Habawel vs. Court of Tax Appeals

Derogatory, offensive, or malicious statements contained in pleadings or written submissions presented to the same court or judge in which proceedings are pending constitute direct contempt of court, as they are equivalent to misbehavior committed in the presence of or so near a court or judge as to interrupt the administration of justice, even if such statements are not read in open court. The test for criticizing a judge's decision is whether the criticism is bona fide or done in good faith and does not spill over the walls of decency and propriety.

Petitioners Denis B. Habawel and Alexis F. Medina, attorneys from the Ponce Enrile Reyes and Manalastas Law Offices, represented Surfield Development Corporation in seeking a refund of excess realty taxes paid from 1995 to 2003 from the City Government of Mandaluyong City. The jurisdictional question at the center of the contempt dispute turned on the proper interpretation of Republic Act No. 9282, which expanded the jurisdiction of the Court of Tax Appeals, and the Local Government Code provisions governing real property tax refunds and administrative remedies.

Petitioners Denis B. Habawel and Alexis F. Medina served as counsel for Surfield Development Corporation, which sought from the Office of the City Treasurer of Mandaluyong City a refund of excess realty taxes paid from 1995 to 2000. After the City Government denied the claim, Surfield filed a special civil action for mandamus in the RTC of Mandaluyong City, docketed as SCA No. MC03-2142 and assigned to Branch 214. Surfield later amended its petition to include claims for refund of excess taxes paid from 2001 to 2003. On October 15, 2004, the RTC dismissed the petition on the ground that the period to file the claim had prescribed and that Surfield had failed to exhaust administrative remedies, ruling that a tax refund was not a ministerial duty compellable by writ of mandamus.

Surfield, through the petitioners, elevated the dismissal to the Court of Tax Appeals via petition for review (CTA AC No. 5). The appeal was assigned to the CTA First Division, composed of Presiding Justice Ernesto D. Acosta and Associate Justices Lovell R. Bautista and Caesar A. Casanova. In its decision dated January 5, 2006, the CTA First Division denied the petition for lack of jurisdiction and for failure to exhaust the remedies provided under Sections 253 and 226 of the Local Government Code. The petitioners sought reconsideration on behalf of Surfield, insisting that the CTA had jurisdiction pursuant to Section 7(a)(3) of Republic Act No. 9282 and arguing that the CTA First Division manifested its "lack of understanding or respect" for the doctrine of stare decisis in not applying the ruling in Ty vs. Trampe.

On March 15, 2006, the CTA First Division denied the motion for reconsideration, explaining that Section 7(a)(3) of RA 9282 referred to appeals from RTCs in local tax cases and did not include real property tax, an ad valorem tax. Taking notice of the language the petitioners employed in the motion, the CTA First Division required them to explain within five days why they should not be held for indirect contempt or subject to disciplinary action. The petitioners submitted a compliance dated March 27, 2006, in which they appeared to apologize but nonetheless justified their language as "necessary to bluntly call the Honorable Court's attention to the grievousness of the error by calling a spade by spade." The CTA First Division found the apology wanting in sincerity and humility, observing that the petitioners' chosen words were "so strong, which brings disrepute the Court's honor and integrity," and adjudged both petitioners guilty of direct contempt of court, sentencing each to ten days' imprisonment and a fine of ₱2,000.00.

The petitioners sought reconsideration, submitting that the phrase "gross ignorance of the law" was used in its legal sense to describe an error of judgment and was not directed at the character or competence of the decision-makers, that there were no "scandalous, offensive or menacing" statements, and that they had repeatedly offered their apology. The CTA First Division denied the motion, declaring that "the tone of an irate lawyer would almost always reveal the sarcasm in the phrases used" and that "scurrilous attacks made in the guise of pointing out errors of judgment almost always result to the destruction of the high esteem and regard towards the Court." The petitioners then elevated the matter to the Supreme Court via certiorari, claiming grave abuse of discretion.

• Language Not Contumacious: Petitioners maintained that the phrase "gross ignorance of the law" was used in its strict legal sense to emphasize the gravity of the error of law committed by the CTA First Division, and was not directed at the character or competence of the decision-makers.
• No Offensive Statements: Petitioners argued that there was no "unfounded accusation or allegation," or "scandalous, offensive or menacing," "intemperate, abusive, abrasive or threatening," or "vile, rude and repulsive" language contained in their motion for reconsideration, and that their overall language was "tempered, restrained and respectful."
• No Disrepute: Petitioners contended that no statement in their motion brought the authority of the CTA and the administration of the law into disrepute, and that the statements should be viewed within the context of the general tone and language of the motion.
• Sincere Apology: Petitioners asserted that they had repeatedly offered their apology in their compliance and that the CTA First Division did not appreciate the sincerity of their apology.
• Zealous Advocacy: Petitioners posited that they were merely prompted by their "zealous advocacy and an appalling error" committed by the CTA First Division to frankly describe such error, and that the language should not be construed as a display of contumacious attitude or "a flouting or arrogant belligerence in defiance of the court."

• Arrogance and Sarcasm: The CTA First Division contended that a reading of the motion for reconsideration and the character of the words used therein indicated that the petitioners' statements reflected no humility, nor were they "expressive of a contrite heart," and that their submissions instead "reflected arrogance and sarcasm" and that they "even took the opportunity to again deride the public respondent on the manner of how it wrote the decision."
• Direct Contempt: The Office of the Solicitor General opined that submitting a pleading containing derogatory, offensive, and malicious statements to the same court or judge in which the proceedings are pending constitutes direct contempt, and that the CTA First Division did not abuse its discretion in finding the petitioners liable under Section 1, Rule 71 of the Rules of Court.

• Contumacious Language: Whether the petitioners' language in the subject motion and compliance was contumacious.
• Sincerity of Apology: Whether the petitioners were sincere in their apology or were arrogant.
• Scope of Contempt Power: Whether the exercise of the contempt power was within the limits set by the Supreme Court.
• Guilt Beyond Reasonable Doubt: Whether the petitioners were guilty beyond reasonable doubt of direct contempt.

• Contumacious Language: Yes. The petitioners' statements—imputing "gross ignorance of the law," accusing the CTA of lacking "understanding or respect" for stare decisis, and branding the CTA as "totally unaware or ignorant" of a statutory provision—clearly overstepped the bounds of propriety and constituted direct contempt of court.
• Sincerity of Apology: No. The apology was insincere and probably feigned, as the petitioners did not relent but continued to justify their contemptuous language, even blaming the CTA for their "perception" of its ignorance.
• Scope of Contempt Power: Yes. The CTA First Division's exercise of its contempt power was preservative rather than vindictive, maintaining and promoting the proper respect that attorneys and clients should bear towards the courts of justice.
• Guilt Beyond Reasonable Doubt: Yes. The petitioners were guilty of direct contempt, but the penalty of imprisonment was deleted as excessive and verging on the vindictive; only the fine of ₱2,000.00 each was retained, being the maximum imposable under Section 1, Rule 71 for a court of the CTA's rank.

• Contumacious Language: The test for criticizing a judge's decision is whether the criticism is bona fide or done in good faith and does not spill over the walls of decency and propriety. Drawing from In re: Almacen, the Court acknowledged the right of a lawyer to criticize courts and judges in properly respectful terms and through legitimate channels, but stressed that "intemperate and unfair criticism is a gross violation of the duty of respect to courts." The petitioners' motion for reconsideration contained statements imputing "gross ignorance of the law" to the CTA, asserting that "the grossness of the Honorable Court's ignorance of the law is matched only by the unequivocal expression of this Honorable Court's jurisdiction," and accusing the CTA of "lack of understanding or respect for the doctrine of stare decisis." An imputation of gross ignorance against a court or its judge, especially absent any evidence, is a serious allegation constituting direct contempt. Derogatory, offensive, or malicious statements in pleadings submitted to the same court in which proceedings are pending are treated as direct contempt because they are equivalent to misbehavior committed in the presence of or so near a court as to interrupt the administration of justice, even if not read in open court. The Court further noted that the petitioners' legal position was itself erroneous: Section 7(a)(3) of RA 9282 covers only local tax cases decided by RTCs, whereas Section 7(a)(5) governs appeals from the Central Board of Assessment Appeals involving real property taxation—confirming that the error was committed by the petitioners, not the CTA.

• Sincerity of Apology: The petitioners' compliance dated March 27, 2006, while appearing to apologize, unrepentantly emphasized their disdain, stating they found it "necessary to bluntly call the Honorable Court's attention to the grievousness of the error by calling a spade a spade" and reiterating their "perception" that the CTA was "totally unaware or ignorant" of Section 7(a)(3). Rather than retreating upon being informed of the untenability of their legal position, they persisted and blamed the CTA for their perception, attributing it to "the terseness of the Decision dated 05 January 2006." The circumstances indicated that the petitioners' tone of apology was probably feigned, for they did not relent but continued to justify their contemptuous language, meriting no leniency.

• Scope of Contempt Power: The power to punish contempt of court is exercised on the preservative and not on the vindictive principle, and only occasionally should a court invoke its inherent power to punish contempt in order to retain that respect without which the administration of justice must falter or fail. The sanction the CTA First Division visited upon the petitioners was preservative, as it maintained and promoted the proper respect that attorneys and their clients should bear towards the courts of justice. The Court concurred with the CTA First Division's treatment of the offensive language as direct contempt under Section 1, Rule 71 of the Rules of Court.

• Guilt Beyond Reasonable Doubt: The petitioners threw out self-restraint and courtesy, shunting aside the nobility of their profession and banishing the ideal that even the highest degree of zealousness in defending clients' causes did not permit crossing the line between liberty and license. Their criticism was not bona fide and spilled over the walls of propriety. However, the penalty of imprisonment for ten days and a fine of ₱2,000.00 was excessive for direct contempt consisting of contemptuous and offensive language and verged on the vindictive. The Court deleted the imprisonment but imposed a fine of ₱2,000.00 each—the maximum imposable under Section 1, Rule 71—taking into account that the CTA is a superior court of the same level as the Court of Appeals. The Court noted that its treatment of contemptuous language has not been uniform, ranging from warnings to fines to indefinite suspension, depending on whether the language is viewed as contempt or ethical misconduct.

• Right to Criticize Courts and Its Limits (In re: Almacen) — A lawyer, both as an officer of the court and as a citizen, has the right to comment upon and criticize the actuations of courts and judges, provided the criticism is bona fide and does not spill over the walls of decency and propriety. A wide chasm exists between fair criticism and abuse or slander of courts and judges. Intemperate and unfair criticism is a gross violation of the duty of respect to courts and subjects a lawyer to disciplinary action. The test is whether the criticism is bona fide or done in good faith and does not spill over the walls of decency and propriety. In this case, the petitioners' criticism failed this test because they imputed gross ignorance of the law to the CTA without any legitimate basis—indeed, it was the petitioners who had erred in their reading of the jurisdictional provisions.

• Direct Contempt Through Written Pleadings — Derogatory, offensive, or malicious statements contained in pleadings or written submissions presented to the same court or judge in which proceedings are pending constitute direct contempt of court, because they are equivalent to misbehavior committed in the presence of or so near a court or judge as to interrupt the administration of justice. This holds true even if the statements are not read in open court. The Court applied this doctrine to hold that the petitioners' motion for reconsideration, which imputed gross ignorance and lack of respect to the CTA, constituted direct contempt under Section 1, Rule 71 of the Rules of Court.

• Preservative vs. Vindictive Exercise of Contempt Power — The power to punish contempt of court is exercised on the preservative and not on the vindictive principle. A court should only occasionally invoke its inherent power to punish contempt in order to retain that respect without which the administration of justice must falter or fail. The Court applied this principle to uphold the CTA's contempt finding as preservative while deleting the penalty of imprisonment as excessive and verging on the vindictive, retaining only the fine.

• "But it is the cardinal condition of all such criticism that it shall be bona fide, and shall not spill over the walls of decency and propriety. A wide chasm exists between fair criticism, on the one hand, and abuse and slander of courts and the judges thereof, on the other. Intemperate and unfair criticism is a gross violation of the duty of respect to courts. It is such a misconduct that subjects a lawyer to disciplinary action." — This passage, quoted from In re: Almacen, articulates the canonical formulation of the boundary between permissible criticism of courts and contumacious language, and serves as the controlling test applied in this decision.

• "An imputation in a pleading of gross ignorance against a court or its judge, especially in the absence of any evidence, is a serious allegation, and constitutes direct contempt of court. It is settled that derogatory, offensive or malicious statements contained in pleadings or written submissions presented to the same court or judge in which the proceedings are pending are treated as direct contempt because they are equivalent to a misbehavior committed in the presence of or so near a court or judge as to interrupt the administration of justice." — This passage states the ratio decidendi on why offensive language in written pleadings constitutes direct contempt, even without being read in open court.

• "No attorney, no matter his great fame or high prestige, should ever brand a court or judge as grossly ignorant of the law, especially if there was no sincere or legitimate reason for doing so. Every attorney must use only fair and temperate language in arguing a worthy position on the law, and must eschew harsh and intemperate language that has no place in the educated ranks of the Legal Profession." — This passage encapsulates the Court's admonition to the Bar on the duty of civility and restraint in legal advocacy.

• In re: Almacen, G.R. No. L-27654, Feb. 18, 1970, 31 SCRA 562 — Leading case on the right of lawyers to criticize courts and judges, and the limits of such criticism. Followed as the controlling authority establishing the test of bona fide criticism that does not spill over the walls of decency and propriety.
• Dantes vs. Judge Ramon S. Caguioa, A.M. No. RTJ-05-1919, June 27, 2005, 461 SCRA 236 — Held that a pleading containing derogatory, offensive, or malicious statements submitted before a court in which proceedings are pending is direct contempt. Followed as directly on point with the petitioners' conduct.
• Slade Perkins vs. Perkins, 57 Phil. 223 — Early Philippine case admonishing the Bar against heated and acrimonious language, stating that excessive language weakens rather than strengthens the persuasive force of legal reasoning. Cited to reinforce the duty of courtesy and restraint.
• Re: Letter Dated 21 February 2005 of Atty. Noel S. Sorreda, A.M. No. 05-3-04-SC, July 22, 2005, 464 SCRA 32 — Errant lawyer who made baseless accusations of manipulation was indefinitely suspended from the practice of law and declared guilty of contempt. Cited to illustrate the range of sanctions for contemptuous language.
• Ng vs. Atty. Benjamin C. Alar, A.C. No. 7252, Nov. 22, 2006, 507 SCRA 465 — Lawyer who cast insults and diatribes against the NLRC First Division was fined ₱5,000.00 with a stern warning. Cited as an example of disciplinary sanction for offensive language in pleadings.
• Nuñez vs. Atty. Arturo B. Astorga, A.C. No. 6131, Feb. 28, 2005, 452 SCRA 353 — Lawyer fined ₱2,000.00 for conduct unbecoming of a lawyer for hurling insulting language against opposing counsel. Cited to show administrative treatment of offensive language.

• Canon 11 and Rule 11.03, Code of Professional Responsibility — Canon 11 mandates all attorneys to observe and maintain the respect due to the courts and judicial officers and to insist on similar conduct by others. Rule 11.03 specifically enjoins attorneys to abstain from scandalous, offensive, or menacing language or behavior before the courts. These provisions were the ethical foundation for the Court's finding that the petitioners violated their sworn duty of respect.
• Section 1, Rule 71, Rules of Court — Defines direct contempt as misbehavior in the presence of or so near a court as to obstruct or interrupt proceedings, including disrespect toward the court, and authorizes summary adjudication and punishment by a fine not exceeding ₱2,000.00 or imprisonment not exceeding ten days, or both, for courts of equivalent or higher rank than the RTC. Applied to uphold the CTA's contempt finding and to impose the fine of ₱2,000.00 each, the maximum imposable.
• Section 7(a)(3) and Section 7(a)(5), Republic Act No. 9282 — Section 7(a)(3) grants the CTA exclusive appellate jurisdiction over decisions, orders, or resolutions of RTCs in local tax cases; Section 7(a)(5) grants jurisdiction over appeals from the Central Board of Assessment Appeals involving real property taxation. The Court examined both provisions and confirmed that the CTA First Division correctly held that Section 7(a)(3) did not apply to real property tax (an ad valorem tax), thereby exposing the petitioners' jurisdictional argument—and their imputation of gross ignorance—as itself erroneous.
• Sections 253 and 226, Republic Act No. 7160 (Local Government Code) — Section 253 governs repayment of excessive collections of real property tax; Section 226 establishes the Local Board of Assessment Appeals. Cited by the CTA First Division in its January 5, 2006 decision denying Surfield's petition for failure to exhaust administrative remedies.

Chief Justice Renato C. Corona, Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Mariano C. Del Castillo, and Associate Justice Martin S. Villarama, Jr. concurred. Justice Del Castillo, while concurring in the result, expressed the view in a separate opinion that the petitioners' statements, though "strong, tactless and hurtful," were not necessarily contemptuous because they were explanations of the petitioners' position in a case under consideration and because "an unfavorable decision usually incites bitter feelings." The majority rejected this view, holding that the characterization of the statements as "strong, tactless and hurtful" provided no ground for leniency.

• Justice Mariano C. Del Castillo — Although listed among the concurring justices, Justice Del Castillo regarded the petitioners' statements as not contemptuous, or not necessarily assuming the level of contempt, viewing them as explanations of their position "in a case under consideration" and reasoning that "an unfavorable decision usually incites bitter feelings." He conceded that the statements were "strong, tactless and hurtful" but did not consider them sufficient to warrant a finding of direct contempt. The majority addressed and rejected this position, holding that the characterization of the language as "strong, tactless and hurtful" provided no ground for leniency, and that snide remarks or sarcastic innuendos made by counsel are not exempt from contempt merely because unfavorable decisions incite bitter feelings.