Soriano vs. Court of Appeals

A supplemental complaint that pleads a cause of action entirely different from or contrary to that in the original complaint is not a proper supplemental pleading and shall not be admitted; it changes the theory of the case and substantially alters the cause of action. The initial payment of filing fees based on the clerk of court’s assessment, made in good faith and without intent to defraud the government, vests jurisdiction in the trial court, subject to later adjustment. Direct contempt requires misbehavior in the presence of or so near the court as to obstruct proceedings; sarcastic or disrespectful remarks in pleadings, without more, do not warrant summary punishment as direct contempt.

From 1968, Socorro Abella Soriano employed Deogracias and Rosalina Reyes as manager and administrative assistant of her real estate holdings. In 1973, she provided them a lifetime apartment unit at No. 67 Elias Angeles St., Naga City, with a token monthly rent; they also operated a pub and restaurant in another unit in the same building, paying nominal rent. The Reyes spouses sold subdivision lots, supervised construction, and collected rents, generating approximately P10 million for Soriano over two decades. In 1986, they became indebted to Soriano for P638,635.36 and, to secure the debt, executed a deed of absolute sale and a memorandum of agreement over their two commercial lots. They claimed the documents were intended as an equitable mortgage but Soriano caused transfer certificates of title to be issued in her name. On October 17, 1988, Soriano gave them notice to vacate the apartment units. The Reyes spouses then filed the complaint that gave rise to these consolidated cases.

• The Complaint: On October 27, 1988, spouses Deogracias and Rosalina Reyes filed a complaint against Socorro Abella Soriano for “declaration and recognition of real right under an implied contract of services, reformation of instrument and damages.” The first cause of action alleged that, as compensation for twenty years of service as manager and administrative assistant, Soriano gave them a lifetime right to occupy an apartment unit at No. 67 Elias Angeles St., Naga City, imposing a token monthly rent of P150.00 to allow them “to keep their self-respect.” They also converted another unit in the same building into a pub and restaurant at their own expense, paying a token rent of P1,500.00. They claimed Soriano reneged on the lifetime arrangement when she served a notice to vacate on October 17, 1988. The second cause of action averred that they owned two commercial lots in Concepcion Grande, Naga City; that they became indebted to Soriano for P638,635.36 in 1986; that the parties agreed the lots would be sold and part of the proceeds applied to the debt; and that, pending sale, the property was conveyed as security via a deed of absolute sale and a memorandum of agreement, which Soriano fraudulently registered, transferring title to herself. They sought nullification of the deed of absolute sale and reformation into an equitable mortgage.

• Docket Fees: Upon filing, the Reyes spouses paid P440.00 as filing fee and P10.00 as legal research fee, based on the clerk of court’s computation of their claims: P100,000.00 as income from the property, P50,000.00 moral damages, P10,000.00 exemplary damages, and P50,000.00 attorney’s fees, totaling P210,000.00.

• Motion to Dismiss and Ex-Parte Restraining Order: Soriano moved to dismiss on November 29, 1988, invoking pendency of an ejectment case and prematurity. On December 8, 1988, Carmelite Sisters, on behalf of Soriano, filed an urgent ex-parte motion for a restraining order to prevent the Reyes spouses from entering vacant apartments and from urging tenants to withhold rent. During a chambers conference, Sister Margaret Mary allegedly remarked to Judge Naval, “Why would Atty. Padilla ask for an ex-parte restraining order when according to you that is prohibited by an order or circular of the Supreme Court? Do you mean Atty. Padilla does not even know that there is such an order or circular, when he has a brother in the Supreme Court?” The trial court denied the restraining order on December 16, 1988, stating the matter fell within the exclusive jurisdiction of the municipal trial court as a question of forcible entry. On January 16, 1989, the motion to dismiss was granted as to the first cause of action and denied as to the second.

• Motion to Inhibit: On the same day, Soriano, through Atty. Padilla, moved to inhibit Judge Naval, citing his alleged past frequent patronage of the Reyeses’ restaurant, his friendship with the spouses and their counsel, Atty. Dennis B. Recon, and the incident involving the Carmelite Sisters. Judge Naval denied the motion on January 23, 1989, denying the alleged friendships and expressing concern that granting inhibition after adverse rulings would set a bad precedent and might affect the integrity of the bench and bar, given the Sisters’ intimation that the Supreme Court would sustain the judge because Atty. Padilla’s brother was a Justice.

• Supplemental Complaint: On April 17, 1989, the Reyes spouses filed a motion to admit a supplemental complaint, alleging that on March 30, 1989, they tendered P638,635.36 to Soriano in accordance with the memorandum of agreement’s three-year repurchase period and that Soriano refused to accept payment. The trial court admitted the supplemental complaint on April 28, 1989, and denied Soriano’s motion to dismiss it on July 6, 1989. The Reyes spouses subsequently paid the additional docket fee of P1,712.00 assessed by the court.

• Contempt Proceedings: Soriano, through Atty. Padilla, filed an omnibus motion for reconsideration of various orders on August 26, 1989. The trial court denied the motion and, on September 25, 1989, ordered Atty. Padilla to show cause why he should not be cited for contempt, citing statements in the omnibus motion that allegedly insulted the court, including remarks that the court could not correctly understand the Supreme Court circular, that “even a first year law student will readily see” the meaning, that the court “vented its anger,” and that “plaintiffs’ obvious desire to keep their case in this particular branch of the court is no excuse for violating the rules.” Soriano failed to appear at successive pre-trial settings and was declared in default on February 9, 1990. On February 27, 1990, Atty. Padilla was found guilty of direct contempt and sentenced to five days’ imprisonment and a P100.00 fine.

• Court of Appeals Decision: Soriano and Atty. Padilla elevated the case to the Court of Appeals via certiorari and mandamus. The appellate court dismissed the petition but annulled the trial court’s orders admitting the supplemental complaint, holding that it did not merely supplement but wholly substituted the original pleading. The Reyes spouses’ motion for partial reconsideration was denied, prompting them to file their own petition for review.

• Admission of Supplemental Complaint: The Reyes spouses argued that the Court of Appeals erred in annulling the trial court’s orders admitting their supplemental complaint. They maintained that the supplemental pleading merely set forth transactions occurring after the filing of the original complaint—namely, their tender of payment and Soriano’s refusal—and was a proper supplemental pleading under the rules.

• On Docket Fees: Respondents countered that the Reyes spouses paid the filing fee as assessed by the clerk of court in good faith, without intent to defraud, and later paid the deficiency when ordered, which under Sun Insurance Office, Ltd. v. Asuncion was sufficient to vest jurisdiction.

• On Restraining Order: Respondents contended that the motion had become moot because the Reyes spouses had already entered the premises, rendering injunction a fait accompli.

• On Inhibition: Respondents argued that no ground for mandatory disqualification existed and that Soriano failed to prove bias or partiality with clear and convincing evidence; mere allegations were insufficient.

• On Contempt: Respondents maintained that Atty. Padilla’s language in the omnibus motion was disrespectful, insulting, and contumacious, warranting the contempt sanction.

• Restraining Order: Whether the trial court gravely abused its discretion in refusing to issue an ex-parte restraining order to prevent the Reyes spouses from seizing the disputed property.

• Docket Fees: Whether the trial court lacked jurisdiction because the Reyes spouses failed to pay the correct filing fee upon filing the complaint.

• Inhibition: Whether the trial court gravely abused its discretion in denying Soriano’s motion to inhibit Judge Naval.

• Supplemental Complaint: Whether the trial court gravely abused its discretion in admitting the supplemental complaint that pleaded a cause of action contrary to the original complaint.

• Direct Contempt: Whether the trial court gravely abused its discretion in finding Atty. Padilla guilty of direct contempt.

• Court of Appeals’ Ruling: Whether the Court of Appeals acted with grave abuse of discretion in affirming the trial court’s orders, except for the order admitting the supplemental complaint.

• Restraining Order: The issue had become moot and academic. The parties stipulated that the Reyes spouses had already entered the premises; the acts sought to be enjoined were a fait accompli. Injunction would no longer lie, and courts do not adjudicate moot questions.

• Docket Fees: The trial court validly acquired jurisdiction. The Reyes spouses paid the filing fee as computed by the clerk of court in good faith, without intent to defraud the government. The ruling in Manchester Development Corporation v. Court of Appeals—which requires dismissal for deliberate underpayment—did not apply. Instead, the rule in Sun Insurance Office, Ltd. v. Asuncion governed: where the initial payment is made in good faith and the deficiency is later paid within a reasonable time, jurisdiction is vested and the additional fee shall constitute a lien on the judgment. The principle in Ng Soon v. Alday—that initial payment based on the estimated claim is allowed subject to later adjustment—was likewise applied.

• Inhibition: The denial of the motion to inhibit was proper. Rule 137, Section 1 of the Revised Rules of Court enumerates the exclusive grounds for mandatory disqualification, none of which were present. Voluntary inhibition rests in the judge’s sound discretion. The Court of Appeals found as a fact that Judge Naval had not crossed the line dividing partiality from impartiality. The test is whether the movant was deprived of a fair and impartial trial, and there was no such showing. Bare allegations of partiality do not suffice; bias must be proved by clear and convincing evidence.

• Supplemental Complaint: The trial court erred in admitting the supplemental complaint. A supplemental pleading must set forth transactions, occurrences, or events happening after the date of the pleading sought to be supplemented. Here, the so-called supplemental complaint contained matters entirely different from and contrary to the original complaint: the original sought nullification of the memorandum of agreement, while the supplemental invoked that same agreement to exercise an option to repurchase. The amendment substantially changed the cause of action and altered the theory of the case, violating the rule that a supplemental pleading cannot substitute a new cause of action. The Court of Appeals correctly annulled the admission orders.

• Direct Contempt: The contempt conviction was reversed. Direct contempt under Rule 71, Section 1 requires misbehavior in the presence of or so near the court as to obstruct or interrupt proceedings. Atty. Padilla’s statements in the omnibus motion—while containing snide remarks and sarcastic innuendoes—did not rise to the level of contumacious behavior in facie curiae. Remarks made in pleadings explaining a party’s position do not automatically constitute direct contempt. Courts must exercise the contempt power sparingly, on the preservative and corrective principle, not vindictively. Judges are expected to tolerate momentary expressions of disappointment. However, the Court admonished Atty. Padilla to observe temperate language and reminded all lawyers of their duty under Canons 8 and 11 of the Code of Professional Responsibility to maintain respect toward the courts.

• Court of Appeals’ Ruling: The Court of Appeals did not commit grave abuse of discretion in affirming the trial court’s orders, except insofar as it affirmed the contempt conviction.

• Sun Insurance Rule on Docket Fees — The trial court acquires jurisdiction over a claim upon the filing of the appropriate pleading and payment of the prescribed filing fee. Where the fee paid upon filing is insufficient, the court may allow payment of the deficiency within a reasonable time, but in no case beyond the applicable prescriptive or reglementary period. If the judgment awards a claim not specified in the pleading, the additional filing fee shall constitute a lien on the judgment. This rule applies when the initial underpayment is made in good faith and without intent to defraud the government, as distinguished from the Manchester rule requiring dismissal for deliberate underpayment.

• Prohibition Against Changing the Theory of the Case by Supplemental Pleading — A supplemental complaint must set forth transactions, occurrences, or events that have happened since the date of the pleading sought to be supplemented. It cannot plead a cause of action entirely different from or contrary to the original complaint. The rule allowing amendments to pleadings is subject to the general limitation that the cause of action shall not be substantially changed or the theory of the case altered.

• Direct Contempt — Preservative, Not Vindictive Principle — The power to punish for direct contempt must be exercised on the preservative, not vindictive, principle, and on the corrective, not retaliatory, idea of punishment. It is intended as a safeguard not for judges as persons but for the functions they exercise. Courts must be slow to punish for direct contempt; the drastic power must be used sparingly and only in cases of clearly contumacious behavior in facie curiae. Snide remarks or sarcastic innuendoes in pleadings do not necessarily assume the level of contumely actionable under Rule 71.

• Inhibition of Judges — Discretionary and Mandatory Grounds — Mandatory disqualification is limited to the grounds enumerated in Rule 137, Section 1. For voluntary inhibition, the test is whether the movant was deprived of a fair and impartial trial. Bias and prejudice must be proved with clear and convincing evidence; bare allegations of partiality are insufficient.

• “A supplemental complaint is one that sets forth transactions, occurrences or events which have happened since the date of the pleading sought to be supplemented. A pleading subsequently filed after an original one which states a totally different cause of action is not a ‘supplemental pleading’ and is not permitted. The rule allowing amendments to a pleading is subject to the general limitation that the cause of action shall not be substantially changed or that the theory of the case shall not be altered.”

• “The salutary rule is that the power to punish for contempt must be exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of punishment. The courts must exercise the power to punish for contempt for purposes that are impersonal because that power is intended as a safeguard not for the judges as persons but for the functions that they exercise.”

• “Snide remarks or even sarcastic innuendoes do not necessarily assume that level of contumely actionable under Rule 71 of the Revised Rules of Court. Judges generally and wisely pass unnoticed any mere hasty and unguarded expression of passion, or at least pass it with simply a reproof.”

• “It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.”

• Manchester Development Corporation v. Court of Appeals, 159 SCRA 569 [1988] — Distinguished. The Court held that the rule requiring dismissal for insufficient docket fees applies only when there is an intention to defraud the government, which was absent here.

• Sun Insurance Office, Ltd. v. Asuncion, 170 SCRA 274 [1989] — Followed. The Court applied the liberal rule that good-faith underpayment of docket fees vests jurisdiction and allows subsequent payment of the deficiency.

• Ng Soon v. Alday, 178 SCRA 221 [1989] — Followed. The case reiterates that initial payment of filing fees corresponding to the estimated amount of the claim is allowed, subject to adjustment upon proof.

• Superclean Services Corporation v. Court of Appeals, 327 Phil. 786 [1996] — Cited for the rule that amendments to pleadings must not substantially change the cause of action or alter the theory of the case.

• Aznar Brothers Realty Corporation v. Court of Appeals, 327 SCRA 359 [2000] — Cited for the principle that injunction will not lie where the acts sought to be enjoined have become a fait accompli.

• Oclarit v. Paderanga, G.R. No. 139519, January 24, 2001 — Cited for the proposition that a lawyer’s remarks explaining his position do not necessarily constitute contempt.

• People v. Godoy, 312 Phil. 977 [1995] — Cited for the principle that judges ought to tolerate momentary expressions of disappointment and not punish every hasty expression as contempt.

• Nazareno v. Barnes, 220 Phil. 451 [1985] — Cited for the preservative and corrective, not vindictive or retaliatory, nature of the contempt power.

• Rule 137, Section 1, Revised Rules of Court — Disqualification of judges. Applied to hold that the grounds for mandatory disqualification were not present, and voluntary inhibition is discretionary.

• Rule 71, Sections 1 and 2, Revised Rules of Court — Direct contempt punished summarily; remedy of person adjudged in direct contempt. Section 1 defines direct contempt; Section 2 clarifies that the proper remedy is certiorari or prohibition, not appeal. The Court held that certiorari was the correct remedy for Atty. Padilla but that the substantive basis for contempt was lacking.

• Rule 10, Section 6, 1997 Rules of Civil Procedure — Supplemental pleadings. The provision states that a supplemental pleading sets forth transactions, occurrences, or events happening since the date of the pleading sought to be supplemented. Applied to reject the Reyes spouses’ supplemental complaint as it changed the cause of action.

• Canon 8, Rule 8.01 and Canon 11, Code of Professional Responsibility — Duty of lawyers to use temperate language and maintain respect toward courts. Invoked in the admonition against Atty. Padilla.

Davide, Jr., C.J., Puno, and Kapunan, JJ., concurred. Ynares-Santiago, J., took no part.