[G.R. No. 102342. July 3, 1992.]
— As it is THE INSTITUTION OF NECESSARY JUDICIAL
LUZ M. ZALDIVIA, Petitioner, v. HON. ANDRES B.
REYES, JR., in his capacity as Acting Presiding
Judge of the Regional Trial Court, Fourth Judicial
Region, Branch 76, San Mateo, Rizal, and PEOPLE
OF THE PHILIPPINES, Respondents.
Hector B. Almeyda for Petitioner.
SYLLABUS
1. REMEDIAL LAW; PRESCRIPTION; 1985
RULES ON CRIMINAL PROCEDURE;
PRESCRIPTIVE PERIOD DOES NOT APPLY TO
OFFENSES SUBJECT TO SUMMARY
PROCEDURE. — Section 1, Rule 110 of the 1985
Rules on Criminal Procedure meaningfully begins with
the phrase, "for offenses not subject to the rule on
summary procedure in special cases," which plainly
signifies that the section does not apply to offenses
which are subject to summary procedure. The phrase
"in all cases" appearing in the last paragraph
obviously refers to the cases covered by the Section,
that is, those offenses not governed by the Rule on
Summary Procedure. This interpretation conforms to
the canon that words in a statute should be read in
relation to and not isolation from the rest of the
measure, to discover the true legislative intent.
2. ID.; ID.; ID.; ID.; SECTION (B) REFERS TO
SECTION 32(2) OF BP NO. 129. — Where paragraph
(b) of the section does speak of "offenses falling
under the jurisdiction of the Municipal Trial Courts and
Municipal Circuit Trial Courts," the obvious reference
is to Section 32(2) of B.P. No. 129, vesting in such
courts: Exclusive original jurisdiction over all offenses
punishable with imprisonment of not exceeding four
years and two months, or a fine of not more than four
thousand pesos, or both such fine and imprisonment,
regardless of other imposable accessory or other
penalties, including the civil liability arising from such
offenses or predicated thereon, irrespective of kind,
nature, value, or amount thereof; Provided, however,
That in offenses involving damage to property through
criminal negligence they shall have exclusive original
jurisdiction where the imposable fine does not exceed
twenty thousand pesos. These offenses are not
covered by the Rule on Summary Procedure.
3. ID.; ID.; RULE ON SUMMARY
PROCEDURE; APPLIES TO VIOLATIONS OF
MUNICIPAL OR CITY ORDINANCES.
clearly provided in the Rule on Summary Procedure
that among the offenses it covers are violations of
municipal or city ordinances, it should follow that the
charge against the petitioner, which is for violation of
a municipal ordinance of Rodriguez, is governed by
that rule and not Section 1 of Rule 110.
4. ID.; ID.; ID.; PRESCRIPTIVE PERIOD
STARTS ONLY WHEN THE CASE IS ACTUALLY
FILED IN COURT. — Under Section 9 of the Rule on
Summary Procedure, "the complaint or information
shall be filed directly in court without need of a prior
preliminary examination or preliminary investigation."
Both parties agree that this provision does not prevent
the prosecutor from conducting a preliminary
investigation if he wants to. However, the case shall
be deemed commenced only when it is filed in court,
whether or not the prosecution decides to conduct a
preliminary investigation. This means that the running
of the prescriptive period shall be halted on the date
the case is actually filed in court and not on any date
before that.
5. ID.; ID.; ID.; ID.; INTERPRETATION IN
CONSONANCE WITH ACT NO. 3326. — This
interpretation is in consonance with Act No. 3326
which says that the period of prescription shall be
suspended "when proceedings are instituted against
the guilty party." The proceedings referred to in
Section 2 thereof are "judicial proceedings," contrary
to the submission of the Solicitor General that they
include administrative proceedings. His contention is
that we must not distinguish as the law does not
distinguish. As a matter of fact, it does.
6. ID.; ID.; ID.; SPECIAL LAW PREVAILS
OVER GENERAL LAW; PRESCRIPTION IN
CRIMINAL CASES IS A SUBSTANTIVE RIGHT. —
The Court feels that if there be a conflict between the
Rule on Summary Procedure and Section 1 of Rule
110 of the Rules on Criminal Procedure, the former
should prevail as the special law. And if there be a
conflict between Act No. 3326 and Rule 110 of the
Rules on Criminal Procedure, the latter must again
yield because this Court, in the exercise of its rule-
making power, is not allowed to "diminish, increase or
modify substantive rights" under Article VIII, Section
5(5) of the Constitution. Prescription in criminal cases
is a substantive right.
7. ID.; ID.; CRIME PRESCRIBES IF THE
PROSECUTOR DELAYS INTENTIONALLY OR NOT
PROCEEDINGS. — The Court realizes that under the
above interpretation, a crime may prescribe even if
the complaint is filed seasonably with the prosecutor’s
office if, intentionally or not, he delays the institution of
the necessary judicial proceedings until it is too late.
However, that possibility should not justify a
misreading of the applicable rules beyond their
obvious intent as reasonably deduced from their plain
language. The remedy is not a distortion of the
meaning of the rules but a rewording thereof to
prevent the problem here sought to be corrected.
DECISION
CRUZ, J.:
The Court is asked to determine the applicable law
specifying the prescriptive period for violations of
municipal ordinances.
The petitioner is charged with quarrying for
commercial purposes without a mayor’s permit in
violation of Ordinance No. 2, Series of 1988, of the
Municipality of Rodriguez, in the Province of
Rizal.chanrobles.com:cralaw:red
The offense was allegedly committed on May 11,
1990. 1 The referral-complaint of the police was
received by the Office of the Provincial Prosecutor of
Rizal on May 30, 1990. 2 The corresponding
information was filed with the Municipal Trial Court of
Rodriguez on October 2, 1990. 3
The petitioner moved to quash the information on the
ground that the crime had prescribed, but the motion
was denied. On appeal to the Regional Trial Court of
Rizal, the denial was sustained by the responded
judge. 4
In the present petition for review on certiorari, the
petitioner first argues that the charge against her is
governed by the following provisions of the Rule on
Summary Procedure:chanrob1es virtual 1aw library
SECTION 1. Scope. — This rule shall govern the
procedure in the Metropolitan Trial Courts, the
Municipal Trial Courts, and the Municipal Circuit Trial
Court in the following cases:chanrob1es virtual 1aw
library
x x x
B. Criminal Cases:chanrob1es virtual 1aw
library
1. Violations of traffic laws, rules and
regulations;
2. Violations of rental law;
3. Violations of municipal or city
ordinances;chanrobles.com.ph : virtual law library
4. All other criminal cases where the penalty
prescribed by law for the offense charged does not
exceed six months imprisonment, or a fine of one
thousand pesos (P1,000.00), or both, irrespective of
other impossible penalties, accessory or otherwise, or
of the civil liability arising therefrom. . . ." (Emphasis
supplied.)
x x x judge, the Solicitor General also invokes Section 1,
SECTION 9. How commenced. — The prosecution of
criminal cases falling within the scope of this Rule
shall be either by complaint or by information filed
directly in court without need of a prior preliminary
examination or preliminary investigation: Provided,
however, That in Metropolitan Manila and chartered
cities, such cases shall be commenced only by
information; Provided, further, That when the offense
cannot be prosecuted de officio, the corresponding
complaint shall be signed and sworn to before the
fiscal by the offended party.
She then invokes Act No. 3326, as amended, 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 Run," reading as follows:chanrob1es virtual
1aw library
SECTION 1. Violations penalized by special acts
shall, unless otherwise provided in such acts,
prescribe in accordance with the following rules: . . .
Violations penalized by municipal ordinances shall
prescribe after two months.
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.
SECTION 3. For the purposes of this Act, special acts
shall be acts defining and penalizing violations of law
not included in the Penal Code." (Emphasis supplied)
Her conclusion is that as the information was filed
way beyond the two-month statutory period from the
date of the alleged commission of the offense, the
charge against her should have been dismissed on
the ground prescription.
For its part, the prosecution contends that the
prescriptive period was suspended upon the filing of
the complaint against her with the Office of the
Provincial Prosecutor. Agreeing with the respondent
Rule 110 of the 1985 Rules on Criminal Procedure,
providing as follows:cralawnad
SECTION 1. How Instituted. — For offenses not
subject to the rule on summary procedure in special
cases, the institution of criminal action shall be as
follows:chanrob1es virtual 1aw library
a) For offenses falling under the jurisdiction of
the Regional Trial Court, by filing the complaint with
the appropriate officer for the purpose of conducting
the requisite preliminary investigation therein;
b) For offenses falling under the jurisdiction of
the Municipal Trial Courts and Municipal Circuit Trial
Courts, by filing the complaint directly with the said
courts, or a complaint with the fiscal’s office.
However, in Metropolitan Manila and other chartered
cities, the complaint may be filed only with the office
of the fiscal.
In all cases such institution interrupts the period of
prescription of the offense charged. (Emphasis
supplied.)
Emphasis is laid on the last paragraph. The
respondent maintains that the filing of the complaint
with the Officer of the Provincial Prosecutor comes
under the phrase "such institution" and that the
phrase "in all cases" applies to all cases, without
distinction, including those falling under the Rule on
Summary Procedure.
The said paragraph, according to the respondent, was
an adoption of the following dictum in Francisco v.
Court of Appeals: 5
In view of this diversity of precedents, and in order to
provide guidance for Bench and Bar, this Court has
re-examined the question and, after mature
consideration, has arrived at the conclusion that the
true doctrine is, and should be, the one established by
the decisions holding that the filing of the complaint in
the Municipal Court, even if it be merely for purposes
of preliminary examination or investigation, should,
and does, interrupt the period of prescription of the
criminal responsibility, even if the court where the
complaint or information is filed can not try the case
on its merits. Several reasons buttress this
conclusion: first, the text of Article 91 of the Revised
Penal Code, in declaring that the period of
prescription "shall be interrupted by the filing of the
complaint or information" without distinguishing
whether the complaint is filed in the court for
preliminary examination or investigation merely, or for
action on the merits. Second, even if the court where
the complaint or information is filed may only proceed
to investigate the case, its actuations already
represent the initial step of the proceedings against
the offender. Third, it is unjust to deprive the injured
party of the right to obtain vindication on account of
delays that are not under his control. All that the
victim of the offense may do on his part to initiate the
prosecution is to file the requisite complaint.
It is important to note that this decision was
promulgated on May 30, 1983, two months before the
promulgation of the Rule on Summary Procedure on
August 1, 1983. On the other hand, Section 1 of Rule
110 is new, having been incorporated therein with the
revision of the Rules on Criminal Procedure on
January 1, 1985, except for the last paragraph, which
was added on October 1, 1988.
That section meaningfully begins with the phrase, "for
offenses not subject to the rule on summary
procedure in special cases," which plainly signifies
that the section does not apply to offenses which are
subject to summary procedure. The phrase "in all
cases" appearing in the last paragraph obviously
refers to the cases covered by the Section, that is,
those offenses not governed by the Rule on Summary
Procedure. This interpretation conforms to the canon
that words in a statute should be read in relation to
and not isolation from the rest of the measure, to
discover the true legislative intent.chanrobles virtual
lawlibrary
As it is clearly provided in the Rule on Summary
Procedure that among the offenses it covers are
violations of municipal or city ordinances, it should
follow that the charge against the petitioner, which is
for violation of a municipal ordinance of Rodriguez, is
governed by that rule and not Section 1 of Rule 110.
Where paragraph (b) of the section does speak of
"offenses falling under the jurisdiction of the Municipal
Trial Courts and Municipal Circuit Trial Courts," the
obvious reference is to Section 32 (2) of B.P. No. 129,
vesting in such courts:chanrob1es virtual 1aw library
(2) Exclusive original jurisdiction over all
offenses punishable with imprisonment of not
exceeding four years and two months, or a fine of not
more than four thousand pesos, or both such fine and
imprisonment, regardless of other imposable
accessory or other penalties, including the civil liability
arising from such offenses or predicated thereon,
irrespective of kind, nature, value, or amount thereof;
Provided, however, That in offenses involving
damage to property through criminal negligence they
shall have exclusive original jurisdiction where the
imposable fine does not exceed twenty thousand
pesos.
These offenses are not covered by the Rules on
Summary Procedure.
Under Section 9 of the Rule on Summary Procedure,
"the complaint or information shall be filed directly in
court without need of a prior preliminary examination
or preliminary investigation." 6 Both parties agree that
this provision does not prevent the prosecutor from
conducting a preliminary investigation if he wants to.
However, the case shall be deemed commenced only
when it is filed in court, whether or not the prosecution
decides to conduct a preliminary investigation. This
means that the running of the prescriptive period shall
be halted on the date the case is actual filed in court
and not on any date before that.
This interpretation is in consonance with the afore-
quoted Act No. 3326 which says that the period of
prescription shall be suspended "when proceedings
are instituted against the guilty party." The
proceedings referred to in Section 2 thereof are
"judicial proceedings," contrary to the submission of
the Solicitor General that they include administrative
proceedings. His contention is that we must not
distinguish as the law does not distinguish. As a
matter of fact, it does.
At any rate, the Court feels that if there be a conflict
between the Rule on Summary Procedure and
Section 1 of Rule 110 of the Rules on Criminal
Procedure, the former should prevail as the special
law. And if there be a conflict between Act No. 3326
and Rule 110 of the Rules on Criminal Procedure, the
latter must again yield because this Court, in the
exercise of its rule-making power, is not allowed to
"diminish, increase or modify substantive rights" under
Article VIII, Section 5 (5) of the Constitution
Prescription in criminal cases is a substantive right. 7
Going back to the Francisco case, we find it not
irrelevant to observe that the decision would have
been conformable to Section 1, Rule 110, as the
offense involved was grave oral defamation
punishable under the Revised Penal Code with
arresto mayor in its maximum period to prision
correccional in its minimum period. By contrast, the
prosecution in the instant case is for violation of a
municipal ordinance, for which the penalty cannot
exceed six months, 8 and is thus covered by the Rule
on Summary Procedure.
The Court realizes that under the above
interpretation, a crime may prescribe even if the
complaint is filed seasonably with the prosecutor’s
office if, intentionally or not, he delays the institution of
the necessary judicial proceedings until it is too late.
However, that possibility should not justify a
misreading of the applicable rules beyond their
obvious intent as reasonably deduced from their plain
language. The remedy is not a distortion of the
meaning of the rules but a rewording thereof to
prevent the problem here sought to be
corrected.cralawnad
Our conclusion is that the prescriptive period for the
crime imputed to the petitioner commenced from its
alleged commission on May 11, 1990, and ended two
months thereafter, on July 11, 1990, in accordance
with Section 1 of Act No. 3326. It was not interrupted
by the filing of the complaint with the Office of the
Provincial Prosecutor on May 30, 1990, as this was
not a judicial proceeding. The judicial proceeding that
could have interrupted the period was the filing of the
information with the Municipal Trial Court of
Rodriguez, but this was done only on October 2,
1990, after the crime had already prescribed.
WHEREFORE, the petition is GRANTED, and the
challenged Order dated October 2, 1991 is SET
ASIDE. Criminal Case No. 90-089 in the Municipal
Trial Court of Rodriguez, Rizal, is hereby DISMISSED
on the ground of prescription. It is so ordered.
Narvasa, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla,
Bidin, Griño-Aquino, Medialdea, Regalado, Davide,
Jr., Romero, Nocon and Bellosillo, JJ., concur.
G.R. No. 167571 November 25, 2008
LUIS PANAGUITON, JR., petitioner
vs.
DEPARTMENT OF JUSTICE, RAMON C. TONGSON
and RODRIGO G. CAWILI, respondents.
DECISION
TINGA, J.:
This is a Petition for Review1 of the resolutions of the
Court of Appeals dated 29 October 2004 and 21
March 2005 in CA G.R. SP No. 87119, which
dismissed Luis Panaguiton, Jr.'s (petitioner's) petition
for certiorari and his subsequent motion for
reconsideration.2
The facts, as culled from the records, follow.
In 1992, Rodrigo Cawili (Cawili) borrowed various
sums of money amounting to P1,979,459.00 from
petitioner. On 8 January 1993, Cawili and his
business associate, Ramon C. Tongson (Tongson),
jointly issued in favor of petitioner three (3) checks in
payment of the said loans. Significantly, all three (3)
checks bore the signatures of both Cawili and
Tongson. Upon presentment for payment on 18
March 1993, the checks were dishonored, either for
insufficiency of funds or by the closure of the account.
Petitioner made formal demands to pay the amounts
of the checks upon Cawili on 23 May 1995 and upon
Tongson on 26 June 1995, but to no avail.3
On 24 August 1995, petitioner filed a complaint
against Cawili and Tongson4 for violating Batas
Pambansa Bilang 22 (B.P. Blg. 22)5 before the
Quezon City Prosecutor's Office. During the
preliminary investigation, only Tongson appeared and
filed his counter-affidavit.6 Tongson claimed that he
had been unjustly included as party-respondent in the
case since petitioner had lent money to Cawili in the
latter's personal capacity. Moreover, like petitioner, he
had lent various sums to Cawili and in appreciation of
his services, he was
offered to be an officer of Roma Oil Corporation. He
averred that he was not Cawili's business associate;
in fact, he himself had filed several criminal cases
against Cawili for violation of B.P. Blg. 22. Tongson
denied that he had issued the bounced checks and
pointed out that his signatures on the said checks had
been falsified.
To counter these allegations, petitioner presented
several documents showing Tongson's signatures,
which were purportedly the same as the those
appearing on the checks.7 He also showed a copy of
an affidavit of adverse claim wherein Tongson himself
had claimed to be Cawili's business associate.8
In a resolution dated 6 December 1995,9 City
Prosecutor III Eliodoro V. Lara found probable cause
only against Cawili and dismissed the charges against
Tongson. Petitioner filed a partial appeal before the
Department of Justice (DOJ) even while the case
against Cawili was filed before the proper court. In a
letter-resolution dated 11 July 1997,10 after finding
that it was possible for Tongson to co-sign the
bounced checks and that he had deliberately altered
his signature in the pleadings submitted during the
preliminary investigation, Chief State Prosecutor
Jovencito R. Zuño directed the City Prosecutor of
Quezon City to conduct a reinvestigation of the case
against Tongson and to refer the questioned
signatures to the National Bureau of Investigation
(NBI).
Tongson moved for the reconsideration of the
resolution, but his motion was denied for lack of merit.
On 15 March 1999, Assistant City Prosecutor Ma.
Lelibet S. Sampaga (ACP Sampaga) dismissed the
complaint against Tongson without referring the
matter to the NBI per the Chief State Prosecutor's
resolution. In her resolution,11 ACP Sampaga held
that the case had already prescribed pursuant to Act
No. 3326, as amended,12 which provides that
violations penalized by B.P. Blg. 22 shall prescribe
after four (4) years. In this case, the four (4)-year
period started on the date the checks were
dishonored, or on 20 January 1993 and 18 March
1993. The filing of the complaint before the Quezon
City Prosecutor on 24 August 1995 did not interrupt
the running of the prescriptive period, as the law
contemplates judicial, and not administrative
proceedings. Thus, considering that from 1993 to
1998, more than four (4) years had already elapsed
and no information had as yet been filed against
Tongson, the alleged violation of B.P. Blg. 22 imputed
to him had already prescribed.13 Moreover, ACP
Sampaga stated that the order of the Chief State
Prosecutor to refer the matter to the NBI could no
longer be sanctioned under Section 3, Rule 112 of the
Rules of Criminal Procedure because the initiative
should come from petitioner himself and not the
investigating prosecutor.14 Finally, ACP Sampaga
found that Tongson had no dealings with petitioner.15
Petitioner appealed to the DOJ. But the DOJ, through
Undersecretary Manuel A.J. Teehankee, dismissed
the same, stating that the offense had already
prescribed pursuant to Act No. 3326.16 Petitioner
filed a motion for reconsideration of the DOJ
resolution. On 3 April 2003,17 the DOJ, this time
through then Undersecretary Ma. Merceditas N.
Gutierrez, ruled in his favor and declared that the
offense had not prescribed and that the filing of the
complaint with the prosecutor's office interrupted the
running of the prescriptive period citing Ingco v.
Sandiganbayan.18 Thus, the Office of the City
Prosecutor of Quezon City was directed to file three
(3) separate informations against Tongson for
violation of B.P. Blg. 22.19 On 8 July 2003, the City
Prosecutor's Office filed an information20 charging
petitioner with three (3) counts of violation of B.P. Blg.
22.21
However, in a resolution dated 9 August 2004,22 the
DOJ, presumably acting on a motion for
reconsideration filed by Tongson, ruled that the
subject offense had already prescribed and ordered
"the withdrawal of the three (3) informations for
violation of B.P. Blg. 22" against Tongson. In justifying
its sudden turnabout, the DOJ explained that Act No.
3326 applies to violations of special acts that do not
provide for a prescriptive period for the offenses
thereunder. Since B.P. Blg. 22, as a special act, does
not provide for the prescription of the offense it
defines and punishes, Act No. 3326 applies to it, and
not Art. 90 of the Revised Penal Code which governs
the prescription of offenses penalized thereunder.23
The DOJ also cited the case of Zaldivia v. Reyes,
Jr.,24 wherein the Supreme Court ruled that the
proceedings referred to in Act No. 3326, as amended,
are judicial proceedings, and not the one before the
prosecutor's office.
Petitioner thus filed a petition for certiorari25 before
the Court of Appeals assailing the 9 August 2004
resolution of the DOJ. The petition was dismissed by
the Court of Appeals in view of petitioner's failure to
attach a proper verification and certification of non-
forum
shopping. The Court of Appeals also noted that the 3
April 2003 resolution of the DOJ attached to the
petition is a mere photocopy.26 Petitioner moved for
the reconsideration of the appellate court's resolution,
attaching to said motion an amended
Verification/Certification of Non-Forum Shopping.27
Still, the Court of Appeals denied petitioner's motion,
stating that subsequent compliance with the formal
requirements would not per se warrant a
reconsideration of its resolution. Besides, the Court of
Appeals added, the petition is patently without merit
and the questions raised therein are too unsubstantial
to require consideration.28
In the instant petition, petitioner claims that the Court
of Appeals committed grave error in dismissing his
petition on technical grounds and in ruling that the
petition before it was patently without merit and the
questions are too unsubstantial to require
consideration.
The DOJ, in its comment,29 states that the Court of
Appeals did not err in dismissing the petition for non-
compliance with the Rules of Court. It also reiterates
that the filing of a complaint with the Office of the City
Prosecutor of Quezon City does not interrupt the
running of the prescriptive period for violation of B.P.
Blg. 22. It argues that under B.P. Blg. 22, a special
law which does not provide for its own prescriptive
period, offenses prescribe in four (4) years in
accordance with Act No. 3326.
Cawili and Tongson submitted their comment, arguing
that the Court of Appeals did not err in dismissing the
petition for certiorari. They claim that the offense of
violation of B.P. Blg. 22 has already prescribed per
Act No. 3326. In addition, they claim that the long
delay, attributable to petitioner and the State, violated
their constitutional right to speedy disposition of
cases.30

The petition is meritorious.
First on the technical issues.
Petitioner submits that the verification attached to his
petition before the Court of Appeals substantially
complies with the rules, the verification being intended
simply to secure an assurance that the allegations in
the pleading are true and correct and not a product of
the imagination or a matter of speculation. He points
out that this Court has held in a number of cases that
a deficiency in the verification can be excused or
dispensed with, the defect being neither jurisdictional
nor always fatal. 31
Indeed, the verification is merely a formal requirement
intended to secure an assurance that matters which
are alleged are true and correct–the court may simply
order the correction of unverified pleadings or act on
them and waive strict compliance with the rules in
order that the ends of justice may be served,32 as in
the instant case. In the case at bar, we find that by
attaching the pertinent verification to his motion for
reconsideration, petitioner sufficiently complied with
the verification requirement.
Petitioner also submits that the Court of Appeals
erred in dismissing the petition on the ground that
there was failure to attach a certified true copy or
duplicate original of the 3 April 2003 resolution of the
DOJ. We agree. A plain reading of the petition before
the
Court of Appeals shows that it seeks the annulment of
the DOJ resolution dated 9 August 2004,33 a certified
true copy of which was attached as Annex "A."34
Obviously, the Court of Appeals committed a grievous
mistake.
Now, on the substantive aspects.
Petitioner assails the DOJ's reliance on Zaldivia v.
Reyes,35 a case involving the violation of a municipal
ordinance, in declaring that the prescriptive period is
tolled only upon filing of the information in court.
According to petitioner, what is applicable in this case
is Ingco v. Sandiganbayan,36 wherein this Court ruled
that the filing of the complaint with the fiscal's office
for preliminary investigation suspends the running of
the prescriptive period. Petitioner also notes that the
Ingco case similarly involved the violation of a special
law, Republic Act (R.A.) No. 3019, otherwise known
as the Anti-Graft and Corrupt Practices Act, petitioner
notes.37 He argues that sustaining the DOJ's and the
Court of Appeals' pronouncements would result in
grave injustice to him since the delays in the present
case were clearly beyond his control.38
There is no question that Act No. 3326, appropriately
entitled An Act to Establish Prescription for Violations
of Special Acts and Municipal Ordinances and to
Provide When Prescription Shall Begin, is the law
applicable to offenses under special laws which do
not provide their own prescriptive periods. The
pertinent provisions read:
Section 1. Violations penalized by special acts shall,
unless otherwise provided in such acts, prescribe in
accordance with the following rules: (a) x x x; (b) after
four years for those punished by imprisonment for
more than one month, but less than two years; (c) x x
x which suspends the prescription of the offense.46
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.
We agree that Act. No. 3326 applies to offenses
under B.P. Blg. 22. An offense under B.P. Blg. 22
merits the penalty of imprisonment of not less than
thirty (30) days but not more than one year or by a
fine, hence, under Act No. 3326, a violation of B.P.
Blg. 22 prescribes in four (4) years from the
commission of the offense or, if the same be not
known at the time, from the discovery thereof.
Nevertheless, we cannot uphold the position that only
the filing of a case in court can toll the running of the
prescriptive period.
It must be pointed out that when Act No. 3326 was
passed on 4 December 1926, preliminary
investigation of criminal offenses was conducted by
justices of the peace, thus, the phraseology in the
law, "institution of judicial proceedings for its
investigation and punishment,"39 and the prevailing
rule at the time was that once a complaint is filed with
the justice of the peace for preliminary investigation,
the prescription of the offense is halted.40
The historical perspective on the application of Act
No. 3326 is illuminating.41 Act No. 3226 was
approved on 4 December 1926 at a time when the
function of conducting the preliminary investigation of
criminal offenses was vested in the justices of the
peace. Thus, the prevailing rule at the time, as shown
in the cases of U.S. v. Lazada42 and People v.
Joson,43 is that the prescription of the offense is
tolled once a complaint is filed with the justice of the
peace for preliminary investigation inasmuch as the
filing of the complaint signifies the
institution of the criminal proceedings against the
accused.44 These cases were followed by our
declaration in People v. Parao and Parao45 that the
first step taken in the investigation or examination of
offenses partakes the nature of a judicial proceeding
Subsequently, in People v. Olarte,47 we held that the
filing of the complaint in the Municipal Court, even if it
be merely for purposes of preliminary examination or
investigation, should, and does, interrupt the period of
prescription of the criminal responsibility, even if the
court where the complaint or information is filed
cannot try the case on the merits. In addition, even if
the court where the complaint or information is filed
may only proceed to investigate the case, its
actuations already represent the initial step of the
proceedings against the offender,48 and hence, the
prescriptive period should be interrupted.
In Ingco v. Sandiganbayan49 and Sanrio Company
Limited v. Lim,50 which involved violations of the Anti-
Graft and Corrupt Practices Act (R.A. No. 3019) and
the Intellectual Property Code (R.A. No. 8293), which
are both special laws, the Court ruled that the
prescriptive period is interrupted by the institution of
proceedings for preliminary investigation against the
accused. In the more recent case of Securities and
Exchange Commission v. Interport Resources
Corporation, et al.,51 the Court ruled that the nature
and purpose of the investigation conducted by the
Securities and Exchange Commission on violations of
the Revised Securities Act,52 another special law, is
equivalent to the preliminary investigation conducted
by the DOJ in criminal cases, and thus effectively
interrupts the prescriptive period.
The following disquisition in the Interport Resources
case53 is instructive, thus:
While it may be observed that the term "judicial
proceedings" in Sec. 2 of Act No. 3326 appears
before "investigation and punishment" in the old law,
with the subsequent change in set-up whereby the
investigation of the charge for purposes of
prosecution has become the exclusive function of the
executive branch, the term "proceedings" should now
be understood either executive or judicial in character:
executive when it involves the investigation phase
and judicial when it refers to the trial and judgment
stage. With this clarification, any kind of investigative
proceeding instituted against the guilty person which
may ultimately lead to his prosecution should be
sufficient to toll prescription.54
Indeed, to rule otherwise would deprive the injured
party the right to obtain vindication on account of
delays that are not under his control.55 A clear
example would be this case, wherein petitioner filed
his complaint-affidavit on 24 August 1995, well within
the four (4)-year prescriptive period. He likewise
timely filed his appeals and his motions for
reconsideration on the dismissal of the charges
against
Tongson. He went through the proper channels,
within the prescribed periods. However, from the time
petitioner filed his complaint-affidavit with the Office of
the City Prosecutor (24 August 1995) up to the time
the DOJ issued the assailed resolution, an aggregate
period of nine (9) years had elapsed. Clearly, the
delay was beyond petitioner's control. After all, he had
already initiated the active prosecution of the case as
early as 24 August 1995, only to suffer setbacks
because of the DOJ's flip-flopping resolutions and its
misapplication of Act No. 3326. Aggrieved parties,
especially those who do not sleep on their rights and
actively pursue their causes, should not be allowed to
suffer unnecessarily further simply because of
circumstances beyond their control, like the accused's
delaying tactics or the delay and inefficiency of the
investigating agencies.
We rule and so hold that the offense has not yet
prescribed. Petitioner 's filing of his complaint-affidavit
before the Office of the City Prosecutor on 24 August
1995 signified the commencement of the proceedings
for the prosecution of the accused and thus effectively
interrupted the prescriptive period for the offenses
they had been charged under B.P. Blg. 22. Moreover,
since there is a definite finding of probable cause,
with the debunking of the claim of prescription there is
no longer any impediment to the filing of the
information against petitioner.
WHEREFORE, the petition is GRANTED. The
resolutions of the Court of Appeals dated 29 October
2004 and 21 March 2005 are REVERSED and SET
ASIDE. The resolution of the Department of Justice
dated 9 August 2004 is also ANNULLED and SET
ASIDE. The Department of Justice is ORDERED to
REFILE the information against the petitioner.
No costs.
SO ORDERED.
EN BANC
SECURITIES AND EXCHANGE COMMISSION,
Petitioner,
- versus -
INTERPORT RESOURCES CORPORATION,
MANUEL S. RECTO, RENE S. VILLARICA,
PELAGIO RICALDE, ANTONIO REINA, FRANCISCO
ANONUEVO, JOSEPH SY and SANTIAGO
TANCHAN, JR.,
Respondents.
G.R. No. 135808
Promulgated:
October 6, 2008
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, GEHIs 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
IRCs failure to immediately disclose the information
as required by the Rules on Disclosure of Material
Facts.[6]
In compliance with the SEC Chairmans 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 IRCs 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 Motion[16] 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 Decision[19] 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 that[22]:
WHEREFORE, [herein petitioner SECs] 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 (Insiders 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 Resolution[23]
issued on 30 September 1998.
Hence, the present petition, which relies on the
following grounds[24]:
I taken the place of the Revised Securities Act.
THE COURT OF APPEALS ERRED WHEN IT
DENIED PETITIONERS 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
(INSIDERS 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/PROCEEDINGS[25] 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
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. Hopkins[33] 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. Insiders 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
issuers 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 persons 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 issuers 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 corporations
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 Investors 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 8[55] 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 V[56] 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 Commissions
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 Cario 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 respondents 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] 27[68] and 23[69] 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 insiders 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
issuers 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 companys 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 SECs
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 petitioners 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
SECs 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 SECs 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
SECs 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.
MINITA V. CHICO-NAZARIO
Associate Justice
G.R. No. 168662 February 19, 2008
SANRIO COMPANY LIMITED, petitioner,
vs.
EDGAR C. LIM, doing business as ORIGNAMURA
TRADING, respondent.
DECISION
CORONA, J.:
This petition for review on certiorari1 seeks to set
aside the decision of the Court of Appeals (CA) in CA-
G.R. CV No. 746602 and its resolution3 denying
reconsideration.
Petitioner Sanrio Company Limited, a Japanese
corporation, owns the copyright of various animated
characters such as "Hello Kitty," "Little Twin Stars,"
"My Melody," "Tuxedo Sam" and "Zashikibuta" among
others.4 While it is not engaged in business in the
Philippines, its products are sold locally by its
exclusive distributor, Gift Gate Incorporated (GGI).5
As such exclusive distributor, GGI entered into
licensing agreements with JC Lucas Creative
Products, Inc., Paper Line Graphics, Inc. and
Melawares Manufacturing Corporation.6 These local
entities were allowed to manufacture certain products
(bearing petitioner's copyrighted animated characters)
for the local market.
Sometime in 2001, due to the deluge of counterfeit
Sanrio products, GGI asked IP Manila Associates
(IPMA) to conduct a market research. The research's
objective was to identify those factories, department
stores and retail outlets manufacturing and/or selling
fake Sanrio items.7 After conducting several test-buys
in various commercial areas, IPMA confirmed that
respondent's Orignamura Trading in Tutuban Center,
Manila was selling imitations of petitioner's products.8
Consequently, on May 29, 2000, IPMA agents Lea A.
Carmona and Arnel P. Dausan executed a joint
affidavit attesting to the aforementioned facts.9 IPMA
forwarded the said affidavit to the National Bureau of
Investigation (NBI) which thereafter filed an
application for the issuance of a search warrant in the
office of the Executive Judge of the Regional Trial
Court of Manila.10
After conducting the requisite searching inquiry, the
executive judge issued a search warrant on May 30,
2000.11 On the same day, agents of the NBI
searched the premises of Orignamura Trading. As a
result thereof, they were able to seize various Sanrio
products.12
On April 4, 2002, petitioner, through its attorney-in-
fact Teodoro Y. Kalaw IV of the Quisumbing Torres
law firm, filed a complaint-affidavit13 with the Task-
Force on Anti-Intellectual Property Piracy (TAPP) of
the Department of Justice (DOJ) against respondent
for violation of Section 217 (in relation to Sections
17714 and 17815) of the Intellectual Property Code
(IPC) which states:
Section 217. Criminal Penalties. - 217.1. Any person
infringing any right secured by provisions of Part IV of
this Act or aiding or abetting such infringement shall
be guilty of a crime punishable by:
(a) Imprisonment of one (1) year to three (3) years
plus a fine ranging from Fifty thousand pesos
(P50,000) to One hundred fifty thousand pesos
(P150,000) for the first offense.
(b) Imprisonment of three (3) years and one (1) day to
six (6) years plus a fine ranging from One hundred
fifty thousand pesos (P150,000) to Five hundred
thousand pesos (P500,000) for the second offense.
(c) Imprisonment of six (6) years and one (1) day to
nine (9) years plus a fine ranging from Five hundred
thousand pesos (P500,000) to One million five
hundred thousand pesos (P1,500,000) for the third
and subsequent offenses.
(d) In all cases, subsidiary imprisonment in cases of
insolvency.
217.2. In determining the number of years of
imprisonment and the amount of fine, the court shall
consider the value of the infringing materials that the
defendant has produced or manufactured and the
damage that the copyright owner has suffered by
reason of infringement.
217.3. Any person who at the time when copyright
subsists in a work has in his possession an article
which he knows, or ought to know, to be an infringing
copy of the work for the purpose of:
(a) Selling, letting for hire, or by way of trade offering
or exposing for sale, or hire, the article;
(b) Distributing the article for purpose of trade or any
other purpose to an extent that will prejudice the
rights of the copyright of the owner in the work; or
(c) Trade exhibit of the article in public, shall be guilty
of an offense and shall be liable on conviction to
imprisonment and fine as above mentioned.
(emphasis supplied)
Respondent asserted in his counter-affidavit16 that he
committed no violation of the provisions of the IPC
because he was only a retailer.17 Respondent neither
reproduced nor manufactured any of petitioner's
copyrighted item; thus, he did not transgress the
economic rights of petitioner.18 Moreover, he
obtained his merchandise from authorized
manufacturers of petitioner's products.19
On September 25, 2002, the TAPP found that:
Evidence on record would show that respondent
bought his merchandise from legitimate sources, as
shown by official receipts issued by JC Lucas
Creative Products, Inc., Paper Line Graphics, Inc. and
Melawares Manufacturing Corporation. In fact, in her
letter dated May 23, 2002, Ms. Ma. Angela S. Garcia
certified that JC Lucas Creative Products, Inc., Paper
Line Graphics, Inc. and Melawares Manufacturing
Corporation are authorized to produce certain Sanrio
products. While it appears that some of the items
seized during the search are not among those
products which [GGI] authorized these establishments
to produce, the fact remains that respondent bought
these from the abovecited legitimate sources. At this
juncture, it bears stressing that respondent relied on
the representations of these manufacturers and
distributors that the items they sold were genuine. As
such, it is not incumbent upon respondent to verify
from these sources what items [GGI] only authorized
them to produce. Thus, as far as respondent is
concerned, the items in his possession are not
infringing copies of the original [petitioner's] products.
(emphasis supplied)20
Thus, in a resolution dated September 25, 2002, it
dismissed the complaint due to insufficiency of
evidence.21
Petitioner moved for reconsideration but it was
denied.22 Hence, it filed a petition for review in the
Office of the Chief State Prosecutor of the DOJ.23 In
a resolution dated August 29, 2003,24 the Office of
the Chief State Prosecutor affirmed the TAPP
resolution. The petition was dismissed for lack of
reversible error.
Aggrieved, petitioner filed a petition for certiorari in the
CA. On May 3, 2005, the appellate court dismissed
the petition on the ground of prescription. It based its
action on Act 3326 which states:
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; Provided, however, That all
offenses against any law or part of law administered
by the Bureau of Internal Revenue shall prescribe
after five years. Violations penalized by municipal
ordinances shall prescribe after two months.
Section 2. Prescription shall begin to run from the day
of the commission of the violation of the law, and if
the same may not be 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.
(emphasis supplied)
According to the CA, because no complaint was filed
in court within two years after the commission of the
alleged violation, the offense had already
prescribed.25
On the merits of the case, the CA concluded that the
DOJ did not commit grave abuse of discretion in
dismissing the petition for review.26 To be criminally
liable for violation of Section 217.3 of the IPC, the
following requisites must be present:
1. possession of the infringing copy and
2. knowledge or suspicion that the copy is an
infringement of the genuine article.
The CA agreed with the DOJ that petitioner failed to
prove that respondent knew that the merchandise he
sold was counterfeit. Respondent, on the other hand,
was able to show that he obtained these goods from
legitimate sources.27
Petitioner moved for reconsideration but it was
denied. Hence, this petition.
Petitioner now essentially avers that the CA erred in
concluding that the alleged violations of the IPC had
prescribed. Recent jurisprudence holds that the
pendency of a preliminary investigation suspends the
running of the prescriptive period.28 Moreover, the
CA erred in finding that the DOJ did not commit grave
abuse of discretion in dismissing the complaint.
Respondent is liable for copyright infringement (even
if he obtained his merchandise from legitimate
sources) because he sold counterfeit goods.29
Although we do not agree wholly with the CA, we
deny the petition.
Filing Of The Complaint In the DOJ Tolled The
Prescriptive Period
Section 2 of Act 3326 provides that the prescriptive
period for violation of special laws starts on the day
such offense was committed and is interrupted by the
institution of proceedings against respondent (i.e., the
accused).
Petitioner in this instance filed its complaint-affidavit
on April 4, 2002 or one year, ten months and four
days after the NBI searched respondent's premises
and seized Sanrio merchandise therefrom. Although
no information was immediately filed in court,
respondent's alleged violation had not yet
prescribed.30
In the recent case of Brillantes v. Court of Appeals,31
we affirmed that the filing of the complaint for
purposes of preliminary investigation interrupts the
period of prescription of criminal responsibility.32
Thus, the prescriptive period for the prosecution of the
alleged violation of the IPC was tolled by petitioner's
timely filing of the complaint-affidavit before the
TAPP.
In The Absence Of Grave Abuse Of Discretion, The
Factual Findings Of The DOJ In Preliminary
Investigations Will Not Be Disturbed
In a preliminary investigation, a public prosecutor
determines whether a crime has been committed and
whether there is probable cause that the accused is
guilty thereof.33 Probable cause is defined as such
facts and circumstances that will engender a well-
founded belief that a crime has been committed and
that the respondent is probably guilty thereof and
should be held for trial.34 Because a public
prosecutor is the one conducting a preliminary
investigation, he determines the existence of probable
cause.35 Consequently, the decision to file a criminal
information in court or to dismiss a complaint depends
on his sound discretion.36
As a general rule, a public prosecutor is afforded a
wide latitude of discretion in the conduct of a
preliminary investigation. For this reason, courts
generally do not interfere with the results of such
proceedings. A prosecutor alone determines the
sufficiency of evidence that will establish probable
cause justifying the filing of a criminal information
against the respondent.37 By way of exception,
however, judicial review is allowed where respondent
has clearly established that the prosecutor committed
grave abuse of discretion.38 Otherwise stated, such
review is appropriate only when the prosecutor has
exercised his discretion in an arbitrary, capricious,
whimsical or despotic manner by reason of passion or
personal hostility, patent and gross enough to amount
to an evasion of a positive duty or virtual refusal to
perform a duty enjoined by law.39
The prosecutors in this case consistently found that
no probable cause existed against respondent for
violation of the IPC. They were in the best position to
determine whether or not there was probable cause.
We find that they arrived at their findings after
carefully evaluating the respective evidence of
petitioner and respondent. Their conclusion was not
tainted with grave abuse of discretion.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
RENATO C. CORONA
Associate Justice
PEOPLE OF THE PHILIPPINES,
Petitioner,
- versus -
MA. THERESA PANGILINAN,
Respondent.
G.R. No. 152662
Promulgated:
June 13, 2012
DECISION
PEREZ, J.:
The Office of the Solicitor General (OSG) filed this
petition for certiorari[1] under Rule 45 of the Rules of
Court, on behalf of the Republic of the Philippines,
praying for the nullification and setting aside of the
Decision[2] of the Court of Appeals (CA) in CA-G.R.
SP No. 66936, entitled Ma. Theresa Pangilinan vs.
People of the Philippines and Private Complainant
Virginia C. Malolos.
The fallo of the assailed Decision reads:
WHEREFORE, the instant petition is GRANTED.
Accordingly, the assailed Decision of the Regional
Trial Court of Quezon City, Branch 218, is
REVERSED and SET ASIDE and Criminal Cases
Nos. 89152 and 89153 against petitioner Ma. Theresa
Pangilinan are hereby ordered DISMISSED.[3]
Culled from the record are the following undisputed
facts:
On 16 September 1997, Virginia C. Malolos (private
complainant) filed an affidavit-complaint for estafa and
violation of Batas Pambansa (BP) Blg. 22 against Ma.
Theresa Pangilinan (respondent) with the Office of the
City Prosecutor of Quezon City. The complaint
alleges that respondent issued nine (9) checks with
an aggregate amount of Nine Million Six Hundred
Fifty-Eight Thousand Five Hundred Ninety-Two Pesos
(P9,658,592.00) in favor of private complainant which
were dishonored upon presentment for payment.
On 5 December 1997, respondent filed a civil case
for accounting, recovery of commercial documents,
enforceability and effectivity of contract and specific
performance against private complainant before the
Regional Trial Court (RTC) of Valenzuela City. This
was docketed as Civil Case No. 1429-V-97.
Five days thereafter or on 10 December 1997,
respondent filed a Petition to Suspend Proceedings
on the Ground of Prejudicial Question before the
Office of the City Prosecutor of Quezon City, citing as
basis the pendency of the civil action she filed with
the RTC of Valenzuela City.
On 2 March 1998, Assistant City Prosecutor Ruben
Catubay recommended the suspension of the criminal
proceedings pending the outcome of the civil action
respondent filed against private complainant with the
RTC of Valenzuela City. The recommendation was
approved by the City Prosecutor of Quezon City.
Aggrieved, private complainant raised the matter
before the Department of Justice (DOJ).
On 5 January 1999, then Secretary of Justice Serafin
P. Cuevas reversed the resolution of the City
Prosecutor of Quezon City and ordered the filing of
informations for violation of BP Blg. 22 against
respondent in connection with her issuance of City
Trust Check No. 127219 in the amount of
P4,129,400.00 and RCBC Check No. 423773 in the
amount of P4,475,000.00, both checks totaling the
amount of P8,604,000.00. The estafa and violation of
BP Blg. 22 charges involving the seven other checks
included in the affidavit-complaint filed on 16
September 1997 were, however, dismissed.
Consequently, two counts for violation of BP Blg. 22,
both dated 18 November 1999, were filed against
respondent Ma.Theresa Pangilinan on 3 February
2000 before the Office of the Clerk of Court,
Metropolitan Trial Court (MeTC), Quezon City. These
cases were raffled to MeTC, Branch 31on 7 June
2000.
On 17 June 2000, respondent filed an Omnibus
Motion to Quash the Information and to Defer the
Issuance of Warrant of Arrest before MeTC, Branch
31, Quezon City. She alleged that her criminal liability
has been extinguished by reason of prescription.
The presiding judge of MeTC, Branch 31, Quezon
City granted the motion in an Order dated 5 October
2000.
On 26 October 2000, private complainant filed a
notice of appeal. The criminal cases were raffled to
RTC, Branch 218, Quezon City.
In a Decision dated 27 July 2001, the presiding judge
of RTC, Branch 218, Quezon City reversed the 5
October 2000 Order of the MeTC. The pertinent
portion of the decision reads:
xxx Inasmuch as the informations in this case were
filed on 03 February 2000 with the Clerk of Court
although received by the Court itself only on 07 June
2000, they are covered by the Rule as it was worded
before the latest amendment. The criminal action on
two counts for violation of BP Blg. 22, had, therefore,
not yet prescribed when the same was filed with the
court a quo considering the appropriate complaint that
started the proceedings having been filed with the
Office of the Prosecutor on 16 September 1997 yet.
WHEREFORE, the assailed Order dated 05 October
2000 is hereby REVERSED AND SET ASIDE. The
Court a quo is hereby directed to proceed with the
hearing of Criminal Cases Nos. 89152 and 89153.[4]
Dissatisfied with the RTC Decision, respondent filed
with the Supreme Court a petition for review[5] on
certiorari under Rule 45 of the Rules of Court. This
was docketed as G.R. Nos. 149486-87.
In a resolution[6] dated 24 September 2000, this
Court referred the petition to the CA for appropriate
action.
On 26 October 2001, the CA gave due course to the
petition by requiring respondent and private
complainant to comment on the petition.
In a Decision dated 12 March 2002, the CA reversed
the 27 July 2001 Decision of RTC, Branch 218,
Quezon City, thereby dismissing Criminal Case Nos.
89152 and 89153 for the reason that the cases for
violation of BP Blg. 22 had already prescribed.
In reversing the RTC Decision, the appellate court
ratiocinated that:
xxx this Court reckons the commencement of the
period of prescription for violations of Batas
Pambansa Blg. 22 imputed to [respondent] sometime
in the latter part of 1995, as it was within this period
that the [respondent] was notified by the private
[complainant] of the fact of dishonor of the subject
checks and, the five (5) days grace period granted by
law had elapsed. The private respondent then had,
pursuant to Section 1 of Act 3326, as amended, four
years therefrom or until the latter part of 1999 to file
her complaint or information against the petitioner
before the proper court.
The informations docketed as Criminal Cases Nos.
89152 and 89152(sic) against the petitioner having
been filed with the Metropolitan Trial Court of Quezon
City only on 03 February 2000, the said cases had
therefore, clearly prescribed.
xxx
Pursuant to Section 2 of Act 3326, as amended,
prescription shall be interrupted when proceedings
are instituted against the guilty person.
In the case of Zaldivia vs. Reyes[7] the Supreme
Court held that the proceedings referred to in Section
2 of Act No. 3326, as amended, are judicial
proceedings, which means the filing of the complaint
or information with the proper court. Otherwise stated,
the running of the prescriptive period shall be stayed
on the date the case is actually filed in court and not
on any date before that, which is in consonance with
Section 2 of Act 3326, as amended.
While the aforesaid case involved a violation of a
municipal ordinance, this Court, considering that
Section 2 of Act 3326, as amended, governs the
computation of the prescriptive period of both
ordinances and special laws, finds that the ruling of
the Supreme Court in Zaldivia v. Reyes[8] likewise
applies to special laws, such as Batas Pambansa Blg.
22.[9]
The OSG sought relief to this Court in the instant
petition for review. According to the OSG, while it
admits that Act No. 3326, as amended by Act No.
3585 and further amended by Act No. 3763 dated 23
November 1930, governs the period of prescription for
violations of special laws, it is the institution of
criminal actions, whether filed with the court or with
the Office of the City Prosecutor, that interrupts the
period of prescription of the offense charged.[10] It
submits that the filing of the complaint-affidavit by
private complainant Virginia C. Malolos on 16
September 1997 with the Office of the City Prosecutor
of Quezon City effectively interrupted the running of
the prescriptive period of the subject BP Blg. 22
cases.
Petitioner further submits that the CA erred in its
decision when it relied on the doctrine laid down by
this Court in the case of Zaldivia v. Reyes, Jr.[11] that
the filing of the complaint with the Office of the City
Prosecutor is not the judicial proceeding that could
have interrupted the period of prescription. In relying
on Zaldivia,[12] the CA allegedly failed to consider the
subsequent jurisprudence superseding the aforesaid
ruling.
Petitioner contends that in a catena of cases,[13] the
Supreme Court ruled that the filing of a complaint with
the Fiscals Office for preliminary investigation
suspends the running of the prescriptive period. It
therefore concluded that the filing of the informations
with the MeTC of Quezon City on 3 February 2000
was still within the allowable period of four years
within which to file the criminal cases for violation of
BP Blg. 22 in accordance with Act No. 3326, as
amended.
In her comment-opposition dated 26 July 2002,
respondent avers that the petition of the OSG should
be dismissed outright for its failure to comply with the
mandatory requirements on the submission of a
certified true copy of the decision of the CA and the
required proof of service. Such procedural lapses are
allegedly fatal to the cause of the petitioner.
Respondent reiterates the ruling of the CA that the
filing of the complaint before the City Prosecutors
Office did not interrupt the running of the prescriptive
period considering that the offense charged is a
violation of a special law.
Respondent contends that the arguments advanced
by petitioner are anchored on erroneous premises.
She claims that the cases relied upon by petitioner
involved felonies punishable under the Revised Penal
Code and are therefore covered by Article 91 of the
Revised Penal Code (RPC)[14] and Section 1, Rule
110 of the Revised Rules on Criminal Procedure.[15]
Respondent pointed out that the crime imputed
against her is for violation of BP Blg. 22, which is
indisputably a special law and as such, is governed
by Act No. 3326, as amended. She submits that a
distinction should thus be made between offenses
covered by municipal ordinances or special laws, as
in this case, and offenses covered by the RPC.
The key issue raised in this petition is whether the
filing of the affidavit-complaint for estafa and violation
of BP Blg. 22 against respondent with the Office of
the City Prosecutor of Quezon City on 16 September
1997 interrupted the period of prescription of such
offense.
We find merit in this petition.
Initially, we see that the respondents claim that the
OSG failed to attach to the petition a duplicate original
or certified true copy of the 12 March 2002 decision of
the CA and the required proof of service is refuted by
the record. A perusal of the record reveals that
attached to the original copy of the petition is a
certified true copy of the CA decision. It was also
observed that annexed to the petition was the proof of
service undertaken by the Docket Division of the
OSG.
With regard to the main issue of the petition, we find
that the CA reversively erred in ruling that the offense
committed by respondent had already prescribed.
Indeed, Act No. 3326 entitled An Act to Establish
Prescription for Violations of Special Acts and
Municipal Ordinances and to Provide When
Prescription Shall Begin, as amended, is the law
applicable to BP Blg. 22 cases. Appositely, the law
reads:
SECTION 1. Violations penalized by special acts
shall, unless otherwise provided in such acts,
prescribe in accordance with the following rules: (a)
xxx; (b) after four years for those punished by
imprisonment for more than one month, but less than
two years; (c) xxx.
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.
Since BP Blg. 22 is a special law that imposes a
penalty of imprisonment of not less than thirty (30)
days but not more than one year or by a fine for its
violation, it therefor prescribes in four (4) years in
accordance with the aforecited law. The running of
the prescriptive period, however, should be tolled
upon the institution of proceedings against the guilty
person.
In the old but oft-cited case of People v. Olarte,[16]
this Court ruled that the filing of the complaint in the
Municipal Court even if it be merely for purposes of
preliminary examination or investigation, should, and
thus, interrupt the period of prescription of the criminal
responsibility, even if the court where the complaint or
information is filed cannot try the case on the merits.
This ruling was broadened by the Court in the case of
Francisco, et.al. v. Court of Appeals, et. al.[17] when it
held that the filing of the complaint with the Fiscals
Office also suspends the running of the prescriptive
period of a criminal offense.
Respondents contention that a different rule should
be applied to cases involving special laws is bereft of
merit. There is no more distinction between cases
under the RPC and those covered by special laws
with respect to the interruption of the period of
prescription. The ruling in Zaldivia v. Reyes, Jr.[18] is
not controlling in special laws. In Llenes v.
Dicdican,[19] Ingco, et al. v. Sandiganbayan,[20]
Brillante v. CA,[21] and Sanrio Company Limited v.
Lim,[22] cases involving special laws, this Court held
that the institution of proceedings for preliminary
investigation against the accused interrupts the period
of prescription. In Securities and Exchange
Commission v. Interport Resources Corporation, et.
al.,[23] the Court even ruled that investigations
conducted by the Securities and Exchange
Commission for violations of the Revised Securities
Act and the Securities Regulations Code effectively
interrupts the prescription period because it is
equivalent to the preliminary investigation conducted
by the DOJ in criminal cases.
In fact, in the case of Panaguiton, Jr. v. Department of
Justice,[24] which is in all fours with the instant case,
this Court categorically ruled that commencement of
the proceedings for the prosecution of the accused
before the Office of the City Prosecutor effectively
interrupted the prescriptive period for the offenses
they had been charged under BP Blg. 22. Aggrieved
parties, especially those who do not sleep on their
rights and actively pursue their causes, should not be
allowed to suffer unnecessarily further simply
because of circumstances beyond their control, like
the accuseds delaying tactics or the delay and
inefficiency of the investigating agencies.
We follow the factual finding of the CA that sometime
in the latter part of 1995 is the reckoning date of the
commencement of presumption for violations of BP
Blg. 22, such being the period within which herein
respondent was notified by private complainant of the
fact of dishonor of the checks and the five-day grace
period granted by law elapsed.
The affidavit-complaints for the violations were filed
against respondent on 16 September 1997. The
cases reached the MeTC of Quezon City only on 13
February 2000 because in the meanwhile, respondent
filed a civil case for accounting followed by a petition
before the City Prosecutor for suspension of
proceedings on the ground of prejudicial question.
The matter was raised before the Secretary of Justice
after the City Prosecutor approved the petition to
suspend proceedings. It was only after the Secretary
of Justice so ordered that the informations for the
violation of BP Blg. 22 were filed with the MeTC of
Quezon City.
Clearly, it was respondents own motion for the
suspension of the criminal proceedings, which motion
she predicated on her civil case for accounting, that
caused the filing in court of the 1997 initiated
proceedings only in 2000.
As laid down in Olarte,[25] it is unjust to deprive the
injured party of the right to obtain vindication on
account of delays that are not under his control. The
only thing the offended must do to initiate the
prosecution of the offender is to file the requisite
complaint.
IN LIGHT OF ALL THE FOREGOING, the instant
petition is GRANTED. The 12 March 2002 Decision of
the Court of Appeals is hereby REVERSED and SET
ASIDE. The Department of Justice is ORDERED to
re-file the informations for violation of BP Blg. 22
against the respondent.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice
G.R. No. 169588 October 7, 2013
JADEWELL PARKING SYSTEMS CORPORATION
represented by its manager and authorized
representative Norma Tan, Petitioner,
vs.
HON. JUDGE NELSON F. LIDUA SR., Presiding
Judge of The Municipal Trial Court Branch 3, Baguio
City, BENEDICTO BALAJADIA, EDWIN ANG, "JOHN
DOES" and "PETER DOES" Respondents.
DECISION
LEONEN, J.:
We are asked to rule on this Petition for Review on
Certiorari under Rule 45 of the Rules of Court, praying
that the assailed Decision of Branch 7 of the Regional
Trial Court of Baguio City and Order dated August 15,
2005 be reversed and that Criminal Case Nos.
112934 and 112935 be ordered reinstated and
prosecuted before the Municipal Trial Court of Baguio
City.
Petitioner Jadewell Parking Systems Corporation is a
private parking operator duly authorized to operate
and manage the parking spaces in Baguio City
pursuant to City Ordinance 003-2000. It is also
authorized under Section 13 of the City Ordinance to
render any motor vehicle immobile by placing its
wheels in a clamp if the vehicle is illegally parked.1
According to the Resolution of the Office of the
Provincial Prosecutor, San Fernando City, La Union,
the facts leading to the filing of the Informations are
the following:
Jadewell Parking Systems Corporation (Jadewell),
thru [sic] its General Manager Norma Tan and
Jadewell personnel Januario S. Ulpindo and Renato
B. Dulay alleged in their affidavit-complaint that on
May 17, 2003, the respondents in I.S No. 2003-1996
Edwin Ang, Benedicto Balajadia and John Doe
dismantled, took and carried away the clamp attached
to the left front wheel of a Mitsubishi Adventure with
Plate No. WRK 624 owned by Edwin Ang.
Accordingly, the car was then illegally parked and left
unattended at a Loading and Unloading Zone. The
value of the clamp belonging to Jadewell which was
allegedly forcibly removed with a piece of metal is
₱26,250.00. The fines of ₱500.00 for illegal parking
and the declamping fee of ₱500.00 were also not paid
by the respondents herein.
In I.S. No., 2003-1997, Jadewell thru [sic] its General
Manager Norina C. Tan, Renato B. Dulay and Ringo
Sacliwan alleged in their affidavit-complaint that on
May 7, 2003, along Upper Mabini Street, Baguio City,
herein respondents Benedicto Balajadia, Jeffrey
Walan and two (2) John Does forcibly removed the
clamp on the wheel of a Nissan Cefiro car with Plate
No. UTD 933, belonging to Jeffrey Walan which was
then considered illegally parked for failure to pay the
prescribed parking fee. Such car was earlier rendered
immobile by such clamp by Jadewell personnel. After
forcibly removing the clamp, respondents took and
carried it away depriving its owner, Jadewell, its use
and value which is ₱26,250.00. According to
complainants, the fine of ₱500.00 and the declamping
fee of ₱500.00 were not paid by the respondents.2
The incident resulted in two cases filed by petitioner
and respondents against each other. Petitioner
Jadewell filed two cases against respondents:
Robbery under I.S. Nos. 2003-1996 and 2003-1997.
Petitioner filed an Affidavit-Complaint against
respondents Benedicto Balajadia, Jeffrey Walan, and
three (3) John Does, one of whom was eventually
identified as respondent Ramon Ang. The Affidavit-
Complaint was filed with the Office of the City
Prosecutor of Baguio City on May 23, 2003.3 A
preliminary investigation took place on May 28, 2003.
Respondent Benedicto Balajadia likewise filed a case
charging Jadewell president, Rogelio Tan, and four
(4) of Jadewell's employees with Usurpation of
Authority/Grave Coercion in I.S. No. 2003-1935.
In his Counter-affidavit for the two cases he filed for
himself and on behalf of his co-respondents,
respondent Benedicto Balajadia denied that his car
was parked illegally. He admitted that he removed the
clamp restricting the wheel of his car since he alleged
that the placing of a clamp on the wheel of the vehicle
was an illegal act. He alleged further that he removed
the clamp not to steal it but to remove the vehicle
from its clamp so that he and his family could
continue using the car. He also confirmed that he had
the clamp with him, and he intended to use it as a
piece of evidence to support the Complaint he filed
against Jadewell.4
In the Resolution5 of the Office of the Provincial
Prosecutor of San Fernando City, La Union, Acting
City Prosecutor Mario Anacleto Banez found probable
cause to file a case of Usurpation of Authority against
the petitioner. Regarding the case of Robbery against
respondents, Prosecutor Banez stated that:
We find no probable cause to charge respondents in
these two (2) cases for the felony of Robbery. The
elements of Robbery, specifically the intent to gain
and force upon things are absent in the instant cases,
thereby negating the existence of the crime.
xxxx
We, however, respectfully submit that the acts of
respondents in removing the wheel clamps on the
wheels of the cars involved in these cases and their
failure to pay the prescribed fees were in violation of
Sec. 21 of Baguio City Ordinance No. 003-2000 which
prescribes fines and penalties for violations of the
provisions of such ordinance. Certainly, they should
not have put the law into their own hands. (Emphasis
supplied)
WHEREFORE, premises considered, there is
probable cause against all the respondents, except
Jeffrey Walan or Joseph Walan (who has been
dragged into this controversy only by virtue of the fact
that he was still the registered owner of the Nissan
Cefiro car) for violation of Section 21 of City Ord. No.
003-2000 in both cases and we hereby file the
corresponding informations against them in Court.6
Prosecutor Banez issued this Resolution on July 25,
2003.
On October 2, 2003, two criminal Informations were
filed with the Municipal Trial Court of Baguio City
dated July 25, 2003, stating:
That on May 17, 2003 at Baguio City and within the
jurisdiction of this Honorable Court, the above-named
accused with unity of action and concerted design, did
then and there, with unity of action and concerted
design, willfully, unlawfully and feloniously forcibly
dismantled [sic] and took [sic] an immobilizing clamp
then attached to the left front wheel of a Mitsubishi
Adventure vehicle with Plate No. WRK 624 belonging
to Edwin Ang which was earlier rendered immobilized
by such clamp by Jadewell Personnel's for violation of
the Baguio City ordinance No. 003-2600 to the
damage and prejudice of private complainant
Jadewell Parking System Corporation (Jadewell)
which owns such clamp worth ₱26,250.00 and other
consequential damages.
CONTRARY TO LAW,
San Fernando City, La Union for Baguio City, this
25th day of July 2003.7
The cases were docketed as Criminal Case Nos.
112934 and 112935 with the Municipal Trial Court of
Baguio City, Branch 3. Respondent Benedicto
Balajadia and the other accused through their counsel
Paterno Aquino filed a January 20, 2004 Motion to
Quash and/or Manifestation8 on February 2, 2004.
The Motion to Quash and/or Manifestation sought the
quashal of the two Informations on the following
grounds: extinguishment of criminal action or liability
due to prescription; failure of the Information to state
facts that charged an offense; and the imposition of
charges on respondents with more than one offense.
In their Motion to Quash, respondents argued that:
1. The accused in this case are charged with violation
of Baguio City Ordinance No. 003-2000.
2. Article 89 of the Revised Penal [sic] provides that
criminal liability is totally extinguished by prescription
of the crime.
3. Act No. 3326, as amended by Act No. 3763,
provides: "Section 1. x x x Violations penalized by
municipal ordinances shall prescribed [sic] after two
months."
4. As alleged in the Information, the offense charged
in this case was committed on May 7, 2003. 5. As can
be seen from the right hand corner of the Information,
the latter was filed with this Honorable Court on
October 2, 2003, almost five (5) months after the
alleged commission of the offense charged. Hence,
criminal liability of the accused in this case, if any,
was already extinguished by prescription when the
Information was filed.9
In an Order10 dated February 10, 2004, respondent
Judge Nelson F. Lidua, Sr., Presiding Judge of the
Municipal Trial Court of Baguio City, Branch 3,
granted the accused's Motion to Quash and
dismissed the cases.
Petitioner filed a Motion for Reconsideration on
February 27, 2004 responding to the February 10,
2004 Order11 to argue among other points that:
6.b. For another, the offenses charged have not yet
prescribed. Under the law, the period of prescription
of offenses shall be interrupted by the filing of the
complaint or information. While it may be true that the
Informations in these cases have been filed only on
October 2, 2003, the private complainant has,
however, filed its criminal complaint on May 23, 2003,
well within the prescribed period.12
Respondents filed their Opposition13 on March 24,
2004, and petitioner filed a Reply14 on April 1, 2004.
The respondent judge released a Resolution15 dated
April 16, 2004 upholding the Order granting
respondents' Motion to Quash. The Resolution held
that:
For the guidance of the parties, the Court will make
an extended resolution on one of the ground [sic] for
the motion to quash, which is that the criminal action
has been extinguished on grounds of prescription.
These offenses are covered by the Rules on
Summary Procedure being alleged violations of City
Ordinances.
Under Section 9 of the Rule [sic] on Summary
Procedure, the running of the prescriptive period shall
be halted on the date the case is filed in Court and not
on any date before that (Zaldivia vs. Reyes, Jr. G.R.
No. 102342, July 3, 1992, En Banc).
In case of conflict, the Rule on Summary Procedure
as the special law prevails over Sec. 1 of Rule 110 of
the Rules on Criminal Procedure and also Rule 110 of
the Rules of Criminal Procedure must yield to Act No.
3326 or "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" (Ibid).
Petitioner then filed a Petition16 for Certiorari under
Rule 65 with the Regional Trial Court of Baguio City.
The case was raffled to Branch 7 of the Regional Trial
Court of Baguio City. Petitioners contended that the
respondent judge committed grave abuse of
discretion amounting to lack or excess of jurisdiction
in dismissing Criminal Case Nos. 112934 and 112935
on the ground of prescription. Petitioners argued that
the respondent judge ruled erroneously saying that
the prescriptive period for the offenses charged
against the private respondents was halted by the
filing of the Complaint/Information in court and not
when the Affidavit-Complaints were filed with the
Office of the City Prosecutor of Baguio City. Petitioner
cited Section 1 of Rule 110 of the Rules on Criminal
Procedure:
x x x "criminal actions shall be instituted x x x in x x x
other chartered cities, the complaint shall be filed with
the office of the prosecutor unless otherwise provided
in their charter" and the last paragraph thereof states
that "the institution of the criminal action shall interrupt
the running of the period of prescription of the offense
charged unless otherwise provided in special laws."17
Petitioner contended further that:
the filing of the criminal complaint with the Office of
the City Prosecutor of Baguio City, not the filing of the
criminal information before this Honorable Court, is
the reckoning point in determining whether or not the
criminal action in these cases had prescribed.
xxxx
The offenses charged in Criminal Case Nos. 112934
and 112935 are covered by the Revised Rules on
Summary Procedure, not by the old Rules on
Summary Procedure. Considering that the offenses
charged are for violations of a City Ordinance, the
criminal cases can only be commenced by
informations. Thus, it was only legally and
procedurally proper for the petitioner to file its
complaint with the Office of the City Prosecutor of
Baguio City as required by Section 11 of the new
Rules on Summary Procedure, these criminal cases
"shall be commenced only by information." These
criminal cases cannot be commenced in any other
way.
Moreover, the ruling of the Supreme Court in Zaldivia
vs. Reyes cited in the assailed Resolution does not
apply in this case. The offense charged in Zaldivia is
a violation of municipal ordinance in which case, the
complaint should have been filed directly in court as
required by Section 9 of the old Rules on Summary
Procedure. On the other hand, Criminal Case Nos.
112934 and 112935 are for violations of a city
ordinance and as aforestated, "shall be commenced
only by information."18
Thus, petitioner contended that the filing of the
criminal complaint with the Office of the City
Prosecutor stopped the running of the two-month
prescriptive period. Hence, the offenses charged have
not prescribed.
In their Comment,19 respondents maintained that the
respondent judge did not gravely abuse his discretion.
They held that Section 2 of Act No. 3326, as
amended, provides that:
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.20
(Emphasis supplied)
Respondents argued that Zaldivia v. Reyes21 held
that the proceedings mentioned in Section 2 of Act
No. 3326, as amended, refer to judicial proceedings .
Thus, this Court, in Zaldivia, held that the filing of the
Complaint with the Office of the Provincial Prosecutor
was not a judicial proceeding. The prescriptive period
commenced from the alleged date of the commission
of the crime on May 7, 2003 and ended two months
after on July 7, 2003. Since the Informations were
filed with the Municipal Trial Court on October 2,
2003, the respondent judge did not abuse its
discretion in dismissing Criminal Case Nos. 112934
and 112935.
In a Decision dated April 20, 2005, the Regional Trial
Court of Baguio City Branch 7, through Judge
Clarence F. Villanueva, dismissed the Petition for
Certiorari. The Regional Trial Court held that, since
cases of city ordinance violations may only be
commenced by the filing of an Information, then the
two-month prescription period may only be interrupted
by the filing of Informations (for violation of City
Ordinance 003-2000) against the respondents in
court. The Regional Trial Court of Baguio City, Branch
7, ruled in favor of the respondents and upheld the
respondent judge’s Order dated February 10, 2004
and the Resolution dated April 16, 2004.
Petitioners then filed a May 17, 2005 Motion for
Reconsideration which was denied by the Regional
Trial Court in an August 15, 2005 Order.
Hence, this Petition.
The principal question in this case is whether the filing
of the Complaint with the Office of the City Prosecutor
on May 23, 2003 tolled the prescription period of the
commission of the offense charged against
respondents Balajadia, Ang, "John Does," and "Peter
Does."
Petitioner contends that the prescription period of the
offense in Act No. 3326, as amended by Act No.
3763, does not apply because respondents were
charged with the violation of a city ordinance and not
a municipal ordinance. In any case, assuming
arguendo that the prescriptive period is indeed two
months, filing a Complaint with the Office of the City
Prosecutor tolled the prescription period of two
months. This is because Rule 110 of the Rules of
Court provides that, in Manila and in other chartered
cities, the Complaint shall be filed with the Office of
the Prosecutor unless otherwise provided in their
charters.
In their Comment,22 respondents maintain that
respondent Judge Lidua did not err in dismissing the
cases based on prescription. Also, respondents raise
that the other grounds for dismissal they raised in
their Motion to Quash, namely, that the facts charged
constituted no offense and that respondents were
charged with more than one offense, were sustained
by the Metropolitan Trial Court. Also, respondents
argue that petitioner had no legal personality to assail
the Orders, since Jadewell was not assailing the civil
liability of the case but the assailed Order and
Resolution. This was contrary to the ruling in People
v. Judge Santiago23 which held that the private
complainant may only appeal the civil aspect of the
criminal offense and not the crime itself.
In the Reply,24 petitioner argues that the respondent
judge only dismissed the case on the ground of
prescription, since the Resolution dated April 16, 2004
only cited that ground. The Order dated February 10,
2004 merely stated but did not specify the grounds on
which the cases were dismissed. Petitioner also
maintains that the proceedings contemplated in
Section 2 of Act No. 3326 must include the
preliminary investigation proceedings before the
National Prosecution Service in light of the Rules on
Criminal Procedure25 and Revised Rules on
Summary Procedure.
Lastly, petitioner maintains that it did have legal
personality, since in a Petition for Certiorari, "persons
aggrieved x x x may file a verified petition"26 before
the court.
The Petition is denied.
The resolution of this case requires an examination of
both the substantive law and the procedural rules
governing the prosecution of the offense. With regard
to the prescription period, Act No. 3326, as amended,
is the only statute that provides for any prescriptive
period for the violation of special laws and municipal
ordinances. No other special law provides any other
prescriptive period, and the law does not provide any
other distinction. Petitioner may not argue that Act No.
3326 as amended does not apply.
In Romualdez v. Hon. Marcelo,27 this Court defined
the parameters of prescription:
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.28
(Citation omitted)
With regard to the period of prescription, it is now
without question that it is two months for the offense
charged under City Ordinance 003-2000.
The commencement of the prescription period is also
governed by statute. Article 91 of the Revised Penal
Code reads:
Art. 91. Computation of prescription of offenses. —
The period of prescription shall commence to run from
the day on which the crime is discovered by the
offended party, the authorities, or their agents, and
shall be interrupted by the filing of the complaint or
information, and shall commence to run again when
such proceedings terminate without the accused
being convicted or acquitted, or are unjustifiably
stopped for any reason not imputable to him.
The offense was committed on May 7, 2003 and was
discovered by the attendants of the petitioner on the
same day. These actions effectively commenced the
running of the prescription period.
The procedural rules that govern this case are the
1991 Revised Rules on Summary Procedure.
SECTION 1. Scope – This rule shall govern the
summary procedure in the Metropolitan Trial Courts,
the Municipal Trial Courts in Cities, the Municipal Trial
Courts, and the Municipal Circuit Trial Courts in the
following cases falling within their jurisdiction:
xxxx
B. Criminal Cases:
(1) Violations of traffic laws, rules and regulations;
(2) Violations of the rental law;
(3) Violations of municipal or city ordinances
(Emphasis supplied)
Section 11 of the Rules provides that:
Sec. 11. How commenced. — The filing of criminal
cases falling within the scope of this Rule shall be
either by complaint or by information: Provided,
however, that in Metropolitan Manila and in Chartered
Cities, such cases shall be commenced only by
information, except when the offense cannot be
prosecuted de officio.
The Local Government Code provides for the
classification of cities. Section 451 reads:
SEC. 451. Cities, Classified. – A city may either be
component or highly urbanized: Provided, however,
that the criteria established in this Code shall not
affect the classification and corporate status of
existing cities. Independent component cities are
those component cities whose charters prohibit their
voters from voting for provincial elective officials.
Independent component cities shall be independent of
the province.
Cities in the Philippines that were created by law can
either be highly urbanized cities or component cities.
An independent component city has a charter that
proscribes its voters from voting for provincial elective
officials. It stands that all cities as defined by
Congress are chartered cities. In cases as early as
United States v. Pascual Pacis,29 this Court
recognized the validity of the Baguio Incorporation Act
or Act No. 1963 of 1909, otherwise known as the
charter of Baguio City.
As provided in the Revised Rules on Summary
Procedure, only the filing of an Information tolls the
prescriptive period where the crime charged is
involved in an ordinance. The respondent judge was
correct when he applied the rule in Zaldivia v. Reyes.
In Zaldivia v. Reyes, the violation of a municipal
ordinance in Rodriguez, Rizal also featured similar
facts and issues with the present case. In that case,
the offense was committed on May 11, 1990. The
Complaint was received on May 30, 1990, and the
Information was filed with the Metropolitan Trial Court
of Rodriguez on October 2, 1990. This Court ruled
that:
As it is clearly provided in the Rule on Summary
Procedure that among the offenses it covers are
violations of municipal or city ordinances, it should
follow that the charge against the petitioner, which is
for violation of a municipal ordinance of Rodriguez, is
governed by that rule and not Section 1 of Rule 110.
Where paragraph (b) of the section does speak of
"offenses falling under the jurisdiction of the Municipal
Trial Courts and Municipal Circuit Trial Courts," the
obvious reference is to Section 32(2) of B.P. No. 129,
vesting in such courts:
(2) Exclusive original jurisdiction over all offenses
punishable with imprisonment of not exceeding four
years and two months, or a fine of not more than four
thousand pesos, or both such fine and imprisonment,
regardless of other imposable accessory or other
penalties, including the civil liability arising from such
offenses or predicated thereon, irrespective of kind,
nature, value, or amount thereof; Provided, however,
That in offenses involving damage to property through
criminal negligence they shall have exclusive original
jurisdiction where the imposable fine does not exceed
twenty thousand pesos.
These offenses are not covered by the Rules on
Summary Procedure.
Under Section 9 of the Rules on Summary Procedure,
"the complaint or information shall be filed directly in
court without need of a prior preliminary examination
or preliminary investigation." Both parties agree that
this provision does not prevent the prosecutor from
conducting a preliminary investigation if he wants to.
However, the case shall be deemed commenced only
when it is filed in court, whether or not the prosecution
decides to conduct a preliminary investigation. This
means that the running of the prescriptive period shall
be halted on the date the case is actually filed in court
and not on any date before that.
This interpretation is in consonance with the afore-
quoted Act No. 3326 which says that the period of
prescription shall be suspended "when proceedings
are instituted against the guilty party." The
proceedings referred to in Section 2 thereof are
"judicial proceedings," contrary to the submission of
the Solicitor General that they include administrative
proceedings. His contention is that we must not
distinguish as the law does not distinguish. As a
matter of fact, it does.
At any rate, the Court feels that if there be a conflict
between the Rule on Summary Procedure and
Section 1 of Rule 110 of the Rules on Criminal
Procedure, the former should prevail as the special
law. And if there be a conflict between Act No. 3326
and Rule 110 of the Rules on Criminal Procedure, the
latter must again yield because this Court, in the
exercise of its rule-making power, is not allowed to
"diminish, increase or modify substantive rights" under
Article VIII, Section 5(5) of the Constitution.
Prescription in criminal cases is a substantive right.30

Jurisprudence exists showing that when the
Complaint is filed with the Office of the Prosecutor
who then files the Information in court, this already
has the effect of tolling the prescription period. The
recent People v. Pangilinan31 categorically stated
that Zaldivia v. Reyes is not controlling as far as
special laws are concerned. Pangilinan referred to
other cases that upheld this principle as well.
However, the doctrine of Pangilinan pertains to
violations of special laws but not to ordinances.
There is no distinction between the filing of the
Information contemplated in the Rules of Criminal
Procedure and in the Rules of Summary Procedure.
When the representatives of the petitioner filed the
Complaint before the Provincial Prosecutor of Baguio,
the prescription period was running. It continued to
run until the filing of the Information. They had two
months to file the Information and institute the judicial
proceedings by filing the Information with the
Municipal Trial Court. The conduct of the preliminary
investigation, the original charge of Robbery, and the
subsequent finding of the violation of the ordinance
did not alter the period within which to file the
Information. Respondents were correct in arguing that
the petitioner only had two months from the discovery
and commission of the offense before it prescribed
within which to file the Information with the Municipal
Trial Court.
Unfortunately, when the Office of the Prosecutor filed
the Informations on October 5, 2003, the period had
already prescribed. Thus, respondent Judge Nestor
Lidua, Sr. did not err when he ordered the dismissal
of the case against respondents. According to the
Department of Justice – National Prosecutors Service
Manual for Prosecutors, an Information is defined
under Part I, Section 5 as:
SEC. 5. Information. - An information is the
accusation in writing charging a person with an
offense, subscribed by the prosecutor, and filed with
the court. The information need not be placed under
oath by the prosecutor signing the same.
The prosecutor must, however, certify under oath that
–a) he has examined the complainant and his
witnesses;
b) there is reasonable ground to believe that a crime
has been committed and that the accused is probably
guilty thereof;
c) the accused was informed of the complaint and of
the evidence submitted against him; and
d) the accused was given an opportunity to submit
controverting evidence.
As for the place of the filing of the Information, the
Manual also provides that:
SEC. 12. Place of the commission of offense. - The
complaint or information is sufficient if it states that
the crime charged was committed or some of the
ingredients thereof occurred at some place within the
jurisdiction of the court, unless the particular place in
which the crime was committed is an essential
element of the crime, e.g. in a prosecution for
violation of the provision of the Election Code which
punishes the carrying of a deadly weapon in a "polling
place," or if it is necessary to identify the offense
charged, e.g., the domicile in the offense of "violation
of domicile."
Finally, as for the prescription period, the Manual
provides that:
SEC. 20. How Period of Prescription Computed and
Interrupted. - For an offense penalized under the
Revised Penal Code, the period of prescription
commences to run from the day on which the crime is
discovered by the offended party, the authorities, or
their agents, and shall be interrupted:
a) by the filing of the complaint with the Office of the
City/Provincial Prosecutor; or with the Office of the
Ombudsman; or
b) by the filing of the complaint or information with the
court even if it is merely for purposes of preliminary
examination or investigation, or even if the court
where the complaint or information is filed cannot try
the case on its merits.
However, for an offense covered by the Rules on
Summary Procedure, the period of prescription is
interrupted only by the filing of the complaint or
information in court.
xxxx
For violation of a special law or ordinance, the period
of prescription shall commence to run from the day of
the commission of the violation, and if the same is not
known at the time, from the discovery and the
institution of judicial proceedings for its investigation
and punishment. The prescription shall be interrupted
only by the filing of the complaint or information in
court and shall begin to run again if the proceedings
are dismissed for reasons not constituting double
jeopardy. (Emphasis supplied).1âwphi1
Presidential Decree No. 127532 reorganized the
Department of Justice’s Prosecution Staff and
established Regional State Prosecution Offices.
These Regional State Prosecution Offices were
assigned centers for particular regions where the
Informations will be filed. Section 6 provides that the
area of responsibility of the Region 1 Center located
in San Fernando, La Union includes Abra, Benguet,
Ilocos Norte, Ilocos Sur, La Union, Mt. Province,
Pangasinan, and the cities of Baguio, Dagupan,
Laoag, and San Carlos.
The Regional Prosecutor for Region 1 or his/her duly
assigned prosecutor was designated to file the
Information within the two-month period provided for
in Act No. 3326, as amended.1âwphi1
The failure of the prosecutor to seasonably file the
Information is unfortunate as it resulted in the
dismissal of the case against the private respondents.
It stands that the doctrine of Zaldivia is applicable to
ordinances and their prescription period. It also
upholds the necessity of filing the Information in court
in order to toll the period. Zaldivia also has this to say
concerning the effects of its ruling:
The Court realizes that under the above
interpretation, a crime may prescribe even if the
complaint is filed seasonably with the prosecutor's
office if, intentionally or not, he delays the institution of
the necessary judicial proceedings until it is too late.
However, that possibility should not justify a
misreading of the applicable rules beyond their
obvious intent as reasonably deduced from their plain
language.
The remedy is not a distortion of the meaning of the
rules but a rewording thereof to prevent the problem
here sought to be corrected.33
WHEREFORE the Petition is DENIED.
SO ORDERED.
MARVIC MARIO VICTOR F. LEONEN
Associate Justice