Preliminary InjunctionNELSON JENOSA - versus - REV. FR. JOSE RENE C. DELARIARTE, O.S.A., in his capacity as the incumbent Principal of the High School Department of the University of San Agustin, and the UNIVERSITY OF SAN AGUSTIN

The Case This is a petition for review[1] of the 16 June 2005 Decision[2] and 22 March 2006[3] Resolution of the Court of Appeals in CA-G.R. SP No. 78894. In its 16 June 2005 Decision, the Court of Appeals granted the petition of respondents University of San Augustin (University), represented by its incumbent President Rev. Fr. Manuel G. Vergara, O.S.A. (University President), and Rev. Fr. Jose Rene C. Delariarte, O.S.A. (Principal), in his capacity as the incumbent Principal of the High School Department of the University (respondents) and ordered the dismissal of Civil Case Nos. 03-27460 and 03-27646 for lack of jurisdiction over the subject matter. In its 22 March 2006 Resolution, the Court of Appeals denied the motion for reconsideration of petitioners Nelson Jenosa and his son Nio Carlo Jenosa, Socorro Canto and her son Patrick Canto, Cynthia Apalisok and her daughter Cyndy Apalisok, Eduardo Vargas and his son Clint Eduard Vargas, and Nelia Duro and her son Nonell Gregory Duro (petitioners). The Facts On 22 November 2002, some students of the University, among them petitioners Nio Carlo Jenosa, Patrick Canto, Cyndy Apalisok, Clint Eduard Vargas, and Nonell Gregory Duro (petitioner students), were caught engaging in hazing outside the school premises. The hazing incident was entered into the blotter of the Iloilo City Police.[4] Thereafter, dialogues and consultations were conducted among the school authorities, the apprehended students and their parents. During the 28 November 2002 meeting, the parties agreed that, instead of the possibility of being charged and found guilty of hazing, the students who participated in the hazing incident as initiators, including petitioner students, would just transfer to another school, while those who participated as neophytes would be suspended for one month. The parents of the apprehended students, including petitioners, affixed their signatures to the minutes of the meeting to signify their conformity.[5] In view of the agreement, the University did not anymore convene the Committee on Student Discipline (COSD) to investigate the hazing incident. On 5 December 2002, the parents of petitioner students (petitioner parents) sent a letter to the University President urging him not to implement the 28 November 2002 agreement.[6] According to petitioner parents, the Principal, without convening the COSD, decided to order the immediate transfer of petitioner students. On 10 December 2002, petitioner parents also wrote a letter to Mrs. Ida B. Endonila, School Division Superintendent, Department of Education (DepEd), Iloilo City, seeking her intervention and prayed that petitioner students be allowed to take the home study program instead of transferring to another school.[7] The DepEd asked the University to comment on the letter.[8] The University replied and attached the minutes of the 28 November 2002 meeting.[9] On 3 January 2003, petitioners filed a complaint for injunction and damages with the Regional Trial Court, Branch 29, Iloilo City (trial court) docketed as Civil Case No. 03-27460.[10] Petitioners assailed the Principals decision to order the immediate transfer of petitioner students as a violation of their right to due process because the COSD was not convened. On 5 February 2003, the trial court issued a writ of preliminary injunction and directed respondents to admit petitioner students during the pendency of the case.[11] The 5 February 2003 Order reads: WHEREFORE, let [a] Writ of Preliminary Mandatory Injunction issue. The defendants are hereby directed to allow the plaintiffs minor children to attend their classes during the pendency of this case, without prejudice to any disciplinary proceeding to which any or all of them may be liable. SO ORDERED.[12] Respondents filed a motion for reconsideration and asked for the dissolution of the writ. The trial court denied respondents motion. Respondents complied but with reservations. On 25 March 2003, respondents filed a motion to dismiss. Respondents alleged that the trial court had no jurisdiction over the subject matter of the case and that petitioners were guilty of forum shopping. On 19 May 2003, the trial court denied respondents motion. Respondents filed a motion for reconsideration. On 21 April 2003, petitioners wrote the DepEd and asked that it direct the University to release the report cards and other credentials of petitioner students.[13] On 8 May 2003, the DepEd sent a letter to the University advising it to release petitioner students report cards and other credentials if there was no valid reason to withhold the same.[14] On 14 May 2003, the DepEd sent another letter to the University to follow-up petitioners request.[15] On 20 May 2003, the University replied that it could not release petitioner students report cards due to their pending disciplinary case with the COSD.[16] On 28 May 2003, petitioners filed another complaint for mandatory injunction praying for the release of petitioner students report cards and other credentials docketed as Civil Case No. 03-27646.[17] The trial court consolidated the two cases.[18] On 17 June 2003, the trial court issued a writ of preliminary injunction and directed the University to release petitioner students report cards and other credentials.[19] Respondents filed a motion for reconsideration. Respondents alleged that they could not comply with the writ because of the on-going disciplinary case against petitioner students. On 26 June 2003, the COSD met with petitioners for a preliminary conference on the hazing incident. On 7 July 2003, the University, through the COSD, issued its report finding petitioner students guilty of hazing. The COSD also recommended the exclusion of petitioner students from its rolls effective 28 November 2002. On 14 July 2003, the trial court issued an Order denying both motions for reconsideration.[20] On 1 September 2003, respondents filed a special civil action for certiorari with the Court of Appeals. Respondents insisted that the trial court had no jurisdiction over the subject matter of Civil Case Nos. 03-27460 and 03-27646. Respondents also alleged that petitioners were guilty of forum shopping. The Ruling of the Court of Appeals In its 16 June 2005 Decision, the Court of Appeals granted respondents petition and ordered the trial court to dismiss Civil Case Nos. 03-27460 and 03-27646 for lack of jurisdiction over the subject matter because of petitioners failure to exhaust administrative remedies or for being premature. According to the Court of Appeals, petitioners should have waited for the action of the DepEd or of the University President before resorting to judicial action. The Court of Appeals held: From the foregoing, it is clear that the court a quo committed grave [abuse] of discretion amounting to LACK OF JURISDICTION in INTERFERING, pre-maturely, with the exclusive and inherent authority of educational institutions to discipline. In directing herein petitioners [respondents in this case] to re-admit herein private respondents [petitioners in this case] and eventually, to release the report cards and other school credentials, prior to the action of the President of USA and of the recommendation of the COSD, the court a quo is guilty of improper judicial intrusion by encroaching into the exclusive prerogative of educational institutions.[21] Petitioners filed a motion for reconsideration.[22] In its 22 March 2006 Resolution, the Court of Appeals denied petitioners motion for lack of merit. The Issues Petitioners raise the following issues: 1. Was the Court of Appeals correct in holding that Branch 29 of the Regional Trial Court of Iloilo City in Civil Case Nos. 03-27460 and 03-27646 did not acquire jurisdiction over the subject matter of this case for failure of petitioners to exhaust administrative remedies?2. Was the recommendation/report/order of the Committee on Student Discipline dated 7 July 2003 valid, and did it justify the order of exclusion of petitioner students retroactive to 28 November 2002?[23] The Ruling of the Court The petition has no merit. Discipline in education is specifically mandated by the 1987 Constitution which provides that all educational institutions shall teach the rights and duties of citizenship, strengthen ethical and spiritual values, develop moral character and personal discipline.[24] Schools and school administrators have the authority to maintain school discipline[25] and the right to impose appropriate and reasonable disciplinary measures.[26] On the other hand, students have the duty and the responsibility to promote and maintain the peace and tranquility of the school by observing the rules of discipline.[27] In this case, we rule that the Principal had the authority to order the immediate transfer of petitioner students because of the 28 November 2002 agreement.[28] Petitioner parents affixed their signatures to the minutes of the 28 November 2002 meeting and signified their conformity to transfer their children to another school. Petitioners Socorro Canto and Nelia Duro even wrote a letter to inform the University that they would transfer their children to another school and requested for the pertinent papers needed for the transfer.[29] In turn, the University did not anymore convene the COSD. The University agreed that it would no longer conduct disciplinary proceedings and instead issue the transfer credentials of petitioner students. Then petitioners reneged on their agreement without any justifiable reason. Since petitioners present complaint is one for injunction, and injunction is the strong arm of equity, petitioners must come to court with clean hands. In University of the Philippines v. Hon. Catungal, Jr.,[30] a case involving student misconduct, this Court ruled: Since injunction is the strong arm of equity, he who must apply for it must come with equity or with clean hands. This is so because among the maxims of equity are (1) he who seeks equity must do equity, and (2) he who comes into equity must come with clean hands. The latter is a frequently stated maxim which is also expressed in the principle that he who has done inequity shall not have equity. It signifies that a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest, or fraudulent, or deceitful as to the controversy in issue.[31] Here, petitioners, having reneged on their agreement without any justifiable reason, come to court with unclean hands. This Court may deny a litigant relief if his conduct has been inequitable, unfair and dishonest as to the controversy in issue. Since petitioners have come to court with inequitable and unfair conduct, we deny them relief. We uphold the validity of the 28 November 2002 agreement and rule that the Principal had the authority to order the immediate transfer of petitioner students based on the 28 November 2002 agreement. WHEREFORE, we DENY the petition. We AFFIRM the 16 June 2005 Decision and the 22 March 2006 Resolution of the Court of Appeals. SO ORDERED

G.R. No. 161338 April 27, 2007

LUZ GARCIA, JUSTO LUKBAN, ALICE ADEVA, MARCEL LUKBAN, WAVA ANN BAYLON, PAMELA ROSANNA APUYA, ALBERTO GARCIA, JR., AIDA FERRER and JANET VENIDA, Petitioners, vs.ROMULO M. ADEVA, CEZAR E. ECHANO and LIBRADO GUERRA, Respondents. *

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Assailed in the present Petition for Review on Certiorari is the Decision 1 of the Court of Appeals (CA) dated September 18, 2002 nullifying the Resolution dated July 11, 2000 of the Securities and Exchange Commission (SEC) En Banc and reinstating the Order dated March 13, 2000 of the SEC Securities Investigation and Clearing Departments (SICDs) Hearing Panel (Hearing Panel). Also assailed is the CA Resolution dated December 18, 2003, denying petitioners motion for reconsideration.

The petition stemmed from a dispute between two groups of shareholders within the Mabini College, Inc. (Mabini), with petitioners comprising the Garcia-Lukban group, and respondents, the Adeva group.

Sometime in 1995, petitioners filed SEC LEO Case No. 95-0005 (EB 496), a petition for Annual Elections of Stockholders and SEC Supervision in the Procedural Matter of Corporate Inspection with Mandatory Injunction, wherein a committee was composed for the reconstitution of Mabinis stock and transfer books.

On July 2, 1999, the incumbent Board of Trustees passed a resolution authorizing the sale through bidding of 106 treasury shares of stock of Mabini by its Pre-qualification, Bids and Award Committee (PBAC) on August 9, 1999. 2 The Board agreed during its Special Meeting held on July 13, 1999 to direct the PBAC to send out to all known stockholders invitations to bid for the entire 106 treasury shares for a minimum bulk bid of One Million Eighty One Thousand Two Hundred (P1,081,200.00) Pesos or Ten Thousand Two Hundred (P10,200.00) Pesos per share. 3 The bidding, however, was deferred to September 4, 1999. 4

Thus, petitioners filed on August 31, 1999, SEC Case No. 08-99-6398 seeking to enjoin the scheduled sale, alleging that since 1983, respondent Romulo Adeva (Adeva) intentionally failed to call a stockholders meeting for the election of Mabinis Board of Trustees on the pretext that its stock and transfer books are missing, ensuring his indefinite tenure as President of the corporation. Petitioners prayed that the impending sale be enjoined on the grounds that the authority given by the Board of Trustees to the PBAC contravenes Section 9 of the Corporation Code which gives the Board of Directors or Trustees the right to dispose said shares for a reasonable price fixed by the Board; that the scheme to bid out the shares is violative of the stockholders preemptive right to purchase treasury shares; 5 that the stock and transfer book of Mabini has yet to be reconstituted; that as of the date of filing of the petition, there is no official list of stockholders of Mabini; and, that two members of the PBAC, namely: Cesar F. Echano (Echano) and Librado Guerra (Guerra) are not registered stockholders of Mabini. 6

Then SEC Chairman Perfecto Yasay, Jr. issued a temporary restraining order (TRO) on September 2, 1999 which was extended until September 22, 1999. Hearing on the application for the issuance of a preliminary injunction was set on September 20 and 21, 1999.

On September 23, 1999, after the expiration of the TRO, the PBAC re-scheduled the sale of the shares on September 28, 1999 at 1:00 to 3:00 p.m. 7 But before said date came, the Hearing Panel issued an Order dated September 27, 1999 granting the issuance of a writ of preliminary injunction, and enjoining the sale of the treasury shares, subject to the posting of an injunction bond in the amount of P50,000.00. 8

Attempt was made to serve a copy of the SEC Order in the morning of September 28, 1999, but it was refused by respondents counsel for the reason that the order was not signed by the majority of the Hearing Panel. 9 The matter was subsequently rectified and at 3:30 p.m. of the same day, the Hearing Panel telefaxed a copy of the signed order but respondents counsel still refused to receive the same on the ground that petitioners did not post an injunction bond and that the bidding had already commenced at 1:00 p.m. that day and was already finished, 10 with respondent Guerra as the winning bidder.

As a result, petitioners filed an Omnibus Motion praying that the sale of the treasury shares be nullified and that respondents be cited in indirect contempt. 11

The Hearing Panel denied petitioners Omnibus Motion per its Order dated March 13, 2000, finding that there is no ground to nullify the sale or hold respondents in indirect contempt since at the time the sale was held, petitioners had yet to post an injunction bond which was done only on October 8, 1999, or 10 days after the scheduled sale. 12

Petitioners appealed to the SEC En Banc, and in its Resolution dated July 11, 2000, it affirmed the Hearing Panels finding that respondents may not be held in indirect contempt as the injunction order was released "with some defects," but it nullified the sale of the treasury shares based on the Hearing Panels "prima facie" finding that it lacked authority from Mabinis Board of Trustees. 13

This prompted respondents to file a petition for review with the CA.

On September 18, 2002, the CA issued the herein assailed Resolution, granting the petition. It nullified the SEC En Bancs Resolution dated July 11, 2000 and reinstated the Hearing Panels Order dated March 13, 2000. 14 In sustaining the sale of the treasury shares, the CA found that the SEC En Banc went beyond the issue of the propriety of granting the writ of preliminary injunction when it annulled the Mabinis board resolution authorizing the sale of the treasury shares. According to the CA, the SEC En Banc delved on matters that were not before it when it ruled that the board of trustees lacked the authority to dispose of the shares, instead of just ruling on whether the Hearing Panel abused its discretion in denying petitioners Omnibus Motion. The CA further stated that it does not concur with the SEC En Bancs ruling that the sale lacked authority from Mabinis board, as it was the board itself which authorized the sale through the PBAC. Lastly, the CA sustained the Hearing Panels denial of petitioners Omnibus Motion due to their failure to timely post an injunction bond. 15

The CA denied petitioners motion for reconsideration per Resolution dated December 18, 2003. 16

Petitioners are now before the Court alleging that:

I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SEC DELVED ON MATTERS WHICH WERE NOT LAID BEFORE IT IN THE PETITION FOR CERTIORARI.

II. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT FOUND THAT THE SALE OF TREASURY SHARES DID NOT LACK AUTHORITY FROM THE BOARD OF TRUSTEES

III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT UPHELD THE HEARING PANELS FINDING THAT THERE IS NO GROUND TO NULLIFY THE BIDDING AND AWARD OF TREASURY SHARES SINCE NO WRIT HAS BEEN ISSUED PREVENTING SUCH BIDDING. 17

The Petition must be denied.

However, it must first be made clear whether the petition filed by petitioners docketed as SEC Case No. 08-99-6398 is one which seeks only an ancillary remedy or one for Injunction, as a principal action.

The prayer of the Petition reads:

PRAYER

WHEREFORE, the foregoing premises considered, it is most respectfully prayed of this Honorable Commission that:

1. Upon the filing of this petition, a Temporary Restraining Order (TRO) be issued directing respondents, their agents or representatives to cease and desist from offering for sale the treasury shares of Mabini College, Inc. in a bidding to be held for the purpose, on 4 September 1999, at 12:00 noon, at the Case Room of the Mabini College, Daet Camarines Norte.

2. After due proceedings, said injunction be made permanent.1awphi1.nt

OTHER RELIEFS, just and equitable under the premises are likewise prayed for. 18

At first glance, it seems obvious that petitioners action is only to enjoin respondents Adeva, in his capacity as member of the Board of Trustees and President of Mabini, Echano, Lydia E. Cacawa, and Guerra, as Chairmen and Members, respectively of the PBAC of Mabini, "from offering for sale the treasury shares of Mabini College in a bidding to be held for the purpose, on September 4, 1999 at 12:00 noon."

Garayblas v. Atienza, Jr. 19 is instructive, to wit:

Injunction is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain act. It may be the main action or merely a provisional remedy for and as an incident in the main action. The Court has distinguished the main action for injunction from the provisional or ancillary remedy of preliminary injunction, thus:

The main action for injunction is distinct from the provisional or ancillary remedy of preliminary injunction which cannot exist except only as part or an incident of an independent action or proceeding. As a matter of course, in an action for injunction, the auxiliary remedy of preliminary injunction, whether prohibitory or mandatory, may issue. Under the law, the main action for injunction seeks a judgment embodying a final injunction which is distinct from, and should not be confused with, the provisional remedy of preliminary injunction, the sole object of which is to preserve the status quo until the merits can be heard. A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final order. It persists until it is dissolved or until the termination of the action without the court issuing a final injunction. 20

Considering the fact that in this case petitioners also prayed that the injunction be made permanent; and considering the allegations in the petition that under Section 9 of the Corporation Code, the power to dispose treasury shares is given to the Board of Directors or Trustees and not to any other Committee created by the Board; that the bidding of treasury shares is a plot by the incumbent President Adeva to corner treasury shares in order to secure majority shareholdings for purposes of corporate control; and that the right of respondents Echano and Guerra to act as Members of the Board of the PBAC is "very dubious" because their names, as subsequent buyers of shares, are not recorded in the Stock and Transfer Book of Mabini which has been declared missing and has yet to be reconstituted, 21 the Court is convinced that SEC Case No. 08-99-6398 is a principal action for Injunction, not merely for an ancillary remedy of writ of preliminary injunction, wherein the main issues involved, among others, are: (1) whether the creation of the PBAC by the Board of Trustees is valid under the Corporation Code; (2) whether there was a quorum when the Board of Trustees authorized the sale of the treasury shares; and (3) whether respondents Echano and Guerra are bona fide shareholders. These issues are not involved in SEC LEO Case No. 95-0005 (EB 496). The latter case is a separate action which involves the annual elections of stockholders and SEC supervision in the procedural matter of corporate injunction as well as the reconstitution of Mabinis stock and transfer books; and the reconstitution is still being undertaken at the time that SEC Case No. 08-99-6398 was filed by petitioners. Thus, SEC Case No. 08-99-6398 cannot even be referred to or consolidated with SEC LEO Case No. 95-0005 (EB 496). It is for the Hearing Panel in SEC Case No. 08-99-6398 to determine whether a final injunction may be issued under the facts and the law of the case.

The issue in the present Petition for Review by Certiorari is whether the CA erred in sustaining the Hearing Panels Order dated March 13, 2000 which denied for lack of merit petitioners Omnibus Motion to nullify the sale of the subject treasury sales in a bidding conducted by respondents on September 28, 1999.

Attacking the CA Decision, petitioners claim that the CA erred in finding that the SEC En Banc delved on matters which were not laid before it in the Petition for Certiorari brought by petitioners questioning the denial of the Omnibus Motion by the Hearing Panel.

To know whether the SEC En Banc went beyond the issue of the propriety of granting the writ of preliminary injunction in annulling the sale of the treasury shares, a look into the Omnibus Motion filed by petitioners with the Hearing Panel must be made as the Order dated March 13, 2000, denying the Omnibus Motion, is the precursor of the dispute at hand. It is from said motion where it can be determined what were the issues brought up to the SEC En Banc for resolution.

Petitioners Omnibus Motion sought the nullity of the sale of the treasury shares in a bidding conducted by the PBAC and to hold respondents in contempt. The only reason given by petitioners in claiming that the award of the treasury shares to the winning bidder was null and void is that the bidding was made despite the issuance of a writ of preliminary injunction by the Hearing Panel per its Order dated September 27, 1999. 22 Petitioners also contended that respondents were guilty of indirect contempt for defying said Order. 23 Thus, it is only on these grounds that the Hearing Panel resolved the Omnibus Motion per its Order dated March 13, 2000, to wit:

In the record however, is the petitioners bond in the amount of P50,000.00 pesos posted only on October 08, 1999, or ten (10) days after the scheduled bidding of the shares of stock on September 28, 1999. Indeed, the injunction bond was lately filed rendering the same as moot and academic to enjoin the bidding. Hence, there is no ground to nullify the said proceedings and the result since no writ has been issued preventing such bidding.

Similarly, and since no bond was immediately posted and no writ was issued, the respondents cannot be charged of committing any act constituting indirect contempt of the Commission. The fact that the September 27, 1999 Order was released with some defects would normally put the respondents and their lawyers on guard, and to then scrutinize the regularity and validity of issuance is just a normal prudence [sic] for every litigants to do. And when the process server finally have [sic] a fax copy of the Order which was validly issued, the same was a fait accompli as the bidding was already done. 24 (Emphasis supplied)

Consequently, it was an error for the SEC En Banc to delve into the question whether the sale of the treasury shares lacked authority from the Board of Trustees, and to further flog the Hearing Panel for allegedly disregarding said issue in resolving the Omnibus Motion.

The Court does not subscribe to petitioners argument that a resolution on the issue of the legality of the corporate act authorizing the bidding sought to be enjoined is essential in the appeal taken by them from the Hearing Panel Resolution dated July 11, 2000 25 to the SEC En Banc.

True, as stated by the SEC En Banc, that the Order dated September 29, 1999 granting petitioners application for the issuance of a writ of preliminary injunction made mention that the sale lacked authority from the Board of Trustees. 26 However, as stated by the SEC En Banc, it was merely a "prima facie finding," 27 i.e., subject to contradiction by other evidence that may be presented during the trial on the merits of the main injunction case.

It cannot be over emphasized that the lone ground relied upon by the Hearing Panel in denying petitioners motion to nullify the sale by PBAC of the treasury shares and to hold respondents in indirect contempt is petitioners failure to timely post a bond. Thus, any conclusive reliance on the alleged lack of authority of the Board of Trustees will, in effect, dispose of the case on the merits and would prematurely prejudge SEC Case No. 08-99-6398 without affording the parties the opportunity to rebut such prima facie finding.

Any discussion on the validity of the authority to sell the treasury shares by PBAC is premature. At best, the Hearing Panels finding on this score is merely preliminary, subject to a final ruling on the main case.

It is in this context that the Court finds that the CA should have refrained from dealing with the validity of the authority to sell the treasury shares. In the assailed Decision, the CA opined that it "cannot subscribe to the view that the sale of treasury shares lacked authority from the board of trustees x x x because it was precisely the board of trustees themselves that authorized the sale of the treasury shares through the PBAC." 28 In effect, the CA went against its own previous ruling that it was grave abuse of discretion on the part of the SEC En Banc to resolve the matter.

The Court sustains the reinstatement of the Hearing Panels Order dated March 13, 2000. The absence of an injunction bond at the time that the bidding was conducted negates the petitioners demand for the invalidity of the sale of the treasury shares and to hold petitioners in indirect contempt of court.

Sec. 4, Rule 58 of the 1997 Rules of Civil Procedure states:

Sec. 4. Verified application and bond for preliminary injunction or temporary restraining order. - A preliminary injunction or temporary restraining order may be granted only when:

(a) The application in the action or proceeding is verified, and shows facts entitling the applicant to the relief demanded; and

(b) Unless exempted by the court, the applicant files with the court where the action or proceeding is pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that the applicant will pay to such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be issued.

x x x x (Emphasis supplied).1awphi1.nt

Also, as stated by the Hearing Panel, the posting of the injunction bond is required by the SEC New Rules of Procedure, to wit:

SECTION 1. Issuance of Preliminary Injunction. - A preliminary injunction may be granted by the Hearing Officer, upon bond filed with the Commission to be fixed by the Hearing Officer, at any time after the commencement of the action and before judgment when it is established after notice and hearing:

x x x x (Emphasis supplied).

A preliminary injunction or TRO may be granted only when, among others, the applicant, unless exempted by the court, files with the court where the action or proceeding is pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that the applicant will pay such party or person all damages which he may sustain by reason of the injunction or TRO if the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be issued. 29 It has been ruled that the posting of a bond is a condition sine qua non in order that the writ of preliminary injunction may issue. 30

Furthermore, respondents cannot be faulted for pushing through with the bidding and sale of the treasury shares. As the facts have it, the Order dated September 27, 1999 granting the issuance of a writ of preliminary injunction and enjoining the sale of the treasury shares was served on respondents counsel in the morning of the scheduled bidding date, September 28, 1999. Respondents counsel, however, rightly refused to receive the order due to the apparent lack of signatures of the majority of the Hearing Panel. By the time the defect was rectified and the order served on respondents counsel at 3:30 p.m. of the same day, the bidding had already commenced at 1:00 p.m., as scheduled, and the treasury shares sold to respondent Guerra. 31

Consequently, the CA is correct in nullifying the SEC En Banc Decision and in reinstating the Order dated March 13, 2000 of the Hearing Panel.

WHEREFORE, the petition is DENIED for lack of merit.

Costs against petitioners.

SO ORDERED.Receivership

JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners, - versus - PHILIPPINE AIRLINES, INC., Respondent. Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003 Decision and April 16, 2004 Resolution of the Court of Appeals[1] in CA-G.R. SP No. 69540 which granted the petition for certiorari of respondent, Philippine Airlines, Inc. (PAL), and denied petitioners Motion for Reconsideration, respectively. The dispositive portion of the assailed Decision reads: WHEREFORE, premises considered and in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution as well as the January 28, 2002 Resolution of public respondent National Labor Relations Commission [NLRC] is hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Consequently, the Writ of Execution and the Notice of Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and SET ASIDE. SO ORDERED.[2] The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners[3] after they were allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Centers Toolroom Section on July 24, 1995. After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline,[4] prompting them to file a complaint for illegal dismissal and damages which was, by Decision of January 11, 1999,[5] resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the decision. Prior to the promulgation of the Labor Arbiters decision, the Securities and Exchange Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999. From the Labor Arbiters decision, respondent appealed to the NLRC which, by Resolution of January 31, 2000, reversed said decision and dismissed petitioners complaint for lack of merit.[6] Petitioners Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment was issued on July 13, 2000.[7] Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ) respecting the reinstatement aspect of his January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of Garnishment (Notice). Respondent thereupon moved to quash the Writ and to lift the Notice while petitioners moved to release the garnished amount. In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which, by Resolutions of November 26, 2001 and January 28, 2002, affirmed the validity of the Writ and the Notice issued by the Labor Arbiter but suspended and referred the action to the Rehabilitation Receiver for appropriate action. Respondent elevated the matter to the appellate court which issued the herein challenged Decision and Resolution nullifying the NLRC Resolutions on two grounds, essentially espousing that: (1) a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiters decision (the first ground), and (2) the impossibility to comply with the reinstatement order due to corporate rehabilitation provides a reasonable justification for the failure to exercise the options under Article 223 of the Labor Code (the second ground). By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and effectively reinstated the NLRC Resolutions insofar as it suspended the proceedings, viz: Since petitioners claim against PAL is a money claim for their wages during the pendency of PALs appeal to the NLRC, the same should have been suspended pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving petitioners case for illegal dismissal and should instead have directed them to lodge their claim before PALs receiver. However, to still require petitioners at this time to re-file their labor claim against PAL under peculiar circumstances of the case that their dismissal was eventually held valid with only the matter of reinstatement pending appeal being the issue this Court deems it legally expedient to suspend the proceedings in this case. WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant proceedings herein are SUSPENDED until further notice from this Court. Accordingly, respondent Philippine Airlines, Inc. is hereby DIRECTED to quarterly update the Court as to the status of its ongoing rehabilitation. No costs. SO ORDERED.[8] (Italics in the original; underscoring supplied) By Manifestation and Compliance of October 30, 2007, respondent informed the Court that the SEC, by Order of September 28, 2007, granted its request to exit from rehabilitation proceedings.[9] In view of the termination of the rehabilitation proceedings, the Court now proceeds to resolve the remaining issue for consideration, which is whether petitioners may collect their wages during the period between the Labor Arbiters order of reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings. Amplification of the First Ground The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiters decision. On this score, the Courts attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp. v. Zamora,[10] while on the other is the recent case of Genuino v. National Labor Relations Commission.[11] At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor Code which reads: In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. (Emphasis and underscoring supplied) The view as maintained in a number of cases is that: x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.[12] (Emphasis in the original; italics and underscoring supplied) In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith.[13] The opposite view is articulated in Genuino which states: If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund. Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.[14] (Emphasis, italics and underscoring supplied) It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was found to be valid, and to do so would constitute unjust enrichment. Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases,[15] the Court did not order the refund of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal of the reinstatement order. The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the rationale of reinstatement pending appeal. x x x [T]he law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working man. x x x x These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the nation's progress and stability. x x x x x x x In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal. x x x x x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family.[16] The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust enrichment espoused by Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and statutory precepts portray the otherwise unjust situation as a condition affording full protection to labor. Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the refund doctrine easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency. Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon. Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiters decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement.[17] In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal on appeal. Respondent insists that with the reversal of the Labor Arbiters Decision, there is no more basis to enforce the reinstatement aspect of the said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument and finds the prevailing doctrine in Air Philippines and allied cases inapplicable because, unlike the present case, the writ of execution therein was secured prior to the reversal of the Labor Arbiters decision. The proposition is tenuous. First, the matter is treated as a mere race against time. The discussion stopped there without considering the cause of the delay. Second, it requires the issuance of a writ of execution despite the immediately executory nature of the reinstatement aspect of the decision. In Pioneer Texturing Corp. v. NLRC,[18] which was cited in Panuncillo v. CAP Philippines, Inc.,[19] the Court observed: x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. x x x In introducing a new rule on the reinstatement aspect of a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. x x x[20] (Italics in the original; emphasis and underscoring supplied) The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.[21] It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employees salaries.[22] Amplification of the Second Ground The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied upon by the appellate court in the assailed issuances. The Court sustains the appellate courts finding that the peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its option under the circumstances. The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of reinstatement. The immediacy of its execution needs no further elaboration. Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution, as observed in Panuncillo and as what actually transpired in Kimberly,[23] Composite,[24] Air Philippines,[25] and Roquero,[26] should not be countenanced. After the labor arbiters decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employers unjustified act or omission. If the delay is due to the employers unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiters decision. In Genuino, there was no showing that the employer refused to reinstate the employee, who was the Treasury Sales Division Head, during the short span of four months or from the promulgation on May 2, 1994 of the Labor Arbiters Decision up to the promulgation on September 3, 1994 of the NLRC Decision. Notably, the former NLRC Rules of Procedure did not lay down a mechanism to promptly effectuate the self-executory order of reinstatement, making it difficult to establish that the employer actually refused to comply. In a situation like that in International Container Terminal Services, Inc. v. NLRC[27] where it was alleged that the employer was willing to comply with the order and that the employee opted not to pursue the execution of the order, the Court upheld the self-executory nature of the reinstatement order and ruled that the salary automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. It was later discovered that the employee indeed moved for the issuance of a writ but was not acted upon by the Labor Arbiter. In that scenario where the delay was caused by the Labor Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the employees motion for the issuance of a writ of execution may no longer adversely affect the cause of the dismissed employee in view of the self-executory nature of the order of reinstatement.[28] The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit a report of compliance within 10 calendar days from receipt of the Labor Arbiters decision,[29] disobedience to which clearly denotes a refusal to reinstate. The employee need not file a motion for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty in determining the employers intransigence in immediately complying with the order. In the case at bar, petitioners exerted efforts[30] to execute the Labor Arbiters order of reinstatement until they were able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiters decision. Technically, there was still actual delay which brings to the question of whether the delay was due to respondents unjustified act or omission. It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission was justified depends on the onset of the exigency of corporate rehabilitation. It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be suspended.[31] As stated early on, during the pendency of petitioners complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver. Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory.[32] This injunction or suspension of claims by legislative fiat[33] partakes of the nature of a restraining order that constitutes a legal justification for respondents non-compliance with the reinstatement order. Respondents failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondents obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach. While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive. The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its options, on the one hand, and a claim of actual and imminent substantial losses as ground for retrenchment, on the other hand, stops at the red line on the financial statements. Beyond the analogous condition of financial gloom, as discussed by Justice Leonardo Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the ground of substantial losses contemplated in a retrenchment case, the state of corporate rehabilitation was judicially pre-determined by a competent court and not formulated for the first time in this case by respondent. More importantly, there are legal effects arising from a judicial order placing a corporation under rehabilitation. Respondent was, during the period material to the case, effectively deprived of the alternative choices under Article 223 of the Labor Code, not only by virtue of the statutory injunction but also in view of the interim relinquishment of management control to give way to the full exercise of the powers of the rehabilitation receiver. Had there been no need to rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to optimize the utilization of resources. Then again, though the management may think this wise, the rehabilitation receiver may decide otherwise, not to mention the subsistence of the injunction on claims. In sum, the obligation to pay the employees salaries upon the employers failure to exercise the alternative options under Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate rehabilitation. WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of Appeals Decision of December 5, 2003 and Resolution of April 16, 2004 annulling the NLRC Resolutions affirming the validity of the Writ of Execution and the Notice of Garnishment are concerned, the Court finds no reversible error. SO ORDERED.EN BANC

G.R. No. L-29169 August 19, 1968

ROGER CHAVEZ, petitioner, vs.THE HONORABLE COURT OF APPEALS, THE PEOPLE OF THE PHILIPPINES and THE WARDEN OF THE CITY JAIL OF MANILA, respondents.

Estanislao E. Fernandez and Fausto Arce for petitioner. Office of the Solicitor General for respondents.

SANCHEZ, J.:

The thrust of petitioner's case presented in his original and supplementary petitions invoking jurisdiction of this Court is that he is entitled, on habeas corpus, to be freed from imprisonment upon the ground that in the trial which resulted in his conviction1 he was denied his constitutional right not to be compelled to testify against himself. There is his prayer, too, that, should he fail in this, he be granted the alternative remedies of certiorari to strike down the two resolutions of the Court of Appeals dismissing his appeal for failure to file brief, and of mandamus to direct the said court to forward his appeal to this Court for the reason that he was raising purely questions of law.

The indictment in the court below the third amended information upon which the judgment of conviction herein challenged was rendered, was for qualified theft of a motor vehicle, one (1) Thunderbird car, Motor No. H9YH-143003, with Plate No. H-16648 Pasay City '62 together with its accessories worth P22,200.00. Accused were the following: Petitioner herein, Roger Chavez, Ricardo Sumilang alias "Romeo Vasquez", Edgardo P. Pascual alias "Ging" Pascual, Pedro Rebullo alias "Pita", Luis Asistio alias "Baby" Asistio, Lorenzo Meneses alias "Lory" Meneses, Peter Doe, Charlie Doe and Paul Doe.2

Averred in the aforesaid information was that on or about the 14th day of November, 1962, in Quezon City, the accused conspired, with intent of gain, abuse of confidence and without the consent of the owner thereof, Dy Sun Hiok y Lim, in asporting the motor vehicle above-described.

Upon arraignment, all the accused, except the three Does who have not been identified nor apprehended, pleaded not guilty.1wph1.t

On July 23, 1963, trial commenced before the judge presiding Branch IX of the Court of First Instance of Rizal in Quezon City.

The trial opened with the following dialogue, which for the great bearing it has on this case, is here reproduced:.

COURT:

The parties may proceed.

FISCAL GRECIA:

Our first witness is Roger Chavez [one of the accused].

ATTY. CARBON [Counsel for petitioner Chavez]:

I am quite taken by surprise, as counsel for the accused Roger Chavez, with this move of the Fiscal in presenting him as his witness. I object.

COURT:

On what ground, counsel? .

ATTY. CARBON:

On the ground that I have to confer with my client. It is really surprising that at this stage, without my being notified by the Fiscal, my client is beingpresented as witness for the prosecution. I want to say in passing that it is only at this very moment that I come to know about this strategy of the prosecution.

COURT (To the Fiscal):

You are not withdrawing the information against the accused Roger Chavez by making [him a] state witness?.

FISCAL GRECIA:

I am not making him as state witness, Your Honor. I am only presenting him as an ordinary witness.

ATTY. CARBON:

As a matter of right, because it will incriminate my client, I object.

COURT:

The Court will give counsel for Roger Chavez fifteen minutes within which to confer and explain to his client about the giving of his testimony.

x x x x x x x x x

COURT: [after the recess]

Are the parties ready? .

FISCAL:

We are ready to call on our first witness, Roger Chavez.

ATTY. CARBON:

As per understanding, the proceeding was suspended in order to enable me to confer with my client.

I conferred with my client and he assured me that he will not testify for the prosecution this morning after I have explained to him the consequences of what will transpire.

COURT:

What he will testify to does not necessarily incriminate him, counsel.

And there is the right of the prosecution to ask anybody to act as witness on the witness-stand including the accused.

If there should be any question that is incriminating then that is the time for counsel to interpose his objection and the court will sustain him if and when the court feels that the answer of this witness to the question would incriminate him.

Counsel has all the assurance that the court will not require the witness to answer questions which would incriminate him.

But surely, counsel could not object to have the accused called on the witnessstand.

ATTY. CARBON:

I submit.

x x x x x x x x x

ATTY. CRUZ [Counsel for defendants Pascual and Meneses]: .

MAY IT PLEASE THE COURT:

This incident of the accused Roger Chavez being called to testify for the prosecution is something so sudden that has come to the knowledge of this counsel.

This representation has been apprised of the witnesses embraced in the information.

For which reason I pray this court that I be given at least some days to meet whatever testimony this witness will bring about. I therefore move for postponement of today's hearing.

COURT:

The court will give counsel time within which to prepare his cross-examination of this witness.

ATTY. CRUZ:

I labored under the impression that the witnesses for the prosecution in this criminal case are those only listed in the information.

I did not know until this morning that one of the accused will testify as witness for the prosecution.

COURT:

That's the reason why the court will go along with counsels for the accused and will give them time within which to prepare for their cross-examination of this witness.

The court will not defer the taking of the direct examination of the witness.

Call the witness to the witness stand.

EVIDENCE FOR THE PROSECUTION

ROGER CHAVEZ, 31 years old, single, buy and sell merchant, presently detained at the Manila Police Department headquarters, after being duly sworn according to law, declared as follows:

ATTY. IBASCO [Counsel for defendant Luis Asistio]:

WITH THE LEAVE OF THE COURT:

This witness, Roger Chavez is one of the accused in this case No. Q-5311.

The information alleges conspiracy. Under Rule 123, Section 12, it states:

'The act or declaration of a conspirator relating to the conspiracy and during its existence, may be given in evidence against the co-conspirator after the conspiracy is shown by evidence other than such act or declaration.'

COURT:

That is premature, counsel. Neither the court nor counsels for the accused know what the prosecution events to establish by calling this witness to the witness stand.

ATTY. IBASCO:

I submit.

COURT: The Fiscal may proceed.3

And so did the trial proceed. It began with the "direct examination" of Roger Chavez by "Fiscal Grecia".

Came the judgment of February 1, 1965. The version of the prosecution as found by the court below may be briefly narrated as follows:

A few days before November 12, 1962, Roger Chavez saw Johnson Lee, a Chinese, driving a Thunderbird car. With Ricardo Sumilang (movie actor Romeo Vasquez) in mind, whom he knew was in the market for such a car, Chavez asked Lee whether his car was for sale. Lee answered affirmatively and left his address with Chavez. Then, on November 12, Chavez met Sumilang at a barbershop informed him about the Thunderbird. But Sumilang said that he had changed his mind about buying a new car. Instead, he told Chavez that he wanted to mortgage his Buick car for P10,000.00 to cover an indebtedness in Pasay City. Upon the suggestion of Chavez, they went to see Luis Asistio, who he knew was lending money on car mortgages and who, on one occasion, already lent Romeo Vasquez P3,000.00 on the same Buick car. Asistio however told the two that he had a better idea on how to raise the money. His plan was to capitalize on Romeo Vasquez' reputation as a wealthy movie star, introduce him as a buyer to someone who was selling a car and, after the deed of sale is signed, by trickery to run away with the car. Asistio would then register it, sell it to a third person for a profit. Chavez known to be a car agent was included in the plan. He furnished the name of Johnson Lee who was selling his Thunderbird. 1wph1.t

In the morning of November 14, Chavez telephoned Johnson Lee and arranged for an appointment. Sometime in the afternoon. Chavez and Sumilang met Lee in his Thunderbird on Highway 54. Sumilang was introduced as the interested buyer. Sumilang's driver inspected the car, took the wheel for a while. After Sumilang and Lee agreed on the purchase price (P21.000.00), they went to Binondo to Johnson Lee's cousin, Dy Sun Hiok, in whose name the car was registered. Thereafter, they went to see a lawyer notary public in Quezon City, known to Chavez for the drafting of the deed of sale. After the deed of sale was drawn up, it was signed by Sumilang as the vendee, Dy Sun Hiok the vendor, and Sumilang's driver and Johnson Lee the witnesses thereto.

As payment was to be made at Eugene's restaurant in Quezon City, all of them then drove in the Thunderbird car to that place. The deed of sale and other papers remained in the pockets of Johnson Lee.

At Eugene's, a man approached Sumilang with a note which stated that the money was ready at the Dalisay Theater. Sumilang then wrote on the same note that the money should be brought to the restaurant. At the same time he requested Lee to exhibit the deed of sale of the car to the note bearer.4

Then, the two Chinese were left alone in the restaurant. For Sumilang, who had left the table to pose for pictures with some fans and come back, again left never to return. So did Chavez, who disappeared after he left on the pretext of buying cigarettes. The two Chinese could not locate Sumilang and Chavez. They went out to the place where the Thunderbird was parked, found that it was gone. They then immediately reported its loss to the police. Much later, the NBI recovered the already repainted car and impounded it.

Right after the meeting at Eugene's, Chavez, Sumilang and Asistio converged that same day at Barrio Fiesta, a restaurant at Highway 54 near the Balintawak monument in Caloocan. There, Asistio handed to Sumilang P1,000.00 cash and a golf set worth P800.00 as the latter's share in the transaction. On the 14th of November, the registration of the car was transferred in the name of Sumilang in Cavite City, and three days later, in the name of Asistio in Caloocan.

From the court's decision, Ricardo Sumilang's version, corroborated in part by Asistio, may be condensed as follows:

In the last week of September, 1962, Sumilang saw Roger Chavez at a gas station. The latter informed him that there was a Thunderbird from Clark Field for sale for a price between P20,000.00 and P22,000.00. Chavez said that it could be held for him with a down payment of P10,000.00.

To raise this sum, Sumilang and Chavez, on October 1, went to the house of a certain Nena Hernaez de los Reyes who wrote out a check for P5,000.00 as a loan to Sumilang. That check was exhibited in court. Sumilang and Chavez then went to Pasay City to see a certain Mario Baltazar, an agent of the Pasay City Mayor, and Narsing Cailles, Chief of the Fire Department. Sumilang asked the two for a P10,000-loan backed up by the P5,000.00-check aforesaid on condition that it should not be cashed immediately as there were not enough funds therefor. Baltazar and Cailles agreed to give the money the nextday as long as the check would be left with them and Sumilang would sign a promissory note for P10,000.00. Baltazar later informed Sumilang that Chavez picked up the money the next day. Four or five days afterwards, Chavez returned P4,000.00 to Sumilang because P6,000.00 was enough for the deposit. And so, Sumilang gave back the P4,000.00 to Baltazar.

About the end of October or at the beginning of November, Chavez asked Sumilang for another P3,000.00. Sumilang sent Chavez to Baltazar and Cailles, with a note requesting that they accommodate him once more. He also sent a check, again without funds. Baltazar gave the money after verifying the authenticity of the note.

On November 14, Chavez appeared at Sumilang's house with the news that the car was ready if Sumilang was ready with the rest of the money. So Sumilang got P9,000.00 from his mother and another P4,000.00 from his aparador. He immediately gave P6,000.00 to Chavez, intending to pay out the balance upon the car's delivery. It was then that Chavez told Sumilang that the car was already bought by a Chinese who would be the vendor.

The purchase price finally agreed upon between Sumilang and Johnson Lee was P21,000.00, plus P500.00 agents commission at the expense of the buyer. Sumilang told Lee that he already paid part of the price to Chavez.

At Eugene's, Chavez asked Sumilang for the balance. Sumilang accommodated. There, Sumilang, also saw a friend, "Ging" Pascual. In the course of their conversation at the bar, Sumilang mentioned the proposed transaction thru Chavez. Pascual warned that Chavez was a "smart" agent and advised that Sumilang should have a receipt for his money. A certain Bimbo, a friend of Pascual, offered to make out a receipt for Chavez to sign.

After Sumilang returned from posing for some photographs with some of his fans, Bimbo showed him the receipt already signed by Chavez. Sumilang requested Pascual and Bimbo to sign the receipt as witnesses. And they did. This receipt was offered as an exhibit by the prosecution and by Sumilang.

When Sumilang was ready to leave Eugene's, Johnson Lee turned over to him the deed of sale, the registration papers and the keys to the car. After shaking hands with Lee, Sumilang drove away in the car with his driver at the wheel.

Two or three days afterwards, Sumilang dropped by the Barrio Fiesta on his way to a film shooting at Bulacan. He saw Asistio with many companions. Asistio liked his Thunderbird parked outside. Asistio offered to buy it from him for P22,500.00. As the offer was good, and knowing Asistio's and his friends' reputation for always getting what they wanted, Sumilang consented to the sale. Asistio tendered a down payment of P1,000.00; the balance he promised to pay the next day after negotiating with some financing company. Before said balance could be paid, the car was impounded.

The trial court gave evidence to Sumilang's averment, strengthened by Baltazar's and Cailles' corroborations, that he paid good money for the car. Sumilang was thus cleared. So was Asistio whom the trial court believed to be a mere buyer of the car. And so, the prosecution's theory of conspiracy was discounted.

As to the other accused, the court found no case against Pedro Rebullo alias "Pita" and Lorenzo Meneses alias "Lory". The accused "Ging" Pascual was also acquitted for in the first place he was not identified by Johnson Lee in court.

As to Roger Chavez, however, the court had this to say: "Roger Chavez does not offer any defense. As a matter of fact, his testimony as witness for the prosecution establishes his guilt beyond reasonable doubt."5 The trial court branded him "a self-confessed culprit".6 The court further continued:

It is not improbable that true to the saying that misery loves company Roger Chavez tried to drag his co-accused down with him by coloring his story with fabrications which he expected would easily stick together what with the newspaper notoriety of one and the sensationalism caused by the other. But Roger Chavez' accusations of Asistio's participation is utterly uncorroborated. And coming, as it does, from a man who has had at least two convictions for acts not very different from those charged in this information, the Court would be too gullible if it were to give full credence to his words even if they concerned a man no less notorious than himself.7

The trial court then came to the conclusion that if Johnson Lee was not paid for his car, he had no one but Roger Chavez to blame.

The sum of all these is that the trial court freed all the accused except Roger Chavez who was found guilty beyond reasonable doubt of the crime of qualified theft. He was accordingly sentenced to suffer an indeterminate penalty of not less than ten (10) years, one (1) day, as minimum and not more than fourteen (14) years, eight (8) months and one (1) day as maximum, to indemnify Dy Sun Hiok and/or Johnson Lee in the sum of P21,000.00 without subsidiary imprisonment in case of insolvency, to undergo the accessory penalties prescribed by law, and to pay the costs. The Thunderbird car then in the custody of the NBI was ordered to be turned over to Ricardo Sumilang, who was directed to return to Asistio the sum of P1,000.00 unless the latter chose to pay P21,500.00, representing the balance of the contract price for the car.

The foregoing sentence was promulgated on March 8, 1965. Roger Chavez appealed to the Court of Appeals.

On April 18, 1968, the Court of Appeals required Atty. Natividad Marquez, counsel for Roger Chavez, to show cause within ten days from notice why Chavez' appeal should not be considered abandoned and dismissed. Reason for this is that said lawyer received notice to file brief on December 28, 1967 and the period for the filing thereof lapsed on January 27, 1968 without any brief having been filed.

On May 13, 1968, Atty. Marquez registered a detailed written explanation. She also stated that if she were allowed to file appellant's brief she would go along with the factual findings of the court below but will show however that its conclusion is erroneous.8

On May 14, 1968, the Court of Appeals, despite the foregoing explanation, resolved to dismiss the appeal. A move to reconsider was unavailing. For, on June 21, 1968, the Court of Appeals, through a per curiam resolution, disposed to maintain its May 14 resolution dismissing the appeal, directed the City Warden of Manila where Chavez is confined by virtue of the warrant of arrest issued by the Court of Appeals, to turn him over to Muntinlupa Bilibid Prisons pending execution of the judgment below, and ordered remand of the case to the Quezon City court for execution of judgment.

It was at this stage that the present proceedings were commenced in this Court.

Upon the petitions, the return, and the reply, and after hearing on oral arguments, we now come to grips with the main problem presented.

We concentrate attention on that phase of the issues which relates petitioner's assertion that he was compelled to testify against himself. For indeed if this one question is resolved in the affirmative, we need not reach the others; in which case, these should not be pursued here.

1. Petitioner's plea on this score rests upon his averment, with proof, of violation of his right constitutionally entrenched against self-incrimination. He asks that the hand of this Court be made to bear down upon his conviction; that he be relieved of the effects thereof. He asks us to consider the constitutional injunction that "No person shall be compelled to be a witness against himself,"9 fully echoed in Section 1, Rule 115, Rules of Court where, in all criminal prosecutions, the defendant shall be entitled: "(e) To be exempt from being a witness against himself." .

It has been said that forcing a man to be a witness against himself is at war with "the fundamentals of a republican government"; 10 that [i]t may suit the purposes of despotic power but it can not abide the pure atmosphere of political liberty and personal freedom."11 Mr. Justice Abad Santos recounts the historical background of this constitutional inhibition, thus: " "The maxim Nemo tenetur seipsum accusare had its origin in a protest against the inquisitorial and manifestly unjust methods of interrogating accused persons, which has long obtained in the continental system, and, until the expulsion of the Stuarts from the British throne in 1688, and the erection of additional barriers for the protection of the people against the exercise of arbitrary power, was not uncommon even in England. While the admissions of confessions of the prisoner, when voluntarily and freely made, have always ranked high in the scale of incriminating evidence, if an accused person be asked to explain his apparent connection with a crime under investigation, the ease with which the questions put to him may assume an inquisitorial character, the temptation to press, the witness unduly, to browbeat him if he be timid or reluctant, to push him into a corner, and to entrap him into fatal contradictions, which is so painfully evident in many of the earlier state trials, notably in those of Sir Nicholas Throckmorton, and Udal, the Puritan minister, made the system so odious as to give rise to a demand for its total abolition. The change in the English criminal procedure in that particular seems to be founded upon no statute and no judicial opinion, but upon a general and silent acquiescence of the courts in a popular demand. But, however adopted, it has become firmly embedded in English, as well as in American jurisprudence. So deeply did the iniquities of the ancient system impress themselves upon the minds of the American colonists that the states, with one accord, made a denial of the right to question an accused person a part of their fundamental law, so that a maxim which in England was a mere rule of evidence, became clothed in this country with the impregnability of a constitutional enactment." (Brown vs. Walker, 161 U.S., 591, 597; 40 Law. ed., 819, 821)." 12 Mr. Justice Malcolm, in expressive language, tells us that this maxim was recognized in England in the early days "in a revolt against the thumbscrew and the rack." 13 An old Philippine case [1904] 14 speaks of this constitutional injunction as "older than the Government of the United States"; as having "its origin in a protest against the inquisitorial methods of interrogating the accused person"; and as having been adopted in the Philippines "to wipe out such practices as formerly prevailed in these Islands of requiring accused persons to submit to judicial examinations, and to give testimony regarding the offenses with which they were charged."

So it is then that this right is "not merely a formal technical rule the enforcement of which is left to the discretion of the court"; it is mandatory; it secures to a defendant a valuable and substantive right; 15 it is fundamental to our scheme of justice. Just a few months ago, the Supreme Court of the United States (January 29, 1968), speaking thru Mr. Justice Harlan warned that "[t]he constitutional privilege was intended to shield the guilty and imprudent as well as the innocent and foresighted." 16

It is in this context that we say that the constitutional guarantee may not be treated with unconcern. To repeat, it is mandatory; it secures to every defendant a valuable and substantive right. Taada and Fernando (Constitution of the Philippines, 4th ed., vol. I, pp. 583-584) take note of U.S. vs. Navarro, supra, which reaffirms the rule that the constitutional proscription was established on broad grounds of public policy and humanity; of policy because it would place the witness against the strongest temptation to commit perjury, and of humanity because it would be to extort a confession of truth by a kind of duress every species and degree of which the law abhors. 17

Therefore, the court may not extract from a defendant's own lips and against his will an admission of his guilt. Nor may a court as much as resort to compulsory disclosure, directly or indirectly, of facts usable against him as a confession of the crime or the tendency of which is to prove the commission of a crime. Because, it is his right to forego testimony, to remain silent, unless he chooses to take the witness stand with undiluted, unfettered exercise of his own free, genuine will.

Compulsion as it is understood here does not necessarily connote the use of violence; it may be the product of unintentional statements. Pressure which operates to overbear his will, disable him from making a free and rational choice, or impair his capacity for rational judgment would in our opinion be sufficient. So is moral coercion "tending to force testimony from the unwilling lips of the defendant." 18

2. With the foregoing as guideposts, we now turn to the facts. Petitioner is a defendant in a criminal case. He was called by the prosecution as the first witness in that case to testify for the People during the first day of trial thereof. Petitioner objected and invoked the privilege of self-incrimination. This he broadened by the clear cut statement that he will not testify. But petitioner's protestations were met with the judge's emphatic statement that it "is the right of the prosecution to ask anybody to act as witness on the witness stand including the accused," and that defense counsel "could not object to have the accused called on the witness stand." The cumulative impact of all these is that accused-petitioner had to take the stand. He was thus peremptorily asked to create evidence against himself. The foregoing situation molds a solid case for petitioner, backed by the Constitution, the law, and jurisprudence.

Petitioner, as accused, occupies a different tier of protection from an ordinary witness. Whereas an ordinary witness may be compelled to take the witness stand and claim the privilege as each question requiring an incriminating answer is shot at him, 19 and accused may altogether refuse to take the witness stand and refuse to answer any and all questions. 20 For, in reality, the purpose of calling an accused as a witness for the People would be to incriminate him. 21 The rule positively intends to avoid and prohibit the certainly inhuman procedure of compelling a person "to furnish the missing evidence necessary for his conviction." 22 This rule may apply even to a co-defendant in a joint trial.23

And the guide in the interpretation of the constitutional precept that the accused shall not be compelled to furnish evidence against himself "is not the probability of the evidence but it is the capability of abuse." 24 Thus it is, that it was undoubtedly erroneous for the trial judge to placate petitioner with these words:.

What he will testify to does not necessarily incriminate him, counsel.

And there is the right of the prosecution to ask anybody to act as witness on the witness-stand including the accused.

If there should be any question that is incriminating then that is the time for counsel to interpose his objection and the court will sustain him if and when the court feels that the answer of this witness to the question would incriminate him.

Counsel has all the assurance that the court will not require the witness to answer questions which would incriminate him.

But surely, counsel could not object to have the accused called on the witness stand.

Paraphrasing Chief Justice Marshall in Aaron Burr's Trial, Robertsons Rep. I, 208, 244, quoted in VIII Wigmore, p. 355, 25 While a defendant's knowledge of the facts remains concealed within his bosom, he is safe; but draw it from thence, and he is exposed" to conviction.

The judge's words heretofore quoted "But surely counsel could not object to have the accused called on the witness stand" wielded authority. By those words, petitioner was enveloped by a coercive force; they deprived him of his will to resist; they foreclosed choice; the realities of human nature tell us that as he took his oath to tell the truth, the whole truth and nothing but the truth, no genuine consent underlay submission to take the witness stand. Constitutionally sound consent was absent.

3. Prejudice to the accused for having been compelled over his objections to be a witness for the People is at once apparent. The record discloses that by leading questions Chavez, the accused, was made to affirm his statement given to the NBI agents on July 17, 1963 at 5:00 o'clock in the afternoon. 26 And this statement detailed the plan and execution thereof by Sumilang (Vasquez), Asistio and himself to deprive the Chinese of his Thunderbird car. And he himself proceeded to narrate the same anew in open court. He identified the Thunderbird car involved in the case. 27

The decision convicting Roger Chavez was clearly of the view that the case for the People was built primarily around the admissions of Chavez himself. The trial court described Chavez as the "star witness for the prosecution". Indeed, the damaging facts forged in the decision were drawn directly from the lips of Chavez as a prosecution witness and of course Ricardo Sumilang for the defense. There are the unequivocal statements in the decision that "even accused Chavez" identified "the very same Thunderbird that Johnson Lee had offered for sale"; that Chavez "testimony as witness for the prosecution establishes his guilt beyond reasonable doubt and that Chavez is "a self-confessed culprit". 1wph1.t

4. With all these, we have no hesitancy in saying that petitioner was forced to testify to incriminate himself, in full breach of his constitutional right to remain silent. It cannot be said now that he has waived his right. He did not volunteer to take the stand and in his own defense; he did not offer himself as a witness; on the contrary, he claimed the right upon being called to testify. If petitioner nevertheless answered the questions inspite of his fear of being accused of perjury or being put under contempt, this circumstance cannot be counted against him. His testimony is not of his own choice. To him it was a case of compelled submission. He was a cowed participant in proceedings before a judge who possessed the power to put him under contempt had he chosen to remain silent. Nor could he escape testifying. The court made it abundantly clear that his testimony at least on direct examination would be taken right then and thereon the first day of the trial.

It matters not that, after all efforts to stave off petitioner's taking the stand became fruitless, no objections to questions propounded to him were made. Here involve is not a mere question of self-incrimination. It is a defendant's constitutional immunity from being called to testify against himself. And the objection made at the beginning is a continuing one. 1wph1.t

There is therefore no waiver of the privilege. "To be effective, a waiver must be certain and unequivocal, and intelligently, understandably, and willingly made; such waiver following only where liberty of choice has been fully accorded. After a claim a witness cannot properly be held to have waived his privilege on vague and uncertain evidence." 28 The teaching in Johnson vs. Zerbst 29 is this: "It has been pointed out that "courts indulge every reasonable presumption against waiver" of fundamental constitutional rights and that we "do not presume acquiescence in the loss of fundamental rights." A waiver is ordinarily an intentional relinquishment or abandonment of a known right or privilege." Renuntiatio non praesumitur.

The foregoing guidelines, juxtaposed with the circumstances of the case heretofore adverted to, make waiver a shaky defense. It cannot stand. If, by his own admission, defendant proved his guilt, still, his original claim remains valid. For the privilege, we say again, is a rampart that gives protection - even to the guilty. 30

5. The course which petitioner takes is correct. Habeas corpus is a high prerogative writ. 31 It is traditionally considered as an exceptional remedy to release a person whose liberty is illegally restrained such as when the accused's constitutional rights are disregarded. 32 Such defect results in the absence or loss of jurisdiction 33 and therefore invalidates the trial and the consequent conviction of the accused whose fundamental right was violated. 34 That void judgment of conviction may be challenged by collateral attack, which precisely is the function of habeas corpus. 35 This writ may issue even if another remedy which is less effective may be availed of by the defendant. 36 Thus, failure by the accused to perfect his appeal before the Court of Appeals does not preclu