Benguet Electric Cooperative, Inc. vs. National Electrification Administration

A party commits forum shopping when, while a petition is pending in the Supreme Court, it files a similar action in the regional trial court arising from the same facts and circumstances and seeking the same injunctive relief, even if it impleads different respondents or labels the action differently; the violation constitutes contempt and a cause for summary dismissal, and counsel may be suspended.

BENECO is an electric cooperative whose Board of Directors was dismissed by NEA through Resolution No. 51; the Baguio-Benguet Community Credit Cooperative, Inc. joined BENECO and its directors as petitioners. The controversy implicated the Interim Rules and Guidelines issued on January 11, 1983, implementing the Judiciary Reorganization Act, particularly the rule against filing similar petitions in different courts. NEA is the respondent agency that issued the challenged resolution.

BENECO is an electric cooperative whose Board of Directors was dismissed by NEA through Resolution No. 51. On July 4, 1990, BENECO, members of its Board of Directors, and Baguio-Benguet Community Credit Cooperative, Inc., through Atty. Emiliano L. Gayo, filed a petition for certiorari in the Supreme Court seeking to nullify Resolution No. 51 and to enjoin NEA from taking over BENECO’s management. The petition was verified by Sinai C. Hamada as President of the Board of Directors of BENECO and Gregorio S. Rimas as President and Chairman of the Board of Baguio-Benguet Community Credit Cooperative, Inc. On July 9, 1990, the Supreme Court required NEA to comment on the petition.

On July 11, 1990, the Supreme Court received a telegram from Atty. Gayo requesting immediate action on the prayer for a restraining order and/or preliminary injunction. Atty. Gayo alleged that armed military men from Philippine Constabulary, Camp Dangwa, led by the Provincial Commander and/or top officers, were leading NEA personnel in forcibly taking over BENECO’s system, offices, collection centers, and substations and installing NEA personnel to replace BENECO employees; the employees and consumers posed strong resistance such that violence and bloodshed might occur. The Supreme Court noted the telegram on July 25, 1990. On August 23, 1990, petitioners filed a supplemental petition reiterating their prayer for a restraining order and/or preliminary injunction based on the same alleged persistence of NEA personnel to take over BENECO and the mounting resistance of BENECO employees and members-consumers. The supplemental petition was verified by Hamada.

On August 31, 1990, while the Supreme Court petition was pending, BENECO, through the same counsel, filed a complaint for damages with prayer for preliminary injunction and/or temporary restraining order before the Regional Trial Court of Baguio City, docketed as Civil Case No. 2160-R. The complaint reproduced similar allegations as the petition and supplemental petition, namely the persistent taking over of BENECO by NEA employees and the resistance by BENECO employees. The complaint was verified by Hamada and Peter M. Cosalan as General Manager of BENECO. On September 6, 1990, the trial court granted BENECO’s prayer for a temporary restraining order. On September 12, 1990, the Supreme Court required NEA to comment on petitioners’ prayer for a temporary restraining order.

In its comment, the Solicitor General, for NEA, invoked forum shopping, failure to exhaust administrative remedies, absence of grave abuse of discretion in dismissing the BENECO Board, and absence of denial of due process. The Solicitor General disclosed that BENECO had filed Civil Case No. 2160-R on August 31, 1990 and had obtained a temporary restraining order. On October 10, 1990, the Supreme Court dismissed the petition for failure to demonstrate grave abuse of discretion because the dissolution of the Board was for a legal cause and its members were afforded due process. The Supreme Court also required Hamada and Atty. Gayo to show cause why they should not be held in contempt for filing a similar complaint before the Regional Trial Court during the pendency of the petition, and required Atty. Gayo to show cause why he should not be suspended from the practice of law for forum shopping.

Hamada and Atty. Gayo filed separate but almost identical explanations on October 30 and 31, 1990. They justified the filing of Civil Case No. 2160-R on the grounds that it was a damage suit requiring presentation of evidence and was directed against NEA employees in their personal capacities, unlike the Supreme Court petition which was directed against NEA as a corporate entity; if the Court found they erred, they submitted it was an honest error in prosecuting what they perceived to be BENECO’s interest. Petitioners then filed a motion for reconsideration on November 5, 1990 and a supplemental motion for reconsideration on November 9, 1990.

• Nullification of NEA Resolution No. 51: Petitioners sought to nullify NEA Resolution No. 51, which dismissed the BENECO Board of Directors, and to enjoin NEA from taking over BENECO’s management.
• Urgent Injunctive Relief: Petitioners requested immediate action on their prayer for a restraining order and/or preliminary injunction, alleging that armed military men from Philippine Constabulary, Camp Dangwa, led by the Provincial Commander and/or top officers, were leading NEA personnel in forcibly taking over BENECO’s system, offices, collection centers, and substations, and installing NEA personnel to replace BENECO employees, with strong resistance creating a risk of violence and bloodshed.
• Propriety of Civil Case No. 2160-R: Petitioners maintained that Civil Case No. 2160-R was a damage suit requiring presentation of evidence and was directed against NEA employees in their personal capacities, unlike the Supreme Court petition which was directed against NEA as a corporate entity.
• Honest Error: Petitioners submitted that if the Court found they erred in filing Civil Case No. 2160-R, it was an honest error in prosecuting what they perceived to be in the interest of BENECO.

• Forum Shopping: The Solicitor General, for NEA, alleged that Hamada and BENECO were guilty of forum shopping because BENECO filed Civil Case No. 2160-R before the Regional Trial Court of Baguio City on August 31, 1990, reproducing similar allegations to the Supreme Court petition and supplemental petition.
• Failure to Exhaust Administrative Remedies: NEA argued that petitioners failed to exhaust administrative remedies before instituting the petition.
• No Grave Abuse of Discretion: NEA maintained that it did not abuse its discretion in dismissing the members of the BENECO Board of Directors.
• Due Process: NEA argued that the dismissed members of the BENECO Board were not denied due process of law.

• Grave Abuse of Discretion and Due Process: Whether NEA Resolution No. 51 dismissing BENECO’s Board of Directors was tainted by grave abuse of discretion and whether the dismissed directors were denied due process.
• Forum Shopping: Whether BENECO, Hamada, and Atty. Gayo committed forum shopping by filing Civil Case No. 2160-R in the Regional Trial Court of Baguio City while the Supreme Court petition was pending.
• Contempt and Suspension: Whether Hamada and Atty. Gayo should be held in contempt and Atty. Gayo suspended from the practice of law for forum shopping.
• Dismissal of the Parallel RTC Case: Whether Civil Case No. 2160-R and the temporary restraining order issued therein should be dismissed and set aside.
• Reconsideration: Whether the motion for reconsideration and supplemental motion for reconsideration present substantial reasons to reverse the October 10, 1990 resolution.

• Grave Abuse of Discretion and Due Process: No. The petition was dismissed for failure to demonstrate grave abuse of discretion; the dissolution of the Board was for a legal cause and its members were afforded due process of law.
• Forum Shopping: Yes. Filing Civil Case No. 2160-R while the Supreme Court petition was pending constituted forum shopping because both actions arose from the same facts and circumstances and sought to enjoin the same acts, notwithstanding different respondents or reliefs.
• Contempt and Suspension: Yes. A violation of the rule against forum shopping constitutes contempt and a cause for summary dismissal; Hamada and Atty. Gayo were held in contempt and fined P1,000 each, and Atty. Gayo was suspended for three months.
• Dismissal of the Parallel RTC Case: Yes. The Regional Trial Court of Baguio City, Branch 5, was ordered to dismiss Civil Case No. 2160-R and to set aside the temporary restraining order and any other orders or processes issued in that case.
• Reconsideration: No. The motion and supplemental motion merely reiterated arguments already raised and presented no substantial reasons not previously invoked or considered.

• Grave Abuse of Discretion and Due Process: The October 10, 1990 resolution dismissed the petition because petitioners failed to demonstrate that NEA Resolution No. 51 was tainted by grave abuse of discretion. The dissolution of the BENECO Board of Directors was for a legal cause, and its members were afforded due process of law. The January 23, 1991 resolution denied reconsideration because the motion merely reiterated arguments already raised and presented no substantial reasons not previously invoked or matters not already considered and passed upon.
• Forum Shopping: The Court found petitioners’ explanations far from acceptable. BENECO did not disclose that a complaint involving the same subject matter had been filed and was pending before the trial court, and that it had obtained a temporary restraining order from that court; the information was revealed only in the Solicitor General’s comment. The attempt to make the Supreme Court petition and Civil Case No. 2160-R appear distinct by impleading different respondents or defendants and seeking ostensibly different reliefs was rejected. The allegation that Civil Case No. 2160-R was a damage suit against NEA employees in their personal capacities while the Supreme Court petition was against NEA as a corporate entity was specious. A reading of the allegations of the complaint and the petition showed that both actions arose from the same facts and circumstances. The fact that the respondents in the petition and defendants in the civil case were different was beside the point because what mattered was that BENECO, in seeking to enjoin the acts complained of, resorted to both the Supreme Court and the trial court. This is the very misdeed the sanction on forum shopping seeks to correct. BENECO’s filing of the complaint during the pendency of the petition indicated lack of faith in the Supreme Court’s evenhanded administration of law, ridiculed judicial processes, and played havoc with the rules on orderly procedure. A party should not be allowed to pursue simultaneous remedies in two different forums. The Court cited E. Razon, Inc. vs. Philippine Port Authority, which defined forum shopping as an act of malpractice proscribed and condemned as trifling with the courts and abusing their processes, and as improper conduct tending to degrade the administration of justice. The rule was formalized in Section 17 of the Interim Rules and Guidelines issued on January 11, 1983, in connection with Section 9 of B.P. Blg. 129, which provides that no such petition may be filed in the Intermediate Appellate Court if another similar petition has been filed or is pending in the Supreme Court and vice-versa. A violation constitutes contempt and is a cause for summary dismissal of both petitions, without prejudice to action against the counsel or party concerned. The rule applies with equal force where a party having filed an action in the Supreme Court shops for the same remedy of prohibition and a restraining order or injunction in the regional trial court.
• Contempt and Suspension: Because the explanations were unacceptable and the conduct was aggravated by deceiving the highest court of the land, the Court declared Sinai C. Hamada and Atty. Emiliano L. Gayo in contempt and ordered them to pay a fine of P1,000.00 each within five days from notice. Atty. Gayo was suspended from the practice of law for three months effective from notice, and a copy of the resolution was ordered attached to his personal record.
• Dismissal of the Parallel RTC Case: As a consequence of the forum shopping, the Regional Trial Court of Baguio City, First Judicial Region, Branch 5, was ordered to dismiss Civil Case No. 2160-R and to set aside, effective immediately, the temporary restraining order and any other orders or processes issued in that case.
• Reconsideration: The motion for reconsideration and supplemental motion for reconsideration merely reiterated the same arguments earlier raised and did not present any substantial reasons not previously invoked nor any matters not already considered and passed upon. They were denied.

• Forum Shopping — Forum shopping is an act of malpractice proscribed and condemned as trifling with the courts and abusing their processes; it is improper conduct that tends to degrade the administration of justice. The Court applied this doctrine where BENECO filed Civil Case No. 2160-R in the Regional Trial Court while its certiorari petition was pending in the Supreme Court. Both actions arose from the same facts and circumstances and sought to enjoin the same acts; different respondents or reliefs did not negate forum shopping. A violation constitutes contempt and a cause for summary dismissal.
• Equal Force of the Prohibition Against Forum Shopping — The rule in Section 17 of the Interim Rules and Guidelines, which prohibits similar petitions in the Intermediate Appellate Court and the Supreme Court, applies with equal force where a party having filed an action in the Supreme Court shops for the same remedy of prohibition and a restraining order or injunction in the regional trial court.
• Contempt and Suspension for Forum Shopping — A violation of the rule against forum shopping constitutes contempt of court and is a cause for summary dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or party concerned. The Court held Hamada and Atty. Gayo in contempt, fined them P1,000 each, and suspended Atty. Gayo from the practice of law for three months.
• Grave Abuse of Discretion and Due Process in NEA Board Dismissal — The dissolution of BENECO’s Board of Directors by NEA was for a legal cause and its members were afforded due process, so the petition failed to demonstrate grave abuse of discretion.

• "forum-shopping (is) an act of malpractice that is proscribed and condemned as trifling with the courts and abusing their processes. It is improper conduct that tends to degrade the administration of justice." — This is the Court’s canonical definition of forum shopping, cited from E. Razon, Inc. vs. Philippine Port Authority, and it supplies the rationale for the sanctions imposed.
• "The rule applies with equal force where the party having filed an action in the Supreme Court shops for the same remedy of prohibition and a restraining order or injunction in the regional trial court." — This passage extends the prohibition against forum shopping to a party that files a parallel action in the regional trial court while a Supreme Court petition is pending.
• "A violation of this rule shall constitute contempt of court and shall be a cause for the summary dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or party concerned." — This states the sanction for forum shopping under Section 17 of the Interim Rules and Guidelines and supports the contempt and suspension imposed on petitioners and counsel.
• "The allegation that Civil Case No. 2160-R is a damage suit directed against the employees of NEA in their personal capacities whereas the present petition is directed against NEA as a corporate entity is nothing but specious" — This passage rejects the attempt to distinguish the two actions by the identity or capacity of the respondents, showing that the substance of the claims, not the labels, controls the forum-shopping inquiry.

• Collado, et al. vs. Hernando, etc., et al., G.R. No. L-43866, May 30, 1988, 161 SCRA 639 — Cited for the Court’s disapproval of a party’s omission to disclose a pending complaint involving the same subject matter, and for the principle that deceiving the highest court aggravates the offense.
• Danville Maritime, Inc. vs. Commission on Audit, G.R. No. 85285, July 28, 1989, 175 SCRA 701 — Cited to reject the attempt to make the Supreme Court petition and the RTC complaint appear distinct by impleading different respondents and seeking different reliefs; both actions arose from the same facts and circumstances.
• Palm Avenue Realty Development Corporation, et al. vs. Philippine Commission on Good Government, et al., G.R. No. 76296, August 31, 1987, 153 SCRA 579 — Cited in support of the finding that the distinction between a damage suit against NEA employees in their personal capacities and a petition against NEA as a corporate entity was specious.
• Limpin, Jr., et al. vs. Intermediate Appellate Court, et al., G.R. No. 70987, May 5, 1988, 161 SCRA 83 — Cited for the proposition that filing a parallel action during the pendency of a Supreme Court petition ridicules judicial processes.
• Minister of Natural Resources, et al. vs. Heirs of Orval Hughes, et al., G.R. No. 62664, November 12, 1987, 155 SCRA 566 — Cited together with Limpin for the same proposition that forum shopping plays havoc with orderly procedure.
• People vs. Court of Appeals, et al., G.R. No. 54641, November 28, 1980, 101 SCRA 450 — Cited for the rule that a party should not be allowed to pursue simultaneous remedies in two different forums.
• E. Razon, Inc., et al. vs. Philippine Port Authority, et al., G.R. No. 75197, July 31, 1986, p. 121 — Cited for the definition of forum shopping as an act of malpractice proscribed and condemned as trifling with the courts and abusing their processes, and as improper conduct tending to degrade the administration of justice.

• Section 17, Interim Rules and Guidelines (January 11, 1983) — Provides that no petition for mandamus, prohibition, etc., may be filed in the Intermediate Appellate Court if another similar petition has been filed or is still pending in the Supreme Court and vice-versa. A violation constitutes contempt of court and is a cause for summary dismissal of both petitions, without prejudice to appropriate action against the counsel or party concerned. The Court applied this rule with equal force to BENECO’s filing of Civil Case No. 2160-R in the Regional Trial Court while its petition was pending in the Supreme Court.
• Section 9, B.P. Blg. 129 (Judiciary Reorganization Act) — Cited as the statutory context for the Interim Rules and Guidelines because it granted the Intermediate Appellate Court equal original jurisdiction to issue writs of mandamus, prohibition, etc., and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction.

Narvasa (Chairman), Cruz, Gancayco, and Grino-Aquino, JJ., concur.