Republic of the Philippines SUPREME COURT SECOND DIVISION G.R. No.

157783 September 23, 2005 NILO PALOMA, Petitioners, vs. DANILO MORA, HILARIO FESTEJO, MAXIMA SALVINO, BRYN BONGBONG and VALENTINO SEVILLA, Respondent. DECISION CHICO-NAZARIO, J.: In this petition for review on certiorari, petitioner NILO PALOMA is in quest of the reversal of the Decision1 and the Resolution,2 dated 15 November 2002 and 01 April 2003, respectively, of the Court of Appeals in CA-G.R. SP No. 42553, affirming in toto the Orders dated 12 March 1996 and 28 June 1996 of the Regional Trial Court (RTC), Branch 17, Palompon, Leyte, in Civil Case No. PN0016, dismissing his complaint for mandamus for being prematurely filed. The undisputed facts, as summarized by the Court of Appeals and as unraveled from the records, follow: Petitioner Nilo Paloma was appointed General Manager of the Palompon, Leyte Water District by its Board of Directors in 1993. His services were subsequently terminated by virtue of Resolution No. 8-953 dated 29 December 1995, which was passed by respondents as Chairman and members of the Board of the Palompon, Leyte Water District, namely: Danilo Mora, Hilario Festejo, Bryn Bongbong and Maxima Salvino, respectively. The Board, in the same Resolution, designated respondent Valentino Sevilla as Officer-in-Charge.4 Pained by his termination, petitioner filed a petition for mandamus5 with prayer for preliminary injunction with damages before the RTC on 11 January 1996 to contest his dismissal with the prayer to be restored to the position of General Manager.6 Petitioner obdurately argued in his petition that the passage of Resolution No. 8-95 resulting in his dismissal was a "capricious and arbitrary act on the part of the Board of Directors, constituting a travesty of justice and a fatal denial of his constitutional right to due process for the grounds relied upon therein to terminate him were never made a subject of a complaint nor was he notified and made to explain the acts he was said to be guilty of." "Fundamental is the rule and also provided for in the Civil Service Rules and Regulations that no officer or employee in the Civil Service shall be suspended, separated or dismissed except for cause and after due process," so stressed petitioner.7 On 25 January 1996, respondents filed a Motion to Dismiss the petition for lack of jurisdiction and want of cause of action.8 On 12 March 1996, the trial court issued the assailed order dismissing the petition, with the fallo:
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WHEREFORE, all foregoing considered, the complaint thus filed for mandamus with a Prayer for a Writ for Preliminary Injunction with Damages is hereby DISMISSED for being a premature cause of action. Without pronouncement as to costs.9 Petitioners motion for reconsideration likewise failed to sway the trial court by Order dated 28 June 1996.10 Meanwhile, petitioner filed a Complaint on 29 March 1996 with the Civil Service Commission (CSC) against same respondents herein, for alleged Violation of Civil Service Law and Rules and for Illegal Dismissal.11 On 06 November 1996, the CSC issued its decision12 exonerating respondents from the charge of violating the Civil Service Law when they voted for the termination of petitioners services as General Manager of the Palompon, Leyte Water District. Thus, the CSC dismissed13 the complaint filed by petitioner before it, to wit: In view of the foregoing, the instant complaint of Mr. Nilo Paloma former General Manager of Palompon Water District against Messrs. Danilo Mora, Hilario Festejo, Bryn Bongbong and Ms. Maxima Salvino for Violation of Civil Service Law and Rules and Illegal Dismissal is hereby DISMISSED, for lack of prima facie case.14 In its Decision15 dated 15 November 2002, the Court of Appeals yielded to the decision of the trial court and dismissed the appeal filed by petitioner, viz: WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. Accordingly, the assailed Orders of the Regional Trial Court dated 12 March 1996 and 28 June 1996 in Civil Case No. PN-0016, are AFFIRMED in toto.16 Equally unavailing was petitioners motion for reconsideration, which was denied by the Court of Appeals on 01 April 2003. Affronted by the ruling, petitioner elevated the matter to us via the instant petition, contending that: the court of appeals gravely erred in affirming the decision of the regional trial court of palompon, leyte, branch 17.17 The central inquiry raised in this petition is whether or not the Court of Appeals committed any reversible error in its challenged decision. Concretely, we are tasked to resolve: (1) whether or not mandamus will lie to compel the Board of Directors of the Palompon, Leyte Water District to reinstate the General Manager thereof, and (2) whether or not the CSC has primary jurisdiction over the case for illegal dismissal of petitioner. Petitioner, in his brief, is emphatic that the Court of Appeals overlooked the fact that mandamus may lie to compel the performance of a discretionary duty in case of non-observance of due process. He enthuses that the Court of Appeals overlooked the fact that as an aggrieved party, he need not exhaust administrative remedies and may resort to court action for relief as due process was clearly violated.18 Espousing a contrary view, respondents posit that petitioner breached the rule against forum shopping as he filed another complaint for illegal dismissal against them with the CSC after
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obtaining an unfavorable ruling in his Petition for Mandamus filed before the RTC.19 Not only is petitioner guilty of forum shopping; he, too, is guilty of submitting a false certificate against forum shopping as the certification he appended with the present petition omitted the fact that he had previously filed a similar case with the CSC, so respondents say.20 Respondents theorize, as well, that the instant case has already been rendered moot by the dissolution of the Palompon, Leyte Water District and its subsequent absorption by the municipal government of Palompon effective 1 June 1999.21 Finally, it is respondents resolute stance that it was fitting for the Court of Appeals to affirm the trial courts ruling dismissing the petition filed by petitioner inasmuch as Section 23 of Presidential Decree (P.D.) No. 128 indeed clearly states that the General Manager shall serve at the pleasure of the Board.22 We are not won over by petitioners avowals. The petition ought to be denied. Section 3, Rule 65 of the Rules of Court providesSec. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. Mandamus lies to compel the performance, when refused, of a ministerial duty, but not to compel the performance of a discretionary duty.23 Mandamus will not issue to control or review the exercise of discretion of a public officer where the law imposes upon said public officer the right and duty to exercise his judgment in reference to any matter in which he is required to act. It is his judgment that is to be exercised and not that of the court.24 In the case at bar, P.D. No. 198,25 otherwise known as THE PROVINCIAL WATER UTILITIES ACT OF 1973, which was promulgated on 25 May 1973, categorically provides that the general manager shall serve at the pleasure of the board of directors, viz: Section 23. Additional Officers. - At the first meeting of the board, or as soon thereafter as practicable, the board shall appoint, by a majority vote, a general manager, an auditor, and an attorney, and shall define their duties and fix their compensation. Said officers shall serve at the pleasure of the board. Section 23 of P.D. No. 198 was later amended by P.D. No. 768 on 15 August 1975 to read: SEC. 23. The General Manager. - At the first meeting of the board, or as soon thereafter as practicable, the board shall appoint, by a majority vote, a general manager and shall define his duties and fix his compensation. Said officer shall serve at the pleasure of the board. (Emphasis supplied) Mandamus does not lie to compel the Board of Directors of the Palompon, Leyte Water District to reinstate petitioner because the Board has the discretionary power to remove him under Section 23 of P.D. No. 198, as amended by P.D. No. 768.

The case of Mita Pardo de Tavera v. Philippine Tuberculosis Society, Inc.26 delineated the nature of an appointment held "at the pleasure of the appointing power" in this wise: An appointment held at the pleasure of the appointing power is in essence temporary in nature. It is co-extensive with the desire of the Board of Directors. Hence, when the Board opts to replace the incumbent, technically there is no removal but only an expiration of term and in an expiration of term, there is no need of prior notice, due hearing or sufficient grounds before the incumbent can be separated from office. The protection afforded by Section 7.04 of the Code of By-Laws on Removal Of Officers and Employees, therefore, cannot be claimed by petitioner.27 (Emphasis supplied) In fine, the appointment of petitioner and his consequent termination are clearly within the wide arena of discretion which the legislature has bestowed the appointing power, which in this case is the Board of Directors of the Palompon, Leyte Water District. Here, considering that the petitioner is at loggerheads with the Board, the formers services obviously ceased to be "pleasurable" to the latter. The Board of Directors of a Water District may abridge the term of the General Manager thereof the moment the latters services cease to be convivial to the former. Put another way, he is at the mercy of the appointing powers since his appointment can be terminated at any time for any cause and following Orcullo there is no need of prior notice or due hearing before the incumbent can be separated from office. Hence, petitioner is treading on shaky grounds with his intransigent posture that he was removed sans cause and due process. Yes, as a general rule, no officer or employee of the civil service shall be removed or suspended except for cause provided by law as provided in Section 2(3), Article IX-B of the 1987 Constitution. As exception to this, P.D. No. 198, which we held in Feliciano v. Commission On Audit 28 to be the special enabling charter of Local Water Districts, categorically provides that the General Manager shall serve "at the pleasure of the board." Correlatively, the nature of appointment of General Managers of Water Districts under Section 23 of P.D. No. 198 falls under Section 14 of the Omnibus Rules Implementing Book V of Executive Order No. 292, otherwise known as the Administrative Code of 1987, which provides: Sec. 14. An appointment may also be co-terminous which shall be issued to a person whose entrance and continuity in the service is based on the trust and confidence of the appointing authority or that which is subject to his pleasure, or co-existent with his tenure, or limited by the duration of project or subject to the availability of funds. The co-terminous status may thus be classified as follows: (1) Co-terminous with the project - when the appointment is co-existent with the duration of a particular project for which purpose employment was made or subject to the availability of funds for the same; (2) Co-terminous with the appointing authority - when appointment is co-existent with the tenure of the appointing authority or at his pleasure; (3) Co-terminous with the incumbent - when the appointment is co-existent with the appointee, in that after the resignation, separation or termination of the services of the incumbent the position shall be deemed automatically abolished; and

(4) Co-terminous with a specific period - appointment is for a specific period and upon expiration thereof, the position is deemed abolished; . . . (Underscoring supplied.) The Court has previously sustained the validity of dismissal of civil servants who serve at the pleasure of the appointing power and whose appointments are covered by Section 14 of the Omnibus Rules Implementing Book V of Executive Order No. 292 as cited above. Thus, in Orcullo, Jr. v. Civil Service Commission,29 petitioner was hired as Project Manager IV by the Coordinating Council of the Philippine Assistance Program-BOT Center. In upholding the termination of his employment prior to the expiration of his contract, we held that petitioner serves at the pleasure of the appointing authority. This Court ruled in Orcullo A perusal of petitioners employment contract will reveal that his employment with CCPAP is qualified by the phrase "unless terminated sooner." Thus, while such employment is co-terminous with the PAPS project, petitioner nevertheless serves at the pleasure of the appointing authority as this is clearly stipulated in his employment contract. We agree with the appellate courts interpretation of the phrase "unless terminated sooner" to mean "that his contractual job as Project Manager IV from March 11, 1996 to January 30, 2000 could end anytime before January 30, 2000 if terminated by the other contracting party-employer CCPAP. (Emphasis supplied) Neither is it the Courts business to intrude into the Congressional sphere on the matter of the wisdom of Section 23 of P.D. No. 198. One of the firmly entrenched principles in constitutional law is that the courts do not involve themselves with nor delve into the policy or wisdom of a statute. That is the exclusive concern of the legislative branch of the government. When the validity of a statute is challenged on constitutional grounds, the sole function of the court is to determine whether it transcends constitutional limitations or the limits of legislative power. No such transgression has been shown in this case.30 Moreover, laws change depending on the evolving needs of society. In a related development, President Gloria Macapagal-Arroyo inked into law Republic Act No. 9286, which amended Section 23 of P.D. No. 198 providing that thereafter, the General Manager of Water Districts shall not be removed from office, except for cause and after due process. Rep. Act No. 9286 reads: Republic Act No. 9286 AN ACT FURTHER AMENDING PRESIDENTIAL DECREE NO. 198, OTHERWISE KNOWN AS "THE PROVINCIAL WATER UTILITIES ACT OF 1973", AS AMENDED Approved: April 2, 2004 ... Sec. 2. Section 23 of Presidential Decree No. 198, as amended, is hereby amended to read as follows: Sec. 23. The General Manager. At the first meeting of the Board, or as soon thereafter as practicable, the Board shall appoint, by a majority vote, a general manager and shall define his duties and fix his compensation. Said officer shall not be removed from office, except for cause and after due process. (Emphasis supplied.) ...

Sec. 5. Effectivity Clause. This Act shall take effect upon its approval.31 Unfortunately for petitioner, Rep. Act No. 9286 is silent as to the retroactivity of the law to pending cases and must, therefore, be taken to be of prospective application. The general rule is that in an amendatory act, every case of doubt must be resolved against its retroactive effect.32 Since the retroactive application of a law usually divests rights that have already become vested,33 the rule in statutory construction is that all statutes are to be construed as having only a prospective operation unless the purpose and intention of the legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used.34 First, there is nothing in Rep. Act No. 9286 which provides that it should retroact to the date of effectivity of P.D. No. 198, the original law. Next, neither is it necessarily implied from Rep. Act No. 9286 that it or any of its provisions should apply retroactively. Third, Rep. Act No. 9286 is a substantive amendment of P.D. No. 198 inasmuch as it has changed the grounds for termination of the General Manager of Water Districts who, under the then Section 23 of P.D. No. 198, "shall serve at the pleasure of the Board." Under the new law, however, said General Manager shall not be removed from office, except for cause and after due process. To apply Rep. Act No. 9286 retroactively to pending cases, such as the case at bar, will rob the respondents as members of the Board of the Palompon, Leyte Water District of the right vested to them by P.D. No. 198 to terminate petitioner at their pleasure or discretion. Stated otherwise, the new law can not be applied to make respondents accountable for actions which were valid under the law prevailing at the time the questioned act was committed. Prescinding from the foregoing premises, at the time petitioner was terminated by the Board of Directors, the prevailing law was Section 23 of P.D. No. 198 prior to its amendment by Rep. Act No. 9286. Petitioner, next, heaves censure on the Court of Appeals for subscribing to the trial courts view that the petition for mandamus was prematurely filed. We recall in Tanjay Water District v. Gabaton35 that water districts are government instrumentalities and that their employees belong to the civil service. Thus, "[t]he hiring and firing of employees of government-owned or controlled corporations are governed by the Civil Service Law and Civil Service Rules and Regulations." Tanjay was clearcut on this matter: . . . Inasmuch as PD No. 198, as amended, is the original charter of the petitioner, Tanjay Water District, and respondent Tarlac Water District and all water districts in the country, they come under the coverage of the civil service law, rules and regulations. (Emphasis supplied) Underlying the rulings of the trial and appellate courts in the case at bar is the doctrine of primary jurisdiction; i.e., courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact.36 In Villaflor v. Court of Appeals,37 we revisited the import of the doctrine of primary jurisdiction, to wit: In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving matters that demand the special competence of administrative agencies even if the question involved is also judicial in character. . .

In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence. In Machete vs. Court of Appeals, the Court upheld the primary jurisdiction of the Department of Agrarian Reform Adjudicatory Board (DARAB) in an agrarian dispute over the payment of back rentals under a leasehold contract. In Concerned Officials of the Metropolitan Waterworks and Sewerage System vs. Vasquez [240 SCRA 502], the Court recognized that the MWSS was in the best position to evaluate and to decide which bid for a waterworks project was compatible with its development plan. (Emphasis supplied) In a surfeit of cases, this Court has held that quasi-judicial bodies like the CSC are better-equipped in handling cases involving the employment status of employees as those in the Civil Service since it is within the field of their expertise.38 This is consistent with the powers and functions of the CSC, being the central personnel agency of the Government, to carry into effect the provisions of the Civil Service Law and other pertinent laws,39 including, in this case, P.D. No. 198. WHEREFORE, the present petition is hereby DENIED. Accordingly, the Decision and the Resolution dated 15 November 2002 and 01 April 2003, respectively, of the Court of Appeals in CA-G.R. SP No. 42553, are hereby AFFIRMED. Costs against petitioner. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice WE CONCUR: REYNATO S. PUNO Associate Justice Chairman MA. ALICIA AUSTRIA-MARTINEZ Associate Justice ROMEO J. CALLEJO, SR. Associate Justice

DANTE O. TINGA Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
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REYNATO S. PUNO Associate Justice Chairman, Second Division CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairmans Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. HILARIO G. DAVIDE, JR. Chief Justice

Footnotes
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Rollo, pp. 19-25. Penned by Associate Justice Eubulo G. Verzola with Associate Justices Jose L. Sabio and Amelita G. Tolentino, concurring. 2 Rollo, p. 66. 3 CA Rollo, pp. 22-24. 4 Rollo, p. 20. 5 Complaint, CA Rollo, pp. 25-27. 6 Rollo, p. 20. 7 Ibid. 8 Records, p. 28. 9 Records, p. 70. 10 Records, p. 72. 11 Rollo, p. 48. 12 CA Rollo, pp. 28-32. 13 Rollo, p. 21. 14 CA Rollo, p. 32. 15 Rollo, pp. 41-57. 16 Rollo, p. 25. 17 Rollo, p. 12. 18 Rollo, p. 13. 19 Rollo, p. 96. 20 Rollo, pp. 97-98. 21 CA Rollo, pp. 65-70, 72. 22 Rollo, p. 98. 23 Sps. Camilo and Delia Go v. Court of Appeals, Hon. Marcelino Bautista, et al., G.R. No. 120040, 29 January 1996, 252 SCRA 564. See also Regalado, 1997 Ed, Remedial Law Compendium, p. 715. 24 Knecht v. Desierto, G.R. No. 121916, 26 June 1998, 291 SCRA 292, citing Magtibay v. Garcia, et al., G.R. No. L-29871, 28 January 1983, 120 SCRA 370; Avenue Arrastre and Stevedoring Corp., Inc. v. The Hon. Commissioner of Customs, et al., G.R. No. L-44674, 28 February 1983, 120 SCRA 878.

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DECLARING A NATIONAL POLICY FAVORING LOCAL OPERATION AND CONTROL OF WATER SYSTEMS; AUTHORIZING THE FORMATION OF LOCAL WATER DISTRICTS AND PROVIDING FOR THE GOVERNMENT AND ADMINISTRATION OF SUCH DISTRICTS; CHARTERING A NATIONAL ADMINISTRATION TO FACILITATE IMPROVEMENT OF LOCAL WATER UTILITIES; GRANTING SAID ADMINISTRATION SUCH POWERS AS ARE NECESSARY TO OPTIMIZE PUBLIC SERVICE FROM WATER UTILITY OPERATIONS, AND FOR OTHER PURPOSES.
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G.R. No. L-48928, 25 February 1982, 243 SCRA 112. Id., p. 253. 28 G. R. No. 147402, 14 January 2004, 419 SCRA 363. 29 G.R. No. 138780, 22 May 2001, 358 SCRA 115, 119-120. 30 Farias v. The Executive Secretary, G.R. No. 147387, 10 December 2003, 417 SCRA 503. 31 http://www.ops.gov.ph/records/ra_no9286.htm 32 CIR v. Marubeni Corp., G.R. No. 137377, 18 December 2001, 372 SCRA 576. 33 People v. Patalin, G.R. No. 125539, 27 July 1999, 311 SCRA 186, citing Benzonan v. Court of Appeals, G.R. No. 97923, 27 January 1992, 205 SCRA 515. 34 Id., citing Balatbat v. Court of Appeals, G.R. No. 36378, 27 January 1992, 205 SCRA 419. 35 G.R. No. 84300, 17 April 1989, 172 SCRA 253, 260, citing Baguio Water District v. Trajano, G.R. No. L-65428, 20 February 1984, 127 SCRA 730; Hagonoy Water District v. NLRC, G.R. No. 81490, 31 August 1988, 165 SCRA 272. 36 Villaflor v. Court of Appeals, G.R. No. 95694, 09 October 1997, 280 SCRA 297, 327. 37 Ibid. 38 Pabu-aya v. Court of Appeals, G.R. No. 128082, 18 April 2001, 356 SCRA 651. 39 Constantino-David v. Pangandaman-Gania, G.R. No. 156039, 14 August 2003, 409 SCRA 80; Civil Service Law, Sections. 1 and 12.

SECOND DIVISION [G.R. No. 132684. September 11, 2002 HERNANI N. FABIA, Petitioner, v. COURT OF APPEALS, DEPARTMENT OF JUSTICE, OFFICE OF THE CITY PROSECUTOR OF MANILA, RTC-Br. 22, MANILA and THE MARITIME TRAINING CENTER OF THE PHILIPPINES (MTCP), Respondents. RESOLUTION BELLOSILLO, J.: This resolves the 9 October 2001 Motion for Clarification of Judgment filed by private respondent which seeks the elucidation of the 20 August 2001 Decision of this Court by praying that the Regional Trial Court of Manila that will hear Crim. Case No. 98-162570 be directed to arraign petitioner, try the case and render judgment thereon as the facts may warrant. It will be recalled that in the subject Decision of 20 August 2001 this Court reversed and set aside the Decision of the Court of Appeals of 12 November 1997 as well as its Resolution of 9 February 1998, this Court holding that Crim. Case No. 98-162570 involves an intra-corporate dispute over which the Securities and Exchange Commission (SEC) has jurisdiction and not the regular courts. Cognizant however that The Securities Regulation Code (RA 8799) amending PD 902-A has effectively vested upon the Regional Trial Courts jurisdiction over all cases formerly cognizable by the SEC, this Court ordered that Crim. Case No. 98-162570 be transferred to the appropriate branch of the Regional Trial Court of Manila tasked to handle intra-corporate matters pursuant to A.M. No. 00-11-3-SC. As the motion for clarification in effect urges the reversal of the questioned Decision of the Court of Appeals, this Court in its Resolution of 12 November 2001 resolved to treat the motion of private respondent MTCP as a motion for reconsideration and required petitioner to file his comment thereon. In his Comment petitioner Fabia prays for the denial of MTCPs motion, arguing that it does not assign any error on the findings and conclusions of law made by this Court as it in fact even accepted the ratio decidendi behind the resolution of the case. Petitioner likewise insists that there is no ambiguity in the Decision as it clearly mandates the dismissal of the criminal case for estafa filed against him after a finding that the matter involved an intra-corporate dispute within the jurisdiction of the SEC. In its Reply private respondent MTCP stresses that Crim. Case No. 98-162570 remains to be a criminal proceeding and may not be converted into an administrative action. It reasons that the substance of the assailed Decision of the Court of Appeals that there is probable cause to indict petitioner for the crime of estafa was after all not reversed by the Decision of this Court of 20 August 2001 as only the procedural aspect was modified. In its Resolution of 17 April 2002 this Court set the case for oral argument on 16 June 2002 during which the principal issue was defined and discussed: Whether the prosecution for violation of PD 902-A as amended by RA 8799 is without prejudice to any liability for violation of The Revised Penal Code.

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Petitioner Fabia argues that there is no ambiguity in the Decision as it clearly mandates the dismissal of the criminal case filed before the RTC of Manila upon the Court's finding that the matter involves an intra-corporate dispute within the jurisdiction of the SEC, and not of the regular courts. Petitioner concedes that the dismissal of the criminal action is without prejudice to the filing of an intracorporate/civil case for violation of PD 902-A as amended by RA 8799 before the RTC which currently exercises jurisdiction over corporate matters. However, invoking the doctrine of primary jurisdiction, petitioner reasons that his corporate/civil prosecution must first be resolved before the criminal action could be filed. Citing Saavedra v. Securities and Exchange Commission,1 petitioner argues that under the doctrine of primary jurisdiction the public prosecutor in the instant case has no authority to rule in a preliminary investigation on a criminal charge arising from an intra-corporate dispute absent prior resolution of the SEC on the matter. Petitioner notes that Saavedra does not deprive the public prosecutors of their jurisdiction to determine the propriety of filing criminal cases, but merely calls for a deferment of the exercise of such criminal jurisdiction pending prior determination by the pertinent administrative agency of the issues involved in the case. Petitioner contends that a violation of the doctrine of primary jurisdiction is jurisdictional in nature and is not rendered moot by RA 8799. Petitioner also avers that RA 8799 is not a curative statute and hence cannot apply retroactively. He explains that curative statutes are intended to retroactively apply to cases pending before their enactment to supply defects, abridge superfluities in the existing law and curb certain evils, or to correct a situation involving conflicting jurisdictions - curative effects which are not evident under RA 8799 as the legislative intent on the transfer of jurisdiction over SEC cases to the regular courts is merely to enable the SEC to concentrate more on its regulatory functions. Petitioner stresses that prior to RA 8799 it was the SEC which had primary jurisdiction over the instant controversy as the governing law then was PD 902-A. He argues that a subsequent law cannot apply retroactively so as to confer jurisdiction upon the city prosecutor and/or regular courts to render a decision which under the law applicable at the time of the rendition of the decision was clearly outside the competence of the prosecutor or the courts. He clarifies that RA 8799 has retroactive application only insofar as it applies to cases pending before the SEC and have not yet been submitted for resolution upon its effectivity. Respondent MTCP does not agree. It maintains that Crim. Case No. 98-162570 subsists, and simultaneously with it, a civil case may be filed for violation of RA 8799. It argues that petitioner is being prosecuted for fraud defined and penalized under The Revised Penal Code which is not a law administered by the SEC; hence, the SEC has no jurisdiction over the criminal case as it lies with the regular courts. It contends however that a civil/intra-corporate case may be filed and prosecuted simultaneously with the criminal case. It argues that the doctrine of primary jurisdiction does not apply as there is no controversy between petitioner and private respondent pending before the SEC or any administrative agency since it filed a criminal complaint. Respondent further claims that RA 8799 rendered the doctrine of primary jurisdiction moot and academic since the rationale behind the prior referral of intra-corporate controversies to the then SEC before the public prosecutor could act on them for purposes of criminal prosecution, i.e., to implore the special knowledge, experience and services of the administrative agency to ascertain technical and intricate matters, no longer stands since the newly enacted law recognizes that the regular courts now have the legal competence to decide intra-corporate disputes. Respondent also argues that Saavedra is not applicable since it involved a pure and simple intra-corporate controversy, i.e., the ownership of stocks in a corporation, which is far different from the criminal nature of the instant case.
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MTCP likewise claims that RA 8799 has rendered moot and academic the issue of jurisdiction. It argues that when a case is filed with the court which originally has no jurisdiction over the case but in the meantime a law is passed vesting that court with jurisdiction to try the case, the jurisdiction of that court will be sustained on the theory that the enabling law is curative in nature and therefore has retroactive effect. It notes that before the jurisdictional issue on the authority of the Office of the Public Prosecutor of Manila to conduct a preliminary investigation of what was claimed to be an intra-corporate controversy was resolved with finality, the criminal case had already been filed with the RTC and, in the meantime, RA 8799 was enacted transferring the intra-corporate jurisdiction of the SEC to the RTC. There is thus no cogent reason to divest the RTC of jurisdiction that it has already acquired over the case. Section 5 of PD 902-A pertinently provides that the SEC shall have jurisdiction to hear and decide cases involving (a) devices or schemes employed by, or any acts of, the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission, and (b) controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively. In synthesis, Sec. 5 of PD 902-A mandates that cases involving fraudulent actions and devices which are detrimental to the interest of stockholders, members or associates and directors of the corporation are within the original and exclusive jurisdiction of the SEC. Taken in conjunction with Sec. 6 of the same law, it will be gathered that the fraudulent acts/schemes which the SEC shall exclusively investigate and prosecute are those "in violation of any law or rules and regulations administered and enforced by the Commission" alone. This investigative and prosecutorial powers of the SEC are further "without prejudice to any liability for violation of any provision of The Revised Penal Code." From the foregoing, it can thus be concluded that the filing of the civil/intra-corporate case before the SEC does not preclude the simultaneous and concomitant filing of a criminal action before the regular courts; such that, a fraudulent act may give rise to liability for violation of the rules and regulations of the SEC cognizable by the SEC itself, as well as criminal liability for violation of the Revised Penal Code cognizable by the regular courts, both charges to be filed and proceeded independently, and may be simultaneously, with the other. It can be discerned from the affidavit-complaint of MTCP President Exequiel B. Tamayo that he sufficiently alleged acts sufficient to constitute the crime of estafa as well as to give rise to a prosecution for violation of PD 902-A. The affidavit-complaint alleged that petitioner Fabia failed to liquidate his cash advances amounting to P1,291,376.61. These cash advances were drawn by petitioner in his capacity as then president of the corporation and include those which were taken purportedly for the purpose of buying office equipment and appliances which petitioner however failed to deliver despite demands as he apparently had converted or misappropriated it to his own use and benefit to the prejudice and damage of respondent MTCP. These incidents are cognizable not only by the then intra-corporate jurisdiction of the SEC but could also very well fall within the criminal jurisdiction of the regular courts. The acts charged may be in the nature of an intra-corporate dispute as they involve fraud committed by virtue of the office assumed by petitioner as President, Director and stockholder in MTCP, and committed against the MTCP corporation, and therefore violative of SEC rules and regulations. An intra-corporate controversy involves fraudulent actions and devices which are detrimental to the interest of
12

stockholders, directors and the corporation. It is one which arises between stockholders and the corporation. In Abejo v. de la Cruz,2 the Court held that there is no distinction, qualification nor any exemption whatsoever, as the provision is broad and covers all kinds of controversies between stockholders and corporations. The alleged failure of petitioner to liquidate and settle his cash advances with respondent MTCP despite demand qualifies as one such controversy. In the same vein, the alleged fraudulent acts constitute the elements of abuse of confidence, deceit or fraudulent means, and damage under Art. 315 of The Revised Penal Code on estafa. In this case, the relationship of the party-litigants with each other or the position held by petitioner as a corporate officer in respondent MTCP during the time he committed the crime becomes merely incidental and holds no bearing on jurisdiction. What is essential is that the fraudulent acts are likewise of a criminal nature and hence cognizable by the regular courts. Be that as it may, petitioner argues that a charge of estafa against him cannot prosper. He insists that no finding of probable cause may be made against him during a preliminary investigation as a question of accounting still exists between him and private respondent. Respondent MTCP believes otherwise. We hold for respondent. Probable cause has been defined as the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted.3 It has been explained as a reasonable presumption that a matter is, or may be, well founded, such a state of facts in the mind of the prosecutor as would lead a person of ordinary caution and prudence to believe, or entertain an honest or strong suspicion, that a thing is so. The term does not mean "actual and positive cause" nor does it import absolute certainty. It is merely based on opinion and reasonable belief. Thus a finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction. It is enough that it is believed that the act or omission complained of constitutes the offense charged, as there is a trial for the reception of evidence of the prosecution in support of the charge.4 Respondent MTCP through its President Exequiel B. Tamayo alleges that petitioner Fabia, as then president of the corporation, drew cash advances from the corporation in huge amounts which he failed to liquidate despite demand. Respondent also claims that certain cash vouchers show that cash was received by petitioner for the purpose of procuring office equipment and materials which upon inventory however failed to materialize. These accusations infer that the acquisitions were facilitated through the office or position occupied by petitioner and as a consequence of which respondent was in dire straits to pay its loan of P850,000.00 owing to the Bank of the Philippine Islands (BPI) circumstances which make up the elements of abuse of confidence and damages and give rise to the presumption or reasonable belief that the offense of estafa has been committed and thus the filing of an Information against petitioner is warranted. Petitioner disagrees and contends that a proper accounting of the amount owing from him should first be conducted before probable cause for estafa can be established since a discrepancy of the amounts allegedly owed by him exists, i.e., the Information for estafa declares a balance of P1,291,376.61 while the audit report of MTCP's external auditor and its Treasurer's report declare the amounts of P1,333,699.89 and P766,135.05 respectively. Prior accounting is not an element of the offense and hence its absence would not preclude the finding of probable cause for estafa against petitioner. In fact, accounting does not seem to be inexistent in this case, as the records show that it has been conducted on two (2) occasions by two (2)
13

separate entities - the auditing firm of Mendoza Ignacio Corvera and Company, and MTCP's own Treasurer, only that petitioner deems it defective due to the divergent amounts computed by the two (2) entities as allegedly owed by him. In his Reply-Affidavit petitioner admits that the auditing firm of Mendoza Ignacio Corvera and Company determined his accountability to MTCP to be P1,291,376.61 but alleges that he was not furnished copy of the audit report thus he doubts that it was ever conducted. MTCP on the other hand claims that petitioner was notified thereof through an audit report, a copy of which petitioner himself had attached in his Comment dated 15 May 1998 and his Petition before the Court of Appeals dated 2 May 1997. Given that the defense mounted by the petitioner calls for an inquiry into the authenticity of the documents he relies upon, a judicial determination, not a preliminary investigation, would be the proper occasion to ferret out the truth. Petitioner's reliance on Perez v. People,5 U.S. v. Camara,6 and U.S. v. Berbari7 which held that there can be no estafa where a previous settlement of an account is necessary to determine the balance owing the offended party is misplaced. As correctly discerned by the Department of Justice, the present case involves a determination of probable cause, while the Perez, Camara and Berbari cases delved into an inquiry on guilt beyond reasonable doubt. Therein, the accused had all undergone trial and were found guilty of the offense charged but were acquitted on appeal for lack of proof beyond reasonable doubt. In the present case, the only issue is whether or not there is probable cause to warrant the filing of the Information for estafa, which issue is resolved in the affirmative. Concededly, the proper case in point is Cruz v. People8 where the president of the corporation was likewise charged with estafa through falsification of public documents for fraud he committed against the corporation. During preliminary investigation, the president invoked the defense that the cash advances were loans to him that he had already paid - the same line of defense herein petitioner Fabia is pursuing. In that case, the Court ruled that such a defense does not defeat probable cause and such is best ventilated in the trial court. Thus, petitioner's defense of accounting does not ipso facto clear him of prima facie guilt. Being a matter of defense, its validity needs to be tested in the crucible of a full-blown trial. In that connection, petitioner in his Reply-Affidavit vehemently disclaimed any liability for the amount demanded from him as he had already fully liquidated his cash advances and averred that the complaint was instigated by those who would like to discredit him and tarnish his name, and had attached copies of vouchers and checks to prove his innocence. The presence or absence of the elements of the crime are evidentiary in nature and are matters of defense, the truth of which can best be passed upon after a full-blown trial on the merits. Litigation will prove petitioner's innocence if his defense be true. The criminal case for estafa currently pending before the RTC can then independently and simultaneously proceed with a civil/intra-corporate case to be filed with the Regional Trial Court vested with special jurisdiction pursuant to The Securities Regulation Code (RA 8799). With RA 8799 signed into law on 19 July 2000, which effectively amended Sec. 5 of PD 902-A, jurisdiction over intra-corporate disputes is now vested in the Regional Trial Courts designated by this Court pursuant to A.M. No. 00-11-03-SC promulgated on 21 November 2000. However, while Sec. 5 of PD No. 902-A was amended by Sec. 5.2 of RA 8799, there is no repeal of Sec. 6 thereof declaring that prosecution under the Decree, or any Act, law, rules and regulations enforced and administered by the SEC shall be without prejudice to any liability for violation of any provision of The Revised Penal Code.

14

Moreover, as pointed out by the Department of Justice, Sec. 54 on Administrative Sanctions found in RA 8799 itself provides that the imposition of the sanctions shall be without prejudice to the filing of criminal charges against the individuals responsible for the violation. From the foregoing, it could be concluded that the fraudulent devices, schemes or representations which, originally, the Prosecution and Enforcement Department of the SEC would exclusively investigate and prosecute, are those in violation of any law or rules and regulations administered and enforced by the SEC and shall be without prejudice to any liability for violation of any provision of The Revised Penal Code. Hence, if the fraudulent act is punished under The Revised Penal Code, like estafa under Art. 315, the responsible person may be criminally prosecuted before the regular courts in addition to proceedings before the branches of the RTC designated by this Court to try and decide intra-corporate controversies. Therefore, since the alleged fraudulent acts committed by petitioner pertaining to the non-liquidation of his cash advances amounting to P1,291,376.61 constitute the offense of estafa under Art. 315 of The Revised Penal Code, the criminal case may be prosecuted independently and simultaneously with the corporate/civil case that may be filed for violation of Sec. 5 of PD 902-A, as amended by RA 8799. In light of the amendment brought about by RA 8799, the doctrine of primary jurisdiction no longer precludes the simultaneous filing of the criminal case with the corporate/civil case. In cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence in observance of the doctrine of primary jurisdiction. The Court has ratiocinated that it cannot or will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered.9 The objective of the doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court.10 It applies where claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view.11 However, as correctly observed by respondent MTCP, the rationale behind the prior referral of intracorporate controversies to the SEC before the public prosecutor could act on them for purposes of criminal prosecution loses significance since the newly enacted law recognizes that the specially designated RTC branches now have the legal competence to decide intra-corporate disputes. To support its contention, petitioner cites the landmark case of Saavedra. However, the doctrine of primary jurisdiction prevailed therein because the dispute comprehends a pure and simple intracorporate controversy involving the ownership of stocks of the corporation arising between and among the principal stockholders, while the instant case involves non-liquidation of corporate funds by a corporate officer as he had allegedly misappropriated the same for his own use and benefit. It was the SEC's authority to issue a temporary restraining order enjoining the petitioners therein from disposing of the company assets that was being challenged, not that of the regular courts, and it was
15

upheld as it was clear that the SEC had properly acquired jurisdiction over the subject matter. Resort to the doctrine of primary jurisdiction was essential as the matter of sales of stocks of the corporation, and thus its ownership, necessitates the expertise and competence of the SEC. It is not so in the instant case, as the liability of petitioner for the alleged fraudulent acts is the issue under contention. WHEREFORE, the Decision of this Court of 20 August 2001 is modified as follows: The Decision of the Court of Appeals of 12 November 1997 annulling and setting aside the Resolution of the Department of Justice of 2 December 1996 and accordingly directing the filing of an Information for estafa against petitioner Hernani N. Fabia in Crim. Case No. 98-162570, "People of the Philippines v. Hernani N. Fabia," is AFFIRMED. The Regional Trial Court, Branch 22, Manila, to which this criminal case was previously raffled and assigned, or any branch of the court to which the case may properly be assigned, is directed to immediately arraign petitioner Hernani N. Fabia and try his case until decided and terminated. No costs. SO ORDERED. Mendoza, Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur.

Endnotes:

1 2

G.R. No. 80879, 21 March 1988, 159 SCRA 57. G.R. Nos. 63558 & 68450-51, 19 May 1987, 149 SCRA 654. 3 Pilapil v. Sandiganbayan, G.R. No. 101978, 7 April 1993, 221 SCRA 349, citing Buchanan v. Vda de Esteban, 32 Phil. 365 (1915).
4 5 6

Ibid.

No. L-43548, 29 June 1981, 105 SCRA 183. 28 Phil. 238 (1914) 7 42 Phil 152 (1921) 8 G.R. No. 110436, 27 June 1994, 233 SCRA 439. 9 Saavedra v. SEC, citing Pambujan Sur United Mine Workers v. Samar Mining Co. Inc., 94 Phil 932 (1954) 10 Quintos ,Jr. v. National Stud Farm, No. L-37052, 29 November 1973, 54 SCRA 210. 11 Industrial Enterprise v. Court of Appeals, G.R. No. 88550, 18 April 1990, 184 SCRA 426, citing United States v. Western Pacific Railroad Co., 352 US 59.

16

FIRST DIVISION [G.R. No.148004 : January 22, 2007] VINCENT E. OMICTIN, Petitioner, v. HON. COURT OF APPEALS (Special Twelfth Division) and GEORGE I. LAGOS, Respondents. DECISION AZCUNA, J.: This is a petition for certiorari 1 with prayer for a writ of preliminary injunction seeking the nullification of the decision rendered by the Court of Appeals (CA) on June 30, 2000, and its resolution, dated March 5, 2001 in CA-G.R. SP No. 55834 entitled "George I. Lagos v. Hon. Reinato G. Quilala, Presiding Judge of RTC, Br. 57, Makati, Hon. Elizabeth Tayo Chua, Asst. City Prosecutor, Makati City, and Vincent E. Omictin." In its assailed decision, the CA declared the existence of a prejudicial question and ordered the suspension of the criminal proceedings initiated by petitioner Vincent E. Omictin on behalf of Saag Phils., Inc. against private respondent George I. Lagos, in view of a pending case before the Securities and Exchange Commission (SEC) filed by the latter against the former, Saag Pte. (S) Ltd., Nicholas Ng, Janifer Yeo and Alex Y. Tan. The facts are as follows: Petitioner Vincent E. Omictin, Operations Manager Ad Interim of Saag Phils., Inc., filed a complaint for two counts of estafa with the Office of the City Prosecutor of Makati against private respondent George I. Lagos. He alleged that private respondent, despite repeated demands, refused to return the two company vehicles entrusted to him when he was still the president of Saag Phils., Inc.. On February 26, 1999, public prosecutor Alex G. Bagaoisan recommended the indictment of private respondent, and on the same day, respondent was charged with the crime of estafa under Article 315, par. 1(b) of the Revised Penal Code before the Regional Trial Court (RTC), Branch 57 of Makati City. The case was docketed as Criminal Case No. 99-633, entitled "People of the Philippines v. George I. Lagos." On June 4, 1999, private respondent filed a motion to recuse praying that Presiding Judge Reinato G. Quilala inhibit himself from hearing the case based on the following grounds: a) In an order, dated May 28, 1999, the presiding judge summarily denied respondent's motion: 1) to defer issuance of the warrant of arrest; and 2) to order reinvestigation. b) Immediately before the issuance of the above-mentioned order, the presiding judge and Atty. Alex Y. Tan, SAAG Philippines, Inc.'s Ad Interim President, were seen together.2

17

On June 24, 1999, private respondent filed a motion to suspend proceedings on the basis of a prejudicial question because of a pending petition with the Securities and Exchange Commission (SEC) involving the same parties. It appears that on January 7, 1999, private respondent filed SEC Case No. 01-99-6185 for the declaration of nullity of the respective appointments of Alex Y. Tan and petitioner as President Ad Interim and Operations Manager Ad Interim of Saag Phils., Inc., declaration of dividends, recovery of share in the profits, involuntary dissolution and the appointment of a receiver, recovery of damages and an application for a temporary restraining order (TRO) and injunction against Saag (S) Pte. Ltd., Nicholas Ng, Janifer Yeo, Tan and petitioner.3 In the action before the SEC, private respondent averred that Saag (S) Pte. Ltd. is a foreign corporation organized and existing under the laws of Singapore, and is fully owned by Saag Corporation (Bhd). On July 1, 1994, he was appointed as Area Sales Manager in the Philippines by Thiang Shiang Hiang, Manager of Saag (S) Pte. Ltd. Pursuant to his appointment, respondent was authorized to organize a local joint venture corporation to be known as Saag Philippines, Inc. for the wholesale trade and service of industrial products for oil, gas and power industries in the Philippines. On September 9, 1994, Saag Philippines, Inc. was incorporated with Saag (S) Pte. Ltd. as the majority stockholder. Private respondent was appointed to the board of directors, along with Rommel I. Lagos, Jose E. Geronimo, Gan Ching Lai and Thiang Shiang Hiang, and was elected president of the domestic corporation. Later, due to intra-corporate disputes, Gan and Thiang resigned and divested their shares in Saag Corporation (Bhd), thereby resulting in a change in the controlling interest in Saag (S) Pte. Ltd. Barely three months after, or on June 23, 1998, private respondent resigned his post as president of Saag Phils., Inc. while still retaining his position as a director of the company.4 According to private respondent, the joint venture agreement (JVA) between him or Saag Phils., Inc. and Saag (S) Pte. Ltd. provided that should the controlling interest in the latter company, or its parent company Saag Corp. (Bhd), be acquired by any other person or entity without his prior consent, he has the option either to require the other stockholders to purchase his shares or to terminate the JVA and dissolve Saag Phils., Inc. altogether. Thus, pursuant to this provision, since private respondent did not give his consent as regards the transfer of shares made by Gan and Thiang, he made several requests to Nicholas Ng, who replaced Gan as director, and Janifer Yeo, Executive Director of Saag (S) Pte. Ltd., to call for a board meeting in order to discuss the following: a) implementation of the board resolution declaring dividends; b) acquisition of private respondent's shares by Saag (S) Pte. Ltd.; c) dissolution of Saag Phils., Inc.; and d) the termination of the JVA. Ng and Yeo failed to appear, however, in the scheduled board meetings. Instead, on September 30, 1998 they issued a letter appointing Alex Y. Tan as President Ad Interim of Saag Phils., Inc. Tan, in turn, appointed petitioner Omictin as the company's Operations Manager Ad Interim. Citing as a reason the absence of a board resolution authorizing the continued operations of Saag Phils., Inc., private respondent retained his possession of the office equipment of the company in a fiduciary capacity as director of the corporation pending its dissolution and/or the resolution of the intra-corporate dispute. He likewise changed the locks of the offices of the company allegedly to prevent Tan and petitioner from seizing company property.

18

Private respondent stressed that Tan's appointment was invalid because it was in derogation of the company by-laws requiring that the president must be chosen from among the directors, and elected by the affirmative vote of a majority of all the members of the board of directors.5 As Tan's appointment did not have the acquiescence of the board of directors, petitioner's appointment by the former is likewise allegedly invalid. Thus, neither has the power or the authority to represent or act for Saag Phils., Inc. in any transaction or action before the SEC or any court of justice. The trial court, in an order dated September 8, 1999, denied respondent's motion to suspend proceedings and motion to recuse. His motion for reconsideration having been denied by the trial court in its order issued on October 29, 1999, respondent filed with the CA the Petition for Certiorari[6] assailing the aforesaid orders. On June 30, 2000, the CA rendered its challenged decision. The pertinent portion reads: In a case for estafa, a valid demand made by an offended party is one of the essential elements. It appears from the records that the delay of delivery of the motor vehicles by petitioner to Saag Corporation is by reason of petitioner's contention that the demand made by Omictin and Atty. Tan to him to return the subject vehicles is not a valid demand. As earlier mentioned, petitioner filed a case with the SEC questioning therein private respondents' appointment. If the SEC should rule that the dissolution of Saag Phils. is proper, or that the appointments of private respondents are invalid, the criminal case will eventually be dismissed due to the absence of one of the essential elements of the crime of estafa. Based on the foregoing, it is clear that a prejudicial question exists which calls for the suspension of the criminal proceedings before the lower court. WHEREFORE, in view of the foregoing, the assailed Order of September 8, 1999 and October 29, 1999, are hereby MODIFIED. The motion to suspend proceedings is hereby GRANTED and respondent court is hereby enjoined from hearing Criminal Case No. 99-633, entitled "People of the Philippines v. George I. Lagos," until the termination of the case with the Securities and Exchange Commission. The denial of the motion to recuse is hereby AFFIRMED. SO ORDERED.7 Incidentally, on January 18, 2001, the SEC case8 was transferred to the Regional Trial Court (RTC) of Mandaluyong City, Branch 214, pursuant to A.M. No. 00-11-03-SC9 implementing the Securities and Regulation Code (Republic Act No. 8799)10 enacted on July 19, 2000, vesting in the RTCs jurisdiction over intra-corporate disputes.11 Meanwhile, on March 5, 2001, the CA, addressing petitioner's motion for reconsideration of the aforementioned decision, issued its assailed resolution: Considering that the Petition for Review on Certiorari of the 30 June 2000 decision of this Court, filed by the Office of the Solicitor General before the Supreme Court has already TERMINATED on November 20, 2000 and a corresponding entry of judgment has already been issued by the High Court, that the same is final and executory, the private respondent's motion for reconsideration of the decision 30 June 2000 before this Court is NOTED for being moot and academic.
19

SO ORDERED.12 Hence, this petition raises the following issues: I RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION A) WHEN IT DECREED THAT A PREJUDICIAL QUESTION EXISTS IN THE SEC CASE FILED BY PRIVATE RESPONDENT AGAINST SAAG (S) PTE. LTD., A FOREIGN CORPORATION, ALTHOUGH THE PRIVATE COMPLAINANT IN THE CRIMINAL CASE FOR ESTAFA (WHERE PRIVATE RESPONDENT IS THE ACCUSED THEREIN) IS ACTUALLY SAAG PHILIPPINES, INC. A DOMESTIC CORPORATION WITH A SEPARATE JURIDICAL PERSONALITY OF ITS OWN AND WHICH IS NOT EVEN A PARTY IN THE SEC CASE; AND, B) WHEN IT ORDERED THE SUSPENSION OF THE PROCEEDINGS IN CRIMINAL CASE NO. 99-633 AGAINST PRIVATE RESPONDENT. II THIS PETITION FOR CERTIORARI IS THE ONLY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE PREMISES. In support of the above, petitioner argues, as follows: 1. The action before the SEC and the criminal case before the trial court do not involve any prejudicial question.13 SEC Case No. 01-99-6185 mainly involves the dissolution of Saag (S) Pte. Ltd., the appointment of a receiver, the distribution of profits, and the authority of petitioner and Tan to represent Saag Phils., Inc. The entity which is being sued is Saag (S) Pte. Ltd., a foreign corporation over which the SEC has yet to acquire jurisdiction. Hence, any decision that may be rendered in the SEC case will neither be determinative of the innocence or guilt of the accused nor bind Saag Phils., Inc. because the same was not made a party to the action even if the former is its holding corporation; 2. Saag Phils., Inc. has a separate corporate existence and is to be treated as a separate entity from its holding or parent company, Saag (S) Pte. Ltd. The mere fact that one or more corporations are owned or controlled by the same or single stockholder is not a sufficient ground for disregarding separate corporate personalities; 3. Private respondent's petition with the SEC seeks affirmative relief against Saag (S) Pte. Ltd. for the enforcement or application of the alleged terms of the joint venture agreement (JVA) that he purportedly entered into with the foreign corporation while he was still its Area Sales Manager in the Philippines. The foreign corporation is not licensed to do business in the Philippines, thus, a party to a contract with a foreign corporation doing business in the Philippines without a license is not entitled to relief from the latter; and
cralawlibrary

20

4. There is no pending civil or administrative case in SEC against Saag Phils., Inc. that warrants the application of a prejudicial question and the consequent suspension of the criminal action it has instituted against private respondent. If any, the action before the SEC was merely a ploy to delay the resolution of the criminal case and eventually frustrate the outcome of the estafa case. In sum, the main issue is whether or not a prejudicial question exists to warrant the suspension of the criminal proceedings pending the resolution of the intra-corporate controversy that was originally filed with the SEC. A prejudicial question is defined as that which arises in a case, the resolution of which is a logical antecedent of the issue involved therein and the cognizance of which pertains to another tribunal.14 Here, the case which was lodged originally before the SEC and which is now pending before the RTC of Mandaluyong City by virtue of Republic Act No. 8799 involves facts that are intimately related to those upon which the criminal prosecution is based. Ultimately, the resolution of the issues raised in the intra-corporate dispute will determine the guilt or innocence of private respondent in the crime of estafa filed against him by petitioner before the RTC of Makati. As correctly stated by the CA, one of the elements of the crime of estafa with abuse of confidence under Article 315, par. 1(b) of the Revised Penal Code is a demand made by the offended party to the offender: The elements of estafa with abuse of confidence under subdivision No. 1, par. (b) of Art. 315 are as follows: 1. That money, goods, or other personal property be received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to make delivery of, or to return the same; 2. That there be misrepresentation or conversion of such money or property by the offender, or denial on his part of such receipt; 3. That such misappropriation or conversion or denial is to the prejudice of another; and 4. That there is a demand made by the offended party to the offender.15 Logically, under the circumstances, since the alleged offended party is Saag Phils., Inc., the validity of the demand for the delivery of the subject vehicles rests upon the authority of the person making such a demand on the company's behalf. Private respondent is challenging petitioner's authority to act for Saag Phils., Inc. in the corporate case pending before the RTC of Mandaluyong, Branch 214. Taken in this light, if the supposed authority of petitioner is found to be defective, it is as if no demand was ever made, hence, the prosecution for estafa cannot prosper. Moreover, the mere failure to return the thing received for safekeeping or on commission, or for administration, or under any other obligation involving the duty to deliver or to return the same or deliver the value thereof to the owner could only give rise to a civil action and does not constitute the crime of estafa. This is because the crime is committed by misappropriating or converting money or goods received by the offender under a lawful transaction. As stated in the case of United States v. Bleibel:16 The crime of estafa is not committed by the failure to return the things received for sale on commission, or to deliver their value, but, as this class of crime is defined by law, by
21
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misappropriating or converting the money or goods received on commission. Delay in the fulfillment of a commission or in the delivery of the sum on such account received only involves civil liability. So long as the money that a person is under obligation to deliver is not demanded of him, and he fails to deliver it for having wrongfully disposed of it, there is no estafa, whatever be the cause of the debt. Likewise, by analogy, the doctrine of primary jurisdiction may be applied in this case. The issues raised by petitioner particularly the status of Saag Phils., Inc. vis - -vis Saag (S) Pte. Ltd., as well as the question regarding the supposed authority of the latter to make a demand on behalf of the company, are proper subjects for the determination of the tribunal hearing the intra-corporate case which in this case is the RTC of Mandaluyong, Branch 214. These issues would have been referred to the expertise of the SEC in accordance with the doctrine of primary jurisdiction had the case not been transferred to the RTC of Mandaluyong. Strictly speaking, the objective of the doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court.17 The court cannot or will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to resolving the same, where the question demands the exercise of sound administrative discretion requiring special knowledge, experience and services in determining technical and intricate matters of fact.18 While the above doctrine refers specifically to an administrative tribunal, the Court believes that the circumstances in the instant case do not proscribe the application of the doctrine, as the role of an administrative tribunal such as the SEC in determining technical and intricate matters of special competence has been taken on by specially designated RTCs by virtue of Republic Act No. 8799.19 Hence, the RTC of Mandaluyong where the intra-corporate case is pending has the primary jurisdiction to determine the issues under contention relating to the status of the domestic corporation, Saag Phils., Inc., vis - -vis Saag Pte. Ltd.; and the authority of petitioner to act on behalf of the domestic corporation, the determination of which will have a direct bearing on the criminal case. The law recognizes that, in place of the SEC, the regular courts now have the legal competence to decide intra-corporate disputes.20 In view of the foregoing, the Court finds no substantial basis in petitioner's contention that the CA committed grave abuse of discretion amounting to lack or excess of jurisdiction. Absent a showing of a despotic, whimsical and arbitrary exercise of power by the CA, the petition must fail. WHEREFORE, the petition is DISMISSED. The decision and resolution of the Court of Appeals in CA-G.R. SP No. 55834, dated June 30, 2000 and March 5, 2001, respectively, are AFFIRMED. No costs. SO ORDERED. Endnotes:
1 2

Under Rule 65 of the Rules of Court. Rollo, p. 42. 3 Id. at 51. 22

4 5

Id. at 55. Id. at 59. 6 Under Rule 65 of the Rules of Court. 7 Id. at 48. 8 Now docketed as SEC Case No. MC-01-024. 9 "Resolution Designating Certain Branches of Regional Trial Courts to Try and Decide Cases Formerly Cognizable by the Securities and Exchange Commission," promulgated on November 21, 2000. 10 Amended Section 5 of Presidential Decree No. 902-A which granted extensive powers to the Securities and Exchange Commission (SEC), a quasi-judicial body charged with the enforcement of all laws affecting corporations. 11 SECTION 1. Cases covered. - These Rules shall govern the procedure to be observed in civil cases involving the following: (1) Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners or members of any corporation, partnership, or association; (2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; (3) Controversies in the election or appointment of directors, trustees, officers or managers of corporations, partnerships, or associations; (4) Derivative suits; and (5) Inspection of corporate books (Interim Rules of Procedure for Intra-Corporate Controversies, effective April 1, 2001). 12 Rollo, p. 50. 13 Section 7, Rule 111 of the Rules of Court provides the elements of a prejudicial question, which are: a) the previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action; and b) the resolution of such issue determines whether or not the criminal action may proceed. 14 People v. Consing, Jr., 443 Phil. 454 (2003). 15 Pangilinan v. Court of Appeals, G.R. No. 117363, December 17, 1999, 321 SCRA 51, citing Reyes, Revised Penal Code, Book II, 1993. 16 34 Phil. 227 (1916). 17 Quintos, Jr. v. National Stud Farm, No. L-37052, November 29, 1973, 54 SCRA 210. 18 Pambujan Sur United Mine Workers v. Samar Mining Co., Inc., 94 Phil. 932 (1954). 19 Section 9 of the Interim Rules of Procedure Governing Intra-Corporate Controversies states: "All cases filed under these Rules shall be tried by judges designated by the Supreme court to hear and decide cases transferred from the Securities and Exchange Commission to the Regional Trial Courts and filed directly with said courts pursuant to Republic Act No. 8799, otherwise known as the Securities and Regulation Code." 20 Fabia v. Court of Appeals, G.R. No. 132684, September 11, 2002, 437 SCRA 389.
cralawlibrary

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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 136048 January 23, 2001

JOSE BARITUA and JB LINE, petitioners, vs. NIMFA DIVINA MERCADER in her capacity and as guardian of DARWIN, GIOVANNI, RODEL and DENNIS, all surnamed MERCADER; LEONIDA Vda. de MERCADER on her behalf and on behalf of her minor child MARY JOY MERCADER; SHIRLEY MERCADER DELA CRUZ; MARIA THERESA MERCADER-GARCIA; DANILO MERCADER; JOSE DANTE MERCADER; JOSEFINA MERCADER, respondents. PANGANIBAN, J.: The Manchester ruling requiring the payment of docket and other fees as a condition for the acquisition of jurisdiction has no retroactive effect and applies only to cases filed after its finality.

The Case Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 17, 1998 Decision1 and the October 28, 1998 Resolution2 of the Court of Appeals (CA) in CA-GR CY No. 40772. The decretal portion of said Decision reads as follows: "WHEREFORE, upon all the foregoing premises considered, the DECISION appealed from is AFFIRMED with the MODIFICATION that the loss of earnings of the late Dominador Mercader is reduced to P798,000.00."3 The assailed Resolution denied petitioners' Motion for Reconsideration. The Court of Appeals sustained the Decision of the Regional Trial Court (RTC) of Laoang, Northern Samar (Branch 21). Except for the modification of the loss of earnings, it affirmed all the monetary damages granted by the trial court to respondents. The decretal portion of the assailed RTC Decision reads as follows:4 "WHEREFORE, on preponderance of evidence, judgment is for [herein respondents] and against [herein petitioners], ordering the latter to pay the former: (a) As compensatory damages for the death of Dominador Mercader -- P50,000.00;

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(b) For the loss of earnings of the late Dominador Mercader -- P1,660,000.00, more or less, based on the average life span of 75 years from the time of his death who earned a net income of P5,000.00 monthly out of his business; (c) Actual damages of P30,000.00 receipted purchases of goods in Manila; P5,750.00 for the first class coffin and a 15-day wake services evidenced by a receipt marked Exh. 'D'; [P.]850.00 for the 50 x 60 headstone, receipt marked Exh. 'E' and P1,590.00 -- Deed of Absolute Sale of a burial lot, marked Exh. 'F'; (d) 25% of whatever amount is collected by [respondents] from [petitioners] but no less than P50,000.00 plus P1 ,000.00 per hearing by way of attorney's fees; (e) As moral damages -- P50,000.00; (f) As exemplary damages -- P30,000.00; and (g) To pay the costs." The Facts The antecedents of the case are succinctly summarized by the Court of Appeals in this wise: "The original complaint was filed against JB Lines, Inc. [Petitioner JB Lines, Inc.] filed a motion to dismiss complaint, to strike out false-impertinent matters therefrom, and/or for bill of particulars on the primary grounds that [respondents] failed to implead Jose Baritua as an indispensable party and that the cause of action is a suit against a wrong and non-existent party. [Respondents] filed an opposition to the said motion and an amended complaint. "In an Order dated December 11, 1984 the trial court denied the aforesaid motion and admitted the amended complaint of [respondents] impleading Jose Baritua and alleged the following: '(10) The late Dominador Mercader is a [b]usinessman mainly engaged in the buy and sell of dry goods in Laoang, N. Samar. He buys his goods from Manila and bring[s] them to Laoang, Northern Samar for sale at his store located in the said locality; (11) Sometime on March 16, 1983, the late Dominador Mercader boarded [petitioners'] bus No. 142 with Plate No. 484 EU at [petitioners'] Manila Station/terminal, bound for Brgy. Rawis, Laoang Northern Samar as a paying passenger; (12) At that time, Dominador Mercader had with him as his baggage, assorted goods (i.e. long pants, short pants, dusters, etc.) which he likewise loaded in [petitioners'] bus; (13) The late Dominador Mercader was not able to reach his destination considering that on March 17, 1983 at Beily (Bugco) Bridge, Barangay Roxas, Mondragon, Northern Samar, while he was on board [petitioners'] bus no. 142 with Plate No. 484

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EU, the said bus fell into the river as a result of which the late Dominador Mercader died. x x x. (14) The accident happened because [petitioners'] driver negligently and recklessly operated the bus at a fast speed in wanton disregard of traffic rules and regulations and the prevailing conditions then existing that caused [the] bus to fall into the river.' "[Respondents] then filed a motion to declare [petitioners] in default which motion was opposed by [petitioners]. [Respondents] withdrew the said motion prompting the trial court to cancel the scheduled hearing of the said motion to declare [petitioners] in default in an Order dated January 23, 1985. "In its answer, [petitioners] denied specifically all the material allegations in the complaint and alleged the following: '2. The alleged person of Dominador Mercader did not board bus 142 at [petitioners'] Manila station/terminal x x x as a (supposed paying passenger). There is even no statement in the complaint that Dominador Mercader (if it were true that he was a passenger of bus 142 'at the [petitioners'] Manila station/terminal') was issued any passenger-freight ticket conformably with law and practice. It is a fact of public knowledge that, in compliance with existing rules and laws, [Petitioner] Baritua, as a public utility operator, issues, thru his conductors, in appropriate situations, to a true passenger, the familiar and known passenger and freight ticket which reads in part: 'NOTICE Baggage carried at owner's risk x x x liability on prepaid freight otherwise declared. xxx xxx xxx

Whole Fare Paid P ___________________________ Declared value x x x. Description of Freight ________________________ Signature of Owner .' 3. It is also a fact of public knowledge that [Petitioner] Baritua does not have any 'Manila station/terminal,' because what he has is a Pasay city station. 4. [Petitioner] Baritua had no prior knowledge that, on or about March 17, 1983, and/or previous thereto, the Bugko Bailey Bridge (across Catarman-Laoang road) in Barangay Roxas, Mondragon, Northern Samar, was in virtual' dilapida[ted] and dangerous condition, in a state of decay and disrepair, thus calling for the concerned government and public officials' performance of their coordinative and joint duties and responsibilities, to repair, improve and maintain that bridge, in good and reasonably safe condition, but, far from performing or complying with said subject duties and responsibilities, the adverted officials concerned, without just cause, not
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only failed and neglected to cause such needed repair, improvement and maintenance of the Bugko Bailey Bridge, on or prior to March 17, 1983, but also failed, and neglected to either close the Bugko Bridge to public use and travel, and/or to put appropriate warning and cautionary signs, for repair, improvement, maintenance, and safety purposes. So that, as a proximate and direct consequence of the aggregate officials' nonfeasance, bad faith, negligence, serious inefficiency, and callous indifference to public safety, that Bugko Bridge collapsed inward and caved in ruin, on that March 17, 1983, while Baritua's bus 142 was cautiously and prudently passing and travelling across the said bridge, as a result of which the bus fell into the river and sea waters, despite the exercise and compliance by Baritua and his driver of their duties in the matter of their requisite degree of diligence, caution and prudence, Baritua also exercised and complied with the requisite duty of diligence, care, and prudence in the selection and supervision over his driver, contrary to the baseless imputation in paragraphs 14 and 20 of the original and amended complaints. Moreover, Baritua and his driver did not violate any traffic rule and regulation, contrary to plaintiffs' insinuation. 5. Furthermore, [Petitioner] Baritua and his driver have no causative connection with the alleged death of Dominador Mercader who, according to a reliable source, was already seriously suffering from a lingering illness even prior to his alleged demise. Baritua also learned lately, and so it is herein alleged that Dominador Mercader contributed considerably, to, and/or provided the proximate and direct cause of his own death, hence, he himself is to be blamed for whatever may have happened to him or for whatever may have been sustained by his supposed heirs, vis--vis the suit against the wrong party. 6. Baritua and his driver, as earlier stated, did not commit any actionable breach of contract with the alleged Dominador Mercader or the latter's supposed heirs. 7. There is no factual nor any legal basis for plaintiffs' proffered claims for damages. II. AFFIRMATIVE DEFENSES 8. Based on the preceding averments, plaintiffs have neither a cause nor a right of action against [Petitioner] Baritua and his driver. 8.1. The allegation that supposedly the 'x x x [p]laintiffs are the compulsory heirs of the late DOMINADOR MERCADER x x x' (par. 8, complaint) is too vague and too broad, as the subject allegation is a bare and pure conclusionary averment unaccompanied by the requisite statement of ultimate facts constitutive of a cause or right of action. 8.2. Even assuming arguendo, without however conceding, plaintiffs statement of a cause of action, the complaint is nonetheless replete with false and impertinent matters which fit the rule on striking out pleadings or parts thereof. To mention only a glaring few: 8.2.a. The allegation on exemplary damages x x x is impertinent and immaterial in the complaint against a supposed employer. For, even theoretically assuming, without
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however admitting a negligent act-omission on the part of a driver, nevertheless, in such a hypothetical situation, the causative negligence, if any there was, is personal to the wrongdoer, i.e., the employee-driver, to the exclusion of the employer. 8.2.b. The allegation on supposed 'minimum life of 75 years' and on 'he expects to earn no less than P1,680,000.00 x x x is false, a pure hyperbole, and bereft of factual and legal basis. Besides, what jurisprudential rule refers to is only net earning. The law abhors a claim, akin to plaintiffs' allegation, which is manifestly speculative, as it may not exist at all. Furthermore, the questioned allegation in the plaintiff's original and amended complaints is not preceded by the requisite statement of definitive facts, nor of any specific fact, which could possibly afford a rational basis for a reasonable expectation of supposed earning that could be lost, or impaired. 8.2.c. Likewise, the allegations that allegedly 'x x x the late Dominador Mercader boarded x x x Bus No. 142 x x x and that supposedly the latter had a baggage x x x containing drygoods x x x in which case [petitioners have] to pay the value thereof in such amount as may be proven by [respondents] in court during the trial x x x, apart from being false, are offensive to the rule on concise statement of ultimate facts. The assailed allegations also contravene Interim Rule 11, '(i)f any demand is for damages in a civil action the amount thereof must be specifically alleged.' In consequence of this averment, [respondents] have not yet paid the correct docket fee, for which reason, [respondents'] case may be dismissed on that ground alone.1wphi1.nt 8.3. In violation also of the same Interim Rule 11, regarding the requisite definitive amount of claim, the allegation on the supposed funeral expense x x x does not also indicate any specific amount. So with the averment on supposed moral damage which may not be warranted because of absence of allegation of fraud or bad faith, if any, there was, apart from want of causative connection with the defendant. 8.4. The allegation in paragraph 15 of the original and amended complaint is also a pure conclusionary averment, without a factual premise. 9. [Petitioner] JB LINE, impleaded in the amended, complaint, is merely a business name and sole proprietorship of defendant Baritua. As such, JB Line is not a juridical person, nor an entity authorized by law to sue and be sued, hence, it cannot legally be a party to any action. With this averment, correlated with that in paragraphs 4-5 hereof, [respondents'] amended complaint is essentially a suit against a wrong party."5 The RTC, after due trial, rendered the aforesaid assailed Decision. Ruling of the Court of Appeals As earlier stated, the Court of Appeals affirmed the trial court's award of monetary damages in favor of respondents, except the amount of Dominador Mercader's lost earnings, which it reduced to P798,000. It held that petitioners failed to rebut the presumption that in the event a passenger died or was injured, the carrier had acted negligently. Petitioners, it added, presented no sufficient proof that they had exercised extraordinary diligence. Hence, this Petition.6
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The Issues In their Memorandum, petitioners submit the following issues for our consideration: "I Did the honorable Court of Appeals (CA) gravely abuse its discretion when it allowed to pass sub silencio the trial court's failure to rule frontally on petitioners' plea for a bill of particulars, and ignored the nature of respondents' prayer in the complaint pleading for an award of -'a) P12,000.00 -- representing the death compensation; b) An amount to be proven in court. representing actual damages; c) P1,660,000.00 or more as may be proven during the trial, by way of loss of earnings; d) An amount to be proven in court as and by way of funeral expenses; e) An amount to be proven during the trial representing moral damages; f) An amount to be determined by this Honorable Court, representing exemplary damages; g) An amount equivalent to 25% of whatever amount the plaintiffs would be able to collect from the defendant but in no case less than P50,000.00 plus an additional amount of P1,000.00 per hearing as and by way of Attorney's fees;' "II Did the CA also ignore the fact that the trial court was not paid the correct amount of the docket and other lawful fees; hence, without jurisdiction over the original and amended complaints or over the subject matter of the case; "III Did the CA likewise arbitrarily disregard petitioners' constitutional right to procedural due process and fairness when it ignored and thrust aside their right to present evidence and to expect that their evidence will be duly considered and appreciated; and "IV. In awarding excessive and extravagant damages, did the CA and the trial court adhere to the rule that their assailed decision must state clearly and distinctly the facts and the laws on which they are based?"7

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Distilling the alleged errors cited above, petitioners raise two main issues for our consideration: (1) whether the CA erred in holding that the RTC had jurisdiction over the subject matter of the case, and (2) whether the CA disregarded petitioners' procedural rights. The Court's Ruling The Petition is devoid of merit. First Issue: Jurisdiction Petitioners contend that since the correct amounts of docket and other lawful fees were not paid by respondents, then the trial court did not acquire jurisdiction over the subject matter of the case. The Court, in Manchester Development Corporation v. CA,8 held that "[t]he court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the court, much less the payment of the docket fee based on the amounts sought in the amended pleading. x x x." Generally, the jurisdiction of a court is determined by the statute in force at the commencement of the action,9 unless such statute provides for its retroactive application.10 Once the jurisdiction of a court attaches, it continues until the case is finally terminated.11 The trial court cannot be ousted therefrom by subsequent happenings or events, although of a character that would have prevented jurisdiction from attaching in the first instance.12 The Manchester ruling, which became final in 1987, has no retroactive application and cannot be invoked in the subject Complaint filed in 1984. The Court explicitly declared: "To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be considered in the assessment of the filing fees in any case. Any pleading that fails to comply with this requirement shall not be accepted nor admitted, or shall otherwise be expunged from the record."13 (emphasis supplied) Second Issue: Petitioners' Procedural Rights Motion for a Bill of Particulars Petitioners argue that the Court of Appeals erred when it passed sub silencio on the trial court's failure to rule frontally on their plea for a bill of particulars. We are not impressed. It must be noted that petitioners' counsel manifested in open court his desire to file a motion for a bill of particulars. The RTC gave him ten days from March 12, 1985 within which to do so.14 He, however, filed the aforesaid motion only on April 2, 1985 or eleven days past the deadline set by the trial court.15 Moreover, such motion was already moot and academic because,
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prior to its filing, petitioners had already filed their answer and several other pleadings to the amended Complaint. Section 1, Rule 12 of the Rules of Court, provides: "Section 1. When applied for; purpose. -- Before responding to a pleading, a party may move for a more definite statement or for a bill of particulars of any matter which is not averred with sufficient definiteness or particularity to enable him properly to prepare his responsive pleading. If the pleading is a reply, the motion must be filed within ten (10) days from service thereof. Such motion shall point out the defects complained of, the paragraphs wherein they are contained, and the details desired."16 (emphasis supplied) Petitioners' Right to Adduce Evidence Petitioners also argue that their right to present evidence was violated by the CA, because it did not consider their contention that the trial judges who heard the case were biased and impartial. Petitioners contend, as they did before the CA, that Judge Tomas B. Noynay based his Decision" on certain chosen partial testimonies of [respondents'] witnesses x x x." They further maintain that Judge Fortunato Operario, who initially handled the case, questioned some witnesses in an overzealous manner and "assum[ed] the dual role of magistrate and advocate."17 These arguments are not meritorious. First, judges cannot be expected to rely on the testimonies of every witness. In ascertaining the facts, they determine who are credible and who are not. In doing so, they consider all the evidence before them. In other words, the mere fact that Judge Noynay based his decision on the testimonies of respondents' witnesses does not necessarily mean that he did not consider those of petitioners. Second, we find no sufficient showing that Judge Operario was overzealous in questioning the witnesses. His questions merely sought to clarify their testimonies. In all, we reject petitioners' contention that their right to adduce evidence was violated. Alleged Failure to State Clearly the Facts and the Law We are not convinced by petitioners' contention, either, that both the trial and the appellate courts failed to state clearly and distinctly the facts and the law involved in the case. As can be gleaned from their Decisions, both courts clearly laid down their bases for awarding monetary damages to respondents. Both the RTC and the CA found that a contract of carriage existed between petitioners and Dominador Mercader when he boarded Bus No. 142 in Pasay City on March 16, 1983. Petitioners failed to transport him to his destination, because the bus fell into a river while traversing the Bugko Bailey Bridge. Although he survived the fall, he later died of asphyxia secondary to drowning. We agree with the findings of both courts that petitioners failed to observe extraordinary diligence18 that fateful morning. It must be noted that a common carrier, by the nature of its business and for reasons of public policy, is bound to carry passengers safely as far as human care and foresight can provide. It is supposed to do so by using the utmost diligence of very cautious persons, with due regard for all the circunistances.19 In case of death or injuries to passengers, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence as prescribed in Articles 1733 and 175520 of the Civil Code.1wphi1.nt We sustain the ruling of the CA that petitioners failed to prove that they had observed extraordinary diligence.
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First, petitioners did not present evidence on the skill or expertise of the driver of Bus No. 142 or the condition of that vehicle at the time of the incident. Second, the bus was overloaded at the time. In fact, several individuals were standing when the incident occurred.21 Third, the bus was overspeeding. Its conductor testified that it had overtaken several buses before it reached the Bugko Bailey Bridge.22 Moreover, prior to crossing the bridge, it had accelerated and maintained its speed towards the bridge.23 We therefore believe that there is no reason to overturn the assailed CA Decision, which affirmed that of the RTC. It is a well-settled rule that the trial court's factual findings, when affirmed by the appellate court, are conclusive and binding, if they are not tainted with arbitrariness or oversight of some fact or circumstance of significance and influence.24 As clearly discussed above, petitioners have not presented sufficient ground to warrant a deviation from this rule. Finally, we cannot fault the appellate court in its computation of the damages and lost earnings, since it effectively computed only net earnings in accordance with existing jurisprudence.25 WHEREFORE, the Petition is hereby DENIED, and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED. Melo, Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

Footnotes:
1 Rollo, pp. 40-54. It was penned by Justice Quirino D. Abad Santos Jr. (Division chairman), with the concurrence of Justices Ruben T. Reyes and Hilarion L. Aquino (members).

2 Rollo, p. 71.

3 CA Decision, p. 15; rollo, p. 54.

4 RTC Decision, p. 31; penned by Judge Tomas B. Noynay.

5 CA Decision, pp. 2-7; rollo, pp: 41-46.

6 The case was deemed submitted for decision upon the Court's receipt of respondents' Memorandum on November 3, 1999. The Memorandum was signed by Atty. Lipata Mercader representing Mercader and Associates Law Offices. Petitioners' Memorandum, signed by Atty. Domingo Lucenario, had been received by the Court on October 28, 1999.

7 Petitioners' Memorandum, p. 54; rollo, pp. 312-313.

8 149 SCRA 562, 569, May 7, 1987, per Gancayco, J.

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9 Lee v. Presiding Judge, 145 SCRA 408, November 10, 1986; People v. Paderna, 22 SCRA 273, January 29, 1968.

10 Atlas Fertilizer Corp. v. Navarro, 149 SCRA 432, April 30, 1987.

11 Tinitigan v. Tinitigan Sr., 100 SCRA 619, October 30, 1980; citing Republic v. Central Surety and Insurance Co., 25 SCRA 641, October 26, 1968.

12 Ramos v. Central Bank, 41 SCRA 565, October 4, 1971; Dioquino v. Cruz Jr., 116 SCRA 451, September 9, 1982.

13 Manchester Development Corporation v. CA, supra, p. 569.

14 Order dated March 12, 1985; records, p. 168.

15 Records, p. 171.

16 The old Rules of Court prior to the 1997 Rules on Civil Procedure contained a substantially identical provision.

17 Petitioners' Memorandum, pp. 59-60; rollo, pp. 318-319.

18 Articles 1733, 1755 and 1756 of the Civil Code provide that common carriers must observe extraordinary diligence. Specifically, these articles respectively read:

"ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

xxx

xxx

xxx

"ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight of very cautious persons, with a due regard for all the circumstances.

"ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755."

19 Article 1733, Civil Code.

20 Article 1756, Civil Code.

21 TSN, January 9, 1989, p. 22; TSN, October 2, 1985, p. 74.

22 TSN, September 13, 1990, p. 49.

23 TSN, October 2, 1985, p. 76.

24 Rizal Surety & Insurance Co. v. CA, GR No. 112360, July 18, 2000.

25 Metropolitan Transit Corporation v. CA, 298 SCRA 495, November 16, 1998.

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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 112193 March 13, 1996 JOSE E. ARUEGO, JR., SIMEONA SAN JUAN ARUEGO, MA. IMMACULADA T. ALANON, ROBERTO A. TORRES, CRISTINA A. TORRES, JUSTO JOSE TORRES and AGUSTIN TORRES, petitioners, vs. THE HON. COURT OF APPEALS, THIRTEENTH DIVISION and ANTONIA ARUEGO, respondents.

HERMOSISIMA, JR., J.:p On March 7, 1983, a Complaint 1 for Compulsory Recognition and Enforcement of Successional Rights was filed before Branch 30 of the Regional Trial Court of Manila by the minors, private respondent Antonia F. Aruego and her alleged sister Evelyn F. Aruego, represented by their mother and natural guardian, Luz M. Fabian. Named defendants therein were Jose E. Aruego, Jr. and the five (5) minor children of the deceased Gloria A. Torres, represented by their father and natural guardian, Justo P. Torres, Jr., now the petitioners herein. In essence, the complaint avers that the late Jose M. Aruego, Sr., a married man, had an amorous relationship with Luz M. Fabian sometime in 1959 until his death on March 30, 1982. Out of this relationship were born Antonia F. Aruego and Evelyn F. Aruego on October 5, 1962 and September 3, 1963, respectively. The complaint prayed for an Order praying that herein private respondent and Evelyn be declared the illegitimate children of the deceased Jose M. Aruego, Sr.; that herein petitioners be compelled to recognize and acknowledge them as the compulsory heirs of the deceased Jose M. Aruego; that their share and participation in the estate of their deceased father be determined and ordered delivered to them. The main basis of the action for compulsory recognition is their alleged "open and continuous possession of the status of illegitimate children" as stated in paragraphs 6 and 7 of the Complaint, to wit:
6. The plaintiffs' father, Jose M. Aruego, acknowledged and recognized the herein plaintiffs as his children verbally among plaintiffs' and their mother's family friends, as well as by myriad different paternal ways, including but not limited to the following: (a) Regular support and educational expenses; (b) Allowance to use his surname;

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(c) Payment of maternal bills; (d) Payment of baptismal expenses and attendance therein; (e) Taking them to restaurants and department stores on occasions of family rejoicing; (f) Attendance to school problems of plaintiffs; (g) Calling and allowing plaintiffs to his office every now and then; (h) Introducing them as such children to family friends. 7. The plaintiffs are thus, in continuous possession of the status of (illegitimate) children of the deceased Jose M. Aruego who showered them, with the continuous and clear manifestations 2 of paternal care and affection as above outlined.

Petitioners denied all these allegations. After trial, the lower court rendered judgment, dated June 15, 1992, the dispositive portion of which reads:
WHEREFORE, judgment is rendered 1. Declaring Antonia Aruego as illegitimate daughter of Jose Aruego and Luz Fabian; 2. Evelyn Fabian is not an illegitimate daughter of Jose Aruego with Luz Fabian; 3. Declaring that the estate of deceased Jose Aruego are the following: xxx xxx xxx 4. Antonia Aruego is entitled to a share equal to 1/2 portion of share of the legitimate children of Jose Aruego; 5. Defendants are hereby ordered to recognize Antonia Aruego as the illegitimate daughter of Jose Aruego with Luz Fabian; 6. Defendants are hereby ordered to deliver to Antonia Aruego (her) share in the estate of Jose Aruego, Sr.; 7. Defendants to play (sic) plaintiffs (Antonia Aruego) counsel the sum of P10,000.00 as atty's fee; 8. Cost against the defendants.
3

Herein petitioners filed a Motion for Partial Reconsideration of the decision alleging loss of jurisdiction on the part of the trial court over the complaint by virtue of the passage of Executive Order No. 209 (as amended by Executive Order No. 227), otherwise known as the Family Code of the Philippines which took effect on August 3, 1988. This motion was denied by the lower court in the Order, dated January 14, 1993. Petitioners interposed an appeal but the lower court refused to give it due course on the ground that it was filed out of time.
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A Petition for Prohibition and Certiorari with prayer for a Writ of Preliminary Injunction was filed by herein petitioners before respondent Court of Appeals, the petition was dismissed for lack of merit in a decision promulgated on August 31, 1993. A Motion for Reconsideration when filed was denied by the respondent court in a minute resolution, dated October 13, 1993. Hence, this Petition for Review on Certiorari under Rule 45 alleging the following grounds:
A RESPONDENT COURT HAD DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE LAW AND IS DIRECTLY CONTRADICTORY TO THE APPLICABLE DECISION ALREADY ISSUED BY THIS HONORABLE COURT. B RESPONDENT COURT ERRED IN HOLDING THAT THE PETITION FILED BY PETITIONERS BEFORE IT DOES NOT INVOLVE A QUESTION OF JURISDICTION. C RESPONDENT COURT HAD CLEARLY ERRED IN RULING THAT THERE IS NO PERCEPTIBLE DIFFERENCE BETWEEN THE CIVIL CODE PROVISION AND THOSE OF THE FAMILY CODE ANENT THE TIME AN ACTION FOR COMPULSORY RECOGNITION MAY BE MADE AND THAT THERE IS NO DIFFERENCE UNDER THE CIVIL CODE FROM THAT OF THE FAMILY CODE CONCERNING THE REQUIREMENT THAT AN ACTION FOR COMPULSORY RECOGNITION ON THE GROUND OF CONTINUOUS POSSESSION OF THE STATUS OF AN ILLEGITIMATE CHILD SHOULD BE FILED DURING THE LIFETIME OF THE PUTATIVE PARENT, IN UTTER DISREGARD OF THE RULING OF THIS HONORABLE COURT IN THE UYGUANGCO CASE THAT THE CIVIL CODE PROVISION HAD BEEN SUPERSEDED OR AT LEAST MODIFIED BY THE CORRESPONDING ARTICLES IN THE FAMILY CODE. D RESPONDENT COURT ERRED IN DISMISSING PETITIONERS' PETITION FOR PROHIBITION AND IN HOLDING THAT PETITIONERS REMEDY IS THAT OF AN APPEAL 4 WHICH ALLEGEDLY HAD ALREADY BEEN LOST.

Private respondent's action for compulsory recognition as an illegitimate child was brought under Book I, Title VIII of the Civil Code on PERSONS, specifically Article 285 thereof, which state the manner by which illegitimate children may prove their filiation, to wit:
Art. 285. The action for the recognition of natural children may be brought only during the lifetime of the presumed parents, except in the following cases: (1) If the father or mother died during the minority of the child, in which case the latter may file the action before the expiration of four years from the attainment of his majority; . . . .

Petitioners, on the other hand, submit that with the advent of the New Family Code on August 3, 1988, the trial court lost jurisdiction over the complaint of private respondent on the ground of prescription, considering that under Article 175, paragraph 2, in relation to Article 172 of the New Family Code, it is provided that an
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action for compulsory recognition of illegitimate filiation, if based on the "open and continuous possession of the status of an illegitimate child," must be brought during the lifetime of the alleged parent without any exception, otherwise the action will be barred by prescription. The law cited reads:
Art. 172. The filiation of legitimate children is established by any of the following: (1) The record of birth appearing in the civil register or a final judgment; or (2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. In the absence of the foregoing evidence, the legitimate filiation shall be proved by: (1) The open and continuous possession of the status of a legitimate child; or (2) Any other means allowed by the Rules of Court and special laws. Art. 175. Illegitimate children may establish their illegitimate filiation in the same way and on the same evidence as legitimate children. The action must be brought within the same period specified in Article 173 [during the lifetime of the child], except when the action is based on the second paragraph of Article 172, in which case the action may be brought during the lifetime of the alleged parent.

In the case at bench, petitioners point out that, since the complaint of private respondent and her alleged sister was filed on March 7, 1983, or almost one (1) year after the death of their presumed father on March 30, 1982, the action has clearly prescribed under the new rule as provided in the Family Code. Petitioners, further, maintain that even if the action was filed prior to the effectivity of the Family Code, this new law must be applied to the instant case pursuant to Article 256 of the Family Code which provides:
This Code shall, have retroactive effect insofar as it does not prejudice or impair vested of acquired rights in accordance with the Civil Code or other laws.

The basic question that must be resolved in this case, therefore, appears to be: Should the provisions of the Family Code be applied in the instant case? As a corollary Will the application of the Family Code in this case prejudice or impair any vested right of the private respondent such that it should not be given retroactive effect in this particular case? The phrase "vested or acquired rights" under Article 256, is not defined by the Family Code. "The Committee did not define what is meant by a 'vested or acquired right,' thus leaving it to the courts to determine what it means as each particular issue is submitted to them. It is difficult to provide the answer for each and every question that may arise in the future." 5 In Tayag vs. Court of Appeals, 6 a case which involves a similar complaint denominated as "Claim for Inheritance" but treated by this court as one to compel recognition as an
37

illegitimate child brought prior to the effectivity of the Family Code by the mother of the minor child, and based also on the "open and continuous possession of the status of an illegitimate child," we had occasion to rule that:
Under the circumstances obtaining in the case at bar, we hold that the right of action of the minor child has been vested by the filing of the complaint in court under the regime of the Civil Code and prior to the effectivity of the Family Code. We herein adopt our ruling in the recent 7 case of Republic of the Philippines vs. Court of Appeals, et. al. where we held that the fact of filing of the petition already vested in the petitioner her right to file it and to have the same proceed to final adjudication in accordance with the law in force at the time, and such right can no longer be prejudiced or impaired by the enactment of a new law . xxx xxx xxx Accordingly, Article 175 of the Family Code finds no proper application to the instant case since it will ineluctably affect adversely a right of private respondent and, consequentially, of the minor child she represents, both of which have been vested with the filing of the complaint in court. The trial court is, therefore, correct in applying the provisions of Article 285 of the Civil Code and in holding that private respondent's cause of action has not yet prescribed.

Tayag applies four-square with the case at bench. The action brought by private respondent Antonia Aruego for compulsory recognition and enforcement of successional rights which was filed prior to the advent of the Family Code, must be governed by Article 285 of the Civil Code and not by Article 175, paragraph 2 of the Family Code. The present law cannot be given retroactive effect insofar as the instant case is concerned, as its application will prejudice the vested right of private respondent to have her case decided under Article 285 of the Civil Code. The right was vested to her by the fact that she filed her action under the regime of the Civil Code. Prescinding from this, the conclusion then ought to be that the action was not yet barred, notwithstanding the fact that it was brought when the putative father was already deceased, since private respondent was then still a minor when it was filed, an exception to the general rule provided under Article 285 of the Civil Code. Hence, the trial court, which acquired jurisdiction over the case by the filing of the complaint, never lost jurisdiction over the same despite the passage of E.O. No. 209, also known as the Family Code of the Philippines. Our ruling herein reinforces the principle that the jurisdiction of a court, whether in criminal or civil cases, once attached cannot be ousted by subsequent happenings or events, although of a character which would have prevented jurisdiction from attaching in the first instance, and it retains jurisdiction until it finally disposes of the case. 8 WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated August 31, 1993 and its Resolution dated October 13, 1993 are hereby AFFIRMED. SO ORDERED. Padilla, Bellosillo and Kapunan, JJ., concur. -------

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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 135394 April 29, 2003

JOSE V. DELA RAMA, petitioner, vs. HON. FRANCISCO G. MENDIOLA, Judge, RTC Pasay City, THE COURT OF APPEALS and TITAN CONSTRUCTION CORP., respondents. YNARES-SANTIAGO, J.: This is a petition for certiorari under Rule 65 of the Revised Rules of Court assailing the orders1 of the Regional Trial Court of Pasay City, Branch 115, in Civil Case No. 97-0734 which denied petitioners Motion to Dismiss and Motion For Direct Contempt based on Forum Shopping, as well as his Motion for Reconsideration. On December 1, 1978, petitioner sold to the government on expropriation a parcel of land consisting of 1,225 square meters, which was part of Lot 831-A, covered by Transfer Certificate of Title No. 22066, for use in the construction of the EDSA Extension Project. The sale was subject to the reconveyance to petitioner of any unused portion of the property after the project is completed.2 On June 17, 1988, petitioner entered into a "Contract to Sell", whereby he undertook to sell to respondent Titan Construction Corporation a parcel of land adjacent to the one expropriated.3 Subsequently, petitioner failed to comply with his obligations under the "Contract to Sell"; thus respondent filed a complaint for rescission/annulment of contract with the Regional Trial Court of Pasay City, Branch 116, which was docketed as Civil Case No. 6020. The parties entered into a compromise agreement and, on May 19, 1989, the trial court rendered judgment approving the parties compromise agreement. The pertinent portion of the judgment reads: 1. That the parties shall execute a deed of absolute sale over the subject property, including the improvements thereon in the total amount of TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00); 2. That relative to the parcel of land sold to the government, a separate agreement is likewise to be executed by the parties; 3. That Atty. and Mrs. Dela Rama will be given a period of 60 days from the signing of this document to fully vacate the premises sold; 4. That failure on their part to vacate within the said period, an ex-parte ejectment writ of execution shall issue;

39

5. That the written agreement relative to the lease of houses in said premises shall be respected.4 Pursuant to the compromise judgment, petitioner executed a deed of absolute sale of the subject property in favor of respondent. Likewise, he executed an Agreement to Sell and Buy, stating among others: 1. That in the event the Republic of the Philippines will return to the vendors (Jose Dela Rama and Esperanza Belmonte) the area sold which is 1,224 sq. ms. or any portion therein, the Vendee (Titan Construction Corporation) is given the exclusive option to buy any area returned at P2,000.00 per square meter. 2. That in consideration of said exclusive option granted to the said Vendee by the Vendors, the Vendee upon registration of this instrument at the back of T.C.T. No. 22066 shall pay P200,000.00 to the Vendors.5 After the execution of the Agreement to Sell and Buy, respondent paid petitioner the amount of P200,000.00, for which the latter issued a receipt which contained the inscription: "amount is not refundable & not deductible from the agreed price."6 Meanwhile, petitioner sought the reconveyance of the unused portion of the property from the government. On December 4, 1996, the Office of the President executed the corresponding Deed of Reconveyance in favor of petitioner over 303 square meters of unused land.7 On January 3, 1997, respondent filed with the Regional Trial Court of Pasay City, Branch 110, a Petition for Declaratory Relief, Prohibition, Mandamus and Preliminary Injunction with Prayer for Restraining Order,8 which was docketed as Civil Case No. 97-1275. It prayed that the Deed of Reconveyance be declared void on the grounds that the same violated its right of preemption under Article 1622 of the Civil Code; and that no public bidding was conducted, resulting in a denial of respondents right to bid considering that petitioners had waived any and all rights over the land by virtue of their Deed of Agreement to Sell and Buy. Respondent also prayed that the Office of the President be ordered to give due course to its application to purchase the subject land. The trial court dismissed the case for lack of merit on March 5, 1997.9 Thus, respondent instituted a petition for certiorari before this Court on March 24, 1997 which, however, was referred to the Court of Appeals, where it was docketed as CA-G.R. SP No. 44094.10 On June 4, 1997, respondent filed an action for specific performance based on the compromise judgment with the Regional Trial Court of Pasay City, which was docketed as Civil Case No. 970734.11 Petitioner thus filed with the Court of Appeals, in CA-G.R. SP No. 44094, a Motion for Direct Contempt and to Dismiss based on Forum Shopping.12 He also filed a similar motion with the Regional Trial Court of Pasay City in Civil Case No. 97-0734.13 On July 18, 1997, respondent filed a motion to withdraw the petition in CA-G.R. SP No. 44094,14 which the Court of Appeals, in its Resolution dated December 10, 1997, granted. Thus, the case was dismissed with finality.15 Meanwhile, the Regional Trial Court of Pasay City denied the motion to dismiss and for direct contempt based on forum shopping filed by petitioner. It held that the alleged violation of Supreme Court Circular No. 04-94 was cured when CA-G.R. SP No. 44094 was dismissed by the Court of
40

Appeals. Moreover, petitioner failed to show that the two cases have the same causes of action.16 Petitioner filed a motion for reconsideration, which was denied.17 Hence the instant petition based on the sole assigned error: THE RESPONDENT COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN NOT RESOLVING PETITIONERS MOTION TO DISMISS AND FOR DIRECT CONTEMPT BASED ON FORUM SHOPPING AND, BY REASON OF THAT SERIOUS ABUSE OF DISCRETION, IT SANCTIONED THE CONTINUANCE OF SAID ACTION BEFORE THE RESPONDENT RTC WHICH ITSELF GRAVELY AND SERIOUSLY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN REFUSING TO DISMISS THE CASE BASED ON AUTER ACTION PENDANT AND RES JUDICATA, AND TO PUNISH FOR DIRECT CONTEMPT THE PRIVATE RESPONDENT AND ITS LAWYERS BASED ON FORUM SHOPPING.18 The decisive issue posed by petitioner is whether or not the specific performance case (Civil Case No. 97-0734) is barred by the petition for declaratory relief case (Civil Case No 96-1725 and CAG.R. SP No. 44094) on the ground of res judicata. There is res judicata where the following four essential conditions concur, viz: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be, between the two cases, identity of parties, subject matter and causes of action.19 Reviewing the records of the case, there is no question that all the first three elements of res judicata are present. The declaratory relief case, which was elevated by way of a petition for certiorari to the Court of Appeals, has been dismissed with finality. The decision was rendered by a court of competent jurisdiction and the case was resolved on its merits. As regards the fourth condition, it is clear that there is identity of parties in the two cases. The declaratory relief case was filed by respondent Titan against Executive Secretary Ruben D. Torres, DPWH Secretary Gregorio R. Vigilar, the Register of Deed of Pasay City, petitioner Jose V. Dela Rama and Esperanza Belmonte (deceased). On the other hand, the specific performance case was filed by respondent Titan against petitioner Dela Rama and the heirs of Esperanza Belmonte. Although the public respondents in the declaratory relief case were not impleaded in the specific performance case, only a substantial identity is necessary to warrant the application of res judicata.20 The addition or elimination of some parties does not alter the situation.21 The subject matters and causes of action of the two cases are likewise identical. A subject matter is the item with respect to which the controversy has arisen, or concerning which the wrong has been done, and it is ordinarily the right, the thing, or the contract under dispute. In the case at bar, both the first and second actions involve the same real property. A cause of action, broadly defined, is an act or omission of one party in violation of the legal right of the other.22 Its elements are the following: (1) the legal right of plaintiff; (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in violation of said legal right.23 Causes of action are identical when there is an identity in the facts essential to the maintenance of the two actions, or where the same evidence will sustain both actions. If the same facts or evidence can sustain either, the two actions are considered the same, so that the judgment in one is a bar to the other.24

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It is true that the first case was a special civil action for declaratory relief while the second case was a civil action for specific performance. However, the difference in form and nature of the two actions is immaterial. The philosophy behind the rule on res judicata prohibits the parties from litigating the same issue more than once.25 The issue involved in the declaratory relief case was whether respondent has rights over the property which was reconveyed to petitioner considering that he waived all his rights by executing the Agreement to Sell and Buy. In the specific performance case, the issue involved was the same, that is, whether respondent was entitled to the property reconveyed when the petitioner failed to comply with the terms of their agreement embodied in the same Agreement to Sell and Buy. Respondents alleged right in both cases depends on one and the same instrument, the Agreement to Sell and Buy. Clearly, respondents ultimate objective in instituting the two actions was to have the property reconveyed in its favor. When material facts or questions in issue in a former action were conclusively settled by a judgment rendered therein, such facts or questions constitute res judicata and may not be again litigated in a subsequent action between the same parties or their privies regardless of the form of the latter. This is the essence of res judicata or bar by prior judgment. The parties are bound not only as regards every matter offered and received to sustain or defeat their claims or demand but as to any other admissible matter which might have been offered for that purpose and of all other matters that could have been adjudged in that case.26 Assuming res judicata finds no application in the instant case, the action for specific performance must nonetheless be dismissed. The Agreement to Sell and Buy, being one of the prestations of the compromise agreement which was judicially confirmed and had long become final and executory, cannot be enforced in a separate action. In the case of Jose Dela Rama v. Hon. Aurora P. NavarreteRecina,27 where petitioner assailed the validity of the Deed of Absolute Sale executed pursuant to the compromise agreement, we held that: Moreover, the Deed of Absolute Sale being impugned by the petitioners is but an offshoot of the compromise agreement entered into, with judicial confirmation, by the parties themselves. Thus, as observed by the respondent court, any further prestations left undone, with regard to the provisions of the compromise judgment, should be the subject of proceedings on execution, and not a separate action. In the earlier case of Arkoncel v. Lagamon,28 we held: The rule is that a judgment rendered in accordance with a compromise agreement is immediately executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake or duress in which case an appeal may be taken against the order denying the motion. It then becomes ministerial for the lower court to order the execution of its final executory judgment. Even more than a contract which may be enforced by ordinary action for specific performance, the compromise agreement is part and parcel of the judgment, and may therefore be enforced as such by a writ of execution. Finally, when the terms of an amicable settlement are violated, as in the case at bar, the remedy of the aggrieved party is to move for its execution.

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The principle of res judicata requires that stability be accorded to judgments. Controversies once decided on the merits shall remain in repose for there should be an end to litigation which, without the doctrine, would be endless.29 Given the circumstances in this case, we find that the trial court committed grave abuse of discretion when it denied the motion to dismiss filed by petitioners. WHEREFORE, in view of the foregoing, the petition is GRANTED. The Order of the Regional Trial Court of Pasay City, Branch 115 in Civil Case No. 97-0734, denying petitioners "Motion to Dismiss Complaint and For Direct Contempt Based on Forum Shopping," as well as the Order denying petitioners "Motion for Reconsideration," are REVERSED and SET ASIDE. The Regional Trial Court of Pasay City, Branch 115, is ordered to DISMISS Civil Case No. 97-0734 on the ground of res judicata. Costs against private respondents. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

Footnotes
1

Rollo, pp. 146 & 155. Id., p. 40. Id., pp. 175-177. Id., p. 174. Id., p. 178. Id., p. 240. Id., pp. 53-59. Id., pp. 60-73. Id., pp. 78-83. Id., pp. 84-110. Id., pp. 166-173. Id., pp. 130-138. Id., pp. 142-145. Id., pp. 139-140. Id., p. 141.
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10

11

12

13

14

15

16

Id., pp. 146-146. Id., p. 155. Id., p. 17. Serrano v. Court of Appeals, G.R. No. 122930, February 6, 2002. Id. University Physicians Services, Inc. v. Court of Appeals, 381 Phil. 54, 67 [2000]. Bachrach Corporation v. Court of Appeals, 357 Phil. 483, 491 [1998]. Avisado v. Rumbaua, G.R. No. 137306, 12 March 2001, 354 SCRA 245, 256. Stilianopulos v. City of Legaspi, G.R. No. 133913, 12 October 1999, 316 SCRA 523, 541. Id., p. 542. Carlet v. Court of Appeals, 341 Phil. 99, 111 [1997]. G.R. No. 116456, 19 August 1996, Unsigned Resolution; Rollo, pp. 264-269. G.R. No. 50526, 4 December 1991, 204 SCRA 560, 567. Nacuray v. NLRC, 336 Phil. 749, 757 [1997].

17

18

19

20

21

22

23

24

25

26

27

28

29

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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 139442 December 6, 2006

LOURDES DELA CRUZ, petitioner, vs. HON. COURT OF APPEALS and MELBA TAN TE, respondents.

DECISION

VELASCO, JR., J.: For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. Holy Bible, Matthew 25:29 The Case This petition for review seeks to nullify the April 30, 1999 Decision and the July 16, 1999 Resolution of the Court of Appeals in CA-G.R. SP No. 49097, which reversed the Decision of the Manila Regional Trial Court (RTC), Branch 35, in Civil Case No. 98-89174, and reinstated the Decision of the Manila Metropolitan Trial Court (MeTC), Branch 20, which ordered petitioner Dela Cruz to vacate the subject lot in favor of respondent Tan Te.1 The Facts The Reyes family, represented by Mr. Lino Reyes, owned the lot located at No. 1332 Lacson Street (formerly Gov. Forbes Street), Sampaloc, Manila. Petitioner Lourdes Dela Cruz was one of their lessees, and she religiously paid rent over a portion of the lot for well over 40 years. Sometime in 1989, a fire struck the premises and destroyed, among others, petitioners dwelling. After the fire, petitioner and some tenants returned to the said lot and rebuilt their respective houses; simultaneously, the Reyes family made several verbal demands on the remaining lessees, including petitioner, to vacate the lot but the latter did not comply. On February 21, 1994, petitioner was served a written demand to vacate said lot but refused to leave. Despite the setback, the Reyes family did not initiate court proceedings against any of the lessees.

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On November 26, 1996, the disputed lot was sold by the Reyeses to respondent Melba Tan Te by virtue of the November 26, 1996 Deed of Absolute Sale. Respondent bought the lot in question for residential purposes. Despite the sale, petitioner Dela Cruz did not give up the lot. On January 14, 1997, petitioner was sent a written demand to relinquish the premises which she ignored, prompting respondent Tan Te to initiate conciliation proceedings at the barangay level. While respondent attempted to settle the dispute by offering financial assistance, petitioner countered by asking PhP 500,000.00 for her house. Respondent rejected the counter offer which she considered unconscionable. As a result, a certificate to file action was issued to Tan Te. On September 8, 1997, respondent Tan Te filed an ejectment complaint with damages before the Manila MeTC, entitled Melba Tan Te v. Lourdes Dela Cruz and docketed as Civil Case No. 156730CV. The complaint averred that: (1) the previous owners, the Reyeses were in possession and control of the contested lot; (2) on November 26, 1996, the lot was sold to Tan Te; (3) prior to the sale, Dela Cruz forcibly entered the property with strategy and/or stealth; (4) the petitioner unlawfully deprived the respondent of physical possession of the property and continues to do so; and, (5) the respondent sent several written demands to petitioner to vacate the premises but refused to do so. On October 24, 1997, petitioner filed her answer and alleged that: (1) the MeTC had no jurisdiction over the case because it falls within the jurisdiction of the RTC as more than one year had elapsed from petitioners forcible entry; (2) she was a rent-paying tenant protected by PD 20;2 (3) her lease constituted a legal encumbrance upon the property; and (4) the lot was subject of expropriation. The Ruling of the Manila MeTC On April 3, 1998, the MeTC decided as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff as follows: 1. Ordering the defendant and all persons claiming right under her to vacate the premises situated at 1332 Lacson Street (formerly Gov. Forbes Street), Sampaloc, Manila and peacefully return possession thereof to plaintiff; 2. Ordering the defendant to pay the plaintiff the amount of P360.00 a month from December 1996 to November 1997; P432.00 a month from December 1997 to November 1998, plus 20% for each subsequent year until the premises shall have been vacated and turned over to the plaintiff; 3. Ordering the defendant to pay the plaintiff the amount of P10,000.00 as attorneys fees; and, the costs of the suit. SO ORDERED.3 The Ruling of the Regional Trial Court Unconvinced, petitioner Dela Cruz appealed the Decision of the MeTC in the Manila RTC and the appeal was docketed as Civil Case No. 98-89174. On September 1, 1998, the RTC rendered its judgment setting aside the April 3, 1998 Decision of the Manila MeTC and dismissed respondent Tan Tes Complaint on the ground that it was the RTC and not the MeTC which had jurisdiction
46

over the subject matter of the case. The RTC believed that since Tan Tes predecessor-in-interest learned of petitioners intrusion into the lot as early as February 21, 1994, the ejectment suit should have been filed within the one-year prescriptive period which expired on February 21, 1995. Since the Reyes did not file the ejectment suit and respondent Tan Te filed the action only on September 8, 1997, then the suit had become an accion publiciana cognizable by the RTC. The Ruling of the Court of Appeals Disappointed at the turn of events, respondent Tan Te appealed the adverse Decision to the Court of Appeals (CA) which was docketed as CA-G.R. SP No. 49097. This time, the CA rendered a Decision in favor of respondent Tan Te reversing the Manila RTC September 1, 1998 Decision and reinstated the Manila MeTC April 3, 1998 Decision. Petitioner tried to have the CA reconsider its Decision but was rebutted in its July 16, 1999 Resolution. Unyielding to the CA Decision and the denial of her request for reconsideration, petitioner Dela Cruz now seeks legal remedy through the instant Petition for Review on Certiorari before the Court. The Issues Petitioner Dela Cruz claims two (2) reversible errors on the part of the appellate court, to wit: A THE HON. COURT OF APPEALS, WITH DUE RESPECT, WENT BEYOND THE ISSUES OF THE CASE AND CONTRARY TO THOSE OF THE TRIAL COURT. B THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN REVERSING THE DECISION OF THE RTC AND IN EFFECT, REINSTATING THE DECISION OF THE [MeTC] WHICH IS CONTRADICTED BY THE EVIDENCE ON RECORD.4 The Courts Ruling Discussion on Rule 45 Before we dwell on the principal issues, a few procedural matters must first be resolved. Petitioner Dela Cruz asks the Court to review the findings of facts of the CA, a course of action proscribed by Section 1, Rule 45. Firm is the rule that findings of fact of the CA are final and conclusive and cannot be reviewed on appeal to this Court provided they are supported by evidence on record or substantial evidence. Fortunately for petitioner, we will be liberal with her petition considering that the CAs factual findings contradict those of the RTC, and there was an asseveration that the court a quo went beyond the issues of the case. Indeed, these grounds were considered exceptions to the factual issue bar rule.

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Secondly, the petition unnecessarily impleaded the CA in violation of Section 4, Rule 45. We will let this breach pass only because there is a need to entertain the petition due to the conflicting rulings between the lower courts; however, a repetition may result to sanctions. The actual threshold issue is which court, the Manila RTC or the Manila MeTC, has jurisdiction over the Tan Te ejectment suit. Once the jurisdictional issue is settled, the heart of the dispute is whether or not respondent is entitled to the ejectment of petitioner Dela Cruz from the premises. However, the petition is bereft of merit. On the Issue of Jurisdiction Jurisdiction is the power or capacity given by the law to a court or tribunal to entertain, hear and determine certain controversies.5 Jurisdiction over the subject matter is conferred by law. Section 33 of Chapter III -- on Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts of B. P. No. 1296 provides: Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in civil cases.Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise: xxxx (2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in such cases, the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession. Thus exclusive, original jurisdiction over ejectment proceedings (accion interdictal) is lodged with the first level courts. This is clarified in Section 1, Rule 70 of the 1997 Rules of Civil Procedure that embraces an action for forcible entry (detentacion), where one is deprived of physical possession of any land or building by means of force, intimidation, threat, strategy, or stealth. In actions for forcible entry, three (3) requisites have to be met for the municipal trial court to acquire jurisdiction. First, the plaintiffs must allege their prior physical possession of the property. Second, they must also assert that they were deprived of possession either by force, intimidation, threat, strategy, or stealth. Third, the action must be filed within one (1) year from the time the owners or legal possessors learned of their deprivation of physical possession of the land or building. The other kind of ejectment proceeding is unlawful detainer (desahucio), where one unlawfully withholds possession of the subject property after the expiration or termination of the right to possess. Here, the issue of rightful possession is the one decisive; for in such action, the defendant is the party in actual possession and the plaintiffs cause of action is the termination of the defendants right to continue in possession.7 The essential requisites of unlawful detainer are: (1) the fact of lease by virtue of a contract express or implied; (2) the expiration or termination of the possessors right to hold possession; (3) withholding by the lessee of the possession of the land or building after expiration or termination of the right to possession; (4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and vacate the premises; and (5) the action must be filed within one (1) year from date of last demand received by the defendant.
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A person who wants to recover physical possession of his real property will prefer an ejectment suit because it is governed by the Rule on Summary Procedure which allows immediate execution of the judgment under Section 19, Rule 70 unless the defendant perfects an appeal in the RTC and complies with the requirements to stay execution; all of which are nevertheless beneficial to the interests of the lot owner or the holder of the right of possession. On the other hand, Section 19, of Chapter II of B.P. No. 129 on Regional Trial Courts provides: Section 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise exclusive original jurisdiction: xxxx (2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts. Two (2) kinds of action to recover possession of real property which fall under the jurisdiction of the RTC are: (1) the plenary action for the recovery of the real right of possession (accion publiciana) when the dispossession has lasted for more than one year or when the action was filed more than one (1) year from date of the last demand received by the lessee or defendant; and (2) an action for the recovery of ownership (accion reivindicatoria) which includes the recovery of possession. These actions are governed by the regular rules of procedure and adjudication takes a longer period than the summary ejectment suit. To determine whether a complaint for recovery of possession falls under the jurisdiction of the MeTC (first level court) or the RTC (second level court), we are compelled to go over the allegations of the complaint. The general rule is that what determines the nature of the action and the court that has jurisdiction over the case are the allegations in the complaint. These cannot be made to depend upon the defenses set up in the answer or pleadings filed by the defendant.8 This general rule however admits exceptions. In Ignacio v. CFI of Bulacan, it was held "that while the allegations in the complaint make out a case for forcible entry, where tenancy is averred by way of defense and is proved to be the real issue, the case should be dismissed for lack of jurisdiction as the case should properly be filed with the then Court of Agrarian Relations."9 The cause of action in a complaint is not what the designation of the complaint states, but what the allegations in the body of the complaint define and describe. The designation or caption is not controlling, more than the allegations in the complaint themselves are, for it is not even an indispensable part of the complaint.10 Let us refer to the allegations of the complaint filed in the Manila MeTC in Civil Case No. 98-89174, which we quote verbatim: 3. That plaintiff is the absolute and registered owner of a parcel of land located at No. 1332, Lacson Street, Sampaloc, Manila now being occupied by defendant;

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4. That plaintiff purchased the above-said parcel of land together with its improvements from the legal heirs of the late EMERLINDA DIMAYUGA REYES on November 26, 1996, under and by virtue of a Deed of Absolute Sale x x x; 5. That pursuant to the said deed of sale, the title to the land and all its improvements was transferred in plaintiffs name as evidenced by Transfer Certificate of Title No. 233273 issued by the Register of Deeds of Manila on April 22, 1997 x x x; 6. That prior to said sale, the previous owners, represented by Mr. Lino Reyes, husband of the said deceased Emerlinda D. Reyes and the administrator of her estate, was in possession and control of the property subject of this complaint; 7. That also prior to said sale, defendant, without the knowledge and consent of Mr. Lino Reyes, surreptitiously and by means of stealth and strategy entered, used and occupied the said premises thus depriving the former of rightful possession thereof; 8. That on February 21, 1994, Mr. Lino Reyes, through Atty. Alejo Sedico, his lawyer, furnished the defendants a letter formally demanding that defendant vacate the premises x x x; 9. That, however, defendant failed and refused to vacate despite just and legal demand by Mr. Lino Reyes; 10. That after the sale to plaintiff of said premises, plaintiff has several times demanded of defendants to vacate the premises, the last demand having been made on them personally and in writing on January 14, 1997 x x x; 11. That defendant failed and refused and still fails and refuses to vacate the premises without legal cause or justifiable reason whatsoever;11 The answer of petitioner averred: 4. The Court has no jurisdiction over the case, having been filed by plaintiff more than the reglementary one year period to commence forcible entry case, which is reckoned from the date of the alleged unlawful entry of defendant by the use of stealth and strategy into the premises; 5. For more than four decades now, defendant has been and still is a rent-paying tenant of the subject land occupied by their residential house, dating back to the original owner-lessor, the Dimayuga family. Her lease with no definite duration, commenced with a rent at P60.00 per month until it was gradually increased in the ensuing years. As of November 1996, it stood at P300.00 a month; 6. In this circumstances [sic], defendant enjoys the protective mantle of P.D. 20 and the subsequent rental control status against dispossession. She cannot be ejected other than for causes prescribed under B.P. Blg. 25. Further, in case of sale of the land, she has the right of first refusal under the express provision of P.D. 1571;

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7. Throughout the years of her tenancy, defendant has been updated in her rental payment until the collector of the original owner-lessor no longer came around as she has done theretofore; 7.1. As a result, she was compelled to file a petition for consignation of rent before the Metropolitan Trial Court of Manila; 8. A bona fide tenant within the ambit if [sic] P.D. 20 and the subsequent rental control status, including B.P. Blg. 25, under its terms, cannot be ousted on a plea of expiration of her monthly lease; 9. Her lease constitutes a legal encumbrance upon the property of the lessor/owner and binds the latters successor-in-interest who is under obligation to respect it; 10. The land at bench is the subject of a pending expropriation proceedings; 11. Plaintiff being a married woman cannot sue or be sued without being joined by her husband;12 Undeniably, the aforequoted allegations of the complaint are vague and iffy in revealing the nature of the action for ejectment. The allegations in the complaint show that prior to the sale by Lino Reyes, representing the estate of his wife Emerlinda Reyes, he was in possession and control of the subject lot but were deprived of said possession when petitioner, by means of stealth and strategy, entered and occupied the same lot. These circumstances imply that he had prior physical possession of the subject lot and can make up a forcible entry complaint. On the other hand, the allegation that petitioner Dela Cruz was served several demands to leave the premises but refused to do so would seem to indicate an action for unlawful detainer since a written demand is not necessary in an action for forcible entry. It is a fact that the MeTC complaint was filed on September 8, 1997 within one (1) year from the date of the last written demand upon petitioner Dela Cruz on January 14, 1997. As previously discussed, the settled rule is jurisdiction is based on the allegations in the initiatory pleading and the defenses in the answer are deemed irrelevant and immaterial in its determination. However, we relax the rule and consider the complaint at bar as an exception in view of the special and unique circumstances present. First, as in Ignacio v. CFI of Bulacan,13 the defense of lack of jurisdiction was raised in the answer wherein there was an admission that petitioner Dela Cruz was a lessee of the former owners of the lot, the Reyeses, prior to the sale to respondent Tan Te. The fact that petitioner was a tenant of the predecessors-in-interest of respondent Tan Te is material to the determination of jurisdiction. Since this is a judicial admission against the interest of petitioner, such admission can be considered in determining jurisdiction. Second, the ejectment suit was filed with the Manila MeTC on September 8, 1997 or more than nine (9) years ago. To dismiss the complaint would be a serious blow to the effective dispensation of justice as the parties will start anew and incur additional legal expenses after having litigated for a long time. Equitable justice dictates that allegations in the answer should be considered to aid in arriving at the real nature of the action. Lastly, Section 6, Rule 1 of the Rules of Court clearly empowers the Court to construe Rule 70 and

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other pertinent procedural issuances "in a liberal manner to promote just, speedy, and inexpensive disposition of every action and proceeding." Based on the complaint and the answer, it is apparent that the Tan Te ejectment complaint is after all a complaint for unlawful detainer. It was admitted that petitioner Dela Cruz was a lessee of the Reyeses for around four (4) decades. Thus, initially petitioner as lessee is the legal possessor of the subject lot by virtue of a contract of lease. When fire destroyed her house, the Reyeses considered the lease terminated; but petitioner Dela Cruz persisted in returning to the lot and occupied it by strategy and stealth without the consent of the owners. The Reyeses however tolerated the continued occupancy of the lot by petitioner. Thus, when the lot was sold to respondent Tan Te, the rights of the Reyeses, with respect to the lot, were transferred to their subrogee, respondent Tan Te, who for a time also tolerated the stay of petitioner until she decided to eject the latter by sending several demands, the last being the January 14, 1997 letter of demand. Since the action was filed with the MeTC on September 8, 1997, the action was instituted well within the one (1) year period reckoned from January 14, 1997. Hence, the nature of the complaint is one of unlawful detainer and the Manila MeTC had jurisdiction over the complaint. Thus, an ejectment complaint based on possession by tolerance of the owner, like the Tan Te complaint, is a specie of unlawful detainer cases. As early as 1913, case law introduced the concept of possession by tolerance in ejectment cases as follows: It is true that the landlord might, upon the failure of the tenant to pay the stipulated rents, consider the contract broken and demand immediate possession of the rented property, thus converting a legal possession into illegal possession. Upon the other hand, however, the landlord might conclude to give the tenant credit for the payment of the rents and allow him to continue indefinitely in the possession of the property. In other words, the landlord might choose to give the tenant credit from month to month or from year to year for the payment of their rent, relying upon his honesty of his financial ability to pay the same. During such period the tenant would not be in illegal possession of the property and the landlord could not maintain an action of desahucio until after he had taken steps to convert the legal possession into illegal possession. A mere failure to pay the rent in accordance with the contract would justify the landlord, after the legal notice, in bringing an action of desahucio. The landlord might, however, elect to recognize the contract as still in force and sue for the sums due under it. It would seem to be clear that the landlord might sue for the rents due and [unpaid, without electing to terminate the contract of tenancy;] [w]hether he can declare the contract of tenancy broken and sue in an action desahucio for the possession of the property and in a separate actions for the rents due and damages, etc.14 The concept of possession by tolerance in unlawful detainer cases was further refined and applied in pertinent cases submitted for decision by 1966. The rule was articulated as follows: Where despite the lessees failure to pay rent after the first demand, the lessor did not choose to bring an action in court but suffered the lessee to continue occupying the land for nearly two years, after which the lessor made a second demand, the one-year period for bringing the detainer case in the justice of the peace court should be counted not from the day the lessee refused the first demand for payment of rent but from the time the second demand for rents and surrender of possession was not complied with.15
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In Calubayan v. Pascual, a case usually cited in subsequent decisions on ejectment, the concept of possession by tolerance was further elucidated as follows: In allowing several years to pass without requiring the occupant to vacate the premises nor filing an action to eject him, plaintiffs have acquiesced to defendants possession and use of the premises. It has been held that a person who occupies the land of another at the latters tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against them. The status of the defendant is analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful deprivation or withholding of possession is to be counted from the date of the demand to vacate.16 (Emphasis supplied.) From the foregoing jurisprudence, it is unequivocal that petitioners possession after she intruded into the lot after the firewas by tolerance or leniency of the Reyeses and hence, the action is properly an unlawful detainer case falling under the jurisdiction of the Manila MeTC. Even if we concede that it is the RTC and not the MeTC that has jurisdiction over the Tan Te complaint, following the reasoning that neither respondent nor her predecessor-in-interest filed an ejectment suit within one (1) year from February 21, 1994 when the Reyeses knew of the unlawful entry of petitioner, and hence, the complaint is transformed into an accion publiciana, the Court deems it fair and just to suspend its rules in order to render efficient, effective, and expeditious justice considering the nine (9) year pendency of the ejectment suit. More importantly, if there was uncertainty on the issue of jurisdiction that arose from the averments of the complaint, the same cannot be attributed to respondent Tan Te but to her counsel who could have been confused as to the actual nature of the ejectment suit. The lawyers apparent imprecise language used in the preparation of the complaint without any participation on the part of Tan Te is sufficient special or compelling reason for the grant of relief. The case of Barnes v. Padilla17 elucidates the rationale behind the exercise by this Court of the power to relax, or even suspend, the application of the rules of procedure: Let it be emphasized that the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed. Even the Rules of Court reflect this principle. The power to suspend or even disregard rules can be so pervasive and compelling as to alter even that which this Court itself has already declared to be final x x x. The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. Time and again, this Court has consistently held that rules must not be applied rigidly so as not to override substantial justice.18 Moreover, Section 8, Rule 40 authorizes the RTCin case of affirmance of an order of the municipal trial court dismissing a case without trial on the merits and the ground of dismissal is lack of jurisdiction over the subject matterto try the case on the merits as if the case was originally filed with it if the RTC has jurisdiction over the case. In the same vein, this Court, in the exercise of its rule-making power, can suspend its rules with respect to this particular case (pro hac vice), even if
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initially, the MeTC did not have jurisdiction over the ejectment suit, and decide to assume jurisdiction over it in order to promptly resolve the dispute. The issue of jurisdiction settled, we now scrutinize the main issue. At the heart of every ejectment suit is the issue of who is entitled to physical possession of the lot or possession de facto. We rule in favor of respondent Tan Te for the following reasons: 1. Petitioner admitted in her Answer that she was a rent-paying tenant of the Reyeses, predecessorsin-interest of respondent Tan Te. As such, she recognized the ownership of the lot by respondent, which includes the right of possession. 2. After the fire raged over the structures on the subject lot in late 1989 the contracts of lease expired, as a result of which Lino Reyes demanded that all occupants, including petitioner, vacate the lot but the latter refused to abandon the premises. During the duration of the lease, petitioners possession was legal but it became unlawful after the fire when the lease contracts were deemed terminated and demands were made for the tenants to return possession of the lot. 3. Petitioners possession is one by the Reyeses tolerance and generosity and later by respondent Tan Tes. Petitioner fully knows that her stay in the subject lot is at the leniency and magnanimity of Mr. Lino Reyes and later of respondent Tan Te; and her acquiescence to such use of the lot carries with it an implicit and assumed commitment that she would leave the premises the moment it is needed by the owner. When respondent Tan Te made a last, written demand on January 14, 1997 and petitioner breached her promise to leave upon demand, she lost her right to the physical possession of the lot. Thus, respondent Tan Te should now be allowed to occupy her lot for residential purposes, a dream that will finally be realized after nine (9) years of litigation. Petitioner raises the ancillary issue that on March 15, 1998, the Manila City Council passed and approved Ordinance No. 7951: [a]uthorizing the Manila City Mayor to acquire either by negotiation or expropriation certain parcels of land covered by Transfer Certificates of Title Nos. 233273, 175106 and 140471, containing an area of One Thousand Four Hundred Twenty Five (1,425) square meters, located at Maria Clara and Governor Forbes Streets, Sta. Cruz, Manila, for low cost housing and award to actual bonafide residents thereat and further authorizing the City Mayor to avail for that purpose any available funds of the city and other existing funding facilities from other government agencies x x x.19 It readily appears that this issue was not presented before the Court of Appeals in CA-G.R. SP No. 49097 despite the fact that the respondents petition was filed on September 25, 1998, six months after the ordinance was passed. Thus, this issue is proscribed as are all issues raised for the first time before the Court are proscribed. Even granting for the sake of argument that we entertain the issue, we rule that the intended expropriation of respondents lot (TCT No. 233273) by the city government of Manila will not affect
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the resolution of this petition. For one thing, the issue can be raised by petitioner in the appropriate legal proceeding. Secondly, the intended expropriation might not even be implemented since it is clear from the ordinance that the City Mayor will still locate available funds for project, meaning the said expense is not a regular item in the budget. WHEREFORE, this petition is DENIED for lack of merit. The April 30, 1999 Decision of the Court of Appeals reinstating the April 3, 1998 MeTC Decision in Civil Case No. 156730-CV and the July 16, 1999 Resolution in CA-G.R. SP No. 49097 are hereby AFFIRMED IN TOTO. No costs. SO ORDERED. Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Tinga, JJ., concur.

Footnotes
1

Tan Teh in the MeTC and RTC Decisions.

Amending Certain Provisions of Republic Act No. 6359, entitled "An Act to Regulate Rentals for the Years of Dwelling Units or of Land on which Anothers Dwelling is Located and Penalizing Violations Thereof, and for Other Purposes."
3

Rollo, p. 29. Id. at 6. People v. Mariano, G.R. No. L-40527, June 30, 1976, 71 SCRA 600, 604. The Judiciary Reorganization Act of 1980. Sumulong v. Court of Appeals, G.R. No. 108817, May 10, 1994, 232 SCRA 372, 383.

Santos v. Ayon, G. R. No. 137013, May 6, 2005, 458 SCRA 83, 89; see also Sumulong v. Court of Appeals, et al., supra.
9

G.R. No. L-27897-98, October 29, 1971, 42 SCRA 89, 95, cited in F.D. Regalado, Remedial Law Compendium, Vol. I (6th revised ed.) 9.
10

Supra note 7, at 386, citing Feranil v. Arcilla, G.R. No. L-44353, February 28, 1979, 88 SCRA 770, 776.
11

Records, pp. 2-4. Id. at 26-27. Supra note 9.

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12

13

14

Lucido v. Vita, 25 Phil. 414 (1913).

15

Racaza v. Susana Realty, Inc., G.R. No. L-20330, December 22, 1966, 18 SCRA 1172, 1175, citing Cruz v. Atencio, G.R. No. L- 11276, February 28, 1959.
16

G.R. No. L-22645, September 18, 1967, 21 SCRA 146, 148. G. R. No. 160753, June 28, 2005, 461 SCRA 533, 541. Id. Rollo, p. 8.

17

18

19

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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 126947 July 15, 1999 HARRY ANG PING, petitioner, vs. THE HONORABLE COURT OF APPEALS, RTC-MAKATI, BRANCH 149 and UNIBANCARD CORPORATION., respondents.

ROMERO, J.: Before us is a petition for review on certiorari assailing the Decision 1 of the Eleventh Division of the Court of Appeals dated June 14, 1996 dismissing petitioner's prayer for annulment of the judgment of the Regional Trial Court of Makati Branch 149 in Civil Case No. 18843 entitled "Unibancard Corporation vs. Tingson and Ang Ping." Likewise under review is the Court of Appeals' Resolution 2 dated September 16, 1996 denying the petitioner's motion for reconsideration. The antecedent facts are as follows: In April 1987, Juan Tingson applied for and was issued a Unicard credit card by respondent Corporation with petitioner Harry Ang Ping as co-obligor. As part of the terms and conditions governing the issuance and use of the credit card, Tingson and Ang Ping agreed to jointly and severally pay Unibancard all purchases and charges made through the said credit card within twenty (20) days from receipt of the monthly statement without necessity of demand. Tingson and Ang Ping likewise bound themselves to pay interest and penalty fees on any unpaid balance and attorney's fees in case of suit. Tingson defaulted on his monthly charges which amounted to P49,988.42 as of December 5, 1987 and despite repeated demands, failed or refused to settle his accounts with respondent Corporation prompting the latter to file a collection suit with the Regional Trial Court of Makati. The summonses for both Tingson and Ang Ping were allegedly served on February 15, 1988 at 189 I. Lopez St., Mandaluyong Metro Manila and 34 Coolidge St., Greenhills West, San Juan, Metro Manila, respectively. In both cases, the person who received the summons was a certain Jonas Umali.1wphi1.nt

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On May 12, 1988, a certain Atty. Benito Salazar filed an answer purportedly on behalf of defendants Tingson and Ang Ping, denying the substantial averments in the complaint and alleging inter alia that the unpaid charges were much less than P49,988.42 and that no proper demand was made on the defendants. At the pre-trial, on the other hand, a certain Atty. Lauro Sandoval represented Tingson and herein petitioner. Later, during trial, defendants' counsel did not present any evidence on their behalf; hence, the trial court deemed that the defendants had waived their right to present evidence and submitted the case for decision on the basis solely of the respondent Corporation's evidence. The trial court rendered judgment on June 11, 1990, holding Tingson and Ang Ping jointly and severally liable for "the sum of P35,233.62 plus 3% interest and 5% penalty charge from August 3, 1987 until the entire amount is fully paid" plus 25% attorney's fees. 3 A writ of execution was subsequently issued and the same was enforced on May 3, 1993 at Ang Ping's Greenhills address where Ruth Ang Ping, petitioner's sister, informed the sheriff that petitioner was no longer residing at the said address. The writ was later returned unsatisfied since a third party claim over the properties attached was filed and successfully proven. Thereafter, on November 5, 1993 and on motion of respondent Corporation, an alias writ of execution was issued and a notice of garnishment was served on San Lorenzo Bus Service Co. covering shares believed to be owned by Ang Ping. Another alias writ of execution was issued on August 29, 1994 by virtue of which, the sheriff levied on certain personal properties found inside Harrod's Haberdashery at SM Megamall, the Certificate of Business Name of which was issued to herein petitioner. During the enforcement of the writ on September 15, 1994, Ang Ping tried to stop the sheriff from carrying away personalty from the establishment and a scuffle between them ensued. The records show that the petitioner grabbed the sheriff by the neck while pulling him to the door, causing injury to the latter. On October 27, 1994, Ang Ping filed with the Court of Appeals a petition 4 to annul the judgment of the trial court which was the basis of the various writs of execution issued against him. He alleged that the judgment in question was rendered without due process of law as he was not given his day in court. Petitioner argued that since there was no valid service of summons upon him and he never appeared before the court by himself or by counsel, the trial court never acquired jurisdiction over his person, thus, the judgment cannot be enforced against him. The Court of Appeals dismissed the petition after finding that petitioner Ang Ping was properly placed under the jurisdiction of the trial court which rendered the assailed judgment. First, the appellate court said, the petitioner was duly represented by counsel who, aside from filing a responsive pleading, had religiously appeared for him and his codefendant before the lower court and petitioner's claim that said counsel was not duly authorized by him was never satisfactorily substantiated. Second, respondent Court noted that there was a valid service of summons on petitioner Ang Ping because the copy of the summons addressed to him was signed by a certain Jonas Umali. The Court of Appeals likewise pointed out that the delay in filing the petition to nullify the judgment of the lower court buttressed private respondent's contention that the same was just a ploy resorted to by petitioner to stymie the enforcement of the alias writ of execution issued against him. Hence, this petition.
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Petitioner insists that the trial court never acquired jurisdiction over his person since he was never validly served with summons and neither did he appear in court. In particular, he assails the substituted service resorted to by the process server on the ground that he never actually received the summons. He pointed to the irregularities in the conduct of the substituted service of summons such as: the fact that the same person, a certain Jonas Umali, received the summonses for both Tingson and petitioner Ang Ping on the same date at different addresses and the failure of the process server to file the proof of service together with the return thus dispensing with the explanation as to why substituted service was resorted to. He further claims that he never authorized the lawyers who filed an answer and appeared in court purportedly in his behalf. In its comment, private respondent Corporation, on the other hand, prayed for the dismissal of the present petition reiterating that the trial court properly acquired jurisdiction over the person of petitioner Ang Ping. Jursidiction over the person of the defendant in civil cases is acquired either by his voluntary appearance in court and his submission to its authority or by service of summons. 5 In this case, the records show that the summons addressed to petitioner Ang Ping was delivered by substituted service, with a certain Jonas Umali signing as the one who received the summons. As correctly pointed out by the petitioner, however, there was no explanation in the proof of service justifying the resort to substituted service. In fact, the records are bereft of any showing that a proof of service was even filed after such substituted service. Well settled is the rule that summons must be served upon the defendant himself. It is only when the defendant cannot be served personally within a reasonable time that substituted service may be resorted to and such impossibility of prompt service should be shown by stating that efforts have been made to find the defendant personally and that such efforts have failed. This is necessary because substituted service is in derogation of the usual method of service. It is a method extraordinary in character and hence may be used only as prescribed and in the circumstances authorized by statute. The statutory requirements of substituted service must be followed strictly, faithfully and fully, and any substituted service other than that authorized by statute is considered ineffective. 6 It should be emphasized that the service of summons is not only required to give the court jurisdiction over the person of the defendant, but also to afford the latter an opportunity to be heard on the claim made against him. 7 Thus, compliance with the rules regarding the service of summons is as much an issue of due process as of jurisdiction. Moreover, as likewise pointed out by the petitioner, the presumption of regularity in the performance of public functions finds no application in the case at bar. Surely, there must be, at the very least, compliance with the procedure outlined in Sections 6 and 20 of Rule 14 of the rules of civil procedure then applicable (now Sections 4 and 18, Rule 14 of the new rules), to wit:
Sec. 6. Return When the service has been completed, the server shall give notice thereof, by registered mail, to plaintiff or his counsel, and shall return the summons to the clerk who issued it, accompanied with the proof of service.

59

Sec. 20. Proof of Service The proof of service of summons shall be made in writing by the server and shall set forth the manner, place, and date of service; shall specify any papers which have been served with the process and the name of the person who received the same; and shall be sworn to when made by a person other than a sheriff or his deputy.

A cursory examination of the records shows that the process server did not file any proof of service in Civil Case No. 18843. In this case, since substituted service was resorted to, there should have been a report indicating that the person who received the summons in Ang Ping's behalf was one with whom petitioner had a relation of confidence that would ensure that the latter will receive or be notified of the summons issued in his name. Certainly, it was never intended that the presumption of regularity in the performance of official duty will be applied even in cases where there is no showing of substantial compliance with the requirements of the rules of procedure. This is all the more so in the present case where the duty to be performed has a direct bearing on the acquisition of jurisdiction of the trial court over the person of the defendant. As regards the alleged appearance of a lawyer in behalf of the petitioner during the proceedings in the trial court, the same cannot be considered as the voluntary appearance contemplated by the rules. In the first place, the records are bereft of any showing that petitioner Ang Ping personally appeared at any stage in the the proceedings of the trial court. Second, no document vesting authority in the lawyer who purportedly represented him appears on record. At the pre-trial, for instance, Atty. Sandoval who claimed to be the counsel for the defendants did not present any special power of attorney executed by the petitioner herein. The rules require that the party-litigant himself must appear for pre-trial but if he chooses to be represented thereat, he should grant a special power of attorney to his counsel or representative. Thus, Section 4 of Rule 18 of the 1997 Rules of Civil Procedure requires:
Sec. 4. Appearance of parties It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents.

Although the proceedings in the trial court were conducted under the old rules of civil procedure, the same procedural requirement applies to the case at bar since well settled is the rule that remedial rules have retroactive application. In any case, the aforecited new rule is merely a crystallization of a procedure long established by jurisprudence and practice.1wphi1.nt With respect to the appellate court's holding that because of petitioner's delay in filing the petition for annulment of judgment, he is deemed to have forfeited his opportunity to present his side, it is enough to say that where the ground invoked as basis for annulment of judgment is lack of jurisdiction, the petition may be filed anytime before it is barred by estoppel or laches, 8 neither of which obtains in the present case. As held by this Court before, it is the better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when to do so, manifest wrong or injustice would result. 9 All told, the judgment sought to be executed against Ang Ping was indeed rendered without jurisdiction as he was not properly served with summons and neither did he voluntarily
60

submit himself to the authority of the trial court. The essence of due process is to be found in the reasonable opportunity to be heard and submit any evidence one may have in support of his defense. 10 It is elementary that before a person can be deprived of his property, he should first be informed of the claim against him and the theory on which such claim is premised. 11 Not having been duly accorded his day in court, petitioner cannot thus be bound by the judgment in the collection suit. WHEREFORE, the instant petition is hereby GRANTED and the decision of the Court of Appeals is REVERSED. Accordingly, the decision of the Regional Trial Court in Civil Case No. 18843 is SET ASIDE as to herein petitioner Ang Ping. No costs. SO ORDERED. Vitug, Panganiban and Purisima, JJ., concur. Gonzaga-Reyes, J., took no part. Footnotes
1 Rollo, pp. 39-57. 2 Ibid, p. 59. 3 Ibid, pp. 71-72. 4 Ibid, pp. 82-100. 5 Avon Incsurance PLC vs. CA, 278 SCRA 312 (1997). 6 Keister vs. Navarro, 77 SCRA 209 (1977). 7 Id. 8 Sec. 3, Rule 47, 1997 Rules of Civil Procedure. 9 Santiago vs. Court of Appeals, 278 SCRA 98 (1997). 10 Salonga vs. Court of Appeals, 269 SCRA 534 (1997). 11 Republic vs. Sandiganbayan, 266 SCRA 515 (1997).

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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 112905 February 3, 2000

THE HEIRS OF PEDRO LOPEZ, EUGENIO LOPEZ DE LEON, PASCUAL LOPEZ DE LEON, ANTONIO GUICO LOPEZ, FORTUNATO GUICO LOPEZ, MIGUEL GUICO LOPEZ, ERLINDA LOCERO LOPEZ, TING LOPEZ DE LEON, RUFINA LAYAO LOPEZ, LUISITA LOPEZ DE LEON, MACARIO LOPEZ DE LEON, FELISA LOPEZ DE LEON, PRINTIS L. DE LEON, FLOVIANA LOPEZ VELASCO, LOURDES LOPEZ DE LEON, LAGRIMAS LOPEZ DE LEON, ROSARIO LOPEZ DE LEON, RESURRECCION LOPEZ DE LEON and RICARDA LOPEZ DE LEON, petitioners, vs. HONESTO C. DE CASTRO, MARIA SOCORRO DE CASTRO married to ANTONIO PERIGRINA, FRANCISCO DE CASTRO, FAUSTINO DE CASTRO, EPIFANIA C. VDA. DE CASTRO, and their successors-in- interest, respondents. YNARES-SANTIAGO, J.: In this case, the two applications for registration of the same parcel of land were filed twelve years apart in different branches of the same Court of First Instance, but a certificate of title was issued in one case while the other is still pending appeal. The applicants in the earlier case are now before this Court on a petition for review on certiorari. They assert that the decision ordering the issuance of a decree of registration in their favor, while promulgated subsequent to the issuance of the certificate of title in the names of the second applicants, should be "executed" and that the certificate of title issued to the latter should be nullified.1wphi1.nt The facts of the case are as follows: On July 25, 1956, Pedro Lopez, et al. filed an application for the registration of a 69-hectare parcel of land in Tagaytay City with the Court of First Instance of Cavite, Branch III under Land Registration Case No. 299 and LRC Record No. 11617. On January 29, 1957, the court issued an order of general default, excepting only the Director of Lands. On June 24, 1957, Assistant Fiscal Jose M. Legaspi, representing the Municipality of Silang, Cavite, filed a motion to lift the order of general default and submitted an opposition on behalf of the municipality. The opposition was later amended on September 16, 1966 alleging that a portion of the land applied for which the municipality had leased to private persons had been its patrimonial property since 1930 or earlier. The municipality further alleged that in a registration case entitled "Mariano Lopez de Leon v. Municipality of Silang" (CA-G.R. No. 8161-R), the Court of Appeals found that the applicants had never been in possession of the land sought to be registered.
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In its answer to the amended opposition, the applicants claimed that a part of the whole tract of land they sought to register was their inheritance, which includes Lot No. 2 of plan PSU-51901 with an area of 119 hectares. However, it had to be excluded in the application for registration of the 69-hectare land in Cavite upon the recommendation of the Chief Surveyor of the General Land Registration Office because it is located in the province of Laguna. Similarly, Lot No. 1 of PSU-51901 that lies within Tagaytay City had been excluded from the registration proceedings under G.L.RO. Rec. No. 53498 or Land Registration Case No. 2201 in the Court of First Instance of Laguna.1 Nevertheless, the municipality filed a motion to dismiss the application for original registration of Lot No. 1 on the ground of res judicata. The applicants, on the other hand, contended that the principle of res jucidata is not applicable because the subject matter of CA-G.R. No. 8161-R (Mariano Lopez de Leon v. Municipality of Silang) was Lot No. 2 or the portion of the land in Laguna. On February 7, 1969, the lower court issued an order denying the motion to dismiss for lack of merit on the ground that the oppositor municipality had no personality to intervene considering that Lot No. 1 was outside of its territorial limits. The lower court held: . . . . Even if said land was communal property of the Municipality of Silang, by virtue of its incorporation into (the) city of Tagaytay it became the property of the latter. Hence, the Municipality of Silang has no personality to appear in this ( sic) proceedings. If any right of action exists, it accrues in favor of the City of Tagaytay and the same should be pursued by the said city.2 The oppositor municipality filed a motion for reconsideration of the said order. On July 23, 1970, the court issued an order stating that "in order not to impede whatever action the movant" might take against the order of February 7, 1969, said motion should be denied. On January 12, 1971, the applicants filed a motion praying that the clerk of court be commissioned to receive evidence for them it appearing that the order of July 23, 1970 had become final and executory "by virtue of which the Municipality of Silang no longer ha(d) any personality to appear in these proceedings."3 The court granted said motion and directed the clerk of court to submit a report on the matter. In his report dated April 15, 1971, Clerk of Court Rolando D. Diaz stated that since time immemorial, Micaela, Fernando, Ciriaco and Catalino, all surnamed De los Reyes, owned and possessed the parcel of land in question. On November 3, 1870, they sold the land to Ambrocio Carrillo Trinidad and Francisco Dimaranan. On September 15, 1892, the property passed in ownership to Pedro Lopez de Leon, Sr. and Maxima Carrillo Trinidad, the daughter and sole heir of Ambrocio Carrillo Trinidad. Pedro and Maxima remained in possession of the property until their death when their children, applicants Pedro Lopez, Mariano Lopez de Leon, Pastor Lopez de Leon, Eulogio Lopez, Clara Lopez, Ricarda Lopez and Rosario Lopez took over ownership and possession thereof. Upon their death, their respective heirs succeeded over the property and, on February 25, 1971, they partitioned it. The agricultural property was under the supervision of Domingo Opea who planted portions thereof to rice and other agricultural products.

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The clerk of court thus recommended that the court confirm its order of general default, approve his report, and register the property in the names of the applicants in accordance with the extrajudicial partition of the property.4 On April 19, 1971, the court5 accordingly rendered a decision approving the report of the clerk of court and ordering that once the decision becomes final, the corresponding decree of registration of title be issued in favor of the applicants.6 The oppositor Municipality of Silang interposed an appeal from the said decision of the land registration court to the Court of Appeals. On May 2, 1979, the Court of Appeals rendered a Decision7 dismissing the appeal "for lack of personality of the oppositor-appellant Municipality of Silang to interfere in the registration proceedings below." 8 Undaunted, the oppositor municipality filed with this Court a petition for review on certiorari docketed as G.R. No. 51054 (Municipality of Silang v. Court of Appeals) which was denied on September 19, 1979. The municipality's motion for reconsideration was likewise denied with finality for lack of merit on October 24, 1979.9 On November 9, 1979, judgment was entered in the said case.10 Meanwhile, in the course of examining the records for the purpose of issuing the decree of registration in favor of Pedro Lopez, et al., the Land Registration Commission discovered that Lot No. 1, plan Psu-51901 had been decreed in favor of private respondents Honesto de Castro, et al.11 Further investigation revealed that sometime in 1967,12 Honesto de Castro, et al. filed before the Court of First Instance of Cavite, Branch IV in Tagaytay City, an application for the registration of the same parcel of land under Land Registration Case No. TG-95 and LRC Rec. No. N-33292. The case was called for hearing on March 18, 1968. Eight (8) days later or on March 26, 1968, the court13 promulgated a decision adjudicating the land located at Barrio Iruhin, Tagaytay City, more particularly described as Plan Psu-51901-Amd., in favor of said applicants and directing that upon the finality of the decision, the corresponding decree of registration be issued.14 The ruling of the court was based on its finding that one Hermogenes Orte, who originally owned the land sought to be registered, sold it in 1932 to Marciano de Castro. The deed evidencing said sale was destroyed during the Japanese occupation. De Castro continued possession of the land until his death on April 26, 1940. His wife Epifania and their children named Maria Socorro, Francisco, Honesto, Romualdo, Felicitacion, Faustino and Felixberto continued possession of the property who declared the land for assessment and taxation purposes in Cabuyao, Laguna. However, upon learning that the property lies in Tagaytay City, the applicants declared it in their names in said city. The cause of the conflicting claims over the same land was never explained because the head of the geodetic engineers of the Land Registration Commission did not appear in court in Land Registration Case No. 299. Hence, on August 19, 1981, the CFI of Cavite, Branch III15 issued an order declaring that the court had lost jurisdiction to hear the case, without, however, dismissing the case. Seven (7) years later, or on June 28, 1988, the heirs of Pedro Lopez, et al. filed a complaint "for execution of judgment and cancellation of land titles of the defendants and their successors-in-interest" before the Regional Trial Court of Cavite, Branch 18, at Tagaytay
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City. Docketed as Civil Case No. TG-1028, the complaint named as defendants Honesto C. de Castro, Maria Socorro de Castro married to Antonio Perigrina, Francisco de Castro "widow", Faustino de Castro, Felixberto de Castro, Epifania C. Vda. de Castro and their successors-in-interest. The complaint alleged the facts pertinent to enforce the judgment of April 19, 1971. The plaintiffs, petitioners herein, alleged further that, upon the filing of their application for registration with the CFI of Cavite, Branch III at Cavite City, said court acquired jurisdiction over the res because land registration proceedings are in rem and therefore, the CFI of Cavite, Branch IV at Tagaytay City could not have acquired jurisdiction over the same res by virtue of De Castros' application for registration. They claimed that no less than this Court had recognized the jurisdiction of Branch III in Cavite City when it passed upon the correctness of the lower court's ruling in favor of Pedro Lopez, et al. Contending that the decision of Branch III on April 19, 1971 declaring that title to the land belonged to Pedro Lopez, et al. had become final and executory on June 18, 1980, they asserted that they were the lawful owners of the land. However, they had been unduly deprived ownership and possession thereof on account of its "wrongful registration" in the name of the defendants "by means of fraud and misrepresentation." As a result of their undue deprivation of ownership, possession and enjoyment of the property notwithstanding that the question of ownership had been settled in their favor, plaintiffs claimed that they suffered actual and moral damages. Claiming that the judgment sought to be executed had not been barred by the statute of limitations, they prayed as follows: WHEREFORE, plaintiffs pray for the judgment to effect: 1. Execution of judgment of the decision of the then Court of First Instance (CFI) Branch III, Cavite, dated April 19, 1971 by the Hon. Judge Alfredo Catolico which became final on June 18, 1980; 2. Ordering the National Land Titles and Deeds Registration Administration and the Register of Deeds of Tagaytay City to cancel the titles of the land in question under the names of the defendants and their successors in interest and that new title to the same parcel of land be issued to plaintiffs; 3. Ordering all the occupants of the questioned land to vacate the premises and deliver possession thereof to the plaintiffs; 4. Ordering the defendants and/or their successors in interest to pay plaintiffs or its (sic) heirs and/or successors in interest actual damages (in) the amount of P200,000.00 or the amount that may be proven during the hearing and trial of this case; 5. Ordering the defendants and/or their successors in interest to pay plaintiffs the sum of P200,000.00 for and as attorney's fees; 6. To pay plaintiffs exemplary damages in the amount of P100,000.00 or the sum that may be proven during the trial; 7. Ordering the defendants to pay the costs of suit.
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Plaintiffs further pray for such other reliefs just and proper under the premises. 16 In their answer with compulsory counterclaim, the defendants interposed the defenses of prescription, laches and/or estoppel and failure to state a cause of action. They averred that they were no longer the owners of the property as it had been sold "absolutely and unconditionally to innocent third parties for valuable consideration and in good faith." They contended that in view of the indefeasibility of their title to the property, even the title of their successors-in-interest can not be subject to collateral attack. They claimed that Branch III of the CFI in Cavite should have "remanded" the records of LRC Case No. 299 or LRC Record No. 11617 to the same CFI branch in Tagaytay City to which the "legal and proper jurisdiction to hear and decide that particular case belonged." They asserted that the complaint should have been directed by the plaintiffs against the Assurance Fund under the provisions of P.D. No. 1529. Alleging that the "very precipitate and wrongful suit" caused them mental anguish, serious anxiety, social humiliation and similar injury, they claimed moral damages of P500,000.00, nominal damages of P100,000.00 and attorney's fees of P300,000.00. On May 21, 1990, the RTC of Cavite, Branch 18 in Tagaytay City17 rendered the decision in Civil Case No. TG-1028 dismissing the complaint for being "improper and premature". The court likewise dismissed the defendants' counterclaims for "their dearth of sufficient legal, factual and evidentiary support."18 The lower court held that the decision of Branch III that became final on June 18, 1980, could not be enforced against defendants considering that they were not parties in LRC Record No. 11617. Neither could it order the cancellation of the titles issued to defendants because the LRC and/or the Register of Deeds of Tagaytay City had not been impleaded as parties to the case and therefore the court did not acquire jurisdiction over them. The lower court held further that because the case was covered by Act No. 496 and/or P.D. No. 1529 which are special laws, Section 6, Rule 39 of the Rules of Court on execution of judgment by independent action cannot be invoked. The court also ruled that: Treating the second issue raised by plaintiffs, the then Court of First Instance of Cavite, Branch IV, or this Court, validly acquired jurisdiction over the case filed by defendants Honesto de Castro, et al., in LRC Case No. TG 95. The records show that herein defendants as petitioner(s) in that case, complied with all the jurisdictional requirements of law, conferring jurisdiction upon this Court to try that case and lent validly (sic) upon its proceedings. As admitted by the plaintiffs themselves, this Court was not aware of the existence of LRC Record No. 11617, pending before the other Branch of this Court, in the same manner that they, or the plaintiffs themselves, did not also know the existence of LRC Case No. TG 95 before this Court. This Court is assured that good faith pervaded among the parties concerned, in the conduct of its proceedings, all procedural requirements having been punctiliously complied with and no irregularity or breach of law having been committed. So that the decision rendered by this Court in that case is valid and subsisting, for all intents and purposes and can be nullified only under circumstances and through procedures mandated by law. Hence, the corresponding decree of registration issued in TG-95 and the original certificates of titles issued to defendants in consequence thereof, are all valid and binding until declared otherwise, in a case directly assailing their validity,
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and of course, by a competent court. And by express provision of law, the same are insulated from any collateral attack.19 The court concluded that the complaint was in the nature of a collateral attack on the validity of the certificate of title issued in favor of the defendants and their successors-ininterest because, "(b)y its caption and averments, the validity of the title in question, is not directly assailed." Petitioners filed a motion for reconsideration of said decision, which was denied on May 29, 1991. It reiterated that the plaintiffs' failure to implead the Administrator of the NLRDRA, the Register of Deeds of Tagaytay City and the possessors of the property in question was a fatal procedural error because they were indispensable parties over which the court should acquire jurisdiction. Their inclusion as defendants in the case was necessary in order that their title to the property could be directly attacked. Petitioners should have availed of the remedy provided by Section 32 of P.D. No. 1529 and their failure to observe that law was a "colossal error" because once issued, a certificate of title becomes indefeasible, "completely insulated from any form of collateral attack assailing its validity." 20 Petitioners sought recourse before the Court of Appeals, dismissed the appeal on November 29, 1993.21 Stressing the indefeasibility of title under the Torrens System of land registration, the Court of Appeals echoed the lower court's ruling that the decree of registration in favor of respondents cannot be reopened or set aside in a "collateral proceeding such as the one in the case at bar which has for its objective the execution of a judgment which apparently has become dormant, thus appellants' insistence that it be revived." Citing Article 1544 of the Civil Code on sale of property to different vendees which it opined had a "persuasive influence" in the resolution of the appeal, it held that "in case land has been registered in the name of two different persons, the earlier in date (of registration) shall prevail." Nonetheless, emphasizing that the land in question has been transferred to a third person, the Court of Appeals ruled that the title issued in favor of respondents should be "maintained in their status quo, until the proper court shall have determined their priorities, and the equities resulting therefrom."22 Consequently, petitioners filed the instant petition for review on certiorari under Rule 45 of the Rules of Court, raising the following assignment of errors: 1. THE RESPONDENT COURT OF APPEALS COMMITTED A SERIOUS REVERSIBLE ERROR WHEN IT FAILED TO RULE ON THE VITAL AND PIVOTAL ISSUE THAT THE TRIAL COURT (CFI TAGAYTAY CITY, BRANCH IV), HAS NO JURISDICTION OVER THE SUBSEQUENT LAND REGISTRATION CASE FILED BY THE APPLICANTS BELOW, PRIVATE RESPONDENTS HEREIN, AND IN DECREEING THE REGISTRATION OF TITLE OVER THE SAID LOTS WHICH WERE ALREADY PREVIOUSLY THE SUBJECT OF REGISTRATION PROCEEDINGS BY ANOTHER COURT (CFI CAVITE, BRANCH III) IN A PREVIOUS LAND REGISTRATION CASE IN FAVOR OF THE PETITIONERS HEREIN WHICH WAS SUSTAINED BY THE COURT OF APPEALS AND EVEN BY THIS HONORABLE COURT. 2. THE RESPONDENT COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR WHEN IT LIKEWISE FAILED TO RESOLVE THE ISSUE OF THE PROPRIETY OF THE INSTANT ACTION FILED BY THE PETITIONERS FOR EXECUTION OF
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JUDGMENT OF CFI BRANCH III, WHICH IS EQUIVALENT TO A REVIVAL OF THE JUDGMENT. 3. THE RESPONDENT COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN MERELY RELYING ON THE DOCTRINE OF INDEFEASIBILITY OF TITLE, COLLATERAL ATTACK ON THE RESPONDENTS' TITLES, AND PRIORITY IN THE REGISTRATION AND ISSUANCE OF THE TITLES IN FAVOR OF THE RESPONDENTS, WHICH RELIANCE ARE MISPLACED AND UNAVAILING IN VIEW OF THE LACK OF JURISDICTION OF THE LOWER COURT TO TAKE COGNIZANCE OF THE LAND REGISTRATION CASE FILED BY THE PRIVATE RESPONDENTS AND TO ISSUE THE DECREE OF REGISTRATION. 4. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE PETITIONERS CANNOT DIVEST PRIVATE RESPONDENTS OF THE DISPUTED LOTS BY FILING THE INSTANT ACTION FOR EXECUTION OF JUDGMENT AND ASSAILING THE VALIDITY OF RESPONDENTS' TITLES. 5. THE RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT THE PETITIONERS ARE RIGHTFULLY AND LEGALLY ENTITLED TO THE LOTS IN QUESTION. In all cases where the authority to proceed is conferred by a statute and the manner of obtaining jurisdiction is mandatory, the same must be strictly compiled with, or the proceedings will be utterly void.23 When petitioners applied for the registration of Lot No. 1 before the CFI in Cavite City in 1956, the governing law then as regards the matter of jurisdiction was the Judiciary Act of 1948 or Republic Act No. 296. Section 52 of that law providing for the permanent stations of district judges or judges of Courts of First Instance stated that for the Seventh Judicial District that included the province of Cavite, there would be two judges in Cavite City. 24 The law did not create other branches of the CFI in the province of Cavite outside of the City of Cavite. It was on June 22, 1963 when Republic Act No. 3749 took effect that a CFI branch in Tagaytay City was set up.25 That amendment to Republic Act No. 296 provided that four judges would preside "over the Courts of First Instance of the Province of Cavite and the Cities of Cavite, Tagaytay and Trece Martires" who would be "judges of the first, second, third and fourth branches" of that court. Because the rule has always been that court having territorial jurisdiction over the property should take cognizance of its registration, 26 upon the creation of the Tagaytay City branch, petitioners' application for registration should have been transferred to that court inasmuch as the property involved is located in that city. It appears, however, that the Cavite City branch remained the venue of petitioners' application for registration, apparently on account of the following provision of Rep. Act No. 3749: Sec. 6. Wherever an additional branch or branches of the Court of First Instance is or are established in this Act in the same place where there is an existing court or

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courts of first instance, all cases already filed in the latter court or courts shall be heard, tried and decided by such latter court or courts. Notably, the law is not clear on whether or not the phrase "in the same place" refers to the judicial district/province or the place where a branch of the court is stationed. Hence, considering the general rule that once a court acquires jurisdiction over a case it remains with that court until its full termination,27 the phrase "in the same place" should be interpreted as referring to the province of Cavite. The Cavite City branch of the CFI of Cavite thus correctly retained jurisdiction over the application for registration because there was no jurisdictional question involved in the proceedings in Land Registration Case No. 299. What was in question was whether the Cavite City branch of the Cavite CFI was the proper venue for said case upon the creation of the Tagaytay City branch. As this Court said: Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon a court which otherwise would have no jurisdiction over the subject-matter of an action; but the venue of an action as fixed by statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the wrong county may be waived by the failure of the defendant to make a timely objection. In either case, the court may render a valid judgment. Rules as to jurisdiction can never be left to the consent or agreement of the parties, whether or not a prohibition exists against their alteration.28 Venue is procedural, not jurisdictional, and hence may be waived. It is meant to provide convenience to the parties, rather than restrict their access to the courts as it relates to the place of trial.29 Thus, the last paragraph of Section 51 of Rep. Act No. 296 provided that in land registration cases, the Secretary of Justice, who was then tasked with the administration and supervision of all courts, may transfer land registration courts "to any other place more convenient to the parties." This implied that Land Registration Case No. 299 could be retained in the Cavite City branch of the CFI if it would be convenient to the applicants who had been used to transacting business with that branch; the case did not have to be transferred to be transferred to Tagaytay City. Parenthetically, Circular No. 46 dated July 3, 1963 that then Secretary of Justice Juan R. Liwag addressed to all CFI judges and clerks of court in line with the enforcement of Rep. Act No. 3947, merely quotes Section 6 thereof. Said circular does not elucidate on whether cases should be transferred to the branches that had territorial jurisdiction over them. Petitioners' claim that this Court had "sustained" the jurisdiction of the Cavite City branch of the CFI over Land Registration Case No. 299 in G.R. No. 51054 is incorrect. To be sure, the principal issue raised in the petition for review on certiorari in G.R. No. 51054 was the personality of the Municipality of Silang to file an opposition to the application for land registration. While this Court upheld the lower court's ruling on that issue, such affirmance in no way implied that the issue of jurisdiction was likewise resolved. It is only now that the same issue is brought to light for resolution. As regards the jurisdiction of the Tagaytay City branch over the land registration proceedings instituted by private respondents, the order of general default issued in Land Registration Case No. 299 is of relevance. When the Cavite City branch of the CFI issued an order of default, it is presumed to have regularly performed its task in accordance with
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law especially with regard to notice requirements. Act No. 496 provided that after the court shall have set the application for initial hearing the following procedure should be observed: Sec. 31. Upon receipt of the order of the court setting the time for initial hearing of the application from the clerk of the Court of First Instance, the Chief of the General Land Registration Office shall cause a notice thereof to be published twice, in successive issues of the Official Gazette, in the English language. The notice shall be issued by order of the court, attested by the Chief of the General Land Registration Office, and shall be in form substantially as follows: . . . . 30 The general order of default of January 29, 1957 stated as follows: It appearing from the certificate of the Chief of the General Land Registration Office and the return of the Sheriff, attached to the record of this case, that the time notice relative to the application in said case was duly published, posted, and served in accordance with law; and that the time allowed for entering appearance and filing answers expired at 9:30 A.M. on the 29th day of January, 1957, for which date said case was duly set for hearing by the Court; And it further appearing from said record that no person has appeared as respondent in the case filed an answer within the time for that purpose allowed, with the exception of the Director of Lands represented by Asst. Provincial Fiscal Jose M. Legaspi; All persons, except those herein above named, are hereby declared to be in default in the above-entitled case, and it is ordered that a general default be recorded in said case, and that the application therein be taken as confessed by all the world, except the persons hereinabove named. It is so ordered.31 On January 24, 1957, the Municipality of Silang filed a motion to lift said general order of default and to admit its opposition to the registration.32 This fact supports the presumption that the officials concerned performed their duties regularly because it implies notice, whether actual or constructive, on the part of said municipality that a land registration proceedings had been filed with respect to Lot No. 1. Compliance with the requirement of notice and publication had the effect of notifying all persons interested in the proceedings including the herein private respondents. As this Court said in Aguilar v. Caoagdan: . . . it is true that appellants were not personally notified of the pendency of the present registration case even if they were actually occupying, as they claim, portions of the land, but such procedural defect cannot affect the jurisdiction of the court because registration proceedings have the nature of actions in rem. . . . .33 A proceeding in rem, such as land registration proceedings, requires constructive seizure of the land as against all persons, including the state, who have rights to or interests in the property.34 Constructive seizure of the land for registration is effected through publication of
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the application for registration and service of notice to affected parties. 35 Consequently, when private respondents filed their own application for registration of the same parcel of land, strictly speaking, the Tagaytay City branch could no longer entertain the application for registration as the res involved had been constructively seized by the Cavite City branch of the same court. In hindsight, this complication of two applications for registration having been filed for one and the same tract of land could have been avoided had Land Registration Case No. 299 been transferred to the Tagaytay City branch of the same court where it rightfully belonged, upon the effectivity of Rep. Act No. 3947. Be that as it may, the Court is not persuaded that the registration proceedings instituted by private respondents should be nullified by reason of the fact that the Cavite City branch of the same court was already proceeding with another registration case for the same piece of land. In land registration proceedings, all interested parties are obliged to take care of their interests and to zealously pursue their objective of registration on account of the rule that whoever first acquires title to a piece of land shall prevail. To illustrate, where more than one certificate of title is issued over the land, the person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate. 36 It should be stressed that said rule refers to the date of the certificate of title and not to the date of filing of the application for registration of title. Hence, even though an applicant precedes another, he may not be deemed to have priority of right to register title. As such, while his application is being processed, an applicant is duty-bound to observe vigilance and to take care that his right or interest is duly protected. Petitioners failed to exercise the due diligence required of them as applicants for land registration. In the same way that publication of their application for registration was supposed to have rendered private respondents on constructive notice of such application, the publication of notice in the land registration proceedings initiated by private respondents had the same effect of notice upon petitioners. Petitioners were thus presumed to have been notified of the land registration proceedings filed by private respondents in the Tagaytay City branch of the Cavite CFI thereby providing them with the opportunity to file an opposition thereto. The fact that an interlocutory matter in Land Registration Case No. 299 had to be resolved by both the Court of Appeals and this Court did not in any way mean that petitioners should no longer exercise due diligence to protect their right or interest in the said proceedings. On the contrary, they were bound to exercise such diligence with vigor especially because as early as April 19, 1971, they already had a judgment in their favor. The record does not show why petitioners did not have actual knowledge of the registration proceedings instituted by private respondents. However, the lack of such knowledge in fact raises a doubt as to the veracity of their claim that they were in possession of the land. If indeed they possessed the property, even if through an administrator, as diligent owners, the threat to their ownership could not have escaped them considering that the property is in a rural community where news travels fast. Even granting that petitioners did not really have actual knowledge of private respondents' application for registration, yet after discovering that the land was already registered in the name of private respondents, petitioners should have immediately sought recourse in law to
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protect their rights. As it turned out, they let almost seven (7) years to pass from such discovery before they acted to revive what already was a dormant judgment. Hence, they filed the separate action "for execution of judgment and cancellation of titles" of private respondents because more than five (5) years had elapsed since the promulgation of the decision directing the issuance of a decree of registration.37 Under these circumstances, the inevitable conclusion is that petitioners neglected for an unreasonable and unexplained length of time to do that which, by exercising due diligence, they could or should have done earlier. They neglected or omitted to assert a right within a reasonable time, warranting the presumption that they either had abandoned or declined to assert it.38 In short, they were guilty of laches. The doctrine of stale demands or laches is based on grounds of policy which requires, for the peace of society, the discouragement of stale claims and is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted. 39 Land registration proceedings entails a race against time and non-observance of time constraints imposed by law exposes an applicant to the loss of registration rights if not to the deleterious effects of the application of the doctrine of laches. An applicant for registration has but a one-year period from the issuance of the decree of registration in favor of another applicant, within which to question the validity of the certificate of title issued pursuant to such decree. Once the one-year period has lapsed, the title to the land becomes indefeasible. While the law grants the aggrieved applicant certain remedial measures, these are designed to make up for his failure to register his title to the property and not necessarily to restore ownership and/or title that he had allowed by inaction to be vested in another person. In Javier v. Court of Appeals,40 the Court set out these remedies as follows: . . . . The basic rule is that after the lapse of one (1) year, a decree of registration is no longer open to review or attack although its issuance is attended with actual fraud. This does not mean however that the aggrieved party is without a remedy at law. If the property has not yet passed to an innocent purchaser for value, an action for reconveyance is still available. The decree becomes incontrovertible and can no longer be reviewed after one (1) year from the date of the decree so that the only remedy of the landowner whose property has been wrongfully or erroneously registered in another's name is to bring an ordinary action in court for reconveyance, which is an action in personam and is always available as long as the property has not passed to an innocent third party for value. If the property has passed into the hands of an innocent purchaser for value, the remedy is an action for damages. . . . . In Spouses Eduarte v. Court of Appeals,41 the Court also said: . . . it has been held that the proper recourse of the true owner of the property who was prejudiced and fraudulently dispossessed of the same is to bring an action for damages against those who caused or employed the fraud, and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance Fund. In filing the action for execution of judgment and cancellation of titles, petitioners must have realized that only the remedy of filing an action for damages was available to them. Otherwise, they could have filed an action for reconveyance of the property. Of course, petitioners cleverly clothed their complaint as one for execution of judgment under the
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provisions of the Rules of Court. Clearly, such procedural strategy was a bid to revive the decision of the lower court ordering the issuance of a decree of registration in their names. In other words, petitioners availed of procedural remedies provided for by the Rules of Court as it appeared that because of the lapse of time, they would not benefit from remedies prescribed by land registration laws. The wrong appellation of petitioners' complaint shall not mislead this Court as, in the determination of the nature of a complaint, its averments rather than its title, are the proper gauges.42 A reading of the allegations of the complaint in Civil Case No. TG-1028 betrays petitioners' true intention in filing the case. In paragraph 15 of the complaint, petitioners alleged that they were '"unduly deprived of their ownership and lawful possession of the land . . . due to the wrongful registration of the subject land in the name of the defendants by means of fraud and misrepresentations." Except for this general statement, the issue of fraud or misrepresentation is not alleged with particularity in the complaint.43 This is unfortunate because, if filed within the time set by law, a complaint with the proper allegation of fraud coupled with proof thereof could cause the loss of the indefeasibility of private respondents' title to the property. It is established that if fraud attended the acquisition of title under the Torrens System, such title cannot be used as a means to perpetuate fraud against the rightful owner of real property. 44 We take note of petitioners' allegation in their reply memorandum that in the registration proceedings filed by private respondents, "what was published in the Official Gazette was the description of a bigger tract of land that includes the smaller lot actually applied for by respondents."45 That factual allegation could have had its impact before the trial court in an action for reconveyance on the ground of fraud in the acquisition of title but not before this Court where factual issues may no longer be raised. The inevitable conclusion therefore is that petitioners were cognizant all the while of the futility of their attempt to cancel the title of private respondents under the law. Hence, they indirectly and collaterally attacked the land title duly issued to private respondents on the theory that the revival of the dormant judgment in their favor could result in the realization of their objective of nullifying such title, However, aggrieved applicants for land registration cannot seek protection under the provisions of the Rules of Court which are merely suppletory to special laws governing land registration proceedings. The resolution of the instant petition cannot be complete without a word on the manner by which officials of the then Land Registration Commission ignored the lower court's order to explain the conflicting claims of ownership over the same property. Particularly, there is a need for an explanation why they caused the publication of the notice of hearing in private respondents' application for registration notwithstanding that the same office had already published the notice of hearing as regards petitioners' application for registration of the same parcel of land. It is within the power of these officials to determine whether or not the same parcel of land is the subject of two applications for registration. The indefeasibility of private respondents' title over the property should not get in the way of an administrative investigation of possible omission or neglect of official duty. This Court cannot let such malfeasance or misfeasance in office pass unnoticed lest the integrity of the Torrens System of land registration be undermined.

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WHEREFORE, the instant petition for review is DENIED, and the dismissal of Civil Case No. TG-1028 is AFFIRMED. Let a copy of this Decision be furnished the Department of Justice so that an investigation against officials who were responsible for the publication of two notices of hearing of an application for registration of the same parcel of land may be conducted and the guilty officials duly sanctioned.1wphi1.nt SO ORDERED. Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.

Footnotes
1

Rollo, p. 67. Ibid., p. 68.

Decision in CA-G.R. No. 49053- R. p. 4; Rollo of G.R. No. 51054 (Municipality of Silang v. Court of Appeals), p. 52.
4

Records, pp. 20-21. Presided by Judge Alfredo Catolico. Rollo, pp. 74-80.

Penned by Associate Justice Milagros A. German and concurred in by Associate Justices B.S. de la Fuente and Pedro D. Cenzon.
8

Rollo, pp. 66-71. Ibid., p. 73. Rollo of G.R. No. 51054, p. 102. Rollo, p. 19. Record, p. 83. Presided by Judge Jose C. Colayco. Rollo, pp. 82-84. Presided by Judge Hector C. Fule. Rollo, pp. 64-65. Presided by Judge Julieto P. Tabiolo.
74

10

11

12

13

14

15

16

17

18

Rollo, pp. 89-94. Ibid., p. 93. Ibid., pp. 95-97.

19

20

21

The Decision was penned by Associate Justice Quirino D. Abad Santos, Jr. and concurred in by Associate Justices Emeterio C. Cui and Alfredo J. Lagamon.
22

Rollo, pp. 105-106. Dordas v. Court of Appeals, 337 Phil. 59, 67 (1997). 44 O.G. 4757, 4775. 59 O.G. 8553. Aguilar v. Caoagdan, 105 Phil. 661, 665 (1959). Secretary of Health v. Court of Appeals, 311 Phil. 803, 812 (1995).

23

24

25

26

27

28

Santos III v. Northwest Orient Airlines, G.R. No. 101538, June 23, 1992, 210 SCRA 256, 265-266.
29

Philippine Banking Corporation v. Tensuan, G.R. No. 104649, February 28, 1994, 230 SCRA 413, 416-417.
30

As amended by Sec. 1 of Rep. Act No. 96 and Rep. Act No. 1151.

31

Record on Appeal in CA-G.R. No. 49053-R, pp. 10-11; Rollo of G.R. No. 51054, p. 76.
32

Ibid., p. 11; supra. Supra, at p. 666. Director of Lands v. Court of Appeals, 342 Phil. 239, 248 (1997). Republic v. Court of Appeals, 327 Phil. 852, 868 (1996).

33

34

35

36

Margolles v. Court of Appeals, G.R. No. 109490, February 14, 1994, 230 SCRA 97, 114.
37

Sec. 6, Rule 39 of the Rules of Court provided for the filing of an action to enforce a judgment after the lapse of the 5-year period.
38

Catholic Bishop of Balanga v. Court of Appeals, 332 Phil. 206, 218 (1996). Ibid., at pp. 219-220.
75

39

40

G.R. No. 101177, March 28, 1994, 231 SCRA 498, 504. 323 Phil. 462, 477 (1996). Heirs of Jacob v. Court of Appeals, 347 Phil. 752, 763 (1997).

41

42

43

In Heirs of Manuel A. Roxas V. Court of Appeals (337 Phil. 41, 52 [1997]), the Court held that there is "fraudulent concealment and misrepresentation in the application" for registration where it is alleged that "no other persons had any claim or interest in the said land."
44

Bornales v. Intermediate Appellate Court, G.R. No. 75336, October 18, 1988, 166 SCRA 516, 524-525.
45

Rollo, p. 186.

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Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. Nos. 115908-09 March 29, 1995 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. DANNY GODOY, accused-appellant. JUDGE EUSTAQUIO Z. GACOTT, JR. complainant, vs. MAURICIO REYNOSO, JR. and EVA P. PONCE DE LEON, respondents. RESOLUTION

REGALADO, J.: For separate resolution, as an incident arising from these criminal cases under automatic review by the court, is a complaint 1 filed by judge Eustaquio Z. Gacott, Jr. of the Regional Trial Court of Palawan and Puerto Princesa City, Branch 47, to cite for indirect contempt Mauricio Reynoso, Jr., a columnist, and Eva P. Ponce de Leon, publisher and chairman of the editorial board, respectively, of the Palawan Times. His Honor's plaint is based on an article written by respondent Reynoso, Jr. in his column, "On the Beat," and published in the July 20, 1994 issue of said newspaper which is of general circulation in Puerto Princesa City. The pertinent portions of the article complained of are hereunder reproduced, with the alleged contemptuous statements italicized for ready identification as the particulars equivalent to the innuendo in a libel charge:
Isang maalab na issues (sic) pa ay ang DEATH THREATS laban kono kay Judge Eustaquio Gacott, Jr. ng mga pamilya ng kanyang sinentensiyahan ng Double Death Penalty. Sinabi ni Wilmar Godoy sa DWRM programa na wala silang pagbabantang ginawa umano, at hindi nila ito kailan man isinaisip. Umaasa na lamang sila sa magiging resulta ng review ng Korte Suprema. Ayon naman kay Gacott sa kanyang interview sa DYPR ay totoong pinagbabantaan siya ng mga Godoy. Kaya ayon marami siyang Security na armado, in full battle gear. Kung totoo ito, bakit hindi niya kasuhan ang mga ito? Ito rin ang katanungan ni Mr. Tony Omaga Diaz, ang station manager ng DYPR. O bale ba gumawa siya ng sariling MULTO Pagkatapos ay takot na takot siya sa multong kanyang ginawa .

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Usap-usapan pa rin ang kaso ni Godoy. Ito raw ay isang open book maging sa kanyang mga co-teachers sa Pulot na nagli-live in si Godoy at ang babaing si Mia Taha. Matagal na ang kanilang ugnayan. Meron ding "balita" ewan kung totoo, na noong si Godoy daw ay nasa Provincial Jail pa ay dinadalaw siya ni Taha At kumakain pa sila sa labas kasama ang isang Provincial Guard. Ito rin ang dahilan kung bakit ipinagpilitan ni Judge Gacott na madala kaagad sa Muntinlupa sa National Bilibid Prisons si Godoy kahit na ang kaso ay naka-apela pa. xxx xxx xxx Pero mayroon payo si Atty. Telesforo Paredes, Jr. sa mga mamamayan ng Palawan, magingat kayo sa paglalakad at baka kung hindi kayo madapa ay madulas daw kayo. Dahil ayon daw kay Judge Gacott, base sa kanyang interview sa Magandang Gabi Bayan, "Tagilid na raw and mundo. Maraming nagpapatunay daw dito, maski sa kapitolyo." Joke lang. Pero isang warning din sa may mga nobya, na mag-ingat sa pag-break sa inyong girlfriend, dahil baka mademanda kayo at masentensyahan ng double death penalty, lalo na kung kay Judge Gacott, dahil alam na ninyo, tagilid and laban diyan.

The complaint avers that the article tends to impede, obstruct, belittle, downgrade and degrade the administration of justice; that the article contains averments which are disrespectful, discourteous, insulting, offensive and derogatory; that it does not only cast aspersions on the integrity and honesty of complainant as a judge and on his ability to administer justice objectively and impartially, but is an imputation that he is biased and he prejudges the cases filed before him; and that the article is sub judice because it is still pending automatic review. Respondent Mauricio Reynoso, Jr. contends in his Comment 2 that his article does not intend to impede nor obstruct the administration of justice because the same was published after complainant had promulgated his decision in the case; that such publication will not affect or influence the review by the Supreme Court of the criminal case, considering that the Palawan Times is circulated only in the City of Puerto Princess and some parts of Palawan; that the comments made therein were made in good faith and in the exercise of the freedom of expression and of the press; that while the article may contain unfavorable comments about complainant, it cannot be considered as having the tendency to degrade or impede the administration of justice; and that the complaint, which is for contempt of a judge of a regional trial court, was erroneously filed with the Supreme Court contrary to Section 4, Rule 71 of the rules of Court. Respondent Eva P. Ponce de Leon, in her Comment 3 and Supplemental Comment, 4 asserts that the article is merely in reaction to the television interview given by complainant in the show, "Magandang Gabi Bayan," last June 18, 1994 wherein the latter defended his decision in Criminal Cases Nos. 11640-41, entitled "People vs. Godoy;" that the article is no longer sub judice as the same was published only after complainant had rendered his decision and had already lost jurisdiction over the case; that the article cannot be considered contemptuous and defamatory in the absence of a clear and present danger that it will tend directly or indirectly to impede, obstruct, or ridicule the administration of justice; that it constitutes a valid exercise of the constitutionally guaranteed freedom of the press; that a reading of the subject article in its entirety will show that the same does not constitute contempt but, at most, is merely a fair criticism which did not intend to malign nor place him in disrepute in the performance of his functions; and that respondent Ponce de Leon cannot be held liable for contempt because she did not have either actual knowledge
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of, or Personal connection with, the authorship or publication of the allegedly contemptuous article, since she had just returned from the United States when the same was published. On the issue of whether the specified statements complained of are contumacious in nature, we are inclined, based on an overall perusal and objective analysis of the subject article, to hold in the negative. We have read and reread the article in its entirety and we are fully convinced that what is involved here is a situation wherein the alleged disparaging statements have been taken out of context. If the statements claimed to be contumelious had been read with contextual care, there would have been no reason for this contempt proceeding. In our aforestated evaluation, we were sufficiently persuaded to favorably consider the following explanation of respondent Ponce de Leon in her Supplemental Comment:
On the other hand, a reading of the subject article in its entirety will show that the same does not constitute contempt, but at most, merely constitutes fair criticism. The first portion of the article reads: "Isang maalab na issues (sic) pa ay ang DEATH THREATS laban kono kay Judge Eustaquio Gacott, Jr. ng mga pamilya ng kanyang sinentensiyahan ng Double Death Penalty. Sinabi ni Wilmar Godoy sa DWRM programa na wala silang pagbabantang ginawa umano, at hindi nila ito kailan man isinaisip. Ayon naman kay Gacott sa kanyang interview sa DYPR ay totoong pinagbabantaan siya ng mga Godoy. Kaya ayon marami siyang Security na armado, in full battle gear. Kung totoo ito, bakit hindi niya kasuhan ang mga ito? Ito rin ang katanungan ni Mr. Tony Omaga Diaz, ang station manager ng DYPR. O bale ba gumawa siya ng sariling MULTO Pagkatapos ay takot na takot siya sa multong kanyang ginawa." The foregoing does not even deal with the merits of the case, but with the public accusations being made by complainant that he is being given death threats by the family of the accused, Danny Godoy. The article only makes a justifiable query as to why Complainant does not file the appropriate charges if his accusations are true. "Usap-usapan pa rin ang kaso ni Godoy. Ito raw ay isang open book maging sa kanyang mga co-teachers sa Pulot na nagli-live in si Godoy at ang babaing si Mia Taha. Matagal na ang kanilang ugnayan. Meron ding balita ewan kung totoo, na noong si Godoy daw ay nasa Provincial Jail pa ay dinadalaw siya ni Taha At kumakain pa sila sa labas kasama ang isang Provincial Guard. Ito rin ang dahilan kung bakit ipinagpilitan ni Judge Gacott na madala kaagad sa Muntinlupa sa National Bilibid Prisons si Godoy kahit na ang kaso ay naka-apela pa." (Emphasis supplied) The foregoing is merely a report of rumors regarding the accused Danny Godoy. They are not presented as facts by respondent Mauricio Reynoso, Jr. In fact, he even goes to the extent of acknowledging that he himself does not know if the rumors are true or not. The subject article then offers the following analysis: "Malaking epekto ang desisyon ng Korte Suprema sa dalawang tao, kay Danny Godoy at Judge Gacott. Kung babaliktarin ng Supreme Court and decision ni Gacott, lalaya si Godoy, si Gacott naman ang masisira, ang kanyang aspirations na maitaas sa Court of Appeals at eventually makasama sa mga miyembro ng korte suprema ng bansa. Kung papaboran naman

79

Gacott ay sigurado na ang kamatayan ni Godoy, at double pa pero si Gacott maitataas pa ang puwesto. Tayo naman, hintay lamang tayo ng ano mang magiging developments ng kaso." The foregoing is nothing more than a fair analysis. For indeed, if the Honorable Court affirms the Decision of Complainant, the accused Danny Godoy would be meted the death sentence. On the other hand, if the decision is reversed, this may adversely affect the aspirations of Complainant to be promoted to the Court of Appeals, and eventually to the Honorable Court. Finally, the subject article reads: "Pero mayroon payo si Atty. Telesforo Paredes, Jr. sa mga mamamayan ng Palawan, mag-ingat kayo sa paglalakad at baka kung hindi kayo madapa ay madulas daw kayo. Dahil ayon daw kay Judge Gacott, base sa kanyang interview sa Magandang Gabi Bayan, 'Tagilid na raw and mundo. Maraming nagpapatunay daw dito, maski sa kapitolyo.' Joke lang. Pero isang warning din sa may mga nobya, na mag-ingat sa pag-break sa inyong girlfriend, dahil baka mademanda kayo at masentensyahan ng double death penalty, lalo na kung kay Judge Gacott, dahil alam na ninyo, tagilid and laban diyan." Again, the subject article merely reports what Atty. Telesforo Paredes, Jr. allegedly said. But more importantly, the foregoing is merely a reaction not so much to Complainant's Decision, but to the public statements made by Complainant in the national television show "Magandang Gabi Bayan."

Snide remarks or sarcastic innuendoes do not necessarily assume that level of contumely which is actionable under Rule 71 of the Rules of Court. Neither do we believe that the publication in question was intended to influence this Court for it could not conceivably be capable of doing so. The article has not transcended the legal limits for editorial comment and criticism. Besides, it has not been shown that there exists a substantive evil which is extremely serious and that the degree of its imminence is so exceptionally high as to warrant punishment for contempt and sufficient to disregard the constitutional guaranties of free speech and press. It has been insightfully explained and suggested that a judge will generally and wisely pass unnoticed any mere hasty and unguarded expression of passion, or at least pass it with simply a reproof. It is so that in every case where a judge decides for one party, he decides against another; and oftentimes both parties are beforehand equally confident and sanguine. The disappointment, therefore, is great, and it is not in human nature that there should be other than a bitter feeling, which often reaches to the judge as the cause of the supposed wrong. A judge, therefore, ought to be patient, and tolerate everything which appears as but the momentary outbreak of disappointment. A second thought will generally make a party ashamed of such, outbreak, and the dignity of the court will suffer none by passing it in silence. 5 Prescinding from the foregoing adjudgment, the Court observes that there are two primary issues presented in this incident which deserve a more extended disquisition, firstly, because of their importance and frequent involvement in contempt proceedings filed in the courts, and, secondly, by reason of the fact that there are numerous and variant pronouncements on the subject of contempt which need to be clarified. The principal issues are (1) whether or not there can be contempt of court in case of post-litigation statements or publications; and (2) which court has jurisdiction over a contempt committed against the
80

trial court while the case is pending on appeal. Other cognate and related issues must also be discussed so as to provide judicial guidance on the present state of our statutory and case laws thereon. Before we go into a more intensive analysis of said issues, however, it may be beneficial for purposes thereof to preliminarily revisit and expound on the nature and implications of a special civil action for contempt or of any initiatory pleading therefor filed as an incident in the main case. That exercise will further explain and justify our disposition of the contempt charge herein. I Prefatorial Considerations The exercise of the power to punish for contempt has a dual aspect, primarily, the proper punishment of the guilty party for his disrespect to the court, and, secondarily, his compulsory performance of some act or duty required of him by the court and which he refuses to perform. Due perhaps to this two fold aspect of the exercise of the power to punish them, contempts are classified as civil or criminal. 6 However, the line of demarcation between acts constituting criminal contempt, as distinguished from civil contempt, is quite indistinct. The confusion in attempts to classify civil and criminal contempts is due to the fact that there are contempts in which both elements appear; or there are contempts which are neither wholly civil nor altogether criminal, but partake of the characteristics of both; or it is also possible that the same act may constitute both a civil and criminal contempt. A. As to the Nature of the Offense A criminal contempt is conduct that is directed against the dignity and authority of the court or a judge acting judicially; it is an act obstructing the administration of justice which tends to bring the court into disrepute or disrespect. 7 On the other hand, civil contempt consists in failing to do something ordered to be done by a court in a civil action for the benefit of the opposing party therein and is, therefore, an offense against the party in whose behalf the violated order is made. 8 A criminal contempt, being directed against the dignity and authority of the court, is an offense against organized society and, in addition, is also held to be an offense against public justice which raises an issue between the public and the accused, and the proceedings to punish it are punitive. On the other hand, the proceedings to punish a civil contempt are remedial and for the purpose of the preservation of the right of private persons. It has been held that civil contempt is neither a felony nor a misdemeanor, but a power of the court. 9 It has further been stated that intent is a necessary element in criminal contempt, and that no one can be punished for a criminal contempt unless the evidence makes it clear that he intended to commit it. On the contrary, there is authority indicating that since the purpose of civil contempt proceedings is remedial, the defendant's intent in committing the contempt is immaterial. Hence, good faith or the absence of intent to violate the court's order is not a defense in civil contempt. 10

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B. As to the Purpose for which the Power is Exercised A major factor in determining whether a contempt is civil or criminal is the purpose for which the power is exercised. Where the primary purpose is to preserve the courts authority and to punish for disobedience of its orders, the contempt is criminal. Where the primary purpose is to provide a remedy for an injured suitor and to coerce compliance with an order, the contempt is civil. A criminal contempt involves no element of personal injury. It is directed against the power and dignity of the court; private parties have little, if any, interest in the proceedings for punishment. Conversely, if the contempt consists in the refusal of a person to do an act that the court has ordered him to do for the benefit or advantage of a party to an action pending before the court, and the contemnor is committed until he complies with the order, the commitment is in the nature of an execution to enforce the judgment of the court; the party in whose favor that judgment was rendered is the real party in interest in the proceedings. Civil contempt proceedings look only to the future. And it is said that in civil contempt proceedings, the contemnor must be in a position to purge himself. 11 C. As to the Character of the Contempt Proceeding It has been said that the real character of the proceedings is to be determined by the relief sought, or the dominant purpose, and the proceedings are to be regarded as criminal when the purpose is primarily punishment, and civil when the purpose is primarily compensatory or remedial. 12 Criminal contempt proceedings are generally held to be in the nature of criminal or quasicriminal actions. They are punitive in nature, and the Government, the courts, and the people are interested in their prosecution. Their purpose is to preserve the power and vindicate the authority and dignity of the court, and to punish for disobedience of its orders. Strictly speaking, however, they are not criminal proceedings or prosecutions, even though the contemptuous act involved is also a crime. The proceeding has been characterized as sui generis, partaking of some of the elements of both a civil and criminal proceeding, but really constituting neither. In general, criminal contempt proceedings should be conducted in accordance with the principles and rules applicable to criminal cases, in so far as such procedure is consistent with the summary nature of contempt proceedings. So it has been held that the strict rules that govern criminal prosecutions apply to a prosecution for criminal contempt, that the accused is to be afforded many of the protections provided in regular criminal cases, and that proceedings under statutes governing them are to be strictly construed. However, criminal proceedings are not required to take any particular form so long as the substantial rights of the accused are preserved. 13 Civil contempt proceedings are generally held to be remedial and civil in their nature; that is, they are proceedings for the enforcement of some duty, and essentially a remedy for coercing a person to do the thing required. As otherwise expressed, a proceeding for civil contempt is one instituted to preserve and enforce the rights of a private party to an action and to compel obedience to a judgment or decree intended to benefit such a party litigant. So a proceeding is one for civil contempt, regardless of its form, if the act charged is wholly the disobedience, by one party to a suit, of a special order made in behalf of the other party and the disobeyed order may still be obeyed, and the purpose of the punishment is to aid in an enforcement of obedience. The rules of procedure governing criminal contempt
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proceedings, or criminal prosecutions, ordinarily are inapplicable to civil contempt proceedings. It has been held that a proceeding for contempt to enforce a remedy in a civil action is a proceeding in that action. Accordingly, where there has been a violation of a court order in a civil action, it is not necessary to docket an independent action in contempt or proceed in an independent prosecution to enforce the order. It has been held, however, that while the proceeding is auxiliary to the main case in that it proceeds out of the original case, it is essentially a new and independent proceeding in that it involves new issues and must be initiated by the issuance and service of new process. 14 In general, civil contempt proceedings should be instituted by an aggrieved party, or his successor, or someone who has a pecuniary interest in the right to be protected. In criminal contempt proceedings, it is generally held that the State is the real prosecutor. 15 Contempt is not presumed. In proceedings for criminal contempt, the defendant is presumed innocent and the burden is on the prosecution to prove the charges beyond reasonable doubt. In proceedings for civil contempt, there is no presumption, although the burden of proof is on the complainant, and while the proof need not be beyond reasonable doubt, it must amount to more than a mere preponderance of evidence. It has been said that the burden of proof in a civil contempt proceeding lies somewhere between the criminal "reasonable doubt" burden and the civil "fair preponderance" burden. 16 On the basis of the foregoing legal principles which are now well settled, it can be safely concluded that under paragraph (d) of Section 3, Rule 71 of the Rules of Court on indirect contempt, any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice, constitutes criminal contempt. II Whether or not Post-Litigation Publications can be the Subject of Contempt Proceedings A. Effect of Freedom of Speech and Press Guaranties In the case of In re Sotto, 17 this Court had the opportunity to define the relation between the courts and the press, quoting there in the statements made by Judge Holmes in U.S. vs. Sullen, 18 thus:
The administration of justice and the freedom of the press, though separate and distinct, are equally sacred, and neither should be violated by the other. The press and the courts have correlative rights and duties and should cooperate uphold the principles of the Constitution and laws, from which the former receives its prerogative and the latter its jurisdiction. The right of legitimate publicity must be scrupulously recognized and care taken at all times to avoid impinging upon it. In a clear case where it is necessary in order to dispose of judicial business unhampered by publications which reasonably tend to impair the impartiality of verdicts, or otherwise obstruct the administration of justice, this Court will not hesitate to exercise its undoubted power to punish for contempt. This Court must be permitted to proceed with the disposition of its business in an orderly manner free from outside interference obstructive of its constitutional functions. This right will be insisted upon as vital to an impartial court, and, as a last resort, as an individual exercises the right of self-defense, it will act to preserve its existence as an unprejudiced tribunal.

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Hence, a person charged with contempt of court for making certain utterances or publishing writings which are clearly opprobrious may not, ordinarily, escape liability therefor by merely invoking the constitutional guaranties of freedom of speech and press. Liberty of speech and the press must not be confused with an abuse of such liberties. Obstructing, by means of the spoken or written word, the administration of justice by the courts has been described as an abuse of the liberty of speech or the press such as will subject the abuser to punishment for contempt of court. Guaranties of free speech and a free press, as they appear in the Constitution, are frequently couched so as to impute responsibility for any abuse of the privilege, and it is sometimes recognized that with respect to whether an allegedly scandalous publication or utterance is to be treated as a contempt, a line must be drawn between those speeches or writings which are protected by the privilege of free speech and a free press and those which constitute an abuse of it. The right of freedom of the press is only a specific instance of the general right of freedom of speech; persons engaged in the newspaper business cannot claim any other or greater right than that possessed by persons not in that business. 19 B. Different Doctrines or Schools of Thought In the case of In re Francisco Brillantes, 20 Justice Perfecto explained in his dissenting opinion that "as to whether contempt may be committed for criticizing a tribunal after the same has rendered decision or taken final action on a matter which is the subject of criticism, there are two schools of thought represented, respectively, by what we may call the English doctrine and the American doctrine, the first for the affirmative and the last one for the negative. The question now is to determine which of the two doctrines is more conformable to reason and justice and, therefore, should be, adopted and applied by our tribunals." 1. The English Doctrine According to Justice Perfecto, the rule in England is that there can be contempt of court even after the case has been terminated. He then proceeded to ramify:
In England comments upon the court's action in a concluded case, where libelous or calculated to bring the court into disrepute, were freely punishable as contempt under the early common law. Distinction between pending and concluded matters does not seem to have been made. Any comment impairing the dignity of the court was punishable as contempt regardless of the time at which made. xxx xxx xxx The whole theory of the early common law of contempt is admirably delivered by Wilmot, J., in King vs. Almon, . . . . The publication there complained of was a volume containing a diatribe against Lord Mansfield for allowing an amendment of pleading as of course, and apparently from corrupt motives, in a concluded case, and further charging him with having introduced a practice to defeat the efficacy of the writ of habeas corpus. It is there said: "The arraignment of the justice of the judges is arraigning the King's justice; it is an impeachment of his wisdom and goodness in the choice of his judges, and excites in the mind of the people a general dissatisfaction with all judicial determinations, and indisposes their minds to obey

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them; and, whenever men's allegiance to the laws is so fundamentally shaken, it is the most fatal and most dangerous obstruction of justice, and, in my opinion, calls for a more rapid and immediate redress than any other obstruction whatever not for the sake of the judges as private individuals, but because they are the channels by which the Kings' justice is conveyed to the people. To be impartial, and to be universally thought so, are both absolutely necessary for giving justice that free, open, and uninterrupted current which it has for many ages found all over this Kingdom, and which so eminently distinguishes and exalts it above all nations upon the earth . . . . The constitution has provided very apt and proper remedies for correcting and rectifying the involuntary mistakes of judges, and for punishing and removing them for any voluntary perversions of justice. But, if their authority is to be trampled upon by pamphleteers and newswriters, and the people are to be told that the power given to the judges for their protection is prostituted to their destruction, the court may retain its power some little time; but I am sure it will instantly lose all its authority, and the power of the court will not long survive the authority of it: Is it possible to stab that authority more fatally than by charging the court, and more particularly the chief justice, with having introduced a rule to subvert the constitutional liberty of the people? A greater scandal could not be published . . . . It is conceded that an act of violence upon his person when he was making such an order would be contempt punishable by attachment. Upon what principle? For striking a judge in walking along the streets would not be a contempt of the court. The reason, therefore, must be, that he is in the exercise of his office, and discharging the function of a judge of this court; and, if his person is under this protection, why should not his character be under the same protection? It is not for the sake of the individual, but for the sake of the public, that his person is under such protection; and, in respect of the public, the imputing of corruption and the perversion of justice to him, in an order made by him at his chambers, is attended with much more mischievous consequences than a blow; and therefore the reason of proceeding in this summary manner applies with equal, if not superior, force, to one case as well as the other. There is no greater obstruction to the execution of justice from the striking a judge than from the abusing him, because his order lies open to be enforced or discharged, whether the judge is struck or abused for making it.

2. The American Doctrine In American jurisprudence, the general rule is that defamatory comments on the conduct of a judge with respect to past cases or matters finally disposed of do not constitute contempt, even though libelous and reflecting on the integrity of the judge and the court. 21 It has been said that the power to punish as a contempt a criticism concerning a case made after its termination is denied under the theory that such a power is not necessary as a safeguard to the proper functioning of the court as a judicial tribunal. And it has been said that comments, however stringent, relating to judicial proceedings which are past and ended are not contempt of court even though they may be a libel against the judge or some other officer of the court. There is even the view that when a case is finished, the courts and judges are subject to the same criticisms as other people and that no comment published in connection with a completed case, however libelous or unjust, is punishable as contempt of court. Thus it is said that the remedies of a judge who suffers abuse at the hands of the press, not amounting to contempt, are the same as those available to persons outside the judiciary. 22 To the same effect was the holding in People ex rel. Supreme Court vs. Albertson, 23 where it was declared that
The great weight of authority is to the effect that in so far as proceedings to punish for contempt are concerned comment upon the behavior of the court in cases fully determined in the particular court criticized is unrestricted under our constitutional guaranty of liberty of the press and free speech, especially in the absence of a statute of direct application to the contrary. This view in brief is based upon the theory

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that keeping our constitutional guaranties in mind libelous publications which bear upon the proceedings of a court while they are pending may in some way affect their correct determination, and are properly the subject of contempt proceedings. On the other hand, such publications or oral utterances of entirely retrospective bearing come within the sphere of authorized comment unless they affect a judge personally, when he has his remedy in an action of libel or slander, as does any other individual thus offended. He has the right to bring an action at law before a jury of his peers.

Along similar lines, in Ex Parte Mcleod, 24 the court ruled that:

The right of a court to punish, as for contempts, criticisms of its acts, or even libels upon its officers, not going to the extent, by improper publications, of influencing a pending trial, . . . would not only be dangerous to the rights of the people, but its exercise would drag down the dignity and moral influence of these tribunals. Such criticism is the right of the citizen, and essential not only to the proper administration of justice, but to the public tranquility and contentment. Withdrawing power from courts to summarily interfere with such exercise of the right of the press and freedom of speech deprives them of no useful power.

Likewise, the State Supreme Court of Montana in State ex rel. Metcalf vs. District Court, 25 pointed out that the legal proceeding involved therein was not pending when the alleged libelous article was published, then referred to the guaranty of freedom of speech and the press, and eventually held that the publication involved was not punishable as contempt. It declared that so long as the published criticism does not impede the due administration of the law, it is better to maintain the guaranty of the Constitution than to undertake to compel respect or punish libel by the summary process of contempt. Finally, in holding that persons who had published newspaper articles alleging that a designated judge had been intentionally partial and corrupt in the trial of certain causes which had been decided and were not pending when the publication occurred could not be punished as for contempt the court, in State ex rel. Attorney General vs. Circuit Court, 26 cited a number of cases supporting the view that libelous newspaper comments upon the acts of a court in actions past and ended do not constitute contempt. It pointed out that some of such decisions took the position that to punish such publications would constitute a serious invasion of constitutional guaranties of free speech and a free press. It ratiocinated in this manner: "Important as it is that courts should perform their grave public duties unimpeded and unprejudiced by illegitimate influences, there are other rights guaranteed to all citizens by our Constitution and form of government, either expressly or impliedly, which are fully as important, and which must be guarded with an equally zealous care. These rights are the rights of free speech and of free publication of the citizens' sentiments on all subjects. It seems clear to us that so extreme a power as to punish for contempt because of libelous publications as to past litigation, is inconsistent with, and would materially impair, the constitutional rights of free speech and free press." However, even under American jurisprudence, as shall hereafter be demonstrated, the aforesaid rulings are not without exceptions. There is ample authority that, under proper circumstances, constitutional guaranties of freedom of speech and liberty of the press do not protect contemptuous publications relating to court proceedings even though such publications are not made until after the pendency of the litigation in question. 27 3. The Philippine Doctrine
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In the Philippine setting, as we have noted, there are conflicting views on this issue which have to be analyzed and, if possible, reconciled. On that exordial indication, we have digressed into these aspects of the law on contempt and seized upon this incident in the criminal cases at bar in order to essay a rapprochement of such views into what we may call the Philippine doctrine. In the early cases decided by this Court involving contempts through newspaper publications, the rule was that contemptuous publications were actionable only if committed with respect to pending suits. Apparently, the weight of authority then was to the effect that criticism of the conduct of a judge or a court with regard to matters finally disposed of does not constitute contempt, even though it may be libelous. That rule first found application in the case of In re Lozano, et al. 28 and was reiterated in the subsequent cases of In re Abistado, 29 and People vs. Alarcon, et al, 30 where this Court, speaking through Justice Malcolm, tersely stated:
The rule is well established that newspaper publications tending to impede, obstruct, embarrass, or influence the courts in administering justice in a pending suit proceeding constitute criminal contempt which is summarily punishable by the courts. The rule is otherwise after the cause is ended. . . . (6 R.C.L., pp. 508-515).

It will be noted that the aforequoted conclusion was arrived at after a short discourse presented by the ponente on the existing divergence of opinions on the matter between the English and American courts. But the learned justice, notwithstanding his preference for and application of the American doctrine, nonetheless thereafter made the recommendatory observation that "(w)ith reference to the applicability of the above authorities, it should be remarked first of all that this court is not bound to accept any of them absolutely and unqualifiedly. What is best for the maintenance of the judiciary in the Philippines should be the criterion." It seems that this view was shared by then Associate Justice Moran when he dissented from the majority opinion in the aforecited case of People vs. Alarcon, et al., which upheld the doctrine enunciated in Lozano and Abistado, in this wise: "I know that in the United States, publications about courts, after the conclusion of a pending case, no matter how perverse or scandalous, are in many instances brought within the constitutional protection of the liberty of the press. But while this rule may find justification in that country, considering the American temper and psychology and the stability of its political institutions, it is doubtful whether here a similar toleration of gross misuse of liberty of the press would, under our circumstances, result in no untoward consequences to our structure of democracy yet in the process of healthful development and growth." Such perception could have probably impelled Justice Moran to deviate from the then accepted doctrine, with this rationalization:
Contempt, by reason of publications relating to courts and to court proceedings, are of two kinds. A publication which tends to impede, obstruct, embarrass or influence the courts in administering justice in a pending suit or proceeding, constitutes criminal contempt which is summarily punishable by courts. This is the rule announced in the cases relied upon by the majority. A publication which tends to degrade the courts and to destroy public confidence in them or that which tends to bring them in any way into disrepute, constitutes likewise criminal contempt, and is equally punishable by courts. In the language of the majority, what is sought,

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in the language of the majority, what is sought, in the first kind of contempt, to be shielded against the influenced of newspaper comments, is the all-important duty of the courts to administer justice in the decision of a pending case. In the second kind of contempt, the punitive hand of justice is extended to vindicate the courts from any act or conduct calculated to bring them into disfavor or to destroy public confidence in them. In the first, there is no contempt where there is no action pending, as there is no decision which might in any way be influenced by the newspaper publication. In the second, the contempt exists, with or without a pending case, as what is sought to be protected is the court itself and its dignity. Courts would lose their utility if public confidence in them is destroyed.

That dissenting opinion was impliedly adopted in the subsequent case of In re Brillantes, 31 where the editor of the Manila Guardian was declared in contempt of court for publishing an editorial, stating that the 1944 Bar Examinations were conducted in a farcical manner, even after the case involving the validity of said examinations had been terminated. This was followed by In re Almacen 32 where the Court stated categorically that the rule that bars contempt after a judicial proceeding has terminated had lost much of its validity, invoking therein the ruling in Brillantes and quoting with approval the dissenting opinion in Alarcon. It appears, therefore, that in the two latest cases decided by this Court, the general rule that there can be no contempt in post-litigation publications is not necessarily all-embracing under certain situations. From the shift in judicial approach in Brillantes to the position announced in Almacen, it can inevitably be concluded that the termination of the case is not a guaranty of immunity from a contempt charge for publications or utterances which are defamatory or libelous, depending on the purpose and effects thereof. In other words, one may still be cited for contempt of court even after a case has ended, where such punitive action is necessary to protect the court and its dignity and to vindicate it from acts or conduct intended or calculated to degrade, ridicule or bring the court into disfavor and thereby erode or destroy public confidence in that court. This qualified distinction is not without justification and, in fact, was also foreshadowed by the concurring opinion of Justice Briones in Brillantes wherein, after noting the conflicting views on the amenability of the contemnor during the pendency or after the termination of the judicial proceeding in the court involved as illustrated by the English and American doctrines thereon, he advanced the proposition that
. . . esta distincion no tiene mucha importancia. Lo importante para mi es ver si la critica lanzada por el recurrido es falsa y esta concebida en terminos tales que "tiende directamente a degradar la administracion de justicia," . . . es indiferente si versa sobre un asunto o negociacion totalmente terminada o no; el desacato existe entonces y debe ser castigado. . . . Se trata simplemente de la facultad inherente en los tribunales de reprimir y castigar todo acto que tiende a ambarazarles y obstruirles en su funcion de administrar justicia, . . . .

The rationale for making a qualification to the rule generally considered as the American doctrine, which rule as herein qualified we now adopt and refer to as the Philippine doctrine on this issue, is profoundly and eloquently explicated by Justice Moran in Alarcon, to wit:
It is true that the Constitution guarantees the freedom of speech and of the press. But license or abuse of that freedom should not be confused with freedom in its true sense. Well-ordered liberty demands no less unrelaxing vigilance against abuse of the sacred guaranties of the Constitution than the fullest protection of their legitimate exercise. As important as is the maintenance of a free press and the free exercise of the rights of the citizens is the maintenance of a judiciary unhampered in its administration of justice and secure in its

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continuous enjoyment of public confidence. "The administration of justice and freedom of the press, though separate and distinct are equally sacred, and neither should be violated by the other. The press and the courts have correlative rights and duties and should cooperate to uphold the principles of the Constitution and the laws, from which the former receives its prerogatives and the latter its jurisdiction." (U.S. vs. Su liens, 38 Fed., 2d., 230.) Democracy cannot long endure in a country where liberty is grossly misused any more than where liberty is illegitimately abridged. xxx xxx xxx If the contemptuous publication made by the respondent herein were directed to this Court in connection with a case already decided, the effect of the rule laid down by the majority is to deny this court the power to vindicate its dignity. The mischievous consequences that will follow from the situation thus sought to be permitted, are both too obvious and odious to be stated. The administration of Justice, no matter how righteous, may be identified with all sorts of fancied scandal and corruption. Litigants, discontented for having lost their cases, will have every way to give vent to their resentment. Respect and obedience to Law will ultimately be shattered, and, as a consequence, the utility of the courts will completely disappear. It may be said that respect to courts cannot be compelled and that public confidence should be a tribute to judicial worth, virtue and intelligence. But compelling respect to courts is one thing and denying the courts the power to vindicate themselves when outraged is another. I know of no principle of law that authorizes with impunity a discontented citizen to unleash, by newspaper publications, the avalanche of his wrath and venom upon courts and judges. If he believes that a judge is corrupt and that justice has somewhere been perverted, law and order require that he follow the processes provided by the Constitution and the statutes by instituting the corresponding proceedings for impeachment or otherwise. As Mr. Justice Palmer, in speaking of the duty of courts and court officers, has wisely said: Would it be just to the persons who are called upon to exercise these powers to compel them to do so, and at the same time allow them to be maltreated or libeled because they did so? How would a suitor like a juryman trying his case who might expect he would be assaulted, beaten, his property destroyed, or his reputation blasted, in case he decided against his opponent? Apply the same thing to judges, or the sheriff, and how long could organized society hold together? With reference to a judge, if he has acted corruptly, it is worse than a mere contempt. But it is apparent it would not be right that the court of which he is a member should determine this, and consequently the law has provided a plain and easy method of bringing him to justice by a petition to Parliament; but, while the law authorizes this, it does not allow infamous charges to be made against him by persons, either in the newspapers or otherwise, with reference to how he has or shall discharge the duties of his office. It must be apparent to all right thinking men that, if such were allowed to be indulged in, it must end in the usefulness of the court itself being destroyed, however righteous its judges may act. From what I have said it must not be supposed that I think that the decisions of the court, or the actions of the judges, or other persons composing the court, are not to be discussed; on the contrary, I would allow the freest criticism of all such acts if done in a fair spirit, only stopping at what must injure or destroy the court itself and bring the administration of the law into disrepute, or be an outrage on the persons whose acts are discussed, or when such discussion would interfere with the right decision of the cause before the court.

We do not hesitate to hereby give our imprimatur to the aforequoted opinion which, we fully believe, conforms to basic dogmatic teachings on judicial and professional conduct requiring respect for and the giving of due deference to the judicial system and its members

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 ethical standards which this Court has, time and again, been trying to inculcate in the minds of every member of the Bar and the public in general. 4. Cautela on the Balancing of Interests On the bases of the foregoing authorities, it is evident that a line has to be drawn between those utterances or writings which are protected by the privileges of free speech and a free press and those which constitute an abuse thereof, in determining whether an allegedly scurrilous publication or statement is to be treated as contempt of court. But to find the line where the permissible right of free speech ends and its reprehensible abuse begins is not always an easy task. In contempt proceedings, it was held that this line must usually be defined by the courts themselves, and in such cases its location is to be established with special care and caution. 33 In so doing, it becomes necessary to give the subject that careful examination commensurate with its importance, mindful that, on the one hand, the dignity and authority of the courts must be maintained, while, on the other, free speech, a free press, and the liberty of the citizen must be preserved. Both are equally valuable rights. If the court is shorn of its power to punish for contempt in all proper cases, it cannot preserve its authority, so that even without any constitutional or statutory guaranty this power is inherent in the court. But the Constitution itself, in the Bill of Rights, guarantees free speech and liberty of the press. Of course, it was never intended, under the guise of these constitutional guaranties, that the power of the court should be trenched upon. 34 How to determine whether an act or utterance is covered by the protective mantle of the constitutional guaranty of liberty of the press or whether it is already outside or an abuse thereof, is an altogether different matter. We have perforce to draw from tenets in American jurisprudence, although with discriminating choice, since after all our present doctrines on contempt vis-a-vis constitutional limitations trace their roots in the main to the lessons laid down and born of the social and judicial experience in that jurisdiction. The liberty of the press consists in the right to publish with impunity the truth, with good motives and for justifiable ends, whether it respects governments individuals; the right freely to publish whatever the citizen may please and to be protected against any responsibility for so doing, except in so far as such publications, from their blasphemy, obscenity, or scandalous character, may be a public offense, are as by their falsehood and malice they may injuriously affect the standing, reputation, or pecuniary interests of individuals. The true liberty of the press is amply secured by permitting every man to publish his opinion; but it is due to the peace and dignity of society to inquire into the motives of such publications, and to distinguish between those which are meant for use and reformation, and with an eye solely to the public good, and those which are intended merely to delude and defame. To the latter description, it is impossible that any good government should afford protection and impunity. The liberty of the press means that anyone can publish anything he pleases, but he is liable for the abuse of this liberty. If he does this by scandalizing the courts of his country, he is liable to be punished for contempt. In other words, the abuse of the privilege consists principally in not telling the truth. There is a right to publish the truth, but no right to publish falsehood to the injury of others with impunity. It, therefore, does not include the right to
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malign the courts, to libel and slander and utter the most flagrant and indecent calumnies about the court and its officers, nor to invade the sanctuaries of the temples. Such practices and such miscreants ought to be condemned, and the courts would deserve condemnation and abolition if they did not vigorously and fearlessly punish such offenders. Such practices are an abuse of the liberty of the press, and if the slander relates to the courts, it concerns the whole public and is consequently punishable summarily as a criminal contempt. It is therefore the liberty of the press that is guaranteed, not the licentiousness. It is the right to speak the truth, not the right to bear false witness against your neighbor. 35 This brings to fore the need to make a distinction between adverse criticism of the court's decision after the case is ended and "scandalizing the court itself." The latter is not criticism; it is personal and scurrilous abuse of a judge as such, in which case it shall be dealt with as a case of contempt. 36 It must be clearly understood and always borne in mind that there is a vast difference between criticism or fair comment on the one side and defamation on the other. Where defamation commences, true criticism ends. True criticism differs from defamation in the following particulars; (1) Criticism deals only with such things as invite public attention or call for public comment. (2) Criticism never attacks the individual but only his work. In every case the attack is on a man's acts, or on some thing, and not upon the man himself. A true critic never indulges in personalities. (3) True criticism never imputes or insinuates dishonorable motives, unless justice absolutely requires it, and then only on the clearest proofs. (4) The critic never takes advantage of the occasion to gratify private malice, or to attain any other object beyond the fair discussion of matters of public interest, and the judicious guidance of the public taste. 37 Generally, criticism of a court's rulings or decisions is not improper, and may not be restricted after a case has been finally disposed of and has ceased to be pending. So long as critics confine their criticisms to facts and base them on the decisions of the court, they commit no contempt no matter how severe the criticism may be; but when they pass beyond that line and charge that judicial conduct was influenced by improper, corrupt, or selfish motives, or that such conduct was affected by political prejudice or interest, the tendency is to create distrust and destroy the confidence of the people in their courts. 38 Moreover, it has been held that criticism of courts after a case is finally disposed of, does not constitute contempt and, to this effect, a case may be said to be pending so long as there is still something for the court to do therein. But criticism should be distinguished from insult. A criticism after a case has been disposed of can no longer influence the court, and on that ground it does not constitute contempt. On the other hand, an insult hurled to the court, even after a case is decided, can under no circumstance be justified. Mere criticism or comment on the correctness or wrongness, soundness or unsoundness of the decision of the court in a pending case made in good faith may be tolerated; but to hurl the false charge that the Supreme Court has been committing deliberately so many blunders and injustices would tend necessarily to undermine the confidence of the people in the honesty and integrity of its members, and consequently to lower or degrade the administration of justice, and it constitutes contempt. 39 The Philippine rule, therefore, is that in case of a post-litigation newspaper publication, fair criticism of the court, its proceedings and its members, are allowed. However, there may be
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a contempt of court, even though the case has been terminated, if the publication is attended by either of these two circumstances: (1) where it tends to bring the court into disrespect or, in other words, to scandalize the court; 40 or (2) where there is a clear and present danger that the administration of justice would be impeded. And this brings us to the familiar invocation of freedom of expression usually resorted to as a defense in contempt proceedings. On the first ground, it has been said that the right of free speech is guaranteed by the Constitution and must be sacredly guarded, but that an abuse thereof is expressly prohibited by that instrument and must not be permitted to destroy or impair the efficiency of the courts or the public respect therefor and the confidence therein. 41 Thus, in State vs. Morril, 42 the court said that any citizen has the right to publish the proceedings and decisions of the court, and if he deems it necessary for the public good, to comment upon them freely, discuss their correctness, the fitness or unfitness of the judges for their stations, and the fidelity with which they perform the important public trusts reposed in them; but he has no right to attempt, by defamatory publications, to degrade the tribunal, destroy public confidence in it, and dispose the community to disregard and set at naught its orders, judgments and decrees. Such publications are an abuse of the liberty of the press; and tend to sap the very foundation of good order and well-being in society by obstructing the course of justice. Courts possess the power to punish for contempt libelous publications regarding their proceedings, present or past, upon the ground that they tend to degrade the tribunals, destroy public confidence and respect for their judgments and decrees, so essentially necessary to the good order and well-being of society, and most effectually obstruct the free course of justice. Then, in In re Hayes, 43 it was said that publishers of newspapers have the right, but no higher right than others, to bring to public notice the conduct of the courts, provided the publications are true and fair in spirit. The liberty of the press secures the privilege of discussing in a decent and temperate manner the decisions and judgments of a court of justice; but the language should be that of fair and honorable criticism, and should not go to the extent of assigning to any party or the court false or dishonest motives. There is no law to restrain or punish the freest expressions of disapprobation that any person may entertain of what is done in or by the courts. Under the right of freedom of speech and of the press the public has a right to know and discuss all judicial proceedings, but this does not include the right to attempt, by wanton defamation, groundless charges of unfairness and stubborn partisanship, to degrade the tribunal and impair its efficiency. Finally, in Weston vs. Commonwealth, 44 it was ruled that the freedom of speech may not be exercise in such a manner as to destroy respect for the courts, the very institution which is the guardian of that right. The dignity of the courts and the duty of the citizens to respect them are necessary adjuncts to the administration of justice. Denigrating the court by libelous attacks upon judicial conduct in an ended case, as well as one which is pending before it, may seriously interfere with the administration of justice. While such an attack may not affect the particular litigation which has been terminated, it may very well affect the course of justice in future litigation and impair, if not destroy, the judicial efficiency of the court or judge subjected to the attack.

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Anent the second ground, the rule in American jurisprudence is that false and libelous utterances present a clear and present danger to the administration of justice. 45 To constitute contempt, criticism of a past action of the court must pose a clear and present danger to a fair administration of justice, that is, the publication must have an inherent tendency to influence, intimidate, impede, embarrass, or obstruct the court's administration of justice. 46 It is not merely a private wrong against the rights of litigants and judges, but a public wrong, a crime against the State, to undertake by libel or slander to impair confidence in the judicial functions. 47 Elucidating on the matter, this Court, in Cabansag vs. Fernandez, et al., 48 held as follows:
. . . The first, as interpreted in a number of cases, means that the evil consequence of the comment or utterance must be ''extremely serious and the degree of imminence extremely high" before the utterance can be punished. The danger to be guarded against is the "substantive evil" sought to be prevented. And this evil is primarily the "disorderly and unfair administration of justice." This test establishes a definite rule in constitutional law. It provides the criterion as to what words may be published. Under this rule, the advocacy of ideas cannot constitutionally be abridged unless there is a clear and present danger that such advocacy will harm the administration of Justice. xxx xxx xxx Thus, speaking of the extent and scope of the application of this rule, the Supreme Court of the United States said: "Clear and present danger of substantive evils as a result of indiscriminate publications regarding judicial proceedings justifies an impairment of the constitutional right of freedom of speech and press only if the evils are extremely serious and the degree of imminence extremely high. . . . The possibility of engendering disrespect for the judiciary as a result of the published criticism of a judge is not such a substantive evil as will justify impairment of the constitutional right of freedom of speech and press." . . . No less important is the ruling on the power of the court to punish for contempt in relation to the freedom of speech and press. We quote: "Freedom of speech and press should not be impaired through the exercise of the power to punish for contempt of court unless there is no doubt that the utterances in question are a serious and imminent threat to the administration of justice. A judge may not hold in contempt one who ventures to publish anything that tends to make him unpopular or to belittle him. The vehemence of the language used in newspaper publications concerning a judge's decision is not alone the measure of the power to punish for contempt . The fires which it kindles must constitute an imminent, not merely a likely, threat to the administration of justice." . . . And in weighing the danger of possible interference with the courts by newspaper criticism against the free speech to determine whether such may constitutionally be punished as contempt, it was ruled that "freedom of public comment should in borderline instances weigh heavily against a possible tendency to influence pending cases." . . . The question in every case, according to Justice Holmes, is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that congress has a right to prevent. It is a question of proximity and degree. . . .

Although Cabansag involved a contempt committed during the pendency of a case, no compelling reason exists why the doctrines enunciated therein should not be made applicable to vituperative publications made after the termination of the case. Whether a
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case is pending or not, there is the constant and ever growing need to protect the courts from a substantive evil, such as invective conduct or utterances which tend to impede or degrade the administration of justice, or which calumniate the courts and their judges. At any rate, in the case of In re Bozorth, 49 it was there expressly and categorically ruled that the clear and present danger rule equally applies to publications made after the determination of a case, with the court declaring that a curtailment of criticism of the conduct of finally concluded litigation, to be justified, must be in terms of some serious substantive evil which it is designed to avert. Adverting again to what was further said in State vs. Shepherd, supra, let it here be emphasized that the protection and safety of life, liberty, property and character, the peace of society, the proper administration of justice and even the perpetuity of our institutions and form of government, imperatively demand that everyone lawyer, layman, citizen, stranger, newspaperman, friend or foe shall treat the courts with proper respect and shall not attempt to degrade them, or impair the respect of the people, or destroy the faith of the people in them. When the temples of justice become polluted or are not kept pure and clean, the foundations of free government are undermined, and the institution itself threatened. III Jurisdiction in Contempt Proceedings where the Alleged Contumely is Committed Against a Lower Court while the Case is Pending in the Appellate or Higher Court In whatever context it may arise, contempt of court involves the doing of an act, or the failure to do an act, in such a manner as to create an affront to the court and the sovereign dignity with which it is clothed. As a matter of practical judicial administration, jurisdiction has been felt properly to rest in only one tribunal at a time with respect to a given controversy. Partly because of administrative considerations, and partly to visit the full personal effect of the punishment on a contemnor, the rule has been that no other court than the one contemned will punish a given contempt. 50 The rationale that is usually advanced for the general rule that the power to punish for contempt rests with the court contemned is that contempt proceedings are sui generis and are triable only by the court against whose authority the contempt are charged; 51 the power to punish for contempt exists for the purpose of enabling a court to compel due decorum and respect in its presence and due obedience to its judgments, orders and processes: 52 and in order that a court may compel obedience to its orders, it must have the right to inquire whether there has been any disobedience thereof, for to submit the question of disobedience to another tribunal would operate to deprive the proceeding of half its efficiency. 53 There are, however, several jurisprudentially and statutorily recognized exceptions to the general rule, both under Philippine and American jurisprudence, viz.: 1. Indirect contempt committed against inferior court may also be tried by the proper regional trial court, regardless of the imposable penalty. 54

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2. Indirect contempt against the Supreme Court may be caused to be investigated by a prosecuting officer and the charge may be filed in and tried by the regional trial court, or the case may be referred to it for hearing and recommendation where the charge involves questions of fact. 55 3. In People vs. Alarcon, et al., supra, this Court ruled that "in the interrelation of the different courts forming our integrated judicial system, one court is not an agent or representative of another and may not, for this reason, punish contempts in vindication of the authority and decorum which are not its own. The appeal transfers the proceedings to the appellate court , and this last court becomes thereby charged with the authority to deal with contempts committed after the perfection of the appeal." The apparent reason is that both the moral and legal effect of a punishment for contempt would be missed if it were regarded as the resentment of personal affronts offered to judges. Contempts are punished as offenses against the administration of justice, and the offense of violating a judicial order is punishable by the court which is charged with its enforcement, regardless of the court which may have made the order. 56 However, the rule presupposes a complete transfer of jurisdiction to the appellate court, and there is authority that where the contempt does not relate to the subject matter of the appeal, jurisdiction to punish remains in the trial court. 57 4. A court may punish contempts committed against a court or judge constituting one of its parts or agencies, as in the case of a court composed of several coordinate branches or divisions. 58 5. The biggest factor accounting for the exceptions is where the singular jurisdiction of a given matter has been transferred from the contemned court to another court. One of the most common reasons for a transfer of jurisdiction among courts is improper venue. The cases involving venue deal primarily with the question whether a change of venue is available after a contempt proceeding has been begun. While generally a change of venue is not available in a contempt proceeding, some jurisdictions allow such a change in proper circumstances. 59 6. A new court wholly replacing a prior court has jurisdiction to punish for violations of orders entered by its predecessor, although where the successor court is created by a statute which does not extinguish jurisdiction in the predecessor, an affirmative transfer of jurisdiction before the contempt occurs is necessary to empower the successor court to act.
60

7. Transfers of jurisdiction by appellate review have produced numerous instances where contempt against the trial court has been punished in the appellate court, and vice versa. Some appellate courts have taken the view that a contempt committed after an appeal is taken is particularly contemptuous of the appellate court because of the tendency of such contempts to upset the status quo or otherwise interfere with the jurisdiction of such court. 61 8. A judge may disqualify himself, or be disqualified, on a contempt hearing or in the main case, which circumstance may require a transfer of jurisdiction, but where a judge is disqualified only in the main case, because of matters which do not disqualify him in a contempt proceeding, the regular judge should sit in the contempt proceeding. Likewise, where the regular judge, is absent or otherwise unavailable and an order is entered by
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another judge and made returnable to the proper court, the regular judge may punish for violations of orders so entered. 62 9. Where the same act is a contempt against two or more courts, it is no bar to contempt proceedings in one of them that there is also a contempt against the other. 63 10. While professional disciplinary proceedings have been resorted to as a punishment for contempt, the more recent view is that punishment is of secondary importance to the need to protect the courts and the people from improper professional practice. To the substantial extent that disciplinary action remains a punishment, disciplinary measures imposed by another court than the one contemned furnish an exception to the rule against punishing for contempt of another court. 64 11. Some contemptuous acts are also crime, usually misdemeanors, which are often punishable in other courts than those against which the contemptuous act was done.
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12. Finally, a conviction for contempt against another court has been allowed to stand on the basis that the failure of the defendant to make timely objection operated as a waiver of the right to be tried before the court actually contemned. 66 The rule, as now accepted and deemed applicable to the present incident, is that where the entire case has already been appealed, jurisdiction to punish for contempt rests with the appellate court where the appeal completely transfers the proceedings thereto or where there is a tendency to affect the status quo or otherwise interfere with the jurisdiction of the appellate court. Accordingly, this Court having acquired jurisdiction over the complaint for indirect contempt against herein respondents, it has taken judicial cognizance thereof and has accordingly resolved the same. IV Appropriate Remedies where the Alleged Contemptuous Statement is also Claimed to be Libelous Under the American doctrine, to repeat, the great weight of authority is that in so far as proceedings to punish for contempt are concerned, critical comment upon the behavior of the court in cases fully determined by it is unrestricted, under the constitutional guaranties of the liberty of the press and freedom of speech. Thus, comments, however stringent, which have relation to judicial proceedings which are past and ended, are not contemptuous of the authority of the court to which reference is made. Such comments may constitute a libel against the judge, but it cannot be treated as in contempt of the court's authority. On this score, it is said that prosecution for libel is usually the most appropriate and effective remedy. 67 The force of American public opinion has greatly restrained the courts in the exercise of the power to punish one as in contempt for making disrespectful or injurious remarks, and it has been said that the remedy of a judge is the same as that given to a private citizen. 68 In such a case, therefore. the remedy of a criminal action for libel is available to a judge who has been derogated in a newspaper publication made after the

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termination aid a case tried by him, since such publication can no longer be made subject of contempt proceedings. The rule, however, is different in instances under the Philippine doctrine earlier discussed wherein there may still be a contempt of court even after a case has been decided and terminated. In such case, the offender may be cited for contempt for uttering libelous remarks against the court or the judge. The availability, however, of the power to punish for contempt does not and will not prevent a prosecution for libel, either before, during, or after the institution of contempt proceedings. In other words, the fact that certain contemptuous conduct likewise constitutes an indictable libel against the judge of the court contemned does not necessarily require him to bring a libel action, rather than relying on contempt Proceedings. 69 The fact that an act constituting a contempt is also criminal and punishable by indictment. or other method of criminal prosecution does not prevent the outraged Court from punishing the contempt. 70 This principle stems from the fundamental doctrine that an act may be punished as a contempt even though it has been punished as a criminal offense. 71 The defense of having once been in jeopardy, based on a conviction for the criminal offense, would not lie in bar of the contempt proceedings, on the proposition that a contempt may be an offense against the dignity of a court and, at the same time, an offense against the peace and dignity of the people of the State. 72 But more importantly. adherence to the American doctrine by insisting that a judge should instead file an action fur libel will definitely give rise to an absurd situation and may even cause more harm than good. Drawing also from American jurisprudence, to compel the judge to descend from the plane of his judicial office to the level of the contemnor, pass over the matter of contempt, and instead attack him by a civil action to satisfy the judge in damages for a libel, would be a still greater humiliation of a court. That conduct would be personal; the court is impersonal. In our jurisdiction, the judicial status is fixed to such a point that our courts and the judges thereof should be protected from the improper consequences of their discharge of duties so much so that judicial officers have always been shielded, on the highest considerations of the public good, from being called for questioning in civil actions for things done in their judicial capacity. Whenever we subject the established courts of the and to the degradation of private prosecution, we subdue their independence, and destroy their authority. instead of being venerable before the public, they become contemptible; and we thereby embolden the licentious to trample upon everything sacred in society, and to overturn those institutions which have hitherto been deemed the best guardians of civil liberty. 73 Hence, the suggestion that judges who are unjustly attacked have a remedy in an action for libel, has been assailed as being without rational basis in principle. In the first place, the outrage is not directed to the judge as a private individual but to the judge as such or to the court as an organ of the administration of justice. In the second place, public interests will gravely suffer where the judge, as such, will, from time to time, be pulled down and disrobed of his judicial authority to face his assailant on equal grounds and prosecute cases in his behalf as a private individual. The same reasons of public policy which exempt a judge from civil liability in the exercise of his judicial functions, most fundamental of which is

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the policy to confine his time exclusively to the discharge of his public duties, applies here with equal, if not superior, force. 74 V Whether or not the Same Contemptuous Conduct of a Member of the Bar can be the Subject of both a Contempt Proceeding and an Administrative Disciplinary Action With the foregoing discussion of the appropriate remedies available to a judge, we feel that this issue with respect to proper remedies against an erring member or the Bar should consequentially be addressed, by way of reiteration, since conflicting and erroneous remedies are sometimes resorted to by aggrieved tribunals or parties. The basic rule here is that the power to punish for contempt and the power to disbar are separate and distinct, and that the exercise of one does not exclude the exercise of the other. 75 A contempt proceeding for misbehavior in court is designed to vindicate the authority of the court; on the other hand, the object of a disciplinary proceeding is to deal with the fitness of the court's officer to continue in that office, to preserve and protect the court and the public from the official ministrations of persons unfit or unworthy to hold such office. 76 The principal purpose of the exercise of the power to cite for contempt is to safeguard the functions of the court and should thus be used sparingly on a preservative and not, on the vindictive principle. 77 The principal purpose of the exercise of disciplinary authority by the Supreme Court is to assure respect for orders of such court by attorneys who, as much as judges, are responsible for the orderly administration of justice. 78 Moreover, it has been held that the imposition a fine as a penalty in a contempt proceeding is not considered res judicata to a subsequent charge for unprofessional conduct. 79 In the same manner an attorney's conviction for contempt was not collaterally estopped by reason of a subsequent disbarment proceeding in which the court found in his favor on essentially the same facts leading to conviction. 80 It has likewise been the rule that a notice to a lawyer to show cause why he should not be punished for contempt cannot be considered as a notice to show cause why he should not be suspended from the practice of law, considering that they have distinct objects and for each of them a different procedure is established. Contempt of court is governed by the procedures laid down under Rule 71 of the Rules of Court, whereas disciplinary actions in the Practice of law are governed by file 138 and 139 thereof. 81 Although apparently different in legal bases, the authority to punish for contempt and to discipline lawyers are both inherent in the Supreme Court and are equally incidents of the court's basic power to oversee the proper administration of justice and the orderly discharge of judicial functions. As was succinctly expounded in Zaldivar vs. Sandiganbayan, et al.: 82
There are, in other words, two (2) related powers which come into play in cases like that before us here: the Court's inherent power to discipline attorneys and the contempt power. The disciplinary authority of the Court over members of the Bar is broader than the power to punish for contempt. Contempt of court may be committed both by lawyers and non-lawyers, both in and out of court. Frequently, where the contemnor is a lawyer, the contumacious conduct also constitutes professional misconduct which calls into play the disciplinary authority of the Supreme Court. Where the respondent is a lawyer, however, the Supreme Court's disciplinary authority over lawyers may come into play whether or not the misconduct with which the respondent is charged also constitutes contempt of court. The power to punish

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for contempt of court does not exhaust the scope of disciplinary authority of the Court over lawyers. The disciplinary authority of the Court over members of the Bar is but corollary to the court's exclusive power of admission to the bar. A lawyer is not merely a professional but also an officer of the court and as such, he is called upon to share in the task and responsibilities of dispensing justice and resolving disputes in society. Any act on his part which visibly tends to obstruct, pervert, or impede and degrade the administration of justice constitutes both professional misconduct calling for the exercise of disciplinary action against him, and contumacious conduct warranting application of the contempt power.

With this rounding out of the subordinate and principal issues in resolving the incident, we feel that the guidelines we have laid down will provide assertive references for the lower courts in disciplinary matters arising before them. Coming back to the incident fore resolution, arising as a spin-off from the criminal cases at bar, we reiterate what we have declared at the outset, absolving judge for the reasons therein stated. WHEREFORE, on the foregoing premises, the complaint for indirect contempt against herein respondents Mauricio Reynoso, Jr. and Eva P. Ponce de Leon is hereby DISMISSED. SO ORDERED. Narvasa, C.J., Feliciano, Padilla, Bidin, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.

Footnotes
* In the interest of an early and separate disposition, this complaint for indirect contempt was assigned to the writer of this resolution for adjudication of this incident, independent of the principal criminal cases which shall await the corresponding administrative and judicial action of the Court En Banc after the filing of all requisite pleadings therein. 1 Rollo, 73. 2 Ibid., 98. 3 Ibid., 133. 4 Ibid., 142. Complainant thereafter filed a Reply, and the Court dispensed with the Rejoinder of respondent Ponce de Leon for non-filing despite several extensions granted to her. 5 In re Pryor, 26 Am. Rep. 747, cited in Francisco, Rules of Court, 1993 ed., Vol. IVB, Part II, 334. 6 Perkins vs. Director of Prisions, 58 Phil. 271 (1993). 7 17 C.J.S., Contempt, Sec. 5(1), p. 10. 8 Ibid., Sec. 6, p. 14.

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9 Ibid., Sec. 7, pp. 15-16. 10 17 Am. Jur. 2d, Contempt, Sec. 8, p. 14. 11 Ibid., Sec. 4, pp. 7-8. 12 17 C.J.S., Contempt, Sec. 62(4), p. 152. 13 Ibid., Sec. 62(5), 154-156. 14 Ibid., Sec. 62(6), pp. 157-160. 15 Ibid., Sec. 63, p. 160. 16 Ibid., Sec. 84(2) to (4), pp. 213-222. 17 82 Phil. 595 (1949). 18 36 F. 2d 220. 19 17 Am. Jur. 2d, Contempt, Sec. 58, pp. 58-59. 20 42 O.G. 59. 21 17 C.J.S., Contempt, Sec. 30(b), p. 85. 22 Ibid., Sec. 61, p. 61. 23 159 ALR 1379. 24 120 F. 130. 25 155 P. 278. 26 38 LRA 554. 27 See, for instance, Burdett vs. Commonwealth, 48 SE 878; State vs. Shepherd, 76 SW 79; Holtzman vs. Tobin, 340 NYS 2d 286; 12 Am. Jur., Contempt, Sec. 36, pp. 415-417; 17 Am. Jur. 2d, Contempt, Sec. 61, pp. 60-61. 28 54 Phil. 801 (1930). 29 57 Phil. 669 (1932). 30 69 Phil. 265 (1939). 31 Supra, Fn 20. 32 L-27654, February 18, 1970, 31 SCRA 562. 33 159 ALR 1391. 34 Ibid., 1393.

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35 State vs. Shepherd, 76 S.W. 79. 36 State vs. Hildreth, 74 A. 71. 37 State vs. Shepherd, supra. 38 17 C.J.S., Contempt, Sec. 25, p. 64. 39 Moran, Rules of Court, Vol. 3, 1980 ed., p. 365. 40 There is ample jurisprudence exemplifying instances of contemptuous postlitigation publications which have been found to constitute an affront against the dignity of the court, and the contemnor declared guilty of contempt. In these cases, the courts were unanimous in holding that a wide chasm exists between fair criticism, on the one hand, and abuse and vilification of the courts and the judges thereof, on the other. 41 159 ALR 1391. 42 16 Ark. 384. 43 73 So. 362. 44 77 S.E. 2d 405. 45 17 C.J.S., Contempt, Sec. 25, p. 64. 46 Ibid., Sec. 30(b), p. 86. 47 State vs. Shepherd, supra, Fn. 35. 48 102 Phil. 152 (1957). 49 118 A. 2d 430. 50 99 ALR 2d 1103. 51 Chemical Fireproofing Corp. vs. Branska, 553 S.W. 2d 710. 52 17 Am. Jur. 2d, Contempt, Sec. 84, p. 7d8. 53 In re Debs, 158 U.S. 564. 54 Section 4, Rule 71, Rules of Court. 55 Section 4, id., id. 56 Menuez vs. Grimes Candy Co., 83 NE 82. 57 99 ALR 2d 1118. 58 17 C.J.S., Contempt, Sec. 51, pp. 126-127. 59 99 ALR 2d 1103-1105.

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60 Ibid., loc. cit. 61 Ibid., loc. cit. 62 Ibid., loc. cit. 63 Ibid., loc. cit. 64 Ibid., loc. cit. 65 Ibid., loc. cit. 66 Ibid., loc. cit. 67 Cheadle vs. State, 11 N.E. 426. 68 State vs. New Mexican Printing Co., 177 p. 751. 69 Coons vs. State, 134 NE 194. 70 Jurney vs. MacCracken, 294 U.S. 125; Steube v State, 2 O.C.D. 216, cited in 4 Dec. Dingiest 1964. 71 17 C.J.S., Contempt, Sec. 60, pp. 136-137. 72 Ex Parte Morris, 227 P. 914. 73 Coons vs. State, supra, Fn. 69. 74 Dissenting opinion of Moran J. in People vs. Alarcon, et al., supra, citing Hamilton vs. Williams, 26 Ala. 529; Busteed v Parson, 54 Ala. 403; Ex Parte McLeod, 120 Fed. 130; Coons vs. State, supra. 75 In Re Isserman, 87 A. 2d 903. 76 In re Schofield, 66 A. 2d 675. 77 Balasabas vs. Aquilizan, etc. G.R. No. 51414, July 31, 1981, 106 SCRA 489. 78 In re Daly, 171 NW 2d. 818. 79 In re Hawke, 63 NE 2d 553. 80 Howell vs. Tomas, 566 F. 2d 469. 81 Balasabas v. Aquilizan, supra. 82 G.R. Nos. 79690-79707, October 7, 1988, 166 SCRA 316.

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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION A.M. No. P-06-2170 July 11, 2006 [Formerly OCA I.P.I No. 05-2223-P] REY C. MUTIA, petitioner, vs. LUCILA C. PACARIEM, Court Stenographer III, Regional Trial Court, and Branch 40, Manila, respondent. RESOLUTION TINGA, J.: Under consideration is the administrative complaint filed by Rey C. Mutia ("Mutia") charging Lucila C. Pacariem ("Pacariem"), Court Stenographer III, Regional Trial Court ("RTC"), Branch 40, Manila, with grave misconduct in relation to an alleged libelous remark made by her in a letter1 addressed to their Branch Clerk of Court, Atty. Lyn L. Llamasares. The Presiding Judge Placido Marquez and Executive Judge Enrico Lanzanas of the RTC Manila were each furnished with a copy of the letter. Then Chief Justice Hilario Davide, then Court Administrator (now Supreme Court Justice) Presbiterio Velasco, Jr., Deputy Court Administrator (now Court Administrator) Christopher Lock, Ms. Caridad Pabello of the Court Management Office, and the Administrative Services Division of the Office of the Court Administrator ("OCA") were each likewise furnished with a copy of the letter. It seems that the controversy sprang from a Memorandum dated 9 August 2004 issued by Atty. Llamasares to Pacariem regarding her work inefficiency. There is no copy of this memorandum in the records of this case but it appears that Atty. Llamasares sent a copy of the same to the OCA. Pacariem answered the memorandum and took the opportunity to inform the Supreme Court of the grievances in their office. It appears that in her answer, Pacariem resented the fact that Atty. Llamasares did not confront her on her shortcomings before submitting a copy of her memorandum to the Supreme Court. It was only after the memorandum was filed with the Supreme Court Administrative Division that Pacariem received a copy. It is in this same answer that the alleged libelous remark against Mutia was made. In her letter, Pacariem stated that their Clerk of Court and Presiding Judge signed the Daily Time Record ("DTR") of a new employee for the period 1-15 May 2004 even though the employee had not yet assumed office at that time. The pertinent portion of the letter follows, to wit: I am aware of the case of one new staff of this office, that his DTR for the period of May 1-15, 2004 were signed by you and the Presiding Judge without thinking that
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you were not authorized to sign it because during that time he was not still assuming his duty, but if we are the one requesting for the signing of DTR you would find any [sic] wrong with it.2 Mutia feels alluded to in the letter, as he was the only new employee in said office at that time. Records show that he worked as Court Interpreter III in RTC, Branch 81, Romblon before he was transferred to RTC, Branch 40, Manila on 17 May 2004. Contrary to the imputation in the letter, neither Atty. Llamasares nor Presiding Judge Marquez signed Mutia's DTR for 1-15 May 2004. Instead, Atty. Karen M. Silverio-Buffe, who was Mutia's supervisor in RTC Romblon, signed his DTR covering the said period. 3 Mutia avers that Pacariem's totally baseless and malicious accusation against him, Atty. Llamasares and Presiding Judge Marquez, of falsifying his DTR, amounts to libel and constitutes grave misconduct for which she should be disciplined. In her Comment,4 Pacariem admits authorship of the letter but denies that she was motivated by malice to destroy the good name and reputation of Mutia. She opines that the letter is privileged, the same being a private communication between her and the persons and authorities concerned in relation to her duties and obligations as court stenographer. As to the portion of her letter concerning Mutia's DTR, she avers that it was an honest mistake or misapprehension of facts made in good faith and apologizes for her lapse of judgment. In its Report,5 the OCA made no findings as to Pacariem's alleged grave misconduct. The OCA noted, however, that there is an undercurrent of animosity among the three employees that reflects adversely on the good image of the judiciary. While stressing that Pacariem is expected to observe propriety and decorum not only to party litigants but to her co-employees as well, the OCA urged Atty. Llamasares to promote unity and cooperation in her office and to instill professionalism in her subordinates. In this wise, the OCA made the following recommendations: Respectfully submitted for the consideration of the Honorable Court are our recommendations that: 1) respondent Lucila Pacariem be ADMONISHED to be more circumspect in her dealings with other court employees; and 2) the Branch Clerk of Court having administrative supervision over court employees, be ADVISED to promote and maintain harmony among her subordinates.6 We adjudicate the matter differently from what the OCA has recommended. Pacariem is accused of committing libel, which allegedly is tantamount to grave misconduct. The offense of libel cannot be loosely considered as misconduct in office. To constitute an administrative offense, misconduct should relate to or be connected with the performance of the official functions and duties of a public officer, amounting to either maladministration, or willful intentional neglect and failure to discharge the duties of the office.7 Although an officer may be suspended or dismissed for malfeasance which is not related to, or connected with, the functions of the office, such as commission of a crime, the
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officer may not be proceeded against administratively based thereon until a final judgment of conviction is rendered by a court of justice.8 The exception is when the crime or act committed also constitutes a violation of administrative rules; there no conviction is required.9 Furthermore, in grave misconduct as distinguished from simple misconduct, the elements of corruption, clear intent to violate the law or flagrant disregard of established rule, must be manifest.10 It cannot be gainsaid that the issue in administrative cases is not whether the complainant has a cause of action against the respondent, but whether the employees have breached the norms and standards of the judiciary.11 While the records show that Pacariem's statement in her letter regarding Mutia's DTR is in fact false, we are not prepared to make a finding as to whether or not Pacariem is guilty of libel inasmuch as libel per se is not an administrative offense. Neither is it shown that a criminal complaint for libel had been filed against her and that she had been convicted thereof so as to be the basis of a disciplinary action against her. As to whether her act of making such a false statement in her answer to her superior's memorandum amounts to grave misconduct, we rule in the negative. There is no showing that in writing the subject letter, there was on Pacariem's part willful intentional neglect or failure to discharge her duties as court stenographer. 12 Neither is there evidence that she profited pecuniarily from the act imputed upon her so as to consider it corrupt. At most, it was an uncalled for emotional outburst after knowing that her immediate superior had reported her alleged inefficiency to the Supreme Court. Nevertheless, we cannot countenance Pacariem's imprudent and ill-suited insouciance in making false actuations against her superiors and co-employee. After a careful perusal of the records, we find nothing that could have provoked such a response from Pacariem. It was Atty. Llamasares's duty as her immediate superior to call her attention on matters affecting her performance as court stenographer and to bring the matter to the attention of the concerned authorities. Although we do not have a copy of Atty. Llamasares's memorandum, it can be gleaned from Pacariem's answer which contains excerpts therefrom that the same was written in proper and straightforward language. While we recognize Pacariem's right to be heard and to explain her side, hurling invectives against an innocent co-employee, the Clerk of Court and even the Presiding Judge, without first verifying the facts, is completely unwarranted. She very well knew that her statements would be read by higher authorities that may initiate an investigation based thereon. Such a demeanor is a failure of circumspection demanded of every public official and employee. In Mendoza v. Buo-Rivera,13 respondent Rivera was meted a P5,000.00 fine for conduct unbecoming a public servant after it was found that the administrative complaint she filed against a co-employee was based on false accusations plus the fact that she had sown intrigues was proved by substantial evidence. We held, thus: Rivera's acts of making false accusations and sowing intrigues are acts unbecoming of a public servant. They go against the principles of public service as solemnly enshrined in the 1987 Constitution and the Code of Conduct and Ethical Standards for Public Officials and Employees (R.A. No. 6713). Such acts rob the attention of public employees and courts from more imperative tasks and result in undue wastage of government resources. Such contemptible kind of behavior must not be tolerated if we are to demand the highest degree of excellence and professionalism

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among public employees and preserve the integrity and dignity of our courts of justice.14 Pacariem ought to be reminded that the image of the court as a true temple of justice is mirrored by the conduct of everyone who works thereat, from the judge to the lowest clerk.15 Hence, one's every act and word should be characterized by prudence, restraint, courtesy and dignity.16 This norm of behavior must be observed not only when dealing with other people but also, more importantly, when dealing with a superior. In our view, Pacariem failed to live up to this standard. We do note, however, that she later admitted her mistake and apologized for her indiscretion, a matter that we believe should mitigate her administrative liability. Under the implementing rules of the Code of Conduct and Ethical Standards for Public Officials and Employees,17 any violation of the Code shall be punished with a fine not exceeding the equivalent of six (6) months salary or suspension not exceeding one (1) year, or removal depending on the gravity of the offense. For her conduct unbecoming a court employee, we deem a fine of P2,000.00 is appropriate. One final note. There is on record a Reply18 filed by Atty. Llamasares in response to Pacariem's answer to her memorandum. The offices that received a copy of Pacariem's answer were also furnished a copy of Atty. Llamasares' Reply. Said Reply enumerates Pacariem's alleged infractions which, according to Atty. Llamasares, demonstrate Pacariem's gross misconduct and inefficiency in the performance of her duties rendering her unfit to continuously serve in the judiciary.19 We thus refer the same to the OCA for appropriate action. WHEREFORE, we find Lucila C. Pacariem GUILTY of conduct unbecoming a court employee and impose on her a FINE of P2,000, with a STERN WARNING that a repetition of the same or similar acts in the future will be dealt with more severely. The Reply of Atty. Lyn L. Llamasares is REFERRED to the OCA for appropriate action. SO ORDERED. Quisumbing, Chairperson, Carpio, Carpio-Morales, Velasco, Jr., J.J., concur.

Footnotes
1

Rollo, pp. 16-19. Id. at 18. Id. at 15. Id. at 54-56. Id. at 57-59.
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Id. at 59.

In Re: Loss of the Records of G.R. No. 126468 Entitled Sonia Llamas-Tan v. Court of Appeals, et. al., A.M. No. 01-1-01-SC, 23 May 2001, 358 SCRA 121, 129-130.
8

Provincial Board of Zamboanga del Norte v. Guzman, 129 Phil. 178 (1967).

R. Agpalo, Administrative Law, Law on Public Officers and Election Law, 479 (2005)
10

Landrito v. Civil Service Commission, G.R. Nos. 104304-05, 22 June 1993, 223 SCRA 564, 567.
11

Mamaclay v. Francisco,447 Phil. 356, 359 (2003). See Imperial v. Santiago, Jr., 446 Phil. 104, 118 (2003). A.M. No. P-04-1784, 28 April 2004, 428 SCRA 72, 78. Id.

12

13

14

15

Floria v. Sunga, 420 Phil. 637, 650 (2001), citing Bucatcat v. Bucatcat, 323 SCRA 578, 588.
16

Judge Caguioa v. Flora , 412 Phil. 426, 433 (2001).

17

Rules Implementing the Code of Conduct and ethical Standards for Public Officials and Employees, Rule XI, Section 1.
18

Rollo, pp. 46-52. Id. at 51.

19

107