G.R. No.
L-22595 November 1, 1927 It has not been proved in these proceedings what the Turkish laws are. He, himself, acknowledges
Testate Estate of Joseph G. Brimo, JUAN MICIANO, administrator, petitioner-appellee,
vs.
ANDRE BRIMO, opponent-appellant.
Ross, Lawrence and Selph for appellant.
Camus and Delgado for appellee.
ROMUALDEZ, J.:
The partition of the estate left by the deceased Joseph G. Brimo is in question in this case.
The judicial administrator of this estate filed a scheme of partition. Andre Brimo, one of the brothers
of the deceased, opposed it. The court, however, approved it.
The errors which the oppositor-appellant assigns are:
(1) The approval of said scheme of partition; (2) denial of his participation in the inheritance; (3) the
denial of the motion for reconsideration of the order approving the partition; (4) the approval of the
purchase made by the Pietro Lana of the deceased's business and the deed of transfer of said
business; and (5) the declaration that the Turkish laws are impertinent to this cause, and the failure
not to postpone the approval of the scheme of partition and the delivery of the deceased's business
to Pietro Lanza until the receipt of the depositions requested in reference to the Turkish laws.
The appellant's opposition is based on the fact that the partition in question puts into effect the
provisions of Joseph G. Brimo's will which are not in accordance with the laws of his Turkish
nationality, for which reason they are void as being in violation or article 10 of the Civil Code which,
among other things, provides the following:
Nevertheless, legal and testamentary successions, in respect to the order of succession
as well as to the amount of the successional rights and the intrinsic validity of their
provisions, shall be regulated by the national law of the person whose succession is in
question, whatever may be the nature of the property or the country in which it may be
situated.
But the fact is that the oppositor did not prove that said testimentary dispositions are not in
accordance with the Turkish laws, inasmuch as he did not present any evidence showing what the
Turkish laws are on the matter, and in the absence of evidence on such laws, they are presumed to
be the same as those of the Philippines. (Lim and Lim vs. Collector of Customs, 36 Phil., 472.)
it when he desires to be given an opportunity to present evidence on this point; so much so that he
assigns as an error of the court in not having deferred the approval of the scheme of partition until
the receipt of certain testimony requested regarding the Turkish laws on the matter.
The refusal to give the oppositor another opportunity to prove such laws does not constitute an
error. It is discretionary with the trial court, and, taking into consideration that the oppositor was
granted ample opportunity to introduce competent evidence, we find no abuse of discretion on the
part of the court in this particular. There is, therefore, no evidence in the record that the national law
of the testator Joseph G. Brimo was violated in the testamentary dispositions in question which, not
being contrary to our laws in force, must be complied with and executed. lawphil.net
Therefore, the approval of the scheme of partition in this respect was not erroneous.
In regard to the first assignment of error which deals with the exclusion of the herein appellant as a
legatee, inasmuch as he is one of the persons designated as such in will, it must be taken into
consideration that such exclusion is based on the last part of the second clause of the will, which
says:
Second. I like desire to state that although by law, I am a Turkish citizen, this citizenship
having been conferred upon me by conquest and not by free choice, nor by nationality
and, on the other hand, having resided for a considerable length of time in the Philippine
Islands where I succeeded in acquiring all of the property that I now possess, it is my wish
that the distribution of my property and everything in connection with this, my will, be made
and disposed of in accordance with the laws in force in the Philippine islands, requesting
all of my relatives to respect this wish, otherwise, I annul and cancel beforehand whatever
disposition found in this will favorable to the person or persons who fail to comply with this
request.
The institution of legatees in this will is conditional, and the condition is that the instituted legatees
must respect the testator's will to distribute his property, not in accordance with the laws of his
nationality, but in accordance with the laws of the Philippines.
If this condition as it is expressed were legal and valid, any legatee who fails to comply with it, as
the herein oppositor who, by his attitude in these proceedings has not respected the will of the
testator, as expressed, is prevented from receiving his legacy.
The fact is, however, that the said condition is void, being contrary to law, for article 792 of the civil
Code provides the following:
 Impossible conditions and those contrary to law or good morals shall be considered as not On April 24, 195 0, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding, admitted
imposed and shall not prejudice the heir or legatee in any manner whatsoever, even to probate a last will and testament of C. O. Bohanan, executed by him on April 23, 1944 in Manila.
should the testator otherwise provide. In the said order, the court made the following findings:

And said condition is contrary to law because it expressly ignores the testator's national law when, According to the evidence of the opponents the testator was born in Nebraska and
according to article 10 of the civil Code above quoted, such national law of the testator is the one to therefore a citizen of that state, or at least a citizen of California where some of his
govern his testamentary dispositions. properties are located. This contention in untenable. Notwithstanding the long residence of
the decedent in the Philippines, his stay here was merely temporary, and he continued
Said condition then, in the light of the legal provisions above cited, is considered unwritten, and the and remained to be a citizen of the United States and of the state of his pertinent
institution of legatees in said will is unconditional and consequently valid and effective even as to residence to spend the rest of his days in that state. His permanent residence or domicile
the herein oppositor. in the United States depended upon his personal intent or desire, and he selected Nevada
as his homicide and therefore at the time of his death, he was a citizen of that state.
Nobody can choose his domicile or permanent residence for him. That is his exclusive
It results from all this that the second clause of the will regarding the law which shall govern it, and personal right.
to the condition imposed upon the legatees, is null and void, being contrary to law.
Wherefore, the court finds that the testator C. O. Bohanan was at the time of his death a
All of the remaining clauses of said will with all their dispositions and requests are perfectly valid citizen of the United States and of the State of Nevada and declares that his will and
and effective it not appearing that said clauses are contrary to the testator's national law. testament, Exhibit A, is fully in accordance with the laws of the state of Nevada and admits
the same to probate. Accordingly, the Philippine Trust Company, named as the executor
Therefore, the orders appealed from are modified and it is directed that the distribution of this of the will, is hereby appointed to such executor and upon the filing of a bond in the sum of
estate be made in such a manner as to include the herein appellant Andre Brimo as one of the P10,000.00, let letters testamentary be issued and after taking the prescribed oath, it may
legatees, and the scheme of partition submitted by the judicial administrator is approved in all other enter upon the execution and performance of its trust. (pp. 26-27, R.O.A.).
respects, without any pronouncement as to costs.
It does not appear that the order granting probate was ever questions on appeal. The executor filed
So ordered. a project of partition dated January 24, 1956, making, in accordance with the provisions of the will,
the following adjudications: (1) one-half of the residuary estate, to the Farmers and Merchants
G.R. No. L-12105 January 30, 1960 National Bank of Los Angeles, California, U.S.A. in trust only for the benefit of testator's grandson
Edward George Bohanan, which consists of several mining companies; (2) the other half of the
residuary estate to the testator's brother, F.L. Bohanan, and his sister, Mrs. M. B. Galbraith, share
TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., executor- and share alike. This consist in the same amount of cash and of shares of mining stock similar to
appellee, those given to testator's grandson; (3) legacies of P6,000 each to his (testator) son, Edward Gilbert
vs. Bohana, and his daughter, Mary Lydia Bohanan, to be paid in three yearly installments; (4) legacies
MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA to Clara Daen, in the amount of P10,000.00; Katherine Woodward, P2,000; Beulah Fox, P4,000;
BOHANAN, oppositors-appellants. and Elizabeth Hastings, P2,000;

Jose D. Cortes for appellants. It will be seen from the above that out of the total estate (after deducting administration expenses)
Ohnick, Velilla and Balonkita for appellee. of P211,639.33 in cash, the testator gave his grandson P90,819.67 and one-half of all shares of
stock of several mining companies and to his brother and sister the same amount. To his children
LABRADOR, J.: he gave a legacy of only P6,000 each, or a total of P12,000.

Appeal against an order of the Court of First Instance of Manila, Hon. Ramon San Jose, presiding, The wife Magadalena C. Bohanan and her two children question the validity of the testamentary
dismissing the objections filed by Magdalena C. Bohanan, Mary Bohanan and Edward Bohanan to provisions disposing of the estate in the manner above indicated, claiming that they have been
the project of partition submitted by the executor and approving the said project. deprived of the legitimate that the laws of the form concede to them.
The first question refers to the share that the wife of the testator, Magdalena C. Bohanan, should
be entitled to received. The will has not given her any share in the estate left by the testator. It is
argued that it was error for the trial court to have recognized the Reno divorce secured by the
testator from his Filipino wife Magdalena C. Bohanan, and that said divorce should be declared a
nullity in this jurisdiction, citing the case of Querubin vs.Querubin, 87 Phil., 124, 47 Off. Gaz., (Sup,
12) 315, Cousins Hiz vs. Fluemer, 55 Phil., 852, Ramirez vs. Gmur, 42 Phil., 855 and
Gorayeb vs. Hashim, 50 Phil., 22. The court below refused to recognize the claim of the widow on
the ground that the laws of Nevada, of which the deceased was a citizen, allow him to dispose of all
of his properties without requiring him to leave any portion of his estate to his wife. Section 9905 of
Nevada Compiled Laws of 1925 provides:
Every person over the age of eighteen years, of sound mind, may, by last will, dispose of
all his or her estate, real and personal, the same being chargeable with the payment of the
testator's debts.
Besides, the right of the former wife of the testator, Magdalena C. Bohanan, to a share in the
testator's estafa had already been passed upon adversely against her in an order dated June 19,
1955, (pp. 155-159, Vol II Records, Court of First Instance), which had become final, as Magdalena
C. Bohanan does not appear to have appealed therefrom to question its validity. On December 16,
1953, the said former wife filed a motion to withdraw the sum of P20,000 from the funds of the
estate, chargeable against her share in the conjugal property, (See pp. 294-297, Vol. I, Record,
Court of First Instance), and the court in its said error found that there exists no community property
owned by the decedent and his former wife at the time the decree of divorce was issued. As
already and Magdalena C. Bohanan may no longer question the fact contained therein, i.e. that
there was no community property acquired by the testator and Magdalena C. Bohanan during their
converture.
Moreover, the court below had found that the testator and Magdalena C. Bohanan were married on
January 30, 1909, and that divorce was granted to him on May 20, 1922; that sometime in 1925,
Magdalena C. Bohanan married Carl Aaron and this marriage was subsisting at the time of the
death of the testator. Since no right to share in the inheritance in favor of a divorced wife exists in
the State of Nevada and since the court below had already found that there was no conjugal
property between the testator and Magdalena C. Bohanan, the latter can now have no longer claim
to pay portion of the estate left by the testator.
The most important issue is the claim of the testator's children, Edward and Mary Lydia, who had
received legacies in the amount of P6,000 each only, and, therefore, have not been given their
shares in the estate which, in accordance with the laws of the forum, should be two-thirds of the
estate left by the testator. Is the failure old the testator to give his children two-thirds of the estate
left by him at the time of his death, in accordance with the laws of the forum valid?
The old Civil Code, which is applicable to this case because the testator died in 1944, expressly
provides that successional rights to personal property are to be earned by the national law of the
person whose succession is in question. Says the law on this point:
Nevertheless, legal and testamentary successions, in respect to the order of succession
as well as to the extent of the successional rights and the intrinsic validity of their
provisions, shall be regulated by the national law of the person whose succession is in
question, whatever may be the nature of the property and the country in which it is found.
(par. 2, Art. 10, old Civil Code, which is the same as par. 2 Art. 16, new Civil Code.)
In the proceedings for the probate of the will, it was found out and it was decided that the testator
was a citizen of the State of Nevada because he had selected this as his domicile and his
permanent residence. (See Decision dated April 24, 1950, supra). So the question at issue is
whether the estementary dispositions, especially hose for the children which are short of the
legitime given them by the Civil Code of the Philippines, are valid. It is not disputed that the laws of
Nevada allow a testator to dispose of all his properties by will (Sec. 9905, Complied Nevada Laws
of 1925, supra). It does not appear that at time of the hearing of the project of partition, the above-
quoted provision was introduced in evidence, as it was the executor's duly to do. The law of
Nevada, being a foreign law can only be proved in our courts in the form and manner provided for
by our Rules, which are as follows:
SEC. 41. Proof of public or official record. — An official record or an entry therein, when
admissible for any purpose, may be evidenced by an official publication thereof or by a
copy tested by the officer having the legal custody of he record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate that such officer
has the custody. . . . (Rule 123).
We have, however, consulted the records of the case in the court below and we have found that
during the hearing on October 4, 1954 of the motion of Magdalena C. Bohanan for withdrawal of
P20,000 as her share, the foreign law, especially Section 9905, Compiled Nevada Laws. was
introduced in evidence by appellant's (herein) counsel as Exhibits "2" (See pp. 77-79, VOL. II, and
t.s.n. pp. 24-44, Records, Court of First Instance). Again said laws presented by the counsel for the
executor and admitted by the Court as Exhibit "B" during the hearing of the case on January 23,
1950 before Judge Rafael Amparo (se Records, Court of First Instance, Vol. 1).
In addition, the other appellants, children of the testator, do not dispute the above-quoted provision
of the laws of the State of Nevada. Under all the above circumstances, we are constrained to hold
that the pertinent law of Nevada, especially Section 9905 of the Compiled Nevada Laws of 1925,
can be taken judicial notice of by us, without proof of such law having been offered at the hearing of
the project of partition.
As in accordance with Article 10 of the old Civil Code, the validity of testamentary dispositions are
to be governed by the national law of the testator, and as it has been decided and it is not disputed
that the national law of the testator is that of the State of Nevada, already indicated above, which
allows a testator to dispose of all his property according to his will, as in the case at bar, the order
of the court approving the project of partition made in accordance with the testamentary provisions,
must be, as it is hereby affirmed, with costs against appellants.
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary
of Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN
RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the
PRINCIPAL AND BIDDING COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF
PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin respondents, their representatives and
agents from proceeding with the bidding for the sale of the 3,179 square meters of land at 306
Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. We granted the
prayer for a temporary restraining order effective February 20, 1990. One of the petitioners (in G.R.
No. 92047) likewise prayes for a writ of mandamus to compel the respondents to fully disclose to
the public the basis of their decision to push through with the sale of the Roppongi property inspire
of strong public opposition and to explain the proceedings which effectively prevent the participation
of Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March
13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents
were required to file a comment by the Court's resolution dated February 22, 1990. The two
petitions were consolidated on March 27, 1990 when the memoranda of the parties in
the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the respondents filed a motion for an
extension of thirty (30) days to file comment in G.R. No. 92047, followed by a second motion for an
extension of another thirty (30) days which we granted on May 8, 1990, a third motion for extension
of time granted on May 24, 1990 and a fourth motion for extension of time which we granted on
June 5, 1990 but calling the attention of the respondents to the length of time the petitions have
been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked for thirty (30)
days to file a reply. We noted his motion and resolved to decide the two (2) cases.
I
The subject property in this case is one of the four (4) properties in Japan acquired by the
Philippine government under the Reparations Agreement entered into with Japan on May 9, 1956,
the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of
approximately 2,489.96 square meters, and is at present the site of the Philippine Embassy
Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square
meters and categorized as a commercial lot now being used as a warehouse and parking lot for the
consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.
The properties and the capital goods and services procured from the Japanese government for
national development projects are part of the indemnification to the Filipino people for their losses
in life and property and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be payable in
twenty (20) years in accordance with annual schedules of procurements to be fixed by the
Philippine and Japanese governments (Article 2, Reparations Agreement). Rep. Act No. 1789, the
Reparations Law, prescribes the national policy on procurement and utilization of reparations and
development loans. The procurements are divided into those for use by the government sector and
those for private parties in projects as the then National Economic Council shall determine. Those
intended for the private sector shall be made available by sale to Filipino citizens or to one hundred
(100%) percent Filipino-owned entities in national development projects.
The Roppongi property was acquired from the Japanese government under the Second Year
Schedule and listed under the heading "Government Sector", through Reparations Contract No.
300 dated June 27, 1958. The Roppongi property consists of the land and building "for the
Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503). As
intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai
on July 22, 1976 when the Roppongi building needed major repairs. Due to the failure of our
government to provide necessary funds, the Roppongi property has remained undeveloped since
that time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to
Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a Japanese
firm - Kajima Corporation — which shall construct two (2) buildings in Roppongi and one (1)
building in Nampeidai and renovate the present Philippine Chancery in Nampeidai. The
consideration of the construction would be the lease to the foreign corporation of one (1) of the
buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The other building
in Roppongi shall then be used as the Philippine Embassy Chancery. At the end of the lease
period, all the three leased buildings shall be occupied and used by the Philippine government. No
change of ownership or title shall occur. (See Annex "B" to Reply to Comment) The Philippine
government retains the title all throughout the lease period and thereafter. However, the
government has not acted favorably on this proposal which is pending approval and ratification
between the parties. Instead, on August 11, 1986, President Aquino created a committee to study
the disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan through
Administrative Order No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or
entities to avail of separations' capital goods and services in the event of sale, lease or disposition.
The four properties in Japan including the Roppongi were specifically mentioned in the first
"Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been pushing,
with great vigor, its decision to sell the reparations properties starting with the Roppongi lot. The
property has twice been set for bidding at a minimum floor price of $225 million. The first bidding
was a failure since only one bidder qualified. The second one, after postponements, has not yet
materialized. The last scheduled bidding on February 21, 1990 was restrained by his Court. Later,
the rules on bidding were changed such that the $225 million floor price became merely a
suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No.
92013 objects to the alienation of the Roppongi property to anyone while the petitioner in G.R. No.
92047 adds as a principal objection the alleged unjustified bias of the Philippine government in
favor of selling the property to non-Filipino citizens and entities. These petitions have been
consolidated and are resolved at the same time for the objective is the same - to stop the sale of
the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?;
and
(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the
Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government
to alienate the Roppongi property assails the constitutionality of Executive Order No. 296 in making
the property available for sale to non-Filipino citizens and entities. He also questions the bidding
procedures of the Committee on the Utilization or Disposition of Philippine Government Properties
in Japan for being discriminatory against Filipino citizens and Filipino-owned entities by denying
them the right to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were
acquired as part of the reparations from the Japanese government for diplomatic and consular use
by the Philippine government. Vice-President Laurel states that the Roppongi property is classified
as one of public dominion, and not of private ownership under Article 420 of the Civil Code (See
infra).
The petitioner submits that the Roppongi property comes under "property intended for public
service" in paragraph 2 of the above provision. He states that being one of public dominion, no
ownership by any one can attach to it, not even by the State. The Roppongi and related properties
were acquired for "sites for chancery, diplomatic, and consular quarters, buildings and other
improvements" (Second Year Reparations Schedule). The petitioner states that they continue to be
intended for a necessary service. They are held by the State in anticipation of an opportune use.
(Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to
put it in more simple terms, it cannot be alienated nor be the subject matter of contracts (Citing
Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at
the moment, the petitioner avers that the same remains property of public dominion so long as the
government has not used it for other purposes nor adopted any measure constituting a removal of
its original purpose or use.
The respondents, for their part, refute the petitioner's contention by saying that the subject property
is not governed by our Civil Code but by the laws of Japan where the property is located. They rely
upon the rule of lex situs which is used in determining the applicable law regarding the acquisition,
transfer and devolution of the title to a property. They also invoke Opinion No. 21, Series of 1988,
dated January 27, 1988 of the Secretary of Justice which used the lex situs in explaining the
inapplicability of Philippine law regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument that the Civil Code is applicable,
the Roppongi property has ceased to become property of public dominion. It has become
patrimonial property because it has not been used for public service or for diplomatic purposes for
over thirteen (13) years now (Citing Article 422, Civil Code) and because the intention by the
Executive Department and the Congress to convert it to private use has been manifested by overt
acts, such as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the
issuance of administrative orders for the possibility of alienating the four government properties in
Japan; (3) the issuance of Executive Order No. 296; (4) the enactment by the Congress of Rep. Act
No. 6657 [the Comprehensive Agrarian Reform Law] on June 10, 1988 which contains a provision
stating that funds may be taken from the sale of Philippine properties in foreign countries; (5) the
holding of the public bidding of the Roppongi property but which failed; (6) the deferment by the
Senate in Resolution No. 55 of the bidding to a future date; thus an acknowledgment by the Senate
of the government's intention to remove the Roppongi property from the public service purpose;
and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al.,
G.R. No. 87478 which sought to enjoin the second bidding of the Roppongi property scheduled on
March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of
Executive Order No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court
dismissed on August 1, 1989. He now avers that the executive order contravenes the constitutional
mandate to conserve and develop the national patrimony stated in the Preamble of the 1987
Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public domain to
Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth
Act 141).i•t•c-aüsl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering
the national economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade practices;
(4) The guarantee of the right of the people to information on all matters of public concern (Section
7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino
citizens of capital goods received by the Philippines under the Reparations Act (Sections 2 and 12
of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public disclosure of all transactions involving public
interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive
order is a misapplication of public funds He states that since the details of the bidding for the
Roppongi property were never publicly disclosed until February 15, 1990 (or a few days before the
scheduled bidding), the bidding guidelines are available only in Tokyo, and the accomplishment of
requirements and the selection of qualified bidders should be done in Tokyo, interested Filipino
citizens or entities owned by them did not have the chance to comply with Purchase Offer
Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225
million from which price capital gains tax under Japanese law of about 50 to 70% of the floor price
would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and
the three related properties were through reparations agreements, that these were assigned to the
government sector and that the Roppongi property itself was specifically designated under the
Reparations Agreement to house the Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated
by the terms of the Reparations Agreement and the corresponding contract of procurement which
bind both the Philippine government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown that the property
has become patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be
alienated. Its ownership is a special collective ownership for general use and enjoyment, an
application to the satisfaction of collective needs, and resides in the social group. The purpose is
not to serve the State as a juridical person, but the citizens; it is intended for the common and
public welfare and cannot be the object of appropration. (Taken from 3 Manresa, 66-69; cited in
Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
 (1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks shores roadsteads, and others of
similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national wealth.
ART. 421. All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as
property belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed because the
lot has been Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy service does
not automatically convert it to patrimonial property. Any such conversion happens only if the
property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]). A property continues to be part of the public domain, not available for private appropriation
or ownership until there is a formal declaration on the part of the government to withdraw it from
being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials insinuating a
change of intention. We emphasize, however, that an abandonment of the intention to use the
Roppongi property for public service and to make it patrimonial property under Article 422 of the
Civil Code must be definiteAbandonment cannot be inferred from the non-use alone specially if the
non-use was attributable not to the government's own deliberate and indubitable will but to a lack of
financial support to repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166
SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal
premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even the failure by the government to repair the building in
Roppongi is not abandonment since as earlier stated, there simply was a shortage of government
funds. The recent Administrative Orders authorizing a study of the status and conditions of
government properties in Japan were merely directives for investigation but did not in any way
signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in
its text expressly authorizing the sale of the four properties procured from Japan for the government
sector. The executive order does not declare that the properties lost their public character. It merely
intends to make the properties available to foreigners and not to Filipinos alone in case of a sale,
lease or other disposition. It merely eliminates the restriction under Rep. Act No. 1789 that
reparations goods may be sold only to Filipino citizens and one hundred (100%) percent Filipino-
owned entities. The text of Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as amended, and of other
laws to the contrary notwithstanding, the above-mentioned properties can be
made available for sale, lease or any other manner of disposition to non-Filipino
citizens or to entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the
three other properties were earlier converted into alienable real properties. As earlier stated, Rep.
Act No. 1789 differentiates the procurements for the government sector and the private sector
(Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can be sold to end-users
who must be Filipinos or entities owned by Filipinos. It is this nationality provision which was
amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds
for its implementation, the proceeds of the disposition of the properties of the Government in
foreign countries, did not withdraw the Roppongi property from being classified as one of public
dominion when it mentions Philippine properties abroad. Section 63 (c) refers to properties which
are alienable and not to those reserved for public use or service. Rep Act No. 6657, therefore, does
not authorize the Executive Department to sell the Roppongi property. It merely enumerates
possible sources of future funding to augment (as and when needed) the Agrarian Reform Fund
created under Executive Order No. 299. Obviously any property outside of the commerce of man
cannot be tapped as a source of funds.
The respondents try to get around the public dominion character of the Roppongi property by
insisting that Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the ones to insist
that in the sale of extremely valuable government property, Japanese law and not Philippine law
should prevail. The Japanese law - its coverage and effects, when enacted, and exceptions to its
provision — is not presented to the Court It is simply asserted that the lex loci rei sitae or Japanese
law should apply without stating what that law provides. It is a ed on faith that Japanese law would
allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A
conflict of law situation arises only when: (1) There is a dispute over the title or ownership of an
immovable, such that the capacity to take and transfer immovables, the formalities of conveyance,
the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are
to be determined (See Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A
foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the
same matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question that the
property belongs to the Philippines. The issue is the authority of the respondent officials to validly
dispose of property belonging to the State. And the validity of the procedures adopted to effect its
sale. This is governed by Philippine Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex
situs rule is misplaced. The opinion does not tackle the alienability of the real properties procured
through reparations nor the existence in what body of the authority to sell them. In discussing who
are capable of acquiring the lots, the Secretary merely explains that it is the foreign law which
should determine who can acquire the properties so that the constitutional limitation on acquisition
of lands of the public domain to Filipino citizens and entities wholly owned by Filipinos is
inapplicable. We see no point in belaboring whether or not this opinion is correct. Why should we
discuss who can acquire the Roppongi lot when there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the
investigating committee to sell the Roppongi property was premature or, at the very least,
conditioned on a valid change in the public character of the Roppongi property. Moreover, the
approval does not have the force and effect of law since the President already lost her legislative
powers. The Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of public
dominion, there is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the Government is a party.
— In cases in which the Government of the Republic of the Philippines is a party
to any deed or other instrument conveying the title to real estate or to any other
property the value of which is in excess of one hundred thousand pesos, the
respective Department Secretary shall prepare the necessary papers which,
together with the proper recommendations, shall be submitted to the Congress of
the Philippines for approval by the same. Such deed, instrument, or contract shall
be executed and signed by the President of the Philippines on behalf of the
Government of the Philippines unless the Government of the Philippines unless
the authority therefor be expressly vested by law in another officer. (Emphasis
supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of 1987
(Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property
of the Government is authorized by law to be conveyed, the deed of conveyance
shall be executed in behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name
of any political subdivision or of any corporate agency or instrumentality, by the
executive head of the agency or instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or her own sole
will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It
requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the
Roppongi property does not withdraw the property from public domain much less authorize its sale.
It is a mere resolution; it is not a formal declaration abandoning the public character of the
Roppongi property. In fact, the Senate Committee on Foreign Relations is conducting hearings on
Senate Resolution No. 734 which raises serious policy considerations and calls for a fact-finding
investigation of the circumstances behind the decision to sell the Philippine government properties
in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the
constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we did not uphold
the authority of the President to sell the Roppongi property. The Court stated that the
constitutionality of the executive order was not the real issue and that resolving the constitutional
question was "neither necessary nor finally determinative of the case." The Court noted that "[W]hat
petitioner ultimately questions is the use of the proceeds of the disposition of the Roppongi
property." In emphasizing that "the decision of the Executive to dispose of the Roppongi property to
finance the CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the
Court did not acknowledge the fact that the property became alienable nor did it indicate that the
President was authorized to dispose of the Roppongi property. The resolution should be read to
mean that in case the Roppongi property is re-classified to be patrimonial and alienable by authority
of law, the proceeds of a sale may be used for national economic development projects including It is for what it stands for, and for what it could never bring back to life, that its
the CARP. significance today remains undimmed, inspire of the lapse of 45 years since the
war ended, inspire of the passage of 32 years since the property passed on to
Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 the Philippine government.
sale of the Roppongi property. We are resolving the issues raised in these petitions, not the issues
raised in 1989. Roppongi is a reminder that cannot — should not — be dissipated ... (Rollo-
92047, p. 9)
Having declared a need for a law or formal declaration to withdraw the Roppongi property from
public domain to make it alienable and a need for legislative authority to allow the sale of the It is indeed true that the Roppongi property is valuable not so much because of the inflated prices
property, we see no compelling reason to tackle the constitutional issues raised by petitioner fetched by real property in Tokyo but more so because of its symbolic value to all Filipinos —
Ojeda. veterans and civilians alike. Whether or not the Roppongi and related properties will eventually be
sold is a policy determination where both the President and Congress must concur. Considering the
The Court does not ordinarily pass upon constitutional questions unless these questions are properties' importance and value, the laws on conversion and disposition of property of public
properly raised in appropriate cases and their resolution is necessary for the determination of the dominion must be faithfully followed.
case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional question
although properly presented by the record if the case can be disposed of on some other ground WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition
such as the application of a statute or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. is issued enjoining the respondents from proceeding with the sale of the Roppongi property in
175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]). Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is made
PERMANENT. SO ORDERED.
The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:
G.R. No. 108292 September 10, 1993
The Roppongi property is not just like any piece of property. It was given to the
Filipino people in reparation for the lives and blood of Filipinos who died and REPUBLIC OF THE PHILIPPINES (Presidential Commission on Good Government
suffered during the Japanese military occupation, for the suffering of widows and [PCGG]), petitioner,
orphans who lost their loved ones and kindred, for the homes and other vs.
properties lost by countless Filipinos during the war. The Tokyo properties are a SANDIGANBAYAN, JOSE L. AFRICA, MANUEL H. NIETO, JR., FERDINAND E. MARCOS,
monument to the bravery and sacrifice of the Filipino people in the face of an IMELDA R. MARCOS, FERDINAND R. MARCOS, JR., ROBERTO S. BENEDICTO, JUAN
invader; like the monuments of Rizal, Quezon, and other Filipino heroes, we do PONCE ENRILE, and POTENCIANO ILUSORIO, respondents.
not expect economic or financial benefits from them. But who would think of
selling these monuments? Filipino honor and national dignity dictate that we keep G. R. No. 108368 September 10, 1993
our properties in Japan as memorials to the countless Filipinos who died and
suffered. Even if we should become paupers we should not think of selling them.
For it would be as if we sold the lives and blood and tears of our countrymen. REPUBLIC OF THE PHILIPPINES, petitioner,
(Rollo- G.R. No. 92013, p.147) vs.
SANDIGANBAYAN, ROBERTO S. BENEDICTO, ET AL., respondents.
The petitioner in G.R. No. 92047 also states:
G. R. Nos. 108548-49 September 10, 1993
Roppongi is no ordinary property. It is one ceded by the Japanese government in
atonement for its past belligerence for the valiant sacrifice of life and limb and for JOSE MA. B. MONTINOLA, ROMEO G. GUANZON, HORTENSIA STARKE, VICENTE LOPEZ,
deaths, physical dislocation and economic devastation the whole Filipino people JR., MANUEL ESCALANTE, ROMAN M. MIRASOL, JESUS T. TALEON, JESUS S. MONTERO,
endured in World War II. RODOLFO T. TIONGSON, JR., PABLO G. LIM, JULIO LEDESMA, CENTRAL AZUCARERA
DON PEDRO, SAN CARLOS MILLING, CO., INC., petitioners,
vs.
SANDIGANBAYAN and ROBERTO S. BENEDICTO, respondents.
G. R. No. 108550 September 10, 1993
JOSE MA. B. MONTINOLA, ROMEO G. GUANZON, HORTENSIA STARKE, VICENTE LOPEZ,
JR., MANUEL ESCALANTE, ROMAN M. MIRASOL, JESUS T. TALEON, JESUS S. MONTERO,
RODOLFO T. TIONGSON, JR., PABLO G. LIM, JULIO LEDESMA, CENTRAL AZUCARERA
DON PEDRO, SAN CARLOS, MILLING, CO., INC., petitioners,
vs.
THE SANDIGANBAYAN and ROBERTO S. BENEDICTO, respondents.
Custodio O. Parlade & Emerito G. Bagabaldo for petitioners in G.R. No. 108368.
Alampay, del Castillo & Maronilla Law Office for P. Sabido, et al. in G.R. Nos. 108548-49 & 108550.
MELO, J.:
The four (4) herein consolidated petitions have as their common prayer the nullification of the
already approved and partially implemented compromise agreement dated November 3, 1990
executed between Roberto S. Benedicto and the Presidential Commission on Good Government
(PCGG) represented by its then Chairman, David M. Castro, and the setting aside of the
Sandiganbayan decision dated October 2, 1992 approving the compromise agreement and
rendering judgment in accordance with its terms. G.R. No. 108548-49 and 108550 were filed by
eleven (11) sugar cane planters and two (2) corporations engaged in the milling of sugar cane who
additionally ask for permission to intervene and to be admitted as parties to Civil Cases No. 0024
and No. 0028 before the Sandiganbayan.
The subject matters of the disputed compromise agreement are Sandiganbayan Civil Case No.
0009, Civil Case No. 00234, Civil Case
No. 0034, the Phil-Asia case before the Tanodbayan and PCGG I.S. No. 1. The cases arose from
complaints for reconveyance, reversion, accounting, restitution, and damages against former
President Ferdinand E. Marcos, members of his family, and alleged cronies, one of whom is said to
be respondent Roberto S. Benedicto.
The compromise agreement involved in these petitions is the third one in a series of global
settlements effected between the Republic and respondent Benedicto. In March, 1990 the cases
brought by the Republic against Benedicto in the United States were settled through a plea
bargaining agreement approved by the New York Court and a "Settlement and Partial Release of
Claims" approved by the California Court of Los Angeles. On July 20 and 23, 1990, the cases in
Switzerland involving Benedicto's bank deposits in that country were settled by another agreement
between the Republic and Benedicto. In fact, as early as December, 1986, the PCGG and
Benedicto had already entered into temporary arrangements covering the management and
operations of Benedicto's media business — BBC Channel 2, IBC Channel 13, Sining Makulay
(CATV), and the Daily Express. No questions have been raised against the first two settlements.
The management issue at Broadcast City was decided by this Court in Benedicto vs. Board of
Administrators of Television Stations RPN, and IBC (207 SCRA 659 [1992])
Under the compromise agreement, Benedicto and his group-controlled corporations ceded to the
government certain pieces of property listed in Annex A of the agreement and assigned or
transferred whatever rights he may have, if any, to the government over all corporate assets listed
in Annex B of the agreement (pp. 115-125, Rollo in G.R. No. 108292).
The PCGG in turn, lifted the sequestrations over the property listed in Annex C (p. 125, Rollo) as
well as other assets mentioned in the agreement. The Government also extended absolute
immunity to Benedicto, members of his family, and officers and employees of the listed
corporations such that there would be no criminal investigation or prosecution for acts or
ommissions prior to February 25, 1986 that may be alleged to have violated penal laws, including
Act No. 3019, in relation to the acquisition of the assets under the agreement.
The government agreed to recognize the constitutional right to travel of Mr. and Mrs. Benedicto and
to interpose no objections to the issuance or restoration of their passports by the government office
concerned.
According to the PCGG in G.R. No. 108292 and G.R. No. 108368, respondent court committed
grave abuse of discretion in approving an agreement containing provisions contrary to law, morals,
good customs, public policy, and public order. The PCGG contends that its consent was obtained
through fraud and misrepresentation; that it is not in estoppel to question the validity of the
agreement; and that the respondent court was wrong in passing upon the PCGG's inability to return
what was ceded to it should the agreement be disapproved.
The authority of the PCGG to enter into compromise agreements in civil cases and to grant
immunity, under certain circumstances, in criminal cases is now settled and established.
In Republic of the Philippines and Jose O. Campos, Jr. vs. Sandiganbayan, et al. (173 SCRA 72,
[1989]), this Court categorically stated that amicable settlements and compromises are not only
allowed but actually encouraged in civil cases. A specific grant of immunity from criminal
prosecutions was also sustained. In Benedicto vs. Board of Administrators of Television Stations
RPN, BBC, and IBC (207 SCRA 659 [1992]), the Court ruled that the authority of the PCGG to
validly enter into compromise agreement for the purpose of avoiding litigation or putting an end to
one already commenced was indisputable. The court took cognizance of the fact that the
compromise agreement which is now the subject of the present petitions was pending before the
Sandiganbayan for determination and approval and, therefore, dismissed the petition directed
against the agreement's implementation and enforcement.
Since this Court specifically ordered the Sandiganbayan to act on the compromise agreement
between the PCGG and Benedicto, what remains to be done is to ascertain the propriety of the
action of the Sandiganbayan in approving the agreement, and the validity of the agreement itself.
The Sandiganbayan stated in its decision that the contract on its face does not appear to be
contrary to law, morals, or public policy and that it was entered into freely and voluntarily by the
parties (p. 79, Rollo in G.R. No. 108292). There is no intimidation of vitiated consent on the part of
the PCGG. On its finding that the compromise agreement was entered into by the parties freely,
voluntarily, and with full understanding of its consequences, respondent court stated that the
agreement is conclusive and binding upon it.
We agree with the following observations of the Sandiganbayan:
A party that availed himself of and complied with the provisions of a judicial
compromise is under estoppel to question its validity. (Serrano vs. Miave, 13
SCRA 461). In the regime of law and order, repudiation of an agreement validly
entered into cannot be made without any ground or reason in law or in fact for
such repudiation. (Rodriguez vs. Alikpala, 57 SCRA 455).
It is in consequences of this that the Supreme Court in Mayuga vs. Court of
Appeals, 154 SCRA 309, held that a compromise upon its perfection became
binding upon the parties and has the effect and authority of res judicata even if
not judicially approved. (Emphasis supplied)
In this connection, therefore, We hold that plaintiff is in estoppel to question the
validity of the herein Compromise Agreement since it had already received
benefits thereunder, such as:
1. Full take over and control of Oriental Petroleum shares of
stocks owned by Piedras Mining and the excercise by the latter
company of the pre-emptive rights granted by Oriental
Petroleum. Said shares have a total
value now of P1,094,816,379.00 (P.0675 and P.0775/per A
and B shares, respectively.
2. Full take over, control and management of Broadcast City,
(Channel 13) inspite of Supreme Court decision in G.R.
No. L-87710 that the Board of Administration, created under
Executive Order No. 11, continued management is no longer
legally possible, upon formal representation and that Benedicto
will comply fully with the terms and conditions of the
Compromise Agreement. Said assets have a total estimated
value of P450 million.
3. Complete turnover of California Overseas Bank, with capital
account of US$18 Million (P406 million), to the Philippine
Government which was in turn sold by the Philippine
Government to the PNB.
4. Receipt of US$16.271 million (P386.0 million —
P23.71/$1.00). The total value of the aforesaid assets
transferred to the Philippine Government amount to P2.336
Billion.
In Katipunan Labor Union vs. Caltex, 101 Phils. 1224, the Supreme Court,
through Justice J. B. L. Reyes, stated in effect that a compromise is governed by
the basic principle that the obligations arising therefrom have the force of law
between the parties (citing Article 1159, New Civil Code), which means
that neither party may unilaterally and upon his own exclusive volition escape his
obligation under the contract.
xxx xxx xxx
Since a compromise has, upon the parties and their successors-in-interest, the
effect of res judicata, it can only be rescinded on the ground of vitiated consent,
and, this is true even if the compromise turns out to be unsatisfactory to either of
the parties (Castro vs. Castro, 97 Phils. 705). By merely asking for a
renegotiation of the agreement, the PCGG herein has impliedly admitted that the
agreement is not contrary to law, public policy or morals nor was there any
circumstance which had vitiated or does now vitiate consent.
(Decision, pp. 26-27; pp. 104-105, Rollo in G.R. No. 108292)
In fact, the Court has consistently ruled that a party to a compromise cannot ask for a rescission
after it has enjoyed its benefits. Thus in Barairo vs. Mendoza (G. R. No. 82545, May 15, 1989
Resolution), re-echoing 5 Ruling Case Law, 883 (1914) it was held:
Compromises are to be favored, without regard to the nature of the controversy
compromised. They cannot be set aside because the event shows all the gain to
have been on one side, and all the sacrifice on the other, if the parties have acted
in good faith and with a belief of the actual existence of a settlement be made,
free from fraud or mistake, whereby there is a surrender or satisfaction, in whole
or in part, of a claim upon one side in exchange for or in consideration of a
 surrender of value, upon the other, however baseless may be the claim upon
either side or harsh the terms as to either of the parties, the other cannot
successfully impeach the agreement in a court of justice which re-echoed
5 Ruling Case Laws 883 (1914).
And in Pasay City Government vs. CFI of Manila (132 SCRA 156 [1984]), was most emphatic in
ruling that a party to a compromise agreement cannot ask its rescission after it has enjoyed its
benefits. Then Justice, later Chief Justice Makasiar had this to say:
[I]t is obvious that the respondent-appellee did not only succeed in enforcing the
compromise but said plaintiff-appellee likewise wants to rescind the said
compromise. It is clear from the language of the law, specifically Article 2041 of
the New Civil Code that one of the parties to a compromise has two options: 1) to
enforce the compromise; or 2) to rescind the same and insist upon his original
demand. The respondent-appellee in the case herein before Us wants to avail of
both of these options. This can not be done. The respondent-appellee cannot ask
for rescission of the compromise agreement after it has already enjoyed the first
option of enforcing the compromise by asking for a writ of execution resulting
thereby in the garnishment of the Pasay City funds deposited with the Philippine
National Bank which eventually was delivered to the respondent-appellee. (at p.
168)
It is equally puerile for the PCGG to contend that the agreement is congenitally defective from the
mere happenstance that the agreement was not authenticated before the consular officials abroad
and without the participation of witnesses and of the Solicitor General. While the rule of lex loci
celebrationis generally governs forms and solemnities of contracts under Article 17 of the Civil
Code (Vitug, Compendium of Civil Law and Jurisprudence, 1986 First ed., p. 11), the principle
of lex rei sitae generally applies with respect to formalities for the acquisition, encumbrance, and
alienation of real and personal property (1 Paras, Civil Code of the Philippines annotated, 1989
12th ed.,
p. 107). And relative to this precept on lex situs, Philippine substantive law is certainly clear on the
matter that contracts are obligatory, in whatever form they may have been entered into, subject to
the existence of all the essential requisites for their validity (Article 1356, New Civil Code). The fact
that the compromise agreement was not authenticated before the consular officers abroad, as well
as the absence of witnesses, cannot be of much legal significance under Philippine law inasmuch
as the requirement under Article 1358(a) of the Civil Code, that a contract intended to extinguish or
transmit real rights over the immovables must be in a public document is merely designed for
greater efficacy or convenience (4 Tolentino, Commentaries and Jurisprudence on the Civil Code of
the Philippines, 1991 ed., p. 546).
Neither does the absence of the Solicitor General's participation render the agreement invalid since
under both Executive Order No. 2 and Executive Order No. 14-A, it is the PCGG which has
been "primarily charged" with the responsibility of recovering illegally acquired or misappropriated
assets. It should perhaps be recalled at this juncture that it was during this period that the OSG
withdrew as counsel in PCGG cases, compelling the latter to hire high-priced and supposedly
competent lawyers of its own. Indeed, these events were the backdrop of the widely acclaimed and
erudite decision penned by Justice Flerida Ruth P. Romero wherein the OSG was advised of its
duties, the scope of its authority, the mandate of its office, and thence ordered to re-enter its
appearance in PCGG cases. In fine, the OSG is the least qualified agency to raise the argument
that it had no participation in the agreement.
The PCGG submits the notion that Benedicto can renege on his undertaking because the
compromise does not have a clause for breach of warranty. Again, we must point out that the
insinuation (p. 30, Petition, p. 35, Rollo in G.R. No. 108292), along this line is uncalled for due to
the language of paragraph 4:
IV. Cooperation in Preservation/Recovery Efforts.
The parties herein hereby undertake to cooperate with each other in the
preservation or recovery of sequestered properties and business, including joint
action or defense in the enforcement or resistance as the case may be, or claims
affecting the sequestered properties and businesses involved in this Agreement.
as well of Paragraph 6 of the Compromise Agreement:
VI. Further Acts/Documents.
Each party to this Agreement agrees to perform such other and further acts and
authorizations, including the execution and delivery of such other and further
documents as may be reasonably necessary to carry out the provisions of this
Agreement.
which serve as built-in safeguards against amnesia, so to speak, and possible repudiation. At any
rate, and assuming in gratia argumenti that a breach occurs, the remedy of the PCGG it clearly set
forth in Article 2041 of the Civil Code:
Art. 2041. If one of the parties fails or refuses to abide by the compromise, the
other party may either enforce the compromise or regard it as rescinded and
insist upon his original demand.
It is advocated by the PCGG that respondent Benedicto retaining a portion of the assets is
anathema to, and incongruous with, the zero-retention policy of the government in the pursuit for
recovery of all ill-gotten wealth pursuant to Section 2(a) of Executive Order No. 1. While full
recovery is ideal, the PCGG is not precluded from entering into a compromise agreement which
entails reciprocal concessions if only to expedite recovery so that the remaining "funds, assets and
other properties may be used to hasten national economic recovery" (3rd WHEREAS clause,
Executive Order No. 14-A). To be sure, the so-called zero retention mentioned in Section 2(a) of
Executive Order No. 1 had been modified to read:
WHEREAS, the Presidential Commission on Good Government was created on
February 28, 1986 by Executive Order No. 1 to assist the President in
the recovery of ill-gotten wealth accumulated by former President Ferdinand E.
Marcos, his immediate family, relatives, subordinates and close associates;
which undoubtedly suggests a departure from the former goal of total restitution.
Contrary to the PCGG's observation that the value of the assets ceded by Benedicto should have
been reflected in the contract, Section 5 of Executive Order No. 14-A does not seem to impose
such an element as a condition sine qua non to the validity of a projected settlement. Information as
to net worth of Benedicto's assets need to be stated in the four corners of the agreement since his
duty to disclose all his property is supposed to be made before the PCGG or to the Sandiganbayan
when called upon to testify as a vital witness on other ill-gotten wealth cases under Section 5 of EO
14-A. It is needless to stress that the series of negotiations which culminated in the signing of the
agreement on November 3, 1990 afforded every opportunity for Benedicto to reveal his assets for
the PCGG's evaluation in conjunction with its general function to collate evidence relative to ill-
gotten wealth (Bataan Shipyard and Engineering Co., Inc. vs. PCGG (150 SCRA 181 [1987]).
The fact that certain details peculiar in other compromise agreements, such as those found in the
Fonacier, Razon and Floirendo deals, are not reflected in the Benedicto agreement does not mean
that the settlement is susceptible to challenge, especially so when the PCGG itself concedes that
any future agreement need not follow the pattern fixed in previous contracts (p. 33, Petition; p.
38, Rollo in G. R. No. 108292).
To support the thesis that the agreement per se is contrary to law, the PCGG shifts discussion to
the salient portions of Republic Act No. 3019, the Anti Graft and Corrupt Practices Act, particularly
those with respect to acts allegedly causing undue injury to the government, resulting into a
manifestly disadvantageous contract and leading to unwarranted priveleges (p. 35, Petition; p.
40, Rollo in G. R. No. 108292). But these assumptions remain mere verisimilitudes, unsupported by
evidence that indeed the contract was entered into under circumstances which would invite
reasonable suspicion of bad faith on the part of those privy thereto.
To backtrack from the effects of the settlement, the PCGG relies on the principle that the State is
never estopped by acts of its agents, as applied in cases which require no citation, and as affirmed
by Section 15, Article 11 of the 1987 Constitution:
The right of the State to recover properties unlawfully acquired by public officials
or employees, from them or from their nominees or transferees, shall not be
barred by prescription, laches or estoppel.
We agree with the statement that the State is immune from estoppel but this concept is understood
to refer to acts and mistakes of its officials especially those which are irregular (Sharp International
Marketing vs. Court of Appeals, 201 SCRA 299; 306 [1991]; Republic vs. Aquino, 120 SCRA 186
[1983], which peculiar circumstances are absent in the case at bar. Although the State's right of
action to recover ill-gotten wealth is not vulnerable to estoppel, it is non sequitur to suggest that a
contract, freely and in good faith executed between the parties thereto is susceptible to
disturbance ad infinitum. A different interpretation will lead to the absurd scenario of permitting a
party to unilaterally jettison a compromise agreement which is supposed to have authority of res
judicata (Article 2037, New Civil Code), and like any other contract, has the force of law between
privies thereto (Article 1159, New Civil Code; Hernaez vs. Kao, 17 SCRA 296 [1966]; 6 Padilla,
Civil Code annotated, 7th ed., 1987. p. 711; 3 Aquino, Civil Code, 1990 ed., p. 463) Thus, as
emphazised by Justice Escareal in Civil Case No. 0034:
Viewed against the backdrop of the foregoing factual antecedents and legal
principles, We are of the considered opinion that new PCGG Chairman
Magtanggol C. Gunigundo lacks the legal and moral authority to overturn and set
aside a previous valid and authorized contract/transaction entered into by his
predecessor in behalf of the Republic. To rule otherwise is to sanction an
unlawful betrayal by one party of the trust and confidence reposed by the other. It
must be noted that the parties to the Agreement are plaintiff Republic of the
Philippines, as represented by the PCGG, and defendant Roberto S. Benedicto,
not anybody else. With this basic premise, it logically follows that after the due
execution of the Agreement by and between PCGG, as representative of plaintiff
Republic of the Philippines, and defendant Benedicto, the same has acquired a
binding and res judicata effect as against the parties thereto. Perforce, any
change in the administrative structure and/or personalities within the PCGG
cannot defeat the validity and binding effect thereof between the parties. A ruling
to the contrary is not only illogical and irrational, but inequitable and pernicious as
well, for it may open the door for capricious adventurism on the part of the policy-
makers of the land, and disregard for the majesty of the law, which could
ultimately bring about the citizenry's loss of faith and confidence in the sincerity of
the government in its dealings with the governed.
(p. 115-116, G.R. No. 108368)
Within the context of the Civil Code, the principle of estoppel under Article 1431 is only of
suppletory application insofar as they are not in direct friction with other provisions of the Code,
such as the binding effect of a compromise agreement under Article 2037, the Code of Commerce,
the Rules of Court and special laws (Article 1432, New Civil Code; 4 Paras, Civil Code Annotated,
12th ed., 1989, p. 172). The real office of the equitable norm of estoppel is limited to supply
deficiency in the law it should not supplant positive law.
Furthermore, this Court will reject a settlement only if it contravenes Article 2035 of the Civil Code
(prohibiting compromises on the civil status of persons, the validity of marriage or a legal
separation, or any ground for such separation, future support, the jurisdiction of courts, and future
legitime) or if the stipulations thereof are repugnant to law, morals, good customs, public order, or
public policy (First Philippine Holdings Corp. vs. Sandiganbayan, 202 SCRA 212 [1991]).
The Sandiganbayan stated in its questioned decision that "the essence of compromise being
mutual concessions by the parties to avoid or end litigation, it is to be expected that neither will be
able to maintain his initial demands wholly unaltered" (Periquet vs. Reyes, 21 SCRA 1503 [1967]).
As succinctly stated by Justice Cipriano A. del Rosario in his concurring opinion, any compromise
has at its very essence reciprocal concessions; that "One must give if one must take. If only one
takes all, then one must first win. But in a compromise, all win by taking some and giving some" (p.
108, Rollo in G.R. No. 108292).
The arguments that the compromise is too one-sided in favor of Benedicto and that undue injury
has been caused to the Government while unwarranted benefits and advantages have been given
to Mr. Benedicto, his family, and employees contrary to Republic Act No. 3019, have no merit.
The compromise agreement was the result of a long drawn out process of negotiations with each
party trying to come out as best as it could. There can be no question of its being freely and
voluntarily entered into by the then PCGG Chairman with full authority from the Commission itself.
The Sandiganbayan had ample opportunity to examine the validity of the compromise agreement
and to look into any iniquitous or illegal features, express, implied, or hidden. Two years elapsed
from the time the agreement was executed up to the time it was judicially approved. The joint
motion to approve the compromise agreement filed by the PCGG and Benedicto dated November
22, 1990 was followed seven days later by an opposition from Solicitor General Frank Chavez.
Comments, replies, various motions, a temporary restraining order of the Court in Guingona
vs. PCGG and our decision in that case — 207 SCRA 659 (1992), memoranda, hearings set for
August 11, 1992, September 1, 1992, and September 17, 1992, oppositions, manifestations, and
the September 17, 1992 resolution of the Sandiganbayan preceded its now questioned October 2,
1992 decision. Every question regarding the legality and propriety of the compromise agreement
was fully threshed out before the Sandiganbayan by the parties. We are not dealing with the usual
compromise agreement perfunctorily submitted to a court and approved as a matter of course. The
PCGG-Benedicto agreement was throughly and, at times, disputatiously discussed before the
respondent court. There could be no deception or misrepresentation foisted on either the PCGG or
the Sandiganbayan.
In Araneta vs. Perez (7 SCRA 923 [1963]), we ruled that a compromise once approved by final
orders of the court has the force of res judicata between the parties and should not be disturbed
except for vices of consent or forgery. It is a long established doctrine that the law does nor relieve
a party from the effects of an unwise, foolish, or disastrous constract, entered into with all the
required formalities and with full awareness of what he was doing (Tanda vs. Aldaya, 89 Phil. 497
[1951]). Courts have no power to relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be disastrous deals or unwise investments (Villacorte vs.
Mariano, 89 Phil. 341 [1951]).
In the case at bar, the compromise agreement, as stated by Sandiganbayan, was signed and
executed by the parties "with their eyes wide open" (Decision, p. 23; p. 101, Rollo in G.R. No.
108292). The PCGG knew the strength of the evidence in its hands, the advantages of immediate
recovery, the projected income if forthwith privatized, and other benefits to the Government. The
Sandiganbayan itself in two years of proceedings and deliberations rejected the allegations of
fraud, deception, illegality, and contrariness to morals, good customs, public policy and public order
now raised again before us.
There is another aspect of these petitions presented by petitioners which appears inconsistent and
infeasible. The original prayer of the new PCGG Chairman was to "renegotiate a more just, fair and
equitable agreement" (Annex G of Petition in G.R. No. 108292, p. 191, Rollo). At the risk of being
redundant, we once again must emphasize that the government has already taken over everything
ceded to it by Benedicto. In fact, it is already selling if it has not yet sold various ceded property
under the privatization program. In other words, the agreement has not only been executed, it has
been implemented. Even as the PCGG seeks to nullify and declare void the compromise
agreement, it has no intention of returning any of the pieces of property which it received under the
agreement. It states that the rules on the question of "restitution" are not those on rescissible
contracts but those on void and inexistent contracts in the Civil Code.
The PCGG seemingly forgets that the ownership of the ceded property has been vested in the
government not because it won its cases in the courts and the true ownership or illegal acquisition
has been definitely established. It cannot assume that its allegations have been sustained by the
Sandiganbayan. Ownership has been transferred because of the compromise agreement, not
because of any evidence presented in court by either side on the merits or demerits of the
reconveyance and reversion cases.
The Compromise Agreement itself declares:
WHEREAS, following the termination of the United States and Swiss cases, and
also without admitting the merits of their respective claims and counterclaims
presently involved in uncertain, protracted, and expensive litigation, the Republic
of the Philippines, solely motivated by the desire for immediate accomplishment
of its recovery mission and
Mr. Benedicto, being interested to lead a peaceful and normal pursuit of his
endeavors, the parties have decided to withdraw and/or dismiss their mutual
 claims and counterclaims under the cases pending in the Philippines earlier
referred to;
In other words, the Government wanted to recover as much as it could and as fast as possible
while Benedicto wanted to buy peace without admitting guilt. If the PCGG wants to nullify the
agreement it entered into freely and voluntarily, it must be willing to return all the property ceded to
it because of the Agreement and recover them by proving its cases in the course of judicial
proceedings. This is an essential first step. It cannot renege on the agreement while holding on to
property which it received as a result of said agreement.
More than any person or institution, the government should honor its solemn commitments. It would
set a bad precedent and result in public disenchantment with government if every new head of a
government agency is allowed to freely disown the legitimate agreements of his predecessors,
especially those bearing court approval and, even as everything is already final and implemented,
insist on further rounds of negotiations. Under the PCGG's theory, there would be nothing to
prevent any of its future Chairman from repudiating and revoking acts of his predecessors. The vital
element of trust, honor, and stability in dealing with the government would be lost.
At any rate, availability of a separate proceeding for petitioners as third persons to the compromise
agreement before the Sandiganbayan, in accordance with the ruling of this Court in Republic
vs. Sandiganbayan (184 SCRA 382 [1990]) and in PCGG vs. Peña (159 SCRA 556 [1988]),
proscribes intervention under Section 2(b), Rule 12 of the Revised Rules of Court:
Sec. 2(b) — Discretion of court — In allowing or disallowing a motion for
intervention, the court, in the excercise of discretion, shall consider whether or
not the intervention will unduly delay or prejudice the adjudication of the rights of
the original parties and whether or not the intervenor's rights may be fully
protected in a separate proceeding.
WHEREFORE, the petitions in G.R. Nos. 108292, 108368, 108548-49, and 108550 are hereby
dismissed. The restraining orders issued in the respective cases dated March 10, 1993, March 23,
1993, and March 24, 1993, are hereby lifted and the parties to the compromise agreement are
ordered to comply strictly with the terms thereof.
SO ORDERED.

The petitioners in G.R. Nos. 108548-49 and 108550 filed their petitions to set aside the denial of G.R. No. 108292 September 10, 1993
their motion to intervene. They raise essentially the same grounds as the PCGG in the two other
cases in their bid to set aside the compromise agreement. According to said petitioners, they are
intervening because Benedicto should compensate them and the sugar industry for the systematic REPUBLIC OF THE PHILIPPINES (Presidential Commission on Good Government
plunder of the industry. We agree with the Sandiganbayan that their rights can be fully protected in [PCGG]), petitioner,
a separate proceeding. vs.
SANDIGANBAYAN, JOSE L. AFRICA, MANUEL H. NIETO, JR., FERDINAND E. MARCOS,
IMELDA R. MARCOS, FERDINAND R. MARCOS, JR., ROBERTO S. BENEDICTO, JUAN
There is no doubt that interested parties who claim ownership of some assets embraced in the PONCE ENRILE, and POTENCIANO ILUSORIO, respondents.
settlement can participate in pending litigations involving ill-gotten wealth before the
Sandiganbayan as held in Republic vs.Sandiganbayan (184 SCRA 382 [1990]) with reference to
incidents arising from, incidental to, or interwoven with, cases falling within respondent court's G. R. No. 108368 September 10, 1993
exclusive and original jurisdiction (PCGG vs. Peña, 159 SCRA 556 [1988]). But inasmuch as the
petitioners in G.R. No. 108548-50 filed their motion for leave to intervene and to admit REPUBLIC OF THE PHILIPPINES, petitioner,
memorandum in intervention on November 13, 1992 (p. 7, Petition; p. 8, Rollo in G.R. No. 108548- vs.
49; p. 7, Petition; p. 7, Rollo in G.R. No. 108550) or after promulgation of the impugned decision on SANDIGANBAYAN, ROBERTO S. BENEDICTO, ET AL., respondents.
October 2, 1992, it cannot be gainsaid that the intended intrusion was not seasonably raised before
or during the trial spoken of by Section 2, Rule 12 of the Revised Rules of Court, to wit: G. R. Nos. 108548-49 September 10, 1993

Sec. 2 — Intervention — A person may, before or during a trial, be permitted by JOSE MA. B. MONTINOLA, ROMEO G. GUANZON, HORTENSIA STARKE, VICENTE LOPEZ,
the court, in its discretion to intervene in an action, if he has legal interest in the JR., MANUEL ESCALANTE, ROMAN M. MIRASOL, JESUS T. TALEON, JESUS S. MONTERO,
matter in litigation, or in the success of either of the parties, or an interest against RODOLFO T. TIONGSON, JR., PABLO G. LIM, JULIO LEDESMA, CENTRAL AZUCARERA
both, or when he is so situated as to be adversely affected by a distribution or DON PEDRO, SAN CARLOS MILLING, CO., INC., petitioners,
other disposition of property in the custody of the court or of an officer thereof. vs.
SANDIGANBAYAN and ROBERTO S. BENEDICTO, respondents.
G. R. No. 108550 September 10, 1993
JOSE MA. B. MONTINOLA, ROMEO G. GUANZON, HORTENSIA STARKE, VICENTE LOPEZ,
JR., MANUEL ESCALANTE, ROMAN M. MIRASOL, JESUS T. TALEON, JESUS S. MONTERO,
RODOLFO T. TIONGSON, JR., PABLO G. LIM, JULIO LEDESMA, CENTRAL AZUCARERA
DON PEDRO, SAN CARLOS, MILLING, CO., INC., petitioners,
vs.
THE SANDIGANBAYAN and ROBERTO S. BENEDICTO, respondents.
Custodio O. Parlade & Emerito G. Bagabaldo for petitioners in G.R. No. 108368.
Alampay, del Castillo & Maronilla Law Office for P. Sabido, et al. in G.R. Nos. 108548-49 & 108550.
MELO, J.:
The four (4) herein consolidated petitions have as their common prayer the nullification of the
already approved and partially implemented compromise agreement dated November 3, 1990
executed between Roberto S. Benedicto and the Presidential Commission on Good Government
(PCGG) represented by its then Chairman, David M. Castro, and the setting aside of the
Sandiganbayan decision dated October 2, 1992 approving the compromise agreement and
rendering judgment in accordance with its terms. G.R. No. 108548-49 and 108550 were filed by
eleven (11) sugar cane planters and two (2) corporations engaged in the milling of sugar cane who
additionally ask for permission to intervene and to be admitted as parties to Civil Cases No. 0024
and No. 0028 before the Sandiganbayan.
The subject matters of the disputed compromise agreement are Sandiganbayan Civil Case No.
0009, Civil Case No. 00234, Civil Case
No. 0034, the Phil-Asia case before the Tanodbayan and PCGG I.S. No. 1. The cases arose from
complaints for reconveyance, reversion, accounting, restitution, and damages against former
President Ferdinand E. Marcos, members of his family, and alleged cronies, one of whom is said to
be respondent Roberto S. Benedicto.
The compromise agreement involved in these petitions is the third one in a series of global
settlements effected between the Republic and respondent Benedicto. In March, 1990 the cases
brought by the Republic against Benedicto in the United States were settled through a plea
bargaining agreement approved by the New York Court and a "Settlement and Partial Release of
Claims" approved by the California Court of Los Angeles. On July 20 and 23, 1990, the cases in
Switzerland involving Benedicto's bank deposits in that country were settled by another agreement
between the Republic and Benedicto. In fact, as early as December, 1986, the PCGG and
Benedicto had already entered into temporary arrangements covering the management and
operations of Benedicto's media business — BBC Channel 2, IBC Channel 13, Sining Makulay
(CATV), and the Daily Express. No questions have been raised against the first two settlements.
The management issue at Broadcast City was decided by this Court in Benedicto vs. Board of
Administrators of Television Stations RPN, and IBC (207 SCRA 659 [1992])
Under the compromise agreement, Benedicto and his group-controlled corporations ceded to the
government certain pieces of property listed in Annex A of the agreement and assigned or
transferred whatever rights he may have, if any, to the government over all corporate assets listed
in Annex B of the agreement (pp. 115-125, Rollo in G.R. No. 108292).
The PCGG in turn, lifted the sequestrations over the property listed in Annex C (p. 125, Rollo) as
well as other assets mentioned in the agreement. The Government also extended absolute
immunity to Benedicto, members of his family, and officers and employees of the listed
corporations such that there would be no criminal investigation or prosecution for acts or
ommissions prior to February 25, 1986 that may be alleged to have violated penal laws, including
Act No. 3019, in relation to the acquisition of the assets under the agreement.
The government agreed to recognize the constitutional right to travel of Mr. and Mrs. Benedicto and
to interpose no objections to the issuance or restoration of their passports by the government office
concerned.
According to the PCGG in G.R. No. 108292 and G.R. No. 108368, respondent court committed
grave abuse of discretion in approving an agreement containing provisions contrary to law, morals,
good customs, public policy, and public order. The PCGG contends that its consent was obtained
through fraud and misrepresentation; that it is not in estoppel to question the validity of the
agreement; and that the respondent court was wrong in passing upon the PCGG's inability to return
what was ceded to it should the agreement be disapproved.
The authority of the PCGG to enter into compromise agreements in civil cases and to grant
immunity, under certain circumstances, in criminal cases is now settled and established.
In Republic of the Philippines and Jose O. Campos, Jr. vs. Sandiganbayan, et al. (173 SCRA 72,
[1989]), this Court categorically stated that amicable settlements and compromises are not only
allowed but actually encouraged in civil cases. A specific grant of immunity from criminal
prosecutions was also sustained. In Benedicto vs. Board of Administrators of Television Stations
RPN, BBC, and IBC (207 SCRA 659 [1992]), the Court ruled that the authority of the PCGG to
validly enter into compromise agreement for the purpose of avoiding litigation or putting an end to
one already commenced was indisputable. The court took cognizance of the fact that the
compromise agreement which is now the subject of the present petitions was pending before the
Sandiganbayan for determination and approval and, therefore, dismissed the petition directed
against the agreement's implementation and enforcement.
Since this Court specifically ordered the Sandiganbayan to act on the compromise agreement
between the PCGG and Benedicto, what remains to be done is to ascertain the propriety of the
action of the Sandiganbayan in approving the agreement, and the validity of the agreement itself.
The Sandiganbayan stated in its decision that the contract on its face does not appear to be
contrary to law, morals, or public policy and that it was entered into freely and voluntarily by the
parties (p. 79, Rollo in G.R. No. 108292). There is no intimidation of vitiated consent on the part of
the PCGG. On its finding that the compromise agreement was entered into by the parties freely,
voluntarily, and with full understanding of its consequences, respondent court stated that the
agreement is conclusive and binding upon it.
We agree with the following observations of the Sandiganbayan:
A party that availed himself of and complied with the provisions of a judicial
compromise is under estoppel to question its validity. (Serrano vs. Miave, 13
SCRA 461). In the regime of law and order, repudiation of an agreement validly
entered into cannot be made without any ground or reason in law or in fact for
such repudiation. (Rodriguez vs. Alikpala, 57 SCRA 455).
It is in consequences of this that the Supreme Court in Mayuga vs. Court of
Appeals, 154 SCRA 309, held that a compromise upon its perfection became
binding upon the parties and has the effect and authority of res judicata even if
not judicially approved. (Emphasis supplied)
In this connection, therefore, We hold that plaintiff is in estoppel to question the
validity of the herein Compromise Agreement since it had already received
benefits thereunder, such as:
1. Full take over and control of Oriental Petroleum shares of
stocks owned by Piedras Mining and the excercise by the latter
company of the pre-emptive rights granted by Oriental
Petroleum. Said shares have a total
value now of P1,094,816,379.00 (P.0675 and P.0775/per A
and B shares, respectively.
2. Full take over, control and management of Broadcast City,
(Channel 13) inspite of Supreme Court decision in G.R.
No. L-87710 that the Board of Administration, created under
Executive Order No. 11, continued management is no longer
legally possible, upon formal representation and that Benedicto
will comply fully with the terms and conditions of the
Compromise Agreement. Said assets have a total estimated
value of P450 million.
3. Complete turnover of California Overseas Bank, with capital
account of US$18 Million (P406 million), to the Philippine
Government which was in turn sold by the Philippine
Government to the PNB.
4. Receipt of US$16.271 million (P386.0 million —
P23.71/$1.00). The total value of the aforesaid assets
transferred to the Philippine Government amount to P2.336
Billion.
In Katipunan Labor Union vs. Caltex, 101 Phils. 1224, the Supreme Court,
through Justice J. B. L. Reyes, stated in effect that a compromise is governed by
the basic principle that the obligations arising therefrom have the force of law
between the parties (citing Article 1159, New Civil Code), which means
that neither party may unilaterally and upon his own exclusive volition escape his
obligation under the contract.
xxx xxx xxx
Since a compromise has, upon the parties and their successors-in-interest, the
effect of res judicata, it can only be rescinded on the ground of vitiated consent,
and, this is true even if the compromise turns out to be unsatisfactory to either of
the parties (Castro vs. Castro, 97 Phils. 705). By merely asking for a
renegotiation of the agreement, the PCGG herein has impliedly admitted that the
agreement is not contrary to law, public policy or morals nor was there any
circumstance which had vitiated or does now vitiate consent.
(Decision, pp. 26-27; pp. 104-105, Rollo in G.R. No. 108292)
In fact, the Court has consistently ruled that a party to a compromise cannot ask for a rescission
after it has enjoyed its benefits. Thus in Barairo vs. Mendoza (G. R. No. 82545, May 15, 1989
Resolution), re-echoing 5 Ruling Case Law, 883 (1914) it was held:
Compromises are to be favored, without regard to the nature of the controversy
compromised. They cannot be set aside because the event shows all the gain to
have been on one side, and all the sacrifice on the other, if the parties have acted
in good faith and with a belief of the actual existence of a settlement be made,
free from fraud or mistake, whereby there is a surrender or satisfaction, in whole
or in part, of a claim upon one side in exchange for or in consideration of a
surrender of value, upon the other, however baseless may be the claim upon
either side or harsh the terms as to either of the parties, the other cannot
successfully impeach the agreement in a court of justice which re-echoed
5 Ruling Case Laws 883 (1914).
And in Pasay City Government vs. CFI of Manila (132 SCRA 156 [1984]), was most emphatic in
ruling that a party to a compromise agreement cannot ask its rescission after it has enjoyed its
benefits. Then Justice, later Chief Justice Makasiar had this to say:
[I]t is obvious that the respondent-appellee did not only succeed in enforcing the
compromise but said plaintiff-appellee likewise wants to rescind the said
compromise. It is clear from the language of the law, specifically Article 2041 of
the New Civil Code that one of the parties to a compromise has two options: 1) to
enforce the compromise; or 2) to rescind the same and insist upon his original
demand. The respondent-appellee in the case herein before Us wants to avail of
both of these options. This can not be done. The respondent-appellee cannot ask
for rescission of the compromise agreement after it has already enjoyed the first
option of enforcing the compromise by asking for a writ of execution resulting
thereby in the garnishment of the Pasay City funds deposited with the Philippine
National Bank which eventually was delivered to the respondent-appellee. (at p.
168)
It is equally puerile for the PCGG to contend that the agreement is congenitally defective from the
mere happenstance that the agreement was not authenticated before the consular officials abroad
and without the participation of witnesses and of the Solicitor General. While the rule of lex loci
celebrationis generally governs forms and solemnities of contracts under Article 17 of the Civil
Code (Vitug, Compendium of Civil Law and Jurisprudence, 1986 First ed., p. 11), the principle
of lex rei sitae generally applies with respect to formalities for the acquisition, encumbrance, and
alienation of real and personal property (1 Paras, Civil Code of the Philippines annotated, 1989
12th ed.,
p. 107). And relative to this precept on lex situs, Philippine substantive law is certainly clear on the
matter that contracts are obligatory, in whatever form they may have been entered into, subject to
the existence of all the essential requisites for their validity (Article 1356, New Civil Code). The fact
that the compromise agreement was not authenticated before the consular officers abroad, as well
as the absence of witnesses, cannot be of much legal significance under Philippine law inasmuch
as the requirement under Article 1358(a) of the Civil Code, that a contract intended to extinguish or
transmit real rights over the immovables must be in a public document is merely designed for
greater efficacy or convenience (4 Tolentino, Commentaries and Jurisprudence on the Civil Code of
the Philippines, 1991 ed., p. 546).
Neither does the absence of the Solicitor General's participation render the agreement invalid since
under both Executive Order No. 2 and Executive Order No. 14-A, it is the PCGG which has
been "primarily charged" with the responsibility of recovering illegally acquired or misappropriated
assets. It should perhaps be recalled at this juncture that it was during this period that the OSG
withdrew as counsel in PCGG cases, compelling the latter to hire high-priced and supposedly
competent lawyers of its own. Indeed, these events were the backdrop of the widely acclaimed and
erudite decision penned by Justice Flerida Ruth P. Romero wherein the OSG was advised of its
duties, the scope of its authority, the mandate of its office, and thence ordered to re-enter its
appearance in PCGG cases. In fine, the OSG is the least qualified agency to raise the argument
that it had no participation in the agreement.
The PCGG submits the notion that Benedicto can renege on his undertaking because the
compromise does not have a clause for breach of warranty. Again, we must point out that the
insinuation (p. 30, Petition, p. 35, Rollo in G.R. No. 108292), along this line is uncalled for due to
the language of paragraph 4:
IV. Cooperation in Preservation/Recovery Efforts.
The parties herein hereby undertake to cooperate with each other in the
preservation or recovery of sequestered properties and business, including joint
action or defense in the enforcement or resistance as the case may be, or claims
affecting the sequestered properties and businesses involved in this Agreement.
as well of Paragraph 6 of the Compromise Agreement:
VI. Further Acts/Documents.
Each party to this Agreement agrees to perform such other and further acts and
authorizations, including the execution and delivery of such other and further
documents as may be reasonably necessary to carry out the provisions of this
Agreement.
which serve as built-in safeguards against amnesia, so to speak, and possible repudiation. At any
rate, and assuming in gratia argumenti that a breach occurs, the remedy of the PCGG it clearly set
forth in Article 2041 of the Civil Code:
Art. 2041. If one of the parties fails or refuses to abide by the compromise, the
other party may either enforce the compromise or regard it as rescinded and
insist upon his original demand.
It is advocated by the PCGG that respondent Benedicto retaining a portion of the assets is
anathema to, and incongruous with, the zero-retention policy of the government in the pursuit for
recovery of all ill-gotten wealth pursuant to Section 2(a) of Executive Order No. 1. While full
recovery is ideal, the PCGG is not precluded from entering into a compromise agreement which
entails reciprocal concessions if only to expedite recovery so that the remaining "funds, assets and
other properties may be used to hasten national economic recovery" (3rd WHEREAS clause,
Executive Order No. 14-A). To be sure, the so-called zero retention mentioned in Section 2(a) of
Executive Order No. 1 had been modified to read:
 WHEREAS, the Presidential Commission on Good Government was created on
February 28, 1986 by Executive Order No. 1 to assist the President in
the recovery of ill-gotten wealth accumulated by former President Ferdinand E.
Marcos, his immediate family, relatives, subordinates and close associates;
which undoubtedly suggests a departure from the former goal of total restitution.
Contrary to the PCGG's observation that the value of the assets ceded by Benedicto should have
been reflected in the contract, Section 5 of Executive Order No. 14-A does not seem to impose
such an element as a condition sine qua non to the validity of a projected settlement. Information as
to net worth of Benedicto's assets need to be stated in the four corners of the agreement since his
duty to disclose all his property is supposed to be made before the PCGG or to the Sandiganbayan
when called upon to testify as a vital witness on other ill-gotten wealth cases under Section 5 of EO
14-A. It is needless to stress that the series of negotiations which culminated in the signing of the
agreement on November 3, 1990 afforded every opportunity for Benedicto to reveal his assets for
the PCGG's evaluation in conjunction with its general function to collate evidence relative to ill-
gotten wealth (Bataan Shipyard and Engineering Co., Inc. vs. PCGG (150 SCRA 181 [1987]).
The fact that certain details peculiar in other compromise agreements, such as those found in the
Fonacier, Razon and Floirendo deals, are not reflected in the Benedicto agreement does not mean
that the settlement is susceptible to challenge, especially so when the PCGG itself concedes that
any future agreement need not follow the pattern fixed in previous contracts (p. 33, Petition; p.
38, Rollo in G. R. No. 108292).
To support the thesis that the agreement per se is contrary to law, the PCGG shifts discussion to
the salient portions of Republic Act No. 3019, the Anti Graft and Corrupt Practices Act, particularly
those with respect to acts allegedly causing undue injury to the government, resulting into a
manifestly disadvantageous contract and leading to unwarranted priveleges (p. 35, Petition; p.
40, Rollo in G. R. No. 108292). But these assumptions remain mere verisimilitudes, unsupported by
evidence that indeed the contract was entered into under circumstances which would invite
reasonable suspicion of bad faith on the part of those privy thereto.
To backtrack from the effects of the settlement, the PCGG relies on the principle that the State is
never estopped by acts of its agents, as applied in cases which require no citation, and as affirmed
by Section 15, Article 11 of the 1987 Constitution:
The right of the State to recover properties unlawfully acquired by public officials
or employees, from them or from their nominees or transferees, shall not be
barred by prescription, laches or estoppel.
We agree with the statement that the State is immune from estoppel but this concept is understood
to refer to acts and mistakes of its officials especially those which are irregular (Sharp International
Marketing vs. Court of Appeals, 201 SCRA 299; 306 [1991]; Republic vs. Aquino, 120 SCRA 186
[1983], which peculiar circumstances are absent in the case at bar. Although the State's right of
action to recover ill-gotten wealth is not vulnerable to estoppel, it is non sequitur to suggest that a
contract, freely and in good faith executed between the parties thereto is susceptible to
disturbance ad infinitum. A different interpretation will lead to the absurd scenario of permitting a
party to unilaterally jettison a compromise agreement which is supposed to have authority of res
judicata (Article 2037, New Civil Code), and like any other contract, has the force of law between
privies thereto (Article 1159, New Civil Code; Hernaez vs. Kao, 17 SCRA 296 [1966]; 6 Padilla,
Civil Code annotated, 7th ed., 1987. p. 711; 3 Aquino, Civil Code, 1990 ed., p. 463) Thus, as
emphazised by Justice Escareal in Civil Case No. 0034:
Viewed against the backdrop of the foregoing factual antecedents and legal
principles, We are of the considered opinion that new PCGG Chairman
Magtanggol C. Gunigundo lacks the legal and moral authority to overturn and set
aside a previous valid and authorized contract/transaction entered into by his
predecessor in behalf of the Republic. To rule otherwise is to sanction an
unlawful betrayal by one party of the trust and confidence reposed by the other. It
must be noted that the parties to the Agreement are plaintiff Republic of the
Philippines, as represented by the PCGG, and defendant Roberto S. Benedicto,
not anybody else. With this basic premise, it logically follows that after the due
execution of the Agreement by and between PCGG, as representative of plaintiff
Republic of the Philippines, and defendant Benedicto, the same has acquired a
binding and res judicata effect as against the parties thereto. Perforce, any
change in the administrative structure and/or personalities within the PCGG
cannot defeat the validity and binding effect thereof between the parties. A ruling
to the contrary is not only illogical and irrational, but inequitable and pernicious as
well, for it may open the door for capricious adventurism on the part of the policy-
makers of the land, and disregard for the majesty of the law, which could
ultimately bring about the citizenry's loss of faith and confidence in the sincerity of
the government in its dealings with the governed.
(p. 115-116, G.R. No. 108368)
Within the context of the Civil Code, the principle of estoppel under Article 1431 is only of
suppletory application insofar as they are not in direct friction with other provisions of the Code,
such as the binding effect of a compromise agreement under Article 2037, the Code of Commerce,
the Rules of Court and special laws (Article 1432, New Civil Code; 4 Paras, Civil Code Annotated,
12th ed., 1989, p. 172). The real office of the equitable norm of estoppel is limited to supply
deficiency in the law it should not supplant positive law.
Furthermore, this Court will reject a settlement only if it contravenes Article 2035 of the Civil Code
(prohibiting compromises on the civil status of persons, the validity of marriage or a legal
separation, or any ground for such separation, future support, the jurisdiction of courts, and future
legitime) or if the stipulations thereof are repugnant to law, morals, good customs, public order, or
public policy (First Philippine Holdings Corp. vs. Sandiganbayan, 202 SCRA 212 [1991]).
The Sandiganbayan stated in its questioned decision that "the essence of compromise being
mutual concessions by the parties to avoid or end litigation, it is to be expected that neither will be
able to maintain his initial demands wholly unaltered" (Periquet vs. Reyes, 21 SCRA 1503 [1967]).
As succinctly stated by Justice Cipriano A. del Rosario in his concurring opinion, any compromise
has at its very essence reciprocal concessions; that "One must give if one must take. If only one
takes all, then one must first win. But in a compromise, all win by taking some and giving some" (p.
108, Rollo in G.R. No. 108292).
The arguments that the compromise is too one-sided in favor of Benedicto and that undue injury
has been caused to the Government while unwarranted benefits and advantages have been given
to Mr. Benedicto, his family, and employees contrary to Republic Act No. 3019, have no merit.
The compromise agreement was the result of a long drawn out process of negotiations with each
party trying to come out as best as it could. There can be no question of its being freely and
voluntarily entered into by the then PCGG Chairman with full authority from the Commission itself.
The Sandiganbayan had ample opportunity to examine the validity of the compromise agreement
and to look into any iniquitous or illegal features, express, implied, or hidden. Two years elapsed
from the time the agreement was executed up to the time it was judicially approved. The joint
motion to approve the compromise agreement filed by the PCGG and Benedicto dated November
22, 1990 was followed seven days later by an opposition from Solicitor General Frank Chavez.
Comments, replies, various motions, a temporary restraining order of the Court in Guingona
vs. PCGG and our decision in that case — 207 SCRA 659 (1992), memoranda, hearings set for
August 11, 1992, September 1, 1992, and September 17, 1992, oppositions, manifestations, and
the September 17, 1992 resolution of the Sandiganbayan preceded its now questioned October 2,
1992 decision. Every question regarding the legality and propriety of the compromise agreement
was fully threshed out before the Sandiganbayan by the parties. We are not dealing with the usual
compromise agreement perfunctorily submitted to a court and approved as a matter of course. The
PCGG-Benedicto agreement was throughly and, at times, disputatiously discussed before the
respondent court. There could be no deception or misrepresentation foisted on either the PCGG or
the Sandiganbayan.
In Araneta vs. Perez (7 SCRA 923 [1963]), we ruled that a compromise once approved by final
orders of the court has the force of res judicata between the parties and should not be disturbed
except for vices of consent or forgery. It is a long established doctrine that the law does nor relieve
a party from the effects of an unwise, foolish, or disastrous constract, entered into with all the
required formalities and with full awareness of what he was doing (Tanda vs. Aldaya, 89 Phil. 497
[1951]). Courts have no power to relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be disastrous deals or unwise investments (Villacorte vs.
Mariano, 89 Phil. 341 [1951]).
In the case at bar, the compromise agreement, as stated by Sandiganbayan, was signed and
executed by the parties "with their eyes wide open" (Decision, p. 23; p. 101, Rollo in G.R. No.
108292). The PCGG knew the strength of the evidence in its hands, the advantages of immediate
recovery, the projected income if forthwith privatized, and other benefits to the Government. The
Sandiganbayan itself in two years of proceedings and deliberations rejected the allegations of
fraud, deception, illegality, and contrariness to morals, good customs, public policy and public order
now raised again before us.
There is another aspect of these petitions presented by petitioners which appears inconsistent and
infeasible. The original prayer of the new PCGG Chairman was to "renegotiate a more just, fair and
equitable agreement" (Annex G of Petition in G.R. No. 108292, p. 191, Rollo). At the risk of being
redundant, we once again must emphasize that the government has already taken over everything
ceded to it by Benedicto. In fact, it is already selling if it has not yet sold various ceded property
under the privatization program. In other words, the agreement has not only been executed, it has
been implemented. Even as the PCGG seeks to nullify and declare void the compromise
agreement, it has no intention of returning any of the pieces of property which it received under the
agreement. It states that the rules on the question of "restitution" are not those on rescissible
contracts but those on void and inexistent contracts in the Civil Code.
The PCGG seemingly forgets that the ownership of the ceded property has been vested in the
government not because it won its cases in the courts and the true ownership or illegal acquisition
has been definitely established. It cannot assume that its allegations have been sustained by the
Sandiganbayan. Ownership has been transferred because of the compromise agreement, not
because of any evidence presented in court by either side on the merits or demerits of the
reconveyance and reversion cases.
The Compromise Agreement itself declares:
WHEREAS, following the termination of the United States and Swiss cases, and
also without admitting the merits of their respective claims and counterclaims
presently involved in uncertain, protracted, and expensive litigation, the Republic
of the Philippines, solely motivated by the desire for immediate accomplishment
of its recovery mission and
Mr. Benedicto, being interested to lead a peaceful and normal pursuit of his
endeavors, the parties have decided to withdraw and/or dismiss their mutual
claims and counterclaims under the cases pending in the Philippines earlier
referred to;
In other words, the Government wanted to recover as much as it could and as fast as possible
while Benedicto wanted to buy peace without admitting guilt. If the PCGG wants to nullify the
agreement it entered into freely and voluntarily, it must be willing to return all the property ceded to
it because of the Agreement and recover them by proving its cases in the course of judicial
proceedings. This is an essential first step. It cannot renege on the agreement while holding on to
property which it received as a result of said agreement.
More than any person or institution, the government should honor its solemn commitments. It would
set a bad precedent and result in public disenchantment with government if every new head of a
government agency is allowed to freely disown the legitimate agreements of his predecessors,
especially those bearing court approval and, even as everything is already final and implemented,
insist on further rounds of negotiations. Under the PCGG's theory, there would be nothing to
prevent any of its future Chairman from repudiating and revoking acts of his predecessors. The vital
element of trust, honor, and stability in dealing with the government would be lost.
The petitioners in G.R. Nos. 108548-49 and 108550 filed their petitions to set aside the denial of
their motion to intervene. They raise essentially the same grounds as the PCGG in the two other
cases in their bid to set aside the compromise agreement. According to said petitioners, they are
intervening because Benedicto should compensate them and the sugar industry for the systematic
plunder of the industry. We agree with the Sandiganbayan that their rights can be fully protected in
a separate proceeding.
There is no doubt that interested parties who claim ownership of some assets embraced in the
settlement can participate in pending litigations involving ill-gotten wealth before the
Sandiganbayan as held in Republic vs.Sandiganbayan (184 SCRA 382 [1990]) with reference to
incidents arising from, incidental to, or interwoven with, cases falling within respondent court's
exclusive and original jurisdiction (PCGG vs. Peña, 159 SCRA 556 [1988]). But inasmuch as the
petitioners in G.R. No. 108548-50 filed their motion for leave to intervene and to admit
memorandum in intervention on November 13, 1992 (p. 7, Petition; p. 8, Rollo in G.R. No. 108548-
49; p. 7, Petition; p. 7, Rollo in G.R. No. 108550) or after promulgation of the impugned decision on
October 2, 1992, it cannot be gainsaid that the intended intrusion was not seasonably raised before
or during the trial spoken of by Section 2, Rule 12 of the Revised Rules of Court, to wit:
Sec. 2 — Intervention — A person may, before or during a trial, be permitted by
the court, in its discretion to intervene in an action, if he has legal interest in the
matter in litigation, or in the success of either of the parties, or an interest against
both, or when he is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof.
At any rate, availability of a separate proceeding for petitioners as third persons to the compromise
agreement before the Sandiganbayan, in accordance with the ruling of this Court in Republic
vs. Sandiganbayan (184 SCRA 382 [1990]) and in PCGG vs. Peña (159 SCRA 556 [1988]),
proscribes intervention under Section 2(b), Rule 12 of the Revised Rules of Court:
Sec. 2(b) — Discretion of court — In allowing or disallowing a motion for
intervention, the court, in the excercise of discretion, shall consider whether or
not the intervention will unduly delay or prejudice the adjudication of the rights of
the original parties and whether or not the intervenor's rights may be fully
protected in a separate proceeding.
WHEREFORE, the petitions in G.R. Nos. 108292, 108368, 108548-49, and 108550 are hereby
dismissed. The restraining orders issued in the respective cases dated March 10, 1993, March 23,
1993, and March 24, 1993, are hereby lifted and the parties to the compromise agreement are
ordered to comply strictly with the terms thereof.
SO ORDERED.
G.R. No. 205487 November 12, 2014
ORION SAVINGS BANK, Petitioner,
vs.
SHIGEKANE SUZUKI, Respondent.
DECISION
BRION, J.:
Before us is the Petition for Review on Certiorari1 filed by petitioner Orion Savings Bank (Orion)
under Rule 45 of the Rules of Court, assailing the decision2 dated August 23, 2012 and the
resolution3 dated January 25, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 94104.
The Factual Antecedents
In the first week of August 2003, respondent Shigekane Suzuki (Suzuki), a Japanese national, met
with Ms. Helen Soneja (Soneja) to inquire about a condominium unit and a parking slot at Cityland
Pioneer, Mandaluyong City, allegedly owned by Yung Sam Kang (Kang), a Korean national and a
Special Resident Retiree's Visa (SRRV) holder.
At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium Certificate of
Title (CCT) No. 18186]4 and Parking Slot No. 42 [covered by CCT No. 9118] 5 were for sale for
₱3,000,000.00. Soneja likewise assured Suzuki that the titles to the unit and the parking slot were
clean. After a brief negotiation, the parties agreed to reduce the price to ₱2,800,000.00. On August
5, 2003, Suzuki issued Kang a Bank of the Philippine Island (BPI) Check No. 83349 6 for One
Hundred Thousand Pesos (₱100,000.00) as reservation fee. 7 On August 21, 2003, Suzuki issued
Kang another check, BPI Check No. 83350,8 this time for ₱2,700,000.00 representing the
remaining balance of the purchase price. Suzuki and Kang then executed a Deed of Absolute Sale
dated August 26, 20039covering Unit No. 536 and Parking Slot No. 42. Soon after, Suzuki took
possession of the condominium unit and parking lot, and commenced the renovation of the interior
of the condominium unit.
Kang thereafter made several representations with Suzuki to deliver the titles to the properties,
which were then allegedly in possession of Alexander Perez (Perez, Orion’s Loans Officer) for
safekeeping. Despite several verbal demands, Kang failed to deliver the documents. Suzuki later
on learned that Kang had left the country, prompting Suzuki to verify the status of the properties
with the Mandaluyong City Registry of Deeds.
Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No. 42
contained no annotations although it remained under the name of Cityland Pioneer. This
notwithstanding, Cityland Pioneer, through Assistant Vice President Rosario D. Perez, certified that
Kang had fully paid the purchase price of Unit. No. 536 10 and Parking Slot No. 42.11 CCT No.
18186 representing the title to the condominium unit had no existing encumbrance, except for
anannotation under Entry No. 73321/C-10186 which provided that any conveyance or
encumbrance of CCT No. 18186 shall be subject to approval by the Philippine Retirement Authority
(PRA). Although CCT No. 18186 contained Entry No. 66432/C-10186 dated February 2, 1999
representing a mortgage in favor of Orion for a ₱1,000,000.00 loan, that annotation was
subsequently cancelled on June 16, 2000 by Entry No. 73232/T. No. 10186. Despite the
cancellation of the mortgage to Orion, the titles to the properties remained in possession of Perez.
To protect his interests, Suzuki thenexecuted an Affidavit of Adverse Claim 12 dated September 8,
2003, withthe Registry of Deeds of Mandaluyong City, annotated as Entry No. 3292/C-No. 18186 in
CCT No. 18186. Suzuki then demanded the delivery of the titles. 13 Orion, (through Perez),
however, refused to surrender the titles, and cited the need to consult Orion’s legal counsel as its
reason.
On October 14, 2003, Suzuki received a letter from Orion’s counsel dated October 9, 2003, stating
that Kang obtained another loan in the amount of ₱1,800,000.00. When Kang failed to pay, he
executed a Dacion en Pagodated February 2, 2003, in favorof Orion covering Unit No. 536. Orion,
however, did not register the Dacion en Pago, until October 15, 2003.
On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot No. 42
(covered by CCT No. 9118) and this was annotated as Entry No. 4712/C-No. 9118 in the parking
lot’s title.
On January 27, 2004, Suzuki filed a complaint for specific performance and damages against Kang
and Orion. At the pre-trial, the parties made the following admissions and stipulations:
1. That as of August 26, 2003, Kang was the registered owner of Unit No. 536 and Parking
Slot No. 42;
2. That the mortgage in favor ofOrion supposedly executed by Kang, with Entry No.
66432/C-10186 dated February 2, 1999, was subsequently cancelled by Entry No.
73232/T No. 10186 dated June 16, 2000;
3. That the alleged Dacion en Pagowas never annotated in CCT Nos. 18186 and 9118;
4. That Orion only paid the appropriate capital gains tax and the documentary stamp tax
for the alleged Dacion en Pago on October 15, 2003;
5. That Parking Slot No. 42, covered by CCT No. 9118, was never mortgaged to Orion;
and
6. That when Suzuki bought the properties, he went to Orion to obtain possession of the
titles.
The RTC Ruling
In its decision14 dated June 29, 2009, the Regional Trial Court (RTC), Branch 213, Mandaluyong
City ruled infavor of Suzuki and ordered Orion to deliver the CCT Nos. 18186 and 9118 to Suzuki.
The court found that Suzuki was an innocent purchaser for value whose rights over the properties
prevailed over Orion’s. The RTC further noted that Suzuki exerted efforts to verify the status of the
properties but he did not find any existing encumbrance inthe titles. Although Orion claims to have
purchased the property by way of a Dacion en Pago, Suzuki only learned about it two (2) months
after he bought the properties because Orion never bothered to register or annotate the Dacion en
Pagoin CCT Nos. 18186 and 9116.
The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral damages,
exemplary damages, attorney’s fees, appearance fees, expenses for litigation and cost ofsuit. Orion
timely appealed the RTC decision with the CA.
The CA Ruling
On August 23, 2012, the CA partially granted Orion’s appeal and sustained the RTC insofar as it
upheld Suzuki’s right over the properties. The CA further noted that Entry No. 73321/C-10186
pertaining to the withdrawal of investment of an SRRV only serves as a warning to an SRRV holder
about the implications of a conveyance of a property investment. It deviated from the RTC ruling,
however, by deleting the award for moral damages, exemplary damages, attorney’s fees, expenses
for litigation and cost of suit.
Orion sought a reconsideration of the CA decision but the CA denied the motion in its January 25,
2013 resolution. Orion then filed a petition for review on certiorariunder Rule 45 with this Court.
The Petition and Comment
Orion’s petition is based on the following grounds/arguments: 15
1. The Deed of Sale executed by Kang in favor of Suzuki is null and void. Under Korean
law, any conveyance of a conjugal property should be made with the consent of both
spouses;
2. Suzuki is not a buyer in good faith for he failed to check the owner’s duplicate copies of
the CCTs;
3. Knowledge of the PRA restriction under Entry No. 73321/C-10186, which prohibits any
conveyance or encumbrance of the property investment, defeats the alleged claim of good
faith by Suzuki; and
4. Orion should not be faulted for exercising due diligence.
In his Comment,16 Suzuki asserts that the issue on spousal consent was belatedly raised on
appeal. Moreover, proof of acquisition during the marital coverture is a condition sine qua nonfor
the operation of the presumption of conjugal ownership. 17 Suzuki additionally maintains that he is a
purchaser in good faith, and is thus entitled to the protection of the law.
The Court’s Ruling
We deny the petition for lack of merit.
The Court may inquire into conclusions of fact when the inference made is manifestly mistaken
In a Rule 45 petition, the latitude of judicial review generally excludes a factual and evidentiary re-
evaluation, and the Court ordinarily abides by the uniform factual conclusions of the trial court and
the appellate court.18 In the present case, while the courts below both arrived at the same
conclusion, there appears tobe an incongruence in their factual findings and the legal principle they
applied to the attendant factual circumstances. Thus, we are compelled to examine certain factual
issues in the exercise of our sound discretion to correct any mistaken inference that may have been
made.19
Philippine Law governs the transfer of real property
Orion believes that the CA erred in not ruling on the issue of spousal consent. We cannot uphold
this position, however, because the issue of spousal consent was only raised on appeal to the CA.
It is a well-settled principle that points of law, theories, issues, and arguments not brought to the
attention of the trial court cannot be raised for the first time on appeal and considered by a
reviewing court.20 To consider these belated arguments would violate basic principles of fairplay,
justice, and due process.
Having said these, we shall nonetheless discuss the issues Orion belatedly raised, if only to put an
end to lingering doubts on the correctness of the denial of the present petition.
It is a universal principle thatreal or immovable property is exclusively subject to the laws of the
country or state where it is located.21 The reason is found in the very nature of immovable property
— its immobility. Immovables are part of the country and so closely connected to it that all rights
over them have their natural center of gravity there. 22
Thus, all matters concerning the titleand disposition ofreal property are determined by what is
known as the lex loci rei sitae, which can alone prescribe the mode by which a title canpass from
one person to another, or by which an interest therein can be gained or lost.23 This general
principle includes all rules governing the descent, alienation and transfer of immovable property
and the validity, effect and construction of wills and other conveyances.24
This principle even governs the capacity of the person making a deed relating to immovable
property, no matter what its nature may be. Thus, an instrument will be ineffective to transfer title to
land if the person making it is incapacitated by the lex loci rei sitae, even though under the law of
his domicile and by the law of the place where the instrument is actually made, his capacity is
undoubted.25
On the other hand, property relations between spouses are governed principally by the national law
of the spouses.26 However, the party invoking the application of a foreign law has the burden of
proving the foreign law. The foreign law is a question of fact to be properly pleaded and proved as
the judge cannot take judicial notice of a foreign law. 27 He is presumed to know only domestic or
the law of the forum.28
To prove a foreign law, the party invoking it must present a copy thereof and comply with Sections
24 and 25 of Rule 132 of the Revised Rules of Court which reads:
SEC. 24. Proof of official record. — The record of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or
by a copy attested by the officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the
custody. If the office in which the record is kept is in a foreign country, the certificate may be made
by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent or
by any officer in the foreign service of the Philippines stationed in the foreign country inwhich the
record is kept, and authenticated by the seal of his office. (Emphasis supplied)
SEC. 25. What attestation ofcopy must state. — Whenever a copy of a document or record is
attested for the purpose of the evidence, the attestation must state, in substance, that the copy is a
correct copy of the original, or a specific part thereof, as the case may be. The attestation must be
under the official seal of the attesting officer, if there be any, or if he be the clerk of a court having a
seal, under the seal of such court.
Accordingly, matters concerning the title and disposition of real property shall be governed by
Philippine law while issues pertaining to the conjugal natureof the property shall be governed by
South Korean law, provided it is proven as a fact.
In the present case, Orion, unfortunately failed to prove the South Korean law on the conjugal
ownership ofproperty. It merely attached a "Certification from the Embassy of the Republic of
Korea"29 to prove the existence of Korean Law. This certification, does not qualify as sufficient proof
of the conjugal nature of the property for there is no showing that it was properly authenticated
bythe seal of his office, as required under Section 24 of Rule 132. 30
Accordingly, the International Law doctrine of presumed-identity approachor processual
presumption comes into play, i.e., where a foreign law is not pleaded or, evenif pleaded, is not
proven, the presumption is that foreign law is the same as Philippine Law. 31
Under Philippine Law, the phrase "Yung Sam Kang ‘married to' Hyun Sook Jung" is merely
descriptive of the civil status of Kang.32 In other words, the import from the certificates of title is that
Kang is the owner of the properties as they are registered in his name alone, and that he is married
to Hyun Sook Jung.
We are not unmindful that in numerous cases we have held that registration of the property in the
name of only one spouse does not negate the possibility of it being conjugal or community
property.33 In those cases, however, there was proof that the properties, though registered in the
name of only one spouse, were indeed either conjugal or community properties.34 Accordingly, we
see no reason to declare as invalid Kang’s conveyance in favor of Suzuki for the supposed lack of
spousal consent.
The petitioner failed to adduce sufficient evidence to prove the due execution of the Dacion en
Pago
Article 1544 of the New Civil Codeof the Philippines provides that:
ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first
in the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith.
The application of Article 1544 of the New Civil Code presupposes the existence of two or more
duly executed contracts of sale. In the present case, the Deed of Sale dated August 26,
200335 between Suzuki and Kang was admitted by Orion 36 and was properly identified by Suzuki’s
witness Ms. Mary Jane Samin (Samin).37
It is not disputed, too, that the Deed of Sale dated August 26, 2003 was consummated. In a
contract of sale, the seller obligates himself to transfer the ownership of the determinate thing sold,
and to deliver the same to the buyer, who obligates himself to pay a price certain to the
seller.38 The execution of the notarized deed of saleand the actual transfer of possession amounted
to delivery that produced the legal effect of transferring ownership to Suzuki. 39
On the other hand, although Orion claims priority in right under the principle of prius tempore, potior
jure (i.e.,first in time, stronger in right), it failedto prove the existence and due execution of the
Dacion en Pagoin its favor.
At the outset, Orion offered the Dacion en Pagoas Exhibit "5"with submarkings "5-a" to "5-c" to
prove the existence of the February 6, 2003 transaction in its Formal Offer dated July 20, 2008.
Orion likewise offered in evidence the supposed promissory note dated September 4, 2002 as
Exhibit "12"to prove the existence of the additional ₱800,000.00 loan. The RTC, however, denied
the admission of Exhibits "5" and "12,"among others, in its order dated August 19, 2008 "since the
same [were] not identified in court by any witness." 40
Despite the exclusion of its most critical documentary evidence, Orion failed to make a tender
ofexcluded evidence, as provided under Section 40, Rule 132 of the Rules of Court. For this reason
alone, we are prevented from seriously considering Exhibit "5" and its submarkings and Exhibit "12"
in the present petition.
Moreover, even if we consider Exhibit "5" and its submarkings and Exhibit "12" in the present
petition, the copious inconsistencies and contradictions in the testimonial and documentary
evidence of Orion, militate against the conclusion that the Dacion en Pagowas duly executed. First,
there appears to be no due and demandable obligation when the Dacion en Pago was executed,
contrary to the allegations of Orion. Orion’s witness Perez tried to impress upon the RTC that Kang
was in default in his ₱1,800,000.00 loan. During his direct examination, he stated:
ATTY. CRUZAT:
Q: Okay, so this loan of ₱1.8 million, what happened to this loan, Mr. Witness?
A: Well it became past due, there has been delayed interest payment by Mr. Kangand...
Q: So what did you do after there were defaults[?]
A: We have to secure the money or the investment of the bank through loans and we have
executed a dacion en pagobecause Mr. Kang said he has no money. So we just
execute[d] the dacion en pago rather than going through the Foreclosure proceedings.
xxxx
Q: Can you tell the court when was this executed?
A: February 6, 2003, your Honor.41
A reading of the supposed promissory note, however, shows that there was nodefault to speak of
when the supposed Dacion en Pagowas executed.
Based on the promissory note, Kang’s loan obligation wouldmature only on August 27, 2003.
Neither can Orion claim that Kang had been in default in his installment payments because the
wordings of the promissory note provide that "[t]he principal of this loanand its interest and other
charges shall be paid by me/us in accordance hereunder: SINGLE PAYMENT LOANS. 42 "There
was thus no due and demandable loan obligation when the alleged Dacion en Pago was executed.
Second, Perez, the supposed person who prepared the Dacion en Pago,appears to only have a
vague idea of the transaction he supposedly prepared. During his cross-examination, he testified:
ATTY. DE CASTRO:
Q: And were you the one who prepared this [dacion en pago] Mr. witness?
A: Yes, sir. I personally prepared this.
xxxx
Q: So this 1.8 million pesos is already inclusive of all the penalties, interest and surcharge
due from Mr. Yung Sam Kang?
A: It’s just the principal, sir.
Q: So you did not state the interest [and] penalties?
A: In the [dacion en pago], we do not include interest, sir. We may actually includethat
but....
Q: Can you read the Second Whereas Clause, Mr. Witness?
A: Whereas the first party failed to pay the said loan to the second party and as of
February 10, 2003, the outstanding obligation which is due and demandable principal and
interest and other charges included amounts to ₱1,800,000.00 pesos, sir.
xxxx
Q: You are now changing your answer[.] [I]t now includes interest and other charges,
based on this document?
A: Yes, based on that document, sir.43
Third, the Dacion en Pago,mentioned that the ₱1,800,000.00 loan was secured by a real
estate mortgage. However, no document was ever presented to prove this real estate
mortgage aside from it being mentioned in the Dacion en Pago itself.
ATTY. DE CASTRO:
Q: Would you know if there is any other document like a supplement to that Credit Line
Agreement referring to this 1.8 million peso loan by Mr. Yung Sam Kang which says that
there was a subsequent collateralization or security given by Mr. Yung [Sam]
Kang for the loan?
xxxx
 A: The [dacion en pago], sir.44
Fourth,the Dacion en Pago was first mentioned only two (2) months after Suzuki and Samin
demanded the delivery of the titles sometime in August 2003,and after Suzuki caused the
annotation of his affidavit of adverse claim. Records show that it was only on October 9, 2003,
when Orion, through its counsel, Cristobal Balbin Mapile & Associates first spoke of the Dacion en
Pago.45 Not even Perez mentioned any Dacion en Pago on October 1, 2003, when he personally
received a letter demanding the delivery of the titles.Instead, Perez refused to accept the letter and
opted to first consult with his lawyer.46
Notably, even the October 9, 2003 letter contained material inconsistencies in its recital of facts
surrounding the execution of the Dacion en Pago. In particular, it mentioned that "on [September 4,
2002], after paying the original loan, [Kang] applied and was granted a new Credit Line Facility by
[Orion] x x x for ONE MILLION EIGHT HUNDRED THOUSAND PESOS (₱1,800,000.00)." Perez,
however, testified that there was "no cash movement" in the original ₱1,000,000.00 loan. In his
testimony, he said:
COURT:
xxxx
Q: Would you remember what was the subject matter of that real estate mortgage for that
first ₱1,000,000.00 loan?
A: It’s a condominium Unit in Cityland, sir.
xxxx
Q: Would you recall if there was any payment by Mr. Yung Sam Kang of this
₱1,000,000.00 loan?
A: None sir.
Q: No payments?
A: None sir.
Q: And from 1999 to 2002, there was no payment, either by way of payment to the
principal, by way ofpayment of interest, there was no payment by Mr. Yung Sam Kang of
this loan?
A: Literally, there was no actual cash movement, sir.
Q: There was no actual cash?
A: Yes, sir.
Q: And yet despite no payment, the bank Orion Savings Bank still extended an
₱800,000.00 additional right?
A: Yes, sir.47
Fifth, it is undisputed that notwithstanding the supposed execution of theDacion en Pago on
February 2, 2003, Kang remained in possession of the condominium unit. In fact, nothing in the
records shows that Orion even bothered to take possession of the property even six (6) months
after the supposed date of execution of the Dacion en Pago. Kang was even able to transfer
possession of the condominium unit to Suzuki, who then made immediate improvements thereon. If
Orion really purchased the condominium unit on February 2, 2003 and claimed to be its true owner,
why did it not assert its ownership immediately after the alleged sale took place? Why did it have to
assert its ownership only after Suzuki demanded the delivery of the titles? These gaps have
remained unanswered and unfilled.
In Suntay v. CA,48 we held that the most prominent index of simulation is the complete absence of
anattempt on the part of the vendee to assert his rights of ownership over the property in question.
After the sale, the vendee should have entered the land and occupied the premises. The absence
of any attempt on the part of Orion to assert its right of dominion over the property allegedly soldto
it is a clear badge of fraud. That notwithstanding the execution of the Dacion en Pago, Kang
remained in possession of the disputed condominium unit – from the time of the execution of the
Dacion en Pagountil the property’s subsequent transfer to Suzuki – unmistakably strengthens the
fictitious nature of the Dacion en Pago.
These circumstances, aside from the glaring inconsistencies in the documents and testimony of
Orion’s witness, indubitably prove the spurious nature of the Dacion en Pago.
The fact that the Dacion en Pago is a notarized document does not support the conclusion that the
sale it embodies is a true conveyance
Public instruments are evidence of the facts that gave rise to their execution and are to be
considered as containing all the terms of the agreement. 49 While a notarized document enjoys this
presumption, "the fact that a deed is notarized is not a guarantee of the validity of its
contents."50 The presumption of regularity of notarized documents is not absolute and may be
rebutted by clear and convincing evidence to the contrary.51
In the present case, the presumption cannot apply because the regularity in the execution of the WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against
Dacion en Pago and the loan documents was challenged in the proceedings below where their petitioner Orion Savings Bank.
prima facievalidity was overthrown by the highly questionable circumstances surrounding their
execution.52 SO ORDERED.

Effect of the PRA restriction on the validity of Suzuki’s title to the property

Orion argues that the PRA restriction in CCT No. 18186 affects the conveyance to Suzuki. In
particular, Orion assails the status of Suzuki as a purchaser in good faith in view of the express
PRA restriction contained in CCT No. 18186.53

We reject this suggested approachoutright because, to our mind, the PRA restriction cannot affect
the conveyance in favor of Suzuki. On this particular point, we concur withthe following findings of
the CA:

x x x the annotation merely servesas a warning to the owner who holds a Special Resident
Retiree’s Visa(SRRV) that he shall lose his visa if he disposes his property which serves as his
investment in order to qualify for such status. Section 14 of the Implementing Investment
Guidelines under Rule VIII-A of the Rules and Regulations Implementing Executive Order No.
1037, Creating the Philippine Retirement Park System Providing Funds Therefor and For Other
Purpose ( otherwise known as the Philippine Retirement Authority) states:

Section 14. Should the retiree-investor withdraw his investment from the Philippines, or transfer the
same to another domestic enterprise, orsell, convey or transfer his condominium unit or units to
another person, natural or juridical without the prior approval of the Authority, the Special Resident
Retiree’s Visa issued to him, and/or unmarried minor child or children[,] may be cancelled or
revoked by the Philippine Government, through the appropriate government department or agency,
upon recommendation of the Authority.54

Moreover, Orion should not be allowed to successfully assail the good faith of Suzuki on the basis
of the PRA restriction. Orion knew of the PRA restriction when it transacted with Kang. Incidentally,
Orion admitted accommodating Kang’s request to cancel the mortgage annotation despite the lack
of payment to circumvent the PRA restriction. Orion, thus, is estopped from impugning the validity
of the conveyance in favor of Suzuki on the basis of the PRA restriction that Orion itself ignored and
"attempted" to circumvent.

With the conclusion that Orion failed to prove the authenticity of the Dacion en Pago, we see no
reason for the application of the rules on double sale under Article 1544 of the New Civil Code.
Suzuki, moreover, successfully adduced sufficient evidence to establish the validity of conveyance
in his favor.