J.A.B. Bulao & Associates

 CASE 2011-0032: LETICIA TAN, MYRNA MEDINA, MARILOU SPOONER, ROSALINDA TAN, AND MARY JANE TAN, MARY LYN TAN, CELEDONIO CHAIRPERSON,TAN, JR., MARY  JOY TAN,   AND MARK ALLAN  TAN, REPRESENTED HEREIN BY THEIR MOTHER, LETICIA TAN, VS. OMC CARRIERS, INC. AND BONIFACIO ARAMBALA,  (G.R. NO. 190521, 12 JANUARY 2011, BRION, J.) SUBJECTS: ACTUAL DAMAGES, HOW PROVEN; TEMPERATE DAMAGES; EXEMPLARY DAMAGES; ATTORNEY’S FEES IN WRECKLESS IMPRUDENCE CASE. (BRIEF TITLE: TAN ET AL VS. OMC CARRIERS ET AL)

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R E S O L U T I O N

BRION, J.:

We resolve the motion for reconsideration^[1][1] – filed by Leticia Tan, Myrna Medina, Marilou Spooner, Rosalinda Tan, Mary Jane Tan, Mary Lyn Tan, Celedonio Tan, Jr., Mary Joy Tan, and Mark Allan Tan (petitioners), all heirs of the late Celedonio Tan – asking us to reverse and set aside our Resolution of February 17, 2010.^[2][2]  We denied in this Resolution their petition for review on certiorari for failing to show any reversible error in the assailed Court of Appeals (CA) decision of June 22, 2009^[3][3] sufficient to warrant the exercise of our discretionary appellate jurisdiction.

The CA decision, in turn, affirmed with modification the decision of the Regional Trial Court (RTC) of Muntinlupa City in Civil Case No. 96-186, finding the respondents – OMC Carriers, Inc. (OMC) and Bonifacio Arambala – guilty of gross negligence and awarding damages to the petitioners.

THE FACTS

On September 27, 1996, the petitioners filed a complaint for damages with the RTC against OMC and Bonifacio Arambala.^[4][4]  The complaint states that on November 24, 1995, at around 6:15 a.m., Arambala was driving a truck^[5][5] with a trailer^[6][6] owned by OMC, along Meralco Road, Sucat, Muntinlupa City.  When Arambala noticed that the truck had suddenly lost its brakes, he told his companion to jump out.  Soon thereafter, he also jumped out and abandoned the truck.  Driverless, the truck rammed into the house and tailoring shop owned by petitioner Leticia Tan and her husband Celedonio Tan, instantly killing Celedonio who was standing at the doorway of the house at the time.^[7][7] 

          The petitioners alleged that the collision occurred due to OMC’s gross negligence in not properly maintaining the truck, and to Arambala’s recklessness when he abandoned the moving truck. Thus, they claimed that the respondents should be held jointly and severally liable for the actual damages that they suffered, which include the damage to their properties, the funeral expenses they incurred for Celedonio Tan’s burial, as well as the loss of his earning capacity. The petitioners also asked for moral and exemplary damages, and attorney’s fees.^[8][8]  

          The respondents denied any liability for the collision, essentially claiming that the damage to the petitioners was caused by a fortuitous event, since the truck skidded due to the slippery condition of the road caused by spilled motor oil.^[9][9]

THE RTC DECISION

          After trial, the RTC found OMC and Arambala jointly and severally liable to the petitioners for damages.^[10][10]  Relying on the doctrine of res ipsa loquitur, the RTC held that it was unusual for a truck to suddenly lose its brakes; the fact that the truck rammed into the petitioners’ house raised the presumption of negligence on the part of the respondents. These, the respondents failed to refute.^[11][11]

The RTC did not agree with the respondents’ claim of a fortuitous event, pointing out that even with oil on the road, Arambala did not slow down or take any precautionary measure to prevent the truck from skidding off the road. The alleged oil on the road did not also explain why the truck lost its brakes. Had OMC done a more rigid inspection of the truck before its use, the defective brake could have been discovered. The RTC, thus, held OMC jointly and severally liable with Arambala for the damage caused to the petitioners, based on the principle of vicarious liability embodied in Article 2180^[12][12] of the Civil Code.^[13][13]

The dispositive portion of the decision stated:

            WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs and against the defendants ordering:

1.      The defendants to pay the plaintiffs jointly and severally the amount of P50,000.00 for the death of Celedonio Tan;

2.      The defendants to pay the plaintiffs jointly and severally the amount of P500,000.00 for the loss of earning capacity of Celedonio Tan, plus interest thereon from the date of death of Celedonio Tan;

3.      The defendants to pay the plaintiff Leticia Tan jointly and severally the amount of P355,895.00 as actual damages;

4.      The defendants to pay the plaintiffs jointly and severally the amount of P500,000.00 as moral damages;

5.      The defendants to pay the plaintiffs jointly and severally the amount of P500,000.00 as exemplary damages; and

6.      The defendants to pay the plaintiffs jointly and solidarily the amount of P500,000.00 as attorney’s fees.

Costs against the defendants.

SO ORDERED.^[14][14]

THE COURT OF APPEALS DECISION

          On appeal, the CA affirmed the RTC’s findings on the issues of the respondents’ negligence and liability for damages. However, the CA modified the damages awarded to the petitioners by reducing the actual damages award from P355,895.00 to P72,295.00. The CA observed that only the latter amount was duly supported by official receipts.^[15][15]

The CA also deleted the RTC’s award for loss of earning capacity. The CA explained that the petitioners failed to substantiate Celedonio Tan’s claimed earning capacity with reasonable certainty; no documentary evidence was ever presented on this point. Instead, the RTC merely relied on Leticia Tan’s testimony regarding Celedonio Tan’s income. The CA characterized this testimony as self-serving.^[16][16]  

The CA further reduced the exemplary damages from P500,000.00 to P200,000.00, and deleted the award of attorney’s fees because the RTC merely included the award in the dispositive portion of the decision without discussing its legal basis.^[17][17]

THE PETITION

          In the petition for review on certiorari before us,^[18][18] the petitioners assert that the CA erred when it modified the RTC’s awarded damages.  The petitioners submit the reasons outlined below.

          First, the CA erred when it reduced the RTC’s award of actual damages from P355,895.00 to P72,295.00. The petitioners claim that they sought compensation for the damage done to petitioner Leticia Tan’s house, tailoring shop, sewing machines, as well as other household appliances. Since the damages primarily refer to the value of their destroyed property, and not the cost of repairing or replacing them, the value cannot be evidenced by receipts. Accordingly, the RTC correctly relied on petitioner Leticia Tan’s testimony and the documentary evidence presented, consisting of pictures of the damaged property, to prove their right to recover actual damages for the destroyed property.

Second, the petitioners are entitled to actual damages for the loss of Celedonio Tan’s earning capacity.  While they admit that they did not submit any documentary evidence to substantiate this claim, the petitioners point out that Celedonio Tan was undisputably a self-employed tailor who owned a small tailor shop; in his line of work, no documentary evidence is available.

Third, the petitioners maintain that they are entitled to exemplary damages in the amount of P500,000.00 because the RTC and the CA  consistently found that the collision was caused by the respondents’ gross negligence. Moreover, the respondents acted with bad faith when they fabricated the “oil slick on the road” story to avoid paying damages to the petitioners.  As observed by the CA, the Traffic Accident Investigation Report did not mention any motor oil on the road at the time of the accident. SPO4 Armando Alambro, the Investigation Officer, likewise testified that there was no oil on the road at the time of the accident. For the public good and to serve as an example, the respondents should be made to pay P500,000.00 as exemplary damages.

          Lastly, the petitioners are entitled to attorney’s fees based on  Article 2208 of the Civil Code which provides, among others, that attorney’s fees can be recovered when exemplary damages are awarded, and when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim.

          We initially denied the petition in our Resolution of February 17, 2010, for the petitioners’ failure to show any reversible error in the CA decision sufficient to warrant the exercise of our discretionary appellate jurisdiction.  In our Resolution of August 11, 2010, we reinstated the petition on the basis of the petitioners’ motion for reconsideration.

OUR RULING

          Finding merit in the petitioners’ arguments, we partly grant the petition.

Procedural Issue

As both the RTC and the CA found that the respondents’ gross negligence led to the death of Celedonio Tan, as well as to the destruction of the petitioners’ home and tailoring shop, we see no reason to disturb this factual finding.  We, thus, concentrate on the sole issue of what damages the petitioners are entitled to.

We are generally precluded from resolving a Rule 45 petition that solely raises the issue of damages, an essentially factual question, because Section 1, Rule 45 of the Rules of Court, expressly states that –

Section 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.

In light, however of the RTC’s and the CA’s conflicting findings on the kind and amount of damages suffered which must be compensated, we are compelled to consider the case as one of the recognized exceptions.^[19][19]  We look into the parties’ presented evidence to resolve this appeal.

Temperate damages in lieu

of actual damages

We begin by discussing the petitioners’ claim for actual damages arising from the damage inflicted on petitioner Leticia Tan’s house and tailoring shop, taking into account the sewing machines and various household appliances affected. Our basic law tells us that to recover damages there must be pleading and proof of actual damages suffered.^[20][20] As we explained in Viron Transportation Co., Inc. v. Delos Santos:^[21][21]

Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages. To justify an award of actual damages, there must be competent proof of the actual amount of loss, credence can be given only to claims which are duly supported by receipts.^[22][22]

The petitioners do not deny that they did not submit any receipt to support their claim for actual damages to prove the monetary value of the damage caused to the house and tailoring shop when the truck rammed into them.  Thus, no actual damages for the destruction to petitioner Leticia Tan’s house and tailoring shop can be awarded.

Nonetheless, absent competent proof on the actual damages suffered, a party still has the option of claiming temperate damages, which may be allowed in cases where, from the nature of the case, definite proof of pecuniary loss cannot be adduced although the court is convinced that the aggrieved party suffered some pecuniary loss.^[23][23] As defined in Article 2224 of the Civil Code:

Article 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be proved with certainty.

In Canada v. All Commodities Marketing Corporation,^[24][24] we disallowed the award of actual damages arising from breach of contract, where the respondent merely alleged that it was entitled to actual damages and failed to adduce proof to support its plea. In its place, we awarded temperate damages, in recognition of the pecuniary loss suffered.

The photographs the petitioners presented as evidence show the extent of the damage done to the house, the tailoring shop and the petitioners’ appliances and equipment.^[25][25]  Irrefutably, this damage was directly attributable to Arambala’s gross negligence in handling OMC’s truck. Unfortunately, these photographs are not enough to establish the amount of the loss with certainty.  From the attendant circumstances and given the property destroyed,^[26][26] we find the amount of P200,000.00 as a fair and sufficient award by way of temperate damages. 

Temperate damages in lieu of

loss of earning capacity

Similarly, the CA was correct in disallowing the award of actual damages for loss of earning capacity. Damages for loss of earning capacity are awarded pursuant to Article 2206 of the Civil Code, which states that:

Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death[.]

As a rule, documentary evidence should be presented to substantiate the claim for loss of earning capacity.^[27][27] By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when: (1) the deceased is self-employed and earning less than the minimum wage under current labor laws, in which case, judicial notice may be taken of the fact that in the deceased’s line of work, no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.^[28][28]

According to the petitioners, prior to his death, Celedonio was a self-employed tailor who earned approximately P156,000.00 a year, or P13,000.00 a month. At the time of his death in 1995, the prevailing daily minimum wage was P145.00,^[29][29] or P3,770.00 per month, provided the wage earner had only one rest day per week.  Even if we take judicial notice of the fact that a small tailoring shop normally does not issue receipts to its customers, and would probably not have any documentary evidence of the income it earns, Celedonio’s alleged monthly income of P13,000.00 greatly exceeded the prevailing monthly minimum wage; thus, the exception set forth above does not apply.

In the past, we awarded temperate damages in lieu of actual damages for loss of earning capacity where earning capacity is plainly established but no evidence was presented to support the allegation of the injured party’s actual income.

In Pleno v. Court of Appeals,^[30][30] we sustained the award of temperate damages in the amount of P200,000.00 instead of actual damages for loss of earning capacity because the plaintiff’s income was not sufficiently proven.

We did the same in People v. Singh,^[31][31] and People v. Almedilla,^[32][32] granting temperate damages in place of actual damages for the failure of the prosecution to present sufficient evidence of the deceased’s income.

Similarly, in Victory Liner, Inc. v. Gammad,^[33][33] we deleted the award of damages for loss of earning capacity for lack of evidentiary basis of the actual extent of the loss. Nevertheless, because the income-earning capacity lost was clearly established, we awarded the heirs P500,000.00 as temperate damages.

In the present case, the income-earning capacity of the deceased was never disputed.  Petitioners Mary Jane Tan, Mary Lyn Tan, Celedonio Tan, Jr., Mary Joy Tan and Mark Allan Tan were all minors at the time the petition was filed on February 4, 2010,^[34][34] and they all relied mainly on the income earned by their father from his tailoring activities for their sustenance and support.  Under these facts and taking into account the unrebutted annual earnings of the deceased, we hold that the petitioners are entitled to temperate damages in the amount of P300,000.00 [or roughly, the gross income for two (2) years] to compensate for damages for loss of the earning capacity of the deceased.

Reduction of exemplary damages proper

Exemplary or corrective damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.^[35][35] In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence.^[36][36]

Celedonio Tan’s death and the destruction of the petitioners’ home and tailoring shop were unquestionably caused by the respondents’ gross negligence. The law allows the grant of exemplary damages in cases such as this to serve as a warning to the pubic and as a deterrent against the repetition of this kind of deleterious actions.^[37][37]  The grant, however, should be tempered, as it is not intended to enrich one party or to impoverish another. From this perspective, we find the CA’s reduction of the exemplary damages awarded to the petitioners from P500,000.00 to P200,000.00 to be proper.

Attorney’s fees in order

In view of the award of exemplary damages, we find it also proper to award the petitioners attorney’s fees, in consonance with Article 2208(1) of the Civil Code.^[38][38]  We find the award of attorney’s fees, equivalent to 10% of the total amount adjudged the petitioners, to be just and reasonable under the circumstances.

Interests due

          Finally, we impose legal interest on the amounts awarded, in keeping with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals,^[39][39] which held that:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

Accordingly, legal interest at the rate of 6% per annum on the amounts awarded starts to run from May 14, 2003, when the trial court rendered judgment. From the time this judgment becomes final and executory, the interest rate shall be 12% per annum on the judgment amount and the interest earned up to that date, until the judgment is wholly satisfied.

WHEREFORE, premises considered, we PARTIALLY GRANT the petition. The June 22, 2009 decision of the Court of Appeals in CA-G.R. CV. No. 84733, which modified the decision of the Regional Trial Court of Muntinlupa City, Branch 256, in Civil Case No. 96-186, is AFFIRMED with MODIFICATION. As modified, respondents OMC Carriers, Inc. and Bonifacio Arambala are ordered to jointly and severally pay the petitioners the following:

(1) P50,000.00 as indemnity for the death of Celedonio Tan;

(2) P72,295.00 as actual damages for funeral expenses;

(3)  P200,000.00 as temperate damages for the damage done to petitioner Leticia’s house, tailoring shop, household appliances and shop equipment;

(4) P300,000.00 as damages for the loss of Celedonio Tan’s earning capacity;

(5) P500,000.00 as moral damages;

(6) P200,000.00 as exemplary damages; and

(7) 10% of the total amount as attorney’s fees; and costs of suit.

In addition, the total amount adjudged shall earn interest at the rate of 6% per annum from May 14, 2003, and at the rate of 12% per annum, from the finality of this Resolution on the balance and interest due, until fully paid.

SO ORDERED.

                                                                   ARTURO D. BRION

                                                                       Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice

    LUCAS P. BERSAMIN                         MARTIN S. VILLARAMA, JR.

        Associate Justice                                           Associate Justice

MARIA LOURDES P.A. SERENO

Associate Justice

ATTESTATION

          I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                          CONCHITA CARPIO MORALES

                                                                             Associate Justice

                                                                                 Chairperson

 CERTIFICATION

          Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                                   RENATO C. CORONA

                                                                             Chief Justice

CASE 2011-0031: JESSIE R. DE LEON VS. ATTY. EDUARDO G. CASTELO (A.C. NO. 8620, 12 JANUARY 2011, BERSAMIN, J.) SUBJECTS: OBLIGATION OF LAWYER TO TELL TRUTH; COMPLAINT AGAINST LAWYER MUST BE MOTIVATED BY GOOD FAITH.

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D E C I S I O N  

BERSAMIN, J.:

          This administrative case, which Jessie R. De Leon initiated on April 29, 2010, concerns respondent attorney’s alleged dishonesty and falsification committed in the pleadings he filed in behalf of the defendants in the civil action in which De Leon intervened.

Antecedents

On January 2, 2006, the Government brought suit for the purpose of correcting the transfer certificates of title (TCTs) covering two parcels of land located in Malabon City then registered in the names of defendants Spouses Lim Hio and Dolores Chu due to their encroaching on a public callejon and on a portion of the Malabon-Navotas River shoreline to the extent, respectively, of an area of 45 square meters and of about 600 square meters. The suit, entitled Republic of the Philippines, represented by the Regional Executive Director, Department of Environment and Natural Resources v. Spouses Lim Hio and Dolores Chu, Gorgonia Flores, and the Registrar of Deeds of Malabon City, was docketed as Civil Case No. 4674MN of the Regional Trial Court (RTC), Branch 74, in Malabon City.^[1][1]

De Leon, having joined Civil Case No. 4674MN as a voluntary intervenor two years later (April 21, 2008), now accuses the respondent, the counsel of record of the defendants in Civil Case No. 4674MN, with the serious administrative offenses of dishonesty and falsification warranting his disbarment or suspension as an attorney. The respondent’s sin was allegedly committed by his filing for defendants Spouses Lim Hio and Dolores Chu of various pleadings (that is, answer with counterclaim and cross-claim in relation to the main complaint; and answer to the complaint in intervention with counterclaim and cross-claim) despite said spouses being already deceased at the time of filing.^[2][2]

De Leon avers that the respondent committed dishonesty and falsification as follows:

xxx in causing it (to) appear that persons (spouses Lim Hio and Dolores Chu) have participated in an act or proceeding (the making and filing of the Answers) when they did not in fact so participate; in fact, they could not have so participated because they were already dead as of that time, which is punishable under Article 172, in relation to Article 171, paragraph 2, of the Revised Penal Code.

Respondent also committed the crime of Use of Falsified Documents, by submitting the said falsified Answers in the judicial proceedings, Civil Case No. 4674MN;

Respondent also made a mockery of the aforesaid judicial proceedings by representing dead persons therein who, he falsely made to appear, as contesting the complaints, counter-suing and cross-suing the adverse parties.

12. That, as a consequence of the above criminal acts, complainant respectfully submits that respondent likewise violated:

(a)    His Lawyer’s Oath:

xxx

(b)   The Code of Professional Responsibility:^[3][3]

xxx

On June 23, 2010, the Court directed the respondent to comment on De Leon’s administrative complaint.^[4][4]

In due course, or on August 2, 2010,^[5][5] the respondent rendered the following explanations in his comment, to wit:

1.  The persons who had engaged him as attorney to represent the Lim family in Civil Case No. 4674MN were William and Leonardo Lim, the children of Spouses Lim Hio and Dolores Chu;

2.  Upon his (Atty. Castelo) initial queries relevant to the material allegations of the Government’s complaint in Civil Case No. 4674MN, William Lim, the representative of the Lim Family, informed him:

a.     That the Lim family had acquired the properties from Georgina Flores;

b.     That William and Leonardo Lim were already actively managing the family business, and now co-owned the properties by virtue of the deed of absolute sale their parents, Spouses Lim Hio and Dolores Chu, had executed in their favor; and

c.  That because of the execution of the deed of absolute sale, William and Leonardo Lim had since honestly assumed that their parents had already caused the transfer of the TCTs to their names.

3.  Considering that William and Leonardo Lim themselves were the ones who had engaged his services, he (Atty. Castelo) consequently truthfully stated in the motion seeking an extension to file responsive pleading dated February 3, 2006 the fact that it was “the family of the defendants” that had engaged him, and that he had then advised “the children of the defendants” to seek the assistance as well of a licensed geodetic surveyor and engineer;

4.     He (Atty. Castelo) prepared the initial pleadings based on his honest belief that Spouses Lim Hio and Dolores Chu were then still living.  Had he known that they were already deceased, he would have most welcomed the information and would have moved to substitute Leonardo and William Lim as defendants for that reason;

5.     He (Atty. Castelo) had no intention to commit either a falsehood or a falsification, for he in fact submitted the death certificates of Spouses Lim Hio and Dolores Chu in order to apprise the trial court of that fact; and

6.     The Office of the Prosecutor for Malabon City even dismissed the criminal complaint for falsification brought against him (Atty. Castelo) through the resolution dated February 11, 2010. The same office denied the complainant’s motion for reconsideration on May 17, 2010.

On September 3, 2010, the complainant submitted a reply,^[6][6]  whereby he asserted that the respondent’s claim in his comment that he had represented the Lim family was a deception, because the subject of the complaint against the respondent was his filing of the answers in behalf of Spouses Lim Hio and Dolores Chu despite their being already deceased at the time of the filing. The complainant regarded as baseless the justifications of the Office of the City Prosecutor for Malabon City in dismissing the criminal complaint against the respondent and in denying his motion for reconsideration.

The Court usually first refers administrative complaints against members of the Philippine Bar to the Integrated Bar of the Philippines (IBP) for investigation and appropriate recommendations. For the present case, however, we forego the prior referral of the complaint to the IBP, in view of the facts being uncomplicated and based on the pleadings in Civil Case No. 4674MN. Thus, we decide the complaint on its merits.

Ruling

We find that the respondent, as attorney, did not commit any falsehood or falsification in his pleadings in Civil Case No. 4674MN. Accordingly, we dismiss the patently frivolous complaint.

I

Attorney’s Obligation to tell the truth

All attorneys in the Philippines, including the respondent, have sworn to the vows embodied in following Lawyer’s Oath,^[7][7] viz:

I, ___________________, do solemnly swear that I will maintain allegiance to the Republic of the Philippines; I will support its Constitution and obey the laws as well as the legal orders of the duly constituted authorities therein; I will do no falsehood, nor consent to the doing of any in court; I will not wittingly or willingly promote or sue any groundless, false or unlawful suit, nor give aid nor consent to the same.  I will delay no man for money or malice, and will conduct myself as a lawyer according to the best of my knowledge and discretion with all good fidelity as well to the courts as to my clients; and I impose upon myself this voluntary obligation without any mental reservation or purpose of evasion. So help me God.

The Code of Professional Responsibility echoes the Lawyer’s Oath, providing:^[8][8]

CANON 1 – A LAWYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR LAW AND LEGAL PROCESSES.

Rule 1.01 – A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

CANON 10 – A LAWYER OWES CANDOR, FAIRNESS AND GOOD FAITH TO THE COURT.

Rule 10.01 – A lawyer shall not do any falsehood, nor consent to the doing of any in Court; nor shall he mislead, or allow the Court to be misled by any artifice.

The foregoing ordain ethical norms that bind all attorneys, as officers of the Court, to act with the highest standards of honesty, integrity, and trustworthiness.  All attorneys are thereby enjoined to obey the laws of the land, to refrain from doing any falsehood in or out of court or from consenting to the doing of any in court, and to conduct themselves according to the best of their knowledge and discretion with all good fidelity as well to the courts as to their clients. Being also servants of the Law, attorneys are expected to observe and maintain the rule of law and to make themselves exemplars worthy of emulation by others.^[9][9] The least they can do in that regard is to refrain from engaging in any form or manner of unlawful conduct (which broadly includes any act or omission contrary to law, but does not necessarily imply the element of criminality even if it is broad enough to include such element).^[10][10] 

To all attorneys, truthfulness and honesty have the highest value, for, as the Court has said in Young v. Batuegas:^[11][11]

A lawyer must be a disciple of truth. He swore upon his admission to the Bar that he will “do no falsehood nor consent to the doing of any in court” and he shall “conduct himself as a lawyer according to the best of his knowledge and discretion with all good fidelity as well to the courts as to his clients.” He should bear in mind that as an officer of the court his high vocation is to correctly inform the court upon the law and the facts of the case and to aid it in doing justice and arriving at correct conclusion. The courts, on the other hand, are entitled to expect only complete honesty from lawyers appearing and pleading before them. While a lawyer has the solemn duty to defend his client’s rights and is expected to display the utmost zeal in defense of his client’s cause, his conduct must never be at the expense of truth.

Their being officers of the Court extends to attorneys not only the presumption of regularity in the discharge of their duties, but also the immunity from liability to others for as long as the performance of their obligations to their clients does not depart from their character as servants of the Law and as officers of the Court.  In particular, the statements they make in behalf of their clients that are relevant, pertinent, or material to the subject of inquiry are absolutely privileged regardless of their defamatory tenor. Such cloak of privilege is necessary and essential in ensuring the unhindered service to their clients’ causes and in protecting the clients’ confidences. With the cloak of privilege, they can freely and courageously speak for their clients, verbally or in writing, in the course of judicial and quasi-judicial proceedings, without running the risk of incurring criminal prosecution or actions for damages.^[12][12]

Nonetheless, even if they enjoy a number of privileges by reason of their office and in recognition of the vital role they play in the administration of justice, attorneys hold the privilege and right to practice law before judicial, quasi-judicial, or administrative tribunals or offices only during good behavior.^[13][13]

II

Respondent did not violate the Lawyer’s Oath

and the Code of Professional Responsibility

On April 17, 2006, the respondent filed an answer with counterclaim and cross-claim in behalf of Spouses Lim Hio and Dolores Chu, the persons whom the Government as plaintiff named as defendants in Civil Case No. 4674MN.^[14][14] He alleged therein that:

         2.  The allegations in paragraph 2 of the complaint are ADMITTED.  Moreover, it is hereby made known that defendants spouses Lim Hio and Dolores Chu had already sold the two (2) parcels of land, together with the building and improvements thereon, covered by Transfer Certificate of Title No. (148805) 139876 issued by the Register of Deeds of  Rizal, to Leonardo C. Lim and William C. Lim, of Rms. 501 – 502 Dolores Bldg., Plaza del Conde, Binondo, Manila. Hence, Leonardo Lim and William Lim are their successors-in-interest and are the present lawful owners thereof.

         In order to properly and fully protect their rights, ownership and interests, Leonardo C. Lim and William C. Lim shall hereby represent the defendants-spouses Lim Hio and Dolores Chu as substitute/representative parties in this action. In this manner, a complete and expeditious resolution of the issues raised in this case can be reached without undue delay.  A photo copy of the Deed of Absolute Sale over the subject property, executed by herein defendants-spouses Lim Hio and Dolores Chu in favor of said Leonardo C. Lim and William C. Lim, is hereto attached as Annex “1” hereof.

xxx

         21. There is improper joinder of parties in the complaint.  Consequently, answering defendants are thus unduly compelled to litigate in a suit regarding matters and facts as to which they have no knowledge of nor any involvement or participation in.

         22. Plaintiff is barred by the principle of estoppel in bringing this suit, as it was the one who, by its governmental authority, issued the titles to the subject property.

This action is barred by the principles of prescription and laches for plaintiff’s unreasonable delay in brining this suit, particularly against defendant Flores, from whom herein answering defendants acquired the subject property in good faith and for value.  If truly plaintiff has a clear and valid cause of action on the subject property, it should not have waited thirty (30) years to bring suit.

Two years later, or on April 21, 2008, De Leon filed his complaint in intervention in Civil Case No. 4674MN.^[15][15] He expressly named therein as defendants vis-à-vis his intervention not only the Spouses Lim Hio and Dolores Chu, the original defendants, but also their sons Leonardo Lim, married to Sally Khoo, and William Lim, married to Sally Lee, the same persons whom the respondent had already alleged in the answer, supra, to be the transferees and current owners of the parcels of land.^[16][16]

The following portions of De Leon’s complaint in intervention in Civil Case No. 4674MN are relevant, viz:

2.   Defendant spouses Lim Hio and Dolores Chu, are Filipino citizens with addresses at 504 Plaza del Conde, Manila and at 46 C. Arellano St., San Agustin, Malabon City, where they may be served with summons and other court processes;

3.  Defendant spouses Leonardo Lim and Sally Khoo and defendant spouses William Lim  and Sally Lee are all of legal age and with postal address at Rms. 501-502 Dolores Bldg., Plaza del Conde, Binondo, Manila, alleged purchasers of the property in question from defendant  spouses Lim Hio and Dolores Chu;

4.  Defendants Registrar of Deeds of Malabon City holds office in Malabon City, where he may be served with summons and other court processes.  He is charged with the duty, among others, of registering decrees of Land Registration in Malabon City under the Land Registration Act;

xxx

7.  That intervenor Jessie de Leon, is the owner of a parcel of land located in Malabon City described in TCT no. M-15183 of the Register of Deeds of Malabon City, photocopy of which is attached to this Complaint as Annex “G”, and copy of the location plan of the aforementioned property is attached to this complaint as Annex “H” and is made an integral part hereof;

8.  That there are now more or less at least 40 squatters on intervenor’s property, most of them employees of defendant spouses Lim Hio and Dolores Chu and defendant spouses Leonardo Lim and Sally Khoo and defendant spouses William Lim and Sally Lee who had gained access to intervenor’s property and built their houses without benefit of any building permits from the government who had made their access to intervenor’s property thru a two panel metal gate more or less 10 meters wide and with an armed guard by the gate and with permission from defendant spouses Lim Hio and Dolores Chu and/or  and defendant spouses Leonardo Lim and Sally Khoo and defendant spouses William Lim and Sally Lee illegally entered intervenor’s property thru a wooden ladder to go over a 12 foot wall now separating intervenor’s property from the former esquinita which is now part of defendant spouses Lim Hio and Dolores Chu’s and defendant spouses Leonardo Lim and Sally Khoo’s and defendant spouses William Lim and Sally Lee’s property and this illegally allowed his employees as well as their relatives and friends thereof to illegally enter intervenor’s property through the ladders defendant spouses Lim Hio and Dolores Chu installed in their wall and also allowed said employees and relatives as well as friends to build houses and shacks without the benefit of any building permit as well as permit to occupy said illegal buildings;

9.  That the enlargement of the properties of spouses Lim Hio and Dolores Chu had resulted in the  closure of street lot no. 3 as described in TCT no. 143828, spouses Lim Hio and Dolores Chu having titled the street lot no. 3 and placed a wall at its opening on C. Arellano street, thus closing any exit or egress or entrance to intervenor’s property as could be seen from Annex “H” hereof and thus preventing intervenor from entering into his property resulted in preventing intervenor from fully enjoying all the beneficial benefits from his property;

 10.  That defendant spouses Lim Hio and Dolores Chu and later on defendant spouses Leonardo Lim and Sally Khoo and defendant spouses William Lim and Sally Lee are the only people who could give permission to allow third parties to enter intervenor’s  property and their control over intervenor’s property is enforced through his armed guard thus exercising illegal beneficial rights over intervenor’s property at intervenor’s loss and expense, thus depriving intervenor of legitimate income from rents as well as legitimate access to intervenor’s property  and the worst is preventing the Filipino people from enjoying the Malabon Navotas River and  enjoying the right of access to the natural fruits and products of the Malabon Navotas River and instead it is defendant spouses Lim Hio and Dolores Chu and defendant spouses Leonardo Lim and Sally Khoo and defendant spouses William Lim and Sally Lee using the public property exclusively to enrich their pockets;

xxx

13.  That defendant spouses Lim Hio and Dolores Chu and defendant spouses Leonardo Lim and Sally Khoo and defendant spouses William Lim and Sally Lee were confederating, working and helping one another in their actions to inhibit intervenor Jessie de Leon to gain access and beneficial benefit from his property;

On July 10, 2008, the respondent, representing all the defendants named in De Leon’s complaint in intervention, responded in an answer to the complaint in intervention with counterclaim and cross-claim,^[17][17] stating that “spouses Lim Hio and Dolores Chu xxx are now both deceased,” to wit:

xxx

2.  The allegations in paragraphs 2 and 3 of the Complaint are ADMITTED, with the qualification that defendants-spouses Leonardo Lim and Sally Khoo Lim, William Lim and Sally Lee Lim are the registered and lawful owners of the subject property covered by Transfer Certificate of Title No. M-35929, issued by the Register of Deeds for Malabon City, having long ago acquired the same from the defendants-spouses Lim Hio and Dolores Chu, who are now both deceased.  Copy of the TCT No. M-35929 is attached hereto as Annexes “1” and “1-A”.  The same title has already been previously submitted to this Honorable Court on December 13, 2006.

xxx

The respondent subsequently submitted to the RTC a so-called clarification and submission,^[18][18] in which he again adverted to the deaths of Spouses Lim Hio and Dolores Chu, as follows:

1.  On March 19, 2009, herein movants-defendants Lim filed before this Honorable Court a Motion for Substitution of Defendants in the Principal Complaint of the plaintiff Republic of the Philippines, represented by the DENR;

2.  The Motion for Substitution is grounded on the fact that the two (2) parcels of land, with the improvements thereon, which are the subject matter of the instant case, had long been sold and transferred by the principal defendants-spouses Lim Hio and Dolores Chu to herein complaint-in-intervention defendants Leonardo C. Lim and William C. Lim, by way of a Deed of Absolute Sale, a copy of which is attached to said Motion as Annex “1” thereof.

3.  Quite plainly, the original principal defendants Lim Hio and Dolores Chu, having sold and conveyed the subject property, have totally lost any title, claim or legal interest on the property.  It is on this factual ground that this Motion for Substitution is based and certainly not on the wrong position of Intervenor de Leon that the same is based on the death of defendants Lim Hio and Dolores Chu.

4.  Under the foregoing circumstances and facts, the demise of defendants Lim Hio and Dolores Chu no longer has any significant relevance to the instant Motion.  To, however, show the fact of their death, photo copy of their respective death certificates are attached hereto as Annexes “1” and “2” hereof.

5.  The Motion for substitution of Defendants in the Principal Complaint dated March 18, 2009 shows in detail why there is the clear, legal and imperative need to now substitute herein movants-defendants Lim for defendants Lim Hio and Dolores Chu in the said principal complaint.

6. Simply put, movants-defendants Lim have become the indispensable defendants in the principal complaint of plaintiff DENR, being now the registered and lawful owners of the subject property and the real parties-in-interest in this case.  Without them, no final determination can be had in the Principal complaint.

7.  Significantly, the property of intervenor Jessie de Leon, which is the subject of his complaint-in-intervention, is identically, if not similarly, situated as that of herein movants-defendants Lim, and likewise, may as well be a proper subject of the Principal Complaint of plaintiff DENR.

8.  Even the plaintiff DENR, itself, concedes the fact that herein movants-defendants Lim should be substituted as defendants in the principal complaint as contained in their Manifestation dated June 3, 2009, which has been filed in this case.

WHEREFORE, herein movants-defendants Lim most respectfully submit their Motion for substitution of Defendants in the Principal Complaint and pray that the same be granted.

xxx

Did the respondent violate the letter and spirit of the Lawyer’s Oath and the Code of Professional Responsibility in making the averments in the aforequoted pleadings of the defendants?

A plain reading indicates that the respondent did not misrepresent that Spouses Lim Hio and Dolores Chu were still living. On the contrary, the respondent directly stated in the answer to the complaint in intervention with counterclaim and cross-claim, supra, and in the clarification and submission, supra, that the Spouses Lim Hio and Dolores Chu were already deceased.

Even granting, for the sake of argument, that any of the respondent’s pleadings might have created any impression that the Spouses Lim Hio and Dolores Chu were still living, we still cannot hold the respondent guilty of any dishonesty or falsification. For one, the respondent was acting in the interest of the actual owners of the properties when he filed the answer with counterclaim and cross-claim on April 17, 2006. As such, his pleadings were privileged and would not occasion any action against him as an attorney. Secondly, having made clear at the start that the Spouses Lim Hio and Dolores Chu were no longer the actual owners of the affected properties due to the transfer of ownership even prior to the institution of the action, and that the actual owners (i.e., Leonardo and William Lim) needed to be substituted in lieu of said spouses, whether the Spouses Lim Hio and Dolores Chu were still living or already deceased as of the filing of the pleadings became immaterial. And, lastly, De Leon could not disclaim knowledge that the Spouses Lim Hio and Dolores Chu were no longer living. His joining in the action as a voluntary intervenor charged him with notice of all the other persons interested in the litigation. He also had an actual awareness of such other persons, as his own complaint in intervention, supra, bear out in its specific allegations against Leonardo Lim and William Lim, and their respective spouses. Thus, he could not validly insist that the respondent committed any dishonesty or falsification in relation to him or to any other party.

III

Good faith must always motivate any complaint

against a Member of the Bar

According to Justice Cardozo,^[19][19] “xxx the fair fame of a lawyer, however innocent of wrong, is at the mercy of the tongue of ignorance or malice. Reputation in such a calling is a plant of tender growth, and its bloom, once lost, is not easily restored.”

A lawyer’s reputation is, indeed, a very fragile object.  The Court, whose officer every lawyer is, must shield such fragility from mindless assault by the unscrupulous and the malicious. It can do so, firstly, by quickly cutting down any patently frivolous complaint against a lawyer; and, secondly, by demanding good faith from whoever brings any accusation of unethical conduct. A Bar that is insulated from intimidation and harassment is encouraged to be courageous and fearless, which can then best contribute to the efficient delivery and proper administration of justice.

The complainant initiated his complaint possibly for the sake of harassing the respondent, either to vex him for taking the cudgels for his clients in connection with Civil Case No. 4674MN, or to get even for an imagined wrong in relation to the subject matter of the pending action, or to accomplish some other dark purpose. The worthlessness of the accusation – apparent from the beginning – has impelled us into resolving the complaint sooner than later.

WHEREFORE, we dismiss the complaint for disbarment or suspension filed against Atty. Eduardo G. Castelo for utter lack of merit.

SO ORDERED.

                                                                    LUCAS P. BERSAMIN

                                                                           Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice

Chairperson

      ARTURO D. BRION              MARTIN S. VILLARAMA, JR.

           Associate Justice                               Associate Justice

MARIA LOURDES P.A. SERENO 

Associate Justice

CASE 2011-0030: IN RE:  REPORT ON THE JUDICIAL AUDIT CONDUCTED IN THE REGIONAL TRIAL COURT, BRANCH 45, URDANETA CITY, PANGASINAN, AND REPORT ON THE INCIDENT AT BRANCH 49, SAME COURT. (A.M. No.  08-4-253-RTC, 12 JANUARY 2011, BERSAMIN, J.) SUBJECTS: ADMINISTRATIVE DUTIES OF A JUDGE AND CLERK OF COURT; OMISSIONS; PENALTIES.

 x—————————————————————-x

D E C I S I O N

BERSAMIN, J.:

          The Court, through the Office of the Court Administrator (OCA), routinely conducts an audit of the caseload and performance of a retiring trial judge. The Court will unhesitatingly impose appropriate sanctions despite the intervening retirement of the judge or member of the staff should the audit establish any inefficiency on the part of the retiring trial judge or of any member of the staff.

          Here, we sanction a judge of the Regional Trial Court (RTC) and his Branch Clerk of Court, despite the former’s intervening retirement, for the inefficient management of their court records and caseload. The sanction should serve as a timely reminder yet again to all incumbent trial judges and court personnel to handle court records and to manage caseloads efficiently and systematically, or else they suffer the appropriate sanctions.

ANTECEDENTS

A.

Findings on Caseload and Docket Inventory of Branch 45

          On September 18-19, 2007, the OCA conducted a judicial audit of the caseload of Branch 45 of the Regional Trial Court (RTC Branch 45) in Urdaneta City in view of the compulsory retirement of Presiding Judge Joven F. Costales (Judge Costales) by November 21, 2007.

          As its preliminary findings,^[1][1] the judicial audit team reported that RTC Branch 45’s caseload totaled 465 cases (i.e., 197 civil cases and 268 criminal cases), of which:

(a) 16 were submitted for decision or resolution but still unresolved;

(b)  14 included unresolved incidents;

(c)  11 had no action taken since their filing;

(d) Three were criminal cases awaiting compliance relative to the last incidents;

(e)  39 underwent no further hearings or actions;

(f)    Seven were civil cases awaiting ex parte reception of evidence; and

(g) 14 were criminal cases with unserved warrants or alias warrants of arrest.

Further, the judicial audit team concluded that the docket inventory of RTC Branch 45 was inaccurate, because:

(a) The docket inventory contained numerous typographical errors that led to the confusion about whether some cases were reported or not;

(b) The form prescribed in Administrative Circular No. 10-94 dated June 29, 1994 was not adopted;

(c)  Some case records had no dates of receipt; and

(d) In Criminal Case No. U-13095, Branch 45 issued an order dated July 27, 2007 resetting the trial notwithstanding that one of the accused had not been arraigned.^[2][2]

On November 19, 2007, the OCA, through then Deputy Court Administrator (DCA) Jose P. Perez,^[3][3] issued a memorandum to Atty. Max Pascua (Atty. Pascua), the Branch Clerk of Court of RTC Branch 45,^[4][4] directing him thuswise:

In view of the compulsory retirement of Judge Joven F. Costales on November 21, 2007, you are DIRECTED to (a) bring these cases to the attention of your pairing/acting judge for his/her guidance and appropriate action; and (b) inform this Office, within ten (10) days from notice, if there were any changes in the status of the listed cases in Annex “A” attaching thereto certified true copies of the orders/decisions.

Further, you are DIRECTED to (a) COMMENT, within ten (10) days from notice, on the following findings:  civil cases for reception of evidence ex-parte listed under Table 10; inaccurate Docket Inventory Report described in letter H.2; and case records with no date of receipt; and (b) henceforth ADOPT THE PRESCRIBED FORM under Administrative Circular No. 10-94 dated June 29, 1994 re: Submission of Semestral Docket Inventory Report.

In partial compliance with the memorandum, Atty. Pascua replied by letter dated January 4, 2008 (accompanied by a report on the status of criminal and civil cases and on other matters),^[5][5] explaining:

         Regarding the inaccurate Docket Inventory and the typographical errors in criminal cases records as observed by the audit team (letter H-2 of the memorandum), rest assured Your Honor that undersigned is arranging things in its (sic) proper order and have instructed the civil and criminal records clerk-in-charge regarding the matter, including the adoption of the prescribed form under Adm. Circular No. 10-94 in submission of Semestral Docket Inventory Report.

It appears that on January 8, 2008,^[6][6] the OCA informed Judge Costales that (a) the clearance necessary for the approval of his claim for compulsory retirement benefits could not issue pending his compliance with the memorandum dated November 19, 2007; and (b) his request for the release of his retirement benefits, less the amount that might answer for any liability, was still under evaluation by the Court.

In his letter dated January 8, 2008,^[7][7] Judge Costales wrote to the OCA, viz:

         This is in connection with your letter dated November 19, 2007 which the undersigned received on November 20, 2007, directing him to conduct an investigation regarding the irregularity in the punching of Bundy clock of the employees of RTC, Branch 49, Urdaneta City, Pangasinan and to submit his report within ten (10) days thereof.

         I am awfully sorry for failing to comply the same (sic) on the following grounds:

1.   I received said memorandum only on November 20, 2007, the date of my compulsory retirement.

2.   That a week before my retirement on November 21, 2007, I was too busy reading and signing decisions and resolutions of motions in order that at the time of my retirement all cases submitted for decision are decided and all motions for resolutions are resolved, which I was able to do so.

3.   That during my last day of the service, November 20, 2007, I instructed my Branch Clerk of Court, Atty. Max Pascua to write your Honor to inform you that as much as I am already retired after November 21, 2007, the Executive Judge should be the one to conduct such investigation.  However, I only learned yesterday that the Branch Clerk of Court was unable to do what I directed him to do by writing you on the matter.

4.   Anent my comments on the findings of the Audit Team regarding the cases pending before Branch 45, I have also ordered Atty. Pascua to make the necessary reply, comment and/or explanations on the matter, as I am no longer in the Judiciary after November 21, 2007.  Nonetheless, I was told by Atty. Pascua that he would submit said comments, reply and/or explanations by next week.

5.   That I have not gone to Branch 45 Office since I retired last November 21, 2007, and I was of the notion and belief that Atty. Pascua had written you on the matter.

         On the above reasons, as I am no longer connected with the Judiciary, my failure to comply with the said memorandum dated November 10, 2007 earlier is reasonable and well-founded.

         Again, I would like to reiterate my apology for what happened.

         Thank you, Sir!

Judge Costales sent to the OCA another letter dated January 26, 2008,^[8][8] as follows:

         The undersigned received last January 23, 2008 the following:

1.   Memorandum dated November 19, 2007 directing me to submit my report and recommendation relative to the irregularity in the punching of Bundy clock at RTC, Branch 49 when I was the Acting Executive Judge of the RTC, Urdaneta City, Pangasinan.

2.   A letter dated November 19, 2007 directing me to give my comment on the findings of the Judicial Audit Team conducted in my sala, RTC, Branch 45.

3.   Annex “A”, re findings of the Audit Team.

4.   Memorandum dated November 19, 2007, addressed to Atty. Max Pascua, Branch Clerk of Court of RTC, Branch 45, Urdaneta City, Pangasinan.

         Anent No. 1, Please be informed that I sent to Your Honor a letter last January 8, 2008, explaining my failure to submit my comments on the matter, a copy of which is hereto attached and marked as Annex “A”.

         With regards (sic) to No. 2, my explanation is also contained in my letter dated January 8, 2008.  Nonetheless, if I am directed to personally submit my comment, I would like then to state that on Tables 1 and 2: A. CASES SUBMITTED FOR DECISION on Civil and Criminal Cases, I have already decided all said cases, a Certification issued by the Branch Clerk of Court Atty. Max Pascua, marked as Annex “B” is hereto attached.  Likewise, a copy of the letter-comment of Atty. Pascua marked as Annex “C” is hereto attached.  In said comments, Annex “C”, of Atty. Pascua, all the comments and/or explanations on the findings of the Audit Team from Table 1 to Table 11 are sufficiently indicated therein.  I am adopting thereof, the comments and/or explanations of Atty. Pascua as my comments and/or explanation on the matter.

         I hope Your Honor, that the above comments and/or explanations on my part would suffice on the matter/s I am directed to do.

         Your Honor, it is indeed regrettable, that up to this time or more two months since I retired after rendering continuous or almost 40 years of Government service, I have not yet received a single centavo of the Retirement Benefits I am supposed to receive.  It is true that an Administrative Case was filed against me, however, a Letter of Retention in order that I can also receive the benefits accorded to me was also submitted by me.  I hope that the resolution/decision of my administrative case be resolved/decided by the Honorable Supreme Court at the soonest.

         In the interest of justice, I should be given my Retirement Benefits as soon as possible.  I am earnestly requesting Your Honor, to please help me on the matter for the early release of my Retirement Benefits.

         Thank you very much, Your Honor! 

B.

Failure of Judge Costales to investigate

and to report on bundy clock incident

In addition to being the Presiding Judge of RTC Branch 45, Judge Costales served as the acting Executive Judge in the absence of the Executive Judge. In that capacity, he discharged duties, among them the investigation of administrative complaints brought against court personnel within his administrative area; and the submission of his findings and recommendations to the Court.^[9][9]

          On September 19, 2007, in the course of the judicial audit of Branch 45, Fernando S. Agbulos, Jr. (Agbulos, Jr.), team leader of the judicial audit, visited RTC Branch 49 to remind the Branch Clerk of Court on the monthly report of cases to be submitted to the OCA. After finding only two employees actually present in Branch 49, he inspected the bundy cards and discovered that all of the court personnel of Branch 49 except two – Helen Lim and Rowena Espinosa – had punched in on that day.  He immediately referred his discovery (bundy-cards incident) to the attention of Judge Costales as acting Executive Judge.

          When nothing was heard from Judge Costales about his action on the bundy-cards incident, the OCA issued to him a memorandum on November 19, 2007 to remind him that his report on the incident was already overdue, and to direct him to submit his report within ten days from notice. However, Judge Costales still did not comply with the directive of the OCA. 

Later on, Judge Costales explained through his aforecited letter dated January 8, 2008 that he had instructed Atty. Pascua upon his receipt of the memorandum on November 20, 2007 to advise the OCA of his forthcoming retirement, but that Atty. Pascua had failed to so inform the OCA; that in the week prior to his retirement on November 21, 2007, he had been too busy reading and signing decisions and resolutions to conduct the investigation of the bundy-cards incident; and that his intervening retirement had left to the new Executive Judge the duty to investigate and report on the bundy-cards incident.

C.

OCA’s Final Findings and Recommendations

          In their memorandum dated April 22, 2008 for the Chief Justice,^[10][10] Court Administrator Zenaida N. Elepaño and DCA Perez rendered the following findings, namely:

(a)  Some case records bore no dates of receipt by Branch 45;

(b)  Several case records did not contain the latest court actions/court processes taken;

(c)  No action was taken in some cases since their filing;

(d) The case record of Criminal Case No. U-12848 was not immediately transmitted to the Office of the Prosecutor, although the transmittal had been ordered as early as January 19, 2005;

(e) Some cases were not set for further hearing, or had no further actions taken on them;

(f)   The issuance of summonses and alias summonses by the Branch Clerk of Court was delayed despite the corresponding orders by the judge;

(g)  No actions were taken on cases set for ex parte reception of evidence; and

(h)  Criminal Case No. U-13095 was set for trial with respect to one of the accused who had not been arraigned.

Court Administrator Elepaño and DCA Perez further found that despite his submission of the report on the status of cases on January 4, 2008 and February 18, 2008, Atty. Pascua did not furnish to the OCA copies of the orders and relevant papers showing the status of four criminal cases (i.e., Criminal Case No. U-15010, Criminal Case No. U-15183, Criminal Case No. U-13095, and Criminal Case No. U-14936) and two civil cases (i.e., Civil Case No. U-2377 and Civil Case No. U-8793).

          Anent the bundy-cards incident in RTC Branch 49, Court Administrator. Elepaño and DCA Perez stated as follows:^[11][11]

On September 19, 2007, the second day of this judicial audit, Mr. Fernando S. Agbulos, Jr., team member, went to Branch 49, same court, to remind the Clerk of Court of the Monthly Reports of Cases due for submission to the Office of the Court Administrator.  He was surprised to see only two (2) employees inside the office.  An inspection of the bundy cards would show, however, that only Ms. Helen Q. Lim and Ms. Rowena Espinosa did not punch in their cards on the said day. The team immediately reported the incident and referred the same to Judge Costales, then Acting Executive Judge of RTC, Urdaneta City, for his investigation, report and recommendation.

On November 19, 2007, this Office reminded Judge Costales of his overdue report on the investigation conducted in September 2007.  Thus:

“In the course of the judicial audit conducted in your court on September 19, 2007, the audit team discovered an appearance of irregularity in the punching of bundy cards at Branch 49, same court.  This was immediately referred to you, in your then capacity as Acting Executive Judge, for investigation.

In view thereof, you are hereby DIRECTED, within ten (10) days from notice, to submit your report and recommendation thereon.”

No response was received from his end.  After his retirement on November 21, 2007, he wrote:

“I am awfully sorry for failing to comply xxx on the following grounds:

1.       I received said memorandum only on November 20, 2007, the date of my compulsory retirement;

2.       That a week before my retirement on November 21, 2007, I instructed my Branch Clerk of Court, Atty. Max Pascua to write your Honor to inform you that as much as I am already retired after November 21, 2007, the Executive Judge should be the one to conduct such investigation.  However, I only learned yesterday that the Branch Clerk of Court was unable to do what I directed him to do by writing you on the matter.

3.      xxx

xxx

On the above reasons (sic), as I am no longer connected with the Judiciary, my failure to comply with the said memorandum dated November 10, 2007 earlier is reasonable and well-founded.”

The explanation is unmeritorious.  The assignment was given to him long before his retirement.  The Memorandum dated November 19, 2007, even if received on November 20, 2007, a day before his compulsory retirement (contrary to his statement that his compulsory retirement was on November 20, 2007), is a mere reminder.

In a long line of cases, the Court has consistently ruled that failure to comply with the directives of the Court is tantamount to insubordination.  In the case at bar, Judge Costales failed to comply with the Memorandum dated November 19, 2007 directing him to submit his report and recommendation on the investigation conducted in September 2007.

          Accordingly, Court Administrator Elepaño and DCA Perez recommended that:

         1.  Retired Judge Joven F. Costales, Regional Trial Court, Branch 45, Urdaneta City be HELD ADMINISTRATIVELY LIABLE for the omissions brought about by records and caseflow mismanagement and insubordination in connection with the non-submission of his report and recommendation on the investigation on the irregularities in the punching of bundy cards at Branch 49, same court;

         2.  Atty. Max G. Pascua, Branch Clerk of Court, same court, Judge Costales be likewise HELD ADMINISTRATIVELY LIABLE for the omissions brought about by records and caseflow mismanagement and his failure to submit all the requirements in connection with the evaluation of the findings during the judicial audit;

         3.  Judge Costales and Atty. Pascua be FINED in the amount of Five Thousand Pesos (P5,000.00) each;

         4.  Atty. Pascua be DIRECTED to DEVICE (sic) an efficient system of record management to ensure that all pending cases are included in the calendar of hearing and that the actual status of each case is reflected in each case record, with a STERN WARNING that similar infraction in the future shall be dealt with more severely; and

         4.  Atty. Pascua be DIRECTED to APPRISE, within ten (10) days from notice, the Acting Presiding Judge of Branch 45 of the status of the following cases by furnishing the judge copies of the latest Orders or court processes in (a) Criminal Cases Nos. U-15010, U-15183, U-13095 (transmittal letter to the Office of the Prosecutor) and U-14936 and Civil Cases Nos. U-2377 and U-8793; and (b) Criminal Case No. U-13095 insofar as the arraignment of accused J. Suetus is concerned; and

         5. The Executive Judge, Regional Trial Court, Urdaneta City, Pangasinan be DIRECTED to ENSURE that no irregularities in the punching of bundy cards in her station could, henceforth, be contrived.          

RULING

          We adopt the well-substantiated findings of Court Administrator Elepaño and DCA Perez, but we impose higher penalties on Judge Costales and Atty. Pascua.

A.

Efficient Handling and Physical Inventory of Cases,

Important and Necessary in the Administration of Justice

All judges discharge administrative responsibilities in addition to their adjudicative responsibilities. They should do so by maintaining professional competence in court management and by facilitating the performance of the administrative functions of other judges and court personnel.^[12][12]

An orderly and efficient case management system is no doubt essential in the expeditious disposition of judicial caseloads, because only thereby can the judges, branch clerks of courts, and the clerks-in-charge of the civil and criminal dockets ensure that the court records, which will be the bases for rendering the judgments and dispositions, and the review of the judgments and dispositions on appeal, if any, are intact, complete, updated, and current. Such a system necessarily includes the regular and continuing physical inventory of cases to enable the judge to keep abreast of the status of the pending cases and to be informed that everything in the court is in proper order.^[13][13] In contrast, mismanaged or incomplete records, and the lack of periodic inventory definitely cause unwanted delays in litigations and inflict unnecessary expenses on the parties and the State.

Although the presiding judge and his or her staff share the duty of taking a continuing and regular inventory of cases, the responsibility primarily resides in the presiding judge. The continuity and regularity of the inventory are designed to invest the judge and the court staff with the actual knowledge of the movements, number, and ages of the cases in the docket of their court, a knowledge essential to the efficient management of caseload. The judge should not forget that he or she is duty-bound to perform efficiently, fairly, and with reasonable promptness all his or her judicial duties, including the delivery of reserved decisions.^[14][14] Thus, the judge must devise an efficient recording and filing system for his or her court that enables him or her to quickly monitor cases and to manage the speedy and timely disposition of the cases.^[15][15]

B.

Inefficiency and Mismanagement of

Records of Branch 45

          The OCA uncovered the mismanagement of the records of Branch 45 of the RTC in Urdaneta City, while still presided by Judge Costales, with Atty. Pascua as the Branch Clerk of Court. The mismanagement included the following, to wit: (a) some case records bore no dates of receipt by the branch; (b) several case records did not contain the latest court actions and court processes taken; (c) action had not been taken in some cases from the time of their filing; (d) the case record of Criminal Case No. U-12848 had not been immediately transmitted to the Office of the Prosecutor, despite the transmittal having been ordered  as early as January 19, 2005; (e) some cases had  not  been  set for further  hearing, or had had no further actions taken on them; (f) the issuances of summonses and alias summonses by the Branch Clerk of Court had been delayed despite the corresponding orders for that purpose; (g) action had not been taken on cases set for ex parte reception of evidence; and (h) Criminal Case No. U-13095 had been set for trial with respect to one of the accused who had not been arraigned.

          Aside from the foregoing findings being based on the actual records of Branch 45 of the RTC in Urdaneta City, we note that neither Judge Costales nor Atty. Pascua have refuted the findings of the OCA. Hence, we declare both of them to be administratively liable and subject to appropriate sanctions.

1.

Judge Costales

The sins of Judge Costales consisted of omissions. To start with, he failed to act on some cases from the time of their receipt at Branch 45 until the period of the audit. And, secondly, he did not properly supervise the court personnel, as borne by the records of some cases either not containing the latest court actions and court processes taken, or not showing the actions taken from the time of their filing, or not being set for further hearing or action, or revealing the delayed issuances of summonses and alias summonses despite the corresponding orders towards that end, or by inaction on cases set for ex parte reception of evidence.

Judge Costales uncharacteristically ignored that he discharged judicial and administrative duties as the Presiding Judge of Branch 45. He seemingly forgot that his responsibility of efficiently and systematically managing his caseload was the inseparable twin to his responsibility of justly and speedily deciding the cases assigned to his court. He should have remembered all too easily that he had assumed both responsibilities upon entering into office as Presiding Judge, and that he was bound to competently and capably discharge them from then on until his compulsory retirement. His failure to discharge them properly by organizing and supervising his court personnel with the end in view of bringing them to the prompt dispatch of the court’s business in anticipation of his forced retirement reflected his inefficiency and breached his obligation to observe at all times the high standards of public service and fidelity.^[16][16] 

In this regard, Judge Costales could not deflect the blame to Atty. Pascua as his Branch Clerk of Court. The responsibility of organizing and coordinating the court personnel to ensure the prompt and efficient performance of the court’s business was direct and primary for him as the judge. Truly, the duty to devise an efficient recording and filing system that would have enabled himself and his personnel to monitor the flow of cases and to manage their speedy and timely disposition pertained to him first and foremost.^[17][17] Moreover, he should know that his subordinates were not the guardians of his responsibilities as the judge.^[18][18] Being in legal contemplation the head of his branch,^[19][19] he was the master of his own domain who should be ready and willing to take the responsibility for the mistakes of his subjects,^[20][20] as well as to be ultimately responsible for order and efficiency in his court. He could not hide behind the inefficiency or the incompetence of any of his subordinates.

2.

Atty. Pascua

As with Judge Costales, omissions made up Atty. Pascua’s myriad faults.

Atty. Pascua bore the responsibility for the non-issuance of summonses or alias summonses in some cases, for the failure to indicate the dates of receipt of case records by Branch 45, for the failure to receive evidence ex parte despite the orders to that effect, for the failure to prepare and submit (or cause the submission of) the monthly inventories, and for the failure to report and update the records of the cases of the branch. Such omissions involved matters that he should have routinely and regularly performed. His duty as the Branch Clerk of Court of Branch 45 required him to receive and file all pleadings and other papers properly presented to the branch, endorsing on each such paper the time when it was filed.^[21][21]

Atty. Pascua was equally accountable with Judge Costales for the inefficient handling of the court records of Branch 45.  His being the Branch Clerk of Court made him the custodian of such records (i.e., pleadings, papers, files, exhibits, and the public properties pertaining to the branch and committed to his charge) with the sworn obligation of safely keeping all of them. Like his Presiding Judge, he carried on his shoulders the burden to see to the orderly and proper keeping and management of the court records, by which he was required to exercise close supervision of the court personnel directly charged with the handling of court records.^[22][22] His position of Branch Clerk of Court rendered him an essential and ranking officer of the judicial system performing delicate administrative functions vital to the prompt and proper administration of justice.^[23][23] Alas, he failed to so perform.

3.

Both Judge Costales and Atty. Pascua, Liable

Based on the foregoing, the OCA properly found that Judge Costales and Atty. Pascua were individually and collectively guilty of mismanagement of the case records of Branch 45, for their omissions led to their Branch’s inability to dispose of many pending matters, causing the litigants concerned and even the Government to suffer needless delay and incur unnecessary expense.

However, the recommendation of the OCA to impose a fine of P5,000.00 on each of Judge Costales and Atty. Pascua trivializes their omissions as a light charge. We cannot concur with such recommendation, because the character and magnitude of the omissions indicated that Judge Costales and Atty. Pascua had been inefficient over a long period of time and had failed to devise and put in place any proper system of records management in that length of time. They were really guilty of violating Supreme Court rules, directives, and circulars, a violation that Section 9, Rule 140, of the Rules of Court treats as a less serious charge, viz:

Section 9. Less Serious Charges. – Less serious charges include:

1. Undue delay in rendering a decision or order, or in transmitting the records of a case;

2. Frequent and unjustified absences without leave or habitual tardiness;

3. Unauthorized practice of law;

4. Violation of Supreme Court rules, directives, and circulars;

5. Receiving additional or double compensation unless specifically authorized by law;

6. Untruthful statements in the certificate of service; and

7. Simple Misconduct.

The sanctions on a less serious charge are stated in Section 11, Rule 140, of the Rules of Court, to wit:

Section 11. Sanctions. – xxx

xxx

B. If the respondent is guilty of a less serious charge, any of the following sanctions shall be imposed: 

1. Suspension from office without salary and other benefits for not less than one (1) nor more than three (3) months; or

2. A fine of more than P10,000.00 but not exceeding P20,000.00.

xxx

Accordingly, the fine to be imposed on Judge Costales is in the maximum of P20,000.00, by reason of his higher and primary responsibility, and that on Atty. Pascua is P8,000.00, in view of his subordinate but non-judicial position.

C.

Insubordination further rendered Judge Costales

Guilty of Simple Misconduct

The records established that Judge Costales did not investigate the bundy-cards incident in RTC Branch 49 from the time the leader of the judicial audit team had reported it to him in his capacity as the Acting Executive Judge. His inaction was even surprising and inexplicable, because the incident concerned the probable falsification of daily time records by subordinate court employees, a very serious matter that when properly established might have merited for those concerned their dismissal from the service.^[24][24] He still needed to be prodded to investigate by the OCA, but all that he could offer thereafter by way of explaining his inaction was that his forthcoming retirement on November 21, 2007 left him no more time and space to look into the incident.

We cannot exculpate Judge Costales from insubordination.

Section 3, Canon 2 of the New Code of Judicial Conduct for the Philippine Judiciary directs a judge to take or initiate appropriate disciplinary measures against lawyers or court personnel for unprofessional conduct of which the judge may have become aware.  This imperative duty becomes the more urgent when the act or omission the court personnel has supposedly committed is in the nature of a grave offense, like the bundy-cards incident involved herein. It would have been surely demanded in the best interest of the public service, if not of the court itself, that the act or omission reported by the judicial audit team to Judge Costales as the Acting Executive Judge be investigated and properly dealt with promptly.

The explanation of Judge Costales of having no more time and space to look into the bundy-cards incident was implausible. Having been informed of the anomaly on September 19, 2007, he had at least two months prior to November 21, 2007, his retirement date, within which to carry out his investigation, and to render a report thereon. That length of time was ample, if only he had acted promptly to investigate the incident. 

Moreover, Judge Costales could not reasonably claim that he had not been aware of the need for him to investigate. Although it is true that he received the OCA’s memorandum dated November 19, 2007 only on November 20, 2007, it is equally true that the memorandum was only a reminder to him about his investigation report and recommendation being already overdue. His inaction from the time when Agbulos, Jr. brought the incident to his official attention indicated his having ignored the need for him as an Acting Executive Judge to investigate. That he did not even bother to explain his inaction or his non-compliance with the reminder aggravated his insubordination. Indeed, the attitude he thereby displayed smacked of an uncharacteristic indifference towards his judicial office and towards the Court.

For disobeying or ignoring the directive to investigate the bundy-cards incident, Judge Costales was guilty of insubordination, an omission that constituted simple misconduct, classified under Section 9, no. 4, Rule 140, of the Rules of Court, supra, as a less serious charge, and is thus punished with a fine of P12,000.00, conformably with Section 11, Rule 140, Rules of Court, supra.

          WHEREFORE, we find and pronounce:

1.     Retired JUDGE JOVEN F. COSTALES and BRANCH CLERK OF COURT ATTY. MAX G. PASCUA guilty of the less serious charge of violation of Supreme Court rules, directives, and circulars, and are respectively ordered to pay fines of P20,000.00 and P8,000.00; and 

2.     Retired JUDGE JOVEN F. COSTALES guilty of the less serious charge of simple misconduct, and is fined in the amount of P12,000.00.

The fines imposed on JUDGE COSTALES shall be deducted from any retirement benefits due to him.

          The Court directs ATTY. MAX G. PASCUA:

1.  To devise an efficient system of record management that ensures that: (a) all pending case are immediately included in the calendar of hearing; and (b) the actual status of every case is reflected in the respective case record;  and

2.  To apprise the Presiding Judge of Branch 45 of the Regional Trial Court in Urdaneta City, Pangasinan within ten (10) days from notice on the status of the following cases and furnishing copies of the latest orders or court processes therein, namely: (a) Criminal Case Nos. U-15010, U-15183, U-13095 (transmittal letter to the Office of the Prosecutor) and Civil Case Nos. U-2377 and U-8793; and (b) Criminal Case No. U-13095 (regarding the arraignment of the accused).

The incumbent Executive Judge of the Regional Trial Court in Urdaneta City, Pangasinan is directed: (a) to immediately investigate and determine the court personnel involved in the bundy clock irregularity committed on September 19, 2007; (b) to report in writing on the investigation to the Office of the Court Administrator within ten (10) days from completion; and (c) to ensure that no similar irregularities are committed in the station.

          SO ORDERED.

                                                                    LUCAS P. BERSAMIN

                                                                           Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice

Chairperson

      ARTURO D. BRION              MARTIN S. VILLARAMA, JR.

           Associate Justice                               Associate Justice

MARIA LOURDES P.A. SERENO 

Associate Justice