed.Petitioner #orthwest $rient Airlines, %nc. &hereinafter NORTHWEST , a corporation organi(ed under the lawsof the )tate of "innesota, *.).A., sought to enforce in Civil Case #o. + - /0 / of the 1egional TrialCourt &1TC , 2ranch 34, "anila, a judgment rendered in its favor ! a Japanese court against private

respondent C.5. )harp 6 Compan!, %nc., &hereinafter )7A1P , a corporation incorporated under Philippinelaws.

As found ! the Court of Appeals in the challenged decision of 8 #ovem er 99 , 1 the following are thefactual and procedural antecedents of this controvers!:

$n "a! 9, 9/4, plaintiff #orthwest Airlines and defendant C.5. )harp 6 Compan!, through itsJapan ranch, entered into an %nternational Passenger )ales Agenc! Agreement, where ! theformer authori(ed the latter to sell its air transportation tickets. *na le to remit the proceeds ofthe ticket sales made ! defendant on ehalf of the plaintiff under the said agreement, plaintiffon "arch ;3, 9+8 sued defendant in Tok!o, Japan, for collection of the unremitted proceeds ofthe ticket sales, with claim for damages.

$n April , 9+8, a writ of summons was issued ! the 0th Civil

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$n "arch ;4, 9+ , defendant received from

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jurisdiction is acquired over the person of the defendant ! serving him e!ond the oundaries of the state.F Tosupport its position, the Court of Appeals further stated:

%n an action strictl! in personam , such as the instant case, personal service of summons withinthe forum is required for the court to acquire jurisdiction over the defendant &"agdalena Dstate%nc. vs. #ieto, ;3 )C1A ; 8 . To confer jurisdiction on the court, personal or su stitutedservice of summons on the defendant not eBtraterritorial service is necessar! &

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$n this premise, defendant appellee is a non-resident corporation. As such, court processesmust e served upon it at a place within the state in which the action is rought and notelsewhere &)t. Clair vs. CoB, 80 *) 38, ;/ H ed. ;;;, ). Ct. 34 . 5

%t then concluded that the service of summons effected in "anila or e!ond the territorial oundaries of Japanwas null and did not confer jurisdiction upon the Tok!o

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proccess to the corporation at its home or principal office. The sending of such cop! is a necessar! part of theservice. 12

)7A1P contends that the laws authori(ing service of process upon the )ecurities and DBchange Commission,the )uperintendent of 2anks, and the %nsurance Commissioner, as the case ma! e, presuppose a situationwherein the foreign corporation doing usiness in the countr! no longer has an! ranches or offices within thePhilippines. )uch contention is elied ! the pertinent provisions of the said laws. Thus, )ection ;+ of theCorporation Code 13 and )ection 98 of the %nsurance Code 1) clearl! contemplate two situations: & if thecorporation had left the Philippines or had ceased to transact usiness therein, and &; if the corporation hasno designated agent. )ection / of the eneral 2anking Act 15 does not even speak a corporation which hadceased to transact usiness in the Philippines.

#owhere in its pleadings did )7A1P profess to having had a resident agent authori(ed to receive courtprocesses in Japan. This silence could onl! mean, or least create an impression, that it had none. 7ence,service on the designated government official or on an! of )7A1P's officers or agents in Japan could eavailed of. The respondent, however, insists that onl! service of an! of its officers or emplo!ees in its ranchesin Japan could e resorted to. Ge do not agree. As found ! the respondent court, two attempts at servicewere made at )7A1P's =okohama ranch. 2oth were unsuccessful. $n the first attempt, "r.

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%t further availed of the ruling in agdalena Estate! "nc . vs . Nieto 19 and #ial $orp . vs . Soriano , 2 as well as theprinciple laid down ! the %owa )upreme Court in the 9 case of Raher vs . Raher . 21

The first three cases are, however, inapplica le. Boudard involved the enforcement of a judgment of the civildivision of the Court of 5irst %nstance of 7anoi, 5rench %ndo-China. The trial court dismissed the case ecausethe 7anoi court never acquired jurisdiction over the person of the defendant considering that F?t@he, evidenceadduced at the trial conclusivel! proves that neither the appellee ?the defendant@ nor his agent or emplo!eeswere ever in 7anoi, 5rench %ndo-ChinaE and that the deceased "arie Theodore Jerome 2oudard had never, atan! time, een his emplo!ee.F %n agdalena Estate , what was declared invalid resulting in the failure of thecourt to acquire jurisdiction over the person of the defendants in an action in personam was the service ofsummons through pu lication against non-appearing resident defendants. %t was claimed that the latterconcealed themselves to avoid personal service of summons upon them. %n #ial , the defendants were foreigncorporations which were not, domiciled and licensed to engage in usiness in the Philippines and which did nothave officers or agents, places of usiness, or properties here. $n the other hand, in the instant case, )7A1Pwas doing usiness in Japan and was maintaining four ranches therein.

%nsofar as to the Philippines is concerned, Raher is a thing of the past. %n that case, a divided )upreme Courtof %owa declared that the principle that there can e no jurisdiction in a court of a territor! to render a personal

judgment against an!one upon service made outside its limits was applica le alike to cases of residents andnon-residents. The principle was put at rest ! the *nited )tates )upreme Court when it ruled in the 948 caseof illi%en vs . e&er 22 that domicile in the state is alone sufficient to ring an a sent defendant within the reachof the state's jurisdiction for purposes of a personal judgment ! means of appropriate su stituted service orpersonal service without the state. This principle is em odied in section +, 1ule 4 of the 1ules of Courtwhich allows service of summons on residents temporaril! out of the Philippines to e made out of the countr!.The rationale for this rule was eBplained in illi%en as follows:

?T@he authorit! of a state over one of its citi(ens is not terminated ! the mere fact of hisa sence from the state. The state which accords him privileges and affords protection to himand his propert! ! virtue of his domicile ma! also eBact reciprocal duties. FDnjo!ment of theprivileges of residence within the state, and the attendant right to invoke the protection of itslaws, are insepara leF from the various incidences of state citi(enship. The responsi ilities ofthat citi(enship arise out of the relationship to the state which domicile creates. That relationshipis not dissolved ! mere a sence from the state. The attendant duties, like the rights andprivileges incident to domicile, are not dependent on continuous presence in the state. $nesuch incident of domicile is amena ilit! to suit within the state even during sojourns without thestate, where the state has provided and emplo!ed a reasona le method for apprising such ana sent part! of the proceedings against him. 23

The domicile of a corporation elongs to the state where it was incorporated. 2) %n a strict technical sense, suchdomicile as a corporation ma! have is single in its essence and a corporation can have onl! one domicilewhich is the state of its creation. 25

#onetheless, a corporation formed in one-state ma!, for certain purposes, e regarded a resident in anotherstate in which it has offices and transacts usiness. This is the rule in our jurisdiction and apropos thereto, it

ma! e necesser! to quote what we stated in State "nvestment House! "nc , vs . $iti'an%! N . ( .,2*

to wit:The issue is whether these Philippine ranches or units ma! e considered Fresidents of thePhilippine %slandsF as that term is used in )ection ;8 of the %nsolvenc! Haw . . . or residents ofthe state under the laws of which the! were respectivel! incorporated. The answer cannot efound in the %nsolvenc! Haw itself, which contains no definition of the term, resident , or an! clearindication of its meaning. There are however other statutes, al eit of su sequent enactment andeffectivit!, from which enlightening notions of the term ma! e derived.

The #ational %nternal 1evenue Code declares that the term F'resident foreign corporation'applies to a foreign corporation engaged in trade or usiness within the Philippines,F as

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distinguished from a F'non-resident foreign corporation' . . . &which is one not engaged in tradeor ussiness within the Philippines.F ?)ec. ;8, pars. &h and &i @.

The $ffshore 2anking Haw, Presidential

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customar! usiness for venue purposesEF and that the Fnecessar! element in its signification islocalit! of eBistence.F ?Gords and Phrases, Permanent Dd., vol. /, pp. 94, 4 ;, 49 @.

%n as much as )7A1P was admittedl! doing usiness in Japan through its four dul! registered ranches at thetime the collection suit against it was filed, then in the light of the processual presumption, )7A1P ma! edeemed a resident of Japan, and, as such, was amena le to the jurisdiction of the courts therein and ma! edeemed to have assented to the said courts' lawful methods of serving process. 27

Accordingl!, the eBtraterritorial service of summons on it ! the Japanese Court was valid not onl! under theprocessual presumption ut also ecause of the presumption of regularit! of performance of official dut!.

Ge find #$1T7GD)T's claim for attorne!'s fees, litigation eBpenses, and eBemplar! damages to e withoutmerit. Ge find no evidence that would justif! an award for attorne!'s fees and litigation eBpenses under Article;;8+ of the Civil Code of the Philippines. #or is an award for eBemplar! damages warranted. *nder Article;; 4 of the Civil Code, efore the court ma! consider the question of whether or not eBemplar! damagesshould e awarded, the plaintiff must show that he is entitled to moral, temperate, or compensator! damaged.There eing no such proof presented ! #$1T7GD)T, no eBemplar! damages ma! e adjudged in its favor.

G7D1D5$1D, the instant petition is partl! 1A#TD

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Case /;

G.R. No. 11)77* February 2, 2

%ENAN'RO -. LA REANO, petitioner,vs.CO RT OF A!!EALS AN' SINGA!ORE AIRLINES LI%ITE', respondents.

IS %-ING, J.:

This petition for review on certiorari under 1ule 43 of the 1ules of Court seeks to reverse the

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eBhaust all possi le avenues for reconsideration and retention.

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. . . %n the instant case, the action for damages due to illegal termination was filed ! plaintiff-appellee onl!on Januar! +, 9+/ or more than four &4 !ears after the effectivit! date of his dismissal on #ovem er ,

9+;. Clearl!, plaintiff-appellee's action has alread! prescri ed.

G7D1D5$1D, the appealed decision is here ! 1DKD1)D< and )DT A)%

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"ore recentl! in #e +uzman vs . $ourt of (ppeals , 8 where the mone! claim was ased on a written contract, theCollective 2argaining Agreement, the Court held:

. . . The language of Art. ;9 of the Ha or Code does not limit its application onl! to Fmone! claimsspecificall! recovera le under said CodeF ut covers all mone! claims arising from an emplo!ee-emplo!errelationsF &Citing Cadalin v. P$DA Administrator, ; + )C1A /; , /04 ? 994@E and *! v. #ational Ha or1elations Commission, ;0 )C1A 383, 3 3 ? 990@ . . . .

%t should e noted further that Article ;9 of the Ha or Code is a special law applica le to mone! claimsarising from emplo!er-emplo!ee relationsE thus, it necessaril! prevails over Article 44 of the Civil Code, ageneral law. 2asic is the rule in statutor! construction that Fwhere two statutes are of equal theoreticalapplication to a particular case, the one designed therefore should prevail.F &Citing Heveri(a v. %ntermediate

Appellate Court, 3/ )C1A ;+;, ;94. +eneralia speciali'us non derogant .

%n the light of Article ;9 , aforecited, we agree with the appellate court's conclusion that petitioner's actionfor damages due to illegal termination filed again on Januar! +, 9+/ or more than four &4 !ears after the effectivedate of his dismissal on #ovem er , 9+; has alread! prescri ed.

%n the instant case, the action for damages due to illegal termination was filed ! plaintiff-appelle onl! onJanuar! +, 9+/ or more than four &4 !ears after the effectivit! date of his dismissal on #ovem er , 9+;.Clearl!, plaintiff-appellee's action has alread! prescri ed.

Ge ase our conclusion not on Article 44 of the Civil Code ut on which sets the prescription period at three &!ears and which governs under this jurisdiction.

Petitioner claims that the running of the prescriptive period was tolled when he filed his complaint for illegaldismissal efore the Ha or Ar iter of the #ational Ha or 1elations Commission. 7owever, this claim deserves scantconsiderationE it has no legal leg to stand on. %n Ol&mpia "nternational! "nc ., vs ., $ourt of (ppeals , we held thatFalthough the commencement of a civil action stops the running of the statute of prescription or limitations, itsdismissal or voluntar! a andonment ! the plaintiff leaves in eBactl! the same position as though no action had

een commenced at all.F ;

#ow, as to whether petitioner's separation from the compan! due to retrenchment was valid, the appellate court

found that the emplo!ment contract of petitioner allowed for pre-termination of emplo!ment. Ge agree with theCourt of Appeals when it said,

%t is a settled rule that contracts have the force of law etween the parties. 5rom the moment the same isperfected, the parties are ound not onl! to the fulfillment of what has een eBpressl! stipulated ut also toall consequences which, according to their nature, ma! e in keeping with good faith, usage and law. Thus,when plaintiff-appellee accepted the offer of emplo!ment, he was ound ! the terms and conditions setforth in the contract, among others, the right of mutual termination ! giving three months written notice or

! pa!ment of three months salar!. )uch provision is clear and readil! understanda le, hence, there is noroom for interpretation.

B B B B B B B B B

5urther, plaintiff-appellee's contention that he is not ound ! the provisions of the Agreement, as he is not asignator! thereto, deserves no merit. %t must e noted that when plaintiff-appellee's emplo!ment wasconfirmed, he applied for mem ership with the )ingapore Airlines Himited &Pilots Association, the signator!to the aforementioned Agreement. As such, plaintiff-appellee is estopped from questioning the legalit! of thesaid agreement or an! proviso contained therein.

"oreover, the records of the present case clearl! show that respondent court's decision is ampl! supported !evidence and it did not err in its findings, including the reason for the retrenchment:

Ghen defendant-appellant was faced with the world-wide recession of the airline industr! resulting in a slowdown in the compan!'s growth particularl! in the regional operation &Asian Area where the Air us 88

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operates. %t had no choice ut to adopt cost cutting measures, such as cutting down services, num er offrequencies of flights, and reduction of the num er of fl!ing points for the A- 88 fleet &t.s.n., Jul! 0, 9++, pp.

/- + . As a result, defendant-appellant had to la! off A- 88 pilots, including plaintiff-appellee, which it foundto e in eBcess of what is reasona l! needed. 4

All these considered, we find sufficient factual and legal asis to conclude that petitioner's termination fromemplo!ment was for an authori(ed cause, for which he was given ample notice and opportunit! to e heard, !respondent compan!. #o error nor grave a use of discretion, therefore, could e attri uted to respondent appellatecourt. ,-.phi,/n0t

ACC$1

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Case /

G.R. Nos. L/27+* a"# L/27+9* %ar0 29, 197)

!HILI!!INE CO%%ERCIAL AN' IN' STRIAL -AN , A# 4"4s ra or o6 e Tes a e Es a e o6 C ar es Ne8 o"Ho# es :S;. !ro0. No. 1*72 o6 e Cour o6 F4rs I"s a"0e o6 I o4 o

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)DC$#

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;. I That in said last will and testament herein petitioner Charles #ewton 7odges is directed tohave the right to manage, control use and enjo! the estate of deceased Hinnie Jane 7odges, in thesame wa!, a provision was placed in paragraph two, the following: F% give, devise and equeath all ofthe rest, residue and remainder of m! estate, to m! eloved hus and, Charles #ewton 7odges, tohave and &to hold unto him, m! said hus and, during his natural lifetime.F

. I That during the lifetime of Hinnie Jane 7odges, herein petitioner was engaged in the usinessof u!ing and selling personal and real properties, and do such acts which petitioner ma! think est.

4. I That deceased Hinnie Jane 7odges died leaving no descendants or ascendants, eBceptrothers and sisters and herein petitioner as eBecutor surviving spouse, to inherit the properties of

the decedent.

3. I That the present motion is su mitted in order not to paral!(e the usiness of petitioner and thedeceased, especiall! in the purchase and sale of properties. That proper accounting will e had alsoin all these transactions.

G7D1D5$1D, it is most respectfull! pra!ed that, petitioner C. #. 7odges &Charles #ewton 7odgese allowed or authori(ed to continue the usiness in which he was engaged and to perform acts

which he had een doing while deceased Hinnie Jane 7odges was living.

Cit! of %loilo, "a! ;/, 93/. &AnneB F

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conve&ances with or without general or special warrant!, conve!ing in fee simple or for an! otherterm or time, an! propert! which he ma! deem proper to dispose ofE to lease an! of the real propert!for oil, gas and or other minerals, and all such deeds or leases shall pass the a solute fee simpletitle to the interest so conve!ed in such propert! as he ma! elect to sell. All rents, emoluments andincome from said estate shall 'elong to him , and he is further authori(ed to use an! part of theprincipal of said estate as he ma! need or desire. ...

;. I That herein DBecutor, is not onl! part owner of the properties left as conjugal, ut also, thesuccessor to all the properties left ! the deceased Hinnie Jane 7odges. That during the lifetime ofherein DBecutor, as Hegatee has the right to sell, conve!, lease or dispose of the properties in thePhilippines. That inasmuch as C.#. 7odges was and is engaged in the u! and sell of real andpersonal properties, even efore the death of Hinnie Jane 7odges, a motion to authori(e said C.#.7odges was filed in Court, to allow him to continue in the usiness of u! and sell, which motion wasfavora l! granted ! the 7onora le Court.

. I That since the death of Hinnie Jane 7odges, "r. C.#. 7odges had een u!ing and selling realand personal properties, in accordance with the wishes of the late Hinnie Jane 7odges.

4. I That the 1egister of

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Pursuant to the provisions of the 1ules of Court, herein eBecutor of the deceased, renders thefollowing account of his administration covering the period from Januar! , 93+ to

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taB returnF for calendar !ear 939 on the estate of Hinnie Jane 7odges reporting, under oath, thesaid estate as having earned income of P 3, .00, eBactl! one-half of the net income of hiscom ined personal assets and that of the estate of Hinnie Jane 7odges. &pp. 9 -9;. Appellee's2rief.

BBB BBB BBB

*nder date of April ;8, 90 , C.#. 7odges filed his third FAnnual )tatement of Account ! theDBecutor for the =ear 908F of the estate of Hinnie Jane 7odges. %n the F)tatement of #et Gorth of"r. C.#. 7odges and the Dstate of Hinnie Jane 7odgesF as of

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*1 D#T E6)*(RTE "$T%$# 5$1 T7D APP$%#T"D#T $5 A)PDC%AH A

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)pecial AdministratriB of the estate of Charles #ewton 7odges, with powers and duties provided for! law. That the 7onora le Court fiB the reasona le ond of P ,888.88 to e filed ! Avelina A.

"agno.

&AnneB F$F, Petition.

which respondent court readil! acted on in its order of even date thus: .

5or the reasons alleged in the *rgent Ex)parte "otion filed ! counsel for the DBecutor dated

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To egin with, Ge gather from the two records on appeal filed ! petitioner, as appellant in the appealed cases, onewith green cover and the other with a !ellow cover, that at the outset, a sort of modus operandi had een agreedupon ! the parties under which the respective administrators of the two estates were supposed to act conjointl!,

ut since no cop! of the said agreement can e found in the record efore *s, Ge have no wa! of knowing wheneBactl! such agreement was entered into and under what specific terms. And while reference is made tosaid modus operandi in the order of )eptem er , 904, on pages ;83-;80 of the reen 1ecord on Appeal,reading thus:

The present incident is to hear the side of administratriB, "iss Avelina A. "agno, in answer to thecharges contained in the motion filed ! Att!. Cesar Tirol on )eptem er , 904. %n answer to thesaid charges, "iss Avelina A. "agno, through her counsel, Att!. 1i(al uimpo, filed a writtenmanifestation.

After reading the manifestation here of Att!. uimpo, for and in ehalf of the administratriB, "iss Avelina A. "agno, the Court finds that ever!thing that happened efore )eptem er , 904, whichwas resolved on )eptem er +, 904, to the satisfaction of parties, was simpl! due to amisunderstanding etween the representative of the Philippine Commercial and %ndustrial 2ank and"iss "agno and in order to restore the harmonious relations etween the parties, the Court orderedthe parties to remain in status quo as to their modus operandi efore )eptem er , 904, until afterthe Court can have a meeting with all the parties and their counsels on $cto er , as formerl!agreed upon etween counsels, Att!s. $(aeta, i s and $(aeta, Att!s. Tirol and Tirol and Att!.

1i(al uimpo.%n the meantime, the pra!ers of Att!. uimpo as stated in his manifestation shall not e resolved !this Court until $cto er , 904.

)$ $1

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Pursuant to the order of this Court thru Judge 2ellosillo dated )eptem er , 904, it is here !ordered:

&a That all cash collections should e deposited in the joint account of the estates of Hinnie Jane7odges and estates of C.#. 7odgesE

& That whatever cash collections that had een deposited in the account of either of the estatesshould e withdrawn and since then deposited in the joint account of the estate of Hinnie Jane7odges and the estate of C.#. 7odgesE

&c That the PC%2 should countersign the check in the amount of P;38 in favor of AdministratriB Avelina A. "agno as her compensation as administratriB of the Hinnie Jane 7odges estatechargea le to the testate estate of Hinnie Jane 7odges onl!E

&d That AdministratriB "agno is here ! directed to allow the PC%2 to inspect whatever records,documents and papers she ma! have in her possession in the same manner that AdministratorPC%2 is also directed to allow AdministratriB "agno to inspect whatever records, documents andpapers it ma! have in its possessionE

&e That the accountant of the estate of Hinnie Jane 7odges shall have access to all records of thetransactions of oth estates for the protection of the estate of Hinnie Jane 7odgesE and in likemanner the accountant or an! authori(ed representative of the estate of C.#. 7odges shall haveaccess to the records of transactions of the Hinnie Jane 7odges estate for the protection of theestate of C.#. 7odges.

$nce the estates' office shall have een opened ! AdministratriB "agno in the presence of thePC%2 or its dul! authori(ed representative and deput! clerk Al is or his dul! authori(edrepresentative, oth estates or an! of the estates should not close it without previous consent andauthorit! from this court.

)$ $1

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ut no cop! of the mentioned agreement of joint administration of the two estates eBists in the record, and so, Geare not informed as to what eBactl! are the terms of the same which could e relevant in the resolution of the issuesherein.

$n the other hand, the appealed order of #ovem er , 903, on pages - ;8 of the reen 1ecord on Appeal,authori(ed pa!ment ! respondent "agno of, inter alia , her own fees as administratriB, the attorne!'s fees of herlaw!ers, etc., as follows:

AdministratriB "agno thru Att!s. 1aul ). "anglapus and 1i(al. 1. uimpo filed a "anifestation and*rgent "otion dated June 8, 904 asking for the approval of the Agreement dated June 0, 904which Agreement is for the purpose of retaining their services to protect and defend the interest ofthe said AdministratriB in these proceedings and the same has een signed ! and ears theeBpress conformit! of the attorne!-in-fact of the late Hinnie Jane 7odges, "r. James H. )ullivan. %t isfurther pra!ed that the AdministratriB of the Testate Dstate of Hinnie Jane 7odges e directed to pa!the retailers fee of said law!ers, said fees made chargea le as eBpenses for the administration ofthe estate of Hinnie Jane 7odges &pp. 04 - 04;, Kol. K, )p. 8/ .

An opposition has een filed ! the Administrator PC%2 thru Att!. 7erminio $(aeta dated Jul! ,904, on the ground that pa!ment of the retainers fee of Att!s. "anglapus and uimpo as pra!ed for

in said "anifestation and *rgent "otion is prejudicial to the 88 claim of the estate of C. #.7odgesE emplo!ment of Att!s. "anglapus and uimpo is premature and or unnecessar!E Att!s.

uimpo and "anglapus are representing conflicting interests and the estate of Hinnie Jane 7odgesshould e closed and terminated &pp. 0/9- 0+4, Kol, K, )p. 8/ .

Att!. Heon P. ellada filed a memorandum dated Jul! ;+, 904 asking that the "anifestation and*rgent "otion filed ! Att!s. "anglapus and uimpo e denied ecause no evidence has eenpresented in support thereof. Att!. "anglapus filed a repl! to the opposition of counsel for the

Administrator of the C. #. 7odges estate wherein it is claimed that eBpenses of administrationinclude reasona le counsel or attorne!'s fees for services to the eBecutor or administrator. As amatter of fact the fee agreement dated 5e ruar! ;/, 904 etween the PC%2 and the law firm of$(aeta, i s 6 $(aeta as its counsel &Pp. ;+8- ;+4, Kol. K, )p. 8/ which stipulates the feesfor said law firm has een approved ! the Court in its order dated "arch , 904. %f pa!ment of thefees of the law!ers for the administratriB of the estate of Hinnie Jane 7odges will cause prejudice tothe estate of C. #. 7odges, in like manner the ver! agreement which provides for the pa!ment ofattorne!'s fees to the counsel for the PC%2 will also e prejudicial to the estate of Hinnie Jane7odges &pp. +8 - + 4, Kol. K, )p. 8/ .

Att!. 7erminio $(aeta filed a rejoinder dated August 8, 904 to the repl! to the opposition to the"anifestation and *rgent "otion alleging principall! that the estates of Hinnie Jane 7odges and C.#. 7odges are not similarl! situated for the reason that C. #. 7odges is an heir of Hinnie Jane7odges whereas the latter is not an heir of the former for the reason that Hinnie Jane 7odgespredeceased C. #. 7odges &pp. + 9- +4+, Kol. K, )p. 8/ E that Att!s. "anglapus and uimpoformall! entered their appearance in ehalf of AdministratriB of the estate of Hinnie Jane 7odges onJune 8, 904 &pp. 0 9- 048, Kol. K, )p. 8/ .

Att!. "anglapus filed a manifestation dated

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checks ma! e necessar! for the a ove purpose and the administrator of the estate of C. #. 7odgesis ordered to countersign the same. &pp. 03 +-03; , Kol K%%, )p. 8/ .

Att!. 1oman "a anta, Jr. for the PC%2 filed a manifestation and motion dated Januar! , 903asking that the order of Januar! 4, 903 which was issued ! Judge ueru in e declared null andvoid and to enjoin the clerk of court and the administratriB and administrator in these specialproceedings from all proceedings and action to enforce or compl! with the provision of the aforesaidorder of Januar! 4, 903. %n support of said manifestation and motion it is alleged that the order ofJanuar! 4, 903 is null and void ecause the said order was never delivered to the deput! clerk

Al is of 2ranch K &the sala of Judge ueru in and the alleged order was found in the drawer of thelate Judge ueru in in his office when said drawer was opened on Januar! , 903 after the deathof Judge ueru in ! Perfecto ueru in, Jr., the son of the judge and in the presence of DBecutiveJudge 1ovira and deput! clerk Al is &)ec. , 1ule 0, #ew Civil Code &Pp. 0088-0080, Kol. K%%%, )p.

8/ .

Att!. 1oman "a anta, Jr. for the PC%2 filed a motion for reconsideration dated 5e ruar! ; , 903asking that the order dated Januar! 4, 904 e reversed on the ground that:

. Attorne!s retained must render services to the estate not to the personal heirE

;. %f services are rendered to oth, fees should e pro-rated etween themE

. Attorne!s retained should not represent conflicting interestsE to the prejudice of the other heirs notrepresented ! said attorne!sE

4. 5ees must e commensurate to the actual services rendered to the estateE

3. There must e assets in the estate to pa! for said fees &Pp. 00;3-00 0, Kol. K%%%, )p. 8/ .

Att!. uimpo for AdministratriB "agno of the estate of Hinnie Jane 7odges filed a motion to su mitdated Jul! 3, 903 asking that the manifestation and urgent motion dated June 8, 904 filed !

Att!s. "anglapus and uimpo and other incidents directl! appertaining thereto e consideredsu mitted for consideration and approval &pp. 0/39-0/03, Kol. K%%%, )p. 8/ .

Considering the arguments and reasons in support to the pleadings of oth the AdministratriB andthe PC%2, and of Att!. ellada, herein efore mentioned, the Court elieves that the order of Januar!4, 903 is null and void for the reason that the said order has not een filed with deput! clerk Al is ofthis court &2ranch K during the lifetime of Judge ueru in who signed the said order. 7owever, thesaid manifestation and urgent motion dated June 8, 904 is eing treated and considered in thisinstant order. %t is worth! to note that in the motion dated Januar! ;4, 904 &Pp. 49- 0 , Kol. K,)p. 8/ which has een filed ! Att!. ellada and his associates and Att!. i s and otherlaw!ers in addition to the stipulated fees for actual services rendered. 7owever, the fee agreementdated 5e ruar! ;/, 904, etween the Administrator of the estate of C. #. 7odges and Att!. i swhich provides for retainer fee of P4,888 monthl! in addition to specific fees for actual appearances,reim ursement for eBpenditures and contingent fees has also een approved ! the Court and saidlaw!ers have alread! een paid. &pp. ;/ - ;/9, Kol. K, )p. Proc. 8/ pp. /;- / , Kol. K, )p.Proc. 8/ .

G7D1D5$1D, the order dated Januar! 4, 903 is here ! declared null and void.

The manifestation and motion dated June 8, 904 which was filed ! the attorne!s for theadministratriB of the testate estate of Hinnie Jane 7odges is granted and the agreement anneBedthereto is here ! approved.

The administratriB of the estate of Hinnie Jane 7odges is here ! directed to e needed to implementthe approval of the agreement anneBed to the motion and the administrator of the estate of C. #.7odges is directed to countersign the said check or checks as the case ma! e.

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)$ $1

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Cancellations of "ortgagesF &C5% 1ecord, )p. Proc. #o. 8/, Kol. K%%%, pp. 03/8-0390 theallegations of which read:

F . %n his lifetime, the late C. #. 7odges eBecuted FContracts to )ellF real propert!, and theprospective u!ers under said contracts have alread! paid the price and complied with the termsand conditions thereofE

F;. %n the course of administration of oth estates, mortgage de tors have alread! paid their de tssecured ! chattel mortgages in favor of the late C. #. 7odges, and are now entitled to releasetherefromE

F . There are attached hereto documents eBecuted jointl! ! the AdministratriB in )p. Proc. #o. 8/and the Administrator in )p. Proc. #o. 0/;, consisting of deeds of sale in favor I

5ernando Cano, 2acolod Cit!, $cc. #egros5e "ag anua, %loilo Cit!Policarpio ". Pareno, Ha Pa(, %loilo Cit!1osario T. Hi re, Jaro, %loilo Cit!5ederico 2. Torres, %loilo Cit!1e!naldo T. Hataquin, Ha Pa(, %loilo Cit!

Anatolio T. Kira!, %loilo Cit!

2enjamin 1olando, Jaro, %loilo Cit!

and cancellations of mortgages in favor of I

Pa lo "an(ano, $ton, %loilo1icardo ".

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G7D1D5$1D, movant 1icardo T. )alas can pa! to oth estates or either of them.

)$ $1

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Fcontracts to sellF signed ! 7odges on June 9, 939 and #ovem er ;/, 90 , respectivel!, after the death of hiswife.

+. $rder of

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&; $n June ;+, 93/ this 7onora le Court admitted to pro ate the Hast Gill and Testament of thedeceased Hinnie Jane 7odges eBecuted #ovem er ;;, 93; and appointed C. #. 7odges asDBecutor of the estate of Hinnie Jane 7odges &pp. ;4-;3, 1ec. )p. Proc. 8/ .

& $n Jul! , 93/ this 7onora le Court issued Hetters Testamentar! to C. #. 7odges in the Dstateof Hinnie Jane 7odges &p. 8, 1ec. )p. Proc. 8/ .

&4 $n

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&pp. 98-9 . 1ec. )p. Proc. 8/E emphasis supplied.

&+ $n

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. I That since Januar!, 90 , oth estates of Hinnie Jane 7odges and Charles#ewton 7odges have een receiving in full, pa!ments for those Fcontracts to sellFentered into ! C. #. 7odges during his lifetime, and the purchasers have eendemanding the eBecution of definite deeds of sale in their favor.

4. I That hereto attached are thirteen & copies deeds of sale eBecuted ! the AdministratriB and ! the co-administrator &5ernando P. "irasol of the estate ofHinnie Jane 7odges and Charles #ewton 7odges respectivel!, in compliance withthe terms and conditions of the respective Fcontracts to sellF eBecuted ! the partiesthereto.F

& 4 The properties involved in the aforesaid motion of )eptem er 0, 90 are all registered in thename of the deceased C. #. 7odges.

& 3 Avelina A. "agno, it is alleged on information and elief, has een advertising in the newspaperin %loilo thusl!:

5or )ale

Testate Dstate of Hinnie Jane 7odges and Charles #ewton 7odges.

All 1eal Dstate or Personal Propert! will e sold on 5irst Come 5irst )erved 2asis.

Avelina A. "agno AdministratriB

& 0 Avelina A. "agno, it is alleged on information and elief, has paid and still is pa!ing sums ofmone! to sundr! persons.

& / Joe 7odges through the undersigned attorne!s manifested during the hearings efore this7onora le Court on )eptem er 3 and 0, 90 that the estate of C. #. 7odges was claiming all of theassets elonging to the deceased spouses Hinnie Jane 7odges and C. #. 7odges situated inPhilippines ecause of the aforesaid election ! C. #. 7odges wherein he claimed and tookpossession as sole owner of all of said assets during the administration of the estate of Hinnie Jane7odges on the ground that he was the sole devisee and legatee under her Hast Gill and Testament.

& + Avelina A. "agno has su mitted no inventor! and accounting of her administration as AdministratriB of the estate of Hinnie Jane 7odges and )pecial AdministratriB of the estate of C. #.7odges. 7owever, from manifestations made ! Avelina A. "agno and her legal counsel, Heon P.

ellada, there is no question she will claim that at least fift! per cent &38 of the conjugal assets ofthe deceased spouses and the rents, emoluments and income therefrom elong to the 7igdon famil!who are named in paragraphs 5ourth and 5ifth of the Gill of Hinnie Jane 7odges &p. 3, 1ec. )p.Proc. 8/ .

G7D1D5$1D, premises considered, movant respectfull! pra!s that this 7onora le Court, after due

hearing, order:

& Avelina A. "agno to su mit an inventor! and accounting of all of the funds, properties and assetsof an! character elonging to the deceased Hinnie Jane 7odges and C. #. 7odges which have comeinto her possession, with full details of what she has done with themE

&; Avelina A. "agno to turn over and deliver to the Administrator of the estate of C. #. 7odges all ofthe funds, properties and assets of an! character remaining in her possessionE

& Pending this 7onora le Court's adjudication of the aforesaid issues, Avelina A. "agno to stop,unless she first secures the conformit! of Joe 7odges &or his dul! authori(ed representative, such as

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&a $n .

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+. )uch assets as ma! have eBisted of the estate of Hinnie Jane 7odges were ordered ! this7onora le Court in special Proceedings #o. 8/ to e turned over and delivered to C. #. 7odgesalone. 7e in fact took possession of them efore his death and asserted and eBercised the right ofeBclusive ownership over the said assets as the sole eneficiar! of the estate of Hinnie Jane7odges.

G7D1D5$1D, premises considered, the PC%2 respectfull! petitions that this 7onora le court:

& )et the "otion of $cto er 3, 90 for hearing at the earliest possi le date with notice to allinterested partiesE

&; $rder Avelina A. "agno to su mit an inventor! and accounting as AdministratriB of the Dstate ofHinnie Jane 7odges and Co-AdministratriB of the Dstate of C. #. 7odges of all of the funds,properties and assets of an! character elonging to the deceased Hinnie Jane 7odges and C. #.7odges which have come into her possession, with full details of what she has done with themE

& $rder Avelina A. "agno to turn over and deliver to the PC%2 as administrator of the estate of C.#. 7odges all of the funds, properties and assets of an! character remaining in her possessionE

&4 Pending this 7onora le Court's adjudication of the aforesaid issues, order Avelina A. "agno andher representatives to stop interferring with the administration of the estate of C. #. 7odges ! thePC%2 and its dul! authori(ed representativesE

&3 Dnjoin Avelina A. "agno from working in the premises at ;80-;8+ uanco )treet, %loilo Cit! asan emplo!ee of the estate of C. #. 7odges and approve her dismissal as such ! the PC%2 effective

August , 904E

&0 Dnjoin James H. )ullivan, Attorne!s "anglapus and uimpo and others allegedl! representing"iss "agno from entering the premises at ;80-;8+ uanco )treet, %loilo Cit! or an! other propertiesof C. #. 7odges without the eBpress permission of the PC%2E

&/ $rder such other relief as this 7onora le Court finds just and equita le in the premises. &AnneBF*F Petition.

$n Januar! +, 903, petitioner also filed a motion for F$fficial

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)DC$#

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rights over mova les &personal properties , and the law of the situs of the propert!&also Philippine law as to properties located in the Philippines with regardsimmova le &real properties . Thus appl!ing the F1envoi

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her estate. 7e operated all the assets, engaged in usiness and performed all acts in connectionwith the entiret! of the conjugal estate, in his o.n name alone , just as he had een operating,engaging and doing while the late Hinnie Jane 7odges was still alive. 5pon his death on #ecem'er:=! ,

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FThat no person interested in the Philippines e given notice, ofthe time and place of eBamining theherein account, as herein executor is the onl& devisee or legatee of the deceased 2innie 1aneHodges! in accordance .ith the last .ill and testament ofthe deceased! alread& pro'ated '& thisHonora'le $ourt .F &C5% 1ecord, )p. Proc. #o. 8/, pp. 98-9 E emphasis supplied.

3. )ince C. #. 7odges was the sole and eBclusive heir of Hinnie Jane 7odges, not onl! ! law, utin accordance with the dispositions of her will, there was, in fact, no need to liquidate the conjugalestate of the spouses. The entirel! of said conjugal estate pertained to him eBclusivel!, therefore this7onora le Court sanctioned and authori(ed, as a ove-stated, C. #. 7odges to manage, operate andcontrol all the conjugal assets as owner.

0. 2! eBpressl! authori(ing C. #. 7odges to act as he did in connection with the estate of his wife,this 7onora le Court has & declared C. #. 7odges as the sole heir of the estate of Hinnie Jane7odges, and &; delivered and distri uted her estate to C. #. 7odges as sole heir in accordance withthe terms and conditions of her Gill. Thus, although the Festate of Hinnie Jane 7odgesF still eBists asa legal and juridical personalit!, it had no assets or properties located in the Philippines registered inits name whatsoever at the time of the death of C. #. 7odges on

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su stitution &Article +0 . All other su stitutions are merel! variations of these. Thesu stitution provided for ! paragraph four of the Gill of Hinnie Jane 7odges is notfideicommissar! su stitution, ecause there is clearl! no o ligation on the part of C.#. 7odges as the first heir designated, to preserve the properties for the su stituteheirs. &Consolacion 5lorentino de Crisologo et al. vs. "anuel )ingson, . 1. #o.H- +/0. At most, it is a vulgar or simple su stitution. 7owever, in order thata vulgar or simple su stitution can e valid, three alternative conditions must epresent, namel!, that the first designated heir & should die efore the testatorE or &;should not wish to accept the inheritanceE or & should e incapacitated to do so.

#one of these conditions appl! to C. #. 7odges, and, therefore, the su stitutionprovided for ! the a ove-quoted provision of the Gill is not authori(ed ! the Code,and, therefore, it is void. "anresa, commenting on these kisses of su stitution,meaningfull! stated that: F... cuando el testador institu!eun primer heredero, ! porfallecimiento de este nom ra otro u otros, ha de entenderse que estas segundasdesignaciones solo han de llegar a tener efectividad en el caso de que el primerinstituido muera antes que el testador, fuera o no esta su verdadera intencion. ...F. &0"anresa, / a ed., pag. /3. %n other words, .hen another heir is designated toinherit upon the death of a first heir! the second designation can have effect onl& incase the first instituted heir dies 'efore the testator! .hether or not that .as the trueintention of said testator . )ince C. #. 7odges did not die efore Hinnie Jane 7odges,the provision for su stitution contained in Hinnie Jane 7odges' Gillis void.

&d %n view of the invalidit! of the provision for su stitution in the Gill, C. #. 7odges'inheritance to the entiret! of the Hinnie Jane 7odges estate is irrevoca le and final.

9. 2e that as it ma!, at the time of C. #. 7odges' death, the entiret! of the conjugal estate appearedand was registered in him eBclusivel! as owner. Thus, the presumption is that all said assetsconstituted his estate. Therefore I

&a %f the 7%

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0. That PC%2, as administrator of the estate of C. #. 7odges, is entitled to full and eBclusive custod!,control and management of all said propertiesE and

/. That Avelina A. "agno, as administratriB of the estate of Hinnie Jane 7odges, as well as the7%

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an! of the improved propert! now owned ! us located at, in or near the Cit! ofHu ock TeBas, ut he shall have the full right to lease, manage and enjo! the sameduring his lifetime, a ove provided. 7e shall have the right to su divide an! farm landand sell lots therein, and ma! sell unimproved town lots.

5$*1T7: At the death of m! said hus and, Charles #ewton 7odges, % give, deviseand equeath all of the rest, residue and remainder of m! estate, oth real andpersonal, wherever situated or located, to e equall! divided among m! rothers andsisters, share and share alike, namel!:

Dsta 7igdon, Dmma 7owell, Heonard 7igdon, 1o! 7igdon, )adie 1ascoe, Dra2oman and #imro! 7igdon.

5%5T7: %n case of the death of an! of m! rothers and or sisters named in item5ourth, a ove, prior to the death of m! hus and, Charles #ewton 7odges, then it ism! will and equest that the heirs of such deceased rother or sister shall take jointl!the share which would have gone to such rother or sister had she or he survived.F

/. That under the provisions of the last will and testament alread! a ove-quoted, Hinnie Jane7odges gave a life-estate or a usufruct over all her estate to her hus and, Charles #ewton 7odges,and a vested remainder-estate or the naked title over the same estate to her relatives named

thereinE

+. That after the death of Hinnie Jane 7odges and after the admission to pro ate of her last will andtestament, ut during the lifetime of Charles #ewton 7odges, the said Charles #ewton 7odges withfull and complete knowledge of the life-estate or usufruct conferred upon him ! the will since hewas then acting as Administrator of the estate and later as DBecutor of the will of Hinnie Jane7odges, unequivoca l! and clearl! through oral and written declarations and sworn pu licstatements, renounced, disclaimed and repudiated his life-estate and usufruct over the estate ofHinnie Jane 7odgesE

9. That, accordingl!, the onl! heirs left to receive the estate of Hinnie Jane 7odges pursuant to herlast will and testament, are her named rothers and sisters, or their heirs, to wit: Dsta 7igdon, Dmma

7owell, Heonard 7igdon, Aline 7igdon and

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. That, on the other hand, the one-half interest of Charles #ewton 7odges in the com inedconjugal estate eBisting as of "a! ; , 93/, while it ma! have earned eBactl! the same amount ofFrents, emoluments and incomeF as that of the share pertaining to Hinnie Jane 7odges, continued to

e urdened ! charges, eBpenditures, and other dispositions which are purel! personal to him innature, until the death of Charles #ewton 7odges himself on

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declarations and sworn pu lic statements, renounced, disclaimed and repudiatedlife-estate and usufruct over the estate of Hinnie Jane 7odges'E

. That F*rgent "otion for An Accounting and

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This motion is predicated on the fact that there are matters pending efore this court such as &a theeBamination alread! ordered ! this 7onora le Court of documents relating to the allegation of

Avelina "agno that Charles #ewton 7odges thru written declaration and sworn pu lic statementsrenounced, disclaimed and repudiated his life-estate and usufruct over the estate of Hinnie Jane7odges & the urgent motion for accounting and deliver! to the estate of C. #. 7odges of all theassets of the conjugal partnership of the deceased Hinnie Jane 7odges and C. #. 7odges eBistingas of "a! ; , 93/ plus all the rents, emoluments and income therefromE &c various motions toresolve the aforesaid motionE and &d manifestation of )eptem er 4, 904, detailing acts ofinterference of Avelina "agno under color of title as administratriB of the estate of Hinnie Jane

7odges.

These matters, according to the instant motion, are all pre-judicial involving no issues of facts andonl! require the resolution of question of lawE that in the motion of $cto er 3, 90 it is alleged thatin a motion dated

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a motion for official declaration of heirs of Hinnie Jane 7odges that the claim of an! heirs of HinnieJane 7odges can e determined onl! in the administration proceedings over the estate of HinnieJane 7odges and not that of C. #. 7odges, since the heirs of Hinnie Jane 7odges are claiming herestate and not the estate of C. #. 7odges.

A repl! &)p. 0/;, Kol. O, pp. 44 0-4444 dated "a! , 900 of the PC%2 has een filed allegingthat the motion dated April ;;, 900 of the PC%2 is not to seek deferment of the hearing andconsideration of the motion for official declaration of heirs of Hinnie Jane 7odges ut to declare thetestate estate of Hinnie Jane 7odges closed and for administratriB "agno to account for and deliverto the PC%2 all assets of the conjugal partnership of the deceased spouses which has come to herpossession plus all rents and income.

A rejoinder &)p. 0/;, Kol. O, pp. 443+-440; of administratriB "agno dated "a! 9, 900 has eenfiled alleging that the motion dated

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su sequent sales, conve!ances, leases and mortgages of the properties left ! the said deceasedHinnie Jane 7odges. &AnneB FOF, Petition

and reiterated its fundamental pose that the Testate Dstate of Hinnie Jane 7odges had alread! een factuall!,although not legall!, closed with the virtual declaration of 7odges and adjudication to him, as sole universal heir ofall the properties of the estate of his wife, in the order of

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%t is as well perhaps to state here as elsewhere in this opinion that in connection with these appeals, petitioner hasassigned a total of sevent!-eight &HOOK%%% alleged errors, the respective discussions and arguments under all ofthem covering also the fundamental issues raised in respect to the petition for certiorari and prohi ition, thus makingit feasi le and more practical for the Court to dispose of all these cases together. )

The assignments of error read thus:

% to %K

T7D $1

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OOK% to OO%O

T7D H$GD1 C$*1T D11D< %# APP1$K%# T7D 5%#AH

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T7$"A) JA"%1 A#< "DH *%A

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T7D H$GD1 C$*1T D11D< %# AHH$G%# T7D APPDHHDD, GD)TD1# %#)T%T*TD $5TDC7#$H$ =, T$ C$#T%#*D PA="D#T) *P$# A C$#T1ACT T$ )DHH T7D TD1") A#ansas, Kermont and)ingalong streets in "alate, "anila, and covered ! Torrens Titles #os. 49/0 , /8+; and /33+. )hortl! afterli eration from 943 to 94/, defendants entered upon these premises without plaintiff's knowledge and consent.The! uilt houses of second-class materials, again without plaintiff's knowledge and consent, and without thenecessar! uilding permits from the cit!. There the! lived thru the !ears to the present.

%n #ovem er, 94/, the presence of defendants having previousl! een discovered, defendants 5elicidad "iranda&Dmigdio Dgipto , "odesta C. Para!no, 2enedicto

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9. Jose 2arrientos 9.3 4./4 /44. +

8. Cecilia "an(ano inlieu of *r ano 1amos &deceased 40.03 3.08

Paid up to5e . 90;.

. Dlena 1amos 4.+8 ;./+ +0.;0

;. Dstefania #epacina 4 .+8 . 4 384. 4

. "odesta )anche( .4+ ;.0+ 444.++

4. "arcial Ha(aro ;;.48 ./9 0++. ;

3. "arciana Alano ;3.+8 ;.80 ;33.44

0. 7onorio 2eriQo ;4.88 .9; ++. 0

/. loria Kelasco ;.48 ;.39 30.9+

+. Gilarico 1icamata 43.+ .0/ / 9.0+

9. 2enedicto

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notice 3 of $rdinance 4300. The reason eing that the cit! charter of "anila requires all courts sitting thereinto take judicial notice of all ordinances passed ! the municipal oard of "anila. 0 And, $rdinance 4300 itselfconfirms the certification aforesaid that an appropriation of P 88,888.88 was set aside for the Fconstructionof additional uildingF of the Dpifanio de los )antos Dlementar! )chool.

5urthermore, defendants' position is vulnera le to assault from a third direction. nowingl!, squatters have em arked on the pernicious act of occup!ing propert!whenever and wherever convenient to their interests I without as much as leave, and even against the will,of the owner. The! are em oldened seemingl! ecause of their elief that the! could violate the law withimpunit!. The pugnaciousness of some of them has tied up the hands of legitimate owners. The latter arethus prevented from recovering possession ! peaceful means. overnment lands have not een spared !them. The! know, of course, that intrusion into propert!, government or private, is wrong. 2ut, then, the millsof justice grind slow, mainl! ecause of law!ers who, ! means, fair or foul, are quite often successful inprocuring dela! of the da! of reckoning. 1ampanc! of forci le entr! into government lands particularl!, isa etted ! the apath! of some pu lic officials to enforce the government's rights. $ stinac! of thesesquatters is difficult to eBplain unless it is spawned ! official tolerance, if not outright encouragement orprotection. )aid squatters have ecome insensi le to the difference etween right and wrong. To them,violation of law means nothing. Gith the result that squatting still eBists, much to the detriment of pu licinterest. %t is high time that, in this aspect, sanit! and the rule of law e restored. %t is in this environment thatwe look into the validit! of the permits granted defendants herein.

These permits, erroneousl! la eled FleaseF contracts, were issued ! the ma!ors in 94/ and 94+ whenthe effects of the war had simmered down and when these defendants could have ver! well adjustedthemselves. Two decades have now elapsed since the unlawful entr!.

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Ge, accordingl!, rule that the "anila ma!ors did not have authorit! to give permits, written or oral, todefendants, and that the permits herein granted are null and void.

. Het us look into the houses and constructions planted ! defendants on the premises. The! clearl! hinderand impair the use of that propert! for school purposes. The courts ma! well take judicial notice of the factthat housing school children in the elementar! grades has een and still is a perennial pro lem in the cit!.The selfish interests of defendants must have to !ield to the general good. The pu lic purpose ofconstructing the school uilding anneB is paramount. 8

%n the situation thus o taining, the houses and constructions aforesaid constitute pu lic nuisance per se. And this, for the reason that the! hinder and impair the use of the propert! for a adl! needed school

uilding, to the prejudice of the education of the !outh of the land. The! shackle the hands of thegovernment and thus o struct performance of its constitutionall! ordained o ligation to esta lish andmaintain a complete and adequate s!stem of pu lic education, and more, to ?provide at least free pu'lic

primar& instruction F. ;

1eason dictates that no further dela! should e countenanced. The pu lic nuisance could well have eensummaril! a ated ! the cit! authorities themselves, even .ithout the aid of the courts .

4.

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Case /3

August 31, 1963

G.R. No. L-18247

FLORENTINO GALLEGO , petitioner,

vs.PEOPLE OF THE PHILIPPINES and THE COURT OF APPEALS , respondents.

K. V. Faylona for petitioner.

Office of the Solicitor General for respondents.

Regala, J. :

Petitioner w s senten!ed "# t$e %ourt o& 'irst (nst n!e o& ()oi)o to p # &ine o& P1* nd t$e !osts nd, in ! se o&

inso)ven!#, to su&&er su"sidi r# i+prison+ent, &o))owing his !onvi!tion o& s)ig$t diso"edien!e o& n gent o& person in

ut$orit#. e ppe )ed to t$e %ourt o& Appe )s w$i!$ &&ir+ed $is senten!e. e now ppe )s to t$is %ourt.

$e %ourt o& Appeals &ound t$e & !ts s &o))ows

. . . $ t in t$e +orning o& / r!$ 1*, 1907, ppe)) nt nd $is !o+p nions were "out to $o)d +eeting o& t$e

e$ov $ s itnesses in &ront o& t$e public market o& L +"un o, ()oi)o. $e chief of police , Ave)ino L rros , ppro !$edppe)) nt nd in uired o& $i+ w$et$er $e $ d per+it to $o)d s id +eeting. As ppe)) nt !ou)d not produ!e n#, t$e

!$ie& o& po)i!e en5oined $i+ &ro+ so pro!eeding wit$ t$e +eeting "ut inste d o& desisting in o"edien!e to t$e !$ie& o&

po)i!e s inti+ tion, ppe)) nt, in !$ ))enging vein, ddressed $is &o))owers, ou +ust !ontinue t$ t, we wi)) see w$ t

t$e# re&erring to t$e !$ie& o& po)i!e nd $is po)i!e+en ! n do &or us.:

$ereupon, t$e !$ie& o& po)i!e w rned ppe)) nt i& $e !ontinued wit$ t$e +eeting, $e w s to p) !e $i+ under rrest.

owever, ppe)) nt, disreg rding t$e w rning, !ontinued t$e +eeting &or t )e st 3* +inutes +ore ; w$ereupon, $e

w s rrested nd !$ rged !!ording)#.

(n $o)ding petitioner gui)t# o& s)ig$t diso"edien!e, t$e %ourt o& Appe )s st ted

$ t t$ere w s diso"edien!e on ppe)) nt s p rt is se)&-evident &ro+ $is i++edi te re !tion to t$e !$ie& o& po)i!e

w rning &or $i+ to dis!ontinue t$e

+eeting ; $is e

r nging &ro+ 1* to 1** pesos s$ )) "e i+posed.

$ere is no uestion $ere t$ t petitioner, in de&i n!e o& t$e order o& t$e !$ie& o& po)i!e, $e)d +eeting o& $is re)igious

se!t. e !ontends, $owever, t$ t $e ! nnot "e !onvi!ted o& )ig$t diso"edien!e "e! use, !!ording to $i+, t$ere is no

proo& o& t$e e

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t$is purpose, petitioner ss i)s t$e %ourt o& Appe )s &or t ?ing 5udi!i ) noti!e o& =rdin n!e No. 2, series o& 1907 o&

L +"un o, ()oi)o, w$en t$e trial court itse)& ))eged)# did not t ?e !ogni@ n!e o& t$e ordin n!e.

$ere is no +erit in t$e de&ense. $ere is not$ing in t$e ) w t$ t pro$i"its !ourt, )i?e t$e %ourt o& Appe )s, &ro+

t ?ing !ogni@ n!e o& +uni!ip ) ordin n!e. =n t$e !ontr r#, >e!tion 0 o& Ru)e 123 o& t$e Ru)es o& %ourt en5oins

!ourts to t ?e 5udi!i ) noti!e o& + tters w$i!$ re ! p ")e o& un uestion ")e de+onstr tion. $is is e< !t)# w$ t t$e

%ourt o& Appe )s did in t$is ! se in $o)ding t$ t !ontr r# to ppe)) nt s petitioner s !ontention, t$ere w s n

eeries o& 1907 providing &or previous per+it &or t$e

$o)ding o& re)igious +eeting in pu")i! p) !es.:

esides, it is not true, s !) i+ed "# petitioner, t$ t t$e tri ) !ourt did not t ?e noti!e o& t$e ordin n!e in uestion.

'or t$e )ower !ourt +entioned petitioner s & i)ure to se!ure t$e ne!ess r# per+it: wit$ o"vious re&eren!e to

=rdin n!e No. 2, >eries o& 1907. (n Peop)e vs. Ge"une, 87 P$i). 727, e $e)d t$ t !ourts o& &irst inst n!e s$ou)d t ?e

5udi!i ) noti!e o& +uni!ip ) ordin n!es wit$in t$eir respe!tive 5urisdi!tions. (t +ust "e in !o+p)i n!e wit$ t$is ru)ing

t$ t t$e tri ) !ourt too? noti!e o& =rdin n!e No. 2, >eries o& 1907 o& t$e /uni!ip )it# o& L +"un o.

(t is )so !ontended t$ t t$e order o& t$e !$ie& o& po)i!e w s i))eg ) nd, t$ere&ore, not entit)ed to o"edien!e "e! use

t$e ordin n!e pp)ies on)# to +eetings $e)d in p) !es w$ere t$e tr &&i! is $e v#. ere, it is !) i+ed, t$ere is no proo&

t$ t t$e tr &&i! w$ere t$e +eeting w s $e)d w s $e v#. Petitioner dds t$ t $e w s given per+it "# t$e + #or

)t$oug$ t t$e ti+e $e !ou)d not produ!e it "e! use it w s given or ))#.

(t s$ou)d not "e )ost sig$t o& t$ t t$is is prose!ution &or s)ig$t diso"edien!e, not &or vio) tion o& t$e ordin n!e.

A)t$oug$ petitioner + # $ ve )egiti+ te re son to protest t$e order o& t$e !$ie& o& po)i!e, $e w s not 5usti&ied in

diso"e#ing $i+ nd in ssu+ing "e))i!ose ttitude "# e

t$e peop)e re!ogni@ed nd gu r nteed "# t$e !onstitutions o& de+o!r ti! !ountries. ut it is sett)ed prin!ip)e

growing out o& t$e n ture o& we))-ordered !ivi) so!ieties t$ t t$e e

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Case /0

G.R. No. +5)23 %ay *, 1991

(OSE TA- ENA, petitioner,vs.CO RT OF A!!EALS a"# E%ILIANO TA-ERNILLA, (R., respondents.

Ramon #imen for petitioner/

#ionisio (/ Hernandez for private respondent/

CR >, J.: p

The petitioner faults the decision of the trial court, as affirmed ! the respondent court, for lack of asis. %t is arguedthat the lower courts should not have taken into account evidence not su mitted ! the private respondent in

accordance with the 1ules of Court.The su ject of the dispute is a parcel of residential land consisting of a out 448 square meters and situated inPo lacion, "akato, Aklan. %n 9/ , an action for recover! of ownership thereof was filed in the 1egional Trial Courtof Aklan ! the estate of Alfredo Ta ernilla against Jose Ta uena, the herein petitioner. After trial, judgment wasrendered in favor of the plaintiff and the defendant was required to vacate the disputed lot. 1

As the trial court found, the lot was sold ! Juan Peralta, Jr. sometime in 9;0 to Alfredo Ta ernilla while the twowere in the *nited )tates. Ta ernilla returned to the Philippines in 9 4, and

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trial court categoricall! declared that FDBhi its FA- , FA-;F, F2F, FCF and FC-l,F were not among those documents oreBhi its formall! offered for admission ! plaintiff-administratriB.F This is a clear contradiction of the finding of theappellate court, which seems to have confused DBhi its FA,F F2F and FCF with DBhi its FOF and F=F, the evidencementioned in the quoted transcript.

1ule ; of the 1ules of Court provides in )ection 3 thereof as follows:

)ec. 3. Offer of evidence .IThe court shall consider no evidence which has not een formall!offered. The purpose for which the evidence is offered must e specified.

The mere fact that a particular document is marked as an eBhi it does not mean it has there ! alread! een offeredas part of the evidence of a part!. %t is true that DBhi its FA,F F2F and FCF were marked at the pre-trial of the case

elow, ut this was onl! for the purpose of identif!ing them at that time. The! were not ! such marking formall!offered as eBhi its. As we said in "nterpacific Transit , "nc . vs . (viles , 3 FAt the trial on the merits, the part! ma!decide to formall! offer &the eBhi its if it elieves the! will advance its cause, and then again it ma! decide not to doso at all. %n the latter event, such documents cannot e considered evidence, nor can the! e given an! evidentiar!value.F

Chief Justice "oran eBplained the rationale of the rule thus:

. . . The offer is necessar! ecause it is the dut! of a judge to rest his findings of facts and his judgment

onl! and strictl! upon the evidence offered ! the patties at the trial. )

Ge did sa! in *eople vs . Napat)a 5 that even if there e no formal offer of an eBhi it, it ma! still e admitted againstthe adverse part! if, first, it has een dul! identified ! testimon! dul! recorded and, second, it has itself eenincorporated in the records of the case. 2ut we do not find that these requirements have een satisfied in the case

efore us. The trial court said the said eBhi its could e validl! considered ecause, even if the! had not eenformall! offered, one of the plaintiffs witnesses, Cunegunda 7ernande(, testified on them at the trial and was evencross-eBamined ! the defendant's counsel. Ge do not agree. Although she did testif!, all she did was identif! thedocuments. #owhere in her testimon! can we find a recital of the contents of the eBhi its.

Thus, her interrogation on DBhi it FAF ran:

HD A)P%: That is this DBh. FAF a out N

A The translation of the letter.

Ghat is the content of this DBh. FAF, the letter of the sister of Juan Peralta to Alfredo Ta ernillaN

Court: The est evidence is the document. Proceed. *

)he also did not eBplain the contents of the other two eBhi its.

The respondent court also held that the trial court committed no reversi le error in taking judicial notice of Ta uena's

testimon! in a case it had previousl! heard which was closel! connected with the case efore it. %t conceded that asa general rule Fcourts are not authori(ed to take judicial notice, in the adjudication of cases pending efore them, ofthe contents of the records of other cases, even when such cases have een tried or are pending in the same court,and notwithstanding the fact that oth cases ma! have een heard or are actuall! pending efore the same

judge. 7 #evertheless, it applied the eBception that:

. . . in the a sence of o jection, and as a matter of convenience to all parties, a court ma! properl! treatall or an! part of the original record of a case filed in its archives as read into the record of a case pending

efore it, when, with the knowledge of the opposing part!, reference is made to it for that purpose, !name and num er or in some other manner ! which it is sufficientl! designatedE or when the originalrecord of the former case or an! part of it, is actuall! withdrawn from the archives ! the court's direction,

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at the request or with the consent of the parties, and admitted as a part of the record of the case thenpending. +

%t is clear, though, that this eBception is applica le onl! when, Fin the a sence of o jection,F Fwith the knowledge ofthe opposing part!,F or Fat the request or with the consent of the parties,F the case is clearl! referred to or Ftheoriginal or part of the records of the case are actuall! withdrawn from the archivesF and Fadmitted as part of therecord of the case then pending.F These conditions have not een esta lished here. $n the contrar!, the petitionerwas completel! unaware that his testimon! in Civil Case #o. ;/ was eing considered ! the trial court in thecase then pending efore it. As the petitioner puts it, the matter was never taken up at the trial and was Funfairl!

sprungF upon him, leaving him no opportunit! to counteract.

The respondent court said that even assuming that the trial court improperl! took judicial notice of the other case,striking off all reference thereto would not e fatal to the plaintiff's cause ecause Fthe said testimon! was merel!corro orative of other evidences su mitted ! the plaintiff.F Ghat Fother evidencesFN The trou le with this

justification is that the eBhi its it intends to corro orate, to wit, DBhi its FAF, F2F and FCF, have themselves not eenformall! su mitted.

Considering the resultant paucit! of the evidence for the private respondent, we feel that the complaint should haveeen dismissed ! the trial court for failure of the plaintiff to su stantiate its allegations. %t has failed to prove that the

su ject lot was the same parcel of land sold ! Juan Peralta, Jr. to Alfredo Ta ernilla and not another propert!, asthe petitioner contends. Dven assuming it was the same lot, there is no eBplanation for the sale thereof ! Juan

Peralta, Jr., who was onl! the son of

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are not consistent with the private respondent's claim that the petitioner was onl! an overseer with mere possessor!rights tolerated ! Ta ernilla.

%t is the polic! of this Court to accord proper deference to the factual findings of the courts elow and even to regardthem as conclusive where there is no showing that the! have een reached ar itraril!. The eBception is where suchfindings do not conform to the evidence on record and appear indeed to have no valid asis to sustain theircorrectness. As in this case.

The conclusions of the trial court were ased mainl! on DBhi its FAF, F2F and FCF, which had not een formall!offered as evidence and therefore should have een totall! disregarded, conforma l! to the 1ules of Court. The trialcourt also erred when it relied on the evidence su mitted in Civil Case #o. ;/ and took judicial notice thereofwithout the consent or knowledge of the petitioner, in violation of eBisting doctrine. Thus vitiated, the factual findingshere challenged are as an edifice uilt upon shifting sands and should not have een sustained ! the respondentcourt.

$ur own finding is that the private respondent, as plaintiff in the lower court, failed to prove his claim of ownershipover the disputed propert! with evidence properl! cogni(a le under our adjudicative laws. 2! contrast, there issu stantial evidence supporting the petitioner's contrar! contentions that should have persuaded the trial judge torule in s favor and dismiss the complaint.

G7D1D5$1D, the petition is 1A#TD

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Case //

5%1)T

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correspondin$ ta;es thereon up to the present time 5E;hibit !6, That claimant is no( a (ido( andhas children namel%) @ernando :antic) Antero :antic) Felipe :antic) Fe :antic and

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and Cu%o) Pala(an ha3e not made an% protest nor interposed an% ob ection on the claim of &osefa'acot durin$ the hearin$s, 4either (as there a manifestation of protest or claim of $o3ernmentuse comin$ from the municipal officials of /a$sa%sa%) Pala(an despite notice sent to them of thecadastral hearin$, And the sad part (as that the $o3ernment had accepted (ithout an% protest allthe ta;es due the propert% paid b% the claimant reli$iousl%, This is not to sa% that this order has

been considered in the pre3ious decision of this Court (hich is hereunder ?uoted as follo(sH

RB B B B B B B B B

1Dith this findin$ of the Court) it is its considered opinion and so holds) that there is no reason todisturb its pre3ious decision afore?uoted," B!

An appeal was taken ! the 1epu lic from the decision of the trial court. %n its nowassailed decision of ;; 5e ruar! 993, the Court of Appeals affirmed in toto the judgmentof the trial court. The appellate court ratiocinated:

1-n its brief) the Office of the Solicitor 'eneral claims that >records of the re0hearin$ sho( that onOctober 92) *+ 2) an order (as) indeed) issued b% &ud$e Loren8o C, 'arlitos of the Court of First-nstance of Pala(an) #th &udicial :istrict) declarin$ that Lot 4o, ! # (as amon$ lots declared as

propert% of the Republic of the Philippines, 5p, !) Appellant s .riefI p, *+) Rec,6 -t no( in3okesRepublic Act 4o, +!*) appro3ed on &une !2) *+ ! and Republic Act 4o, 92 *) (hich took effecton &une !2) *+ G) both la(s settin$ the time limits for the filin$ of applications) amon$ otherthin$s) for the reopenin$ of udicial proceedin$s on certain lands (hich (ere declared publicland, Under R,A, 92 *) the time for filin$ an application shall not e;tend be%ond :ecember !*)*+ G, Thus) petitioner0appellant ar$ues that since claimant0appellee &osefa 'acot filed her ans(eronl% on 2# &une *+#*) the court a quo did not ac?uire urisdiction o3er the instant claim since shedid not file her ans(er (ithin the period fi;ed b% R,A, 4o, 92 *,

1This (ould be true) if the Order dated 92 October *+ 2 of &ud$e Loren8o 'arlitos declarin$ Lot 4o, ! # as propert% of the Republic of the Philippines) (as presented as e3idence in the rehearin$of this case, Unfortunatel%) the Republic of the Philippines failed to offer as its e;hibit the saidorder, There is no basis for the appellant) therefore) to in3oke R,A, 92 *) to support its claim thatclaimant0appellee &osefa 'acot filed her ans(er be%ond the period fi;ed b% said la( and thereforethe court a quo did not ac?uire urisdiction o3er the case,

1Precisel%) the purpose of the rehearin$ (as to enable the Republic of the Philippines) thru theOffice of the Solicitor 'eneral) to present in e3idence the said order, The Solicitor 'eneral) in its/otion dated 9* /a% *++*) pra%ed that (ith re$ards to Lot 4o, ! # >the proceedin$s therein beordered reopened and the same be remanded to the court a quo to enable the Republic of thePhilippines to present the ud$ment dated October 92) *+ 2 of &ud$e Loren8o 'arlitos declarin$Lot 4o, ! # as $o3ernment propert%, 5pp, !20!*) Rollo 6 BUnderlines Ours

1This Court $ranted the motion and ordered the records of the case remanded to the court a quo forfurther proceedin$s Jto enable the $o3ernment to present in e3idence the ud$ment dated October92) *+ 2) declarin$ Lot 4o, ! # as $o3ernment propert% ; ; ;, 5p, =9) Rollo 6 BUnderlines Ours

http://sc.judiciary.gov.ph/jurisprudence/1997/aug1997/119288.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/1997/aug1997/119288.htm#_edn3

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1:urin$ the rehearin$) ho(e3er) the 'o3ernment failed to present the said order of &ud$e 'arlitosin e3idence, Thus) the court a quo said in its appealed decisionH

1 This case (as set for hearin$ se3eral times for the $o3ernment to present its e3idence andfor the parties to submit their respecti3e memoranda in support of their respecti3e stand onthe matter, The claimant submitted her memorandum (hile the $o3ernment represented b%the Assistant Pro3incial Prosecutor has not presented an% (itness to present the

$o3ernment s claim neither has he submitted an% memorandum to support the$o3ernment s stand on this matter, 5see p, +9) Rollo 6 BUnderlines Ours

1-t is the rule that >The court shall consider no e3idence (hich has not been formall%offered, 5Rule *!9) Sec, !=6 -t is true that the Order of 92 October *+ 2 has been appended to therecords of this case 5see p, *+) Rec,6, .ut it is misleadin$ on the part of the Solicitor 'eneral tostate that >Records of the rehearin$ sho( that on October 92) *+ 2) an order (as) indeed) issued b%&ud$e Loren8o C, 'arlitos ; ; ;, For) durin$ the rehearin$) as reflected in the appealed decision)the $o3ernment did not present an% e3idence nor an% memorandum despite ha3in$ been ordered b%the court a quo ,

14either can De take udicial notice of the Order of &ud$e 'arlitos, As a $eneral rule) courts arenot authori8ed to take udicial kno(led$e of the contents of the record of other cases) in thead udication of cases pendin$ before them) e3en thou$h the trial ud$e in fact kno(s or remembersthe contents thereof) or e3en (hen said other cases ha3e been heard or are pendin$ in the samecourt and not(ithstandin$ the fact that both cases ma% ha3e been heard or are reall% pendin$ beforethe same ud$e, 5/unicipal Council vs, Cole$io de San &ose) et al,) ',R, 4o, L0= = 2I !* C,&,S,

9!0 9=I cited in p, 9 ) E3idence) Second Ed,I R,&, Francisco6 -ndeed) the 'o3ernment missed itsopportunit% to ha3e the claim of &osefa 'acot) the herein appellee) declared as a nullit%) considerin$that no e3idence (as presented b% it in opposition thereto, B=

%n the instant petition, the 1epu lic, assigning a sole error, contends that -

1T@E @O4ORA.LE COURT OF APPEALS 5@AS6 ERRE: -4 RUL-4' T@AT T@ERE -S 4O.AS-S FOR PET-T-O4ER TO -4

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%t ehooves all concerned that the a ove matters e carefull! looked into, al eit withreasona le dispatch, for the final resolution of this case.

WHEREFORE, the case is 1D"A#

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Case /+

G.R. No. 122)+ A;r4 12, 2

-!I/FA%IL& SA=INGS -AN , I"0., petitioner,vs.CO RT OF A!!EALS, CO RT OF TA A!!EALS a"# e CO%%ISSIONER OF INTERNALRE=EN E,respondents.

!ANGANI-AN, J.:

%f the )tate eBpects its taBpa!ers to o serve fairness and honest! in pa!ing their taBes, so must it appl! the samestandard against itself in refunding eBcess pa!ments. Ghen it is undisputed that a taBpa!er is entitled to a refund,the )tate should not invoke technicalities to keep mone! not elonging to it. #o one, not even the )tate, shouldenrich oneself at the eBpense of another.

The $ase

2efore us is a Petition for 1eview assailing the "arch , 993

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9+9 TaB Credit P ;,49 .88

T$TAH A"$*#T P;9/,49;.88

1D5*#

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ain "ssue :

*etitioner Entitled to Refund

%t is undisputed that petitioner had eBcess withholding taBes for the !ear 9+9 and was thus entitled to a refundamounting to P ;,49 . Pursuant to )ection 09 8 of the 9+0 TaB Code which states that a corporation entitled to arefund ma! opt either & to o tain such refund or &; to credit said amount for the succeeding taBa le !ear,petitioner indicated in its 9+9 %ncome TaB 1eturn that it would appl! the said amount as a taB credit for thesucceeding taBa le !ear, 998. )u sequentl!, petitioner informed the 2ureau of %nternal 1evenue &2%1 that itwould claim the amount as a taB refund, instead of appl!ing it as a taB credit. Ghen no action from the 2%1 wasforthcoming, petitioner filed its claim with the Court of TaB Appeals.

The CTA and the CA, however, denied the claim for taB refund. )ince petitioner declared in its 9+9 %ncome TaB1eturn that it would appl! the eBcess withholding taB as a taB credit for the following !ear, the TaB Court held thatpetitioner was presumed to have done so. The CTA and the CA ruled that petitioner failed to overcome thispresumption ecause it did not present its 998 1eturn, which would have shown that the amount in dispute wasnot applied as a taB credit. 7ence, the CA concluded that petitioner was not entitled to a taB refund.

Ge disagree with the Court of Appeals. As a rule, the factual findings of the appellate court are inding on thisCourt. This rule, however, does not appl! where, inter alia , the judgment is premised on a misapprehension of facts,or when the appellate court failed to notice certain relevant facts which if considered would justif! a different

conclusion. This case is one such eBception.

%n the first place, petitioner presented evidence to prove its claim that it did not appl! the amount as a taB credit.

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Court. 3 To repeat, the undisputed fact is that petitioner suffered a net loss in 998E accordingl!, it incurred no taBlia ilit! to which the taB credit could e applied. Consequentl!, there is no reason for the 2%1 and this Court towithhold the taB refund which rightfull! elongs to the petitioner.

Pu lic respondents maintain that what was attached to petitioner's "otion for 1econsideration was not the finaladjustment 1eturn, ut petitioner's first two quarterl! returns for 998. 0 This allegation is wrong. An eBamination ofthe records shows that the 998 5inal Adjustment 1eturn was attached to the "otion for 1econsideration. $n theother hand, the two quarterl! returns for 998 mentioned ! respondent were in fact attached to the Petition for1eview filed efore the CTA. %ndeed, to re ut respondents' specific contention, petitioner su mitted efore us its)urrejoinder, to which was attached the "otion for 1econsideration and DBhi it FAF thereof, the 5inal Adjustment1eturn for 998. /

$T( $ase No/ KL

Petitioner also calls the attention of this Court, as it had done efore the CTA, to a

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Case /9

T7%1<

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1Petitioner also reported ?uarterl% pa%ments for the second and third ?uarters of *++ in theamounts of P9)!9G)#=#,9 and P*)2G9)*2G,22) respecti3el%,

1-t is the proposition of the Bp etitioner that for the %ear *++ ) se3eral of its clients (ithheld ta;esfrom their income pa%ments to Bp etitioner and remitted the same to the .ureau of -nternal Re3enue5.-R6 in the sum of P!)* +) G#,22, Petitioner further alle$ed that due to its income loss positionsfor the three ?uarters of *++ ) it (as unable to use the e;cess ta; paid for and in its behalf b% the

(ithholdin$ a$ents,

1Thus) an administrati3e claim (as filed b% the Bp etitioner on April *2) *++# for the refundof P!)* +) G#,22 representin$ e;cess or unused creditable (ithholdin$ ta;es for the %ear *++ ,The instant petition (as subse?uentl% filed on April *G) *++#,

1Respondent) in his Ans(er) a3erred) amon$ others) thatH

J*6 Petitioner has no cause of actionI

J96 Petitioner failed to compl% (ith the procedural re?uirements set out in Section ofRe3enue Re$ulations 4o, B5RR6 *90+=I

J!6 -t is incumbent upon Bp etitioner to pro3e b% competent and sufficient e3idence that theta; refund or ta; credit bein$ sou$ht is allo(ed under the 4ational -nternal Re3enue Code and itsimplementin$ rules and re$ulationsI and

J=6 Claims for ta; refund or ta; credit are construed strictl% a$ainst the ta;pa%er as the% partake the nature of ta; e;emption,

1To buttress its claim) Bp etitioner presented documentar% and testimonial e3idence, Respondent)on the other hand) presented the Br e3enue Bo fficer (ho conducted the e;amination of Bp etitioner sclaim and found petitioner liable for deficienc% 3alue added ta;, Petitioner also presented rebuttale3idence,

1The sole issue submitted for Bo ur determination is (hether or not Bp etitioner is entitled to therefund of P!)* +) G#,22 representin$ e;cess or o3erpaid income ta; for the ta;able %ear *++ , ?4@

Ru 4" o6 e Cour o6 A;;ea s

%n den!ing petitionerSs refund, the CA reasoned out that no evidence other than thatpresented efore the CTA was adduced to prove that eBcess taB pa!ments had eenmade in 993. 5rom the inception of the case to the formal offer of its evidence, petitionerdid not present its 990 income taB return to disclose its total income taB lia ilit!, thusmaking it difficult to determine whether such eBcess taB pa!ments were utili(ed in 990.

7ence, this Petition. ?3@

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T e Issue

Petitioner raises this sole issue for our consideration:

1Dhether the Court of Appeals $ra3el% erred (hen) (hile purportedl% re?uirin$ petitioner tosubmit its *++ annual income ta; return to support its claim for refund) nonetheless i$nored thee;istence of the ta; return e;tant on the record the authenticit% of (hich has not been denied or itsadmissibilit% opposed b% the Commissioner of -nternal Re3enue, ?0@

T e Cour s Ru 4"

The Petition is partl! meritorious.

So e Issue

Entitlement to Tax Refund

)ection 09 of the #ational %nternal 1evenue Code %1C ?/@ provides:

1Sec, +, Final ad ustment return, 00 E3er% corporation liable to ta; under Section 9= shall file afinal ad ustment return co3erin$ the total ta;able income for the precedin$ calendar or fiscal %ear,-f the sum of the ?uarterl% ta; pa%ments made durin$ the said ta;able %ear is not e?ual to the totalta; due on the entire ta;able net income of that %ear the corporation shall eitherH

J5a6 Pa% the e;cess ta; still dueI or

J5b6 .e refunded the e;cess amount paid) as the case ma% be,

1-n case the corporation is entitled to a refund of the e;cess estimated ?uarterl% income ta;es paid)the refundable amount sho(n on its final ad ustment return ma% be credited a$ainst the estimated?uarterl% income ta; liabilities for the ta;able ?uarters of the succeedin$ ta;able %ear,

Tax Refund Allowed by NIRC

A perusal of this provision shows that a taxa'le corporation is entitled to a taxrefund when the sum of the quarterl! income taxes it paid during a taBa le !ear eBceedsits total income tax due also for that !ear. Consequentl!, the refunda le amount that isshown on its final adCustment return ma! e credited, at its option, against itsquarterl! income tax lia'ilities for the neBt taxa'le &ear .

Petitioner is a corporation lia le to pa! income taxes under )ection ;4 of the #%1C.7ence, it is a taxa'le corporation . %n 993, it reported that it had eBcess income taxes thathad een paid for and on its ehalf ! its .ithholding agents E and that, appl!ing the

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a ove-quoted )ection 09, this eBcess should e credited against its income taxlia'ilities for 990. 7owever, it claimed in 99/ that it should get a refund, ecause it wasstill una le to use the eBcess income taxes paid in 993 against its tax lia'ilities in 990.%s this possi leN )tating the argument otherwise, ma! eBcess income taxes paid in 993that could not e applied to taBes due in 990 e refunded in 99/N

The answer is in the affirmative. 7ere are the reasons:

Claim of Tax Refund eyond t!e"u##eedin$ Taxable %ear

4irst! a tax refund ma! e claimed even e!ond the taxa'le &ear following that inwhich the tax credit arises.

#o provision in our taB law limits the entitlement to such a refund, other than therequirement that the filing of the administrative claim for it e made ! the taBpa!er withina two-!ear prescriptive period. )ection ;84& of the #%1C states that no refund of taBesRshall e allowed unless the taBpa!er files in writing with the Commissioner ?the@ claim forB B B refund within two !ears after the pa!ment of the taB.

Appl!ing the aforequoted legal provisions, if the eBcess income taxes paid in agiven taxa'le &ear have not een entirel! used ! a taxa'le corporation against itsquarterl! income taB lia ilities for the neBt taxa'le &ear , the unused amount of the eBcessma! still e refunded, provided that the claim for such a refund is made within two !earsafter pa!ment of the taB. Petitioner filed its claim in 99/ -- well within the two-!earprescriptive period. Thus, its unused tax credits in 993 ma! still e refunded.

Dven the phrase Rsucceeding taxa'le &ear in the second paragraph of the said)ection 09 is a limitation that applies onl! to a tax credit , not a tax refund . Petitionerherein does not claim a tax credit , ut a tax refund . Therefore, the statutor! limitationdoes not appl!.

In#ome &ayments 'erely (e#lared &art of )ross In#ome

Second , to e a le to claim a tax refund , a taBpa!er onl! needs to declare the income

pa!ments it received as part of its gross income and to esta'lish the fact of withholding.)ection 3 of 11 ;-94 ?+@ states:

; ; ; ; ; ; ; ; ;