1.G.R. No.

186597, June 17, 2015

PEOPLE OF THE PHILIPPINES, Petitioner, v. VICTORIA R. ARAMBULO AND
MIGUEL ARAMBULO, JR., Respondents.
DECISION
PEREZ, J.:
This Petition for Review on Certiorari seeks to annul the Decision1 and Resolution2
dated 5 February 2008 and 27 February 2009, respectively of the Court of Appeals,
Seventeenth Division in CA-G.R. SP No. 86353 which effectively suspended the
criminal proceedings in Criminal Case No. C-62784, an estafa case against
respondents before the Regional Trial Court (RTC), Branch 121, Caloocan City.
Records show that respondent Victoria R. Arambulo (Victoria), ET., AL Emerenciana
R. Gungab, Reynaldo Reyes (Reynaldo), Domingo Reyes (Domingo), Rodrigo Reyes
and Oscar Reyes (Oscar) are the heirs of Spouses Pedro C. Reyes and Anastacia
Reyes. Anaped Estate Inc. (Anaped) was incorporated as part of the estate planning
or as conduit to hold the properties of the estate of Pedro Reyes for and in behalf of
his heirs.
Jose Buban (Buban), as Vice-President and General Manager of Anaped Estate Inc.
(Anaped), filed a complaint for estafa against Victoria and her husband Miguel
Arambulo, Jr. (Miguel) before the Office of the City Prosecutor of Caloocan City. He
alleged that Victoria failed to remit the rentals collected from the time the
ownership of the commercial apartments was transferred to Anaped.
On 24 April 2001, Assistant City Prosecutor Alvin A. Almora recommended the filing
of an Information against respondents. On 1 June 2001, respondents were charged
with estafa committed as follow:chanRoblesvirtualLawlibrary
That on [or] about the period from December, 1994 to June, 1997, in the City of
Caloocan, Philippines, and within the jurisdiction of the Honorable Court, the said
accused, conspiring together and mutually helping one another, and with
unfaithfulness or abuse of confidence, after having received rentals from IMF
International Corporation, in the total amount of THREE HUNDRED NINETEEN
THOUSAND EIGHT HUNDRED EIGHTY-EIGHT (P319,888.00) PESOS, under the
express obligation of turning over or remitting the same to ANAPED ESTATE
INCORPORATED, once in possession of the said amount and far from complying with
their obligation aforesaid and despite notice [to] that effect, the said accused did
then and there willfully, unlawfully and feloniously misappropriate, misapply, and
convert the said amount to their own personal use and benefit to the damage and
prejudice of ANAPED ESTATE, INC., in the sum above-aforementioned. 3
On 14 April 2003, respondents filed a Motion to Suspend Proceedings on the ground
of a prejudicial question in view of the pendency of two intra-corporate cases
pending before the RTC of Quezon City and Makati City. SEC Case No. 05-97-5659 is
a petition filed by Victorias brother Oscar for accounting of all corporate funds and
assets of Anaped, annulment of sale, injunction, receivership and damages. 4 SEC
Case No. 03-99-6259 is a petition filed by Victoria and her brothers Reynaldo and

Domingo questioning the authority of their elder sibling Rodrigo Reyes and
Emerenciana R. Gungab, as well as the Anaped Board of Directors and officers,
including private complainant Buban to act for and in behalf of the
corporation.5chanrobleslaw
In their motion to suspend proceedings, respondents asserted that the resolution of
the SEC cases in their favor particularly the issues of whether of the group of
Rodrigo and Buban are the lawful representatives of the corporation and whether
they are duly authorized to make a demand for remittance would necessarily result
in their acquittal in the criminal case.
On 28 August 2003, the trial court, through Presiding Judge Adoracion G. Angeles,
granted the motion for suspension of the proceedings. The trial court reasoned that
the issue in the SEC cases, i.e., who between the groups has the right to act for and
in behalf of the corporation, has a direct link to the issue of the culpability of the
accused for estafa, thus:chanRoblesvirtualLawlibrary
For indeed, if the aforesaid issues are resolved in the [respondents] favor, they
cannot be held liable for misappropriation for they possess the authority to collect
rentals and hold the same on behalf of the firm. They would then be justified in not
remitting the collections to the group of Jose Buban who would be then deemed as
mere usurpers of authority.6
Acting on the Motion for Reconsideration filed by petitioner, the trial court issued an
Order dated 19 February 2004 setting aside its 28 August 2003 Order and setting
the case for pre-trial. The trial court noted that respondents failed to file an
opposition to the motion for reconsideration.
Respondents filed an Omnibus Motion praying that they be allowed to file their
Comment/Opposition to the motion for reconsideration and that the pre-trial be held
in abeyance. Respondents claimed that the Order of the trial court to file
comment/opposition was served on respondents themselves and not on their
counsel.
On 23 June 2004, the trial court denied respondents Omnibus Motion. The trial
court stressed that even if the order was served upon respondents and not upon
their counsel, records show that a copy of the motion for reconsideration was
served by registered mail upon counsel. Thus, the trial court stated that
respondents counsel was well aware of the existence of the motion for
reconsideration, thus he could have taken the initiative to file his comment thereto
without waiting for any directive from the court.
Aggrieved, respondents filed a petition for certiorari before the Court of Appeals
asserting that the trial court committed grave abuse of discretion when it denied
them the opportunity to file their comment; when it ruled that respondents counsel
should have filed the comment as he was furnished a copy of the motion for
reconsideration; and when it granted petitioners motion for reconsideration.
On 5 February 2008, the Court of Appeals granted the petition. The dispositive
portion reads:chanRoblesvirtualLawlibrary
WHEREFORE, the assailed Orders of the respondent Judge dated February 19,
2004 and July 23, 2004 are REVERSED and SET ASIDE and she is hereby enjoined

from hearing the Criminal Case No. C-62784 until the termination of the SEC Case
No. 03-99-6259. The August 28, 2003 Order of the respondent Judge is hereby
REINSTATED.7
Preliminarily, on the procedural question, the Court of Appeals pointed out that
respondents were given the opportunity to present their side in their motion to
suspend proceedings. The appellate court treated respondents arguments in said
motion as their Comment/Opposition to the Motion for Reconsideration filed by
petitioner. That is correct.
The appellate court ruled that in SEC Case No. 03-996259:chanRoblesvirtualLawlibrary
[T]he issue is the legality of the election of Anaped Board of Directors, as well as the
authority of its officers, which include private complainant Jose Buban, to act for and
in behalf of the corporation. Clearly, it involves facts that are intimately related to
those upon which the criminal case is based. The resolution of the issues raised in
this intra-corporate dispute will ultimately determine the guilt or innocence of
[respondents] in the crime of estafa initiated by Jose Buban. It must be remembered
that one of the elements of the crime of estafa with abuse of confidence under
paragraph 1 (b) of Article 315 of the Revised Penal Code is a demand made by the
offended party to the offender. A valid demand must therefore be made by an
offended party to the offender.8
The appellate court added that since respondents are challenging the authority of
Buban, then the validity of Bubans demand to turn over or remit the rentals is put
in question. The appellate court concluded that if the supposed authority of Buban
is found to be defective, it is as if no demand was ever made, hence the prosecution
for estafa cannot prosper.
Petitioner filed a motion for reconsideration but it was denied in a Resolution dated
27 February 2009.
In this petition for review on certiorari, petitioner raises the lone ground of whether
the Court of Appeals erred in declaring that there exists a prejudicial question which
calls for the suspension of the criminal proceedings before the trial court.
Petitioner argues that any decision of the trial court in the SEC cases with respect to
the question of who are the lawful officers or directors of Anaped is not
determinative of the liability of respondents to remit the rental collections in favor
of Anaped. Petitioner proffers that a corporation has a personality distinct and
separate from its individual stockholders. Petitioner emphasizes that at the time the
demand for remittance of the rental collections was made against respondents,
Buban was an officer of Anaped and until such time that his authority is validly
revoked, all his previous acts are valid and binding. Moreover, petitioner avers that
the duty of respondents to remit the collection still subsists even during the
pendency of the SEC cases as the money remitted goes directly to the corporation
and not to the person who demanded the remittance. Finally, petitioner opines that
question pertaining to the authority of Buban to demand remittance may only be
considered as a defense in the estafa case and not as a ground to suspend the
proceedings.
A prejudicial question is one that arises in a case the resolution of which is a logical

antecedent of the issue involved therein, and the cognizance of which pertains to
another tribunal. It is a question based on a fact distinct and separate from the
crime but so intimately connected with it that it determines the guilt or innocence of
the accused, and for it to suspend the criminal action, it must appear not only that
said case involves facts intimately related to those upon which the criminal
prosecution would be based but also that in the resolution of the issue or issues
raised in the civil case, the guilt or innocence of the accused would necessarily be
determined.9chanrobleslaw
Section 7, Rule 111 of the 2000 Rules of Criminal Procedure prescribes the elements
that must concur in order for a civil case to be considered a prejudicial question, to
wit:chanRoblesvirtualLawlibrary
Section 7. Elements of prejudicial question. The elements of a prejudicial question
are: (a) the previously instituted civil action involves an issue similar or intimately
related to the issue raised in the subsequent criminal action, and (b) the resolution
of such issue determines whether or not the criminal action may
proceed.chanroblesvirtuallawlibrary
Aptly put, the following requisites must be present for a civil action to be considered
prejudicial to a criminal case as to cause the suspension of the criminal proceedings
until the final resolution of the civil case: (1) the civil case involves facts intimately
related to those upon which the criminal prosecution would be based; (2) in the
resolution of the issue or issues raised in the civil action, the guilt or innocence of
the accused would necessarily be determined; and (3) jurisdiction to try said
question must be lodged in another tribunal. 10chanrobleslaw
As correctly stated by the Court of Appeals, SEC Case No. 05-97-5659 does not
present a prejudicial question to the criminal case for estafa. It is an action for
accounting of all corporate funds and assets of Anaped, annulment of sale,
injunction, receivership and damages. Even if said case will be decided against
respondents, they will not be adjudged free from criminal liability. It also does not
automatically follow that an accounting of corporate funds and properties and
annulment of fictitious sale of corporate assets would result in the conviction of
respondents in the estafa case.
With respect to SEC Case No. 03-99-6259, however, we affirm the Court of Appeals
finding that a prejudicial question exists. The Complaint in SEC Case No. 03-99-6259
prays for the nullification of the election of Anaped directors and officers, including
Buban. Essentially, the issue is the authority of the aforesaid officers to act for and
behalf of the corporation.
On the other hand, the issue in the criminal case pertains to whether respondents
committed estafa. Under Article 315, paragraph 1(b) of the RPC, the elements of
estafa with abuse of confidence are as follows: (1) that the money, goods or other
personal property is received by the offender in trust or on commission, or for
administration, or under any other obligation involving the duty to make delivery of,
or to return, the same; (2) that there be misappropriation or conversion of such
money or property by the offender, or denial on his part of such receipt; (3) that
such misappropriation or conversion or denial is to the prejudice of another; and (4)
that there is demand by the offended party to the offender. 11chanrobleslaw

The elements of demand and misappropriation bear relevance to the validity or

invalidity of the authority of Anaped directors and officers. In Omictin v. Court of
Appeals,12 we held that since the alleged offended party is the corporation, the
validity of the demand for the delivery rests upon the authority of the person
making such a demand on the companys behalf. If the supposed authority of the
person making the demand is found to be defective, it is as if no demand was ever
made, hence the prosecution for estafa cannot prosper. The Court added that mere
failure to return the thing received for administration or under any other obligation
involving the duty to deliver or return the same or deliver the value thereof to the
owner could only give rise to a civil action and does not constitute the crime of
estafa.13chanrobleslaw
It is true that the accused may be convicted of the felony under Article 315,
paragraph 1(b) of the Revised Penal Code if the prosecution proves
misappropriation or conversion by the accused of the money or property subject of
the Information. In a prosecution for estafa, demand is not necessary where there is
evidence of misappropriation or conversion. 14 The phrase, to misappropriate to
ones own use has been said to include not only conversion to ones personal
advantage, but also every attempt to dispose of the property of another without
right.15 In this case, the resolution of the issue of misappropriation by respondents
depends upon the result of SEC Case No. 03-99-6259. If it is ruled in the SEC case
that the present Anaped directors and officers were not validly elected, then
respondent Victoria may have every right to refuse remittance of rental to Buban.
Hence, the essential element of misappropriation in estafa may be absent in this
case.
In this connection, we find important the fact, noted by the CA,
that:chanRoblesvirtualLawlibrary
It appears from the record of the case that Victoria Arambulo for the last twenty
(20) years had been tasked with the management and collection of rentals of the
real properties the Reyes siblings inherited from their parents, Ana and Pedro
Reyes.16
As earlier mentioned, SEC Case No. 03-99-6259 is a petition filed by Victoria and her
brothers Domingo and Reynaldo questioning the very authority of their elder
siblings Rodrigo and Emerenciana, as well as the Anaped Board of Directors and
Officers, including Buban to act for and in behalf of the corporation. We find this
issue consonant with the provisions of the Corporation Code which provides in
Section 23 that:chanRoblesvirtualLawlibrary
Sec. 23. The Board of Directors or Trustees. - Unless otherwise provided in this
Code, the corporate powers of all corporations formed under this Code shall be
exercised, all business conducted and all property of such corporations controlled
and held by the board of directors or trustees to be elected from among the holders
of stocks, or where there is no stock, from among the members of the corporation,
who shall hold office for one (1) year and until their successors are elected and
qualified.chanroblesvirtuallawlibrary
In Valle Verde Country Club, Inc. v. Africa,17 we said that:chanRoblesvirtualLawlibrary
The underlying policy of the Corporation Code is that the business and affairs of the
corporation must be governed by a board of directors whose members have stood
for election, and who have actually been elected by the stockholders, on an annual
basis. Only in that way can the directors continued accountability to shareholders,

and the legitimacy of their decisions that bind the corporations stockholders, be
assured. The shareholder vote is critical to the theory that legitimizes the exercise
of power by the directors or officers over properties that they do not
own.chanroblesvirtuallawlibrary
From the foregoing, it is clear that, should respondents herein prevail in SEC Case
No. 03-99-6259, then Buban, who does not own either by himself or in behalf of
Anaped which is the owner, the property heretofore managed by Victoria, cannot
demand remittance of the rentals on the property and Victoria does not have the
obligation to turn over the rentals to Buban.
Verily, the result of SEC Case No. 03-99-6259 will determine the innocence or guilt
of respondents in the criminal case for estafa.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated 5 February 2008 and 27 February 2009 enjoining the Regional Trial
Court of Caloocan City, Branch 121 from hearing Criminal Case No. C-62784 until
the termination of SEC Case No. 03-99-6259, are AFFIRMED.
SO ORDERED.cralawlawlibrary

2.Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 188767

July 24, 2013

SPOUSES ARGOVAN AND FLORIDA GADITANO, Petitioners,

vs.
SAN MIGUEL CORPORATION, Respondent.

DECISION
PEREZ, J.:
For review on certiorari are the Decision dated 11 March 2008 and Resolution dated
16 July 2009 of the Court of Appeals in CA-G.R. SP No. 88431 which reversed the
Resolutions issued by the Secretary of Justice, suspending the preliminary
investigation of I.S. No. 01-4205 on the ground of prejudicial question.
Petitioner Spouses Argovan Gaditano (Argovan) and Florida Gadiano (Florida), who
were engaged in the business of buying and selling beer and softdrinks products,
purchased beer products from San Miguel Corporation (SMC) in the amount of P285,
504.00 on 7 April 2000. Petitioners paid through a check signed by Florida and
drawn against Argovans Asia Trust Bank Current Account. When said check was
presented for payment on 13 April 2000, the check was dishonored for having been
drawn against insufficient funds. Despite three (3) written demands,1 petitioner
failed to make good of the check. This prompted SMC to file a criminal case for
violation of Batas Pambansa Blg. 22 and estafa against petitioners, docketed as I.S.
No. 01-4205 with the Office of the Prosecutor in Quezon City on 14 March 2001.
In their Counter-Affidavit, petitioners maintained that their checking account was
funded under an automatic transfer arrangement, whereby funds from their joint
savings account with AsiaTrust Bank were automatically transferred to their
checking account with said bank whenever a check they issued was presented for
payment. Petitioners narrated that sometime in 1999, Fatima Padua (Fatima)
borrowed P30,000.00 from Florida. On 28 February 2000, Fatima delivered Allied
Bank Check No. 82813 dated 18 February 2000 payable to Florida in the amount of
P378,000.00. Said check was crossed and issued by AOWA Electronics. Florida
pointed out that the amount of the check was in excess of the loan but she was
assured by Fatima that the check was in order and the proceeds would be used for
the payroll of AOWA Electronics. Thus, Florida deposited said check to her joint
AsiaTrust Savings Account which she maintained with her husband, Argovan. The
check was cleared on 6 March 2000 and petitioners joint savings account was
subsequently credited with the sum of P378,000.00. Florida initially paid P83,000.00
to Fatima. She then withdrew P295,000.00 from her joint savings account and
turned over the amount to Fatima. Fatima in turn paid her loan to Florida.
Petitioners claimed that on 7 April 2000, the date when they issued the check to
SMC, their joint savings account had a balance of P330,353.17.2 As of 13 April 2000,
petitioners balance even amounted to P412,513.17.3
On 13 April 2000, Gregorio Guevarra (Guevarra), the Bank Manager of AsiaTrust
Bank, advised Florida that the Allied Bank Check No. 82813 for P378,000.00, the
same check handed to her by Fatima, was not cleared due to a material alteration in

the name of the payee. Guevarra explained further that the check was allegedly
drawn payable to LG Collins Electronics, and not to her, contrary to Fatimas
representation. AsiaTrust Bank then garnished the P378,000.00 from the joint
savings account of petitioners without any court order. Consequently, the check
issued by petitioners to SMC was dishonored having been drawn against insufficient
funds.
On 23 October 2000, petitioners filed an action for specific performance and
damages against AsiaTrust Bank, Guevarra, SMC and Fatima, docketed as Civil Case
No. Q-00-42386. Petitioners alleged that AsiaTrust Bank and Guevarra unlawfully
garnished and debited their bank accounts; that their obligation to SMC had been
extinguished by payment; and that Fatima issued a forged check.
Petitioners assert that the issues they have raised in the civil action constitute a bar
to the prosecution of the criminal case for violation of Batas Pambansa Blg. 22 and
estafa.
On 29 January 2002, the Office of the Prosecutor recommended that the criminal
proceedings be suspended pending resolution of Civil Case No. Q-00-42386. SMC
thereafter filed a motion for reconsideration before the Office of the Prosecutor but
it was denied for lack of merit on 19 September 2002.
SMC filed with the Department of Justice (DOJ) a petition for review challenging the
Resolutions of the Office of the Prosecutor. In a Resolution dated 3 June 2004, the
DOJ dismissed the petition. SMC filed a motion for reconsideration, which the DOJ
Secretary denied in a Resolution dated 15 December 2004.
Undaunted, SMC went up to the Court of Appeals by filling a petition for certiorari,
docketed as CA-G.R. SP No. 88431. On 11 March 2008, the Court of Appeals
rendered a Decision granting the petition as follows:
IN THE LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Resolutions of
the Department of Justice dated June 3, 2004 and December 15, 2004 are SET
ASIDE. In view thereof, let the suspension of the preliminary investigation of the
case docketed as I.S. No. 01-4205 with the Office of the Prosecutor of Quezon City
be LIFTED. Accordingly, the continuation of the preliminary investigation until
completed is ordered and if probable cause exists, let the corresponding information
against the respondents be filed.4
The Court of Appeals drew a distinction between the civil case which is an action for
specific performance and damages involving petitioners joint savings account, and
the criminal case which is an action for estafa/violation of Batas Pambansa Blg. 22
involving Argovans current account. The Court of Appeals belied the claim of

petitioners about an automatic fund transfer arrangement from petitioners joint

savings account to Argovans current account.
By petition for review, petitioners assail the ruling of the Court of Appeals on the
following grounds:
I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND EXCEEDED
THE BOUNDS OF ITS JURISDICTION IN GIVING DUE COURSE TO
RESPONDENTS PETITION FOR CERTIORARI.
II. THE COURT OF APPEALS ERRED IN REVERSING THE RESOLUTIONS DATED
JUNE 3, 2004 AND DECEMBER 15, 2004 OF THE DOJ, THERE BEING NO GRAVE
ABUSE OF DISCRETION.
III. THE COURT OF APPEALS ERRED IN RULING THAT THERE WAS NO
PREJUDICIAL QUESTION BELOW BECAUSE TWO DIFFERENT BANK ACCOUNTS
ARE INVOLVED IN THE CIVIL AND CRIMINAL CASES.
IV. THE APPELLATE COURT ERRED IN REQUIRING PETITIONERS TO PRESENT
EVIDENCE TO PROVE THE PREJUDICIAL QUESTION DURING THE PRELIMINARY
INVESTIGATION.5
The issues raised by petitioners are divided into the procedural issue of whether
certiorari is the correct mode of appeal to the Court of Appeals and the substantive
issue of whether a prejudicial question exists to warrant the suspension of the
criminal proceedings.
On the procedural issue, petitioners contend that SMCs resort to certiorari under
Rule 65 was an improper remedy because the DOJs act of sustaining the
investigating prosecutors resolution to suspend the criminal proceedings due to a
valid prejudicial question was an error in judgment and not of jurisdiction.
Petitioners further assert that nevertheless, an error of judgment is not correctible
by certiorari when SMC had a plain, speedy and adequate remedy, which was to file
an appeal to the Office of the President.
The procedure taken up by petitioner was correct.
The Court of Appeals is clothed with jurisdiction to review the resolution issued by
the Secretary of the DOJ through a petition for certiorari under Rule 65 of the Rules
of Court albeit solely on the ground that the Secretary of Justice committed grave
abuse of his discretion amounting to excess or lack of jurisdiction. 6
In Alcaraz v. Gonzalez,7 we stressed that the resolution of the Investigating
Prosecutor is subject to appeal to the Justice Secretary who exercises the power of

control and supervision over said Investigating Prosecutor; and who may affirm,
nullify, reverse, or modify the ruling of such prosecutor. Thus, while the Court of
Appeals may review the resolution of the Justice Secretary, it may do so only in a
petition for certiorari under Rule 65 of the Rules of Court, solely on the ground that
the Secretary of Justice committed grave abuse of his discretion amounting to
excess of lack of jurisdiction.8
Also, in Tan v. Matsuura,9 we held that while the findings of prosecutors are
reviewable by the DOJ, this does not preclude courts from intervening and
exercising our own powers of review with respect to the DOJs findings. In the
exceptional case in which grave abuse of discretion is committed, as when a clear
sufficiency or insufficiency of evidence to support a finding of probable cause is
ignored, the Court of Appeals may take cognizance of the case via a petition under
Rule 65 of the Rules of Court. 10
We agree with the Court of Appeals that the DOJ abused its discretion when it
affirmed the prosecutors suspension of the criminal investigation due to the
existence of an alleged prejudicial question.
We expound.
Petitioners insist that the Court of Appeals erroneously ruled against the existence
of a prejudicial question by separately treating their joint savings account and
Argovans current account, and concluding therefrom that the civil and criminal
cases could proceed independently of each other.
It is argued that the appellate court overlooked the fact that petitioners had an
automatic transfer arrangement with AsiaTrust Bank, such that funds from the
savings account were automatically transferred to their checking account whenever
a check they issued was presented for payment.
Petitioners maintain that since the checking account was funded by the monies
deposited in the savings account, what mattered was the sufficiency of the funds in
the savings account. Hence, petitioners separate action against AsiaTrust Bank for
unlawfully garnishing their savings account, which eventually resulted in the
dishonor of their check to SMC, poses a prejudicial question in the instant criminal
proceedings.
Moreover, petitioners argue that they were not required to fully and exhaustively
present evidence to prove their claims. The presentation of their passbook, which
confirmed numerous withdrawals made on the savings account and indicated as
"FT" or "Fund Transfer," proved the existence of fund transfer from their savings
account to the checking account.

A prejudicial question generally comes into play in a situation where a civil action
and a criminal action are both pending and there exists in the former an issue which
must be preemptively resolved before the latter may proceed, because howsoever
the issue raised in the civil action is resolved would be determinative juris et de jure
of the guilt or innocence of the accused in the criminal case. The rationale behind
the principle of prejudicial question is to avoid two conflicting decisions.11
Section 7, Rule 111 of the 2000 Rules of Criminal Procedure states the two elements
necessary for a civil case to be considered a prejudicial question, to wit:
Section 7. Elements of prejudicial question. The elements of a prejudicial question
are: (a) the previously instituted civil action involves an issue similar or intimately
related to the issue raised in the subsequent criminal action, and (b) the resolution
of such issue determines whether or not the criminal action may proceed.
(Emphasis supplied).
If both civil and criminal cases have similar issues, or the issue in one is intimately
related to the issues raised in the other, then a prejudicial question would likely
exist, provided that the other element or characteristic is satisfied. It must appear
not only that the civil case involves the same facts upon which the criminal
prosecution would be based, but also that the resolution of the issues raised in the
civil action would be necessarily determinative of the guilt or innocence of the
accused. If the resolution of the issue in the civil action will not determine the
criminal responsibility of the accused in the criminal action based on the same
facts, or if there is no necessity that the civil case be determined first before taking
up the criminal case, the civil case does not involve a prejudicial question. Neither is
there a prejudicial question if the civil and the criminal action can, according to law,
proceed independently of each other. 12
The issue in the criminal case is whether the petitioner is guilty of estafa and
violation of Batas Pambansa Blg. 22, while in the civil case, it is whether AsiaTrust
Bank had lawfully garnished the P378,000.00 from petitioners savings account.
The subject of the civil case is the garnishment by AsiaTrust Bank of petitioners
savings account.1wphi1 Based on petitioners account, they deposited the check
given to them by Fatima in their savings account. The amount of said check was
initially credited to petitioners savings account but the Fatima check was later on
dishonored because there was an alleged alteration in the name of the payee. As a
result, the bank debited the amount of the check from petitioners savings account.
Now, petitioners seek to persuade us that had it not been for the unlawful
garnishment, the funds in their savings account would have been sufficient to cover
a check they issued in favor of SMC.

The material facts surrounding the civil case bear no relation to the criminal
investigation being conducted by the prosecutor. The prejudicial question in the civil
case involves the dishonor of another check. SMC is not privy to the nature of the
alleged materially altered check leading to its dishonor and the eventual
garnishment of petitioners savings account. The source of the funds of petitioners
savings account is no longer SMCs concern. The matter is between petitioners and
Asia Trust Bank. On the other hand, the issue in the preliminary investigation is
whether petitioners issued a bad check to SMC for the payment of beer products.
The gravamen of the offense punished by Batas Pambansa Blg. 22 is the act of
making and issuing a worthless check or a check that is dishonored upon its
presentation for payment.13 Batas Pambansa Blg. 22 punishes the mere act of
issuing a worthless check. The law did not look either at the actual ownership of the
check or of the account against which it was made, drawn, or issued, or at the
intention of the drawee, maker or issuer. 14 The thrust of the law is to prohibit the
making of worthless checks and putting them into circulation. 15
Even if the trial court in the civil case declares Asia Trust Bank liable for the unlawful
garnishment of petitioners savings account, petitioners cannot be automatically
adjudged free from criminal liability for violation of Batas Pambansa Blg. 22,
because the mere issuance of worthless checks with knowledge of the insufficiency
of funds to support the checks is in itself the offense. 16
Furthermore, three notices of dishonor were sent to petitioners, who then, should
have immediately funded the check. When they did not, their liabilities under the
bouncing checks law attached. Such liability cannot be affected by the alleged
prejudicial question because their failure to fund the check upon notice of dishonour
is itself the offense.
In the crime of estafa under Article 315, paragraph 2(d) of the Revised Penal Code,
deceit and damage are additional and essential elements of the offense. It is the
fraud or deceit employed by the accused in issuing a worthless check that is
penalized.17 A prima facie presumption of deceit arises when a check is dishonored
for lack or insufficiency of funds. 18 Records show that a notice of dishonor as well as
demands for payment, were sent to petitioners. The presumption of deceit applies,
and petitioners must overcome this presumption through substantial evidence.
These issues may only be threshed out in a criminal investigation which must
proceed independently of the civil case.
Based on the foregoing, we rule that the resolution or the issue raised in the civil
action is not determinative or the guilt or innocence of the accused in the criminal
investigation against them. There is no necessity that the civil case be determined
firrst before taking up the criminal complaints.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals
dated 11 March 2008 and its Resolution dated 16 July 2000, in CA-G.R. SP No.
88431, are hereby AFFIRMED.
SO ORDERED.

3.Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION
G.R. No. 159823

February 18, 2013

TEODORO A. REYES, Petitioner,

vs.
ETTORE ROSSI, Respondent.
DECISION
BERSAMIN, J.:
The rescission of a contract of sale is not a prejudicial question that will warrant the
suspension of the criminal proceedings commenced to prosecute the buyer for
violations of the Bouncing Checks Law (Batas Pambansa Blg. 22) arising from the
dishonor of the checks the buyer issued in connection with the sale.
Antecedents
On October 31, 1997, petitioner Teodoro A. Reyes (Reyes) and Advanced Foundation
Construction Systems Corporation (Advanced Foundation), represented by its
Executive Project Director, respondent Ettore Rossi (Rossi), executed a deed of
conditional sale involving the purchase by Reyes of equipment consisting of a
Warman Dredging Pump HY 300A worth P10,000,000.00. The parties agreed therein
that Reyes would pay the sum of P3,000,000.00 as downpayment, and the balance
of P7,000,000.00 through four post-dated checks. Reyes complied, but in January
1998, he requested the restructuring of his obligation under the deed of conditional
sale by replacing the four post-dated checks with nine post-dated checks that would
include interest at the rate of P25,000.00/month accruing on the unpaid portion of
the obligation on April 30, 1998, June 30, 1998, July 31, 1998, September 30, 1998
and October 31, 1998.1
Advanced Foundation assented to Reyes request, and returned the four checks. In
turn, Reyes issued and delivered the following nine postdated checks in the
aggregate sum of P7,125,000.00 drawn against the United Coconut Planters Bank, 2
to wit:
Check No.

Date

Amount

72807

April 30, 1998

P 25,000.00

79125

May 1, 1998

1,000,000.00

72802

May 30, 1998

2,000,000.00

72808

June 30, 1998

25,000.00

72809

July 31, 1998

25,000.00

72801

August 31, 1998

2,000,000.00

72810

September 30, 1998

25,000.00

72811

October 31, 1998

25,000.00

72903

November 30, 1998

2,000,000.00

Rossi deposited three of the post-dated checks (i.e., No. 72807, No. 79125 and No.
72808) on their maturity dates in Advanced Foundations bank account at the PCI
Bank in Makati. Two of the checks were denied payment ostensibly upon Reyes
instructions to stop their payment, while the third (i.e., No. 72802) was dishonored
for insufficiency of funds.3
Rossi likewise deposited two more checks (i.e., No. 72809 and No. 72801) in
Advanced Foundations account at the PCI Bank in Makati, but the checks were
returned with the notation Account Closed stamped on them. He did not anymore
deposit the three remaining checks on the assumption that they would be similarly
dishonored.4
In the meanwhile, on July 29, 1998, Reyes commenced an action for rescission of
contract and damages in the Regional Trial Court in Quezon City (RTC). His
complaint, docketed as Civil Case No. Q98-35109 and entitled Teodoro A. Reyes v.
Advanced Foundation Construction Systems Corporation, sought judgment declaring
the deed of conditional sale "rescinded and of no further force and effect," and
ordering Advanced Foundation to return the P3,000,000.00 downpayment with legal
interest from June 4, 1998 until fully paid; and to pay to him attorneys fees, and
various kinds and amounts of damages.5
On September 8, 1998, Rossi charged Reyes with five counts of estafa and five
counts of violation of Batas Pambansa Blg. 22 in the Office of the City Prosecutor of
Makati for the dishonor of Checks No. 72807, No. 72808, No. 72801, No. 72809 and
No. 79125. Another criminal charge for violation of Batas Pambansa Blg. 22 was
lodged against Reyes in the Office of the City Prosecutor of Quezon City for the
dishonor of Check No. 72802.6
On September 29, 1998, Reyes submitted his counter-affidavit in the Office of the
City Prosecutor of Makati,7 claiming that the checks had not been issued for any
valuable consideration; that he had discovered from the start of using the dredging
pump involved in the conditional sale that the Caterpillar diesel engine powering
the pump had been rated at only 560 horsepower instead of the 1200 horsepower
Advanced Foundation had represented to him; that welding works on the pump had
neatly concealed several cracks; that on May 6, 1998 he had written to Advanced
Foundation complaining about the misrepresentations on the specifications of the
pump and demanding documentary proof of Advanced Foundations ownership of
the pump; that he had caused the order to stop the payment of three checks (i.e.,
No. 72806, No. 72807 and No. 79125); that Advanced Foundation had replied to his
letter on May 8, 1998 by saying that the pump had been sold to him on an as is,
where is basis; that he had then sent another letter to Advanced Foundation on May
18, 1998 to reiterate his complaints and the request for proper documentation of
ownership; that he had subsequently discovered other hidden defects, prompting
him to write another letter; and that instead of attending to his complaints and
request, Advanced Foundations lawyers had threatened him with legal action.

At the same time, Reyes assailed the jurisdiction of the Office of the City Prosecutor
of Makati over the criminal charges against him on the ground that he had issued
the checks in Quezon City; as well as argued that the Office of the City Prosecutor of
Makati should suspend the proceedings because of the pendency in the RTC of the
civil action for rescission of contract that posed a prejudicial question as to the
criminal proceedings.8
On November 20, 1998, the Assistant City Prosecutor handling the preliminary
investigation recommended the dismissal of the charges of estafa and the
suspension of the proceedings relating to the violation of Batas Pambansa Blg. 22
based on a prejudicial question.9
On January 5, 1999, the City Prosecutor of Makati approved the recommendation of
the handling Assistant City Prosecutor, 10 stating:
WHEREFORE, premises considered, the complaint for Estafa is respectfully
recommended to be dismissed, as upon approval, it is hereby dismissed.
Further, it is respectfully recommended that the proceedings in the charge for
Violation of Batas Pambansa Bilang 22 against the respondent be suspended until
the prejudicial question raised in Civil Case Q-98-35109 for Rescission of Contract
and Damages which is now pending with the RTC of Quezon City, Branch 224, has
been duly resolved.
Rossi appealed the resolution of the City Prosecutor to the Department of Justice,
but the Secretary of Justice, by resolution of July 24, 2001, denied Rossis petition
for review.
After the denial of his motion for reconsideration on April 29, 2002, Rossi challenged
the resolutions of the Secretary of Justice by petition for certiorari in the CA.
Ruling of the CA
In the petition for certiorari, Rossi insisted that the Secretary of Justice had
committed grave abuse of discretion amounting to lack or excess of jurisdiction in
upholding the suspension of the criminal proceedings by the City Prosecutor of
Makati on account of the existence of a prejudicial question, and in sustaining the
dismissal of the complaints for estafa.
On May 30, 2003, the CA promulgated its assailed decision,11 to wit:
WHEREFORE, the foregoing considered, the assailed resolution is hereby
MODIFIED and the instant petition is GRANTED in so far as the issue of the
existence of prejudicial question is concerned. Accordingly, the order suspending
the preliminary investigation in I.S. No. 98-40024-29 is REVERSED and SET ASIDE,
and the dismissal of the complaint for estafa is AFFIRMED.
SO ORDERED.

Issues
Hence, this appeal by Reyes.
Reyes asserts that the CA erred in ruling that there was no prejudicial question that
warranted the suspension of the criminal proceedings against him; that the petition
suffered fatal defects that merited its immediate dismissal; that the CA was wrong
in relying on the pronouncements in Balgos, Jr. v. Sandiganbayan12 and Umali v.
Intermediate Appellate Court13 because the factual backgrounds thereat were not
similar to that obtaining here; and that the Secretary of Justice did not commit any
grave abuse of discretion amounting to lack or excess of jurisdiction.
In his comment,14 Rossi counters that the petition for review should be outrightly
dismissed because of its fatal defect; that the CA did not err in ruling that the action
for rescission of contract did not pose a prejudicial question that would suspend the
criminal proceedings.
Reyes submitted a reply,15 declaring that the defect in the affidavit of service
attached to his petition for review had been due to oversight; that he had
substantially complied with the rules; that there existed a prejudicial question that
could affect the extent of his liability in light of Supreme Court Administrative
Circular No. 12-2000; and that the CA erred in finding that the Secretary of Justice
committed grave abuse of discretion.
To be resolved is whether or not the civil action for rescission of the contract of sale
raised a prejudicial question that required the suspension of the criminal
prosecution for violation of Batas Pambansa Blg. 22.
Ruling
The petition for review is without merit.
A prejudicial question generally comes into play in a situation where a civil action
and a criminal action are both pending, and there exists in the former an issue that
must first be determined before the latter may proceed, because howsoever the
issue raised in the civil action is resolved would be determinative juris et de jure of
the guilt or innocence of the accused in the criminal case. 16 The rationale for the
suspension on the ground of a prejudicial question is to avoid conflicting decisions. 17
Two elements that must concur in order for a civil case to be considered a
prejudicial question are expressly stated in Section 7, Rule 111 of the 2000 Rules of
Criminal Procedure, to wit:
Section 7. Elements of prejudicial question. The elements of a prejudicial question
are: (a) the previously instituted civil action involves an issue similar or intimately
related to the issue raised in the subsequent criminal action, and (b) the resolution
of such issue determines whether or not the criminal action may proceed.
In Sabandal v. Tongco,18 the concept of prejudicial question is explained in this wise:

For a civil action to be considered prejudicial to a criminal case as to cause the

suspension of the criminal proceedings until the final resolution of the civil, the
following requisites must be present: (1) the civil case involves facts intimately
related to those upon which the criminal prosecution would be based; (2) in the
resolution of the issue or issues raised in the civil action, the guilt or innocence of
the accused would necessarily be determined; and (3) jurisdiction to try said
question must be lodged in another tribunal.
If both civil and criminal cases have similar issues or the issue in one is intimately
related to the issues raised in the other, then a prejudicial question would likely
exist, provided the other element or characteristic is satisfied. It must appear not
only that the civil case involves the same facts upon which the criminal prosecution
would be based, but also that the resolution of the issues raised in the civil action
would be necessarily determinative of the guilt or innocence of the accused. If the
resolution of the issue in the civil action will not determine the criminal
responsibility of the accused in the criminal action based on the same facts, or there
is no necessity "that the civil case be determined first before taking up the criminal
case," therefore, the civil case does not involve a prejudicial question. Neither is
there a prejudicial question if the civil and the criminal action can, according to law,
proceed independently of each other.
Contending that the rescission of the contract of sale constitutes a prejudicial
question, Reyes posits that the resolution of the civil action will be determinative of
whether or not he was criminally liable for the violations of Batas Pambansa Blg. 22.
He states that if the contract would be rescinded, his obligation to pay under the
conditional deed of sale would be extinguished, and such outcome would
necessarily result in the dismissal of the criminal proceedings for the violations of
Batas Pambansa Blg. 22.
The action for the rescission of the deed of sale on the ground that Advanced
Foundation did not comply with its obligation actually seeks one of the alternative
remedies available to a contracting party under Article 1191 of the Civil Code, to
wit:
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfilment and the rescission of the
obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfilment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage
Law.

Article 1191 of the Civil Code recognizes an implied or tacit resolutory condition in
reciprocal obligations. The condition is imposed by law, and applies even if there is
no corresponding agreement thereon between the parties. The explanation for this
is that in reciprocal obligations a party incurs in delay once the other party has
performed his part of the contract; hence, the party who has performed or is ready
and willing to perform may rescind the obligation if the other does not perform, or is
not ready and willing to perform.19
It is true that the rescission of a contract results in the extinguishment of the
obligatory relation as if it was never created, the extinguishment having a
retroactive effect. The rescission is equivalent to invalidating and unmaking the
juridical tie, leaving things in their status before the celebration of the contract. 20
However, until the contract is rescinded, the juridical tie and the concomitant
obligations subsist.
To properly appreciate if there is a prejudicial question to warrant the suspension of
the criminal actions, reference is made to the elements of the crimes charged. The
violation of Batas Pambansa Blg. 22 requires the concurrence of the following
elements, namely: (1) the making, drawing, and issuance of any check to apply for
account or for value; (2) the knowledge of the maker, drawer, or issuer that at the
time of issue he does not have sufficient funds in or credit with the drawee bank for
the payment of the check in full upon its presentment; and (3) the subsequent
dishonor of the check by the drawee bank for insufficiency of funds or credit or
dishonor for the same reason had not the drawer, without any valid cause, ordered
the bank to stop payment.21 The issue in the criminal actions upon the violations of
Batas Pambansa Blg. 22 is, therefore, whether or not Reyes issued the dishonoured
checks knowing them to be without funds upon presentment. On the other hand,
the issue in the civil action for rescission is whether or not the breach in the
fulfilment of Advanced Foundations obligation warranted the rescission of the
conditional sale. If, after trial on the merits in the civil action, Advanced Foundation
would be found to have committed material breach as to warrant the rescission of
the contract, such result would not necessarily mean that Reyes would be absolved
of the criminal responsibility for issuing the dishonored checks because, as the
aforementioned elements show, he already committed the violations upon the
dishonor of the checks that he had issued at a time when the conditional sale was
still fully binding upon the parties. His obligation to fund the checks or to make
arrangements for them with the drawee bank should not be tied up to the future
event of extinguishment of the obligation under the contract of sale through
rescission. Indeed, under Batas Pambansa Blg. 22, the mere issuance of a worthless
check was already the offense in itself. Under such circumstances, the criminal
proceedings for the violation of Batas Pambansa Blg. 22 could proceed despite the
pendency of the civil action for rescission of the conditional sale.
Accordingly, we agree with the holding of the CA that the civil action for the
rescission of contract was not determinative of the guilt or innocence of Reyes. We
consider the exposition by the CA of its reasons to be appropriate enough, to wit:
xxxx
We find merit in the petition.

A careful perusal of the complaint for rescission of contract and damages reveals
that the causes of action advanced by respondent Reyes are the alleged
misrepresentation committed by the petitioner and AFCSC and their alleged failure
to comply with his demand for proofs of ownership. On one hand, he posits that his
consent to the contract was vitiated by the fraudulent act of the company in
misrepresenting the condition and quality of the dredging pump. Alternatively, he
claims that the company committed a breach of contract which is a ground for the
rescission thereof. Either way, he in effect admits the validity and the binding effect
of the deed pending any adjudication which nullifies the same.
Indeed, under the Jaw on contracts, vitiated consent does not make a contract
unenforceable but merely voidable, the remedy of which would be to annul the
contract since voidable contracts produce legal effects until they are annulled. On
the other hand, rescission of contracts in case of breach pursuant to Article 1191 of
the Civil Code of the Philippines also presupposes a valid contract unless rescinded
or annulled.
As defined, a prejudicial question is one that arises in a case, the resolution of which
is a logical antecedent of the issue involved therein, and the cognizance of which
pertains to another tribunal. The prejudicial question must be determinative of the
case before the court but the jurisdiction to try and resolve the question must be
lodged in another court or tribunal.
It is a question based on a fact distinct and separate from the crime but so
intimately connected with it that it determines the guilt or innocence of the
accused, and for it to suspend the criminal action, it must appear not only that said
case involves facts intimately related to those upon which the criminal prosecution
would be based but also that in the resolution of the issue or issues raised in the
civil case, the guilt or innocence of the accused would necessarily be determined. It
comes into play generally in a situation where a civil action and a criminal action
are both pending and there exists in the former an issue which must be
preemptively resolved before the criminal action may proceed, because howsoever
the issue raised in the civil action is resolved would be determinative juris et de jure
of the guilt or innocence of the accused in the criminal case.
In this light, it is clear that the pendency of the civil case does not bar the
continuation of the proceedings in the preliminary investigation on the ground that
it poses a prejudicial question. Considering that the contracts are deemed to be
valid until rescinded, the consideration and obligatory effect thereof are also
deemed to have been validly made, thus demandable. Consequently, there was no
failure of consideration at the time when the subject checks were dishonored.
(Emphasis supplied)
xxxx
WHEREFORE, the Court DENIES the petition for review; AFFIRMS the decision the
Court of Appeals promulgated on May 30, 2003; and DIRECTS the petitioner to pay
the costs of suit.

SO ORDERED.

4.Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 161075

July 15, 2013

RAFAEL JOSE-CONSING, JR., Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
BERSAMIN, J.:
An independent civil action based on fraud initiated by the defrauded party does not raise a
prejudicial question to stop the proceedings in a pending criminal prosecution of the defendant
for estafa through falsification. This is because the result of the independent civil action is
irrelevant to the issue of guilt or innocence of the accused.
The Case

On appeal is the amended decision promulgated on August 18, 2003,1 whereby the Court of
Appeals (CA) granted the writ of certiorari upon petition by the State in C.A.-G.R. No. 71252
entitled People v. Han. Winlove M Dumayas, Presiding Judge, Branch 59, Regional Trial Court,
Makati City and Rafael Consing, Jr., and set aside the assailed order issued on November 26,
2001 by the Regional Trial Court (RTC), Branch 59, in Makati City deferring the arraignment of
petitioner in Criminal Case No. 00-120 entitled People v. Rafael Consing, Jr. upon his motion on
the ground of the existence of a prejudicial question in the civil cases pending between him and
the complainant in the trial courts in Pasig City and Makati City.
Antecedents
Petitioner negotiated with and obtained for himself and his mother, Cecilia de la Cruz (de la
Cruz) various loans totaling P18,000,000.00 from Unicapital Inc. (Unicapital). The loans were
secured by a real estate mortgage constituted on a parcel of land (property) covered by Transfer
Certificate of Title (TCT) No. T-687599 of the Registry of Deeds for the Province of Cavite
registered under the name of de la Cruz.2 In accordance with its option to purchase the
mortgaged property, Unicapital agreed to purchase one-half of the property for a total
consideration of P21,221,500.00. Payment was effected by off-setting the amounts due to
Unicapital under the promissory notes of de la Cruz and Consing in the amount of
P18,000,000.00 and paying an additional amount of P3,145,946.50. The other half of the
property was purchased by Plus Builders, Inc. (Plus Builders), a joint venture partner of
Unicapital.3
Before Unicapital and Plus Builders could develop the property, they learned that the title to the
property was really TCT No. 114708 in the names of Po Willie Yu and Juanito Tan Teng, the
parties from whom the property had been allegedly acquired by de la Cruz. TCT No. 687599
held by De la Cruz appeared to be spurious.4
On its part, Unicapital demanded the return of the total amount of P41,377,851.48 as of April 19,
1999 that had been paid to and received by de la Cruz and Consing, but the latter ignored the
demands.5
On July 22, 1999, Consing filed Civil Case No. 1759 in the Pasig City Regional Trial Court
(RTC) (Pasig civil case) for injunctive relief, thereby seeking to enjoin Unicapital from
proceeding against him for the collection of the P41,377,851.48 on the ground that he had acted
as a mere agent of his mother.
On the same date, Unicapital initiated a criminal complaint for estafa through falsification of
public document against Consing and de la Cruz in the Makati City Prosecutors Office.6

On August 6, 1999, Unicapital sued Consing in the RTC in Makati City (Civil Case No. 991418) for the recovery of a sum of money and damages, with an application for a writ of
preliminary attachment (Makati civil case).7
On January 27, 2000, the Office of the City Prosecutor of Makati City filed against Consing and
De la Cruz an information for estafa through falsification of public document in the RTC in
Makati City (Criminal Case No. 00-120), which was assigned to Branch 60 (Makati criminal
case).8
On February 15, 2001, Consing moved to defer his arraignment in the Makati criminal case on
the ground of existence of a prejudicial question due to the pendency of the Pasig and Makati
civil cases. On September 25, 2001, Consing reiterated his motion for deferment of his
arraignment, citing the additional ground of pendency of CA-G.R. SP No. 63712 in the CA. On
November 19, 2001, the Prosecution opposed the motion.9
On November 26, 2001, the RTC issued an order suspending the proceedings in the Makati
criminal case on the ground of the existence of a prejudicial question, and on March 18, 2001,
the RTC denied the Prosecutions motion for reconsideration.10
The State thus assailed in the CA the last two orders of the RTC in the Makati criminal case via
petition for certiorari (C.A.-G.R. SP No. 71252).
On May 20, 2003, the CA promulgated its decision in C.A.-G.R. SP No. 71252,11 dismissing the
petition for certiorari and upholding the RTCs questioned orders, explaining:
Is the resolution of the Pasig civil case prejudicial to the Cavite and Makati criminal cases?
We hold that it is. The resolution of the issue in the Pasig case, i.e. whether or not private
respondent may be held liable in the questioned transaction, will determine the guilt or innocence
of private respondent Consing in both the Cavite and Makati criminal cases.
The analysis and comparison of the Pasig civil case, Makati criminal case, Makati civil case and
Cavite criminal case show that: (1) the parties are identical; (2) the transactions in controversy
are identical; (3) the Transfer Certificate of Titles (TCT) involved are identical; (4) the
questioned Deeds of Sale/Mortgage are identical; (5) the dates in question are identical; and (6)
the issue of private respondents culpability for the questioned transactions is identical in all the
proceedings.
As discussed earlier, not only was the issue raised in the Pasig civil case identical to or intimately
related to the criminal cases in Cavite and Makati. The similarities also extend to the parties in
the cases and the TCT and Deed of Sale/ Mortgage involved in the questioned transactions.

The respondent Judge, in ordering the suspension of the arraignment of private respondent in the
Makati case, in view of CA-G.R. SP No. 63712, where Unicapital was not a party thereto, did so
pursuant to its mandatory power to take judicial notice of an official act of another judicial
authority. It was also a better legal tack to prevent multiplicity of action, to which our legal
system abhors.
Applying the Tuanda ruling, the pendency of CA-G.R. SP No. 63712 may be validly invoked to
suspend private respondents arraignment in the Makati City criminal case, notwithstanding the
fact that CA-G.R. SP No. 63712 was an offshoot, merely, in the Cavite criminal case.12
In the meanwhile, on October 13, 1999, Plus Builders commenced its own suit for damages
against Consing (Civil Case No. 99-95381) in the RTC in Manila (Manila civil case).13
On January 21, 2000, an information for estafa through falsification of public document was
filed against Consing and De la Cruz in the RTC in Imus, Cavite, docketed as Criminal Case No.
7668-00 and assigned to Branch 21 (Cavite criminal case). Consing filed a motion to defer the
arraignment on the ground of the existence of a prejudicial question, i.e., the pendency of the
Pasig and Manila civil cases. On January 27, 2000, however, the RTC handling the Cavite
criminal case denied Consings motion. Later on, it also denied his motion for reconsideration.
Thereafter, Consing commenced in the CA a special civil action for certiorari with prayer for the
issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction (C.A.-G.R.
SP No. 63712), seeking to enjoin his arraignment and trial in the Cavite criminal case. The CA
granted the TRO on March 19, 2001, and later promulgated its decision on May 31, 2001,
granting Consing petition for certiorari and setting aside the January 27, 2000 order of the RTC,
and permanently enjoining the RTC from proceeding with the arraignment and trial until the
Pasig and Manila civil cases had been finally decided.
Not satisfied, the State assailed the decision of the CA in this Court (G.R. No. 148193), praying
for the reversal of the May 31, 2001 decision of the CA. On January 16, 2003, the Court granted
the petition for review in G.R. No. 148193, and reversed and set aside the May 31, 2001 decision
of the CA,14 viz:
In the case at bar, we find no prejudicial question that would justify the suspension of the
proceedings in the criminal case (the Cavite criminal case). The issue in Civil Case No. SCA
1759 (the Pasig civil case) for Injunctive Relief is whether or not respondent (Consing) merely
acted as an agent of his mother, Cecilia de la Cruz; while in Civil Case No. 99-95381 (the Manila
civil case), for Damages and Attachment, the question is whether respondent and his mother are
liable to pay damages and to return the amount paid by PBI for the purchase of the disputed lot.
Even if respondent is declared merely an agent of his mother in the transaction involving the sale
of the questioned lot, he cannot be adjudged free from criminal liability. An agent or any person
may be held liable for conspiring to falsify public documents. Hence, the determination of the

issue involved in Civil Case No. SCA 1759 for Injunctive Relief is irrelevant to the guilt or
innocence of the respondent in the criminal case for estafa through falsification of public
document.
Likewise, the resolution of PBIs right to be paid damages and the purchase price of the lot in
question will not be determinative of the culpability of the respondent in the criminal case for
even if PBI is held entitled to the return of the purchase price plus damages, it does not ipso facto
follow that respondent should be held guilty of estafa through falsification of public document.
Stated differently, a ruling of the court in the civil case that PBI should not be paid the purchase
price plus damages will not necessarily absolve respondent of liability in the criminal case where
his guilt may still be established under penal laws as determined by other evidence.
Moreover, neither is there a prejudicial question if the civil and the criminal action can,
according to law, proceed independently of each other. Under Rule 111, Section 3 of the Revised
Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil
Code, the independent civil action may be brought by the offended party. It shall proceed
independently of the criminal action and shall require only a preponderance of evidence. In no
case, however, may the offended party recover damages twice for the same act or omission
charged in the criminal action.
Thus, in Rojas v. People, the petitioner was accused in a criminal case for violation of Article
319 of the Revised Penal Code, for executing a new chattel mortgage on personal property in
favor of another party without consent of the previous mortgagee. Thereafter, the offended party
filed a civil case for termination of management contract, one of the causes of action of which
consisted of petitioner having executed a chattel mortgage while the previous chattel mortgage
was still valid and subsisting. Petitioner moved that the arraignment and trial of the criminal case
be held in abeyance on the ground that the civil case was a prejudicial question, the resolution of
which was necessary before the criminal proceedings could proceed. The trial court denied the
suspension of the criminal case on the ground that no prejudicial question exist. We affirmed the
order of the trial court and ruled that:
the resolution of the liability of the defendant in the civil case on the eleventh cause of action
based on the fraudulent misrepresentation that the chattel mortgage the defendant executed in
favor of the said CMS Estate, Inc. on February 20, 1957, that his D-6 "Caterpillar" Tractor with
Serial No. 9-U-6565 was "free from all liens and encumbrances" will not determine the criminal
liability of the accused in the said Criminal Case No. 56042 for violation of paragraph 2 of
Article 319 of the Revised Penal Code. . . . (i) That, even granting for the sake of argument, a
prejudicial question is involved in this case, the fact remains that both the crime charged in the
information in the criminal case and the eleventh cause of action in the civil case are based upon
fraud, hence both the civil and criminal cases could proceed independently of the other pursuant
to Article 33 of the new Civil Code which provides: "In cases of defamation, fraud and physical

injuries, a civil action for damages, entirely separate and distinct from the criminal action shall
proceed independently of the criminal prosecution, and shall require only a preponderance of
evidence." (j) That, therefore, the act of respondent judge in issuing the orders referred to in the
instant petition was not made with "grave abuse of discretion."
In the instant case, Civil Case No. 99-95381, for Damages and Attachment on account of the
alleged fraud committed by respondent and his mother in selling the disputed lot to PBI is an
independent civil action under Article 33 of the Civil Code. As such, it will not operate as a
prejudicial question that will justify the suspension of the criminal case at bar.15
Turning back to the Makati criminal case, the State moved for the reconsideration of the adverse
decision of the CA, citing the ruling in G.R. No. 148193, supra, to the effect that the Pasig and
Manila civil cases did not present a prejudicial question that justified the suspension of the
proceedings in the Cavite criminal case, and claiming that under the ruling in G.R. No. 148193,
the Pasig and Makati civil cases did not raise a prejudicial question that would cause the
suspension of the Makati criminal case.
In his opposition to the States motion for reconsideration, Consing contended that the ruling in
G.R. No. 148193 was not binding because G.R. No. 148193 involved Plus Builders, which was
different from Unicapital, the complainant in the Makati criminal case. He added that the
decision in G.R. No. 148193 did not yet become final and executory, and could still be reversed
at any time, and thus should not control as a precedent to be relied upon; and that he had acted as
an innocent attorney-in-fact for his mother, and should not be held personally liable under a
contract that had involved property belonging to his mother as his principal.
On August 18, 2003, the CA amended its decision, reversing itself. It relied upon the ruling in
G.R. No. 148193, and held thusly:
CA-G.R. SP No. 63712 is similar with the case at bench. The transactions in controversy, the
documents involved; the issue of the respondents culpability for the questioned transactions are
all identical in all the proceedings; and it deals with the same parties with the exception of
private complainant Unicapital.
However, the Supreme Court, upon review of CA-G.R. SP No. 63712, People of the Philippines
vs. Rafael Jose Consing, Jr. (G.R. No. 148193, January 16, 2003) held that "Civil Case No. 9995381, for Damages and attachment on account of alleged fraud committed by respondent and
his mother in selling the disputed lot to Plus Builders, Inc. is an independent civil action under
Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will justify
the suspension of the criminal case at bar." In view of the aforementioned decision of the
Supreme Court, We are thus amending Our May 20, 2003 decision.

WHEREFORE, the petitioners motion for reconsideration is GRANTED. The Orders dated
November 26, 2001 and March 18, 2002 issued by the respondent Judge are hereby REVERSED
and SET ASIDE. Respondent Judge is hereby ordered to proceed with the hearing of Criminal
Case No. 00-120 with dispatch.
SO ORDERED.16
Consing filed a motion for reconsideration,17 but the CA denied the motion through the second
assailed resolution of December 11, 2003.18
Hence, this appeal by petition for review on certiorari.
Issue
Petitioner reiterates his contention that the decision in G.R. No. 148193 was not controlling in
relation to C.A.-G.R. No. 71252, which involved Plus Builders, not Unicapital, the complainant
in Criminal Case No. 00-120. He posits that in arriving at its amended decision, the CA did not
consider the pendency of the Makati civil case (Civil Case No. 99-1418), which raised a
prejudicial question, considering that the resolution of such civil action would include the issue
of whether he had falsified a certificate of title or had willfully defrauded Unicapital, the
resolution of either of which would determine his guilt or innocence in Criminal Case No. 00120.
In its comment,19 the Office of the Solicitor General (OSG) counters that Unicapital brought the
Makati civil case as an independent civil action intended to exact civil liability separately from
Criminal Case No. 00-120 in a manner fully authorized under Section 1(a) and Section 2, Rule
111 of the Rules of Court.20 It argues that the CA correctly took cognizance of the ruling in G.R.
No. 148193, holding in its challenged amended decision that the Makati civil case, just like the
Manila civil case, was an independent civil action instituted by virtue of Article 33 of the Civil
Code; that the Makati civil case did not raise a prejudicial question that justified the suspension
of Criminal Case No. 00-120; and that as finally settled in G.R. No. 148193, the Pasig civil case
did not also raise any prejudicial question, because the sole issue thereat was whether Consing,
as the mere agent of his mother, had any obligation or liability toward Unicapital.
In his reply,21 Consing submits that the Pasig civil case that he filed and Unicapitals Makati civil
case were not intended to delay the resolution of Criminal Case No. 00-120, nor to pre-empt such
resolution; and that such civil cases could be validly considered determinative of whether a
prejudicial question existed to warrant the suspension of Criminal Case No. 00-120.
Did the CA err in reversing itself on the issue of the existence of a prejudicial question that
warranted the suspension of the proceedings in the Makati criminal case?

Ruling
The petition for review on certiorari is absolutely meritless.
Consing has hereby deliberately chosen to ignore the firm holding in the ruling in G.R. No.
148193 to the effect that the proceedings in Criminal Case No. 00-120 could not be suspended
because the Makati civil case was an independent civil action, while the Pasig civil case raised
no prejudicial question. That was wrong for him to do considering that the ruling fully applied to
him due to the similarity between his case with Plus Builders and his case with Unicapital.
A perusal of Unicapitals complaint in the Makati civil case reveals that the action was
predicated on fraud. This was apparent from the allegations of Unicapital in its complaint to the
effect that Consing and de la Cruz had acted in a "wanton, fraudulent, oppressive, or malevolent
manner in offering as security and later object of sale, a property which they do not own, and
foisting to the public a spurious title."22 As such, the action was one that could proceed
independently of Criminal Case No. 00-120 pursuant to Article 33 of the Civil Code, which
states as follows:
Article 33. In cases of defamation, fraud, and physical injuries a civil action for damages,
entirely separate and distinct from the criminal action, may be brought by the injured party. Such
civil action shall proceed independently of the criminal prosecution, and shall require only a
preponderance of evidence.
It is well settled that a civil action based on defamation, fraud and physical injuries may be
independently instituted pursuant to Article 33 of the Civil Code, and does not operate as a
prejudicial question that will justify the suspension of a criminal case.23 This was precisely the
Courts thrust in G.R. No. 148193, thus:
Moreover, neither is there a prejudicial question if the civil and the criminal action can,
according to law, proceed independently of each other. Under Rule 111, Section 3 of the Revised
Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil
Code, the independent civil action may be brought by the offended party. It shall proceed
independently of the criminal action and shall require only a preponderance of evidence. In no
case, however, may the offended party recover damages twice for the same act or omission
charged in the criminal action.
xxxx
In the instant case, Civil Case No. 99-95381, for Damages and Attachment on account of the
alleged fraud committed by respondent and his mother in selling the disputed lot to PBI is an

independent civil action under Article 33 of the Civil Code. As such, it will not operate as a
prejudicial question that will justify the suspension of the criminal case at bar.24
Contrary to Consings stance, it was not improper for the CA to apply the ruling in G.R. No.
148193 to his case with Unicapital, for, although the Manila and Makati civil cases involved
different complainants (i.e., Plus Builders and Unicapital), the civil actions Plus Builders and
Unicapital had separately instituted against him were undeniably of similar mold, i.e., they were
both based on fraud, and were thus covered by Article 33 of the Civil Code. Clearly, the Makati
criminal case could not be suspended pending the resolution of the Makati civil case that
Unicapital had filed.
As far as the Pasig civil case is concerned, the issue of Consings being a mere agent of his
mother who should not be criminally liable for having so acted due to the property involved
having belonged to his mother as principal has also been settled in G.R. No. 148193, to wit:
In the case at bar, we find no prejudicial question that would justify the suspension of the
proceedings in the criminal case (the Cavite criminal case). The issue in Civil Case No. SCA
1759 (the Pasig civil case) for Injunctive Relief is whether or not respondent (Consing) merely
acted as an agent of his mother, Cecilia de la Cruz; while in Civil Case No. 99-95381 (the Manila
civil case), for Damages and Attachment, the question is whether respondent and his mother are
liable to pay damages and to return the amount paid by PBI for the purchase of the disputed lot.
Even if respondent is declared merely an agent of his mother in the transaction involving the sale
of the questioned lot, he cannot be adjudged free from criminal liability. An agent or any person
may be held liable for conspiring to falsify public documents. Hence, the determination of the
issue involved in Civil Case No. SCA 1759 for Injunctive Relief is irrelevant to the guilt or
innocence of the respondent in the criminal case for estafa through falsification of public
document.25 (Words in parentheses supplied; bold underscoring supplied for emphasis)
WHEREFORE, the Court AFFIRMS the amended decision promulgated on August 18, 2003;
and ORDERS petitioner to pay the costs of suit.
SO ORDERED.
Digest ng Facts: SUMMARIZED NG FACTS.
On February 15, 2001, Consing moved to defer his arraignment in the
Makati criminal case on the ground of existence of a prejudicial question
due to the pendency of the Pasig and Makati civil cases.
The analysis and comparison of the Pasig civil case, Makati criminal case,
Makati civil case and Cavite criminal case show that: the parties are
identical; the transactions in controversy are identical; the Transfer

Certificate of Titles involved are identical; the questioned Deeds of

Sale/Mortgage are identical; the dates in question are identical; and the
issue of private respondents culpability for the questioned transactions is
identical in all the proceedings.
Thereafter, the offended party filed a civil case for termination of
management contract, one of the causes of action of which consisted of
petitioner having executed a chattel mortgage while the previous chattel
mortgage was still valid and subsisting.
Petitioner moved that the arraignment and trial of the criminal case be
held in abeyance on the ground that the civil case was a prejudicial
question, the resolution of which was necessary before the criminal
proceedings could proceed.
That, even granting for the sake of argument, a prejudicial question is
involved in this case, the fact remains that both the crime charged in the
information in the criminal case and the eleventh cause of action in the
civil case are based upon fraud, hence both the civil and criminal cases
could proceed independently of the other pursuant to Article 33 of the
new Civil Code which provides: In cases of defamation, fraud and physical
injuries, a civil action for damages, entirely separate and distinct from the
criminal action shall proceed independently of the criminal prosecution,
and shall require only a preponderance of evidence.
Turning back to the Makati criminal case, the State moved for the
reconsideration of the adverse decision of the CA, citing the ruling in G.R.
No. 148193, supra, to the effect that the Pasig and Manila civil cases did
not present a prejudicial question that justified the suspension of the
proceedings in the Cavite criminal case, and claiming that under the ruling
in G.R. No. 148193, the Pasig and Makati civil cases did not raise a
prejudicial question that would cause the suspension of the Makati
criminal case.

5. Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 166836

September 4, 2013

SAN MIGUEL PROPERTIES, INC., PETITIONER,

vs.
SEC. HERNANDO B. PEREZ, ALBERT C. AGUIRRE, TEODORO B. ARCENAS, JR.,
MAXY S. ABAD, JAMES G. BARBERS, STEPHEN N. SARINO, ENRIQUE N.
ZALAMEA, JR., MARIANO M. MARTIN, ORLANDO O. SAMSON, CATHERINE R.
AGUIRRE, AND ANTONIO V. AGCAOILI, RESPONDENTS.
DECISION
BERSAMIN, J.:
The pendency of an administrative case for specific performance brought by the buyer of
residential subdivision lots in the Housing and Land Use Regulatory Board (HLURB) to compel

the seller to deliver the transfer certificates of title (TCTs) of the fully paid lots is properly
considered a ground to suspend a criminal prosecution for violation of Section 25 of Presidential
Decree No. 9571 on the ground of a prejudicial question. The administrative determination is a
logical antecedent of the resolution of the criminal charges based on non-delivery of the TCTs.
Antecedents
Petitioner San Miguel Properties Inc. (San Miguel Properties), a domestic corporation engaged in
the real estate business, purchased in 1992, 1993 and April 1993 from B.F. Homes, Inc. (BF
Homes), then represented by Atty. Florencio B. Orendain (Orendain) as its duly authorized
rehabilitation receiver appointed by the Securities and Exchange Commission (SEC),2 130
residential lots situated in its subdivision BF Homes Paraaque, containing a total area of 44,345
square meters for the aggregate price of P106,248,000.00. The transactions were embodied in
three separate deeds of sale.3 The TCTs covering the lots bought under the first and second deeds
were fully delivered to San Miguel Properties, but 20 TCTs covering 20 of the 41 parcels of land
with a total area of 15,565 square meters purchased under the third deed of sale, executed in
April 1993 and for which San Miguel Properties paid the full price of P39,122,627.00, were not
delivered to San Miguel Properties.
On its part, BF Homes claimed that it withheld the delivery of the 20 TCTs for parcels of land
purchased under the third deed of sale because Atty. Orendain had ceased to be its rehabilitation
receiver at the time of the transactions after being meanwhile replaced as receiver by FBO
Network Management, Inc. on May 17, 1989 pursuant to an order from the SEC.4
BF Homes refused to deliver the 20 TCTs despite demands. Thus, on August 15, 2000, San
Miguel Properties filed a complaint-affidavit in the Office of the City Prosecutor of Las Pias
City (OCP Las Pias) charging respondent directors and officers of BF Homes with non-delivery
of titles in violation of Section 25, in relation to Section 39, both of Presidential Decree No. 957
(I.S. No. 00-2256).5
At the same time, San Miguel Properties sued BF Homes for specific performance in the
HLURB (HLURB Case No. REM-082400-11183),6 praying to compel BF Homes to release the
20 TCTs in its favor.
In their joint counter-affidavit submitted in I.S. No. 00-2256,7 respondent directors and officers
of BF Homes refuted San Miguel Properties assertions by contending that: (a) San Miguel
Properties claim was not legally demandable because Atty. Orendain did not have the authority
to sell the 130 lots in 1992 and 1993 due to his having been replaced as BF Homes rehabilitation
receiver by the SEC on May 17, 1989; (b) the deeds of sale conveying the lots were irregular for
being undated and unnotarized; (c) the claim should have been brought to the SEC because BF
Homes was under receivership; (d) in receivership cases, it was essential to suspend all claims

against a distressed corporation in order to enable the receiver to effectively exercise its powers
free from judicial and extra-judicial interference that could unduly hinder the rescue of the
distressed company; and (e) the lots involved were under custodia legis in view of the pending
receivership proceedings, necessarily stripping the OCP Las Pias of the jurisdiction to proceed
in the action.
On October 10, 2000, San Miguel Properties filed a motion to suspend proceedings in the OCP
Las Pias,8 citing the pendency of BF Homes receivership case in the SEC. In its
comment/opposition, BF Homes opposed the motion to suspend. In the meantime, however, the
SEC terminated BF Homes receivership on September 12, 2000, prompting San Miguel
Properties to file on October 27, 2000 a reply to BF Homes comment/opposition coupled with a
motion to withdraw the sought suspension of proceedings due to the intervening termination of
the receivership.9
On October 23, 2000, the OCP Las Pias rendered its resolution,10 dismissing San Miguel
Properties criminal complaint for violation of Presidential Decree No. 957 on the ground that no
action could be filed by or against a receiver without leave from the SEC that had appointed him;
that the implementation of the provisions of Presidential Decree No. 957 exclusively pertained
under the jurisdiction of the HLURB; that there existed a prejudicial question necessitating the
suspension of the criminal action until after the issue on the liability of the distressed BF Homes
was first determined by the SEC en banc or by the HLURB; and that no prior resort to
administrative jurisdiction had been made; that there appeared to be no probable cause to indict
respondents for not being the actual signatories in the three deeds of sale.
On February 20, 2001, the OCP Las Pias denied San Miguel Properties motion for
reconsideration filed on November 28, 2000, holding that BF Homes directors and officers
could not be held liable for the non-delivery of the TCTs under Presidential Decree No. 957
without a definite ruling on the legality of Atty. Orendains actions; and that the criminal liability
would attach only after BF Homes did not comply with a directive of the HLURB directing it to
deliver the titles.11
San Miguel Properties appealed the resolutions of the OCP Las Pias to the Department of
Justice (DOJ), but the DOJ Secretary denied the appeal on October 15, 2001, holding:
After a careful review of the evidence on record, we find no cogent reason to disturb the ruling
of the City Prosecutor of Las Pias City. Established jurisprudence supports the position taken by
the City Prosecutor concerned.
There is no dispute that aside from the instant complaint for violation of PD 957, there is still
pending with the Housing and Land Use Resulatory Board (HLURB, for short) a complaint for
specific performance where the HLURB is called upon to inquire into, and rule on, the validity

of the sales transactions involving the lots in question and entered into by Atty. Orendain for and
in behalf of BF Homes.
As early as in the case of Solid Homes, Inc. vs. Payawal, 177 SCRA 72, the Supreme Court had
ruled that the HLURB has exclusive jurisdiction over cases involving real estate business and
practices under PD 957. This is reiterated in the subsequent cases of Union Bank of the
Philippines versus HLURB, G.R. [No.] 953364, June 29, 1992 and C.T. Torres Enterprises vs.
Hilionada, 191 SCRA 286.
The said ruling simply means that unless and until the HLURB rules on the validity of the
transactions involving the lands in question with specific reference to the capacity of Atty.
Orendain to bind BF Homes in the said transactions, there is as yet no basis to charge criminally
respondents for non-delivery of the subject land titles. In other words, complainant cannot
invoke the penal provision of PD 957 until such time that the HLURB shall have ruled and
decided on the validity of the transactions involving the lots in question.
WHEREFORE, the appeal is hereby DENIED.
SO ORDERED.12 (Emphasis supplied)
The DOJ eventually denied San Miguel Properties motion for reconsideration.13
Ruling of the CA
Undaunted, San Miguel Properties elevated the DOJs resolutions to the CA on certiorari and
mandamus (C.A.-G.R. SP No. 73008), contending that respondent DOJ Secretary had acted with
grave abuse in denying their appeal and in refusing to charge the directors and officers of BF
Homes with the violation of Presidential Decree No. 957. San Miguel Properties submitted the
issue of whether or not HLURB Case No. REM-082400-11183 presented a prejudicial question
that called for the suspension of the criminal action for violation of Presidential Decree No. 957.
In its assailed decision promulgated on February 24, 2004 in C.A.-G.R. SP No. 73008,14 the CA
dismissed San Miguel Properties petition, holding and ruling as follows:
From the foregoing, the conclusion that may be drawn is that the rule on prejudicial question
generally applies to civil and criminal actions only.
However, an exception to this rule is provided in Quiambao vs. Osorio cited by the respondents.
In this case, an issue in an administrative case was considered a prejudicial question to the
resolution of a civil case which, consequently, warranted the suspension of the latter until after
termination of the administrative proceedings.

Quiambao vs. Osorio is not the only instance when the Supreme Court relaxed the application of
the rule on prejudicial question.
In Tamin vs. CA involving two (2) civil actions, the Highest Court similarly applied the rule on
prejudicial question when it directed petitioner therein to put up a bond for just compensation
should the demolition of private respondents building proved to be illegal as a result of a
pending cadastral suit in another tribunal.
City of Pasig vs. COMELEC is yet another exception where a civil action involving a boundary
dispute was considered a prejudicial question which must be resolved prior to an administrative
proceeding for the holding of a plebiscite on the affected areas.
In fact, in Vidad vs. RTC of Negros Oriental, Br. 42, it was ruled that in the interest of good
order, courts can suspend action in one case pending determination of another case closely
interrelated or interlinked with it.
It thus appears that public respondent did not act with grave abuse of discretion x x x when he
applied the rule on prejudicial question to the instant proceedings considering that the issue on
the validity of the sale transactions x x x by x x x Orendain in behalf of BF Homes, Inc., is
closely intertwined with the purported criminal culpability of private respondents, as
officers/directors of BF Homes, Inc., arising from their failure to deliver the titles of the parcels
of land included in the questioned conveyance.
All told, to sustain the petitioners theory that the result of the HLURB proceedings is not
determinative of the criminal liability of private respondents under PD 957 would be to espouse
an absurdity. If we were to assume that the HLURB finds BFHI under no obligation to delve the
subject titles, it would be highly irregular and contrary to the ends of justice to pursue a criminal
case against private respondents for the non-delivery of certificates of title which they are not
under any legal obligation to turn over in the first place. (Bold emphasis supplied)
On a final note, absent grave abuse of discretion on the part of the prosecutorial arm of the
government as represented by herein public respondent, courts will not interfere with the
discretion of a public prosecutor in prosecuting or dismissing a complaint filed before him. A
public prosecutor, by the nature of his office, is under no compulsion to file a criminal
information where no clear legal justification has been shown, and no sufficient evidence of guilt
nor prima facie case has been established by the complaining party.
WHEREFORE, premises considered, the instant Petition for Certiorari and Mandamus is hereby
DENIED. The Resolutions dated 15 October 2001 and 12 July 2002 of the Department of Justice
are AFFIRMED.

SO ORDERED. 15
The CA denied San Miguel Properties motion for reconsideration on January 18, 2005.16
Issues
Aggrieved, San Miguel Properties is now on appeal, raising the following for consideration and
resolution, to wit:
THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE ERRORS
WHEN IT DISMISSED PETITIONERS CERTIORARI AND MANDAMUS PETITION TO
ORDER AND DIRECT RESPONDENT SECRETARY TO INDICT RESPONDENTS FOR
VIOLATION OF SECTION 25, PD. 957 IN THAT:
THE OBLIGATION OF PRIVATE RESPONDENTS TO DELIVER TO PETITIONER THE
TITLES TO 20 FULLY-PAID LOTS IS MANDATED BY SECTION 25, PD 957. IN FACT,
THE OFFICE OF THE PRESIDENT HAD DULY CONFIRMED THE SAME PER ITS
DECISION DATED 27 JANUARY 2005 IN O.P. CASE NO. 03-E-203, ENTITLED "SMPI V.
BF HOMES, INC.".
A FORTIORI, PRIVATE RESPONDENTS FAILURE AND/OR REFUSAL TO DELIVER TO
PETITIONER THE SUBJECT TITLES CONSTITUTES CRIMINAL OFFENSE PER
SECTIONS 25 AND 39, PD 957 FOR WHICH IT IS THE MINISTERIAL DUTY OF
RESPONDENT SECRETARY TO INDICT PRIVATE RESPONDENTS THEREFOR.
IN ANY EVENT, THE HLURB CASE DOES NOT PRESENT A "PREJUDICIAL QUESTION"
TO THE SUBJECT CRIMINAL CASE SINCE THE FORMER INVOLVES AN ISSUE
SEPARATE AND DISTINCT FROM THE ISSUE INVOLVED IN THE LATTER.
CONSEQUENTLY, THE HLURB CASE HAS NO CORRELATION, TIE NOR LINKAGE TO
THE PRESENT CRIMINAL CASE WHICH CAN PROCEED INDEPENDENTLY THEREOF.
IN FACT, THE CRIMINAL CULPABILITY OF PRIVATE RESPONDENTS EMANATE
FROM THEIR MALA PROHIBITA NON-DELIVERY OF THE TITLES TO TWENTY (20)
FULLY-PAID PARCELS OF LAND TO PETITIONER, AND NOT FROM THEIR NONCOMPLIANCE WITH THE HLURBS RULING IN THE ADMINISTRATIVE CASE.
NONETHELESS, BY DECREEING THAT PETITIONERS CRIMINAL COMPLAINT IS
PREMATURE, BOTH THE COURT OF APPEALS AND RESPONDENT SECRETARY HAD
IMPLIEDLY ADMITTED THE EXISTENCE OF SUFFICIENT PROBABLE CAUSE
AGAINST PRIVATE RESPONDENTS FOR THE CRIME CHARGED.17

It is relevant at this juncture to mention the outcome of the action for specific performance and
damages that San Miguel Properties instituted in the HLURB simultaneously with its filing of
the complaint for violation of Presidential Decree No. 957. On January 25, 2002, the HLURB
Arbiter ruled that the HLURB was inclined to suspend the proceedings until the SEC resolved
the issue of Atty. Orendains authority to enter into the transactions in BF Homes behalf,
because the final resolution by the SEC was a logical antecedent to the determination of the issue
involved in the complaint before the HLURB. Upon appeal, the HLURB Board of
Commissioners (HLURB Board), citing the doctrine of primary jurisdiction, affirmed the
HLURB Arbiters decision, holding that although no prejudicial question could arise, strictly
speaking, if one case was civil and the other administrative, it nonetheless opted to suspend its
action on the cases pending the final outcome of the administrative proceeding in the interest of
good order.18
Not content with the outcome, San Miguel Properties appealed to the Office of the President
(OP), arguing that the HLURB erred in suspending the proceedings. On January 27, 2004, the
OP reversed the HLURB Boards ruling, holding thusly:
The basic complaint in this case is one for specific performance under Section 25 of the
Presidential Decree (PD) 957 "The Subdivision and Condominium Buyers Protective."
As early as August 1987, the Supreme Court already recognized the authority of the HLURB, as
successor agency of the National Housing Authority (NHA), to regulate, pursuant to PD 957, in
relation to PD 1344, the real estate trade, with exclusive original jurisdiction to hear and decide
cases "involving specific performance of contractual and statutory obligation filed by buyers of
subdivision lots against the owner, developer, dealer, broker or salesman," the HLURB, in the
exercise of its adjudicatory powers and functions, "must interpret and apply contracts, determine
the rights of the parties under these contracts and award[s] damages whenever appropriate."
Given its clear statutory mandate, the HLURBs decision to await for some forum to decide if
ever one is forthcoming the issue on the authority of Orendain to dispose of subject lots before
it peremptorily resolves the basic complaint is unwarranted, the issues thereon having been
joined and the respective position papers and the evidence of the parties having been submitted.
To us, it behooved the HLURB to adjudicate, with the usual dispatch, the right and obligation of
the parties in line with its own appreciation of the obtaining facts and applicable law. To borrow
from Mabubha Textile Mills Corporation vs. Ongpin, it does not have to rely on the finding of
others to discharge this adjudicatory functions.19
After its motion for reconsideration was denied, BF Homes appealed to the CA (C.A.-G.R. SP
No. 83631), raising as issues: (a) whether or not the HLURB had the jurisdiction to decide with
finality the question of Atty. Orendains authority to enter into the transaction with San Miguel
Properties in BF Homes behalf, and rule on the rights and obligations of the parties to the

contract; and (b) whether or not the HLURB properly suspended the proceedings until the SEC
resolved with finality the matter regarding such authority of Atty. Orendain.
The CA promulgated its decision in C.A.-G.R. SP No. 83631,20 decreeing that the HLURB, not
the SEC, had jurisdiction over San Miguel Properties complaint. It affirmed the OPs decision
and ordered the remand of the case to the HLURB for further proceedings on the ground that the
case involved matters within the HLURBs competence and expertise pursuant to the doctrine of
primary jurisdiction, viz:
[T]he High Court has consistently ruled that the NHA or the HLURB has jurisdiction over
complaints arising from contracts between the subdivision developer and the lot buyer or those
aimed at compelling the subdivision developer to comply with its contractual and statutory
obligations.
Hence, the HLURB should take jurisdiction over respondents complaint because it pertains to
matters within the HLURBs competence and expertise. The proceedings before the HLURB
should not be suspended.
While We sustain the Office of the President, the case must be remanded to the HLURB. This is
in recognition of the doctrine of primary jurisdiction. The fairest and most equitable course to
take under the circumstances is to remand the case to the HLURB for the proper presentation of
evidence.21
Did the Secretary of Justice commit grave abuse of discretion in upholding the dismissal of San
Miguel Properties criminal complaint for violation of Presidential Decree No. 957 for lack of
probable cause and for reason of a prejudicial question?
The question boils down to whether the HLURB administrative case brought to compel the
delivery of the TCTs could be a reason to suspend the proceedings on the criminal complaint for
the violation of Section 25 of Presidential Decree No. 957 on the ground of a prejudicial
question.
Ruling of the Court
The petition has no merit.
1.
Action for specific performance, even if pending in the HLURB, an administrative agency, raises
a prejudicial question BF Homes posture that the administrative case for specific performance in
the HLURB posed a prejudicial question that must first be determined before the criminal case
for violation of Section 25 of Presidential Decree No. 957 could be resolved is correct.

A prejudicial question is understood in law to be that which arises in a case the resolution of
which is a logical antecedent of the issue involved in the criminal case, and the cognizance of
which pertains to another tribunal. It is determinative of the criminal case, but the jurisdiction to
try and resolve it is lodged in another court or tribunal. It is based on a fact distinct and separate
from the crime but is so intimately connected with the crime that it determines the guilt or
innocence of the accused.22 The rationale behind the principle of prejudicial question is to avoid
conflicting decisions.23 The essential elements of a prejudicial question are provided in Section 7,
Rule 111 of the Rules of Court, to wit: (a) the previously instituted civil action involves an issue
similar or intimately related to the issue raised in the subsequent criminal action, and (b) the
resolution of such issue determines whether or not the criminal action may proceed.
The concept of a prejudicial question involves a civil action and a criminal case. Yet, contrary to
San Miguel Properties submission that there could be no prejudicial question to speak of
because no civil action where the prejudicial question arose was pending, the action for specific
performance in the HLURB raises a prejudicial question that sufficed to suspend the proceedings
determining the charge for the criminal violation of Section 2524 of Presidential Decree No. 957.
This is true simply because the action for specific performance was an action civil in nature but
could not be instituted elsewhere except in the HLURB, whose jurisdiction over the action was
exclusive and original.25
The determination of whether the proceedings ought to be suspended because of a prejudicial
question rested on whether the facts and issues raised in the pleadings in the specific
performance case were so related with the issues raised in the criminal complaint for the
violation of Presidential Decree No. 957, such that the resolution of the issues in the former
would be determinative of the question of guilt in the criminal case. An examination of the
nature of the two cases involved is thus necessary.
An action for specific performance is the remedy to demand the exact performance of a contract
in the specific form in which it was made, or according to the precise terms agreed upon by a
party bound to fulfill it.26 Evidently, before the remedy of specific performance is availed of,
there must first be a breach of the contract.27 The remedy has its roots in Article 1191 of the Civil
Code, which reads:
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with
the payment of damages in either case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible. x x x (Emphasis supplied)

Accordingly, the injured party may choose between specific performance or rescission with
damages. As presently worded, Article 1191 speaks of the remedy of rescission in reciprocal
obligations within the context of Article 1124 of the former Civil Code which used the term
resolution. The remedy of resolution applied only to reciprocal obligations, such that a partys
breach of the contract equated to a tacit resolutory condition that entitled the injured party to
rescission. The present article, as in the former one, contemplates alternative remedies for the
injured party who is granted the option to pursue, as principal actions, either the rescission or the
specific performance of the obligation, with payment of damages in either case.28
On the other hand, Presidential Decree No. 957 is a law that regulates the sale of subdivision lots
and condominiums in view of the increasing number of incidents wherein "real estate
subdivision owners, developers, operators, and/or sellers have reneged on their representations
and obligations to provide and maintain properly" the basic requirements and amenities, as well
as of reports of alarming magnitude of swindling and fraudulent manipulations perpetrated by
unscrupulous subdivision and condominium sellers and operators,29 such as failure to deliver
titles to the buyers or titles free from liens and encumbrances. Presidential Decree No. 957
authorizes the suspension and revocation of the registration and license of the real estate
subdivision owners, developers, operators, and/or sellers in certain instances, as well as provides
the procedure to be observed in such instances; it prescribes administrative fines and other
penalties in case of violation of, or non-compliance with its provisions.
Conformably with the foregoing, the action for specific performance in the HLURB would
determine whether or not San Miguel Properties was legally entitled to demand the delivery of
the remaining 20 TCTs, while the criminal action would decide whether or not BF Homes
directors and officers were criminally liable for withholding the 20 TCTs. The resolution of the
former must obviously precede that of the latter, for should the HLURB hold San Miguel
Properties to be not entitled to the delivery of the 20 TCTs because Atty. Orendain did not have
the authority to represent BF Homes in the sale due to his receivership having been terminated
by the SEC, the basis for the criminal liability for the violation of Section 25 of Presidential
Decree No. 957 would evaporate, thereby negating the need to proceed with the criminal case.
Worthy to note at this juncture is that a prejudicial question need not conclusively resolve the
guilt or innocence of the accused. It is enough for the prejudicial question to simply test the
sufficiency of the allegations in the information in order to sustain the further prosecution of the
criminal case. A party who raises a prejudicial question is deemed to have hypothetically
admitted that all the essential elements of the crime have been adequately alleged in the
information, considering that the Prosecution has not yet presented a single piece of evidence on
the indictment or may not have rested its case. A challenge to the allegations in the information
on the ground of prejudicial question is in effect a question on the merits of the criminal charge
through a non-criminal suit.30

2.
Doctrine of primary jurisdiction is applicable
That the action for specific performance was an administrative case pending in the HLURB,
instead of in a court of law, was of no consequence at all. As earlier mentioned, the action for
specific performance, although civil in nature, could be brought only in the HLURB. This
situation conforms to the doctrine of primary jurisdiction. There has been of late a proliferation
of administrative agencies, mostly regulatory in function. It is in favor of these agencies that the
doctrine of primary jurisdiction is frequently invoked, not to defeat the resort to the judicial
adjudication of controversies but to rely on the expertise, specialized skills, and knowledge of
such agencies in their resolution. The Court has observed that one thrust of the proliferation is
that the interpretation of contracts and the determination of private rights under contracts are no
longer a uniquely judicial function exercisable only by the regular courts.31
The doctrine of primary jurisdiction has been increasingly called into play on matters demanding
the special competence of administrative agencies even if such matters are at the same time
within the jurisdiction of the courts. A case that requires for its determination the expertise,
specialized skills, and knowledge of some administrative board or commission because it
involves technical matters or intricate questions of fact, relief must first be obtained in an
appropriate administrative proceeding before a remedy will be supplied by the courts although
the matter comes within the jurisdiction of the courts. The application of the doctrine does not
call for the dismissal of the case in the court but only for its suspension until after the matters
within the competence of the administrative body are threshed out and determined.32
To accord with the doctrine of primary jurisdiction, the courts cannot and will not determine a
controversy involving a question within the competence of an administrative tribunal, the
controversy having been so placed within the special competence of the administrative tribunal
under a regulatory scheme. In that instance, the judicial process is suspended pending referral to
the administrative body for its view on the matter in dispute. Consequently, if the courts cannot
resolve a question that is within the legal competence of an administrative body prior to the
resolution of that question by the latter, especially where the question demands the exercise of
sound administrative discretion requiring the special knowledge, experience, and services of the
administrative agency to ascertain technical and intricate matters of fact, and a uniformity of
ruling is essential to comply with the purposes of the regulatory statute administered, suspension
or dismissal of the action is proper.33
3.
Other submissions of petitioner are unwarranted

It is not tenable for San Miguel Properties to argue that the character of a violation of Section 25
of Presidential Decree No. 957 as malum prohibitum, by which criminal liability attached to BF
Homes directors and officers by the mere failure to deliver the TCTs, already rendered the
suspension unsustainable.34 The mere fact that an act or omission was malum prohibitum did not
do away with the initiative inherent in every court to avoid an absurd result by means of
rendering a reasonable interpretation and application of the procedural law. Indeed, the
procedural law must always be given a reasonable construction to preclude absurdity in its
application.35 Hence, a literal application of the principle governing prejudicial questions is to be
eschewed if such application would produce unjust and absurd results or unreasonable
consequences.
San Miguel Properties further submits that respondents could not validly raise the prejudicial
question as a reason to suspend the criminal proceedings because respondents had not
themselves initiated either the action for specific performance or the criminal action.1wphi1 It
contends that the defense of a prejudicial question arising from the filing of a related case could
only be raised by the party who filed or initiated said related case.
The submission is unfounded. The rule on prejudicial question makes no distinction as to who is
allowed to raise the defense. Ubi lex non distinguit nec nos distinguere debemos. When the law
makes no distinction, we ought not to distinguish.36
WHEREFORE, the Court AFFIRMS the decision promulgated on February 24, 2004 by the
Court of Appeals in CA-G.R. SP NO. 73008; and ORDERS petitioner to pay the costs of suit.
SO ORDERED.
6. G.R. No. 183805
July 3, 2013 JAMES WALTER P. CAPILI, Petitioner, vs.
PEOPLE OF THE PHILIPPINES AND SHIRLEY TISMO-CAPILI, Respondents.
In September 1999, James Capili married Karla Medina. But then, just three months later in
December 1999, he married another woman named Shirley Tismo.
In 2004, Karla Medina filed an action for declaration of nullity of the second marriage between
Capili and Tismo. In June 2004, Tismo filed a bigamy case against Capili.
Before a decision can be had in the bigamy case, the action filed by Karla Medina was granted
and Capilis marriage with Tismo was declared void by reason of the subsisting marriage
between Medina and Capili. Thereafter, Capili filed a motion to dismiss in the bigamy case. He
alleged that since the second marriage was already declared void ab initio that marriage never
took place and that therefore, there is no bigamy to speak of.

The trial court agreed with Capili and it dismissed the bigamy case. On appeal, the Court of
Appeals reversed the dismissal and remanded the case to the trial court.
ISSUE: Whether or not a declaration of nullity of the second marriage avoids a prosecution for
bigamy.
HELD: No. The elements of bigamy are:
1. That the offender has been legally married;
2. That the first marriage has not been legally dissolved or, in case his or her spouse is absent, the
absent spouse could not yet be presumed dead according to the Civil Code;
3. That he contracts a second or subsequent marriage;
4. That the second or subsequent marriage has all the essential requisites for validity.
When Capili married Tismo, all the above elements are present. The crime of bigamy was
already consummated. It is already immaterial if the second (or first marriage, see Mercado vs
Tan) was subsequently declared void. The outcome of the civil case filed by Karla Medina had
no bearing to the determination of Capilis guilt or innocence in the bigamy case because all that
is required for the charge of bigamy to prosper is that the first marriage be subsisting at the time
the second marriage is contracted. He who contracts a second marriage before the judicial
declaration of the first marriage assumes the risk of being prosecuted for bigamy.
The Supreme Court also notes that even if a party has reason to believe that his first marriage is
void, he cannot simply contract a second marriage without having such first marriage be
judicially declared as void. The parties to the marriage should not be permitted to judge for
themselves its nullity, for the same must be submitted to the judgment of competent courts and
only when the nullity of the marriage is so declared can it be held as void, and so long as there is
no such declaration the presumption is that the marriage exists.
7. Republic of the Philippines

Supreme Court Manila THIRD DIVISION

JESSE Y. YAP,Petitioner, - versus - HON. MONICO G. CABALES, Presiding

Judge, Regional Trial Court, Branch 35, General Santos City; MUNICIPAL
TRIAL COURT, Branch 1, General Santos City; COURT OF APPEALS, PEOPLE
OF THE PHILIPPINES, JOVITA DIMALANTA and MERGYL MIRABUENO,
Respondents.
G.R. No. 159186
Present:

YNARES-SANTIAGO, J.,
Chairperson,
CARPIO,*
CORONA,**
NACHURA, and
PERALTA, JJ.
Promulgated:
June 5, 2009
DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
with prayer for the issuance of a writ of preliminary injunction and/or issuance of
status quo order seeking to annul and set aside the Resolution [1] of the Court of
Appeals (CA) dated July 17, 2003 denying petitioner's motion for reconsideration of
the Decision [2] dated April 30, 2003 in CA-G.R. SP No. 68250.
The facts of the case are as follows:
Petitioner Jesse Y. Yap and his spouse Bessie Yap are engaged in the real
estate business through their company Primetown Property Group.
Sometime in 1996, petitioner purchased several real properties from a certain
Evelyn Te (Evelyn). In consideration of said purchases, petitioner issued several
Bank of the Philippine Islands (BPI) postdated checks to Evelyn. Thereafter, spouses
Orlando and Mergyl Mirabueno and spouses Charlie and Jovita Dimalanta,
rediscounted the checks from Evelyn.
In the beginning, the first few checks were honored by the bank, but in the
early part of 1997, when the remaining checks were deposited with the drawee
bank, they were dishonored for the reason that the Account is Closed. Demands
were made by Spouses Mirabueno and Spouses Dimalanta to the petitioner to make
good the checks. Despite this, however, the latter failed to pay the amounts
represented by the said checks.
On December 8, 1997, Spouses Mirabueno filed a civil action for collection of
sum of money, damages and attorney's fee with prayer for the issuance of a writ of
preliminary attachment against petitioner before the Regional Trial Court (RTC) of
General Santos City, docketed as Civil Case No. 6231. [3] On December 15, 1997,
Spouses Dimalanta followed suit and instituted a similar action, which was docketed
as Civil Case No. 6238. [4]

Subsequently, on various dates, the Office of the City Prosecutor of General

Santos City filed several informations for violation of Batas Pambansa Bilang (B.P.
Blg.) 22 against the petitioner with the Municipal Trial Court in Cities (MTCC),
General Santos City. The criminal complaints were docketed as Criminal Case Nos.
34873, 34874, 34862 to 34869, and Criminal Case No. 35522-I. [5]
In the criminal cases, petitioner filed separate motions to suspend
proceedings on account of the existence of a prejudicial question and motion to
exclude the private prosecutor from participating in the proceedings. [6] Petitioner
prayed that the proceedings in the criminal cases be suspended until the civil cases
pending before the RTC were finally resolved.
The MTCC, in its Orders [7] dated June 21, 2000 and July 4, 2000, denied the
motions for lack of merit. Petitioner filed a Partial Motion for Reconsideration [8]
relative to Criminal Case Nos. 34873, 34874, 34862 to 34869 and a Motion for
Reconsideration of the Part of the Order Denying the Motion to Suspend Proceedings
on Account of the Existence of a Prejudicial Question relative to Criminal Case No.
35522-I. [9] The subsequent motions were denied in the Order [10] dated October
18, 2000.
Aggrieved, petitioner filed a Petition for Certiorari with a Prayer for the
Issuance of a Writ of Preliminary Injunction [11] before the RTC, docketed as SPL.
Civil Case No. 539, imputing grave abuse of discretion on the part of the MTCC
Judge. On July 2, 2001, the RTC issued an Order [12] denying the petition.
Petitioner then filed a Motion for Reconsideration, [13] which was denied in
an Order dated October 18, 2001. [14]
Thereafter, petitioner filed with the CA a Petition for Certiorari Prohibition and
Mandamus with Urgent Prayer for the Issuance of Status Quo Order and Writ of
Preliminary Injunction, [15] docketed as CA-G.R. SP No. 68250.
On April 30, 2003, the CA rendered a Decision [16] dismissing the petition for
lack of merit. The CA opined that Civil Case Nos. 6231 and 6238 did not pose a
prejudicial question to the prosecution of the petitioner for violation of B.P. Blg. 22.
The CA ruled:
In the instant case, a careful perusal of Civil Cases Nos. 6231 and 6238
reveals that the issue involved therein is not the validity of the sale as incorrectly
pointed out by the petitioner, but it is, whether or not the complainants therein are
entitled to collect from the petitioner the sum or the value of the checks which they
have rediscounted from Evelyn Te. It behooves this Court to state that the sale and
the rediscounting of the checks are two transactions, separate and distinct from
each other. It so happened that in the subject civil cases it is not the sale that is in
question, but rather the rediscounting of the checks. Therefore, petitioner's

contention that the main issue involved in said civil cases is the validity of the sale
stands on hollow ground. Furthermore, if it is indeed the validity of the sale that is
contested in the subject civil cases, then, We cannot fathom why the petitioner
never contested such sale by filing an action for the annulment thereof or at least
invoked or prayed in his answer that the sale be declared null and void. Accordingly,
even if Civil Cases Nos. 6231 and 6238 are tried and the resolution of the issues
therein is had, it cannot be deduced therefrom that the petitioner cannot be held
liable anymore for violation of B.P. Blg. 22. [17]
Petitioner filed a Motion for Reconsideration, [18] which was denied in the
Order [19] dated July 17, 2003.
Hence, the petition assigning the following errors:
1.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THERE IS
NO PREJUDICIAL QUESTION IN THE CIVIL CASES (FOR COLLECTION OF SUMS OF
MONEY INSTITUTED BY PRIVATE RESPONDENTS OVER CHECKS ISSUED BY THE
PETITIONER, CIVIL CASE NOS. 6238 AND 6231) THAT WOULD WARRANT
SUSPENSION OF THE CRIMINAL CASES (CASE NO. 35522-1, FOR VIOLATION OF B.P.
22, SUBJECT OF WHICH ARE THE VERY SAME CHECKS).
2.
THE HONORABLE COURT OF APPEALS ERRED IN NOT GRANTING THE
PRAYER FOR THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION AND/OR
STATUS QUO ORDER. [20]
The main contention of the petitioner is that a prejudicial question, as defined
by law and jurisprudence, exists in the present case. It is the petitioner's assertion
that Civil Case Nos. 6231 and 6238 for collection of sum of money and damages
were filed ahead of the criminal cases for violation of B.P. Blg. 22. He further alleged
that, in the pending civil cases, the issue as to whether private respondents are
entitled to collect from the petitioner despite the lack of consideration, is an issue
that is a logical antecedent to the criminal cases for violation of B.P. Blg. 22. For if
the court rules that there is no valid consideration for the check's issuance, as
petitioner contends, then it necessarily follows that he could not also be held liable
for violation of B.P. Blg. 22.
Petitioner further avers that B.P. Blg. 22 specifically requires, among other
elements, that the check should have been issued for account or for value. There
must be a valid consideration; otherwise, no violation of the said law could be
rightfully pursued. Petitioner said that the reason for the dishonor of the checks was
his order to the drawee bank to stop payment and to close his account in order to
avoid necessary penalty from the bank. He made this order due to the failure of
Evelyn to deliver to him the titles to the purchased properties to him.
On the other hand, the Office of the Solicitor General (OSG) contends that
there is no prejudicial question in Civil Case Nos. 6231 and 6238 which would

warrant the suspension of the proceedings in the criminal cases for violation of B.P.
Blg. 22 against the petitioner. The issue in the civil cases is not the validity of the
sale between the petitioner and Evelyn, but whether the complainants therein are
entitled to damages arising from the checks. These checks were issued by the
petitioner in favor of Evelyn, who, thereafter, negotiated the same checks to private
complainants. The checks were subsequently dishonored due to insufficiency of
funds. The OSG maintains that the resolution of such issue has absolutely no
bearing on the issue of whether petitioner may be held liable for violation of B.P.
Blg. 22. [21]
The present case hinges on the determination of whether there exists a
prejudicial question that necessitates the suspension of the proceedings in the
MTCC.
We find that there is none and, thus, we resolve to deny the petition.
A prejudicial question generally exists in a situation where a civil action and a
criminal action are both pending, and there exists in the former an issue that must
be preemptively resolved before the latter may proceed, because howsoever the
issue raised in the civil action is resolved would be determinative juris et de jure of
the guilt or innocence of the accused in the criminal case. The rationale behind the
principle of prejudicial question is to avoid two conflicting decisions. It has two
essential elements: (i) the civil action involves an issue similar or intimately related
to the issue raised in the criminal action; and (ii) the resolution of such issue
determines whether or not the criminal action may proceed. [22]
If both civil and criminal cases have similar issues, or the issue in one is
intimately related to the issues raised in the other, then a prejudicial question would
likely exist, provided the other element or characteristic is satisfied. It must appear
not only that the civil case involves the same facts upon which the criminal
prosecution would be based, but also that the resolution of the issues raised in the
civil action would be necessarily determinative of the guilt or innocence of the
accused. If the resolution of the issue in the civil action will not determine the
criminal responsibility of the accused in the criminal action based on the same
facts, or if there is no necessity that the civil case be determined first before taking
up the criminal case, the civil case does not involve a prejudicial question. [23]
Neither is there a prejudicial question if the civil and the criminal action can,
according to law, proceed independently of each other. [24]
The issue in the criminal cases is whether the petitioner is guilty of violating
B.P. Blg. 22, while in the civil case, it is whether the private respondents are entitled
to collect from the petitioner the sum or the value of the checks that they have
rediscounted from Evelyn.

The resolution of the issue raised in the civil action is not determinative of the
guilt or innocence of the accused in the criminal cases against him, and there is no
necessity that the civil case be determined first before taking up the criminal cases.
In the aforementioned civil actions, even if petitioner is declared not liable for
the payment of the value of the checks and damages, he cannot be adjudged free
from criminal liability for violation of B.P. Blg. 22. The mere issuance of worthless
checks with knowledge of the insufficiency of funds to support the checks is in itself
an offense. [25]
In Jose v. Suarez, [26] the prejudicial question under determination was
whether the daily interest rate of 5% was void, such that the checks issued by
respondents to cover said interest were likewise void for being contra bonos mores,
and thus the cases for B.P. Blg. 22 will no longer prosper. In resolving the issue, We
ruled that whether or not the interest rate imposed by petitioners is eventually
declared void for being contra bonos mores will not affect the outcome of the BP
Blg. 22 cases because what will ultimately be penalized is the mere issuance of
bouncing checks. In fact, the primordial question posed before the court hearing the
B.P. Blg. 22 cases is whether the law has been breached; that is, if a bouncing check
has been issued.
Further, We held in Ricaforte v. Jurado, [27] that:
The gravamen of the offense punished by B.P. Blg. 22 is the act of making
and issuing a worthless check; that is, a check that is dishonored upon its
presentation for payment. In Lozano v. Martinez, we have declared that it is not the
non-payment of an obligation which the law punishes. The law is not intended or
designed to coerce a debtor to pay his debt. The thrust of the law is to prohibit,
under pain of penal sanctions, the making and circulation of worthless checks.
Because of its deleterious effects on the public interest, the practice is proscribed
by the law. The law punishes the act not as an offense against property, but an
offense against public order. In People v. Nitafan, we said that a check issued as an
evidence of debt - though not intended to be presented for payment - has the same
effect as an ordinary check and would fall within the ambit of B.P. Blg. 22.
xxxx
x x x The mere act of issuing a worthless check - whether as a deposit, as a
guarantee or even as evidence of pre-existing debt - is malum prohibitum.
To determine the reason for which checks are issued, or the terms and
conditions for their issuance, will greatly erode the faith the public reposes in the
stability and commercial value of checks as currency substitutes, and bring about
havoc in trade and in banking communities. So what the law punishes is the
issuance of a bouncing check and not the purpose for which it was issued or the

terms and conditions relating to its issuance. The mere act of issuing a worthless
check is malum prohibitum. [28]
Moreover, petitioner's reliance on Ras v. Rasul [29] is misplaced. The case of
Ras involves a complaint for nullification of a deed of sale on the ground of an
alleged double sale. While the civil case was pending, an information for estafa was
filed against Ras (the defendant in the civil case) arising from the same alleged
double sale, subject matter of the civil complaint. The Court ruled that there was a
prejudicial question considering that the defense in the civil case was based on the
very same facts that would be determinative of the guilt or innocence of the
accused in the estafa case.
The instant case is different from Ras, inasmuch as the determination of
whether the petitioner is liable to pay the private respondents the value of the
checks and damages, will not affect the guilt or innocence of the petitioner because
the material question in the criminal cases is whether petitioner had issued bad
checks, regardless of the purpose or condition of its issuance.
Guided by the following legal precepts, it is clear that the determination of
the issues involved in Civil Case Nos. 6231 and 6238 for collection of sum of money
and damages is irrelevant to the guilt or innocence of the petitioner in the criminal
cases for violation of B.P. Blg. 22.
In addition, petitioner's claim of lack of consideration may be raised as a
defense during the trial of the criminal cases against him. The validity and merits of
a partys defense and accusation, as well as the admissibility and weight of
testimonies and evidence brought before the court, are better ventilated during trial
proper.
Precisely, the reason why a state has courts of law is to ascertain the
respective rights of the parties, to examine and to put to test all their respective
allegations and evidence through a well designed machinery termed trial. Thus, all
the defenses available to the accused should be invoked in the trial of the criminal
cases. This court is not the proper forum that should ascertain the facts and decide
the case for violation of B.P. Blg. 22 filed against the petitioner.
In fine, the CA committed no reversible error in affirming the decision of the
RTC.
WHEREFORE, the petition is DENIED and the Decision dated April 30, 2003 and the
Resolution dated July 17, 2003 of the Court of Appeals in CA-G.R. SP No. 68250 are
AFFIRMED.
SO ORDERED.

8. FIRST DIVISION sta. lucia realty & development, inc., Petitioner, - versus
- city of pasig, Respondent,
MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL,
Intervenor.
G.R. No. 166838
Present:
VELASCO, JR .,*
Acting Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,**
DEL CASTILLO, and
PEREZ, JJ.
Promulgated:
June 15, 2011
DECISION

LEONARDO-DE CASTRO, J.:

FACTS NA SUMMARIZED:
Lucia, in its Answer, alleged that it had been religiously paying its real
estate taxes to Cainta, just like what its predecessors-in-interest did, by
virtue of the demands and assessments made and the Tax Declarations
issued by Cainta on the claim that the subject properties were within its
territorial jurisdiction.
Lucia and Cainta thereafter moved for the suspension of the proceedings,
and claimed that the pending petition in the Antipolo RTC, for the
settlement of boundary dispute between Cainta and Pasig, presented a
prejudicial question to the resolution of the case.
Lucia and Cainta filed their Notices of Appeal, Pasig, on September 11,
1998, filed a Motion for Reconsideration of the RTCs August 10, 1998
Decision.
Lucia filed a Petition for Certiorari under Rule 65 of the Rules of Court with
the Court of Appeals to assail the RTCs order granting the execution.
The assailed Order dated April 15, 1999 in Civil Case No. 65420 granting
the motion for execution pending appeal and ordering the issuance of a
writ of execution pending appeal is hereby SET ASIDE and declared NULL
and VOID.
For review is the June 30, 2004 Decision[1] and the January 27, 2005 Resolution[2]
of the Court of Appeals in CA-G.R. CV No. 69603, which affirmed with modification
the August 10, 1998 Decision[3] and October 9, 1998 Order[4] of the Regional Trial
Court (RTC) of Pasig City, Branch 157, in Civil Case No. 65420.
Petitioner Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the registered owner
of several parcels of land with Transfer Certificates of Title (TCT) Nos. 39112, 39110
and 38457, all of which indicated that the lots were located in Barrio Tatlong
Kawayan, Municipality of Pasig[5] (Pasig).
The parcel of land covered by TCT No. 39112 was consolidated with that covered by
TCT No. 518403, which was situated in Barrio Tatlong Kawayan, Municipality of
Cainta, Province of Rizal (Cainta). The two combined lots were subsequently
partitioned into three, for which TCT Nos. 532250, 598424, and 599131, now all
bearing the Cainta address, were issued.
TCT No. 39110 was also divided into two lots, becoming TCT Nos. 92869 and 92870.

The lot covered by TCT No. 38457 was not segregated, but a commercial building
owned by Sta. Lucia East Commercial Center, Inc., a separate corporation, was built
on it.[6]

Upon Pasigs petition to correct the location stated in TCT Nos. 532250, 598424, and
599131, the Land Registration Court, on June 9, 1995, ordered the amendment of
the TCTs to read that the lots with respect to TCT No. 39112 were located in Barrio
Tatlong Kawayan, Pasig City.[7]
On January 31, 1994, Cainta filed a petition[8] for the settlement of its land
boundary dispute with Pasig before the RTC, Branch 74 of Antipolo City (Antipolo
RTC). This case, docketed as Civil Case No. 94-3006, is still pending up to this date.
On November 28, 1995, Pasig filed a Complaint,[9] docketed as Civil Case No.
65420, against Sta. Lucia for the collection of real estate taxes, including penalties
and interests, on the lots covered by TCT Nos. 532250, 598424, 599131, 92869,
92870 and 38457, including the improvements thereon (the subject properties).
Sta. Lucia, in its Answer, alleged that it had been religiously paying its real estate
taxes to Cainta, just like what its predecessors-in-interest did, by virtue of the
demands and assessments made and the Tax Declarations issued by Cainta on the
claim that the subject properties were within its territorial jurisdiction. Sta. Lucia
further argued that since 1913, the real estate taxes for the lots covered by the
above TCTs had been paid to Cainta.[10]
Cainta was allowed to file its own Answer-in-Intervention when it moved to
intervene on the ground that its interest would be greatly affected by the outcome
of the case. It averred that it had been collecting the real property taxes on the
subject properties even before Sta. Lucia acquired them. Cainta further asseverated
that the establishment of the boundary monuments would show that the subject
properties are within its metes and bounds.[11]
Sta. Lucia and Cainta thereafter moved for the suspension of the proceedings, and
claimed that the pending petition in the Antipolo RTC, for the settlement of
boundary dispute between Cainta and Pasig, presented a prejudicial question to the
resolution of the case.[12]
The RTC denied this in an Order dated December 4, 1996 for lack of merit. Holding
that the TCTs were conclusive evidence as to its ownership and location,[13] the
RTC, on August 10, 1998, rendered a Decision in favor of Pasig:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of
[Pasig], ordering Sta. Lucia Realty and Development, Inc. to pay [Pasig]:

1)
P273,349.14 representing unpaid real estate taxes and penalties as of 1996,
plus interest of 2% per month until fully paid;
2)

P50,000.00 as and by way of attorneys fees; and

3)

The costs of suit.

Judgment is likewise rendered against the intervenor Municipality of Cainta, Rizal,

ordering it to refund to Sta. Lucia Realty and Development, Inc. the realty tax
payments improperly collected and received by the former from the latter in the
aggregate amount of P358, 403.68.[14]
After Sta. Lucia and Cainta filed their Notices of Appeal, Pasig, on September 11,
1998, filed a Motion for Reconsideration of the RTCs August 10, 1998 Decision.
The RTC, on October 9, 1998, granted Pasigs motion in an Order[15] and modified
its earlier decision to include the realty taxes due on the improvements on the
subject lots:
WHEREFORE, premises considered, the plaintiffs motion for reconsideration is
hereby granted. Accordingly, the Decision, dated August 10, 1998 is hereby
modified in that the defendant is hereby ordered to pay plaintiff the amount of
P5,627,757.07 representing the unpaid taxes and penalties on the improvements on
the subject parcels of land whereon real estate taxes are adjudged as due for the
year 1996.[16]
Accordingly, Sta. Lucia filed an Amended Notice of Appeal to include the RTCs
October 9, 1998 Order in its protest.
On October 16, 1998, Pasig filed a Motion for Execution Pending Appeal, to which
both Sta. Lucia and Cainta filed several oppositions, on the assertion that there
were no good reasons to warrant the execution pending appeal.[17]
On April 15, 1999, the RTC ordered the issuance of a Writ of Execution against Sta.
Lucia.
On May 21, 1999, Sta. Lucia filed a Petition for Certiorari under Rule 65 of the Rules
of Court with the Court of Appeals to assail the RTCs order granting the execution.
Docketed as CA-G.R. SP No. 52874, the petition was raffled to the First Division of
the Court of Appeals, which on September 22, 2000, ruled in favor of Sta. Lucia, to
wit:
WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE
COURSE and GRANTED by this Court. The assailed Order dated April 15, 1999 in
Civil Case No. 65420 granting the motion for execution pending appeal and ordering
the issuance of a writ of execution pending appeal is hereby SET ASIDE and
declared NULL and VOID.[18]

The Court of Appeals added that the boundary dispute case presented a prejudicial
question which must be decided before x x x Pasig can collect the realty taxes due
over the subject properties.[19]
Pasig sought to have this decision reversed in a Petition for Certiorari filed before
this Court on November 29, 2000, but this was denied on June 25, 2001 for being
filed out of time.[20]
Meanwhile, the appeal filed by Sta. Lucia and Cainta was raffled to the (former)
Seventh Division of the Court of Appeals and docketed as CA-G.R. CV No. 69603. On
June 30, 2004, the Court of Appeals rendered its Decision, wherein it agreed with
the RTCs judgment:
WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION
that the award of P50,000.00 attorneys fees is DELETED.[21]
In affirming the RTC, the Court of Appeals declared that there was no proper legal
basis to suspend the proceedings.[22] Elucidating on the legal meaning of a
prejudicial question, it held that there can be no prejudicial question when the cases
involved are both civil.[23] The Court of Appeals further held that the elements of
litis pendentia and forum shopping, as alleged by Cainta to be present, were not
met.
Sta. Lucia and Cainta filed separate Motions for Reconsideration, which the Court of
Appeals denied in a Resolution dated January 27, 2005.
Undaunted, Sta. Lucia and Cainta filed separate Petitions for Certiorari with this
Court. Caintas petition, docketed as G.R. No. 166856 was denied on April 13, 2005
for Caintas failure to show any reversible error. Sta. Lucias own petition is the one
subject of this decision.[24]
In praying for the reversal of the June 30, 2004 judgment of the Court of Appeals,
Sta. Lucia assigned the following errors:
ASSIGNMENT OF ERRORS
I
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING [WITH MODIFICATION]
THE DECISION OF THE REGIONAL TRIAL COURT IN PASIG CITY
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT SUSPENDING THE CASE IN
VIEW OF THE PENDENCY OF THE BOUNDARY DISPUTE WHICH WILL FINALLY
DETERMINE THE SITUS OF THE SUBJECT PROPERTIES
III.

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PAYMENT
OF REALTY TAXES THROUGH THE MUNICIPALITY OF CAINTA WAS VALID PAYMENT OF
REALTY TAXES
IV.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT IN THE
MEANTIME THAT THE BOUNDARY DISPUTE CASE IN ANTIPOLO CITY REGIONAL TRIAL
COURT IS BEING FINALLY RESOLVED, THE PETITIONER STA. LUCIA SHOULD BE
PAYING THE REALTY TAXES ON THE SUBJECT PROPERTIES THROUGH THE
INTERVENOR CAINTA TO PRESERVE THE STATUS QUO.[25]
Pasig, countering each error, claims that the lower courts correctly decided the case
considering that the TCTs are clear on their faces that the subject properties are
situated in its territorial jurisdiction. Pasig contends that the principles of litis
pendentia, forum shopping, and res judicata are all inapplicable, due to the absence
of their requisite elements. Pasig maintains that the boundary dispute case before
the Antipolo RTC is independent of the complaint for collection of realty taxes which
was filed before the
Pasig RTC. It avers that the doctrine of prejudicial question, which has a definite
meaning in law, cannot be invoked where the two cases involved are both civil.
Thus, Pasig argues, since there is no legal ground to preclude the simultaneous
hearing of both cases, the suspension of the proceedings in the Pasig RTC is
baseless.
Cainta also filed its own comment reiterating its legal authority over the subject
properties, which fall within its territorial jurisdiction. Cainta claims that while it has
been collecting the realty taxes over the subject properties since way back 1913,
Pasig only covered the same for real property tax purposes in 1990, 1992, and
1993. Cainta also insists that there is a discrepancy between the locational entries
and the technical descriptions in the TCTs, which further supports the need to await
the settlement of the boundary dispute case it initiated.
The errors presented before this Court can be narrowed down into two basic issues:
1) Whether the RTC and the CA were correct in deciding Pasigs Complaint without
waiting for the resolution of the boundary dispute case between Pasig and Cainta;
and
2) Whether Sta. Lucia should continue paying its real property taxes to Cainta, as it
alleged to have always done, or to Pasig, as the location stated in Sta. Lucias TCTs.
We agree with the First Division of the Court of Appeals in CA-G.R. SP No. 52874 that
the resolution of the boundary dispute between Pasig and Cainta would determine
which local government unit is entitled to collect realty taxes from Sta. Lucia.[26]

The Local Government Unit entitled

To Collect Real Property Taxes
The Former Seventh Division of the Court of Appeals held that the resolution of the
complaint lodged before the Pasig RTC did not necessitate the assessment of the
parties evidence on the metes and bounds of their respective territories. It cited our
ruling in Odsigue v. Court of Appeals[27] wherein we said that a certificate of title is
conclusive evidence of both its ownership and location.[28] The Court of Appeals
even referred to specific provisions of the 1991 Local Government Code and Act. No.
496 to support its ruling that Pasig had the right to collect the realty taxes on the
subject properties as the titles of the subject properties show on their faces that
they are situated in Pasig.[29]
Under Presidential Decree No. 464 or the Real Property Tax Code, the authority to
collect real property taxes is vested in the locality where the property is situated:
Sec. 5. Appraisal of Real Property. All real property, whether taxable or exempt, shall
be appraised at the current and fair market value prevailing in the locality where the
property is situated.
xxxx
Sec. 57. Collection of tax to be the responsibility of treasurers. The collection of the
real property tax and all penalties accruing thereto, and the enforcement of the
remedies provided for in this Code or any applicable laws, shall be the responsibility
of the treasurer of the province, city or municipality where the property is situated.
(Emphases ours.)
This requisite was reiterated in Republic Act No. 7160, also known as the 1991 the
Local Government Code, to wit:
Section 201. Appraisal of Real Property. All real property, whether taxable or
exempt, shall be appraised at the current and fair market value prevailing in the
locality where the property is situated. The Department of Finance shall promulgate
the necessary rules and regulations for the classification, appraisal, and assessment
of real property pursuant to the provisions of this Code.
Section 233. Rates of Levy. A province or city or a municipality within the
Metropolitan Manila Area shall fix a uniform rate of basic real property tax
applicable to their respective localities as follows: x x x. (Emphases ours.)
The only import of these provisions is that, while a local government unit is
authorized under several laws to collect real estate tax on properties falling under
its territorial jurisdiction, it is imperative to first show that these properties are
unquestionably within its geographical boundaries.

Accentuating on the importance of delineating territorial boundaries, this Court, in

Mariano, Jr. v. Commission on Elections[30] said:
The importance of drawing with precise strokes the territorial boundaries of a local
unit of government cannot be overemphasized. The boundaries must be clear for
they define the limits of the territorial jurisdiction of a local government unit. It can
legitimately exercise powers of government only within the limits of its territorial
jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any
uncertainty in the boundaries of local government units will sow costly conflicts in
the exercise of governmental powers which ultimately will prejudice the people's
welfare. This is the evil sought to be avoided by the Local Government Code in
requiring that the land area of a local government unit must be spelled out in metes
and bounds, with technical descriptions.[31] (Emphasis ours.)
The significance of accurately defining a local government units boundaries was
stressed in City of Pasig v. Commission on Elections,[32] which involved the
consolidated petitions filed by the parties herein, Pasig and Cainta, against two
decisions of the Commission on Elections (COMELEC) with respect to the plebiscites
scheduled by Pasig for the ratification of its creation of two new Barangays. Ruling
on the contradictory reliefs sought by Pasig and Cainta, this Court affirmed the
COMELEC decision to hold in abeyance the plebiscite to ratify the creation of
Barangay Karangalan; but set aside the COMELECs other decision, and nullified the
plebiscite that ratified the creation of Barangay Napico in Pasig, until the boundary
dispute before the Antipolo RTC had been resolved. The aforementioned case held
as follows:
1.
The Petition of the City of Pasig in G.R. No. 125646 is DISMISSED for lack of
merit; while
2.
The Petition of the Municipality of Cainta in G.R. No. 128663 is GRANTED. The
COMELEC Order in UND No. 97-002, dated March 21, 1997, is SET ASIDE and the
plebiscite held on March 15, 1997 to ratify the creation of Barangay Napico in the
City of Pasig is declared null and void. Plebiscite on the same is ordered held in
abeyance until after the courts settle with finality the boundary dispute between the
City of Pasig and the Municipality of Cainta, in Civil Case No. 94-3006.[33]
Clearly therefore, the local government unit entitled to collect real property taxes
from Sta. Lucia must undoubtedly show that the subject properties are situated
within its territorial jurisdiction; otherwise, it would be acting beyond the powers
vested to it by law.
Certificates of Title as
Conclusive Evidence of Location

While we fully agree that a certificate of title is conclusive as to its ownership and
location, this does not preclude the filing of an action for the very purpose of
attacking the statements therein. In De Pedro v. Romasan Development
Corporation,[34] we proclaimed that:
We agree with the petitioners that, generally, a certificate of title shall be conclusive
as to all matters contained therein and conclusive evidence of the ownership of the
land referred to therein. However, it bears stressing that while certificates of title
are indefeasible, unassailable and binding against the whole world, including the
government itself, they do not create or vest title. They merely confirm or record
title already existing and vested. They cannot be used to protect a usurper from the
true owner, nor can they be used as a shield for the commission of fraud; neither do
they permit one to enrich himself at the expense of other.[35]
In Pioneer Insurance and Surety Corporation v. Heirs of Vicente Coronado,[36] we
set aside the lower courts ruling that the property subject of the case was not
situated in the location stated and described in the TCT, for lack of adequate basis.
Our decision was in line with the doctrine that the TCT is conclusive evidence of
ownership and location. However, we refused to simply uphold the veracity of the
disputed TCT, and instead, we remanded the case back to the trial court for the
determination of the exact location of the property seeing that it was the issue in
the complaint filed before it.[37]
In City Government of Tagaytay v. Guerrero,[38] this Court reprimanded the City of
Tagaytay for levying taxes on a property that was outside its territorial jurisdiction,
viz:
In this case, it is basic that before the City of Tagaytay may levy a certain property
for sale due to tax delinquency, the subject property should be under its territorial
jurisdiction. The city officials are expected to know such basic principle of law. The
failure of the city officials of Tagaytay to verify if the property is within its jurisdiction
before levying taxes on the same constitutes gross negligence.[39] (Emphasis ours.)
Although it is true that Pasig is the locality stated in the TCTs of the subject
properties, both Sta. Lucia and Cainta aver that the metes and bounds of the
subject properties, as they are described in the TCTs, reveal that they are within
Caintas boundaries.[40] This only means that there may be a conflict between the
location as stated and the location as technically described in the TCTs. Mere
reliance therefore on the face of the TCTs will not suffice as they can only be
conclusive evidence of the subject properties locations if both the stated and
described locations point to the same area.
The Antipolo RTC, wherein the boundary dispute case between Pasig and Cainta is
pending, would be able to best determine once and for all the precise metes and
bounds of both Pasigs and Caintas respective territorial jurisdictions. The resolution
of this dispute would necessarily ascertain the extent and reach of each local

governments authority, a prerequisite in the proper exercise of their powers, one of

which is the power of taxation. This was the conclusion reached by this Court in City
of Pasig v. Commission on Elections,[41] and by the First Division of the Court of
Appeals in CA-G.R. SP No. 52874. We do not see any reason why we cannot adhere
to the same logic and reasoning in this case.
The Prejudicial Question Debate
It would be unfair to hold Sta. Lucia liable again for real property taxes it already
paid simply because Pasig cannot wait for its boundary dispute with Cainta to be
decided. Pasig has consistently argued that the boundary dispute case is not a
prejudicial question that would entail the suspension of its collection case against
Sta. Lucia. This was also its argument in City of Pasig v. Commission on Elections,
[42] when it sought to nullify the COMELECs ruling to hold in abeyance (until the
settlement of the boundary dispute case), the plebiscite that will ratify its creation
of Barangay Karangalan. We agreed with the COMELEC therein that the boundary
dispute case presented a prejudicial question and explained our statement in this
wise:
To begin with, we agree with the position of the COMELEC that Civil Case No. 943006 involving the boundary dispute between the Municipality of Cainta and the
City of Pasig presents a prejudicial question which must first be decided before
plebiscites for the creation of the proposed barangays may be held.
The City of Pasig argues that there is no prejudicial question since the same
contemplates a civil and criminal action and does not come into play where both
cases are civil, as in the instant case. While this may be the general rule, this Court
has held in Vidad v. RTC of Negros Oriental, Br. 42, that, in the interest of good
order, we can very well suspend action on one case pending the final outcome of
another case closely interrelated or linked to the first.
In the case at bar, while the City of Pasig vigorously claims that the areas covered
by the proposed Barangays Karangalan and Napico are within its territory, it can not
deny that portions of the same area are included in the boundary dispute case
pending before the Regional Trial Court of Antipolo. Surely, whether the areas in
controversy shall be decided as within the territorial jurisdiction of the Municipality
of Cainta or the City of Pasig has material bearing to the creation of the proposed
Barangays Karangalan and Napico. Indeed, a requisite for the creation of a
barangay is for its territorial jurisdiction to be properly identified by metes and
bounds or by more or less permanent natural boundaries. Precisely because
territorial jurisdiction is an issue raised in the pending civil case, until and unless
such issue is resolved with finality, to define the territorial jurisdiction of the
proposed barangays would only be an exercise in futility. Not only that, we would be
paving the way for potentially ultra vires acts of such barangays. x x x.[43]
(Emphases ours.)

It is obvious from the foregoing, that the term prejudicial question, as appearing in
the cases involving the parties herein, had been used loosely. Its usage had been
more in reference to its ordinary meaning, than to its strict legal meaning under the
Rules of Court.[44] Nevertheless, even without the impact of the connotation
derived from the term, our own Rules of Court state that a trial court may control its
own proceedings according to its sound discretion:
POWERS AND DUTIES OF COURTS AND JUDICIAL OFFICERS
Rule 135
SEC. 5. Inherent powers of courts. Every court shall have power:
xxxx
(g) To amend and control its process and orders so as to make them comformable to
law and justice.
Furthermore, we have acknowledged and affirmed this inherent power in our own
decisions, to wit:
The court in which an action is pending may, in the exercise of a sound discretion,
upon proper application for a stay of that action, hold the action in abeyance to
abide the outcome of another pending in another court, especially where the parties
and the issues are the same, for there is power inherent in every court to control
the disposition of causes (sic) on its dockets with economy of time and effort for
itself, for counsel, and for litigants. Where the rights of parties to the second action
cannot be properly determined until the questions raised in the first action are
settled the second action should be stayed.
The power to stay proceedings is incidental to the power inherent in every court to
control the disposition of the cases on its dockets, considering its time and effort,
that of counsel and the litigants. But if proceedings must be stayed, it must be done
in order to avoid multiplicity of suits and prevent vexatious litigations, conflicting
judgments, confusion between litigants and courts. It bears stressing that whether
or not the RTC would suspend the proceedings in the SECOND CASE is submitted to
its sound discretion.[45]
In light of the foregoing, we hold that the Pasig RTC should have held in abeyance
the proceedings in Civil Case No. 65420, in view of the fact that the outcome of the
boundary dispute case before the Antipolo RTC will undeniably affect both Pasigs
and Caintas rights. In fact, the only reason Pasig had to file a tax collection case
against Sta. Lucia was not that Sta. Lucia refused to pay, but that Sta. Lucia had
already paid, albeit to another local government unit. Evidently, had the territorial

boundaries of the contending local government units herein been delineated with
accuracy, then there would be no controversy at all.
In the meantime, to avoid further animosity, Sta. Lucia is directed to deposit the
succeeding real property taxes due on the subject properties, in an escrow account
with the Land Bank of the Philippines.
WHEREFORE, the instant petition is GRANTED. The June 30, 2004 Decision and the
January 27, 2005 Resolution of the Court of Appeals in CA-G.R. CV No. 69603 are
SET ASIDE. The City of Pasig and the Municipality of Cainta are both directed to
await the judgment in their boundary dispute case (Civil Case No. 94-3006),
pending before Branch 74 of the Regional Trial Court in Antipolo City, to determine
which local government unit is entitled to exercise its powers, including the
collection of real property taxes, on the properties subject of the dispute. In the
meantime, Sta. Lucia Realty and Development, Inc. is directed to deposit the
succeeding real property taxes due on the lots and improvements covered by TCT
Nos. 532250, 598424, 599131, 92869, 92870 and 38457 in an escrow account with
the Land Bank of the Philippines.
SO ORDERED.

9.PIMENTEL v. PIMENTEL G.R. No. 172060, September 13, 2010

On 25 October 2004, Maria Pimentel y Lacap (private respondent) filed an action for frustrated
parricide against Joselito Pimentel (petitioner) before the Regional Trial Court of Quezon City.
On 7 February 2005, petitioner received summons to appear before the Regional Trial Court of
Antipolo City for the pre-trial and trial of a civil case (Maria Pimentel v. Joselito Pimentel) for
Declaration of Nullity of Marriage under Article 36 of the Family Code on the ground of
psychological incapacity.

On 11 February 2005, petitioner filed an urgent motion to suspend the proceedings before the
RTC Quezon City on the ground of the existence of a prejudicial question.
ISSUE: Whether the resolution of the action for annulment of marriage is a prejudicial question
that warrants the suspension of the criminal case for frustrated parricide against petitioner.
The issue in the civil case for annulment of marriage under Article 36 is whether petitioner is
psychologically incapacitated to comply with the essential marital obligations. The issue in
parricide is whether the accused killed the victim. In this case, since petitioner was charged with
frustrated parricide, the issue is whether he performed all the acts of execution which would have
killed respondent as a consequence but which, nevertheless, did not produce it by reason of

causes independent of petitioners will. At the time of the commission of the alleged crime,
petitioner and respondent were married. The subsequent dissolution of their marriage will have
no effect on the alleged crime that was committed at the time of the subsistence of the marriage.
In short, even if the marriage between petitioner and respondent is annulled, petitioner could still
be held criminally liable since at the time of the commission of the alleged crime, he was still
married to respondent.

We cannot accept petitioners reliance on Tenebro v. CA that the judicial declaration of the
nullity of a marriage on the ground of psychological incapacity retroacts to the date of the
celebration of the marriage insofar as the vinculum between the spouses is concerned x x x.
First, the issue in Tenebro is the effect of the judicial declaration of nullity of a second or
subsequent marriage on the ground of psychological incapacity on a criminal liability for
bigamy. There was no issue of prejudicial question in that case. Second, the Court ruled in
Tenebro that [t]here is x x x a recognition written into the law itself that such a marriage,
although void ab initio, may still produce legal consequences. In fact, the Court declared in that
case that a declaration of the nullity of the second marriage on the ground of psychological
incapacity is of absolutely no moment insofar as the States penal laws are concerned.
10.Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 173183

November 18, 2013

SYCAMORE VENTURES CORPORATION and SPOUSES SIMON D. PAZ AND LENG

LENG PAZ, Petitioners,
vs.
METROPOLITAN BANK AND TRUST COMPANY, Respondent.
DECISION
BRION, J.:
We are once more faced by a petition filed by debtors who could not pay their indebtedness and
who, at the point of foreclosure, sought judicial recourse to delay the inevitable. In this case, the
issue used as anchor is the valuation of the mortgage property s appraised value an issue that
hardly carries any significant consequence in extrajudicial foreclosure proceedings. How the
delay in the foreclosure has affected the parties is a matter that is not in the record before us, but

delay, if it had been the objective sought, came as it has come in many other similar cases. To be
sure, the Judiciary has been affected by these cases as they have unnecessarily clogged the
dockets of our courts, to the detriment of more important cases equally crying for attention.
The petitioners, Sycamore Ventures Corporation (Sycamore) and the spouses Simon D. Paz and
Leng Leng Paz, challenge the decision1 dated May 3, 2006 and the resolution2 dated June 19,
2006 of the Court of Appeals (CA) in CA-G.R. SP No. 88463. The CA reversed and set aside the
orders3 dated August 5, 2004 and November 22, 2004 of the Regional Trial Court (RTC), Branch
43, San Fernando, Pampanga, in Civil Case No. 12569.
The Factual Antecedents
Sixteen years ago (or sometime in 1997), Sycamore and the spouses Paz obtained from
respondent Metropolitan Bank and Trust Company (Metrobank) a credit line of
P180,000,000.00, secured by 10 real estate mortgages4 over Sycamores 11 parcels of land,5
together with their improvements.6 Sycamore and the spouses Paz withdrew from the credit line
the total amount of P65,694,914.26, evidenced by 13 promissory notes.7
Because the petitioners failed to pay their loan obligations and for violations of the terms and
conditions of their 13 promissory notes, Metrobank instituted extrajudicial foreclosure
proceedings over the six real estate mortgages, pursuant to Act No. 3135, as amended.8 The
public auction sale was set for various dates March 22, 2000, April 23, 2000 and May 23, 2000
but the sale did not take place because Sycamore and the spouses Paz asked for postponements.
Metrobank subsequently restructured Sycamore and the spouses Pazs loan, resulting in the
issuance of one promissory note denominated as PN No. 751622 736864.92508.000.99, in lieu of
the 13 promissory notes9 previously issued, and the execution of a single real estate mortgage
covering the 12 parcels of land.10
Application for Extrajudicial
Foreclosure
Despite reminders, Sycamore and the spouses Paz still failed to settle their loan obligations,
compelling Metrobank to file a second petition for auction sale, which was set for October 25,
2002.
On October 16, 2002, Sycamore and the spouses Paz once again asked for the postponement of
the October 25, 2002 public auction sale; they asked that the sale be moved to November 26,
2002, but this time Metrobank refused to give in.11
Civil Case No. 12569 for Annulment of
Contract and Real Estate Mortgage with

Temporary Restraining Order and

Injunction
Decision G.R. No. 173183 3
Application for Extrajudicial Foreclosure
Despite reminders, Sycamore and the spouses Paz still failed to settle their loan obligations,
compelling Metrobank to file a second petition for auction sale, which was set for October 25,
2002. On October 16, 2002, Sycamore and the spouses Paz once again asked for the
postponement of the October 25, 2002 public auction sale; they asked that the sale be moved to
November 26, 2002, but this time Metrobank refused to give in.11
Civil Case No. 12569 for Annulment of
Contract and Real Estate Mortgage with
Temporary Restraining Order and
Injunction
On November 25, 2002, Sycamore and the spouses Paz filed before the RTC, Branch 43, San
Fernando Pampanga, a complaint for the annulment of the contract and of the real estate
mortgage. They likewise asked for the issuance of a temporary restraining order (TRO).
The petitioners disputed Metrobanks alleged unilateral and arbitrary reduction of the mortgaged
properties appraisal value from P1,200.00 to P300.00-P400.00 per square meter. They likewise
sought the maintenance of the status quo, to enjoin Metrobank, and to prevent it from proceeding
with the extrajudicial foreclosure.
On the same day, the Executive Judge issued a 72-hour TRO, directing the sheriff to cease and
desist from proceeding with the scheduled public auction.12 After summary hearing, Judge
Carmelita S. Gutierrez-Fruelda, RTC, San Fernando Pampanga, ordered the extension of the
TRO to its full 20-day term.13
On December 17, 2002, Judge Fruelda issued a writ of preliminary injunction which Metrobank
unsuccessfully resisted through a motion for reconsideration that was denied.14 Thus, Metrobank
ran to the CA on a petition for certiorari15 to question the RTC orders for grave abuse of
discretion.
The CA dismissed Metrobanks petition for lack of merit and upheld the RTCs issued injunction.
Order for Appointment of
Independent Commissioners

Meanwhile, the proceedings in the main case continued. At the trial, Sycamore and the spouses
Paz moved for the appointment of independent commissioners to determine the mortgaged
properties appraisal value.16 They mainly alleged that Metrobank arbitrarily and unilaterally
reduced the mortgaged properties appraisal value; hence, the need for their reappraisal to
determine their true value.
In an order dated August 5, 2004, the RTC granted the petitioners motion, and again Metrobank
was unsuccessful in securing a reconsideration.
Metrobank thus again went to the CA on a petition for certiorari under Rule 65, imputing grave
abuse of discretion on the RTC for issuing the questioned order. The bank alleged that the
appraisal value of the mortgaged properties is not an issue in the proceedings because their value
is already a matter of record.
On May 3, 2006, the CA this time granted Metrobanks petition for certiorari and set aside the
RTCs orders. It found that the appraisal value of the mortgaged properties was not an issue since
the real estate mortgage and the promissory note already indicated with certainty the amount of
the loan obligation.
It was Sycamore and the spouses Paz this time who filed their motion for reconsideration which
the CA denied. Significantly, the CA noted that the determination of the properties appraisal
value has nothing to do with the question of whether the foreclosure proceeding will proceed.
The CAs denial gave rise to the present petition for review on certiorari.
The Petition
Sycamore and the spouses Paz contend that the CA erred in setting aside the RTCs order
granting their motion for appointment of independent commissioners. They argue that it had the
effect of preventing the RTCs determination of a critical question of fact i.e., the determination
of the mortgaged properties true valuation which, they insist, is an issue that needs to be
resolved prior to the determination of the foreclosures validity.
They claim that before resolving the said issue, the RTC has to decide the following prejudicial
questions, namely:
(1) Whether Metrobank validly reduced the mortgaged properties valuation; and
(2) Whether Metrobank can validly foreclose the mortgaged properties at a further
reduced valuation.17

Lastly, Sycamore and the spouses Paz invoke this Courts intervention to prevent an unfair
situation where the mortgage foreclosure, based on Metrobanks arbitrary and unilateral
reduction of the properties appraisal value, would deprive them of all their properties and, at the
same time, leave a deficiency of P500,000,000.00.
The Issue
The core issue for our determination is whether the determination of the mortgaged properties
appraisal value constitutes a prejudicial question that warrants the suspension of the foreclosure
proceedings.
Simply put, is the appraisal value of the mortgaged properties material in the mortgage
foreclosures validity?
The Courts Ruling
We deny the petition for lack of merit. The CA did not err when it set aside the RTCs order
granting the motion for appointment of independent commissioners.
Remedies of a secured creditor
A secured creditor may institute against the mortgage debtor either a personal action for the
collection of the debt, a real action to judicially foreclose the real estate mortgage, or an
extrajudicial judicial foreclosure of the mortgage. The remedies, however, are alternative, not
cumulative, and the election or use of one remedy operate as a waiver of the others.18
We discussed these legal points in Bachrach Motor Co., Inc. v. Icarangal19 and ruled that:
[I]n the absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In
other words, he may pursue either of the two remedies, but not both. By such election, his cause
of action can by no means be impaired, for each of the two remedies is complete in itself. Thus,
an election to bring a personal action will leave open to him all the properties of the debtor for
attachment and execution, even including the mortgaged property itself. And, if he waives such
personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment
thereon would still give him the right to sue for a deficiency judgment, in which case, all the
properties of the defendant, other than the mortgaged property, are again open to him for the
satisfaction of the deficiency. In either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely
accidental and are all under his right of election.

In the present case, Metrobank elected the third remedy the extrajudicial foreclosure of the real
estate mortgage.
Extrajudicial foreclosure under Act No. 3135
Extrajudicial foreclosure is governed by Act No. 3135, as amended by Act No. 4118.
It provides in its Section 1 that:
SECTION 1. When a sale is made under a special power inserted in or attached to any real-estate
mortgage hereafter made as security for the payment of money or the fulfillment of any other
obligation, the provisions of the following election shall govern as to the manner in which the
sale and redemption shall be effected, whether or not provision for the same is made in the
power.
In brief, Act No. 3135 recognizes the right of a creditor to foreclose a mortgage upon the
mortgagors failure to pay his/her obligation. In choosing this remedy, the creditor enforces his
lien through the sale on foreclosure of the mortgaged property. The proceeds of the sale will then
be applied to the satisfaction of the debt. In case of a deficiency, the mortgagee has the right to
recover the deficiency resulting from the difference between the amount obtained in the sale at
public auction, and the outstanding obligation at the time of the foreclosure proceedings.20
Certain requisites must be established before a creditor can proceed to an extrajudicial
foreclosure, namely: first, there must have been the failure to pay the loan obtained from the
mortgagee-creditor; second, the loan obligation must be secured by a real estate mortgage; and
third, the mortgagee-creditor has the right to foreclose the real estate mortgage either judicially
or extrajudicially.
Act No. 3135 outlines the notice and publication requirements and the procedure for the
extrajudicial foreclosure which constitute a condition sine qua non for its validity. Specifically,
Sections 2, 3 and 4 of the law prescribe the formalities of the extrajudicial foreclosure
proceeding, which we quote:
SECTION 2. Said sale cannot be made legally outside of the province in which the property sold
is situated; and in case the place within said province in which the sale is to be made is subject to
stipulation, such sale shall be made in said place or in the municipal building of the municipality
in which the property or part thereof is situated.
SECTION 3. Notice shall be given by posting notices of the sale for not less than twenty days in
at least three public places of the municipality or city where the property is situated, and if such
property is worth more than four hundred pesos, such notice shall also be published once a week

for at least three consecutive weeks in a newspaper of general circulation in the municipality or
city.
SECTION 4. The sale shall be made at public auction, between the hours or nine in the morning
and four in the afternoon; and shall be under the direction of the sheriff of the province, the
justice or auxiliary justice of the peace of the municipality in which such sale has to be made, or
a notary public of said municipality, who shall be entitled to collect a fee of five pesos each day
of actual work performed, in addition to his expenses.
Act No. 3135 does not require
determination of appraised value
All the above provisions are quoted verbatim to stress that Act No. 3135 has no requirement for
the determination of the mortgaged properties appraisal value. Nothing in the law likewise
indicates that the mortgagee-creditors appraisal value shall be the basis for the bid price. Neither
is there any rule nor any guideline prescribing the minimum amount of bid, nor that the bid
should be at least equal to the properties current appraised value. What the law only provides are
the requirements, procedure, venue and the mortgagors right to redeem the property. When the
law does not provide for the determination of the propertys valuation, neither should the courts
so require, for our duty limits us to the interpretation of the law, not to its augmentation.
Under the circumstances, we fail to see the necessity of determining the mortgaged properties
current appraised value.1wphi1 We likewise do not discern the existence of any prejudicial
question, anchored on the mortgaged properties appraised value, that would warrant the
suspension of the foreclosure proceedings.
For greater certainty, a prejudicial question is a prior issue whose resolution rests with another
tribunal, but at the same time is necessary in the resolution of another issue in the same case.21
For example, there is a prejudicial question where there is a civil action involving an issue
similar or intimately related to the issue raised in a criminal action, and the resolution of the issue
in the civil action is determinative of the outcome of the criminal action.
As so defined, we do not see how the motion for the appointment of independent commissioners
can serve as a prejudicial question. It is not a main action but a mere incident of the main
proceedings; it does not involve an issue that is intimately related to the foreclosure proceedings;
and lastly, the motions resolution is not determinative of the foreclosures outcome.
On this point alone, the petition should be denied. But even if Metrobanks reduced appraised
value were lesser than the mortgaged properties current valuation, the petition would still fail.
There is no question in this case that Sycamore and the spouses Paz failed to settle their loan
obligations to Metrobank as they fell due. (In fact, there were multiple or repeated failures to

pay.) There is likewise no dispute on the total amount of their outstanding loan obligation.
Sycamore and the spouses Paz also acknowledged Metrobanks right to foreclose when they
asked for the sales postponement, to quote:The undersigned mortgagor(s) hereby
acknowledged(s) that the publication and posting of the Notice of Auction Sale have been
completely and regularly complied with the request(s) that republication and reposting of the
same be dispensed with at the discretion of the mortgagee bank and agreed that all expenses
incurred by the said mortgagee bank in connection herewith shall be chargeable to his/her/their
account(s) and secured by the said mortgage(s).
The undersigned mortgagor(s) likewise stipulate(s) that, in consideration of the mortgagees
having acceded and agreed to this postponement, he/she/they hereby waive(s), forego(es),
quitclaim(s) and set(s) over unto the said mortgagee any and all his/her/their cause or causes of
action, claims or demands arising out of or necessarily connected with the Promissory Note(s),
Real Estate Mortgage Contract(s) and other credit documents mentioned in the above entitled
Petition for Foreclosure of Real Estate Mortgage.22 [emphases supplied]
What Sycamore and the spouses Paz only assail in the present petition is the validity of
Metrobanks appraisal of the mortgaged properties. Even that issue, if the quoted terms above
were to be considered, appears to have been waived "in consideration of the mortgagees having
acceded and agreed to this postponement."23
Under these facts, how and why to petitioners would still insist on the appraisal valuation as an
issue boggles the mind and this is a puzzle that only they have a key to. But whatever may that
key or answer be, it is not one that is material to the case below or to the present petition.
Determination of mortgaged
properties appraisal value is not
material to the foreclosures validity
We have held in a long line of cases that mere inadequacy of price per se will not invalidate a
judicial sale of real property. It is only when the inadequacy of the price is grossly shocking to
the conscience or revolting to the mind, such that a reasonable man would neither directly nor
indirectly be likely to consent to it, that the sale shall be declared null and void. This rule,
however, does not strictly apply in the case of extrajudicial foreclosure sales where the right of
redemption is available.
In Bank of the Philippine Islands v. Reyes,24 involving a similar question arising from the
correctness of the mortgaged properties valuation, we held that the inadequacy of the price at
which the mortgaged property was sold does not invalidate the foreclosure sale.

In that case, the winning bid price was P9,032,960.00 or merely 19% of the alleged current
appraisal value of the property pegged at P47,536,000.00. Despite the relatively sizeable
discrepancy, the Court ruled that the level of the bid price is immaterial in a forced sale because a
low price is more beneficial to the mortgage debtor.
We quote from the relevant portion of this decision:
In the case at bar, the winning bid price of P9,032,960.00 is nineteen percent (19%) of the
appraised value of the property subject of the extrajudicial foreclosure sale that is pegged at
P47,536,000.00 which amount, notably, is only an arbitrary valuation made by the appraising
officers of petitioners predecessor-in-interest ostensibly for loan purposes only. Unsettled
questions arise over the correctness of this valuation in light of conflicting evidence on record.
xxxx
xxx. In the case at bar, other than the mere inadequacy of the bid price at the foreclosure sale,
respondent did not allege any irregularity in the foreclosure proceedings nor did she prove that a
better price could be had for her property under the circumstances.
Thus, even if we assume that the valuation of the property at issue is correct, we still hold that
the inadequacy of the price at which it was sold at public auction does not invalidate the
foreclosure sale."25 (emphasis ours)
In Hulst v. PR Builders, Inc.,26 we explained that when there is a right of redemption, the
inadequacy of the price becomes immaterial because the judgment debtor may still re-acquire the
property or even sell his right to redeem and thus recover the loss he might have suffered by
reason of the "inadequate price" obtained at the execution sale. In this case, the judgment debtor
even stands to gain rather than be harmed.1wphi1
These rulings were also applied in Rabat v. Philippine National Bank,27 where the Court used
the same reasoning and arrived at the same conclusion:
It bears also to stress that the mode of forced sale utilized by petitioner was an extrajudicial
foreclosure of real estate mortgage which is governed by Act No. 3135, as amended.
An examination of the said law reveals nothing to the effect that there should be a minimum bid
price or that the winning bid should be equal to the appraised value of the foreclosed property or
to the amount owed by the mortgage debtor. What is clearly provided, however, is that a
mortgage debtor is given the opportunity to redeem the foreclosed property "within the term of
one year from and after the date of sale." In the case at bar, other than the mere inadequacy of the
bid price at the foreclosure sale, respondent did not allege any irregularity in the foreclosure

proceedings nor did she prove that a better price could be had for her property under the
circumstances.
At any rate, we consider it notable enough that PNBs bid price of P3,874,800.00 might not even
be said to be outrageously low as to be shocking to the conscience. As the CA cogently noted in
the second amended decision,20 that bid price was almost equal to both the P4,000,000.00
applied for by the Spouses Rabat as loan, and to the total sum of P3,517,380.00 of their actual
availment from PNB. [emphasis ours]
We find no reason to depart from these sound and established rulings. We also need not rule on
the validity of Metrobanks valuation. Whether Metrobanks reduced valuation is valid or not, or
whether the valuation is outrageously lower than its current value, has nothing to do with the
foreclosure proceedings. From this perspective, we cannot but conclude that that the recourses
sought in this case have been intended solely to delay the inevitable the foreclosure sale and
the closure of the collection action -and are an abuse of the processes of this Court. Under these
circumstances the maximum allowable triple costs should be imposed on the petitioners for this
abuse in accordance with Section 3 Rule 142 of the Rules of Court to be paid by counsel for the
petitioners. Let counsel also be warned that what happened in this case is a practice that in a
proper administrative proceeding may be found violative of their duties to the Court.
WHEREFORE, the petition is DENIED for lack of merit; the appealed decision of the Court of
Appeals dated May 3, 2006 is AFFIRMED. Let a copy of this Decision be furnished the Board of
Governors Integrated Bar of the Philippines for its information. Triple costs against the
petitioners Sycamore Ventures Corporation and the spouses Simon D. Paz and Leng Leng Paz to
be paid by their counsel of record.
SO ORDERED.