THIRD DIVISION

G.R. No. 208587               July 29, 2015

JM DOMINGUEZ AGRONOMIC COMPANY, INC., HELEN D.

DAGDAGAN, PATRICK PACIS, KENNETH PACIS, and SHIRLEY
DOMINGUEZ, Petitioners,
vs.
CECILIA LICLICAN, NORMA D. ISIP, and PURITA
DOMINGUEZ, Respondents.

DECISION

VELASCO, JR., J.:

Nature of the Case

Petitioners, through the instant Petition for Review on Certiorari under Rule
45 of the Rules of Court, seek the reversal of the Court of Appeals (CA)
Decision1 dated August 30, 2012 and its Resolution2 dated July 15, 2013 in
CA-G.R. SP No. 108617. Said rulings nullified the Orders authorizing the
issuance of the assailed warrants of arrest against respondents for
allegedly having been issued in grave abuse of discretion.

The Facts

During the annual stockholders meeting of petitioner JM Dominguez

Agronomic Company, Inc. (JMD) held on December 29, 2007 at the Baguio
City Country Club, the election for its new set of directors was conducted.
This event was presided by then company president, and herein
respondent, Cecilia Liclican (Liclican), and attended by her co-respondents
Norma Isip (Isip) and Purita Rodriguez, and by petitioners Helen Dagdagan
(Dagdagan), Patrick Pacis, Kenneth Pacis, and Shirley Dominguez
(Dominguez) as well. Conflict ensued when petitioners Patrick and Kenneth
Pacis were allegedly not allowed to vote on the ground that they are not
registered stockholders of JMD. As pointed out, it was their mother and
grandmother, both deceased, who are the stockholders in JMD, and that
there is still no settlement of their respective estates to effectively transfer
their shares in the company to Patrick and Kenneth Pacis. 3
Tensions rose and respondents, allegedly, walked out of the meeting. But
since the remaining stockholders with outstanding shares constituted a
quorum, the election of officers still proceeded, which yielded the following
result: 4

Officers:

1. Helen D. Dagdagan as President

2. Patrick D. Pacis as Vice-President

3. Kenneth D. Pacis as Secretary

4. Shirley C. Dominguez as Treasurer

After staging the walk-out, respondents, on even date, executed a Board

Resolution certifying that in the stockholders meeting, the following were
elected directors and officers of JMD:5 Board of Directors:

1. Cecilia D. Liclican – Chairman and Presiding Officer

2. Norma D. Isip

3. Purita C. Dominguez

4. Tessie C. Dominguez, and

5. Shirley C. Dominguez

Officers:

1. Cecilia D. Liclican as President and Presiding Officer

2. Norma D. Isip as Vice-President

3. Gerald B. Cabrera as Corporate Secretary/Treasurer and

4. Oscar Aquino – Financial Consultant Auditor

In reaction to the foregoing developments, petitioners Dagdagan, Patrick

and Kenneth Pacis, and Dominguez filed a Complaint against respondents
before the Regional Trial Comi of Baguio City (RTC) for nullification of
meetings, election and acts of directors and officers, injunction and other
reliefs, raffled to Branch 59 of the court. Docketed as Civil Case No. 6623-
R, the case, after a failed mediation, was referred for appropriate Judicial
Dispute Resolution (JDR) to Branch 7 of the RTC. Meanwhile, petitioner
stockholders immediately took hold of corporate properties, represented
themselves to JMD's tenants as the true and lawful directors of the
company, and collected and deposited rents due the company to its bank
account.6

Subsequently, JMD, represented by petitioners Dagdagan and Patrick

Pacis, executed an Affidavit-Complaint7 dated December 15, 2008
charging respondents Liclican and Isip with qualified theft. Petitioners
alleged in the complaint, docketed as I.S. No. 3011 with the Office of the
City Prosecutor in Baguio City, that on January 2, 2008, Liclican and Isip,
without any authority whatsoever, conspired to withdraw the amount of
₱852,024.19 from the corporation's savings account with the Equitable-PCI
Bank; and that the following day, they issued Check No. C0002489901 8 in
the amount of ₱200,000, payable to cash, and to be drawn against JMD's
account with Robinson's Savings Bank.9

In a separate complaint,10 docketed as I.S. No. 3118, the corporation

claimed that respondents Liclican and Isip likewise issued Equitable-PCI
Bank Check No. 32095311 payable to one Atty. Francisco Lava, Jr. for
₱200,000 to be debited from the corporation's account.

After due proceedings, the Office of the City Prosecutor of Baguio City, by
Joint Resolution of February 2, 2009, recommended the filing of
informations as follows:12

WHEREFORE, premises considered. the undersigned recommends for

approval the attached Informations for Qualified Theft against LICLICAN
and ISIP in LS. No. 3011 and another against LICLICAN in LS. No. 3118.

When filed, the informations were eventually raffled to Branch 7 of the

RTC, the same court overseeing the JDR,13 presided over by Judge Mona
Lisa V. Tiongson-Tabora (Judge Tiongson-Tabora). The criminal cases for
qualified theft were then docketed as Criminal Case Nos. 29176-R (based
on I.S. No. 3118) and 29175-R (based on I.S. No. 3111).

On March 10, 2009, Judge Tiongson-Tabora issued an Order 14 in Criminal

Case No. 29176-R, finding probable cause for the issuance of a warrant of
arrest against Liclican, thus: WHEREFORE. the Information filed herein is
hereby given due course. Let the corresponding warrant of arrest be issued
against the accused. As recommended, the bail is hereby fixed as Php
80,000.00.

SO ORDERED.

A similar Order,15 also dated March 10, 2009, was issued in Criminal Case
No. 29175-R likewise finding probable cause against respondents Liclican
and Isip, viz:

WHEREFORE, the Information filed herein is hereby given due course. Let
the corresponding warrant of arrest be issued against the accused. As
recommended, the bail is hereby fixed at Php 80,000.00 each.

Considering that the address provided for accused Norma Isip is

Washington, U.S.A., the private complainants are hereby given fifteen ( 15)
days from receipt hereof to provide the Court with a local address for the
said accused if she may be found in the Philippines.

SO ORDERED.

Consequently, the corresponding warrants were issued for the arrests of

Isip and Liclican.16 In due time, respondents lodged a petition for certiorari
with the CA, docketed as CA-G.R. SP No. 108617, to annul and set aside
the two (2) March I 0, 2009 Orders by the RTC Branch 7, anchored, among
others, on the alleged existence of a prejudicial question. According to
respondents, petitioner stockholders, by filing the complaint-affidavit, are
already assuming that they are the legitimate directors of JMD, which is the
very issue in the intra-corporate dispute pending in the RTC, Branch 59.

Ruling of the Court of Appeals

In its assailed Decision, the CA granted the petition for certiorari, disposing
as follows: WHEREFORE, the challenged Orders both dated March 10.
2009 are hereby ANNULLED and SET ASIDE for having been issued with
grave abuse of discretion amounting to lack or excess of jurisdiction.

SO ORDERED.
The appellate court held that Judge Tiongson-Tabora should have
refrained from determining probable cause since she is well aware of the
pendency of the issue on the validity of JMD's elections in Civil Case No.
6623-R. As the judge overseeing the JDR of the said intra-corporate
dispute, she knew that there was still doubt as to who the rightfully elected
directors of JMD are and, corollarily, who would have the authority to
initiate the criminal proceedings for qualified theft. 17

The CA further noted that even as corporate officers, as they claim to be,
petitioners Dagdagan and Patrick Pacis cannot file the Complaint-Affidavit
in the exercise of corporate powers without authority from the board of
directors under Sec. 23,18 in relation to Sec. 2519 of the Corporation
Code.20 Any doubt cast on the validity of the board elections would then
necessarily extend to the authority of the officers to act.

As further held by the CA:

x x x Since there is doubt in the instant case as to the sufficiency of the

authority of a corporate officer, Judge Tiongson-Tabora should have
exercised prudence by holding the criminal cases in abeyance pending
resolution of the intra-corporate dispute which private respondents
themselves instituted.21

Aggrieved, individual petitioners moved for reconsideration, on the main

contention that their election as officers and directors of JMD has already
been sustained by the trial court via its Judgment in Civil Case No. 6623-R
dated May 6, 2011. They likewise claimed that the issue on whether or not
the R TC, Branch 7 committed grave abuse of discretion is already
rendered moot and academic by the judge's inhibition in Criminal Case
Nos. 29175-R and 29176-R, and the termination of the JDR proceedings in
Civil Case No. 6623-R. Petitioners' motion, however, proved futile as the
appellate court denied the same in its July 15, 2013 Resolution. 22 Hence,
the instant recourse.

The Issues

Plainly, the resolution of the extant case depends on whether or not there
exists a prejudicial question that could affect the criminal proceedings for
qualified theft against respondents. In the concrete, the issues are (i)
whether or not Civil Case No. 6623-R constituted a prejudicial question
warranting the suspension of the proceedings in Criminal Case Nos.
29175-R and 29176-R; and (ii) whether or not grave abuse of discretion
attended the issuance of the two assailed March 10, 2009 Orders in
Criminal Case Nos. 29175-R and 29176-R.

The Court's Ruling

The petition lacks merit.

The challenged Orders of the trial court

were issued in grave abuse of discretion

We have previously ruled that grave abuse of discretion may arise when a
lower court or tribunal violates or contravenes the Constitution, the law or
existing jurisprudence. By grave abuse of discretion is meant, such
capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the power is
exercised in an arbitrary or despotic manner by reason of passion or
personal hostility and must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined
by or to act at all in contemplation of law. The word "capricious," usually
used in tandem with the term "arbitrary," conveys the notion of willful and
unreasoning action. Thus, when seeking the corrective hand of certiorari, a
clear showing of caprice and arbitrariness in the exercise of discretion is
imperative.23

In the case at bar, the CA correctly ruled that Judge Tiongson-Tabora

acted with grave abuse of discretion when she ordered the arrests of
respondents Isip and Liclican despite the existence of a prejudicial
question.

As jurisprudence elucidates, 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 pre-emptively 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. 24 The rationale behind the
principle is to avoid two conflicting decisions, 25 and its existence rests on
the concurrence of 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.26
Here, the CA aptly observed that Civil Case No. 6623-R, the intra-corporate
dispute, posed a prejudicial question to Criminal Case Nos. 29175-R and
29176-R. To be sure, Civil Case No. 6623-R involves the same parties
herein, and is for nullification of JMD's meetings, election and acts of its
directors and officers, among others. Court intervention was sought to
ascertain who between the two contesting group of officers should rightfully
be seated at the company's helm. Without Civil Case No. 6623-R's
resolution, petitioners' authority to commence and prosecute Criminal Case
Nos. 29175-R and 29176-R against respondents for qualified theft in JMD's
behalf remained questionable, warranting the suspension of the criminal
proceedings.

Judge Tiongson-Tabora cannot deny knowledge of the pendency of Civil

Case No. 6623-R as the judge presiding over its JDR. As correctly held by
the CA:

Judge Tiongson-Tabora is well-aware of the existence of said prejudicial

question that should have barred the filing of the criminal complaint against
petitioners Liclican and Isip, for the simple reason that a juridical person
can only act through its officers, and the issue in the main case submitted
for JDR before Judge Tiongson-Tabora is one for nullification of meetings,
election and act of directors and officers, injunction and other reliefs Thus,
she knows for a fact that there is a question as to who are the legitimate
directors of JMD such that there is doubt as to whether private respondents
are in a position to act for JMD. (emphasis added)

Verily, the RTC ought to have suspended the proceedings, instead of

issuing the challenged Orders issued by the RTC.

The subsequent resolution of the prejudicial

question did not cure the defect

It may be, as the petitioners pointed out in their motion for reconsideration
filed before the CA, that Civil Case No. 6623-R was eventually resolved in
their favor through a Judgment27 dated May 6, 2011 rendered by the RTC,
Branch 59, the dispositive portion of which reads: WHEREFORE, from all
the foregoing disquisitions, the Court hereby declares that the plaintiffs
[petitioners herein] are the duly elected board of directors and officers of
the JM Dominguez Agronomic Company, Inc. for the year 2008 and hold-
over capacity unless here had already been an election of new officers.
Consequently, all Corporate Acts which the defendants [herein
respondents and one Gerald Cabrera and one Oscar Aquino] have done
and performed and all documents they have executed and issued have no
force and effect.

Considering that the amount of Php850,000.00 which defendants have

withdrawn under the account of JM Dominguez Agronomic Company, Inc.
from the Equitable – PCI Bank (now Banco de Oro) is the same subject in
CC no. 29175-R entitled Pp. vs. Cecilia Liclican and Norma D. Isip for
Qualified Theft, the Court will no longer dwell on the same.

xxxx

SO ORDERED. (emphasis and words in bracket added)

This Judgment has, on June 6, 2011, become final and executory, as per
the Notice of Entry of Judgment issued by the same trial court. 28 Evidently,
whatever cloud of doubt loomed over petitioners' actuations has already
been dispelled. Petitioners then postulate that the question on whether or
not the challenged Orders were issued in grave abuse of discretion has
already been rendered moot and academic by the June 6, 2011 ruling and
by Judge Tiongson-Tabora's subsequent inhibition in the criminal
proceedings. Consequently, they argue that their motion for reconsideration
should have been granted by the appellate court.

We are not convinced.

The resolution of the prejudicial question did not, in context, cure the grave
abuse of discretion already committed. The fact remains that when the
RTC, Branch 7 issued its challenged Orders on March 10, 2009, the
Judg1pent in favor of petitioners was not yet rendered. Consequently, there
was still, at that time, a real dispute as to who the rightful set of officers
were. Plainly, Judge Tiongson-Tabora should not have issued the
challenged Orders and should have, instead, suspended the proceedings
until Civil Case No. 6623-R was resolved with finality.

To grant the instant petition and rule that the procedural infirmity has
subsequently been cured either by the Judgment or by Judge Tiongson-
Tabora's inhibition would mean condoning the continuation of the criminal
proceedings despite, at that time, the existence of a prejudicial question.
Such condonation would create a precedent that renders inutile the
doctrine on prejudicial question, such that the court trying the criminal case
will be permitted to proceed with the trial in the aberrant assumption that
the resolution of the prior instituted civil case would benefit the private
complainant in the criminal proceedings. To reiterate, there was no
certainty yet on how the RTC, Branch 59 would rule; thus, no assumption
on Civil Case No. 6623-R's resolution can be made when the challenged
Orders were issued. Indeed, had the RTC, Branch 59 not given credence
to petitioners' arguments, it would have led to an awkward situation wherein
much time and effort is wasted by the RTC, Branch 7 in trying criminal
cases it should not have entertained.

The foregoing notwithstanding, it should be made clear that the nullification

of the March 10, 2009 Orders does not, under the premises.1âwphi1 entail
the dismissal of the instituted criminal cases, but would merely result in the
suspension of the proceedings in view of the prejudicial question. However,
given the resolution of the prejudicial question and Judge Tiongson-
Tabora's inhibition, Criminal Case Nos. 29175-R and 29176-R may already
proceed, and ought to be re-raffled to re-determine the existence of
probable cause for the issuance of warrants of arrest against respondents.

WHEREFORE, premises considered, the petition is hereby DENIED for

lack of merit. The Court of Appeals' August 30, 2012 Decision and July 15,
2013 Resolution in CA-G.R. SP No. 108617 are hereby AFFIRMED.

Criminal Case Nos. 29175-R and 29176-R are hereby REMANDED to the
Executive Judge of the Regional Trial Court of Baguio City to be re-raffled
to one of its branches other than Branch 7.