1. WILLIAM LI YAO vs. COLLECTOR OF INTERNAL REVENUE, G.R. No. L-11875, Dec. 28, 1963 2. DR. LUCAS G.

ADAMSON and ADAMSON MANAGEMENT CORP. vs. CA and APAC HOLDINGS LIMITED, G.R. No. 106879, May 27, 1994 3. PRESIDENTIAL ANTI-GRAFT COMMISSION (PAGC) and THE OFFICE OF THE PRESIDENT vs. SALVADOR A. PLEYTO, G.R. No. L-17715, July 31, 1963 4. JOSE AVELINO vs. COLLECTOR OF INTERNAL REVENUE, G.R. No. 176058, March 23, 2011 5. CHIEF JUSTICE RENATO C. CORONA vs. SENATE OF THE PHILIPPINES sitting as an IMPEACHMENT COURT, BANK OF THE PHILIPPINE ISLANDS, PHILIPPINE SAVINGS BANK, ARLENE "KAKA" BAG-AO, GIORGIDI AGGABAO, MARILYN PRIMICIAS-AGABAS, NIEL TUPAS, RODOLFO FARINAS, SHERWIN TUGNA, RAUL DAZA, ELPIDIO BARZAGA, REYNALDO UMALI, NERI COLMENARES (ALSO KNOWN AS THE PROSECUTORS FROM THE HOUSE OF REPRESENTATIVES), G.R. No. 200242, July 17, 2012 6. PCIB vs. VENICIO ESCOLIN, Presiding Judge of the CFI Iloilo, Branch II, and AVELINA A. MAGNO, G.R. Nos. L27860 and L-27896 March 29, 1974 / TESTATE ESTATE OF THE LATE LINNIE JANE HODGES vs. LORENZO CARLES, et. al., G.R. Nos. L-27936 & L-27937 March 29, 1974 7. OCA vs. JUDGE UYAG P. USMAN, Judge, Shari'a Circuit Court, Pagadian City, A.M. No. SCC-08-12, October 19, 2011 (Formerly OCA I.P.I. No. 08-29-SCC) 8. BRIGIDO B. QUIAO vs. RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, rep by their mother RITA QUIAO, G.R. No 176556, July 4, 2012 9. WONDER BOOK CORP. vs. PHIL. BANK OF COMMUNICATIONS, G.R. No. 187316, July 16, 2012 10. FERDINAND R. MARCOS, JR. vs. REPUBLIC rep. by the PCGG, G.R. No. 189434, April 25, 2012 IMELDA ROMUALDEZ-MARCOS vs. REPUBLIC, G.R. No. 189505 11. COLLECTOR OF INTERNAL REVENUE vs. DOUGLAS FISHER AND BETTINA FISHER, CA, G.R. No. L-11622, January 28, 1961 / DOUGLAS FISHER AND BETTINA FISHER vs. COLLECTOR OF INTERNAL REVENUE, and the CA, G.R. No. L-11668, January 28, 1961 12. SAMHWA COMPANY LTD., and LOTUS EXPORTS SPECIALISTS, INC. vs. IAC, LOUIS SHEFF and HERSCHELL SWIRYN, G.R. No. 74305, January 31, 1992 13. COMMISSIONER OF INTERNAL REVENUE vs. CA, R.O.H. AUTO PRODUCTS PHILIPPINES, INC. and CTA, G.R. No. 108358, January 20, 1995 14. TOMAS CALASANZ, ET AL. vs. COMM. INTERNAL REVENUE & CTA, G.R. No. L-26284, 10-8-86 15. HEIRS OF TAN ENG KEE vs. CA and BENGUET LUMBER COMPANY, G.R. No. 126881, Oct 3, 2000 WILLIAM LI YAO vs. COLLECTOR OF INTERNAL REVENUE, G.R. No. L-11875, December 28, 1963 LABRADOR, J.: This is a petition filed by William Li Yao for the review of a decision of the Court of Tax Appeals in C.T.A. Case No. 30, entitled "William Li Yao, petitioner, vs. Collector of Internal Revenue, respondent." The record discloses that petitioner is a naturalized Filipino of Chinese parents, the eldest son of a prosperous local businessman by the name of Li Chay Too, who died sometime in 1948. In 1945 petitioner organized the Li Yao and Company and made himself managing partner; from 1948 to February 1955 he was president of, and owned shares in, the Li Chay Too and Sons, Inc.; and in 1950 he organized a corporation known as the Far East Realty and Investment Co. (known as FERIN for short) of which he was also stockholder and president. Petitioner filed his income tax returns for the years 1945 to 1951, paying the following taxes: YEAR 1945 1946 1947 1948 1949 1950 1951 AMOUNT OF TAX P 918.31 1,393.42 5,923.57 700.34 538.07 3,837.00 2,971.00

In 1948 a verification of his income tax returns for the years 1945 to 1947 was made and a deficiency income tax in the amount of P5,470.98 was assessed against him, which he paid. In 1952 the Collector of Internal Revenue, believing that petitioner had not reported his true incomes for the previous years, appointed a team to examine his books, on July 30, 1952 an additional assessment of P898,794.02 was made against him for the years 1945 to 1951, inclusive. A second team of investigators was appointed on June 30, 1953 this team recommended a deficiency income tax assessment of P2,722,030.33. This team employed what is known as the net worth or inventory method. A third team was appointed, headed by BIR Examiner Quesada. This team recommended an assessment of P1,505,768.54 against petitioner; the inventory method was also used in making this assessment. Demand was made for the collection of said assessment on August 10, 1954, so petitioner herein presented a petition with the Court of Tax Appeal for the review of the said assessment. After hearing the Court of Tax Appeals, after revising the various items contained in the assessment of BIR Examiner Quesada, made various findings of fact on the issues presented by the parties and thereafter rendered a decision in which it found that the amount of the income tax deficiency due from petitioner P424,536.77. The resume of the assessment made in the decision of the Court of Tax Appeals is as follows: 1945 Assets admitted by parties Add assets established at trial: P 41,538.50 143,910.89

Funds held in trust by father, Li Chay Too Net Worth as of December 31, 1945 Less Net Worth as of January 1, 1945: Assets admitted by Parties Add assets proven at trial Funds held in trust by father, Li Chay Too Increase in net worth in 1945 Add non-deductible expenditures: Personal living and family expenses Less personal exemptions Amount subject to tax Tax due thereon Less tax already paid No deficiency tax due 1946 Assets admitted by both parties Add assets established at trial: cash funds from loans Total assets Liabilities established at trial Net worth as of December 31, 1946 Less net worth as of Jan. 1, 1946 Decrease in net worth in 1946 Add non-deductible expenditures: Personal living and family expenses Income tax paid in previous year Net loss

P P

185,449.39 500.00 159,910.89 160,410.89 25,038.50 3,500.00 28,538.50 3,500.00 25,038.50 1,082.31 1,111.74

(29.43) =================

P P

148,326.77 90,032.43 238,359.20 100,000.00 185,449.39

(P

47,090.19) 3,500.00 918.91

(P 42,671.88) =================

1947 Assets admitted by parties Add assets established at trial: Cash funds from loans Total assets Liabilities established at trial Net worth as of December 31, 1947 Less net worth as of Jan. 1, 1947 Increase in net worth in 1947 Add: non-deductible expenditures: Personal, living and family expenses Income tax paid in previous year Net Income Less personal exemptions Amount subject to tax Tax due thereon P 3,500.00 1,393.42 29,024.19 3,500.00 25,524.19 3,795.32 P P P P P 184,453.45 78,036.52 262,489.97 100,000.00 162,489.97 138,359.20 24,130.77

Less tax already paid No deficiency tax due

10,055.78 (P ============= 6,260.46)

1948 Assets admitted by parties Add assets established at trial: Cash funds from loans Investments in Tan Pee Cu Yek Chim and Co Total assets Less liabilities established at trial Net worth as of December 31, 1948 Less net worth as of Jan. 1, 1948 Decrease in net worth in 1948 Add non-deductible expenditures: Personal, living and family expenses Income tax paid in previous year Net Income Less personal exemptions Amount subject to tax Tax due thereon Less tax already paid Deficiency tax Add: 50% surcharge Total tax due 20,000.00 11,394.55 26,223.27 3,500.00 22,723.27 3,179.11 700.00 2,478.77 1,239.38 3,718.15 ======== 176,933.76 50,384.93 30,000.00 257,318.69 100,000.00 157,318.69 2,489.97 (P 5,171.28)

1949 Assets admitted by parties Add assets established at trial: China Banking Corporation Time Deposit Investment in Tan Pee Cu Yek Chim and Co Total assets Liabilities established at trial Net worth as of December 31, 1949 Less net worth as of Jan. 1, 1949 Increase in net worth in 1949 Add non-deductible P 435,405.83

60,000.00 30,000.00 P 525,405.83 163,000.00 P 362,405.83 157,318.69 P 205,087.14

expenditures: Personal, living and family expenses Income tax paid in previous year Net Income Less personal exemptions Net income before deduction of inheritance Less inheritance Amount subject to tax Tax due thereon Less tax already paid Deficiency tax Add: 50% surcharge Total tax due 20,000.00 700.34 P 225,787.48 3,500.00 P 222,287.48 72,392.91 149,894.57 47,137.82 538.07 P 46,599.75 23,299.87 P 69,899.62 =============

1950 Assets admitted by parties P 842,273.50

Add assets established at trial: Investments in Tan Pee Cu Yek Chim and Co 30,000.00 Investments in FERIN through others 170,000.00 Race Horses Total Assets Liabilities established at trial Net worth as of Dec. 31, 1950 Less net worth as of Jan. 1, 1950 Increase in net worth in 1950 Add: non-deductible expenditures: Personal, living and family expenses Income tax paid in previous year Net Income Less personal exemptions Amount subject to tax Tax due thereon Less tax already paid Deficiency tax Add: 50% surcharge Total tax due 20,000.00 538.07 266,405.74 4,200.00 P 262,205.74 125,977.00 3,837.00 P 122,140.00 61,070.00 P 183,210.00 11,500.00 P1,053,773.50 445,500.00 608,273.50 362,405.83 P 245,867.67

============= 1951 Assets admitted by parties Add assets established at trial: Investments in Tan Pee Cu Yek Chim and Co Investments in FERIN through others Race Horses Total Assets Liabilities established at trial Net worth as of Dec. 31, 1951 Less net worth as of Jan. 1, 1951 Increase in net worth Add: non-deductible Personal, living and family expenses Income tax paid in previous year Net Income Less personal exemptions Amount subject to tax Tax due thereon Less tax already paid Deficiency tax Add: 50 % surcharge Total tax due P 1,630,658.94

30,000.00 200,000.00 11,500.00 1,872,158.94 1,040,500.00 831,658.94 608,273.50 223,385.44 20,000.00 3,839.00 P 247,222.44 4,800.00 242,422.44 P 114,777.00 2,971.00 111,806.00 55,903.00 P 167,709.00 ===========

Summary of Tax Due 1945 1946 1947 1948 1949 1950 1951 Total tax due None None None P 3,718.15 69,899.62 183,210.00 167,709.00 P 424,536.77 ===========

Petitioner Li Yao sought to reconsider the decision and the assessment, alleging that the sum of P5,470.98 paid by him as additional tax for the years 1945 to 1947 should be credited against his deficiency income taxes, so that instead of P424,536.77 this sum due should be only P411,294.12, following the decision in the case of University of Santo Tomas vs. Collector of Internal Revenue, C.T.A. Case No. 10, dated June 4, 1956, in which the doctrine of equitable recoupment was applied provided the two requirements for its applicability are met. The court approved this petition for recoupment and reduced the assessment to P411,293.80. Both petitioner and respondent appealed from the decision of the Court of Tax Appeals petitioner's appeal is within the case G.R. No. L-11875 and the respondent's appeal is case G.R. No. L-11861. This decision deals with Li Yao's appeal. Two principal questions are raised by petitioner Li Yao before Us, the first of which questions the validity of the net worth method of inventory used against him, and the second assails the Court of Tax Appeals, refusal to grant petitioner's request that the deficiency income assessed be distributed evenly over the taxable years. We will leave these questions for the present until after We have decided the appeal raised against various items of the assessment. The first issue relates to the disapproval of various items, claimed by petitioner to be his obligations, which are as follows: J. Crisostomo Chavez P100,000.00

Li Chick Eng Ong Tiao Seng Li Chiu Ka Li Tong Na Ko Chiu Seng Carlos M. Go Dee Mong @ Lim Sing Arturo Mercado Go Hoc Ong Chin TOTAL

50,000.00 20,000.00 20,000.00 20,000.00 10,000.00 10,000.00 25,000.00 10,000.00 20,000.00 P 30,000.00 P 315,000.00 ===========

The procedure adopted by the Court of Tax Appeal in passing upon the first of these alleged obligations is as follows: . . . that when a taxpayer claims he owes money to another for the purpose of reducing his tax liability, particularly the Net Worth Expenditure (Inventory) Method of investigation is employed against him, his admission (claim) must corroborated by other evidence independent of the admission itself. For example, the promissory note, if there be any, should be produced for the inspection of the Court and government counsel. The alleged creditor must be produced in Court to confirm the taxpayer's admission and to give government's counsel an opportunity to cross-examine him, unless he is dead, outside of the Philippines, or unable to testify for one reason or another. If the taxpayer is in business, his books as required of him by the National Internal Revenue Code should be produced showing the corresponding entry or entries of his alleged liabilities. If for one reason or another the alleged creditor is not available as a witness, his financial capacity to extend the loan should at least be established. Attacking the above procedure counsel for petitioner argues that in the inventory method the burden of proof lies with the Government; that the taxpayer completes his obligation if he furnishes the lead by presenting the evidence of the obligation, and it is thereafter incumbent the Government to follow the lead to determine if the alleged liabilities actually or really existed. We find no merit or sense in the above contention. The taxpayer has no means of proving the existence of the obligation and it is he that must produce such proof. The obligation and it is he that must produce such proof. The procedure followed by the Court of Tax Appeals is that laid down by the rules on evidence; that is, that the taxpayer who alleges thereof by preponderance of evidence. This rule is not only a legal one. In the nature of things, the obligor or taxpayer has the means of proving that the obligation does not exist or has been paid; the Government collecting the tax cannot be expected to find the evidence itself, because it is natural that the taxpayer would try to suppress such evidence as may prove that the obligation still exists. The court below ruled, in relation to the obligation or the supposed loan given by Crisostomo Chavez, as follows: Although this loan is evidenced by a duplicate promissory note, Exhibit JJJJ, we find the explanation of petitioner regarding the reproduction of the original note marked Exhibit 55-A from which Exhibit JJJJ was taken, to be highly fantastic. This alleged creditor was seen by the Court on several occasions loitering in the Court promises during the early stages of the trial of this case. However, when his turn came to testify as witness for the respondent, he could not be served with a summons. He was cited by respondent's counsel precisely to confirm or repudiate the contents of an affidavit which he executed dated July 6, 1955 denying having made such a loan. Considering the past criminal record of this alleged creditor, his failure to testify before this Court upon being cited to do so and the explanation of petitioner regarding the two controversial promissory notes Exhibits 55 and JJJJ, which we believe to be much too strained and fantastic, we cannot give credit to this alleged liability of petitioner. We agree with the court below; the supposed duplicate of the promissory note could well have been fabricated. Furthermore, the supposed creditor had denied the existence of the loan in an affidavit and the taxpayer failed to produce him in evidence. Lastly the taxpayer suppressed the evidence to show that the obligation still exists and if he did so it is because the same would be unfavorable to his claim. In connection with the loans of Ong Tiao Seng for P20,000.00, Li Chiu Ka for P20,000.00, Li Tong Na for P20,000.00, Ko Chiu Seng for P10,000.00, Carlos M. Go for P10,000.00 and Lim Siong for P25,000.00, We, also agree with the court below that as petitioner had not presented the supposed creditors to confirm the existence of the loans, and no explanation had been given for such failure to present them, the existence of these loans cannot be considered as proven. The petitioner suppressed evidence which should favor him, and his suppression of such evidence proves that said evidence would be unfavorable to him if produced. As to the other loans that had been disapproved for the same reason, we find the ruling of the court below correct. One of the items subject of the appeal is the P30,000.00 investment in the Tan Pee, Cu Yek Chim and Co., Inc. The said amount represent shares of stocks issued in the name of Li Yao, petitioner, now contending that Tan Pee transferred the shares to Li Yao in 1948, as he felt ill and was in danger of death, and that when he recovered in the year 1952 he decided to recall the shares and so requested Li Yao to endorse the certificates of stock back to him, which Li Yao did. Thereafter the shares were again placed in the name of Tan Pee. After analyzing the evidence submitted to support the claim of petitioner that Tan Pee did not intend ultimately to transfer his stocks to his son-in-law Li Yao, the court below declared that the explanation was not sufficient to refute the presumption that the transfer of said stocks was made for a valid consideration, in the ordinary course of business, so that it considered the item an unreported asset of petitioner for the years 1948 to 1951. After reading the arguments presented by petitioner and considering that the witnesses for petitioner herein are his father-in-law and his wife and their testimonies failed to convince the judges of the court below, this Court finds no potent reason why the findings of the court below that heard the evidence should be disturbed.

Another item subject of the appeal is the amount of P60,000.00 deposited with the China Banking Corporation in the name of petitioner as of the end of the year 1949. Petitioner claims that one by the name of James Li, a friend of his, came to the Philippines from Hongkong 1949 bringing with him $30,000.00 in cash which he intended to invest in the local textile business, so petitioner alleges he deposited this sum with the China Banking Corporation in his name; that the sum was withdrawn 1949 upon instruction of James Li and delivered to an emissary of the latter by the name of Chen Heng. As the supposed owner of the fund, James Li was not presented to corroborate petitioner's claim that he owned the money, nor any other circumstances proved to corroborate petitioner's explanation, the court below held that the evidence was insufficient and declared the sum as an asset of the petitioner. We also find no reason for disturbing the conclusion of fact and of law made by the court below. It is strange that no evidence of any kind was ever presented to corroborate the story that the sum belonged to petitioner's friend James Li; no written or testimonial evidence was also presented to prove that the amount, after it was withdrawn from the bank, was actually sent to the supposed owner. Counsel for petitioner contends that there is no prima faciepresumption in favor of the correctness of the assessment made by the respondent. This is true, but the question now involved is not the correctness of the assessment but whether or not the amount of P60,000.00 deposited with the China Banking Corporation belong to Li Yao, petitioner herein. There being no credible evidence presented that the said amount belongs to James Li and not to Li Yao, then the only reasonable inference is that the money must belong to petitioner. The Court of Tax Appeals therefore correctly included it among the assets of the petitioner. The next items also disallowed by the Court of Tax Appeals are the amounts of P100,000.00 each, belonging to taxpayers Vicente Duazo and Delfin Fulay. The findings of the Court of Tax Appeals on these items are as follows: Of the five, Gloria Pineda and Delfin Fulay are the two persons upon whom suspicion could rest because of their close association with petitioner. As we have said, Gloria Pineda is the private secretary and accountant of petitioner and Delfin Fulay is his driver and bodyguard. However, with respect to Gloria Pineda, who is single, her income tax returns Exhibits 58, 59, 60, 61 and 62 for 1946 to 1951, inclusive, show that she had a total net income of P25,299.50 during those years. From these returns, it is quite apparent that the investment of P25,000.00 attributed to her in 1950 which was increased to P40,000.00 in 1951 is not far beyond her reach. The relations of employer and employee between petitioner and Gloria Pineda cannot be considered, therefore, as a decisive factor in determining whether she could well afford to invest P40,000.00 in the corporation headed by her employer. The case of Delfin Fulay, who is admittedly a bodyguard and driver of petitioner, is quite different. The books of FERIN show that Delfin Fulay invested P85,000.00 in said corporation in 1950, which he increased to P100,000.00 in 1951. His income tax return for the years 1949, Exhibit 66, and his return for 1951, Exhibit 67, show that he had a total net income of only P8,500.00 during those years. Could it be possible for a mere hireling like Delfin Fulay, with such a moderate income to have invested such an enormous amount as P100,000.00 in FERIN? The investment of Fulay in FERIN is so highly disproportionate to his income, that we find it impossible to believe the investment to be his own. And if the investment did not come from his own personal funds with his meager salary as driver and bodyguard, from who else could it have come but petitioner, considering the latter's admission that he purposely saw to it that the incorporators of FERIN were his close friends and persons whom he could trust. From all appearance, the petitioner could not have chosen a person more trustworthy than Delfin Fulay the "Man Friday" entrusted with the protection of his life and limb.lawphil.net The case of Vicente Duazo who is admittedly a bodyguard and driver of petitioner's mother would seem at first blush to be entirely different from that of Delfin Fulay as far as relationship with petitioner is concerned. It appears from the evidence for the respondent that Vicente Duazo declared a net come in his return for 1948, Exhibit 63, the amount of P2,345.00; for 1949, Exhibit 64, the amount of P1,640.00 and for 1950, Exhibit 65, the amount of P3,480.00 or a total of P7,465.00. His investment in FERIN in 1950 was P85,000.00 and in 1951, it was increased to P100,000.00. It will be noted that the net income of Vicente Duazo for three years (1948, 1949, 1950) much less than that of Delfin Fulay for two years (1949, 1951). Yet, far from being just a mere coincidence, they invested P25,000.00 each in FERIN in August 25, 1950.... This striking similarity in the amounts invested at the same time, let alone the disparity in the amounts of their respective incomes, has led us to the conclusion that the investments of these two persons in said corporation came from only one source. And the evidence on record indubitably point to petitioner as the source considering his admission that after the death of his father, he was entrusted with the business affairs of his family he being the eldest son and favorite of the deceased. We find no flaw in the facts and in the conclusion arrived at that the two supposed stockholders in FERIN, Duazo and Fulay, are mere dummies and said facts an conclusion are hereby affirmed. The last item questioned by petitioner is the sum of P30,000.00 alleged to be his obligation to one Ong Chiu. To support petitioner's claim is a copy of a complaint in court against petitioner for the amount. Respondent found one Benjamin Ong Chiu, who was presented by respondent to show that he had no claim or had filed no such action at the trial that his creditor is not the one that respondent presented at the trial, but petitioner did not present the one whom he claims to be the real creditor. Assuming for the sake of argument that the one presented by respondent is not the real creditor, why did not petitioner present the supposed real creditor? If there are nine Ong Chiu's well may he have conceived of presenting a fictitious action in court in the name of one of them. The case is the same as the other cases above explained - one where petitioner has failed to present corroborative evidence, or the real creditor, to prove the existence of the debt in dispute. Failure to adduce the proof required, the petitioner' own testimony may not be held sufficient in law to prove his claim of the existence of the obligation. We next come to the question of the use of the inventory method in assessing the income taxes due from petitioner. The use of the inventory method is authorized under Section 15 of the National Internal Revenue Code (Com. Act No. 466), as amended, which authorizes the Collector of Internal Revenue to assess taxes due a taxpayer from any other available fact or evidence. If a taxpayer commits a violation of the law, hiding his income to evade payment of taxes, the Government must be permitted to resort to all evidence or sources available to determine his said income, so that the tax may be collected for public purposes. There is and there should be a presumption of regularity accorded this action of the Collector of Internal Revenue in assessing the tax on the best evidence obtainable, otherwise it would be impossible to assess taxes due from a dishonest taxpayer. This form of assessment has also been adopted by the Collector of Internal Revenue with the approval of this Court in three cases, Perez vs. Collector, G.R. No. L-10507, May 30, 1958; Collector vs. Reyes, G.R. Nos. L-115534 and L-11558, Nov. 25, 1958; and Avelino vs. Collector, No. L-17715, July 31, 1963. In the case at bar the existence of assets or properties appearing in the name of the taxpayer or in the name of his dummies or friends, without the taxpayer being able to give a definite reasonable explanation for their existence, justifies the Court of Tax Appeals and this Court to resort to the inventory method of assessment, such being necessary and at the same time just and equitable.

The last important legal question raised is petitioner's claim that the unreported incomes which appeared during the last years of the period of assessment should not be considered as having been earned during the years in which said incomes appeared but should be spread throughout the whole period covered by the assessment, that is, from 1945 to 1951. As authority for this claim the case of U.S. v. Ridley, 120 Fed. Supp. 530 is cited. In the said case Claude Ridley was assessed for the years through 1951, including taxes, penalties and interests amounting to $106,674.37. The spouses Claude Ridley were a frugal couple, living in a small farm in which they resided and kept a small store. No records were kept of the amount of income earned and of the business transactions entered into from time to time, and it was possible to determine accurately not only the amount of income received by Claude Ridley, but also to determine accurately the years in which such income was received. The purchases and expenditures made by the spouses appeared through the years 1937 to 1951, without any specific amount for any particular year. The District Court held that inasmuch as the oral testimony as well as the oral circumstances indicate that the investment purchases were made from accumulated savings rather than from current income and there being no evidence to indicate greater income in one year than in another, the income should be distributed evenly through the years 1937 to 1951, inclusive. The above decision does not sustain the argument adduced by counsel for petitioner. The facts found in the case at bar do not justify the petitioner's claim. Petitioner does not claim that the amounts appearing in the last period of the assessment were acquired through savings or accumulated savings or accumulated savings or any slow and continuous process, such that the incomes cannot be distributed to any particular year of the period of assessment. On the other hand, Section 39 of the National Internal Revenue Code requires the taxpayer to report yearly to the Collector of Internal Revenue the income that he gets during the year from whatever source and include the same in the taxable year in which the income was received by him. It is to be presumed that the income was earned at the time that it appeared in the possession or control of the taxpayer, in accordance with the rule that the law has been followed. [Rule 123, Section 69 (q), Rules of Court] Were we to sanction the use of the spreading method claimed, We would be tolerating a violation of the law or rule that the taxpayer must report his income in the year it was earned. Under the practice advocated, a taxpayer would be encouraged to hide his income because in any case, if his unreported income would be discovered afterwards the said income, although appearing in one year, would be distributed over a period of years. In other words, we will have a rule, as advocated by petitioner's counsel, that would be discourage the hiding of taxable income because any discovery of any unreported income could always be allowed to be distributed over a period of years. In the case at bar, the distribution over a period of years demanded by petitioner would bring about a reduction of the tax assessed by the Court of Tax Appeals from P424,536.77 to P232,416.59 (see computation attached to Motion for Reconsideration, Annex K of Petition for Review), or about one-half of the assessment made by the Court of Appeals. We are not prepared to permit such unauthorized reduction in public taxes favorable to a dishonest taxpayer and prejudicial to the interests of the State. WHEREFORE, finding no merit in the various supposed errors attributed to the Court of Tax Appeals in its decision, We hereby find that the decision is justified by law and the evidence. Wherefore, the decision appealed from is hereby affirmed, with costs against the petitioner. So ordered. Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur. DR. LUCAS G. ADAMSON and ADAMSON MANAGEMENT CORPORATION vs. HON. COURT OF APPEALS and APAC HOLDINGS LIMITED, G.R. No. 106879 May 27, 1994 ROMERO, J.: Before us is a petition for review on certiorari of a decision of the Court of Appeals, the dispositive portion of which is quoted hereunder: WHEREFORE, judgment is hereby rendered setting aside respondent judge's questioned order dated 23 August 1991 and confirming the subject arbitration award. Costs against private respondents. SO ORDERED. The antecedents of this case are as follows: On June 15, 1990, the parties, Adamson Management Corporation and Lucas Adamson on the one hand, and APAC Holdings Limited on the other, entered into a contract whereby the former sold 99.97% of outstanding common shares of stocks of Adamson and Adamson, Inc. to the latter for P24,384,600.00 plus the Net Asset Value (NAV) of Adamson and Adamson, Inc. as of June 19, 1990. But the parties failed to agree on a reasonable Net Asset Value. This prompted them to submit the case for arbitration in accordance with Republic Act No. 876, otherwise known as the Arbitration Law. On May 15, 1991, the Arbitration Committee rendered a decision finding the Net Asset Value of the Company to be P167,118.00 which was computed on the basis of a pro-forma balance sheet submitted by SGV and which was the difference between the total assets of the Company amounting to P65,554,258.00 (the sum of the balance sheet asset amounting to P65,413,978.00 and the increase in Cuevo appraisal amounting to P140,280.00) and total liabilities amounting to P65,387,140.00 (the difference between current liabilities and long term debt amounting to P68,356,132.00 and Tax Savings for 1987 amounting to P2,968,992). In so holding that NAV equals P167,118.00, the Arbitration Committee disregarded petitioners' argument that there was a fixed NAV amounting to P5,146,000.00 as of February 28, 1990 to which should be added the value of intangible assets (P19,116,000.00), the increment of tangible assets excluding land (P17,003,976.00), the 1987 tax savings (P2,968,992.00), and estimated net income from February 28, 1990 to June 19, 1990 (P1,500,000.00, later increased to P3,949,772.00). According to the Committee, however, the amount of P5,146,000.00 which was claimed as initial NAV by petitioners, was merely an estimate of the Company's NAV as of February 28, 1990 which was still subject to financial developments until June 19, 1990, the cut-off date. The basis for this ruling was Clause 3(B) of the Agreement which fixed the said amount; Clause 1(A) which defined NAV and provided that it should be computed in accordance with Clause 7(A); Clause 7(A) which directed the auditors to prepare in accordance with good accounting principles a balance sheet as of cut-off date which would include the goodwill and intangible assets (P19,116,000.00), the value of tangible assets excluding the land as per Cuervo appraisal, the adjustment agreed upon by the parties, and the cost of redeeming preferred shares; and Clause 5(E). Furthermore, the Committee held that the parties used the figures in the pro-forma balance sheet to arrive at the said amount of P5,146,000.00; that the same had already included the value of the intangible assets and of the Cuervo appraisal of the tangible assets so that the latter items could not be added again to what Vendor claimed to be the initial NAV; and that apart from being an estimate, the amount of P5,146,000.00 was

tentative as it was still subject to the adjustments to be made thereto to reflect subsequent financial events up to the cutoff date. In the computation of the NAV, the Committee deemed it proper to appreciate in favor of petitioners the 1987 tax savings because as of the date of the proceedings, no assessment was ever made by the BIR and the three-year prescriptive period had already expired. However, it did not consider the estimated net income for the period beginning February 28, 1990 to June 19, 1990 as part of the NAV because it found that as of June 1990, the books of the company carried a net loss of P4,678,627.00 which increased to P8,547,868.00 after the proposed adjustments were included in the computation of the NAV. The Committee pointed out that although petitioners herein contested the adjustments, they were, however, not able to prove that these were not valid, except with respect to the tax savings. Aside from deciding the amount of NAV, the Committee also held that any ambiguity in the contract should not necessarily be interpreted against herein private respondents because the parties themselves had stipulated that the draft of the agreement was submitted to petitioners for approval and that the latter even proposed changes which were eventually incorporated in the final form of the Agreement. Thereafter, APAC Holdings Ltd. filed a petition for confirmation of the arbitration award before the Regional Trial Court of Makati. Herein petitioners opposed the petition and prayed for the nullification, modification and/or correction of the same, alleging that the arbitrators committed evident partiality and grave abuse of discretion as shown by the following errors: a. In creating an entirely new contract for the parties that contradicts the essence of their agreement and results in the absurd situation where a seller incurs enormous expense to sell his property; b. In treating the provisions in the Agreement independently of one another and thereby nullifying the simple, clear and express stipulations therein; c. In interpreting the Agreement although it is couched in plain, simple and clear language, contrary to the well established principle that if the terms of a contract are clear, the literal meaning of its stipulations shall control; d. In accepting SGV's proposed adjustments, contrary to the parties' stipulation that the final adjustment items shall pertain to a specific period and subject to their agreement; and in giving full reliance on SGV report despite SGV's disclosure of its lack of independence because it acted solely to assist petitioner and its report was intended solely for petitioner's information; e. In not applying the "suppressed evidence" rule against petitioner inspite of its refusal to present the Company's income statement or any other similar report for the adjustment period; and in disregarding respondent's estimate of the net income for the period as "Adjustment" using SGV's figures and ratios; f. In not awarding damages and attorney's fee to respondents despite petitioner's bad faith in violating the contract. 1 The Regional Trial Court rendered a decision vacating the arbitration award. The dispositive portion of the decision reads as follows: WHEREFORE, the Decision/Arbitration Award in question is hereby VACATED, and APAC (herein petitioner) is hereby ordered to pay ADAMSON (herein respondents) the final NAV of Forty-seven Million One Hundred Twenty-One Thousand Four Hundred Sixty-Eight Pesos (P47,121,468.00), Philippine Currency, in accordance with the pertinent stipulations expressed in the Agreement as discussed above, plus twelve (12) percent interest on the above amount which ADAMSON should have earned had the balance of the final NAV been paid to the Escrow Agent after offset on August 2, 1990. ADAMSON's claim for moral and exemplary damages and attorney's fees are (sic) dismissed for lack of sufficient merit. SO ORDERED. 2 On appeal, the above decision was reversed and a petition for review was filed in this Court. Petitioners allege that the Court of Appeals erred and acted in excess of jurisdiction or with grave abuse of discretion in holding that: (a) the trial judge reversed the arbitration award solely on the basis of the pleadings submitted by the parties; (b) petitioners failed to substantiate with proofs their imputation of partiality to the members of the arbitration committee; (c) the nullification by the trial court of the award was not based on any of the grounds provided by law; (d) to allow the trial judge to substitute his own findings in lieu of the arbitrators' would defeat the object of arbitration which is to avoid litigation; and (e) if there really was a ground for vacating the award, it was improper for trial judge to reverse the decision because it contravened Section 25 of R.A. No. 876. Did the Court of Appeals err in affirming the arbitration award and in reversing the decision of the trial court? The Court of Appeals, in reversing the trial court's decision held that the nullification of the decision of the Arbitration Committee was not based on the grounds provided by the Arbitration Law and that ". . . private respondents [petitioners herein] have failed to substantiate with any evidence their claim of partiality. Significantly, even as respondent judge ruled against the arbitrators' award, he could not find fault with their impartiality and integrity. Evidently, the nullification of the award rendered at the case at bar was made not on the basis of any of the grounds provided by law." 3 Assailing the above conclusion, petitioners argue that ". . . evident partiality is a state of mind that need not be proved by direct evidence but may be inferred from the circumstances of the case (citations omitted). It is related to intention which is a mental process, an internal state of mind that must be judged by the person's conduct and acts which are the best index of his intention (citations omitted)." 4 They pointed out that from the following circumstances may be inferred the arbitrators' evident partiality: 1. the material difference between the results of the arbitrators' computation of the NAV and that of petitioners; 2. the alleged piecemeal interpretation by the arbitrators of the Agreement which went beyond the clear provisions of the contract and negated the obvious intention of the parties; 3. reliance by the arbitrators on the financial statements and reports submitted by SGV which, according to petitioners, acted solely for the interests of private respondents; and 4. the finding of the trial court that "the arbitration committee has advanced no valid justification to warrant a departure from the well-settled rule in contract interpretation that if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties the literal meaning of its interpretation shall control." 5 We find no reason to depart from the Court of Appeal's conclusion. Section 24 of the Arbitration Law provides as follows: Sec. 24. Grounds for vacating award. In any one of the following cases, the court must make an order vacating the award upon the petition of any party to the controversy when such party proves affirmatively that in the arbitration proceedings: (a) The award was procured by corruption, fraud or other undue means; or (b) That there was evident partiality or corruption in the arbitrators or any of them; or

(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from disclosing such disqualifications or any other misbehavior by which the rights of any party have been materially prejudiced; or (d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made. . . . Petitioners herein failed to prove their allegation of partiality on the part of the arbitrators. Proofs other than mere inferences are needed to establish evident partiality. That they were disadvantaged by the decision of the Arbitration Committee does not prove evident partiality. Too much reliance has been accorded by petitioners on the decision of the trial court. However, we find that the same is but an adaptation of the arguments of petitioners to defeat the petition for confirmation of the arbitral award in the trial court by herein private respondent. The trial court itself stated as follows: In resolving the issues in favor of respondents, the Court has no alternative but to agree with the contention of said party, as supported by their exhaustive and very convincing arguments contained in more than twenty-one (21) pages, doubledspaced, which are adopted and reproduced herein by reference. Said arguments may be CAPSULIZED as follows: The penultimate paragraph of its decision reads, thus: To allay any fear of petitioner that its reply and opposition, dated 11 June 1991, has not been taken into account in resolving this case, it will be well to state that the court has carefully read the same and, what is more, it has also read respondents' comment, dated 19 June 1991, wherein they made convincing arguments which are likewise adopted and incorporated herein by reference. 6 The justifications advanced by the trial court for vacating the arbitration award are the following: (a) ". . . that the arbitration committee had advanced no valid justification to warrant a departure from the well-settled rule in contract interpretation that if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties the literal meaning of its interpretation shall control; (b) that the final NAV of P47,121,468.00 as computed by herein petitioners was well within APAC's normal investment level which was at least US$1 million and to say that the NAV was merely P167,118.00 would negate Clause 6 of the Agreement which provided that the purchaser would deposit in escrow P5,146,000.00 to be held for two (2) years and to be used to satisfy any actual or contingent liability of the vendor under the Agreement; (c) that the provision for an escrow account negated any idea of the NAV being less than P5,146,000.00; and (d) that herein private respondent, being the drafter of the Agreement could not avoid performance of its obligations by raising ambiguity of the contract, or its failure to express the intention of the parties, or the difficulty of performing the same. It is clear therefore, that the award was vacated not because of evident partiality of the arbitrators but because the latter interpreted the contract in a way which was not favorable to herein petitioners and because it considered that herein private respondents, by submitting the controversy to arbitration, was seeking to renege on its obligations under the contract. That the award was unfavorable to petitioners herein did not prove evident partiality. That the arbitrators resorted to contract interpretation neither constituted a ground for vacating the award because under the circumstances, the same was necessary to settle the controversy between the parties regarding the amount of the NAV. In any case, this Court finds that the interpretation made by the arbitrators did not create a new contract, as alleged by herein petitioners but was a faithful application of the provisions of the Agreement. Neither was the award arbitrary for it was based on the statements prepared by the SGV which was chosen by both parties to be the "auditors." The trial court held that herein private respondent could not shirk from performing its obligations on account of the difficulty of complying with the terms of the contract. It said further that the contract may be harsh but private respondent could not excuse itself from performing its obligations on account of the ambiguity of the contract because as its drafter, private respondent was well aware of the implications of the Agreement. We note herein that during the arbitration proceedings, the parties agreed that the contract as prepared by private respondent, was submitted to petitioners for approval. Petitioners, therefore, are presumed to have studied the provisions of the Agreement and agreed to its import when they approved and signed the same. When it was submitted to arbitration to settle the issue regarding the computation of the NAV, petitioners agreed to be bound by the judgment of the arbitration committee, except in cases where the grounds for vacating the award existed. Petitioners cannot now refuse to perform its obligation after realizing that it had erred in its understanding of the Agreement. Petitioners also assailed the arbitrator's reliance upon the financial statements submitted by SGV as they allegedly served the interests of private respondents and did not reflect the true intention of the parties. We agree with the observation made by the arbitrators that SGV, being a reputable firm, it should be presumed to have prepared the statements in accordance with sound accounting principles. Petitioners have presented no proof to establish that SGV's computation was erroneous and biased. Petitioners likewise pointed out that the computation of the arbitrators leads to the absurd result of petitioners incurring great expense just to sell its properties. In arguing that the NAV could not be less than P5,146,000, petitioners quote Clause (B) of the Agreement as follows: CLAUSE 3(B) The consideration for the purchase of the Sale Shares by the Purchaser shall be equivalent to the Net Asset Value of the Company, . . . which the parties HAVE FIXED at P5,146,000.00 prior to Adjustments . . . However, such quotation is incomplete and, therefore, misleading. The full text of the above provision as quoted by the arbitration committee reads as follows: (B) The consideration for the purchase of the Sale Shares by the purchaser shall be equivalent to the Net Asset Value of the Company, without the Property, which the parties have fixed at P5,146,000 prior to Adjustments plus P24,384,600. The consideration for the sale of the Sale Shares by the Vendor, is the acquisition of the property by the Vendor, through Aloha, from the Company at historical cost plus all Taxes due on said transfer of Property, and the release of all collaterals of the Vendor securing the RSBS Credit Facility. However, in the implementation of this Agreement, the parties shall designate the amounts specified in Clause 5 as the purchaser prices in the pro-forma deeds of sale and other documents required to effect the transfers contemplated in this Agreement. Thus, petitioner cannot claim that the consideration for private respondent's acquisition of the outstanding common shares of stock was grossly inadequate. If the NAV as computed was small, the result was not due to error in the computations made by the arbitrators but due to the extent of the liabilities being borne by petitioners. During the arbitration proceedings, the committee found that petitioner has been suffering losses since 1983, a fact which was not denied by

petitioner. We cannot sustain the argument of petitioners that the amount of P5,146,000.00 was an initial NAV as of February 28, 1990 to which should still be added the value of tangible assets (excluding the land) and of intangible assets. If indeed the P5,146,000.00 was the initial NAV as of February 28, 1990, then as of said date, the total assets and liabilities of the company have already been set off against each other. NET ASSET VALUE is arrived at only after deducting TOTAL LIABILITIES from TOTAL ASSETS. "TOTAL ASSETS" includes those that are tangible and intangible. If the amount of the tangible and intangible assets would still be added to the "initial NAV," this would constitute double counting. Unless the company acquired new assets from February 28, 1990 up to June 19, 1990, no value corresponding to tangible and intangible assets may be added to the NAV. We also note that the computation by petitioners of the NAV did not reflect the liabilities of the company. The term "net asset value" indicates the amount of assets exceeding the liabilities as differentiated from total assets which include the liabilities. If petitioners were not satisfied, they could have presented their own financial statements to rebut SGV's report but this, they did not do. Lastly, in assailing the decision of the Court of Appeals, petitioners would have this Court believe that the respondent court held that the decision of the arbitrators was not subject to review by the courts. This was not the position taken by the respondent court. The Court of Appeals, in its decision stated, thus: It is settled that arbitration awards are subject to judicial review. In the recent case of Chung Fu Industries (Philippines), Inc., et. al. v. Court of Appeals, Hon Francisco X. Velez, et. al ., G. R. No. 96283, February 25, 1992, the Supreme Court categorically ruled that: It is stated expressly under Art. 2044 of the Civil Code that the finality of the arbitrators' award is not absolute and without exceptions. Where the conditions described in Articles 2038, 2039 and 2040 applicable to both compromises and arbitrations are obtaining, the arbitrators' award may be annulled or rescinded. Additionally, under Sections 24 and 25 of the Arbitration Law, there are grounds for vacating, modifying or rescinding anarbitrators' award. Thus, if and when the factual circumstances referred to in the above-cited provisions are present, judicial review of the award is properly warranted. Clearly, though recourse to the courts may be availed of by parties aggrieved by decisions or awards rendered by arbitrator/s, the extent of such is neither absolute nor all encompassing. . . . 7 It is clear then that the Court of Appeals reversed the trial court not because the latter reviewed the arbitration award involved herein, but because the respondent appellate court found that the trial court had no legal basis for vacating the award. WHEREFORE, in view of the foregoing, this petition is hereby DISMISSED and the decision of the Court of Appeals AFFIRMED. SO ORDERED. Feliciano, Bidin, Melo and Vitug, JJ., concur. PRESIDENTIAL ANTI-GRAFT COMMISSION (PAGC) and THE OFFICE OF THE PRESIDENT vs. SALVADOR A. PLEYTO, G.R. No. 176058, March 23, 2011 DECISION ABAD, J.: This case is about the dismissal of a department undersecretary for failure to declare in his Sworn Statement of Assets, Liabilities, and Net Worth (SALN) his wifes business interests and financial connections. The Facts and the Case On December 19, 2002 the Presidential Anti-Graft Commission (PAGC) received an anonymous letter-complaint 1from alleged employees of the Department of Public Works and Highways (DPWH). The letter accused DPWH Undersecretary Salvador A. Pleyto of extortion, illicit affairs, and manipulation of DPWH projects. In the course of the PAGCs investigation, Pleyto submitted his 1999, 2 2000,3 and 20014 SALNs. PAGC examined these and observed that, while Pleyto said therein that his wife was a businesswoman, he did not disclose her business interests and financial connections. Thus, on April 29, 2003 PAGC charged Pleyto before the Office of the President (OP) for violation of Section 8 of Republic Act (R.A.) 6713, 5 also known as the Code of Conduct and Ethical Standards for Public Officials and Employees" and Section 7 of R.A. 3019 6 or "The Anti-Graft and Corrupt Practices Act." 7 Pleyto claimed that he and his wife had no business interests of any kind and for this reason, he wrote "NONE" under the column "Business Interests and Financial Connections" on his 1999 SALN and left the column blank in his 2000 and 2001 SALNs.8 Further, he attributed the mistake to the fact that his SALNs were merely prepared by his wifes bookkeeper. 9 On July 10, 2003 PAGC found Pleyto guilty as charged and recommended to the OP his dismissal with forfeiture of all government financial benefits and disqualification to re-enter government service. 10 On January 29, 2004 the OP approved the recommendation. 11 From this, Pleyto filed an Urgent Motion for Reconsideration12 claiming that: 1) he should first be allowed to avail of the review and compliance procedure in Section 10 of R.A. 671313 before he is administratively charged; 2) he indicated "NONE" in the column for financial and business interests because he and his wife had no business interests related to DPWH; and 3) his failure to indicate his wifes business interests is not punishable under R.A. 3019. On March 2, 2004 PAGC filed its comment,14 contending that Pleytos reliance on the Review and Complicance Procedure was unavailing because the mechanism had not yet been established and, in any case, his SALN was a sworn statement, the contents of which were beyond the corrective guidance of the DPWH Secretary. Furthermore, his failure to declare his wife's business interests and financial connections was highly irregular and was a form of dishonesty. On March 11, 2005 Executive Secretary Eduardo R. Ermita ordered PAGC to conduct a reinvestigation of Pleytos case.15 In compliance, PAGC queried the Department of Trade and Industry of Region IIIBulacan regarding the businesses registered in the name of Miguela Pleyto, his wife. PAGC found that she operated the following businesses: 1) R.S. Pawnshop, registered since May 19, 1993; 2) M. Pleyto Piggery and Poultry Farm, registered since December 29, 1998; 3) R.S. PawnshopPulong Buhangin Branch, registered since July 24, 2000; and 4) RSP Laundry and Dry Cleaning, registered since July 24, 2001.16 The PAGC also inquired with the DPWH regarding their Review and Compliance procedure. The DPWH said that, they merely reminded their officials of the need for them to comply with R.A. 6713 by filing their SALNs on time and that they

had no mechanism for reviewing or validating the entries in the SALNs of their more than 19,000 permanent, casual and contractual employees.17 On February 21, 2006 the PAGC maintained its finding and recommendation respecting Pleyto. 18 On August 29, 2006 the OP denied Pleytos Motion for Reconsideration.19 Pleyto raised the matter to the Court of Appeals (CA), 20 which on December 29, 2006 granted Pleytos petition and permanently enjoined the PAGC and the OP from implementing their decisions.21 This prompted the latter offices to come to this Court on a petition for review. 22 Issues Presented This case presents the following issues: 1. Whether or not the CA erred in not finding Pleytos failure to indicate his spouses business interests in his SALNs a violation of Section 8 of R.A. 6713. 2. Whether or not the CA erred in finding that under the Review and Compliance Procedure, Pleyto should have first been allowed to correct the error in his SALNs before being charged for violation of R.A. 6713. The Courts Rulings This is the second time Pleytos SALNs are before this Court. The first time was in G.R. 169982, Pleyto v. Philippine National Police Criminal Investigation and Detection Group (PNP-CIDG).23 In that case, the PNP-CIDG filed on July 28, 2003 administrative charges against Pleyto with the Office of the Ombudsman for violating, among others, Section 8 of R.A. 6713 in that he failed to disclose in his 2001 and 2002 SALNs his wifes business interests and financial connections. On June 28, 2004 the Office of the Ombudsman ordered Pleyto dismissed from the service. He appealed the order to the CA but the latter dismissed his petition and the motion for reconsideration that he subsequently filed. Pleyto then assailed the CAs ruling before this Court raising, among others, the following issues: 1) whether or not Pleyto violated Section 8(a) of R.A. 6713; and 2) whether or not Pleytos reliance on the Review and Compliance Procedure in the law was unwarranted. After threshing out the other issues, this Court found that Pleytos failure to disclose his wifes business interests and financial connections constituted simple negligence, not gross misconduct or dishonesty. Thus: Neither can petitioners failure to answer the question, "Do you have any business interest and other financial connections including those of your spouse and unmarried children living in your household?" be tantamount to gross misconduct or dishonesty. On the front page of petitioners 2002 SALN, it is already clearly stated that his wife is a businesswoman, and it can be logically deduced that she had business interests. Such a statement of his wifes occupation would be inconsistent with the intention to conceal his and his wifes business interests. That petitioner and/or his wife had business interests is thus readily apparent on the face of the SALN; it is just that the missing particulars may be subject of an inquiry or investigation. An act done in good faith, which constitutes only an error of judgment and for no ulterior motives and/or purposes, does not qualify as gross misconduct, and is merely simple negligence. Thus, at most, petitioner is guilty of negligence for having failed to ascertain that his SALN was accomplished properly, accurately, and in more detail. Negligence is the omission of the diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. In the case of public officials, there is negligence when there is a breach of duty or failure to perform the obligation, and there is gross negligence when a breach of duty is flagrant and palpable. Both Section 7 of the Anti-Graft and Corrupt Practices Act and Section 8 of the Code of Conduct and Ethical Standards for Public Officials and Employees require the accomplishment and submission of a true, detailed and sworn statement of assets and liabilities. Petitioner was negligent for failing to comply with his duty to provide a detailed list of his assets and business interests in his SALN. He was also negligent in relying on the family bookkeeper/accountant to fill out his SALN and in signing the same without checking or verifying the entries therein. Petitioners negligence, though, is only simple and not gross, in the absence of bad faith or the intent to mislead or deceive on his part, and in consideration of the fact that his SALNs actually disclose the full extent of his assets and the fact that he and his wife had other business interests. Gross misconduct and dishonesty are serious charges which warrant the removal or dismissal from service of the erring public officer or employee, together with the accessory penalties, such as cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification from reemployment in government service. Hence, a finding that a public officer or employee is administratively liable for such charges must be supported by substantial evidence.24 The above concerns Pleytos 2001 and 2002 SALN; the present case, on the other hand, is about his 1999, 2000 and 2001 SALNs but his omissions are identical. While he said that his wife was a businesswoman, he also did not disclose her business interests and financial connections in his 1999, 2000 and 2001 SALNs. Since the facts and the issues in the two cases are identical, the judgment in G.R. 169982, the first case, is conclusive upon this case. There is "conclusiveness of judgment" when any right, fact, or matter in issue, directly adjudicated on the merits in a previous action by a competent court or necessarily involved in its determination, is conclusively settled by the judgment in such court and cannot again be litigated between the parties and their privies whether or not the claim, demand, purpose, or subject matter of the two actions is the same. 25 Thus, as in G.R. 169982, Pleytos failure to declare his wifes business interest and financial connections does not constitute dishonesty and grave misconduct but only simple negligence, warranting a penalty of forfeiture of the equivalent of six months of his salary from his retirement benefits. 26 With regard to the issue concerning compliance with the Review and Compliance Procedure provided in R.A. 6713, this Court already held in G.R. 169982 that such procedure cannot limit the authority of the Ombudsman to conduct administrative investigations. R.A. 6770, otherwise known as "The Ombudsman Act of 1989," intended to vest in the Office of the Ombudsman full administrative disciplinary authority. 27 Here, however, it was the PAGC and the OP, respectively, that conducted the investigation and meted out the penalty of dismissal against Pleyto. Consequently, the ruling in G.R. 169982 in this respect cannot apply. Actually, nowhere in R.A. 6713 does it say that the Review and Compliance Procedure is a prerequisite to the filing of administrative charges for false declarations or concealments in ones SALN. Thus: Section 10. Review and Compliance Procedure. - (a) The designated Committees of both Houses of the Congress shall establish procedures for the review of statements to determine whether said statements which have been submitted on time, are complete, and are in proper form. In the event a determination is made that a statement is

not so filed, the appropriate Committee shall so inform the reporting individual and direct him to take the necessary corrective action. (b) In order to carry out their responsibilities under this Act, the designated Committees of both Houses of Congress shall have the power within their respective jurisdictions, to render any opinion interpreting this Act, in writing, to persons covered by this Act, subject in each instance to the approval by affirmative vote of the majority of the particular House concerned. The individual to whom an opinion is rendered, and any other individual involved in a similar factual situation, and who, after issuance of the opinion acts in good faith in accordance with it shall not be subject to any sanction provided in this Act. (c) The heads of other offices shall perform the duties stated in subsections (a) and (b) hereof insofar as their respective offices are concerned, subject to the approval of the Secretary of Justice, in the case of the Executive Department and the Chief Justice of the Supreme Court, in the case of the Judicial Department. The provision that gives an impression that the Review and Compliance Procedure is a prerequisite to the filing of an administrative complaint is found in paragraph (b) of Section 10 which states that "The individual to whom an opinion is rendered, and any other individual involved in a similar factual situation, and who, after the issuance of the opinion acts in good faith in accordance with it shall not be subject to any sanction provided in this Act." This provision must not, however, be read in isolation. Paragraph (b) concerns the power of the Review and Compliance Committee to interpret the law governing SALNs. It authorizes the Committee to issue interpretative opinions regarding the filing of SALNs. Officers and employees affected by such opinions "as well as" all who are similarly situated may be allowed to correct their SALNs according to that opinion. What the law prohibits is merely the retroactive application of the committees opinions. In no way did the law say that a public officer clearly violating R.A. 6713 must first be notified of any concealed or false information in his SALN and allowed to correct the same before he is administratively charged. Furthermore, the only concern of the Review and Compliance Procedure, as per paragraph (a), is to determine whether the SALNs are complete and in proper form. This means that the SALN contains all the required data, i.e., the public official answered all the questions and filled in all the blanks in his SALN form. If it finds that required information has been omitted, the appropriate Committee shall so inform the official who prepared the SALN and direct him to make the necessary correction. The Court cannot accept the view that the review required of the Committee refers to the substance of what is stated in the SALN, i.e., the truth and accuracy of the answers stated in it, for the following reasons: First. Assuring the truth and accuracy of the answers in the SALN is the function of the filers oath 28 that to the best of his knowledge and information, the data he provides in it constitutes the true statements of his assets, liabilities, net worth, business interests, and financial connections, including those of his spouse and unmarried children below 18 years of age.29 Any falsity in the SALN makes him liable for falsification of public documents under Article 172 of the Revised Penal Code. Second. The law will not require the impossible, namely, that the Committee must ascertain the truth of all the information that the public officer or employee stated or failed to state in his SALNs and remind him of it. The DPWH affirms this fact in its certification below: This is to certify that this Department issues a memorandum every year reminding its officials and employees to submit their Statement of Assets and Liabilities and Networth (SALN) in compliance with R.A. 6713. Considering that it has approximately 19,000 permanent employees plus a variable number of casual and contractual employees, the Department does not have the resources to review or validate the entries in all the SALNs. Officials and employees are assumed to be accountable for the veracity of the entries considering that the SALNs are under oath.301avvphi1 Indeed, if the Committee knows the truth about the assets, liabilities, and net worth of its departments employees, there would be no need for the law to require the latter to file their sworn SALNs yearly. In this case, the PAGC succeeded in discovering the business interest of Pleytos wife only after it subpoenaed from the Department of Trade and IndustryBulacan certified copies of her business interests there. The Heads of Offices do not have the means to compel production of documents in the hands of other government agencies or third persons. The purpose of R.A. 6713 is "to promote a high standard of ethics in public service. Public officials and employees shall at all times be accountable to the people and shall discharge their duties with utmost responsibility, integrity, competence, and loyalty, act with patriotism and justice, lead modest lives, and uphold public interest over personal interest." 31 The law expects public officials to be accountable to the people in the matter of their integrity and competence. Thus, the Court cannot interpret the Review and Compliance Procedure as transferring such accountability to the Committee. WHEREFORE, the Court GRANTS the petition but finds petitioner Salvador A. Pleyto guilty only of simple negligence and imposes on him the penalty of forfeiture of the equivalent of six months of his salary from his retirement benefits. SO ORDERED. ROBERTO A. ABAD Associate Justice JOSE AVELINO vs. THE COLLECTOR OF INTERNAL REVENUE, G.R. No. L-17715, July 31, 1963 LABRADOR, J.: This is an appeal from a decision of the Court of Tax Appeals confirming substantially the assessment of Income tax deficiencies of the petitioner Jose Avelino for the years 1946, 1947 and 1948. The assessments approved by the Court of Tax Appeals for the said years are as follows: 1946 Net taxable income in 1946 Tax due on P106,223.06 P106,223.06 =========== P 29,669.22

Less tax previously assessed & paid Deficiency tax 50% surcharge Total deficiency tax & surcharge 1947 Net taxable income in 1947 Tax due on P43,504.34 Less tax previously assessed & paid Deficiency tax 50% surcharge Total deficiency tax & surcharge 1948 Net taxable income in 1948 Tax due on P38,885.81

1,472.08 P 28,197.14 14,098.57 P 42,295.71 ===========

P 43,504.34 =========== P 8,361.22 4,375.72. P 3,985.50 1,992.75 P 5,978.25 ===========

P 38,885.81 =========== P 7,090.31

Less tax previously assessed & 747.51 paid Deficiency tax 50% surcharge Total deficiency tax & surcharge SUMMARY Deficiency tax & surcharge for P 42,295.71 1946 Deficiency tax & surcharge for 5,978.25 1947 Deficiency tax & surcharge for 9,414.20 1948 GRAND TOTAL P 57,788.16 =========== P 6,342.80 3,171.40 P 9,514.20 ===========

In the brief of the petitioner various assignments of errors are made, each error raising specific questions of law and of fact. The errors will now be considered one by one, each independently of the others. I THE COURT OF TAX APPEALS ERRED IN NOT HOLDING THAT THE NET WORTH METHOD USED BY RESPONDENT IN DETERMINING PETITIONER'S TAXABLE INCOME IS WITHOUT JUSTIFIABLE BASIS It is contended under this assignment of error that there is no reasonable certainty of the amount taken as an opening net worth, there being no sufficient basis for establishing such opening net worth. Included in the opening net worth as of January 1, 1946, both according to the petitioner as well as to the Commissioner of Internal Revenue, are P700.00 and P5,500.00, representing cash in bank, PNB savings account and PNB current account, respectively. But petitioner claims that the cash on hand in the opening net worth should be, on December 31, 1945 (or January 1, 1946), not P100.00 as estimated by respondent but P47,300.00, for the reason that in an income tax return submitted by the wife of the petitioner, Mrs. Enriqueta Avelino, she made it appear that the netted a profit of P55,000.00 from her business of importation of shoes, operation of a bar, and of a restaurant, shortly after liberation. The income tax return submitted by her for the year 1946 was submitted in the year 1949 and was presented at the hearing as Exhibit "A". Petitioner asserts that his wife made a gain of P55,000.00 during the year 1946, but the supposed copy of the income tax return that she has submitted as evidence does not show how that amount had been earned. If she did actually earn that amount Exhibit "A" would have contained the details indicating the transactions in which the big sum was earned. Why none of that

amount or the greater part thereof appears to have been deposited in a bank has not been explained. Apparently the court below considered the return as a self-serving statement, and We agree that on the basis of that income tax return, without any other explanation how the gains were used or invested or deposited, there is no reason to disturb the action of the court below in giving no credence to the said alleged existence of the cash net worth existing at the beginning of the year 1946. We therefore declare that the alleged error has not been committed. II THE COURT OF TAX APPEALS, IN COMPUTING THE DEFICIENCY INCOME TAX ALLEGEDLY DUE FROM THE PETITIONER, ERRED IN NOT DEDUCTING FROM THE INCREASE IN NET WORTH OF THE PETITIONER FOR THE YEAR 1948, THE SUM OF P6,508.00 REPRESENTING ONE-HALF () OF THE CAPITAL GAIN REALIZED FROM THE SALE OF TWO PARCELS OF LAND (CAPITAL ASSETS) MADE IN 1948. The respondent denies that this error have been committed. In Annex 1, the yellow working sheet prepared by Examiner Lasquety, it is shown that the sum of P6,508.00 was deducted in the year 1948 is the taxable capital gain. This deduction was sustained by the Court below. The alleged error, therefore, is disproved by Annex I. III THE COURT OF TAX APPEALS ERRED IN DISALLOWING THE AMOUNT OF P9,816.78 AS DEPRECIATION ON RENTAL PROPERTIES IN DETERMINING THE PETITIONER'S NET WORTH FOR THE YEAR 1948. This supposed error was not committed as evidenced by an examination of Annex I, which shows that P9,816.78 was allowed as deduction for 1948 under the heading "Reserve for Depreciation, Building". IV THE COURT OF TAX APPEALS ERRED IN FAILING TO REFLECT OR TAKE UP IN 1947 THE IMPROVEMENTS VALUED AT P35,000.00. ERECTED IN 1947 IN THE QUEZON CITY LOT OF PETITIONER. This error again is disproved by Annex I, the yellow working sheet prepared by Bureau of Internal Revenue Examiner Lasquety. This working sheet was adopted by the Court of Tax Appeals and it shows that P35,000.00 alleged to have been omitted was actually taken into account in the computation of the 1947 accounts of the petitioner, as improvements on four buildings. V THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE PETITIONER AND HIS WIFE HAD INVESTMENT IN THE TALISAY LUMBER COMPANY IN THE SUM OF P20,000.00 WITHOUT CONSIDERING AN OFFSETTING LIABILITY IN THE SAME AMOUNT. Neither do we find any merit in this assignment of error. According to the evidence, the articles, of incorporation of the Talisay Lumber Company, which is under oath, petitioner and his wife invested the sums of P28,000.00 and P1,000.00 in the company. If these sums were not furnished by the petitioner but by the organizer of the company, still the total amount of P29,000.00 should be considered as a gift, or an income received by the petitioner and his wife from the said organizer of the Talisay Lumber Company, which income is liable to tax. VI THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE PETITIONER HAD INVESTMENT IN AVELINO, BAGTAS, ALZATE AND COMPANY IN THE SUM OF P5,000.00 FOR EACH OF THE YEARS 1946 TO 1950. Under this assignment of error, petitioner argues that the appearance of the said amount as having been contributed to the partnership by petitioner is no proof that that amount was petitioner's actual investment in the company. The same reasons obtaining in the case of the investment of P29,000.00 of the spouses in the Talisay Lumber Company obtain in the case of the petitioner's investment in the partnership of Avelino, Bagtas, Alzate and Company. VII THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE LOAN OF P10,000.00 FROM ROSARIO GRAY DE HAYS AND ANOTHER LOAN OF P30,000.00 FROM ANGELA M. VDA. DE BUTTE NEVER EXISTED. In support of this assignment of error, petitioner contends that he owed the sum of P10,000.00 to Rosario Gray de Hays, which amount represents one-half of the price of P20,000.00 which was the consideration for the sale of certain property described in Exhibit "C". But the original of the document shows that the amount of the consideration was P22,000.00 and the vendor was Severina de Casal, and nothing is said in the original of the document that any part of the amount under consideration has not been paid. It is also alleged in support of this error that the petitioner is indebted to Angela M. Vda. de Butte in 1948 in the sum of P30,000.00. Mrs. Butte testified that petitioner owed her the amount of P30,000.00; that the debt was in the form of a check and that in 1949 Mr. Avelino, the petitioner, paid P15,000.00, and that he paid the balance in 1951, no interest on the loan having been demanded and paid. Evidence of this character has, as a rule, been declared insufficient for purposes of the income tax law. (Eugenio Perez vs. Court of Tax Appeals, et al., G.R. No. L-10507, May 30, 1958; Aurelio P. Reyes vs. Collector of Internal Revenue, G.R. Nos. L-11534 & L-11558, Nov. 25, 1958.) We declare that in consonance with the rule which appears to be reasonable, the alleged loan cannot be declared as, actually existing. VIII THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE PETITIONER COMMITTED FRAUD IN FILING HIS INCOME TAX RETURNS FOR THE YEARS UNDER REVIEW. Under this alleged error it is contended that there was no evidence of fraud committed by the petitioner. We find that the acts of the petitioner in declaring an income of only P5,258.99 in the year 1946 when he had an actual income of P105,223.06; his act in submitting an income tax return for 1947 only for the amount of P12,219.96 when he actually had a net taxable income of P43,504.34; and lastly his act in reporting an income for the year 1948 which is only ten percent of the actual taxable income of P38,885.81 all these circumstances justify the finding of the court below that there has been fraud subject to be penalized by law. IX APPEALS ERRED IN HOLDING THE COURT OF TAX THAT THE RESPONDENT'S ASSESSMENTS HAVE NOT YET PRESCRIBED. In this assignment of error it is contended that the liability of the petitioner for income tax for the years 1946, 1947 and 1948 has already prescribed. The contention is without merit as it has been found out that the petitioner has been guilty of fraud. The period within which he may be subjected to liability in case of fraud begins from the moment the fraud is discovered and not when the income tax return was presented. (Sec. 332, Internal Revenue Law). X THE COURT OF TAX APPEALS ERRED IN HOLDING THE PETITIONER LIABLE FOR P57,788.16 AS DEFICIENCY INCOME TAX FOR THE YEARS 1946, 1947, AND 1948.

This supposed error is the result of the previous errors and need not be considered. 1wph1.t Finding no error in the conclusions of fact and of law made by the respondent court, we hereby affirm the assessments made by it as above indicated, with costs against petitioner. Bengzon, C.J., Concepcion, Reyes, J.B.L., Paredes, Regala and Makalintal, JJ., concur. Padilla, Bautista Angelo and Dizon, JJ., took no part. CHIEF JUSTICE RENATO C. CORONA vs. SENATE OF THE PHILIPPINES sitting as an IMPEACHMENT COURT, BANK OF THE PHILIPPINE ISLANDS, PHILIPPINE SAVINGS BANK, ARLENE "KAKA" BAG-AO, GIORGIDI AGGABAO, MARILYN PRIMICIAS-AGABAS, NIEL TUPAS, RODOLFO FARINAS, SHERWIN TUGNA, RAUL DAZA, ELPIDIO BARZAGA, REYNALDO UMALI, NERI COLMENARES (ALSO KNOWN AS THE PROSECUTORS FROM THE HOUSE OF REPRESENTATIVES), G.R. No. 200242, July 17, 2012 RESOLUTION VILLARAMA, JR., J.: Before this Court is a petition for certiorari and prohibition with prayer for immediate issuance of temporary restraining order (TRO) and writ of preliminary injunction filed by the former Chief Justice of this Court, Renato C. Corona, assailing the impeachment case initiated by the respondent Members of the House of Representatives (HOR) and trial being conducted by respondent Senate of the Philippines. On December 12, 2011, a caucus was held by the majority bloc of the HOR during which a verified complaint for impeachment against petitioner was submitted by the leadership of the Committee on Justice. After a brief presentation, on the same day, the complaint was voted in session and 188 Members signed and endorsed it, way above the one-third vote required by the Constitution. On December 13, 2011, the complaint was transmitted to the Senate which convened as an impeachment court the following day, December 14, 2011. On December 15, 2011, petitioner received a copy of the complaint charging him with culpable violation of the Constitution, betrayal of public trust and graft and corruption, allegedly committed as follows: ARTICLE I RESPONDENT BETRAYED THE PUBLIC TRUST THROUGH HIS TRACK RECORD MARKED BY PARTIALITY AND SUBSERVIENCE IN CASES INVOLVING THE ARROYO ADMINISTRATION FROM THE TIME OF HIS APPOINTMENT AS SUPREME COURT JUSTICE AND UNTIL HIS DUBIOUS APPOINTMENT AS A MIDNIGHT CHIEF JUSTICE TO THE PRESENT. ARTICLE II RESPONDENT COMMITTED CULPABLE VIOLATION OF THE CONSTITUTION AND/OR BETRAYED THE PUBLIC TRUST WHEN HE FAILED TO DISCLOSE TO THE PUBLIC HIS STATEMENT OFASSETS, LIABILITIES AND NET WORTH AS REQUIRED UNDER SEC. 17, ART. XI OF THE 1987 CONSTITUTION. 2.1. It is provided for in Art. XI, Section 17 of the 1987 Constitution that "a public officer or employee shall, upon assumption of office and as often thereafter as may be required by law, submit a declaration under oath of his assets, liabilities, and net worth. In the case of the President, the Vice-President, the Members of the Cabinet, and other constitutional offices, and officers of the armed forces with general or flag rank, the declaration shall be disclosed to the public in the manner provided by law." 2.2. Respondent failed to disclose to the public his statement of assets, liabilities, and net worth as required by the Constitution. 2.3. It is also reported that some of the properties of Respondent are not included in his declaration of his assets, liabilities, and net worth, in violation of the anti-graft and corrupt practices act. 2.4. Respondent is likewise suspected and accused of having accumulated ill-gotten wealth, acquiring assets of high values and keeping bank accounts with huge deposits. It has been reported that Respondent has, among others, a 300sq. meter apartment in a posh Mega World Property development at the Fort in Taguig. Has he reported this, as he is constitutionally-required under Art. XI, Sec. 17 of the Constitution in his Statement of Assets and Liabilities and Net Worth (SALN)? Is this acquisition sustained and duly supported by his income as a public official? Since his assumption as Associate and subsequently, Chief Justice, has he complied with this duty of public disclosure? ARTICLE III RESPONDENT COMMITTED CULPABLE VIOLATIONS OF THE CONSTITUTION AND/OR BETRAYED THE PUBLIC TRUST BY FAILING TO MEET AND OBSERVE THE STRINGENT STANDARDS UNDER ART. VIII, SECTION 7 (3) OF THE CONSTITUTION THAT PROVIDES THAT "[A] MEMBER OF THE JUDICIARY MUST BE A PERSON OF PROVEN COMPETENCE, INTEGRITY, PROBITY, AND INDEPENDENCE" IN ALLOWING THE SUPREME COURT TO ACT ON MERE LETTERS FILED BY A COUNSEL WHICH CAUSED THE ISSUANCE OF FLIP-FLOPPING DECISIONS IN FINAL AND EXECUTORY CASES; IN CREATING AN EXCESSIVE ENTANGLEMENT WITH MRS. ARROYO THROUGH HER APPOINTMENT OF HIS WIFE TO OFFICE; AND IN DISCUSSING WITH LITIGANTS REGARDING CASES PENDING BEFORE THE SUPREME COURT. ARTICLE IV RESPONDENT BETRAYED THE PUBLIC TRUST AND/OR COMMITTED CULPABLE VIOLATION OF THE CONSTITUTION WHEN HE BLATANTLY DISREGARDED THE PRINCIPLE OF SEPARATION OF POWERS BY ISSUING A "STATUS QUO ANTE" ORDER AGAINST THE HOUSE OF REPRESENTATIVES IN THE CASE CONCERNING THE IMPEACHMENT OF THEN OMBUDSMAN MERCEDITAS NAVARRO-GUTIERREZ. ARTICLE V RESPONDENT BETRAYED THE PUBLIC TRUST THROUGH WANTON ARBITRARINESS AND PARTIALITY IN CONSISTENTLY DISREGARDING THE PRINCIPLE OF RES JUDICATA IN THE CASES INVOLVING THE 16 NEWLYCREATED CITIES, AND THE PROMOTION OF DINAGAT ISLAND INTO A PROVINCE. ARTICLE VI RESPONDENT BETRAYED THE PUBLIC TRUST BY ARROGATING UNTO HIMSELF, AND TO A COMMITTEE HE CREATED, THE AUTHORITY AND JURISDICTION TO IMPROPERLY INVESTIGATE A JUSTICE OF THE SUPREME COURT FOR THE PURPOSE OF EXCULPATING HIM. SUCH AUTHORITY AND JURISDICTION IS PROPERLY REPOSED BY THE CONSTITUTION IN THE HOUSE OF REPRESENTATIVES VIA IMPEACHMENT. ARTICLE VII

RESPONDENT BETRAYED THE PUBLIC TRUST THROUGH HIS PARTIALITY IN GRANTING A TEMPORARY RESTRAINING ORDER (TRO) IN FAVOR OF FORMER PRESIDENT GLORIA MACAPAGAL-ARROYO AND HER HUSBAND JOSE MIGUEL ARROYO IN ORDER TO GIVE THEM AN OPPORTUNITY TO ESCAPE PROSECUTION AND TO FRUSTRATE THE ENDS OF JUSTICE, AND IN DISTORTING THE SUPREME COURT DECISION ON THE EFFECTIVITY OF THE TRO IN VIEW OF A CLEAR FAILURE TO COMPLY WITH THE CONDITIONS OF THE SUPREME COURTS OWN TRO. ARTICLE VIII RESPONDENT BETRAYED THE PUBLIC TRUST AND/OR COMMITTED GRAFT AND CORRUPTION WHEN HE FAILED AND REFUSEDTO ACCOUNT FOR THE JUDICIARY DEVELOPMENT FUND (JDF) AND SPECIAL ALLOWANCE FOR THE JUDICIARY (SAJ) COLLECTIONS. 1 On December 26, 2011, petitioner filed his Answer 2 assailing the "blitzkrieg" fashion by which the impeachment complaint was signed by the Members of the HOR and immediately transmitted to the Senate. Citing previous instances when President Aquino openly expressed his rejection of petitioners appointment as Chief Justice and publicly attacked this Court under the leadership of petitioner for "derailing his administrations mandate," petitioner concluded that the move to impeach him was the handiwork of President Aquinos party mates and supporters, including"hidden forces" who will be benefited by his ouster. As to the charges against him, petitioner denied the same but admitted having once served the Offices of the President and Vice-President during the term of former President Gloria Macapagal-Arroyo and granted the request for courtesy call only to Mr. Dante Jimenez of the Volunteers Against Crime and Corruption (VACC) while Mr. Lauro Vizconde appeared with Mr. Jimenez without prior permission or invitation. Petitioner argued at length that the acts, misdeeds or offenses imputed to him were either false or baseless, and otherwise not illegal nor improper. He prayed for the outright dismissal of the complaint for failing to meet the requirements of the Constitution or that the Impeachment Court enter a judgment of acquittal for all the articles of impeachment. Meanwhile, the prosecution panel composed of respondent Representatives held a press conference revealing evidence which supposedly support their accusations against petitioner. The following day, newspapers carried front page reports of high-priced condominium units and other real properties in Fort Bonifacio, Taguig and Quezon City allegedly owned by petitioner, as disclosed by prosecutors led by respondent Rep. Niel C. Tupas, Jr. The prosecution told the media that it is possible that these properties were not included by petitioner in his Statement of Assets, Liabilities and Net Worth (SALN) which had not been made available to the public. Reacting to this media campaign, Senators scolded the prosecutors reminding them that under the Senate Rules of Procedure on Impeachment Trials 3 they are not allowed to make any public disclosure or comment regarding the merits of a pending impeachment case. 4 By this time, five petitions have already been filed with this Court by different individuals seeking to enjoin the impeachment trial on grounds of improperly verified complaint and lack of due process. On January 16, 2012, respondent Senate of the Philippines acting as an Impeachment Court, commenced trial proceedings against the petitioner.Petitioners motion for a preliminary hearing was denied. On January 18, 2012, Atty. Enriqueta E. Vidal, Clerk of Court of this Court, in compliance with a subpoena issued by the Impeachment Court, took the witness stand and submitted the SALNs of petitioner for the years 2002 to 2010. Other prosecution witnesses also testified regarding petitioners SALNs for the previous years (Marianito Dimaandal, Records Custodian of Malacaang Palace, Atty. Randy A. Rutaquio, Register of Deeds of Taguig and Atty. Carlo V. Alcantara, Acting Register of Deeds of Quezon City). In compliance with the directive of the Impeachment Court, the prosecution and defense submitted their respective memoranda on the question of whether the prosecution may present evidence to prove the allegations in paragraphs 2.3 (failure to report some properties in SALN) and 2.4 (acquisition of ill-gotten wealth and failure to disclose in SALN such bank accounts with huge deposits and 300-sq.m. Megaworld property at the Fort in Taguig) under Article II (par. 2.2. refers to petitioners alleged failure to disclose to the public his SALN as required by the Constitution). On January 27, 2012, the Impeachment Court issued a Resolution 5 which states: IN SUM, THEREFORE, this Court resolves and accordingly rules: 1. To allow the Prosecution to introduce evidence in support of Paragraphs 2.2 and 2.3 of Article II of the Articles of Impeachment; 2. To disallow the introduction of evidence in support of Par. 2.4 of the Articles of Impeachment, with respect to which, this Court shall be guided by and shall rely upon the legal presumptions on the nature of any property or asset which may be proven to belong to the Respondent Chief Justice as provided under Section 8 of Republic Act No. 3019 and Section 2 of Republic Act No. 1379. SO ORDERED.6 In a subsequent Resolution 7 dated February 6, 2012, the Impeachment Court granted the prosecutions request for subpoena directed to the officersof two private banks where petitioner allegedly deposited millions in peso and dollar currencies, as follows: WHEREFORE, IN VIEW OF THE FOREGOING, the majority votes to grant the Prosecutions Requests for Subpoenae to the responsible officers of Philippine Savings Bank (PSBank) and Bank of the Philippine Island (BPI), for them to testify and bring and/or produce before the Court documents on the alleged bank accounts of Chief Justice Corona, only for the purpose of the instant impeachment proceedings, as follows: a) The Branch Manager of the Bank of Philippine Islands, Ayala Avenue Branch, 6th Floor, SGV Building, 6758 Ayala Avenue, Makati City, is commanded to bring before the Senate at 2:00 p.m. on February 8, 2012, the original and certified true copies of the account opening forms/documents for Bank Account no. 1445-8030-61 in the name of Renato C. Corona and the bank statements showing the balances of the said account as of December 31, 2005, December 31, 2006, December 31, 2007, December 31, 2008, December 31, 2009 and December 31, 2010. b) The Branch Manager (and/or authorized representative) of Philippine Savings Bank, Katipunan Branch, Katipunan Avenue, Loyola Heights, Quezon City, is commanded to bring before the Senate at 2:00 p.m. on February 8, 2012, the original and certified true copies of the account opening forms/documents for the following bank accounts allegedly in the name of Renato C. Corona, and the documents showing the balances of the said accounts as of December 31, 2007, December 31, 2008, December 31, 2009 and December 31, 2010: 089-19100037-3 089-13100282-6 089-121017358 089-121019593 089-121020122 089-121021681 089-141-00712-9

089-141-00746-9 089-14100814-5 089-121-01195-7 SO ORDERED.8 On February 8, 2012, PSBank filed a petition for certiorari and prohibition (G.R. No. 200238) seeking to enjoin the Impeachment Court and the HOR prosecutors from implementing the aforesaid subpoena requiring PSBank thru its authorized representative to testify and to bring the original and certified true copies of the opening documents for petitionersalleged foreign currency accounts, and thereafter to render judgment nullifying the subpoenas including the bank statements showing the year-end balances for the said accounts. On the same day, the present petition was filed arguing that the Impeachment Court committed grave abuse of discretion amounting to lack or excess of jurisdiction when it: (1) proceeded to trial on the basis of the complaint filed by respondent Representatives which complaint is constitutionally infirm and defective for lack of probable cause; (2) did not strike out the charges discussed in Art. II of the complaint which, aside from being a "hodge-podge" of multiple charges, do not constitute allegations in law, much less ultimate facts, being all premised on suspicion and/or hearsay; assuming arguendo that the retention of Par. 2.3 is correct, the ruling of the Impeachment Court to retain Par. 2.3 effectively allows the introduction of evidence under Par. 2.3, as vehicle to prove Par. 2.4 and therefore its earlier resolution was nothing more than a hollow relief, bringing no real protection to petitioner; (3) allowed the presentation of evidence on charges of alleged corruption and unexplained wealth which violates petitioners right to due process because first, Art. II does not mention "graft and corruption" or unlawfully acquired wealth as grounds for impeachment, and second, it is clear under Sec. 2, Art. XI of the Constitution that "graft and corruption" is a separate and distinct ground from "culpable violation of the Constitution" and "betrayal of public trust"; and (4) issued the subpoena for the production of petitioners alleged bank accounts as requested by the prosecution despite the same being the result of an illegal act ("fruit of the poisonous tree") considering that those documents submitted by the prosecution violates the absolute confidentiality of such accounts under Sec. 8 of R.A. No. 6426 (Foreign Currency Deposits Act) which is also penalized under Sec. 10 thereof. Petitioner thus prayed for the following reliefs: (a) Immediately upon filing of this Petition, issue a temporary restraining order or a writ of preliminary injunction enjoining: (i) the proceedings before the Impeachment Court; (ii) implementation ofResolution dated 6 February 2012; (iii) the officers or representatives of BPI and PSBank from testifying and submitting documents on petitioners or his familys bank accounts; and (iv) the presentation, reception and admission of evidence on paragraphs 2.3 and 2.4 of the Impeachment Complaint; (b) After giving due course to the Petition, render judgment: (i) Declaring the Impeachment Complaint null and void ab initio; (ii) Prohibiting the presentation, reception and admission of evidence on paragraphs 2.3 and 2.4 of the Impeachment Complaint; (iii) Annulling the Impeachment Courts Resolution dated 27 January 2012 and 6 February 2011 [sic], as well as any Subpoenae issued pursuant thereto; and (iv) Making the TRO and/or writ of preliminary injunction permanent. Other reliefs, just or equitable, are likewise prayed for. 9 Petitioner also sought the inhibition of Justices Antonio T. Carpio and Maria Lourdes P. A. Sereno on the ground of partiality, citing their publicly known "animosity" towards petitioner aside from the fact that they have been openly touted as the likely replacements in the event that petitioner is removed from office. 10 On February 9, 2012, this Court issued a TRO in G.R. No. 200238 enjoining the Senate from implementing the Resolution and subpoena ad testificandum et duces tecum issued by the Senate sitting as an Impeachment Court, both dated February 6, 2012. The Court further resolved to deny petitioners motion for the inhibition of Justices Carpio and Sereno "in the absence of any applicable compulsory ground and of any voluntary inhibition from the Justices concerned." On February 13, 2012, petitioner filed a Supplemental Petition 11 claiming that his right to due process is being violated in the ongoing impeachment proceedings because certain Senator-Judges have lost the coldneutrality of impartial judges by acting as prosecutors. Petitioner particularly mentioned Senator-Judge Franklin S. Drilon, whose inhibition he had sought from the Impeachment Court, to no avail. He further called attention to the fact that despite the Impeachment Courts January 27, 2012 Resolution which disallowed the introduction of evidence in support of paragraph 2.4 of Article II, from which no motion for reconsideration would be entertained, "the allies of President Aquino in the Senate abused their authority and continued their presentation of evidence for the prosecution, without fear of objection". In view of the persistent efforts of President Aquinos Senator-allies to overturn the ruling of Presiding Officer Juan Ponce Enrile that the prosecution could not present evidence on paragraph 2.4 of Article II -- for which President Aquino even thanked "his senator allies in delivering what the prosecution could not"-- petitioner reiterates the reliefs prayed for in his petition before this Court. In the Comment Ad Cautelam Ex Superabundanti 12 filed on behalf of the respondents, the Solicitor General argues that the instant petition raises matters purely political in character which may be decided or resolved only by the Senate and HOR, with the manifestation that the comment is being filed by the respondents "without submitting themselves to the jurisdiction of the Honorable Supreme Court and without conceding the constitutional and exclusive power of the House to initiate all cases of impeachment and of the Senate to try and decide all cases of impeachment." Citing the case of Nixon v. United States,13 respondents contend that to allow a public official being impeached to raise before this Court any and all issues relative to the substance of the impeachment complaint would result in an unnecessarily long and tedious process that may even go beyond the terms of the Senator-Judges hearing the impeachment case. Such scenario is clearly not what the Constitution intended. Traversing the allegations of the petition, respondents assert that the Impeachment Court did not commit any grave abuse of discretion; it has, in fact, been conducting the proceedings judiciously. Respondents maintain that subjecting the ongoing impeachment trial to judicial review defeats the very essence of impeachment. They contend that the constitutional command of public accountability to petitioner and his obligation to fully disclose his assets, liabilities and net worth prevail over his claim of confidentiality of deposits; hence, the subpoena subject of this case were correctly and judiciously issued. Considering that the ongoing impeachment proceedings, which was initiated and is being conducted in accordance with the Constitution, simply aims to enforce the principle of public accountability and ensure that the transgressions of impeachable public officials are corrected, the injury being claimed by petitioner allegedly resulting from

the impeachment trial has no factual and legal basis. It is thus prayed that the present petition, as well as petitioners prayer for issuance of a TRO/preliminary injunction, be dismissed. The core issue presented is whether the certiorari jurisdiction of this Court may be invoked to assail matters or incidents arising from impeachment proceedings, and to obtain injunctive relief for alleged violations of right to due process of the person being tried by the Senate sitting as Impeachment Court. Impeachment and Judicial Review Impeachment, described as "the most formidable weapon in the arsenal of democracy," 14 was foreseen as creating divisions, partialities and enmities, or highlighting pre-existing factions with the greatest danger that "the decision will be regulated more by the comparative strength of parties, than by the real demonstrations of innocence or guilt." 15 Given their concededly political character, the precise role of the judiciary in impeachment cases is a matter of utmost importance to ensure the effective functioning of the separate branches while preserving the structure of checks and balance in our government. Moreover, in this jurisdiction, the acts of any branch or instrumentality of the government, including those traditionally entrusted to the political departments, are proper subjects of judicial review if tainted with grave abuse or arbitrariness. Impeachment refers to the power of Congress to remove a public official for serious crimes or misconduct as provided in the Constitution. A mechanism designed to check abuse of power, impeachment has its roots in Athens and was adopted in the United States (US) through the influence of English common law on the Framers of the US Constitution. Our own Constitutions provisions on impeachment were adopted from the US Constitution. Petitioner was impeached through the mode provided under Art. XI, par. 4, Sec. 3, in a manner that he claims was accomplished with undue haste and under a complaint which is defective for lack of probable cause. Petitioner likewise assails the Senate in proceeding with the trial under the said complaint, and in the alleged partiality exhibited by some Senator-Judges who were apparently aiding the prosecution during the hearings. On the other hand, respondents contend that the issues raised in the Supplemental Petition regarding the behavior of certain Senator-Judges in the course of the impeachment trial are issues that do not concern, or allege any violation of, the three express and exclusive constitutional limitations on the Senates sole power to try and decide impeachment cases. They argue that unless there is a clear transgression of these constitutional limitations, this Court may not exercise its power of expanded judicial review over the actions of Senator-Judges during the proceedings. By the nature of the functions they discharge when sitting as an Impeachment Court, Senator-Judges are clearly entitled to propound questions on the witnesses, prosecutors and counsel during the trial. Petitioner thus failed to prove any semblance of partiality on the part of any Senator-Judges. But whether the Senate Impeachment Rules were followed or not, is a political question that is not within this Courts power of expanded judicial review. In the first impeachment case decided by this Court, Francisco, Jr. v. Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino, Inc. 16 we ruled that the power of judicial review in this jurisdiction includes the power of review over justiciable issues in impeachment proceedings. Subsequently, in Gutierrez v. House of Representatives Committee on Justice, 17 the Court resolved the question of the validity of the simultaneous referral of two impeachment complaints against petitioner Ombudsman which was allegedly a violation of the due process clause and of the one-year bar provision. On the basis of these precedents, petitioner asks this Court to determine whether respondents committed a violation of the Constitution or gravely abused its discretion in the exercise of their functions and prerogatives that could translate as lack or excess of jurisdiction, which would require corrective measures from the Court. Mootness In the meantime, the impeachment trial had been concluded with the conviction of petitioner by more than the required majority vote of the Senator-Judges. Petitioner immediately accepted the verdict and without any protest vacated his office. In fact, the Judicial and Bar Council is already in the process of screening applicants and nominees, and the President of the Philippines is expected to appoint a new Chief Justice within the prescribed 90-day period from among those candidates shortlisted by the JBC. Unarguably, the constitutional issue raised by petitioner had been mooted by supervening events and his own acts.1wphi1 An issue or a case becomes moot and academic when it ceases to present a justiciable controversy so that a determination thereof would be without practical use and value. 18 In such cases, there is no actual substantial relief to which the petitioner would be entitled to and which would be negated by the dismissal of the petition. 19 WHEREFORE, the present petition for certiorari and prohibition with prayer for injunctive relief/s is DISMISSED on the ground of MOOTNESS. No pronouncement as to costs. SO ORDERED. MARTIN S. VILLARAMA, JR. PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, Administrator of the Testate Estate of Charles Newton Hodges (Sp. Proc. No. 1672 of the Court of First Instance of Iloilo), petitioner, vs. THE HONORABLE VENICIO ESCOLIN, Presiding Judge of the Court of First Instance of Iloilo, Branch II, and AVELINA A. MAGNO, respondents. G.R. Nos. L-27860 and L-27896 March 29, 1974 TESTATE ESTATE OF THE LATE LINNIE JANE HODGES (Sp. Proc. No. 1307). TESTATE ESTATE OF THE LATE CHARLES NEWTON HODGES (Sp. Proc. No. 1672). PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK,administrator-appellant, vs. LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL, SALVADOR GUZMAN, BELCESAR CAUSING, FLORENIA BARRIDO, PURIFICACION CORONADO, GRACIANO LUCERO, ARITEO THOMAS JAMIR, MELQUIADES BATISANAN, PEPITO IYULORES, ESPERIDION PARTISALA, WINIFREDO ESPADA, ROSARIO ALINGASA, ADELFA PREMAYLON, SANTIAGO PACAONSIS, and AVELINA A. MAGNO, the last as Administratrix in Sp. Proc. No. 1307, appellees, WESTERN INSTITUTE OF TECHNOLOGY, INC., movant-appellee. G.R. Nos. L27936 & L-27937 March 29, 1974

San Juan, Africa, Gonzales and San Agustin for Philippine Commercial and Industrial Bank. Manglapus Law Office, Antonio Law Office and Rizal R. Quimpo for private respondents and appellees Avelina A. Magno, etc., et al. BARREDO, J.:p Certiorari and prohibition with preliminary injunction; certiorari to "declare all acts of the respondent court in the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307 of the Court of First Instance of Iloilo) subsequent to the order of December 14, 1957 as null and void for having been issued without jurisdiction"; prohibition to enjoin the respondent court from allowing, tolerating, sanctioning, or abetting private respondent Avelina A. Magno to perform or do any acts of administration, such as those enumerated in the petition, and from exercising any authority or power as Regular Administratrix of above-named Testate Estate, by entertaining manifestations, motion and pleadings filed by her and acting on them, and also to enjoin said court from allowing said private respondent to interfere, meddle or take part in any manner in the administration of the Testate Estate of Charles Newton Hodges (Sp. Proc. No. 1672 of the same court and branch); with prayer for preliminary injunction, which was issued by this Court on August 8, 1967 upon a bond of P5,000; the petition being particularly directed against the orders of the respondent court of October 12, 1966 denying petitioner's motion of April 22, 1966 and its order of July 18, 1967 denying the motion for reconsideration of said order. Related to and involving basically the same main issue as the foregoing petition, thirty-three (33) appeals from different orders of the same respondent court approving or otherwise sanctioning the acts of administration of the respondent Magno on behalf of the testate Estate of Mrs. Hodges. THE FACTS On May 23, 1957, Linnie Jane Hodges died in Iloilo City leaving a will executed on November 22, 1952 pertinently providing as follows: FIRST: I direct that all my just debts and funeral expenses be first paid out of my estate. SECOND: I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real, wherever situated, or located, to my beloved husband, Charles Newton Hodges, to have and to hold unto him, my said husband, during his natural lifetime. THIRD: I desire, direct and provide that my husband, Charles Newton Hodges, shall have the right to manage, control, use and enjoy said estate during his lifetime, and he is hereby given the right to make any changes in the physical properties of said estate, by sale or any part thereof which he may think best, and the purchase of any other or additional property as he may think best; to execute conveyances with or without general or special warranty, conveying in fee simple or for any other term or time, any property which he may deem proper to dispose of; to lease any of the real property for oil, gas and/or other minerals, and all such deeds or leases shall pass the absolute fee simple title to the interest so conveyed in such property as he may elect to sell. All rents, emoluments and income from said estate shall belong to him, and he is further authorized to use any part of the principal of said estate as he may need or desire. It is provided herein, however, that he shall not sell or otherwise dispose of any of the improved property now owned by us located at, in or near the City of Lubbock, Texas, but he shall have the full right to lease, manage and enjoy the same during his lifetime, above provided. He shall have the right to subdivide any farm land and sell lots therein. and may sell unimproved town lots. FOURTH: At the death of my said husband, Charles Newton Hodges, I give, devise and bequeath all of the rest, residue and remainder of my estate, both real and personal, wherever situated or located, to be equally divided among my brothers and sisters, share and share alike, namely: Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Saddie Rascoe, Era Roman and Nimroy Higdon. FIFTH: In case of the death of any of my brothers and/or sisters named in item Fourth, above, prior to the death of my husband, Charles Newton Hodges, then it is my will and bequest that the heirs of such deceased brother or sister shall take jointly the share which would have gone to such brother or sister had she or he survived. SIXTH: I nominate and appoint my said husband, Charles Newton Hodges, to be executor of this, my last will and testament, and direct that no bond or other security be required of him as such executor. SEVENTH: It is my will and bequest that no action be had in the probate court, in the administration of my estate, other than that necessary to prove and record this will and to return an inventory and appraisement of my estate and list of claims. (Pp. 2-4, Petition.) This will was subsequently probated in aforementioned Special Proceedings No. 1307 of respondent court on June 28, 1957, with the widower Charles Newton Hodges being appointed as Executor, pursuant to the provisions thereof. Previously, on May 27, 1957, the said widower (hereafter to be referred to as Hodges) had been appointed Special Administrator, in which capacity he filed a motion on the same date as follows: URGENT EX-PARTE MOTION TO ALLOW OR AUTHORIZE PETITIONER TO CONTINUE THE BUSINESS IN WHICH HE WAS ENGAGED AND TO PERFORM ACTS WHICH HE HAD BEEN DOING WHILE DECEASED WAS LIVING Come petitioner in the above-entitled special proceedings, thru his undersigned attorneys, to the Hon. Court, most respectfully states: 1. That Linnie Jane Hodges died leaving her last will and testament, a copy of which is attached to the petition for probate of the same. 2. That in said last will and testament herein petitioner Charles Newton Hodges is directed to have the right to manage, control use and enjoy the estate of deceased Linnie Jane Hodges, in the same way, a provision was placed in paragraph two, the following: "I give, devise and bequeath all of the rest, residue and remainder of my estate, to my beloved husband, Charles Newton Hodges, to have and (to) hold unto him, my said husband, during his natural lifetime." 3. That during the lifetime of Linnie Jane Hodges, herein petitioner was engaged in the business of buying and selling personal and real properties, and do such acts which petitioner may think best. 4. That deceased Linnie Jane Hodges died leaving no descendants or ascendants, except brothers and sisters and herein petitioner as executor surviving spouse, to inherit the properties of the decedent. 5. That the present motion is submitted in order not to paralyze the business of petitioner and the deceased, especially in the purchase and sale of properties. That proper accounting will be had also in all these transactions. WHEREFORE, it is most respectfully prayed that, petitioner C. N. Hodges (Charles Newton Hodges) be allowed or authorized to continue the business in which he was engaged and to perform acts which he had been doing while deceased Linnie Jane Hodges was living. City of Iloilo, May 27, 1957. (Annex "D", Petition.) which the respondent court immediately granted in the following order:

It appearing in the urgent ex-parte motion filed by petitioner C. N. Hodges, that the business in which said petitioner and the deceased were engaged will be paralyzed, unless and until the Executor is named and appointed by the Court, the said petitioner is allowed or authorized to continue the business in which he was engaged and to perform acts which he had been doing while the deceased was living. SO ORDERED. City of Iloilo May 27, 1957. (Annex "E", Petition.) Under date of December 11, 1957, Hodges filed as such Executor another motion thus: MOTION TO APPROVE ALL SALES, CONVEYANCES, LEASES, MORTGAGES THAT THE EXECUTOR HAD MADE FURTHER AND SUBSEQUENT TRANSACTIONS WHICH THE EXECUTOR MAY DO IN ACCORDANCE WITH THE LAST WISH OF THE DECEASED LINNIE JANE HODGES. Comes the Executor in the above-entitled proceedings, thru his undersigned attorney, to the Hon. Court, most respectfully states: 1. That according to the last will and testament of the deceased Linnie Jane Hodges, the executor as the surviving spouse and legatee named in the will of the deceased; has the right to dispose of all the properties left by the deceased, portion of which is quoted as follows: Second: I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real, wherever situated, or located, to my beloved husband, Charles Newton Hodges, to have and to hold unto him, my said husband, during his natural lifetime. Third: I desire, direct and provide that my husband, Charles Newton Hodges, shall have the right to manage, control, use and enjoy said estate during his lifetime, and he is hereby given the right to make any changes in the physical properties of said estate, by sale or any part thereof which he may think best, and the purchase of any other or additional property as he may think best; to execute conveyances with or without general or special warranty, conveying in fee simple or for any other term or time, any property which he may deem proper to dispose of; to lease any of the real property for oil, gas and/or other minerals, and all such deeds or leases shall pass the absolute fee simple title to the interest so conveyed in such property as he may elect to sell. All rents, emoluments and income from said estate shall belong to him, and he is further authorized to use any part of the principal of said estate as he may need or desire. ... 2. That herein Executor, is not only part owner of the properties left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane Hodges. That during the lifetime of herein Executor, as Legatee has the right to sell, convey, lease or dispose of the properties in the Philippines. That inasmuch as C.N. Hodges was and is engaged in the buy and sell of real and personal properties, even before the death of Linnie Jane Hodges, a motion to authorize said C.N. Hodges was filed in Court, to allow him to continue in the business of buy and sell, which motion was favorably granted by the Honorable Court. 3. That since the death of Linnie Jane Hodges, Mr. C.N. Hodges had been buying and selling real and personal properties, in accordance with the wishes of the late Linnie Jane Hodges. 4. That the Register of Deeds for Iloilo, had required of late the herein Executor to have all the sales, leases, conveyances or mortgages made by him, approved by the Hon. Court. 5. That it is respectfully requested, all the sales, conveyances leases and mortgages executed by the Executor, be approved by the Hon. Court. and subsequent sales conveyances, leases and mortgages in compliances with the wishes of the late Linnie Jane Hodges, and within the scope of the terms of the last will and testament, also be approved; 6. That the Executor is under obligation to submit his yearly accounts, and the properties conveyed can also be accounted for, especially the amounts received. WHEREFORE, it is most respectfully prayed that, all the sales, conveyances, leases, and mortgages executed by the Executor, be approved by the Hon. Court, and also the subsequent sales, conveyances, leases, and mortgages in consonance with the wishes of the deceased contained in her last will and testament, be with authorization and approval of the Hon. Court. City of Iloilo, December 11, 1967. (Annex "G", Petition.) which again was promptly granted by the respondent court on December 14, 1957 as follows: ORDER As prayed for by Attorney Gellada, counsel for the Executor for the reasons stated in his motion dated December 11, 1957, which the Court considers well taken all the sales, conveyances, leases and mortgages of all properties left by the deceased Linnie Jane Hodges executed by the Executor Charles N. Hodges are hereby APPROVED. The said Executor is further authorized to execute subsequent sales, conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance with the wishes conveyed in the last will and testament of the latter. So ordered. Iloilo City. December 14, 1957. (Annex "H", Petition.) On April 14, 1959, in submitting his first statement of account as Executor for approval, Hodges alleged: Pursuant to the provisions of the Rules of Court, herein executor of the deceased, renders the following account of his administration covering the period from January 1, 1958 to December 31, 1958, which account may be found in detail in the individual income tax return filed for the estate of deceased Linnie Jane Hodges, to wit: That a certified public accountant has examined the statement of net worth of the estate of Linnie Jane Hodges, the assets and liabilities, as well as the income and expenses, copy of which is hereto attached and made integral part of this statement of account as Annex "A". IN VIEW OF THE FOREGOING, it is most respectfully prayed that, the statement of net worth of the estate of Linnie Jane Hodges, the assets and liabilities, income and expenses as shown in the individual income tax return for the estate of the deceased and marked as Annex "A", be approved by the Honorable Court, as substantial compliance with the requirements of the Rules of Court. That no person interested in the Philippines of the time and place of examining the herein accounts be given notice, as herein executor is the only devisee or legatee of the deceased, in accordance with the last will and testament already probated by the Honorable court. City of Iloilo April 14, 1959. (Annex "I", Petition.) The respondent court approved this statement of account on April 21, 1959 in its order worded thus:

Upon petition of Atty. Gellada, in representation of the Executor, the statement of net worth of the estate of Linnie Jane Hodges, assets and liabilities, income and expenses as shown in the individual income tax return for the estate of the deceased and marked as Annex "A" is approved. SO ORDERED. City of Iloilo April 21, 1959. (Annex "J", Petition.) His accounts for the periods January 1, 1959 to December 31, 1959 and January 1, 1960 to December 31, 1960 were submitted likewise accompanied by allegations identical mutatis mutandis to those of April 14, 1959, quoted above; and the respective orders approving the same, dated July 30, 1960 and May 2, 1961, were substantially identical to the abovequoted order of April 21, 1959. In connection with the statements of account just mentioned, the following assertions related thereto made by respondent-appellee Magno in her brief do not appear from all indications discernible in the record to be disputable: Under date of April 14, 1959, C.N. Hodges filed his first "Account by the Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1958 annexed thereto, C.N. Hodges reported that the combined conjugal estate earned a net income of P328,402.62, divided evenly between him and the estate of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return" for calendar year 1958 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as having earned income of P164,201.31, exactly one-half of the net income of his combined personal assets and that of the estate of Linnie Jane Hodges. (p. 91, Appellee's Brief.) xxx xxx xxx Under date of July 21, 1960, C.N. Hodges filed his second "Annual Statement of Account by the Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1959 annexed thereto, C.N. Hodges reported that the combined conjugal estate earned a net income of P270,623.32, divided evenly between him and the estate of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return" for calendar year 1959 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as having earned income of P135,311.66, exactly one-half of the net income of his combined personal assets and that of the estate of Linnie Jane Hodges. (pp. 91-92. Appellee's Brief.) xxx xxx xxx Under date of April 20, 1961, C.N. Hodges filed his third "Annual Statement of Account by the Executor for the Year 1960" of the estate of Linnie Jane Hodges. In the "Statement of Net Worth of Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1960 annexed thereto, C.N. Hodges reported that the combined conjugal estate earned a net income of P314,857.94, divided evenly between him and the estate of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return" for calendar year 1960 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as having earned income of P157,428.97, exactly one-half of the net income of his combined personal assets and that of the estate of Linnie Jane Hodges. (Pp. 92-93, Appellee's Brief.) Likewise the following: In the petition for probate that he (Hodges) filed, he listed the seven brothers and sisters of Linnie Jane as her "heirs" (see p. 2, Green ROA). The order of the court admitting the will to probate unfortunately omitted one of the heirs, Roy Higdon (see p. 14, Green ROA). Immediately, C.N. Hodges filed a verified motion to have Roy Higdon's name included as an heir, stating that he wanted to straighten the records "in order the heirs of deceased Roy Higdon may not think or believe they were omitted, and that they were really and are interested in the estate of deceased Linnie Jane Hodges. . As an executor, he was bound to file tax returns for the estate he was administering under American law. He did file such as estate tax return on August 8, 1958. In Schedule "M" of such return, he answered "Yes" to the question as to whether he was contemplating "renouncing the will". On the question as to what property interests passed to him as the surviving spouse, he answered: "None, except for purposes of administering the Estate, paying debts, taxes and other legal charges. It is the intention of the surviving husband of deceased to distribute the remaining property and interests of the deceased in their Community estate to the devisees and legatees named in the will when the debts, liabilities, taxes and expenses of administration are finally determined and paid." Again, on August 9, 1962, barely four months before his death, he executed an "affidavit" wherein he ratified and confirmed all that he stated in Schedule "M" of his estate tax returns as to his having renounced what was given him by his wife's will. 1 As appointed executor, C.N. Hodges filed an "Inventory" dated May 12, 1958. He listed all the assets of his conjugal partnership with Linnie Jane Hodges on a separate balance sheet and then stated expressly that her estate which has come into his possession as executor was "one-half of all the items" listed in said balance sheet. (Pp. 89-90, Appellee's Brief.) Parenthetically, it may be stated, at this juncture, that We are taking pains to quote wholly or at least, extensively from some of the pleadings and orders whenever We feel that it is necessary to do so for a more comprehensive and clearer view of the important and decisive issues raised by the parties and a more accurate appraisal of their respective positions in regard thereto. The records of these cases do not show that anything else was done in the above-mentioned Special Proceedings No. 1307 until December 26, 1962, when on account of the death of Hodges the day before, the same lawyer, Atty. Leon P. Gellada, who had been previously acting as counsel for Hodges in his capacity as Executor of his wife's estate, and as such had filed the aforequoted motions and manifestations, filed the following: URGENT EX-PARTE MOTION FOR THE APPOINTMENT OF A SPECIAL ADMINISTRATRIX COMES the undersigned attorney for the Executor in the above-entitled proceedings, to the Honorable Court, most respectfully states: 1. That in accordance with the Last Will and Testament of Linnie Jane Hodges (deceased), her husband, Charles Newton Hodges was to act as Executor, and in fact, in an order issued by this Hon. Court dated June 28, 1957, the said Charles Newton Hodges was appointed Executor and had performed the duties as such. 2. That last December 22, 1962, the said Charles Newton Hodges was stricken ill, and brought to the Iloilo Mission Hospital for treatment, but unfortunately, he died on December 25, 1962, as shown by a copy of the death certificate hereto attached and marked as Annex "A".

3. That in accordance with the provisions of the last will and testament of Linnie Jane Hodges, whatever real and personal properties that may remain at the death of her husband Charles Newton Hodges, the said properties shall be equally divided among their heirs. That there are real and personal properties left by Charles Newton Hodges, which need to be administered and taken care of. 4. That the estate of deceased Linnie Jane Hodges, as well as that of Charles Newton Hodges, have not as yet been determined or ascertained, and there is necessity for the appointment of a general administrator to liquidate and distribute the residue of the estate to the heirs and legatees of both spouses. That in accordance with the provisions of Section 2 of Rule 75 of the Rules of Court, the conjugal partnership of Linnie Jane Hodges and Charles Newton Hodges shall be liquidated in the testate proceedings of the wife. 5. That the undersigned counsel, has perfect personal knowledge of the existence of the last will and testament of Charles Newton Hodges, with similar provisions as that contained in the last will and testament of Linnie Jane Hodges. However, said last will and testament of Charles Newton Hodges is kept inside the vault or iron safe in his office, and will be presented in due time before this honorable Court. 6. That in the meantime, it is imperative and indispensable that, an Administratrix be appointed for the estate of Linnie Jane Hodges and a Special Administratrix for the estate of Charles Newton Hodges, to perform the duties required by law, to administer, collect, and take charge of the goods, chattels, rights, credits, and estate of both spouses, Charles Newton Hodges and Linnie Jane Hodges, as provided for in Section 1 and 2, Rule 81 of the Rules of Court. 7. That there is delay in granting letters testamentary or of administration, because the last will and testament of deceased, Charles Newton Hodges, is still kept in his safe or vault, and in the meantime, unless an administratrix (and,) at the same time, a Special Administratrix is appointed, the estate of both spouses are in danger of being lost, damaged or go to waste. 8. That the most trusted employee of both spouses Linnie Jane Hodges and C.N. Hodges, who had been employed for around thirty (30) years, in the person of Miss Avelina Magno, (should) be appointed Administratrix of the estate of Linnie Jane Hodges and at the same time Special Administratrix of the estate of Charles Newton Hodges. That the said Miss Avelina Magno is of legal age, a resident of the Philippines, the most fit, competent, trustworthy and well-qualified person to serve the duties of Administratrix and Special Administratrix and is willing to act as such. 9. That Miss Avelina Magno is also willing to file bond in such sum which the Hon. Court believes reasonable. WHEREFORE, in view of all the foregoing, it is most respectfully prayed that, Miss AVELINA A. MAGNO be immediately appointed Administratrix of the estate of Linnie Jane Hodges and as Special Administratrix of the estate of Charles Newton Hodges, with powers and duties provided for by law. That the Honorable Court fix the reasonable bond of P1,000.00 to be filed by Avelina A. Magno. (Annex "O", Petition.) which respondent court readily acted on in its order of even date thus: . For the reasons alleged in the Urgent Ex-parte Motion filed by counsel for the Executor dated December 25, 1962, which the Court finds meritorious, Miss AVELINA A. MAGNO, is hereby appointed Administratrix of the estate of Linnie Jane Hodges and as Special Administratrix of the estate of Charles Newton Hodges, in the latter case, because the last will of said Charles Newton Hodges is still kept in his vault or iron safe and that the real and personal properties of both spouses may be lost, damaged or go to waste, unless a Special Administratrix is appointed. Miss Avelina A. Magno is required to file bond in the sum of FIVE THOUSAND PESOS (P5,000.00), and after having done so, let letters of Administration be issued to her." (Annex "P", Petition.) On December 29, 1962, however, upon urgent ex-parte petition of respondent Magno herself, thru Atty. Gellada, Harold, R. Davies, "a representative of the heirs of deceased Charles Newton Hodges (who had) arrived from the United States of America to help in the administration of the estate of said deceased" was appointed as Co-Special Administrator of the estate of Hodges, (pp. 29-33, Yellow - Record on Appeal) only to be replaced as such co-special administrator on January 22, 1963 by Joe Hodges, who, according to the motion of the same attorney, is "the nephew of the deceased (who had) arrived from the United States with instructions from the other heirs of the deceased to administer the properties or estate of Charles Newton Hodges in the Philippines, (Pp. 47-50, id.) Meanwhile, under date of January 9, 1963, the same Atty. Gellada filed in Special Proceedings 1672 a petition for the probate of the will of Hodges, 2 with a prayer for the issuance of letters of administration to the same Joe Hodges, albeit the motion was followed on February 22, 1963 by a separate one asking that Atty. Fernando Mirasol be appointed as his co-administrator. On the same date this latter motion was filed, the court issued the corresponding order of probate and letters of administration to Joe Hodges and Atty. Mirasol, as prayed for. At this juncture, again, it may also be explained that just as, in her will, Mrs. Hodges bequeathed her whole estate to her husband "to have and to hold unto him, my said husband, during his natural lifetime", she, at the same time or in like manner, provided that "at the death of my said husband I give devise and bequeath all of the rest, residue and remainder of my estate, both real and personal, wherever situated or located, to be equally divided among my brothers and sisters, share and share alike ". Accordingly, it became incumbent upon Hodges, as executor of his wife's will, to duly liquidate the conjugal partnership, half of which constituted her estate, in order that upon the eventuality of his death, "the rest, residue and remainder" thereof could be determined and correspondingly distributed or divided among her brothers and sisters. And it was precisely because no such liquidation was done, furthermore, there is the issue of whether the distribution of her estate should be governed by the laws of the Philippines or those of Texas, of which State she was a national, and, what is more, as already stated, Hodges made official and sworn statements or manifestations indicating that as far as he was concerned no "property interests passed to him as surviving spouse "except for purposes of administering the estate, paying debts, taxes and other legal charges" and it was the intention of the surviving husband of the deceased to distribute the remaining property and interests of the deceased in their Community Estate to the devisees and legatees named in the will when the debts, liabilities, taxes and expenses of administration are finally determined and paid", that the incidents and controversies now before Us for resolution arose. As may be observed, the situation that ensued upon the death of Hodges became rather unusual and so, quite understandably, the lower court's actuations presently under review are apparently wanting in consistency and seemingly lack proper orientation. Thus, We cannot discern clearly from the record before Us the precise perspective from which the trial court proceeded in issuing its questioned orders. And, regretably, none of the lengthy briefs submitted by the parties is of valuable assistance in clearing up the matter. To begin with, We gather from the two records on appeal filed by petitioner, as appellant in the appealed cases, one with green cover and the other with a yellow cover, that at the outset, a sort of modus operandi had been agreed upon by the parties under which the respective administrators of the two estates were supposed to act conjointly, but since no copy of

the said agreement can be found in the record before Us, We have no way of knowing when exactly such agreement was entered into and under what specific terms. And while reference is made to said modus operandi in the order of September 11, 1964, on pages 205-206 of the Green Record on Appeal, reading thus: The present incident is to hear the side of administratrix, Miss Avelina A. Magno, in answer to the charges contained in the motion filed by Atty. Cesar Tirol on September 3, 1964. In answer to the said charges, Miss Avelina A. Magno, through her counsel, Atty. Rizal Quimpo, filed a written manifestation. After reading the manifestation here of Atty. Quimpo, for and in behalf of the administratrix, Miss Avelina A. Magno, the Court finds that everything that happened before September 3, 1964, which was resolved on September 8, 1964, to the satisfaction of parties, was simply due to a misunderstanding between the representative of the Philippine Commercial and Industrial Bank and Miss Magno and in order to restore the harmonious relations between the parties, the Court ordered the parties to remain in status quo as to their modus operandi before September 1, 1964, until after the Court can have a meeting with all the parties and their counsels on October 3, as formerly agreed upon between counsels, Attys. Ozaeta, Gibbs and Ozaeta, Attys. Tirol and Tirol and Atty. Rizal Quimpo. In the meantime, the prayers of Atty. Quimpo as stated in his manifestation shall not be resolved by this Court until October 3, 1964. SO ORDERED. there is nothing in the record indicating whatever happened to it afterwards, except that again, reference thereto was made in the appealed order of October 27, 1965, on pages 292-295 of the Green Record on Appeal, as follows: On record is an urgent motion to allow PCIB to open all doors and locks in the Hodges Office at 206-208 Guanco Street, Iloilo City, to take immediate and exclusive possession thereof and to place its own locks and keys for security purposes of the PCIB dated October 27, 1965 thru Atty. Cesar Tirol. It is alleged in said urgent motion that Administratrix Magno of the testate estate of Linnie Jane Hodges refused to open the Hodges Office at 206-208 Guanco Street, Iloilo City where PCIB holds office and therefore PCIB is suffering great moral damage and prejudice as a result of said act. It is prayed that an order be issued authorizing it (PCIB) to open all doors and locks in the said office, to take immediate and exclusive possession thereof and place thereon its own locks and keys for security purposes; instructing the clerk of court or any available deputy to witness and supervise the opening of all doors and locks and taking possession of the PCIB. A written opposition has been filed by Administratrix Magno of even date (Oct. 27) thru counsel Rizal Quimpo stating therein that she was compelled to close the office for the reason that the PCIB failed to comply with the order of this Court signed by Judge Anacleto I. Bellosillo dated September 11, 1964 to the effect that both estates should remain in status quo to their modus operandi as of September 1, 1964. To arrive at a happy solution of the dispute and in order not to interrupt the operation of the office of both estates, the Court aside from the reasons stated in the urgent motion and opposition heard the verbal arguments of Atty. Cesar Tirol for the PCIB and Atty. Rizal Quimpo for Administratix Magno. After due consideration, the Court hereby orders Magno to open all doors and locks in the Hodges Office at 206-208 Guanco Street, Iloilo City in the presence of the PCIB or its duly authorized representative and deputy clerk of court Albis of this branch not later than 7:30 tomorrow morning October 28, 1965 in order that the office of said estates could operate for business. Pursuant to the order of this Court thru Judge Bellosillo dated September 11, 1964, it is hereby ordered: (a) That all cash collections should be deposited in the joint account of the estates of Linnie Jane Hodges and estates of C.N. Hodges; (b) That whatever cash collections that had been deposited in the account of either of the estates should be withdrawn and since then deposited in the joint account of the estate of Linnie Jane Hodges and the estate of C.N. Hodges; (c) That the PCIB should countersign the check in the amount of P250 in favor of Administratrix Avelina A. Magno as her compensation as administratrix of the Linnie Jane Hodges estate chargeable to the testate estate of Linnie Jane Hodges only; (d) That Administratrix Magno is hereby directed to allow the PCIB to inspect whatever records, documents and papers she may have in her possession in the same manner that Administrator PCIB is also directed to allow Administratrix Magno to inspect whatever records, documents and papers it may have in its possession; (e) That the accountant of the estate of Linnie Jane Hodges shall have access to all records of the transactions of both estates for the protection of the estate of Linnie Jane Hodges; and in like manner the accountant or any authorized representative of the estate of C.N. Hodges shall have access to the records of transactions of the Linnie Jane Hodges estate for the protection of the estate of C.N. Hodges. Once the estates' office shall have been opened by Administratrix Magno in the presence of the PCIB or its duly authorized representative and deputy clerk Albis or his duly authorized representative, both estates or any of the estates should not close it without previous consent and authority from this court. SO ORDERED. As may be noted, in this order, the respondent court required that all collections from the properties in the name of Hodges should be deposited in a joint account of the two estates, which indicates that seemingly the so-called modus operandi was no longer operative, but again there is nothing to show when this situation started. Likewise, in paragraph 3 of the petitioner's motion of September 14, 1964, on pages 188-201 of the Green Record on Appeal, (also found on pp. 83-91 of the Yellow Record on Appeal) it is alleged that: 3. On January 24, 1964 virtually all of the heirs of C.N. Hodges, Joe Hodges and Fernando P. Mirasol acting as the two co-administrators of the estate of C.N. Hodges, Avelina A. Magno acting as the administratrix of the estate of Linnie Jane Hodges and Messrs. William Brown and Ardell Young acting for all of the Higdon family who claim to be the sole beneficiaries of the estate of Linnie Jane Hodges and various legal counsel representing the aforementioned parties entered into an amicable agreement, which was approved by this Honorable Court, wherein the parties thereto agreed that certain sums of money were to be paid in settlement of different claims against the two estates and that the assets (to the extent they existed) of both estates would be administered jointly by the PCIB as administrator of the estate of C.N. Hodges and Avelina A. Magno as administratrix of the estate of Linnie Jane Hodges, subject, however, to the aforesaid October 5, 1963 Motion, namely, the PCIB's claim to exclusive possession and ownership of one hundred percent (100%) (or, in the alternative, seventy-five percent (75%) of all assets owned by C.N. Hodges or Linnie Jane Hodges situated in the Philippines. On February 1, 1964 (pp. 934-935, CFI Rec., S.P. No. 1672) this Honorable Court amended its order of January 24, 1964 but in no way changed its recognition of the afore-described basic demand by the PCIB as administrator of the estate of C.N. Hodges to one hundred percent (100%) of the assets claimed by both estates.

but no copy of the mentioned agreement of joint administration of the two estates exists in the record, and so, We are not informed as to what exactly are the terms of the same which could be relevant in the resolution of the issues herein. On the other hand, the appealed order of November 3, 1965, on pages 313-320 of the Green Record on Appeal, authorized payment by respondent Magno of, inter alia, her own fees as administratrix, the attorney's fees of her lawyers, etc., as follows: Administratrix Magno thru Attys. Raul S. Manglapus and Rizal. R. Quimpo filed a Manifestation and Urgent Motion dated June 10, 1964 asking for the approval of the Agreement dated June 6, 1964 which Agreement is for the purpose of retaining their services to protect and defend the interest of the said Administratrix in these proceedings and the same has been signed by and bears the express conformity of the attorney-in-fact of the late Linnie Jane Hodges, Mr. James L. Sullivan. It is further prayed that the Administratrix of the Testate Estate of Linnie Jane Hodges be directed to pay the retailers fee of said lawyers, said fees made chargeable as expenses for the administration of the estate of Linnie Jane Hodges (pp. 1641-1642, Vol. V, Sp. 1307). An opposition has been filed by the Administrator PCIB thru Atty. Herminio Ozaeta dated July 11, 1964, on the ground that payment of the retainers fee of Attys. Manglapus and Quimpo as prayed for in said Manifestation and Urgent Motion is prejudicial to the 100% claim of the estate of C. N. Hodges; employment of Attys. Manglapus and Quimpo is premature and/or unnecessary; Attys. Quimpo and Manglapus are representing conflicting interests and the estate of Linnie Jane Hodges should be closed and terminated (pp. 1679-1684, Vol, V, Sp. 1307). Atty. Leon P. Gellada filed a memorandum dated July 28, 1964 asking that the Manifestation and Urgent Motion filed by Attys. Manglapus and Quimpo be denied because no evidence has been presented in support thereof. Atty. Manglapus filed a reply to the opposition of counsel for the Administrator of the C. N. Hodges estate wherein it is claimed that expenses of administration include reasonable counsel or attorney's fees for services to the executor or administrator. As a matter of fact the fee agreement dated February 27, 1964 between the PCIB and the law firm of Ozaeta, Gibbs & Ozaeta as its counsel (Pp. 1280-1284, Vol. V, Sp. 1307) which stipulates the fees for said law firm has been approved by the Court in its order dated March 31, 1964. If payment of the fees of the lawyers for the administratrix of the estate of Linnie Jane Hodges will cause prejudice to the estate of C. N. Hodges, in like manner the very agreement which provides for the payment of attorney's fees to the counsel for the PCIB will also be prejudicial to the estate of Linnie Jane Hodges (pp. 1801-1814, Vol. V, Sp. 1307). Atty. Herminio Ozaeta filed a rejoinder dated August 10, 1964 to the reply to the opposition to the Manifestation and Urgent Motion alleging principally that the estates of Linnie Jane Hodges and C. N. Hodges are not similarly situated for the reason that C. N. Hodges is an heir of Linnie Jane Hodges whereas the latter is not an heir of the former for the reason that Linnie Jane Hodges predeceased C. N. Hodges (pp. 1839-1848, Vol. V, Sp. 1307); that Attys. Manglapus and Quimpo formally entered their appearance in behalf of Administratrix of the estate of Linnie Jane Hodges on June 10, 1964 (pp. 1639-1640, Vol. V, Sp. 1307). Atty. Manglapus filed a manifestation dated December 18, 1964 stating therein that Judge Bellosillo issued an order requiring the parties to submit memorandum in support of their respective contentions. It is prayed in this manifestation that the Manifestation and Urgent Motion dated June 10, 1964 be resolved (pp. 6435-6439, Vol. VII, Sp. 1307). Atty. Roman Mabanta, Jr. for the PCIB filed a counter- manifestation dated January 5, 1965 asking that after the consideration by the court of all allegations and arguments and pleadings of the PCIB in connection therewith (1) said manifestation and urgent motion of Attys. Manglapus and Quimpo be denied (pp. 6442-6453, Vol. VII, Sp. 1307). Judge Querubin issued an order dated January 4, 1965 approving the motion dated June 10, 1964 of the attorneys for the administratrix of the estate of Linnie Jane Hodges and agreement annexed to said motion. The said order further states: "The Administratrix of the estate of Linnie Jane Hodges is authorized to issue or sign whatever check or checks may be necessary for the above purpose and the administrator of the estate of C. N. Hodges is ordered to countersign the same. (pp. 6518-6523, Vol VII, Sp. 1307). Atty. Roman Mabanta, Jr. for the PCIB filed a manifestation and motion dated January 13, 1965 asking that the order of January 4, 1965 which was issued by Judge Querubin be declared null and void and to enjoin the clerk of court and the administratrix and administrator in these special proceedings from all proceedings and action to enforce or comply with the provision of the aforesaid order of January 4, 1965. In support of said manifestation and motion it is alleged that the order of January 4, 1965 is null and void because the said order was never delivered to the deputy clerk Albis of Branch V (the sala of Judge Querubin) and the alleged order was found in the drawer of the late Judge Querubin in his office when said drawer was opened on January 13, 1965 after the death of Judge Querubin by Perfecto Querubin, Jr., the son of the judge and in the presence of Executive Judge Rovira and deputy clerk Albis (Sec. 1, Rule 36, New Civil Code) (Pp. 66006606, Vol. VIII, Sp. 1307). Atty. Roman Mabanta, Jr. for the PCIB filed a motion for reconsideration dated February 23, 1965 asking that the order dated January 4, 1964 be reversed on the ground that: 1. Attorneys retained must render services to the estate not to the personal heir; 2. If services are rendered to both, fees should be pro-rated between them; 3. Attorneys retained should not represent conflicting interests; to the prejudice of the other heirs not represented by said attorneys; 4. Fees must be commensurate to the actual services rendered to the estate; 5. There must be assets in the estate to pay for said fees (Pp. 6625-6636, Vol. VIII, Sp. 1307). Atty. Quimpo for Administratrix Magno of the estate of Linnie Jane Hodges filed a motion to submit dated July 15, 1965 asking that the manifestation and urgent motion dated June 10, 1964 filed by Attys. Manglapus and Quimpo and other incidents directly appertaining thereto be considered submitted for consideration and approval (pp. 6759-6765, Vol. VIII, Sp. 1307). Considering the arguments and reasons in support to the pleadings of both the Administratrix and the PCIB, and of Atty. Gellada, hereinbefore mentioned, the Court believes that the order of January 4, 1965 is null and void for the reason that the said order has not been filed with deputy clerk Albis of this court (Branch V) during the lifetime of Judge Querubin who signed the said order. However, the said manifestation and urgent motion dated June 10, 1964 is being treated and considered in this instant order. It is worthy to note that in the motion dated January 24, 1964 (Pp. 1149- 1163, Vol. V, Sp. 1307) which has been filed by Atty. Gellada and his associates and Atty. Gibbs and other lawyers in addition to the stipulated fees for actual services rendered. However, the fee agreement dated February 27, 1964, between the Administrator of the estate of C. N. Hodges and Atty. Gibbs which provides for retainer fee of P4,000 monthly in addition to specific fees for actual appearances, reimbursement for expenditures and contingent fees has also been approved by

the Court and said lawyers have already been paid. (pp. 1273-1279, Vol. V, Sp. Proc. 1307 pp. 1372-1373, Vol. V, Sp. Proc. 1307). WHEREFORE, the order dated January 4, 1965 is hereby declared null and void. The manifestation and motion dated June 10, 1964 which was filed by the attorneys for the administratrix of the testate estate of Linnie Jane Hodges is granted and the agreement annexed thereto is hereby approved. The administratrix of the estate of Linnie Jane Hodges is hereby directed to be needed to implement the approval of the agreement annexed to the motion and the administrator of the estate of C. N. Hodges is directed to countersign the said check or checks as the case may be. SO ORDERED. thereby implying somehow that the court assumed the existence of independent but simultaneous administrations. Be that as it may, again, it appears that on August 6, 1965, the court, acting on a motion of petitioner for the approval of deeds of sale executed by it as administrator of the estate of Hodges, issued the following order, also on appeal herein: Acting upon the motion for approval of deeds of sale for registered land of the PCIB, Administrator of the Testate Estate of C. N. Hodges in Sp. Proc. 1672 (Vol. VII, pp. 2244-2245), dated July 16, 1965, filed by Atty. Cesar T. Tirol in representation of the law firms of Ozaeta, Gibbs and Ozaeta and Tirol and Tirol and the opposition thereto of Atty. Rizal R. Quimpo (Vol. VIII, pp. 6811-6813) dated July 22, 1965 and considering the allegations and reasons therein stated, the court believes that the deeds of sale should be signed jointly by the PCIB, Administrator of the Testate Estate of C. N. Hodges and Avelina A. Magno, Administratrix of the Testate Estate of Linnie Jane Hodges and to this effect the PCIB should take the necessary steps so that Administratrix Avelina A. Magno could sign the deeds of sale. SO ORDERED. (p. 248, Green Record on Appeal.) Notably this order required that even the deeds executed by petitioner, as administrator of the Estate of Hodges, involving properties registered in his name, should be co-signed by respondent Magno. 3 And this was not an isolated instance. In her brief as appellee, respondent Magno states: After the lower court had authorized appellee Avelina A. Magno to execute final deeds of sale pursuant to contracts to sell executed by C. N. Hodges on February 20, 1963 (pp. 45-46, Green ROA), motions for the approval of final deeds of sale (signed by appellee Avelina A. Magno and the administrator of the estate of C. N. Hodges, first Joe Hodges, then Atty. Fernando Mirasol and later the appellant) were approved by the lower court upon petition of appellee Magno's counsel, Atty. Leon P. Gellada, on the basis of section 8 of Rule 89 of the Revised Rules of Court. Subsequently, the appellant, after it had taken over the bulk of the assets of the two estates, started presenting these motions itself. The first such attempt was a "Motion for Approval of Deeds of Sale for Registered Land and Cancellations of Mortgages" dated July 21, 1964 filed by Atty. Cesar T. Tirol, counsel for the appellant, thereto annexing two (2) final deeds of sale and two (2) cancellations of mortgages signed by appellee Avelina A. Magno and D. R. Paulino, Assistant Vice-President and Manager of the appellant (CFI Record, Sp. Proc. No. 1307, Vol. V, pp. 1694-1701). This motion was approved by the lower court on July 27, 1964. It was followed by another motion dated August 4, 1964 for the approval of one final deed of sale again signed by appellee Avelina A. Magno and D. R. Paulino (CFI Record, Sp. Proc. No. 1307. Vol. V, pp. 18251828), which was again approved by the lower court on August 7, 1964. The gates having been opened, a flood ensued: the appellant subsequently filed similar motions for the approval of a multitude of deeds of sales and cancellations of mortgages signed by both the appellee Avelina A. Magno and the appellant. A random check of the records of Special Proceeding No. 1307 alone will show Atty. Cesar T. Tirol as having presented for court approval deeds of sale of real properties signed by both appellee Avelina A. Magno and D. R. Paulino in the following numbers: (a) motion dated September 21, 1964 6 deeds of sale; (b) motion dated November 4, 1964 1 deed of sale; (c) motion dated December 1, 1964 4 deeds of sale; (d) motion dated February 3, 1965 8 deeds of sale; (f) motion dated May 7, 1965 9 deeds of sale. In view of the very extensive landholdings of the Hodges spouses and the many motions filed concerning deeds of sale of real properties executed by C. N. Hodges the lower court has had to constitute special separate expedientes in Special Proceedings Nos. 1307 and 1672 to include mere motions for the approval of deeds of sale of the conjugal properties of the Hodges spouses. As an example, from among the very many, under date of February 3, 1965, Atty. Cesar T. Tirol, as counsel for the appellant, filed "Motion for Approval of Deeds of Sale for Registered Land and Cancellations of Mortgages" (CFI Record, Sp. Proc. No. 1307, Vol. VIII, pp. 6570-6596) the allegations of which read: "1. In his lifetime, the late C. N. Hodges executed "Contracts to Sell" real property, and the prospective buyers under said contracts have already paid the price and complied with the terms and conditions thereof; "2. In the course of administration of both estates, mortgage debtors have already paid their debts secured by chattel mortgages in favor of the late C. N. Hodges, and are now entitled to release therefrom; "3. There are attached hereto documents executed jointly by the Administratrix in Sp. Proc. No. 1307 and the Administrator in Sp. Proc. No. 1672, consisting of deeds of sale in favor Fernando Cano, Bacolod City, Occ. Negros Fe Magbanua, Iloilo City Policarpio M. Pareno, La Paz, Iloilo City Rosario T. Libre, Jaro, Iloilo City Federico B. Torres, Iloilo City Reynaldo T. Lataquin, La Paz, Iloilo City Anatolio T. Viray, Iloilo City Benjamin Rolando, Jaro, Iloilo City and cancellations of mortgages in favor of Pablo Manzano, Oton, Iloilo Ricardo M. Diana, Dao, San Jose, Antique Simplicio Tingson, Iloilo City Amado Magbanua, Pototan, Iloilo Roselia M. Baes, Bolo, Roxas City William Bayani, Rizal Estanzuela, Iloilo City Elpidio Villarete, Molo, Iloilo City Norma T. Ruiz, Jaro, Iloilo City "4. That the approval of the aforesaid documents will not reduce the assets of the estates so as to prevent any creditor from receiving his full debt or diminish his dividend." And the prayer of this motion is indeed very revealing:

"WHEREFORE, it is respectfully prayed that, under Rule 89, Section 8 of the Rules of Court, this honorable court approve the aforesaid deeds of sale and cancellations of mortgages." (Pp. 113-117, Appellee's Brief.) None of these assertions is denied in Petitioner's reply brief. Further indicating lack of concrete perspective or orientation on the part of the respondent court and its hesitancy to clear up matters promptly, in its other appealed order of November 23, 1965, on pages 334-335 of the Green Record on Appeal, said respondent court allowed the movant Ricardo Salas, President of appellee Western Institute of Technology (successor of Panay Educational Institutions, Inc.), one of the parties with whom Hodges had contracts that are in question in the appeals herein, to pay petitioner, as Administrator of the estate of Hodges and/or respondent Magno, as Administrator of the estate of Mrs. Hodges, thus: Considering that in both cases there is as yet no judicial declaration of heirs nor distribution of properties to whomsoever are entitled thereto, the Court believes that payment to both the administrator of the testate estate of C. N. Hodges and the administratrix of the testate estate of Linnie Jane Hodges or to either one of the two estates is proper and legal. WHEREFORE, movant Ricardo T. Salas can pay to both estates or either of them. SO ORDERED. (Pp. 334-335, Green Record on Appeal.) On the other hand, as stated earlier, there were instances when respondent Magno was given authority to act alone. For instance, in the other appealed order of December 19, 1964, on page 221 of the Green Record on Appeal, the respondent court approved payments made by her of overtime pay to some employees of the court who had helped in gathering and preparing copies of parts of the records in both estates as follows: Considering that the expenses subject of the motion to approve payment of overtime pay dated December 10, 1964, are reasonable and are believed by this Court to be a proper charge of administration chargeable to the testate estate of the late Linnie Jane Hodges, the said expenses are hereby APPROVED and to be charged against the testate estate of the late Linnie Jane Hodges. The administrator of the testate estate of the late Charles Newton Hodges is hereby ordered to countersign the check or checks necessary to pay the said overtime pay as shown by the bills marked Annex "A", "B" and "C" of the motion. SO ORDERED. (Pp. 221-222, Green Record on Appeal.) Likewise, the respondent court approved deeds of sale executed by respondent Magno alone, as Administratrix of the estate of Mrs. Hodges, covering properties in the name of Hodges, pursuant to "contracts to sell" executed by Hodges, irrespective of whether they were executed by him before or after the death of his wife. The orders of this nature which are also on appeal herein are the following: 1. Order of March 30, 1966, on p. 137 of the Green Record on Appeal, approving the deed of sale executed by respondent Magno in favor of appellee Lorenzo Carles on February 24, 1966, pursuant to a "contract to sell" signed by Hodges on June 17, 1958, after the death of his wife, which contract petitioner claims was cancelled by it for failure of Carles to pay the installments due on January 7, 1965. 2. Order of April 5, 1966, on pp. 139-140, id., approving the deed of sale executed by respondent Magno in favor of appellee Salvador Guzman on February 28, 1966 pursuant to a "contract to sell" signed by Hodges on September 13, 1960, after the death of his wife, which contract petitioner claims it cancelled on March 3, 1965 in view of failure of said appellee to pay the installments on time. 3. Order of April 20, 1966, on pp. 167-168, id., approving the deed of sale executed by respondent Magno in favor of appellee Purificacion Coronado on March 28, 1966 pursuant to a "contract to sell" signed by Hodges on August 14, 1961, after the death of his wife. 4. Order of April 20, 1966, on pp. 168-169, id., approving the deed of sale executed by respondent Magno in favor of appellee Florenia Barrido on March 28, 1966, pursuant to a "contract to sell" signed by Hodges on February 21, 1958, after the death of his wife. 5. Order of June 7, 1966, on pp. 184-185, id., approving the deed of sale executed by respondent Magno in favor of appellee Belcezar Causing on May 2, 1966, pursuant to a "contract to sell" signed by Hodges on February 10, 1959, after the death of his wife. 6. Order of June 21, 1966, on pp. 211-212, id., approving the deed of sale executed by respondent Magno in favor of appellee Artheo Thomas Jamir on June 3, 1966, pursuant to a "contract to sell" signed by Hodges on May 26, 1961, after the death of his wife. 7. Order of June 21, 1966, on pp. 212-213, id., approving the deed of sale executed by respondent Magno in favor of appellees Graciano Lucero and Melquiades Batisanan on June 6 and June 3, 1966, respectively, pursuant to "contracts to sell" signed by Hodges on June 9, 1959 and November 27, 1961, respectively, after the death of his wife. 8. Order of December 2, 1966, on pp. 303-304, id., approving the deed of sale executed by respondent Magno in favor of appellees Espiridion Partisala, Winifredo Espada and Rosario Alingasa on September 6, 1966, August 17, 1966 and August 3, 1966, respectively, pursuant to "contracts to sell" signed by Hodges on April 20, 1960, April 18, 1960 and August 25, 1958, respectively, that is, after the death of his wife. 9. Order of April 5, 1966, on pp. 137-138, id., approving the deed of sale executed by respondent Magno in favor of appellee Alfredo Catedral on March 2, 1966, pursuant to a "contract to sell" signed by Hodges on May 29, 1954, before the death of his wife, which contract petitioner claims it had cancelled on February 16, 1966 for failure of appellee Catedral to pay the installments due on time. 10. Order of April 5, 1966, on pp. 138-139, id., approving the deed of sale executed by respondent Magno in favor of appellee Jose Pablico on March 7, 1966, pursuant to a "contract to sell" signed by Hodges on March 7, 1950, after the death of his wife, which contract petitioner claims it had cancelled on June 29, 1960, for failure of appellee Pablico to pay the installments due on time. 11. Order of December 2, 1966, on pp. 303-304, id., insofar as it approved the deed of sale executed by respondent Magno in favor of appellee Pepito Iyulores on September 6, 1966, pursuant to a "contract to sell" signed by Hodges on February 5, 1951, before the death of his wife. 12. Order of January 3, 1967, on pp. 335-336, id., approving three deeds of sale executed by respondent Magno, one in favor of appellees Santiago Pacaonsis and two in favor of appellee Adelfa Premaylon on December 5, 1966 and November 3, 1966, respectively, pursuant to separate "promises to sell" signed respectively by Hodges on May 26, 1955 and January 30, 1954, before the death of his wife, and October 31, 1959, after her death.

In like manner, there were also instances when respondent court approved deeds of sale executed by petitioner alone and without the concurrence of respondent Magno, and such approvals have not been the subject of any appeal. No less than petitioner points this out on pages 149-150 of its brief as appellant thus: The points of fact and law pertaining to the two abovecited assignments of error have already been discussed previously. In the first abovecited error, the order alluded to was general, and as already explained before, it was, as admitted by the lower court itself, superseded by the particular orders approving specific final deeds of sale executed by the appellee, Avelina A. Magno, which are subject of this appeal, as well as the particular orders approving specific final deeds of sale executed by the appellant, Philippine Commercial and Industrial Bank, which were never appealed by the appellee, Avelina A. Magno, nor by any party for that matter, and which are now therefore final. Now, simultaneously with the foregoing incidents, others of more fundamental and all embracing significance developed. On October 5, 1963, over the signature of Atty. Allison J. Gibbs in representation of the law firm of Ozaeta, Gibbs & Ozaeta, as counsel for the co-administrators Joe Hodges and Fernando P. Mirasol, the following self-explanatory motion was filed: URGENT MOTION FOR AN ACCOUNTING AND DELIVERY TO ADMINISTRATION OF THE ESTATE OF C. N. HODGES OF ALL OF THE ASSETS OF THE CONJUGAL PARTNERSHIP OF THE DECEASED LINNIE JANE HODGES AND C N. HODGES EXISTING AS OF MAY 23, 1957 PLUS ALL THE RENTS, EMOLUMENTS AND INCOME THEREFROM. COMES NOW the co-administrator of the estate of C. N. Hodges, Joe Hodges, through his undersigned attorneys in the above-entitled proceedings, and to this Honorable Court respectfully alleges: (1) On May 23, 1957 Linnie Jane Hodges died in Iloilo City. (2) On June 28, 1957 this Honorable Court admitted to probate the Last Will and Testament of the deceased Linnie Jane Hodges executed November 22, 1952 and appointed C. N. Hodges as Executor of the estate of Linnie Jane Hodges (pp. 24-25, Rec. Sp. Proc. 1307). (3) On July 1, 1957 this Honorable Court issued Letters Testamentary to C. N. Hodges in the Estate of Linnie Jane Hodges (p. 30, Rec. Sp. Proc. 1307). (4) On December 14, 1957 this Honorable Court, on the basis of the following allegations in a Motion dated December 11, 1957 filed by Leon P. Gellada as attorney for the executor C. N. Hodges: "That herein Executor, (is) not only part owner of the properties left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane Hodges." (p. 44, Rec. Sp. Proc. 1307; emphasis supplied.) issued the following order: "As prayed for by Attorney Gellada, counsel for the Executory, for the reasons stated in his motion dated December 11, 1957 which the court considers well taken, all the sales, conveyances, leases and mortgages of all properties left by the deceased Linnie Jane Hodges are hereby APPROVED. The said executor is further authorized to execute subsequent sales, conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance with the wishes contained in the last will and testament of the latter ." (p. 46, Rec. Sp. Proc. 1307; emphasis supplied.) (5) On April 21, 1959 this Honorable Court approved the inventory and accounting submitted by C. N. Hodges through his counsel Leon P. Gellada on April 14, 1959 wherein he alleged among other things "That no person interested in the Philippines of the time and place of examining the herein account, be given notice, as herein executor is the only devisee or legatee of the deceased, in accordance with the last will and testament already probated by the Honorable Court." (pp. 77-78, Rec. Sp. Proc. 1307; emphasis supplied.). (6) On July 30, 1960 this Honorable Court approved the "Annual Statement of Account" submitted by C. N. Hodges through his counsel Leon P. Gellada on July 21, 1960 wherein he alleged among other things: "That no person interested in the Philippines of the time and place of examining the herein account, be given notice as herein executor is the only devisee or legatee of the deceased Linnie Jane Hodges , in accordance with the last will and testament of the deceased, already probated by this Honorable Court." (pp. 81-82. Rec. Sp. Proc. 1307; emphasis supplied.) (7) On May 2, 1961 this Honorable court approved the "Annual Statement of Account By The Executor for the Year 1960" submitted through Leon P. Gellada on April 20, 1961 wherein he alleged: That no person interested in the Philippines be given notice, of the time and place of examining the herein account, as herein Executor is the only devisee or legatee of the deceased Linnie Jane Hodges, in accordance with the last will and testament of the deceased, already probated by this Honorable Court . (pp. 90-91. Rec. Sp. Proc. 1307; emphasis supplied.) (8) On December 25, 1962, C.N. Hodges died. (9) On December 25, 1962, on the Urgent Ex-parte Motion of Leon P. Gellada filed only in Special Proceeding No. 1307, this Honorable Court appointed Avelina A. Magno "Administratrix of the estate of Linnie Jane Hodges and as Special Administratrix of the estate of Charles Newton Hodges, in the latter case, because the last will of said Charles Newton Hodges is still kept in his vault or iron safe and that the real and personal properties of both spouses may be lost, damaged or go to waste, unless a Special Administratrix is appointed." (p. 100. Rec. Sp. Proc. 1307) (10) On December 26, 1962 Letters of Administration were issued to Avelina Magno pursuant to this Honorable Court's aforesaid Order of December 25, 1962 "With full authority to take possession of all the property of said deceased in any province or provinces in which it may be situated and to perform all other acts necessary for the preservation of said property, said Administratrix and/or Special Administratrix having filed a bond satisfactory to the Court." (p. 102, Rec. Sp. Proc. 1307) (11) On January 22, 1963 this Honorable Court on petition of Leon P. Gellada of January 21, 1963 issued Letters of Administration to: (a) Avelina A. Magno as Administratrix of the estate of Linnie Jane Hodges; (b) Avelina A. Magno as Special Administratrix of the Estate of Charles Newton Hodges; and (c) Joe Hodges as Co-Special Administrator of the Estate of Charles Newton Hodges. (p. 43, Rec. Sp. Proc. 1307)

(12) On February 20, 1963 this Honorable Court on the basis of a motion filed by Leon P. Gellada as legal counsel on February 16, 1963 for Avelina A. Magno acting as Administratrix of the Estate of Charles Newton Hodges (pp. 114-116, Sp. Proc. 1307) issued the following order: "... se autoriza a aquella (Avelina A. Magno) a firmar escrituras de venta definitiva de propiedades cubiertas por contratos para vender, firmados, en vida, por el finado Charles Newton Hodges, cada vez que el precio estipulado en cada contrato este totalmente pagado. Se autoriza igualmente a la misma a firmar escrituras de cancelacion de hipoteca tanto de bienes reales como personales cada vez que la consideracion de cada hipoteca este totalmente pagada. "Cada una de dichas escrituras que se otorguen debe ser sometida para la aprobacion de este Juzgado." (p. 117, Sp. Proc. 1307). [Par 1 (c), Reply to Motion For Removal of Joe Hodges] (13) On September l6, 1963 Leon P. Gellada, acting as attorney for Avelina A. Magno as Administratrix of the estate of Linnie Jane Hodges, alleges: 3. That since January, 1963, both estates of Linnie Jane Hodges and Charles Newton Hodges have been receiving in full, payments for those "contracts to sell" entered into by C. N. Hodges during his lifetime, and the purchasers have been demanding the execution of definite deeds of sale in their favor. 4. That hereto attached are thirteen (13) copies deeds of sale executed by the Administratrix and by the coadministrator (Fernando P. Mirasol) of the estate of Linnie Jane Hodges and Charles Newton Hodges respectively, in compliance with the terms and conditions of the respective "contracts to sell" executed by the parties thereto." (14) The properties involved in the aforesaid motion of September 16, 1963 are all registered in the name of the deceased C. N. Hodges. (15) Avelina A. Magno, it is alleged on information and belief, has been advertising in the newspaper in Iloilo thusly: For Sale Testate Estate of Linnie Jane Hodges and Charles Newton Hodges. All Real Estate or Personal Property will be sold on First Come First Served Basis. Avelina A. Magno Administratrix (16) Avelina A. Magno, it is alleged on information and belief, has paid and still is paying sums of money to sundry persons. (17) Joe Hodges through the undersigned attorneys manifested during the hearings before this Honorable Court on September 5 and 6, 1963 that the estate of C. N. Hodges was claiming all of the assets belonging to the deceased spouses Linnie Jane Hodges and C. N. Hodges situated in Philippines because of the aforesaid election by C. N. Hodges wherein he claimed and took possession as sole owner of all of said assets during the administration of the estate of Linnie Jane Hodges on the ground that he was the sole devisee and legatee under her Last Will and Testament. (18) Avelina A. Magno has submitted no inventory and accounting of her administration as Administratrix of the estate of Linnie Jane Hodges and Special Administratrix of the estate of C. N. Hodges. However, from manifestations made by Avelina A. Magno and her legal counsel, Leon P. Gellada, there is no question she will claim that at least fifty per cent (50%) of the conjugal assets of the deceased spouses and the rents, emoluments and income therefrom belong to the Higdon family who are named in paragraphs Fourth and Fifth of the Will of Linnie Jane Hodges (p. 5, Rec. Sp. Proc. 1307). WHEREFORE, premises considered, movant respectfully prays that this Honorable Court, after due hearing, order: (1) Avelina A. Magno to submit an inventory and accounting of all of the funds, properties and assets of any character belonging to the deceased Linnie Jane Hodges and C. N. Hodges which have come into her possession, with full details of what she has done with them; (2) Avelina A. Magno to turn over and deliver to the Administrator of the estate of C. N. Hodges all of the funds, properties and assets of any character remaining in her possession; (3) Pending this Honorable Court's adjudication of the aforesaid issues, Avelina A. Magno to stop, unless she first secures the conformity of Joe Hodges (or his duly authorized representative, such as the undersigned attorneys) as the Coadministrator and attorney-in-fact of a majority of the beneficiaries of the estate of C. N. Hodges: (a) Advertising the sale and the sale of the properties of the estates: (b) Employing personnel and paying them any compensation. (4) Such other relief as this Honorable Court may deem just and equitable in the premises. (Annex "T", Petition.) Almost a year thereafter, or on September 14, 1964, after the co-administrators Joe Hodges and Fernando P. Mirasol were replaced by herein petitioner Philippine Commercial and Industrial Bank as sole administrator, pursuant to an agreement of all the heirs of Hodges approved by the court, and because the above motion of October 5, 1963 had not yet been heard due to the absence from the country of Atty. Gibbs, petitioner filed the following: MANIFESTATION AND MOTION, INCLUDING MOTION TO SET FOR HEARING AND RESOLVE "URGENT MOTION FOR AN ACCOUNTING AND DELIVERY TO ADMINISTRATORS OF THE ESTATE OF C. N. HODGES OF ALL THE ASSETS OF THE CONJUGAL PARTNERSHIP OF THE DECEASED LINNIE JANE HODGES AND C. N. HODGES EXISTING AS OF MAY 23, 1957 PLUS ALL OF THE RENTS, EMOLUMENTS AND INCOME THEREFROM OF OCTOBER 5, 1963. COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB), the administrator of the estate of C. N. Hodges, deceased, in Special Proceedings No. 1672, through its undersigned counsel, and to this Honorable Court respectfully alleges that: 1. On October 5, 1963, Joe Hodges acting as the co-administrator of the estate of C. N. Hodges filed, through the undersigned attorneys, an "Urgent Motion For An Accounting and Delivery To Administrator of the Estate of C. N. Hodges of all Of The Assets Of The Conjugal Partnership of The Deceased Linnie Jane Hodges and C. N. Hodges Existing as Of May, 23, 1957 Plus All Of The Rents, Emoluments and Income Therefrom" (pp. 536-542, CFI Rec. S. P. No. 1672). 2. On January 24, 1964 this Honorable Court, on the basis of an amicable agreement entered into on January 23, 1964 by the two co-administrators of the estate of C. N. Hodges and virtually all of the heirs of C. N. Hodges (p. 912, CFI Rec., S. P. No. 1672), resolved the dispute over who should act as administrator of the estate of C. N. Hodges by appointing the PCIB as administrator of the estate of C. N. Hodges (pp. 905-906, CFI Rec. S. P. No. 1672) and issuing letters of administration to the PCIB. 3. On January 24, 1964 virtually all of the heirs of C. N. Hodges, Joe Hodges and Fernando P. Mirasol acting as the two co-administrators of the estate of C. N. Hodges, Avelina A. Magno acting as the administratrix of the estate of Linnie Jane Hodges, and Messrs. William Brown and Ardel Young Acting for all of the Higdon family who claim to be the sole

beneficiaries of the estate of Linnie Jane Hodges and various legal counsel representing the aforenamed parties entered into an amicable agreement, which was approved by this Honorable Court, wherein the parties thereto agreed that certain sums of money were to be paid in settlement of different claims against the two estates and that the assets (to the extent they existed)of both estates would be administrated jointly by the PCIB as administrator of the estate of C. N. Hodges and Avelina A. Magno as administratrix of the estate of Linnie Jane Hodges , subject, however, to the aforesaid October 5, 1963 Motion, namely, the PCIB's claim to exclusive possession and ownership of one-hundred percent (10017,) (or, in the alternative, seventy-five percent [75%] of all assets owned by C. N. Hodges or Linnie Jane Hodges situated in the Philippines. On February 1, 1964 (pp. 934-935, CFI Rec., S. P. No. 1672) this Honorable Court amended its order of January 24, 1964 but in no way changes its recognition of the aforedescribed basic demand by the PCIB as administrator of the estate of C. N. Hodges to one hundred percent (100%) of the assets claimed by both estates. 4. On February 15, 1964 the PCIB filed a "Motion to Resolve" the aforesaid Motion of October 5, 1963. This Honorable Court set for hearing on June 11, 1964 the Motion of October 5, 1963. 5. On June 11, 1964, because the undersigned Allison J. Gibbs was absent in the United States, this Honorable Court ordered the indefinite postponement of the hearing of the Motion of October 5, 1963. 6. Since its appointment as administrator of the estate of C. N. Hodges the PCIB has not been able to properly carry out its duties and obligations as administrator of the estate of C. N. Hodges because of the following acts, among others, of Avelina A. Magno and those who claim to act for her as administratrix of the estate of Linnie Jane Hodges: (a) Avelina A. Magno illegally acts as if she is in exclusive control of all of the assets in the Philippines of both estates including those claimed by the estate of C. N. Hodges as evidenced in part by her locking the premises at 206-208 Guanco Street, Iloilo City on August 31, 1964 and refusing to reopen same until ordered to do so by this Honorable Court on September 7, 1964. (b) Avelina A. Magno illegally acts as though she alone may decide how the assets of the estate of C.N. Hodges should be administered, who the PCIB shall employ and how much they may be paid as evidenced in party by her refusal to sign checks issued by the PCIB payable to the undersigned counsel pursuant to their fee agreement approved by this Honorable Court in its order dated March 31, 1964. (c) Avelina A. Magno illegally gives access to and turns over possession of the records and assets of the estate of C.N. Hodges to the attorney-in-fact of the Higdon Family, Mr. James L. Sullivan, as evidenced in part by the cashing of his personal checks. (d) Avelina A. Magno illegally refuses to execute checks prepared by the PCIB drawn to pay expenses of the estate of C. N. Hodges as evidenced in part by the check drawn to reimburse the PCIB's advance of P48,445.50 to pay the 1964 income taxes reported due and payable by the estate of C.N. Hodges. 7. Under and pursuant to the orders of this Honorable Court, particularly those of January 24 and February 1, 1964, and the mandate contained in its Letters of Administration issued on January 24, 1964 to the PCIB, it has "full authority to take possession of all the property of the deceased C. N. Hodges "and to perform all other acts necessary for the preservation of said property." (p. 914, CFI Rec., S.P. No. 1672.) 8. As administrator of the estate of C. N. Hodges, the PCIB claims the right to the immediate exclusive possession and control of all of the properties, accounts receivables, court cases, bank accounts and other assets, including the documentary records evidencing same, which existed in the Philippines on the date of C. N. Hodges' death, December 25, 1962, and were in his possession and registered in his name alone. The PCIB knows of no assets in the Philippines registered in the name of Linnie Jane Hodges, the estate of Linnie Jane Hodges, or, C. N. Hodges, Executor of the Estate of Linnie Jane Hodges on December 25, 1962. All of the assets of which the PCIB has knowledge are either registered in the name of C. N. Hodges, alone or were derived therefrom since his death on December 25, 1962. 9. The PCIB as the current administrator of the estate of C. N. Hodges, deceased, succeeded to all of the rights of the previously duly appointed administrators of the estate of C. N. Hodges, to wit: (a) On December 25, 1962, date of C. N. Hodges' death, this Honorable Court appointed Miss Avelina A. Magno simultaneously as: (i) Administratrix of the estate of Linnie Jane Hodges (p. 102, CFI Rec., S.P. No. 1307) to replace the deceased C. N. Hodges who on May 28, 1957 was appointed Special Administrator (p. 13. CFI Rec. S.P. No. 1307) and on July 1, 1957 Executor of the estate of Linnie Jane Hodges (p. 30, CFI Rec., S. P. No. 1307). (ii) Special Administratrix of the estate of C. N. Hodges (p. 102, CFI Rec., S.P. No. 1307). (b) On December 29, 1962 this Honorable Court appointed Harold K. Davies as co-special administrator of the estate of C.N. Hodges along with Avelina A. Magno (pp. 108-111, CFI Rec., S. P. No. 1307). (c) On January 22, 1963, with the conformity of Avelina A. Magno, Harold K. Davies resigned in favor of Joe Hodges (pp. 35-36, CFI Rec., S.P. No. 1672) who thereupon was appointed on January 22, 1963 by this Honorable Court as special co-administrator of the estate of C.N. Hodges (pp. 38-40 & 43, CFI Rec. S.P. No. 1672) along with Miss Magno who at that time was still acting as special co-administratrix of the estate of C. N. Hodges. (d) On February 22, 1963, without objection on the part of Avelina A. Magno, this Honorable Court appointed Joe Hodges and Fernando P. Mirasol as co-administrators of the estate of C.N. Hodges (pp. 76-78, 81 & 85, CFI Rec., S.P. No. 1672). 10. Miss Avelina A. Magno, pursuant to the orders of this Honorable Court of December 25, 1962, took possession of all Philippine Assets now claimed by the two estates. Legally, Miss Magno could take possession of the assets registered in the name of C. N. Hodges alone only in her capacity as Special Administratrix of the Estate of C.N. Hodges. With the appointment by this Honorable Court on February 22, 1963 of Joe Hodges and Fernando P. Mirasol as the coadministrators of the estate of C.N. Hodges, they legally were entitled to take over from Miss Magno the full and exclusive possession of all of the assets of the estate of C.N. Hodges. With the appointment on January 24, 1964 of the PCIB as the sole administrator of the estate of C.N. Hodges in substitution of Joe Hodges and Fernando P. Mirasol, the PCIB legally became the only party entitled to the sole and exclusive possession of all of the assets of the estate of C. N. Hodges. 11. The PCIB's predecessors submitted their accounting and this Honorable Court approved same, to wit: (a) The accounting of Harold K. Davies dated January 18, 1963 (pp. 16-33, CFI Rec. S.P. No. 1672); which shows or its face the: (i) Conformity of Avelina A. Magno acting as "Administratrix of the Estate of Linnie Jane Hodges and Special Administratrix of the Estate of C. N. Hodges"; (ii) Conformity of Leslie Echols, a Texas lawyer acting for the heirs of C.N. Hodges; and (iii) Conformity of William Brown, a Texas lawyer acting for the Higdon family who claim to be the only heirs of Linnie Jane Hodges (pp. 18, 25-33, CFI Rec., S. P. No. 1672).

Note: This accounting was approved by this Honorable Court on January 22, 1963 (p. 34, CFI Rec., S. P. No. 1672). (b) The accounting of Joe Hodges and Fernando P. Mirasol as of January 23, 1964, filed February 24, 1964 (pp. 9901000, CFI Rec. S.P. No. 1672 and pp. 1806-1848, CFI Rec. S.P. No. 1307). Note: This accounting was approved by this Honorable Court on March 3, 1964. (c) The PCIB and its undersigned lawyers are aware of no report or accounting submitted by Avelina A. Magno of her acts as administratrix of the estate of Linnie Jane Hodges or special administratrix of the estate of C.N. Hodges, unless it is the accounting of Harold K. Davies as special co-administrator of the estate of C.N. Hodges dated January 18, 1963 to which Miss Magno manifested her conformity (supra). 12. In the aforesaid agreement of January 24, 1964, Miss Avelina A. Magno agreed to receive P10,000.00 "for her services as administratrix of the estate of Linnie Jane Hodges" and in addition she agreed to be employed, starting February 1, 1964, at "a monthly salary of P500.00 for her services as an employee of both estates." 24 ems. 13. Under the aforesaid agreement of January 24, 1964 and the orders of this Honorable Court of same date, the PCIB as administrator of the estate of C. N. Hodges is entitled to the exclusive possession of all records, properties and assets in the name of C. N. Hodges as of the date of his death on December 25, 1962 which were in the possession of the deceased C. N. Hodges on that date and which then passed to the possession of Miss Magno in her capacity as Special Co-Administratrix of the estate of C. N. Hodges or the possession of Joe Hodges or Fernando P. Mirasol as coadministrators of the estate of C. N. Hodges. 14. Because of Miss Magno's refusal to comply with the reasonable request of PCIB concerning the assets of the estate of C. N. Hodges, the PCIB dismissed Miss Magno as an employee of the estate of C. N. Hodges effective August 31, 1964. On September 1, 1964 Miss Magno locked the premises at 206-208 Guanco Street and denied the PCIB access thereto. Upon the Urgent Motion of the PCIB dated September 3, 1964, this Honorable Court on September 7, 1964 ordered Miss Magno to reopen the aforesaid premises at 206-208 Guanco Street and permit the PCIB access thereto no later than September 8, 1964. 15. The PCIB pursuant to the aforesaid orders of this Honorable Court is again in physical possession of all of the assets of the estate of C. N. Hodges. However, the PCIB is not in exclusive control of the aforesaid records, properties and assets because Miss Magno continues to assert the claims hereinabove outlined in paragraph 6, continues to use her own locks to the doors of the aforesaid premises at 206-208 Guanco Street, Iloilo City and continues to deny the PCIB its right to know the combinations to the doors of the vault and safes situated within the premises at 206-208 Guanco Street despite the fact that said combinations were known to only C. N. Hodges during his lifetime. 16. The Philippine estate and inheritance taxes assessed the estate of Linnie Jane Hodges were assessed and paid on the basis that C. N. Hodges is the sole beneficiary of the assets of the estate of Linnie Jane Hodges situated in the Philippines. Avelina A. Magno and her legal counsel at no time have questioned the validity of the aforesaid assessment and the payment of the corresponding Philippine death taxes. 17. Nothing further remains to be done in the estate of Linnie Jane Hodges except to resolve the aforesaid Motion of October 5, 1963 and grant the PCIB the exclusive possession and control of all of the records, properties and assets of the estate of C. N. Hodges. 18. Such assets as may have existed of the estate of Linnie Jane Hodges were ordered by this Honorable Court in special Proceedings No. 1307 to be turned over and delivered to C. N. Hodges alone. He in fact took possession of them before his death and asserted and exercised the right of exclusive ownership over the said assets as the sole beneficiary of the estate of Linnie Jane Hodges. WHEREFORE, premises considered, the PCIB respectfully petitions that this Honorable court: (1) Set the Motion of October 5, 1963 for hearing at the earliest possible date with notice to all interested parties; (2) Order Avelina A. Magno to submit an inventory and accounting as Administratrix of the Estate of Linnie Jane Hodges and Co-Administratrix of the Estate of C. N. Hodges of all of the funds, properties and assets of any character belonging to the deceased Linnie Jane Hodges and C. N. Hodges which have come into her possession, with full details of what she has done with them; (3) Order Avelina A. Magno to turn over and deliver to the PCIB as administrator of the estate of C. N. Hodges all of the funds, properties and assets of any character remaining in her possession; (4) Pending this Honorable Court's adjudication of the aforesaid issues, order Avelina A. Magno and her representatives to stop interferring with the administration of the estate of C. N. Hodges by the PCIB and its duly authorized representatives; (5) Enjoin Avelina A. Magno from working in the premises at 206-208 Guanco Street, Iloilo City as an employee of the estate of C. N. Hodges and approve her dismissal as such by the PCIB effective August 31, 1964; (6) Enjoin James L. Sullivan, Attorneys Manglapus and Quimpo and others allegedly representing Miss Magno from entering the premises at 206-208 Guanco Street, Iloilo City or any other properties of C. N. Hodges without the express permission of the PCIB; (7) Order such other relief as this Honorable Court finds just and equitable in the premises. (Annex "U" Petition.) On January 8, 1965, petitioner also filed a motion for "Official Declaration of Heirs of Linnie Jane Hodges Estate" alleging: COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB), as administrator of the estate of the late C. N. Hodges, through the undersigned counsel, and to this Honorable Court respectfully alleges that: 1. During their marriage, spouses Charles Newton Hodges and Linnie Jane Hodges, American citizens originally from the State of Texas, U.S.A., acquired and accumulated considerable assets and properties in the Philippines and in the States of Texas and Oklahoma, United States of America. All said properties constituted their conjugal estate. 2. Although Texas was the domicile of origin of the Hodges spouses, this Honorable Court, in its orders dated March 31 and December 12, 1964 (CFI Record, Sp. Proc. No. 1307, pp. ----; Sp. Proc. No. 1672, p. ----), conclusively found and categorically ruled that said spouses had lived and worked for more than 50 years in Iloilo City and had, therefore, acquired a domicile of choice in said city, which they retained until the time of their respective deaths. 3. On November 22, 1952, Linnie Jane Hodges executed in the City of Iloilo her Last Will and Testament, a copy of which is hereto attached as Annex "A". The bequests in said will pertinent to the present issue are the second, third, and fourth provisions, which we quote in full hereunder. SECOND: I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real, wherever situated, or located, to my husband, Charles Newton Hodges, to have and to hold unto him, my said husband during his natural lifetime.

THIRD: I desire, direct and provide that my husband, Charles Newton Hodges, shall have the right to manage, control, use and enjoy said estate during his lifetime, and he is hereby given the right to make any changes in the physical properties of said estate by sale of any part thereof which he think best, and the purchase of any other or additional property as he may think best; to execute conveyances with or without general or special warranty, conveying in fee simple or for any other term or time, any property which he may deem proper to dispose of; to lease any of the real property for oil, gas and/or other minerals, and all such deeds or leases shall pass the absolute fee simple title to the interest so conveyed in such property as he may elect to sell. All rents, emoluments and income from said estate shall belong to him, and he is further authorized to use any part of the principal of said estate as he may need or desire. It is provided herein, however, that he shall not sell or otherwise dispose of any of the improved property now owned by us located at, in or near the City of Lubbock, Texas, but he shall have the full right to lease, manage and enjoy the same during his lifetime, as above provided. He shall have the right to sub-divide any farmland and sell lots therein, and may sell unimproved town lots. FOURTH: At the death of my said husband, Charles Newton Hodges, I give, devise and bequeath all of the rest, residue and remainder of my estate both real and personal, wherever situated or located, to be equally divided among my brothers and sisters, share and share alike, namely: "Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie Rascoe, Era Boman and Nimray Higdon." 4. On November 14, 1953, C. N. Hodges executed in the City of Iloilo his Last Will and Testament, a copy of which is hereto attached as Annex "B ". In said Will, C. N. Hodges designated his wife, Linnie Jane Hodges, as his beneficiary using the identical language she used in the second and third provisos of her Will, supra. 5. On May 23, 1957 Linnie Jane Hodges died in Iloilo City, predeceasing her husband by more than five (5) years. At the time of her death, she had no forced or compulsory heir, except her husband, C. N. Hodges. She was survived also by various brothers and sisters mentioned in her Will ( supra), which, for convenience, we shall refer to as the HIGDONS. 6. On June 28, 1957, this Honorable Court admitted to probate the Last Will and Testament of the deceased Linnie Jane Hodges (Annex "A"), and appointed C. N. Hodges as executor of her estate without bond. (CFI Record, Sp. Proc. No. 1307, pp. 24-25). On July 1, 1957, this Honorable Court issued letters testamentary to C. N. Hodges in the estate of Linnie Jane Hodges. (CFI Record, Sp. Proc. No. 1307, p. 30.) 7. The Will of Linnie Jane Hodges, with respect to the order of succession, the amount of successional rights, and the intrinsic of its testamentary provisions, should be governed by Philippine laws because: (a) The testatrix, Linnie Jane Hodges, intended Philippine laws to govern her Will; (b) Article 16 of the Civil Code provides that "the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found", shall prevail. However, the Conflict of Law of Texas, which is the "national law" of the testatrix, Linnie Jane Hodges, provide that the domiciliary law (Philippine law see paragraph 2, supra) should govern the testamentary dispositions and successional rights over movables (personal properties), and the law of the situs of the property (also Philippine law as to properties located in the Philippines) with regards immovable (real properties). Thus applying the "Renvoi Doctrine", as approved and applied by our Supreme Court in the case of "In The Matter Of The Testate Estate of Eduard E. Christensen", G.R. No. L-16749, promulgated January 31, 1963, Philippine law should apply to the Will of Linnie Jane Hodges and to the successional rights to her estate insofar as her movable andimmovable assets in the Philippines are concerned. We shall not, at this stage, discuss what law should govern the assets of Linnie Jane Hodges located in Oklahoma and Texas, because the only assets in issue in this motion are those within the jurisdiction of this motion Court in the two abovecaptioned Special Proceedings. 8. Under Philippine and Texas law, the conjugal or community estate of spouses shall, upon dissolution, be divided equally between them. Thus, upon the death of Linnie Jane Hodges on May 23, 1957, one-half (1/2) of the entirety of the assets of the Hodges spouses constituting their conjugal estate pertained automatically to Charles Newton Hodges, not by way of inheritance, but in his own right as partner in the conjugal partnership . The other one-half (1/2) portion of the conjugal estate constituted the estate of Linnie Jane Hodges. This is the only portion of the conjugal estate capable of inheritance by her heirs. 9. This one-half (1/2) portion of the conjugal assets pertaining to Linnie Jane Hodges cannot, under a clear and specific provision of her Will, be enhanced or increased by income, earnings, rents, or emoluments accruing after her death on May 23, 1957. Linnie Jane Hodges' Will provides that " all rents, emoluments and income from said estate shall belong to him (C. N. Hodges) and he is further authorized to use any part of the principal of said estate as he may need or desire ." (Paragraph 3, Annex "A".) Thus, by specific provision of Linnie Jane Hodges' Will, "all rents, emoluments and income" must be credited to the one-half (1/2) portion of the conjugal estate pertaining to C. N. Hodges. Clearly, therefore, the estate of Linnie Jane Hodges, capable of inheritance by her heirs, consisted exclusively of no more than one-half (1/2) of the conjugal estate, computed as of the time of her death on May 23, 1957 . 10. Articles 900, 995 and 1001 of the New Civil Code provide that the surviving spouse of a deceased leaving no ascendants or descendants is entitled, as a matter of right and by way of irrevocable legitime, to at least one-half (1/2) of the estate of the deceased, and no testamentary disposition by the deceased can legally and validly affect this right of the surviving spouse. In fact, her husband is entitled to said one-half (1/2) portion of her estate by way of legitime. (Article 886, Civil Code.) Clearly, therefore, immediately upon the death of Linnie Jane Hodges, C. N. Hodges was the owner of at least three-fourths (3/4) or seventy-five (75%) percent of all of the conjugal assets of the spouses, (1/2 or 50% by way of conjugal partnership share and 1/4 or 25% by way of inheritance and legitime) plus all "rents, emoluments and income" accruing to said conjugal estate from the moment of Linnie Jane Hodges' death (see paragraph 9, supra). 11. The late Linnie Jane Hodges designated her husband C.N. Hodges as her sole and exclusive heir with full authority to do what he pleased, as exclusive heir and owner of all the assets constituting her estate, except only with regards certain properties "owned by us, located at, in or near the City of Lubbock, Texas". Thus, even without relying on our laws of succession and legitime, which we have cited above , C. N. Hodges, by specific testamentary designation of his wife, was entitled to the entirely to his wife's estate in the Philippines . 12. Article 777 of the New Civil Code provides that "the rights of the successor are transmitted from the death of the decedent". Thus, title to the estate of Linnie Jane Hodges was transmitted to C. N. Hodges immediately upon her death on May 23, 1957. For the convenience of this Honorable Court, we attached hereto as Annex "C" a graph of how the conjugal estate of the spouses Hodges should be divided in accordance with Philippine law and the Will of Linnie Jane Hodges.

13. In his capacity as sole heir and successor to the estate of Linnie Jane Hodges as above-stated, C. N. Hodges, shortly after the death of Linnie Jane Hodges, appropriated to himself the entirety of her estate. He operated all the assets, engaged in business and performed all acts in connection with the entirety of the conjugal estate, in his own name alone, just as he had been operating, engaging and doing while the late Linnie Jane Hodges was still alive. Upon his death on December 25, 1962, therefore, all said conjugal assets were in his sole possession and control, and registered in his name alone, not as executor, but as exclusive owner of all said assets . 14. All these acts of C. N. Hodges were authorized and sanctioned expressly and impliedly by various orders of this Honorable Court, as follows: (a) In an Order dated May 27, 1957, this Honorable Court ruled that C. N. Hodges "is allowed or authorized to continue the business in which he was engaged, and to perform acts which he had been doing while the deceased was living." (CFI Record, Sp. Proc. No. 1307, p. 11.) (b) On December 14, 1957, this Honorable Court, on the basis of the following fact, alleged in the verified Motion dated December 11, 1957 filed by Leon P. Gellada as attorney for the executor C. N. Hodges: That herein Executor, (is) not only part owner of the properties left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane Hodges.' (CFI Record, Sp. Proc. No. 1307, p. 44; emphasis supplied.) issued the following order: "As prayed for by Attorney Gellada, counsel for the Executor, for the reasons stated in his motion dated December 11, 1957, which the Court considers well taken , all the sales, conveyances, leases and mortgages of all the properties left by the deceased Linnie Jane Hodges executed by the Executor, Charles Newton Hodges are hereby APPROVED. The said Executor is further authorized to execute subsequent sales, conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance with the wishes contained in the last will and testament of the latter." (CFI Record. Sp. Proc. No. 1307, p. 46; emphasis supplied.) 24 ems (c) On April 21, 1959, this Honorable Court approved the verified inventory and accounting submitted by C. N. Hodges through his counsel Leon P. Gellada on April 14, 1959 wherein he alleged among other things, "That no person interested in the Philippines of the time and place of examining the herein account, be given notice, as herein executor is the only devisee or legatee of the deceased, in accordance with the last will and testament already probated by the Honorable Court." (CFI Record, Sp. Proc. No. 1307, pp. 77-78; emphasis supplied.) (d) On July 20, 1960, this Honorable Court approved the verified "Annual Statement of Account" submitted by C. N. Hodges through his counsel Leon P. Gellada on July 21, 1960 wherein he alleged, among other things. "That no person interested in the Philippines of the time and place of examining the herein account, be given notice as herein executor is the only devisee or legatee of the deceased Linnie Jane Hodges , in accordance with the last will and testament ofthe deceased, already probated by this Honorable Court." (CFI Record, Sp. Proc. No. 1307, pp. 81-82; emphasis supplied.) (e) On May 2, 1961, this Honorable Court approved the verified "Annual Statement of Account By The Executor For the Year 1960" submitted through Leon P. Gellada on April 20, 1961 wherein he alleged: "That no person interested in the Philippines be given notice, ofthe time and place of examining the herein account, as herein executor is the only devisee or legatee of the deceased Linnie Jane Hodges, in accordance with the last will and testament ofthe deceased, already probated by this Honorable Court ." (CFI Record, Sp. Proc. No. 1307, pp. 90-91; emphasis supplied.) 15. Since C. N. Hodges was the sole and exclusive heir of Linnie Jane Hodges, not only by law, but in accordance with the dispositions of her will, there was, in fact, no need to liquidate the conjugal estate of the spouses. The entirely of said conjugal estate pertained to him exclusively, therefore this Honorable Court sanctioned and authorized, as above-stated, C. N. Hodges to manage, operate and control all the conjugal assets as owner. 16. By expressly authorizing C. N. Hodges to act as he did in connection with the estate of his wife, this Honorable Court has (1) declared C. N. Hodges as the sole heir of the estate of Linnie Jane Hodges, and (2) delivered and distributed her estate to C. N. Hodges as sole heir in accordance with the terms and conditions of her Will. Thus, although the "estate of Linnie Jane Hodges" still exists as a legal and juridical personality, it had no assets or properties located in the Philippines registered in its name whatsoever at the time of the death of C. N. Hodges on December 25, 1962. 17. The Will of Linnie Jane Hodges (Annex "A"), fourth paragraph, provides as follows: "At the death of my said husband, Charles Newton Hodges, I give, devise and bequeath all of the rest, residue and remainder of my estate both real and personal, wherever situated or located, to be equally divided among my brothers and sisters, share and share alike, namely: "Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie Rascoe, Era Boman and Nimray Higdon." Because of the facts hereinabove set out there is no "rest, residue and remainder", at least to the extent of the Philippine assets, which remains to vest in the HIGDONS, assuming this proviso in Linnie Jane Hodges' Will is valid and binding against the estate of C. N. Hodges. 18. Any claims by the HIGDONS under the above-quoted provision of Linnie Jane Hodges' Will is without merit because said provision is void and invalid at least as to the Philippine assets. It should not, in anyway, affect the rights of the estate of C. N. Hodges or his heirs to the properties, which C. N. Hodges acquired by way of inheritance from his wife Linnie Jane Hodges upon her death. (a) In spite of the above-mentioned provision in the Will of Linnie Jane Hodges, C. N. Hodges acquired, not merely a usufructuary right, but absolute title and ownership to her estate. In a recent case involving a very similar testamentary provision, the Supreme Court held that the heir first designated acquired full ownership of the property bequeathed by the will, not mere usufructuary rights. (Consolacion Florentino de Crisologo, et al., vs. Manuel Singson, G. R. No. L-13876, February 28, 1962.) (b) Article 864, 872 and 886 of the New Civil Code clearly provide that no charge, condition or substitution whatsoever upon the legitime can be imposed by a testator. Thus, under the provisions of Articles 900, 995 and 1001 of the New Civil Code, the legitime of a surviving spouse is 1/2 of the estate of the deceased spouse. Consequently, the above-mentioned provision in the Will of Linnie Jane Hodges is clearly invalid insofar as the legitime of C. N. Hodges was concerned, which consisted of 1/2 of the 1/2 portion of the conjugal estate, or 1/4 of the entire conjugal estate of the deceased. (c) There are generally only two kinds of substitution provided for and authorized by our Civil Code (Articles 857-870), namely, (1) simple or common substitution, sometimes referred to as vulgar substitution (Article 859), and (2) fideicommissary substitution (Article 863). All other substitutions are merely variations of these. The substitution provided for by paragraph four of the Will of Linnie Jane Hodges is not fideicommissary substitution, because there is clearly no

obligation on the part of C. N. Hodges as the first heir designated, to preserve the properties for the substitute heirs. (Consolacion Florentino de Crisologo et al. vs. Manuel Singson, G. R. No. L-13876.) At most, it is a vulgar or simple substitution. However, in order that a vulgar orsimple substitution can be valid, three alternative conditions must be present, namely, that the first designated heir (1) should die before the testator; or (2) should not wish to accept the inheritance; or (3) should be incapacitated to do so. None of these conditions apply to C. N. Hodges, and, therefore, the substitution provided for by the above-quoted provision of the Will is not authorized by the Code, and, therefore, it is void. Manresa, commenting on these kisses of substitution, meaningfully stated that: "... cuando el testador instituyeun primer heredero, y por fallecimiento de este nombra otro u otros, ha de entenderse que estas segundas designaciones solo han de llegar a tener efectividad en el caso de que el primer instituido muera antes que el testador, fuera o no esta su verdadera intencion. ...". (6 Manresa, 7 a ed., pag. 175.) In other words, when another heir is designated to inherit upon the death of a first heir, the second designation can have effect only in case the first instituted heir dies before the testator, whether or not that was the true intention of said testator . Since C. N. Hodges did not die before Linnie Jane Hodges, the provision for substitution contained in Linnie Jane Hodges' Willis void. (d) In view of the invalidity of the provision for substitution in the Will, C. N. Hodges' inheritance to the entirety of the Linnie Jane Hodges estate is irrevocable and final. 19. Be that as it may, at the time of C. N. Hodges' death, the entirety of the conjugal estate appeared and was registered in him exclusively as owner. Thus, the presumption is that all said assets constituted his estate. Therefore (a) If the HIGDONS wish to enforce their dubious rights as substituted heirs to 1/4 of the conjugal estate (the other 1/4 is covered by the legitime of C. N. Hodges which can not be affected by any testamentary disposition), their remedy, if any, is to file their claim against the estate of C. N. Hodges, which should be entitled at the present time to full custody and control of all the conjugal estate of the spouses. (b) The present proceedings, in which two estates exist under separate administration, where the administratrix of the Linnie Jane Hodges estate exercises an officious right to object and intervene in matters affecting exclusively the C. N. Hodges estate, is anomalous. WHEREFORE, it is most respectfully prayed that after trial and reception of evidence, this Honorable Court declare: 1. That the estate of Linnie Jane Hodges was and is composed exclusively of one-half (1/2) share in the conjugal estate of the spouses Hodges, computed as of the date of her death on May 23, 1957; 2. That the other half of the conjugal estate pertained exclusively to C. N. Hodges as his share as partner in the conjugal partnership; 3. That all "rents, emoluments and income" of the conjugal estate accruing after Linnie Jane Hodges' death pertains to C. N. Hodges; 4. That C. N. Hodges was the sole and exclusive heir of the estate of Linnie Jane Hodges; 5. That, therefore, the entire conjugal estate of the spouses located in the Philippines, plus all the "rents, emoluments and income" above-mentioned, now constitutes the estate of C. N. Hodges, capable of distribution to his heirs upon termination of Special Proceedings No. 1672; 6. That PCIB, as administrator of the estate of C. N. Hodges, is entitled to full and exclusive custody, control and management of all said properties; and 7. That Avelina A. Magno, as administratrix of the estate of Linnie Jane Hodges, as well as the HIGDONS, has no right to intervene or participate in the administration of the C. N. Hodges estate. PCIB further prays for such and other relief as may be deemed just and equitable in the premises." (Record, pp. 265-277) Before all of these motions of petitioner could be resolved, however, on December 21, 1965, private respondent Magno filed her own "Motion for the Official Declaration of Heirs of the Estate of Linnie Jane Hodges" as follows: COMES NOW the Administratrix of the Estate of Linnie Jane Hodges and, through undersigned counsel, unto this Honorable Court most respectfully states and manifests: 1. That the spouses Charles Newton Hodges and Linnie Jane Hodges were American citizens who died at the City of Iloilo after having amassed and accumulated extensive properties in the Philippines; 2. That on November 22, 1952, Linnie Jane Hodges executed a last will and testament (the original of this will now forms part of the records of these proceedings as Exhibit "C" and appears as Sp. Proc. No. 1307, Folio I, pp. 17-18); 3. That on May 23, 1957, Linnie Jane Hodges died at the City of Iloilo at the time survived by her husband, Charles Newton Hodges, and several relatives named in her last will and testament; 4. That on June 28, 1957, a petition therefor having been priorly filed and duly heard, this Honorable Court issued an order admitting to probate the last will and testament of Linnie Jane Hodges (Sp. Proc. No. 1307, Folio I, pp. 24-25, 2628); 5. That the required notice to creditors and to all others who may have any claims against the decedent, Linnie Jane Hodges has already been printed, published and posted (Sp. Proc. No. 1307, Folio I. pp. 34-40) and the reglamentary period for filing such claims has long ago lapsed and expired without any claims having been asserted against the estate of Linnie Jane Hodges, approved by the Administrator/Administratrix of the said estate, nor ratified by this Honorable Court; 6. That the last will and testament of Linnie Jane Hodges already admitted to probate contains an institution of heirs in the following words: "SECOND: I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real, wherever situated or located, to my beloved husband, Charles Newton Hodges to have and to hold unto him, my said husband, during his natural lifetime. THIRD: I desire, direct and provide that my husband, Charles Newton Hodges, shall have the right to manage, control, use and enjoy said estate during his lifetime, and, he is hereby given the right to make any changes in the physical properties of said estate, by sale of any part thereof which he may think best, and the purchase of any other or additional property as he may think best; to execute conveyances with or without general or special warranty, conveying in fee simple or for any other term or time, any property which he may deem proper to dispose of; to lease any of the real property for oil, gas and/or other minerals, and all such deeds or leases shall pass the absolute fee simple title to the interest so conveyed in such property as he elect to sell. All rents, emoluments and income from said estate shall belong to him, and he is further authorized to use any part of the principal of said estate as he may need or desire. It is provided herein, however, that he shall not sell or otherwise dispose of any of the improved property now owned by us located at, in or near the City of Lubbock Texas, but he shall have the full right to lease, manage and enjoy the same during his

lifetime, above provided. He shall have the right to subdivide any farm land and sell lots therein, and may sell unimproved town lots. FOURTH: At the death of my said husband, Charles Newton Hodges, I give, devise and bequeath all of the rest, residue and remainder of my estate, both real and personal, wherever situated or located, to be equally divided among my brothers and sisters, share and share alike, namely: Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie Rascoe, Era Boman and Nimroy Higdon. FIFTH: In case of the death of any of my brothers and/or sisters named in item Fourth, above, prior to the death of my husband, Charles Newton Hodges, then it is my will and bequest that the heirs of such deceased brother or sister shall take jointly the share which would have gone to such brother or sister had she or he survived." 7. That under the provisions of the last will and testament already above-quoted, Linnie Jane Hodges gave a life-estate or a usufruct over all her estate to her husband, Charles Newton Hodges, and a vested remainder-estate or the naked title over the same estate to her relatives named therein; 8. That after the death of Linnie Jane Hodges and after the admission to probate of her last will and testament, but during the lifetime of Charles Newton Hodges, the said Charles Newton Hodges with full and complete knowledge of the lifeestate or usufruct conferred upon him by the will since he was then acting as Administrator of the estate and later as Executor of the will of Linnie Jane Hodges, unequivocably and clearly through oral and written declarations and sworn public statements, renounced, disclaimed and repudiated his life-estate and usufruct over the estate of Linnie Jane Hodges; 9. That, accordingly, the only heirs left to receive the estate of Linnie Jane Hodges pursuant to her last will and testament, are her named brothers and sisters, or their heirs, to wit: Esta Higdon, Emma Howell, Leonard Higdon, Aline Higdon and David Higdon, the latter two being the wife and son respectively of the deceased Roy Higdon, Sadie Rascoe Era Boman and Nimroy Higdon, all of legal ages, American citizens, with residence at the State of Texas, United States of America; 10. That at the time of the death of Linnie Jane Hodges on May 23, 1957, she was the co-owner (together with her husband Charles Newton Hodges) of an undivided one-half interest in their conjugal properties existing as of that date, May 23, 1957, which properties are now being administered sometimes jointly and sometimes separately by the Administratrix of the estate of Linnie Jane Hodges and/or the Administrator of the estate of C. N. Hodges but all of which are under the control and supervision of this Honorable Court; 11. That because there was no separation or segregation of the interests of husband and wife in the combined conjugal estate, as there has been no such separation or segregation up to the present, both interests have continually earned exactly the same amount of "rents, emoluments and income", the entire estate having been continually devoted to the business of the spouses as if they were alive; 12. That the one-half interest of Linnie Jane Hodges in the combined conjugal estate was earning "rents, emoluments and income" until her death on May 23, 1957, when it ceased to be saddled with any more charges or expenditures which are purely personal to her in nature, and her estate kept on earning such "rents, emoluments and income" by virtue of their having been expressly renounced, disclaimed and repudiated by Charles Newton Hodges to whom they were bequeathed for life under the last will and testament of Linnie Jane Hodges; 13. That, on the other hand, the one-half interest of Charles Newton Hodges in the combined conjugal estate existing as of May 23, 1957, while it may have earned exactly the same amount of "rents, emoluments and income" as that of the share pertaining to Linnie Jane Hodges, continued to be burdened by charges, expenditures, and other dispositions which are purely personal to him in nature, until the death of Charles Newton Hodges himself on December 25, 1962; 14. That of all the assets of the combined conjugal estate of Linnie Jane Hodges and Charles Newton Hodges as they exist today, the estate of Linnie Jane Hodges is clearly entitled to a portion more than fifty percent (50%) as compared to the portion to which the estate of Charles Newton Hodges may be entitled, which portions can be exactly determined by the following manner: a. An inventory must be made of the assets of the combined conjugal estate as they existed on the death of Linnie Jane Hodges on May 23, 1957 one-half of these assets belong to the estate of Linnie Jane Hodges; b. An accounting must be made of the "rents, emoluments and income" of all these assets again one-half of these belong to the estate of Linnie Jane Hodges; c. Adjustments must be made, after making a deduction of charges, disbursements and other dispositions made by Charles Newton Hodges personally and for his own personal account from May 23, 1957 up to December 25, 1962, as well as other charges, disbursements and other dispositions made for him and in his behalf since December 25, 1962 up to the present; 15. That there remains no other matter for disposition now insofar as the estate of Linnie Jane Hodges is concerned but to complete the liquidation of her estate, segregate them from the conjugal estate, and distribute them to her heirs pursuant to her last will and testament. WHEREFORE, premises considered, it is most respectfully moved and prayed that this Honorable Court, after a hearing on the factual matters raised by this motion, issue an order: a. Declaring the following persons, to wit: Esta Higdon, Emma Howell, Leonard Higdon, Aline Higdon, David Higdon, Sadie Rascoe, Era Boman and Nimroy Higdon, as the sole heirs under the last will and testament of Linnie Jane Hodges and as the only persons entitled to her estate; b. Determining the exact value of the estate of Linnie Jane Hodges in accordance with the system enunciated in paragraph 14 of this motion; c. After such determination ordering its segregation from the combined conjugal estate and its delivery to the Administratrix of the estate of Linnie Jane Hodges for distribution to the heirs to whom they properly belong and appertain. (Green Record on Appeal, pp. 382-391) whereupon, instead of further pressing on its motion of January 8, 1965 aforequoted, as it had been doing before, petitioner withdrew the said motion and in addition to opposing the above motion of respondent Magno, filed a motion on April 22, 1966 alleging in part that: 1. That it has received from the counsel for the administratrix of the supposed estate of Linnie Jane Hodges a notice to set her "Motion for Official Declaration of Heirs of the Estate of Linnie Jane Hodges"; 2. That before the aforesaid motion could be heard, there are matters pending before this Honorable Court, such as: a. The examination already ordered by this Honorable Court of documents relating to the allegation of Avelina Magno that Charles Newton Hodges "through ... written declarations and sworn public statements, renounced, disclaimed and repudiated life-estate and usufruct over the estate of Linnie Jane Hodges';

b. That "Urgent Motion for An Accounting and Delivery to the Estate of C. N. Hodges of All the Assets of the Conjugal Partnership of the Deceased Linnie Jane Hodges and C. N. Hodges Existing as of May 23, 1957 Plus All the Rents, Emoluments and Income Therefrom"; c. Various motions to resolve the aforesaid motion; d. Manifestation of September 14, 1964, detailing acts of interference of Avelina Magno under color of title as administratrix of the Estate of Linnie Jane Hodges; which are all prejudicial, and which involve no issues of fact, all facts involved therein being matters of record, and therefore require only the resolution of questions of law; 3. That whatever claims any alleged heirs or other persons may have could be very easily threshed out in the Testate Estate of Charles Newton Hodges; 4. That the maintenance of two separate estate proceedings and two administrators only results in confusion and is unduly burdensome upon the Testate Estate of Charles Newton Hodges, particularly because the bond filed by Avelina Magno is grossly insufficient to answer for the funds and property which she has inofficiously collected and held, as well as those which she continues to inofficiously collect and hold; 5. That it is a matter of record that such state of affairs affects and inconveniences not only the estate but also thirdparties dealing with it;" (Annex "V", Petition.) and then, after further reminding the court, by quoting them, of the relevant allegations of its earlier motion of September 14, 1964, Annex U, prayed that: 1. Immediately order Avelina Magno to account for and deliver to the administrator of the Estate of C. N. Hodges all the assets of the conjugal partnership of the deceased Linnie Jane Hodges and C. N. Hodges, plus all the rents, emoluments and income therefrom; 2. Pending the consideration of this motion, immediately order Avelina Magno to turn over all her collections to the administrator Philippine Commercial & Industrial Bank; 3. Declare the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307) closed; 4. Defer the hearing and consideration of the motion for declaration of heirs in the Testate Estate of Linnie Jane Hodges until the matters hereinabove set forth are resolved. (Prayer, Annex "V" of Petition.) On October 12, 1966, as already indicated at the outset of this opinion, the respondent court denied the foregoing motion, holding thus: ORDER On record is a motion (Vol. X, Sp. 1672, pp. 4379-4390) dated April 22, 1966 of administrator PCIB praying that (1) Immediately order Avelina Magno to account for and deliver to the administrator of the estate of C. N. Hodges all assets of the conjugal partnership of the deceased Linnie Jane Hodges and C. N. Hodges, plus all the rents, emoluments and income therefrom; (2) Pending the consideration of this motion, immediately order Avelina Magno to turn over all her collections to the administrator PCIB; (3) Declare the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307) closed; and (4) Defer the hearing and consideration of the motion for declaration of heirs in the Testate Estate of Linnie Jane Hodges until the matters hereinabove set forth are resolved. This motion is predicated on the fact that there are matters pending before this court such as (a) the examination already ordered by this Honorable Court of documents relating to the allegation of Avelina Magno that Charles Newton Hodges thru written declaration and sworn public statements renounced, disclaimed and repudiated his life-estate and usufruct over the estate of Linnie Jane Hodges (b) the urgent motion for accounting and delivery to the estate of C. N. Hodges of all the assets of the conjugal partnership of the deceased Linnie Jane Hodges and C. N. Hodges existing as of May 23, 1957 plus all the rents, emoluments and income therefrom; (c) various motions to resolve the aforesaid motion; and (d) manifestation of September 14, 1964, detailing acts of interference of Avelina Magno under color of title as administratrix of the estate of Linnie Jane Hodges. These matters, according to the instant motion, are all pre-judicial involving no issues of facts and only require the resolution of question of law; that in the motion of October 5, 1963 it is alleged that in a motion dated December 11, 1957 filed by Atty. Leon Gellada as attorney for the executor C. N. Hodges, the said executor C. N. Hodges is not only part owner of the properties left as conjugal but also the successor to all the properties left by the deceased Linnie Jane Hodges. Said motion of December 11, 1957 was approved by the Court in consonance with the wishes contained in the last will and testament of Linnie Jane Hodges. That on April 21, 1959 this Court approved the inventory and accounting submitted by C. N. Hodges thru counsel Atty. Leon Gellada in a motion filed on April 14, 1959 stating therein that executor C. N. Hodges is the only devisee or legatee of Linnie Jane Hodges in accordance with the last will and testament already probated by the Court. That on July 13, 1960 the Court approved the annual statement of accounts submitted by the executor C. N. Hodges thru his counsel Atty. Gellada on July 21, 1960 wherein it is stated that the executor, C. N. Hodges is the only devisee or legatee of the deceased Linnie Jane Hodges; that on May 2, 1961 the Court approved the annual statement of accounts submitted by executor, C. N. Hodges for the year 1960 which was submitted by Atty. Gellada on April 20, 1961 wherein it is stated that executor Hodges is the only devisee or legatee of the deceased Linnie Jane Hodges; That during the hearing on September 5 and 6, 1963 the estate of C. N. Hodges claimed all the assets belonging to the deceased spouses Linnie Jane Hodges and C. N. Hodges situated in the Philippines; that administratrix Magno has executed illegal acts to the prejudice of the testate estate of C. N. Hodges. An opposition (Sp. 1672, Vol. X, pp. 4415-4421) dated April 27, 1966 of administratrix Magno has been filed asking that the motion be denied for lack of merit and that the motion for the official declaration of heirs of the estate of Linnie Jane Hodges be set for presentation and reception of evidence. It is alleged in the aforesaid opposition that the examination of documents which are in the possession of administratrix Magno can be made prior to the hearing of the motion for the official declaration of heirs of the estate of Linnie Jane Hodges, during said hearing. That the matters raised in the PCIB's motion of October 5, 1963 (as well as the other motion) dated September 14, 1964 have been consolidated for the purpose of presentation and reception of evidence with the hearing on the determination of the heirs of the estate of Linnie Jane Hodges. It is further alleged in the opposition that the motion for the official declaration of heirs of the estate of Linnie Jane Hodges is the one that constitutes a prejudicial question to the motions dated October 5 and September 14, 1964 because if said motion is found meritorious and granted by the Court, the

PCIB's motions of October 5, 1963 and September 14, 1964 will become moot and academic since they are premised on the assumption and claim that the only heir of Linnie Jane Hodges was C. N. Hodges. That the PCIB and counsel are estopped from further questioning the determination of heirs in the estate of Linnie Jane Hodges at this stage since it was PCIB as early as January 8, 1965 which filed a motion for official declaration of heirs of Linnie Jane Hodges that the claim of any heirs of Linnie Jane Hodges can be determined only in the administration proceedings over the estate of Linnie Jane Hodges and not that of C. N. Hodges, since the heirs of Linnie Jane Hodges are claiming her estate and not the estate of C. N. Hodges. A reply (Sp. 1672, Vol. X, pp. 4436-4444) dated May 11, 1966 of the PCIB has been filed alleging that the motion dated April 22, 1966 of the PCIB is not to seek deferment of the hearing and consideration of the motion for official declaration of heirs of Linnie Jane Hodges but to declare the testate estate of Linnie Jane Hodges closed and for administratrix Magno to account for and deliver to the PCIB all assets of the conjugal partnership of the deceased spouses which has come to her possession plus all rents and income. A rejoinder (Sp. 1672, Vol. X, pp. 4458-4462) of administratrix Magno dated May 19, 1966 has been filed alleging that the motion dated December 11, 1957 only sought the approval of all conveyances made by C. N. Hodges and requested the Court authority for all subsequent conveyances that will be executed by C. N. Hodges; that the order dated December 14, 1957 only approved the conveyances made by C. N. Hodges; that C. N. Hodges represented by counsel never made any claim in the estate of Linnie Jane Hodges and never filed a motion to declare himself as the heir of the said Linnie Jane Hodges despite the lapse of more than five (5) years after the death of Linnie Jane Hodges; that it is further alleged in the rejoinder that there can be no order of adjudication of the estate unless there has been a prior express declaration of heirs and so far no declaration of heirs in the estate of Linnie Jane Hodges (Sp. 1307) has been made. Considering the allegations and arguments in the motion and of the PCIB as well as those in the opposition and rejoinder of administratrix Magno, the Court finds the opposition and rejoinder to be well taken for the reason that so far there has been no official declaration of heirs in the testate estate of Linnie Jane Hodges and therefore no disposition of her estate. WHEREFORE, the motion of the PCIB dated April 22, 1966 is hereby DENIED. (Annex "W", Petition) In its motion dated November 24, 1966 for the reconsideration of this order, petitioner alleged inter alia that: It cannot be over-stressed that the motion of December 11, 1957 was based on the fact that: a. Under the last will and testament of the deceased, Linnie Jane Hodges, the late Charles Newton Hodges was the sole heir instituted insofar as her properties in the Philippines are concerned; b. Said last will and testament vested upon the said late Charles Newton Hodges rights over said properties which, in sum, spell ownership, absolute and in fee simple; c. Said late Charles Newton Hodges was, therefore, "not only part owner of the properties left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane Hodges. Likewise, it cannot be over-stressed that the aforesaid motion was granted by this Honorable Court "for the reasons stated" therein. Again, the motion of December 11, 1957 prayed that not only "all the sales, conveyances, leases, and mortgages executed by" the late Charles Newton Hodges, but also all "the subsequent sales, conveyances, leases, and mortgages ..." be approved and authorized. This Honorable Court, in its order of December 14, 1957, "for the reasons stated" in the aforesaid motion, granted the same, and not only approved all the sales, conveyances, leases and mortgages of all properties left by the deceased Linnie Jane Hodges executed by the late Charles Newton Hodges, but also authorized "all subsequent sales, conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges. (Annex "X", Petition) and reiterated its fundamental pose that the Testate Estate of Linnie Jane Hodges had already been factually, although not legally, closed with the virtual declaration of Hodges and adjudication to him, as sole universal heir of all the properties of the estate of his wife, in the order of December 14, 1957, Annex G. Still unpersuaded, on July 18, 1967, respondent court denied said motion for reconsideration and held that "the court believes that there is no justification why the order of October 12, 1966 should be considered or modified", and, on July 19, 1967, the motion of respondent Magno "for official declaration of heirs of the estate of Linnie Jane Hodges", already referred to above, was set for hearing. In consequence of all these developments, the present petition was filed on August 1, 1967 (albeit petitioner had to pay another docketing fee on August 9, 1967, since the orders in question were issued in two separate testate estate proceedings, Nos. 1307 and 1672, in the court below). Together with such petition, there are now pending before Us for resolution herein, appeals from the following: 1. The order of December 19, 1964 authorizing payment by respondent Magno of overtime pay, (pp. 221, Green Record on Appeal) together with the subsequent orders of January 9, 1965, (pp. 231-232, id.) October 27, 1965, (pp. 227, id.) and February 15, 1966 (pp. 455-456, id.) repeatedly denying motions for reconsideration thereof. 2. The order of August 6, 1965 (pp. 248, id.) requiring that deeds executed by petitioner to be co-signed by respondent Magno, as well as the order of October 27, 1965 (pp. 276-277) denying reconsideration. 3. The order of October 27, 1965 (pp. 292-295, id.) enjoining the deposit of all collections in a joint account and the same order of February 15, 1966 mentioned in No. 1 above which included the denial of the reconsideration of this order of October 27, 1965. 4. The order of November 3, 1965 (pp. 313-320, id.) directing the payment of attorney's fees, fees of the respondent administratrix, etc. and the order of February 16, 1966 denying reconsideration thereof. 5. The order of November 23, 1965 (pp. 334-335, id.) allowing appellee Western Institute of Technology to make payments to either one or both of the administrators of the two estates as well as the order of March 7, 1966 (p. 462, id.) denying reconsideration. 6. The various orders hereinabove earlier enumerated approving deeds of sale executed by respondent Magno in favor of appellees Carles, Catedral, Pablito, Guzman, Coronado, Barrido, Causing, Javier, Lucero and Batisanan, (see pp. 35 to 37 of this opinion), together with the two separate orders both dated December 2, 1966 (pp. 306-308, and pp. 308-309, Yellow Record on Appeal) denying reconsideration of said approval. 7. The order of January 3, 1967, on pp. 335-336, Yellow Record on Appeal, approving similar deeds of sale executed by respondent Magno, as those in No. 6, in favor of appellees Pacaonsis and Premaylon, as to which no motion for reconsideration was filed. 8. Lastly, the order of December 2, 1966, on pp. 305-306, Yellow Record on Appeal, directing petitioner to surrender to appellees Lucero, Batisanan, Javier, Pablito, Barrido, Catedral, Causing, Guzman, and Coronado, the certificates of title covering the lands involved in the approved sales, as to which no motion for reconsideration was filed either.

Strictly speaking, and considering that the above orders deal with different matters, just as they affect distinctly different individuals or persons, as outlined by petitioner in its brief as appellant on pp. 12-20 thereof, there are, therefore, thirtythree (33) appeals before Us, for which reason, petitioner has to pay also thirty-one (31) more docket fees. It is as well perhaps to state here as elsewhere in this opinion that in connection with these appeals, petitioner has assigned a total of seventy-eight (LXXVIII) alleged errors, the respective discussions and arguments under all of them covering also the fundamental issues raised in respect to the petition for certiorari and prohibition, thus making it feasible and more practical for the Court to dispose of all these cases together. 4 The assignments of error read thus: I to IV THE ORDER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE APPELLEES, PEPITO G. IYULORES, ESPIRIDION PARTISALA, WINIFREDO C. ESPADA AND ROSARIO ALINGASA, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME. V to VIII THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE APPELLEES, PEPITO G. IYULORES, ESPIRIDION PARTISALA, WINIFREDO C. ESPADA AND ROSARIO ALINGASA, COVERING PARCELS OF LAND FOR WHICH THEY HAVE NEVER PAID IN FULL IN ACCORDANCE WITH THE ORIGINAL CONTRACTS TO SELL. IX to XII THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF OWNERSHIP OVER REAL PROPERTY OF THE APPELLEES, PEPITO G. IYULORES, ESPIRIDION PARTISALA, WINIFREDO C. ESPADA AND ROSARIO ALINGASA, WHILE ACTING AS A PROBATE COURT. XIII to XV THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE APPELLEES ADELFA PREMAYLON (LOT NO. 102), SANTIAGO PACAONSIS, AND ADELFA PREMAYLON (LOT NO. 104), EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME. XVI to XVIII THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE APPELLEES ADELFA PREMAYLON (LOT NO. 102), SANTIAGO PACAONSIS, AND ADELFA PREMAYLON (LOT NO. 104) COVERING PARCELS OF LAND FOR WHICH THEY HAVE NEVER PAID IN FULL IN ACCORDANCE WITH THE ORIGINAL CONTRACTS TO SELL. XIX to XXI THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF OWNERSHIP OVER REAL PROPERTY OF THE APPELLEES ADELFA PREMAYLON (LOT NO. 102), SANTIAGO PACAONSIS, AND ADELFA PREMAYLON (LOT NO. 104) WHILE ACTING AS A PROBATE COURT. XXII to XXV THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE APPELLEES LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND SALVADOR S. GUZMAN, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME. XXVI to XXIX THE LOWER COURT ERRED IN APPROVING THE FINAL DEED OF SALE EXECUTED IN FAVOR OF THE APPELLEES, LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND SALVADOR S. GUZMAN PURSUANT TO CONTRACTS TO SPELL WHICH WERE CANCELLED AND RESCINDED. XXX to XXXIV THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF OWNERSHIP OVER REAL PROPERTY OF THE LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND SALVADOR S. GUZMAN, WHILE ACTING AS A PROBATE COURT. XXXV to XXXVI THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE APPELLEES, FLORENIA BARRIDO AND PURIFICACION CORONADO, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME. XXXVII to XXXVIII THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE APPELLEES, FLORENIA BARRIDO AND PURIFICACION CORONADO, ALTHOUGH THEY WERE IN ARREARS IN THE PAYMENTS AGREED UPON IN THE ORIGINAL CONTRACT TO SELL WHICH THEY EXECUTED WITH THE DECEASED, CHARLES NEWTON HODGES, IN THE AMOUNT OF P10,680.00 and P4,428.90, RESPECTIVELY. XXXIX to XL THE LOWER COURT ERRED IN DEPRIVING THE DECEASED, CHARLES NEWTON HODGES, OF THE CONTRACTUAL RIGHT, EXERCISED THROUGH HIS ADMINISTRATOR, THE INSTANT APPELLANT, TO CANCEL THE CONTRACTS TO SELL OF THE APPELLEES, FLORENIA BARRIDO AND PURIFICACION CORONADO. XLI to XLIII THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE APPELLEES, GRACIANO LUCERO, ARITEO THOMAS JAMIR AND MELQUIADES BATISANAN, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME. XLIV to XLVI THE LOWER COURT ERRED IN APPROVING THE FINAL DEED OF SALE IN FAVOR OF THE APPELLEES, GRACIANO LUCERO, ARITEO THOMAS JAMIR AND MELQUIADES BATISANAN, PURSUANT TO CONTRACTS TO

SELL EXECUTED BY THEM WITH THE DECEASED, CHARLES NEWTON HODGES, THE TERMS AND CONDITIONS OF WHICH THEY HAVE NEVER COMPLIED WITH. XLVII to XLIX THE LOWER COURT ERRED IN DEPRIVING THE DECEASED, CHARLES NEWTON HODGES, OF HIS RIGHT, EXERCISED THROUGH HIS ADMINISTRATION, THE INSTANT APPELLANT, TO CANCEL THE CONTRACTS TO SELL OF THE APPELLEES, GRACIANO LUCERO, ARITEO THOMAS JAMIR AND MELQUIADES BATISANAN, AND IN DETERMINING THE RIGHTS OF THE SAID APPELLEES OVER REAL PROPERTY WHILE ACTING AS A PROBATE COURT. L THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME. LI THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING, ALTHOUGH HE WAS IN ARREARS IN THE PAYMENTS AGREED UPON IN THE ORIGINAL CONTRACT TO SELL WHICH HE EXECUTED WITH THE DECEASED, CHARLES NEWTON HODGES, IN THE AMOUNT OF P2,337.50. LII THE LOWER COURT ERRED IN APPROVING THE DEED OF SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING, ALTHOUGH THE SAME WAS NOT EXECUTED IN ACCORDANCE WITH THE RULES OF COURT. LIII to LXI THE LOWER COURT ERRED IN ORDERING THE APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK TO SURRENDER THE OWNER'S DUPLICATE CERTIFICATES OF TITLE OVER THE RESPECTIVE LOTS COVERED BY THE DEEDS OF SALE EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, IN FAVOR OF THE OTHER APPELLEES, JOSE PABLICO, ALFREDO CATEDRAL, SALVADOR S. GUZMAN, FLRENIA BARRIDO, PURIFICACION CORONADO, BELCESAR CAUSING, ARITEO THOMAS JAMIR, MAXIMA BATISANAN AND GRACIANO L. LUCERO. LXII THE LOWER COURT ERRED IN RESOLVING THE MOTION OF THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, DATED NOVEMBER 3, 1965, WITHOUT ANY COPY THEREOF HAVING BEEN SERVED UPON THE APPELLANT, PHILIPPINE COMMERCIAL & INDUSTRIAL BANK. LXIII THE LOWER COURT ERRED IN HEARING AND CONSIDERING THE MOTION OF THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, DATED NOVEMBER 3rd, 1965, ON NOVEMBER 23, 1965, WHEN THE NOTICE FOR THE HEARING THEREOF WAS FOR NOVEMBER 20, 1965. LXIV THE LOWER COURT ERRED IN GRANTING THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY A RELIEF OTHER THAN THAT PRAYED FOR IN ITS MOTION, DATED NOVEMBER 3, 1965, IN THE ABSENCE OF A PRAYER FOR GENERAL RELIEF CONTAINED THEREIN. LXV THE LOWER COURT ERRED IN ALLOWING THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, TO CONTINUE PAYMENTS UPON A CONTRACT TO SELL THE TERMS AND CONDITIONS OF WHICH IT HAS FAILED TO FULFILL. LXVI THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY OVER THE REAL PROPERTY SUBJECT MATTER OF THE CONTRACT TO SELL IT EXECUTED WITH THE DECEASED, CHARLES NEWTON HODGES, WHILE ACTING AS A PROBATE COURT. LXVII LOWER COURT ERRED IN ALLOWING THE CONTINUATION OF PAYMENTS BY THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, UPON A CONTRACT TO SELL EXECUTED BY IT AND THE DECEASED, CHARLES NEWTON HODGES, TO A PERSON OTHER THAN HIS LAWFULLY APPOINTED ADMINISTRATOR. LXVIII THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF RETAINER'S FEES FROM THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, WHEN THERE IS NEITHER SUCH ESTATE NOR ASSETS THEREOF. LXIX THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF RETAINER'S FEES OF LAWYERS OF ALLEGED HEIRS TO THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES. LXX THE LOWER COURT ERRED IN IMPLEMENTING THE ALLEGED AGREEMENT BETWEEN THE HEIRS OF THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, AND THEIR LAWYERS. LXXI THE LOWER COURT ERRED IN ORDERING THE PREMATURE DISTRIBUTION OF ESTATE ASSETS TO ALLEGED HEIRS OR BENEFICIARIES THEREOF, BY WAY OF RETAINER'S FEES. LXXII THE LOWER COURT ERRED IN ORDERING THAT ALL FINAL DEEDS OF SALE EXECUTED PURSUANT TO CONTRACTS TO SELL ENTERED INTO BY THE DECEASED, CHARLES NEWTON HODGES, DURING HIS LIFETIME, BE SIGNED JOINTLY BY THE APPELLEE, AVELINA A. MAGNO, AND THE APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, AND NOT BY THE LATTER ONLY AS THE LAWFULLY APPOINTED ADMINISTRATOR OF HIS ESTATE. LXXIII THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF LEGAL EXPENSES FROM THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, WHEN THERE IS NEITHER SUCH ESTATE NOR ASSETS THEREOF. LXXIV

THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF LEGAL EXPENSES OF LAWYERS OF ALLEGED HEIRS TO THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES. LXXV THE LOWER COURT ERRED IN ORDERING THE PREMATURE DISTRIBUTION OF ESTATE ASSETS TO ALLEGED HEIRS OR BENEFICIARIES THEREOF, BY WAY OF LEGAL EXPENSES. LXXVI THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF COMPENSATION TO THE PURPORTED ADMINISTRATRIX OF THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, THE INSTANT APPELLEE, AVELINA A. MAGNO, WHEN THERE IS NEITHER SUCH ESTATE NOR ASSETS THEREOF. LXXVII THE LOWER COURT ERRED IN ORDERING THAT THE FUNDS OF THE TESTATE ESTATE OF THE DECEASED, CHARLES NEWTON HODGES, BE PLACED IN A JOINT ACCOUNT OF THE APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, AND THE APPELLEE, AVELINA A. MAGNO, WHO IS A COMPLETE STRANGER TO THE AFORESAID ESTATE. LXXVIII THE LOWER COURT ERRED IN ORDERING THAT THE APPELLEE, AVELINA A. MAGNO, BE GIVEN EQUAL ACCESS TO THE RECORDS OF THE TESTATE ESTATE OF THE DECEASED, CHARLES NEWTON HODGES, WHEN SHE IS A COMPLETE STRANGER TO THE AFORESAID ESTATE. (Pp. 73-83, Appellant's Brief.) To complete this rather elaborate, and unavoidably extended narration of the factual setting of these cases, it may also be mentioned that an attempt was made by the heirs of Mrs. Hodges to have respondent Magno removed as administratrix, with the proposed appointment of Benito J. Lopez in her place, and that respondent court did actually order such proposed replacement, but the Court declared the said order of respondent court violative of its injunction of August 8, 1967, hence without force and effect (see Resolution of September 8, 1972 and February 1, 1973). Subsequently, Atty. Efrain B. Trenas, one of the lawyers of said heirs, appeared no longer for the proposed administrator Lopez but for the heirs themselves, and in a motion dated October 26, 1972 informed the Court that a motion had been filed with respondent court for the removal of petitioner PCIB as administrator of the estate of C. N. Hodges in Special Proceedings 1672, which removal motion alleged that 22.968149% of the share of C. N. Hodges had already been acquired by the heirs of Mrs. Hodges from certain heirs of her husband. Further, in this connection, in the answer of PCIB to the motion of respondent Magno to have it declared in contempt for disregarding the Court's resolution of September 8, 1972 modifying the injunction of August 8, 1967, said petitioner annexed thereto a joint manifestation and motion, appearing to have been filed with respondent court, informing said court that in addition to the fact that 22% of the share of C. N. Hodges had already been bought by the heirs of Mrs. Hodges, as already stated, certain other heirs of Hodges representing 17.343750% of his estate were joining cause with the heirs of Mrs. Hodges as against PCIB, thereby making somewhat precarious, if not possibly untenable, petitioners' continuation as administrator of the Hodges estate. RESOLUTION OF ISSUES IN THE CERTIORARI AND PROHIBITION CASES I As to the Alleged Tardiness of the Present Appeals The priority question raised by respondent Magno relates to the alleged tardiness of all the aforementioned thirty-three appeals of PCIB. Considering, however, that these appeals revolve around practically the same main issues and that it is admitted that some of them have been timely taken, and, moreover, their final results hereinbelow to be stated and explained make it of no consequence whether or not the orders concerned have become final by the lapsing of the respective periods to appeal them, We do not deem it necessary to pass upon the timeliness of any of said appeals. II The Propriety Here of Certiorari and Prohibition instead of Appeal The other preliminary point of the same respondent is alleged impropriety of the special civil action of certiorariand prohibition in view of the existence of the remedy of appeal which it claims is proven by the very appeals now before Us. Such contention fails to take into account that there is a common thread among the basic issues involved in all these thirty-three appeals which, unless resolved in one single proceeding, will inevitably cause the proliferation of more or less similar or closely related incidents and consequent eventual appeals. If for this consideration alone, and without taking account anymore of the unnecessary additional effort, expense and time which would be involved in as many individual appeals as the number of such incidents, it is logical and proper to hold, as We do hold, that the remedy of appeal is not adequate in the present cases. In determining whether or not a special civil action of certiorari or prohibition may be resorted to in lieu of appeal, in instances wherein lack or excess of jurisdiction or grave abuse of discretion is alleged, it is not enough that the remedy of appeal exists or is possible. It is indispensable that taking all the relevant circumstances of the given case, appeal would better serve the interests of justice. Obviously, the longer delay, augmented expense and trouble and unnecessary repetition of the same work attendant to the present multiple appeals, which, after all, deal with practically the same basic issues that can be more expeditiously resolved or determined in a single special civil action, make the remedies of certiorari and prohibition, pursued by petitioner, preferable, for purposes of resolving the common basic issues raised in all of them, despite the conceded availability of appeal. Besides, the settling of such common fundamental issues would naturally minimize the areas of conflict between the parties and render more simple the determination of the secondary issues in each of them. Accordingly, respondent Magno's objection to the present remedy of certiorari and prohibition must be overruled. We come now to the errors assigned by petitioner-appellant, Philippine Commercial & Industrial Bank, (PCIB, for short) in the petition as well as in its main brief as appellant. III On Whether or Not There is Still Any Part of the Testate Estate Mrs. Hodges that may be Adjudicated to her brothers and sisters as her estate, of which respondent Magno is the unquestioned Administratrix in special Proceedings 1307. In the petition, it is the position of PCIB that the respondent court exceeded its jurisdiction or gravely abused its discretion in further recognizing after December 14, 1957 the existence of the Testate Estate of Linnie Jane Hodges and in sanctioning purported acts of administration therein of respondent Magno. Main ground for such posture is that by the

aforequoted order of respondent court of said date, Hodges was already allowed to assert and exercise all his rights as universal heir of his wife pursuant to the provisions of her will, quoted earlier, hence, nothing else remains to be done in Special Proceedings 1307 except to formally close it. In other words, the contention of PCIB is that in view of said order, nothing more than a formal declaration of Hodges as sole and exclusive heir of his wife and the consequent formal unqualified adjudication to him of all her estate remain to be done to completely close Special Proceedings 1307, hence respondent Magno should be considered as having ceased to be Administratrix of the Testate Estate of Mrs. Hodges since then. After carefully going over the record, We feel constrained to hold that such pose is patently untenable from whatever angle it is examined. To start with, We cannot find anywhere in respondent Order of December 14, 1957 the sense being read into it by PCIB. The tenor of said order bears no suggestion at all to such effect. The declaration of heirs and distribution by the probate court of the estate of a decedent is its most important function, and this Court is not disposed to encourage judges of probate proceedings to be less than definite, plain and specific in making orders in such regard, if for no other reason than that all parties concerned, like the heirs, the creditors, and most of all the government, the devisees and legatees, should know with certainty what are and when their respective rights and obligations ensuing from the inheritance or in relation thereto would begin or cease, as the case may be, thereby avoiding precisely the legal complications and consequent litigations similar to those that have developed unnecessarily in the present cases. While it is true that in instances wherein all the parties interested in the estate of a deceased person have already actually distributed among themselves their respective shares therein to the satisfaction of everyone concerned and no rights of creditors or third parties are adversely affected, it would naturally be almost ministerial for the court to issue the final order of declaration and distribution, still it is inconceivable that the special proceeding instituted for the purpose may be considered terminated, the respective rights of all the parties concerned be deemed definitely settled, and the executor or administrator thereof be regarded as automatically discharged and relieved already of all functions and responsibilities without the corresponding definite orders of the probate court to such effect. Indeed, the law on the matter is specific, categorical and unequivocal. Section 1 of Rule 90 provides: SECTION 1. When order for distribution of residue made . When the debts, funeral charges, and expenses of administration, the allowance to the widow and inheritance tax, if any, chargeable to the estate in accordance with law have been paid, the court, on the application of the executor or administrator, or of a person interested in the estate, and after hearing upon notice, shall assign the residue of the estate to the persons entitled to the same, naming them and the proportions, or parts, to which each is entitled, and such persons may demand and recover their respective shares from the executor or administrator, or any other person having the same in his possession. If there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases. No distribution shall be allowed until the payment of the obligations above mentioned has been made or provided for, unless the distributees, or any of them give a bond, in a sum to be fixed by the court, conditioned for the payment of said obligations within such time as the court directs. These provisions cannot mean anything less than that in order that a proceeding for the settlement of the estate of a deceased may be deemed ready for final closure, (1) there should have been issued already an order of distribution or assignment of the estate of the decedent among or to those entitled thereto by will or by law, but (2) such order shall not be issued until after it is shown that the "debts, funeral expenses, expenses of administration, allowances, taxes, etc. chargeable to the estate" have been paid, which is but logical and proper. (3) Besides, such an order is usually issued upon proper and specific application for the purpose of the interested party or parties, and not of the court. ... it is only after, and not before, the payment of all debts, funeral charges, expenses of administration, allowance to the widow, and inheritance tax shall have been effected that the court should make a declaration of heirs or of such persons as are entitled by law to the residue. (Moran, Comments on the Rules of Court, 2nd ed., Vol. II, p. 397, citing Capistrano vs. Nadurata, 49 Phil., 726; Lopez vs. Lopez, 37 Off. Gaz., 3091.) (JIMOGA-ON v. BELMONTE, 84 Phil. 545, 548) (p. 86, Appellee's Brief) xxx xxx xxx Under Section 753 of the Code of Civil Procedure, (corresponding to Section 1, Rule 90) what brings an intestate (or testate) proceeding to a close is the order of distribution directing delivery of the residue to the persons entitled thereto after paying the indebtedness, if any, left by the deceased. (Santiesteban vs. Santiesteban, 68 Phil. 367, 370.) In the cases at bar, We cannot discern from the voluminous and varied facts, pleadings and orders before Us that the above indispensable prerequisites for the declaration of heirs and the adjudication of the estate of Mrs. Hodges had already been complied with when the order of December 14, 1957 was issued. As already stated, We are not persuaded that the proceedings leading to the issuance of said order, constituting barely of the motion of May 27, 1957, Annex D of the petition, the order of even date, Annex E, and the motion of December 11, 1957, Annex H, all aforequoted, are what the law contemplates. We cannot see in the order of December 14, 1957, so much relied upon by the petitioner, anything more than an explicit approval of "all the sales, conveyances, leases and mortgages of all the properties left by the deceased Linnie Jane Hodges executed by the Executor Charles N. Hodges" (after the death of his wife and prior to the date of the motion), plus a general advance authorization to enable said "Executor to execute subsequent sales, conveyances, leases and mortgages of the properties left the said deceased Linnie Jane Hodges in consonance with wishes conveyed in the last will and testament of the latter", which, certainly, cannot amount to the order of adjudication of the estate of the decedent to Hodges contemplated in the law. In fact, the motion of December 11, 1957 on which the court predicated the order in question did not pray for any such adjudication at all. What is more, although said motion did allege that "herein Executor (Hodges) is not only part owner of the properties left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane Hodges", it significantly added that "herein Executor, as Legatee (sic), has the right to sell, convey, lease or dispose of the properties in the Philippines during his lifetime", thereby indicating that what said motion contemplated was nothing more than either the enjoyment by Hodges of his rights under the particular portion of the dispositions of his wife's will which were to be operative only during his lifetime or the use of his own share of the conjugal estate, pending the termination of the proceedings. In other words, the authority referred to in said motions and orders is in the nature of that contemplated either in Section 2 of Rule 109 which permits, in appropriate cases, advance or partial implementation of the terms of a duly probated will before final adjudication or distribution when the rights of third parties would not be adversely affected thereby or in the established practice of allowing the surviving spouse to dispose of his own share of he conjugal estate, pending its final liquidation, when it appears that no creditors of the conjugal partnership would be prejudiced thereby, (see the Revised Rules of Court by Francisco, Vol. V-B, 1970 ed. p.

887) albeit, from the tenor of said motions, We are more inclined to believe that Hodges meant to refer to the former. In any event, We are fully persuaded that the quoted allegations of said motions read together cannot be construed as a repudiation of the rights unequivocally established in the will in favor of Mrs. Hodges' brothers and sisters to whatever have not been disposed of by him up to his death. Indeed, nowhere in the record does it appear that the trial court subsequently acted upon the premise suggested by petitioner. On the contrary, on November 23, 1965, when the court resolved the motion of appellee Western Institute of Technology by its order We have quoted earlier, it categorically held that as of said date, November 23, 1965, "in both cases (Special Proceedings 1307 and 1672) there is as yet no judicial declaration of heirs nor distribution of properties to whomsoever are entitled thereto." In this connection, it may be stated further against petitioner, by way of some kind of estoppel, that in its own motion of January 8, 1965, already quoted in full on pages 54-67 of this decision, it prayed inter alia that the court declare that "C. N. Hodges was the sole and exclusive heir of the estate of Linnie Jane Hodges", which it would not have done if it were really convinced that the order of December 14, 1957 was already the order of adjudication and distribution of her estate. That said motion was later withdrawn when Magno filed her own motion for determination and adjudication of what should correspond to the brothers and sisters of Mrs. Hodges does not alter the indubitable implication of the prayer of the withdrawn motion. It must be borne in mind that while it is true that Mrs. Hodges bequeathed her whole estate to her husband and gave him what amounts to full powers of dominion over the same during his lifetime, she imposed at the same time the condition that whatever should remain thereof upon his death should go to her brothers and sisters. In effect, therefore, what was absolutely given to Hodges was only so much of his wife's estate as he might possibly dispose of during his lifetime; hence, even assuming that by the allegations in his motion, he did intend to adjudicate the whole estate to himself, as suggested by petitioner, such unilateral act could not have affected or diminished in any degree or manner the right of his brothers and sisters-in-law over what would remain thereof upon his death, for surely, no one can rightly contend that the testamentary provision in question allowed him to so adjudicate any part of the estate to himself as to prejudice them. In other words, irrespective of whatever might have been Hodges' intention in his motions, as Executor, of May 27, 1957 and December 11, 1957, the trial court's orders granting said motions, even in the terms in which they have been worded, could not have had the effect of an absolute and unconditional adjudication unto Hodges of the whole estate of his wife. None of them could have deprived his brothers and sisters-in-law of their rights under said will. And it may be added here that the fact that no one appeared to oppose the motions in question may only be attributed, firstly, to the failure of Hodges to send notices to any of them, as admitted in the motion itself, and, secondly, to the fact that even if they had been notified, they could not have taken said motions to be for the final distribution and adjudication of the estate, but merely for him to be able, pending such final distribution and adjudication, to either exercise during his lifetime rights of dominion over his wife's estate in accordance with the bequest in his favor, which, as already observed, may be allowed under the broad terms of Section 2 of Rule 109, or make use of his own share of the conjugal estate. In any event, We do not believe that the trial court could have acted in the sense pretended by petitioner, not only because of the clear language of the will but also because none of the interested parties had been duly notified of the motion and hearing thereof. Stated differently, if the orders of May 27, 1957 and December 4, 1957 were really intended to be read in the sense contended by petitioner, We would have no hesitancy in declaring them null and void. Petitioner cites the case of Austria vs. Ventenilla, G. R. No. L-10018, September 19, 1956, (unreported but a partial digest thereof appears in 99 Phil. 1069) in support of its insistence that with the orders of May 27 and December 14, 1957, the closure of Mrs. Hodges' estate has become a mere formality, inasmuch as said orders amounted to the order of adjudication and distribution ordained by Section 1 of Rule 90. But the parallel attempted to be drawn between that case and the present one does not hold. There the trial court had in fact issued a clear, distinct and express order of adjudication and distribution more than twenty years before the other heirs of the deceased filed their motion asking that the administratrix be removed, etc. As quoted in that decision, the order of the lower court in that respect read as follows: En orden a la mocion de la administradora, el juzgado la encuentra procedente bajo la condicion de que no se hara entrega ni adjudicacion de los bienes a los herederos antes de que estos presten la fianza correspondiente y de acuerdo con lo prescrito en el Art. 754 del Codigo de Procedimientos: pues, en autos no aparece que hayan sido nombrados comisionados de avaluo y reclamaciones. Dicha fianza podra ser por un valor igual al de los bienes que correspondan a cada heredero segun el testamento. Creo que no es obice para la terminacion del expediente el hecho de que la administradora no ha presentado hasta ahora el inventario de los bienes; pues, segun la ley, estan exentos de esta formalidad os administradores que son legatarios del residuo o remanente de los bienes y hayan prestado fianza para responder de las gestiones de su cargo, y aparece en el testamento que la administradora Alejandra Austria reune dicha condicion. POR TODO LO EXPUESTO, el juzgado declara, 1.o: no haber lugar a la mocion de Ramon Ventenilla y otros; 2.o, declara asimismo que los unicos herederos del finado Antonio Ventenilla son su esposa Alejandra Austria, Maria Ventenilla, hermana del testador, y Ramon Ventenilla, Maria Ventenilla, Ramon Soriano, Eulalio Soriano, Jose Soriano, Gabriela Ventenilla, Lorenzo Ventenilla, Felicitas Ventenilla, Eugenio Ventenilla y Alejandra Ventenilla, en representacion de los difuntos Juan, Tomas, Catalino y Froilan, hermanos del testador, declarando, ademas que la heredera Alejandra Austria tiene derecho al remanente de todos los bienes dejados por el finado, despues de deducir de ellos la porcion que corresponde a cada uno de sus coherederos, conforme esta mandado en las clausulas 8.a, 9.a, 10.a, 11.a, 12.a y 13.a del testamento; 3.o, se aprueba el pago hecho por la administradora de los gastos de la ultima enfermedad y funerales del testador, de la donacion hecha por el testador a favor de la Escuela a Publica del Municipio de Mangatarem, y de las misas en sufragio del alma del finado; 4.o, que una vez prestada la fianza mencionada al principio de este auto, se haga la entrega y adjudicacion de los bienes, conforme se dispone en el testamento y se acaba de declarar en este auto; 5.o, y, finalmente, que verificada la adjudicacion, se dara por terminada la administracion, revelandole toda responsabilidad a la administradora, y cancelando su fianza. ASI SE ORDENA. Undoubtedly, after the issuance of an order of such tenor, the closure of any proceedings for the settlement of the estate of a deceased person cannot be but perfunctory. In the case at bar, as already pointed out above, the two orders relied upon by petitioner do not appear ex-facie to be of the same tenor and nature as the order just quoted, and, what is more, the circumstances attendant to its issuance do not suggest that such was the intention of the court, for nothing could have been more violative of the will of Mrs. Hodges. Indeed, to infer from Hodges' said motions and from his statements of accounts for the years 1958, 1959 and 1960, A Annexes I, K and M, respectively, wherein he repeatedly claimed that "herein executor (being) the only devisee or legatee of the deceased, in accordance with the last will and testament already probated," there is "no (other) person interested in

the Philippines of the time and place of examining herein account to be given notice", an intent to adjudicate unto himself the whole of his wife's estate in an absolute manner and without regard to the contingent interests of her brothers and sisters, is to impute bad faith to him, an imputation which is not legally permissible, much less warranted by the facts of record herein. Hodges knew or ought to have known that, legally speaking, the terms of his wife's will did not give him such a right. Factually, there are enough circumstances extant in the records of these cases indicating that he had no such intention to ignore the rights of his co-heirs. In his very motions in question, Hodges alleged, thru counsel, that the "deceased Linnie Jane Hodges died leaving no descendants and ascendants, except brothers and sisters and herein petitioner, as surviving spouse, to inherit the properties of the decedent ", and even promised that "proper accounting will be had in all these transactions" which he had submitted for approval and authorization by the court, thereby implying that he was aware of his responsibilities vis-a-vis his co-heirs. As alleged by respondent Magno in her brief as appellee: Under date of April 14, 1959, C. N. Hodges filed his first "Account by the Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1958 annexed thereto, C. N. Hodges reported that the combined conjugal estate earned a net income of P328,402.62, divided evenly between him and the estate of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return" for calendar year 1958 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as having earned income of P164,201.31, exactly one-half of the net income of his combined personal assets and that of the estate of Linnie Jane Hodges. (p. 91, Appellee's Brief.) Under date of July 21, 1960, C. N. Hodges filed his second "Annual Statement of Account by the Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1959 annexed thereto, C. N. Hodges reported that the combined conjugal estate earned a net income of P270,623.32, divided evenly between him and the estate of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return" for calendar year 1959 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as having earned income of P135,311.66, exactly one-half of the net income of his combined personal assets and that of the estate of Linnie Jane Hodges. (pp. 91-92, id.) Under date of April 20, 1961, C. N. Hodges filed his third "Annual Statement of Account by the Executor for the year 1960" of the estate of Linnie Jane Hodges. In the "Statement of Net Worth of Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1960 annexed thereto, C. N. Hodges reported that the combined conjugal estate earned a net income of P314,857.94, divided of Linnie Jane Hodges. Pursuant to this, he filed an "individual evenly between him and the estate income tax return" for calendar year 1960 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as having earned income of P157,428.97, exactly one-half of the net income of his combined personal assets and that of the estate of Linnie Jane Hodges. (pp. 92-93, id.) In the petition for probate that he (Hodges) filed, he listed the seven brothers and sisters of Linnie Jane as her "heirs" (see p. 2, Green ROA). The order of the court admitting the will to probate unfortunately omitted one of the heirs, Roy Higdon (see p. 14, Green ROA). Immediately, C. N. Hodges filed a verified motion to have Roy Higdon's name included as an heir, stating that he wanted to straighten the records "in order (that) the heirs of deceased Roy Higdon may not think or believe they were omitted, and that they were really and are interested in the estate of deceased Linnie Jane Hodges". Thus, he recognized, if in his own way, the separate identity of his wife's estate from his own share of the conjugal partnership up to the time of his death, more than five years after that of his wife. He never considered the whole estate as a single one belonging exclusively to himself. The only conclusion one can gather from this is that he could have been preparing the basis for the eventual transmission of his wife's estate, or, at least, so much thereof as he would not have been able to dispose of during his lifetime, to her brothers and sisters in accordance with her expressed desire, as intimated in his tax return in the United States to be more extensively referred to anon. And assuming that he did pay the corresponding estate and inheritance taxes in the Philippines on the basis of his being sole heir, such payment is not necessarily inconsistent with his recognition of the rights of his co-heirs. Without purporting to rule definitely on the matter in these proceedings, We might say here that We are inclined to the view that under the peculiar provisions of his wife's will, and for purposes of the applicable inheritance tax laws, Hodges had to be considered as her sole heir, pending the actual transmission of the remaining portion of her estate to her other heirs, upon the eventuality of his death, and whatever adjustment might be warranted should there be any such remainder then is a matter that could well be taken care of by the internal revenue authorities in due time. It is to be noted that the lawyer, Atty. Leon P. Gellada, who signed the motions of May 27, 1957 and December 11, 1957 and the aforementioned statements of account was the very same one who also subsequently signed and filed the motion of December 26, 1962 for the appointment of respondent Magno as "Administratrix of the Estate of Mrs. Linnie Jane Hodges" wherein it was alleged that "in accordance with the provisions of the last will and testament of Linnie Jane Hodges, whatever real properties that may remain at the death of her husband, Charles Newton Hodges, the said properties shall be equally divided among their heirs." And it appearing that said attorney was Hodges' lawyer as Executor of the estate of his wife, it stands to reason that his understanding of the situation, implicit in his allegations just quoted, could somehow be reflective of Hodges' own understanding thereof. As a matter of fact, the allegations in the motion of the same Atty. Gellada dated July 1, 1957, a "Request for Inclusion of the Name of Roy Higdon in the Order of the Court dated July 19, 1957, etc.", reference to which is made in the above quotation from respondent Magno's brief, are over the oath of Hodges himself, who verified the motion. Said allegations read: 1. That the Hon. Court issued orders dated June 29, 1957, ordering the probate of the will. 2. That in said order of the Hon. Court, the relatives of the deceased Linnie Jane Hodges were enumerated. However, in the petition as well as in the testimony of Executor during the hearing, the name Roy Higdon was mentioned, but deceased. It was unintentionally omitted the heirs of said Roy Higdon who are his wife Aline Higdon and son David Higdon, all of age, and residents of Quinlan, Texas, U.S.A. 3. That to straighten the records, and in order the heirs of deceased Roy Higdon may not think or believe they were omitted, and that they were really and are interested in the estate of deceased Linnie Jane Hodges , it is requested of the Hon. Court to insert the names of Aline Higdon and David Higdon, wife and son of deceased Roy Higdon in the said order of the Hon. Court dated June 29, 1957. (pars. 1 to 3, Annex 2 of Magno's Answer Record, p. 260) As can be seen, these italicized allegations indicate, more or less, the real attitude of Hodges in regard to the testamentary dispositions of his wife. In connection with this point of Hodges' intent, We note that there are documents, copies of which are annexed to respondent Magno's answer, which purportedly contain Hodges' own solemn declarations recognizing the right of his coheirs, such as the alleged tax return he filed with the United States Taxation authorities, identified as Schedule M, (Annex

4 of her answer) and his supposed affidavit of renunciation, Annex 5. In said Schedule M, Hodges appears to have answered the pertinent question thus: 2a. Had the surviving spouse the right to declare an election between (1) the provisions made in his or her favor by the will and (11) dower, curtesy or a statutory interest? (X) Yes ( ) No 2d. Does the surviving spouse contemplate renouncing the will and electing to take dower, curtesy, or a statutory interest? (X) Yes ( ) No 3. According to the information and belief of the person or persons filing the return, is any action described under question 1 designed or contemplated? ( ) Yes (X) No (Annex 4, Answer Record, p. 263) and to have further stated under the item, "Description of property interests passing to surviving spouse" the following: None, except for purposes of administering the Estate, paying debts, taxes and other legal charges. It is the intention of the surviving husband of deceased to distribute the remaining property and interests of the deceased in their Community Estate to the devisees and legatees named in the will when the debts, liabilities, taxes and expenses of administration are finally determined and paid. (Annex 4, Answer Record, p. 263) In addition, in the supposed affidavit of Hodges, Annex 5, it is stated: I, C. N. Hodges, being duly sworn, on oath affirm that at the time the United States Estate Tax Return was filed in the Estate of Linnie Jane Hodges on August 8, 1958, I renounced and disclaimed any and all right to receive the rents, emoluments and income from said estate, as shown by the statement contained in Schedule M at page 29 of said return, a copy of which schedule is attached to this affidavit and made a part hereof. The purpose of this affidavit is to ratify and confirm, and I do hereby ratify and confirm, the declaration made in Schedule M of said return and hereby formally disclaim and renounce any right on my part to receive any of the said rents, emoluments and income from the estate of my deceased wife, Linnie Jane Hodges. This affidavit is made to absolve me or my estate from any liability for the payment of income taxes on income which has accrued to the estate of Linnie Jane Hodges since the death of the said Linnie Jane Hodges on May 23, 1957. (Annex 5, Answer Record, p. 264) Although it appears that said documents were not duly presented as evidence in the court below, and We cannot, therefore, rely on them for the purpose of the present proceedings, still, We cannot close our eyes to their existence in the record nor fail to note that their tenor jibes with Our conclusion discussed above from the circumstances related to the orders of May 27 and December 14, 1957. 5 Somehow, these documents, considering they are supposed to be copies of their originals found in the official files of the governments of the United States and of the Philippines, serve to lessen any possible apprehension that Our conclusion from the other evidence of Hodges' manifest intent vis-a-vis the rights of his co-heirs is without basis in fact. Verily, with such eloquent manifestations of his good intentions towards the other heirs of his wife, We find it very hard to believe that Hodges did ask the court and that the latter agreed that he be declared her sole heir and that her whole estate be adjudicated to him without so much as just annotating the contingent interest of her brothers and sisters in what would remain thereof upon his demise. On the contrary, it seems to us more factual and fairer to assume that Hodges was well aware of his position as executor of the will of his wife and, as such, had in mind the following admonition made by the Court in Pamittan vs. Lasam, et al., 60 Phil., 908, at pp. 913-914: Upon the death of Bernarda in September, 1908, said lands continued to be conjugal property in the hands of the defendant Lasam. It is provided in article 1418 of the Civil Code that upon the dissolution of the conjugal partnership, an inventory shall immediately be made and this court in construing this provision in connection with section 685 of the Code of Civil Procedure (prior to its amendment by Act No. 3176 of November 24, 1924) has repeatedly held that in the event of the death of the wife, the law imposes upon the husband the duty of liquidating the affairs of the partnership without delay (desde luego) (Alfonso vs. Natividad, 6 Phil., 240; Prado vs. Lagera, 7 Phil., 395; De la Rama vs. De la Rama, 7 Phil., 745; Enriquez vs. Victoria, 10 Phil., 10; Amancio vs. Pardo, 13 Phil., 297; Rojas vs. Singson Tongson, 17 Phil., 476; Sochayseng vs. Trujillo, 31 Phil., 153; Molera vs. Molera, 40 Phil., 566; Nable Jose vs. Nable Jose, 41 Phil., 713.) In the last mentioned case this court quoted with approval the case of Leatherwood vs. Arnold (66 Texas, 414, 416, 417), in which that court discussed the powers of the surviving spouse in the administration of the community property. Attention was called to the fact that the surviving husband, in the management of the conjugal property after the death of the wife, was a trustee of unique character who is liable for any fraud committed by him with relation to the property while he is charged with its administration. In the liquidation of the conjugal partnership, he had wide powers (as the law stood prior to Act No. 3176) and the high degree of trust reposed in him stands out more clearly in view of the fact that he was the owner of a half interest in his own right of the conjugal estate which he was charged to administer. He could therefore no more acquire a title by prescription against those for whom he was administering the conjugal estate than could a guardian against his ward or a judicial administrator against the heirs of estate. Section 38 of Chapter III of the Code of Civil Procedure, with relation to prescription, provides that "this chapter shall not apply ... in the case of a continuing and subsisting trust." The surviving husband in the administration and liquidation of the conjugal estate occupies the position of a trustee of the highest order and is not permitted by the law to hold that estate or any portion thereof adversely to those for whose benefit the law imposes upon him the duty of administration and liquidation. No liquidation was ever made by Lasam hence, the conjugal property which came into his possession on the death of his wife in September, 1908, still remains conjugal property, a continuing and subsisting trust. He should have made a liquidation immediately (desde luego). He cannot now be permitted to take advantage of his own wrong. One of the conditions of title by prescription (section 41, Code of Civil Procedure) is possession "under a claim of title exclusive of any other right". For a trustee to make such a claim would be a manifest fraud. And knowing thus his responsibilities in the premises, We are not convinced that Hodges arrogated everything unto himself leaving nothing at all to be inherited by his wife's brothers and sisters. PCIB insists, however, that to read the orders of May 27 and December 14, 1957, not as adjudicatory, but merely as approving past and authorizing future dispositions made by Hodges in a wholesale and general manner, would necessarily render the said orders void for being violative of the provisions of Rule 89 governing the manner in which such dispositions may be made and how the authority therefor and approval thereof by the probate court may be secured. If We sustained such a view, the result would only be that the said orders should be declared ineffective either way they are understood, considering We have already seen it is legally impossible to consider them as adjudicatory. As a matter of fact, however, what surges immediately to the surface, relative to PCIB's observations based on Rule 89, is that from such point of view, the supposed irregularity would involve no more than some non-jurisdictional technicalities of procedure, which have for their evident fundamental purpose the protection of parties interested in the estate, such as the heirs, its creditors, particularly the government on account of the taxes due it; and since it is apparent here that none of such parties are objecting to said orders or would be prejudiced by the unobservance by the trial court of the procedure pointed

out by PCIB, We find no legal inconvenience in nor impediment to Our giving sanction to the blanket approval and authority contained in said orders. This solution is definitely preferable in law and in equity, for to view said orders in the sense suggested by PCIB would result in the deprivation of substantive rights to the brothers and sisters of Mrs. Hodges, whereas reading them the other way will not cause any prejudice to anyone, and, withal, will give peace of mind and stability of rights to the innocent parties who relied on them in good faith, in the light of the peculiar pertinent provisions of the will of said decedent. Now, the inventory submitted by Hodges on May 12, 1958 referred to the estate of his wife as consisting of "One-half of all the items designated in the balance sheet, copy of which is hereto attached and marked as "Annex A"." Although, regrettably, no copy of said Annex A appears in the records before Us, We take judicial notice, on the basis of the undisputed facts in these cases, that the same consists of considerable real and other personal kinds of properties. And since, according to her will, her husband was to be the sole owner thereof during his lifetime, with full power and authority to dispose of any of them, provided that should there be any remainder upon his death, such remainder would go to her brothers and sisters, and furthermore, there is no pretension, much less any proof that Hodges had in fact disposed of all of them, and, on the contrary, the indications are rather to the effect that he had kept them more or less intact, it cannot truthfully be said that, upon the death of Hodges, there was no more estate of Mrs. Hodges to speak of. It is Our conclusion, therefore, that properties do exist which constitute such estate, hence Special Proceedings 1307 should not yet be closed. Neither is there basis for holding that respondent Magno has ceased to be the Administratrix in said proceeding. There is no showing that she has ever been legally removed as such, the attempt to replace her with Mr. Benito Lopez without authority from the Court having been expressly held ineffective by Our resolution of September 8, 1972. Parenthetically, on this last point, PCIB itself is very emphatic in stressing that it is not questioning said respondent's status as such administratrix. Indeed, it is not clear that PCIB has any standing to raise any objection thereto, considering it is a complete stranger insofar as the estate of Mrs. Hodges is concerned. It is the contention of PCIB, however, that as things actually stood at the time of Hodges' death, their conjugal partnership had not yet been liquidated and, inasmuch as the properties composing the same were thus commingled pro indiviso and, consequently, the properties pertaining to the estate of each of the spouses are not yet identifiable, it is PCIB alone, as administrator of the estate of Hodges, who should administer everything, and all that respondent Magno can do for the time being is to wait until the properties constituting the remaining estate of Mrs. Hodges have been duly segregated and delivered to her for her own administration. Seemingly, PCIB would liken the Testate Estate of Linnie Jane Hodges to a party having a claim of ownership to some properties included in the inventory of an administrator of the estate of a decedent, (here that of Hodges) and who normally has no right to take part in the proceedings pending the establishment of his right or title; for which as a rule it is required that an ordinary action should be filed, since the probate court is without jurisdiction to pass with finality on questions of title between the estate of the deceased, on the one hand, and a third party or even an heir claiming adversely against the estate, on the other. We do not find such contention sufficiently persuasive. As We see it, the situation obtaining herein cannot be compared with the claim of a third party the basis of which is alien to the pending probate proceedings. In the present cases what gave rise to the claim of PCIB of exclusive ownership by the estate of Hodges over all the properties of the Hodges spouses, including the share of Mrs. Hodges in the community properties, were the orders of the trial court issued in the course of the very settlement proceedings themselves, more specifically, the orders of May 27 and December 14, 1957 so often mentioned above. In other words, the root of the issue of title between the parties is something that the court itself has done in the exercise of its probate jurisdiction. And since in the ultimate analysis, the question of whether or not all the properties herein involved pertain exclusively to the estate of Hodges depends on the legal meaning and effect of said orders, the claim that respondent court has no jurisdiction to take cognizance of and decide the said issue is incorrect. If it was within the competence of the court to issue the root orders, why should it not be within its authority to declare their true significance and intent, to the end that the parties may know whether or not the estate of Mrs. Hodges had already been adjudicated by the court, upon the initiative of Hodges, in his favor, to the exclusion of the other heirs of his wife instituted in her will? At this point, it bears emphasis again that the main cause of all the present problems confronting the courts and the parties in these cases was the failure of Hodges to secure, as executor of his wife's estate, from May, 1957 up to the time of his death in December, 1962, a period of more than five years, the final adjudication of her estate and the closure of the proceedings. The record is bare of any showing that he ever exerted any effort towards the early settlement of said estate. While, on the one hand, there are enough indications, as already discuss that he had intentions of leaving intact her share of the conjugal properties so that it may pass wholly to his co-heirs upon his death, pursuant to her will, on the other hand, by not terminating the proceedings, his interests in his own half of the conjugal properties remained commingled proindiviso with those of his co-heirs in the other half. Obviously, such a situation could not be conducive to ready ascertainment of the portion of the inheritance that should appertain to his co-heirs upon his death. Having these considerations in mind, it would be giving a premium for such procrastination and rather unfair to his co-heirs, if the administrator of his estate were to be given exclusive administration of all the properties in question, which would necessarily include the function of promptly liquidating the conjugal partnership, thereby identifying and segregating without unnecessary loss of time which properties should be considered as constituting the estate of Mrs. Hodges, the remainder of which her brothers and sisters are supposed to inherit equally among themselves. To be sure, an administrator is not supposed to represent the interests of any particular party and his acts are deemed to be objectively for the protection of the rights of everybody concerned with the estate of the decedent, and from this point of view, it maybe said that even if PCIB were to act alone, there should be no fear of undue disadvantage to anyone. On the other hand, however, it is evidently implicit in section 6 of Rule 78 fixing the priority among those to whom letters of administration should be granted that the criterion in the selection of the administrator is not his impartiality alone but, more importantly, the extent of his interest in the estate, so much so that the one assumed to have greater interest is preferred to another who has less. Taking both of these considerations into account, inasmuch as, according to Hodges' own inventory submitted by him as Executor of the estate of his wife, practically all their properties were conjugal which means that the spouses have equal shares therein, it is but logical that both estates should be administered jointly by representatives of both, pending their segregation from each other. Particularly is such an arrangement warranted because the actuations so far of PCIB evince a determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from their inheritance. Besides, to allow PCIB, the administrator of his estate, to perform now what Hodges was duty bound to do as executor is to violate the spirit, if not the letter, of Section 2 of Rule 78 which expressly provides that

"The executor of an executor shall not, as such, administer the estate of the first testator." It goes without saying that this provision refers also to the administrator of an executor like PCIB here. We are not unmindful of the fact that under Section 2 of Rule 73, "When the marriage is dissolved by the death of the husband or wife, the community property shall be inventoried, administered, and liquidated, and the debts thereof paid, in the testate or intestate proceedings of the deceased spouse. If both spouses have died, the conjugal partnership shall be liquidated in the testate or intestate proceedings of either." Indeed, it is true that the last sentence of this provision allows or permits the conjugal partnership of spouses who are both deceased to be settled or liquidated in the testate or intestate proceedings of either, but precisely because said sentence allows or permits that the liquidation be made in either proceeding, it is a matter of sound judicial discretion in which one it should be made. After all, the former rule referring to the administrator of the husband's estate in respect to such liquidation was done away with by Act 3176, the pertinent provisions of which are now embodied in the rule just cited. Thus, it can be seen that at the time of the death of Hodges, there was already the pending judicial settlement proceeding of the estate of Mrs. Hodges, and, more importantly, that the former was the executor of the latter's will who had, as such, failed for more than five years to see to it that the same was terminated earliest, which was not difficult to do, since from ought that appears in the record, there were no serious obstacles on the way, the estate not being indebted and there being no immediate heirs other than Hodges himself. Such dilatory or indifferent attitude could only spell possible prejudice of his co-heirs, whose rights to inheritance depend entirely on the existence of any remainder of Mrs. Hodges' share in the community properties, and who are now faced with the pose of PCIB that there is no such remainder. Had Hodges secured as early as possible the settlement of his wife's estate, this problem would not arisen. All things considered, We are fully convinced that the interests of justice will be better served by not permitting or allowing PCIB or any administrator of the estate of Hodges exclusive administration of all the properties in question. We are of the considered opinion and so hold that what would be just and proper is for both administrators of the two estates to act conjointly until after said estates have been segregated from each other. At this juncture, it may be stated that we are not overlooking the fact that it is PCIB's contention that, viewed as a substitution, the testamentary disposition in favor of Mrs. Hodges' brothers and sisters may not be given effect. To a certain extent, this contention is correct. Indeed, legally speaking, Mrs. Hodges' will provides neither for a simple or vulgar substitution under Article 859 of the Civil Code nor for a fideicommissary substitution under Article 863 thereof. There is no vulgar substitution therein because there is no provision for either (1) predecease of the testator by the designated heir or (2) refusal or (3) incapacity of the latter to accept the inheritance, as required by Article 859; and neither is there a fideicommissary substitution therein because no obligation is imposed thereby upon Hodges to preserve the estate or any part thereof for anyone else. But from these premises, it is not correct to jump to the conclusion, as PCIB does, that the testamentary dispositions in question are therefore inoperative and invalid. The error in PCIB's position lies simply in the fact that it views the said disposition exclusively in the light of substitutions covered by the Civil Code section on that subject, (Section 3, Chapter 2, Title IV, Book III) when it is obvious that substitution occurs only when another heir is appointed in a will "so that he may enter into inheritance in default of the heir originally instituted," (Article 857, id.) and, in the present case, no such possible default is contemplated. The brothers and sisters of Mrs. Hodges are not substitutes for Hodges because, under her will, they are not to inherit what Hodges cannot, would not or may not inherit, but what he would not dispose of from his inheritance; rather, therefore, they are also heirs instituted simultaneously with Hodges, subject, however, to certain conditions, partially resolutory insofar as Hodges was concerned and correspondingly suspensive with reference to his brothers and sisters-in-law. It is partially resolutory, since it bequeaths unto Hodges the whole of her estate to be owned and enjoyed by him as universal and sole heir with absolute dominion over them 6 only during his lifetime, which means that while he could completely and absolutely dispose of any portion thereof inter vivos to anyone other than himself, he was not free to do so mortis causa, and all his rights to what might remain upon his death would cease entirely upon the occurrence of that contingency, inasmuch as the right of his brothers and sisters-in-law to the inheritance, although vested already upon the death of Mrs. Hodges, would automatically become operative upon the occurrence of the death of Hodges in the event of actual existence of any remainder of her estate then. Contrary to the view of respondent Magno, however, it was not the usufruct alone of her estate, as contemplated in Article 869 of the Civil Code, that she bequeathed to Hodges during his lifetime, but the full ownership thereof, although the same was to last also during his lifetime only, even as there was no restriction whatsoever against his disposing or conveying the whole or any portion thereof to anybody other than himself. The Court sees no legal impediment to this kind of institution, in this jurisdiction or under Philippine law, except that it cannot apply to the legitime of Hodges as the surviving spouse, consisting of one-half of the estate, considering that Mrs. Hodges had no surviving ascendants nor descendants. (Arts. 872, 900, and 904, New Civil Code.) But relative precisely to the question of how much of Mrs. Hodges' share of the conjugal partnership properties may be considered as her estate, the parties are in disagreement as to how Article 16 of the Civil Code 7 should be applied. On the one hand, petitioner claims that inasmuch as Mrs. Hodges was a resident of the Philippines at the time of her death, under said Article 16, construed in relation to the pertinent laws of Texas and the principle of renvoi, what should be applied here should be the rules of succession under the Civil Code of the Philippines, and, therefore, her estate could consist of no more than one-fourth of the said conjugal properties, the other fourth being, as already explained, the legitime of her husband (Art. 900, Civil Code) which she could not have disposed of nor burdened with any condition (Art. 872, Civil Code). On the other hand, respondent Magno denies that Mrs. Hodges died a resident of the Philippines, since allegedly she never changed nor intended to change her original residence of birth in Texas, United States of America, and contends that, anyway, regardless of the question of her residence, she being indisputably a citizen of Texas, under said Article 16 of the Civil Code, the distribution of her estate is subject to the laws of said State which, according to her, do not provide for any legitime, hence, the brothers and sisters of Mrs. Hodges are entitled to the remainder of the whole of her share of the conjugal partnership properties consisting of one-half thereof. Respondent Magno further maintains that, in any event, Hodges had renounced his rights under the will in favor of his co-heirs, as allegedly proven by the documents touching on the point already mentioned earlier, the genuineness and legal significance of which petitioner seemingly questions. Besides, the parties are disagreed as to what the pertinent laws of Texas provide. In the interest of settling the estates herein involved soonest, it would be best, indeed, if these conflicting claims of the parties were determined in these proceedings. The Court regrets, however, that it cannot do so, for the simple reason that neither the evidence submitted by the parties in the court below nor their discussion, in their respective briefs and memoranda before Us, of their respective contentions on the pertinent legal issues, of grave importance as they are, appear to Us to be adequate enough to enable Us to render an intelligent comprehensive and just resolution. For one thing, there is no clear

and reliable proof of what in fact the possibly applicable laws of Texas are. 7* Then also, the genuineness of documents relied upon by respondent Magno is disputed. And there are a number of still other conceivable related issues which the parties may wish to raise but which it is not proper to mention here. In Justice, therefore, to all the parties concerned, these and all other relevant matters should first be threshed out fully in the trial court in the proceedings hereafter to be held therein for the purpose of ascertaining and adjudicating and/or distributing the estate of Mrs. Hodges to her heirs in accordance with her duly probated will. To be more explicit, all that We can and do decide in connection with the petition for certiorari and prohibition are: (1) that regardless of which corresponding laws are applied, whether of the Philippines or of Texas, and taking for granted either of the respective contentions of the parties as to provisions of the latter, 8 and regardless also of whether or not it can be proven by competent evidence that Hodges renounced his inheritance in any degree, it is easily and definitely discernible from the inventory submitted by Hodges himself, as Executor of his wife's estate, that there are properties which should constitute the estate of Mrs. Hodges and ought to be disposed of or distributed among her heirs pursuant to her will in said Special Proceedings 1307; (2) that, more specifically, inasmuch as the question of what are the pertinent laws of Texas applicable to the situation herein is basically one of fact, and, considering that the sole difference in the positions of the parties as to the effect of said laws has reference to the supposed legitime of Hodges it being the stand of PCIB that Hodges had such a legitime whereas Magno claims the negative - it is now beyond controversy for all future purposes of these proceedings that whatever be the provisions actually of the laws of Texas applicable hereto, the estate of Mrs. Hodges is at least, one-fourth of the conjugal estate of the spouses; the existence and effects of foreign laws being questions of fact, and it being the position now of PCIB that the estate of Mrs. Hodges, pursuant to the laws of Texas, should only be one-fourth of the conjugal estate, such contention constitutes an admission of fact, and consequently, it would be in estoppel in any further proceedings in these cases to claim that said estate could be less, irrespective of what might be proven later to be actually the provisions of the applicable laws of Texas; (3) that Special Proceedings 1307 for the settlement of the testate estate of Mrs. Hodges cannot be closed at this stage and should proceed to its logical conclusion, there having been no proper and legal adjudication or distribution yet of the estate therein involved; and (4) that respondent Magno remains and continues to be the Administratrix therein. Hence, nothing in the foregoing opinion is intended to resolve the issues which, as already stated, are not properly before the Court now, namely, (1) whether or not Hodges had in fact and in law waived or renounced his inheritance from Mrs. Hodges, in whole or in part, and (2) assuming there had been no such waiver, whether or not, by the application of Article 16 of the Civil Code, and in the light of what might be the applicable laws of Texas on the matter, the estate of Mrs. Hodges is more than the one-fourth declared above. As a matter of fact, even our finding above about the existence of properties constituting the estate of Mrs. Hodges rests largely on a general appraisal of the size and extent of the conjugal partnership gathered from reference made thereto by both parties in their briefs as well as in their pleadings included in the records on appeal, and it should accordingly yield, as to which exactly those properties are, to the more concrete and specific evidence which the parties are supposed to present in support of their respective positions in regard to the foregoing main legal and factual issues. In the interest of justice, the parties should be allowed to present such further evidence in relation to all these issues in a joint hearing of the two probate proceedings herein involved. After all, the court a quo has not yet passed squarely on these issues, and it is best for all concerned that it should do so in the first instance. Relative to Our holding above that the estate of Mrs. Hodges cannot be less than the remainder of one-fourth of the conjugal partnership properties, it may be mentioned here that during the deliberations, the point was raised as to whether or not said holding might be inconsistent with Our other ruling here also that, since there is no reliable evidence as to what are the applicable laws of Texas, U.S.A. "with respect to the order of succession and to the amount of successional rights" that may be willed by a testator which, under Article 16 of the Civil Code, are controlling in the instant cases, in view of the undisputed Texan nationality of the deceased Mrs. Hodges, these cases should be returned to the court a quo, so that the parties may prove what said law provides, it is premature for Us to make any specific ruling now on either the validity of the testamentary dispositions herein involved or the amount of inheritance to which the brothers and sisters of Mrs. Hodges are entitled. After nature reflection, We are of the considered view that, at this stage and in the state of the records before Us, the feared inconsistency is more apparent than real. Withal, it no longer lies in the lips of petitioner PCIB to make any claim that under the laws of Texas, the estate of Mrs. Hodges could in any event be less than that We have fixed above. It should be borne in mind that as above-indicated, the question of what are the laws of Texas governing the matters herein issue is, in the first instance, one of fact, not of law. Elementary is the rule that foreign laws may not be taken judicial notice of and have to be proven like any other fact in dispute between the parties in any proceeding, with the rare exception in instances when the said laws are already within the actual knowledge of the court, such as when they are well and generally known or they have been actually ruled upon in other cases before it and none of the parties concerned do not claim otherwise. (5 Moran, Comments on the Rules of Court, p. 41, 1970 ed.) In Fluemer vs. Hix, 54 Phil. 610, it was held: It is the theory of the petitioner that the alleged will was executed in Elkins West Virginia, on November 3, 1925, by Hix who had his residence in that jurisdiction, and that the laws of West Virginia govern. To this end, there was submitted a copy of section 3868 of Acts 1882, c. 84 as found in West Virginia Code, Annotated, by Hogg Charles E., vol. 2, 1914, p. 1960, and as certified to by the Director of the National Library. But this was far from a compliance with the law. The laws of a foreign jurisdiction do not prove themselves in our courts. The courts of the Philippine Islands are not authorized to take judicial notice of the laws of the various States of the American Union. Such laws must be proved as facts. (In re Estate of Johnson [1918], 39 Phil., 156.) Here the requirements of the law were not met. There was no showing that the book from which an extract was taken was printed or published under the authority of the State of West Virginia, as provided in section 300 of the Code of Civil Procedure. Nor was the extract from the law attested by the certificate of the officer having charge of the original, under the seal of the State of West Virginia, as provided in section 301 of the Code of Civil Procedure. No evidence was introduced to show that the extract from the laws of West Virginia was in force at the time the alleged will was executed." No evidence of the nature thus suggested by the Court may be found in the records of the cases at bar. Quite to the contrary, the parties herein have presented opposing versions in their respective pleadings and memoranda regarding the matter. And even if We took into account that in Aznar vs. Garcia, the Court did make reference to certain provisions regarding succession in the laws of Texas, the disparity in the material dates of that case and the present ones would not permit Us to indulge in the hazardous conjecture that said provisions have not been amended or changed in the meantime. On the other hand, in In re Estate of Johnson, 39 Phil. 156, We held:

Upon the other point as to whether the will was executed in conformity with the statutes of the State of Illinois we note that it does not affirmatively appear from the transcription of the testimony adduced in the trial court that any witness was examined with reference to the law of Illinois on the subject of the execution of will. The trial judge no doubt was satisfied that the will was properly executed by examining section 1874 of the Revised Statutes of Illinois, as exhibited in volume 3 of Starr & Curtis's Annotated Illinois Statutes, 2nd ed., p. 426; and he may have assumed that he could take judicial notice of the laws of Illinois under section 275 of the Code of Civil Procedure. If so, he was in our opinion mistaken. That section authorizes the courts here to take judicial notice, among other things, of the acts of the legislative department of the United States. These words clearly have reference to Acts of the Congress of the United States; and we would hesitate to hold that our courts can, under this provision, take judicial notice of the multifarious laws of the various American States. Nor do we think that any such authority can be derived from the broader language, used in the same section, where it is said that our courts may take judicial notice of matters of public knowledge "similar" to those therein enumerated. The proper rule we think is to require proof of the statutes of the States of the American Union whenever their provisions are determinative of the issues in any action litigated in the Philippine courts. Nevertheless, even supposing that the trial court may have erred in taking judicial notice of the law of Illinois on the point in question, such error is not now available to the petitioner, first, because the petition does not state any fact from which it would appear that the law of Illinois is different from what the court found, and, secondly, because the assignment of error and argument for the appellant in this court raises no question based on such supposed error. Though the trial court may have acted upon pure conjecture as to the law prevailing in the State of Illinois, its judgment could not be set aside, even upon application made within six months under section 113 of the Code of Civil Procedure, unless it should be made to appear affirmatively that the conjecture was wrong. The petitioner, it is true, states in general terms that the will in question is invalid and inadequate to pass real and personal property in the State of Illinois, but this is merely a conclusion of law. The affidavits by which the petition is accompanied contain no reference to the subject, and we are cited to no authority in the appellant's brief which might tend to raise a doubt as to the correctness of the conclusion of the trial court. It is very clear, therefore, that this point cannot be urged as of serious moment. It is implicit in the above ruling that when, with respect to certain aspects of the foreign laws concerned, the parties in a given case do not have any controversy or are more or less in agreement, the Court may take it for granted for the purposes of the particular case before it that the said laws are as such virtual agreement indicates, without the need of requiring the presentation of what otherwise would be the competent evidence on the point. Thus, in the instant cases wherein it results from the respective contentions of both parties that even if the pertinent laws of Texas were known and to be applied, the amount of the inheritance pertaining to the heirs of Mrs. Hodges is as We have fixed above, the absence of evidence to the effect that, actually and in fact, under said laws, it could be otherwise is of no longer of any consequence, unless the purpose is to show that it could be more. In other words, since PCIB, the petitioner-appellant, concedes that upon application of Article 16 of the Civil Code and the pertinent laws of Texas, the amount of the estate in controversy is just as We have determined it to be, and respondent-appellee is only claiming, on her part, that it could be more, PCIB may not now or later pretend differently. To be more concrete, on pages 20-21 of its petition herein, dated July 31, 1967, PCIB states categorically: Inasmuch as Article 16 of the Civil Code provides that "intestate and testamentary successions both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found", while the law of Texas (the Hodges spouses being nationals of U.S.A., State of Texas), in its conflicts of law rules, provides that the domiciliary law (in this case Philippine law) governs the testamentary dispositions and successional rights over movables or personal properties, while the law of the situs (in this case also Philippine law with respect to all Hodges properties located in the Philippines), governs with respect to immovable properties, and applying therefore the 'renvoi doctrine' as enunciated and applied by this Honorable Court in the case of In re Estate of Christensen (G.R. No. L-16749, Jan. 31, 1963), there can be no question that Philippine law governs the testamentary dispositions contained in the Last Will and Testament of the deceased Linnie Jane Hodges, as well as the successional rights to her estate, both with respect to movables, as well as to immovables situated in the Philippines. In its main brief dated February 26, 1968, PCIB asserts: The law governing successional rights. As recited above, there is no question that the deceased, Linnie Jane Hodges, was an American citizen. There is also no question that she was a national of the State of Texas, U.S.A. Again, there is likewise no question that she had her domicile of choice in the City of Iloilo, Philippines, as this has already been pronounced by the above-cited orders of the lower court, pronouncements which are by now res adjudicata (par. [a], See. 49, Rule 39, Rules of Court; In re Estate of Johnson, 39 Phil. 156). Article 16 of the Civil Code provides: "Real property as well as personal property is subject to the law of the country where it is situated. However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found." Thus the aforecited provision of the Civil Code points towards the national law of the deceased, Linnie Jane Hodges, which is the law of Texas, as governing succession "both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions ...". But the law of Texas, in its conflicts of law rules, provides that the domiciliary law governs the testamentary dispositions and successional rights over movables or personal property, while the law of the situs governs with respect to immovable property. Such that with respect to both movable property, as well as immovable property situated in the Philippines, the law of Texas points to the law of the Philippines. Applying, therefore, the so-called "renvoi doctrine", as enunciated and applied by this Honorable Court in the case of "In re Christensen" (G.R. No. L-16749, Jan. 31, 1963), there can be no question that Philippine law governs the testamentary provisions in the Last Will and Testament of the deceased Linnie Jane Hodges, as well as the successional rights to her estate, both with respect to movables, as well as immovables situated in the Philippines. The subject of successional rights. Under Philippine law, as it is under the law of Texas, the conjugal or community property of the spouses, Charles Newton Hodges and Linnie Jane Hodges, upon the death of the latter, is to be divided into two, one-half pertaining to each of the

spouses, as his or her own property. Thus, upon the death of Linnie Jane Hodges, one-half of the conjugal partnership property immediately pertained to Charles Newton Hodges as his own share, and not by virtue of any successional rights. There can be no question about this. Again, Philippine law, or more specifically, Article 900 of the Civil Code provides: If the only survivor is the widow or widower, she or he shall be entitled to one-half of the hereditary estate of the deceased spouse, and the testator may freely dispose of the other half. If the marriage between the surviving spouse and the testator was solemnized in articulo mortis, and the testator died within three months from the time of the marriage, the legitime of the surviving spouse as the sole heir shall be one-third of the hereditary estate, except when they have been living as husband and wife for more than five years. In the latter case, the legitime of the surviving spouse shall be that specified in the preceding paragraph. This legitime of the surviving spouse cannot be burdened by a fideicommisary substitution (Art. 864, Civil code), nor by any charge, condition, or substitution (Art, 872, Civil code). It is clear, therefore, that in addition to one-half of the conjugal partnership property as his own conjugal share, Charles Newton Hodges was also immediately entitled to one-half of the half conjugal share of the deceased, Linnie Jane Hodges, or one-fourth of the entire conjugal property, as his legitime. One-fourth of the conjugal property therefore remains at issue. In the summary of its arguments in its memorandum dated April 30, 1968, the following appears: Briefly, the position advanced by the petitioner is: a. That the Hodges spouses were domiciled legally in the Philippines (pp. 19-20, petition). This is now a matter of res adjudicata (p. 20, petition). b. That under Philippine law, Texas law, and the renvoi doctrine, Philippine law governs the successional rights over the properties left by the deceased, Linnie Jane Hodges (pp. 20-21, petition). c. That under Philippine as well as Texas law, one-half of the Hodges properties pertains to the deceased, Charles Newton Hodges (p. 21, petition). This is not questioned by the respondents. d. That under Philippine law, the deceased, Charles Newton Hodges, automatically inherited one-half of the remaining one-half of the Hodges properties as his legitime (p. 21, petition). e. That the remaining 25% of the Hodges properties was inherited by the deceased, Charles Newton Hodges, under the will of his deceased spouse (pp. 22-23, petition). Upon the death of Charles Newton Hodges, the substitution 'provision of the will of the deceased, Linnie Jane Hodges, did not operate because the same is void (pp. 23-25, petition). f. That the deceased, Charles Newton Hodges, asserted his sole ownership of the Hodges properties and the probate court sanctioned such assertion (pp. 25-29, petition). He in fact assumed such ownership and such was the status of the properties as of the time of his death (pp. 29-34, petition). Of similar tenor are the allegations of PCIB in some of its pleadings quoted in the earlier part of this option. On her part, it is respondent-appellee Magno's posture that under the laws of Texas, there is no system of legitime, hence the estate of Mrs. Hodges should be one-half of all the conjugal properties. It is thus unquestionable that as far as PCIB is concerned, the application to these cases of Article 16 of the Civil Code in relation to the corresponding laws of Texas would result in that the Philippine laws on succession should control. On that basis, as We have already explained above, the estate of Mrs. Hodges is the remainder of one-fourth of the conjugal partnership properties, considering that We have found that there is no legal impediment to the kind of disposition ordered by Mrs. Hodges in her will in favor of her brothers and sisters and, further, that the contention of PCIB that the same constitutes an inoperative testamentary substitution is untenable. As will be recalled, PCIB's position that there is no such estate of Mrs. Hodges is predicated exclusively on two propositions, namely: (1) that the provision in question in Mrs. Hodges' testament violates the rules on substitution of heirs under the Civil Code and (2) that, in any event, by the orders of the trial court of May 27, and December 14, 1957, the trial court had already finally and irrevocably adjudicated to her husband the whole free portion of her estate to the exclusion of her brothers and sisters, both of which poses, We have overruled. Nowhere in its pleadings, briefs and memoranda does PCIB maintain that the application of the laws of Texas would result in the other heirs of Mrs. Hodges not inheriting anything under her will. And since PCIB's representations in regard to the laws of Texas virtually constitute admissions of fact which the other parties and the Court are being made to rely and act upon, PCIB is "not permitted to contradict them or subsequently take a position contradictory to or inconsistent with them." (5 Moran, id, p. 65, citing Cunanan vs. Amparo, 80 Phil. 227; Sta. Ana vs. Maliwat, L-23023, Aug. 31, 1968, 24 SCRA 1018). Accordingly, the only question that remains to be settled in the further proceedings hereby ordered to be held in the court below is how much more than as fixed above is the estate of Mrs. Hodges, and this would depend on (1) whether or not the applicable laws of Texas do provide in effect for more, such as, when there is no legitime provided therein, and (2) whether or not Hodges has validly waived his whole inheritance from Mrs. Hodges. In the course of the deliberations, it was brought out by some members of the Court that to avoid or, at least, minimize further protracted legal controversies between the respective heirs of the Hodges spouses, it is imperative to elucidate on the possible consequences of dispositions made by Hodges after the death of his wife from the mass of the unpartitioned estates without any express indication in the pertinent documents as to whether his intention is to dispose of part of his inheritance from his wife or part of his own share of the conjugal estate as well as of those made by PCIB after the death of Hodges. After a long discussion, the consensus arrived at was as follows: (1) any such dispositions made gratuitously in favor of third parties, whether these be individuals, corporations or foundations, shall be considered as intended to be of properties constituting part of Hodges' inheritance from his wife, it appearing from the tenor of his motions of May 27 and December 11, 1957 that in asking for general authority to make sales or other disposals of properties under the jurisdiction of the court, which include his own share of the conjugal estate, he was not invoking particularly his right over his own share, but rather his right to dispose of any part of his inheritance pursuant to the will of his wife; (2) as regards sales, exchanges or other remunerative transfers, the proceeds of such sales or the properties taken in by virtue of such exchanges, shall be considered as merely the products of "physical changes" of the properties of her estate which the will expressly authorizes Hodges to make, provided that whatever of said products should remain with the estate at the time of the death of Hodges should go to her brothers and sisters; (3) the dispositions made by PCIB after the death of Hodges must naturally be deemed as covering only the properties belonging to his estate considering that being only the administrator of the estate of Hodges, PCIB could not have disposed of properties belonging to the estate of his wife. Neither could such dispositions be considered as involving conjugal properties, for the simple reason that the conjugal partnership automatically ceased when Mrs. Hodges died, and by the peculiar provision of her will, under discussion, the remainder of her share descended also automatically upon the death of Hodges to her brothers and sisters, thus outside of the scope of PCIB's administration. Accordingly, these construction of the will of Mrs. Hodges

should be adhered to by the trial court in its final order of adjudication and distribution and/or partition of the two estates in question. THE APPEALS A cursory examination of the seventy-eight assignments of error in appellant PCIB's brief would readily reveal that all of them are predicated mainly on the contention that inasmuch as Hodges had already adjudicated unto himself all the properties constituting his wife's share of the conjugal partnership, allegedly with the sanction of the trial court per its order of December 14, 1957, there has been, since said date, no longer any estate of Mrs. Hodges of which appellee Magno could be administratrix, hence the various assailed orders sanctioning her actuations as such are not in accordance with law. Such being the case, with the foregoing resolution holding such posture to be untenable in fact and in law and that it is in the best interest of justice that for the time being the two estates should be administered conjointly by the respective administrators of the two estates, it should follow that said assignments of error have lost their fundamental reasons for being. There are certain matters, however, relating peculiarly to the respective orders in question, if commonly among some of them, which need further clarification. For instance, some of them authorized respondent Magno to act alone or without concurrence of PCIB. And with respect to many of said orders, PCIB further claims that either the matters involved were not properly within the probate jurisdiction of the trial court or that the procedure followed was not in accordance with the rules. Hence, the necessity of dealing separately with the merits of each of the appeals. Indeed, inasmuch as the said two estates have until now remained commingled pro-indiviso, due to the failure of Hodges and the lower court to liquidate the conjugal partnership, to recognize appellee Magno as Administratrix of the Testate Estate of Mrs. Hodges which is still unsegregated from that of Hodges is not to say, without any qualification, that she was therefore authorized to do and perform all her acts complained of in these appeals, sanctioned though they might have been by the trial court. As a matter of fact, it is such commingling pro-indivisoof the two estates that should deprive appellee of freedom to act independently from PCIB, as administrator of the estate of Hodges, just as, for the same reason, the latter should not have authority to act independently from her. And considering that the lower court failed to adhere consistently to this basic point of view, by allowing the two administrators to act independently of each other, in the various instances already noted in the narration of facts above, the Court has to look into the attendant circumstances of each of the appealed orders to be able to determine whether any of them has to be set aside or they may all be legally maintained notwithstanding the failure of the court a quo to observe the pertinent procedural technicalities, to the end only that graver injury to the substantive rights of the parties concerned and unnecessary and undesirable proliferation of incidents in the subject proceedings may be forestalled. In other words, We have to determine, whether or not, in the light of the unusual circumstances extant in the record, there is need to be more pragmatic and to adopt a rather unorthodox approach, so as to cause the least disturbance in rights already being exercised by numerous innocent third parties, even if to do so may not appear to be strictly in accordance with the letter of the applicable purely adjective rules. Incidentally, it may be mentioned, at this point, that it was principally on account of the confusion that might result later from PCIB's continuing to administer all the community properties, notwithstanding the certainty of the existence of the separate estate of Mrs. Hodges, and to enable both estates to function in the meantime with a relative degree of regularity, that the Court ordered in the resolution of September 8, 1972 the modification of the injunction issued pursuant to the resolutions of August 8, October 4 and December 6, 1967, by virtue of which respondent Magno was completely barred from any participation in the administration of the properties herein involved. In the September 8 resolution, We ordered that, pending this decision, Special Proceedings 1307 and 1672 should proceed jointly and that the respective administrators therein "act conjointly none of them to act singly and independently of each other for any purpose." Upon mature deliberation, We felt that to allow PCIB to continue managing or administering all the said properties to the exclusion of the administratrix of Mrs. Hodges' estate might place the heirs of Hodges at an unduly advantageous position which could result in considerable, if not irreparable, damage or injury to the other parties concerned. It is indeed to be regretted that apparently, up to this date, more than a year after said resolution, the same has not been given due regard, as may be gleaned from the fact that recently, respondent Magno has filed in these proceedings a motion to declare PCIB in contempt for alleged failure to abide therewith, notwithstanding that its repeated motions for reconsideration thereof have all been denied soon after they were filed. 9 Going back to the appeals, it is perhaps best to begin first with what appears to Our mind to be the simplest, and then proceed to the more complicated ones in that order, without regard to the numerical sequence of the assignments of error in appellant's brief or to the order of the discussion thereof by counsel. Assignments of error numbers LXXII, LXXVII and LXXVIII. These assignments of error relate to (1) the order of the trial court of August 6, 1965 providing that "the deeds of sale (therein referred to involving properties in the name of Hodges) should be signed jointly by the PCIB, as Administrator of Testate Estate of C.N. Hodges, and Avelina A. Magno, as Administratrix of the Testate Estate of Linnie Jane Hodges, and to this effect, the PCIB should take the necessary steps so that Administratrix Avelina A. Magno could sign the deeds of sale," (p. 248, Green Rec. on Appeal) (2) the order of October 27, 1965 denying the motion for reconsideration of the foregoing order, (pp. 276-277, id.) (3) the other order also dated October 27, 1965 enjoining inter alia, that "(a) all cash collections should be deposited in the joint account of the estate of Linnie Jane Hodges and estate of C. N. Hodges, (b) that whatever cash collections (that) had been deposited in the account of either of the estates should be withdrawn and since then (sic) deposited in the joint account of the estate of Linnie Jane Hodges and the estate of C. N. Hodges; ... (d) (that) Administratrix Magno allow the PCIB to inspect whatever records, documents and papers she may have in her possession, in the same manner that Administrator PCIB is also directed to allow Administratrix Magno to inspect whatever records, documents and papers it may have in its possession" and "(e) that the accountant of the estate of Linnie Jane Hodges shall have access to all records of the transactions of both estates for the protection of the estate of Linnie Jane Hodges; and in like manner, the accountant or any authorized representative of the estate of C. N. Hodges shall have access to the records of transactions of the Linnie Jane Hodges estate for the protection of the estate of C. N. Hodges", (pp. 292-295, id.) and (4) the order of February 15, 1966, denying, among others, the motion for reconsideration of the order of October 27, 1965 last referred to. (pp. 455-456, id.) As may be readily seen, the thrust of all these four impugned orders is in line with the Court's above-mentioned resolution of September 8, 1972 modifying the injunction previously issued on August 8, 1967, and, more importantly, with what We have said the trial court should have always done pending the liquidation of the conjugal partnership of the Hodges spouses. In fact, as already stated, that is the arrangement We are ordering, by this decision, to be followed. Stated differently, since the questioned orders provide for joint action by the two administrators, and that is precisely what We are

holding out to have been done and should be done until the two estates are separated from each other, the said orders must be affirmed. Accordingly the foregoing assignments of error must be, as they are hereby overruled. Assignments of error Numbers LXVIII to LXXI and LXXIII to LXXVI. The orders complained of under these assignments of error commonly deal with expenditures made by appellee Magno, as Administratrix of the Estate of Mrs. Hodges, in connection with her administration thereof, albeit additionally, assignments of error Numbers LXIX to LXXI put into question the payment of attorneys fees provided for in the contract for the purpose, as constituting, in effect, premature advances to the heirs of Mrs. Hodges. More specifically, assignment Number LXXIII refers to reimbursement of overtime pay paid to six employees of the court and three other persons for services in copying the court records to enable the lawyers of the administration to be fully informed of all the incidents in the proceedings. The reimbursement was approved as proper legal expenses of administration per the order of December 19, 1964, (pp. 221-222, id.) and repeated motions for reconsideration thereof were denied by the orders of January 9, 1965, (pp. 231-232, id.) October 27, 1965, (p. 277, id.) and February 15, 1966. (pp. 455-456, id.) On the other hand, Assignments Numbers LXVIII to LXXI, LXXIV and LXXV question the trial court's order of November 3, 1965 approving the agreement of June 6, 1964 between Administratrix Magno and James L. Sullivan, attorney-in-fact of the heirs of Mrs. Hodges, as Parties of the First Part, and Attorneys Raul Manglapus and Rizal R. Quimpo, as Parties of the Second Part, regarding attorneys fees for said counsel who had agreed "to prosecute and defend their interests (of the Parties of the First Part) in certain cases now pending litigation in the Court of First Instance of Iloilo , more specifically in Special Proceedings 1307 and 1672 " (pp. 126-129, id.) and directing Administratrix Magno "to issue and sign whatever check or checks maybe needed to implement the approval of the agreement annexed to the motion" as well as the "administrator of the estate of C. N. Hodges to countersign the said check or checks as the case maybe." (pp. 313-320, id.), reconsideration of which order of approval was denied in the order of February 16, 1966, (p. 456,id.) Assignment Number LXXVI imputes error to the lower court's order of October 27, 1965, already referred to above, insofar as it orders that "PCIB should counter sign the check in the amount of P250 in favor of Administratrix Avelina A. Magno as her compensation as administratrix of Linnie Jane Hodges estate chargeable to the Testate Estate of Linnie Jane Hodges only." (p. 294, id.) Main contention again of appellant PCIB in regard to these eight assigned errors is that there is no such estate as the estate of Mrs. Hodges for which the questioned expenditures were made, hence what were authorized were in effect expenditures from the estate of Hodges. As We have already demonstrated in Our resolution above of the petition for certiorari and prohibition, this posture is incorrect. Indeed, in whichever way the remaining issues between the parties in these cases are ultimately resolved, 10 the final result will surely be that there are properties constituting the estate of Mrs. Hodges of which Magno is the current administratrix. It follows, therefore, that said appellee had the right, as such administratrix, to hire the persons whom she paid overtime pay and to be paid for her own services as administratrix. That she has not yet collected and is not collecting amounts as substantial as that paid to or due appellant PCIB is to her credit. Of course, she is also entitled to the services of counsel and to that end had the authority to enter into contracts for attorney's fees in the manner she had done in the agreement of June 6, 1964. And as regards to the reasonableness of the amount therein stipulated, We see no reason to disturb the discretion exercised by the probate court in determining the same. We have gone over the agreement, and considering the obvious size of the estate in question and the nature of the issues between the parties as well as the professional standing of counsel, We cannot say that the fees agreed upon require the exercise by the Court of its inherent power to reduce it. PCIB insists, however, that said agreement of June 6, 1964 is not for legal services to the estate but to the heirs of Mrs. Hodges, or, at most, to both of them, and such being the case, any payment under it, insofar as counsels' services would redound to the benefit of the heirs, would be in the nature of advances to such heirs and a premature distribution of the estate. Again, We hold that such posture cannot prevail. Upon the premise We have found plausible that there is an existing estate of Mrs. Hodges, it results that juridically and factually the interests involved in her estate are distinct and different from those involved in her estate of Hodges and vice versa. Insofar as the matters related exclusively to the estate of Mrs. Hodges, PCIB, as administrator of the estate of Hodges, is a complete stranger and it is without personality to question the actuations of the administratrix thereof regarding matters not affecting the estate of Hodges. Actually, considering the obviously considerable size of the estate of Mrs. Hodges, We see no possible cause for apprehension that when the two estates are segregated from each other, the amount of attorney's fees stipulated in the agreement in question will prejudice any portion that would correspond to Hodges' estate. And as regards the other heirs of Mrs. Hodges who ought to be the ones who should have a say on the attorney's fees and other expenses of administration assailed by PCIB, suffice it to say that they appear to have been duly represented in the agreement itself by their attorney-in-fact, James L. Sullivan and have not otherwise interposed any objection to any of the expenses incurred by Magno questioned by PCIB in these appeals. As a matter of fact, as ordered by the trial court, all the expenses in question, including the attorney's fees, may be paid without awaiting the determination and segregation of the estate of Mrs. Hodges. Withal, the weightiest consideration in connection with the point under discussion is that at this stage of the controversy among the parties herein, the vital issue refers to the existence or non-existence of the estate of Mrs. Hodges. In this respect, the interest of respondent Magno, as the appointed administratrix of the said estate, is to maintain that it exists, which is naturally common and identical with and inseparable from the interest of the brothers and sisters of Mrs. Hodges. Thus, it should not be wondered why both Magno and these heirs have seemingly agreed to retain but one counsel. In fact, such an arrangement should be more convenient and economical to both. The possibility of conflict of interest between Magno and the heirs of Mrs. Hodges would be, at this stage, quite remote and, in any event, rather insubstantial. Besides, should any substantial conflict of interest between them arise in the future, the same would be a matter that the probate court can very well take care of in the course of the independent proceedings in Case No. 1307 after the corresponding segregation of the two subject estates. We cannot perceive any cogent reason why, at this stage, the estate and the heirs of Mrs. Hodges cannot be represented by a common counsel. Now, as to whether or not the portion of the fees in question that should correspond to the heirs constitutes premature partial distribution of the estate of Mrs. Hodges is also a matter in which neither PCIB nor the heirs of Hodges have any interest. In any event, since, as far as the records show, the estate has no creditors and the corresponding estate and inheritance taxes, except those of the brothers and sisters of Mrs. Hodges, have already been paid, 11 no prejudice can caused to anyone by the comparatively small amount of attorney's fees in question. And in this connection, it may be

added that, although strictly speaking, the attorney's fees of the counsel of an administrator is in the first instance his personal responsibility, reimbursable later on by the estate, in the final analysis, when, as in the situation on hand, the attorney-in-fact of the heirs has given his conformity thereto, it would be idle effort to inquire whether or not the sanction given to said fees by the probate court is proper. For the foregoing reasons, Assignments of Error LXVIII to LXXI and LXXIII to LXXVI should be as they are hereby overruled. Assignments of error I to IV, XIII to XV, XXII to XXV, XXXV to XXX VI, XLI to XLIII and L. These assignments of error deal with the approval by the trial court of various deeds of sale of real properties registered in the name of Hodges but executed by appellee Magno, as Administratrix of the Estate of Mrs. Hodges, purportedly in implementation of corresponding supposed written "Contracts to Sell" previously executed by Hodges during the interim between May 23, 1957, when his wife died, and December 25, 1962, the day he died. As stated on pp. 118-120 of appellant's main brief, "These are: the, contract to sell between the deceased, Charles Newton Hodges, and the appellee, Pepito G. Iyulores executed on February 5, 1961; the contract to sell between the deceased, Charles Newton Hodges, and the appellant Esperidion Partisala, executed on April 20, 1960; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Winifredo C. Espada, executed on April 18, 1960; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Rosario Alingasa, executed on August 25, 1958; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Lorenzo Carles, executed on June 17, 1958; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Salvador S. Guzman, executed on September 13, 1960; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Florenia Barrido, executed on February 21, 1958; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Purificacion Coronado, executed on August 14, 1961; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Graciano Lucero, executed on November 27, 1961; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Ariteo Thomas Jamir, executed on May 26, 1961; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Melquiades Batisanan, executed on June 9, 1959; the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Belcezar Causing, executed on February 10, 1959 and the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Adelfa Premaylon, executed on October 31, 1959, re Title No. 13815." Relative to these sales, it is the position of appellant PCIB that, inasmuch as pursuant to the will of Mrs. Hodges, her husband was to have dominion over all her estate during his lifetime, it was as absolute owner of the properties respectively covered by said sales that he executed the aforementioned contracts to sell, and consequently, upon his death, the implementation of said contracts may be undertaken only by the administrator of his estate and not by the administratrix of the estate of Mrs. Hodges. Basically, the same theory is invoked with particular reference to five other sales, in which the respective "contracts to sell" in favor of these appellees were executed by Hodges before the death of his wife, namely, those in favor of appellee Santiago Pacaonsis, Alfredo Catedral, Jose Pablico, Western Institute of Technology and Adelfa Premaylon. Anent those deeds of sale based on promises or contracts to sell executed by Hodges after the death of his wife, those enumerated in the quotation in the immediately preceding paragraph, it is quite obvious that PCIB's contention cannot be sustained. As already explained earlier, 1 1* all proceeds of remunerative transfers or dispositions made by Hodges after the death of his wife should be deemed as continuing to be parts of her estate and, therefore, subject to the terms of her will in favor of her brothers and sisters, in the sense that should there be no showing that such proceeds, whether in cash or property have been subsequently conveyed or assigned subsequently by Hodges to any third party by acts inter vivos with the result that they could not thereby belong to him anymore at the time of his death, they automatically became part of the inheritance of said brothers and sisters. The deeds here in question involve transactions which are exactly of this nature. Consequently, the payments made by the appellees should be considered as payments to the estate of Mrs. Hodges which is to be distributed and partitioned among her heirs specified in the will. The five deeds of sale predicated on contracts to sell executed Hodges during the lifetime of his wife, present a different situation. At first blush, it would appear that as to them, PCIB's position has some degree of plausibility. Considering, however, that the adoption of PCIB's theory would necessarily have tremendous repercussions and would bring about considerable disturbance of property rights that have somehow accrued already in favor of innocent third parties, the five purchasers aforenamed, the Court is inclined to take a pragmatic and practical view of the legal situation involving them by overlooking the possible technicalities in the way, the non-observance of which would not, after all, detract materially from what should substantially correspond to each and all of the parties concerned. To start with, these contracts can hardly be ignored. Bona fide third parties are involved; as much as possible, they should not be made to suffer any prejudice on account of judicial controversies not of their own making. What is more, the transactions they rely on were submitted by them to the probate court for approval, and from already known and recorded actuations of said court then, they had reason to believe that it had authority to act on their motions, since appellee Magno had, from time to time prior to their transactions with her, been allowed to act in her capacity as administratrix of one of the subject estates either alone or conjointly with PCIB. All the sales in question were executed by Magno in 1966 already, but before that, the court had previously authorized or otherwise sanctioned expressly many of her act as administratrix involving expenditures from the estate made by her either conjointly with or independently from PCIB, as Administrator of the Estate of Hodges. Thus, it may be said that said buyers-appellees merely followed precedents in previous orders of the court. Accordingly, unless the impugned orders approving those sales indubitably suffer from some clearly fatal infirmity the Court would rather affirm them. It is quite apparent from the record that the properties covered by said sales are equivalent only to a fraction of what should constitute the estate of Mrs. Hodges, even if it is assumed that the same would finally be held to be only one-fourth of the conjugal properties of the spouses as of the time of her death or, to be more exact, one-half of her estate as per the inventory submitted by Hodges as executor, on May 12, 1958. In none of its numerous, varied and voluminous pleadings, motions and manifestations has PCIB claimed any possibility otherwise. Such being the case, to avoid any conflict with the heirs of Hodges, the said properties covered by the questioned deeds of sale executed by appellee Magno may be treated as among those corresponding to the estate of Mrs. Hodges, which would have been actually under her control and administration had Hodges complied with his duty to liquidate the conjugal partnership. Viewing the situation in that manner, the only ones who could stand to be prejudiced by the appealed orders referred to in the assignment of errors

under discussion and who could, therefore, have the requisite interest to question them would be only the heirs of Mrs. Hodges, definitely not PCIB. It is of no moment in what capacity Hodges made the "contracts to sell' after the death of his wife. Even if he had acted as executor of the will of his wife, he did not have to submit those contracts to the court nor follow the provisions of the rules, (Sections 2, 4, 5, 6, 8 and 9 of Rule 89 quoted by appellant on pp. 125 to 127 of its brief) for the simple reason that by the very orders, much relied upon by appellant for other purposes, of May 27, 1957 and December 14, 1957, Hodges was "allowed or authorized" by the trial court "to continue the business in which he was engaged and to perform acts which he had been doing while the deceased was living", (Order of May 27) which according to the motion on which the court acted was "of buying and selling personal and real properties", and "to execute subsequent sales, conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance with the wishes conveyed in the last will and testament of the latter." (Order of December 14) In other words, if Hodges acted then as executor, it can be said that he had authority to do so by virtue of these blanket orders, and PCIB does not question the legality of such grant of authority; on the contrary, it is relying on the terms of the order itself for its main contention in these cases. On the other hand, if, as PCIB contends, he acted as heir-adjudicatee, the authority given to him by the aforementioned orders would still suffice. As can be seen, therefore, it is of no moment whether the "contracts to sell" upon which the deeds in question were based were executed by Hodges before or after the death of his wife. In a word, We hold, for the reasons already stated, that the properties covered by the deeds being assailed pertain or should be deemed as pertaining to the estate of Mrs. Hodges; hence, any supposed irregularity attending the actuations of the trial court may be invoked only by her heirs, not by PCIB, and since the said heirs are not objecting, and the defects pointed out not being strictly jurisdictional in nature, all things considered, particularly the unnecessary disturbance of rights already created in favor of innocent third parties, it is best that the impugned orders are not disturbed. In view of these considerations, We do not find sufficient merit in the assignments of error under discussion. Assignments of error V to VIII, XVI to XVIII, XXVI to XXIX, XXXVII to XXXVIII, XLIV to XLVI and LI. All these assignments of error commonly deal with alleged non-fulfillment by the respective vendees, appellees herein, of the terms and conditions embodied in the deeds of sale referred to in the assignments of error just discussed. It is claimed that some of them never made full payments in accordance with the respective contracts to sell, while in the cases of the others, like Lorenzo Carles, Jose Pablico, Alfredo Catedral and Salvador S. Guzman, the contracts with them had already been unilaterally cancelled by PCIB pursuant to automatic rescission clauses contained in them, in view of the failure of said buyers to pay arrearages long overdue. But PCIB's posture is again premised on its assumption that the properties covered by the deeds in question could not pertain to the estate of Mrs. Hodges. We have already held above that, it being evident that a considerable portion of the conjugal properties, much more than the properties covered by said deeds, would inevitably constitute the estate of Mrs. Hodges, to avoid unnecessary legal complications, it can be assumed that said properties form part of such estate. From this point of view, it is apparent again that the questions, whether or not it was proper for appellee Magno to have disregarded the cancellations made by PCIB, thereby reviving the rights of the respective buyers-appellees, and, whether or not the rules governing new dispositions of properties of the estate were strictly followed, may not be raised by PCIB but only by the heirs of Mrs. Hodges as the persons designated to inherit the same, or perhaps the government because of the still unpaid inheritance taxes. But, again, since there is no pretense that any objections were raised by said parties or that they would necessarily be prejudiced, the contentions of PCIB under the instant assignments of error hardly merit any consideration. Assignments of error IX to XII, XIX to XXI, XXX to XXIV, XXXIX to XL, XLVII to XLIX, LII and LIII to LXI. PCIB raises under these assignments of error two issues which according to it are fundamental, namely: (1) that in approving the deeds executed by Magno pursuant to contracts to sell already cancelled by it in the performance of its functions as administrator of the estate of Hodges, the trial court deprived the said estate of the right to invoke such cancellations it (PCIB) had made and (2) that in so acting, the court "arrogated unto itself, while acting as a probate court, the power to determine the contending claims of third parties against the estate of Hodges over real property," since it has in effect determined whether or not all the terms and conditions of the respective contracts to sell executed by Hodges in favor of the buyers-appellees concerned were complied with by the latter. What is worse, in the view of PCIB, is that the court has taken the word of the appellee Magno, "a total stranger to his estate as determinative of the issue". Actually, contrary to the stand of PCIB, it is this last point regarding appellee Magno's having agreed to ignore the cancellations made by PCIB and allowed the buyers-appellees to consummate the sales in their favor that is decisive. Since We have already held that the properties covered by the contracts in question should be deemed to be portions of the estate of Mrs. Hodges and not that of Hodges, it is PCIB that is a complete stranger in these incidents. Considering, therefore, that the estate of Mrs. Hodges and her heirs who are the real parties in interest having the right to oppose the consummation of the impugned sales are not objecting, and that they are the ones who are precisely urging that said sales be sanctioned, the assignments of error under discussion have no basis and must accordingly be as they are hereby overruled. With particular reference to assignments LIII to LXI, assailing the orders of the trial court requiring PCIB to surrender the respective owner's duplicate certificates of title over the properties covered by the sales in question and otherwise directing the Register of Deeds of Iloilo to cancel said certificates and to issue new transfer certificates of title in favor of the buyers-appellees, suffice it to say that in the light of the above discussion, the trial court was within its rights to so require and direct, PCIB having refused to give way, by withholding said owners' duplicate certificates, of the corresponding registration of the transfers duly and legally approved by the court. Assignments of error LXII to LXVII All these assignments of error commonly deal with the appeal against orders favoring appellee Western Institute of Technology. As will be recalled, said institute is one of the buyers of real property covered by a contract to sell executed by Hodges prior to the death of his wife. As of October, 1965, it was in arrears in the total amount of P92,691.00 in the payment of its installments on account of its purchase, hence it received under date of October 4, 1965 and October 20, 1965, letters of collection, separately and respectively, from PCIB and appellee Magno, in their respective capacities as administrators of the distinct estates of the Hodges spouses, albeit, while in the case of PCIB it made known that "no other arrangement can be accepted except by paying all your past due account", on the other hand, Magno merely said

she would "appreciate very much if you can make some remittance to bring this account up-to-date and to reduce the amount of the obligation." (See pp. 295-311, Green R. on A.) On November 3, 1965, the Institute filed a motion which, after alleging that it was ready and willing to pay P20,000 on account of its overdue installments but uncertain whether it should pay PCIB or Magno, it prayed that it be "allowed to deposit the aforesaid amount with the court pending resolution of the conflicting claims of the administrators." Acting on this motion, on November 23, 1965, the trial court issued an order, already quoted in the narration of facts in this opinion, holding that payment to both or either of the two administrators is "proper and legal", and so "movant can pay to both estates or either of them", considering that "in both cases (Special Proceedings 1307 and 1672) there is as yet no judicial declaration of heirs nor distribution of properties to whomsoever are entitled thereto." The arguments under the instant assignments of error revolve around said order. From the procedural standpoint, it is claimed that PCIB was not served with a copy of the Institute's motion, that said motion was heard, considered and resolved on November 23, 1965, whereas the date set for its hearing was November 20, 1965, and that what the order grants is different from what is prayed for in the motion. As to the substantive aspect, it is contended that the matter treated in the motion is beyond the jurisdiction of the probate court and that the order authorized payment to a person other than the administrator of the estate of Hodges with whom the Institute had contracted. The procedural points urged by appellant deserve scant consideration. We must assume, absent any clear proof to the contrary, that the lower court had acted regularly by seeing to it that appellant was duly notified. On the other hand, there is nothing irregular in the court's having resolved the motion three days after the date set for hearing the same. Moreover, the record reveals that appellants' motion for reconsideration wherein it raised the same points was denied by the trial court on March 7, 1966 (p. 462, Green R. on A.) Withal, We are not convinced that the relief granted is not within the general intent of the Institute's motion. Insofar as the substantive issues are concerned, all that need be said at this point is that they are mere reiterations of contentions We have already resolved above adversely to appellants' position. Incidentally, We may add, perhaps, to erase all doubts as to the propriety of not disturbing the lower court's orders sanctioning the sales questioned in all these appeal s by PCIB, that it is only when one of the parties to a contract to convey property executed by a deceased person raises substantial objections to its being implemented by the executor or administrator of the decedent's estate that Section 8 of Rule 89 may not apply and, consequently, the matter has, to be taken up in a separate action outside of the probate court; but where, as in the cases of the sales herein involved, the interested parties are in agreement that the conveyance be made, it is properly within the jurisdiction of the probate court to give its sanction thereto pursuant to the provisions of the rule just mentioned. And with respect to the supposed automatic rescission clauses contained in the contracts to sell executed by Hodges in favor of herein appellees, the effect of said clauses depend on the true nature of the said contracts, despite the nomenclature appearing therein, which is not controlling, for if they amount to actual contracts of sale instead of being mere unilateral accepted "promises to sell", (Art. 1479, Civil Code of the Philippines, 2nd paragraph) thepactum commissorium or the automatic rescission provision would not operate, as a matter of public policy, unless there has been a previous notarial or judicial demand by the seller (10 Manresa 263, 2nd ed.) neither of which have been shown to have been made in connection with the transactions herein involved. Consequently, We find no merit in the assignments of error Number LXII to LXVII. SUMMARY Considering the fact that this decision is unusually extensive and that the issues herein taken up and resolved are rather numerous and varied, what with appellant making seventy-eight assignments of error affecting no less than thirty separate orders of the court a quo, if only to facilitate proper understanding of the import and extent of our rulings herein contained, it is perhaps desirable that a brief restatement of the whole situation be made together with our conclusions in regard to its various factual and legal aspects. . The instant cases refer to the estate left by the late Charles Newton Hodges as well as that of his wife, Linnie Jane Hodges, who predeceased him by about five years and a half. In their respective wills which were executed on different occasions, each one of them provided mutually as follows: "I give, devise and bequeath all of the rest, residue and remainder (after funeral and administration expenses, taxes and debts) of my estate, both real and personal, wherever situated or located, to my beloved (spouse) to have and to hold unto (him/her) during (his/her) natural lifetime", subject to the condition that upon the death of whoever of them survived the other, the remainder of what he or she would inherit from the other is "give(n), devise(d) and bequeath(ed)" to the brothers and sisters of the latter. Mrs. Hodges died first, on May 23, 1957. Four days later, on May 27, Hodges was appointed special administrator of her estate, and in a separate order of the same date, he was "allowed or authorized to continue the business in which he was engaged, (buying and selling personal and real properties) and to perform acts which he had been doing while the deceased was living." Subsequently, on December 14, 1957, after Mrs. Hodges' will had been probated and Hodges had been appointed and had qualified as Executor thereof, upon his motion in which he asserted that he was "not only part owner of the properties left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane Hodges", the trial court ordered that "for the reasons stated in his motion dated December 11, 1957, which the Court considers well taken, ... all the sales, conveyances, leases and mortgages of all properties left by the deceased Linnie Jane Hodges executed by the Executor, Charles Newton Hodges are hereby APPROVED. The said Executor is further authorized to execute subsequent sales, conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance with the wishes contained in the last will and testament of the latter." Annually thereafter, Hodges submitted to the court the corresponding statements of account of his administration, with the particularity that in all his motions, he always made it point to urge the that "no person interested in the Philippines of the time and place of examining the herein accounts be given notice as herein executor is the only devisee or legatee of the deceased in accordance with the last will and testament already probated by the Honorable Court." All said accounts approved as prayed for. Nothing else appears to have been done either by the court a quo or Hodges until December 25, 1962. Importantly to be the provision in the will of Mrs. Hodges that her share of the conjugal partnership was to be inherited by her husband "to have and to hold unto him, my said husband, during his natural lifetime" and that "at the death of my said husband, I give, devise and bequeath all the rest, residue and remainder of my estate, both real and personal, wherever situated or located, to be equally divided among my brothers and sisters, share and share alike", which provision naturally made it imperative that the conjugal partnership be promptly liquidated, in order that the "rest, residue and remainder" of his wife's share thereof, as of the time of Hodges' own death, may be readily known and identified, no such liquidation was ever undertaken. The record gives no indication of the reason for such omission, although relatedly, it appears therein:

1. That in his annual statement submitted to the court of the net worth of C. N. Hodges and the Estate of Linnie Jane Hodges, Hodges repeatedly and consistently reported the combined income of the conjugal partnership and then merely divided the same equally between himself and the estate of the deceased wife, and, more importantly, he also, as consistently, filed corresponding separate income tax returns for each calendar year for each resulting half of such combined income, thus reporting that the estate of Mrs. Hodges had its own income distinct from his own. 2. That when the court a quo happened to inadvertently omit in its order probating the will of Mrs. Hodges, the name of one of her brothers, Roy Higdon then already deceased, Hodges lost no time in asking for the proper correction "in order that the heirs of deceased Roy Higdon may not think or believe they were omitted, and that they were really interested in the estate of the deceased Linnie Jane Hodges". 3. That in his aforementioned motion of December 11, 1957, he expressly stated that "deceased Linnie Jane Hodges died leaving no descendants or ascendants except brothers and sisters and herein petitioner as the surviving spouse, to inherit the properties of the decedent", thereby indicating that he was not excluding his wife's brothers and sisters from the inheritance. 4. That Hodges allegedly made statements and manifestations to the United States inheritance tax authorities indicating that he had renounced his inheritance from his wife in favor of her other heirs, which attitude he is supposed to have reiterated or ratified in an alleged affidavit subscribed and sworn to here in the Philippines and in which he even purportedly stated that his reason for so disclaiming and renouncing his rights under his wife's will was to "absolve (him) or (his) estate from any liability for the payment of income taxes on income which has accrued to the estate of Linnie Jane Hodges", his wife, since her death. On said date, December 25, 1962, Hodges died. The very next day, upon motion of herein respondent and appellee, Avelina A. Magno, she was appointed by the trial court as Administratrix of the Testate Estate of Linnie Jane Hodges, in Special Proceedings No. 1307 and as Special Administratrix of the estate of Charles Newton Hodges, "in the latter case, because the last will of said Charles Newton Hodges is still kept in his vault or iron safe and that the real and personal properties of both spouses may be lost, damaged or go to waste, unless Special Administratrix is appointed," (Order of December 26, 1962, p. 27, Yellow R. on A.) although, soon enough, on December 29, 1962, a certain Harold K. Davies was appointed as her Co-Special Administrator, and when Special Proceedings No. 1672, Testate Estate of Charles Newton Hodges, was opened, Joe Hodges, as next of kin of the deceased, was in due time appointed as CoAdministrator of said estate together with Atty. Fernando P. Mirasol, to replace Magno and Davies, only to be in turn replaced eventually by petitioner PCIB alone. At the outset, the two probate proceedings appear to have been proceeding jointly, with each administrator acting together with the other, under a sort of modus operandi. PCIB used to secure at the beginning the conformity to and signature of Magno in transactions it wanted to enter into and submitted the same to the court for approval as their joint acts. So did Magno do likewise. Somehow, however, differences seem to have arisen, for which reason, each of them began acting later on separately and independently of each other, with apparent sanction of the trial court. Thus, PCIB had its own lawyers whom it contracted and paid handsomely, conducted the business of the estate independently of Magno and otherwise acted as if all the properties appearing in the name of Charles Newton Hodges belonged solely and only to his estate, to the exclusion of the brothers and sisters of Mrs. Hodges, without considering whether or not in fact any of said properties corresponded to the portion of the conjugal partnership pertaining to the estate of Mrs. Hodges. On the other hand, Magno made her own expenditures, hired her own lawyers, on the premise that there is such an estate of Mrs. Hodges, and dealth with some of the properties, appearing in the name of Hodges, on the assumption that they actually correspond to the estate of Mrs. Hodges. All of these independent and separate actuations of the two administrators were invariably approved by the trial court upon submission. Eventually, the differences reached a point wherein Magno, who was more cognizant than anyone else about the ins and outs of the businesses and properties of the deceased spouses because of her long and intimate association with them, made it difficult for PCIB to perform normally its functions as administrator separately from her. Thus, legal complications arose and the present judicial controversies came about. Predicating its position on the tenor of the orders of May 27 and December 14, 1957 as well as the approval by the court a quo of the annual statements of account of Hodges, PCIB holds to the view that the estate of Mrs. Hodges has already been in effect closed with the virtual adjudication in the mentioned orders of her whole estate to Hodges, and that, therefore, Magno had already ceased since then to have any estate to administer and the brothers and sisters of Mrs. Hodges have no interests whatsoever in the estate left by Hodges. Mainly upon such theory, PCIB has come to this Court with a petition for certiorari and prohibition praying that the lower court's orders allowing respondent Magno to continue acting as administratrix of the estate of Mrs. Hodges in Special Proceedings 1307 in the manner she has been doing, as detailed earlier above, be set aside. Additionally, PCIB maintains that the provision in Mrs. Hodges' will instituting her brothers and sisters in the manner therein specified is in the nature of a testamentary substitution, but inasmuch as the purported substitution is not, in its view, in accordance with the pertinent provisions of the Civil Code, it is ineffective and may not be enforced. It is further contended that, in any event, inasmuch as the Hodges spouses were both residents of the Philippines, following the decision of this Court in Aznar vs. Garcia, or the case of Christensen, 7 SCRA 95, the estate left by Mrs. Hodges could not be more than one-half of her share of the conjugal partnership, notwithstanding the fact that she was citizen of Texas, U.S.A., in accordance with Article 16 in relation to Articles 900 and 872 of the Civil Code. Initially, We issued a preliminary injunction against Magno and allowed PCIB to act alone. At the same time PCIB has appealed several separate orders of the trial court approving individual acts of appellee Magno in her capacity as administratrix of the estate of Mrs. Hodges, such as, hiring of lawyers for specified fees and incurring expenses of administration for different purposes and executing deeds of sale in favor of her co-appellees covering properties which are still registered in the name of Hodges, purportedly pursuant to corresponding "contracts to sell" executed by Hodges. The said orders are being questioned on jurisdictional and procedural grounds directly or indirectly predicated on the principal theory of appellant that all the properties of the two estates belong already to the estate of Hodges exclusively. On the other hand, respondent-appellee Magno denies that the trial court's orders of May 27 and December 14, 1957 were meant to be finally adjudicatory of the hereditary rights of Hodges and contends that they were no more than the court's general sanction of past and future acts of Hodges as executor of the will of his wife in due course of administration. As to the point regarding substitution, her position is that what was given by Mrs. Hodges to her husband under the provision in question was a lifetime usufruct of her share of the conjugal partnership, with the naked ownership passing directly to her brothers and sisters. Anent the application of Article 16 of the Civil Code, she claims that the applicable law to the will of Mrs. Hodges is that of Texas under which, she alleges, there is no system of legitime, hence,

the estate of Mrs. Hodges cannot be less than her share or one-half of the conjugal partnership properties. She further maintains that, in any event, Hodges had as a matter of fact and of law renounced his inheritance from his wife and, therefore, her whole estate passed directly to her brothers and sisters effective at the latest upon the death of Hodges. In this decision, for the reasons discussed above, and upon the issues just summarized, We overrule PCIB's contention that the orders of May 27, 1957 and December 14, 1957 amount to an adjudication to Hodges of the estate of his wife, and We recognize the present existence of the estate of Mrs. Hodges, as consisting of properties, which, while registered in that name of Hodges, do actually correspond to the remainder of the share of Mrs. Hodges in the conjugal partnership, it appearing that pursuant to the pertinent provisions of her will, any portion of said share still existing and undisposed of by her husband at the time of his death should go to her brothers and sisters share and share alike. Factually, We find that the proven circumstances relevant to the said orders do not warrant the conclusion that the court intended to make thereby such alleged final adjudication. Legally, We hold that the tenor of said orders furnish no basis for such a conclusion, and what is more, at the time said orders were issued, the proceedings had not yet reached the point when a final distribution and adjudication could be made. Moreover, the interested parties were not duly notified that such disposition of the estate would be done. At best, therefore, said orders merely allowed Hodges to dispose of portions of his inheritance in advance of final adjudication, which is implicitly permitted under Section 2 of Rule 109, there being no possible prejudice to third parties, inasmuch as Mrs. Hodges had no creditors and all pertinent taxes have been paid. More specifically, We hold that, on the basis of circumstances presently extant in the record, and on the assumption that Hodges' purported renunciation should not be upheld, the estate of Mrs. Hodges inherited by her brothers and sisters consists of one-fourth of the community estate of the spouses at the time of her death, minus whatever Hodges had gratuitously disposed of therefrom during the period from, May 23, 1957, when she died, to December 25, 1962, when he died provided, that with regard to remunerative dispositions made by him during the same period, the proceeds thereof, whether in cash or property, should be deemed as continuing to be part of his wife's estate, unless it can be shown that he had subsequently disposed of them gratuitously. At this juncture, it may be reiterated that the question of what are the pertinent laws of Texas and what would be the estate of Mrs. Hodges under them is basically one of fact, and considering the respective positions of the parties in regard to said factual issue, it can already be deemed as settled for the purposes of these cases that, indeed, the free portion of said estate that could possibly descend to her brothers and sisters by virtue of her will may not be less than one-fourth of the conjugal estate, it appearing that the difference in the stands of the parties has reference solely to the legitime of Hodges, PCIB being of the view that under the laws of Texas, there is such a legitime of one-fourth of said conjugal estate and Magno contending, on the other hand, that there is none. In other words, hereafter, whatever might ultimately appear, at the subsequent proceedings, to be actually the laws of Texas on the matter would no longer be of any consequence, since PCIB would anyway be in estoppel already to claim that the estate of Mrs. Hodges should be less than as contended by it now, for admissions by a party related to the effects of foreign laws, which have to be proven in our courts like any other controverted fact, create estoppel. In the process, We overrule PCIB's contention that the provision in Mrs. Hodges' will in favor of her brothers and sisters constitutes ineffective hereditary substitutions. But neither are We sustaining, on the other hand, Magno's pose that it gave Hodges only a lifetime usufruct. We hold that by said provision, Mrs. Hodges simultaneously instituted her brothers and sisters as co-heirs with her husband, with the condition, however, that the latter would have complete rights of dominion over the whole estate during his lifetime and what would go to the former would be only the remainder thereof at the time of Hodges' death. In other words, whereas they are not to inherit only in case of default of Hodges, on the other hand, Hodges was not obliged to preserve anything for them. Clearly then, the essential elements of testamentary substitution are absent; the provision in question is a simple case of conditional simultaneous institution of heirs, whereby the institution of Hodges is subject to a partial resolutory condition the operative contingency of which is coincidental with that of the suspensive condition of the institution of his brothers and sisters-in-law, which manner of institution is not prohibited by law. We also hold, however, that the estate of Mrs. Hodges inherited by her brothers and sisters could be more than just stated, but this would depend on (1) whether upon the proper application of the principle of renvoi in relation to Article 16 of the Civil Code and the pertinent laws of Texas, it will appear that Hodges had no legitime as contended by Magno, and (2) whether or not it can be held that Hodges had legally and effectively renounced his inheritance from his wife. Under the circumstances presently obtaining and in the state of the record of these cases, as of now, the Court is not in a position to make a final ruling, whether of fact or of law, on any of these two issues, and We, therefore, reserve said issues for further proceedings and resolution in the first instance by the court a quo, as hereinabove indicated. We reiterate, however, that pending such further proceedings, as matters stand at this stage, Our considered opinion is that it is beyond cavil that since, under the terms of the will of Mrs. Hodges, her husband could not have anyway legally adjudicated or caused to be adjudicated to himself her whole share of their conjugal partnership, albeit he could have disposed any part thereof during his lifetime, the resulting estate of Mrs. Hodges, of which Magno is the uncontested administratrix, cannot be less than one-fourth of the conjugal partnership properties, as of the time of her death, minus what, as explained earlier, have beengratuitously disposed of therefrom, by Hodges in favor of third persons since then, for even if it were assumed that, as contended by PCIB, under Article 16 of the Civil Code and applying renvoi the laws of the Philippines are the ones ultimately applicable, such one-fourth share would be her free disposable portion, taking into account already the legitime of her husband under Article 900 of the Civil Code. The foregoing considerations leave the Court with no alternative than to conclude that in predicating its orders on the assumption, albeit unexpressed therein, that there is an estate of Mrs. Hodges to be distributed among her brothers and sisters and that respondent Magno is the legal administratrix thereof, the trial court acted correctly and within its jurisdiction. Accordingly, the petition for certiorari and prohibition has to be denied. The Court feels however, that pending the liquidation of the conjugal partnership and the determination of the specific properties constituting her estate, the two administrators should act conjointly as ordered in the Court's resolution of September 8, 1972 and as further clarified in the dispositive portion of its decision. Anent the appeals from the orders of the lower court sanctioning payment by appellee Magno, as administratrix, of expenses of administration and attorney's fees, it is obvious that, with Our holding that there is such an estate of Mrs. Hodges, and for the reasons stated in the body of this opinion, the said orders should be affirmed. This We do on the assumption We find justified by the evidence of record, and seemingly agreed to by appellant PCIB, that the size and value of the properties that should correspond to the estate of Mrs. Hodges far exceed the total of the attorney's fees and administration expenses in question.

With respect to the appeals from the orders approving transactions made by appellee Magno, as administratrix, covering properties registered in the name of Hodges, the details of which are related earlier above, a distinction must be made between those predicated on contracts to sell executed by Hodges before the death of his wife, on the one hand, and those premised on contracts to sell entered into by him after her death. As regards the latter, We hold that inasmuch as the payments made by appellees constitute proceeds of sales of properties belonging to the estate of Mrs. Hodges, as may be implied from the tenor of the motions of May 27 and December 14, 1957, said payments continue to pertain to said estate, pursuant to her intent obviously reflected in the relevant provisions of her will, on the assumption that the size and value of the properties to correspond to the estate of Mrs. Hodges would exceed the total value of all the properties covered by the impugned deeds of sale, for which reason, said properties may be deemed as pertaining to the estate of Mrs. Hodges. And there being no showing that thus viewing the situation, there would be prejudice to anyone, including the government, the Court also holds that, disregarding procedural technicalities in favor of a pragmatic and practical approach as discussed above, the assailed orders should be affirmed. Being a stranger to the estate of Mrs. Hodges, PCIB has no personality to raise the procedural and jurisdictional issues raised by it. And inasmuch as it does not appear that any of the other heirs of Mrs. Hodges or the government has objected to any of the orders under appeal, even as to these parties, there exists no reason for said orders to be set aside. DISPOSITIVE PART IN VIEW OF ALL THE FOREGOING PREMISES, judgment is hereby rendered DISMISSING the petition in G. R. Nos. L27860 and L-27896, and AFFIRMING, in G. R. Nos. L-27936-37 and the other thirty-one numbers hereunder ordered to be added after payment of the corresponding docket fees, all the orders of the trial court under appeal enumerated in detail on pages 35 to 37 and 80 to 82 of this decision; the existence of the Testate Estate of Linnie Jane Hodges, with respondent-appellee Avelina A. Magno, as administratrix thereof is recognized, and it is declared that, until final judgment is ultimately rendered regarding (1) the manner of applying Article 16 of the Civil Code of the Philippines to the situation obtaining in these cases and (2) the factual and legal issue of whether or not Charles Newton Hodges had effectively and legally renounced his inheritance under the will of Linnie Jane Hodges, the said estate consists of one-fourth of the community properties of the said spouses, as of the time of the death of the wife on May 23, 1957, minus whatever the husband had already gratuitously disposed of in favor of third persons from said date until his death, provided, first, that with respect to remunerative dispositions, the proceeds thereof shall continue to be part of the wife's estate, unless subsequently disposed of gratuitously to third parties by the husband, and second, that should the purported renunciation be declared legally effective, no deductions whatsoever are to be made from said estate; in consequence, the preliminary injunction of August 8, 1967, as amended on October 4 and December 6, 1967, is lifted, and the resolution of September 8, 1972, directing that petitioner-appellant PCIB, as Administrator of the Testate Estate of Charles Newton Hodges, in Special Proceedings 1672, and respondent-appellee Avelina A. Magno, as Administratrix of the Testate Estate of Linnie Jane Hodges, in Special Proceedings 1307, should act thenceforth always conjointly, never independently from each other, as such administrators, is reiterated, and the same is made part of this judgment and shall continue in force, pending the liquidation of the conjugal partnership of the deceased spouses and the determination and segregation from each other of their respective estates, provided, that upon the finality of this judgment, the trial court should immediately proceed to the partition of the presently combined estates of the spouses, to the end that the one-half share thereof of Mrs. Hodges may be properly and clearly identified; thereafter, the trial court should forthwith segregate the remainder of the one-fourth herein adjudged to be her estate and cause the same to be turned over or delivered to respondent for her exclusive administration in Special Proceedings 1307, while the other one-fourth shall remain under the joint administration of said respondent and petitioner under a joint proceedings in Special Proceedings 1307 and 1672, whereas the half unquestionably pertaining to Hodges shall be administered by petitioner exclusively in Special Proceedings 1672, without prejudice to the resolution by the trial court of the pending motions for its removal as administrator 12; and this arrangement shall be maintained until the final resolution of the two issues of renvoi and renunciation hereby reserved for further hearing and determination, and the corresponding complete segregation and partition of the two estates in the proportions that may result from the said resolution. Generally and in all other respects, the parties and the court a quo are directed to adhere henceforth, in all their actuations in Special Proceedings 1307 and 1672, to the views passed and ruled upon by the Court in the foregoing opinion. Appellant PCIB is ordered to pay, within five (5) days from notice hereof, thirty-one additional appeal docket fees, but this decision shall nevertheless become final as to each of the parties herein after fifteen (15) days from the respective notices to them hereof in accordance with the rules. Costs against petitioner-appellant PCIB. Zaldivar, Castro, Esguerra and Fernandez, JJ., concur. Makasiar, Antonio, Muoz Palma and Aquino, JJ., concur in the result.

Separate Opinions FERNANDO, J., concurring: I concur on the basis of the procedural pronouncements in the opinion. TEEHANKEE, J., concurring: I concur in the result of dismissal of the petition for certiorari and prohibition in Cases L-27860 and L-27896 and with the affirmance of the appealed orders of the probate court in Cases L-27936-37. I also concur with the portion of the dispositive part of the judgment penned by Mr. Justice Barredo decreeing the lifting of the Court's writ of preliminary injunction of August 8, 1967 as amended on October 4, and December 6, 1967 1 and ordering in lieu thereof that the Court's resolution of September 8, 1972 2 which directed thatpetitioner-appellant PCIB as administrator of C. N. (Charles Newton) Hodges' estate (Sp. Proc. No. 1672 and respondent-appellee Avelina A. Magno as administratrix of Linnie Jane Hodges' estate (Sp. Proc. No. 1307) should act always conjointly never independently from each other, as such administrators, is reiterated and shall continue in force and made part of the judgment. It is manifest from the record that petitioner-appellant PCIB's primal contention in the cases at bar belatedly filedby it with this Court on August 1, 1967 (over ten (10) years after Linnie Jane Hodges' death on May 23, 1957 and (over five (5) years after her husband C.N. Hodges' death on December 25, 1962 during which time both estates have been pending settlement and distribution to the decedents' respective rightful heirs all this time up to now) that the

probate court per its order of December 14, 1957 (supplementing an earlier order of May 25, 1957) 3 in granting C. N. Hodges' motion as Executor of his wife Linnie's estate to continue their "business of buying and selling personal and real properties" and approving "all sales, conveyances, leases and mortgages" made and to be made by him as such executor under his obligation to submit his yearly accounts in effect declared him as sole heir of his wife's estate and nothing remains to be done except to formally close her estate (Sp. Proc. No. 1307) as her estate was thereby merged with his own so that nothing remains of it that may be adjudicated to her brothers and sisters as her designated heirs after him, 4 is wholly untenable and deserves scant consideration. Aside from having been put forth as an obvious afterthought much too late in the day, this contention of PCIB that there no longer exists any separate estate of Linnie Jane Hodges after the probate court's order of December 14, 1957 goes against the very acts and judicial admissions of C.N. Hodges as her executor whereby he consistently recognized the separate existence and identity of his wife's estate apart from his own separate estate and from his own share of their conjugal partnership and estate and "never considered the whole estate as a single one belonging exclusively to himself" during the entire period that he survived her for over five (5) years up to the time of his own death on December 25, 1962 5 and against the identical acts and judicial admissions of PCIB as administrator of C.N. Hodges' estate until PCIB sought in 1966 to take over both estates as pertaining to its sole administration. PCIB is now barred and estopped from contradicting or taking a belated position contradictory to or inconsistent with its previous admissions 6 (as well as those of C.N. Hodges himself in his lifetime and of whose estate PCIB is merely an administrator) recognizing the existence and identity of Linnie Jane Hodges' separate estate and the legal rights and interests therein of her brothers and sisters as her designated heirs in her will. PCIB's petition for certiorari and prohibition to declare all acts of the probate court in Linnie Jane Hodges' estate subsequent to its order of December 14, 1957 as "null and void for having been issued without jurisdiction" must therefore be dismissed with the rejection of its belated and untenable contention that there is no longer any estate of Mrs. Hodges of which respondent Avelina Magno is the duly appointed and acting administratrix. PCIB's appeal 7 from the probate court's various orders recognizing respondent Magno as administratrix of Linnie's estate (Sp. Proc No. 1307) and sanctioning her acts of administration of said estate and approving the sales contracts executed by her with the various individual appellees, which involve basically the same primal issue raised in the petition as to whether there still exists a separate estate of Linnie of which respondent-appellee Magno may continue to be the administratrix, must necessarily fail a result of the Court's main opinion at bar that there does exist such an estate and that the two estates (husband's and wife's) must be administered cojointlyby their respective administrators (PCIB and Magno). The dispositive portion of the main opinion The main opinion disposes that: IN VIEW OF ALL THE FOREGOING PREMISES, judgment is hereby rendered DISMISSING the petition in G. R. Nos. L27860 and L-27896, and AFFIRMING, in G. R. Nos. L-27936-37 and the other thirty-one numbers hereunder ordered to be added after payment of the corresponding docket fees, all the orders of the trial court under appeal enumerated in detail on pages 35 to 37 and 80 to 82 of this decision: The existence of the Testate Estate of Linnie Jane Hodges, with respondent-appellee Avelina A. Magno, as administratrix thereof is recognized, and It is declared that, until final judgment is ultimately rendered regarding (1) the manner of applying Article 16 of the Civil Code of the Philippines to the situation obtaining in these cases and (2) the factual and legal issues of whether or not Charles Newton Hodges has effectively and legally renounced his inheritance under the will of Linnie Jane Hodges, the said estate consists of one-fourthof the community properties of the said spouses, as of the time of the death of the wife on May 23, 1957, minus whatever the husband had already gratuitously disposed of in favor of third persons from said date until his death, provided, first, that with respect to remunerative dispositions, the proceeds thereof shall continue to be part of the wife's estate, unless subsequently disposed of gratuitously to third parties by the husband, and second, that should the purported renunciation be declared legally effective, no deduction whatsoever are to be made from said estate; In consequence, the preliminary injunction of August 8, 1967, as amended on October 4 and December 6, 1967, is lifted and the resolution of September 8, 1972, directing that petitioner-appellant PCIB, as Administrator of the Testate Estate of Charles Newton Hodges in Special Proceedings 1672, and respondent-appellee Avelina A. Magno, as Administratrix of the Testate Estate of Linnie Jane Hodges in Special Proceedings 1307, should act thenceforth always conjointly, never independently from each other, as such administrators, is reiterated, and the same is made part of this judgment and shall continue in force, pending the liquidation of the conjugal partnership of the deceased spouses and the determination and segregation from each other of their respective estates; provided, that upon the finality of this judgment, the trial court should immediately proceed to the partition of the presently combined estates of the spouses, to the end that the one-half share thereof of Mrs. Hodges may be properly and clearly identified; Thereafter, the trial court should forthwith segregate the remainder of the one-fourth herein adjudged to be her estate and cause the same to be turned over or delivered to respondent for her exclusive administration in Special Proceedings 1307, while the other one-fourth shall remain under the joint administrative of said respondent and petitioner under a joint proceedings in Special Proceedings 1307 and 1672, whereas the half unquestionably pertaining to Hodges shall be administered bypetitioner exclusively in Special Proceedings 1672, without prejudice to the resolution by the trial court of the pending motions for its removal as administrator; And this arrangement shall be maintained until the final resolution of the two issues of renvoi andrenunciation hereby reserved for further hearing and determination, and the corresponding completesegregation and partition of the two estates in the proportions that may result from the said resolution. Generally and in all other respects, the parties and the court a quo are directed to adhere henceforth, in all their actuations in Special Proceedings 1307 and 1672, to the views passed and ruled upon by the Court in the foregoing opinion. 8 Minimum estimate of Mrs. Hodges' estate: One-fourth of conjugal properties. The main opinion in declaring the existence of a separate estate of Linnie Jane Hodges which shall pass to her brothers and sisters with right of representation (by their heirs) as her duly designated heirs declares that her estate consists as a minimum (i.e. assuming (1) that under Article 16 of the Philippine Civil Code C. N. Hodges as surviving husband was entitled to one-half of her estate as legitime and (2) that he had not effectively and legallyrenounced his inheritance under her will) of "one-fourth of the community properties of the said spouses, as of the time of the death of the wife on May 23, 1957, minus whatever the husband had already gratuitously disposed of in favor of third persons from said date until his

death," with the proviso that proceeds of remunerative dispositions or sales for valuable consideration made by C. N. Hodges after his wife Linnie's death shall continue to be part of her estate unless subsequently disposed of by him gratuitously to third parties subject to the condition, however, that if he is held to have validly and effectively renounced his inheritance under his wife's will, no deductions of any dispositions made by Hodges even if gratuitously are to be made from his wife Linnie's estate which shall pass intact to her brothers and sisters as her designated heirs called in her will to succeed to her estate upon the death of her husband C. N. Hodges. Differences with the main opinion I do not share the main opinion's view that Linnie Jane Hodges instituted her husband as her heir under her will "to have dominion over all her estate during his lifetime ... as absolute owner of the properties ..." 9 and that she bequeathed "the whole of her estate to be owned and enjoyed by him as universal and sole heir with absolute dominion over them only during his lifetime, which means that while he could completely and absolutely dispose of any portion thereof inter vivos to anyone other than himself, he was not free to do so mortis causa, and all his rights to what might remain upon his death would cease entirely upon the occurrence of that contingency, inasmuch as the right of his brothers and sisters-in-law to the inheritance, although vested already upon the death of Mrs. Hodges, would automatically become operative upon the occurrence of the death of Hodges in the event of actual existence of any remainder of her estate then." 10 As will be amplified hereinafter, I do not subscribe to such a view that Linnie Jane Hodges willed "full and absolute ownership" and "absolute dominion" over her estate to her husband, but rather that she named her husband C. N. Hodges and her brothers and sisters as instituted heirs with a term under Article 885 of our Civil Code, to wit, Hodges as instituted heir with a resolutory term whereunder his right to the succession ceased in diem upon arrival of the resolutory term of his death on December 25, 1962 and her brothers and sisters as instituted heirs with asuspensive term whereunder their right to the succession commenced ex die upon arrival of the suspensive term of the death of C. N. Hodges on December 25, 1962. Hence, while agreeing with the main opinion that the proceeds of all remunerative dispositions made by C. N. Hodges after his wife's death remain an integral part of his wife's estate which she willed to her brothers and sisters, I submit that C. N. Hodges could not validly make gratuitous dispositions of any part or all of his wife's estate "completely and absolutely dispose of any portion thereof inter vivos to anyone other than himself" in the language of the main opinion, supra and thereby render ineffectual and nugatory her institution of her brothers and sisters as her designated heirs to succeed to her whole estate "at the death of (her) husband." If according to the main opinion, Hodges could not make such gratuitous "complete and absolute dispositions" of his wife Linnie's estate " mortis causa," it would seem that by the same token and rationale he was likewise proscribed by the will from making such dispositions of Linnie's estate inter vivos. I believe that the two questions of renvoi and renunciation should be resolved preferentially and expeditiously by the probate court ahead of the partition and segregation of the minimum one-fourth of the conjugal or community properties constituting Linnie Jane Hodges' separate estate, which task considering that it is now seventeen (17) years since Linnie Jane Hodges' death and her conjugal estate with C. N. Hodges has remained unliquidated up to now might take a similar number of years to unravel with the numerous items, transactions and details of the sizable estates involved. Such partition of the minimum one-fourth would not be final, since if the two prejudicial questions of renvoi andrenunciation were resolved favorably to Linnie's estate meaning to say that if it should be held that C. N. Hodges is not entitled to any legitime of her estate and at any rate he had totally renounced his inheritance under the will), then Linnie's estate would consist not only of the minimum one-fourth but one-half of the conjugal or community properties of the Hodges spouses, which would require again the partition and segregation of still another one-fourth of said. properties to complete Linnie's separate estate. My differences with the main opinion involve further the legal concepts, effects and consequences of the testamentary dispositions of Linnie Jane Hodges in her will and the question of the best to reach a solution of the pressing question of expediting the closing of the estates which after all do not appear to involve any outstanding debts nor any dispute between the heirs and should therefore be promptly settled now after all these years without any further undue complications and delays and distributed to the heirs for their full enjoyment and benefit. As no consensus appears to have been reached thereon by a majority of the Court, I propose to state views as concisely as possible with the sole end in view that they may be of some assistance to the probate court and the parties in reaching an expeditious closing and settlement of the estates of the Hodges spouses. Two Assumptions As indicated above, the declaration of the minimum of Mrs. Hodges' estate as one-fourth of the conjugal properties is based on two assumptions most favorable to C. N. Hodges' estate and his heirs, namely (1) that the probate court must accept the renvoi or "reference back" 11 allegedly provided by the laws of the State of Texas (of which state the Hodges spouses were citizens) whereby the civil laws of the Philippines as the domicile of the Hodges spouses would govern their succession notwithstanding the provisions of Article 16 of our Civil Code (which provides that the national law of the decedents, in this case, of Texas, shall govern their succession) with the result that her estate would consist of no more than one-fourth of the conjugal properties since the legitime of her husband (the other one-fourth of said conjugal properties or one-half of her estate, under Article 900 of our Civil Code) could not then be disposed of nor burdened with any condition by her and (2) that C.N. Hodges had noteffectively and legally renounced his inheritance under his wife's will. These two assumptions are of course flatly disputed by respondent-appellee Magno as Mrs. Hodges' administratrix, who avers that the law of the State of Texas governs her succession and does not provide for and legitime, hence, her brothers and sisters are entitled to succeed to the whole of her share of the conjugal properties which is one-half thereof and that in any event, Hodges had totally renounced all his rights under the will. The main opinion concedes that "(I)n the interest of settling the estates herein involved soonest, it would be best, indeed, if these conflicting claims of the parties were determined in these proceedings." It observes however that this cannot be done due to the inadequacy of the evidence submitted by the parties in the probate court and of the parties' discussion, viz, "there is no clear and reliable proof of what the possibly applicable laws of Texas are. Then also, the genuineness of the documents relied upon by respondent Magno [re Hodges' renunciation] is disputed." 12 Hence, the main opinion expressly reserves resolution and determination on these two conflicting claims and issues which it deems "are not properly before the Court now," 13 and specifically holds that "(A)ccordingly, the only question that remains to be settled in the further proceedings hereby ordered to be held in the court below is how much more than as fixed above is the estate of Mrs. Hodges, and this would depend on (1) whether or not the applicable laws of Texas do provide in effect for more, such as, when there is

no legitime provided therein, and (2) whether or not Hodges has validly waived his whole inheritance from Mrs. Hodges." 14 Suggested guidelines Considering that the only unresolved issue has thus been narrowed down and in consonance with the ruling spirit of our probate law calling for the prompt settlement of the estates of deceased persons for the benefit of creditors and those entitled to the residue by way of inheritance considering that the estates have been long pending settlement since 1957 and 1962, respectively it was felt that the Court should lay down specific guidelines for the guidance of the probate court towards the end that it may expedite the closing of the protracted estates proceedings below to the mutual satisfaction of the heirs and without need of a dissatisfied party elevating its resolution of this only remaining issue once more to this Court and dragging out indefinitely the proceedings. After all, the only question that remains depends for its determination on the resolution of the two questions ofrenvoi and renunciation, i.e. as to whether C. N. Hodges can claim a legitime and whether he had renounced the inheritance. But as already indicated above, the Court without reaching a consensus which would finally resolve the conflicting claims here and now in this case opted that "these and other relevant matters should first be threshed out fully in the trial court in the proceedings hereinafter to be held for the purpose of ascertaining and/or distributing the estate of Mrs. Hodges to her heirs in accordance with her duly probated will." 15 The writer thus feels that laying down the premises and principles governing the nature, effects and consequences of Linnie Jane Hodges' testamentary dispositions in relation to her conjugal partnership and co-ownership of properties with her husband C. N. Hodges and "thinking out" the end results, depending on whether the evidence directed to be formally received by the probate court would bear out that under renvoi C. N. Hodges was or was not entitled to claim a legitime of one-half of his wife Linnie's estate and/or that he had or had not effectively and validly renounced his inheritance should help clear the decks, as it were, and assist the probate court in resolving the only remaining question of how much more than the minimum one-fourth of the community properties of the Hodges spouses herein finally determined should be awarded as the separate estate of Linnie, particularly since the views expressed in the main opinion have not gained a consensus of the Court. Hence, the following suggested guidelines, which needless to state, represent the personal opinion and views of the writer: 1. To begin with, as pointed out in the main opinion, "according to Hodges' own inventory submitted by him as executor of the estate of his wife, practically all their properties were conjugal which means that the spouses have equal shares therein." 16 2. Upon the death of Mrs. Hodges on May 23, 1957, and the dissolution thereby of the marriage, the law imposed upon Hodges as surviving husband the duty of inventorying, administering and liquidating the conjugal or community property. 17 Hodges failed to discharge this duty of liquidating the conjugal partnership and estate. On the contrary, he sought and obtained authorization from the probate court to continue the conjugal partnership'sbusiness of buying and selling real and personal properties. In his annual accounts submitted to the probate court as executor of Mrs. Hodges' estate, Hodges thusconsistently reported the considerable combined income (in six figures) of the conjugal partnership or coownershipand then divided the same equally between himself and Mrs. Hodges' estate and as consistently filed separate income tax returns and paid the income taxes for each resulting half of such combined income corresponding to his own and to Mrs. Hodges' estate. 18 (Parenthetically, he could not in law do this, had he adjudicated Linnie's entire estate to himself, thus supporting the view advanced even in the main opinion that "Hodges waived not only his rights to the fruits but to the properties themselves." 19 By operation of the law of trust 20 as well as by his own acknowledgment and acts, therefore, all transactions made by Hodges after his wife's death were deemed for and on behalf of their unliquidated conjugal partnership andcommunity estate and were so reported and treated by him. 3. With this premise established that all transactions of Hodges after his wife's death were for and on behalf of their unliquidated conjugal partnership and community estate, share and share alike, it should be clear that nogratuitous dispositions, if any, made by C. N. Hodges from his wife Linnie's estate should be deducted from herseparate estate as held in the main opinion. On the contrary, any such gratuitous dispositions should be charged to his own share of the conjugal estate since he had no authority or right to make any gratuitous dispositions of Linnie's properties to the prejudice of her brothers and sisters whom she called to her succession upon his death, not to mention that the very authority obtained by him from the probate court per its orders of May 25, and December 14, 1957 was to continue the conjugal partnership's business of buying and selling real properties for the account of their unliquidated conjugal estate and co-ownership, share and share alike and not to make anyfree dispositions of Linnie's estate. 4. All transactions as well after the death on December 25, 1962 of Hodges himself appear perforce and necessarily to have been conducted, on the same premise, for and on behalf of their unliquidated conjugal partnership and/or coownership, share and share alike since the conjugal partnership remained unliquidated which is another way of saying that such transactions, purchases and sales, mostly the latter, must be deemed in effect to have been made for the respective estates of C. N. Hodges and of his wife Linnie Jane Hodges, as both estates continued to have an equal stake and share in the conjugal partnership which was not only left unliquidated but continued as a co-ownership or joint business with the probate court's approval by Hodges during the five-year period that he survived his wife. This explains the probate court's action of requiring that deeds of sale executed by PCIB as Hodges' estate's administrator be "signed jointly" by respondent Magno as Mrs. Hodges' estate's administratrix, as well as its order authorizing payment by lot purchasers from the Hodges to either estate, since "there is as yet no judicial declaration of heirs nor distribution of properties to whomsoever are entitled thereto." 22 And this equally furnishes the rationale of the main opinion for continued conjoint administration by the administrators of the two estates of the deceased spouses, "pending the liquidation of the conjugal partnership," 23 since "it is but logical that both estates should be administered jointly by the representatives of both, pending their segregation from each other. Particularly ... because the actuations so far of PCIB evince a determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from their inheritance." 24 5. Antly by the representatives of both, pending their segregation from each other. Particularly ... because the actuations so far of PCIB evince a determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from their inheritance." 24 5. As stressed in the main opinion, the determination of the only unresolved issue of how much more than the minimum of one-fourth of the community or conjugal properties of the Hodges spouses pertains to Mrs. Hodges' estate depends on the twin questions of renunciation and renvoi. It directed consequently that "a joint hearing of the two probate proceedings

herein involved" be held by the probate court for the reception of "further evidence" in order to finally resolved these twin questions. 25 (a) On the question of renunciation, it is believed that all that the probate court has to do is to receive formally in evidence the various documents annexed to respondent Magno's answer at bar, 26 namely: Copy of the U.S. Estate Tax Return filed on August 8, 1958 by C. N. Hodges for his wife Linnie's estate wherein he purportedly declared that he was renouncing his inheritance under his wife's will in favor of her brothers and sisters as co-heirs designated with him and that it was his "intention (as) surviving husband of the deceased to distribute the remaining property and interests of the deceased in their community estate to the devisee and legatees named in the will when the debts, liabilities, taxes and expenses of administration are finally determined and paid;" 27 and The affidavit of ratification of such renunciation (which places him in estoppel) allegedly executed on August 9, 1962 by C. N. Hodges in Iloilo City wherein he reaffirmed that "... on August 8, 1958, I renounced and disclaimed any and all right to receive the rents, emoluments and income from said estate" and further declared that "(T)he purpose of this affidavit is to ratify and confirm, and I do hereby ratify and confirm, the declaration made in schedule M of said return and hereby formally disclaim and renounce any right on my part to receive any of the said rents, emoluments and income from the estate of my deceased wife, Linnie Jane Hodges. This affidavit is made to absolve me or my estate from any liability for the payment of income taxes on income which has accrued to the estate of Linnie Jane Hodges since the death of the said Linnie Jane Hodges on May 23, 1957." 28 (b) On the question of renvoi, all that remains for the probate court to do is to formally receive in evidence duly authenticated copies of the laws of the State of Texas governing the succession of Linnie Jane Hodges and her husband C. N. Hodges as citizens of said State at the time of their respective deaths on May 23, 1957 andDecember 25, 1962. 29 6. The text and tenor of the declarations by C. N. Hodges of renunciation of his inheritance from his wife in favor of her other named heirs in her will (her brothers and sisters and their respective heirs) as ratified and reiterated expressly in his affidavit of renunciation executed four years later for the avowed purpose of not being held liable for payment of income taxes on income which has accrued to his wife's estate since her death indicate a valid and effective renunciation. Once the evidence has been formally admitted and its genuineness and legal effectivity established by the probate court, the renunciation by C. N. Hodges must be given due effect with the result that C. N. Hodges therefore acquired no part of his wife's one-half share of the community properties since he removed himself as an heir by virtue of his renunciation. By simple substitution then under Articles 857 and 859 of our Civil Code 30 and by virtue of the will's institution of heirs, since "the heir originally instituted C. N. Hodges) does not become an heir" 31 by force of his renunciation, Mrs. Hodges' brothers and sisters whom she designated as her heirs upon her husband's death are called immediately to her succession. Consequently, the said community and conjugal properties would then pertain pro indiviso share and share alike to their respective estates, with each estate, however, shouldering its own expenses of administration, estate and inheritance taxes, if any remain unpaid, attorneys' fees and other like expenses and the net remainder to be adjudicated directly to the decedents' respective brothers and sisters (and their heirs) as the heirs duly designated in their respective wills. The question of renvoi becomes immaterial since most laws and our lawspermit such renunciation of inheritance. 7. If there were no renunciation (or the same may somehow be declared to have not been valid and effective) by C. N. Hodges of his inheritance from his wife, however, what would be the consequence? (a) If the laws on succession of the State of Texas do provide for renvoi or "reference back" to Philippine law as the domiciliary law of the Hodges' spouses governing their succession, then petitioners' view that Mrs. Hodges' estate would consist only of the minimum of "one-fourth of the community properties of the said spouses, as of the time of (her) death on May 23, 1957" would have to be sustained and C. N. Hodges' estate would consist of three-fourths of the community properties, comprising his own one-half (or two-fourths) share and the other fourth of Mrs. Hodges' estate as the legitime granted him as surviving spouse by Philippine law (Article 900 of the Civil Code) which could not be disposed of nor burdened with any condition by Mrs. Hodges as testatrix. (b) If the laws on succession of the State of Texas do not provide for such renvoi and respondent Magno's assertion is correct that the Texas law which would then prevail, provides for no legitime for C. N. Hodges as the surviving spouse, then respondent Magno's assertion that Mrs. Hodges' estate would consist of one-half of the community properties (with the other half pertaining to C. N. Hodges) would have to be sustained. The community and conjugal properties would then pertain share and share alike to their respective estates, with each estate shouldering its own expenses of administration in the same manner stated in the last paragraph of paragraph 6 hereof. . 8. As to the nature of the institution of heirs made by Mrs. Hodges in her will, the main opinion holds that "(T)he brothers and sisters of Mrs. Hodges are not substitutes for Hodges; rather, they are also heirs instituted simultaneously with Hodges," but goes further and holds that "it was not the usufruct alone of her estate ... that she bequeathed to Hodges during his lifetime, but the full ownership thereof, although the same was to last also during his lifetime only , even as there was no restriction against his disposing or conveying the whole or any portion thereof anybody other than himself" and describes Hodges "as universal and sole heir with absolute dominion over Mrs. Hodges' estate (except over their Lubbock, Texas property ), 32 adding that "Hodges was not obliged to preserve anything for them" (referring to Mrs. Hodges' brothers and sisters as instituted co-heirs). 33 Contrary to this view of the main opinion, the writer submits that the provisions of Mrs. Hodges' will did not grant to C.N. Hodges "full ownership" nor "absolute dominion" over her estate, such that he could as "universal and sole heir" by the mere expedient of gratuitously disposing to third persons her whole estate during his lifetime nullify her institution of her brothers and sisters as his co-heirs to succeed to her whole estate "at the death of (her) husband ," deprive them of any inheritance and make his own brothers and sisters in effect sole heirs not only of his own estate but of his wife's estate as well. Thus, while Linnie Jane Hodges did not expressly name her brothers and sisters as substitutes for Hodges because she willed that they would enter into the succession upon his death, still it cannot be gainsaid, as the main opinion concedes, "that they are also heirs instituted simultaneously with Hodges, subject however to certain conditions, partially resolutory insofar as Hodges was concerned and correspondingly suspensive with reference to his brothers and sisters-in-law." 34 Hence, if Hodges is found to have validly renounced his inheritance, there would be a substitution of heirs in fact and in law since Linnie's brothers and sisters as the heirs "simultaneously instituted" with a suspensive term would be called immediately to her succession instead of waiting for the arrival of suspensive term of Hodges' death, since as the heir originally instituted he does not become an heir by force of his renunciation and therefore they would "enter into the inheritance in default of the heir originally instituted" (Hodges) under the provisions of Article 857 and 859 of our Civil Code, supra, 35 thus accelerating their succession to her estate as a consequence of Hodges' renunciation.

Consequently, Linnie Jane Hodges willed that her husband C.N. Hodges would "during his natural lifetime ... manage, control, use and enjoy said estate" and that only "all rents, emoluments and income" alone shall belong to him. She further willed that while he could sell and purchase properties of her estate, and "use any part of the principal estate," such principal notwithstanding "any changes in the physical properties of said estate"(i.e. new properties acquired or exchanged) would still pertain to her estate, which at the time of his death would pass in full dominion to her brothers and sisters as the ultimate sole and universal heirs of her estate. 36 The testatrix Linnie Jane Hodges in her will thus principally provided that "I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real ... to my beloved husband, Charles Newton Hodges, to have and to hold with him ... during his natural lifetime;" 37 that "(he) shall have the right to manage, control, use and enjoy said estate during his lifetime, ... to make any changes in the physical properties of said estate, by sale ... and the purchase of any other or additional property as he may think best ... . All rents, emoluments and income from said estate shall belong to him and he is further authorized to use any part of the principal of said estate as he may need or desire, ... he shall not sell or otherwise dispose of any of the improved property now owned by us, located at ... City of Lubbock, Texas ... . He shall have the right to subdivide any farmland and sell lots therein, and may sell unimproved town lots;" 38 that "(A)t the death of my said husband, Charles Newton, I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real, ... to be equally divided among my brothers and sisters, share and share alike, namely: Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie Rascoe, Era Roman and Nimroy Higdon;" 39 and that "(I)n case of the death of any of my brothers and/or sisters ... prior to the death of my husband ... the heirs of such deceased brother or sister shall take jointly the share which would have gone to such brother or sister had she or he survived." 40 Such provisions are wholly consistent with the view already fully expounded above that all transactions and sales made by Hodges after his wife Linnie's death were by operation of the law of trust as well as by his ownacknowledgment and acts deemed for and on behalf of their unliquidated conjugal partnership and community estate, share and share alike, with the express authorization of the probate court per its orders of May 25, and December 14, 1957 granting Hodges' motion to continue the conjugal partnership business of buying and selling real estate even after her death. By the same token, Hodges could not conceivably be deemed to have had any authority or right to dispose gratuitously of any portion of her estate to whose succession she had called her brothers and sisters upon his death. 9. Such institutions of heirs with a term are expressly recognized and permitted under Book III, Chapter 2, section 4 of our Civil Code dealing with "conditional testamentary dispositions and testamentary dispositions with a term." 41 Thus, Article 885 of our Civil Code expressly provides that: ART 885. The designation of the day or time when the effects of the institution of an heir shall commence or cease shall be valid. In both cases, the legal heir shall be considered as called to the succession until the arrival of the period or its expiration. But in the first case he shall not enter into possession of the property until after having given sufficient security, with the intervention of the instituted heir. Accordingly, under the terms of Mrs. Hodges' will, her husband's right to the succession as the instituted heir ceased in diem, i.e. upon the arrival of the resolutory term of his death on December 25, 1962, while her brothers' and sisters' right to the succession also as instituted heirs commenced ex die, i.e. upon the expiration of the suspensive term (as far as they were concerned) of the death of C. N. Hodges on December 25, 1962 . 42 As stated in Padilla's treatise on the Civil Code, "A term is a period whose arrival is certain although the exact date thereof may be uncertain. A term may have either a suspensive or a resolutory effect. The designation of the day when the legacy "shall commence" is ex die, or a term with a suspensive effect, from a certain day. The designation of the day when the legacy "shall cease" is in diem or a term with a resolutory effect, until a certain day." He adds that "A legacy based upon a certain age or upon the death of a person is not a condition but a term. If the arrival of the term would commence the right of the heir, it is suspensive. If the arrival of the term would terminate his right, it is resolutory" and that "upon the arrival of the period, in case of a suspensive term, the instituted heir is entitled to the succession, and in case of a resolutory term, his right terminates." 43 10. The sizable estates herein involved have now been pending settlement for a considerably protracted period (of seventeen years counted from Linnie's death in 1957), and all that is left to be done is to resolve the onlyremaining issue (involving the two questions of renunciation and renvoi) hereinabove discussed in order to close up the estates and finally effect distribution to the deceased spouses' respective brothers and sisters and their heirs as the heirs duly instituted in their wills long admitted to probate. Hence, it is advisable for said instituted heirs and their heirs in turn 44 to come to terms for the adjudication and distribution to them pro-indiviso of the up to now unliquidated community properties of the estates of the Hodges spouses (derived from their unliquidatedconjugal partnership) rather than to get bogged down with the formidable task of physically segregating andpartitioning the two estates with the numerous transactions, items and details and physical changes of properties involved. The estates proceedings would thus be closed and they could then name their respective attorneys-in-fact to work out the details of segregating, dividing or partitioning the unliquidated community properties or liquidating them which can be done then on their own without further need of intervention on the part of the probate court as well as allow them meanwhile to enjoy and make use of the income and cash and liquid assets of the estates in such manner as may be agreed upon between them. Such a settlement or modus vivendi between the heirs of the unliquidated two estates for the mutual benefit of all of them should not prove difficult, considering that it appears as stated in the main opinion that 22.968149% of the share or undivided estate of C. N. Hodges have already been acquired by the heirs of Linnie Jane Hodges from certain heirs of her husband, while certain other heirs representing 17.34375% of Hodges' estate were joining cause with Linnie's heirs in their pending and unresolved motion for the removal of petitioner PCIB as administrator of Hodges' estate, 45 apparently impatient with the situation which has apparently degenerated into a running battle between the administrators of the two estates to the common prejudice of all the heirs. 11. As earlier stated, the writer has taken the pain of suggesting these guidelines which may serve to guide the probate court as well as the parties towards expediting the winding up and closing of the estates and the distribution of the net estates to the instituted heirs and their successors duly entitled thereto. The probate court should exert all effort towards this desired objective pursuant to the mandate of our probate law, bearing in mind the Court's admonition in previous cases that "courts of first instance should exert themselves to close up estate within twelve months from the time they are presented, and they may refuse to allow any compensation to executors and administrators who do not actively labor to that end, and they may even adopt harsher measures."46

Timeliness of appeals and imposition of thirty-one (31) additional docket fees Two appeals were docketed with this Court, as per the two records on appeal submitted (one with a green cover and the other with a yellow cover). As stated at the outset, these appeals involve basically the same primal issue raised in the petition for certiorari as to whether there still exists a separate estate of Linnie Jane Hodges which has to continue to be administered by respondent Magno. Considering the main opinion's ruling in the affirmative and that her estate and that of her husband (since they jointly comprise unliquidated community properties) must be administered conjointly by their respective administrators (PCIB and Magno), the said appeals (involving thirty-three different orders of the probate court approving sales contracts and other acts of administration executed and performed by respondent Magno on behalf of Linnie's estate) have been necessarily overruled by the Court's decision at bar. (a) The "priority question" raised by respondent Magno as to the patent failure of the two records on appeal to show on their face and state the material data that the appeals were timely taken within the 30-day reglamentary period as required by Rule 41, section 6 of the Rules of Court, has been brushed aside by the main opinion with the statement that it is "not necessary to pass upon the timeliness of any of said appeals" since they "revolve around practically the same main issues and ... it is admitted that some of them have been timely taken." 47 The main opinion thus proceeded with the determination of the thirty-three appealed orders despite the grave defect of the appellant PCIB's records on appeal and their failure to state the required material data showing the timeliness of the appeals. Such disposition of the question of timeliness deemed as "mandatory and jurisdictional" in a number of cases merits the writer's concurrence in that the question raised has been subordinated to the paramount considerations of substantial justice and a "liberal interpretation of the rules" applied so as not to derogate and detract from the primary intent and purpose of the rules, viz "the proper and just determination of a litigation" 48 which calls for "adherence to a liberal construction of the procedural rules in order to attain their objective of substantial justice and of avoiding denials of substantial justice due to procedural technicalities." 49 Thus, the main opinion in consonance with the same paramount considerations of substantial justice has likewise overruled respondents' objection to petitioner's taking the recourse of "the present remedy of certiorari and prohibition" "despite the conceded availability of appeal" on the ground that "there is a common thread among the basic issues involved in all these thirty-three appeals (which) deal with practically the same basic issues that can be more expeditiously resolved or determined in a single special civil action . . . " 50 (b) Since the basic issues have been in effect resolved in the special civil action at bar (as above stated) with the dismissal of the petition by virtue of the Court's judgment as to the continued existence of a separate estate of Linnie Jane Hodges and the affirmance as a necessary consequence of the appealed orders approving and sanctioning respondent Magno's sales contracts and acts of administration, some doubt would arise as to the propriety of the main opinion requiring the payment by PCIB of thirty-one (31) additional appeal docket fees. This doubt is further enhanced by the question of whether it would make the cost of appeal unduly expensive or prohibitive by requiring the payment of a separate appeal docket fee for each incidental order questioned when the resolution of all such incidental questioned orders involve basically one and the same main issue (in this case, the existence of a separate estate of Linnie Jane Hodges) and can be more expeditiously resolved or determined in a single special civil action" (for which a single docket fee is required) as stated in the main opinion. 51Considering the importance of the basic issues and the magnitude of the estates involved, however, the writer haspro hac vice given his concurrence to the assessment of the said thirty-one (31) additional appeal docket fees. MAKALINTAL, C.J., concurring: I concur in the separate opinion of Justice Teehankee, which in turn agrees with the dispositive portion of the main opinion of Justice Barredo insofar as it dismisses the petition for certiorari and prohibition in Cases L-27860 and L-27896 and affirms the appealed orders of the probate court in cases L-27936-37. However, I wish to make one brief observation for the sake of accuracy. Regardless of whether or not C. N. Hodges was entitled to a legitime in his deceased wife's estate which question, still to be decided by the said probate court, may depend upon what is the law of Texas and upon its applicability in the present case the said estate consists of one-half, not one-fourth, of the conjugal properties. There is neither a minimum of one-fourth nor a maximum beyond that. It is important to bear this in mind because the estate of Linnie Hodges consists of her share in the conjugal properties, is still under administration and until now has not been distributed by order of the court. The reference in both the main and separate opinions to a one-fourth portion of the conjugal properties as Linnie Hodges' minimum share is a misnomer and is evidently meant only to indicate that if her husband should eventually be declared entitled to a legitime, then the disposition made by Linnie Hodges in favor of her collateral relatives would be valid only as to one-half of her share, or one-fourth of the conjugal properties, since the remainder, which constitutes such legitime, would necessarily go to her husband in absolute ownership, unburdened by any substitution, term or condition, resolutory or otherwise. And until the estate is finally settled and adjudicated to the heirs who may be found entitled to it, the administration must continue to cover Linnie's entire conjugal share. Separate Opinions FERNANDO, J., concurring: I concur on the basis of the procedural pronouncements in the opinion. TEEHANKEE, J., concurring: I concur in the result of dismissal of the petition for certiorari and prohibition in Cases L-27860 and L-27896 and with the affirmance of the appealed orders of the probate court in Cases L-27936-37. I also concur with the portion of the dispositive part of the judgment penned by Mr. Justice Barredo decreeing the lifting of the Court's writ of preliminary injunction of August 8, 1967 as amended on October 4, and December 6, 1967 1 and ordering in lieu thereof that the Court's resolution of September 8, 1972 2 which directed thatpetitioner-appellant PCIB as administrator of C. N. (Charles Newton) Hodges' estate (Sp. Proc. No. 1672 and respondent-appellee Avelina A. Magno as administratrix of Linnie Jane Hodges' estate (Sp. Proc. No. 1307) should act always conjointly never independently from each other, as such administrators, is reiterated and shall continue in force and made part of the judgment. It is manifest from the record that petitioner-appellant PCIB's primal contention in the cases at bar belatedly filedby it with this Court on August 1, 1967 (over ten (10) years after Linnie Jane Hodges' death on May 23, 1957 and (over five (5) years after her husband C.N. Hodges' death on December 25, 1962 during which time both estates have been pending settlement and distribution to the decedents' respective rightful heirs all this time up to now) that the

probate court per its order of December 14, 1957 (supplementing an earlier order of May 25, 1957) 3 in granting C. N. Hodges' motion as Executor of his wife Linnie's estate to continue their "business of buying and selling personal and real properties" and approving "all sales, conveyances, leases and mortgages" made and to be made by him as such executor under his obligation to submit his yearly accounts in effect declared him as sole heir of his wife's estate and nothing remains to be done except to formally close her estate (Sp. Proc. No. 1307) as her estate was thereby merged with his own so that nothing remains of it that may be adjudicated to her brothers and sisters as her designated heirs after him, 4 is wholly untenable and deserves scant consideration. Aside from having been put forth as an obvious afterthought much too late in the day, this contention of PCIB that there no longer exists any separate estate of Linnie Jane Hodges after the probate court's order of December 14, 1957 goes against the very acts and judicial admissions of C.N. Hodges as her executor whereby he consistently recognized the separate existence and identity of his wife's estate apart from his own separate estate and from his own share of their conjugal partnership and estate and "never considered the whole estate as a single one belonging exclusively to himself" during the entire period that he survived her for over five (5) years up to the time of his own death on December 25, 1962 5 and against the identical acts and judicial admissions of PCIB as administrator of C.N. Hodges' estate until PCIB sought in 1966 to take over both estates as pertaining to its sole administration. PCIB is now barred and estopped from contradicting or taking a belated position contradictory to or inconsistent with its previous admissions 6 (as well as those of C.N. Hodges himself in his lifetime and of whose estate PCIB is merely an administrator) recognizing the existence and identity of Linnie Jane Hodges' separate estate and the legal rights and interests therein of her brothers and sisters as her designated heirs in her will. PCIB's petition for certiorari and prohibition to declare all acts of the probate court in Linnie Jane Hodges' estate subsequent to its order of December 14, 1957 as "null and void for having been issued without jurisdiction" must therefore be dismissed with the rejection of its belated and untenable contention that there is no longer any estate of Mrs. Hodges of which respondent Avelina Magno is the duly appointed and acting administratrix. PCIB's appeal 7 from the probate court's various orders recognizing respondent Magno as administratrix of Linnie's estate (Sp. Proc No. 1307) and sanctioning her acts of administration of said estate and approving the sales contracts executed by her with the various individual appellees, which involve basically the same primal issue raised in the petition as to whether there still exists a separate estate of Linnie of which respondent-appellee Magno may continue to be the administratrix, must necessarily fail a result of the Court's main opinion at bar that there does exist such an estate and that the two estates (husband's and wife's) must be administered cojointlyby their respective administrators (PCIB and Magno). The dispositive portion of the main opinion The main opinion disposes that: IN VIEW OF ALL THE FOREGOING PREMISES, judgment is hereby rendered DISMISSING the petition in G. R. Nos. L27860 and L-27896, and AFFIRMING, in G. R. Nos. L-27936-37 and the other thirty-one numbers hereunder ordered to be added after payment of the corresponding docket fees, all the orders of the trial court under appeal enumerated in detail on pages 35 to 37 and 80 to 82 of this decision: The existence of the Testate Estate of Linnie Jane Hodges, with respondent-appellee Avelina A. Magno, as administratrix thereof is recognized, and It is declared that, until final judgment is ultimately rendered regarding (1) the manner of applying Article 16 of the Civil Code of the Philippines to the situation obtaining in these cases and (2) the factual and legal issues of whether or not Charles Newton Hodges has effectively and legally renounced his inheritance under the will of Linnie Jane Hodges, the said estate consists of one-fourthof the community properties of the said spouses, as of the time of the death of the wife on May 23, 1957, minus whatever the husband had already gratuitously disposed of in favor of third persons from said date until his death, provided, first, that with respect to remunerative dispositions, the proceeds thereof shall continue to be part of the wife's estate, unless subsequently disposed of gratuitously to third parties by the husband, and second, that should the purported renunciation be declared legally effective, no deduction whatsoever are to be made from said estate; In consequence, the preliminary injunction of August 8, 1967, as amended on October 4 and December 6, 1967, is lifted and the resolution of September 8, 1972, directing that petitioner-appellant PCIB, as Administrator of the Testate Estate of Charles Newton Hodges in Special Proceedings 1672, and respondent-appellee Avelina A. Magno, as Administratrix of the Testate Estate of Linnie Jane Hodges in Special Proceedings 1307, should act thenceforth always conjointly, never independently from each other, as such administrators, is reiterated, and the same is made part of this judgment and shall continue in force, pending the liquidation of the conjugal partnership of the deceased spouses and the determination and segregation from each other of their respective estates; provided, that upon the finality of this judgment, the trial court should immediately proceed to the partition of the presently combined estates of the spouses, to the end that the one-half share thereof of Mrs. Hodges may be properly and clearly identified; Thereafter, the trial court should forthwith segregate the remainder of the one-fourth herein adjudged to be her estate and cause the same to be turned over or delivered to respondent for her exclusive administration in Special Proceedings 1307, while the other one-fourth shall remain under the joint administrative of said respondent and petitioner under a joint proceedings in Special Proceedings 1307 and 1672, whereas the half unquestionably pertaining to Hodges shall be administered bypetitioner exclusively in Special Proceedings 1672, without prejudice to the resolution by the trial court of the pending motions for its removal as administrator; And this arrangement shall be maintained until the final resolution of the two issues of renvoi andrenunciation hereby reserved for further hearing and determination, and the corresponding completesegregation and partition of the two estates in the proportions that may result from the said resolution. Generally and in all other respects, the parties and the court a quo are directed to adhere henceforth, in all their actuations in Special Proceedings 1307 and 1672, to the views passed and ruled upon by the Court in the foregoing opinion. 8 Minimum estimate of Mrs. Hodges' estate: One-fourth of conjugal properties. The main opinion in declaring the existence of a separate estate of Linnie Jane Hodges which shall pass to her brothers and sisters with right of representation (by their heirs) as her duly designated heirs declares that her estate consists as a minimum (i.e. assuming (1) that under Article 16 of the Philippine Civil Code C. N. Hodges as surviving husband was entitled to one-half of her estate as legitime and (2) that he had not effectively and legallyrenounced his inheritance under her will) of "one-fourth of the community properties of the said spouses, as of the time of the death of the wife on May 23, 1957, minus whatever the husband had already gratuitously disposed of in favor of third persons from said date until his

death," with the proviso that proceeds of remunerative dispositions or sales for valuable consideration made by C. N. Hodges after his wife Linnie's death shall continue to be part of her estate unless subsequently disposed of by him gratuitously to third parties subject to the condition, however, that if he is held to have validly and effectively renounced his inheritance under his wife's will, no deductions of any dispositions made by Hodges even if gratuitously are to be made from his wife Linnie's estate which shall pass intact to her brothers and sisters as her designated heirs called in her will to succeed to her estate upon the death of her husband C. N. Hodges. Differences with the main opinion I do not share the main opinion's view that Linnie Jane Hodges instituted her husband as her heir under her will "to have dominion over all her estate during his lifetime ... as absolute owner of the properties ..." 9 and that she bequeathed "the whole of her estate to be owned and enjoyed by him as universal and sole heir with absolute dominion over them only during his lifetime, which means that while he could completely and absolutely dispose of any portion thereof inter vivos to anyone other than himself, he was not free to do so mortis causa, and all his rights to what might remain upon his death would cease entirely upon the occurrence of that contingency, inasmuch as the right of his brothers and sisters-in-law to the inheritance, although vested already upon the death of Mrs. Hodges, would automatically become operative upon the occurrence of the death of Hodges in the event of actual existence of any remainder of her estate then." 10 As will be amplified hereinafter, I do not subscribe to such a view that Linnie Jane Hodges willed "full and absolute ownership" and "absolute dominion" over her estate to her husband, but rather that she named her husband C. N. Hodges and her brothers and sisters as instituted heirs with a term under Article 885 of our Civil Code, to wit, Hodges as instituted heir with a resolutory term whereunder his right to the succession ceased in diem upon arrival of the resolutory term of his death on December 25, 1962 and her brothers and sisters as instituted heirs with asuspensive term whereunder their right to the succession commenced ex die upon arrival of the suspensive term of the death of C. N. Hodges on December 25, 1962. Hence, while agreeing with the main opinion that the proceeds of all remunerative dispositions made by C. N. Hodges after his wife's death remain an integral part of his wife's estate which she willed to her brothers and sisters, I submit that C. N. Hodges could not validly make gratuitous dispositions of any part or all of his wife's estate "completely and absolutely dispose of any portion thereof inter vivos to anyone other than himself" in the language of the main opinion, supra and thereby render ineffectual and nugatory her institution of her brothers and sisters as her designated heirs to succeed to her whole estate "at the death of (her) husband." If according to the main opinion, Hodges could not make such gratuitous "complete and absolute dispositions" of his wife Linnie's estate " mortis causa," it would seem that by the same token and rationale he was likewise proscribed by the will from making such dispositions of Linnie's estate inter vivos. I believe that the two questions of renvoi and renunciation should be resolved preferentially and expeditiously by the probate court ahead of the partition and segregation of the minimum one-fourth of the conjugal or community properties constituting Linnie Jane Hodges' separate estate, which task considering that it is now seventeen (17) years since Linnie Jane Hodges' death and her conjugal estate with C. N. Hodges has remained unliquidated up to now might take a similar number of years to unravel with the numerous items, transactions and details of the sizable estates involved. Such partition of the minimum one-fourth would not be final, since if the two prejudicial questions of renvoi andrenunciation were resolved favorably to Linnie's estate meaning to say that if it should be held that C. N. Hodges is not entitled to any legitime of her estate and at any rate he had totally renounced his inheritance under the will), then Linnie's estate would consist not only of the minimum one-fourth but one-half of the conjugal or community properties of the Hodges spouses, which would require again the partition and segregation of still another one-fourth of said. properties to complete Linnie's separate estate. My differences with the main opinion involve further the legal concepts, effects and consequences of the testamentary dispositions of Linnie Jane Hodges in her will and the question of the best to reach a solution of the pressing question of expediting the closing of the estates which after all do not appear to involve any outstanding debts nor any dispute between the heirs and should therefore be promptly settled now after all these years without any further undue complications and delays and distributed to the heirs for their full enjoyment and benefit. As no consensus appears to have been reached thereon by a majority of the Court, I propose to state views as concisely as possible with the sole end in view that they may be of some assistance to the probate court and the parties in reaching an expeditious closing and settlement of the estates of the Hodges spouses. Two Assumptions As indicated above, the declaration of the minimum of Mrs. Hodges' estate as one-fourth of the conjugal properties is based on two assumptions most favorable to C. N. Hodges' estate and his heirs, namely (1) that the probate court must accept the renvoi or "reference back" 11 allegedly provided by the laws of the State of Texas (of which state the Hodges spouses were citizens) whereby the civil laws of the Philippines as the domicile of the Hodges spouses would govern their succession notwithstanding the provisions of Article 16 of our Civil Code (which provides that the national law of the decedents, in this case, of Texas, shall govern their succession) with the result that her estate would consist of no more than one-fourth of the conjugal properties since the legitime of her husband (the other one-fourth of said conjugal properties or one-half of her estate, under Article 900 of our Civil Code) could not then be disposed of nor burdened with any condition by her and (2) that C.N. Hodges had noteffectively and legally renounced his inheritance under his wife's will. These two assumptions are of course flatly disputed by respondent-appellee Magno as Mrs. Hodges' administratrix, who avers that the law of the State of Texas governs her succession and does not provide for and legitime, hence, her brothers and sisters are entitled to succeed to the whole of her share of the conjugal properties which is one-half thereof and that in any event, Hodges had totally renounced all his rights under the will. The main opinion concedes that "(I)n the interest of settling the estates herein involved soonest, it would be best, indeed, if these conflicting claims of the parties were determined in these proceedings." It observes however that this cannot be done due to the inadequacy of the evidence submitted by the parties in the probate court and of the parties' discussion, viz, "there is no clear and reliable proof of what the possibly applicable laws of Texas are. Then also, the genuineness of the documents relied upon by respondent Magno [re Hodges' renunciation] is disputed." 12 Hence, the main opinion expressly reserves resolution and determination on these two conflicting claims and issues which it deems "are not properly before the Court now," 13 and specifically holds that "(A)ccordingly, the only question that remains to be settled in the further proceedings hereby ordered to be held in the court below is how much more than as fixed above is the estate of Mrs. Hodges, and this would depend on (1) whether or not the applicable laws of Texas do provide in effect for more, such as, when there is

no legitime provided therein, and (2) whether or not Hodges has validly waived his whole inheritance from Mrs. Hodges." 14 Suggested guidelines Considering that the only unresolved issue has thus been narrowed down and in consonance with the ruling spirit of our probate law calling for the prompt settlement of the estates of deceased persons for the benefit of creditors and those entitled to the residue by way of inheritance considering that the estates have been long pending settlement since 1957 and 1962, respectively it was felt that the Court should lay down specific guidelines for the guidance of the probate court towards the end that it may expedite the closing of the protracted estates proceedings below to the mutual satisfaction of the heirs and without need of a dissatisfied party elevating its resolution of this only remaining issue once more to this Court and dragging out indefinitely the proceedings. After all, the only question that remains depends for its determination on the resolution of the two questions ofrenvoi and renunciation, i.e. as to whether C. N. Hodges can claim a legitime and whether he had renounced the inheritance. But as already indicated above, the Court without reaching a consensus which would finally resolve the conflicting claims here and now in this case opted that "these and other relevant matters should first be threshed out fully in the trial court in the proceedings hereinafter to be held for the purpose of ascertaining and/or distributing the estate of Mrs. Hodges to her heirs in accordance with her duly probated will." 15 The writer thus feels that laying down the premises and principles governing the nature, effects and consequences of Linnie Jane Hodges' testamentary dispositions in relation to her conjugal partnership and co-ownership of properties with her husband C. N. Hodges and "thinking out" the end results, depending on whether the evidence directed to be formally received by the probate court would bear out that under renvoi C. N. Hodges was or was not entitled to claim a legitime of one-half of his wife Linnie's estate and/or that he had or had not effectively and validly renounced his inheritance should help clear the decks, as it were, and assist the probate court in resolving the only remaining question of how much more than the minimum one-fourth of the community properties of the Hodges spouses herein finally determined should be awarded as the separate estate of Linnie, particularly since the views expressed in the main opinion have not gained a consensus of the Court. Hence, the following suggested guidelines, which needless to state, represent the personal opinion and views of the writer: 1. To begin with, as pointed out in the main opinion, "according to Hodges' own inventory submitted by him as executor of the estate of his wife, practically all their properties were conjugal which means that the spouses have equal shares therein." 16 2. Upon the death of Mrs. Hodges on May 23, 1957, and the dissolution thereby of the marriage, the law imposed upon Hodges as surviving husband the duty of inventorying, administering and liquidating the conjugal or community property. 17 Hodges failed to discharge this duty of liquidating the conjugal partnership and estate. On the contrary, he sought and obtained authorization from the probate court to continue the conjugal partnership'sbusiness of buying and selling real and personal properties. In his annual accounts submitted to the probate court as executor of Mrs. Hodges' estate, Hodges thusconsistently reported the considerable combined income (in six figures) of the conjugal partnership or coownershipand then divided the same equally between himself and Mrs. Hodges' estate and as consistently filed separate income tax returns and paid the income taxes for each resulting half of such combined income corresponding to his own and to Mrs. Hodges' estate. 18 (Parenthetically, he could not in law do this, had he adjudicated Linnie's entire estate to himself, thus supporting the view advanced even in the main opinion that "Hodges waived not only his rights to the fruits but to the properties themselves." 19 By operation of the law of trust 20 as well as by his own acknowledgment and acts, therefore, all transactions made by Hodges after his wife's death were deemed for and on behalf of their unliquidated conjugal partnership andcommunity estate and were so reported and treated by him. 3. With this premise established that all transactions of Hodges after his wife's death were for and on behalf of their unliquidated conjugal partnership and community estate, share and share alike, it should be clear that nogratuitous dispositions, if any, made by C. N. Hodges from his wife Linnie's estate should be deducted from herseparate estate as held in the main opinion. On the contrary, any such gratuitous dispositions should be charged to his own share of the conjugal estate since he had no authority or right to make any gratuitous dispositions of Linnie's properties to the prejudice of her brothers and sisters whom she called to her succession upon his death, not to mention that the very authority obtained by him from the probate court per its orders of May 25, and December 14, 1957 was to continue the conjugal partnership's business of buying and selling real properties for the account of their unliquidated conjugal estate and co-ownership, share and share alike and not to make anyfree dispositions of Linnie's estate. 4. All transactions as well after the death on December 25, 1962 of Hodges himself appear perforce and necessarily to have been conducted, on the same premise, for and on behalf of their unliquidated conjugal partnership and/or coownership, share and share alike since the conjugal partnership remained unliquidated which is another way of saying that such transactions, purchases and sales, mostly the latter, must be deemed in effect to have been made for the respective estates of C. N. Hodges and of his wife Linnie Jane Hodges, as both estates continued to have an equal stake and share in the conjugal partnership which was not only left unliquidated but continued as a co-ownership or joint business with the probate court's approval by Hodges during the five-year period that he survived his wife. This explains the probate court's action of requiring that deeds of sale executed by PCIB as Hodges' estate's administrator be "signed jointly" by respondent Magno as Mrs. Hodges' estate's administratrix, as well as its order authorizing payment by lot purchasers from the Hodges to either estate, since "there is as yet no judicial declaration of heirs nor distribution of properties to whomsoever are entitled thereto." 22 And this equally furnishes the rationale of the main opinion for continued conjoint administration by the administrators of the two estates of the deceased spouses, "pending the liquidation of the conjugal partnership," 23 since "it is but logical that both estates should be administered jointly by the representatives of both, pending their segregation from each other. Particularly ... because the actuations so far of PCIB evince a determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from their inheritance." 24 5. Antly by the representatives of both, pending their segregation from each other. Particularly ... because the actuations so far of PCIB evince a determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from their inheritance." 24 5. As stressed in the main opinion, the determination of the only unresolved issue of how much more than the minimum of one-fourth of the community or conjugal properties of the Hodges spouses pertains to Mrs. Hodges' estate depends on the twin questions of renunciation and renvoi. It directed consequently that "a joint hearing of the two probate proceedings

herein involved" be held by the probate court for the reception of "further evidence" in order to finally resolved these twin questions. 25 (a) On the question of renunciation, it is believed that all that the probate court has to do is to receive formally in evidence the various documents annexed to respondent Magno's answer at bar, 26 namely: Copy of the U.S. Estate Tax Return filed on August 8, 1958 by C. N. Hodges for his wife Linnie's estate wherein he purportedly declared that he was renouncing his inheritance under his wife's will in favor of her brothers and sisters as co-heirs designated with him and that it was his "intention (as) surviving husband of the deceased to distribute the remaining property and interests of the deceased in their community estate to the devisee and legatees named in the will when the debts, liabilities, taxes and expenses of administration are finally determined and paid;" 27 and The affidavit of ratification of such renunciation (which places him in estoppel) allegedly executed on August 9, 1962 by C. N. Hodges in Iloilo City wherein he reaffirmed that "... on August 8, 1958, I renounced and disclaimed any and all right to receive the rents, emoluments and income from said estate" and further declared that "(T)he purpose of this affidavit is to ratify and confirm, and I do hereby ratify and confirm, the declaration made in schedule M of said return and hereby formally disclaim and renounce any right on my part to receive any of the said rents, emoluments and income from the estate of my deceased wife, Linnie Jane Hodges. This affidavit is made to absolve me or my estate from any liability for the payment of income taxes on income which has accrued to the estate of Linnie Jane Hodges since the death of the said Linnie Jane Hodges on May 23, 1957." 28 (b) On the question of renvoi, all that remains for the probate court to do is to formally receive in evidence duly authenticated copies of the laws of the State of Texas governing the succession of Linnie Jane Hodges and her husband C. N. Hodges as citizens of said State at the time of their respective deaths on May 23, 1957 andDecember 25, 1962. 29 6. The text and tenor of the declarations by C. N. Hodges of renunciation of his inheritance from his wife in favor of her other named heirs in her will (her brothers and sisters and their respective heirs) as ratified and reiterated expressly in his affidavit of renunciation executed four years later for the avowed purpose of not being held liable for payment of income taxes on income which has accrued to his wife's estate since her death indicate a valid and effective renunciation. Once the evidence has been formally admitted and its genuineness and legal effectivity established by the probate court, the renunciation by C. N. Hodges must be given due effect with the result that C. N. Hodges therefore acquired no part of his wife's one-half share of the community properties since he removed himself as an heir by virtue of his renunciation. By simple substitution then under Articles 857 and 859 of our Civil Code 30 and by virtue of the will's institution of heirs, since "the heir originally instituted C. N. Hodges) does not become an heir" 31 by force of his renunciation, Mrs. Hodges' brothers and sisters whom she designated as her heirs upon her husband's death are called immediately to her succession. Consequently, the said community and conjugal properties would then pertain pro indiviso share and share alike to their respective estates, with each estate, however, shouldering its own expenses of administration, estate and inheritance taxes, if any remain unpaid, attorneys' fees and other like expenses and the net remainder to be adjudicated directly to the decedents' respective brothers and sisters (and their heirs) as the heirs duly designated in their respective wills. The question of renvoi becomes immaterial since most laws and our lawspermit such renunciation of inheritance. 7. If there were no renunciation (or the same may somehow be declared to have not been valid and effective) by C. N. Hodges of his inheritance from his wife, however, what would be the consequence? (a) If the laws on succession of the State of Texas do provide for renvoi or "reference back" to Philippine law as the domiciliary law of the Hodges' spouses governing their succession, then petitioners' view that Mrs. Hodges' estate would consist only of the minimum of "one-fourth of the community properties of the said spouses, as of the time of (her) death on May 23, 1957" would have to be sustained and C. N. Hodges' estate would consist of three-fourths of the community properties, comprising his own one-half (or two-fourths) share and the other fourth of Mrs. Hodges' estate as the legitime granted him as surviving spouse by Philippine law (Article 900 of the Civil Code) which could not be disposed of nor burdened with any condition by Mrs. Hodges as testatrix. (b) If the laws on succession of the State of Texas do not provide for such renvoi and respondent Magno's assertion is correct that the Texas law which would then prevail, provides for no legitime for C. N. Hodges as the surviving spouse, then respondent Magno's assertion that Mrs. Hodges' estate would consist of one-half of the community properties (with the other half pertaining to C. N. Hodges) would have to be sustained. The community and conjugal properties would then pertain share and share alike to their respective estates, with each estate shouldering its own expenses of administration in the same manner stated in the last paragraph of paragraph 6 hereof. . 8. As to the nature of the institution of heirs made by Mrs. Hodges in her will, the main opinion holds that "(T)he brothers and sisters of Mrs. Hodges are not substitutes for Hodges; rather, they are also heirs instituted simultaneously with Hodges," but goes further and holds that "it was not the usufruct alone of her estate ... that she bequeathed to Hodges during his lifetime, but the full ownership thereof, although the same was to last also during his lifetime only , even as there was no restriction against his disposing or conveying the whole or any portion thereof anybody other than himself" and describes Hodges "as universal and sole heir with absolute dominion over Mrs. Hodges' estate (except over their Lubbock, Texas property ), 32 adding that "Hodges was not obliged to preserve anything for them" (referring to Mrs. Hodges' brothers and sisters as instituted co-heirs). 33 Contrary to this view of the main opinion, the writer submits that the provisions of Mrs. Hodges' will did not grant to C.N. Hodges "full ownership" nor "absolute dominion" over her estate, such that he could as "universal and sole heir" by the mere expedient of gratuitously disposing to third persons her whole estate during his lifetime nullify her institution of her brothers and sisters as his co-heirs to succeed to her whole estate "at the death of (her) husband ," deprive them of any inheritance and make his own brothers and sisters in effect sole heirs not only of his own estate but of his wife's estate as well. Thus, while Linnie Jane Hodges did not expressly name her brothers and sisters as substitutes for Hodges because she willed that they would enter into the succession upon his death, still it cannot be gainsaid, as the main opinion concedes, "that they are also heirs instituted simultaneously with Hodges, subject however to certain conditions, partially resolutory insofar as Hodges was concerned and correspondingly suspensive with reference to his brothers and sisters-in-law." 34 Hence, if Hodges is found to have validly renounced his inheritance, there would be a substitution of heirs in fact and in law since Linnie's brothers and sisters as the heirs "simultaneously instituted" with a suspensive term would be called immediately to her succession instead of waiting for the arrival of suspensive term of Hodges' death, since as the heir originally instituted he does not become an heir by force of his renunciation and therefore they would "enter into the inheritance in default of the heir originally instituted" (Hodges) under the provisions of Article 857 and 859 of our Civil Code, supra, 35 thus accelerating their succession to her estate as a consequence of Hodges' renunciation.

Consequently, Linnie Jane Hodges willed that her husband C.N. Hodges would "during his natural lifetime ... manage, control, use and enjoy said estate" and that only "all rents, emoluments and income" alone shall belong to him. She further willed that while he could sell and purchase properties of her estate, and "use any part of the principal estate," such principal notwithstanding "any changes in the physical properties of said estate"(i.e. new properties acquired or exchanged) would still pertain to her estate, which at the time of his death would pass in full dominion to her brothers and sisters as the ultimate sole and universal heirs of her estate. 36 The testatrix Linnie Jane Hodges in her will thus principally provided that "I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real ... to my beloved husband, Charles Newton Hodges, to have and to hold with him ... during his natural lifetime;" 37 that "(he) shall have the right to manage, control, use and enjoy said estate during his lifetime, ... to make any changes in the physical properties of said estate, by sale ... and the purchase of any other or additional property as he may think best ... . All rents, emoluments and income from said estate shall belong to him and he is further authorized to use any part of the principal of said estate as he may need or desire, ... he shall not sell or otherwise dispose of any of the improved property now owned by us, located at ... City of Lubbock, Texas ... . He shall have the right to subdivide any farmland and sell lots therein, and may sell unimproved town lots;" 38 that "(A)t the death of my said husband, Charles Newton, I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal and real, ... to be equally divided among my brothers and sisters, share and share alike, namely: Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie Rascoe, Era Roman and Nimroy Higdon;" 39 and that "(I)n case of the death of any of my brothers and/or sisters ... prior to the death of my husband ... the heirs of such deceased brother or sister shall take jointly the share which would have gone to such brother or sister had she or he survived." 40 Such provisions are wholly consistent with the view already fully expounded above that all transactions and sales made by Hodges after his wife Linnie's death were by operation of the law of trust as well as by his ownacknowledgment and acts deemed for and on behalf of their unliquidated conjugal partnership and community estate, share and share alike, with the express authorization of the probate court per its orders of May 25, and December 14, 1957 granting Hodges' motion to continue the conjugal partnership business of buying and selling real estate even after her death. By the same token, Hodges could not conceivably be deemed to have had any authority or right to dispose gratuitously of any portion of her estate to whose succession she had called her brothers and sisters upon his death. 9. Such institutions of heirs with a term are expressly recognized and permitted under Book III, Chapter 2, section 4 of our Civil Code dealing with "conditional testamentary dispositions and testamentary dispositions with a term." 41 Thus, Article 885 of our Civil Code expressly provides that: ART 885. The designation of the day or time when the effects of the institution of an heir shall commence or cease shall be valid. In both cases, the legal heir shall be considered as called to the succession until the arrival of the period or its expiration. But in the first case he shall not enter into possession of the property until after having given sufficient security, with the intervention of the instituted heir. Accordingly, under the terms of Mrs. Hodges' will, her husband's right to the succession as the instituted heir ceased in diem, i.e. upon the arrival of the resolutory term of his death on December 25, 1962, while her brothers' and sisters' right to the succession also as instituted heirs commenced ex die, i.e. upon the expiration of the suspensive term (as far as they were concerned) of the death of C. N. Hodges on December 25, 1962 . 42 As stated in Padilla's treatise on the Civil Code, "A term is a period whose arrival is certain although the exact date thereof may be uncertain. A term may have either a suspensive or a resolutory effect. The designation of the day when the legacy "shall commence" is ex die, or a term with a suspensive effect, from a certain day. The designation of the day when the legacy "shall cease" is in diem or a term with a resolutory effect, until a certain day." He adds that "A legacy based upon a certain age or upon the death of a person is not a condition but a term. If the arrival of the term would commence the right of the heir, it is suspensive. If the arrival of the term would terminate his right, it is resolutory" and that "upon the arrival of the period, in case of a suspensive term, the instituted heir is entitled to the succession, and in case of a resolutory term, his right terminates." 43 10. The sizable estates herein involved have now been pending settlement for a considerably protracted period (of seventeen years counted from Linnie's death in 1957), and all that is left to be done is to resolve the onlyremaining issue (involving the two questions of renunciation and renvoi) hereinabove discussed in order to close up the estates and finally effect distribution to the deceased spouses' respective brothers and sisters and their heirs as the heirs duly instituted in their wills long admitted to probate. Hence, it is advisable for said instituted heirs and their heirs in turn 44 to come to terms for the adjudication and distribution to them pro-indiviso of the up to now unliquidated community properties of the estates of the Hodges spouses (derived from their unliquidatedconjugal partnership) rather than to get bogged down with the formidable task of physically segregating andpartitioning the two estates with the numerous transactions, items and details and physical changes of properties involved. The estates proceedings would thus be closed and they could then name their respective attorneys-in-fact to work out the details of segregating, dividing or partitioning the unliquidated community properties or liquidating them which can be done then on their own without further need of intervention on the part of the probate court as well as allow them meanwhile to enjoy and make use of the income and cash and liquid assets of the estates in such manner as may be agreed upon between them. Such a settlement or modus vivendi between the heirs of the unliquidated two estates for the mutual benefit of all of them should not prove difficult, considering that it appears as stated in the main opinion that 22.968149% of the share or undivided estate of C. N. Hodges have already been acquired by the heirs of Linnie Jane Hodges from certain heirs of her husband, while certain other heirs representing 17.34375% of Hodges' estate were joining cause with Linnie's heirs in their pending and unresolved motion for the removal of petitioner PCIB as administrator of Hodges' estate, 45 apparently impatient with the situation which has apparently degenerated into a running battle between the administrators of the two estates to the common prejudice of all the heirs. 11. As earlier stated, the writer has taken the pain of suggesting these guidelines which may serve to guide the probate court as well as the parties towards expediting the winding up and closing of the estates and the distribution of the net estates to the instituted heirs and their successors duly entitled thereto. The probate court should exert all effort towards this desired objective pursuant to the mandate of our probate law, bearing in mind the Court's admonition in previous cases that "courts of first instance should exert themselves to close up estate within twelve months from the time they are presented, and they may refuse to allow any compensation to executors and administrators who do not actively labor to that end, and they may even adopt harsher measures."46

Timeliness of appeals and imposition of thirty-one (31) additional docket fees Two appeals were docketed with this Court, as per the two records on appeal submitted (one with a green cover and the other with a yellow cover). As stated at the outset, these appeals involve basically the same primal issue raised in the petition for certiorari as to whether there still exists a separate estate of Linnie Jane Hodges which has to continue to be administered by respondent Magno. Considering the main opinion's ruling in the affirmative and that her estate and that of her husband (since they jointly comprise unliquidated community properties) must be administered conjointly by their respective administrators (PCIB and Magno), the said appeals (involving thirty-three different orders of the probate court approving sales contracts and other acts of administration executed and performed by respondent Magno on behalf of Linnie's estate) have been necessarily overruled by the Court's decision at bar. (a) The "priority question" raised by respondent Magno as to the patent failure of the two records on appeal to show on their face and state the material data that the appeals were timely taken within the 30-day reglamentary period as required by Rule 41, section 6 of the Rules of Court, has been brushed aside by the main opinion with the statement that it is "not necessary to pass upon the timeliness of any of said appeals" since they "revolve around practically the same main issues and ... it is admitted that some of them have been timely taken." 47 The main opinion thus proceeded with the determination of the thirty-three appealed orders despite the grave defect of the appellant PCIB's records on appeal and their failure to state the required material data showing the timeliness of the appeals. Such disposition of the question of timeliness deemed as "mandatory and jurisdictional" in a number of cases merits the writer's concurrence in that the question raised has been subordinated to the paramount considerations of substantial justice and a "liberal interpretation of the rules" applied so as not to derogate and detract from the primary intent and purpose of the rules, viz "the proper and just determination of a litigation" 48 which calls for "adherence to a liberal construction of the procedural rules in order to attain their objective of substantial justice and of avoiding denials of substantial justice due to procedural technicalities." 49 Thus, the main opinion in consonance with the same paramount considerations of substantial justice has likewise overruled respondents' objection to petitioner's taking the recourse of "the present remedy of certiorari and prohibition" "despite the conceded availability of appeal" on the ground that "there is a common thread among the basic issues involved in all these thirty-three appeals (which) deal with practically the same basic issues that can be more expeditiously resolved or determined in a single special civil action . . . " 50 (b) Since the basic issues have been in effect resolved in the special civil action at bar (as above stated) with the dismissal of the petition by virtue of the Court's judgment as to the continued existence of a separate estate of Linnie Jane Hodges and the affirmance as a necessary consequence of the appealed orders approving and sanctioning respondent Magno's sales contracts and acts of administration, some doubt would arise as to the propriety of the main opinion requiring the payment by PCIB of thirty-one (31) additional appeal docket fees. This doubt is further enhanced by the question of whether it would make the cost of appeal unduly expensive or prohibitive by requiring the payment of a separate appeal docket fee for each incidental order questioned when the resolution of all such incidental questioned orders involve basically one and the same main issue (in this case, the existence of a separate estate of Linnie Jane Hodges) and can be more expeditiously resolved or determined in a single special civil action" (for which a single docket fee is required) as stated in the main opinion. 51Considering the importance of the basic issues and the magnitude of the estates involved, however, the writer haspro hac vice given his concurrence to the assessment of the said thirty-one (31) additional appeal docket fees. MAKALINTAL, C.J., concurring: I concur in the separate opinion of Justice Teehankee, which in turn agrees with the dispositive portion of the main opinion of Justice Barredo insofar as it dismisses the petition for certiorari and prohibition in Cases L-27860 and L-27896 and affirms the appealed orders of the probate court in cases L-27936-37. However, I wish to make one brief observation for the sake of accuracy. Regardless of whether or not C. N. Hodges was entitled to a legitime in his deceased wife's estate which question, still to be decided by the said probate court, may depend upon what is the law of Texas and upon its applicability in the present case the said estate consists of one-half, not one-fourth, of the conjugal properties. There is neither a minimum of one-fourth nor a maximum beyond that. It is important to bear this in mind because the estate of Linnie Hodges consists of her share in the conjugal properties, is still under administration and until now has not been distributed by order of the court. The reference in both the main and separate opinions to a one-fourth portion of the conjugal properties as Linnie Hodges' minimum share is a misnomer and is evidently meant only to indicate that if her husband should eventually be declared entitled to a legitime, then the disposition made by Linnie Hodges in favor of her collateral relatives would be valid only as to one-half of her share, or one-fourth of the conjugal properties, since the remainder, which constitutes such legitime, would necessarily go to her husband in absolute ownership, unburdened by any substitution, term or condition, resolutory or otherwise. And until the estate is finally settled and adjudicated to the heirs who may be found entitled to it, the administration must continue to cover Linnie's entire conjugal share. Footnotes 1 Actually, the affidavit reads as follows: "I, C. N. Hodges, being duly sworn, on oath affirm that at the time the United States Estate Tax Return was filed in the Estate of Linnie Jane Hodges on August 8, 1958, I renounced and disclaimed any and all right to receive the rents, emoluments and income from said estate, as shown by the statement contained in schedule M at page 29 of said return, a copy of which schedule is attached to this affidavit and made a part hereof. "The purpose of this affidavit is to ratify and confirm, and I do hereby ratify and confirm, the declaration made in schedule M of said return and hereby formally disclaim and renounce any right on my part to receive any of the said rents, emoluments and income from the estate of my deceased wife, Linnie Jane Hodges. This affidavit is made to absolve me or my estate from any liability for the payment of income taxes on income which has accrued to the estate of Linnie Jane Hodges since the death of the said Linnie Jane Hodges on May 23, 1957." ( annex 5, Answer of respondent Avelina Magno, p. 264, L-27860 Rollo.) 2 The will of Hodges executed on November 14, 1953 contained mutually similar dispositions as those of his wife as follows: xxx xxx xxx "FIRST: I direct that all my just debts and funeral expenses be first paid out of my estate.

SECOND: I give, devise and bequeath all the rest, residue and remainder of my estate, both personal and real, wherever situated, or located, to my beloved wife, Linnie Jane Hodges, to have and to hold unto her, my said wife, during her natural lifetime. THIRD: I desire, direct and provide that my wife, Linnie Jane Hodges, shall have the right to manage, control, use and enjoy said estate during her lifetime, and she is hereby given the right to make any changes in the physical properties of said estate, by sale or any part thereof which she may think best; to execute conveyances with or without general or special warranty, conveying in fee simple or for any other term or time, any property which she may deem proper to dispose of; to lease any of the real property for oil, gas and/or other minerals, and all such deeds or leases shall pass the absolute fee simple title to the interest so conveyed in such property as she may elect to sell. All rents, emoluments and income from said estate shall belong to her, and she is further authorized to use any part of the principal of said estate as she may need or desire. It is provided herein, however, that she shall not sell or otherwise dispose of any of the improved property now owned by us located at, in or near the City of Lubbock, Texas, but she shall have the full right to lease, manage and enjoy the same during her lifetime, as above provided. She shall have the right to subdivide any farm land and sell lots therein, and may sell unimproved town lots. xxx xxx xxx FIFTH: At the death of my beloved wife, Linnie Jane Hodges, I give, devise and bequeath to the heirs of my half brother, Robert Hodges, who is now deceased, a half brother's share of my estate. SIXTH: At the death of my said wife, Linnie Jane Hodges, I give, devise and bequeath to the heirs of my deceased full sister, Mattie Hodges Simpkins, a full sister's share of my estate. SEVENTH: At the death of my said wife, Linnie Jane Hodges, I give, devise and bequeath to the heirs of my deceased half sister, Barbara O'dell, a half sister's share of my estate. EIGHT: At the death of my said wife, Linnie Jane Hodges, I give, devise and bequeath to the heirs of my full brother, Joe Hodges, deceased, a full brother's share of my estate. . NINTH: At the death of my said wife, Linnie Jane Hodges, I give, devise and bequeath to the heirs of my half brother, Willie Carver, deceased, a half brother's share of my estate. TENTH: At the death of my said wife, Linnie Jane Hodges, I give, devise and bequeath all of the rest, residue and remainder of my estate, both real and personal, wherever situated or located, to be equally divided among my other full brothers and full sisters, share and share alike, namely: J. A. Hodges, B. F. Hodges, Laura Holland and Addie Elliot. ELEVENTH: In case of the death of any of my full brothers and/or full sisters named in Item Tenth above, prior to the death of my wife, Linnie Jane Hodges, then it is my will and bequest that the heirs of such deceased full brother or full sister shall take jointly the share which would have gone to such full brother or full sister had he or she survived. xxx xxx xxx All erasures and interlineations made before signing." 3 None of the two records on appeal contains any copy of the motion and the opposition upon which the court acted. 4 More specific factual details related to these appeals will be stated later in the course of the distribution of the assignments of error. 5 It should be noted that in his affidavit, Hodges ratified and confirmed the "declaration made in Schedule M (of the inheritance tax return he filed in the U.S.)" wherein he declared that no property interests passed to him as the surviving spouse, except for purposes of administration and distribution to the devisees and legatees named in the will of his wife, and further disclaimed and renounced any right on his part to receive rents, emoluments and income therefrom because he wanted to be "absolved ... from liability for the payment of income taxes on income that has accrued to the estate of" his wife. While We cannot make any definite ruling on the point now, We might at least express the impression that reading all these statements together, one can hardly escape the conclusion that in the literal sense the idea conveyed by them is that Hodges waived not only his rights to the fruits but to the properties themselves. 6 With the exception of the limitations referring to the Texas properties. 7 "Real property as well as personal property is subject to the law of the country where it is situated. However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found." (Article 16, Civil Code.) 7* The question of what is the law of a foreign country is one of fact subject to proof like any other factual issue. (Sy Joc Lien vs. Sy Quia, 16 Phil. 137; Ching Huat vs. Co Heong 77 Phil. 988.) 8 PCIB claims that pursuant to the laws of Texas, Mrs. Hodges' estate is only one-fourth of the conjugal estate, while, on the other hand, Magno contends that under said laws, it is one-half of said estate since there is no legitime for the surviving spouse provided in said laws. 9 The motion for contempt will be separately taken up in due time. 10 The issues We have expressly reserved for later resolution. (See pp. 111-114 of this opinion.) 11 If it should be found by the court later that Hodges did renounce his inheritance from Mrs. Hodges, as seems to be indicated in the documents mentioned in the opinion, Schedule M of the Inheritance Tax Return filed by Hodges in the United States, Annex 4 of the Answer in G. R. Nos. L- 27860 & L-27896, and the affidavit of Hodges, Annex 5 also of the same answer, it is likely that Hodges did not have to pay any inheritance tax, and it would only be after these proceedings are finally terminated with a judgment favorable to the brothers and sisters of Mrs. Hodges that taxes could be assessed against them according to their respective individual shares. 11* See page 114-I ante. 12 See page 89-A of this decision. TEEHANKEE J., CONCURRING: 1 This writ enjoined respondent court from acting in Sp. Proc. No. 1307 (Testate Estate of Linnie Jane Hodges) and respondent-appellee Avelina A. Magno from interfering and intervening therein, pendingdetermination of the main issue raised by petitioner-appellant PCIB as to whether or not Mrs. Hodges' estate continued to exist as such so as to require the services of said Avelina A. Magno as administratrix thereof in view of PCIB's contention that her (Mrs. Hodges') entire estate had been adjudicated in 1957 by the probate court to her surviving husband C. N. Hodges as "the only devisee or legatee" under her will, which contention has now been rejected in the Court's decision at bar. 2 This resolution was based on "the inherent fairness of allowing the administratrix of the estate of Mrs. Hodges [Avelina A. Magno] to jointly administer the properties, rights and interests comprising both estates [Linnie Jane Hodges' and that of her husband C. N. Hodges] until they are separated from each other" in order to give adequate protection to the rights

and interests of their respective brothers and sisters as their designated heirs rather than "if the whole [both] proceedings were to be under the administration of the estate of Mr. Hodges [PCIB] to the exclusion of any representative of the heirs of Mrs. Hodges." 3 See page 5 et seq of main opinion. 4 See page 91 et seq of main opinion. 5 See page 100 of main opinion. 6 "Sec. 2. Judicial Admissions. Admissions made by the parties in the pleadings, or in the course of the trial or other proceedings do not require proof and can not be contradicted unless previously shown to have been made through palpable mistake." (Rule 129). See also 5 Moran's 1970 Ed. 65 and cases cited. 7 See p. 114-1 et seq. of main opinion. 8 At pp., 136-137 of main opinion; paragraphing and emphasis supplied. 9 At page 121 of main opinion. 10 At pages 110-11 of main opinion. 11 See In re: Testate Estate of Edward E. Christiansen, deceased, Aznar vs. Garcia, 7 SCRA 95, 103, 107 (1963). 12 At p. 112, main opinion. See also p. 103, where the main opinion refers to still other documents evidencing Hodges' renunciation and observes that "we cannot close our eyes to their existence in the record." (emphasis supplied). 13 At p. 113, main opinion. 14 At p. 114-I, main opinion, emphasis supplied. 15 At page 112, main opinion. 16 At page 109, main opinion; emphasis supplied. 17 "SEC 2. Where estate settled upon dissolution of marriage . When the marriage is dissolved by the death of the husband or wife, the community property shall be inventoried, administered, and liquidated, and the debts thereof paid, in the testate or intestate proceedings of the deceased spouse. If both spouses have died, the conjugal partnership shall be liquidated in the testate or intestate proceedings of either." (Rule 73) 18 At pp. 129-130, main opinion. 19 At page 103, main opinion, fn. 5. 20 Pamittan vs. Lasam, 60 Phil. 908 (1934), where the Court stressed the " high degree of trust" reposed in the surviving husband as "owner of a half interest in his own right of the conjugal estate which he was charged to administer" and that the conjugal property which thus comes into his possession upon his wife's death " remains conjugal property, a continuing and subsisting trust" for as long as it remains unliquidated. 21 Order of August 6, 1965, p. 248 Green Record on Appeal; see p. 30, main opinion. 22 Appealed order of November 23, 1965 against Western Institute of Technology, Inc. as purchaser-appellee, pp. 334335, Green Rec. on App. see pp. 33-34, main opinion. 23 At p. 137, main opinion. 24 At pp. 108-109, main opinion. 25 At p. 114, main opinion, which notes that "the question of what are the laws of Texas governing the matter here in issue is . . . one of fact, not of law." 26 See p. 102 et seq. main opinion; Annexes 4 and 5 Answer, pp. 163-264 of Rollo. 27 Annex 4, Answer, p. 263 of Rollo; emphasis supplied. 28 Annex 5, Answer, see p. 103, main opinion; emphasis supplied. 29 See pp. 114 et seq. main opinion. 30 "ART. 857. Substitution is the appointment of another heir so that he may enter into the inheritance in default of the heir originally instituted." (Civil Code) "ART. 859. The testator may designate one or more persons to substitute the heir or heirs instituted in case such heir or heirs should die before him, or should not wish, or should be incapacitated to accept the inheritance. "A simple substitution, without a statement of the cases to which it refers, shall comprise the three mentioned in the preceding paragraph, unless the testator has otherwise provided." (Civil Code, emphasis supplied) 31 6 Manresa 116, cited in III Padilla's Civil Code 1973 Ed., p. 241. 32 At pp. 110-112, main opinion; emphasis supplied. 33 At p. 134, main opinion. 34 At page 110, main opinion. 35 Text reproduced in fn. 30 hereof. 36 C.N. Hodges' own will contained identical provisions in favor of his wife, Linnie Jane Hodges to " manage, control, use and enjoy (his)estate during her lifetime" and making specific bequests of his whole estate to his full and half-brothers and sisters in clauses Fifth to Tenth thereof all " at the death of my said wife, Linnie Jane Hodges. "At p. 18 et seq. main opinion. 37 Second of seven clauses of will, emphasis supplied. 38 Third clause of will, idem. 39 Fourth clause of will, idem. 40 Fifth clause of will, idem. 41 Art. 871, Civil Code provides that "(T)he institution of an heir may he made conditionally, or for a certain purpose or cause." 42 An analogous case is found in Crisologo v Republic of the Philippines SUPREME COURT Manila THIRD DIVISION A.M. No. SCC-08-12 October 19, 2011 (Formerly OCA I.P.I. No. 08-29-SCC) OFFICE OF THE COURT ADMINISTRATOR, Complainant, vs. JUDGE UYAG P. USMAN, Presiding Judge, Shari'a Circuit Court, Pagadian City, Respondent. DECISION MENDOZA, J.: This administrative proceeding stemmed from a letter-complaint dated April 23, 2008 filed before the Office of the Ombudsman, Mindanao, requesting for a lifestyle check on respondent Judge Uyag P. Usman (respondent), Presiding

Judge, Sharia Circuit Court, Pagadian City, in connection with his acquisition of a Sports Utility Vehicle (SUV) amounting to P 1,526,000.00. In his letter,1 complainant alleged that respondent acquired a brand new SUV, specifically a Kia Sorento EX, Automatic Transmission and 2.57 CRDI Diesel for P 1,526,000.00; that he paid in cash the total down payment ofP 344,200.00; and that the remaining balance was payable in 48 months with a monthly amortization of P34,844.00 to the Philippine Savings Bank (PS Bank), Ozamis City Branch. Complainant further averred that respondent had just been recently appointed as a judge and since he assumed his post, he seldom reported for work and could not be located within the courts premises during office hours. Moreover, he was only receiving a very small take home pay because of his salary and policy loans with the Supreme Court Savings and Loan Association (SCSLA) and the Government Service Insurance System (GSIS), many of which he incurred when he was still a Clerk of Court of the Sharia Circuit Court in Isabela City, Basilan. Complainant attached photocopies of his pay slips to prove his allegation. Respondents financial capability to acquire said vehicle has been questioned because he is the sole bread winner in his family and he has seven (7) children, two (2) of whom were college students at the Medina College School of Nursing, a private school. On May 26, 2008, the Office of the Ombudsman forwarded the complaint to the Office of the Court Administrator (OCA). In turn, the OCA, in its Letter dated April 22, 2009, directed respondent to comment on the letter 2 within 10 days from receipt thereof. In his Comment,3 respondent explained that he acquired the Kia Sorento vehicle in 2008 but it was a second-hand, and not a brand new, vehicle; that he had no intention of buying the said vehicle but his friend, who was a manager of KIA Motors, Pagadian City, convinced him to avail of their lowest down payment promo of P 90,000.00 to own a second-hand demo unit vehicle; that he was hesitant to avail of the promo but his mother, a U.S. Veteran Pensioner receiving a monthly pension of US$1,056.00, persuaded him to avail of it; that it was his mother who paid the down payment of P 90,000.00 and the monthly installment of more than P 30,000.00; that when his mother got sick, her pensions and savings were used to buy medicines, thus, he defaulted in the payment of the said vehicle for four (4) months; and that PS Bank foreclosed the mortgage on the said vehicle. Respondent denied the allegation that all his seven (7) children depended on him for support. He claimed that only three of his children, all in the elementary level and studying in public schools, were under his care; that his mother financially helped him in the education of his two daughters who were in college; and that his other two children were already married and gainfully employed. Respondent also refuted the charges that he seldom reported for work and could not be located within the courts premises. He, instead, asserted that there was never a single day that he failed to report for work; that he often arrived ahead of his staff considering that he lived near the court; and that his conduct as a judge was beyond reproach and this could be attested to by his staff and employees at the Sangguniang Panlunsod of Pagadian City. To support his claim, respondent submitted the Joint Affidavit of his staff and the affidavit of Mohammad Basher Cader, a member of a religious group in Pagadian City, attesting to his diligence and dedication in the performance of his function as a judge. Respondent bared that, at present, he is receiving a monthly take home pay of more than P 40,000.00 including his salary and allowances plus honorarium from the local government. In its Report4 dated March 16, 2011, the OCA found the explanation of respondent meritorious. The OCA, however, held respondent liable for violation of Section 8 of Republic Act (R.A.) No. 6713 otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees and of Section 7 of R.A. No. 3019, known as the Anti-Graft and Corrupt Practices Act, for failing to file his Statement of Assets, Liabilities and Net Worth (SALN) for the years 2004-2008. Thus, the OCA recommended that respondent be fined in the amount of P 10,000.00 The Court agrees with the finding of the OCA that the charges against respondent were not fully substantiated. The evidence adduced in the case, consisting of documents submitted by respondent are sufficient to prove that it was, indeed, his mother who paid the down payment and the monthly amortizations for the subject vehicle. The Court also agrees with the OCA that respondent is guilty of violating Section 7 of R.A. No. 3019 and Section 8 of R.A. No. 6713. Section 7 of R.A. No. 3019 provides: Sec. 7. Statement of Assets and Liabilities. Every public officer, within thirty days after assuming office and, thereafter, on or before the fifteenth day of April following the close of every calendar year, as well as upon the expiration of his term of office, or upon his resignation or separation from office, shall prepare and file with the office of the corresponding Department Head, or in the case of a Head of Department or Chief of an independent office, with the Office of the President, a true, detailed and sworn statement of assets and liabilities, including a statement of the amounts and sources of his income, the amounts of his personal and family expenses and the amount of income taxes paid for the next preceding calendar year: Provided, That public officers assuming office less than two months before the end of the calendar year, may file their first statement on or before the fifteenth day of April following the close of the said calendar year. In the same manner, Section 8, R.A. No. 6713 states: SEC. 8. Statements and Disclosure. Public officials and employees have an obligation to accomplish and submit declarations under oath of, and the public has the right to know, their assets, liabilities, net worth and financial and business interests including those of their spouses and of unmarried children under eighteen (18) years of age living in their households. (A) Statements of Assets and Liabilities and Financial Disclosure. All public officials and employees, except those who serve in an honorary capacity, laborers and casual or temporary workers, shall file under oath their Statements of Assets, Liabilities and Net Worth and a Disclosure of Business Interests and Financial connections and those of their spouses and unmarried children under eighteen (18) years of age living in their households. The two documents shall contain information on the following: (a) real property, its improvements, acquisition costs, assessed value and current fair market value; (b) personal property and acquisition cost; (c) all other assets such as investments, cash on hand or in banks, stocks, bonds, and the like; (d) liabilities, and; (e) all business interests and financial connections. The documents must be filed: (a) within thirty (30) days after assumption of office;

(b) on or before April 30, of every year thereafter; and (c) within thirty (30) days after separation from the service. All public officials and employees required under this section to file the aforestated documents shall also execute, within thirty (30) days from the date of their assumption of office, the necessary authority in favor of the Ombudsman to obtain from all appropriate government agencies, including the Bureau of Internal Revenue, such documents as may show their assets, liabilities, net worth, and also their business interests and financial connections in previous years, including, if possible, the year when they first assumed any office in the Government. Husband and wife who are both public officials or employees may file the required statements jointly or separately. xxx xxx xxx From the foregoing, it is imperative that every public official or government employee must make and submit a complete disclosure of his assets, liabilities and net worth in order to suppress any questionable accumulation of wealth. 5 This serves as the basis of the government and the people in monitoring the income and lifestyle of public officials and employees in compliance with the constitutional policy to eradicate corruption, to promote transparency in government, and to ensure that all government employees and officials lead just and modest lives, 6 with the end in view of curtailing and minimizing the opportunities for official corruption and maintaining a standard of honesty in the public service. 7 In the present case, respondent clearly violated the above-quoted laws when he failed to file his SALN for the years 20042008. He gave no explanation either why he failed to file his SALN for five (5) consecutive years. While every office in the government service is a public trust, no position exacts a greater demand on moral righteousness and uprightness of an individual than a seat in the Judiciary. Hence, judges are strictly mandated to abide with the law, the Code of Judicial Conduct and with existing administrative policies in order to maintain the faith of our people in the administration of justice.81avvphi1 Considering that this is the first offense of the respondent, albeit for five years, the Court shall impose a fine of only Five Thousand Pesos (P 5,000.00) with warning. WHEREFORE, the Court finds respondent Uyag P. Usman, Presiding Judge, Sharia Circuit Court, Pagadian City,GUILTY of violation of Section 7, R.A. No. 3019 and Section 8, R.A. No. 6713 and orders him to pay a FINE of Five Thousand Pesos (P5,000.00) with a STERN WARNING that a repetition of the same or similar act will be dealt with more severely. SO ORDERED. JOSE CATRAL MENDOZA Associate Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No 176556 July 4, 2012 BRIGIDO B. QUIAO, Petitioner, vs. RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by their mother RITA QUIAO, Respondents. DECISION REYES, J.: The family is the basic and the most important institution of society. It is in the family where children are born and molded either to become useful citizens of the country or troublemakers in the community. Thus, we are saddened when parents have to separate and fight over properties, without regard to the message they send to their children. Notwithstanding this, we must not shirk from our obligation to rule on this case involving legal separation escalating to questions on dissolution and partition of properties. The Case This case comes before us via Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. The petitioner seeks that we vacate and set aside the Order 2 dated January 8, 2007 of the Regional Trial Court (RTC), Branch 1, Butuan City. In lieu of the said order, we are asked to issue a Resolution defining the net profits subject of the forfeiture as a result of the decree of legal separation in accordance with the provision of Article 102(4) of the Family Code, or alternatively, in accordance with the provisions of Article 176 of the Civil Code. Antecedent Facts On October 26, 2000, herein respondent Rita C. Quiao (Rita) filed a complaint for legal separation against herein petitioner Brigido B. Quiao (Brigido). 3 Subsequently, the RTC rendered a Decision 4 dated October 10, 2005, the dispositive portion of which provides: WHEREFORE, viewed from the foregoing considerations, judgment is hereby rendered declaring the legal separation of plaintiff Rita C. Quiao and defendant-respondent Brigido B. Quiao pursuant to Article 55. As such, the herein parties shall be entitled to live separately from each other, but the marriage bond shall not be severed. Except for Letecia C. Quiao who is of legal age, the three minor children, namely, Kitchie, Lotis and Petchie, all surnamed Quiao shall remain under the custody of the plaintiff who is the innocent spouse. Further, except for the personal and real properties already foreclosed by the RCBC, all the remaining properties, namely: 1. coffee mill in Balongagan, Las Nieves, Agusan del Norte; 2. coffee mill in Durian, Las Nieves, Agusan del Norte; 3. corn mill in Casiklan, Las Nieves, Agusan del Norte; 4. coffee mill in Esperanza, Agusan del Sur; 5. a parcel of land with an area of 1,200 square meters located in Tungao, Butuan City; 6. a parcel of agricultural land with an area of 5 hectares located in Manila de Bugabos, Butuan City; 7. a parcel of land with an area of 84 square meters located in Tungao, Butuan City; 8. Bashier Bon Factory located in Tungao, Butuan City; shall be divided equally between herein [respondents] and [petitioner] subject to the respective legitimes of the children and the payment of the unpaid conjugal liabilities of [P]45,740.00. [Petitioners] share, however, of the net profits earned by the conjugal partnership is forfeited in favor of the common children.

He is further ordered to reimburse [respondents] the sum of [P]19,000.00 as attorney's fees and litigation expenses of [P]5,000.00[.] SO ORDERED.5 Neither party filed a motion for reconsideration and appeal within the period provided for under Section 17(a) and (b) of the Rule on Legal Separation.6 On December 12, 2005, the respondents filed a motion for execution 7 which the trial court granted in its Order dated December 16, 2005, the dispositive portion of which reads: "Wherefore, finding the motion to be well taken, the same is hereby granted. Let a writ of execution be issued for the immediate enforcement of the Judgment. SO ORDERED."8 Subsequently, on February 10, 2006, the RTC issued a Writ of Execution 9 which reads as follows: NOW THEREFORE, that of the goods and chattels of the [petitioner] BRIGIDO B. QUIAO you cause to be made the sums stated in the afore-quoted DECISION [sic], together with your lawful fees in the service of this Writ, all in the Philippine Currency. But if sufficient personal property cannot be found whereof to satisfy this execution and your lawful fees, then we command you that of the lands and buildings of the said [petitioner], you make the said sums in the manner required by law. You are enjoined to strictly observed Section 9, Rule 39, Rule [sic] of the 1997 Rules of Civil Procedure. You are hereby ordered to make a return of the said proceedings immediately after the judgment has been satisfied in part or in full in consonance with Section 14, Rule 39 of the 1997 Rules of Civil Procedure, as amended. 10 On July 6, 2006, the writ was partially executed with the petitioner paying the respondents the amount ofP46,870.00, representing the following payments: (a) P22,870.00 as petitioner's share of the payment of the conjugal share; (b) P19,000.00 as attorney's fees; and (c) P5,000.00 as litigation expenses.11 On July 7, 2006, or after more than nine months from the promulgation of the Decision, the petitioner filed before the RTC a Motion for Clarification,12 asking the RTC to define the term "Net Profits Earned." To resolve the petitioner's Motion for Clarification, the RTC issued an Order 13 dated August 31, 2006, which held that the phrase "NET PROFIT EARNED" denotes "the remainder of the properties of the parties after deducting the separate properties of each [of the] spouse and the debts." 14 The Order further held that after determining the remainder of the properties, it shall be forfeited in favor of the common children because the offending spouse does not have any right to any share of the net profits earned, pursuant to Articles 63, No. (2) and 43, No. (2) of the Family Code. 15 The dispositive portion of the Order states: WHEREFORE, there is no blatant disparity when the sheriff intends to forfeit all the remaining properties after deducting the payments of the debts for only separate properties of the defendant-respondent shall be delivered to him which he has none. The Sheriff is herein directed to proceed with the execution of the Decision. IT IS SO ORDERED.16 Not satisfied with the trial court's Order, the petitioner filed a Motion for Reconsideration 17 on September 8, 2006. Consequently, the RTC issued another Order 18 dated November 8, 2006, holding that although the Decision dated October 10, 2005 has become final and executory, it may still consider the Motion for Clarification because the petitioner simply wanted to clarify the meaning of "net profit earned." 19 Furthermore, the same Order held: ALL TOLD, the Court Order dated August 31, 2006 is hereby ordered set aside. NET PROFIT EARNED, which is subject of forfeiture in favor of [the] parties' common children, is ordered to be computed in accordance [with] par. 4 of Article 102 of the Family Code.20 On November 21, 2006, the respondents filed a Motion for Reconsideration, 21 praying for the correction and reversal of the Order dated November 8, 2006. Thereafter, on January 8, 2007, 22 the trial court had changed its ruling again and granted the respondents' Motion for Reconsideration whereby the Order dated November 8, 2006 was set aside to reinstate the Order dated August 31, 2006. Not satisfied with the trial court's Order, the petitioner filed on February 27, 2007 this instant Petition for Review under Rule 45 of the Rules of Court, raising the following: Issues I IS THE DISSOLUTION AND THE CONSEQUENT LIQUIDATION OF THE COMMON PROPERTIES OF THE HUSBAND AND WIFE BY VIRTUE OF THE DECREE OF LEGAL SEPARATION GOVERNED BY ARTICLE 125 (SIC) OF THE FAMILY CODE? II WHAT IS THE MEANING OF THE NET PROFITS EARNED BY THE CONJUGAL PARTNERSHIP FOR PURPOSES OF EFFECTING THE FORFEITURE AUTHORIZED UNDER ARTICLE 63 OF THE FAMILY CODE? III WHAT LAW GOVERNS THE PROPERTY RELATIONS BETWEEN THE HUSBAND AND WIFE WHO GOT MARRIED IN 1977? CAN THE FAMILY CODE OF THE PHILIPPINES BE GIVEN RETROACTIVE EFFECT FOR PURPOSES OF DETERMINING THE NET PROFITS SUBJECT OF FORFEITURE AS A RESULT OF THE DECREE OF LEGAL SEPARATION WITHOUT IMPAIRING VESTED RIGHTS ALREADY ACQUIRED UNDER THE CIVIL CODE? IV WHAT PROPERTIES SHALL BE INCLUDED IN THE FORFEITURE OF THE SHARE OF THE GUILTY SPOUSE IN THE NET CONJUGAL PARTNERSHIP AS A RESULT OF THE ISSUANCE OF THE DECREE OF LEGAL SEPARATION? 23 Our Ruling While the petitioner has raised a number of issues on the applicability of certain laws, we are well-aware that the respondents have called our attention to the fact that the Decision dated October 10, 2005 has attained finality when the Motion for Clarification was filed. 24 Thus, we are constrained to resolve first the issue of the finality of the Decision dated October 10, 2005 and subsequently discuss the matters that we can clarify. The Decision dated October 10, 2005 has become final and executory at the time the Motion for Clarification was filed on July 7, 2006. Section 3, Rule 41 of the Rules of Court provides:

Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order. The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. In Neypes v. Court of Appeals ,25 we clarified that to standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, we held that "it would be practical to allow a fresh period of 15 days within which to file the notice of appeal in the RTC, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration."26 In Neypes, we explained that the "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal Trial Courts to the RTCs; Rule 42 on petitions for review from the RTCs to the Court of Appeals (CA); Rule 43 on appeals from quasi-judicial agencies to the CA and Rule 45 governing appeals by certiorari to the Supreme Court. We also said, "The new rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution." 27 In other words, a party litigant may file his notice of appeal within a fresh 15-day period from his receipt of the trial court's decision or final order denying his motion for new trial or motion for reconsideration. Failure to avail of the fresh 15-day period from the denial of the motion for reconsideration makes the decision or final order in question final and executory. In the case at bar, the trial court rendered its Decision on October 10, 2005. The petitioner neither filed a motion for reconsideration nor a notice of appeal. On December 16, 2005, or after 67 days had lapsed, the trial court issued an order granting the respondent's motion for execution; and on February 10, 2006, or after 123 days had lapsed, the trial court issued a writ of execution. Finally, when the writ had already been partially executed, the petitioner, on July 7, 2006 or after 270 days had lapsed, filed his Motion for Clarification on the definition of the "net profits earned." From the foregoing, the petitioner had clearly slept on his right to question the RTCs Decision dated October 10, 2005. For 270 days, the petitioner never raised a single issue until the decision had already been partially executed. Thus at the time the petitioner filed his motion for clarification, the trial courts decision has become final and executory. A judgment becomes final and executory when the reglementary period to appeal lapses and no appeal is perfected within such period. Consequently, no court, not even this Court, can arrogate unto itself appellate jurisdiction to review a case or modify a judgment that became final.28 The petitioner argues that the decision he is questioning is a void judgment. Being such, the petitioner's thesis is that it can still be disturbed even after 270 days had lapsed from the issuance of the decision to the filing of the motion for clarification. He said that "a void judgment is no judgment at all. It never attains finality and cannot be a source of any right nor any obligation."29 But what precisely is a void judgment in our jurisdiction? When does a judgment becomes void? "A judgment is null and void when the court which rendered it had no power to grant the relief or no jurisdiction over the subject matter or over the parties or both." 30 In other words, a court, which does not have the power to decide a case or that has no jurisdiction over the subject matter or the parties, will issue a void judgment or a coram non judice.31 The questioned judgment does not fall within the purview of a void judgment. For sure, the trial court has jurisdiction over a case involving legal separation. Republic Act (R.A.) No. 8369 confers upon an RTC, designated as the Family Court of a city, the exclusive original jurisdiction to hear and decide, among others, complaints or petitions relating to marital status and property relations of the husband and wife or those living together. 32 The Rule on Legal Separation33 provides that "the petition [for legal separation] shall be filed in the Family Court of the province or city where the petitioner or the respondent has been residing for at least six months prior to the date of filing or in the case of a non-resident respondent, where he may be found in the Philippines, at the election of the petitioner." 34 In the instant case, herein respondent Rita is found to reside in Tungao, Butuan City for more than six months prior to the date of filing of the petition; thus, the RTC, clearly has jurisdiction over the respondent's petition below. Furthermore, the RTC also acquired jurisdiction over the persons of both parties, considering that summons and a copy of the complaint with its annexes were served upon the herein petitioner on December 14, 2000 and that the herein petitioner filed his Answer to the Complaint on January 9, 2001.35 Thus, without doubt, the RTC, which has rendered the questioned judgment, has jurisdiction over the complaint and the persons of the parties. From the aforecited facts, the questioned October 10, 2005 judgment of the trial court is clearly not void ab initio, since it was rendered within the ambit of the court's jurisdiction. Being such, the same cannot anymore be disturbed, even if the modification is meant to correct what may be considered an erroneous conclusion of fact or law. 36 In fact, we have ruled that for "[as] long as the public respondent acted with jurisdiction, any error committed by him or it in the exercise thereof will amount to nothing more than an error of judgment which may be reviewed or corrected only by appeal." 37 Granting without admitting that the RTC's judgment dated October 10, 2005 was erroneous, the petitioner's remedy should be an appeal filed within the reglementary period. Unfortunately, the petitioner failed to do this. He has already lost the chance to question the trial court's decision, which has become immutable and unalterable. What we can only do is to clarify the very question raised below and nothing more. For our convenience, the following matters cannot anymore be disturbed since the October 10, 2005 judgment has already become immutable and unalterable, to wit: (a) The finding that the petitioner is the offending spouse since he cohabited with a woman who is not his wife; 38 (b) The trial court's grant of the petition for legal separation of respondent Rita; 39 (c) The dissolution and liquidation of the conjugal partnership; 40 (d) The forfeiture of the petitioner's right to any share of the net profits earned by the conjugal partnership; 41 (e) The award to the innocent spouse of the minor children's custody; 42 (f) The disqualification of the offending spouse from inheriting from the innocent spouse by intestate succession; 43 (g) The revocation of provisions in favor of the offending spouse made in the will of the innocent spouse; 44 (h) The holding that the property relation of the parties is conjugal partnership of gains and pursuant to Article 116 of the Family Code, all properties acquired during the marriage, whether acquired by one or both spouses, is presumed to be conjugal unless the contrary is proved;45 (i) The finding that the spouses acquired their real and personal properties while they were living together; 46 (j) The list of properties which Rizal Commercial Banking Corporation (RCBC) foreclosed; 47 (k) The list of the remaining properties of the couple which must be dissolved and liquidated and the fact that respondent Rita was the one who took charge of the administration of these properties; 48 (l) The holding that the conjugal partnership shall be liable to matters included under Article 121 of the Family Code and the conjugal liabilities totaling P503,862.10 shall be charged to the income generated by these properties; 49

(m) The fact that the trial court had no way of knowing whether the petitioner had separate properties which can satisfy his share for the support of the family;50 (n) The holding that the applicable law in this case is Article 129(7); 51 (o) The ruling that the remaining properties not subject to any encumbrance shall therefore be divided equally between the petitioner and the respondent without prejudice to the children's legitime; 52 (p) The holding that the petitioner's share of the net profits earned by the conjugal partnership is forfeited in favor of the common children;53 and (q) The order to the petitioner to reimburse the respondents the sum of P19,000.00 as attorney's fees and litigation expenses of P5,000.00.54 After discussing lengthily the immutability of the Decision dated October 10, 2005, we will discuss the following issues for the enlightenment of the parties and the public at large. Article 129 of the Family Code applies to the present case since the parties' property relation is governed by the system of relative community or conjugal partnership of gains. The petitioner claims that the court a quo is wrong when it applied Article 129 of the Family Code, instead of Article 102. He confusingly argues that Article 102 applies because there is no other provision under the Family Code which defines net profits earned subject of forfeiture as a result of legal separation. Offhand, the trial court's Decision dated October 10, 2005 held that Article 129(7) of the Family Code applies in this case. We agree with the trial court's holding. First, let us determine what governs the couple's property relation. From the record, we can deduce that the petitioner and the respondent tied the marital knot on January 6, 1977. Since at the time of the exchange of marital vows, the operative law was the Civil Code of the Philippines (R.A. No. 386) and since they did not agree on a marriage settlement, the property relations between the petitioner and the respondent is the system of relative community or conjugal partnership of gains.55 Article 119 of the Civil Code provides: Art. 119. The future spouses may in the marriage settlements agree upon absolute or relative community of property, or upon complete separation of property, or upon any other regime. In the absence of marriage settlements, or when the same are void, the system of relative community or conjugal partnership of gains as established in this Code, shall govern the property relations between husband and wife. Thus, from the foregoing facts and law, it is clear that what governs the property relations of the petitioner and of the respondent is conjugal partnership of gains. And under this property relation, "the husband and the wife place in a common fund the fruits of their separate property and the income from their work or industry." 56 The husband and wife also own in common all the property of the conjugal partnership of gains. 57 Second, since at the time of the dissolution of the petitioner and the respondent's marriage the operative law is already the Family Code, the same applies in the instant case and the applicable law in so far as the liquidation of the conjugal partnership assets and liabilities is concerned is Article 129 of the Family Code in relation to Article 63(2) of the Family Code. The latter provision is applicable because according to Article 256 of the Family Code "[t]his Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other law."58 Now, the petitioner asks: Was his vested right over half of the common properties of the conjugal partnership violated when the trial court forfeited them in favor of his children pursuant to Articles 63(2) and 129 of the Family Code? We respond in the negative. Indeed, the petitioner claims that his vested rights have been impaired, arguing: "As earlier adverted to, the petitioner acquired vested rights over half of the conjugal properties, the same being owned in common by the spouses. If the provisions of the Family Code are to be given retroactive application to the point of authorizing the forfeiture of the petitioner's share in the net remainder of the conjugal partnership properties, the same impairs his rights acquired prior to the effectivity of the Family Code." 59 In other words, the petitioner is saying that since the property relations between the spouses is governed by the regime of Conjugal Partnership of Gains under the Civil Code, the petitioner acquired vested rights over half of the properties of the Conjugal Partnership of Gains, pursuant to Article 143 of the Civil Code, which provides: "All property of the conjugal partnership of gains is owned in common by the husband and wife." 60 Thus, since he is one of the owners of the properties covered by the conjugal partnership of gains, he has a vested right over half of the said properties, even after the promulgation of the Family Code; and he insisted that no provision under the Family Code may deprive him of this vested right by virtue of Article 256 of the Family Code which prohibits retroactive application of the Family Code when it will prejudice a person's vested right. However, the petitioner's claim of vested right is not one which is written on stone. In Go, Jr. v. Court of Appeals,61we define and explained "vested right" in the following manner: A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency. The term "vested right" expresses the concept of present fixed interest which, in right reason and natural justice, should be protected against arbitrary State action, or an innately just and imperative right which enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny. To be vested, a right must have become a titlelegal or equitableto the present or future enjoyment of property.62 (Citations omitted) In our en banc Resolution dated October 18, 2005 for ABAKADA Guro Party List Officer Samson S. Alcantara, et al. v. The Hon. Executive Secretary Eduardo R. Ermita,63 we also explained: The concept of "vested right" is a consequence of the constitutional guaranty of due process that expresses a present fixed interest which in right reason and natural justice is protected against arbitrary state action; it includes not only legal or equitable title to the enforcement of a demand but also exemptions from new obligations created after the right has become vested. Rights are considered vested when the right to enjoyment is a present interest, absolute, unconditional, and perfect or fixed and irrefutable.64 (Emphasis and underscoring supplied) From the foregoing, it is clear that while one may not be deprived of his "vested right," he may lose the same if there is due process and such deprivation is founded in law and jurisprudence. In the present case, the petitioner was accorded his right to due process. First, he was well-aware that the respondent prayed in her complaint that all of the conjugal properties be awarded to her. 65 In fact, in his Answer, the petitioner prayed that the trial court divide the community assets between the petitioner and the respondent as circumstances and evidence warrant after the accounting and inventory of all the community properties of the parties. 66 Second, when the Decision dated October 10, 2005 was promulgated, the petitioner never questioned the trial court's ruling forfeiting what the trial

court termed as "net profits," pursuant to Article 129(7) of the Family Code. 67 Thus, the petitioner cannot claim being deprived of his right to due process. Furthermore, we take note that the alleged deprivation of the petitioner's "vested right" is one founded, not only in the provisions of the Family Code, but in Article 176 of the Civil Code. This provision is like Articles 63 and 129 of the Family Code on the forfeiture of the guilty spouse's share in the conjugal partnership profits. The said provision says: Art. 176. In case of legal separation, the guilty spouse shall forfeit his or her share of the conjugal partnership profits, which shall be awarded to the children of both, and the children of the guilty spouse had by a prior marriage. However, if the conjugal partnership property came mostly or entirely from the work or industry, or from the wages and salaries, or from the fruits of the separate property of the guilty spouse, this forfeiture shall not apply. In case there are no children, the innocent spouse shall be entitled to all the net profits. From the foregoing, the petitioner's claim of a vested right has no basis considering that even under Article 176 of the Civil Code, his share of the conjugal partnership profits may be forfeited if he is the guilty party in a legal separation case. Thus, after trial and after the petitioner was given the chance to present his evidence, the petitioner's vested right claim may in fact be set aside under the Civil Code since the trial court found him the guilty party. More, in Abalos v. Dr. Macatangay, Jr.,68 we reiterated our long-standing ruling that: [P]rior to the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into title until it appears that there are assets in the community as a result of the liquidation and settlement. The interest of each spouse is limited to the net remainder or "remanente liquido" (haber ganancial) resulting from the liquidation of the affairs of the partnership after its dissolution. Thus, the right of the husband or wife to one-half of the conjugal assets does not vest until the dissolution and liquidation of the conjugal partnership, or after dissolution of the marriage, when it is finally determined that, after settlement of conjugal obligations, there are net assets left which can be divided between the spouses or their respective heirs.69 (Citations omitted) Finally, as earlier discussed, the trial court has already decided in its Decision dated October 10, 2005 that the applicable law in this case is Article 129(7) of the Family Code. 70 The petitioner did not file a motion for reconsideration nor a notice of appeal. Thus, the petitioner is now precluded from questioning the trial court's decision since it has become final and executory. The doctrine of immutability and unalterability of a final judgment prevents us from disturbing the Decision dated October 10, 2005 because final and executory decisions can no longer be reviewed nor reversed by this Court. 71 From the above discussions, Article 129 of the Family Code clearly applies to the present case since the parties' property relation is governed by the system of relative community or conjugal partnership of gains and since the trial court's Decision has attained finality and immutability. The net profits of the conjugal partnership of gains are all the fruits of the separate properties of the spouses and the products of their labor and industry. The petitioner inquires from us the meaning of "net profits" earned by the conjugal partnership for purposes of effecting the forfeiture authorized under Article 63 of the Family Code. He insists that since there is no other provision under the Family Code, which defines "net profits" earned subject of forfeiture as a result of legal separation, then Article 102 of the Family Code applies. What does Article 102 of the Family Code say? Is the computation of "net profits" earned in the conjugal partnership of gains the same with the computation of "net profits" earned in the absolute community? Now, we clarify. First and foremost, we must distinguish between the applicable law as to the property relations between the parties and the applicable law as to the definition of "net profits." As earlier discussed, Article 129 of the Family Code applies as to the property relations of the parties. In other words, the computation and the succession of events will follow the provisions under Article 129 of the said Code. Moreover, as to the definition of "net profits," we cannot but refer to Article 102(4) of the Family Code, since it expressly provides that for purposes of computing the net profits subject to forfeiture under Article 43, No. (2) and Article 63, No. (2), Article 102(4) applies. In this provision, net profits "shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution." 72 Thus, without any iota of doubt, Article 102(4) applies to both the dissolution of the absolute community regime under Article 102 of the Family Code, and to the dissolution of the conjugal partnership regime under Article 129 of the Family Code. Where lies the difference? As earlier shown, the difference lies in the processes used under the dissolution of the absolute community regime under Article 102 of the Family Code, and in the processes used under the dissolution of the conjugal partnership regime under Article 129 of the Family Code. Let us now discuss the difference in the processes between the absolute community regime and the conjugal partnership regime. On Absolute Community Regime: When a couple enters into a regime of absolute community , the husband and the wife becomes joint owners ofall the properties of the marriage. Whatever property each spouse brings into the marriage, and those acquired during the marriage (except those excluded under Article 92 of the Family Code) form the common mass of the couple's properties. And when the couple's marriage or community is dissolved, that common mass is divided between the spouses, or their respective heirs, equally or in the proportion the parties have established, irrespective of the value each one may have originally owned.73 Under Article 102 of the Family Code, upon dissolution of marriage, an inventory is prepared, listing separately all the properties of the absolute community and the exclusive properties of each; then the debts and obligations of the absolute community are paid out of the absolute community's assets and if the community's properties are insufficient, the separate properties of each of the couple will be solidarily liable for the unpaid balance. Whatever is left of the separate properties will be delivered to each of them. The net remainder of the absolute community is its net assets, which shall be divided between the husband and the wife; and for purposes of computing the net profits subject to forfeiture, said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution. 74 Applying Article 102 of the Family Code, the "net profits" requires that we first find the market value of the properties at the time of the community's dissolution. From the totality of the market value of all the properties, we subtract the debts and obligations of the absolute community and this result to the net assets or net remainder of the properties of the absolute community, from which we deduct the market value of the properties at the time of marriage, which then results to the net profits.75 Granting without admitting that Article 102 applies to the instant case, let us see what will happen if we apply Article 102:

(a) According to the trial court's finding of facts, both husband and wife have no separate properties, thus, the remaining properties in the list above are all part of the absolute community. And its market value at the time of the dissolution of the absolute community constitutes the "market value at dissolution." (b) Thus, when the petitioner and the respondent finally were legally separated, all the properties which remained will be liable for the debts and obligations of the community. Such debts and obligations will be subtracted from the "market value at dissolution." (c) What remains after the debts and obligations have been paid from the total assets of the absolute community constitutes the net remainder or net asset. And from such net asset/remainder of the petitioner and respondent's remaining properties, the market value at the time of marriage will be subtracted and the resulting totality constitutes the "net profits." (d) Since both husband and wife have no separate properties, and nothing would be returned to each of them, what will be divided equally between them is simply the "net profits." However, in the Decision dated October 10, 2005, the trial court forfeited the half-share of the petitioner in favor of his children. Thus, if we use Article 102 in the instant case (which should not be the case), nothing is left to the petitioner since both parties entered into their marriage without bringing with them any property. On Conjugal Partnership Regime: Before we go into our disquisition on the Conjugal Partnership Regime, we make it clear that Article 102(4) of the Family Code applies in the instant case for purposes only of defining "net profit ." As earlier explained, the definition of "net profits" in Article 102(4) of the Family Code applies to both the absolute community regime and conjugal partnership regime as provided for under Article 63, No. (2) of the Family Code, relative to the provisions on Legal Separation. Now, when a couple enters into a regime of conjugal partnership of gains under Article 142 of the Civil Code, "the husband and the wife place in common fund the fruits of their separate property and income from their work or industry, and divide equally, upon the dissolution of the marriage or of the partnership, the net gains or benefits obtained indiscriminately by either spouse during the marriage." 76 From the foregoing provision, each of the couple has his and her own property and debts. The law does not intend to effect a mixture or merger of those debts or properties between the spouses. Rather, it establishes a complete separation of capitals. 77 Considering that the couple's marriage has been dissolved under the Family Code, Article 129 of the same Code applies in the liquidation of the couple's properties in the event that the conjugal partnership of gains is dissolved, to wit: Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply: (1) An inventory shall be prepared, listing separately all the properties of the conjugal partnership and the exclusive properties of each spouse. (2) Amounts advanced by the conjugal partnership in payment of personal debts and obligations of either spouse shall be credited to the conjugal partnership as an asset thereof. (3) Each spouse shall be reimbursed for the use of his or her exclusive funds in the acquisition of property or for the value of his or her exclusive property, the ownership of which has been vested by law in the conjugal partnership. (4) The debts and obligations of the conjugal partnership shall be paid out of the conjugal assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties, in accordance with the provisions of paragraph (2) of Article 121. (5) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them. (6) Unless the owner had been indemnified from whatever source, the loss or deterioration of movables used for the benefit of the family, belonging to either spouse, even due to fortuitous event, shall be paid to said spouse from the conjugal funds, if any. (7) The net remainder of the conjugal partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code. (8) The presumptive legitimes of the common children shall be delivered upon the partition in accordance with Article 51. (9) In the partition of the properties, the conjugal dwelling and the lot on which it is situated shall, unless otherwise agreed upon by the parties, be adjudicated to the spouse with whom the majority of the common children choose to remain. Children below the age of seven years are deemed to have chosen the mother, unless the court has decided otherwise. In case there is no such majority, the court shall decide, taking into consideration the best interests of said children. In the normal course of events, the following are the steps in the liquidation of the properties of the spouses: (a) An inventory of all the actual properties shall be made, separately listing the couple's conjugal properties and their separate properties.78 In the instant case, the trial court found that the couple has no separate properties when they married.79 Rather, the trial court identified the following conjugal properties, to wit: 1. coffee mill in Balongagan, Las Nieves, Agusan del Norte; 2. coffee mill in Durian, Las Nieves, Agusan del Norte; 3. corn mill in Casiklan, Las Nieves, Agusan del Norte; 4. coffee mill in Esperanza, Agusan del Sur; 5. a parcel of land with an area of 1,200 square meters located in Tungao, Butuan City; 6. a parcel of agricultural land with an area of 5 hectares located in Manila de Bugabos, Butuan City; 7. a parcel of land with an area of 84 square meters located in Tungao, Butuan City; 8. Bashier Bon Factory located in Tungao, Butuan City. 80 (b) Ordinarily, the benefit received by a spouse from the conjugal partnership during the marriage is returned in equal amount to the assets of the conjugal partnership; 81 and if the community is enriched at the expense of the separate properties of either spouse, a restitution of the value of such properties to their respective owners shall be made. 82 (c) Subsequently, the couple's conjugal partnership shall pay the debts of the conjugal partnership; while the debts and obligation of each of the spouses shall be paid from their respective separate properties. But if the conjugal partnership is not sufficient to pay all its debts and obligations, the spouses with their separate properties shall be solidarily liable. 83 (d) Now, what remains of the separate or exclusive properties of the husband and of the wife shall be returned to each of them.84 In the instant case, since it was already established by the trial court that the spouses have no separate properties,85 there is nothing to return to any of them. The listed properties above are considered part of the conjugal partnership. Thus, ordinarily, what remains in the above-listed properties should be divided equally between the spouses and/or their respective heirs.86However, since the trial court found the petitioner the guilty party, his share from the net profits of the conjugal partnership is forfeited in favor of the common children, pursuant to Article 63(2) of the Family Code. Again, lest we be confused, like in the absolute community regime, nothing will be returned to the guilty party in the

conjugal partnership regime, because there is no separate property which may be accounted for in the guilty party's favor. In the discussions above, we have seen that in both instances, the petitioner is not entitled to any property at all. Thus, we cannot but uphold the Decision dated October 10, 2005 of the trial court. However, we must clarify, as we already did above, the Order dated January 8, 2007. WHEREFORE, the Decision dated October 10, 2005 of the Regional Trial Court, Branch 1 of Butuan City is AFFIRMED. Acting on the Motion for Clarification dated July 7, 2006 in the Regional Trial Court, the Order dated January 8, 2007 of the Regional Trial Court is hereby CLARIFIED in accordance with the above discussions. SO ORDERED. BIENVENIDO L. REYES Associate Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 187316 July 16, 2012 WONDER BOOK CORPORATION, Petitioner, vs. PHILIPPINE BANK OF COMMUNICATIONS, Respondent. DECISION REYES, J.: This is a petition for review under Rule 45 of the Rules of Court assailing the Decision 1 dated March 25, 2009 of the Court of Appeals ( CA) in CA-G.R. SP No. 102860, which reversed and set aside the Order 2 dated February 15, 2008 of Branch 21 of the Regional Trial Court (RTC) of Imus, Cavite in SEC Case No. 058-06 upon a petition for review tiled by respondent Philippine Bank of Communications (PBCOM). Factual Antecedents The facts are undisputed. Petitioner Wonder Book Corporation (Wonder Book) is a corporation duly organized and existing under Philippine laws engaged in the business of retailing books, school and office supplies, greeting cards and other related items. It operates the chain of stores known as the Diplomat Book Center. On February 27, 2004, Wonder Book and eight (8) other corporations, 3 collectively known as the Limtong Group of Companies (LGC), filed a joint petition for rehabilitation with the RTC. The petition was docketed as SEC Case No. 03104 and raffled to Branch 21. On March 2, 2004, a Stay Order4 was issued. On April 30, 2004, Equitable PCI Bank (EPCI Bank), one of the creditors of LGC, filed an opposition raising, among others, the impropriety of nine (9) corporations with separate and distinct personalities seeking joint rehabilitation under one proceeding.5 On February 9, 2005, the RTC issued an Order 6 approving the petition for rehabilitation, the dispositive portion of which states: CONSIDERING THE FOREGOING, the Court hereby approves the Rehabilitation Plan of the LGC thereby granting the LGC a moratorium of two (2) years from today in the payment of all its obligations, together with the corresponding interests, to its creditor banks, subject to the modification that the interest charges shall be reduced to 5% per annum. After the two-year grace period, the LGC shall commence to pay its existing obligations with its creditor banks monthly within a period of fifteen (15) years. LGC are enjoined to comply strictly with the provisions of the Rehabilitation Plan, perform its obligations thereunder and take all actions necessary to carry out the Plan, failing which, the Court shall either, upon motion, motu proprio or upon recommendation of the Rehabilitation Receiver, terminate the proceedings pursuant to Section 27, Rule 1 of the Interim Rules of Procedure on Corporate Rehabilitation. The Rehabilitation Receiver is directed to strictly monitor the implementation of the Plan and submit a quarterly report on the progress thereof. SO ORDERED.7 The foregoing was questioned by EPCI Bank and PBCOM before the CA by way of a petition for review. EPCI Banks petition8 was docketed as CA-G.R. SP No. 89461 and raffled to the Third Division. PBCOMs petition 9 was docketed as CA-G.R. SP No. 89507 and raffled to the Eight Division. On October 25, 2005, the CA rendered a Decision 10 granting EPCI Banks petition. The CA reversed the Order dated February 9, 2005 of the RTC and dismissed LGCs petition for rehabilitation. LGC filed a petition for review on certiorari with this Court, which was later withdrawn. On the other hand, PBCOMs petition was denied by the CA in a Decision 11 dated January 16, 2008. The denial became final as PBCOM did not move for reconsideration or interpose an appeal to this Court. 12 Meantime, on September 5, 2006, Wonder Book filed a petition for Rehabilitation 13 with the RTC, which was docketed as SEC Case No. 058-06 and raffled to Branch 21. Wonder Book cited the following as causes for its inability to pay its debts as they fall due: (a) high interest rates, penalties and charges imposed by its creditors; (b) low demand for gift items and greeting cards due to the widespread use of cellular phones and economic recession; (c) competition posed by other stores; and (d) the fire on July 19, 2002 that destroyed its inventories worth P264 Million, which are insured for P245 Million but yet to be collected.14 Wonder Books rehabilitation plan put forward a payment program that guaranteed full payment of its loan from PBCOM after fifteen (15) years at a reduced interest rate of five percent (5%) per annum with a waiver of all penalties and moratorium on interest and principal payments for two (2) years and five (5) years, respectively, that will be counted from the courts approval. Wonder Book proposed to pay its trade creditors and the interest that will accrue during the two-year moratorium within ten (10) years from the approval of its rehabilitation plan. 15Further, it committed to: (a) convert all deposits for future subscriptions to common stock; (b) treat all its liabilities to its officers and stockholders as trade payables; (c) infuse an additional capital of P10 Million; and (d) use 70% and 30% of its unpaid insurance claim for the payment of its debts and capital infusion, respectively. 16 The RTC issued a Stay Order17 on September 5, 2006. PBCOM filed an Opposition18 dated October 18, 2006 stating that: (a) Wonder Books petition cannot be granted on the basis of proposals that are vague and anchored on baseless presumptions; (b) it is clear from Wonder Books financial

statements that it is insolvent and can no longer be rehabilitated; (c) Wonder Books proposed capital infusion is speculative at best, as there is no reasonable expectation that it will be paid under the insurance covering the inventory that was destroyed by fire on July 19, 2002; (d) Wonder Book failed to present an alternative funding for its capital infusion should its insurance claim fail to materialize; (e) Wonder Book failed to specify how its proposed sales, marketing and production strategies would be carried out; (f) Wonder Book failed to specify its underpinnings for its claim that these strategies would certainly lead to its expected rate of profitability; and (g) Wonder Books proposed payment program is too onerous. On September 17, 2007, Wonder Book filed what it described as its detailed rehabilitation plan. 19 Wonder Book maintained its proposed term of fifteen (15) years and reduced interest rate of 5% per annum. However, it shortened the period on the suspension of principal payments from five (5) to three (3) years and extended the moratorium on interest payment from two (2) to three (3) years. It also lengthened the period for the payment of interest that will accrue during the stay from ten (10) to twelve (12) years and proffered a waiver of penalties and interest from February 2004 up to the courts approval of its rehabilitation plan.20 Wonder Book likewise intimated the sale of some real properties owned by TOL Realty and Development Corporation (TOL), an affiliate that is likewise undergoing rehabilitation and similarly indebted to PBCOM. The proceeds of such sale will be used for the payment of TOLs debt to PBCOM and any excess will be used to settle Wonders Book debt to PBCOM.21 Wonder Book limited its commitments to the conversion of deposits for future subscriptions to common stock and treatment of its payables to its officers and stockholders as trade payables. 22 Wonder Book undertook to implement the following changes in its internal operations by: (a) changing the name "Diplomat Book Center" to one more appropriate for a bookstore and retailer of office and school supplies; (b) closing down nonperforming branches and opening new stores in areas with high human traffic; (c) improving product display and variety; (d) investing in technology to properly monitor sales and manage inventory; (e) launching customer loyalty program; (f) allocating three percent (3%) of total sales to advertising and promotions; (g) strengthening its organization by improving its hiring, training and incentive programs; and (h) carrying its own brand of products. 23 Wonder Books expects to accomplish the foregoing on capital from investors and sales during the three-year moratorium. 24 On February 15, 2008, the RTC issued an Order, approving Wonder Books rehabilitation plan, the dispositive portion of which states: CONSIDERING THE FOREGOING, the Court hereby approves the Detailed Rehabilitation Plan, together with the receivers report and recommendation and its clarifications and corrections and enjoins the petitioner to strictly comply with the provisions of the plan, perform its obligations thereunder and take all actions necessary to carry out the plan, failing which, the Court shall either, upon motion, motu proprio or upon the recommendation of the Rehabilitation Receiver, terminate the proceedings pursuant to Section 27, Rule 1 of the Interim Rules of Procedure on Corporate Rehabilitation. The Rehabilitation Receiver is directed to strictly monitor the implementation of the Plan and submit a quarterly report on the progress thereof. SO ORDERED.25 (Citation omitted) PBCOM filed a petition for review 26 of the approval of Wonder Books rehabilitation plan, which the CA granted in a Decision27 dated March 25, 2009. According to the CA, Wonder Books financial statements reveal that it is not merely illiquid but in a state of insolvency: A perusal of the interim financial statement of Wonder Book as of August 2006 will readily show that Wonder Book is not merely having liquidity problems, but it is actually in a state of serious insolvency. It should be noted that this fact was never denied by Wonder Book. The RTC even mentioned in its order that as of August 2006, the total assets of Wonder Book is only P144,922,218.00 whereas its liabilities totaled to P306,141,399.00. In effect, the debt ratio of Wonder Book is 2.11 to 1. This means that Wonder Book has P2.11 pesos in debt for every peso of asset. Obviously, Wonder Book is in terrible financial condition as it does not have enough assets to pay its obligations. For a good financial status, the total debt ratio should be 1 or less.28 (Citation omitted) The CA noted that Wonder Book failed to support its petition with reassuring "material financial commitments", which is a requirement under Section 5 of the 2000 Interim Rules on Corporate Rehabilitation (Interim Rules): Indeed, page 7 of the assailed order provides the following: "Wonder Book will commit an additional amount of P10 Million as working capital. If the insurance claim in the amount of P245 Million will be collected, 70% or the amount of P171,500,000.00 shall be used to pay existing debts and 30% shall be used as additional working capital. The stockholders agreed that no dividends will be paid within the rehabilitation period. The directors and shareholders of Wonder Book are so fully committed to rehabilitate the corporation that they have committed to convert their deposit for future subscription to common stock. The company is highly confident that the financing will be made available by its investors once the rehabilitation plan is given green light by the court. Its financial plan does not take into consideration the possibility of sourcing funds outside internally generated cash nor the entry of strategic investors who have expressed interest in the completion of the project and assist in rehabilitating the corporation." We note, however, that the foregoing statements were mentioned in Wonder Books original rehabilitation plan but were no longer restated in its detailed rehabilitation plan, which was the one approved by the RTC. True enough, the commitment of Wonder Book to put up additional P10 Million as working capital was not reflected in the projected balance sheet of Wonder Book. There was also no mention about the expected insurance claim in the amount of P245 Million whereby 70% thereof or the amount of P171,500,000.00 should be used to pay existing debts and the remaining 30% shall be used as additional working capital. As a matter of fact, a full-allowance for non-recovery of said insurance claim was already provided by Wonder Book because the latter believed that it could no longer be recovered. It may be observed that the detailed rehabilitation plan merely provided for two management commitments, such as, (1) all deposits for future subscriptions by the officers and directors will be converted to common stock and (2) all liabilities (cash advances made by the stockholders (sic) to the corporation) of the company from the officers and stockholders shall be treated just like trade payable. But these could hardly be considered as "material financial commitments" that would support Wonder Books rehabilitation plan. The first commitment was not even shown in the projected balance sheet of Wonder Book. The subscribed and paid-up capital of Wonder Book remained at P4,500,000.00 even at the end of the 15th year from the approval of the rehabilitation plan. Even so, the deposits for future subscription is (sic) only

P319,000.00, which is very significant vis--vis Wonder Books capital deficiency of P161,219,121.00 as of August 2006. x x x29 (Citations omitted) The CA also noted that Wonder Books expected profits during the rehabilitation period are not sufficient to cover its liabilities and reverse its dismal financial state: A careful examination of the projected balance sheet and income statement of Wonder Book for the period of rehabilitation reveals that while Wonder Book will be earning, the same will not be sufficient to cover its accumulated losses. At the 15th year, its profit margin will be only 2.9% (P3,785,000.00/[P]466,277,000.00). This tells us that for every peso in sales, Wonder Book will be generating 3 centavos net profit, which is most insubstantial to cover up its ending deficit of P50,960,000.00. Thus, at the end of the rehabilitation period, though Wonder Book will be able to fully pay its obligation to PBCOM, it will remain insolvent. It would still have a capital deficiency of P46,142,000.00. Its total assets will be only P196,515,000.00 whereas its total liabilities will still be P242,657,000.00. Consequently, its debt ratio would remain high, at 1.23 to 1. It would have P1.23 pesos in debt for every peso of asset. Furthermore, liquidity problems would still exist because on the 15th year, its current ratio would be 0.9353 to 1 (P83,339,000.00/P89,104,000.00), meaning Wonder Book would only have 0.9353 cents to meet every peso of its current liabilities. x x x 30 (Citations omitted) Wonder Book instituted the present petition claiming that the CA erred in dismissing its petition for rehabilitation. The CA allegedly has no basis in concluding that Wonder Book is insolvent, hence, incapable of being rehabilitated considering that: (a) P162,286,966.00 of its total liabilities in the amount of P286,944,120.00 represents advances or loans extended by affiliates that are not due and demandable during the period of rehabilitation; (b) the prevailing rules do not preclude a corporation who is insolvent from seeking rehabilitation; (c) there is nothing in the rules that specify a parameter for classifying a debt as sustainable or not, hence, its apparent insolvency should not be a determinant of the feasibility of its rehabilitation; (d) one of its shareholders paid a supplier the amount of P13,600,000.00, thus, ensuring the continuous supply of products for sale, and was willing to postpone collection until Wonder Book is successfully rehabilitated;31 (e) its suppliers have agreed to supply products on credit and this indicates their faith in the feasibility of the proposed rehabilitation plan; 32 and (f) the payment posted by one of its stockholders was more than enough to cover the promised capital infusion of P10,000,000.00. Our Ruling The sole issue is whether Wonder Books petition for rehabilitation is impressed with merit and this Court rules in the negative. I Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. The purpose of rehabilitation proceedings is to enable the company to gain a new lease on life and thereby allow creditors to be paid their claims from its earnings. The rehabilitation of a financially distressed corporation benefits its employees, creditors, stockholders and, in a larger sense, the general public.33 Rehabilitation proceedings in our jurisdiction, much like the bankruptcy laws of the United States, have equitable and rehabilitative purposes. On one hand, they attempt to provide for the efficient and equitable distribution of an insolvent debtors remaining assets to its creditors; and on the other, to provide debtors with a "fresh start" by relieving them of the weight of their outstanding debts and permitting them to reorganize their affairs. The rationale of Presidential Decree No. 902-A, as amended, is to "effect a feasible and viable rehabilitation," by preserving a floundering business as going concern, because the assets of a business are often more valuable when so maintained than they would be when liquidated.34 Under Section 23, Rule 4 of the Interim Rules, a rehabilitation plan may be approved if there is a showing that rehabilitation is feasible and the opposition entered by the creditors holding a majority of the total liabilities is unreasonable. In determining whether the objections to the approval of a rehabilitation plan are reasonable or otherwise, the court has the following to consider: (a) that the opposing creditors would receive greater compensation under the plan than if the corporate assets would be sold; (b) that the shareholders would lose their controlling interest as a result of the plan; and (c) that the receiver has recommended approval. Rehabilitation is therefore available to a corporation who, while illiquid, has assets that can generate more cash if used in its daily operations than sold. Its liquidity issues can be addressed by a practicable business plan that will generate enough cash to sustain daily operations, has a definite source of financing for its proper and full implementation, and anchored on realistic assumptions and goals. This remedy should be denied to corporations whose insolvency appears to be irreversible and whose sole purpose is to delay the enforcement of any of the rights of the creditors, which is rendered obvious by the following: (a) the absence of a sound and workable business plan; (b) baseless and unexplained assumptions, targets and goals; (c) speculative capital infusion or complete lack thereof for the execution of the business plan; (d) cash flow cannot sustain daily operations; and (e) negative net worth and the assets are near full depreciation or fully depreciated. In China Banking Corporation v. Cebu Printing and Packaging Corporation, 35 this Court declared that Cebu Printing and Packaging Corporation can no longer be rehabilitated given its patent insolvency that appeared irremediable because of the unfounded projections on profitability: The RTC found CEPRI to be in the state of insolvency which precludes it from being entitled to rehabilitation. The findings of fact of the RTC must be given respect as it is clear and categorical in ruling that CEPRI is not merely in the state of illiquidity, but in an apparent state of insolvency. There is nothing more detailed than the contents of the said Order, which reads, in part: "After the aforesaid initial hearing, this Court made a careful and judicious scrutiny and evaluation as to whether the petition for rehabilitation filed by the petitioner is impressed with merit or not. Up to this time, this Court is not satisfied that there is merit in the said petition. Foremost of all, it appears that the petitioner does not really have enough assets, net worth and earning to meet and settle its outstanding liabilities. As stated by it in paragraph 7.8 of the petition, it has outstanding liabilities in the aggregate sum of P69,539,903.57 to the Bank of Philippine Islands and China Banking Corporation. These major liabilities are broken down as follows: P20,230,000.00 to BPI and P49,309,903.57 to China Banking Corporation as of December 31, 2001. There is a strong probability that these may still increase substantially after December 31, 2001. However, the petitioner has relatively less assets to answer for these liabilities. As historically shown by its audited financial statements, the petitioners assets from 1990 to 2000 were only worth as follows: P352,222.40 in 1990 (Exhibit K), P452,723.33 in 1991 (Exhibit K), P569,948.19 in 1992 (Exhibit L), P787,300.65 in 1993 (Exhibit M), P761,310.69 in 1994 (Exhibit N), P3,042,411.81 in 1995 (Exhibit O), P5,608,866.70 in 1996 (Exhibit P), P8,100,022.81 in 1997 (Exhibit Q), P10,007,490.26

in 1998 (Exhibit R), P10,905,649.83 in 1999 (Exhibit S) and P11,615,251.75 in 2000 (Exhibit T). x x x For all intents and purposes, it can thus be said that the petitioner was not actually better off in terms of its assets and equity in 2001 than in 2000. In view thereof, this Court concurs with the oppositor, China Banking Corporation, that the petitioner is actually now in a state of insolvency, not illiquidity. In other words, it cannot be the proper subject of rehabilitation. Secondly, this Court is not really prepared to give full faith to the financial projections of the petitioner (Annex H-1 of the petition). The assumption that petitioners gross sales will increase by 25% to 30% within the next five years is without adequate basis. It is too speculative and unrealistic. It is not borne by petitioners historical operations. Neither is it borne by an objective industry forecast. It is even belied by the Packaging Industry Profile prepared by the DTI Cebu Provincial Office which the petitioner submitted to this Court (Exhibit U). In said Packaging Industry Profile, it is categorically and explicitly stated that "packaging demand is projected by the Strategic Industry Research and Analysis (SIRA) to increase only by around 4.7% compound per annum over the period 1997-2003." And so, there is actually no faithful and adequate showing by the petitioner that it has ample capacity to pay its outstanding and overdue loans to its major creditors such as the BPI and China Banking Corporation, even if it be given a breathing spell. x x x." 36 (Citation omitted) This Court finds no reason to accord a different treatment to Wonder Book. The figures appearing on Wonder Books financial documents and the nature and value of its assets are indeed discouraging. First, as of August 2006, Wonder Books total assets are worth P144,922,218.00 and its total liabilities amount to P306,141,399.00 and this is a clear evidence of its actual insolvency, not mere illiquidity, and dispossession of financial leverage. Second, bulk or approximately seventy-two percent (72%) of its current assets consists of inventories 37 and the average turn-over rate is seventy-three (73) days, hence, cannot be relied on for a quick cash flow. Third, a majority or seventy-seven percent (77%) of its non-current assets is comprised of deferred tax assets 38 or taxes that have been paid on income that have not yet been reported, hence, may only be used to decrease future tax liability but not for the increase of capital, the finance of operations or the purchase of an asset. Fourth, its property and equipment comprise only two percent (2%) of its noncurrent assets. Apart from the fact that these consist largely of personal properties computers and store equipment that are certain to depreciate over time, there is no evidence that the valuation assigned to them by Wonder Book is attributable to an independent third-party appraiser. There is likewise no mention of their actual market values as, more often than not, they will be sold for less than their book value. In other words, rehabilitation is not the proper remedy for Wonder Books dire financial condition. Given that it is actually insolvent and not just suffering from temporary liquidity problems, rehabilitation is not a viable option. II Another reason for this Courts denial of Wonder Books petition is its failure to comply with Section 5 of the Interim Rules, which enumerates the minimum requirements of an acceptable rehabilitation plan: Sec. 5. Rehabilitation Plan. The rehabilitation plan shall include: (a) the desired business targets or goals and the duration and coverage of the rehabilitation; (b) the terms and conditions of such rehabilitation which shall include the manner of its implementation, giving due regard to the interests of secured creditors; (c) the material financial commitments to support the rehabilitation plan; (d) the means for the execution of the rehabilitation plan, which may include conversion of the debts or any portion thereof to equity, restructuring of the debts, dacion en pago, or sale of assets or of the controlling interest; (e) a liquidation analysis that estimates the proportion of the claims that the creditors and shareholders would receive if the debtors properties were liquidated; and (f) such other relevant information to enable a reasonable investor to make an informed decision on the feasibility of the rehabilitation plan. It is imperative for a distressed corporation seeking rehabilitation to present "material financial commitments" as this is critical in determining its resolve, determination, earnestness and good faith in financing its proposed rehabilitation plan. As discussed above, Wonder Books "material financial commitments" are limited to converting all deposits for future subscriptions to common stock and treating all its payables to its officers and stockholders as trade payables. These, unfortunately, do not qualify as sincere commitment and even betray Wonder Books intent to fund the implementation of its rehabilitation plan using whatever cash it will generate during the reprieve provided by the stay order and the moratorium on the principal and interest payments. This scheme is certainly unfair as PBCOM or any of Wonder Books creditors cannot be compelled to finance Wonder Books rehabilitation by a delay in the payment of their claims or a considerable reduction in the amounts thereof. Apart from the fact that the deposits for future subscriptions in the amount of P319,000.00 39 is insignificant as compared to Wonder Books capital deficiency of P161,219,121.00, 40 its projected balance sheet reveals that Wonder Book has no intention to carry out this commitment. No adjustment in its paid-up capital is reflected in the balance sheet attached to Wonder Books rehabilitation plan as the amount thereof is consistently pegged at P4,500,000.00 until the end of the rehabilitation period. Indeed, this commitment is far from being "material" as it will not even create a dent on Wonder Books capital deficit. Furthermore, it will not qualify as a "commitment" and is, in fact, a mere artifice, as Wonder Books balance sheet unequivocally demonstrates. On the other hand, treating its debts to its stockholders and officers as trade payables only signifies that no priority in payment will be accorded to them but this does not provide Wonder Book with the means to finance the activities supposedly ensuring its successful rehabilitation. While Wonder Book mentioned that there are individuals who have expressed their interest in investing and financing its business plans, their identities were not disclosed nor were the evidence of the existence of these funds proved. It was alleged before this Court that one of its stockholders paid the amount of P13,600,000.00 to one of Wonder Books suppliers and this constitutes sufficient compliance with the commitment of substantial capital infusion. However, apart from being belated, uncorroborated and unreflected in Wonder Books rehabilitation plan and balance sheet, this supposed payment will not do wonders to change the undisputed fact that Wonder Book will still be saddled with a deficit of P50,960,000.00 by the end of the fifteen-year period. The foregoing only goes to show that rehabilitation is a vain waste of effort and resources and a mere exercise in futility.1wphi1 Worse, that Wonder Book will still post a negative net worth after its rehabilitation plan is fully implemented suggests that the remedy of rehabilitation is availed without a reasonable expectation that Wonder Book will regain its prior status of viability and profitability but with a mere crapshoot that the value of its present pool of assets will increase during the rehabilitation period. Given Wonder Books admission that fifteen (15) years do not suffice for it to register a positive net worth, it is logical to assume that the only thing the stockholders are gunning for is the recovery of their investments or a portion thereof after the corporate debts are satisfied from the liquidation of the corporate assets. This Court cannot sanction such a selfish venture. While there is no absolute certainty in rehabilitation, the sacrifice that the creditors are compelled to make can only be considered justified if the restoration of the corporations former state of

solvency is feasible due to a sound business plan with an assured funding. Such cannot be said in this case, hence, PBCOMs skepticism is not unfounded. The RTCs approval of the subject rehabilitation plan is heavily premised on the collection of Wonder Books insurance claim and the conversion of the deposit for future subscription to common stocks. However, Wonder Book has already admitted the impossibility of being paid by reducing its two (2) commitments discussed above and by writing-off this receivable from its balance sheet. A cursory examination of Wonder Books balance sheet reveals its lack of sincerity insofar as these two (2) commitments are concerned and this should have been enough for the RTC to dismiss Wonder Books attempt at rehabilitation. Wonder Books undertaking to fully pay its debts through sales, which it expected to increase by ten percent (10%) annually during the period it is under rehabilitation, hardly inspires belief. No basis was provided for this presumptive figure such as forecasts of independent industry analysts. In fact, even Wonder Books performance in previous years does not indicate that its sales grow annually at such rate. Wonder Book also failed to explain its favorable assumptions relative to its future market share and ability to contend with large-scale corporations when it cited the competition posed by the latter as one of the reasons for its monumental losses. Notably, the proposed changes in Wonder Books internal operations are far from being innovative and merely imitate the business plans of its successful competitors. Wonder Book did not explain why it assumed that the consumers would shift their loyalties in its favor. Wonder Book alleged that it posted pre-tax income of P1,167,765.00 and P826,714.00 in 2007 and 2008. In its rehabilitation plan, which it submitted for approval in 2007 and approved in 2008, Wonder Book projected that it will earn the following pre-tax income during the first five (5) years of rehabilitation: 1st 2nd 3rd 4th 5th

P4,958,000.00 P5,804,000.00 P5,934,000.00 P6,367,000.00 P6,616,000.00 Apart from the fact that Wonder Book's actual income does not even approximate its projected income, there was even a plunge in its earnings for two (2) successive years belying its anticipated annual growth rate of ten percent (I 0%). Wonder Book is therefore mistaken in interpreting its actual income for 2007 and 2008 as a positive indicator of its viability and fitness for rehabilitation. On the contrary, it validates the doubtful stance taken by PBCOM and the CA that Wonder Book can no longer rise from its financial debacles even if granted a lengthy respite. WHEREFORE, premises considered, the petition is DENIED and the Decision dated March 25, 2009 of the Court of Appeals in CA-G.R. SP No. 102860 is AFFIRMED. SO ORDERED. BIENVENIDO L. REYES Associate justice Republic of the Philippines SUPREME COURT Baguio City SECOND DIVISION G.R. No. 189434 April 25, 2012 FERDINAND R. MARCOS, JR. Petitioner, vs. REPUBLIC OF THE PHILIPPINES, represented by the Presidential Commission on Good Government, Respondent. x-----------------------x G.R. No. 189505 IMELDA ROMUALDEZ-MARCOS, Petitioner, vs. REPUBLIC OF THE PHILIPPINES, Respondent. DECISION SERENO, J.: These two consolidated Petitions filed under Rule 45 of the 1997 Rules of Civil Procedure pray for the reversal of the 2 April 2009 Decision of the Sandiganbayan in Civil Case No. 0141 entitled Republic of the Philippines v. Heirs of Ferdinand E. Marcos and Imelda R. Marcos. 1 The anti-graft court granted the Motion for Partial Summary Judgment filed by respondent Republic of the Philippines (Republic) and declared all assets and properties of Arelma, S.A., an entity created by the late Ferdinand E. Marcos, forfeited in favor of the government. On 17 December 1991, the Republic, through the Presidential Commission on Good Government (PCGG), filed a Petition for Forfeiture2 before the Sandiganbayan pursuant to the forfeiture law, Republic Act No. 1379 (R.A. 1379) 3 in relation to Executive Order Nos. 1, 2 and 14.4 The petition was docketed as Civil Case No. 0141. Respondent Republic, through the PCGG and the Office of the Solicitor General (OSG), sought the declaration of Swiss bank accounts totaling USD 356 million (now USD 658 million), and two treasury notes worth USD 25 million and USD 5 million, as ill-gotten wealth.5 The Swiss accounts, previously held by five groups of foreign foundations, 6 were deposited in escrow with the Philippine National Bank (PNB), while the treasury notes were frozen by the Bangko Sentral ng Pilipinas (BSP). Respondent also sought the forfeiture of the assets of dummy corporations and entities established by nominees of Marcos and his wife, Petitioner Imelda Romualdez-Marcos, as well as real and personal properties manifestly out of proportion to the spouses lawful income. This claim was based on evidence collated by the PCGG with the assistance of the United States Justice Department and the Swiss Federal Police Department. 7 The Petition for Forfeiture described among others, a corporate entity by the name "Arelma, Inc.," which maintained an account and portfolio in Merrill Lynch, New York, and which was purportedly organized for the same purpose of hiding ill-gotten wealth. 8 Before the case was set for pretrial, the Marcos children and PCGG Chairperson Magtanggol Gunigundo signed several Compromise Agreements (a General Agreement and Supplemental Agreements) all dated 28 December 1993 for a global settlement of the Marcos assets. One of the "whereas" clauses in the General Agreement specified that the Republic "obtained a judgment from the Swiss Federal Tribunal on December 21, 1990, that the Three Hundred Fifty-six Million U.S. dollars (USD 356 million) belongs in principle to the Republic of the Philippines provided certain conditionalities are met xxx." This Decision was in turn based on the finding of Zurich District Attorney Peter Cosandey that the deposits in the name of the foundations were of illegal provenance. 9

On 18 October 1996, respondent Republic filed a Motion for Summary Judgment and/or judgment on the pleadings (the 1996 Motion) pertaining to the forfeiture of the USD 356 million. The Sandiganbayan denied the 1996 Motion on the sole ground that the Marcoses had earlier moved for approval of the Compromise Agreements, and that this latter Motion took precedence over that for summary judgment. Petitioner Imelda Marcos filed a manifestation claiming she was not a party to the Motion for Approval of the Compromise Agreements, and that she owned 90% of the funds while the remaining 10% belonged to the Marcos estate.10 On 10 March 2000, the Republic filed another Motion for Summary Judgment (the 2000 Motion), based on the grounds that: (1) the essential facts that warrant the forfeiture of the funds subject of the Petition under R.A. 1379 are admitted by respondents in their pleadings and other submissions; and (2) the respondent Marcoses pretrial admission that they did not have any interest or ownership over the funds subject of the action for forfeiture tendered no genuine issue or controversy as to any material fact. In a 19 September 2000 Decision, the Sandiganbayan initially granted the 2000 Motion, declaring that the Swiss deposits held in escrow at the PNB were ill-gotten wealth, and, thus, forfeited in favor of the State. 11 In a Resolution dated 31 January 2002, the Sandiganbayan reversed its earlier ruling and denied the 2000 Motion. Alleging grave abuse of discretion on the part of the court in rendering the later Resolution, the Republic filed a Petition for Certiorari with the Supreme Court. In G.R. No. 152154 entitled Republic of the Philippines v. Sandiganbayan (for brevity, the "Swiss Deposits Decision"),12 this Court set aside the 31 January 2002 Sandiganbayan Resolution and reinstated the 19 September 2000 Decision, including the declaration that the Swiss deposits are ill-gotten wealth. On 18 November 2003, the Court denied with finality petitioner Marcoses Motion for Reconsideration. On 16 July 2004, the Republic filed a Motion for Partial Summary Judgment (2004 Motion) to declare "the funds, properties, shares in and interests of ARELMA, wherever they may be located, as ill-gotten assets and forfeited in favor of the Republic of the Philippines pursuant to R.A. 1379 in the same manner (that) the Honorable Supreme Court forfeited in favor of the petitioner the funds and assets of similar Marcos foundations such as AVERTINA, VIBUR, AGUAMINA, MALER and PALMY."13 Petitioner contends that: (1) respondents are deemed to have admitted the allegations of the Petition as regards Arelma; and (2) there is no dispute that the combined lawful income of the Marcoses is grossly disproportionate to the deposits of their foundations and dummy corporations, including Arelma. Ferdinand Marcos, Jr., Imelda Marcos, and Imee Marcos-Manotoc filed their respective Oppositions. Irene Marcos-Araneta filed a Motion to Expunge on the ground that the proceedings in Civil Case No. 0141 had already terminated. On 2 April 2009, the Sandiganbayan rendered the assailed Decision granting respondents Motion for Partial Summary Judgment.14 It found that the proceedings in Civil Case No. 0141 had not yet terminated, as the Petition for Forfeiture included numerous other properties, which the Sandiganbayan and Supreme Court had not yet ruled upon. The Republics 1996 Motion was merely held in abeyance to await the outcome of the global settlement of the Marcos assets. Further, this development had prompted the Republic to file the 2000 Motion, which was clearly limited only to the Swiss accounts amounting to USD 356 million. Thus, according to the Sandiganbayan, its 19 September 2000 Decision as affirmed by the Supreme Court in G.R. No. 152154, was in the nature of a separate judgment over the Swiss accounts and did not preclude a subsequent judgment over the other properties subject of the same Petition for Forfeiture, such as those of Arelma.15 The Sandiganbayan held as follows: WHEREFORE, considering all the foregoing, the Motion for Partial Summary Judgment dated July 16, 2004 of petitioner is hereby GRANTED. Accordingly, Partial Summary Judgment is hereby rendered declaring the assets, investments, securities, properties, shares, interests, and funds of Arelma, Inc., presently under management and/or in an account at the Meryll (sic) Lynch Asset Management, New York, U.S.A., in the estimated aggregate amount of US$3,369,975.00 as of 1983, plus all interests and all other income that accrued thereon, until the time or specific day that all money or monies are released and/or transferred to the possession of the Republic of the Philippines, are hereby forfeited in favor of petitioner Republic of the Philippines. SO ORDERED.16 On 22 October 2009, Ferdinand R. Marcos, Jr. filed the instant Rule 45 Petition, questioning the said Decision. 17One week later, Imelda Marcos filed a separate Rule 45 Petition 18 on essentially identical grounds, which was later consolidated with the first Petition. The grievances of both petitioners boil down to the following issues: 1. Whether the forfeiture proceeding, Civil Case No. 0141 with the Sandiganbayan is criminal in nature, such that summary judgment is not allowed; 2. Whether petitioner Republic complied with Section 3, subparagraphs c, d, and e of R.A. 1375; 3. Whether Civil Case No. 0141 has been terminated such that a motion for partial summary judgment may no longer be allowed; and 4. Whether in this case there are genuine, triable issues which would preclude the application of the rule on summary judgment. I. Forfeiture proceedings are civil in nature Petitioner Ferdinand Marcos, Jr. argues that R.A. 1379 is a penal law; therefore a person charged under its provisions must be accorded all the rights granted to an accused under the Constitution and penal laws. 19 He asserts that the Marcoses were entitled to all the substantial rights of an accused, one of these being the right "to present their evidence to a full blown trial as per Section 5 of R.A. 1379." 20 He relies on the 1962 case, Cabal v. Kapunan, 21 where the Court ruled that: We are not unmindful of the doctrine laid down in Almeda vs. Perez, L-18428 (August 30, 1962) in which the theory that, after the filing of respondents' answer to a petition for forfeiture under Republic Act No. 1379, said petition may not be amended as to substance pursuant to our rules of criminal procedure, was rejected by this Court upon the ground that said forfeiture proceeding is civil in nature. This doctrine refers, however, to the purely procedural aspect of said proceeding, and has no bearing on the substantial rights of the respondents therein, particularly their constitutional right against self-incrimination. This argument fails to convince. Petitioner conveniently neglects to quote from the preceding paragraphs of Cabal, which clearly classified forfeiture proceedings as quasi-criminal, not criminal. And even so, Cabal declared that forfeiture cases partake of a quasi-criminal nature only in the sense that the right against self-incrimination is applicable to the proceedings, i.e., in which the owner of the property to be forfeited is relieved from the compulsory production of his books and papers: Generally speaking, informations for the forfeiture of goods that seek no judgment of fine or imprisonment against any person are deemed to be civil proceedings in rem. Such proceedings are criminal in nature to the extent that where the

person using the res illegally is the owner or rightful possessor of it, the forfeiture proceeding is in the nature of a punishment. xxx xxx xxx Proceedings for forfeitures are generally considered to be civil and in the nature of proceedings in rem. The statute providing that no judgment or other proceedings in civil cases shall be arrested or reversed for any defect or want of form is applicable to them. In some aspects, however, suits for penalties and forfeitures are of quasi-criminal nature and within the reason of criminal proceedings for all the purposes of * * * that portion of the Fifth Amendment which declares that no person shall be compelled in any criminal case to be a witness against himself. The proceeding is one against the owner, as well as against the goods; for it is his breach of the laws which has to be proved to establish the forfeiture and his property is sought to be forfeited. xxx xxx xxx As already observed, the various constitutions provide that no person shall be compelled in any criminal case to be a witness against himself. This prohibition against compelling a person to take the stand as a witness against himself applies only to criminal, quasi-criminal, and penal proceedings, including a proceeding civil in form for forfeiture of property by reason of the commission of an offense , but not a proceeding in which the penalty recoverable is civil or remedial in nature. (Emphasis supplied.)22 The right of the Marcoses against self-incrimination has been amply protected by the provisions of R.A. 1379, which prohibits the criminal prosecution of individuals for or on account of any transaction, matter or thing concerning which they are compelled -- after having claimed the privilege against self-incrimination -- to testify or produce evidence, documentary or otherwise.23 Since this cases inception in 1991, petitioners have participated in the hearings, argued their case, and submitted their pleadings and other documents, never once putting at issue their right against self-incrimination or the violation thereof.24 More importantly, the factual context in the present case is wholly disparate from that in Cabal, which was originally initiated as an action in personam. Manuel C. Cabal, then Chief of Staff of the Armed Forces of the Philippines, was charged with "graft, corrupt practices, unexplained wealth, conduct unbecoming of an officer and gentleman, dictatorial tendencies, giving false statements of his assets and liabilities in 1958 and other equally reprehensible acts." 25 In contradistinction, the crux of the present case devolves solely upon the recovery of assets presumptively characterized by the law as ill-gotten, and owned by the State; hence, it is an action in rem. In Republic v. Sandiganbayan, this Court settled the rule that forfeiture proceedings are actions in rem and therefore civil in nature. 26 Proceedings under R.A. 1379 do not terminate in the imposition of a penalty but merely in the forfeiture of the properties illegally acquired in favor of the State.27 As early as Almeda v. Judge Perez, 28 we have already delineated the difference between criminal and civil forfeiture and classified the proceedings under R.A. 1379 as belonging to the latter, viz: "Forfeiture proceedings may be either civil or criminal in nature, and may be in rem or in personam. If they are under a statute such that if an indictment is presented the forfeiture can be included in the criminal case, they are criminal in nature, although they may be civil in form; and where it must be gathered from the statute that the action is meant to be criminal in its nature it cannot be considered as civil. If, however, the proceeding does not involve the conviction of the wrongdoer for the offense charged the proceeding is of a civil nature; and under statutes which specifically so provide, where the act or omission for which the forfeiture is imposed is not also a misdemeanor, such forfeiture may be sued for and recovered in a civil action." In the first place a proceeding under the Act (Rep. Act No. 1379) does not terminate in the imposition of a penalty but merely in the forfeiture of the properties illegally acquired in favor of the state. (Sec. 6) In the second place the procedure outlined in the law leading to forfeiture is that provided for in a civil action. Thus there is a petition (Sec. 3), then an answer (Sec. 4), and lastly, a hearing. The preliminary investigation which is required prior to the filing of the petition, in accordance with Sec. 2 of the Act, is provided expressly to be one similar to a preliminary investigation in a criminal case. If the investigation is only similar to that in a criminal case, but the other steps in the proceedings are those for civil proceedings, it stands to reason that the proceeding is not criminal. xxx. (citations omitted) Forfeiture cases impose neither a personal criminal liability, nor the civil liability that arises from the commission of a crime (ex delicto). The liability is based solely on a statute that safeguards the right of the State to recover unlawfully acquired properties.29 Executive Order No. 14 (E.O. No. 14), Defining the Jurisdiction Over Cases Involving the Ill-gotten Wealth of Former President Ferdinand Marcos, authorizes the filing of forfeiture suits that will proceed independently of any criminal proceedings. Section 3 of E.O. 14 empowered the PCGG to file independent civil actions separate from the criminal actions.30 Thus, petitioners cannot equate the present case with a criminal case and assail the proceedings before the Sandiganbayan on the bare claim that they were deprived of a "full-blown trial." In affirming the Sandiganbayan and denying petitioners Motion for Reconsideration in the Swiss Deposits Decision, the Court held: Section 5 of RA 1379 provides: The court shall set a date for a hearing which may be open to the public, and during which the respondent shall be given ample opportunity to explain, to the satisfaction of the court, how he has acquired the property in question. And pursuant to Section 6 of the said law, if the respondent is unable to show to the satisfaction of the court that he has lawfully acquired the property in question, then the court shall declare such property forfeited in favor of the State. xxx xxx xxx A careful analysis of Section 5 of RA 1379 readily discloses that the word "hearing" does not always require the formal introduction of evidence in a trial, only that the parties are given the occasion to participate and explain how they acquired the property in question. If they are unable to show to the satisfaction of the court that they lawfully acquired the property in question, then the court shall declare such property forfeited in favor of the State. There is no provision in the law that a full blown trial ought to be conducted before the court declares the forfeiture of the subject property. Thus, even if the forfeiture proceedings do not reach trial, the court is not precluded from determining the nature of the acquisition of the property in question even in a summary proceeding. 31 As forfeiture suits under R.A. 1379 are civil in nature, it follows that Rule 35 of the Rules of Court on Summary Judgment may be applied to the present case. This is consistent with our ruling in the Swiss Deposits Decision upholding the summary judgment rendered by the Sandiganbayan over the Swiss deposits, which are subject of the same Petition for Forfeiture as the Arelma assets. II. Republic complied with Section 3 (c), (d), and (e) of R.A. 1375

Petitioner Marcos, Jr. argues that there are genuine issues of fact as borne by the Pre-trial Order, Supplemental Pre-trial Order, and the Pre-trial Briefs of the parties. He laments that the Republic was unable to meet the necessary averments under the forfeiture law, which requires a comparison between the approximate amount of property acquired during the incumbency of Ferdinand Marcos, and the total amount of governmental salaries and other earnings. 32 While the Petition contained an analysis of Ferdinand Marcoss income from 1965 to 1986 (during his incumbency), there was purportedly no mention of the latters income from 1940 to 1965 when he was a practicing lawyer, congressman and senator; other earnings until the year 1985; and real properties that were auctioned off to satisfy the estate tax assessed by the Bureau of Internal Revenue.33 Petitioner Marcos, Jr. implores us herein to revisit and reverse our earlier ruling in the Swiss Deposits Decision and argues that the pronouncements in that case are contrary to law and its basic tenets. The Court in that case allegedly applied a lenient standard for the Republic, but a strict one for the Marcoses. He finds fault in the ruling therein which was grounded on public policy and the ultimate goal of the forfeiture law, arguing that public policy is better served if the Court gave more importance to the substantive rights of the Marcoses. In accordance with the principle of immutability of judgments, petitioners can no longer use the present forum to assail the ruling in the Swiss Deposits Decision, which has become final and executory. Aside from the fact that the method employed by petitioner is improper and redundant, we also find no cogent reason to revisit the factual findings of the Sandiganbayan in Civil Case No. 0141, which this Court in the Swiss Deposits Decision found to be thorough and convincing. In the first place, using a Rule 45 Petition to question a judgment that has already become final is improper, especially when it seeks reconsideration of factual issues, such as the earnings of the late President from 1940 to 1965 and the existence of real properties that petitioners claim were auctioned off to pay the taxes. Secondly, petitioners never raised the existence of these earnings and real properties at the outset and never mentioned these alleged other incomes by way of defense in their Answer. In their Answer, and even in their subsequent pleadings, they merely made general denials of the allegations without stating facts admissible in evidence at the hearing. As will be discussed later, both the Sandiganbayan and the Supreme Court found that the Marcoses unsupported denials of matters patently and necessarily within their knowledge were inexcusable, and that a trial would have served no purpose at all. 34 R.A. 1379 provides that whenever any public officer or employee has acquired during his incumbency an amount of property manifestly out of proportion to his salary as such public officer and to his other lawful income, said property shall be presumed prima facie to have been unlawfully acquired. 35 The elements that must concur for this prima facie presumption to apply are the following: (1) the offender is a public officer or employee; (2) he must have acquired a considerable amount of money or property during his incumbency; and (3) said amount is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and income from legitimately acquired property. Thus, in determining whether the presumption of ill-gotten wealth should be applied, the relevant period is incumbency, or the period in which the public officer served in that position. The amount of the public officers salary and lawful income is compared against any property or amount acquired for that same period. In the Swiss Deposits Decision, the Court ruled that petitioner Republic was able to establish the prima facie presumption that the assets and properties acquired by the Marcoses "were manifestly and patently disproportionate to their aggregate salaries as public officials." 36 For a petition to flourish under the forfeiture law, it must contain the following: (a) The name and address of the respondent. (b) The public officer or employment he holds and such other public offices or employment which he has previously held. (c) The approximate amount of property he has acquired during his incumbency in his past and present offices and employments. (d) A description of said property, or such thereof as has been identified by the Solicitor General. (e) The total amount of his government salary and other proper earnings and incomes from legitimately acquired property, and (f) Such other information as may enable the court to determine whether or not the respondent has unlawfully acquired property during his incumbency.37 (Emphasis supplied) Petitioners claim that the Republic failed to comply with subparagraphs c, d, and e above, because the latter allegedly never took into account the years when Ferdinand Marcos served as a war veteran with back pay, a practicing lawyer, a trader and investor, a congressman and senator. We find this claim to be a haphazard rehash of what has already been conclusively determined by the Sandiganbayan and the Supreme Court in the Swiss Deposits Decision. The alleged "receivables from prior years" were without basis, because Marcos never had a known law office nor any known clients, and neither did he file any withholding tax certificate that would prove the existence of a supposedly profitable law practice before he became President. As discussed in the Swiss Deposits Decision: The Solicitor General made a very thorough presentation of its case for forfeiture: xxx xxx xxx 4. Respondent Ferdinand E. Marcos (now deceased and represented by his Estate/Heirs) was a public officer for several decades continuously and without interruption as Congressman, Senator, Senate President and President of the Republic of the Philippines from December 31, 1965 up to his ouster by direct action of the people of EDSA on February 22-25, 1986. 5. Respondent Imelda Romualdez Marcos (Imelda, for short) the former First Lady who ruled with FM (Ferdinand Marcos) during the 14-year martial law regime, occupied the position of Minister of Human Settlements from June 1976 up to the peaceful revolution in February 22-25, 1986. She likewise served once as a member of the Interim Batasang Pambansa during the early years of martial law from 1978 to 1984 and as Metro Manila Governor in concurrent capacity as Minister of Human Settlements.1wphi1 xxx xxx xxx 11. At the outset, however, it must be pointed out that based on the Official Report of the Minister of Budget, the total salaries of former President Marcos as President from 1966 to 1976 was P 60,000 a year and from 1977 to 1985, P 100,000 a year; while that of the former First Lady, Imelda R. Marcos, as Minister of Human Settlements from June 1976 to February 22-25, 1986 was P 75,000 a year.38 The Sandiganbayan found that neither the late Ferdinand Marcos nor petitioner Imelda Marcos filed any Statement of Assets and Liabilities, as required by law, from which their net worth could be determined. Coupled with the fact that the Answer consisted of general denials and a standard plea of "lack of knowledge or information sufficient to form a belief as to the truth of the allegations" what the Court characterized as "foxy replies" and mere pretense fairness dictates that what must be considered as lawful income should only be the accumulated salaries of the spouses and what are shown in

the public documents they submitted, such as their Income Tax Return (ITR) and their Balance Sheets. The amounts representing the combined salaries of the spouses were admitted by petitioner Imelda Marcos in paragraph 10 of her Answer, and reflected in the Certification dated May 27, 1986 issued by then Minister of Budget and Management Alberto Romulo: Ferdinand E. Marcos, as President 1966-1976 at P 60,000/year P 660,000 1977-1984 at P 100,000/year 800,000 1985 at P 110,000/year 110,000 P 1,570,00 Imelda R. Marcos, as Minister June 1976-1985 at P 75,000/year P 718,000 In addition to their accumulated salaries from 1966 to 1985 are the Marcos couple's combined salaries from January to February 1986 in the amount of P 30,833.33. Hence, their total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars on the basis of the corresponding peso-dollar exchange rates prevailing during the applicable period when said salaries were received, the total amount had an equivalent value of $304,372.43. 39 The date contained in the ITRs and Balance Sheets filed by the Marcoses are summarized in Schedules A to D submitted as evidence by the Republic. Schedule A showed that from 1965 to 1984, the Marcoses reported Php 16,408,442.00 or USD 2,414,484.91 in total income, comprised of: Income Source Amount Percentage Official Salaries - P 2,627,581.00 - 16.01% Legal Practice - 11,109,836.00 - 67.71% Farm Income - 149,700.00 - .91% Others - 2,521,325.00 - 15.37% Total P 16,408,442.00 - 100.00% The amount reported by the Marcos couple as their combined salaries more or less coincided with the Official Report submitted by the Minister of Budget. Yet what appeared anomalous was the Php 11,109,836 representing "Legal Practice," which accounted for 67% or more than three-fourths of their reported income. Out of this anomalous amount, Php 10,649,836, or 96% thereof, represented "receivables from prior years" during the period 1967 to 1984. The Court cited the Solicitor Generals findings: In the guise of reporting income using the cash method under Section 38 of the National Internal Revenue Code, FM made it appear that he had an extremely profitable legal practice before he became a President (FM being barred by law from practicing his law profession during his entire presidency) and that, incredibly, he was still receiving payments almost 20 years after. The only problem is that in his Balance Sheet attached to his 1965 ITR immediately preceding his ascendancy to the presidency he did not show any Receivables from client at all, much less the P 10.65-M that he decided to later recognize as income. There are no documents showing any withholding tax certificates. Likewise, there is nothing on record that will show any known Marcos client as he has no known law office. As previously stated, his net worth was a mere P 120,000.00 in December, 1965. The joint income tax returns of FM and Imelda cannot, therefore, conceal the skeletons of their kleptocracy.40 In addition, the former President also reported a total of Php 2,521,325 which he referred to as "Miscellaneous Items" and "Various Corporations" under "Other Income" for 1972-1976. Spouses Marcos did not declare any income from any deposits that may be subject to a 5% withholding tax, nor did they file any capital gains tax returns from 1960 to 1965. The Bureau of Internal Revenue attested that there are no records pertaining to the tax transactions of the spouses in Baguio City, Manila, Quezon City, and Tacloban. The Balance Sheet attached to the couples ITR for 1965 indicates an ending net worth of Php 120,000, which covered the year immediately preceding their ascendancy to the presidency. As previously mentioned, the combined salaries of the spouses for the period 1966 to 1986, or in the two decades that they stayed in power, totaled only USD 304,372.43. In stark contrast, as shown by Schedule D, computations establish the total net worth of the spouses for the years 1965 until 1984 in the total amount of USD 957,487.75, assuming that the income from legal practice is real and valid. 41 The combined salaries make up only 31.79% of the spouses total net worth from 1965 to 1984. This means petitioners are unable to account for or explain more than two-thirds of the total net worth of the Marcos spouses from 1965 to 1984. Thus, for the final time, we soundly reiterate that the Republic was able to establish the prima facie presumption that the assets and properties acquired by the Marcoses were manifestly and patently disproportionate to their aggregate salaries as public officials. The Republic presented further evidence that they had bigger deposits beyond their lawful incomes, foremost of which were the Swiss accounts deposited in the names of five foundations spirited away by the couple to different countries. Petitioners herein thus failed to overturn this presumption when they merely presented vague denials and pleaded "lack of sufficient knowledge" in their Answer. In any case, petitioners may no longer question the findings of the Sandiganbayan affirmed by the Supreme Court in the Swiss Deposits Decision, as these issues have long become the "law of the case" in the original Petition for Forfeiture. As held in Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic: 42 Law of the case is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. Otherwise put, the principle means that questions of law that have been previously raised and disposed of in the proceedings shall be controlling in succeeding instances where the same legal question is raised, provided that the facts on which the legal issue was predicated continue to be the facts of the case before the court. In the case at bar, the same legal issues are being raised by petitioners. In fact, petitioner Marcos Jr. admits outright that what he seeks is a reversal of the issues identical to those already decided by the Court in the Swiss Deposits Decision.43 He may not resuscitate, via another petition for review, the same issues long laid to rest and established as the law of the case. III. Civil Case No. 0141 has not yet terminated

Petitioners next argue that the "law of the case" doctrine should be applied, not to the ruling affirming the forfeiture, but to the grant of the summary judgment over the Swiss accounts as affirmed by the Supreme Court in the Swiss Deposits Decision. They contend that since the Courts Decision mentioned only the deposits under the five Swiss foundations, then the Republic can no longer seek partial summary judgment for forfeiture over the Arelma account. And since the said Decision has long become final and has in fact been executed, they insist that the Sandiganbayan has lost its jurisdiction over the case. Petitioners are under the mistaken impression that the Swiss Deposits Decision serves as the entire judgment in Civil Case No. 0141. Just because respondent Republic succeeded in obtaining summary judgment over the Swiss accounts does not mean it is precluded from seeking partial summary judgment over a different subject matter covered by the same petition for forfeiture. In fact, Civil Case No. 0141 pertains to the recovery of all the assets enumerated therein, such as (1) holding companies, agro-industrial ventures and other investments; (2) landholdings, buildings, condominium units, mansions; (3) New York properties; (4) bills amounting to Php 27,744,535, time deposits worth Php 46.4 million, foreign currencies and jewelry seized by the United States customs authorities in Honolulu, Hawaii; (5) USD 30 million in the custody of the Central Bank in dollar-denominated Treasury Bills; shares of stock, private vehicles, and real estate in the United States, among others.44 In the enumeration of properties included in the Petition, the Arelma assets were described as "Assets owned by Arelma, Inc., a Panamanian corporation organized in Liechtenstein, for sole purpose (sic) of maintaining an account in Merrill Lynch, New York."45 Paragraph 59 of the Petition for Forfeiture states: 59. FM and Imelda used a number of their close business associations or favorite cronies in opening bank accounts abroad for the purpose of laundering their filthy riches. Aside from the foundations and corporations established by their dummies/nominees to hide their ill-gotten wealth as had already been discussed, several other corporate entities had been formed for the same purpose, to wit: (1). ARELMA, INC (T)his was organized for the sole purpose of maintaining an account and portfolio in Merrill Lynch, New York. (2). Found among Malacaang documents is a letter dated September 21, 1972 by J.L. Sunier, Senior Vice President of SBC to Mr. Jose V. Campos, a known Marcos crony (See Annex "V-21" hereof). In the said letter, instructions were given by Sunier to their Panama office to constitute a Panamanian company, the name of which will be either Larema, Inc. or Arelma, Inc., or Relma, Inc. this company will have the same set-up as Maler; the appointment of Sunier and Dr. Barbey as attorneys and appointment of selected people in Panama as directors; the opening of direct account in the name of the new company with Merrill Lynch, New York, giving them authority to operate the account, but excluding withdrawals of cash, securities or pledging of portfolio; and sending of money in favor of the new company under reference AZUR in order to cut links with the present account already opened with Merrill Lynch under an individuals name. (3). Also found was a letter dated November 14, 1972 and signed by Jose Y. Campos (Annex "V-21-a" hereof). The letter was addressed to SEC, Geneva, and Sunier duly authorized by their "mutual friend" regarding the opening of an account of Arelma, Inc. with Merrill Lynch, New York to the attention of Mr. Saccardi, Vice-President. (4). On May 19, 1983, J. L. Sunier wrote a letter with a reference "SAPPHIRE" and a salutation "Dear Excellency" stating, among others, the current valuation by Merrill Lynch of the assets of Arelma, Inc. amounting to $3,369,975 (Annex "V-21b" hereof). (5). Included in the documents sent by SBC, Geneva, through the Swiss Federal Department of Justice and Police were those related to Arelma, Inc. as follows: (a) Opening bank documents for Account No. 53.145 A.R. dated September 17, 1972, signed by Dr. Barbey and Mr. Sunier. This was later on cancelled as a result of the change in attorneys and authorized signatories of the company (Annexes "V-21-c" and "V-21-d" hereof). (b) Opening bank documents for Account No. 53. 145 A.R. signed by new attorneys led by Michel Amandruz (Annexes "V-21-e" and "V-21-f" hereof). (c). Bank statements for Account No. 53.145 A.R. with ending balance of $26.10 as of 12-31-85 (Annex "V-21-g" and "V21-h" hereof). (d). An informative letter stating that Account 53. 145 A.R. was related to an account opened with Merrill Lynch Asset Management, Inc., New York for Arelma, Inc. The opening of this account slowly made Account 53. 145 A.R. an inactive account (See Annexes "V-21-I" and "V-21-j" hereof).46 When the Marcos family fled Manila in 1986, they left behind several documents that revealed the existence of secret bank deposits in Switzerland and other financial centers. 47 These papers, referred to by respondent as Malacaang documents, detailed how "Arelma, Inc." 48 was established. Attached as Annex V-21 was the Letter of Instruction sent to the Panamanian branch of the Sunier company to open Arelma. The latter was to have the same set-up as Maler, one of the five Swiss foundations, subject of the 2000 Motion. Annexes "V-21-c" to "V-21-j" pertained to documents to be used to open an account with Merrill Lynch Asset Management, Inc. in New York. The Swiss Deposits Decision dealt only with the summary judgment as to the five Swiss accounts, because the 2000 Motion for Partial Summary Judgment dated 7 March 2000 specifically identified the five Swiss accounts only. It did not include the Arelma account. There was a prayer for general reliefs in the 1996 Motion, but as has been discussed, this prayer was dismissed by the Sandiganbayan. The dismissal was based solely on the existence of the Compromise Agreements for a global settlement of the Marcos assets, which the Supreme Court later invalidated. The 2000 Motion for Summary Judgment was confined only to the five accounts amounting to USD 356 million held by five Swiss foundations. As clarified by the Solicitor General during the hearing of 24 March 2000 in the Sandiganbayan: PJ: The Court is of the impression and the Court is willing to be corrected, that ones (sic) the plaintiff makes a claim for summary judgment it in fact states it no longer intends to present evidence and based on this motion to render judgment, is that correct? SOL. BALLACILLO: Yes, your Honors. PJ: In other words, on the basis of pre-trial, you are sayingbecause if we are talking of a partial claim, then there is summary judgment, unless there is preliminary issue to the claim which is a matter of stipulation. SOL. BALLACILLO: We submit, your Honors, that there can be partial summary judgment on this matter. PJ: But in this instance, you are making summary judgment on the entire case? SOL. BALLACILLO: With respect to the $365 million. PJ: In the complaint you asked for the relief over several topics. You have $356 million, $25 million and $5 million. Now with regards to the $365 million, you are asking for summary judgment?

SOL. BALLACILLO: Yes, your Honor. PJ: And, therefore, you are telling us now, "thats it, we need not have to prove." SOL. BALLACILLO: Yes, your Honors.49 (Emphasis supplied.) The Courts discussion clearly did not include the Arelma account. The dispositive portion of the Swiss Deposits Decision states: WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of the Sandiganbayan dated January 31, 2002 is SET ASIDE. The Swiss deposits which were transferred to and are now deposited in escrow at the Philippine National Bank in the estimated aggregate amount of US$658,175,373.60 as of January 31, 2002, plus interest, are hereby forfeited in favor of petitioner Republic of the Philippines.50 Thus, the other properties, which were subjects of the Petition for Forfeiture, but were not included in the 2000 Motion, can still be subjects of a subsequent motion for summary judgment. To rule otherwise would run counter to this Courts long established policy on asset recovery which, in turn, is anchored on considerations of national survival. E.O. 14, Series of 1986,51 and Section 1(d) of Proclamation No. 352 declared the national policy after the Marcos regime. The government aimed to implement the reforms mandated by the people: protecting their basic rights, adopting a provisional constitution, and providing for an orderly transition to a government under a new constitution. The said Proclamation further states that "The President shall give priority to measures to achieve the mandate of the people to recover ill-gotten properties amassed by the leaders and supporters of the previous regime and protect the interest of the people through orders of sequestration or freezing of assets or accounts." One of the "whereas" clauses of E.O. 14 entrusts the PCGG with the "just and expeditious recovery of such ill-gotten wealth in order that the funds, assets and other properties may be used to hasten national economic recovery." These clauses are anchored on the overriding considerations of national interest and national survival, always with due regard to the requirements of fairness and due process. With the myriad of properties and interconnected accounts used to hide these assets that are in danger of dissipation, it would be highly unreasonable to require the government to ascertain their exact locations and recover them simultaneously, just so there would be one comprehensive judgment covering the different subject matters. In any case, the Sandiganbayan rightly characterized their ruling on the 2004 Motion as a separate judgment, which is allowed by the Rules of Court under Section 5 of Rule 36: Separate judgments.When more than one claim for relief is presented in an action, the court, at any stage, upon a determination of the issues material to a particular claim and all counterclaims arising out of the transaction or occurrence which is the subject matter of the claim, may render a separate judgment disposing of such claim. The judgment shall terminate the action with respect to the claim so disposed of and the action shall proceed as to the remaining claims. In case a separate judgment is rendered, the court by order may stay its enforcement until the rendition of a subsequent judgment or judgments and may prescribe such conditions as may be necessary to secure the benefit thereof to the party in whose favor the judgment is rendered.53 Rule 35 on summary judgments, admits of a situation in which a case is not fully adjudicated on motion, 54 and judgment is not rendered upon all of the reliefs sought. In Philippine Business Bank v. Chua, 55 we had occasion to rule that a careful reading of its Section 4 reveals that a partial summary judgment was never intended to be considered a "final judgment," as it does not "[put] an end to an action at law by declaring that the plaintiff either has or has not entitled himself to recover the remedy he sues for." In this case, there was never any final or complete adjudication of Civil Case No. 0141, as the Sandiganbayans partial summary judgment in the Swiss Deposits Decision made no mention of the Arelma account. Section 4 of Rule 35 pertains to a situation in which separate judgments were necessary because some facts existed without controversy, while others were controverted. However, there is nothing in this provision or in the Rules that prohibits a subsequent separate judgment after a partial summary judgment on an entirely different subject matter had earlier been rendered. There is no legal basis for petitioners contention that a judgment over the Swiss accounts bars a motion for summary judgment over the Arelma account. Thus, the Swiss Deposits Decision has finally and thoroughly disposed of the forfeiture case only as to the five Swiss accounts. Respondents 2004 Motion is in the nature of a separate judgment, which is authorized under Section 5 of Rule 36. More importantly respondent has brought to our attention the reasons why a motion for summary judgment over the Arelma account was prompted only at this stage. In Republic of the Philippines v. Pimentel, 56 a case filed by human rights victims in the United States decided by the US Supreme Court only in 2008, the antecedents of the Arelma account were described as follows: In 1972, Ferdinand Marcos, then President of the Republic, incorporated Arelma, S.A. (Arelma), under Panamanian law. Around the same time, Arelma opened a brokerage account with Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch) in New York, in which it deposited $2 million. As of the year 2000, the account had grown to approximately $35 million. Alleged crimes and misfeasance by Marcos during his presidency became the subject of worldwide attention and protest. A class action by and on behalf of some 9,539 of his human rights victims was filed against Marcos and his estate, among others. The class action was tried in the United States District Court for the District of Hawaii and resulted in a nearly $2 billion judgment for the class. See Hilao v. Estate of Marcos, 103 F.3d 767 (C.A.9 1996) . We refer to that litigation as the Pimentel case and to its class members as the Pimentel class. In a related action, the Estate of Roger Roxas and Golden Budha [sic] Corporation (the Roxas claimants) claim a right to execute against the assets to satisfy their own judgment against Marcos' widow, Imelda Marcos. See Roxas v. Marcos, 89 Hawaii 91, 113-115, 969 P.2d 1209, 1231-1233 (1998) . The Pimentel class claims a right to enforce its judgment by attaching the Arelma assets held by Merrill Lynch. The Republic and the Commission claim a right to the assets under a 1955 Philippine law providing that property derived from the misuse of public office is forfeited to the Republic from the moment of misappropriation. See An Act Declaring Forfeiture in Favor of the State Any Property Found To Have Been Unlawfully Acquired by Any Public Officer or Employee and Providing for the Proceedings Therefor, Rep. Act No. 1379, 51:9 O.G. 4457 (June 18, 1955). After Marcos fled the Philippines in 1986, the Commission was created to recover any property he wrongfully took. Almost immediately the Commission asked the Swiss Government for assistance in recovering assets-including shares in Arelma-that Marcos had moved to Switzerland. In compliance the Swiss Government froze certain assets and, in 1990, that freeze was upheld by the Swiss Federal Supreme Court. In 1991, the Commission asked the Sandiganbayan, a Philippine court of special jurisdiction over corruption cases, to declare forfeited to the Republic any property Marcos had obtained through misuse of his office. That litigation is still pending in the Sandiganbayan. (Citations omitted.) The pursuit of the Arelma account encountered several hindrances, as it was subject to not one, but two claims of human rights victims in foreign courts: the Pimentel class and the Roxas claimants. The government and the PCGG were able to

obtain a Stay Order at the appellate level, but the trial court judge vacated the stay and awarded the Arelma assets to the Pimentel class of human rights victims. As early as 1986, the PCGG had already sought assistance from the Swiss government to recover the Arelma assets; however, it was only in 2000 that the Swiss authorities turned over two Stock Certificates, which were assets of Arelma. The transfer by Switzerland of the Stock Certificates to the Republic was made under the same conditions as the bank deposits of the five Swiss foundations.57 Meanwhile, the Pimentel case was tried as a class action before Judge Manuel Real of the United States District Court for the Central District of California. Judge Real was sitting by designation in the District of Hawaii after the Judicial Panel on Multidistrict Litigation consolidated the various human rights Complaints against Marcos in that court. 58 Judge Real directed Merrill Lynch to file an action for interpleader in the District of Hawaii, where he presided over the matter, and where the Republic and the PCGG were named as defendants. In Pimentel, the Court further narrates how Judge Real ruled that the pending litigation in Philippine courts could not determine entitlement to the Arelma assets: After being named as defendants in the interpleader action, the Republic and the Commission asserted sovereign immunity under the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. 1604 . They moved to dismiss pursuant to Rule 19(b) , based on the premise that the action could not proceed without them Judge Real initially rejected the request by the Republic and the Commission to dismiss the interpleader action. They appealed, and the Court of Appeals reversed. It held the Republic and the Commission are entitled to sovereign immunity and that under Rule 19(a) they are required parties (or "necessary" parties under the old terminology). See In re Republic of the Philippines, 309 F.3d 1143, 1149-1152 (C.A.9 2002) . The Court of Appeals entered a stay pending the outcome of the litigation in the Sandiganbayan over the Marcos assets. After concluding that the pending litigation in the Sandiganbayan could not determine entitlement to the Arelma assets, Judge Real vacated the stay, allowed the action to proceed, and awarded the assets to the Pimentel class. A week later, in the case initiated before the Sandiganbayan in 1991, the Republic asked that court to declare the Arelma assets forfeited, arguing the matter was ripe for decision. The Sandiganbayan has not yet ruled. In the interpleader case the Republic, the Commission, Arelma, and PNB appealed the District Court's judgment in favor of the Pimentel claimants. This time the Court of Appeals affirmed. Dismissal of the interpleader suit, it held, was not warranted under Rule 19(b) because, though the Republic and the Commission were required ("necessary") parties under Rule 19(a) , their claim had so little likelihood of success on the merits that the interpleader action could proceed without them. One of the reasons the court gave was that any action commenced by the Republic and the Commission to recover the assets would be barred by New York's 6-year statute of limitations for claims involving the misappropriation of public property.59 (Citations omitted) The American Supreme Court reversed the judgment of the Court of Appeals for the Ninth Circuit and remanded the case with instructions to order the District Court to dismiss the interpleader action. The former held that the District Court and the Court of Appeals failed to give full effect to sovereign immunity when they held that the action could proceed without the Republic and the Commission: Comity and dignity interests take concrete form in this case. The claims of the Republic and the Commission arise from events of historical and political significance for the Republic and its people. The Republic and the Commission have a unique interest in resolving the ownership of or claims to the Arelma assets and in determining if, and how, the assets should be used to compensate those persons who suffered grievous injury under Marcos. There is a comity interest in allowing a foreign state to use its own courts for a dispute if it has a right to do so. The dignity of a foreign state is not enhanced if other nations bypass its courts without right or good cause. Then, too, there is the more specific affront that could result to the Republic and the Commission if property they claim is seized by the decree of a foreign court. 60 Thus it was only in 2008 that the Republic was finally able to obtain a favorable judgment from the American Supreme Court with regard to the different claims against the Arelma assets. Petitioners never intervened or lifted a finger in any of the litigation proceedings involving the enforcement of judgment against the Arelma assets abroad. We find merit in respondents observation that petitioner Imelda Marcoss participation in the proceedings in the Philippines, particularly her invocation of her right against undue deprivation of property, is inconsistent with her and Ferdinand Marcos, Jr.s insistence that the properties in question do not belong to them, and that they are mere beneficiaries. 61 Indeed, it is clear that the Arelma assets are in danger of dissipation. Even as the United States Supreme Court gave weight to the likely prejudice to be suffered by the Republic when it dismissed the interpleader in Pimentel, it also considered that the "balance of equities may change in due course. One relevant change may occur if it appears that the Sandiganbayan cannot or will not issue its ruling within a reasonable period of time. If the Sandiganbayan rules that the Republic and the Commission have no right to the assets, their claims in some later interpleader suit would be less substantial than they are now."62 IV. Petitioners sham denials justify the application of summary judgment As already settled in the Swiss Deposits Decision and reiterated in the discussion above as the law of the case, the lawful income of the Marcoses is only USD 304,372.43. As discussed in paragraph 9 of the Petition for Forfeiture, Annex V-21-b states that Arelmas assets as of 19 May 1983 were worth USD 3,369,975.00. 63 The entirety of the lawful income of the Marcoses represents only 9% of the entire assets of Arelma, which petitioners remain unable to explain. In their Answer to the Petition for Forfeiture, petitioners employ the same tactic, consisting of general denials based on a purported lack of knowledge regarding the whereabouts of the Arelma assets. Paragraph 32 of the said pleading states: Respondents specifically DENY paragraph 59 of the Petition insofar as it alleges that the Marcoses used their cronies and engaged in laundering their filthy riches for being false and conclusory of the truth being that the Marcoses did not engage in any such illegal acts and that all the properties they acquired were lawfully acquired; and specifically DENY the rest for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents are not privy to the alleged transactions.64 This particular denial mimics petitioners similar denials of the allegations in the forfeiture Petition pertaining to the Swiss accounts and is practically identical to paragraphs 7 to 37 of the Answer. The Swiss Deposits Decision has characterized these as "sham" denials: 17. Respondents specifically DENY paragraph 18 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 18. Respondents specifically DENY paragraph 19 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs and that they are not privy to the activities of the BIR.

19. Respondents specifically DENY paragraph 20 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 20. Respondents specifically DENY paragraph 21 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 21. Respondents specifically DENY paragraph 22 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundation and corporate entities for being false, the truth being that Respondents aforesaid properties were lawfully acquired. 23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur Foundation accounts, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36,37, 38, 39, 40, and 41 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents are not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 25. Respondents specifically DENY paragraphs 42, 43, 44, 45, and 46, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 26. Respondents specifically DENY paragraphs 49, 50, 51 and 52, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos and the Marcos children indubitably failed to tender genuine issues in their answer to the petition for forfeiture. A genuine issue is an issue of fact which calls for the presentation of evidence as distinguished from an issue which is fictitious and contrived, set up in bad faith or patently lacking in substance so as not to constitute a genuine issue for trial. Respondents' defenses of "lack of knowledge for lack of privity" or "(inability to) recall because it happened a long time ago" or, on the part of Mrs. Marcos, that "the funds were lawfully acquired" are fully insufficient to tender genuine issues. Respondent Marcoses' defenses were a sham and evidently calibrated to compound and confuse the issues. 65(Emphasis supplied.) In the case at bar, petitioners give the same stock answer to the effect that the Marcoses did not engage in any illegal activities, and that all their properties were lawfully acquired. They fail to state with particularity the ultimate facts surrounding the alleged lawfulness of the mode of acquiring the funds in Arelma (which totaled USD 3,369,975.00 back in 1983), considering that the entirety of their lawful income amounted only to USD 304,372.43, or only 9% of the entire Arelma fund. Then, as now, they employ what the Court in G.R. No. 152154 characterized as a "negative pregnant," not just in denying the criminal provenance of the Arelma funds, but in the matter of ownership of the said funds. As discussed by the Court in the first Republic case, cited by the Sandiganbayan: Evidently, this particular denial had the earmark of what is called in the law on pleadings as a negative pregnant, that is, a denial pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied. It was in effect an admission of the averments it was directed at. Stated otherwise, a negative pregnant is a form of negative expression which carries with it an affirmation or at least an implication of some kind favorable to the adverse party. It is a denial pregnant with an admission of the substantial facts alleged in the pleading. Where a fact is alleged with qualifying or modifying language and the words of the allegation as so qualified or modified are literally denied, it has been held that the qualifying circumstances alone are denied while the fact itself is admitted. 66 Due to the insufficiency of petitioners denial of paragraph 59 which in effect denies only the qualifying circumstances, and by virtue of the Courts ruling in the Swiss Deposits Decision, petitioners are deemed to have admitted the factual antecedents and the establishment of Arelma. In paragraph 32 of their Answer, they only deny the first few sentences of paragraph 59, while conveniently neglecting to address subparagraphs 1 to 5 and the opening bank documents described in 5 (a) to (d) of the Petition for Forfeiture. Paragraphs 1 and 2 of the Petition discusses the establishment of a Panamanian company to be named either "Larema, Inc. or Arelma, Inc., or Relma, Inc.;" the appointment of several people as directors; and the opening of a direct account with Merrill Lynch. Paragraphs 3 to 5 also of the Petition for Forfeiture detail correspondences between a "J.L. Sunier" and a letter addressed to Malacaang with the salutation "Dear Excellency." Regarding the averment of petitioners that they lack knowledge sufficient to form a belief as to the truth of the above allegations in the Petition for Forfeiture, the Courts discussion in the Swiss Deposits Decision bears reiterating: Here, despite the serious and specific allegations against them, the Marcoses responded by simply saying that they had no knowledge or information sufficient to form a belief as to the truth of such allegations. Such a general, self-serving claim of ignorance of the facts alleged in the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses should have positively stated how it was that they were supposedly ignorant of the facts alleged. 67 Petitioners cannot escape the fact that there is manifest disparity between the amount of the Arelma funds and the lawful income of the Marcoses as shown in the ITRs filed by spouses Marcos. The Swiss Deposits Decision found that the genuineness of the said ITRs and balance sheets of the Marcos spouses have already been admitted by petitioners themselves: Not only that. Respondents answer also technically admitted the genuineness and due execution of the Income Tax Returns (ITRs) and the balance sheets of the late Ferdinand E. Marcos and Imelda R. Marcos attached to the petition for forfeiture, as well as the veracity of the contents thereof.

The answer again premised its denials of said ITRs and balance sheets on the ground of lack of knowledge or information sufficient to form a belief as to the truth of the contents thereof. Petitioner correctly points out that respondents' denial was not really grounded on lack of knowledge or information sufficient to form a belief but was based on lack of recollection. By reviewing their own records, respondent Marcoses could have easily determined the genuineness and due execution of the ITRs and the balance sheets. They also had the means and opportunity of verifying the same from the records of the BIR and the Office of the President. They did not. When matters regarding which respondents claim to have no knowledge or information sufficient to form a belief are plainly and necessarily within their knowledge, their alleged ignorance or lack of information will not be considered a specific denial. An unexplained denial of information within the control of the pleader, or is readily accessible to him, is evasive and is insufficient to constitute an effective denial. 68 (Footnotes omitted.) We find that petitioners have again attempted to delay the goal of asset recovery by their evasiveness and the expedient profession of ignorance. It is well-established that a profession of ignorance about a fact that is necessarily within the pleaders knowledge or means of knowing is as ineffective as no denial at all. On a similar vein, there is a failure by petitioners to properly tender an issue, which as correctly ruled by the Sandiganbayan, justifies the Republics resort to summary judgment. Summary judgment may be allowed where there is no genuine issue as to any material fact and where the moving party is entitled to a judgment as a matter of law. 69 In Yuchengco v. Sandiganbayan, the Court has previously discussed the importance of summary judgment in weeding out sham claims or defenses at an early stage of the litigation in order to avoid the expense and loss of time involved in a trial, viz: Even if the pleadings appear, on their face, to raise issues, summary judgment may still ensue as a matter of law if the affidavits, depositions and admissions show that such issues are not genuine. The presence or absence of a genuine issue as to any material fact determines, at bottom, the propriety of summary judgment. A "genuine issue", as differentiated from a fictitious or contrived one, is an issue of fact that requires the presentation of evidence. To the party who moves for summary judgment rests the onus of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue for trial. 70 Even if in the Answer itself there appears to be a tender of issues requiring trial, yet when the relevant affidavits, depositions, or admissions demonstrate that those issues are not genuine but sham or fictitious, the Court is justified in dispensing with the trial and rendering summary judgment for plaintiff. 71 Summary judgment, or accelerated judgment as it is sometimes known, may also call for a hearing so that both the movant and the adverse party may justify their positions. However, the hearing contemplated (with 10-day notice) is for the purpose of determining whether the issues are genuine or not, not to receive evidence of the issues set up in the pleadings. In Carcon Development Corporation v. Court of Appeals, 72 the Court ruled that a hearing is not de riguer. The matter may be resolved, and usually is, on the basis of affidavits, depositions, and admissions. This does not mean that the hearing is superfluous; only that the court is empowered to determine its necessity. It is the law itself that determines when a summary judgment is proper. Under the rules, summary judgment is appropriate when there are no genuine issues of fact that call for the presentation of evidence in a full-blown trial. 1wphi1Even if on their face the pleadings appear to raise issues, when the affidavits, depositions and admissions show that such issues are not genuine, then summary judgment as prescribed by the rules must ensue as a matter of law. What is crucial to a determination, therefore, is the presence or absence of a genuine issue as to any material fact. When the facts as pleaded appear uncontested or undisputed, then summary judgment is called for. 73 Guided by the principles above indicated, we hold that under the circumstances obtaining in the case at bar, summary judgment is proper. The Sandiganbayan did not commit a reversible error in granting the corresponding 2004 Motion for Summary Judgment filed by respondent. The latter is well within its right to avail itself of summary judgment and obtain immediate relief, considering the insufficient denials and pleas of ignorance made by petitioners on matters that are supposedly within their knowledge. These denials and pleas constitute admissions of material allegations under paragraph 59 of the Petition for Forfeiture a tact they have employed repeatedly in Civil Case No. 0141. As discussed, the purpose of summary judgment is precisely to avoid long drawn litigations and useless delays. 74 We also affirm the Sandiganbayans findings that the moving party, the Republic, is now entitled to judgment as a matter of law. WHEREFORE, the instant Petition is DENIED. The Decision dated 2 April 2009 of the Sandiganbayan is AFFIRMED. All assets, properties, and funds belonging to Arelma, S.A., with an estimated aggregate amount of USD 3,369,975 as of 1983, plus all interests and all other income that accrued thereon, until the time or specific day that all money or monies are released and/or transferred to the possession of the Republic of the Philippines, are hereby forfeited in favor of Respondent Republic of the Philippines. SO ORDERED. MARIA LOURDES P. A. SERENO Associate Justice Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-11622 January 28, 1961 THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. DOUGLAS FISHER AND BETTINA FISHER, and the COURT OF TAX APPEALS, respondents. x---------------------------------------------------------x G.R. No. L-11668 January 28, 1961. DOUGLAS FISHER AND BETTINA FISHER, petitioner, vs. THE COLLECTOR OF INTERNAL REVENUE, and the COURT OF TAX APPEALS, respondents. BARRERA, J.: This case relates to the determination and settlement of the hereditary estate left by the deceased Walter G. Stevenson, and the laws applicable thereto. Walter G. Stevenson (born in the Philippines on August 9, 1874 of British parents and married in the City of Manila on January 23, 1909 to Beatrice Mauricia Stevenson another British subject) died on February 22, 1951 in San Francisco, California, U.S.A. whereto he and his wife moved and established their permanent

residence since May 10, 1945. In his will executed in San Francisco on May 22, 1947, and which was duly probated in the Superior Court of California on April 11, 1951, Stevenson instituted his wife Beatrice as his sole heiress to the following real and personal properties acquired by the spouses while residing in the Philippines, described and preliminary assessed as follows: Gross Estate Real Property 2 parcels of land in Baguio, covered by T.C.T. Nos. 378 and 379 P43,500.00 Personal Property (1) 177 shares of stock of Canacao Estate at P10.00 each 1,770.00 (2) 210,000 shares of stock of Mindanao Mother Lode Mines, Inc. at P0.38 per share 79,800.00 (3) Cash credit with Canacao Estate Inc. 4,870.88 (4) Cash, with the Chartered Bank of India, Australia & China 851.97 Total Gross Assets P130,792.85 On May 22, 1951, ancillary administration proceedings were instituted in the Court of First Instance of Manila for the settlement of the estate in the Philippines. In due time Stevenson's will was duly admitted to probate by our court and Ian Murray Statt was appointed ancillary administrator of the estate, who on July 11, 1951, filed a preliminary estate and inheritance tax return with the reservation of having the properties declared therein finally appraised at their values six months after the death of Stevenson. Preliminary return was made by the ancillary administrator in order to secure the waiver of the Collector of Internal Revenue on the inheritance tax due on the 210,000 shares of stock in the Mindanao Mother Lode Mines Inc. which the estate then desired to dispose in the United States. Acting upon said return, the Collector of Internal Revenue accepted the valuation of the personal properties declared therein, but increased the appraisal of the two parcels of land located in Baguio City by fixing their fair market value in the amount of P52.200.00, instead of P43,500.00. After allowing the deductions claimed by the ancillary administrator for funeral expenses in the amount of P2,000.00 and for judicial and administration expenses in the sum of P5,500.00, the Collector assessed the state the amount of P5,147.98 for estate tax and P10,875,26 or inheritance tax, or a total of P16,023.23. Both of these assessments were paid by the estate on June 6, 1952. On September 27, 1952, the ancillary administrator filed in amended estate and inheritance tax return in pursuance f his reservation made at the time of filing of the preliminary return and for the purpose of availing of the right granted by section 91 of the National Internal Revenue Code. In this amended return the valuation of the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc. was reduced from 0.38 per share, as originally declared, to P0.20 per share, or from a total valuation of P79,800.00 to P42,000.00. This change in price per share of stock was based by the ancillary administrator on the market notation of the stock obtaining at the San Francisco California) Stock Exchange six months from the death of Stevenson, that is, As of August 22, 1931. In addition, the ancillary administrator made claim for the following deductions: Funeral expenses ($1,04326) P2,086.52 Judicial Expenses: (a) Administrator's Fee (b) Attorney's Fee P1,204.34 6.000.00

(c) Judicial and Administration expenses as of August 9, 1952 1,400.05 8,604.39 Real Estate Tax for 1951 on Baguio real properties (O.R. No. B-1 686836) Claims against the ($5,000.00) P10,000.00 estate: P10,000.00 10,022.47 652.50

Plus: 4% int. p.a. from Feb. 2 to 22, 1951 22.47

Sub-Total P21,365.88 In the meantime, on December 1, 1952, Beatrice Mauricia Stevenson assigned all her rights and interests in the estate to the spouses, Douglas and Bettina Fisher, respondents herein. On September 7, 1953, the ancillary administrator filed a second amended estate and inheritance tax return (Exh. "M-N"). This return declared the same assets of the estate stated in the amended return of September 22, 1952, except that it contained new claims for additional exemption and deduction to wit: (1) deduction in the amount of P4,000.00 from the gross estate of the decedent as provided for in Section 861 (4) of the U.S. Federal Internal Revenue Code which the ancillary administrator averred was allowable by way of the reciprocity granted by Section 122 of the National Internal Revenue Code, as then held by the Board of Tax Appeals in case No. 71 entitled "Housman vs. Collector," August 14, 1952; and (2) exemption from the imposition of estate and inheritance taxes on the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc. also pursuant to the reciprocity proviso of Section 122 of the National Internal Revenue Code. In this last return, the estate claimed that it was liable only for the amount of P525.34 for estate tax and P238.06 for inheritance tax and that, as a consequence, it had overpaid the government. The refund of the amount of P15,259.83, allegedly overpaid, was accordingly requested by the estate. The Collector denied the claim. For this reason, action was commenced in the Court of First Instance of Manila by respondents, as assignees of Beatrice Mauricia Stevenson, for the recovery of said amount. Pursuant to Republic Act No. 1125, the case was forwarded to the Court of Tax Appeals which court, after hearing, rendered decision the dispositive portion of which reads as follows:

In fine, we are of the opinion and so hold that: (a) the one-half () share of the surviving spouse in the conjugal partnership property as diminished by the obligations properly chargeable to such property should be deducted from the net estate of the deceased Walter G. Stevenson, pursuant to Section 89-C of the National Internal Revenue Code; (b) the intangible personal property belonging to the estate of said Stevenson is exempt from inheritance tax, pursuant to the provision of section 122 of the National Internal Revenue Code in relation to the California Inheritance Tax Law but decedent's estate is not entitled to an exemption of P4,000.00 in the computation of the estate tax; (c) for purposes of estate and inheritance taxation the Baguio real estate of the spouses should be valued at P52,200.00, and 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc. should be appraised at P0.38 per share; and (d) the estate shall be entitled to a deduction of P2,000.00 for funeral expenses and judicial expenses of P8,604.39. From this decision, both parties appealed. The Collector of Internal Revenue, hereinafter called petitioner assigned four errors allegedly committed by the trial court, while the assignees, Douglas and Bettina Fisher hereinafter called respondents, made six assignments of error. Together, the assigned errors raise the following main issues for resolution by this Court: (1) Whether or not, in determining the taxable net estate of the decedent, one-half () of the net estate should be deducted therefrom as the share of tile surviving spouse in accordance with our law on conjugal partnership and in relation to section 89 (c) of the National Internal revenue Code; (2) Whether or not the estate can avail itself of the reciprocity proviso embodied in Section 122 of the National Internal Revenue Code granting exemption from the payment of estate and inheritance taxes on the 210,000 shares of stock in the Mindanao Mother Lode Mines Inc.; (3) Whether or not the estate is entitled to the deduction of P4,000.00 allowed by Section 861, U.S. Internal Revenue Code in relation to section 122 of the National Internal Revenue Code; (4) Whether or not the real estate properties of the decedent located in Baguio City and the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc., were correctly appraised by the lower court; (5) Whether or not the estate is entitled to the following deductions: P8,604.39 for judicial and administration expenses; P2,086.52 for funeral expenses; P652.50 for real estate taxes; and P10,0,22.47 representing the amount of indebtedness allegedly incurred by the decedent during his lifetime; and (6) Whether or not the estate is entitled to the payment of interest on the amount it claims to have overpaid the government and to be refundable to it. In deciding the first issue, the lower court applied a well-known doctrine in our civil law that in the absence of any antenuptial agreement, the contracting parties are presumed to have adopted the system of conjugal partnership as to the properties acquired during their marriage. The application of this doctrine to the instant case is being disputed, however, by petitioner Collector of Internal Revenue, who contends that pursuant to Article 124 of the New Civil Code, the property relation of the spouses Stevensons ought not to be determined by the Philippine law, but by the national law of the decedent husband, in this case, the law of England. It is alleged by petitioner that English laws do not recognize legal partnership between spouses, and that what obtains in that jurisdiction is another regime of property relation, wherein all properties acquired during the marriage pertain and belong Exclusively to the husband. In further support of his stand, petitioner cites Article 16 of the New Civil Code (Art. 10 of the old) to the effect that in testate and intestate proceedings, the amount of successional rights, among others, is to be determined by the national law of the decedent. In this connection, let it be noted that since the mariage of the Stevensons in the Philippines took place in 1909, the applicable law is Article 1325 of the old Civil Code and not Article 124 of the New Civil Code which became effective only in 1950. It is true that both articles adhere to the so-called nationality theory of determining the property relation of spouses where one of them is a foreigner and they have made no prior agreement as to the administration disposition, and ownership of their conjugal properties. In such a case, the national law of the husband becomes the dominant law in determining the property relation of the spouses. There is, however, a difference between the two articles in that Article 1241 of the new Civil Code expressly provides that it shall be applicable regardless of whether the marriage was celebrated in the Philippines or abroad while Article 1325 2 of the old Civil Code is limited to marriages contracted in a foreign land. It must be noted, however, that what has just been said refers to mixed marriages between a Filipino citizen and a foreigner. In the instant case, both spouses are foreigners who married in the Philippines. Manresa, 3 in his Commentaries, has this to say on this point: La regla establecida en el art. 1.315, se refiere a las capitulaciones otorgadas en Espana y entre espanoles. El 1.325, a las celebradas en el extranjero cuando alguno de los conyuges es espanol. En cuanto a la regla procedente cuando dos extranjeros se casan en Espana, o dos espanoles en el extranjero hay que atender en el primer caso a la legislacion de pais a que aquellos pertenezean, y en el segundo, a las reglas generales consignadas en los articulos 9 y 10 de nuestro Codigo. (Emphasis supplied.) If we adopt the view of Manresa, the law determinative of the property relation of the Stevensons, married in 1909, would be the English law even if the marriage was celebrated in the Philippines, both of them being foreigners. But, as correctly observed by the Tax Court, the pertinent English law that allegedly vests in the decedent husband full ownership of the properties acquired during the marriage has not been proven by petitioner. Except for a mere allegation in his answer, which is not sufficient, the record is bereft of any evidence as to what English law says on the matter. In the absence of proof, the Court is justified, therefore, in indulging in what Wharton calls "processual presumption," in presuming that the law of England on this matter is the same as our law. 4 Nor do we believe petitioner can make use of Article 16 of the New Civil Code (art. 10, old Civil Code) to bolster his stand. A reading of Article 10 of the old Civil Code, which incidentally is the one applicable, shows that it does not encompass or contemplate to govern the question of property relation between spouses. Said article distinctly speaks of amount of successional rights and this term, in speaks in our opinion, properly refers to the extent or amount of property that each heir is legally entitled to inherit from the estate available for distribution. It needs to be pointed out that the property relation of spouses, as distinguished from their successional rights, is governed differently by the specific and express provisions of Title VI, Chapter I of our new Civil Code (Title III, Chapter I of the old Civil Code.) We, therefore, find that the lower court correctly deducted the half of the conjugal property in determining the hereditary estate left by the deceased Stevenson. On the second issue, petitioner disputes the action of the Tax Court in the exempting the respondents from paying inheritance tax on the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc. in virtue of the reciprocity proviso of Section 122 of the National Internal Revenue Code, in relation to Section 13851 of the California Revenue and Taxation Code, on the ground that: (1) the said proviso of the California Revenue and Taxation Code has not been duly proven by

the respondents; (2) the reciprocity exemptions granted by section 122 of the National Internal Revenue Code can only be availed of by residents of foreign countries and not of residents of a state in the United States; and (3) there is no "total" reciprocity between the Philippines and the state of California in that while the former exempts payment of both estate and inheritance taxes on intangible personal properties, the latter only exempts the payment of inheritance tax.. To prove the pertinent California law, Attorney Allison Gibbs, counsel for herein respondents, testified that as an active member of the California Bar since 1931, he is familiar with the revenue and taxation laws of the State of California. When asked by the lower court to state the pertinent California law as regards exemption of intangible personal properties, the witness cited article 4, section 13851 (a) and (b) of the California Internal and Revenue Code as published in Derring's California Code, a publication of the Bancroft-Whitney Company inc. And as part of his testimony, a full quotation of the cited section was offered in evidence as Exhibits "V-2" by the respondents. It is well-settled that foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them.5 Like any other fact, they must be alleged and proved. 6 Section 41, Rule 123 of our Rules of Court prescribes the manner of proving foreign laws before our tribunals. However, although we believe it desirable that these laws be proved in accordance with said rule, we held in the case of Willamette Iron and Steel Works v. Muzzal, 61 Phil. 471, that "a reading of sections 300 and 301 of our Code of Civil Procedure (now section 41, Rule 123) will convince one that these sections do not exclude the presentation of other competent evidence to prove the existence of a foreign law." In that case, we considered the testimony of an attorney-at-law of San Francisco, California who quoted verbatim a section of California Civil Code and who stated that the same was in force at the time the obligations were contracted, as sufficient evidence to establish the existence of said law. In line with this view, we find no error, therefore, on the part of the Tax Court in considering the pertinent California law as proved by respondents' witness. We now take up the question of reciprocity in exemption from transfer or death taxes, between the State of California and the Philippines.F Section 122 of our National Internal Revenue Code, in pertinent part, provides: ... And, provided, further, That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at the time of his death was a resident of a foreign country which at the time of his death did not impose a transfer of tax or death tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country." (Emphasis supplied). On the other hand, Section 13851 of the California Inheritance Tax Law, insofar as pertinent, reads:. "SEC. 13851, Intangibles of nonresident: Conditions. Intangible personal property is exempt from the tax imposed by this part if the decedent at the time of his death was a resident of a territory or another State of the United States or of a foreign state or country which then imposed a legacy, succession, or death tax in respect to intangible personal property of its own residents, but either:. (a) Did not impose a legacy, succession, or death tax of any character in respect to intangible personal property of residents of this State, or (b) Had in its laws a reciprocal provision under which intangible personal property of a non-resident was exempt from legacy, succession, or death taxes of every character if the Territory or other State of the United States or foreign state or country in which the nonresident resided allowed a similar exemption in respect to intangible personal property of residents of the Territory or State of the United States or foreign state or country of residence of the decedent." (Id.) It is clear from both these quoted provisions that the reciprocity must be total, that is, with respect to transfer or death taxes of any and every character, in the case of the Philippine law, and to legacy, succession, or death taxes of any and every character, in the case of the California law. Therefore, if any of the two states collects or imposes and does not exempt any transfer, death, legacy, or succession tax of any character, the reciprocity does not work. This is the underlying principle of the reciprocity clauses in both laws. In the Philippines, upon the death of any citizen or resident, or non-resident with properties therein, there are imposed upon his estate and its settlement, both an estate and an inheritance tax. Under the laws of California, only inheritance tax is imposed. On the other hand, the Federal Internal Revenue Code imposes an estate tax on non-residents not citizens of the United States,7 but does not provide for any exemption on the basis of reciprocity. Applying these laws in the manner the Court of Tax Appeals did in the instant case, we will have a situation where a Californian, who is non-resident in the Philippines but has intangible personal properties here, will the subject to the payment of an estate tax, although exempt from the payment of the inheritance tax. This being the case, will a Filipino, non-resident of California, but with intangible personal properties there, be entitled to the exemption clause of the California law, since the Californian has not been exempted from every character of legacy, succession, or death tax because he is, under our law, under obligation to pay an estate tax? Upon the other hand, if we exempt the Californian from paying the estate tax, we do not thereby entitle a Filipino to be exempt from a similar estate tax in California because under the Federal Law, which is equally enforceable in California he is bound to pay the same, there being no reciprocity recognized in respect thereto. In both instances, the Filipino citizen is always at a disadvantage. We do not believe that our legislature has intended such an unfair situation to the detriment of our own government and people. We, therefore, find and declare that the lower court erred in exempting the estate in question from payment of the inheritance tax. We are not unaware of our ruling in the case of Collector of Internal Revenue vs. Lara (G.R. Nos. L-9456 & L-9481, prom. January 6, 1958, 54 O.G. 2881) exempting the estate of the deceased Hugo H. Miller from payment of the inheritance tax imposed by the Collector of Internal Revenue. It will be noted, however, that the issue of reciprocity between the pertinent provisions of our tax law and that of the State of California was not there squarely raised, and the ruling therein cannot control the determination of the case at bar. Be that as it may, we now declare that in view of the express provisions of both the Philippine and California laws that the exemption would apply only if the law of the other grants an exemption from legacy, succession, or death taxes of every character, there could not be partial reciprocity. It would have to be total or none at all. With respect to the question of deduction or reduction in the amount of P4,000.00 based on the U.S. Federal Estate Tax Law which is also being claimed by respondents, we uphold and adhere to our ruling in the Lara case (supra) that the amount of $2,000.00 allowed under the Federal Estate Tax Law is in the nature of a deduction and not of an exemption regarding which reciprocity cannot be claimed under the provision of Section 122 of our National Internal Revenue Code. Nor is reciprocity authorized under the Federal Law. .

On the issue of the correctness of the appraisal of the two parcels of land situated in Baguio City, it is contended that their assessed values, as appearing in the tax rolls 6 months after the death of Stevenson, ought to have been considered by petitioner as their fair market value, pursuant to section 91 of the National Internal Revenue Code. It should be pointed out, however, that in accordance with said proviso the properties are required to be appraised at their fair market value and the assessed value thereof shall be considered as the fair market value only when evidence to the contrary has not been shown. After all review of the record, we are satisfied that such evidence exists to justify the valuation made by petitioner which was sustained by the tax court, for as the tax court aptly observed: "The two parcels of land containing 36,264 square meters were valued by the administrator of the estate in the Estate and Inheritance tax returns filed by him at P43,500.00 which is the assessed value of said properties. On the other hand, defendant appraised the same at P52,200.00. It is of common knowledge, and this Court can take judicial notice of it, that assessments for real estate taxation purposes are very much lower than the true and fair market value of the properties at a given time and place. In fact one year after decedent's death or in 1952 the said properties were sold for a price of P72,000.00 and there is no showing that special or extraordinary circumstances caused the sudden increase from the price of P43,500.00, if we were to accept this value as a fair and reasonable one as of 1951. Even more, the counsel for plaintiffs himself admitted in open court that he was willing to purchase the said properties at P2.00 per square meter. In the light of these facts we believe and therefore hold that the valuation of P52,200.00 of the real estate in Baguio made by defendant is fair, reasonable and justified in the premises." (Decision, p. 19). In respect to the valuation of the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc., (a domestic corporation), respondents contend that their value should be fixed on the basis of the market quotation obtaining at the San Francisco (California) Stock Exchange, on the theory that the certificates of stocks were then held in that place and registered with the said stock exchange. We cannot agree with respondents' argument. The situs of the shares of stock, for purposes of taxation, being located here in the Philippines, as respondents themselves concede and considering that they are sought to be taxed in this jurisdiction, consistent with the exercise of our government's taxing authority, their fair market value should be taxed on the basis of the price prevailing in our country. Upon the other hand, we find merit in respondents' other contention that the said shares of stock commanded a lesser value at the Manila Stock Exchange six months after the death of Stevenson. Through Atty. Allison Gibbs, respondents have shown that at that time a share of said stock was bid for at only P.325 (p. 103, t.s.n.). Significantly, the testimony of Atty. Gibbs in this respect has never been questioned nor refuted by petitioner either before this court or in the court below. In the absence of evidence to the contrary, we are, therefore, constrained to reverse the Tax Court on this point and to hold that the value of a share in the said mining company on August 22, 1951 in the Philippine market was P.325 as claimed by respondents.. It should be noted that the petitioner and the Tax Court valued each share of stock of P.38 on the basis of the declaration made by the estate in its preliminary return. Patently, this should not have been the case, in view of the fact that the ancillary administrator had reserved and availed of his legal right to have the properties of the estate declared at their fair market value as of six months from the time the decedent died.. On the fifth issue, we shall consider the various deductions, from the allowance or disallowance of which by the Tax Court, both petitioner and respondents have appealed.. Petitioner, in this regard, contends that no evidence of record exists to support the allowance of the sum of P8,604.39 for the following expenses:. 1) Administrator's fee P1,204.34 2) Attorney's fee 3) Judicial and Administrative expenses 6,000.00 2,052.55

Total Deductions P8,604.39 An examination of the record discloses, however, that the foregoing items were considered deductible by the Tax Court on the basis of their approval by the probate court to which said expenses, we may presume, had also been presented for consideration. It is to be supposed that the probate court would not have approved said items were they not supported by evidence presented by the estate. In allowing the items in question, the Tax Court had before it the pertinent order of the probate court which was submitted in evidence by respondents. (Exh. "AA-2", p. 100, record). As the Tax Court said, it found no basis for departing from the findings of the probate court, as it must have been satisfied that those expenses were actually incurred. Under the circumstances, we see no ground to reverse this finding of fact which, under Republic Act of California National Association, which it would appear, that while still living, Walter G. Stevenson obtained we are not inclined to pass upon the claim of respondents in respect to the additional amount of P86.52 for funeral expenses which was disapproved by the court a quo for lack of evidence. In connection with the deduction of P652.50 representing the amount of realty taxes paid in 1951 on the decedent's two parcels of land in Baguio City, which respondents claim was disallowed by the Tax Court, we find that this claim has in fact been allowed. What happened here, which a careful review of the record will reveal, was that the Tax Court, in itemizing the liabilities of the estate, viz: 1) Administrator's fee P1,204.34 2) Attorney's fee 3) Judicial and Administration expenses as of August 9, 1952 6,000.00 2,052.55

Total P9,256.89 added the P652.50 for realty taxes as a liability of the estate, to the P1,400.05 for judicial and administration expenses approved by the court, making a total of P2,052.55, exactly the same figure which was arrived at by the Tax Court for judicial and administration expenses. Hence, the difference between the total of P9,256.98 allowed by the Tax Court as deductions, and the P8,604.39 as found by the probate court, which is P652.50, the same amount allowed for realty taxes. An evident oversight has involuntarily been made in omitting the P2,000.00 for funeral expenses in the final computation. This amount has been expressly allowed by the lower court and there is no reason why it should not be. . We come now to the other claim of respondents that pursuant to section 89(b) (1) in relation to section 89(a) (1) (E) and section 89(d), National Internal Revenue Code, the amount of P10,022.47 should have been allowed the estate as a deduction, because it represented an indebtedness of the decedent incurred during his lifetime. In support thereof, they offered in evidence a duly certified claim, presented to the probate court in California by the Bank of California National

Association, which it would appear, that while still living, Walter G. Stevenson obtained a loan of $5,000.00 secured by pledge on 140,000 of his shares of stock in the Mindanao Mother Lode Mines, Inc. (Exhs. "Q-Q4", pp. 53-59, record). The Tax Court disallowed this item on the ground that the local probate court had not approved the same as a valid claim against the estate and because it constituted an indebtedness in respect to intangible personal property which the Tax Court held to be exempt from inheritance tax. For two reasons, we uphold the action of the lower court in disallowing the deduction. Firstly, we believe that the approval of the Philippine probate court of this particular indebtedness of the decedent is necessary. This is so although the same, it is averred has been already admitted and approved by the corresponding probate court in California, situs of the principal or domiciliary administration. It is true that we have here in the Philippines only an ancillary administration in this case, but, it has been held, the distinction between domiciliary or principal administration and ancillary administration serves only to distinguish one administration from the other, for the two proceedings are separate and independent. 8 The reason for the ancillary administration is that, a grant of administration does not ex proprio vigore, have any effect beyond the limits of the country in which it was granted. Hence, we have the requirement that before a will duly probated outside of the Philippines can have effect here, it must first be proved and allowed before our courts, in much the same manner as wills originally presented for allowance therein. 9 And the estate shall be administered under letters testamentary, or letters of administration granted by the court, and disposed of according to the will as probated, after payment of just debts and expenses of administration. 10 In other words, there is a regular administration under the control of the court, where claims must be presented and approved, and expenses of administration allowed before deductions from the estate can be authorized. Otherwise, we would have the actuations of our own probate court, in the settlement and distribution of the estate situated here, subject to the proceedings before the foreign court over which our courts have no control. We do not believe such a procedure is countenanced or contemplated in the Rules of Court. Another reason for the disallowance of this indebtedness as a deduction, springs from the provisions of Section 89, letter (d), number (1), of the National Internal Revenue Code which reads: (d) Miscellaneous provisions (1) No deductions shall be allowed in the case of a non-resident not a citizen of the Philippines unless the executor, administrator or anyone of the heirs, as the case may be, includes in the return required to be filed under section ninety-three the value at the time of his death of that part of the gross estate of the non-resident not situated in the Philippines." In the case at bar, no such statement of the gross estate of the non-resident Stevenson not situated in the Philippines appears in the three returns submitted to the court or to the office of the petitioner Collector of Internal Revenue. The purpose of this requirement is to enable the revenue officer to determine how much of the indebtedness may be allowed to be deducted, pursuant to (b), number (1) of the same section 89 of the Internal Revenue Code which provides: (b) Deductions allowed to non-resident estates. In the case of a non-resident not a citizen of the Philippines, by deducting from the value of that part of his gross estate which at the time of his death is situated in the Philippines (1) Expenses, losses, indebtedness, and taxes. That proportion of the deductions specified in paragraph (1) of subjection (a) of this section11 which the value of such part bears the value of his entire gross estate wherever situated;" In other words, the allowable deduction is only to the extent of the portion of the indebtedness which is equivalent to the proportion that the estate in the Philippines bears to the total estate wherever situated. Stated differently, if the properties in the Philippines constitute but 1/5 of the entire assets wherever situated, then only 1/5 of the indebtedness may be deducted. But since, as heretofore adverted to, there is no statement of the value of the estate situated outside the Philippines, no part of the indebtedness can be allowed to be deducted, pursuant to Section 89, letter (d), number (1) of the Internal Revenue Code. For the reasons thus stated, we affirm the ruling of the lower court disallowing the deduction of the alleged indebtedness in the sum of P10,022.47. In recapitulation, we hold and declare that: (a) only the one-half (1/2) share of the decedent Stevenson in the conjugal partnership property constitutes his hereditary estate subject to the estate and inheritance taxes; (b) the intangible personal property is not exempt from inheritance tax, there existing no complete total reciprocity as required in section 122 of the National Internal Revenue Code, nor is the decedent's estate entitled to an exemption of P4,000.00 in the computation of the estate tax; (c) for the purpose of the estate and inheritance taxes, the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc. are to be appraised at P0.325 per share; and (d) the P2,000.00 for funeral expenses should be deducted in the determination of the net asset of the deceased Stevenson. In all other respects, the decision of the Court of Tax Appeals is affirmed. Respondent's claim for interest on the amount allegedly overpaid, if any actually results after a recomputation on the basis of this decision is hereby denied in line with our recent decision in Collector of Internal Revenue v. St. Paul's Hospital (G.R. No. L-12127, May 29, 1959) wherein we held that, "in the absence of a statutory provision clearly or expressly directing or authorizing such payment, and none has been cited by respondents, the National Government cannot be required to pay interest." WHEREFORE, as modified in the manner heretofore indicated, the judgment of the lower court is hereby affirmed in all other respects not inconsistent herewith. No costs. So ordered. Paras, C.J., Bengzon, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Gutierrez David, Paredes and Dizon, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 74305 January 31, 1992 SAMHWA COMPANY LTD., and LOTUS EXPORTS SPECIALISTS, INC., petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, LOUIS SHEFF and HERSCHELL SWIRYN, respondents. Angara, Abello, Concepcion, Regala & Cruz for petitioners. Tee, Tomas & Associates for private respondents.

MEDIALDEA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals affirming the trial court's judgment which ordered petitioner Samwha Company Ltd. (Samhwa for brevity) to pay damages to private respondents. The civil action was instituted before the trial court against Samhwa by respondents Louis Sheff and Herschel Swiryn, who were among the original stockholders of a company known as Lotus Export Specialists, Inc. (Lotus, Inc. for brevity). The antecedent facts of the case as found both by the respondent appellate court and the trial court are as follows: On September 28, 1977, the plaintiffs and the other original stockholders sold their shareholdings in said company to Samhwa Company Ltd. The terms of the sale were embodied in a Memorandum of Agreement (Exhibit A) the pertinent provisions of which provided that only 70% of the equity sold would be turned over to Samhwa immediately (par 3(a) of Exhibit A) and 30% upon release of the personal guarantees and other collaterals stated in paragraph 3(c) of Exhibit A. The personal guarantees referred to in Exhibit A cover the personal guarantees executed by the plaintiffs in favor of the Development Bank of the Philippines, hereinafter referred to as DBP, to guarantee payment of a loan extended by the DBP to Lotus. In addition, the original stockholders and more particularly Mariano Marcos furnished the DBP with 212,980 shares of Marcopper as collaterals for said loan. (In their various pleadings both parties placed the figure at 250,000 shares but Exhibit 3 only states 212,980 shares). After the sale for all intents and purposes, Samhwa took control of the operations of Lotus and the management of said corporation remained in the hands of Samhwa to the exclusion of plaintiffs. Under the terms of the Agreement of September 28, 1977 the following provisions were brought to the attention of the Court as part of the evidence and are vital to the consideration of the matters raised in issue (par. 3(c) of Exhibit A): 1. The primary consideration of this sale is the release of sellers from their individual or personal guarantees and the collateral (250,000 shares of Marcopper Mining Corporation given to the DBP in connection with a loan DBP has extended to Lotus) . . . provided, however, that if, after two years from date of this agreement, the said release of the SELLERS' personal guarantees and collaterals will not have been accomplished, BUYER undertakes to cause Lotus to pay DBP US $50,000.00 and a further US $50,000.00 every six (6) months thereafter, aside from payment of the regular amortization schedule due the DBP, until the release of the said personal guarantees and the aforesaid collateral will have been effected or until full payment of the Lotus loan whichever comes first (par 3 (c) of Exhibit A). 2. Without prejudice to Lotus entering into any arrangements regarding the payment or restructuring of all interests, BUYER undertakes to cause Lotus to pay and keep current all interests on said DBP loan; provided, however, that BUYER shall cause Lotus to pay interest on said loans as and when due, it being understood that any such restructuring as heretofore mentioned will not involve any further monetary or other type of obligation on the part of SELLERS (par. 5 of Exhibit A). Reduced to its simplest terms the above provisions made it incumbent on Samhwa to secure the release of the personal guarantees and collateral posted by the plaintiffs and other original stockholders (par. 3(c) of Exhibit A) in default of which Samhwa undertook to cause Lotus to pay the DBP US $50,000.00 every six (6) months two years from date of the agreement until the release of the personal guarantees or full payment of the Lotus loan was made. Samhwa also undertook to cause Lotus to pay and keep current all interests on said DBP loan. The other matter raised in the complaint of representation in the Board was not proved or brought up during the hearing and therefore, for all intents and purposes, can be disregarded in this decision. On the other hand, under paragraph 3(b) of Exhibit A, plaintiffs agreed and stipulated that if the negative net assets value of the company exceeded the Amount of P3,375,000.00 then the plaintiffs would pay Samhwa any excess "at the time of release by the DBP of sellers" personal guarantees and other collaterals." In addition, plaintiffs also undertook to pay Samhwa the difference between the peso equivalent and foreign currency loan extended by the DBP to Lotus on the basis of prevailing rate of exchange available as of September 28, 1977 but not to exceed P750,000.00 which payment again shall be effected at the time of the release by the DBP of plaintiffs' personal guarantees and other collateral (par. 3, (b)-IV of Exhibit A). Time went by and defendants Samhwa and Lotus did not secure the release of the individual and personal guarantees of the plaintiffs despite the fact that on December 10, 1980 under Res. 4083(par. 7 of Exhibit A) the DBP approved the substitution of the personal guarantees of Louis Sheff, Isabel Wilson, Herschel Swiryn and Alfredo Africa by Samhwa under certain conditions. It also appears from the record that until the time of the trial no payment was made on the principal obligation due the DBP and that defendants allowed the DBP loan to become delinquent (tsn, April 5, 1982; pp. 22-23; pp. 28-29; pp. 32-35). Inspite of the fact that the principal obligations due the DBP had not been settled on time and interest payments were delinquent as of the date of the trial Samhwa and Lotus never paid the US $50,000.00 every six (6) months provided in paragraph 3(c) of Exhibit A . This was admitted by the witness for Samhwa himself, Mr. Sae Chae Lee (tsn. Oct, 22, 1982, pp. 75-78). Having failed to compel defendants to comply with their undertakings under Exhibit A, plaintiff brought the present complaint to this court with the prayer that defendants be ordered: 1. To open its books of account and records for inspection, 2. To pay the DBP amortization; 3. To pay interest on the DBP loan; 4. To deposit US $200,000.00 with the DBP representing payments due for September 1979, March 1980, September 1980 and March 198l; 5. To release the personal guarantees of the plaintiffs with the DBP; 6. To pay plaintiffs damages in the amount of P1,000,000.00; and 7. Such other relief as this Court may deem just and proper . In its Answer to the complaint the defendants, while admitting the existence of Exhibit A, allege that the complaint was malicious and unfounded and was filed to avoid plaintiffs' obligations under the said agreement which was quantified as follows: 1. Excess of negative net assets value, under par. 3(b) of the Memorandum Agreement P 679,950.75 2. Foreign currency differential under par. 3(b)-iv of the Memorandum of Agreement. 750,000.00 P1,429,950.75

The theory offered by the defendants is that under the provisions of Exhibit A and particularly paragraph 3(b), plaintiffs had to pay defendants the amount of P1,429,950.75 and having failed to do so the defendants did not have to comply with the undertakings stated in the complaint. . . . (pp. 84-88, Rollo). On September 2, 1983, the trial court rendered a decision in favor of respondents, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiffs Louis Sheff and Herschel Swiryn and against defendants Samhwa Company Ltd. and Lotus Exports Specialists Inc. as follows: 1. That the defendants take immediate steps to maintain the obligation due the DBP in such a manner as to free the plaintiffs from any further liability to the DBP; 2. That the defendants immediately secure the release of the personal guarantees of the plaintiffs and the collateral of Mr. Mariano Marcos without any further demands on the plaintiffs; 3. That the plaintiffs upon receipt of the clearances from the DBP turn over to the defendants the 30% equity of Lotus: 4. That the counterclaims of defendants in the amount of P1,429,950.75 is offset against plaintiffs right of damages against defendants in the amount of P2,250,627.30 so that defendants are jointly and severally ordered to pay plaintiffs the amount of P833,455.35 in actual damages; and 5. That the defendants are ordered to pay plaintiffs the sum of P150,000.00 as exemplary damages for bad faith and malice in the handling of the matter in issue. With costs against the defendants. SO ORDERED. (pp. 45-46, Rollo) Not satisfied with the decision, petitioners appealed to the Court of Appeals. On November 15, 1985, the respondent appellate court rendered judgment affirming the decision of the trial court. On a motion for reconsideration filed by petitioners, the Court of Appeals on April 9, 1986 issued the following resolutions: We find that there is sufficient evidence of actual damages, but no sufficient evidence of malice and bad faith. WHEREFORE, the Motion for Reconsideration is denied, except that the order for defendants to pay P150,000.00 as exemplary damages to the plaintiffs is ordered deleted from the dispositive portion of the lower court's decision. SO ORDERED. (p. 121, Rollo) Hence, this petition was filed with the petitioners assigning the following errors committed by the respondent appellate court: 1. Respondent Court has decided a question of substance, not heretofore determined by this Honorable Court, involving the propriety or fairness of an award for actual damages despite the admitted absence of actual proof substantiating pecuniary loss. 2. Respondent Court has decided in a way not in accord with law or with applicable decisions of this Honorable Court by awarding actual damages based on unsupported allegations, speculations, and conjectures. 3. Respondent Court has awarded actual damages in an excessive amount despite the fact that private respondents did not incur any actual or additional cost or expense as a consequence of the acts and omissions complained of. (pp. 23, Rollo) The errors assigned by petitioners boil down to the issue of whether or not the award of actual damages made by the trial court and affirmed by the respondent appellate court in favor of respondents Sheff and Swiryn is proper. Petitioners contend that the actual damages awarded by the trial court in favor of respondents representing guaranty fees which banks normally charge, which in this case amounted to l,111,663.30, has no legal basis considering that respondents did not suffer any damage resulting from the non-release of their personal guarantees; that respondents did not pay any amount to the DBP on the loan of petitioner Lotus, Inc. nor were they called upon to make good their subsidiary liability on their personal guarantees. Petitioners also submit that those actual damages awarded to respondents equivalent to the value of the Marcopper shares which respondents could have realized if the shares were released by petitioners on time is speculative, there being no proof of the actual value of the shares or of the availability of buyers thereof during said period. Further, as to the difference in the exchange value of US $50,000 which petitioners committed to pay the DBP every six months pursuant to the memorandum agreement, petitioners argue that this cannot be the basis for awarding damages to respondents since this is also remote and speculative, taking into account again the fact that respondents Sheff and Swiryn were never made to pay any amount on the loan to DBP. The contract has the force of law between the parties. From the moment the contract is perfected, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law (Art. 1315, Civil Code). Hence, those who in the performance of their obligations under the contract are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages (Art. 1170, Civil Code). There is no doubt that petitioners have committed a substantial breach of the contract when they failed without reasonable ground to release respondents Sheff and Swiryn from their personal guarantees on the loan of petitioner Lotus, Inc. from DBP and when petitioners failed to pay the indebtedness of Lotus, Inc. within the stipulated period as provided in the Memorandum Agreement. In this case, the damages to which said respondents are entitled are governed by Article 2201 of the Civil Code which states: Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. The trial court awarded actual damages in favor of respondents in the form of guaranty fees, loss in the value of Marcopper shares and the difference in the peso value of US $50,000.00 payable semi-annually by petitioners to DBP, as well as exemplary damages in the amount of P150,000.00 due to bad faith on the part of petitioners. Except as to the award of exemplary damages, the respondent appellate court affirmed the findings of the trial court as to the award of actual damages. These were their findings: It was incumbent upon defendants: 1. To keep payment of the principal obligation and interests with the DBP up to date; 2. To secure within the two-year period stipulated the release of the personal guarantees and collateral of the plaintiffs. They failed in the above to pay US $50,000.00 every six (6) months starting September 1979. Having failed to perform any of the foregoing under the provision of Articles 1169 and 1181 of the Civil Code quoted above the plaintiffs had no obligation to pay defendants the demanded P1,429,950.75.

The total obligation to the DBP was P19,762,995.31 (Exhibit F) computed at a conservative 12% per annum from the target date of payment or 2 years after September 18, 1977 or September 1979 to the present or for 3 years and 9 months or 45 months. Plaintiffs' exposure for interest alone to the DBP is equivalent to P8,893,347.87 On the other hand, this obligation was restructured as early as December 10, 1980 and April 1, 1981 (Exhibit E & 7) so that in fact DBP has looked primarily to defendants for the payment of the obligation secured by plaintiff's guarantees and collateral. Such being the case it would not be fair to charge defendants for this total interest figure but the fact of the matter is that plaintiffs remained liable to the DBP for the loan subsidiarily and this has a cost of at least 1-1/2% per annum which is what banks charge as a guaranty fee or Pl,111,668.30 for the 45 months after September 28, 1979. (Arts, l191 & 1192, Civil Code of the Philippines) In September of 1979 the Marcopper shares had a value of P1,011,665.00 computed at P4.75 per share (Manila Stock Market Price). This is what plaintiffs could have realized from said shares if they had been released at the correct time. The Marcopper shares only fetch P1.20 (price as of July 6, 1983) per share or 255,576. 00 for the 212,980 shares. This means a loss to the plaintiffs of P756,089.00. On the US $50.000.00 that defendants committed to pay the DBP every six (6) months the Court agrees with the computation of the plaintiffs that in exchange value alone the plaintiffs were damaged in the amount of P382,870.00 up to September of 1982 computed as follows: Date Payment of US$ 50,000.00 Dollar should Dollar is have been was now made worth or worth or Loss Sept 1979 P7.3715 368.575 P8.95 P447,500 P78,925.00 March 1980 7.426 371.300 8.95 447,500 76,200.00 Sept 1980 7.5605 378.025 8.95 447,500 69,475.00 March 1981 7.75 387.500 8.95 447,500 60,000.00 Sept 1981 8.02 401.000 8.95 447,500 46,500.00 March 1982 8.2764 413.410 8.95 447,500 33,680.00 Sept 1982 8.5882 429.410 8.95 447,500 18,090.00 P382,870.00 All in all, therefore, on the basis of actual damage plaintiffs lost because of the delay in the settlement of the DBP account the following: Pl,111,668.30 as guaranty cost 756,089.00 on the Marcopper shares 382,870.00 on the dollar difference 2,250,627.30 total The above figure more than compensates what could be due defendants on their claim arising out of Exhibit A. Plaintiffs did not contest the correctness of the figure of P1,429,950.75 and so it stands uncontroverted and is accepted by the Court as correct. When the guarantee and collateral are released, therefore, the said amount becomes due defendants from plaintiffs subject to plaintiffs claim for damages (pp. 210-213, Original Records) (pp. 42-45, Rollo) We give weight to the factual findings of the respondent appellate court and trial court with respect to the loss suffered by respondents in the value of the Marcopper shares and as to the guaranty fees and difference in the peso equivalent of the sum of US $50,000.00 that should have been paid semi-annually. Petitioners failed in the performance of their contract, and as provided under the Civil Code, the person who fails in the performance of his obligations shall be subject to indemnify for the losses and damages caused thereby. The true measure of damages for the breach of such a contract is what the private respondents have lost by the breach (De la Cruz v. Seminario de Manila, 18 Phil. 330). While the contract imposed no penalty for such violation, this does not grant any of the parties the unbridled liberty to breach it with impunity. Our law on contracts recognizes the principle that actionable injury inheres in every contractual breach (Boysaw v. Interphil Promotions, Inc., No. L-22590, March 20, 1987, 148 SCRA 635). Since the trial court and respondent appellate court found that private respondents did not refute their liability to petitioners under the contract in the amount of P1,429,950.75, this should be set off against the aforestated damages due to respondents in the amount of P2,250,627.30. Hence, petitioners shall he liable to pay respondents in the amount of P820,676.55. ACCORDINGLY, the petition is DENIED and the assailed decision of the respondent appellate court dated November 15, 1985 and its resolution dated April 9, 1986 are AFFIRMED. Petitioners Samhwa Company Ltd. and Lotus Exports Specialists Inc. shall be jointly and severally liable to pay respondents Louis Sheff and Herschell Swiryn in the amount of P820,676.55 SO ORDERED. Narvasa, C.J., Cruz and Grio-Aquino, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 108358 January 20, 1995 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. THE HON. COURT OF APPEALS, R.O.H. AUTO PRODUCTS PHILIPPINES, INC. and THE HON. COURT OF TAX APPEALS, respondents. VITUG, J.:

On 22 August 1986, during the period when the President of the Republic still wielded legislative powers, Executive Order No. 41 was promulgated declaring a one-time tax amnesty on unpaid income taxes, later amended to include estate and donor's taxes and taxes on business, for the taxable years 1981 to 1985. Availing itself of the amnesty, respondent R.O.H. Auto Products Philippines, Inc., filed, in October 1986 and November 1986, its Tax Amnesty Return No. 34-F-00146-41 and Supplemental Tax Amnesty Return No. 34-F-00146-64-B, respectively, and paid the corresponding amnesty taxes due. Prior to this availment, petitioner Commissioner of Internal Revenue, in a communication received by private respondent on 13 August 1986, assessed the latter deficiency income and business taxes for its fiscal years ended 30 September 1981 and 30 September 1982 in an aggregate amount of P1,410,157.71. The taxpayer wrote back to state that since it had been able to avail itself of the tax amnesty, the deficiency tax notice should forthwith be cancelled and withdrawn. The request was denied by the Commissioner, in his letter of 22 November 1988, on the ground that Revenue Memorandum Order No. 4-87, dated 09 February 1987, implementing Executive Order No. 41, had construed the amnesty coverage to include only assessments issued by the Bureau of Internal Revenue after the promulgation of the executive order on 22 August 1986 and not to assessments theretofore made. The invoked provisions of the memorandum order read: TO: All Internal Revenue Officers and Others Concerned: 1.0. To give effect and substance to the immunity provisions of the tax amnesty under Executive Order No. 41, as expanded by Executive Order No. 64, the following instructions are hereby issued: xxx xxx xxx 1.02. A certification by the Tax Amnesty Implementation Officer of the fact of availment of the said tax amnesty shall be a sufficient basis for: xxx xxx xxx 1.02.3. In appropriate cases, the cancellation/withdrawal of assessment notices and letters of demand issued after August 21, 1986 for the collection of income, business, estate or donor's taxes due during the same taxable years . 1 (Emphasis supplied) Private respondent appealed the Commissioner's denial to the Court of Tax Appeals. Ruling for the taxpayer, the tax court said: Respondent (herein petitioner Commissioner) failed to present any case or law which proves that an assessment can withstand or negate the force and effects of a tax amnesty. This burden of proof on the petitioner (herein respondent taxpayer) was created by the clear and express terms of the executive order's intention qualified availers of the amnesty may pay an amnesty tax in lieu of said unpaid taxes which are forgiven (Section 2, Section 5, Executive Order No. 41, as amended). More specifically, the plain provisions in the statute granting tax amnesty for unpaid taxes for the period January 1, 1981 to December 31, 1985 shifted the burden of proof on respondent to show how the issuance of an assessment before the date of the promulgation of the executive order could have a reasonable relation with the objective periods of the amnesty, so as to make petitioner still answerable for a tax liability which, through the statute, should have been erased with the proper availment of the amnesty. Additionally, the exceptions enumerated in Section 4 of Executive Order No. 41, as amended, do not indicate any reference to an assessment or pending investigation aside from one arising from information furnished by an informer. . . . Thus, we deem that the rule in Revenue Memorandum Order No. 4-87 promulgating that only assessments issued after August 21, 1986 shall be abated by the amnesty is beyond the contemplation of Executive Order No. 41, as amended. 2 On appeal by the Commissioner to the Court of Appeals, the decision of the tax court was affirmed. The appellate court further observed: In the instant case, examining carefully the words used in Executive Order No. 41, as amended, we find nothing which justifies petitioner Commissioner's ground for denying respondent taxpayer's claim to the benefits of the amnesty law. Section 4 of the subject law enumerates, in no uncertain terms, taxpayers who may not avail of the amnesty granted,. . . . Admittedly, respondent taxpayer does not fall under any of the . . . exceptions. The added exception urged by petitioner Commissioner based on Revenue Memorandum Order No. 4-87, further restricting the scope of the amnesty clearly amounts to an act of administrative legislation quite contrary to the mandate of the law which the regulation ought to implement. xxx xxx xxx Lastly, by its very nature, a tax amnesty, being a general pardon or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law, partakes of an absolute forgiveness or waiver by the Government of its right to collect what otherwise would be due it, and in this sense, prejudicial thereto, particularly to give tax evaders, who wish to relent and are willing to reform a chance to do so and thereby become a part of the new society with a clean slate. (Republic vs. Intermediate Appellate Court. 196 SCRA 335, 340 [1991] citing Commissioner of Internal Revenue vs. Botelho Shipping Corp., 20 SCRA 487) To follow [the restrictive application of Revenue Memorandum Order No. 4-87 pressed by petitioner Commissioner would be to work against the raison d'etre of E.O. 41, as amended, i.e., to raise government revenues by encouraging taxpayers to declare their untaxed income and pay the tax due thereon. (E.O. 41, first paragraph)] 3 In this petition for review, the Commissioner raises these related issues: 1. WHETHER OR NOT REVENUE MEMORANDUM ORDER NO. 4-87, PROMULGATED TO IMPLEMENT E.O. NO. 41, IS VALID; 2. WHETHER OR NOT SAID DEFICIENCY ASSESSMENTS IN QUESTION WERE EXTINGUISHED BY REASON OR PRIVATE RESPONDENT'S AVAILMENT OF EXECUTIVE ORDER NO. 41 AS AMENDED BY EXECUTIVE ORDER NO. 64; 3. WHETHER OR NOT PRIVATE RESPONDENT HAS OVERCOME THE PRESUMPTION OF VALIDITY OF ASSESSMENTS. 4 The authority of the Minister of Finance (now the Secretary of Finance), in conjunction with the Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective enforcement of internal revenue laws cannot be controverted. Neither can it be disputed that such rules and regulations, as well as administrative opinions and rulings, ordinarily should deserve weight and respect by the courts. Much more fundamental than either of the above, however, is that all such issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor to modify, the law. The real and only issue is whether or not the position taken by the Commissioner coincides with the meaning and intent of executive Order No. 41.

We agree with both the court of Appeals and court of Tax Appeals that Executive Order No. 41 is quite explicit and requires hardly anything beyond a simple application of its provisions. It reads: Sec. 1. Scope of Amnesty. A one-time tax amnesty covering unpaid income taxes for the years 1981 to 1985 is hereby declared. Sec. 2. Conditions of the Amnesty. A taxpayer who wishes to avail himself of the tax amnesty shall, on or before October 31, 1986; a) file a sworn statement declaring his net worth as of December 31, 1985; b) file a certified true copy of his statement declaring his net worth as of December 31, 1980 on record with the Bureau of Internal Revenue, or if no such record exists, file a statement of said net worth therewith, subject to verification by the Bureau of Internal Revenue; c) file a return and pay a tax equivalent to ten per cent (10%) of the increase in net worth from December 31, 1980 to December 31, 1985: Provided, That in no case shall the tax be less than P5,000.00 for individuals and P10,000.00 for judicial persons. Sec. 3. Computation of Net Worth. In computing the net worths referred to in Section 2 hereof, the following rules shall govern: a) Non-cash assets shall be valued at acquisition cost. b) Foreign currencies shall be valued at the rates of exchange prevailing as of the date of the net worth statement. Sec. 4. Exceptions. The following taxpayers may not avail themselves of the amnesty herein granted: a) Those falling under the provisions of Executive Order Nos. 1, 2 and 14; b) Those with income tax cases already filed in Court as of the effectivity hereof; c) Those with criminal cases involving violations of the income tax already filed in court as of the effectivity filed in court as of the effectivity hereof; d) Those that have withholding tax liabilities under the National Internal Revenue Code, as amended, insofar as the said liabilities are concerned; e) Those with tax cases pending investigation by the Bureau of Internal Revenue as of the effectivity hereof as a result of information furnished under Section 316 of the National Internal Revenue Code, as amended; f) Those with pending cases involving unexplained or unlawfully acquired wealth before the Sandiganbayan; g) Those liable under Title Seven, Chapter Three (Frauds, Illegal Exactions and Transactions) and Chapter Four (Malversation of Public Funds and Property) of the Revised Penal Code, as amended. xxx xxx xxx Sec. 9. The Minister of finance, upon the recommendation of the Commissioner of Internal Revenue, shall promulgate the necessary rules and regulations to implement this Executive Order. xxx xxx xxx Sec. 11. This Executive Order shall take effect immediately. DONE in the City of Manila, this 22nd day of August in the year of Our Lord, nineteen hundred and eighty-six. The period of the amnesty was later extended to 05 December 1986 from 31 October 1986 by Executive Order No. 54, dated 04 November 1986, and, its coverage expanded, under Executive Order No. 64, dated 17 November 1986, to include estate and honors taxes and taxes on business. If, as the Commissioner argues, Executive Order No. 41 had not been intended to include 1981-1985 tax liabilities already assessed (administratively) prior to 22 August 1986, the law could have simply so provided in its exclusionary clauses. It did not. The conclusion is unavoidable, and it is that the executive order has been designed to be in the nature of a general grant of tax amnesty subject only to the cases specifically excepted by it. It might not be amiss to recall that the taxable periods covered by the amnesty include the years immediately preceding the 1986 revolution during which time there had been persistent calls, all too vivid to be easily forgotten, for civil disobedience, most particularly in the payment of taxes, to the martial law regime. It should be understandable then that those who ultimately took over the reigns of government following the successful revolution would promptly provide for abroad, and not a confined, tax amnesty. Relative to the two other issued raised by the Commissioner, we need only quote from Executive Order No. 41 itself; thus: Sec. 6. Immunities and Privileges. Upon full compliance with the conditions of the tax amnesty and the rules and regulations issued pursuant to this Executive order, the taxpayer shall enjoy the following immunities and privileges: a) The taxpayer shall be relieved of any income tax liability on any untaxed income from January 1, 1981 to December 31, 1985, including increments thereto and penalties on account of the non-payment of the said tax. Civil, criminal or administrative liability arising from the non-payment of the said tax, which are actionable under the National Internal Revenue Code, as amended, are likewise deemed extinguished. b) The taxpayer's tax amnesty declaration shall not be admissible in evidence in all proceedings before judicial, quasijudicial or administrative bodies, in which he is a defendant or respondent, and the same shall not be examined, inquired or looked into by any person, government official, bureau or office. c) The books of account and other records of the taxpayer for the period from January 1, 1981 to December 31, 1985 shall not be examined for income tax purposes: Provided, That the Commissioner of Internal Revenue may authorize in writing the examination of the said books of accounts and other records to verify the validity or correctness of a claim for grant of any tax refund, tax credit (other than refund on credit of withheld taxes on wages), tax incentives, and/or exemptions under existing laws. There is no pretension that the tax amnesty returns and due payments made by the taxpayer did not conform with the conditions expressed in the amnesty order. WHEREFORE, the decision of the court of Appeals, sustaining that of the court of Tax Appeals, is hereby AFFIRMED in toto. No costs. SO ORDERED. Feliciano, Bidin, Romero and Melo, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-26284 October 8, 1986

TOMAS CALASANZ, ET vs. THE COMMISSIONER OF INTERNAL REVENUE and the COURT OF TAX APPEALS, respondents. San Juan, Africa, Gonzales & San Agustin Law Office for petitioners.

AL., petitioners,

FERNAN, J.: Appeal taken by Spouses Tomas and Ursula Calasanz from the decision of the Court of Tax Appeals in CTA No. 1275 dated June 7, 1966, holding them liable for the payment of P3,561.24 as deficiency income tax and interest for the calendar year 1957 and P150.00 as real estate dealer's fixed tax. Petitioner Ursula Calasanz inherited from her father Mariano de Torres an agricultural land located in Cainta, Rizal, containing a total area of 1,678,000 square meters. In order to liquidate her inheritance, Ursula Calasanz had the land surveyed and subdivided into lots. Improvements, such as good roads, concrete gutters, drainage and lighting system, were introduced to make the lots saleable. Soon after, the lots were sold to the public at a profit. In their joint income tax return for the year 1957 filed with the Bureau of Internal Revenue on March 31, 1958, petitioners disclosed a profit of P31,060.06 realized from the sale of the subdivided lots, and reported fifty per centum thereof or P15,530.03 as taxable capital gains. Upon an audit and review of the return thus filed, the Revenue Examiner adjudged petitioners engaged in business as real estate dealers, as defined in Section 194 [s] 1 of the National Internal Revenue Code, required them to pay the real estate dealer's tax 2 and assessed a deficiency income tax on profits derived from the sale of the lots based on the rates for ordinary income. On September 29, 1962, petitioners received from respondent Commissioner of Internal Revenue: a. Demand No. 90-B-032293-57 in the amount of P160.00 representing real estate dealer's fixed tax of P150.00 and P10.00 compromise penalty for late payment; and b. Assessment No. 90-5-35699 in the amount of P3,561.24 as deficiency income tax on ordinary gain of P3,018.00 plus interest of P 543.24. On October 17, 1962, petitioners filed with the Court of Tax Appeals a petition for review contesting the aforementioned assessments. On June 7, 1966, the Tax Court upheld the respondent Commissioner except for that portion of the assessment regarding the compromise penalty of P10.00 for the reason that in this jurisdiction, the same cannot be collected in the absence of a valid and binding compromise agreement. Hence, the present appeal. The issues for consideration are: a. Whether or not petitioners are real estate dealers liable for real estate dealer's fixed tax; and b. Whether the gains realized from the sale of the lots are taxable in full as ordinary income or capital gains taxable at capital gain rates. The issues are closely interrelated and will be taken jointly. Petitioners assail their liabilities as "real estate dealers" and seek to bring the profits from the sale of the lots under Section 34 [b] [2] 3 of the Tax Code. The theory advanced by the petitioners is that inherited land is a capital asset within the meaning of Section 34[a] [1] of the Tax Code and that an heir who liquidated his inheritance cannot be said to have engaged in the real estate business and may not be denied the preferential tax treatment given to gains from sale of capital assets, merely because he disposed of it in the only possible and advantageous way. Petitioners averred that the tract of land subject of the controversy was sold because of their intention to effect a liquidation. They claimed that it was parcelled out into smaller lots because its size proved difficult, if not impossible, of disposition in one single transaction. They pointed out that once subdivided, certainly, the lots cannot be sold in one isolated transaction. Petitioners, however, admitted that roads and other improvements were introduced to facilitate its sale. 4 On the other hand, respondent Commissioner maintained that the imposition of the taxes in question is in accordance with law since petitioners are deemed to be in the real estate business for having been involved in a series of real estate transactions pursued for profit. Respondent argued that property acquired by inheritance may be converted from an investment property to a business property if, as in the present case, it was subdivided, improved, and subsequently sold and the number, continuity and frequency of the sales were such as to constitute "doing business." Respondent likewise contended that inherited property is by itself neutral and the fact that the ultimate purpose is to liquidate is of no moment for the important inquiry is what the taxpayer did with the property. Respondent concluded that since the lots are ordinary assets, the profits realized therefrom are ordinary gains, hence taxable in full. We agree with the respondent. The assets of a taxpayer are classified for income tax purposes into ordinary assets and capital assets. Section 34[a] [1] of the National Internal Revenue Code broadly defines capital assets as follows: [1] Capital assets.-The term 'capital assets' means property held by the taxpayer [whether or not connected with his trade or business], but does not include, stock in trade of the taxpayer or other property of a kind which would properly be included, in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or property used in the trade or business of a character which is subject to the allowance for depreciation provided in subsection [f] of section thirty; or real property used in the trade or business of the taxpayer. The statutory definition of capital assets is negative in nature. 5 If the asset is not among the exceptions, it is a capital asset; conversely, assets falling within the exceptions are ordinary assets. And necessarily, any gain resulting from the sale or exchange of an asset is a capital gain or an ordinary gain depending on the kind of asset involved in the transaction. However, there is no rigid rule or fixed formula by which it can be determined with finality whether property sold by a taxpayer was held primarily for sale to customers in the ordinary course of his trade or business or whether it was sold as a capital asset. 6 Although several factors or indices 7 have been recognized as helpful guides in making a determination, none of these is decisive; neither is the presence nor the absence of these factors conclusive. Each case must in the last analysis rest upon its own peculiar facts and circumstances. 8

Also a property initially classified as a capital asset may thereafter be treated as an ordinary asset if a combination of the factors indubitably tend to show that the activity was in furtherance of or in the course of the taxpayer's trade or business. Thus, a sale of inherited real property usually gives capital gain or loss even though the property has to be subdivided or improved or both to make it salable. However, if the inherited property is substantially improved or very actively sold or both it may be treated as held primarily for sale to customers in the ordinary course of the heir's business. 9 Upon an examination of the facts on record, We are convinced that the activities of petitioners are indistinguishable from those invariably employed by one engaged in the business of selling real estate. One strong factor against petitioners' contention is the business element of development which is very much in evidence. Petitioners did not sell the land in the condition in which they acquired it. While the land was originally devoted to rice and fruit trees, 10 it was subdivided into small lots and in the process converted into a residential subdivision and given the name Don Mariano Subdivision. Extensive improvements like the laying out of streets, construction of concrete gutters and installation of lighting system and drainage facilities, among others, were undertaken to enhance the value of the lots and make them more attractive to prospective buyers. The audited financial statements 11 submitted together with the tax return in question disclosed that a considerable amount was expended to cover the cost of improvements. As a matter of fact, the estimated improvements of the lots sold reached P170,028.60 whereas the cost of the land is only P 4,742.66. There is authority that a property ceases to be a capital asset if the amount expended to improve it is double its original cost, for the extensive improvement indicates that the seller held the property primarily for sale to customers in the ordinary course of his business. 12 Another distinctive feature of the real estate business discernible from the records is the existence of contracts receivables, which stood at P395,693.35 as of the year ended December 31, 1957. The sizable amount of receivables in comparison with the sales volume of P446,407.00 during the same period signifies that the lots were sold on installment basis and suggests the number, continuity and frequency of the sales. Also of significance is the circumstance that the lots were advertised 13 for sale to the public and that sales and collection commissions were paid out during the period in question. Petitioners, likewise, urge that the lots were sold solely for the purpose of liquidation. In Ehrman vs. Commissioner, 14 the American court in clear and categorical terms rejected the liquidation test in determining whether or not a taxpayer is carrying on a trade or business The court observed that the fact that property is sold for purposes of liquidation does not foreclose a determination that a "trade or business" is being conducted by the seller. The court enunciated further: We fail to see that the reasons behind a person's entering into a business-whether it is to make money or whether it is to liquidate-should be determinative of the question of whether or not the gains resulting from the sales are ordinary gains or capital gains. The sole question is-were the taxpayers in the business of subdividing real estate? If they were, then it seems indisputable that the property sold falls within the exception in the definition of capital assets . . . that is, that it constituted 'property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. Additionally, in Home Co., Inc. vs. Commissioner, 15 the court articulated on the matter in this wise: One may, of course, liquidate a capital asset. To do so, it is necessary to sell. The sale may be conducted in the most advantageous manner to the seller and he will not lose the benefits of the capital gain provision of the statute unless he enters the real estate business and carries on the sale in the manner in which such a business is ordinarily conducted. In that event, the liquidation constitutes a business and a sale in the ordinary course of such a business and the preferred tax status is lost. In view of the foregoing, We hold that in the course of selling the subdivided lots, petitioners engaged in the real estate business and accordingly, the gains from the sale of the lots are ordinary income taxable in full. WHEREFORE, the decision of the Court of Tax Appeals is affirmed. No costs. SO ORDERED. Feria (Chairman), Alampay, Gutierrez, Jr. and Paras, JJ., concur. Republic of the Philippines SUPREME COURT SECOND DIVISION G.R. No. 126881 October 3, 2000 HEIRS OF TAN ENG KEE, petitioners, vs. COURT OF APPEALS and BENGUET LUMBER COMPANY, represented by its President TAN ENG LAY,respondents. DE LEON, JR., J.: In this petition for review on certiorari, petitioners pray for the reversal of the Decision 1 dated March 13, 1996 of the former Fifth Division2 of the Court of Appeals in CA-G.R. CV No. 47937, the dispositive portion of which states: THE FOREGOING CONSIDERED, the appealed decision is hereby set aside, and the complaint dismissed. The facts are: Following the death of Tan Eng Kee on September 13, 1984, Matilde Abubo, the common-law spouse of the decedent, joined by their children Teresita, Nena, Clarita, Carlos, Corazon and Elpidio, collectively known as herein petitioners HEIRS OF TAN ENG KEE, filed suit against the decedent's brother TAN ENG LAY on February 19, 1990. The complaint,3 docketed as Civil Case No. 1983-R in the Regional Trial Court of Baguio City was for accounting, liquidation and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay. On March 18, 1991, the petitioners filed an amended complaint 4 impleading private respondent herein BENGUET LUMBER COMPANY, as represented by Tan Eng Lay. The amended complaint was admitted by the trial court in its Order dated May 3, 1991.5 The amended complaint principally alleged that after the second World War, Tan Eng Kee and Tan Eng Lay, pooling their resources and industry together, entered into a partnership engaged in the business of selling lumber and hardware and construction supplies. They named their enterprise "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. Petitioners herein averred that the business prospered due to the hard work and thrift of the alleged partners. However, they claimed that in 1981, Tan Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a corporation called "Benguet Lumber Company." The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. Petitioners prayed for accounting of the

partnership assets, and the dissolution, winding up and liquidation thereof, and the equal division of the net assets of Benguet Lumber. After trial, Regional Trial Court of Baguio City, Branch 7 rendered judgment 6 on April 12, 1995, to wit: WHEREFORE, in view of all the foregoing, judgment is hereby rendered: a) Declaring that Benguet Lumber is a joint venture which is akin to a particular partnership; b) Declaring that the deceased Tan Eng Kee and Tan Eng Lay are joint adventurers and/or partners in a business venture and/or particular partnership called Benguet Lumber and as such should share in the profits and/or losses of the business venture or particular partnership; c) Declaring that the assets of Benguet Lumber are the same assets turned over to Benguet Lumber Co. Inc. and as such the heirs or legal representatives of the deceased Tan Eng Kee have a legal right to share in said assets; d) Declaring that all the rights and obligations of Tan Eng Kee as joint adventurer and/or as partner in a particular partnership have descended to the plaintiffs who are his legal heirs. e) Ordering the defendant Tan Eng Lay and/or the President and/or General Manager of Benguet Lumber Company Inc. to render an accounting of all the assets of Benguet Lumber Company, Inc. so the plaintiffs know their proper share in the business; f) Ordering the appointment of a receiver to preserve and/or administer the assets of Benguet Lumber Company, Inc. until such time that said corporation is finally liquidated are directed to submit the name of any person they want to be appointed as receiver failing in which this Court will appoint the Branch Clerk of Court or another one who is qualified to act as such. g) Denying the award of damages to the plaintiffs for lack of proof except the expenses in filing the instant case. h) Dismissing the counter-claim of the defendant for lack of merit. SO ORDERED. Private respondent sought relief before the Court of Appeals which, on March 13, 1996, rendered the assailed decision reversing the judgment of the trial court. Petitioners' motion for reconsideration 7 was denied by the Court of Appeals in a Resolution8 dated October 11, 1996. Hence, the present petition. As a side-bar to the proceedings, petitioners filed Criminal Case No. 78856 against Tan Eng Lay and Wilborn Tan for the use of allegedly falsified documents in a judicial proceeding. Petitioners complained that Exhibits "4" to "4-U" offered by the defendants before the trial court, consisting of payrolls indicating that Tan Eng Kee was a mere employee of Benguet Lumber, were fake, based on the discrepancy in the signatures of Tan Eng Kee. They also filed Criminal Cases Nos. 78857-78870 against Gloria, Julia, Juliano, Willie, Wilfredo, Jean, Mary and Willy, all surnamed Tan, for alleged falsification of commercial documents by a private individual. On March 20, 1999, the Municipal Trial Court of Baguio City, Branch 1, wherein the charges were filed, rendered judgment 9 dismissing the cases for insufficiency of evidence. In their assignment of errors, petitioners claim that: I THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO PARTNERSHIP BETWEEN THE LATE TAN ENG KEE AND HIS BROTHER TAN ENG LAY BECAUSE: (A) THERE WAS NO FIRM ACCOUNT; (B) THERE WAS NO FIRM LETTERHEADS SUBMITTED AS EVIDENCE; (C) THERE WAS NO CERTIFICATE OF PARTNERSHIP; (D) THERE WAS NO AGREEMENT AS TO PROFITS AND LOSSES; AND (E) THERE WAS NO TIME FIXED FOR THE DURATION OF THE PARTNERSHIP (PAGE 13, DECISION). II THE HONORABLE COURT OF APPEALS ERRED IN RELYING SOLELY ON THE SELF-SERVING TESTIMONY OF RESPONDENT TAN ENG LAY THAT BENGUET LUMBER WAS A SOLE PROPRIETORSHIP AND THAT TAN ENG KEE WAS ONLY AN EMPLOYEE THEREOF. III THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE FOLLOWING FACTS WHICH WERE DULY SUPPORTED BY EVIDENCE OF BOTH PARTIES DO NOT SUPPORT THE EXISTENCE OF A PARTNERSHIP JUST BECAUSE THERE WAS NO ARTICLES OF PARTNERSHIP DULY RECORDED BEFORE THE SECURITIES AND EXCHANGE COMMISSION: a. THAT THE FAMILIES OF TAN ENG KEE AND TAN ENG LAY WERE ALL LIVING AT THE BENGUET LUMBER COMPOUND; b. THAT BOTH TAN ENG LAY AND TAN ENG KEE WERE COMMANDING THE EMPLOYEES OF BENGUET LUMBER; c. THAT BOTH TAN ENG KEE AND TAN ENG LAY WERE SUPERVISING THE EMPLOYEES THEREIN; d. THAT TAN ENG KEE AND TAN ENG LAY WERE THE ONES DETERMINING THE PRICES OF STOCKS TO BE SOLD TO THE PUBLIC; AND e. THAT TAN ENG LAY AND TAN ENG KEE WERE THE ONES MAKING ORDERS TO THE SUPPLIERS (PAGE 18, DECISION). IV THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO PARTNERSHIP JUST BECAUSE THE CHILDREN OF THE LATE TAN ENG KEE: ELPIDIO TAN AND VERONICA CHOI, TOGETHER WITH THEIR WITNESS BEATRIZ TANDOC, ADMITTED THAT THEY DO NOT KNOW WHEN THE ESTABLISHMENT KNOWN IN BAGUIO CITY AS BENGUET LUMBER WAS STARTED AS A PARTNERSHIP (PAGE 16-17, DECISION). V THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO PARTNERSHIP BETWEEN THE LATE TAN ENG KEE AND HIS BROTHER TAN ENG LAY BECAUSE THE PRESENT CAPITAL OR ASSETS OF BENGUET LUMBER IS DEFINITELY MORE THAN P3,000.00 AND AS SUCH THE EXECUTION OF A PUBLIC INSTRUMENT CREATING A PARTNERSHIP SHOULD HAVE BEEN MADE AND NO SUCH PUBLIC INSTRUMENT ESTABLISHED BY THE APPELLEES (PAGE 17, DECISION). As a premise, we reiterate the oft-repeated rule that findings of facts of the Court of Appeals will not be disturbed on appeal if such are supported by the evidence. 10 Our jurisdiction, it must be emphasized, does not include review of factual issues. Thus: Filing of petition with Supreme Court . A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.11 [emphasis supplied]

Admitted exceptions have been recognized, though, and when present, may compel us to analyze the evidentiary basis on which the lower court rendered judgment. Review of factual issues is therefore warranted: (1) when the factual findings of the Court of Appeals and the trial court are contradictory; (2) when the findings are grounded entirely on speculation, surmises, or conjectures; (3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or impossible; (4) when there is grave abuse of discretion in the appreciation of facts; (5) when the appellate court, in making its findings, goes beyond the issues of the case, and such findings are contrary to the admissions of both appellant and appellee; (6) when the judgment of the Court of Appeals is premised on a misapprehension of facts; (7) when the Court of Appeals fails to notice certain relevant facts which, if properly considered, will justify a different conclusion; (8) when the findings of fact are themselves conflicting; (9) when the findings of fact are conclusions without citation of the specific evidence on which they are based; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such findings are contradicted by the evidence on record.12 In reversing the trial court, the Court of Appeals ruled, to wit: We note that the Court a quo over extended the issue because while the plaintiffs mentioned only the existence of a partnership, the Court in turn went beyond that by justifying the existence of a joint venture. When mention is made of a joint venture, it would presuppose parity of standing between the parties, equal proprietary interest and the exercise by the parties equally of the conduct of the business, thus: xxx xxx xxx We have the admission that the father of the plaintiffs was not a partner of the Benguet Lumber before the war. The appellees however argued that (Rollo, p. 104; Brief, p. 6) this is because during the war, the entire stocks of the pre-war Benguet Lumber were confiscated if not burned by the Japanese. After the war, because of the absence of capital to start a lumber and hardware business, Lay and Kee pooled the proceeds of their individual businesses earned from buying and selling military supplies, so that the common fund would be enough to form a partnership, both in the lumber and hardware business. That Lay and Kee actually established the Benguet Lumber in Baguio City, was even testified to by witnesses. Because of the pooling of resources, the post-war Benguet Lumber was eventually established. That the father of the plaintiffs and Lay were partners, is obvious from the fact that: (1) they conducted the affairs of the business during Kee's lifetime, jointly, (2) they were the ones giving orders to the employees, (3) they were the ones preparing orders from the suppliers, (4) their families stayed together at the Benguet Lumber compound, and (5) all their children were employed in the business in different capacities. xxx xxx xxx It is obvious that there was no partnership whatsoever. Except for a firm name, there was no firm account, no firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits and losses, and no time fixed for the duration of the partnership. There was even no attempt to submit an accounting corresponding to the period after the war until Kee's death in 1984. It had no business book, no written account nor any memorandum for that matter and no license mentioning the existence of a partnership [citation omitted]. Also, the exhibits support the establishment of only a proprietorship. The certification dated March 4, 1971, Exhibit "2", mentioned co-defendant Lay as the only registered owner of the Benguet Lumber and Hardware. His application for registration, effective 1954, in fact mentioned that his business started in 1945 until 1985 (thereafter, the incorporation). The deceased, Kee, on the other hand, was merely an employee of the Benguet Lumber Company, on the basis of his SSS coverage effective 1958, Exhibit "3". In the Payrolls, Exhibits "4" to "4-U", inclusive, for the years 1982 to 1983, Kee was similarly listed only as an employee; precisely, he was on the payroll listing. In the Termination Notice, Exhibit "5", Lay was mentioned also as the proprietor. xxx xxx xxx We would like to refer to Arts. 771 and 772, NCC, that a partner [sic] may be constituted in any form, but when an immovable is constituted, the execution of a public instrument becomes necessary. This is equally true if the capitalization exceeds P3,000.00, in which case a public instrument is also necessary, and which is to be recorded with the Securities and Exchange Commission. In this case at bar, we can easily assume that the business establishment, which from the language of the appellees, prospered (pars. 5 & 9, Complaint), definitely exceeded P3,000.00, in addition to the accumulation of real properties and to the fact that it is now a compound. The execution of a public instrument, on the other hand, was never established by the appellees. And then in 1981, the business was incorporated and the incorporators were only Lay and the members of his family. There is no proof either that the capital assets of the partnership, assuming them to be in existence, were maliciously assigned or transferred by Lay, supposedly to the corporation and since then have been treated as a part of the latter's capital assets, contrary to the allegations in pars. 6, 7 and 8 of the complaint. These are not evidences supporting the existence of a partnership: 1) That Kee was living in a bunk house just across the lumber store, and then in a room in the bunk house in Trinidad, but within the compound of the lumber establishment, as testified to by Tandoc; 2) that both Lay and Kee were seated on a table and were "commanding people" as testified to by the son, Elpidio Tan; 3) that both were supervising the laborers, as testified to by Victoria Choi; and 4) that Dionisio Peralta was supposedly being told by Kee that the proceeds of the 80 pieces of the G.I. sheets were added to the business. Partnership presupposes the following elements [citation omitted]: 1) a contract, either oral or written. However, if it involves real property or where the capital is P3,000.00 or more, the execution of a contract is necessary; 2) the capacity of the parties to execute the contract; 3) money property or industry contribution; 4) community of funds and interest, mentioning equality of the partners or one having a proportionate share in the benefits; and 5) intention to divide the profits, being the true test of the partnership. The intention to join in the business venture for the purpose of obtaining profits thereafter to be divided, must be established. We cannot see these elements from the testimonial evidence of the appellees. As can be seen, the appellate court disputed and differed from the trial court which had adjudged that TAN ENG KEE and TAN ENG LAY had allegedly entered into a joint venture. In this connection, we have held that whether a partnership exists is a factual matter; consequently, since the appeal is brought to us under Rule 45, we cannot entertain inquiries relative to the correctness of the assessment of the evidence by the court a quo. 13 Inasmuch as the Court of Appeals and

the trial court had reached conflicting conclusions, perforce we must examine the record to determine if the reversal was justified. The primordial issue here is whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber. A contract of partnership is defined by law as one where: . . . two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also form a partnership for the exercise of a profession. 14 Thus, in order to constitute a partnership, it must be established that (1) two or more persons bound themselves to contribute money, property, or industry to a common fund, and (2) they intend to divide the profits among themselves.15 The agreement need not be formally reduced into writing, since statute allows the oral constitution of a partnership, save in two instances: (1) when immovable property or real rights are contributed, 16 and (2) when the partnership has a capital of three thousand pesos or more. 17 In both cases, a public instrument is required. 18 An inventory to be signed by the parties and attached to the public instrument is also indispensable to the validity of the partnership whenever immovable property is contributed to the partnership. 19 The trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular partnership.20 A particular partnership is distinguished from a joint adventure, to wit: (a) A joint adventure (an American concept similar to our joint accounts) is a sort of informal partnership, with no firm name and no legal personality. In a joint account, the participating merchants can transact business under their own name, and can be individually liable therefor. (b) Usually, but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a successful termination may continue for a number of years; a partnership generally relates to a continuing business of various transactions of a certain kind.21 A joint venture "presupposes generally a parity of standing between the joint co-ventures or partners, in which each party has an equal proprietary interest in the capital or property contributed, and where each party exercises equal rights in the conduct of the business." 22 Nonetheless, in Aurbach, et. al. v. Sanitary Wares Manufacturing Corporation, et. al., 23 we expressed the view that a joint venture may be likened to a particular partnership, thus: The legal concept of a joint venture is of common law origin. It has no precise legal definition, but it has been generally understood to mean an organization formed for some temporary purpose. (Gates v. Megargel, 266 Fed. 811 [1920]) It is hardly distinguishable from the partnership, since their elements are similar community of interest in the business, sharing of profits and losses, and a mutual right of control. (Blackner v. McDermott, 176 F. 2d. 498, [1949]; Carboneau v. Peterson, 95 P.2d., 1043 [1939]; Buckley v. Chadwick, 45 Cal. 2d. 183, 288 P.2d. 12 289 P.2d. 242 [1955]). The main distinction cited by most opinions in common law jurisdiction is that the partnership contemplates a general business with some degree of continuity, while the joint venture is formed for the execution of a single transaction, and is thus of a temporary nature. (Tufts v. Mann. 116 Cal. App. 170, 2 P. 2d. 500 [1931]; Harmon v. Martin, 395 Ill. 595, 71 NE 2d. 74 [1947]; Gates v. Megargel 266 Fed. 811 [1920]). This observation is not entirely accurate in this jurisdiction, since under the Civil Code, a partnership may be particular or universal, and a particular partnership may have for its object a specific undertaking. (Art. 1783, Civil Code). It would seem therefore that under Philippine law, a joint venture is a form of partnership and should thus be governed by the law of partnerships. The Supreme Court has however recognized a distinction between these two business forms, and has held that although a corporation cannot enter into a partnership contract, it may however engage in a joint venture with others. (At p. 12, Tuazon v. Bolaos, 95 Phil. 906 [1954]) (Campos and Lopez-Campos Comments, Notes and Selected Cases, Corporation Code 1981). Undoubtedly, the best evidence would have been the contract of partnership itself, or the articles of partnership but there is none. The alleged partnership, though, was never formally organized. In addition, petitioners point out that the New Civil Code was not yet in effect when the partnership was allegedly formed sometime in 1945, although the contrary may well be argued that nothing prevented the parties from complying with the provisions of the New Civil Code when it took effect on August 30, 1950. But all that is in the past. The net effect, however, is that we are asked to determine whether a partnership existed based purely on circumstantial evidence. A review of the record persuades us that the Court of Appeals correctly reversed the decision of the trial court. The evidence presented by petitioners falls short of the quantum of proof required to establish a partnership. Unfortunately for petitioners, Tan Eng Kee has passed away. Only he, aside from Tan Eng Lay, could have expounded on the precise nature of the business relationship between them. In the absence of evidence, we cannot accept as an established fact that Tan Eng Kee allegedly contributed his resources to a common fund for the purpose of establishing a partnership. The testimonies to that effect of petitioners' witnesses is directly controverted by Tan Eng Lay. It should be noted that it is not with the number of witnesses wherein preponderance lies; 24 the quality of their testimonies is to be considered. None of petitioners' witnesses could suitably account for the beginnings of Benguet Lumber Company, except perhaps for Dionisio Peralta whose deceased wife was related to Matilde Abubo. 25 He stated that when he met Tan Eng Kee after the liberation, the latter asked the former to accompany him to get 80 pieces of G.I. sheets supposedly owned by both brothers.26Tan Eng Lay, however, denied knowledge of this meeting or of the conversation between Peralta and his brother.27 Tan Eng Lay consistently testified that he had his business and his brother had his, that it was only later on that his said brother, Tan Eng Kee, came to work for him. Be that as it may, co-ownership or co-possession (specifically here, of the G.I. sheets) is not an indicium of the existence of a partnership. 28 Besides, it is indeed odd, if not unnatural, that despite the forty years the partnership was allegedly in existence, Tan Eng Kee never asked for an accounting. The essence of a partnership is that the partners share in the profits and losses.29 Each has the right to demand an accounting as long as the partnership exists. 30 We have allowed a scenario wherein "[i]f excellent relations exist among the partners at the start of the business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible."31 But in the situation in the case at bar, the deferment, if any, had gone on too long to be plausible. A person is presumed to take ordinary care of his concerns.32 As we explained in another case: In the first place, plaintiff did not furnish the supposed P20,000.00 capital. In the second place, she did not furnish any help or intervention in the management of the theatre. In the third place, it does not appear that she has even demanded from defendant any accounting of the expenses and earnings of the business. Were she really a partner, her first concern should have been to find out how the business was progressing, whether the expenses were legitimate, whether the earnings were correct, etc. She was absolutely silent with respect to any of the acts that a partner should have done ; all that she did was to receive her share of P3,000.00 a month, which cannot be interpreted in any manner than a payment for the use of the premises which she had leased from the owners. Clearly, plaintiff had always acted in accordance with

the original letter of defendant of June 17, 1945 (Exh. "A"), which shows that both parties considered this offer as the real contract between them.33 [emphasis supplied] A demand for periodic accounting is evidence of a partnership. 34 During his lifetime, Tan Eng Kee appeared never to have made any such demand for accounting from his brother, Tang Eng Lay. This brings us to the matter of Exhibits "4" to "4-U" for private respondents, consisting of payrolls purporting to show that Tan Eng Kee was an ordinary employee of Benguet Lumber, as it was then called. The authenticity of these documents was questioned by petitioners, to the extent that they filed criminal charges against Tan Eng Lay and his wife and children. As aforesaid, the criminal cases were dismissed for insufficiency of evidence. Exhibits "4" to "4-U" in fact shows that Tan Eng Kee received sums as wages of an employee. In connection therewith, Article 1769 of the Civil Code provides: In determining whether a partnership exists, these rules shall apply: (1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as to third persons; (2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made by the use of the property; (3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property which the returns are derived; (4) The receipt by a person of a share of the profits of a business is a prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment: (a) As a debt by installment or otherwise; (b) As wages of an employee or rent to a landlord; (c) As an annuity to a widow or representative of a deceased partner; (d) As interest on a loan, though the amount of payment vary with the profits of the business; (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. In the light of the aforequoted legal provision, we conclude that Tan Eng Kee was only an employee, not a partner. Even if the payrolls as evidence were discarded, petitioners would still be back to square one, so to speak, since they did not present and offer evidence that would show that Tan Eng Kee received amounts of money allegedly representing his share in the profits of the enterprise. Petitioners failed to show how much their father, Tan Eng Kee, received, if any, as his share in the profits of Benguet Lumber Company for any particular period. Hence, they failed to prove that Tan Eng Kee and Tan Eng Lay intended to divide the profits of the business between themselves, which is one of the essential features of a partnership. Nevertheless, petitioners would still want us to infer or believe the alleged existence of a partnership from this set of circumstances: that Tan Eng Lay and Tan Eng Kee were commanding the employees; that both were supervising the employees; that both were the ones who determined the price at which the stocks were to be sold; and that both placed orders to the suppliers of the Benguet Lumber Company. They also point out that the families of the brothers Tan Eng Kee and Tan Eng Lay lived at the Benguet Lumber Company compound, a privilege not extended to its ordinary employees. However, private respondent counters that: Petitioners seem to have missed the point in asserting that the above enumerated powers and privileges granted in favor of Tan Eng Kee, were indicative of his being a partner in Benguet Lumber for the following reasons: (i) even a mere supervisor in a company, factory or store gives orders and directions to his subordinates. So long, therefore, that an employee's position is higher in rank, it is not unusual that he orders around those lower in rank. (ii) even a messenger or other trusted employee, over whom confidence is reposed by the owner, can order materials from suppliers for and in behalf of Benguet Lumber. Furthermore, even a partner does not necessarily have to perform this particular task. It is, thus, not an indication that Tan Eng Kee was a partner. (iii) although Tan Eng Kee, together with his family, lived in the lumber compound and this privilege was not accorded to other employees, the undisputed fact remains that Tan Eng Kee is the brother of Tan Eng Lay . Naturally, close personal relations existed between them. Whatever privileges Tan Eng Lay gave his brother, and which were not given the other employees, only proves the kindness and generosity of Tan Eng Lay towards a blood relative. (iv) and even if it is assumed that Tan Eng Kee was quarreling with Tan Eng Lay in connection with the pricing of stocks, this does not adequately prove the existence of a partnership relation between them. Even highly confidential employees and the owners of a company sometimes argue with respect to certain matters which, in no way indicates that they are partners as to each other.35 In the instant case, we find private respondent's arguments to be well-taken. Where circumstances taken singly may be inadequate to prove the intent to form a partnership, nevertheless, the collective effect of these circumstances may be such as to support a finding of the existence of the parties' intent. 36 Yet, in the case at bench, even the aforesaid circumstances when taken together are not persuasive indicia of a partnership. They only tend to show that Tan Eng Kee was involved in the operations of Benguet Lumber, but in what capacity is unclear. We cannot discount the likelihood that as a member of the family, he occupied a niche above the rank-and-file employees. He would have enjoyed liberties otherwise unavailable were he not kin, such as his residence in the Benguet Lumber Company compound. He would have moral, if not actual, superiority over his fellow employees, thereby entitling him to exercise powers of supervision. It may even be that among his duties is to place orders with suppliers. Again, the circumstances proffered by petitioners do not provide a logical nexus to the conclusion desired; these are not inconsistent with the powers and duties of a manager, even in a business organized and run as informally as Benguet Lumber Company. There being no partnership, it follows that there is no dissolution, winding up or liquidation to speak of. Hence, the petition must fail. WHEREFORE, the petition is hereby denied, and the appealed decision of the Court of Appeals is hereby AFFIRMED in toto. No pronouncement as to costs. SO ORDERED. Bellosillo, Mendoza, Quisumbing and Buena, JJ ., concur.