BANCO FILIPINO v.

MONETARY BOARD
July 8, 1986 | Carpio, J. | Judicial Notice | Conejero

PETITIONER/S: Banco Filipino

RESPONDENT/S: Monetary Board et al.
SUMMARY:
DOCTRINE:

FACTS:

RESOLUTION

On November 4, 1985, Petitioner Bank filed in the instant case a "Motion to Pay Back Salaries to All
BF Officers and Employees from February to August 29, 1985" in connection with its "Opposition to
Respondents" Motion for Reconsideration or for Clarification of the Resolution of the Court En Banc
of October 8, 1985." On November 7, 1985, this Court referred said motion to pay back salaries to
Branch 136 (Judge Ricardo Francisco, presiding) of the Makati Regional Trial Court, which this
Court had earlier directed under our Resolution of October 8, 1985 issued in G.R. No. 77054, to
conduct hearings on the matter of the closure of petitioner Bank and its alleged pre-planned
liquidation.

On January 22, 1986, said Regional Trial Court, after considering the petitioner's motion of
November 4, 1985, the respondents' opposition thereto dated January 15, 1986; the petitioner's Reply
dated January 16, 1986, and the respondents' Rejoinder dated January 20, 1986, issued an order
directing the respondents herein "to pay all officers and employees of petitioner their back salaries
and wages corresponding to the period from February to August 29, 1985."

On February 4, 1986, respondents herein filed with this Court an "Appeal from, or Petition to Set
Aside, order to Pay Back Salaries dated 22 January 1986" praying for the reversal and setting aside of
the aforestated trial court's Order dated January 22, 1986. This was formally opposed by Petitioner
when it filed its "Answer to Appeal (re: back salaries)" on February 26, 1986. A month later, on
March 26, 1986, respondents filed their "Reply to the Answer" which petitioner traversed in a
"Rejoinder to the Reply" dated April 2, 1986.

In a normal situation, no controversy would be expected in the matter of the payment of said back
salaries because in the instant case, the party praying for the same is the employer Bank. The
attendant circumstances here present have, however, created a peculiar situation. There is resistance
to the claim because the management of the assets of the Bank has been transferred to the
Respondents' Receiver who perceived that the directive to pay back salaries after closure of the Bank
would be dissipation of the banks' assets to the prejudice of its various creditors.

There is, however, in this case a significant matter that deserves consideration of this Court and
which must be viewed from the stand-point of equity. What stands out is that, regardless of whether
the employees of Banco Filipino worked or not after January 25, 1985, there is the uncontested
manifestation found in BF's Answer to the Appeal, dated February 26, 1986 (Vol. IV of Case Records)
that:
 2. In the fact the receiver/liquidator Carlota Valenzuela had paid Union employees
of petitioner BF back salaries for no work from January 25, 1985 up to June, 1985. ..
(Emphasis supplied)

All employees, thereto, of petitioner Banco Filipino who have not yet received their back salaries
corresponding to the period from January 25, 1985 up to June, 1985 manifestly deserve and ought to
be similarly paid by the respondent Monetary Board. It is but fair that the issue whether or not the
employees of petitioner Bank had actually worked during said period should now be discounted
considering this voluntary act of respondent Monetary Board which would remove by estoppel any
impediment to the receipt by all bank employees of their back salaries from January 25, 1985 up to
June, 1985, assuming that some of them have not yet received the same.

As the remaining period from June, 1985 to August, 1985, involves but a minimal period only of two
(2) months, and considering the unfortunate plight of the numerous employees who now invoke the
symphathetic concern of this Court, and inasmuch as the appealed Order for the payment of back
salaries is only for a limited period or up to August, 1985, the appealed order of November 7, 1985
may be sustained.

Petitioner BF and its stockholders have long put on record their consent to this patment of back
salaries of its separated officers and employees. It is also averred that BF intends to reopen its bank
and branches, and the payment of back salaries to its employees, no less would help in the
preservation of its personnel which is the bank's most important assest, apart from doing justice to
those aggrieved employees. It is mentioned that the Central Bank Liquidator has now more than a
billion pesos in cash of Banco Filipino since it continued to receive payments from BF borrowers
some P1.5 million a day. It is also said that with the deposits of petitioner BF with the Bank of PI,
there is money sufficient to allow the withdrawal of the sums needed to pay the salaries of the
employees who have been now out of work for over a year. Apparently, no substantial prejudice for
the payment of the distressed employees of the bank for only a specified limited period until the
other issues in the consolidated consideration.

RESOLUTION:

WHEREFORE, ruling that the Order of November 7, 1985 of Judge Ricardo Francisco, granting
salary to the officers and employees of Banco Filipino for the period from February, 1985 to August
29, 1985, may now be deemed moot and academic insofar as it relates to the period from January 25,
1985 to June, 1985 up to August, 1985, covers but a minimal span of two (2) months, the Court
RESOLVES, for the reasons of equity, to allow the aforestated Order to remain undisturbed and to
DISMISS the appeal therefrom. This Order is immediately held executory.

BANCO FILIPINO, petitioner,

vs.
MONETARY BOARD, ET AL., respondents.

RESOLUTION

Banco Filipino "Petition to Set Aside Order to Produce Documents dated 17 February 1986" is the
Order of Branch 136, Regional Trial Court, Makati, granting the motion of the petitioner herein,
based on Section 1, Rule 27, of the Rules of Court, for the production, inspection, and copying of
certain papers and records which are claimed as needed by the Petitioner Bank for the
preparation of its comments, objections, and exceptions to the Conservator's report dated January
8, 1985, and Receiver's Report dated March 19, 1985. The documents now asked to be produced,
inspected, and copied are the following:

(1) Copies of tapes and transcripts of the Monetary Board (MB) deliberations on the closure of
Banco Filipino (BF) and its meeting on July 27, 1984, and March 22, 1985;

(2) Copies of the letter and reports of first conservator, Mr. Basilio Estanislao, to the MB and to
Central Bank Governor Jose Fernandez;

(3) Papers showing computations of all the interests and penalties charged by the CB against BF;

(4) Schedule of recommended valuation of reserves per Mr. Tiaoqui's report dated March 19, 1985;

(5) Adjustment per A0nnex "C" of Mr. Tiaoqui's report;

(6) Annexes"A","B",and"C"of the joint report of Mr. Tiaoqui, Mr. Aurellano, and Mrs. Valenzuela;

(7) Schedule of devaluation of CB premises of Paseo de Roxas of same report;

(8) Schedule of BF's realizable assets from P5,159.44 B to P3,909.23 B as of January 25, 1985;

(9) Documents listed in BF's letter to Mrs. Carlota Valenzuela dated October 25, 1985.

In issuing the challenged order, the court below took the view that the Supreme Court's
resolution referring to it the matters relative to the bank's closure does not preclude the petitioner
from availing of this mode of discovery as an additional means of preparing for the hearing. It
considered the documents sought to be produced as not privileged because these constitute or
contain evidence material to the issues into by the Court. These materials are said to comprise of
records of the administrative proceedings conducted by respondent's officials and representatives
from the inception of and preparation of the challenged reports and the resolution placing
petitioner under receivership and thereafter under liquidation as it is the regularity and
impartiality of these administrative proceedings which are being assailed by the petitioner, the
trial court saw no reason why said documents should be thus concealed from it.

Respondents Monetary Board and Central Bank take exception to the said order and pray in their
petition before this Court for the reversal and setting aside of the same. The grounds recited in
support of their petition are the following:

(1) The ratiocination of the trial court is wholly in error because the proceedings before it do not
at all deal with either the administrative proceedings conducted by the respondents or the
regularity and impartiality of the CB actions on BF; it does so simply upon the charge that no
"hearing" was given BF prior to those actions of closure and liquidation. However, no such prior
hearing had been called as none is required by the law and by the Supreme Court decisions in
force to this date (Rural Bank of Lucena, Inc. vs. Arca, 15 SCRA 66, and Rural Bank of Bato vs.
IAC, G.R. 65642, Oct. 15, 1984).

(2) The tapes and transcripts of the Monetary Board deliberations are confidential pursuant to
Sections 13 and 15 of the Central Bank Act.
 Sec. 13. Withdrawal of persons having a personal interest. Whenever any member
attending a meeting of the Monetary Board has a material personal interest,
directly or indirectly, in the discussion or resolution of any given matter, said
member shall not participate in the discussion or resolution of the matter and
must retire from the meeting during the deliberation thereon. The subject matter,
when resolved, and the fact that a member had a personal interest in it, shall be
made available to the public. The minutes of the meeting shall note the
withdrawal of the member concerned. (As amended by PD No. 1827).

Sec. 15. Responsibility. Any member of the Monetary Board or officer or

employee of the Central Bank who wilfully violates this Act or who is guilty of
gross negligence in the performance of his duties shall be held liable for any loss
or injury suffered by the Bank as a result of such violation or negligence. Similar
responsibility shall apply to the disclosure of any information of a confidential
nature about the discussion or resolutions of the Monetary Board, except as required
in Section 13 of this Act, or about the operations of the Bank, and to the use of such
information for personal gain or to the detriment of the Government, the Bank or
third parties. (As amended by Presidential Decree No. 72). (Italics supplied).

(3) The Monetary Board deliberations were necessarily held subsequent t the submission of the
CB reports. They did not enter into the making of those reports and can have no materiality to
any question of fact that may be raised in relation to their contents.

On April 16, 1986, Petitioner Banco Filipino filed its Comment on Respondent's petition to set
aside the order for the production of the documents. In said pleading, the petitioner bank assails
the respondent's petition on the following grounds:

(1) There is no reason why Banco Filipino should not be furnished the documents, particularly
Nos. 3 to 9 of its motion, when these are merely attachments to the Supervision and Examination
Sector, Dept. It (SES) Reports, copies of which were given to it pursuant to a Supreme Court
order.

(2) The Supreme Court in its referral of October 8, 1985 to the RTC Makati intended full evidence
taking of the proceeding for judicial review of administrative action filed with the Supreme
Court, the trial court being better equipped for evidence taking.

(3) The respondents cannot claim privilege in refusing to produce the Central Bank records
because it is based only on the generalized interest in confidentiality. Petitioner cites as a
precedent the doctrine established in the case of U.S. vs. Nixon, 418 U.S. 683, 713, which states
that "when the ground for asserting privilege as to subpoenaed materials sought for use in a
criminal case is based only on the generalized interest in confidentiality, it cannot prevail over
the fundamental demands of due process of law."

(4) The requested documents and records of the Central Bank are material and relevant because
BF is entitled to prove from the CB records (a) that Governor Fernandez closed BF without a MB
resolution and without examiner's reports on the financial position of BF; (b) that a MB
resolution was later made to legalize the BF closure but it had no supporting examiner's report;
(c) that the earlier reports did not satisfy respondent Governor Fernandez and he ordered the
examiners and the conservator, Gilberto Teodoro, to "improve" them; and (d) that the reports
were then fabricated.
Petitioner adds that what respondents fear is disclosure of their proceedings because petitioner
has accused the CB governor of (a) covering 51% of its stockholding, (b) encashing BF securities
in trickles as fuel a run, (c) appointing a conservator when the President ordered the MB to grant
petitioner a P 3 Billion credit line, (d) replacing Estanislao with Gilberto Teodoro when the
former wanted to resume normal operations of BF, and (e) changing the conservatorship to
receivership when it appointed Carlota Valenzuela as receiver again without hearing.

On May 13, 1986, Respondent Monetary Board filed their Reply to Petitioner Bank's Comment
dated April 15, 1986. Respondents argue that:

(1) The case of U.S. vs. Nixon and the other decisions cited by petitioner are inapplicable because-

a) The authorities cited refer only to a claim of privilege based only on the
generalized interest of confidentiality or on an executive privilege that is merely
presumptive. On the other hand, the so-called MB deliberations are privileged
communications pursuant to Section 21, Rule 130 of the Rules of Court because
statements and opinions expressed in the deliberation of the members of the MB
are specifically vested with confidentiality under Secs. 13 and 15 of the Central
Bank Act. The "public interest" requirement for non-disclosure is evident from the
fact that the statute punishes any disclosure of such deliberations.

b) Petitioner has not in the least shown any relevance or need to produce the
alleged MB deliberations. What petitioner intends to prove are not "issues" raised
in the pleadings of the main petition.

(2) Petitioner is interested, not in discovering evidence, but in practicing

oppression by the forced publication of the MB members' confidential statements
at board meetings.

(3) The so-called deliberations of the Monetary Board are in truth merely the
individual statements and expressions of opinion of its members. They are not
statements or opinions that can be imputed to the board itself or to the Central
Bank. The transcripts of stenographic notes on the deliberations of the MB are not
official records of the CB; they are taken merely to assist the Secretary of the MB
in the preparation of the minutes of the meetings. And as advertedly also, the tape
recordings are not available as these are used over and over again.

The motion for the production of the subject documents was filed by petitioner pursuant to
Section 1, Rule 27, of the Rules of Court. It has been held that "a party is ordinarily entitled to the
production of books, documents and papers which are material and relevant to the establishment
of his cause of action or defense" (General Electric Co. vs. Superior Court in and for Alameda
County, 45 C. 2d 879, cited in Martin, Rules of Court, 3rd edition, Vol. 2, p. 104). "The test to be
applied by the trial judge in determining the relevancy of documents and the sufficiency of their
description is one of reasonableness and practicability" (Line Corp. of the Philippines vs. Moran,
59 Phil. 176, 180). "On the ground of public policy, the rules providing for production and
inspection of books and papers do not authorize the production or inspection of privileged
matter, that is, books, papers which because of their confidential and privileged character could
not be received in evidence" (27) CJS 224). "In passing on a motion for discovery of documents,
the courts should be liberal in determining whether or not documents are relevant to the subject
matter of action" (Hercules Powder Co. vs. Haas Co., U.S. Dist. Ct. Oct. 26, 1944, 9 Fed. Rules
Service, 659, cited in Moran, Comments on the Rules of Court, 1979 Ed. Vol. 2, p. 102). Likewise,
"any statute declaring in general terms that official records are confidential should be liberally
construed, to have an implied exception for disclosure when needed in a court of justice"
(Wigmore on Evidence, Vol. VIII, p. 801, citing the case of Marbury vs. Madison, 1 Cr. 137,143).

In the light of the jurisprudence above-cited, this Court holds that no grave abuse of discretion
was committed by the court below in granting petitioner's motion for the production of the
documents enumerated herein. We accept the view taken by the court below that the documents
are not privileged and that these constitute or contain evidence material to the issues being
inquired into by the Court.

With respect to Items Nos. 3 to 9, these are the annexes to the Supervision and Examination
Sector, Dept. II (SES) Reports submitted to the Central Bank and Monetary Board which were
taken into consideration by said respondents in closing petitioner bank. A copy of the SES
Reports was furnished to the petitioner. We, therefore, fail to see any proper reason why the
annexes thereto should be withheld. Petitioner cannot adequately study and properly analyze the
report without the corresponding annexes. Pertinent and relevant, these could be useful and even
necessary to the preparation by petitioner of its comment, objections and exceptions to the
Conservator's reports and receiver's reports.

Regarding copies of the letter and reports of first Conservator, Mr. Basilio Estanislao, to the
Monetary Board and to Central Bank Governor Fernandez (Item No. 2) these appear relevant as
petitioner has asserted that the above-named Conservator had in fact wanted to resume normal
operations of Banco Filipino but then he was thereafter replaced by Mr. Gilberto Teodoro. The
letter and reports could be favorable or adverse to the case of petitioner but whatever the result
may be, petitioner should be allowed to photocopy the same.

As to the tapes and transcripts of the Monetary Board deliberations on the closure of Banco
Filipino and its meetings on July 27, 1984, and March 22, 1985, (Item No. 1), respondents contend
that "it is obvious from the requirement (Sections 13 and 15 of the Central Bank Act) that the
subject matter (of the deliberations), when resolved. . . shall be made available to the public but
the deliberations themselves are not open to disclosure but are to be kept in confidence." This
Court, however, sees it in a different light. The deliberations may be confidential but not
necessarily absolute and privileged. There is no specific provision in the Central Bank Act, even
in Sections 13 and 15 thereof, which prohibits absolutely the courts from conducting an inquiry
on said deliberations when these are relevant or material to a matter subject of a suit pending
before it. The disclosure is here not intended to obtain information for personal gain. There is no
indication that such disclosure would cause detriment to the government, to the bank or to third
parties. Significantly, it is the bank itself here that is interested in obtaining what it considers as
information useful and indispensably needed by it to support its position in the matter being
inquired to by the court below.

On the other hand, respondents cite Section 21, Rule 130, Rules of Court which states:

Section 21. Privileged Communications. The following persons cannot testify as to

matters learned in confidence in the following cases:

xxx xxx xxx

 (e) A public officer cannot be examined during his term of office or afterwards, as
to communications made to him in official confidence, when the court finds that
the public interest would suffer by disclosure.

But this privilege, as this Court notes, is intended not for the protection of public officers but for
the protection of public interest (Vogel vs. Gruaz 110 U.S. 311 cited in Moran, Comments on the
Rules of Court, 1980 Ed. Vol. 5, p. 211). Where there is no public interest that would be
prejudiced, this invoked rule will not be applicable.

The rule that a public officer cannot be examined as to communications made to

him in official confidence does not apply when there is nothing to show that the
public interest would suffer by the disclosure question. ... ,( Agnew vs. Agnew,'52
SD 472, cited in Martin Rules of Court of the Philippines, Third Edition, Vol. 5, p.
199).

In the case at bar, the respondents have not established that public interest would suffer by the
disclosure of the papers and documents sought by petitioner. Considering that petitioner bank
was already closed as of January 25, 1985, any disclosure of the aforementioned letters, reports,
and transcripts at this time pose no danger or peril to our economy. Neither will it trigger any
bank run nor compromise state secrets. Respondent's reason for their resistance to the order of
production are tenuous and specious. If the respondents public officials acted rightfully and
prudently in the performance of their duties, there should be nothing at all that would provoke
fear of disclosure

On the contrary, public interests will be best served by the disclosure of the documents. Not only
the banks and its employees but also its numerous depositors and creditors are entitled to be
informed as to whether or not there was a valid and legal justification for the petitioner's bank
closure. It will be well to consider that

Public interest means more than a mere curiosity; it means something in which the
public, the community at large, has some pecuniary interest by which their legal
rights or liabilities are affected (State vs. Crocket, 206, p. 816 cited in Words and
Phrases, Vol. 35, p. 229).

IN VIEW OF ALL THE FOREGOING, the order to produce documents dated February 17, 1986
issued by the court below in S.C.- G.R. No. 70054, is hereby affirmed, except as to the copies of
the tapes relative to the Monetary Board deliberations on the closure of Banco Filipino on
January 25, 1985 and its meetings on July 27, 1984, and March 22, 1985 and only if such tapes are
actually no longer available taking into account respondent Monetary Board's manifestations that
the tape recording of the deliberations of that Board are, for purposes of economy, used over and
over again inasmuch as these tapes are not required to be kept or stored. (See Respondent's
Reply, dated May 12, 1986; Rollo, Vol. IV, pp. 1288-1289).

SO ORDERED.
 LEA MER v. MALAYAN INSURANCE
September 30, 2005 | Panganiban, J. | Testimonial knowledge| Conejero

PETITIONER/S: Lea Mer Industries, Inc.

RESPONDENT/S: Malayan Insurance Co., Inc.
FACT TO BE ESTABLISHED: That the barge Judy VII on which the insured silica sand was
transported was not seaworthy because of the existence of the holes, proving Lea Mers negligence
EVIDENCE PRESENTED: Survey Report prepared by Jesus Cortez, the cargo surveyor
SUMMARY: Ilian Silica contracted for Lea Mer to ship 900 tons of silica sand from Palawan to Manila,
but the Judy VII sank and Malayan Insurance paid the cost. Malayan sued to collect from Lea Mer,
which the RTC dismissed and the CA on appeal granted. The SC affirmed the CA as Lea Mer did not
overcome the presumption of fault against it as a common carrier, and the survey report was
inadmissible as hearsay since Cortez did not testify during the trial.
DOCTRINE: Unless the affiant is presented as a witness, an affidavit is considered hearsay. An
exception to the foregoing rule is that on independently relevant statements, where a report made by a
person is admissible if it is intended to prove the tenor, not the truth, of the statements.

FACTS:
1. Ilian Silica Mining entered into a contract of carriage with Lea Mer for shipment from Palawan to
Manila of 900 metric tons of silica sand consigned to Vulcan Industrial and Mining Corporation.
2. On October 25, 1991, Judy VII, a barge leased by Lea Mer, sank, resulting in the loss of the sand.
3. Malayan Insurance Co., Inc., as insurer, paid Vulcan the P565,000 value of the lost cargo, which it
unsuccessfully sought to recover from Lea Mer in the exercise of its right of subrogation.
4. Malayan filed a complaint for collection RTC Manila on September 4, 1992, which was dismissed
upon finding that the cause of the loss was a fortuitous event.
a. The vessel had sunk because of the bad weather conditions of Typhoon Trining.
b. Petitioner had no advance knowledge of the incoming typhoon, and that the vessel had
been cleared by the Philippine Coast Guard to travel from Palawan to Manila.
5. The CA reversed, holding that the vessel was not seaworthy when it sailed for Manila, and that
the loss of the cargo was occasioned by petitioners fault.

ISSUES/HELD/RATIO:
1. Whether petitioner is liable for the loss of the cargoYES.
a. Question of fact: The SC may consider it since the TC and CA findings vary.
b. Petitioner is a common carrier: It offers to the public its business of transporting goods
through its vessels.
i. Common carriers: persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods, or both -- by land,
water, or air -- when this service is offered to the public for compensation.
c. This was a contract of affreightment: since it was petitioners crew that manned the
tugboat M/V Ayalit and controlled the barge Judy VII.
i. Demise or bareboat charter: private business undertaking governed by
stipulation, where the charterer is considered owner pro hac vice for the voyage or
service, mans the vessel with his people, subject to liability for damages.
ii. Contract of affreightment: anything short of such a complete relinquishment of
possession, command and navigation to the charterer is a contract of
affreightment (time or voyage charter party) or not a charter party at all.
d. Liability of common carriers like Lea Mer: as required by the nature of their business and
for public policy reasons, extraordinary diligence is required rendering service with the
 greatest skill and foresight to avoid damage and destruction to the goods entrusted for
carriage and delivery; there is a presumption of fault against common carriers
e. Presumption of fault of common carriers: can be rebutted only by
i. Proof that they observed extraordinary diligence; OR
ii. That the loss or damage was due to a fortuitous event, such as pleaded here:
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity;
2. Act of the public enemy in war, whether international or civil;
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in the containers;
5. Order or act of competent public authority
f. Fortuitous events (Article 1174, CC): To excuse a common carrier, two elements
i. fortuitous event must be the proximate and only cause of loss; and
ii. there was due diligence to prevent or minimize the loss before, during and after
the occurrence of event
g. Petitioner did not prove that it was free from fault:
i. Evidence presented was insufficient: loss of the cargo was allegedly due to the
bad weather condition brought about by Typhoon Trining, petitioner had
not been informed of the incoming typhoon, and that the Philippine Coast
Guard had given it clearance to begin the voyage since Typhoon Trining was
allegedly far from Palawan, where the storm warning was only Signal No. 1
ii. Witness could not prove due diligence: Joey A. Draper, testified that he could
no longer remember whether anything had been done to minimize loss when
water started entering the barge except for beaching the barge.
h. Fortuitous event was not sole proximate cause of loss:
i. Proximate cause: the barge was not seaworthy when it sailed for Manila, as
respondent proved that the hull of the barge had holes that might have
caused or aggravated the sinking.
ii. Evidence insufficient: regularity of the Philippine Coast Guards Certificate of
Inspection of Judy VII, dated July 31, 1991 is questioned; and such certificate
did not take into consideration the status of the boat at the time

2. (TOPIC) Whether the survey report of Jesus Cortez is admissible in evidenceNO.

a. Survey report not sole evidence: Existence of the holes was proved not merely by
Cortez Survey Report, but by the testimonies of the witnesses Charlie M. Soriano;
and Federico S. Manlapig, a cargo marine surveyor and the vice-president of Toplis
and Harding Company.
b. Hearsay rule: TC correctly refused to admit Jesus Cortezs Affidavit. Unless the
affiant is presented as a witness, an affidavit is considered hearsay. That witnesses
must be examined and presented during the trial, and that their testimonies must be
confined to personal knowledge is required by the rules on evidence, Section 36.
c. Exception: A report made by a person is admissible if it is intended to prove the
tenor, not the truth, of the statements. Independent of the truth or the falsity of the
statement given in the report, the fact that it has been made is relevant.
d. Hearsay rule not applicable: the challenged Survey Report prepared by Cortez was
admitted only as part of the testimonies of respondents witnesses. The referral to
Cortezs Report was in relation to Manlapigs final Adjustment Report. Evidently, it
was the existence of the Survey Report that was testified to. The admissibility of that
Report as part of the testimonies of the witnesses was correctly ruled upon by the
trial court.
 DISPOSITION: Petition is DENIED and the assailed Decision and Resolution are AFFIRMED.
Costs against petitioner.

ALSUA-BETTS v. CA
July 30, 1979 | Guerrero, J. | Wills > Allowance and Disallowance > Grounds

PETITIONERS: Francisca Alsua-Betts et. al.

RESPONDENTS: Court of Appeals, Amparo Alsua Buenviaje, Fernando Buenviaje, Fernando Alsua
SUMMARY: Don Jesus and Dona Florentina, together with their children, executed an extra-judicial partition of their
property in which the properties assigned or adjudicated to each and everyone of the heirs shall be considered as his
share or participation in the estate or as his inheritance left by the deceased. Subsequently, both Don Jesus and Dona
Florentina separately executed their own holographic wills and codicils reflecting the agreement. When Dona
Florentina died, Don Jesus revoked his holographic will and codicil and executed a new will in which he gave his
daughter Francisca more property and named her executor. Upon the death of Don Jesus, Francisca filed a petition
for the probate of her father's will which was opposed by her siblings. The Supreme Court held that the extrajudicial
partition was void because the Old Civil Code (Art. 1056)required that there must be a prior will before a testator
can partition his property inter vivos. Furthermore, future inheritance cannot be the object of contracts unless there is
compliance with Art. 1056.
DOCTRINE: A testator must first make a will before he can partition his property inter vivos

FACTS:
November 25, 1949-Don Jesus Alsua and his wife, Doa Florentina Rella, together with all their living children,
Francisca Alsua-Betts, Pablo Alsua, Fernando Alsua thru this judicial guardian Clotilde Samson, and Amparo
Alsua de Buenviaje, entered into a duly notarized agreement, Escritura de Particion Extrajudicial (extra-judicial
partition), over the then present and existing properties of the spouses Don Jesus and Doa Florentina.
Each of the four children was allotted with the properties considered as their share in the estate or as inheritance
left by the deceased where they will be the absolute owner of the properties assigned in case of death of one of
the spouses.
Don Jesus and Doa Florentina also separately executed holographic wills with exactly the same terms and
conditions in conformity with the executed extra judicial partition naming each other as an executor without having
to post any bond. That in case new properties be acquired same shall be partitioned one half to the surviving spouse
and the other half to children of equal parts.
Don Jesus and Doa Florentina subsequently executed separately a codicil of exactly the same terms and conditions,
amending and supplementing their holographic wills stating that they reserved for themselves the other half not
disposed of to their legitimate heirs under the agreement of partition and mutually and reciprocally bequeathed each
other their participation as well all properties which might be acquired subsequently.
October 2, 1959- Doa Florentina died and Don Jesus was named executor to serve without bond.
November, 1959- Don Jesus cancelled his holographic will in the presence of his bookkeeper and secretary,
Esteban P. Ramirez, and instructed hislawyer to draft a new will. This was a notarial will and testament of 3
essential features as follows;
o 1. It expressly cancelled revoked and annulled all the provisions of his holographic will and
codicil.
o 2. It provided for the collation of all his properties donated to his four living children by virtue
of the Escritura de Partition Extra judicial.
o 3. It instituted his children as legatees / devisees of specific properties, and as to the rest of the
properties and whatever may be subsequently acquired in the future, before his death, were to
be given to Francisca and Pablo naming Francisca as executor to serve without a bond.
After all debts, funeral charges and other expenses of the estate of Doa Tinay had been paid, all her heirs including
Don Jesus, submitted to the probate court for approval a deed of partition executed on December 19, 1959 and which
essentially confirmed the provisions of the partition of 1949, the holographic will and codicil of Doa Tinay..
May 6,1964-Don Jesus Alsua died
May 20, 1964- Francisca Alsua Betts (petitioner), as the executrix named in the will of November 14, 1959, filed a
petition for the probate of said new will of Don Jesus Alsua.
 Oppositions thereto were filed by Pablo, Amparo and Fernando, thru his judicial guardian Clotilde Samson, on the
following grounds:
o (a) that Don Jesus was not of sound and disposing mind at the time of the execution of the alleged
will;
o (b) that the will was executed under duress or influence of fear or threats; or it was procured by
undue and improper pressure and influence on the part of the main beneficiaries and of person or
persons in collusion with them, or the signature of the testator was secured by or thru fraud;
o (c) that the will was not executed according to the formal requirements of the law; and
o (d) that the alleged will subject of probate contravened the Extrajudicial Partition of 1949 agreed
upon by him, his deceased spouse, Doa Florentina, and all his children, Francisco, Pablo, Amparo
and Fernando thru his judicial guardian Clotilde Samson, and also contravened Don Jesus' own
probated holographic will and codicil of 1955 and 1956, respectively, essentially confirming and
implementing the said partition of 1949 which had already been partially executed by all the
signatories thereto in the partition of the estate of Doa Florentina in December, 1959.
The RTC allowed the probate of the will.
The CA reversed the RTC decision and denied the probate of the will.

ISSUES & RATIO:

1. WON The Extrajudicial Partition is null and void. YES
The Extrajudicial Partition of November 25, 1949 is null and void under Article 1056 in relation to Article 1271 of the old
Civil Code.. These Articles provide as follows:
a. Art. 1056. If the testator should make a partition of his property by an act inter vivos, or by will,
such partition shall stand in so far as it does not prejudice the legitime of the forced heirs. ...
b. Art. 1271. All things, even future ones, which are not excluded from the commerce of man, may
be the subject-matter of contracts.
Nevertheless, no contract may be entered into with respect to future inheritances, except those the
object of which is to make a division inter vivos of an estate, in accordance with Article 1056.
All services not contrary to law or to good morals may also be the subject- matter of contract.
Article 1056 specifically uses the word "testator" from which the clear intent of the law may be deduced
that the privilege of partitioning one's estate by acts inter vivos is restricted only to one who has made a
prior will or testament
Both the Spanish Supreme Court and the learned and authoritative commentator, Manresa, are of opinion
that a testator may, by an act inter vivos, partition his property, but he must first make a will with all the
formalities provided for by law. And it could not be otherwise, for without a will there can be no testator;
when the law, therefore, speaks of the partition inter vivos made by a testator of his property, it necessarily
refers to that property which he has devised to his heirs. A person who disposes of his property gratis inter
vivos is not called a testator, but a donor. In employing the word "testator," the law evidently desired to
distinguish between one who freely donates his property in life and one who disposes of it by will to take
effect after his death.
There being no will prior to the extrajudicial partition, the extradjudicial partition is not valid.
Furthermore, the extrajudicial partition is not a valid or enforceable contract because it involved future
inheritance; it may only be given effect as a donation inter vivos of specific properties to the heirs made
by the parents.
2. WON oppositors to the probate of the will, are in estoppel to question the competence of testator Don Jesus Alsua.
NO
The principle of estoppel is not applicable in probate proceedings because it involves public
interest, and the application therein of the rile of estoppel, when it win block the ascertainment of
the truth as to the circumstances surrounding the execution of a testament, would seem inimical to
public policy. Over and above the interest of private parties is that of the state to see that
testamentary dispositions be carried out if, and only if, executed conformably to law.
3. WON Don Jesus can revoke his previous holographic will and codicil YES
Don Jesus was not forever bound by his previous holographic will and codicil as such, would remain revokable at
his discretion. Art. 828 of the new Civil Code is clear: "A will may be revoked by the testator at any time before
his death. Any waiver or restriction of this right is void." There can be no restriction that may be made on his
absolute freedom to revoke his holographic will and codicil previously made.