PLACIDO O. URBANES, JR., PETITIONER, VS. THE HON. COURT OF APPEALS AND NATIONAL POWER CORPORATION, RESPONDENTS.

This petition for review on certiorari, assails
the decision of the Court of Appeals in CA G.R. CV No. 34524 for, among other
things, having been penned by Justice Eduardo G. Montenegro who, it is averred,
should have disqualified himself from sitting and participating in said case
pursuant to Rule 137 of the Rules of Court. Justice Montenegro, prior to his appointment to the Court of Appeals,
was the Acting Solicitor General who, in that capacity, had represented herein
respondent National Power Corporation (“NPC”) in the case.

Civil Case No. 47216 was filed, on 18 February 1986, by
petitioner Placido Urbanes, Jr., against respondent NPC for injunction and
damages. Urbanes had contracts of
security services for NPC’s various installations. His two contracts expired on 01 January and 16 February 1985, respectively,
but, according to Urbanes, he was asked by NPC to stay on until he would have
been properly relieved.

On 24 January 1986, Urbanes was finally advised by NPC’s
management of the termination of his contracts. In his complaint for injunction and damages, with a prayer for
preliminary injunction, Urbanes asserted that, there having been no timely
action from either of the contracting parties to terminate the contracts, the
same were deemed “automatically renewed” in accordance with the
pertinent provisions of the two agreements. He also contended that NPC’s management lacked authority to end his
security services on the ground that only NPC’s Board of Directors had the sole
prerogative to terminate the contracts.

On 10 March 1986, the lower court issued an order granting the
application of Urbanes for a writ of preliminary injunction enjoining the
parties to observe status quo ante. NPC’s motion for reconsideration was denied.

On 23 April 1986, NPC filed with the Court of Appeals a petition
for certiorari and prohibition seeking to annul and set aside the
10th March 1986 order of the court a quo. In a resolution penned by Justice Ricardo P.
Tensuan, promulgated on 19 December 1986, the petition was dismissed by the
Court of Appeals.

On 24 August 1987, NPC filed with the court a quo an “Urgent Motion to Dissolve
Preliminary Injunction and/or Motion to Dismiss.”

On 22 September
1987, Urbanes filed a “Motion for Leave to File an Amended Supplemental
Complaint,” claiming that the action of the NPC Board banning Urbanes from
participating in future public biddings for security service requirements of
NPC was unjust and illegal, and he, again, thus prayed for a writ of preliminary mandatory
injunction.

On 14 December 1987, the trial court denied NPC’s urgent motion
to dissolve the preliminary injunction and deferred resolution on its motion to
dismiss the case until after trial on the merit. The court admitted the amended and supplemental complaint of
Urbanes.

On 13 January 1988, NPC filed its answer to the amended and
supplemental complaint.

On 22 January 1988, the trial court granted the application of
Urbanes (in his amended/supplemental complaint) for a writ of preliminary
prohibitory injunction and, accordingly, ordered NPC to cease and desist from implementing
the order of the Board of Directors banning Urbanes from participating in
future biddings for any security service contract with NPC.

On 18 April 1988, the trial court, on motion of NPC, dissolved the writ of preliminary
injunction of 10 March 1986 upon the filing by NPC of a counterbond
in the sum of P100,000.00 but denied the motion for reconsideration of the
order admitting the amended supplemental complaint and granting the writ of
preliminary prohibitory injunction therein prayed for. NPC filed a petition for certiorari,
mandamus and prohibition with the Supreme Court which it referred
to the Court of Appeals. The petition
questioned, among other things, the trial court’s order, dated 14 December
1987, denying NPC’s motion to
dissolve the writ of preliminary injunction and admitting the amended and
supplemental complaint of Urbanes, as well as the lower court’s order, dated 22
January 1988, granting his application for preliminary prohibitory injunction.

On 18 May 1989, the Court of Appeals dismissed the petition,
holding that the court a quo did not abuse its discretion in
issuing its questioned orders. The
decision was elevated to the Supreme Court via a petition for certiorari. In a resolution, dated 06 November 1989,
this Court denied the petition for lack of merit.

On 29 June 1991, the trial court finally issued its decision in
Civil Case No. 47216 upholding the complaint against NPC, making permanent the
writ of injunction and awarding damages to Urbanes.

From the above decision, NPC appealed to the Court of Appeals.

On 30 September 1993, the Court of Appeals^[1]
issued its decision, penned by Justice Eduardo G. Montenegro, modifying the
decision of the trial court thusly:

“WHEREFORE, all the foregoing considered, the decision
appealed from is MODIFIED. Paragraph 1
of the dispositive portion making permanent the writ of preliminary injunction
issued March 19, 1986 per Order dated March 10, 1986 enjoining defendant NPC from implementing the letters of
defendant dated January 24, 1986 terminating plaintiff’s security service
contracts and paragraph 2 of the same dispositive portion ordering NPC to pay
plaintiff-appellee the sum of P500,000.00 as moral, actual and exemplary
damages and P200,000.00 as attorney’s fees are REVERSED and SET ASIDE. Paragraph 2 of the dispositive portion
reinstating and making permanent the writ of preliminary prohibitory injunction
dated February 11, 1988 issued pursuant to the order dated January 22, 1988,
directing defendant NPC to cease and desist from implementing the Order of the
Board of Directors banning plaintiff and his related companies from
participating in future biddings for any security service contracts with NPC is
AFFIRMED. There is no pronouncement as
to costs.

“SO ORDERED.”

Urbanes filed a motion for
reconsideration, which the appellate court denied. On 09 November 1993, he filed a motion for the inhibition of
Justice Montenegro on the ground that before he became an Associate Justice of
the Court of Appeals, he had acted as counsel
for NPC in his then capacity as Acting Solicitor General. On 17 December 1993, Justice Montenegro
inhibited himself from the case and forthwith caused to be set aside the resolution denying the motion for reconsideration.

On 07 January 1994, the
Court of Appeals, through Justice Minerva P. Gonzaga-Reyes,^[2]
ultimately denied the motion for
reconsideration.

Hence, the instant petition for review on certiorari,
which raises, among other issues, the following assignment of error:

“The Hon. Court of Appeals erred in promulgating a decision in
this case with the participation of Justice Eduardo G. Montenegro who is
disqualified under the rules to participate in deciding this case.”

We agree with
petitioner on the above submission. The
Rules of Court (Disqualification of Judges) has truly called for the total
inhibition of Justice Montenegro from the case. Section 1 of Rule 137 provides:

“SECTION 1. 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.”

The intendment of the above provision of the Rules of Court is
not difficult to find. Its rationale is
predicated in the long standing precept that no judge should handle a case in
which he might be perceived, rightly or wrongly, to be susceptible to bias and
partiality. His judgment must not be
tainted by even the slightest suspicion of improbity or preconceived interest. The rule is aimed at preserving at all times
the faith and confidence in courts of justice by any party to the litigation
(see Gutierrez vs. Santos, 112 Phil. 184; Geotina vs. Gonzalez, 41 SCRA 66;
Umale vs. Villaluz, 51 SCRA 84; Pimentel vs. Salanga, 21 SCRA 160).

Considering that Justice Montenegro had so represented the
National Power Corporation in CA G.R. CV No. 34524 in his then capacity as the
Acting Solicitor General, he should have really begged off from any
participation in the decision process by, indeed from being the ponente
for, the appellate court. In all
fairness to Justice Montenegro, however, he explained such failure to promptly
inhibit himself as one of mere inadvertence and oversight on his part, and when
reminded that he, in fact, had acted as counsel for respondent NPC as the then
Acting Solicitor General, he then forthwith disengaged himself from further
involvement in the disposition of the case.

With the required inhibition of Justice Montenegro from taking
part in the disposition of C.A. G.R. CV No. 34524, the presence of the two
remaining Justices of the appellate court’s First Division neither would be
enough to constitute a quorum for its due deliberation on the case nor would
allow a judgment to be promulgated thereon. The pertinent provision of Section 4 of the Revised Internal Rules of
the Court of Appeals, as amended, provides:

“SEC. 4. Quorum and
Affirmative Vote. — x x x

“a. The presence of all members of a Division
shall constitute a quorum and their unanimous vote shall be necessary for the
pronouncement of a decision or resolution, otherwise the Chairman shall ask the
Raffle Committee to designate by raffle two additional members of the Court to
constitute a special division of five members.”

WHEREFORE, CA G.R. CV No. 34524 is hereby REMANDED to the
Court of Appeals for appropriate action conformably with the foregoing
opinion. No costs.

SO ORDERED.

Feliciano, (Chairman), Bidin, Romero, and Melo, JJ., concur.

^[1]
First Division, P. J. Santiago M. Kapunan, J. Minerva P. Gonzaga-Reyes and J.
Eduardo G. Montenegro (Ponente)

^[2]
Also of the First Division.