REMEDIAL LAW

2014

Philippine Supreme Court Jurisprudence > Year 2014 > March 2014 Decisions > G.R.
No. 208232, March 10, 2014 - SURVIVING HEIRS OF ALFREDO R. BAUTISTA,
NAMELY: EPIFANIA G. BAUTISTA AND ZOEY G. BAUTISTA, Petitioners, v.
FRANCISCO LINDO AND WELHILMINA LINDO; AND HEIRS OF FILIPINA
DAQUIGAN, NAMELY: MA. LOURDES DAQUIGAN, IMELDA CATHERINE
DAQUIGAN, IMELDA DAQUIGAN AND CORSINO DAQUIGAN, REBECCA
QUIAMCO AND ANDRES QUIAMCO, ROMULO LORICA AND DELIA LORICA,
GEORGE CAJES AND LAURA CAJES, MELIDA BAÑEZ AND FRANCISCO
BAÑEZ, MELANIE GOFREDO, GERVACIO CAJES AND ISABEL CAJES,
EGMEDIO SEGOVIA AND VERGINIA SEGOVIA, ELSA N. SAM, PEDRO M. SAM
AND LINA SAM, SANTIAGO MENDEZ AND MINA MENDEZ, HELEN M.
BURTON AND LEONARDO BURTON, JOSE JACINTO AND BIENVENIDA
JACINTO, IMELDA DAQUIGAN, LEO MATIGA AND ALICIA MATIGA,
FLORENCIO ACEDO JR., AND LYLA VALERIO, Respondents.:
G.R. No. 208232, March 10, 2014 - SURVIVING HEIRS OF ALFREDO R.
BAUTISTA, NAMELY: EPIFANIA G. BAUTISTA AND ZOEY G. BAUTISTA,
Petitioners, v. FRANCISCO LINDO AND WELHILMINA LINDO; AND HEIRS OF
FILIPINA DAQUIGAN, NAMELY: MA. LOURDES DAQUIGAN, IMELDA
CATHERINE DAQUIGAN, IMELDA DAQUIGAN AND CORSINO DAQUIGAN,
REBECCA QUIAMCO AND ANDRES QUIAMCO, ROMULO LORICA AND
DELIA LORICA, GEORGE CAJES AND LAURA CAJES, MELIDA BAÑEZ AND
FRANCISCO BAÑEZ, MELANIE GOFREDO, GERVACIO CAJES AND ISABEL
CAJES, EGMEDIO SEGOVIA AND VERGINIA SEGOVIA, ELSA N. SAM,
PEDRO M. SAM AND LINA SAM, SANTIAGO MENDEZ AND MINA MENDEZ,
HELEN M. BURTON AND LEONARDO BURTON, JOSE JACINTO AND
BIENVENIDA JACINTO, IMELDA DAQUIGAN, LEO MATIGA AND ALICIA
MATIGA, FLORENCIO ACEDO JR., AND LYLA VALERIO, Respondents.
THIRD DIVISION

G.R. No. 208232, March 10, 2014

SURVIVING HEIRS OF ALFREDO R. BAUTISTA, NAMELY: EPIFANIA G.

BAUTISTA AND ZOEY G. BAUTISTA, Petitioners, v. FRANCISCO LINDO
AND WELHILMINA LINDO; AND HEIRS OF FILIPINA DAQUIGAN,
NAMELY: MA. LOURDES DAQUIGAN, IMELDA CATHERINE DAQUIGAN,
IMELDA DAQUIGAN AND CORSINO DAQUIGAN, REBECCA QUIAMCO
AND ANDRES QUIAMCO, ROMULO LORICA AND DELIA LORICA,
GEORGE CAJES AND LAURA CAJES, MELIDA BAÑEZ AND FRANCISCO
BAÑEZ, MELANIE GOFREDO, GERVACIO CAJES AND ISABEL CAJES,
EGMEDIO SEGOVIA AND VERGINIA SEGOVIA, ELSA N. SAM, PEDRO M.
SAM AND LINA SAM, SANTIAGO MENDEZ AND MINA MENDEZ, HELEN
M. BURTON AND LEONARDO BURTON, JOSE JACINTO AND
BIENVENIDA JACINTO, IMELDA DAQUIGAN, LEO MATIGA AND ALICIA
MATIGA, FLORENCIO ACEDO JR., AND LYLA VALERIO, Respondents.

DECISION

VELASCO JR., J.:

The Case

This is a Petition for Review on Certiorari under Rule 45 assailing the April 25, 2013
Order of the Regional Trial Court (RTC) in Civil Case No. (1798)-021 as well as its
Order of July 3, 2013 denying reconsideration.

The Facts

Alfredo R. Bautista (Bautista), petitioner’s predecessor, inherited in 1983 a free-patent

land located in Poblacion, Lupon, Davao Oriental and covered by Original Certificate
of Title (OCT) No. (1572) P-6144. A few years later, he subdivided the property and
sold it to several vendees, herein respondents, via a notarized deed of absolute sale
dated May 30, 1991. Two months later, OCT No. (1572) P-6144 was canceled and
Transfer Certificates of Title (TCTs) were issued in favor of the
vendees.1crallawlibrary

Three years after the sale, or on August 5, 1994, Bautista filed a complaint for
repurchase against respondents before the RTC, Branch 32, Lupon, Davao Oriental,
docketed as Civil Case No. 1798,2anchoring his cause of action on Section 119 of
Commonwealth Act No. (CA) 141, otherwise known as the “Public Land Act,” which
reads:chanRoblesVirtualawlibrary

SECTION 119. Every conveyance of land acquired under the free patent or homestead
provisions, when proper, shall be subject to repurchase by the applicant, his widow, or
legal heirs, within a period of five years from the date of the conveyance.

Respondents, in their Answer, raised lack of cause of action, estoppel, prescription, and
laches, as defenses.

Meanwhile, during the pendency of the case, Bautista died and was substituted by
petitioner Epifania G. Bautista (Epifania).

Respondents Francisco and Welhilmina Lindo later entered into a compromise

agreement with petitioners, whereby they agreed to cede to Epifania a three thousand
two hundred and thirty square meter (3,230 sq.m.)-portion of the property as well as to
waive, abandon, surrender, and withdraw all claims and counterclaims against each
other. The compromise was approved by the RTC in its Decision dated January 27,
2011, the fallo of which reads:chanRoblesVirtualawlibrary

WHEREFORE, a DECISION is hereby rendered based on the above-

quoted Compromise Agreement and the parties are enjoined to strictly comply with the
terms and conditions of the same.

SO ORDERED.3

Other respondents, however, filed a Motion to Dismiss4 dated February 4, 2013,

alleging that the complaint failed to state the value of the property sought to be
recovered. Moreover, they asserted that the total selling price of all the properties is
only sixteen thousand five hundred pesos (PhP 16,500), and the selling price or market
value of a property is always higher than its assessed value. Since Batas Pambansa
Blg. (BP) 129, as amended, grants jurisdiction to the RTCs over civil actions involving
title to or possession of real property or interest therein where the assessed value is
more than PhP 20,000, then the RTC has no jurisdiction over the complaint in question
since the property which Bautista seeks to repurchase is below the PhP 20,000
jurisdictional ceiling.

RTC Ruling5

Acting on the motion, the RTC issued the assailed order dismissing the complaint for
lack of jurisdiction. The trial court found that Bautista failed to allege in his complaint
that the value of the subject property exceeds 20 thousand pesos. Furthermore, what
was only stated therein was that the total and full refund of the purchase price of the
property is PhP 16,500. This omission was considered by the RTC as fatal to the case
considering that in real actions, jurisdictional amount is determinative of whether it is
the municipal trial court or the RTC that has jurisdiction over the case.

With respect to the belated filing of the motion, the RTC, citing Cosco Philippines
Shipping, Inc. v. Kemper Insurance Company,6 held that a motion to dismiss for lack
of jurisdiction may be filed at any stage of the proceedings, even on appeal, and is not
lost by waiver or by estoppel. The dispositive portion of the assailed Order
reads:chanRoblesVirtualawlibrary

WHEREFORE, the complaint for Repurchase, Consignation, with Preliminary

Injunction and Damages is hereby dismissed for lack of jurisdiction.

SO ORDERED.7crallawlibrary

Assignment of Errors

Their motion for reconsideration having been denied, petitioners now seek recourse
before this Court with the following assigned errors:chanRoblesVirtualawlibrary

THE PUBLIC RESPONDENT RTC ERRED IN ADMITTING THE MOTION TO

DISMISS DATED FEBRUARY 4, 2013, BELATEDLY FILED BY THE PRIVATE
RESPONDENTS IN THE CASE.
II

THE PUBLIC RESPONDENT RTC ERRED IN HOLDING THAT THE INSTANT

CASE FOR REPURCHASE IS A REAL ACTION.8crallawlibrary

The Issue

Stated differently, the issue for the Court’s resolution is: whether or not the RTC erred
in granting the motion for the dismissal of the case on the ground of lack of jurisdiction
over the subject matter.

Arguments
Petitioners argue that respondents belatedly filed their Motion to Dismiss and are now
estopped from seeking the dismissal of the case, it having been filed nine (9) years
after the filing of the complaint and after they have actively participated in the
proceedings. Additionally, they allege that an action for repurchase is not a real action,
but one incapable of pecuniary estimation, it being founded on privity of contract
between the parties. According to petitioners, what they seek is the enforcement of
their right to repurchase the subject property under Section 119 of CA 141.

Respondents, for their part, maintain that since the land is no longer devoted to
agriculture, the right of repurchase under said law can no longer be availed of,
citing Santana v. Mariñas.9 Furthermore, they suggest that petitioners intend to resell
the property for a higher profit, thus, the attempt to repurchase. This, according to
respondents, goes against the policy and is not in keeping with the spirit of CA 141
which is the preservation of the land gratuitously given to patentees by the State as a
reward for their labor in cultivating the property. Also, the Deed of Absolute Sale
presented in evidence by Bautista was unilaterally executed by him and was not signed
by respondents. Lastly, respondents argue that repurchase is a real action capable of
pecuniary estimation.

Our Ruling

The petition is meritorious.

Jurisdiction of courts is granted by the Constitution and pertinent laws.

Jurisdiction of RTCs, as may be relevant to the instant petition, is provided in Sec. 19

of BP 129, which reads:chanRoblesVirtualawlibrary
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
original jurisdiction:chanRoblesVirtualawlibrary

1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;

2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, where the assessed value of the property involved exceeds Twenty
thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such value
exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred
upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts.

On the other hand, jurisdiction of first level courts is prescribed in Sec. 33 of BP 129,
which provides:chanRoblesVirtualawlibrary

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in civil cases. — Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall
exercise:chanRoblesVirtualawlibrary

x x x x

3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of the
property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in
civil actions in Metro Manila, where such assessed value does not exceed Fifty
thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorney’s fees, litigation expenses and costs: Provided, That in cases of land not
declared for taxation purposes, the value of such property shall be determined by the
assessed value of the adjacent lots.

The core issue is whether the action filed by petitioners is one involving title to or
possession of real property or any interest therein or one incapable of pecuniary
estimation.

The course of action embodied in the complaint by the present petitioners’ predecessor,
Alfredo R. Bautista, is to enforce his right to repurchase the lots he formerly owned
pursuant to the right of a free-patent holder under Sec. 119 of CA 141 or the Public
Land Act.

The Court rules that the complaint to redeem a land subject of a free patent is a civil
action incapable of pecuniary estimation.

It is a well-settled rule that jurisdiction of the court is determined by the allegations in

the complaint and the character of the relief sought.10 In this regard, the Court,
in Russell v. Vestil,11 wrote that “in determining whether an action is one the subject
matter of which is not capable of pecuniary estimation this Court has adopted the
criterion of first ascertaining the nature of the principal action or remedy sought.
If it is primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the municipal courts or in the
RTCs would depend on the amount of the claim.” But where the basic issue is
something other than the right to recover a sum of money, where the money claim is
purely incidental to, or a consequence of, the principal relief sought, this Court has
considered such actions as cases where the subject of the litigation may not be
estimated in terms of money, and, hence, are incapable of pecuniary estimation. These
cases are cognizable exclusively by RTCs.12crallawlibrary

Settled jurisprudence considers some civil actions as incapable of pecuniary

estimation, viz:chanRoblesVirtualawlibrary

1. Actions for specific performance;

2. Actions for support which will require the determination of the civil status;
3. The right to support of the plaintiff;
4. Those for the annulment of decisions of lower courts;
13
5. Those for the rescission or reformation of contracts; crallawlibrary
6. Interpretation of a contractual stipulation.14

The Court finds that the instant cause of action to redeem the land is one for specific
performance.

The facts are clear that Bautista sold to respondents his lots which were covered by a
free patent. While the deeds of sale do not explicitly contain the stipulation that the
sale is subject to repurchase by the applicant within a period of five (5) years from the
date of conveyance pursuant to Sec. 119 of CA 141, still, such legal provision is
deemed integrated and made part of the deed of sale as prescribed by law. It is basic
that the law is deemed written into every contract.15 Although a contract is the law
between the parties, the provisions of positive law which regulate contracts are deemed
written therein and shall limit and govern the relations between the parties.16 Thus, it is
a binding prestation in favor of Bautista which he may seek to enforce. That is
precisely what he did. He filed a complaint to enforce his right granted by law to
recover the lot subject of free patent. Ergo, it is clear that his action is for specific
performance, or if not strictly such action, then it is akin or analogous to one of
specific performance. Such being the case, his action for specific performance is
incapable of pecuniary estimation and cognizable by the RTC.

Respondents argue that Bautista’s action is one involving title to or possession of real
property or any interests therein and since the selling price is less than PhP 20,000,
then jurisdiction is lodged with the MTC. They rely on Sec. 33 of BP 129.

Republic Act No. 769117 amended Sec. 33 of BP 129 and gave Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts exclusive original
jurisdiction in all civil actions which involve title to, or possession of, real property, or
any interest therein where the assessed value of the property or interest therein does not
exceed twenty thousand pesos (PhP 20,000) or, in civil actions in Metro Manila, where
such assessed value does not exceed fifty thousand pesos (PhP 50,000) exclusive of
interest, damages of whatever kind, attorney’s fees, litigation expenses and costs.

At first blush, it appears that the action filed by Bautista involves title to or possession
of the lots he sold to respondents. Since the total selling price is less than PhP 20,000,
then the MTC, not the RTC, has jurisdiction over the case. This proposition is
incorrect for the re-acquisition of the lots by Bautista or herein successors-in-interests,
the present petitioners, is but incidental to and an offshoot of the exercise of the right
by the latter to redeem said lots pursuant to Sec. 119 of CA 141. The reconveyance of
the title to petitioners is solely dependent on the exercise of such right to repurchase
the lots in question and is not the principal or main relief or remedy sought. Thus, the
action of petitioners is, in reality, incapable of pecuniary estimation, and the
reconveyance of the lot is merely the outcome of the performance of the obligation to
return the property conformably to the express provision of CA 141.

Even if we treat the present action as one involving title to real property or an interest
therein which falls under the jurisdiction of the first level court under Sec. 33 of BP
129, as the total selling price is only PhP 16,000 way below the PhP 20,000 ceiling,
still, the postulation of respondents that MTC has jurisdiction will not hold water. This
is because respondents have actually participated in the proceedings before the RTC
and aggressively defended their position, and by virtue of which they are already
barred to question the jurisdiction of the RTC following the principle of jurisdiction by
estoppel.

In Heirs of Jose Fernando v. De Belen, it was held that the party raising defenses to the
complaint, actively participating in the proceedings by filing pleadings, presenting his
evidence, and invoking its authority by asking for an affirmative relief is deemed
estopped from questioning the jurisdiction of the court.18crallawlibrary

Here, we note that aside from the belated filing of the motion to dismiss--it having
been filed nine (9) years from the filing of the complaint--respondents actively
participated in the proceedings through the following acts:chanRoblesVirtualawlibrary

1. By filing their Answer and Opposition to the Prayer for Injunction19 dated
September 29, 1994 whereby they even interposed counterclaims, specifically:
PhP 501,000 for unpaid survey accounts, PhP 100,000 each as litigation
 expenses, PhP 200,000 and PhP 3,000 per daily appearance by way of attorney’s
fees, PhP 500,000 as moral damages, PhP 100,000 by way of exemplary
damages, and costs of suit;

2. By participating in Pre-trial;

3. By moving for the postponement of their presentation of

evidence;20crallawlibrary

4. By presenting their witness;21 and

5. By submitting the compromise agreement for approval.22crallawlibrary

Having fully participated in all stages of the case, and even invoking the RTC’s
authority by asking for affirmative reliefs, respondents can no longer assail the
jurisdiction of the said trial court. Simply put, considering the extent of their
participation in the case, they are, as they should be, considered estopped from raising
lack of jurisdiction as a ground for the dismissal of the action.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The

April 25, 2013 and July 3, 2013 Orders of the Regional Trial Court in Civil Case No.
(1798)-021 are hereby REVERSED and SET ASIDE.

The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is ORDERED to

proceed with dispatch in resolving Civil Case No. (1798)-021.

No pronouncement as to costs.

SO ORDERED.

Peralta, Abad, Mendoza, and Leonen, JJ., concur.

Endnotes:

1
Namely: Francisco S. Lindo (TCT No. T-14045); Filipina Daquigan (TCT No. T-
14050); Lyla D. Valerio (TCT No. T-15372); Rebecca P. Quiamco (TCT No. T-
14051); Romulo D. Lorica (TCT No. T-14052); George D. Cajes (TCT No. T-14053);
Melida A. Bañez (TCT No. T-14054); Melanie T. Gofredo (TCT No. T-14055);
Gervacio Cajes (TCT No. T-14056); Elsa N. Sam (TCT No. T-14058); Pedro M. Sam
(TCT No. T-14059); Santiago T. Mendez (TCT No. T-14060); Florencio Acedo Jr.
(TCT No. T-14061); Helen M. Burton (TCT No. T-14062); Jose Jacinto (TCT No. T-
14063); Imelda L. Daquigan (TCT No. T-14064); Leo Matiga (TCT No. T-14066); and
Egmedio C. Segovia (TCT No. T-14057).
2
“Civil Case No. (1798)-021” in some parts of the records.
3
Rollo, p. 98.
4
Id. at 101-104.
5
By Presiding Judge Emilio G. Dayanghirang III.
6
G.R. No. 179488, April 23, 2012, 670 SCRA 343.
7
Rollo, p. 23.
8
Id. at 12.
9
No. L-35337, December 27, 1979, 94 SCRA 853.
10
General Milling Corporation v. Uytengsu III, G.R. No. 160514, June 30, 2006, 494
SCRA 241, 245.
11
G.R. No. 119347, March 17, 1999, 304 SCRA 738, 744; citation omitted.
12
Id.
13
1 F. Regalado, Remedial Law Compendium 44 (9th rev. ed., 2005).
14
Id. at 45; citing Vda de Murga v. Chan, No. L-24680, October 7, 1968, 25 SCRA
441.
15
National Steel Corporation v. Regional Trial Court of Lanao del Norte, Br. 2, Iligan
City, G.R. No. 127004, March 11, 1999, 304 SCRA 595, 608.
16
Asia World Recruitment, Inc. v. National Labor Relations Commission, G.R. No.
113363, August 24, 1999, 313 SCRA 1, 14.
17
An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts, Amending for the Purpose Batas Pambansa
Blg. 129, otherwise known as the “Judiciary Reorganization Act of 1980.”
18
G.R. No. 186366, July 3, 2013, 700 SCRA 556, 567-568; citations omitted.
19
Rollo, pp. 44-50.
20
Id. at 94.
21
Id. at 145.
22
Id. at 97-98.
2015

Philippine Supreme Court Jurisprudence > Year 2015 > March 2015
Decisions > G.R. No. 201427, March 18, 2015 - TEOFILO B. ADOLFO,
Petitioner, v. FE. T. ADOLFO, Respondent.:

G.R. No. 201427, March 18, 2015 - TEOFILO B. ADOLFO, Petitioner, v. FE. T.
ADOLFO, Respondent.

SECOND DIVISION

G.R. No. 201427, March 18, 2015

TEOFILO B. ADOLFO, Petitioner, v. FE. T. ADOLFO, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside: 1) the October 6, 2009
Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 01783 reversing the
October 2, 2006 Order3 of the Regional Trial Court, 7th Judicial Region, Mandaue
City (RTC Mandaue), Branch 55 in Civil Case No. MAN-4821; as well as 2) the
CA’s March 2, 2012 Resolution4 denying petitioner’s Motion for
Reconsideration5 and Supplement6 thereto.

Civil Case No. MAN-4821

On April 14, 2004, petitioner Teofilo B. Adolfo filed with the RTC Mandaue a
Petition7 for judicial separation of property against his estranged wife, respondent Fe
Adolfo, nee Tudtud. Docketed as Civil Case No. MAN-4821 and assigned to Branch
55, the petition alleged that the parties were married on November 26, 1966; that the
union bore one child; that during the marriage, they acquired through conjugal funds
Lot 1087-A-2-E, a 3,652-square meter property in Brgy. Cabancalan, Mandaue City,
Cebu (the subject property) covered by Transfer Certificate of Title No. (TCT)
18368; that later on, the parties separated due to irreconcilable differences; that since
reunion was no longer feasible, petitioner suggested a separation of the conjugal
property, but respondent adamantly refused; that respondent denied petitioner’s co-
ownership of the subject property, claiming the same as her paraphernal property;
that several earnest efforts to amicably settle the matter between them proved
unavailing; and that a judicial separation of property is proper under the
circumstances and pursuant to Article 135(6) of the Family Code.8 Petitioner thus
prayed that judgment be rendered decreeing a separation of the conjugal property and
the subdivision or sale thereof, to the end of dividing the same or the proceeds
thereof; and ordering respondent to pay petitioner P50,000.00 as attorney’s fees,
appearance fees (P2,000.00 per hearing), and P20,000.00 litigation costs.

In her Answer9 with counterclaim, respondent contended that while she remained
married to petitioner, she is the sole owner of the subject property, the same being her
paraphernal property which she inherited from her mother; that petitioner is a lazy
bum, gambler, drunkard, wife abuser, and neglectful father; that respondent found all
means to support the family even as petitioner neglected it; that respondent bought on
installment a tricycle for the petitioner’s use in business, but he kept the proceeds
thereof to himself and used the same in his gambling and drinking sprees; that
respondent alone took the initiative to support the family and found ways to take care
of the daily needs of her child; that she caused to be built on a portion of her mother’s
land a house even while petitioner was bumming around; that one day, petitioner
destroyed the roof of the house that was then being built; that petitioner subsequently
abandoned her and their child in 1968, and transferred to Davao City where he took a
mistress and begot four children by her; that in 1986, petitioner returned to Cebu City
seeking reconciliation with respondent; that respondent took petitioner back, but in
1987 they once more separated; that thereafter, respondent never again saw or heard
from petitioner.

Respondent claimed in her Answer that the subject property was a portion of a bigger
lot (mother lot) owned by her mother Petronila Tudtud which was covered by TCT T-
15941. On October 11, 1967, her mother executed a quitclaim deed transferring a
portion of the mother lot – the subject property – to respondent. The mother title
TCT T-15941 was then cancelled and a new one, TCT (17216)-5415, was issued in
respondent’s name. Respondent then sold the subject property to her brother on
January 19, 1968, and a new TCT (17833)-5515 was issued in her brother’s name.
Her brother then mortgaged the property to Development Bank of the Philippines
(DBP), which foreclosed on the same. TCT 18231 was issued in DBP’s name. DBP
then sold the property to the spouses Antonio and Lucy Garcia (the Garcias), and
TCT 18266 was in turn issued in their name. Finally, on May 25, 1983, the Garcias
sold back the subject property to respondent, and a new title – TCT 1836810 – was
then issued in the name of respondent “FE M. TUDTUD, x x x married to Teofilo
Adolfo.”

Respondent argued that she is the sole owner of the subject property, the same being
her paraphernal property which she alone redeemed from the Garcias; that the
inclusion of petitioner’s name in TCT 18368 does not make him a co-owner of the
property, but was merely necessary to describe respondent’s civil status; and that
under Article 13511 of the Civil Code, all property brought by the wife to the marriage
as well as all property she acquires during the marriage in accordance with Article
14812of the same Code constitutes paraphernal property.

Respondent thus prayed that the petition be dismissed. By way of counterclaim, she
sought the payment of moral, exemplary, and nominal damages, attorney’s fees, and
litigation expenses.

Civil Case No. MAN-2683

In 1996, respondent’s sister Florencia Tudtud and her husband Juanito Gingoyon (the
Gingoyons) filed a case for partition with damages against respondent. The case was
docketed as Civil Case No. MAN-2683 and raffled to Branch 55 of the RTC
Mandaue. The Complaint13 therein alleged that in 1988, respondent executed a deed
of sale in favor of the Gingoyons over a 300-square meter portion of the subject
property, but that respondent refused to partition/subdivide the same even after the
Gingoyons paid the taxes, fees and expenses of the sale. For her defense, respondent
claimed in her Answer14 that when the sale to the Gingoyons was made, the subject
property constituted conjugal property of her marriage with petitioner; that as early as
1983, or when the Garcias executed the deed of sale in her favor, the subject property
became a conjugal asset; since petitioner did not sign the deed of sale in favor of the
Gingoyons as he was in Davao at the time and knew nothing about the sale, the sale
was null and void.

On May 15, 2002, the trial court rendered its Decision15 in Civil Case No. MAN-
2683, declaring that the subject property constituted conjugal property of the
marriage. It thus nullified the 1988 deed of sale executed by respondent in favor of
the Gingoyons for lack of consent on the part of petitioner, citing Article 124 of the
Family Code.16 The trial court likewise awarded moral and exemplary damages,
attorney's fees and litigation expenses in favor of the respondent in the total amount
of P107,000.00.

The Gingoyons filed an appeal with the CA, which was docketed as CA-G.R. CV No.
78971.

Motion for Judgment Based on the Pleadings in Civil Case No. MAN-4821

Meanwhile, during the pre-trial conference in Civil Case No. MAN-4821, petitioner
submitted as part of his evidence and for marking certified true copies of the
Gingoyons’ Complaint in Civil Case No. MAN-2683, respondent’s Answer thereto,
and the trial court’s May 15, 2002 Decision in said case.

On August 1, 2005, petitioner filed a Request for Admission17 of 1) the genuineness

of the duly marked certified true copies of the Complaint, Answer, and Decision in
Civil Case No. MAN-2683 (Exhibits “F,” “G” and “H,” respectively); 2)
respondent’s declaration in said Answer that the subject property constituted conjugal
property of the marriage; and 3) the trial court’s pronouncement in said case that the
subject property forms part of the conjugal estate.

Respondent failed to file her answer or response to the request for admission.

On September 5, 2005, petitioner filed a Motion for Judgment Based on the

Pleadings,18 stating that since respondent failed to answer his request for admission,
the matters contained in the request are deemed admitted pursuant to Rule 26, Section
2 of the 1997 Rules of Civil Procedure19 (1997 Rules); that as a consequence of the
application of the rule, respondent is in effect considered to have admitted that the
subject property is a conjugal asset of their subsisting marriage which may thus be
the subject of his petition for judicial separation of property; and that on account of
said admission, a hearing on the merits becomes unnecessary and, instead, Rule
3420 of the 1997 Rules on judgments on the pleadings should apply. Petitioner thus
prayed that the trial court render judgment in his favor based on the pleadings.

Respondent filed an Opposition.21 In her Opposition to Plaintiff’s

22
Memorandum, respondent argued among others that the request for admission was
premature considering that the decision in Civil Case No. MAN-2683 was the subject
of an appeal, and thus not yet final.

In an October 11, 2005 Order,23 the trial court directed the transfer of Civil Case No.
MAN-4821 to Branch 55 of the RTC Mandaue, since it is said court which decided
the closely related Civil Case No. MAN-2683.

On October 2, 2006, Branch 55 issued an Order24 granting petitioner’s motion for

judgment on the pleadings. It held as follows:chanRoblesvirtualLawlibrary

This court has painstakingly exerted effort in going over the record and took serious
note of all the pleadings, documents and others on file. After serious consideration,
the court believes and so holds that there is basis in rendering judgment. The Motion
for Judgment Based on the Pleadings though denominated as such but [sic] shall be
treated as a move to seek summary judgment. x x x

x x x x

The court in arriving at this resolution was guided by the following pronouncements
by the Supreme Court in the case of Diman vs. Alumbres, G.R. No. 131466,
November 27, 1998, 299 SCRA 459 x x x:
x x x x

In the same case, it was held –

“It is also the law which determines when a summary judgment is proper. It declares
that although the pleadings on their face appear to raise issues of fact – e.g., there are
denials of, or a conflict in, factual allegations – if it is shown by admissions,
depositions or affidavits, that those issues are sham, fictitious, or not genuine, or, in
the language of the Rules, that ‘except as to the amount of damages, there is no
genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law, the Court shall render a summary judgment for the
plaintiff or the defendant, as the case may be. (Italics and underscoring supplied)

On the other hand, in the case of a summary judgment[,] issues apparently exist – i.e..
facts are asserted in the complaint regarding which there is as yet no admission,
disavowal or qualification; or specific denials or affirmative defenses are in truth set
out in the answer – but the issues thus arising from the pleadings are sham, fictitious,
not genuine, as shown by [affidavits], depositions or admissions. In other words, as a
noted authority remarks, a judgment on the pleadings is a judgment on the facts as
pleaded, while a summary judgment is a judgment on the facts as summarily proven
by affidavits, depositions or admissions.” (Italics and underscoring supplied)

x x x xcralawlawlibrary
Defendant25 did not file any verified answer or a pleading denying under oath the
genuineness and authenticity of the documents attached to the Request for Admission
and of the other matters therein set forth. This failure has far reaching implications in
that the following are deemed admitted: a) the genuineness of Exhibits F, G and H,
all attached to the Request for Admission; b) that she admitted in paragraph 10 in her
Answer to Civil Case No. MAN-2683 that Lot 1087-A-2-E was no longer
paraphernal property but rather a conjugal property of Spouses Teofilo and Fe Adolfo
and; c) that RTC, Branch 55, Mandaue City, sustained and/or held the view of
defendant (Fe Tudtud) that Lot 1087-A-2-E is a conjugal property of Spouses Teofilo
and Fe Adolfo, thus, dismissed Civil Case No. MAN-2683 and awarded damages to
the defendant.

Judicial admissions may be made in (a) the pleadings filed by the parties, (b) in the
course of the trial either by verbal or written manifestations or stipulations, or (c) in
other stages of the judicial proceeding, as in the pre-trial of the case. Admissions
obtained through depositions, written interrogatories or requests for admission are
also considered judicial admissions.” Page 686, Remedial Law Compendium, Vol. II,
9th Rev. Ed., Regalado

With the admission that Lot 1087-A-2-E is a conjugal property, it follows as its
necessary and logical consequence, that plaintiff26 is entitled to the relief
demanded.chanrobleslaw

x x x x

A DECISION in Civil Case No. MAN-2683 had already been rendered by RTC,
Branch 55, on the 15th day of May 2002 with the court finding that Lot 1087-A-2-E
is a conjugal property x x x –

x x x x

For reason[s] of expediency and convenience, the court may even take judicial notice
of its earlier decision finding Lot 1087-A-2-E as a conjugal property.27cralawred

x x x x

Under the circumstances, judicial separation of property is proper. Aware that the
separation has the effect of a dissolution of the conjugal partnership property regime,
the presumptive legitime of Nilo Adolfo (the only common child of the spouses) has
to be delivered in accordance with Article 51 in relation to paragraph (8) Article 127
and Article 137 of the Family Code of the Philippines.

WHEREFORE, premises considered, judgment is hereby rendered directing the

partition of Lot 1087-A-2-E between the plaintiff and the defendant in equal share of
what remains after allocating to Nilo Adolfo a portion of Nine hundred thirteen (913)
square meters representing his presumptive legitime.

The plaintiff is directed to submit to this court the proposed subdivision plan for its
consideration before submitting the same for approval to the Bureau of Lands.

In case of disagreement as to their respective location, the same shall be done through
raffle to be conducted by the sheriff who shall see to it that judgment in this case shall
be fully implemented.

SO ORDERED.28cralawlawlibrary

Respondent instituted an appeal with the CA, which was docketed as CA-G.R. CV
No. 01783.

Court of Appeals Decision in CA-G.R. CV No. 78971

Meanwhile, on May 30, 2007, the CA rendered its Decision29 in CA-G.R. CV No.
78971. It reversed the May 15, 2002 Decision of the trial court in Civil Case No.
MAN-2683. It declared, among others, that the subject property was respondent’s
paraphernal property. Thus, it held:chanRoblesvirtualLawlibrary

Proceeding from the foregoing consideration, the finding that Lot No. 1087-A-2-E is
a conjugal property does not have any basis, hence, does not have any merit at all.
On the contrary, plaintiffs-appellants30 sufficiently proved that the aforesaid lot was
defendant-appellee’s31 paraphernal property as the latter even admitted that she
inherited the same from her mother although she claimed it as a conjugal property
based on the TCT’s attached to her answer. Another strong indication that Lot No.
1087-A-2-E is solely owned by defendant-appellee is the fact that in another case
(Civil Case No. MAN-2008) involving the same property and the same parties but for
a different issue (road right of way), defendant-appellee alone signed the compromise
agreement ceding a portion of the subject lot as a right of way perpetually open and
unobstructed for the benefit of plaintiffs-appellants, defendant-appellee, their
respective heirs, assigns and transferees and guests. The same compromise
agreement which became the decision of the case attained finality without defendant-
appellee questioning the absence of her husband’s signature.chanrobleslaw
x x x x

WHEREFORE, prescinding from the foregoing premises, the appeal is hereby

GRANTED and the Decision of the Regional Trial Court of Mandaue City, Branch
55, dated 15 May 2002, in Civil Case No. MAN-2683 is REVERSED and SET
ASIDE.

Let the partition of Lot No. 1087-A-2-E consisting of 300 square meters bought by
plaintiffs-appellants from defendant-appellee be done in accordance to [sic] the
sketch plan executed for that purpose.

SO ORDERED.32cralawred
cralawlawlibrary

On June 23, 2007, the above CA decision became final and executory.33cralawred

Ruling of the Court of Appeals in CA-G.R. CV No. 01783

In CA-G.R. CV No. 01783, respondent filed her Appellant’s Brief,34 where she
argued that the trial court erred in issuing its October 2, 2006 Order directing the
partition or sale of the subject property; that it was error for the trial court to take
judicial notice of its own judgment in Civil Case No. MAN-2683 and thus declare
that the subject property is conjugal, since the issue of whether it constitutes conjugal
or paraphernal property was still pending in the appeal in CA-G.R. CV No. 78971;
that since the proceedings in Civil Case No. MAN-2683 have not been terminated
and the issue regarding the character of the subject property has not been resolved
with finality, then petitioner’s resort to a request for admission and motion for
judgment on the pleadings was premature; and that with the May 30, 2007 Decision
in CA-G.R. CV No. 78971, petitioner and the trial court should submit to the finding
therein that the subject property is her paraphernal property.

In his Appellee’s Brief,35 petitioner insisted that the trial court did not err in treating
his motion for judgment on the pleadings as one for summary judgment; that
respondent’s Answer in Civil Case No. MAN-2683 constituted a judicial admission
that the subject property was a conjugal asset, which required no further proof; that
respondent’s failure to reply to his written request for admission also resulted in the
acknowledgment that the subject property is a conjugal asset; that the trial court
correctly took judicial notice of the proceedings in Civil Case No. MAN-2683, as
they were relevant and material to the resolution of Civil Case No. MAN-4821; that
since it was not respondent who appealed the May 15, 2002 decision in Civil Case
No. MAN-2683, then the finding therein that the subject property is conjugal should
bind her; and that the CA’s eventual finding in CA-G.R. CV No. 78971 that the
subject lot was respondent’s paraphernal property cannot bind him because he was
not a party to Civil Case No. MAN-2683.

On October 6, 2009, the CA issued the assailed Decision containing the following
decretal portion:chanRoblesvirtualLawlibrary

WHEREFORE, based from the foregoing premises, the Order of the Regional Trial
Court, Branch 55, Mandaue City, in Civil Case No. MAN-4821, is hereby
REVERSED and SET ASIDE and the records of this case are remanded to RTC
(Branch 55), Mandaue City, for further proceedings.

SO ORDERED.36cralawlawlibrary

In arriving at the above conclusion, the CA held that the trial court cannot treat
petitioner’s motion for judgment on the pleadings as one for summary judgment. It
stated that in a proper case for judgment on the pleadings, there are no ostensible
issues at all on account of the defending party’s failure to raise an issue in his answer,
while in a proper case for summary judgment, such issues exist, although they are
sham, fictitious, or not genuine as shown by affidavits, depositions or admissions. In
other words, a judgment on the pleadings is a judgment on the facts as pleaded, while
a summary judgment is a judgment on the facts as summarily proved by affidavits,
depositions, or admissions.37 It added that respondent’s Answer appeared on its face
to tender an issue; it disputed petitioner’s claim that the subject property is their
conjugal property. The next thing to be determined is whether this issue is fictitious
or sham as to justify a summary judgment.

The CA added that although respondent was bound by the resulting admission
prompted by her failure to reply to petitioner’s request for admission, her claims and
documentary exhibits clearly contradict what petitioner sought to be admitted in his
request; that the trial court disregarded the fact that the issue of whether the subject
property is conjugal was still unresolved as CA-G.R. CV No. 78971 was still
pending; and that finally, the trial court should have been guided by the principles
that trial courts have but limited authority to render summary judgments and that
summary judgments should not be rendered hastily.38cralawred

Petitioner moved to reconsider, but in a March 2, 2012 Resolution, he was rebuffed.

Hence, the present Petition was filed on April 30, 2012.
In a March 20, 2013 Resolution,39 the Court resolved to give due course to the instant
Petition.chanroblesvirtuallawlibrary

Issue

Petitioner now claims that the Court of Appeals erred in deciding the case on a
question of substance not in accord with law, Rule 26 of the 1997 Rules, and
applicable jurisprudence.40cralawred

Petitioner’s Arguments

In his Petition seeking to reverse and set aside the assailed CA dispositions and thus
reinstate the October 2, 2006 Order of the trial court, petitioner insists that
respondent’s failure to reply to his written request for admission resulted in her
admitting that the subject property is a conjugal asset, applying Rule 26, Section 2 of
the 1997 Rules; that the CA grossly erred in disregarding the rule; that with the
resulting admission, there remains no genuine issue to be resolved in Civil Case No.
MAN-4821, such that judgment based on the pleadings is proper. Finally, petitioner
adds that respondent’s trifling with the law and rules of procedure – by conveniently
claiming in one case that the subject property is conjugal, and then in another that it is
paraphernal – should not be countenanced; she should be held to her original
declaration that the subject property is conjugal.

Respondent’s Arguments

In her Comment,41 respondent counters that, as correctly ruled by the CA, petitioner
elected the wrong remedy in filing a motion for judgment on the pleadings when he
should have moved for summary judgment; that in a motion for judgment on the
pleadings, the movant is deemed to admit the truth of all of the opposing party’s
material and relevant allegations, and rest his motion on those allegations taken
together with that of his own as are admitted in the pleadings; 42 that the effect of this
is that petitioner is deemed to have admitted that the subject property is paraphernal,
as claimed in her Answer; that with the final and executory May 30, 2007 Decision of
the CA in CA-G.R. CV No. 78971, the subject property should now be considered as
her paraphernal property, and petitioner’s case for partition on the claim that the
subject property is conjugal should be dismissed for being moot and academic.

Our Ruling
The Court denies the Petition.

Judgment on the pleadings is proper “where an answer fails to tender an issue, or

otherwise admits the material allegations of the adverse party’s pleading.”43
Summary judgment, on the other hand, will be granted “if the pleadings, supporting
affidavits, depositions, and admissions on file, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.”44cralawred

We have elaborated on the basic distinction between summary judgment and

judgment on the pleadings, thus:chanRoblesvirtualLawlibrary

The existence or appearance of ostensible issues in the pleadings, on the one hand,
and their sham or fictitious character, on the other, are what distinguish a proper case
for summary judgment from one for a judgment on the pleadings. In a proper case
for judgment on the pleadings, there is no ostensible issue at all because of the failure
of the defending party’s answer to raise an issue. On the other hand, in the case of a
summary judgment, issues apparently exist ? i.e. facts are asserted in the complaint
regarding which there is as yet no admission, disavowal or qualification; or specific
denials or affirmative defenses are in truth set out in the answer?but the issues thus
arising from the pleadings are sham, fictitious or not genuine, as shown by affidavits,
depositions, or admissions.45cralawlawlibrary

An answer would “fail to tender an issue” if it “does not deny the material allegations
in the complaint or admits said material allegations of the adverse party’s pleadings
by confessing the truthfulness thereof and/or omitting to deal with them at all. Now,
if an answer does in fact specifically deny the material averments of the complaint
and/or asserts affirmative defenses (allegations of new matter which, while admitting
the material allegations of the complaint expressly or impliedly, would nevertheless
prevent or bar recovery by the plaintiff), a judgment on the pleadings would naturally
be improper.”46cralawred

On the other hand, “whether x x x the issues raised by the Answer are genuine is not
the crux of inquiry in a motion for judgment on the pleadings. It is so only in a
motion for summary judgment. In a case for judgment on the pleadings, the Answer
is such that no issue is raised at all. The essential question in such a case is whether
there are issues generated by the pleadings.”47 “A ‘genuine issue’ is an issue of fact
which requires the presentation of evidence as distinguished from a sham, fictitious,
contrived or false claim. When the facts as pleaded appear uncontested or
undisputed, then there is no real or genuine issue or question as to the facts, and
summary judgment is called for.”48cralawred

In rendering summary judgment, the trial court relied on respondent’s failure to reply
to petitioner’s request for admission, her admission in Civil Case No. MAN-2683, as
well as its May 15, 2002 Decision declaring that the subject property is a conjugal
asset. It took judicial notice of the proceedings in said case. While there is nothing
irregular with this – as courts may “take judicial notice of a decision or the facts
prevailing in another case sitting in the same court if (1) the parties present them in
evidence, absent any opposition from the other party; or (2) the court, in its
discretion, resolves to do so”49 – the trial court however disregarded the fact that its
decision was then the subject of a pending appeal in CA-G.R. CV No. 78971. It
should have known that until the appeal is resolved by the appellate court, it would be
premature to render judgment on petitioner’s motion for judgment on the pleadings;
that it would be presumptuous to assume that its own decision would be affirmed on
appeal. One of the issues raised in the appeal is precisely whether the subject
property is conjugal, or a paraphernal asset of the respondent. Thus, instead of
resolving petitioner’s motion for judgment on the pleadings, the trial court should
have denied it or held it in abeyance. It should have guided petitioner to this end,
instead of aiding in the hasty resolution of his case. In the first place, Civil Case No.
MAN-4821 was transferred to it from Branch 56 precisely for the reason that it was
the court which tried the closely related Civil Case No. MAN-2683.

Even if respondent is deemed to have admitted the matters contained in petitioner’s

request for admission by her failure to reply thereto, the trial court should have
considered the pending appeal in CA-G.R. CV No. 78971. It cannot take judicial
notice solely of the proceedings in Civil Case No. MAN-2683, and ignore the appeal
in CA-G.R. CV No. 78971. After all, CA-G.R. CV No. 78971 is merely a
continuation of Civil Case No. MAN-2683; an appeal is deemed a continuation of the
same case commenced in the lower court.50cralawred

On the part of petitioner, it must be said that he could not have validly resorted to a
motion for judgment on the pleadings or summary judgment. While it may appear
that under Rules 34 and 35 of the 1997 Rules, he may file a motion for judgment on
the pleadings or summary judgment as a result of the consequent admission by
respondent that the subject property is conjugal, this is not actually the case. Quite
the contrary, by invoking the proceedings and decision in Civil Case No. MAN-2683,
petitioner is precluded from obtaining judgment while the appeal in said case is
pending, because the result thereof determines whether the subject property is indeed
conjugal or paraphernal. He may not preempt the appeal in CA-G.R. CV No. 78971.
While it is true that a judgment cannot bind persons who are not parties to the
action,51 petitioner cannot, after invoking the proceedings in Civil Case No. MAN-
2683 to secure affirmative relief against respondent and thereafter failing to obtain
such relief, be allowed to repudiate or question the CA’s ruling in CA-G.R. CV No.
78971. The principle of estoppel bars him from denying the resultant pronouncement
by the appellate court, which became final and executory, that the subject property is
respondent’s paraphernal property. “In estoppel, a person, who by his deed or
conduct has induced another to act in a particular manner, is barred from adopting an
inconsistent position, attitude or course of conduct that thereby causes loss or injury
to another. It further bars him from denying the truth of a fact which has, in the
contemplation of law, become settled by the acts and proceeding of judicial or
legislative officers or by the act of the party himself, either by conventional writing or
by representations, express or implied or in pais.”52cralawred

Finally, the Court notes that the appellate court overlooked the May 30, 2007
Decision in CA-G.R. CV No. 78971, which became final and executory on June 23,
2007. The respondent included this development in her appellee’s brief, but the CA
did not take it into account. As an unfortunate consequence, the case was not
appreciated and resolved completely.

Thus, with the development in Civil Case No. MAN-2683 brought upon by the final
and executory decision in CA-G.R. CV No. 78971, petitioner’s case is left with no
leg to stand on. There being no conjugal property to be divided between the parties,
Civil Case No. MAN-4821 must be dismissed.

WHEREFORE, the Petition is DENIED. The October 6, 2009 Decision and March
2, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 01783
are AFFIRMED WITH MODIFICATION in that Civil Case No. MAN-4821 is
ordered DISMISSED.

SO ORDERED.cralawlawlibrary

Carpio, (Acting Chief Justice),* Velasco, Jr.,** Mendoza, and Leonen, JJ., concur.

Endnotes:

*
Per Special Order No. 1945 dated March 12, 2015.
**
Per Special Order No. 1951 dated March 18, 2015.
1
Rollo, pp. 3-26.
2
Id. at 182-192; penned by Associate Justice Florito S. Macalino and concurred in by
Associate Justices Manuel M. Barrios and Samuel H. Gaerlan.
3
Id. at 151-159; penned by Judge Ulric R. Canete.
4
Id. at 239-241; penned by Associate Justice Myra V. Garcia-Fernandez and
concurred in by Associate Justices Nina G. Antonio-Valenzuela and Abraham B.
Borreta.
5
Id. at 193-202.
6
Id. at 229-238.
7
Id. at 27-31.
8
Art. 135. Any of the following shall be considered sufficient cause for judicial
separation of property:

(1) That the spouse of the petitioner has been sentenced to a penalty which carries
with it civil interdiction;
(2) That the spouse of the petitioner has been judicially declared an absentee;
(3) That loss of parental authority of the spouse of petitioner has been decreed by the
court;
(4) That the spouse of the petitioner has abandoned the latter or failed to comply with
his or her obligations to the family as provided for in Article 101;
(5) That the spouse granted the power of administration in the marriage settlements
has abused that power; and
(6) That at the time of the petition, the spouses have been separated in fact for at least
one year and reconciliation is highly improbable.

In the cases provided for in Numbers (1), (2) and (3), the presentation of the final
judgment against the guilty or absent spouse shall be enough basis for the grant of the
decree of judicial separation of property.
9
Rollo, pp. 38-44.
10
Id. at 33-34.
11
Art. 135. All property brought by the wife to the marriage, as well as all property
she acquires during the marriage, in accordance with article 148, is paraphernal.
12
Art. 148. The following shall be the exclusive property of each spouse:

(1) That which is brought to the marriage as his or her own;

(2) That which each acquires, during the marriage, by lucrative title;
(3) That which is acquired by right of redemption or by exchange with other property
belonging to only one of the spouses;
(4) That which is purchased with exclusive money of the wife or of the husband.
13
Rollo, pp. 57-60.
14
Id. at 61-65.
15
Id. at 66-79; penned by Judge Ulric R. Canete.
16
Art. 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. In case of disagreement, the husband's decision
shall prevail, subject to recourse to the court by the wife for proper remedy, which
must be availed of within five years from the date of the contract implementing such
decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers
of administration. These powers do not include disposition or encumbrance without
authority of the court or the written consent of the other spouse. In the absence of
such authority or consent, the disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer on the part of the consenting
spouse and the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the court before the offer is
withdrawn by either or both offerors.
17
Rollo, pp.55-56.
18
Id. at 80-82.
19
RULE 26 ADMISSION BY ADVERSE PARTY
x x x x

Sec. 2. Implied admission. – Each of the matters of which an admission is requested

shall be deemed admitted unless, within a period designated in the request, which
shall not be less than fifteen (15) days after service thereof, or within such further
time as the court may allow on motion, the party to whom the request is directed files
and serves upon the party requesting the admission a sworn statement either denying
specifically the matters of which an admission is requested or setting forth in detail
the reasons why he cannot truthfully either admit or deny those matters.

Objections to any request for admission shall be submitted to the court by the party
requested within the period for and prior to the filing of his sworn statement as
contemplated in the preceding paragraph and his compliance therewith shall be
deferred until such objections are resolved, which resolution shall be made as early as
practicable.
20
RULE 34 JUDGMENT ON THE PLEADINGS

Section 1. Judgment on the pleadings. – Where an answer fails to tender an issue, or

otherwise admits the material allegations of the adverse party’s pleading, the court
may, on motion of that party, direct judgment on such pleading. However, in actions
for declaration of nullity or annulment of marriage or for legal separation, the
material facts alleged in the complaint shall always be proved.
21
Rollo, pp. 84-86.
22
Id. at 97-105.
23
Id. at 87.
24
Id. at 151-159; penned by Judge Ulric R. Cañete.
25
Herein respondent.
26
Herein petitioner.
27
In Civil Case No. MAN-2683.
28
Rollo, pp. 153-159.
29
Id. at 135-150; penned by Associate Justice Priscilla Baltazar-Padilla and
concurred in by Associate Justices Pampio A. Abarintos and Stephen C. Cruz.
30
The Gingoyons.
31
Herein respondent.
32
Rollo, pp. 144-149.
33
Id. at 270; Entry of Judgment in CA-G.R. CV No. 78971.
34
Id. at 116-133.
35
Id. at 160-181.
36
Id. at 192.
37
Citing Wood Technology Corporation v. Equitable Banking Corporation, 492 Phil.
106 (2005).
38
Citing Excelsa Industries, Inc. v. Court of Appeals, 317 Phil. 664 (1995).
39
Rollo, pp. 287-288.
40
Id. at 12.
41
Id. at 245-253.
42
Citing Bauermann v. Casas, 10 Phil. 386 (1908); Evangelista v. Dela Rosa, 76 Phil.
115 (1946); and Aquino v. Blanco, 79 Phil. 647 (1947).
43
RULES OF COURT, Rule 34, Section 1.
44
Id., Rule 35, Section 3.
45
Tan v. De la Vega, 519 Phil. 515, 527 (2006). Citation omitted.
46
Id. at 522.
47
Wood Technology Corporation v. Equitable Banking Corporation, supra note 37 at
114.
48
Tan v. De la Vega, supra note 45 at 528.
49
Land Bank of the Philippines v. Yatco Agricultural Enterprises, G.R. No. 172551,
January 15, 2014, 713 SCRA 370, 384.
50
Guanzon v. Hon. Montesclaros, 208 Phil. 171, 177 (1983); Strachan & Macmurray,
Ltd. v. Court of Appeals, 159 Phil. 126, 131 (1975); Luzon Rubber and
Manufacturing Co. v. Estaris, 152 Phil. 341, 349 (1973).
51
Bank of Commerce v. Radio Philippines Network, Inc., G.R. No. 195615, April 21,
2014.
52
Cruz v. Court of Appeals, 354 Phil. 1036, 1054 (1998).
2016

Philippine Supreme Court Jurisprudence > Year 2016 > June 2016 Decisions > G.R. No.
214399, June 28, 2016 - ARMANDO N. PUNCIA, Petitioner, v. TOYOTA
SHAW/PASIG, INC., Respondent.:

G.R. No. 214399, June 28, 2016 - ARMANDO N. PUNCIA, Petitioner, v. TOYOTA
SHAW/PASIG, INC., Respondent.

FIRST DIVISION

G.R. No. 214399, June 28, 2016

ARMANDO N. PUNCIA, Petitioner, v. TOYOTA SHAW/PASIG, INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated June 9, 2014
and the Resolution3 dated September 23, 2014 of the Court of Appeals (CA) in CA-G.R.
SP No. 132615, which annulled and set aside the Decision 4 dated February 14, 2013 and
the Resolution5 dated August 30, 2013 of the National Labor Relations Commission
(NLRC) in NLRC NCR CN. 10-15949-11/NLRC LAC No. 07-001991-12 and instead,
reinstated the Decision6 dated May 4, 2012 of the Labor Arbiter (LA) finding that
respondent Toyota Shaw/Pasig, Inc. (Toyota) validly dismissed petitioner Armando N.
Puncia (Puncia) for just cause.

The Facts

Puncia alleged that since 2004, he worked as a messenger/collector for Toyota and was
later on appointed on March 2, 2011 as a Marketing Professional7 tasked to sell seven
(7) vehicles as monthly quota.8 However, Puncia failed to comply and sold only one (1)
vehicle for the month of July and none for August,9 prompting Toyota to send him a
Notice to Explain.10 In reply,11 Puncia stated that as a trainee, he was only required to
sell three (3) vehicles per month; that the month of May has always been a lean month;
and that he was able to sell four (4) vehicles in the month of September. 12Thereafter, a
hearing was conducted but Puncia failed to appear despite notice.13chanrobleslaw

On October 18, 2011, Toyota sent Puncia a Notice of Termination,14 dismissing him on
the ground of insubordination for his failure to attend the scheduled hearing and justify
his absence.15 This prompted Puncia to file a complaint16 for illegal dismissal with
prayer for reinstatement and payment of backwages, unfair labor practice, damages, and
attorney's fees against Toyota and its officers, claiming, inter alia, that Toyota dismissed
him after discovering that he was a director of the Toyota-Shaw Pasig Workers Union-
Automotive Industry Worker's Alliance; and that he was terminated on the ground of
insubordination and not due to his failure to meet his quota as contained in the Notice to
Explain.17chanrobleslaw

In its defense, Toyota denied the harassment charges and claimed that there was a valid
cause to dismiss Puncia, considering his failure to comply with the company's strict
requirements on sales quota. It likewise stated that Puncia has consistently violated the
company rules on attendance and timekeeping as several disciplinary actions were
already issued against him.18chanrobleslaw

The LA Ruling

In a Decision19 dated May 4, 2012, the LA dismissed Puncia's complaint for lack of
merit, but nevertheless, ordered Toyota to pay Puncia his money claims consisting of his
earned commissions, 13thmonth pay for 2011, sick leave, and vacation leave
benefits.20chanrobleslaw

The LA found that Puncia was dismissed not because of his involvement in the labor
union, but was terminated for a just cause due to his inefficiency brought about by his
numerous violations of the company rules on attendance from 2006 to 2010 and his
failure to meet the required monthly quota.21This notwithstanding, the LA found Puncia
entitled to his money claims, considering that Toyota failed to deny or rebut his
entitlement thereto.22chanrobleslaw

Aggrieved, Puncia appealed23 to the NLRC.

The NLRC Ruling

In a Decision24 dated February 14, 2013, the NLRC reversed the LA ruling and,
accordingly, declared Puncia to have been illegally dismissed by Toyota, thus, entitling
him to reinstatement and backwages.25cralawred The NLRC found that Toyota illegally
dismissed Puncia from employment as there were no valid grounds to justify his
termination. Moreover, the NLRC observed that Toyota failed to comply with the due
process requirements as: first, the written notice served on the employee did not
categorically indicate the specific ground for dismissal sufficient to have given Puncia a
reasonable opportunity to explain his side, since the Intra-Company
Communication26 providing the company rules failed to explain in detail that Puncia's
deficiency merited the penalty of dismissal;27 and second, Puncia's dismissal was not
based on the same grounds cited in the Notice to Explain, since the ground indicated was
Puncia's failure to meet the sales quota, which is different from the ground stated in the
Notice of Termination, which is his unjustified absence during the scheduled
hearing.28chanrobleslaw

Both parties filed their separate motions for reconsideration,29 which were denied in a
Resolution30 dated August 30, 2013.

Aggrieved, Toyota filed a Petition for Certiorari31 before the CA, which was docketed
as CA-G.R. SP No. 132615 and was raffled to the First Division (CA-First Division). In
the same vein, Puncia filed his Petition for Certiorari32 before the CA, which was
docketed as CA-G.R. SP No. 132674 and was raffled to the Eleventh Division (CA-
Eleventh Division).33chanrobleslaw

The CA Proceedings

In a Resolution34 dated November 29, 2013, the CA-Eleventh Division dismissed

outright CA-G.R. SP No. 132674 on procedural grounds. Consequently, Puncia filed an
Omnibus Motion (For Consolidation and Reconsideration of Order of November 29,
2013)35 and a Supplement to the Omnibus Motion,36 seeking the consolidation of CA-
G.R. SP No. 132674 with CA-G.R. SP No. 132615.

In a Resolution37 dated January 24, 2014, the CA-First Division denied the motion for
consolidation on the ground that CA-G.R. SP No. 132674 was already dismissed by the
CA-Eleventh Division. Thereafter, and while CA-G.R. SP No. 132674 remained
dismissed, the CA-First Division promulgated the assailed Decision38 dated June 9,
2014 (June 9, 2014 Decision) in CA-G.R. SP No. 132615 annulling and setting aside the
NLRC ruling and reinstating that of the LA. It held that Toyota was able to present
substantial evidence in support of its contention that there was just cause in Puncia's
dismissal from employment and that it was done in compliance with due process,
considering that: (a) Puncia's repeated failure to meet his sales quota constitutes gross
inefficiency and gross neglect of duties; and (b) Puncia was afforded due process as he
was able to submit a written explanation within the period given to him by
Toyota.39chanrobleslaw

Dissatisfied, Puncia filed a motion for reconsideration,40 which the CA-First Division
denied in the assailed Resolution41 dated September 23, 2014 (September 23, 2014
Resolution).

Meanwhile, in a Resolution42 dated July 22, 2014, the CA-Eleventh Division

reconsidered its dismissal of CA-G.R. SP No. 132674, and accordingly, reinstated the
same and ordered Toyota to file its comment thereto.

In view of the foregoing, Puncia filed the instant petition43 mainly contending that the
rulings in CA-G.R. SP No. 132615, i.e., the assailed June 9, 2014 Decision and
September 23, 2014 Resolution, should be set aside and the case be remanded back to
the CA for consolidation with CA-G.R. SP No. 132674 so that both cases will be jointly
decided on the merits.44chanrobleslaw

For its part,45 Toyota maintained that the CA-First Division correctly promulgated its
June 9, 2014 Decision in CA-G.R. SP No. 132615, considering that at the time of
promulgation, there was no other pending case before the CA involving the same issues
and parties as CA-G.R. SP No. 132674 was dismissed by the CA-Eleventh Division on
November 29, 2013, and was only reinstated on July 22, 2014.46chanrobleslaw

The Issues Before the Court

The issues for the Court's resolution are (a) whether or not the CA-First Division
correctly promulgated its June 9, 2014 Decision in CA-G.R. SP No. 132615 without
consolidating the same with CA-G.R. SP No. 132674; and (b) whether or not Puncia was
dismissed from employment for just cause.

The Court's Ruling

The petition is denied.

At the outset, the Court notes that consolidation of cases is a procedure sanctioned by the
Rules of Court for actions which involve a common question of law or fact before the
court.47 It is a procedural device granted to the court as an aid in deciding how cases in
its docket are to be tried so that the business of the court may be dispatched
expeditiously and with economy while providing justice to the parties. 48chanrobleslaw

The rationale for consolidation is to have all cases, which are intimately related, acted
upon by one branch of the court to avoid the possibility of conflicting decisions being
rendered49 and in effect, prevent confusion, unnecessary costs,50 and delay.51 It is an
action sought to avoid multiplicity of suits; guard against oppression and abuse; clear
congested dockets; and to simplify the work of the trial court in order to attain justice
with the least expense and vexation to the parties-litigants.52chanrobleslaw

In order to determine whether consolidation is proper, the test is to check whether the
cases involve the resolution of common questions of law, related facts,53 or the same
parties.54 Consolidation is proper whenever the subject matter involved and the relief
demanded in the different suits make it expedient for the court to determine all of the
issues involved and adjudicate the rights of the parties by hearing the suits
together.55However, it must be stressed that an essential requisite of consolidation is
that the several actions which should be pending before the court, arise from the
same act, event or transaction, involve the same or like issues, and depend largely
or substantially on the same evidence.56 As succinctly stated in the rules, consolidation
is allowed when there are similar actions which are pending before the court57 - for
there is nothing to consolidate when a matter has already been resolved and the very
purpose of consolidation, to avoid conflicting decisions and multiplicity of suits,
rendered futile. The Court's pronouncement in Honoridez v. Mahinay,58 is instructive on
this matter, to wit:ChanRoblesVirtualawlibrary
Petitioners attempt to revive the issues in Civil Case No. CEB-16335 by moving for the
consolidation of the same with Civil Case No. CEB-23653. Under Section 1, Rule 31 of
the Rules of Court, only pending actions involving a common question of law or
fact may be consolidated. Obviously, petitioners cannot make out a case for
consolidation in this case since Civil Case No. CEB-16335, the case which petitioners
seek to consolidate with the case a quo, has long become final and executory; as such, it
cannot be re-litigated in the instant proceedings without virtually impeaching the
correctness of the decision in the other case. Public policy abhors such
eventuality.59 (Emphasis and underscoring supplied)
In the instant case, while there were indeed two (2) separate petitions filed before the CA
assailing the Decision dated February 14, 2013 and the Resolution dated August 30,
2013 of the NLRC in NLRC NCR CN. 10-15949-11/NLRC LAC No. 07-001991-
12, i.e., CA-G.R. SP No. 132615 and CA-G.R. SP No. 132674, it must nevertheless be
stressed that CA-G.R. SP No. 132674 was dismissed by the CA-Eleventh Division as
early as November 29, 2013 due to procedural grounds. This fact was even pointed out
by the CA-First Division in its Resolution60 dated January 24, 2014 when it held that
CA-G.R. SP No. 132674 could no longer be consolidated with CA-G.R. SP No. 132615
since the former case had already been dismissed. From that point until the CA-First
Division's promulgation of the assailed June 9, 2014 Decision in CA-G.R. SP No.
132615, no consolidation between CA-G.R. SP No. 132615 and CA-G.R. SP No.
132674 could take place mainly because the latter case remained dismissed during that
time. In other words, when the CA-First Division promulgated its ruling in CA-G.R. SP
No. 132615, it was the one and only case pending before the CA assailing the aforesaid
NLRC rulings. Therefore, the CA-First Division acted within the scope of its jurisdiction
when it promulgated its ruling in CA-G.R. SP No. 132615 without having the case
consolidated with CA-G.R. SP No. 132674, notwithstanding the latter case's
reinstatement after said promulgation.

It should be emphasized that the consolidation of cases is aimed to simplify the

proceedings as it contributes to the swift dispensation of justice. 61 As such, it is
addressed to the sound discretion of the court and the latter's action in consolidation will
not be disturbed in the absence of manifest abuse of discretion tantamount to an evasion
of a positive duty or a refusal to perform a duty enjoined by law, 62which is absent in this
case.

The foregoing notwithstanding, the Court deems it appropriate to look into the issue of
the validity of Puncia's dismissal so as to finally resolve the main controversy at hand.

In his petition, Puncia insists that the CA gravely erred in upholding his dismissal,
considering that the administrative proceeding against him was due to his failure to meet
his monthly sales quota, but he was dismissed on the ground of gross
insubordination.63 On the other hand, Toyota maintains that the CA correctly declared
Puncia's termination to be valid and in compliance with due process. 64chanrobleslaw

It is settled that "for a dismissal to be valid, the rule is that the employer must comply
with both substantive and procedural due process requirements. Substantive due process
requires that the dismissal must be pursuant to either a just or an authorized cause under
Articles 297, 298 or 299 (formerly Articles 282, 283, and 284)65 of the Labor Code.
Procedural due process, on the other hand, mandates that the employer must observe the
twin requirements of notice and hearing before a dismissal can be effected." 66 Thus, to
determine the validity of Puncia's dismissal, there is a need to discuss whether there was
indeed just cause for his termination.

In the instant case, records reveal that as a Marketing Professional for Toyota, Puncia
had a monthly sales quota of seven (7) vehicles from March 2011 to June 2011. As he
was having trouble complying with said quota, Toyota even extended him a modicum of
leniency by lowering his monthly sales quota to just three (3) vehicles for the months of
July and August 2011; but even then, he still failed to comply. 67In that six (6)-month
span, Puncia miserably failed in satisfying his monthly sales quota, only selling a measly
five (5) vehicles out of the 34 he was required to sell over the course of said period.
Verily, Puncia's repeated failure to perform his duties - i.e., reaching his monthly sales
quota - for such a period of time falls under the concept of gross inefficiency. In this
regard, case law instructs that "gross inefficiency" is analogous to "gross neglect of
duty," a just cause of dismissal under Article 297 of the Labor Code, for both involve
specific acts of omission on the part of the employee resulting in damage to the
employer or to his business.68 In Aliling v. Feliciano,69 the Court held that an employer is
entitled to impose productivity standards for its employees, and the latter's non-
compliance therewith can lead to his termination from
work, viz.:ChanRoblesVirtualawlibrary
[T]he practice of a company in laying off workers because they failed to make the work
quota has been recognized in this jurisdiction, x x x. In the case at bar, the petitioners'
failure to meet the sales quota assigned to each of them constitute a just cause of
their dismissal, regardless of the permanent or probationary status of their
employment. Failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to mean failure to attain work goals or
work quotas, either by failing to complete the same within the allotted reasonable
period, or by producing unsatisfactory results.70 (Emphases and underscoring
supplied)
Indisputably, Toyota complied with the substantive due process requirement as there
was indeed just cause for Puncia's termination.

Anent the issue of procedural due process, Section 2 (I), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code71 provides for the required standard of
procedural due process accorded to employees who stand to be terminated from work, to
wit:ChanRoblesVirtualawlibrary
Section 2. Standards of due process; requirements of notice. - In all cases of termination
of employment, the following standards of due process shall be substantially observed:

chanRoblesvirtualLawlibraryI. For termination of employment based on just causes as

defined in Article 282 [now Article 297] of the Labor Code:

chanRoblesvirtualLawlibrary
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to explain
his side;
(b) A hearing or conference during which the employee concerned, with the assistance
of counsel if the employee so desires, is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
The foregoing standards were then further refined in Unilever Philippines, Inc. v.
Rivera72 as follows:ChanRoblesVirtualawlibrary
To clarify, the following should be considered in terminating the services of employees:

chanRoblesvirtualLawlibrary(1) The first written notice to be served on the

employees should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to submit their
written explanation within a reasonable period. "Reasonable opportunity" under the
Omnibus Rules means every kind of assistance that management must accord to the
employees to enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge
against the employees. A general description of the charge will not suffice. Lastly,
the notice should specifically mention which company rules, if any, are violated and/or
which among the grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and
clarify their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover,
this conference or hearing could be used by the parties as an opportunity to come to an
amicable settlement.

(3) After determining that termination of employment is justified, the employers

shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered;
and (2) grounds have been established to justify the severance of their
employment.73 (Emphases and underscoring supplied)
In this case, at first glance it seemed like Toyota afforded Puncia procedural due process,
considering that: (a) Puncia was given a Notice to Explain;74 (b) Toyota scheduled a
hearing on October 17, 2011 regarding the charge stated in the Notice to Explain; 75 (c)
on the date of the hearing, Puncia was able to submit a letter 76 addressed to Toyota's
vehicle sales manager explaining his side, albeit he failed to attend said hearing; and (d)
Toyota served a written Notice of Termination77 informing Puncia of his dismissal from
work. However, a closer look at the records reveals that in the Notice to Explain, Puncia
was being made to explain why no disciplinary action should be imposed upon him for
repeatedly failing to reach his monthly sales quota, which act, as already adverted to
earlier, constitutes gross inefficiency. On the other hand, a reading of the Notice of
Termination shows that Puncia was dismissed not for the ground stated in the Notice to
Explain, but for gross insubordination on account of his non-appearance in the scheduled
October 17, 2011 hearing without justifiable reason. In other words, while Toyota
afforded Puncia the opportunity to refute the charge of gross inefficiency against him,
the latter was completely deprived of the same when he was dismissed for gross
insubordination - a completely different ground from what was stated in the Notice to
Explain. As such, Puncia's right to procedural due process was violated.

Hence, considering that Toyota had dismissed Puncia for a just cause, albeit failed to
comply with the proper procedural requirements, the former should pay the latter
nominal damages in the amount of P30,000.00 in accordance with recent
jurisprudence.78chanrobleslaw

WHEREFORE, the petition is DENIED. The Decision dated June 9, 2014 and the
Resolution dated September 23, 2014 of the Court of Appeals in CA-G.R. SP No.
132615 are hereby AFFIRMED with MODIFICATION in that respondent Toyota
Shaw/Pasig, Inc. is ORDERED to indemnify petitioner Armando N. Puncia nominal
damages in the amount of P30,000.00 for dismissing the latter in violation of his right to
procedural due process, but for a just cause.

SO ORDERED.chanRoblesvirtualLawlibrary

Sereno, C.J., Leonardo-De Castro, Bersamin, and Caguioa, JJ., concur.

Endnotes:

1
Rollo, pp. 10-30.
2
Id. at 34-46. Penned by Associate Justice Normandie B. Pizarro with Presiding Justice
Andres B. Reyes, Jr. and Associate Justice Manuel M. Barrios concurring.
3
Id. at 48-49.
4
Id. at 84-97. Penned by Presiding Commissioner Leonardo L. Leonida with
Commissioners Dolores M. Peralta-Beley and Mercedes R. Posada-Lacap concurring.
5
Id. at 100-108. Penned by Commissioner Mercedes R. Posada-Lacap with
Commissioner Dolores M. Peralta-Beley concurring, and certified by Presiding
Commissioner Herminio V. Suelo.
6
Id. at 58-65. Penned by Labor Arbiter Antonio R. Macam.
7
Id. at 35.
8
Id. at 37.
9
Id.
10
Dated October 15, 2011. Id. at 328.
11
See letter-memorandum dated October 17, 2011; id. at 198.
12
Id. See also id. at 38.
13
Id. at 37.
14
Id. at 199.
15
Id.
16
Not attached to the rollo.
17
Rollo, pp. 85-87.
18
See Reply to Complainant's Position Paper dated March 14, 2012; id. at 222-223 and
Opposition to the Memorandum of Appeal dated July 4, 2012; id. at 333-335.
19
Id. at 58-65.
20
Id. at 65.
21
Id. at 61-63.
22
Id. at 64.
23
See Memorandum of Appeal dated June 13, 2012; id. at 66-82.
24
Id. at 84-97.
25
cralawred Id. at 96.
26
Id. at 319.
27
Id. at 90-91.
28
Id. at 94.
29
See Puncia's Motion for Partial Reconsideration dated March 6, 2013; id. at 152-156.
Toyota's motion for reconsideration is not attached to the rollo.
30
Id. at 100-108.
31
Dated October 19, 2013. Id. at 376-411.
32
Dated November 13,2013. Id. at 416-437.
33
See id. at 10-11.
34
Id. at 439. Issued by Division Clerk of Court Atty. Celedonia M. Ogsimer.
35
Dated December 26, 2013. Id. at 255-265.
36
Dated December 27, 2013. Id. at 344-345.
37
Id. at 440. Issued by Division Clerk of Court Atty. Anita Jamerlan Rey.
38
Id. at 34-45.
39
See id. at 41-45.
40
Dated June 23, 2014: id. at 454-459.
41
Id. at 48-49.
42
Id. at 496-497. Penned by Associate Justice Eduardo B. Peralta, Jr. with Associate
Justices Vicente S.E. Veloso and Jane Aurora C. Lantion concurring.
43
Id. at 10-30.
44
See id. at 22 and 29.
45
See Comment dated April 28, 2015; id. at 354-373.
46
Id. at 361-363.
47
Rule 31, Section 1 of the RULES OF COURT states:ChanRoblesVirtualawlibrary
Section 1. Consolidation. - When actions involving a common question of law or fact
are pending before the court, it may order a joint hearing or trial of any or all the matters
in issue in the actions; it may order all the actions consolidated; and it may make such
orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.
48
Producers Bank of the Philippines v. Excelsa Industries, Inc., 685 Phil. 694, 700
(2012).
49
Deutsche Bank AG v. CA, 683 Phil. 80, 93 (2012), citing Benguet Corporation Inc. v.
CA, 247-A Phil. 356 (1988).
50
See Herrera, Oscar M., Remedial Law (Revised Edition), 1994 Ed., pp. 48-49.
51
RULES OF COURT, Rule 31, Section 1.
52
Deutsche Bank AG v. CA, supra note 49, at 94-95.
53
See Herrera, Oscar M., Remedial Law (Revised Edition), 1994 Ed., p. 48, citing Active
Wood Products Co., Inc. v. CA, 260 Phil. 825, 830 (1990).
54
Section 3 (a), Rule III of the 2009 Internal Rules of the Court of Appeals has
forthrightly mandated the consolidation of related cases assigned to different
Justices, viz.:ChanRoblesVirtualawlibrary
Section 3. Consolidation of Cases. — When related cases are assigned to different
Justices, they shall be consolidated and assigned to one Justice.

(a) Upon motion of a party with notice to the other party/ies, or at the instance of the
Justice to whom any or the related cases is assigned, upon notice to the
parties, consolidation shall ensue when the cases involve the same parties and/or
related questions of fact and/ or law. (Emphasis supplied)
55
Deutsche Bank AG v. CA, supra note 49, at 91.
56
Philippine National Bank v. Gotesco Tyan Ming Development, Inc., 606 Phil. 806, 812
(2009), citing Teston v. Development Bank of the Philippines, 511 Phil. 221, 229 (2005).
57
RULES OR COURT, Rule 31, Section 1.
58
504 Phil. 204 (2005).
59
Id. at 212-213.
60
Rollo, p. 440.
61
See Domdom v. Sandiganbayan, 627 Phil. 341, 349 (2010).
62
See Deutsche Bank AG v. CA, supra note 49, at 97-98.
63
See rollo, p. 27.
64
See Comment dated April 28, 2015; id. at 355-356 and 363.
65
See Department of Labor and Employment Department Advisory No. 01, Series of
2015, entitled "RENUMBERING OF THE LABOR CODE OF THE PHILIPPINES, AS
AMENDED," approved on April 21, 2015.
66
Alps Transportation v. Rodriguez, 711 Phil. 122, 129 (2013); citations omitted.
67
See rollo, pp. 36-37.
68
See Aliling v. Feliciano, 686 Phil. 889, 910 (2012), citing Lim v. NLRC, 328 Phil. 843
(1996).
69
Id.
70
Id. at 911, citing Leonardo v. NLRC, 389 Phil. 118, 126-127.
71
As amended by DOLE Department Order No. 009-97 entitled "AMENDING THE
RULES IMPLEMENTING BOOK V OF THE LABOR CODE AS AMENDED"
approved on May 1, 1997.
72
710 Phil. 124 (2013).
73
Id. at 136-137, citing King of Kings Transport, Inc. v. Mamac, 553 Phil. 108, 115-116
(2007).
74
Rollo, p. 328.
75
Id.
76
Id. at 198.
77
Id. at 199.
78
See Sang-an v. Equator Knights Detective and Security Agency. Inc., 703 Phil. 492,
503 (2013), citing Agabon v. NLRC, 485 Phil. 248 (2004).
2017

Philippine Supreme Court Jurisprudence > Year 2017 > April 2017 Decisions > G.R. No.
197358, April 05, 2017 - BUTUAN DEVELOPMENT CORPORATION (BDC), Petitioner,
v. THE TWENTY-FIRST DIVISION OF THE HONORABLE COURT OF APPEALS
(MINDANAO STATION), MAX ARRIOLA, JR., DE ORO RESOURCES, INC. (DORI)
AND LOUIE A. LIBARIOS, Respondents.:

G.R. No. 197358, April 05, 2017 - BUTUAN DEVELOPMENT CORPORATION (BDC),
Petitioner, v. THE TWENTY-FIRST DIVISION OF THE HONORABLE COURT OF
APPEALS (MINDANAO STATION), MAX ARRIOLA, JR., DE ORO RESOURCES,
INC. (DORI) AND LOUIE A. LIBARIOS, Respondents.

THIRD DIVISION

G.R. No. 197358, April 05, 2017

BUTUAN DEVELOPMENT CORPORATION (BDC), Petitioner, v. THE TWENTY-

FIRST DIVISION OF THE HONORABLE COURT OF APPEALS (MINDANAO
STATION), MAX ARRIOLA, JR., DE ORO RESOURCES, INC. (DORI) AND
LOUIE A. LIBARIOS, Respondents.

DECISION

REYES, J.:

This is a petition for certiorari1 under Rule 65 of the Rules of Court seeking to annul and set
aside the Decision2 dated January 14, 2011 and Resolution3 dated May 24, 2011 issued by
the Court of Appeals (CA) in CA-G.R. SP No. 01473.

The Facts
On March 31, 1966, Butuan Development Corporation (BDC), which was then still in the
process of incorporation, through its then President Edmundo Satorre (Satorre), purchased
from the Spouses Jose and Socorro Sering (Spouses Sering) a 7.6923-hectare parcel of land
situated in Butuan City (subject property).4 Thus, on January 28, 1969, the Registry of Deeds
for Butuan City issued Transfer Certificate of Title (TCT) No. RT-47245 in the name of
BDC.6

On May 5, 1998, Max L. Arriola, Jr. (Max Jr.), representing himself as the Chairman of
BDC and armed with a duly notarized Resolution7 of the BDC Board of Directors therefor,
mortgaged the subject property to De Oro Resources, Inc. (DORI) and its President Louie A.
Libarios (Libarios).8

On May 13, 2002, Satorre, together with Ma. Laurisse Satorre-Gabor, Liza Therese Satorre-
Balansag, Edmundo C. Satorre II, and Leslie Mae Satorre-King, executed the Articles of
Incorporation9 of BDC. The Securities and Exchange Commission approved the Articles of
Incorporation and issued the Certificate of Incorporation10 of BDC on May 23, 2002.

On August 23, 2005, BDC filed a complaint for declaration of nullity of real estate
mortgage11 (REM) with the Regional Trial Court (RTC) of Agusan del Norte and Butuan
City against Max Jr., Libarios, and DORI (collectively, the respondents), and Casilda L.
Arriola, Rebecca J. Arriola, and Joseph L. Arriola. It alleged that, sometime in 2004, it
discovered that the owner's duplicate copy of TCT No. RT-4724 was missing and efforts to
locate the same proved futile. However, it subsequently discovered that the owner's duplicate
copy of TCT No. RT-4724 was already in Libario's possession, pursuant to the REM
executed by the Arriolas who misrepresented themselves as the owners and directors of
BDC.12 Accordingly, claiming that the said REM was a nullity, BDC prayed that the same be
nullified.13

In their answer,14 Libarios and DORI denied that the Arriolas misrepresented themselves as
the directors of BDC since, at the time of the execution of the REM, the Arriolas had
possession of the subject property and the owner's duplicate copy of TCT No. RT-
4724.15 Further, the tax declaration over the subject property filed with the Butuan City
Assessor's Office indicated that Max Arriola, Sr. (Max Sr.) was the administrator of the
subject property.16

As special and affirmative defense, Libarios and DORI claimed that the complaint filed by
BDC should be dismissed outright for failing to state a cause of action since at the time of
the execution of the REM on May 5, 1998, BDC did not yet exist, having been incorporated
only on May 23, 2002, and, hence, could not have claimed ownership of the subject
property.17
Max Jr., in his Answer,18 echoed the foregoing contentions set forth by Libarios and DORI
and, additionally, claimed that the owner's duplicate copy of TCT No. RT-4724, from the
time it was issued on January 28, 1969, had been in the possession of their family since it
was his father Max Sr. who actually paid for the acquisition of the subject property.19

Ruling of the RTC

On February 22, 2006, the RTC heard the respondents' special and affirmative defense and,
thereafter, directed the parties to submit their respective memoranda.20

On August 11, 2006, the RTC issued an Order,21 the decretal portion of which
reads:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, the special/affirmative defenses put forward by the
defendants cannot be given due consideration for lack of merit.

SO ORDERED.22
The RTC opined that, taking into account BDC's allegation that it purchased the subject
property while it was still in the process of incorporation and, thus, obtained title to the same
in its name, any act which amounts to alienation of the subject property done by any person
other than the corporation itself, through its Board of Directors, shall give rise to violation of
BDC's rights. The respondents filed their respective motions for reconsideration23 of the
Order dated August 11, 2006, but it was denied by the RTC in its Order 24 dated November
24, 2006, the dispositive portion of which reads:chanRoblesvirtualLawlibrary
WHEREFORE, in the light of the foregoing, the motion for reconsideration is
hereby DENIED for lack of merit.

SO ORDERED.25
The respondents then filed a petition for certiorari26 with the CA, claiming that the RTC
gravely abused its discretion in brushing aside their special and affirmative defense. The
respondents likewise prayed for the issuance of a temporary restraining order and/or a writ of
preliminary injunction. The respondents maintained that BDC, at the time of the execution of
the REM, was not yet incorporated and, hence, had no right to hold a property in its own
name.

Ruling of the CA

Consequently, on January 14, 2011, the CA rendered the herein assailed Decision; 27 which
declared:chanRoblesvirtualLawlibrary
WHEREFORE, the instant petition is GRANTED. The assailed Orders are SET ASIDE and
a new one issued DISMISSING the Complaint for failure to state a cause of action.

SO ORDERED.28
The CA opined that corporate existence begins only from the moment a certificate of
incorporation is issued, and, thus, BDC had no corporate existence and juridical personality
when it purchased the subject property. Thus, the CA held that, having no right over the
subject property, no cause of action could have accrued in favor of BDC when the subject
property was mortgaged to Libarios and DORI.29

BDC sought a reconsideration30 of the Decision dated January 14, 2011, but it was denied by
the CA in its Resolution31 dated May 24, 2011, thus:chanRoblesvirtualLawlibrary
ACCORDINGLY, the motion for reconsideration is hereby DENIED for lack of merit.

SO ORDERED.32
Hence, this petition.

BDC maintains that it has a cause of action against the respondents notwithstanding that it
was not yet incorporated at the time of the execution of the REM on May 5, 1998. 33 Further,
BDC alleges that Libarios and DORI are estopped from questioning the legal personality of
BDC; it claims that DORI and Libarios, at the time of the execution of the REM, treated
BDC as a corporation and may no longer raise the fact that BDC was not yet incorporated at
the time they entered into the mortgage.34

On the other hand, the respondents, in their Comment,35 maintain that this petition
for certiorari is not the proper remedy to assail the CA's Decision dated January 14, 2011
and Resolution dated May 24, 2011. They aver that BDC should have filed a petition for
review on certiorari under Rule 45 of the Rules of Court instead.36 In any case, the
respondents claim that the CA did not commit any abuse of discretion when it set aside, the
RTC's Orders dated August 11, 2006 and November 24, 2006.37 They point out that BDC
was not yet incorporated at the time of the execution of the REM and, hence, could not hold
title to any property in its own name.38

Issue

Essentially, the issue set forth for the Court's resolution is whether the CA gravely abused its
discretion when it set aside the RTC's Orders dated August 11, 2006 and November 24,
2006, ruling that BDC's complaint failed to state a cause of action.

Ruling of the Court

The petition is granted.

Prefatorily, there is a need to address the respondents' claim that BDC should have filed an
appeal under Rule 45 of the Rules of Court instead of filing this certiorari suit.

The CA's disposition is a final judgment, as distinguished from an interlocutory order, as the
same finally disposed of the petition for certiorari filed by the respondents and left nothing
more to be done by the CA in respect thereto. Sections 1 and 2 of Rule 45 essentially states
that a party desiring to appeal by certiorari from a judgment or a final order of the CA
may file with this Court a verified petition for review on certiorari within 15 days from
notice of the judgment or final order.

BDC's counsel received a copy of the CA's Resolution dated May 24, 2011, denying
reconsideration of the Decision dated January 14, 2011, on May 31, 2011.39 Thus, BDC only
had until June 15, 2011 within which to file with this Court a petition for review
on certiorari assailing the CA's Decision dated January 14, 2011 and Resolution dated May
24, 2011.

However, BDC failed to file a petition for review on certiorari within the period to do so
and, instead, opted to file a petition for certiorari under Rule 65 with this Court on July 4,
2011. Evidently, this petition for certiorari is merely being used by BDC as a substitute for
the lost remedy of appeal under Rule 45.

A party cannot substitute the special civil action of certiorari under Rule 65 of the Rules of
Court for the remedy of appeal. The existence and availability of the right of appeal are
antithetical to the availability of the special civil action of certiorari.40 Remedies of appeal
(including petitions for review) and certiorariare mutually exclusive, not alternative or
successive. Hence, certiorari is not and cannot be a substitute for an appeal, especially if
one's own negligence or error in one's choice of remedy occasioned such loss or lapse. One
of the requisites of certiorari is that there be no available appeal or any plain, speedy and
adequate remedy. Where an appeal is available, certiorari will not prosper, even if the
ground therefor is grave abuse of discretion.41

Nevertheless, the acceptance of a petition for certiorari, as well as the grant of due course
thereto is, generally, addressed to the sound discretion of the court. The provisions of the
Rules of Court, which are technical rules, may be relaxed in certain exceptional
situations.42 While a petition for certiorari is dismissible for being the wrong remedy, there
are exceptions to this rule, to wit: (a) when public welfare and the advancement of public
policy dictates; (b) when the broader interest of justice so requires; (c) when the writs issued
are null and void; or (d) when the questioned order amounts to an oppressive exercise of
judicial authority.43

In view of the factual circumstances in this case, the dismissal of the petition
for certiorari would result in the miscarriage of justice. On account of the CA's unwarranted
dismissal of its complaint, as will be explained later, BDC was effectively denied due
process as it was unduly prevented from presenting evidence to prove its claim. The CA
arbitrarily directed the dismissal of BDC's complaint on the ground that the complaint failed
to state a cause of action.

One of the grounds for the dismissal of a complaint is the failure of the pleading asserting
the claim to state a cause of action.44 The elements of a cause of action are: (1) a right in
favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such right; and (3)
act or omission on the part of such defendant in violation of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff for which the latter
may maintain an action for recovery of damages or other appropriate relief.45

In resolving whether the complaint states a cause of action or not, only the facts alleged in
the complaint are considered. The test is whether the court can render a valid judgment on
the complaint based on the facts alleged and the prayer asked for. Only ultimate facts, not
legal conclusions or evidentiary facts, are considered for purposes of applying the test. 46

In this case, BDC's complaint, inter alia, alleged that:chanRoblesvirtualLawlibrary

5. Sometime on March 31, 1996, while the [BDC] was still in the process of
incorporation, thru its then President and General Manager, [SATORRE], purchased
a parcel of land from the [Spouses Sering], x x x as evidenced by a Deed of Absolute Sale,
machine copy of which is hereto attached as Annex "B" hereof;

6. Subsequent to the execution of Annex "B" hereof, [TCT] bearing No. RT-4724 was
issued unto and in favor of the [BDC] x x x;

7. [BDC], thru its legitimate officers, has been paying the real estate taxes due on the
aforesaid parcel of land, and not the "[ARRIOLAs]" who are not in any way connected
with the legitimate, genuine and authentic plaintiff x x x;

x x x x

10. Sometime in the year 2004, [BDC] discovered that the owner's copy of [TCT] bearing
No. RT-4724 was missing and efforts to locate the same proved futile as it could nowhere be
found, hence [BDC] through counsel filed a petition in Court for issuance of the owner's
copy of said title;

11. To [BDC's] great surprise, it surfaced that the aforesaid certificate of title is now in the
possession of [Libarios] as it appears that the land covered by said title was mortgaged to
[DORI] by the defendant "ARRIOLAs" who misrepresented themselves as owners and
directors of [BDC.]47 (Emphasis ours)
Based on the foregoing allegations, BDC's complaint sufficiently stated a cause of action for
declaration of nullity of the REM. Basically, BDC alleged in its complaint that it is the
owner of the subject property as evidenced by TCT No. RT-4724, which was issued in its
name after it purchased the subject property, through Satorre, from the Spouses Sering on
March 31, 1966. It bears stressing that a certificate of title issued is an absolute and
indefeasible evidence of ownership of the property in favor of the person whose name
appears therein.48 BDC further alleged that the subject property was mortgaged to DORI and
Libarios without their knowledge or consent and that the Arriolas were not in any way
connected with BDC.

What is clear is that the issues of whether the REM constituted over the subject property is
void and whether BDC has a right to the subject property at the time of the execution of the
REM would have been best resolved during the trial.

The. respondents' affirmative defense that BDC, at the time of the execution of the REM,
had no right to hold the subject property in its name being merely an unincorporated
association, if at all, amounts to an allegation that BDC has no cause of action against the
respondents. However, failure to state a cause of action is different from lack of cause of
action. Failure to state a cause of action refers to the insufficiency of the pleading, and is a
ground for dismissal under Rule 16 of the Rules of Court. On the other hand, lack of cause
action refers to a situation where the evidence does not prove the cause of action alleged in
the pleading.49 The remedy in the first is to move for the dismissal of the pleading, while the
remedy in the second is to demur to the evidence.50

WHEREFORE, in consideration of the foregoing disquisitions, the petition is GRANTED.

The Decision dated January 14, 2011 and Resolution dated May 24, 2011 of the Court of
Appeals in CA-G.R. SP No. 01473 are hereby REVERSED and SET ASIDE. The Orders
dated August 11, 2006 and November 24, 2006 of the Regional Trial Court of Agusan del
Norte and Butuan City, Branch 5, in SP Civil Case No. 1259 are REINSTATED. The case
is remanded to the trial court for further proceedings.

SO ORDERED.

Velasco, Jr., Bersamin, Jardeleza, and Tijam, JJ., concur.

Endnotes:

1
Rollo, pp. 5-21.
2
Penned by Associate Justice Edgardo T. Lloren, with Associate Justices Romulo V. Borja
and Ramon Paul L. Hernando concurring; id. at 219-226.
3
Id. at 270-271.
4
Id. at 7.
5
Id. at 45-46.
6
Id. at 291.
7
Id. at 50.
8
Id. at 48-49.
9
Id. at 52-56.
10
Id. at 57.
11
Id. at 78-87.
12
Id. at 81.
13
Id. at 85.
14
Id. at 118-129.
15
Id. at 123.
16
Id.
17
Id. at 126.
18
Id. at 143-153.
19
Id. at 147.
20
Id. at 29.
21
Rendered by Presiding Judge Augustus L. Calo; id. at 42-43.
22
Id. at 43.
23
Id. at 180-186; 187-188.
24
Id. at 44.
25
Id.
26
Id. at 23-41.
27
Id. at 219-226.
28
Id. at 225.
29
Id. at 224-225.
30
Id. at 227-238.
31
Id. at 270-271.
32
Id. at 271.
33
Id. at 13.
34
Id. at 14-15.
35
Id. at 290-317.
36
Id. at 311-312.
37
Id. at 298.
38
Id. at 299.
39
Id. at 7.
40
Heirs of Placido Miranda v. CA, 325 Phil. 674, 685 (1996).
41
Spouses Leynes v. Former Tenth Division of the Court of Appeals, et al., 655 Phil. 25, 43
(2011), citing Madrigal Transport, Inc. v. Lapanday Holdings Corp., 479 Phil. 768, 782-783
(2004).
42
See Spouses Leynes v. Former Tenth Division of the Court of Appeals, et al., id. at 41.
43
Tanenglian v. Lorenzo, et al., 573 Phil. 472, 488 (2008).
44
RULES OF COURT, Rule 16, Section 1 (g).
45
Philippine Daily Inquirer, et al. v. Judge Alameda, et al., 573 Phil. 338, 345-346 (2008).
46
Macaslang v. Spouses Zamora, 664 Phil. 337, 351 (2011).
47
Rollo, pp. 79-81.
48
Serrano v. Spouses Gutierrez, 537 Phil. 187, 197 (2006).
49
Macaslang v. Spouses Zamora, supra note 46, at 353.
50
See REGALADO, REMEDIAL LAW COMPENDIUM, Vol. 1, 9th Revised Ed. (2005), p.
182.
CRIMINAL LAW

2007

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. 06-11-5-SC

October 2, 2007

RULE ON DNA EVIDENCE

RESOLUTION

Acting on the recommendation of the Chairperson and Members of the

Subcommittee on Evidence submitting for this Court's consideration and approval
the proposed Rule on DNA Evidence, the Court Resolved to APPROVE the same.

This Resolution shall take effect on October 15, 2007 following its publication in a
newspaper of general circulation.

October 2, 2007.

(Sgd.)
RENATO S. PUNO
Chief Justice
(Sgd.)
LEONARO A. QUISUMBING
Associate Justice

(Sgd.)
CONSUELO YNARES-SANTIAGO
Associate Justice

(Sgd.)
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

(Sgd.)
ANTONIO T. CARPIO
Associate Justice

(Sgd.)
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice

(Sgd.)
RENATO C. CORONA
Associate Justice

(Sgd.)
CONCHITA CARPIO MORALES
Associate Justice

(Sgd.)
ADOLFO S. AZCUNA
Associate Justice

(Sgd.)
DANTE O. TINGA
Associate Justice

(Sgd.)
MINITA V. CHICO-NAZARIO
Associate Justice

(Sgd.)
CANCIO C. GARCIA
Associate Justice

(Sgd.)
PRESBITERO J. VELASCO, JR.
Associate Justice

(Sgd.)
ANTONIO EDUARDO B. NACHURA
Associate Justice

(Sgd.)
RUBEN T. REYES
Associate Justice

RULE ON DNA EVIDENCE

Section. 1. Scope. - This Rule shall apply whenever DNA evidence, as defined
in Section 3 hereof, is offered, used, or proposed to be offered or used as evidence
in all criminal and civil actions as well as special proceedings. chan robles virtual
law library
Sec. 2. Application of other Rules on Evidence. - In all matters not specifically
covered by this Rule, the Rules of Court and other pertinent provisions of law on
evidence shall apply. chanroblesvirtualawlibrary

Sec. 3. Definition of Terms. - For purposes of this Rule, the following terms shall
be defined as follows:

(a) "Biological sample" means any organic material originating from a person's
body, even if found in inanimate objects, that is susceptible to DNA testing. This
includes blood, saliva and other body fluids, tissues, hairs and bones;

(b) "DNA" means deoxyribonucleic acid, which is the chain of molecules found in
every nucleated cell of the body. The totality of an individual's DNA is unique for
the individual, except identical twins;

(c) "DNA evidence" constitutes the totality of the DNA profiles, results and other
genetic information directly generated from DNA testing of biological samples;

(d) "DNA profile" means genetic information derived from DNA testing of a
biological sample obtained from a person, which biological sample is clearly
identifiable as originating from that person; chan robles virtual law library

(e) "DNA testing" means verified and credible scientific methods which include
the extraction of DNA from biological samples, the generation of DNA profiles
and the comparison of the information obtained from the DNA testing of biological
samples for the purpose of determining, with reasonable certainty, whether or not
the DNA obtained from two or more distinct biological samples originates from
the same person (direct identification) or if the biological samples originate from
related persons (kinship analysis); and

(f) "Probability of Parentage" means the numerical estimate for the likelihood of
parentage of a putative parent compared with the probability of a random match of
two unrelated individuals in a given population. chan robles virtual law library
Sec. 4. Application for DNA Testing Order. - The appropriate court may, at any
time, either motu proprio or on application of any person who has a legal interest
in the matter in litigation, order a DNA testing. Such order shall issue after due
hearing and notice to the parties upon a showing of the following:
chanroblesvirtualawlibrary

(a) A biological sample exists that is relevant to the case;

(b) The biological sample:cralaw

(i) was not previously subjected to the type of DNA testing now requested; or

(ii) was previously subjected to DNA testing, but the results may require
confirmation for good reasons;

(c) The DNA testing uses a scientifically valid technique;

(d) The DNA testing has the scientific potential to produce new information that is
relevant to the proper resolution of the case; and chan robles virtual law library

(e) The existence of other factors, if any, which the court may consider as
potentially affecting the accuracy or integrity of the DNA testing.

This Rule shall not preclude a DNA testing, without need of a prior court order, at
the behest of any party, including law enforcement agencies, before a suit or
proceeding is commenced.

Sec. 5. DNA Testing Order. - If the court finds that the requirements in Section 4
hereof have been complied with, the court shall -
(a) Order, where appropriate, that biological samples be taken from any person or
crime scene evidence;

(b) Impose reasonable conditions on DNA testing designed to protect the integrity
of the biological sample, the testing process and the reliability of the test results,
including the condition that the DNA test results shall be simultaneously disclosed
to parties involved in the case; and

(c) If the biological sample taken is of such an amount that prevents the conduct of
confirmatory testing by the other or the adverse party and where additional
biological samples of the same kind can no longer be obtained, issue an order
requiring all parties to the case or proceedings to witness the DNA testing to be
conducted.

An order granting the DNA testing shall be immediately executory and shall not be
appealable. Any petition for certiorari initiated therefrom shall not, in any way,
stay the implementation thereof, unless a higher court issues an injunctive order.
The grant of a DNA testing application shall not be construed as an automatic
admission into evidence of any component of the DNA evidence that may be
obtained as a result thereof. chan robles virtual law library

Sec. 6. Post-conviction DNA Testing. - Post-conviction DNA testing may be

available, without need of prior court order, to the prosecution or any person
convicted by final and executory judgment provided that (a) a biological sample
exists, (b) such sample is relevant to the case, and (c) the testing would probably
result in the reversal or modification of the judgment of conviction. chan robles
virtual law library

Sec. 7. Assessment of probative value of DNA evidence. - In assessing the

probative value of the DNA evidence presented, the court shall consider the
following:cralaw
(a) The chain of custody, including how the biological samples were collected,
how they were handled, and the possibility of contamination of the samples;

(b) The DNA testing methodology, including the procedure followed in analyzing
the samples, the advantages and disadvantages of the procedure, and compliance
with the scientifically valid standards in conducting the tests;

(c) The forensic DNA laboratory, including accreditation by any reputable

standards-setting institution and the qualification of the analyst who conducted the
tests. If the laboratory is not accredited, the relevant experience of the laboratory in
forensic casework and credibility shall be properly established; and

(d) The reliability of the testing result, as hereinafter provided.

The provisions of the Rules of Court concerning the appreciation of evidence shall
apply suppletorily. chan robles virtual law library

Sec. 8. Reliability of DNA Testing Methodology. - In evaluating whether the

DNA testing methodology is reliable, the court shall consider the following: chan
robles virtual law library

(a) The falsifiability of the principles or methods used, that is, whether the theory
or technique can be and has been tested;

(b) The subjection to peer review and publication of the principles or methods;

(c) The general acceptance of the principles or methods by the relevant scientific
community;

(d) The existence and maintenance of standards and controls to ensure the
correctness of data generated;

(e) The existence of an appropriate reference population database; and

(f) The general degree of confidence attributed to mathematical calculations used
in comparing DNA profiles and the significance and limitation of statistical
calculations used in comparing DNA profiles. chan robles virtual law library

Sec. 9. Evaluation of DNA Testing Results. - In evaluating the results of DNA

testing, the court shall consider the following: chan robles virtual law library

(a) The evaluation of the weight of matching DNA evidence or the relevance of
mismatching DNA evidence;

(b) The results of the DNA testing in the light of the totality of the other evidence
presented in the case; and that chan robles virtual law library

(c) DNA results that exclude the putative parent from paternity shall be conclusive
proof of non-paternity. If the value of the Probability of Paternity is less than
99.9%, the results of the DNA testing shall be considered as corroborative
evidence. If the value of the Probability of Paternity is 99.9% or higher, there shall
be a disputable presumption of paternity.

Sec. 10. Post-conviction DNA Testing. Remedy if the Results Are Favorable to the
Convict. - The convict or the prosecution may file a petition for a writ of habeas
corpus in the court of origin if the results of the post-conviction DNA testing are
favorable to the convict.

In case the court, after due hearing, finds the petition to be meritorious, it shall
reverse or modify the judgment of conviction and order the release of the convict,
unless continued detention is justified for a lawful cause.

A similar petition may be filed either in the Court of Appeals or the Supreme
Court, or with any member of said courts, which may conduct a hearing thereon or
remand the petition to the court of origin and issue the appropriate orders.
Sec. 11. Confidentiality. - DNA profiles and all results or other information
obtained from DNA testing shall be confidential. Except upon order of the court, a
DNA profile and all results or other information obtained from DNA testing shall
only be released to any of the following, under such terms and conditions as may
be set forth by the court: chan robles virtual law library

(a) Person from whom the sample was taken;

(b) Lawyers representing parties in the case or action where the DNA evidence is
offered and presented or sought to be offered and presented;

(c) Lawyers of private complainants in a criminal action;

(d) Duly authorized law enforcement agencies; and

(e) Other persons as determined by the court.

Whoever discloses, utilizes or publishes in any form any information concerning a

DNA profile without the proper court order shall be liable for indirect contempt of
the court wherein such DNA evidence was offered, presented or sought to be
offered and presented.

Where the person from whom the biological sample was taken files a written
verified request to the court that allowed the DNA testing for the disclosure of the
DNA profile of the person and all results or other information obtained from the
DNA testing, the same may be disclosed to the persons named in the written
verified request.

Sec. 12. Preservation of DNA Evidence. - The trial court shall preserve the DNA
evidence in its totality, including all biological samples, DNA profiles and results
or other genetic information obtained from DNA testing. For this purpose, the
court may order the appropriate government agency to preserve the DNA evidence
as follows: chan robles virtual law library

(a) In criminal cases:

i. for not less than the period of time that any person is under trial for an offense;
or

ii. in case the accused is serving sentence, until such time as the accused has
served his sentence; and

(b) In all other cases, until such time as the decision in the case where the DNA
evidence was introduced has become final and executory. chan robles virtual law
library

The court may allow the physical destruction of a biological sample before the
expiration of the periods set forth above, provided that: chan robles virtual law
library

(a) A court order to that effect has been secured; or

(b) The person from whom the DNA sample was obtained has consented in
writing to the disposal of the DNA evidence. chan robles virtual law library

Sec. 13. Applicability to Pending Cases. - Except as provided in Sections 6 and 10

hereof, this Rule shall apply to cases pending at the time of its effectivity. chan
robles virtual law library

Sec. 14. Effectivity. - This Rule shall take effect on October 15, 2007, following
publication in a newspaper of general circulation. chan robles virtual law library
2008

THIRD DIVISION

[G.R. NO. 179150 : June 17, 2008]

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. DELIA BAYANI y

BOTANES, Accused-Appellant.

DECISION

CHICO-NAZARIO, J.:

Appellant Delia Bayani y Botanes assails the Decision1 of the Court of Appeals
dated 20 December 2005 in CA-G.R. CR-H.C. No. 00310, affirming the
Decision2 dated 16 July 2004 of Branch 103 of the Regional Trial Court (RTC) of
Quezon City, in Criminal Case No. Q-03-115598. The RTC found appellant guilty
beyond reasonable doubt of drug pushing, in violation of Section 5, Article II of
Republic Act No. 9165,3 also known as the Comprehensive Dangerous Drugs Act
of 2002, and sentenced her to suffer life imprisonment and a fine of five hundred
thousand pesos.

On 7 March 2003, an Information4 was filed before the RTC charging appellant
with Violation of Section 5 of Republic Act No. 9165, which reads:

That on or about the 3rd day of March 2003, in the Quezon City, Philippines, the
above-named accused, not being authorized by law to sell, dispense, deliver,
transport or distribute any dangerous drug, did then and there, willfully and
unlawfully sell, dispense, deliver, transport, distribute or act as broker in the said
transaction, six point forty one (6.41) grams of Methylamphetamine
Hydrochloride, a dangerous drug.

On 9 September 2003, appellant, with the assistance of counsel , was arraigned and
she pleaded "Not guilty." Thereafter, a pre-trial conference was held, and trial
ensued accordingly.5

Evidence for the prosecution consisted of the testimony of PO3 Virgilio Bernardo,
who testified that on 3 March 2003, a confidential informant arrived at Police
Station 3, Quirino Highway, Barangay Talipapa, Quezon City, where he was on
duty, and reported to the Drug Enforcement Unit that appellant was illegally
trading drugs along Trinidad Street, Barangay Gulod, Novaliches, Quezon City.
Chief Superintendent Gerardo Ratuita formed a team composed of PO3 Bernardo,
SPO4 Brigido An, SPO2 Levi Sevilla, PO2 Manny Panlilio, and PO2 Cecil
Collado to conduct a buy-bust operation. The team took with them "boodle" money
with two (2) pieces of genuine one-hundred-peso bills on top as buy-bust money.6

At around 10:30 in the morning of the same day, PO3 Bernardo and the informant
went in front of the appellant's house located at No. 22 Barangay Gulod, Trinidad
Street, Novaliches, Quezon City, while the other police officers positioned
themselves within viewing distance. The appellant was standing in front of her
house. As they approached her, the informant introduced Bernardo to her as a
buyer. Witness testified that he told appellant that he wanted to buy ten thousand
pesos (P10,000.00) worth of shabu, and the appellant nodded her head. Thereafter,
she handed him two sachets containing a crystalline substance which was
suspected to be shabu. Witness, in turn, gave the boodle money, after which he
grabbed the appellant's right hand, apprehended her, and identified himself as a
police officer.7

After the apprehension of the appellant, the team brought her before the Police
Station investigator, while the drugs and the buy-bust money were turned over to
the crime laboratory. Appellant was apprised of her constitutional rights.8

During his testimony, PO3 Bernardo identified the accused, the boodle money with
his initials "VB," as well as two (2) sachets of crystalline substance (also with the
same initials) which was positive of methylamphetamine hydrochloride after
laboratory examination.9

Denying the charge filed against her, appellant testified that at around 7:00 in the
morning of 3 March 2003, she was inside her house with her children and her
sister-in-law. While changing her clothes inside her room at the third floor, seven
men barged inside her house. When she asked them what they were doing inside
her house, they refused to answer. Although they continued to search her house,
they did not find drugs therein. Thereafter, they introduced themselves as police
officers and commanded her to show them the shabu. When she denied possession
of any shabu, the police officers got angry and forced her to go with them to the
Police Station. She also testified that she could not cry to her neighbors for help
because she was locked inside her room while her sister-in-law and her five
children were all afraid of the police.10

When they arrived at the Police Station, she was asked if she knew a certain
"Allan." She answered in the negative. After a day of detention, she was brought to
the office of the inquest fiscal where she was informed that she was being charged
with drug pushing.11

Appellant's seventeen-year-old son, Dan Jefferson, corroborated his mother's

testimony. He recounted that he was about to leave their house when five men
barged into their house and went straight to his mother's room at the third floor. He
testified that he did not know what happened on the third floor since, at that time,
he stayed in their sala at the second floor of the house. Thereafter, the rest of the
police officers and his mother left the house, while he stayed put.12

In a Decision dated 16 July 2004, the RTC decreed that the accused was guilty
without reasonable doubt since the fact of the illegal sale of a dangerous drug,
methylamphetamine hydrochloride, was sufficiently and indisputably established
by the prosecution. PO3 Bernardo, as the poseur-buyer, positively identified the
appellant as the person who handed him two sachets containing 6.41 grams
of shabu in exchange for P10,000.00. The boodle money was marked as Exhibit
"B" for the prosecution.13 The two sachets of shabu were likewise presented and
marked in court as Exhibits "G" and "H."14The RTC gave full credence to PO3
Bernardo's testimony, given the presumption of regularity in the performance of
his functions as a police officer, especially since no ill motive was attributed to him
for the appellant's apprehension. On the other hand, the RTC found the testimony
of appellant's son, Dan, on what transpired on the third floor to be unreliable, since
at that time he was supposedly staying in the sala, which was located at another
floor.15

According to the dispositive part of the Decision dated 16 July 2004:

ACCORDINGLY, judgment is hereby rendered finding the

accused GUILTY beyond reasonable doubt for (sic) violation of Section 5, Article
II, R.A. 9165 for drug pushing of six point forty one (6.41) grams of crystalline
substance containing Methylamphetamine hydrochloride and is hereby sentenced
to suffer LIFE IMPRISONMENT and to pay a fine of Five Hundred Thousand
Pesos.

The drug involved in this case is hereby ordered transmitted to the Philippine Drug
Enforcement Agency (PDEA) through the Dangerous Drugs Board for proper
disposition.16

The appellant filed an appeal before the Court of Appeals docketed as CA-G.R.
CR-H.C. No. 00310. Raising only one assignment of error, appellant faulted the
RTC's finding of guilt for being based on a buy-bust transaction instigated by the
arresting officers. In affirming the RTC Decision, the appellate court declared that
the police officers did not induce the appellant to sell the prohibited drugs. By
pointing out the fact that appellant had the shabu in her possession, ready for
selling, before the police officer approached her, it adjudged that the appellant's
criminal resolve was evident; no inducement to sell the prohibited drugs had led to
the commission of the offense. It maintained that the fact that the police officers
did not conduct a prior surveillance does not affect the validity of an entrapment
operation. It further held that presentation by the prosecution of the informant and
other police officers who had witnessed the buy-bust operations was not required
to prove the appellant's guilt, where their testimonies would merely repeat the
testimony of the poseur-buyer.17 In the Decision dated 20 December 2005,
the fallo reads:

WHEREFORE, the foregoing considered, the appeal is hereby DISMISSED and

the assailed Decision AFFIRMEDin toto. Without pronouncement as to costs.18

Hence, the present petition in which the appellant reiterates the sole assignment of
error, to wit:

THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-

APPELLANT OF THE CRIME CHARGED DESPITE THE FACT THAT THE
POLICE INSTIGATED THE ALLEGED BUY-BUST TRANSACTION.

This petition must fail, since the argument raised by appellant is specious.
Appellant argues that PO3 Bernardo's act of approaching the appellant to
buy shabu during a buy-bust operation amounted to instigation. Such contention
lacks basis and is contrary to jurisprudence.

Instigation is the means by which the accused is lured into the commission of the
offense charged in order to prosecute him. On the other hand, entrapment is the
employment of such ways and means for the purpose of trapping or capturing a
lawbreaker.19 Thus, in instigation, officers of the law or their agents incite, induce,
instigate or lure an accused into committing an offense which he or she would
otherwise not commit and has no intention of committing. But in entrapment, the
criminal intent or design to commit the offense charged originates in the mind of
the accused, and law enforcement officials merely facilitate the apprehension of
the criminal by employing ruses and schemes; thus, the accused cannot justify his
or her conduct. In instigation, where law enforcers act as co-principals, the accused
will have to be acquitted. But entrapment cannot bar prosecution and conviction.
As has been said, instigation is a "trap for the unwary innocent," while entrapment
is a "trap for the unwary criminal."20

As a general rule, a buy-bust operation, considered as a form of entrapment, is a

valid means of arresting violators of Republic Act No. 9165. It is an effective way
of apprehending law offenders in the act of committing a crime. In a buy-bust
operation, the idea to commit a crime originates from the offender, without
anybody inducing or prodding him to commit the offense.

A police officer's act of soliciting drugs from the accused during a buy-bust
operation, or what is known as a "decoy solicitation," is not prohibited by law and
does not render invalid the buy-bust operations. The sale of contraband is a kind of
offense habitually committed, and the solicitation simply furnishes evidence of the
criminal's course of conduct.21 In People v. Sta. Maria, the Court clarified that a
"decoy solicitation" is not tantamount to inducement or instigation:

It is no defense to the perpetrator of a crime that facilities for its commission were
purposely placed in his way, or that the criminal act was done at the "decoy
solicitation" of persons seeking to expose the criminal, or that detectives feigning
complicity in the act were present and apparently assisting its commission.
Especially is this true in that class of cases where the office is one habitually
committed, and the solicitation merely furnishes evidence of a course of conduct.

As here, the solicitation of drugs from appellant by the informant utilized by the
police merely furnishes evidence of a course of conduct. The police received an
intelligence report that appellant has been habitually dealing in illegal drugs. They
duly acted on it by utilizing an informant to effect a drug transaction with
appellant. There was no showing that the informant induced the appellant to sell
illegal drugs to him.22

Conversely, the law deplores instigation or inducement, which occurs when the
police or its agent devises the idea of committing the crime and lures the accused
into executing the offense. Instigation absolves the accused of any guilt, given the
spontaneous moral revulsion from using the powers of government to beguile
innocent but ductile persons into lapses that they might otherwise resist. 23

People v. Doria enumerated the instances when this Court recognized instigation
as a valid defense, and an instance when it was not applicable:

In United Sates v. Phelps, we acquitted the accused from the offense of smoking
opium after finding that the government employee, a BIR personnel, actually
induced him to commit the crime in order to persecute him. Smith, the BIR agent,
testified that Phelps' apprehension came after he overheard Phelps in a saloon say
that he like smoking opium on some occasions. Smith's testimony was disregarded.
We accorded significance to the fact that it was Smith who went to the accused
three times to convince him to look for an opium den where both of them could
smoke this drug. The conduct of the BIR agent was condemned as "most
reprehensible." In People v. Abella, we acquitted the accused of the crime of
selling explosives after examining the testimony of the apprehending police officer
who pretended to be a merchant. The police officer offered "a tempting price, x x x
a very high one" causing the accused to sell the explosives. We found there was
inducement, "direct, persistent and effective" by the police officer and that outside
of his testimony, there was no evidence sufficient to convict the accused. In People
v. Lua Chu and Uy Se Tieng, [W]e convicted the accused after finding that there
was no inducement on the part of the law enforcement officer. We stated that the
Customs secret serviceman smoothed the way for the introduction of opium from
Hong Kong to Cebu after the accused had already planned its importation and
ordered said drug. We ruled that the apprehending officer did not induce the
accused to import opium but merely entrapped him by pretending to have an
understanding with the Collector of Customs of Cebu to better assure the seizure of
the prohibited drug and the arrest of the surreptitious importers.24

In recent years, it has become common practice for law enforcement officers and
agents to engage in buy-bust operations and other entrapment procedures in
apprehending drug offenders, which is made difficult by the secrecy with which
drug-related offenses are conducted and the many devices and subterfuges
employed by offenders to avoid detection. On the other hand, the Court has taken
judicial notice of the ugly reality that in cases involving illegal drugs, corrupt law
enforcers have been known to prey upon weak, hapless and innocent
persons.25 The distinction between entrapment and instigation has proven to be
crucial. The balance needs to be struck between the individual rights and the
presumption of innocence on one hand, and ensuring the arrest of those engaged in
the illegal traffic of narcotics on the other.

In the present case, PO3 Bernardo testified that appellant stood in front of her
house and was in possession of drugs readily available for anyone who would buy
them. PO3 Bernardo did not even have to employ any act of instigation or
inducement, such as repeated requests for the sale of prohibited drugs or offers of
exorbitant prices.
In addition, PO3 Bernardo was able to identify the accused, the boodle money, and
the two packets of crystalline substance, which tested positive for
methylamphetamine hydrochloride.26 The essential elements for the prosecution
for illegal sale of shabu were established: (1) the identity of the buyer and the
seller, the object of the sale and the consideration; and (2) the delivery of the thing
sold and payment therefor. In short, the delivery of the illicit drug to the poseur-
buyer and the receipt by the seller of the marked money, as relayed by PO3
Bernardo, successfully consummated the buy-bust transaction.27

In the case before us, we find the testimony of the poseur-buyer, together with the
dangerous drug taken from the appellant, more than sufficient to prove the crime
charged. Considering that this Court has access only to the cold and impersonal
records of the proceedings, it generally relies upon the assessment of the trial court,
which had the distinct advantage of observing the conduct and demeanor of the
witnesses during the trial. It is a fundamental rule that findings of the trial courts
which are factual in nature and which involve credibility are accorded respect
when no glaring errors; gross misapprehension of facts; or speculative, arbitrary,
and unsupported conclusions can be gathered from such findings. The reason for
this is that the trial court is in a better position to decide the credibility of
witnesses, having heard their testimonies and observed their deportment and
manner of testifying during the trial.28

The rule finds an even more stringent application where said findings are sustained
by the Court of Appeals.29 Finding no compelling reason to depart from the
findings of both the trial court and the Court of Appeals, this Court affirms the
same.

The self-serving denial of the appellant deserves scant credence, since it is

unsupported by any evidence other than the testimony of her son, Dan Jefferson.
This Court finds her son's testimony even more suspect, considering that his
statement that five men barged into their house was belied by appellant's allegation
that seven men forcibly entered their home. An allegation of frame-up and
extortion by police officers is a common and standard defense in most dangerous
drug cases. To substantiate such defense, which can be easily concocted, the
evidence must be clear and convincing.30

In this case, there was no allegation of any attempt at extortion on the part of police
officers or any reason for the police officers to falsify a serious criminal charge
against appellant. Appellant admitted that she had never even seen any of the
police officers until she was arrested. This negates any vengeful motive for her
arrest. In the absence of proof of any ill motive or intent on the part of the police
authorities to falsely impute a serious crime to the appellants, the presumption of
regularity in the performance of official duties must prevail over the latter's self-
serving and uncorroborated claim. This presumption is placed on an even more
firm foothold when supported by the findings of the trial court on the credibility of
the witness, PO3 Bernardo.31

Contrary to the appellant's claim, the prevailing doctrine is that additional

corroborating testimony of the confidential informant is not essential to a
successful prosecution. Intelligence agents are not often called to testify in court in
order to hide their identities and preserve their invaluable service to the police.
Once known, they may even be the object of revenge by criminals they implicate.32

Lastly, the testimonies of other arresting officers are not required in obtaining a
conviction. The testimony of PO3 Bernardo, being candid and straightforward, is
complete and sufficient for a finding of guilt. Section 6, Rule 133 of the Rules of
Court allows the court to stop introduction of further testimony upon a particular
point when more witnesses to the same point cannot be expected to be additionally
persuasive. Furthermore, appellant cannot allude to or suggest the possibility of
any irregularity that could have been revealed by the presentation of additional
witnesses, when she herself failed to exert any effort to summon these witnesses
when she had the chance to do so.

WHEREFORE, the instant appeal is DENIED. The Decision of the Court of

Appeals dated 20 December 2005 in CA-GR. CR-H.C. No. 00310 is AFFIRMED.
Appellant Delia Bayani y Botanes is found GUILTY of violation of Section 5,
Article II of Republic Act No 9165. No costs.

SO ORDERED.

Endnotes:

*
Per Special Order No. 507, dated 28 May 2008, signed by Chief Justice Reynato
S. Puno, designating Associate Justice Arturo D. Brion to replace Associate Justice
Antonio Eduardo B. Nachura, who is on official leave under the Court's Wellness
Program.
1
Penned by Associate Justice Josefina Guevara-Salonga with Associate Justices
Eliezer R. de los Santos and Fernanda Lampas Peralta, concurring; Rollo, pp. 2-10.
2
Penned by Presiding Judge Jaime N. Salazar, Jr.; CA rollo, pp. 36-38.
3
Section 5. Sale, Trading, Administration, Dispensation, Delivery, Distribution
and Transportation of Dangerous Drugs and/or Controlled Precursors and Essential
Chemicals. - The penalty of life imprisonment to death and a fine ranging from
Five hundred thousand pesos (P500,000.00) to Ten million pesos (P10,000,000.00)
shall be imposed upon any person, who, unless authorized by law, shall sell, trade,
administer, dispense, deliver, give away to another, distribute, dispatch in transit or
transport any dangerous drug, including any and all species of opium poppy
regardless of the quantity and purity involved, or shall act as a broker in any of
such transactions.
4
CA rollo, p. 11.
5
Id. at 12.
6
Id.
7
Id.
8
Id. at 13.
9
Id.
10
Id.
11
Id.
12
Id.
13
Records, p. 24.
14
Id. at 28.
15
CA rollo, pp. 13-14.
16
Id. at 14.
17
Rollo, pp. 2-10.
18
Id. at 10.
19
People v. Gatong-o, G.R. No.L-78698, 29 December 1988, 168 SCRA 716, 717.
20
Cabrera v. Pajares, A.M. Nos. R-278-RTJ & R-309-RTJ, 30 May 1986, 142
SCRA 127, 134; Araneta v. Court of Appeals, G.R. No. L-46638, 9 July 1986, 142
SCRA 534, 539; People v. Lapatha, G.R. No. L-63074, 9 November 1988, 167
SCRA 159, 172-173; and People v. Patog, G.R. No. L-69620, 24 September 1986,
144 SCRA 429, 437.
21
People v. Gonzales, 430 Phil. 504, 513 (2002).
22
People v. Sta. Maria, G.R. No. 171019, 23 February 2007, 516 SCRA 621, 628.
23
People v. Doria, G.R. No. 125299, 22 January 1999, 301 SCRA 668,
'686; People v. Boco, G.R. No. 129676, 23 June 1999, 309 SCRA 42, 65.
24
People v. Doria, id. at '692-693.
25
Id. at 697; People v. Ale, G.R. No. L-70998, 14 October 1986, 145 SCRA 50,
58-59; People v. Fernando, G.R. No. L-66947, 24 October 1986, 145 SCRA 151,
159; People v. Crisostomo, G.R. No. 97427, 24 May 1993, 222 SCRA
511,514; People v. Salcedo, G.R. No. 86975, 18 March 1991, 195 SCRA 345, 352;
and People v. Cruz, G.R. No. 102880; 25 April 1994, 231 SCRA 759, 764-765.
26
Chemistry Report No. D-236-2003, 4 March 2003; Records, p. 8.
27
People v. Gonzales, supra note 21 at 513; and People v. Jocson, G.R. No.
169875, 18 December 2007.
28
People v. Julian-Fernandez, 423 Phil. 895, 910 (2001).
29
People v. Cabugatan, G.R. No. 172019, 12 February 2007, 515 SCRA 537, 547.
30
People v. Boco, supra note 23 at 65.
31
People v. Pacis, 434 Phil. 148, 158-159 (2001); People v. Simon, G.R. No.
93028, 29 July 1994, 234 SCRA 555, 563.
32
People v. Doria, supra note 23 at 699; People v. Pacis, id. at 159; People v.
Boco, supra note 23 at 62.
2009

THIRD DIVISION

[G.R. NO. 173637 : April 21, 2009]

DANTE T. TAN, Petitioner, v. PEOPLE OF THE PHILIPPINES,Respondents.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari filed under Rule 45 of the
Revised Rules of Court seeking the reversal and setting aside of the
Decision1 dated 22 February 2006 and Resolution2 dated 17 July 2006 issued by
the Court of Appeals in CA-G.R. SP No. 83068 entitled, "People of the Philippines
v. Hon. Briccio C. Ygana, in his capacity as Presiding Judge of Branch 153,
Regional Trial Court, Pasig City and Dante Tan."

The assailed Decision reinstated Criminal Case No. 119830, earlier dismissed by
the trial court due to an alleged violation of petitioner Dante T. Tan's right to
speedy trial.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The assailed Resolution denied his Motion for Reconsideration and Motion to
Inhibit.

The factual and procedural antecedents of the instant petition are as follows:

On 19 December 2000, a Panel of Prosecutors of the Department of Justice (DOJ),

on behalf of the People of the Philippines (People), filed three Informations against
Dante T. Tan (petitioner) before the Regional Trial Court (RTC) of Pasig City. The
cases were docketed as Criminal Cases No. 119830, No. 119831 and No. 119832,
all entitled, "People of the Philippines v. Dante Tan."

Criminal Case No. 1198303 pertains to allegations that petitioner employed

manipulative devises in the purchase of Best World Resources Corporation (BW)
shares. On the other hand, Criminal Cases No. 1198314 and No. 1198325 involve
the alleged failure of petitioner to file with the Securities and Exchange
Commission (SEC) a sworn statement of his beneficial ownership of BW shares.
In two other related cases, two Informations were filed against a certain Jimmy
Juan and Eduardo G. Lim for violation of the Revised Securities Act involving BW
shares of stock. These were docketed as Criminal Cases No. 119828 and No.
119829.

On the same day, the DOJ, through Assistant Chief State Prosecutor Nilo C.
Mariano, filed a Motion for Consolidation praying that Criminal Cases No.
119830, No. 119831 and No. 119832 be consolidated together with Criminal Cases
No. 119828 and No. 119829, which the trial court granted.

On 21 December 2000, Criminal Cases No. 119830, No. 119831 and No. 119832
were raffled off to the Pasig RTC, Branch 153, presided by Judge Briccio C.
Ygana. Criminal Cases No. 119828 and No. 119829 also went to the same court.

Petitioner was arraigned on 16 January 2001, and pleaded not guilty to the
charges.6

On 6 February 2001, the pre-trial was concluded, and a pre-trial order set, among
other things, the first date of trial on 27 February 2001.7

Atty. Celia Sandejas of the Securities and Exchange Commission (SEC), under the
direct control and supervision of Public Prosecutor Nestor Lazaro, entered her
appearance for the People; Atty. Agnes Maranan for petitioner Dante Tan; Atty.
Sigfrid Fortun for Eduardo Lim, Jr.; and Atty. Rudolf Brittanico for Jimmy Juan.
State Prosecutors Susan Dacanay and Edna Villanueva later on took over as
lawyers for the People.

The People insists that during the pendency of the initial hearing on 27 February
2001, the parties agreed that Criminal Cases No. 119831 and No. 119832 would be
tried ahead of Criminal Case No. 119830, and that petitioner would not interpose
any objection to its manifestation, nor would the trial court disapprove it.

Thereafter, the People presented evidence for Criminal Cases No. 119831 and No.
119832. On 18 September 2001, the prosecution completed the presentation of its
evidence and was ordered by the RTC to file its formal offer of evidence within
thirty days.

After being granted extensions to its filing of a formal offer of evidence, the
prosecution was able to file said formal offer for Criminal Cases No. 119831 and
No. 119832 on 25 November 2003.8
On 2 December 2003, petitioner moved to dismiss Criminal Case No. 119830 due
to the People's alleged failure to prosecute. Claiming violation of his right to
speedy trial, petitioner faults the People for failing to prosecute the case for an
unreasonable length of time and without giving any excuse or justification for the
delay. According to petitioner, he was persistent in asserting his right to speedy
trial, which he had allegedly done on several instances. Finally, he claimed to have
been substantially prejudiced by this delay.

The prosecution opposed the Motion, insisting on its claim that the parties had an
earlier agreement to defer the trial of Criminal Case No. 119830 until after that of
Criminal Cases No. 119831-119832, as the presentation of evidence and
prosecution in each of the five cases involved were to be done separately. The
presentation of evidence in Criminal Cases No. 119831-119832, however, were
done simultaneously, because they involved similar offenses of non-disclosure of
beneficial ownership of stocks proscribed under Rule 36(a)-19 in relation to
Sections 32(a)-110 and 5611 of Batas Pambansa Bilang 178, otherwise known as the
"Revised Securities Act." Criminal Case No. 119830 pertains to alleged violation
of Section 27 (b),12 in relation to Section 56 of said act.

On 22 December 2003, Judge Briccio C. Ygana of the Pasig RTC, Branch 153,
ruled that the delays which attended the proceedings of petitioner's case (Criminal
Case No. 119830) were vexatious, capricious and oppressive, resulting in violation
of petitioner's right to speedy trial. The RTC ordered13 the dismissal of Criminal
Case No. 119830, disposing as follows:

WHEREFORE, foregoing premises duly considered and finding the motion to

dismiss to be meritorious, the Court hereby orders Criminal Case No. 119830
DISMISSED.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

On motion for reconsideration, the prosecution insisted that the parties agreed to
hold separate trials of the BW cases, with petitioner acquiescing to the prosecution
of Criminal Cases No. 119831 and No. 119832 ahead of Criminal Case No.
119830. In an Order dated 20 January 2004, the RTC denied the Motion for
Reconsideration for lack of merit.

The RTC's order of dismissal was elevated to the Court of Appeals via a petition
for certiorari, with the People contending that:

RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION IN RULING

THAT THE PEOPLE VIOLATED DANTE TAN'S RIGHT TO SPEEDY TRIAL,
ALBEIT, THE LATTER AND RESPONDENT JUDGE HIMSELF HAVE
CONFORMED TO THE DEFERMENT OF CRIMINAL CASE NO. 119830
PENDING HEARING OF THE TWO OTHER RELATED CASES.

Setting aside the trial court's order of dismissal, the Court of Appeals granted the
petition for certiorari in its Decision dated 22 February 2006. In resolving the
petition, the appellate court reinstated Criminal Case No. 119830 in this wise:

WHEREFORE, the petition is granted and the assailed Orders dated December 22,
2003 and January 20, 2004 are set aside. Criminal Case No. 119830 is reinstated
and the trial court is ordered to conduct further proceedings in said case
immediately.14

Petitioner moved for a reconsideration of the Decision and filed a motion for
inhibition of the Justices who decided the case.

On 17 July 2006, the Court of Appeals denied both motions.

Petitioner Dante Tan, henceforth, filed the instant Petition for Review
on Certiorari, raising the following issues:

I.

WHETHER OR NOT THE ACTING SECRETARY OF JUSTICE MAY

VALIDLY EXECUTE THE CERTIFICATE OF NON-FORUM SHOPPING
ATTACHED TO THE PETITION FOR CERTIORARI FILED BY THE PEOPLE
WITH THE COURT OF APPEALS EVEN THOUGH THE CRIMINAL ACTION
WAS INSTITUTED BY A COMPLAINT SUBSCRIBED BY THE
AUTHORIZED OFFICERS OF THE SECURITIES AND EXCHANGE
COMMISSION.

II.

WHETHER OR NOT THE PETITION FOR CERTIORARI VIOLATED TAN'S

RIGHT AGAINST DOUBLE JEOPARDY.

III.

WHETHER OR NOT CRIMINAL CASE NO. 119830 WAS CORRECTLY

DISMISSED BY THE TRIAL COURT ON THE GROUND OF VIOLATION OF
TAN'S RIGHT TO SPEEDY TRIAL.
IV.

WHETHER OR NOT THE TRIAL COURT COMMITTED GRAVE ABUSE OF

DISCRETION.

We first resolve the preliminary issues.

In an attempt at having the instant petition dismissed, petitioner contends that the
certificate of non-forum shopping attached to the People's appeal before the Court
of Appeals should have been signed by the Chairman of the SEC as complainant in
the cases instead of Acting DOJ Secretary Merceditas N. Gutierrez.

Petitioner's argument is futile. The Court of Appeals was correct in sustaining the
authority of Acting DOJ Secretary Merceditas Gutierrez to sign the certificate of
non-forum shopping of the petition for certiorari before said court. It must be
stressed that the certification against forum shopping is required to be executed by
the plaintiff.15Although the complaint-affidavit was signed by the Prosecution and
Enforcement Department of the SEC, the petition before the Court of Appeals
originated from Criminal Case No. 119830, where the plaintiff or the party
instituting the case was the People of the Philippines. Section 2, Rule 110 of the
Rules of Court leaves no room for doubt and establishes that criminal cases are
prosecuted in the name of the People of the Philippines, the offended party in
criminal cases. Moreover, pursuant to Section 3, paragraph (2) of the Revised
Administrative Code, the DOJ is the executive arm of the government mandated to
investigate the commission of crimes, prosecute offenders and administer the
probation and correction system. It is the DOJ, through its prosecutors, which is
authorized to prosecute criminal cases on behalf of the People of the
Philippines.16Prosecutors control and direct the prosecution of criminal offenses,
including the conduct of preliminary investigation, subject to review by the
Secretary of Justice. Since it is the DOJ which is the government agency tasked to
prosecute criminal cases before the trial court, the DOJ is best suited to attest
whether a similar or related case has been filed or is pending in another court of
tribunal. Acting DOJ Secretary Merceditas N. Gutierrez, being the head of the
DOJ, therefore, had the authority to sign the certificate of non-forum shopping for
Criminal Case No. 119830, which was filed on behalf of the People of the
Philippines.

The preliminary issues having been resolved, the Court shall proceed to discuss the
main issues.
At the crux of the controversy is the issue of whether there was a violation of
petitioner Dante Tan's right to speedy trial.

Petitioner Dante Tan assails the Decision and Resolution of the Court of Appeals
in CA-G.R. SP No. 83068. The appellate court determined that he "impliedly
agreed" that Case No. 119830 would not be tried until after termination of
Criminal Cases No. 119831-119832, which finding was grounded entirely on
speculations, surmises and conjectures.

Both parties concede that this issue is factual. It is a basic rule that factual issues
are beyond the province of this Court in a Petition for Review, for it is not our
function to review evidence all over again.17Rule 45 of the Rules of Court provides
that only questions of law may be raised in this Court in a Petition for Review
on Certiorari .18 The reason is that the Court is not a trier of facts.19 However, the
rule is subject to several exceptions.20 Under these exceptions, the Court may delve
into and resolve factual issues, such as in cases where the findings of the trial court
and the Court of Appeals are absurd, contrary to the evidence on record,
impossible, capricious or arbitrary, or based on a misappreciation of facts.

In this case, the Court is convinced that the findings of the Court of Appeals on the
substantial matters at hand, while conflicting with those of the RTC, are adequately
supported by the evidence on record. We, therefore, find no reason to deviate from
the jurisprudential holdings and treat the instant case differently.

An accused's right to "have a speedy, impartial, and public trial" is guaranteed in

criminal cases by Section 14(2) of Article III of the Constitution. This right to a
speedy trial may be defined as one free from vexatious, capricious and oppressive
delays, its "salutary objective" being to assure that an innocent person may be free
from the anxiety and expense of a court litigation or, if otherwise, of having his
guilt determined within the shortest possible time compatible with the presentation
and consideration of whatsoever legitimate defense he may interpose.21 Intimating
historical perspective on the evolution of the right to speedy trial, we reiterate the
old legal maxim, "justice delayed is justice denied." This oft-repeated adage
requires the expeditious resolution of disputes, much more so in criminal cases
where an accused is constitutionally guaranteed the right to a speedy trial.22

Following the policies incorporated under the 1987 Constitution, Republic Act No.
8493, otherwise known as "The Speedy Trial Act of 1998," was enacted, with
Section 6 of said act limiting the trial period to 180 days from the first day of
trial.23 Aware of problems resulting in the clogging of court dockets, the Court
implemented the law by issuing Supreme Court Circular No. 38-98, which has
been incorporated in the 2000 Rules of Criminal Procedure, Section 2 of Rule
119.24

In Corpuz v. Sandiganbayan,25 the Court had occasion to state'

The right of the accused to a speedy trial and to a speedy disposition of the case
against him was designed to prevent the oppression of the citizen by holding
criminal prosecution suspended over him for an indefinite time, and to prevent
delays in the administration of justice by mandating the courts to proceed with
reasonable dispatch in the trial of criminal cases. Such right to a speedy trial and a
speedy disposition of a case is violated only when the proceeding is attended by
vexatious, capricious and oppressive delays. The inquiry as to whether or not an
accused has been denied such right is not susceptible by precise qualification. The
concept of a speedy disposition is a relative term and must necessarily be a flexible
concept.

While justice is administered with dispatch, the essential ingredient is orderly,

expeditious and not mere speed. It cannot be definitely said how long is too long in
a system where justice is supposed to be swift, but deliberate. It is consistent with
delays and depends upon circumstances. It secures rights to the accused, but it does
not preclude the rights of public justice. Also, it must be borne in mind that the
rights given to the accused by the Constitution and the Rules of Court are shields,
not weapons; hence, courts are to give meaning to that intent.

The Court emphasized in the same case that:

A balancing test of applying societal interests and the rights of the accused
necessarily compels the court to approach speedy trial cases on an ad hoc basis.

In determining whether the accused has been deprived of his right to a speedy
disposition of the case and to a speedy trial, four factors must be considered: (a)
length of delay; (b) the reason for the delay; (c) the defendant's assertion of his
right; and (d) prejudice to the defendant. x x x.

Closely related to the length of delay is the reason or justification of the State for
such delay. Different weights should be assigned to different reasons or
justifications invoked by the State. x x x.26

Exhaustively explained in Corpuz v. Sandiganbayan, an accused's right to speedy

trial is deemed violated only when the proceeding is attended by vexatious,
capricious, and oppressive delays. In determining whether petitioner was deprived
of this right, the factors to consider and balance are the following: (a) duration of
the delay; (b) reason therefor; (c) assertion of the right or failure to assert it; and
(d) prejudice caused by such delay.27

From the initial hearing on 27 February 2001 until the time the prosecution filed its
formal offer of evidence for Criminal Cases No. 119831-119832 on 25 November
2003, both prosecution and defense admit that no evidence was presented for
Criminal Case No. 119830. Hence, for a period of almost two years and eight
months, the prosecution did not present a single evidence for Criminal Case No.
119830.

The question we have to answer now is whether there was vexatious, capricious,
and oppressive delay. To this, we apply the four-factor test previously mentioned.

We emphasize that in determining the right of an accused to speedy trial, courts are
required to do more than a mathematical computation of the number of
postponements of the scheduled hearings of the case. A mere mathematical
reckoning of the time involved is clearly insufficient,28 and particular regard must
be given to the facts and circumstances peculiar to each case.29

In Alvizo v. Sandiganbayan,30 the Court ruled that there was no violation of the
right to speedy trial and speedy disposition. The Court took into account the
reasons for the delay, i.e., the frequent amendments of procedural laws by
presidential decrees, the structural reorganizations in existing prosecutorial
agencies and the creation of new ones by executive fiat, resulting in changes of
personnel, preliminary jurisdiction, and the functions and powers of prosecuting
agencies. The Court also considered the failure of the accused to assert such right,
and the lack of prejudice caused by the delay to the accused.

In Defensor-Santiago v. Sandiganbayan,31 the complexity of the issues and the

failure of the accused to invoke her right to speedy disposition at the appropriate
time spelled defeat for her claim to the constitutional guarantee.

In Cadalin v. Philippine Overseas Employment Administration's

32
Administrator, the Court, considering also the complexity of the cases and the
conduct of the parties' lawyers, held that the right to speedy disposition was not
violated therein.

Petitioner's objection to the prosecution's stand that he gave an implied consent to

the separate trial of Criminal Case No. 119830 is belied by the records of the case.
No objection was interposed by his defense counsel when this matter was
discussed during the initial hearing.33 Petitioner's conformity thereto can be
deduced from his non-objection at the preliminary hearing when the prosecution
manifested that the evidence to be presented would be only for Criminal Cases No.
119831-119832. His failure to object to the prosecution's manifestation that the
cases be tried separately is fatal to his case. The acts, mistakes and negligence of
counsel bind his client, except only when such mistakes would result in serious
injustice.34 In fact, petitioner's acquiescence is evident from the transcript of
stenographic notes during the initial presentation of the People's evidence in the
five BW cases on 27 February 2001, herein quoted below:

COURT: Atty. Sandejas, call your witness.

ATTY. SANDEJAS [SEC Prosecuting Lawyer]: May we make some

manifestation first, your Honor, before we continue presenting our witness. First of
all, this witness will only be testifying as to two (2) of the charges: non-disclosure
of beneficial ownership of Dante Tan x x x.

xxx

COURT: (to Atty. Sandejas) Call your witness.

ATTY. SANDEJAS: Our witness is Mr. Wilfredo Baltazar of the Securities and
Exchange Commission, your Honor. We are presenting this witness for the purpose
of non-disclosure of beneficial ownership case'

COURT: I would advise the counsel from the SEC to make it very clear your
purpose in presenting your first witness.

ATTY. SANDEJAS: Yes, your Honor. Can I borrow the file?cralawred

COURT: Show it to counsel.

ATTY. SANDEJAS: Crim. Case Nos. 119831 and 119832, for Violation of RA
Rule 36(a)1, in relation to Sec. 32 (a)-1 of the Revised Securities Act when he
failed to disclose his beneficial ownership amounting to more than 10% which
requires disclosure of such fact.35

During the same hearing, the People manifested in open court that the parties had
agreed to the separate trials of the BW Cases:
PROSECUTOR LAZARO:

May we be allowed to speak, your Honor?cralawred

Your Honor please, as we x x x understand, this is not a joint trial but a separate
trial x x x so as manifested by the SEC lawyer, the witness is being presented
insofar as 119831 and 119832 as against Dante Tan only x x x.36

The transcript of stenographic notes taken from the 3 April 2001 hearing further
clarifies that only the two cases against Dante Tan were being prosecuted:

ATTY. DE LA CRUZ [new counsel for accused Eduardo Lim, Jr.]:

Your Honor, please, may I request clarification from the prosecutors regarding the
purpose of the testimony of the witness in the stand. While the Private Prosecutor
stated the purpose of the testimony of the witness. . .

xxx

PROSECUTOR LAZARO:

I was present during the last hearing. I was then going over the transcript of this
case, well, I believe the testimony x x x mainly [is] on accused Dante Tan, your
Honor. As a matter of fact, there was a clarification made by the parties and
counsels after the witness had testified that the hearing in these cases is not a joint
trial because it involves separate charges, involving different documents, your
Honor. That is why the witness already testified only concerning Dante Tan. Per
the query made by Atty. Fortun, because at that time, Atty. Fortun was still
representing Mr. Lim, I believe, your Honor, then I understand that the testimony
of this witness cannot just be adopted insofar as the other accused, your Honor.

ATTY. MARANAN:

We confirm that, your Honor, since x x x particularly since this is already cross, it
is clear that the direct examination dealt exclusively with Mr. Dante Tan.

PROS. LAZARO:

Mr. Dante Tan, involving the 2 (two) cases.37

Moreover, although periods for trial have been stipulated, these periods are not
absolute. Where periods have been set, certain exclusions are allowed by
law.38 After all, this Court and the law recognize that it is but a fact that judicial
proceedings do not exist in a vacuum and must contend with the realities of
everyday life. In spite of the prescribed time limits, jurisprudence continues to
adopt the view that the fundamentally recognized principle is that the concept of
speedy trial is a relative term and must necessarily be a flexible concept.39

As to the assertion that delay in the presentation of evidence for Criminal Case No.
119830 has prejudiced petitioner because the witnesses for the defense may no
longer be available at this time, suffice it to say that the burden of proving his guilt
rests upon the prosecution.40 Should the prosecution fail for any reason to present
evidence sufficient to show his guilt beyond reasonable doubt, petitioner will be
acquitted. It is safely entrenched in our jurisprudence that unless the prosecution
discharges its burden to prove the guilt of an accused beyond reasonable doubt, the
latter need not even offer evidence in his behalf.41

In the cases involving petitioner, the length of delay, complexity of the issues and
his failure to invoke said right to speedy trial at the appropriate time tolled the
death knell on his claim to the constitutional guarantee.42 More importantly, in
failing to interpose a timely objection to the prosecution's manifestation during the
preliminary hearings that the cases be tried separately, one after the other,
petitioner was deemed to have acquiesced and waived his objection thereto.

For the reasons above-stated, there is clearly insufficient ground to conclude that
the prosecution is guilty of violating petitioner's right to speedy trial. Grave abuse
of discretion defies exact definition, but generally refers to "capricious or
whimsical exercise of judgment as is equivalent to lack of jurisdiction." Any
capricious or whimsical exercise of judgment in dismissing a criminal case is
equivalent to lack of jurisdiction. This is true in the instant case.

There is also no merit to petitioner's claim that a reversal of the RTC's Order
dismissing Criminal Case No. 119830 is a violation of his constitutional right
against double jeopardy which dismissal was founded on an alleged violation of
his right to speedy trial.

The constitutional protection against double jeopardy shields one from a second or
later prosecution for the same offense. Article III, Section 21 of the 1987
Constitution declares that no person shall be twice put in jeopardy of punishment
for the same offense, providing further that if an act is punished by a law and an
ordinance, conviction or acquittal under either shall constitute a bar to another
prosecution for the same act.

Following the above constitutional provision, Section 7, Rule 117 of the Revised
Rules of Court found it apt to stipulate:

SEC. 7. Former conviction or acquittal; double jeopardy. - When an accused has

been convicted or acquitted, or the case against him dismissed or otherwise
terminated without his express consent by a court of competent jurisdiction, upon a
valid complaint or information or other formal charge sufficient in form and
substance to sustain a conviction and after the accused had pleaded to the charge,
the conviction or acquittal of the accused or the dismissal of the case shall be a bar
to another prosecution for the offense charged, or for any attempt to commit the
same or frustration thereof, or for any offense which necessarily includes or is
necessarily included in the offense charged in the former complaint or information.

For double jeopardy to attach then, the following elements in the first criminal case
must be present:

(a) The complaint or information or other formal charge was sufficient in form and
substance to sustain a conviction;

(b) The court had jurisdiction;

(c) The accused had been arraigned and had pleaded; andcralawlibrary

(d) He was convicted or acquitted or the case was dismissed or otherwise

terminated without the express consent of the accused.43

Among the above-cited elements, we are concerned with the fourth element,
conviction or acquittal, or the case was dismissed or otherwise terminated without
the express consent of the accused. This element is crucial since, as a general rule,
the dismissal of a criminal case resulting in acquittal, made with the express
consent of the accused or upon his own motion, will not place the accused in
double jeopardy.44 This rule, however, admits of two exceptions, namely:
insufficiency of evidence and denial of the right to speedy trial.45 While indeed
petitioner was in fact the one who filed the Motion to Dismiss Criminal Case No.
119830, the dismissal thereof was due to an alleged violation of his right to speedy
trial, which would otherwise put him in double jeopardy should the same charges
be revived. Petitioner's situation is different. Double jeopardy has not attached,
considering that the dismissal of Criminal Case No. 119830 on the ground of
violation of his right to speedy trial was without basis and issued with grave abuse
of discretion amounting to lack or excess of jurisdiction. Where the right of the
accused to speedy trial has not been violated, there is no reason to support the
initial order of dismissal.

Following this Court's ruling in Almario v. Court of Appeals,46 as petitioner's right

to speedy trial was not transgressed, this exception to the fourth element of double
jeopardy - that the defendant was acquitted or convicted, or the case was dismissed
or otherwise terminated without the express consent of the accused - was not met.
Where the dismissal of the case was allegedly capricious, certiorari lies from such
order of dismissal and does not involve double jeopardy, as the petition challenges
not the correctness but the validity of the order of dismissal; such grave abuse of
discretion amounts to lack of jurisdiction, which prevents double jeopardy from
attaching.47

As this Court ruled in People v. Tampal,48 reiterated in People v. Leviste,49 where

we overturned an order of dismissal by the trial court predicated on the right to
speedy trial'

It is true that in an unbroken line of cases, we have held that dismissal of cases on
the ground of failure to prosecute is equivalent to an acquittal that would bar
further prosecution of the accused for the same offense. It must be stressed,
however, that these dismissals were predicated on the clear right of the accused to
speedy trial. These cases are not applicable to the petition at bench considering that
the right of the private respondents to speedy trial has not been violated by the
State. x x x.

From the foregoing, it follows that petitioner cannot claim that double jeopardy
attached when said RTC order was reversed by the Court of Appeals. Double
jeopardy does not apply to this case, considering that there is no violation of
petitioner's right to speedy trial.

The old adage that justice delayed is justice denied has never been more valid than
in our jurisdiction, where it is not a rarity for a case to drag in our courts for years
and years and even decades. It was this difficulty that inspired the constitutional
requirement that the rules of court to be promulgated by the Supreme Court shall
provide for a simplified and inexpensive procedure for the speedy trial and
disposition of cases.50 Indeed, for justice to prevail, the scales must balance, for
justice is not to be dispensed for the accused alone.51
Evidently, the task of the pillars of the criminal justice system is to preserve our
democratic society under the rule of law, ensuring that all those who appear before
or are brought to the bar of justice are afforded a fair opportunity to present their
side. As correctly observed by the Court of Appeals, Criminal Case No. 119830 is
just one of the many controversial cases involving the BW shares scam where
public interest is undoubtedly at stake. The State, like any other litigant, is entitled
to its day in court, and to a reasonable opportunity to present its case. A hasty
dismissal, instead of unclogging dockets, has actually increased the workload of
the justice system and unwittingly prolonged the litigation.52

Finally, we reiterate that the rights given to the accused by the Constitution and the
Rules of Court are shields, not weapons. Courts are tasked to give meaning to that
intent. There being no capricious, vexatious, oppressive delay in the proceedings,
and no postponements unjustifiably sought, we concur in the conclusions reached
by the Court of Appeals.

WHEREFORE, the petition is DISMISSED. The assailed 22 February 2006

Decision and 17 July 2006 Resolution issued by the Court of Appeals in CA-G.R.
SP No. 83068 are hereby AFFIRMED.

The instant case is REMANDED to the Regional Trial Court, Branch 153, Pasig
City for further proceedings in Criminal Case No. 119830 with reasonable
dispatch.

SO ORDERED.

Endnotes:

*
Per Special Order No. 602, dated 20 March 2009, signed by Chief Justice
Reynato S. Puno, designating Associate Justice Conchita Carpio Morales to
replace Associate Justice Ma. Alicia Austria-Martinez, who is on official leave.
**
Associate Justice Presbitero J. Velasco, Jr. was designated to sit as additional
member replacing Associate Justice Antonio Eduardo B. Nachura per Raffle dated
14 January 2008.
***
Associate Justice Teresita J. Leonardo-De Castro was designated to sit as
additional member replacing Associate Justice Antonio T. Carpio per Raffle dated
15 April 2009.
1
Penned by Associate Justice Fernanda Lampas Peralta with Associate Justices
Josefina Guevara-Salonga and Sesinando E. Villon, concurring; rollo, pp. 90-100.
2
Id. at 102-112.
3
Id. at 228-230.
4
Id. at 231-232.
5
Id. at 233-235.
6
Records, p. 194.
7
Id. at 253-259.
8
Rollo, pp. 247-253.
9
Section 36. Directors, officers and principal stockholders.'

(a) Every person who is directly or indirectly the beneficial owner of more than ten
per centum of any class of any equity security which is registered pursuant to this
Act, or who is a director or an officer of the issuer of such security, shall file, at the
time of the registration of such security on a securities exchange or by the effective
date of a registration statement or within ten days after he becomes such a
beneficial owner, director, or officer, a statement with the Commission and, if such
security is registered on a securities exchange, also with the exchange, of the
amount of all equity securities of such issuer of which he is the beneficial owner,
and within ten days after the close of each calendar month thereafter, if there has
been a change in such ownership during such month, shall file with the
Commission, and if such security is registered on a securities exchange, shall also
file with the exchange, a statement indicating his ownership at the close of the
calendar month and such changes in his ownership as have occurred during such
calendar month.
10
Section 32. Reports. - (a) (1) Any person who, after acquiring directly or
indirectly the beneficial ownership of any equity security of a class which is
registered pursuant to this Act, is directly or indirectly the beneficial owner of
more than ten (10%) per centum of such class shall, within ten days after such
acquisition or such reasonable time as fixed by the Commission, submit to the
issuer of the security, to the stock exchanges where the security is traded, and to
the Commission a sworn statement x x x.
11
Penalties. Any person who violates any of the provisions of this Act, or the rules
and regulations promulgated by the Commission under authority thereof, or any
person who, in a registration statement filed under this Act, makes any untrue
statement of a material fact of omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, shall, upon
conviction, suffer a fine of not less than five thousand (P5,000.00) pesos nor more
than five hundred thousand (P500,000.00) pesos or imprisonment of not less than
seven (7) years nor more than twenty one (21) years, or both in the discretion of
the court. If the offender is a corporation, partnership or association or other
juridical entity, the penalty shall be imposed upon the officer or officers of the
corporation, partnership, association or entity responsible for the violation, and if
such officer is an alien, he shall, in addition to the penalties prescribed, be deported
without further proceedings after service of sentence.
12
Section 27. Manipulative and deceptive devices. It shall be unlawful for any
person, directly or indirectly, by the use of any facility of any exchange '

x x x

(b) To use or employ, in connection with the purchase or sale of any security, any
manipulative or deceptive device or contrivance.
13
Rollo, pp. 835-855.
14
Id. at 99-100.
15
Regalado, Remedial Law, p. 729.
16
Revised Administrative Code, Section 3(2).
17
Centeno v. Viray, 440 Phil. 881, 887 (2002).
18
Busmente, Jr. v. National Labor Relations Commission, G.R. No. 73647, 8 April
1991, 195 SCRA 710, 713.
19
Tad-y v. People, G.R. No. 148862, 11 August 2005, 466 SCRA 474, 492;
Romago Electric Co., Inc. v. Court of Appeals, 388 Phil. 964, 975 (2000).
20
Palon v. Nino, 405 Phil. 670, 681 (2001).
21
Acebedo v. Sarmiento, 146 Phil. 820, 823 (1970).
22
Philippine Constitution, Art. III, Sec. 14(2).
23
SECTION 6. Time Limit for Trial. - In criminal cases involving persons charged
of a crime, except those subject to the Rules on Summary Procedure, or where the
penalty prescribed by law does not exceed six (6) months imprisonment, or a fine
of One thousand pesos (P1,000.00) or both, irrespective of other imposable
penalties, the justice or judge shall, after consultation with the public prosecutor
and the counsel for the accused, set the case for continuous trial on a weekly or
other short-term trial calendar at the earliest possible time so as to ensure speedy
trial. In no case shall the entire trial period exceed one hundred eighty (180) days
from the first day of trial, except as otherwise authorized by the Chief Justice of
the Supreme Court pursuant to Section 3, Rule 22 of the Rules of Court.
24
SEC. 2. Continuous trial until terminated; postponements. Trial once
commenced shall continue from day to day as far as practicable until terminated. It
may be postponed for a reasonable period of time for good cause.

The court shall, after consultation with the prosecutor and defense counsel, set the
case for continuous trial on a weekly or other short-term trial calendar at the
earliest possible time so as to ensure speedy trial. In no case shall the entire trial
period exceed one hundred eighty (180) days from the first day of trial, except as
otherwise authorized by the Supreme Court.

The time limitations provided under this section and the preceding section shall not
apply where special laws or circulars of the Supreme Court provide for a shorter
period of trial.
25
G.R. No. 162214, 11 November 2004, 442 SCRA 294, 312-313.
26
Id. at 313-314.
27
Abardo v. Sandiganbayan, 407 Phil. 985, 999-1000 (2001); Dela Pena v.
Sandiganbayan, 412 Phil. 921, 929 (2001).
28
Socrates v. Sandiganbayan, 324 Phil. 151, 170 (1996); Tai Lim v. Court of
Appeals, 375 Phil. 971, 977 (1999).
29
Santiago v. Garchitorena, G.R. No. 109266, 2 December 1993, 228 SCRA 214,
221.
30
G.R. No. 101689, 17 March 1993, 220 SCRA 55.
31
408 Phil. 767 (2001).
32
G.R. No. 104776, 5 December 1994, 238 SCRA 721.
33
TSN, 27 February 2001.
34
Producers Bank of the Philippines v. Court of Appeals, 430 Phil. 812, 823
(2002); People v. Hernandez, 328 Phil. 1123, 1143 (1996).
35
TSN, 27 February 2001, pp. 3-7; CA rollo, pp. 87-91.
36
Id. at 71-74; id. at 155-156.
37
TSN, 3 April 2001, pp. 5-10; id. at 225-230.
38
Solar Team Entertainment, Inc. v. Judge How, 393 Phil. 172, 184 (2000).
39
Id.
40
Republic v. Sandiganbayan and Marcos, 461 Phil. 598, 615 (2003).
41
People v. Ganguso, G.R. No 115430, 23 November 1995, 250 SCRA 268, 274-
275; People v. Abellanosa, 332 Phil. 760, 788 (1996), citing People v. Baclayon,
G.R. No. 110837, 29 March 1994, 231 SCRA 578, 584, citing People v. Garcia,
G.R. No. 94187, 4 November 1992, 215 SCRA 349, 358-359.
42
Santiago v. Garchitorena, supra note 29.
43
Condrada v. People, 446 Phil. 635, 641 (2003).
44
Id.
45
Id.; Philippine Savings Bank v. Bermoy, G.R. No. 151912, 26 September 2005,
471 SCRA 94, 106, citing People v. Bans, G.R. No. 104147, 8 December 1994,
239 SCRA 48, 55.
46
407 Phil. 279 (2002).
47
Regalado, Remedial Law Compendium (Vol. II, 2001), p. 503.
48
314 Phil. 35, 45 (1995).
49
325 Phil. 525, 537 (1996).
50
Justice Isagani Cruz, Philippine Political Law, p. 292.
51
Dimatulac v. Villon, 358 Phil. 328, 366 (1998); People v. Subida, G.R. No.
145945, 27 June 2006, 493 SCRA 125, 137.
52
People v. Leviste, supra note 49.
 2010

2010 BAR EXAMINATION QUESTION

CRIMINAL LAW

12 September 2010 2 P.M. – 5 P.M.

INSTRUCTIONS

This questionnaire is in TWO (2) PARTS: Part I with eleven (11) questions (numbered I
to XI), contained in five (5) pages; and Part II with twelve (12) questions (numbered XII
to XXIII), contained in six (6) pages, for a total number of eleven (11) pages.

Write your answers to Part I and Part II in the corresponding portions indicated in the
booklet.

Begin your answer to each numbered question on a separate page; an answer to a sub-
question/s under the same number may be written continuously on the same page and
succeeding pages until completed.

Answer the questions directly and concisely. Do not repeat the question. Write legibly.

HAND IN YOUR NOTEBOOK WITH THIS QUESTIONNAIRE

GOOD LUCK!!!

_____________________________________
CONCHITA CARPIO MORALES
CHAIRPERSON
2010 BAR EXAMINATIONS COMMITTEE
CRIMINAL LAW

PART I

An agonizing and protracted trial having come to a close, the judge found A guilty
beyond reasonable doubt of homicide and imposed on him a straight penalty of SIX (6)
YEARS and ONE (1) DAY of prision mayor.

The public prosecutor objected to the sentence on the ground that the proper penalty
should have been TWELVE (12) YEARS and ONE (1) DAY of reclusion temporal.

The defense counsel chimed in, contending that application of the Indeterminate Sentence
Law should lead to the imposition of a straight penalty of SIX (6) MONTHS and ONE
(1) DAY of prision correccional only. Who of the three is on the right track? Explain.
(3%)

II

a. What is the crime of qualified bribery? (2%)

b. May a judge be charged and prosecuted for such felony? How about a public
prosecutor? A police officer? Explain. (5%)

III

May a public officer charged under Section 3(b) of Republic Act No. 3019 ["directly or
indirectly requesting or receiving any gift, present, share, percentage or benefit, for
himself or for any other person, in connection with any contract or transaction between
the government and any other party, wherein the public officer in his official capacity has
to intervene under the law"] also be simultaneously or successively charged with direct
bribery under Article 210 of the Revised Penal Code? Explain. (4%)

IV

Because of the barbarity and hideousness of the acts committed by the

suspects/respondents in cutting off their victims’ appendages, stuffing their torsos, legs,
body parts into oil drums and bullet-riddled vehicles and later on burying these oil drums,
vehicles with the use of backhoes and other earth-moving machinery, the Commission on
Human Rights (CHR) investigating team recommended to the panel of public prosecutors
that all respondents be charged with violation of the "Heinous Crimes Law." The
prosecution panel agreed with the CHR. As the Chief Prosecutor tasked with approving
the filing of the Information, how will you pass upon the recommendation? Explain. (5%)

Arlene is engaged in the buy and sell of used garments, more popularly known as "ukay-
ukay." Among the items found by the police in a raid of her store in Baguio City were
brand-new Louie Feraud blazers.

Arlene was charged with "fencing." Will the charge prosper? Why or why not? (5%)

VI

There being probable cause to believe that certain deposits and investments in a bank are
related to an unlawful activity of smuggling by Alessandro as defined under Republic Act
(RA) No. 9160, as amended (Anti-Money Laundering Act) an application for an order to
allow inquiry into his deposit was filed with the Regional Trial Court.

After hearing the application, the court granted the application and issued a freeze order.

Pass upon the correctness of the court’s order. Explain. (3%)

VII

A widower of ten years, septuagenarian Canuto felt that he had license to engage in
voyeurism. If not peeping into his neighbors’ rooms through his powerful single-cylinder
telescope, he would trail young, shapely damsels along the hallways of shopping malls.
While going up the escalator, he stayed a step behind a mini-skirted one, and in a moment
of excitement, put his hand on her left hip and massaged it. The damsel screamed and
hollered for help. Canuto was apprehended and brought up on inquest. What charge/s, if
any, may he be held responsible for? Explain. (5%)

VIII

A asked financial support from her showbiz friend B who accommodated her by issuing
in her favor a postdated check in the sum of P90,000.00. Both of them knew that the
check would not be honored because B’s account had just been closed. The two then
approached trader C whom they asked to change the check with cash, even agreeing that
the exchange be discounted at P85,000.00 with the assurance that the check shall be
funded upon maturity. Upon C’s presentment of the check for payment on due date, it
was dishonored because the account had already been closed.

What action/s may C commence against A and B to hold them to account for the loss of
her P85,000.00? Explain. (5%)

IX

Proserfina, an assistant public high school principal, acted to facilitate the release of
salary differentials and election duty per diem of classroom teachers with the agreement
that they would reimburse her for her expenses.

Did Proserfina commit a crime? Explain. (5%)

A, B and C are members of SFC Fraternity. While eating in a seaside restaurant, they
were attacked by X, Y and Z, members of a rival fraternity. A rumble ensued in which
the abovenamed members of the two fraternities assaulted each other in a confused and
tumultuous manner resulting in the death of A. As it cannot be ascertained who actually
killed A, the members of the two fraternities who took part in the rumble were charged
for death caused in a tumultuous affray. Will the charge prosper? Explain. (4%)

XI

Angelina maintains a website where visitors can give their comments on the posted
pictures of the goods she sells in her exclusive boutique. Bettina posted a comment that
the red Birkin bag shown in Angelina’s website is fake and that Angelina is known to sell
counterfeit items.

Angelina wants to file a case against Bettina. She seeks your advice. What advice will
you give her? (4%)

PART II

XII

a. Define Money Laundering. What are the three (3) stages in money laundering?
(3%)
b. What is the doctrine of pro reo? How does it relate to Article 48 of the Revised
Penal Code? (3%)
XIII

While his wife was on a 2-year scholarship abroad, Romeo was having an affair with his
maid Dulcinea. Realizing that the affair was going nowhere, Dulcinea told Romeo that
she was going back to the province to marry her childhood sweetheart. Clouded by anger
and jealousy, Romeo strangled Dulcinea to death while she was sleeping in the maid’s
quarters.

The following day, Romeo was found catatonic inside the maid’s quarters. He was
brought to the National Center for Mental Health (NCMH) where he was diagnosed to be
mentally unstable.

Charged with murder, Romeo pleaded insanity as a defense.

a. Will Romeo’s defense prosper? Explain. (2%)

b. What is the effect of the diagnosis of the NCMH on the case? (2%)

XIV

Paul lives with his long-time girlfriend Joan in a ondominium in Makati. For more than a
year, he has been secretly saving money in an envelope under their bed to buy her an
engagement ring. One day, while Joan was cleaning their room, she found the envelope,
took the money, and left Paul. As prosecutor, what crime, if any, would you charge Joan?
Explain. (3%)

XV

Suspecting that her husband of twenty years was having an affair, Leilanie hired a private
investigator to spy on him. After two weeks, the private investigator showed Leilanie a
video of her husband having sexual intercourse with another woman in a room of a five-
star hotel. Based on what she saw on the video, Leilanie accused her husband of
concubinage.

Will the case of concubinage prosper? Explain. (3%)

XVI

The president, treasurer, and secretary of ABC Corporation were charged with syndicated
estafa under the following Information:

That on or about the 1st week of January 2010 or subsequent thereto in Cebu City and
within the jurisdiction of this Honorable Court, the above-named accused, conspiring and
confederating together and all of them mutually helping and aiding one another in a
syndicated manner, through a corporation registered with the Securities and Exchange
Commission (SEC), with intention of carrying out the unlawful or illegal act, transaction,
enterprise or scheme, with intent to gain and by means of fraud and deceit, did then and
there wilfully, unlawfully, and feloniously defraud Virna, Lana, Deborah and several
other persons by falsely or fraudulently pretending or representing in a transaction or
series of transactions, which they made with complainants and the public in general, to
the effect that they were in a legitimate business of foreign exchange trading successively
or simultaneously operating under the name and style of ABC Corporation and DEF
Management Philippines, Incorporated, induced and succeeded in inducing complainants
and several other persons to give and deliver to said accused the amount of at least
P20,000,000.00 on the strength of said manifestations and representations, the accused
knowing fully well that the abovenamed corporations registered with the SEC are not
licensed nor authorized to engage in foreign exchange trading and that such
manifestations and representations to transact in foreign exchange were false and
fraudulent, that these resulted to the damage and prejudice of the complainants and other
persons, and that the defraudation pertains to funds solicited from the public in general by
such corporations/associations.

Will the case for syndicated estafa prosper? Explain. (5%)

XVII

A killed his wife and buried her in their backyard. He immediately went into hiding in the
mountains.

Three years later, the bones of A’s wife were discovered by X, the gardener. Since X had
a standing warrant of arrest, he hid the bones in an old clay jar and kept quiet about it.
After two years, Z, the caretaker, found the bones and reported the matter to the police.

After 15 years of hiding, A left the country but returned three years later to take care of
his ailing sibling. Six years thereafter, he< was charged with parricide but raised the
defense of prescription.

a. Under the Revised Penal Code, when does the period of prescription of a crime
commence to run? (1%)
b. When is it interrupted? (1%)
c. Is A’s defense tenable? Explain. (3%)
XVIII

On her way home, Eva Marie saw an injured chow chow puppy behind a bush. Since the
puppy did not have a collar, she brought it home so she could have it as a pet. Her son in
fact begged Eva Marie to keep the puppy. The following day, Eva Marie bought a collar
for the puppy and brought it to a veterinarian for treatment.

a. Did Eva Marie incur criminal liability in bringing the puppy home as a pet?
Explain. (2%)
b. Did she incur civil liability? Explain. (2%)

XIX

Jack and Jill have been married for seven years. One night, Jack came home drunk.
Finding no food on the table, Jack started hitting Jill only to apologize the following day.

A week later, the same episode occurred – Jack came home drunk and started hitting Jill.

Fearing for her life, Jill left and stayed with her sister. To woo Jill back, Jack sent her
floral arrangements of spotted lilies and confectioneries. Two days later, Jill returned
home and decided to give Jack another chance. After several days, however, Jack again
came home drunk. The following day, he was found dead.

Jill was charged with parricide but raised the defense of "battered woman syndrome."

a. Define "Battered Woman Syndrome." (2%)

b. What are the three phases of the "Battered Woman Syndrome"? (3 %)
c. Would the defense prosper despite the absence of any of the elements for justifying
circumstances of self-defense under the Revised Penal Code? Explain. (2%)

XX

Matt was found guilty of drug trafficking while his younger brother Jeff was found guilty
of possession of equipment, instrument, apparatus and other paraphernalia for dangerous
drugs under Section 12 of Republic Act No. 9165.

Matt filed a petition for probation. Jeff appealed his conviction during the pendency of
which he also filed a petition for probation.

The brothers’ counsel argued that they being first time offenders, their petitions for
probation should be granted. How would you resolve the brothers’ petitions for
probation? Explain. (3%)

XXI

Because peace negotiations on the Spratlys situation had failed, the People’s Republic of
China declared war against the Philippines. Myra, a Filipina who lives with her Italian
expatriate boyfriend, discovered e-mail correspondence between him and a certain
General Tung Kat Su of China.

On March 12, 2010, Myra discovered that on even date her boyfriend had sent an e-mail
to General Tung Kat Su, in which he agreed to provide vital information on the military
defense of the Philippines to the Chinese government in exchange for P1 million and his
safe return to Italy. Two weeks later, Myra decided to report the matter to the proper
authorities.

Did Myra commit a crime? Explain. (3%)

XXII

Immediately after murdering Bob, Jake went to his mother to seek refuge. His mother
told him to hide in the maid’s quarters until she finds a better place for him to hide. After
two days, Jake transferred to his aunt’s house. A week later, Jake was apprehended by the
police. Can Jake’s mother and aunt be made criminally liable as accessories to the crime
of murder? Explain. (3 %)

XXIII

Christopher, John, Richard, and Luke are fraternity brothers. To protect themselves from
rival fraternities, they all carry guns wherever they go. One night, after attending a party,
they boarded a taxicab, held the driver at gunpoint and took the latter’s earnings.

a. What crime, if any, did the four commit? Enumerate the elements of the crime.
(2%)
b. Would your answer be the same if they killed the driver? Explain. (2%)
 2016

Philippine Supreme Court Jurisprudence > Year 2016 > September 2016
Decisions > G.R. No. 205871, September 28, 2016 - RUEL TUANO Y
HERNANDEZ, Petitioner, v. PEOPLE OF THE PHILIPPINES,
Respondent.:

G.R. No. 205871, September 28, 2016 - RUEL TUANO Y HERNANDEZ, Petitioner, v. PEOPLE OF THE
PHILIPPINES, Respondent.

SECOND DIVISION

G.R. No. 205871, September 28, 2016

RUEL TUANO Y HERNANDEZ, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.

RESOLUTION

LEONEN, J.:

For our resolution is a Memorandum submitted by the Deputy Clerk of Court and Chief Judicial Records Officer
requesting instructions on the proper date of finality of a case in which this Court issued a resolution acquitting the
accused without having been informed of his prior death.

Accused Ruel Tuano y Hernandez was charged with violation of Article II, Section 11(3) of Republic Act No. 9165
before Branch 13 of the Regional Trial Court of Manila for having in his possession one (1) heat-sealed transparent
plastic sachet with 0.064 grams of shabu.1chanrobleslaw

After trial on the merits, the Regional Trial Court convicted accused in the Decision2 dated May 4, 2010. The
dispositive portion reads:ChanRoblesVirtualawlibrary

WHEREFORE, premises considered, RUEL TUANO y HERNANDEZ is found GUILTY beyond reasonable doubt for
Violation of Section 11(3), Article II of R.A. 9165 and is sentenced to suffer imprisonment of twelve (12) years and
one (1) day to twenty (20) years and a fine of Three hundred thousand pesos (P300,000.00).
In the service of his sentence, the actual confinement under detention during the pendency of this case shall be deducted
from the said prison term in accordance with Article 29 of the Revised Penal Code.

The evidence presented is ordered transferred to the Philippine Drug Enforcement Agency (PDEA) for destruction.

SO ORDERED.3chanroblesvirtuallawlibrary
On appeal, the Court of Appeals affirmed in toto the ruling of the Regional Trial Court in the Decision 4dated June 8,
2012, the dispositive portion of which reads:ChanRoblesVirtualawlibrary
WHEREFORE, premises considered, the appeal is hereby DENIED. The assailed 04 May 2010 Decision of the
Regional Trial Court, Branch 13 of the City of Manila is AFFIRMED in toto.

SO ORDERED.5 (Emphasis in the original)

Accused moved for reconsideration6 on July 4, 2012, but the Motion was denied by the Court of Appeals in the
Resolution7 dated February 12, 2013.

On April 16, 2013, accused filed before this Court a Petition for Review on Certiorari 8 questioning the Court of
Appeals' June 8, 2012 Decision and February 12, 2013 Resolution.

On June 23, 2014, this Court sustained the conviction of accused, thus affirming the ruling of the Court of
Appeals.9 The dispositive portion of this Court's unsigned Resolution reads:ChanRoblesVirtualawlibrary
WHEREFORE, the June 8, 2012 decision and the February 12, 2013 resolution of the Court of Appeals in CA-G.R.
No. 33363 are AFFIRMED.10 (Emphasis in the original)
On August 7, 2014, accused moved for reconsideration, questioning this Court's June 23, 2014 unsigned Resolution and
praying for his acquittal.11chanrobleslaw

On Feburary 25, 2015, this Court required respondent People of the Philippines, through the Office of the Solicitor
General, to file a comment on accused's Motion for Reconsideration.12 Respondent filed a Motion for Extension of
Time to File Comment13 dated March 27, 2015 and a Comment14 dated April 20, 2015.

Accused, through the Public Attorney's Office, filed a Motion for Extension of Time to File Reply15 dated September
16, 2015 and a Reply16 on September 22, 2015.

On June 27, 2016, this Court issued the Resolution17 reconsidering its June 23, 2014 unsigned Resolution. This Court
acquitted accused for failure of the prosecution to prove his guilt beyond reasonable doubt. The dispositive portion of
the Resolution reads:ChanRoblesVirtualawlibrary
WHEREFORE, the Resolution dated June 23, 2014 affirming the Court of Appeals' June 8, 2012 Decision and
February 12, 2013 Resolution in CA-G.R. CR No. 33363 is hereby RECONSIDERED. Petitioner Ruel Tuano Y
Hernandez is hereby ACQUITTED for failure of the prosecution to prove his guilt beyond reasonable doubt. He is
ordered immediately RELEASED from detention, unless he is confined for any other lawful cause.

Let a copy of this Resolution be furnished to the Director of the Bureau of Corrections for immediate implementation.
The Director of the Bureau of Corrections is directed to report to this Court within five (5) days from receipt of this
Resolution on the action taken. Copies shall also be furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drug Enforcement Agency for their information.

SO ORDERED.18 (Emphasis in the original)

Thus, an Order of Release19 was issued and sent to the Director of the Bureau of Corrections.

On July 22, 2016, this Court received from the Director General of the Bureau of Corrections a letter20dated July 15,
2016 informing this Court that accused died on March 1, 2015, prior to the issuance of this Court's June 27, 2016
Resolution. A certified machine copy of accused's Death Certificate was attached to the letter.21chanrobleslaw

On August 22, 2016, this Court received a memorandum from the Division Clerk of Court requesting instructions on
the proper date of finality of this Court's June 27, 2016 Resolution, in light of accused's death prior to the Resolution's
issuance.22chanrobleslaw

This Court notes that counsels for accused should have informed this Court of the death of their client.

Rule 3, Section 16 of the Rules of Court provides that the counsel is duty-bound to report the death of a party to the
court, thus:ChanRoblesVirtualawlibrary
RULE 3
Filing and Service of Pleadings, Judgments and Other Papers

. . . .

SEC. 16. Death of party; duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby
extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact
thereof and to give the name and address of his legal representative or representatives. Failure of counsel to comply
with this duty shall be a ground for disciplinary action.

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint a guardian ad litem for the minor heirs.

The court shall forthwith order said legal representative or representatives to appear and be substituted within a period
of thirty (30) days from notice.

If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear
within the specified period, the court may order the opposing party, within a specified time, to procure the appointment
of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf
of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered
as costs. (Emphasis supplied)
Although Rule 3, Section 16 of the Rules of Court is directly applied more often in civil actions for the substitution of
the deceased party, the rule that the counsel of the deceased party must inform the court of the death of his or her client
also properly applies in criminal actions. Regardless of the nature of the action, courts cannot be expected to assume the
death of the party without the counsel's proper manifestation.23 Furthermore, the rules presume that "the attorney for the
deceased party is in a better position than the attorney for the adverse party to know about the death of his [or her]
client[.]"24chanrobleslaw

As officers of the court and as protectors of the legal interests of their clients, counsels have a duty to properly act in
case of their clients' death by notifying the Court of this development.

Counsels for accused were grossly remiss in this duty. Accused died on March 1, 2015.25cralawred However, his
counsels continued to file pleadings on his behalf, including a Motion for Extension of Time to File Reply dated
September 16, 201526 and a Reply dated September 22, 2015.27 It was only through the July 15, 2016 letter of the
Director General of the Bureau of Corrections did this Court find out that accused had already died:—one (1) year, four
(4) months, and 15 days after its occurrence.28chanrobleslaw

This Court notes that accused was represented by the Public Attorney's Office. Notwithstanding their heavy case
workload and the free legal assistance they provide to indigents and low-income persons, however, counsels from the
Public Attorney's Office are still obliged to pursue their cases with competence and diligence. This is consistent with
their commitment to public service.

Rule 14.04 of the Code of Professional Responsibility provides that "[a] lawyer who accepts the cause of a person
unable to pay his professional fees shall observe the same standard of conduct governing his relations with paying
clients." In Endaya v. Oca:29
On top of all these is respondent's employment as a lawyer of the Public Attorney's Office which is tasked to provide
free legal assistance for indigents and low-income persons so as to promote the rule of law in the protection of the
rights of the citizenry and the efficient and speedy administration of justice. Against this backdrop, respondent should
have been more judicious in the performance of his professional obligations. As we held in Vitriola v. Dasig[,] "lawyers
in the government are public servants who owe the utmost fidelity to the public service." Furthermore, a lawyer from
the government is not exempt from observing the degree of diligence required in the Code of Professional
Responsibility. Canon 6 of the Code provides that "the canons shall apply to lawyers in government service in the
discharge of their official tasks."

At this juncture, it bears stressing that much is demanded from those who engage in the practice of law because they
have a duty not only to their clients, but also to the court, to the bar, and to the public. The lawyer's diligence and
dedication to his work and profession not only promote the interest of his client, [they] likewise help attain the ends of
justice by contributing to the proper and speedy administration of cases, bring prestige to the bar and maintain respect
to the legal profession.30 (Citations omitted)
Additionally, Canon 2 of the Code of Professional Responsibility explicitly states that "a lawyer shall make his legal
services available in an efficient and convenient manner compatible with the independence, integrity and effectiveness
of the profession."

Counsels for accused have shown inefficiency in the performance of their duties. Relying on their representations in
their pleadings, this Court was led to believe that the criminal action against accused subsisted.

Consequently, this Court issued a resolution even after accused's death. Had counsels for accused informed this Court
earlier of the death of their client, this Court would have been saved precious time, effort, and resources, which could
have been devoted to other pending cases that call for this Court's resolution and judgment. Likewise, the parties need
not have filed the pleadings calling for the resolution of accused's Motion for Reconsideration.

Given these circumstances, counsels for accused are directed to show cause why no disciplinary action should be taken
against them in light of their failure to inform this Court of accused's death.

This Court resolves to set aside its June 27, 2016 Resolution and dismiss this case.

The death of accused extinguishes his criminal liability. Article 89, paragraph 1 of the Revised Penal Code
provides:ChanRoblesVirtualawlibrary
Art. 89. How criminal liability is totally extinguished. — Criminal liability is totally extinguished:

chanRoblesvirtualLawlibrary1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties,
liability therefore is extinguished only when the death of the offender occurs before final judgment[.]
Likewise, the civil liability of the accused arising from his criminal liability is extinguished upon his death. In People v.
Bayotas:31
1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability
based solely thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior to final judgment
terminates his criminal liability and only the civil liability directly arising from and based solely on the offense
committed, i.e., civil liability ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also be
predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of
obligation from which the civil liability may arise as a result of the same act or omission:ChanRoblesVirtualawlibrary
a) Law

b) Contracts

c) Quasi-contracts

d) . . . .

e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued
but only by way of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal
Procedure as amended. This separate civil action may be enforced either against the executor/administrator or the estate
of the accused, depending on the source of obligation upon which the same is based as explained above.32 (Emphasis
supplied, citations omitted)
In People v. Paras,33 this Court rendered judgment in a criminal case without being informed earlier that the accused
had already passed away. Premised on the principle that the death of the accused extinguishes his criminal liability, the
Court set aside its decision and dismissed the criminal case.

Considering accused's death pending appeal extinguishes his criminal liability and civil liability ex delicto, the criminal
action must be dismissed since there is no longer a defendant to stand as the accused.34chanrobleslaw

Therefore, when accused died on March 1, 2015 during the pendency of his appeal and prior to this Court's Resolution
dated June 27, 2016, his criminal liability has already been extinguished. From that point on, the criminal action had no
defendant upon which the action is based.

This Court's June 27, 2016 Resolution had become ineffectual and must be set aside. Likewise, the criminal action must
be dismissed.

WHEREFORE, this Court resolves to SET ASIDE its Resolution dated June 27, 2016 and DISMISSCriminal Case
No. 03-211976 before Branch 13 of the Regional Trial Court of Manila, on account of the death of accused Ruel Tuano
y Hernandez on March 1, 2015.
Counsels for accused, however, are DIRECTED to show cause, within five (5) days of receipt of this Resolution, why
no disciplinary action should be taken against them for failing to inform this Court of accused's death.

SO ORDERED.chanRoblesvirtualLawlibrary

Brion,**(Acting Chairperson), Del Castillo, and Mendoza, JJ., concur.

Carpio, J., on official leave.

Endnotes:

**
Designated Acting Chairperson per Special Order No. 2374 dated September 14, 2016.
1
Rollo, p. 56, Regional Trial Court Decision.
2
Id. at 56-60. The Decision was penned by Acting Presiding Judge Cicero D. Jurado, Jr.
3
Id. at 60.
4
Id. at 73—81. The Decision was penned by Associate Justice Samuel Gaerlan and concurred in by Associate Justices
Ramon R. Garcia and Ricardo R. Rosario of the Special Fifth Division, Court of Appeals, Manila.
5
Id. at 81.
6
Id. at 82-89.
7
Id. at 96. The Resolution was penned by Associate Justice Samuel Gaerlan and concurred in by Associate Justices
Ramon R. Garcia and Ricardo R. Rosario of the Special Fifth Division, Court of Appeals, Manila.
8
Id. at 9-28.
9
Id. at 125-135.
10
Id. at 134.
11
Id. at 138-147.
12
Id. at 149.
13
Id. at 150-152.
14
Id. at 153-160.
15
Id. at 162-166.
16
Id. at 167-173.
17
Id. at 178-185.
18
Id. at 184.
19
Id. at 175-176.
20
Id. at 186.
21
Id. at 188.
22
Id. at 192-193.
23
Ang Kek Chen v. Andrade, 316 Phil. 136, 143-144 (1999) [Per J. Mendoza, Second Division]; Florendo v. Coloma,
214 Phil. 268, 274 (1984) [Per J. Gutierrez, Jr., First Division].
24
Id. at 144.
25
cralawred Rollo, p. 188, Death Certificate.
26
Id. at 163.
27
Id. at 170-171.
28
Id. at 186.
29
457 Phil. 314 (2003) [Per J. Tinga, Second Division].
30
Id. at 329.
31
G.R. No. 102007, September 2, 1994, 236 SCRA 239 [Per J. Romero, En Banc]. People V. Egagamao, G.R. No.
218809, August 3, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2016/august2016/1218809.pdf> [Per J. Perlas-
Bernabe, First Division].
32
Id. at 255-256, as cited in People v. Egagamao, G.R. No. 218809, August 3, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2016/august2016/218809.pdf> 5-6 [Per J. Perlas-
Bernabe, First Division].
33
G.R. No. 192912, October 22, 2014, 739 SCRA 179 [Per J. Leonardo-De Castro, Special First Division].
34
Id. at 184.
 2017

Philippine Supreme Court Jurisprudence > Year 2017 > January 2017 Decisions > G.R. No. 189158, January 11, 2017 - JAMES IENT AND MAHARLIKA
SCHULZE, Petitioners, v. TULLETT PREBON (PHILIPPINES), INC., Respondent.; G.R. No. 189530 - JAMES IENT AND MAHARLIKA SCHULZE, Petitioners, v.
TULLETT PREBON (PHILIPPINES), INC., Respondent.:

G.R. No. 189158, January 11, 2017 - JAMES IENT AND MAHARLIKA SCHULZE, Petitioners, v. TULLETT PREBON (PHILIPPINES), INC.,
Respondent.; G.R. No. 189530 - JAMES IENT AND MAHARLIKA SCHULZE, Petitioners, v. TULLETT PREBON (PHILIPPINES), INC., Respondent.

FIRST DIVISION

G.R. No. 189158, January 11, 2017

JAMES IENT AND MAHARLIKA SCHULZE, Petitioners, v. TULLETT PREBON (PHILIPPINES), INC., Respondent.

G.R. No. 189530

JAMES IENT AND MAHARLIKA SCHULZE, Petitioners, v. TULLETT PREBON (PHILIPPINES), INC., Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

In these consolidated Petitions for Review under Rule 45 of the Rules of Court, petitioners James A. Ient (Ient) and Maharlika C. Schulze
(Schulze) assail the Court of Appeals Decision 1 dated August 12, 2009 in CA-G.R. SP No. 109094, which affirmed the Resolutions dated April
23, 20092 and May 15, 20093 of the Secretary of Justice in I.S. No. 08-J-8651. The Secretary of Justice, through the Resolutions dated April
23, 2009 and May 15, 2009, essentially ruled that there was probable cause to hold petitioners, in conspiracy with certain former directors
and officers of respondent Tullet Prebon (Philippines), Inc. (Tullett), criminally liable for violation of Sections 31 and 34 in relation to Section
144 of the Corporation Code.

From an assiduous review of the records, we find that the relevant factual and procedural antecedents for these petitions can be
summarized as follows:

Petitioner Ient is a British national and the Chief Financial Officer of Tradition Asia Pacific Pte. Ltd. (Tradition Asia) in Singapore.4 Petitioner
Schulze is a Filipino/German who does Application Support for Tradition Financial Services Ltd. in London (Tradition London). 5 Tradition Asia
and Tradition London are subsidiaries of Compagnie Financiere Tradition and are part of the "Tradition Group." The Tradition Group is
allegedly the third largest group of Inter-dealer Brokers (IDB) in the world while the corporate organization, of which respondent Tullett is a
part, is supposedly the second largest. In other words, the Tradition Group and Tullett are competitors in the inter-dealer broking business.
IDBs purportedly "utilize the secondary fixed income and foreign exchange markets to execute their banks and their bank customers' orders,
trade for a profit and manage their exposure to risk, including credit, interest rate and exchange rate risks." In the Philippines, the clientele
for IDBs is mainly comprised of banks and financial institutions. 6

Tullett was the first to establish a business presence in the Philippines and had been engaged in the inter-dealer broking business or voice
brokerage here since 1995.7 Meanwhile, on the part of the Tradition Group, the needs of its Philippine clients were previously being serviced
by Tradition Asia in Singapore. The other IDBs in the Philippines are Amstel and Icap. 8

Sometime in August 2008, in line with Tradition Group's motive of expansion and diversification in Asia, petitioners Ient and Schulze were
tasked with the establishment of a Philippine subsidiary of Tradition Asia to be known as Tradition Financial Services Philippines, Inc.
(Tradition Philippines).9 Tradition Philippines was registered with the Securities and Exchange Commission (SEC) on September 19,
200810 with petitioners Ient and Schulze, among others, named as incorporators and directors in its Articles of Incorporation. 11

On October 15, 2008, Tullett, through one of its directors, Gordon Buchan, filed a Complaint-Affidavit12with the City Prosecution Office of
Makati City against the officers/employees of the Tradition Group for violation of the Corporation Code. Impleaded as respondents in the
Complaint-Affidavit were petitioners Ient and Schulze, Jaime Villalon (Villalon), who was formerly President and Managing Director of Tullett,
Mercedes Chuidian (Chuidian), who was formerly a member of Tullett's Board of Directors, and other John and Jane Does. Villal on and
Chuidian were charged with using their former positions in Tullett to sabotage said company by orchestrating the mass resignation of its
entire brokering staff in order for them to join Tradition Philippines. With respect to Villalon, Tullett claimed that the former held several
meetings between August 22 to 25, 2008 with members of Tullett's Spot Desk and brokering staff in order to convince them to leave the
company. Villalon likewise supposedly intentionally failed to renew the contracts of some of the brokers. On August 25, 2008, a meeting was
also allegedly held in Howzat Bar in Makati City where petitioners and a lawyer of Tradition Philippines were present. At said meeting, the
brokers of complainant Tullett were purportedly induced, en masse, to sign employment contracts with Tradition Philippines and were
allegedly instructed by Tradition Philippines' lawyer as to how they should file their resignation letters.
Complainant also claimed that Villalon asked the brokers present at the meeting to call up Tullett's clients to inform them that they had
already resigned from the company and were moving to Tradition Philippines. On August 26, 2008, Villalon allegedly informed Mr. Barry
Dennahy, Chief Operating Officer of Tullett Prebon in the Asia-Pacific, through electronic mail that all of Tullett's brokers had resigned.
Subsequently, on September 1, 2008, in another meeting with Ient and Tradition Philippines' counsel, indemnity contracts in favor of the
resigning employees were purportedly distributed by Tradition Philippines. According to Tullett, respondents Villalon and Chuidian (who were
still its directors or officers at the times material to the Complaint-Affidavit) violated Sections 31 and 34 of the Corporation Code which made
them criminally liable under Section 144. As for petitioners Ient and Schulze, Tullett asserted that they conspired with Vill alon and Chuidian
in the latter's acts of disloyalty against the company. 13

Villalon and Chuidian filed their respective Counter-Affivadits.14

Villalon alleged that frustration with management changes in Tullett Prebon motivated his personal decision to move from Tullett and accept
the invitation of a Leonard Harvey (also formerly an executive of Tullett) to enlist with the Tradition Group. As a courtesy to the brokers and
staff, he informed them of his move contemporaneously with the tender of his resignation letter and claimed that his meetings with the
brokers was not done in bad faith as it was but natural, in light of their long working relationship, that he share with them his plans. The
affidavit of Engelbert Wee should allegedly be viewed with great caution since Wee was one of those who accepted employment with
Tradition Philippines but changed his mind and was subsequently appointed Managing Director (Villalon's former position) as a prize for his
return. Villalon further argued that his resignation from Tullett was done in the exercise of his fundamental rights to the pursuit of life and
the exercise of his profession; he can freely choose to avail of a better life by seeking greener pastures; and his actions did not fall under
any of the prohibited acts under Sections 31 and 34 of the Corporation Code. It is likewise his contention that Section 144 of the Corporation
Code applies only to violations of the Corporation Code which do not provide for a penalty while Sections 31 and 34 already provide for the
applicable penalties for violations of said provisions - damages, accounting and restitution. Citing the Department of Justice (DOJ) Resolution
dated July 30, 2008 in UCPB v. Antiporda, Villalon claimed that the DOJ had previously proclaimed that Section 31 is not a penal provision of
law but only the basis of a cause of action for civil liability. Thus, he concluded that there was no probable cause that he violated the
Corporation Code nor was the charge of conspiracy properly substantiated. 15

Chuidian claimed that she left Tullett simply to seek greener pastures. She also insisted the complaint did not allege any act on her part that
is illegal or shows her participation in any conspiracy. She merely exercised her right to exercise her chosen profession and pursue a better
life. Like Villalon, she stressed that her resignation from Tullett and subsequent transfer to Tradition Philippines did not fall under any of the
prohibited acts under Sections 31 and 34. Section 144 of the Corporation Code purportedly only applies to provisions of said Code that do
not provide for any penalty while Sections 31 and 34 already provide for the penalties for their violation - damages, accounting and
restitution. In her view, that Section 34 provided for the ratification of the acts of the erring corporate director, trustee or office evinced
legislative intent to exclude violation of Section 34 from criminal prosecution. She argued that Section 144 as a penal provi sion should be
strictly construed against the State and liberally in favor of the accused and Tullett has failed to substantiate its charge of bad faith on her
part.16

In her Counter-Affidavit,17 petitioner Schulze denied the charges leveled against her. She pointed out that the Corporation Code is not a
"special law" within the contemplation of Article 1018 of the Revised Penal Code on the supplementary application of the Revised Penal Code
to special laws since said provision purportedly applies only to "special penal laws." She further argued that "[s]ince the Corporation Code
does not expressly provide that the provisions of the Revised Penal Code shall be made to apply suppletorily, nor does it adopt the
nomenclature of penalties of the Revised Penal Code, the provisions of the latter cannot be made to apply suppletorily to the former as
provided for in the first sentence of Article 10 of the Revised Penal Code." 19 Thus, she concluded that a charge of conspiracy which has for
its basis Article 8 of the Revised Penal Code cannot be made applicable to the provisions of the Corporation Code.

Schulze also claimed that the resignations of Tullett's employees were done out of their own free will without force, intimidation or pressure
on her and Ient's part and were well within said employees' right to "free choice of employment."20

For his part, petitioner Ient alleged in his Counter-Affidavit that the charges against him were merely filed to harass Tradition Philippines and
prevent it from penetrating the Philippine market. He further asserted that due to the highly specialized nature of the industry, there has
always been a regular flow of brokers between the major players. He claimed that Tradition came to the Philippines in good faith and with a
sincere desire to foster healthy competition with the other brokers. He averred that he never forced anyone to join Tradition Philippines and
the Tullett employees' signing on with Tradition Philippines was their voluntary act since they were discontented with the working
environment in Tullett. Adopting a similar line of reasoning as Schulze, Ient believed that the Revised Penal Code could not be made
suppletorily applicable to the Corporation Code so as to charge him as a conspirator. According to Ient, he merely acted within his rights
when he offered job opportunities to any interested person as it was within the employees' rights to change their employment, especially
since Article 23 of the Universal Declaration of Human Rights (of which the Philippines is a signatory) provides that "everyone has the right
to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment." 21 He also
denounced the ComplaintAffidavit and the affidavits of Tullett employees attached thereto as self-serving or as an exaggeration/twisting of
the true events.22

In a Consolidated Reply-Affidavit23 notarized on January 22, 2009, Tullett argued that Villalon, Chuidian, Schulze, and Ient have mostly
admitted the acts attributed to them in the Complaint-Affidavit and only attempted to characterize said acts as "normal," "innocent" or
"customary." It was allegedly evident from the Counter-Affidavits that the resignation of Tullett's employees was an orchestrated plan and
not simply motivated by their seeking "greener pastures." Purported employee movements in the industry between the major companies are
irrevelant since such movements are subject to contractual obligations. Tullett likewise denied that its working environment was stringent
and "weird." Even assuming that Villalon and Chuidian were dissatisfied with their employment in Tullett, this would supposedly not justify
nor exempt them from violating their duties as Tullett's officers/directors. There was purportedly no violation of their constitutional rights to
liberty or to exercise their profession as such rights are not unbridled and subject to the laws of the State. In the case of Villalon and
Chuidian, they had to comply with their duties found in Sections 31 and 34 of the Corporation Code. Tullett asserts that Section 144 applies
to the case at bar since the DOJ Resolution in UCPB is not binding as it applies only to the parties therein and it likewise involved facts
different from the present case. Relying on Home Insurance Company v. Eastern Shipping Lines,24 Tullett argued that Section 144 applies to
all other violations of the Corporation Code without exception. Article 8 of the Revised Penal Code on conspiracy was allegedly applicable to
the Corporation Code as a special law with a penal provision.25 cralaw red

In a Supplemental Complaint-Affidavit likewise notarized on January 22, 2009, Tullett included Leonard James Harvey (Harvey) in the case
26

and alleged that it learned of Harvey's complicity through the Counter Affidavit of Villalon. Tullett claimed that Harvey, who was Chairman of
its Board of Directors at the time material to the Complaint, also conspired to instigate the resignations of its employees and was an
indispensable part of the sabotage committed against it.

In his Rejoiner-Affidavit,27 Ient vehemently denied that there was a pre-arranged plan to sabotage Tullett. According to Ient, Gordon Buchan
of Tullett thought too highly of his employer to believe that the Tradition Group's purpose in setting up Tradition Philippines was specifically
to sabotage Tullett. He stressed that Tradition Philippines was set up for legitimate business purposes and Tullett employees who signed
with Tradition did so out of their own free will and without any force, intimidation, pressure or inducement on his and Schul ze's part. All he
allegedly did was confirm the rumors that the Tradition Group was planning to set up a Philippine office. Echoing the arguments of Villal on
and Chuidian, Ient claimed that (a) there could be no violation of Sections 31 and 34 of the Corporation as these sections refer to corporate
acts or corporate opportunity; (b) Section 144 of the same Code cannot be applied to Sections 31 and 34 which already contains the
penalties or remedies for their violation; and (c) conspiracy under the Revised Penal Code cannot be applied to the Sections 31 and 34 of
the Corporation Code.

In a Resolution28 dated February 17, 2009, State Prosecutor Cresencio F. Delos Trinos, Jr. (Prosecutor Delos Trinos), Acting City Prosecutor
of Makati City, dismissed the criminal complaints. He reasoned that:
chanRoble svirtual Lawlib ra ry

It is our considered view that the acts ascribed [to] respondents Villalon and Chuidian did not constitute any of the prohibited acts of
directors or trustees enunciated under Section 31. Their cited actuations certainly did not involve voting for or assenting to patently unlawful
acts of [Tullett] nor could the same be construed as gross negligence or bad faith in directing the affairs of [Tullett]. There is also no
showing that they acquired any personal or pecuniary interest in conflict with their duty as directors of [Tullett]. Neither was there a showing
that they attempted to acquire or acquired, in violation of their duty as directors, any interest adverse to [Tullett] in respect [to] any matter
which has been reposed in them in confidence.

xxxx

The issue that respondent Villalon informed the brokers of his plan to resign from [Tullett] and to subsequently transfer to Tradition is not in
dispute. However, we are unable to agree that the brokers were induced or coerced into resigning from [Tullett] and transferring to Tradition
themselves. x x x As the record shows, Mr. Englebert Wee and the six (6) members of the broking staff who stand as [Tullett]'s witnesses,
also initially resigned from [Tullett] and transferred to Tradition but backed out from their contract of employment with Tradition and opted
to remain with [Tullett].

Even assuming ex gratia argumenti that the brokers were induced by the respondents or anyone of them to leave their employment with
[Tullett], such inducement may only give rise to civil liability for damages against the respondents but no criminal liability would attach on
them. x x x.

On the alleged inducements of clients of [Tullett] to transfer to Tradition, there is no showing that clients of [Tullett] actually transferred to
Tradition. Also, the allegation that respondents orchestrated the mass resignation of employees of [Tullett] to destroy or shut down its
business and to eliminate it from the market in order that Tradition could take its place is baseless and speculative. Significantly, it is noted
that despite the resignations of respondents Villalon and Chuidian and the majority of the broking staff and their subsequent transfer to
Tradition, the business of [Tullet] was not destroyed or shut down. [Tullett] was neither eliminated from the market nor its place in the
market taken by Tradition. x x x

In the same vein, the "corporate opportunity doctrine" enunciated under Section 34 does not apply herein and cannot be rightfully raised
against respondents Villalon and Chuidian. Under Section 34, a director of a corporation is prohibited from competing with the business in
which his corporation is engaged in as otherwise he would be guilty of disloyalty where profits that he may realize will have to go to the
corporate funds except if the disloyal act is ratified. Suffice it to say that their cited acts did not involve any competiti on with the business of
[Tullett].29 ChanRoblesVi rtualaw lib rary

On the issue of conspiracy, Prosecutor Delos Trinos found that since Villalon and Chuidian did not commit any acts in violation of Sections 31
and 34 of the Corporation Code, the charge of conspiracy against Schulze and Ient had no basis. As for Harvey, said Resolution noted that
he was similarly situated as Villalon and Chuidian; thus, the considerations in the latter's favor were applicable to the former. 30 Lastly, on
the applicability of Section 144 to Sections 31 and 34, Prosecutor Delos Trinos relied on the reasoning in the DOJ Resolution dated July 30,
2008 in UCPB v. Antiporda issued by then Secretary of Justice Raul M. Gonzalez, to wit:
chanRoble svirtual Lawlib ra ry

We maintain and reiterate the ratiocination of the Secretary of Justice in United Coconut Planters Bank vs. Tirso Antiporda, et al., I.S. No.
2007-633 promulgated on July 30, 2008, thus - "It must be noted that Section 144 covers only those provisions 'not otherwise specifically
penalized therein.' In plain language, this means that the penalties under Section 144 apply only when the other provisions of the
Corporation Code do not yet provide penalties for non-compliance therewith."

A reading of Sections 31 and 34 shows that penalties for violations thereof are already provided therein. Under Section 31, directors or
trustees are made liable for damages that may result from their fraudulent or illegal acts. Also, directors, trustees or officers who attempt to
acquire or acquire any interest adverse to the corporation will have to account for the profits which otherwise would have accrued to the
corporation. Section 34, on the other hand, penalizes directors who would be guilty of disloyalty to the corporation by accounting to the
corporation all profits that they may realize by refunding the same. 31 ChanRoblesVi rt ualawlib ra ry

Consequently, Tullett filed a petition for review with the Secretary of Justice to assail the foregoing resolution of the Acting City Prosecutor of
Makati City. In a Resolution32 dated April 23, 2009, then Secretary of Justice Raul M. Gonzalez reversed and set aside Prosecutor Delos
Trinos's resolution and directed the latter to file the information for violation of Sections 31 and 34 in relation to Section 144 of the
Corporation Code against Villalon, Chuidian, Harvey, Schulze, and Ient before the proper court. As can be gleaned from the April 23, 2009
Resolution, the Secretary of Justice ruled that:
chanRoble svirtual Lawlib ra ry

It is evident from the case at bar that there is probable cause to indict respondents Villalon, Chuidian and Harvey for violating Section 31 of
the Corporation Code. Indeed, there is prima facie evidence to show that the said respondents acted in bad faith in directing the affairs of
complainant. Undeniably, respondents Villalon, Chuidian and Harvey occupied positions of high responsibility and great trust as they were
members of the board of directors and corporate officers of complainant. x x x As such, they are required to administer the corporate affairs
of complainant for the welfare and benefit of the stockholders and to exercise the best care, skill and judgment in the management of the
corporate business and act solely for the interest of the corporation.

xxxx

Respondents Villalon and Chuidian acted with dishonesty and in fraud. They went to the extent of having their several meetings away from
complainant's office so as to secretly entice and induce all its brokers to transfer to Tradition. Respondents Villalon and Chuidian did not
entice merely one or two employees of complainant but admittedly, the entire broking staff of the latter. This act would lead to the sure
collapse of complainant. x x x.

Further, respondents Villalon and Chuidian acquired personal and pecuniary interest in conflict with their duties as directors of complainant.
Respondents Villalon and Chuidian committed the acts complained of in order to transfer to Tradition, to have a higher salary and position
and bring the clients and business of complainant with them. The fact that Tradition is not yet incorporated at that time is of no
consequence.

Moreover, respondents Villalon and Chuidian violated Section 34 of the Corporation Code when they acquired business opportunity adverse
to that of complainant. When respondents Villalon and Chuidian told the brokers of complainant to convince their clients to transfer their
business to Tradition, the profits of complainant which rightly belonging to it will be transferred to a competitor company to be headed by
respondents.

The provision of Section 144 of the Corporation Code is also applicable in the case at bar as the penal provision provided therein is made
applicable to all violations of the Corporation Code, not otherwise specifically penalized. Moreover, the factual milieu of the case entitled
"Antiporda, et al., IS No. 2007-633" is inapplicable as the facts of the above-entitled case is different.

xxxx
As for respondent Harvey's probable indictment, aside from not submitting his counter-affidavit, the counter-affidavit of respondent Villalon
showed that he is also liable as such since the idea to transfer the employment of complainant's brokers was broached by him.

Anent respondents Ient and Schulze, record revealed that they conspired with respondents Villalon and Chuidian when they acti vely
participated in the acts complained of. They presented the employment contracts and indemnity agreements with the brokers of complainant
in a series of meetings held with respondents Villalon and Chuidian. Respondent Ient signed the contracts as CFO of Tradition Asia and even
confirmed the transfer of respondent Villalon to Tradition. Respondent Schulze admitted that the purpose of her sojourn in the Philippines
was to assist in the formation of Tradition. Thus, it is clear that their role in the acts complained of were instrumental for respondents
Villalon and Chuidian to violate their duties and responsibilities as directors and officers of complainant. 33 ChanRobles Virtualawl ibra ry

Ient and Schulze moved for reconsideration of the foregoing Resolution by the Secretary of Justice. Meanwhile, on May 14, 2009, two
Informations, one for violation of Section 31 and another for violation of Section 34, were filed by Prosecutor Delos Trinos with the
Metropolitan Trial Court of Makati City. In a Resolution dated May 15, 2009, the Secretary of Justice denied the motion for reconsideration
filed by petitioners. Unsatisfied with this tum of events, petitioners Ient and Schulze brought the matter to the Court of Appeals via a
petition for certiorari under Rule 65 which was docketed as CA-G.R. SP No. 109094.

In a Decision dated August 12, 2009, the Court of Appeals affirmed the Secretary of Justice's Resolutions dated April 23, 2009 and May 15,
2009, after holding that:
chanRoble svirtual Lawlib ra ry

Respondent Secretary correctly stressed that Sections 31 and 34 must be read in the light of the nature of the position of a director and
officer of the corporation as highly imbued with trust and confidence. Petitioners' rigid interpretation of clear-cut instances of liability serves
only to undermine the values of loyalty, honesty and fairness in managing the affairs of the corporation, which the law vested on their
position. Besides, this Court can hardly deduce abuse of discretion on the part of respondent Secretary in considering a conflict of interest
scenario from petitioners' act of advancing the interest of an emerging competitor in the field rather than fiercely protecting the business of
their own company. As aptly pointed out by the private respondent, the issue is not the right of the employee brokers to seek greener
pastures or better employment opportunities but the breach of fiduciary duty owed by its directors and officers.

In the commentary on the subject of duties of directors and controlling stockholders under the Corporation Code, Campos explained:
chanRoble svirtual Lawlib ra ry

"Fiduciary Duties; Conflict of Interest

"A director, holding as he does a position of trust, is a fiduciary of the corporation. As such, in case of conflict of his interest with those of
the corporation, he cannot sacrifice the latter without incurring liability for his disloyal act. The fiduciary duty has many ramifications,
and the possible conflict-of-interest situations are almost limitless, each possibility posing different problems. There will be
cases where a breach of trust is clear. Thus, where a director converts for his own use funds or property belonging to the corporation, or
accepts material benefits for exercising his powers in favor of someone seeking to do business with the corporation, no court will allow him
to keep the profit he derives from his wrongdoing. In many other cases, however, the line of demarcation between the fiduciary relationship
and a director's personal right is not easy to define. The Code has attempted at least to lay down general rules of conduct and
although these serve as guidelines for directors to follow, the determination as to whether in a given case the duty of loyalty
has been violated has ultimately to be decided by the court on the case's own merits." x x x. ChanRoblesVi rtualaw lib rary

Prescinding from the above, We agree with the Secretary of Justice that the acts complained of in this case establish a prima facie case for
violation of Sec. 31 such that the accused directors and officers of private respondent corporation are probably guilty of breach of bad faith
in directing the affairs of the corporation. The breach of fiduciary duty as such director and corporate office (sic) are evident from their
participation in recruiting the brokers employed in the corporation, inducing them to accept employment contracts with the newly formed
firm engaged in competing business, and securing these new hires against possible breach of contract complaint by the corporation through
indemnity contracts provided by Tradition Philippines. Clearly, no grave abuse of discretion was committed by the respondent Secretary in
reversing the city prosecutor's dismissal of the criminal complaint and ordering the filing of the corresponding information against the
accused, including herein petitioners.

As to petitioners' contention that conspiracy had not been established by the evidence, suffice it to state that such stance is belied by their
own admission of the very acts complained of in the Complaint-Affidavit, the defense put up by them consists merely in their common
argument that no crime was committed because private respondent's brokers had the right to resign and transfer employment if they so
decide.

It bears to reiterate that probable cause is such set of facts and circumstances which would lead a reasonably discreet and prudent man to
believe that the offense charged in the Information or any offense included therein has been committed by the person sought to be arrested.
In determining probable cause, the average man weighs the facts and circumstances without resorting to the calibrations of the rules of
evidence of which he has no technical knowledge. He relies on common sense. Thus, a finding of probable cause does not require an inquiry
into whether there is sufficient evidence to procure a conviction. It is enough that it is believed that the act or omission complained of
constitutes the offense charged. Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.

Finally, the Court finds no merit in the argument of petitioners that Sec. 144 is not applicable since Sec. 31 already provides for liability for
damages against the guilty director or corporate officer.
"SEC. 144. Violations of the Code. - Violations of any of the provisions of this Code or its amendments not otherwise specifically
penalized thereinshall be punished by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand
(P10,000.00) pesos or by imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the di scretion of the
court. If the violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before
the Securities and Exchange Commission; Provided, That such dissolution shall not preclude the institution of appropriate action against the
director, trustee or officer of the corporation responsible for the said violation; Provided, further, That nothing in this section shall be
construed to repeal the other causes for dissolution of a corporation provided in this Code." x x x. ChanRoblesVirtualawl ibra ry

"Damages" as the term is used in Sec. 31 cannot be deemed as punishment or penalty as this appears in the above-cited criminal provision
of the Corporation Code. Such "damage" implies civil, rather than, criminal liability and hence does not fall under those provisions of the
Code which are not "specifically penalized" with fine or imprisonment. 34 ChanRobles Virtualawl ibra ry

In light of the adverse ruling of the Court of Appeals, petitioners Ient and Schulze filed separate petitions for review with this Court. After
requiring further pleadings from the parties, the Court directed the parties to submit their memoranda to consolidate their positions on the
issues.

At the outset, it should be noted that respondent Tullett interposed several procedural objections which we shall dispose of first.

Anent respondent's contentions that the present petitions (assailing the issuances of the Secretary of Justice on the question of probable
cause) had become moot and academic with the filing of the Informations in the trial court and that under our ruling in Advincula v. Court of
Appeals35 the filing of a petition for certiorari with the appellate court was the improper remedy as findings of the Secretary of Justice on
probable cause must be respected, we hold that these cited rules are not inflexible.

In Yambot v. Tuquero,36 we observed that under exceptional circumstances, a petition for certiorariassailing the resolution of the Secretary
of Justice (involving an appeal of the prosecutor's ruling on probable cause) may be allowed, notwithstanding the filing of an information
with the trial court. We reiterated the doctrine in Ching v. Secretary of Justice37 that the acts of a quasi-judicial officer may be assailed by
the aggrieved party through a petition for certiorari and enjoined (a) when necessary to afford adequate protection to the constitutional
rights of the accused; (b) when necessary for the orderly administration of justice; (c) when the acts of the officer are without or in excess
of authority; (d) where the charges are manifestly false and motivated by the lust for vengeance; and (e) when there is clearly no prima
facie case against the accused.
In the case at bar, it is unsettling to perceive a seeming lack of uniformity in the rulings of the Secretary of Justice on the issue of whether a
violation of Section 31 entails criminal or only civil liability and such divergent actions are explained with a terse declaration of an alleged
difference in factual milieu and nothing further. Such a state of affairs is not only offensive to principles of fair play but also anathema to the
orderly administration of justice. Indeed, we have held that where the action of the Secretary of Justice is tainted with arbitrariness, an
aggrieved party may seek judicial review via certiorari on the ground of grave abuse of discretion.38

We likewise cannot give credit to respondent's claim of mootness. The "moot and academic" principle is not a magical formula that can
automatically dissuade the courts in resolving a case.39 The Court will not hesitate to resolve the legal and constitutional issues raised to
formulate controlling principles to guide the bench, the bar, and the public, particularly on a question capable of repetition, yet evading
review.40

As for the assertion that the present petitions are dismissible due to forum shopping since they were filed during the pendency of petitioners'
motion to quash and their co-accused's motion for judicial determination of probable cause with the trial court, we hold that there is no
cause to dismiss these petitions on such ground.

Forum shopping is an act of a party, against whom an adverse judgment or order has been rendered in one forum, of seeking and possibly
getting a favorable opinion in another forum, other than by appeal or special civil action for certiorari. It may also involve the
institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a
favorable disposition.41 There is no forum shopping where the suits involve different causes of action or different reliefs. 42

Jurisprudence explains that:

chanRoble svirtual Lawlib ra ry

A motion to quash is the mode by which an accused assails, before entering his plea, the validity of the criminal complaint or the criminal
information filed against him for insufficiency on its face in point of law, or for defect apparent on the face of the Information. The motion,
as a rule, hypothetically admits the truth of the facts spelled out in the complaint or information. The rules governing a motion to quash are
found under Rule 117 of the Revised Rules of Court. Section 3 of this Rule enumerates the grounds for the quashal of a complaint or
information. x x x.43 (Citation omitted.)ChanRobles Virtualawl ibra ry

On the other hand, the action at bar is a review on certiorari of the assailed Court of Appeals decision wherein the main issue is whether or
not the Secretary of Justice committed grave abuse of discretion in reversing the City Prosecutor's dismissal of the criminal complaint. These
consolidated petitions may proceed regardless of whether or not there are grounds to quash the criminal information pending in the court a
quo.

Neither do we find relevant the pendency of petitioners' co-accused's motion for judicial determination of probable cause before the trial
court. The several accused in these consolidated cases had a number of remedies available to them and they are each free to pursue the
remedy which they deem is their best option. Certainly, there is no requirement that the different parties in a case must all choose the same
remedy. We have held that even assuming separate actions have been filed by different parties involving essentially the same subject
matter, no forum shopping is committed where the parties did not resort to multiple judicial remedies. 44 In any event, we have stated in the
past that the rules on forum shopping are not always applied with inflexibility. 45

As a final point on the technical aspects of this case, we reiterate here the principle that in the exercise of the Courts equity jurisdiction,
procedural lapses may be disregarded so that a case may be resolved on its merits. 46 Indeed where strong considerations of substantive
justice are manifest in a petition, the strict application of the rules of procedure may be relaxed. 47 This is particularly true in these
consolidated cases where legal issues of first impression have been raised.

We now proceed to rule upon the parties' substantive arguments.

The main bone of disagreement among the parties in this case is the applicability of Section 144 of the Corporation Code to Sections 31 and
34 of the same statute such that criminal liability attaches to violations of Sections 31 and 34. For convenient reference, we quote the
contentious provisions here:
chanRoble svirtual Lawlib ra ry

SECTION 31. Liability of Directors, Trustees or Officers. - Directors or trustees who willfully and knowingly vote for or assent to patently
unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any
personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages
resulting therefrom suffered by the corporation, its stockholders or members and other persons.

When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation in respect
of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he
shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation.

SECTION 34. Disloyalty of a Director. - Where a director, by virtue of his office, acquires for himself a business opportunity which should
belong to the corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the latter for all such profits by
refunding the same, unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the
outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked his own funds in the venture.

SECTION 144. Violations of the Code. - Violations of any of the provisions of this Code or its amendments not otherwise specifically
penalized therein shall be punished by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00)
pesos or by imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the court. If the
violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before the
Securities and Exchange Commission: Provided, That such dissolution shall not preclude the institution of appropriate action against the
director, trustee or officer of the corporation responsible for said violation: Provided, further, That nothing in this section shall be construed
to repeal the other causes for dissolution of a corporation provided in this Code. ChanRobles Vi rtualaw lib rary

Petitioners posit that Section 144 only applies to the provisions of the Corporation Code or its amendments "not otherwise specifically
penalized" by said statute and should not cover Sections 31 and 34 which both prescribe the "penalties" for their violation; namely,
damages, accounting and restitution of profits. On the other hand, respondent and the appellate court have taken the position that the term
"penalized" under Section 144 should be interpreted as referring to criminal penalty, such as fine or imprisonment, and that it could not
possibly contemplate "civil" penalties such as damages, accounting or restitution.

As Section 144 speaks, among others, of the imposition of criminal penalties, the Court is guided by the elementary rules of statutory
construction of penal provisions. First, in all criminal prosecutions, the existence of criminal liability for which the accused is made
answerable must be clear and certain. We have consistently held that "penal statutes are construed strictly against the State and liberally in
favor of the accused. When there is doubt on the interpretation of criminal laws, all must be resolved in favor of the accused. Since penal
laws should not be applied mechanically, the Court must determine whether their application is consistent with the purpose and reason of
the law."48

Intimately related to the in dubio pro reo49 principle is the rule of lenity. The rule applies when the court is faced with two possible
interpretations of a penal statute, one that is prejudicial to the accused and another that is favorable to him. The rule calls for the adoption
of an interpretation which is more lenient to the accused. 50

In American jurisprudence, there are two schools of thought regarding the application of the rule of lenity. Justice David Souter, writing for
the majority in United States v. R.L.C.,51 refused to resort to the rule and held that lenity is reserved "for those situations in which a
reasonable doubt persists about a statute's intended scope even after resort to 'the language and structure, legislative history, and
motivating policies' of the statute." Justice Antonin Scalia, although concurring in part and concurring in the judgment, argued that "it is not
consistent with the rule of lenity to construe a textually ambiguous penal statute against a criminal defendant on the basis of legislative
history... The rule of lenity, in my view, prescribes the result when a criminal statute is ambiguous: The more lenient interpretation must
prevail."52 In other words, for Justice Scalia, textual ambiguity in a penal statute suffices for the rule of lenity to be applied. Although foreign
case law is merely persuasive authority and this Court is not bound by either legal perspective expounded in United States v. R.L.C., said
case provides a useful framework in our own examination of the scope and application of Section 144.

After a meticulous consideration of the arguments presented by both sides, the Court comes to the conclusion that there is textual
ambiguity in Section 144; moreover, such ambiguity remains even after an examination of its legislative history and the use of other aids to
statutory construction, necessitating the application of the rule of lenity in the case at bar.

Respondent urges this Court to strictly construe Section 144 as contemplating only penal penalties. However, a perusal of Section 144
shows that it is not a purely penal provision. When it is a corporation that commits a violation of the Corporation Code, it may be dissolved
in appropriate proceedings before the Securities and Exchange Commission. The involuntary dissolution of an erring corporation is not
imposed as a criminal sanction,53 but rather it is an administrative penalty.

The ambivalence in the language of Section 144 becomes more readily apparent in comparison to the penal provision54 in Republic Act No.
8189 (The Voter's Registration Act of 1996), which was the subject of our decision in Romualdez v. Commission on Elections.55 In that case,
we upheld the constitutionality of Section 45(j) of Republic Act No. 8189 which made any violation of said statute a criminal offense. It is
respondent's opinion that the penal clause in Section 144 should receive similar treatment and be deemed applicable to any vi olation of the
Corporation Code. The Court cannot accept this proposition for there are weighty reasons to distinguish this case from Romualdez.

We find it apropos to quote Sections 45 and 46 of Republic Act No. 8189 here:
chanRoble svirtual Lawlib ra ry

SECTION 45. Election Offense. - The following shall be considered election offenses under this Act:

a) to deliver, hand over, entrust or give, directly or indirectly, his voter's identification card to another in consideration of money or other
benefit or promise; or take or accept such voter's identification card, directly or indirectly, by giving or causing the giving of money or other
benefit or making or causing the making of a promise therefor; chanrob leslaw

b) to fail, without cause, to post or give any of the notices or to make any of the reports required under this Act; chanrobleslaw

c) to issue or cause the issuance of a voter's identification number to cancel or cause the cancellation thereof in violation of the provisions of
this Act; or to refuse the issuance of registered voters their voter's identification card; chanro bleslaw

d) to accept an appointment, to assume office and to actually serve as a member of the Election Registration Board although ineligible
thereto; to appoint such ineligible person knowing him to be ineligible; chanroble slaw

e) to interfere with, impede, abscond for purposes of gain or to prevent the installation or use of computers and devices and the processing,
storage, generation and transmission of registration data or information; chanroble slaw

f) to gain, cause access to, use, alter, destroy, or disclose any computer data, program, system software, network, or any computer related
devices, facilities, hardware or equipment, whether classified or declassified; chanrobleslaw

g) failure to provide certified voters and deactivated voters list to candidates and heads or representatives of political parties upon written
request as provided in Section 30 hereof; chanroble slaw

h) failure to include the approved application form for registration of a qualified voter in the book of voters of a particular precinct or the
omission of the name of a duly registered voter in the certified list of voters of the precinct where he is duly registered resulting in his failure
to cast his vote during an election, plebiscite, referendum, initiative and/or recall. The presence of the form or name in the book of voters or
certified list of voters in precincts other than where he is duly registered shall not be an excuse hereof; chanrobles law

i) The posting of a list of voters outside or at the door of a precinct on the day of an election, plebiscite, referendum, initiative and/or recall
and which list is different in contents from the certified list of voters being used by the Board of Election Inspectors; and

j) Violation of any of the provisions of this Act.

SECTION 46. Penalties. - Any person found guilty of any Election offense under this A.ct shall be punished with imprisonment of not less
than one (1) year but nor more than six (6) years and shall not be subject to probation. In addition, the guilty party shall be sentenced to
suffer disqualification to hold public office and deprivation of the right of suffrage. If he is a foreigner, he shall be deported after the prison
term has been served. Any political party found guilty shall be sentenced to pay a fine of not less than One hundred thousand pesos
(P100,000) but not more than Five hundred thousand pesos (P500,000). ChanRoblesVi rt ualawlib ra ry

The crux of the Court's ruling in Romualdez is that, from the wording of Section 450), there is a clear legislative intent to treat as an election
offense any violation of the provisions of Republic Act No. 8189. For this reason, we do not doubt that Section 46 contemplates the term
"penalty" primarily in the criminal law or punitive concept of the term.

There is no provision in the Corporation Code using similarly emphatic language that evinces a categorical legislative intent to treat as a
criminal offense each and every violation of that law. Consequently, there is no compelling reason for the Court to construe Section 144 as
similarly employing the term "penalized" or "penalty" solely in terms of criminal liability.

In People v. Temporada,56 we held that in interpreting penal laws, "words are given their ordinary meaning and that any reasonable doubt
about the meaning is decided in favor of anyone subjected to a criminal statute." Black's Law Dictionary recognizes the numerous
conceptions of the term penalty and discusses in part that it is "[a]n elastic term with many different shades of meaning; it involves idea of
punishment, corporeal or pecuniary, or civil or criminal, although its meaning is generally confined to pecuniary
punishment."57 Persuasively, in Smith v. Doe,58 the U.S. Supreme Court, interpreting a statutory provision that covers both punitive and
non-punitive provisions, held that:
chanRoble svirtual Lawlib ra ry

The location and labels of a statutory provision do not by themselves transform a civil remedy into a criminal one. In 89 Firearms, the Court
held a forfeiture provision to be a civil sanction even though the authorizing statute was in the criminal code. The Court rejected the
argument that the placement demonstrated Congress' "intention to create an additional criminal sanction," observing that "both criminal
and civil sanctions may be labeled 'penalties.'" (Emphasis supplied.) ChanRoblesVirtualawl ibra ry

Giving a broad and flexible interpretation to the term "penalized" in Section 144 only has utility if there are provisions in the Corporation
Code that specify consequences other than "penal" or "criminal" for violation of, or non-compliance with, the tenets of the Code. Petitioners
point to the civil liability prescribed in Sections 31 and 34. Aside from Sections 31 and 34, we consider these provisions of interest:
chanRoble svirtual Lawlib ra ry

SECTION 21. Corporation by Estoppel. - All persons who assume to act as a corporation knowing it to be without authority to do
so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a resultthereof: Provided,
however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it
as such, it shall not be allowed to use as a defense its lack of corporate personality.
One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact
no corporation.

SECTION 22. Effects of non-use of corporate charter and continuous in operation of a corporation. - If a corporation does not formally
organize and commence the transaction of its business or the construction of its works within two (2) years from the date of
its incorporation, its corporate powers cease and the corporation shall be deemed dissolved. However, if a corporation has
commenced the transaction of its business but subsequently becomes continuously inoperative for a period of at least five (5) years, the
same shall be a ground for the suspension or revocation of its corporate franchise or certificate of incorporation.

This provision shall not apply if the failure to organize, commence the transaction of its business or the construction of its works, or to
continuously operate is due to causes beyond the control of the corporation as may be determined by the Securities and Exchange
Commission.

SECTION 65. Liability of directors for watered stocks. - Any director or officer of a corporation consenting to the issuance of stocks
for a consideration less than its par or issued value or for a consideration in any form other than cash, valued in excess of its
fair value, or who, having knowledge thereof, does not forthwith express his objection in writing and file the same with the corporate
secretary, shall be solidarily liable with the stockholder concerned to the corporation and its creditors for the difference
between the fair value received at the time of issuance of the stock and the par or issued value of the same.

SECTION 66. Interest on unpaid subscriptions. - Subscribers for stock shall pay to the corporation interest on all unpaid
subscriptions from the date of subscription, if so required by, and at the rate of interest fixed in, the by-laws. If no rate of interest is fixed
in the bylaws, such rate shall be deemed to be the legal rate.

SECTION 67. Payment of balance of subscription. - Subject to the provisions of the contract of subscription, the board of directors of any
stock corporation may at any time declare due and payable to the corporation unpaid subscriptions to the capital stock and may collect the
same or such percentage of said unpaid subscriptions, in either case with interest accrued, if any, as it may deem necessary.

Payment of any unpaid subscription or any percentage thereof, together with the interest accrued, if any, shall be made on the date
specified in the contract of subscription or on the date stated in the call made by the board. Failure to pay on such date shall render the
entire balance due and payable and shall make the stockholder liable for interest at the legal rate on such balance, unless a
different rate of interest is provided in the by-laws, computed from such date until full payment. If within thirty (30) days from
the said date no payment is made, all stocks covered by said subscription shall thereupon become delinquent and shall be subject to
sale as hereinafter provided, unless the board of directors orders otherwise.

SECTION 74. Books to be kept; stock transfer agent. - Every corporation shall, at its principal office, keep and carefully preserve a record of
all business transactions, and minutes of all meetings of stockholders or members, or of the board of directors or trustees, in which shall be
set forth in detail the time and place of holding the meeting, how authorized, the notice given, whether the meeting was regular or special, if
special its object, those present and absent, and every act done or ordered done at the meeting. Upon the demand of any director, trustee,
stockholder or member, the time when any director, trustee, stockholder or member entered or left the meeting must be noted in the
minutes; and on a similar demand, the yeas and nays must be taken on any motion or proposition, and a record thereof carefully made. The
protest of any director, trustee, stockholder or member on any action or proposed action must be recorded in full on his demand.

The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director,
trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of
excerpts from said records or minutes, at his expense.

Any officer or agent of the corporation who shall refuse to allow any director, trustee, stockholder or member of the
corporation to examine and copy excerpts from its records or minutes, in accordance with the provisions of this Code, shall be
liable to such director, trustee, stockholder or member for damages, and in addition, shall be guilty of an offense which shall
be punishable under Section 144 of this Code: Provided, That if such refusal is pursuant to a resolution or order of the board of
directors or trustees, the liability under this section for such action shall be imposed upon the directors or trustees who voted for such
refusal: and Provided, further, That it shall be a defense to any action under this section that the person demanding to examine and copy
excerpts from the corporation's records and minutes has improperly used any information secured through any prior examination of the
records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making his
demand.

Stock corporations must also keep a book to be known as the "stock and transfer book", in which must be kept a record of all stocks in the
names of the stockholders alphabetically arranged; the installments paid and unpaid on all stock for which subscription has been made, and
the date of payment of any installment; a statement of every alienation, sale or transfer of stock made, the date thereof, and by and to
whom made; and such other entries as the by laws may prescribe. The stock and transfer book shall be kept in the principal office of the
corporation or in the office of its stock transfer agent and shall be open for inspection of any director or stockholder of the corporation at
reasonable hours on business days.

No stock transfer agent or one engaged principally in the business of registering transfer of stocks in behalf of a stock corporation shall be
allowed to operate in the Philippines unless he secures a license from the Securities and Exchange Commission and pays a fee as may be
fixed by the Commission, which shall be renewed annually: Provided, That a stock corporation is not precluded from performing or making
transfer of its own stocks, in which case all the rules and regulations imposed on stock transfer agents, except the payment of a license fee
herein provided, shall be applicable. ChanRoblesVirt ualawli bra ry

Section 22 imposes the penalty of involuntary dissolution for non-use of corporate charter. The rest of the above-quoted provisions, like
Sections 31 and 34, provide for civil or pecuniary liabilities for the acts covered therein but what is significant is the fact that, of all these
provisions that provide for consequences other than penal, only Section 74 expressly states that a violation thereof is likewise considered an
offense under Section 144. If respondent and the Court of Appeals are correct, that Section 144 automatically imposes penal sanctions on
violations of provisions for which no criminal penalty was imposed, then such language in Section 74 defining a violation thereof as an
offense would have been superfluous. There would be no need for legislators to clarify that, aside from civil liability, violators of Section 74
are exposed to criminal liability as well. We agree with petitioners that the lack of specific language imposing criminal liability in Sections 31
and 34 shows legislative intent to limit the consequences of their violation to the civil liabilities mentioned therein. Had it been the intention
of the drafters of the law to define Sections 31 and 34 as offenses, they could have easily included similar language as that found in Section
74.

If we were to employ the same line of reasoning as the majority in United States v. R.L.C., would the apparent ambiguities in the text of the
Corporation Code disappear with an analysis of said statute's legislative history as to warrant a strict interpretation of its provisions? The
answer is a negative.

In his sponsorship speech of Cabinet Bill (C.B.) No. 3 (the bill that was enacted into the Corporation Code), then Minister Estelito Mendoza
highlighted Sections 31 to 34 as among the significant innovations made to the previous statute (Act 1459 or the Corporation Law), thusly:
chanRoble svirtual Lawlib ra ry

There is a lot of jurisprudence on the liability of directors, trustees or officers for breach of trust or acts of disloyalty to the corporation. Such
jurisprudence is not, of course, without any ambiguity of dissent. Sections 31, 32, 33 and 34 of the code indicate in detail prohibited acts in
this area as well as consequences of the performance of such acts or failure to perform or discharge the responsibility to di rect the affairs of
the corporation with utmost fidelity.59ChanRoblesVi rtua lawlibra ry

Alternatively stated, Sections 31 to 34 were introduced into the Corporation Code to define what acts are covered, as well as the
consequences of such acts or omissions amounting to a failure to fulfil a director's or corporate officer's fiduciary duties to the corporation. A
closer look at the subsequent deliberations on C.B. No. 3, particularly in relation to Sections 31 and 34, would show that the discussions
focused on the civil liabilities or consequences prescribed in said provisions themselves. We quote the pertinent portions of the legislative
records:

On Section 31
(Period of Sponsorship, December 4, 1979 Session)

MR. LEGASPI. x x x.

In Section 31 page 22, it seems that the proviso is to make the directors or the trustees who willfully and knowingly vote for or
assent to patently unlawful act or guilty of gross negligence or bad faith in directing the affairs of the corporation would
be solidarity liable with the officers concerned.

Now, would this, Your Honor, not discourage the serving of competent people as members of the Board of Directors,
considering that they might feel that in the event things would do badly against the corporation, they might be held liable
personally for acts which should be attributed only to the corporation?

MR. MENDOZA. Your Honor will note that the directors or trustees who are held liable must be proven to have acted willfully and knowingly,
or if not willfully and knowingly, it must be proven that they acted with gross negligence or bad faith. It must also be demonstrated that the
acts done were patently unlawful. So, the requirement for liability is somewhat serious to the point of, in my opinion, being extreme. It will
be noted that this provision does not merely require assenting to patently unlawful acts. It does not merely require being negligent. The
provision requires that they assent to patently unlawful acts willfully and with knowledge of the illegality of the act.

Now, it might be true, as Your Honor suggested, that some persons will be discouraged or disinclined to agree to serve the Board of
Directors because of this liability. But at the same time this provision - Section 31 - is really no more than a consequence of the
requirement that the position of membership in the Board of Directors is a position of high responsibility and great trust.
Unless a provision such as this is included, then that requirement of responsibility and trust will not be as meaningful as i t should be. For
after all, directors may take the attitude that unless they themselves commit the act, they would not be liable. But the responsibility of a
director is not merely to act properly. The responsibility of a director is to assure that the Board of Directors, which means his colleagues
acting together, docs not act in a manner that is unlawful or to the prejudice of the corporation because of personal or pecuniary interest of
the directors.60(Emphases supplied.)

(Period of Amendments, March 11, 1980 Session)

MR. MILLORA. On line 16, Section 31, referring to the phrase "patently unlawful acts." Before I introduce my proposed amendment to delete
the word "patently'' is there a reason for placing this adjective before the word "unlawful", Your Honor?

MR. ABELLO. Probably the one who prepared this original draft of Cabinet Bill No. 3 wanted to make sure that a director or trustee is not
[made] liable for an act that is not clearly unlawful, so he used a better word than "clearly," he used the word "patently."

MR. MILLORA. So, in that case, Your Honor, a director may not be liable for certain unlawful acts. Is that right, Your Honor?

MR. ABELLO. Yes, if it is not patently unlawful. Precisely, the use of the word "patently" is also to give some kind of protection to the
directors or trustees. Because if you will hold the directors or trustees responsible for everything, then no one will serve as
director or trustee of any corporation. But, he is made liable so long as he willfully and knowingly votes for or assent to patently
unlawful acts of the corporation. So it is also to protect the director [or] trustees from liability for acts that was not patently unlawful.

MR. MILLORA. With that explanation, Your Honor, I will not proceed with my proposed amendment. 61 ChanRoblesVirtualawli bra ry

On Section 34
(Period of Sponsorship, November 5, 1979 Session)

MR. NUÑEZ. x x x

May I go now to page 24, Section 34.

"Disloyalty of a Director - Where a director by virtue of his office acquires for himself a business opportunity which should belong to the
corporation thereby obtaining profits to the prejudice of the corporation, he must account to the latter for all such profits, unless his act has
been ratified by a vote of the stockholders owning or representing at least two thirds (2/3) of the outstanding capital stock. This provision
shall be applicable notwithstanding the fact that the director risked his own funds in the venture."

My question, Your Honor, is: is this not the so-called corporate opportunity doctrine found in the American jurisprudence?

MR. MENDOZA. Yes, Mr. Speaker, as I stated many of the changes that have been incorporated in the Code were drawn from jurisprudence
on the matter, but even jurisprudence on several matters or several issues relating to the Corporation Code are sometimes ambiguous,
sometimes controversial. In order, therefore, to clarify those issues, what was done was to spell out in statutory language the rule
that should be applied on those matters and one of such examples is Section 34.

MR. NUÑEZ. Does not His Honor believe that to codify this particular document into law may lead to absurdity or confusion as the cited
doctrine is subject to many qualifications depending on the peculiar nature of the case?

Let us suppose that there is a business opportunity that the corporation did not take advantage of or was not interested in. Would you hold
the director responsible for acquiring the interest despite the fact that the corporation did not take advantage of or was not interested in
that particular business venture? Does not His Honor believe that this should be subject to qualifications and should be dealt with on a case-
to-case basis depending on the circumstances of the case?

MR. MENDOZA. If a director is prudent or wise enough, then he can protect himself in such contingency. If he is aware of a business
opportunity, he can make it known to the corporation, propose it to the corporation, and allow the corporation to reject it,
after which he, certainly, may avail of it without risk of the consequences provided for in Section 34.

MR. NUÑEZ. I see. So that the position of Your Honor is that the matter should be communicated to the corporation, the matter of the
director acquiring the business opportunity should be communicated to the corporation and that if it is not communicated to the corporation,
the director will be responsible. Is that the position of His Honor?

MR. MENDOZA. In my opinion it must not only be made known to the corporation; the corporation must be formally advised and if he really
would like to be assured that he is protected against the consequences provided for in Section 34, he should take such steps
whereby the opportunity is clearly presented to the corporation and the corporation has the opportunity to decide on whether to avail of it or
not and then let the corporation reject it, after which then he may avail of it. Under such circumstances I do not believe he would expose
himself to the consequences provided for under Section 34.

Precisely, the reason we have laid down this ruling in statutory language is that for as long as the rule is not clarified there will be ambiguity
in the matter. And directors of corporations who may acquire knowledge of such opportunities would always be risking consequences not
knowing how the courts will later on decide such issues. But now with the statutory rule, any director who comes to know of an
opportunity that may be available to the corporation would be aware of the consequences in case he avails of that opportunity
without giving the corporation the privilege of deciding beforehand on whether to take advantage of it or not.

MR. NUÑEZ. Let us take the case of a corporation where, from all indications, the corporation was aware of this business opportunity and
despite this fact, Your Honor, and the failure of the director to communicate the venture to the corporation, the director entered into the
business venture. Is the director liable, Your Honor, despite the fact that the corporation has knowledge, Your Honor, from all indications,
from all facts, from all circumstances of the case, the corporation is aware?

MR. MENDOZA. First of all, to say that a corporation has knowledge is itself a point that can be subject of an argument. When does a
corporation have knowledge - when its president comes to know of the fact, when its general manager knows of the fact, when one or two
of the directors know of that fact, when a majority of the directors come to know of that fact? So that in itself is a matter of great ambiguity,
when one says it has knowledge.

That is why when I said that a prudent director, who would assure that he does not become liable under Section 34, should not
only be sure that the corporation has official knowledge, that is, the Board of Directors, but must take steps, positive steps, which will
demonstrate that the matter or opportunity was brought before the corporation for its decision whether to avail of it or not, and the
corporation rejected it.

So, under those circumstances narrated by Your Honor, it is my view that the director will be liable, unless his acts are ratified later by the
vote of stockholders holding at least 2/3 of the outstanding capital stock.

MR. NUÑEZ. Your Honor has already raised the possible complications that may arise out of this particular provision. My question is: how
can we remedy the situation? Is there a necessity, Your Honor, of a formal notice to the corporation that it should be placed in the agenda,
in a meeting or a special or regular meeting of the corporation that such a business venture exists, that the corporation should take
advantage of this business venture before a director can be held not responsible for acquiring this business venture?

MR. MENDOZA. Well, I believe, as I have stated, Mr. Speaker, that is what a prudent director should do. If he does not wish to be in any
way handicapped in availing of business opportunities, he should, to the same degree, be circumspect in accepting directorshi ps in
corporations. If he wants to be completely free to avail of any opportunity which may come his way, he should not accept the position of
director in any corporation which he may anticipate may be dealing in a business in connection with which he may acquire a certain interest.

The purpose of all these provisions is to assure that directors or corporations constantly - not only constantly remember but actually
are imposed with certain positive obligations that at least would assure that they will discharge their responsibilities with
utmost fidelity.62

(December 5, 1979 Session)

MR. CAMARA. Thank you, Your Honor. May we go to page 24, lines 1 to 20, Section 34 - Disloyalty of a director.

Your Honor, it is provided that a director, who by virtue of his office acquires for himself a business opportunity which should belong to the
corporation thereby obtaining profits to the prejudice of such corporation, must account to the corporation for all such profits unless his act
has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the outstanding capital stock.

However, Your Honor, the right to ratification would serve to defeat the intention of this pro-vision. This is possible if the director or officer is
the controlling stockholder.

It is, therefore, suggested, Your Honor, that the twenty per cent (20%) stockholding limit be applied here in which case, over twenty per
cent limit, said director or officer is disallowed to participate in the ratification. And this is precisely the point I was driving at in the previous
section, Your Honor.

MR. ABELLO. Your Honor, I see the point that Your Honor has raised and that wi11 be considered by the committee at an appropriate time.

MR. CAMARA. Thank you, Your Honor.

Further, under the same provision, it is not clear as to what "account to the corporation" means or what it includes. Is the
offender liable for the profits in favor of the corporation?

MR. ABELLO. Yes, that is what it means.

MR. CAMARA. Or he be merely made to accow1t?

MR. ABELLO. Well, Your Honor, when the law says "He must account to the latter for all such profits," that means that he is
liable to the corporation for such profits.

MR. CAMARA. Who gets the profits then, Your Honor? MR. ABELLO. The corporation itself.

MR. CAMARA. The corporation? MR. ABELLO. Correct.

MR. CAMARA. Thank you, Your Honor.

Supposing under the same section, Your Honor, the director took the opportunity after resigning as director or officer? It is suggested, Your
Honor, that this should be clarified because the resigning director can take the opportunity of this transaction before he resigns.

MR. ABELLO. If Your Honor refers to the fact that he took that opportunity while he was a director, Section 34, would apply. But if the action
was made after his resignation as a director of the corporation, then Section 34 would not apply.63

(Period of Amendments, March 11, 1980 Session)

MR. CAMARA. This is on Section 34, page 24, line 15, I propose to insert between the word "profits" and the comma (,) the words BY
REFUNDING THE SAME. So that the first sentence, lines 11 to 18 of said section, as modified, shall read as follows:
chanRoble svirtual Lawlib ra ry
"SEC. 34. Disloyalty of a director. - Where a director by virtue of his office acquires for himself a business opportunity which should belong
to the corporation thereby obtaining profits to the prejudice of such corporation, he must account to the latter for all such profits BY
REFUNDING THE SAME, unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the
outstanding capital stock." ChanRoblesVi rtua lawlib rary

The purpose of this amendment, Mr. Speaker, is to clarify as to what to account to the corporation.

MR. ABELLO. Mr. Speaker, the committee accepts the amendment. 64 (Emphases and underscoring supplied.) ChanRoblesVirtualawl ibra ry

Verily, in the instances that Sections 31 and 34 were taken up on the floor, legislators did not veer away from the civil consequences as
stated within the four corners of these provisions. Contrasted with the interpellations on Section 74 (regarding the right to inspect the
corporate records), the discussions on said provision leave no doubt that legislators intended both civil and penal liabiliti es to attach to
corporate officers who violate the same, as was repeatedly stressed in the excerpts from the legislative record quoted below:

On Section 74:
(Period of Sponsorship, December 10, 1979 Session)

MR. TUPAZ. x x x I guess, Mr. Speaker, that the distinguished sponsor has in mind a particular situation where a minority shareholder is one
of the thousands of shareholders. But I present a situation, Your Honor, where the minority is 49% owner of a corporation and here comes
this minority shareholder wanting, but a substantial minority, and yet he cannot even have access to the records of this corporation over
which he owns almost one-half because, precisely, of this particular provision of law.65

MR. MENDOZA. He will not have access if the grounds expressed in the proviso are present. It must also be noted, Mr. Speaker, that the
provision before us would, let us say, make it very difficult for corporate officers to act unreasonably because they are not only subject
to a suit which would compel them to allow the access to corporate records, they are also liable for damages and are in
fact guilty of a penal act under Section 143.66

MR. TUPAZ. That is correct, Your Honor.

MR. MENDOZA. So that when corporate officers deny access to a shareholder, they do so under very serious consequences. If they should
err in making that decision and it is demonstrated that they have erred deliberately, they expose themselves to damagesand even to
certain penal sanctions.

xxxx

As I said, Your Honor, I think it is fair enough to assume that persons do not act deliberately in bad faith, that they do not act
deliberately to expose themselves to damages, or to penal sanctions. In the ultimate, I would agree that certain decisions may be
unnecessarily harsh and prejudicial. But by and large, I think, the probabilities are in favor of a decision being reasonable and in accord with
the interest of the corporation.67(Emphases and underscoring supplied.) ChanRoblesVirt ualawli bra ry

Quite apart that no legislative intent to criminalize Sections 31 and 34 was manifested in the deliberations on the Corporation Code, it is
noteworthy from the same deliberations that legislators intended to codify the common law concepts of corporate opportunity and fiduciary
obligations of corporate officers as found in American jurisprudence into said provisions. In common law, the remedies available in the event
of a breach of director's fiduciary duties to the corporation are civil remedies. If a director or officer is found to have breached his duty of
loyalty, an injunction may be issued or damages may be awarded.68 A corporate officer guilty of fraud or mismanagement may be held liable
for lost profits.69 A disloyal agent may also suffer forfeiture of his compensation.70 There is nothing in the deliberations to indicate that
drafters of the Corporation Code intended to deviate from common law practice and enforce the fiduciary obligations of directors and
corporate officers through penal sanction aside from civil liability. On the contrary, there appears to be a concern among the drafters of the
Corporation Code that even the imposition of the civil sanctions under Section 31 and 34 might discourage competent persons from serving
as directors in corporations.

In Crandon v. United States,71 the U.S. Supreme Court had the occasion to state that:
chanRoble svirtual Lawlib ra ry

In determining the meaning of the statute, we look not only to the particular statutory language, but to the design of the statute
as a whole and to its object and policy.Moreover, because the governing standard is set forth in a criminal statute, it is appropriate to
apply the rule of lenity in resolving any ambiguity in the ambit of the statute's coverage. To the extent that the language or history of [the
statute] is uncertain, this "time-honored interpretive guideline" serves to ensure both that there is fair warning of the boundaries of
criminal conduct and that legislatures, not courts, define criminal liability. (Citations omitted; emphases supplied.) ChanRobles Virtualawl ibra ry

Under the circumstances of this case, we are convinced to adopt a similar view. For this reason, we take into account the avowed legislative
policy in the enactment of the Corporation Code as outlined in the Sponsorship Speech of Minister Mendoza:
chanRoble svirtual Lawlib ra ry

Cabinet Bill No. 3 is entitled "The Corporation Code of the Philippines." Its consideration at this time in the history of our nation provides a
fitting occasion to remind that under our Constitution the economic system known as "free enterprise" is recognized and
protected. We acknowledge as a democratic republic that the individual must be free and that as a free man - "free to choose his work and
to retain the fruits of his labor" he may best develop his capabilities and will produce and supply the economic needs of the nation.

xxxx

The formation and organization of private corporations, and I underscore private corporations as distinguished from corporations
owned or controlled by the government or any subdivision or instrumentality thereof, gives wider dimensions to free enterprise or free
trade. For not only is the right of individuals to organize collectively recognized; the collective organization is vested with a juridical
personality distinct from their own. Thus "the skill, dexterity, and judgment" of a nation's labor force need not be constricted in their
application to those of an individual or that which he alone may assemble but to those of a collective organization.

While a code, such as the proposed code now before us, may appear essentially regulatory in nature, it does not, and is not
intended, to curb or stifle the use of the corporate entity as a business organization. Rather, the proposed code recognizes the
value, and seeks to inspire confidence in the value of the corporate vehicle in the economic life of society. 72 (Emphases supplied.) ChanRoblesVi rtua lawlib rary

The Corporation Code was intended as a regulatory measure, not primarily as a penal statute. Sections 31 to 34 in particular were intended
to impose exacting standards of fidelity on corporate officers and directors but without unduly impeding them in the discharge of their work
with concerns of litigation. Considering the object and policy of the Corporation Code to encourage the use of the corporate entity as a
vehicle for economic growth, we cannot espouse a strict construction of Sections 31 and 34 as penal offenses in relation to Section 144 in
the absence of unambiguous statutory language and legislative intent to that effect.

When Congress intends to criminalize certain acts it does so in plain, categorical language, otherwise such a statute would be susceptible to
constitutional attack. As earlier discussed, this can be readily seen from the text of Section 45G) of Republic Act No. 8189 and Section 74 of
the Corporation Code.

We stress that had the Legislature intended to attach penal sanctions to Sections 31 and 34 of the Corporation Code it could have expressly
stated such intent in the same manner that it did for Section 74 of the same Code.

At this point, we dispose of some related arguments raised in the pleadings.

We do not agree with respondent Tullett that previous decisions of this Court have already settled the matter in controversy in the
consolidated cases at bar. The declaration of the Court in Home Insurance Company v. Eastern Shipping Lines73 that "[t]he prohibition
against doing business without first securing a license [under Section 133] is now given penal sanction which is also applicable to other
violations of the Corporation Code under the general provisions of Section 144 of the Code" is unmistakably obiter dictum. We explained in
another case:
chanRoble svirtual Lawlib ra ry

An obiter dictum has been defined as an opinion expressed by a court upon some question of law that is not necessary in the determination
of the case before the court. It is a remark made, or opinion expressed, by a judge, in his decision upon a cause by the way, that
is, incidentally or collaterally, and not directly upon the question before him, or upon a point not necessarily involved in the determination of
the cause, or introduced by way of illustration, or analogy or argument. It does not embody the resolution or determination of the
court, and is made without argument, or full consideration of the point. It lacks the force of an adjudication, being a mere
expression of an opinion with no binding force for purposes of res judicata.74 (Emphasis supplied.) ChanRoblesVi rtua lawlib rary

The issue in the Home Insurance Company case was whether or not a foreign corporation previously doing business here without a license
has the capacity to sue in our courts when it had already acquired the necessary license at the time of the filing of the complaints. The Court
ruled in the affirmative. The statement regarding the supposed penal sanction for violation of Section 133 of the Corporation Code was not
essential to the resolution of the case as none of the parties was being made criminally liable under Section 133.

As for respondent's allusion to Genuino v. National Labor Relations Commission,75 we find the same unavailing. Genuino involved the appeal
of an illegal dismissal case wherein it was merely mentioned in the narration of facts that the employer-bank also filed criminal complaints
against its dismissed corporate officers for alleged violation of Section 31 in relation to Section 144 of the Corporation Code. The
interpretation of said provisions of the Corporation Code in the context of a criminal proceeding was notat issue in that case.

As additional support for its contentions, respondent cites several opinions of the SEC, applying Section 144 to various violations of the
Corporation Code in the imposition of graduated fines. In respondent's view, these opinions show a consistent administrative interpretation
on the applicability of Section 144 to the other provisions of the Corporation Code and allegedly render absurd petitioners' concern regarding
the "over criminalization" of the Corporation Code. We find respondent's reliance on these SEC opinions to be misplaced. As petitioners
correctly point out, the fines imposed by the SEC in these instances of violations of the Corporation Code are in the nature of administrative
fines and are not penal in nature. Without ruling upon the soundness of the legal reasoning of the SEC in these opinions, we note that these
opinions in fact support the view that even the SEC construes "penalty" as used in Section 144 as encompassing administrative penalties,
not only criminal sanctions. In all, these SEC issuances weaken rather than strengthen respondent's case.

With respect to the minutiae of other arguments cited in the parties' pleadings, it is no longer necessary for the Court to pass upon the same
in light of our determination that there is no clear, categorical legislative intent to define Sections 31 and 34 as offenses under Section 144
of the Corporation Code. We likewise refrain from resolving the question on the constitutionality of Section 144 of the Corporation Code. It is
a long standing principle in jurisprudence that "courts will not resolve the constitutionality of a law, if the controversy can be settled on other
grounds. The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of the poljtica1 departments are
valid, absent a clear and unmistakable showing to the contrary." 76

WHEREFORE, the consolidated petitions are GRANTED. The Decision dated August 12, 2009 of the Court of Appeals in CA-G.R. SP No.
109094 and the Resolutions dated April 23, 2009 and May 15, 2009 of the Secretary of Justice in I.S. No. 08-J-8651 are REVERSED and
SET ASIDE.

SO ORDERED. cralawlawlib rary

Sereno, C. J., (Chairperson), Del Castillo, Jardeleza,* and Caguioa, JJ., concur. chanRoblesvi rtual Lawli bra ry

Endnotes:

*
Per Raffle dated December 7, 2016.

1
Rollo (G.R. No. 189158), Vol. I, pp. 64-84; penned by then Court of Appeals Associate Justice Martin S. Villarama, Jr. (a retired member of
this Court) with Associate Justices Vicente S.E. Veloso and Normandie B. Pizarro concurring.

2
Id. at 85-95.

3
Id. at 96-97.

4
Id. at 19.

5
Rollo (G.R. No. 189530), Vol. I, p. 7.

6
Rollo(G.R. No. 189158), Vol. I, pp. 19-22.

7
See Tullett's 2007 General Information Sheet, id. at 112.

8
Id. at 21-22.

9
Rollo (G.R. No. 189530), Vol. I, p. 10.

10
See 2008 General Information Sheet of Tradition Philippines, id. at 240.

11
Rollo (G.R. No. 189158), Vol. I, pp. 118-124.

12
Id. at 98-111.

13
Id. at 102-107

14
Id. at 200-254 and 255-295.

15
Id. at 203-223.

16
Id. at 256-273.

17
Id. at 308-313.

18
Article 10 of the Revised Penal Code states:
Art. 10. Offenses not subject to the provisions of this Code. - Offenses which are or in the future may be punishable under special laws are
not subject to the provisions of this Code. This Code shall be supplementary to such laws, unless the latter should specially provide the
contrary.

19
Rollo (G.R. No. 189158), Vol. I, p. 312.

20
Id. at 312.

21
Id. at 323.

22
Id. at 314-323.

23
Id. at 370-401.

24
208 Phil. 359 (1983).

25
cra lawred Rollo (G.R. No. 189158), Vol. I, pp. 395-397.

26
Id. at 402-411.

27
Id. at 429.

28
Id. at 455-472.

29
Id. at 467-469.

30
Id. at 469.

31
Id. at 470.

32
Id. at 85-95.

33
Id. at 91-93.

34
Id. at 81-83.

35
397 Phil. 641 (2000).

36
661 Phil. 599, 606 (2011).

37
517 Phil. 151, 170 (2006).

38
Ty v. De Jemil, 653 Phil. 356, 369 (2010).

39
Funa v. Villar, 686 Phil. 571, 583 (2012).

40
Deutsche Bank AG v. Court of Appeals, 683 Phil. 80, 88 (2012).

41
People v. Grey, 639 Phil. 535, 545 (2010).

42
Chavez v. Court of Appeals, 624 Phil. 396, 400 (2010).

43
Los Baños v. Pedro, 604 Phil. 215, 227-228 (2009).

44
Development Bank of the Philippines v. Court of Appeals, 526 Phil. 525, 548-549 (2006).

45
London v. Baguio Country Club Corp., 439 Phil. 487, 492 (2002).

46
Superlines Transportation Co., Inc. v. Philippine National Construction Co., 548 Phil. 354, 362 (2007).

47
Victorio-Aquino v. Pacific Plans, Inc., G.R. No. 193108, December 10, 2014, 744 SCRA 480, 499.

48
People v. Valdez, G.R. Nos. 216007-09, December 8, 2015.

49
This Latin legal maxim translates into "when in doubt, [rule] for the accused."

50
Intestate Estate of Manolita Gonzales Vda. de Carungcong v. People, 626 Phil. 177, 200 (2010).

51
503 u.s. 291, 305-308 (1992).

52
Id. at 307-308.

53
Criminal penalties are generally understood to be limited to imprisonment or a fine. In Article 25 of the Revised Penal Code, penalties for
lighter crimes may include suspension, destierro, public censure and a bond to keep the peace.

54
We are aware of the existence of other penal/penalty provisions in various civil statutes. However, as the constitutionality and proper
interpretation of these provisions vis-a-vis criminal law principles have not been specifically dealt with in jurisprudence, it is neither
necessary nor practical to analyze and discuss here the variances in wording or syntax of every penal/penalty provision in our jurisdiction.
The validity, scope and application of each penal/penalty provision should be raised and decided in the proper case.

55
576 Phil. 357 (2008).

56
594 Phil. 680, 739 (2008).

57
Black's Law Dictionary, 6th edition (1990), p. 1133.

58
Smith v. Doe, 538 U.S. 84, 94-95 (2003); citing U.S. v. One Assortment of 89 Firearms, 465 U.S. 354, 364-365, 104 S.Ct. 1099 (1984).
59
Rollo (G.R. No. 189158), Vol. I, p. 1454. Record of Batasan (R.B.), Novernber 5, 1979, p. 1214.

60
Id. at 1480; R.B., December 4, 1979, p. 1614.

61
Id. at 1563-1564; R.B., March 11, 1980, pp. 2349-2350.

62
Id. at 1457-1459; R.B., November 5, 1979, pp. 1217-1219.

63
Id. at 1498; R.B., December 5, 1979, p. 1633.

64
Id. at 1565; R.B., March 11, 1980. p. 2351.

65
Mr. Tupaz's interpellation centered on the proviso in Section 74 that it is a defense under said section that the person demanding to see
the corporation's records has improperly used any information secured through any prior examination or was not acting in good faith or for a
legitimate purpose.

66
This was renumbered as Section 144 when the Corporation Code was enacted.

67
Rollo (G.R. No. 189158), Vol. I, pp. 1515-1516; R.B., December 10, 1979, pp. 1695-1696.

68
See Fletcher Cyclopedia of the Law of Corporations, 3 Fletcher Cyc. Corp. § 837.60, September 2016 update.

69
See 3A Fletcher Cyc. Corp. § 1343.

70
See 5A Fletcher Cyc. Corp. § 2185.

71
494 U.S. 152, 110 S.Ct. 997, 1001-1002 (1990).

72
Rollo (G.R. No. 189158) Vol. I, p. 1452; R.B., November 5, 1979, p. 1212.

73
208 Phil. 359, 372 (1983).

74
Ocean East Agency, Corp. v. Lopez, G.R. No. 194410, October 14, 2015.
`
75
564 Phil. 315 (2007).

76
Mirasol v. Court of Appeals, 403 Phil. 760, 774 (2001). ChanRoblesVirtualawl ibra ry