JOHNSON LEE AND SONNY MORENO, PETITIONERS, VS. PEOPLE OF THE PHILIPPINES AND THE COURT OF APPEALS, RESPONDENTS.

Johnson Lee and Sonny Moreno versus People of the Philippines

The Case

This is a petition for review on certiorari brought by Johnson Lee and Sonny Moreno against the People of the Philippines and the Court of Appeals. The petitioners were charged with estafa with abuse of confidence before the Regional Trial Court of Bacolod City. They sought to stop the criminal proceedings on the ground that a separate case pending before the Securities and Exchange Commission raised a prejudicial question. The case matters because it teaches the strict limits of the extraordinary writ of certiorari against interlocutory orders, the correct remedy of an accused who believes the information does not charge an offense, and the requisites of a prejudicial question.

Procedural History

Neugene Marketing, Incorporated, through its designated trustee, charged the petitioners with estafa with abuse of confidence before the Office of the City Prosecutor of Bacolod City. The City Prosecutor initially absolved the petitioners for lack of malice, and the Department of Justice denied the complainant's appeal. On motion for reconsideration, however, the Department of Justice ordered a reinvestigation, and upon the recommendation of the City Prosecutor, two criminal cases for estafa were filed before the Regional Trial Court of Bacolod City.

The petitioners sought reinvestigation before the Department of Justice, but this was denied because the trial court's permission must first be secured. They then moved to suspend the proceedings, invoking a prejudicial question in a case pending before the Supreme Court concerning the validity of the dissolution of Neugene Marketing and the designation of its trustee. The trial court first granted the motion, but on the prosecutor's motion for reconsideration it reversed itself, set aside its order, and scheduled the arraignment. The trial court denied the renewed motion to suspend, and when petitioner Lee failed to appear at the arraignment, it ordered his arrest and fixed an additional bond of 30,000 pesos.

The petitioners filed a petition for certiorari under Rule 65 before the Court of Appeals, which dismissed the petition and ordered the trial court to proceed with deliberate speed. Hence, this petition for review on certiorari under Rule 45 before the Supreme Court.

Facts

The criminal charges arose from corporate funds in the amount of 1,500,150 pesos, which the petitioners allegedly received as payment for plastic bought by Victorias Milling Corporation from Neugene Marketing. The complaint alleged that upon demand, the petitioners failed to deliver the money to the corporation's trustee.

The petitioners refused to turn over the money after the dissolution of Neugene Marketing, claiming they were keeping it for the protection of the corporation itself and that they had already turned it over to the majority stockholder of the defunct corporation. They insisted that the elements of misappropriation and damage were absent.

Meanwhile, a separate case was pending before the Supreme Court, originating from the Securities and Exchange Commission, which questioned the validity of the dissolution of Neugene Marketing and the designation of the trustee. The petitioners argued that this case raised a prejudicial question that should suspend the criminal proceedings.

Issues

• Whether or not the Court of Appeals erred in not ordering the dismissal of the criminal cases on the ground that the facts alleged in the complaint do not constitute the crime of estafa.
• Whether or not the pendency of the case before the Securities and Exchange Commission, questioning the dissolution of the corporation and the appointment of the trustee, constitutes a prejudicial question warranting the suspension of the criminal proceedings.
• Whether or not the criminal cases involve an intra-corporate dispute within the exclusive jurisdiction of the Securities and Exchange Commission.
• Whether or not the petitioners' rights to due process, equal protection of the laws, and speedy disposition of their cases were violated.

Applicable Provisions

Section 3, paragraph a, of Rule 117 of the Revised Rules of Criminal Procedure provides:

The accused may move to quash the complaint or information on any of the following grounds: (a) That the facts charged do not constitute an offense.

This provision bears on the case because the Court held that this was the plain and adequate remedy available to the petitioners instead of a petition for certiorari.

Section 1 of Rule 65 of the Rules of Court provides:

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

This provision governs the extraordinary remedy the petitioners invoked, and the Court measured their petition against its requisites.

Section 5.2 of Republic Act Number 8799, the Securities Regulation Code of 2001, provides:

The Regional Trial Courts shall have jurisdiction over all cases involving intra-corporate disputes.

This provision bears on the case because the Court held that even if the matter were intra-corporate, the Regional Trial Courts are now competent to rule on it.

Ruling

On the first issue, the Court denied the petition. It held that certiorari lies only where there is a patent and gross abuse of discretion amounting to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law. Certiorari will issue only to correct errors of jurisdiction, not errors of procedure or mistakes in the court's findings and conclusions. The petitioners' contentions that they did not misappropriate the funds and that they kept the money for the protection of the corporation were defenses that must be presented as evidence at trial, not grounds for certiorari.

On the second issue, the Court held that the petition was premature because there were other plain and adequate remedies at law. The accused could have moved to quash the information on the ground that the facts do not constitute an offense. The Court stressed that even if a motion to quash were denied, the remedy is not certiorari but to go to trial, and if an adverse decision is rendered, to appeal. The Court also held that there was no prejudicial question, because the validity of the dissolution would not determine the petitioners' criminal liability. As the Court put it, the fact that the petitioners were officers of the corporation does not mean they could not be held liable for estafa if they in fact misappropriated corporate funds for personal use.

On the third issue, the Court held that estafa and intra-corporate disputes are entirely different matters with entirely different elements, and the Securities and Exchange Commission is not a trier of a criminal case. Even assuming the matter were intra-corporate, the Regional Trial Courts are now competent to rule on it under the Securities Regulation Code.

On the fourth issue, the Court held that the Department of Justice substantially followed procedure and adequately justified its finding of a prima facie case. On the claim of delay, the Court found that it was the petitioners themselves who dragged and hindered the resolution of the cases through a series of repetitious and dilatory motions. They thus had no reason to complain against the delay.

Doctrine

A Bar candidate must retain that certiorari under Rule 65 lies only to correct errors of jurisdiction, not errors of judgment, and only where there is grave abuse of discretion. An interlocutory order may be assailed by certiorari only when the court acted without or in excess of jurisdiction or with grave abuse of discretion, and the Court frowns upon the practice of subjecting interlocutory orders to certiorari because it delays the administration of justice.

Where a motion to quash is denied, the remedy is not certiorari but to go to trial without prejudice to reiterating the special defenses, and if an adverse decision is rendered, to appeal. A petition for review under Rule 45 allows only questions of law.

There is a prejudicial question only where the resolution of the issue in the civil or administrative case is necessarily determinative of the criminal liability. The validity of a corporation's dissolution does not preclude a finding of estafa against its officers for misappropriating corporate funds.

Disposition

The Court affirmed the decision of the Court of Appeals and ordered the Regional Trial Court to conduct the arraignment without further delay, with costs against the petitioners.

Remember This

The single line worth memorizing is that certiorari corrects errors of jurisdiction, not errors of judgment, and the denial of a motion to quash is remedied by trial and appeal, not by certiorari. Examiners like to use this case on the proper remedy against interlocutory orders and on the requisites of a prejudicial question.