G.R. No. 75297. August 12, 1987
HACIENDA BENITO, INC., ROBERT O. PHILLIPS & SONS, INC., LAS ROCAS TENNIS & COUNTRY CLUB, INC., AND MAGDALENA YSMAEL-PHILLIPS, PETITIONERS, VS. INTERMEDIATE APPELLATE COURT AND V…
GUTIERREZ, JR., J.:
This is a petition to review the decision of the Intermediate
Appellate Court, now Court of Appeals, in AC-G.R. No. SP-02790, which affirmed
the three orders dated November 9,
1983 of Judge Pastor T. Reyes, Presiding Judge of Branch 166 of the Regional Trial Court of the National Capital Region (Pasig), in Civil Case No. 35014.
On May 18, 1977,
petitioner Hacienda Benito, Inc., and private respondent Valley Resources, Inc.
entered into a “Mutual Agreement” wherein the former sold to the
latter parcels of land, roads including road rights, land covered by
installment contracts, receivables, and improvements therein in Victoria
Valley, Antipolo, Rizal for
the price of P6,300,000.00 payable in installments.
On the same day, May 18, 1977, Robert Phillips, husband of
petitioner Magdalena Ysmael Phillips acting thru his
agent, petitioner Las Rocas Tennis and Country Club,
and private respondent Valley Land Resources, Inc., entered into an
“AGREEMENT FOR THE PURCHASE OF SHARES OF STOCKS” wherein the former
sold to Valley Land Resources, Inc., 200 proprietary shares of stocks of the
Las Rocas Tennis and Country Club, Inc., for the
price of P6,000,000.00 also payable in installments.
Private respondent Valley Land Resources allegedly without the
knowledge and consent of the petitioners, withdrew the
land titles, subject of the abovementioned “Mutual Agreement” from
the depository banks and had them cancelled.
New titles were then issued in the name of the private respondent which
thereafter sold lots to the public.
On August 31, 1979, the petitioners, prompted by the failure of
the private respondent to execute the two mortgages pursuant to the agreements
filed an amended petition entitled “In the matter of the petition to
direct the Register of Deeds of Rizal to Annotate
certain Liens and Encumbrances” before the Rizal
Court of First Instance, Branch I (GRLO) LRC Nos. 15233, 12532, 22593 and 13131
(R-2144). The petitioners prayed for the
annotation at the back of the titles involved of pertinent portions of the
Mutual Agreement and the “Agreement
for the purchase of shares of stocks” to serve as warning to prospective
lot buyers that said titles are encumbered, pursuant to sections 72 and 112 of
Act 496. The Register of Deeds of Marikina, Rizal, was impleaded in the said petition in his official capacity.
The aforementioned
petition was granted by the court which directed the Register of Deeds to make
the annotation at the back of the transfer certificates of titles upon payment
of the corresponding fees.
On October 30, 1979, private respondent Valley Land Resources
filed a complaint for “specific performance with damages and judicial
tender of payment” against the petitioners before the Court of First
Instance of Rizal, Branch VI. The case docketed as Civil Case No. 35014
alleged that the private respondent has performed all its obligations under the
two contracts, particularly the payments of its obligations thereunder
without default, but that Magdalena Y. Phillips, as incumbent president of the
three corporations, deliberately failed and refused to comply with her
duties. It asked that upon consignation
in court of P420,000.00 representing payment of the installments due on October
30, 1979, in accordance with the
two contracts, and after hearing, judgment be rendered in favor of plaintiff
and against defendants ?
“1. Jointly and solidarily ordering defendants to perform and discharge the
following obligations and liabilities, to wit:
“1) To deliver to plaintiff the following
Transfer Certificates of Titles
covering the following lots, plan numbers and areas, to wit:
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Mother Title TCT No. 83424 in their
possession, but refused to deliver Title for cancellation by Register of Deeds
so that the new Titles could be issued.
“2) To remove, eliminate and clear the following Transfer Certificates
of Titles from liens and encumbrances:
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“3) To deliver 176
shares of stocks of Las Rocas Tennis and Country
Club, Inc. and the Pledge Agreement executed by plaintiff to guaranty the
payment of the purchase price of said 176 shares duly annotated thereon; and to
deliver 24 shares of stocks of Las Rocas Tennis and
Country Club, Inc. free from any lien and encumbrances whatsoever; provided
that membership dues shall be suspended during the pendency
of this case for reasons stated above;
“4) To construct and
finish the tennis courts and the sports facilities of the Las Rocas and Country Club, Inc., intended to be used by its
members stockholders; provided that membership dues shall be likewise suspended
during the pendency of this case and until defendants
comply with this obligation;
“5) To execute and
return the Mortgage Contract and Second Mortgage Contract as well as the
Supplementary Agreement in relation to said mortgage contracts already signed
by the authorized representatives of plaintiff which are still in the
possession of the defendants; and
“6) To erase and
eliminate all adverse claims annotated on all the properties of plaintiff
purchased from defendant Hacienda Benito, Inc., under the Mutual Agreement
dated May 18, 1977.”
(pp. 55-56, Rollo)
In addition, the private
respondent asked for P1,000,000.00 as actual and/or
compensatory damages, P1,000,000.00 as moral damages, P500,000.00 as exemplary
damages, P500,000.00 as attorney’s fees, and for costs.
A motion to dismiss the
complaint filed by the petitioners herein was denied for lack of merit by the
court, presided over by Judge Ricardo J. Francisco. The petitioners, therefore, filed their
answer but with the reservation:
x x x x x x x
x x
“4. That, if
defendants feel that specific performance is not warranted at any state of the
proceedings, the defendants shall consider the ownership of the properties
covered by Annexes “D” and “B” as automatically reverted to
the owner thereof, which option they shall exercise at the opportune
time.”
x x
x x
x x x x x
(pp. 57-57-a, Rollo)
In the meantime, the
Register of Deeds of Marikina, Rizal tried but without success to annotate petitioners’ liens at the back
of the transfer certificates of titles of the parcels of lands, subject of the
“Mutual Agreement” pursuant to the court’s order. Thus, on May 12, 1980, the Deputy Register of Deeds of Marikina submitted to the Court of First Instance, Rizal, in LRC Case No. R-2144, the annotation of liens and
encumbrances case earlier mentioned, a report wherein he prayed that pursuant
to Section 71, Presidential Decree No. 1529, “an order be issued directing
Resources Corporation and/or Valley Land Resources, Inc., to produce the
certificates of titles listed in Annex “B” hereof and to surrender
the same to him for cancellation and issuance of new titles in the name of
Hacienda Benito”(p. 58, Rollo).
With this development,
petitioner Mrs. Phillips executed an affidavit for the rescission of the Mutual
Agreement and the Agreement for
the Purchase of Shares of Stock
and for the reversion of the ownership of the real properties and the paid
shares of stock, pursuant to the reservation in the petitioners’ answer and the
conditions in said agreements. The
petitioners also filed a motion to dismiss in Civil Case No. 35014 on the
ground that the Report of the Registry of Deeds had rendered the case moot and
academic.
On the other hand, the
private respondent moved for the admission of its supplemental complaint in
Civil Case No. 35014 for the inclusion of the Deputy Register of Deeds of Marikina as additional party defendant with the prayer that
the affidavit of Mrs. Phillips be declared null and void.
The petitioners filed a
motion to dismiss the supplemental
complaint based on the pendency of LRC Case No.
R-2144 which calls for the determination of the question – whether or not the
automatic rescission of the “Mutual Agreement” and the reversion of
ownership are valid and legal –
which is also the issue raised in the supplemental complaint.
In separate orders the
trial court: 1) denied the petitioners’
motion to dismiss Civil Case No. 35014; 2) admitted the supplemental complaint;
and 3) denied the motion to dismiss supplemental complaint.
The March
17, 1980 affidavit
of rescission executed by Mrs. Phillips prompted the private respondent to file
an urgent motion for a writ of preliminary injunction in Civil Case No.
35014. It prayed that the defendants,
petitioners herein, be restrained, prohibited and enjoined from
“performing any and all other acts to implement, enforce or effectuate,
directly or indirectly, the alleged rescission and/or reversion embodied in the
affidavit of defendant Magdalena Y. Phillips dated March 17, 1980 and from
proceeding, continuing and prosecuting the Report (Petition) of Deputy Register
of Deeds Oscar G. Nolasco under section 71, P.D.
1529, until after the trial on the merits of the verified complaint and the
verified supplemental complaint filed by plaintiff in the case at bar is
finished and/or until further order of this Honorable Court.” (pp. 58-59, Rollo)
The motion was opposed by
the petitioners. The petitioners also
filed an urgent motion for the release of the P420,000.00
deposited by the private respondent on October 30, 1979.
In an order dated January
30, 1981, the Court,
now through Judge Eficio Acosta granted the writ of
preliminary injunction prayed for although, at the same time, it also authorized
the release of the P420,000.00 deposit.
The petitioners assailed
the legality of the aforementioned order before the Court of Appeals in CA-G.R.
No. SP-12009 entitled “Hacienda Benito, Inc. and Magdalena Ysmael Phillips, petitioners v. Honorable Eficio B. Acosta, et al.” The appellate court,
however, denied the petition for lack of merit.
Civil Case No. 35014 was
then calendared for pretrial on the merits.
In the meantime, the private respondent continued to deposit the
payments of the installments due under the
two contracts. On April
30, 1981, the
private respondent was able to deposit the sum of P7,260,000.00
to complete all the payments due to the petitioners under the two contracts.
In the course of the trial on the merits, certain incidents occurred
insofar as the total deposit of P7,260,000.00 was
concerned.
On March 25, 1982,
the petitioners filed a motion for release of deposit on the ground that said
amounts should be released to them in the concept of penalties and/or
liquidated damages. The motion was
denied by the court. The lower court, however, later reconsidered
its earlier order upon an urgent motion for reconsideration filed by the
petitioners.
The lower court justified its order to release the deposit upon
the filing of an indemnity bond of P7,260,000.00
posted by the Philippine American General Insurance Group in this
wise:
x x x x x x x x x
“x
x x In their motion
for reconsideration, however, defendants now theorize that the installment
payments made by the plaintiff is an implied admission or constructive
fulfillment of plaintiff’s obligations in favor of defendants under the two
agreements. Hence, under this concept of
payment as now viewed by the defendants, this Court is inclined and thus hereby
grants the release x x x.”
(p. 62, Rollo)
In consideration of the
release of the P7,260,000.00 the trial court also
ordered “that all entries of adverse claim, lis
pendens and/or rescission and reversion as well as all liens and encumbrances
registered in the titles of the properties in the name of the plaintiff,
subject of this litigation and caused by the defendants in relation to their
controversies arising from the two agreements abovementioned be cancelled or deleted” (p. 63, Rollo). In addition, Mrs. Phillips and Las Rocas Tennis and Country Club, Inc., were ordered to issue
and deliver to the plaintiff the 200 proprietary certificates or shares of
stocks of Las Rocas Tennis and Country Club, Inc.,
under the Agreement for the Purchase of Shares of Stocks, dated May 18, 1977.
Upon motion for
reconsideration of the aforementioned order filed by petitioners which
was opposed by the private respondent, the lower court issued another order
dated December 17, 1982,
the dispositive portion of which reads:
“WHEREFORE, premises considered, without prejudice to the
pending litigation and without waiving any cause of action, claims or defenses
by either parties, the Court hereby orders that:
“1. Paragraphs 1 and
2 of the dispositive portion of the Order dated November 10, 1982 be upheld and
considered immediately executory; and
“2. That the sum of
P7,260,000.00 be released to the defendants thru the
proper person duly and lawfully authorized to receive said amount upon filing
with this Court of an indemnity bond in the amount of P1.5 million to be posted
by a reputable bonding company subject to the approval of this Court or a cash
bond in the same amount.” (p. 64, Rollo)
In view of the Judicial Reorganization Act of 1980, Civil Case
No. 35014 was re-raffled and re-assigned to the Regional Trial Court of the
National Capital Judicial Region, Branch CLXVI at Pasig, Metro Manila, presided over
by Judge Pastor P. Reyes.
Acting on an urgent motion for release of deposit without bond
filed by the petitioners and the opposition thereto filed by the private
respondent, the lower court issued an order dated April 29, 1983, the dispositive portion of which reads:
“FOR ALL THE FOREGOING, an Order is hereby issued in the tenor
and disposition herein-below provided, to wit:
“1. Granting
defendants’ motion for the release of the deposit in the amount of
P7,260,000.00 presently deposited with the Philippine National Bank, Pasig Branch, Pasig, Metro Manila
and/or the Provincial Treasurer of Rizal Provinces, Pasig, Metro Manila to the Mutual Agreement and Agreement
for the Purchase of Shares of Stocks entered into between the parties on May
18, 1977, without bond; consequently, the Branch Manager of the aforesaid Bank
are hereby ordered to deliver, pay and release the aforesaid amount or any part
thereof in their respective custody immediately to Mrs. Magdalena Ysmael Phillips only, receipt of which to be attested by
her attorney of record, Atty. Magtanggol Gunigundo;
“2. Ordering Celino Pereda, Branch Clerk of
the defunct Court of First Instance, Branch X, Seventh Judicial District, Pasig, Metro Manila as well as Atty. Maximo
Contreras, former Clerk of Court of the Rizal Courts
of First Instance or whoever is in possession of the Passbooks and/or Deposit
Receipts for this P7,260,000.00 to deliver and surrender said passbooks and
receipts to the Branch Clerk of this Court, Atty. Felixberto
E. Bayani, who is hereby directed to execute and
implement paragraph 1 hereof;
“3. Denying
defendants’ motion to restore the liens, encumbrances, lis
pendens cancelled by Oscar Nolasco,
Register of Deeds, Marikina, Metro Manila On all the
titles covered by paragraph 1 of the Order dated November 10, 1982; Hence,
defendants’ motion to cite said Register of Deeds and/or Celino
Pereda is hereby denied;
“4. Declaring that this
Order shall not in any manner affect the rights or defenses of both parties nor
shall constitute any waiver, quitclaim or renunciation of the same as brought
out by their pleadings or in the continuation of the hearing on the merits;
“5. Revoking or modifying
any and all previous Orders only on matters treated in this Order and same
shall be considered as unenforceable and without any legal effects; and
“6. Setting
the continuation of the hearing on the merits on August 9, 1983 at 2:30
o’clock in the afternoon, Pasig, Metro Manila. (p.
66-67, Rollo)
This order triggered off
the filing of several motions and counter-motions by the parties before the
trial court. The private respondent
filed the following motions: (1) Urgent
motion for reconsideration and to stay execution of an alleged order allegedly
dated April 29, 1983; (2) Motion to strike out “urgent ex-parte motion
to stay execution dated February 9,
1983″ and “order dated February 11, 1983”; and (3) Urgent motion
to request the Honorable Judge to immediately act on plaintiff’s motion to stay
execution and to re-raffle case.
On the other hand, the petitioners filed the following: (1) Opposition to amended motion for reconsideration;
(2) Comment on motion to re-raffle case; (3) Motion for release of interest and
(4) Motion for an inventory and accounting.
The private respondent filed
separate oppositions to the petitioners’ motion.
On November 9, 1983,
Judge Reyes issued three orders to resolve all the issues raised by the parties
in the above-mentioned motions and counter-motions. At the same time, he also inhibited himself
from further hearing the case.
The first order resolved the private respondent’s motions for
reconsideration and to re-raffle the case.
The second order denied the petitioners’ motion for release of
interest while the third order also denied the petitioners’ motion for an
inventory and accounting.
In view of Judge Pastor Reyes’ declaration in the first order
dated November 9, 1983, that he is inhibiting himself from further hearing the case, the then Judge Rizalina S. Bonifacio who was the
Executive Judge sent notices to the parties setting the re-raffle of Civil Case
No. 35014 on February 23, 1984 at 2:00 p.m.
The records do not show whether a re-raffle was in fact held as
scheduled.
On the other hand, on November
18, 1983, the petitioners filed an urgent motion for
reconsideration to which the private respondent filed an opposition. Judge
Reyes did not act on the urgent motion because he had already inhibited himself
from the case.
Under this backdrop, the
petitioners filed a petition for certiorari, prohibition, and mandamus
questioning the three orders, all dated November 9, 1983 before the then
Intermediate Appellate Court.
In addition to its
comment, the private respondent filed a compulsory counter-petition for certiorari.
On May 30,
1986, the Appellate
Court rendered a decision dismissing the petition. The dispositive
portion of the decision reads:
“WHEREFORE, the petition is hereby dismissed for lack of
merit. The Executive Judge is hereby
ordered to re-raffle Civil Case No. 35014, if such has not yet been done, after
which its trial on the merits should proceed until its final determination.
“The restraining order
We issued on February 29, 1984 is hereby lifted. No special pronouncement is made as to
costs.” (p. 72, Rollo)
A motion for
reconsideration filed by the petitioner was denied for lack of merit. Hence, this petition. Our resolution dated November
3, 1986 required the
private respondent to comment on the petition.
The respondent has chosen not to file any comment. We have, therefore, resolved to give due
course to this petition and decide it on the merits.
The petitioners contend
that:
A
The respondent court committed grave abuse
of discretion and/or acted with or in excess of jurisdiction in dismissing the
petition thereby in effect ruling that Judge Reyes correctly acted in
inhibiting himself and at the same time resolving contentious issues.
B
Respondent court committed grave abuse of
discretion and/or acted without or in excess of jurisdiction in dismissing the
petition, thereby in effect sustaining the Order of Judge Reyes in ordering the
petitioners to deliver 200 shares of stock of Las Rocas
Tennis & Country Club, Inc., under the Stock Agreement, and all titles
included in the Mutual Agreement.
C
The respondent court went beyond the issues
raised by the parties and practically prejudged the merits of the case, when
the case was still supposed to be tried on the merits.
The initiative to
disqualify Judge Reyes from further proceeding with Civil Case No. 35014 came
from the private respondent. He charged
that the April 29, 1983 order was “patently antedated” and
that the release of the P7,260,000.00 deposit without
bond by the petitioners represented by Magdalena Y. Phillips was done under
suspicious circumstances.
The private respondent’s
claim that the April 29, 1983 order was “patently antedated”
stems from the fact that the said order contains a statement that the
defendants (petitioners herein) filed their comments on May 4,
1983 when the same
did not yet exist on April 29, 1983.
Judge Reyes admitted that
the date April 29, 1983 of the questioned order was not
correct. Nevertheless, he saw nothing
wrong about his antedated order.
Judge Reyes lengthily discussed the reasons for such mistake in
one of the orders dated November 9,
1983. He stated that he
tried his best to have the parties agree to a compromise. To achieve this end, Judge Reyes explained
that he was able to persuade the parties to submit proposals for
settlement. It was understood, however,
that hearings could last only up to April 30, 1983 since he
was taking a leave of absence beginning May
1, 1983. He stated that on April 22, 1983, the private
respondent filed its “Compromise Agreement.” In addition, the private
respondent submitted a proposal for settlement.
Since no settlement was reached during the April 22, 1983 hearing, the parties agreed to meet on April 30, 1983. On April
29, 1983, Judge Reyes prepared the final draft of the order. On May
5, 1983, the petitioners submitted a comment on “Compromise
Agreement.”
Judge Reyes then emphasized the following explanation in his November 9, 1983 order:
x x x x x x x x x
“When the attention of the Presiding
Judge was called the aforesaid comment, he had to insert the same on the penultimate paragraph of page 6
of the Order which is as follows:
“Without losing the hope for the parties to enter into a
compromise agreement, the Court prevailed upon them in submitting proposals for
settlement, i.e., plaintiff’s ‘COMPROMISE AGREEMENT’ dated April 21, 1983 and defendants’ ‘PROPOSAL FOR
SETTLEMENT’ bearing the same date. In
accordance with the agreement between the parties, the Court presented for
their consideration in a
‘COMPROMISE AGREEMENT’ dated April 29,
1983 to which defendants submitted its ‘COMMENT ON COMPROMISE
AGREEMENT’ dated May 4, 1983.”
(p. 39, Rollo)
In conclusion, Judge Reyes added that the mistake was “due
to oversight brought about by the death of his brother and other matters
related thereto. At most, this matter is
a clear error which neither the Court stenographer nor the Branch Clerk of
Court noticed.” Moreover, according to Judge Reyes x x x “[T]he mistake in not changing the date April
29, 1983 to May 5, 1983 or thereabout did not vary, change or alter the order
nor has the change in the date speak falsely (sic) on something different from
the release of the deposit.
The private respondent’s charge that the P7,260,000.00 deposit
was released under suspicious circumstances was compounded by the fact that its
release to petitioner Magdalena Ysmael Phillips was
done on May 18, 1983, or two days prior to the private respondent’s receipt of a copy of the
April 29, 1983 order on May 20, 1983.
Judge Reyes in his November
9, 1983 order admitted that
in view of the circumstances under which P7,260,000.00
deposit without bond was released, the private respondent may have grounds to
harbor suspicion. Judge Reyes, however,
exonerated himself from any involvement in the release of the P7,260,000.00 by stating that:
“With respect to the haste in the withdrawal of the deposit
whereby the copy of the Order for defendants was served much earlier than that of plaintiff who received a copy only
at 4:30 o’clock p.m. on May 20, 1983 after the deposit had already been
withdrawn by defendants through Magdalena Y. Phillips, the Court finds this
matter regrettable and unpardonable. On
its face, it appears to be a deliberate act on the part of the person or person
responsible for delivery of copies of the Order and/or the withdrawal of the
deposit to deprive plaintiff the right to resort to legal action to enjoin the
withdrawal. Without knowing the exact
date when said Order was signed which can not be earlier than May 5, 1983 (date
of the filing of defendants’ ‘Comments on Compromise Agreement’) nor later than
May 17, 1983 (date of departure for abroad of the Presiding Judge, he
personally delivers it to the Branch Clerk of Court for immediate release. Hence, the Presiding Judge was already out of
the country when copies of the Order were delivered to the parties and their
counsel as well as the time when the deposit was withdrawn. However, the Presiding Judge can assure
plaintiff and all concerned that should there be any irregularity or anomaly
any person or persons including any personnel of the Court who, in one way or
the other, is/are connected therewith or received some consideration or promise
thereof, the Presiding Judge upon request of plaintiff, shall take the
corresponding action against them as may be warranted in the premises.”
(p. 42, Rollo)
Judge Reyes’ explanations regarding these controversial matters
were accepted by the appellate court.
The petitioners, for obvious reasons, interposed no objections to Judge
Reyes’ explanation. And the private respondent seemed to be
satisfied with these explanations as it did not anymore raise any questions
and for obvious reasons, too. Judge
Reyes, in the three (3) questioned November
9, 1983 orders, favored the private respondent.
These facts, notwithstanding, we find it necessary to review the
explanations even if they are not raised as errors or issues because the
resolution of issues raised in
the questioned orders is necessary to arrive at a
just decision of the case. (See
Hernandez v. Andal,
78 Phil. 198-199; Saura Import and Export Co.,
Inc., v. Philippine
International Surety Co., Inc., 8 SCRA 143; Fegurin
v. National Labor Relations Commission, 120 SCRA 910) Added to this is our
responsibility to look into alleged acts of erring members of the bench and bar to preserve the
integrity of the judiciary. (See Arban
v. Borja, 143 SCRA 634).
Judge Reyes admitted that the April 29, 1983 order did not reflect the date of its
actual issuance. According to him the order was issued
sometime between May 5, 1983,
the date of the filing of the petitioners’ Comments on Compromise Agreement and
May 16, 1983. In short, he does not even know when his court
issued the controversial
order. Moreover, the Judge admitted that he was on leave of absence
beginning May 1, 1983. Hence,
he had no more authority to issue the controversial order which among
other things directed the release of the P7,260,000.00
deposit without bond to the petitioners.
Moreover, petitioner Magdalena Ysmael Phillips
was able to withdraw the P7,260,000.00 deposit without
any bond even before the private respondent could receive a copy of the order thus preventing the
latter not only from questioning the April
29, 1983 order but from taking steps to enjoin the release of the
money.
These circumstances, taken together, make the explanation on the
antedated April 29, 1983 order and the sudden withdrawal of the
P7,260,000.00 deposit unsatisfactory to say the least. This Court finds, that in the interest of justice, a further inquiry should be conducted
into the release of the P7,260,000.00 deposit of the
private respondent to the petitioner Mrs. Phillips two (2) days prior to the
respondent’s receipt of the April 29, 1983 order.
Judge Reyes committed an act of judicial indiscretion when he issued the
controversial April 29, 1983 order despite the fact that, in his own
words, he was already on vacation leave of absence on May 1,
1983.
Admittedly, the
controversial April 29, 1983 order
was issued long after May 1, 1983.
Hence, for lack of authority and considering the circumstances
surrounding its issuance, the April 29, 1983 order must be declared null and void. Consequently, the P7,260,000.00
deposit already withdrawn by petitioner Magdalena Ysmael
Phillips pursuant to the April 29, 1983 order will have to be returned to the court.
The first assigned error raises the issue as to whether or not
Judge Reyes abused his discretion in inhibiting himself from further proceeding
with the case but not before resolving all the pending motions of the
parties. These motions are: (a) motion for reconsideration of the April 29, 1983 order filed by the
private respondent; (b) motion to re-raffle the case filed by the private
respondent; (c) motion to withdraw interest filed by the petitioners and (d)
motion for accounting and inventory filed by the petitioners.
The petitioners submit that if Judge Reyes was going to inhibit
himself after all, he should not have resolved any of the pending actions
except the motion for his inhibition.
The petitioners argue that if Judge Reyes had to decide on the contentious issues and motions he should
have gone all the way, without in the
end inhibiting himself after he had granted reliefs to the private respondent.
Section 1, Rule 137 on disqualification of judges provides:
“Disqualification of judges. –
No judge or judicial officer shall sit in any case in which he, or his wife or
child, is pecuniarily interested as heir, legatee,
creditor or otherwise,
or in which he is
related to either party within the sixth degree of consanguinity or
affinity, or to counsel within the fourth degree, computed according to the
rules of the civil law, or in which he has been executor, administrator,
guardian, trustee or counsel, or in which he has presided in any inferior
court when his ruling or decision is the subject of review, without the written
consent of all parties in interest, signed by them and entered upon the record.
“A judge may, in the exercise of his sound discretion,
disqualify himself from sitting in a case, for just or valid reasons other than
those mentioned above.”
The rationale behind this rule is to preserve public faith in
the judiciary’s fairness and
objectivity to allay suspicions and distrust as to a possible bias and
prejudice in favor of a party coming into play.
(See Villapando v. Quitain, 75 SCRA 24; and Bautista v. Rebueno,
81 SCRA 535).
Judge Reyes, in
inhibiting himself stated:
x x x x x x x x x
“x xx In order to give peace of mind
to the party concerned as well as to him in particular and as he approaches the
darkening shadows of his compulsory retirement, the Presiding Judge has no
recourse but to voluntarily inhibit himself from further hearing this
case.” (p. 46, Rollo)
The judge’s inhibition from the case is founded on a
valid reason. Considering the
circumstances under which the controversial April 29, 1983 order was issued and the sudden withdrawal
of the P7,260,000.00 deposit by the petitioners, the
private respondent had reasons to suspect the objectivity of the presiding
judge. This, Judge Reyes readily
admits. The question, however, is not
the inhibition itself but its timeliness.
Section 2, Rule 137 of the Revised Rules of Court
provides:
“Objection
that judge disqualified, how made and effect.– If
it be claimed that an official is
disqualified from sitting as above provided, the party objecting to his
competency may, in writing, file with the official his objection, stating the grounds therefor, and the official shall thereupon
proceed with the trial, or withdraw therefrom, in
accordance with his determination of the question of his disqualification. His decision shall be forthwith made
in writing and filed with the other papers in the case, but no appeal or stay shall be allowed from, or by reason of,
his decision in favor of his own competency, until after final judgment in the
case.” (Underlining supplied)
Pursuant to this rule,
Judge Reyes had two options following his receipt of the motion to disqualify
him from the case – to proceed with the case or withdraw therefrom. He can not do both at the same time.
A cursory reading of the
questioned November 9, 1983 order shows that the judge practically
disposed of the case on the merits and at the same time inhibited himself
from further hearing the case. Thus, the dispositive
portion of the November 9,1983 order reads:
“FOR ALL THE FOREGOING CONSIDERATION, the Court hereby adopts
and reproduces the dispositive part of the Order
dated April 29, 1983 and the same is accordingly modified in the tenor and
disposition herein-below provided:
“1. Modifying
paragraph 1 of the dispositive part of the Order
dated April 29, 1983 ordering the delivery, payment and release of the deposit
in the amount of P7,260,000.00 to defendant Hacienda Benito, Inc. thru Mrs.
Magdalena Ysmael Phillips instead of ‘to Mrs.
Magdalena Ysmael Phillips only’ as therein provided;
“2. Declaring that
the Order dated April 29, 1983
to be legal, valid and binding between the parties although same was signed by
the Presiding Judge after May 5, 1983;
“3. Ordering
defendants Hacienda Benito, Inc. and the Las Rocas
Tennis and Country Club, Inc., thru Mrs. Magdalena Ysmael
Phillips to issue and deliver to plaintiff the proprietary certificates
consisting of two hundred (200) shares of stocks of the Las Rocas
Tennis and Country Club, Inc., sold under the Agreement for the Purchase of
Shares of Stocks dated May 18, 1977;
“4. In the event that
defendants have not delivered to plaintiff the Certificates of Titles covering
the Lots, Plan and Block Nos. and areas which are as follows:
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Mother Title TCT No. 83424 in their
possession, but refused to deliver title for cancellation by Register of Deeds
so that the new title could be issued.
ordering said
defendants to deliver them to plaintiff, and
“5. The Presiding
Judge, motu proprio,
inhibits himself from further hearing this case and directing the Branch Clerk
of Court to return the records to the Acting Executive Judge for re-raffle as
requested by plaintiff.” (pp. 46-47, Rollo)
The judge committed grave
abuse of discretion in resolving the pending motions of the parties and after
doing so inhibiting himself from further proceeding with the case. (Sec. 2, Rule 137, Revised Rules of Court)
The second and third assigned errors raise the
issue as to whether or not the appellate court was right in categorically
stating that the private respondent had performed all its obligations
under the two contracts.
The appellate court
affirmed the aforequoted November 9, 1983 order.
The appellate court even went further by discussing the merits of the
case and concluding therein that the private respondent had performed all its
obligations under the two contracts.
This cannot be done. The issue raised in the case is whether or
not the petitioners could rescind the ”Mutual Agreement” and the
“Stock Agreement” considering that the petitioners extrajudicially did so by executing the Affidavit of
Rescission of Ownership Hence, the appellate court’s conclusion that the
private respondent had performed all its obligations under the two said
contracts would render the case moot and academic.
At this juncture, we note that a main issue raised in the case pertains to a May
18, 1977 “Mutual Agreement” executed by petitioner Hacienda Benito,
Inc., and private respondent Valley Land Resources Inc., wherein the former
sold to the latter parcels of lands, roads, including road rights, land covered
by installment contracts receivables,
and improvements therein in Victoria Valley, Antipolo,
Rizal. Whether
or not this agreement is legal and binding between the parties is one of the
issues to be resolved in Civil Case No. 35014.
In this connection, we take note of G.R. No. 50911, Miguel Perez
Rubio v. Court of Appeals, et al., decided by this Court on March 12, 1986.
G.R. No. 50911 involves shares of stock of the petitioner herein,
Hacienda Benito which were sold by Miguel Perez Rubio to Robert O. Phillips and
Sons, Inc., (ROPSI) for P5,500,000.00. ROPSI was not able to pay P4,250,000.00 of the purchase price resulting in two other
cases involving Perez Rubio, ROPSI, Spouses Robert Phillips and Magdalena Y.
Phillips, major stockholders of ROPSI and Hacienda Benito among others, which
reached this Court earlier. (G.R. Nos.
L-24581; L-30404) In all these cases, it was clearly
shown that ROPSI tried to sell the shares of stock of Hacienda Benito without
first paying its unpaid balance to Perez Rubio.
Finally, in G.R. No. 50911, we ruled that Robert O.
Phillips and Sons and the Phillips spouses are to be jointly and severally
liable to the petitioner for the outstanding debt of Phillips and Sons in the amount of P4,250,000.00
with interest thereon as provided
in the parties’ agreement of the sale of the shares of stock of Hacienda
Benito.
In order that the
decision in G.R. No. 50911 will not become ineffectual, this Court rules that
the issue as regards the
validity of the “Mutual Agreement” between the two parties herein should be resolved in a way as
not to prejudice the rights and
interest of Miguel Perez Rubio in relation to the P4,250.000.00
he has yet to collect for selling his shares of stocks therein.
Finally, our declaration
that the April 29, 1983 order and the three orders all dated November 9, 1983
are null and void for reasons
earlier stated necessitates the return of the P7,260,000.00
deposit of the private respondent to this court representing the full purchase
price of the sale of the assets
of Hacienda Benito and the proprietary shares of Las Rocas Tennis Club pursuant to the parties’ “Mutual
Agreement” and “Stock Agreement”. This is so, because
it was in accordance with the void April 29, 1983 order that petitioner Magdalena Y. Phillips was able to withdraw said
deposit.
WHEREFORE, the instant petition is hereby
GRANTED. The questioned decision of the then Intermediate Appellate Court is MODIFIED as
follows:
1. The November 9, 1983 Orders issued by Judge Pastor Reyes and
affirmed by the appellate court are
DECLARED NULL and VOID;
2. The April 29, 1983 Order of Judge Pastor Reyes is DECLARED
NULL and VOID. As a consequence,
petitioner Magdalena Y. Phillips is directed to return the P7,260,000.00
deposit of the private respondent to the court to which Civil Case No. 35014
will be re-raffled;
3. The Executive Judge at Pasig, Rizal
is ordered to re-raffle Civil Case No. 35014, after which daily hearings shall
be held; the case shall be resolved; and a report made to this Court within
thirty (30) days;
4. The successor lower court is directed to look into the
circumstances surrounding the hasty release of the P7,260,000.00 deposit to
petitioner Magdalena Y. Phillips, two days prior to the receipt by the private
respondent of the April 29, 1983 order within thirty (30) days;
5. The court to which Civil Case No. 35014 will be re-raffled
is directed to consider Miguel Perez Rubio impleaded
in the case; and
6. The Court Administrator is ordered to conduct an investigation
for purposes of corrective action into any irregularity which may have occurred
in this case and report to this Court within thirty (30) days.
SO OR.DERED.
Fernan, (Chairman), Feliciano, Bidin, and Cortes, JJ., concur.