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Republic of the PhilippinesSUPREME COURT

SECOND DIVISION

G.R. No. 157783 September 23, 2005

NILO PALOMA, Petitioners,vs.DANILO MORA, HILARIO FESTEJO, MAXIMA SALVINO, BRYN BONGBONG andVALENTINO SEVILLA, Respondent.

D E C I S I O N

CHICO-NAZARIO, J .:

In this petition for review on certiorari , petitioner NILO PALOMA is in quest of the reversal of theDecision 1 and the Resolution ,2 dated 15 November 2002 and 01 April 2003, respectively, of theCourt of Appeals in CA-G.R. SP No. 42553, affirming in toto the Orders dated 12 March 1996 and28 June 1996 of the Regional Trial Court (RTC), Branch 17, Palompon, Leyte, in Civil Case No. PN-0016, dismissing his complaint for mandamus for being prematurely filed.

The undisputed facts, as summarized by the Court of Appeals and as unraveled from the records,follow:

Petitioner Nilo Paloma was appointed General Manager of the Palompon, Leyte Water District by itsBoard of Directors in 1993. His services were subsequently terminated by virtue of Resolution No.8-95 3 dated 29 December 1995, which was passed by respondents as Chairman and members of theBoard of the Palompon, Leyte Water District, namely: Danilo Mora, Hilario Festejo, Bryn Bongbongand Maxima Salvino, respectively. The Board, in the same Resolution, designated respondentValentino Sevilla as Officer-in-Charge .4

Pained by his termination, petitioner filed a petition for mandamu s5 with prayer for preliminaryinjunction with damages before the RTC on 11 January 1996 to contest his dismissal with the prayer to be restored to the position of General Manager .6

Petitioner obdurately argued in his petition that the passage of Resolution No. 8-95 resulting in hisdismissal was a "capricious and arbitrary act on the part of the Board of Directors, constituting atravesty of justice and a fatal denial of his constitutional right to due process for the grounds reliedupon therein to terminate him were never made a subject of a complaint nor was he notified andmade to explain the acts he was said to be guilty of." "Fundamental is the rule and also provided for in the Civil Service Rules and Regulations that no officer or employee in the Civil Service shall besuspended, separated or dismissed except for cause and after due process," so stressed petitioner .7

On 25 January 1996, respondents filed a Motion to Dismiss the petition for lack of jurisdiction andwant of cause of action .8

On 12 March 1996, the trial court issued the assailed order dismissing the petition, with the fallo :
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WHEREFORE, all foregoing considered, the complaint thus filed for mandamus with a Prayer for aWrit for Preliminary Injunction with Damages is hereby DISMISSED for being a premature cause of action. Without pronouncement as to costs .9

Petitioners motion for reconsideration likewise failed to sway the trial court by Order dated 28 June

1996 .10

Meanwhile, petitioner filed a Complaint on 29 March 1996 with the Civil Service Commission(CSC) against same respondents herein, for alleged Violation of Civil Service Law and Rules and for Illegal Dismissal .11

On 06 November 1996, the CSC issued its decision 12 exonerating respondents from the charge of violating the Civil Service Law when they voted for the termination of petitioners services asGeneral Manager of the Palompon, Leyte Water District. Thus, the CSC dismisse d13 the complaintfiled by petitioner before it, to wit:

In view of the foregoing, the instant complaint of Mr. Nilo Paloma former General Manager of Palompon Water District against Messrs. Danilo Mora, Hilario Festejo, Bryn Bongbong and Ms.Maxima Salvino for Violation of Civil Service Law and Rules and Illegal Dismissal is herebyDISMISSED, for lack of prima facie case .14

In its Decision 15 dated 15 November 2002, the Court of Appeals yielded to the decision of the trialcourt and dismissed the appeal filed by petitioner, viz :

WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. Accordingly, theassailed Orders of the Regional Trial Court dated 12 March 1996 and 28 June 1996 in Civil Case No.PN-0016, are AFFIRMED in toto .16

Equal ly unavailing was petitioners motion for reconsideration, which was denied by the Court of Appeals on 01 April 2003.

Affronted by the ruling, petitioner elevated the matter to us via the instant petition, contending that:

the court of appeals gravely erred in affirming the decision of the regional trial court of palompon,leyte, branch 17 .17

The central inquiry raised in this petition is whether or not the Court of Appeals committed any

reversible error in its challenged decision. Concretely, we are tasked to resolve: (1) whether or notmandamus will lie to compel the Board of Directors of the Palompon, Leyte Water District toreinstate the General Manager thereof, and (2) whether or not the CSC has primary jurisdiction over the case for illegal dismissal of petitioner.

Petitioner, in his brief, is emphatic that the Court of Appeals overlooked the fact that mandamus maylie to compel the performance of a discretionary duty in case of non-observance of due process. Heenthuses that the Court of Appeals overlooked the fact that as an aggrieved party, he need notexhaust administrative remedies and may resort to court action for relief as due process was clearlyviolated .18

Espousing a contrary view, respondents posit that petitioner breached the rule against forumshopping as he filed another complaint for illegal dismissal against them with the CSC after
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obtaining an unfavorable ruling in his Petition for Mandamus filed before the RTC .19 Not only is petitioner guilty of forum shopping; he, too, is guilty of submitting a false certificate against forumshopping as the certification he appended with the present petition omitted the fact that he had

previously filed a similar case with the CSC, so respondents say .20 Respondents theorize, as well,that the instant case has already been rendered moot by the dissolution of the Palompon, Leyte Water

District and its subsequent absorption by the municipal government of Palompon effective 1 June1999 .21 Finally, it is respondents resolute stance that it was fitting for the Court of Appeals to affirmthe trial courts ruling dismissing the petition filed by petitioner inasmuch as Section 23 of Presidential Decree (P.D.) No. 128 indeed clearly states that the General Manager shall serve at the

pleasure of the Board .22

We are not won over by petitioners avowals. The petition ought to be denied.

Section 3, Rule 65 of the Rules of Court provides-

Sec. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person unlawfullyneglects the performance of an act which the law specifically enjoins as a duty resulting from anoffice, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in theordinary course of law, the person aggrieved thereby may file a verified petition in the proper court,alleging the facts with certainty and praying that judgment be rendered commanding the respondent,immediately or at some other time to be specified by the court, to do the act required to be done to

protect the rights of the petitioner and to pay the damages sustained by the petitioner by reason of thewrongful acts of the respondent.

Mandamus lies to compel the performance, when refused, of a ministerial duty, but not to compel the performance of a discretionary duty .23 Mandamus will not issue to control or review the exercise of discretion of a public officer where the law imposes upon said public officer the right and duty toexercise his judgment in reference to any matter in which he is required to act. It is his judgment thatis to be exercised and not that of the court .24

In the case at bar, P.D. No. 198 ,25 otherwise known as THE PROVINCIAL WATER UTILITIESACT OF 1973, which was promulgated on 25 May 1973, categorically provides that the generalmanager shall serve at the pleasure of the board of directors, viz :

Section 23. Additional Officers. - At the first meeting of the board, or as soon thereafter as practicable, the board shall appoint, by a majority vote, a general manager, an auditor, and an

attorney, and shall define their duties and fix their compensation. Said of fi cers shal l serve at the pleasur e of the board.

Section 23 of P.D. No. 198 was later amended by P.D. No. 768 on 15 August 1975 to read:

SEC. 23. The General Manager. - At the first meeting of the board, or as soon thereafter as practicable, the board shall appoint, by a majority vote, a general manager and shall define his dutiesand fix his compensation. Said officer shall serve at the pleasure of the board. (Emphasis supplied)

Mandamus does not lie to compel the Board of Directors of the Palompon, Leyte Water District toreinstate petitioner because the Board has the discretionary power to remove him under Section 23 of

P.D. No. 198, as amended by P.D. No. 768.
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The case of Mita Pardo de Tavera v. Philippine Tuberculosis Society, Inc .26 delineated the nature of an appointment held "at the pleasure of the appointing power" in this wise:

An appointment held at the pleasure of the appointing power is in essence temporary in nature. It isco-extensive with the desire of the Board of Directors. Hence, when the Board opts to replace the

incumbent, technically there is no removal but only an expiration of term and in an expiration of term, there is no need of prior notice, due hearing or sufficient grounds before the incumbent can be

separated from office. The protection afforded by Section 7.04 of the Code of By-Laws on RemovalOf Officers and Employees, therefore, cannot be claimed by petitioner .27 (Emphasis supplied)

In fine, the appointment of petitioner and his consequent termination are clearly within the widearena of discretion which the legislature has bestowed the appointing power, which in this case is theBoard of Directors of the Palompon, Leyte Water District. Here, considering that the petitioner is atloggerheads with the Board, the formers services obviously ceased to be "pleasurable" to the latter.The Board of Directors of a Water District may abridge the term of the General Manager thereof themoment the la tters services cease to be convivial to the former. Put another way, he is at the mercyof the appointing powers since his appointment can be terminated at any time for any cause andfollowing Orcullo there is no need of prior notice or due hearing before the incumbent can beseparated from office. Hence, petitioner is treading on shaky grounds with his intransigent posturethat he was removed sans cause and due process.

Yes, as a general rule, no officer or employee of the civil service shall be removed or suspendedexcept for cause provided by law as provided in Section 2(3), Article IX-B of the 1987Constitution. As exception to this, P.D. No. 198, which we held in Feliciano v. Commission On

Audit 28 to be the special enabling charter of Local Water Districts, categorically provides that theGeneral Manager shall serve "at the pleasure of the board."

Correlatively, the nature of appointment of General Managers of Water Districts under Section 23 of P.D. No. 198 falls under Section 14 of the Omnibus Rules Implementing Book V of Executive Order

No. 292, otherwise known as the Administrative Code of 1987, which provides:

Sec. 14. An appointment may also be co-terminous which shall be issued to a person whose entranceand continuity in the service is based on the trust and confidence of the appointing authority or thatwhich is subject to his pleasure, or co-existent with his tenure, or limited by the duration of project or subject to the availability of funds.

The co-terminous status may thus be classified as follows:

(1) Co-terminous with the project - when the appointment is co-existent with the duration of a particular project for which purpose employment was made or subject to the availability of funds for the same;

(2) Co-terminous with the appointing authority - when appointment is co-existent with the tenure of the appointing authority or at his pleasure;

(3) Co-terminous with the incumbent - when the appointment is co-existent with the appointee, inthat after the resignation, separation or termination of the services of the incumbent the position shall

be deemed automatically abolished; and
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(4) Co-terminous with a specific period - appointment is for a specific period and upon expirationthereof, the position is deemed abolished; . . . (Underscoring supplied.)

The Court has previously sustained the validity of dismissal of civil servants who serve at the pleasure of the appointing power and whose appointments are covered by Section 14 of the Omnibus

Rules Implementing Book V of Executive Order No. 292 as cited above. Thus, in Orcullo, Jr. v.Civil Service Commission ,29 petitioner was hired as Project Manager IV by the Coordinating Councilof the Philippine Assistance Program-BOT Center. In upholding the termination of his employment

prior to the expiration of his contract, we held that petitioner serves at the pleasure of the appointingauthority. This Court ruled in Orcullo

A perusal of petitioners employment contract will reveal that his employment with CCPAP isqualified by the phrase "unless terminated sooner." Thus, while such employment is co-terminouswith the PAPS project, petitioner nevertheless serves at the pleasur e of the appoin tin g authori ty asthis is clearly stipulated in his employment contract. We agree with the appellate courtsinterpretation of the phrase "unless terminated sooner" to mean "that his contractual job as ProjectManager IV from March 11, 1996 to January 30, 2000 could end anytime before January 30, 2000 if terminated by the other contracting party-employer CCPAP. (Emphasis supplied)

Neither is it the Courts business to intrud e into the Congressional sphere on the matter of thewisdom of Section 23 of P.D. No. 198. One of the firmly entrenched principles in constitutional lawis that the courts do not involve themselves with nor delve into the policy or wisdom of a statute.That is the exclusive concern of the legislative branch of the government. When the validity of astatute is challenged on constitutional grounds, the sole function of the court is to determine whether it transcends constitutional limitations or the limits of legislative power. No such transgression has

been shown in this case .30

Moreover, laws change depending on the evolving needs of society. In a related development,President Gloria Macapagal-Arroyo inked into law Republic Act No. 9286, which amended Section23 of P.D. No. 198 providing that thereafter, the General Manager of Water Districts shall not beremoved from office, except for cause and after due process . Rep. Act No. 9286 reads:

Republic Act No. 9286

AN ACT FURTHER AMENDING PRESIDENTIAL DECREE NO. 198, OTHERWISEKNOWN AS "THE PROVINCIAL WATER UTILITIES ACT OF 1973", AS AMENDED

Approved: April 2, 2004

. . .

Sec. 2. Section 23 of Presidential Decree No. 198, as amended, is hereby amended to read as follows:

Sec. 23. The General Manager. At the first meeting of the Board, or as soon thereafter as practicable, the Board shall appoint, by a majority vote, a general manager and shall define his duties

and fix his compensation. Said officer shall not be removed from office, except for cause and after due process . (Emphasis supplied.)

. . .
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Sec. 5. Effectivity Clause. This Act shall take effect upon its approval .31

Unfortunately for petitioner, Rep. Act No. 9286 is silent as to the retroactivity of the law to pendingcases and must, therefore, be taken to be of prospective application. The general rule is that in anamendatory act, every case of doubt must be resolved against its retroactive effect .32 Since the

retroactive application of a law usually divests rights that have already become vested ,33

the rule instatutory construction is that all statutes are to be construed as having only a prospective operationunless the purpose and intention of the legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used .34

First , there is nothing in Rep. Act No. 9286 which provides that it should retroact to the date of effectivity of P.D. No. 198, the original law. Next , neither is it necessarily implied from Rep. Act No.9286 that it or any of its provisions should apply retroactively. Third , Rep. Act No. 9286 is asubstantive amendment of P.D. No. 198 inasmuch as it has changed the grounds for termination of the General Manager of Water Districts who, under the then Section 23 of P.D. No. 198, "shall serveat the pleasure of the Board." Under the new law, however, said General Manager shall not beremoved from office, except for cause and after due process . To apply Rep. Act No. 9286retroactively to pending cases, such as the case at bar, will rob the respondents as members of theBoard of the Palompon, Leyte Water District of the right vested to them by P.D. No. 198 to terminate

petitioner at their pleasure or discretion. Stated otherwise, the new law can not be applied to makerespondents accountable for actions which were valid under the law prevailing at the time thequestioned act was committed.

Prescinding from the foregoing premises, at the time petitioner was terminated by the Board of Directors, the prevailing law was Section 23 of P.D. No. 198 prior to its amendment by Rep. Act No.9286.

Petitioner, next, heaves censure on the Court of Appeals for subscribing to the trial courts view thatthe petition for mandamus was prematurely filed. We recall in Tanjay Water District v. Gabato n35 that water districts are government instrumentalities and that their employees belong to the civilservice. Thus, "[t]he hiring and firing of employees of government-owned or controlled corporationsare governed by the Civil Service Law and Civil Service Rules and Regulations." Tanjay was clear-cut on this matter:

. . . Inasmuch as PD No. 198, as amended, is the original charter of the petitioner, Tanjay Water District, and respondent Tarlac Water District and all water districts in the country , they come under the coverage of the civil service law, rules and regulations. (Emphasis supplied)

Underlying the rulings of the trial and appellate courts in the case at bar is the doctrine of primary jurisdiction; i.e., courts cannot and will not resolve a controversy involving a question which iswithin the jurisdiction of an administrative tribunal, especially where the question demands theexercise of sound administrative discretion requiring the special knowledge, experience and servicesof the administrative tribunal to determine technical and intricate matters of fact .36 In Villaflor v.Court of Appeals ,37 we revisited the import of the doctrine of primary jurisdiction, to wit:

In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving mattersthat demand the special competence of administrative agencies even if the question involved is also

judicial in character. . .
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In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogateunto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged withan administrative body of special competence. In Machete vs. Court of Appeals , the Court upheld the

primary jurisdiction of the Department of Agrarian Reform Adjudicatory Board (DARAB) in anagrarian dispute over the payment of back rentals under a leasehold contract. In Concerned Officials

of the Metropolitan Waterworks and Sewerage System vs. Vasquez [240 SCRA 502], the Courtrecognized that the MWSS was in the best position to evaluate and to decide which bid for awaterworks project was compatible with its development plan. (Emphasis supplied)

In a surfeit of cases, this Court has held that quasi-judicial bodies like the CSC are better-equipped inhandling cases involving the employment status of employees as those in the Civil Service since it iswithin the field of their expertise .38 This is consistent with the powers and functions of the CSC,

being the central personnel agency of the Government, to carry into effect the provisions of the CivilService Law and other pertinent laws ,39 including, in this case, P.D. No. 198.

WHEREFORE, the present petition is hereby DENIED. Accordingly, the Decision and theResolution dated 15 November 2002 and 01 April

2003, respectively, of the Court of Appeals in CA-G.R. SP No. 42553, are hereby AFFIRMED.Costs against petitioner.

SO ORDERED.

MINITA V. CHICO-NAZARIO

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Associate Justice

Chairman

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

ROMEO J. CALLEJO, SR.

Associate Justice

DANTE O. TINGA

Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the case wasassigned to the writer of the opinion of the Courts Division.
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25 DECLARING A NATIONAL POLICY FAVORING LOCAL OPERATION AND CONTROL OF WATER SYSTEMS;AUTHORIZING THE FORMATION OF LOCAL WATER DISTRICTS AND PROVIDING FOR THE GOVERNMENT ANDADMINISTRATION OF SUCH DISTRICTS; CHARTERING A NATIONAL ADMINISTRATION TO FACILITATEIMPROVEMENT OF LOCAL WATER UTILITIES; GRANTING SAID ADMINISTRATION SUCH POWERS AS ARENECESSARY TO OPTIMIZE PUBLIC SERVICE FROM WATER UTILITY OPERATIONS, AND FOR OTHER PURPOSES.

26 G.R. No. L-48928, 25 February 1982, 243 SCRA 112.27 Id ., p. 253.28 G. R. No. 147402, 14 January 2004, 419 SCRA 363. 29 G.R. No. 138780, 22 May 2001, 358 SCRA 115, 119-120.30 Farias v. The Executive Secretary, G.R. No. 147387, 10 December 2003, 417 SCRA 503.31 http://www.ops.gov.ph/records/ra_no9286.htm32 CIR v. Marubeni Corp., G.R. No. 137377, 18 December 2001, 372 SCRA 576.33 People v. Patalin, G.R. No. 125539, 27 July 1999, 311 SCRA 186, citing Benzonan v. Court of Appeals, G.R.No. 97923, 27 January 1992, 205 SCRA 515.34 Id ., citing Balatbat v. Court of Appeals, G.R. No. 36378, 27 January 1992, 205 SCRA 419.35

G.R. No. 84300, 17 April 1989, 172 SCRA 253, 260, citing Baguio Water District v. Trajano, G.R. No. L-65428,20 February 1984, 127 SCRA 730; Hagonoy Water District v. NLRC, G.R. No. 81490, 31 August 1988, 165 SCRA272.36 Villaflor v. Court of Appeals, G.R. No. 95694, 09 October 1997, 280 SCRA 297, 327.37 Ibid. 38 Pabu-aya v. Court of Appeals, G.R. No. 128082, 18 April 2001, 356 SCRA 651.39 Constantino-David v. Pangandaman-Gania, G.R. No. 156039, 14 August 2003, 409 SCRA 80; Civil ServiceLaw, Sections. 1 and 12.
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SECOND DIVISION

[G.R. No. 132684. September 11, 2002

HERNANI N. FABIA , Petitioner , v. COURT OF APPEALS, DEPARTMENT OF JUSTICE,

OFFICE OF THE CITY PROSECUTOR OF MANILA, RTC-Br. 22, MANILA and THEMARITIME TRAINING CENTER OF THE PHILIPPINES (MTCP), Respondents.

R E S O L U T I O N

BELLOSILLO, J .:

This resolves the 9 October 2001 Motion for Clarification of Judgment filed by private respondentwhich seeks the elucidation of the 20 August 2001 Decision of this Court by praying that theRegional Trial Court of Manila that will hear Crim. Case No. 98-162570 be directed to arraign

petitioner, try the case and render judgment thereon as the facts may warrant.

It will be recalled that in the subject Decision of 20 August 2001 this Court reversed and set aside theDecision of the Court of Appeals of 12 November 1997 as well as its Resolution of 9 February 1998,this Court holding that Crim. Case No. 98-162570 involves an intra-corporate dispute over which theSecurities and Exchange Commission (SEC) has jurisdiction and not the regular courts. Cognizanthowever that The Securities Regulation Code (RA 8799) amending PD 902-A has effectively vestedupon the Regional Trial Courts jurisdiction over all cases formerly cognizable by the SEC, this Courtordered that Crim. Case No. 98-162570 be transferred to the appropriate branch of the Regional TrialCourt of Manila tasked to handle intra-corporate matters pursuant to A.M. No. 00-11-3-SC.

As the motion for clarification in effect urges the reversal of the questioned Decision of the Court of Appeals, this Court in its Resolution of 12 November 2001 resolved to treat the motion of privaterespondent MTCP as a motion for reconsideration and required petitioner to file his commentthereon.

In his Comment petitioner Fabia prays for the denial of MTCPs motion, arguing that it does notassign any error on the findings and conclusions of law made by this Court as it in fact even acceptedthe ratio decidendi behind the resolution of the case. Petitioner likewise insists that there is noambiguity in the Decision as it clearly mandates the dismissal of the criminal case for estafa filedagainst him after a finding that the matter involved an intra-corporate dispute within the jurisdictionof the SEC.

In its Reply private respondent MTCP stresses that Crim. Case No. 98-162570 remains to be acriminal proceeding and may not be converted into an administrative action. It reasons that thesubstance of the assailed Decision of the Court of Appeals that there is probable cause to indict

petitioner for the crime of estafa was after all not reversed by the Decision of this Court of 20 August2001 as only the procedural aspect was modified.

In its Resolution of 17 April 2002 this Court set the case for oral argument on 16 June 2002 duringwhich the principal issue was defined and discussed: Whether the prosecution for violation of PD902-A as amended by RA 8799 is without prejudice to any liability for violation of The RevisedPenal Code.


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Petitioner Fabia argues that there is no ambiguity in the Decision as it clearly mandates the dismissalof the criminal case filed before the RTC of Manila upon the Court's finding that the matter involvesan intra-corporate dispute within the jurisdiction of the SEC, and not of the regular courts. Petitioner concedes that the dismissal of the criminal action is without prejudice to the filing of an intra-corporate/civil case for violation of PD 902-A as amended by RA 8799 before the RTC which

currently exercises jurisdiction over corporate matters. However, invoking the doctrine of primary jurisdiction, petitioner reasons that his corporate/civil prosecution must first be resolved before thecriminal action could be filed. Citing Saavedra v. Securities and Exchange Commission, 1 petitioner argues that under the doctrine of primary jurisdiction the public prosecutor in the instant case has noauthority to rule in a preliminary investigation on a criminal charge arising from an intra-corporatedispute absent prior resolution of the SEC on the matter. Petitioner notes that Saavedra does notdeprive the public prosecutors of their jurisdiction to determine the propriety of filing criminal cases,

but merely calls for a deferment of the exercise of such criminal jurisdiction pending prior determination by the pertinent administrative agency of the issues involved in the case. Petitioner contends that a violation of the doctrine of primary jurisdiction is jurisdictional in nature and is notrendered moot by RA 8799.

Petitioner also avers that RA 8799 is not a curative statute and hence cannot apply retroactively. Heexplains that curative statutes are intended to retroactively apply to cases pending before their enactment to supply defects, abridge superfluities in the existing law and curb certain evils, or tocorrect a situation involving conflicting jurisdictions - curative effects which are not evident under RA 8799 as the legislative intent on the transfer of jurisdiction over SEC cases to the regular courtsis merely to enable the SEC to concentrate more on its regulatory functions.

Petitioner stresses that prior to RA 8799 it was the SEC which had primary jurisdiction over theinstant controversy as the governing law then was PD 902-A. He argues that a subsequent law cannotapply retroactively so as to confer jurisdiction upon the city prosecutor and/or regular courts torender a decision which under the law applicable at the time of the rendition of the decision wasclearly outside the competence of the prosecutor or the courts. He clarifies that RA 8799 hasretroactive application only insofar as it applies to cases pending before the SEC and have not yet

been submitted for resolution upon its effectivity.

Respondent MTCP does not agree. It maintains that Crim. Case No. 98-162570 subsists, andsimultaneously with it, a civil case may be filed for violation of RA 8799. It argues that petitioner is

being prosecuted for fraud defined and penalized under The Revised Penal Code which is not a lawadministered by the SEC; hence, the SEC has no jurisdiction over the criminal case as it lies with theregular courts. It contends however that a civil/intra-corporate case may be filed and prosecuted

simultaneously with the criminal case. It argues that the doctrine of primary jurisdiction does notapply as there is no controversy between petitioner and private respondent pending before the SECor any administrative agency since it filed a criminal complaint.

Respondent further claims that RA 8799 rendered the doctrine of primary jurisdiction moot andacademic since the rationale behind the prior referral of intra-corporate controversies to the then SEC

before the public prosecutor could act on them for purposes of criminal prosecution, i.e., to implorethe special knowledge, experience and services of the administrative agency to ascertain technicaland intricate matters, no longer stands since the newly enacted law recognizes that the regular courtsnow have the legal competence to decide intra-corporate disputes. Respondent also argues thatSaavedra is not applicable since it involved a pure and simple intra-corporate controversy, i.e., the

ownership of stocks in a corporation, which is far different from the criminal nature of the instantcase.


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MTCP likewise claims that RA 8799 has rendered moot and academic the issue of jurisdiction. Itargues that when a case is filed with the court which originally has no jurisdiction over the case butin the meantime a law is passed vesting that court with jurisdiction to try the case, the jurisdiction of that court will be sustained on the theory that the enabling law is curative in nature and therefore hasretroactive effect. It notes that before the jurisdictional issue on the authority of the Office of the

Public Prosecutor of Manila to conduct a preliminary investigation of what was claimed to be anintra-corporate controversy was resolved with finality, the criminal case had already been filed withthe RTC and, in the meantime, RA 8799 was enacted transferring the intra-corporate jurisdiction of the SEC to the RTC. There is thus no cogent reason to divest the RTC of jurisdiction that it hasalready acquired over the case.

Section 5 of PD 902-A pertinently provides that the SEC shall have jurisdiction to hear and decidecases involving (a) devices or schemes employed by, or any acts of, the board of directors, businessassociates, its officers or partners, amounting to fraud and misrepresentation which may bedetrimental to the interest of the public and/or of the stockholders, partners, members of associationsor organizations registered with the Commission, and (b) controversies arising out of intra-corporateor partnership relations, between and among stockholders, members or associates; between any or allof them and the corporation, partnership or association of which they are stockholders, members or associates, respectively.

In synthesis, Sec. 5 of PD 902-A mandates that cases involving fraudulent actions and devices whichare detrimental to the interest of stockholders, members or associates and directors of the corporationare within the original and exclusive jurisdiction of the SEC. Taken in conjunction with Sec. 6 of thesame law, it will be gathered that the fraudulent acts/schemes which the SEC shall exclusivelyinvestigate and prosecute are those "in violation of any law or rules and regulations administered andenforced by the Commission" alone. This investigative and prosecutorial powers of the SEC arefurther "without prejudice to any liability for violation of any provision of The Revised Penal Code."

From the foregoing, it can thus be concluded that the filing of the civil/intra-corporate case beforethe SEC does not preclude the simultaneous and concomitant filing of a criminal action before theregular courts; such that, a fraudulent act may give rise to liability for violation of the rules andregulations of the SEC cognizable by the SEC itself, as well as criminal liability for violation of theRevised Penal Code cognizable by the regular courts, both charges to be filed and proceededindependently, and may be simultaneously, with the other.

It can be discerned from the affidavit-complaint of MTCP President Exequiel B. Tamayo that hesufficiently alleged acts sufficient to constitute the crime of estafa as well as to give rise to a

prosecution for violation of PD 902-A. The affidavit-complaint alleged that petitioner Fabia failed toliquidate his cash advances amounting to P1,291,376.61. These cash advances were drawn by petitioner in his capacity as then president of the corporation and include those which were taken purportedly for the purpose of buying office equipment and appliances which petitioner however failed to deliver despite demands as he apparently had converted or misappropriated it to his own useand benefit to the prejudice and damage of respondent MTCP.

These incidents are cognizable not only by the then intra-corporate jurisdiction of the SEC but couldalso very well fall within the criminal jurisdiction of the regular courts. The acts charged may be inthe nature of an intra-corporate dispute as they involve fraud committed by virtue of the officeassumed by petitioner as President, Director and stockholder in MTCP, and committed against the

MTCP corporation, and therefore violative of SEC rules and regulations. An intra-corporatecontroversy involves fraudulent actions and devices which are detrimental to the interest of


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stockholders, directors and the corporation. It is one which arises between stockholders and thecorporation. In Abejo v. de la Cruz, 2 the Court held that there is no distinction, qualification nor anyexemption whatsoever, as the provision is broad and covers all kinds of controversies betweenstockholders and corporations. The alleged failure of petitioner to liquidate and settle his cashadvances with respondent MTCP despite demand qualifies as one such controversy.

In the same vein, the alleged fraudulent acts constitute the elements of abuse of confidence, deceit or fraudulent means, and damage under Art. 315 of The Revised Penal Code on estafa. In this case, therelationship of the party-litigants with each other or the position held by petitioner as a corporateofficer in respondent MTCP during the time he committed the crime becomes merely incidental andholds no bearing on jurisdiction. What is essential is that the fraudulent acts are likewise of acriminal nature and hence cognizable by the regular courts.

Be that as it may, petitioner argues that a charge of estafa against him cannot prosper. He insists thatno finding of probable cause may be made against him during a preliminary investigation as aquestion of accounting still exists between him and private respondent. Respondent MTCP believesotherwise.

We hold for respondent. Probable cause has been defined as the existence of such facts andcircumstances as would excite the belief, in a reasonable mind, acting on the facts within theknowledge of the prosecutor, that the person charged was guilty of the crime for which he was

prosecuted. 3 It has been explained as a reasonable presumption that a matter is, or may be, wellfounded, such a state of facts in the mind of the prosecutor as would lead a person of ordinarycaution and prudence to believe, or entertain an honest or strong suspicion, that a thing is so. Theterm does not mean "actual and positive cause" nor does it import absolute certainty. It is merely

based on opinion and reasonable belief. Thus a finding of probable cause does not require an inquiryinto whether there is sufficient evidence to procure a conviction. It is enough that it is believed thatthe act or omission complained of constitutes the offense charged, as there is a trial for the receptionof evidence of the prosecution in support of the charge. 4

Respondent MTCP through its President Exequiel B. Tamayo alleges that petitioner Fabia, as then president of the corporation, drew cash advances from the corporation in huge amounts which hefailed to liquidate despite demand. Respondent also claims that certain cash vouchers show that cashwas received by petitioner for the purpose of procuring office equipment and materials which uponinventory however failed to materialize. These accusations infer that the acquisitions were facilitatedthrough the office or position occupied by petitioner and as a consequence of which respondent wasin dire straits to pay its loan of P850,000.00 owing to the Bank of the Philippine Islands (BPI) -

circumstances which make up the elements of abuse of confidence and damages and give rise to the presumption or reasonable belief that the offense of estafa has been committed and thus the filing of an Information against petitioner is warranted.

Petitioner disagrees and contends that a proper accounting of the amount owing from him shouldfirst be conducted before probable cause for estafa can be established since a discrepancy of theamounts allegedly owed by him exists, i.e., the Information for estafa declares a balance of P1,291,376.61 while the audit report of MTCP's external auditor and its Treasurer's report declare theamounts of P1,333,699.89 and P766,135.05 respectively.

Prior accounting is not an element of the offense and hence its absence would not preclude the

finding of probable cause for estafa against petitioner. In fact, accounting does not seem to beinexistent in this case, as the records show that it has been conducted on two (2) occasions by two (2)


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separate entities - the auditing firm of Mendoza Ignacio Corvera and Company, and MTCP's ownTreasurer, only that petitioner deems it defective due to the divergent amounts computed by the two(2) entities as allegedly owed by him.

In his Reply-Affidavit petitioner admits that the auditing firm of Mendoza Ignacio Corvera and

Company determined his accountability to MTCP to be P1,291,376.61 but alleges that he was notfurnished copy of the audit report thus he doubts that it was ever conducted. MTCP on the other handclaims that petitioner was notified thereof through an audit report, a copy of which petitioner himself had attached in his Comment dated 15 May 1998 and his Petition before the Court of Appeals dated2 May 1997. Given that the defense mounted by the petitioner calls for an inquiry into theauthenticity of the documents he relies upon, a judicial determination, not a preliminaryinvestigation, would be the proper occasion to ferret out the truth.

Petitioner's reliance on Perez v. People, 5 U.S. v. Camara, 6 and U.S. v. Berbari 7 which held that therecan be no estafa where a previous settlement of an account is necessary to determine the balanceowing the offended party is misplaced. As correctly discerned by the Department of Justice, the

present case involves a determination of probable cause, while the Perez, Camara and Berbari casesdelved into an inquiry on guilt beyond reasonable doubt. Therein, the accused had all undergone trialand were found guilty of the offense charged but were acquitted on appeal for lack of proof beyondreasonable doubt. In the present case, the only issue is whether or not there is probable cause towarrant the filing of the Information for estafa, which issue is resolved in the affirmative.

Concededly, the proper case in point is Cruz v. People 8 where the president of the corporation waslikewise charged with estafa through falsification of public documents for fraud he committedagainst the corporation. During preliminary investigation, the president invoked the defense that thecash advances were loans to him that he had already paid - the same line of defense herein petitioner Fabia is pursuing. In that case, the Court ruled that such a defense does not defeat probable cause andsuch is best ventilated in the trial court. Thus, petitioner's defense of accounting does not ipso factoclear him of prima facie guilt. Being a matter of defense, its validity needs to be tested in the crucibleof a full-blown trial.

In that connection, petitioner in his Reply-Affidavit vehemently disclaimed any liability for theamount demanded from him as he had already fully liquidated his cash advances and averred that thecomplaint was instigated by those who would like to discredit him and tarnish his name, and hadattached copies of vouchers and checks to prove his innocence. The presence or absence of theelements of the crime are evidentiary in nature and are matters of defense, the truth of which can best

be passed upon after a full-blown trial on the merits. Litigation will prove petitioner's innocence if

his defense be true.

The criminal case for estafa currently pending before the RTC can then independently andsimultaneously proceed with a civil/intra-corporate case to be filed with the Regional Trial Courtvested with special jurisdiction pursuant to The Securities Regulation Code (RA 8799). With RA8799 signed into law on 19 July 2000, which effectively amended Sec. 5 of PD 902-A, jurisdictionover intra-corporate disputes is now vested in the Regional Trial Courts designated by this Court

pursuant to A.M. No. 00-11-03-SC promulgated on 21 November 2000. However, while Sec. 5 of PD No. 902-A was amended by Sec. 5.2 of RA 8799, there is no repeal of Sec. 6 thereof declaringthat prosecution under the Decree, or any Act, law, rules and regulations enforced and administered

by the SEC shall be without prejudice to any liability for violation of any provision of The Revised

Penal Code.


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Moreover, as pointed out by the Department of Justice, Sec. 54 on Administrative Sanctions found inRA 8799 itself provides that the imposition of the sanctions shall be without prejudice to the filing of criminal charges against the individuals responsible for the violation.

From the foregoing, it could be concluded that the fraudulent devices, schemes or representations

which, originally, the Prosecution and Enforcement Department of the SEC would exclusivelyinvestigate and prosecute, are those in violation of any law or rules and regulations administered andenforced by the SEC and shall be without prejudice to any liability for violation of any provision of The Revised Penal Code. Hence, if the fraudulent act is punished under The Revised Penal Code,like estafa under Art. 315, the responsible person may be criminally prosecuted before the regular courts in addition to proceedings before the branches of the RTC designated by this Court to try anddecide intra-corporate controversies.

Therefore, since the alleged fraudulent acts committed by petitioner pertaining to the non-liquidationof his cash advances amounting to P1,291,376.61 constitute the offense of estafa under Art. 315 of The Revised Penal Code, the criminal case may be prosecuted independently and simultaneouslywith the corporate/civil case that may be filed for violation of Sec. 5 of PD 902-A, as amended byRA 8799.

In light of the amendment brought about by RA 8799, the doctrine of primary jurisdiction no longer precludes the simultaneous filing of the criminal case with the corporate/civil case.

In cases involving specialized disputes, the practice has been to refer the same to an administrativeagency of special competence in observance of the doctrine of primary jurisdiction. The Court hasratiocinated that it cannot or will not determine a controversy involving a question which is withinthe jurisdiction of the administrative tribunal prior to the resolution of that question by theadministrative tribunal, where the question demands the exercise of sound administrative discretionrequiring the special knowledge, experience and services of the administrative tribunal to determinetechnical and intricate matters of fact, and a uniformity of ruling is essential to comply with the

premises of the regulatory statute administered. 9 The objective of the doctrine of primary jurisdictionis to guide a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising inthe proceeding before the court. 10 It applies where claim is originally cognizable in the courts andcomes into play whenever enforcement of the claim requires the resolution of issues which, under aregulatory scheme, has been placed within the special competence of an administrative body; in suchcase, the judicial process is suspended pending referral of such issues to the administrative body for its view. 11

However, as correctly observed by respondent MTCP, the rationale behind the prior referral of intra-corporate controversies to the SEC before the public prosecutor could act on them for purposes of criminal prosecution loses significance since the newly enacted law recognizes that the speciallydesignated RTC branches now have the legal competence to decide intra-corporate disputes.

To support its contention, petitioner cites the landmark case of Saavedra. However, the doctrine of primary jurisdiction prevailed therein because the dispute comprehends a pure and simple intra-corporate controversy involving the ownership of stocks of the corporation arising between andamong the principal stockholders, while the instant case involves non-liquidation of corporate funds

by a corporate officer as he had allegedly misappropriated the same for his own use and benefit. It

was the SEC's authority to issue a temporary restraining order enjoining the petitioners therein fromdisposing of the company assets that was being challenged, not that of the regular courts, and it was


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upheld as it was clear that the SEC had properly acquired jurisdiction over the subject matter. Resortto the doctrine of primary jurisdiction was essential as the matter of sales of stocks of thecorporation, and thus its ownership, necessitates the expertise and competence of the SEC. It is notso in the instant case, as the liability of petitioner for the alleged fraudulent acts is the issue under contention.

WHEREFORE, the Decision of this Court of 20 August 2001 is modified as follows: The Decisionof the Court of Appeals of 12 November 1997 annulling and setting aside the Resolution of theDepartment of Justice of 2 December 1996 and accordingly directing the filing of an Information for estafa against petitioner Hernani N. Fabia in Crim. Case No. 98-162570, "People of the Philippinesv. Hernani N. Fabia," is AFFIRMED. The Regional Trial Court, Branch 22, Manila, to which thiscriminal case was previously raffled and assigned, or any branch of the court to which the case may

properly be assigned, is directed to immediately arraign petitioner Hernani N. Fabia and try his caseuntil decided and terminated. No costs.

SO ORDERED.

M endoza, Quisumbing, Au stri a-M artinez, and Callejo, Sr., JJ., concur.

Endnotes:

1 G.R. No. 80879, 21 March 1988, 159 SCRA 57.2 G.R. Nos. 63558 & 68450-51, 19 May 1987, 149 SCRA 654.3 Pilapil v . Sandiganbayan, G.R. No. 101978, 7 April 1993, 221 SCRA 349, citing Buchanan v . Vda de Esteban,32 Phil. 365 (1915).4 Ibid. 5 No. L-43548, 29 June 1981, 105 SCRA 183.6 28 Phil. 238 (1914)7 42 Phil 152 (1921)8 G.R. No. 110436, 27 June 1994, 233 SCRA 439.9 Saavedra v . SEC, citing Pambujan Sur United Mine Workers v. Samar Mining Co. Inc., 94 Phil 932 (1954)10 Quintos ,Jr. v . National Stud Farm, No. L-37052, 29 November 1973, 54 SCRA 210.11 Industrial Enterprise v. Court of Appeals, G.R. No. 88550, 18 April 1990, 184 SCRA 426, citing United Statesv. Western Pacific Railroad Co., 352 US 59.


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FIRST DIVISION

[G.R. No.148004 : January 22, 2007]

VINCENT E. OMICTIN, Petitioner , v. HON. COURT OF APPEALS (Special TwelfthDivision) and GEORGE I. LAGOS, Respondents .

D E C I S I O N

AZCUNA, J. :

This is a petition for certiorari 1 with prayer for a writ of preliminary injunction seeking thenullification of the decision rendered by the Court of Appeals (CA) on June 30, 2000, and itsresolution, dated March 5, 2001 in CA-G.R. SP No. 55834 entitled "George I. Lagos v. Hon. ReinatoG. Quilala, Presiding Judge of RTC, Br. 57, Makati, Hon. Elizabeth Tayo Chua, Asst. CityProsecutor, Makati City, and Vincent E. Omictin."

In its assailed decision, the CA declared the existence of a prejudicial question and ordered thesuspension of the criminal proceedings initiated by petitioner Vincent E. Omictin on behalf of SaagPhils., Inc. against private respondent George I. Lagos, in view of a pending case before theSecurities and Exchange Commission (SEC) filed by the latter against the former, Saag Pte. (S) Ltd.,

Nicholas Ng, Janifer Yeo and Alex Y. Tan.

The facts are as follows:

Petitioner Vincent E. Omictin, Operations Manager Ad Interim of Saag Phils., Inc., filed a complaintfor two counts of estafa with the Office of the City Prosecutor of Makati against private respondentGeorge I. Lagos. He alleged that private respondent, despite repeated demands, refused to return thetwo company vehicles entrusted to him when he was still the president of Saag Phils., Inc..

On February 26, 1999, public prosecutor Alex G. Bagaoisan recommended the indictment of privaterespondent, and on the same day, respondent was charged with the crime of estafa under Article 315,

par. 1(b) of the Revised Penal Code before the Regional Trial Court (RTC), Branch 57 of MakatiCity. The case was docketed as Criminal Case No. 99-633, entitled "People of the Philippines v.

George I. Lagos."

On June 4, 1999, private respondent filed a motion to recuse praying that Presiding Judge Reinato G.Quilala inhibit himself from hearing the case based on the following grounds:

a) In an order, dated May 28, 1999, the presiding judge summarily denied respondent's motion: 1) todefer issuance of the warrant of arrest; and 2) to order reinvestigation.

b) Immediately before the issuance of the above-mentioned order, the presiding judge and Atty. AlexY. Tan, SAAG Philippines, Inc.'s Ad Interim President, were seen together .2
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On June 24, 1999, private respondent filed a motion to suspend proceedings on the basis of a prejudicial question because of a pending petition with the Securities and Exchange Commission(SEC) involving the same parties.

It appears that on January 7, 1999, private respondent filed SEC Case No. 01-99-6185 for thedeclaration of nullity of the respective appointments of Alex Y. Tan and petitioner as President AdInterim and Operations Manager Ad Interim of Saag Phils., Inc., declaration of dividends, recoveryof share in the profits, involuntary dissolution and the appointment of a receiver, recovery of damages and an application for a temporary restraining order (TRO) and injunction against Saag (S)Pte. Ltd., Nicholas Ng, Janifer Yeo, Tan and petitioner .3

In the action before the SEC, private respondent averred that Saag (S) Pte. Ltd. is a foreigncorporation organized and existing under the laws of Singapore, and is fully owned by SaagCorporation (Bhd). On July 1, 1994, he was appointed as Area Sales Manager in the Philippines byThiang Shiang Hiang, Manager of Saag (S) Pte. Ltd. Pursuant to his appointment, respondent wasauthorized to organize a local joint venture corporation to be known as Saag Philippines, Inc. for thewholesale trade and service of industrial products for oil, gas and power industries in the Philippines.

On September 9, 1994, Saag Philippines, Inc. was incorporated with Saag (S) Pte. Ltd. as themajority stockholder. Private respondent was appointed to the board of directors, along with RommelI. Lagos, Jose E. Geronimo, Gan Ching Lai and Thiang Shiang Hiang, and was elected president of the domestic corporation.

Later, due to intra-corporate disputes, Gan and Thiang resigned and divested their shares in SaagCorporation (Bhd), thereby resulting in a change in the controlling interest in Saag (S) Pte. Ltd.

Barely three months after, or on June 23, 1998, private respondent resigned his post as president of Saag Phils., Inc. while still retaining his position as a director of the company .4 According to privaterespondent, the joint venture agreement (JVA) between him or Saag Phils., Inc. and Saag (S) Pte.Ltd. provided that should the controlling interest in the latter company, or its parent company SaagCorp. (Bhd), be acquired by any other person or entity without his prior consent, he has the optioneither to require the other stockholders to purchase his shares or to terminate the JVA and dissolveSaag Phils., Inc. altogether. Thus, pursuant to this provision, since private respondent did not give hisconsent as regards the transfer of shares made by Gan and Thiang, he made several requests to

Nicholas Ng, who replaced Gan as director, and Janifer Yeo, Executive Director of Saag (S) Pte.Ltd., to call for a board meeting in order to discuss the following: a) implementation of the board

resolution declaring dividends; b) acquisition of private respondent's shares by Saag (S) Pte. Ltd.; c)dissolution of Saag Phils., Inc.; and d) the termination of the JVA.

Ng and Yeo failed to appear, however, in the scheduled board meetings. Instead, on September 30,1998 they issued a letter appointing Alex Y. Tan as President Ad Interim of Saag Phils., Inc. Tan, inturn, appointed petitioner Omictin as the company's Operations Manager Ad Interim.

Citing as a reason the absence of a board resolution authorizing the continued operations of SaagPhils., Inc., private respondent retained his possession of the office equipment of the company in afiduciary capacity as director of the corporation pending its dissolution and/or the resolution of theintra-corporate dispute. He likewise changed the locks of the offices of the company allegedly to

prevent Tan and petitioner from seizing company property.


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Private respondent stressed that Tan's appointment was invalid because it was in derogation of thecompany by-laws requiring that the president must be chosen from among the directors, and elected

by the affirmative vote of a majority of all the members of the board of directors .5 As Tan'sappointment did not have the acquiescence of the board of directors, petitioner's appointment by the

former is likewise allegedly invalid. Thus, neither has the power or the authority to represent or actfor Saag Phils., Inc. in any transaction or action before the SEC or any court of justice.

The trial court, in an order dated September 8, 1999, denied respondent's motion to suspend proceedings and motion to recuse.

His motion for reconsideration having been denied by the trial court in its order issued on October 29, 1999, respondent filed with the CA the Petition for Certiorar i[6] assailing the aforesaid orders.

On June 30, 2000, the CA rendered its challenged decision. The pertinent portion reads:

In a case for estafa, a valid demand made by an offended party is one of the essential elements. Itappears from the records that the delay of delivery of the motor vehicles by petitioner to SaagCorporation is by reason of petitioner's contention that the demand made by Omictin and Atty. Tanto him to return the subject vehicles is not a valid demand. As earlier mentioned, petitioner filed acase with the SEC questioning therein private respondents' appointment.

If the SEC should rule that the dissolution of Saag Phils. is proper, or that the appointments of private respondents are invalid, the criminal case will eventually be dismissed due to the absence of one of the essential elements of the crime of estafa.

Based on the foregoing, it is clear that a prejudicial question exists which calls for the suspension of the criminal proceedings before the lower court.

WHEREFORE, in view of the foregoing, the assailed Order of September 8, 1999 and October 29,1999, are hereby MODIFIED. The motion to suspend proceedings is hereby GRANTED andrespondent court is hereby enjoined from hearing Criminal Case No. 99-633, entitled "People of thePhilippines v. George I. Lagos," until the termination of the case with the Securities and ExchangeCommission. The denial of the motion to recuse is hereby AFFIRMED.

SO ORDERED .7

Incidentally, on January 18, 2001, the SEC cas e8

was transferred to the Regional Trial Court (RTC)of Mandaluyong City, Branch 214, pursuant to A.M. No. 00-11-03-SC 9 implementing the Securitiesand Regulation Code (Republic Act No. 8799 )10 enacted on July 19, 2000, vesting in the RTCs

jurisdiction over intra-corporate disputes .11

Meanwhile, on March 5, 2001, the CA, addressing petitioner's motion for reconsideration of theaforementioned decision, issued its assailed resolution:

Considering that the Petition for Review on Certiorari of the 30 June 2000 decision of this Court,filed by the Office of the Solicitor General before the Supreme Court has already TERMINATED on

November 20, 2000 and a corresponding entry of judgment has already been issued by the High

Court, that the same is final and executory, the private respondent's motion for reconsideration of thedecision 30 June 2000 before this Court is NOTED for being moot and academic.
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SO ORDERED .12

Hence, this petition raises the following issues:

I

RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETIONAMOUNTING TO LACK OF JURISDICTION -

A) WHEN IT DECREED THAT A PREJUDICIAL QUESTION EXISTS IN THE SEC CASEFILED BY PRIVATE RESPONDENT AGAINST SAAG (S) PTE. LTD., A FOREIGNCORPORATION, ALTHOUGH THE PRIVATE COMPLAINANT IN THE CRIMINAL CASEFOR ESTAFA (WHERE PRIVATE RESPONDENT IS THE ACCUSED THEREIN) ISACTUALLY SAAG PHILIPPINES, INC. A DOMESTIC CORPORATION WITH A SEPARATEJURIDICAL PERSONALITY OF ITS OWN AND WHICH IS NOT EVEN A PARTY IN THESEC CASE; AND,

B) WHEN IT ORDERED THE SUSPENSION OF THE PROCEEDINGS IN CRIMINAL CASE NO. 99-633 AGAINST PRIVATE RESPONDENT.

II

THIS PETITION FOR CERTIORARI IS THE ONLY PLAIN, SPEEDY AND ADEQUATEREMEDY IN THE PREMISES.

In support of the above, petitioner argues, as follows:

1. The action before the SEC and the criminal case before the trial court do not involve any prejudicial question .13 SEC Case No. 01-99-6185 mainly involves the dissolution of Saag (S) Pte.Ltd., the appointment of a receiver, the distribution of profits, and the authority of petitioner and Tanto represent Saag Phils., Inc. The entity which is being sued is Saag (S) Pte. Ltd., a foreigncorporation over which the SEC has yet to acquire jurisdiction. Hence, any decision that may berendered in the SEC case will neither be determinative of the innocence or guilt of the accused nor

bind Saag Phils., Inc. because the same was not made a party to the action even if the former is itsholding corporation;

2. Saag Phils., Inc. has a separate corporate existence and is to be treated as a separate entity from itsholding or parent company, Saag (S) Pte. Ltd. The mere fact that one or more corporations areowned or controlled by the same or single stockholder is not a sufficient ground for disregardingseparate corporate personalities;

3. Private respondent's petition with the SEC seeks affirmative relief against Saag (S) Pte. Ltd. for the enforcement or application of the alleged terms of the joint venture agreement (JVA) that he

purportedly entered into with the foreign corporation while he was still its Area Sales Manager in thePhilippines. The foreign corporation is not licensed to do business in the Philippines, thus, a party toa contract with a foreign corporation doing business in the Philippines without a license is notentitled to relief from the latter; and cralawlibrary


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4. There is no pending civil or administrative case in SEC against Saag Phils., Inc. that warrants theapplication of a prejudicial question and the consequent suspension of the criminal action it hasinstituted against private respondent. If any, the action before the SEC was merely a ploy to delay theresolution of the criminal case and eventually frustrate the outcome of the estafa case.

In sum, the main issue is whether or not a prejudicial question exists to warrant the suspension of thecriminal proceedings pending the resolution of the intra-corporate controversy that was originallyfiled with the SEC.

A prejudicial question is defined as that which arises in a case, the resolution of which is a logicalantecedent of the issue involved therein and the cognizance of which pertains to another tribunal .14 Here, the case which was lodged originally before the SEC and which is now pending before theRTC of Mandaluyong City by virtue of Republic Act No. 8799 involves facts that are intimatelyrelated to those upon which the criminal prosecution is based.

Ultimately, the resolution of the issues raised in the intra-corporate dispute will determine the guilt or innocence of private respondent in the crime of estafa filed against him by petitioner before the RTCof Makati. As correctly stated by the CA, one of the elements of the crime of estafa with abuse of confidence under Article 315, par. 1(b) of the Revised Penal Code is a demand made by the offended

party to the offender:

The elements of estafa with abuse of confidence under subdivision No. 1, par. (b) of Art. 315 are asfollows:

1. That money, goods, or other personal property be received by the offender in trust, or oncommission, or for administration, or under any other obligation involving the duty to make deliveryof, or to return the same;

2. That there be misrepresentation or conversion of such money or property by the offender, or denialon his part of such receipt;

3. That such misappropriation or conversion or denial is to the prejudice of another; and cralawlibrary

4. That there is a demand made by the offended party to the offender .15

Logically, under the circumstances, since the alleged offended party is Saag Phils., Inc., the validity

of the demand for the delivery of the subject vehicles rests upon the authority of the person makingsuch a demand on the company's behalf. Private respondent is challenging petitioner's authority toact for Saag Phils., Inc. in the corporate case pending before the RTC of Mandaluyong, Branch 214.Taken in this light, if the supposed authority of petitioner is found to be defective, it is as if nodemand was ever made, hence, the prosecution for estafa cannot prosper. Moreover, the mere failureto return the thing received for safekeeping or on commission, or for administration, or under anyother obligation involving the duty to deliver or to return the same or deliver the value thereof to theowner could only give rise to a civil action and does not constitute the crime of estafa. This is

because the crime is committed by misappropriating or converting money or goods received by theoffender under a lawful transaction. As stated in the case of United States v. Bleibel :16

The crime of estafa is not committed by the failure to return the things received for sale oncommission, or to deliver their value, but, as this class of crime is defined by law, by
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misappropriating or converting the money or goods received on commission. Delay in the fulfillmentof a commission or in the delivery of the sum on such account received only involves civil liability.So long as the money that a person is under obligation to deliver is not demanded of him, and he failsto deliver it for having wrongfully disposed of it, there is no estafa , whatever be the cause of the

debt.

Likewise, by analogy, the doctrine of primary jurisdiction may be applied in this case. The issuesraised by petitioner particularly the status of Saag Phils., Inc. vis - -vis Saag (S) Pte. Ltd., as well asthe question regarding the supposed authority of the latter to make a demand on behalf of thecompany, are proper subjects for the determination of the tribunal hearing the intra-corporate casewhich in this case is the RTC of Mandaluyong, Branch 214. These issues would have been referredto the expertise of the SEC in accordance with the doctrine of primary jurisdiction had the case not

been transferred to the RTC of Mandaluyong.

Strictly speaking, the objective of the doctrine of primary jurisdiction is to guide a court indetermining whether it should refrain from exercising its jurisdiction until after an administrativeagency has determined some question or some aspect of some question arising in the proceeding

before the court .17 The court cannot or will not determine a controversy involving a question whichis within the jurisdiction of the administrative tribunal prior to resolving the same, where thequestion demands the exercise of sound administrative discretion requiring special knowledge,experience and services in determining technical and intricate matters of fact .18

While the above doctrine refers specifically to an administrative tribunal, the Court believes that thecircumstances in the instant case do not proscribe the application of the doctrine, as the role of anadministrative tribunal such as the SEC in determining technical and intricate matters of specialcompetence has been taken on by specially designated RTCs by virtue of Republic Act No. 8799 .19 Hence, the RTC of Mandaluyong where the intra-corporate case is pending has the primary

jurisdiction to determine the issues under contention relating to the status of the domesticcorporation, Saag Phils., Inc., vis - -vis Saag Pte. Ltd.; and the authority of petitioner to act on

behalf of the domestic corporation, the determination of which will have a direct bearing on thecriminal case. The law recognizes that, in place of the SEC, the regular courts now have the legalcompetence to decide intra-corporate disputes .20

In view of the foregoing, the Court finds no substantial basis in petitioner's contention that the CAcommitted grave abuse of discretion amounting to lack or excess of jurisdiction. Absent a showing of a despotic, whimsical and arbitrary exercise of power by the CA, the petition must fail.

WHEREFORE, the petition is DISMISSED. The decision and resolution of the Court of Appeals inCA-G.R. SP No. 55834, dated June 30, 2000 and March 5, 2001, respectively, are AFFIRMED.

No costs.

SO ORDERED.

Endnotes :

1 Under Rule 65 of the Rules of Court.2

Rollo, p. 42.3 Id. at 51.
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