G.R. No.

L-57555 August 28, 1984

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
TERESA JALANDONI, accused-appellant.

The Solicitor General for plaintiff-appellee.

Teodoro Padilla as private prosecutor for Bank of the Philippine Islands.

Rodolfo U. Jimenez for accused-appelant.

RESOLUTION

ABAD SANTOS, J.:

This refers to the MOTION TO MODIFY JUDGMENT (as to appellant's civil liability) filed by the Bank of the Philippine Islands, the private complainant.

In Criminal Case No. CCC-VI-2866 of the defunct Circuit Criminal Court of Manila, Teresa Jalandoni was accused of estafa. The information alleged
that she issued several checks drawn against the Rizal Commercial Banking Corporation in favor of the Bank of the Philippine Islands (BPI); that the
checks were dishonored for lack of funds, a fact which was known by the accused; and that as a result thereof the BPI suffered damage in the amount
of P1,391,780.00.

The trial court rendered the following judgment against the accused:

WHEREFORE, the Court finds the accused guilty beyond reasonable doubt of the crime of estafa defined under Article 315, 2(a), and
hereby sentences her to a penalty of reclusion perpetua; to indemnify the bank of the Philippine Islands, Cervantes Branch, in the sum
of P1,600,000.00 representing the balance of the amount which she swindled from the said bank; and to pay the costs. (Expediente, p.
603.)

Jalandoni appealed to this Court which in turn pronounced:

WHEREFORE, the guilt of the appellant not having been demonstrated beyond reasonable doubt, the appealed judgment is hereby
set aside and another one is entered acquitting her of the charge. No costs. (People vs. Jalandoni G.R. No. 57555, May 30, 1983, 122
SCRA 588, 600.)

Subsequently, BPI filed the aforesaid Motion to Modify Judgment. BPI invoked a Court of Appeals decision (People vs. De Castillo, 48 O.G. 4890)
where the court acquitted the appellant who was accused of malversation of public funds on the ground of reasonable doubt but nonetheless ordered
her to pay the amount of her civil liability. Accordingly, BPI prayed that in the interest of justice and to avoid multiplicity of suits, a second paragraph
be added to Our judgment, to wit:
 As to appellant's civil liability, considering that the civil action was instituted at the commencement of the criminal action, judgment is
hereby rendered ordering appellant to pay the Bank of the Philippine Islands, Cervantes branch, the amount of P1,491,780.00 with
interests at the legal rate from the filing of the action until paid. (Rollo, p. 139.)

In its Sur-Rejoinder, BPI reduced the amount claimed to P1,391,780.00 for the following reason:

Accused-appellant admits that per information for estafa, complainant suffered by her transactions a damage of P1,391,780.00 which
represents P100,000.00 less than complainant's computation. To shorten the proceedings, as manifested in the oral arguments of 17
October 1983, complainant is willing to accept P1,391,780.00 as accused-appellant's civil liability to private complainant plus interest
at the legal rate of 12% per annum from the time of demand for payment until full payment (Rollo, p. 168.)

The appellant opposed the Motion on the following grounds: (a) People vs. de Castillo is not in point because it was decided under the old Rules of
Court; and (b) the amount of civil liability, if any, is unsettled and requires necessarily the introduction of proof.

At this stage, the Motion was before the Second Division of this Court which rendered the decision acquitting the appellant on reasonable doubt. And
because the Motion called for the application of a novel doctrine, the case was prudently referred to the Court En Banc on February 28, 1984.

On May 31, 1984, the Court En Banc promulgated its decision in the case of Padilla, et al. vs. Court of Appeals (G.R. No. L-39999) where it held "that
the respondent Court of Appeals did not err in awarding damages despite a judgment of acquittal." The reason therefor has bee n stated thus:

There appear to be no sound reasons to require a separate civil action to still be filed considering that the facts to be proved in the civil
case have already been established in the criminal proceedings where the accused was acquitted. Due process has been accorded
the accused. He was, in fact, exonerated of the criminal charge. The constitutional presumption of innocence called for more vigilant
efforts on the part of prosecuting attorneys and defense counsel, a keener awareness by all witnesses of the serious implicat ions of
perjury, and a more studied consideration by the judge of the entire records and of applicable statutes and precedents. To require a
separate civil action simply because the accused was acquitted would mean needless clogging of court dockets and unnecessary
duplication of litigation with all its attendant loss of time, effort, and money on the part of all concerned.

In the instant case, the appellant made the following ad missions in her brief:

The following facts are admitted in the information aforequoted:

(a) accused-appellant issued nine (9) RCBC personal checks;

(b) the sum total of the face value of said nine (9) checks is P2,150,000.00;

(c) of said nine (9) checks, one (1) was honored, namely, RCBC check No. 2424530 in the amount of 200,000.00, when the checks
went through clearing;

(d) the checks drawn by accused-appellant against said personal checks aggregated P2,041,780.00;

(e) said checks were drawn in favor of third parties, not the accused-appellant; and
 (f) out of the P2,150,000.00 worth of the nine (9) checks involved, the damaged suffered is only P1,391,780.00. (emphasis supplied.)
(pp. 56.)

Jalandoni's claim that "[t]he amount of the civil liability, if any, is unsettled and requires necessarily the introduction of proof (Rollo, p. 161) is utterly
devoid of merit. As shown above the appellant has formally admitted that BPI suffered damage in the amount of P1,391,780.00. For her now to assert
that the civil liability, if any, is unsettled is an insult to the dignity of this Court. We cannot allow a party to state a fact only to disown it afterwards
because of convenience.

WHEREFORE, the Motion is hereby granted; the judgment of this Court is modified in that the appellant is ordered to pay the B ank of the Philippine
Islands the amount of P1,391,780.00 with interest at the legal rate of 12% per annum from the filing of the action until paid.

SO ORDERED.
G.R. No. 90478 November 21, 1991

REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner,

vs.
SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR. and DOMINADOR R. SANTIAGO, respondents.

Dominador R. Santiago for and in his own behalf and as counsel for respondent Tantoco, Jr.

NARVASA, J.:

Private respondents Bienvenido R. Tantoco, Jr. and Dominador R. Santiago — together with Ferdinand E. Marcos, Imelda R. Marcos, Bienvenido R.
Tantoco, Sr., Gliceria R. Tantoco, and Maria Lourdes Tantoco-Pineda-are defendants in Civil Case No. 0008 of the Sandiganbayan. The case was
commenced on July 21, 1987 by the Presidential Commission on Good Government (PCGG) in behalf of the Republic of the Philippines. The complaint
which initiated the action was denominated one "for reconveyance, reversion, accounting, restitution and damages," and was avowedly filed pursuant
to Executive Order No. 14 of President Corazon C. Aquino.

After having been served with summons, Tantoco, Jr. and Santiago, instead of filing their answer, jointly filed a "MOTION TO STRIKE OUT SOME
PORTIONS OF THE COMPLAINT AND FOR BILL OF PARTICULARS OF OTHER PORTIONS" dated Nov. 3, 1987. 1 The PCGG filed an opposition
thereto, 2 and the movants, a reply to the opposition. 3 By order dated January 29, 1988, the Sandiganbayan, in order to expedite proceedings and
accommodate the defendants, gave the PCGG forty-five (45) days to expand its complaint to make more specific certain allegations. 4
Tantoco and Santiago then presented a "motion for leave to file interrogatories under Rule 25 of the Rules of Court" dated February 1, 1988, and "Interrogatories under Rule 25." 5
Basically, they sought an answer
to the question: "Who were the Commissioners of the PCGG (aside from its Chairman, Hon. Ramon Diaz, who verified the complaint) who approved
or authorized the inclusion of Messrs. Bienvenido R. Tantoco, Jr. and Dominador R. Santiago as defendants in the . . case?" 6 The PCGG responded
by filing a motion dated February 9, 1988 to strike out said motion and interrogatories as being impertinent, "queer," "weird," or "procedurally bizarre
as the purpose thereof lacks merit as it is improper, impertinent and irrelevant under any
7
guise."
On March 18, 1988, in compliance with the Order of January 29, 1988, the PCGG filed an Expanded Complaint. 8
As this expanded complaint, Tantoco and Santiago reiterated their motion
9
for bill of particulars, through a Manifestation dated April 11, 1988.
Afterwards, by Resolution dated July 4, 1988, 10
the Sandiganbayan denied the motion to strike out, for bill of particulars, and for leave to file interrogatories, holding
them to be without legal and factual basis. Also denied was the PCGG's motion to strike out impertinent pleading dated Februa ry 9, 1988. The
Sandiganbayan declared inter alia the complaint to be "sufficiently definite and clear enough," there are adequate allegations . . which clearly portray
the supposed involvement and/or alleged participation of defendants-movants in the transactions described in detail in said Complaint," and "the other
matters sought for particularization are evidentiary in nature which should be ventilated in the pre-trial or trial proper . ." It also opined that "(s)ervice
of interrogatories before joinder of issue and without leave of court is premature . . (absent) any special or extraordinary circumstances . . which would
justify . . (the same)."
 11
Tantoco and Santiago then filed an Answer with Compulsory Counterclaim under date of July 18, 1988. In response, the PCGG presented a "Reply
to Answer with Motion to Dismiss Compulsory Counterclaim " 12
The case was set for pre-trial on July 31, 1989. 13 14
On July 25, 1989, the PCGG submitted its PRE-TRIAL. The pre-trial was however reset to September 11, 1989,
and all other parties were required to submit pre-trial briefs on or before that date. 15
On July 27, 1989 Tantoco and Santiago filed with the Sandiganbayan a pleading denominated "Interrogatories to Plaintiff," 16
and on August 2, 1989, an "Amended Interrogatories to Plaintiff"' 17 as
18
well as a Motion for Production and Inspection of Documents.

The amended interrogatories chiefly sought factual details relative to specific averments of PCGG's amended complaint, through such questions, for instance, as—

1. In connection with the allegations . . in paragraph 1 . ., what specific property or properties does the plaintiff claim it has the right to recover from defendants Tantoco, Jr. and Santiago for being ill-gotten?

3. In connection with the allegations . . in paragraph 10 (a) . . what specific act or acts . . were committed by defendants Tantoco, Jr. and Santiago in "concert with" defendant Ferdinand Marcos and in furtherance or pursuit,
of the alleged systematic plan of said defendant Marcos to accumulate ill-gotten wealth?"

5. In connection with . . paragraph 13 . ., what specific act or acts of the defendants Tantoco, Jr. and Santiago. . were committed by said defendants as part, or in furtherance, of the alleged plan to conceal assets of
defendants Ferdinand and Imelda Marcos?

7. In connection with . . paragraph 15(c) . . is it plaintiff's position or theory of the case that Tourist Duty Free Shops, Inc., including all the assets of said corporation, are beneficially owned by either or both defendants
Ferdinand and Imelda Marcos and that the defendants Tantoco, Jr. and Santiago, as well as, the other stockholders of record of the same corporation are mere "dummies" of said defendants Ferdinand and /or Imelda R.
Marcos?

On the other hand, the motion for production and inspection of documents prayed for examination and copying of—

1) the "official records and other evidence" on the basis of which the verification of the Amended Complaint asserted that the allegations thereof are "true and correct;"

2) the documents listed in PCGG's Pre-Trial Brief as those "intended to be presented and . . marked as exhibits for the plaintiff;" and

3) "the minutes of the meeting of the PCGG which chronicles the discussion (if any) and the decision (of the Chairman and members) to file the complaint" in the case at bar.

By Resolutions dated August 21, 1989 and August 25, 1989, the Sandiganbayan admitted the Amended Interrogatories and granted the motion for production and inspection of documents (production being scheduled on September
14 and 15, 1989), respectively.

On September 1, 1989, the PCGG filed a Motion for Reconsideration of the Resolution of August 25, 1989 (allowing production and inspection of documents). It argued that

1) since the documents subject thereof would be marked as exhibits during the pre-trial on September 11, 1989 anyway, the order for "their production and inspection on September 14 and 15, are purposeless and unnecessary;"

2) movants already know of the existence and contents of the document which "are clearly described . . (in) plaintiff's Pre-Trial Brief;"

3) the documents are "privileged in character" since they are intended to be used against the PCGG and/or its Commissioners in violation of Section 4, Executive Order No. 1, viz.:
 (a) No civil action shall lie against the Commission or any member thereof for anything done or omitted in the discharge of the task contemplated by this Order.

(b) No member or staff of the Commission shall be required to testify or produce evidence in any judicial, legislative, or administrative proceeding concerning matters within its official cognizance.

It also filed on September 4, 1989 an opposition to the Amended Interrogatories, 19

which the Sandiganbayan treated as a motion for reconsideration of the Resolution of August
21, 1989 (admitting the Amended Interrogatories). The opposition alleged that —

1) the interrogatories "are not specific and do not name the person to whom they are propounded . .," or "who in the PCGG, in particular, . . (should)
answer the interrogatories;"

2) the interrogatories delve into "factual matters which had already been decreed . . as part of the proof of the Complaint upon trial . .;"

3) the interrogatories "are frivolous" since they inquire about "matters of fact . . which defendants . . sought to . . (extract) through their aborted Motion
for Bill of Particulars;"

4) the interrogatories "are really in the nature of a deposition, which is prematurely filed and irregularly utilized . . (since) the order of trial calls for
plaintiff to first present its evidence."

Tantoco and Santiago filed a reply and opposition on September 18, 1989.

After hearing, the Sandiganbayan promulgated two (2) Resolutions on September 29, 1989, the first, denying reconsideration (of the Resolution
allowing production of documents), and the second, reiterating by implication the permission to serve the amended interrogatories on the plaintiff
(PCGG). 20

Hence, this petition for certiorari.

The PCGG contends that said orders, both dated September 29, 1989, should be nullified because rendered with grave abuse of discretion amounting to excess of jurisdiction. More particularly, it claims —

a) as regards the order allowing the amended interrogatories to the plaintiff PCGG:

1) that said interrogatories are not specific and do not name the particular individuals to whom they are propounded, being addressed only to the PCGG;

2) that the interrogatories deal with factual matters which the Sandiganbayan (in denying the movants' motion for bill of particulars) had already declared to be part of the PCGG's proof upon trial; and

3) that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention of Executive Order No. 14 and related issuances; and

b) as regards the order granting the motion for production of documents:

1) that movants had not shown any good cause therefor;

2) that some documents sought to be produced and inspected had already been presented in Court and marked preliminarily as PCGG's exhibits, and the movants had viewed, scrutinized and even offered objections thereto
and made comments thereon; and

3) that the other documents sought to be produced are either —

(a) privileged in character or confidential in nature and their use is proscribed by the immunity provisions of Executive Order No. 1, or

(b) non-existent, or mere products of the movants' suspicion and fear.

This Court issued a temporary restraining order on October 27, 1989, directing the Sandiganbayan to desist from enforcing its questioned resolutions of September 29, 1989 in Civil Case No. 0008. 21

After the issues were delineated and argued at no little length by the parties, the Solicitor General withdrew "as counsel for plaintiff . . with the reservation, however, conformably with Presidential Decree No. 478, the
provisions of Executive Order No. 292, as well as the decisional law of 'Orbos v. Civil Service Commission, et al.,' (G.R. No. 92561, September 12, 1990) 22
to submit his comment/observation on
incidents/matters pending with this . . Court if called for by circumstances in the interest of the Government or if he is so required by the
Court." 23 This, the Court allowed by Resolution dated January 21, 1991. 24
Subsequently, PCGG Commissioner Maximo A. Maceren advised the Court that the cases from which the Solicitor General had withdrawn would henceforth be under his (Maceren's) charge "and/or any of the following
private attorneys: Eliseo B. Alampay, Jr., Mario E. Ongkiko, Mario Jalandoni and such other attorneys as it may later authorize." 25

The facts not being in dispute, and it appearing that the parties have fully ventilated their respective positions, the Court now proceeds to decide the case.

Involved in the present proceedings are two of the modes of discovery provided in the Rules of Court: interrogatories to parties , 26
and production and inspection of documents and
things. 27 Now, it appears to the Court that among far too many lawyers (and not a few judges), there is, if not a regrettable unfamiliarity and
even outright ignorance about the nature, purposes and operation of the modes of discovery, at least a strong yet unreasoned and
unreasonable disinclination to resort to them — which is a great pity for the intelligent and adequate use of the deposition-discovery
mechanism, coupled with pre-trial procedure, could, as the experience of other jurisdictions convincingly demonstrates, effectively shorten the
period of litigation and speed up adjudication. 28 Hence, a few words about these remedies is not at all inappropriate.

The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential function is accomplished by first, the
ascertainment of all the material and relevant facts from the pleadings and from the evidence adduced by the parties, and second, after that
determination of the facts has been completed, by the application of the law thereto to the end that the controversy may be settled
authoritatively, definitely and finally.
It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with assuring that all the facts are indeed presented
to the Court; for obviously, to the extent that adjudication is made on the basis of incomplete facts, to that extent there is faultiness in the
approximation of objective justice. It is thus the obligation of lawyers no less than of judges to see that this objective is attained; that is to say,
that there no suppression, obscuration, misrepresentation or distortion of the facts; and that no party be unaware of any fact material a relevant
to the action, or surprised by any factual detail suddenly brought to his attention during the trial. 29
Seventy-one years ago, in Alonso v. Villamor, 30
this Court described the nature and object of litigation and in the process laid down the standards by which
judicial contests are to be conducted in this jurisdiction. It said:

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position,
entraps and destroys the other. It is, rather a contest in which each contending party fully and fairly lays before the court the facts in
issue and then brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice
be done on the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as
an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts. There should be no
vested right in technicalities. . . .

The message is plain. It is the duty of each contending party to lay before the court the facts in issue-fully and fairly; i.e., to present to the
court all the material and relevant facts known to him, suppressing or concealing nothing, nor preventing another party, by clever and adroit
manipulation of the technical rules of pleading and evidence, from also presenting all the facts within his knowledge.

Initially, that undertaking of laying the facts before the court is accomplished by the pleadings filed by the parties; but that, only in a very
general way. Only "ultimate facts" are set forth in the pleadings; hence, only the barest outline of the facfual basis of a party's claims or
defenses is limned in his pleadings. The law says that every pleading "shall contain in a methodical and logical form, a plain, conc ise and
direct statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the statement of
mere evidentiary facts." 31

Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or "not averred with sufficient definiteness or particularity to enable . . (an adverse party) properly to prepare his responsive
pleading or to prepare for trial," a bill of particulars seeking a "more definite statement" may be ordered by the court on motion of a party. The office of a bill of particulars is, however, limited to making more particular or
definite the ultimate facts in a pleading It is not its office to supply evidentiary matters. And the common perception is that said evidentiary details are made known to the parties and the court only during the trial, when proof
is adduced on the issues of fact arising from the pleadings.

The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial. Indeed, it is the purpose and policy of the law that the parties — before the trial if not indeed even before the pre-trial —
should discover or inform themselves of all the facts relevant to the action, not only those known to them individually, but also those known to adversaries; in other words, the desideratum is that civil trials should not be
carried on in the dark; and the Rules of Court make this ideal possible through the deposition-discovery mechanism set forth in Rules 24 to 29. The experience in other jurisdictions has been that ample discovery before trial,
under proper regulation, accomplished one of the most necessary of modern procedure: it not only eliminates unessential issue from trials thereby shortening them considerably, but also requires parties to play the game
with the cards on the table so that the possibility of fair settlement before trial is measurably increased. . ." 32
As just intimated, the deposition-discovery procedure was designed to remedy the conceded inadequacy and cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact revelation theretofore
performed primarily by the pleadings.

The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining
the facts relative to those issues. The evident purpose is, to repeat, to enable parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the issues and facts before trials and thus prevent that
said trials are carried on in the dark. 33

To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad as when the interrogated party is called as a witness to testify orally at trial. The inquiry extends to all facts which are relevant,
whether they be ultimate or evidentiary, excepting only those matters which are privileged. The objective is as much to give every party the fullest possible information of all the relevant facts before the trial as to obtain
evidence for use upon said trial. The principle is reflected in Section 2, Rule 24 (governing depositions) 34
which generally allows the examination of a deponent —

1) "regarding any matter, not privileged, which is relevant to the subject of the pending action, whether relating to the claim or defense
of any other party;"

2) as well as:

(a) "the existence, description, nature, custody, condition and location of any books, documents, or other tangible things" and

(b) "the identity and location of persons having knowledge of relevant facts."

What is chiefly contemplated is the discovery of every bit of information which may be useful in the preparation for trial, such as the identity
and location of persons having knowledge of relevant facts; those relevant facts themselves; and the existence, description, nature, custody,
condition, and location of any books, documents, or other tangible things. Hence, "the deposition-discovery rules are to be accorded a broad
and liberal treatment. No longer can the time-honored cry of "fishing expedition" serve to preclude a party from inquiring into the facts underlying
his opponent's case. Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either
party may compel the other to disgorge whatever facts he has in his possession. The deposition-discovery procedure simply advances the
stage at which the disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility, of surprise, . . . 35
In line with this principle of according liberal treatment to the deposition-discovery mechanism, such modes of discovery as (a) depositions (whether by oral examination or written interrogatories) under Rule 24, (b)
interrogatories to parties under Rule 25, and (c) requests for admissions under Rule 26, may be availed of without leave of court, and generally, without court intervention. The Rules of Court explicitly provide that leave of
court is not necessary to avail of said modes of discovery after an answer to the complaint has been served. 36
It is only when an answer has not yet been filed (but after jurisdiction
has been obtained over the defendant or property subject of the action) that prior leave of court is needed to avail of these modes of discovery,
the reason being that at that time the issues are not yet joined and the disputed facts are not clear. 37

On the other hand, leave of court is required as regards discovery by (a) production or inspection of documents or things in accordance with Rule 27, or (b) physical and mental examination of persons under Rule 28, which
may be granted upon due application and a showing of due cause.
To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law imposes serious sanctions on the party who refuses to make discovery, such as dismissing the action or proceeding or
part thereof, or rendering judgment by default against the disobedient party; contempt of court, or arrest of the party or agent of the party; payment of the amount of reasonable expenses incurred in obtaining a court order
to compel discovery; taking the matters inquired into as established in accordance with the claim of the party seeking discovery; refusal to allow the disobedient party support or oppose designated claims or defenses; striking
out pleadings or parts thereof; staying further proceedings. 38

Of course, there are limitations to discovery, even when permitted to be undertaken without leave and without judicial intervention. "As indicated by (the) Rules . . ., limitations inevitably arise when it can be shown that the
examination is being conducted in bad faith or in such a manner as to annoy, embarass, or oppress the person subject to the inquiry. 39
And . . . further limitations come into existence when
the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege." 40

In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired into are otherwise relevant and not privileged, and the inquiry is made in good faith and within the bounds of the law.

It is in light of these broad principles underlying the deposition-discovery mechanism, in relation of course to the particular rules directly involved, that the issues in this case will now be resolved.

The petitioner's objections to the interrogatories served on it in accordance with Rule 25 of the Rules of Court cannot be sustained.

It should initially be pointed out — as regards the private respondents "Motion for Leave to File Interrogatories" dated February 1, 1988 41
— that it was correct for them to seek leave to serve
interrogatories, because discovery was being availed of before an answer had been served. In such a situation, i.e., "after jurisdiction has
been obtained over any defendant or over property subject of the action" but before answer, Section 1 of Rule 24 (treating of depositions), in
relation to Section 1 of Rule 25 (dealing with interrogatories to parties) explicitly requires "leave of court." 42 But there was no need for the
private respondents to seek such leave to serve their "Amended Interrogatories to Plaintiff" (dated August 2, 1989 43) after they had filed their
answer to the PCGG's complaint, just as there was no need for the Sandiganbayan to act thereon.

1. The petitioner's first contention — that the interrogatories in question are defective because they (a) do not name the particular individuals
to whom they are propounded, being addressed only to the PCGG, and (b) are "fundamentally the same matters . . (private respondents)
sought to be clarified through their aborted Motion . . for Bill of Particulars" — are untenable and quickly disposed of.

The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states that if the party served with interrogatories
is a juridical entity such as "a public or private corporation or a partnership or association," the same shall be "answered . . by any officer
thereof competent to testify in its behalf." There is absolutely no reason why this proposition should not be applied by analogy to the
interrogatories served on the PCGG. That the interrogatories are addressed only to the PCGG, without naming any specific commissioner o
officer thereof, is utterly of no consequence, and may not be invoked as a reason to refuse to answe r. As the rule states, the interrogatories
shall be answered "by any officer thereof competent to testify in its behalf."

That the matters on which discovery is desired are the same matters subject of a prior motion for bill of particulars addressed to the PCGG's
amended complaint — and denied for lack of merit — is beside the point. Indeed, as already pointed out above, a bill of particulars may elicit
only ultimate facts, not so-called evidentiary facts. The latter are without doubt proper subject of discovery. 44
Neither may it be validly argued that the amended interrogatories lack specificity. The merest glance at them disproves the argument. The interrogatories are made to relate to individual paragraphs of the PCGG's expanded
complaint and inquire about details of the ultimate facts therein alleged. What the PCGG may properly do is to object to specific items of the interrogatories, on the ground of lack of relevancy, or privilege, or that the inquiries
are being made in bad faith, or simply to embarass or oppress it. 45
But until such an objection is presented and sustained, the obligation to answer subsists.

2. That the interrogatories deal with factual matters which will be part of the PCGG's proof upon trial, is not ground for suppressing them either.
As already pointed out, it is the precise purpose of discovery to ensure mutual knowledge of all the relevant facts on the part of all parties even
before trial, this being deemed essential to proper litigation. This is why either party may compel the other to disgorge whatever facts he has
in his possession; and the stage at which disclosure of evidence is made is advanced from the time of trial to the period preceding it.

3. Also unmeritorious is the objection that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention of
Executive Order No. 14 and related issuances. In the first place, there is nothing at all wrong in a party's making his adversary his witness
. 46 This is expressly allowed by Section 6, Rule 132 of the Rules of Court, viz.:

Sec. 6. Direct examination of unwilling or hostile witnesses. — A party may . . . call an adverse party or an officer, director, or managing
agent of a public or private corporation or of a partnership or association which is an adverse party, and interrogate him by leading
questions and contradict and impeach him in all respects as if he had been called by the adverse party, and the witness thus called
may be contradicted and impeached by or on behalf of the adverse party also, and may be cross-examined by the adverse party only
upon the subject-matter of his examination in chief.

The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart from the fact that the information sought is
immaterial since they are evidently meant to establish a claim against PCGG officers who are not parties to the action. It suffices to point out
that "fishing expeditions" are precisely permitted through the modes of discovery. 47 Moreover, a defendant who files a counterclaim against
the plaintiff is allowed by the Rules to implead persons (therefore strangers to the action) as additional defendants on said counterclaim. This
may be done pursuant to Section 14, Rule 6 of the Rules, to wit:

Sec. 14. Bringing new parties. — When the presence of parties other than those to the original action is required for the granting of
complete relief in the determination of a counterclaim or cross-claim, the court shall order them to be brought in as defendants, if
jurisdiction over them can be obtained."

The PCGG's assertion that it or its members are not amenable to any civil action "for anything done or omitted in the discharge of the task
contemplated by . . (Executive) Order (No. 1)," is not a ground to refuse to answer the interrogatories. The disclosure of fa cto relevant to the
action and which are not self-incriminatory or otherwise privileged is one thing; the matter of whether or not liability may arise from the facts
disclosed in light of Executive Order
No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the action.

The apprehension has been expressed that the answers to the interrogatories may be utilized as foundation for a counterclaim against the
PCGG or its members and officers. They will be. The private respondents have made no secret that this is in fact their intention. Withal, the
Court is unable to uphold the proposition that while the PCGG obviously feels itself at liberty to bring actions on the basis of its study and
appreciation of the evidence in its possession, the parties sued should not be free to file counterclaims in the same actions against the PCGG
or its officers for gross neglect or ignorance, if not downright bad faith or malice in the commencement or initiation of such judicial proceedings,
or that in the actions that it may bring, the PCGG may opt not to be bound by rule applicable to the parties it has sued, e.g., the rules of
discovery.
So, too, the PCGG's postulation that none of its members may be "required to testify or produce evidence in any judicial . . proceeding
concerning matters within its official cognizance," has no application to a judicial proceeding it has itself initiated. As just suggested, the act of
bringing suit must entail a waiver of the exemption from giving evidence; by bringing suit it brings itself within the operation and scope of all
the rules governing civil actions, including the rights and duties under the rules of discovery. Otherwise, the absurd would have to be conceded,
that while the parties it has impleaded as defendants may be required to "disgorge all the facts" within their knowledge and in their possession,
it may not itself be subject to a like compulsion.

The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its consent. But it is axiomatic that in filing an
action, it divests itself of its sovereign character and sheds its immunity from suit, descending to the level of an ordinary litigant. The PCGG
cannot claim a superior or preferred status to the State, even while assuming to represent or act for the State. 48
The suggestion 49
that the State makes no implied waiver of immunity by filing suit except when in so doing it acts in, or in matters concernin g, its
proprietary or non-governmental capacity, is unacceptable; it attempts a distinction without support in principle or precedent. On the contrary
—

The consent of the State to be sued may be given expressly or impliedly. Express consent may be manifested either through a general
law or a special law. Implied consent is given when the State itself commences litigation or when it enters into a contract. 50
The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state as plaintiff may avail itself of the different forms of actions open to private litigants. In short, by
taking the initiative in an action against the private parties, the state surrenders its privileged position and comes down to the level of the defendant. The latter automatically acquires, within certain limits, the right
to set up whatever claims and other defenses he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-37, citing U.S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899)" 51

It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private
property has been taken in expropriation without just compensation being paid, the defense of immunity from suit cannot be set up by the State against an action for payment by the owner. 52

The Court also finds itself unable to sustain the PCGG's other principal contention, of the nullity of the Sandiganbayan's Order for the production and inspection of specified documents and things allegedly in its possession.

The Court gives short shrift to the argument that some documents sought to be produced and inspected had already been presented in Court and marked preliminarily as PCGG's exhibits, the movants having in fact viewed,
scrutinized and even offered objections thereto and made comments thereon. Obviously, there is nothing secret or confidential about these documents. No serious objection can therefore be presented to the desire of the
private respondents to have copies of those documents in order to study them some more or otherwise use them during the trial for any purpose allowed by law.

The PCGG says that some of the documents are non-existent. This it can allege in response to the corresponding question in the interrogatories, and it will incur no sanction for doing so unless it is subsequently established
that the denial is false.

The claim that use of the documents is proscribed by Executive Order No. 1 has already been dealt with. The PCGG is however at liberty to allege and prove that said documents fall within some other privilege, constitutional
or statutory.

The Court finally finds that, contrary to the petitioner's theory, there is good cause for the production and inspection of the documents subject of the motion dated August 3, 1989. 53
Some of the documents
are, according to the verification of the amended complaint, the basis of several of the material allegations of said complaint. Others, admittedly,
are to be used in evidence by the plaintiff. It is matters such as these into which inquiry is precisely allowed by the rules of discovery, to the
end that the parties may adequately prepare for pre-trial and trial. The only other documents sought to be produced are needed in relation to
the allegations of the counterclaim. Their relevance is indisputable; their disclosure may not be opposed.

One last word. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and operation of the modes of discovery earlier
mentioned, 54 there also appears to be a widely entertained idea that application of said modes is a complicated matter, unduly expensive and
dilatory. Nothing could be farther from the truth. For example, as will already have been noted from the preceding discussion, all that is entailed
to activate or put in motion the process of discovery by interrogatories to parties under Rule 25 of the Rules of Court, is simply the delivery
directly to a party of a letter setting forth a list of least questions with the request that they be answered individually. 55 That is all. The service
of such a communication on the party has the effect of imposing on him the obligation of answering the questions "separately and fully in
writing underoath," and serving "a copy of the answers on the party submitting the interrogatories within fifteen (15) days after service of the
interrogatories . . ." 56 The sanctions for refusing to make discovery have already been mentioned. 57 So, too, discovery under Rule 26 is begun
by nothing more complex than the service on a party of a letter or other written communication containing a request that specific facts therein
set forth and/or particular documents copies of which are thereto appended, be admitted in writing. 58 That is all. Again, the receipt of such a
communication by the party has the effect of imposing on him the obligation of serving the party requesting admission with "a sworn statement
either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either
admit or deny those matters," failing in which "(e)ach of the matters of which admission is requested shall be deemed admitted." 59 The taking
of depositions in accordance with Rule 24 (either on oral examination or by written interrogatories) while somewhat less simple, is nonetheless
by no means as complicated as seems to be the lamentably extensive notion.

WHEREFORE, the petition is DENIED, without pronouncement as to costs. The temporary restraining order issued on October 27, 1 989 is
hereby LIFTED AND SET ASIDE.

SO ORDERED.
G.R. No. 110970 March 16, 1994

ASUNCION JUANIR VDA. DE ALVAREZ, petitioner,

vs.
COURT OF APPEALS, and JOSEFA ALMEDA (Deceased) NOW HER HEIRS Namely: FREDISVINDA A. CONSUNJI, ANGELITA A. CRUZ,
EMMANUEL M. ALMEDA, ERLINDA A. CHIKIANCO, ZENAIDA A. ROXAS, BENJAMIN A. ALMEDA, DOMINADOR M. ALMEDA, JR., and
ERMELO M. ALMEDA, represented by ERMELO M. ALMEDA, respondents.

Esteban R. Abonal for petitioner.

Topacio, Tagoc & Associates for private respondents.

CRUZ, J.:

The main issue for resolution is whether Lot 129 at Penefrancia Avenue, Naga City, with an area of 510 square meters, was actually sold by Asuncion
Juanir Vda. de Alvarez to Josefa Almeda or merely mortgaged to secure a loan.

In a complaint for "Recovery of Possession" filed on January 30, 1981, with the Court of First Instance of Camarines Sur, plaintiff Josefa Almeda
alleged that, as the registered owner of the said Lot 129, she leased a 170 square-meter thereof, including the building erected on it, to defendant
Asuncion Juanir, Vda. de Alvarez for a monthly rental of P900.00; that the defendant failed to pay the rentals from August to December 1978, from
October to December 1979, and from January 1980 onward, and did not keep her promise to leave the rented property after Christmas of 1979; and
that despite written demands, she had refused to vacate the premises.1

In her answer, defendant Alvarez averred that sometime in 1973, the plaintiff offered to lend her money to settle her unpaid loan of P20,000.00 with
the Continental Bank, Naga City, provided that the land given as security for the said loan would be mortgaged to the plaintiff instead. For this purpose,
the plaintiff asked her to sign a document, which she did not read nor was it read to her, that she assumed was a mortgage pursuant to their agreement.
It was only later that she discovered it was a deed of sale of her land together with the improvements thereon for the sum of P80,000.00.2

While the case was pending in the trial court, plaintiff Josefa Almeda died and was substituted by her heirs, the private respondents therein.

On April 20, 1990, the lower court rendered judgment: 1) declaring that the contract entered into by the parties was one of absolute sale; 2) confirming
the validity of the contract; 3) ordering defendant Alvarez and her successors-in-interest to surrender the possession of the subject lot to plaintiff
Almeda's heirs or successors-in-interest; 4) ordering the defendant to pay the monthly rental of P900.00 for the entire duration of her occupancy of
the land and building until the same was vacated, P2,500.00 as attorney's fees, and P500.00 as expenses of litigation; and 5) granting the writ of
injunction preventing the defendant or her heirs or successors-in-interest from committing further acts of dispossession. 3

On appeal, the decision was affirmed by the respondent court,4 which also subsequently denied the appellant's motion for new trial and/or
reconsideration. Alvarez the came to this Court, insisting that the contract invoked by Almeda should be treated as an equitable mortgage on the
grounds that: 1) the document purporting on its face to be an absolute sale was in fact a mortgage given as a security repayment of a loan; 2) being
merely a second grader, he could not have intelligently understood the document she signed; 3) the price is grossly inadequate; and 4) she continued
to possess the property in the concept of an owner.
The petitioner bases her arguments on the presumptions laid down by Article 1602 of the Civil Code, in relation to Article 1604 of the same Code,
said provisions reading as follows:

Art. 1602. The contract shall be presumed to be an equitable mortgaged, in any of the following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or gra nting a
new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairy inferred that the real intention of the parties is that the transaction shall secure the payment
of a debt or the performance of any other obligation.

In any of the foregoing cases, any money, fruits or other benefit to be received by the vendee as rent or otherwise shall be considered
as interest which shall be subject to the usury laws.

Art. 1604. The provision of Article 1602 shall also apply to a contract purporting to be an absolute sale.

The document evidencing the transaction between Josefa Almeda and the petitioner is denominated a contract of sale. 5 However, parol evidence
may be introduced to show that the agreement was in fact merely a mortgage masquerading as a sale.

Section 9, Rule 130, of the Rules of Court provides:

When the terms of agreement have been reduced to writing, it is considered as containing al the terms agreed upon and there can be,
between the parties and their successors-in-interest, no evidence of such terms other than the contents of the written agreement.

However, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading:

a) an intrinsic ambiguity, mistake or imperfection in the written agreement;

b) the failure of the written agreement to express the true intent and agreement of the parties thereto;

xxx xxx xxx

There is no ambiguity, mistake or imperfection in the deed of sale. We also find no compelling reason to consider the express stipulations in the deed
of sale were intended only to create an equitable mortgage. The petitioner has not presented clear, satisfactory and convincing evidence that the real
intention of the parties to the said deed was to make the property in question merely a security for a loan extended by Almeda to the petitioner.
Article 1371 of the Civil Code provided that in order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall
be principally considered. In the case before us, the facts clearly show that the transaction between Almeda and the petitioner was indeed a contract
of sale.

It is noted that in May 1973, Almeda caused the registration of the disputed deed of sale, resulting in the cancellation of O riginal Certificate of Title
No. 2896 in the name of the petitioner and the consequent issuance of Transfer Certificate of Title No. 6999 7 in Almeda's favor. The petitioner admitted
having learned this fact as early as 1973, first from her lawyer and personally afterwards, when she went to the Register of Deeds to verify the matter.

If Alvarez was really mislead into signing the deed of sale, she should have protested or at least notified the Register of Deeds that she had on ly
mortgaged and not sold the land to Almeda. Better still, she should have taken steps to annul the sale and recover the property. Inexplicably, she did
nothing at all. It was only in 1981, when Almeda sued her recovery of the property, that she alleged in her answer that the deed sale was a disguised
mortgage. It took her all of eight years to challenge the registration of the disputed property in favor of Almeda.

The Court also notes that, also in 1973, Almeda declared the subject property in her name for tax purposes, resulting in the cancellation of the tax
declaration in the petitioner's name. 8 Alvarez never questioned the said cancellation nor did she ask the tax declaration in her name to be revived.

It is a matter of record that when the petitioner and Almeda were sued in 1979 by Dolores Salvan, one of the lessees of the subject property, she
declared in her answer9 to the complaint:

4. That defendant admits that she has been receiving plaintiff's rentals but from 1973 she has been receiving such rentals for defendant
Josefa Almeda after the latter purchased the land from her and that when she refused to receive plaintiff's rental for March, it was upon
instruction of defendant Josefa Almeda, the owner of the land;

5. That she denies the allegations contained in paragraph 6 of the complaint, the truth being that if she refused to accept p ayment, it
was because of the instruction made upon her by her co-defendant, owner of the land, Josefa Almeda;

6. That plaintiff knows that she has no cause of action against the herein defendant, she being no longer the owner of the land or the
leased premises, . . . (Emphasis Supplied).
10
And when in May 1979, another lessee, Basilio Caning, filed a complaint against her, the petitioner made the following allegations in her answer:

4. That she denies the allegations contained in par. 4 of the complaint, the truth being that plaintiff has never tendered any payment in
February or March, what happened was that defendant, upon instruction of Mrs. Josefa Almeda, who is the present owner of both the
land and the building occupied and leased by plaintiff, Mrs. Almeda having long bought this from defendant, she gave notice to plaintiff
to vacate the premises as the land will be used for the construction of a multi-story building to keep up with the growing commercial
needs of the City;

5. That she specifically denies each and every allegation contained in pars. 5, 6, 7, and 9 of the complaint, she having no knowledge
of any useful improvement made by plaintiff, nor has she given any consent therefor, and she knows not only any portion of the building
which needed repairs and besides as already stated defendant sold the lot including the building to Mrs. Josefa Almeda since 1973 and
therefore she had no more obligation to repair the same, but the owner if at all which it Mrs. Almeda;

xxx xxx xxx

 7. That the complaint does not include the real parties in interest, Mrs. Josefa Almeda, who is the registered owner and lessor of the
lot and building in question and without her included no final determination of this case can be had;

xxx xxx xxx

WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that this case be dismissed, or if at all that
it be prosecuted against the proper party, Mrs. Josefa Almeda, . . . (Emphasis Supplied)

The petitioner points out that it was Almeda who paid for the services of the lawyer who prepared the said pleadings, but that fact alone does not
disprove or nullify her declarations therein.

An Admission in a pleading in one action may be admitted in evidence against the pleader or his successor-in-interest at the subsequent trial of the
same suit or in another action involving the same issue or in which the admission is pertinent tot he issues. 11 It is true that this rule will not apply if
the pleading in which the statement is found was not signed by the party and no proof was presented that he had authorized th e making of such
admission. 12 In the case at bar, however, the aforequoted answer bear the signature of the petitioner, who in fact acknowledged it at the trial. 13

Alvarez now claims that she signed the pleadings merely upon the prodding of Almeda, who had not read or explained their contents to her. The
petitioner's behavior is certainly strange, considering that this happened six years after she and her lawyer came to know ab out the transfer of the
land in Almeda's name. Almeda and Alvarez would have been at loggerheads by that time. Yet Alvarez, would have this Court bel ieve that she still
willingly left their common defense to Almeda and willingly signed the pleadings without clearing them first with her own lawyer. It is inconceivable
that Alvarez would still have trusted Almeda if it is true that she had earlier been deceived by this person.

The petitioner says Almeda took advantage of her illiteracy but her own evidence reveals her shrewdness and shows that she is not all that gullible
or helpless, as she pretends. She herself negated this pose when she testified that she was able to mortgage the subject lot no less than three times
with different banks without any difficulty or the assistance of a lawyer. She said she knew she could manage by itself. 14

Alvarez also claims that she could not have sold the disputed property for only P80,000.00 because she even turned down an offer in 1971 to buy the
land at P265,200.00. She presents no corroboration, however, such as the testimony of the supposed offeror.
15
To show that the consideration of P80,000.00 was grossly inadequate, the petitioner invites attention to Tax Declaration No. 16807 and a deed of
sale covering a nearby 906 square meter lot, which was sold for P600,000.00. 16

The deed was executed on June 22, 1987. Surely, it cannot be considered evidence of the market value of the land in 1973, all of fourteen years
earlier. As for the tax declaration, which was issued on May 14, 1974, the true market value of the land in question is placed at only P60,000.00 and
that of the building at only P7,200.00, for a total of P67,200.00. This instrument belies the petitioner's contention that the price of P80,000.00 is grossly
inadequate.

The petitioner points to certain documents she filed with the respondent court tending to show, from a comparison of the 1987 market value of a lot
adjacent to the disputed property and the 1973 market value of the disputed property itself, that the consideration for her land was grossly inadequate.
The Court of Appeals did not err in rejecting these documents on the ground that they had not been formally offered as eviden ce with the trial court.
Section 34, Rule 132, of the Rules of Court provides that the court shall not consider evidence not formally offered. Furthermore, the documents could
hardly be considered newly-discovered evidence to justify the grant of a new trial as they were existing and known to the petitioner at the time of the
original trial.
Even on the assumption that the price of P80,000.00 was below the market value of the lot in 1973, it would nonetheless not be gross and
unconscionable, as the petitioner insists. According to Tolentino, the presumption of equitable mortgage will apply only if it is clearly shown that the
consideration was unusually inadequate such that the mind revolts at it and such that a reasonable man would neither directly or indirectly be likely
to consent to it. 17

In Cuyugan v. Santos, 18 the Court held that another test to determine whether a conveyance is a sale or merely a security for the payment of a loan
is the continued existence of a debt or liability on the part of the alleged mortgagor. If such a relationship exists, the transaction is a mortgage;
otherwise, it is a contract of sale.

In the present case, the petitioner admitted that she never paid the alleged indebtedness 19 and there is no evidence either that she attempted or
offered to discharge the alleged mortgaged. On the contrary, it was Almeda, the alleged lender, who had made payments to the petitioner as follows:
P40,000.00 on May 23, 1973; 20 P60,000.00 on February 11, 1974. 21 P2,000.00 on February 7, 1975; 22 and P18,00.00 on April 22, 1976 23. All the
receipts acknowledging the said payments were signed by the petitioner, who did not controvert them at the trial.

It would appear from these payments that the true selling price of the land was P120,000.00, which was way above the market v alue stated in the
1973 tax declaration covering the property in question. There was an obvious reason for fixing the consideration at only P80,000.00 in the dispute
deed of sale. As the petitioner blandly admitted in her brief, "the true consideration of sales of land are not usually placed in the documents of
conveyances to reduce the documentary stamps, the transfer tax fees as well as other taxes chargeable relative thereto."

The petitioner next asserts that if the deed of sale were considered a contract of antichresis, the loan of P80,000.00 would be deemed fully paid or
offset by the rentals received by Almeda (or the private respondents) from the 340 square-meter portion of the subject lot since 1973 up to the present.
The aggregate amount of these rentals could be more than P211,400.00.

This Contention is untenable.

The Civil Code provides:

Article 2132. By the contract of antichresis the creditor acquires the right to receive the fruits of an immovable of his deb tor, with the
obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit.

Article 2134. The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of antichresis shall be
void.

There is no provision in the disputed documents specifically authorizing Almeda to receive the fruits of the land in question with the obligation to apply
them to the payment of interest if any was due, and to the principal of the alleged loan. The instrument also does not fix the amount of P80,000.00 as
the petitioner's principal obligation.

Alvarez also stresses that she remained in actual possession of the subject property and says this possession has given rise to the presumption of
an equitable mortgage. That presumption cannot override her own judicial admission that Almeda was the new owner of the prope rty, having bought
it from her way back in 1973. If Alvarez was indeed in possession, it was because the property had been leased to her by Almeda, who in fact later
sued her for its recovery and payment of back rentals.
There is no merit in the private respondents' submission that the decision of the respondent court has already become final and executory. The
petitioner received that decision on May 5, 1993, and so had until May 20, 1993, to file a motion for new trial or reconsideration. The registry receipt
and the envelope, containing her motion disclose that it was mailed on May 14, 1993, well within the period to stay enforcement of the judgment under
review.

The private respondent' contention that the petitioner failed to comply with Par. 4 of Circular 1-88 is also untenable. The "verification" accompanying
the petition clearly states the material dates, i.e., the date of receipt of the questioned decision, the date of filing of the motion for new trial and/or
reconsideration, and the date of receipt of the order denying such motion.

Our conclusion is that the respondent Court of Appeals committed no error in sustaining the finding of the Regional Trial Cou rt of Naga City that the
document executed between Josefa Almeda and Asuncion Juanir Vda. de Alvarez was a deed of sale and not an equitable mortgage.

ACCORDINGLY, the petition is DENIED, with costs against the petitioner. It is so ordered.
G.R. No. 152058 September 27, 2004

SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, petitioners,

vs.
COURT OF APPEALS and JOSE RAGO, respondents.

DECISION

DAVIDE, JR., C.J.:

This is a petition for the review of the decision 1 of 18 October 2001 and the resolution of 30 January 2002 of the Court of Appeals in CA-G.R. SP No.
63389 entitled Jose Rago vs. Social Security Commission and Social Security System. The decision reversed the 20 December 2000 Resolution of
the Social Security Commission (SSC) in SSC Case No. 4-15009-2000 denying respondent Jose Rago’s request to convert his monthly pension from
permanent partial disability to permanent total disability. The resolution denied the motion to reconsider the decision.

Private respondent Jose Rago (hereafter Rago) worked as an electrician for Legend Engineering in Basak, Pardo, Cebu City. On 1 December 1993,
at about 6:15 p.m., while working on the ceiling of a building, he stepped on a weak ceiling joist. The structure gave way an d he crashed into the
corridor twelve feet below. The x-rays taken that day revealed that he had a (1) marked compression fracture of L1 vertebra without signs of dislocation
and bone destruction; and (2) slight kyphosis at the level of L1 vertebrae, with the alignment of the spine still normal. 2 He was confined at the Perpetual
Succour Hospital in Cebu City for twenty-four (24) days from 1 December 1993 to 24 December 1993, 3 and, thereafter, he was confined in his home
from 25 December 1993 to 25 August 1994. 4

On 20 May 1994, Rago filed a claim for permanent partial disability with the Cebu City office of the Social Security System (SSS). Since he had only
35 monthly contributions, he was granted only a lump sum benefit. 5 He made additional premium contributions on 6 November 1995, and sought the
adjustment of his approved partial disability benefits from lump sum to monthly payments. The adjustment was resolved in his favor on 18 October
1995.6

On 9 November 1995, Rago filed a claim for Employee’s Compensation (EC) sickness benefit, which was supported by an x-ray report dated 1
December 1993. This was approved for a maximum of 120 days to cover the period of illness from 1 December 1993 to 30 March 1994.

On 7 June 1996, Rago filed another claim to convert his SSS disability to EC disability. Again, it was resolved in his favor on 14 June 1996.7

Two years later, on 16 June 1998, Rago claimed for the extension of his EC partial disability. A rating of 50% OB (of the body) was granted
corresponding to the maximum benefit allowed under the Manual on Ratings of Physical Impairment. 8

Thereafter, Rago filed several requests for the adjustment of his partial disability to total disability. This time, his requests were denied by the Cebu
City office of the SSS in its letters of 11 April 1999, 10 September 1999, 28 September 1999, 4 April 2000, and 17 April 2000. The denial was based
on the medical findings of the Cebu City office that he was not totally prevented from engaging in any gainful occupation. 9

Undaunted, on 3 April 2000, Rago filed with the petitioner Social Security Commission (SSC) a petition for total permanent disability benefits based
on the following grounds:
 1. his convalescence period from the time of his hospital confinement to home confinement totaled 268 days and under SSS guidelines, if the
injury persisted for more than 240 days, the injury would be considered as a permanent total disability;

2. his x-ray results showed a deterioration of his condition without any visible improvement on the disabilities resulting from the accident; and

3. he had lost his original capacity to work as an electrician and has been unemployed since the accident.

The petition was docketed as SSC Case No. 4-15009-2000.10

In its position paper dated 24 August 2000, the SSS argued that Rago had already been granted the maximum partial disability benefits. The physical
examination conducted by the Cebu City office of the SSS showed that he was more than capable of physically engaging in any gainful occup ation
and that there was no manifestation of progression of illness. Thus, the SSS recommended the denial of Rago’s petition. 11

In a resolution dated 20 December 2000, the SSC denied Rago’s petition for lack of merit. The SSC ruled that he was not entitled to permanent partial
disability more than what was already granted, more so to permanent total disability benefits since he was already granted the maximum allowable
benefit for his injury.12

Without filing a motion for reconsideration, Rago appealed to the Court of Appeals by filing a petition for review and reiterating his claim for permanent
disability benefits under Section 13-A (g) of R.A. No. 1161, as amended by R.A. No. 8282. 13 The petition was docketed as CA-G.R. SP No. 63389.

In its decision of 18 October 2001, the Court of Appeals reversed the SSC’s resolution, and decreed as follows:

WHEREFORE, the assailed decision of the Social Security Commission is hereby reversed and set aside. Petitioner’s plea for conversion of
his disability status from permanent partial to permanent total is granted. The SSS is hereby directed to pay him the necessary compensation
benefits in accordance with the proper computation.

The SSS seasonably filed a motion for reconsideration on the ground that the Court of Appeals should have considered an order issued by the SSC
dated 11 July 2001 which affirmed, but clarified, its 20 December 2000 Resolution under appeal. The SSS then referred to the findings and conclusions
of the SSC in said 11 July 2001 order, which emphasized that: (1) Rago failed to file a motion for reconsideration with the SSC, which is mandatory,
before filing a petition for review with the Court of Appeals; (2) the manual verification of the monthly contributions of Rago revealed that he had only
35 contributions and not 59; and (3) thus, whether or not the sickness or disability of Rago had showed signs of progression, a conversion of the same
from permanent partial disability to permanent total disability could not be granted. This is because Rago lacked the required number of contributions
mentioned in Section 13-A (a) of R.A. 1161, as amended, which reads:

SEC. 13-A. Permanent disability benefits. – (a) Upon the permanent total disability of a member who has paid at least thirty-six (36) monthly
contributions prior to the semester of disability, he shall be entitled to the monthly pension: Provided, That if he has not paid the required thirty-
six (36) monthly contributions, he shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly
contributions paid to the SSS or twelve (12) times the monthly pension, whichever is higher. A member who (1) has received a lump sum
benefit and (2) is re-employed or has resumed self-employment or has resumed self-employment not earlier than one (1) year from the date
of his disability shall again be subject to compulsory coverage and shall be considered a new member.

With that, the SSC ordered the SSS to re-compute the lump sum benefit due Rago and his EC benefit on the basis of the actual monthly
contributions remitted in his behalf and to collect all excess payments made to him. 14
In its resolution of 30 January 2002, the Court of Appeals denied the motion for reconsideration. It explained the denial in this wise:

At the outset, the Court strikes down the Commission’s July 11, 2001 clarificatory order as an exercise of grave abuse of authority amounting
to lack and/or excess of jurisdiction. The said Order was issued at a time when the Commission itself was knowledgeable of the petition for
review pending before this Court. …It must be pointed out that when petitioner timely filed his petition for review, [the] appeal from the
Commission’s resolution had thus become perfected, and it is this Court which therefore had jurisdiction over the matter, and sole authority to
make any affirmation or modification of the assailed resolution. Once appeal is perfected, the lower tribunal loses its jurisdiction over the case,
in favor of the appellate tribunal. The Court deems it the height of injustice for the Commission to add to and bolster its f inal ruling with additional
observations and justifications, not otherwise embodied in the original ruling, after the losing claimant had already perfected and was actively
pursuing his appeal. It behooves upon the Commission, therefore, to refrain from making any substantial addition, or modification of its assailed
ruling, such authority in law, now having been transferred to this Court. What prompted the Social Security Commission to issue its clarificatory
order is not made clear in its motion for reconsideration, nor in the clarificatory order itself. In any case, any modification of the tenor and
justification of the assailed resolution of the Commission by the same body effectively altered the tenor of the earlier ruling, amounting to a
violation of the petitioner’s right to due process and fair play, and, therefore, null and void.

Moreover, the specific arguments raised by the Commission are not convincing to encourage a reversal of our earlier decision.

To be sure, the alleged failure to file a motion for reconsideration of the Commission’s December 20, 2000 resolution is not a fatal mistake, it
appearing that the same was in clear violation of the petitioner’s rights and claims, as a member of the Social Security Syst em. It is the
established rule that the filing of a motion for reconsideration may be dispensed with when the assailed ruling is a patent nullity. Furthermore,
the fact that the petitioner as credited by SSS monthly contributions short to entitle him to be qualified for permanent tota l disability benefits
appear to be largely due to the SSS’ and its branches’ failure to accurately account the petitioner’s total payments, and not on the petitioner’s
or his employers’ failure to do so. The same July 11, 2001 Order shows that the SSS Cotabato City Branch and the SSS Davao Hub Branch
Office were unable to account for the complete contributions of the petitioner while he was employed by the San Miguel Corporation. 15

Thus, in their petition in the case at bar, the SSS and the SSC pray to set aside the Court of Appeals’ decision of 18 Octobe r 2001 and resolution of
30 January 2002 and to remand the case to the SSC for further proceedings. 16

In support of their prayer, the petitioners assert that the Court of Appeals erred in disregarding the established jurisprudence that the filing of a motion
for reconsideration is a prerequisite to the filing of a petition for review to enable the tribunal, board or office concerned to pass upon and correct its
mistakes without the intervention of the higher court. Failure to do so is a fatal procedural defect. 17

The petitioners likewise argue that they had not violated Rago’s rights; hence, his case does not fall within the purview of Arroyo v. House of
Representatives Electoral Tribunal18 where we held that a prior motion for reconsideration could be dispensed with if fundamental rights to due process
were violated.

Additionally, the petitioners contend that the SSC’s 11 July 2001 clarificatory order was issued to rectify its perceived error in the 20 January 2000
resolution relative to the number of Rago’s contributions which directly affected the computation of his disability benefits. Petitioners further maintain
that the Court of Appeals relied heavily on the x-ray reports which contained no statement that Rago could no longer work. However, a certain Alvin
C. Cabreros attested in an affidavit that Rago went out "disco[e]ing" after the accident, for which reason, Rago is not totally helpless as he portrayed
himself to be.
On 20 March 2003, we received a handwritten letter from Rago informing us that his lawyer had withdrawn from the case and of his difficulty in
securing a new counsel. After naming Attys. Pedro Rosito, Arturo Fernan or Fritz Quiñanola of the IBP Cebu City at Capitol Compound as his "informal
lawyers," he asked us to consider, in lieu of his Comment, an attached copy of the opposition to the motion for reconsideration he filed with the Court
of Appeals. In said pleading, Rago argued that the word "may" as used in the provision concerning the filing of a motion for reconsideration in the
SSC’s 1997 Revised Rules of Procedure is not mandatory but merely permissive. He also agreed with the conclusion of the Court of Appeals that a
very strict interpretation of procedural rules would defeat the constitutional mandate on social justice.

We gave due course to the petition and required the parties to submit their Memoranda, which they did.

We shall first dispose of the procedural issue of prematurity raised by petitioners which is Rago’s failure to file a motion for reconsideration. Section
5, Rule VI of the SSC’s 1997 Revised Rules of Procedure provides:

The party aggrieved by the order, resolution, award or decision of the Commission may file a motion for reconsideration thereof within fifteen
(15) days from receipt of the same. Only one motion for reconsideration shall be allowed any party.

The filing of the motion for reconsideration shall interrupt the running of the period to appeal, unless said motion is pro forma.

The ordinary acceptations of the terms "may" and "shall" may be resorted to as guides in ascertaining the mandatory or directory character of
statutory provisions. As regards adjective rules in general, the term "may" is construed as permissive and operating to confer discretion, while
the word "shall" is imperative and operating to impose a duty which may be enforced. 19 However, these are not absolute and inflexible criteria
in the vast areas of law and equity. Depending upon a consideration of the entire provision, its nature, its object and the c onsequences that
would follow from construing it one way or the other, the convertibility of said terms either as mandatory or permissive is a standard recourse
in statutory construction.20

Conformably therewith, we have consistently held that the term "may" is indicative of a mere possibility, an opportunity or a n option. The grantee of
that opportunity is vested with a right or faculty which he has the option to exercise. 21 If he chooses to exercise the right, he must comply with the
conditions attached thereto.22

Applying these guidelines, we can construe Section 5, Rule VI as granting Rago, or any member of the System aggrieved by the SSC’s resolution,
the option of filing a motion for reconsideration which he may or may not exercise. Should he choose to do so, he is allowed to file only one motion
for reconsideration within fifteen days from the promulgation of the questioned resolution.

This is as far as we go in construing the provision in isolation because a second procedural rule now comes into play: the requirements for appeals
filed against the rulings of quasi-judicial agencies in the exercise of its quasi-judicial functions.

Section 1 of Rule VII of the SSC rules provides:

[A]ny order, resolution, award or decision of the Commission, in the absence of an appeal therefrom as herein provides, shall become final
and executory fifteen (15) days after the date of notification to the parties, and judicial review thereof shall be permitted only after any party
claiming to be aggrieved thereby has exhausted his remedies before the Commission….

It now becomes apparent that the permissive nature of a motion for reconsideration with the SSC must be read in conjunction with the
requirements for judicial review, or the conditions sine qua non before a party can institute certain civil actions. A combined reading of Section
 5 of Rule VI, quoted earlier, and Section 1 of Rule VII of the SSC’s 1997 Revised Rules of Procedure reveals that the petitioners are correct
in asserting that a motion for reconsideration is mandatory in the sense that it is a precondition to the institution of an a ppeal or a petition for
review before the Court of Appeals. Stated differently, while Rago certainly had the option to file a motion for reconsideration before the SSC,
it was nevertheless mandatory that he do so if he wanted to subsequently avail of judicial remedies.

This rule is explicit in Rule 43 of the Rules of Court, which states:

Sec. 1. Scope – This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final
orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are
the…Social Security Commission….

Sec. 4. Period of appeal. – The appeal shall be taken within fifteen (15) days from notice of the award, judgment, final order or resolution, or
from the date of its last publication, if publication is required by law for its effectivity, or of the denial of petitioner’s motion for new trial or
reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be
allowed.

The policy of judicial bodies to give quasi-judicial agencies, such as the SSC, an opportunity to correct its mistakes by way of motions for
reconsideration or other statutory remedies before accepting appeals therefrom finds extensive doctrinal support in the well-entrenched principle of
exhaustion of administrative remedies.

The reason for the principle rests upon the presumption that the administrative body, if given the chance to correct its mist ake or error, may amend
its decision on a given matter and decide it properly. 23 The principle insures orderly procedure and withholds judicial interference until the administrative
process would have been allowed to duly run its course. This is but practical since availing of administrative remedies entails lesser expenses and
provides for a speedier disposition of controversies. 24 Even comity dictates that unless the available administrative remedies have been resorted to
and appropriate authorities given an opportunity to act and correct the errors committed in the administrative forum, judicial recourse must be held to
be inappropriate, impermissible,25 premature, and even unnecessary.26

However, we are not unmindful of the doctrine that the principle of exhaustion of administrative remedies is not an ironclad rule. It may be disregarded
(1) when there is a violation of due process, (2) when the issue involved is purely a legal question, (3) when the administrative action is patently illegal
amounting to lack or excess of jurisdiction, (4) when there is estoppel on the part of the administrative agency concerned, (5) when there is irreparable
injury, (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the
latter, (7) when to require exhaustion of administrative remedies would be unreasonable, (8) when it would amount to a nullif ication of a claim, (9)
when the subject matter is a private land in land case proceedings, (10) when the rule does not provide a plain, speedy and adequate remedy, (11)
when there are circumstances indicating the urgency of judicial intervention, 27 (12) when no administrative review is provided by law, (13) where the
rule of qualified political agency applies, and (14) when the issue of non-exhaustion of administrative remedies has been rendered moot. 28

Fortunately for Rago, his case falls within some of these exceptions as discussed below.

Petitioners’ attempts to distinguish Arroyo v. House of Representatives Electoral Tribunal29 from this case is misplaced. The ground relied upon by
the Court of Appeals for exempting this case from exhaustion of administrative remedies was not the denial of due process but of the patent nullity of
the SSC decision in question.
It is true that Rago disregarded procedural and curative rules in taking immediate recourse to the appellate court. The Court of Appeals similarly erred
in taking cognizance of Rago’s appeal. We likewise do not subscribe to issuing rulings or decisions that do not acknowledge or give reason for the
disregard of the procedural defect of the petition, especially when it was specifically raised as an issue in respondent’s answer.30

Nevertheless, to require Rago to comply with the principle of exhaustion of administrative remedies at this stage of the proceedings would be
unreasonable, unjust and inequitable. It would prolong needlessly and uselessly the resolution of his claim.

Petitioners SSS and SSC have consistently shown their obstinacy in their stand to deny Rago’s request to convert his permanent partial disability to
permanent total disability. The SSC’s reliance on the SSS recommendations, which did not consider other evidence of the illness’ progression and its
disregard of long-standing jurisprudence, made for the patent nullity of the SSC decision. The error was made more blatant when, in the SSC’s
clarificatory order, it classified the disability based on the amount of contributions Rago had paid. 31

To give the SSC another chance to rectify its error in accordance with the principle of exhaustion of administrative remedies would inevitably result in
the same inflexible stance in defense of its error. We say another chance because we can consider the SSC’s clarificatory order as in the nature of a
judgment on Rago’s motion for reconsideration as if he had filed one. Otherwise, to admit the misnamed order which was issued when the SSC no
longer had jurisdiction over the case, and which modified and altered the contents and tenor of its original resolution, would have amounted to a
violation of Rago’s right to due process. To this extent we give imprimatur to the assailed decision and resolution of the Court of Appeals, and uphold
its factual determination that Rago is entitled to the conversion of his permanent partial disability to permanent total disability. Thus:

There is merit in the petition. Evidently clear from the recitals of the assailed decision some indicia of petitioner’s state of permanent total
disability. To emphasize, he was granted sickness benefit for a maximum period of 120 days from December 1, 1993 to March 30, 1994. Then
he was awarded lump sum permanent partial disability benefits paid on June 15, 1994, which was then adjusted on October 18, 1 995 to
monthly pension benefit covering the period of 30 months from May 20, 1994 to October 1996. More, the permanent partial disability benefit
was extended for another eight (8) months from July 3, 1998 to February 1999, all in all covering a period of 38 months. If t emporary total
disability lasting continuously for more than 120 days is deemed total and permanent, it is not therefore amiss to consider the pa yment of
permanent partial disability benefits for 38 months as recognition of permanent total disability. Award of permanent partial disability benefits
for 19 months was considered by the Supreme Court as an acknowledgment that the awardee was suffering from permanent total di sability.
(Diopenes vs. GSIS (205 SCRA 331[1992]).

xxx

The test of whether or not an employee suffers from permanent total disability is a showing of the capacity of the employee to continue
performing his work notwithstanding the disability he incurred. (IJARES v. Court of Appeals, 313 SCRA 141 [1999]). The cited radiologic report
under date of February 26, 1999 is demonstrative of the fact that petitioner is still in a state which at the time of the taking deters him from
performing his job or any such related function. It is evident that the pain caused to petitioner by his injuries still persists even after more than
5 years when the accident occurred on December 1, 1993. The disability caused thereby which had earlier been diagnosed as permanent
partial had possibly became permanent total. (GSIS vs. CA 260 SCRA 133, [1996]). Also in the case of Tria vs. ECC, (supra) – a disability is
total and permanent if as a result of the injury, the employee is not able to perform any gainful occupation for a period exceeding 120 days.

Moreover, prior payment of compensation benefits for permanent partial disability may not foreclose his right to compensation benefits for
permanent total disability. Otherwise, the social justice policy underlying the enactment of labor laws would lose its meaning.
 Caution should be taken against a too strict interpretation of the rules lest the constitutional mandate of social justice policy calls for a liberal
and sympathetic approval of the pleas of disabled employees like herein petitioner. Compassion for him is not a dole out. It is a right. (GSIS
vs. Court of Appeals, 285 SCRA 430 [1998]).32

The Court of Appeals correctly observed that Rago’s injury made him unable to perform any gainful occupation for a continuous period exceeding
120 days. The SSS had granted Rago sickness benefit for 120 days and, thereafter, permanent partial disability for 38 months. Such grant is an
apparent recognition by the SSS that his injury is permanent and total as we have pronounced in several cases. 33 This is in conformity with Section 2
(b), Rule VII of the Amended Rules on Employees Compensation which defines a disability to be total and permanent if, as a result of the injury or
sickness, the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days, and Section 1, b (1) of Rule XI of
the same Amended Rules which provides that a temporary total disability lasting continuously for more than 120 days, shall be considered permanent.

In Vicente vs. Employees Compensation Commission, 34 we laid down the litmus test and distinction between Permanent Total Disability and
Permanent Partial Disability, to wit:

[W]hile ‘permanent total disability’ invariably results in an employee’s loss of work or inability to perform his usual work, ‘permanent partial
disability,’ on the other hand, occurs when an employee loses the use of any particular anatomical part of his body which disables him to
continue with his former work. Stated otherwise, the test of whether or not an employee suffers from ‘permanent total disability’ is a showing
of the capacity of the employee to continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or
sickness he sustained, the employee is unable to perform his customary job for more than 120 days and he does not come within the coverage
of Rule X of the Amended Rules on Employees Compensability (which, in a more detailed manner, describes what constitutes temporary total
disability), then the said employee undoubtedly suffers from ‘permanent total disability’ regardless of whether or not he los es the use of any
part of his body.

We further reiterate that disability should be understood less on its medical significance than on the loss of earning capacity. Permanent total disability
means disablement of an employee to earn wages in the same kind of work, or work of similar nature that he was trained for or accustomed to perform,
or any kind of work which a person of his mentality and attainment could do. It does not mean absolute helplessness. 35 Moreover, a person’s disability
may not manifest fully at one precise moment in time but rather over a period of time. It is possible that an injury which at first was considered to be
temporary may later on become permanent or one who suffers a partial disability becomes totally and permanently disabled from the same cause.36

With this, petitioners’ additional arguments that the x-ray reports lacked a physician’s finding that Rago could no longer work and that Mr. Cabrero’s
affidavit attested to the contrary lose persuasive worth. X-ray reports and its confirmation by a physician are simply appraised for their evidentiary
value and are not considered as indispensable prerequisites to compensation. 37 Even then, the three x-ray reports submitted by Rago clearly show
the degenerative condition of his injury, viz.

(a) Radiology report stated 1 December 1993 revealed "Mark compression fracture o L1 vertebra without signs of dislocation and bone
destruction and slight kyphosis at the level of L1 vertebra but the alignment of the spine is normal";

(b) Radiology report dated 4 may 1994 showed that "consistent with compression fracture with mild posterior dislocation of the L1"; and

(c) Radiology report dated 26 February 1999 showed anterior wedging or compression fracture of L1 with gibbus deformity and thoraco-lumber
junction and suggested lumbo-sacral AP for further study. [emphasis supplied]

Clearly, Rago is entitled to permanent total disability benefits.

One final note. Although the SSS and the SSC should be commended for their vigilance against unjustified claims that will deplete the funds intended
to be disbursed for the benefit only of deserving disabled employees, they should be cautioned against a very strict interpre tation of the rules lest it
results in the withholding of full assistance from those whose capabilities have been diminished, if not completely impaired, as a consequence of their
dedicated service. A humanitarian impulse, dictated by no less than the Constitution under its social justice policy, calls f or a liberal and sympathetic
approach to the legitimate appeals of disabled workers like Rago. Compassion for them is not a dole out but a right. 38

WHEREFORE, the decision of the Court of Appeals dated 18 October 2001 and its resolution of 30 January 2002 in CA-G.R. SP No. 63389 reversing
the Social Security Commission’s Resolution of 20 December 2000 in SSC Case No. 4-15009-2000 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 146710-15 March 2, 2001

JOSEPH E. ESTRADA, petitioner,

vs.
ANIANO DESIERTO, in his capacity as Ombudsman, RAMON GONZALES, VOLUNTEERS AGAINST CRIME AND CORRUPTION, GRAFT
FREE PHILIPPINES FOUNDATION, INC., LEONARD DE VERA, DENNIS FUNA, ROMEO CAPULONG and ERNESTO B. FRANCISCO,
JR., respondent.

----------------------------------------

G.R. No. 146738 March 2, 2001

JOSEPH E. ESTRADA, petitioner,

vs.
GLORIA MACAPAGAL-ARROYO, respondent.

PUNO, J.:

On the line in the cases at bar is the office of the President. Petitioner Joseph Ejercito Estrada alleges that he is the Pre sident on leave while
respondent Gloria Macapagal-Arroyo claims she is the President. The warring personalities are important enough but more transcendental are the
constitutional issues embedded on the parties' dispute. While the significant issues are many, the jugular issue involves the relationship between the
ruler and the ruled in a democracy, Philippine style.

First, we take a view of the panorama of events that precipitated the crisis in the office of the President.

In the May 11, 1998 elections, petitioner Joseph Ejercito Estrada was elected President while respondent Gloria Macapagal-Arroyo was elected Vice-
President. Some ten (10) million Filipinos voted for the petitioner believing he would rescue them from life's adversity. Both petitioner and the
respondent were to serve a six-year term commencing on June 30, 1998.

From the beginning of his term, however, petitioner was plagued by a plethora of problems that slowly but surely eroded his p opularity. His sharp
descent from power started on October 4, 2000. Ilocos Sur Governor, Luis "Chavit" Singson, a longtime friend of the petitioner, went on air and
accused the petitioner, his family and friends of receiving millions of pesos from jueteng lords.1

The exposẻ immediately ignited reactions of rage. The next day, October 5, 2000, Senator Teofisto Guingona, Jr., then the Senate Minority Leader,
took the floor and delivered a fiery privilege speech entitled "I Accuse." He accused the petitioner of receiving some P220 million in jueteng money
from Governor Singson from November 1998 to August 2000. He also charged that the petitioner took from Governor Singson P70 million on excise
tax on cigarettes intended for Ilocos Sur. The privilege speech was referred by then Senate President Franklin Drilon, to the Blue Ribbon Committee
(then headed by Senator Aquilino Pimentel) and the Committee on Justice (then headed by Senator Renato Cayetano) for joint investigation. 2

The House of Representatives did no less. The House Committee on Public Order and Security, then headed by Representative Roilo Golez, decided
to investigate the exposẻ of Governor Singson. On the other hand, Representatives Heherson Alvarez, Ernesto Herrera and Michael Defensor
spearheaded the move to impeach the petitioner.
Calls for the resignation of the petitioner filled the air. On October 11, Archbishop Jaime Cardinal Sin issued a pastoral statement in behalf of the
Presbyteral Council of the Archdiocese of Manila, asking petitioner to step down from the presidency as he had lost the moral authority to govern.3 Two
days later or on October 13, the Catholic Bishops Conference of the Philippines joined the cry for the resignation of the petitioner. 4 Four days later, or
on October 17, former President Corazon C. Aquino also demanded that the petitioner take the "supreme self -sacrifice" of resignation.5 Former
President Fidel Ramos also joined the chorus. Early on, or on October 12, respondent Arroyo resigned as Secretary of the Depa rtment of Social
Welfare and Services6 and later asked for petitioner's resignation. 7 However, petitioner strenuously held on to his office and refused to resign.

The heat was on. On November 1, four (4) senior economic advisers, members of the Council of Senior Economic Advisers, resigned. They were
Jaime Augusto Zobel de Ayala, former Prime Minister Cesar Virata, former Senator Vicente Paterno and Washington Sycip. 8 On November 2,
Secretary Mar Roxas II also resigned from the Department of Trade and Industry. 9 On November 3, Senate President Franklin Drilon, and House
Speaker Manuel Villar, together with some 47 representatives defected from the ruling coalition, Lapian ng Masang Pilipino. 10

The month of November ended with a big bang. In a tumultuous session on November 13, House Speaker Villar transmitted the Art icles of
Impeachment11 signed by 115 representatives, or more than 1/3 of all the members of the House of Representatives to the Senate. This caused
political convulsions in both houses of Congress. Senator Drilon was replaced by Senator Pimentel as Senate President. Speake r Villar was unseated
by Representative Fuentebella.12 On November 20, the Senate formally opened the impeachment trial of the petitioner. Twenty-one (21) senators
took their oath as judges with Supreme Court Chief Justice Hilario G. Davide, Jr., presiding. 13

The political temperature rose despite the cold December. On December 7, the impeachment trial started. 14 The battle royale was fought by some of
the marquee names in the legal profession. Standing as prosecutors were then House Minority Floor Leader Feliciano Belmonte and Representatives
Joker Arroyo, Wigberto Tañada, Sergio Apostol, Raul Gonzales, Oscar Moreno, Salacnib Baterina, Roan Libarios, Oscar Rodriguez, Clavel Martinez
and Antonio Nachura. They were assisted by a battery of private prosecutors led by now Secretary of Justice Hernando Perez and now Solicitor
General Simeon Marcelo. Serving as defense counsel were former Chief Justice Andres Narvasa, former Solicitor General and Sec retary of Justice
Estelito P. Mendoza, former City Fiscal of Manila Jose Flaminiano, former Deputy Speaker of the House Raul Daza, Atty. Siegfried Fortun and his
brother, Atty. Raymund Fortun. The day to day trial was covered by live TV and during its course enjoyed the highest viewing rating. Its high and low
points were the constant conversational piece of the chattering classes. The dramatic point of the December hearings was the testimony of Clarissa
Ocampo, senior vice president of Equitable-PCI Bank. She testified that she was one foot away from petitioner Estrada when he affixed the signature
"Jose Velarde" on documents involving a P500 million investment agreement with their bank on February 4, 2000. 15

After the testimony of Ocampo, the impeachment trial was adjourned in the spirit of Christmas. When it resumed on January 2, 2001, more bombshells
were exploded by the prosecution. On January 11, Atty. Edgardo Espiritu who served as petitioner's Secretary of Finance took the witness stand. He
alleged that the petitioner jointly owned BW Resources Corporation with Mr. Dante Tan who was facing charges of insider trading.16 Then came the
fateful day of January 16, when by a vote of 11-1017 the senator-judges ruled against the opening of the second envelope which allegedly contained
evidence showing that petitioner held P3.3 billion in a secret bank account under the name "Jose Velarde." The public and private prosecutors walked
out in protest of the ruling. In disgust, Senator Pimentel resigned as Senate President. 18 The ruling made at 10:00 p.m. was met by a spontaneous
outburst of anger that hit the streets of the metropolis. By midnight, thousands had assembled at the EDSA Shrine and speeches full of sulphur were
delivered against the petitioner and the eleven (11) senators.

On January 17, the public prosecutors submitted a letter to Speaker Fuentebella tendering their collective resignation. They also filed their
Manifestation of Withdrawal of Appearance with the impeachment tribunal. 19Senator Raul Roco quickly moved for the indefinite postponement of the
impeachment proceedings until the House of Representatives shall have resolved the issue of resignation of the public prosecutors. Chief Justice
Davide granted the motion.20
January 18 saw the high velocity intensification of the call for petitioner's resignation. A 10-kilometer line of people holding lighted candles formed a
human chain from the Ninoy Aquino Monument on Ayala Avenue in Makati City to the EDSA Shrine to symbolize the people's solidarity in demanding
petitioner's resignation. Students and teachers walked out of their classes in Metro Manila to show their concordance. Speakers in the continuing
rallies at the EDSA Shrine, all masters of the physics of persuasion, attracted more and more people. 21

On January 19, the fall from power of the petitioner appeared inevitable. At 1:20 p.m., the petitioner informed Executive Secretary Edgardo Angara
that General Angelo Reyes, Chief of Staff of the Armed Forces of the Philippines, had defected. At 2:30 p.m., petitioner agreed to the holding of a
snap election for President where he would not be a candidate. It did not diffuse the growing crisis. At 3:00 p.m., Secretary of National Defense
Orlando Mercado and General Reyes, together with the chiefs of all the armed services went to the EDSA Shrine. 22 In the presence of former
Presidents Aquino and Ramos and hundreds of thousands of cheering demonstrators, General Reyes declared that "on behalf of Your Armed Forces,
the 130,000 strong members of the Armed Forces, we wish to announce that we are withdrawing our support to this government." 23 A little later, PNP
Chief, Director General Panfilo Lacson and the major service commanders gave a similar stunning announcement. 24 Some Cabinet secretaries,
undersecretaries, assistant secretaries, and bureau chiefs quickly resigned from their posts. 25 Rallies for the resignation of the petitioner exploded in
various parts of the country. To stem the tide of rage, petitioner announced he was ordering his lawyers to agree to the open ing of the highly
controversial second envelope.26There was no turning back the tide. The tide had become a tsunami.

January 20 turned to be the day of surrender. At 12:20 a.m., the first round of negotiations for the peaceful and orderly transfer of power started at
Malacañang'' Mabini Hall, Office of the Executive Secretary. Secretary Edgardo Angara, Senior Deputy Executive Secretary Ramon Bagatsing,
Political Adviser Angelito Banayo, Asst. Secretary Boying Remulla, and Atty. Macel Fernandez, head of the Presidential Manage ment Staff, negotiated
for the petitioner. Respondent Arroyo was represented by now Executive Secretary Renato de Villa, now Secretary of Finance Alberto Romulo and
now Secretary of Justice Hernando Perez. 27 Outside the palace, there was a brief encounter at Mendiola between pro and anti-Estrada protesters
which resulted in stone-throwing and caused minor injuries. The negotiations consumed all morning until the news broke out that Chief Justice Davide
would administer the oath to respondent Arroyo at high noon at the EDSA Shrine.

At about 12:00 noon, Chief Justice Davide administered the oath to respondent Arroyo as President of the Philippines. 28 At 2:30 p.m., petitioner and
his family hurriedly left Malacañang Palace.29 He issued the following press statement: 30

"20 January 2001

STATEMENT FROM

PRESIDENT JOSEPH EJERCITO ESTRADA

At twelve o'clock noon today, Vice President Gloria Macapagal-Arroyo took her oath as President of the Republic of the Philippines. While
along with many other legal minds of our country, I have strong and serious doubts about the legality and constitutionality of her proclamation
as President, I do not wish to be a factor that will prevent the restoration of unity and order in our civil society.

It is for this reason that I now leave Malacañang Palace, the seat of the presidency of this country, for the sake of peace and in order to begin
the healing process of our nation. I leave the Palace of our people with gratitude for the opportunities given to me for serv ice to our people. I
will not shirk from any future challenges that may come ahead in the same service of our country.

I call on all my supporters and followers to join me in to promotion of a constructive national spirit of reconciliation and solidarity.
 May the Almighty bless our country and beloved people.

MABUHAY!

(Sgd.) JOSEPH EJERCITO ESTRADA"

It also appears that on the same day, January 20, 2001, he signed the following letter: 31

"Sir:

By virtue of the provisions of Section 11, Article VII of the Constitution, I am hereby transmitting this declaration that I am unable to exercise
the powers and duties of my office. By operation of law and the Constitution, the Vice-President shall be the Acting President.

(Sgd.) JOSEPH EJERCITO ESTRADA"

A copy of the letter was sent to former Speaker Fuentebella at 8:30 a.m. on January 20. 23 Another copy was transmitted to Senate President Pimentel
on the same day although it was received only at 9:00 p.m. 33

On January 22, the Monday after taking her oath, respondent Arroyo immediately discharged the powers the duties of the Presid ency. On the same
day, this Court issued the following Resolution in Administrative Matter No. 01-1-05-SC, to wit:

"A.M. No. 01-1-05-SC — In re: Request of Vice President Gloria Macapagal-Arroyo to Take her Oath of Office as President of the Republic of
the Philippines before the Chief Justice — Acting on the urgent request of Vice President Gloria Macapagal-Arroyo to be sworn in as President
of the Republic of the Philippines, addressed to the Chief Justice and confirmed by a letter to the Court, dated January 20, 2001, which request
was treated as an administrative matter, the court Resolve unanimously to confirm the authority given by the twelve (12) members of the Court
then present to the Chief Justice on January 20, 2001 to administer the oath of office of Vice President Gloria Macapagal-Arroyo as President
of the Philippines, at noon of January 20, 2001.1âwphi1.nêt

This resolution is without prejudice to the disposition of any justiciable case that may be filed by a proper party."

Respondent Arroyo appointed members of her Cabinet as well as ambassadors and special envoys. 34 Recognition of respondent Arroyo's government
by foreign governments swiftly followed. On January 23, in a reception or vin d' honneur at Malacañang, led by the Dean of the Diplomatic Corps,
Papal Nuncio Antonio Franco, more than a hundred foreign diplomats recognized the government of respondent Arroyo. 35 US President George W.
Bush gave the respondent a telephone call from the White House conveying US recognition of her government. 36

On January 24, Representative Feliciano Belmonte was elected new Speaker of the House of Representatives. 37The House then passed Resolution
No. 175 "expressing the full support of the House of Representatives to the administration of Her Excellency, Gloria Macapaga l-Arroyo, President of
the Philippines."38 It also approved Resolution No. 176 "expressing the support of the House of Representatives to the assumption into office by Vice
President Gloria Macapagal-Arroyo as President of the Republic of the Philippines, extending its congratulations and expressing its support for her
administration as a partner in the attainment of the nation's goals under the Constitution." 39

On January 26, the respondent signed into law the Solid Waste Management Act. 40 A few days later, she also signed into law the Political Advertising
ban and Fair Election Practices Act.41
On February 6, respondent Arroyo nominated Senator Teofisto Guingona, Jr., as her Vice President. 42 The next day, February 7, the Senate adopted
Resolution No. 82 confirming the nomination of Senator Guingona, Jr. 43Senators Miriam Defensor-Santiago, Juan Ponce Enrile, and John Osmena
voted "yes" with reservations, citing as reason therefor the pending challenge on the legitimacy of respondent Arroyo's presidency before the Supreme
Court. Senators Teresa Aquino-Oreta and Robert Barbers were absent. 44 The House of Representatives also approved Senator Guingona's
nomination in Resolution No. 178. 45 Senator Guingona, Jr. took his oath as Vice President two (2) days later. 46

On February 7, the Senate passed Resolution No. 83 declaring that the impeachment court is functus officio and has been terminated.47 Senator
Miriam Defensor-Santiago stated "for the record" that she voted against the closure of the impeachment court on the grounds that the Senate had
failed to decide on the impeachment case and that the resolution left open the question of whether Estrada was still qualified to run for another elective
post.48

Meanwhile, in a survey conducted by Pulse Asia, President Arroyo's public acceptance rating jacked up from 16% on January 20, 2001 to 38% on
January 26, 2001.49 In another survey conducted by the ABS-CBN/SWS from February 2-7, 2001, results showed that 61% of the Filipinos nationwide
accepted President Arroyo as replacement of petitioner Estrada. The survey also revealed that President Arroyo is accepted by 60% in Metro Manila,
by also 60% in the balance of Luzon, by 71% in the Visayas, and 55% in Mindanao. Her trust rating increased to 52%. Her presidency is accepted by
majorities in all social classes: 58% in the ABC or middle-to-upper classes, 64% in the D or mass class, and 54% among the E's or very poor class. 50

After his fall from the pedestal of power, the petitioner's legal problems appeared in clusters. Several cases previously filed against him in the Office
of the Ombudsman were set in motion. These are: (1) OMB Case No. 0-00-1629, filed by Ramon A. Gonzales on October 23, 2000 for bribery and
graft and corruption; (2) OMB Case No. 0-00-1754 filed by the Volunteers Against Crime and Corruption on November 17, 2000 for plunder, forfeiture,
graft and corruption, bribery, perjury, serious misconduct, violation of the Code of Conduct for Government Employees, etc; (3) OMB Case No. 0-00-
1755 filed by the Graft Free Philippines Foundation, Inc. on November 24, 2000 for plunder, forfeiture, graft and corruption, bribery, perjury, serious
misconduct; (4) OMB Case No. 0-00-1756 filed by Romeo Capulong, et al., on November 28, 2000 for malversation of public funds, illegal use of
public funds and property, plunder, etc.; (5) OMB Case No. 0-00-1757 filed by Leonard de Vera, et al., on November 28, 2000 for bribery, plunder,
indirect bribery, violation of PD 1602, PD 1829, PD 46, and RA 7080; and (6) OMB Case No. 0-00-1758 filed by Ernesto B. Francisco, Jr. on December
4, 2000 for plunder, graft and corruption.

A special panel of investigators was forthwith created by the respondent Ombudsman to investigate the charges against the pet itioner. It is chaired
by Overall Deputy Ombudsman Margarito P. Gervasio with the following as members, viz: Director Andrew Amuyutan, Prosecutor Pelayo Apostol,
Atty. Jose de Jesus and Atty. Emmanuel Laureso. On January 22, the panel issued an Order directing the petitioner to file his counter-affidavit and
the affidavits of his witnesses as well as other supporting documents in answer to the aforementioned complaints against him.

Thus, the stage for the cases at bar was set. On February 5, petitioner filed with this Court GR No. 146710-15, a petition for prohibition with a prayer
for a writ of preliminary injunction. It sought to enjoin the respondent Ombudsman from "conducting any further proceedings in Case Nos. OMB 0-00-
1629, 1754, 1755, 1756, 1757 and 1758 or in any other criminal complaint that may be filed in his office, until after the term of petitioner as President
is over and only if legally warranted." Thru another counsel, petitioner, on February 6, filed GR No. 146738 for Quo Warranto. He prayed for judgment
"confirming petitioner to be the lawful and incumbent President of the Republic of the Philippines temporarily unable to discharge the duties of his
office, and declaring respondent to have taken her oath as and to be holding the Office of the President, only in an acting capacity pursuant to the
provisions of the Constitution." Acting on GR Nos. 146710-15, the Court, on the same day, February 6, required the respondents "to comment thereon
within a non-extendible period expiring on 12 February 2001." On February 13, the Court ordered the consolidation of GR Nos. 146710-15 and GR
No. 146738 and the filing of the respondents' comments "on or before 8:00 a.m. of February 15."
On February 15, the consolidated cases were orally argued in a four-hour hearing. Before the hearing, Chief Justice Davide, Jr.51 and Associate
Justice Artemio Panganiban52 recused themselves on motion of petitioner's counsel, former Senator Rene A. Saguisag. They debunked the charge
of counsel Saguisag that they have "compromised themselves by indicating that they have thrown their weight on one side" but nonetheless inhibited
themselves. Thereafter, the parties were given the short period of five (5) days to file their memoranda and two (2) days to submit their simultaneous
replies.

In a resolution dated February 20, acting on the urgent motion for copies of resolution and press statement for "Gag Order" on respondent Ombudsman
filed by counsel for petitioner in G.R. No. 146738, the Court resolved:

"(1) to inform the parties that the Court did not issue a resolution on January 20, 2001 declaring the office of the President vacant and that
neither did the Chief Justice issue a press statement justifying the alleged resolution;

(2) to order the parties and especially their counsel who are officers of the Court under pain of being cited for contempt to refrain from making
any comment or discussing in public the merits of the cases at bar while they are still pending decision by the Court, and

(3) to issue a 30-day status quo order effective immediately enjoining the respondent Ombudsman from resolving or deciding the criminal
cases pending investigation in his office against petitioner, Joseph E. Estrada and subject of the cases at bar, it appearing from news reports
that the respondent Ombudsman may immediately resolve the cases against petitioner Joseph E. Estrada seven (7) days after the hearing
held on February 15, 2001, which action will make the cases at bar moot and academic." 53

The parties filed their replies on February 24. On this date, the cases at bar were deemed submitted for decision.

The bedrock issues for resolution of this Court are:

Whether the petitions present a justiciable controversy.

II

Assuming that the petitions present a justiciable controversy, whether petitioner Estrada is a President on leave while respondent Arroyo is an
Acting President.

III

Whether conviction in the impeachment proceedings is a condition precedent for the criminal prosecution of petitioner Estrada. In the negative
and on the assumption that petitioner is still President, whether he is immune from criminal prosecution.

IV

Whether the prosecution of petitioner Estrada should be enjoined on the ground of prejudicial publicity.

We shall discuss the issues in seriatim.

I

Whether or not the cases

At bar involve a political question

Private respondents54 raise the threshold issue that the cases at bar pose a political question, and hence, are beyond the jurisdiction of this Cou rt to
decide. They contend that shorn of its embroideries, the cases at bar assail the "legitimacy of the Arroyo administration." They stress that respondent
Arroyo ascended the presidency through people power; that she has already taken her oath as the 14 th President of the Republic; that she has
exercised the powers of the presidency and that she has been recognized by foreign governments. They submit that these realities on ground
constitute the political thicket, which the Court cannot enter.

We reject private respondents' submission. To be sure, courts here and abroad, have tried to lift the shroud on political question but its exact latitude
still splits the best of legal minds. Developed by the courts in the 20th century, the political question doctrine which rests on the principle of separation
of powers and on prudential considerations, continue to be refined in the mills of constitutional law. 55 In the United States, the most authoritative
guidelines to determine whether a question is political were spelled out by Mr. Justice Brennan in the 1962 case or Baker v. Carr,56 viz:

"x x x Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of
the issue to a coordinate political department or a lack of judicially discoverable and manageable standards for resolving it, or the impossibility
of deciding without an initial policy determination of a kind clearly for non-judicial discretion; or the impossibility of a court's undertaking
independent resolution without expressing lack of the respect due coordinate branches of government; or an unusual need for unquestioning
adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments
on question. Unless one of these formulations is inextricable from the case at bar, there should be no dismissal for non justiciability on the
ground of a political question's presence. The doctrine of which we treat is one of 'political questions', not of 'political cases'."

In the Philippine setting, this Court has been continuously confronted with cases calling for a firmer delineation of the inner and outer perimeters of a
political question.57 Our leading case is Tanada v. Cuenco,58 where this Court, through former Chief Justice Roberto Concepcion, held that political
questions refer "to those questions which, under the Constitution, are to be decided by the people in their sovereign capacity, or in regard to which full
discretionary authority has been delegated to the legislative or executive branch of the government. It is concerned with issues dependent upon
the wisdom, not legality of a particular measure." To a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine
when it expanded the power of judicial review of this court not only to settle actual controversies involving rights which are legally demandable and
enforceable but also to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of government.59 Heretofore, the judiciary has focused on the "thou shalt not's" of the Constitution
directed against the exercise of its jurisdiction. 60With the new provision, however, courts are given a greater prerogative to determine what it can do
to prevent grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government. Clearly,
the new provision did not just grant the Court power of doing nothing. In sync and symmetry with this intent are other provisions of the 1987
Constitution trimming the so called political thicket. Prominent of these provisions is section 18 of Article VII which empowers this Court in limpid
language to "x x x review, in an appropriate proceeding filed by any citizen, the sufficiency of the factual basis of the proclamation of martial law or
the suspension of the privilege of the writ (of habeas corpus) or the extension thereof x x x."

Respondents rely on the case of Lawyers League for a Better Philippines and/or Oliver A. Lozano v. President Corazon C. Aquino, et al. 61 and
related cases62 to support their thesis that since the cases at bar involve the legitimacy of the government of respondent Arroyo, ergo, they
present a political question. A more cerebral reading of the cited cases will show that they are inapplicable. In the cited cases, we held that the
government of former President Aquino was the result of a successful revolution by the sovereign people, albeit a peaceful one. No less than
the Freedom Constitution63 declared that the Aquino government was installed through a direct exercise of the power of the Filipino people "in
defiance of the provisions of the 1973 Constitution, as amended." In is familiar learning that the legitimacy of a government sired by a successful
revolution by people power is beyond judicial scrutiny for that government automatically orbits out of the constitutional loop. In checkered contrast, the
government of respondent Arroyo is not revolutionary in character. The oath that she took at the EDSA Shrine is the oath under the 1987
Constitution.64 In her oath, she categorically swore to preserve and defend the 1987 Constitution. Indeed, she has stressed that she is
discharging the powers of the presidency under the authority of the 1987 Constitution.

In fine, the legal distinction between EDSA People Power I EDSA People Power II is clear. EDSA I involves the exercise of the people power of
revolution which overthrew the whole government. EDSA II is an exercise of people power of freedom of speech and freedom of assembly
to petition the government for redress of grievances which only affected the office of the President. EDSA I is extra constitutional and the
legitimacy of the new government that resulted from it cannot be the subject of judicial review, but EDSA II is intra constitutional and the resignation
of the sitting President that it caused and the succession of the Vice President as President are subject to judicial review. EDSA I presented a
political question; EDSA II involves legal questions. A brief discourse on freedom of speech and of the freedom of assembly to petition the
government for redress of grievance which are the cutting edge of EDSA People Power II is not inappropriate.

Freedom of speech and the right of assembly are treasured by Filipinos. Denial of these rights was one of the reasons of our 1898 revolution against
Spain. Our national hero, Jose P. Rizal, raised the clarion call for the recognition of freedom of the press of the Filipinos and included it as among
"the reforms sine quibus non."65 The Malolos Constitution, which is the work of the revolutionary Congress in 1898, provided in its Bill of Rights that
Filipinos shall not be deprived (1) of the right to freely express his ideas or opinions, orally or in writing, through the use of the press or other similar
means; (2) of the right of association for purposes of human life and which are not contrary to public means; and (3) of the right to send petitions to
the authorities, individually or collectively." These fundamental rights were preserved when the United States acquired jurisdiction over the
Philippines. In the Instruction to the Second Philippine Commission of April 7, 1900 issued by President McKinley, it is specifically provided "that no
law shall be passed abridging the freedom of speech or of the press or of the rights of the people to peaceably assemble and petition the Government
for redress of grievances." The guaranty was carried over in the Philippine Bill, the Act of Congress of July 1, 1902 and the Jones Law, the Act of
Congress of August 29, 1966.66

Thence on, the guaranty was set in stone in our 1935 Constitution,67 and the 197368 Constitution. These rights are now safely ensconced in section
4, Article III of the 1987 Constitution, viz:

"Sec. 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances."

The indispensability of the people's freedom of speech and of assembly to democracy is now self-evident. The reasons are well put by Emerson: first,
freedom of expression is essential as a means of assuring individual fulfillment; second, it is an essential process for advancing knowledge and
discovering truth; third, it is essential to provide for participation in decision-making by all members of society; and fourth, it is a method of achieving
a more adaptable and hence, a more stable community of maintaining the precarious balance between healthy cleavage and necessary
consensus."69 In this sense, freedom of speech and of assembly provides a framework in which the "conflict necessary to the progress of
a society can take place without destroying the society." 70In Hague v. Committee for Industrial Organization,71 this function of free speech
and assembly was echoed in the amicus curiae filed by the Bill of Rights Committee of the American Bar Association which emphasized that "the
basis of the right of assembly is the substitution of the expression of opinion and belief by talk rather than force; and this means talk for all and by
all."72 In the relatively recent case of Subayco v. Sandiganbayan,73 this Court similar stressed that "… it should be clear even to those with intellectual
deficits that when the sovereign people assemble to petition for redress of grievances, all should listen. For in a democracy, it is the people who
count; those who are deaf to their grievances are ciphers."

Needless to state, the cases at bar pose legal and not political questions. The principal issues for resolution require the proper interpretation of certain
provisions in the 1987 Constitution, notably section 1 of Article II, 74 and section 875 of Article VII, and the allocation of governmental powers under
section 1176 of Article VII. The issues likewise call for a ruling on the scope of presidential immunity from suit. They also involve the correct calibration
of the right of petitioner against prejudicial publicity. As early as the 1803 case of Marbury v. Madison,77 the doctrine has been laid down that "it is
emphatically the province and duty of the judicial department to say what the law is . . ." Thus, respondent's in vocation of the doctrine of
political question is but a foray in the dark.

II

Whether or not the petitioner

Resigned as President

We now slide to the second issue. None of the parties considered this issue as posing a political question. Indeed, it involves a legal question whose
factual ingredient is determinable from the records of the case and by resort to judicial notice. Petitioner denies he resigned as President or that he
suffers from a permanent disability. Hence, he submits that the office of the President was not vacant when respondent Arroyo took her oath as
President.

The issue brings under the microscope the meaning of section 8, Article VII of the Constitution which provides:

"Sec. 8. In case of death, permanent disability, removal from office or resignation of the President, the Vice President shall become the
President to serve the unexpired term. In case of death, permanent disability, removal from office, or resignation of both the President and
Vice President, the President of the Senate or, in case of his inability, the Speaker of the House of Representatives, shall then act as President
until the President or Vice President shall have been elected and qualified.

x x x."

The issue then is whether the petitioner resigned as President or should be considered resigned as of January 20, 2001 when r espondent took her
oath as the 14th President of the Public. Resignation is not a high level legal abstraction. It is a factual question and its elements are beyond
quibble: there must be an intent to resign and the intent must be coupled by acts of relinquishment. 78 The validity of a resignation is not
government by any formal requirement as to form. It can be oral. It can be written. It can be express. It can be implied. As long as the resignation is
clear, it must be given legal effect.

In the cases at bar, the facts show that petitioner did not write any formal letter of resignation before he evacuated Malacañang Palace in the afternoon
of January 20, 2001 after the oath-taking of respondent Arroyo. Consequently, whether or not petitioner resigned has to be determined from his act
and omissions before, during and after January 20, 2001 or by the totality of prior, contemporaneous and posterior facts and circumstantial
evidence bearing a material relevance on the issue.

Using this totality test, we hold that petitioner resigned as President.

To appreciate the public pressure that led to the resignation of the petitioner, it is important to follow the succession of events after the exposẻ of
Governor Singson. The Senate Blue Ribbon Committee investigated. The more detailed revelations of petitioner's alleged misgovernance in the Blue
Ribbon investigation spiked the hate against him. The Articles of Impeachment filed in the House of Representatives which initially was given a near
cipher chance of succeeding snowballed. In express speed, it gained the signatures of 115 representatives or more than 1/3 of the House of
Representatives. Soon, petitioner's powerful political allies began deserting him. Respondent Arroyo quit as Secretary of Soc ial Welfare. Senate
President Drilon and former Speaker Villar defected with 47 representatives in tow. Then, his respected senior economic advisers resigned together
with his Secretary of Trade and Industry.

As the political isolation of the petitioner worsened, the people's call for his resignation intensified. The call reached a new crescendo when the eleven
(11) members of the impeachment tribunal refused to open the second envelope. It sent the people to paroxysms of outrage. Before the night of
January 16 was over, the EDSA Shrine was swarming with people crying for redress of their grievance. Their number grew exponentially. Rallies and
demonstration quickly spread to the countryside like a brush fire.

As events approached January 20, we can have an authoritative window on the state of mind of the petitioner. The window is provided in the "Final
Days of Joseph Ejercito Estrada," the diary of Executive Secretary Angara serialized in the Philippine Daily Inquirer.79 The Angara Diary reveals
that in the morning of January 19, petitioner's loyal advisers were worried about the swelling of the crowd at EDSA, hence, they decided to create an
ad hoc committee to handle it. Their worry would worsen. At 1:20 p.m., petitioner pulled Secretary Angara into his small office at the presidential
residence and exclaimed: "Ed, seryoso na ito. Kumalas na si Angelo (Reyes) (Ed, this is serious. Angelo has defected.)" 80 An hour later or at 2:30
p.m., the petitioner decided to call for a snap presidential election and stressed he would not be a candidate. The proposal for a snap election
for president in May where he would not be a candidate is an indicium that petitioner had intended to give up the presidency even at that
time. At 3:00 p.m., General Reyes joined the sea of EDSA demonstrators demanding the resignation of the petitioner and dramatically announced
the AFP's withdrawal of support from the petitioner and their pledge of support to respondent Arroyo. The seismic shift of support left petitioner weak
as a president. According to Secretary Angara, he asked Senator Pimentel to advise petitioner to consider the option of "dignified exit or
resignation."81 Petitioner did not disagree but listened intently. 82 The sky was falling fast on the petitioner. At 9:30 p.m., Senator Pimentel
repeated to the petitioner the urgency of making a graceful and dignified exit. He gave the proposal a sweetener by saying that petitioner would be
allowed to go abroad with enough funds to support him and his family. 83 Significantly, the petitioner expressed no objection to the suggestion
for a graceful and dignified exit but said he would never leave the country. 84 At 10:00 p.m., petitioner revealed to Secretary Angara, "Ed, Angie
(Reyes) guaranteed that I would have five days to a week in the palace." 85 This is proof that petitioner had reconciled himself to the reality that
he had to resign. His mind was already concerned with the five-day grace period he could stay in the palace. It was a matter of time.

The pressure continued piling up. By 11:00 p.m., former President Ramos called up Secretary Angara and requested, "Ed, magtulungan tayo para
magkaroon tayo ng (let's cooperate to ensure a) peaceful and orderly transfer of power."86 There was no defiance to the request. Secretary Angara
readily agreed. Again, we note that at this stage, the problem was already about a peaceful and orderly transfer of power. The resignation of
the petitioner was implied.

The first negotiation for a peaceful and orderly transfer of power immediately started at 12:20 a.m. of January 20, that fateful Saturday.
The negotiation was limited to three (3) points: (1) the transition period of five days after the petitioner's resignation; (2) the guarantee of the safety
of the petitioner and his family, and (3) the agreement to open the second envelope to vindicate the name of the petitioner.87 Again, we note that the
resignation of petitioner was not a disputed point. The petitioner cannot feign ignorance of this fact. According to Secretary Angara, at 2:30
a.m., he briefed the petitioner on the three points and the following entry in the Angara Diary shows the reaction of the petitioner, viz:

"x x x
 I explain what happened during the first round of negotiations. The President immediately stresses that he just wants the five-day period
promised by Reyes, as well as to open the second envelope to clear his name.

If the envelope is opened, on Monday, he says, he will leave by Monday.

The President says. "Pagod na pagod na ako. Ayoko na masyado nang masakit. Pagod na ako sa red tape, bureaucracy, intriga. (I am
very tired. I don't want any more of this – it's too painful. I'm tired of the red tape, the bureaucracy, the intrigue.)

I just want to clear my name, then I will go."88

Again, this is high grade evidence that the petitioner has resigned. The intent to resign is clear when he said "x x x Ayoko na masyado nang
masakit." "Ayoko na" are words of resignation.

The second round of negotiation resumed at 7:30 a.m. According to the Angara Diary, the following happened:

"Opposition's deal

7:30 a.m. – Rene arrives with Bert Romulo and (Ms. Macapagal's spokesperson) Rene Corona. For this round, I am accompanied by Dondon
Bagatsing and Macel.

Rene pulls out a document titled "Negotiating Points." It reads:

'1. The President shall sign a resignation document within the day, 20 January 2001, that will be effective on Wednesday, 24 January 2001,
on which day the Vice President will assume the Presidency of the Republic of the Philippines.

2. Beginning to day, 20 January 2001, the transition process for the assumption of the new administration shall commence, and persons
designated by the Vice President to various positions and offices of the government shall start their orientation activities in coordination with
the incumbent officials concerned.

3. The Armed Forces of the Philippines and the Philippine National Police shall function under the Vice President as national military and
police authority effective immediately.

4. The Armed Forced of the Philippines, through its Chief of Staff, shall guarantee the security of the President and his family as approved by
the national military and police authority (Vice President).

5. It is to be noted that the Senate will open the second envelope in connection with the alleged savings account of the Pres ident in the
Equitable PCI Bank in accordance with the rules of the Senate, pursuant to the request to the Senate President.

Our deal

We bring out, too, our discussion draft which reads:

The undersigned parties, for and in behalf of their respective principals, agree and undertake as follows:
 '1. A transition will occur and take place on Wednesday, 24 January 2001, at which time President Joseph Ejercito Estrada will turn over the
presidency to Vice President Gloria Macapagal-Arroyo.

'2. In return, President Estrada and his families are guaranteed security and safety of their person and property throughout their natural
lifetimes. Likewise, President Estrada and his families are guarantee freedom from persecution or retaliation from government and the private
sector throughout their natural lifetimes.

This commitment shall be guaranteed by the Armed Forces of the Philippines (AFP) through the Chief of Staff, as approved by the nationa l
military and police authorities – Vice President (Macapagal).

'3. Both parties shall endeavor to ensure that the Senate sitting as an impeachment court will authorize the opening of the second envelope
in the impeachment trial as proof that the subject savings account does not belong to President Estrada.

'4. During the five-day transition period between 20 January 2001 and 24 January 2001 (the 'Transition Period"), the incoming Cabinet
members shall receive an appropriate briefing from the outgoing Cabinet officials as part of the orientation program.

During the Transition Period, the AFP and the Philippine National Police (PNP) shall function Vice President (Macapagal) as national military
and police authorities.

Both parties hereto agree that the AFP chief of staff and PNP director general shall obtain all the necessary signatures as affixed to this
agreement and insure faithful implementation and observance thereof.

Vice President Gloria Macapagal-Arroyo shall issue a public statement in the form and tenor provided for in "Annex A" heretofore attached to
this agreement."89

The second round of negotiation cements the reading that the petitioner has resigned. It will be noted that during this second round of negotiation,
the resignation of the petitioner was again treated as a given fact. The only unsettled points at that time were the measures to be undertaken by the
parties during and after the transition period.

According to Secretary Angara, the draft agreement, which was premised on the resignation of the petitioner was further refin ed. It was then, signed
by their side and he was ready to fax it to General Reyes and Senator Pimentel to await the signature of the United Opposition. However, the signing
by the party of the respondent Arroyo was aborted by her oath-taking. The Angara diary narrates the fateful events, viz;90

"xxx

11:00 a.m. – Between General Reyes and myself, there is a firm agreement on the five points to effect a peaceful transition. I can hear the
general clearing all these points with a group he is with. I hear voices in the background.

Agreement.

The agreement starts: 1. The President shall resign today, 20 January 2001, which resignation shall be effective on 24 January 2001, on which
day the Vice President will assume the presidency of the Republic of the Philippines.
xxx

The rest of the agreement follows:

2. The transition process for the assumption of the new administration shall commence on 20 January 2001, wherein persons designated by
the Vice President to various government positions shall start orientation activities with incumbent officials.

'3. The Armed Forces of the Philippines through its Chief of Staff, shall guarantee the safety and security of the President and his families
throughout their natural lifetimes as approved by the national military and police authority – Vice President.

'4. The AFP and the Philippine National Police (PNP) shall function under the Vice President as national military and police authorities.

'5. Both parties request the impeachment court to open the second envelope in the impeachment trial, the contents of which shall be offered
as proof that the subject savings account does not belong to the President.

The Vice President shall issue a public statement in the form and tenor provided for in Annex "B" heretofore attached to this agreement.

11:20 a.m. – I am all set to fax General Reyes and Nene Pimentel our agreement, signed by our side and awaiting the signature of the United
opposition.

And then it happens. General Reyes calls me to say that the Supreme Court has decided that Gloria Macapagal-Arroyo is President and will
be sworn in at 12 noon.

'Bakit hindi naman kayo nakahintay? Paano na ang agreement (why couldn't you wait? What about the agreement)?' I asked.

Reyes answered: 'Wala na, sir (it's over, sir).'

I ask him: Di yung transition period, moot and academic na?'

And General Reyes answers: ' Oo nga, I delete na natin, sir (yes, we're deleting the part).'

Contrary to subsequent reports, I do not react and say that there was a double cross.

But I immediately instruct Macel to delete the first provision on resignation since this matter is already moot and academic. Within moments,
Macel erases the first provision and faxes the documents, which have been signed by myself, Dondon and Macel, to Nene Pimente l and
General Reyes.

I direct Demaree Ravel to rush the original document to General Reyes for the signatures of the other side, as it is important that the provisions
on security, at least, should be respected.

I then advise the President that the Supreme Court has ruled that Chief Justice Davide will administer the oath to Gloria at 12 noon.

The President is too stunned for words:

 Final meal

12 noon – Gloria takes her oath as president of the Republic of the Philippines.

12:20 p.m. – The PSG distributes firearms to some people inside the compound.

The president is having his final meal at the presidential Residence with the few friends and Cabinet members who have gathered.

By this time, demonstrators have already broken down the first line of defense at Mendiola. Only the PSG is there to protect the Palace, since
the police and military have already withdrawn their support for the President.

1 p.m. – The President's personal staff is rushing to pack as many of the Estrada family's personal possessions as they can.

During lunch, Ronnie Puno mentions that the president needs to release a final statement before leaving Malacañang.

The statement reads: At twelve o'clock noon today, Vice President Gloria Macapagal-Arroyo took her oath as President of the Republic of the
Philippines. While along with many other legal minds of our country, I have strong and serious doubts about the legality and constitutionality
of her proclamation as President, I do not wish to be a factor that will prevent the restoration of unity and order in our civil society.

It is for this reason that I now leave Malacañang Palace, the seat of the presidency of this country, for the sake of peace and in order to begin
the healing process of our nation. I leave the Palace of our people with gratitude for the opportunities given to me for serv ice to our people. I
will not shirk from any future challenges that may come ahead in the same service of our country.

I call on all my supporters and followers to join me in the promotion of a constructive national spirit of reconciliation and solidarity.

May the Almighty bless our country and our beloved people.

MABUHAY!"'

It was curtain time for the petitioner.

In sum, we hold that the resignation of the petitioner cannot be doubted. It was confirmed by his leaving Malacañang. In the press release containing
his final statement, (1) he acknowledged the oath-taking of the respondent as President of the Republic albeit with reservation about its legality; (2)
he emphasized he was leaving the Palace, the seat of the presidency, for the sake of peace and in order to begin the healing process of our nation.
He did not say he was leaving the Palace due to any kind inability and that he was going to re-assume the presidency as soon as the disability
disappears: (3) he expressed his gratitude to the people for the opportunity to serve them. Without doubt, he was referring to the past opportunity
given him to serve the people as President (4) he assured that he will not shirk from any future challenge that may come ahead in the same service
of our country. Petitioner's reference is to a future challenge after occupying the office of the president which he has given up; and (5) he called on
his supporters to join him in the promotion of a constructive national spirit of reconciliation and solidarity. Certainly, the national spirit of reconciliation
and solidarity could not be attained if he did not give up the presidency. The press release was petitioner's valedictory, his final act of farewell. His
presidency is now in the part tense.
It is, however, urged that the petitioner did not resign but only took a temporary leave dated January 20, 2001 of the petitioner sent to Senate President
Pimentel and Speaker Fuentebella is cited. Again, we refer to the said letter, viz:

"Sir.

By virtue of the provisions of Section II, Article VII of the Constitution, I am hereby transmitting this declaration that I am unable to exercise the
powers and duties of my office. By operation of law and the Constitution, the Vice President shall be the Acting president.

(Sgd.) Joseph Ejercito Estrada"

To say the least, the above letter is wrapped in mystery.91 The pleadings filed by the petitioner in the cases at bar did not discuss, may even intimate,
the circumstances that led to its preparation. Neither did the counsel of the petitioner reveal to the Court these circumstances during the oral argument.
It strikes the Court as strange that the letter, despite its legal value, was never referred to by the petitioner during the week-long crisis. To be sure,
there was not the slightest hint of its existence when he issued his final press release. It was all too easy for him to tell the Filipino people in his press
release that he was temporarily unable to govern and that he was leaving the reins of government to respondent Arroyo for the time bearing. Under
any circumstance, however, the mysterious letter cannot negate the resignation of the petitioner. If it was prepared before the press release of the
petitioner clearly as a later act. If, however, it was prepared after the press released, still, it commands scant legal significance. Petitioner's resignation
from the presidency cannot be the subject of a changing caprice nor of a whimsical will especially if the resignation is the result of his reputation by
the people. There is another reason why this Court cannot given any legal significance to petitioner's letter and this shall be discussed in issue number
III of this Decision.

After petitioner contended that as a matter of fact he did not resign, he also argues that he could not resign as a matter of law. He relies on section
12 of RA No. 3019, otherwise known as the Anti-graft and Corrupt Practices Act, which allegedly prohibits his resignation, viz:

"Sec. 12. No public officer shall be allowed to resign or retire pending an investigation, criminals or administrative, or pending a prosecution
against him, for any offense under this Act or under the provisions of the Revised Penal Code on bribery."

A reading of the legislative history of RA No. 3019 will hardly provide any comfort to the petitioner. RA No. 3019 originated form Senate Bill No. 293.
The original draft of the bill, when it was submitted to the Senate, did not contain a provision similar to section 12 of the law as it now stands. However,
in his sponsorship speech, Senator Arturo Tolentino, the author of the bill, "reserved to propose during the period of amendments the inclusion of a
provision to the effect that no public official who is under prosecution for any act of graft or corruption, or is under administrative investigation, shall
be allowed to voluntarily resign or retire."92 During the period of amendments, the following provision was inserted as section 15:

"Sec. 15. Termination of office – No public official shall be allowed to resign or retire pending an investigation, criminal or administrative, or
pending a prosecution against him, for any offense under the Act or under the provisions of the Revised Penal Code on bribery.

The separation or cessation of a public official form office shall not be a bar to his prosecution under this Act for an offense committed during
his incumbency."93

The bill was vetoed by then President Carlos P. Garcia who questioned the legality of the second paragraph of the provision a nd insisted that the
President's immunity should extend after his tenure.
Senate Bill No. 571, which was substantially similar Senate Bill No. 293, was thereafter passed. Section 15 above became section 13 under the new
bill, but the deliberations on this particular provision mainly focused on the immunity of the President, which was one of th e reasons for the veto of
the original bill. There was hardly any debate on the prohibition against the resignation or retirement of a public official with pending criminal and
administrative cases against him. Be that as it may, the intent of the law ought to be obvious. It is to prevent the act of resignation or retirement from
being used by a public official as a protective shield to stop the investigation of a pending criminal or administrative case against him and to prevent
his prosecution under the Anti-Graft Law or prosecution for bribery under the Revised Penal Code. To be sure, no person can be compelled to render
service for that would be a violation of his constitutional right. 94 A public official has the right not to serve if he really wants to retire or resign.
Nevertheless, if at the time he resigns or retires, a public official is facing administrative or criminal investigation or prosecution, such resigna tion or
retirement will not cause the dismissal of the criminal or administrative proceedings against him. He cannot use his resignation or retirement to avoid
prosecution.

There is another reason why petitioner's contention should be rejected. In the cases at bar, the records show that when petitioner resigned on January
20, 2001, the cases filed against him before the Ombudsman were OMB Case Nos. 0-00-1629, 0-00-1755, 0-00-1756, 0-00-1757 and 0-00-1758.
While these cases have been filed, the respondent Ombudsman refrained from conducting the preliminary investigation of the pe titioner for the reason
that as the sitting President then, petitioner was immune from suit. Technically, the said cases cannot be considered as pending for the Ombudsman
lacked jurisdiction to act on them. Section 12 of RA No. 3019 cannot therefore be invoked by the petitioner for it contemplat es of cases whose
investigation or prosecution do not suffer from any insuperable legal obstacle like the immunity from suit of a sitting President.

Petitioner contends that the impeachment proceeding is an administrative investigation that, under section 12 of RA 3019, bar s him from resigning.
We hold otherwise. The exact nature of an impeachment proceeding is debatable. But even assuming arguendo that it is an administrative proceeding,
it can not be considered pending at the time petitioner resigned because the process already broke down when a majority of the senator-judges voted
against the opening of the second envelope, the public and private prosecutors walked out, the public prosecutors filed their Manifestation of
Withdrawal of Appearance, and the proceedings were postponed indefinitely. There was, in effect, no impeachment case pending against petitioner
when he resigned.

III

Whether or not the petitioner Is only temporarily unable to Act as President.

We shall now tackle the contention of the petitioner that he is merely temporarily unable to perform the powers and duties of the presidency, and
hence is a President on leave. As aforestated, the inability claim is contained in the January 20, 2001 letter of petitioner sent on the same day to
Senate President Pimentel and Speaker Fuentebella.

Petitioner postulates that respondent Arroyo as Vice President has no power to adjudge the inability of the petitioner to dis charge the powers and
duties of the presidency. His significant submittal is that "Congress has the ultimate authority under the Constitution to determine whether the President
is incapable of performing his functions in the manner provided for in section 11 of article VII." 95 This contention is the centerpiece of petitioner's
stance that he is a President on leave and respondent Arroyo is only an Acting President.

An examination of section 11, Article VII is in order. It provides:

"SEC. 11. Whenever the President transmits to the President of the Senate and the Speaker of the House of Representatives his written
declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary,
such powers and duties shall be discharged by the Vice-President as Acting President.
 Whenever a majority of all the Members of the Cabinet transmit to the President of the Senate and to the Speaker of the House of
Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice-President shall
immediately assume the powers and duties of the office as Acting President.

Thereafter, when the President transmits to the President of the Senate and to the Speaker of the House of Representatives his written
declaration that no inability exists, he shall reassume the powers and duties of his office. Meanwhile, should a majority of all the Members of
the Cabinet transmit within five days to the President of the Senate and to the Speaker of the House of Representatives their written declaration
that the President is unable to discharge the powers and duties of his office, the Congress shall decide the issue. For that purpose, the
Congress shall convene, if it is not in session, within forty-eight hours, in accordance with its rules and without need of call.

If the Congress, within ten days after receipt of the last written declaration, or, if not in session, within twelve days after it is required to
assemble, determines by a two-thirds vote of both Houses, voting separately, that the President is unable to discharge the powers and duties
of his office, the Vice-President shall act as President; otherwise, the President shall continue exercising the powers and duties of his office."

That is the law. Now, the operative facts:

1. Petitioner, on January 20, 2001, sent the above letter claiming inability to the Senate President and Speaker of the House;

2. Unaware of the letter, respondent Arroyo took her oath of office as President on January 20, 2001 at about 12:30 p.m.;

3. Despite receipt of the letter, the House of Representatives passed on January 24, 2001 House Resolution No. 175; 96

On the same date, the House of the Representatives passed House Resolution No. 17697 which states:

"RESOLUTION EXPRESSING THE SUPPORT OF THE HOUSE OF REPRESENTATIVES TO THE ASSUMPTION INTO OFFICE BY VICE
PRESIDENT GLORIA MACAPAGAL-ARROYO AS PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES, EXTENDING ITS
CONGRATULATIONS AND EXPRESSING ITS SUPPORT FOR HER ADMINISTRATION AS A PARTNER IN THE ATTAINMENT OF THE
NATION'S GOALS UNDER THE CONSTITUTION

WHEREAS, as a consequence of the people's loss of confidence on the ability of former President Joseph Ejercito Estrada to ef fectively
govern, the Armed Forces of the Philippines, the Philippine National Police and majority of his cabinet had withdrawn support from him;

WHEREAS, upon authority of an en banc resolution of the Supreme Court, Vice President Gloria Macapagal-Arroyo was sworn in as President
of the Philippines on 20 January 2001 before Chief Justice Hilario G. Davide, Jr.;

WHEREAS, immediately thereafter, members of the international community had extended their recognition to Her Excellency, Gloria
Macapagal-Arroyo as President of the Republic of the Philippines;

WHEREAS, Her Excellency, President Gloria Macapagal-Arroyo has espoused a policy of national healing and reconciliation with justice for
the purpose of national unity and development;

WHEREAS, it is axiomatic that the obligations of the government cannot be achieved if it is divided, thus by reason of the constitutional duty
of the House of Representatives as an institution and that of the individual members thereof of fealty to the supreme will of the people, the
 House of Representatives must ensure to the people a stable, continuing government and therefore must remove all obstacles to the
attainment thereof;

WHEREAS, it is a concomitant duty of the House of Representatives to exert all efforts to unify the nation, to eliminate frac tious tension, to
heal social and political wounds, and to be an instrument of national reconciliation and solidarity as it is a direct representative of the various
segments of the whole nation;

WHEREAS, without surrending its independence, it is vital for the attainment of all the foregoing, for the House of Represent atives to extend
its support and collaboration to the administration of Her Excellency, President Gloria Macapagal-Arroyo, and to be a constructive partner in
nation-building, the national interest demanding no less: Now, therefore, be it

Resolved by the House of Representatives, To express its support to the assumption into office by Vice President Gloria Macapagal-Arroyo
as President of the Republic of the Philippines, to extend its congratulations and to express its support for her administrat ion as a partner in
the attainment of the Nation's goals under the Constitution.

Adopted,

(Sgd.) FELICIANO BELMONTE JR.

Speaker

This Resolution was adopted by the House of Representatives on January 24, 2001.

(Sgd.) ROBERTO P. NAZARENO

Secretary General"

On February 7, 2001, the House of the Representatives passed House Resolution No. 17898 which states:

"RESOLUTION CONFIRMING PRESIDENT GLORIA MACAPAGAL-ARROYO'S NOMINATION OF SENATOR TEOFISTO T. GUINGONA,

JR. AS VICE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES

WHEREAS, there is a vacancy in the Office of the Vice President due to the assumption to the Presidency of Vice President Gloria Macapagal-
Arroyo;

WHEREAS, pursuant to Section 9, Article VII of the Constitution, the President in the event of such vacancy shall nominate a Vice President
from among the members of the Senate and the House of Representatives who shall assume office upon confirmation by a majority vote of
all members of both Houses voting separately;

WHEREAS, Her Excellency, President Gloria Macapagal-Arroyo has nominated Senate Minority Leader Teofisto T. Guingona Jr., to the
position of Vice President of the Republic of the Philippines;

WHEREAS, Senator Teofisto T. Guingona Jr., is a public servant endowed with integrity, competence and courage; who has served the Filipino
people with dedicated responsibility and patriotism;
WHEREAS, Senator Teofisto T. Guingona, Jr. possesses sterling qualities of true statesmanship, having served the government in various
capacities, among others, as Delegate to the Constitutional Convention, Chairman of the Commission on Audit, Executive Secretary, Secretary
of Justice, Senator of the Philippines – qualities which merit his nomination to the position of Vice President of the Republic: Now, therefore,
be it

Resolved as it is hereby resolved by the House of Representatives, That the House of Representatives confirms the nomination of Senator
Teofisto T. Guingona, Jr. as the Vice President of the Republic of the Philippines.

Adopted,

(Sgd.) FELICIANO BELMONTE JR.

Speaker

This Resolution was adopted by the House of Representatives on February 7, 2001.

(Sgd.) ROBERTO P. NAZARENO

Secretary General"

(4) Also, despite receipt of petitioner's letter claiming inability, some twelve (12) members of the Senate signed the following:

"RESOLUTION

WHEREAS, the recent transition in government offers the nation an opportunity for meaningful change and challenge;

WHEREAS, to attain desired changes and overcome awesome challenges the nation needs unity of purpose and resolve cohesive res olute
(sic) will;

WHEREAS, the Senate of the Philippines has been the forum for vital legislative measures in unity despite diversities in perspectives;

WHEREFORE, we recognize and express support to the new government of President Gloria Macapagal-Arroyo and resolve to discharge
and overcome the nation's challenges." 99

On February 7, the Senate also passed Senate Resolution No. 82100 which states:

"RESOLUTION CONFIRMING PRESIDENT GLORIA MACAPAGAL ARROYO'S NOMINATION OF SEM. TEOFISTO T. GUINGONA, JR. AS
VICE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES

WHEREAS, there is vacancy in the Office of the Vice President due to the assumption to the Presidency of Vice President Gloria Macapagal-
Arroyo;

WHEREAS, pursuant to Section 9 Article VII of the Constitution, the President in the event of such vacancy shall nominate a Vice President
from among the members of the Senate and the House of Representatives who shall assume office upon confirmation by a majority vote of
all members of both Houses voting separately;
WHEREAS, Her Excellency, President Gloria Macapagal-Arroyo has nominated Senate Minority Leader Teofisto T. Guingona, Jr. to the
position of Vice President of the Republic of the Philippines;

WHEREAS, Sen. Teofisto T. Guingona, Jr. is a public servant endowed with integrity, competence and courage; who has served the Filipino
people with dedicated responsibility and patriotism;

WHEREAS, Sen. Teofisto T. Guingona, Jr. possesses sterling qualities of true statemanship, having served the government in various
capacities, among others, as Delegate to the Constitutional Convention, Chairman of the Commission on Audit, Executive Secretary, Secretary
of Justice, Senator of the land - which qualities merit his nomination to the position of Vice President of the Republic: Now, therefore, be it

Resolved, as it is hereby resolved, That the Senate confirm the nomination of Sen. Teofisto T. Guingona, Jr. as Vice President of the Republic
of the Philippines.

Adopted,

(Sgd.) AQUILINO Q. PIMENTEL JR.

President of the Senate

This Resolution was adopted by the Senate on February 7, 2001.

(Sgd.) LUTGARDO B. BARBO

Secretary of the Senate"

On the same date, February 7, the Senate likewise passed Senate Resolution No. 83101 which states:

"RESOLUTION RECOGNIZING THAT THE IMPEACHMENT COURT IS FUNCTUS OFFICIO

Resolved, as it is hereby resolved. That the Senate recognize that the Impeachment Court is functus officioand has been terminated.

Resolved, further, That the Journals of the Impeachment Court on Monday, January 15, Tuesday, January 16 and Wednesday, January 17,
2001 be considered approved.

Resolved, further, That the records of the Impeachment Court including the "second envelope" be transferred to the Archives of the Senate
for proper safekeeping and preservation in accordance with the Rules of the Senate. Disposition and retrieval thereof shall be made only upon
written approval of the Senate president.

Resolved, finally. That all parties concerned be furnished copies of this Resolution.

Adopted,

(Sgd.) AQUILINO Q. PIMENTEL, JR.

President of the Senate
 This Resolution was adopted by the Senate on February 7, 2001.

(Sgd.) LUTGARDO B. BARBO

Secretary of the Senate"

(5) On February 8, the Senate also passed Resolution No. 84 "certifying to the existence of vacancy in the Senate and calling on the COMELEC to
fill up such vacancy through election to be held simultaneously with the regular election on May 14, 2001 and the Senatorial candidate garnering the
thirteenth (13th) highest number of votes shall serve only for the unexpired term of Senator Teofisto T. Guingona, Jr.'

(6) Both houses of Congress started sending bills to be signed into law by respondent Arroyo as President.

(7) Despite the lapse of time and still without any functioning Cabinet, without any recognition from any sector of government, and without any support
from the Armed Forces of the Philippines and the Philippine National Police, the petitioner continues to claim that his inabi lity to govern is only
momentary.

What leaps to the eye from these irrefutable facts is that both houses of Congress have recognized respondent Arroyo as the President.
Implicitly clear in that recognition is the premise that the inability of petitioner Estrada. Is no longer temporary. Congress has clearly
rejected petitioner's claim of inability.

The question is whether this Court has jurisdiction to review the claim of temporary inability of petitioner Estrada and thereafter revise the
decision of both Houses of Congress recognizing respondent Arroyo as president of the Philippines. Following Tañada v. Cuenco,102 we hold that
this Court cannot exercise its judicial power or this is an issue "in regard to which full discretionary authority has been delegated to the Legislative xxx
branch of the government." Or to use the language in Baker vs. Carr,103 there is a "textually demonstrable or a lack of judicially discoverable and
manageable standards for resolving it." Clearly, the Court cannot pass upon petitioner's claim of inability to discharge the power and duties of the
presidency. The question is political in nature and addressed solely to Congress by constitutional fiat. It is a political issue, which cannot be
decided by this Court without transgressing the principle of separation of powers.

In fine, even if the petitioner can prove that he did not resign, still, he cannot successfully claim that he is a President on leave on the
ground that he is merely unable to govern temporarily. That claim has been laid to rest by Congress and the decision that respondent
Arroyo is the de jure, president made by a co-equal branch of government cannot be reviewed by this Court.

IV

Whether or not the petitioner enjoys immunity from suit.

Assuming he enjoys immunity, the extent of the immunity

Petitioner Estrada makes two submissions: first, the cases filed against him before the respondent Ombudsman should be prohibited because he
has not been convicted in the impeachment proceedings against him; and second, he enjoys immunity from all kinds of suit, whether criminal or
civil.

Before resolving petitioner's contentions, a revisit of our legal history executive immunity will be most enlightening. The doctrine of executive immunity
in this jurisdiction emerged as a case law. In the 1910 case of Forbes, etc. vs. Chuoco Tiaco and Crosfield,104 the respondent Tiaco, a Chinese
citizen, sued petitioner W. Cameron Forbes, Governor-General of the Philippine Islands. J.E. Harding and C.R. Trowbridge, Chief of Police and Chief
of the Secret Service of the City of Manila, respectively, for damages for allegedly conspiring to deport him to China. In granting a writ of prohibition,
this Court, speaking thru Mr. Justice Johnson, held:

" The principle of nonliability, as herein enunciated, does not mean that the judiciary has no authority to touch the acts of the Governor-General;
that he may, under cover of his office, do what he will, unimpeded and unrestrained. Such a construction would mean that tyranny, under the
guise of the execution of the law, could walk defiantly abroad, destroying rights of person and of property, wholly free from interference of
courts or legislatures. This does not mean, either that a person injured by the executive authority by an act unjustifiable u nder the law has n
remedy, but must submit in silence. On the contrary, it means, simply, that the governors-general, like the judges if the courts and the members
of the Legislature, may not be personally mulcted in civil damages for the consequences of an act executed in the performance of his official
duties. The judiciary has full power to, and will, when the mater is properly presented to it and the occasion justly warrants it, declare an act of
the Governor-General illegal and void and place as nearly as possible in status quo any person who has been deprived his liberty or his
property by such act. This remedy is assured to every person, however humble or of whatever country, when his personal or property rights
have been invaded, even by the highest authority of the state. The thing which the judiciary can not do is mulct the Governor-General personally
in damages which result from the performance of his official duty, any more than it can a member of the Philippine Commission of the Philippine
Assembly. Public policy forbids it.

Neither does this principle of nonliability mean that the chief executive may not be personally sued at all in relation to acts which he claims to
perform as such official. On the contrary, it clearly appears from the discussion heretofore had, particularly that portion which touched the
liability of judges and drew an analogy between such liability and that of the Governor-General, that the latter is liable when he acts in a case
so plainly outside of his power and authority that he can not be said to have exercised discretion in determining whether or not he had the right
to act. What is held here is that he will be protected from personal liability for damages not only when he acts within his authority, but also
when he is without authority, provided he actually used discretion and judgement, that is, the judicial faculty, in de termining whether he had
authority to act or not. In other words, in determining the question of his authority. If he decide wrongly, he is still protected provided the
question of his authority was one over which two men, reasonably qualified for that position, might honestly differ; but he s not protected if the
lack of authority to act is so plain that two such men could not honestly differ over its determination. In such case, be act s, not as Governor-
General but as a private individual, and as such must answer for the consequences of his act."

Mr. Justice Johnson underscored the consequences if the Chief Executive was not granted immunity from suit, viz"xxx. Action upon important matters
of state delayed; the time and substance of the chief executive spent in wrangling litigation; disrespect engendered for the person of one of the highest
officials of the state and for the office he occupies; a tendency to unrest and disorder resulting in a way, in distrust as t o the integrity of government
itself."105

Our 1935 Constitution took effect but it did not contain any specific provision on executive immunity. Then came the tumult of the martial law years
under the late President Ferdinand E. Marcos and the 1973 Constitution was born. In 1981, it was amended and one of the amendments involved
executive immunity. Section 17, Article VII stated:

"The President shall be immune from suit during his tenure. Thereafter, no suit whatsoever shall lie for official acts done b y him or by others
pursuant to his specific orders during his tenure.

The immunities herein provided shall apply to the incumbent President referred to in Article XVII of this Constitution.
In his second Vicente G. Sinco professional Chair lecture entitled, "Presidential Immunity and All The King's Men: The Law of Privilege As a Defense
To Actions For Damages,"106 petitioner's learned counsel, former Dean of the UP College of Law, Atty. Pacificao Agabin, brightened the modifications
effected by this constitutional amendment on the existing law on executive privilege. To quote his disquisition:

"In the Philippines, though, we sought to do the Americans one better by enlarging and fortifying the absolute immunity concept. First, we
extended it to shield the President not only form civil claims but also from criminal cases and other claims. Second, we enlarged its scope so
that it would cover even acts of the President outside the scope of official duties. And third, we broadened its coverage so as to include not
only the President but also other persons, be they government officials or private individuals, who acted upon orders of the President. It can
be said that at that point most of us were suffering from AIDS (or absolute immunity defense syndrome)."

The Opposition in the then Batasan Pambansa sought the repeal of this Marcosian concept of executive immunity in the 1973 Constitution. The move
was led by them Member of Parliament, now Secretary of Finance, Alberto Romulo, who argued that the after incumbency immunity granted to
President Marcos violated the principle that a public office is a public trust. He denounced the immunity as a return to the anachronism "the king can
do no wrong."107 The effort failed.

The 1973 Constitution ceased to exist when President Marcos was ousted from office by the People Power revolution in 1986. When the 1987
Constitution was crafted, its framers did not reenact the executive immunity provision of the 1973 Constitution. The followin g explanation was given
by delegate J. Bernas vis:108

"Mr. Suarez. Thank you.

The last question is with reference to the Committee's omitting in the draft proposal the immunity provision for the President. I agree with
Commissioner Nolledo that the Committee did very well in striking out second sentence, at the very least, of the original provision on immunity
from suit under the 1973 Constitution. But would the Committee members not agree to a restoration of at least the first sentence that the
President shall be immune from suit during his tenure, considering that if we do not provide him that kind of an immunity, he might be spending
all his time facing litigation's, as the President-in-exile in Hawaii is now facing litigation's almost daily?

Fr. Bernas. The reason for the omission is that we consider it understood in present jurisprudence that during his tenure he is immune from
suit.

Mr. Suarez. So there is no need to express it here.

Fr. Bernas. There is no need. It was that way before. The only innovation made by the 1973 Constitution was to make that explicit and to add
other things.

Mr. Suarez. On that understanding, I will not press for any more query, Madam President.

I think the Commissioner for the clarifications."

We shall now rule on the contentions of petitioner in the light of this history. We reject his argument that he cannot be prosecuted for the reason that
he must first be convicted in the impeachment proceedings. The impeachment trial of petitioner Estrada was aborted by the walkout of the prosecutors
and by the events that led to his loss of the presidency. Indeed, on February 7, 2001, the Senate passed Senate Resolution No. 83 "Recognizing that
the Impeachment Court is Functus Officio."109 Since, the Impeachment Court is now functus officio, it is untenable for petitioner to demand that he
should first be impeached and then convicted before he can be prosecuted. The plea if granted, would put a perpetual bar against his prosecution.
Such a submission has nothing to commend itself for it will place him in a better situation than a non-sitting President who has not been subjected to
impeachment proceedings and yet can be the object of a criminal prosecution. To be sure, the debates in the Constitutional Commission make it clear
that when impeachment proceedings have become moot due to the resignation of the President, the proper criminal and civil cases may already be
filed against him, viz:110

"xxx

Mr. Aquino. On another point, if an impeachment proceeding has been filed against the President, for example, and the Preside nt resigns
before judgement of conviction has been rendered by the impeachment court or by the body, how does it affect the impeachment proceeding?
Will it be necessarily dropped?

Mr. Romulo. If we decide the purpose of impeachment to remove one from office, then his resignation would render the case moo t and
academic. However, as the provision says, the criminal and civil aspects of it may continue in the ordinary courts."

This is in accord with our ruling In Re: Saturnino Bermudez 111 that 'incumbent Presidents are immune from suit or from being brought to court during
the period of their incumbency and tenure" but not beyond. Considering the peculiar circumstance that the impeachment process against the petitioner
has been aborted and thereafter he lost the presidency, petitioner Estrada cannot demand as a condition sine qua non to his criminal prosecution
before the Ombudsman that he be convicted in the impeachment proceedings. His reliance on the case of Lecaroz vs. Sandiganbayan112 and related
cases113 are inapropos for they have a different factual milieu.

We now come to the scope of immunity that can be claimed by petitioner as a non-sitting President. The cases filed against petitioner Estrada are
criminal in character. They involve plunder, bribery and graft and corruption. By no stretch of the imagination can these crimes, especially plunder
which carries the death penalty, be covered by the alleged mantle of immunity of a non-sitting president. Petitioner cannot cite any decision of this
Court licensing the President to commit criminal acts and wrapping him with post-tenure immunity from liability. It will be anomalous to hold that
immunity is an inoculation from liability for unlawful acts and conditions. The rule is that unlawful acts of public officials are not acts of the State and
the officer who acts illegally is not acting as such but stands in the same footing as any trespasser. 114

Indeed, critical reading of current literature on executive immunity will reveal a judicial disinclination to expand the privilege especially when it impedes
the search for truth or impairs the vindication of a right. In the 1974 case of US v. Nixon, 115 US President Richard Nixon, a sitting President, was
subpoenaed to produce certain recordings and documents relating to his conversations with aids and advisers. Seven advisers of President Nixon's
associates were facing charges of conspiracy to obstruct Justice and other offenses, which were committed in a burglary of the Democratic National
Headquarters in Washington's Watergate Hotel during the 972 presidential campaign. President Nixon himself was named an unindicted co-
conspirator. President Nixon moved to quash the subpoena on the ground, among others, that the President was not subject to judicial process and
that he should first be impeached and removed from office before he could be made amenable to judicial proceedings. The claim was rejected by the
US Supreme Court. It concluded that "when the ground for asserting privilege as to subpoenaed materials sought for use in a c riminal trial is based
only on the generalized interest in confidentiality, it cannot prevail over the fundamental demands of due process of law in the fair administration of
criminal justice." In the 1982 case of Nixon v. Fitzgerald, 116 the US Supreme Court further held that the immunity of the president from civil damages
covers only "official acts." Recently, the US Supreme Court had the occasion to reiterate this doctrine in the case of Clinton v. Jones117 where it held
that the US President's immunity from suits for money damages arising out of their official acts is inapplicable to unofficial conduct.

There are more reasons not to be sympathetic to appeals to stretch the scope of executive immunity in our jurisdiction. One of the great themes of
the 1987 Constitution is that a public office is a public trust.118 It declared as a state policy that "the State shall maintain honesty and integrity in the
public service and take positive and effective measures against graft and corruptio." 119 it ordained that "public officers and employees must at all times
be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency act with patriotism a nd justice, and lead modest
lives."120 It set the rule that 'the right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their
nominees or transferees, shall not be barred by prescription, latches or estoppel." 121 It maintained the Sandiganbayan as an anti-graft court.122 It
created the office of the Ombudsman and endowed it with enormous powers, among which is to "investigate on its own, or on complaint by any
person, any act or omission of any public official, employee, office or agency, when such act or omission appears to be illeg al, unjust improper or
inefficient."123 The Office of the Ombudsman was also given fiscal autonomy. 124 These constitutional policies will be devalued if we sustain petitioner's
claim that a non-sitting president enjoys immunity from suit for criminal acts committed during his incumbency.

Whether or not the prosecution of petitioner

Estrada should be enjoined due to prejudicial publicity

Petitioner also contends that the respondent Ombudsman should be stopped from conducting the investigation of the cases filed against him due to
the barrage of prejudicial publicity on his guilt. He submits that the respondent Ombudsman has developed bias and is all set file the criminal cases
violation of his right to due process.

There are two (2) principal legal and philosophical schools of thought on how to deal with the rain of unrestrained publicity during the investigation
and trial of high profile cases.125 The British approach the problem with the presumption that publicity will prejudice a jury. Thus, English courts readily
stay and stop criminal trials when the right of an accused to fair trial suffers a threat. 126 The American approach is different. US courts assume a
skeptical approach about the potential effect of pervasive publicity on the right of an accused to a fair trial. They have de veloped different strains of
tests to resolve this issue, i.e., substantial; probability of irreparable harm, strong likelihood, clear and present danger, etc.

This is not the first time the issue of trial by publicity has been raised in this Court to stop the trials or annul convictions in high profile criminal
cases.127 In People vs. Teehankee, Jr.,128 later reiterated in the case of Larranaga vs. court of Appeals, et al., 129 we laid down the doctrine that:

"We cannot sustain appellant's claim that he was denied the right to impartial trial due to prejudicial publicity. It is true that the print and
broadcast media gave the case at bar pervasive publicity, just like all high profile and high stake criminal trials. Then and now, we rule that the
right of an accused to a fair trial is not incompatible to a free press. To be sure, responsible reporting enhances accused's right to a fair trial
for, as well pointed out, a responsible press has always been regarded as the criminal field xxx. The press does not simply publish information
about trials but guards against the miscarriage of justice by subjecting the police, prosecutors, and judicial processes to e xtensive public
scrutiny and criticism.

Pervasive publicity is not per se prejudicial to the right of an accused to fair trial. The mere fact that the trial of appellant was given a day-to-
day, gavel-to-gavel coverage does not by itself prove that the publicity so permeated the mind of the trial judge and impaired his impartia lity.
For one, it is impossible to seal the minds of members of the bench from pre-trial and other off-court publicity of sensational criminal cases.
The state of the art of our communication system brings news as they happen straight to our breakfast tables and right to our bedrooms. These
news form part of our everyday menu of the facts and fictions of life. For another, our idea of a fair and impartial judge is not tha t of a hermit
who is out of touch with the world. We have not installed the jury system whose members are overly protected from publicity lest they lose
there impartially. xxx xxx xxx. Our judges are learned in the law and trained to disregard off -court evidence and on-camera performances of
parties to litigation. Their mere exposure to publications and publicity stunts does not per se fatally infect their impartiality.
 At best, appellant can only conjure possibility of prejudice on the part of the trial judge due to the barrage of publicity t hat characterized the
investigation and trial of the case. In Martelino, et al. v. Alejandro, et al., we rejected this standard of possibility of prejudice and adopted the
test of actual prejudice as we ruled that to warrant a finding of prejudicial publicity, there must be allegation and proof that the judges have
been unduly influenced, not simply that they might be, by the barrage of publicity. In the case at a bar, the records do not show that the trial
judge developed actual bias against appellants as a consequence of the extensive media coverage of the pre -trial and trial of his case. The
totality of circumstances of the case does not prove that the trial judge acquired a fixed opinion as a result of prejudicial pub licity, which is
incapable of change even by evidence presented during the trial. Appellant has the burden to prove this actual bias and he has not discharged
the burden.'

We expounded further on this doctrine in the subsequent case of Webb vs. Hon. Raul de Leon, etc. 130 and its companion cases, viz:

"Again petitioners raise the effect of prejudicial publicity on their right to due process while undergoing preliminary investigation. We find no
procedural impediment to its early invocation considering the substantial risk to their liberty while undergoing a preliminary investigation.

xxx

The democratic settings, media coverage of trials of sensational cases cannot be avoided and oftentimes, its excessiveness has been
aggravated by kinetic developments in the telecommunications industry. For sure, few cases can match the high volume and high velocity of
publicity that attended the preliminary investigation of the case at bar. Our daily diet of facts and fiction about the case continues unabated
even today. Commentators still bombard the public with views not too many of which are sober and sublime. Indeed, even the principal actors
in the case – the NBI, the respondents, their lawyers and their sympathizers have participated in this media blitz. The possibility of media
abuses and their threat to a fair trial notwithstanding, criminal trials cannot be completely closed to the press and pu blic. In the seminal case
of Richmond Newspapers, Inc. v. Virginia, it was

xxx

a. The historical evidence of the evolution of the criminal trial in Anglo-American justice demonstrates conclusively that at the time this
Nation's organic laws were adopted, criminal trials both here and in England had long been presumptively open, thus giving assurance
that the proceedings were conducted fairly to all concerned and discouraging perjury, the misconduct of participants, or decisions
based on secret bias or partiality. In addition, the significant community therapeutic value of public trials was recognized when a
shocking crime occurs a community reaction of outrage and public protest often follows, and thereafter the open processes of justice
serve an important prophylactic purpose, providing an outlet for community concern, hostility and emotion. To work effectively, it is
important that society's criminal process satisfy the appearance of justice,' Offutt v. United States, 348 US 11, 14, 99 L ED 11, 75 S Ct
11, which can best be provided by allowing people to observe such process. From this unbroken, uncontradicted history, supported by
reasons as valid today as in centuries past, it must be concluded that a presumption of openness inheres in the very nature of a criminal
trial under this Nation's system of justice, Cf., e,g., Levine v. United States, 362 US 610, 4 L Ed 2d 989, 80 S Ct 1038.

b. The freedoms of speech. Press and assembly, expressly guaranteed by the First Amendment, share a common core purpose of
assuring freedom of communication on matters relating to the functioning of government. In guaranteeing freedom such as those of
speech and press, the First Amendment can be read as protecting the right of everyone to attend trials so as give meaning to those
explicit guarantees; the First Amendment right to receive information and ideas means, in the context of trials, that the guaran tees of
speech and press, standing alone, prohibit government from summarily closing courtroom doors which had long been open to the
public at the time the First Amendment was adopted. Moreover, the right of assembly is also relevant, having been regarded not only
 as an independent right but also as a catalyst to augment the free exercise of the other First Amendment rights with which the draftsmen
deliberately linked it. A trial courtroom is a public place where the people generally and representatives of the media have a right to be
present, and where their presence historically has been thought to enhance the integrity and quality of what takes place.

c. Even though the Constitution contains no provision which be its terms guarantees to the public the right to attend criminal trials, various
fundamental rights, not expressly guaranteed, have been recognized as indispensable to the enjoyment of enumerated rights. The
right to attend criminal trial is implicit in the guarantees of the First Amendment: without the freedom to attend such trials, which people
have exercised for centuries, important aspects of freedom of speech and of the press be eviscerated.

Be that as it may, we recognize that pervasive and prejudicial publicity under certain circumstances can deprive an accused of his due process
right to fair trial. Thus, in Martelino, et al. vs. Alejandro, et al., we held that to warrant a finding of prejudicial publicity there must be allegation
and proof that the judges have been unduly influenced, not simply that they might be, by the barrage of publicity. In the case at bar, we find
nothing in the records that will prove that the tone and content of the publicity that attended the investigation of petitioners fatally infected the
fairness and impartiality of the DOJ Panel. Petitioners cannot just rely on the subliminal effects of publicity on the sense of fairness of the DOJ
Panel, for these are basically unbeknown and beyond knowing. To be sure, the DOJ Panel is composed of an Assistant Chief State Prosecutor
and Senior State Prosecutors. Their long experience in criminal investigation is a factor to consider in determining whether they can easily be
blinded by the klieg lights of publicity. Indeed, their 26-page Resolution carries no indubitable indicia of bias for it does not appear that they
considered any extra-record evidence except evidence properly adduced by the parties. The length of time the investigation was conducted
despite its summary nature and the generosity with which they accommodated the discovery motions of petitioners speak well of their fairness.
At no instance, we note, did petitioners seek the disqualification of any member of the DOJ Panel on the ground of bias resulting from their
bombardment of prejudicial publicity." (emphasis supplied)

Applying the above ruling, we hold that there is not enough evidence to warrant this Court to enjoin the preliminary investigation of the
petitioner by the respondent Ombudsman. Petitioner needs to offer more than hostile headlines to discharge his burden of proof. 131 He needs to
show more weighty social science evidence to successfully prove the impaired capacity of a judge to render a bias-free decision. Well to note, the
cases against the petitioner are still undergoing preliminary investigation by a special panel of prosecutors in the office of the respondent
Ombudsman. No allegation whatsoever has been made by the petitioner that the minds of the members of this special panel have already been
infected by bias because of the pervasive prejudicial publicity against him. Indeed, the special panel has yet to come out wi th its findings and the
Court cannot second guess whether its recommendation will be unfavorable to the petitioner.1âwphi1.nêt

The records show that petitioner has instead charged respondent Ombudsman himself with bias. To quote petitioner's submission, the respondent
Ombudsman "has been influenced by the barrage of slanted news reports, and he has buckled to the threats and pressures directed at him by the
mobs."132 News reports have also been quoted to establish that the respondent Ombudsman has already prejudged the cases of the petitioner133 and
it is postulated that the prosecutors investigating the petitioner will be influenced by this bias of their superior.

Again, we hold that the evidence proffered by the petitioner is insubstantial. The accuracy of the news reports referred to by the petitioner cannot
be the subject of judicial notice by this Court especially in light of the denials of the respondent Ombudsman as to his alleged pre judice and the
presumption of good faith and regularity in the performance of official duty to which he is entitled. Nor can we adopt the theory of derivative
prejudice of petitioner, i.e., that the prejudice of respondent Ombudsman flows to his subordinates. In truth, our Revised Rules of Criminal
Procedure, give investigation prosecutors the independence to make their own findings and recommendations albeit they are reviewable by their
superiors.134 They can be reversed but they can not be compelled cases which they believe deserve dismissal. In other words, investigating
prosecutors should not be treated like unthinking slot machines. Moreover, if the respondent Ombudsman resolves to file the cases against the
petitioner and the latter believes that the findings of probable cause against him is the result of bias, he still has the re medy of assailing it before the
proper court.

VI.

Epilogue

A word of caution to the "hooting throng." The cases against the petitioner will now acquire a different dimension and then move to a new stage - - -
the Office of the Ombudsman. Predictably, the call from the majority for instant justice will hit a higher decibel while the gnashing of teeth of the
minority will be more threatening. It is the sacred duty of the respondent Ombudsman to balance the right of the State to prosecute the guilty and the
right of an accused to a fair investigation and trial which has been categorized as the "most fundamental of all freedoms." 135To be sure, the duty of a
prosecutor is more to do justice and less to prosecute. His is the obligation to insure that the preliminary investigation of the petitioner shall have a
circus-free atmosphere. He has to provide the restraint against what Lord Bryce calls "the impatient vehemence of the majority." Rights in a democracy
are not decided by the mob whose judgment is dictated by rage and not by reason. Nor are rights necessarily resolved by the power of number for in
a democracy, the dogmatism of the majority is not and should never be the definition of the rule of law. If democracy has pro ved to be the best form
of government, it is because it has respected the right of the minority to convince the majority that it is wrong. Tolerance of multiformity of thoughts,
however offensive they may be, is the key to man's progress from the cave to civilization. Let us not throw away that key just to pander to some
people's prejudice.

IN VIEW WHEREOF, the petitions of Joseph Ejercito Estrada challenging the respondent Gloria Macapagal-Arroyo as the de jure 14th President of
the Republic are DISMISSED.

SO ORDERED.
G.R. No. 144413 July 30, 2004

REPUBLIC GLASS CORPORATION and GERVEL, INC, petitioners,

vs.
LAWRENCE C. QUA, respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 6 March 2000 Decision 2 and the 26 July 2000 Resolution of the Court of Appeals in CA-G.R.
CV No. 54737. The Court of Appeals set aside the Order 3 of 3 May 1996 of the Regional Trial Court of Makati, Branch 63 ("RTC-Branch 63"), in Civil
Case No. 88-2643 and reinstated the Decision 4 of 12 January 1996 in respondent’s favor.

The Facts

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

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

RGC, GERVEL and QUA each covenant that each will respectively reimburse the party made to pay the Lenders to the extent and subject to
the limitations set forth herein, all sums of money which the party made to pay the Lenders shall pay or become liable to pay by reason of any
of the foregoing, and will make such payments within five (5) days from the date that the party made to pay the Lenders gives written notice
to the parties hereto that it shall have become liable therefor and has advised the Lenders of its willingness to pay whether or not it shall have
already paid out such sum or any part thereof to the Lenders or to the persons entitled thereto. (Emphasis supplied)

Under the same Agreements, Qua pledged 1,892,360 common shares of stock of General Milling Corporation ("GMC") in favor of RGC and Gervel.
The pledged shares of stock served as security for the payment of any sum which RGC and Gervel may be held liable under the Agreements.

Ladtek defaulted on its loan obligations to Metrobank and PDCP. Hence, Metrobank filed a collection case against Ladtek, RGC, Gervel and Qua
docketed as Civil Case No. 8364 ("Collection Case No. 8364") which was raffled to the Regional Trial Court of Makati, Branch 149 ("RTC-Branch
149"). During the pendency of Collection Case No. 8364, RGC and Gervel paid Metrobank P7 million. Later, Metrobank executed a waiver and
quitclaim dated 7 September 1988 in favor of RGC and Gervel. Based on this waiver and quitclaim, 9 Metrobank, RGC and Gervel filed on 16
September 1988 a joint motion to dismiss Collection Case No. 8364 against RGC and Gervel. Accordingly, RTC-Branch 149 dismissed the case
against RGC and Gervel, leaving Ladtek and Qua as defendants. 10

In a letter dated 7 November 1988, RGC and Gervel’s counsel, Atty. Antonio C. Pastelero, demanded that Qua pay P3,860,646, or 42.22% of
P8,730,543.55,11 as reimbursement of the total amount RGC and Gervel paid to Metrobank and PDCP. Qua refused to reimburse the amount to RGC
and Gervel. Subsequently, RGC and Gervel furnished Qua with notices of foreclosure of Qua’s pledged shares.

Qua filed a complaint for injunction and damages with application for a temporary restraining order, docketed as Civil Case No. 88-2643 ("Foreclosure
Case No. 88-2643"), with RTC-Branch 63 to prevent RGC and Gervel from foreclosing the pledged shares. Although it issued a temporary restraining
order on 9 December 1988, RTC-Branch 63 denied on 2 January 1989 Qua’s "Urgent Petition to Suspend Foreclosure Sale." RGC and Gervel
eventually foreclosed all the pledged shares of stock at public auction. Thus, Qua’s application for the issuance of a preliminary injunction became
moot.12

Trial in Foreclosure Case No. 88-2643 ensued. RGC and Gervel offered Qua’s Motion to Dismiss 13 in Collection Case No. 8364 as basis for the
foreclosure of Qua’s pledged shares. Qua’s Motion to Dismiss states:

8. The foregoing facts show that the payment of defendants Republic Glass Corporation and Gervel, Inc. was for the entire
obligation covered by the Continuing Surety Agreements which were Annexes "B" and "C" of the Complaint, and that the same naturally
redound[ed] to the benefit of defendant Qua herein, as provided for by law, specifically Article 1217 of the Civil Code, which states that:

xxx

10. It is very clear that the payment of defendants Republic Glass Corporation and Gervel, Inc. was much more than the amount stipulated in
the Continuing Surety Agreement which is the basis for the action against them and defendant Qua, which was just SIX MILLION TWO
HUNDRED [THOUSAND] PESOS (P6,200,000.00), hence, logically the said alleged obligation must now be considered as fully paid and
extinguished.

RGC and Gervel likewise offered as evidence in Foreclosure Case No. 88-2643 the Order dismissing Collection Case No. 8364, 14 which RTC-Branch
149 subsequently reversed on Metrobank’s motion for reconsideration. Thus, RTC-Branch 149 reinstated Collection Case No. 8364 against Qua.

On 12 January 1996, RTC-Branch 63 rendered a Decision in Foreclosure Case No. 88-2643 ("12 January 1996 Decision") ordering RGC and Gervel
to return the foreclosed shares of stock to Qua. The dispositive portion of the 12 January 1996 Decision reads:

WHEREFORE, premises considered, this Court hereby renders judgment ordering defendants jointly and severally liable to return to plaintiff
the 1,892,360 shares of common stock of General Milling Corporation which they foreclosed on December 9, 1988, or should the return of
these shares be no longer possible then to pay to plaintiff the amount of P3,860,646.00 with interest at 6% per annum from December 9, 1988
until fully paid and to pay plaintiff P100,000.00 as and for attorney’s fees. The costs will be for defendants’ account.

SO ORDERED.15
However, on RGC and Gervel’s Motion for Reconsideration, RTC-Branch 63 issued its Order of 3 May 1996 ("3 May 1996 Order") reconsidering and
setting aside the 12 January 1996 Decision. The 3 May 1996 Order states:

After a thorough review of the records of the case, and an evaluation of the evidence adduced by the parties as well as their contentions, the
issues to be resolved boil down to the following:

1. Whether or not the parties’ obligation to reimburse, under the Indemnity Agreements was premised on the payment by any of them
of the entire obligation;

2. Whether or not there is basis to plaintiff’s apprehension that he would be made to pay twice for the single obligation; and

3. Whether or not plaintiff was benefited by the payments made by defendants.

Regarding the first issue, a closer scrutiny of the pertinent provisions of the Indemnity Agreements executed by the parties would not reveal
any significant indication that the parties’ liabilities are indeed premised on the payment by any of them of the entire obligation. These
agreements clearly provide that the parties’ obligation to reimburse accrues upon mere advice that one of them has paid or will so pay the
obligation. It is not specified whether the payment is for the entire obligation or not.

Accordingly, the Court stands corrected in this regard. The obvious conclusion that can be seen now is that payment of the entire
obligation is not a condition sine qua non for the paying party to demand reimbursement. The parties have expressly contracted that
each will reimburse whoever is made to pay the obligation whether entirely or just a portion thereof.

On the second issue, plaintiff’s apprehension that he would be made to pay twice for the single obligation is unfounded. Unde r the above-
mentioned Indemnity Agreements, in the event that the creditors are able to collect from him, he has the right to ask defendants to pay the ir
proportionate share, in the same way defendants had collected from the plaintiff, by foreclosing his pledged shares of stock, his proportionate
share, after they had made payments. From all indications, the provisions of the Indemnity Agreements have remained binding b etween the
parties.

On the third issue, there is merit to defendants’ assertion that plaintiff has benefited from the payments made by defendants. As alleged by
defendants, and this has not been denied by plaintiff, in Civil Case No. 8364 filed before Branch 149 of this Court, where the creditors
were enforcing the parties’ liabilities as sureties, plaintiff succeeded in having the case dismissed by arguing that defendants’
payments [were] for the entire obligation, hence, the obligation should be considered fully paid and extinguished. With the dismissal
of the case, the indications are that the creditors are no longer running after plaintiff to enforce his liabilities as surety of Ladtek.

Whether or not the surety agreements signed by the parties and the creditors were novated is not material in this controversy. The fact is that
there was payment of the obligation. Hence, the Indemnity Agreements govern.

In the final analysis, defendants’ payments gave rise to plaintiff’s obligation to reimburse the former. Having failed to do so, upon demand,
defendants were justified in foreclosing the pledged shares of stocks.

xxx
 WHEREFORE, premises considered, the decision dated January 12, 1996 is reconsidered and set aside. The above-entitled complaint against
defendants is DISMISSED.

Likewise, defendants’ counterclaim is also dismissed.

SO ORDERED.16 (Emphasis supplied)

Qua filed a motion for reconsideration of the 3 May 1996 Order which RTC-Branch 63 denied.

Aggrieved, Qua appealed to the Court of Appeals. During the pendency of the appeal, Qua filed a Manifestation17with the Court of Appeals attaching
the Decision18 of 21 November 1996 rendered in Collection Case No. 8364. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants Ladtek, Inc. and Lawrence C. Qua:

1. To pay, jointly and severally, the plaintiff the amount of P44,552,738.34 as of October 31, 1987 plus the stipulated interest of 30.73% per
annum and penalty charges of 12% per annum from November 1, 1987 until the whole amount is fully paid, less P7,000,000.00 pai d by
defendants Republic Glass Corporation and Gervel, Inc., but the liability of defendant Lawrence C. Qua should be limited only to
P5,000,000.00 and P1,200,000.00, the amount stated in the Continuing Suretyship dated June 15, 1983, Exh. "D" and Continuing
Suretyship dated December 14, 1981, Exh. "D-1", respectively, plus the stipulated interest and expenses incurred by the plaintiff.

2. To pay, jointly and severally, the plaintiff an amount equivalent to ten (10%) percent of the total amount due as and by way of attorney’s
fees;

3. To pay the cost of suit.

The Counterclaims of the defendants Ladtek, Inc. and Lawrence C. Qua against the plaintiff are hereby dismissed.

Likewise, the cross-claims of the defendants are dismissed.

SO ORDERED.19 (Emphasis supplied)

On 6 March 2000, the Court of Appeals rendered the questioned Decision setting aside the 3 May 1996 Order of RTC-Branch 63 and reinstating the
12 January 1996 Decision ordering RGC and Gervel to return the foreclosed shares of stock to Qua. 20

Hence, this petition.

The Ruling of the Court of Appeals

In reversing the 3 May 1996 Order and reinstating the 12 January 1996 Decision, the appellate court quoted the RTC-Branch 63’s 12 January 1996
Decision:
 The liability of each party under the indemnity agreements therefore is premised on the payment by any of them of the entire obligation. Without
such payment, there would be no corresponding share to reimburse. Payment of the entire obligation naturally redounds to the benefit of the
other solidary debtors who must then reimburse the paying co-debtors to the extent of his corresponding share.

In the case at bar, Republic Glass and Gervel made partial payments only, and so they did not extinguish the entire obligation. But Republic
Glass and Gervel nevertheless obtained quitclaims in their favor and so they ceased to be solidarily liable with plaintiff fo r the balance of the
debt (Exhs. "D", "E", and "I"). Plaintiff thus became solely liable for the unpaid portion of the debt even as he is being held liable for
reimbursement on the said portion.

What happened therefore, was that Metrobank and PDCP in effect enforced the Suretyship Agreements jointly as against plaintiff and
defendants. Consequently, the solidary obligation under the Suretyship Agreements was novated by the substantial modification of its principal
conditions. xxx The resulting change was from one with three solidary debtors to one in which Lawrence Qua became the sole so lidary co-
debtor of Ladtek.

Defendants cannot simply pay off a portion of the debt and then absolve themselves from any further liability when the obligation has not been
totally extinguished.

xxx

In the final reckoning, this Court finds that the foreclosure and sale of the shares pledged by plaintiff was totally unjustified and without basis
because the obligation secured by the underlying pledge had been extinguished by novation. xxx 21

The Court of Appeals further held that there was an implied novation or substantial incompatibility in the surety’s mode or manner of payment from
one for the entire obligation to one merely of proportionate share. The appellate court ruled that RGC and Gervel’s payment to the creditors only
amounted to their proportionate shares of the obligation, considering the following evidence:

The letter of the Republic to the appellant, Exhibit "G", dated June 25, 1987, which mentioned the letter from PDCP confirming its willingness
to release the joint and solidary obligation of the Republic and Gervel subject to some terms and conditions, one of which is the appellant’s
acceptable repayment plan of his "pro-rata share"; and the letter of PDCP to the Republic, Exhibit "H", mentioning full payment of the "pro rata
share" of the Republic and Gervel, and the need of the appellant to submit an acceptable repayment plan covering his "pro-rata share"’, the
release from solidary liability by PDCP, Exhibit "J", mentioning full payment by the Republic and Gervel of their "pro rata share" in the loan, as
solidary obligors, subject however to the terms and conditions of the hold out agreement; and the non-payment in full of the loan, subject of
the May 10, 1984 Promissory Note, except the 7 million payment by both Republic and Gervel, as mentioned in the Decision (Case No. 8364,
Metrobank vs. Ladtek, et al). Precisely, Ladtek and the appellant, in said Decision were directed to pay Metrobank the balance of P9,560,798,
supposedly due and unpaid.

Thus, the payment did not extinguish the entire obligation and did not benefit Qua. Accordingly, RGC and Gervel cannot demand reimbursement. The
Court of Appeals also held that Qua even became solely answerable for the unpaid balance of the obligations by virtue of the quitclaims executed by
Metrobank and PDCP in favor of RGC and Gervel. RGC and Gervel ceased to be solidarily liable for Ladtek’s loan obligations. 22

The Issues

RGC and Gervel raise the following issues for resolution:

 I.

WHETHER THE PRINCIPLE OF ESTOPPEL APPLIES TO QUA’S JUDICIAL STATEMENTS THAT RGC AND GERVEL PAID THE ENTIRE
OBLIGATION.

II.

WHETHER PAYMENT OF THE ENTIRE OBLIGATION IS A CONDITION SINE QUA NON FOR RGC AND GERVEL TO DEMAND
REIMBURSEMENT FROM QUA UNDER THE INDEMNITY AGREEMENTS EXECUTED BY THEM AFTER RGC AND GERVEL PAID
METROBANK UNDER THE SURETY AGREEMENT.

III.

ASSUMING ARGUENDO THAT THERE WAS NOVATION OF THE SURETY AGREEMENTS SIGNED BY THE PARTIES AND THE
CREDITORS, WHETHER THE NOVATION IS MATERIAL IN THIS CASE. 23

The Court’s Ruling

We deny the petition.

Whether Qua was in estoppel

RGC and Gervel contend that Qua is in estoppel for making conflicting statements in two different and separate cases. Qua can not now claim that
the payment made to Metrobank was not for the entire obligation because of his Motion to Dismiss Collection Case No. 8364 where he stated that
RGC and Gervel’s payment was for the entireobligation.

The essential elements of estoppel in pais are considered in relation to the party to be estopped, and to the party invoking the estoppel in his favor.
On the party to be estopped, such party (1) commits conduct amounting to false representation or concealment of material facts or at least calculated
to convey the impression that the facts are inconsistent with those which the party subsequently attempts to assert; (2) has the intent, or at least
expectation that his conduct shall at least influence the other party; and (3) has knowledge, actual or constructive, of the real facts. On the party
claiming the estoppel, such party (1) has lack of knowledge and of the means of knowledge of the truth on the facts in question; (2) has relied, in
good faith, on the conduct or statements of the party to be estopped; (3) has acted or refrained from acting based on such conduct or statements
as to change the position or status of the party claiming the estoppel, to his injury, detriment or prejudice. 24

In this case, the essential elements of estoppel are inexistent.

While Qua’s statements in Collection Case No. 8364 conflict with his statements in Foreclosure Case No. 88-2643, RGC and Gervel miserably failed
to show that Qua, in making those statements, intended to falsely represent or conceal the material facts. Both parties undeniably know the real facts.

Nothing in the records shows that RGC and Gervel relied on Qua’s statements in Collection Case No. 8364 such that they changed their position or
status, to their injury, detriment or prejudice. RGC and Gervel repeatedly point out that it was the presiding judge 25 in Collection Case No. 8364 who
relied on Qua’s statements in Collection Case No. 8364. RGC and Gervel claim that Qua "deliberately led the Presiding Judge to believe" that their
payment to Metrobank was for the entire obligation. As a result, the presiding judge ordered the dismissal of Collection Case No. 8364 against Qua.26
RGC and Gervel further invoke Section 4 of Rule 129 of the Rules of Court to support their stance:

Sec. 4. Judicial admissions. – An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not
require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was
made.

A party may make judicial admissions in (a) the pleadings filed by the parties, (b) during the trial either by verbal or written manifestations or
stipulations, or (c) in other stages of the judicial proceeding. 27

The elements of judicial admissions are absent in this case. Qua made conflicting statements in Collection Case No. 8364 and in Foreclosure Case
No. 88-2643, and not in the "same case" as required in Section 4 of Rule 129. To constitute judicial admission, the admission must be made in
the same case in which it is offered. If made in another case or in another court, the fact of such admission must be proved as in the case of any
other fact, although if made in a judicial proceeding it is entitled to greater weight. 28

RGC and Gervel introduced Qua’s Motion to Dismiss and the Order dismissing Collection Case No. 8364 to prove Qua’s claim that the payment was
for the entire obligation. Qua does not deny making such statement but explained that he "honestly believed and pleaded in the lower court and in
CA-G.R. CV No. 58550 that the entire debt was fully extinguished when the petitioners paid P7 million to Metrobank." 29

We find Qua’s explanation substantiated by the evidence on record. As stated in the Agreements, Ladtek’s original loan from Metrobank was only
P6.2 million. Therefore, Qua reasonably believed that RGC and Gervel’s P7 million payment to Metrobank pertained to the entire obligation. However,
subsequent facts indisputably show that RGC and Gervel’s payment was not for the entire obligation. RTC-Branch 149 reinstated Collection Case
No. 8364 against Qua and ruled in Metrobank’s favor, ordering Qua to pay P6.2 million.

Whether payment of the entire obligation is an essential condition for reimbursement

RGC and Gervel assail the Court of Appeals’ ruling that the parties’ liabilities under the Agreements depend on the full payment of the obligation.
RGC and Gervel insist that it is not an essential condition that the entire obligation must first be paid before they can seek reimbursement fro m Qua.
RGC and Gervel contend that Qua should pay 42.22% of any amount which they paid or would pay Metrobank and PDCP.

RGC and Gervels’ contention is partly meritorious.

Payment of the entire obligation by one or some of the solidary debtors results in a corresponding obligation of the other debtors to reimburse the
paying debtor.30 However, we agree with RGC and Gervel’s contention that in this case payment of the entire obligation is not an essential con dition
before they can seek reimbursement from Qua. The words of the Agreements are clear.

RGC, GERVEL and QUA each covenant that each will respectively reimburse the party made to pay the Lenders to the extent and subject to
the limitations set forth herein, all sums of money which the party made to pay the Lenders shall pay or become liable to pay by reason
of any of the foregoing, and will make such payments within five (5) days from the date that the party made to pay the Lenders gi ves written
notice to the parties hereto that it shall have become liable therefor and has advised the Lenders of its willingness to pay whether or not it shall
have already paid out such sum or any part thereof to the Lenders or to the persons entitled thereto. (Emphasis supplied)

The Agreements are contracts of indemnity not only against actual loss but against liability as well. In Associated Insurance & Surety Co., Inc. v.
Chua,31 we distinguished between a contract of indemnity against loss and a contract of indemnity against liability, thus: 32
 The agreement here sued upon is not only one of indemnity against loss but of indemnity against liability. While the first does not render the
indemnitor liable until the person to be indemnified makes payment or sustains loss, the second becomes operative as soon as the liability
of the person indemnified arises irrespective of whether or not he has suffered actual loss. (Emphasis supplied)

Therefore, whether the solidary debtor has paid the creditor, the other solidary debtors should indemnify the former once his liability becomes absolute.
However, in this case, the liability of RGC, Gervel and Qua became absolute simultaneously when Ladtek defaulted in its loan payment. As a result,
RGC, Gervel and Qua all became directly liable at the same time to Metrobank and PDCP. Thus, RGC and Gervel cannot automatica lly claim for
indemnity from Qua because Qua himself is liable directly to Metrobank and PDCP.

If we allow RGC and Gervel to collect from Qua his proportionate share, then Qua would pay much more than his stipulated liability under the
Agreements. In addition to the P3,860,646 claimed by RGC and Gervel, Qua would have to pay his liability of P6.2 million to Metrobank and more
than P1 million to PDCP. Since Qua would surely exceed his proportionate share, he would then recover from RGC and Gervel the excess payment.
This situation is absurd and circuitous.

Contrary to RGC and Gervel’s claim, payment of any amount will not automatically result in reimbursement. If a solidary debtor pays the obligation
in part, he can recover reimbursement from the co-debtors only in so far as his payment exceeded his share in the obligation.33 This is precisely
because if a solidary debtor pays an amount equal to his proportionate share in the obligation, then he in effect pays only what is due from him. If the
debtor pays less than his share in the obligation, he cannot demand reimbursement because his payment is less than his actual debt.

To determine whether RGC and Gervel have a right to reimbursement, it is indispensable to ascertain the total obligation of the parties. At this point,
it becomes necessary to consider the decision in Collection Case No. 8364 on the parties’ obligation to Metrobank. To repeat, Metrobank filed
Collection Case No. 8364 against Ladtek, RGC, Gervel and Qua to collect Ladtek’s unpaid loan.

RGC and Gervel assail the Court of Appeals’ consideration of the decision in Collection Case No. 8364 34 because Qua did not offer the decision in
evidence during the trial in Foreclosure Case No. 88-2643 subject of this petition. RTC-Branch 6235 rendered the decision in Collection Case No. 8364
on 21 November 1996 while Qua filed his Notice of Appeal of the 3 May 1996 Order on 19 June 1996. Qua could not have possibly offered in evidence
the decision in Collection Case No. 8364 because RTC-Branch 62 rendered the decision only after Qua elevated the present case to the Court of
Appeals. Hence, Qua submitted the decision in Collection Case No. 8364 during the pendency of the appeal of Foreclosure Case No. 88-2643 in the
Court of Appeals.

As found by RTC-Branch 62, RGC, Gervel and Qua’s total obligation was P14,200,854.37 as of 31 October 1987. 36During the pendency of Collection
Case No. 8364, RGC and Gervel paid Metrobank P7 million. Because of the payment, Metrobank executed a quitclaim 37 in favor of RGC and Gervel.
By virtue of Metrobank’s quitclaim, RTC-Branch 62 dismissed Collection Case No. 8364 against RGC and Gervel, leaving Ladtek and Qua as
defendants. Considering that RGC and Gervel paid only P7 million out of the total obligation of P14,200,854.37, which payment was less than RGC
and Gervel’s combined shares in the obligation, 38 it was clearly partial payment. Moreover, if it were full payment, then the obligation would have been
extinguished. Metrobank would have also released Qua from his obligation.

RGC and Gervel also made partial payment to PDCP. Proof of this is the Release from Solidary Liability that PDCP executed in RGC and Gervel’s
favor which stated that their payment of P1,730,543.55 served as "full payment of their corresponding proportionate share" in Ladtek’s foreign currency
loan.39 Moreover, PDCP filed a collection case against Qua alone, docketed as Civil Case No. 2259, in the Regional Trial Court of Makati, Branch
150.40
Since they only made partial payments, RGC and Gervel should clearly and convincingly show that their payments to Metrobank and PDCP exceeded
their proportionate shares in the obligations before they can seek reimbursement from Qua. This RGC and Gervel failed to do. RGC and Gervel, in
fact, never claimed that their payments exceeded their shares in the obligations. Consequently, RGC and Gervel cannot validly seek reimbursement
from Qua.

Whether there was novation of the Agreements

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

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

We find that there was no novation of the Agreements. The parties did not constitute a new obligation to substitute the Agree ments. The terms and
conditions of the Agreements remain the same. There was also no showing of complete incompatibility in the manner of payment of the parties’
obligations. Contrary to the Court of Appeals’ ruling, the mode or manner of payment by the parties did not change from one f or the entire obligation
to one merely of proportionate share. The creditors, namely Metrobank and PDCP, merely proceeded against RGC and Gervel for their proportionate
shares only.43 This preference is within the creditors’ discretion which did not necessarily affect the nature of the obligations as well as the terms and
conditions of the Agreements. A creditor may choose to proceed only against some and not all of the solidary debtors. The creditor may also choose
to collect part of the debt from some of the solidary debtors, and the remaining debt from the other solidary debtors.

In sum, RGC and Gervel have no legal basis to seek reimbursement from Qua. Consequently, RGC and Gervel cannot validly foreclose the pledge
of Qua’s GMC shares of stock which secured his obligation to reimburse. 44Therefore, the foreclosure of the pledged shares of stock has no leg to
stand on.

WHEREFORE, we DENY the petition. The Decision dated 6 March 2000 of the Court of Appeals in CA-G.R. CV No. 54737 is AFFIRMED. Costs
against petitioners.

SO ORDERED.
G.R. No. 175021 June 15, 2011

REPUBLIC OF THE PHILIPPINES, represented by the Chief of the Philippine National Police, Petitioner,
vs.
THI THU THUY T. DE GUZMAN, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari1 filed by Republic of the Philippines, as represented by the Chief of the Philippine National Police (PNP), of
the September 27, 2006 Decision 2 of the Court of Appeals in CA-G.R. CV No. 80623, which affirmed with modification the September 8, 2003
Decision3 of the Regional Trial Court (RTC), Branch 222, of Quezon City in Civil Case No. Q99-37717.

Respondent is the proprietress of Montaguz General Merchandise (MGM), 4 a contractor accredited by the PNP for the supply of office and construction
materials and equipment, and for the delivery of various services such as printing and rental, repair of various equipment, and renovation of buildings,
facilities, vehicles, tires, and spare parts. 5

On December 8, 1995, the PNP Engineering Services (PNPES), released a Requisition and Issue Voucher 6 for the acquisition of various building
materials amounting to Two Million Two Hundred Eighty-Eight Thousand Five Hundred Sixty-Two Pesos and Sixty Centavos (₱2,288,562.60) for the
construction of a four-storey condominium building with roof deck at Camp Crame, Quezon City. 7

Respondent averred that on December 11, 1995, MGM and petitioner, represented by the PNP, through its chief, executed a Contr act of
Agreement8 (the Contract) wherein MGM, for the price of ₱2,288,562.60, undertook to procure and deliver to the PNP the construction mate rials
itemized in the purchase order9 attached to the Contract. Respondent claimed that after the PNP Chief approved the Contract and purchase
order,10 MGM, on March 1, 1996, proceeded with the delivery of the construction materials, as evidenced by Delivery Receipt Nos. 151 -153,11Sales
Invoice Nos. 038 and 041,12 and the "Report of Public Property Purchase"13 issued by the PNP’s Receiving and Accounting Officers to their Internal
Auditor Chief. Respondent asseverated that following the PNP’s inspection of the delivered materials on March 4, 1996, 14 the PNP issued two
Disbursement Vouchers; one in the amount of ₱2,226,147.26 in favor of MGM, 15 and the other, 16 in the amount of ₱62,415.34, representing the three
percent (3%) withholding tax, in favor of the Bureau of Internal Revenue (BIR). 17

On November 5, 1997, the respondent, through counsel, sent a letter dated October 20, 1997 18 to the PNP, demanding the payment of ₱2,288,562.60
for the construction materials MGM procured for the PNP under their December 1995 Contract.

On November 17, 1997, the PNP, through its Officer-in-Charge, replied19 to respondent’s counsel, informing her of the payment made to MGM via
Land Bank of the Philippines (LBP) Check No. 0000530631, 20 as evidenced by Receipt No. 001, 21 issued by the respondent to the PNP on April 23,
1996.22

On November 26, 1997, respondent, through counsel, responded by reiterating her demand 23 and denying having ever received the LBP check,
personally or through an authorized person. She also claimed that Receipt No. 001, a copy of which was attached to the PNP’s November 17, 1997
letter, could not support the PNP’s claim of payment as the aforesaid receipt belonged to Montaguz Builders, her other compan y, which was also
doing business with the PNP, and not to MGM, with which the contract was made.
On May 5, 1999, respondent filed a Complaint for Sum of Money against the petitioner, represented by the Chief of the PNP, before the RTC, Branch
222 of Quezon City.24 This was docketed as Civil Case No. Q99-37717.

The petitioner filed a Motion to Dismiss 25 on July 5, 1999, on the ground that the claim or demand set forth in respondent’s complaint had already
been paid or extinguished,26 as evidenced by LBP Check No. 0000530631 dated April 18, 1996, issued by the PNP to MGM, and Receipt No. 001,
which the respondent correspondingly issued to the PNP. The petitioner also argued that aside from the fact that the respondent, in her October 20,
1997 letter, demanded the incorrect amount since it included the withholding tax paid to the BIR, her delay in making such demand "[did] not speak
well of the worthiness of the cause she espouse[d]."27

Respondent opposed petitioner’s motion to dismiss in her July 12, 1999 Opposition28and September 10, 1999 Supplemental Opposition to Motion to
Dismiss.29 Respondent posited that Receipt No. 001, which the petitioner claimed was issued by MGM upon respondent’s receipt of the LBP check,
was, first, under the business name "Montaguz Builders," an entity separate from MGM. Next, petitioner’s allegation that she received the LBP check
on April 19, 1996 was belied by the fact that Receipt No. 001, which was supposedly issued for the check, was dated four days later, or April 23,
1996. Moreover, respondent averred, the PNP’s own Checking Account Section Logbook or the Warrant Register, showed that it was one Edgardo
Cruz (Cruz) who signed for the check due to MGM, 30contrary to her usual practice of personally receiving and signing for checks payable to her
companies.

After conducting hearings on the Motion to Dismiss, the RTC issued an Order 31 on May 4, 2001, denying the petitioner’s motion for lack of merit. The
petitioner thereafter filed its Answer, 32 wherein it restated the same allegations in its Motion to Dismiss.

Trial on the merits followed the pre-trial conference, which was terminated on June 25, 2002 when the parties failed to arrive at an amicable
settlement.33

On September 3, 2002, shortly after respondent was sworn in as a witness, and after her counsel formally offered her testimony in evidence, Atty.
Norman Bueno, petitioner’s counsel at that time, made the following stipulations in open court:

Atty. Bueno (To Court)

Your Honor, in order to expedite the trial, we will admit that this witness was contracted to deliver the construction supplies or materials. We will admit
that she complied, that she actually delivered the materials. We will admit that Land Bank Corporation check was issued although we will not admit
that the check was not released to her, as [a] matter of fact, we have the copy of the check. We will admit that Warrant Regi ster indicated that the
check was released although we will not admit that the check was not received by the [respondent].

Court (To Atty. Albano)

So, the issues here are whether or not the [respondent] received the check for the payment of the construction materials or supplies and who received
the same. That is all.

Atty. Albano (To Court)

Yes, your Honor.

Court (To Atty. Albano)

I think we have an abbreviated testimony here. Proceed. 34 (Emphasis ours.)

The stipulations made by the petitioner through Atty. Bueno were in consonance with the admissions it had previously made, also through Atty. Bueno,
in its Answer,35 and pre-trial brief 36:

Answer:

IX

It ADMITS the allegation in paragraph 9 of the Complaint that [respondent] delivered to the PNP Engineering Service the construction materials. It
also ADMITS the existence of Receipt Nos. 151, 152 and 153 alleged in the same paragraph, copies of which are attached to the Complaint as
Annexes "G," "G-1" and "G-2."37 (Emphasis ours.)

Pre-trial Brief:

III

ADMISSIONS

3.1. Facts and/or documents admitted

For brevity, [petitioner] admit[s] only the allegations in [respondent’s] Complaint and the annexes thereto that were admitte d in the
Answer.38 (Emphases ours.)

With the issue then confined to whether respondent was paid or not, the RTC proceeded with the trial.

Respondent, in her testimony, narrated that on April 18, 1996, she went to the PNP Finance Center to claim a check due to one of her companies,
Montaguz Builders. As the PNP required the issuance of an official receipt upon claiming its checks, respondent, in preparation for the PNP check
she expected, already signed Montaguz Builders Official Receipt No. 001, albeit the details were still blank. However, upon arriving at the PNP Finance
Center, respondent was told that the check was still with the LBP, which could not yet release it. Respondent then left for the Engineering Services
Office to see Captain Rama, along with Receipt No. 001, which she had not yet issued. 39Respondent claimed that after some time, she left her
belongings, including her receipt booklet, at a bench in Captain Rama’s office when she went around the Engineering Office to talk to some other
people.40 She reasoned that since she was already familiar and comfortable with the people in the PNPES Office, she felt no need to ask anyone to
look after her belongings, as it was her "normal practice" 41 to leave her belongings in one of the offices there. The next day, respondent alleged that
when she returned for the check due to Montaguz Builders that she was not able to claim the day before, she discovered for the first time that Receipt
No. 001, which was meant for that check, was missing. Since she would not be able to claim her check without issuing a receip t, she just informed
the releaser of the missing receipt and issued Receipt No. 002 in its place. 42 After a few months, respondent inquired with the PNP Finance Center
about the payment due to MGM under the Contract of December 1995 and was surprised to find out that the check payable to MGM had already
been released. Upon making some inquiries, respondent learned that the check, payable to MGM, in the amount of ₱2,226,147.26, was received by
Cruz, who signed the PNP’s Warrant Register. Respondent admitted to knowing Cruz, as he was connected with Highland Enterprises, a fellow PNP-
accredited contractor. However, she denied ever having authorized Cruz or Highland Enterprises to receive or claim any of the checks due to MGM
or Montaguz Builders.43 When asked why she had not filed a case against Cruz or Herminio Reyes, the owner of Highland Enterprises, considering
the admitted fact that Cruz claimed the check due to her, respondent declared that there was no reason for her to confront them as it was the PNP’s
fault that the check was released to the wrong person. Thus, it was the PNP’s problem to find out where the money had gone, w hile her course of
action was to go after the PNP, as the party involved in the Contract. 44

On April 29, 2003, petitioner presented Ms. Jesusa Magtira, who was then the "check releaser"45 of the PNP, to prove that the respondent received
the LBP check due to MGM, and that respondent herself gave the check to Cruz. 46 Ms. Magtira testified that on April 23, 1996, she released the LBP
check payable to the order of MGM, in the amount of ₱2,226,147.26, to the respondent herein, whom she identified in open court. She claimed that
when she released the check to respondent, she also handed her a voucher, and a logbook also known as the Warrant Register, for signing.47 When
asked why Cruz was allowed to sign for the check, Ms. Magtira explained that this was allowed since the respondent already ga ve her the official
receipt for the check, and it was respondent herself who gave the logbook to Cruz for signing.48

The petitioner next presented Edgardo Cruz for the purpose of proving that the payment respondent was claiming rightfully belonged to Highland
Enterprises. Cruz testified that Highland Enterprises had been an accredited contractor of the PNP since 1975. In 1995, Cruz claimed that the PNPES
was tasked to construct "by administration" a condominium building. This meant that the PNPES had to do all the work, from the canvassing of the
materials to the construction of the building. The PNPES allegedly lacked the funds to do this and so asked for Highland Ente rprises’s help.49 In a
meeting with its accredited contractors, the PNPES asked if the other contractors would agree to the use of their business na me50 for a two percent
(2%) commission of the purchase order price to avoid the impression that Highland Enterprises was monopolizing the supply of labor and materials
to the PNP.51Cruz alleged that on April 23, 1996, he and the respondent went to the PNP Finance Center to claim the LBP check due to MGM. Cruz
said that the respondent handed him the already signed Receipt No. 001, which he filled up. He claimed that the respondent knew that the LBP check
was really meant for Highland Enterprises as she had already been paid her 2% commission for the use of her business name in the concerned
transaction.52

On September 8, 2003, the RTC rendered its Decision, the dispositive of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of [respondent] and against [petitioner] ordering the la tter to pay
[respondent] the following sums:

(1) ₱2,226,147.26 representing the principal sum plus interest at 14% per annum from April 18, 1996 until the same shall have been fully paid;

(2) 20% of the sum to be collected as attorney’s fees; and,

(3) Costs of suit.53

The RTC declared that while Cruz’s testimony seemed to offer a plausible explanation on how and why the LBP check ended up wi th him, the
petitioner, already admitted in its Answer, and Pre-trial Brief, that MGM, did in fact deliver the construction materials worth ₱2,288,562.60 to the PNP.
The RTC also pointed out the fact that the petitioner made the same admissions in open court to expedite the trial, leaving only one issue to be
resolved: whether the respondent had been paid or not. Since this was the only issue, the RTC said that it had no choice but to go back to the
documents and the "documentary evidence clearly indicates that the check subject of this case was never received by [respondent]."54 In addition,
the PNP’s own Warrant Register showed that it was Edgardo Cruz who received the LBP check, and Receipt No. 001 submitted by the petitioner to
support its claim was not issued by MGM, but by Montaguz Builders, a different entity. Finally, the RTC held that Cruz’s test imony, which appeared
to be an afterthought to cover up the PNP’s blunder, were irreconcilable with the petitioner’s earlier declarations and admissions, hence, not credit-
worthy.

The petitioner appealed this decision to the Court of Appeals, which affirmed with modification the RTC’s ruling on September 27, 2006:
WHEREFORE, the decision appealed from is AFFIRMED with the MODIFICATION that the 14% interest per annum imposed on the principal amount
is ordered reduced to 12%, computed from November 16, 1997 until fully paid. The order for the payment of attorney’s fees and costs of the suit is
DELETED.55

The Court of Appeals, in deciding against the petitioner, held that the petitioner’s admissions and declarations, made in various stages of the
proceedings are express admissions, which cannot be overcome by allegations of respondent’s implied admissions. Moreover, petitioner cannot
controvert its own admissions and it is estopped from denying that it had a contract with MGM, which MGM duly complied with. The Court of Appeals
agreed with the RTC that the real issue for determination was whether the petitioner was able to discharge its contractual ob ligation with the
respondent. The Court of Appeals held that while the PNP’s own Warrant Register disclosed that the payment due to MGM was received by Cruz, on
behalf of Highland Enterprises, the PNP’s contract was clearly with MGM, and not with Highland Enterprises. Thus, in order to extinguish its obligation,
the petitioner should have directed its payment to MGM unless MGM authorized a third person to accept payment on its behalf.

The petitioner is now before this Court, praying for the reversal of the lower courts’ decisions on the ground that "the Cour t of Appeals committed a
serious error in law by affirming the decision of the trial court."56

THE COURT’S RULING:

This case stemmed from a contract executed between the respondent and the petitioner. While the petitioner, in proclaiming that the respondent’s
claim had already been extinguished, initially insisted on having fulfilled its contractual obligation, it now contends that the contract it executed with
the respondent is actually a fictitious contract to conceal the fact that only one contractor will be supplying all the materials and labor for the PNP
condominium project.

Both the RTC and the Court of Appeals upheld the validity of the contract between the petitioner and the respondent on the strength of the documentary
evidence presented and offered in Court and on petitioner’s own stipulations and admissions during various stages of the proceedings.

It is worthy to note that while this petition was filed under Rule 45 of the Rules of Court, the assertions and arguments advanced herein are those that
will necessarily require this Court to re-evaluate the evidence on record.

It is a well-settled rule that in a petition for review under Rule 45, only questions of law may be raised by the parties and passed upon by this Court.57

This Court has, on many occasions, distinguished between a question of law and a question of fact. We held that when there is doubt as to what the
law is on a certain state of facts, then it is a question of law; but when the doubt arises as to the truth or falsity of the alleged facts, then it is a question
of fact.58 "Simply put, when there is no dispute as to fact, the question of whether or not the conclusion drawn therefrom is correct, i s a question of
law."59To elucidate further, this Court, in Hko Ah Pao v. Ting 60 said:

One test to determine if there exists a question of fact or law in a given case is whether the Court can resolve the issue that was raised without having
to review or evaluate the evidence, in which case, it is a question of law; otherwise, it will be a question of fact. Thus, the petition must not involve the
calibration of the probative value of the evidence presented. In addition, the facts of the case must be undisputed, and the only issue that should be
left for the Court to decide is whether or not the conclusion drawn by the CA from a certain set of facts was appropriate. 61(Emphases ours.)

In this case, the circumstances surrounding the controversial LBP check are central to the issue before us, the resolution of which, will require a
perusal of the entire records of the case including the transcribed testimonies of the witnesses. Since this is an appeal via certiorari, questions of fact
are not reviewable. As a rule, the findings of fact of the Court of Appeals are final and conclusive 62 and this Court will only review them under the
following recognized exceptions: (1) when the inference made is manifestly mistaken, absurd or impossible; (2 ) when there is a grave abuse of
discretion; (3) when the finding is grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the Court of Appeals is based
on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues
of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to
those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the Court
of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different
conclusion; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence
on record.63

Although petitioner’s sole ground to support this petition was stated in such a manner as to impress upon this Court that the Court of Appeals
committed an error in law, what the petitioner actually wants us to do is to review and re-examine the factual findings of both the RTC and the Court
of Appeals.

Since the petitioner has not shown this Court that this case falls under any of the enumerated exceptions to the rule, we are constrained to uphold
the facts as established by both the RTC and the Court of Appeals, and, consequently, the conclusions reached in the appealed decision.

Nonetheless, even if we were to exercise utmost liberality and veer away from the rule, the records will show that the petitioner had failed to establish
its case by a preponderance of evidence. 64 Section 1, Rule 133 of the Revised Rules of Court provides the guidelines in determining preponderance
of evidence:

SECTION 1. Preponderance of evidence, how determined.— In civil cases, the party having the burden of proof must establish his case by a
preponderance of evidence. In determining where the preponderance or superior weight of evidence on the issues involved lies , the court may
consider all the facts and circumstances of the case, the witnesses’ manner of testifying, their intelligence, their means an d opportunity of knowing
the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or
want of interest, and also their personal credibility so far as the same may legitimately appear upon the trial. The court may also consider the number
of witnesses, though the preponderance is not necessarily with the greater number.

Expounding on the concept of preponderance of evidence, this Court in Encinas v. National Bookstore, Inc., 65 held:

"Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on either side and is usually considered to be synonymous
with the term "greater weight of the evidence" or "greater weight of the credible evidence." Preponderance of evidence is a phrase which, in the last
analysis, means probability of the truth. It is evidence which is more convincing to the court as worthy of belief than that which is offered in opposition
thereto.66

The petitioner avers that the Court of Appeals should not have relied "heavily, if not solely" 67 on the admissions made by petitioner’s former counsel,
thereby losing sight of the "secret agreement" between the respondent and Highland Enterprises, which explains why all the do cumentary evidence
were in respondent’s name.68

The petitioner relies mainly on Cruz’s testimony to support its allegations. Not only did it not present any other witness to corroborate Cruz, but it also
failed to present any documentation to confirm its story. It is doubtful that the petitioner or the contractors would enter into any "secret agreement"
involving millions of pesos based purely on verbal affirmations. Meanwhile, the respondent not only presented all the documentary evidence to prove
her claims, even the petitioner repeatedly admitted that respondent had fully complied with her contractual obligations.
The petitioner argued that the Court of Appeals should have appreciated the clear and adequate testimony of Cruz, and should have given it utmost
weight and credit especially since his testimony was a "judicial admission against interest – a primary evidence which should have been accorded full
evidentiary value."69

The trial court’s appreciation of the witnesses’ testimonies is entitled to the highest respect since it was in a better position to assess their
credibility.70 The RTC held Cruz’s testimony to be "not credit worthy" 71 for being irreconcilable with petitioner’s earlier admissions. Contrary to
petitioner’s contentions, Cruz’s testimony cannot be considered as a judicial admission against his interest as he is neither a party to the case nor
was his admission against his own interest, but actually against either the petitioner’s or the respondent’s interest. Petitioner’s statements on the other
hand, were deliberate, clear, and unequivocal and were made in the course of judicial proceedings; thus, they qualify as judicial admissions.72 In
Alfelor v. Halasan,73 this Court held that:

A party who judicially admits a fact cannot later challenge that fact as judicial admissions are a waiver of proof; production of evidence is dispensed
with. A judicial admission also removes an admitted fact from the field of controversy. Consequently, an admission made in the pleadings cannot be
controverted by the party making such admission and are conclusive as to such party, and all proofs to the contrary or inconsistent therewith should
be ignored, whether objection is interposed by the party or not. The allegations, statements or admissions contained in a ple ading are conclusive as
against the pleader. A party cannot subsequently take a position contrary of or inconsistent with what was pleaded. 74

The petitioner admitted to the existence and validity of the Contract of Agreement executed between the PNP and MGM, as represented by the
respondent, on December 11, 1995. It likewise admitted that respondent delivered the construction materials subject of the Co ntract, not once, but
several times during the course of the proceedings. The only matter petitioner assailed was respondent’s allegation that she had not yet been paid. If
Cruz’s testimony were true, the petitioner should have put respondent in her place the moment she sent a letter to the PNP, demanding payment for
the construction materials she had allegedly delivered. Instead, the petitioner replied that it had already paid respondent a s evidenced by the LBP
check and the receipt she supposedly issued. This line of defense continued on, with the petitioner assailing only the respondent’s claim of
nonpayment, and not the rest of respondent’s claims, in its motion to dismiss, its answer, its pre-trial brief, and even in open court during the
respondent’s testimony. Section 4, Rule 129 of the Rules of Court states:

SECTION 4. Judicial Admissions.–An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not
require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.

Petitioner’s admissions were proven to have been made in various stages of the proceedings, and since the petitioner has not shown us that they
were made through palpable mistake, they are conclusive as to the petitioner. Hence, the only question to be resolved is whether the respondent was
paid under the December 1995 Contract of Agreement.

The RTC and the Court of Appeals correctly ruled that the petitioner’s obligation has not been extinguished. The petitioner’s obligation consists of
payment of a sum of money. In order for petitioner’s payment to be effective in extinguishing its obligation, it must be made to the proper person.
Article 1240 of the Civil Code states:

Art. 1240. Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person
authorized to receive it.

In Cembrano v. City of Butuan,75 this Court elucidated on how payment will effectively extinguish an obligation, to wit:
Payment made by the debtor to the person of the creditor or to one authorized by him or by the law to receive it extinguishes the obligation. When
payment is made to the wrong party, however, the obligation is not extinguished as to the creditor who is without fault or negligence even if the debtor
acted in utmost good faith and by mistake as to the person of the creditor or through error induced by fraud of a third person.

In general, a payment in order to be effective to discharge an obligation, must be made to the proper person. Thus, payment m ust be made to the
obligee himself or to an agent having authority, express or implied, to receive the particular payment. Payment made to one having apparent authority
to receive the money will, as a rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one who by
law is authorized to act for the creditor, it will work a discharge. The receipt of money due on a judgment by an officer authorized by law to accept it
will, therefore, satisfy the debt.76

The respondent was able to establish that the LBP check was not received by her or by her authorized personnel. The PNP’s own records show that
it was claimed and signed for by Cruz, who is openly known as being connected to Highland Enterprises, another contractor. Hence, absent any
showing that the respondent agreed to the payment of the contract price to another person, or that she authorized Cruz to cla im the check on her
behalf, the payment, to be effective must be made to her. 77

The petitioner also challenged the RTC’s findings, on the ground that it "overlooked material fact and circumstance of signif icant weight and
substance."78 Invoking the doctrine of adoptive admission, the petitioner pointed out that the respondent’s inaction towards Cruz, whom she has
known to have claimed her check as early as 1996, should be taken against her. Finally, the petitioner contends that Cruz’s testimony should be taken
against respondent as well, under Rule 130, Sec. 32 of the Revised Rules on Evidence, since she has not presented any "controverting evidence x x
x notwithstanding that she personally heard it."79

The respondent has explained her inaction towards Cruz and Highland Enterprises. Both the RTC and the Court of Appeals have found her explanation
sufficient and this Court finds no cogent reason to overturn the assessment by the trial court and the Court of Appeals of the respondent’s testimony.
It may be recalled that the respondent argued that since it was the PNP who owed her money, her actions should be directed towards the PNP and
not Cruz or Highland Enterprises, against whom she has no adequate proof. 80 Respondent has also adequately explained her delay in filing an action
against the petitioner, particularly that she did not want to prejudice her other pending transactions with the PNP. 81

The petitioner claims that the RTC "overlooked material fact and circumstance of significant weight and substance," 82 but it ignores all the documentary
evidence, and even its own admissions, which are evidence of the greater weight and substance, that support the conclusions reached by both the
RTC and the Court of Appeals.

We agree with the Court of Appeals that the RTC erred in the interest rate and other monetary sums awarded to respondent as baseless. However,
we must further modify the interest rate imposed by the Court of Appeals pursuant to the rule laid down in Eastern Shipping L ines, Inc. v. Court of
Appeals83:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held
liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
 demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awa rded may be
imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment
of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit.84

Since the obligation herein is for the payment of a sum of money, the legal interest rate to be imposed, under Article 2209 of the Civil Code is six
percent (6%) per annum:

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent
per annum.

Following the guidelines above, the legal interest of 6% per annum is to be imposed from November 16, 1997, the date of the last demand, and 12%
in lieu of 6% from the date this decision becomes final until fully paid.lawphi1

Petitioner’s allegations of sham dealings involving our own government agencies are potentially disturbing and alarming. If Cruz’s testimony were
true, this should be a lesson to the PNP not to dabble in spurious transactions. Obviously, if it can afford to give a 2% commission to other contractors
for the mere use of their business names, then the petitioner is disbursing more money than it normally would in a legitimate transaction. It is
recommended that the proper agency investigate this matter and hold the involved personnel accountable to avoid any similar occurrence in the
future.

WHEREFORE, the Petition is hereby DENIED and the Decision of the Court of Appeals in C.A. G.R. CV No. 80623 dated September 27, 2006 is
AFFIRMED with the MODIFICATION that the legal interest to be paid is SIX PERCENT (6%) per annum on the amount of ₱2,226,147.26, computed
from the date of the last demand or on November 16, 1997. A TWELVE PERCENT (12%) per annum interest in lieu of SIX PERCENT (6%) shall be
imposed on such amount upon finality of this decision until the payment thereof.

SO ORDERED.
March 18, 2015

G.R. No. 201427

TEOFILO B. ADOLFO, Petitioner,

vs.
FE T. ADOLFO, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside: 1) the October 6, 2009 Decision 2 of the Court of Appeals (CA) in CA-G.R. CV No. 01783
reversing the October 2, 2006 Order3 of the Regional Trial Court, 7th Judicial Region, Mandaue City (RTC Mandaue), Branch 55 in Civil Case No.
MAN-4821; as well as 2) the CA's March 2, 2012 Resolution 4 denying petitioner's Motion for Reconsideration 5 and Supplement6 thereto.

Civil Case No. MAN-4821

On April 14, 2004, petitioner Teofilo B. Adolfo filed with the RTC Mandaue a Petition 7 for judicial separation of property against his estranged wife,
respondent Fe Adolfo, nee Tudtud. Docketed as Civil Case No. MAN-4821 and assigned to Branch 55, the petition alleged that the parties were
married on November 26, 1966; that the union bore one child; that during the marriage, they acquired through conjugal funds Lot 1087-A-2-E, a 3,652-
square meter property in Brgy. Cabancalan, Mandaue City, Cebu (the subject property) covered by Transfer Certificate of Title No. (TCT) 18368; that
later on, the parties separated due to irreconcilable differences; that since reunion was no longer feasible, petitioner suggested a separation of the
conjugal property, but respondent adamantly refused; that respondent denied petitioner’s co-ownership of the subject property, claiming the same as
her paraphernal property; that several earnest efforts to amicably settle the matter between them proved unavailing; and that a judicial separation of
property is proper under the circumstances and pursuant to Article 135(6) of the Family Code. 8Petitioner thus prayed that judgment be rendered
decreeing a separation of the conjugal property and the subdivision or sale thereof, to the end of dividing the same or the p roceeds thereof; and
ordering respondent to pay petitioner P50,000.00 as attorney’s fees, appearance fees (P2,000.00 per hearing), and P20,000.00 litigation costs.

In her Answer9 with counterclaim, respondent contended that while she remained married to petitioner, she is the sole owner of the subject property,
the same being her paraphernal property which she inherited from her mother; that petitioner is a lazy bum, gambler, drunkard, wife abuser, and
neglectful father; that respondent found all means to support the family even as petitioner neglected it; that respondent bought on installment a tricycle
for the petitioner’s use in business, but he kept the proceeds thereof to himself and used the same in his gambling and drinking sprees; that respondent
alone took the initiative to support the family and found ways to take care of the daily needs of her child; that she caused to be built on a portion of
her mother’s land a house even while petitioner was bumming around; that one day, petitioner destroyed the roof of the house that was then be ing
built; that petitioner subsequently abandoned her and their child in 1968, and transferred to Davao City where he took a mist ress and begot four
children by her; that in 1986, petitioner returned to Cebu City seeking reconciliation with respondent; that respondent took petitioner back, but in 1987
they once more separated; that thereafter, respondent never again saw or heard from petitioner.

Respondent claimed in her Answer that the subject property was a portion of a bigger lot (mother lot) owned by her mother Pet ronila Tudtud which
was covered by TCT T-15941. On October 11, 1967, her mother executed a quitclaim deed transferring a portion of the mother lot – the subject
property – to respondent. The mother title TCT T-15941 was then cancelled and a new one, TCT (17216)- 5415, was issued in respondent’s name.
Respondent then sold the subject property to her brother on January 19, 1968, and a new TCT (17833)-5515 was issued in her brother’s name. Her
brother then mortgaged the property to Development Bank of the Philippines (DBP), which foreclosed on the same. TCT 18231 was issued in DBP’s
name. DBP then sold the property to the spouses Antonio and Lucy Garcia (the Garcias), and TCT 18266 was in turn issued in their name. Finally,
on May 25, 1983, the Garcias sold back the subject property to respondent, and a new title – TCT 1836810 – was then issued in the name of respondent
"FE M. TUDTUD, x x x married to Teofilo Adolfo."

Respondent argued that she is the sole owner of the subject property, the same being her paraphernal property which she alone redeemed from the
Garcias; that the inclusion of petitioner’s name in TCT 18368 does not make him a co- owner of the property, but was merely necessary to describe
respondent’s civil status; and that under Article 135 11 of the Civil Code, all property brought by the wife to the marriage as well as all property she
acquires during the marriage in accordance with Article 148 12 of the same Code constitutes paraphernal property.

Respondent thus prayed that the petition be dismissed. By way of counterclaim, she sought the payment of moral, exemplary, and nominal damages,
attorney’s fees, and litigation expenses.

Civil Case No. MAN-2683

In 1996, respondent’s sister Florencia Tudtud and her husband Juanito Gingoyon (the Gingoyons) filed a case for partition wit h damages against
respondent. The case was docketed as Civil Case No. MAN-2683 and raffled to Branch 55 of the RTC Mandaue. The Complaint 13 therein alleged
that in 1988, respondent executed a deed of sale in favor of the Gingoyons over a 300-square meter portion of the subject property, but that respondent
refused to partition/subdivide the same even after the Gingoyons paid the taxes, fees and expenses of the sale. For her defense, respondent claimed
in her Answer14 that when the sale to the Gingoyons was made, the subject property constituted conjugal property of her marriage with petitioner; that
as early as 1983, or when the Garcias executed the deed of sale in her favor, the subject property became a conjugal asset; since petitioner did not
sign the deed of sale in favor of the Gingoyons as he was in Davao at the time and knew nothing about the sale, the sale was null and void.

On May 15, 2002, the trial court rendered its Decision 15 in Civil Case No. MAN-2683, declaring that the subject property constituted conjugal property
of the marriage. It thus nullified the 1988 deed of sale executed by respondent in favor of the Gingoyons for lack of consent on the part of petitioner,
citing Article 124 of the Family Code. 16 The trial court likewise awarded moral and exemplary damages, attorney's fees and litigation expenses in
favor of the respondent in the total amount of P107,000.00.

The Gingoyons filed an appeal with the CA, which was docketed as CA- G.R. CV No. 78971.

Motion for Judgment Based on the Pleadings in Civil Case No. MAN-4821

Meanwhile, during the pre-trial conference in Civil Case No. MAN-4821, petitioner submitted as part of his evidence and for marking certified true
copies of the Gingoyons’ Complaint in Civil Case No. MAN-2683, respondent’s Answer thereto, and the trial court’s May 15, 2002 Decision in said
case.

On August 1, 2005, petitioner filed a Request for Admission 17 of 1) the genuineness of the duly marked certified true copies of the Complaint, Answer,
and Decision in Civil Case No. MAN-2683 (Exhibits "F," "G" and "H," respectively); 2) respondent’s declaration in said Answer that the subject property
constituted conjugal property of the marriage; and 3) the trial court’s pronouncement in said case that the subject property forms part of the conjugal
estate.

Respondent failed to file her answer or response to the request for admission.
On September 5, 2005, petitioner filed a Motion for Judgment Based on the Pleadings, 18 stating that since respondent failed to answer his request for
admission, the matters contained in the request are deemed admitted pursuant to Rule 26, Section 2 of the 1997 Rules of Civil Procedure 19 (1997
Rules); that as a consequence of the application of the rule, respondent is in effect considered to have admitted that the subject property is a conjugal
asset of their subsisting marriage which may thus be the subject of his petition for judicial separation of property; and that on account of said admission,
a hearing on the merits becomes unnecessary and, instead, Rule 34 20 of the 1997 Rules on judgments on the pleadings should apply. Petitioner thus
prayed that the trial court render judgment in his favor based on the pleadings.

Respondent filed an Opposition. 21 In her Opposition to Plaintiff’s Memorandum, 22 respondent argued among others that the request for admission
was premature considering that the decision in Civil Case No. MAN-2683 was the subject of an appeal, and thus not yet final.

In an October 11, 2005 Order,23 the trial court directed the transfer of Civil Case No. MAN-4821 to Branch 55 of the RTC Mandaue, since it is said
court which decided the closely related Civil Case No. MAN-2683.

On October 2, 2006, Branch 55 issued an Order24 granting petitioner’s motion for judgment on the pleadings. It held as follows:

This court has painstakingly exerted effort in going over the record and took serious note of all the pleadings, documents and others on file. After
serious consideration, the court believes and so holds that there is basis in rendering judgment. The Motion for Judgment Based on the Pleadings
though denominated as such but [sic] shall be treated as a move to seek summary judgment. x x x

xxxx

The court in arriving at this resolution was guided by the following pronouncements by the Supreme Court in the case of Diman vs. Alumbres, G.R.
No. 131466, November 27, 1998, 299 SCRA 459 x x x:

xxxx

In the same case, it was held –

"It is also the law which determines when a summary judgment is proper. It declares that although the pleadings on their face appear to raise issues
of fact – e.g., there are denials of, or a conflict in, factual allegations – if it is shown by admissions, depositions or affidavits, that those issues are
sham, fictitious, or not genuine, or, in the language of the Rules, that ‘except as to the amount of damages, there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law, the Court shall render a summary judgment for the plaintiff or the defendant,
as the case may be. (Italics and underscoring supplied)

On the other hand, in the case of a summary judgment[,] issues apparently exist – i.e.. facts are asserted in the complaint regarding which there is as
yet no admission, disavowal or qualification; or specific denials or affirmative defenses are in truth set out in the answer – but the issues thus arising
from the pleadings are sham, fictitious, not genuine, as shown by [affidavits], depositions or admissions. In other words, as a noted authority remarks,
a judgment on the pleadings is a judgment on the facts as pleaded, while a summary judgment is a judgment on the facts as summarily proven by
affidavits, depositions or admissions." (Italics and underscoring supplied)

xxxx
Defendant25 did not file any verified answer or a pleading denying under oath the genuineness and authenticity of the documents attached to the
Request for Admission and of the other matters therein set forth. This failure has far reaching implications in that the following are deemed admitted:
a) the genuineness of Exhibits F, G and H, all attached to the Request for Admission; b) that she admitted in paragraph 10 in her Answer to Civil Case
No. MAN-2683 that Lot 1087-A-2-E was no longer paraphernal property but rather a conjugal property of Spouses Teofilo and Fe Adolfo and; c) that
RTC, Branch 55, Mandaue City, sustained and/or held the view of defendant (Fe Tudtud) that Lot 1087-A-2-E is a conjugal property of Spouses
Teofilo and Fe Adolfo, thus, dismissed Civil Case No. MAN-2683 and awarded damages to the defendant.

Judicial admissions may be made in (a) the pleadings filed by the parties,

(b) in the course of the trial either by verbal or written manifestations or stipulations, or (c) in other stages of the judicial proceeding, as in the pre-trial
of the case. Admissions obtained through depositions, written interrogatories or requests for admission are also considered judicial admissions." Page
686, Remedial Law Compendium, Vol. II, 9th Rev. Ed., Regalado

With the admission that Lot 1087-A-2-E is a conjugal property, it follows as its necessary and logical consequence, that plaintiff 26 is entitled to the
relief demanded.

xxxx

A DECISION in Civil Case No. MAN-2683 had already been rendered by RTC, Branch 55, on the 15th day of May 2002 with the court finding that Lot
1087-A-2-E is a conjugal property x x x –

xxxx

For reason[s] of expediency and convenience, the court may even take judicial notice of its earlier decision finding Lot 1087 -A-2-E as a conjugal
property.27

xxxx

Under the circumstances, judicial separation of property is proper. Aware that the separation has the effect of a dissolution of the conjugal partnership
property regime, the presumptive legitime of Nilo Adolfo (the only common child of the spouses) has to be delivered in accordance with Article 51 in
relation to paragraph (8) Article 127 and Article 137 of the Family Code of the Philippines.

WHEREFORE, premises considered, judgment is hereby rendered directing the partition of Lot 1087-A-2-E between the plaintiff and the defendant
in equal share of what remains after allocating to Nilo Adolfo a portion of Nine hundred thirteen (913) square meters represe nting his presumptive
legitime.

The plaintiff is directed to submit to this court the proposed subdivision plan for its consideration before submitting the same for approval to the Bureau
of Lands.

In case of disagreement as to their respective location, the same shall be done through raffle to be conducted by the sheriff who shall see to it that
judgment in this case shall be fully implemented.

SO ORDERED.28
Respondent instituted an appeal with the CA, which was docketed as CA- G.R. CV No. 01783.

Court of Appeals Decision in CA-G.R. CV No. 78971

Meanwhile, on May 30, 2007, the CA rendered its Decision 29 in CA-G.R. CV No. 78971. It reversed the May 15, 2002 Decision of the trial court in
Civil Case No. MAN-2683. It declared, among others, that the subject property was respondent’s paraphernal property. Thus, it held:

Proceeding from the foregoing consideration, the finding that Lot No. 1087-A-2-E is a conjugal property does not have any basis, hence, does not
have any merit at all. On the contrary, plaintiffs-appellants30 sufficiently proved that the aforesaid lot was defendant-appellee’s31 paraphernal property
as the latter even admitted that she inherited the same from her mother although she claimed it as a conjugal property based on the TCT’s attached
to her answer. Another strong indication that Lot No. 1087-A-2-E is solely owned by defendant-appellee is the fact that in another case (Civil Case
No. MAN-2008) involving the same property and the same parties but for a different issue (road right of way), defendant-appellee alone signed the
compromise agreement ceding a portion of the subject lot as a right of way perpetually open and unobstructed for the benefit of plaintiffs-appellants,
defendant-appellee, their respective heirs, assigns and transferees and guests. The same compromise agreement which became the decision of the
case attained finality without defendant-appellee questioning the absence of her husband’s signature.

xxxx

WHEREFORE, prescinding from the foregoing premises, the appeal is hereby GRANTED and the Decision of the Regional Trial Court of Mandaue
City, Branch 55, dated 15 May 2002, in Civil Case No. MAN-2683 is REVERSED and SET ASIDE.

Let the partition of Lot No. 1087-A-2-E consisting of 300 square meters bought by plaintiffs-appellants from defendant-appellee be done in accordance
to [sic] the sketch plan executed for that purpose.

SO ORDERED.32

On June 23, 2007, the above CA decision became final and executory. 33

Ruling of the Court of Appeals in CA-G.R. CV No. 01783

In CA-G.R. CV No. 01783, respondent filed her Appellant’s Brief,34 where she argued that the trial court erred in issuing its October 2, 2006 Order
directing the partition or sale of the subject property; that it was error for the trial court to take judicial notice of its own judgment in Civil Case No.
MAN-2683 and thus declare that the subject property is conjugal, since the issue of whether it constitutes conjugal or parapherna l property was still
pending in the appeal in CA- G.R. CV No. 78971; that since the proceedings in Civil Case No. MAN-2683 have not been terminated and the issue
regarding the character of the subject property has not been resolved with finality, then petitioner’s resort to a request fo r admission and motion for
judgment on the pleadings was premature; and that with the May 30, 2007 Decision in CA-G.R. CV No. 78971, petitioner and the trial court should
submit to the finding therein that the subject property is her paraphernal property.

In his Appellee’s Brief,35 petitioner insisted that the trial court did not err in treating his motion for judgment on the pleadings as one for summary
judgment; that respondent’s Answer in Civil Case No. MAN-2683 constituted a judicial admission that the subject property was a conjugal asset, which
required no further proof; that respondent’s failure to reply to his written request for admission also resulted in the acknowledgment that the subject
property is a conjugal asset; that the trial court correctly took judicial notice of the proceedings in Civil Case No. MAN-2683, as they were relevant
and material to the resolution of Civil Case No. MAN-4821; that since it was not respondent who appealed the May 15, 2002 decision in Civil Case
No. MAN-2683, then the finding therein that the subject property is conjugal should bind her; and that the CA’s eventual finding in C A- G.R. CV No.
78971 that the subject lot was respondent’s paraphernal property cannot bind him because he was not a party to Civil Case No. MAN-2683.

On October 6, 2009, the CA issued the assailed Decision containing the following decretal portion:

WHEREFORE, based from the foregoing premises, the Order of the Regional Trial Court, Branch 55, Mandaue City, in Civil Case No. MAN-4821, is
hereby REVERSED and SET ASIDE and the records of this case are remanded to RTC (Branch 55), Mandaue City, for further proceed ings.

SO ORDERED.36

In arriving at the above conclusion, the CA held that the trial court cannot treat petitioner’s motion for judgment on the pleadings as one for summary
judgment. It stated that in a proper case for judgment on the pleadings, there are no ostensible issues at all on account of the defending party’s failure
to raise an issue in his answer, while in a proper case for summary judgment, such issues exist, although they are sham, fictitious, or not genuine as
shown by affidavits, depositions or admissions. In other words, a judgment on the pleadings is a judgment on the facts as pleaded, while a summary
judgment is a judgment on the facts as summarily proved by affidavits, depositions, or admissions.37 It added that respondent’s Answer appeared on
its face to tender an issue; it disputed petitioner’s claim that the subject property is their conjugal property. The next thing to be determined is whether
this issue is fictitious or sham as to justify a summary judgment.

The CA added that although respondent was bound by the resulting admission prompted by her failure to reply to petitioner’s request for admission,
her claims and documentary exhibits clearly contradict what petitioner sought to be admitted in his request; that the trial court disregarded the fact
that the issue of whether the subject property is conjugal was still unresolved as CA-G.R. CV No. 78971 was still pending; and that finally, the trial
court should have been guided by the principles that trial courts have but limited authority to render summary judgments and that summary judgments
should not be rendered hastily.38

Petitioner moved to reconsider, but in a March 2, 2012 Resolution, he was rebuffed. Hence, the present Petition was filed on April 30, 2012.

In a March 20, 2013 Resolution,39 the Court resolved to give due course to the instant Petition.1âwphi1

Issue

Petitioner now claims that the Court of Appeals erred in deciding the case on a question of substance not in accord with law, Rule 26 of the 1997
Rules, and applicable jurisprudence. 40

Petitioner’s Arguments

In his Petition seeking to reverse and set aside the assailed CA dispositions and thus reinstate the October 2, 2006 Order of the trial court, petitioner
insists that respondent’s failure to reply to his written request for admission resulted in her admitting that the subject property is a conjugal asset,
applying Rule 26, Section 2 of the 1997 Rules; that the CA grossly erred in disregarding the rule; that with the resulting ad mission, there remains no
genuine issue to be resolved in Civil Case No. MAN-4821, such that judgment based on the pleadings is proper. Finally, petitioner adds that
respondent’s trifling with the law and rules of procedure – by conveniently claiming in one case that the subject property is conjugal, and then in
another that it is paraphernal – should not be countenanced; she should be held to her original declaration that the subject property is conjugal.

Respondent’s Arguments
In her Comment,41 respondent counters that, as correctly ruled by the CA, petitioner elected the wrong remedy in filing a motion for judgment on the
pleadings when he should have moved for summary judgment; that in a motion for judgment on the pleadings, the movant is deeme d to admit the
truth of all of the opposing party’s material and relevant allegations, and rest his motion on those allegations taken together with that of his own as
are admitted in the pleadings;42 that the effect of this is that petitioner is deemed to have admitted that the subject property is paraphernal, as claimed
in her Answer; that with the final and executory May 30, 2007 Decision of the CA in CA-G.R. CV No. 78971, the subject property should now be
considered as her paraphernal property, and petitioner’s case for partition on the claim that the subject property is conjuga l should be dismissed for
being moot and academic.

Our Ruling

The Court denies the Petition.

Judgment on the pleadings is proper "where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party’s
pleading."43 Summary judgment, on the other hand, will be granted "if the pleadings, supporting affidavits, depositions, and admissions on file, show
that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is enti tled to a judgment as a
matter of law."44

We have elaborated on the basic distinction between summary judgment and judgment on the pleadings, thus:

The existence or appearance of ostensible issues in the pleadings, on the one hand, and their sham or fictitious character, on the other, are what
distinguish a proper case for summary judgment from one for a judgment on the pleadings. In a proper case for judgment on the pleadings, there is
no ostensible issue at all because of the failure of the defending party’s answer to raise an issue. On the other hand, in the case of a summary
judgment, issues apparently exist-i.e. facts are asserted in the complaint regarding which there is as yet no admission, disavowal or qualification; or
specific denials or affirmative defenses are in truth set out in the answer-but the issues thus arising from the pleadings are sham, fictitious or not
genuine, as shown by affidavits, depositions, or admissions. 45

An answer would "fail to tender an issue" if it "does not deny the material allegations in the complaint or admits said material allegations of the adverse
party’s pleadings by confessing the truthfulness thereof and/or omitting to deal with them at all. Now, if an answer does in fact specifically den y the
material averments of the complaint and/or asserts affirmative defenses (allegations of new matter which, while admitting th e material allegations of
the complaint expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff), a judgment on the pleadings would naturally be
improper."46

On the other hand, "whether x x x the issues raised by the Answer are genuine is not the crux of inquiry in a motion for judgment on the pleadings. It
is so only in a motion for summary judgment. In a case for judgment on the pleadings, the Answer is such that no issue is raised at all. The essential
question in such a case is whether there are issues generated by the pleadings." 47 "A ‘genuine issue’ is an issue of fact which requires the presentation
of evidence as distinguished from a sham, fictitious, contrived or false claim. When the facts as pleaded appear uncontested or undisputed, then there
is no real or genuine issue or question as to the facts, and summary judgment is called for."48

In rendering summary judgment, the trial court relied on respondent’s failure to reply to petitioner’s request for admission, her admission in Civil Case
No. MAN-2683, as well as its May 15, 2002 Decision declaring that the subject property is a conjugal asset. It took judicial notice of the proceedings
in said case. While there is nothing irregular with this – as courts may "take judicial notice of a decision or the facts prevailing in another case sitting
in the same court if (1) the parties present them in evidence, absent any opposition from the other party; or (2) the court, in its discretion, resolves to
do so"49 – the trial court however disregarded the fact that its decision was then the subject of a pending appeal in CA-G.R. CV No. 78971. It should
have known that until the appeal is resolved by the appellate court, it would be premature to render judgment on petitioner’s motion for judgment on
the pleadings; that it would be presumptuous to assume that its own decision would be affirmed on appeal. One of the issues raised in the ap peal is
precisely whether the subject property is conjugal, or a paraphernal asset of the respondent. Thus, instead of resolving petitioner’s motion for judgment
on the pleadings, the trial court should have denied it or held it in abeyance. It should have guided petitioner to this end, instead of aiding in the hasty
resolution of his case. In the first place, Civil Case No. MAN-4821 was transferred to it from Branch 56 precisely for the reason that it was the court
which tried the closely related Civil Case No. MAN-2683.

Even if respondent is deemed to have admitted the matters contained in petitioner’s request for admission by her failure to reply thereto, the trial court
should have considered the pending appeal in CA-G.R. CV No. 78971. It cannot take judicial notice solely of the proceedings in Civil Case No. MAN-
2683, and ignore the appeal in CA-G.R. CV No. 78971. After all, CA-G.R. CV No. 78971 is merely a continuation of Civil Case No. MAN-2683; an
appeal is deemed a continuation of the same case commenced in the lower court. 50

On the part of petitioner, it must be said that he could not have validly resorted to a motion for judgment on the pleadings or summary judgment. While
it may appear that under Rules 34 and 35 of the 1997 Rules, he may file a motion for judgment on the pleadings or summary judgment as a result of
the consequent admission by respondent that the subject property is conjugal, this is not actually the case. Quite the contra ry, by invoking the
proceedings and decision in Civil Case No. MAN-2683, petitioner is precluded from obtaining judgment while the appeal in said case is pending,
because the result thereof determines whether the subject property is indeed conjugal or paraphernal. He may not preempt the appeal in CA-G.R.
CV No. 78971.

While it is true that a judgment cannot bind persons who are not parties to the action, 51 petitioner cannot, after invoking the proceedings in Civil Case
No. MAN-2683 to secure affirmative relief against respondent and thereafter failing to obtain such relief, be allowed to repudiate or question the CA’s
ruling in CA-G.R. CV No. 78971. The principle of estoppel bars him from denying the resultant pronouncement by the appellate court, which became
final and executory, that the subject property is respondent’s paraphernal property. "In estoppel, a person, who by his deed or conduct has induced
another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury
to another. It further bars him from denying the truth of a fact which has, in the contemplation of law, become settled by th e acts and proceeding of
judicial or legislative officers or by the act of the party himself, either by conventional writing or by representations, express or implied or in pais." 52

Finally, the Court notes that the appellate court overlooked the May 30, 2007 Decision in CA-G.R. CV No. 78971, which became final and executory
on June 23 , 2007. The respondent included this development in her appellee's brief, but the CA did not take it into account. As an unfortunate
consequence, the case was not appreciated and resolved completely.

Thus, with the development in Civil Case No. MAN-2683 brought upon by the final and executory decision in CA-G.R. CV No. 78971 , petitioner's
case is left with no leg to stand on. There being no conjugal property to be divided between the parties, Civil Case No. MAN-4821 must be dismissed.

WHEREFORE, the Petition is DENIED. The October 6, 2009 Decision and March 2, 2012 Resolution of the Court ofAppeals in CA-G.R. CV No. 01783
are AFFIRMED WITH MODIFICATION in that Civil Case No. MAN-4821 is ordered DISMISSED.

SO ORDERED.
G.R. No. 149576 August 8, 2006

REPUBLIC OF THE PHILIPPINES, represented by the Land Registration Authority, Petitioner,

vs.
KENRICK DEVELOPMENT CORPORATION, Respondent.

DECISION

CORONA, J.:

The Republic of the Philippines assails the May 31, 2001 decision 1 and August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948
in this petition for review under Rule 45 of the Rules of Court.

This case stemmed from the construction by respondent Kenrick Development Corporation of a concrete perimeter fence around so me parcels of
land located behind the Civil Aviation Training Center of the Air Transportation Office (ATO) in 1996. As a result, the ATO was dispossessed of some
30,228 square meters of prime land. Respondent justified its action with a claim of ownership over the property. It presented Transfer Certificate of
Title (TCT) Nos. 135604, 135605 and 135606 issued in its name and which allegedly originated from TCT No. 17508 registered in the name of one
Alfonso Concepcion.

ATO verified the authenticity of respondent’s titles with the Land Registration Authority (LRA). On May 17, 1996, Atty. Jose Loriega, head of the Land
Title Verification Task Force of the LRA, submitted his report. The Registrar of Deeds of Pasay City had no record of TCT No. 17508 and its ascendant
title, TCT No. 5450. The land allegedly covered by respondent’s titles was also found to be within Villamor Air Base (headquarters of the Philippine
Air Force) in Pasay City.

By virtue of the report, the Office of the Solicitor General (OSG), on September 3, 1996, filed a complaint for revocation, annulment and cancellation
of certificates of title in behalf of the Republic of the Philippines (as represented by the LRA) against respondent and Alfonso Concepcion. It was
raffled to Branch 114 of the Regional Trial Court of Pasay City where it was docketed as Civil Case No. 96-1144.

On December 5, 1996, respondent filed its answer which was purportedly signed by Atty. Onofre Garlitos, Jr. as counsel for respondent.

Since Alfonso Concepcion could not be located and served with summons, the trial court ordered the issuance of an alias summons by publication
against him on February 19, 1997.

The case was thereafter punctuated by various incidents relative to modes of discovery, pre-trial, postponements or continuances, motions to dismiss,
motions to declare defendants in default and other procedural matters.

During the pendency of the case, the Senate Blue Ribbon Committee and Committee on Justice and Human Rights conducted a hearing in aid of
legislation on the matter of land registration and titling. In particular, the legislative investigation looked into the issuance of fake titles and focused on
how respondent was able to acquire TCT Nos. 135604, 135605 and 135606.

During the congressional hearing held on November 26, 1998, one of those summoned was Atty. Garlitos, respondent’s former counsel. He testified
that he prepared respondent’s answer and transmitted an unsigned draft to respondent’s president, Mr. Victor Ong. The signatu re appearing above
his name was not his. He authorized no one to sign in his behalf either. And he did not know who finally signed it.
With Atty. Garlitos’ revelation, the Republic promptly filed an urgent motion on December 3, 1998 to declare respondent in default, 2 predicated on its
failure to file a valid answer. The Republic argued that, since the person who signed the answer was neither authorized by Atty. Garlitos nor even
known to him, the answer was effectively an unsigned pleading. Pursuant to Section 3, Rule 7 of the Rules of Court, 3 it was a mere scrap of paper
and produced no legal effect.

On February 19, 1999, the trial court issued a resolution granting the Republic’s motion. 4 It found respondent’s answer to be sham and false and
intended to defeat the purpose of the rules. The trial court ordered the answer stricken from the records, declared respondent in default and allowed
the Republic to present its evidence ex parte.

The Republic presented its evidence ex parte, after which it rested its case and formally offered its evidence.

Meanwhile, respondent sought reconsideration of the February 19, 1999 resolution but the trial court denied it.

Aggrieved, respondent elevated the matter to the Court of Appeals via a petition for certiorari 5 seeking to set aside the February 19, 1999 resolution
of the trial court. Respondent contended that the trial court erred in declaring it in default for failure to file a valid and timely answer.

On May 31, 2001, the Court of Appeals rendered the assailed decision. It found Atty. Garlitos’ statements in the legislative hearing to be unreliable
since they were not subjected to cross-examination. The appellate court also scrutinized Atty. Garlitos’ acts after the filing of the answer 6 and
concluded that he assented to the signing of the answer by somebody in his stead. This supposedly cured whatever defect the answer may have had.
Hence, the appellate court granted respondent’s petition for certiorari. It directed the lifting of the order of default against respondent and ordered the
trial court to proceed to trial with dispatch. The Republic moved for reconsideration but it was denied. Thus, this petition.

Did the Court of Appeals err in reversing the trial court’s order which declared respondent in default for its failure to file a valid answer? Yes, it did.

A party may, by his words or conduct, voluntarily adopt or ratify another’s statement. 7 Where it appears that a party clearly and unambiguously
assented to or adopted the statements of another, evidence of those statements is admissible against him. 8 This is the essence of the principle of
adoptive admission.

An adoptive admission is a party’s reaction to a statement or action by another person when it is reasonable to treat the par ty’s reaction as an
admission of something stated or implied by the other person. 9 By adoptive admission, a third person’s statement becomes the admission of the
party embracing or espousing it. Adoptive admission may occur when a party:
10
(a) expressly agrees to or concurs in an oral statement made by another;

(b) hears a statement and later on essentially repeats it; 11

12
(c) utters an acceptance or builds upon the assertion of another;
13
(d) replies by way of rebuttal to some specific points raised by another but ignores further points which he or she has heard the other make or
14
(e) reads and signs a written statement made by another.
Here, respondent accepted the pronouncements of Atty. Garlitos and built its case on them. At no instance did it ever deny or contradict its former
counsel’s statements. It went to great lengths to explain Atty. Garlitos’ testimony as well as its implications, as follows:

1. While Atty. Garlitos denied signing the answer, the fact was that the answer was signed. Hence, the pleading could not be considered invalid for
being an unsigned pleading. The fact that the person who signed it was neither known to Atty. Garlitos nor specifically autho rized by him was
immaterial. The important thing was that the answer bore a signature.

2. While the Rules of Court requires that a pleading must be signed by the party or his counsel, it does not prohibit a counsel from giving a general
authority for any person to sign the answer for him which was what Atty. Garlitos did. The person who actually signed the pleading was of no moment
as long as counsel knew that it would be signed by another. This was similar to addressing an authorization letter "to whom it may concern" such that
any person could act on it even if he or she was not known beforehand.

3. Atty. Garlitos testified that he prepared the answer; he never disowned its contents and he resumed acting as counsel for respondent subsequent
to its filing. These circumstances show that Atty. Garlitos conformed to or ratified the signing of the answer by another.

Respondent repeated these statements of Atty. Garlitos in its motion for reconsideration of the trial court’s February 19, 19 99 resolution. And again
in the petition it filed in the Court of Appeals as well as in the comment 15 and memorandum it submitted to this Court.

Evidently, respondent completely adopted Atty. Garlitos’ statements as its own. Respondent’s adoptive admission constituted a judicial admission
which was conclusive on it.

Contrary to respondent’s position, a signed pleading is one that is signed either by the party himself or his counsel. Section 3, Rule 7 is clear on this
matter. It requires that a pleading must be signed by the party or counsel representing him.

Therefore, only the signature of either the party himself or his counsel operates to validly convert a pleading from one that is unsigned to one that is
signed.

Counsel’s authority and duty to sign a pleading are personal to him. He may not delegate it to just any person.

The signature of counsel constitutes an assurance by him that he has read the pleading; that, to the best of his knowledge, i nformation and belief,
there is a good ground to support it; and that it is not interposed for delay. 16Under the Rules of Court, it is counsel alone, by affixing his signature,
who can certify to these matters.

The preparation and signing of a pleading constitute legal work involving practice of law which is reserved exclusively for the members of the legal
profession. Counsel may delegate the signing of a pleading to another lawyer 17 but cannot do so

in favor of one who is not. The Code of Professional Responsibility provides:

Rule 9.01 ― A lawyer shall not delegate to any unqualified person the performance of any task which by law may only be performed by a member of
the Bar in good standing.
18
Moreover, a signature by agents of a lawyer amounts to signing by unqualified persons, something the law strongly proscribes.
Therefore, the blanket authority respondent claims Atty. Garlitos entrusted to just anyone was void. Any act taken pursuant to that authority was
likewise void. There was no way it could have been cured or ratified by Atty. Garlitos’ subsequent acts.

Moreover, the transcript of the November 26, 1998 Senate hearing shows that Atty. Garlitos consented to the signing of the an swer by another "as
long as it conformed to his draft." We give no value whatsoever to such self-serving statement.

No doubt, Atty. Garlitos could not have validly given blanket authority for just anyone to sign the answer. The trial court correctly ruled that respondent’s
answer was invalid and of no legal effect as it was an unsigned pleading. Respondent was properly declared in default and the Republic was rightly
allowed to present evidence ex parte.

Respondent insists on the liberal application of the rules. It maintains that even if it were true that its answer was supposedly an unsigned pleading,
the defect was a mere technicality that could be set aside.

Procedural requirements which have often been disparagingly labeled as mere technicalities have their own valid raison d’ etre in the orderly
administration of justice. To summarily brush them aside may result in arbitrariness and injustice. 19

The Court’s pronouncement in Garbo v. Court of Appeals 20 is relevant:

Procedural rules are [tools] designed to facilitate the adjudication of cases. Courts and litigants alike are thus [enjoined] to abide strictly by the rules.
And while the Court, in some instances, allows a relaxation in the application of the rules, this, we stress, was never intended to forge a bastion for
erring litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only in proper cases and under
justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted
in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.

Like all rules, procedural rules should be followed except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of
an injustice not commensurate with the degree of his thoughtlessness in not complying with the prescribed procedure. 21 In this case, respondent
failed to show any persuasive reason why it should be exempted from strictly abiding by the rules.

As a final note, the Court cannot close its eyes to the acts committed by Atty. Garlitos in violation of the ethics of the legal profession. Thus, he should
be made to account for his possible misconduct.

WHEREFORE, the petition is hereby GRANTED. The May 31, 2001 decision and August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP
No. 52948 are REVERSED and SET ASIDE and the February 19, 1999 resolution of the Regional Trial Court of Pasay City, Branch 114 declaring
respondent in default is hereby REINSTATED.

Let a copy of this decision be furnished the Commission on Bar Discipline of the Integrated Bar of the Philippines for the commencement of disbarment
proceedings against Atty. Onofre Garlitos, Jr. for his possible unprofessional conduct not befitting his position as an officer of the court.

SO ORDERED.

G.R. No. 110844 April 27, 2000

ALFREDO CHING, petitioner,
vs.
HON. COURT OF APPEALS, HON. ZOSIMO Z. ANGELES, RTC- BR. 58, MAKATI, METRO MANILA, PEOPLE OF THE PHILIPPINES AND
ALLIED BANKING CORPORATION, respondents.

BUENA, J.:

Confronting the Court in this instant petition for review on certiorari under Rule 45 is the task of resolving the issue of whether the pendency of a civil
action for damages and declaration of nullity of documents, specifically trust receipts, warrants the suspension of criminal proceedings instituted for
violation of Article 315 1(b) of the Revised Penal Code, in relation to P.D. 115, otherwise known as the "Trust Receipts Law".

Petitioner Alfredo Ching challenges before us the decision 1 of the Court of Appeals promulgated on 27 January 1993 in CA G.R. SP No. 28912,
dismissing his "Petition for Certiorari and Prohibition with Prayer for Issuance of Temporary Restraining Order/ Preliminary Injunction", on the ground
of lack of merit.

Assailed similarly is the resolution 2 of the Court of Appeals dated 28 June 1993 denying petitioner's motion for reconsideration.

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

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

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

That on or about the (18th day of May 1981; 3rd day of June 1981; 24th day of June 1981 and 24th day of June 1981), in the Mu nicipality of
Makati, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused having executed a trust receipt
agreement in favor of Allied Banking Corporation in consideration of the receipt by the said accused of goods described as "12 Containers
(200 M/T) Magtar Brand Dolomites"; "18 Containers (Zoom M/T) Magtar Brand Dolomites"; "High Fired Refractory Sliding Nozzle Bricks"; and
"High Fired Refractory Sliding Nozzle Bricks" for which there is now due the sum of (P278, 917.80; P419,719.20; P387, 551. 95; and
P389,085.14 respectively) under the terms of which the accused agreed to sell the same for cash with the express obligation to remit to the
complainant bank the proceeds of the sale and/or to turn over the goods, if not sold, on demand, but the accused, once in possession of said
goods, far from complying with his obligation and with grave abuse of confidence, did then and there, willfully, unlawfully and feloniously
misappropriate, misapply and convert to his own personal use and benefit the said goods and/or the proceeds of the sale thereof, and despite
repeated demands, failed and refused and still fails and refuses, to account for and/or remit the proceeds of sale thereof to the Allied Banking
Corporation to the damage and prejudice of the said complainant bank in the aforementioned amount of (P278,917.80; P419,719.20;
P387,551.95; and P389,085.14).

On 10 February 1992, an "Omnibus Motion 5 to Strike Out Information, or in the Alternative to Require Public Prosecutor to Conduct Preliminary
Investigation, and to Suspend in the Meantime Further Proceedings in these Cases," was filed by the petitioner.
In an order dated 13 February 1992, the Regional Trial Court of Makati, Branch 58, acting on the omnibus motion, required the prosecutor' s office to
conduct a preliminary investigation and suspended further proceedings in the criminal cases.

On 05 March 1992, petitioner Ching, together with Philippine Blooming Mills Co. Inc., filed a case 6 before the Regional Trial Court of Manila (RTC-
Manila), Branch 53, for declaration of nullity of documents and for damages docketed as Civil Case No. 92-60600, entitled "Philippine Blooming Mills,
Inc. et. al. vs. Allied Banking Corporation.

On 07 August 1992, Ching filed a petition 7 before the RTC-Makati, Branch 58, for the suspension of the criminal proceedings on the ground of
prejudicial question in a civil action.

The prosecution then filed an opposition to the petition for suspension, against which opposition, herein petitioner filed a reply. 8

On 26 August 1992, the RTC-Makati issued an order9 which denied the petition for suspension and scheduled the arraignment and pre-trial of the
criminal cases. As a result, petitioner moved to reconsider 10 the order to which the prosecution filed an opposition.

In an order11 dated 04 September 1992, the RTC-Makati, before which the criminal cases are pending, denied petitioner's motion for reconsideration
and set the criminal cases for arraignment and pre-trial.

Aggrieved by these orders12 of the lower court in the criminal cases, petitioner brought before the Court of Appeals a petition for certiorari and
prohibition which sought to declare the nullity of the aforementioned orders and to prohibit the RTC-Makati from conducting further proceedings in the
criminal cases.

In denying the petition,13 the Court of Appeals, in CA G.R. SP No. 28912, ruled:

. . . Civil Case No. 90-60600 pending before the Manila Regional Trial Court seeking (sic) the declaration of nullity of the trust receipts in
question is not a prejudicial question to Criminal Case Nos. 92-0934 to 37 pending before the respondent court charging the petitioner with
four counts of violation of Article 315, par. 1(b), RPC, in relation to PD 115 as to warrant the suspension of the proceedings in the latter . . . .
14
Consequently, petitioner filed a motion for reconsideration of the decision which the appellate court denied for lack of merit, via a resolution dated
28 June 1993.

Notwithstanding the decision rendered by the Court of Appeals, the RTC-Manila, Branch 53 in an order dated 19 November 1993 in Civil Case No.
92-60600, admitted petitioner's amended complaint 15 which, inter alia, prayed the court for a judgment:

xxx xxx xxx

1. Declaring the 'Trust Receipts," annexes D, F, H and J hereof, null and void, or otherwise annulling the same, for failure to express the true
intent and agreement of the parties;

2. Declaring the transaction subject hereof as one of pure and simple loan without any trust receipt agreement and/or not one involving a trust
receipt, and accordingly declaring all the documents annexed hereto as mere loan documents . . . (emphasis ours).
In its amended answer,16 herein private respondent Allied Banking Corporation submitted in riposte that the transaction applied for was a "letter of
credit/trust receipt accommodation" and not a "pure and simple loan with the trust receipts as mere additional or side documents", as asse rted by
herein petitioner in its amended complaint. 17

Through the expediency of Rule 45, petitioner seeks the intervention of this Court and prays:

After due consideration, to render judgment reversing the decision and resolution, Annexes A and B hereof, respectively, and ordering the
suspension of Criminal Cases (sic) Nos. 92-0934 to 92-0937, inclusive, entitled "People of the Philippines vs. Alfredo Ching" pending before
Branch 58 of the Regional Trial Court of Makati, Metro Manila, until final determination of Civil Case No. 92 -600 entitled Philippine Blooming
Mills Co. Inc. and Alfredo Ching vs. Allied Banking Corporation" pending before Branch 53 of the Regional Trial Court of Manila.

The instant petition is bereft of merit.

We agree with the findings of the trial court, as affirmed by the Court of Appeals, that no prejudicial question exists in the present case.

As defined, a prejudicial question is one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the
cognizance of which pertains to another tribunal. The prejudicial question must be determinative of the case before the court but the jurisdiction to try
and resolve the question must be lodged in another court or tribunal. 18

It is a question based on a fact distinct and separate from the crime but so intimately connected with it that it determines the guilt or innocence of the
accused, and for it to suspend the criminal action, it must appear not only that said case involves facts intimately related to those upon which the
criminal prosecution would be based but also that in the resolution of the issue or issues raised in the civil case, the guilt or innocence of the accused
would necessarily be determined.19 It comes into play generally in a situation where a civil action and a criminal action are both pending and there
exists in the former an issue which must be preemptively resolved before the criminal action may proceed, because howsoever the issue raised in
the civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case.20

More simply, for the court to appreciate the pendency of a prejudicial question, the law, 21 in no uncertain terms, requires the concurrence of two
essential requisites, to wit:

a) The civil action involves an issue similar or intimately related to the issue raised in the criminal action; and

b) The resolution of such issue determines whether or not the criminal action may proceed.

Verily, under the prevailing circumstances, the alleged prejudicial question in the civil case for declaration of nullity of documents and for damages,
does not juris et de jure determine the guilt or innocence of the accused in the criminal action for estafa. Assuming arguendo that the court hearing
the civil aspect of the case adjudicates that the transaction entered into between the parties was not a trust receipt agreement, nonetheless the guilt
of the accused could still be established and his culpability under penal laws determined by other evidence. To put it differently, even on the assumption
that the documents are declared of null, it does not ipso facto follow that such declaration of nullity shall exonerate the accused from criminal
prosecution and liability.

Accordingly, the prosecution may adduce evidence to prove the criminal liability of the accused for estafa, specifically unde r Article 315 1(b) of the
Revised Penal Code which explicitly provides that said crime is committed:
 . . . (b) By misappropriating or converting, to the prejudice of another, money; goods, or any other personal property received by the offender
in trust or on commission, or for administration, or any other obligation involving the duty to make delivery of or to return the same, even though
such obligation be totally or partially guaranteed by a bond; or by denying having received such money, goods, or other property.

Applying the foregoing principles, the criminal liability of the accused for violation of Article 315 1(b) of the Revised Penal Code, may still be shown
through the presentation of evidence to the effect that: (a) the accused received the subject goods in trust or under the obligation to sell the same and
to remit the proceeds thereof to Allied Banking Corporation, or to return the goods, if not sold; (b) that accused Ching misa ppropriated or converted
the goods and/or the proceeds of the sale; (c) that accused Ching performed such acts with abuse of confidence to the damage and prejudice of
Allied Banking Corporation; and (d) that demand was made by the bank to herein petitioner.

Presidential Decree 115, otherwise known as the "Trust Receipts Law", specifically Section 13 thereof, provides:

The failure of an entrustee to turn over the proceeds of the sale of the goods, documents or instruments covered by a trust receipt to the extent
of the amount owing to the entruster or as appears in the trust receipt or to return said goods, documents or instruments if they were not sold
or disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa, punishable under the p rovisions of Article
Three hundred fifteen, paragraph one (b) of Act Numbered Three thousand eight hundred and fifteen, as amended, otherwise known as the
Revised Penal Code.

We must stress though, that an act violative of a trust receipt agreement is only one mode of committing estafa under the abo vementioned provision
of the Revised Penal Code. Stated differently, a violation of a trust receipt arrangement is not the sole basis for incurring liability under Article 315 1
(b) of the Code.

In Jimenez vs. Averia,22 where the accused was likewise charged with estafa, this Court had occasion to rule that a civil case contesting the validity
of a certain receipt is not a prejudicial question that would warrant the suspension of criminal proceedings for estafa.1âwphi1.nêt

In the abovementioned case, a criminal charge for estafa was filed in the Court of First Instance of Cavite against the two a ccused. The information
alleged that the accused, having received the amount of P20,000.00 from Manuel Jimenez for the purchase of a fishing boat, with the obligation on
the part of the former to return the money in case the boat was not purchased, misappropriated the said amount to the damage and prejudice of
Jimenez.23

Before arraignment, the accused filed a civil case contesting the validity of a certain receipt signed by them. In the receipt, the accused acknowledged
having received the aforesaid sum, in addition to the amount of P240.00 as agent's commission. The complaint, however, alleged that the accused
never received any amount from Jimenez and that the signatures on the questioned receipt were secured by means of fraud, deceit and intimidation.

In ruling out the existence of prejudicial question, we declared:

. . . It will be readily seen that the alleged prejudicial question is not determinative of the guilt or innocence of the parties charged with estafa,
because even on the assumption that the execution of the receipt whose annulment they sought in the civil case was vitiated by fraud, duress
or intimidation, their guilt could still be established by other evidence showing, to the degree required by law, that they h ad actually received
from the complainant the sum of P20,000,00 with which to buy for him a fishing boat, and that, instead of doing so, they misappropriated the
money and refused or otherwise failed to return it to him upon demand. . . .
Furthermore, petitioner submits that the truth or falsity of the parties' respective claims as regards the true nature of the transactions and of the
documents, shall have to be first determined by the Regional Trial Court of Manila, which is the court hearing the civil case.

While this may be true, it is no less true that the Supreme Court may, on certain exceptional instances, resolve the merits of a case on the basis of
the records and other evidence before it, most especially when the resolution of these issues would best serve the ends of ju stice and promote the
speedy disposition of cases.

Thus, considering the peculiar circumstances attendant in the instant case, this Court sees the cogency to exercise its plenary power:

It is a rule of procedure for the Supreme Court to strive to settle the entire controversy in a single proceeding leaving no root or branch to bear
the seeds of future litigation. No useful purpose will be served if a case or the determination of an issue in a case is remanded to the trial court
only to have its decision raised again to the Court of Appeals and from there to the Supreme Court (citing Board of Commissioners vs. Judge
Joselito de la Rosa and Judge Capulong, G.R. Nos. 95122-23).

We have laid down the rule that the remand of the case or of an issue to the lower court for further reception of evidence is not necessary
where the Court is in position to resolve the dispute based on the records before it and particularly where the ends of justice would not be
subserved by the remand thereof (Escudero vs. Dulay, 158 SCRA 69). Moreover, the Supreme Court is clothed with ample authority to review
matters, even those not raised on appeal if it finds that their consideration is necessary in arriving at a just disposition of the case. 24

On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of
remanding them to the trial court for further proceedings, such as where the ends of justice would not be subserved by the remand of the case. 25

Inexorably, the records would show that petitioner signed and executed an application and agreement for a commercial letter of credit to finance the
purchase of imported goods. Likewise, it is undisputed that petitioner signed and executed trust receipt documents in favor of private respondent
Allied Banking Corporation.

In its amended complaint, however, which notably was filed only after the Court of Appeals rendered its assailed decision, petitioner urges that the
transaction entered into between the parties was one of "pure loan without any trust receipt agreement". According to petitio ner, the trust receipt
documents were intended merely as "additional or side documents covering the said loan" contrary to petitioner's allegation in his original complaint
that the trust receipts were executed as collateral or security.

We do not agree. As Mr. Justice Story succinctly puts it: "Naked statements must be entitled to little weight when the parties hold better evidence
behind the scenes. 26

Hence, with affirmance, we quote the findings of the Court of Appeals:

The concept in which petitioner signed the trust receipts, that is whether he signed the trust receipts as such trust receipts or as a mere
evidence of a pure and simple loan transaction is not decisive because precisely, a trust receipt is a security agreement of an indebtedness.

Contrary to petitioner's assertions and in view of jurisprudence established in this jurisdiction, a trust receipt is not merely an additional or side
document to a principal contract, which in the instant case is alleged by petitioner to be a pure and simple loan.
As elucidated in Samo vs. People,27 a trust receipt is considered a security transaction intended to aid in financing importers and retail dealers who
do not have sufficient funds or resources to finance the importation or purchase of merchandise, and who may not be able to a cquire credit except
through utilization, as collateral, of the merchandise imported or purchased.

Further, a trust receipt is a document in which is expressed a security transaction whereunder the lender, having no prior title in the goods on which
the lien is to be given and not having possession which remains in the borrower, lends his money to the borrower on security of the goods which the
borrower is privileged to sell clear of the lien with an agreement to pay all or part of the proceeds of the sale to the lender.28 It is a security agreement
pursuant to which a bank acquires a "security interest" in the goods. It secures an indebtedness and there can be no such thing as security interest
that secures no obligation.29

Clearly, a trust receipt partakes the nature of a security transaction. It could never be a mere additional or side document as alleged by petitioner.
Otherwise, a party to a trust receipt agreement could easily renege on its obligations thereunder, thus undermining the importance and defeating with
impunity the purpose of such an indispensable tool in commercial transactions.

Of equal importance is the fact that in his complaint in Civil Case No. 92-60600, dated 05 March 1992, petitioner alleged that the trust receipts were
executed and intended as collateral or security. Pursuant to the rules, such particular allegation in the complaint is tantamount to a judicial admission
on the part of petitioner Ching to which he must be bound.

Thus, the Court of Appeals in its resolution dated 28 June 1993, correctly observed:

It was petitioner himself who acknowledged the trust receipts as mere collateral and security for the payment of the loan but kept on insisting
that the real and true transaction was one of pure loan. . . .

In his present motion, the petitioner alleges that the trust receipts are evidence of a pure loan or that the same were ad ditional or side
documents that actually stood as promissory notes and not a collateral or security agreement. He cannot assume a position inconsistent with
his previous allegations in his civil complaint that the trust receipts were intended as mere collateral or security . . . .

Perhaps, realizing such flaw, petitioner, in a complete turn around, filed a motion to admit amended complaint before the RTC-Manila. Among others,
the amended complaint alleged that the trust receipts stood as additional or side documents, the real transaction between the parties being that of a
pure loan without any trust receipt agreement.

In an order dated 19 November 1993, the RTC-Manila, Branch 53, admitted the amended complaint. Accordingly, with the lower court's admission of
the amended complaint, the judicial admission made in the original complaint was, in effect, superseded.

Under the Rules, pleadings superseded or amended disappear from the record, lose their status as pleadings and cease to be judicial admissions.
While they may nonetheless be utilized against the pleader as extrajudicial admissions, they must, in order to have such effect, be formally offered in
evidence. If not offered in evidence, the admission contained therein will not be considered. 30

Consequently, the original complaint, having been amended, lost its character as a judicial admission, which would have requi red no proof, and
became merely an extrajudicial admission, the admissibility of which, as evidence, required its formal offer. 31

In virtue thereof, the amended complaint takes the place of the original. The latter is regarded as abandoned and ceases to perform any further
function as a pleading. The original complaint no longer forms part of the record. 32
Thus, in the instant case, the original complaint is deemed superseded by the amended complaint. Corollarily, the judicial admissions in the original
complaint are considered abandoned. Nonetheless, we must stress that the actuations of petitioner, as sanctioned by the RTC-Manila, Branch 53
through its order admitting the amended complaint, demands stern rebuke from this Court.

Certainly, this Court is not unwary of the tactics employed by the petitioner specifically in filing the amended complaint only after the promulgation of
the assailed decision of the Court of Appeals. It bears noting that a lapse of almost eighteen months (from March 1992 to September 1993), from the
filing of the original complaint to the filing of the amended complaint, is too lengthy a time sufficient to enkindle suspicion and enflame doubts as to
the true intentions of petitioner regarding the early disposition of the pending cases.

Although the granting of leave to file amended pleadings is a matter peculiarly within the sound discretion of the trial court and such discretion would
not normally be disturbed on appeal, it is also well to mention that this rule is relaxed when evident abuse thereof is apparent. 33

Hence, in certain instances we ruled that amendments are not proper and should be denied when delay would arise, 34 or when the amendments
would result in a change of cause of action or defense or change the theory of the case, 35 or would be inconsistent with the allegations in the original
complaint.36

Applying the foregoing rules, petitioner, by filing the amended complaint, in effect, altered the theory of his case. Likewis e, the allegations embodied
in the amended complaint are inconsistent with that of the original complaint inasmuch as in the latter, petitioner alleged that the trust receipts were
intended as mere collateral or security, the principal transaction being one of pure loan.

Yet, in the amended complaint, petitioner argued that the said trust receipts were executed as additional or side documents, the tran saction being
strictly one of pure loan without any trust receipt arrangement. Obviously these allegations are in discord in relation to each other and therefore cannot
stand in harmony.

These circumstances, taken as a whole, lead this Court to doubt the genuine purpose of petitioner in filing the amended compl aint.1âwphi1 Again,
we view petitioner's actuations with abhorrence and displeasure.

Moreover, petitioner contends that the transaction between Philippine Blooming Mills (PBM) and private respondent Allied Banking Corporation does
not fall under the category of a trust receipt arrangement claiming that the goods were not to be sold but were to be used, consumed and destroyed
by the importer PBM.

To our mind, petitioner's contention is a stealthy attempt to circumvent the principle enunciated in the case of Alied Banking Corporation vs.
Ordonez, 37 thus:

. . . In an attempt to escape criminal liability, private respondent claims P.D. 115 covers goods which are ultimately destined for sale and not
goods for use in manufacture. But the wording of Section 13 covers failure to turn over the proceeds of the sale of the entrusted goods, or to
return said goods if unsold or disposed of in accordance with the terms of the trust receipts. Private respondent claims that at the time of
PBM's application for the issuance of the LC's, it was not represented to the petitioner that the items were intended for sale, hence, there was
no deceit resulting in a violation of the trust receipts which would constitute a criminal liability. Again we cannot uph old this contention. The
non-payment of the amount covered by a trust receipt is an act violative of the entrustee's obligation to pay. There is no reason why the law
should not apply to all transactions covered by trust receipts, except those expressly excluded (68 Am. Jur. 125).
 The Court takes judicial notice of customary banking and business practices where trust receipts are used for importation of heavy equipment,
machineries and supplies used in manufacturing operations. We are perplexed by the statements in the assailed DOJ resolution that the goods
subject of the instant case are outside the ambit of the provisions of PD 115 albeit covered by trust receipt agreements (17 February 1988
resolution) and that not all transactions covered by trust receipts may be considered as trust receipt transactions defined and penalized under
P.D. 115 (11 January 1988 resolution). A construction should be avoided when it affords an opportunity to defeat compliance w ith the terms
of a statute.

xxx xxx xxx

The penal provision of P.D. 115 encompasses any act violative of an obligation covered by the trust receipt; it is not limited to transactions in
goods which are to be sold (retailed), reshipped, stored or processed as a component of a product ultimately sold.

An examination of P.D. 115 shows the growing importance of trust receipts in Philippine business, the need to provide for the rights and obligations
of parties to a trust receipt transaction, the study of the problems involved and the action by monetary authorities, and the necessity of regulating the
enforcement of rights arising from default or violations of trust receipt agreements. The legislative intent to meet a pressing need is clearly expressed. 38

In fine, we reiterate that the civil action for declaration of nullity of documents and for damages does not constitute a prejudicial question to the criminal
cases for estafa filed against petitioner Ching.

WHEREFORE, premises considered, the assailed decision and resolution of the Court of Appeals are hereby AFFIRMED and the instant petition is
DISMISSED for lack of merit. Accordingly, the Regional Trial Court of Makati, Branch 58, is hereby directed to proceed with the hearing and trial on
the merits of Criminal Case Nos. 92-0934 to 92-0937, inclusive, and to expedite proceedings therein, without prejudice to the right of the accused to
due process.

SO ORDERED.