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.
September 30, 2004
The imperative and sacred duty of each and everyone in the court is to maintain its good name and standing as a temple of justice.1 The Court condemns and would never countenance any conduct, act or omission on the part of all those involved in the administration of justice which would violate the norm of public accountability or tend to diminish the faith of the people in the judiciary.2
In a verified complaint dated June 12, 2002, Adarlina G. Mataga, a retired Court Stenographer 1 of the Municipal Trial Court of Santiago City, Isabela, charged Judge Maxwel S. Rosete and Process Server Gasat M. Payoyo with Dishonesty and Misconduct in connection with the encashing of the check representing her terminal pay.3
Complainant alleged that she applied for disability retirement because she was suffering from Organic Brain Syndrome Moderate to Severe Secondary to Cerebro-Vascular Accident (Thrombosis). Complainant?s application was approved on January 30, 1996,4 and consequently, Disbursement Voucher No. 101-96-03-89245 for One Hundred Sixty Five Thousand Five Hundred Thirty and 8/100 Pesos (P165,530.08) and the corresponding Land Bank Check No. 370216 were prepared in the name of complainant. The check was released to respondent Payoyo who turned it over to Judge Rosete.7
Sometime in March 1996, respondent Payoyo brought complainant to the house of respondent Judge Rosete, where she was given the amount of P44,000.00 as her terminal pay. It was only subsequently that complainant came to know that the disability retirement benefit granted to her was in the amount of P165,530.08, which respondents did not deliver to her.
When asked to comment,8 respondent judge denied the complainant?s allegations. He stated that complainant has not been to his house in Quezon City, nor has he given the complainant the sum of P44,000.00 as her terminal pay. Respondent judge, however, admitted that the check representing the retirement benefits of the complainant was indeed turned over to him by the Supreme Court security guard after it was misplaced by his co-respondent, Payoyo. Upon his receipt of complainant?s check, respondent judge immediately handed the same to Payoyo because he knew that complainant had requested the latter to follow up her check.
For his part, respondent process server Payoyo denied the accusations against him. He claimed that he did not know complainant personally. Respondent judge instructed him to claim complainant?s disability check, which he did. Respondent judge then told him to encash the check at the Land Bank of the Philippines, Taft Avenue Branch and to proceed to the former?s house to meet complainant and her son. There, he turned over the full amount of complainant?s disability benefit.
The case was referred to Judge Fe Albano Madrid, the Executive Judge of the Regional Trial Court of Santiago City, Isabela, for investigation, report and recommendation.9 On July 9, 2003, Judge Madrid submitted her report,10 wherein she recommended that the complaint be dismissed in view of the admission of the complainant that she has received the full amount of her benefits as early as March 17, 1996, as evidenced by a receipt which bore her signature.11
After noting the report of Judge Albano Madrid, we resolved to refer the case to the Office of the Court Administrator (OCA) for evaluation, report and recommendation.12 The OCA recommended that, in view of the failure to thresh out the material contradictions between the allegations of the complainant and the assertions of the respondent, the case be returned to the investigating judge for further investigation, report and recommendation.13 On December 10, 2003, we resolved to return the case to Judge Albano Madrid.14
After conducting another investigation of the case, Judge Albano Madrid submitted her report, stating that during the second investigation, complainant made it clear that she had no more complaint against respondent judge provided that the latter will give her the money. Rather, the complaint was directed at the dishonesty of respondent Payoyo in his dealings with the complainant.
After reviewing the records of this case, we hold that the complaint against respondent judge should be dismissed.
Any administrative complaint leveled against a judge must always be examined with a discriminating eye, for its consequential effect are by their nature highly penal, such that the respondent judge stands to face the sanction of dismissal or disbarment.15 Mere imputation of judicial misconduct in the absence of sufficient proof to sustain the same will never be countenanced. If a judge should be disciplined for misconduct, the evidence against him should be competent.
When an administrative charge against a judge is determined to have no basis whatsoever, we will not hesitate to protect him against any groundless accusation that trifles with judicial process. We will not shirk from our responsibility of imposing discipline upon employees of the Judiciary but neither shall we hesitate to shield the same employees from unfounded suits that only serve to disrupt rather than promote the orderly administration of justice.16
On the other hand, respondent Payoyo should be held administratively liable. As correctly pointed out by the investigating judge:
x x x           x x x           x x x
From the conduct and actuations of Mr. Gasat Payoyo, together with his confusing testimony, it is clear that he was not honest enough when he gave the proceeds of the terminal leave benefits of the complainant. He was able to collect P165,530.00. He lost the check. It was found and given to the security guard of the Supreme Court who in turn gave it to Judge Rosete who gave it back to Gasat Payoyo who he knew was the one authorized by Ms. Mataga to release it from the Supreme Court. By virtue of his special power-of-attorney Mr. Payoyo encashed the check but he did not give all of it to the complainant. But the complainant must have accepted the amount given to her pursuant to an agreement she had with Mr. Payoyo. It is hard to imagine that Ms. Mataga authorized Mr. Payoyo to follow-up her retirement benefits without any consideration whatsoever.
Six years later the complainant?s daughter complained why her mother accepted a lesser amount than what was indicated in the check. She urged her mother to file a complaint with the Supreme Court against both Gasat Payoyo and Judge Rosete. The daughter must have suspected that Judge Rosete had something to do with the lesser amount delivered to her mother because she found out that the lost check had been given to Judge Rosete and yet the latter did not give the check to her mother but instead returned it to Payoyo for encashment.
When Gasat Payoyo was apprised that the complaint was scheduled for investigation, he got scared. Before the scheduled date of hearing on June 11, 2003 he went to talk to the complainant and agreed to give her P100,000.00 provided she will sign a receipt antedated March 17, 1996 to show that he actually delivered the full amount of the check to her. He presented this as evidence during the investigation. Because of their agreement about the receipt, the complainant gave a vague and confusing testimony regarding it.
It is clear that the complainant did not receive the full amount of her terminal leave benefits. As to how much she received, the complainant said she only received P40,000.00. But Gasat Payoyo said he gave it all. Nevertheless there was an agreement between the complainant and Payoyo regarding the amount received by the complainant which was satisfactory to both of them. Thus Ms. Mataga should not have any cause to complain. But her daughter believed that her mother was taken advantage of because of her illness.
Judge Maxwell Rosete denied any participation in the follow-up and encashment of the check representing the terminal leave benefits of the complainant. There is no reason to doubt this inspite of the statements given by Gasat Payoyo in his supplemental affidavit which he admitted were not true. To absolve himself, the respondent Payoyo by himself or upon the advice of others, tried to put the blame on Judge Rosete. x x x
Subsequently M. Payoyo became more worried and became more scared of what he did. He could not face Judge Rosete. So he refused to appear in the scheduled investigation. But finally he appeared and admitted that the contents of his supplemental affidavit are not true.
The Investigating Judge believes that it was the initial dishonesty of the respondent Mr. Gasat Payoyo in not delivering to the complainant the full amount of her terminal leave benefits minus only a reasonable amount for his efforts in following it up, that led to the filing of the complaint. His efforts to cover up what he did by paying the complainant and falsifying the date of a receipt compounded his fault. He aggravated it more when he attempted to maliciously implicate his co-respondent in the commission of his dishonesty. x x x.17
The behavior of everyone connected with an office charged with the dispensation of justice, from the presiding judge to the clerk of lowest rank, should be circumscribed with a high degree of responsibility.18 The image of a court, as a true temple of justice, is mirrored in the conduct, official or otherwise, of the men and women who work thereat. Judicial personnel are expected to be living examples of uprightness in the performance of official duties to preserve at all times the good name and standing of the courts in the community.19
The acts of the respondent Payoyo in not giving to the complainant the full amount of her terminal leave benefits minus reasonable expenses that he incurred in making a follow-up of its release; his efforts at covering the same by paying the complainant and by falsifying the date of the receipt for such payment and his aborted attempt to maliciously implicate his co-respondent judge, all fall short of the measure of uprightness expected of judicial personnel. For respondent Payoyo?s dishonesty, he should be suspended for a period of six months.
WHEREFORE, the complaint filed against respondent Judge Maxwell S. Rosete is DISMISSED for lack of merit. Respondent Process Server, Gasat M. Payoyo, is found GUILTY of Dishonesty and is SUSPENDED for a period of SIX MONTHS. Respondent Payoyo is WARNED that a repetition of this or any similar act will be dealt with more severely.
Davide, Jr., Quisumbing, Carpio, and Azcuna*, JJ., concur.
* On Leave.
1 Ma. Corazon M. Andal v. Nicolas A. Tonga, A.M. No. P-02-1581, 28 October 2003, 414 SCRA 524.
2 Renato M. Daguman v. Melvin Bagabaldo, A.M. No. P-04-1799, 31 March 2004.
3 "Malayang Sumbong Sinumpaang Salaysay", Rollo, pp. 1-3.
4 Supreme Court En Banc Resolution dated January 30, 1996, Rollo p. 4.
5 Rollo, p. 5.
6 No copy of the check was included in the records of this case but reference to it were made not only in page 1 of the complaint but also in the disbursement voucher.
7 Rollo, p. 7.
8 First Indorsement dated June 25, 2002 and addressed to Judge Rosete by Court Administrator Presbitero J. Velasco, Jr., Rollo, p. 8.
9 Supreme Court First Division Resolution, Rollo, p. 27.
10 Rollo, pp. 30-32.
11 Id., p. 38.
12 Resolution of the Supreme Court First Division dated July 28, 2003, Rollo, p. 76.
13 Rollo, pp. 78-84.
14 Id., p. 86.
15 Atty. Cea v. Judge Paguio, A.M. No. MTJ-03-1479, 17 February 2003, 397 SCRA 494.
16 Felicidad B. Dadizon v. Judge Enrique C. Asis, A.M. No. RTJ-03-1760, 15 January 2004, citing Francisco v. Leyva, 364 Phil. 1 (1999).
17 Rollo, pp. 91-92.
18 Luzita Alpeche v. Expedito B. Bato, A.M. No. P-02-1592, 15 October 2003, 413 SCRA 530.
19 Baldomero de Vera Soliman, Jr. v. Princesito D. Soriano, A.M. No. P-03-1705, 2 September 2003, 410 SCRA 225.
September 30, 2004
Before the Court is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 51759 granting the petition for certiorari of Cesar O. delos Reyes and nullifying Search Warrant No. 98-905 issued on June 18, 1998 by Judge Manuela F. Lorenzo of the Regional Trial Court (RTC) of Manila, Branch 43.
On June 18, 1998, SPO3 Benjamin Nuguid of the Western Police District applied for a search warrant with the RTC of Manila, Branch 43, against Cesar Reyes alias "Cesar Itlog." In support of his application, Nuguid submitted his affidavit and that of Alexis Tan, a housewife. Nuguid and Tan also testified in support of the application. After the court conducted examination of the said witnesses, it issued on even date Search Warrant No. 98-905 authorizing the search of the house allegedly under the possession and custody of one Cesar Reyes alias "Cesar Itlog," at No. 2600 Oroquieta Street, Sta. Cruz, Manila, worded as follows:
SEARCH WARRANTTO ANY PEACE OFFICER:
Upon sufficient showing of probable cause, after determination personally made by the undersigned on examination under oath of the applicant and his witness, by means of searching questions and answers, that respondent Cesar Reyes alias "Cesar Itlog" has in his possession, custody and control at the house and premises at 2600 Oroquieta St., Sta. Cruz, Manila, the following items:
a) undetermined amount of methamphetamine hydrochloride; and
b) drug paraphernalia
in violation of Republic Act No. 6425 as amended;
You are hereby commanded to make an immediate search at anytime of the day or night of the house and premises above-mentioned and forthwith seize and take possession of the above-cited items and to bring said items to the undersigned to be dealt with as the law require. Further, you are required to submit the return within ten (10) days from today.
GIVEN UNDER MY HAND AND SEAL this 18th day of June 1998 at the City of Manila.
MANUELA F. LORENZOJ u d g e2
The policemen conducted a search not only of the house at No. 2600 Oroquieta Street, Sta Cruz, Manila, which turned out to be the house of respondent Cesar delos Reyes, but also of the car and motorcycle owned by the latter, bearing Plate Nos. UBS 463 and TA 8077, respectively. The car and the motorcycle happened to be parked near the house.
As per the receipt of the property signed by Nuguid, the search of the house, the car and the motorcycle yielded the following:
That in the course of orderly search at the premises of Cesar Reyes alias "Cesar Itlog," inside his room at the ground floor was a steel vault and when forced open it yields 13 transparent plastic bags containing [an] undetermined amount of white crystalline substance suspected to be Methamphetamine Hydrochloride or Shabu, three (3) weighing scales "Tamita" broad, drugs paraphernalia and 38 pcs. of Valium-10, also found atop his drawer; a .9mm "Smith & Wesson" pistol, Model 39mm with SN-A643638 with magazines loaded with ammo, one (1) loaded magazine of 9mm and 36 rounds of .25 cal. ammunition inside his drawer, one (1) plastic transparent bag containing white crystalline substance suspected to be Methamphetamine Hydrochloride or Shabu and three (3) 12-gauge shotgun ammo. His personal car, a black VITARA bearing plate No. UBS 463 parked beside his house was also search[ed] in the presence of [a] Bgy. Kagawad and found inside tucked beneath the driver?s seat are three (3) sealed transparent plastic bags containing white crystalline substance wrapped in a mail envelope suspected to be Methamphetamine Hydrochloride or Shabu and in his sport Honda Motorcycle 900cc with plate No. TA 8077 also yields one (1) transparent plastic sachet containing white crystalline substance suspected to be Methamphetamine Hydrochloride or Shabu at the motorbike back compartment.3
According to the Certification prepared by the NBI Forensic Chemistry Division, the crystalline substances contained in the transparent plastic bags which were seized in the respondent?s house, car and motorcycle tested positive for methamphetamine hydrochloride.4
Thereafter, two Informations were filed with the RTC of Manila, Branch 41, against the respondent for violation of Republic Act No. 6425, as amended by Rep. Act No. 8294, docketed as Criminal Cases Nos. 98-165628 and 98-165629, viz:
That on or about June 18, 1998, in the City of Manila, Philippines, the said accused without being authorized by law to possess or use any regulated drug, did then and there willfully, unlawfully and knowingly have in his possession and under his custody and control eighteen (18) transparent plastic bags (small and big) with [a] total net weight of eight hundred eighty-six point eight (886.8) grams of white crystalline substance known as "shabu" containing methamphetamine hydrochloride, a regulate drug, without the corresponding license or prescription thereof.
Contrary to law.5
That on or about June 18, 1998, in the City of Manila, Philippines, said accused did then and there willfully, unlawfully and feloniously have in his possession and under his custody and control of one (1) .9mm Smith & Wesson pistol, Model 39 with Serial Number-A643638 with two magazines loaded with ammunitions, 36 rounds of .25 caliber ammunition, three (3) 12-gauge shotgun ammunitions, without first having secured from the proper authorities the necessary license therefor.
Contrary to law.6
The respondent filed a motion to quash the informations on the following grounds: (a) as shown by their testimony before the trial court, applicant Nuguid and his witness Tan had no personal knowledge of the factual allegations in their affidavits which were appended to the application for a search warrant; (b) the factual allegations contained in the said affidavits and their testimonies do not support a finding of probable cause for violation of Rep. Act No. 6425, as amended; and (c) Nuguid and Tan did not personally know the respondent as well as the latter?s house because first, Tan identified the illicit drug seller as Cesar Reyes alias "Cesar Itlog" while the respondent?s name is Cesar delos Reyes; and, second, the said witnesses described the house as consisting of a two-storey structure with one bedroom located at Oroquieta Street, Sta. Cruz, Manila.
On August 11, 1998, the trial court issued an Order denying the respondent?s motion. The court also denied his motion for reconsideration of said order.
The respondent forthwith filed a petition for certiorari against Nuguid and the Public Prosecutor therein in the CA, alleging, inter alia, that the questions propounded by RTC Judge Manuela F. Lorenzo on Nuguid and Tan were leading and not searching. He also alleged that Judge Lorenzo delegated the examination of Tan to Nuguid, and allowed the latter to question her. He, likewise, reiterated that Tan and Nuguid did not know him personally because they identified him as "Cesar Reyes" when his full name was Cesar delos Reyes. Furthermore, contrary to the claim of Tan and Nuguid that his house was a two-storey edifice located at Oroquieta Street, Sta. Cruz, Manila, said house was only a one-storey structure located at No. 2600 Oroquieta Street, Sta. Cruz, Manila.
The respondent also assailed the search of his house, car and motorcycle on the ground that he was not there when the search was conducted and that no barangay officials were present as required by Section 7, Rule 126 of the 1997 Rules of Criminal Procedure.
On October 15, 1999, the CA rendered a Decision granting the petition and nullifying the search warrant. The decretal portion reads:
WHEREFORE, all the foregoing considered, the petition is GRANTED. The questioned Order dated January 11, 1999 as well as Search Warrant No. 98-905 dated June 18, 1998 are both hereby ANNULLED and SET ASIDE. Consequently, let a Writ of Prohibition be issued permanently enjoining respondents from using in evidence the articles seized by virtue of Search Warrant No. 98-905 in Criminal Case Nos. 98-165628 and 98-165629. The seized articles obtained by virtue of Search Warrant 98-905, consisting of regulated drug, guns and ammunitions, are hereby ORDERED delivered and turned over to the proper authorities concerned for disposition in accordance with law.
The appellate court ruled that (a) the RTC delegated its duty to determine probable cause to the applicant; (b) the application for a search warrant was based on hearsay evidence; and (c) the application for the search warrant issued was filed more than four (4) weeks from the alleged time the offense took place; hence, was considered "stale."
After the denial of its motion for reconsideration of the said decision, the People of the Philippines filed the instant petition for review of the decision, alleging that ?
THE COURT OF APPEALS [EIGHTH DIVISION] GRAVELY ERRED IN DECLARING SEARCH WARRANT NO. 98-905 NULL AND VOID DESPITE (i) THE UNMISTAKABLE MANNER BY WHICH THE INVESTIGATING JUDGE CONDUCTED A PERSONAL EXAMINATION OF THE APPLICANT AND HIS WITNESS; (ii) THE SEARCHING QUESTIONS PROPOUNDED AND ANSWERS OBTAINED; AND (iii) THE PERSONAL KNOWLEDGE OF THE APPLICANT AND HIS WITNESS OF THE FACTS THAT INEVITABLY JUSTIFIES THE ISSUANCE OF THE SEARCH WARRANT.8
The petitioner avers that Judge Lorenzo did not delegate the determination of probable cause to Nuguid before issuing the subject warrant. While she allowed Nuguid to propound questions on Alexis Tan, the same consisted of only three preliminary questions, and, as such, was inconsequential. The petitioner also asserts that the leading questions propounded by Judge Lorenzo on Tan does not detract from the fact that searching questions were also propounded on the witnesses, and that based on the entirety of such propounded questions and the latter?s answers, there was probable cause for the issuance of a search warrant. The petitioner maintains that Tan had personal knowledge of the respondent?s delictual acts which were in violation of Rep. Act No. 6425, as amended. Moreover, as gleaned from the affidavits of Tan and Nuguid and their collective testimonies before the RTC, the respondent?s house was sufficiently described and identified, which description Nuguid was able to confirm through his surveillance of the house, the place where the crime was committed.
The petitioner further contends that although there was an interregnum of six (6) months from the time the commission of the crime came to the knowledge of Tan up to the filing of the application of the search warrant by Nuguid, the same did not obscure the finding of probable cause made by Judge Lorenzo.
The Court gave due course to the petition and required the parties to submit their respective memoranda.9
After a comprehensive and well-studied review of the Rollo and the records of the Court of Appeals, we resolve to deny the petition.
The Petition Was Filed Out of Time
The Office of the Solicitor General (OSG) admitted in the petition at bar that it received a copy of the assailed decision of the CA on October 21, 1999. Under Section 2, Rule 45 of the Rules of Court, the OSG had until November 5, 1999 within which to file its petition for review on certiorari. However, it did so only on November 25, 1999, long after the period therefor had lapsed. We reject as totally unacceptable the pretext of Solicitor Ma. Theresa Dolores C. Gomez-Estoesta that, because of heavy pressure of work,10 the actual filing of the motion to file the petition at bar prepared on November 3, 1999, was "accidentally slighted." The Solicitor is mandated to insure that her motion for extension was filed within the period therefor.11 Volume of work is a lame excuse.12 She cannot escape the adverse effects of her forgetfulness.
Even if we gloss over the gross negligence of the OSG and resolve the petition on its merits, we find the same to be barren of merit.
A search warrant must (a) be based on probable cause; (b) contain a particular description of the place to be searched; and (c) must describe the items or property to be seized.13 Probable cause comprehends such facts and circumstances as will induce a cautious man to rely upon and act in pursuance thereof.14
It bears stressing that the requirement of particularity is related to the probable cause requirement in that, at least, under severe circumstances, the lack of a more specific description will make it apparent that there has not been a sufficient showing to the Judge that the described items are to be found in a particular place. Probable cause must first focus on a specific location. If the applicant or official is unable to state with sufficient precision the place to be searched and why he reasonably believes that contraband or evidence of criminal activity will be found therein, it is highly doubtful that he possesses probable cause for a warrant.15
In issuing a search warrant, the Judge must strictly comply with the requirements of the Constitution and the statutory provisions.16
A search warrant shall not issue except upon probable cause to be determined personally by the Judge after examination under oath or affirmation of the complainant and the witnesses he may produce.17 Before issuing a search warrant, the Judge must personally examine, in the form of searching questions and answers, in writing and under oath, the complainant and his witnesses he may produce, on facts personally known to them.18
The mandate of the Judge is for him to conduct a full and searching examination of the complainant and the witnesses he may produce. In the absence of a rule to the contrary, the determination of probable cause cannot be delegated by the Judge, in part, or in whole, regardless of the qualifications of the person on whom reliance is placed. It is not permissible for the Judge to share the required determination with another.19
The searching questions propounded to the applicant and the witnesses must depend on a large extent upon the discretion of the Judge. Although there is no hard-and-fast rule as to how a Judge may conduct his examination, it is axiomatic that the said examination must be probing and exhaustive and not merely routinary, general, peripheral or perfunctory.20 He must make his own inquiry on the intent and factual and legal justifications for a search warrant. The questions should not merely be repetitious of the averments not stated in the affidavits/deposition of the applicant and the witnesses.21 If the Judge fails to determine probable cause by personally examining the applicant and his witnesses in the form of searching questions before issuing a search warrant, it constitutes grave abuse of discretion.22
A search warrant proceeding is independent of any criminal case. It is ex parte and non-adversarial.23 Hence, the Judge acting on an application for a search warrant is not bound to apply strictly the rules of evidence. As ruled in Brinegar v. United States:24
The inappropriateness of applying the rules of evidence as a criterion to determine probable cause is apparent in the case of an application for a warrant before a magistrate, the context in which the issue of probable cause most frequently arises. The ordinary rules of evidence are generally not applied in ex parte proceedings, partly because there is no opponent to invoke them, partly because the Judge?s determination is usually discretionary, partly because it is seldom that, but mainly because the system of evidence rules was devised for the special control of trials by jury.
The Judge is not proscribed, at all times, from propounding leading questions on the applicant and the witnesses he may produce. Indeed, the Judge is allowed to propound leading questions if, for instance, the witness is a child or is suffering from mental illness, or if the questions are preliminary or clarificatory, or when there is difficulty in getting direct and intelligent answers from the witness who is ignorant.
But it can hardly be justifiably claimed that, by propounding leading questions only on the complainant and the witnesses he may produce, the Judge thereby conducts probing and exhaustive examination. After all, a leading question is one which suggests to the witness the answer which the examining party desires.25 By propounding leading questions, the Judge thereby puts the words or answers in the mind of the witness to be echoed back.26
It bears stressing that the determination of the existence of probable cause must be made by a detached and neutral Judge.27 If he resorts to propounding leading questions to the applicant and his witnesses to determine probable cause, the Judge may be perceived as being partial, or even in cahoots with the officers engaged in the often competitive enterprise of ferreting out crime.28
A search warrant is not thereby rendered invalid; nor is a finding of probable cause proscribed merely because the Judge propounded leading questions on the applicant and the witnesses he produces. The entirety of the questions propounded by the court and the answers thereto must be considered and calibrated by the Judge.
The Judge Allowed the Applicant Nuguid to Examine Tan, His Witness, and Failed to Propound Searching Questions
The transcript of the stenographic notes taken when Nuguid and Tan testified is quoted, in toto, infra:
Who is the applicant here?
I am the applicant, Your Honor.
(Swearing the applicant) -
Q You are applying for a search warrant.
A Yes, Your Honor.
Q Where is this place to be searched?
A At no. 2006 Oroquieta St., Sta. Cruz, Manila, Your Honor.
Q Is there any person there whom you would want to search?
A Yes, Your Honor.
A In the name of Cesar Reyes, Your Honor, alias "Cesar Itlog."
Q Why, what is it he is keeping in his custody?
A Undetermined quantities of suspected methamphetamine hydrochloride also known as "Shabu."
Q How do you know that such things exist in his place?
A Thru my witness, Your Honor, we were able to test-buy and examine the contents in a plastic sachet.
Q Why, what did your witness do, if any?
A I asked my witness to buy from Cesar Reyes alias "Cesar Itlog" and she was able to buy the subject shabu.
Q How did you know that your witness was able to buy from Cesar Reyes and not from other source?
A She told me and according to her she got it from Cesar Reyes.
Q Who is this witness you are referring to?
A Alexis Tan, Your Honor.
Q Where is she?
A She is the one, Your Honor. (Witness pointing to a lady who answered when asked of her name as Alexis Tan).
Alright, I will ask her.
(Swearing Ms. Tan) ?
Q Do you swear to tell the truth and nothing but the whole truth?
A Yes, I do.
Q Please state your name, age and other personal circumstances.
A ALEXIS TAN, 34 years old, married, jobless and with address c/o WBD Drug Enforcement Section, U.N. Ave., Manila.
Q What is your occupation?
A None for the moment, Your Honor.
Q What was your occupation, if any, before?
A A plain housewife, Your Honor.
(to SPO3 Nuguid) ?
You want to ask her questions on record?
Your Honor, she has her statement ?
Yes, but for the record, you may ask her.
Yes, Your Honor.
Q Do you personally know one Cesar Reyes alias "Cesar Itlog?"
A Yes, Sir.
Q How long have you known Cesar Reyes?
A Maybe around 6 months ago.
Q How did you come to know him?
A I was introduced to him by a friend, Sir.
Q What was the purpose of introducing you to him by your friend?
A It started when I was separated from my husband when my friend taught me how to use shabu, Your Honor.
Q When you were separated from your husband, what has it something to do with introducing you to Cesar Reyes?
A Thru influence, Your Honor.
Q What connection does it have?
A They know each other, Your Honor. My friend knows that Cesar Reyes is selling shabu, Your Honor.
Q Did you really find out if Cesar Reyes alias "Cesar Itlog" is selling shabu?
A Yes, Your Honor.
A At first, I was accompanied by my friend, but later I went there on my own alone.
Q You mean, this Cesar Reyes is really in the business if (sic) selling shabu?
A Yes, Your Honor.
Q Knowing his prohibited ((sic) activity, does he also sell to any other people?
A Those known to him, Ma?am.
Q You consider yourself as very well known to him?
A Yes, Your Honor.
Q Have you also seen him in [the] company of that friend of yours who introduced you to him?
A Yes, Ma?am for many times.
Q And you have been going to this place of Cesar Reyes several times also.
A Yes, Your Honor, I bought shabu from him.
Q How did he sell it to you?
A I will call him first through the phone before I go to him.
Q You make an appointment with him first?
A Yes, Your Honor.
Q Where is this place?
A At Oroquieta Street, Sta. Cruz, Manila, Your Honor.
Q Everytime you go and buy shabu from him, is it always ready for sale to you?
A Yes, Your Honor.
Q You mean he has always in his custody and does not run out of stock?
A There was one time when I called him if he could sell one for me he told me through the phone to call back after an hour because he will be getting it from other source.
Q Did you call him back after an hour?
A Yes, Your Honor, and he told me to come over to his place.
Q How much quantity (sic) did you buy from him?
A For P3,000.00, Your Honor.
Q I am referring to the quantity.
A 3 grams, Your Honor, he does not sell lower than 3 grams, Your Honor, it must be 3 grams and above.
Q You have not yet bought from him only one gram?
A No, Your Honor, not less than 3 grams.
Q During the time you bought shabu from Cesar Reyes, were you the only customer?
A He entertains customer (sic) one at a time, Your Honor, but he has several customers.
Q How do you know that he has several customers?
A Because he also talked [to] callers on the phone. During the time I bought shabu from him, he also talked to somebody on the phone.
Q That is only. . .
Q Since when did you start buying shabu from him?
A Between December 1997 and January 1998, Your Honor.
Q The shabu you had been buying from him, do you use it or sell it to some other person?
A No, Your Honor, I do not sell it.
Q You use it?
A Yes, Your Honor.
Q You know the house of Cesar Reyes after confirmation, in what particular part of the house does Cesar Reyes entertain you?
A In [the] living room, Your Honor.
Q When you go to his house, you usually go and see him in that (sic) living room and not elsewhere before he comes out from that house?
A Normally, Your Honor, when I go to his house, he would open the door for me and would say "come in" then ask me "how much." If, for example, I would say 3 grams, he would just go to his room and comes out with the item.
Q In other words, everytime you go to his place to buy shabu she (sic) is there ready to entertain you?
A Yes, Your Honor.
Q Is it not that he is still busy conversing with other people when he comes out from his room?
A When I go to his house, he is there ready to open for me (sic) he knows I am coming.
Q That is always the case, he is ready to open the door for you?
A There was also a time that his maid opened the door for me.
Q Aside from the maid, did you see other people inside that house?
A His family- his wife and a baby then he would usually let them stay away from the living room or just get inside the room.
Q What kind of a house does Cesar Reyes have?
A A two-story (sic) house, Your Honor.
Q Not an apartment?
A No, Your Honor.
Q A single detach (sic) house?
A Yes, Your Honor.
Q Is there any guard on (sic) the main gate of the house?
A None, Ma?am, it is just an ordinary house.
Q There are no people you usually see when you go there?
A There are some members of the family but usually he let (sic) them stay away from the living room.
Q Was there an occasion when somebody arrives when you see him?
A None, Your Honor.
Q So, this is a one-on-one affair.
A Yes, Your Honor.
Q How do you know that these things are stored in his house?
A Everytime I bought shabu from him, he would get the money from me and then get inside his room to get a sachet of shabu and give it to me.
Q Are you sure that these things (shabu) are stocked in his house permanently or maybe they are just brought there from somewhere because he knows you are coming to buy and get it?
A There was once when I called him by phone and he asked me “how much" and I told him I will buy for (sic) P4,000.00 worth of shabu and he said "you just proceed to my place by 2 o?clock in the afternoon," I will have to get it from other source."
Q He got it from other source for you?
A According to him, if it is by large (sic) quantity and he will just repack it in his house.
Q He himself told you?
A Yes, Your Honor, but he does not reveal from whom.
Q You have no idea?
A No, Your Honor.
Q You did not ask him?
A No, Your Honor.
Q You used to transact business on the ground floor of his house?
A Yes, Your Honor.
Q Did you notice if his house has several rooms?
A There is one room on the ground floor, Ma?am, but sometimes he also goes upstairs and comes down with the shabu item. Most of the time of the transaction just on the ground floor.
Q Is there a partition in that particular room?
A It is just a single room, Ma?am.
Q Did you not notice if there are other people in that room in the ground floor?
A I did not notice but there was one time when I saw a child but he let that child stay away from the visitor.
Q You mean this room where you saw him come out serve as storeroom of shabu?
A Yes, Ma?am.
Q Did he tell you about it?
A Yes, Ma?am.
Q Why did he tell you?
A Because when he entertained me, he left me for the moment and I said "where do you go" and he said "I will get inside that room to get the shabu."
Q So, since you were requested by the police officer to purchase shabu from Cesar Reyes, how many times?
A That was the only time, Your Honor.
COURT: (to SPO3 NUGUID)
Q Did you make surveillance in that place?
A Yes, Your Honor, we made a surveillance after the test-buy.
Q What did you do?
A During the surveillance, we brought several witnesses.
Q Did you notice people going there to the house of Cesar Reyes?
A Yes, Your Honor.
Q And what have you observed?
A Some customers are even using cars.
Q You do not know if those people were visitors or not?
A We are not sure if those people are visitors of Cesar Reyes because we have no contact inside his house.
COURT: (to Ms. TAN) -
Q When did you buy shabu from Cesar Reyes?
A June 13, 1998, Your Honor.
Q This Cesar Reyes at the time did not have any idea that you were there being sent by the police officers?
A No, Your Honor.
Q Did you really go to his place and successfully bought the shabu from Cesar Reyes?
A Yes, Your Honor.29
The questions propounded on Nuguid by Judge Lorenzo were not searching and probing, but merely superficial and perfunctory. The records show that in his application for a search warrant, Nuguid described the place to be searched as the house located at "No. 2600 Oroquieta Street, Sta. Cruz, Manila," under the name of Cesar Reyes alias "Cesar Itlog." However, the Judge ignored this inconsistency and did not bother to inquire from Nuguid why he applied for a search warrant of the premises at No. 2600 Oroquieta Street, Sta. Cruz, Manila, when the house where Tan had apparently purchased shabu from the respondent was located at No. 2006 Oroquieta Street, Sta. Cruz, Manila.
Nuguid declared that he and the police officers conducted a test-buy on June 13, 1998, using Tan as the buyer for said purpose. The ordinary procedure for a test-buy is for the police officers to monitor and observe, at a distance, the sale of illicit drugs by the suspect to the buyer. In this case,
when the Judge asked Nuguid how Tan was able to buy shabu from the respondent, Nuguid reported that Tan told him that he got shabu from Cesar Reyes, implying that he did not witness the test-buy; however, Nuguid also declared that he was at a distance when the test-buy was conducted.
The Judge also failed to ask Nuguid the circumstances upon which he and the other police officers came to know how Tan was able to purchase shabu from the respondent. Inexplicably, Nuguid conducted a search of the house of the respondent only after the test-buy and not before then. However, the Judge failed to inquire why the application for a search warrant was made only on June 18, 1998, or after the lapse of five days from the time the test-buy was conducted on June 13, 1998. The Judge also failed to ask Nuguid why no surveillance was made before the test-buy and whether any report on the surveillance operations conducted on the respondent?s house after the test-buy was submitted.
Even a cursory reading of the transcript will show that most of the questions propounded on Tan by the Judge were leading questions, and that those which were not leading were merely based on or related to the answers earlier given to the leading questions. By asking such leading questions, the Judge thereby supplied the answers to her questions. Although Tan testified that she used to buy at least three (3) grams for P3,000.00 from the respondent during the period of December 1997 to January 1998, the Judge did not even bother to inquire from Tan, a plain housewife who was separated from her husband, how she could afford to purchase shabu for P3,000.00 on several occasions during the period of December 1997 to January 1998.
Indeed, there was an interregnum of more than four (4) months from the time Tan purchased shabu from the respondent up to the time when the test-buy was supposedly made. However, the Judge was not even curious as to why Tan failed to purchase shabu from the respondent for such a long period of time, considering that from her testimony, Tan made it plain that she was a regular user of shabu. The Judge should have asked Tan why she did not buy shabu from the respondent for more than four months.
The Judge even failed to inquire from Tan when and under what circumstances Nuguid was able to meet with her to discuss how she would be utilized for the test-buy. The curiosity of the Judge was not even aroused when, in answer to her question on the location of the house of "Cesar Reyes," Tan replied that it was located at Oroquieta Street, Sta. Cruz, Manila, without specifying the house number. At the very least, it behooved the Judge to require Tan to specify the house number if only to test her credibility. And yet, immediately after propounding the questions on Tan and Nuguid, the Judge announced that she was issuing the search warrant.
A June 13, 1998, Your Honor.
Q This Cesar Reyes at the time did not have any idea that you were there being sent by the police officers?
A No, Your Honor.
Q Did you really go to his place and successfully bought the shabu from Cesar Reyes?
A Yes, Your Honor.
(to SPO3 NUGUID) ?
Q During the time that Alexis Tan was being sent there to buy shabu from Cesar Reyes, where were you then?
A We were at a distance, Your Honor.
Do you have something to add questions from her?
No more at the moment, Your Honor.
That will be all for now and the Court will issue the Search Warrant.30
The Judge allowed and even egged on Nuguid to examine Tan and elicit facts and circumstances from her relating to the alleged purchase of shabu from the respondent. What is so worrisome is that Nuguid, besides being the applicant, was the same police officer who asked Tan to buy shabu from the respondent and the one who, along with other officers, arrested the respondent. That Nuguid propounded comparatively fewer questions on Tan is beside the point. By allowing Nuguid himself to examine Tan, the Judge thereby compromised her impartiality.
We echo, once again, the oft-cited caveat of the Court:
It has been said that of all the rights of a citizen, few are of greater importance or more essential to his peace and happiness than the right of personal security, and that involves the exemption of his private affairs, books, and papers from inspection and scrutiny of others. While the power to search and seize is necessary to the public welfare, still it must be exercised and the law enforced without transgressing the constitutional rights of the citizens, for the enforcement of no statute is of sufficient importance to justify indifference to the basic principles of government.
Thus, in issuing a search warrant, the Judge must strictly comply with the requirements of the Constitution and the statutory provisions. A liberal construction should be given in favor of the individual to prevent stealthy encroachment upon, or gradual depreciation of the rights secured by the Constitution. No presumption of regularity is to be invoked in aid of the process when an officer undertakes to justify it.31
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED.
Puno, Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
1 Penned by Associate Justice Martin S. Villarama, Jr., with Associate Justices Angelina Sandoval-Gutierrez (now an Associate Justice of the Supreme Court), and Romeo A. Brawner, concurring.
2 CA Rollo, p. 23.
3 Id. at 38.
4 Id. at 37.
5 Id. at 25.
6 Id. at 27.
7 Rollo, p. 38.
8 Id. at 11-12.
9 Id. at 164.
10 The Solicitor made the following as her excuse for the late filing of the instant petition:
8. On November 3, 1999, a Motion for Extension of Time to File Petition for Review on Certiorari (seeking a 30-day extension from November 5, 1999 or until December 5, 1999) has been prepared by the undersigned Solicitor for its eventual filing. Due to the fact, however, that such Motion for Extension coincided with the successive drafting and preparation of a Comment in Maruhom v. COMELEC, G.R. No. 139357 and a Consolidated Brief in People v. Sicad et al., G.R. No 133833, the actual filing of said Motion for Extension was accidentally slighted since the final draft was unintentionally inundated in the deluge of records and paperwork that jammed the table of the undersigned Solicitor.
9. All the while, however, the undersigned Solicitor was of the impression that the Motion for Extension was actually filed. The mind fulfilled its task; a physical realization of such task, however, loomed a shortcoming (Rollo, pp. 4-5).
11 Adaza v. Barinaga, 104 SCRA 684 (1981).
12 Velasco v. Ortiz, 184 SCRA 303 (1990).
13 Taylor v. State, 974 S.W.2d 851 (1998).
14 Nolasco v. Paño, 139 SCRA 152 (1985).
15 Taylor v. The State of Texas, 974 S.W.2d 851 (1998).
16 Mata v. Bayona, 128 SCRA 388 (1984).
17 Section 4, Rule 126, Revised Rules of Criminal Procedure.
18 Section 5, Rule 126, Revised Rules of Criminal Procedure.
19 People v. Potwora, 397 N.W. 2d 361 (1979); Bache & Co. (Phils), Inc. v. Ruiz, 37 SCRA 823 (1971).
20 Roan v. Gonzales, 145 SCRA 687 (1986).
21 Nolasco v. Paño, supra.
22 Silva v. Presiding Judge, RTC of Negros Oriental, Br. 33, 203 SCRA 140 (1991).
23 Aguilar v. State of Texas, 12 L.ed.72 (1964).
24 93 L.ed.1879 (1949), citing Wigmore, Evidence (3d ed., 1940) 19.
25 Section 10, Rule 132, Revised Rules of Court.
26 Underskill, Criminal Evidence, 5th ed., p. 1199.
27 Kislin v. State, 429 F.2d 950 (1970).
28 Aguilar v. State of Texas, 12 L.ed. 2d 72 (1964).
29 CA Rollo, pp. 41-49.
30 CA Rollo, p. 49.
31 Mata v. Bayona, supra.
September 30, 2004
22 Record of the Senate, Vol. IV, No. 122, May 21, 1990, p. 837.
23 Id. at 839.
24 Platinum Tours and Travel, Inc. v. Panlilio, 411 SCRA 142 (2003).
Before the Court are two petitions essentially assailing the jurisdiction of the General Court-Martial to conduct the court-martial proceedings involving several junior officers and enlisted men of the Armed Forces of the Philippines (AFP) charged with violations of the Articles of War (Commonwealth Act No. 408, as amended) in connection with their participation in the take-over of the Oakwood Premier Apartments in Ayala Center, Makati City on July 27, 2003.
In G.R. No. 162341, Roberto Rafael Pulido, a lawyer, filed with this Court a Petition for Habeas Corpus seeking the release of his clients, junior officers and enlisted men of the AFP, who are allegedly being unlawfully detained by virtue of the Commitment Order1 dated August 2, 2003 issued by General Narciso L. Abaya, Chief of Staff of the AFP, pursuant to Article 70 of the Articles of War. Under the said commitment order, all the Major Service Commanders and the Chief of the Intelligence Service of the Armed Forces of the Philippines (ISAFP) were directed to take custodial responsibility of all the "military personnel involved in the 27 July 2003 mutiny" belonging to their respective commands. This included all the junior officers and enlisted men (hereinafter referred to as Capt. Reaso,2 et al.) who are subject of the instant petition for habeas corpus. The commitment order, however, expressly stated that LtSG. Antonio F. Trillanes, LtSG. James A. Layug, Capt. Garry C. Alejano, Capt. Milo D. Maestrecampo, Capt. Gerardo O. Gambala, and Capt. Nicanor E. Faeldon would remain under the custody of the Chief of the ISAFP.3
In G.R. No. 162318, the petitioners (hereinafter referred to as 1Lt. Navales, et al.), seven of the detained junior officers and enlisted men, filed with this Court a Petition for Prohibition under Rule 65 of the Rules of Court seeking to enjoin the General Court-Martial from proceeding with the trial of the petitioners and their co-accused for alleged violations of the Articles of War.
Named as respondents in the two petitions are General Narciso Abaya who, as Chief of Staff of the AFP, exercises command and control over all the members and agencies of the AFP, and Brigadier General Mariano Sarmiento, Jr., the Judge Advocate General of the AFP and officer in command of the Judge Advocate General Office (JAGO), the agency of the AFP tasked to conduct the court-martial proceedings.
At past 1:00 a.m. of July 27, 2003, more than three hundred junior officers and enlisted men, mostly from the elite units of the AFP ? the Philippine Army?s Scout Rangers and the Philippine Navy?s Special Warfare Group (SWAG) ? quietly entered the premises of the Ayala Center in Makati City. They disarmed the security guards and took over the Oakwood Premier Apartments (Oakwood). They planted explosives around the building and in its vicinity. Snipers were posted at the Oakwood roof deck.
The soldiers, mostly in full battle gear and wearing red arm bands, were led by a small number of junior officers, widely known as the Magdalo Group. The leaders were later identified as including Navy LtSG. Antonio Trillanes IV, Army Capt. Gerardo Gambala, Army Capt. Milo Maestrecampo, Navy LtSG. James Layug, and Marine Capt. Gary Alejano.
Between 4:00 to 5:00 a.m., the soldiers were able to issue a public statement through the ABS-CBN News (ANC) network. They claimed that they went to Oakwood to air their grievances against the administration of President Gloria Macapagal Arroyo. Among those grievances were: the graft and corruption in the military, the sale of arms and ammunition to the "enemies" of the State, the bombings in Davao City which were allegedly ordered by Brig. Gen. Victor Corpus, Chief of the ISAFP, in order to obtain more military assistance from the United States government, and the "micro-management" in the AFP by then Department of National Defense (DND) Secretary Angelo Reyes. They declared their withdrawal of support from the chain of command and demanded the resignation of key civilian and military leaders of the Arroyo administration.
Around 9:00 a.m., Pres. Arroyo gave the soldiers until 5:00 p.m. to give up their positions peacefully and return to barracks. At about 1:00 p.m., she declared the existence of a "state of rebellion" and issued an order to use reasonable force in putting down the rebellion. A few hours later, the soldiers again went on television reiterating their grievances. The deadline was extended twice, initially to 7:00 p.m., and later, indefinitely.
In the meantime, a series of negotiations ensued between the soldiers and the Government team led by Ambassador Roy Cimatu. An agreement was forged between the two groups at 9:30 p.m. Shortly thereafter, Pres. Arroyo announced that the occupation of Oakwood was over. The soldiers agreed to return to barracks and were out of the Oakwood premises by 11:00 p.m.
The Filing of Charges
Under the Information5 dated August 1, 2003 filed with the Regional Trial Court (RTC) of Makati City, the Department of Justice (DOJ) charged 321 of those soldiers who took part in the "Oakwood Incident" with violation of Article 134-A (coup d?etat) of the Revised Penal Code.6 Among those charged were petitioners 1Lt. Navales, et al. (G.R. No. 162318) and those who are subject of the petition for habeas corpus Capt. Reaso, et al. (G.R. No. 162341). The case, entitled People v. Capt. Milo Maestrecampo, et al., was docketed as Criminal Case No. 03-2784 and raffled to Branch 61 presided by Judge Romeo F. Barza.
On September 12, 2003, several (243 in number) of the accused in Criminal Case No. 03-2784 filed with the RTC (Branch 61) an Omnibus Motion praying that the trial court:
1. [A]ssume jurisdiction over all the charges filed before the military tribunal in accordance with Republic Act No. 7055; and
2. Order the prosecution to present evidence to establish probable cause against 316 of the 321 accused and, should the prosecution fail to do so, dismiss the case as against the 316 other accused.7
While the said motion was pending resolution, the DOJ issued the Resolution dated October 20, 2003 finding probable cause for coup d?etat8 against only 31 of the original 321 accused and dismissing the charges against the other 290 for insufficiency of evidence.
Thus, upon the instance of the prosecution, the RTC (Branch 61), in its Order9 dated November 14, 2003, admitted the Amended Information10 dated October 30, 2003 charging only 31 of the original accused with the crime of coup d?etat defined under Article 134-A of the Revised Penal Code.11 Only the following were charged under the Amended Information: CPT. MILO D. MAESTRECAMPO, LTSG. ANTONIO F. TRILLANES IV, CPT. GARY C. ALEJANO, LTSG. JAMES A. LAYUG, CPT. LAURENCE LUIS B. SOMERA, CPT. GERARDO O. GAMBALA, CPT. NICANOR FAELDON, CPT. ALBERT T. BALOLOY, CPT. SEGUNDINO P. ORFIANO, JR., CPT. JOHN P. ANDRES, CPT. ALVIN H. EBREO, 1LT. FLORENTINO B. SOMERA, 1LT. CLEO B. DUNGGA-AS, 1LT. SONNY S. SARMIENTO, 1LT. AUDIE S. TOCLOY, 1LT. VON RIO TAYAB, 1LT. REX C. BOLO, 1LT. LAURENCE R. SAN JUAN, 1LT. WARREN LEE G. DAGUPON, 1LT. NATHANIEL N. RABONZA, 2LT. KRISTOFFER BRYAN M. YASAY, 1LT. JONNEL P. SANGGALANG, 1LT. BILLY S. PASCUA, 1LT. FRANCISCO ACEDILLO, LTSG. MANUEL G. CABOCHAN, LTSG. EUGENE LOUIE GONZALES, LTSG. ANDY G. TORRATO, LTJG. ARTURO S. PASCUA, JR., ENS. ARMAND PONTEJOS, PO3 JULIUS J. MESA, PO3 CESAR GONZALES, and several JOHN DOES and JANE DOES. Further, the said Order expressly stated that the case against the other 290 accused, including petitioners 1Lt. Navales, et al. and those who are subject of the petition for habeas corpus, Capt. Reaso, et al., was dismissed. In another Order dated November 18, 2003, the RTC (Branch 61) issued commitment orders against those 31 accused charged under the Amended Information and set their arraignment.
Meanwhile, 1Lt. Navales, et al. and Capt. Reaso, et al., who were earlier dropped as accused in Criminal Case No. 03-2784, were charged before the General Court-Martial with violations of the Articles of War (AW), particularly: AW 67 (Mutiny), AW 97 (Conduct Prejudicial to Good Order and Military Discipline), AW 96 (Conduct Unbecoming an Officer and a Gentleman), AW 63 (Disrespect to the President, the Secretary of Defense, etc.) and AW 64 (Disrespect Towards Superior Officer).12 On the other hand, Capt. Maestrecampo and the 30 others who remained charged under the Amended Information were not included in the charge sheets for violations of the Articles of War.
Thereafter, Criminal Case No. 03-2784 was consolidated with Criminal Case No. 03-2678, entitled People v. Ramon Cardenas, pending before Branch 148 of the RTC of Makati City, presided by Judge Oscar B. Pimentel.
On February 11, 2004, acting on the earlier Omnibus Motion filed by the 243 of the original accused under the Information dated August 1, 2003, the RTC (Branch 148) issued an Order, the dispositive portion of which reads:
WHEREFORE, premises considered, in view of the Orders dated November 14 and 18, 2003 of Judge Romeo Barza, the Omnibus Motion to: 1) Assume jurisdiction over all charges filed before the Military Courts in accordance with R.A. 7055; and 2) Implement the August 7, 2003 Order of the Court requiring the prosecution to produce evidence to establish probable cause are hereby considered MOOT AND ACADEMIC and, lastly, all charges before the court-martial against the accused (those included in the Order of November 18, 2003) as well as those former accused (those included in the Order of November 14, 2003) are hereby declared not service-connected, but rather absorbed and in furtherance to the alleged crime of coup d?etat.13
In the Notice of Hearing dated March 1, 2004, the General Court-Martial set on March 16, 2004 the arraignment/trial of those charged with violations of the Articles of War in connection with the July 27, 2003 Oakwood Incident.
The present petitions were then filed with this Court. Acting on the prayer for the issuance of temporary restraining order in the petition for prohibition in G.R. No. 162318, this Court, in the Resolution dated March 16, 2004, directed the parties to observe the status quo prevailing before the filing of the petition.14
The Petitioners? Case
In support of the petitions for prohibition and for habeas corpus, the petitioners advance the following arguments:
I. UNDER REPUBLIC ACT NO. 7055, THE RESPONDENTS AND THE GENERAL COURT-MARTIAL ARE WITHOUT ANY JURISDICTION TO FURTHER CONDUCT PROCEEDINGS AGAINST THE PETITIONERS AND THEIR COLLEAGUES BECAUSE THE REGIONAL TRIAL COURT HAS ALREADY DETERMINED THAT THE OFFENSES ARE NOT SERVICE-RELATED AND ARE PROPERLY WITHIN THE JURISDICTION OF THE CIVILIAN COURTS;15 and
II. THE RESPONDENTS HAVE NO AUTHORITY TO FURTHER DETAIN THE JUNIOR OFFICERS AND ENLISTED MEN AS THE CHARGES FOR COUP D?ETAT BEFORE THE REGIONAL TRIAL COURT HAVE BEEN DISMISSED FOR LACK OF EVIDENCE UPON MOTION OF THE DEPARTMENT OF JUSTICE.16
Citing Section 117 of Republic Act No. 7055,18 the petitioners theorize that since the RTC (Branch 148), in its Order dated February 11, 2004, already declared that the offenses for which all the accused were charged were not service-connected, but absorbed and in furtherance of the crime of coup d?etat, the General Court-Martial no longer has jurisdiction over them. As such, respondents Gen. Abaya and the JAGO have no authority to constitute the General Court-Martial, to charge and prosecute the petitioners and their co-accused for violations of the Articles of War in connection with the July 27, 2003 Oakwood Incident. The petitioners posit that, as a corollary, there is no longer any basis for their continued detention under the Commitment Order dated August 2, 2003 issued by Gen. Abaya considering that the charge against them for coup d?etat had already been dismissed.
In G.R. No. 162318, the petitioners pray that the respondents be enjoined from constituting the General Court-Martial and from further proceeding with the court-martial of the petitioners and their co-accused for violations of the Articles of War in connection with the Oakwood Incident of July 27, 2003. In G.R. No. 162341, the petitioner prays that the respondents be ordered to explain why the detained junior officers and enlisted men subject of the petition for habeas corpus should not be released without delay.
The Respondents? Arguments
The respondents, through the Office of the Solicitor General, urge the Court to dismiss the petitions. The respondents contend that the Order dated February 11, 2004 promulgated by the RTC (Branch 148), insofar as it resolved the Omnibus Motion and declared that the charges against all the accused, including those excluded in the Amended Information, were not service-connected, is null and void. They aver that at the time that the said motion was resolved, petitioners 1Lt. Navales, et al. and Capt. Reaso, et al. (as movants therein) were no longer parties in Criminal Case No. 03-2784 as the charge against them was already dismissed by the RTC (Branch 61) in the Order dated November 14, 2003. Thus, 1Lt. Navales, et al. and Capt. Reaso, et al. no longer had any personality to pursue the Omnibus Motion since one who has no right or interest to protect cannot invoke the jurisdiction of the court. In other words, the petitioners were not "real parties in interest" at the time that their Omnibus Motion was resolved by the RTC (Branch 148).
The respondents further claim denial of due process as they were not given an opportunity to oppose or comment on the Omnibus Motion. Worse, they were not even given a copy of the Order dated February 11, 2004. As such, the same cannot be enforced against the respondents, especially because they were not parties to Criminal Case No. 03-2784.
The respondents, likewise, point out a seeming ambiguity in the February 11, 2004 Order as it declared, on one hand, that the charges filed before the court-martial were not service-connected, but on the other hand, it ruled that the Omnibus Motion was moot and academic. According to the respondents, these two pronouncements cannot stand side by side. If the Omnibus Motion was already moot and academic, because the accused who filed the same were no longer being charged with coup d?etat under the Amended Information, then the trial court did not have any authority to further resolve and grant the same Omnibus Motion.
The respondents maintain that since 1Lt. Navales, et al. and Capt. Reaso, et al. were not being charged with coup d?etat under the Amended Information, the trial court could not make a finding that the charges filed against them before the General Court-Martial were in furtherance of coup d?etat. For this reason, the declaration contained in the dispositive portion of the February 11, 2004 Order – that charges filed against the accused before the court-martial were not service-connected – cannot be given effect.
Similarly invoking Section 1 of Rep. Act No. 7055, the respondents vigorously assert that the charges against 1Lt. Navales, et al. and Capt. Reaso, et al. filed with the General Court-Martial, i.e., violations of the Articles of War 63, 64, 67, 96 and 97, are, in fact, among those declared to be service-connected under the second paragraph of this provision. This means that the civil court cannot exercise jurisdiction over the said offenses, the same being properly cognizable by the General Court-Martial. Thus, the RTC (Branch 148) acted without or in excess of jurisdiction when it declared in its February 11, 2004 Order that the charges against those accused before the General Court-Martial were not service-connected, but absorbed and in furtherance of the crime of coup d?etat. Said pronouncement is allegedly null and void.
The respondents denounce the petitioners for their forum shopping. Apparently, a similar petition (petition for habeas corpus, prohibition with injunction and prayer for issuance of a temporary restraining order) had been filed by the petitioners? co-accused with the Court of Appeals, docketed as CA-G.R. SP No. 82695. The case was resolved against the petitioners therein.
The respondents pray that the petitions be dismissed for lack of merit.
The sole issue that needs to be resolved is whether or not the petitioners are entitled to the writs of prohibition and habeas corpus.
The Court?s Ruling
We rule in the negative.
We agree with the respondents that the sweeping declaration made by the RTC (Branch 148) in the dispositive portion of its Order dated February 11, 2004 that all charges before the court-martial against the accused were not service-connected, but absorbed and in furtherance of the crime of coup d?etat, cannot be given effect. For reasons which shall be discussed shortly, such declaration was made without or in excess of jurisdiction; hence, a nullity.
The trial court?s declaration wasmade when the Omnibus Motionhad already been rendered mootand academic with respect to1Lt. Navales, et al. and Capt.Reaso, et al. by reason of thedismissal of the charge of coupd?etat against them
The Order dated February 11, 2004 was issued purportedly to resolve the Omnibus Motion, which prayed for the trial court to, inter alia, acquire jurisdiction over all the charges filed before the military courts in accordance with Rep. Act No. 7055. The said Omnibus Motion was filed on September 12, 2003 by 243 of the original accused under the Information dated August 1, 2003. However, this information was subsequently superseded by the Amended Information dated October 20, 2003 under which only 31 were charged with the crime of coup d?etat. In the November 14, 2003 Order of the RTC (Branch 61), the Amended Information was admitted and the case against the 290 accused, including 1Lt. Navales, et al. and Capt. Reaso, et al., was dismissed. The said Order became final and executory since no motion for reconsideration thereof had been filed by any of the parties.
Thus, when the RTC (Branch 148) eventually resolved the Omnibus Motion on February 11, 2004, the said motion had already been rendered moot by the November 14, 2003 Order of the RTC (Branch 61) admitting the Amended Information under which only 31 of the accused were charged and dismissing the case as against the other 290. It had become moot with respect to those whose charge against them was dismissed, including 1Lt. Navales, et al. and Capt. Reaso, et al., because they were no longer parties to the case. This was conceded by the RTC (Branch 148) itself as it stated in the body of its February 11, 2004 Order that:
Now, after going over the records of the case, the Court is of the view that the movants? first concern in their omnibus motion, i.e., assume jurisdiction over all charges filed before military courts in accordance with R.A. 7055, has been rendered moot and academic by virtue of the Order dated November 14, 2003 dismissing the case against TSg. Leonel M. Alnas, TSg. Ramon B. Norico, SSg. Eduardo G. Cedeno, et al. and finding probable cause in the Order dated November 18, 2003 against accused Cpt. Milo D. Maestrecampo, LtSg. Antonio F. Trillanes IV, et al., issued by Judge Barza.
In view of the Order of Judge Barza dated November 14, 2003 dismissing the case against aforesaid accused, the Court, therefore, can no longer assume jurisdiction over all charges filed before the military courts and this Court cannot undo nor reverse the Order of November 14, 2003 of Judge Barza, there being no motion filed by the prosecution to reconsider the order or by any of the accused.19
Accordingly, in the dispositive portion of the said Order, the RTC (Branch 148) held that the Omnibus Motion was considered "moot and academic." And yet, in the same dispositive portion, the RTC (Branch 148) still proceeded to declare in the last clause thereof that "all the charges before the court-martial against the accused (those included in the Order of November 18, 2003) as well as those former accused (those included in the Order of November 14, 2003) are hereby declared not service-connected," on its perception that the crimes defined in and penalized by the Articles of War were committed in furtherance of coup d?etat; hence, absorbed by the latter crime.
As earlier explained, insofar as those whose case against them was dismissed, there was nothing else left to resolve after the Omnibus Motion was considered moot and academic. Indeed, as they were no longer parties to the case, no further relief could be granted to them. 1Lt. Navales, et al. and Capt. Reaso, et al. could be properly considered as strangers to the proceedings in Criminal Case No. 03-2784. And in the same manner that strangers to a case are not bound by any judgment rendered by the court,20 any rulings made by the trial court in Criminal Case No. 03-2784 are no longer binding on 1Lt. Navales, et al. and Capt. Reaso, et al. The RTC (Branch 148) itself recognized this as it made the statement, quoted earlier, that "in view of the Order of Judge Barza dated November 14, 2003 dismissing the case against aforesaid accused, the Court, therefore, can no longer assume jurisdiction over all charges filed before the military courts and this Court cannot undo nor reverse the Order of November 14, 2003 of Judge Barza there being no motion filed by the prosecution to reconsider the order or by any of the accused."21
Thus, 1Lt. Navales, et al. and Capt. Reaso, et al., who are no longer charged with coup d?etat, cannot find solace in the declaration of the RTC (Branch 148) that the charges filed before the General Court-Martial against them were not service-connected. The same is a superfluity and cannot be given effect for having been made by the RTC (Branch 148) without or in excess of its jurisdiction.
Such declaration was made by the
RTC (Branch 148) in violation of
Section 1, Republic Act No. 7055
Section 1 of Rep. Act No. 7055 reads in full:
Section 1. Members of the Armed Forces of the Philippines and other persons subject to military law, including members of the Citizens Armed Forces Geographical Units, who commit crimes or offenses penalized under the Revised Penal Code, other special penal laws, or local government ordinances, regardless of whether or not civilians are co-accused, victims, or offended parties which may be natural or juridical persons, shall be tried by the proper civil court, except when the offense, as determined before arraignment by the civil court, is service-connected, in which case the offense shall be tried by court-martial: Provided, That the President of the Philippines may, in the interest of justice, order or direct at any time before arraignment that any such crimes or offenses be tried by the proper civil courts.
As used in this Section, service-connected crimes or offenses shall be limited to those defined in Articles 54 to 70, Articles 72 to 92, and Articles 95 to 97 of Commonwealth Act No. 408, as amended.
In imposing the penalty for such crimes or offenses, the court-martial may take into consideration the penalty prescribed therefor in the Revised Penal Code, other special laws, or local government ordinances.
The second paragraph of the above provision explicitly specifies what are considered "service-connected crimes or offenses" under Commonwealth Act No. 408 (CA 408), as amended, also known as the Articles of War, to wit:
Articles 54 to 70:
Art. 54. Fraudulent Enlistment.
Art. 55. Officer Making Unlawful Enlistment.
Art. 56. False Muster.
Art. 57. False Returns.
Art. 58. Certain Acts to Constitute Desertion.
Art. 59. Desertion.
Art. 60. Advising or Aiding Another to Desert.
Art. 61. Entertaining a Deserter.
Art. 62. Absence Without Leave.
Art. 63. Disrespect Toward the President, Vice-President, Congress of the Philippines, or Secretary of National Defense.
Art. 64. Disrespect Toward Superior Officer.
Art. 65. Assaulting or Willfully Disobeying Superior Officer.
Art. 66. Insubordinate Conduct Toward Non-Commissioned Officer.
Art. 67. Mutiny or Sedition.
Art. 68. Failure to Suppress Mutiny or Sedition.
Art. 69. Quarrels; Frays; Disorders.
Art. 70. Arrest or Confinement.
Articles 72 to 92
Art. 72. Refusal to Receive and Keep Prisoners.
Art. 73. Report of Prisoners Received.
Art. 74. Releasing Prisoner Without Authority.
Art. 75. Delivery of Offenders to Civil Authorities.
Art. 76. Misbehavior Before the Enemy.
Art. 77. Subordinates Compelling Commander to Surrender.
Art. 78. Improper Use of Countersign.
Art. 79. Forcing a Safeguard.
Art. 80. Captured Property to be Secured for Public Service.
Art. 81. Dealing in Captured or Abandoned Property.
Art. 82. Relieving, Corresponding With, or Aiding the Enemy.
Art. 83. Spies.
Art. 84. Military Property. ? Willful or Negligent Loss, Damage or Wrongful Disposition.
Art. 85. Waste or Unlawful Disposition of Military Property Issued to Soldiers.
Art. 86. Drunk on Duty.
Art. 87. Misbehavior of Sentinel.
Art. 88. Personal Interest in Sale of Provisions.
Art. 88-A. Unlawfully Influencing Action of Court.
Art. 89. Intimidation of Persons Bringing Provisions.
Art. 90. Good Order to be Maintained and Wrongs Redressed.
Art. 91. Provoking Speeches or Gestures.
Art. 92. Dueling.
Articles 95 to 97:
Art. 95. Frauds Against the Government.
Art. 96. Conduct Unbecoming an Officer and Gentleman.
Art. 97 General Article.
Further, Section 1 of Rep. Act No. 7055 vests on the military courts the jurisdiction over the foregoing offenses. The following deliberations in the Senate on Senate Bill No. 1468, which, upon consolidation with House Bill No. 31130, subsequently became Rep. Act No. 7055, are instructive:
Senator Shahani. I would like to propose an addition to Section 1, but this will have to be on page 2. This will be in line 5, which should be another paragraph, but still within Section 1. This is to propose a definition of what "service-connected" means, because this appears on line 8. My proposal is the following:
"SERVICE-CONNECTED OFFENSES SHALL MEAN THOSE COMMITTED BY MILITARY PERSONNEL PURSUANT TO THE LAWFUL ORDER OF THEIR SUPERIOR OFFICER OR WITHIN THE CONTEXT OF A VALID MILITARY EXERCISE OR MISSION."
I believe this amendment seeks to avoid any confusion as to what "service-connected offense" means. Please note that "service-connected offense," under this bill, remains within the jurisdiction of military tribunals.
So, I think that is an important distinction, Mr. President.
Senator Tañada. Yes, Mr. President. I would just want to propose to the Sponsor of this amendment to consider, perhaps, defining what this service-related offenses would be under the Articles of War. And so, I would submit for her consideration the following amendment to her amendment which would read as follows: AS USED IN THIS SECTION, SERVICE-CONNECTED CRIMES OR OFFENSES SHALL BE LIMITED TO THOSE DEFINED IN ARTICLES 54 TO 70, ARTICLES 72 TO 75, ARTICLES 76 TO 83 AND ARTICLES 84 TO 92, AND ARTICLES 95 TO 97, COMMONWEALTH ACT NO. 408 AS AMENDED.
This would identify, I mean, specifically, what these service-related or connected offenses or crimes would be.
The President. What will happen to the definition of "service-connected offense" already put forward by Senator Shahani?
Senator Tañada. I believe that would be incorporated in the specification of the Article I have mentioned in the Articles of War.
SUSPENSION OF THE SESSION
The President. Will the Gentleman kindly try to work it out between the two of you? I will suspend the session for a minute, if there is no objection. [There was none.]
It was 5:02 p.m.
RESUMPTION OF THE SESSION
At 5:06 p.m., the session was resumed.
The President. The session is resumed.
Senator Tañada. Mr. President, Senator Shahani has graciously accepted my amendment to her amendment, subject to refinement and style.
The President. Is there any objection? [Silence] There being none, the amendment is approved.22
In the same session, Senator Wigberto E. Tañada, the principal sponsor of SB No. 1468, emphasized:
Senator Tañada. Section 1, already provides that crimes of offenses committed by persons subject to military law … will be tried by the civil courts, except, those which are service-related or connected. And we specified which would be considered service-related or connected under the Articles of War, Commonwealth Act No. 408.23
It is clear from the foregoing that Rep. Act No. 7055 did not divest the military courts of jurisdiction to try cases involving violations of Articles 54 to 70, Articles 72 to 92 and Articles 95 to 97 of the Articles of War as these are considered "service-connected crimes or offenses." In fact, it mandates that these shall be tried by the court-martial.
Indeed, jurisdiction is the power and authority of the court to hear, try and decide a case.24 Moreover, jurisdiction over the subject matter or nature of the action is conferred only by the Constitution or by law.25 It cannot be (1) granted by the agreement of the parties; (2) acquired, waived, enlarged or diminished by any act or omission of the parties; or (3) conferred by the acquiescence of the courts.26 Once vested by law on a particular court or body, the jurisdiction over the subject matter or nature of the action cannot be dislodged by any body other than by the legislature through the enactment of a law. The power to change the jurisdiction of the courts is a matter of legislative enactment which none but the legislature may do. Congress has the sole power to define, prescribe and apportion the jurisdiction of the courts.27
In view of the clear mandate of Rep. Act No. 7055, the RTC (Branch 148) cannot divest the General Court-Martial of its jurisdiction over those charged with violations of Articles 63 (Disrespect Toward the President etc.), 64 (Disrespect Toward Superior Officer), 67 (Mutiny or Sedition), 96 (Conduct Unbecoming an Officer and a Gentleman) and 97 (General Article) of the Articles of War, as these are specifically included as "service-connected offenses or crimes" under Section 1 thereof. Pursuant to the same provision of law, the military courts have jurisdiction over these crimes or offenses.
There was no factual and legal basis for the RTC (Branch 148) to rule that violations of Articles 63, 64, 67, 96, and 97 of the Articles of War were committed in furtherance of coup d?etat and, as such, absorbed by the latter crime. It bears stressing that, after a reinvestigation, the Panel of Prosecutors found no probable cause for coup d?etat against the petitioners and recommended the dismissal of the case against them. The trial court approved the recommendation and dismissed the case as against the petitioners. There is, as yet, no evidence on record that the petitioners committed the violations of Articles 63, 64, 96, and 97 of the Articles of War in furtherance of coup d?etat.
In fine, in making the sweeping declaration that these charges were not service-connected, but rather absorbed and in furtherance of the crime of coup d?etat, the RTC (Branch 148) acted without or in excess of jurisdiction. Such declaration is, in legal contemplation, necessarily null and void and does not exist.28
At this point, a review of its legislative history would put in better perspective the raison d?etre of Rep. Act No. 7055. As early as 1938, jurisdiction over offenses punishable under CA 408, as amended, also known as the Articles of War, committed by "persons subject to military law" was vested on the military courts. Thereafter, then President Ferdinand E. Marcos promulgated Presidential Decree (PD) Nos. 1822,29 185030 and 1852.31 These presidential decrees transferred from the civil courts to the military courts jurisdiction over all offenses committed by members of the AFP, the former Philippine Constabulary, the former Integrated National Police, including firemen, jail guards and all persons subject to military law.
In 1991, after a series of failed coup d?etats, Rep. Act No. 7055 was enacted. In his sponsorship speech, Senator Tañada explained the intendment of the law, thus:
Senator Tañada. The long and horrible nightmare of the past continues to haunt us to this present day. Its vestiges remain instituted in our legal and judicial system. Draconian decrees which served to prolong the past dictatorial regime subsist to rule our new-found lives. Two of these decrees, Presidential Decree No. 1822 and Presidential Decree No. 1850, as amended, remain intact as laws, in spite of the fact that four years have passed since we regained our democratic freedom.
The late Mr. Chief Justice Claudio Teehankee enunciated in the case of Olaguer vs. Military Commission No. 34 that "the greatest threat to freedom is the shortness of human memory."
PD No. 1822 and PD No. 1850 made all offenses committed by members of the Armed Forces of the Philippines, the Philippine Constabulary, the Integrated National Police, including firemen and jail guards, and all persons subject to military law exclusively triable by military courts though, clearly, jurisdiction over common crimes rightly belongs to civil courts.
Article II, Section 3 of the 1987 Constitution provides that civilian authority is, at all times, supreme over the military. Likewise, Article VIII, Section 1 declares that "the judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law."
In the case of Anima vs. The Minister of National Defense, (146 Supreme Court Reports Annotated, page 406), the Supreme Court through Mr. Justice Gutierrez declared:
The jurisdiction given to military tribunals over common crimes at a time when all civil courts were fully operational and freely functioning constitutes one of the saddest chapters in the history of the Philippine Judiciary.
The downgrading of judicial prestige caused by the glorification of military tribunals … the many judicial problems spawned by extended authoritarian rule which effectively eroded judicial independence and self-respect will require plenty of time and determined efforts to cure.
The immediate return to civil courts of all cases which properly belong to them is only a beginning.
Thus, as long as the civil courts in the land remain open and are regularly functioning, military tribunals cannot try and exercise jurisdiction over military men for criminal offenses committed by them which are properly cognizable by the civil courts. …32
Clearly, in enacting Rep. Act No. 7055, the lawmakers merely intended to return to the civilian courts the jurisdiction over those offenses that have been traditionally within their jurisdiction, but did not divest the military courts jurisdiction over cases mandated by the Articles of War.
The writs of prohibition (G.R. No. 162318) and habeas corpus (G.R. No. 162341) prayed for by the petitioners must perforce fail. As a general rule, the writ of habeas corpus will not issue where the person alleged to be restrained of his liberty is in the custody of an officer under a process issued by the court which has jurisdiction to do so.33 Further, the writ of habeas corpus should not be allowed after the party sought to be released had been charged before any court or quasi-judicial body.34 The term "court" necessarily includes the General Court-Martial. These rules apply to Capt. Reaso, et al., as they are under detention pursuant to the Commitment Order dated August 2, 2003 issued by respondent Chief of Staff of the AFP pursuant to Article 7035 of the Articles of War.
On the other hand, the office of the writ of prohibition is to prevent inferior courts, corporations, boards or persons from usurping or exercising a jurisdiction or power with which they have not been vested by law.36 As earlier discussed, the General Court-Martial has jurisdiction over the charges filed against petitioners 1Lt. Navales, et al. under Rep. Act No. 7055. A writ of prohibition cannot be issued to prevent it from exercising its jurisdiction.
WHEREFORE, premises considered, the petitions are hereby DISMISSED.
Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio Morales, Azcuna*, Tinga, Chico-Nazario, and Garcia, JJ., concur.
* On leave.
1 Rollo, p. 18. (G.R. No. 162341)
2 On August 19, 2004, Capt. Ruperto L. Reaso filed with this Court a Motion to Withdraw as One of the Petitioners in G.R. No. 162341 and prayed that the law office of Atty. Pulido be enjoined from representing him.
3 Rollo, p. 18. (G.R. No. 162341)
4 The narration of the events that transpired on July 27, 2003 is largely taken from THE REPORT OF THE FACT-FINDING COMMISSION dated October 15, 2003. The Fact-Finding Commission, headed by Retired Senior Associate Justice Florentino P. Feliciano, was created under Administrative Order No. 78 dated July 30, 2003 of President Gloria Macapagal-Arroyo to investigate the "Oakwood Incident."
5 Rollo, pp. 18-29. (G.R. No. 162318)
6 The accusatory portion reads:
That on or about July 27, 2003 or on dates prior and subsequent thereto, in Makati City, a place within the jurisdiction of this Honorable Court, above-named accused, all officers and enlisted men of the Armed Forces of the Philippines (AFP), conspiring, confederating and mutually helping one another, did then and there, willfully, unlawfully, feloniously and swiftly attack and seize by means of intimidation, threat, strategy, or stealth the Ayala Center, particularly Oakwood Premier Hotel and its immediate vicinity, a facility needed for the exercise and continued possession of power, and directed against the duly constituted authorities of the Republic of the Philippines, rise publicly and take arms against the Government of the Republic of the Philippines, demanding the resignation of the President and members of her official cabinet and top officials of the AFP and Philippine National Police, for the purpose of seizing and diminishing state power.
CONTRARY TO LAW.
7 Rollo, p. 100. (G.R. No. 162318)
8 ART. 134-A. Coup d?etat ? How committed. ? The crime of coup d?etat is a swift attack, accompanied by violence, intimidation, threat, strategy or stealth, directed against duly constituted authorities of the Republic of the Philippines, or any military camp or installation, communications networks, public utilities or other facilities needed for the exercise and continued possession of power, singly or simultaneously carried out anywhere in the Philippines by any person or persons, belonging to the military or police or holding any public office or employment, with or without civilian support or participation, for the purpose of seizing or diminishing state power. (As added by RA No. 6968, 86 OG 52, p. 9864 .)
9 Rollo, pp. 63-66. (G.R. No. 162318)
10 Id. at 57-62.
11 The accusatory portion reads:
That on or about July 27, 2003, and on dates prior and subsequent thereto, in Makati City, a place within the jurisdiction of this Honorable Court, above-named accused, all officers and enlisted men of the Armed Forces of the Philippines (AFP), together with several John Does and Jane Does, conspiring, conniving, confederating and mutually helping one another, each committing individual acts toward a common design or purpose of committing coup d?etat, by did then and there, knowingly, willfully, unlawfully, feloniously plan, orchestrate, recruit, instigate, mobilize, deploy and execute said common design or purpose of committing coup d?etat, swiftly attack and seize by means of force, intimidation, threat, strategy, or stealth the facilities of the Ayala Center, particularly Oakwood Premier Hotel and its immediate vicinity, for the exercise and continued possession of power, directed against the duly constituted authorities of the Republic of the Philippines, by did then and there, withdraw support and demand the resignation of PRESIDENT GLORIA MACAPAGAL-ARROYO and members of her official cabinet and top officials of the AFP and the Philippine National Police, for the purpose of seizing or diminishing state power.
CONTRARY TO LAW.
12 Rollo, pp. 31-51. (G.R. No. 162318)
13 Id. at 70.
14 Id. at 72.
15 Petition in G.R. No. 162318, p. 7; Petition in G.R. 162341, p. 11.
16 Petition in G.R. No. 162341, p. 13.
18 An Act to Strengthen Civilian Supremacy Over the Military by Returning to the Civil Courts the Jurisdiction Over Certain Offense Involving Members of the Armed Forces of the Philippines, Other Persons Subject to Military Law, and the Members of the Philippine National Police, Repealing for the Purpose Certain Presidential Decrees.
19 Rollo, pp. 68-69. (G.R. No. 162318)
20 Orquiola v. Court of Appeals, 386 SCRA 301 (2002).
21 Supra at 19.
22 Record of the Senate, Vol. IV, No. 122, May 21, 1990, p. 837.
23 Id. at 839.
24 Platinum Tours and Travel, Inc. v. Panlilio, 411 SCRA 142 (2003).
25 Republic v. Estipular, 336 SCRA 333 (2000).
27 Zamora v. Court of Appeals, 183 SCRA 279 (1990).
28 See People v. Velasco, 340 SCRA 207 (2000).
29 Providing for the Trial by Courts-Martial of Members of the Armed Forces Charged with Offenses Related to the Performance of their Duties (January 16, 1981).
30 Providing for the Trial by Courts-Martial of Members of the Integrated National Police and Further Defining the Jurisdiction of Courts-Martial over Members of the Armed Forces of the Philippines (October 4, 1982).
31 Amending Section 1 of P.D. No. 1850 (September 5, 1984).
32 Record of the Senate, Vol. IV, No. 116, May 9, 1990, pp. 670-671.
33 Serapio v. Sandiganbayan, 396 SCRA 443 (2003).
34 Rodriguez v. Bonifacio, 344 SCRA 519 (2000).
35 The provision reads:
Art. 70. Arrest or Confinement. ? Any person subject to military law charged with crime or with a serious offense under these articles shall be placed in confinement or in arrest, as circumstances may require; but when charged with a minor offense only, such person shall not ordinarily be placed in confinement. Any person placed in arrest under the provisions of this article shall thereby be restricted to his barracks, quarters, or tent, unless such limits shall be enlarged by proper authority. Any officer or cadet who breaks his arrest or who escapes from confinement, whether before or after trial or sentence and before he is set at liberty by proper authority, shall be dismissed from the service or suffer such other punishment as a court-martial may direct, and any other person subject of the military law who escapes from confinement or who breaks his arrest, whether before or after trial or sentence and before he is set at liberty by proper authority, shall be punished as a court-martial may direct.
36 Matuguina Integrated Wood Products, Inc. v. Court of Appeals, 263 SCRA 490 (1996).
September 30, 2004
The Constitution requires trial judges to decide cases within 90 days from the time the last pleading is filed.1 Indeed, justice is defined not just by how but, equally important, by when it is dispensed. When circumstances make it impossible for judges to decide a litigation within the reglementary period, they are required to inform this Court of the reasons for the delay and to ask for an extension within which to dispose of the case. This simple requirement is meant to assure litigants that their causes have not been forgotten and buried among the myriad concerns courts have to attend to, and to demonstrate that judges are conscientious of their constitutionally imposed time limits.
Before this Court is a case that originated as Administrative Matter No. 04-6-352-RTC (Re: Judicial Audit Conducted in the Regional Trial Court, Dasmariñas, Branch 90 [Stationed at Imus], Cavite). The Complaint, filed against Judge Dolores L. Español (ret.) of the said Regional Trial Court (RTC), was for gross inefficiency.2 Upon the recommendation of the Office of the Court Administrator (OCA), the matter was re-docketed as a regular administrative case on August 9, 2004.3
The facts, as found by the OCA, are as follows:
"A Judicial Audit and Inventory of Cases was conducted in the Regional Trial Court, Branch 90, Dasmariñas (stationed at Imus), Cavite, prior to the compulsory retirement of Judge Dolores L. Español on January 9, 2004.
"On the basis of the findings of the audit team, a Memorandum dated 27 November 2003 was sent to Judge Español directing her to decide all cases submitted for decision, resolve all motions/incidents submitted for resolution and to take actions on the unacted cases as tabulated in the memorandum.
"On May 25, 2004, Judge Español submitted her compliance with the memorandum dated November 27, 2003. A tabulated list showing the actions taken on the cases was submitted and copies of the decisions rendered were attached to the compliance.
"Judge Español in her compliance pointed out that the directive requiring [her] to take appropriate action in the cases was received by her two (2) days before her compulsory retirement and due to human limitations, all the listed cases for action could not be completely done. All the cases may have been unresolved due to the election protest returned by the Commission on Elections after 17 months and which was given priority."
The OCA?s investigation showed that upon her compulsory retirement on January 9, 2004, Judge Español left a total of 69 cases that had not been acted upon. In particular, these included six criminal and sixteen civil cases already submitted for decision, five criminal and eighteen civil cases on appeal, and sixteen cases with pending incidents for resolution.4
In separate communications addressed to Deputy Court Administrator (DCA) Jose Perez dated May 27, 20045 and September 1, 2004, respondent judge explained that the delay in the disposition of cases in her court was due to the following reasons:
1. Only two days before her compulsory retirement on January 9, 2004 did she receive the Memorandum dated November 27, 2003, directing her to decide all cases submitted for decision, to resolve all motions/incidents, and to take actions on cases tabulated therein that had not yet been acted upon. Pointing to "human limitations," she explained that she could not have disposed of the cases contained in the directive within her remaining two days in office.
2. She gave priority, as was required by law, to Election Protest No. 01-02, Oscar Jaro v. Homer Saquilayan. That case took much of her court time and energy, as it required the revision and review of 52,694 ballots from 453 precincts of Imus, Cavite, and necessitated the creation of two revision committees. The clerk of court and three other court personnel, particularly the researcher and two clerks, had to devote their full time to assist in the revision.
3. In Solar Resources, Inc. v. Rolando Aldunar, 63 counts of unlawful detainer with damages required the implementations of 63 writs of execution and demolition. The negotiations undertaken by both the plaintiff and the defendants, the latter numbering about six hundred families, caused setbacks in the final disposition of the cases. It was only after the negotiations failed that respondent?s court was constrained to exercise its firm hand.
4. Delay in the service of the writs in the aforementioned Solar Resources cases was also partly the fault of Sheriff Tomas C. Azurin, who allegedly frustrated the enforcement of the writs through highly questionable acts. Among those acts were cavorting with the leaders of squatter groups that had opposed the implementation of the Orders and the Writs of the court and contracting the food preparation of the demolition team, part of which he himself had recruited. In an Order dated December 29, 2003, respondent judge ordered the relief of Azurin and the deputization of Sheriffs Danny Lapuz and Rodelio Buenviaje of Cavite City. The Writs were finally completed on March 8, 2004, as evidenced by the sheriff?s return and receipt of possession.
5. The transfer of court records from the maintenance room to the courtroom vacated by Judge Eduardo Israel Tanguanco, as well as the temporary storage of those records in a 20-foot container van, caused the misplacement of some records.
In her letter to DCA Perez dated September 1, 2004, respondent denied the charges of gross inefficiency leveled against her. She alleged that as early as August 2003, in anticipation of her compulsory retirement, she had approached the Court Management Office (CMO). She discussed with the CMO the possibility of requesting another judge to assist her in the ongoing revision of ballots in EPC No. 01-02, as well as in the implementation of writs in sixty-three appealed cases for unlawful detainer involving Solar Resources. On the advice of the CMO, however, she did not submit a formal request.
Respondent also called attention to the fact that, notwithstanding a full calendar and the absence of an assisting judge, she was not remiss in disposing of cases. Even before her receipt of the Memorandum of January 7, 2004, which was two days before her retirement on January 9, 2004, she had already acted on a number of cases not covered by the Audit Report. The latest tabulation showed that the cases listed in the Memorandum dated November 27, 2003, had been disposed of accordingly.
Evaluation and Recommendation of the Office of the Court Administrator
The OCA found respondent guilty of gross inefficiency and recommended a fine of ten thousand pesos (P10,000) to be deducted from the retirement benefits due her.
The Ruling of the Court
We agree with and adopt the findings of the OCA, but adjust the penalty in accordance with Rule 140.
The 1987 Constitution mandates trial judges to dispose of the court?s business promptly and to decide cases and matters within three (3) months from the filing of the last pleading, brief or memorandum.6 In the disposition of cases, members of the bench have always been exhorted to observe strict adherence to the foregoing rule to prevent delay, a major culprit in the erosion of public faith and confidence in our justice system.
In the evolvement of public perception of the judiciary, there can be no more conclusive empirical influence than the prompt and proper disposition of cases.7 Hence, a clear failure to comply with the reglementary period is regarded as inexcusable gross inefficiency.8 The speedy disposition of cases by judges is unequivocally directed by Canon 6 of the Code of Judicial Ethics:
"He should be prompt in disposing of all matters submitted to him, remembering that justice delayed is often justice denied."
This Court is aware of the predicament that plagues respondent, as well as most other trial judges in the country. The problem of case inputs grossly exceeding case outputs may be traced to several factors, the most prevalent of which are the large number of cases filed, indiscriminate grant of continuances to litigants, inefficient case flow management by judges, and unrealistic management of the calendar of cases.
To solve these problems, this Court has, in several instances, advised judges to follow certain guidelines to facilitate speedy case disposition.9 Among these measures is the discouragement of continuances, except for exceptional reasons. To enforce due diligence in the dispatch of judicial business without arbitrarily or unreasonably forcing cases to trial when counsels are unprepared, judges should endeavor to hold them to a proper appreciation of their duties to the public, as well as to their own clients and to the adverse party.10
In criminal cases, pretrial is mandatory because, at the outset, litigation is abbreviated by the identification of contentious issues. In civil cases, judges are also required to take advantage of the pretrial conference to arrive at settlements and compromises between the parties, to ask the latter to explore the possibility of submitting their cases to any of the alternative modes of dispute resolution, and at least to reduce and limit the issues for trial. Judges are further directed to implement and observe strictly the provisions of Section 2 of Rule 119, providing for a continuous day-to-day trial as far as practicable until termination.11
The work of magistrates is multifarious. They do not only hear cases and write decisions in the seclusion of their chambers; equally important, they act also as administrators. Their administrative efficiency may well define the justice they dispense.
They should be rational and realistic in calendaring cases. Only a sufficient number should be calendared in order to permit them to hear all the cases scheduled.12 Hence, unless the docket of the court requires otherwise, not more than four cases daily should be scheduled for trial.13 A continuous and physical inventory of cases on a monthly basis is also recommended, so that they would be aware of the status of each case.
With the assistance of the clerk of court, a checklist should be prepared, indicating the steps to be taken to keep cases moving.14 While decision-writing is a matter of personal style, judges are well-advised to prepare concise but complete as well as correct and clear decisions, orders or resolutions.15 With a table or calendar indicating the cases submitted for decision, they should note the exact day, month and year when the 90-day period is to expire.
Prompt disposition of the court?s business is attained through proper and efficient court management. Judges would be remiss in their duty and responsibility as court managers if they fail to adopt an efficient system of record management.16
At times, circumstances beyond their control result in the accumulation of ripe cases to a daunting number, making it humanly impossible for them to comply with the constitutionally mandated 90-day period. In such instances, all that they should do is write a request for extension from the Supreme Court, stating therein their reasons for the delay.17 Such administrative requirement finds basis in the 1987 Constitution.18
This Court has further directed members of the bench to call the attention of the OCA "when the situation requires remedies beyond the control or capability of the judges."
"10.3 The reduction of case loads would be an efficacious design to strengthen public confidence in the Courts. All efforts should be exerted so that case disposals should exceed case inputs. Whenever obstacles present themselves which delay case disposition, the Presiding Judge should immediately call the attention of the Supreme Court through the Court Administrator when the situation requires remedies beyond the control or capability of the judges."19
In his recommendation, DCA Perez made the following observation:
"At the very least, Judge Español should have requested for an extension of time once she knew that she could not comply with the prescribed ninety (90) day period to render judgment. In doing so, she would have been able to apprise litigants as to the status of the case and the reason for the delay, if any. It would have shown that she minded the deadlines.
"While Judge Español professes her human limitations coupled with the disposition of the election cases which allegedly demand priority, the same cannot exculpate her for non-compliance with the mandates of the law and the rules."
As we have stated in Maquiran v. Lopez,20 a heavy case load may excuse the failure of judges to decide cases within the reglementary period, but not their failure to request an extension of time within which to decide them on time.
In her letter dated September 1, 2004, respondent aired her frustrations over matters that allegedly "deter the achievement of a super-efficient court"; among these was "the lack of materials, equipment and supplies." In her own words, she had to "use her own funds to provide air conditioning units in the courtroom, computer and cleaning materials and supplies, repairs of the courtroom and providing for an additional storage space for court records."21
Her concern over lack of adequate materials and supplies is not unique to her; presently, the Court is trying to address it. Unfortunately, her initiative in personally acting on the problem, while commendable, cannot completely absolve her from her administrative liability in this case. It can however mitigate the penalty to be imposed.
As amended, Section 9 (1) of Rule 140 of the Revised Rules of Court classifies undue delay in rendering a decision as a less serious charge. As such, under Section 11 (b) of the same Rule, this offense is punishable by suspension from office without salary and other benefits for not less one (1) but not more than three (3) months, or a fine of more than P10,000 but not exceeding P20,000.
We close this Decision with a final exhortation. The magistracy is a very exacting and demanding vocation. Judges are expected to embody "four character traits: integrity, independence, intelligence and industry." Moreover, in the performance of their tasks, they must exhibit "four work habits; namely, excellence, ethics, effectiveness and expeditiousness."22 Only those who patiently cultivate these four character traits and four work habits can succeed in journeying through the straight and narrow judicial path.
WHEREFORE, the factual findings of the Office of Court Administrator are ADOPTED. Judge Dolores L. Español is found GUILTY of gross inefficiency and is fined in the amount of eleven thousand pesos (P11,000), to be deducted from the retirement benefits due her.
Sandoval-Gutierrez, Corona, and Carpio Morales*, JJ., concur.
* On leave.
1 ??15 (1) and (2) of Article IIX of the 1987 Constitution respectively provide:
"All cases or matters filed after the effectivity of this Constitution must be decided or resolved within twenty-four months, from the date of submission for the Supreme Court, and, unless reduced by the Supreme Court, twelve months for all lower collegiate courts, and three months for all other lower courts."
"A case or matter shall be deemed submitted for decision or resolution upon the filing of the last pleading, brief, or memorandum required by the Rules of Court or by the court itself."
2 Rollo; see Memorandum for Hon. Hilario G. Davide Jr. in OA-6-352-RTC, dated June 17, 2004.
3 Rollo; Resolution of the Third Division, August 9, 2004.
4 Id. Upon her retirement, respondent judge failed to render a decision in Criminal Case Nos. 8553-01, 8707-01, 9880-02, 9874-02, 10528-02 and 10882-03. Those on appeal that were left undecided beyond the 90-day reglementary period were Criminal Case Nos. 027-98, 028-98, 029-98, 039-01 and 041-01. She also failed to render a decision in Civil Case Nos. 1592-97, 2499-02, 2437-01, 2590-02, 1049-95, 2430-01. Those undecided beyond the 90-day period included SP No. 881-01, 1515-97, 1832-99, 1922-99, 2176-00, 2704-02, 2795-03, SCA-045-00 and LRC-1672-95. Those left undecided beyond the 90-day period included Civil Case Nos. 2227-00, SP-10002-02, SP-911-02, 1506-97, 2145-00, 1160-95 and 1354-96. Those on appeal that were left undecided beyond the 90-day period were Civil Case Nos. 147-00, 148-00, 149-00, 150-00, 243-02, 121-01, 171-01, 172-01, 173-01, 110-99, 282-02, 227-02, 272-02, 111-99, 076-97, 088-97, 157-01 and 184-01. Respondent judge also failed to resolve the pending incident in Criminal Case No. 8934-01; or to take further action in Criminal Case No. 4913-97 and Civil Case Nos. 2339-01, 1600-97, 1581-97, LRC-2078-02, LRC-2092-02, SCA-056-02, SCA-044-00, SCA-041-99, 2786-03, 2649-02, 2236-01, 2863-03, 2706-02, [1732-98,] 1923-99 and 1179-95. (See Memorandum to Hon. Hilario G. Davide and the Status of Cases listed in the Audit Report, attached to the letter of respondent to DCA Jose Perez, dated May 27, 2004.)
5 Rollo; letter of Judge Dolores L. Español dated May 27, 2004.
6 Abarquez v. Rebosura, 349 Phil. 24, 35, January 28, 1998.
7 Cruz Jr. v. Joven, 350 SCRA 70, January 23, 2001.
8 Report on the Judicial Audit in RTC, Branch 27, Lapu-lapu City, 352 Phil. 223, 230, April 22, 1998.
9 See Supreme Court Circular No. 39-98, August 11, 1998; and Administrative Circular No. 3-99, January 15, 1999.
10 Canons of Judicial Ethics, August 1, 1946.
11 See Supreme Court Circular No. 13, July 1, 1987.
?2 of Rule 119 of the Rules of Court provides:
"Continuous trial until terminated; postponements. ? Trial once commenced shall continue from day to day as far as practicable until terminated; but for good cause, it may be postponed for a reasonable period of time."
12 Supreme Court Circular No. 13, supra.
13 Supreme Court Administrative Circular No. 3-99, supra.
15 Velarde v. Social Justice Society, GR No. 159357, April 28, 2004 (citing Panganiban, "On Developing My Decision Writing Style," Justice and Faith , pp. 9-29).
16 Office of the Court Administrator v. Quilala, 351 SCRA 597, February 15, 2001.
17 Request for Assistance Relative to Special Proceedings No. 28 Pending at RTC, Br. 55, Negros Occidental Presided by Judge Jose Y. Aguirre Jr., 355 SCRA 62, March 26, 2001.
18 Subparagraphs 3 and 4, ?15 of Article VIII, 1987 Constitution.
19 Supreme Court Circular No. 1, January 28, 1988.
20 411 Phil 544, June 20, 2001.
21 Rollo; letter of respondent to DCA Perez dated September 1, 2004.
22 See the Opening Remarks of the ponente during the Awarding Ceremonies for the 2004 Judicial Excellence Awards sponsored by the Supreme Court on September 17, 2004, reprinted as an Appendix in his book, Leveling the Playing Field (2004).
September 30, 2004
For review on certiorari is the Partial Judgment1 dated November 26, 2001 in Civil Case No. 01-0140, of the Regional Trial Court (RTC) of Parañaque City, Branch 258. The trial court declared the February 9, 2001, election of the board of directors of the Medical Center Parañaque, Inc. (MCPI) valid. The Partial Judgment dismissed petitioners? first cause of action, specifically, to annul said election for depriving petitioners their voting rights and to be voted on as members of the board.
The facts, as culled from records, are as follows:
Petitioners and the respondents are stockholders of MCPI, with the former holding Class "B" shares and the latter owning Class "A" shares.
MCPI is a domestic corporation with offices at Dr. A. Santos Avenue, Sucat, Parañaque City. It was organized sometime in September 1977. At the time of its incorporation, Act No. 1459, the old Corporation Law was still in force and effect. Article VII of MCPI?s original Articles of Incorporation, as approved by the Securities and Exchange Commission (SEC) on October 26, 1977, reads as follows:
SEVENTH. That the authorized capital stock of the corporation is TWO MILLION (P2,000,000.00) PESOS, Philippine Currency, divided into TWO THOUSAND (2,000) SHARES at a par value of P100 each share, whereby the ONE THOUSAND SHARES issued to, and subscribed by, the incorporating stockholders shall be classified as Class A shares while the other ONE THOUSAND unissued shares shall be considered as Class B shares. Only holders of Class A shares can have the right to vote and the right to be elected as directors or as corporate officers.2 (Stress supplied)
On July 31, 1981, Article VII of the Articles of Incorporation of MCPI was amended, to read thus:
SEVENTH. That the authorized capital stock of the corporation is FIVE MILLION (P5,000,000.00) PESOS, divided as follows:
CLASSNO. OF SHARESPAR VALUE
Only holders of Class A shares have the right to vote and the right to be elected as directors or as corporate officers.3 (Emphasis supplied)
The foregoing amendment was approved by the SEC on June 7, 1983. While the amendment granted the right to vote and to be elected as directors or corporate officers only to holders of Class "A" shares, holders of Class "B" stocks were granted the same rights and privileges as holders of Class "A" stocks with respect to the payment of dividends.
On September 9, 1992, Article VII was again amended to provide as follows:
SEVENTH: That the authorized capital stock of the corporation is THIRTY TWO MILLION PESOS (P32,000,000.00) divided as follows:
CLASSNO. OF SHARESPAR VALUE
Except when otherwise provided by law, only holders of Class "A" shares have the right to vote and the right to be elected as directors or as corporate officers4 (Stress and underscoring supplied).
The SEC approved the foregoing amendment on September 22, 1993.
On February 9, 2001, the shareholders of MCPI held their annual stockholders? meeting and election for directors. During the course of the proceedings, respondent Rustico Jimenez, citing Article VII, as amended, and notwithstanding MCPI?s history, declared over the objections of herein petitioners, that no Class "B" shareholder was qualified to run or be voted upon as a director. In the past, MCPI had seen holders of Class "B" shares voted for and serve as members of the corporate board and some Class "B" share owners were in fact nominated for election as board members. Nonetheless, Jimenez went on to announce that the candidates holding Class "A" shares were the winners of all seats in the corporate board. The petitioners protested, claiming that Article VII was null and void for depriving them, as Class "B" shareholders, of their right to vote and to be voted upon, in violation of the Corporation Code (Batas Pambansa Blg. 68), as amended.
On March 22, 2001, after their protest was given short shrift, herein petitioners filed a Complaint for Injunction, Accounting and Damages, docketed as Civil Case No. CV-01-0140 before the RTC of Parañaque City, Branch 258. Said complaint was founded on two (2) principal causes of action, namely:
a. Annulment of the declaration of directors of the MCPI made during the February 9, 2001 Annual Stockholders? Meeting, and for the conduct of an election whereat all stockholders, irrespective of the classification of the shares they hold, should be afforded their right to vote and be voted for; and
b. Stockholders? derivative suit challenging the validity of a contract entered into by the Board of Directors of MCPI for the operation of the ultrasound unit.5
Subsequently, the complaint was amended to implead MCPI as party-plaintiff for purposes only of the second cause of action.
Before the trial court, the herein petitioners alleged that they were deprived of their right to vote and to be voted on as directors at the annual stockholders? meeting held on February 9, 2001, because respondents had erroneously relied on Article VII of the Articles of Incorporation of MCPI, despite Article VII being contrary to the Corporation Code, thus null and void. Additionally, respondents were in estoppel, because in the past, petitioners were allowed to vote and to be elected as members of the board. They further claimed that the privilege granted to the Class "A" shareholders was more in the nature of a right granted to founder?s shares.
In their Answer, the respondents averred that the provisions of Article VII clearly and categorically state that only holders of Class "A" shares have the exclusive right to vote and be elected as directors and officers of the corporation. They denied that the exclusivity was intended only as a privilege granted to founder?s shares, as no such proviso is found in the Articles of Incorporation. The respondents further claimed that the exclusivity of the right granted to Class "A" holders cannot be defeated or impaired by any subsequent legislative enactment, e.g. the New Corporation Code, as the Articles of Incorporation is an intra-corporate contract between the corporation and its members; between the corporation and its stockholders; and among the stockholders. They submit that to allow Class "B" shareholders to vote and be elected as directors would constitute a violation of MCPI?s franchise or charter as granted by the State.
At the pre-trial, the trial court ruled that a partial judgment could be rendered on the first cause of action and required the parties to submit their respective position papers or memoranda.
On November 26, 2001, the RTC rendered the Partial Judgment, the dispositive portion of which reads:
WHEREFORE, viewed in the light of the foregoing, the election held on February 9, 2001 is VALID as the holders of CLASS "B" shares are not entitled to vote and be voted for and this case based on the First Cause of Action is DISMISSED.
In finding for the respondents, the trial court ruled that corporations had the power to classify their shares of stocks, such as "voting and non-voting" shares, conformably with Section 67 of the Corporation Code of the Philippines. It pointed out that Article VII of both the original and amended Articles of Incorporation clearly provided that only Class "A" shareholders could vote and be voted for to the exclusion of Class "B" shareholders, the exception being in instances provided by law, such as those enumerated in Section 6, paragraph 6 of the Corporation Code. The RTC found merit in the respondents? theory that the Articles of Incorporation, which defines the rights and limitations of all its shareholders, is a contract between MCPI and its shareholders. It is thus the law between the parties and should be strictly enforced as to them. It brushed aside the petitioners? claim that the Class "A" shareholders were in estoppel, as the election of Class "B" shareholders to the corporate board may be deemed as a mere act of benevolence on the part of the officers. Finally, the court brushed aside the "founder?s shares" theory of the petitioners for lack of factual basis.
Hence, this petition submitting the sole legal issue of whether or not the Court a quo, in rendering the Partial Judgment dated November 26, 2001, has decided a question of substance in a way not in accord with law and jurisprudence considering that:
1. Under the Corporation Code, the exclusive voting right and right to be voted granted by the Articles of Incorporation of the MCPI to Class A shareholders is null and void, or already extinguished;
2. Hence, the declaration of directors made during the February 9, 2001 Annual Stockholders? Meeting on the basis of the purported exclusive voting rights is null and void for having been done without the benefit of an election and in violation of the rights of plaintiffs and Class B shareholders; and
3. Perforce, another election should be conducted to elect the directors of the MCPI, this time affording the holders of Class B shares full voting right and the right to be voted.8
The issue for our resolution is whether or not holders of Class "B" shares of the MCPI may be deprived of the right to vote and be voted for as directors in MCPI.
Before us, petitioners assert that Article VII of the Articles of Incorporation of MCPI, which denied them voting rights, is null and void for being contrary to Section 6 of the Corporation Code. They point out that Section 6 prohibits the deprivation of voting rights except as to preferred and redeemable shares only. Hence, under the present law on corporations, all shareholders, regardless of classification, other than holders of preferred or redeemable shares, are entitled to vote and to be elected as corporate directors or officers. Since the Class "B" shareholders are not classified as holders of either preferred or redeemable shares, then it necessarily follows that they are entitled to vote and to be voted for as directors or officers.
The respondents, in turn, maintain that the grant of exclusive voting rights to Class "A" shares is clearly provided in the Articles of Incorporation and is in accord with Section 59 of the Corporation Law (Act No. 1459), which was the prevailing law when MCPI was incorporated in 1977. They likewise submit that as the Articles of Incorporation of MCPI is in the nature of a contract between the corporation and its shareholders and Section 6 of the Corporation Code could not retroactively apply to it without violating the non-impairment clause10 of the Constitution.
We find merit in the petition.
When Article VII of the Articles of Incorporation of MCPI was amended in 1992, the phrase "except when otherwise provided by law" was inserted in the provision governing the grant of voting powers to Class "A" shareholders. This particular amendment is relevant for it speaks of a law providing for exceptions to the exclusive grant of voting rights to Class "A" stockholders. Which law was the amendment referring to? The determination of which law to apply is necessary. There are two laws being cited and relied upon by the parties in this case. In this instance, the law in force at the time of the 1992 amendment was the Corporation Code (B.P. Blg. 68), not the Corporation Law (Act No. 1459), which had been repealed by then.
We find and so hold that the law referred to in the amendment to Article VII refers to the Corporation Code and no other law. At the time of the incorporation of MCPI in 1977, the right of a corporation to classify its shares of stock was sanctioned by Section 5 of Act No. 1459. The law repealing Act No. 1459, B.P. Blg. 68, retained the same grant of right of classification of stock shares to corporations, but with a significant change. Under Section 6 of B.P. Blg. 68, the requirements and restrictions on voting rights were explicitly provided for, such that "no share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares, unless otherwise provided in this Code" and that "there shall always be a class or series of shares which have complete voting rights." Section 6 of the Corporation Code being deemed written into Article VII of the Articles of Incorporation of MCPI, it necessarily follows that unless Class "B" shares of MCPI stocks are clearly categorized to be "preferred" or "redeemable" shares, the holders of said Class "B" shares may not be deprived of their voting rights. Note that there is nothing in the Articles of Incorporation nor an iota of evidence on record to show that Class "B" shares were categorized as either "preferred" or "redeemable" shares. The only possible conclusion is that Class "B" shares fall under neither category and thus, under the law, are allowed to exercise voting rights.
One of the rights of a stockholder is the right to participate in the control and management of the corporation that is exercised through his vote. The right to vote is a right inherent in and incidental to the ownership of corporate stock, and as such is a property right. The stockholder cannot be deprived of the right to vote his stock nor may the right be essentially impaired, either by the legislature or by the corporation, without his consent, through amending the charter, or the by-laws.11
Neither do we find merit in respondents? position that Section 6 of the Corporation Code cannot apply to MCPI without running afoul of the non-impairment clause of the Bill of Rights. Section 14812 of the Corporation Code expressly provides that it shall apply to corporations in existence at the time of the effectivity of the Code. Hence, the non-impairment clause is inapplicable in this instance. When Article VII of the Articles of Incorporation of MCPI were amended in 1992, the board of directors and stockholders must have been aware of Section 6 of the Corporation Code and intended that Article VII be construed in harmony with the Code, which was then already in force and effect. Since Section 6 of the Corporation Code expressly prohibits the deprivation of voting rights, except as to "preferred" and "redeemable" shares, then Article VII of the Articles of Incorporation cannot be construed as granting exclusive voting rights to Class "A" shareholders, to the prejudice of Class "B" shareholders, without running afoul of the letter and spirit of the Corporation Code.
The respondents then take the tack that the phrase "except when otherwise provided by law" found in the amended Articles is only a handwritten insertion and could have been inserted by anybody and that no board resolution was ever passed authorizing or approving said amendment.
Said contention is not for this Court to pass upon, involving as it does a factual question, which is not proper in this petition. In an appeal via certiorari, only questions of law may be reviewed.13 Besides, respondents did not adduce persuasive evidence, but only bare allegations, to support their suspicion. The presumption that in the amendment process, the ordinary course of business has been followed14 and that official duty has been regularly performed15 on the part of the SEC, applies in this case.
WHEREFORE, the petition is GRANTED. The Partial Judgment dated November 26, 2001 of the Regional Trial Court of Parañaque City, Branch 258, in Civil Case No. 01-0140 is REVERSED AND SET ASIDE. No pronouncement as to costs.
LEONARDO A. QUISUMBING
Davide, Jr., Ynares-Santiago, Carpio, and Azcuna*, JJ., concur.
* On Leave.
Sometimes "Arceli" in some parts of the records.
1 Rollo, pp. 44-47. Penned by Hon. Judge Raul E. De Leon.
2 Id. at 128-129.
3 Id. at 83-84.
4 Id. at 71-72.
5 Id. at 377.
6 Rollo, p. 47.
7 SEC. 6. Classification of shares. ? The shares of stock of stock corporations may be divided into classes or series of shares, or both, any of which classes or series of shares may have such rights, privileges or restrictions as may be stated in the articles of incorporation: Provided, That no share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares, unless otherwise provided in this Code: Provided, further, That there shall always be a class or series of shares which have complete voting rights. Any or all of the shares or series of shares may have a par value or have no par value as may be provided for in the articles of incorporation: Provided, however, That banks, trust companies, insurance companies, public utilities, and building and loan associations shall not be permitted to issue no-par value shares of stock.
Preferred shares of stock issued by any corporation may be given preference in the distribution of the assets of the corporation in case of liquidation and in the distribution of dividends, or such other preferences as may be stated in the articles of incorporation which are not violative of the provisions of this Code; Provided, That preferred shares of stock may be issued only with a stated par value. The Board of Directors, where authorized in the articles of incorporation, may fix the terms and conditions of preferred shares of stock or any series thereof: Provided, That such terms and conditions shall be effective upon filing of a certificate thereof with the Securities and Exchange Commission.
Shares of capital stock issued without par value shall be deemed fully paid and non-assessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereto: Provided, That shares without par value may not be issued for a consideration less than the value of five (P5.00) pesos per share; Provided, further, That the entire consideration received by the corporation for its no-par value shares shall be treated as capital and shall not be available for distribution as dividends.
A corporation may, furthermore, classify its shares for the purpose of insuring compliance with constitutional or legal requirements.
Except as otherwise provided by the articles of incorporation and stated in the certificate of stock, each share shall be equal in all respects to every other share.
Where the articles of incorporation provide for non-voting shares in the cases allowed by this Code, the holders of such shares shall nevertheless be entitled to vote on the following matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or other corporations;
7. Investment of corporate funds in another corporation or business in accordance with this Code; and
8. Dissolution of the corporation.
Except as provided in the immediately preceding paragraph, the vote necessary to approve a particular corporate act as provided in this Code shall be deemed to refer only to stocks with voting rights.
8 Rollo, p. 23.
9 SEC. 5. The shares of any corporation formed under this Act may be divided into classes with such rights, voting powers, preferences, and restrictions as may be provided for in the articles of incorporation. Any or all of the shares may have a par value or have no par value, as provided in the articles of incorporation: Provided, however, That banks, trust companies, insurance companies, and building and loan associations shall not be permitted to issue no-par value shares of stock. Subject to the laws creating and defining the duties of the Public Service Commission, shares of capital stock without par value may be issued from time to time, (a) for such consideration as may be prescribed in the articles of incorporation; or (b) in the absence of fraud in the transaction, for such consideration as, from time to time, may be fixed by the board of directors pursuant to authority conferred in the articles of incorporation; or (c) for such consideration as shall be consented to or approved by the holders of a majority of the shares entitled to vote at a meeting called in the manner prescribed by the by-laws, provided the call for such meeting shall contain notice of such purpose. Any or all shares so issued shall be deemed fully paid and non-assessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereto: Provided, however, That shares without par value may not be issued for a consideration less than the value of five pesos per share. Except as otherwise provided by the articles of incorporation, and stated in the certificate of stock, each share shall be in all respects equal to every other share.
Preferred shares of stock issued by any corporation the holders of which are entitled to any preference in the distribution of the assets of the corporation in case of liquidation, may be issued only with a stated par value and, in all certificates for such shares of stock, the amount which the holder of each of such preferred shares shall be entitled to receive from the assets of the corporation in preference to holders of other shares, shall be stated.
The entire consideration received by the corporation for its no-par value shares shall be treated as capital, and shall not be available for distribution as dividends.
10 THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES, Article III.
SEC. 10. No law impairing the obligation of contracts shall be passed.
11 William Meade Fletcher, 5 FLETCHER CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS ? 2025, 116 (Revised Volume 1976).
12 SEC. 148. Applicability to existing corporations. ? All corporations lawfully existing and doing business in the Philippines on the date of the effectivity of this Code and heretofore authorized, licensed or registered by the Securities and Exchange Commission, shall be deemed to have been authorized, licensed or registered under the provisions of this Code, subject to the terms and conditions of its license, and shall be governed by the provisions hereof: Provided, That where any such corporation is affected by the new requirements of this Code, said corporation shall, unless otherwise herein provided, be given a period of not more than two (2) years from the effectivity of this Code within which to comply with the same. (Emphasis supplied)
13 Bangko Sentral ng Pilipinas v. Santamaria, G.R. No. 139885, 13 January 2003, 395 SCRA 84, 92.
14 See Revised Rules of Court, Rule 131, Section 3(q).
15 Id. at Section 3(m).
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).