September 30, 2004
This is an appeal from the decision of the Regional Trial Court of Caloocan City, Branch 121, in Criminal Case No. C-58083 (99), which disposed of the case thus:
WHEREFORE, premises considered, this Court finds accused JOSEFINA M. DIMALANTA GUILTY beyond reasonable doubt of the crime of ESTAFA and sentences her to suffer the penalty of imprisonment of 30 years of RECLUSION PERPETUA and to pay the private complainant Elvira D. Abarca the sum of P383,826.00.
On November 10, 1999, appellant was charged with Estafa under Article 315, paragraph 2 (d) of the Revised Penal Code, as amended by Presidential Decree No. 818, in an Information which reads:
That sometime during the month of October, 1998 in Caloocan City, MM. and within the jurisdiction of this Honorable Court, the above-named accused, after misrepresentation that she has more than enough fund, defrauded and deceived one, ELVIRA D. ABARCA in the following manner, to wit: said accused purchased and received assorted jewelries from herein complainant in the total amount of P408,826.00 and in payment thereof, accused simultaneously issued the following Panasaid [should read: Panasia] Banking, Inc. checks, to wit:
0002598Nov. 30, 1998P 37,166.00
0020952Dec. 15, 199837,166.00
0020953Dec. 31, 199837,166.00
0020954Jan. 15, 199937,166.00
0020956Jan. 31, 199937,166.00
0020957Feb. 15, 199937,166.00
0020958Feb. 28, 199937,166.00
0020959Mar. 15, 199937,166.00
0020960Mar. 31, 199937,166.00
0020961Apr. 15, 199937,166.00
0020962Apr. 30, 199937,166.00
when said accused knew fully well that at the time the said checks were not covered with sufficient funds in said bank and would not have such fund even on the date stated on the faces thereof, and when the said checks were presented to the drawee bank for encashment, the same were dishonored for the reason "ACCOUNT CLOSED" and despite due notice as required by Republic Act 4885 and further amended by PD 818 and despite repeated demands, did then and there willfully, unlawfully and feloniously refuse and fail to make good her checks and still refused and fails to do so, to the damage and prejudice of herein complainant ELVIRA D. ABARCA in the aforestated amount of P408,826.00.
Contrary to law.2
On January 24, 2000, appellant, assisted by counsel de oficio, was arraigned. She entered a plea of "not guilty."3 Trial on the merits followed in due course.
The evidence for the prosecution disclosed that in the first week of October 1998, appellant, who was then employed at the Caloocan City Engineer?s Office, called up complainant Elvira D. Abarca on the telephone to express her desire to purchase jewelry. Complainant went to appellant?s house, located at No. 89 P. Jacinto Street, Caloocan City, where the latter purchased twelve pairs of jewelry. In payment thereof, appellant issued twelve postdated checks with the representation that the same will be sufficiently funded on their respective maturity dates.4
The first check issued by appellant was honored and paid by the drawee bank. However, the eleven checks, which are enumerated in the Information, were all returned unpaid by the drawee bank for the reason that appellant?s account was closed.5 Thus, on May 28, 1999, complainant?s counsel wrote a letter to appellant informing her of the dishonor of the eleven checks and demanding payment of the value of the checks within five banking days from receipt thereof.6 The letter was sent to appellant by registered mail on June 7, 1999.7
Appellant failed to pay the value of the checks despite the lapse of the five-day period contained in the demand letter. On June 21, 1999, appellant filed with the Prosecutor?s Office a complaint charging appellant with the crimes of Estafa and Violation of Batas Pambansa Blg. 22.8
In her defense, appellant denied that she purchased jewelry from complainant, saying that she could not afford them. She alleged that it was complainant who approached her asking for help in selling jewelry. In turn, appellant asked her friend, Levinia Maranan, to look for buyers for the jewelry. Appellant and complainant agreed that Maranan will sell the jewelry and, upon the latter?s confirmation that the items had been sold, appellant shall deliver to complainant the postdated checks in payment therefor. They further agreed that the unsold pieces of jewelry shall be returned to complainant.9
In the middle of September 1998, complainant delivered to appellant the pieces of jewelry to be sold, which were then picked up by Maranan. After one week, appellant issued to complainant postdated checks representing the purchase price of the sold jewelry, with the understanding that Maranan will fund the same. Maranan was able to remit to appellant money to cover the first check, hence it was honored by the drawee bank.10
Maranan failed to fund the second check. In order to cover its amount, appellant gave complainant P25,000.00 out of her own money as partial satisfaction. Subsequently, Maranan, who had apparently encountered financial problems, went into hiding. As a consequence, the rest of appellant?s checks were dishonored.11
On October 16, 2002, the trial court rendered the appealed decision convicting appellant of Estafa.
In the instant appeal, appellant alleged that the Regional Trial Court committed reversible errors:
IN FINDING APPELLANT JOSEFINA M. DIMALANTA GUILTY BEYOND REASONABLE DOUBT OF THE CRIME OF ESTAFA;
IN SENTENCING HER TO SUFFER THE PENALTY OF IMPRISONMENT OF 30 YEARS OF RECLUSION PERPETUA; AND
IN ORDERING HER TO PAY COMPLAINANT ABARCA THE SUM OF P383,826.00.12
The Office of the Solicitor General thereafter filed a Manifestation and Motion in Lieu of Appellee?s Brief, recommending that a judgment of acquittal be rendered in Criminal Case No. C-58083 (99) without prejudice to appellant?s civil liability as found by the trial court.13
The appeal has merit.
Appellant was charged with and convicted of Estafa under Article 315, paragraph 2 (d) of the Revised Penal Code, as amended by Republic Act No. 4885, defined as follows:
2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the fraud:
x x x           x x x           x x x.
(d) By postdating a check, or issuing a check in payment of an obligation when the offender had no funds in the bank, or his funds deposited therein were not sufficient to cover the amount of the check. The failure of the drawer of the check to deposit the amount necessary to cover his check within three (3) days from receipt of notice from the bank and/or the payee or holder that said check has been dishonored for lack or insufficiency of funds shall be prima facie evidence of deceit constituting false pretense or fraudulent act.
x x x           x x x           x x x.
Presidential Decree No. 818 amended Article 315 of the Revised Penal Code insofar as the penalties for felonies under paragraph 2 (d) are concerned, viz:
SECTION 1. Any person who shall defraud another by means of false pretenses or fraudulent acts as defined in paragraph 2(d) of Article 315 of the Revised Penal Code, as amended by Republic Act No. 4885, shall be punished by:
1st. The penalty of reclusión temporal if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos, and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each additional 10,000 pesos but the total penalty which may be imposed shall in no case exceed thirty years. In such cases, and in connection with the accessory penalties which may be imposed under the Revised Penal Code, the penalty shall be termed reclusión perpetua;
2nd. The penalty of prisión mayor in its maximum period, if the amount of the fraud is over 6,000 pesos but does not exceed 12,000 pesos;
3rd. The penalty of prisión mayor in its medium period, if such amount is over 200 pesos but does not exceed 6,000 pesos; and
4th. By prisión mayor in its minimum period, if such amount does not exceed 200 pesos.
The elements of this form of Estafa are: (1) postdating or issuing a check in payment of an obligation contracted at the time the check was issued; (2) lack of sufficient funds to cover the check; (3) knowledge on the part of the offender of such circumstances; and (4) damage to the complainant.14
Damage and deceit are essential elements of the offense and must be established with satisfactory proof to warrant conviction. The false pretense or fraudulent act must be committed prior to or simultaneously with the issuance of the bad check.15 Thus, the drawer of the dishonored check is given three days from receipt of the notice of dishonor to cover the amount of the check. Otherwise a prima facie presumption of deceit arises.16
In the case at bar, the prosecution failed to establish beyond a shadow of a doubt that appellant employed deceit. Its evidence was overcome by the defense?s proof that the pieces of jewelry were not purchased by appellant for her own use; rather the same were merely given to her for resale. This much is admitted by complainant, to wit:
Q. Is it not a fact, Madam Witness, that it was your agreement with Mrs. Dimalanta that these jewelries were subject of a reselling, that she will sell them?
A. Yes, sir.
Q. You were very aware of that?
A. Yes, sir.17
In point of fact, appellant was able to show that she was merely requested by complainant to assist in the sale of the jewelry. In her desire to help, she was able to convince Levinia Maranan to dispose of the items. Appellant further testified that the checks she issued to complainant were to be funded by Maranan everytime she was able to sell pieces of jewelry.
Significantly, the Office of the Solicitor General?s own findings sustain appellant?s position. Thus, in its Manifestation and Motion in lieu of Appellee?s Brief wherein it joined the prayer for appellant?s acquittal, it made the following observations:
This admission lends credence to the claim of appellant that she subsequently delivered the jewelry to Maranan. It was only after notice from Maranan that the jewelry had been sold on installment that appellant issued the postdated checks. The issuance of the checks was merely to facilitate collection by Abarca of payments due. Thus, the checks were not the efficient cause of the defraudation. The bad checks were not issued prior to or simultaneous with the act of fraud, but rather, for a pre-existing obligation. This fact is evidenced by Abarca?s own testimony that appellant signed a piece of paper acknowledging receipt of the jewelry, the individual items of which were listed therein. Abarca went on to say that she no longer had the receipt signed by appellant, which was why she had to rely on another list on a pink slip of paper during her testimony in court (TSN, April 23, 2001, p. 4). If indeed appellant issued the postdated checks as payment for the jewelry on the same occasion that the said jewelry were delivered, why then would she need to sign a receipt for the same? Moreover, why was the said receipt no longer in the possession of Abarca? It is entirely possible that Abarca surrendered the receipt upon the subsequent delivery of the checks to her by appellant.
x x x           x x x           x x x.
Thus, even assuming that the checks were indeed issued simultaneously with the delivery of the jewelry as Abarca claims, she was not induced to part with the jewelry because of the checks. Abarca admitted that she knew that appellant was just a secretary at the Caloocan City Hall and that the latter was merely renting the place where she was residing. These facts tend to show that Abarca was aware of the financial status of appellant, that is, that the latter could not afford the P408,826.00-price of the jewelry. Consequently, Abarca must have likewise known at the time the checks were issued that appellant had no money of her own to fund the checks on their maturity. She was well aware that the jewelry were to be sold by appellant and that the proceeds of the sale would be deposited by the latter in her current account to fund the checks. It was a business arrangement she entered into with appellant whereby the latter would assist her in selling the jewelry. Abarca had been in the business of buying and selling jewelry for around ten years already. Abarca was thus fully aware of the conditions, advantages and disadvantages of the arrangement and cannot now allege to be the victim of deceit.18
In effect, therefore, appellant issued the checks as evidence of indebtedness to cover the value of the jewelry. It has been ruled in this connection that a drawer who issues a check as security or evidence of investment is not liable for Estafa.19
Furthermore, we find that appellant acted in good faith during the transaction. After the first check was dishonored, she exerted best efforts to make good the value of the check, albeit only to the extent of P25,000.00. Good faith is a defense to a charge of Estafa by postdating a check. This may be manifested by appellant?s act of offering to make arrangements with complainant as to the manner of payment.20
In the recent case of People v. Ojeda, et al.,21 it was held:
The prosecution failed to prove deceit in this case. The prima facie presumption of deceit was successfully rebutted by appellant?s evidence of good faith, a defense in estafa by postdating a check. Good faith may be demonstrated, for instance, by a debtor?s offer to arrange a payment scheme with his creditor. In this case, the debtor not only made arrangements for payment; as complainant herself categorically stated, the debtor-appellant fully paid the entire amount of the dishonored checks.
It must be noted that our Revised Penal Code was enacted to penalize unlawful acts accompanied by evil intent denominated as crimes mala in se. The principal consideration is the existence of malicious intent. There is a concurrence of freedom, intelligence and intent which together make up the "criminal mind" behind the "criminal act." Thus, to constitute a crime, the act must, generally and in most cases, be accompanied by a criminal intent. Actus non facit reum, nisi mens sit rea. No crime is committed if the mind of the person performing the act complained of is innocent.
Indeed, any allegation of intent of malice or deceit on appellant?s part was rebutted by her extraordinary effort to pay complainant notwithstanding her own financial situation.22
In the case at bar, the evidence for the prosecution is concededly weak. In such cases, even if the evidence for defense is also weak, the accused must be duly accorded the benefit of the doubt in view of the constitutional presumption of innocence that an accused enjoys. When the circumstances are capable of two or more inferences, as in this case, one of which is consistent with the presumption of innocence while the other is compatible with guilt, the presumption of innocence must prevail and the court must acquit.23
Courts are mandated to "put prosecution evidence under severe testing." Furthermore, the constitutional presumption of innocence requires them to take "a more than casual consideration" of every circumstance or doubt favoring the innocence of the accused.24 The evidence for the prosecution must stand or fall on its own weight and cannot be allowed to draw strength from the weakness of the defense.25 Considering the failure of the prosecution to discharge its burden of proof and overcome the constitutional presumption of innocence, it is not only appellant?s right to be freed; it is, even more, this Court?s constitutional duty to acquit her.26
Anent the civil liability which was impliedly instituted together with the criminal action, it appears that Levinia Maranan, in whom resided the duty to turn over the proceeds of the sale of the jewelry or to return the same if unsold, must be impleaded either as a co-defendant or a third-party defendant. Since she was not a party in the case at bar, a separate action should be instituted for the full determination of the civil liability.
WHEREFORE, in view of the foregoing, the appealed decision of the Regional Trial Court of Caloocan City, Branch 121, in Criminal Case No. C-58083 (99), is REVERSED and SET ASIDE. Appellant Josefina M. Dimalanta is ACQUITTED on grounds of reasonable doubt. The civil action is DISMISSED, without prejudice to the filing of a separate action to recover the civil liability under the transaction. The bail bond posted for her provisional liberty is CANCELLED and RELEASED.
Costs de oficio.
Davide, Jr., Quisumbing, Carpio, and Azcuna*, JJ., concur.
1 Record, pp. 241-247, at 247; penned by Presiding Judge Adoracion G. Angeles.
2 Id., p. 2.
3 Id., p. 54.
4 TSN, August 28, 2000, pp. 3-4.
5 Exhibits "A" to "K".
6 Exh. "L".
7 Exh. "L-2".
8 Exh. "O".
9 TSN, July 17, 2002, pp. 4-5.
10 Id., pp. 5-8.
11 Id., pp. 8-10.
12 Rollo, p. 130.
13 Id., pp. 189-204.
14 People v. Dinglasan, G.R. No. 133645, 17 September 2002, 389 SCRA 71, 77.
15 People v. Tan, G.R. No. 120672, 17 August 2000, 338 SCRA 330, 336-337.
16 People v. Ojeda, et al., G.R. Nos. 104238-58, 7 June 2004.
17 TSN, April 23, 2001, p. 4.
18 Rollo, pp. 199-202.
19 Pacheco, et al. v. Court of Appeals, G.R. No. 126670, 2 December 1999, 319 SCRA 595, 603.
20 People v. Gulion, et al., G.R. No. 141183 18 January 2001, 349 SCRA 610, 624.
22 Cf.: People v. Ojeda, supra.
23 People v. Batoctoy, et al., G.R. Nos. 137458-59, 24 April 2003, 401 SCRA 478, 496-497.
24 People v. Ratunil, G.R. No. 137270, 29 June 2000, 334 SCRA 721, 737.
25 People v. Cañete, G.R. No. 138400, 11 July 2002, 384 SCRA 411, 424; citations omitted.
26 People v. Go, G.R. No. 144639, 12 September 2003, 411 SCRA 81, 112.
September 30, 2004
The administrative complaint before us arose from a letter-complaint received by the Office of the Court Administrator (OCA) on October 10, 2003, filed by complainant Dante P. Flores, a member of Philippine Veterans Bank Employees? Union-NUBE (PVBEU-NUBE).
The complainant alleged that respondent justices Bennie A. Adefuin de la Cruz, Wenceslao I. Agnir, Jr., Rebecca De Guia-Salvador, and Division Clerk of Court Atty. Josefina C. Mallari, all of the Court of Appeals, committed grave abuse of discretion in rendering the decision in the consolidated cases in CA-G.R. SP No. 51218, CA-G.R. SP No. 51219 and CA-G.R. SP No. 51220 entitled "Philippine Veterans Bank vs. National Labor Relations Commission and Philippine Veterans Bank Employees Union ? NUBE," "Philippine Veterans Bank Employees Union ? NUBE vs. National Labor Relations Commission and the Philippine Veterans Bank" and "Lady Lydia Corneta Domingo, et al. vs. National Labor Relations Commission, Labor Arbiter Eduardo J. Carpio, Philippine Veterans Bank and/or Sunday Lavin, Philippine Veterans Bank Employees Union and/or Felizardo Sarapat, et al.," respectively.
The assailed decision of the Court of Appeals (CA) dated December 21, 2001, declared as null and void the decision of the NLRC dated September 14, 1993, as well as its resolution dated November 22, 1993. In these aforementioned decisions, the NLRC ordered the reinstatement of certain dismissed employees of the Philippine Veterans Bank (PVB). The CA decision in the consolidated cases in effect reinstated the ruling of Labor Arbiter Eduardo J. Carpio dated March 31, 1993 which held:
WHEREFORE, premises considered, the claim of the Union for reinstatement of the individual complainants it represent as well as the claims for payment of backwages, other benefits and damages are hereby, as they should be dismissed, for lack of merit.
The charges for unfair labor practice filed by the Union against the respondent Bank is likewise dismissed for lack of factual and legal basis.1
Two other petitions for certiorari relative to CA-G.R. SP No. 51219 and CA-G.R. SP No. 51220 filed by the union and a certain Lydia Domingo were also dismissed by the CA for lack of merit.
Complainant claimed that the Court of Appeals committed grave abuse of discretion, ignorance of the law and violation of the lawyer?s oath in deciding the consolidated cases because:
1. Decision for reinstatement is inappelable (sic) per Article 223 of the Labor Code.
2. Decision for reinstatement has long been final and executory.
3. No supervening event after it became final and executory.
4. Petition for certiorari of PVB was filed after the issuance of 1st Writ of Execution which was only forum-shopping.
5. Compromise Agreement was legal and binding, when in fact, subject of the Agreement was the issue of reinstatement which they declared NULL and VOID. No common sense. It sounds stupid.
6. The fact that PVB entered into Compromise Agreement with some union members was a clear manifestation that PVB had already accepted, respected and complied [with] the September 14, 1993 NLRC Decision.2
In its final report and recommendation, the OCA found that:
Preliminarily, the complaint against Justice Agnir may no longer be given due course. At the time of the filing of the complaint, Justice Agnir is no longer a member of the judiciary having compulsorily retired on September 29, 2002.
For determination is whether the respondent justices and clerk of court committed gross ignorance of law that may warrant an administrative sanction.
Even a cursory reading of the complaint would show that it pertains to respondent justices? appreciation of the evidence before them and the interpretation, as well as the application, of the laws and jurisprudence in relation thereto. The remedy of the complainant is judicial and not the filing of this administrative case.
The Supreme Court has already ruled on the matter and made a pointed observation in the case of IN RE: JOAQUIN T. BORROMEO (Adm. Matter No. 93-7-696-0, February 21, 1995). Said the Supreme Court:
Now, the Court takes judicial notice of the fact that there has been of late a regrettable increase in the resort to, administrative prosecution ? or the institution of a civil or criminal action ? as a substitute for or supplement to appeal. Whether intended or not, such a resort to these remedies operates as a form of threat or intimidation to coerce judges into timorous surrender of their prerogatives, or a reluctance to exercise them. With rising frequency, administrative complaints are being presented to the Office of the Court Administrator; criminal complaints are being file[d] with the Office of the Ombudsman or the public prosecutor?s office; civil actions for recovery of damages commenced in the Regional Trial Courts against trial judges, and justices of the Court of Appeals and even of the Supreme Court.
1. Common Basis of Complaints Against Judges
Many of these complaints set forth a common indictment that the respondent Judges or Justices rendered manifestly unjust judgments or interlocutory orders ?i.e., judgments or orders which are allegedly not in accord with the evidence, or with law or jurisprudence, or are tainted by grave abuse of discretion ? thereby causing injustice, and actionable and compensable injury to the complainants (invariably losing litigants). Resolution of complaints of this sort quite obviously entails a common requirement for the fiscal, the Ombudsman or the Trial Court, a review of the decision or order of the respondent Judge or Justice to determine its correctness or erroneousness, as basic premise for a pronouncement of liability.
2. Exclusivity of Specific Procedures for Correction of Judgments and Orders
The question then, is whether or not these complaints are proper; whether or not in lieu of the prescribed recourses for appeal or review of judgments and orders of courts, a party may file an administrative or criminal complaint against the judge for rendition of an unjust judgment, or, having opted for appeal, may nonetheless simultaneously seek also such administrative or criminal remedies.
Given the nature of the judicial function, the power vested by the Constitution in the Supreme Court and the lower courts established by law, the question submits to only one answer: the administrative or criminal remedies are neither alternative nor cumulative to judicial review where such review i[s] available, and must wait on the result thereof.
Simple reflection will make this proposition amply clearly, and demonstrate that any contrary postulation can have only intolerable legal implications. Allowing a party who feels aggrieved by a judicial order or decision not yet final and executory to mount an administrative, civil, or criminal prosecution for unjust judgment against the issuing judge would, at a minimum and as an indispensable first step, confer the prosecutor (or Ombudsman) with an incongruous function pertaining, not to him, but to the courts; the determination of whether the questioned disposition is erroneous in its findings of fact or conclusions of law, or both. If he does proceed despite that impediment, whatever determination he makes could well set off a proliferation of administrative or criminal litigation, a possibility hereafter more fully explored.
Such actions are impermissible and cannot prosper. It is not, as already pointed out, within the power of public prosecutors, or the Ombudsman or his deputies, directly or vicariously, to review judgments or final orders or resolutions of the Courts of the land. The power of review ? by appeal or special civil action ? is not only lodged exclusively in the Courts themselves but must be exercised in accordance with a well-defined and long established hierarchy, and long-standing processes and procedures. No other review is allowed; otherwise litigation would be interminable, and vexatiously repetitive.
The Court has reiterated this doctrine in later cases and pronounced that "an administrative complaint is not the appropriate remedy for every act of a Judge deemed aberrant or irregular where a judicial remedy exists and is available, such as a motion for reconsideration, or an appeal. Obviously, if subsequent developments prove the Judge?s challenged act to be correct, there would be no occasion to proceed against him at all" (Santos vs. Orlino, Adm. Matter No. Rtj-98-1418, September 25, 1998).
Further, the complaint against Division Clerk of Court Josefina C. Mallari is utterly without basis. There is no showing that she participated in the writing of the decision or the resolution of the appellate court.
EVALUATION: WHEREFORE it is respectfully recommended that the complaint against Justices Bennie Adefuin-Dela Cruz, Wenceslao Agnir and Rebecca De Guia-Salvador and Division Clerk of Court Josefina C. Mallari be DISMISSED for lack of merit.3 (italics ours)
We agree with the recommendation.
Philippine Veterans Bank (PVB) was originally organized and established by virtue of RA 3518 which took effect on June 18, 1963. On April 10, 1983, PVB was placed under receivership by virtue of Resolution No. 334 of the Monetary Board of the Central Bank. Subsequently, the PVB underwent a retrenchment and reorganization program which PVBEU-NUBE questioned before the Supreme Court on the ground of violation of security of tenure. On June 7, 1985, the PVB was placed under liquidation by the Monetary Board after finding that the PVB had incurred an outstanding liability of P540,835,860.75. The liquidator subsequently terminated the employment of all the employees of PVB effective June 15, 1985 and offered payment of separation pay and other benefits. A number of employees accepted the settlement but some chose to question their termination.
Thus, PVBEU-NUBE questioned the validity of the liquidation order of the Central Bank. A writ of preliminary injunction was issued by this Court halting the bank?s liquidation. Consequently, in a decision dated August 24, 1990, we dismissed PVBEU-NUBE?s petition and ruled, inter alia, that the claims for backwages must be rejected because the claimant-employees were not illegally dismissed but lawfully separated as a result of the liquidation of the bank on orders of the monetary authority. The Supreme Court also lifted the writ of preliminary injunction issued on March 26, 1987.
On January 2, 1992, Congress enacted RA 7169 rehabilitating the PVB and authorizing its re-opening. To facilitate the implementation of RA 7169, a rehabilitation committee was created to select and organize an initial manning force headed by a management team staffed by a trained workforce. On August 3, 1992, PVB reopened its head office.
PVBEU-NUBE again demanded from the rehabilitation committee the reinstatement of its members with backwages from 1985. PVB denied the demand on the ground that their employer-employee relationship was dissolved when the bank ceased operations by virtue of the liquidation ordered by the Central Bank.
On January 20, 1992, PVBEU-NUBE filed a petition with the Secretary of Labor and Employment praying for an order directing the PVB rehabilitation committee to cease and desist from screening and hiring new employees, and directing the immediate reinstatement of its members. In the same petition, the union sought payment of the remaining accrued collective agreement (CBA) benefits and backwages of its members from the time their employment was terminated in 1985 up to the time of their actual reinstatement. It also charged PVB with unfair labor practice. The said petition was referred to the Regional Arbitration Branch, NCR of the NLRC.
As already mentioned, the claim of the union was eventually dismissed for lack of merit, with the labor arbiter holding that the PVB employees were not entitled to reinstatement. The NLRC reversed the labor arbiter and ruled that:
ACCORDINGLY, the decision of the Labor Arbiter is hereby SET ASIDE and a new one entered, finding the claim for reinstatement of the appellant to be legal and proper. Accordingly, Appellee bank therefore is hereby ordered to immediately reinstate all the members of the appellant union inclusive of those who have executed their quitclaims and release and all the rest of the PVBEU members, who will signify their intention to be reinstated from the date of this decision. In the meanwhile however, that the bank has not fully reopened and activated, all its operations departments, offices and branches, the employees? reinstatement shall be conditioned to actual personnel requirement of the department branch office to be reopened, for which reason, preference shall be given to employees formerly occupying the position being reinstated or reactivated or at the prerogative and discretion of management, to any position in the office provided the latter is of equivalent rank and at least has the same rate of pay.4
In opposing the NLRC ruling, PVB cited the 1990 decision of the Supreme Court in G.R. No. 67125 (PVBEU-NUBE, et al. vs. PVB, et al.) where we held that members of the union were terminated from employment by virtue of the liquidation ordered by the Monetary Board and were not illegally dismissed. They were therefore not entitled to backwages. In its decision now being assailed, the Court of Appeals held:
We cannot agree with the ratiocination of the NLRC for the following reasons:
1. The Supreme Court said in G.R. No. 67125 (189 SCRA 14) that the PVB employees were "not illegally dismissed but lawfully separated." This is a pronouncement as categorical as can be, that the employment relationship between the Bank and the separated employees had definitely ceased to exist as of that time.
2. The subsequent rehabilitation of PVB did not, by any test of reason "revive" what was already a "dead" employment relationship. It is therefore incorrect to say that the former employees can be reinstated because the liquidation was halted with the issuance by the Supreme Court of a writ of preliminary injunction in G.R. No. 67125. Firstly, the injunction was eventually lifted when the case was decided. Secondly, the liquidation of PVB proceeded after the Supreme Court?s pronouncement that the employees had been lawfully dismissed. The circumstance of PVB was not finally liquidated because it was eventually rehabilitated is therefore irrelevant to the issue of reinstatement.
3. The rehabilitation of the Bank did not affect the Supreme Court?s pronouncement that the PVB employees were already "lawfully separated." This is the correct interpretation of the prologue of the Supreme Court decision in G.R. No. 67125 as far as the issue of reinstatement is concerned.
4. It is a well-settled doctrine that reinstatement is proper only in cases of illegal dismissal. The pronouncement of the Supreme Court that the PVB employees were "not illegally dismissed" forecloses any right of reinstatement under any circumstance.
While the PVB employees concerned should be given priority in hiring, they cannot demand it as a matter of right.
x x x           x x x           x x x
Further, as earlier extensively discussed, the Supreme Court has already spoken loud and clear on G.R. No. 67125 (189 SCRA 14, 30) that the Union members were not entitled to backwages because they were lawfully separated due to the forcible closure of the Bank.5
While it is true that an administrative proceeding against a judge is predicated on his continuance in office in the judiciary and that his retirement6 or resignation will moot a pending administrative case,7 we are unable to find anything in the records for which respondents can be held liable. Even a cursory reading of the complaint reveals that it pertains to respondents? appreciation of evidence. Thus, it is evident that an administrative complaint is not the appropriate remedy. As a matter of public policy, the acts of a judge in his official capacity are not subject to disciplinary action even though such acts may be erroneous, provided he acts in good faith and without malice. In this case, the respondents cannot even be faulted for any error.
The allegation of the complainant that respondent justices of the Court of Appeals committed grave abuse of discretion in reinstating the labor arbiter?s decision (which was unfavorable to him) must likewise fail. Grave abuse of discretion is the capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. As long as the court has jurisdiction, any error committed by the judge in the exercise of his judicial prerogatives will amount to nothing more than an error of judgment which may be reviewed or corrected only by appeal.8
WHEREFORE, the administrative complaint against JUSTICE BENNIE A. ADEFUIN-DE LA CRUZ, JUSTICE WENCESLAO I. AGNIR, JR. and JUSTICE REBECCA DE GUIA-SALVADOR and DIVISION CLERK OF COURT JOSEFINA C. MALLARI, all of the Court of Appeals, is hereby DISMISSED for lack of merit.
Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio Morales, Callejo, Sr., Azcuna*, Tinga, and Chico-Nazario*, JJ., concur.
* on leave
1 Rollo, pp. 31-32.
2 Rollo, pp. 1-2.
3 Rollo, pp. 2-3.
4 Rollo, pp. 11-12.
5 Rollo, pp. 35-37.
6 Justice Agnir retired on September 29, 2002, more than a year before this complaint was filed on October 10, 2003. On the other hand, Justice Adefuin-de la Cruz retired on May 14, 2004.
7 Ambrosio Diamalon vs. Hon. Jesus Quintillan, 139 Phil. 654 (1969).
8 Jalandoni vs. Drilon, 383 Phil. 855 (2000).
September 30, 2004
This is a petition for review on certiorari assailing the Decision dated March 9, 1998, rendered by the Court of Appeals (CA) in CA-G.R. CV No. 35911,1 which reversed the decision of the Regional Trial Court of Manila (Branch 18) in Civil Case No. 87-39888, as well as the CA?s Resolution dated July 6, 1999, denying petitioner?s motion for reconsideration.
Civil Case No. 87-39888 is an action for the declaration of nullity of contract, torts and damages with preliminary injunction and attachment filed by petitioner against all the herein respondents. It was consolidated by the trial court with Civil Case No. 87-39732, which is an action for specific performance with damages and preliminary injunction filed by respondents Emilia S. Blas2 and Lea Productions, Inc., against Golden "L" Films International, as these two cases arose from the same set of factual antecedents, which, as stated by the CA, is as follows:
In his complaint filed with the court a quo, Clement Cucueco alleged that sometime in 1985, he entered into a joint venture with Golden "L" Films International (Golden Films) and its owners, Orlando, Francisco and Diosdado, all surnamed Lapid, to co-produce a movie entitled "JIMBO" with the condition that Cucueco?s investment would be repaid first before that of the Golden Films and that the net profit would be divided between the parties in proportion to their respective investments.
Cucueco invested P662,345.00 in the project which was subsequently increased by P176,539.98 or a total of P838,884.98.
The proceeds from the showing of "JIMBO" were reinvested in the production of another film entitled "MARUSO" starring Lito Lapid.
After the shooting of "MARUSO" and while the film was being processed preparatory to its commercial exhibition, Golden Films, without the knowledge and prior consent of Cucueco, sold the film to Lea Productions, Inc. (LEA), represented by Emilia Blas. LEA, however, failed to pay in full, so Golden Films withheld delivery of the film.
Meantime, Cucueco, upon request of Golden Films, paid SQ Laboratories the processing fee of the film "MARUSO" in the amount of P82,900.00 to facilitate the recovery of his investment and share in the joint venture. In turn, SQ Laboratories delivered to Cucueco the "master" copy and other copies of the film "MARUSO." Subsequently, Emilia Blas and the Lapids demanded that Cucueco deliver the film to them but he refused. He maintains that the sale of "MARUSO" by Golden Films to LEA is void for lack of consent on his part, he being a co-owner and co-producer of the film, invoking Section 18 of P.D. 49.
In their separate answers, the defendants denied specifically Cucueco?s material allegations in the instant complaint, raising affirmative defenses.
Meanwhile, LEA filed with the RTC of Manila, Branch 26, a complaint for specific performance and damages with application for a preliminary injunction (docketed as Civil Case No. 87-39732) seeking to compel Golden Films and the Lapids to comply with their obligation under the contract of sale of "MARUSO." In an amended complaint, LEA and Emilia Blas impleaded Cucueco as additional defendant.
The two cases (Civil Cases Nos. 87-39888 and 87-39732), being intimately related, were consolidated before Branch 26 of the RTC of Manila.
After a joint hearing on the application of Cucueco for preliminary injunction and attachment in Civil Case No. 87-39888 as well as the application of LEA for preliminary injunction in Civil Case No. 87-39732, the court below issued an order dated June 5, 1987, the dispositive portion of which reads:
WHEREFORE, after hearing, the Court finds the evidence sufficient to grant the issuance of a writ of preliminary injunction to avoid further irreparable injury and to maintain the status quo during the pendency of the two cases:
Let a writ of preliminary injunction be issued restraining Lea Productions and Golden "L" Films International, their representatives, agents and any person or persons acting for and in their behalf, stead or name or with their authority, from taking possession of any and/or prints of the film "MARUSO": sell, distribute and exhibit the film in any and/or (sic) theaters inside or outside the Philippines, including video tape viewing; reprinting the same from any of the prints already existing including video tape printing; and publishing or advertising that Lea Productions is the owner of the film "MARUSO" during the pendency of the two cases and until further order of the court.
Acting further to the application of plaintiff Clement Cucueco in his complaint, Civil Case No. 87-39888, for an order of attachment, the Court finds that the complaint is supported by plaintiff?s affidavit of merit that proves that there exists a sufficient cause of action under Sec. 1, Rule 57 of the Rules of Court; that there was fraud in the acts of the defendants in incurring the obligation and there is no other sufficient security for the claim sought to be enforced by the action.
In view hereof, the restraining order issued against Clement Cucueco is ORDERED lifted and a writ of attachment ORDERED issued upon the execution of a bond in the amount of ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000.00) to answer for any and for all damages the defendants may suffer if the Court shall adjudge that the applicant was not entitled thereto. The sheriff is hereby ORDERED to attach all the existing file prints of "MARUSO" including the master print and video tapes and the film share of the showing of the "MARUSO" still in the possession of the twenty eight (28) theaters listed in the Order of the Court dated March 20, 1987 to satisfy plaintiff Clement Cucueco?s demand.
The above order was challenged by LEA and Emilia Blas in a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 13069.
In a decision promulgated on April 27, 1988, the Court of Appeals affirmed the assailed order with modification in the sense that the writ of preliminary attachment issued in favor of Cucueco was annulled.
LEA and Emilia Blas pursued the cases up to the Supreme Court in a petition for review on certiorari, docketed therein as G.R. Nos. 84269-70. The main issue posed was whether a writ of preliminary injunction may still be issued after the effectivity of a temporary restraining order. The Supreme Court sustained the decision of the Court of Appeals and denied the petition in a Resolution promulgated on July 12, 1989.
The twin cases were then remanded to the trial court for further proceedings. It then conducted the pre-trial but was not concluded.
Subsequently, Cucueco filed a motion for summary judgment in Civil Case No. 87-39888 alleging that the order of the lower court dated June 5, 1987 contains findings of fact and law, affirmed by the Court of Appeals and the Supreme Court. All the defendants opposed the motion basically on the grounds that the June 5, 1987 order is interlocutory and that no factual finding was affirmed by the Court of Appeals and the Supreme Court.
Acting upon Cucueco?s motion, the lower court rendered a decision (summary judgment) the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendants:
1. Declaring plaintiff co-owner and co-producer of the film MARUSO, with the right to its possession, use, distribution, exhibition and profits, as well as to other rights appertaining to a copyright proprietor, and the sale of said film between defendants null and void.
2. Ordering defendants to deliver to the plaintiff all copies of the movie MARUSO in their respective possession, together with all trailers and other components or parts thereof, and declaring the preliminary injunction previously issued permanent.
3. Ordering all the defendants to pay jointly and severally the plaintiff actual damages in the sum of P1,969,506.64; moral and exemplary damages in the respective sums of P150,000.00 and P100,000.00 and an additional sum of P50,000.00 as and for attorney?s fees with interest thereon at the legal rate from the date of the filing of this action, plus the costs of suit.
4. Ordering defendants Lea Productions and Emilia Blas, jointly and severally, to pay, deliver or turnover to the plaintiff all profits or income they derived from MARUSO in the total sum of P3,446,600.00, with interest thereon from June 5, 1987 until fully paid, and to legal rate (sic).
5. Ordering the separation of this case from Civil Case No. 87-39732.
Respondents filed an ordinary appeal from the trial court?s decision with the CA, to which petitioner filed a Motion to Dismiss Appeal on the ground that respondents should have filed a petition for review on certiorari with this Court, instead of an ordinary appeal to the CA, as the case involves pure questions of law.4 Per its Resolution dated October 7, 1992, the CA resolved that it will consider the issues raised therein in the decision it will render on the main case.5
On March 9, 1998, the Court of Appeals rendered the herein assailed decision, with the following dispositive portion:
WHEREFORE, the appealed decision (summary judgment) is hereby REVERSED and SET ASIDE. Let the records of both cases be remanded to the court of origin for further proceedings with dispatch.
His motion for reconsideration having been denied, petitioner filed the instant petition for review on certiorari, alleging the following questions of law:
(1) Whether or not the mode of appeal resorted to by private respondents from the Decision (Summary Judgment) of the trial court to the respondent COURT is proper; and
(2) Whether or not the trial court correctly rendered the Decision (Summary Judgment) appealed from and in applying the Doctrine of the "Law of the Case" doctrine (sic) in the process.7
Notably, while the CA stated in its Resolution dated October 7, 1992 that it would resolve petitioner?s Motion to Dismiss Appeal in its decision on the appeal, it apparently failed to consider the same, as the appellate court?s decision does not show any discussion thereon. Thus, petitioner insists that the mode of appeal taken by respondents from the trial court?s decision is erroneous. According to him, the issues raised in the appeal were purely questions of law as the summary judgment rendered by the trial court was rendered merely based on the pleadings and documents on record, and without any trial or reception of evidence.8 Petitioner also argues that inasmuch as respondents failed to contradict the evidence he presented, they having focused on the issue of the propriety of the summary judgment and the application of the "law of the case," the "correctness or incorrectness of the conclusions drawn by the trial court from the undisputed evidence of petitioner also raises a question of law."9 Such being the case, respondents should have filed a petition for review on certiorari with this Court and not an ordinary appeal to the CA.
The Court finds that the issues raised by respondents in their appeal clearly involve questions of law.
There is no question that when an appeal raises only pure questions of law, it is this Court that has the sole jurisdiction to entertain the same.10 On the other hand, appeals involving both questions of law and fact fall within the exclusive appellate jurisdiction of the CA.11
The distinction between questions of law and questions of fact has long been settled. There is a "question of law" when the doubt or difference arises as to what the law is on certain state of facts, and which does not call for an examination of the probative value of the evidence presented by the parties-litigants. On the other hand, there is a "question of fact" when the doubt or controversy arises as to the truth or falsity of the alleged facts. Simply put, when there is no dispute as to fact, the question of whether or not the conclusion drawn therefrom is correct, is a question of law.12
Simple as it may seem, determining the true nature and extent of the distinction is sometimes complicated. In a case involving a "question of law," the resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. If the query requires a reevaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation to each other, the issue in that query is factual.13
In their brief filed before the CA, respondents as appellants raised the following assignment of errors: (1) the lower court erred in rendering the summary judgment in Civil Case No. 87-39888; and (2) the lower court grossly misapplied the doctrine of the law of the case.14 In support thereof, respondents argue that the summary judgment rendered by the trial court in Civil Case No. 87-39888 was erroneous, as there were material facts alleged in petitioner?s complaint that they denied and disputed, and which can only be solved after trial on the merits, i.e., cost of production; the parties? contributions to the production of "Jimbo"; whether or not the film made any earnings or losses; whether or not petitioner is a co-producer of the film "Maruso"; etc.15 Respondents also argued that the "law of the case" should not have been applied by the trial court in resolving Civil Case No. 87-39888 as no final conclusions of fact were drawn by the CA in CA-G.R. SP Nos. 13069 and 13911, and the Supreme Court in G.R. Nos. 84269 and 84270, as these cases merely involved an interlocutory order.16
At first blush, it may appear that the issues raised by respondents indeed involve questions of fact justifying their resort to ordinary appeal. A closer scrutiny, however, shows that the appeal actually involves purely questions of law. The test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a question of fact.17
Respondents? appeal calls for a determination of whether the pleadings filed by the parties indeed tendered a genuine issue as to the material facts. In order to resolve this issue, the appellate court need only to look into the pleadings, depositions, admissions, and affidavits submitted by the respective parties without going into the truth or falsity of such documents. It must be noted that under Section 1, Rule 35, of the Rules of Court, a trial court may grant a summary judgment if, on motion of either party, there appears from the pleadings, depositions, admissions, and affidavits that no important issues of fact are involved, except the amount of damages. Trial courts have limited authority to render summary judgments and may do so only when there is clearly no genuine issue as to any material fact. In other words, in a motion for summary judgment, the crucial question is: are the issues raised in the pleadings genuine, sham or fictitious, as shown by affidavits, depositions or admissions accompanying the motion?18
Any review by the appellate court of the propriety of the summary judgment rendered by the trial court based on these pleadings would not involve an evaluation of the probative value of any evidence, but would only limit itself to the inquiry of whether the law was properly applied given the facts and these supporting documents. Therefore, what would inevitably arise from such a review are pure questions of law, and not questions of fact, which are not proper in an ordinary appeal under Rule 41, but should be raised by way of a petition for review on certiorari under Rule 45.
Likewise, the issue of whether the rulings of the CA in CA-G.R. SP Nos. 13069 and 13911, and the Supreme Court in G.R. Nos. 84269 and 84270, may be applied as "law of the case" involves a question of law.
"Law of the case" has been defined as the opinion delivered on a former appeal. It is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal.19 It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. As a general rule, a decision on a prior appeal of the same case is held to be the law of the case whether that question is right or wrong, the remedy of the party deeming himself aggrieved being to seek a rehearing.20
Again, a court need not go into the probative value and/or evaluation of the evidence on hand to determine whether the doctrine of the "law of the case" is applicable in a given case or not. In fact, a mere perusal of the pleadings, orders, and other documents would suffice for a court to determine the applicability of such doctrine. The appellate court need even not delve into the truth or falsity of the evidence presented by the parties during the hearing on the application for a writ of preliminary injunction, or the findings of the trial court in said hearing, rather, the appellate court merely had to determine whether such evidence and findings are conclusive to be considered as "law of the case" on the controversy at hand. Perforce, such inquiry is a question of law.
It is undeniable that the appellate court did not make any finding of fact. Neither did it evaluate the parties? respective evidence, nor pass upon the truth or falsity of the parties? allegations. What the appellate court did was simply apply the law as to the facts borne out by the allegations in the pleadings, and whatever conclusions the appellate court arrived at evidently involved questions of law.
Hence, the issues raised being pure questions of law, the appellate court should have dismissed respondents? appeal outright pursuant to Supreme Court Circular 2-90, which was the law prevailing at the time the appeal was taken,21 viz.:
4. Erroneous Appeals. — An appeal taken to either the Supreme Court or the Court of Appeals by the wrong or inappropriate mode shall be dismissed.
c) Raising issues purely of law in the Court of Appeals, or appeal by wrong mode. — If an appeal under Rule 41 is taken from the regional trial court to the Court of Appeals and therein the appellant raises only questions of law, the appeal shall be dismissed, issues purely of law not being reviewable by said Court. ?
Nevertheless, in order to serve the ends of substantial justice and fair play, the Court deems it apt to suspend the enforcement of statutory and mandatory rules on appeal in the present case. After all, rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just and inexpensive determination of the cases before them. Liberal construction of the rules and the pleadings is the controlling principle to effect substantial justice. Litigations should, as much as possible, be decided on their merits and not on mere technicalities.22
Thus, in Ginete vs. Court of Appeals,23 the Court ruled that:
In the case at bar, the lawyer?s negligence without any participatory negligence on the part of petitioners is a sufficient reason to set aside the resolutions of the Court of Appeals. Aside from matters of life, liberty, honor or property which would warrant the suspension of the rules of the most mandatory character and an examination and review by the appellate court of the lower court’s findings of fact, the other elements that should be considered are the following: (1) the existence of special or compelling circumstances, (2) the merits of the case, (3) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (4) a lack of any showing that the review sought is merely frivolous and dilatory, (5) the other party will not be unjustly prejudiced thereby.
On the whole, the principal considerations in giving due course to an appeal by suspending the enforcement of statutory and mandatory rules are substantial justice and equity considerations. But the above-cited elements should likewise be considered for the appeal to be reinstated and given due course.
In the present case, the trial court disregarded and misappreciated the allegations in the parties? respective pleadings, and misapplied the rules on summary judgment. A perusal of the records of this case shows that the parties? respective pleadings show that there are genuine issues of fact that necessitate formal trial. Petitioner?s complaint alleges certain facts in support of his claim for the nullity of the contract between Golden "L" Films International and Lea Production, Inc., regarding the sale of the film "Maruso." On the other hand, respondents raise substantial factual matters denying petitioner?s entitlement to the relief prayed for. These denials in fact tendered genuine material issues necessitating a full-blown trial on the merits and presentation of evidence.
As was found by the appellate court:
Here, the answer of appellants LEA and Emilia Blas raises the following defenses: (1) Appellee Cucueco is not a co-owner or co-producer of the film "MARUSO;" (2) They bought "MARUSO" in good faith from Golden Films, its absolute owner; (3) Appellee does not appear to have any interest in the said motion picture either as stockholder or investor; and (4) Appellee, not being a party in the contract of sale, has no personality to impugn its validity.
Meanwhile, the answer of appellants Golden Films and the Lapids poses the following defenses: (1) The contract between them and appellee Cucueco in the production of "JIMBO" is a "Joint Agreement" wherein under business practices and tradition, all losses and proceeds are shared equally between the parties; (2) All proceeds from the showing of "JIMBO" were actually received by Appellee, through his mother; (3) "MARUSO" was solely produced by the appellants Golden Films and the Lapids and should actually belong to appellants LEA and Emilia Blas upon full payment of the purchase price; and (4) Appellants did not authorize Appellee to pay SQ Laboratories the processing fee, etc.
There is no question that these recitals in appellants? answers raise genuine issues which can only be threshed out in a formal hearing to determine their veracity.24
Thus, despite the fact that the CA should not have reviewed this case when it was before it on ordinary appeal, the Court finds it imperative to consider the CA?s decision as a valid and binding judgment on the case.
WHEREFORE, the petition for certiorari is DENIED. The Court of Appeals? Decision dated March 9, 1998, together with the Resolution dated July 6, 1999, is AFFIRMED. Let the records of this case be remanded to the Regional Trial Court of Manila (Branch 18) for further proceedings.
Puno, Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.
1 Penned by Associate Justice Angelina Sandoval Gutierrez (now a Member of this Court), with Associate Justices Romeo J. Callejo, Sr. (also now a Member of this Court) and Demetrio G. Demetria, concurring.
2 Now substituted by her heirs; see Resolution dated December 2, 2002, p. 239, Rollo.
3 CA Rollo, pp. 318-322.
4 Id., Motion to Dismiss Appeal, p. 11.
5 Id., p. 57.
6 Id., p. 327.
7 Rollo, p. 18.
8 Id., pp. 21-22.
9 Id., p. 23.
10 Article VIII, Section 5 (2)(e), 1987 Constitution; Rule 45, Rules of Court.
11 Far East Marble (Phils.), Inc. vs. Court of Appeals, G.R. No. 94093, August 10, 1993, 225 SCRA 249, 255.
12 Traverse Development Corporation vs. DBP, G.R. No. 150888, September 24, 2004.
13 Microsoft Corporation vs. Maxicorp., G.R. No. 140946, September 13, 2004.
14 CA Rollo, Appellants? Brief, p. 18.
15 Id., pp. 25-27.
16 Id., pp. 37-58.
17 China Road and Bridge Corporation vs. Court of Appeals, G.R. No. 137898, December 15, 2000, 348 SCRA 401, 411.
18 Cotabato Timberland Co., Inc. vs. Alcantara and Sons, Inc., G.R. No. 145469, May 28, 2004.
19 Magellan Capital Management Corporation vs. Zosa, G.R. No. 129916, March 26, 2001, 355 SCRA 157, 167.
20 Padillo vs. Court of Appeals, G.R. No. 119707, November 29, 2001, 371 SCRA 141.
21 Respondents filed a Notice of Appeal from the trial court?s decision on October 7, 1991.
22 Sanchez vs. Court of Appeals, G.R. No. 152766, June 20, 2003, 404 SCRA 540.
23 G.R. No. 127596, September 24, 1998, 296 SCRA 38, 53.
24 CA Rollo, pp. 324-325.
September 30, 2004
Petitioner PICOP Resources, Inc. (PICOP) owns and operates a multi-billion peso pulp and paper manufacturing facility in Bislig City, Agusan del Norte. It holds government-issued Pulpwood and Timber License Agreement (PTLA) No. 47 and Integrated Forest Management Agreement (IFMA) No. 35 which gave petitioner the exclusive right to co-manage and develop with the State almost 130,000 hectares of forest land within the Agusan-Davao-Surigao Forest Reserve.
The Department of Environment and Natural Resources (DENR), through its officers, rendered three Memoranda, dated August 22, 1997,1 February 16, 2001,2 and April 6, 2001,3 by virtue of which petitioner was designated a DENR depository and custodian for apprehended forest products and conveyances within its concession. On May 25, 2001, the Office of the CENRO-Bislig and petitioner entered into a Memorandum of Agreement (MOA) containing "Procedural Guidelines in the Conduct of Verification of Private Tree Plantation."4 The MOA provided, among others, that field validation/verification of applications for Certificates of Private Tree Ownership (CTPOs) shall be conducted jointly by the DENR, the local government unit concerned, and petitioner. Pursuant to these Memoranda, petitioner?s security personnel were deputized as DENR officers to apprehend and seize the tools, equipment and conveyance used in the commission of illegal logging and the forest products removed and possessed by the offenders.
In the course of the enforcement of the aforesaid Memoranda, petitioner PICOP, through its security personnel, had on numerous occasions apprehended within its concession and tree plantation area, violators who loaded the illegally cut trees in trucks and other forms of conveyance, such as carabaos, for transport out of the plantation area. These illegally cut forest products and conveyances were kept in PICOP?s impounding area.
On June 18, 2001, private respondents Eduardo Casia, Rogelio Castillo, Uldarico Casinginan, Eladio Galano, Catalino Virtudazo, Ricardo Balad-on, Joel Villareal, Tiburcio Impuerto, Hilario Fernandez, Andrea Vasquez, Spouses Remelito Codera and Marilyn Ranoso-Codera, and Florio Josafat, Jr., for himself and in representation, by way of a class suit, of the members of the UNITED FARMERS ASSOCIATION OF BISLIG (UFAB), filed a complaint for damages and injunction with prayer for issuance of writ of preliminary mandatory injunction before the Regional Trial Court (RTC), Branch 5, Agusan del Norte and Butuan City against the DENR Regional Office XIII (CARAGA) and/or its Regional Executive Director Elias C. Seraspi, Jr., Provincial Environment and Natural Resources Offices (PENRO) of Surigao del Sur, Agusan del Norte and Butuan City and/or their respective PENR Officers, Community Environment and Natural Resources Offices (CENRO) of San Francisco, Bunawan, Lianga and Bislig and/or their respective CENR Officers, and herein petitioner PICOP/Wilfredo D. Fuentes.5
Private respondents-complainants were some of those apprehended by PICOP?S security officers transporting without any permit several hundred cubic meters of falcata logs allegedly grown in petitioner?s plantation. The logs, trucks and other forms of conveyance on which they were carried were confiscated and kept in petitioner?s impounding area. Private respondents alleged in their complaint that the Memoranda dated August 22, 1997, February 16, 2001 and April 6, 2001 and the MOA dated May 25, 2001 were illegal for having been issued with grave abuse of discretion. They sought to have the Memoranda declared null and void for this reason and also sought to restrain the DENR and all those acting for and in their behalf, including herein petitioner, from enforcing or implementing said Memoranda.
On September 21, 2001, the RTC rendered its Decision.6 With regard to private respondent?s allegation that the aforesaid Memoranda were illegally issued, the trial court disregarded the claim and sustained the validity of the Memoranda. The Memoranda were issuances of a duly-authorized government agency in the normal and regular course of its duty to enforce forestry laws and procedures. The RTC added that the application for the writ of preliminary injunction was the wrong remedy to assail the legality of the Memoranda, such an action being merely a collateral attack. Private respondents should instead have filed a petition to declare the Memoranda null and void. However, the trial court granted private respondent?s prayer for preliminary mandatory injunction. It noted that administrative or criminal cases had been filed against private respondents involving the apprehended conveyances. The RTC ordered RED Elias R. Seraspio, Jr. to recall, withdraw and abrogate the enforcement of the assailed Memorandum dated February 16, 2001 and commanded all those acting pursuant to said Memorandum to refrain and desist from implementing the Memorandum. Petitioner was also ordered to release the confiscated falcata logs and vehicles to the owners thereof, or to the CENRO-Bislig or the Office of the Government Prosecution-Surigao del Sur, where the administrative and criminal proceedings were ongoing.7
Petitioner moved for reconsideration but this was denied for lack of merit on October 17, 2001.8
On January 21, 2002, DENR-Region XIII RED Benjamin T. Tumaliuan issued a Memorandum revoking the February 16, 2001 Memorandum issued by former OIC-RED Constancio A. Paye, Jr.9
On April 29, 2002, petitioner filed a petition for certiorari with prayer for issuance of a temporary restraining order and/or writ of injunction before the Court of Appeals. The petition was dismissed for lack of merit on July 23, 2003.10 The appellate court held there was no grave abuse of discretion when the RTC issued the assailed Decision and Resolution. Petitioner had no right or interest to protect in the confiscated forest products and conveyances. Petitioner?s compound was used only as a depository for the confiscated logs and conveyances by virtue of the Memorandum dated February 16, 2001. Neither did petitioner claim ownership of the confiscated conveyances. While it claimed that some of the confiscated forest products may have come from its concession area, petitioner admitted that the ownership of the confiscated products was still to be determined in the cases pending either at the CENRO-Bislig or at the Office of the Government Prosecution-Surigao del Sur. Hence, petitioner?s interest in the confiscated forest products was merely contingent and cannot be material as contemplated under Section 2, Rule 3 of the Revised Rules of Civil Procedure. Necessarily therefore, petitioner had no basis to bring the action against respondents and it was not entitled to the ancillary remedy of a writ of preliminary injunction.
On August 15, 2003, petitioner filed a Motion for Reconsideration but this was denied in the Resolution of January 16, 2003.11
Petitioner then filed this petition for review.
Petitioner argues that it is a proper party-in-interest, vested with a material interest in the outcome of the case. It allegedly has more than just a contingent interest in the outcome of the dispute.
Petitioner contend that private respondents? intrusion was in violation of petitioner?s PTLA No. 47 and IFMA No. 35. These license agreements gave petitioner the exclusive right to co-manage and develop forest lands, and recognized petitioner as owner of the trees and other products in the concession area.12 In filing this petition, petitioner is merely defending its subsisting proprietary interest pursuant to these license agreements.
Public respondents never refuted petitioner PICOP?s allegation that private respondents were apprehended by the DENR-deputized PICOP guards at its checkpoint within PICOP?s concession area. Private respondents also never denied that PICOP?s guards had been deputized as DENR officers to enforce the Memoranda. Petitioner was therefore within its rights in exercising control over its concession area pursuant to its duty as DENR depository.
Petitioner also argues that the RTC intruded upon the primary jurisdiction of the DENR when it took cognizance of private respondents? complaint for damages and issued the writ of injunction. Petitioner invokes DENR Department Administrative Order (DAO) No. 97-3213 in asserting that it has the obligation to keep custody of the apprehended forest products, tools and conveyances, the disposal of which rests solely on the DENR.
The RTC also allegedly committed grave abuse of discretion in granting private respondents? prayer for issuance of injunction in violation of the doctrine of exhaustion of administrative remedies. Petitioner argues that private respondents should have awaited the results of the administrative procedure for summary administrative apprehensions and seizures of the DENR under Sections 5 and 6 of DAO No. 97-32, instead of filing the complaint before the trial court. This would have allegedly allowed the proper administrative officer to ascertain whether a prima facie case lies against the offenders and whether the apprehended articles should answer for the offense. By issuing the assailed writ of injunction, the trial court arrogated unto itself the power to rule on the rightful possession of the subject conveyances.
Petitioner also contends that the injunctive writ was issued without due process of law since the transfer of custody of the forest products and conveyances was not even sought by private respondents in their complaint. Consequently, the matter of the return of the seized conveyances was never ventilated during the hearing and the issuance of the writ not sought for violates the rules of due process.
Petitioner?s arguments do not convince us. The petition should be denied.
It is clear that petitioner has no material interest to protect in the confiscated forest products and conveyances. It has no subsisting proprietary interest, as borne out by its licensing agreements, which need to be protected by annulling the writ of injunction issued by the trial court. As observed by the Court of Appeals, any interest petitioner has in the confiscated properties is dependent on the outcome of the proceedings before the CENRO-Bislig and the Office of the Government Prosecution-Surigao del Sur. The issue of ownership and possession of the confiscated products still has to be determined in those proceedings. Petitioner had not refuted this.
Petitioner also cannot claim the right to retain custody of the apprehended logs and conveyances by virtue of its being designated a depository of the DENR pursuant to the assailed Memoranda. As such depository, petitioner merely holds the confiscated products and conveyances in custody for the DENR while the administrative or criminal proceedings regarding said products is pending.
The trial court noted that the confiscated vehicles were already subject of administrative proceedings before the CENRO-Bislig and criminal complaints before the Office of the Government Prosecution-Surigao del Sur. There were also letters or notices to petitioner from officers of the CENRO and the Office of the Government Prosecution requesting the release of some of the conveyances to their owners.14 There is no reason for petitioner to refuse to hand over possession of the vehicles and forest products since, being confiscated items, they will have to be handed over to the proper government agencies for appropriate disposition proceedings.
Furthermore, the transfer of custody of the confiscated products and conveyances will not in any way place petitioner at a disadvantage. Petitioner is merely a depository and the release of the conveyances and products to the government agencies concerned has to be done but only in compliance with lawful court orders.
It should also be remembered that the Memorandum dated February 16, 2001, which designated petitioner as a DENR depository, had been revoked by the Memorandum of January 21, 2002. As of the filing of the petition for review before this Court on March 11, 2004, petitioner no longer had any right, as a depository, to retain possession of the conveyances.
All the foregoing considered, petitioner?s contention that the trial court violated the doctrines of primary jurisdiction and exhaustion of administrative remedies should also fail. The transfer of custody of the confiscated products to the CENRO and the Office of the Government Prosecution was for the purpose of resolving the cases with dispatch.
WHEREFORE, in view of the foregoing, the Petition for Review is DENIED.
Puno, Austria-Martinez, Callejo, Sr., and Chico-Nazario, and Chico-Nazario, JJ., concur.
1 Issued by Regional Executive Director (RED) Elias R. Seraspi, Jr., and having for its subject, "Conduct of Joint DENR/p>RI Evaluation/Verification of Plantation Species in A & D Lands Within and Adjacent to the Concession of PRI Prior to the Issuance of Cutting Permits, CVCs and Transport Documents." The Memorandummemorandum directed PRI representatives to actively participate in the monitoring of forest products that pass through the monitoring stations; Rollo, p. 118-119.
2 Issued by Officer-In-Charge Regional Executive Director (OIC-RED) Constancio A. Paye, Jr., and having for its subject, "Depository Area for Apprehended/Confiscated Forest Products and Conveyance Within CENRO Bislig City." In said Memorandum, OIC-RED Paye, Jr. favorably considered the offer of PRI to provide a depository area within their compound for apprehended and confiscated forest products and conveyances at no cost to the DENR; Id. at 120.
3 Issued by RED Seraspi, Jr., having for its subject the "Abuse of Self-Monitoring Forms (SMFs)," and providing that in CENROs of Bislig, Bunawan, San Francisco and Lianga, the Certificate of Private Tree Plantation Ownership (CTPO) shall be issued upon verification duly represented by PRI; Id. at 121.
4 Id. at 122-127.
5 Id. at Rollo, pp. 143-241.
6 Penned by Acting Presiding Judge Victor A. Tomaneng; Id. at 242-263.
7 Only the hauler trucks of private respondents Eduardo Casia and Ricardo BaAlad-opn, and the three (3) carabaos of private respondents Joel Villareal, Tiburcio Impuerto and Hilario Fernandez were returned to t heir respective owners; Id. at 262-263 and 107-108.
8 By Presiding Judge Augustus L. Calo; Id. at 264.
9 CA Decision, Id. at 74.
10 Penned by Associate Justice Eliezer R. de los Santos, concurred in by Associate Justices Romeo A. Brawner and Jose C. Mendoza of the Twelfth Division; Id. at 71-78.
11 Promulgated January 16, 2004; Id. at 107-108.
12 Petitioner argues that Sec. 34 of Presidential Decree No. 1559 provides that an IFMA holder is the owner of the trees planted in the concession area. Under DENRA Department Administrative Order (DAO) No. 2000-03, a Timber License Agreement (TLA) holder owns seventy percent (70%) of the trees planted inside a TLA area, with the government owning the other thirty percent (30%); Id. atRollo, p. 33.
13 "1997 Rules for the Administrative Adjudication of Illegal Forest Products and the Machinery, Equipment, Tools and Conveyances Used Inused in Connection Therewith;" Id. atRollo, pp. 128-142.
14 The Memorandum dated April 2, 2001 of OIC PECRO Adelfo R. Luengas, Jr. of Tandag, Surigao del Sur directed the CENRO of DENR R-13 D4, Bislig Ccity, to release the conveyance registered to private respondent Eduardo Casia. Separate issuances from the Office of the Government Prosecution, a Resolution dated April 16, 2001 and an Order dated August 11, 2002, ordered release of private respondent Ricardo Balad-on?s hauler truck, and private respondents Joel Villareal, Tiburcio Impuerto and Hilarion Fernandez? carabaos. Supra, note 7.
September 30, 2004
In two verified complaints dated March 12, 2001 and March 22, 2001 filed with the Office the Court Administrator (OCA), Sultan Sabdulah Ali Pacasum, in his capacity as President and Chairman of Pacasum College, Inc., Atty. Alfonso M. Gomos and Dr. Roberto T. Borromeo, as counsel and President of the Fund for Assistance to Private Education (FAPE) respectively, charged respondent Judge Santos B. Adiong of RTC, Branch 8, Marawi City with gross ignorance of law, abuse of authority and gross misconduct.
The antecedent facts are as follows:
On February 26, 2001, Saripada Ali Pacasum filed Special Civil Action No. 690-01 for mandamus with application for preliminary mandatory injunction against FAPE. He alleged that FAPE was required by law to pay subsidy to Pacasum College, Inc. under the Educational Service Program of the Department of Education, Culture and Sports (DECS); that although the DECS has already released to FAPE the total amount of P746,000,000.00 for payment to different participating schools, FAPE refused to release to Pacasum College, Inc. the sum of P1,845,040.00 which represented the remaining unpaid collectible of the said institution for the school year 2000-2001; that the continued refusal by FAPE to release the said amount has caused the school to fail in its obligation to pay the salaries of its teachers for 3 months.
On the same day the petition was filed, respondent judge granted1 the application for preliminary mandatory injunction upon the posting by the petitioner of a surety or property bond in the amount of P200,000.00.
On February 28, 2001, the respondent judge issued another order directing the president of FAPE, Dr. Roberto T. Borromeo, "to prepare and issue a check for P1,845,040.00 representing the payment to the Pacasum College, Inc. x x x payable to its president and chairman Saripada Ali Pacasum, the petitioner herein."2 On the same day, Sheriff Acmad Alipanto served upon FAPE, throught its president, summons and a copy of the petition.
On March 5, 2001, FAPE filed a Petition for Certiorari and Prohibition docketed as CA-G.R. No. 635333 before the Court of Appeals, challenging the Orders, both dated February 26, 2001, issued by the respondent judge. It argued that a pending ownership dispute between Sultan Sabdulah Ali Pacasum and Saripada Ali Pacasum over the shares of the Pacasum College before the Securities and Exchange Commission precludes the release of the remaining balance of the subsidy to Pacasum College under the ESC Program, which requires that any dispute must be settled first before the release could be made. The petition further stated that the RTC of Marawi City has no jurisdiction to enforce the writs of mandamus and preliminary injunction to FAPE, in its principal office in Makati City, since the place is outside the 12th judicial region where it belongs.4 FAPE also prayed for the issuance of a TRO against Saripada Ali Pacasum and his agents who have been harrassing its employees with hourly calls and threats of bodily harm.
On March 9, 2001, Sheriff Acmad Alipanto and Saripada Ali Pacasum served an Order dated March 7, 2001, which was allegedly issued on a mere ex-parte motion by Saripada Ali Pacasum, reiterating the Orders of February 26, 2001 with a warning that "failure to comply would be under pain of contempt of court."5 On March 13, 2001, Saripada Ali Pacasum together with a Makati policeman served warrant of arrest upon Dr. Borromeo.
On March 14, 2001, the Court of Appeals issued a TRO enjoining the respondent judge from enforcing the orders of February 26, 2001. Despite the TRO, respondent judge ordered the arrest of Dr. Borromeo and certain FAPE employees for failure to comply with his directive. Two of FAPE?s employees, namely: Evangeline Domondon and Nenita Torres, were subsequently arrested and detained.
On March 12, 2001, Sultan Sabdulah Ali Pacasum filed a letter complaint before the OCA charging the respondent judge with gross ignorance of the law and gross misconduct. On March 22, 2001, a similar letter-complaint was filed by Atty. Jose Gomos on the same ground that the respondent judge violated the hearing, notice and jurisdictional requirements of the Rules of Court in issuing the questioned orders of February 26 and 28, 2001.
In his Comment, respondent judge claimed that he took cognizance of Special Civil Action No. 690-10 after it was raffled to his court. He found that the pleadings were in order; that after a careful examination of the pleadings submitted by the petitioner, he saw an extreme necessity to resolve the case expeditiously; and that all the pending incidents has been rendered moot and academic with the dismissal of Special Civil Action No. 690-10.
After evaluation of the records, the OCA found that the respondent judge was liable for gross ignorance of the law, oppression and abuse of authority; that the respondent, as the Presiding Judge of RTC, Marawi City, has no authority to enforce a preliminary injunction in Makati City where the principal office of FAPE was located; that he violated the rights of FAPE employees when he summarily cited them in contempt without regard to the procedure prescribed by the Rules of Court. He abused his authority when he issued a warrant of arrest on May 25, 2001 despite a TRO issued by the Court of Appeals. Accordingly, the OCA made the following recommendations:
1. This matter be re-docketed as a regular administrative case against the respondent judge;
2. Respondent judge be found guilty of gross ignorance of the law and the rules;
3. Respondent judge be meted with the penalty of FINE in the sum of Forty Thousand Pesos (P40,000.00).6
Upon being directed by the Court,7 complainants manifested their willingness to submit the case for decision on the basis of the pleadings submitted.8 Respondent judge, on the other hand, failed to file his manifestation hence, the Court was constrained to dispense with the filing thereof.
We agree with the recommendations of the OCA, except as to the penalty.
Respondent judge granted Saripada Ali Pacasum?s application for preliminary mandatory injunction on the very same day the Special Civil Action No. 690-01 was filed on February 26, 2001. Sections 4(c) and 5, Rule 58 of the 1997 Rules of Civil Procedure9 is very explicit that the writ of preliminary injuction may issue only after prior notice and hearing upon the adverse party. In issuing the subject writ on the very same day the application was filed and considering that the person against whom the same was to be served was located in Makati, summons could not have been served upon them or a hearing conducted in evident disregard of the due process requirements of the Rules of Court.
Respondent judge?s failure to comply with procedural due process is aggravated by his total inattention to the parameters of his jurisdiction. As the presiding judge of RTC, Marawi City, he should have known that Makati City was way beyond the boundaries of his territorial jurisdiction insofar as enforcing a writ of preliminary injunction is concerned. Section 21(1) of B.P. Blg. 129, as amended, provides that the RTC shall exercise original jurisdiction in the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction which may be enforced in any part of their respective regions. The rationale, as explained in Embassy Farms, Inc. v. Court of Appeals,10 is "that the trial court has no jurisdiction to issue a writ of preliminary injunction to enjoin acts being performed or about to be performed outside its territorial jurisdiction."
In the case at bar, the issuance of the writ of preliminary injunction is not a mere deficiency in prudence, or lapse of judgment on the part of respondent judge but a blatant disregard of basic rules constitutive of gross ignorance of the law. The responsibility of judges to keep abreast of the law and changes therein, as well as with the latest decisions of the Supreme Court, is a pressing need. One cannot seek refuge in a mere cursory acquaintance with the statute and procedural rules. Ignorance of the law, which everyone is bound to know, excuses no one ? not even judges.11
Respondent judge is likewise guilty of gross ignorance of the law for summarily punishing FAPE?s president and employees without any written charge for indirect contempt or giving them any opportunity to explain their refusal to obey the court?s order, as mandated by Section 3, Rule 71 of the 1997 Rules of Civil Procedure.12 What makes the act more reprehensible was the four FAPE employees cited for contempt, two of whom were arrested and detained with the exception of Dr. Borromeo, were not even impleaded in Special Civil Action No. 690-10. Worse, the arrest of the said employees was made despite the issuance by the Court of Appeals of a TRO enjoining the respondent from enforcing the Order of February 26, 2001.
The contempt power was given to the courts in trust for the public, by tradition and necessity, inasmuch as respect for the courts, which are ordained to administer the laws necessary to the good order of society, is as necessary as respect for the laws themselves. As in all other powers of the court, the contempt power, however plenary it may seem, must be exercised judiciously and sparingly. A judge should never allow himself to be moved by pride, prejudice, passion, or pettiness in the performance of his duties.13 The failure of a judge to afford the alleged contemner the opportunity to be heard as a matter of due process of law deserves administrative sanction.
The seeming eagerness and haste with which respondent judge demonstrated in issuing the assailed orders, warrants and writ betray a design to railroad judicial processes to favor a preferred litigant. The act of a judge in citing a person in contempt of court in a manner which displays obvious partiality is deplorable and violative of Rule 2.01 of the Code of Judicial Conduct which requires a judge to behave at all times to promote public confidence in the integrity and impartiality of the judiciary.14 A judge is guilty of gross ignorance of the law and grave abuse of judicial authority for having precipitately adjudged guilty of indirect contempt in disregard of the elementary rules of procedure.
The Court recognizes that not every judicial error bespeaks ignorance of the law and that, if committed in good faith, does not warrant administrative sanction, but only in cases within the parameters of tolerable misjudgment. Where, however, the procedure is so simple and the facts so evident as to be beyond permissible margins of error, to still err thereon amounts to ignorance of the law.15
Under Section 8 of A.M. No. 01-8-10-SC, amending Rule 140 of the Rules of Court on the Discipline of Justices and Judges, gross ignorance of the law is classified as a serious charge which carries with it a penalty of either dismissal from service, suspension for more than 3 months but not exceeding 6 months, or a fine of more than P20,000.00 but not exceeding P40,000.00.
We take judicial notice that the respondent judge had been previously sanctioned in (1) A.M. No. RTJ-98-1407 per Resolution of July 20, 1998, where he was fined in the sum of P20,000.00 for ignorance of the law; and (2) A.M. No. RTJ-00-1581 per Resolution of July 2002, where he was also fined in the sum of P5,000.00 for gross ignorance of the law and grave abuse of discretion.
Obviously, after being chastised twice, respondent judge has remained undeterred in disregarding the law which he has pledged to uphold and the Code which he has promised to live by. He appears undaunted by the previous penalties and warnings he received. If only for this, we are constrained to impose a penalty more severe than a fine, as earlier recommended. Suspension from office for 6 months would be reasonble under the circumstances.
WHEREFORE, respondent Judge Santos B. Adiong, Presiding Judge of Regional Trial Court, Branch 8, Marawi City, is found GUILTY of gross ignorance of the law for issuing a writ of preliminary injunction in violation of Section 21(1) of Batas Pambansa Blg. 129 and Sections 4(c) and 5, Rule 58 of the 1997 Rules of Civil Procedure and for citing FAPE employees in contempt of court in disregard of Section 3, Rule 71 of the 1997 Rules of Civil Procedure. Accordingly, he is SUSPENDED from office without salary and other benefits for SIX (6) MONTHS with WARNING that a repetition of the same or similar acts shall be dealt with more severely.
Davide, Jr., Quisumbing, Carpio, and Azcuna*, JJ., concur.
* On Leave.
1 Rollo, p. 12.
2 Id., p. 13.
3 Id., p. 15.
4 Id., p. 37.
5 Id., p. 122.
6 Id., p. 326.
7 In a resolution dated July 7, 2004, the Court required the parties to manifest within 10 days from notice whether they are submitting the case for resolution on the basis of the pleadings filed.
8 Manifestation dated August 19, 2004.
9 Section 4(c) Rule 58 states: When an application for a writ of preliminary injunction or a temporary restraining order is included in a complaint or any initiatory pleading, the case, if filed in a multiple sala court, shall be raffled only after notice to and in the presence of the adverse party or the person to be enjoined. In the event, such notice shall be preceded, or contemporaneously accompanied by service of summons, together with a copy of the complaint or initiatory pleading and the applicant?s affidavit or bond, upon the adverse party in the Philippines x x x .
Section 5. Preliminary injunction not granted without notice; exception. ? No preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined. If it shall appear from the facts shown by affidavits or by the verified application that great or irreparable injury would result to the applicant before the matter can be heard on notice, the court to which the applicantion for preliminary injunction was made, may issue ex parte a temporary restraining order to be effective only for a period of twenty (20) days from service on the party or person sought to be enjoined, except as herein provided. Within the said tweenty-day period, the court must order said party or person to show cause, at a specified time and place, why the injunction should not be granted, determine within the same period whether or not the preliminary injunction shall be granted, and accordingly issue the corresponding order x x x.
10 G.R. No. 80682, 13 August 1990, 188 SCRA 492.
11 Rivera, et al. v. Judge Mirasol, RTC, Branch 23, Roxas, Isabela, A.M. No. RTJ-04-1885, 14 July 2004.
12 See: Atty. Saludo v. Judge Fineza, A.M. No. RTJ-03-1813, 21 November 2003.
13 Sison v. Judge Caoibes, Jr., Presiding Judge, and Alvarez, Sheriff IV, Regional Trial Court, Las Piñas City, Branch 253, A.M. No. RTJ-03-1771, 27 May 2004.
15 Judge Mupas v. Judge Español, Regional Trial Court, Branch 90, Dasmariñas, Cavite, A.M. No. RTJ-04-1850, 14 July 2004.
September 30, 2004
Inasmuch as the facts indubitably and eloquently show an implied trust in favor of respondent, the Court of Appeals did not err in affirming the Decision of the Regional Trial Court ordering petitioner to convey the subject property to her. That Decision satisfied the demands of justice and prevented unjust enrichment.
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the August 22, 2001 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 54852. The assailed Decision disposed as follows:
"WHEREFORE, the decision appealed from is AFFIRMED."3
On the other hand, the Regional Trial Court (RTC) Decision affirmed by the CA disposed as follows:
"WHEREFORE, considering that this action is essentially one for reconveyance or enforcement of a trust, judgment is hereby rendered ordering the substituted defendant Marietta Cuenco Cuyegkeng to reconvey or transfer, in a duly registrable public instrument, Lot No 903-A-6 under TCT No. 113781 of the Registry of Deeds of Cebu City, of the Banilad Estate with an area of 834 square meters, in favor of plaintiff Concepcion Cuenco Vda. De Manguerra; or should the substituted defendant, for one reason or another, fail to execute the necessary instrument once the decision becomes final, the Clerk of Court of this Court (RTC) is hereby instructed, in accordance with the Rules of Court, to prepare and execute the appropriate and requisite conveyance and instrument in favor of herein plaintiff which, in either case, shall be registered with the Office of the Register of Deeds of Cebu City.
Without costs in this instance."4
The facts were summarized by the appellate court as follows:
"On September 19, 1970, the [respondent] filed the initiatory complaint herein for specific performance against her uncle [Petitioner] Miguel Cuenco which averred, inter alia that her father, the late Don Mariano Jesus Cuenco (who became Senator) and said [petitioner] formed the ?Cuenco and Cuenco Law Offices?; that on or around August 4, 1931, the Cuenco and Cuenco Law Offices served as lawyers in two (2) cases entitled ?Valeriano Solon versus Zoilo Solon? (Civil Case 9037) and ?Valeriano Solon versus Apolonia Solon? (Civil Case 9040) involving a dispute among relatives over ownership of lot 903 of the Banilad Estate which is near the Cebu Provincial Capitol; that records of said cases indicate the name of the [petitioner] alone as counsel of record, but in truth and in fact, the real lawyer behind the success of said cases was the influential Don Mariano Jesus Cuenco; that after winning said cases, the awardees of Lot 903 subdivided said lot into three (3) parts as follows:
Lot 903-A: 5,000 [square meters]: Mariano Cuenco?s attorney?s fees
Lot 903-B: 5,000 [square meters]: Miguel Cuenco?s attorney?s fees
Lot 903-C: 54,000 [square meters]: Solon?s retention
"That at the time of distribution of said three (3) lots in Cebu, Mariano Jesus Cuenco was actively practicing law in Manila, and so he entrusted his share (Lot 903-A) to his brother law partner (the [petitioner]); that on September 10, 1938, the [petitioner] was able to obtain in his own name a title for Lot 903-A (Transfer Certificate of Title [TCT] RT-6999 [T-21108]); that he was under the obligation to hold the title in trust for his brother Mariano?s children by first marriage; that sometime in 1947, the Cuenco family was anticipating Mariano?s second marriage, and so on February 1, 1947, they partitioned Lot 903-A into six (6) sub-lots (Lots 903-A-1 to 903-A-6) to correspond to the six (6) children of Mariano?s first marriage (Teresita, Manuel, Lourdes, Carmen, Consuelo, and Concepcion); that the [petitioner] did not object nor oppose the partition plan; that on June 4, 1947, the [petitioner] executed four (4) deeds of donation in favor of Mariano?s four (4) children: Teresita, Manuel, Lourdes, and Carmen, pursuant to the partition plan (per notary documents 183, 184, 185, 186, Book III, Series 1947 of Cebu City Notary Public Candido Vasquez); that on June 24, 1947, the [petitioner] executed the fifth deed of donation in favor of Mariano?s fifth child ? Consuelo (per notary document 214, Book III, Series 1947 of Cebu City Notary Public Candido Vasquez) (Exhibits ?2? to ?5?); that said five (5) deeds of donation left out Mariano?s sixth child ? Concepcion ? who later became the [respondent] in this case; that in 1949, [respondent] occupied and fenced a portion of Lot 903-A-6 for taxation purposes (Exhibit ?F?, Exhibit ?6?); that she also paid the taxes thereon (Exhibit ?G?); that her father died on February 25, 1964 with a Last Will and Testament; that the pertinent portion of her father?s Last Will and Testament bequeaths the lot.
?? near the Cebu provincial capitol, which were my attorney?s fees from my clients, Victoria Rallos and Zoilo Solon, respectively ? have already long been disposed of, and distributed by me, through my brother, Miguel, to all my said children in the first marriage;?
"That on June 3, 1966, the [petitioner] wrote a letter petitioning the Register of Deeds of Cebu to transfer Lot 903-A-6 to his name on the ground that Lot 903-A-6 is a portion of Lot 903-A; that on April 6, 1967, the [respondent] requested the Register of Deeds to annotate an affidavit of adverse claim against the [petitioner?s] TCT RT-6999 (T-21108) which covers Lot 903-A; that on June 3, 1967, the Register of Deeds issued TCT 35275 covering Lot 903-A-6 in the name of the [petitioner] but carrying the earlier annotation of adverse claim; that in 1969, the [petitioner] tore down the wire fence which the [respondent] constructed on Lot 903-A-6 which compelled the latter to institute the instant complaint dated August 20, 1970 on September 19, 1970.
"On December 5, 1970, the answer with counterclaim dated December 3, 1970 of [petitioner] Miguel Cuenco was filed where he alleged that he was the absolute owner of Lot 903-A-6; that this lot was a portion of Lot 903-A which in turn was part of Lot 903 which was the subject matter of litigation; that he was alone in defending the cases involving Lot 903 without the participation of his brother Mariano Cuenco; that he donated five (5) of the six (6) portions of Lot 903-A to the five (5) children of his brother Mariano out of gratitude for the love and care they exhibited to him (Miguel) during the time of his long sickness; that he did not give or donate any portion of the lot to the [respondent] because she never visited him nor took care of him during his long sickness; that he became critically ill on February 11, 1946 and was confined at the Singian?s Clinic in Manila and then transferred to Cebu where he nearly died in 1946; that his wife Fara Remia Ledesma Cuenco had an operation on January 1951 and was confined at the University of Santo Tomas Hospital and John Hopkins Hospital in the United States; that two of his children died at the University of Santo Tomas Hospital in 1951 and 1952; and that his wife was blind for many months due to malignant hypertension but [respondent] never remembered her nor did she commiserate with him and his wife in their long period of sorrow.
"[Petitioner] Miguel Cuenco took the witness stand as early as September 13, 1974. His self-conducted direct examination lasted until 1985, the last one on November 22, 1985. Unfortunately, he died5 before he was able to submit himself for cross-examination and so his testimony had to be stricken off the record. His only surviving daughter, Marietta Cuyegkeng, stood as the substitute [petitioner] in this case. She testified that she purchased Lot 903-A-6 (the property subject matter of this case) from her late father sometime in 1990 and constructed a house thereon in the same year; that she became aware of this case because her late father used to commute to Cebu City to attend to this case; and that Lot 903-A-6 is in her name per Transfer Certificate of Title #113781 of the Registry of Deeds for Cebu."6
Ruling of the Court of Appeals
The CA found respondent?s action not barred by res judicata, because there was "no identity of causes of action between the Petition for cancellation of adverse claim in L.R.C. Records 5988 and the Complaint for specific performance to resolve the issue of ownership in Civil Case No. R-11891."
The appellate court further found no reason to disturb the findings of the trial court that respondent "has the legal right of ownership over lot 903-A-6." The CA ruled that the subject land "is part of the attorney?s fees of Don Mariano Cuenco, predecessor-in-interest of [Respondent] Concepcion Cuenco vda. de Manguerra and [petitioner] merely holds such property in trust for [her], his title there[to] notwithstanding."
Finally, the CA held that the right of action of respondent "has not yet prescribed as she was in possession of the lot in dispute and the prescriptive period to file the case commences to run only from the time she acquired knowledge of an adverse claim over [her] possession."
Hence, this Petition.7
In her Memorandum, petitioner raises the following issues for our consideration:
On question of law, the Court of Appeals failed to consider facts of substance and significance which, if considered, will show that the preponderance of evidence is in favor of the petitioner.
On question of law, the Court of Appeals failed to appreciate the proposition that, contrary to the position taken by the trial court, no constructive or implied trust exists between the parties, and neither is the action one for reconveyance based upon a constructive or implied trust.
On question of law, the Court of Appeals erred in not finding that even where implied trust is admitted to exist the respondent?s action for relief is barred by laches and prescription.
On question of law, the trial court and the appellate court erred in expunging from the records the testimony of Miguel Cuenco."8
This Court?s Ruling
The Petition has no merit.
Evaluation of Evidence
Petitioner asks us to appreciate and weigh the evidence offered in support of the finding that Lot 903-A-6 constituted a part of Mariano Cuenco?s share in the attorney?s fees. In other words, she seeks to involve us in a reevaluation of the veracity and probative value of the evidence submitted to the lower court. What she wants us to do is contrary to the dictates of Rule 45 that only questions of law may be raised and resolved in a petition for review. "Absent any whimsical or capricious exercise of judgment, and unless the lack of any basis for the conclusions made by the lower courts be amply demonstrated, the Supreme Court will not disturb such factual findings."9
As a rule, findings of fact of the Court of Appeals affirming those of the trial court are binding and conclusive. Normally, such factual findings are not disturbed by this Court, to which only questions of law may be raised in an appeal by certiorari.10 This Court has consistently ruled that these questions "must involve no examination of the probative value of the evidence presented by the litigants or any of them."11 Emphasizing the difference between the two types of question, it has explained that "there is a question of law in a given case when the doubt or difference arises as to what the law is pertaining to a certain state of facts, and there is a question of fact when the doubt arises as the truth or the falsity of alleged facts."12
Indeed, after going over the records of the present case, we are not inclined to disturb the factual findings of the trial and the appellate courts, just because of the insistent claim of petitioner. His witnesses allegedly testified that Civil Case No. 9040 involving Lot 903 had not been handled by Mariano for defendants therein — Apolonia Solon, Zoilo Solon, et al. It has sufficiently been proven, however, that these defendants were represented by the Cuenco and Cuenco Law Office, composed of Partners Mariano Cuenco and Miguel Cuenco.
Given as attorney?s fees was one hectare of Lot 903, of which two five-thousand square meter portions were identified as Lot 903-A and Lot 903-B. That only Miguel handled Civil Case No. 9040 does not mean that he alone is entitled to the attorney?s fees in the said cases. "When a client employs the services of a law firm, he does not employ the services of the lawyer who is assigned to personally handle the case. Rather, he employs the entire law firm."13 Being a partner in the law firm, Mariano — like Miguel — was likewise entitled14 to a share in the attorney?s fees from the firm?s clients. Hence, the lower courts? finding that Lot 903-A was a part of Mariano Cuenco?s attorney?s fees has ample support.
Petitioner then contends that no constructive or implied trust exists between the parties.
A trust is a legal relationship between one having an equitable ownership in a property and another having legal title to it.15
Trust relations between parties may either be express or implied.16 Express trusts are created by the direct and positive acts of the parties, indicated through some writing, deed, will, or words evidencing an intention to create a trust.17 On the other hand, implied trusts are those that, "without being express, are deducible from the nature of the transaction as matters of intent[;] or which are superinduced on the transaction by operation of law as a matter of equity, independently of the particular intention of the parties. Implied trusts may either be resulting or constructive trusts, both coming into being by operation of law."18
Resulting trusts are presumed to have been contemplated by the parties and are based on the equitable doctrine that valuable consideration, not legal title, determines the equitable title or interest.19 These trusts arise from the nature of or the circumstances involved in a transaction,20 whereby legal title becomes vested in one person, who is obligated in equity to hold that title for the benefit of another.
Constructive trusts are "created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold."21
A review of the records shows that indeed there is an implied trust between the parties.
Although Lot 903-A was titled in Miguel?s name, the circumstances surrounding the acquisition and the subsequent partial dispositions of this property eloquently speak of the intent that the equitable or beneficial ownership of the property should belong to Mariano and his heirs.
First, Lot 903-A was one half of the one-hectare portion of Lot 903 given as attorney?s fees by a client of the law firm of Partners Miguel and Mariano Cuenco. It constituted the latter?s share in the attorney?s fees and thus equitably belonged to him, as correctly found by the CA. That Lot 903-A had been titled in the name of Miguel gave rise to an implied trust between him and Mariano, specifically, the former holds the property in trust for the latter. In the present case, it is of no moment that the implied trust arose from the circumstance — a share in the attorney?s fees — that does not categorically fall under Articles 1448 to 1456 of the Civil Code. The cases of implied trust enumerated therein "does not exclude others established by the general law of trust."22
Second, from the time it was titled in his name in 1938,23 Lot 903-A remained undivided and untouched24 by Miguel. Only on February 3, 1947, did Lourdes Cuenco,25 upon the instruction of Mariano, have it surveyed and subdivided into six almost equal portions — 903-A-1 to 903-A-6. Each portion was specifically allocated to each of the six children of Mariano with his first wife.26
Third, Miguel readily surrendered his Certificate of Title27 and interposed no objection28 to the subdivision and the allocation of the property to Mariano?s six children, including Concepcion.
Fourth, Mariano?s children, including Concepcion,29 were the ones who shouldered the expenses incurred for the subdivision of the property.
Fifth, after the subdivision of the property, Mariano?s children — including Concepcion30 — took possession of their respective portions thereof.
Sixth, the legal titles to five portions of the property were transferred via a gratuitous deed of conveyance to Mariano?s five children, following the allocations specified in the subdivision plan prepared for Lourdes Cuenco.31
With respect to Lot 903-A-6 in particular, the existence of Concepcion?s equitable ownership thereof is bolstered, not just by the above circumstances, but also by the fact that respondent fenced the portion allocated to her and planted trees thereon.32
More significantly, she also paid real property taxes on Lot 903-A-6 yearly, from 1956 until 196933 — the year when she was dispossessed of the property. "Although tax declarations or realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession."34 Such realty tax payments constitute proof that the holder has a claim of title over the property.
Tellingly, Miguel started paying real property taxes on Lot 903-A-6 only on April 4, 1964,35 after the death of Mariano.36 This fact shows that it was only in that year that he was emboldened to claim the property as his own and to stop recognizing Mariano?s, and subsequently Concepcion?s, ownership rights over it. It was only by then that the one who could have easily refuted his claim had already been silenced by death. Such a situation cannot be permitted to arise, as will be explained below.
From the time Lot 903-A was subdivided and Mariano?s six children — including Concepcion — took possession as owners of their respective portions, no whimper of protest from petitioner was heard until 1963. By his acts as well as by his omissions, Miguel led Mariano and the latter?s heirs, including Concepcion, to believe that Petitioner Cuenco respected the ownership rights of respondent over Lot 903-A-6. That Mariano acted and relied on Miguel?s tacit recognition of his ownership thereof is evident from his will, executed in 1963, which states:
"I hereby make it known and declare that x x x all properties which my first wife and I had brought to, or acquired during our marriage, or which I had acquired during the years I was a widower ? including jewelry, war damage compensation, and two other lots also located at Cebu City, one near the South-Western University and the other near the Cebu provincial capitol, which were my attorney?s fees from my clients, Victoria Rallos and Zoilo Solon, respectively ? have already long been disposed of, and distributed by me, through my brother, Miguel, to all my said six children in the first marriage."37 (emphasis supplied)
Indeed, as early as 1947, long before Mariano made his will in 1963, Lot 903-A — situated along Juana Osmeña Extension, Kamputhaw, Cebu City,38 near the Cebu Provincial Capitol — had been subdivided and distributed to his six children in his first marriage. Having induced him and his heirs to believe that Lot 903-A-6 had already been distributed to Concepcion as her own, petitioner is estopped from asserting the contrary and claiming ownership thereof.
The principle of estoppel in pais applies when — by one?s acts, representations, admissions, or silence when there is a need to speak out — one, intentionally or through culpable negligence, induces another to believe certain facts to exist; and the latter rightfully relies and acts on such belief, so as to be prejudiced if the former is permitted to deny the existence of those facts.39
Petitioner claims that respondent?s action is already barred by laches.
We are not persuaded. Laches is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to it has either abandoned or declined to assert it.40 In the present case, respondent has persistently asserted her right to Lot 903-A-6 against petitioner.
Concepcion was in possession as owner of the property from 1949 to 1969.41 When Miguel took steps to have it separately titled in his name, despite the fact that she had the owner?s duplicate copy of TCT No. RT-6999 — the title covering the entire Lot 903-A — she had her adverse claim annotated on the title in 1967. When petitioner ousted her from her possession of the lot by tearing down her wire fence in 1969,42 she commenced the present action on September 19, 1970,43 to protect and assert her rights to the property. We find that she cannot be held guilty of laches, as she did not sleep on her rights.
Expunging of Testimony
Petitioner Cuyegkeng questions the expunging of the direct testimony of Miguel Cuenco. Respondent points out that this issue was not raised before the CA. Neither had petitioner asked the trial court to reconsider its Order expunging the testimony. Hence, this issue cannot for the first time be raised at this point of the appeal. Issues, arguments and errors not adequately and seriously brought below cannot be raised for the first time on appeal.44 "Basic considerations of due process impel this rule."45
WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against petitioner.
Sandoval-Gutierrez, Corona, and Carpio Morales*, JJ., concur.
* On leave.
1 Rollo, pp. 9-59.
2 Id., pp. 61-80. Eleventh Division. Penned by Justice Presbitero J. Velasco Jr., with the concurrence of Justices Ruben T. Reyes (chair) and Juan Q. Enriquez Jr. (member).
3 Assailed CA Decision, p. 20; rollo, p. 80.
4 RTC Decision, p. 5; rollo, p. 86.
5 Miguel Cuenco died on June 20, 1990. Certificate of Death; records, Vol. III, p. 1079.
6 Assailed Decision, pp. 2-5; rollo, pp. 62-65.
7 This case was deemed submitted for resolution on May 23, 2003, when the Court received respondent?s Manifestation. On August 11, 2003, this Manifestation was taken up by the Third Division, which resolved to allow a substitution of parties. Petitioner?s Memorandum, signed by Atty. Rody P. Padlan, was filed on September 18, 2002; respondent?s Memorandum, signed by Atty. Paul Nicomedes L. Roldan, was received on October 17, 2002.
8 Petitioner?s Memorandum, pp. 14-15; rollo, pp. 251-252.
9 Almora v. CA, 309 SCRA 586, 597, July 2, 1999, per Gonzaga-Reyes, J. (citing Tañedo v. CA, 252 SCRA 80, 90, January 22, 1996, per Panganiban, J.).
10 ?1 of Rule 45 of the 1997 Rules of Civil Procedure.
11 Manila Bay Club Corporation v. CA, 245 SCRA 715, 725, July 11, 1995, per Francisco, J.
12 Serna v. CA, 308 SCRA 527, 534, June 18, 1999, per Pardo, J. (citing Reyes v. CA, 258 SCRA 651, 658, July 11, 1996, per Romero, J.).
13 Rilloraza, Africa, De Ocampo and Africa v. Eastern Telecommunications Phils., Inc., 309 SCRA 566, 574, July 2, 1999, per Pardo, J.
14 Art. 1799 of the Civil Code states: "A stipulation which excludes one or more partners from any share in the profits or losses is void."
15 Vda. de Esconde v. CA, 253 SCRA 66, February 1, 1996 (citing Tolentino, Civil Code of the Philippines, , Vol. IV, p. 669, which in turn cited 54 Am Jur. 21).
16 Art. 1441 of the Civil Code.
17 Rosario v. CA, 310 SCRA 464, July 19, 1999 (citing O?laco v. Co Cho Chit, 220 SCRA 662, March 31, 1993).
18 Id., p. 475, per Gonzaga-Reyes, J. (citing Tigno v. CA, 280 SCRA 271, October 8, 1997; and Policarpio v. CA, 269 SCRA 344, March 7, 1997).
19 Rosario v. CA, supra.
20 Vitug, Civil Law Annotated , Vol. III, p. 176.
21 Rosario v. CA, supra, p. 475, per Gonzaga-Reyes, J. (citing Morales v. CA, 274 SCRA 282, June 19, 1997; Huang v. CA, 236 SCRA 420, September 13, 1994; Vda. de Esconde v. CA, supra).
22 Art. 1447 of the Civil Code.
23 TCT No. 21108; records, Vol. I, p. 7.
24 The property was overgrown with shrubs. TSN, December 9, 1994, p. 6.
25 One of Mariano Cuenco?s daughters. TSN, December 9, 1994, p. 6.
26 Annex "D" of respondent?s Memorandum.
27 TSN, December 9, 1994, p. 7.
28 Id., pp. 27-28.
29 Respondent?s Memorandum, p. 12; rollo, p. 308.
30 TSN, December 9, 1994, p. 9.
31 Records, Vol. I, p. 6.
32 TSN, June 11, 1973, p. 45.
33 Exhibit "G," Certification dated June 13, 1973.
34 Development Bank of the Philippines v. CA, 331 SCRA 267, 293, April 28, 2000, per Mendoza, J.
35 Miguel Cuenco paid realty taxes for the years 1945 to 1963 only on April 4, 1964. Exhibit "7," Certification dated July 31, 1974; records, Vol. III, p. 2065.
36 Mariano Cuenco died on February 25, 1964. TSN, June 11, 1973, p. 9.
37 Last Will and Testament of M. Jesus Cuenco, pp. 1-2; rollo, pp. 378-379.
38 Petitioner?s Memorandum, p. 6; rollo, p. 243.
39 Hanopol v. Shoemart, Incorporated, 390 SCRA 439, October 4, 2002.
40 Westmont Bank v. Ong, 375 SCRA 212, January 30, 2002; De Castro v. CA, 384 SCRA 607, July 18, 2002.
41 Respondent?s Memorandum, p. 32; rollo, p. 328.
43 Complaint; records, pp. 1-8.
44 Magellan Capital Management Corportion v. Zosa, 355 SCRA 157, March 26, 2001; Magnolia Dairy Products Corp. v. NLRC, 252 SCRA 483, January 29, 1996.
45 City of Cebu v. Heirs of Candido Rubi, 306 SCRA 408, 424, April 29, 1999, per Gonzaga-Reyes, J. (citing Mendoza v. CA, 274 SCRA 527, June 20, 1997).
September 30, 2004
Petitioners seek a reversal of the twin Orders1 of the Court of Appeals dated 15 November 19962 and 31 January 1997,3 in CA-G.R. CV No. 35886, entitled "ALS Management et al., v. Swedish Match, AB et al." The appellate court overturned the trial court?s Order4 dismissing the respondents? complaint for specific performance and remanded the case to the trial court for further proceedings.
Swedish Match AB (hereinafter SMAB) is a corporation organized under the laws of Sweden not doing business in the Philippines. SMAB, however, had three subsidiary corporations in the Philippines, all organized under Philippine laws, to wit: Phimco Industries, Inc. (Phimco), Provident Tree Farms, Inc., and OTT/Louie (Phils.), Inc.
Sometime in 1988, STORA, the then parent company of SMAB, decided to sell SMAB of Sweden and the latter?s worldwide match, lighter and shaving products operation to Eemland Management Services, now known as Swedish Match NV of Netherlands, (SMNV), a corporation organized and existing under the laws of Netherlands. STORA, however, retained for itself the packaging business.
SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the shaving business. SMNV adopted a two-pronged strategy, the first being to sell its shares in Phimco Industries, Inc. and a match company in Brazil, which proposed sale would stave-off defaults in the loan covenants of SMNV with its syndicate of lenders. The other move was to sell at once or in one package all the SMNV companies worldwide which were engaged in match and lighter operations thru a global deal (hereinafter, global deal).
Ed Enriquez (Enriquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA)?the management company of the Swedish Match group?was commissioned and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of SMNV. Enriquez came to the Philippines in November 1989 and informed the Philippine financial and business circles that the Phimco shares were for sale.
Several interested parties tendered offers to acquire the Phimco shares, among whom were the AFP Retirement and Separation Benefits System, herein respondent ALS Management & Development Corporation and respondent Antonio Litonjua (Litonjua), the president and general manager of ALS.
In his letter dated 3 November 1989, Litonjua submitted to SMAB a firm offer to buy all of the latter?s shares in Phimco and all of Phimco?s shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. for the sum of P750,000,000.00.5
Through its Chief Executive Officer, Massimo Rossi (Rossi), SMAB, in its letter dated 1 December 1989, thanked respondents for their interest in the Phimco shares. Rossi informed respondents that their price offer was below their expectations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares, with the assurance that respondents would enjoy a certain priority although several parties had indicated their interest to buy the shares.6
Thereafter, an exchange of correspondence ensued between petitioners and respondents regarding the projected sale of the Phimco shares. In his letter dated 21 May 1990, Litonjua offered to buy the disputed shares, excluding the lighter division for US$30.6 million, which per another letter of the same date was increased to US$36 million.7 Litonjua stressed that the bid amount could be adjusted subject to availability of additional information and audit verification of the company finances.
Responding to Litonjua?s offer, Rossi sent his letter dated 11 June 1990, informing the former that ALS should undertake a due diligence process or pre-acquisition audit and review of the draft contract for the Match and Forestry activities of Phimco at ALS? convenience. However, Rossi made it clear that at the completion of the due diligence process, ALS should submit its final offer in US dollar terms not later than 30 June 1990, for the shares of SMAB corresponding to ninety-six percent (96%) of the Match and Forestry activities of Phimco. Rossi added that in case the "global deal" presently under negotiation for the Swedish Match Lights Group would materialize, SMAB would reimburse up to US$20,000.00 of ALS? costs related to the due diligence process.8
Litonjua in a letter dated 18 June 1990, expressed disappointment at the apparent change in SMAB?s approach to the bidding process. He pointed out that in their 4 June 1990 meeting, he was advised that one final bidder would be selected from among the four contending groups as of that date and that the decision would be made by 6 June 1990. He criticized SMAB?s decision to accept a new bidder who was not among those who participated in the 25 May 1990 bidding. He informed Rossi that it may not be possible for them to submit their final bid on 30 June 1990, citing the advice to him of the auditing firm that the financial statements would not be completed until the end of July. Litonjua added that he would indicate in their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time.9
Two days prior to the deadline for submission of the final bid, Litonjua again advised Rossi that they would be unable to submit the final offer by 30 June 1990, considering that the acquisition audit of Phimco and the review of the draft agreements had not yet been completed. He said, however, that they would be able to finalize their bid on 17 July 1990 and that in case their bid would turn out better than any other proponent, they would remit payment within ten (10) days from the execution of the contracts.10
Enriquez sent notice to Litonjua that they would be constrained to entertain bids from other parties in view of Litonjua?s failure to make a firm commitment for the shares of Swedish Match in Phimco by 30 June 1990.11
In a letter dated 3 July 1990, Rossi informed Litonjua that on 2 July 1990, they signed a conditional contract with a local group for the disposal of Phimco. He told Litonjua that his bid would no longer be considered unless the local group would fail to consummate the transaction on or before 15 September1990.12
Apparently irked by SMAB?s decision to junk his bid, Litonjua promptly responded by letter dated 4 July 1990. Contrary to his prior manifestations, he asserted that, for all intents and purposes, the US$36 million bid which he submitted on 21 May 1990 was their final bid based on the financial statements for the year 1989. He pointed out that they submitted the best bid and they were already finalizing the terms of the sale. He stressed that they were firmly committed to their bid of US$36 million and if ever there would be adjustments in the bid amount, the adjustments were brought about by SMAB?s subsequent disclosures and validated accounts, such as the aspect that only ninety-six percent (96%) of Phimco shares was actually being sold and not one-hundred percent (100%).13
More than two months from receipt of Litonjua?s last letter, Enriquez sent a fax communication to the former, advising him that the proposed sale of SMAB?s shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with ALS on an exclusive basis for a period of fifteen (15) days from 26 September 1990 subject to the terms contained in the letter. Additionally, Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period, SMAB would enter into negotiations with other buyers.14
Shortly thereafter, Litonjua sent a letter expressing his objections to the totally new set of terms and conditions for the sale of the Phimco shares. He emphasized that the new offer constituted an attempt to reopen the already perfected contract of sale of the shares in his favor. He intimated that he could not accept the new terms and conditions contained therein.15
On 14 December 1990, respondents, as plaintiffs, filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages, with a prayer for the issuance of a writ of preliminary injunction, against defendants, now petitioners. The individual defendants were sued in their respective capacities as officers of the corporations or entities involved in the aborted transaction.
Aside from the averments related to their principal cause of action for specific performance, respondents alleged that the Phimco management, in utter bad faith, induced SMAB to violate its contract with respondents. They contended that the Phimco management took an interest in acquiring for itself the Phimco shares and that petitioners conspired to thwart the closing of such sale by interposing various obstacles to the completion of the acquisition audit.16 Respondents claimed that the Phimco management maliciously and deliberately delayed the delivery of documents to Laya Manabat Salgado & Co. which prevented them from completing the acquisition audit in time for the deadline on 30 June 1990 set by petitioners.17 Respondents added that SMAB?s refusal to consummate the perfected sale of the Phimco shares amounted to an abuse of right and constituted conduct which is contrary to law, morals, good customs and public policy.18
Respondents prayed that petitioners be enjoined from selling or transferring the Phimco shares, or otherwise implementing the sale or transfer thereof, in favor of any person or entity other than respondents, and that any such sale to third parties be annulled and set aside. Respondents also asked that petitioners be ordered to execute all documents or instruments and perform all acts necessary to consummate the sales agreement in their favor.
Traversing the complaint, petitioners alleged that respondents have no cause of action, contending that no perfected contract, whether verbal or written, existed between them. Petitioners added that respondents? cause of action, if any, was barred by the Statute of Frauds since there was no written instrument or document evidencing the alleged sale of the Phimco shares to respondents.
Petitioners filed a motion for a preliminary hearing of their defense of bar by the Statute of Frauds, which the trial court granted. Both parties agreed to adopt as their evidence in support of or against the motion to dismiss, as the case may be, the evidence which they adduced in support of their respective positions on the writ of preliminary injunction incident.
In its Order dated 17 April 1991, the RTC dismissed respondents? complaint.19 It ruled that there was no perfected contract of sale between petitioners and respondents. The court a quo said that the letter dated 11 June 1990, relied upon by respondents, showed that petitioners did not accept the bid offer of respondents as the letter was a mere invitation for respondents to conduct a due diligence process or pre-acquisition audit of Phimco?s match and forestry operations to enable them to submit their final offer on 30 June 1990. Assuming that respondent?s bid was favored by an oral acceptance made in private by officers of SMAB, the trial court noted, such acceptance was merely preparatory to a formal acceptance by the SMAB?the acceptance that would eventually lead to the execution and signing of the contract of sale. Moreover, the court noted that respondents failed to submit their final bid on the deadline set by petitioners.
Respondents appealed to the Court of Appeals, assigning the following errors:
A. THE TRIAL COURT EXCEEDED ITS AUTHORITY AND JURISDICTION WHEN IT ERRED PROCEDURALLY IN MOTU PROPIO (sic) DISMISSING THE COMPLAINT IN ITS ENTIRETY FOR "LACK OF A VALID CAUSE OF ACTION" WITHOUT THE BENEFIT OF A FULL-BLOWN TRIAL AND ON THE MERE MOTION TO DISMISS.
B. THE TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANTS? CAUSE OF ACTION BASED ON TORT WHICH, HAVING BEEN SUFFICIENTLY PLEADED, INDEPENDENTLY WARRANTED A FULL-BLOWN TRIAL.
C. THE TRIAL COURT ERRED IN IGNORING PLAINTIFFS-APPELLANTS? CAUSE OF ACTION BASED ON PROMISSORY ESTOPPEL WHICH, HAVING BEEN SUFFICIENTLY PLEADED, WARRANTED A FULL-BLOWN TRIAL, INDEPENDENTLY FOR THE OTHER CAUSES OF ACTION.
D. THE TRIAL COURT JUDGE ERRED IN FORSWEARING JUDICIAL OBJECTIVITY TO FAVOR DEFENDANTS-APPELLEES BY MAKING UNFOUNDED FINDINGS, ALL IN VIOLATION OF PLAINTIFFS-APPELLANTS? RIGHT TO DUE PROCESS.20
After assessing the respective arguments of the parties, the Court of Appeals reversed the trial court?s decision. It ruled that the series of written communications between petitioners and respondents collectively constitute a sufficient memorandum of their agreement under Article 1403 of the Civil Code; thus, respondents? complaint should not have been dismissed on the ground that it was unenforceable under the Statute of Frauds. The appellate court opined that any document or writing, whether formal or informal, written either for the purpose of furnishing evidence of the contract or for another purpose which satisfies all the Statute?s requirements as to contents and signature would be
sufficient; and, that two or more writings properly connected could be considered together. The appellate court concluded that the letters exchanged by and between the parties, taken together, were sufficient to establish that an agreement to sell the disputed shares to respondents was reached.
The Court of Appeals clarified, however, that by reversing the appealed decision it was not thereby declaring that respondents are entitled to the reliefs prayed for in their complaint, but only that the case should not have been dismissed on the ground of unenforceability under the Statute of Frauds. It ordered the remand of the case to the trial court for further proceedings.
Hence, this petition.
Petitioners argue that the Court of Appeals erred in failing to consider that the Statute of Frauds requires not just the existence of any note or memorandum but that such note or memorandum should evidence an agreement to sell; and, that in this case, there was no word, phrase, or statement in the letters exchanged between the two parties to show or even imply that an agreement had been reached for the sale of the shares to respondent.
Petitioners stress that respondent Litonjua made it clear in his letters that the quoted prices were merely tentative and still subject to further negotiations between him and the seller. They point out that there was no meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept respondents? offer that consideration would be paid in Philippine pesos. Moreover, Litonjua signified their inability to submit their final bid on 30 June 1990, at the same time stating that the broad terms and conditions described in their meeting were inadequate for them to make a response at that time so much so that he would have to await the corresponding specifics. Petitioners argue that the foregoing circumstances prove that they failed to reach an agreement on the sale of the Phimco shares.
In their Comment, respondents maintain that the Court of Appeals correctly ruled that the Statute of Frauds does not apply to the instant case. Respondents assert that the sale of the subject shares to them was perfected as shown by the following circumstances, namely: petitioners assured them that should they increase their bid, the sale would be awarded to them and that they did in fact increase their previous bid of US$30.6 million to US$36 million; petitioners orally accepted their revised offer and the acceptance was relayed to them by Rene Dizon; petitioners directed them to proceed with the acquisition audit and to submit a comfort letter from the United Coconut Planters? Bank (UCPB); petitioner corporation confirmed its previous verbal acceptance of their offer in a letter dated 11 June 1990; with the prior approval of petitioners, respondents engaged the services of Laya, Manabat, Salgado & Co., an independent auditing firm, to immediately proceed with the acquisition audit; and, petitioner corporation reiterated its commitment to be bound by the result of the acquisition audit and
promised to reimburse respondents? cost to the extent of US$20,000.00. All these incidents, according to respondents, overwhelmingly prove that the contract of sale of the Phimco shares was perfected.
Further, respondents argued that there was partial performance of the perfected contract on their part. They alleged that with the prior approval of petitioners, they engaged the services of Laya, Manabat, Salgado & Co. to conduct the acquisition audit. They averred that petitioners agreed to be bound by the results of the audit and offered to reimburse the costs thereof to the extent of US$20,000.00. Respondents added that in compliance with their obligations under the contract, they have submitted a comfort letter from UCPB to show petitioners that the bank was willing to finance the acquisition of the Phimco shares.21
The basic issues to be resolved are: (1) whether the appellate court erred in reversing the trial court?s decision dismissing the complaint for being unenforceable under the Statute of Frauds; and (2) whether there was a perfected contract of sale between petitioners and respondents with respect to the Phimco shares.
The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil Code22 requires certain contracts enumerated therein to be evidenced by some note or memorandum in order to be enforceable. The term "Statute of Frauds" is descriptive of statutes which require certain classes of contracts to be in writing. The Statute does not deprive the parties of the right to contract with respect to the matters therein involved, but merely regulates the formalities
of the contract necessary to render it enforceable.23 Evidence of the agreement cannot be received without the writing or a secondary evidence of its contents.
The Statute, however, simply provides the method by which the contracts enumerated therein may be proved but does not declare them invalid because they are not reduced to writing. By law, contracts are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable.24 Consequently, the effect of non-compliance with the requirement of the Statute is simply that no action can be enforced unless the requirement is complied with.25 Clearly, the form required is for evidentiary purposes only. Hence, if the parties permit a contract to be proved, without any objection, it is then just as binding as if the Statute has been complied with.26
The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses, by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged.27
However, for a note or memorandum to satisfy the Statute, it must be complete in itself and cannot rest partly in writing and partly in parol. The note or memorandum must contain the names of the parties, the terms and conditions of the contract, and a description of the property sufficient to render it capable of identification.28 Such note or memorandum must contain the essential elements of the contract expressed with certainty that may be ascertained from the note or memorandum itself, or some other writing to which it refers or within which it is connected, without resorting to parol evidence.29
Contrary to the Court of Appeals? conclusion, the exchange of correspondence between the parties hardly constitutes the note or memorandum within the context of Article 1403 of the Civil Code. Rossi?s letter dated 11 June 1990, heavily relied upon by respondents, is not complete in itself. First, it does not indicate at what price the shares were being sold. In paragraph (5) of the letter, respondents were supposed to submit their final offer in U.S. dollar terms, at that after the completion of the due diligence process. The paragraph undoubtedly proves that there was as yet no definite agreement as to the price. Second, the letter does not state the mode of payment of the price. In fact, Litonjua was supposed to indicate in his final offer how and where payment for the shares was planned to be made.30
Evidently, the trial court?s dismissal of the complaint on the ground of unenforceability under the Statute of Frauds is warranted.31
Even if we were to consider the letters between the parties as a sufficient memorandum for purposes of taking the case out of the operation of the Statute the action for specific performance would still fail.
A contract is defined as a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another, or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do.32 There can be no contract unless the following requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; (c) cause of the obligation which is established.33 Contracts are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.34
Specifically, in the case of a contract of sale, required is the concurrence of three elements, to wit: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter, and (c) price certain in money or its equivalent.35 Such contract is born from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.36
In general, contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.37
A negotiation is formally initiated by an offer. A perfected promise merely tends to insure and pave the way for the celebration of a future contract. An imperfect promise (policitacion), on the other hand, is a mere unaccepted offer.38 Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. At any time prior to the perfection of the contract, either negotiating party may stop the negotiation.39 The offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal.40
An offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. Consent in a contract of sale should be manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.41
Quite obviously, Litonjua?s letter dated 21 May 1990, proposing the acquisition of the Phimco shares for US$36 million was merely an offer. This offer, however, in Litonjua?s own words, "is understood to be subject to adjustment on the basis of an audit of the assets, liabilities and net worth of Phimco and its subsidiaries and on the final negotiation between ourselves."42
Was the offer certain enough to satisfy the requirements of the Statute of Frauds? Definitely not.
Litonjua repeatedly stressed in his letters that they would not be able to submit their final bid by 30 June 1990.43 With indubitable inconsistency, respondents later claimed that for all intents and purposes, the US$36 million was their final bid. If this were so, it would be inane for Litonjua to state, as he did, in his letter dated 28 June 1990 that they would be in a position to submit their final bid only on 17 July 1990. The lack of a definite offer on the part of respondents could not possibly serve as the basis of their claim that the sale of the Phimco shares in their favor was perfected, for one essential element of a contract of sale was obviously wanting?the price certain in money or its equivalent. The price must be certain, otherwise there is no true consent between the parties.44 There can be no sale without a price.45 Quite recently, this Court reiterated the long-standing doctrine that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist since the agreement on the manner of payment goes into the price such that a
disagreement on the manner of payment is tantamount to a failure to agree on the price.46
Granting arguendo, that the amount of US$36 million was a definite offer, it would remain as a mere offer in the absence of evidence of its acceptance. To produce a contract, there must be acceptance, which may be express or implied, but it must not qualify the terms of the offer.47 The acceptance of an offer must be unqualified and absolute to perfect the contract.48 In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.49
Respondents? attempt to prove the alleged verbal acceptance of their US$36 million bid becomes futile in the face of the overwhelming evidence on record that there was in the first place no meeting of the minds with respect to the price. It is dramatically clear that the US$36 million was not the actual price agreed upon but merely a preliminary offer which was subject to adjustment after the conclusion of the audit of the company finances. Respondents? failure to submit their final bid on the deadline set by petitioners prevented the perfection of the contract of sale. It was not perfected due to the absence of one essential element which was the price certain in money or its equivalent.
At any rate, from the procedural stand point, the continuing objections raised by petitioners to the admission of parol evidence50 on the alleged verbal acceptance of the offer rendered any evidence of acceptance inadmissible.
Respondents? plea of partial performance should likewise fail. The acquisition audit and submission of a comfort letter, even if considered together, failed to prove the perfection of the contract. Quite the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part of the due diligence process to help them arrive at and make their final offer. On the other hand, the submission of the comfort letter was merely a guarantee that respondents had the financial capacity to pay the price in the event that their bid was accepted by petitioners.
The Statute of Frauds is applicable only to contracts which are executory and not to those which have been consummated either totally or partially.51 If a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already derived by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.52 This rule, however, is predicated on the fact of ratification of the contract within the meaning of Article 1405 of the Civil Code either (1) by failure to object to the presentation of oral evidence to prove the same, or (2) by the acceptance of benefits under them. In the instant case, respondents failed to prove that there was partial performance of the contract within the purview of the Statute.
Respondents insist that even on the assumption that the Statute of Frauds is applicable in this case, the trial court erred in dismissing the complaint altogether. They point out that the complaint presents several causes of action.
A close examination of the complaint reveals that it alleges two distinct causes of action, the first is for specific performance53 premised on the existence of the contract of sale, while the other is solely for damages, predicated on the purported dilatory maneuvers executed by the Phimco management.54
With respect to the first cause of action for specific performance, apart from petitioners? alleged refusal to honor the contract of sale?which has never been perfected in the first place?respondents made a number of averments in their complaint all in support of said cause of action. Respondents
claimed that petitioners were guilty of promissory estoppel,55 warranty breaches56 and tortious conduct57 in refusing to honor the alleged contract of sale. These averments are predicated on or at least interwoven with the existence or perfection of the contract of sale. As there was no such perfected contract, the trial court properly rejected the averments in conjunction with the dismissal of the complaint for specific performance.
However, respondents? second cause of action due to the alleged malicious and deliberate delay of the Phimco management in the delivery of documents necessary for the completion of the audit on time, not being based on the existence of the contract of sale, could stand independently of the action for specific performance and should not be deemed barred by the dismissal of the cause of action predicated on the failed contract. If substantiated, this cause of action would entitle respondents to the recovery of damages against the officers of the corporation responsible for the acts complained of.
Thus, the Court cannot forthwith order dismissal of the complaint without affording respondents an opportunity to substantiate their allegations with respect to its cause of action for damages against the officers of Phimco based on the latter?s alleged self-serving dilatory maneuvers.
WHEREFORE, the petition is in part GRANTED. The appealed Decision is hereby MODIFIED insofar as it declared the agreement between the parties enforceable under the
Statute of Frauds. The complaint before the trial court is ordered DISMISSED insofar as the cause of action for specific
performance is concerned. The case is ordered REMANDED to the trial court for further proceedings with respect to the cause of action for damages as above specified.
Puno, Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
1 Penned by Justice Pedro A. Ramirez, concurred in by Justices Pacita Cañizares-Nye and Romeo J. Callejo, Sr.(now Associate Justice of this Court)
2 Rollo, pp.74-99.
3 Id. at 103.
4 Issued by Judge Armie E. Elma of the Regional Trial Court of Pasig.
5 Annex "A," Rollo, p. 101.
6 Annex "B," Id. at 104.
7 Annex "D," Id. at 110.
8 Id. at 114-115.
9 Id. at 116-117.
10 Id. at 121.
11 Id. at 123.
12 Annex "K," Rollo, p. 125.
13 Annex "L," Id. at 126.
14 Annex "M," Id. at 128.
15 Rollo, p. 130.
16 RTC Rollo. p. 17
17 Id. at 19.
18 Id. at 23.
19 The dispositive portion of the trial court?s decision reads:
"WHEREFORE, in view of all the foregoing considerations, this Court gives due course to defendants? (except Rene Dizon) affirmative defense of bar by the statute of frauds. This case is ordered DISMISSED for lack of a valid cause of action with costs against plaintiffs. The writ of preliminary injunction issued on January 14, 1991 is herby dissolved."
20 Rollo, pp. 81-82.
21 Id. at 164.
22 Art. 1403. The following contracts are unenforceable, unless they are ratified:
x x x
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year from the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;
(c) An agreement made in consideration of marriage, other than a mutual promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
(f) A representation as to the credit of a third person.
23 Rosencor Development Corporation v. Court of Appeals, G.R. No. 140479, March 8, 2001, 354 SCRA 119.
24 Article 1356, Civil Code.
25 Gallemit v. Tabilaran, 20 Phil. 241 (1911).
26 Domalagan v. Bolifer, 33 Phil. 471 (1915-1916).
27 Asia Productions Co., Inc. v. Pano, et. al., G.R. No. 51058, January 27, 1992, 205 SCRA 458.
28 Litonjua v. Fernandez, et.al., G.R. No. 148116, April 14, 2004, citing Holsz v. Stephen, 200 N.E. 601(1936).
29 Ibid., citing Franklin Sugar Refining Co. v. Egerton, 288 Fed. Rep. 698(1923); Williams v. Morris, 95 U.S. 360 (1877).
30 Annex "E," Rollo, p. 114.
31 Rule 16, par. (i), Rules of Civil Procedure.
32 4 Sanchez Roman 146.
33 Article 1318, Civil Code.
34 Gomez v. Court of Appeals, G. R. No. 120747, September 21, 2000, 340 SCRA 720.
35 Roble v. Arbasa, 414 Phil. 434 (2001).
36 Laforteza v. Machuca, 389 Phil. 167 (2000); Katipunan v. Katipunan, Jr., 425 Phil. 818 (2002); Londres v. Court of Appeals, G.R. No. 136427, December 17, 2002, 394 SCRA 133.
37 Bugatti v. Court of Appeals, G.R. No. 138113, October 17, 2000, 343 SCRA 335.
38 8 Manresa, 5th Ed., Bk. 2, pp. 268-270 cited in Jurado, Comments and Jurisprudence on Obligations and Contracts, 1993 Ed., p. 354.
39 Ang Yu v. Asuncion, G.R. No. 109125, December 2, 1994, 238 SCRA 1994.
40 Laudico v. Arias, 43 Phil. 270.
41 Article 1319, Civil Code.
42 Annex "D," Rollo, p. 111.
43 span style=’font-siz
September 30, 2004
Basic is the rule that only the allegations of a complaint may be used to determine whether a cause of action is being pleaded. Whether these are true or false is unimportant at this point. The test is, assuming the allegations to be true, can a valid judgment, as prayed for by the plaintiff, be rendered by the court? If so, then the complaint states a cause of action.
In the present case, the Second Amended Complaint contains sufficient allegations to implicate Gregorio S. Licaros in an alleged conspiracy to accumulate ill-gotten wealth. The contentions that his acts were done in good faith, or by the Monetary Board are matters of defense that cannot abate the Complaint upon a motion to dismiss.
Before the Court is a Petition for Certiorari1 under Rule 65 of the Rules of Court, seeking to nullify the August 13, 20022 and the February 6, 20033 Resolutions of the Sandiganbayan in Civil Case No. 0005. The decretal portion of the first assailed Resolution reads:
"WHEREFORE, for lack of merit, the motion to dismiss is hereby DENIED."4
The second challenged Resolution denied petitioners? Motion for Reconsideration.
Gregorio S. Licaros, petitioners? predecessor-in-interest, served as governor of the Central Bank of the Philippines from 1970 to 1980, during the incumbency of then President Ferdinand E. Marcos. He died on August 3, 1983.
On July 17, 1987, the Republic of the Philippines — through the Presidential Commission on Good Government (PCGG), assisted by the Office of the Solicitor General (OSG) — filed a Complaint for reversion, reconveyance, restitution, accounting and damages against former President Marcos and his alleged crony, Lucio C. Tan. The Complaint, docketed as Sandiganbayan Case No. 0005, summed up the nature of the action as follows:
"x x x. This is a civil action against Defendants Lucio C. Tan, Ferdinand E. Marcos, Imelda R. Marcos and the rest of the Defendants to recover from them ill-gotten wealth consisting of funds and other property which they, in unlawful concert with one another, had acquired and accumulated in flagrant breach of trust and of their fiduciary obligations as public officers, with grave abuse of right and power and in brazen violation of the Constitution and laws of the Republic of the Philippines, thus resulting in their unjust enrichment during Defendant Ferdinand E. Marcos? 20 years of rule from December 30, 1965 to February 25, 1986, first as President of the Philippines under the 1935 Constitution and, thereafter, as one-man ruler under martial law and Dictator under the 1973 Marcos-promulgated Constitution."5
Aside from the main defendants (Marcos, his wife Imelda R. Marcos, and Tan), twenty-three other persons — who had purportedly acted as their dummies, nominees or agents — were likewise impleaded in the Complaint. It alleged, among others, that Tan — with the connivance of some government officials, including Central Bank Governor Gregorio S. Licaros — had fraudulently acquired the assets of the General Bank and Trust Company (GBTC), now known as the Allied Bank. A pertinent portion of the Complaint reads thus:
"SPECIFIC AVERMENTS OF
DEFENDANTS? ILLEGAL ACTS
"13. Defendant Lucio C. Tan, by himself and/or in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, and taking undue advantage of his relationship and influence with Defendant spouses, among others:
(a) without sufficient collateral and for a nominal consideration, with the active collaboration, knowledge and willing participation of Defendant Willy Co, arbitrarily and fraudulently acquired control of the General Bank and Trust Company which eventually became Allied Banking Corporation, through then Central Bank Governor Gregorio Licaros x x x."6 (Emphasis supplied)
Despite the allegation, Licaros was not impleaded in this Complaint or in the subsequent Expanded Complaint.
On September 13, 1991, four years after the filing of the original action,7 the Republic filed a Motion for Leave to Amend Complaint and for Admission of a Second Amended Complaint, which impleaded the Estate/Heirs of Licaros for the first time. The Amended Complaint, reiterating earlier allegations in the Expanded Complaint, detailed Licaros? participation in the alleged unholy conspiracy as follows:
"5a. Former Central Bank Governor Licaros, now deceased, had facilitated the fraudulent acquisition of the assets of General Bank and Trust Company (GBTC) worth over P688 Million at that time, to favor the Marcoses and the Lucio Tan Group who acquired said GBTC?s assets for a measly sum of P500,000.00. Hence, his Estate represented by his heirs must be impleaded as a party defendant for the purpose of obtaining complete relief. The said heirs may be served with summons and other court processes at Home Bankers Trust, 105 Paseo de Roxas, Makati, Metro Manila.
x x x           x x x           x x x
"SPECIFIC AVERMENTS OF DEFENDANTS?
"14. Defendant Lucio C. Tan, by himself and/or in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, taking undue advantage of his relationship and influence with Defendant spouses, and embarking upon devices, schemes and strat[a]gems, including the use of Defendant Corporations, among others:
(a) without sufficient collateral and for a nominal consideration, with the active collaboration, knowledge and willing participation of Defendant Willy Co, arbitrarily and fraudulently acquired control of the General Bank and Trust Company (GBTC) which eventually became Allied Banking Corporation. Through the manipulation of then Central Bank Governor Gregorio Licaros and of then President Panfilo O. Domingo of the Philippine National Bank (PNB), as shown by, but not limited to the following circumstances:
(1) In 1976, the General Bank and Trust Company, (GBTC for short) got into financial difficulties. The Central Bank then extended an emergency loan to GBTC reaching a total of P310 million. In extending this loan, the CB, however, took control of GBTC when the latter executed an irrevocable Proxy of 2/3 of GBTC?s outstanding shares in favor of the CB and 7 of the 11-member Board of Directors were CB nominees. Subsequently, on March 25, 1977, the Monetary Board of CB issued a Resolution declaring GBTC insolvent, forbidding it to do business and placing it under receivership.
(2) In the meantime, a public bidding for the sale of GBTC assets and liabilities was scheduled at 7:00 P.M. on March 28, 1977. Among the conditions of the bidding were: (a) submission by the bidder of Letter of Credit issued by a bank acceptable to CB to guaranty payment or as collateral of the CB emergency loan; and (b) a 2-year period to repay the said CB emergency loan. On March 29, 1977, CB thru a Monetary Board Resolution, approved the bid of the group of Lucio Tan and Willy Co. This bid, among other things, offered to pay only P500,000.00 for GBTC assets estimated at P688,201,301; Capital Accounts of P103,984,477.55; Cash of P25,698,473.00; and the takeover of the GBTC Head Office and branch offices. The required Letter of Credit was not also attached to the bid. What was attached to the bid was a letter of Defendant Panfilo O. Domingo as PNB President promising to open an irrevocable letter of credit to secure the advances of the Central Bank in the amount of P310 Million. Without this letter of commitment, the Lucio Tan bid would have not been approved. But such letter of commitment was a fraud because it was not meant to be fulfilled. Defendants Ferdinand E. Marcos, Gregorio Licaros and Panfilo O. Domingo conspired together in giving the Lucio Tan group undue favors such as the doing away with the required irrevocable letter of credit, the extension of the term of payment from two years to five years, the approval of the second mortgage as collateral for the Central Bank advances which was deficient by more than P90 Million, and other concessions to the great prejudice of the government and of the GBTC stockholders."8
The Amended Complaint restated the same causes of action originally appearing in the initial Complaint: (1) abuse of right and power in violation of Articles 19, 20 and 21 of the Civil Code; (2) unjust enrichment; (3) breach of public trust; (4) accounting of all legal or beneficial interests in funds, properties and assets in excess of lawful earnings and income; and (5) actual, moral, temperate, nominal and exemplary damages.
On September 3, 2001, the heirs of Licaros filed a Motion to Dismiss the Complaint. Essentially, it raised the following grounds therefor: (1) lack of cause of action and (2) prescription. On October 12, 2001, the Republic filed its Opposition to the Motion.
Ruling of the Sandiganbayan
The Sandiganbayan held that the averments in the Second Amended Complaint had sufficiently established a cause of action against former Central Bank Governor Licaros. Ruled untenable was the argument of petitioners that he could not be held personally liable, because the GBTC assets had been acquired by Tan through a public bidding duly approved by the Monetary Board. According to the anti-graft court, this argument was a matter of defense that could not be resorted to in a motion to dismiss, and that did not constitute a valid ground for dismissal.
It was immaterial that Licaros was not a business associate of the main defendants; and not an officer, a director, or a stockholder of any of the defendant corporations. The paramount issue hinged on his acts as Central Bank governor, particularly his participation in an allegedly illegal conspiracy with Marcos and Domingo to give undue advantage to Tan?s bid for the GBTC assets.
The Sandiganbayan also brushed aside the claim of petitioners that the action against Licaros had already prescribed. It pointed to Section 15 of Article XI of the 1987 Constitution, which mandated that "[t]he right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their nominees or transferees, shall not be barred by prescription, laches or estoppel."
Hence, this Petition.9
In their Memorandum, petitioners raise the following issues10 for our consideration:
Whether or not the Second Amended Complaint states a cause of action against petitioners.
Whether or not the Second Amended Complaint is barred by prescription and laches.
Whether or not Respondent Court has jurisdiction to determine the validity of the liquidation of General Bank and Trust Company (GENBANK or GBTC) and its acquisition by the Lucio Tan group and the consequent culpability of the late Central Bank Governor Licaros in view of the pendency of the issues in G.R. No. 152551 (General Bank and Trust Co. versus Central Bank of the Philippines, et. al.)."11
The Court?s Ruling
The Petition has no merit.
Cause of Action
A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect and not to violate that right; and (3) an act or omission constituting a breach of obligation of the defendant to the plaintiff or violating the right of the plaintiff, for which the latter may maintain an action for recovery of damages.12
The allegations in the Second Amended Complaint clearly and unequivocally outlines its cause of action against Defendant Licaros as follows:
"The wrongs committed by Defendants, acting singly or collectively and in unlawful concert with one another, include the misappropriation and theft of public funds, plunder of the nation?s wealth, extortion, blackmail, bribery, embezzlement and other acts of corruption, betrayal of public trust and brazen abuse of power, as more fully described below, all at the expense and to the grave and irreparable damage of the plaintiff and the Filipino people.
x x x           x x x           x x x
"Former Central Bank Governor Gregorio Licaros, now deceased, had facilitated the fraudulent acquisition of the assets x x x General Bank and Trust Company (GBTC) worth over P688-Million at that time, to favor the Marcoses and the Lucio Tan group who acquired said GBTC?s assets for a measly sum of P500,000.00. Hence, his Estate represented by his heirs must be impleaded as a party defendant for the purpose of obtaining complete relief."13
The Second Amended Complaint was unambiguous when it charged that Licaros, during his lifetime, had conspired with the main defendants — particularly former President Ferdinand E. Marcos, Imelda R. Marcos, Lucio Tan and Philippine National Bank President Panfilo O. Domingo — in facilitating the allegedly questionable transfer of the GBTC assets to Tan.
This charge of "conspiracy" casts a wide net, sufficiently extensive to include all acts and all incidents incidental, related to or arising from the charge of systematic plunder and pillage against the main defendants in Sandiganbayan Case No. 0005. The assailed role of Licaros as Central Bank governor in the questioned GBTC deal is not excluded therefrom. If proven, the allegation of conspiracy may make him liable with his co-defendants.
The alleged conspiracy to defraud the Republic put the case against the Estate/Heirs of Licaros squarely under the exclusive jurisdiction of the Sandiganbayan. Said the Court:
"Under Section 2 of the President?s Executive Order No. 14 issued on May 7, 1986, all cases of the Commission regarding the ?Funds, Moneys, Assets and Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, their close Relatives, Subordinates, Business Associates, Dummies, Agents or Nominees? whether civil or criminal are lodged with the ?exclusive and original jurisdiction of the Sandiganbayan? and all incidents arising from, incident to, or related to, such cases necessarily fall likewise under the Sandiganbayan?s exclusive and original jurisdiction, subject to the review on certiorari exclusively by the Supreme Court."14 (Emphasis supplied)
No Ground to Dismiss the Amended Complaint.
In Virata v. Sandiganbayan,15 a similar case for reconveyance, reversion, accounting and restitution of the allegedly hidden loot of the Marcos regime, this Court denied petitioners? prayer for the dismissal of the Expanded Complaint, insofar as it had impleaded him. Applicable to the instant case is our pronouncement therein:
"The essential elements of a cause of action are a legal right of the plaintiff, a correlative obligation of the defendant, and an act or omission of the defendant violative of said legal right. The test of sufficiency of the facts to constitute a cause of action is whether or not, admitting the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer. As stated in Adamos vs. J.M. Tuason & Co., Inc., (25 SCRA 529), ?It is a well-settled rule that in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question submitted to the court for determination is the sufficiency of the allegations in the complaint itself. Whether these allegations are true or not is beside the point, for their truth is hypothetically admitted. The issue rather is: admitting them to be true, may the court render a valid judgment in accordance with the prayer in the complaint? So rigid is the norm prescribed that if the court should doubt the truth of the facts averred, it must not dismiss the complaint but require an answer and proceed to hear the case on the merits.?"16
Starkly similar to the foregoing discussion, the herein petitioners are seeking the dismissal of the present case, because (1) the actions imputed to Licaros as Central Bank governor were allegedly official acts of the members of the Monetary Board acting as a collegial body; and (2) the acquisition was done through a public bidding and in good faith. These contentions are evidently matters of defense, the veracity of which must be determined in a full-blown trial (or in a pretrial stipulation), and not in a mere motion to dismiss.
The instant action for reconveyance, restitution, and accounting impleads the Estate/Heirs of Gregorio Licaros for previous acts committed by the decedent during his lifetime, more particularly for conspiring with the main defendants to prejudice the Republic. An action to recover ill-gotten wealth is outside the purview of the ordinary rules on prescription, as contained in Article 1146 of the Civil Code.17 Section 15 of Article XI of the 1987 Constitution states:
"Section 15. The right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their nominees or transferees, shall not be barred by prescription, laches or estoppel."
The intendment of the foregoing constitutional provision — exempting actions to recover ill-gotten wealth from the operation of the general rules of prescription — presumably lies in the special attendant circumstances and the primordial state interests involved in cases of such nature.
From the preceding discussion, it is clear that any action involving the recovery of unlawfully acquired properties against Licaros or his transferees, may not be deemed to have prescribed. The language of the Constitution, the law and the Rules of Court is clear and unequivocal. Clearly, the Sandiganbayan did not commit any grave abuse of discretion amounting to lack or excess of jurisdiction when it issued the assailed Resolutions denying, for lack of merit, petitioners? Motion to Dismiss.
Pendency of GR No. 152551 Inconsequential
Petitioners further argue that in not dismissing the Complaint against Licaros for his acts as Central Bank governor, the anti-graft court is in effect passing judgment on the validity of the liquidation of the GBTC and its acquisition by the Lucio Tan group. They contend that the Second Amended Complaint, insofar as it had impleaded Licaros, was clearly pushed beyond the Sandiganbayan?s jurisdiction, as the issue is presently being raised in GR No. 152551 (General Bank and Trust Co. v. Central Bank of the Philippines et al.), pending before this Court.
Suffice it to say that, having established the jurisdiction of the Sandiganbayan over the Second Expanded Complaint and without prejudging the merits of the aforementioned case, this Court believes, and so holds, that a further discussion of this third alleged error raised by petitioners is no longer necessary.
This Court is as interested as the government in recovering ill-gotten wealth. We commend the present leadership of both the PCGG and the OSG for their demonstrated zeal in prosecuting this case. Asking only for an extended period of 40 days, the Office of the Solicitor General has filed its Comment and Memorandum within record time.18 Petitioners are also to be lauded for their timeliness in filing their Reply and Memorandum,19 which manifest a candid intent to settle the issues raised and not to delay unduly the resolution of Sandiganbayan Case No. 0005.
The conduct of both parties in the foregoing case has made it possible for the Court to dispose of the matter in less than a year after the last pleading was filed. Such conduct should characterize the ideal that must be aspired for by parties involved in cases of ill-gotten wealth, when they prosecute and defend their causes before the courts — with utmost dispatch.
The Court, however, cannot ignore earlier lapses, particularly the past lackadaisical prosecution of the present case. The voluminous records show that while the original Complaint had been filed on August 20, 1987, and subsequently expanded in 1988 to include additional and more specific allegations, it was only in 1991 — or more than four years later — when it was amended to include as party-defendants Gregorio Licaros, his heirs and his estate. No new evidence had surfaced within the interim period to justify their belated inclusion. The Amended Complaint was, in essence, a rehash of the earlier Expanded Complaint.
While the rules allow amendments, they must be made on just and reasonable grounds. An amendment is unwarranted if it involves facts already within the knowledge of the plaintiffs at the time of the filing of the original action; otherwise, the protracted trial involving the allegedly ill-gotten wealth of Marcos — almost twenty years in the running — may further stretch unreasonably with no end in sight.
More incredibly, from the time the Second Amended Complaint was filed in 1991, it took the then PCGG and the then OSG ten long years to cause the service of summons on the heirs of Gregorio Licaros.20 The OSG cannot, as it did in its Memorandum, so cavalierly dismiss the delay by conveniently pointing to the clerk of court as the official who had the duty to issue summonses to the defendants. While indeed the Rules of Court entrusts that task to the clerk of court, it behooved the plaintiff to ascertain and inform the court where the summons could be served.
As manifested in the present Petition, Mrs. Concepcion Licaros, the widow of Gregorio S. Licaros, has been living at 802 Harvard Street, Mandaluyong City, to this day. The same address appears on both the private and the official records of the deceased — particularly on his Death Certificate,21 which respondents could have obtained with facility. That it took the then OSG all of ten years just to cause the service of summons on the Licaros heirs is certainly dismaying.
After nearly twenty years, the commitment to exorcise the specter of the bygone dictatorship, a resolve that was forged on the streets of EDSA in 1986, may have sadly been lost to memory. Those who are tasked to undo past wrongs and transgressions are exhorted to tenaciously and steadfastly keep the resolve alive, so that our people could at last put a closure to this dark chapter in our history, avoid the same thorny path, and move forward in the quest for our nation?s destiny.
WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED.
Costs against petitioners.
Sandoval-Gutierrez, Corona, Carpio Morales, and Garcia*, JJ., concur.
* On leave.
1 Rollo, pp. 3-25.
2 Id., pp. 27-34. Fifth Division. Penned by Justice Minita V. Chico-Nazario (Division chair and now a member of this Court), with the concurrence of Justices Ma. Christina G. Cortez-Estrada and Francisco H. Villaruz Jr. (members).
3 Id., pp. 36-37.
4 Assailed Resolution dated August 13, 2002, p. 8; rollo, p. 34.
5 Complaint dated July 17, 1987, p. 2; records, Vol. 1, p. 2.
6 Id., pp. 13-14.
7 See Expanded Complaint; records, Vol. 1, pp. 312-346.
8 Assailed Resolution dated August 13, 2002, pp. 4-8; rollo, pp. 30-32. For a full text of the Second Amended Complaint dated September 5, 1991, see records, Vol. 4, pp. 1598-1635.
9 This case was deemed submitted for decision on December 3, 2003, upon receipt by this Court of respondents? Memorandum, signed by Commissioner Victoria A. Avena and Special Legal Counsels Jose Jose, Aileen Duremdes and Alfonso Tan Jr. of the PCGG; and Solicitor General Alfredo L. Benipayo, Assistant Solicitor General Alexander G. Gesmundo and Associate Solicitor Mauricia E. Dinopol of the OSG. Petitioners? Memorandum, signed by Atty. Ernesto Vinluan Perez, was received by the Court on November 12, 2003.
10 The question of whether the Second Amended Complaint — insofar as it impleaded the Heirs of Gregorio S. Licaros — is a personal or real action has neither been raised by the parties nor passed upon by the Sandiganbayan. Hence, the same question shall not be passed upon by this Court.
11 Petitioners? Memorandum, p. 10; rollo, p. 232. Original in upper case.
12 Vergara v. Court of Appeals, 319 SCRA 323, 327, November 26, 1999.
13 Second Amended Complaint, supra.
14 Republic of the Philippines v. Sandiganbayan, 186 SCRA 864, 871, June 27, 1990, per Gutierrez Jr., J.
15 202 SCRA 680, October 15, 1991.
16 Id., p. 694, per Davide Jr., J. (now CJ).
17 Article 1146 of the Civil Code provides, among others:
"The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff?
(2) Upon a quasi-delict."
18 On May 22, 2003, the OSG asked for an extension of 30 days within which to file its Comment on the Petition, which had been submitted to this Court on May 23, 2003. On June 23, 2003, the OSG asked for another 10 days within which to file the aforementioned pleading. It finally filed its Comment on July 2, 2003, and its Memorandum on December 3, 2003.
19 Petitioners filed their Petition on March 24, 2003, their Reply on August 21, 2003, and their Memorandum on November 12, 2003.
20 It was already on August 3, 2001, when the OSG, in its Manifestation with Ex Parte Motion for the Issuance of an Alias Writ of Summons, informed the Sandiganbayan of the address of herein petitioners. Records, Vol. 9, pp. 352-353.
Accordingly, during its proceedings on August 9, 2001, the Sandiganbayan ordered the issuance of an alias writ of summons to be served on petitioners. (Records, Vol. 9, p. 359).
The Sheriff?s Return dated August 22, 2001, showed that the summons had finally been served on Concepcion B. Licaros on August 20, 2001. Records, Vol. 9, p. 391.
21 Rollo, p. 56.
Republic of the Philippines
September 27, 2004
A.M. No. 2004-17-
On 10 February 2004, Atty. Francis Allan Rubio, former Director IV, Senate Electoral Tribunal and formerly detailed to the Office of retired Senior Associate Justice Josue N. Bellosillo, filed a letter-complaint1 with the Office of the Chief Justice regarding what he described as "a criminal act of MALVERSATION THRU FALSIFICATION OF PUBLIC DOCUMENTS."2
Atty. Rubio claimed that he was not able to collect his overtime pay worth P1, 900.00 for work rendered from 05 to 09 November 1993 during the impeachment cases against the Chief Justice. According to him, when he tried to collect his overtime pay in January 2004, Mr. Jesus Moncayo, Cashier III, Chief of the Cash Disbursement Section, told him that the amount was already recorded as account payable and would be paid through a voucher. After some follow-ups, Atty. Rubio learned that "some unscrupulous and corrupt person/s" forged his signature in the payroll and collected his overtime pay.3
COMPLAINT FILED BY ATTY. FRANCIS ALLAN A. RUBIO ON THE ALLEGED FALSIFICATION OF PUBLIC DOCUMENTS AND …
Republic of the PhilippinesSUPREME COURTManila
A.M. No. 2004-17-SC             September 27, 2004
RE: COMPLAINT FILED BY ATTY. FRANCIS ALLAN A. RUBIO ON THE ALLEGED FALSIFICATION OF PUBLIC DOCUMENTS AND MALVERSATION OF PUBLIC FUNDS.
R E S O L U T I ON
On 10 February 2004, Atty. Francis Allan Rubio, former Director IV, Senate Electoral Tribunal and formerly detailed to the Office of retired Senior Associate Justice Josue N. Bellosillo, filed a letter-complaint1 with the Office of the Chief Justice regarding what he described as "a criminal act of MALVERSATION THRU FALSIFICATION OF PUBLIC DOCUMENTS."2
Atty. Rubio claimed that he was not able to collect his overtime pay worth P1, 900.00 for work rendered from 05 to 09 November 1993 during the impeachment cases against the Chief Justice. According to him, when he tried to collect his overtime pay in January 2004, Mr. Jesus Moncayo, Cashier III, Chief of the Cash Disbursement Section, told him that the amount was already recorded as account payable and would be paid through a voucher. After some follow-ups, Atty. Rubio learned that "some unscrupulous and corrupt person/s" forged his signature in the payroll and collected his overtime pay.3
However, on 11 February 2004, Atty. Rubio, through another letter submitted to the Office of the Chief Justice, sought the withdrawal of his earlier letter-complaint, considering that he received from Mr. Moncayo the amount of P1,900.00 covering his overtime pay which he was not able to collect earlier.4
On 16 February 2004, the Office of the Chief Attorney through a Memorandum5 to the Chief Justice, recommended that the letter-complaint of Atty. Rubio be referred to the Complaints and Investigation Division of the Office of Administrative Services (CID-OAS) for investigation, report and recommendation for the purpose of (1) digging deeper into the incident so as to pinpoint responsibility for the alleged forgery and the erroneous delivery of overtime pay to the wrong individual, and (2) finding means that may be adopted by the Cashier Division to prevent the recurrence of the incident.6
In the course of the investigation by the CID-OAS, the following persons were summoned: (1) Ms. Araceli Bayuga, SC Judicial Staff Officer, Collection and Disbursement Division, FMBO; (2) Mr. Jesus R. Moncayo, Cashier III, Collection and Disbursement Division, FMBO; (3) Ms. Ludeva Medina, former Judicial Staff Head, Office of Associate Justice Josue N. Bellosillo and now PET Supervising Judicial Staff Officer, Office of Associate Justice Dante O. Tinga; (4) Atty. Francis Allan Rubio, former legal staff of the Office of Retired Senior Associate Justice Josue N. Bellosillo; (5) Mr. Roberto Angelias, former Court Stenographer II, Office of Associate Justice Josue N. Bellosillo and now Clerk III, Office of the Deputy Court Administrator Zenaida N. Elepaño; and (6) Mr. Romeo B. Garrovillas, Messenger, Collection and Disbursement Division, FMBO.7
The Court adopts the findings of the CID-OAS, summarized as follows:
Atty. Rubio was one of the lawyers entitled to overtime pay for work rendered in November 2003 during the impeachment proceedings against the Chief Justice. Incidentally, the Office of Justice Bellosillo was busy around the same time in view of the Justiceâ€™s retirement. In line with this, Atty. Rubio was working on his transfer to the Office of the Ombudsman.8
Sometime in January 2004, Atty. Rubio went to the Cashierâ€™s Office to claim his overtime pay, which was supposed to be paid in cash. Mr. Moncayo of the Cash Division told him that the amount was already under "Accounts Payable" account and, hence, would be paid through a voucher. Atty. Rubio asked Mr. Roberto Angelias to follow up the voucher. When Mr. Angelias did so, he found out that there was no check available, prompting Mr. Moncayo and his staff to look for the voucher. Upon verification from the payroll, they found out that there was no voucher because the amount appeared to have been released. There appeared on the voucher a signature opposite the name of Atty. Rubio, signifying receipt of the amount.9
In the early part of February 2004, Atty. Rubio tried to get his check from the Cashierâ€™s Office, only to find out that he could not get anything. When he confronted Mr. Moncayo about this, the latter was discourteous and even insinuated that Atty. Rubio should be blamed for what had happened because it took him some time to make a claim for his money.10 Atty. Rubio, through Mr. Angelias, was able to secure a photocopy of the payroll.11
Atty. Rubio filed his letter-complaint on 10 February 2004, but withdrew the same on the next day in view of Mr. Moncayoâ€™s payment of his overtime pay.12
During the investigation, Mr. Moncayo admitted to having remitted the amount of P1, 900.00 to Atty. Rubio, but denied responsibility for the unauthorized release of Atty. Rubioâ€™s overtime pay. He claimed that it was Mr. Garrovillas, a messenger at the FMBO, who released the amount. Moreover, Mr. Moncayo stated that he was surprised that an investigation was still conducted when in fact he had already paid with his own money the amount due Atty. Rubio. He claimed that he made the payment because Atty. Rubio got very angry and threatened to file a complaint before the Chief Justice. He maintained that he conducted his own investigation and compared available signatures to find a match with the forged signature, but to no avail.13
Mrs. Araceli Bayuga, Chief of the Cash Division, FMBO claimed that she herself made a comparison of the forged signature with that of the signatures of other Court employees, but did not come up with a conclusive result. She discarded the idea that the incident was an "inside job," stating that in her long years of service with her division, this was the first time than an incident like the subject incident occurred. She implored the Court to help them come up with a measure to deter incidents similar to this.14
On the other hand, Mr. Garrovillas denied having released the money. He testified that he did not know Atty. Rubio until February 2004, when the incident broke out. He stated that if a person making a claim for payment with the Cashierâ€™s Office is not familiar with any of its staff (referring to Mrs. Julieta Jorie Alcaraz, Ms. Belen Jimenez and Mr. Garrovillas himself), and such person does not have the proper identification or a Special Power of Attorney (SPA)Â¾should he be making the claim on behalf of anotherÂ¾then they refer the person to Mr. Moncayo, who by reason of his position takes charge and ultimately releases the amount.15
The CID-OAS conducted its own thorough inspection of the payroll and took pains to compare the forged signature with the existing signatures in the payroll sheets, but it did not find any match. The CID surmised that no person in his right mind would perpetrate the act of forgery and at the same time would let himself be traced as a culprit. Thus, it concluded that the perpetratorâ€™s signing for and claiming the disputed overtime pay are acts which done deliberately.16 Nevertheless, the CID found the following facts to be undisputed: "Atty. Rubio did not receive his overtime allowance; the signature appearing on the payroll was not Atty. Rubioâ€™s; the person to whom it was released or the person [who] claimed for it remained to be unidentified, and so was the Cash Division personnel who released the said amount."17
As a result of its investigation, the CID-OAS recommended the following:
a. Mr. Jesus R. Moncayo be charged administratively for Neglect of Duty and be asked to comment on the Letter-Complaint of Atty. Rubio to accord him due process; and
b. Mrs. Corazon M. Ordoñez, Director V, Fiscal Management and Budget Office be directed to prepare and submit policy on the guidelines on the release of cash benefits, allowances or salaries of officials and employees of the Court in coordination with the SC Chief Judicial Staff Officers of the FMBO within thirty (30) days from receipt of the Courtâ€™s action.18
Mr. Moncayo submitted his Comment,19 wherein he stated that as a matter of practice; they (in the Disbursement Section) initially require employees to present their IDs but dispensed with the requirement after gaining familiarity with the employees and their signatures. They likewise require SPAs when the claimants are representatives of employees.20 Mr. Moncayo claims that prior to the incident, he did not know Atty. Rubio personally, and that if he was the one who released Atty. Rubioâ€™s overtime pay, he would have required the latter to produce his ID.21 Mr. Moncayo averred that upon knowledge of the incident, he conducted his own investigation but failed to identify the perpetrator, as well as the employee who released the subject overtime pay. He claimed he had no intention to cover-up or to countenance the unauthorized release of the amount when he paid Atty. Rubio his overtime pay. He explained that it was a judgment call on his part taking into account that it was the first time that this situation happened.22
Meanwhile, Mrs. Ordoñez submitted proposed guidelines on the disbursement of salaries, allowances and other monetary benefits of Court officials and employees.23 The same was referred to Atty. Eden Candelaria, Deputy Clerk of Court and Chief Administrative Officer for comment. On 21 July 2004, Atty. Candelaria submitted a Memorandum addressed to the Court, containing comments and recommendations on the proposed guidelines.24 On 27 July 2004, the Court en banc issued Administrative Circular No. 32-2004, "PRESCRIBING THE GUIDELINES FOR THE DISTRIBUTION OF SALARIES PAID IN CASH, ALLOWANCES, OVERTIME PAY, FRINGE BENEFITS, TAX REFUNDS, BONUSES, AND ALL OTHER EMOLUMENTS PAID IN CASH TO OFFICIALS AND EMPLOYEES OF THE COURT AND THE PRESIDENTIAL ELECTORAL TRIBUNAL."25 The circular seeks to avoid problems affecting the distribution of salaries, allowances and emoluments paid in cash to Court officials and employees, similar to the instant controversy.26 It features new rules in the distribution of pay envelopes, to wit: i) delivery of allowances and emoluments to key officials of the Court only, while all other employees must claim the same from the counter of the Cash Division; ii) limited period for release of emoluments; iii) schedule of distribution of pay envelopes per surname; iv) presentation of identification cards to the disbursing officer, counting of the contents of the envelope, and acknowledgment of receipt thereof by signing the payroll; v) non-release of emoluments to a person other than the employee concerned, except when such person is an immediate member of the employeeâ€™s family, and such person has a duly notarized Special Power of Attorney (SPA), specifying its validity date and monetary emolument for which it is issued.27
With the safety measures adopted and in place, the only issue remaining is the liability of Mr. Moncayo, who as Cashier III and head of the Cash Disbursement Division, had ultimate responsibility for the matter at hand.
The need to maintain the faith and confidence of the people in the government, its agencies and instrumentalities requires that proceedings in administrative cases should not be made to depend on the whims and caprices of complainants.28 This Court cannot be bound by the unilateral act of the complainant in a matter which may involve its disciplinary power; otherwise that power may be put to naught, thereby undermining the trust character of a public office and impairing the integrity and dignity of this Court as a disciplining authority over all employees of the judiciary.29
The Position of Cashier III has the following job description:
Under general supervision and in his particular area of specialization, provides expert recommendatory action and assistance as required by his immediate head; provides back-up studies on matters within area of specialization; conducts necessary research and discussions on a variety of specialized subjects and submits recommendation for action; undertakes studies towards the continuing improvement of work procedures and techniques; does special assignments given by his immediate head. Prepares payroll of Supreme Court Officials and employees, Judicial and Bar Council and Judiciary Planning, Development and Implementation Office personnel, assist in the counting of monies to be placed in pay envelopes for payment of salaries, Allowances and Overtime pay to the Courtâ€™s Justices, Officials and employees; prepares vouchers for cash advances, for initial salaries, including computation thereof, for terminal leave with pay and maternity leave with pay, unclaimed salaries, Index payments to employees, performs other duties as may be assigned from time to time by immediate Chief; and does related task.30
Over and above these responsibilities is Mr. Moncayoâ€™s duties and functions as Section Chief, described as follows:
Under general supervision, has direct supervision and control over the operations and activities of the section including the personnel thereof; gives instructions and guidance on work methods and procedures; plans distribution of work among subordinates; maintains data concerning the activities of the unit for adequate review of higher officials; analyzes, verifies and consolidates data required by higher officials; studies and prepares reports and recommendations on matters referred to him by his superior; participates in the review of a variety of matters before final submission and approval by the chief of office; maintains office discipline and recommends required administrative action to superior; settles technical and procedural problems; prepares reports, communications and memoranda as required; authenticates copies of documents; approves and signs requisitions for supplies and equipment; signs official correspondence; rates the efficiency/performance of subordinate personnel; and does related tasks.31
The payment made by Mr. Moncayo and the consequent withdrawal of complaint by Atty. Rubio did not end or resolve the issue. Sec. 6, Rule XIV of the Omnibus Rules Implementing Book V of the Administrative Code of 1987 (E.O. 292) provides:
Sec.6. Withdrawal of the complaint does not necessarily discharge respondent from any administrative liability. Where there is obvious truth or merit to the charges or complaint, the same should be given due course.
In his Reply, Atty. Rubio clarified that he was not accusing Mr. Moncayo of any wrongdoing, nor of being a participant in the irregularities regarding his overtime pay. He claimed that Mr. Moncayoâ€™s name was mentioned in his complaint only because the latter was the one who attended to him when he claimed his overtime pay.
Actions in administrative cases are independent of the will of the complainant. While Atty. Rubio may consider this case closed insofar as Mr. Moncayo is concerned, this Court cannot close its eyes to the anomaly which was brought to its attention. Withdrawal of the complaint will not free respondent from his administrative liability particularly because administrative proceedings against public employees are imbued with public interest, public office being a public trust.32
While there may be no evidence pointing to the perpetrator in the instant case, the fact remains that the incident would have been avoided had the Cash Disbursement Section observed the proper procedure involved in the releasing of the allowance, to wit: requiring the person to present proper identification or, in this particular case, a Special Power of Attorney. In the course of the investigation made by the OAS, Mr. Moncayo stated that it became a matter of practice in his Section to release monies without requiring the presentation of the required documents if they recognize or are familiar with the face of the claimant. He admitted that the unauthorized release in the instant case was made without requiring the claimant to present any identification. However, he denied having made the release and claimed that it was one of the members of his staff who released the amount.
As Chief of the Cash Disbursement Section, it was Mr. Moncayoâ€™s primary duty to see to it that the proper procedure for release of money due the employees is followed. For having condoned, and even being guilty of not abiding by these rules, Mr. Moncayo had shown himself to be lacking in the diligence required of his position. His failure amounts to negligence.
The Court agrees with the recommendation of the OAS that respondent Jesus Moncayo be administratively sanctioned for his neglect of duty, which, under the Omnibus Rules Implementing Book V of the E.O. No. 292,33 is tantamount to Simple Neglect of Duty, a less grave offense penalized with suspension for one (1) month and one (1) day to six (6) months for the first offense and dismissal for the second offense.
However, in determining the applicable penalty in this case, this Court takes into consideration the lack of bad faith and the long years of service of Mr. Moncayo in the judiciary. In addition, this Court gives due regard to the fact that this is the first time that this incident happened during Mr. Moncayoâ€™s watch as Chief of the Cash Disbursement Section. On 01 September 2004, Mr. Moncayo retired from the Supreme Court, having reached the compulsory retirement age of 60 years.
Bearing in mind the foregoing and for humanitarian considerations, and in view of Mr. Moncayoâ€™s retirement which makes suspension inapplicable, the proper action is to impose a fine on him in the amount equivalent to his one monthâ€™s salary, deductible from his retirement pay.
WHEREFORE, Jesus A. Moncayo is found GUILTY of simple neglect of duty and is ORDERED to pay a FINE equivalent to one monthâ€™s salary to be deducted from his retirement benefits.
Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Chico-Nazario*, JJ., concur.
1 Rollo, pp. 128-129.
2 Id. at 128.
4 Id. at 137.
5 Id. at 132-136.
6 Id. at 135.
7 Id. at 74.
8 Id. at 74-75.
9 Id. at 74.
11 Id. at 139.
12 Supra note 4.
13 Id. at 76-77.
14 Id. at 77.
15 Id. at 77.
16 Id. at 79.
18 Id. at 80.
19 Id. at 25.
20 Id. at 26.
23 Id. at 22-23.
24 Id. at 13.
25 Id. at 9-12.
26 Id. at 9.
27 Id. at 10-11.
28 Bulado v. Tiu, Jr., A.M. No. P-96-1211, 31 March 2000, 329 SCRA 308, 313, citing Estreller v. Manatad, Jr., A.M. No. P-94-1034, 268 SCRA 608 (1997), Gacho v. Fuentes, Jr., A.M. No. P-98-1265, 291 SCRA 474 (1998).
29 Sandoval v. Manalo, A.M. No. MTJ-96-1080, 22 August 1996, 260 SCRA 611, 620, citing Zamora v. Jumamoy, A.M. No. P-93-781, 238 SCRA 587 (1994), Dela Cruz v. Curso, A.M. No.MTJ-89-315, 221 SCRA 66 (1993), and Presado v. Genova, A.M. No. RTJ-91-657, 223 SCRA 489 (1993).
30 Supreme Court Position Description Form, BC-CSC Form No.1.
31 Supreme Court Job Description Form.
32 Supra note 28.
33 Rule XIV, Section 22 (a) (Amended by CSC Memorandum Circular No. 19, s. 1999).
Republic of the Philippines
September 15, 2004
G.R. No. 160568
CIVIL SERVICE COMMISSION</b>, petitioner,
HERMOGENES P. POBRE, respondent.
D E C I S I O N
Before us is a petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, seeking a review and reversal of the decision1 dated March 31, 2003 of the Court of Appeals annulling and setting aside the resolutions2 promulgated by petitioner Civil Service Commission (CSC), specifically CSC Resolution Nos. 01-1739 dated October 29, 2001 and 02-0236 dated February 19, 2002.
Respondent Hermogenes P. Pobre is a former government official who retired from the government service three times. Respondent first retired as commissioner of the Commission on Audit (COA) on March 31, 1986. He reentered the government and retired as chairman of the Board of Accountancy on October 31, 1990. He was then appointed as associate commissioner of the Professional Regulation Commission (PRC) of which he retired eventually as chairman on February 17, 2001. The first two times he retired, respondent Pobre received his terminal leave pay amounting to P310,522.60 and P55,000, respectively.
On his third retirement, respondent Pobre claimed payment of his terminal leave based on his highest monthly salary as PRC chairman but to be reckoned from the date he first entered the government service as budget examiner in the defunct Budget Commission in 1958. He invoked Section 13 of Commonwealth Act 186:
Sec. 13. Computation of service. – The aggregate period of service which forms the basis for retirement and calculating the amount of annuity described in section eleven hereof shall be computed from the date of original employment, whether as a classified or unclassified employee in the service of an "employer," including periods of service at different times and under one or more employers; x x x.
Doubtful of the legality of the claim, successor PRC chairperson Antonieta Fortuna-Ibe sought the opinion of two constitutional commissions, petitioner CSC and the COA.
On October 29, 2001, petitioner CSC promulgated CSC Resolution No. 01-1739 stating that all respondent Pobre was entitled to were his terminal leave benefits based only on his accrued leave credits from the date of his assumption to office as PRC chairman and not his total terminal leave credits, including those earned in other government agencies3 from the beginning of his government service.
Respondent Pobre sought reconsideration of the above resolution. On February 19, 2002 the CSC issued Resolution No. 02-0236 denying his motion, with the modification, however, that the computation of his terminal leave benefits should include his service as PRC associate commissioner:
WHEREFORE, the motion for reconsideration of former PRC Chairman Hermogenes P. Pobre is hereby DENIED for want of merit. CSC Resolution No. 01-1739 dated October 29, 2001 is, however, modified such that Chairman Pobre is entitled to the payment of his terminal leave benefits computed from the date he was appointed as PRC Commissioner until the termination of his term as Chairman of the Professional Regulation Commission.4
Dissatisfied with the resolution, respondent Pobre elevated the case to the Court of Appeals via a petition for review, raising two issues:
1. whether or not the CSC had the jurisdiction to pass upon the validity of petitionerâ€™s claim for terminal leave benefits when this claim was pending adjudication by the COA and
2. whether or not a retired employee who had served a string of government agencies in his career was entitled to have his terminal leaves computed from the time of his original appointment to the first agency in the manner retirement annuities are computed under Section 13 of Commonwealth Act 186.5
In a decision dated March 31, 2003, the Court of Appeals set aside the resolutions of petitioner CSC and declared that it was the COA, not petitioner CSC, which had jurisdiction to adjudicate respondent Pobreâ€™s claim for terminal leave benefits:
WHEREFORE, the instant petition is PARTIALLY GRANTED. The assailed Resolution No. 02-0236 dated February 19, 2002 of the Civil Service Commission is ANNULLED and SET ASIDE for having been issued without jurisdiction. Instead, the parties are ordered to await the outcome of the query addressed by the respondent Professional Regulation Commission to the Commission on Audit and thereafter, move on the premises. No costs.
Petitioner CSC filed a motion for reconsideration but it was denied on September 24, 2003.
Hence, the instant petition. Petitioner CSC raises a lone issue:
WHETHER THE PETITIONER CSC HAS JURISDICTION TO PASS UPON THE VALIDITY OF RESPONDENT HERMOGENES P. POBREâ€™S CLAIM FOR TERMINAL LEAVE, THE COMPUTATION OF WHICH IS TO BE RECKONED FROM THE DATE HE WAS FIRST EMPLOYED IN THE GOVERNMENT SERVICE IN 1958, UP TO HIS RETIREMENT AS CHAIRMAN OF THE PROFESSIONAL REGULATION COMMISSION ON FEBRUARY 17, 2001, ALTHOUGH IN THE MEANTIME HE ALREADY RECEIVED THE MONETARY VALUE OF HIS TERMINAL LEAVE WHEN HE TWICE RETIRED FROM THE GOVERNMENT SERVICE.7
Petitioner CSC anchors its authority to dispose of respondent Pobreâ€™s claim for terminal leave benefits to its powers under the 1987 Administrative Code. Section 12 (17), Subtitle A, Title I, Book V of the Code enumerates the expanded powers and functions of petitioner CSC, among which is to "(a)dminister the retirement program for government officials and employees."
Under PD 807, otherwise known as the Civil Service Decree of the Philippines, the CSC has, among others, the following powers and functions:
(1) administer and enforce the constitutional and statutory provisions on the merit system;
(2) prescribe, amend and enforce suitable rules and regulations for carrying into effect the provisions of the Decree;
(3) promulgate policies, standards, and guidelines for the Civil Service and adopt plans and programs to promote economical, efficient, and effective personnel administration in the government;
(4) supervise and coordinate the conduct of civil service examination;
(5) approve appointments, whether original or promotional, to positions in the civil service;
(6) inspect and audit periodically the personnel work program of the different departments, bureaus, offices, agencies and other instrumentalities of the government;
(7) hear and decide administrative disciplinary cases instituted directly with it or brought to it on appeal; and
(8) perform such other functions as properly belonging to a central personnel agency.8
On the other hand, the powers and functions of COA are delineated in Section 2 subsections (1) and (2) Article IX-D of the 1987 Constitution:
SEC. 2 (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property owned or held in trust by or pertaining to, the government, or any of its subdivisions, agencies, or instrumentalities, including government-owned and controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the government which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies it shall keep the central accounts of the government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.
(2) The Commission shall have exclusive authority, subject to the limitations in this article, to define the scope of its audit and examination, establish the technique and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties.
These powers and functions may be classified thus:
1. to examine and audit all forms of government revenues;
2. to examine and audit all forms of government expenditures;
3. to settle government accounts;
4. to define the scope and techniques for its own auditing procedures;
5. to promulgate accounting and auditing rules "including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or conscionable expenditures" and
6. to decide administrative cases involving expenditure of public funds.9
In turn, Section 26 of PD 1445, otherwise known as the Government Auditing Code of the Philippines states:
SECTION 26. General jurisdiction. – The authority and powers of the Commission shall extend to and comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the examination and inspection of the books, records, and papers relating to those accounts; and the audit and settlement of the accounts of all persons respecting funds or property received or held by them in an accountable capacity, as well as the examination, audit, and settlement of all debts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned or controlled corporations, including their subsidiaries, and other self-governing boards, commissions, or agencies of the Government, and as herein prescribed, including non-governmental entities subsidized by the government, those funded by donations through the government, those required to pay levies or government share, and those for which the government has put up a counterpart fund or those partly funded by the government. (Italics supplied)
While the determination of leave benefits is within the functions of the CSC as the central personnel agency of the government, the duty to examine accounts and expenditures relating to such benefits properly pertains to the COA. Where government expenditures or use of funds is involved, the CSC cannot claim exclusive jurisdiction simply because leave matters are involved. Thus, even as we recognize CSCâ€™s jurisdiction in this case, its power is not exclusive as it is shared with the COA.
This Courtâ€™s ruling in Borromeo vs. Civil Service Commission10 has already settled this issue. When petitioner Borromeo retired as chairman of the CSC, he wrote a letter to the COA, coursed through the CSC chairman, requesting the inclusion of allowances received at the time of his retirement in the computation of his terminal leave benefits. The COA did not oppose Borromeoâ€™s claim. The CSC, on the other hand and upon the advice of DBM, denied it, arguing that it had exclusive jurisdiction over petitionerâ€™s claim because the determination of the legality of leave credit claims was within its province as the central personnel agency of the government. We ruled that:
The respondent CSCâ€™s stance, however, that it is the body empowered to determine the legality of claims on leave matters, to the exclusion of COA, is not well-taken. While the implementation and enforcement of leave benefits are matters within the functions of the CSC as the central personnel agency of the government, the duty to examine accounts and expenditures relating to leave benefits properly pertains to the COA. Where government expenditures or use of funds is involved, the CSC cannot claim an exclusive domain simply because leave matters are also involved.
The COA, the CSC and the Commission on Elections are equally pre-eminent in their respective spheres. Neither one may claim dominance over the others. In case of conflicting rulings, it is the Judiciary which interprets the meaning of the law and ascertains which view shall prevail.11
Here, there is no conflicting ruling to speak of because the COA is yet to render its opinion on PRCâ€™s query regarding respondent Pobreâ€™s claim for terminal leave benefits. We therefore find it prudent to abstain from any pronouncement on this issue and to wait for COA to rule on respondentâ€™s claim.
WHEREFORE, the decision of the Court of Appeals dated March 31, 2003 is hereby MODIFIED. Its ruling on the issue of jurisdiction is SET ASIDE but the order to await the outcome of COAâ€™s decision respecting respondent Pobreâ€™s claim is AFFIRMED.
Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio Morales*, Callejo, Sr., Azcuna, Tinga, and Chico-Nazario*, JJ., concur.
* on leave
1 Penned by Associate Justice Buenaventura J. Regalado and concurred in by Associate Justices Salvador J. Valdez, Jr., Mercedes Gozo-Dadole and Mariano C. Del Castillo of the Special Division of Five of the Former Second Division, Associate Justice Teodoro P. Regino dissenting.
2 Penned by Commissioner J. Waldemar V. Valmores, concurred in by Chairman Karina Contantino-David and Commissioner Jose Erestain, Jr.
3 Rollo, p. 14.
4 Rollo, p. 21.
5 Rollo, p. 28.
6 Rollo, p. 33.
7 Rollo, p. 5.
8 de Leon, Philippine Constitution Law, vol. ii, 1999 Ed., pp. 631-632.
9 Bernas, The Constitution of the Republic of the Philippines, A Commentary, Vol. II, 1988 First Ed., p. 369.
10 G.R. No. 96032, 31 July 1991, 199 SCRA 911.
11 Id., p. 917.