G.R. No.

136490 October 19, 2000

BRENDA B. MARCOS, petitioner,

vs.

WILSON G. MARCOS, respondent.

DECISION

PANGANIBAN, J.:

Psychological incapacity, as a ground for declaring the nullity of a marriage, may be established by the totality of evidence
presented. There is no requirement, however, that the respondent should be examined by a physician or a psychologist as a
conditio sine qua non for such declaration.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the July 24, 1998 Decision1 of the
Court of Appeals (CA) in CA-GR CV No. 55588, which disposed as follows:

"WHEREFORE, the contested decision is set aside and the marriage between the parties is hereby declared valid."2

Also challenged by petitioner is the December 3, 1998 CA Resolution denying her Motion for Reconsideration.

Earlier, the Regional Trial Court (RTC) had ruled thus:

"WHEREFORE, the marriage between petitioner Brenda B. Marcos and respondent Wilson G. Marcos, solemnized on
September 6, 1982 in Pasig City is declared null and void ab initio pursuant to Art. 36 of the Family Code. The conjugal
properties, if any, is dissolved [sic] in accordance with Articles 126 and 129 of the same Code in relation to Articles 50, 51 and
52 relative to the delivery of the legitime of [the] parties' children. In the best interest and welfare of the minor children, their
custody is granted to petitioner subject to the visitation rights of respondent.

"Upon finality of this Decision, furnish copy each to the Office of the Civil Registrar of Pasig City where the marriage was
solemnized, the National Census and Statistics Office, Manila and the Register of Deeds of Mandaluyong City for their
appropriate action consistent with this Decision.

"SO ORDERED."

The Facts

The facts as found by the Court of Appeals are as follows:

"It was established during the trial that the parties were married twice: (1) on September 6, 1982 which was solemnized by
Judge Eriberto H. Espiritu at the Municipal Court of Pasig (Exh. A); and (2) on May 8, 1983 which was solemnized by Rev.
Eduardo L. Eleazar, Command Chaplain, at the Presidential Security Command Chapel in Malacañang Park, Manila (Exh. A-1).
Out of their marriage, five (5) children were born (Exhs. B, C, D, E and F).

"Appellant Wilson G. Marcos joined the Armed Forces of the Philippines in 1973. Later on, he was transferred to the
Presidential Security Command in Malacañang during the Marcos Regime. Appellee Brenda B. Marcos, on the other hand,
joined the Women's Auxilliary Corps under the Philippine Air Force in 1978. After the Edsa Revolution, both of them sought a
discharge from the military service.

"They first met sometime in 1980 when both of them were assigned at the Malacañang Palace, she as an escort of Imee
Marcos and he as a Presidential Guard of President Ferdinand Marcos. Through telephone conversations, they became
acquainted and eventually became sweethearts.

"After their marriage on September 6, 1982, they resided at No. 1702 Daisy Street, Hulo Bliss, Mandaluyong, a housing unit
which she acquired from the Bliss Development Corporation when she was still single.

"After the downfall of President Marcos, he left the military service in 1987 and then engaged in different business ventures
that did not however prosper. As a wife, she always urged him to look for work so that their children would see him, instead
of her, as the head of the family and a good provider. Due to his failure to engage in any gainful employment, they would
often quarrel and as a consequence, he would hit and beat her. He would even force her to have sex with him despite her
weariness. He would also inflict physical harm on their children for a slight mistake and was so severe in the way he chastised
them. Thus, for several times during their cohabitation, he would leave their house. In 1992, they were already living
separately.

"All the while, she was engrossed in the business of selling "magic uling" and chickens. While she was still in the military, she
would first make deliveries early in the morning before going to Malacañang. When she was discharged from the military
service, she concentrated on her business. Then, she became a supplier in the Armed Forces of the Philippines until she was
able to put up a trading and construction company, NS Ness Trading and Construction Development Corporation.

"The 'straw that broke the camel's back' took place on October 16, 1994, when they had a bitter quarrel. As they were already
living separately, she did not want him to stay in their house anymore. On that day, when she saw him in their house, she was
so angry that she lambasted him. He then turned violent, inflicting physical harm on her and even on her mother who came to
her aid. The following day, October 17, 1994, she and their children left the house and sought refuge in her sister's house.

"On October 19, 1994, she submitted herself [to] medical examination at the Mandaluyong Medical Center where her injuries
were diagnosed as contusions (Exh. G, Records, 153).

"Sometime in August 1995, she together with her two sisters and driver, went to him at the Bliss unit in Mandaluyong to look
for their missing child, Niko. Upon seeing them, he got mad. After knowing the reason for their unexpected presence, he ran
after them with a samurai and even [beat] her driver.

"At the time of the filing of this case, she and their children were renting a house in Camella, Parañaque, while the appellant
was residing at the Bliss unit in Mandaluyong.

"In the case study conducted by Social Worker Sonia C. Millan, the children described their father as cruel and physically
abusive to them (Exh. UU, Records, pp. 85-100).

"The appellee submitted herself to psychologist Natividad A. Dayan, Ph.D., for psychological evaluation (Exh. YY, Records, pp.
207-216), while the appellant on the other hand, did not.

"The court a quo found the appellant to be psychologically incapacitated to perform his marital obligations mainly because of
his failure to find work to support his family and his violent attitude towards appellee and their children, x x x."3

Ruling of the Court of Appeals

Reversing the RTC, the CA held that psychological incapacity had not been established by the totality of the evidence
presented. It ratiocinated in this wise:
"Essential in a petition for annulment is the allegation of the root cause of the spouse's psychological incapacity which should
also be medically or clinically identified, sufficiently proven by experts and clearly explained in the decision. The incapacity
must be proven to be existing at the time of the celebration of the marriage and shown to be medically or clinically
permanent or incurable. It must also be grave enough to bring about the disability of the parties to assume the essential
obligations of marriage as set forth in Articles 68 to 71 and Articles 220 to 225 of the Family Code and such non-complied
marital obligations must similarly be alleged in the petition, established by evidence and explained in the decision.

"In the case before us, the appellant was not subjected to any psychological or psychiatric evaluation. The psychological
findings about the appellant by psychiatrist Natividad Dayan were based only on the interviews conducted with the appellee.
Expert evidence by qualified psychiatrists and clinical psychologists is essential if only to prove that the parties were or any
one of them was mentally or psychically ill to be truly incognitive of the marital obligations he or she was assuming, or as
would make him or her x x x unable to assume them. In fact, he offered testimonial evidence to show that he [was] not
psychologically incapacitated. The root cause of his supposed incapacity was not alleged in the petition, nor medically or
clinically identified as a psychological illness or sufficiently proven by an expert. Similarly, there is no evidence at all that would
show that the appellant was suffering from an incapacity which [was] psychological or mental - not physical to the extent that
he could not have known the obligations he was assuming: that the incapacity [was] grave, ha[d] preceded the marriage and
[was] incurable."4

Hence, this Petition.5

Issues

In her Memorandum,6 petitioner presents for this Court's consideration the following issues:

"I. Whether or not the Honorable Court of Appeals could set aside the findings by the Regional Trial Court of psychological
incapacity of a respondent in a Petition for declaration of nullity of marriage simply because the respondent did not subject
himself to psychological evaluation.

II. Whether or not the totality of evidence presented and the demeanor of all the witnesses should be the basis of the
determination of the merits of the Petition."7

The Court's Ruling

We agree with petitioner that the personal medical or psychological examination of respondent is not a requirement for a
declaration of psychological incapacity. Nevertheless, the totality of the evidence she presented does not show such
incapacity.

Preliminary Issue: Need for Personal Medical Examination

Petitioner contends that the testimonies and the results of various tests that were submitted to determine respondent's
psychological incapacity to perform the obligations of marriage should not have been brushed aside by the Court of Appeals,
simply because respondent had not taken those tests himself. Petitioner adds that the CA should have realized that under the
circumstances, she had no choice but to rely on other sources of information in order to determine the psychological capacity
of respondent, who had refused to submit himself to such tests.

In Republic v. CA and Molina,8 the guidelines governing the application and the interpretation of psychological incapacity
referred to in Article 36 of the Family Code9 were laid down by this Court as follows:

"1) The burden of proof to show the nullity of the marriage belongs to the plaintiff. Any doubt should be resolved in favor of
the existence and continuation of the marriage and against its dissolution and nullity. This is rooted in the fact that both our
Constitution and our laws cherish the validity of marriage and unity of the family. Thus, our Constitution devotes an entire
Article on the Family, recognizing it 'as the foundation of the nation.' It decrees marriage as legally 'inviolable,' thereby
protecting it from dissolution at the whim of the parties. Both the family and marriage are to be 'protected' by the state.
xxx xxx xxx

2) The root cause of the psychological incapacity must be: (a) medically or clinically identified, (b) alleged in the complaint, (c)
sufficiently proven by experts and (d) clearly explained in the decision. Article 36 of the Family Code requires that the
incapacity must be psychological - not physical, although its manifestations and/or symptoms may be physical. The evidence
must convince the court that the parties, or one of them, was mentally or psychically ill to such an extent that the person
could not have known the obligations he was assuming, or knowing them, could not have given valid assumption thereof.
Although no example of such incapacity need be given here so as not to limit the application of the provision under the
principle of ejusdem generis, nevertheless such root cause must be identified as a psychological illness and its incapacitating
nature fully explained. Expert evidence may be given by qualified psychiatrists and clinical psychologists.

3) The incapacity must be proven to be existing at 'the time of the celebration' of the marriage. The evidence must show that
the illness was existing when the parties exchanged their 'I do's.' The manifestation of the illness need not be perceivable at
such time, but the illness itself must have attached at such moment, or prior thereto.

4) Such incapacity must also be shown to be medically or clinically permanent or incurable. Such incurability may be absolute
or even relative only in regard to the other spouse, not necessarily absolutely against everyone of the same sex. Furthermore,
such incapacity must be relevant to the assumption of marriage obligations, not necessarily to those not related to marriage,
like the exercise of a profession or employment in a job. Hence, a pediatrician may be effective in diagnosing illnesses of
children and prescribing medicine to cure them but not be psychologically capacitated to procreate, bear and raise his/her
own children as an essential obligation of marriage.

5) Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage.
Thus, 'mild characteriological peculiarities, mood changes, occasional emotional outbursts cannot be accepted as root causes.
The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other
words, there is a natal or supervening disabling factor in the person, an adverse integral element in the personality structure
that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to
marriage.

6) The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband
and wife as well as Articles 220, 221 and 225 of the same Code in regard to parents and their children. Such non-complied
marital obligation(s) must also be stated in the petition, proven by evidence and included in the text of the decision.

7) Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not
controlling or decisive, should be given great respect by our courts.

xxx xxx xxx

(8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. No
decision shall be handed down unless the Solicitor General issues a certification, which will be quoted in the decision, briefly
stating therein his reasons for his agreement or opposition, as the case may be, to the petition. The Solicitor General, along
with the prosecuting attorney, shall submit to the court such certification within fifteen (15) days from the date the case is
deemed submitted for resolution of the court. The Solicitor General shall discharge the equivalent function of the defensor
vinculi contemplated under Canon 1095."10

The guidelines incorporate the three basic requirements earlier mandated by the Court in Santos v. Court of Appeals:11
"psychological incapacity must be characterized by (a) gravity (b) juridical antecedence, and (c) incurability." The foregoing
guidelines do not require that a physician examine the person to be declared psychologically incapacitated. In fact, the root
cause may be "medically or clinically identified." What is important is the presence of evidence that can adequately establish
the party's psychological condition. For indeed, if the totality of evidence presented is enough to sustain a finding of
psychological incapacity, then actual medical examination of the person concerned need not be resorted to.

Main Issue: Totality of Evidence Presented

The main question, then, is whether the totality of the evidence presented in the present case -- including the testimonies of
petitioner, the common children, petitioner's sister and the social worker -- was enough to sustain a finding that respondent
was psychologically incapacitated.

We rule in the negative. Although this Court is sufficiently convinced that respondent failed to provide material support to the
family and may have resorted to physical abuse and abandonment, the totality of his acts does not lead to a conclusion of
psychological incapacity on his part. There is absolutely no showing that his "defects" were already present at the inception of
the marriage or that they are incurable.

Verily, the behavior of respondent can be attributed to the fact that he had lost his job and was not gainfully employed for a
period of more than six years. It was during this period that he became intermittently drunk, failed to give material and moral
support, and even left the family home.

Thus, his alleged psychological illness was traced only to said period and not to the inception of the marriage. Equally
important, there is no evidence showing that his condition is incurable, especially now that he is gainfully employed as a taxi
driver.1âwphi1

Article 36 of the Family Code, we stress, is not to be confused with a divorce law that cuts the marital bond at the time the
causes therefor manifest themselves. It refers to a serious psychological illness afflicting a party even before the celebration of
the marriage. It is a malady so grave and so permanent as to deprive one of awareness of the duties and responsibilities of the
matrimonial bond one is about to assume. These marital obligations are those provided under Articles 68 to 71, 220, 221 and
225 of the Family Code.

Neither is Article 36 to be equated with legal separation, in which the grounds need not be rooted in psychological incapacity
but on physical violence, moral pressure, moral corruption, civil interdiction, drug addiction, habitual alcoholism, sexual
infidelity, abandonment and the like.12 At best, the evidence presented by petitioner refers only to grounds for legal
separation, not for declaring a marriage void.

Because Article 36 has been abused as a convenient divorce law, this Court laid down the procedural requirements for its
invocation in Molina. Petitioner, however, has not faithfully observed them.

In sum, this Court cannot declare the dissolution of the marriage for failure of petitioner to show that the alleged
psychological incapacity is characterized by gravity, juridical antecedence and incurability; and for her failure to observe the
guidelines outlined in Molina.

WHEREFORE, the Petition is DENIED and assailed Decision AFFIRMED, except that portion requiring personal medical
examination as a conditio sine qua non to a finding of psychological incapacity. No costs.

SO ORDERED.

Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

 Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 61950 September 28, 1990

MARUBENI NEDERLAND B.V., petitioner,

vs.

THE HONORABLE JUDGE RICARDO P. TENSUAN, Presiding Judge of the Court of First Instance of Rizal, Branch IV, Quezon
City and ARTEMIO GATCHALIAN, respondents.

Siquion Reyna, Montecillo & Ongsiako for petitioner.

Maximo Belmonte for private respondent.

FERNAN, C.J.:

On October 23, 1976, in Tokyo, Japan, petitioner Marubeni Nederland B.V. and D.B. Teodoro Development Corporation (DBT
for short) entered into a contract whereby petitioner agreed to supply all the necessary equipment, machinery, materials,
technical know-how and the general design of the construction of DBT's lime plant at the Guimaras Islands in Iloilo for a total
contract price of US$5,400,000.00 on a deferred payment basis. Simultaneously with the supply contract, the parties entered
into two financing contracts, namely a construction loan agreement in the amount of US$1,600,000.00 and a cash loan
agreement for US$1,500,000.00. The obligation of DBT to pay the loan amortizations on their due dates under the three (3)
contracts were absolutely and unconditionally guaranteed by the National Investment and Development Corporation (NIDC).

Pursuant to the terms of the financing contracts, the loan amortizations of DBT fell due on January 7, 1980, July 7, 1980 and
January 7, 1981. But before the first installment became due, DBT wrote a letter to the NIDC interposing certain claims against
the petitioner and at the same time requesting NIDC for a revision of the repayment schedule and of the amounts due under
the contracts on account of petitioner's delay in the performance of its contractual commitments. 1 In due time, the problems
regarding the lime plant were ironed out and the parties signed a "Settlement Agreement" on July 2, 1981. 2

However, on May 14, 1982, DBT through counsel, informed petitioner that it was rejecting the lime plant on the ground that it
has not been constructed in accordance with their agreement. DBT made a formal demand for indemnification in the total
amount of P95,150,000. 3 In its letter dated June 1, 1982, petitioner refused to accept DBT's unilateral rejection of the plant
and reasoned that the alleged operation and technical problems were "totally unrelated to the guaranteed capacity and
specifications of the plant and definitely are not attributable to any fault or omission on the part of Marubeni." 4

Before the first installment under the "Settlement Agreement" could be paid, private respondent Artemio Gatchalian, a
stockholder of DBT sued petitioner Marubeni for contractual breach before the then Court of First Instance of Rizal, Branch 4,
Quezon City. 5 In his complaint filed on June 22, 1982, Gatchalian impleaded DBT as an "unwilling plaintiff . . . for whose
primary benefit th(e) action (wa)s being prosecuted" together with NIDC which, as pledgee of the voting shares in DBT has
controlling interest in that corporation. 6 Gatchalian sought indemnification in the amount of P95,150,000.00 and further
prayed for a writ of preliminary injunction to enjoin DBT and NIDC from making directly or indirectly any payment to
Marubeni in connection with the contracts they had entered into. On June 25, 1982, respondent judge issued a temporary
restraining order directed against DBT and NIDC and set the injunction for hearing. 7

On July 5, 1982, petitioner Marubeni entered a limited and special appearance and sought the dismissal of the complaint on
the ground that the court a quo had no jurisdiction over the person of petitioner since it is a foreign corporation neither doing
nor licensed to do business in the Philippines. Private respondent opposed that motion. On September 22, 1982, the lower
court denied petitioner's motion to dismiss for lack of merit and gave it ten (10) days within which to file an answer. Petitioner
opted to elevate the jurisdictional issue directly to the High Court. 8 Hence, this petition for certiorari and prohibition with
prayer for a temporary restraining order. On October 6, 1982, we issued the restraining order and subsequently required the
parties to file simultaneous memoranda.

The pivotal issue in this case is whether or not petitioner Marubeni Nederland B.V. can be considered as "doing business" in
the Philippines and therefore subject to the jurisdiction of our courts.

Petitioner claims that it is a foreign corporation not doing business in the country and as an entity with its own capitalization,
it is separate and distinct from Marubeni Corporation, Japan which is doing business in the Philippines through its Manila
branch; that the three (3) contracts entered into with DBT were perfected and consummated in Tokyo, Japan; that the sale
and purchase of the machineries and equipment for the Guimaras lime plant were isolated contracts and in no way indicated
a purpose to engage in business; and that the services performed by petitioner in the Philippines were merely auxillary to the
aforesaid isolated transactions entered into and perfected outside the Philippines.

On the other hand, private respondent Gatchalian contends that petitioner can be sued in Philippine courts on liabilities
arising from even a single transaction because in reality, it is already engaging in business in the country through Marubeni
Corporation, Manila branch and that they, together with Nihon Cement Company, Ltd. of Japan are but "alter egos, adjuncts,
conduits instruments or branch affiliates of Marubeni Corporation of Japan", the parent company. 9

In resolving the issue at hand, we reiterate that there is no general rule or principle that can be laid down to determine what
constitutes doing or engaging in business. Each case must be judged in the light of its peculiar factual milieu and upon the
language of the statute applicable. 10

Contrary to petitioner's allegations, we hold that petitioner can be sued in the regular courts because it is doing business in
the Philippines. The applicable law is Republic Act No. 5455 as implemented by the following rules and regulations of the
Board of Investments which took effect on February 3, 1969. Thus:

xxx xxx xxx

(f) the performance within the Philippines of any act or combination of acts enumerated in Section 1 (1) of the Act shall
constitute "doing business" therein. In particular, "doing business" includes:

1) Soliciting orders, purchases (sales) or service contracts. Concrete and specific solicitations by a foreign firm amounting to
negotiation or fixing of the terms and conditions of sales or service contracts, regardless of whether the contracts are actually
reduced to writing, shall constitute doing business even if the enterprise has no office or fixed place of business in the
Philippines. . . .

2) Appointing a representative or distributor who is domiciled in the Philippines, unless said representative or distributor has
an independent status, i.e., it transacts business in its name and for its own account, and not in the name or for the account of
the principal.

xxx xxx xxx

4) Opening offices whether called "liaison" offices, agencies or branches, unless proved otherwise.

xxx xxx xxx

10) Any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident to, or in the progressive prosecution
of, commercial gain or of the purpose and objective of the business organization. 11
It cannot be denied that petitioner had solicited the lime plant business from DBT through the Marubeni Manila branch.
Records show that the "turn-key proposal for the . . . 300 T/D Lime Plant" was initiated by the Manila office through its Mr. T.
Hojo. In a follow-up letter dated August 3, 1976, Hojo committed the firm to a price reduction of $200,000.00 and submitted
the proposed contract forms. As reflected in the letterhead used, it was Marubeni Corporation, Tokyo, Japan which assumed
an active role in the initial stages of the negotiation. Petitioner Marubeni Nederland B.V. had no visible participation until the
actual signing of the October 28, 1976 agreement in Tokyo and even there, in the space reserved for petitioner, it was the
signature. of "S. Adachi as General Manager of Marubeni Corporation, Tokyo on behalf of Marubeni Nederland B.V." which
appeared. 12

Even assuming for the sake of argument that Marubeni Nederland B.V. is a different and separate business entity from
Marubeni Japan and its Manila branch, in this particular transaction, at least, Marubeni Nederland B.V. through the foregoing
acts, had effectively solicited "orders, purchases (sales) or service contracts" as well as constituted Marubeni Corporation,
Tokyo, Japan and its Manila Branch as its representative in the Philippines to transact business for its account as principal.
These circumstances, taken singly or in combination, constitute "doing business in the Philippines" within the contemplation
of the law.

At this juncture it must be emphasized that a foreign corporation doing business in the Philippines with or without license is
subject to process and jurisdiction of the local courts. If such corporation is properly licensed, well and good. But it shall not
be allowed, under any circumstances, to invoke its lack of license to impugn the jurisdiction of our courts. 13

Finally, petitioner contends that it was denied due process when respondent Judge Tensuan peremptorily denied its motion to
dismiss without giving petitioner any opportunity to present evidence at a hearing set for this purpose. 14

The alleged denial of due process is more apparent than real. Under Section 13, Rule 16 of the Revised Rules of Court, the
court, when confronted with a motion to dismiss, is given two courses of action, to wit: (1) to deny or grant the motion or
allow amendment of the pleading or (2) to defer the hearing and determination of the motion until the trial on the merits, if
the ground alleged therein does not appear to be indubitable.

In the case at bar, assuming there was no formal hearing on the motion to dismiss prior to its rejection, such did not unduly
prejudice the rights of petitioner. Respondent court still had to conduct trial on the merits during which time it could grant the
motion after sufficient evidence has been presented showing without any question the want of jurisdiction over the person of
the movant. It would have been different had respondent court sustained petitioner's motion to dismiss without the required
hearing in which case, the corrective writ of certiorari would have issued against said court. In the absence of a hearing, the
appellate court, in an appeal from an order of dismissal, would have had no means of determining or resolving the legality of
the proceedings and the sufficiency of the proofs on which the order was based.

WHEREFORE, the petition is DISMISSED for lack of merit. Respondent Court is hereby directed to proceed with the hearing of
Civil Case No. Q-35534 with dispatch. This decision is immediately executory. Costs against the petitioner.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortés, JJ., concur.

 Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-27781 January 28, 1980

CATALINA MATANGUIHAN and DAMASO BALBA, petitioners,

vs.

HON. DAMASO S. TENGCO, Judge of the Court of First Instance of Batangas (Lipa City) and IRENE MALABANAN,
respondents.

S. Salas for petitioners.

B. Atienza for private respondent.

FERNANDEZ, J.:

This is a petition for certiorari instituted by Catalina Matanguihan and Damaso Balba against Hon. Damaso S. Tengco, Judge of
the Court of First Instance of Batangas (Lipa City), and Irene Malabanan seeking the following relief:

WHEREFORE, petitioners pray this Honorable Court:

1. That a writ of certiorari be issued to the respondents directing them to answer this petition within the time fixed by the
Revised Rules of Court:

2. For the issuance of an order requiring the Clerk of the Court of First Instance of Batangas (Lipa City) to certify to this Court a
copy each of the Sheriff's Return dated March 21, 1966; the Memoranda submitted by the parties in this case; the Court order
dated July 5, 1967, and such other evidence pertinent to the issue and part of the records of the case;

3. That a preliminary injunction issued forthwith ex-parte restraining the respondent judge and the respondent Malabanan
from making any steps for execution against the property of petitioners, and, after hearing, said preliminary injunction be
made permanent;

4. That upon hearing, the said Order as well as the judgment upon which the same is based, be declared null and void as
having been done without jurisdiction;

5. That petitioners recover their proper costs; and

6. Such other relief and remedy which justice and equity require in the discretion of the Honorable Court. Manila, Philippines,
July 15, 1967.

On July 19, 1967, this Court adopted a resolution directing the respondents to answer within 10 days from notice thereof and
ordering the issuance of a writ of pre injunction upon the filing of a bond of P200.00 by the petitioners.
The writ of preliminary injunction restraining Judge Damaso S. Tengco and Irene Malabanan from making any step for
execution against the property of herein petitioners, subject matter of Civil Case 1709 of the Court of First Instance of
Batangas entitled "Irene Malabanan v. Leandro Matanguihan, et al.," was issued on August 4, 1967.

The record discloses that on February 15, 1966, a complaint was filed by Irene Malabanan against Leandro and Catalina, both
surnamed and Damaso Balba in the Court of First Instance of Batangas (Lipa City Branch); that the complaint was docketed as
Civil Case No. 1709; that summons was issued on February 16, 1966; that on March 21, 1966, the Deputy Sheriff for the
Province of Batangas executed return wherein he stated that the defendants Damaso Balba and his wife Catalina
Matanguihan who had transferred their residence to Biñan Laguna five years before said date were served copies of the
summons through the defendant Leandro Matanguihan, brother of defendant Catalina that on April 23, 1966, upon motion of
counsel for the plaintiff, all the defendants were declared in default for having failed to file any answer; that thereafter the
trial court received evidence for the plaintiff; that on May 19, 1966, the respondent Judge rendered judgment, the dispositive
portion of which reads:

WHEREFORE, finding the averments in the complaint as supported by the evidence reasonable and justified, judgment is
hereby rendered ... ordering them (defendants):

1) to execute a formal deed of absolute sale covering that part or portion constituting 314 square meters sold to Faustino
Matanguihan by Leon Matanguihan of Lot No. 8696 formerly covered by Original Certificate of Title No. 9127;

2) to jointly and severally pay to the plaintiff the sum of P2,000.00 for moral and exemplary damages;

3) to jointly and severally pay to the plaintiff the sum of P1,000.00 for attorney's fees; and

4) to jointly and severally pay to the plaintiff the costs of this suit ...;

that on April 24, 1967, counsel for plaintiff filed a Motion for Execution with Bill of Costs; that on May 3, 1967, allegedly
having teamed of the case for the first time, the petitioners filed an opposition was conducted by the respondent judge; that
the parties filed their respective memoranda in support of their contentions emphasizing on two (2) issues: first, whether or
not the trial court had acquired jurisdiction to hear and decide the case by virtue of the service of summons to one of the
three defendants; and second, whether or not the herein petitioners Possess Personality to appear and oppose the execution
of judgment when they had been declared in default and judgment had already been rendered, and moreover, the period
within which a petition for relief under Rule 38 of the Rules of Court had already expired; that on July 5, 1967, the respondent
Judge issued an order against the herein petitioners, ruling on the first issue, that there had been substantial compliance with
the requirements on service of summons and therefore the trial court had jurisdiction to hear and decide the case and the
judgment thereon is valid; and on the second issue, that the herein petitioners have no personality to appear and be
represented by counsel for the purpose of opposing the motion for execution of the questioned judgment; and that a copy of
the afore-mentioned order was received by counsel for petitioners on July 13, 1967.

The main issue in this case is whether the Court of First Instance of Batangas (Lipa City) has acted without jurisdiction on the
person of the petitioners.

It is the contention of the petitioners that the lower court failed to acquire jurisdiction over them. Hence the judgment
rendered Against them is not valid.

Under Section 7, Rule 14 of the Revised Rules of Court, summons may be served personally by handing a copy thereof to the
defendant in person or if he refuses to receive it, by tendering it to him. Personal service means actual delivery or tender of
the summons to the defendant personally.

The letter of the provincial deputy sheriff to the Clerk of Court of the Court of First Instance of Lipa City reads:

Sir:
I have the honor to return herewith the attached original summons issued in Civil Case No. 1709, IRENE MALABANAN, plaintiff,
versus LEANDRO MATANGUIHAN, et, als, defendants, with information that copies of the same together with the attached
complaint, were PERSONALLY SERVED to the defendants named therein in their residence in Barrio Luyos Tanauan, Batangas
on March 14, 1966. I wish to apprise your Honor that Mr. & Mrs. Damaso Balba received copies of the same thru defendant
Leandro Matanguihan, brother of defendant Catalina, for apparent reasons that they have transferred their residence to
Biñan, Laguna five years ago. The proof of service appears at the back of the attached original summons.

Batangas, Batangas, March 21, 1966.

Very truly yours,

FOR THE PROVINCIAL SHERIFF:

(SGD.) PABLO G. EVANGELO

Provincial Deputy Sheriff.

The return of the sheriff clearly shows that the defendants Damaso Balba and Catalina Matanguihan were not properly served
with summons., No summons was actually delivered or tendered to them. Delivering the copies of the summons intended for
Damaso Balba and Catalina Matanguihan to their co-defendant Leandro Matanguihan whose residence was in Luyos Tanauan,
Batangas is not the personal service contemplated by the Rules. Moreover, by serving the summons on Leandro Matanguihan,
the deputy sheriff violated two (2) provisions of the Rules of Court on summons.

Section 2, Rule 14, reads:

SEC. 2. Defendants residing in different provinces. — If the defendants reside in different provinces, one summons shall issue
for all the defendants residing in one province and another for all the defendants residing in another province, and in the
same way until summons have been issued for all the defendants.

A copy of the complaint and order for appointment of guardian ad litem, if any, shall be attached to the original and each copy
of the summons.

Leonardo Matanguihan resided in Batangas while Damaso Balba and Catalina Matanguihan resided in Laguna. A separate
summons should have been issued for the two defendants residing in Biñan Laguna.

Section 5, Rule 14, provides:

SEC. 5. By whom summons may be served. — The us may be served by the sheriff or other proper court officer of the province
in which it is to be made, or for special reasons by any person specially authorized by the judge of the court issuing the
summons

It is obvious that the petitioners were not legally served with summons. Leonardo Matanguihan was neither the sheriff, nor a
court officer, nor a person specially authorized by the judge to serve the summons in the province of Laguna.

Inasmuch as summons is the writ by which the defendants are notified of the action against them and since the service of
such writ is the means by which the court acquires jurisdiction over their person it is clear that the trial court acquired no
jurisdiction over the person of the petitioners. The judgment against them is consequently nugatory and without legal effect.

The respondents contend that certiorari is not the proper remedy of the petitioners because the petitioners failed to ask for
the reconsideration of the order of the lower court dated July 5, 1967 denying their petition for relief and granting the motion
for execution of the judgment before going to the Supreme Court; that appeal is the plain, speedy, and adequate remedy of
petitioners; and that following the ruling in the case of Inocencia Cavan v. Filomeno Galan, et al., the petitioners should
have filed an action for the annulment of judgment

As a general rule, a petition for certiorari can not prosper unless the court a quo has been given the opportunity to re-examine
the legal aspect of the case by means of a motion for reconsideration. When, however, the order or judgment complained of
is a patent nullity, a motion for reconsideration is not required.

It is also the general rule that certiorari can not be maintained if appeal is available as a plain, speedy and adequate remedy.
An exception to this rule is when ordinary appeal would be inadequate as a remedy. In the instant case, ordinary appeal is
an inadequate remedy for the petitioners. An appeal win not promptly relieve them from the injurious effects of the judgment.
Besides, a party may resort to the remedy of certiorari rather than appeal where the proceeding in the trial court has gone so
far out of hand as to require prompt action.

An action for an annulment of judgment is not a plain, speedy and adequate remedy.

WHEREFORE, the petition for writ of certiorari is granted and the judgment of the respondent Judge dated May 19, 1966, and
the order dated July 5, 1967, are nullified and set aside. The temporary restraining order heretofore issued is made
permanent.

Civil Case No. 1709 is remanded to the trial court for further proceedings, without pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 164584 June 22, 2009

PHILIP MATTHEWS, Petitioner,

vs.

BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents.

DECISION

NACHURA, J.:

Assailed in this petition for review on certiorari are the Court of Appeals (CA) December 19, 2003 Decision1 and July 14, 2004
Resolution2 in CA-G.R. CV No. 59573. The assailed decision affirmed and upheld the June 30, 1997 Decision3 of the Regional
Trial Court (RTC), Branch 8, Kalibo, Aklan in Civil Case No. 4632 for Declaration of Nullity of Agreement of Lease with Damages.

On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British subject, married Joselyn C. Taylor (Joselyn), a 17-year
old Filipina.4 On June 9, 1989, while their marriage was subsisting, Joselyn bought from Diosa M. Martin a 1,294 square-meter
lot (Boracay property) situated at Manoc-Manoc, Boracay Island, Malay, Aklan, for and in consideration of ₱129,000.00.5 The
sale was allegedly financed by Benjamin.6 Joselyn and Benjamin, also using the latter’s funds, constructed improvements
thereon and eventually converted the property to a vacation and tourist resort known as the Admiral Ben Bow Inn.7 All
required permits and licenses for the operation of the resort were obtained in the name of Ginna Celestino, Joselyn’s sister.8

However, Benjamin and Joselyn had a falling out, and Joselyn ran away with Kim Philippsen. On June 8, 1992, Joselyn executed
a Special Power of Attorney (SPA) in favor of Benjamin, authorizing the latter to maintain, sell, lease, and sub-lease and
otherwise enter into contract with third parties with respect to their Boracay property.9

On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee, entered into an Agreement of Lease10
(Agreement) involving the Boracay property for a period of 25 years, with an annual rental of ₱12,000.00. The agreement was
signed by the parties and executed before a Notary Public. Petitioner thereafter took possession of the property and renamed
the resort as Music Garden Resort.1avvphi1

Claiming that the Agreement was null and void since it was entered into by Joselyn without his (Benjamin’s) consent,
Benjamin instituted an action for Declaration of Nullity of Agreement of Lease with Damages11 against Joselyn and the
petitioner. Benjamin claimed that his funds were used in the acquisition and improvement of the Boracay property, and
coupled with the fact that he was Joselyn’s husband, any transaction involving said property required his consent.

No Answer was filed, hence, the RTC declared Joselyn and the petitioner in defeault. On March 14, 1994, the RTC rendered
judgment by default declaring the Agreement null and void.12 The decision was, however, set aside by the CA in CA-G.R. SP
No. 34054.13 The CA also ordered the RTC to allow the petitioner to file his Answer, and to conduct further proceedings.

In his Answer,14 petitioner claimed good faith in transacting with Joselyn. Since Joselyn appeared to be the owner of the
Boracay property, he found it unnecessary to obtain the consent of Benjamin. Moreover, as appearing in the Agreement,
Benjamin signed as a witness to the contract, indicating his knowledge of the transaction and, impliedly, his conformity to the
agreement entered into by his wife. Benjamin was, therefore, estopped from questioning the validity of the Agreement.
There being no amicable settlement during the pre-trial, trial on the merits ensued.

On June 30, 1997, the RTC disposed of the case in this manner:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants as
follows:

1. The Agreement of Lease dated July 20, 1992 consisting of eight (8) pages (Exhibits "T", "T-1", "T-2", "T-3", "T-4", "T-5", "T-6"
and "T-7") entered into by and between Joselyn C. Taylor and Philip Matthews before Notary Public Lenito T. Serrano under
Doc. No. 390, Page 79, Book I, Series of 1992 is hereby declared NULL and VOID;

2. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of SIXTEEN THOUSAND (₱16,000.00) PESOS as
damages representing unrealized income for the residential building and cottages computed monthly from July 1992 up to the
time the property in question is restored to plaintiff; and

3. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of TWENTY THOUSAND (₱20,000.00) PESOS,
Philippine Currency, for attorney’s fees and other incidental expenses.

SO ORDERED.15

The RTC considered the Boracay property as community property of Benjamin and Joselyn; thus, the consent of the spouses
was necessary to validate any contract involving the property. Benjamin’s right over the Boracay property was bolstered by
the court’s findings that the property was purchased and improved through funds provided by Benjamin. Although the
Agreement was evidenced by a public document, the trial court refused to consider the alleged participation of Benjamin in
the questioned transaction primarily because his signature appeared only on the last page of the document and not on every
page thereof.

On appeal to the CA, petitioner still failed to obtain a favorable decision. In its December 19, 2003 Decision,16 the CA affirmed
the conclusions made by the RTC. The appellate court was of the view that if, indeed, Benjamin was a willing participant in the
questioned transaction, the parties to the Agreement should have used the phrase "with my consent" instead of "signed in
the presence of." The CA noted that Joselyn already prepared an SPA in favor of Benjamin involving the Boracay property; it
was therefore unnecessary for Joselyn to participate in the execution of the Agreement. Taken together, these circumstances
yielded the inevitable conclusion that the contract was null and void having been entered into by Joselyn without the consent
of Benjamin.

Aggrieved, petitioner now comes before this Court in this petition for review on certiorari based on the following grounds:

4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN TAYLOR IS NOT REQUIRED IN THE AGREEMENT OF LEASE DATED 20
JULY 1992. GRANTING ARGUENDO THAT HIS CONSENT IS REQUIRED, BENJAMIN TAYLOR IS DEEMED TO HAVE GIVEN HIS
CONSENT WHEN HE AFFIXED HIS SIGNATURE IN THE AGREEMENT OF LEASE AS WITNESS IN THE LIGHT OF THE RULING OF THE
SUPREME COURT IN THE CASE OF SPOUSES PELAYO VS. MELKI PEREZ, G.R. NO. 141323, JUNE 8, 2005.

4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT OF LEASE IS THE EXCLUSIVE PROPERTY OF JOCELYN C. TAYLOR, A
FILIPINO CITIZEN, IN THE LIGHT OF CHEESMAN VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.

4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE 96 OF THE FAMILY CODE OF THE PHILIPPINES WHICH IS A
PROVISION REFERRING TO THE ABSOLUTE COMMUNITY OF PROPERTY. THE PROPERTY REGIME GOVERNING THE PROPERTY
RELATIONS OF BENJAMIN TAYLOR AND JOSELYN TAYLOR IS THE CONJUGAL PARTNERSHIP OF GAINS BECAUSE THEY WERE
MARRIED ON 30 JUNE 1988 WHICH IS PRIOR TO THE EFFECTIVITY OF THE FAMILY CODE. ARTICLE 96 OF THE FAMILY CODE OF
THE PHILIPPINES FINDS NO APPLICATION IN THIS CASE.

4.4. THE HONORABLE COURT OF APPEALS IGNORED THE PRESUMPTION OF REGULARITY IN THE EXECUTION OF NOTARIAL
DOCUMENTS.
4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS UPON THE COUNTERCLAIM OF PETITIONER DESPITE THE FACT
THAT IT WAS NOT CONTESTED AND DESPITE THE PRESENTATION OF EVIDENCE ESTABLISHING SAID CLAIM.17

The petition is impressed with merit.

In fine, we are called upon to determine the validity of an Agreement of Lease of a parcel of land entered into by a Filipino
wife without the consent of her British husband. In addressing the matter before us, we are confronted not only with civil law
or conflicts of law issues, but more importantly, with a constitutional question.

It is undisputed that Joselyn acquired the Boracay property in 1989. Said acquisition was evidenced by a Deed of Sale with
Joselyn as the vendee. The property was also declared for taxation purposes under her name. When Joselyn leased the
property to petitioner, Benjamin sought the nullification of the contract on two grounds: first, that he was the actual owner of
the property since he provided the funds used in purchasing the same; and second, that Joselyn could not enter into a valid
contract involving the subject property without his consent.

The trial and appellate courts both focused on the property relations of petitioner and respondent in light of the Civil Code
and Family Code provisions. They, however, failed to observe the applicable constitutional principles, which, in fact, are the
more decisive.

Section 7, Article XII of the 1987 Constitution states:18

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain.1avvphi1

Aliens, whether individuals or corporations, have been disqualified from acquiring lands of the public domain. Hence, by virtue
of the aforecited constitutional provision, they are also disqualified from acquiring private lands.19 The primary purpose of
this constitutional provision is the conservation of the national patrimony.20 Our fundamental law cannot be any clearer. The
right to acquire lands of the public domain is reserved only to Filipino citizens or corporations at least sixty percent of the
capital of which is owned by Filipinos.21

In Krivenko v. Register of Deeds,22 cited in Muller v. Muller,23 we had the occasion to explain the constitutional prohibition:

Under Section 1 of Article XIII of the Constitution, "natural resources, with the exception of public agricultural land, shall not
be alienated," and with respect to public agricultural lands, their alienation is limited to Filipino citizens. But this constitutional
purpose conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens
themselves who may alienate their agricultural lands in favor of aliens. It is partly to prevent this result that Section 5 is
included in Article XIII, and it reads as follows:

"Section 5. Save in cases of hereditary succession, no private agricultural land will be transferred or assigned except to
individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines."

This constitutional provision closes the only remaining avenue through which agricultural resources may leak into alien’s
hands. It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if, after all, they may be freely
so alienated upon their becoming private agricultural lands in the hands of Filipino citizens. x x x

xxxx

If the term "private agricultural lands" is to be construed as not including residential lots or lands not strictly agricultural, the
result would be that "aliens may freely acquire and possess not only residential lots and houses for themselves but entire
subdivisions, and whole towns and cities," and that "they may validly buy and hold in their names lands of any area for
building homes, factories, industrial plants, fisheries, hatcheries, schools, health and vacation resorts, markets, golf courses,
playgrounds, airfields, and a host of other uses and purposes that are not, in appellant’s words, strictly agricultural." (Solicitor
General’s Brief, p. 6) That this is obnoxious to the conservative spirit of the Constitution is beyond question.24

The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or private lands in the Philippines, save only
in constitutionally recognized exceptions.25 There is no rule more settled than this constitutional prohibition, as more and
more aliens attempt to circumvent the provision by trying to own lands through another. In a long line of cases, we have
settled issues that directly or indirectly involve the above constitutional provision. We had cases where aliens wanted that a
particular property be declared as part of their father’s estate;26 that they be reimbursed the funds used in purchasing a
property titled in the name of another;27 that an implied trust be declared in their (aliens’) favor;28 and that a contract of
sale be nullified for their lack of consent.29

In Ting Ho, Jr. v. Teng Gui,30 Felix Ting Ho, a Chinese citizen, acquired a parcel of land, together with the improvements
thereon. Upon his death, his heirs (the petitioners therein) claimed the properties as part of the estate of their deceased
father, and sought the partition of said properties among themselves. We, however, excluded the land and improvements
thereon from the estate of Felix Ting Ho, precisely because he never became the owner thereof in light of the
above-mentioned constitutional prohibition.

In Muller v. Muller,31 petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in Germany. During
the subsistence of their marriage, respondent purchased a parcel of land in Antipolo City and constructed a house thereon.
The Antipolo property was registered in the name of the petitioner. They eventually separated, prompting the respondent to
file a petition for separation of property. Specifically, respondent prayed for reimbursement of the funds he paid for the
acquisition of said property. In deciding the case in favor of the petitioner, the Court held that respondent was aware that as
an alien, he was prohibited from owning a parcel of land situated in the Philippines. He had, in fact, declared that when the
spouses acquired the Antipolo property, he had it titled in the name of the petitioner because of said prohibition. Hence, we
denied his attempt at subsequently asserting a right to the said property in the form of a claim for reimbursement. Neither did
the Court declare that an implied trust was created by operation of law in view of petitioner’s marriage to respondent. We
said that to rule otherwise would permit circumvention of the constitutional prohibition.

In Frenzel v. Catito,32 petitioner, an Australian citizen, was married to Teresita Santos; while respondent, a Filipina, was
married to Klaus Muller. Petitioner and respondent met and later cohabited in a common-law relationship, during which
petitioner acquired real properties; and since he was disqualified from owning lands in the Philippines, respondent’s name
appeared as the vendee in the deeds of sale. When their relationship turned sour, petitioner filed an action for the recovery of
the real properties registered in the name of respondent, claiming that he was the real owner. Again, as in the other cases,
the Court refused to declare petitioner as the owner mainly because of the constitutional prohibition. The Court added that
being a party to an illegal contract, he could not come to court and ask to have his illegal objective carried out. One who loses
his money or property by knowingly engaging in an illegal contract may not maintain an action for his losses.

Finally, in Cheesman v. Intermediate Appellate Court,33 petitioner (an American citizen) and Criselda Cheesman acquired a
parcel of land that was later registered in the latter’s name. Criselda subsequently sold the land to a third person without the
knowledge of the petitioner. The petitioner then sought the nullification of the sale as he did not give his consent thereto. The
Court held that assuming that it was his (petitioner’s) intention that the lot in question be purchased by him and his wife, he
acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in
land, vicariously and clandestinely, he knowingly violated the Constitution; thus, the sale as to him was null and void.

In light of the foregoing jurisprudence, we find and so hold that Benjamin has no right to nullify the Agreement of Lease
between Joselyn and petitioner. Benjamin, being an alien, is absolutely prohibited from acquiring private and public lands in
the Philippines. Considering that Joselyn appeared to be the designated "vendee" in the Deed of Sale of said property, she
acquired sole ownership thereto. This is true even if we sustain Benjamin’s claim that he provided the funds for such
acquisition. By entering into such contract knowing that it was illegal, no implied trust was created in his favor; no
reimbursement for his expenses can be allowed; and no declaration can be made that the subject property was part of the
conjugal/community property of the spouses. In any event, he had and has no capacity or personality to question the
subsequent lease of the Boracay property by his wife on the theory that in so doing, he was merely exercising the prerogative
of a husband in respect of conjugal property. To sustain such a theory would countenance indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal, this would accord the alien husband a substantial
interest and right over the land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the
Constitution does not permit him to have.34

In fine, the Agreement of Lease entered into between Joselyn and petitioner cannot be nullified on the grounds advanced by
Benjamin. Thus, we uphold its validity.
With the foregoing disquisition, we find it unnecessary to address the other issues raised by the petitioner.

WHEREFORE, premises considered, the December 19, 2003 Decision and July 14, 2004 Resolution of the Court of Appeals in
CA-G.R. CV No. 59573, are REVERSED and SET ASIDE and a new one is entered DISMISSING the complaint against petitioner
Philip Matthews.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 135083 May 26, 1999

ERNESTO S. MERCADO, petitioner,

vs.

EDUARDO BARRIOS MANZANO and the COMMISSION ON ELECTIONS, respondents.

MENDOZA, J.:

Petitioner Ernesto S. Mercado and private respondent Eduardo B. Manzano were candidates for vice mayor of the City of
Makati in the May 11, 1998 elections. The other one was Gabriel V. Daza III. The results of the election were as follows:

Eduardo B. Manzano 103,853

Ernesto S. Mercado 100,894

Gabriel V. Daza III 54,2751

The proclamation of private respondent was suspended in view of a pending petition for disqualification filed by a certain
Ernesto Mamaril who alleged that private respondent was not a citizen of the Philippines but of the United States.

In its resolution, dated May 7, 1998,2 the Second Division of the COMELEC granted the petition of Mamaril and ordered the
cancellation of the certificate of candidacy of private respondent on the ground that he is a dual citizen and, under §40(d) of
the Local Government Code, persons with dual citizenship are disqualified from running for any elective position. The
COMELEC's Second Division said:

What is presented before the Commission is a petition for disqualification of Eduardo Barrios Manzano as candidate for the
office of Vice-Mayor of Makati City in the May 11, 1998 elections. The petition is based on the ground that the respondent is
an American citizen based on the record of the Bureau of Immigration and misrepresented himself as a natural-born Filipino
citizen.

In his answer to the petition filed on April 27, 1998, the respondent admitted that he is registered as a foreigner with the
Bureau of Immigration under Alien Certificate of Registration No. B-31632 and alleged that he is a Filipino citizen because he
was born in 1955 of a Filipino father and a Filipino mother. He was born in the United States, San Francisco, California,
September 14, 1955, and is considered in American citizen under US Laws. But notwithstanding his registration as an
American citizen, he did not lose his Filipino citizenship.

Judging from the foregoing facts, it would appear that respondent Manzano is born a Filipino and a US citizen. In other words,
he holds dual citizenship.
The question presented is whether under our laws, he is disqualified from the position for which he filed his certificate of
candidacy. Is he eligible for the office he seeks to be elected?

Under Section 40(d) of the Local Government Code, those holding dual citizenship are disqualified from running for any
elective local position.

WHEREFORE, the Commission hereby declares the respondent Eduardo Barrios Manzano DISQUALIFIED as candidate for
Vice-Mayor of Makati City.

On May 8, 1998, private respondent filed a motion for reconsideration.3 The motion remained pending even until after the
election held on May 11, 1998.

Accordingly, pursuant to Omnibus Resolution No. 3044, dated May 10, 1998, of the COMELEC, the board of canvassers
tabulated the votes cast for vice mayor of Makati City but suspended the proclamation of the winner.

On May 19, 1998, petitioner sought to intervene in the case for disqualification.4 Petitioner's motion was opposed by private
respondent.

The motion was not resolved. Instead, on August 31, 1998, the COMELEC en banc rendered its resolution. Voting 4 to 1, with
one commissioner abstaining, the COMELEC en banc reversed the ruling of its Second Division and declared private
respondent qualified to run for vice mayor of the City of Makati in the May 11, 1998 elections.5 The pertinent portions of the
resolution of the COMELEC en banc read:

As aforesaid, respondent Eduardo Barrios Manzano was born in San Francisco, California, U.S.A. He acquired US citizenship by
operation of the United States Constitution and laws under the principle of jus soli.

He was also a natural born Filipino citizen by operation of the 1935 Philippine Constitution, as his father and mother were
Filipinos at the time of his birth. At the age of six (6), his parents brought him to the Philippines using an American passport as
travel document. His parents also registered him as an alien with the Philippine Bureau of Immigration. He was issued an alien
certificate of registration. This, however, did not result in the loss of his Philippine citizenship, as he did not renounce
Philippine citizenship and did not take an oath of allegiance to the United States.

It is an undisputed fact that when respondent attained the age of majority, he registered himself as a voter, and voted in the
elections of 1992, 1995 and 1998, which effectively renounced his US citizenship under American law. Under Philippine law,
he no longer had U.S. citizenship.

At the time of the May 11, 1998 elections, the resolution of the Second Division, adopted on May 7, 1998, was not yet final.
Respondent Manzano obtained the highest number of votes among the candidates for vice-mayor of Makati City, garnering
one hundred three thousand eight hundred fifty three (103,853) votes over his closest rival, Ernesto S. Mercado, who
obtained one hundred thousand eight hundred ninety four (100,894) votes, or a margin of two thousand nine hundred fifty
nine (2,959) votes. Gabriel Daza III obtained third place with fifty four thousand two hundred seventy five (54,275) votes. In
applying election laws, it would be far better to err in favor of the popular choice than be embroiled in complex legal issues
involving private international law which may well be settled before the highest court (Cf. Frivaldo vs. Commission on
Elections, 257 SCRA 727).

WHEREFORE, the Commission en banc hereby REVERSES the resolution of the Second Division, adopted on May 7, 1998,
ordering the cancellation of the respondent's certificate of candidacy.

We declare respondent Eduardo Luis Barrios Manzano to be QUALIFIED as a candidate for the position of vice-mayor of
Makati City in the May 11, 1998, elections.

ACCORDINGLY, the Commission directs the Makati City Board of Canvassers, upon proper notice to the parties, to reconvene
and proclaim the respondent Eduardo Luis Barrios Manzano as the winning candidate for vice-mayor of Makati City.
Pursuant to the resolution of the COMELEC en banc, the board of canvassers, on the evening of August 31, 1998, proclaimed
private respondent as vice mayor of the City of Makati.

This is a petition for certiorari seeking to set aside the aforesaid resolution of the COMELEC en banc and to declare private
respondent disqualified to hold the office of vice mayor of Makati City. Petitioner contends that —

[T]he COMELEC en banc ERRED in holding that:

A. Under Philippine law, Manzano was no longer a U.S. citizen when he:

1. He renounced his U.S. citizenship when he attained the age of majority when he was already 37 years old; and,

2. He renounced his U.S. citizenship when he (merely) registered himself as a voter and voted in the elections of 1992, 1995
and 1998.

B. Manzano is qualified to run for and or hold the elective office of Vice-Mayor of the City of Makati;

C. At the time of the May 11, 1998 elections, the resolution of the Second Division adopted on 7 May 1998 was not yet final so
that, effectively, petitioner may not be declared the winner even assuming that Manzano is disqualified to run for and hold
the elective office of Vice-Mayor of the City of Makati.

We first consider the threshold procedural issue raised by private respondent Manzano — whether petitioner Mercado his
personality to bring this suit considering that he was not an original party in the case for disqualification filed by Ernesto
Mamaril nor was petitioner's motion for leave to intervene granted.

I. PETITIONER'S RIGHT TO BRING THIS SUIT

Private respondent cites the following provisions of Rule 8 of the Rules of Procedure of the COMELEC in support of his claim
that petitioner has no right to intervene and, therefore, cannot bring this suit to set aside the ruling denying his motion for
intervention:

Sec. 1. When proper and when may be permitted to intervene. — Any person allowed to initiate an action or proceeding may,
before or during the trial of an action or proceeding, be permitted by the Commission, in its discretion to intervene in such
action or proceeding, 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 such action or proceeding.

xxx xxx xxx

Sec. 3. Discretion of Commission. — In allowing or disallowing a motion for intervention, the Commission or the Division, in
the exercise of its 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 action or
proceeding.

Private respondent argues that petitioner has neither legal interest in the matter in litigation nor an interest to protect
because he is "a defeated candidate for the vice-mayoralty post of Makati City [who] cannot be proclaimed as the Vice-Mayor
of Makati City if the private respondent be ultimately disqualified by final and executory judgment."

The flaw in this argument is it assumes that, at the time petitioner sought to intervene in the proceedings before the
COMELEC, there had already been a proclamation of the results of the election for the vice mayoralty contest for Makati City,
on the basis of which petitioner came out only second to private respondent. The fact, however, is that there had been no
proclamation at that time. Certainly, petitioner had, and still has, an interest in ousting private respondent from the race at
the time he sought to intervene. The rule in Labo v. COMELEC,6 reiterated in several cases,7 only applies to cases in which the
election of the respondent is contested, and the question is whether one who placed second to the disqualified candidate
may be declared the winner. In the present case, at the time petitioner filed a "Motion for Leave to File Intervention" on May
20, 1998, there had been no proclamation of the winner, and petitioner's purpose was precisely to have private respondent
disqualified "from running for [an] elective local position" under §40(d) of R.A. No. 7160. If Ernesto Mamaril (who originally
instituted the disqualification proceedings), a registered voter of Makati City, was competent to bring the action, so was
petitioner since the latter was a rival candidate for vice mayor of Makati City.

Nor is petitioner's interest in the matter in litigation any less because he filed a motion for intervention only on May 20, 1998,
after private respondent had been shown to have garnered the highest number of votes among the candidates for vice mayor.
That petitioner had a right to intervene at that stage of the proceedings for the disqualification against private respondent is
clear from §6 of R.A. No. 6646, otherwise known as the Electoral Reform Law of 1987, which provides:

Any candidate who his been declared by final judgment to be disqualified shall not be voted for, and the votes cast for him
shall not be counted. If for any reason a candidate is not declared by final judgment before an election to be disqualified and
he is voted for and receives the winning number of votes in such election, the Court or Commission shall continue with the
trial and hearing of action, inquiry, or protest and, upon motion of the complainant or any intervenor, may during the
pendency thereof order the suspension of the proclamation of such candidate whenever the evidence of guilt is strong.

Under this provision, intervention may be allowed in proceedings for disqualification even after election if there has yet been
no final judgment rendered.

The failure of the COMELEC en banc to resolve petitioner's motion for intervention was tantamount to a denial of the motion,
justifying petitioner in filing the instant petition for certiorari. As the COMELEC en banc instead decided the merits of the case,
the present petition properly deals not only with the denial of petitioner's motion for intervention but also with the
substantive issues respecting private respondent's alleged disqualification on the ground of dual citizenship.

This brings us to the next question, namely, whether private respondent Manzano possesses dual citizenship and, if so,
whether he is disqualified from being a candidate for vice mayor of Makati City.

II. DUAL CITIZENSHIP AS A GROUND FOR DISQUALIFICATION

The disqualification of private respondent Manzano is being sought under §40 of the Local Government Code of 1991 (R.A. No.
7160), which declares as "disqualified from running for any elective local position: . . . (d) Those with dual citizenship." This
provision is incorporated in the Charter of the City of Makati. 8

Invoking the maxim dura lex sed lex, petitioner, as well as the Solicitor General, who sides with him in this case, contends that
through §40(d) of the Local Government Code, Congress has "command[ed] in explicit terms the ineligibility of persons
possessing dual allegiance to hold local elective office."

To begin with, dual citizenship is different from dual allegiance. The former arises when, as a result of the concurrent
application of the different laws of two or more states, a person is simultaneously considered a national by the said states.9
For instance, such a situation may arise when a person whose parents are citizens of a state which adheres to the principle of
jus sanguinis is born in a state which follows the doctrine of jus soli. Such a person, ipso facto and without any voluntary act
on his part, is concurrently considered a citizen of both states. Considering the citizenship clause (Art. IV) of our Constitution,
it is possible for the following classes of citizens of the Philippines to possess dual citizenship:

(1) Those born of Filipino fathers and/or mothers in foreign countries which follow the principle of jus soli;

(2) Those born in the Philippines of Filipino mothers and alien fathers if by the laws of their father's' country such children are
citizens of that country;
(3) Those who marry aliens if by the laws of the latter's country the former are considered citizens, unless by their act or
omission they are deemed to have renounced Philippine citizenship.

There may be other situations in which a citizen of the Philippines may, without performing any act, be also a citizen of
another state; but the above cases are clearly possible given the constitutional provisions on citizenship.

Dual allegiance, on the other hand, refers to the situation in which a person simultaneously owes, by some positive act, loyalty
to two or more states. While dual citizenship is involuntary, dual allegiance is the result of an individual's volition.

With respect to dual allegiance, Article IV, §5 of the Constitution provides: "Dual allegiance of citizens is inimical to the
national interest and shall be dealt with by law." This provision was included in the 1987 Constitution at the instance of
Commissioner Blas F. Ople who explained its necessity as follows: 10

. . . I want to draw attention to the fact that dual allegiance is not dual citizenship. I have circulated a memorandum to the
Bernas Committee according to which a dual allegiance — and I reiterate a dual allegiance — is larger and more threatening
than that of mere double citizenship which is seldom intentional and, perhaps, never insidious. That is often a function of the
accident of mixed marriages or of birth on foreign soil. And so, I do not question double citizenship at all.

What we would like the Committee to consider is to take constitutional cognizance of the problem of dual allegiance. For
example, we all know what happens in the triennial elections of the Federation of Filipino-Chinese Chambers of Commerce
which consists of about 600 chapters all over the country. There is a Peking ticket, as well as a Taipei ticket. Not widely known
is the fact chat the Filipino-Chinese community is represented in the Legislative Yuan of the Republic of China in Taiwan. And
until recently, sponsor might recall, in Mainland China in the People's Republic of China, they have the Associated Legislative
Council for overseas Chinese wherein all of Southeast Asia including some European and Latin countries were represented,
which was dissolved after several years because of diplomatic friction. At that time, the Filipino-Chinese were also
represented in that Overseas Council.

When I speak of double allegiance, therefore, I speak of this unsettled kind of allegiance of Filipinos, of citizens who are
already Filipinos but who, by their acts, may be said to be bound by a second allegiance, either to Peking or Taiwan. I also took
close note of the concern expressed by some Commissioners yesterday, including Commissioner Villacorta, who were
concerned about the lack of guarantees of thorough assimilation, and especially Commissioner Concepcion who has always
been worried about minority claims on our natural resources.

Dull allegiance can actually siphon scarce national capital to Taiwan, Singapore, China or Malaysia, and this is already
happening. Some of the great commercial places in downtown Taipei are Filipino-owned, owned by Filipino-Chinese — it is of
common knowledge in Manila. It can mean a tragic capital outflow when we have to endure a capital famine which also
means economic stagnation, worsening unemployment and social unrest.

And so, this is exactly what we ask — that the Committee kindly consider incorporating a new section, probably Section 5, in
the article on Citizenship which will read as follows: DUAL ALLEGIANCE IS INIMICAL TO CITIZENSHIP AND SHALL BE DEALT
WITH ACCORDING TO LAW.

In another session of the Commission, Ople spoke on the problem of these citizens with dual allegiance, thus: 11

. . . A significant number of Commissioners expressed their concern about dual citizenship in the sense that it implies a double
allegiance under a double sovereignty which some of us who spoke then in a freewheeling debate thought would be
repugnant to the sovereignty which pervades the Constitution and to citizenship itself which implies a uniqueness and which
elsewhere in the Constitution is defined in terms of rights and obligations exclusive to that citizenship including, of course, the
obligation to rise to the defense of the State when it is threatened, and back of this, Commissioner Bernas, is, of course, the
concern for national security. In the course of those debates, I think some noted the fact that as a result of the wave of
naturalizations since the decision to establish diplomatic relations with the People's Republic of China was made in 1975, a
good number of these naturalized Filipinos still routinely go to Taipei every October 10; and it is asserted that some of them
do renew their oath of allegiance to a foreign government maybe just to enter into the spirit of the occasion when the
anniversary of the Sun Yat-Sen Republic is commemorated. And so, I have detected a genuine and deep concern about double
citizenship, with its attendant risk of double allegiance which is repugnant to our sovereignty and national security. I
appreciate what the Committee said that this could be left to the determination of a future legislature. But considering the
scale of the problem, the real impact on the security of this country, arising from, let us say, potentially great numbers of
double citizens professing double allegiance, will the Committee entertain a proposed amendment at the proper time that will
prohibit, in effect, or regulate double citizenship?

Clearly, in including §5 in Article IV on citizenship, the concern of the Constitutional Commission was not with dual citizens per
se but with naturalized citizens who maintain their allegiance to their countries of origin even after their naturalization. Hence,
the phrase "dual citizenship" in R.A. No. 7160, §40(d) and in R.A. No. 7854, §20 must be understood as referring to "dual
allegiance." Consequently, persons with mere dual citizenship do not fall under this disqualification. Unlike those with dual
allegiance, who must, therefore, be subject to strict process with respect to the termination of their status, for candidates
with dual citizenship, it should suffice if, upon the filing of their certificates of candidacy, they elect Philippine citizenship to
terminate their status as persons with dual citizenship considering that their condition is the unavoidable consequence of
conflicting laws of different states. As Joaquin G. Bernas, one of the most perceptive members of the Constitutional
Commission, pointed out: "[D]ual citizenship is just a reality imposed on us because we have no control of the laws on
citizenship of other countries. We recognize a child of a Filipino mother. But whether she is considered a citizen of another
country is something completely beyond our control." 12

By electing Philippine citizenship, such candidates at the same time forswear allegiance to the other country of which they are
also citizens and thereby terminate their status as dual citizens. It may be that, from the point of view of the foreign state and
of its laws, such an individual has not effectively renounced his foreign citizenship. That is of no moment as the following
discussion on §40(d) between Senators Enrile and Pimentel clearly shows: 13

SENATOR ENRILE. Mr. President, I would like to ask clarification of line 41, page 17: "Any person with dual citizenship" is
disqualified to run for any elective local position. Under the present Constitution, Mr. President, someone whose mother is a
citizen of the Philippines but his father is a foreigner is a natural-born citizen of the Republic. There is no requirement that
such a natural born citizen, upon reaching the age of majority, must elect or give up Philippine citizenship.

On the assumption that this person would carry two passports, one belonging to the country of his or her father and one
belonging to the Republic of the Philippines, may such a situation disqualify the person to run for a local government position?

SENATOR PIMENTEL. To my mind, Mr. President, it only means that at the moment when he would want to run for public
office, he has to repudiate one of his citizenships.

SENATOR ENRILE. Suppose he carries only a Philippine passport but the country of origin or the country of the father claims
that person, nevertheless, as a citizen? No one can renounce. There are such countries in the world.

SENATOR PIMENTEL. Well, the very fact that he is running for public office would, in effect, be an election for him of his desire
to be considered as a Filipino citizen.

SENATOR ENRILE. But, precisely, Mr. President, the Constitution does not require an election. Under the Constitution, a
person whose mother is a citizen of the Philippines is, at birth, a citizen without any overt act to claim the citizenship.

SENATOR PIMENTEL. Yes. What we are saying, Mr. President, is: Under the Gentleman's example, if he does not renounce his
other citizenship, then he is opening himself to question. So, if he is really interested to run, the first thing he should do is to
say in the Certificate of Candidacy that: "I am a Filipino citizen, and I have only one citizenship."

SENATOR ENRILE. But we are talking from the viewpoint of Philippine law, Mr. President. He will always have one citizenship,
and that is the citizenship invested upon him or her in the Constitution of the Republic.

SENATOR PIMENTEL. That is true, Mr. President. But if he exercises acts that will prove that he also acknowledges other
citizenships, then he will probably fall under this disqualification.

This is similar to the requirement that an applicant for naturalization must renounce "all allegiance and fidelity to any foreign
prince, potentate, state, or sovereignty" 14 of which at the time he is a subject or citizen before he can be issued a certificate
of naturalization as a citizen of the Philippines. In Parado v. Republic, 15 it was held:
[W]hen a person applying for citizenship by naturalization takes an oath that he renounce, his loyalty to any other country or
government and solemnly declares that he owes his allegiance to the Republic of the Philippines, the condition imposed by
law is satisfied and compiled with. The determination whether such renunciation is valid or fully complies with the provisions
of our Naturalization Law lies within the province and is an exclusive prerogative of our courts. The latter should apply the law
duly enacted by the legislative department of the Republic. No foreign law may or should interfere with its operation and
application. If the requirement of the Chinese Law of Nationality were to be read into our Naturalization Law, we would be
applying not what our legislative department has deemed it wise to require, but what a foreign government has thought or
intended to exact. That, of course, is absurd. It must be resisted by all means and at all cost. It would be a brazen
encroachment upon the sovereign will and power of the people of this Republic.

III. PETITIONER'S ELECTION OF PHILIPPINE CITIZENSHIP

The record shows that private respondent was born in San Francisco, California on September 4, 1955, of Filipino parents.
Since the Philippines adheres to the principle of jus sanguinis, while the United States follows the doctrine of jus soli, the
parties agree that, at birth at least, he was a national both of the Philippines and of the United States. However, the COMELEC
en banc held that, by participating in Philippine elections in 1992, 1995, and 1998, private respondent "effectively renounced
his U.S. citizenship under American law," so that now he is solely a Philippine national.

Petitioner challenges this ruling. He argues that merely taking part in Philippine elections is not sufficient evidence of
renunciation and that, in any event, as the alleged renunciation was made when private respondent was already 37 years old,
it was ineffective as it should have been made when he reached the age of majority.

In holding that by voting in Philippine elections private respondent renounced his American citizenship, the COMELEC must
have in mind §349 of the Immigration and Nationality Act of the United States, which provided that "A person who is a
national of the United States, whether by birth or naturalization, shall lose his nationality by: . . . (e) Voting in a political
election in a foreign state or participating in an election or plebiscite to determine the sovereignty over foreign territory." To
be sure this provision was declared unconstitutional by the U.S. Supreme Court in Afroyim v. Rusk 16 as beyond the power
given to the U.S. Congress to regulate foreign relations. However, by filing a certificate of candidacy when he ran for his
present post, private respondent elected Philippine citizenship and in effect renounced his American citizenship. Private
respondent's certificate of candidacy, filed on March 27, 1998, contained the following statements made under oath:

6. I AM A FILIPINO CITIZEN (STATE IF "NATURAL-BORN" OR "NATURALIZED") NATURAL-BORN

xxx xxx xxx

10. I AM A REGISTERED VOTER OF PRECINCT NO. 747-A, BARANGAY SAN LORENZO, CITY/MUNICIPALITY OF MAKATI,
PROVINCE OF NCR.

11. I AM NOT A PERMANENT RESIDENT OF, OR IMMIGRANT TO, A FOREIGN COUNTRY.

12. I AM ELIGIBLE FOR THE OFFICE I SEEK TO BE ELECTED. I WILL SUPPORT AND DEFEND THE CONSTITUTION OF THE
PHILIPPINES AND WILL MAINTAIN TRUE FAITH AND ALLEGIANCE THERETO; THAT I WILL OBEY THE LAWS, LEGAL ORDERS AND
DECREES PROMULGATED BY THE DULY CONSTITUTED AUTHORITIES OF THE REPUBLIC OF THE PHILIPPINES; AND THAT I
IMPOSE THIS OBLIGATION UPON MYSELF VOLUNTARILY, WITHOUT MENTAL RESERVATION OR PURPOSE OF EVASION. I
HEREBY CERTIFY THAT THE FACTS STATED HEREIN ARE TRUE AND CORRECT OF MY OWN PERSONAL KNOWLEDGE.

The filing of such certificate of candidacy sufficed to renounce his American citizenship, effectively removing any
disqualification he might have as a dual citizen. Thus, in Frivaldo v. COMELEC it was held: 17

It is not disputed that on January 20, 1983 Frivaldo became an American. Would the retroactivity of his repatriation not
effectively give him dual citizenship, which under Sec. 40 of the Local Government Code would disqualify him "from running
for any elective local position?" We answer this question in the negative, as there is cogent reason to hold that Frivaldo was
really STATELESS at the time he took said oath of allegiance and even before that, when he ran for governor in 1988. In his
Comment, Frivaldo wrote that he "had long renounced and had long abandoned his American citizenship — long before May
8, 1995. At best, Frivaldo was stateless in the interim — when he abandoned and renounced his US citizenship but before he
was repatriated to his Filipino citizenship."

On this point, we quote from the assailed Resolution dated December 19, 1995:

By the laws of the United States, petitioner Frivaldo lost his American citizenship when he took his oath of allegiance to the
Philippine Government when he ran for Governor in 1988, in 1992, and in 1995. Every certificate of candidacy contains an
oath of allegiance to the Philippine Government.

These factual findings that Frivaldo has lost his foreign nationality long before the elections of 1995 have not been effectively
rebutted by Lee. Furthermore, it is basic that such findings of the Commission are conclusive upon this Court, absent any
showing of capriciousness or arbitrariness or abuse.

There is, therefore, no merit in petitioner's contention that the oath of allegiance contained in private respondent's certificate
of candidacy is insufficient to constitute renunciation that, to be effective, such renunciation should have been made upon
private respondent reaching the age of majority since no law requires the election of Philippine citizenship to be made upon
majority age.

Finally, much is made of the fact that private respondent admitted that he is registered as an American citizen in the Bureau
of Immigration and Deportation and that he holds an American passport which he used in his last travel to the United States
on April 22, 1997. There is no merit in this. Until the filing of his certificate of candidacy on March 21, 1998, he had dual
citizenship. The acts attributed to him can be considered simply as the assertion of his American nationality before the
termination of his American citizenship. What this Court said in Aznar v. COMELEC 18 applies mutatis mundatis to private
respondent in the case at bar:

. . . Considering the fact that admittedly Osmeña was both a Filipino and an American, the mere fact that he has a Certificate
staring he is an American does not mean that he is not still a Filipino. . . . [T]he Certification that he is an American does not
mean that he is not still a Filipino, possessed as he is, of both nationalities or citizenships. Indeed, there is no express
renunciation here of Philippine citizenship; truth to tell, there is even no implied renunciation of said citizenship. When We
consider that the renunciation needed to lose Philippine citizenship must be "express," it stands to reason that there can be
no such loss of Philippine citizenship when there is no renunciation, either "express" or "implied."

To recapitulate, by declaring in his certificate of candidacy that he is a Filipino citizen; that he is not a permanent resident or
immigrant of another country; that he will defend and support the Constitution of the Philippines and bear true faith and
allegiance thereto and that he does so without mental reservation, private respondent has, as far as the laws of this country
are concerned, effectively repudiated his American citizenship and anything which he may have said before as a dual citizen.

On the other hand, private respondent's oath of allegiance to the Philippines, when considered with the fact that he has spent
his youth and adulthood, received his education, practiced his profession as an artist, and taken part in past elections in this
country, leaves no doubt of his election of Philippine citizenship.

His declarations will be taken upon the faith that he will fulfill his undertaking made under oath. Should he betray that trust,
there are enough sanctions for declaring the loss of his Philippine citizenship through expatriation in appropriate proceedings.
In Yu v. Defensor-Santiago, 19 we sustained the denial of entry into the country of petitioner on the ground that, after taking
his oath as a naturalized citizen, he applied for the renewal of his Portuguese passport and declared in commercial documents
executed abroad that he was a Portuguese national. A similar sanction can be taken against any one who, in electing
Philippine citizenship, renounces his foreign nationality, but subsequently does some act constituting renunciation of his
Philippine citizenship.

WHEREFORE, the petition for certiorari is DISMISSED for lack of merit.1âwphi1.nêt

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 97816 July 24, 1992

MERRILL LYNCH FUTURES, INC., petitioner,

vs.

HON. COURT OF APPEALS, and the SPOUSES PEDRO M. LARA and ELISA G. LARA, respondents.

NARVASA, C.J.:

The capacity of a foreign corporation to maintain an action in the Philippines against residents thereof, is the principal
question in the appellate proceedings at bar. The issue arises from the undisputed facts now to be briefly narrated.

On November 23, 1987, Merrill Lynch Futures, Inc. (hereafter, simply ML FUTURES) filed a complaint with the Regional Trial
Court at Quezon City against the Spouses Pedro M. Lara and Elisa G. Lara for the recovery of a debt and interest thereon,
damages, and attorney's fees. 1 In its complaint ML FUTURES described itself as —

a) a non-resident foreign corporation, not doing business in the Philippines, duly organized and existing under and by virtue of
the laws of the state of Delaware, U.S.A.;" as well as

b) a "futures commission merchant" duly licensed to act as such in the futures markets and exchanges in the United States, . .
essentially functioning as a broker . . (executing) orders to buy and sell futures contracts received from its customers on U.S.
futures exchanges.

It also defined a "futures contract" as a "contractual commitment to buy and sell a standardized quantity of a particular item
at a specified future settlement date and at a price agreed upon, with the purchase or sale being executed on a regulated
futures exchange."

In its complaint ML FUTURES alleged the following:

1) that on September 28, 1983 it entered into a Futures Customer Agreement with the defendant spouses (Account No.
138-12161), in virtue of which it agreed to act as the latter's broker for the purchase and sale of futures contracts in the U.S.;

2) that pursuant to the contract, orders to buy and sell futures contracts were transmitted to ML FUTURES by the Lara
Spouses "through the facilities of Merrill Lynch Philippines, Inc., a Philippine corporation and a company servicing plaintiffs
customers; 2

3) that from the outset, the Lara Spouses "knew and were duly advised that Merrill Lynch Philippines, Inc. was not a broker in
futures contracts," and that it "did not have a license from the Securities and Exchange Commission to operate as a
commodity trading advisor (i.e., 'an entity which, not being a broker, furnishes advice on commodity futures to persons who
trade in futures contracts');

4) that in line with the above mentioned agreement and through said Merrill Lynch Philippines, Inc., the Lara Spouses actively
traded in futures contracts, including "stock index futures" for four years or so, i.e., from 1983 to October, 1987, 3 there being
more or less regular accounting and corresponding remittances of money (or crediting or debiting) made between the
spouses and ML FUTURES;

5) that because of a loss amounting to US$160,749.69 incurred in respect of three (3) transactions involving "index futures,"
and after setting this off against an amount of US$75,913.42 then owing by ML FUTURES to the Lara Spouses, said spouses
became indebted to ML FUTURES for the ensuing balance of US$84,836.27, which the latter asked them to pay;

6) that the Lara Spouses however refused to pay this balance, "alleging that the transactions were null and void because
Merrill Lynch Philippines, Inc., the Philippine company servicing accounts of plaintiff, . . had no license to operate as a
'commodity and/or financial futures broker.'"

On the foregoing essential facts, ML FUTURES prayed (1) for a preliminary attachment against defendant spouses' properties
"up to the value of at least P2,267,139.50," and (2) for judgment, after trial, sentencing the spouses to pay ML FUTURES:

a) the Philippine peso equivalent of $84,836.27 at the applicable exchanged rate on date of payment, with legal interest from
date of demand until full payment;

b) exemplary damages in the sum of at least P500,000.00; and

c) attorney's fees and expenses of litigation as may be proven at the trial.

Preliminary attachment issued ex parte on December 2, 1987, and the defendant spouses were duly served with summons.

They then filed a motion to dismiss dated December 18, 1987 on the grounds that:

(1) plaintiff ML FUTURES had "no legal capacity to sue" and

(2) its "complaint states no cause of action since . . (it) is not the real party in interest."

In that motion to dismiss, the defendant spouses averred that:

a) although not licensed to do so, ML FUTURES had been doing business in the Philippines "at least for the last four (4) years,"
this being clear from the very allegations of the complaint; consequently, ML FUTURES is prohibited by law "to maintain or
intervene in any action, suit or proceeding in any court or administrative agency of the Philippines;" and

b) they had never been informed that Merrill Lynch Philippines, Inc. was not licensed to do business in this country; and
contrary to the allegations of the complaint, all their transactions had actually been with MERRILL LYNCH PIERCE FENNER &
SMITH, INC., and not with ML FUTURES (Merrill Lynch Futures, Inc.), in proof of which they attached to their motion to dismiss
copies of eight (8) agreements, receipts or reminders, etc., executed on standard printed forms of said Merrill Lynch Pierce
Fenner & Smith Inc. 4

ML FUTURES filed an OPPOSITION to the defendant spouses' motion to dismiss. In that motion —

a) it drew attention to paragraph 4 of its complaint, admitted by defendants, that the latter "have been actively trading in
futures contracts . . . in U.S. futures exchanges from 1983 to 1987," and ask, "If the trading . . . (was) made in U.S., how could
plaintiff be doing business in the Philippines?"

b) it also drew attention to a printed form of "Merrill Lynch Futures, Inc." filled out and signed by defendant spouses when
they opened an account with ML Futures, in order to supply information about themselves, including their bank's name —
(1) in which appear the following epigraph: "Account introduced by Merrill Lynch International, Inc.," and the following
statements, to wit:

This Commodity Trading Advisor (Merrill Lynch, Pierce, Fenner & Smith Philippines, Inc.) is prohibited by the Philippine
Securities and Exchange Commission from accepting funds in the trading advisor's name from a client of Merrill Lynch Futures,
Inc. for trading commodity interests. All funds in this trading program must be placed with Merrill Lynch Futures, Inc.;

and

. . . It is agreed between MERRILL LYNCH, PIERCE, FENNER & SMITH INC., and other account carrying MERRILL LYNCH entities
and their customers that all legal relationships between them will be governed by applicable laws in countries outside the
Philippines where sale and purchase transactions take place.

c) and it argued that —

(1) it is not permitted for defendant spouses to present "evidence" in connection with a motion to dismiss based on failure of
the complaint to state a cause of action;

(2) even if the documents appended to the motion to dismiss be considered as admissible "evidence," the same would be
immaterial since the documents refer to a different account number: 138-12136, the defendants' account number with ML
FUTURES being 138-12161;

(3) it is a lie for the defendant spouses to assert that they were never informed that Merrill Lynch Philippines, Inc. had not
been licensed to do business in the Philippines; and

(4) defendant spouses should not be allowed to "invoke the aid of the court with unclean hands.

The defendant spouses filed a REPLY reaffirming their lack of awareness that Merrill Lynch Philippines, Inc. (formerly
registered as Merrill Lynch, Pierce, Fenner & Smith Philippines, Inc.) 5 did not have a license, claiming that they learned of this
only from inquiries with the Securities and Exchange Commission which elicited the information that it had denied said
corporation's application to operate as a commodity futures trading advisor — a denial subsequently affirmed by the Court of
Appeals (Merrill Lynch Philippines, Inc. v. Securities & Exchange Commission, CA-G.R. No. 10821-SP, Nov. 19, 1987). The
spouses also submitted additional documents (Annexes J to R) involving transactions with Merrill Lynch Pierce Fenner & Smith,
Inc., dating back to 1980, stressing that all but one of the documents "refer to Account No. 138-12161 which is the very
account that is involved in the instant complaint."

ML FUTURES filed a Rejoinder alleging it had given the spouses a disclosure statement by which the latter were made aware
that the transactions they were agreeing on would take place outside of the Philippines, and that "all funds in the trading
program must be placed with Merrill Lynch Futures, Inc."

On January 12, 1988, the Trial Court promulgated an Order sustaining the motion to dismiss, directing the dismissal of the
case and discharging the writ of preliminary attachment. It later denied ML FUTURES's motion for reconsideration, by Order
dated February 29, 1988. ML FUTURES appealed to the Court of Appeals. 6

In its own decision promulgated on November 27, 1990, 7 the Court of Appeals affirmed the Trial Court's judgment. It
declared that the Trial Court had seen "through the charade in the representation of MLPI and the plaintiff that MLPI is only a
trading advisor and in fact it is a conduit in the plaintiff's business transactions in the Philippines as a basis for invoking the
provisions of Section 133 of the Corporation Code," 8 viz.:

Sec. 133. Doing business without a license. — No foreign corporation transacting business in the Philippines without a license,
or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or
administrative agency in the Philippines; but such corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under Philippine laws.

It also declared that the evidence established that plaintiff had in fact been "doing business" in this country in legal
contemplation, adverting to Mentholatum v. Mangaliman, 72 Phil. 524, 528-530, and Section 1 of Republic Act No. 5455
reading as follows: 9

Sec. 1. Definition and scope of this ACT . (1) As used in this Act, the term "investment" shall mean equity participation in any
enterprise formed, organized, or existing under the laws of the Philippines; and the phrase "doing business" shall INCLUDE
soliciting orders, purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing
representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a
period or periods totalling one hundred eighty days or more; participating in the management, supervision or control of any
domestic business firm, entity or corporation in the Philippines; AND ANY OTHER ACT OR ACTS THAT IMPLY A CONTINUITY OF
COMMERCIAL DEALINGS OR ARRANGEMENTS AND CONTEMPLATE TO THAT EXTENT THE PERFORMANCE OF ACTS OR WORKS,
OR THE EXERCISE OF SOME FUNCTIONS NORMALLY INCIDENT TO, AND IN PROGRESSIVE PROSECUTION OF COMMERCIAL
GAIN OR OF THE PURPOSE AND OBJECT OF THE BUSINESS ORGANIZATION.

As regards the claim that it was error for the Trial Court to place reliance on the decision of the Court of Appeals in CA-G.R. No.
10821-SP — sustaining the finding of the Securities & Exchange Commission that ML FUTURES was doing business in the
Philippines — since that judgment was not yet final and ML FUTURES was not a party to that proceeding, the Court of Appeals
ruled that there was no need to belabor the point considering that there was, in any event, "adequate proof of the activities
of MLPI . . . which manifestly show that the plaintiff (ML FUTURES) performed a series of business acts, consummated
contracts and undertook transactions for the period from 1983 to October 1987," "and because ML FUTURES had done so
without license, it consequently had "no legal personality to bring suit in Philippine courts."

Its motion for reconsideration having been denied, 10 ML FUTURES has appealed to this Court on certiorari. Here, it submits
the following issues for resolution:

(a) Whether or not the annexes appended by the Laras to their Motion to Dismiss and Reply filed with the Regional Trial Court,
but never authenticated or offered, constitute admissible evidence.

(b) Whether or not in the proceedings below, ML FUTURES has been accorded procedural due process.

(c) Whether or not the annexes, assuming them to be admissible, established that ML FUTURES was doing business in the
Philippines without a license.

As just stated, the Lara Spouse's motion to dismiss was founded on two (2) grounds: (a) that the plaintiff has no legal capacity
to sue, and (b) that the complaint states no cause of action (Sec. 1 [d], and [g], Rule 16, Rules of Court).

As regards the second ground, i.e., that the complaint states no cause of action, the settled doctrine of course is that said
ground must appear on the face of the complaint, and its existence may be determined only by the allegations of the
complaint, consideration of other facts being proscribed, and any attempt to prove extraneous circumstances not being
allowed. 11 The test of the sufficiency of the facts alleged in a complaint as constituting a cause of action is whether or not,
admitting the facts alleged, the court might render a valid judgment upon the same in accordance with the prayer of the
complaint. 12 Indeed, it is error for a judge to conduct a preliminary hearing and receive evidence on the affirmative defense
of failure of the complaint to state a cause of action. 13

The other ground for dismissal relied upon, i.e., that the plaintiff has no legal capacity to sue — may be understood in two
senses: one, that the plaintiff is prohibited or otherwise incapacitated by law to institute suit in Philippine Courts, 14 or two,
although not otherwise incapacitated in the sense just stated, that it is not a real party in interest.15 Now, the Lara Spouses
contend that ML Futures has no capacity to sue them because the transactions subject of the complaint were had by them,
not with the plaintiff ML FUTURES, but with Merrill Lynch Pierce Fenner & Smith, Inc. Evidence is quite obviously needed in
this situation, for it is not to be expected that said ground, or any facts from which its existence may be inferred, will be found
in the averments of the complaint. When such a ground is asserted in a motion to dismiss, the general rule governing
evidence on motions applies. The rule is embodied in Section 7, Rule 133 of the Rules of Court.
Sec. 7. Evidence on motion. — When a motion is based on facts not appearing of record the court may hear the matter on
affidavits or depositions presented by the respective parties, but the court may direct that the matter be heard wholly or
partly on oral testimony or depositions.

There was, to be sure, no affidavit or deposition attached to the Lara Spouses' motion to dismiss or thereafter proffered in
proof of the averments of their motion. The motion itself was not verified. What the spouses did do was to refer in their
motion to documents which purported to establish that it was not with ML FUTURES that they had theretofore been dealing,
but another, distinct entity, Merrill Lynch, Pierce, Fenner & Smith, Inc., copies of which documents were attached to the
motion. It is significant that ML FUTURES raised no issue relative to the authenticity of the documents thus annexed to the
Laras' motion. In fact, its arguments subsumed the genuineness thereof and even adverted to one or two of them. Its
objection was centered on the propriety of taking account of those documents as evidence, considering the established
principle that no evidence should be received in the resolution of a motion to dismiss based on an alleged failure of the
complaint to state a cause of action.

There being otherwise no question respecting the genuineness of the documents, nor of their relevance to at least one of the
grounds for dismissal — i.e., the prohibition on suits in Philippine Courts by foreign corporations doing business in the country
without license — it would have been a superfluity for the Court to require prior proof of their authenticity, and no error may
be ascribed to the Trial Court in taking account of them in the determination of the motion on the ground, not that the
complaint fails to state a cause of action — as regards which evidence is improper and impermissible — but that the plaintiff
has no legal capacity to sue — respecting which proof may and should be presented.

Neither may ML FUTURES argue with any degree of tenability that it had been denied due process in the premises. As just
pointed out, it was very clear from the outset that the claim of lack of its capacity to sue was being made to rest squarely on
the documents annexed thereto, and ML FUTURES had more than ample opportunity to impugn those documents and require
their authentication, but did not do so. To sustain its theory that there should have been identification and authentication,
and formal offer, of those documents in the Trial Court pursuant to the rules of evidence would be to give unwarranted
importance to technicality and make it prevail over the substance of the issue.

The first question then, is, as ML FUTURES formulates it, whether or not the annexes, assuming them to be admissible,
establish that (a) ML FUTURES is prohibited from suing in Philippine Courts because doing business in the country without a
license, and that (b) it is not a real party in interest since the Lara Spouses had not been doing business with it, but with
another corporation, Merrill Lynch, Pierce, Fenner & Smith, Inc.

The Court is satisfied that the facts on record adequately establish that ML FUTURES, operating in the United States, had
indeed done business with the Lara Spouses in the Philippines over several years, had done so at all times through Merrill
Lynch Philippines, Inc. (MLPI), a corporation organized in this country, and had executed all these transactions without ML
FUTURES being licensed to so transact business here, and without MLPI being authorized to operate as a commodity futures
trading advisor. These are the factual findings of both the Trial Court and the Court of Appeals. These, too, are the conclusions
of the Securities & Exchange Commission which denied MLPI's application to operate as a commodity futures trading advisor,
a denial subsequently affirmed by the Court of Appeals. Prescinding from the proposition that factual findings of the Court of
Appeals are generally conclusive this Court has been cited to no circumstance of substance to warrant reversal of said
Appellate Court's findings or conclusions in this case.

The Court is satisfied, too, that the Laras did transact business with ML FUTURES through its agent corporation organized in
the Philippines, it being unnecessary to determine whether this domestic firm was MLPI (Merrill Lynch Philippines, Inc.) or
Merrill Lynch Pierce Fenner & Smith (MLPI's alleged predecessor). The fact is that ML FUTURES did deal with futures contracts
in exchanges in the United States in behalf and for the account of the Lara Spouses, and that on several occasions the latter
received account documents and money in connection with those transactions.

Given these facts, if indeed the last transaction executed by ML FUTURES in the Laras's behalf had resulted in a loss
amounting to US $160,749.69; that in relation to this loss, ML FUTURES had credited the Laras with the amount of
US$75,913.42 — which it (ML FUTURES) then admittedly owed the spouses — and thereafter sought to collect the balance,
US$84,836.27, but the Laras had refused to pay (for the reasons already above stated), the crucial question is whether or not
ML FUTURES may sue in Philippine Courts to establish and enforce its rights against said spouses, in light of the undeniable
fact that it had transacted business in this country without being licensed to do so. In other words, if it be true that during all
the time that they were transacting with ML FUTURES, the Laras were fully aware of its lack of license to do business in the
Philippines, and in relation to those transactions had made payments to, and received money from it for several years, the
question is whether or not the Lara Spouses are now estopped to impugn ML FUTURES' capacity to sue them in the courts of
the forum.
The rule is that a party is estopped to challenge the personality of a corporation after having acknowledged the same by
entering into a contract with it. 16 And the "doctrine of estoppel to deny corporate existence applies to foreign as well as to
domestic corporations;" 17 "one who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny
its corporate existence and capacity." 18 The principle "will be applied to prevent a person contracting with a foreign
corporation from later taking advantage of its noncompliance with the statutes, chiefly in cases where such person has
received the benefits of the contract (Sherwood v. Alvis, 83 Ala 115, 3 So 307, limited and distinguished in Dudley v. Collier, 87
Ala 431, 6 So 304; Spinney v. Miller, 114 Iowa 210, 86 NW 317), where such person has acted as agent for the corporation and
has violated his fiduciary obligations as such, and where the statute does not provide that the contract shall be void, but
merely fixes a special penalty for violation of the statute. . . ." 19

The doctrine was adopted by this Court as early as 1924 in Asia Banking Corporation v. Standard Products Co., 20 in which the
following pronouncement was made: 21

The general rule that in the absence of fraud of person who has contracted or otherwise dealt with an association in such a
way as to recognize and in effect admit its legal existence as a corporate body is thereby estopped to deny its corporate
existence in any action leading out of or involving such contract or dealing, unless its existence is attacked for causes which
have arisen since making the contract or other dealing relied on as an estoppel and this applies to foreign as well as domestic
corporations. (14 C.J .7; Chinese Chamber of Commerce vs. Pua Te Ching, 14 Phil. 222).

There would seem to be no question that the Laras received benefits generated by their business relations with ML FUTURES.
Those business relations, according to the Laras themselves, spanned a period of seven (7) years; and they evidently found
those relations to be of such profitability as warranted their maintaining them for that not insignificant period of time;
otherwise, it is reasonably certain that they would have terminated their dealings with ML FUTURES much, much earlier. In
fact, even as regards their last transaction, in which the Laras allegedly suffered a loss in the sum of US$160,749.69, the Laras
nonetheless still received some monetary advantage, for ML FUTURES credited them with the amount of US$75,913.42 then
due to them, thus reducing their debt to US$84,836.27. Given these facts, and assuming that the Lara Spouses were aware
from the outset that ML FUTURES had no license to do business in this country and MLPI, no authority to act as broker for it, it
would appear quite inequitable for the Laras to evade payment of an otherwise legitimate indebtedness due and owing to ML
FUTURES upon the plea that it should not have done business in this country in the first place, or that its agent in this country,
MLPI, had no license either to operate as a "commodity and/or financial futures broker."

Considerations of equity dictate that, at the very least, the issue of whether the Laras are in truth liable to ML FUTURES and if
so in what amount, and whether they were so far aware of the absence of the requisite licenses on the part of ML FUTURES
and its Philippine correspondent, MLPI, as to be estopped from alleging that fact as defense to such liability, should be
ventilated and adjudicated on the merits by the proper trial court.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 16478 dated November 27, 1990 and its Resolution of
March 7, 1991 are REVERSED and SET ASIDE, and the Regional Trial Court at Quezon City, Branch 84, is ORDERED to reinstate
Civil Case No. Q-52360 and forthwith conduct a hearing to adjudicate the issues set out in the preceding paragraph on the
merits.

SO ORDERED.