Yasay v. Recto

G.R. No.
129521 September 7, 1999

SECURITIES AND EXCHANGE COMMISSION CHAIRMAN PERFECTO R. YASAY, JR.,
ASSOCIATE COMMISSIONERS FE ELOISA C. GLORIA, EDIJER MARTINEZ and ROSALINDA
U. CASIGURAN V.
MANUEL D. RECTO, PELAGIO T. RICALDE and CESAR P. MANALAYSAY
PARDO, J.
FACTS
On June 28, 1996, SEC Chairman Yasay upon request of certain stockholders of Interport
Resources Corporation, directed respondent Ricalde to submit to the SEC a list of stockholders and
to set a definite time and place for the validation of proxies and nominations for directors of the firm.
On the same date, June 28, 1996, the SEC issued a temporary restraining order (TRO)
enjoining the Interport Resources Corporation from holding the July 9, 1996 scheduled
annual meeting of the stockholders.
Notwithstanding the SEC's TRO, the stockholders proceeded with the meeting on July 9, 1996,
presided over by respondent Manalaysay.
On July 10, 1996, the SEC declared the stockholders meeting of Interport Resources Corporation
held on July 9, 1996, null and void and directed respondents to appear before the SEC on July
15, 1996, at 3:00 p.m., to show cause why no disciplinary action should be taken against them or
why they should not be cited in contempt.
At the hearing on July 15, 1996, respondent Manalaysay questioned the validity of the TRO as
well as the contempt proceedings in light of the TRO issued by the Court of Appeals restraining the
SEC from enforcing its TRO.
After the hearing, on July 15, 1996, the SEC issued an order stating:
VIEWED in this light Atty. Cesar Manalaysay, Manuel D. Recto and Atty. Pelagio T. Ricalde are
hereby DECLARED GUILTY OF CONTEMPT and are correspondingly ORDERED to pay a fine
of TEN THOUSAND (P10,000.00) Pesos each upon finality of this Order for willfully disobeying and
disregarding the July 8, 1996 Order of this Commission. Atty. Cesar Manalaysay is likewise
BARRED from practicing his law profession before this commission for a period of sixty (60)
days from date hereof and Mr. Recto and Atty. Ricalde are, by this ORDER, prohibited and barred
from acting as President/Chairman and Secretary respectively of Interport Resources, Inc.
within the same period. This Order shall be immediately executory unless otherwise restrained by a
court of competent jurisdiction.
In due time, respondents appealed from the aforesaid order to the Court of Appeals.
After due proceedings, on April 14, 1997, the Court of Appeals promulgated its decision
reversing and setting aside the SEC order declaring respondents guilty of contempt.
ISSUE: W/N contempt is criminal in character and their exoneration from a charge of contempt amounts
to an acquittal from which an appeal would not lie
HELD: YES
In this case, the contempt is not civil in nature, but criminal, imposed to vindicate the dignity
and power of the Commission; hence, as in criminal proceedings, an appeal would not lie
from the order of dismissal of, or an exoneration from, a charge of contempt."
We agree with respondents that the charge of contempt partakes of the nature of a criminal
offense. The exoneration of the contemner from the charge amounts to an acquittal from which an
appeal would not lie.
A distinction is made between a civil and criminal contempt.
Civil contempt is the failure to do something ordered by a court to be done for the benefit of a
party.
A criminal contempt is any conduct directed against the authority or dignity of the court.
"Civil contempt proceedings are generally held to be remedial and civil in their nature; that is, they
are proceedings for the enforcement of some duty, and essentially a remedy for coercing a
person to do the thing required." "In general, civil contempt proceedings should be instituted by an
aggrieved party, or his successor, or someone who has a pecuniary interest in the right to be protected."
If the contempt is initiated by the court or tribunal exercising the power to punish a given
contempt, it is criminal in nature, and the proceedings are to be conducted in accordance with the
principles and rules applicable to criminal cases. The State is the real prosecutor.
"The real character of the proceedings in contempt cases is to be determined by the relief sought or
by the dominant purpose.
The proceedings are to be regarded as criminal when the purpose is primarily punishment,
and civil when the purpose is primarily compensatory or remedial."
"But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for
instance, is a bar to a second prosecution. The distinction is for the purpose only of determining
the character of punishment to be administered."
At any rate, the SEC order directing respondents to show cause why they should not be cited in
contempt was highly improper. The Court of Appeals issued on July 8, 1996, a temporary
restraining order against the order of the SEC of June 28, 1996 directing the Interport Resources
Corporation to desist from holding the stockholders' meeting on July 9, 1996. The Court of Appeals
enjoined that order. Consequently, respondents' act in proceeding with the scheduled stockholders' meeting was not contumacious as there was no willful disobedience to an order of
the SEC. More, the Court of Appeals in its final decision nullified the SEC's order. Hence, there was
no willful disobedience to a lawful order of the SEC. Respondents were not guilty of contempt.
While the SEC is vested with the power to punish for contempt, 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 and other tribunals vested with the power of
contempt 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.
Finally, the penalty imposed exceeded those authorized in the powers of the SEC in relation to the
1964 Revised Rules of Court as amended. If the contempt was committed against a superior court or
judge, the accused may be fined not exceeding thirty thousand pesos (P30,000.00) or imprisoned not
more than six (6) months, or both. The SEC suspended respondent Manalaysay from the practice of
law in the SEC, a power vested exclusively in the Supreme Court.

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G.R. No.

129521 September 7, 1999

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