FIRST DIVISION

[G.R. No. 85494. May 7, 1991.]

CHOITHRAM JETHMAL RAMNANI and/or NIRMLA V. RAMNANIAND MOTI G. RAMNANI, petitioners, vs. COURT OF APPEALS,SPOUSES ISHWAR JETHMAL RAMNANI, SONYA JETHMALRAMNANI and OVERSEAS HOLDING CO., LTD., respondents.

[G.R. No. 85496. May 7, 1991.]

SPOUSES ISHWAR JETHMAL RAMNANI and SONYA JETHMALRAMNANI, petitioners, vs. THE HONORABLE COURT OF APPEALS,ORTIGAS & CO., LTD. PARTNERSHIP, and OVERSEAS HOLDINGCO., LTD., respondents.

Quasha, Asperilla, Ancheta, Peña and Nolasco for petitioners in G.R. No. 85496.

Salonga, Andres, Hernandez & Allado for petitioners in G.R. No. 85494.

Rama Law Office for petitioners in G.R. No. 85494, in collaboration with Salonga,Andres, Hernandez & Allado.

Eulogio R. Rodriguez for Ortigas & Co., Ltd.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; ENTRUSTING MONEY AND VALUABLES WITHOUTRECEIPT TO CLOSE FAMILY MEMBERS, NOT UNUSUAL. — The environmentalcircumstances of this case buttress the claim of Ishwar that he did entrust theamount of US$150,000.00 to his brother, Choithram, which the latter invested inthe real property business subject of this litigation in his capacity as attorney-in-factof Ishwar. True it is that there is no receipt whatever in the possession of Ishwar toevidence the same, but it is not unusual among brothers and close family membersto entrust money and valuables to each other without any formalities or receipt dueto the special relationship of trust between them.

2. ID.; CIVIL PROCEDURE; DEFAULT; FAILURE TO FILE COMMENT OR ANSWER.— Overseas was impleaded as respondent in the cases and required to file commentor answer to the different pleadings filed by petitioner. No comment or answer wasfiled by Overseas despite due notice, thus it is and must be considered to be indefault and to have lost the right to contest the representations of spouses Ishwarto declare the aforesaid alleged mortgage null and void.

3. CIVIL LAW; MORTGAGE; NULLITY OF MORTGAGE SHOWN BYCIRCUMSTANCES IN CASE AT BAR. — This purported mortgage of the subjectproperties in litigation appears to be fraudulent and simulated. The stated amountof $3 Million for which it was mortgaged is much more than the value of themortgaged properties and its improvements. The alleged mortgagee-company(Overseas) was organized only on June 26, 1989 but the mortgage was executedmuch earlier, on June 20, 1989, that is six (6) days before Overseas was organized.Overseas is a "shelf" company worth only $100.00. In the manifestation of spousesIshwar dated April 1, 1991, the Court was informed that this matter was brought tothe attention of the Central Bank (CB) for investigation, and that in a letter ofMarch 20, 1991, the CB informed counsel for spouses Ishwar that said allegedforeign loan of Choithram, et al. from Overseas has not been previouslyapproved/registered with the CB. Obviously, this is another ploy of Choithram, et al.to place these properties beyond the reach of spouses Ishwar should they obtain afavorable judgment in this case. The Court finds and so declares that this allegedmortgage should be as it is hereby declared null and void.

4. ID.; AGENCY; NOTICE OF REVOCATION OF POWER OF ATTORNEY INNEWSPAPER, SUFFICIENT WARNING TO THIRD PARTY. — The problem iscompounded in that respondent Ortigas is caught in the web of this bitter fight. Ithad all the time been dealing with Choithram as attorney-in-fact of Ishwar.However, evidence had been adduced that notice in writing had been served notonly on Choithram, but also on Ortigas, of the revocation of Choithram's power ofattorney by Ishwar's lawyer, on May 24, 1971. A publication of said notice wasmade in the April 2, 1971 issue of The Manila Times for the information of thegeneral public. Such notice of revocation in a newspaper of general circulation issufficient warning to third persons including Ortigas. A notice of revocation was alsoregistered with the Securities and Exchange Commission on March 29, 1971.

5. ID.; ID.; ID.; THIRD PARTY'S FAULT RENDERS HIM GUILTY TO PRINCIPAL. —Indeed in the letter of Choithram to Ishwar of June 25, 1971, Choithram waspleading that Ishwar execute another power of attorney to be shown to Ortigas whoapparently learned of the revocation of Choithram's power of attorney. Despite saidnotices, Ortigas nevertheless acceded to the representation of Choithram, as allegedattorney-in-fact of Ishwar, to assign the rights of petitioner Ishwar to Nirmla. Whilethe primary blame should be laid at the doorstep of Choithram, Ortigas is notentirely without fault. It should have required Choithram to secure another powerof attorney from Ishwar. For recklessly believing the pretension of Choithram thathis power of attorney was still good, it must, therefore, share in the latter's liabilityto Ishwar.

6. ID.; TRUST; IMPLIED TRUST; CREATED WHERE THERE WAS FRAUDULENTTRANSFER OF PROPERTY. — The allegations of the amended complaint abovereproduced clearly spelled out that the transfer of the property to Nirmla wasfraudulent and that it should be considered to be held in trust by Nirmla for spousesIshwar. As above-discussed, this allegation is well-taken and the transfer of theproperty to Nirmla should be considered to have created an implied trust by Nirmlaas trustee of the property for the benefit of spouses Ishwar.

7. REMEDIAL LAW; PROVISIONAL REMEDY; PRELIMINARY INJUNCTION;ISSUANCE. — The motion to dissolve the writ of preliminary injunction filed byChoithram, et al. should be denied. Its issuance by this Court is proper andwarranted under the circumstances of the case. Under Section 3(c), Rule 58 of theRules of Court, a writ of preliminary injunction may be granted at any time aftercommencement of the action and before judgment when it is established: "(c) thatthe defendant is doing, threatens, or is about to do, or is procuring or suffering to bedone, some act probably in violation of plaintiff's rights respecting the subject of theaction, and tending to render the judgment ineffectual."

8. ID.; ID.; ID.; PURPOSE. — The purpose of the provisional remedy ofpreliminary injunction is to preserve the status quo of the things subject of thelitigation and to protect the rights of the spouses Ishwar respecting the subject ofthe action during the pendency of the suit, and not to obstruct the administration ofjustice or prejudice the adverse party. In this case for damages, should Choithram,et al. continue to commit acts of disposition of the properties subject of thelitigation, an award of damages to spouses Ishwar would thereby be renderedineffectual and meaningless.

9. ID.; ID.; ATTACHMENT; WARRANTED WHERE THERE IS AN INTENT TODEFRAUD CREDITORS; CASE AT BAR. — Section 1, Rule 57 of the Rules of Courtprovides that at the commencement of an action or at any time thereafter, theplaintiff or any proper party may have the property of the adverse party attached assecurity for the satisfaction of any judgment that may be recovered, in, amongothers, the following cases: "(d) In an action against a party who has been guilty ofa fraud in contracting the debt or incurring the obligation upon which the action isbrought, or in concealing or disposing of the property for the taking, detention orconversion of which the action is brought; (e) In an action against a party who hasremoved or disposed of his property, or is about to do so, with intent to defraud hiscreditors; . . ." Verily, the acts of Choithram, et al. of disposing the properties subjectof the litigation disclose a scheme to defraud spouses Ishwar so they may not beable to recover at all, given a judgment in their favor, thus requiring the issuance ofthe writ of attachment in this instance.

10. COMMERCIAL LAW; CORPORATION LAW; INDUSTRIAL PARTY WHILE GUILTYOF FRAUDULENT SCHEME SHARES EQUALLY WITH CAPITALIST PARTNER; CASE ATBAR. — Nevertheless, under the peculiar circumstances of this case and despite thefact that Choithram, et al., have committed acts which demonstrate their bad faithand scheme to defraud spouses Ishwar and Sonya of their rightful share in theproperties in litigation, the Court cannot ignore the fact that Choithram must havebeen motivated by a strong conviction that as the industrial partner in theacquisition of said assets he has as much claim to said properties as Ishwar, thecapitalist partner in the joint venture. Through the industry and genius ofChoithram, Ishwar's property was developed and improved into what it is now — avaluable asset worth millions of pesos. As of the last estimate in 1985, while thecase was pending before the trial court, the market value of the properties is no lessthan P22,304,000.00. It should be worth much more today. We have a situationwhere two brothers engaged in a business venture. One furnished the capital, the

other contributed his industry and talent. Justice and equity dictate that the twoshare equally the fruit of their joint investment and efforts. Perhaps this Solomonicsolution may pave the way towards their reconciliation. Both would stand to gain.No one would end up the loser. After all, blood is thicker than water.

11. CIVIL LAW; DAMAGES; AWARD OF MORAL & EXEMPLARY DAMAGES IN CASEAT BAR. — However, the Court cannot just close its eyes to the deviousmachinations and schemes that Choithram employed in attempting to dispose of, ifnot dissipate, the properties to deprive spouses Ishwar of any possible means torecover any award the Court may grant in their favor. Since Choithram, et al. actedwith evident bad faith and malice, they should pay moral and exemplary damagesas well as attorney's fees to spouses Ishwar.

D E C I S I O N

GANCAYCO, J p:

This case involves the bitter quarrel of two brothers over two (2) parcels of land andits improvements now worth a fortune. The bone of contention is the apparentlyconflicting factual findings of the trial court and the appellate court, the resolutionof which will materially affect the result of the contest.

The following facts are not disputed.

Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of thefull blood. Ishwar and his spouse Sonya had their main business based in New York.Realizing the difficulty of managing their investments in the Philippines theyexecuted a general power of attorney on January 24, 1966 appointing Navalrai andChoithram as attorneys-in-fact, empowering them to manage and conduct theirbusiness concern in the Philippines. 1

On February 1, 1966 and on May 16, 1966, Choithram, in his capacity as aforesaidattorney-in-fact of Ishwar, entered into two agreements for the purchase of twoparcels of land located in Barrio Ugong, Pasig, Rizal, from Ortigas & Company, Ltd.Partnership (Ortigas for short) with a total area of approximately 10,048 squaremeters. 2 Per agreement, Choithram paid the down payment and installments onthe lot with his personal checks. A building was constructed thereon by Choithramin 1966 and this was occupied and rented by Jethmal Industries and a wardrobeshop called Eppie's Creation. Three other buildings were built thereon by Choithramthrough a loan of P100,000.00 obtained from the Merchants Bank as well as theincome derived from the first building. The buildings were leased out by Choithramas attorney-in-fact of Ishwar. Two of these buildings were later burned. LibLex

Sometime in 1970 Ishwar asked Choithram to account for the income and expensesrelative to these properties during the period 1967 to 1970. Choithram failed and

refused to render such accounting. As a consequence, on February 4, 1971, Ishwarrevoked the general power of attorney. Choithram and Ortigas were duly notified ofsuch revocation on April 1, 1971 and May 24, 1971, respectively. 3 Said notice wasalso registered with the Securities and Exchange Commission on March 29, 1971 4and was published in the April 2, 1971 issue of The Manila Times for the informationof the general public. 5

Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rightsand interests of Ishwar and Sonya in favor of his daughter-in-law, Nirmla Ramnani,on February 19, 1973. Her husband is Moti, son of Choithram. Upon completepayment of the lots, Ortigas executed the corresponding deeds of sale in favor ofNirmla. 6 Transfer Certificates of Title Nos. 403150 and 403152 of the Register ofDeeds of Rizal were issued in her favor.

Thus, on October 6, 1982, Ishwar and Sonya (spouses Ishwar for short) filed acomplaint in the Court of First Instance of Rizal against Choitram and/or spousesNirmla and Moti (Choithram, et al. for brevity) and Ortigas for reconveyance of saidproperties or payment of its value and damages. An amended complaint fordamages was thereafter filed by said spouses.

After the issues were joined and the trial on the merits, a decision was rendered bythe trial court on December 3, 1985 dismissing the complaint and counterclaim. Amotion for reconsideration thereof filed by spouses Ishwar was denied on March 3,1986.

An appeal therefrom was interposed by spouses Ishwar to the Court of Appealswherein in due course a decision was promulgated on March 14, 1988, thedispositive part of which reads as follows:

"WHEREFORE, judgment is hereby rendered reversing and setting aside theappealed decision of the lower court dated December 3, 1985 and the Orderdated March 3, 1986 which denied plaintiffs-appellants' Motion forReconsideration from aforesaid decision. A new decision is hereby renderedsentencing defendants-appellees Choithram, Jethmal Ramnani, Nirmla V.Ramnani, Moti C. Ramnani, and Ortigas and Company Limited Partnership topay, jointly and severally, plaintiffs-appellants the following:

1. Actual or compensatory damages to the extent of the fair marketvalue of the properties in question and all improvements thereon covered byTransfer Certificate of Title No. 403150 and Transfer Certificate of Title No.403152 of the Registry of Deeds of Rizal, prevailing at the time of thesatisfaction of the judgment but in no case shall such damages be less thanthe value of said properties as appraised by Asian Appraisal, Inc. in itsAppraisal Report dated August 1985 (Exhibits T to T-14, inclusive). prcd

2. All rental incomes paid or ought to be paid for the use and occupancyof the properties in question and all improvements thereon consisting ofbuildings, and to be computed as follows:

a) On Building C occupied by Eppie's Creation and Jethmal

Industries from 1967 to 1973, inclusive, based on the 1967 to 1973monthly rentals paid by Eppie's Creation;

b) Also on Building C above, occupied by Jethmal Industriesand Lavine from 1974 to 1978, the rental incomes based on thenrates prevailing as shown under Exhibit 'P'; and from 1979 to 1981,based on then prevailing rates as indicated under Exhibit 'Q';

c) On Building A occupied by Transworld Knitting Mills from1972 to 1978, the rental incomes based upon then prevailing ratesshown under Exhibit 'P', and from 1979 to 1981, based on prevailingrates per Exhibit 'Q';

d) On the two-Bays Buildings occupied by Sigma-Mariwasafrom 1972 to 1978, the rentals based on the Lease Contract, Exhibit'P', and from 1979 to 1980, the rentals based on the Lease Contract,Exhibit 'Q',

and thereafter commencing 1982, to account for and turn over the rentalincomes paid or ought to be paid for the use and occupancy of theproperties and all improvements totalling 10,048 sq. m., based on the rateper square meter prevailing in 1981 as indicated annually cumulative up to1984. Then, commencing 1985 and up to the satisfaction of the judgment,rentals shall be computed at ten percent (10%) annually of the fair marketvalues of the properties as appraised by the Asian Appraisal, Inc. in August1985 (Exhibits T to T-14, inclusive.)

3. Moral damages in the sum of P200,000.00;

4. Exemplary damages in the sum of P100,000.00;

5. Attorney's fees equivalent to 10% of the award herein made;

6. Legal interest on the total amount awarded computed from firstdemand in 1967 and until the full amount is paid and satisfied;.

and

7. The cost of suit." 7

Acting on a motion for reconsideration filed by Choithram, et al. and Ortigas, theappellate court promulgated an amended decision on October 17, 1988 granting themotion for reconsideration of Ortigas by affirming the dismissal of the case by thelower court as against Ortigas but denying the motion for reconsideration ofChoithram, et al. 8

Choithram, et al. thereafter filed a petition for review of said judgment of theappellate court alleging the following grounds: LLpr

"1. The Court of Appeals gravely abused its discretion in making a factualfinding not supported by and contrary to the evidence presented at the TrialCourt.

2. The Court of Appeals acted in excess of jurisdiction in awardingdamages based on the value of the real properties in question where thecause of action of private respondents is recovery of a sum of money.

ARGUMENTS

I

THE COURT OF APPEALS ACTED IN GRAVE ABUSE OF ITS DISCRETION INMAKING A FACTUAL FINDING THAT PRIVATE RESPONDENT ISHWARREMITTED THE AMOUNT OF US$150,000.00 TO PETITIONER CHOITHRAM INTHE ABSENCE OF PROOF OF SUCH REMITTANCE.

II

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION ANDMANIFEST PARTIALITY IN DISREGARDING THE TRIAL COURT'S FINDINGSBASED ON THE DIRECT DOCUMENTARY AND TESTIMONIAL EVIDENCEPRESENTED BY CHOITHRAM IN THE TRIAL COURT ESTABLISHING THAT THEPROPERTIES WERE PURCHASED WITH PERSONAL FUNDS OF PETITIONERCHOITHRAM AND NOT WITH MONEY ALLEGEDLY REMITTED BYRESPONDENT ISHWAR.

III

THE COURT OF APPEALS ACTED IN EXCESS OF JURISDICTION INAWARDING DAMAGES BASED ON THE VALUE OF THE PROPERTIES ANDTHE FRUITS OF THE IMPROVEMENTS THEREON." 9

Similarly, spouses Ishwar filed a petition for review of said amended decision of theappellate court exculpating Ortigas of liability based on the following assigned errors—

"I

THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVEERROR AND HAS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORDWITH LAW AND/OR WITH APPLICABLE DECISIONS OF THIS HONORABLECOURT —

A) IN PROMULGATING THE QUESTIONED AMENDEDDECISION (ANNEX 'A') RELIEVING RESPONDENT ORTIGAS FROMLIABILITY AND DISMISSING PETITIONERS' AMENDED COMPLAINT INCIVIL CASE NO. 534-P, AS AGAINST SAID RESPONDENT ORTIGAS;

B) IN HOLDING IN SAID AMENDED DECISION THAT AT ANYRATE NO ONE EVER TESTIFIED THAT ORTIGAS WAS A SUBSCRIBERTO THE MANILA TIMES PUBLICATION OR THAT ANY OF ITS OFFICERSREAD THE NOTICE AS PUBLISHED IN THE MANILA TIMES, THEREBYERRONEOUSLY CONCLUDING THAT FOR RESPONDENT ORTIGAS TOBE CONSTRUCTIVELY BOUND BY THE PUBLISHED NOTICE OFREVOCATION, ORTIGAS AND/OR ANY OF ITS OFFICERS MUST BE A

SUBSCRIBER AND/OR THAT ANY OF ITS OFFICERS SHOULD READTHE NOTICE AS ACTUALLY PUBLISHED;

C) IN HOLDING IN SAID AMENDED DECISION THATORTIGAS COULD NOT BE HELD LIABLE JOINTLY AND SEVERALLYWITH THE DEFENDANTS-APPELLEES CHOITHRAM, MOTI AND NIRMLARAMNANI, AS ORTIGAS RELIED ON THE WORD OF CHOITHRAM THATALL ALONG HE WAS ACTING FOR AND IN BEHALF OF HIS BROTHERISHWAR WHEN IT TRANSFERRED THE RIGHTS OF THE LATTER TONIRMLA V. RAMNANI; LibLex

D) IN IGNORING THE EVIDENCE DULY PRESENTED ANDADMITTED DURING THE TRIAL THAT ORTIGAS WAS PROPERLYNOTIFIED OF THE NOTICE OF REVOCATION OF THE GENERAL POWEROF ATTORNEY GIVEN TO CHOITHRAM, EVIDENCED BY THEPUBLICATION IN THE MANILA TIMES ISSUE OF APRIL 2, 1971 (EXH. F)WHICH CONSTITUTES NOTICE TO THE WHOLE WORLD; THE RECEIPTOF THE NOTICE OF SUCH REVOCATION WHICH WAS SENT TOORTIGAS ON MAY 22, 1971 BY ATTY. MARIANO P. MARCOS ANDRECEIVED BY ORTIGAS ON MAY 24, 1971 (EXH. G) AND THE FILINGOF THE NOTICE WITH THE SECURITIES AND EXCHANGE COMMISSIONON MARCH 29, 1971 (EXH. H);

E) IN DISCARDING ITS FINDINGS CONTAINED IN ITSDECISION OF 14 MARCH 1988 (ANNEX B) THAT ORTIGAS WAS DULYNOTIFIED OF THE REVOCATION OF THE POWER OF ATTORNEY OFCHOITHRAM, HENCE ORTIGAS ACTED IN BAD FAITH IN EXECUTINGTHE DEED OF SALE TO THE PROPERTIES IN QUESTION IN FAVOR OFNIRMLA V. RAMNANI;

F) IN SUSTAINING RESPONDENT ORTIGAS VACUOUSREHASHED ARGUMENTS IN ITS MOTION FOR RECONSIDERATIONTHAT IT WOULD NOT GAIN ONE CENTAVO MORE FROM CHOITHRAMFOR THE SALE OF SAID LOTS AND THE SUBSEQUENT TRANSFER OFTHE SAME TO THE LATTER'S DAUGHTER-IN-LAW, AND THAT IT WASIN GOOD FAITH WHEN IT TRANSFERRED ISHWAR'S RIGHTS TO THELOTS IN QUESTION.

II

THE RESPONDENT HONORABLE COURT OF APPEALS HAS SO FARDEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIALPROCEEDING WHEN IT HELD IN THE QUESTIONED AMENDED DECISION OF17 NOVEMBER 1988 (ANNEX A) THAT RESPONDENT ORTIGAS & CO., LTD.,IS NOT JOINTLY AND SEVERALLY LIABLE WITH DEFENDANTS-APPELLEESCHOITHRAM, MOTI AND NIRMLA RAMNANI IN SPITE OF ITS ORIGINALDECISION OF 14 MARCH 1988 THAT ORTIGAS WAS DULY NOTIFIED OF THEREVOCATION OF THE POWER OF ATTORNEY OF CHOITHRAM RAMNANI." 10

The center of controversy is the testimony of Ishwar that during the latter part of1965, he sent the amount of US$150,000.00 to Choithram in two bank drafts ofUS$65,000.00 and US$85,000.00 for the purpose of investing the same in realestate in the Philippines. The trial court considered this lone testimony unworthy offaith and credit. On the other hand, the appellate court found that the trial courtmisapprehended the facts in complete disregard of the evidence, documentary andtestimonial. cdphil

Another crucial issue is the claim of Choithram that because he was then a Britishcitizen, as a temporary arrangement, he arranged the purchase of the properties inthe name of Ishwar who was an American citizen and who was then qualified topurchase property in the Philippines under the then Parity Amendment. The trialcourt believed this account but it was debunked by the appellate court.

As to the issue of whether of not spouses Ishwar actually sent US$150,000.00 toChoithram precisely to be used in the real estate business, the trial court made thefollowing disquisition —

"After a careful, considered and conscientious examination of the evidenceadduced in the case at bar, plaintiff Ishwar Jethmal Ramnani's main evidence,which centers on the alleged payment by sending through registered mailfrom New York two (2) US$ drafts of $85,000.00 and $65,000.00 in thelatter part of 1965 (TSN 28 Feb. 1984, p. 10-11). The sending of thesemoneys were before the execution of that General Power of Attorney, whichwas dated in New York, on January 24, 1966. Because of these allegedremittances of US$150,000.00 and the subsequent acquisition of theproperties in question, plaintiffs averred that they constituted a trust infavor of defendant Choithram Jethmal Ramnani. This Court can be in fullagreement if the plaintiffs were only able to prove preponderantly theseremittances. The entire record of this case is bereft of even a shred of proofto that effect. It is completely barren. His uncorroborated testimony that heremitted these amounts in the 'later part of 1965' does not engenderenough faith and credence. Inadequacy of details of such remittance on thetwo (2) US dollar drafts in such big amounts is completely not positive,credible, probable and entirely not in accord with human experience. This isa classic situation, plaintiffs not exhibiting any commercial document or anydocument and/or paper as regard to these alleged remittances. PlaintiffIshwar Ramnani is not an ordinary businessman in the strict sense of theword. Remember his main business is based in New York, and he shouldknow better how to send these alleged remittances. Worst, plaintiffs did notpresent even a scum of proof, that defendant Choithram Ramnani receivedthe alleged two US dollar drafts. Significantly, he does not know even thebank where these two (2) US dollar drafts were purchased. Indeed, plaintiffIshwar Ramnani's lone testimony is unworthy of faith and credit and,therefore, deserves scant consideration, and since the plaintiffs' theory isbuilt or based on such testimony, their cause of action collapses or falls withit. LLpr

Further, the rate of exchange that time in 1966 was P4.00 to $1.00. The allegedtwo US dollar drafts amounted to $150,000.00 or about P600,000.00. Assuming the

cash price of the two (2) lots was only P530,000.00 (ALTHOUGH he said: 'Based onmy knowledge I have no evidence,' when asked if he even knows the cash price ofthe two lots). If he were really the true and bonafide investor and purchaser forprofit as he asserted, he could have paid the price in full in cash directly andobtained the title in his name and not thru 'Contracts To Sell' in installments payinginterest and thru an attorney-in-fact (TSN of May 2, 1984, pp. 10-11) and, again,plaintiff Ishwar Ramnani told this Court that he does not know whether or not hislate father-in-law borrowed the two US dollar drafts from the Swiss Bank orwhether or not his late father-in-law had any debit memo from the Swiss Bank(TSN of May 2, 1984, pp. 9-10). 11

On the other hand, the appellate court, in giving credence to the version of Ishwar,had this to say —

"While it is true, that generally the findings of fact of the trial court arebinding upon the appellate courts, said rule admits of exceptions such aswhen (1) the conclusion is a finding grounded entirely on speculations,surmises and conjectures; (2) when the inferences made is manifestlymistaken, absurd and impossible; (3) when there is grave abuse ofdiscretion; (4) when the judgment is based on a misapprehension of factsand when the court, in making its findings, went beyond the issues of thecase and the same are contrary to the admissions of both appellant andappellee (Ramos vs. Court of Appeals, 63 SCRA 33; Philippine American LifeAssurance Co. vs. Santamaria, 31 SCRA 798; Aldaba vs. Court of Appeals,24 SCRA 189).

The evidence on record shows that the trial court acted under amisapprehension of facts and the inferences made on the evidence palpablya mistake.

The trial court's observation that 'the entire records of the case is bereft ofeven a shred of proof' that plaintiffs-appellants have remitted to defendant-appellee Choithram Ramnani the amount of US$150,000 00 for investmentin real estate in the Philippines, is not borne by the evidence on record andshows the trial court's misapprehension of the facts if not a completedisregard of the evidence, both documentary and testimonial.

Plaintiff-appellant Ishwar Jethmal Ramnani testifying in his own behalf,declared that during the latter part of 1965, he sent the amount ofUS$150,000 .00 to his brother Choithram in two bank drafts ofUS$65,000.00 and US$85,000.00 for the purpose of investing the same inreal estate in the Philippines. His testimony is as follows:

'ATTY. MARAPAO:

Mr. Witness, you said that your attorney-in-fact paid in your behalf. Canyou tell this Honorable Court where your attorney-in-fact got themoney to pay this property?

'ATTY. CRUZ:

Wait. It is now clear it becomes incompetent or hearsay.

'COURT:

Witness can answer.

'A I paid through my attorney-in-fact. I am the one who gave him themoney.

'ATTY. MARAPAO:

'Q You gave him the money?

'A That's right.

'Q How much money did you give him?

'A US$150,000.00.

'Q How was it given then?

'A Through Bank drafts. US$65,000.00 and US$85,000.00 bank drafts.The total amount which is $150,000.00 (TSN, 28 February 1984, p.10; emphasis supplied.)

xxx xxx xxx

'ATTY. CRUZ:

'Q The two bank drafts which you sent I assume you bought that fromsome banks in New York?

'A No, sir.

'Q But there is no question those two bank drafts were for the purposeof paying down payment and installment of the two parcels of land?

'A Down payment, installment and to put up the building.

'Q I thought you said that the buildings were constructed . . . subject toour continuing objection from rentals of first building.

'ATTY. MARAPAO:

Your Honor, that is misleading.

'COURT;

Witness (may) answer.

'A Yes, the first building was immediately put up after the purchase ofthe two parcels of land — that was in 1966 and the funds were usedfor the construction of the building from the US$150,000.00 (TSN, 7

March 1984, page 14, emphasis supplied.)

xxx xxx xxx

'Q These two bank drafts which you mentioned and the use for it yousent them by registered mail, did you send them from New York?

'A That is right.

'Q And the two bank drafts which were put in the registered mail, theregistered mail was addressed to whom?

'A Choithram Ramnani.' (TSN, 7 March 1984, pp. 14-15).

On cross-examination, the witness reiterated the remittance of the money to hisbrother Choithram, which was sent to him by his father-in-law, Rochiram L.Mulchaudoni from Switzerland, a man of immense wealth, which even defendants-appellees' witness Navalrai Ramnani admits to be so (tsn., p. 16, S. Oct. 13, 1985).Thus, on cross-examination, Ishwar testified as follows:

'Q How did you receive these two bank drafts from the bank the nameof which you cannot remember?

'A I got it from my father-in-law.

'Q From where did your father-in-law sent these two bank drafts?

'A From Switzerland.

'Q He was in Switzerland.

'A Probably, they sent out these two drafts from Switzerland.' (TSN, 7March 1984, pp. 16-17; emphasis supplied.)

This positive and affirmative testimony of plaintiff-appellant that he sent thetwo (2) bank drafts totalling US$150,000.00 to his brother, is proof of saidremittance. Such positive testimony has greater probative force thandefendant-appellee's denial of receipt of said bank drafts, for a witness whotestifies affirmatively that something did happen should be believed for it isunlikely that a witness will remember what never happened (Underhill's Cr.Guidance, 5th Ed., Vol. 1, pp. 10-11).

That is not all. Shortly thereafter, plaintiff-appellant Ishwar Ramnani executeda General Power of Attorney (Exhibit 'A') dated January 24, 1966 appointinghis brothers, defendants-appellees Navalrai and Choithram as attorney-in-fact empowering the latter to conduct and manage plaintiffs-appellants'business affairs in the Philippines and specifically —

'No. 14. To acquire, purchase for us, real estates andimprovements for the purpose of real estate business anywhere in the

Philippines and to develop, subdivide, improve and to resell to buyingpublic (individual, firm or corporation); to enter in any contract of salein our behalf and to enter mortgages between the vendees and theherein grantors that may be needed to finance the real estatebusiness being undertaken.'

Pursuant thereto, on February 1, 1966 and May 16, 1966, ChoithramJethmal Ramnani entered into Agreements (Exhibits 'B' and 'C') with the otherdefendant. Ortigas and Company, Ltd., for the purchase of two (2) parcelsof land situated at Barrio Ugong, Pasig, Rizal, with said defendant-appelleesigning the Agreements in his capacity as Attorney-in-fact of Ishwar JethmalRamnani.

Again, on January 5, 1972, almost seven (7) years after Ishwar sent theUS$150,000.00 in 1965, Choithram Ramnani, as attorney-in-fact of Ishwarentered into a Contract of Lease with Sigma-Mariwasa (Exhibit 'P') therebyre-affirming the ownership of Ishwar over the disputed property and thetrust relationship between the latter as principal and Choithram as attorney-in-fact of Ishwar.

All of these facts indicate that if plaintiff-appellant Ishwar had not earlier sentthe U5$150,000.00 to his brother, Choithram, there would be no purposefor him to execute a power of attorney appointing his brothers as hisattorney-in-fact in buying real estate in the Philippines. Cdpr

As against Choithram's denial that he did not receive the US$150,000.00remitted by Ishwar and that the Power of Attorney, as well as theAgreements entered into with Ortigas & Co., were only temporaryarrangements, Ishwar's testimony that he did send the bank drafts toChoithram and was received by the latter, is the more credible version sinceit is natural, reasonable and probable. It is in accord with the commonexperience, knowledge and observation of ordinary men (Gardner vs.Wentors, 18 Iowa 533). And in determining where the superior weight of theevidence on the issues involved lies, the court may consider the probabilityor improbability of the testimony of the witness (Sec. 1, Rule 133, Rules ofCourt).

Contrary, therefore, to the trial court's sweeping observation that 'the entirerecords of the case is bereft of even a shred of proof' that Choithramreceived the alleged bank drafts amounting to US$150,000.00, we have notonly testimonial evidence but also documentary and circumstantial evidenceproving said remittance of the money and the fiduciary relationship betweenthe former and Ishwar." 12

The Court agrees. The environmental circumstances of this case buttress the claimof Ishwar that he did entrust the amount of US$150,000.00 to his brother,Choithram, which the latter invested in the real property business subject of thislitigation in his capacity as attorney-in-fact of Ishwar.

True it is that there is no receipt whatever in the possession of Ishwar to evidencethe same, but it is not unusual among brothers and close family members to entrust

money and valuables to each other without any formalities or receipt due to thespecial relationship of trust between them.

And another proof thereof is the fact that Ishwar, out of frustration when Choithramfailed to account for the realty business despite his demands, revoked the generalpower of attorney he extended to Choithram and Navalrai. Thereafter, Choithramwrote a letter to Ishwar pleading that the power of attorney be renewed or anotherauthority to the same effect be extended, which reads as follows:

"June 25, 1971

MR. ISWAR JETHMALNEW YORK

(1) Send power of Atty. immediately, because the case has beenpostponed for two weeks. The same way as it has been send before infavour of both names. Send it immediately otherwise everything will be lostunnecessarily, and then it will take us in litigation. Now that we have goneahead with a case and would like to end it immediately otherwise squatterswill take the entire land. Therefore, send it immediately.

(2) Ortigas also has sued us because we are holding the installments,because they have refused to give a rebate of P5.00 per meter which theyhave to give us as per contract. They have filed the law suit that since wehave not paid the installment they should get back the land. The hearing ofthis case is in the month of July. Therefore, please send the powerimmediately. In one case DADA (Elder Brother) will represent and in anotherone, I shall.

(3) In case if you do not want to give power then make one letter infavor of Dada and the other one in my favor showing that in any litigation wecan represent you and your wife, and whatever the court decide it will beacceptable by me. You can ask any lawyer, he will be able to prepare theseletters. After that you can have these letters ratify before P.I. Consulate. Itshould be dated April 15, 1971. LibLex

(4) Try to send the power because it will be more useful. Make it in anymanner whatever way you have confident in it. But please send itimmediately.

You have cancelled the power. Therefore, you have lost your reputationeverywhere. What can I further write you about it. I have told everybodythat due to certain reasons I have written you to do this, that is why youhave done this. This way your reputation have been kept intact. Otherwise ifI want to do something about it, I can show you that inspite of the poweryou have cancelled you can not do anything. You can keep this letterbecause my conscience is clear. I do not have anything in my mind.

I should not be writing you this, but because my conscience is clear do youknow that if I had predated papers what could you have done? Or do youknow that I have many paper signed by you and if I had done anything or do

then what can you do about it? It is not necessary to write further aboutthis. It does not matter if you have cancelled the power At that time if I hadpredated and done something about it what could you have done? You donot know me. I am not after money. I can earn money anytime. It has beenten months since I have not received a single penny for expenses fromDada (elder brother). Why there are no expenses? We can not draw a singlepenny from knitting (factory). Well I am not going to write you further, northere is any need for it. This much I am writing you because of the way youhave conducted yourself. But remember, whenever I have the money I willnot keep it myself. Right now I have not got anything at all.

I am not going to write any further.

Keep your business clean with Naru. Otherwise he will discontinue becausehe likes to keep his business very clean." 13

The said letter was in Sindhi language. It was translated to English by the FirstSecretary of the Embassy of Pakistan, which translation was verified correct by theChairman, Department of Sindhi, University of Karachi. 14

From the foregoing letter what could be gleaned is that —

1. Choithram asked for the issuance of another power of attorney in their favorso they can continue to represent Ishwar as Ortigas has sued them for unpaidinstallments. It also appears therefrom that Ortigas learned of the revocation of thepower of attorney so the request to issue another.

2. Choithram reassured Ishwar to have confidence in him as he was not aftermoney, and that he was not interested in Ishwar's money.

3. To demonstrate that he can be relied upon, he said that he could have ante-dated the sales agreement of the Ortigas lots before the issuance of the powers ofattorney and acquired the same in his name, if he wanted to, but he did not do so.

4. He said he had not received a single penny for expenses from Dada (theirelder brother Navalrai). Thus, confirming that if he was not given money by Ishwarto buy the Ortigas lots, he could not have consummated the sale.

5. It is important to note that in said letter Choithram never claimed ownershipof the property in question. He affirmed the fact that he bought the same as mereagent and in behalf of Ishwar. Neither did he mention the alleged temporaryarrangement whereby Ishwar, being an American citizen, shall appear to be thebuyer of the said property, but that after Choithram acquires Philippine citizenship,its ownership shall be transferred to Choithram. LLjur

This brings us to this temporary arrangement theory of Choithram.

The appellate court disposed of this matter in this wise —

"Choithram's claim that he purchased the two parcels of land for himself in1966 but placed it in the name of his younger brother, Ishwar, who is an

American citizen, as a 'temporary arrangement,' because as a British subjecthe is disqualified under the 1935 Constitution to acquire real property in thePhilippines, which is not so with respect to American citizens in view of theOrdinance Appended to the Constitution granting them parity rights, there isnothing in the records showing that Ishwar ever agreed to such atemporary arrangement.

During the entire period from 1965, when the US$150,000.00 wastransmitted to Choithram, and until Ishwar filed a complaint against him in1982, or over 16 years, Choithram never mentioned of a temporaryarrangement nor can he present any memorandum or writing evidencingsuch temporary arrangement, prompting plaintiff-appellant to observe:

'The properties in question which are located in a primeindustrial site in Ugong, Pasig, Metro Manila have a present fair marketvalue of no less than P22,364,000.00 (Exhibits T to T-14, inclusive),and yet for such valuable pieces of property, Choithram who nowbelatedly claims that he purchased the same for himself did notdocument in writing or in a memorandum the alleged temporaryarrangement with Ishwar' (pp. 4-41, Appellant's Brief).

Such verbal allegation of a temporary arrangement is simply improbable andinconsistent. It has repeatedly been held that important contracts madewithout evidence are highly improbable.

The improbability of such temporary arrangement is brought to fore whenwe consider that Choithram has a son (Haresh Jethmal Ramnani) who is anAmerican citizen under whose name the properties in question could beregistered, both during the time the contracts to sell were executed and atthe time absolute title over the same was to be delivered. At the time theAgreements were entered into with defendant Ortigas & Co. in 1966,Haresh, was already 18 years old and consequently, Choithram could haveexecuted the deeds in trust for his minor son. But, he did not do this. Three(3) years, thereafter, or in 1968 after Haresh had attained the age of 21,Choithram should have terminated the temporary arrangement with Ishwar,which according to him would be effective only pending the acquisition ofcitizenship papers. Again, he did not do anything.

'Evidence to be believed, said Vice Chancellor Van Fleet of NewJersey, must not only proceed from the mouth of a credible witness,but it must be credible in itself — such as the common experience andobservation of mankind can approve as probable under thecircumstances. We have no test of the truth of human testimony,except its conformity to our knowledge, observation and experience.Whatever is repugnant to these belongs to the miraculous and isoutside of judicial cognizance.' (Daggers vs. Van Dyek, 37 M.J. Eq.130, 132). prcd

Another factor that can be counted against the temporary arrangement

excuse is that upon the revocation on February 4, 1971 of the Power ofAttorney dated January 24, 1966 in favor of Navalrai and Choithram byIshwar, Choithram wrote (tsn, p. 21, S. July 19, 1985) a letter dated June 25,1971 (Exhibits R, R-1, R-2 and R-3) imploring Ishwar to execute a newpower of attorney in their favor. That if he did not want to give power, thenIshwar could make a letter in favor of Dada and another in his favor so thatin any litigation involving the properties in question, both of them couldrepresent Ishwar and his wife. Choithram tried to convince Ishwar to issuethe power of attorney in whatever manner he may want. In said letter nomention was made at all of any temporary arrangement.

On the contrary, said letter recognize(s) the existence of principal andattorney-in-fact relationship between Ishwar and himself Choithram wrote: '.. . do you know that if I had predated papers what could you have done? Ordo you know that I have many papers signed by you and if I had doneanything or do then what can you do about it?' Choithram was saying thathe could have repudiated the trust and ran away with the properties ofIshwar by predating documents and Ishwar would be entirely helpless. Hewas bitter as a result of Ishwar's revocation of the power of attorney but nomention was made of any temporary arrangement or a claim of ownershipover the properties in question nor was he able to present anymemorandum or document to prove the existence of such temporaryarrangement.

Choithram is also estopped in pais or by deed from claiming an interest overthe properties in question adverse to that of Ishwar. Section 3(a) of Rule131 of the Rules of Court states that whenever 'a party has, by his owndeclaration, act, or omission intentionally and deliberately led another tobelieve a particular thing true and act upon such belief, he cannot in anylitigation arising out of such declaration, act or omission be permitted tofalsify it.' While estoppel by deed is a bar which precludes a party to a deedand his privies from asserting as against the other and his privies any rightof title in derogation of the deed, or from denying the truth of any materialfact asserted in it (31 C.J.S. 195;19 Am. Jur. 603).

Thus, defendants-appellees are not permitted to repudiate their admissionsand representations or to assert any right or title in derogation of the deedsor from denying the truth of any material fact asserted in the (1) power ofattorney dated January 24, 1966 (Exhibit A); (2) the Agreements of February1, 1966 and May 16, 1966 (Exhibits B and C); and (3) the Contract of Leasedated January 5, 1972 (Exhibit P).

'. . . The doctrine of estoppel is based upon the grounds ofpublic policy, fair dealing, good faith and justice, and its purpose is toforbid one to speak against his own act, representations, orcommitments to the injury of one to whom they were directed andwho reasonably relied thereon. The doctrine of estoppel springs fromequitable principles and the equities in the case. It is designed to aidthe law in the administration of justice where without its aid injusticemight result. It has been applied by this court wherever and wheneverspecial circumstances of a case so demands' (Philippine National Bank

vs. Court of Appeals, 94 SCRA 357, 368 [1979]).

It was only after the services of counsel has been obtained that Choithramalleged for the first time in his Answer that the General Power of Attorney(Annex A) with the Contracts to Sell (Annexes B and C) were made only forthe sole purpose of assuring defendants' acquisition and ownership of thelots described thereon in due time under the law; that said instruments donot reflect the true intention of the parties' (par. 2, Answer dated May 30,1983), seventeen (17) long years from the time he received the moneytransmitted to him by his brother, Ishwar.

Moreover, Choithram's 'temporary arrangement,' by which he claimedpurchasing the two (2) parcels in question in 1966 and placing them in thename of Ishwar who is an American citizen, to circumvent thedisqualification provision of aliens acquiring real properties in the Philippinesunder the 1935 Philippine Constitution, as Choithram was then a Britishsubject, show a palpable disregard of the law of the land and to sustain thesupposed 'temporary arrangement' with Ishwar would be sanctioning theperpetration of an illegal act and culpable violation of the Constitution.

Defendants-appellees likewise violated the Anti-Dummy Law (CommonwealthAct 108, as amended), which provides in Section 1 thereof, that:

'In all cases in which any constitutional or legal provisionrequires Philippine or any other specific citizenship as a requisite forthe exercise or enjoyment of a right, franchise or privilege, . . . anyalien or foreigner profiting thereby, shall be punished . . . byimprisonment . . . and of a fine of not less than the value of the right,franchise or privileges, which is enjoyed or acquired in violation of theprovisions hereof . . .'

Having come to court with unclean hands, Choithram must not be permittedto foist his 'temporary arrangement' scheme as a defense before this court.Being in delicto, he does not have any right whatsoever from being shieldedfrom his own wrong doing, which is not so with respect to Ishwar, who wasnot a party to such an arrangement.

The falsity of Choithram's defense is further aggravated by the materialinconsistencies and contradictions in his testimony. While on January 23,1985 he testified that he purchased the land in question on his own behalf(tsn, p. 4, S. Jan. 23, 1985), in the July 18, 1985 hearing, forgetting probablywhat he stated before, Choithram testified that he was only an attorney-in-fact of Ishwar (tsn, p. 5, S. July 18, 1985). Also in the hearing of January 23,1985, Choithram declared that nobody rented the building that wasconstructed on the parcels of land in question (tsn, pp. 5 and 6), only toadmit in the hearing of October 30, 1985, that he was in fact renting thebuilding for P12,000.00 per annum (tsn, p. 3). Again, in the hearing of July19, 1985, Choithram testified that he had no knowledge of the revocation ofthe Power of Attorney (tsn, pp. 20-21), only to backtrack when confrontedwith the letter of June 25, 1971 (Exhibits R to R-3), which he admitted to bein 'his own writing,' indicating knowledge of the revocation of the Power of

Attorney. Cdpr

These inconsistencies are not minor but go into the entire credibility of thetestimony of Choithram and the rule is that contradictions on a very crucialpoint by a witness, renders his testimony incredible (People vs. Rafallo, 80Phil. 22). Not only this, the doctrine of falsus in uno, falsus in omnibus is fullyapplicable as far as the testimony of Choithram is concerned. The cardinalrule, which has served in all ages, and has been applied to all conditions ofmen, is that a witness willfully falsifying the truth in one particular, whenupon oath, ought never to be believed upon the strength of his owntestimony, whatever he may assert (U.S. vs. Osgood, 27 Feb. Case No.15971-a, p. 364); Gonzales vs. Mauricio, 52 Phil. 728), for what ground ofjudicial relief can there be left when the party has shown such grossinsensibility to the difference between right and wrong, between truth andfalsehood? (The Santisima Trinidad, 7 Wheat, 283, 5 U.S. [L. ed.] 454).

True, that Choithram's testimony finds corroboration from the testimony ofhis brother, Navalrai, but the same would not be of much help to Choithram.Not only is Navalrai an interested and biased witness, having admitted hisclose relationship with Choithram and that whenever he or Choithram hadproblems, they ran to each other (tsn, pp. 17-18, S. Sept. 20, 1985),Navalrai has a pecuniary interest in the success of Choithram in the case inquestion. Both he and Choithram are business partners in Jethmal and Sonsand/or Jethmal Industries, wherein he owns 60% of the company andChoithram, 40% (p. 62, Appellant's Brief). Since the acquisition of theproperties in question in 1966, Navalrai was occupying 1,200 square metersthereof as a factory site plus the fact that his son (Navalrai's) was occupyingthe apartment on top of the factory with his family rent free except theamount of P1,000.00 a month to pay for taxes on said properties (tsn, p.17, S. Oct. 3, 1985).

Inherent contradictions also marked Navalrai's testimony. While the latterwas very meticulous in keeping a receipt for the P10,000.00 that he paidIshwar as settlement in Jethmal Industries, yet in the alleged payment ofP100,000.00 to Ishwar, no receipt or voucher was ever issued by him (tsn,p. 17, S. Oct. 3, 1983)." 15

We concur.

The foregoing findings of facts of the Court of Appeals which are supported by theevidence is conclusive on this Court. The Court finds that Ishwar entrustedUS$150,000.00 to Choithram in 1965 for investment in the realty business. Soonthereafter, a general power of attorney was executed by Ishwar in favor of bothNavalrai and Choithram. If it is true that the purpose only is to enable Choithram topurchase realty temporarily in the name of Ishwar, why the inclusion of their elderbrother Navalrai as an attorney-in-fact?

Then, acting as attorney-in-fact of Ishwar, Choithram purchased two parcels of landlocated in Barrio Ugong, Pasig, Rizal, from Ortigas in 1966. With the balance of themoney of Ishwar, Choithram erected a building on said lot. Subsequently, with a

loan obtained from a bank and the income of the said property, Choithramconstructed three other buildings thereon. He managed the business and collectedthe rentals. Due to their relationship of confidence it was only in 1970 when Ishwardemanded for an accounting from Choithram. And even as Ishwar revoked thegeneral power of attorney on February 4, 1971, of which Choithram was dulynotified, Choithram wrote to Ishwar on June 25, 1971 requesting that he execute anew power of attorney in their favor. 16 When Ishwar did not respond thereto,Choithram nevertheless proceeded as such attorney-in-fact to assign all the rightsand interest of Ishwar to his daughter-in-law Nirmla in 1973 without the knowledgeand consent of Ishwar. Ortigas in turn executed the corresponding deeds of sale infavor of Nirmla after full payment of the purchase price of the lots.

In the prefatory statement of their petition, Choithram pictured Ishwar to be somotivated by greed and ungratefulness, who squandered the family business inNew York, who had to turn to his wife for support, accustomed to living inostentation and who resorted to blackmail in filing several criminal and civil suitsagainst them. These statements find no support and should be stricken from therecords. Indeed, they are irrelevant to the proceeding.

Moreover, assuming Ishwar is of such a low character as Choithram proposes tomake this Court to believe, why is it that of all persons, under his temporaryarrangement theory, Choithram opted to entrust the purchase of valuable realestate and built four buildings thereon all in the name of Ishwar? Is it not anunconscious emergence of the truth that this otherwise wayward brother of theirswas on the contrary able to raise enough capital through the generosity of hisfather-in-law for the purchase of the very properties in question? As the appellatecourt aptly observed if truly this temporary arrangement story is the onlymotivation, why Ishwar of all people? Why not the own son of Choithram, Haresh,who is also an American citizen and who was already 18 years old at the time ofpurchase in 1966? The Court agrees with the observation that this theory is anafterthought which surfaced only when Choithram, Nirmla and Moti filed theiranswer. LLpr

When Ishwar asked for an accounting in 1970 and revoked the general power ofattorney in 1971, Choithram had a total change of heart. He decided to claim theproperty as his. He caused the transfer of the rights and interest of Ishwar toNirmla. On his representation, Ortigas executed the deeds of sale of the propertiesin favor of Nirmla. Choithram obviously surmised Ishwar cannot stake a valid claimover the property by so doing.

Clearly, this transfer to Nirmla is fictitious and, as admitted by Choithram, wasintended only to place the property in her name until Choithram acquires Philippinecitizenship. 17 What appears certain is that it appears to be a scheme of Choithramto place the property beyond the reach of Ishwar should he successfully claim thesame. Thus, it must be struck down.

Worse still, on September 27, 1990 spouses Ishwar filed an urgent motion for the

issuance of a writ of preliminary attachment and to require Choithram, et al. tosubmit certain documents, inviting the attention of this Court to the following:

a) Donation by Choithram of his 2,500 shares of stock in General GarmentsCorporation in favor of his children on December 29, 1989; 18

b) Sale on August 2, 1990 by Choithram of his 100 shares in Biflex (Phils.), Inc.,in favor of his children; 19 and

c) Mortgage on June 20, 1989 by Nirmla through her attorney-in-fact,Choithram, of the properties subject of this litigation, for the amount of $3 Million infavor of Overseas Holding, Co. Ltd., (Overseas for brevity), a corporation whichappears to be organized and existing under and by virtue of the laws of CaymanIslands, with a capital of only $100.00 divided into 100 shares of $1.00 each, andwith address at P.O. Box 1790, Grand Cayman, Cayman Islands. 20

An opposition thereto was filed by Choithram, et al. but no documents wereproduced. A manifestation and reply to the opposition was filed by spouses Ishwar.

All these acts of Choithram, et al. appear to be fraudulent attempts to remove theseproperties to the detriment of spouses Ishwar should the latter prevail in thislitigation.

On December 10, 1990 the court issued a resolution that substantially reads asfollows:

"Considering the allegations of petitioners Ishwar Jethmal Ramnani andSonya Ramnani that respondents Choithram Jethmal Ramnani, NirmlaRamnani and Moti G. Ramnani have fraudulently executed a simulatedmortgage of the properties subject of this litigation dated June 20, 1989, infavor of Overseas Holding Co., Ltd. which appears to be a corporationorganized in Cayman Islands, for the amount of $3,000,000.00, which ismuch more than the value of the properties in litigation; that said allegedmortgagee appears to be a "shell" corporation with a capital of only $100.00;and that this alleged transaction appears to be intended to defraudpetitioners Ishwar and Sonya Jethmal Ramnani of any favorable judgmentthat this Court may render in this case;

Wherefore the Court Resolved to issue a writ of preliminary injunctionenjoining and prohibiting said respondents Choithram Jethmal Ramnani,Nirmla V. Ramnani, Moti G. Ramnani and the Overseas Holding Co., Ltd. fromencumbering, selling or otherwise disposing of the properties andimprovements subject of this litigation until further orders of the Court.Petitioners Ishwar and Sonya Jethmal Ramnani are hereby required to post abond of P100,000.00 to answer for any damages said respondents maysuffer by way of this injunction if the Court finally decides the said petitionersare not entitled thereto.

The Overseas Holding Co., Ltd. with address at P.O. Box 1790 GrandCayman, Cayman Islands, is hereby IMPLEADED as a respondent in these

cases, and is hereby required to SUBMIT its comment on the Urgent Motionfor the Issuance of a Writ of Preliminary Attachment and Motion forProduction of Documents, the Manifestation and the Reply to the Oppositionfiled by said petitioners, within Sixty (60) days after service by publication onit in accordance with the provisions of Section 17, Rule 14 of the Rules ofCourt, at the expense of petitioners Ishwar and Sonya Jethmal Ramnani.

Let copies of this resolution be served on the Register of Deeds of Pasig,Rizal, and the Provincial Assessor of Pasig, Rizal, both in Metro Manila, for itsannotation on the Transfer Certificates of Titles Nos. 403150 and 403152registered in the name of respondent Nirmla V. Ramnani, and on the taxdeclarations of the said properties and its improvements subject of thislitigation." 21

The required injunction bond in the amount of P100,000.00 was filed by thespouses Ishwar which was approved by the Court. The above resolution of the Courtwas published in the Manila Bulletin issue of December 17, 1990 at the expense ofsaid spouses. 22 On December 19, 1990 the said resolution and petition for reviewwith annexes in G.R. Nos. 85494 and 85496 were transmitted to respondentOverseas, Grand Cayman Islands at its address c/o Cayman Overseas Trust Co. Ltd.,through the United-Parcel Services Bill of Lading, 23 and it was actually delivered tosaid company on January 23, 1991. 24

On January 22, 1991, Choithram, et al., filed a motion to dissolve the writ ofpreliminary injunction alleging that there is no basis therefor as in the amendedcomplaint what is sought is actual damages and not a reconveyance of the property,that there is no reason for its issuance, and that acts already executed cannot beenjoined. They also offered to file a counterbond to dissolve the writ. LexLib

A comment/opposition thereto was filed by spouses Ishwar that there is basis for theinjunction as the alleged mortgage of the property is simulated and the otherdonations of the shares of Choithram to his children are fraudulent schemes tonegate any judgment the Court may render for petitioners.

No comment or answer was filed by Overseas despite due notice, thus it is and mustbe considered to be in default and to have lost the right to contest therepresentations of spouses Ishwar to declare the aforesaid alleged mortgage nulland void.

This purported mortgage of the subject properties in litigation appears to befraudulent and simulated. The stated amount of $3 Million for which it wasmortgaged is much more than the value of the mortgaged properties and itsimprovements. The alleged mortgagee-company (Overseas) was organized only onJune 26, 1989 but the mortgage was executed much earlier, on June 20, 1989, thatis six (6) days before Overseas was organized. Overseas is a "shelf" company worthonly $100.00. 25 In the manifestation of spouses Ishwar dated April 1, 1991, theCourt was informed that this matter was brought to the attention of the CentralBank (CB) for investigation, and that in a letter of March 20, 1991, the CB informedcounsel for spouses Ishwar that said alleged foreign loan of Choithram, et al. from

Overseas has not been previously approved/registered with the CB. 26

Obviously, this is another ploy of Choithram, et al. to place these properties beyondthe reach of spouses Ishwar should they obtain a favorable judgment in this case.The Court finds and so declares that this alleged mortgage should be as it is herebydeclared null and void.

All these contemporaneous and subsequent acts of Choithram, et al., betray theweakness of their cause so they had to take all steps, even as the case was alreadypending in Court, to render ineffective any judgment that may be rendered againstthem.

The problem is compounded in that respondent Ortigas is caught in the web of thisbitter fight. It had all the time been dealing with Choithram as attorney-in-fact ofIshwar. However, evidence had been adduced that notice in writing had been servednot only on Choithram, but also on Ortigas, of the revocation of Choithram's powerof attorney by Ishwar's lawyer, on May 24, 1971. 27 A publication of said notice wasmade in the April 2, 1971 issue of The Manila Times for the information of thegeneral public. 28 Such notice of revocation in a newspaper of general circulation issufficient warning to third persons including Ortigas. 29 A notice of revocation wasalso registered with the Securities and Exchange Commission on March 29, 1971. 30

Indeed in the letter of Choithram to Ishwar of June 25, 1971, Choithram waspleading that Ishwar execute another power of attorney to be shown to Ortigas whoapparently learned of the revocation of Choithram's power of attorney. 31 Despitesaid notices, Ortigas nevertheless acceded to the representation of Choithram, asalleged attorney-in-fact of Ishwar, to assign the rights of petitioner Ishwar toNirmla. While the primary blame should be laid at the doorstep of Choithram,Ortigas is not entirely without fault. It should have required Choithram to secureanother power of attorney from Ishwar. For recklessly believing the pretension ofChoithram that his power of attorney was still good, it must, therefore, share in thelatter's liability to Ishwar.

In the original complaint, the spouses Ishwar asked for a reconveyance of theproperties and or payment of its present value and damages. 32 In the amendedcomplaint they asked, among others, for actual damages of not less than thepresent value of the real properties in litigation, moral and exemplary damages,attorneys fees, costs of the suit and further prayed for "such other reliefs as may bedeemed just and equitable in the premises." 33 The amended complaint contain thefollowing positive allegations: llcd

"7. Defendant Choithram Ramnani, in evident bad faith and despite duenotice of the revocation of the General Power of Attorney, Annex "D" hereof,caused the transfer of the rights over the said parcels of land to hisdaughter-in-law, defendant Nirmla Ramnani in connivance with defendantOrtigas & Co., the latter having agreed to the said transfer despite receivinga letter from plaintiffs' lawyer informing them of the said revocation; copy of

the letter is hereto attached and made an integral part hereof as Annex "H";

8. Defendant Nirmla Ramnani having acquired the aforesaid property byfraud is, by force of law, considered a trustee of an implied trust for thebenefit of plaintiff and is obliged to return the same to the latter;

9. Several efforts were made to settle the matter within the family butdefendants (Choithram Ramnani, Nirmla Ramnani, and Moti Ramnani)refused and up to now fail and still refuse to cooperate and respond to thesame; thus, the present case;

10. In addition to having been deprived of their rights over theproperties (described in par. 3 hereof, plaintiffs, by reason of defendants'fraudulent act, suffered actual damages by way of lost rental on theproperty which defendants (Choithram Ramnani, Nirmla Ramnani, and MotiRamnani) have collected for themselves;" 34

In said amended complaint, spouses Ishwar, among others, pray for payment ofactual damages in an amount no less than the value of the properties in litigationinstead of a reconveyance as sought in the original complaint. Apparently theyopted not to insist on a reconveyance as they are American citizens as alleged in theamended complaint.

The allegations of the amended complaint above reproduced clearly spelled out thatthe transfer of the property to Nirmla was fraudulent and that it should beconsidered to be held in trust by Nirmla for spouses Ishwar. As above-discussed, thisallegation is well-taken and the transfer of the property to Nirmla should beconsidered to have created an implied trust by Nirmla as trustee of the property forthe benefit of spouses Ishwar." 35

The motion to dissolve the writ of preliminary injunction filed by Choithram, et al.should be denied. Its issuance by this Court is proper and warranted under thecircumstances of the case. Under Section 3(c), Rule 58 of the Rules of Court, a writof preliminary injunction may be granted at any time after commencement of theaction and before judgment when it is established:

"(c) that the defendant is doing, threatens, or is about to do, or isprocuring or suffering to be done, some act probably in violation of plaintiff'srights respecting the subject of the action, and tending to render thejudgment ineffectual."

As above extensively discussed, Choithram, et al. have committed and threaten tocommit further acts of disposition of the properties in litigation as well as the otherassets of Choithram, apparently designed to render ineffective any judgment theCourt may render favorable to spouses Ishwar.

The purpose of the provisional remedy of preliminary injunction is to preserve thestatus quo of the things subject of the litigation and to protect the rights of thespouses Ishwar respecting the subject of the action during the pendency of the suit,36 and not to obstruct the administration of justice or prejudice the adverse party. 37

In this case for damages, should Choithram, et al. continue to commit acts ofdisposition of the properties subject of the litigation, an award of damages tospouses Ishwar would thereby be rendered ineffectual and meaningless. 38

Consequently, if only to protect the interest of spouses Ishwar, the Court herebyfinds and holds that the motion for the issuance of a writ of preliminary attachmentfiled by spouses Ishwar should be granted covering the properties subject of thislitigation.

Section 1, Rule 57 of the Rules of Court provides that at the commencement of anaction or at any time thereafter, the plaintiff or any proper party may have theproperty of the adverse party attached as security for the satisfaction of anyjudgment that may be recovered, in, among others, the following cases:

"(d) In an action against a party who has been guilty of a fraud incontracting the debt or incurring the obligation upon which the action isbrought, or in concealing or disposing of the property for the taking,detention or conversion of which the action is brought; prLL

(e) In an action against a party who has removed or disposed of hisproperty, or is about to do so, with intent to defraud his creditors; . . ."

Verily, the acts of Choithram, et al. of disposing the properties subject of thelitigation disclose a scheme to defraud spouses Ishwar so they may not be able torecover at all, given a judgment in their favor, thus requiring the issuance of thewrit of attachment in this instance.

Nevertheless, under the peculiar circumstances of this case and despite the fact thatChoithram, et al., have committed acts which demonstrate their bad faith andscheme to defraud spouses Ishwar and Sonya of their rightful share in theproperties in litigation, the Court cannot ignore the fact that Choithram must havebeen motivated by a strong conviction that as the industrial partner in theacquisition of said assets he has as much claim to said properties as Ishwar, thecapitalist partner in the joint venture.

The scenario is clear. Spouses Ishwar supplied the capital of $150,000.00 for thebusiness. They entrusted the money to Choithram to invest in a profitable businessventure in the Philippines. For this purpose they appointed Choithram as theirattorney-in-fact.

Choithram in turn decided to invest in the real estate business. He bought the two(2) parcels of land in question from Ortigas as attorney-in-fact of Ishwar. Instead ofpaying for the lots in cash, he paid in installments and used the balance of thecapital entrusted to him, plus a loan, to build two buildings. Although the buildingswere burned later, Choithram was able to build two other buildings on the property.He rented them out and collected the rentals. Through the industry and genius ofChoithram, Ishwar's property was developed and improved into what it is now — avaluable asset worth millions of pesos. As of the last estimate in 1985, while thecase was pending before the trial court, the market value of the properties is no less

than P22,304,000.00. 39 It should be worth much more today.

We have a situation where two brothers engaged in a business venture. Onefurnished the capital, the other contributed his industry and talent. Justice andequity dictate that the two share equally the fruit of their joint investment andefforts. Perhaps this Solomonic solution may pave the way towards theirreconciliation. Both would stand to gain. No one would end up the loser. After all,blood is thicker than water.

However, the Court cannot just close its eyes to the devious machinations andschemes that Choithram employed in attempting to dispose of, if not dissipate, theproperties to deprive spouses Ishwar of any possible means to recover any awardthe Court may grant in their favor. Since Choithram, et al. acted with evident badfaith and malice, they should pay moral and exemplary damages as well asattorney's fees to spouses Ishwar.

WHEREFORE, the petition in G.R. No. 85494 is DENIED, while the petition in G.R.No. 85496 is hereby given due course and GRANTED. The judgment of the Court ofAppeals dated October 18, 1988 is hereby modified as follows:

1. Dividing equally between respondents spouses Ishwar, on the one hand, andpetitioner Choithram Ramnani, on the other, (in G.R. No. 85494) the two parcels ofland subject of this litigation, including all the improvements thereon, presentlycovered by Transfer Certificates of Title Nos. 403150 and 403152 of the Registry ofDeeds, as well as the rental income of the property from 1967 to the present.

2. Petitioner Choithram Jethmal Ramnani, Nirmla V. Ramnani, Moti C. Ramnaniand respondent Ortigas and Company, Limited Partnership (in G.R. No. 85496) areordered solidarily to pay in cash the value of said one-half (1/2) share in the saidland and improvements pertaining to respondents spouses Ishwar and Sonya attheir fair market value at the time of the satisfaction of this judgment but in nocase less than their value as appraised by the Asian Appraisal, Inc. in its AppraisalReport dated August 1985 (Exhibits T to T-14, inclusive).

3. Petitioners Choithram, Nirmla and Moti Ramnani and respondent Ortigas &Co., Ltd. Partnership shall also be jointly and severally liable to pay to saidrespondents spouses Ishwar and Sonya Ramnani one-half (1/2) of the total rentalincome of said properties and improvements from 1967 up to the date ofsatisfaction of the judgment to be computed as follows:

"a. On Building C occupied by Eppie's Creation and Jethmal Industriesfrom 1967 to 1973, inclusive, based on the 1967 to 1973 monthly rentalspaid by Eppie's Creation;

"b. Also on Building C above, occupied by Jethmal Industries and Lavinefrom 1974 to 1978, the rental incomes based on then rates prevailing asshown under Exhibit 'P'; and from 1979 to 1981, based on then prevailingrates as indicated under Exhibit 'Q'; LLpr

"c. On Building A occupied by Transworld Knitting Mills from 1972 to

1978, the rental incomes based upon then prevailing rates shown underExhibit 'P', and from 1979 to 1981, based on prevailing rates per Exhibit 'Q';

"d. On the two-Bays Buildings occupied by Sigma-Mariwasa from 1972to 1978, the rentals based on the Lease Contract, Exhibit 'P', and from 1979to 1980, the rentals based on the Lease Contract, Exhibit 'Q'.

and thereafter commencing 1982, to account for and turn over the rentalincomes paid or ought to be paid for the use and occupancy of theproperties and all improvements totalling 10,048 sq. m., based on the rateper square meter prevailing in 1981 as indicated annually cumulative up to1984. Then, commencing 1985 and up to the satisfaction of the judgment,rentals shall be computed at ten percent (10%) annually of the fair marketvalues of the properties as appraised by the Asian Appraisals, Inc. in August1985. (Exhibits T to T-14, inclusive.)"

4. To determine the market value of the properties at the time of thesatisfaction of this judgment and the total rental incomes thereof, the trial court ishereby directed to hold a hearing with deliberate dispatch for this purpose only andto have the judgment immediately executed after such determination.

5. Petitioners Choithram, Nirmla and Moti, all surnamed Ramnani, are alsojointly and severally liable to pay respondents Ishwar and Sonya Ramnani theamount of P500,000.00 as moral damages, P200,000.00 as exemplary damagesand attorney's fees equal to 10% of the total award to said respondents spouses.

6. The motion to dissolve the writ of preliminary injunction dated December 10,1990 filed by petitioners Choithram, Nirmla and Moti, all surnamed Ramnani, ishereby DENIED and the said injunction is hereby made permanent. Let a writ ofattachment be issued and levied against the properties and improvements subjectof this litigation to secure the payment of the above awards to spouses Ishwar andSonya.

7. The mortgage constituted on the subject property dated June 20, 1989 bypetitioners Choithram and Nirmla, both surnamed Ramnani in favor of respondentOverseas Holding, Co. Ltd. (in G.R. No. 85496) for the amount of $3M is herebydeclared null and void. The Register of Deeds of Pasig, Rizal, is directed to cancel theannotation of said mortgage on the titles of the properties in question.

8. Should respondent Ortigas Co., Ltd. Partnership pay the awards to Ishwar andSonya Ramnani under this judgment, it shall be entitled to reimbursement frompetitioners Choithram, Nirmla and Moti, all surnamed Ramnani.

9. The above awards shall bear legal rate of interest of six percent (6%) perannum from the time this judgment becomes final until they are fully paid bypetitioners Choithram Ramnani, Nirmla V. Ramnani, Moti C. Ramnani and Ortigas,Co., Ltd. Partnership. Said petitioners Choithram, et al. and respondent Ortigas shallalso pay the costs.

SO ORDERED.

Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.

Footnotes

1. Exhibit A.

2. Exhibits B and C.

3. Exhibit 3.

4. Exhibit H.

5. Exhibit F.

6. Exhibits and J.

7. Pages 80 to 82, Rollo of G.R. No. 85496; pages 55 to 57, G.R. No 85494;Associate Justice Rodolfo A. Nocon was the ponente, concurred in separateopinions by Justices Ricardo P. Tensuan and Manuel C. Herrera. Justices Felipe B.Kalalo and Venancio D. Aldecoa, Jr., both dissented in separate the opinions andvoted to affirm the decision of the trial court.

8. The five justices wrote separate opinions.

9. Pages 15 and 16, Rollo, G.R. No. 85494.

10. Pages 23 to 24, Rollo, G.R. No. 85496.

11. Pages 117 to 119, Rollo, G.R. No. 85496.

12. Pages 41 to 45, Rollo, G.R. No. 85494.

13. Exhibit R-1; italics supplied.

14. See Exhibit R to R-3.

15. Pages 45 to 50, Rollo, G.R. No. 85494; emphasis supplied.

16. Exhibits R to R-3.

17. TSN, July 18, 1985, page 12; and July 19, 1985, pages 8 to 9.

18. Annex A to Urgent Motion, etc; pages 438 to 450, Rollo, G.R. No. 85494.

19. Annex B, supra; page 451, supra.

20. Annex C, supra; pages 452 to 456, supra.

21. Pages 438 to 442, rollo, G.R. No. 85496; pages 413 to 417, rollo, G.R. No.85494.

22. Page 450, rollo, G.R. No. 85496.

23. Annexes C, C-1 and C-2 to Manifestation and Complaint of petitioners Ishwar &Sonya filed on January 26, 1991.

24. Annex D to Manifestation, etc.

25. Annex A to Reply to Opposition filed by petitioners on December 7, 1990; Pages383 to 384, Rollo; See also Manifestation of petitioners, December 11, 1990, pages438 to 443 rollo, G.R. 85494.

26. See pages to of Rollo.

27. Exhibit B.

28. Exhibit F.

29. Article 1922, Civil Code.

30. Exhibit H.

31. Exhibit R-1; supra.

32. Annex C to Petition in G.R. No. 85494; pages 88 to 92, rollo.

33. Annex D, supra; Pages 93 to 97, Rollo.

34. Supra, pages 95 to 96, Rollo; italics supplied.

35. Annex C to Petition in G.R. No. 85494; pages 88 to 92, Rollo.

36. Calo vs. Roldan, 76 Phil. 445 (1946); De los Reyes v. Elepaño, G.R. L-5282, May29, 1959; De la Cruz vs. Tan Torres, G.R. L-14925, April 30, 1960.

37. Yu Tiong Tay vs. Barrios, 79 Phil. 597 (1947).

38. Calo vs. Rolda. supra.

39. Exhibits T to T-14.