MODULE 12: EXTINCTION OF CRIMINAL LIABILITY

1. Sermonia v. Court of Appeals, G.R. No. 109454,14 June 1994

[G.R. No. 109454. June 14, 1994.]

JOSE C. SERMONIA, Petitioner, v. HON. COURT OF APPEALS, Eleventh Division, HON. DEOGRACIAS
FELIZARDO, Presiding Judge, Regional Trial Court of Pasig, Br. 151, and JOSEPH SINSAY, Respondents.

DECISION
BELLOSILLO, J.:

Bigamy is an illegal marriage committed by contracting a second or subsequent marriage before the first
marriage has been legally dissolved, or before the absent spouse has been declared presumptively dead
by means of a judgment rendered in the proper proceedings. Bigamy carries with it the imposable
penalty of prision mayor. Being punishable by an afflictive penalty, this crime prescribes in fifteen (15)
years. The fifteen-year prescriptive period commences to run from the day on which the crime is
discovered by the offended party, the authorities, or their agents. . . ."

That petitioner contracted a bigamous marriage seems impliedly admitted. 4 At least, it is not expressly
denied. Thus the only issue for resolution is whether his prosecution for bigamy is already time-barred,
which hinges on whether its discovery is deemed to have taken place from the time the offended party
actually knew of the second marriage or from the time the document evidencing the subsequent
marriage was registered with the Civil Registry consistent with the rule on constructive notice.

The antecedents: In an information filed in 26 May 1992, petitioner Jose C. Sermonia was charged with
bigamy before the Regional Trial Court of Pasig, Br. 151, for contracting marriage with Ma. Lourdes
Unson on 15 February 1975 while his prior marriage to Virginia C. Nievera remained valid and subsisting.
5

Petitioner moved to quash the information on the ground that his criminal liability for bigamy has been
extinguished by prescription.

In the order of 1 October 1992, respondent judge denied the motion to quash. On 27 October 1992, he
likewise denied the motion to reconsider his order of denial.

Petitioner challenged the above orders before the Court of Appeals through a petition for certiorari and
prohibition. In the assailed decision of 21 January 1993, his petition was dismissed for lack of merit. 6

In this recourse, petitioner contends that his criminal liability for bigamy has been obliterated by
prescription. He avers that since the second marriage contract was duly registered with the Office of the
Civil Registrar in 1975, 7 such fact of registration makes it a matter of public record and thus constitutes
notice to the whole world. The offended party therefore is considered to have had constructive notice
of the subsequent marriage as of 1975; hence, prescription commenced to run on the day the marriage
contract was registered. For this reason, the corresponding information for bigamy should have been
filed on or before 1990 and not only in 1992.

Petitioner likewise takes issue with the "alleged concealment of the bigamous marriage" as declared by
the appellate court, insisting that the second marriage was publicly held at Our Lady of Nativity Church
in Marikina on 15 February 1975, and adding for good measure that from the moment of registration
the marriage contract was open to inspection by any interested person.

On the other hand, the prosecution maintains that the prescriptive period does not begin from the
commission of the crime but from the time of discovery by complainant which was in July 1991.

While we concede the point that the rule on constructive notice in civil cases may be applied in criminal
actions if the factual and legal circumstances so warrant, 8 we agree with the view expounded by the
Court of Appeals that it cannot apply in the crime of bigamy notwithstanding the possibility of its being
more favorable to the accused. The appellate court succinctly explains —

Argued by the petitioner is that the principle of constructive notice should be applied in the case at bar,
principally citing in support of his stand, the cases of People v. Reyes (175 SCRA 597); and People v.
Dinsay (40 SCRA 50).

This Court is of the view that the principle of constructive notice should not be applied in regard to the
crime of bigamy as judicial notice may be taken of the fact that a bigamous marriage is generally
entered into by the offender in secrecy from the spouse of the previous subsisting marriage. Also, a
bigamous marriage is generally entered into in a place where the offender is not known to be still a
married person, in order to conceal his legal impediment to contract another marriage.

In the case of real property, the registration of any transaction involving any right or interest therein is
made in the Register of Deeds of the place where the said property is located. Verification in the office
of the Register of Deeds concerned of the transactions involving the said property can easily be made by
any interested party. In the case of a bigamous marriage, verification by the offended person or the
authorities of the same would indeed be quite difficult as such a marriage may be entered into in a place
where the offender is not known to be still a married person.

Be it noted that in the criminal cases cited by the petitioner wherein constructive notice was applied,
involved therein were land or property disputes and certainly, marriage is not property.

The non-application to the crime of bigamy of the principle of constructive notice is not contrary to the
well entrenched policy that penal laws should be construed liberally in favor of the accused. To compute
the prescriptive period for the offense of bigamy from registration thereof would amount to almost
absolving the offenders thereof for liability therefor. While the celebration of the bigamous marriage
may be said to be open and made of public record by its registration, the offender however is not
truthful as he conceals from the officiating authority and those concerned the existence of his previous
subsisting marriage. He does not reveal to them that he is still a married person. He likewise conceals
from his legitimate spouse his bigamous marriage. And for these, he contracts the bigamous marriage in
a place where he is not known to be still a married person. And such a place may be anywhere, under
which circumstance, the discovery of the bigamous marriage is rendered quite difficult and would take
time. It is therefore reasonable that the prescriptive period for the crime of bigamy should be counted
only from the day on which the said crime was discovered by the offended party, the authorities or their
agency (sic).

Considering such concealment of the bigamous marriage by the offender, if the prescriptive period for
the offense of bigamy were to be counted from the date of registration thereof, the prosecution of the
violators of the said offense would almost be impossible. The interpretation urged by the petitioner
would encourage fearless violations of a social institution cherished and protected by law. 9

To this we may also add that the rule on constructive notice will make de rigueur the routinary
inspection or verification of the marriages listed in the National Census Office and in various local civil
registries all over the country to make certain that no second or even third marriage has been
contracted without the knowledge of the legitimate spouse. This is too formidable a task to even
contemplate.

More importantly, while Sec. 52 of P.D. 1529 (Property Registration Decree) provides for constructive
notice to all persons of every conveyance, mortgage, lease, lien, attachment, order, judgment,
instrument or entry affecting registered land filed or entered in the office of the Register of Deeds for
the province or city where the land to which it relates lies from the time of such registering, filing or
entering, there is no counterpart provision either in Act No. 3753 (Act to Establish a Civil Register) or in
Arts. 407 to 413 of the Civil Code, which leads us to the conclusion that there is no legal basis for
applying the constructive notice rule to the documents registered in the Civil Register.

Finally, petitioner would want us to believe that there was no concealment at all because his marriage
contract with Ms. Unson was recorded in the Civil Registry which is open to all and sundry for
inspection. We cannot go along with his argument because why did he indicate in the marriage contract
that he was "single" thus obviously hiding his true status as a married man? Or for that matter, why did
he not simply tell his first wife about the subsequent marriage in Marikina so that everything would be
out in the open. The answer is obvious: He knew that no priest or minister would knowingly perform or
authorize a bigamous marriage as this would subject him to punishment under the Marriage Law. 10
Obviously, petitioner had no intention of revealing his duplicity to his first spouse and gambled instead
on the probability that she or any third party would ever go to the local civil registrar to inquire. In the
meantime, through the simple expedience of having the second marriage recorded in the local civil
registry, he has set into motion the running of the fifteen-year prescriptive period against the unwary
and the unsuspecting victim of his philandering.

Were we to put our imprimatur to the theory advanced by petitioner, in all likelihood we would be
playing right into the hands of philanderers. For we would be equating the contract of marriage with
ordinary deeds of conveyance and other similar documents without due regard for the stability of
marriage as an inviolable social institution, the preservation of which is a primary concern of our society.

WHEREFORE, finding no reversible error in the questioned decision of the Court of Appeals, the same is
AFFIRMED.

SO ORDERED.

2. Republic v. Desierto, G.R. No. 136506, 23 August 2001, 363 SCRA 585
G.R. No. 136506 August 23, 2001

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
THE HONORABLE ANIANO A. DESIERTO as OMBUDSMAN, EDUARDO COJUANGCO, JR., JUAN PONCE
ENRILE, MARIA CLARA LOBREGAT, ROLANDO DELA CUESTA, JOSE ELEAZAR, JR., JOSE C. CONCEPCION,
DANILO URSUA, NARCISO PINEDA and AUGUSTO OROSA, respondents.

DE LEON, JR., J.:

Before us is a petition for certiorari1 which seeks to annul the Review and Recommendation2 dated
August 6, 1998 of Graft Investigation Officer I Emora C. Pagunuran, approved by Ombudsman Aniano A.
Desierto, dismissing the petitioner's complaint in OMB-0-90-2808 against private respondents Eduardo
M. Cojuangco, Jr., Juan Ponce Enrile, Maria Clara Lobregat, Rolando Dela Cuesta, Jose R. Eleazar, Jr., Jose
C. Concepcion, Danilo S. Ursua, Narciso M. Pineda and Augusto Orosa, for violation of Republic Act No.
3019 otherwise known as the Anti-Graft and Corrupt Practices Act as well as the Order3 dated
September 25, 1998 denying petitioner's subsequent motion for reconsideration of the said Review and
Recommendation.

It appears that on February 12, 1990 the Office of the Solicitor General (OSG)4 initiated the complaint for
violation of R.A. No. 3019 before the Presidential Commission on Good Government (PCGG). The
complaint was subsequently referred to the Office of the Ombudsman5 and docketed as OMB-0-90-
2808. The referral of the case to the Ombudsman was in line with our decision in Cojuangco, Jr. v.
PCGG,6 promulgated on October 2, 1990, wherein we declared that while the PCGG has the power to
conduct preliminary investigation, it "cannot possibly conduct the preliminary investigation of said
criminal complaints with the cold neutrality of an impartial judge", after having earlier gathered
evidence concerning alleged ill-gotten wealth against the respondents, and also after having issued a
freeze order against all properties of respondent Cojuangco, Jr.7

The complaint alleged, inter alia, that respondent Cojuangco, Jr., taking advantage of his close
relationship with then President Marcos, had caused the latter to issue favorable decrees to advance his
personal and business interests, had caused the government through the National Investment
Development Corporation (NIDC) to enter into a contract with him under terms and conditions grossly
disadvantageous to the government, and, in conspiracy with the aforenamed members of the UCPB
Board of Directors, in flagrant breach of the fiduciary duty as administrator-trustee of the Coconut
Industry Development Fund (CIDF), manipulated the said Fund resulting in the successful siphoning of
Eight Hundred Forty Million Seven Hundred Eighty-Nine Thousand Eight Hundred Fifty-Five Pesos and
Fifty-Three Centavos (P840,789,855.53) of CIDF to his own corporation, the Agricultural Investors, Inc.
(AII); and that respondents were directly or indirectly interested for personal gain or had material
interest in the transactions requiring the approval of a board, panel or group of which they were
members, in violation of the Anti-Graft and Corrupt Practices Act to the grave damage and prejudice of
public interest, the Filipino people, the Republic of the Philippines, and the coconut farmers.

Apparently, during the early stage of the Martial Law rule of the then President Ferdinand E. Marcos in
1972, respondent Eduardo "Danding" Cojuangco, Jr., through AII, a private corporation owned and
controlled by respondent Cojuangco. Jr., started to develop a coconut seed garden in its property in
Bugsuk Island, Palawan.8
On November 14, 1974, Presidential Decree No. 582 was issued by then President Marcos,9 which
created the Coconut Industry Development Fund (CIDF). The CIDF is one of the four (4) so-called "Coco-
Levy Funds" set-up to revitalize the coconut industry. The CIDF was envisioned to finance a nationwide
coconut-replanting program using "precocious high-yielding hybrid seednuts" to be distributed for free
b coconut farmers.10 Its initial capital of One Hundred Million Pesos (P100,000,000.00) was to be paid
from the Coconut Consumers Stabilization Fund (CCSF), with an additional amount of at least twenty
centavos (P0.20) per kilogram of copra resecada out of the CCSF collected by the Philippine Coconut
Authority.11

Six (6) days after the issuance of P.D. No. 582, or on November 20, 1974, at the instigation of
respondent Cojuangco, Jr., AII, represented by respondent Cojuangco, Jr. as Chairman and President,
and NIDC, represented by its Senior Vice-President, Augusto E. Orosa, entered into a Memorandum of
Agreement (MOA). Cojuangco had an exclusive contract with Dr. Yann Fremond of the Research
Institute for Oil and Oilseeds, granting the former the exclusive right to establish and operate a seed
garden for the production of Ivory Coast Hybrid Seednuts, a hybrid developed by Dr. Fremond, and
supposedly most suitable for Philippine soil and climate.12 AII and NIDC stipulated, in fine, that AII shall
develop the Bugsuk property for the growing of hybrid seednuts and sell the entire production to NIDC,
which shall in turn pay AII part of the costs in the development and operation of the seed garden and
the support facilities.13

On June 11, 1978, President Marcos issued P.D. No. 1468, otherwise known as the Revised Coconut
Industry Code, substituting the United Coconut Planters Bank (UCPB) for the NIDC as administrator-
trustee of the CIDF. UCPB is a commercial bank acquired by the government through the CCSF for the
benefit of the coconut farmers. On August 27, 1982, President Marcos lifted the coconut levy. With the
only financial source of the CIDF depleted, UCPB had no choice but to terminate the agreement with the
AII effective December 31, 1982.

Adversely affected by this turn of events, All demanded arbitration. A Board of Arbitrators was created
pursuant to the arbitration clause in the MOA. AII nominated Atty. Esteban Bautista while UCPB
designated Atty. Anacleto Dideles. In turn, the two appointed Atty. Bartolome Carale, a professor at the
UP College of Law, as third member and Chairman of the Board.

On March 29, 1983, the Board of Arbitrators rendered a decision awarding to AII liquidated damages for
Nine Hundred Fifty-Eight Million Six Hundred Fifty Thousand Pesos (P958,650,000.00) from the CIDF.
From this award was deducted the Four Hundred Twenty-Six Million Two Hundred Sixty-One Thousand
Six Hundred Forty Pesos (P426,261,640.00) advanced by the NIDC for the development of the seed
garden, leaving a balance due to AII amounting to Five Hundred Thirty-Two Million Three Hundred
Eighty-Eight Thousand Three Hundred Fifty-Four Pesos (P532,388,354.00). Costs of arbitration and the
arbitrator's fee of One Hundred Fifty Thousand Pesos (P150,000.00) were also taken from the CIDF.14

On April 19, 1983, the UCPB Board of Directors, composed of respondents Cojuangco, Jr., as President,
Enrile as Chairman, Dela Cuesta, Zayco, Ursua and Pineda as members, adopted Resolution No. 111-83,
resolving to "note" the decision of the Board of Arbitrators, allowing the arbitral award to lapse with
finality.

The complaint filed by the Solicitor General alleged that the MOA "is a one-sided contract with
provisions clearly stacked up against the NIDC thereby placing the latter in a no-win situation." It cited
several stipulations in the contract to substantiate its claim, to wit:15
 1. Under Section 9.1 of the MOA, neither party shall be liable for any loss or damage due to the
non-performance of their respective obligations resulting from any cause beyond the
reasonable control of the party concerned. However, under Section 9.3, notwithstanding the
occurrence of such causes, the obligation of the NIDC to pay AII's share of the development
costs amounting to P426,260,000.00 would still remain enforceable.

2. Under Sec. 11.2, if NIDC fails to perform its obligations, for any cause whatsoever, it will be
liable out of the CIDF, not only for the development costs, but also for liquidated damages equal
to the stipulated price of the hybrid seednuts for a period of five (5) years at the rate of
19,173,000 seednuts per annum, totaling P958,650.00.16

3. Under Section 11.3, while AII was given the right to terminate the contract in case of force
majeure, no such right was given in favor of NIDC. Moreover, AII can do so without incurring any
liability for damages.

4. AII was only required to exert best efforts to produce a projected number of seednuts while
NIDC was required to set aside and reserve from CIDF such amount as would insure full and
prompt payment.

Respondent Cojuangco, Jr. sought the dismissal of the complaint on the ground of prescription, citing
the 1992 cases of People v. Sandiganbayan,17 and Zaldivia v. Hon. Andres B. Reyes.18

On December 29, 1997, Graft Investigation Officer (GIO) Manuel J. Tablada recommended the dismissal
of the case, which was subsequently assigned to GIO I Emora C. Pagunuran. GIO I Pagunuran issued the
assailed memorandum, denominated "Review and Recommendation", dated August 6, 1998 wherein
she found that the alleged offense had allegedly prescribed. Following the case of People v.
Sandiganbayan, GIO I Pagunuran reckoned the prescription period from the date the Memorandum of
Agreement was entered into, or on November 20, 1974. As the case was filed only on February 12, 1990,
respondent Ombudsman ruled that the same was filed beyond the prescriptive period of ten (10) years
as fixed under Sec. 11 of R.A. No. 3019. In addition, the "Review and Recommendation" ruled that the
questioned MOA was expressly confirmed and ratified by P.D. No. 96119 (1976) and P.D. No.
146820 (1978) and, thus, was given "legislative imprimatur."

The OSG filed a Motion for Reconsideration dated September 11, 1998, arguing that (a) the offense
charged in the complaint falls within the category of an ill-gotten wealth case which under the
Constitution is imprescriptible; and (b) that void contracts are not subject to ratification and/or
confirmation. Inasmuch public respondent Ombudsman denied petitioner's motion for reconsideration
in the Order dated September 25, 1998, petitioner interposed on December 28, 1998 the instant
petition raising two (2) issues for resolution, to wit:21

WHETHER THE OMBUDSMAN ACTED WITH GRAVE ABUSE OF DISCRETION IN DECLARING THAT THE
OFFENSE CHARGED IN THE COMPLAINT FOR VIOLATION OF RA. NO. 3019 HAD ALREADY PRESCRIBED
WHEN THE COMPLAINT WAS FILED.

II
WHETHER THE OMBUDSMAN ACTED WITH GRAVE ABUSE OF DISCRETION IN DECLARING THAT THERE IS
NO BASIS TO INDICT PRIVATE RESPONDENTS FOR VIOLATION OF THE ANTI-GRAFT LAW BASED ON THE
CONTRACT IN QUESTION.

Respondents aver that the instant petition for certiorari is but a mere attempt to substitute for a lost
appeal and was filed out of time. While the petitioner concedes that its petition suffers from procedural
infirmities, it urges this Court to exercise its equity jurisdiction.

At the outset, this Court notes that the petitioner received a copy of the assailed memorandum dated
August 6, 1998 on August 28, 1998. Petitioner interposed a motion for reconsideration on September
11, 1998. On October 28, 1998, petitioner received a copy of the order denying its motion for
reconsideration. Following Section 4 of Rule 65 of the 1997 Rules of Civil Procedure, as amended by
Circular No. 39-98,22 which took effect on September 1, 1998, the instant petition should have been filed
on December 13, 1998. Thus, since the instant petition was filed only on December 28, 1998, it was filed
fifteen (15) days beyond the sixty (60) day reglementary period prescribed by the Rules. However,
during the pendency of the instant petition, the Court promulgated A.M. No. 00-2-03-SC,23 effective on
September 1, 2000, which further amended Section 4 of Rule 65 of the 1997 Rules of Civil Procedure to
read as:

SECTION 4. When and where petition filed. — The petition shall be filed not later than sixty (60)
days from notice of judgment, order or resolution. In case a motion for reconsideration or new
trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be
counted from notice of the denial of said motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a
lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising
jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the
Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a
quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed
in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason and in no
case exceeding fifteen (15) days.24

Statutes regulating procedure of the courts will be construed as applicable to actions pending and
undetermined at the time of their passage. In that context and in view of the retroactive application of
procedural laws,25 the instant petition should thus be considered timely filed.

On the matter of prescription, before B.P. Blg. 195, which was approved on March 16, 1982, the
prescription period for violation of the Anti-Graft Practices Act was ten (10) years. The complaint for
violation of R.A. No. 3019 was filed before the PCGG on February 12, 1990 or more than fifteen (15)
years after the birth of the allegedly illegal contract.

The Solicitor General presents a novel theory to advance his view that the prescription period in R.A. No.
3019 does not apply to respondents. The Solicitor General asserts that the respondents are public
officers within the coverage of the Anti-Graft Law since they are being prosecuted as members and
officers of the Board of Directors of the UCPB, which was acquired by the government through the coco
levy funds. He argues that while the dismissed complaint is for violation of R.A. No. 3019, or the Anti-
Graft and Corrupt Practices Act, the prosecution thereof is actually a suit intended to recover ill-gotten
wealth from public officials, and therefore covered by R.A. No. 1379, entitled "An Act Declaring Forfeited
in Favor of the State Any Property Found to Have been Unlawfully Acquired By Any Public Officer or
Employee and Providing for the Procedure Therefor."

As this is supposedly a suit under R.A. No. 1379, the Solicitor General urges the Court to follow its ruling
in Republic v. Migrino,26 which held that cases falling under the said law are imprescriptible. According
to Migrino, Sec. 2 of R.A. No. 1379 which provides that petition for forfeiture of unlawfully acquired
wealth shall prescribe within four (4) years from the date of resignation, dismissal or separation or
expiration of the officer or employee concerned should be deemed amended or repealed by Section 15,
Article XI of the 1987 Constitution which provides:

The right of the State to recover properties unlawfully acquired by public officials or employees,
from them or their nominees, shall not be barred by prescription, laches, or estoppel.

It has already been settled in Presidential Ad Hoc Fact-Finding Committee on Behest Loans v.
Desierto27 that Section 15 of Article XI of the Constitution applies only to civil actions for recovery of ill-
gotten wealth, and not to criminal cases such as the complaint against the respondents in OMB-0-90-
2808. Conversely, prescription of criminal cases are governed by special laws on prescription.

Furthermore, to construe Section 15, Article XI of the 1987 Constitution in order to give it retroactive
application to the private respondents will run counter to another constitutional provision, that is,
Section 22, Article III which provides that "No ex post facto law or bill of attainder shall be enacted."
An ex post facto law is defined, in part, as a law which deprives persons accused of crime of some lawful
protection of a former conviction or acquittal, or of the proclamation of amnesty; every law which, in
relation to the offense or its consequences, alters the situation of a person to his disadvantage.28 A
construction which raises a conflict between different parts of the constitution is not permissible when
by reasonable construction, the parts may made to harmonize.29

We now turn to another novel theory of the Solicitor General. He claims that there are "special
circumstances" that would warrant the reckoning of the prescription period, not from the date of the
violation of the penalizing law because "it could not have been known at that time", but from the EDSA
Revolution of February 1986, which is supposedly the only time that the offense could have been
discovered. According to the Solicitor General:30

It bears emphasizing that the criminal acts complained of against private respondents in this
case were committed during the Marcos regime. Private respondents were closely associated
with Marcos who unquestionably wielded power and influence and/or who, by themselves,
were also highly-placed in government. Thus assuming that the offense charged is deemed to
have been committed upon the execution of the contract in question, who could have known of
the existence of this contract apart from the contracting parties thereto? Being privies to the
contract, would private respondents have initiated criminal suits against themselves? Assuming
that third persons to the contract knew of its existence, was there a reasonable opportunity, or
even political will, to prosecute those involved in the execution of the questioned contract?
 To recall, due to the abnormal situation obtaining at that time, no one dared question the
excesses and abscesses of the officialdom which is eloquently exemplified by subject case.

The applicable provisions of law on prescription of offenses are found in Article 90 and Article 91 of the
Revised Penal Code for offenses punishable thereunder and Act No. 3326 for those penalized by special
laws. R.A. No. 3019 being a special law, the commencement of the period for the prescription for any
act violating it is governed by Section 2 of Act No. 3326,31 which provides:

SECTION 2. Prescription shall begin to run from the day of the commission of the violation of the
law, and if the same be not known at the time, from the discovery thereof and the institution of
judicial proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person,
and shall begin to run again if the proceedings are dismissed for reasons not constituting
jeopardy.

As a rule, if the commission of the crime is known, the prescriptive period shall commence to run on the
day it was committed.32 However, in cases where the time of commission is unknown, prescription shall
only run from its discovery and institution of judicial proceedings for its investigation and punishment.
Ordinarily, there is no problem in determining the date when the crime consists of a series of acts,
especially when some or all of these acts are innocent in themselves.

The Ombudsman and private respondents relied on our ruling in People v. Sandiganbayan, involving the
prosecution of a Provincial Attorney who allegedly influenced officials in the Bureau of Lands to issue a
free patent in his favor. The prosecution advanced the theory that the prescriptive period should not
commence upon the filing of the application because no one could have known about it except the
accused and the Lands Inspector. In rejecting his theory and ruling that "the date of the violation of the
law becomes the operative date of the commencement of the period of prescription", this Court
ratiocinated:

It is not only the Lands Inspector who passes upon the disposability of public land x x x other
public officials pass upon the application for a free patent including the location of the land and,
therefore, the disposable character thereof. Indeed, practically all the department personnel,
who had a hand in processing and approving the application, namely x x x could not have helped
"discovering" that the subject of the application was nondisposable public agricultural land.

This issue confronted this Court anew, albeit in a larger scale, in Presidential Ad Hoc Fact-Finding
Committee on Behest Loans v. Desierto.33 In the said recent case, the Board of Directors of the Philippine
Seeds, Inc. and Development Bank of the Philippines were charged with violation of paragraphs (e) and
(g) of Section 3 of R.A. No. 3019, by the Presidential Ad Hoc Fact-Finding Committee on Behest Loans,
created by then President Fidel V. Ramos to investigate and to recover the so-called "Behest Loans",
where the Philippine Government guaranteed several foreign loans to corporations and entities
connected with the former President Marcos. As in the present case, the Ombudsman in that case
dismissed the complaint on the ground of prescription. In holding that the case had not yet prescribed,
this Court ruled that:
 In the present case, it was well-nigh impossible for the State, the aggrieved party, to have
known the violations of R.A. No. 3019 at the time the questioned transactions were made
because, as alleged, the public officials concerned connived or conspired with the "beneficiaries
of the loans." Thus, we agree with the COMMITTEE that the prescriptive period for the offenses
with which the respondents in OMB-0-96-0968 were charged should be computed from the
discovery of the commission thereof and not from the day of such commission.

xxx xxx xxx

People v. Duque is more in point, and what was stated there stands reiteration: In the nature of
things, acts made criminal by special laws are frequently not immoral or obviously criminal in
themselves; for this reason, the applicable statute requires that if the violation of the special law
is not known at the time, the prescription begins to run only from the discovery thereof i.e.,
discovery of the unlawful nature of the constitutive act or acts. (Italics supplied)

There are striking parallelisms between the said Behest Loans Case and the present one which lead us to
apply the ruling of the former to the latter. First, both cases arose out of seemingly innocent business
transactions; second, both were "discovered" only after the government created bodies to investigate
these anomalous transactions; third, both involve prosecutions for violations of R.A. No. 3019;
and, fourth, in both cases, it was sufficiently raised in the pleadings that the respondents conspired and
connived with one another in order to keep the alleged violations hidden from public scrutiny.

This Courts pronouncement in the case of Domingo v. Sandiganbayan34 is quite relevant and instructive
as to the date when the discovery of the offense should be reckoned, thus:

"In the present case, it was well-nigh impossible for the government, the aggrieved party, to
have known the violations committed at the time the questioned transactions were made
because both parties to the transactions were allegedly in conspiracy to perpetrate fraud
against the government. The alleged anomalous transactions could only have been discovered
after the February 1986 Revolution when one of the original respondents, then President
Ferdinand Marcos, was ousted from office. Prior to said date, no person would have dared to
question the legality or propriety of those transactions. Hence, the counting of the prescriptive
period would commence from the date of discovery of the offense, which could have been
between February 1986 after the EDSA Revolution and 26 May 1987 when the initiatory
complaint was filed."35

We do not subscribe to the Ombudsman's view that P.D. Nos. 961 and 1468 ipso facto served to insulate
the private respondents from prosecution. The "legislative imprimatur" allegedly granted by the then
President Marcos to the MOA is not necessarily inconsistent with the existence of a violation of R.A. No.
3019. Thus, Section t, Article III of P.D. No. 961, promulgated in 1976, reads:

SECTION 3. Coconut Industry Development Fund. — There is hereby created a permanent fund
to be known as Coconut Industry Development Fund which shall be deposited, subject to the
provisions of P.D. No. 755, with, and administered and utilized by the Philippine National Bank
subsidiary, the National Investment and Development Corporation for the following purposes:
 a) To finance the establishment operation and maintenance of a hybrid coconut seednut
farm under such terms and conditions that may be negotiated by the National
Investment and Development Corporation with any private person, corporation, firm or
entity as would insure that the country shall have, at the earliest possible time, a
proper, adequate and continuous supply of high-yielding hybrid seednuts and, for this
purpose, the contract entered into by the NIDC as herein authorized is hereby
confirmed and ratified; x x x

A similarly worded provision in P.D. 1468, promulgated in 1978, reads:

SECTION 3. Coconut Industry Development Fund. — There is hereby created a

permanent fund to be known as Coconut Industry Development Fund which shall be
administered and utilized by the bank acquired for the benefit of the coconut farmers
under P.D. 755 for the following purposes:

a) To finance the establishment, operation and maintenance of a hybrid coconut

seednut farm under such terms and conditions that may be negotiated by the
National Investment and Development Corporation (NIDC) with any private
person, corporation, firm or entity as would insure that the country shall have,
at the earliest possible time, a proper, adequate and continuous supply of high-
yielding hybrid seednuts and, for this purpose, the contract, including the
amendments and supplements thereto as provided for herein, entered into by
NIDC as herein authorized is hereby confirmed and ratified, and the bank
acquired for the benefit of the coconut farmers under P.D. 755 shall administer
the said contract, including its amendments and supplements, and perform all
the rights and obligation of NIDC thereunder, utilizing for that purpose the
Coconut Industry Development find; x x x

R.A. No. 3019, as applied to the instant case, covers not only the alleged one-sidedness of the MOA, but
also as to whether the contracts or transactions entered pursuant thereto by private respondents were
manifestly and grossly disadvantageous to the government36 , whether they caused undue injury to the
government,37 and whether the private respondents were interested for personal gain or had material
interest in the transactions.38

The task to determine and find whether probable cause to charge the private respondents exists
properly belongs to the Ombudsman. We only rule that the Office of the Ombudsman should not have
dismissed the complaint on the basis of prescription which is erroneous as hereinabove discussed. The
Ombudsman should have given the Solicitor General the opportunity to present his evidence and then
resolve the case for purposes of preliminary investigation. Failing to do so, the Ombudsman acted with
grave abuse of discretion.

WHEREFORE, the instant petition is hereby GRANTED. The assailed Review and Recommendation dated
August 6, 1998 of Graft Investigation Officer Emora C. Pagunuran, and approved by Ombudsman Aniano
A. Desierto, dismissing the petitioner's complaint in OMB-0-90-2808, and the Order dated September
25, 1998 denying the petitioner's motion for reconsideration, are hereby REVERSED and SET ASIDE.
The Ombudsman is hereby directed to proceed with the preliminary investigation of the case OMB-0-90-
2808.

No pronouncement as to costs.

SO ORDERED.

3. Act No. 3326 as amended by Act No. 3763

ACT NO. 3326

ACT NO. 3326 - AN ACT TO ESTABLISH PERIODS OF PRESCRIPTION FOR VIOLATIONS PENALIZED BY
SPECIAL ACTS AND MUNICIPAL ORDINANCES AND TO PROVIDE WHEN PRESCRIPTION SHALL BEGIN TO
RUN

Section 1. Violations penalized by special acts shall, unless otherwise provided in such acts, prescribe in
accordance with the following rules: (a) after a year for offenses punished only by a fine or by
imprisonment for not more than one month, or both; (b) after four years for those punished by
imprisonment for more than one month, but less than two years; (c) after eight years for those punished
by imprisonment for two years or more, but less than six years; and (d) after twelve years for any other
offense punished by imprisonment for six years or more, except the crime of treason, which shall
prescribe after twenty years. Violations penalized by municipal ordinances shall prescribe after two
months.

Sec. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if
the same be not known at the time, from the discovery thereof and the institution of judicial proceeding
for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person, and shall
begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.

Sec. 3. For the purposes of this Act, special acts shall be acts defining and penalizing violations of the law
not included in the Penal Code.

Sec. 4. This Act shall take effect on its approval.

4. Romualdez v. Marcelo, G.R. No. 165510, 28 July 2006

G.R. Nos. 165510-33 July 28, 2006

BENJAMIN ("KOKOY") T. ROMUALDEZ, petitioner,
vs.
HON. SIMEON V. MARCELO, in his official capacity as the Ombudsman, and PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT, respondents.

RESOLUTION

YNARES-SANTIAGO, J.:

For resolution is petitioner’s Motion for Reconsideration1 assailing the Decision dated September 23,
2005, the dispositive portion of which states:

WHEREFORE, the petition is DISMISSED. The resolutions dated July 12, 2004 and September 6,
2004 of the Office of the Special Prosecutor, are AFFIRMED.

SO ORDERED.2

Petitioner claims that the Office of the Ombudsman gravely abused its discretion in recommending the
filing of 24 informations against him for violation of Section 7 of Republic Act (RA) No. 3019 or the Anti-
Graft and Corrupt Practices Act; that the Ombudsman cannot revive the aforementioned cases which
were previously dismissed by the Sandiganbayan in its Resolution of February 10, 2004; that the defense
of prescription may be raised even for the first time on appeal and thus there is no necessity for the
presentation of evidence thereon before the court a quo. Thus, this Court may accordingly dismiss
Criminal Case Nos. 28031-28049 pending before the Sandiganbayan and Criminal Case Nos. 04-231857–
04-231860 pending before the Regional Trial Court of Manila, all on the ground of prescription.

In its Comment,3 the Ombudsman argues that the dismissal of the informations in Criminal Case Nos.
13406-13429 does not mean that petitioner was thereafter exempt from criminal prosecution; that new
informations may be filed by the Ombudsman should it find probable cause in the conduct of its
preliminary investigation; that the filing of the complaint with the Presidential Commission on Good
Government (PCGG) in 1987 and the filing of the information with the Sandiganbayan in 1989
interrupted the prescriptive period; that the absence of the petitioner from the Philippines from 1986
until 2000 also interrupted the aforesaid period based on Article 91 of the Revised Penal Code.

For its part, the PCGG avers in its Comment4 that, in accordance with the 1987 Constitution and RA No.
6770 or the Ombudsman Act of 1989, the Omdudsman need not wait for a new complaint with a new
docket number for it to conduct a preliminary investigation on the alleged offenses of the petitioner;
that considering that both RA No. 3019 and Act No. 3326 or the Act To Establish Periods of Prescription
For Violations Penalized By Special Acts and Municipal Ordinances and to Provide When Prescription
Shall Begin To Run, are silent as to whether prescription should begin to run when the offender is absent
from the Philippines, the Revised Penal Code, which answers the same in the negative, should be
applied.

The issues for resolution are: (1) whether the preliminary investigation conducted by the Ombudsman in
Criminal Case Nos. 13406-13429 was a nullity; and (2) whether the offenses for which petitioner are
being charged have already prescribed.
Anent the first issue, we reiterate our ruling in the assailed Decision that the preliminary investigation
conducted by the Ombudsman in Criminal Case Nos. 13406-13429 is a valid proceeding despite the
previous dismissal thereof by the Sandiganbayan in its Minute Resolution5 dated February 10, 2004
which reads:

Crim. Cases Nos. 13406-13429–PEO. vs. BENJAMIN T. ROMUALDEZ

Considering that the Decision of the Honorable Supreme Court in G.R. Nos. 143618-41, entitled
"Benjamin ‘Kokoy’ Romualdez vs. The Honorable Sandiganbayan (First Division, et al.)"
promulgated on July 30, 2002 annulled and set aside the orders issued by this Court on June 8,
2000 which, among others, denied the accused’s motion to quash the informations in these
cases; that in particular the above-mentioned Decision ruled that the herein informations may
be quashed because the officer who filed the same had no authority to do so; and that the said
Decision has become final and executory on November 29, 2002, these cases are considered
DISMISSED. Let these cases be sent to the archives.

The aforesaid dismissal was effected pursuant to our ruling in Romualdez v. Sandiganbayan6 where
petitioner assailed the Sandiganbayan’s Order dated June 8, 2000 in Criminal Case Nos. 13406-13429
which denied his Motion to Quash, terminated the preliminary investigation conducted by Prosecutor
Evelyn T. Lucero and set his arraignment for violations of Section 7 of RA No. 3019 on June 26, 2000.7 In
annulling and setting aside the aforesaid Order of the Sandiganbayan, we held that:

In the case at bar, the flaw in the information is not a mere remediable defect of form, as
in Pecho v. Sandiganbayan where the wording of the certification in the information was found
inadequate, or in People v. Marquez, where the required certification was absent. Here, the
informations were filed by an unauthorized party. The defect cannot be cured even by
conducting another preliminary investigation. An invalid information is no information at all and
cannot be the basis for criminal proceedings.8

In effect, we upheld in Romualdez v. Sandiganbayan9 petitioner’s Motion to Quash and directed the
dismissal of Criminal Case Nos. 13406-13429 because the informations were filed by an unauthorized
party, hence void.

In such a case, Section 6, Rule 117 of the Rules of Court is pertinent and applicable. Thus:

SEC. 6. Order sustaining the motion to quash not a bar to another prosecution; exception. – An
order sustaining the motion to quash is not a bar to another prosecution for the same offense
unless the motion was based on the grounds specified in section 3(g) and (i)10 of this Rule.

An order sustaining a motion to quash on grounds other than extinction of criminal liability or double
jeopardy does not preclude the filing of another information for a crime constituting the same facts.
Indeed, we held in Cudia v. Court of Appeals11 that:

In fine, there must have been a valid and sufficient complaint or information in the former
prosecution. If, therefore, the complaint or information was insufficient because it was so
defective in form or substance that the conviction upon it could not have been sustained, its
dismissal without the consent of the accused cannot be pleaded. As the fiscal had no authority
 to file the information, the dismissal of the first information would not be a bar in petitioner’s
subsequent prosecution. x x x.12

Be that as it may, the preliminary investigation conducted by the Ombudsman in the instant cases was
not a violation of petitioner’s right to be informed of the charges against him. It is of no moment that
the cases investigated by the Ombudsman bore the same docket numbers as those cases which have
already been dismissed by the Sandiganbayan, to wit: Criminal Case Nos. 13406-13429. As we have
previously stated:

The assignment of a docket number is an internal matter designed for efficient record keeping.
It is usually written in the Docket Record in sequential order corresponding to the date and time
of filing a case.

This Court agrees that the use of the docket numbers of the dismissed cases was merely for
reference. In fact, after the new informations were filed, new docket numbers were
assigned, i.e., Criminal Cases Nos. 28031-28049 x x x.13

Besides, regardless of the docket numbers, the Ombudsman conducted the above-referred preliminary
investigation pursuant to our Decision in Romualdez v. Sandiganbayan14 when we categorically declared
therein that:

The Sandiganbayan also committed grave abuse of discretion when it abruptly terminated the
reinvestigation being conducted by Prosecutor Lucero. It should be recalled that our directive in
G.R. No. 105248 for the holding of a preliminary investigation was based on our ruling that the
right to a preliminary investigation is a substantive, rather than a procedural right. Petitioner’s
right was violated when the preliminary investigation of the charges against him were
conducted by an officer without jurisdiction over the said cases. It bears stressing that our
directive should be strictly complied with in order to achieve its objective of affording petitioner
his right to due process.15

Anent the issue on the prescription of the offenses charged, we should first resolve the question of
whether this Court may validly take cognizance of and resolve the aforementioned issue considering
that as we have said in the assailed Decision, "this case has never progressed beyond the filing of the
informations against the petitioner"16 and that "it is only prudent that evidence be gathered through
trial on the merits to determine whether the offense charged has already prescribed."17 We reconsider
our stance and shall rule in the affirmative.

Rule 117 of the Rules of Court provides that the accused may, at any time before he enters his plea,
move to quash the complaint and information18 on the ground that the criminal action or liability has
been extinguished,19 which ground includes the defense of prescription considering that Article 89 of the
Revised Penal Code enumerates prescription as one of those grounds which totally extinguishes criminal
liability. Indeed, even if there is yet to be a trial on the merits of a criminal case, the accused can very
well invoke the defense of prescription.

Thus, the question is whether or not the offenses charged in the subject criminal cases have prescribed?
We held in the case of Domingo v. Sandiganbayan20 that:
 In resolving the issue of prescription of the offense charged, the following should be considered:
(1) the period of prescription for the offense charged; (2) the time the period of prescription
starts to run; and (3) the time the prescriptive period was interrupted.21

Petitioner is being charged with violations of Section 7 of RA No. 3019 for failure to file his Statements of
Assets and Liabilities for the period 1967-1985 during his tenure as Ambassador Extraordinary and
Plenipotentiary and for the period 1963-1966 during his tenure as Technical Assistant in the Department
of Foreign Affairs.

Section 11 of RA No. 3019 provides that all offenses punishable therein shall prescribe in 15 years.
Significantly, this Court already declared in the case of People v. Pacificador22 that:

It appears however, that prior to the amendment of Section 11 of R.A. No. 3019 by B.P. Blg. 195
which was approved on March 16, 1982, the prescriptive period for offenses punishable under
the said statute was only ten (10) years. The longer prescriptive period of fifteen (15) years, as
provided in Section 11 of R.A. No. 3019 as amended by B.P. Blg. 195, does not apply in this case
for the reason that the amendment, not being favorable to the accused (herein private
respondent), cannot be given retroactive effect. Hence, the crime prescribed on January 6, 1986
or ten (10) years from January 6, 1976.23

Thus, for offenses allegedly committed by the petitioner from 1962 up to March 15, 1982, the same
shall prescribe in 10 years. On the other hand, for offenses allegedly committed by the petitioner during
the period from March 16, 1982 until 1985, the same shall prescribe in 15 years.

As to when these two periods begin to run, reference is made to Act No. 3326 which governs the
computation of prescription of offenses defined by and penalized under special laws. Section 2 of Act
No. 3326 provides:

SEC. 2. Prescription shall begin to run from the day of the commission of the violation of the law,
and if the same be not known at the time, from the discovery thereof and the institution of
judicial proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person,
and shall begin to run again if the proceedings are dismissed for reasons not constituting
jeopardy.

In the case of People v. Duque,24 we construed the aforequoted provision, specifically the rule on the
running of the prescriptive period as follows:

In our view, the phrase "institution of judicial proceedings for its investigation and punishment"
may be either disregarded as surplusage or should be deemed preceded by the word "until."
Thus, Section 2 may be read as:

"Prescription shall begin to run from the day of the commission of the violation of the
law; and if the same be not known at the time, from the discovery thereof;"

or as:
 "Prescription shall begin to run from the day of the commission of the violation of the
law, and if the same be not known at the time, from the discovery thereof
and until institution of judicial proceedings for its investigation and punishment."
(Emphasis supplied)25

Thus, this Court rules that the prescriptive period of the offenses herein began to run from the discovery
thereof or on May 8, 1987, which is the date of the complaint filed by the former Solicitor General
Francisco I. Chavez against the petitioner with the PCGG.

In the case of Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto26 this Court
already took note that:

In cases involving violations of R.A. No. 3019 committed prior to the February 1986 EDSA
Revolution that ousted President Ferdinand E. Marcos, we ruled that the government as the
aggrieved party could not have known of the violations at the time the questioned transactions
were made. Moreover, no person would have dared to question the legality of those
transactions. Thus, the counting of the prescriptive period commenced from the date of
discovery of the offense in 1992 after an exhaustive investigation by the Presidential Ad Hoc
Committee on Behest Loans.27

However, both respondents in the instant case aver that, applying Article 91 of the Revised Penal Code
suppletorily, the absence of the petitioner from the Philippines from 1986 until April 27, 2000 prevented
the prescriptive period for the alleged offenses from running.

We disagree.

Section 2 of Act. No. 3326 is conspicuously silent as to whether the absence of the offender from the
Philippines bars the running of the prescriptive period. The silence of the law can only be interpreted to
mean that Section 2 of Act No. 3326 did not intend such an interruption of the prescription unlike the
explicit mandate of Article 91. Thus, as previously held:

Even on the assumption that there is in fact a legislative gap caused by such an omission, neither
could the Court presume otherwise and supply the details thereof, because a legislative lacuna
cannot be filled by judicial fiat. Indeed, courts may not, in the guise of the interpretation,
enlarge the scope of a statute and include therein situations not provided nor intended by the
lawmakers. An omission at the time of the enactment, whether careless or calculated, cannot be
judicially supplied however after later wisdom may recommend the inclusion. Courts are not
authorized to insert into the law what they think should be in it or to supply what they think the
legislature would have supplied if its attention has been called to the omission.28

The only matter left to be resolved is whether the filing of the complaint with the PCGG in 1987 as well
as the filing of the informations with the Sandiganbayan to initiate Criminal Case Nos. 13406-13429 in
1989 interrupted the running of the prescriptive period such that when the Ombudsman directed
petitioner to file his counter-affidavit on March 3, 2004, the offenses have already prescribed.
Under Section 2 of Act No. 3326, the prescriptive period shall be interrupted "when proceedings are
instituted against the guilty person." However, there is no such proceeding instituted against the
petitioner to warrant the tolling of the prescriptive periods of the offenses charged against him.

In Romualdez v. Sandiganbayan,29 petitioner averred that PCGG acted without jurisdiction and/or grave
abuse of discretion in conducting a preliminary investigation of cases not falling within its
competence.30 This Court, in its resolve to "deal with the merits of the case to remove the possibility of
any misunderstanding as to the course which it wishes petitioner’s cases in the Sandiganbayan to
take"31declared invalid –

the preliminary investigation conducted by the PCGG over the 24 offenses ascribed to
Romualdez (of failure to file annual statements of assets and liabilities), for lack of jurisdiction of
said offenses.32

In Romualdez v. Sandiganbayan,33 petitioner assailed the validity of the informations filed with the
Sandiganbayan in Criminal Case Nos. 13406-13429 considering that the same were subscribed and filed
by the PCGG. In granting petitioner’s plea, this Court held, thus:

Here, the informations were filed by an unauthorized party. The defect cannot be cured by conducting
another preliminary investigation. An invalid information is no information at all and cannot be the basis
for criminal proceedings.34

Indeed, the nullity of the proceedings initiated by then Solicitor General Chavez in 1987 with the PCGG
and by the PCGG with the Sandiganbayan in 1989 is judicially settled. In contemplation of the law, no
proceedings exist that could have merited the suspension of the prescriptive periods.

Besides, the only proceeding that could interrupt the running of prescription is that which is filed or
initiated by the offended party before the appropriate body or office. Thus, in the case of People v.
Maravilla,35 this Court ruled that the filing of the complaint with the municipal mayor for purposes of
preliminary investigation had the effect of suspending the period of prescription. Similarly, in the case
of Llenes v. Dicdican,36 this Court held that the filing of a complaint against a public officer with the
Ombudsman tolled the running of the period of prescription.

In the case at bar, however, the complaint was filed with the wrong body, the PCGG. Thus, the same
could not have interrupted the running of the prescriptive periods.

However, in his Dissenting Opinion, Mr. Justice Carpio contends that the offenses charged against the
petitioner could not have prescribed because the latter was absent from the Philippines from 1986 to
April 27, 2000 and thus the prescriptive period did not run from the time of discovery on May 8, 1987,
citing Article 91 of the Revised Penal Code which provides that "[t]he term of prescription should not run
when the offender is absent from the Philippine Archipelago."

Mr. Justice Carpio argues that –

Article 10 of the same Code makes Article 91 "x x x supplementary to [special laws], unless the
latter should x x x provide the contrary." Nothing in RA 3019 prohibits the supplementary
application of Article 91 to that law. Hence, applying Article 91, the prescriptive period in
 Section 11 of RA 3019, before and after its amendment, should run only after petitioner
returned to this jurisdiction on 27 April 2000.

There is no gap in the law. Where the special law is silent, Article 10 of the RPC applies
suppletorily, as the Court has held in a long line of decisions since 1934, starting with People v.
Moreno. Thus, the Court has applied suppletorily various provisions of the RPC to resolve cases
where the special laws are silent on the matters in issue. The law on the applicability of Article
10 of the RPC is thus well-settled, with the latest reiteration made by this Court in 2004 in Jao Yu
v. People.

He also expresses his apprehension on the possible effects of the ruling of the Majority Opinion and
argues that –

The accused should not have the sole discretion of preventing his own prosecution by the
simple expedient of escaping from the State’s jurisdiction. x x x An accused cannot acquire legal
immunity by being a fugitive from the State’s jurisdiction. x x x.

To allow an accused to prevent his prosecution by simply leaving this jurisdiction unjustifiably
tilts the balance of criminal justice in favor of the accused to the detriment of the State’s ability
to investigate and prosecute crimes. In this age of cheap and accessible global travel, this Court
should not encourage individuals facing investigation or prosecution for violation of special laws
to leave Philippine jurisdiction to sit-out abroad the prescriptive period. The majority opinion
unfortunately chooses to lay the basis for such anomalous practice.

With all due respect, we beg to disagree.

Article 10 of the Revised Penal Code provides:

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.

Pursuant thereto, one may be tempted to hastily conclude that a special law such as RA No. 3019 is
supplemented by the Revised Penal Code in any and all cases. As it is, Mr. Justice Carpio stated in his
Dissenting Opinion that –

There is no gap in the law. Where the special law is silent, Article 10 of the RPC applies
suppletorily, as the Court has held in a long line of decisions since 1934, starting with People v.
Moreno. Thus, the Court has applied suppletorily various provisions of the RPC to resolve cases
where the special laws are silent on the matters in issue. The law on the applicability of Article
10 of the RPC is thus well-settled, with the latest reiteration made by this Court in 2004 in Jao Yu
v. People.

However, it must be pointed out that the suppletory application of the Revised Penal Code to special
laws, by virtue of Article 10 thereof, finds relevance only when the provisions of the special law are
silent on a particular matteras evident from the cases cited and relied upon in the Dissenting Opinion:
In the case of People v. Moreno,37 this Court, before ruling that the subsidiary penalty under Article 39
of the Revised Penal Code may be applied in cases of violations of Act No. 3992 or the Revised Motor
Vehicle Law, noted that the special law did not contain any provision that the defendant can be
sentenced with subsidiary imprisonment in case of insolvency.

In the case of People v. Li Wai Cheung,38 this Court applied the rules on the service of sentences
provided in Article 70 of the Revised Penal Code in favor of the accused who was found guilty of multiple
violations of RA No. 6425 or The Dangerous Drugs Act of 1972 considering the lack of similar rules under
the special law.

In the case of People v. Chowdury,39 the Court applied Articles 17, 18 and 19 of the Revised Penal Code
to define the words "principal," "accomplices" and "accessories" under RA No. 8042 or the Migrant
Workers and Overseas Filipinos Act of 1995 because it was not defined therein although it referred to
the same terms in enumerating the persons liable for the crime of illegal recruitment.

In the case at bar, the silence of RA No. 3019 on the question of whether or not the absence of the
accused from the Philippines prevents or tolls the running of the prescriptive period is more apparent
than real.

Even before the enactment of RA No. 3019 in 1960, Act No. 3326 was already in effect as early as
December 4, 1926. Section 3 thereof categorically defines "special acts" as "acts defining and penalizing
violations of the law not included in the Penal Code".

Thus, in the case of Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto,40 this Court
was categorical in ruling that –

The law on prescription of offenses is found in Articles 90 and 91 of the Revised Penal Code for
offenses punishable thereunder. For those penalized under special laws, Act No. 3326 applies.

Section 2 of Act No. 3326 provides that the prescription shall begin to run from the day of the
commission of the violation of the law, and if the same be not known at the time, from the discovery
thereof and the institution of judicial proceedings for its investigation and punishment. The running of
the prescriptive period shall be interrupted when proceedings are instituted against the guilty person,
and shall begin to run again if the proceedings are dismissed for reasons not constituting
jeopardy. Clearly, Section 2 of Act No. 3326 did not provide that the absence of the accused from the
Philippines prevents the running of the prescriptive period. Thus, the only inference that can be
gathered from the foregoing is that the legislature, in enacting Act No. 3326, did not consider the
absence of the accused from the Philippines as a hindrance to the running of the prescriptive
period. Expressio unius est exclusio alterius. To elaborate, -

Indeed, it is an elementary rule of statutory construction that the express mention of one
person, thing, act, or consequence excludes all others. This rule is expressed in the familiar
maxim "expressio unius est exclusio alterius." Where a statute, by its terms, is expressly limited
to certain matters, it may not, by interpretation or construction, be extended to others. The rule
proceeds from the premise that the legislature would not have made specified enumerations in
a statute had the intention been not to restrict its meaning and to confine its terms to those
expressly mentioned.41
Had the legislature intended to include the accused’s absence from the Philippines as a ground for the
interruption of the prescriptive period in special laws, the same could have been expressly provided in
Act No. 3326. A case in point is RA No. 8424 or the Tax Reform Act of 1997 where the legislature made
its intention clear and was thus categorical that –

SEC. 281. Prescription for Violations of any Provision of this Code – All violations of any
provision of this Code shall prescribe after five (5) years.

Prescription shall begin to run from the day of the commission of the violation of the law, and if
the same be not known at the time, from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty persons
and shall begin to run again if the proceedings are dismissed for reasons not constituting
jeopardy.

The term of prescription shall not run when the offender is absent from the Philippines.
(Emphasis supplied)

According to Mr. Justice Carpio, Article 91 of the Revised Penal Code fills the so-called "gap" in Act No.
3326. Thus, while Act No. 3326 governs the operation of the prescriptive period for violations of R.A. No.
3019, Article 91 of the Revised Penal Code can and shall still be applied in cases where the accused is
absent from the Philippines. In effect, Article 91 would supplement Act No. 3326.

This could not have been the intention of the framers of the law.

While it is true that Article 10 of the Revised Penal Code makes the Code suppletory to special laws,
however, Act No. 3326 cannot fall within the ambit of "special law" as contemplated and used in Article
10 of the RPC.

In the case of United States v. Serapio,42 the Court had the occasion to interpret the term "special laws"
mentioned in Article 7 of then Penal Code of the Philippines, which is now Article 10 of the Revised
Penal Code, as referring to penal laws that punish acts not defined and penalized by the Penal Code of
the Philippines. Thus –

This contention makes it necessary to define "special laws," as that phrase is used in article 7 of
the Penal Code. Does this phrase "leyes especiales," as used in the Penal Code (article 7) have
the meaning applied to the phrase "special laws," as the same is generally used? x x x It is
confidently contended that the phrase "leyes especiales," as used in the Penal Code (article 7) is
not used with this general signification: In fact, said phrase may refer not to a special law as
above defined, but to a general law. A careful reading of said article 7 clearly indicates that the
phrase "leyes especiales" was not used to signify "special laws" in the general signification of
that phrase. The article, it will be noted, simply says, in effect, that when a crime is made
punishable under some other law than the Penal Code, it (the crime) is not subject to the
provisions of said code.43
Even if we consider both Act No. 3326 and Article 91 as supplements to RA No. 3019, the same result
would obtain. A conflict will arise from the contemporaneous application of the two laws. The Revised
Penal Code explicitly states that the absence of the accused from the Philippines shall be a ground for
the tolling of the prescriptive period while Act No. 3326 does not. In such a situation, Act No. 3326 must
prevail over Article 91 because it specifically and directly applies to special laws while the Revised Penal
Code shall apply to special laws only suppletorily and only when the latter do not provide the contrary.
Indeed, elementary rules of statutory construction dictate that special legal provisions must prevail over
general ones.

The majority notes Mr. Justice Carpio’s reservations about the effects of ruling that the absence of the
accused from the Philippines shall not suspend the running of the prescriptive period. Our duty,
however, is only to interpret the law. To go beyond that and to question the wisdom or effects of the
law is certainly beyond our constitutionally mandated duty. As we have already explained –

Even on the assumption that there is in fact a legislative gap caused by such an omission, neither
could the Court presume otherwise and supply the details thereof, because a legislative lacuna
cannot be filled by judicial fiat. Indeed, courts may not, in the guise of interpretation, enlarge
the scope of a statute and include therein situations not provided nor intended by the
lawmakers. An omission at the time of the enactment, whether careless or calculated, cannot be
judicially supplied however after later wisdom may recommend the inclusion. Courts are not
authorized to insert into the law what they think should be in it or to supply what they think the
legislature would have supplied if its attention has been called to the omission.44

Mr. Justice Carpio also remarks that the liberal interpretation of the statute of limitations in favor of the
accused only relates to the following issues: (1) retroactive or prospective application of laws providing
or extending the prescriptive period; (2) the determination of the nature of the felony committed vis-à-vis
the applicable prescriptive period; and (3) the reckoning of when the prescriptive period runs. Therefore,
the aforementioned principle cannot be utilized to support the Majority Opinion’s conclusion that the
prescriptive period in a special law continues to run while the accused is abroad.

We take exception to the foregoing proposition.

We believe that a liberal interpretation of the law on prescription in criminal cases equally provides the
authority for the rule that the prescriptive period runs while the accused is outside of Philippine
jurisdiction. The nature of the law on prescription of penal statutes supports this conclusion. In the old
but still relevant case of People v. Moran,45 this Court extensively discussed the rationale behind and the
nature of prescription of penal offenses –

"We should at first observe that a mistake is sometimes made in applying to statutes of
limitation in criminal suits the construction that has been given to statutes of limitation in civil
suits. The two classes of statutes, however, are essentially different. In civil suits the statute is
interposed by the legislature as an impartial arbiter between two contending parties. In the
construction of the statute, therefore, there is no intendment to be made in favor of either
party. Neither grants the right to the other; there is therefore no grantor against whom the
ordinary presumptions, of construction are to be made. But it is, otherwise when a statute of
limitation is granted by the State. Here the State is the grantor, surrendering by act of grace its
rights to prosecute, and declaring the offense to be no longer the subject of prosecution.' The
statute is not a statute of process, to be scantily and grudgingly applied, but an amnesty,
 declaring that after a certain time oblivion shall be cast over the offence; that the offender
shall be at liberty to return to his country, and resume his immunities as a citizen and that
from henceforth he may cease to preserve the proofs of his innocence, for the proofs of his
guilt are blotted out. Hence it is that statutes of limitation are to be liberally construed in favor
of the defendant, not only because such liberality of construction belongs to all acts of amnesty
and grace, but because the very existence of the statute, is a recognition and notification by the
legislature of the fact that time, while it gradually wears out proofs of innocence, has assigned
to it fixed and positive periods in which it destroys proofs of guilt. Independently of these views,
it must be remembered that delay in instituting prosecutions is not only productive of expense
to the State, but of peril to public justice in the attenuation and distortion, even by mere natural
lapse of memory, of testimony. It is the policy of the law that prosecutions should be prompt,
and that statutes, enforcing such promptitude should be vigorously maintained. They are not
merely acts of grace, but checks imposed by the State upon itself, to exact vigilant activity from
its subalterns, and to secure for criminal trials the best evidence that can be obtained."
(Emphasis supplied)

Indeed, there is no reason why we should deny petitioner the benefits accruing from the liberal
construction of prescriptive laws on criminal statutes. Prescription emanates from the liberality of the
State. Any bar to or cause of interruption in the operation of prescriptive periods cannot simply be
implied nor derived by mere implication. Any diminution of this endowment must be directly and
expressly sanctioned by the source itself, the State. Any doubt on this matter must be resolved in favor
of the grantee thereof, the accused.

The foregoing conclusion is logical considering the nature of the laws on prescription. The exceptions to
the running of or the causes for the interruption of the prescriptive periods may and should not be
easily implied. The prescriptive period may only be prevented from operating or may only be tolled for
reasons explicitly provided by the law.

In the case of People v. Pacificador,46 we ruled that:

It bears emphasis, as held in a number of cases, that in the interpretation of the law on
prescription of crimes, that which is more favorable to the accused is to be adopted. The said
legal principle takes into account the nature of the law on prescription of crimes which is an act
of amnesty and liberality on the part of the state in favor of the offender. In the case of People
v. Moran, this Court amply discussed the nature of the statute of limitations in criminal cases, as
follows:

The statute is not statute of process, to be scantily and grudgingly applied, but an
amnesty, declaring that after a certain time oblivion shall be cast over the offense; that
the offender shall be at liberty to return to his country, and resume his immunities as a
citizen; and that from henceforth he may cease to preserve the proofs of his innocence,
for the proofs of his guilt are blotted out. Hence, it is that statues of limitation are to be
liberally construed in favor of the defendant, not only because such liberality of
construction belongs to all acts of amnesty and grace, but because the very existence of
the statute is a recognition and notification by the legislature of the fact that time, while
it gradually wears out proofs of innocence, has assigned to it fixed and positive periods
in which it destroys proofs of guilt.47
In view of the foregoing, the applicable 10-and-15-year prescriptive periods in the instant case, were not
interrupted by any event from the time they began to run on May 8, 1987. As a consequence, the
alleged offenses committed by the petitioner for the years 1963-1982 prescribed 10 years from May 8,
1987 or on May 8, 1997. On the other hand, the alleged offenses committed by the petitioner for the
years 1983-1985 prescribed 15 years from May 8, 1987 or on May 8, 2002.

Therefore, when the Office of the Special Prosecutor initiated the preliminary investigation of Criminal
Case Nos. 13406-13429 on March 3, 2004 by requiring the petitioner to submit his counter-affidavit, the
alleged offenses subject therein have already prescribed. Indeed, the State has lost its right to prosecute
petitioner for the offenses subject of Criminal Case Nos. 28031-28049 pending before the
Sandiganbayan and Criminal Case Nos. 04-231857–04-231860 pending before the Regional Trial Court of
Manila.

WHEREFORE, premises considered, petitioner’s Motion for Reconsideration is GRANTED. Criminal Case
Nos. 28031-28049 pending before the Sandiganbayan and Criminal Case Nos. 04-231857–04-231860
pending before the Regional Trial Court of Manila are all hereby ordered DISMISSED.

SO ORDERED.

5. Cruz III v. Go, G.R. No. 223446, 28 November 2016

[G.R. No. 223446. November 28, 2016.]

RICARDO RANIER G. CRUZ III, IN HIS CAPACITY AS DIRECTOR GENERAL OF THE BUREAU
OF CORRECTIONS; RICHARD W. SCHWARZKOPF, IN HIS CAPACITY AS
SUPERINTENDENT, NEW BILIBID PRISON, BUREAU OF CORRECTIONS; AND
EMERENCIANA M. DIVINA, IN HER CAPACITY AS THE OFFICER-IN-CHARGE, INMATE
DOCUMENTS AND PROCESSING DIVISION OF THE NEW BILIBID PRISON, BUREAU OF
CORRECTIONS, petitioners, vs. ROLITO T. GO, DETAINED AT THE MAXIMUM SECURITY
COMPOUND, NEW BILIBID PRISON, JOINED BY HIS WIFE ELSA ANG GO, respondent.

NOTICE

Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution dated November 28,
2016, which reads as follows:
G.R. No. 223446 — (Ricardo Ranier G. Cruz III, in his capacity as Director General of the
Bureau of Corrections; Richard W. Schwarzkopf, in his capacity as Superintendent, New Bilibid
Prison, Bureau of Corrections; and Emerenciana M. Divina, in her capacity as the Officer-in-Charge,
Inmate Documents and Processing Division of the New Bilibid Prison, Bureau of Corrections v. Rolito
T. Go, detained at the Maximum Security Compound, New Bilibid Prison, joined by his wife Elsa Ang
Go)
 RESOLUTION

Before us is a petition for review on certiorari 1 filed under Rule 45 of the Rules of
Court wherein petitioners assail the Decision 2 of the Court of Appeals (CA) dated 27 August 2015 in
CA-G.R. SP No. 135263, dismissing their appeal for being an improper remedy. The petitioners seek
to reverse and set aside the Decision 3 of the Regional Trial Court (RTC), Branch 204, Muntinlupa City
in SP. Proc. Case No. 14-004 dated 28 April 2014, which granted a Writ of Habeas Corpus in favor of
respondent Rolito T. Go (Go).
The antecedents of this petition follow.
By virtue of the 4 November 1993 Decision of the RTC, Branch 168, Pasig City in Criminal Case
No. 87411, respondent Rolito T. Go was convicted of murder and sentenced to suffer the penalty
of reclusion perpetua. He began serving his sentence on 30 April 1996 at the New Bilibid Prison.
On 30 July 2008, in carrying out the Resolution and Certificate of Eligibility by then Bureau of
Corrections (BuCor) Director Oscar C. Calderon, the New Bilibid Prison Classification Board granted
Go, along with other 24 inmates, a colonist status. Accordingly, in view of his commuted sentence, Go
filed a petition for habeas corpus on 30 January 2014, pleading for his release. He posits that his
original prison sentence which shall expire on 31 January 2022 instead should have expired on 21
August 2013 upon deduction of lawful and proper allowances for good conduct, colonist status, and
preventive imprisonment based on the provisions of Act No. 2489, otherwise known as "An Act
Authorizing Special Compensation, Credits, and Modification in the Sentence of Prisoners as a Reward
for Exceptional Conduct and Workmanship and for Other Purposes."
In opposition to Go's release, petitioners maintained that Go's sentence neither has expired
nor was commuted. According to petitioners, the grant of colonist status on Go did not carry with it
the automatic commutation of his sentence from the indivisible penalty of reclusion perpetua to thirty
(30) years because only the President has the power to commute a sentence. Sans the signature of
the President, any commutation is ineffectual. TCAScE
On 28 April 2014, the RTC granted the petition and issued a Writ of Habeas Corpus. The RTC
found that Go's sentence was validly commuted from reclusion perpetua to 30 years pursuant to
Section 7, Chapter 3 of the BuCor Manual:
Section 7. Privileges of a colonist. — A colonist shall have the following
privileges:
a. credit of additional GCTA of five (5) days for such calendar month while
retains said classification aside from the regular GCTA authorized under
Article 97 of the Revised Penal Code;
b. automatic reduction of life sentence imposed on the colonist to a sentence
of thirty (30) years; (Emphasis supplied)
The BuCor Manual is very clear. No ambiguity attends that provision that once an inmate is
granted a colonist status, his life sentence is commuted to 30 years. The RTC further held that, "[w]hile
it is true that the President may commute the service of sentence of a prisoner, the law also recognizes
partial reduction of sentences under Art. 97 of the Revised Penal Code which provides for allowances
of good conduct." Contrary to petitioners' contention that the penalty of reclusion perpetua cannot
be commuted to 30 years, the RTC cited Article 70 of the Revised Penal Code, which specifically
provides that for perpetual penalties like reclusion perpetua, the duration shall be computed at 30
years. Clearly, it is not correct that only the President can commute a sentence as these
provisions, i.e., Articles 70 and 97, warrant partial extinguishment or commutation of sentence.
The pertinent portion of the Decision of the RTC granting the Writ of Habeas Corpus reads:
The court adheres therefore, to the computation of GO's expiration of
sentence on August 21, 2013 which is based on the 30 year reduction of his life
sentence. His further detention beyond this period to the mind of the court is illegal.
WHEREFORE, premises considered, the petition is hereby GRANTED. The
petitioner ROLITO GO y TAMBUNTING is ordered released from custody having fully
served his sentence unless detained for some other legal cause.
Let notices of this Decision be served personally to the petitioner and to the
public respondents by the Process Server or Sheriff of this court.
SO ORDERED. 4
Aggrieved, petitioners elevated the case to the CA via ordinary appeal through Rule 41 of
the Rules of Court. On 27 August 2015, the CA in a Decision dated 27 August 2015, dismissed the
appeal as an improper remedy. The CA resolved that because the appeal raised only pure question of
law, as the sole issue involved in the present case is whether the BuCor may validly commute a
sentence, the proper recourse should have been a petition for review on certiorari under Rule 45 of
the Rules of Court before the Supreme Court (SC).
The Motion for Reconsideration was also denied in a Resolution dated 14 March 2016.
Hence, the present Petition which argues that the CA committed a reversible error in
dismissing petitioners' appeal filed under Rule 41 for improper remedy. Petitioners also aver that the
commutation of Go's prison sentence is ineffective because it has no prior approval by the President
in violation of Section 19, Article VII of the Constitution, which mandates that only the President has
the power to exercise executive clemency.
First, the issue of whether or not the proper remedy is an appeal via Rule 41 of the Rules of
Court. cTDaEH
Judgments of the RTC may be appealed either through (1) an ordinary appeal to the CA in
cases decided by the RTC in the exercise of its original jurisdiction which may involve either questions
of fact or mixed questions of fact and law; (2) a petition for review before the CA in cases decided by
the RTC in the exercise of its appellate jurisdiction raising questions of fact, of law, or both; and (3) a
petition for review on certiorari directly filed with the SC where only questions of law are raised.
Adherence to the principle of judicial hierarchy of courts dictates that recourse must first be made to
the lower ranked court exercising concurrent jurisdiction with a higher court. At the outset, therefore,
in the exercise of its appellate jurisdiction, regardless whether the issue involves a question of fact, of
law, or mixed questions of fact and law, an appeal to the CA is in order. 5 This rule however, admits
of certain exceptions. As already held, when the case does not involve factual, but purely legal
questions, the appeal may be elevated directly to the SC. 6 Such is the attendant circumstance in the
present case.
The facts surrounding the case are undisputed and the sole issue raised is a pure question of
law, i.e., whether or not the BuCor has authority to commute a prison sentence. As succinctly resolved
by the CA, petitioners never disputed Go's "classification as a colonist status, the pertinent portions
of the BuCor Operating Manual, and the refusal of respondents-appellants to apply the privileges
provided therein were never questioned by either parties. [Petitioners] were only assailing the
 correctness of the RTC's interpretation of Section 7, Chapter 3 of the BuCor Operating Manual, the
conclusions drawn therefrom, and its application to the settled facts surrounding [Go's] case. There
is therefore no need to evaluate the evidence on record to determine the power of the BuCor, or its
lack thereof, to commute an inmate's sentence." Indeed, the CA is correct in dismissing the appeal for
improper remedy because the issue raised before it is purely a question of law, which is within the
jurisdiction of this Court.
Now, the main issue.
Petitioners aver that Go's commutation of sentence as a result of the grant of penal colonist
status, deduction of lawful and proper allowances for good conduct, and preventive imprisonment of
Go is ineffective without prior approval by the President because it violates Section 19, Article VII of
the Constitution, which mandates that only the President has the power to exercise executive
clemency. 7
We deny the petition.
As correctly resolved by the trial court, while only the President can commute a prison
sentence, Articles 70 8 and 97 9 of the Revised Penal Code (RPC) recognize partial reduction or
commutation of sentences by providing that "for penal penalties, the duration shall be computed for
30 years and the allowances of good conduct must be applied on top of the [good conduct time
allowance] accorded to an inmate with a colonist status."
Accordingly, to implement the provisions of Article 97, the law has granted the Director of
Prisons the power to grant good conduct allowances. The mandate of the Director of Prisons
embodied in Article 99 of the RPC is clear and unambiguous. In fact, once granted, such allowances
shall not be revoked. Article 99 of the RPC explicitly states:
Art. 99. Who grants time allowances. — Whenever lawfully justified, the Director of
Prisons shall grant allowances for good conduct. Such allowances once granted shall
not be revoked. (Emphasis supplied)
Therefore, after crediting his preventive imprisonment of nine (9) months and sixteen (16)
days, and the regular Good Conduct Time Allowance (GCTA) under Act No. 3815 and Special Credit
Time Allowance (SCTA) under Act No. 2409 granted upon him, Go has completed serving his sentence
of thirty (30) years on 21 August 2013, which he commenced to serve on 30 April 1996. 10
The intent and spirit of the law in affording persons the remedy of writ of habeas corpus is to
devise a speedy and effective means to relieve persons from unlawful restraint. 11 To rule otherwise
would render Article 99 of the RPC as a mere surplusage and would unduly impose excessive
imprisonment on inmates in violation of the basic right to liberty. cSaATC
WHEREFORE, the petition is DENIED. This Resolution is IMMEDIATELY EXECUTORY. The
Director of the Bureau of Corrections is ordered to immediately RELEASE petitioner Rolito T. Go from
detention unless he is detained for any other lawful cause.
(Jardeleza, J., no part due to his prior action as Solicitor General; Bersamin, J., additional
member.)
SO ORDERED.
||| (Cruz III v. Go, G.R. No. 223446 (Notice), [November 28, 2016])
6. People v. Bayotas, G.R. No. 102007, 2 September 1994

G.R. No. 102007 September 2, 1994

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
ROGELIO BAYOTAS y CORDOVA, accused-appellant.

The Solicitor General for plaintiff-appellee.

Public Attorney's Office for accused-appellant.

ROMERO, J.:

In Criminal Case No. C-3217 filed before Branch 16, RTC Roxas City, Rogelio Bayotas y Cordova was
charged with Rape and eventually convicted thereof on June 19, 1991 in a decision penned by Judge
Manuel E. Autajay. Pending appeal of his conviction, Bayotas died on February 4, 1992 at
the National Bilibid Hospital due to cardio respiratory arrest secondary to hepatic encephalopathy
secondary to hipato carcinoma gastric malingering. Consequently, the Supreme Court in its Resolution of
May 20, 1992 dismissed the criminal aspect of the appeal. However, it required the Solicitor General to
file its comment with regard to Bayotas' civil liability arising from his commission of the offense charged.

In his comment, the Solicitor General expressed his view that the death of accused-appellant did not
extinguish his civil liability as a result of his commission of the offense charged. The Solicitor General,
relying on the case of People v. Sendaydiego 1 insists that the appeal should still be resolved for the
purpose of reviewing his conviction by the lower court on which the civil liability is based.

Counsel for the accused-appellant, on the other hand, opposed the view of the Solicitor General arguing
that the death of the accused while judgment of conviction is pending appeal extinguishes both his
criminal and civil penalties. In support of his position, said counsel invoked the ruling of the Court of
Appeals in People v. Castillo and Ocfemia 2 which held that the civil obligation in a criminal case takes
root in the criminal liability and, therefore, civil liability is extinguished if accused should die before final
judgment is rendered.

We are thus confronted with a single issue: Does death of the accused pending appeal of his conviction
extinguish his civil liability?

In the aforementioned case of People v. Castillo, this issue was settled in the affirmative. This same issue
posed therein was phrased thus: Does the death of Alfredo Castillo affect both his criminal responsibility
and his civil liability as a consequence of the alleged crime?

It resolved this issue thru the following disquisition:

Article 89 of the Revised Penal Code is the controlling statute. It reads, in part:

Art. 89. How criminal liability is totally extinguished. — Criminal liability

is totally extinguished:
 1. By the death of the convict, as to the personal penalties; and as to the
pecuniary penalties liability therefor is extinguished only when the
death of the offender occurs before final judgment;

With reference to Castillo's criminal liability, there is no question. The law is plain.
Statutory construction is unnecessary. Said liability is extinguished.

The civil liability, however, poses a problem. Such liability is extinguished only when the
death of the offender occurs before final judgment. Saddled upon us is the task of
ascertaining the legal import of the term "final judgment." Is it final judgment as
contradistinguished from an interlocutory order? Or, is it a judgment which is final and
executory?

We go to the genesis of the law. The legal precept contained in Article 89 of the Revised
Penal Code heretofore transcribed is lifted from Article 132 of the Spanish El Codigo
Penal de 1870 which, in part, recites:

La responsabilidad penal se extingue.

1. Por la muerte del reo en cuanto a las penas personales siempre, y

respecto a las pecuniarias, solo cuando a su fallecimiento no hubiere
recaido sentencia firme.

xxx xxx xxx

The code of 1870 . . . it will be observed employs the term "sentencia firme." What is
"sentencia firme" under the old statute?

XXVIII Enciclopedia Juridica Española, p. 473, furnishes the ready answer: It says:

SENTENCIA FIRME. La sentencia que adquiere la fuerza de las definitivas

por no haberse utilizado por las partes litigantes recurso alguno contra
ella dentro de los terminos y plazos legales concedidos al efecto.

"Sentencia firme" really should be understood as one which is definite. Because, it is

only when judgment is such that, as Medina y Maranon puts it, the crime is confirmed
— "en condena determinada;" or, in the words of Groizard, the guilt of the accused
becomes — "una verdad legal." Prior thereto, should the accused die, according to
Viada, "no hay legalmente, en tal caso, ni reo, ni delito, ni responsabilidad criminal de
ninguna clase." And, as Judge Kapunan well explained, when a defendant dies before
judgment becomes executory, "there cannot be any determination by final judgment
whether or not the felony upon which the civil action might arise exists," for the simple
reason that "there is no party defendant." (I Kapunan, Revised Penal Code, Annotated,
p. 421. Senator Francisco holds the same view. Francisco, Revised Penal Code, Book
One, 2nd ed., pp. 859-860)
 The legal import of the term "final judgment" is similarly reflected in the Revised Penal
Code. Articles 72 and 78 of that legal body mention the term "final judgment" in the
sense that it is already enforceable. This also brings to mind Section 7, Rule 116 of the
Rules of Court which states that a judgment in a criminal case becomes final "after the
lapse of the period for perfecting an appeal or when the sentence has been partially or
totally satisfied or served, or the defendant has expressly waived in writing his right to
appeal."

By fair intendment, the legal precepts and opinions here collected funnel down to one
positive conclusion: The term final judgment employed in the Revised Penal Code means
judgment beyond recall. Really, as long as a judgment has not become executory, it
cannot be truthfully said that defendant is definitely guilty of the felony charged against
him.

Not that the meaning thus given to final judgment is without reason. For where, as in
this case, the right to institute a separate civil action is not reserved, the decision to be
rendered must, of necessity, cover "both the criminal and the civil aspects of the
case." People vs. Yusico (November 9, 1942), 2 O.G., No. 100, p. 964. See also: People
vs. Moll, 68 Phil., 626, 634; Francisco, Criminal Procedure, 1958 ed., Vol. I, pp. 234, 236.
Correctly, Judge Kapunan observed that as "the civil action is based solely on the felony
committed and of which the offender might be found guilty, the death of the offender
extinguishes the civil liability." I Kapunan, Revised Penal Code, Annotated, supra.

Here is the situation obtaining in the present case: Castillo's criminal liability is out. His
civil liability is sought to be enforced by reason of that criminal liability. But then, if we
dismiss, as we must, the criminal action and let the civil aspect remain, we will be faced
with the anomalous situation whereby we will be called upon to clamp civil liability in a
case where the source thereof — criminal liability — does not exist. And, as was well
stated in Bautista, et al. vs. Estrella, et al., CA-G.R.
No. 19226-R, September 1, 1958, "no party can be found and held criminally liable in a
civil suit," which solely would remain if we are to divorce it from the criminal
proceeding."

This ruling of the Court of Appeals in the Castillo case 3 was adopted by the Supreme Court in the cases
of People of the Philippines v. Bonifacio Alison, et al., 4 People of the Philippines v. Jaime Jose, et
al. 5 and People of the Philippines v. Satorre 6 by dismissing the appeal in view of the death of the
accused pending appeal of said cases.

As held by then Supreme Court Justice Fernando in the Alison case:

The death of accused-appellant Bonifacio Alison having been established, and

considering that there is as yet no final judgment in view of the pendency of the appeal,
the criminal and civil liability of the said accused-appellant Alison was extinguished by
his death (Art. 89, Revised Penal Code; Reyes' Criminal Law, 1971 Rev. Ed., p. 717, citing
People v. Castillo and Ofemia C.A., 56 O.G. 4045); consequently, the case against him
should be dismissed.
On the other hand, this Court in the subsequent cases of Buenaventura Belamala v. Marcelino
Polinar 7 and Lamberto Torrijos v. The Honorable Court of Appeals 8 ruled differently. In the former, the
issue decided by this court was: Whether the civil liability of one accused of physical injuries who died
before final judgment is extinguished by his demise to the extent of barring any claim therefore against
his estate. It was the contention of the administrator-appellant therein that the death of the accused
prior to final judgment extinguished all criminal and civil liabilities resulting from the offense, in view of
Article 89, paragraph 1 of the Revised Penal Code. However, this court ruled therein:

We see no merit in the plea that the civil liability has been extinguished, in view of the
provisions of the Civil Code of the Philippines of 1950 (Rep. Act No. 386) that became
operative eighteen years after the revised Penal Code. As pointed out by the Court
below, Article 33 of the Civil Code establishes a civil action for damages on account of
physical injuries, entirely separate and distinct from the criminal action.

Art. 33. In cases of defamation, fraud, and physical injuries, a civil action
for damages, entirely separate and distinct from the criminal action,
may be brought by the injured party. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a
preponderance of evidence.

Assuming that for lack of express reservation, Belamala's civil action for damages was to
be considered instituted together with the criminal action still, since both proceedings
were terminated without final adjudication, the civil action of the offended party under
Article 33 may yet be enforced separately.

In Torrijos, the Supreme Court held that:

xxx xxx xxx

It should be stressed that the extinction of civil liability follows the extinction of the
criminal liability under Article 89, only when the civil liability arises from the criminal act
as its only basis. Stated differently, where the civil liability does not exist independently
of the criminal responsibility, the extinction of the latter by death, ipso
facto extinguishes the former, provided, of course, that death supervenes before final
judgment. The said principle does not apply in instant case wherein the civil liability
springs neither solely nor originally from the crime itself but from a civil contract of
purchase and sale. (Emphasis ours)

xxx xxx xxx

In the above case, the court was convinced that the civil liability of the accused who was
charged with estafa could likewise trace its genesis to Articles 19, 20 and 21 of the Civil Code
since said accused had swindled the first and second vendees of the property subject matter of
the contract of sale. It therefore concluded: "Consequently, while the death of the accused
herein extinguished his criminal liability including fine, his civil liability based on the laws of
human relations remains."
Thus it allowed the appeal to proceed with respect to the civil liability of the accused, notwithstanding
the extinction of his criminal liability due to his death pending appeal of his conviction.

To further justify its decision to allow the civil liability to survive, the court relied on the following
ratiocination: Since Section 21, Rule 3 of the Rules of Court 9 requires the dismissal of all money claims
against the defendant whose death occurred prior to the final judgment of the Court of First Instance
(CFI), then it can be inferred that actions for recovery of money may continue to be heard on appeal,
when the death of the defendant supervenes after the CFI had rendered its judgment. In such case,
explained this tribunal, "the name of the offended party shall be included in the title of the case as
plaintiff-appellee and the legal representative or the heirs of the deceased-accused should be
substituted as defendants-appellants."

It is, thus, evident that as jurisprudence evolved from Castillo to Torrijos, the rule established was that
the survival of the civil liability depends on whether the same can be predicated on sources of
obligations other than delict. Stated differently, the claim for civil liability is also extinguished together
with the criminal action if it were solely based thereon, i.e., civil liability ex delicto.

However, the Supreme Court in People v. Sendaydiego, et al. 10 departed from this long-established
principle of law. In this case, accused Sendaydiego was charged with and convicted by the lower court of
malversation thru falsification of public documents. Sendaydiego's death supervened during the
pendency of the appeal of his conviction.

This court in an unprecedented move resolved to dismiss Sendaydiego's appeal but only to the extent of
his criminal liability. His civil liability was allowed to survive although it was clear that such claim thereon
was exclusively dependent on the criminal action already extinguished. The legal import of such decision
was for the court to continue exercising appellate jurisdiction over the entire appeal, passing upon the
correctness of Sendaydiego's conviction despite dismissal of the criminal action, for the purpose of
determining if he is civilly liable. In doing so, this Court issued a Resolution of July 8, 1977 stating thus:

The claim of complainant Province of Pangasinan for the civil liability survived
Sendaydiego because his death occurred after final judgment was rendered by the Court
of First Instance of Pangasinan, which convicted him of three complex crimes of
malversation through falsification and ordered him to indemnify the Province in the
total sum of P61,048.23 (should be P57,048.23).

The civil action for the civil liability is deemed impliedly instituted with the criminal
action in the absence of express waiver or its reservation in a separate action (Sec. 1,
Rule 111 of the Rules of Court). The civil action for the civil liability is separate and
distinct from the criminal action (People and Manuel vs. Coloma, 105 Phil. 1287; Roa vs.
De la Cruz, 107 Phil. 8).

When the action is for the recovery of money and the defendant dies before final
judgment in the Court of First Instance, it shall be dismissed to be prosecuted in the
manner especially provided in Rule 87 of the Rules of Court (Sec. 21, Rule 3 of the Rules
of Court).
 The implication is that, if the defendant dies after a money judgment had been
rendered against him by the Court of First Instance, the action survives him. It may be
continued on appeal (Torrijos vs. Court of Appeals, L-40336, October 24, 1975; 67 SCRA
394).

The accountable public officer may still be civilly liable for the funds improperly
disbursed although he has no criminal liability (U.S. vs. Elvina, 24 Phil. 230; Philippine
National Bank vs. Tugab, 66 Phil. 583).

In view of the foregoing, notwithstanding the dismissal of the appeal of the deceased
Sendaydiego insofar as his criminal liability is concerned, the Court Resolved to continue
exercising appellate jurisdiction over his possible civil liability for the money claims of
the Province of Pangasinan arising from the alleged criminal acts complained of, as if no
criminal case had been instituted against him, thus making applicable, in determining his
civil liability, Article 30 of the Civil Code . . . and, for that purpose, his counsel is directed
to inform this Court within ten (10) days of the names and addresses of the decedent's
heirs or whether or not his estate is under administration and has a duly appointed
judicial administrator. Said heirs or administrator will be substituted for the deceased
insofar as the civil action for the civil liability is concerned (Secs. 16 and 17, Rule 3, Rules
of Court).

Succeeding cases 11 raising the identical issue have maintained adherence to our ruling in Sendaydiego;
in other words, they were a reaffirmance of our abandonment of the settled rule that a civil liability
solely anchored on the criminal (civil liability ex delicto) is extinguished upon dismissal of the entire
appeal due to the demise of the accused.

But was it judicious to have abandoned this old ruling? A re-examination of our decision
in Sendaydiego impels us to revert to the old ruling.

To restate our resolution of July 8, 1977 in Sendaydiego: The resolution of the civil action impliedly
instituted in the criminal action can proceed irrespective of the latter's extinction due to death of the
accused pending appeal of his conviction, pursuant to Article 30 of the Civil Code and Section 21, Rule 3
of the Revised Rules of Court.

Article 30 of the Civil Code provides:

When a separate civil action is brought to demand civil liability arising from a criminal
offense, and no criminal proceedings are instituted during the pendency of the civil
case, a preponderance of evidence shall likewise be sufficient to prove the act
complained of.

Clearly, the text of Article 30 could not possibly lend support to the ruling in Sendaydiego. Nowhere in
its text is there a grant of authority to continue exercising appellate jurisdiction over the accused's civil
liability ex delicto when his death supervenes during appeal. What Article 30 recognizes is an alternative
and separate civil action which may be brought to demand civil liability arising from a criminal offense
independently of any criminal action. In the event that no criminal proceedings are instituted during the
pendency of said civil case, the quantum of evidence needed to prove the criminal act will have to be
that which is compatible with civil liability and that is, preponderance of evidence and not proof of guilt
beyond reasonable doubt. Citing or invoking Article 30 to justify the survival of the civil action despite
extinction of the criminal would in effect merely beg the question of whether civil liability ex
delicto survives upon extinction of the criminal action due to death of the accused during appeal of his
conviction. This is because whether asserted in
the criminal action or in a separate civil action, civil liability ex delicto is extinguished by the death of the
accused while his conviction is on appeal. Article 89 of the Revised Penal Code is clear on this matter:

Art. 89. How criminal liability is totally extinguished. — Criminal liability is totally
extinguished:

1. By the death of the convict, as to the personal penalties; and as to pecuniary

penalties, liability therefor is extinguished only when the death of the offender occurs
before final judgment;

xxx xxx xxx

However, the ruling in Sendaydiego deviated from the expressed intent of Article 89. It allowed claims
for civil liability ex delicto to survive by ipso facto treating the civil action impliedly instituted with the
criminal, as one filed under Article 30, as though no criminal proceedings had been filed but merely a
separate civil action. This had the effect of converting such claims from one which is dependent on the
outcome of the criminal action to an entirely new and separate one, the prosecution of which does not
even necessitate the filing of criminal proceedings. 12 One would be hard put to pinpoint the statutory
authority for such a transformation. It is to be borne in mind that in recovering civil liability ex delicto,
the same has perforce to be determined in the criminal action, rooted as it is in the court's
pronouncement of the guilt or innocence of the accused. This is but to render fealty to the intendment
of Article 100 of the Revised Penal Code which provides that "every person criminally liable for a felony
is also civilly liable." In such cases, extinction of the criminal action due to death of the accused pending
appeal inevitably signifies the concomitant extinction of the civil liability. Mors Omnia Solvi. Death
dissolves all things.

In sum, in pursuing recovery of civil liability arising from crime, the final determination of the criminal
liability is a condition precedent to the prosecution of the civil action, such that when the criminal action
is extinguished by the demise of accused-appellant pending appeal thereof, said civil action cannot
survive. The claim for civil liability springs out of and is dependent upon facts which, if true, would
constitute a crime. Such civil liability is an inevitable consequence of the criminal liability and is to be
declared and enforced in the criminal proceeding. This is to be distinguished from that which is
contemplated under Article 30 of the Civil Code which refers to the institution of a separate civil action
that does not draw its life from a criminal proceeding. The Sendaydiego resolution of July 8, 1977,
however, failed to take note of this fundamental distinction when it allowed the survival of the civil
action for the recovery of civil liability ex delicto by treating the same as a separate civil action referred
to under Article 30. Surely, it will take more than just a summary judicial pronouncement to authorize
the conversion of said civil action to an independent one such as that contemplated under Article 30.

Ironically however, the main decision in Sendaydiego did not apply Article 30, the resolution of July 8,
1977 notwithstanding. Thus, it was held in the main decision:
 Sendaydiego's appeal will be resolved only for the purpose of showing his criminal
liability which is the basis of the civil liability for which his estate would be liable. 13

In other words, the Court, in resolving the issue of his civil liability, concomitantly made a determination
on whether Sendaydiego, on the basis of evidenced adduced, was indeed guilty beyond reasonable
doubt of committing the offense charged. Thus, it upheld Sendaydiego's conviction and pronounced the
same as the source of his civil liability. Consequently, although Article 30 was not applied in the final
determination of Sendaydiego's civil liability, there was a reopening of the criminal action already
extinguished which served as basis for Sendaydiego's civil liability. We reiterate: Upon death of the
accused pending appeal of his conviction, the criminal action is extinguished inasmuch as there is no
longer a defendant to stand as the accused; the civil action instituted therein for recovery of civil
liability ex delicto is ipso facto extinguished, grounded as it is on the criminal.

Section 21, Rule 3 of the Rules of Court was also invoked to serve as another basis for
the Sendaydiego resolution of July 8, 1977. In citing Sec. 21, Rule 3 of the Rules of Court, the Court made
the inference that civil actions of the type involved in Sendaydiego consist of money claims, the recovery
of which may be continued on appeal if defendant dies pending appeal of his conviction by holding his
estate liable therefor. Hence, the Court's conclusion:

"When the action is for the recovery of money" "and the defendant dies before final
judgment in the court of First Instance, it shall be dismissed to be prosecuted in the
manner especially provided" in Rule 87 of the Rules of Court (Sec. 21, Rule 3 of the Rules
of Court).

The implication is that, if the defendant dies after a money judgment had been
rendered against him by the Court of First Instance, the action survives him. It may be
continued on appeal.

Sadly, reliance on this provision of law is misplaced. From the standpoint of procedural law, this course
taken in Sendaydiego cannot be sanctioned. As correctly observed by Justice Regalado:

xxx xxx xxx

I do not, however, agree with the justification advanced in

both Torrijos and Sendaydiego which, relying on the provisions of Section 21, Rule 3 of
the Rules of Court, drew the strained implication therefrom that where the civil liability
instituted together with the criminal liabilities had already passed beyond the judgment
of the then Court of First Instance (now the Regional Trial Court), the Court of Appeals
can continue to exercise appellate jurisdiction thereover despite the extinguishment of
the component criminal liability of the deceased. This pronouncement, which has been
followed in the Court's judgments subsequent and consonant
to Torrijos and Sendaydiego, should be set aside and abandoned as being clearly
erroneous and unjustifiable.

Said Section 21 of Rule 3 is a rule of civil procedure in ordinary civil actions. There is
neither authority nor justification for its application in criminal procedure to civil actions
instituted together with and as part of criminal actions. Nor is there any authority in law
 for the summary conversion from the latter category of an ordinary civil action upon the
death of the offender. . . .

Moreover, the civil action impliedly instituted in a criminal proceeding for recovery of civil liability ex
delicto can hardly be categorized as an ordinary money claim such as that referred to in Sec. 21, Rule 3
enforceable before the estate of the deceased accused.

Ordinary money claims referred to in Section 21, Rule 3 must be viewed in light of the provisions of
Section 5, Rule 86 involving claims against the estate, which in Sendaydiego was held liable for
Sendaydiego's civil liability. "What are contemplated in Section 21 of Rule 3, in relation to Section 5 of
Rule 86, 14 are contractual money claims while the claims involved in civil liability ex delicto may include
even the restitution of personal or real property." 15 Section 5, Rule 86 provides an exclusive
enumeration of what claims may be filed against the estate. These are: funeral expenses, expenses for
the last illness, judgments for money and claim arising from contracts, expressed or implied. It is clear
that money claims arising from delict do not form part of this exclusive enumeration. Hence, there could
be no legal basis in (1) treating a civil action ex delicto as an ordinary contractual money claim referred
to in Section 21, Rule 3 of the Rules of Court and (2) allowing it to survive by filing a claim therefor
before the estate of the deceased accused. Rather, it should be extinguished upon extinction of the
criminal action engendered by the death of the accused pending finality of his conviction.

Accordingly, we rule: if the private offended party, upon extinction of the civil liability ex delicto desires
to recover damages from the same act or omission complained of, he must subject to Section 1, Rule
111 16 (1985 Rules on Criminal Procedure as amended) file a separate civil action, this time predicated
not on the felony previously charged but on other sources of obligation. The source of obligation upon
which the separate civil action is premised determines against whom the same shall be enforced.

If the same act or omission complained of also arises from quasi-delict or may, by provision of law, result
in an injury to person or property (real or personal), the separate civil action must be filed against the
executor or administrator 17 of the estate of the accused pursuant to Sec. 1, Rule 87 of the Rules of
Court:

Sec. 1. Actions which may and which may not be brought against executor or
administrator. — No action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against the executor or administrator; but actions to
recover real or personal property, or an interest therein, from the estate, or to enforce a
lien thereon, and actions to recover damages for an injury to person or property, real or
personal, may be commenced against him.

This is in consonance with our ruling in Belamala 18 where we held that, in recovering damages for injury
to persons thru an independent civil action based on Article 33 of the Civil Code, the same must be filed
against the executor or administrator of the estate of deceased accused and not against the estate
under Sec. 5, Rule 86 because this rule explicitly limits the claim to those for funeral expenses, expenses
for the last sickness of the decedent, judgment for money and claims arising from contract, express or
implied. Contractual money claims, we stressed, refers only to purely personal obligations other than
those which have their source in delict or tort.
Conversely, if the same act or omission complained of also arises from contract, the separate civil action
must be filed against the estate of the accused, pursuant to Sec. 5, Rule 86 of the Rules of Court.

From this lengthy disquisition, we summarize our ruling herein:

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. 19 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:

a) Law 20

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.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil
action by prescription, in cases where during the prosecution of the criminal action and prior to its
extinction, the private-offended party instituted together therewith the civil action. In such case, the
statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal
case, conformably with provisions of Article 1155 21 of the Civil Code, that should thereby avoid any
apprehension on a possible privation of right by prescription. 22

Applying this set of rules to the case at bench, we hold that the death of appellant Bayotas extinguished
his criminal liability and the civil liability based solely on the act complained of, i.e., rape. Consequently,
the appeal is hereby dismissed without qualification.

WHEREFORE, the appeal of the late Rogelio Bayotas is DISMISSED with costs de oficio.

SO ORDERED.
7. Securities and Exchange Commission v. Intraport Resources Corp, G.R. No. 135808, 6 October 2008

G.R. No. 135808 October 6, 2008

SECURITIES AND EXCHANGE COMMISSION, petitioner,

vs.
INTERPORT RESOURCES CORPORATION, MANUEL S. RECTO, RENE S. VILLARICA, PELAGIO RICALDE,
ANTONIO REINA, FRANCISCO ANONUEVO, JOSEPH SY and SANTIAGO TANCHAN, JR., respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision,1 dated 20 August 1998, rendered by the Court of Appeals in C.A.-G.R. SP No. 37036, enjoining
petitioner Securities and Exchange Commission (SEC) from taking cognizance of or initiating any action
against the respondent corporation Interport Resources Corporation (IRC) and members of its board of
directors, respondents Manuel S. Recto, Rene S. Villarica, Pelagio Ricalde, Antonio Reina, Francisco
Anonuevo, Joseph Sy and Santiago Tanchan, Jr., with respect to Sections 8, 30 and 36 of the Revised
Securities Act. In the same Decision of the appellate court, all the proceedings taken against the
respondents, including the assailed SEC Omnibus Orders of 25 January 1995 and 30 March 1995, were
declared void.

The antecedent facts of the present case are as follows.

On 6 August 1994, the Board of Directors of IRC approved a Memorandum of Agreement with Ganda
Holdings Berhad (GHB). Under the Memorandum of Agreement, IRC acquired 100% or the entire capital
stock of Ganda Energy Holdings, Inc. (GEHI),2 which would own and operate a 102 megawatt (MW) gas
turbine power-generating barge. The agreement also stipulates that GEHI would assume a five-year
power purchase contract with National Power Corporation. At that time, GEHI's power-generating barge
was 97% complete and would go on-line by mid-September of 1994. In exchange, IRC will issue to GHB
55% of the expanded capital stock of IRC amounting to 40.88 billion shares which had a total par value
of P488.44 million.3

On the side, IRC would acquire 67% of the entire capital stock of Philippine Racing Club, Inc. (PRCI). PRCI
owns 25.724 hectares of real estate property in Makati. Under the Agreement, GHB, a member of the
Westmont Group of Companies in Malaysia, shall extend or arrange a loan required to pay for the
proposed acquisition by IRC of PRCI.4

IRC alleged that on 8 August 1994, a press release announcing the approval of the agreement was sent
through facsimile transmission to the Philippine Stock Exchange and the SEC, but that the facsimile
machine of the SEC could not receive it. Upon the advice of the SEC, the IRC sent the press release on
the morning of 9 August 1994.5

The SEC averred that it received reports that IRC failed to make timely public disclosures of its
negotiations with GHB and that some of its directors, respondents herein, heavily traded IRC shares
utilizing this material insider information. On 16 August 1994, the SEC Chairman issued a directive
requiring IRC to submit to the SEC a copy of its aforesaid Memorandum of Agreement with GHB. The
SEC Chairman further directed all principal officers of IRC to appear at a hearing before the Brokers and
Exchanges Department (BED) of the SEC to explain IRC's failure to immediately disclose the information
as required by the Rules on Disclosure of Material Facts.6

In compliance with the SEC Chairman's directive, the IRC sent a letter dated 16 August 1994 to the SEC,
attaching thereto copies of the Memorandum of Agreement. Its directors, Manuel Recto, Rene Villarica
and Pelagio Ricalde, also appeared before the SEC on 22 August 1994 to explain IRC's alleged failure to
immediately disclose material information as required under the Rules on Disclosure of Material Facts.7

On 19 September 1994, the SEC Chairman issued an Order finding that IRC violated the Rules on
Disclosure of Material Facts, in connection with the Old Securities Act of 1936, when it failed to make
timely disclosure of its negotiations with GHB. In addition, the SEC pronounced that some of the officers
and directors of IRC entered into transactions involving IRC shares in violation of Section 30, in relation
to Section 36, of the Revised Securities Act.8

Respondents filed an Omnibus Motion, dated 21 September 1994, which was superseded by an
Amended Omnibus Motion, filed on 18 October 1994, alleging that the SEC had no authority to
investigate the subject matter, since under Section 8 of Presidential Decree No. 902-A,9 as amended by
Presidential Decree No. 1758, jurisdiction was conferred upon the Prosecution and Enforcement
Department (PED) of the SEC. Respondents also claimed that the SEC violated their right to due process
when it ordered that the respondents appear before the SEC and "show cause why no administrative,
civil or criminal sanctions should be imposed on them," and, thus, shifted the burden of proof to the
respondents. Lastly, they sought to have their cases tried jointly given the identical factual situations
surrounding the alleged violation committed by the respondents.10

Respondents also filed a Motion for Continuance of Proceedings on 24 October 1994, wherein they
moved for discontinuance of the investigations and the proceedings before the SEC until the undue
publicity had abated and the investigating officials had become reasonably free from prejudice and
public pressure.11

No formal hearings were conducted in connection with the aforementioned motions, but on 25 January
1995, the SEC issued an Omnibus Order which thus disposed of the same in this wise:12

WHEREFORE, premised on the foregoing considerations, the Commission resolves and hereby
rules:

1. To create a special investigating panel to hear and decide the instant case in accordance with
the Rules of Practice and Procedure Before the Prosecution and Enforcement Department (PED),
Securities and Exchange Commission, to be composed of Attys. James K. Abugan, Medardo
Devera (Prosecution and Enforcement Department), and Jose Aquino (Brokers and Exchanges
Department), which is hereby directed to expeditiously resolve the case by conducting
continuous hearings, if possible.

2. To recall the show cause orders dated September 19, 1994 requiring the respondents to
appear and show cause why no administrative, civil or criminal sanctions should be imposed on
them.
 3. To deny the Motion for Continuance for lack of merit.

Respondents filed an Omnibus Motion for Partial Reconsideration,13 questioning the creation of the
special investigating panel to hear the case and the denial of the Motion for Continuance. The SEC
denied reconsideration in its Omnibus Order dated 30 March 1995.14

The respondents filed a petition before the Court of Appeals docketed as C.A.-G.R. SP No. 37036,
questioning the Omnibus Orders dated 25 January 1995 and 30 March 1995.15 During the proceedings
before the Court of Appeals, respondents filed a Supplemental Motion16 dated 16 May 1995, wherein
they prayed for the issuance of a writ of preliminary injunction enjoining the SEC and its agents from
investigating and proceeding with the hearing of the case against respondents herein. On 5 May 1995,
the Court of Appeals granted their motion and issued a writ of preliminary injunction, which effectively
enjoined the SEC from filing any criminal, civil or administrative case against the respondents herein.17

On 23 October 1995, the SEC filed a Motion for Leave to Quash SEC Omnibus Orders so that the case
may be investigated by the PED in accordance with the SEC Rules and Presidential Decree No. 902-A,
and not by the special body whose creation the SEC had earlier ordered.18

The Court of Appeals promulgated a Decision19 on 20 August 1998. It determined that there were no
implementing rules and regulations regarding disclosure, insider trading, or any of the provisions of the
Revised Securities Acts which the respondents allegedly violated. The Court of Appeals likewise noted
that it found no statutory authority for the SEC to initiate and file any suit for civil liability under Sections
8, 30 and 36 of the Revised Securities Act. Thus, it ruled that no civil, criminal or administrative
proceedings may possibly be held against the respondents without violating their rights to due process
and equal protection. It further resolved that absent any implementing rules, the SEC cannot be allowed
to quash the assailed Omnibus Orders for the sole purpose of re-filing the same case against the
respondents.20

The Court of Appeals further decided that the Rules of Practice and Procedure Before the PED, which
took effect on 14 April 1990, did not comply with the statutory requirements contained in the
Administrative Code of 1997. Section 8, Rule V of the Rules of Practice and Procedure Before the PED
affords a party the right to be present but without the right to cross-examine witnesses presented
against him, in violation of Section 12(3), Chapter 3, Book VII of the Administrative Code. 21

In the dispositive portion of its Decision, dated 20 August 1998, the Court of Appeals ruled that22:

WHEREFORE, [herein petitioner SEC's] Motion for Leave to Quash SEC Omnibus Orders is
hereby DENIED. The petition for certiorari, prohibition and mandamus is GRANTED.
Consequently, all proceedings taken against [herein respondents] in this case, including the
Omnibus Orders of January 25, 1995 and March 30, 1995 are declared null and void. The writ of
preliminary injunction is hereby made permanent and, accordingly, [SEC] is hereby prohibited
from taking cognizance or initiating any action, be they civil, criminal, or administrative against
[respondents] with respect to Sections 8 (Procedure for Registration), 30 (Insider's duty to
disclose when trading) and 36 (Directors, Officers and Principal Stockholders) in relation to
Sections 46 (Administrative sanctions) 56 (Penalties) 44 (Liabilities of Controlling persons) and
45 (Investigations, injunctions and prosecution of offenses) of the Revised Securities Act and
Section 144 (Violations of the Code) of the Corporation Code. (Emphasis provided.)
The SEC filed a Motion for Reconsideration, which the Court of Appeals denied in a Resolution23 issued
on 30 September 1998.

Hence, the present petition, which relies on the following grounds24:

THE COURT OF APPEALS ERRED WHEN IT DENIED PETITIONER'S MOTION FOR LEAVE TO QUASH
THE ASSAILED SEC OMNIBUS ORDERS DATED JANUARY 25 AND MARCH 30, 1995.

II

THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE IS NO STATUTORY AUTHORITY
WHATSOEVER FOR PETITIONER SEC TO INITIATE AND FILE ANY SUIT BE THEY CIVIL, CRIMINAL OR
ADMINISTRATIVE AGAINST RESPONDENT CORPORATION AND ITS DIRECTORS WITH RESPECT TO
SECTION 30 (INSIDER'S DUTY TO DISCOLSED [sic] WHEN TRADING) AND 36 (DIRECTORS
OFFICERS AND PRINCIPAL STOCKHOLDERS) OF THE REVISED SECURITIES ACT; AND

III

THE COURT OF APPEALS ERRED WHEN IT RULED THAT RULES OF PRACTICE AND PROSECUTION
BEFORE THE PED AND THE SICD RULES OF PROCEDURE ON ADMINISTRATIVE
ACTIONS/PROCEEDINGS25 ARE INVALID AS THEY FAIL TO COMPLY WITH THE STATUTORY
REQUIREMENTS CONTAINED IN THE ADMINISTRATIVE CODE OF 1987.

The petition is impressed with merit.

Before discussing the merits of this case, it should be noted that while this case was pending in this
Court, Republic Act No. 8799, otherwise known as the Securities Regulation Code, took effect on 8
August 2000. Section 8 of Presidential Decree No. 902-A, as amended, which created the PED, was
already repealed as provided for in Section 76 of the Securities Regulation Code:

SEC. 76. Repealing Clause. - The Revised Securities Act (Batas Pambansa Blg. 178), as amended,
in its entirety, and Sections 2, 4 and 8 of Presidential Decree 902-A, as amended, are hereby
repealed. All other laws, orders, rules and regulations, or parts thereof, inconsistent with any
provision of this Code are hereby repealed or modified accordingly.

Thus, under the new law, the PED has been abolished, and the Securities Regulation Code has taken the
place of the Revised Securities Act.

The Court now proceeds with a discussion of the present case.

I. Sctions 8, 30 and 36 of the Revised Securities Act do not require the enactment of implementing rules
to make them binding and effective.

The Court of Appeals ruled that absent any implementing rules for Sections 8, 30 and 36 of the Revised
Securities Act, no civil, criminal or administrative actions can possibly be had against the respondents
without violating their right to due process and equal protection, citing as its basis the case Yick Wo v.
Hopkins.26 This is untenable.

In the absence of any constitutional or statutory infirmity, which may concern Sections 30 and 36 of the
Revised Securities Act, this Court upholds these provisions as legal and binding. It is well settled that
every law has in its favor the presumption of validity. Unless and until a specific provision of the law is
declared invalid and unconstitutional, the same is valid and binding for all intents and purposes.27 The
mere absence of implementing rules cannot effectively invalidate provisions of law, where a reasonable
construction that will support the law may be given. In People v. Rosenthal,28 this Court ruled that:

In this connection we cannot pretermit reference to the rule that "legislation should not be held
invalid on the ground of uncertainty if susceptible of any reasonable construction that will
support and give it effect. An Act will not be declared inoperative and ineffectual on the ground
that it furnishes no adequate means to secure the purpose for which it is passed, if men of
common sense and reason can devise and provide the means, and all the instrumentalities
necessary for its execution are within the reach of those intrusted therewith." (25 R.C.L., pp.
810, 811)

In Garcia v. Executive Secretary,29 the Court underlined the importance of the presumption of validity of
laws and the careful consideration with which the judiciary strikes down as invalid acts of the legislature:

The policy of the courts is to avoid ruling on constitutional questions and to presume that the
acts of the political departments are valid in the absence of a clear and unmistakable showing to
the contrary. To doubt is to sustain. This presumption is based on the doctrine of separation of
powers which enjoins upon each department a becoming respect for the acts of the other
departments. The theory is that as the joint act of Congress and the President of the Philippines,
a law has been carefully studied and determined to be in accordance with the fundamental law
before it was finally enacted.

The necessity for vesting administrative authorities with power to make rules and regulations is based
on the impracticability of lawmakers' providing general regulations for various and varying details of
management.30 To rule that the absence of implementing rules can render ineffective an act of
Congress, such as the Revised Securities Act, would empower the administrative bodies to defeat the
legislative will by delaying the implementing rules. To assert that a law is less than a law, because it is
made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the
public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things
future and impossible to fully know.31 It is well established that administrative authorities have the
power to promulgate rules and regulations to implement a given statute and to effectuate its policies,
provided such rules and regulations conform to the terms and standards prescribed by the statute as
well as purport to carry into effect its general policies. Nevertheless, it is undisputable that the rules and
regulations cannot assert for themselves a more extensive prerogative or deviate from the mandate of
the statute.32 Moreover, where the statute contains sufficient standards and an unmistakable intent, as
in the case of Sections 30 and 36 of the Revised Securities Act, there should be no impediment to its
implementation.

The reliance placed by the Court of Appeals in Yick Wo v. Hopkins33 shows a glaring error. In the cited
case, this Court found unconstitutional an ordinance which gave the board of supervisors authority to
refuse permission to carry on laundries located in buildings that were not made of brick and stone,
because it violated the equal protection clause and was highly discriminatory and hostile to Chinese
residents and not because the standards provided therein were vague or ambiguous.

This Court does not discern any vagueness or ambiguity in Sections 30 and 36 of the Revised Securities
Act, such that the acts proscribed and/or required would not be understood by a person of ordinary
intelligence.

Section 30 of the Revised Securities Act

Section 30 of the Revised Securities Act reads:

Sec. 30. Insider's duty to disclose when trading. - (a) It shall be unlawful for an insider to sell or
buy a security of the issuer, if he knows a fact of special significance with respect to the issuer or
the security that is not generally available, unless (1) the insider proves that the fact is generally
available or (2) if the other party to the transaction (or his agent) is identified, (a) the insider
proves that the other party knows it, or (b) that other party in fact knows it from the insider or
otherwise.

(b) "Insider" means (1) the issuer, (2) a director or officer of, or a person controlling, controlled
by, or under common control with, the issuer, (3) a person whose relationship or former
relationship to the issuer gives or gave him access to a fact of special significance about the
issuer or the security that is not generally available, or (4) a person who learns such a fact from
any of the foregoing insiders as defined in this subsection, with knowledge that the person from
whom he learns the fact is such an insider.

(c) A fact is "of special significance" if (a) in addition to being material it would be likely, on being
made generally available, to affect the market price of a security to a significant extent, or (b) a
reasonable person would consider it especially important under the circumstances in
determining his course of action in the light of such factors as the degree of its specificity, the
extent of its difference from information generally available previously, and its nature and
reliability.

(d) This section shall apply to an insider as defined in subsection (b) (3) hereof only to the extent
that he knows of a fact of special significance by virtue of his being an insider.

The provision explains in simple terms that the insider's misuse of nonpublic and undisclosed
information is the gravamen of illegal conduct. The intent of the law is the protection of investors
against fraud, committed when an insider, using secret information, takes advantage of an uninformed
investor. Insiders are obligated to disclose material information to the other party or abstain from
trading the shares of his corporation. This duty to disclose or abstain is based on two factors: first, the
existence of a relationship giving access, directly or indirectly, to information intended to be available
only for a corporate purpose and not for the personal benefit of anyone; and second, the inherent
unfairness involved when a party takes advantage of such information knowing it is unavailable to those
with whom he is dealing.34

In the United States (U.S.), the obligation to disclose or abstain has been traditionally imposed on
corporate "insiders," particularly officers, directors, or controlling stockholders, but that definition has
since been expanded.35 The term "insiders" now includes persons whose relationship or former
relationship to the issuer gives or gave them access to a fact of special significance about the issuer or
the security that is not generally available, and one who learns such a fact from an insider knowing that
the person from whom he learns the fact is such an insider. Insiders have the duty to disclose material
facts which are known to them by virtue of their position but which are not known to persons with
whom they deal and which, if known, would affect their investment judgment. In some cases, however,
there may be valid corporate reasons for the nondisclosure of material information. Where such reasons
exist, an issuer's decision not to make any public disclosures is not ordinarily considered as a violation of
insider trading. At the same time, the undisclosed information should not be improperly used for non-
corporate purposes, particularly to disadvantage other persons with whom an insider might transact,
and therefore the insider must abstain from entering into transactions involving such securities.36

Respondents further aver that under Section 30 of the Revised Securities Act, the SEC still needed to
define the following terms: "material fact," "reasonable person," "nature and
reliability" and "generally available." 37 In determining whether or not these terms are vague, these
terms must be evaluated in the context of Section 30 of the Revised Securties Act. To fully understand
how the terms were used in the aforementioned provision, a discussion of what the law recognizes as a
fact of special significance is required, since the duty to disclose such fact or to abstain from any
transaction is imposed on the insider only in connection with a fact of special significance.

Under the law, what is required to be disclosed is a fact of "special significance" which may be (a) a
material fact which would be likely, on being made generally available, to affect the market price of a
security to a significant extent, or (b) one which a reasonable person would consider especially
important in determining his course of action with regard to the shares of stock.

(a) Material Fact - The concept of a "material fact" is not a new one. As early as 1973, the Rules
Requiring Disclosure of Material Facts by Corporations Whose Securities Are Listed In Any Stock
Exchange or Registered/Licensed Under the Securities Act, issued by the SEC on 29 January 1973,
explained that "[a] fact is material if it induces or tends to induce or otherwise affect the sale or
purchase of its securities." Thus, Section 30 of the Revised Securities Act provides that if a fact affects
the sale or purchase of securities, as well as its price, then the insider would be required to disclose such
information to the other party to the transaction involving the securities. This is the first definition given
to a "fact of special significance."

(b.1) Reasonable Person - The second definition given to a fact of special significance involves the
judgment of a "reasonable person." Contrary to the allegations of the respondents, a "reasonable
person" is not a problematic legal concept that needs to be clarified for the purpose of giving effect to a
statute; rather, it is the standard on which most of our legal doctrines stand. The doctrine on negligence
uses the discretion of the "reasonable man" as the standard.38 A purchaser in good faith must also take
into account facts which put a "reasonable man" on his guard.39 In addition, it is the belief of the
reasonable and prudent man that an offense was committed that sets the criteria for probable cause for
a warrant of arrest.40 This Court, in such cases, differentiated the reasonable and prudent man from "a
person with training in the law such as a prosecutor or a judge," and identified him as "the average man
on the street," who weighs facts and circumstances without resorting to the calibrations of our technical
rules of evidence of which his knowledge is nil. Rather, he relies on the calculus of common sense of
which all reasonable men have in abundance.41 In the same vein, the U.S. Supreme Court similarly
determined its standards by the actual significance in the deliberations of a "reasonable investor," when
it ruled in TSC Industries, Inc. v. Northway, Inc.,42 that the determination of materiality "requires delicate
assessments of the inferences a ‘reasonable shareholder' would draw from a given set of facts and the
significance of those inferences to him."

(b.2) Nature and Reliability - The factors affecting the second definition of a "fact of special
significance," which is of such importance that it is expected to affect the judgment of a reasonable
man, were substantially lifted from a test of materiality pronounced in the case In the Matter of
Investors Management Co., Inc.43:

Among the factors to be considered in determining whether information is material under this
test are the degree of its specificity, the extent to which it differs from information previously
publicly disseminated, and its reliability in light of its nature and source and the circumstances
under which it was received.

It can be deduced from the foregoing that the "nature and reliability" of a significant fact in determining
the course of action a reasonable person takes regarding securities must be clearly viewed in connection
with the particular circumstances of a case. To enumerate all circumstances that would render the
"nature and reliability" of a fact to be of special significance is close to impossible. Nevertheless, the
proper adjudicative body would undoubtedly be able to determine if facts of a certain "nature and
reliability" can influence a reasonable person's decision to retain, sell or buy securities, and thereafter
explain and justify its factual findings in its decision.

(c) Materiality Concept - A discussion of the "materiality concept" would be relevant to both a material
fact which would affect the market price of a security to a significant extent and/or a fact which a
reasonable person would consider in determining his or her cause of action with regard to the shares of
stock. Significantly, what is referred to in our laws as a fact of special significance is referred to in the
U.S. as the "materiality concept" and the latter is similarly not provided with a precise definition. In Basic
v. Levinson,44 the U.S. Supreme Court cautioned against confining materiality to a rigid formula, stating
thus:

A bright-line rule indeed is easier to follow than a standard that requires the exercise of
judgment in the light of all the circumstances. But ease of application alone is not an excuse for
ignoring the purposes of the Securities Act and Congress' policy decisions. Any approach that
designates a single fact or occurrence as always determinative of an inherently fact-specific
finding such as materiality, must necessarily be overinclusive or underinclusive.

Moreover, materiality "will depend at any given time upon a balancing of both the indicated probability
that the event will occur and the anticipated magnitude of the event in light of the totality of the
company activity."45 In drafting the Securities Act of 1934, the U.S. Congress put emphasis on the
limitations to the definition of materiality:

Although the Committee believes that ideally it would be desirable to have absolute certainty in
the application of the materiality concept, it is its view that such a goal is illusory and
unrealistic. The materiality concept is judgmental in nature and it is not possible to translate
this into a numerical formula. The Committee's advice to the [SEC] is to avoid this quest for
certainty and to continue consideration of materiality on a case-by-case basis as disclosure
problems are identified." House Committee on Interstate and Foreign Commerce, Report of the
 Advisory Committee on Corporate Disclosure to the Securities and Exchange Commission, 95th
Cong., 1st Sess., 327 (Comm.Print 1977). (Emphasis provided.)46

(d) Generally Available - Section 30 of the Revised Securities Act allows the insider the defense that in a
transaction of securities, where the insider is in possession of facts of special significance, such
information is "generally available" to the public. Whether information found in a newspaper, a
specialized magazine, or any cyberspace media be sufficient for the term "generally available" is a
matter which may be adjudged given the particular circumstances of the case. The standards cannot
remain at a standstill. A medium, which is widely used today was, at some previous point in time,
inaccessible to most. Furthermore, it would be difficult to approximate how the rules may be applied to
the instant case, where investigation has not even been started. Respondents failed to allege that the
negotiations of their agreement with GHB were made known to the public through any form of media
for there to be a proper appreciation of the issue presented.

Section 36(a) of the Revised Securities Act

As regards Section 36(a) of the Revised Securities Act, respondents claim that the term "beneficial
ownership" is vague and that it requires implementing rules to give effect to the law. Section 36(a) of
the Revised Securities Act is a straightforward provision that imposes upon (1) a beneficial owner of
more than ten percent of any class of any equity security or (2) a director or any officer of the issuer of
such security, the obligation to submit a statement indicating his or her ownership of the issuer's
securities and such changes in his or her ownership thereof. The said provision reads:

Sec. 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. (Emphasis provided.)

Section 36(a) refers to the "beneficial owner." Beneficial owner has been defined in the following
manner:

[F]irst, to indicate the interest of a beneficiary in trust property (also called "equitable
ownership"); and second, to refer to the power of a corporate shareholder to buy or sell the
shares, though the shareholder is not registered in the corporation's books as the owner.
Usually, beneficial ownership is distinguished from naked ownership, which is the enjoyment of
all the benefits and privileges of ownership, as against possession of the bare title to property.47
Even assuming that the term "beneficial ownership" was vague, it would not affect respondents' case,
where the respondents are directors and/or officers of the corporation, who are specifically required to
comply with the reportorial requirements under Section 36(a) of the Revised Securities Act. The validity
of a statute may be contested only by one who will sustain a direct injury as a result of its
enforcement.48

Sections 30 and 36 of the Revised Securities Act were enacted to promote full disclosure in the securities
market and prevent unscrupulous individuals, who by their positions obtain non-public information,
from taking advantage of an uninformed public. No individual would invest in a market which can be
manipulated by a limited number of corporate insiders. Such reaction would stifle, if not stunt, the
growth of the securities market. To avert the occurrence of such an event, Section 30 of the Revised
Securities Act prevented the unfair use of non-public information in securities transactions, while
Section 36 allowed the SEC to monitor the transactions entered into by corporate officers and directors
as regards the securities of their companies.

In the case In the Matter of Investor's Management Co.,49 it was cautioned that "the broad language of
the anti-fraud provisions," which include the provisions on insider trading, should not be "circumscribed
by fine distinctions and rigid classifications." The ambit of anti-fraud provisions is necessarily broad so as
to embrace the infinite variety of deceptive conduct.50

In Tatad v. Secretary of Department of Energy,51 this Court brushed aside a contention, similar to that
made by the respondents in this case, that certain words or phrases used in a statute do not set
determinate standards, declaring that:

Petitioners contend that the words "as far as practicable," "declining" and "stable" should have
been defined in R.A. No. 8180 as they do not set determinate and determinable standards. This
stubborn submission deserves scant consideration. The dictionary meanings of these words are
well settled and cannot confuse men of reasonable intelligence. x x x. The fear of petitioners
that these words will result in the exercise of executive discretion that will run riot is thus
groundless. To be sure, the Court has sustained the validity of similar, if not more general
standards in other cases.

Among the words or phrases that this Court upheld as valid standards were "simplicity and
dignity,"52 "public interest,"53 and "interests of law and order."54

The Revised Securities Act was approved on 23 February 1982. The fact that the Full Disclosure Rules
were promulgated by the SEC only on 24 July 1996 does not render ineffective in the meantime Section
36 of the Revised Securities Act. It is already unequivocal that the Revised Securities Act requires full
disclosure and the Full Disclosure Rules were issued to make the enforcement of the law more
consistent, efficient and effective. It is equally reasonable to state that the disclosure forms later
provided by the SEC, do not, in any way imply that no compliance was required before the forms were
provided. The effectivity of a statute which imposes reportorial requirements cannot be suspended by
the issuance of specified forms, especially where compliance therewith may be made even without such
forms. The forms merely made more efficient the processing of requirements already identified by the
statute.
For the same reason, the Court of Appeals made an evident mistake when it ruled that no civil, criminal
or administrative actions can possibly be had against the respondents in connection with Sections 8, 30
and 36 of the Revised Securities Act due to the absence of implementing rules. These provisions are
sufficiently clear and complete by themselves. Their requirements are specifically set out, and the acts
which are enjoined are determinable. In particular, Section 855 of the Revised Securities Act is a
straightforward enumeration of the procedure for the registration of securities and the particular
matters which need to be reported in the registration statement thereof. The Decision, dated 20 August
1998, provides no valid reason to exempt the respondent IRC from such requirements. The lack of
implementing rules cannot suspend the effectivity of these provisions. Thus, this Court cannot find any
cogent reason to prevent the SEC from exercising its authority to investigate respondents for violation of
Section 8 of the Revised Securities Act.

II. The right to cross-examination is not absolute and cannot be demanded during investigative
proceedings before the PED.

In its assailed Decision dated 20 August 1998, the Court of Appeals pronounced that the PED Rules of
Practice and Procedure was invalid since Section 8, Rule V56 thereof failed to provide for the parties'
right to cross-examination, in violation of the Administrative Code of 1987 particularly Section 12(3),
Chapter 3, Book VII thereof. This ruling is incorrect.

Firstly, Section 4, Rule I of the PED Rules of Practice and Procedure, categorically stated that the
proceedings before the PED are summary in nature:

Section 4. Nature of Proceedings - Subject to the requirements of due process, proceedings

before the "PED" shall be summary in nature not necessarily adhering to or following the
technical rules of evidence obtaining in the courts of law. The Rules of Court may apply in said
proceedings in suppletory character whenever practicable.

Rule V of the PED Rules of Practice and Procedure further specified that:

Section 5. Submission of Documents - During the preliminary conference/hearing, or

immediately thereafter, the Hearing Officer may require the parties to simultaneously submit
their respective verified position papers accompanied by all supporting documents and the
affidavits of their witnesses, if any which shall take the place of their direct testimony. The
parties shall furnish each other with copies of the position papers together with the supporting
affidavits and documents submitted by them.

Section 6. Determination of necessity of hearing. - Immediately after the submission by the

parties of their position papers and supporting documents, the Hearing Officer shall determine
whether there is a need for a formal hearing. At this stage, he may, in his discretion, and for the
purpose of making such determination, elicit pertinent facts or information, including
documentary evidence, if any, from any party or witness to complete, as far as possible, the
facts of the case. Facts or information so elicited may serve as basis for his clarification or
simplifications of the issues in the case. Admissions and stipulation of facts to abbreviate the
proceedings shall be encouraged.
 Section 7. Disposition of Case. If the Hearing Officer finds no necessity of further hearing after
the parties have submitted their position papers and supporting documents, he shall so inform
the parties stating the reasons therefor and shall ask them to acknowledge the fact that they
were so informed by signing the minutes of the hearing and the case shall be deemed submitted
for resolution.

As such, the PED Rules provided that the Hearing Officer may require the parties to submit their
respective verified position papers, together with all supporting documents and affidavits of witnesses.
A formal hearing was not mandatory; it was within the discretion of the Hearing Officer to determine
whether there was a need for a formal hearing. Since, according to the foregoing rules, the holding of a
hearing before the PED is discretionary, then the right to cross-examination could not have been
demanded by either party.

Secondly, it must be pointed out that Chapter 3, Book VII of the Administrative Code, entitled
"Adjudication," does not affect the investigatory functions of the agencies. The law creating the PED,
Section 8 of Presidential Decree No. 902-A, as amended, defines the authority granted to the PED, thus:

SEC. 8. The Prosecution and Enforcement Department shall have, subject to the Commission's
control and supervision, the exclusive authority to investigate, on complaint or motu proprio,
any act or omission of the Board of Directors/Trustees of corporations, or of partnerships, or of
other associations, or of their stockholders, officers or partners, including any fraudulent
devices, schemes or representations, in violation of any law or rules and regulations
administered and enforced by the Commission; to file and prosecute in accordance with law
and rules and regulations issued by the Commission and in appropriate cases, the corresponding
criminal or civil case before the Commission or the proper court or body upon prima facie
finding of violation of any laws or rules and regulations administered and enforced by the
Commission; and to perform such other powers and functions as may be provided by law or duly
delegated to it by the Commission. (Emphasis provided.)

The law creating PED empowers it to investigate violations of the rules and regulations promulgated by
the SEC and to file and prosecute such cases. It fails to mention any adjudicatory functions insofar as the
PED is concerned. Thus, the PED Rules of Practice and Procedure need not comply with the provisions of
the Administrative Code on adjudication, particularly Section 12(3), Chapter 3, Book VII.

In Cariño v. Commission on Human Rights,57 this Court sets out the distinction between investigative and
adjudicative functions, thus:

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into,
research on, study. The dictionary definition of "investigate" is "to observe or study closely;
inquire into systematically: "to search or inquire into" xx to subject to an official probe xx: to
conduct an official inquiry." The purpose of an investigation, of course is to discover, to find out,
to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or
resolving a controversy involved in the facts inquired into by application of the law to the facts
established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient
inquiry or observation. To trace or track; to search into; to examine and inquire into with care
 and accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal
inquiry;" "to inquire; to make an investigation," "investigation" being in turn described as "(a)n
administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d
Adm L Sec. 257; xx an inquiry, judicial or otherwise, for the discovery and collection of facts
concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide,

determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights
and duties of parties to a court case) on the merits of issues raised: xx to pass judgment on:
settle judicially: xx act as judge." And "adjudge" means "to decide or rule upon as a judge or
with judicial or quasi-judicial powers: xx to award or grant judicially in a case of controversy x x
x."

In a legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally.
Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide,
settle, or decree, or to sentence or condemn. x x x Implies a judicial determination of a fact, and the
entry of a judgment."

There is no merit to the respondent's averment that the sections under Chapter 3, Book VII of the
Administrative Code, do not distinguish between investigative and adjudicatory functions. Chapter 3,
Book VII of the Administrative Code, is unequivocally entitled "Adjudication."

Respondents insist that the PED performs adjudicative functions, as enumerated under Section 1(h) and
(j), Rule II; and Section 2(4), Rule VII of the PED Rules of Practice and Procedure:

Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential

Decree No. 902-A, as amended by Presidential Decree No. 1758, the Prosecution and
Enforcement Department is primarily charged with the following:

xxxx

(h) Suspends or revokes, after proper notice and hearing in accordance with these Rules, the
franchise or certificate of registration of corporations, partnerships or associations, upon any of
the following grounds:

1. Fraud in procuring its certificate of registration;

2. Serious misrepresentation as to what the corporation can do or is doing to the great prejudice
of or damage to the general public;

3. Refusal to comply or defiance of any lawful order of the Commission restraining commission
of acts which would amount to a grave violation of its franchise;

xxxx

(j) Imposes charges, fines and fees, which by law, it is authorized to collect;
 xxxx

Section 2. Powers of the Hearing Officer. The Hearing Officer shall have the following powers:

xxxx

4. To cite and/or declare any person in direct or indirect contempt in accordance with pertinent
provisions of the Rules of Court.

Even assuming that these are adjudicative functions, the PED, in the instant case, exercised its
investigative powers; thus, respondents do not have the requisite standing to assail the validity of the
rules on adjudication. A valid source of a statute or a rule can only be contested by one who will sustain
a direct injury as a result of its enforcement.58 In the instant case, respondents are only being
investigated by the PED for their alleged failure to disclose their negotiations with GHB and the
transactions entered into by its directors involving IRC shares. The respondents have not shown
themselves to be under any imminent danger of sustaining any personal injury attributable to the
exercise of adjudicative functions by the SEC. They are not being or about to be subjected by the PED to
charges, fees or fines; to citations for contempt; or to the cancellation of their certificate of registration
under Section 1(h), Rule II of the PED Rules of Practice and Procedure.

To repeat, the only powers which the PED was likely to exercise over the respondents were investigative
in nature, to wit:

Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential

Decree No. 902-A, as amended by Presidential Decree No. 1758, the Prosecution and
Enforcement Department is primarily charged with the following:

xxxx

b. Initiates proper investigation of corporations and partnerships or persons, their books,

records and other properties and assets, involving their business transactions, in coordination
with the operating department involved;

xxxx

e. Files and prosecutes civil or criminal cases before the Commission and other courts of justice
involving violations of laws and decrees enforced by the Commission and the rules and
regulations promulgated thereunder;

f. Prosecutes erring directors, officers and stockholders of corporations and partnerships,

commercial paper issuers or persons in accordance with the pertinent rules on procedures;

The authority granted to the PED under Section 1(b), (e), and (f), Rule II of the PED Rules of Practice and
Procedure, need not comply with Section 12, Chapter 3, Rule VII of the Administrative Code, which
affects only the adjudicatory functions of administrative bodies. Thus, the PED would still be able to
investigate the respondents under its rules for their alleged failure to disclose their negotiations with
GHB and the transactions entered into by its directors involving IRC shares.
This is not to say that administrative bodies performing adjudicative functions are required to strictly
comply with the requirements of Chapter 3, Rule VII of the Administrative Code, particularly, the right to
cross-examination. It should be noted that under Section 2.2 of Executive Order No. 26, issued on 7
October 1992, abbreviated proceedings are prescribed in the disposition of administrative cases:

2. Abbreviation of Proceedings. All administrative agencies are hereby directed to adopt and
include in their respective Rules of Procedure the following provisions:

xxxx

2.2 Rules adopting, unless otherwise provided by special laws and without prejudice to Section
12, Chapter 3, Book VII of the Administrative Code of 1987, the mandatory use of affidavits in
lieu of direct testimonies and the preferred use of depositions whenever practicable and
convenient.

As a consequence, in proceedings before administrative or quasi-judicial bodies, such as the National

Labor Relations Commission and the Philippine Overseas Employment Agency, created under laws which
authorize summary proceedings, decisions may be reached on the basis of position papers or other
documentary evidence only. They are not bound by technical rules of procedure and evidence. 59 In fact,
the hearings before such agencies do not connote full adversarial proceedings.60 Thus, it is not necessary
for the rules to require affiants to appear and testify and to be cross-examined by the counsel of the
adverse party. To require otherwise would negate the summary nature of the administrative or quasi-
judicial proceedings.61 In Atlas Consolidated Mining and Development Corporation v. Factoran, Jr.,62 this
Court stated that:

[I]t is sufficient that administrative findings of fact are supported by evidence, or negatively
stated, it is sufficient that findings of fact are not shown to be unsupported by evidence.
Substantial evidence is all that is needed to support an administrative finding of fact, and
substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion."

In order to comply with the requirements of due process, what is required, among other things, is that
every litigant be given reasonable opportunity to appear and defend his right and to introduce relevant
evidence in his favor.63

III. The Securities Regulations Code did not repeal Sections 8, 30 and 36 of the Revised Securities Act
since said provisions were reenacted in the new law.

The Securities Regulations Code absolutely repealed the Revised Securities Act. While the absolute
repeal of a law generally deprives a court of its authority to penalize the person charged with the
violation of the old law prior to its appeal, an exception to this rule comes about when the repealing law
punishes the act previously penalized under the old law. The Court, in Benedicto v. Court of Appeals, sets
down the rules in such instances:64

As a rule, an absolute repeal of a penal law has the effect of depriving the court of its authority
to punish a person charged with violation of the old law prior to its repeal. This is because an
unqualified repeal of a penal law constitutes a legislative act of rendering legal what had been
 previously declared as illegal, such that the offense no longer exists and it is as if the person who
committed it never did so. There are, however, exceptions to the rule. One is the inclusion of a
saving clause in the repealing statute that provides that the repeal shall have no effect on
pending actions. Another exception is where the repealing act reenacts the former statute and
punishes the act previously penalized under the old law. In such instance, the act committed
before the reenactment continues to be an offense in the statute books and pending cases are
not affected, regardless of whether the new penalty to be imposed is more favorable to the
accused. (Emphasis provided.)

In the present case, a criminal case may still be filed against the respondents despite the repeal, since
Sections 8, 65 12,66 26,67 2768 and 2369 of the Securities Regulations Code impose duties that are
substantially similar to Sections 8, 30 and 36 of the repealed Revised Securities Act.

Section 8 of the Revised Securities Act, which previously provided for the registration of securities and
the information that needs to be included in the registration statements, was expanded under Section
12, in connection with Section 8 of the Securities Regulations Code. Further details of the information
required to be disclosed by the registrant are explained in the Amended Implementing Rules and
Regulations of the Securities Regulations Code, issued on 30 December 2003, particularly Sections 8 and
12 thereof.

Section 30 of the Revised Securities Act has been reenacted as Section 27 of the Securities Regulations
Code, still penalizing an insider's misuse of material and non-public information about the issuer, for the
purpose of protecting public investors. Section 26 of the Securities Regulations Code even widens the
coverage of punishable acts, which intend to defraud public investors through various devices,
misinformation and omissions.

Section 23 of the Securities Regulations Code was practically lifted from Section 36(a) of the Revised
Securities Act. Both provisions impose upon (1) a beneficial owner of more than ten percent of any class
of any equity security or (2) a director or any officer of the issuer of such security, the obligation to
submit a statement indicating his or her ownership of the issuer's securities and such changes in his or
her ownership thereof.

Clearly, the legislature had not intended to deprive the courts of their authority to punish a person
charged with violation of the old law that was repealed; in this case, the Revised Securities Act.

IV. The SEC retained the jurisdiction to investigate violations of the Revised Securities Act, reenacted in
the Securities Regulations Code, despite the abolition of the PED.

Section 53 of the Securities Regulations Code clearly provides that criminal complaints for violations of
rules and regulations enforced or administered by the SEC shall be referred to the Department of Justice
(DOJ) for preliminary investigation, while the SEC nevertheless retains limited investigatory
powers.70 Additionally, the SEC may still impose the appropriate administrative sanctions under Section
54 of the aforementioned law.71

In Morato v. Court of Appeals,72 the cases therein were still pending before the PED for investigation and
the SEC for resolution when the Securities Regulations Code was enacted. The case before the SEC
involved an intra-corporate dispute, while the subject matter of the other case investigated by the PED
involved the schemes, devices, and violations of pertinent rules and laws of the company's board of
directors. The enactment of the Securities Regulations Code did not result in the dismissal of the cases;
rather, this Court ordered the transfer of one case to the proper regional trial court and the SEC to
continue with the investigation of the other case.

The case at bar is comparable to the aforecited case. In this case, the SEC already commenced the
investigative proceedings against respondents as early as 1994. Respondents were called to appear
before the SEC and explain their failure to disclose pertinent information on 14 August 1994. Thereafter,
the SEC Chairman, having already made initial findings that respondents failed to make timely
disclosures of their negotiations with GHB, ordered a special investigating panel to hear the case. The
investigative proceedings were interrupted only by the writ of preliminary injunction issued by the Court
of Appeals, which became permanent by virtue of the Decision, dated 20 August 1998, in C.A.-G.R. SP
No. 37036. During the pendency of this case, the Securities Regulations Code repealed the Revised
Securities Act. As in Morato v. Court of Appeals, the repeal cannot deprive SEC of its jurisdiction to
continue investigating the case; or the regional trial court, to hear any case which may later be filed
against the respondents.

V. The instant case has not yet prescribed.

Respondents have taken the position that this case is moot and academic, since any criminal complaint
that may be filed against them resulting from the SEC's investigation of this case has already
prescribed.73 They point out that the prescription period applicable to offenses punished under special
laws, such as violations of the Revised Securities Act, is twelve years under Section 1 of Act No. 3326, as
amended by Act No. 3585 and Act No. 3763, entitled "An Act to Establish Periods of Prescription for
Violations Penalized by Special Acts and Municipal Ordinances and to Provide When Prescription Shall
Begin to Act."74 Since the offense was committed in 1994, they reasoned that prescription set in as early
as 2006 and rendered this case moot. Such position, however, is incongruent with the factual
circumstances of this case, as well as the applicable laws and jurisprudence.

It is an established doctrine that a preliminary investigation interrupts the prescription period.75 A

preliminary investigation is essentially a determination whether an offense has been committed, and
whether there is probable cause for the accused to have committed an offense:

A preliminary investigation is merely inquisitorial, and it is often the only means of discovering
the persons who may be reasonably charged with a crime, to enable the fiscal to prepare the
complaint or information. It is not a trial of the case on the merits and has no purpose except
that of determining whether a crime has been committed or whether there is probable cause to
believe that the accused is guilty thereof.76

Under Section 45 of the Revised Securities Act, which is entitled Investigations, Injunctions and
Prosecution of Offenses, the Securities Exchange Commission (SEC) has the authority to "make such
investigations as it deems necessary to determine whether any person has violated or is about to violate
any provision of this Act XXX." After a finding that a person has violated the Revised Securities Act, the
SEC may refer the case to the DOJ for preliminary investigation and prosecution.

While the SEC investigation serves the same purpose and entails substantially similar duties as the
preliminary investigation conducted by the DOJ, this process cannot simply be disregarded. In Baviera v.
Paglinawan,77 this Court enunciated that a criminal complaint is first filed with the SEC, which
determines the existence of probable cause, before a preliminary investigation can be commenced by
the DOJ. In the aforecited case, the complaint filed directly with the DOJ was dismissed on the ground
that it should have been filed first with the SEC. Similarly, the offense was a violation of the Securities
Regulations Code, wherein the procedure for criminal prosecution was reproduced from Section 45 of
the Revised Securities Act. 78 This Court affirmed the dismissal, which it explained thus:

The Court of Appeals held that under the above provision, a criminal complaint for violation of
any law or rule administered by the SEC must first be filed with the latter. If the Commission
finds that there is probable cause, then it should refer the case to the DOJ. Since petitioner
failed to comply with the foregoing procedural requirement, the DOJ did not gravely abuse its
discretion in dismissing his complaint in I.S. No. 2004-229.

A criminal charge for violation of the Securities Regulation Code is a specialized dispute. Hence,
it must first be referred to an administrative agency of special competence, i.e., the SEC. Under
the doctrine of primary jurisdiction, courts will not determine a controversy involving a question
within the jurisdiction of the administrative tribunal, where the question demands the exercise
of sound administrative discretion requiring the specialized knowledge and expertise of said
administrative tribunal to determine technical and intricate matters of fact. The Securities
Regulation Code is a special law. Its enforcement is particularly vested in the SEC. Hence, all
complaints for any violation of the Code and its implementing rules and regulations should be
filed with the SEC. Where the complaint is criminal in nature, the SEC shall indorse the complaint
to the DOJ for preliminary investigation and prosecution as provided in Section 53.1 earlier
quoted.

We thus agree with the Court of Appeals that petitioner committed a fatal procedural lapse
when he filed his criminal complaint directly with the DOJ. Verily, no grave abuse of discretion
can be ascribed to the DOJ in dismissing petitioner's complaint.

The said case puts in perspective the nature of the investigation undertaken by the SEC, which is a
requisite before a criminal case may be referred to the DOJ. The Court declared that it is imperative that
the criminal prosecution be initiated before the SEC, the administrative agency with the special
competence.

It should be noted that the SEC started investigative proceedings against the respondents as early as
1994. This investigation effectively interrupted the prescription period. However, said proceedings were
disrupted by a preliminary injunction issued by the Court of Appeals on 5 May 1995, which effectively
enjoined the SEC from filing any criminal, civil, or administrative case against the respondents
herein.79 Thereafter, on 20 August 1998, the appellate court issued the assailed Decision in C.A. G.R. SP.
No. 37036 ordering that the writ of injunction be made permanent and prohibiting the SEC from taking
cognizance of and initiating any action against herein respondents. The SEC was bound to comply with
the aforementioned writ of preliminary injunction and writ of injunction issued by the Court of Appeals
enjoining it from continuing with the investigation of respondents for 12 years. Any deviation by the SEC
from the injunctive writs would be sufficient ground for contempt. Moreover, any step the SEC takes in
defiance of such orders will be considered void for having been taken against an order issued by a court
of competent jurisdiction.
An investigation of the case by any other administrative or judicial body would likewise be impossible
pending the injunctive writs issued by the Court of Appeals. Given the ruling of this Court in Baviera v.
Paglinawan,80 the DOJ itself could not have taken cognizance of the case and conducted its preliminary
investigation without a prior determination of probable cause by the SEC. Thus, even presuming that the
DOJ was not enjoined by the Court of Appeals from conducting a preliminary investigation, any
preliminary investigation conducted by the DOJ would have been a futile effort since the SEC had only
started with its investigation when respondents themselves applied for and were granted an injunction
by the Court of Appeals.

Moreover, the DOJ could not have conducted a preliminary investigation or filed a criminal case against
the respondents during the time that issues on the effectivity of Sections 8, 30 and 36 of the Revised
Securities Act and the PED Rules of Practice and Procedure were still pending before the Court of
Appeals. After the Court of Appeals declared the aforementioned statutory and regulatory provisions
invalid and, thus, no civil, criminal or administrative case may be filed against the respondents for
violations thereof, the DOJ would have been at a loss, as there was no statutory provision which
respondents could be accused of violating.

Accordingly, it is only after this Court corrects the erroneous ruling of the Court of Appeals in its Decision
dated 20 August 1998 that either the SEC or DOJ may properly conduct any kind of investigation against
the respondents for violations of Sections 8, 30 and 36 of the Revised Securities Act. Until then, the
prescription period is deemed interrupted.

To reiterate, the SEC must first conduct its investigations and make a finding of probable cause in
accordance with the doctrine pronounced in Baviera v. Paglinawan.81 In this case, the DOJ was precluded
from initiating a preliminary investigation since the SEC was halted by the Court of Appeals from
continuing with its investigation. Such a situation leaves the prosecution of the case at a standstill, and
neither the SEC nor the DOJ can conduct any investigation against the respondents, who, in the first
place, sought the injunction to prevent their prosecution. All that the SEC could do in order to break the
impasse was to have the Decision of the Court of Appeals overturned, as it had done at the earliest
opportunity in this case. Therefore, the period during which the SEC was prevented from continuing
with its investigation should not be counted against it. The law on the prescription period was never
intended to put the prosecuting bodies in an impossible bind in which the prosecution of a case would
be placed way beyond their control; for even if they avail themselves of the proper remedy, they would
still be barred from investigating and prosecuting the case.

Indubitably, the prescription period is interrupted by commencing the proceedings for the prosecution
of the accused. In criminal cases, this is accomplished by initiating the preliminary investigation. The
prosecution of offenses punishable under the Revised Securities Act and the Securities Regulations Code
is initiated by the filing of a complaint with the SEC or by an investigation conducted by the SEC motu
proprio. Only after a finding of probable cause is made by the SEC can the DOJ instigate a preliminary
investigation. Thus, the investigation that was commenced by the SEC in 1995, soon after it discovered
the questionable acts of the respondents, effectively interrupted the prescription period. Given the
nature and purpose of the investigation conducted by the SEC, which is equivalent to the preliminary
investigation conducted by the DOJ in criminal cases, such investigation would surely interrupt the
prescription period.

VI. The Court of Appeals was justified in denying SEC's Motion for Leave to Quash SEC Omnibus Orders
dated 23 October 1995.
The SEC avers that the Court of Appeals erred when it denied its Motion for Leave to Quash SEC
Omnibus Orders, dated 23 October 1995, in the light of its admission that the PED had the sole authority
to investigate the present case. On this matter, this Court cannot agree with the SEC.

In the assailed decision, the Court of Appeals denied the SEC's Motion for Leave to Quash SEC Omnibus
Orders, since it found other issues that were more important than whether or not the PED was the
proper body to investigate the matter. Its refusal was premised on its earlier finding that no criminal,
civil, or administrative case may be filed against the respondents under Sections 8, 30 and 36 of the
Revised Securities Act, due to the absence of any implementing rules and regulations. Moreover, the
validity of the PED Rules on Practice and Procedure was also raised as an issue. The Court of Appeals,
thus, reasoned that if the quashal of the orders was granted, then it would be deprived of the
opportunity to determine the validity of the aforementioned rules and statutory provisions. In addition,
the SEC would merely pursue the same case without the Court of Appeals having determined whether
or not it may do so in accordance with due process requirements. Absent a determination of whether
the SEC may file a case against the respondents based on the assailed provisions of the Revised
Securities Act, it would have been improper for the Court of Appeals to grant the SEC's Motion for Leave
to Quash SEC Omnibus Orders.

In all, this Court rules that no implementing rules were needed to render effective Sections 8, 30 and 36
of the Revised Securities Act; nor was the PED Rules of Practice and Procedure invalid, prior to the
enactment of the Securities Regulations Code, for failure to provide parties with the right to cross-
examine the witnesses presented against them. Thus, the respondents may be investigated by the
appropriate authority under the proper rules of procedure of the Securities Regulations Code for
violations of Sections 8, 30, and 36 of the Revised Securities Act.82

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. This Court hereby REVERSES the assailed
Decision of the Court of Appeals promulgated on 20 August 1998 in CA-G.R. SP No. 37036 and LIFTS the
permanent injunction issued pursuant thereto. This Court further DECLARES that the investigation of the
respondents for violations of Sections 8, 30 and 36 of the Revised Securities Act may be undertaken by
the proper authorities in accordance with the Securities Regulations Code. No costs.

SO ORDERED.
8. People v. Consorte, G.R. No. 194068, 26 November 2014

G.R. No. 194068 November 26, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
BENJIE CONSORTE y FRANCO, Accused-Appellant.

RESOLUTION

PEREZ, J.:

For the resolution of the Court is the Motion for Reconsideration1 of our Decision dated 9 July
2014,2 which affirmed the conviction of accused appellant Benjie Consorte y Franco for the murder of
Elizabeth Palmar, the dispositive portion of which reads:

WHEREFORE, the Decision of the Court of Appeals dated 27 May 2010 in CA-G.R. CR HC No. 01806 is
AFFIRMED with the following MODIFICATIONS (1) that the amount of civil indemnity is increased from
₱50,000.00 to ₱75,000.00; and (2) that the amount of exemplary damages is increased from ₱25,000.00
to ₱30,000.00. An interest, at the rate of six percent (6%) per annum shall be imposed on all the
damages awarded in this case from the date of finality of this judgment until they are fully paid.

SO ORDERED.3

Accused-appellant raises the incredibility of his identification as the perpetrator of the crime.4 He avers
that despite the alleged positive identification made by Rolando Visbe (Visbe), the testimony of
prosecution witness Aneline Mendoza clearly shows the impossibility of the same.5 Moreover, further
casting doubt on the alleged identification of accused appellant is Visbe’s unbelievable and inconsistent
statements on how such identification was made.6 Meanwhile, in a Letter dated 21 September
2014,7 the Officer-inCharge of the New Bilibid Prison (NBP) informed the Court that accused appellant
died on 14 July 2014, as evidenced by the attached Death Certificate issued by NBP Medical Officer III
Ruth B. Algones, M.D.8

Owing to this development, the Court now addresses the effect of death pending accused-appellant’s
appeal with regard to his criminal and civil liabilities.

Article 89 (1) of the Revised Penal Code is illuminating:

Art. 89. How criminal liability is totally extinguished. – Criminal liability is totally extinguished: (1) By the
death of the convict, as to the personal penalties; and as to pecuniary penalties, liability therefor is
extinguished only when the death of the offender occurs before final judgment;

xxxx

In People v. Brillantes,9 the Court, citing People v. Bayotas,10 clarified that:

1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the
civil liability based solely thereon.1âwphi1 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."

In the case at bar, accused-appellant died before final judgment, as in fact, his motion for
reconsideration is still pending resolution by the Court. As such, it therefore becomes necessary for us to
declare his criminal liability as well as his civil liability ex delicto to have been extinguished by his death
prior to final judgment.11

WHEREFORE, the criminal and civil liability ex delicto of accused appellant Benjie Consorte y Franco are
declared EXTINGUISHED by his death prior to final judgment. The judgment or conviction against him is
therefore SET ASIDE.

SO ORDERED.