Negotiorum
gestio is a form of spontaneous agency
in which an agent, the gestor, acts on behalf and for the benefit of a principal, but without his or her
consent, though the action is later ratified by the principal. The gestor is
only entitled to reimbursement for expenses and not to remuneration, the
underlying principle being that negotiorum gestio is intended as an act
of generosity and friendship and not to allow the gestor to profit from his
agency. This form of agency is found in civil law countries and in Scots law.
It
originated as a Roman legal
institution in which an individual acted on behalf of another, without his
asking and without remuneration. It was considered a part of officium
(duty), for
instance, to defend a friend's or neighbor's
interests while the friend or neighbor was away.[1]
The
principal, or dominus, more fully dominus negotiorum dominus rei
gestae, is bound to indemnify the gestor for the expenses and liabilities
incurred.
EN BANC
G.R. No. L-12289 May 28, 1958
LIM SIOK HUEY, ET AL., plaintiffs-appellants,
vs.
ALFREDO LAPIZ, ET AL., defendants-appellees.
Godofredo C. Montesines and Alfonso E. Generoso for appellants.
Tengco Rosales for appellees Vicente Reyes and Lazaro Limjuco.
BAUTISTA ANGELO, J.:
This is an action to recover damages amounting to P83,701.30 filed in the Court of First Instance of Laguna. The plaintiffs are Lim Siok Huey, Pua Yek Ben, Pua Chok Ben, Pua Sam Ben and Pua Go Kuan, the first being the surviving spouse and the last four the surviving children of Chua Pua Lun, represented by their counsel, and the defendants are Alfredo Lapiz, Victorino Sapin, Vicente Reyes and Lazaro Limjuco. The damages are claimed by reason of the death of Chua Pua Lun as a result of a collision suffered by the jeepney in which he was a passenger.
Defendant Alfredo Capiz, the driver of the driver of the Jaguar jeepney, in answer to the complaint, alleged that the vehicle driven by him was hit by the Kapalaran bus which was driven by defendant Vicente Reyes due to the negligence of the latter, thereby causing the death of Chua Pua Lun who was a passenger of the jeepney. Defendant Victorino Sapin in turn alleged that he was not the owner of the jeepney driven by Lapiz, while defendants Vicente Reyes and Lazaro Limjuco, the first as driver and the second as owner of the bus, alleged that the collision between the two vehicles was due to the negligence of Alfredo Lapiz.
Plaintiffs Pua Sam Ben and Pua Go Kuan, being minors, the court, upon motion of their counsel, appointed Chua Pua Tam, a brother of the deceased, as guardian ad litem to represent them in this case.
After trial, the court rendered decision "dismissing the complaint, defendant Lapiz cross-claim against defendants Reyes and Limjuco as well as the counterclaim of these last two named defendant against the plaintiff and their cross-claim against defendants Lapiz and Sapin." Plaintiffs appealed directly to this Court in view of the amount involved.
In dismissing the complaint, the trial court made the following pronouncement:
Notwithstanding the above conclusion, the Court is
however, of the opinion that the present action cannot be maintained not on the
ground invoked by the defendants but on the theory that the plaintiffs have not
authorized anyone to file the complaint against the defendants. While an
attorney representing a client `in a case pending in Court is presumed to be
authorized for the purpose, nevertheless in the case under consideration, such
presumption had been destroyed and overcome by the very evidence presented by
counsel himself. The plaintiffs are all citizens and residents of Communist
China and they have not communicated with anyone in the Philippines in
connection with the filing of an action for damages in their behalf arising
from the death of Chua Pau Lun. Chua Pua Tam, who is the brother-in-law of the
first plaintiff and uncle of the others, testified that the plaintiffs had not
written to him nor had he communicated with them. The letters supposedly sent
to Lim Ping Kok by his sister Lim Sick Huey (Exh. J) and his mother (Exh. K)
did not contain any intimation much less of an authorization for the filing of
a claim for damages in behalf of the widow and children of the deceased, Chua
Pua Lun, against the parties responsible for his death. Under this situation,
the Court has no other alternative but to dismiss the complaint on the ground
that the evidence on record does not show that the plaintiffs have authorized
much less directed the commencement of the present action.
Appellants now contend that the trial court erred (1) in finding that
plaintiffs, being residents of Communist China, have not authorized anyone to
file the present case against the defendants; (2) in dismissing the complaint
when the authority to prosecute the case stems from the appointment of Chua Pua
Tam as guardian ad litem of minors Pua Sam Ben and Pua Go Kuan; (3) in
dismissing the case when the same could be considered as prosecuted by a negotiorum
gestor and (4) in finding that there was no authority to file the case when
such question was not raised in issue nor was evidence adduced on the point.With regard to the first question, we find no error in the findings made by the trial court. Indeed, the same is supported by the record and the evidence. Thus, it appears that the plaintiffs who are the widow and children of the deceased Chua Pua Lun are all citizens and residents of Communist China and notwithstanding the fact that they have been informed of the death of the deceased, they have not sent any communication to anyone in the Philippines giving authority to take whatever action may be proper to obtain an indemnity for his death other than two letters supposedly sent to Lim Ping Kok by his sister Lim Siok Huey and his mother, which do not contain any intimation nor authorization for the filing of the present action. The most that they contain was an inquiry with regard to the progress of the case and the administration of the duck-raising business which the deceased left in the Philippines. Such certainly cannot be considered as an authority to the present counsel to file and prosecute the present case in behalf of the widow and children now residing in Communist China.
It should be noted that the present action was initiated by plaintiffs represented merely by their counsel and the question arose as to whether the latter had the proper authority to represent the former in view of the fact that they are all residents of a foreign country. And the question was properly raised in view of the rule that, while a lawyer is presumed to be properly authorized to represent any cause in which he appears, he may however be required by the court on motion of either party to produce his authority under which he appears (Section 20, Rule 127). Undoubtedly, the question was properly raised by counsel for the defendants as otherwise the trial court would not have given proper attention to the matter. Indeed, on this point, the trial court made this important comment: "While an attorney representing a client in a case pending in Court is presumed to be authorized for the purpose, nevertheless in the case under consideration, such presumption had been destroyed and come by the very evidence presented by counsel himself ." (Emphasis supplied)
It is true that one Chua Pua Tam was appointed as guardian ad litem of two of plaintiffs who allegedly are minors to represent them in the prosecution of the present case, but while this representation may only benefit the minors, and not the other plaintiffs, yet the same would not suffice to meet the requirement of the rule which provides that every action must be prosecuted in the name of the real party in interest (Section 2, Rule 3). Again, we need hereto show that Chua Pua Tam was authorized by the heirs abroad to act as such in behalf of the minors for it was in this belief that he was so appointed by the trial court. But when in the course of the," trial it developed that he never had any communication with any of the heirs and much less received any authority from them either to prosecute this case or to act, as such guardian in behalf of the minors, the trial court lost no time in disauthorizing him and considering his representation ineffective. Thus, on this point, the trial court said: "Chua Pua Tam, who is the brother-in law of the first plaintiff and uncle of the others, testified that the plaintiffs had not written to him nor had he communicated with them. The letters supposedly sent to Lim Ping Kok by his sister Lim Siock Huey (Exh. J) and his mother (Exh. K) did not contain any intimation much less an authorization for the filing of the claim for damages in behalf of the widow and children of the deceased."
Nor can the claim that Chua Pua Tam can be considered as negotiorum gestor be entertained because in the present case there is need of express authority on his part to represent the minors by virtue of an express provision of our Rules of Court. In negotiorum gestio no such authority is required.
The contention that the trial court considered the issue regarding the lack of authority on the part of counsel to represent plaintiffs in this case or of Chua Pua Tam to act as guardian ad litem of the minors even if the same was not raised by any of the opposing parties or their counsel, cannot be entertained, it appearing that the same was expressly raised by defendants Reyes and Limjuco not only in the course of the trial but in their answers. Moreover, this flaw in the case of the plaintiffs was discovered by the court in the course of the trial in view of the evidence presented by the very counsel of plaintiffs. In view of such development, the trial court could not but take notice of the matter considering the prayer in defendants' answer that they be given "such reliefs as this Court may deem just and equitable in the premises.".
Wherefore, the decision appealed from in so far as it the complaint is hereby affirmed, with costs against appellants.
Paras, C.J., Montemayor, Reyes, A., Labrador, Concepcion, Endencia and Felix, JJ., concur.
REYES, J.B.L., J., concurring:
I concur, but with respect to the issue of negotiorum gestio my position is that the same can not exist where the authority of the alleged gestor is disputed. This quasi-contract presupposes, that the gestor's authority is taken for granted by the persons with whom he deals, although in fact he has not been legally empowered by the one in whose behalf he presumes to act.
THIRD DIVISION
G.R. No. 97995 January 21, 1993
PHILIPPINE NATIONAL BANK, petitioner,
vs.
COURT OF APPEALS AND B.P. MATA AND CO., INC., respondents.
Roland A. Niedo for petitioner.
Benjamin C. Santos Law Office for respondent.
ROMERO, J.:
Rarely is this Court confronted with a case calling for the delineation in broad strokes of the distinctions between such closely allied concepts as the quasi-contract called "solutio indebiti" under the venerable Spanish Civil Code and the species of implied trust denominated "constructive trusts," commonly regarded as of Anglo-American origin. Such a case is the one presented to us now which has highlighted more of the affinity and less of the dissimilarity between the two concepts as to lead the legal scholar into the error of interchanging the two. Presented below are the factual circumstances that brought into juxtaposition the twin institutions of the Civil Law quasi-contract and the Anglo-American trust.
Private Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing goods and services to shipping companies. Since 1966, it has acted as a manning or crewing agent for several foreign firms, one of which is Star Kist Foods, Inc., USA (Star Kist). As part of their agreement, Mata makes advances for the crew's medical expenses, National Seaman's Board fees, Seaman's Welfare fund, and standby fees and for the crew's basic personal needs. Subsequently, Mata sends monthly billings to its foreign principal Star Kist, which in turn reimburses Mata by sending a telegraphic transfer through banks for credit to the latter's account.
Against this background, on February 21, 1975, Security Pacific National Bank (SEPAC) of Los Angeles which had an agency arrangement with Philippine National Bank (PNB), transmitted a cable message to the International Department of PNB to pay the amount of US$14,000 to Mata by crediting the latter's account with the Insular Bank of Asia and America (IBAA), per order of Star Kist. Upon receipt of this cabled message on February 24, 1975, PNB's International Department noticed an error and sent a service message to SEPAC Bank. The latter replied with instructions that the amount of US$14,000 should only be for US$1,400.
On the basis of the cable message dated February 24, 1975 Cashier's Check No. 269522 in the amount of US$1,400 (P9,772.95) representing reimbursement from Star Kist, was issued by the Star Kist for the account of Mata on February 25, 1975 through the Insular Bank of Asia and America (IBAA).
However, fourteen days after or on March 11, 1975, PNB effected another payment through Cashier's Check No. 270271 in the amount of US$14,000 (P97,878.60) purporting to be another transmittal of reimbursement from Star Kist, private respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of US$14,000 (P97,878.60) after it discovered its error in effecting the second payment.
On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000 against Mata arguing that based on a constructive trust under Article 1456 of the Civil Code, it has a right to recover the said amount it erroneously credited to respondent Mata. 1
After trial, the Regional Trial Court of Manila rendered judgment dismissing the complaint ruling that the instant case falls squarely under Article 2154 on solutio indebiti and not under Article 1456 on constructive trust. The lower court ruled out constructive trust, applying strictly the technical definition of a trust as "a right of property, real or personal, held by one party for the benefit of another; that there is a fiduciary relation between a trustee and a cestui que trust as regards certain property, real, personal, money or choses in action." 2
In affirming the lower court, the appellate court added in its opinion that under Article 2154 on solutio indebiti, the person who makes the payment is the one who commits the mistake vis-a-vis the recipient who is unaware of such a mistake. 3 Consequently, recipient is duty bound to return the amount paid by mistake. But the appellate court concluded that petitioner's demand for the return of US$14,000 cannot prosper because its cause of action had already prescribed under Article 1145, paragraph 2 of the Civil Code which states:
The following actions must be commenced within six
years:
xxx xxx xxx
(2) Upon a quasi-contract.
This is because petitioner's complaint was filed
only on February 4, 1982, almost seven years after March 11, 1975 when petitioner
mistakenly made payment to private respondent.
Hence, the instant petition for certiorari proceeding seeking to
annul the decision of the appellate court on the basis that Mata's obligation
to return US$14,000 is governed, in the alternative, by either Article 1456 on
constructive trust or Article 2154 of the Civil Code on quasi-contract. 4Article 1456 of the Civil Code provides:
If property is acquired through mistake or fraud,
the person obtaining it is, by force of law, considered a trustee of an implied
trust for the benefit of the person from whom the property comes.
On the other hand, Article 2154 states:
If something is received when there is no right to
demand it, and it was unduly delivered through mistake, the obligation to
return it arises.
Petitioner naturally opts for an interpretation under constructive trust as
its action filed on February 4, 1982 can still prosper, as it is well within
the prescriptive period of ten (10) years as provided by Article 1144,
paragraph 2 of the Civil Code.
5If it is to be construed as a case of payment by mistake or solutio indebiti, then the prescriptive period for quasi-contracts of six years applies, as provided by Article 1145. As pointed out by the appellate court, petitioner's cause of action thereunder shall have prescribed, having been brought almost seven years after the cause of action accrued. However, even assuming that the instant case constitutes a constructive trust and prescription has not set in, the present action has already been barred by laches.
To recall, trusts are either express or implied. While express trusts are created by the intention of the trustor or of the parties, implied trusts come into being by operation of law. 6 Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties. 7
In turn, implied trusts are subdivided into resulting and constructive trusts. 8 A resulting trust is a trust raised by implication of law and presumed always to have been contemplated by the parties, the intention of which is found in the nature of the transaction, but not expressed in the deed or instrument of conveyance. 9 Examples of resulting trusts are found in Articles 1448 to 1455 of the Civil Code. 10 On the other hand, a constructive trust is one not created by words either expressly or impliedly, but by construction of equity in order to satisfy the demands of justice. An example of a constructive trust is Article 1456 quoted above. 11
A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense 12 for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que trust. 13 A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. 14
In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no intent of holding the same for a supposed beneficiary or cestui que trust, namely PNB. But under Article 1456, the law construes a trust, namely a constructive trust, for the benefit of the person from whom the property comes, in this case PNB, for reasons of justice and equity.
At this juncture, a historical note on the codal provisions on trust and quasi-contracts is in order.
Originally, under the Spanish Civil Code, there were only two kinds of quasi contracts: negotiorum gestio and solutio indebiti. But the Code Commission, mindful of the position of the eminent Spanish jurist, Manresa, that "the number of quasi contracts may be indefinite," added Section 3 entitled "Other Quasi-Contracts." 15
Moreover, even as Article 2142 of the Civil Code defines a quasi-contract, the succeeding article provides that: "The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article." 16
Indubitably, the Civil Code does not confine itself exclusively to the quasi-contracts enumerated from Articles 2144 to 2175 but is open to the possibility that, absent a pre-existing relationship, there being neither crime nor quasi-delict, a quasi-contractual relation may be forced upon the parties to avoid a case of unjust enrichment. 17 There being no express consent, in the sense of a meeting of minds between the parties, there is no contract to speak of. However, in view of the peculiar circumstances or factual environment, consent is presumed to the end that a recipient of benefits or favors resulting from lawful, voluntary and unilateral acts of another may not be unjustly enriched at the expense of another.
Undoubtedly, the instant case fulfills the indispensable requisites of solutio indebiti as defined in Article 2154 that something (in this case money) has been received when there was no right to demand it and (2) the same was unduly delivered through mistake. There is a presumption that there was a mistake in the payment "if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just cause." 18
In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's Check No. 269522 had already been made by PNB for the account of Mata on February 25, 1975. Strangely, however, fourteen days later, PNB effected another payment through Cashier's Check No. 270271 in the amount of US$14,000, this time purporting to be another transmittal of reimbursement from Star Kist, private respondent's foreign principal.
While the principle of undue enrichment or solutio indebiti, is not new, having been incorporated in the subject on quasi-contracts in Title XVI of Book IV of the Spanish Civil Code entitled "Obligations incurred without contract," 19 the chapter on Trusts is fairly recent, having been introduced by the Code Commission in 1949. Although the concept of trusts is nowhere to be found in the Spanish Civil Code, the framers of our present Civil Code incorporated implied trusts, which includes constructive trusts, on top of quasi-contracts, both of which embody the principle of equity above strict legalism. 20
In analyzing the law on trusts, it would be instructive to refer to Anglo-American jurisprudence on the subject. Under American Law, a court of equity does not consider a constructive trustee for all purposes as though he were in reality a trustee; although it will force him to return the property, it will not impose upon him the numerous fiduciary obligations ordinarily demanded from a trustee of an express trust. 21 It must be borne in mind that in an express trust, the trustee has active duties of management while in a constructive trust, the duty is merely to surrender the property.
Still applying American case law, quasi-contractual obligations give rise to a personal liability ordinarily enforceable by an action at law, while constructive trusts are enforceable by a proceeding in equity to compel the defendant to surrender specific property. To be sure, the distinction is more procedural than substantive. 22
Further reflection on these concepts reveals that a constructive "trust" is as much a misnomer as a "quasi-contract," so far removed are they from trusts and contracts proper, respectively. In the case of a constructive trust, as in the case of quasi-contract, a relationship is "forced" by operation of law upon the parties, not because of any intention on their part but in order to prevent unjust enrichment, thus giving rise to certain obligations not within the contemplation of the parties. 23
Although we are not quite in accord with the opinion that "the trusts known to American and English equity jurisprudence are derived from the fidei commissa of the Roman Law," 24 it is safe to state that their roots are firmly grounded on such Civil Law principles are expressed in the Latin maxim, "Nemo cum alterius detrimento locupletari potest," 25 particularly the concept of constructive trust.
Returning to the instant case, while petitioner may indeed opt to avail of an action to enforce a constructive trust or the quasi-contract of solutio indebiti, it has been deprived of a choice, for prescription has effectively blocked quasi-contract as an alternative, leaving only constructive trust as the feasible option.
Petitioner argues that the lower and appellate courts cannot indulge in semantics by holding that in Article 1456 the recipient commits the mistake while in Article 2154, the recipient commits no mistake. 26 On the other hand, private respondent, invoking the appellate court's reasoning, would impress upon us that under Article 1456, there can be no mutual mistake. Consequently, private respondent contends that the case at bar is one of solutio indebiti and not a constructive trust.
We agree with petitioner's stand that under Article 1456, the law does not make any distinction since mutual mistake is a possibility on either side — on the side of either the grantor or the grantee. 27 Thus, it was error to conclude that in a constructive trust, only the person obtaining the property commits a mistake. This is because it is also possible that a grantor, like PNB in the case at hand, may commit the mistake.
Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it erroneously paid private respondent under a constructive trust, we rule in the negative. Although we are aware that only seven (7) years lapsed after petitioner erroneously credited private respondent with the said amount and that under Article 1144, petitioner is well within the prescriptive period for the enforcement of a constructive or implied trust, we rule that petitioner's claim cannot prosper since it is already barred by laches. It is a well-settled rule now that an action to enforce an implied trust, whether resulting or constructive, may be barred not only by prescription but also by laches. 28
While prescription is concerned with the fact of delay, laches deals with the effect of unreasonable delay. 29 It is amazing that it took petitioner almost seven years before it discovered that it had erroneously paid private respondent. Petitioner would attribute its mistake to the heavy volume of international transactions handled by the Cable and Remittance Division of the International Department of PNB. Such specious reasoning is not persuasive. It is unbelievable for a bank, and a government bank at that, which regularly publishes its balanced financial statements annually or more frequently, by the quarter, to notice its error only seven years later. As a universal bank with worldwide operations, PNB cannot afford to commit such costly mistakes. Moreover, as between parties where negligence is imputable to one and not to the other, the former must perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of its own negligence.
WHEREFORE, the decision of the Court of Appeals dismissing petitioner's claim against private respondent is AFFIRMED.
Costs against petitioner.
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., J., concurs in the result.
# Footnotes
1 Records, p. 122.
2 Salao v. Salao, G.R. No. L-26699, March 16,
1976, 70 SCRA 65.
3 Rollo, p. 41.
4 Rollo, p. 27.
5 Article 1144. The following actions must be
brought within ten years from the time the right of action accrues:
xxx xxx xxx
(2) Upon an obligation created by law;
xxx xxx xxx
6 Article 1441, Civil Code.
7 89 CJS 724.
8 89 CJS 722.
9 89 CJS 725.
10 Aquino, Civil Code, Vol. II. pp. 556-557; Ramos
v. Ramos, G.R. No. L-19872, December 3, 1974, 61 SCRA 284.
11 Salao v. Salao, G.R. No. L-26699, March 16,
1976, 70 SCRA 65.
12 Ramos v. Ramos, G.R. No. L-19872 December 3,
1974, 61 SCRA 284, citing Gayondato v. Treasurer of the Philippine
Islands, 49 Phil. 244.
13 State ex Wirt v. Superior Court for Spokane
Country, 10 Wash. 2d, 362, 116 P. 2d 752, 755, Article 1440 Civil Code.
14 Diaz v. Goricho, 103 Phil. 261.
15 Report of the Code Commission, p. 60.
16 Article 2143, Civil Code.
17 Report of the Code Commission, pp. 159-160.
18 Article 2163, Civil Code.
19 Lao Chit v. Security and Trust Co. and
Consolidated Investment, Inc., 105 Phil. 490.
20 Report of the Code Commission, p. 26.
21 Scott on Trusts, Volume 3, p. 2315.
22 Ibid, p. 2312.
23 Scott on Trusts, Volume 3, p. 2316.
24 Government v. Abadilla, 46 Phil. 642 and Miguel
et al v. Court of Appeals,
L-20274, October 30, 1969, 29 SCRA 760.
L-20274, October 30, 1969, 29 SCRA 760.
25 Translated as, "No one should be allowed
to enrich himself unjustly at the expense of another." (Jenk Cent. Cas. 4;
10 Barb. [N.Y.] 626, 633, "Cyclopedic Law Dictionary," 2nd Edition,
p. 688).
26 Rollo, p. 32.
27 Tolentino, Civil Code of the Philippines,
Vol. IV, p. 685.
28 Villagonzalo v. IAC, G.R. No. 711110, November
22, 1988, 167 SCRA 535; Perez v. Ong Chua, No. L-36850, September 23, 1982, 116
SCRA 732, 90 CJS 887-889 and 54 Am Jur., pp. 449-450.
29 Mapa III v. Guanzon, G.R. No. L-25605, June 20,
1977, 77 SCRA 387.
SECOND
DIVISION
YUN KWAN BYUNG,
Petitioner,
- versus -
PHILIPPINE AMUSEMENT AND
GAMING CORPORATION,
Respondent.
|
G.R. No. 163553
Present:
CARPIO, J., Chairperson,
CARPIO MORALES,*
LEONARDO-DE CASTRO,**
DEL CASTILLO, and
ABAD, JJ.
Promulgated:
December 11, 2009
|
x -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - x
D
E C I S I O N
CARPIO,
J.:
The Case
Yun Kwan Byung (petitioner) filed this Petition for Review[1][1] assailing
the Court of Appeals’ Decision[2][2] dated 27
May 2003 in CA-G.R. CV No. 65699
as well as the Resolution[3][3] dated 7 May
2004 denying the Motion for Reconsideration. In the assailed decision, the
Court of Appeals (CA) affirmed the Regional Trial Court’s Decision[4][4] dated 6 May 1999. The Regional Trial Court of
Manila, Branch 13 (trial court), dismissed petitioner’s demand against
respondent Philippine Amusement and Gaming Corporation (PAGCOR) for the
redemption of gambling chips.
The Facts
PAGCOR is a government-owned and controlled corporation
tasked to establish and operate gambling clubs and casinos as a means to
promote tourism and generate sources of revenue for the government. To achieve these objectives, PAGCOR is vested
with the power to enter into contracts of every kind and for any lawful purpose
that pertains to its business. Pursuant to this authority, PAGCOR launched its
Foreign Highroller Marketing Program (Program). The Program aims to invite
patrons from foreign countries to play at the dollar pit of designated
PAGCOR-operated casinos under specified terms and conditions and in accordance
with industry practice.[5][5]
The
Korean-based ABS Corporation was one of the international groups that availed
of the Program. In a letter-agreement dated 25 April 1996 (Junket Agreement),
ABS Corporation agreed to bring in foreign players to play at the five
designated gaming tables of the Casino Filipino Silahis at the Grand Boulevard
Hotel in Manila
(Casino Filipino). The relevant stipulations of the Junket Agreement state:
1.
PAGCOR
will provide ABS Corporation with separate
junket chips. The junket chips
will be distinguished from the chips being used by other players in the gaming
tables.
ABS Corporation will
distribute these junket chips to its players and at the end of the playing
period, ABS Corporation will collect the junket chips from its players and make
an accounting to the casino treasury.
2.
ABS
Corporation will assume sole responsibility to pay the winnings of its foreign
players and settle the collectibles from losing players.
3.
ABS
Corporation shall hold PAGCOR absolutely free and harmless from any damage,
claim or liability which may arise from any cause in connection with the Junket
Agreement.
5. In
providing the gaming facilities and services to these foreign players, PAGCOR
is entitled to receive from ABS Corporation a 12.5% share in the gross winnings
of ABS Corporation or 1.5 million US dollars, whichever is higher, over a
playing period of 6 months. PAGCOR has the option to extend the period.[6][6]
Petitioner, a Korean national, alleges that from November
1996 to March 1997, he came to the Philippines four times to play for
high stakes at the Casino Filipino.[7][7] Petitioner
claims that in the course of the games, he was able to accumulate gambling
chips worth US$2.1 million. Petitioner presented as evidence during the trial
gambling chips with a face value of US$1.1 million. Petitioner contends that when he presented
the gambling chips for encashment with PAGCOR’s employees or agents, PAGCOR
refused to redeem them.[8][8]
Petitioner brought an action against PAGCOR seeking the
redemption of gambling chips valued at US$2.1 million. Petitioner claims that
he won the gambling chips at the Casino Filipino, playing continuously day and
night. Petitioner alleges that every time he would come to Manila, PAGCOR would extend to him amenities
deserving of a high roller. A PAGCOR official who meets him at the airport
would bring him to Casino Filipino, a casino managed and operated by PAGCOR.
The card dealers were all PAGCOR employees, the gambling chips, equipment and
furnitures belonged to PAGCOR, and PAGCOR enforced all the regulations dealing
with the operation of foreign exchange gambling pits. Petitioner states that he
was able to redeem his gambling chips with the cashier during his first few
winning trips. But later on, the casino cashier
refused to encash his gambling chips so he had no recourse but to deposit his
gambling chips at the Grand Boulevard Hotel’s deposit box, every time he
departed from Manila.[9][9]
PAGCOR claims that petitioner, who was brought into the Philippines by
ABS Corporation, is a junket player who played in the dollar pit exclusively
leased by ABS Corporation for its junket players. PAGCOR alleges that it
provided ABS Corporation with distinct junket chips. ABS Corporation
distributed these chips to its junket players. At the end of each playing
period, the junket players would surrender the chips to ABS Corporation. Only
ABS Corporation would make an accounting of these chips to PAGCOR’s casino
treasury.[10][10]
As
additional information for the junket players playing in the gaming room leased
to ABS Corporation, PAGCOR posted a notice written in English and Korean
languages which reads:
NOTICE
This
GAMING ROOM is exclusively operated by ABS under arrangement with PAGCOR, the
former is solely accountable for all PLAYING CHIPS wagered on the tables. Any
financial ARRANGEMENT/TRANSACTION
between PLAYERS and ABS shall only be binding upon said PLAYERS and ABS.[11][11]
PAGCOR claims that this notice is a standard precautionary
measure[12][12] to avoid
confusion between junket players of ABS Corporation and PAGCOR’s players.
PAGCOR argues that petitioner is not a PAGCOR player
because under PAGCOR’s gaming rules, gambling chips cannot be brought outside
the casino. The gambling chips must be converted to cash at the end of every
gaming period as they are inventoried every shift. Under PAGCOR’s rules, it is
impossible for PAGCOR players to accumulate two million dollars worth of
gambling chips and to bring the chips out of the casino premises.[13][13]
Since PAGCOR disclaimed liability for the winnings of
players recruited by ABS Corporation and refused to encash the gambling chips,
petitioner filed a complaint for a sum of money before the trial court.[14][14] PAGCOR
filed a counterclaim against petitioner. Then, trial ensued.
On
6 May 1999, the trial court dismissed the complaint and counterclaim.
Petitioner appealed the trial court’s decision to the CA. On 27 May 2003, the CA affirmed the appealed
decision. On 27 June 2003, petitioner moved for reconsideration which was
denied on 7 May 2004.
Aggrieved
by the CA’s decision and resolution, petitioner elevated the case before this
Court.
The Ruling of the Trial Court
The trial court ruled that based on PAGCOR’s charter,[15][15] PAGCOR has
no authority to lease any portion of the gambling tables to a private party
like ABS Corporation. Section 13 of Presidential Decree No. 1869 or the
PAGCOR’s charter states:
Sec. 13. Exemptions -
x x x
(4) Utilization of Foreign Currencies – The
Corporation shall have the right and authority, solely and exclusively in
connection with the operations of the casino(s), to purchase, receive, exchange
and disburse foreign exchange, subject to the following terms and conditions:
(a) A
specific area in the casino(s) or gaming pit shall be put up solely and
exclusively for players and patrons utilizing foreign currencies;
(b) The
Corporation shall appoint and designate a duly accredited commercial bank agent
of the Central Bank, to handle, administer and manage the use of foreign
currencies in the casino(s);
(c) The
Corporation shall provide an office at casino(s) exclusively for the employees
of the designated bank, agent of the Central Bank, where the Corporation shall
maintain a dollar account which will be utilized exclusively for the above
purpose and the casino dollar treasury employees;
(d) Only
persons with foreign passports or certificates of identity (for Hong Kong patron only) duly issued by the government or
country of their residence will be allowed to play in the foreign exchange
gaming pit;
(e) Only
foreign exchange prescribed to form part of the Philippine International
Reserve and the following foreign exchange currencies: Australian Dollar,
Singapore Dollar, Hong Kong Dollar, shall be used in this gaming pit;
(f) The
disbursement, administration, management and recording of foreign exchange
currencies used in the casino(s) shall be carried out in accordance with
existing foreign exchange regulations, and periodical reports of the
transactions in such foreign exchange currencies by the Corporation shall be
duly recorded and reported to the Central Bank thru the designated Agent Bank;
and
(g) The
Corporation shall issue the necessary rules and regulations for the guidance
and information of players qualified to participate in the foreign exchange
gaming pit, in order to make certain that the terms and conditions as above set
forth are strictly complied with.
The trial court held that only PAGCOR
could use foreign currency in its gaming tables. When PAGCOR accepted only a
fixed portion of the dollar earnings of ABS Corporation in the concept of a
lease of facilities, PAGCOR shared its franchise with ABS Corporation in
violation of the PAGCOR’s charter. Hence, the Junket Agreement is void. Since
the Junket Agreement is not permitted by PAGCOR’s charter, the mutual rights
and obligations of the parties to this case would be resolved based on agency
and estoppel.[16][16]
The trial court found that the
petitioner wanted to redeem gambling chips that were specifically used by ABS
Corporation at its gaming tables. The gambling chips come in distinctive orange
or yellow colors with stickers bearing denominations of 10,000 or 1,000. The
1,000 gambling chips are smaller in size and the words “no cash value” marked on
them. The 10,000 gambling chips do not reflect the “no cash value” sign. The senior treasury head of PAGCOR testified
that these were the gambling chips used by the previous junket operators and
PAGCOR merely continued using them. However, the gambling chips used in the
regular casino games were of a different quality.[17][17]
The trial court pointed out that
PAGCOR had taken steps to warn players brought in by all junket operators,
including ABS Corporation, that they were playing under special rules. Apart
from the different kinds of gambling chips used, the junket players were
confined to certain gaming rooms. In these rooms, notices were posted that
gambling chips could only be encashed there and nowhere else. A photograph of
one such notice, printed in Korean and English, stated that the gaming room was
exclusively operated by ABS Corporation and that ABS Corporation was solely
accountable for all the chips wagered on the gaming tables. Although petitioner
denied seeing this notice, this disclaimer has the effect of a negative
evidence that can hardly prevail against the positive assertions of PAGCOR
officials whose credibility is also not open to doubt. The trial court
concluded that petitioner had been alerted to the existence of these special
gambling rules, and the mere fact that he continued to play under the same
restrictions over a period of several months confirms his acquiescence to them.
Otherwise, petitioner could have simply chose to stop gambling.[18][18]
In dismissing petitioner’s complaint,
the trial court concluded that petitioner’s demand against PAGCOR for the
redemption of the gambling chips could not stand. The trial court stated that
petitioner, a stranger to the agreement between PAGCOR and ABS Corporation,
could not under principles of equity be charged with notice other than of the
apparent authority with which PAGCOR had clothed its employees and agents in
dealing with petitioner. Since petitioner was made aware of the special rules
by which he was playing at the Casino Filipino, petitioner could not now claim
that he was not bound by them. The trial court explained that in an unlawful
transaction, the courts will extend equitable relief only to a party who was
unaware of all its dimensions and whose ignorance of them exposed him to the
risk of being exploited by the other. Where the parties enter into such a
relationship with the opportunity to know all of its ramifications, as in this
case, there is no room for equitable considerations to come to the rescue of
any party. The trial court ruled that it would leave the parties where they
are.[19][19]
The Ruling of the Court of Appeals
In dismissing the appeal, the appellate court addressed the
four errors assigned by petitioner.
First, petitioner maintains that he
was never a junket player of ABS Corporation. Petitioner also denies seeing a
notice that certain gaming rooms were exclusively operated by entities under
special agreement.[20][20]
The CA ruled that the records do not
support petitioner’s theory. Petitioner’s own testimony reveals that he enjoyed
special accommodations at the Grand Boulevard Hotel. This similar accommodation
was extended to players brought in by ABS Corporation and other junket
operators. Petitioner cannot disassociate himself from ABS Corporation for it is
unlikely that an unknown high roller would be accorded choice accommodations by
the hotel unless the accommodation was facilitated by a junket operator who
enjoyed such privilege.[21][21]
The CA added that the testimonies of
PAGCOR’s employees affirming that
notices were posted in English and Korean in the gaming areas are credible in
the absence of any convincing proof of ill motive. Further, the specified
gaming areas used only special chips that could be bought and exchanged at
certain cashier booths in that area.[22][22]
Second, petitioner attacks the
validity of the contents of the notice. Since the Junket Agreement is void, the
notice, which was issued pursuant to the Junket Agreement, is also void and
cannot affect petitioner.[23][23]
The CA reasoned that the trial court
never declared the notice valid and neither did it enforce the contents
thereof. The CA emphasized that it was the act of cautioning and alerting the
players that was upheld. The trial court ruled that signs and warnings were in
place to inform the public, petitioner included, that special rules applied to
certain gaming areas even if the very agreement giving rise to these rules is
void.[24][24]
Third, petitioner takes the position
that an implied agency existed between PAGCOR and ABS Corporation.[25][25]
The CA disagreed with petitioner’s
view. A void contract has no force and effect from the very beginning. It
produces no effect either against or in favor of anyone. Neither can it create,
modify or extinguish the juridical relation to which it refers. Necessarily,
the Junket Agreement, being void from the beginning, cannot give rise to an
implied agency. The CA explained that it cannot see how the principle of
implied agency can be applied to this case. Article 1883[26][26] of the Civil
Code applies only to a situation where the agent is authorized by the principal
to enter into a particular transaction, but instead of contracting on behalf of
the principal, the agent acts in his own name.[27][27]
The CA concluded that no such legal
fiction existed between PAGCOR and ABS Corporation. PAGCOR entered into a
Junket Agreement to lease to ABS
Corporation certain gaming areas. It was never PAGCOR’s intention to deal with the junket players.
Neither did PAGCOR intend ABS Corporation to represent PAGCOR in dealing with
the junket players. Representation is the basis of agency but unfortunately for
petitioner none is found in this case.[28][28]
The CA added that the special gaming
chips, while belonging to PAGCOR, are mere accessories in the void Junket
Agreement with ABS Corporation. In Article 1883, the phrase “things belonging
to the principal” refers only to those things or properties subject of a
particular transaction authorized by the principal to be entered into by its
purported agent. Necessarily, the gambling chips being mere incidents to the
void lease agreement cannot fall under this category.[29][29]
The CA ruled that Article 2152[30][30] of the
Civil Code is also not applicable. The circumstances relating to negotiorum
gestio are non-existent to warrant an officious manager to take over the
management and administration of PAGCOR.[31][31]
The CA explained that although
petitioner was never a party to the void Junket Agreement, petitioner cannot
deny or feign blindness to the signs and warnings all around him. The notices,
the special gambling chips, and the separate gaming areas were more than enough
to alert him that he was playing under different terms. Petitioner persisted
and continued to play in the casino. Petitioner also enjoyed the perks extended
to junket players of ABS Corporation. For failing to heed these signs and
warnings, petitioner can no longer be permitted to claim equitable relief. When
parties do not come to court with clean hands, they cannot be allowed to profit
from their own wrong doing.[33][33]
The Issues
Petitioners
raise three issues in this petition:
1. Whether
the CA erred in holding that PAGCOR is not liable to petitioner, disregarding
the doctrine of implied agency, or agency by estoppel;
2. Whether the CA erred in using intent of the
contracting parties as the test for creation of agency, when such is not
relevant since the instant case involves liability of the presumed principal in
implied agency to a third party; and
3. Whether the CA erred in failing to consider that
PAGCOR ratified, or at least adopted, the acts of the agent, ABS Corporation.[34][34]
The Ruling of the Court
The petition lacks merit.
Courts
will not enforce debts arising from illegal gambling
Gambling is prohibited by the laws of
the Philippines
as specifically provided in Articles 195 to 199 of the Revised Penal Code, as
amended. Gambling is an act beyond the pale of good morals,[35][35] and is thus
prohibited and punished to repress an evil that undermines the social, moral,
and economic growth of the nation.[36][36] Presidential
Decree No. 1602 (PD 1602),[37][37] which
modified Articles 195-199 of the Revised Penal Code and repealed inconsistent
provisions,[38][38] prescribed
stiffer penalties on illegal gambling.[39][39]
As a rule, all forms of gambling are illegal. The only
form of gambling allowed
by law is that stipulated under Presidential Decree No. 1869, which gave PAGCOR its franchise
to maintain and operate gambling casinos. The issue then turns on whether
PAGCOR can validly share its franchise with junket operators to operate
gambling casinos in the country. Section 3(h) of PAGCOR’s charter states:
Section 3. Corporate Powers. -
The Corporation shall have the following powers and functions, among others:
x x x
h) to
enter into, make, perform, and carry out contracts of every kind and for any lawful purpose
pertaining to the business of the Corporation, or in any manner incident
thereto, as principal, agent or
otherwise, with any person, firm, association, or corporation.
x
x x
The Junket Agreement would
be valid if under Section 3(h) of PAGCOR’s charter, PAGCOR
could share its
gambling franchise with another
entity. In Senator Jaworski v. Phil.
Amusement and Gaming Corp.,[40][40] the Court discussed the extent of the grant of the legislative
franchise to PAGCOR on its authority to operate gambling casinos:
A legislative franchise is a special privilege granted by the
state to corporations. It is a
privilege of public concern which cannot be exercised at will and pleasure, but
should be reserved for public control and administration, either by the
government directly, or by public agents, under such conditions and regulations
as the government may impose on them
in the interest of the public. It is Congress that prescribes the
conditions on which the grant of the franchise may be made. Thus the
manner of granting the franchise, to whom it may be granted, the mode of
conducting the business, the charter and the quality of the service to be rendered and the duty of the
grantee to the public in exercising the franchise are almost always defined in
clear and unequivocal language.
After a circumspect consideration of the foregoing
discussion and the contending
positions of the parties, we hold that
PAGCOR has acted beyond the limits of its authority when it passed on or shared
its franchise to SAGE.
In the Del Mar case
where a similar issue was raised when
PAGCOR entered into a joint venture agreement with two other
entities in the operation and
management of jai alai games, the Court, in an En Banc Resolution dated 24 August 2001, partially granted the
motions for clarification filed by respondents
therein insofar as it prayed that PAGCOR
has a valid franchise, but only by itself (i.e.
not in association with any other person or entity), to operate, maintain
and/or manage the game of jai-alai.
In the case at bar, PAGCOR executed an agreement with SAGE
whereby the former grants the latter the authority to operate and maintain
sports betting stations and Internet gaming operations. In essence, the grant
of authority gives SAGE the privilege to actively participate, partake and
share PAGCOR’s franchise to operate a gambling activity. The grant of franchise is a special privilege
that constitutes a right and a duty to be performed by the grantee. The grantee
must not perform its activities arbitrarily and whimsically but must abide by
the limits set by its franchise and strictly adhere to its terms and
conditionalities. A corporation as a creature of the State is presumed to exist
for the common good. Hence, the special privileges and franchises it receives
are subject to the laws of the State and the limitations of its charter. There
is therefore a reserved right of the State to inquire how these privileges had
been employed, and whether they have been abused. (Emphasis supplied)
Thus,
PAGCOR has the sole and exclusive authority to operate a gambling activity. While PAGCOR is allowed under its charter to enter into
operator’s or management contracts, PAGCOR is not allowed under the same
charter to relinquish or share its franchise. PAGCOR cannot delegate its power
in view of the legal principle of delegata
potestas delegare non potest, inasmuch as there is nothing in the charter
to show that it has been expressly authorized to do so.[41][41]
Similarly, in this case, PAGCOR, by
taking only a percentage of the earnings of ABS Corporation from its foreign
currency collection, allowed ABS Corporation to operate gaming tables in the
dollar pit. The Junket Agreement is in direct violation of PAGCOR’s charter and
is therefore void.
Since the
Junket Agreement violates PAGCOR’s charter, gambling between the junket player and the junket
operator under such agreement is illegal and may not be enforced by the courts.
Article 2014[42][42] of the Civil Code, which refers to illegal
gambling, states that no action can be maintained by the winner for the collection
of what he has won in a game of chance.
Although
not raised as an issue by petitioner, we deem it necessary to discuss the
applicability of Republic Act No. 9487[43][43] (RA 9487) to the present case.
RA 9487 amended the PAGCOR charter,
granting PAGCOR the power to enter into special agreement with third parties to
share the privileges under its franchise for the operation of gambling casinos:
Section
1. The Philippine Amusement
and Gaming Corporation (PAGCOR)
franchise granted under
Presidential Decree No. 1869
otherwise known as the PAGCOR Charter, is hereby further amended to read
as follows:
x x x
(2) Section 3(h) is
hereby amended to read as follows:
“SEC. 3. Corporate
Powers. -
“x x x
“(h) to
enter into, make, conclude, perform, and carry out contracts of every kind and
nature and for any lawful purpose which are necessary, appropriate, proper or
incidental to any business or purpose of the PAGCOR, including but not limited
to investment agreements, joint venture
agreements, management agreements, agency agreements, whether as principal
or as an agent, manpower supply agreements, or any other similar agreements or
arrangements with any person, firm, association or corporation.” (Boldfacing
supplied)
PAGCOR sought the amendment of
its charter precisely to address and remedy the legal impediment raised in Senator Jaworski v. Phil. Amusement and
Gaming Corp.
Unfortunately
for petitioner, RA 9487 cannot be applied to the present case. The Junket
Agreement was entered into between PAGCOR and ABS Corporation on 25 April 1996
when the PAGCOR charter then prevailing (PD 1869) prohibited PAGCOR from
entering into any arrangement with a third party that would allow such party to
actively participate in the casino operations.
It is a basic principle that laws should only be
applied prospectively unless the legislative intent to give them retroactive
effect is expressly declared or is necessarily implied from the language used.[44][44] RA 9487
does not provide for any retroactivity of its provisions. All laws operate
prospectively absent a clear contrary language in the text,[45][45] and that in
every case of doubt, the doubt will be resolved against the retroactive
operation of laws.[46][46]
Thus, petitioner cannot avail of the provisions of
RA 9487 as this was not the law when the acts giving rise to the claimed
liabilities took place. This makes the gambling activity participated in by
petitioner illegal. Petitioner cannot sue PAGCOR to redeem the cash value of
the gambling chips or recover damages arising from an illegal activity for two
reasons. First, petitioner engaged in gambling with ABS Corporation and not
with PAGCOR. Second, the court cannot assist petitioner in enforcing an illegal
act. Moreover, for a court to grant petitioner’s prayer would mean enforcing
the Junket Agreement, which is void.
Now, to address the issues raised by petitioner in his
petition, petitioner claims that he is a third party proceeding against the
liability of a presumed principal and claims relief, alternatively, on the
basis of implied agency or agency by estoppel.
Article 1869 of the Civil Code states that implied agency is derived
from the acts of the principal, from his silence or lack of action, or his
failure to repudiate the agency, knowing that another person is acting on his
behalf without authority. Implied agency, being an actual agency, is a fact to
be proved by deductions or inferences from other facts.[47][47]
On the other hand, apparent authority is based
on estoppel and can arise from two instances. First, the principal may
knowingly permit the agent to hold himself out as having such authority, and
the principal becomes estopped to claim that the agent does not have such
authority. Second, the principal may clothe the agent with the indicia of
authority as to lead a reasonably prudent person to believe that the agent
actually has such authority.[48][48] In an
agency by estoppel, there is no agency at all, but the one assuming to act as
agent has apparent or ostensible, although not real, authority to represent
another.[49][49]
The law makes no presumption of agency and proving its
existence, nature and extent is incumbent upon the person alleging it.[50][50] Whether or not an agency has been created is a
question to be determined by the fact that one represents and is acting for
another. [51][51]
Acts and
conduct of PAGCOR negates the existence of an implied agency or an agency by
estoppel
Petitioner
alleges that there is an implied agency. Alternatively,
petitioner claims that even assuming that no actual agency existed between
PAGCOR and ABS Corporation, there is still an agency by estoppel based on the
acts and conduct of PAGCOR showing apparent authority in favor of ABS
Corporation. Petitioner states that one factor which distinguishes agency from
other legal precepts is control and the following undisputed facts show a
relationship of implied agency:
1.
Three floors of the Grand Boulevard Hotel[52][52] were leased to PAGCOR for
conducting gambling operations;[53][53]
2. Of the three floors, PAGCOR allowed ABS
Corporation to use one whole floor for foreign exchange gambling, conducted by
PAGCOR dealers using PAGCOR facilities, operated by PAGCOR employees and using
PAGCOR chips bearing the PAGCOR logo;[54][54]
3. PAGCOR
controlled the release, withdrawal and return of all the gambling chips given
to ABS Corporation in that part of the casino and at the end of the day, PAGCOR
conducted an inventory of the gambling chips;[55][55]
4. ABS
Corporation accounted for all gambling chips with the Commission on Audit
(COA), the official auditor of PAGCOR;[56][56]
5. PAGCOR enforced, through its own manager, all
the rules and regulations on the operation of the gambling pit used by ABS
Corporation.[57][57]
Petitioner’s argument
is clearly misplaced. The basis for agency is
representation,[58][58] that is,
the agent acts for and on behalf of the principal on matters within the scope
of his authority and said acts have the same legal effect as if they were
personally executed by the principal.[59][59] On the
part of the principal, there must be an actual intention to appoint or an
intention naturally inferable from his words or actions, while on the part of
the agent, there must be an intention to accept the appointment and act on it.[60][60] Absent such
mutual intent, there is generally no agency.[61][61]
There is no implied agency in this case because PAGCOR did not
hold out to the public as the principal of ABS Corporation. PAGCOR’s actions
did not mislead the public into believing that an agency can be implied from
the arrangement with the junket operators, nor did it hold out ABS Corporation
with any apparent authority to represent it in any capacity. The Junket
Agreement was merely a contract of lease of facilities and services.
The players brought in by ABS Corporation were covered by a
different set of rules in acquiring and encashing chips. The players used a
different kind of chip than what was used in the regular gaming areas of
PAGCOR, and that such junket players played specifically only in the third
floor area and did not mingle with the regular patrons of PAGCOR. Furthermore,
PAGCOR, in posting notices stating that the players are playing under special
rules, exercised the necessary precaution to warn the gaming public that no
agency relationship exists.
For the second assigned error, petitioner claims that the
intention of the parties cannot apply to him as he is not a party to the
contract.
We disagree. The Court of Appeals correctly used the intent
of the contracting parties in determining whether an agency by estoppel existed
in this case. An agency by estoppel, which is similar to the doctrine of
apparent authority requires proof of reliance upon the representations, and
that, in turn, needs proof that the representations predated the action taken
in reliance.[62][62]
There can be no apparent authority of an agent without acts
or conduct on the part of the principal and such acts or conduct of the
principal must have been known and relied upon in good faith and as a result of
the exercise of reasonable prudence by a third person as claimant, and such
must have produced a change of position to its detriment.[63][63] Such proof is lacking in this case.
In the entire duration that petitioner played in Casino Filipino,
he was dealing only with ABS Corporation, and availing of the privileges
extended only to players brought in by ABS Corporation. The facts that he
enjoyed special treatment upon his arrival in Manila and special accommodations
in Grand Boulevard Hotel, and that he was playing in special gaming rooms are
all indications that petitioner cannot claim good faith that he believed he was
dealing with PAGCOR. Petitioner cannot be considered as an innocent third party
and he cannot claim entitlement to equitable relief as well.
For his third and final assigned error, petitioner asserts that
PAGCOR ratified the acts of ABS Corporation.
The trial court has declared,
and we affirm, that the Junket Agreement is void. A void or inexistent contract is one which has no force and effect from
the very beginning. Hence, it is as if it has never been entered into and
cannot be validated either by the passage of time or by ratification.[64][64] Article 1409 of the Civil
Code provides that contracts expressly prohibited or declared void by law, such
as gambling contracts, “cannot be ratified.”[65][65]
WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals’ Decision
dated 27 May 2003 as well as the Resolution dated 7 May 2004 as modified by
this Decision.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
CONCHITA
CARPIO MORALES
Associate Justice
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
|
MARIANO
C. DEL CASTILLO
Associate Justice
|
ROBERTO A. ABAD
Associate
Justice
ATTESTATION
I attest that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO
S. PUNO
Chief Justice
SUPREME COURT
Manila
EN BANC
G.R. No. L-24137 January 30, 1970
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,
vs.
PEDRO C. HERNAEZ and RAMON M. DE LA RAMA, defendants-appellees.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Esmeraldo Umali, Solicitor Ricardo Pronove, Jr. and Special Attorney Maria C. Paraiso for plaintiff appellant.
Pedro C. Hernaez and Ramon M. de la Rama for their own behalf defendants-appellees.
BARREDO, J.:
Appeal by the Government from the decision of the Court of First Instance of Manila in its Civil Case No. 50010 — a suit filed by the Republic of the Philippines against Pedro C. Hernaez and Ramon M. de la Rama for collection of certain loans obtained from the Bank of Taiwan, Ltd., during the Japanese occupation — which was dismissed by the court a quo on the ground that the action of the Government had already prescribed.
The background facts as set forth in the decision appealed from which are not disputed by appellant are as follows:
It appears from the evidence submitted by the
Plaintiff, both testimonial and documentary, that on various dates during the
Japanese occupation in 1943 defendant Ramon M. de la Rama, brother-in-law and
negotiorum gestor of his co-defendant Pedro C. Hernaez, obtained loans from the
former Bank of Taiwan, Ltd., with 6% annual interest compounded quarterly and
payable at its offices in Bacolod City, in the total amount of P14,786.61,
Philippine Currency, as follows:
Date of Promissory
|
Amount
|
Date Due
|
Note
|
of Note
|
|
1. April 7, 1943
|
P271.00
|
|
2. April 28, 1943
|
500.00
|
April 28, 1944
|
3. May 6,1943
|
321.02
|
May 6, 1944
|
4. May 22, 1943
|
300.00
|
|
5. June 14, 1943
|
5,000.00
|
June 14, 1944
|
6. July 10, 1943
|
177.00
|
|
7. July 16, 1943
|
1,500.00
|
July 16, 1944
|
8. Aug. 17, 1943
|
6,000.00
|
|
9. Aug. 20, 1943
|
600.00
|
|
10. Oct. 27, 1943
|
117.59
|
As security for the payment of the loans De la
Rama, also as negotiorum gestor, executed two chattel mortgages on the
standing crops growing on lots 1089 and 1090 (part) of the Cadastral survey
of Murcia belonging to Hernaez and described in Certificate of Title Nos.
16164 and 16165 of the Register of Deeds of Negros Occidental (Exhs. D and
E). The chattel mortgages were recorded and registered on May 8, and 17,
1943, respectively, with the Office of the Register of Deeds of Negros
Occidental in accordance with the Chattel Mortgage Law.
By virtue of the transfer agreement dated July
20, 1954, and June 5, 1957, between the governments of the United States of
America and the Republic of the Philippines, all the assets of the Bank of
Taiwan, Ltd., including the promissory notes Exhibits C, C-1 to C- 9, and the
chattel mortgages on standing crops Exhibits D and E, were transferred by the
United States Government, thru its Attorney General, as successor of the
Philippine Alien Property Administration, to the Government of the Republic
of the Philippines. These assets are now administered by the Board of
Liquidators, an agency under the Office of the President of the Philippines.
Under the Ballantyne Schedule the amount of P14,786.61
was reduced to P10,652.49. The interest due thereon at the rate of 6% per
annum, compounded quarterly as of December 31, 1961, amounted to P21,248.42.
As of that date therefore the principal and interest totaled P31,900.91 (Exh.
A-1). In spite of repeated demands the said amount remains unpaid up to the
present (Exhs. B, B-1, B-2 and B-3).
xxx xxx xxx
Upon these facts, the court below dismissed the
complaint filed by the Government on the ground that the action had
prescribed, reasoning as follows:
The obligations under the promissory notes were
due and payable one year after the execution thereof. Altho the period of
maturity is not stated in all the notes, this is sufficiently shown by the
nature of the standing crops — maiz, sugarcane and palay — mortgaged, which
are yearly crops. The first promissory note is dated April 7, 1943, and the
last, October 27, 1943; but the complaint was filed only on March 30, 1962.
Even taking into consideration that "the moratorium law suspended the
running of the period of prescription and the enforcement of the payment of
all debts and other monetary obligations payable within the Philippines from
March 10, 1945, to July 26, 1948, or a period of three years, four months and
sixteen days' as repeatedly stated by the Supreme Court in so many decisions
and cited in the case of Bachrach Motor Co., Inc vs. Antonio Lejano 56 O.G.
3278, still the action has already prescribed because from the last
promissory note dated October 27, 1943, which became due on October 27, 1944
to March 30, 1962, the date when the complaint was filed a period of 17
years, 5 months and 3 days had elapsed, and deducting from this the period of
moratorium of 3 years, 4 months and 16 years, there remains a period of 14
years and 17 days.
Wherefore, judgment is hereby rendered
dismissing the complaint, without special pronouncement as to costs.
The Government's motion for the reconsideration
of this decision proved unavailing; hence, this appeal from the said decision
directly taken to this Court.
The sole issue presented for resolution under
the lone assignment of error is whether or not the action of the Republic had
really prescribed. It is the position of the Solicitor General that it has
not. We agree. This Court has had occasions to turn down such plea of
prescription in situations similar to the one now presented before Us, and We
find the rulings laid then squarely applicable here. Thus, this Court
explained in the case of Republic of the Philippines vs. Jose Grijaldo: 1
... [T]he appellant maintains that the action of
the appellee had prescribed. The appellant points out that the loans became
due on June 1, 1944; and when the complaint was filed on January 17, 1961 a
period of more than 16 years had already elapsed — far beyond the period of ten
years when an action based on a written contract should be brought to court.
This contention of the appellant has no merit.
Firstly, it should be considered that the complaint in the present case was
brought by the Republic of the Philippines not as a nominal
party but in the exercise of its sovereign functions, to protect the
interests of the State over a public property. Under paragraph 4 of Article
1108 of the Civil Code prescription, both acquisitive and extinctive, does
not run against the State. This Court has held that the statute of
limitations does not run against the right of action of the Government of the
Philippines
(Government of the Philippine Islands vs. Monte de Piedad, etc., 35 Phil.
738-751). Secondly, the running of the period of prescription of the action
to collect the loan from the appellant was interrupted by the moratorium laws
(Executive Order No. 25 dated November 18, 1944; Executive Order No. 32,
dated March 10, 1945; and Republic Act No. 342, approved on July 26, 1948).
The loan in question, as evidenced by the five promissory notes, were
incurred in the year 1943, or during the period of Japanese occupation of the
Philippines.
This case is squarely covered by Executive Order No. 25, which became
effective on November 18, 1944, providing for the suspension of payments of
debts incurred after December 31, 1941. The period of prescription was,
therefore, suspended beginning November 18, 1944. This Court, in the case of
Rutter vs. Esteban L-3708, May 18, 1953; 93 Phil. 68), declared on May 18,
1953 that the Moratorium was R.A. No. 342 and Executive Orders Nos. 25 and
32, are unconstitutional; but in that case this Court ruled that the
moratorium laws had suspended the prescriptive period until May 18, 1953.
This ruling was categorically reiterated in the decision in the case of
Manila Motors vs. Flores, L-9396, August 16,
1956. It follows, therefore, that the prescriptive period in the case now
before Us was suspended from November 18, 1944, when Executive Order No. 25
took effect, until May 18, 1953 when R. A. 342 along with Executive Orders
Nos. 25 and 32 were declared unconstitutional by this Court. Computed
accordingly, the prescriptive period was suspended for 8 years and 6 months.
By the appellant's own admission, the cause of action on the five promissory
notes in question arose on June 1, 1944. The complaint in the present case
was filed on January 17, 1961, or after a period of 16 years, 6 months and 16
days when the cause of action arose. If the prescriptive period was not interrupted
by the moratorium laws, the action would have prescribed already; but, as We
have stated, the prescriptive period was suspended by the moratorium laws for
a period of 8 years and 6 months. If we deduct the period of suspension (8
years and 6 months) from the period that elapsed from the time the cause of
action arose to the time when the complaint was filed (16 years, 6 months and
16 days) there remains a period of 8 years and 16 days. In other words, the
prescriptive period ran for only 8 years and 16 days. There still remained a
period of one year, 11 months and 14 days of the prescriptive period when the
complaint was filed."
The above ruling was later reiterated in the
case of Republic vs. Rodriguez,2 the facts of
which, except that the loans there involved were contracted by therein
defendant himself, are on all fours with those of the one here present.
There, defendant Gregorio Rodriguez obtained loans, evidenced by two
promissory notes and secured by a chattel mortgage, from the Bank of Taiwan,
Ltd. in the year 1943. The loans remained unpaid until January 21, 1946,
where they became vested in the United States of America thru its
Alien Property Custodian, pursuant to the United States Trading with the
Enemy Act, as amended, and under its Vesting Order No. P-4. Later, on July
20, 1954, said unpaid accounts together with other assets of the Bank of
Taiwan were transferred, conveyed and assigned to the Government of the
Philippines by virtue of the Transfer Agreement executed on that date between
the United States and the Philippine governments, In June, 1960, the Republic
sued on the notes; but the action was dismissed on the ground of
prescription, first, by the justice of the peace of La Carlota, Negros
Occidental and, later, by the Court of First Instance of Negros Occidental.
On appeal to this Court, however, the order of dismissal was reversed and the
record remanded for further proceedings. Speaking thru Mr. Chief Justice
Bengzon, this Court ruled:
At first glance, the period of prescription has
lapsed. However, the Government argues that from the period of 1943-1954,
must be deducted the time when the Moratorium Law was in force, because it
tolled or suspended the running of the statute of limitations. The other side
replies that as the Moratorium did not bind the Republic of the Philippines or the Government of the United States,
the running of the prescriptive period was never interrupted, and therefore,
more than ten years having elapsed, the notes prescribed.
It will be recalled that the Moratorium Law was
established by Executive Orders Nos. 25 and 32, dated November 18, 1944, and
March 10, 1945, respectively. At that time, these credits belonged to the
Bank of Taiwan. The Moratorium Law bound it. Therefore, as to it, the
prescriptive Period was tolled. As it was only on January 21, 1946, that it
lost ownership to the United States Government, more than one year
must be deducted from the period from November, 1943 to July, 1954; with the
result that, for purposes of prescription, less than ten years had elapsed
when (in July, 1954) the Republic became the owner of the promissory notes.
It must be remembered that from that time (July, 1954), the prescriptive
period stopped to run against the Republic of the Philippine Islands.
Prescription does not run against the State
(Art. 1108, New Civil Code).
It may be added in this connection that after
Independence in July, 1946, the United States Government became a foreign
country, lost its sovereignty over these Islands, and therefore, could not
sue, by reason of the Moratorium Law, which lost its force only on May 18,
1953 (Rutter vs. Esteban, 93 Phil. 68).So the period between July, 1946 to
May, 1953 (about 7 years) should be deducted in computing the period of
prescription. ...
Applying the precedents above-quoted to the
problem on hand, it is clear that the right of action of the Republic had not
prescribed when it filed its complaint in this case. The first of the
promissory notes here involved matured on April 7, 1944, whereupon, a right
of action to enforce the obligation thereunder accrued in favor of the Bank
of Taiwan. At that time, the said bank was free to sue herein appellees to
recover the debt; but since it did not choose to do so, the period of
prescription commenced to run against it, and seven (7) months, and eleven
(11) days elapsed before the running of the statute of limitations against it
was suspended on November 18,1944, when it was tolled, first, by Executive
Order No. 25 which provided for the suspension of payments of debts incurred
after December 31, 1941 and, later, by Executive Order No. 32, dated March
10, 1945, which suspended the enforcement of payments not only of all debts
and monetary obligations incurred before December 8, 1941, but also of all
debts contracted during the Japanese occupation.3 On January 21, 1946, the assets of the Bank of Taiwan in the
Philippines, including the promissory notes referred, to, became vested in
the Government of the United States of America by virtue of its Vesting Order
No. P-4, issued under authority of its Trading with the Enemy Act. Granting, argumenti
gratia herein appellees' claim that the period of prescription then
commenced to run against the U.S. Government because the moratorium provided
for in the executive orders above-mentioned did not bind it, still, the
running of the statute of limitations was suspended for a second time on July
4, 1946, when the Philippines obtained independence and the United States
became a foreign country in this jurisdiction and could not sue, by reason of
the moratorium laws,4 with the resultant effect that four (4) months and
thirteen (13) days of the prescriptive period again elapsed. The memorandum
laws were declared unconstitutional and lost their binding effect on May 18,
1953 (Rutter vs. Esteban, supra) after which the period of
prescription started to run anew against the United States Government; but on
July 20, 1954, after the lapse of one (1) year, one (1) month and two
(2)days, the running thereof was suspended for the third time when the obligation
under consideration was transferred and assigned to the Government of the
Philippines by the Attorney General of the United States by virtue of the
corresponding transfer agreements entered into between the two governments
pursuant to the Philippine Property Act of 1946. And there is no gainsaying
that from that date (July 20, 1954), the statute of limitations ceased to run
against the Republic of the Philippines since prescription does not run
against the State which, in this case, seeks to enforce the said obligation
in the exercise of its sovereign role.5 In fine, a
total of only two (2) years and twenty-six (26) days, i.e., 7 months and 11
days during the period from April 7, 1944 to November 18, 1944, added to 4
months and 13 days during the period from January 21, 1946 to July 4, 1946,
plus 1 year, 1 month and 2 days during the period from May 18, 1953 to July
20, 1954, had elapsed when the ownership of the first note fell into the
hand's of the Republic of the Philippines, and as against whom no
prescription had run thereafter up to the time the present case was filed on
March 30, 1962. This conclusion applies with greater force in respect of the
other promissory notes here involved which matured much later. Accordingly,
We hold that the lower court erred in holding that the action of the Republic
of the Philippines
in this case had prescribed.
Appellee Pedro C. Hernaez, however, interposes
his own assignment of errors in his brief, claiming that:
I. THE LOWER
COURT ERRED IN DECLARING THAT THERE EXISTED A
NEGOTIORUM GESTIO RELATION BETWEEN DEFENDANT PEDRO C. HERNAEZ AND DEFENDANT
RAMON DE LA RAMA;
II. THE LOWER COURT LIKEWISE ERRED IN DECLARING
THAT DEFENDANT PEDRO C. HERNAEZ RATIFIED THE ACTS OF MANAGEMENT OF THE
GESTOR,
III. THE LOWER COURT ERRED IN NOT DECLARING THAT
ON THE SUPPOSITION THAT DEFENDANT DE LA RAMA WAS THE NEGOTIORUM GESTOR OF
DEFENDANT HERNAEZ, THE SUMS OF MONEY SUPPOSEDLY LOANED BY THE TAIWAN BANK,
LTD., TO RAMON DE LA RAMA REPRESENTED THE MONEY PROCEEDS OF SUGAR BELONGING
TO DEFENDANT HERNAEZ. (Pp. 79-80, R.A.)
Of course, it is permissible for an appellee who
has not himself appealed to assign what he believes to be errors committed by
the trial court in its decision, if his purpose in doing so is not to have
the appealed judgment modified or reversed in any way but only to be sure
that it is affirmed on other grounds, just in case it cannot be sustained on
the ground upheld by the trial judge. Indeed, to that end, it is not even
necessary for him to make any assignment of error, all he has to do is to
point out in the discussion in his brief the errors allegedly committed by
the trial court against him. (2 Moran, Comments on the Rules of Court, pp.
427-428, 1963 ed.)
We cannot, however, apply these observations to
the above assignment of errors of appellee Hernaez in this case. True, said
assignment is intended for no other purpose than to sustain the judgment of
dismissal of the court a quo in his favor, but it will be noted that
said assignment raises issues of fact which require a review of the evidence,
and as plaintiff-appellee has appealed directly to this Court on a question
of law, namely, whether or not the trial court erred in dismissing its
complaint on the ground of prescription, upon the factual premises found by
His Honor from the evidence submitted by the Parties after due trial, the
record on appeal here does not incorporate such evidence, hence the same
cannot reviewed. Upon the other hand, even if appellee Hernaez had himself
perfected his own appeal, which understandably he could not have done since
the judgment of the trial court was in his favor, this Court would still be
unable to pass on issues of fact he raised, for they properly belong to the
jurisdiction of the Court of Appeals, even under the former law in force at
the time the present case was appealed. Under these circumstances, We hold
that the appropriate procedure is for appellee to take up the above
assignment of errors in the appeal he may make, if necessary from the
judgment that the court a quo will render after this case is remanded
to it.
IN VIEW OF ALL THE FOREGOING, the judgment of
dismissal rendered By the trial court is hereby reversed, the motion of
appellee for the dismissal of the complaint on the ground of prescription is
denied, and this case is ordered remanded to the trial court in order that
judgment on the merits and pass on all issues between the parties other than
that of prescription resolved herein, with costs against appellees.
Concepcion, C.J., Reyes, J.B.L., Dizon,
Zaldivar, Sanchez, Fernando and Teehankee, JJ., concur.
Makalintal and Castro, JJ., concur in the
result.
Footnotes
1 L-20240, December 31, 1965.
2 L-18967, January 31, 1966, 16 SCRA 53, 55-56.
3 See Nielson & Co., Inc. vs. Lepanto
Consolidated Mining Company, L-21601 (Resolution of Motion for
Reconsideration of the decision of this Court in that case on December 17,
1966, 18 SCRA 1040), December 28, 1968, 26 SCRA 540, 561.
4 Republic vs. Rodriguez, supra.
5 Republic of the Philippines vs. Grijaldo, supra.
|
Republic
of the Philippines
SUPREME COURT
Manila
SUPREME COURT
Manila
THIRD
DIVISION
G.R. No. 71479 October 18,
1990
MELLON BANK, N.A., petitioner,
vs.
HON. CELSO L. MAGSINO, in his capacity as Presiding Judge of Branch CLIX of the Regional Trial Court at Pasig; MELCHOR JAVIER, JR., VICTORIA JAVIER; HEIRS OF HONORIO POBLADOR, JR., namely: Elsa Alunan Poblador, Honorio Poblador III, Rafael Poblador, Manuel Poblador, Ma. Regina Poblador, Ma. Concepcion Poblador & Ma. Dolores Poblador; F.C. HAGEDORN & CO., INC.; DOMINGO JHOCSON, JR.; JOSE MARQUEZ; ROBERTO GARINO; ELNOR INVESTMENT CO., INC.; PARAMOUNT FINANCE CORPORATION; RAFAEL CABALLERO; and TRI-ARC INVESTMENT and MANAGEMENT CO., INC. respondents.
vs.
HON. CELSO L. MAGSINO, in his capacity as Presiding Judge of Branch CLIX of the Regional Trial Court at Pasig; MELCHOR JAVIER, JR., VICTORIA JAVIER; HEIRS OF HONORIO POBLADOR, JR., namely: Elsa Alunan Poblador, Honorio Poblador III, Rafael Poblador, Manuel Poblador, Ma. Regina Poblador, Ma. Concepcion Poblador & Ma. Dolores Poblador; F.C. HAGEDORN & CO., INC.; DOMINGO JHOCSON, JR.; JOSE MARQUEZ; ROBERTO GARINO; ELNOR INVESTMENT CO., INC.; PARAMOUNT FINANCE CORPORATION; RAFAEL CABALLERO; and TRI-ARC INVESTMENT and MANAGEMENT CO., INC. respondents.
Romulo, Mabanta,
Buenaventura, Sayoc & De los
Angeles for petitioner.
Jose Buendia for respondent
Jose Marquez.
Raul L. Cornea &
Associates for Jhocson and Garino.
Jesus L. Santos and Conrado
Valera for Tri-Arc Investment, etc.
Bernardo D. Calderon for
respondent ELNOR and Rafael Caballero.
Nazareno, Azada, Sabado
& Dizon for Movants.
Balgos & Perez for
Paramount Finance Corporation.
Meer, Meer & Meer for
Hagedorn.
Alberto Villareza for F.C.
Hagedorn & Co.
FERNAN, C.J.:
The issue in the instant
special civil action of certiorari is whether or not, by virtue of the
principle of election of remedies, an action filed in California, U.S.A., to
recover real property located therein and to constitute a constructive trust on
said property precludes the filing in our jurisdiction of an action to recover
the purchase price of said real property.
On May 27, 1977, Dolores
Ventosa requested the transfer of $1,000 from the First National Bank of Moundsville, West Virginia,
U.S.A. to Victoria Javier in
Manila through
the Prudential Bank. Accordingly, the First National Bank requested the
petitioner, Mellon Bank, to effect the transfer. Unfortunately the wire sent by
Mellon Bank to Manufacturers Hanover Bank, a correspondent of Prudential Bank,
indicated the amount transferred as "US$1,000,000.00" instead of
US$1,000.00. Hence Manufacturers Hanover Bank transferred one million dollars
less bank charges of $6.30 to the Prudential Bank for the account of Victoria
Javier.
On June 3, 1977, Javier
opened a new dollar account (No. 343) in the Prudential Bank and deposited
$999,943.70. Immediately their, Victoria Javier and her husband, Melchor
Javier, Jr., made withdrawals from the account, deposited them in several banks
only to withdraw them later in an apparent plan to conceal, "launder"
and dissipate the erroneously sent amount.
On June 14, 1977, Javier
withdrew $475,000 from account No. 343 and converted it into eight cashier's
checks made out to the following: (a) F.C. Hagedorn & Co., Inc., two cheeks
for the total amount of P1,000,000; (b) Elnor Investment Co., Inc., two checks
for P1,000,000; (c) Paramount Finance Corporation, two checks for P1,000,000;
and (d) M. Javier, Jr., two checks for P496,000. The first six checks were
delivered to Jose Marquez and Honorio Poblador, Jr.
It appears that Melchor
Javier, Jr. had requested Jose Marquez, a realtor, to look for properties for
sale in the United States.
Marquez offered a 160-acre lot in the Mojave desert in California City which
was owned by Honorio Poblador, Jr. Javier, without having seen the property,
agreed to buy it for P3,236,800 (US$437,405) although it was actually appraised
at around $38,500. Consequently, as Poblador's agent, Marquez executed in Makati a deed of absolute sale in favor of the Javiers and
had the document notarized in Manila
before an associate of Poblador. Marquez executed another deed of sale
indicating receipt of the purchase price and sent the deed to the Kern County
Registrar in California
for registration.
Inasmuch as Poblador had
requested that the purchase price should not be paid directly to him, the
payment of P3,000,000 was coursed through Elnor Investment Co., Inc., allegedly
Poblador's personal holding company; Paramount Finance, allegedly headed by
Poblador's brother, and F.C. Hagedorn, allegedly a stock brokerage with
extensive dealings with Poblador. The payment was made through the
aforementioned six cashier's checks while the balance of P236,000 was paid in
cash by Javier who did not even ask for a receipt.
The two checks totalling
P1,000,000 was delivered by Poblador to F.C. Hagedorn with specific
instructions to purchase Atlas, SMC and Philex shares. The four checks for
P2,000,000 with Elnor Investment and Paramount Finance as payees were delivered
to the latter to purchase "bearer" notes.
Meanwhile, in July, 1977,
Mellon Bank filed a complaint docketed as No. 148056 in the Superior Court of
California, County of Kern, against Melchor Javier, Jane Doe Javier, Honorio
Poblador, Jrn, and Does I through V. In its first amended complaint to impose
constructive trust dated July 14, 1977, 1 Mellon Bank alleged that
it had mistakenly and inadvertently cause the transfer of the sum of
$999,000.00 to Jane Doe Javier; that it believes that the defendants had
withdrawn said funds; that "the defendants and each of them have used a
portion of said funds to purchase real property located in Kern County,
California"; and that because of defendants' knowledge of Mellon Bank's
mistake and inadvertence and their use of the funds to purchase the property,
they and "each of them are involuntary or constructive trustees of the
real property and of any profits therefrom, with a duty to convey the same to
plaintiff forthwith." It prayed that the defendants and each of them be
declared as holders of the property in trust for the plaintiff; that defendants
be compelled to transfer legal title and possession of the property to the
plaintiff; that defendants be made to pay the costs of the suit, and that other
reliefs be granted them.
On July 29, 1977, Mellon
Bank also filed in the Court of First Instance of Rizal, Branch X, a complaint
against the Javier spouses, Honorio Poblador, Jr., Domingo L. Jhocson, Jr.,
Jose Marquez, Roberto Gariño, Elnor Investment Co., Inc., F.C. Hagedorn &
Co., Inc. and Paramount Finance Corporation. After its amendment, Rafael
Caballero and Tri-Arc Investment & Management Company, Inc. were also named
defendants. 2
The amended and
supplemental complaint alleged the facts set forth above and added that Roberto
Gariño, chief accountant of Prudential Bank, and who was the reference of Mrs.
Ventosa's dollar remittances to Victoria Javier, immediately informed the
Javiers of the receipt of US$1,000,000.00; that knowing the financial
circumstances of Mrs. Ventosa and the fact that a mistake had been committed,
the Javiers, with undue haste, took unlawful advantage of the mistake, withdrew
the whole amount and transferred the same to a "343 dollar account";
that, aided and abetted by Poblador and Domingo L. Jhocson, the Javiers
"compounded and completed the conversion" of the funds by withdrawing
from the account dollars or pesos equivalent to US $975,000; that by force of
law, the Javiers had been constituted trustees of an implied trust for the
benefit of Mellon Bank with a clear duty to return to said bank the moneys
mistakenly paid to them; that, upon request of Mellon Bank and Manufacturers
Hanover Bank, Prudential Bank informed the Javiers of the erroneous transmittal
of one million dollars first orally and later by letter-demand; that
conferences between the representatives of the Javiers, led by Jhocson and
Poblador, in the latter's capacity as legal and financial counsel, and
representatives of Mellon Bank, proved futile as the Javiers claimed that most
of the moneys had been irretrievably spent; that the Javiers could only return
the amount if the Mellon Bank should agree to make an absolute quitclaim and
waiver of future rights against them, and that in a scheme to conceal and
dissipate the funds, through the active participation of Jose Marquez, the
Javiers bought the California property of Poblador.
It further alleged that
trust fund moneys totalling P3,000,000.00 were made payable to Hagedorn
Paramount and Elnor; that Hagedorn on instructions of Poblador, purchased
shares of stock at a stock exchange for P1,000,000.00 but later, it hastily
sold said shares at a loss of approximately P150,000.00 to the prejudice of the
plaintiff; that proceeds of the sale were deposited by Hagedorn in the name of
Poblador and/or the law office of Poblador, Nazareno, Azada, Tomacruz and
Paredes; that dividends declared on the shares were delivered by Hagedorn to
Caballero after the complaint had been filed and thereafter, Caballero
deposited the dividends in his personal account; that after receiving the
P1,000,000.00 trust money, Paramount issued promissory notes upon maturity of
which Paramount released the amount to unknown persons; that Elnor also
invested P1,000,000.00 in Paramount for which the latter also issued promissory
notes; that after the filing of the complaint, counsel for plaintiff requested
Paramount not to release the amount after maturity; that in evident bad faith,
Elnor transferred the non-negotiable Paramount promissory notes to Tri-Arc.
that when the notes matured, Paramount delivered the proceeds of P1,000,000.00
to Tri-Arc; that Poblador knew or should have known that the attorney's fees he
received from the Javiers came from the trust funds; and that despite formal
demands even after the filing of the complaint, the defendants refused to
return the trust funds which they continued concealing and dissipating.
It prayed that: (a) the
Javiers, Poblador, Elnor, Jhocson and Gariño be ordered to account for and pay
jointly and severally unto the plaintiff US$999,000.00 plus increments,
additions, fruits and interests earned by the funds from receipt thereof until
fully paid; (b) the other defendants be ordered to account for and pay unto the
plaintiff jointly and severally with the Javiers to the extent of the amounts
which each of them may have received directly or indirectly from the
US$999,000.00 plus increments, additions, fruits and interests; (c) Marquez be
held jointly and severally liable with Poblador for the amount received by the
latter for the sale of the 160-acre lot in California City; and (d) defendants
be likewise held liable jointly and severally for attomey's fees and litigation
expenses plus exemplary damages.
In due course, the
defendants filed their answers and hearing of the case ensued. In his
testimony, Jose Marquez stated that Prudential Bank and Trust Company checks
Nos. 2530 and 2531 in the respective amounts of P100,000 and P900,000 payable
to F. C. Hagedorn were delivered to him by Melchor Javier, Jr. as partial
consideration for the sale of Poblador's property in California. After receiving the checks,
Hagedorn purchased shares of Atlas Mining, Philex, Marcopper and San Miguel
Corporation for Account No. 3000, which, according to Fred Hagedorn belonged to
the law office of Poblador. 3
F.C. Hagedorn & Co.,
Inc. then sold the shares for P874,490.75 as evidenced by HSBC check No. 339736
for P400,000 and HSBC check No. 339737 for P474,490.75 payable to
"cash". Mellon Bank traced these checks to Account 2825-1 of the
Philippine Veterans Bank in the name of Cipriano Azada, Poblador's law partner
and counsel to the Javiers. 4
An employee of the Philippine
Veterans Bank thereafter introduced the specimen signature cards for Account
No. 2825-1 thereby confirming Azada's ownership of the account. Defendants
objected to this testimony on the grounds of Azada's absence, the
confidentiality of the bank account, and the best evidence rule. The court
overruled the objection. Another employee of the Philippine Veterans Bank then
presented the ledger card for Account No. 2825-1, a check deposit slip and a
daily report of returned items. The defendants objected but they were again
overruled by the court.
Mellon Bank then subpoenaed
Erlinda Baylosis of the Philippine Veterans Bank to show that Azada deposited
HSBC checks No. 339736 and 339737 amounting to P874,490.75 in his personal
current account with said bank. It also subpoenaed Pilologo Red, Jr. of
Hongkong & Shanghai Banking Corporation to prove that said amount was
returned by Azada to Hagedorn.
The testimonies of these
witnesses were objected to by the defense on the grounds of res inter alios
acta, immateriality, irrelevancy and confidentiality. To resolve the
matter, the court ordered the parties to submit memoranda. The defendants'
objections were also discussed at the hearing on July 13, 1982. For the first
time, Poblador's counsel raised the matter of "election of remedies."
5
At the July 20, 1982
hearing, the lower court, then presided by Judge Eficio Acosta, conditionally
allowed the testimonies of Baylosis and Red. Baylosis afffirmed that Azada
deposited checks Nos. 339736 and 339737 in the total amount of P874,490.75 in
his personal account with the Philippine Veterans Bank but almost
simultaneously, Azada issued his PVB check for the same amount in favor of
Hagedorn Consequently, Azada's check initially bounced. For his part, Red
testified that Azada's check for P874,490.75 was received by the Hongkong &
Shanghai Banking Corporation and credited to the account of Hagedorn .
The defendants then moved
to strike off the testimonies of Baylosis and Red from the record. Defendant
Paramount Finance Corporation, which is not a party to the California case, thereafter filed its
memorandum raising the matter of "election of remedies". It averred
that inasmuch as the Mellon Bank had filed in California
an action to impose constructive trust on the California property and to recover the same,
Mellon Bank can no longer try to regain the purchase price of the same property
through Civil Case No. 26899. The other defendants adopted Paramount's stand.
After Mellon Bank filed its
reply to the memorandum of Paramount,
on September 10, 1982, Judge Acosta issued a resolution ordering that the
testimonies of Baylosis and Red and the documents they testified on, which were
conditionally allowed, be stricken from the records. 6 Judge Acosta explained:
After a judicious evaluation of the arguments of the parties the
Court is of the view that in cases where money held in trust was diverted by
the trustee, under the "rule of trust pursuit" the beneficiary
"may elect whether to accept the trust estate in its new form or hold the trustee
responsible for it in its original condition" (Lathrop vs. Hampton, 31
Cal. 17; Zodos vs. Marefalos 48 Idaho 291; Bahle vs. Hasselbrach 64 NW Eq. 334,
51 Sections 508-76 Am Jur. 2d p. 475), and that "an election to pursue one
remedy waives and bars pursuit of any inconsistent remedy"(76 Am Jur. 2d
S253). The instant complaint among others is for the recovery of the purchase
price of the Kern property as held in trust for the plaintiff while in the California case the
plaintiff maintains that the Kern property is held in trust for the plaintiff,
which positions are inconsistent with each other. Neither can the plaintiff now
abandon his complaint for the recovery of the Kern property and pursue his
complaint for the recovery of the purchase price of said property for "if
he has first sought to follow the res, the plaintiff cannot thereafter hold the
trustee personally responsible" and "when once there has been an
election to do one of two things, you cannot retract it and do the other thing.
The election once made is finally made." (Fowler vs. Bowvery Savings Bank
113 N.Y. 450, 21 N.E. 172, 4 LRA 145, 10 Am. S.R. 479. 2 Silv. 280, 23, Abb. N.
Cos. 133065 C. J. p. 980 Note 32).
The fact that the California case
has been stayed pending determination of the instant case only means that
should this case be dismissed, the California
case can proceed to its final determination.
Furthermore, when the plaintiff filed the California case for the
transfer of legal title and possession of the Kern property to the plaintiff it
in effect ratified the transaction for "by taking the proceeds or product
of a wrongful transfer of trust property or funds, the beneficiary ratifies the
transaction" (Board of Commissioner vs. Strawn [CA6 Ohio] 157 F. 49, 76 Am
Jur. 2d Section 253). Consequently the purchase price of the California property received by defendant
Poblador from Javier is no longer the proper subject matter of litigation and
the movement and disposition of the purchase price is therefore within the
scope of the absolutely confidential nature of bank deposits as provided by
Sec. 2, R.A. 1405 as amended by PD No. 1792.
Mellon Bank moved for
reconsideration, alleging that said order prevented the presentation of
evidence on the purchase price of the California property; that the California
case cannot be considered a waiver of the pursuit of the purchase price as even
if said case was filed fifteen days prior to the filing of the original
complaint in this case, except for the Javiers, no other defendants raised in their
answers the affirmative defense of the filing of the California case; that
after the amendment of the complaint, none of the defendants raised the matter
of "election of remedies" in their answers; that realizing this
procedural error, Paramount sought the amendment of its answer to reflect the
"defence" of "election of remedies"; that, disregarding its
previous orders allowing evidence and testimonies on Account No. 2825-1, the
court made a turnabout and ruled that the testimonies on said account were
irrelevant and confidential under Republic Act No. 1405; that Philippine law
and jurisprudence does not require the election of remedies for they favor
availment of all remedies; that even United States jurisprudence frowns upon
election of remedies if it will lead to an inequitable result; that, as held by
this Court in Radiowealth vs. Javier, 7 there can be no binding
election of remedies before the decision on the merits is had; that until
Mellon Bank gets full recovery of the trust moneys, any contention of election
of remedy is premature, and that, the purchase price being the subject of
litigation, inquiring into its movement, including its deposit in banks, is
allowed under Republic Act No. 1405.
Defendants filed their
respective comments and oppositions to the motion for reconsideration. In its
reply, the Mellon Bank presented proof to the effect that in the California
case, defendants filed motions to stake out the cross-complaint of Mellon Bank,
for summary judgment and to stay or dismiss the action on the ground of
inconvenient forum but the first two motions and the motion to dismiss were
denied "without prejudice to renew upon determination of the Philippine
action." The motion to stay proceedings was "granted until
determination of the Philippine action." 8
On October 28, 1983, the
lower court, through Judge Acosta, denied the motion for reconsideration and
ordered the continuation of the hearing (Rollo, p. 182). The plaintiff filed a
motion for the reconsideration of both the September 10, 1982 and October 28,
1983 orders. After the parties had filed comments, opposition and reply, the
court, through Judge Celso L. Magsino, denied Mellon Bank's second motion for
reconsideration on the ground that it was "prescribed by the 1983 Interim
Rules of Court" in an order dated July 9, 1985. 9
The court ruled that the
determination of the relevancy of the testimonies of Baylosis and Red was
"premised directly and principally" on whether or not Mellon Bank
could still recover the purchase price of the California property
notwithstanding the filing of the case in California to recover title and
possession of the said property. After quoting the resolution of September 10,
1982, the Court ruled that it was a "final order or a definitive judgment
with respect to the claim of plaintiff for the recovery" of the purchase
price of the California
property. It stated:
The adjudication in the Order of September 10, 1982 and the Order
of October 28, 1983, which has the effect of declaring that plaintiff has no
cause of action against the defendants for the recovery of the proceeds of the
sale of Kern property in the amount of Three Million Three Hundred Fifty
Thousand Pesos (P3,500,000.00 [sic]) for having filed a complaint for the
recovery of the Kern property in the Superior Court of California, County of
Kern is a final and definitive disposition of the claim of the plaintiff
to recover in the instant action the proceeds of sale of said property against
the defendants. The issue of "election of remedy" by the plaintiff
was lengthily and thoroughly discussed and argued by the parties before the
rendition of the resolution of September 10, 1982, and in the motion for
reconsideration and oppositions thereto before its resolution in the Order of
October 28, 1983. Such issue is a substantive one as it refers to the
existence of plaintiffs cause of action to recover the proceeds of the sale of
the Kern property in this action, and that issue was presented to the Court as
if a motion to dismiss or a preliminary hearing of an affirmative defense on
the ground that plaintiff has no cause of action, and was resolved against
plaintiff in the Order of September 10, 1982, after a full hearing of all the
parties. Said Order of September 10, 1982 has the effect of putting an end
to the controversy between the parties as to the right of plaintiff to claim or
recover the proceeds of the sale of the Kern property from the defendants. It
is therefore an adjudication upon the merits. 10
Hence, Mellon Bank filed
the instant petition for certiorari claiming that the resolution of September
10, 1982 and the orders of October 28, 1983 and July 9, 1985 are void for being
unlawful and oppressive exercises of legal authority, subversive of the fair
administration of justice, and in excess of jurisdiction. The petition is
founded on its allegations that: (a) the resolution of September 10, 1982 is
interlocutory as it does not dispose of Civil Case No. 26899 completely: (b)
the evidence stricken from the records is relevant on the basis of the allegations
of the amended and supplemental complaint, and (c) the doctrine of election of
remedies, which has long been declared obsolete in the United States, is not
applicable in this case.
With the exception of the
Javiers, all the respondents filed their respective comments on the petition.
Having failed to file said comment, the Javiers' counsel of record, Azada,
Tomacruz & Cacanindin, 11 was required to show cause
why disciplinary action should not be taken against it. And, having also failed
to show cause, it was fined P300.
In his motion for
reconsideration of the resolution imposing said fine, Cipriano Azada alleged
that in Civil Case No. 26899, the Javiers were indeed represented by the law
firm of Poblador, Azada, Tomacruz & Cacanindin but he was never the lawyer
of the Javiers' in his personal capacity; that after the death of Honorio
Poblador, Jr., he had withdrawn from the partnership; that he is the counsel of
the Administratrix of the Estate of Honorio Poblador, Jr. for which he had
filed a comment, and that should the Court still require him to file comment
for the Javiers despite the lack of client-lawyer relationship, he would adopt
the comment he had filed for the said Administratrix. 12
In its effort to locate the
Javiers so that their side could be heard, we required the petitioner to
furnish us with the Javiers' address as well as the name and address of their
counsel. 13 In compliance therewith, counsel for petitioner manifested that the
Javiers had two known addresses in San Juan, Metro Manila and in Sampaloc,
Manila; that since their conviction in Crim. Case No. CCC-VII 2369-P.C. of the
Pasig Regional Trial Court, the Javiers had gone into hiding and warrants for
their arrest still remain unserved; 14 that the Javiers' counsel
of record in Civil Case No. 26899 is Atty. Cipriano Azada; that the same
counsel appeared for the Javiers in Criminal Case No. 39851 of the Pasig
Regional Trial Court which is a tax evasion case filed by the Republic of the
Philippines, and that during the hearings of the civil and tax evasion cases
against the Javiers, Atty. Cipriano Azada, Jr. represented them. 15
Inasmuch as copies of the
resolution requiring comment on the petition and the petition itself addressed
to Melchor Javier were returned with the notations "moved" and
"deceased", the Court required that said copies be sent to Mrs.
Javier herself and that petitioner should inform the Court of the veracity of
Javier's death. 16 A copy of the resolution addressed to Mrs. Javier was returned
also with the notation "deceased." 17
Counsel for petitioner
accordingly informed the Court that he learned that the Javiers had fled the
country and that he had no way of verifying whether Melchor Javier had indeed
died. 18
In view of these
circumstances, the Javiers' comment on the petition shall be dispensed with as
the Court deems the pleadings filed by the parties sufficient bases for
resolving this case. The Javiers shall be served copies of this decision in
accordance with Section 6, Rule 13 of the Rules of Court by delivering said
copies to the clerk of court of the lower court, with proof of failure of both
personal service and service by mail.
We hold that the lower
court gravely abused its discretion in ruling that the resolution of September
10, 1982 is a "final and definitive disposition" of petitioner's
claim for the purchase price of the Kern property. The resolution is
interlocutory and means no more than what it states in its dispositive
portion-the testimonies of Baylosis and Red and the documents they testified
on, should be stricken from the record.
That the resolution
discusses the common-law principle of election of remedies, a subject matter
which shall be dealt with later, is beside the point. It is interlocutory
because the issue resolved therein is merely the admissibility of the
plaintiff's evidence. 19 As such, it does not
dispose of the case completely but leaves something more to be done upon its
merits. 20 There are things left undone in Civil Case No. 26899 after the
issuance of the September 10, 1982 resolution not only because of its explicit
dispositive portion but also due to the fact that even until now, the case is
still pending and being heard. 21
Furthermore, the lower
court's holding in its July 9, 1985 order that petitioner's second motion for
reconsideration is proscribed by the 1983 Interim Rules of Court which
disallows such motion on a final order or judgment, should be rectified.
As explained above, the resolution of September 10, 1982 is not a final one. It
also contains conclusions on procedural matters which, if left unchecked, would
prejudice petitioner's substantive rights.
In effect, therefore, the
July 9, 1985 order is a shortcut disposition of Civil Case No. 26899 in total
disregard of petitioner's right to a thorough ventilation of its claims. By
putting a premium on procedural technicalities over the resolution of the
merits of the case, the lower court rode roughshod over the basic judicial
tenet that litigations should, as much as possible, be decided on their merits and
not on technicalities. 22 The trial court's patent
grave abuse of discretion therefore forces us to exercise supervisory authority
to correct its errors notwithstanding the fact that ordinarily, this Court
would not entertain a petition for certiorari questioning the legality and
validity of an interlocutory order. 23
Respondents' principal
objection to the testimonies of Baylosis and Red is their alleged irrelevance
to the issues raised in Civil Case No. 26899. The fallacy of this objection
comes to fore upon a scrutiny of the complaint. Petitioner's theory therein is
that after the Javiers had maliciously appropriated unto themselves $999,000,
the other private respondents conspired and participated in the concealment and
dissipation of said amount. The testimonies of Baylosis and Red are therefore
needed to establish the scheme to hide the erroneously sent amount.
Private respondents'
protestations that to allow the questioned testimonies to remain on record
would be in violation of the provisions of Republic Act No. 1405 on the secrecy
of bank deposits, is unfounded. Section 2 of said law allows the disclosure of
bank deposits in cases where the money deposited is the subject matter of the
litigation. 24 Inasmuch as Civil Case No. 26899 is aimed at recovering the amount
converted by the Javiers for their own benefit, necessarily, an inquiry into
the whereabouts of the illegally acquired amount extends to whatever is
concealed by being held or recorded in the name of persons other than the one
responsible for the illegal acquisition. 25
We view respondents'
reliance on the procedural principle of election of remedies as part of their
ploy to terminate Civil Case No. 26899 prematurely. With the exception of the
Javiers, respondents failed to raise it as a defense in their answers and
therefore, by virtue of Section 2, Rule 9 of the Rules of Court, such defense
is deemed waived. 26 Notwithstanding its lengthy
and thorough discussion during the hearing and in pleadings subsequent to the
answers, the issue of election of remedies has not, contrary to the lower
court's assertion, been elevated to a "substantive one." Having been
waived as a defense, it cannot be treated as if it has been raised in a motion
to dismiss based on the nonexistence of a cause of action.
Moreover, granting that the
defense was properly raised, it is inapplicable in this case. In its broad
sense, election of remedies refers to the choice by a party to an action of one
of two or more coexisting remedial rights, where several such rights arise out
of the same facts, but the term has been generally limited to a choice by a
party between inconsistent remedial rights, the assertion of one being
necessarily repugnant to, or a repudiation of, the other. In its technical and
more restricted sense, election of remedies is the adoption of one of two or
more coexisting remedies, with the effect of precluding a resort to the others.
27
As a technical rule of
procedure, the purpose of the doctrine of election of remedies is not to
prevent recourse to any remedy, but to prevent double redress for a single
wrong. 28 It is regarded as an application of the law of estoppel, upon the
theory that a party cannot, in the assertion of his right occupy inconsistent
positions which form the basis of his respective remedies. However, when a
certain state of facts under the law entitles a party to alternative remedies,
both founded upon the Identical state of facts, these remedies are not
considered inconsistent remedies. In such case, the invocation of one remedy is
not an election which will bar the other, unless the suit upon the remedy first
invoked shall reach the stage of final adjudication or unless by the invocation
of the remedy first sought to be enforced, the plaintiff shall have gained an
advantage thereby or caused detriment or change of situation to the other. 29 It must be pointed out
that ordinarily, election of remedies is not made until the judicial
proceedings has gone to judgment on the merits. 30
Consonant with these
rulings, this Court, through Justice J.B.L. Reyes, opined that while some
American authorities hold that the mere initiation of proceedings constitutes a
binding choice of remedies that precludes pursuit of alternative courses, the
better rule is that no binding election occurs before a decision on the merits
is had or a detriment to the other party supervenes. 31 This is because the
principle of election of remedies is discordant with the modern procedural
concepts embodied in the Code of Civil Procedure which Permits a party to seek
inconsistent remedies in his claim for relief without being required to elect
between them at the pleading stage of the litigation. 32
It should be noted that the
remedies pursued in the California
case and in Civil Case No. 26899 are not exactly repugnant or inconsistent with
each other. If ever, they are merely alternative in view of the inclusion of
parties in the latter case who are not named defendants in the former. The
causes of action, although they all stem from the erroneous transmittal of dollars,
are distinct as shown by the complaints lengthily set out above. The bar of an
election of remedies does not apply to the assertion of distinct causes of
action against different persons arising out of independent transactions. 33
As correctly pointed out by
the petitioner, the doctrine of election of remedies is not favored in the United States
for being harsh. 34 Its application with regard to two cases filed in two different
jurisdictions is also circumscribed by jurisprudence on abatement of suits. Thus,
in Brooks Erection Co. v. William R. Montgomery & Associates, Inc., 35 it is held:
The pendency of an action in the courts of one state or country is
not a bar to the institution of another action between the same parties and for
the same cause of action in a court of another state or country, nor is it the
duty of the court in which the latter action is brought to stay the same
pending a determination of the earlier action, even though the court in which
the earlier action is brought has jurisdiction sufficient to dispose of the
entire controversy. Nevertheless, sometimes stated as a matter of comity not of
right, it is usual for the court in which the later action is brought to stay
proceedings under such circumstances until the earlier action is determined.
However, in view of the
fact that the California court wherein the case for recovery of the Kern
property was first filed against the Javiers had stayed proceedings therein
until after the termination of Civil Case No. 26899, the court below can do no
less than expedite the disposition of said case.
We cannot dispose of this
case without condemning in the strongest terms possible the acts of chicanery
so apparent from the records. The respective liabilities of the respondents are
still being determined by the court below. We must warn, however, against the
use of technicalities and obstructive tactics to delay a just settlement of
this case. The taking advantage of the petitioner's mistake to gain sudden and
undeserved wealth is marked by circumstances so brazen and shocking that any
further delay will reflect poorly on the kind of justice our courts dispense.
The possible involvement of lawyers in this sorry scheme stamps a black mark on
the legal profession. The Integrated Bar of the Philippines (IBP) must be made
aware of the ostensible participation, if not instigation, in the spiriting
away of the missing funds. The IBP must take the proper action at the
appropriate time against all lawyers involved in any misdeeds arising from this
case.
WHEREFORE, the resolution
of September 10, 1982 and the orders of October 28, 1982 and July 9, 1985 are
hereby annulled. The lower court is ordered to proceed with dispatch in the
disposition of Civil case No. 26899, considering that thirteen (13) years have
gone by since the original erroneous remittance.
Service of this decision on
the Javier spouses shall be in accordance with Section 6, Rule 13 of the Rules
of Court. A copy of this decision shall be served on the Integrated Bar of the Philippines.
The decision is immediately
executory. Costs against private respondents.
SO ORDERED.
Gutierrez, Jr., Feliciano,
Bidin and Cortes,JJ., concur.
Footnotes
1 Rollo, p. 101.
2 Civil Case No. 26899.
3 Rollo, p. 73.
4 Rollo, pp. 73-74.
5 Rollo, p. 28.
6 Rollo, pp. 118-119.
7 SCRA 804.
8 Rollo, p. 167.
9 Rollo, p. 251.
10 See Licup vs. Manila Railroad Co., 2 SCRA 267, 271.
Emphasis supplied.
11 Rollo, p. 17.
12 Rollo, p. 459.
13 Rollo, p. 467.
14 See: People vs. Court of Appeals, No. 51635,
December 14, 1982, 119 SCRA 162.
15 Rollo, p. 483.
16 Rollo, p. 601.
17 Rollo, p. 615.
18 Rollo, p. 607.
19 Lamagan vs. De la Cruz, L-27950, July 29, 1971, 40 SCRA
101, 106-107.
FIRST
DIVISION
G.R.
No. L-51635 December l4, 1982
PEOPLE
OF THE PHILIPPINES, Petitioners, vs. COURT OF APPEALS, HON. RAMON
G. GAVIOLA, JR., HON. BUENAVENTURA S. DE LA FUENTE, HON. EDGARDO L. PARAS,
MELCHOR J. JAVIER and VICTORIA L. JAVIER, Respondents.
Alejandro
de Santos for respondent Javier.
-->
TEEHANKEE,
Acting C.J.: chanrobles
virtual law library
The
Court hereby sets aside the challenged resolutions of respondent Court of
Appeals - the first dated September 18, 1979 which granted private
respondents-accused's motion that the trial court's challenged order denying
their demurrer to evidence be considered a "judgment of conviction"
against them and that their petition for certiorari against said order of
denial be considered as an "appeal" from such "judgment"
and declared that it would decide the "appeal" on the merits "as
soon as the respective briefs and/or memorandum of the parties are in" and
gave the "appellants" (respondents-accused) twenty days from the time
the basic record and transcripts were submitted within which to submit their
"memorandum in lieu of appellants' brief" and the appellee (the
petitioner People who was merely a respondent therein) a period of twenty days
from receipt of "appellants' brief" within which to file their
"appellee's brief;" and the second, dated October 8, 1979 which
declared the case submitted for decision without the briefs or memoranda having
been filed, which respondent court has stated in its comment was a "manifestly
erroneous" resolution inadvertently issued by the division clerk of court
upon his own responsibility.chanroblesvirtuallawlibrary
chanrobles virtual law library
Respondents-accused
upon the denial by the trial court of their demurrer to evidence and prayer for
dismissal of the criminal case against them (arising from their conversion to
their own use and benefit of an erroneous bank remittance to them of U.S.
$1,000,000.00 instead of U.S. $1,000.00) had filed in respondent court their
special civil action of certiorari 1 praying for the
annulment of said interlocutory order, on the claim that their liability was
civil rather than criminal. When they moved that they waived the right to
present evidence in the trial court and that the trial court's challenged order
be considered a "judgment of conviction" and that their action be
considered as an appeal from the said judgment," it was an admission of
the futility of their action which could not prosper since the trial court
obviously committed no grave abuse of discretion in denying their demurrer to
evidence. All that was before respondent appellate court were the trial court's
interlocutory orders denying dismissal of the criminal case since it
"believe(d) that the prosecution has established a prima facie case"
and setting the continuation of the trial on September 22, 1978 for reception
of evidence on behalf of respondents-accused.chanroblesvirtuallawlibrary chanrobles virtual law library
All
that respondent court could accordingly do in view of respondents-accused's
motion was to dismiss the petition and remand the case to the trial court for
the rendition of its final judgment determining the imposable penalty in the
exercise of its original and exclusive jurisdiction over the criminal case.
Respondent court being exclusively a court of appellate jurisdiction could not
preempt or arrogate unto itself the trial court's original and exclusive
jurisdiction, much less convert the accused's petition of certiorari before it
(questioning interlocutory orders of the trial court) into an appeal over a
criminal case wherein the trial court had not yet rendered judgment nor imposed
any penalty on the accused. In short, there was no judgment of the trial court
over which it could exercise its only jurisdiction - the appellate jurisdiction
of review on appeal.chanroblesvirtuallawlibrary chanrobles virtual law library
Assuming
arguendo that respondent court could validly entertain
respondents-accused's motion to consider themselves convicted solely on the
prosecution's evidence since they were, no longer presenting any evidence on
their behalf and to rule upon their "conviction" by way of an appeal,
the most that respondent court could do - since only a pure question of law is
involved, to wit, whether their admitted acts as shown by the evidence of the
prosecution constitute the crime of estafa or merely give rise to a civil
liability which they admit - was to elevate the case to this Court under its
exclusive jurisdiction to review and determine all such cases involving only
errors or questions of law.chanroblesvirtuallawlibrary
chanrobles virtual law library
The
undisputed pertinent background facts of the case are as follows: On November
8, 1977, respondents-accused Melchor J. Javier and Victoria L. Javier were charged
with estafa before the Circuit Criminal Court of the Seventh Judicial District
presided over by then Judge, now Court of Appeals Associate Justice, Onofre
Villaluz, in an information reading as follows: chanrobles
virtual law library
That
on or about June 3, 1977, in Pasay City, Metro Manila, Philippines, and within
the jurisdiction of this Honorable Court the above-named accused, Melchor J.
Javier, Jr. and Victoria L. Javier, received from Prudential Bank & Trust
Company, Pasay City Branch, the amount of US$ 999,993.70, United States
Currency, by virtue of a Telex from Manufacturers Hanover Bank, which latter
bank acted pursuant to a request of the First National Bank of Moundsville
Moundsville West Virginia, U.S.A., to effect a transfer of US$ 1,000.00 to the
Prudential Bank & Trust Company for the account of the accused Victoria L.
Javier but a Mellon Bank, N.A. employee sent by mistake a wire to Manufacturers
Hanover Bank, New York. U.S.A..
to effect the transfer of US$ 1,000,000.00 instead of only US$ 1,000.00; that
once in possession of the aforesaid amount of US$ 999,9993.70, said accused
Melchor J. Javier, Jr. and Victoria L. Javier, conspiring and confederation
with each other, and fraudulently taking advantage of said take of' Which they
were fully aware, with grave abuse of confidence and/or unfaithfulness, in
serious breach of their legal obligation to return the excess amount unduly
sent and received by them did then and there wilfully unlawfully, feloniously
and fraudulently misappropriate, misapply and convert the amount of US$
999,000.00. for their own use and benefit and despite repeated demands by the
complainant, the accused refused and failed to return the same, to the damage
and prejudice of Mellon Bank, N.A. in the aforesaid amount of US$999,000.00.chanroblesvirtuallawlibrary chanrobles virtual law library
CONTRARY
TO LAW.
A
plea of not guilty, having been interposed by the accused, the trial preceeded,
and after the People had rested its case, the accused, on June 30, 1978, filed
a demurrer to evidence and prayed for the dismissal of the criminal charge
against them. Upon opposition by the People, the trial court on July 27, 1978
denied the demurrer to evidence or motion to dismiss, ruling that "the
prosecution has established a prima facie case" and that "demurrer to
evidence, under Rule 35, is not applicable to criminal cases."
Reconsideration, which was duly opposed by the People, was denied per the trial
court's Order of August 18, 1978, which set the continuation of the trial for
reception of the accused's evidence on September 22, 1978.chanroblesvirtuallawlibrary chanrobles virtual law library
On
September 8, 1978, the accused filed with respondent Court of Appeals their
petition for certiorari with preliminary injunction questioning the
interlocutory denial of their demurrer to evidence and motion for dismissal.
The parties, respectively, thereafter filed their continent, reply, rejoinder
and sur-rejoinder.chanroblesvirtuallawlibrary chanrobles virtual law library
The
petition was set and called for oral argument in respondent court on July 10,
1979 and respondents-accused, as petitioners therein, then made their move
personally and through counsel eschewing the presentation of any evidence in
their behalf in the trial of the criminal case and praying that respondent
appellate court treat their petition as if it were an appeal from a judgment of
conviction and rule upon their "appeal." chanrobles virtual law library
After
having required the parties to submit their respective memoranda on the
question of whether it could so consider and convert the petition for
certiorari as and into an "appeal," respondent court issued its
challenged Resolution of September 18, 1979 reciting what transpired at the
oral argument and ruling as follows: chanrobles
virtual law library
Herein
Petition for certiorari challenges the order of the court a quo denying
petitioners 'Demurrer to the Evidence' as well as its order denying
petitioners' motion for reconsideration. Without giving due course to the Petition,
we required the respondents to comment and in the meantime restrained
respondents from any further proceedings in Criminal Case No.
CCC-VIII-2369-P.C.chanroblesvirtuallawlibrary
chanrobles virtual law library
The
pertinent facts, are as summarized in the People's memorandum, as follows:
On November 8, 1977, petitioners were charged before the
Circuit Criminal Court of the Seventh Judicial District with the crime of
estafa through misappropriation for refusing to return or account for the
amount of US$ 999,000.00. which was erroneously remitted to them by the
Manufacturers Hanover Bank of Pittsburgh.
In due course, petitioners pleaded not guilty and the prosecution presented its
evidence. After the prosecution had rested its case, petitioners tiled a demurrer
to evidence. The same was denied by respondent Judge Onofre Villaluz.
The
court a quo denied petitioners' 'Demurrer to Evidence' on its belief
that the prosecution has established a prima facie case and because demurrer to
evidence under Rule 35, Rules of Court is not applicable to criminal cases.chanroblesvirtuallawlibrary chanrobles virtual law library
The
herein case was scheduled for oral argument on July 10, 1979, at which hearing,
counsel for the petitioners manifested that they had no intention to present
any further evidence in the criminal case; that on the basis of the evidence
presented by the prosecution before the court a quo, they deserve an
acquittal. They moved that the challenged order be considered a judgment
against the petitioners and that the herein Petition for certiorari be
considered as an appeal from the said judgment. Confronted with the
manifestation of their counsel, the petitioners, by themselves affirmed their
counsel's representation, thus: chanrobles
virtual law library
Mr.
JUSTICE RAMON G. GAVIOLA JR.: Are the petitioners here? chanrobles virtual law library
ATTY.
BALGOS: Yes, your Honor. They are here. chanrobles virtual law library
Mr.
JUSTICE RAMON G. GAVIOLA ,JR.: Make it of record that the petitioners are here.
chanrobles virtual law library
Mr.
JUSTICE RAMON G. GAVIOLA ,JR.: (to the petitioners) chanrobles virtual law library
Did
you understand what your counsel said insofar as his manifestation is concerned
to the effect that you are not going to present evidence? chanrobles virtual law library
PETITIONERS:
Yes, your Honor. chanrobles virtual
law library
Mr.
JUSTICE RAMON G. GAVIOLA ,JR.: chanrobles
virtual law library
Q
- Do you also share your counsel's position that you consider the denial of
your demurrer to the evidence as a verdict against you by the court a quo? chanrobles virtual law library
A
- Yes, your Honor.chanroblesvirtuallawlibrary
chanrobles virtual law library
Q
- Do you also realize that if this petition is treated as though it is an
appeal, and, a verdict is found by this court against you, you could no longer
go back to the court of origin for a new trial? chanrobles virtual law library
A
- Yes, your Honor.chanroblesvirtuallawlibrary
chanrobles virtual law library
Q
- And that your only are of relief is with the Supreme Court? chanrobles virtual law library
A
- Yes, your Honor.
On
the basis of the foregoing, we fined it pointless for Us to remand the record
of the herein case to the court of origin for the lower court to do no more
than impose the proper penalty. A review of the challenged order admits no
other rationale. For clarity, however, we are incorporating pertinent portions
of the findings upon which His Honor based his denial of petitioners' demurrer
to the evidence.
(Note:
The trial court's interlocutory order of denial of the demurrer to evidence and
motion to dismiss is reproduced, but for brevity's sake is herein excerpted.)
The trial court after ruling that "the prosecution has established a prima
facie case" made a general dissertation as to the world- wide interest
that the case aroused and that chanrobles
virtual law library
...
The Philippines
can unquestionably take pride in the fact that justice as it is known,
practised and accepted by highly civilized society can be attained here. This
is so because Philippine laws are based on the quintessence of civilization's
well established, undebatable, and impregnable norm of conduct, perception
sense of values, and proper upbringing which, in turn, are in recognition of
the supremacy of God's own laws.chanroblesvirtuallawlibrary
chanrobles virtual law library
In
bringing this case to the proper perspective, it is important to cite Chapter
22 of the Book of Deuteronomy in she Old Testament portion of the Bible: chanrobles virtual law library
If
you see someone's ox or sheep wandering away, don't pretend you didn't see, it;
take it back to its owner. If you don't know who the owner is, take it to your
farm and keep it there until the owner comes looking for it, and then give it
to him. The same applies to donkeys, clothings, or anything else you find. Keep
it for its owner.chanroblesvirtuallawlibrary
chanrobles virtual law library
In
analogy , the one million dollars which the Javier couple received by mistake
an amount which was nine-hundred-ninety-nine thousand dollars n excess of what
was due them, as an inanimate object but, under the circumstances upon which
the said amount found its way to them, it was akin to the movement of the ox or
sheep (made as example in the Bible) that wandered. It went to the Javier
couple, and the couple, instead of obeying the Bible's mandate to 'take it back
to its owner,' kept the excess amount to themselves. They insisted in keeping
it despite demands from the Mellon Bank to give it back.
It
added that "A predominantly Christian country, the Philippines produced
Christian legislators who lost no time in enacting laws based on the Laws of
God" and that "(I)t is not only the Christian religion that mandates
the return to its owner of anything found or given by mistake. Other great
religious Mohammedanism, Buddhism, Shintoism - espouse the virtue of honesty,
too. No wonder that the bodies of man-made laws all over the world reflect the
same God-given mandate. As Christians are fully aware of, 'The Lord hates cheating
and delights in honesty.' (Proverbs II)," and concluded as follows: chanrobles virtual law library
Considering
the wide publicity generated by the Mellon Bank case, the world is indeed
keenly waiting for the outcome. It has been very eager to find out if a foreign
bank can attain justice in a court of law in the Philippines. Filipinos, of course,
know the answer. They knew fully well that any person or any citizen of the
world can attain it here.chanroblesvirtuallawlibrary
chanrobles virtual law library
Implicit
in the Philippine's bid for beneficial foreign instrument and joint econonic
venture with Filipinos in a manner that would give the host people a just and
reasonable share of profits in the development of their own country is the
inherent capacity of its courts of law to administer justice. Beneficial
foreign investment and joint economic venture would just be relegated to dreams
if the host people are regarded as dishonest, cheaters, and deceivers and the
country's courts of law incapable of meeting out elementary justice. Indeed,
the Philippines
will just be scaring away foreign investors all those who sincerely want to
help in the development of this country - if Filipinos who steal, cheat and
deceive were not held in check and were not meted out punishments by their own
courts of law. The tourism program would collapse, too, for what foreign
visitors would visit with a people who they think, does not value the virtue of
honesty? chanrobles virtual law
library
In
the petitioners' motion for reconsideration it was pointed out that:
1. It was error to declare that a demurrer to the evidence
is not applicable to criminal cases.chanroblesvirtuallawlibrary
chanrobles virtual law library
2. It was error to deny the demurrer to the evidence on the
basis of conjectures and speculations not based on the evidence presented by
the prosecution.chanroblesvirtuallawlibrary
chanrobles virtual law library
3. The order amounts to a pre-judgment of the case which
practically declares the accused guilty as charged.
The
motion for reconsideration was, however, denied for lack of merit.chanroblesvirtuallawlibrary chanrobles virtual law library
In
the light of the foregoing and considering the right of the accused to a speedy
trial, the appellants' motion is granted, hereby treating the herein Petition
as an appeal, and hereby proceeding to decide herein case on the merits as soon
as the respective briefs and/or memorandum of the parties are in.chanroblesvirtuallawlibrary chanrobles virtual law library
A
review of the records show that on July 3, 1979, we required the court a quo to
forward within ten (10) days from notice, the records and the stenographic
notes of Criminal Case No. CC VIl-2369-PC for our consideration at the hearing
scheduled for July 10, 1979. Since record does not show any compliance, the
order is reiterated. Accordingly, the appellants are ordered to file their
memorandum in lieu of Appellant's Brief with a period of twenty (20) days from
the time basic record and transcripts are submitted and the appellees, their
Appellees' Brief within a period of twenty (20) days from receipt of
Appellants' Brief.
As
indicated above, respondent court, through the division clerk of court,
thereafter issued its admittedly "manifestly erroneous" Resolution of
October 8, 1979 declaring the case submitted for decision without any briefs or
memoranda having been filed (under the mistaken notion of the division clerk of
court that such briefs or memoranda on the merits, pursuant to respondent
court's questioned resolution considering the action before it as one of
appeal, had already been filed), leading to the filing of the present action.
The petitioner People in its petition for certiorari, prohibition and mandamus
prays that the Court annul the two resolutions in question, prohibit respondent
court from deciding the criminal case as if it were already an appeal and
command said court to remand the case to the trial court for promulgation of
judgment. As further prayed for, the Court issued on October 15, 1979 its temporary
restraining order enjoining respondent court from enforcing its challenged
resolutions of September 18, 1979 and October 8, 1979, and from further
proceeding with the case before it.chanroblesvirtuallawlibrary
chanrobles virtual law library
The
Court finds the petition to be well taken, by virtue of the following
considerations in amplification of those outlined hereinabove.chanroblesvirtuallawlibrary chanrobles virtual law library
1.
The only question submitted to the respondent court in the certiorari petition
filed by denying their demurrer to evidence and motion to dismiss - which was
filed therein in aid of its appellate jurisdiction. 2 Such a
petition was doomed to failure in view of the long settled rule that certiorari
does not lie to challenge the trial court's interlocutory order finding in the
exercise of its sound judgment and discretion that the prosecution's evidence
has established a prima facie case and denying the accused's motion to fiss
since as reaffirmed in Joseph vs. Villaluz, 3 (which
controlling case was expressly noted by respondent court in the course of the
hearing of July 10, 1979) that the appellate courts cannot and will not review
in such special civil actions the prosecution's evidence and decide here and
now in advance that it has or has not established beyond reasonable doubt the
guilt of the accused and hence "this Court will not annul an interlocutory
order denying a motion to dismiss a criminal case. Appeal is the proper remedy
of the [accused] in order to have the findings of fact of the respondent judge
reviewed by a superior court." Such special civil actions questioning the
trial court's interlocutory order denying the accused's motion to dismiss the
criminal case by way of demurrer to evidence, should be given short shrift
since the orderly procedure prescribed by the Rules of Court is for the accused
to present their evidence after which the trial court, on its evaluation of the
evidence submitted by both the prosecution and the defense, may then properly
render its judgment of conviction or acquittal.chanroblesvirtuallawlibrary chanrobles virtual law library
2.
Respondents-accused's move at the hearing of July 10, 1979 waiving their right
to present evidence and praying that respondent court unprecedentedly consider
the trial court's interlocutory denial of the motion to dismiss as a
"judgment of conviction" and convert their certiorari action to one
of appeal from such "judgment" could not confer any jurisdiction or
authority upon respondent court to do so. The moment the accused waived their
right to present evidence and accepted the interlocutory order of denial as a
verdict of conviction, thereby conceding the futility of their petition, its
appellate jurisdiction ceased. The petition was filed with it in aid of its
appellate jurisdiction and an it could do was to dismiss the petition
accordingly for the trial court to render judgment imposing the corresponding
penalty. At the hearing of July 10, 1979, Justice Paras had in his
interpolation of the accused's counsel correctly brought this out, as per the
transcript of the hearing submitted by respondent court with its comment, as
follows: chanrobles virtual law
library
MR.
JUSTICE EDGARDO L. PARAS:
chanrobles virtual law library
Now,
in such a case has there been any penalty imposed by the court a quo? Now, if
there is no penalty it will be very difficult for this court to affirm or to
deny it since there is no penalty imposed as yet.chanroblesvirtuallawlibrary chanrobles virtual law library
ATTY.
BALGOS: chanrobles virtual law
library
I
submit to the pronouncement of the Honorable Justice. ... Inasmuch as Judge
Villaluz has already said that under the bible and to help the tourism program
of the government and to aid the economic program of the government these people
must be convicted. Why do we have to go back to Judge Villaluz and then just
come up here again? We might as well resolve the case already here before this
Honorable Court. ...chanroblesvirtuallawlibrary
chanrobles virtual law library
Mr
JUSTICE EDGARDO L. PARAS: chanrobles
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Mr.
counsel, I think the court is aware of this fact that although generally an
appeal here should be the remedy. I mean that this case cannot as yet be
appealed. It is merely interlocutory. According to you are manifesting before
us that your clients will not present evidence anymore. You said it will be a
waste of time if we remand this to the lower court. But the court below has not
yet imposed any penalty. Even assuming that it is convinced that your clients
are guilty, it has not yet imposed any particular penalty. Do you think Mr.
counsel that this court, Court of Appeals, can impose a penalty even if no such
penalty has been given by the court a quo? chanrobles virtual law library
ATTY.
BALGOS: chanrobles virtual law
library
Yes,
your Honor, I cannot find specific jurisprudence on this point ... Our penal
code provides for penalties in a situation like that. So, I sincerely believe
that this court as it is so inclined can find the accused guilty and impose
upon them the requisite penalty provided for by law. We feel that this petition
for certiorari can be considered a petition for review and you would then
resolve the questions on the merits already. 4 chanrobles virtual law library
3.
The accused's contention has been that their liability is civil and not
criminal, as per their extensive comment at bar wherein they aver that
"(J)udge Villaluz has obviously confused criminal responsibility with
civil liability to the extent that where civil liability is contested in court,
there must also be criminal responsibility. This is certainly wrong and
confused. The Javiers have never denied receipt of the money, they have never
denied their civil obligation to account for and return what was not rightfully
theirs, what they have contested was the attitude of the Mellon Bank
representatives and their unreasonable demand for the immediate reimbursement
to the last cent - which is precisely the subject of a pending civil
case." 5 While the trial court did make a general dissertation
on Philippine laws being based on the Bible and the Laws of God without
specifically mentioning the particular Article on Estafa of the Revised Penal
Code under which the accused were charged, all such dissertations were but obiter
dicta, and the determinative ruling was his finding of the prosecution
having established a prima facie case with the documentary and testimonial
evidence. The pleadings of the People, both in the trial and respondent courts
in opposition to the accused's demurrer and motion to dismiss (as well as in
the case at bar) had specified Article 315, paragraph 1, sub-paragraph (a) of
the Revised Penal Code under which the accused were charged for
misappropriation and conversion to their own use and benefit of the
US$999,000.00. erroneously remitted to them but involving the duty and
obligation on their part to return the same as well as complete undisputed
details of the accused's massive withdrawals and disbursements of US$975,000.00
- in eleven days from their receipt of the US$1,000,000.00 bank remittance,
complete with citations of authorities and jurisprudence. 6
The lack of express factual findings in the interlocutory order goes but to
show the need of returning the case to the trial court for the rendition of
judgment and imposition oil penalty in the exercise of its original and
exclusive jurisdiction over the criminal case.chanroblesvirtuallawlibrary chanrobles virtual law library
4.
Manifestly, respondent court was bereft of jurisdiction to grant accused's
counsel's motion, supra, to by-pass the trial court and itself
"find the accused guilty and impose upon them the requisite penalty
provided by law" (with their proposal to consider the trial court's denial
order as a "judgment of conviction") and then review its own verdict
and imposition of penalty (with the conversion of the certiorari petition into
one of review on appeal).chanroblesvirtuallawlibrary chanrobles virtual law library
The
exclusive and original jurisdiction to hear the case for estafa involving the
sum of US$ 999,000.00 and pass judgment upon the evidence and render its
findings of fact and in the first instance adjudicate the guilt or non-guilt of
the accused lies with the trial court i.e. the Court of First Instance 7
concurently with the Circuit Criminal Court, as in this case. 8 chanrobles virtual law library
On
the other hand, the certiorari petition before it was filed only in aid of its
appellate jurisdiction on the narrow issue of whether the trial court committed
a grave abuse of discretion in denying the motion to dismiss the criminal case.
Such a petition merited outright dismissal, more so with the accused's motion
to consider the denial order as a verdict of conviction, as above shown.chanroblesvirtuallawlibrary chanrobles virtual law library
There
was no judgment of the trial court over which respondent court could exercise
its jurisdiction. The mandate of Article X, section 9 of the Constitution
requires that "Every decision of a court of record shall state the facts
and the law on which it is based." Rule 120, section 2 of the Rules of
Court requires further that."The judgment must be written in the official
language, personally and directly prepared by the judge and signed by him and
shall contain clearly and distinctly a statement of the facts proved or
admitted by the defendant and upon which the judgment is based. If it is of
conviction the judgment or sentence shall state (a) the legal qualification of
the offense constituted by the acts committed by the defendant, and the
aggravating or mitigating circumstances attending the commission thereof, if
there is any; (b) the participation of the defendant in the commission of the
offense, whether as principal, accomplice or accessory after the fact; (c) the
penalty imposed upon the defendant; and (d) the civil liability or damages
caused by the offended party, if there is any, unless the enforcement of the
civil liability by a separate action has been reserved." It is obvious
that the denial order was not such a judgment.chanroblesvirtuallawlibrary chanrobles virtual law library
Assuming
further that the denial order could be deemed such a "judgment of
conviction", since the facts are undisputed and based solely on the
prosecution's evidence (with the accused having waived their right to present
evidence), respondent court could not exercise appellate jurisdiction over the
"appeal", since the case would involve purely questions of law, i.e.
whether the admitted facts constitute or not the crime of estafa - which falls
within the exclusive jurisdiction of the Supreme Court to review on certiorari
under Section 17 of the Judiciary act, as amended by Republic Act No. 5440.chanroblesvirtuallawlibrary chanrobles virtual law library
5.
There is no question that as per the record of the hearing of July 10, 1979,
respondents-accused affirmed personally and through counsel that they
categorically waived their right to present their evidence in the trial of the
criminal case. Thus, Justice de la Fuente expressly asked: "You have to be
consistent. If the case is denied and returned to the court of origin, you want
to present witnesses" of their counsel, Atty. Balgos, who replied "No
more," 9 and "so that our position is this -
inasmuch as Mr. Justice de la Fuente asked whether if the petition were denied
and the case were returned to the court of origin whether we will still present
evidence. We are not presenting already." 10 Their
counsel further replied to Justice Gaviola "Precisely I asked my client to
come here today and for the record make manifest that they are not presenting
any further evidence." 11 Respondents-accused affirmed
their counsel's manifestations to respondent court as reproduced in respondent
court's September 18, 1979 Resolution quoted hereinabove, wherein they
expressed undertook that if a verdict were found against them, "they could
no longer go back to the court of origin for a new trial" and that their
"only area of relief is with the Supreme Court." Such express waiver
is binding upon them and the trial court "has no alternative but to decide
the case upon the evidence presented by the prosecution alone." 12 chanrobles virtual law library
The
Court makes this clear in the exercise of its supervisory power so that there
may be no further undue delay in this case, and the orderly procedure prescribed
by the law on jurisdiction and judgments and by the Rules of Court be duly
observed by all subordinate courts. Since the accused accepted as a judgment of
conviction the trial court's denial of their demurrer to evidence and waived
their right to present evidence, their petition for certiorari is ordered
dismissed and the case remanded to the trial court for rendition of judgment
and imposition of the corresponding penalty, as should have been done from the
beginning. And any appeal that accused may take therefrom would have to be to
this Court on a petition for review on certiorari under Republic Act No. 5440
in relation to section 17 of the Judiciary Act as amended thereby, since it
would involve the pure question of law of whether their acts make them
criminally liable for estafa or swindling, besides their accepted civil
liability for the excess bank remittance of US$999,000.00.chanroblesvirtuallawlibrary chanrobles virtual law library
ACCORDINGLY,
the petition is granted and the questioned resolutions of respondent Court of
Appeals of September 18, 1979 and October 8, 1979, are hereby annulled and see
aside, and the restraining order enjoining said respondent court from further
proceedings in Case CA-G.R. No. SP-08339 is hereby made permanent. As further
prayed for, Criminal Case No. CCC-VII 2369 P.C. against respondents-accused is
ordered remanded to the Circuit Criminal Court of the Seventh Judicial District
for prompt promulgation of judgment in accordance herewith. This decision is
immediately executory upon its promulgation.chanroblesvirtuallawlibrary chanrobles virtual law library
SO
ORDERED.
Plana,
Vasquez, Relova and Gutierrez, Jr., JJ., concur.chanroblesvirtuallawlibrary chanrobles virtual law library
Melencio-Herrera,
J., concur in the result.
Endnotes:
1 Docketed as CA-G.R. No. 08339, entitled "Melchor J.
Javier, Jr. and Victoria L. Javier vs. People of the Phil. and Hon. Onofre H.
Villaluz, etc."
2 Under Rule 65, Section 4 of the Rules of Court.chanrobles virtual law library
3 89 SCRA 324 (April 10, 1979), citing Manalo vs. Mariano,
69 SCRA 80 (1976). See also to same effect: U.S.
vs. Romero, 22 Phil. 565 (1912); U.S.
vs. de la Cruz, 28 Phil. 279 (1914); and U.S. vs. Choa Chick, 36 Phil. 831
(l9l7).chanrobles virtual law library
4 Transcript of hearing of July 10, 1979, Annex B of
respondent court's Comment; Record, pp. 313-314.chanrobles virtual law library
5 Record, p. 254.chanrobles
virtual law library
6 Record, pp. 12, et seq., 92, p. 353-365, Record, cit. U.S.
vs- Yap, 34 Phil. 102.chanrobles
virtual law library
7 Section 17, Judiciary Act in conjunction with Article 315,
Revised Penal Code. The cited statutes read: "Section 44. Original
jurisdiction. - Courts of First Instance shall have original jurisdiction:
"... (f) In all criminal cases in which the penalty
provided by law is imprisonment for more than six months, or a fine of more
than two hundred pesos; ...'"
Art. 315. Swindling (estafa). - Any person who shall defraud
another by way of the means mentioned hereinbelow shall by punished by:
First. The penalty of prision correccional in its maximum
period to prision mayor in its minimum period, if the amount of the fraud is
over 12,000 pesos but does not exceed 22,000 pesos, and if such amount exceeds
the latter sum, the penalty provided in this paragraph shall be imposed in its
maximum period, adding one year for each additional 10,000 pesos; but the total
penalty which may be imposed shall not exceed twenty years. In such cases, and
in connection with the accessory penalties which may be imposed and for the
purpose of the other provisions of this Code, the penalty shall be termed
prision mayor or reclusion temporal, as the case may be.chanrobles virtual law library
8 Rep. Act 5179 section 1.chanrobles virtual law library
9 Transcript of hearing, p. 4, Rec., p. 307.chanrobles virtual law library
10 Idem, p. 5, Rec., p. 308.chanrobles virtual law library
11 Idem, pp. 8-9, Rec., pp. 311-312.chanrobles virtual law library
12 Abriol v. Homeres, 84 Phil. 525 (1949).
Filipino
Couple Must Serve 20-Year Jail Term for Fraud
February 03, 1985|United Press International
MANILA, Philippines
— The Supreme Court has affirmed a 20-year sentence on fraud charges against a
Filipino couple who became instant millionaires after a U.S. bank made an erroneous
remittance in 1977, officials said Friday.
In
upholding a criminal court's decision in 1983, the high tribunal threw out the
argument of Melchor and Victoria Javier that they accepted the money in good
faith.
The
Supreme Court, in its decision Thursday, ordered the immediate arrest and
imprisonment of the couple.
The
case stemmed from a $1,000 remittance to Manila
by Victoria Javier's relative, Jose Ventosa, on May 27, 1977, through the First
National Bank of Moundsville, W. Va.
The
Moundsville bank sent the money via the Mellon Bank, which made the error and
transmitted a check for $1 million.
The
error was discovered on June 13, 1977. The Javiers by then claimed that they
had spent the money.
Republic
of the Philippines
SUPREME COURT
Manila
SUPREME COURT
Manila
SECOND
DIVISION
G.R.
No. 78953 July 31, 1991
COMMISSIONER
OF INTERNAL REVENUE, Petitioner, vs. MELCHOR J. JAVIER, JR. and
THE COURT OF TAX APPEALS, Respondents.
SARMIENTO,
J.:
Central
in this controversy is the issue as to whether or not a taxpayer who merely
states as a footnote in his income tax return that a sum of money that he
erroneously received and already spent is the subject of a pending litigation
and there did not declare it as income is liable to pay the 50% penalty for
filing a fraudulent return.chanroblesvirtuallawlibrary chanrobles virtual law library
This
question is the subject of the petition for review before the Court of the
portion of the Decision 1 dated July 27, 1983 of the Court of
Tax Appeals (CTA) in C.T.A. Case No. 3393, entitled, "Melchor J. Javier,
Jr. vs. Ruben B. Ancheta, in his capacity as Commissioner of Internal
Revenue," which orders the deletion of the 50% surcharge from Javier's
deficiency income tax assessment on his income for 1977.chanroblesvirtuallawlibrary chanrobles virtual law library
The
respondent CTA in a Resolution 2 dated May 25, 1987, denied the
Commissioner's Motion for Reconsideration 3 and Motion for
New Trial 4 on the deletion of the 50% surcharge assessment
or imposition.chanroblesvirtuallawlibrary chanrobles virtual law library
The
pertinent facts as are accurately stated in the petition of private respondent
Javier in the CTA and incorporated in the assailed decision now under review,
read as follows:
xxx xxx xxx
chanrobles virtual law library
2. That on or about June 3, 1977, Victoria L. Javier, the
wife of the petitioner (private respondent herein), received from the
Prudential Bank and Trust Company in Pasay City the amount of US$999,973.70
remitted by her sister, Mrs. Dolores Ventosa, through some banks in the United
States, among which is Mellon Bank, N.A.chanroblesvirtuallawlibrary chanrobles virtual law library
3. That on or about June 29, 1977, Mellon Bank, N.A. filed a
complaint with the Court of First Instance of Rizal (now Regional Trial Court),
(docketed as Civil Case No. 26899), against the petitioner (private respondent
herein), his wife and other defendants, claiming that its remittance of
US$1,000,000.00 was a clerical error and should have been US$1,000.00 only, and
praying that the excess amount of US$999,000.00 be returned on the ground that
the defendants are trustees of an implied trust for the benefit of Mellon Bank
with the clear, immediate, and continuing duty to return the said amount from
the moment it was received.chanroblesvirtuallawlibrary chanrobles virtual law library
4. That on or about November 5, 1977, the City Fiscal of
Pasay City filed an Information with the then Circuit Criminal Court (docketed
as CCC-VII-3369-P.C.) charging the petitioner (private respondent herein) and
his wife with the crime of estafa, alleging that they misappropriated,
misapplied, and converted to their own personal use and benefit the amount of
US$999,000.00 which they received under an implied trust for the benefit of
Mellon Bank and as a result of the mistake in the remittance by the latter.chanroblesvirtuallawlibrary chanrobles virtual law library
5. That on March 15, 1978, the petitioner (private
respondent herein) filed his Income Tax Return for the taxable year 1977
showing a gross income of P53,053.38 and a net income of P48,053.88 and stating
in the footnote of the return that "Taxpayer was recipient of some money
received from abroad which he presumed to be a gift but turned out to be an
error and is now subject of litigation." chanrobles virtual law library
6. That on or before December 15, 1980, the petitioner
(private respondent herein) received a letter from the acting Commissioner of
Internal Revenue dated November 14, 1980, together with income assessment
notices for the years 1976 and 1977, demanding that petitioner (private
respondent herein) pay on or before December 15, 1980 the amount of P1,615.96
and P9,287,297.51 as deficiency assessments for the years 1976 and 1977
respectively. . . .chanroblesvirtuallawlibrary chanrobles virtual law library
7. That on December 15, 1980, the petitioner (private
respondent herein) wrote the Bureau of Internal Revenue that he was paying the
deficiency income assessment for the year 1976 but denying that he had any
undeclared income for the year 1977 and requested that the assessment for 1977
be made to await final court decision on the case filed against him for filing
an allegedly fraudulent return. . . .chanroblesvirtuallawlibrary chanrobles virtual law library
8. That on November 11, 1981, the petitioner (private
respondent herein) received from Acting Commissioner of Internal Revenue Romulo
Villa a letter dated October 8, 1981 stating in reply to his December 15, 1980
letter-protest that "the amount of Mellon Bank's erroneous remittance
which you were able to dispose, is definitely taxable." . . . 5 chanrobles virtual law library
The
Commissioner also imposed a 50% fraud penalty against Javier.chanroblesvirtuallawlibrary chanrobles virtual law library
Disagreeing,
Javier filed an appeal 6 before the respondent Court of Tax
Appeals on December 10, 1981.chanroblesvirtuallawlibrary chanrobles virtual law library
The
respondent CTA, after the proper proceedings, rendered the challenged decision.
We quote the concluding portion:
We note that in the deficiency income tax assessment under
consideration, respondent (petitioner here) further requested petitioner
(private respondent here) to pay 50% surcharge as provided for in Section 72 of
the Tax Code, in addition to the deficiency income tax of P4,888,615.00 and
interest due thereon. Since petitioner (private respondent) filed his income tax
return for taxable year 1977, the 50% surcharge was imposed, in all
probability, by respondent (petitioner) because he considered the return filed
false or fraudulent. This additional requirement, to our mind, is much less
called for because petitioner (private respondent), as stated earlier,
reflected in as 1977 return as footnote that "Taxpayer was recipient of
some money received from abroad which he presumed to be gift but turned out to
be an error and is now subject of litigation."
chanrobles virtual law library
From this, it can hardly be said that there was actual and
intentional fraud, consisting of deception willfully and deliberately done or
resorted to by petitioner (private respondent) in order to induce the
Government to give up some legal right, or the latter, due to a false return,
was placed at a disadvantage so as to prevent its lawful agents from proper
assessment of tax liabilities. (Aznar vs. Court of Tax Appeals, L-20569, August
23, 1974, 56 (sic) SCRA 519), because petitioner literally "laid
his cards on the table" for respondent to examine. Error or mistake of
fact or law is not fraud. (Insular Lumber vs. Collector, L-7100, April 28,
1956.). Besides, Section 29 is not too plain and simple to understand. Since
the question involved in this case is of first impression in this jurisdiction,
under the circumstances, the 50% surcharge imposed in the deficiency assessment
should be deleted. 7
chanrobles virtual law library
The
Commissioner of Internal Revenue, not satisfied with the respondent CTA's
ruling, elevated the matter to us, by the present petition, raising the main
issue as to: chanrobles virtual law
library
WHETHER
OR NOT PRIVATE RESPONDENT IS LIABLE FOR THE 50% FRAUD PENALTY? 8 chanrobles virtual law library
On
the other hand, Javier candidly stated in his Memorandum, 9
that he "did not appeal the decision which held him liable for the basic
deficiency income tax (excluding the 50% surcharge for fraud)." However,
he submitted in the same memorandum "that the issue may be raised
in the case not for the purpose of correcting or setting aside the decision
which held him liable for deficiency income tax, but only to show that there is
no basis for the imposition of the surcharge." This subsequent disavowal
therefore renders moot and academic the posturings articulated in as Comment 10
on the non-taxability of the amount he erroneously received and the bulk of
which he had already disbursed. In any event, an appeal at that time (of the
filing of the Comments) would have been already too late to be seasonable. The
petitioner, through the office of the Solicitor General, stresses that:
xxx xxx xxx
chanrobles virtual law library
The record however is not ambivalent, as the record clearly
shows that private respondent is self-convinced, and so acted, that he is the
beneficial owner, and of which reason is liable to tax. Put another way, the
studied insinuation that private respondent may not be the beneficial owner of
the money or income flowing to him as enhanced by the studied claim that the amount
is "subject of litigation" is belied by the record and clearly
exposed as a fraudulent ploy, as witness what transpired upon receipt of the
amount.chanroblesvirtuallawlibrary chanrobles virtual law library
Here, it will be noted that the excess in the amount
erroneously remitted by MELLON BANK for the amount of private respondent's wife
was $999,000.00 after opening a dollar account with Prudential Bank in the
amount of $999,993.70, private respondent and his wife, with haste and
dispatch, within a span of eleven (11) electric days, specifically from June 3
to June 14, 1977, effected a total massive withdrawal from the said dollar
account in the sum of $975,000.00 or P7,020,000.00. . . . 11
In reply, the private respondent argues:
xxx xxx xxx
chanrobles virtual law library
The petitioner contends that the private respondent
committed fraud by not declaring the "mistaken remittance" in his
income tax return and by merely making a footnote thereon which read:
"Taxpayer was the recipient of some money from abroad which he presumed to
be a gift but turned out to be an error and is now subject of litigation."
It is respectfully submitted that the said return was not fraudulent. The
footnote was practically an invitation to the petitioner to make an investigation,
and to make the proper assessment.chanroblesvirtuallawlibrary chanrobles virtual law library
The rule in fraud cases is that the proof "must be
clear and convincing" (Griffiths v. Comm., 50 F [2d] 782), that is, it
must be stronger than the "mere preponderance of evidence" which
would be sufficient to sustain a judgment on the issue of correctness of the
deficiency itself apart from the fraud penalty. (Frank A. Neddas, 40 BTA 672).
The following circumstances attendant to the case at bar show that in filing
the questioned return, the private respondent was guided, not by that
"willful and deliberate intent to prevent the Government from making a
proper assessment" which constitute fraud, but by an honest doubt as to
whether or not the "mistaken remittance" was subject to tax.chanroblesvirtuallawlibrary chanrobles virtual law library
First, this Honorable Court will take judicial notice of the
fact that so-called "million dollar case" was given very, very wide
publicity by media; and only one who is not in his right mind would have
entertained the idea that the BIR would not make an assessment if the amount in
question was indeed subject to the income tax.chanroblesvirtuallawlibrary chanrobles virtual law library
Second, as the respondent Court ruled, "the question
involved in this case is of first impression in this jurisdiction" (See
p. 15 of Annex "A" of the Petition). Even in the United States, the
authorities are not unanimous in holding that similar receipts are subject to
the income tax. It should be noted that the decision in the Rutkin case is a
five-to-four decision; and in the very case before this Honorable Court, one
out of three Judges of the respondent Court was of the opinion that the amount
in question is not taxable. Thus, even without the footnote, the failure to
declare the "mistaken remittance" is not fraudulent.chanroblesvirtuallawlibrary chanrobles virtual law library
Third, when the private respondent filed his income tax
return on March 15, 1978 he was being sued by the Mellon Bank for the return of
the money, and was being prosecuted by the Government for estafa committed
allegedly by his failure to return the money and by converting it to his
personal benefit. The basic tax amounted to P4,899,377.00 (See p. 6 of
the Petition) and could not have been paid without using part of the mistaken
remittance. Thus, it was not unreasonable for the private respondent to simply
state in his income tax return that the amount received was still under
litigation. If he had paid the tax, would that not constitute estafa for using
the funds for his own personal benefit? and would the Government refund it to
him if the courts ordered him to refund the money to the Mellon Bank? 12
xxx xxx xxx
Under
the then Section 72 of the Tax Code (now Section 248 of the 1988 National
Internal Revenue Code), a taxpayer who files a false return is liable to pay
the fraud penalty of 50% of the tax due from him or of the deficiency tax in
case payment has been made on the basis of the return filed before the
discovery of the falsity or fraud.chanroblesvirtuallawlibrary chanrobles virtual law library
We
are persuaded considerably by the private respondent's contention that there is
no fraud in the filing of the return and agree fully with the Court of Tax
Appeals' interpretation of Javier's notation on his income tax return filed on
March 15, 1978 thus: "Taxpayer was the recipient of some money from abroad
which he presumed to be a gift but turned out to be an error and is now subject
of litigation that it was an "error or mistake of fact or law" not
constituting fraud, that such notation was practically an invitation for
investigation and that Javier had literally "laid his cards on the
table." 13 chanrobles
virtual law library
In
Aznar v. Court of Tax Appeals, 14 fraud in relation
to the filing of income tax return was discussed in this manner:
. . . The fraud contemplated by law is actual and not
constructive. It must be intentional fraud, consisting of deception willfully
and deliberately done or resorted to in order to induce another to give up some
legal right. Negligence, whether slight or gross, is not equivalent to the
fraud with intent to evade the tax contemplated by law. It must amount to
intentional wrong-doing with the sole object of avoiding the tax. It necessarily
follows that a mere mistake cannot be considered as fraudulent intent, and if
both petitioner and respondent Commissioner of Internal Revenue committed
mistakes in making entries in the returns and in the assessment, respectively,
under the inventory method of determining tax liability, it would be unfair to
treat the mistakes of the petitioner as tainted with fraud and those of the
respondent as made in good faith.
Fraud
is never imputed and the courts never sustain findings of fraud upon
circumstances which, at most, create only suspicion and the mere understatement
of a tax is not itself proof of fraud for the purpose of tax evasion. 15
A "fraudulent return" is always an attempt to
evade a tax, but a merely "false return" may not be, Rick v. U.S., App.
D.C., 161 F. 2d 897, 898. 16 chanrobles virtual law library
In
the case at bar, there was no actual and intentional fraud through willful and
deliberate misleading of the government agency concerned, the Bureau of
Internal Revenue, headed by the herein petitioner. The government was not
induced to give up some legal right and place itself at a disadvantage so as to
prevent its lawful agents from proper assessment of tax liabilities because
Javier did not conceal anything. Error or mistake of law is not fraud. The
petitioner's zealousness to collect taxes from the unearned windfall to Javier
is highly commendable. Unfortunately, the imposition of the fraud penalty in
this case is not justified by the extant facts. Javier may be guilty of
swindling charges, perhaps even for greed by spending most of the money he
received, but the records lack a clear showing of fraud committed because he
did not conceal the fact that he had received an amount of money although it
was a "subject of litigation." As ruled by respondent Court of Tax
Appeals, the 50% surcharge imposed as fraud penalty by the petitioner against
the private respondent in the deficiency assessment should be deleted.chanroblesvirtuallawlibrary chanrobles virtual law library
WHEREFORE,
the petition is DENIED and the decision appealed from the Court of Tax Appeals
is AFFIRMED. No costs.chanroblesvirtuallawlibrary chanrobles virtual law library
SO
ORDERED.
Melencio-Herrera,
Padilla and Regalado, JJ., concur.chanroblesvirtuallawlibrary chanrobles virtual law library
Paras,
J., took no part.
* Designated
additional member per Special Order No. 807.
** Designated
additional member per Special Order No. 776.
[2][2]Rollo , pp. 30-38. Penned by Associate
Justice Rosmari D. Carandang, with Associate Justices Conrado M. Vasquez, Jr.
and Mercedes Gozo-Dadole, concurring.
[3][3]Id. at 57.
Penned by Associate Justice Rosmari D. Carandang with Associate Justices
Conrado M. Vasquez, Jr. and Mercedes Gozo-Dadole, concurring.
[4][4]Id. at 58-62.
Penned by RTC Judge Mario Guariña III.
[15][15]Presidential Decree No. 1869, Consolidating
and Amending Presidential Decree Nos. 1067-A, 1067-B, 1067-C, 1399 and 1632
Relative to the Franchise and Powers of the Philippine Amusement and Gaming
Corporation (PAGCOR). Took effect on 11 July 1983.
[26][26]Art. 1883. If an agent acts in his own name,
the principal has no right of action against the persons with whom the agent
has contracted, neither have such persons against the principal.
In such case, the agent is the one
directly bound in favor of the person with whom he has contracted, as if the
transaction were his own, except when the contract involves things belonging to
the principal.
The provisions of this article shall be
understood to be without prejudice to the actions between the principal and
agent.
[27][27]Rollo, p. 35.
[30][30]Art. 2152. The officious manager is
personally liable for contracts which he has entered into with third persons,
even though he acted in the name of the owner, and there shall be no right of
action between the owner and third persons. These provisions shall not apply:
(1)
If the owner has expressly or tacitly ratified the management, or
(2)
When the contract refers to things pertaining to the owner of the business.
[36][36]People v. Punto, 68 Phil. 481, 482
(1939).
[38][38]Gambling and
Illegal Lottery are crimes covered by Chapter One, Title VI (Crimes against
Public Morals) of the Revised Penal Code.
[42][42]Art. 2014. No action can be maintained by the
winner for the collection of what he has won in a game of chance. But any loser
in a game of chance may recover his loss from the winner, with legal interest
from the time he paid the amount lost, and subsidiarily from the operator or
manager of the gambling house.
[43][43] An Act
Further Amending Presidential Decree No. 1869, Otherwise Known as PAGCOR
Charter. Took effect on 20 June 2007.
Prior to the amendment, Section 3(h) of the PAGCOR Charter (PD 1869) reads as follows:
SEC. 3. Corporate Powers. - The Corporation
shall have the following powers and functions, among others:
x
x x
h)
to enter into, make, perform, and carry out contracts of every kind and for any
lawful purpose pertaining to the business of the Corporation, or in any manner
incident thereto, as principal, agent or otherwise, with any person, firm,
association or corporation.
[46][46] Cebu Portland Cement Co. v. Collector of
Internal Revenue, 134 Phil. 735, 740 (1968).
[47][47]De Leon, Hector S., Comments and Cases on Partnership, Agency and Trusts, 5th
edition, 1999, p. 411.
[48][48]Woodchild
Holdings, Inc. v. Roxas Electric and Construction Company, Inc., 479 Phil. 896, 914 (2004).
[49][49] Supra note 47
at 410.
[51][51]Angeles v. Philippine National Railways,
G.R. No. 150128, 31 August 2006, 500 SCRA 444, 452.
[59][59]Eurotech Industrial Technologies, Inc. v.
Cuizon, G.R. No. 167552, 23 April 2007, 521 SCRA 584, 593.
[60][60]Victorias Milling Co., Inc. v. Court of
Appeals, 389 Phil. 184, 196 (2000).
[61][61] Supra note 50
at 415.
[65][65]Art. 1409. The
following contracts are inexistent and void from the beginning:
x x x
(7) Those expressly prohibited or declared
void by law.
These
contracts cannot be ratified.
Neither can the right to set up the defense of illegality be waived.
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