Securities and Exchange Commission v. Tampac

THIRD DIVISION

[A.M. No. RTJ-21-008. October 6, 2021.][Formerly OCA IPI 19-5003-RTJ]

SECURITIES AND EXCHANGE COMMISSION, REPRESENTED BY EMILIO B. AQUINO, complainant, vs.HON. RENATO V. TAMPAC, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution datedOctober 6, 2021, which reads as follows:

"A.M. No. RTJ-21-008 [Formerly OCA IPI 19-5003-RTJ] (Securities and Exchange Commission, represented by Emilio B. Aquino v. Hon. Renato V. Tampac). — This Court resolves an administrative complaint for gross ignorance of the law and violation of Canons 2 and 3 of the New Code of Judicial Conduct against Judge Renato V. Tampac (respondent), in his capacity as the Presiding Judge of Branch 59, Regional Trial Court (RTC) of General Santos City, South Cotabato, relative to Special Civil Case No. 19-809, titled "Alabel Maasim Credit Cooperative (ALAMCCO) represented by Jerson Cagang v. Securities and Exchange Commission" (the case). Complainant Securities and Exchange Commission (SEC), represented by its chairperson Emilio V. Aquino, 1 maintains that respondent erred in assuming jurisdiction over the case and in issuing a Status Quo Ante Order (SQAO) despite the proscription in Section 179 2 of the Revised Corporation Code (RCC).

In its Complaint, 3 the SEC alleged that on April 30, 2019, it issued an Advisory 4 warning the public of the investment taking activities of Alabel-Maasim Small-Scale Mining Cooperative and Alabel-Maasim Credit Cooperative (ALAMCCO) without a permit or license from the SEC in violation Section 8.1 5 of the Securities Regulations Code (SRC). On June 4, 2019, the SEC issued a Cease and Desist Order 6 (CDO) against ALAMCCO upon finding that it is still offering and selling securities without a license. On June 10, 2019, ALAMCCO filed the case — a Petition for Declaratory Relief with Prayer for Temporary Restraining Order/Status Quo Ante Order and Writ of Preliminary Injunction 7 — against the SEC in the RTC of General Santos City. ALAMCCO denied that it was engaged in soliciting investments/securities from the public. It claimed that it operates based on the funds contributed by its members. It further averred that is a legitimate cooperative under the supervision and regulation of the Cooperative Development Authority (CDA) and not the SEC. Hence, ALAMCCO asked the RTC to declare inter alia that the SEC has no jurisdiction over it as a cooperative and to issue a Temporary Restraining Order/Status Quo Ante Order of 72 hours upon the filing of the case prior to notice to the SEC, which will be extended, after notice and hearing, to 20 days and a Writ of Preliminary Injunction pending resolution of the case. 8

On June 10, 2019, the RTC of General Santos City took cognizance of the case and issued the following orders: (1) notice setting the case for raffle on June 11, 2019; (2) summons ordering the SEC to file its Answer within 15 days from service; and (3) 72-hour Temporary Restraining Order (TRO) enjoining the SEC from implementing and enforcing the CDO. 9 The case was raffled to the RTC, Branch 59. Thereafter, in an Order dated June 11, 2019, respondent set the hearing of the application for the issuance of a writ of preliminary injunction (WPI) on June 13, 2019. However, the SEC received said Order also on June 13, 2019. On even date, respondent issued an Order extending the TRO for 20 days and setting the hearing on June 24, 2019. The SEC received the Order on June 19, 2019. 10

On June 26, 2019, the SEC filed its Comment/Opposition to the prayer for issuance of WPI, arguing that: (1) Branch 59 has no authority to issue an injunction pursuant to Section 179 of the RCC; (2) said RTC has no territorial jurisdiction over the SEC; and (3) ALAMCCO failed to prove the existence of the elements of a WPI. 11

The SEC alleged that during the July 1, 2019 hearing on the application for the issuance of a WPI, respondent made negative remarks on the actions of SEC against Kabus Padatoon (KAPA) and shared how he feels for the people who used to benefit from KAPA's blessings. This, for the SEC, is an indication of respondent's partiality to ALAMCCO. 12

Subsequently, in his Resolution 13 dated July 1, 2019, respondent issued a SQAO against the SEC effective until the case is resolved with finality. The Resolution was addressed to Atty. Patrick Stephen Cua and not to the SEC and was served through private courier. 14 The SEC filed an Urgent Motion for Reconsideration to Lift SQAO. 15

Meanwhile, ALAMCCO filed a Motion Ex Abundanti Ad Cautelam to Lift the Cease and Desist Order before the SEC, which was denied. 16

On July 11, 2019, the SEC filed an Answer/Comment 17 reiterating the arguments it earlier raised in its Opposition. On August 15, 2019, it filed a Memorandum of Authorities, 18 praying for the dismissal of the petition for lack of merit.

On September 10, 2019, respondent issued an Omnibus Order stating that: (1) the Comment/Opposition is already moot and academic since the parties already argued in open court on July 1, 2019; (2) the Opposition with Urgent Motion for Reconsideration is denied pending the resolution of the main case; and (3) the case is submitted for resolution. 19

On September 25, 2019, respondent issued a Resolution, 20 granting the petition for declaratory relief and permanently enjoining the SEC from posting similar public advisories against ALAMCCO unless the applicable laws are followed and the statutory and constitutional rights of ALAMCCO are respected. Respondent furthermore directed the SEC to remove the April 30, 2019 public advisory posted from its social media/website and to refrain from meddling into the operation, activities, and management of ALAMCCO. 21

Accordingly, the SEC charges respondent for gross ignorance of the law for blatantly disregarding Section 179 of the RCC, which provides that no court below the Court of Appeals (CA) shall have jurisdiction to issue a restraining order or preliminary injunction in any case that directly or indirectly interferes with the SEC's exercise of the powers, duties, and responsibilities that falls exclusively within its jurisdiction. The subject of the petition for declaratory relief is the Advisory which the SEC issued in the exercise of its exclusive power and authority under Section 5 (d) of the SRC to "[r]egulate, investigate[,] or supervise the activities of persons to ensure compliance[.]" In addition, the SEC noted that respondent, in his Resolutions dated July 1, 2019 and September 25, 2019, did not discuss, or explain how the Advisory may cause grave irreparable injury to ALAMCCO. Moreover, the RTC and the SEC are co-equal bodies, hence under the doctrine of judicial independence or non-interference, the RTC cannot issue an injunction against the SEC. Moreover, respondent disregarded the doctrine of exhaustion of administrative remedies when it assumed jurisdiction over the petition despite the pendency of ALAMCCO's Motion to Lift CDO before the SEC. 22 By reason of the foregoing actions which showed respondent's incompetence in the performance of the functions of his office, the SEC maintained that respondent also violated Canons 1, 2, 3, and 6 of the Code of Judicial Conduct. 23

In its 1st Indorsement dated November 19, 2019, 24 the Office of the Court Administrator (OCA) directed respondent to file a Comment within 10 days from receipt of the notice.

In his Memorandum and Comment, 25 respondent argued first and foremost that the complaint against him should be dismissed because the SEC is estopped from assailing the jurisdiction of the RTC to hear the petition for declaratory relief. He noted that the SEC filed a Motion for Partial Reconsideration of the Resolution dated September 25, 2019, where it only prayed for the setting aside of the order directing the SEC to remove the Advisory in its social media page/website and the permanent injunction against the posting of public advisories against ALAMCCO. Second, respondent averred that the case is now on appeal. Under the doctrine of hierarchy of courts, the higher tribunal must respect and wait for the resolution of a particular case by the lower court having jurisdiction of the case originally or on appeal before resolving any issues raised involving the same party to the case. Third, the resolution of the appeal is a prejudicial question in the resolution of the present administrative complaint. The issues raised in the former are the same issues raised by the SEC in the latter. Fourth, the complaint violated the anti-forum shopping rule.

Respondent clarified that he had nothing to do with the Order dated June 10, 2019 which provided for the issuance of a 72-hour TRO. It was the Executive Judge of the RTC of General Santos who issued the same. Respondent claimed that the SEC misunderstood Section 179 of the RCC and the principal action filed by ALAMCCO. ALAMCCO filed a petition for declaratory relief which falls under the jurisdiction of the RTC. The prayer for the issuance of a TRO and WPI are merely provisional remedies available to any party in a case. Besides, the SEC's act of publishing the Advisory in its social media account does not fall within its exclusive jurisdiction. ALAMCCO is registered with the CDA, a fact admitted by the SEC. Consequently, it is the SEC which violated the doctrine of exhaustion of administrative remedies when it failed to observe the primary jurisdiction of the CDA over ALAMCCO by issuing the Advisory. Respondent also insisted that Section 179 of the RCC does not automatically make the RTC and the SEC as co-equal bodies. 26

As regards his alleged violation of the New Code of Judicial Conduct, respondent contended that he was not informed of the Motion Ex Abundanti Ad Cautelam to Lift Issued CDO that ALAMCCO filed before the SEC. He only learned about it when the administrative complaint was filed against him. Hence, he cannot be accused of incompetence in the performance of the functions of his office. Contrary to the claim of the SEC, he never expressed his sentiments on the actions of the SEC against KAPA. 27 He also sent his Order dated July 1, 2019 via private courier due to the urgency of the SQAO. 28 He emphasized that he did not restrain the SEC from exercising its powers and authority but merely warned it to observe due process. Finally, he believed that the complaint against him was filed purely for vendetta. 29

In its Recommendation 30 dated January 12, 2021, the OCA held that the complaint hinges on the propriety of respondent's issuance of the Order dated July 1, 2019, providing for a SQAO effective until the case is resolved with finality by the court. The OCA ruled that it is clear under Section 179 of the RCC, that the RTC — a court below the CA — cannot issue a TRO or WPI against the SEC in the exercise of its powers, duties, and responsibilities. It found respondent grossly ignorant of the law for not applying Section 179. It also ruled that Rule 3.01, Canon 3 of the Code of Judicial Conduct mandates that a judge shall be faithful to the law and maintain professional competence. Likewise, Section 3, Canon 6 of the New Code of Judicial Conduct requires judges to take reasonable steps to maintain and enhance their knowledge and skills to properly perform their judicial functions. 31

The OCA noted that respondent was admonished previously with severe warning for conduct unbecoming of a judge in A.M. No. RTJ-17-2499, titled Anonymous v. Judge Renato Tampac. However, it is respondent's first offense for gross ignorance of the law. Thus, the OCA recommended the penalty of a fine in the amount of P21,000.00 with a stern warning that repetition of the same or similar offense shall be dealt with more severely. It also recommended that the administrative complaint be re-docketed as a regular administrative matter. 32

Issue

The issue is whether respondent should be held administratively liable for gross ignorance of the law.

Ruling of the Court

We agree with the findings and evaluation of the OCA but We modify the penalty.

Gross ignorance of the law is the disregard of basic rules and settled jurisprudence. For liability to attach, the assailed order, decision or actuation of the judge in the performance of official duties must not only be found erroneous but, most importantly, it must also be established that they were moved by bad faith, dishonesty, hatred, or some other like motive. Judges enjoy the presumption of regularity and good faith in the performance of their judicial functions. However, a blatant disregard of clear and unmistakable provisions of a statute as well as this Court's circulars enjoining their strict compliance, upends the presumption and subjects the magistrate to corresponding administrative sanctions. 33

In this case, respondent blatantly disregarded Section 179 of the RCC when he issued the Order dated July 1, 2019 providing for a SQAO against the SEC and Resolution dated September 25, 2019 permanently enjoining the SEC from posting a public advisory against ALAMCCO. Section 179 states that "[n]o court below the Court of Appeals shall have jurisdiction to issue a restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy that directly or indirectly interferes with the exercise of the powers, duties and responsibilities of the [Securities and Exchange] Commission that falls exclusively within its jurisdiction." The Advisory subject of the petition before respondent's sala was issued pursuant to the SEC's powers and functions under the SRC. 34 Thus, applying Section 179 of the RCC, respondent had no jurisdiction to take cognizance of the case and issue an injunction against the SEC. Section 179 is clear and straightforward that respondent need only to apply it. His failure to do so constitutes gross ignorance of the law.

If ordinary people are presumed to know the law, judges are duty-bound to actually know and understand it. 35 When judges display an utter lack of familiarity with the rules, they erode the confidence of the public in the courts. Hence, a judge is expected to keep abreast of the developments and amendments to the law and the rules, as well as of prevailing jurisprudence. 36

Under Section 8 in relation to Section 11 of Rule 140 of the Rules of Court, as amended, gross ignorance of the law is a serious charge, the penalty for which ranges from dismissal from service, suspension from office without salary for more than three months but not exceeding six months, or payment of a fine of more than P20,000.00 but not exceeding P40,000.00. 37 The OCA recommended the penalty of a fine in the amount of P21,000.00. However, the record shows that this is not the first time that respondent was charged administratively. Thus, the maximum fine of P40,000.00 is in order. 38

WHEREFORE, respondent Renato V. Tampac, Presiding Judge of the Regional Trial Court of General Santos City, South Cotabato, Branch 59 is found GUILTY of gross ignorance of the law. He is FINED in the amount of P40,000.00.

He is STERNLY WARNED that the commission of the same or similar acts shall be dealt with more severely.

Let this Resolution be attached to the personal files of respondent in the Office of the Court Administrator and the Office of the Bar Confidant.

SO ORDERED."

By authority of the Court:

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

Footnotes

1. In his capacity as the Chief Executive Official and authorized representative of the SEC En Banc pursuant to En Banc Resolution dated October 29, 2019; rollo, p. 21.

2. x x x No court below the Court of Appeals shall have jurisdiction to issue a restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy that directly or indirectly interferes with the exercise of the powers, duties and responsibilities of the Commission that falls exclusively within its jurisdiction.

3. Rollo, pp. 2-19.

4. Id. at 22.

5. Section 8. Requirement of Registration of Securities. — 8.1. Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser.

6. Rollo, pp. 23-34.

7. Id. at 35-43.

8. Id. at 42-43.

9. Id. at 87-89.

10. Id. at 3-4.

11. Id. at 4.

12. Id. at 5.

13. Id. at 123-124.

14. Id. at 5.

15. Seeid. at 388.

16. Id. at 127-139.

17. Id. at 225-260.

18. Id. at 342-385.

19. Id. at 388-389.

20. Id. at 481-495.

21. Id. at 493-494.

22. Id. at 8-11.

23. Id. at 13-19.

24. Id. at 405.

25. Id. at 411-429.

26. Id. at 417-423.

27. Id. at 424.

28. Id. at 425.

29. Id. at 427-428.

30. Id. at 499-506.

31. Id. at 504-505.

32. Id. at 505.

33. Department of Justice v. Mislang, A.M. Nos. RTJ-14-2369 & RTJ-14-2372, July 26, 2016 (Citations omitted).

34. Securities Regulations Code, Section 5. Powers and Functions of the Commission. — 5.1. The Commission shall act with transparency and shall have the powers and functions provided by this Code, Presidential Decree No. 902-A, the Corporation Code, the Investment Houses Law, the Financing Company Act and other existing laws. Pursuant thereto the Commission shall have, among others, the following powers and functions:

xxx xxx xxx

(d) Regulate, investigate or supervise the activities of persons to ensure compliance[.]

35. Benito v. Balindong, A.M. No. RTJ-08-2103, 599 Phil. 196, 204 (2009).

36. Sunico v. Gutierrez, 806 Phil, 94, 109 (2017).

37. Sections 8 and 11, Rule 140 of the Rules of Court, as amended by A.M. No. 01-8-10-SC.

38. See Alconera v. Majaducon, 496 Phil. 833 (2005).