7/25/2019 Rule 129 cases

1/30

"G" HOLDINGS, INC., Petitioner,vs.NATIONAL MINES AND ALLIED WORKERS UNION Local 103 (NAMAWU);SHERIS RICHARD H. A!ROSTA a# AL$ERTO MUNO%, all ac&' S*+'-;DE!ARTMENT O LA$OR AND EM!LOMENT, R*'o /I, $acolo# D'-&+'c&O'c*, $acolo# C'&,Respondents.

D E C I S I O N

NACHURA, J.:

Before this Court is a petition for review on certiorari under Rule 4 of the Rules ofCourt assailin! the Octo"er #4, $%%& Decision#of the Court of 'ppeals (C') in C'*+.R. SP No. &$$.

-he acts

-he petitioner, /+/ 0oldin!s, Inc. (+0I), is a do1estic corporation pri1aril2 en!a!edin the "usiness of ownin! and holdin! shares of stoc3 of different co1panies. $It wasre!istered with the Securities and Echan!e Co11ission on 'u!ust &, #55$. Private

respondent, National 6ines and 'llied 7or3ers 8nion 9ocal #%& (N'6'78), was theeclusive "ar!ainin! a!ent of the ran3 and file e1plo2ees of 6aricalu1 6inin!Corporation (66C),&an entit2 operatin! a copper 1ine and 1ill co1ple at Sipala2,Ne!ros Occidental.4

66C was incorporated "2 the Develop1ent Ban3 of the Philippines (DBP) and thePhilippine National Ban3 (PNB) on Octo"er #5, #5:4, on account of their foreclosureof 6arindu;ue 6inin! and Industrial Corporation

eecuted "etween+0I and 'sset Privati=ation -rust ('P-), the for1er "ou!ht ninet2 percent (5%?) of66C

7/25/2019 Rule 129 cases

2/30

'l1ost four 2ears thereafter, or on 'u!ust $&, #55>, a la"or dispute (refusal to"ar!ain collectivel2 and unfair la"or practice) arose "etween 66C and N'6'78,with the latter eventuall2 filin! with the National Conciliation and 6ediation Board ofBacolod Cit2 a notice of stri3e.##-hen 9a"or Secretar2, now 'ssociate ustice of thisCourt, 9eonardo '. Juisu1"in!, later assu1ed Kurisdiction over the dispute and ruledin favor of N'6'78. In his ul2 &%, #55 Order in OS*'*#%*5>*%#4 (Juisu1"in!Order), Secretar2 Juisu1"in! declared that the la2*off (of wor3ers) i1ple1ented on6a2 , #55> and Octo"er , #55> was ille!al and that 66C co11itted unfair la"orpractice. 0e then ordered the reinstate1ent of the laid*off wor3ers, with pa21ent of

full "ac3wa!es and "enefits, and directed the eecution of a new collective "ar!ainin!a!ree1ent (CB') incorporatin! the ter1s and conditions of the previous CB'providin! for an annual increase in the wor3ers< dail2 wa!e.#$ In two separatecasesL+.R. Nos. #& and #&:55>Lfiled with this Court, we sustained the validit2of the Juisu1"in! Order, which "eca1e final and eecutor2 on anuar2 $>, $%%%.#&

On 6a2 ##, $%%#, then 'ctin! Depart1ent of 9a"or and E1plo21ent (DO9E)Secretar2, now also an 'ssociate ustice of this Court, 'rturo D. Brion, on 1otion ofN'6'78, directed the issuance of a partial writ of eecution (Brion 7rit), andordered the DO9E sheriffs to proceed to the 66C pre1ises for the eecution of thesa1e.#46uch later, in $%%>, this Court, in +.R. Nos. #>5>*5, entitled 6aricalu16inin! Corporation v. Brion and N'6'78,#affir1ed the propriet2 of the issuance ofthe Brion 7rit.

-he Brion 7rit was not full2 satisfied "ecause 66COn 1otion of N'6'78, then DO9E Secretar2 Patricia '. Sto. -o1asordered the issuance of the ul2 #:, $%%$ 'lias 7rit of Eecution and Brea3*OpenOrder (Sto. -o1as 7rit).#On Octo"er ##, $%%$, the respondent actin! sheriffs, the1e1"ers of the union, and several ar1ed 1en i1ple1ented the Sto. -o1as 7rit, andlevied on the properties of 66C located at its co1pound in Sipala2, Ne!rosOccidental.#:

On Octo"er #4, $%%$, +0I filed with the Re!ional -rial Court (R-C) of a"an3alanCit2, Ne!ros Occidental, Special Civil 'ction (SC') No. ##$ for Conte1pt withPra2er for the Issuance of a -e1porar2 Restrainin! Order (-RO) and 7rit ofPreli1inar2 InKunction and to Nullif2 the Sheriff$%eecuted "2 66C in favor of +0I to secure theaforesaid P%6 pro1issor2 notesH that this deed was re!istered on e"ruar2 $4,$%%%H$#and that the 1ort!a!ed properties were alread2 etraKudiciall2 foreclosed inul2 $%%# and sold to +0I as the hi!hest "idder on Dece1"er &, $%%#, as evidenced"2 the Certificate of Sale dated Dece1"er 4, $%%#.$$

-he trial court issued e parte a -RO effective for $ hours, and set the hearin! onthe application for a writ of inKunction.$&On Octo"er #, $%%$, the trial court orderedthe issuance of a 7rit of InKunction (issued on Octo"er #:, $%%$) $4 enKoinin! theDO9E sheriffs fro1 further enforcin! the Sto. -o1as 7rit and fro1 conductin! an2pu"lic sale of the levied*on properties, su"Kect to +0I, assailin!the Octo"er #, #: and Dece1"er 4, $%%$ orders of the R-C.$:

'fter due proceedin!s, on Octo"er #4, $%%&, the appellate court rendered a Decisionsettin! aside the R-C issuances and directin! the i11ediate eecution of the Sto.-o1as 7rit. -he C' ruled, a1on! others, that the circu1stances surroundin! theeecution of the Septe1"er , #55> Deed of Real Estate and Chattel 6ort!a!e2ielded the conclusion that the deed was sha1, fictitious and fraudulentH that it waseecuted two wee3s after the la"or dispute arose in #55>, "ut surprisin!l2, it was

re!istered onl2 on e"ruar2 $4, $%%%, i11ediatel2 after the Court affir1ed with finalit2the Juisu1"in! Order. -he C' also found that the certificates of title to 66C

7/25/2019 Rule 129 cases

3/30

70EREORE, in view of the fore!oin! considerations, the petition is +R'N-ED. -heOcto"er #, $%%$ and the Dece1"er 4, $%%$ Order of the R-C, Branch ># ofa"an3alan Cit2, Ne!ros Occidental are here"2 'NN899ED and SE- 'SIDE forhavin! "een issued in ecess or without authorit2. -he 7rit of Preli1inar2 InKunctionissued "2 the said court is lifted, and the DO9E Sheriff is directed to i11ediatel2enforce the 7rit of Eecution issued "2 the Depart1ent of 9a"or and E1plo21ent inthe case /In re@ 9a"or Dispute in 6aricalu1 6inin! Corporation/ doc3eted as OS*'*#%*5>*%# (NC6B*RB>*%:*5>).&$

-he Issues

Dissatisfied, +0I elevated the case to this Court via the instant petition for review oncertiorari, raisin! the followin! issues@

I

70E-0ER OR NO- +0I IS ' P'R-A -O -0E 9'BOR DISP8-E BE-7EENN'6'78 'ND 66C.

II

70E-0ER OR NO-, 'SS86IN+ 'R+8ENDO -0'- -0E PER-INEN- DECISIONOR ORDER IN -0E S'ID 9'BOR DISP8-E BE-7EEN 66C 'ND N'6'78 6'ABE ENORCED '+'INS- +0I, -0ERE IS '9RE'DA ' IN'9 DEE-ER6IN'-IONBA -0E S8PRE6E CO8R- O -0E RI+0-S O -0E P'R-IES IN S'ID 9'BORDISP8-E CONSIDERIN+ -0E PENDENCA O +.R. NOS. #>5>*5.

III

70E-0ER OR NO- +0I IS -0E 'BSO98-E O7NER O -0E PROPER-IES8N9'7899A +'RNIS0ED BA RESPONDEN-S S0ERIS.

I

70E-0ER OR NO- -0E 0ONOR'B9E 0ENRA D. 'R9ES CORREC-9A ISS8ED '7RI- O IN8NC-ION '+'INS- -0E 8N9'789 EFEC8-IOIN ON +0I

7/25/2019 Rule 129 cases

4/30

stipulations were su"se;uentl2 for1ali=ed in a separate docu1ent deno1inated Deedof Real Estate and Chattel 6ort!a!e on Septe1"er , #55>. -hereafter, the Deedwas re!istered on e"ruar2 4, $%%%.&>

7e find "oth decisions criticall2 relevant to the instant dispute. In fact, the2 shouldhave !uided the courts "elow in the disposition of the controvers2 at their respectivelevels. -o repeat, these decisions respectivel2 confir1 the ri!ht of N'6'78 to itsla"or clai1s&and affir1 the ri!ht of +0I to its financial and 1ort!a!e clai1s over thereal and personal properties of 66C, as will "e eplained "elow. -he assailed C'

decision apparentl2 failed to consider the i1pact of these two decisions on the caseat "ar. -hus, we find it ti1el2 to reiterate that@ /courts have also ta3en Kudicial notice ofprevious cases to deter1ine whether or not the case pendin! is a 1oot one orwhether or not a previous rulin! is applica"le to the case under consideration./&:

0owever, the C' correctl2 assessed that the authorit2 of the lower court to issue thechallen!ed writ of inKunction depends on the validit2 of the third part2

7/25/2019 Rule 129 cases

5/30

intended to defraud N'6'78. 'fter all, the2 were a!reed upon lon! "efore the seedsof the la"or dispute !er1inated.

7hile it is true that the Deed of Real Estate and Chattel 6ort!a!e was eecuted onl2on Septe1"er , #55>, it is "e2ond cavil that this for1al docu1ent of 1ort!a!e was1erel2 a derivative of the ori!inal 1ort!a!e stipulations contained in the Pro1issor2Notes of Octo"er $, #55$. -he eecution of this Deed in #55> does not detract fro1,"ut instead reinforces, the 1anifest intention of the parties to /esta"lish andconstitute/ the 1ort!a!es on 66C, in order to enforce the trial court. -his appears to "e the 1ost plausi"le eplanation for theeecution of the Deed of Real Estate and Chattel 6ort!a!e onl2 in Septe1"er #55>.Even as the parties had alread2 validl2 constituted the 1ort!a!es in #55$, aseplicitl2 provided in the Pro1issor2 Notes, a specific deed of 1ort!a!e in a separatedocu1ent 1a2 have "een dee1ed necessar2 for re!istration purposes. O"viousl2,this eplanation is 1ore lo!ical and 1ore sensi"le than the strained conKecture thatthe 1ort!a!e was eecuted on Septe1"er , #55> onl2 for the purpose of defraudin!N'6'78.

It is undenia"le that the Deed of Real Estate and Chattel 6ort!a!e was for1all2docu1ented two wee3s after N'6'78 filed its notice of stri3e a!ainst 66C on

'u!ust $&, #55>. 0owever, this fact alone cannot !ive rise to an adverse inference fortwo reasons. First,as discussed a"ove, the 1ort!a!es had alread2 "een /esta"lishedand constituted/ as earl2 as Octo"er $, #55$ in the Pro1issor2 Notes, showin! theclear intent of the parties to i1pose a lien upon 66C

7/25/2019 Rule 129 cases

6/30

in #55$ with such a presu1ption that has not "een successfull2 re"utted. InTanongon, the conduct of a full*"lown trial led to the findin!Ldul2 supported "2evidenceLthat the voluntar2 sale of the assets of the Kud!1ent de"tor was 1ade in"ad faith. 0ere, no trial was held, owin! to the 1otion to dis1iss filed "2 N'6'78,and the C' failed to consider the factual findin!s 1ade "2 this Court in Republic, etc.v. "G" Holdings, Inc. urther1ore, in Tanongon, the clai1ant did not eercise hisoption to file a separate action in court, thus allowin! the N9RC Sheriff to lev2 oneecution and to deter1ine the ri!hts of third*part2 clai1ants.4 In this case, aseparate action was filed in the re!ular courts "2 +0I, the third*part2 clai1ant. inall2,the ;uestioned transaction in Tanongonwas a plain, voluntar2 transfer in the for1 of asale eecuted "2 the Kud!1ent de"tor in favor of a du"ious third*part2, resultin! in theina"ilit2 of the Kud!1ent creditor to satisf2 the Kud!1ent. On the other hand, this caseinvolves an involuntar2 transfer (foreclosure of 1ort!a!e) arisin! fro1 a loano"li!ation that well*eisted lon! "efore the co11ence1ent of the la"or clai1s of theprivate respondent.

-hree other circu1stances have "een put forward "2 the C' to support its conclusionthat the 1ort!a!e contract is a sha1. irst, the C' considered it hi!hl2 suspect thatthe Deed of Real Estate and Chattel 6ort!a!e was re!istered onl2 on e"ruar2 4,$%%%, /three 2ears after its eecution, and al1ost one 1onth after the Supre1e Courtrendered its decision in the la"or dispute./ 4>E;uall2 suspicious, as far as the C' isconcerned, is the fact that the 1ort!a!es were foreclosed on ul2 , $%%#, after theDO9E had alread2 issued a Partial 7rit of Eecution on 6a2 5, $%%#.4 -o theappellate court, the ti1in! of the re!istration of the 1ort!a!e deed was toocoincidental, while the date of the foreclosure si!nified that it was /effected precisel2to prevent the satisfaction of the Kud!1ent awards./4:urther1ore, the C' found thatthe 1ort!a!e deed itself was eecuted without an2 consideration, "ecause at the ti1eof its eecution, all the assets of 66C had alread2 "een transferred to +0I.45

-hese circu1stances provided the C' with sufficient Kustification to appl2 'rticle #&:of the Civil Code on presu1ed fraudulent transactions, and to declare that the1ort!a!e deed was void for "ein! si1ulated and fictitious.%

7e do not a!ree. 7e find this Court,5#.%>, was re1itted in favor of the Ban3 of Nova Scotia, its 1aKorstoc3holder.

-he facts of the case so far show that the assi!n1ent contracts were eecuted in!ood faith. -he eecution of the /'ssi!n1ent '!ree1ent/ on 6arch $%, #55 and the/Deed of 'ssi!n1ent/ on Dece1"er :,#55 is not the alp!aof this case. 7hile theeecution of these assi!n1ent contracts al1ost coincided with the rendition on 6a2, #55 of the Partial ud!1ent in Civil Case No. 5>*:%%:& "2 the 6anila R-C,however, there was no intention on the part of petitioner to defeat Solid"an3?00?3 7 &*Ma'la RTC.To-* co&+ac&- cao& 7* '*9*# ' '-ola&'o.If we 1a2 add, it ishi!hl2 inconceiva"le that 'DB, a reputa"le international financial or!ani=ation, will

connive with 6arcopper to fei!n or si1ulate a contract in #55$ Kust to defraudSolid"an3 for its clai1 four 2ears thereafter. 'nd it is e;uall2 incredi"le for petitioner to"e pa2in! the hu!e su1 of 8SM#:,4&,4%.#$ to 'DB onl2 for the purpose ofdefraudin! Solid"an3 of the su1 of P$,5%,>.:5.

It is said that the test as to whether or not a conve2ance is fraudulent is does itpreKudice the ri!hts of creditors 7e cannot see how Solid"an3

7/25/2019 Rule 129 cases

7/30

Solid"an3, that N'6'78 filed a notice of stri3e to protestnon*pa21ent of its ri!htful la"or clai1s. &But, as alread2 1entioned, the outco1e ofthat la"or dispute was 2et unascertaina"le at that ti1e, and N'6'78 could onl2have hoped for, or speculated a"out, a favora"le rulin!. -o paraphrase 6R 0oldin!s,we cannot see how N'6'78-hus, Section # of 'ct No. 45>, as a1ended "2 Section $ of P.D. No. #$5,provides@

SEC-ION $. Constructive notice upon re!istration.Ever2 conve2ance, 1ort!a!e,

lease, lien, attach1ent, order, Kud!1ent, instru1ent or entr2 affectin! re!istered landshall, if re!istered, filed or entered in the Office of the Re!ister of Deeds for the

province or cit2 where the land to which it relates lies, "e constructive notice to allpersons fro1 the ti1e of such re!isterin!, filin! or enterin!.

But, there is nothin! in 'ct No. 45>, as a1ended "2 P.D. No. #$5, that i1poses aperiod within which to re!ister annotations of /conve2ance, 1ort!a!e, lease, lien,attach1ent, order, Kud!1ent, instru1ent or entr2 affectin! re!istered land./ If lienswere not so re!istered, then it /shall operate onl2 as a contract "etween the partiesand as evidence of authorit2 to the Re!istr2 of Deeds to 1a3e re!istration./ Ifre!istered, it /shall "e the operative act to conve2 or affect the land insofar as third

persons are concerned./ -he 1ere lapse of ti1e fro1 the eecution of the 1ort!a!edocu1ent to the 1o1ent of its re!istration does not affect the ri!hts of a 1ort!a!ee.

Neither will the circu1stance of +0I5>H and that +.R. No.

#>5> was decided "2 this Court onl2 on e"ruar2 5, $%%>.

-his chronolo!2 of su"se;uent events shows that e"ruar2 5, $%%> would have "eenthe earliest date for the uni1peded enforce1ent of the Partial 7rit of Eecution, as itwas onl2 then that this Court resolved the issue. -his happened four and a half 2earsafter ul2 , $%%#, the date when +0I foreclosed on the 1ort!a!ed properties. -hus,it is not accurate to sa2 that the foreclosure 1ade on ul2 , $%%# was /effectedonl2 to prevent satisfaction of the Kud!1ent award./

7e also o"serve the error in the C' Deed of Real Estate andChattel 6ort!a!e was not supported "2 an2 consideration since at the ti1e the deedwas eecuted, /all the real and personal propert2 of 66C had alread2 "eentransferred in the hands of + 0oldin!s./:It should "e re1e1"ered that the Purchase

and Sale '!ree1ent "etween +0I and 'P- involved lar!e a1ounts (P%6) andeven spawned a su"se;uent court action (Civil Case No. 5*>#&$, R-C of 6anila).

http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt52http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt52http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt53http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt54http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt55http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt55http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt55http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt56http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt57http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt57http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt58http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt52http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt53http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt54http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt55http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt56http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt57http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt58

7/25/2019 Rule 129 cases

8/30

Aet, nowhere in the '!ree1ent or in the R-C decision is there an2 1ention of realand personal properties of 66C "ein! included in the sale to +0I in #55$. -heseproperties si1pl2 served as 1ort!a!ed collateral for the #55$ Pro1issor2 Notes. 5

-he Purchase and Sale '!ree1ent and the Pro1issor2 Notes the1selves are the"est evidence that there was a1ple consideration for the 1ort!a!e.

-hus, we 1ust reKect the conclusion of the C' that the Deed of Real Estate andChattel 6ort!a!e eecuted in #55> was a si1ulated transaction.

On the issue of whether there had "een an effective lev2 upon the properties of +0I.

-he well*settled principle is that the ri!hts of a 1ort!a!e creditor over the 1ort!a!edproperties are superior to those of a su"se;uent attachin! creditor. In %abral v.&vangelista,>%this Court declared that@

Defendants*appellants purchase of the 1ort!a!ed chattels at the pu"lic sheriffQs saleand the deliver2 of the chattels to the1 with a certificate of sale did not !ive the1 asuperior ri!ht to the chattels as a!ainst plaintiffs*1ort!a!ees. Rule &5, Section $$ ofthe old Rules of Court (now Rule &5, Section $ of the Revised Rules), cited "2appellants precisel2 provides that /the sale conve2s to the purchaser all the ri!htwhich the de"tor had in such propert2 on the da2 the eecution or attach1ent waslevied./ It has lon! "een settled "2 this Court that /-he ri!ht of those who so ac;uiresaid properties should not and can not "e superior to that of the creditor who has inhis favor an instru1ent of 1ort!a!e eecuted with the for1alities of the law, in !oodfaith, and without the least indication of fraud. -his is all the 1ore true in the presentcase, "ecause, when the plaintiff purchased the auto1o"ile in ;uestion on 'u!ust $$,#5&&, he 3new, or at least, it is presu1ed that he 3new, "2 the 1ere fact that theinstru1ent of 1ort!a!e, Ehi"it $, was re!istered in the office of the re!ister of deedsof 6anila, that said auto1o"ile was su"Kect to a 1ort!a!e lien. In purchasin! it, withfull 3nowled!e that such circu1stances eisted, it should "e presu1ed that he did so,ver2 1uch willin! to respect the lien eistin! thereon, since he should not haveepected that with the purchase, he would ac;uire a "etter ri!ht than that which thevendor then had./ In another case "etween two 1ort!a!ees, we held that /'s"etween the first and second 1ort!a!ees, therefore, the second 1ort!a!ee has at1ost onl2 the ri!ht to redee1, and even when the second 1ort!a!ee !oes throu!h

the for1alit2 of an etraKudicial foreclosure, the purchaser ac;uires no 1ore than theri!ht of rede1ption fro1 the first 1ort!a!ee./ -he superiorit2 of the 1ort!a!eeQs lienover that of a su"se;uent Kud!1ent creditor is now epressl2 provided in Rule &5,Section #> of the Revised Rules of Court, which states with re!ard to the effect of lev2on eecution as to third persons that /-he lev2 on eecution shall create a lien infavor of the Kud!1ent creditor over the ri!ht, title and interest of the Kud!1ent de"torin such propert2 at the ti1e of the lev2, su"Kect to liens or encu1"rances theneistin!./

Even in the 1atter of possession, 1ort!a!ees over chattel have superior, preferentialand para1ount ri!hts thereto, and the 1ort!a!or has 1ere ri!hts of rede1ption.>#

Si1ilar rules appl2 to cases of 1ort!a!ed real properties that are re!istered. Since

the properties were alread2 1ort!a!ed to +0I, the onl2 interest re1ainin! in the1ort!a!or was its ri!ht to redee1 said properties fro1 the 1ort!a!e. -he ri!ht of

rede1ption was the onl2 levia"le or attacha"le propert2 ri!ht of the 1ort!a!or in the1ort!a!ed real properties. 7e have held that

-he 1ain issue in this case is the nature of the lien of a Kud!1ent creditor, li3e thepetitioner, who has levied an attach1ent on the Kud!1ent de"torQs (C6I) realproperties which had "een 1ort!a!ed to a consortiu1 of "an3s and weresu"se;uentl2 sold to a third part2, -op Rate.

-he sheriffQs lev2 on C6IQs properties, under the writ of attach1ent o"tained "2 thepetitioner, was actuall2 a lev2 on the interest onl2 of the Kud!1ent de"tor C6I onthose properties. Since the properties were alread2 1ort!a!ed to the consortiu1 of"an3s, the onl2 interest re1ainin! in the 1ort!a!or C6I was its ri!ht to redee1 saidproperties fro1 the 1ort!a!e. -he ri!ht of rede1ption was the onl2 levia"le orattacha"le propert2 ri!ht of C6I in the 1ort!a!ed real properties. -he sheriff couldnot have attached the properties the1selves, for the2 had alread2 "een conve2ed tothe consortiu1 of "an3s "2 1ort!a!e (defined as a /conditional sale/), so his lev21ust "e understood to have attached onl2 the 1ort!a!orQs re1ainin! interest in the1ort!a!ed propert2 the ri!ht to redee1 it fro1 the 1ort!a!e.>$

-here appears in the record a factual contradiction relatin! to whether the foreclosure"2 +0I on ul2 #&, $%%#>&over so1e of the contested properties ca1e ahead of thelev2 thereon, or the reverse. N'6'78 clai1s that the lev2 on two truc3s waseffected on une $$, $%%#,>4which +0I disputes as a 1isstate1ent "ecause the lev2was atte1pted on ul2 #:, $%%$, and not $%%#>7hat is undisputed thou!h is that the1ort!a!e of +0I was re!istered on e"ruar2 4, $%%%, >> well ahead of an2 lev2 "2N'6'78. Prior re!istration of a lien creates a preference, as the act of re!istration isthe operative act that conve2s and affects the land,> even a!ainst su"se;uentKud!1ent creditors, such as respondent herein. Its re!istration of the 1ort!a!e wasnot intended to defraud N'6'78 of its Kud!1ent clai1s, since even the courts werealread2 Kudiciall2 aware of its eistence since #55$. -hus, at that 1o1ent in ti1e, withthe re!istration of the 1ort!a!e, either N'6'78 had no properties of 66C to attach"ecause the sa1e had "een previousl2 foreclosed "2 +0I as 1ort!a!ee thereofH or"2 virtue of the DO9E

7/25/2019 Rule 129 cases

9/30

fiction of the separate corporate personalit2 is a"used, such as when the sa1e isused for fraudulent or wron!ful ends, the courts have not hesitated to pierce thecorporate veil (rancisco vs. 6eKia, &>$ SCR' &:). In the case at "ar, the Deed ofReal Estate and Chattel 6ort!a!e was entered into "etween 66C and + 0oldin!s forthe purpose of evadin! the satisfaction of the le!iti1ate clai1s of the petitionera!ainst 66C. -he notion of separate personalit2 is clearl2 "ein! utili=ed "2 the twocorporations to perpetuate the violation of a positive le!al dut2 arisin! fro1 a finalKud!1ent to the preKudice of the petitioner5

Settled Kurisprudence%

has it that

/(') corporation, upon co1in! into eistence, is invested "2 law with a personalit2separate and distinct fro1 those persons co1posin! it as well as fro1 an2 other le!alentit2 to which it 1a2 "e related. B2 this attri"ute, a stoc3holder 1a2 not, !enerall2, "e1ade to answer for acts or lia"ilities of the said corporation, and vice versa. -hisseparate and distinct personalit2 is, however, 1erel2 a fiction created "2 law forconvenience and to pro1ote the ends of Kustice. or this reason, it 1a2 not "e usedor invo3ed for ends su"versive to the polic2 and purpose "ehind its creation or whichcould not have "een intended "2 law to which it owes its "ein!. -his is particularl2true when the fiction is used to defeat pu"lic convenience, Kustif2 wron!, protect fraud,defend cri1e, confuse le!iti1ate le!al or Kudicial issues, perpetrate deception orotherwise circu1vent the law. -his is li3ewise true where the corporate entit2 is "ein!

used as an alter e!o, adKunct, or "usiness conduit for the sole "enefit of thestoc3holders or of another corporate entit2. In all these cases, the notion of corporateentit2 will "e pierced or disre!arded with reference to the particular transactioninvolved.

+iven this Kurisprudential principle and the factual circu1stances o"tainin! in thiscase, we now as3@ 7as the C' correct in piercin! the veil of corporate identit2 of +0Iand 66C

In our dis;uisition a"ove, we have shown that the C'#&$, R-C 6anila). -his can onl2 1ean that +0I and 66C haveseparate corporate personalities.

Neither was 66C used 1erel2 as an alter e!o, adKunct, or "usiness conduit for the

sole "enefit of +0I, to Kustif2 piercin! the for1er%5, > N.A.S.$d $&4) andthe 1atter proceeded to a nonKur2 trial. Supre1e Court thereafter rendered Kud!1entin favor of defendant upon its findin!s that, althou!h defendant do1inated 9+, it didnot use that do1ination to co11it a fraud or wron! on plaintiffs. Plaintiffsappealed.(avvp!i(

-he trial evidence showed that 9+ was incorporated in Nove1"er #5:.DefendantQs principal, rancesco +alesi, initiall2 held 5%? of the stoc3 and all of thestoc3 was ulti1atel2 transferred to defendant. Initial proKect fundin! was providedthrou!h a M$. 1illion loan fro1 Che1ical Ban3, secured "2 defendantQs !uarantee ofrepa21ent of the loan and co1pletion of the proKect. -he loan proceeds were utili=edto purchase the real propert2 upon which the proKect was to "e esta"lished. Che1ical

Ban3 thereafter loaned an additional M&. 1illion to 9+, a!ain !uaranteed "2defendant, and the two loans were consolidated into a first 1ort!a!e loan of M>

http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt69http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt70http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt70http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt71http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt69http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt70http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt71http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204

7/25/2019 Rule 129 cases

10/30

1illion. In #5:5, the loan was 1odified "2 splittin! the loan into a M#.5 ter1 note onwhich defendant was pri1ar2 o"li!or and a M4.# 1illion proKect note on which 9+was the o"li!or and defendant was a !uarantor.

Due to 9+Qs lac3 of success in 1ar3etin! the proKectQs townhouses a# ' o+#*+ &o2+o&*c& '&-*l +o &* *6*+c'-* o C*'cal $aB- *o+c**& +**#'*-,defendant was forced to 1a3e 1onthl2 install1ents of principal and interest on 9+Qs"ehalf. 8lti1atel2, defendant purchased the proKect note fro1 Che1ical Ban3 for M&.#1illion, paid the M#. 1illion "alance on the ter1 note and too3 an assi!n1ent of the

first 1ort!a!e on the proKectQs realt2. 'fter 9+ failed to 1a3e pa21ents on theinde"tedness over the course of the succeedin! two 2ears, defendant "rou!ht anaction to foreclose its 1ort!a!e. 8lti1atel2, defendant o"tained a Kud!1ent offoreclosure and sale in the a1ount of M>,%%,$4>.%. Defendant "id in the propert2 atthe foreclosure sale and thereafter o"tained a deficienc2 Kud!1ent in the a1ount ofM&,%%,$4>.%.

ollowin! the foreclosure sale, 9+ transferred to defendant all of the shares of -opof the 7orld 7ater Co1pan2, a separate entit2 that had "een or!ani=ed to constructand operate the water suppl2 and deliver2 s2ste1 for the proKect, in echan!e for aM5%,%%% reduction in the deficienc2 Kud!1ent.

the 8.S. Supre1e Court of New Aor3 held

Based on the fore!oin!, and acceptin! that defendant eercised co1plete do1inationand control over 9+, we are at a loss as to how plaintiffs perceive the1selves tohave "een ine;uita"l2 affected "2 defendantQs foreclosure action a!ainst 9+, "29+Qs divestiture of the water co1pan2 stoc3 or the sports co1ple propert2, or "2defendantQs transfer to 9+ of a third part2Qs uncollecti"le note, acco1plished solel2for ta purposes. It is undisputed that 9+ was, and for so1e period of ti1e had"een, una"le to 1eet its o"li!ations and, at the ti1e of the foreclosure sale, liensa!ainst its propert2 eceeded the value of its assets "2 several 1illion dollars, evenincludin! the water co1pan2 and sports co1ple at the values plaintiffs would assi!nto the1. In fact, even if plaintiffsQ anal2sis were utili=ed to eli1inate the entire M&1illion deficienc2 Kud!1ent, the fact re1ains that su"ordinate 1ort!a!es totalin!nearl2 an additional M$ 1illion have priorit2 over plaintiffsQ Kud!1ents.

's properl2 concluded "2 Supre1e Court, a"sent a findin! of an2 ine;uita"leconse;uence to plaintiffs, "oth causes of action pleaded in the a1ended co1plaint1ust fail. unda1entall2, a part2 see3in! to pierce the corporate veil 1ust showco1plete do1ination and control of the su"sidiar2 "2 the parent and also that suchdo1ination was used to co11it a fraud or wron! a!ainst the plaintiff that resulted inthe plaintiffQs inKur2 ( $$ '.D.$d >%5, >#%, > N.A.S.$d $&4, supraH see, 6atter of6orris v. New Aor3 State Dept. of -aation in., :$ N.A.$d #&, #4#, >%& N.A.S.$d:%, >$& N.E.$d ##). Nota"l2, /evidence of do1ination alone does not sufficewithout an additional showin! that it led to ine;uit2, fraud or 1alfeasance/ (-NS0oldin!s v. 6I Sec. Corp., 5$ N.A.$d &&, &&5, >:% N.A.S.$d :5#, %& N.E.$d 45).

In reachin! that conclusion, we specificall2 reKect a nu1"er of plaintiffsQ assertions,includin! the entirel2 erroneous clai1s that our deter1ination on the prior appeal ($$'.D.$d >%5, > N.A.S.$d $&4, supra)set forth a /road1ap/ for the proof re;uired attrial and 1andated a verdict in favor of plaintiffs upon their production of evidence thatsupported the decisionQs /listed facts/. -o the contrar2, our decision was predicatedupon the eistence of such evidence, a"sent which we would have !ranted su11ar2Kud!1ent in favor of defendant. 7e are e;uall2 unpersuaded "2 plaintiffsQ continuedreliance upon defendantQs Dece1"er #55# unilateral conversion of its interco1pan2loans with 9+ fro1 de"t to e;uit2, which constituted nothin! 1ore than a/"oo33eepin! transaction/ and had no apparent effect on 9+Qs o"li!ations todefendant or defendantQs ri!ht to foreclose on its 1ort!a!e.$

-his doctrine is !ood law under Philippine Kurisdiction.

In %oncept #uilders, Inc. v. )ational abor Relations %ommission,&we laid down thetest in deter1inin! the applica"ilit2 of the doctrine of piercin! the veil of corporatefiction, to wit@

#. Control, not 1ere 1aKorit2 or co1plete control, "ut co1plete do1ination,not onl2 of finances "ut of polic2 and "usiness practice in respect to thetransaction attac3ed so that the corporate entit2 as to this transaction had atthe ti1e no separate 1ind, will or eistence of its own.

$. Such control 1ust have "een used "2 the defendant to co11it fraud orwron!, to perpetuate the violation of a statutor2 or other positive le!al dut2,or dishonest and, unKust act in contravention of plaintiffs le!al ri!htsH and,

&. -he aforesaid control and "reach of dut2 1ust proi1atel2 cause theinKur2 or unKust loss co1plained of.

-i1e and a!ain, we have reiterated that 1ere ownership "2 a sin!le stoc3holder or "2another corporation of all or nearl2 all of the capital stoc3 of a corporation is not, "2

itself, a sufficient !round for disre!ardin! a separate corporate personalit2.4It is "asicthat a corporation has a personalit2 separate and distinct fro1 that co1posin! it aswell as fro1 that of an2 other le!al entit2 to which it 1a2 "e related. Clear andconvincin! evidence is needed to pierce the veil of corporate fiction.

In this case, the 1ere interloc3in! of directors and officers does not warrant piercin!the separate corporate personalities of 66C and +0I. Not onl2 1ust there "e ashowin! that there was 1aKorit2 or co1plete control, "ut co1plete do1ination, notonl2 of finances "ut of polic2 and "usiness practice in respect to the transactionattac3ed, so that the corporate entit2 as to this transaction had at the ti1e noseparate 1ind, will or eistence of its own. -he 1ort!a!e deed transaction attac3edas a "asis for piercin! the corporate veil was a transaction that was an offshoot, aderivative, of the 1ort!a!es earlier constituted in the Pro1issor2 Notes dated

Octo"er $, #55$. But these Pro1issor2 Notes with 1ort!a!e were eecuted "2 +0Iwith 'P- in the na1e of 66C, in a full privati=ation process. It appears that if there

http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1998217006http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1998217006http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1998217006http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt72http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt73http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt73http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt74http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt75http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt75http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt75http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1993199712http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1998217006http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1998217006http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1998217006http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=578&FindType=Y&SerialNum=1998217006http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://international.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=602&FindType=Y&SerialNum=1998139204http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt72http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt73http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt74http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt75

7/25/2019 Rule 129 cases

11/30

was an2 control or do1ination eercised over 66C, it was 'P-, not +0I, that wieldedit. Neither can we conclude that the constitution of the loan nearl2 four (4) 2ears priorto N'6'78#,a"an3alan Cit2 on ul2 #&, $%%#, the fact that said E*Officio Sheriff and the Cler3 ofCourt issue a Notice of oreclosure, Possession and Control over said 1ort!a!edproperties on ul2 #5, $%%# and the fact that a Sheriff

7/25/2019 Rule 129 cases

12/30

consider, our Decisions in Repu"lic, etc., v. /+/ 0oldin!s, Inc., and 6aricalu1 6inin!Corporation v. Brion and N'6'78, in which we respectivel2 reco!ni=ed theentitle1ent of +0I to the shares and the co1pan2 notes of 66C (under the Purchaseand Sale '!ree1ent), and the ri!hts of N'6'78 to its la"or clai1s. 't this sta!e,therefore, neither the lower court nor the C', nor even this Court, can depart fro1 ourfindin!s in those two cases "ecause of the doctrine of stare decisis.

ro1 our discussion a"ove, we now rule that the trial court, in issuin! the ;uestionedorders, did not co11it !rave a"use of discretion, "ecause its issuance was a1pl2

supported "2 factual and le!al "ases.

7e are not un1indful, however, of the fact that the la"or clai1s of N'6'78,ac3nowled!ed "2 this Court in 6aricalu1, still awaits final eecution. 's successfades fro1 N'6'78:#,%% (PN No. :4*%). It was a!reed in PN No.:4*%4 that the loan it covered would earn an interest of &>? per annu1 and a penalt2of #$? in case of non*pa21ent "2 une $, #5:, while the loan covered "2 PN No.:4*% would earn an interest of #:? per annu1 and #$? penalt2 if not paid "2 une$, #5:.4On 'u!ust :, #5:>, these pro1issor2 notes were assi!ned to respondentPhil"an3in! Corporation throu!h a Deed of 'ssi!n1ent.

Respondent alle!ed that despite de1ands, petitioner failed to pa2 the pro1issor2notes upon 1aturit2 such that its o"li!ation alread2 a1ounted to PhP ,>&,&%&.5% asof ul2 #, #55&. Respondent filed on ul2 $%, #55& a co1plaint "efore the 6a3atiCit2 R-C for the collection of said a1ount. In its 'nswer,> petitioner raised thefollowin! as specialGaffir1ative defenses@

#. -he co1plaint stated no cause of action or if there was an2, the sa1e was"arred "2 estoppel, statute of frauds, statute of li1itations, laches,prescription, pa21ent, andGor releaseH

$. On 'u!ust $, #5:>, the parties eecuted a acion en +ago (acion)which ceded and conve2ed petitioner,&$.#$.5

-hus, petitioner, "2 wa2 of co1pulsor2 counterclai1, alle!ed that it 1ade an

overpa21ent of approi1atel2 PhP 4 1illion inclusive of interest "ased on CentralBan3 Reference 9endin! Rates on dates of overpa21ent. Petitioner further clai1ed

http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt82http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt82http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt82http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt83http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt83http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt84http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt1http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt1http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt2http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt3http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt3http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt4http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt5http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt6http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt6http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt7http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt8http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt9http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt82http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt83http://lawphil.net/judjuris/juri2009/oct2009/gr_160236_2009.html#fnt84http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt1http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt2http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt3http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt4http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt5http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt6http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt7http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt8http://www.lawphil.net/judjuris/juri2007/sep2007/gr_150731_2007.html#fnt9

7/25/2019 Rule 129 cases

13/30

1oral and ee1plar2 da1a!es and attorne2

7/25/2019 Rule 129 cases

14/30

$. Should Kudicial ad1issions "e considered in resolvin! a de1urrer toevidence If 2es, are the Kudicial ad1issions in this case sufficient to warrantthe dis1issal of the co1plaint

Petitioner asserts that its o"li!ation to pa2 under the pro1issor2 notes was alread2etin!uished as evidenced "2 the acion and Confir1ation State1ent. Petitionersu"1its that when it presented these docu1ents in its 'nswer, respondent shouldhave denied the sa1e under oath. Since respondent failed to file a Repl2, the!enuineness and due eecution of said docu1ents were dee1ed ad1itted, thus also

ad1ittin! that the loan was alread2 paid. On the other hand, respondent states thatwhile it failed to file a Repl2, all the new 1atters were dee1ed controverted pursuantto Section #%, Rule > of the Rules of Court. 'lso, the loan which was covered "2 theacion refers to another loan of petitioner a1ountin! to PhP &,5$#,% which waso"tained directl2 fro1 the respondent as of 'u!ust #5:>.$% urther1ore, petitionerar!ued that assu1in! respondent ad1itted the !enuineness and due eecution of theacion and Confir1ation State1ent, said ad1ission was not all*enco1passin! as toinclude the alle!ations and defenses pleaded in petitioner

7/25/2019 Rule 129 cases

15/30

su"stantial alteration to the docu1ent. 7hile due eecution refers to whetherthe docu1ent was si!ned "2 one with authorit2.$

-he 1ore i1portant issue now is whether the acion and Confir1ation State1entsufficientl2 prove that petitioner.-he Deed of 'ssi!n1ent provides, thus@

Rare Realt2 Corporation, a corporation dul2 or!ani=ed and eistin! inaccordance with law, with office at :th loor Phil"an3in! Buildin!, '2ala 've.,6a3ati, 6etro 6anila (herein called 'ssi!nor) in consideration of the su1 of-0REE 6I99ION SEEN 08NDRED NINE-A -0O8S'ND %%G#%% pesosPhP &,5%,%%%.%% and as securit2 fee or in the pa21ent of the su1,o"tained or to "e o"tained as loan or credit acco11odation of whateverfor1 or nature fro1 the P0I9B'NIN+ CORPOR'-ION, with office at'2ala 've., 6a3ati, 6etro 6anila (herein called 'ssi!nee), includin!renewals or etensions of such loan or credit acco11odation, now eistin!or hereinafter incurred, due or to "eco1e due, whether a"solute orcontin!ent, direct or indirect, and whether incurred "2 the 'ssi!nor asprincipal, !uarantor, suret2, co*1a3er, or in an2 other capacit2, includin!

interest, char!es, penalties, fees, li;uidated da1a!e, collection epensesand attorne2

It is clear fro1 the fore!oin! deed that the pro1issor2 notes were !iven as securit2for the loan !ranted "2 respondent to Rare Realt2. -hrou!h the Deed of 'ssi!n1ent,respondent stepped into the shoes of Rare Realt2 as petitioner

7/25/2019 Rule 129 cases

16/30

Petitioner 'lfredo Chin! challen!es "efore us the decision# of the Court of 'ppealspro1ul!ated on $ anuar2 #55& in C' +.R. SP No. $:5#$, dis1issin! his /Petitionfor %ertiorari and Prohi"ition with Pra2er for Issuance of -e1porar2 Restrainin!OrderG Preli1inar2 InKunction/, on the !round of lac3 of 1erit.

'ssailed si1ilarl2 is the resolution$ of the Court of 'ppeals dated $: une #55&den2in! petitionerQs 1otion for reconsideration.

's "orne "2 the records, the controvers2 arose fro1 the followin! facts@

On %4 e"ruar2 #55$,&petitioner was char!ed "efore the Re!ional -rial Court of6a3ati (R-C*6a3ati), Branch :, with four counts of estafa punisha"le under 'rticle par. #(") of the Revised Penal Code, in relation to Presidential Decree ##,otherwise 3nown as the /-rust Receipts 9aw/.

-he four separate infor1ations4which were couched in si1ilar lan!ua!e ecept forthe date, su"Kect !oods and a1ount thereof, char!ed herein petitioner in this wise@

-hat on or a"out the (#:th da2 of 6a2 #5:#H &rd da2 of une #5:#H $4th da2of une #5:# and $4th da2 of une #5:#), in the 6unicipalit2 of 6a3ati,6etro 6anila, Philippines and within the Kurisdiction of this 0onora"le Court,

the a"ove*na1ed accused havin! eecuted a trust receipt a!ree1ent infavor of 'llied Ban3in! Corporation in consideration of the receipt "2 the saidaccused of !oods descri"ed as /#$ Containers ($%% 6G-) 6a!tar BrandDolo1ites/H /#: Containers (Too1 6G-) 6a!tar Brand Dolo1ites/H /0i!hired Refractor2 Slidin! No==le Bric3s/H and /0i!h ired Refractor2 Slidin!No==le Bric3s/ for which there is now due the su1 of (P$:, 5#.:%HP4#5,#5.$%H P&:, #. 5H and P&:5,%:.#4 respectivel2) under the ter1sof which the accused a!reed to sell the sa1e for cash with the epresso"li!ation to re1it to the co1plainant "an3 the proceeds of the sale andGor toturn over the !oods, if not sold, on de1and, "ut the accused, once inpossession of said !oods, far fro1 co1pl2in! with his o"li!ation and with!rave a"use of confidence, did then and there, willfull2, unlawfull2 andfeloniousl2 1isappropriate, 1isappl2 and convert to his own personal useand "enefit the said !oods andGor the proceeds of the sale thereof, and

despite repeated de1ands, failed and refused and still fails and refuses, toaccount for andGor re1it the proceeds of sale thereof to the 'llied Ban3in!Corporation to the da1a!e and preKudice of the said co1plainant "an3 in theafore1entioned a1ount of (P$:,5#.:%H P4#5,#5.$%H P&:,#.5H andP&:5,%:.#4).

On #% e"ruar2 #55$, an /O1ni"us 6otion to Stri3e Out Infor1ation, or in the'lternative to Re;uire Pu"lic Prosecutor to Conduct Preli1inar2 Investi!ation, and toSuspend in the 6eanti1e urther Proceedin!s in these Cases,/ was filed "2 thepetitioner.

In an order dated #& e"ruar2 #55$, the Re!ional -rial Court of 6a3ati, Branch :,actin! on the o1ni"us 1otion, re;uired the prosecutorQs office to conduct apreli1inar2 investi!ation and suspended further proceedin!s in the cri1inal cases.

On % 6arch #55$, petitioner Chin!, to!ether with Philippine Bloo1in! 6ills Co. Inc.,filed a case>"efore the Re!ional -rial Court of 6anila (R-C*6anila), Branch &, fordeclaration of nullit2 of docu1ents and for da1a!es doc3eted as Civil Case No. 5$*>%>%%, entitled /Philippine Bloo1in! 6ills, Inc. et. al. vs. 'llied Ban3in! Corporation.

On % 'u!ust #55$, Chin! filed a petition"efore the R-C*6a3ati, Branch :, for thesuspension of the cri1inal proceedin!s on the !round of preKudicial ;uestion in a civilaction.

-he prosecution then filed an opposition to the petition for suspension, a!ainst whichopposition, herein petitioner filed a repl2.:

On $> 'u!ust #55$, the R-C*6a3ati issued an order5which denied the petition forsuspension and scheduled the arrai!n1ent and pre*trial of the cri1inal cases. 's aresult, petitioner 1oved to reconsider#%the order to which the prosecution filed anopposition.

In an order##dated %4 Septe1"er #55$, the R-C*6a3ati, "efore which the cri1inalcases are pendin!, denied petitionerQs 1otion for reconsideration and set the cri1inalcases for arrai!n1ent and pre*trial.

'!!rieved "2 these orders#$

of the lower court in the cri1inal cases, petitioner "rou!ht"efore the Court of 'ppeals a petition for certiorariand prohi"ition which sou!ht todeclare the nullit2 of the afore1entioned orders and to prohi"it the R-C*6a3ati fro1conductin! further proceedin!s in the cri1inal cases.

In den2in! the petition,#&the Court of 'ppeals, in C' +.R. SP No. $:5#$, ruled@

. . . Civil Case No. 5%*>%>%% pendin! "efore the 6anila Re!ional -rial Courtsee3in! (sic) the declaration of nullit2 of the trust receipts in ;uestion is notapreKudicial ;uestion to Cri1inal Case Nos. 5$*%5&4 to & pendin! "efore therespondent court char!in! the petitioner with four counts of violation of'rticle , par. #("), RPC, in relation to PD ## as to warrant thesuspension of the proceedin!s in the latter . . . .

Conse;uentl2, petitioner filed a 1otion for reconsideration of the decision which theappellate court denied for lac3 of 1erit, viaa resolution#4dated $: une #55&.

Notwithstandin! the decision rendered "2 the Court of 'ppeals, the R-C*6anila,Branch & in an order dated #5 Nove1"er #55& in Civil Case No. 5$*>%>%%, ad1ittedpetitionerQs a1ended co1plaint#which, inter alia, pra2ed the court for a Kud!1ent@

#. Declarin! the Q-rust Receipts,/ annees D, , 0 and hereof, null andvoid, or otherwise annullin! the sa1e, for failure to epress the true intent

and a!ree1ent of the partiesH

http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt1http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt1http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt2http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt2http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt3http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt4http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt5http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt6http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt7http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt7http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt8http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt9http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt9http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt10http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt11http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt11http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt12http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt13http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt13http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt14http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt14http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt14http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt15http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt1http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt2http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt3http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt4http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt5http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt6http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt7http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt8http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt9http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt10http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt11http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt12http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt13http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt14http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt15

7/25/2019 Rule 129 cases

17/30

$. Declarin! the transaction su"Kect hereof as one of pure and si1ple loanwithout an2 trust receipt a!ree1ent andGor not one involvin! a trust receipt,and accordin!l2 declarin! all the docu1ents anneed hereto as 1ere loandocu1ents . . . (e1phasis ours).

In its a1ended answer,#> herein private respondent 'llied Ban3in! Corporationsu"1itted in riposte that the transaction applied for was a /letter of creditGtrust receiptacco11odation/ and not a /pure and si1ple loan with the trust receipts as 1ereadditional or side docu1ents/, as asserted "2 herein petitioner in its a1ended

co1plaint.#

-hrou!h the epedienc2 of Rule 4, petitioner see3s the intervention of this Court andpra2s@

'fter due consideration, to render Kud!1ent reversin! the decision andresolution, 'nnees ' and B hereof, respectivel2, and orderin! thesuspension of Cri1inal Cases (sic) Nos. 5$*%5&4 to 5$*%5&, inclusive,entitled /People of the Philippines vs. 'lfredo Chin!/ pendin! "efore Branch: of the Re!ional -rial Court of 6a3ati, 6etro 6anila, until finaldeter1ination of Civil Case No. 5$*>%% entitled Philippine Bloo1in! 6ills Co.Inc. and 'lfredo Chin! vs. 'llied Ban3in! Corporation/ pendin! "eforeBranch & of the Re!ional -rial Court of 6anila.

-he instant petition is "ereft of 1erit.

7e a!ree with the findin!s of the trial court, as affir1ed "2 the Court of 'ppeals, thatno preKudicial ;uestion eists in the present case.

's defined, a preKudicial ;uestion is one that arises in a case the resolution of which isa lo!ical antecedent of the issue involved therein, and the co!ni=ance of whichpertains to another tri"unal. -he preKudicial ;uestion 1ust "e deter1inative of thecase "efore the court "ut the Kurisdiction to tr2 and resolve the ;uestion 1ust "elod!ed in another court or t ri"unal.#:

It is a ;uestion "ased on a fact distinct and separate fro1 the cri1e "ut so inti1atel2connected with it that it deter1ines the !uilt or innocence of the accused, and for it tosuspend the cri1inal action, it 1ust appear not onl2 that said case involves factsinti1atel2 related to those upon which the cri1inal prosecution would "e "ased "utalso that in the resolution of the issue or issues raised in the civil case, the !uilt orinnocence of the accused would necessaril2 "e deter1ined.#5 It co1es into pla2!enerall2 in a situation where a civil action and a cri1inal action are "oth pendin! andthere eists in the for1er an issue which 1ust "e pree1ptivel2 resolved "efore thecri1inal action 1a2 proceed, "ecause howsoever the issue raised in the civil action isresolved would "e deter1inative $uris et de $ure of the !uilt or innocence of theaccused in the cri1inal case.$%

6ore si1pl2, for the court to appreciate the pendenc2 of a preKudicial ;uestion, the

law,$#

in no uncertain ter1s, re;uires the concurrence of two essential re;uisites, towit@

a) -he civil action involves an issue si1ilar or inti1atel2 related to the issueraised in the cri1inal actionH and

") -he resolution of such issue deter1ines whether or not the cri1inal action1a2 proceed.

eril2, under the prevailin! circu1stances, the alle!ed preKudicial ;uestion in the civilcase for declaration of nullit2 of docu1ents and for da1a!es, does not$uris et de $uredeter1ine the !uilt or innocence of the accused in the cri1inal action for estafa.

'ssu1in! ar!uendo that the court hearin! the civil aspect of the case adKudicates thatthe transaction entered into "etween the parties was not a trust receipt a!ree1ent,nonetheless the !uilt of the accused could still "e esta"lished and his culpa"ilit2under penal laws deter1ined "2 other evidence. -o put it differentl2, even on theassu1ption that the docu1ents are declared of null, it does not ipso actofollow thatsuch declaration of nullit2 shall eonerate the accused fro1 cri1inal prosecution andlia"ilit2.

'ccordin!l2, the prosecution 1a2 adduce evidence to prove the cri1inal lia"ilit2 of theaccused for estafa, specificall2 under 'rticle #(") of the Revised Penal Codewhich eplicitl2 provides that said cri1e is co11itted@

. . . (") B2 1isappropriatin! or convertin!, to the preKudice of another,

1one2H !oods, or an2 other personal propert2 received "2 the offender intrust or on co11ission, or for ad1inistration, or an2 other o"li!ationinvolvin! the dut2 to 1a3e deliver2 of or to return the sa1e, even thou!hsuch o"li!ation "e totall2 or partiall2 !uaranteed "2 a "ondH or "2 den2in!havin! received such 1one2, !oods, or other propert2.

'ppl2in! the fore!oin! principles, the cri1inal lia"ilit2 of the accused for violation of'rticle #(") of the Revised Penal Code, 1a2 still "e shown throu!h thepresentation of evidence to the effect that@ (a) the accused received the su"Kect !oodsin trust or under the o"li!ation to sell the sa1e and to re1it the proceeds thereof to'llied Ban3in! Corporation, or to return the !oods, if not soldH (") that accused Chin!1isappropriated or converted the !oods andGor the proceeds of the saleH (c) thataccused Chin! perfor1ed such acts with a"use of confidence to the da1a!e and

preKudice of 'llied Ban3in! CorporationH and (d) that de1and was 1ade "2 the "an3to herein petitioner.

Presidential Decree ##, otherwise 3nown as the /-rust Receipts 9aw/, specificall2Section #& thereof, provides@

-he failure of an entrustee to turn over the proceeds of the sale of the!oods, docu1ents or instru1ents covered "2 a trust receipt to the etent ofthe a1ount owin! to the entruster or as appears in the trust receipt or toreturn said !oods, docu1ents or instru1ents if the2 were not sold ordisposed of in accordance with the ter1s of the trust receipt shall constitutethe cri1e of estafa, punisha"le under the provisions of 'rticle -hree hundredfifteen, para!raph one (") of 'ct Nu1"ered -hree thousand ei!ht hundredand fifteen, as a1ended, otherwise 3nown as the Revised Penal Code.

http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt16http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt16http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt17http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt18http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt19http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt19http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt19http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt20http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt20http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt21http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt21http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt21http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt16http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt17http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt18http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt19http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt20http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt21

7/25/2019 Rule 129 cases

18/30

7e 1ust stress thou!h, that an act violative of a trust receipt a!ree1ent is onl2 one1ode of co11ittin! estafa under the a"ove1entioned provision of the Revised PenalCode. Stated differentl2, a violation of a trust receipt arran!e1ent is not the sole "asisfor incurrin! lia"ilit2 under 'rticle # (") of the Code.

In 1imenez vs. 'veria,$$where the accused was li3ewise char!ed with estafa, thisCourt had occasion to rule that a civil case contestin! the validit2 of a certain receiptis not a preKudicial ;uestion that would warrant the suspension of cri1inalproceedin!s for estafa.(20p!i(.n3t

In the a"ove1entioned case, a cri1inal char!e for estafa was filed in the Court ofirst Instance of Cavite a!ainst the two accused. -he infor1ation alle!ed that theaccused, havin! received the a1ount of P$%,%%%.%% fro1 6anuel i1ene= for thepurchase of a fishin! "oat, with the o"li!ation on the part of the for1er to return the1one2 in case the "oat was not purchased, 1isappropriated the said a1ount to theda1a!e and preKudice of i1ene=.$&

Before arrai!n1ent, the accused filed a civil case contestin! the validit2 of a certainreceipt si!ned "2 the1. In the receipt, the accused ac3nowled!ed havin! received theaforesaid su1, in addition to the a1ount of P$4%.%% as a!entQs co11ission. -heco1plaint, however, alle!ed that the accused never received an2 a1ount fro1i1ene= and that the si!natures on the ;uestioned receipt were secured "2 1eans of

fraud, deceit and inti1idation.

In rulin! out the eistence of preKudicial ;uestion, we declared@

. . . It will "e readil2 seen that the alle!ed preKudicial ;uestion is notdeter1inative of the !uilt or innocence of the parties char!ed with estafa,"ecause even on the assu1ption that the eecution of the receipt whoseannul1ent the2 sou!ht in the civil case was vitiated "2 fraud, duress orinti1idation, their !uilt could still "e esta"lished "2 other evidence showin!,to the de!ree re;uired "2 law, that the2 had actuall2 received fro1 theco1plainant the su1 of P$%,%%%,%% with which to "u2 for hi1 a fishin! "oat,and that, instead of doin! so, the2 1isappropriated the 1one2 and refusedor otherwise failed to return it to hi1 upon de1and. . . .

urther1ore, petitioner su"1its that the truth or falsit2 of the partiesQ respective clai1sas re!ards the true nature of the transactions and of the docu1ents, shall have to "efirst deter1ined "2 the Re!ional -rial Court of 6anila, which is the court hearin! thecivil case.

7hile this 1a2 "e true, it is no less true that the Supre1e Court 1a2, on certaineceptional instances, resolve the 1erits of a case on the "asis of the records andother evidence "efore it, 1ost especiall2 when the resolution of these issues would"est serve the ends of Kustice and pro1ote the speed2 disposition of cases.

-hus, considerin! the peculiar circu1stances attendant in the instant case, this Court

sees the co!enc2 to eercise its plenar2 power@

It is a rule of procedure for the Supre1e Court to strive to settle the entirecontrovers2 in a sin!le proceedin! leavin! no root or "ranch to "ear theseeds of future liti!ation. No useful purpose will "e served if a case or thedeter1ination of an issue in a case is re1anded to the trial court onl2 tohave its decision raised a!ain to the Court of 'ppeals and fro1 there to theSupre1e Court (citing Board of Co11issioners vs. ud!e oselito de laRosa and ud!e Capulon!, +.R. Nos. 5#$$*$&).

7e have laid down the rule that the re1and of the case or of an issue to the

lower court for further reception of evidence is not necessar2 where theCourt is in position to resolve the dispute "ased on the records "efore it andparticularl2 where the ends of Kustice would not "e su"served "2 the re1andthereof (Escudero vs. Dula2, #: SCR' >5). 6oreover, the Supre1e Court isclothed with a1ple authorit2 to review 1atters, even those not raised onappeal if it finds that their consideration is necessar2 in arrivin! at a Kustdisposition of the case. $4

On 1an2 occasions, the Court, in the pu"lic interest and for the epeditiousad1inistration of Kustice, has resolved actions on the 1erits instead of re1andin!the1 to the trial court for further proceedin!s, such as where the ends of Kustice wouldnot "e su"served "2 the re1and of the case.$

Ineora"l2, the records would show that petitioner si!ned and eecuted an applicationand a!ree1ent for a co11ercial letter of credit to finance the purchase of i1ported!oods. 9i3ewise, it is undisputed that petitioner si!ned and eecuted trust receiptdocu1ents in favor of private respondent 'llied Ban3in! Corporation.

In its a1ended co1plaint, however, which nota"l2 was filed onl2 after the Court of'ppeals rendered its assailed decision, petitioner ur!es that the transaction enteredinto "etween the parties was one of /pure loan without an2 trust receipt a!ree1ent/.'ccordin! to petitioner, the trust receipt docu1ents were intended 1erel2 as/additional or side docu1ents coverin! the said loan/ contrar2 to petitionerQsalle!ation in his ori!inal co1plaint that the trust receipts were eecuted as collateralor securit2.

7e do not a!ree. 's 6r. ustice Stor2 succinctl2 puts it@ /Na3ed state1ents 1ust "eentitled to little wei!ht when the parties hold "etter evidence "ehind the scenes.$>

0ence, with affir1ance, we ;uote the findin!s of the Court of 'ppeals@

-he concept in which petitioner si!ned the trust receipts, that is whether hesi!ned the trust receipts as such trust receipts or as a 1ere evidence of apure and si1ple loan transaction is not decisive "ecause precisel2, a trustreceipt is a securit2 a!ree1ent of an inde"tedness.

Contrar2 to petitionerQs assertions and in view of Kurisprudence esta"lished in thisKurisdiction, a trust receipt is not 1erel2 an additional or side docu1ent to a principal

contract, which in the instant case is alle!ed "2 petitioner to "e a pure and si1pleloan.

http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt22http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt22http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt23http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt24http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt25http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt26http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt26http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt22http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt23http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt24http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt25http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt26

7/25/2019 Rule 129 cases

19/30

's elucidated in Samo vs. +eople,$ a trust receipt is considered a securit2transaction intended to aid in financin! i1porters and retail dealers who do not havesufficient funds or resources to finance the i1portation or purchase of 1erchandise,and who 1a2 not "e a"le to ac;uire credit ecept throu!h utili=ation, as collateral, ofthe 1erchandise i1ported or purchased.

urther, a trust receipt is a docu1ent in which is epressed a securit2 transactionwhereunder the lender, havin! no prior title in the !oods on which the lien is to "e!iven and not havin! possession which re1ains in the "orrower, lends his 1one2 to

the "orrower on securit2 of the !oods which the "orrower is privile!ed to sell clear ofthe lien with an a!ree1ent to pa2 all or part of the proceeds of the sale to the lender.$:

It is a securit2 a!ree1ent pursuant to which a "an3 ac;uires a /securit2 interest/ inthe !oods. It secures an inde"tedness and there can "e no such thin! as securit2interest that secures no o"li!ation.$5

Clearl2, a trust receipt parta3es the nature of a securit2 transaction. It could never "ea 1ere additional or side docu1ent as alle!ed "2 petitioner. Otherwise, a part2 to atrust receipt a!ree1ent could easil2 rene!e on its o"li!ations thereunder, thusunder1inin! the i1portance and defeatin! with i1punit2 the purpose of such anindispensa"le tool in co11ercial transactions.

Of e;ual i1portance is the fact that in his co1plaint in Civil Case No. 5$*>%>%%, dated

% 6arch #55$, petitioner alle!ed that the trust receipts were eecuted and intendedas collateral or securit2. Pursuant to the rules, such particular alle!ation in theco1plaint is tanta1ount to a Kudicial ad1ission on the part of petitioner Chin! towhich he 1ust "e "ound.

-hus, the Court of 'ppeals in its resolution dated $: une #55&, correctl2 o"served@

It was petitioner hi1self who ac3nowled!ed the trust receipts as 1erecollateral and securit2 for the pa21ent of the loan "ut 3ept on insistin! thatthe real and true transaction was one of pure loan. . . .

In his present 1otion, the petitioner alle!es that the trust receipts areevidence of a pure loan or that the sa1e were additional or side docu1entsthat actuall2 stood as pro1issor2 notes and not a collateral or securit2a!ree1ent. 0e cannot assu1e a position inconsistent with his previousalle!ations in his civil co1plaint that the trust receipts were intended as 1erecollateral or securit2 . . . .

Perhaps, reali=in! such flaw, petitioner, in a co1plete turn around, filed a 1otion toad1it a1ended co1plaint "efore the R-C*6anila. '1on! others, the a1endedco1plaint alle!ed that the trust receipts stood as additional or side docu1ents, thereal transaction "etween the parties "ein! that of a pure loan without an2 trust receipta!ree1ent.

In an order dated #5 Nove1"er #55&, the R-C*6anila, Branch &, ad1itted the

a1ended co1plaint. 'ccordin!l2, with the lower courtQs ad1ission of the a1ended

co1plaint, the Kudicial ad1ission 1ade in the ori!inal co1plaint was, in effect,superseded.

8nder the Rules, pleadin!s superseded or a1ended disappear fro1 the record, losetheir status as pleadin!s and cease to "e Kudicial ad1issions. 7hile the2 1a2nonetheless "e utili=ed a!ainst the pleader as etraKudicial ad1issions, the2 1ust, inorder to have such effect, "e for1all2 offered in evidence. If not offered in evidence,the ad1ission contained therein will not "e considered.&%

Conse;uentl2, the ori!inal co1plaint, havin! "een a1ended, lost its character as aKudicial ad1ission, which would have re;uired no proof, and "eca1e 1erel2 anetraKudicial ad1ission, the ad1issi"ilit2 of which, as evidence, re;uired its for1aloffer.

In virtue thereof, the a1ended co1plaint ta3es the place of the ori!inal. -he latter isre!arded as a"andoned and ceases to perfor1 an2 further function as a pleadin!.-he ori!inal co1plaint no lon!er for1s part of the record.&$

-hus, in the instant case, the ori!inal co1plaint is dee1ed superseded "2 thea1ended co1plaint. Corollaril2, the Kudicial ad1issions in the ori!inal co1plaint areconsidered a"andoned. Nonetheless, we 1ust stress that the actuations of petitioner,as sanctioned "2 the R-C*6anila, Branch & throu!h its order ad1ittin! the a1ended

co1plaint, de1ands stern re"u3e fro1 this Court.

Certainl2, this Court is not unwar2 of the tactics e1plo2ed "2 the petitioner specificall2in filin! the a1ended co1plaint onl2 after the pro1ul!ation of the assailed decision ofthe Court of 'ppeals. It "ears notin! that a lapse of al1ost ei!hteen 1onths (fro16arch #55$ to Septe1"er #55&), fro1 the filin! of the ori!inal co1plaint to the filin!of the a1ended co1plaint, is too len!th2 a ti1e sufficient to en3indle suspicion andenfla1e dou"ts as to the true intentions of petitioner re!ardin! the earl2 disposition ofthe pendin! cases.

'lthou!h the !rantin! of leave to file a1ended pleadin!s is a 1atter peculiarl2 withinthe sound discretion of the trial court and such discretion would not nor1all2 "edistur"ed on appeal, it is also well to 1ention that this rule is relaed when evidenta"use thereof is apparent. &&

0ence, in certain instances we ruled that a1end1ents are not proper and should "edenied when dela2 would arise,&4or when the a1end1ents would result in a chan!eof cause of action or defense or chan!e the theor2 of the case, & or would "einconsistent with the alle!ations in the ori!inal co1plaint.&>

'ppl2in! the fore!oin! rules, petitioner, "2 filin! the a1ended co1plaint, in effect,altered the theor2 of his case. 9i3ewise, the alle!ations e1"odied in the a1endedco1plaint are inconsistent with that of the ori!inal co1plaint inas1uch as in the latter,petitioner alle!ed that the trust receipts were intended as 1ere collateral or securit2,the principal transaction "ein! one of pure loan.

http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt27http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt28http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt29http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt30http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt30http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt31http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt31http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt32http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt32http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt33http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt34http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt34http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt34http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt35http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt35http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt35http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt36http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt27http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt28http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt29http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt30http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt31http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt32http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt33http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt34http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt35http://www.lawphil.net/judjuris/juri2000/apr2000/gr_110844_2000.html#fnt36

7/25/2019 Rule 129 cases

20/30

Aet, in the a1ended co1plaint, petitioner ar!ued that the said trust receipts wereeecuted as additional or side docu1ents, the transaction "ein! strictl2 one of pureloan without an2 trust receipt arran!e1ent. O"viousl2 these alle!ations are in discordin relation to each other and therefore cannot stand in har1on2.

-hese circu1stances, ta3en as a whole, lead this Court to dou"t the !enuine purposeof petitioner in filin! the a1ended co1plaint.(20p!i('!ain, we view petitionerQsactuations with a"horrence and displeasure.

6oreover, petitioner contends that the transaction "etween Philippine Bloo1in! 6ills(PB6) and private respondent 'llied Ban3in! Corporation does not fall under thecate!or2 of a trust receipt arran!e1ent clai1in! that the !oods were not to "e sold"ut were to "e used, consu1ed and destro2ed "2 the i1porter PB6.

-o our 1ind, petitionerQs contention is a stealth2 atte1pt to circu1vent the principleenunciated in the case of'lied #aning %orporation vs. 4rdonez,&thus@

. . . In an atte1pt to escape cri1inal lia"ilit2, private respondent clai1s P.D.## covers !oods which are ulti1atel2 destined for sale and not !oods foruse in 1anufacture. But the wordin! of Section #& covers failure to turn overthe proceeds of the sale of the entrusted !oods, or to return said !oods ifunsold or disposed of in accordance with the ter1s of the trust receipts.

Private respondent clai1s that at the ti1e of PB6Qs application for theissuance of the 9CQs, it was not represented to the petitioner that the ite1swere intended for sale, hence, there was no deceit resultin! in a violation ofthe trust receipts which would constitute a cri1inal lia"ilit2. '!ain we cannotuphold this contention. -he non*pa21ent of the a1ount covered "2 a trustreceipt is an act violative of the entrusteeQs o"li!ation to pa2. -here is noreason wh2 the law should not appl2 to all transactions covered "2 trustreceipts, ecept those epressl2 ecluded (>:'m. 1ur. #$).

-he Court ta3es Kudicial notice of custo1ar2 "an3in! and "usiness practiceswhere trust receipts are used for i1portation of heav2 e;uip1ent,1achineries and supplies used in 1anufacturin! operations. 7e areperpleed "2 the state1ents in the assailed DO resolution that the !oods

su"Kect of the instant case are outside the a1"it of the provisions of PD ##al"eit covered "2 trust receipt a!ree1ents (# e"ruar2 #5:: resolution)and that not all transactions covered "2 trust receipts 1a2 "e considered astrust receipt transactions defined and penali=ed under P.D. ## (## anuar2#5:: resolution). ' construction should "e avoided when it affords anopportunit2 to defeat co1pliance with the ter1s of a statute.

-he penal provision of P.D. ## enco1passes an2 act violative of ano"li!ation covered "2 the trust receiptH it is not li1ited to transactions in!oods which are to "e sold (retailed), reshipped, stored or processed as aco1ponent of a product ulti1atel2 sold.

'n ea1ination of P.D. ## shows the !rowin! i1portance of trust receipts inPhilippine "usiness, the need to provide for the ri!hts and o"li!ations of parties to atrust receipt transaction, the stud2 of the pro"le1s involved and the action "21onetar2 authorities, and the necessit2 of re!ulatin! the enforce1ent of ri!hts arisin!fro1 default or violations of trust receipt a!ree1ents. -he le!islative intent to 1eet apressin! need is clearl2 epressed. &:

In fine, we reiterate that the civil action for declaration of nullit2 of docu1ents and forda1a!es does not constitute a preKudicial ;uestion to the cri1inal cases for estafa

filed a!ainst petitioner Chin!.

70EREORE, pre1ises considered, the assailed decision and resolution of theCourt of 'ppeals are here"2 'IR6ED and the instant petition is DIS6ISSED forlac3 of 1erit. 'ccordin!l2, the Re!ional -rial Court of 6a3ati, Branch :, is here"2directed to proceed with the hearin! and trial on the 1erits of Cri1inal Case Nos. 5$*%5&4 to 5$*%5&, inclusive, and to epedite proceedin!s therein, without preKudice tothe ri!ht of the accused to due process.(20p!i(.n3t

SO ORDERED.

ANICETO G. SALUDO,

7/25/2019 Rule 129 cases

21/30

-he co1plaint alle!ed, inter alia, that plaintiff (herein petitioner Saludo) /is a ilipinociti=en, of le!al a!e, and a 1e1"er of the 0ouse of Representatives and a resident ofIchon, 6acrohon, Southern 9e2te, Philippines./ On the other hand, defendant (hereinrespondent '6EF, Inc.) /is a corporation doin! "usiness in the Philippines anden!a!ed in providin! credit and other credit facilities and allied services with officeaddress at 4th floor, 'CE Buildin!, Rada Street, 9e!aspi illa!e, 6a3ati Cit2./ -heother defendants (herein respondents ish and 6ascrinas) are officers of respondent'6EF, and 1a2 "e served with su11ons and other court processes at their officeaddress.

-he co1plaintQs cause of action ste11ed fro1 the alle!ed wron!ful dishonor ofpetitioner SaludoQs '6EF credit card and the supple1entar2 card issued to hisdau!hter. -he first dishonor happened when petitioner SaludoQs dau!hter used hersupple1entar2 credit card to pa2 her purchases in the 8nited States so1e ti1e in'pril $%%%. -he second dishonor occurred when petitioner Saludo used his principalcredit card to pa2 his account at the 0otel O3awa in -o32o, apan while he was therewith other dele!ates fro1 the Philippines to attend the Con!ressional Reco!nition inhonor of 6r. 0iroshi -ana3a.

-he dishonor of these '6EF credit cards were alle!edl2 unKustified as the2 resultedfro1 respondentsQ unilateral act of suspendin! petitioner SaludoQs account for hisfailure to pa2 its "alance coverin! the period of 6arch $%%%. Petitioner Saludo deniedhavin! received the correspondin! state1ent of account. urther, he was alle!edl2wron!full2 char!ed for late pa21ent in une $%%%. Su"se;uentl2, his credit card andits supple1entar2 cards were canceled "2 respondents on ul2 $%, $%%%.

Petitioner Saludo clai1ed that he suffered !reat inconvenience, wounded feelin!s,1ental an!uish, e1"arrass1ent, hu1iliation and "es1irched political andprofessional standin! as a result of respondentsQ acts which were co11itted in !rossand evident "ad faith, and in wanton, rec3less and oppressive 1anner. 0e thuspra2ed that respondents "e adKud!ed to pa2 hi1, Kointl2 and severall2, actual, 1oraland ee1plar2 da1a!es, and attorne2Qs fees.

In their answer, respondents specificall2 denied the alle!ations in the co1plaint.urther, the2 raised the affir1ative defenses of lac3 of cause of action and i1proper

venue. On the latter, respondents averred that the co1plaint should "e dis1issed onthe !round that venue was i1properl2 laid "ecause none of the parties was a residentof 9e2te. -he2 alle!ed that respondents were not residents of Southern 9e2te.6oreover, notwithstandin! the clai1 in his co1plaint, petitioner Saludo was notalle!edl2 a resident thereof as evidenced "2 the fact that his co11unit2 tacertificate, which was presented when he eecuted the co1plaintQs verification andcertification of non*foru1 shoppin!, was issued at Pasa2 Cit2. -o "uttress theircontention, respondents pointed out that petitioner SaludoQs co1plaint was preparedin Pasa2 Cit2 and si!ned "2 a law2er of the said cit2. Respondents pra2ed for thedis1issal of the co1plaint a ;uo.

-hereafter, respondents filed an Opposition to E*Parte 6otion (to Set Case for Pre*-rial) and 6otion for Preli1inar2 0earin! (on 'ffir1ative Defense of I1proper enue)

to which petitioner Saludo filed his Co11ents andGor O"Kections to the 'ffir1ativeDefense of I1proper enue. 0e asserted that an2 alle!ation refutin! his residenc2 in

Southern 9e2te was "aseless and unfounded considerin! that he was thecon!ress1an of the lone district thereof at the ti1e of the filin! of his co1plaint. 0eur!ed the court a ;uo to ta3e Kudicial notice of this particular fact. 's a 1e1"er ofCon!ress, he possessed all the ;ualifications prescri"ed "2 the Constitution includin!that of "ein! a resident of his district. 0e was also a 1e1"er of the Inte!rated Bar ofthe Philippines*Southern 9e2te Chapter, and has "een such ever since his ad1issionto the Bar. 0is co11unit2 ta certificate was issued at Pasa2 Cit2 onl2 "ecause hehas an office thereat and the office 1essen!er o"tained the sa1e in the said cit2. Inan2 event, the co11unit2 ta certificate is not deter1inative of oneQs residence.

In the Order dated Septe1"er #%, $%%#, the court a ;uo denied the affir1ativedefenses interposed "2 respondents. It found the alle!ations of the co1plaintsufficient to constitute a cause of action a!ainst respondents. -he court a ;uoli3ewise denied respondentsQ affir1ative defense that venue was i1properl2 laid. Itreasoned, thus@

-he fact alone that the plaintiff at the ti1e he filed the co1plaint was and still is,the incu1"ent Con!ress1an of the 9one District of Southern 9e2te with residence atIchon, 6acrohon, Southern 9e2te, is enou!h to dispell an2 and all dou"ts a"out hisactual residence. 's a hi!h*ran3in! !overn1ent official of the province, his residencethere can "e ta3en Kudicial notice of. 's such his personal, actual and ph2sicalha"itation or his actual residence or place of a"ode can never "e in so1e other place"ut in Ichon, 6acrohon, Southern 9e2te. It is correctl2 stated "2 the plaintiff, citin! thecase of Core v. Core, #%% Phil. &$# that, /residence, for purposes of fiin! venue ofan action, is s2non21ous with do1icile. -his is defined as the per1anent ho1e, theplace to which, whenever a"sent for "usiness or pleasure, one intends to return, anddepends on the facts and circu1stances, in the sense that the2 disclose intent. 'person can have "ut one do1icile at a ti1e. ' 1an can have "ut one do1icile for oneand the sa1e purpose at an2 ti1e, "ut he 1a2 have nu1erous places of residence.enue could "e at place of his residence. (6asa v. 6ison, $%% SCR' # #55#)&

Respondents sou!ht the reconsideration thereof "ut the court a ;uo denied the sa1ein the Order dated anuar2 $, $%%$. -he2 then filed with the appellate court a petitionfor certiorari and prohi"ition alle!in! !rave a"use of discretion on the part of thepresidin! Kud!e of the court a ;uo in issuin! the Septe1"er #%, $%%# and anuar2 $,$%%$ Orders. 8pon respondentsQ postin! of a "ond, the appellate court issued on6arch #4, $%%$ a te1porar2 restrainin! order which enKoined the presidin! Kud!e ofthe court a ;uo fro1 conductin! further proceedin!s in Civil Case No. R*$.

On 6a2 $$, $%%&, the appellate court rendered the assailed decision !rantin!respondentsQ petition for certiorari as it found that venue was i1properl2 laid. Itdirected the court a ;uo to vacate and set aside its Orders dated Septe1"er #%, $%%#and anuar2 $, $%%$, and enKoined the presidin! Kud!e thereof fro1 furtherproceedin! in the case, ecept to dis1iss the co1plaint.

-he appellate court eplained that the action filed "2 petitioner Saludo a!ainstrespondents is !overned "2 Section $, Rule 4 of the Rules of Court. -he said rule onvenue of personal actions "asicall2 provides that personal actions 1a2 "e

co11enced and tried where plaintiff or an2 of the principal plaintiffs resides, or wheredefendant or an2 of the principal defendants resides, at the election of plaintiff.

http://www.lawphil.net/judjuris/juri2006/apr2006/gr_159507_2006.html#fnt3http://www.lawphil.net/judjuris/juri2006/apr2006/gr_159507_2006.html#fnt3

7/25/2019 Rule 129 cases

22/30

enue was i1properl2 laid in the court a ;uo, accordin! to the appellate court,"ecause not one of the parties was a resident of Southern 9e2te. Specificall2, itdeclared that petitioner Saludo was not a resident thereof. -he appellate courtpronounced that, for purposes of venue, the residence of a person is his personal,actual or ph2sical ha"itation, or his actual residence or place of a"ode, which 1a2 notnecessaril2 "e his le!al residence or do1icile provided he resides therein withcontinuit2 and consistenc2.4

-he appellate court ;uoted the followin! discussion in oh v. Court of 'ppealswhere

the Court distin!uished the ter1s /residence/ and /do1icile/ in this wise@

-he ter1 do1icile is not eactl2 s2non21ous in le!al conte1plation with theter1 residence, for it is an esta"lished principle in Conflict of 9aws that do1icilerefers to the relativel2 1ore per1anent a"ode of a person while residence applies toa te1porar2 sta2 of a person in a !iven place. In fact, this distinction is ver2 welle1phasi=ed in those cases where the Do1iciliar2 -heor2 1ust necessaril2 supplantthe Nationalit2 -heor2 in cases involvin! stateless persons.

/-here is a difference "etween do1icile and residence. Residence is used to indicatea place of a"ode, whether per1anent or te1porar2H do1icile denotes a fied

per1anent residence to which when a"sent, one has the intention of returnin!. ' 1an1a2 have a residence in one place and a do1icile in another. Residence is notdo1icile, "ut do1icile is residence coupled with intention to re1ain for an unli1itedti1e. ' 1an can have "ut one do1icile for one and the sa1e purpose at an2 ti1e, "uthe 1a2 have nu1erous places of residence. 0is place of residence !enerall2 is hisplace of do1icile, "ut is not "2 an2 1eans, necessaril2 so since no len!th ofresidence without intention of re1ainin! will constitute do1icile./> (Italici=ed fore1phasis)

In holdin! that petitioner Saludo is not a resident of 6aasin Cit2, S