MODULE 12: EXTINCTION OF CRIMINAL LIABILITY

1. Sermonia v. Court of Appeals, G.R. No. 109454,14 June 1994

[G.R. No. 109454. June 14, 1994.]

JOSE C. SERMONIA, Petitioner, v. HON. COURT OF APPEALS, Eleventh Division, HON. DEOGRACIAS
FELIZARDO, Presiding Judge, Regional Trial Court of Pasig, Br. 151, and JOSEPH SINSAY,
Respondents.

DE C I S I O N
BELLOSILLO, J.:

Bigamy is an illegal marriage committed by contracting a second or subsequent marriage before the first
marriage has been legally dissolved, or before the absent spouse has been declared presumptively dead by
means of a judgment rendered in the proper proceedings. Bigamy carries with it the imposable penalty of prision
mayor. Being punishable by an afflictive penalty, this crime prescribes in fifteen (15) years. The fifteen-year
prescriptive period commences to run from the day on which the crime is discovered by the offended party, the
authorities, or their agents. . . ."

That petitioner contracted a bigamous marriage seems impliedly admitted. 4 At least, it is not expressly denied.
Thus the only issue for resolution is whether his prosecution for bigamy is already time-barred, which hinges on
whether its discovery is deemed to have taken place from the time the offended party actually knew of the second
marriage or from the time the document evidencing the subsequent marriage was registered with the Civil
Registry consistent with the rule on constructive notice.

The antecedents: In an information filed in 26 May 1992, petitioner Jose C. Sermonia was charged with bigamy
before the Regional Trial Court of Pasig, Br. 151, for contracting marriage with Ma. Lourdes Unson on 15
February 1975 while his prior marriage to Virginia C. Nievera remained valid and subsisting. 5

Petitioner moved to quash the information on the ground that his criminal liability for bigamy has been
extinguished by prescription.

In the order of 1 October 1992, respondent judge denied the motion to quash. On 27 October 1992, he likewise
denied the motion to reconsider his order of denial.

Petitioner challenged the above orders before the Court of Appeals through a petition for certiorari and
prohibition. In the assailed decision of 21 January 1993, his petition was dismissed for lack of merit. 6

In this recourse, petitioner contends that his criminal liability for bigamy has been obliterated by prescription. He
avers that since the second marriage contract was duly registered with the Office of the Civil Registrar in 1975, 7
such fact of registration makes it a matter of public record and thus constitutes notice to the whole world. The
offended party therefore is considered to have had constructive notice of the subsequent marriage as of 1975;
hence, prescription commenced to run on the day the marriage contract was registered. For this reason, the
corresponding information for bigamy should have been filed on or before 1990 and not only in 1992.

Petitioner likewise takes issue with the "alleged concealment of the bigamous marriage" as declared by the
appellate court, insisting that the second marriage was publicly held at Our Lady of Nativity Church in Marikina on
15 February 1975, and adding for good measure that from the moment of registration the marriage contract was
open to inspection by any interested person.

On the other hand, the prosecution maintains that the prescriptive period does not begin from the commission of
the crime but from the time of discovery by complainant which was in July 1991.

While we concede the point that the rule on constructive notice in civil cases may be applied in criminal actions if
the factual and legal circumstances so warrant, 8 we agree with the view expounded by the Court of Appeals that
it cannot apply in the crime of bigamy notwithstanding the possibility of its being more favorable to the accused.
The appellate court succinctly explains —

Argued by the petitioner is that the principle of constructive notice should be applied in the case at bar, principally
citing in support of his stand, the cases of People v. Reyes (175 SCRA 597); and People v. Dinsay (40 SCRA
50).

This Court is of the view that the principle of constructive notice should not be applied in regard to the crime of
bigamy as judicial notice may be taken of the fact that a bigamous marriage is generally entered into by the
offender in secrecy from the spouse of the previous subsisting marriage. Also, a bigamous marriage is generally
entered into in a place where the offender is not known to be still a
married person, in order to conceal his legal impediment to contract another marriage.
In the case of real property, the registration of any transaction involving any right or interest therein is made in the
Register of Deeds of the place where the said property is located. Verification in the office of the Register of
Deeds concerned of the transactions involving the said property can easily be made by any interested party. In
the case of a bigamous marriage, verification by the offended person or the authorities of the same would indeed
be quite difficult as such a marriage may be entered into in a place where the offender is not known to be still a
married person.

Be it noted that in the criminal cases cited by the petitioner wherein constructive notice was applied, involved
therein were land or property disputes and certainly, marriage is not property.

The non-application to the crime of bigamy of the principle of constructive notice is not contrary to the well
entrenched policy that penal laws should be construed liberally in favor of the accused. To compute the
prescriptive period for the offense of bigamy from registration thereof would amount to almost absolving the
offenders thereof for liability therefor. While the celebration of the bigamous marriage may be said to be open and
made of public record by its registration, the offender however is not truthful as he conceals from the officiating
authority and those concerned the existence of his previous subsisting marriage. He does not reveal to them that
he is still a married person. He likewise conceals from his legitimate spouse his bigamous marriage. And for
these, he contracts the bigamous marriage in a place where he is not known to be still a married person. And
such a place may be anywhere, under which circumstance, the discovery of the bigamous marriage is rendered
quite difficult and would take time. It is therefore reasonable that the prescriptive period for the crime of bigamy
should be counted only from the day on which the said crime was discovered by the offended party, the
authorities or their agency (sic).

Considering such concealment of the bigamous marriage by the offender, if the prescriptive period for the offense
of bigamy were to be counted from the date of registration thereof, the prosecution of the violators of the said
offense would almost be impossible. The interpretation urged by the petitioner would encourage fearless
violations of a social institution cherished and protected by law. 9

To this we may also add that the rule on constructive notice will make de rigueur the routinary inspection or
verification of the marriages listed in the National Census Office and in various local civil registries all over the
country to make certain that no second or even third marriage has been contracted without the knowledge of the
legitimate spouse. This is too formidable a task to even contemplate.

More importantly, while Sec. 52 of P.D. 1529 (Property Registration Decree) provides for constructive notice to all
persons of every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting
registered land filed or entered in the office of the Register of Deeds for the province or city where the land to
which it relates lies from the time of such registering, filing or entering, there is no counterpart provision either in
Act No. 3753 (Act to Establish a Civil Register) or in Arts. 407 to 413 of the Civil Code, which leads us to the
conclusion that there is no legal basis for applying the constructive notice rule to the documents registered in the
Civil Register.

Finally, petitioner would want us to believe that there was no concealment at all because his marriage contract
with Ms. Unson was recorded in the Civil Registry which is open to all and sundry for inspection. We cannot go
along with his argument because why did he indicate in the marriage contract that he was "single" thus obviously
hiding his true status as a married man? Or for that matter, why did he not simply tell his first wife about the
subsequent marriage in Marikina so that everything would be out in the open. The answer is obvious: He knew
that no priest or minister would knowingly perform or authorize a bigamous marriage as this would subject him to
punishment under the Marriage Law. 10 Obviously, petitioner had no intention of revealing his duplicity to his first
spouse and gambled instead on the probability that she or any third party would ever go to the local civil registrar
to inquire. In the meantime, through the simple expedience of having the second marriage recorded in the local
civil registry, he has set into motion the running of the fifteen-year prescriptive period against the unwary and the
unsuspecting victim of his philandering.

Were we to put our imprimatur to the theory advanced by petitioner, in all likelihood we would be playing right into
the hands of philanderers. For we would be equating the contract of marriage with ordinary deeds of conveyance
and other similar documents without due regard for the stability of marriage as an inviolable social institution, the
preservation of which is a primary concern of our society.

WHEREFORE, finding no reversible error in the questioned decision of the Court of Appeals, the same is
AFFIRMED.

SO ORDERED.
2. Republic v. Desierto, G.R. No. 136506, 23 August 2001, 363 SCRA 585
G.R. No. 136506 August 23, 2001

REPUBLIC OF THE PHILIPPINES, petitioner, vs.

THE HONORABLE ANIANO A. DESIERTO as OMBUDSMAN, EDUARDO COJUANGCO, JR., JUAN PONCE
ENRILE, MARIA CLARA LOBREGAT, ROLANDO DELA CUESTA, JOSE ELEAZAR, JR., JOSE C.
CONCEPCION, DANILO URSUA, NARCISO PINEDA and AUGUSTO OROSA, respondents.

DE LEON, JR., J.:

Before us is a petition for certiorari1 which seeks to annul the Review and Recommendation 2 dated August 6,
1998 of Graft Investigation Officer I Emora C. Pagunuran, approved by Ombudsman Aniano A. Desierto,
dismissing the petitioner's complaint in OMB-0-90-2808 against private respondents Eduardo M. Cojuangco, Jr.,
Juan Ponce Enrile, Maria Clara Lobregat, Rolando Dela Cuesta, Jose R. Eleazar, Jr., Jose C. Concepcion,
Danilo S. Ursua, Narciso M. Pineda and Augusto Orosa, for violation of Republic Act No. 3019 otherwise known
as the Anti-Graft and Corrupt Practices Act as well as the Order 3 dated September 25, 1998 denying petitioner's
subsequent motion for reconsideration of the said Review and Recommendation.

It appears that on February 12, 1990 the Office of the Solicitor General (OSG) 4 initiated the complaint for violation
of R.A. No. 3019 before the Presidential Commission on Good Government (PCGG). The complaint was
subsequently referred to the Office of the Ombudsman 5 and docketed as OMB-0-902808. The referral of the case
to the Ombudsman was in line with our decision in Cojuangco, Jr. v. PCGG,6 promulgated on October 2, 1990,
wherein we declared that while the PCGG has the power to conduct preliminary investigation, it "cannot possibly
conduct the preliminary investigation of said criminal complaints with the cold neutrality of an impartial judge",
after having earlier gathered evidence concerning alleged ill-gotten wealth against the respondents, and also
after having issued a freeze order against all properties of respondent Cojuangco, Jr. 7

The complaint alleged, inter alia, that respondent Cojuangco, Jr., taking advantage of his close relationship with
then President Marcos, had caused the latter to issue favorable decrees to advance his personal and business
interests, had caused the government through the National Investment Development Corporation (NIDC) to enter
into a contract with him under terms and conditions grossly disadvantageous to the government, and, in
conspiracy with the aforenamed members of the UCPB Board of Directors, in flagrant breach of the fiduciary duty
as administrator-trustee of the Coconut Industry Development Fund (CIDF), manipulated the said Fund resulting
in the successful siphoning of Eight Hundred Forty Million Seven Hundred Eighty-Nine Thousand Eight Hundred
Fifty-Five Pesos and Fifty-Three Centavos (P840,789,855.53) of CIDF to his own corporation, the Agricultural
Investors, Inc. (AII); and that respondents were directly or indirectly interested for personal gain or had material
interest in the transactions requiring the approval of a board, panel or group of which they were members, in
violation of the Anti-Graft and Corrupt Practices Act to the grave damage and prejudice of public interest, the
Filipino people, the Republic of the Philippines, and the coconut farmers. Apparently, during the early stage of the
Martial Law rule of the then President Ferdinand E. Marcos in 1972, respondent Eduardo "Danding" Cojuangco,
Jr., through AII, a private corporation owned and controlled by respondent Cojuangco. Jr., started to develop a
coconut seed garden in its property in Bugsuk Island, Palawan. 8

On November 14, 1974, Presidential Decree No. 582 was issued by then President Marcos, 9 which created the
Coconut Industry Development Fund (CIDF). The CIDF is one of the four (4) so-called "CocoLevy Funds" set-up
to revitalize the coconut industry. The CIDF was envisioned to finance a nationwide coconut-replanting program
using "precocious high-yielding hybrid seednuts" to be distributed for free b coconut farmers. 10 Its initial capital of
One Hundred Million Pesos (P100,000,000.00) was to be paid from the Coconut Consumers Stabilization Fund
(CCSF), with an additional amount of at least twenty centavos (P0.20) per kilogram of copra resecada out of the
CCSF collected by the Philippine Coconut Authority.11

Six (6) days after the issuance of P.D. No. 582, or on November 20, 1974, at the instigation of respondent
Cojuangco, Jr., AII, represented by respondent Cojuangco, Jr. as Chairman and President, and NIDC,
represented by its Senior Vice-President, Augusto E. Orosa, entered into a Memorandum of Agreement (MOA).
Cojuangco had an exclusive contract with Dr. Yann Fremond of the Research Institute for Oil and Oilseeds,
granting the former the exclusive right to establish and operate a seed garden for the production of Ivory Coast
Hybrid Seednuts, a hybrid developed by Dr. Fremond, and supposedly most suitable for Philippine soil and
climate.12 AII and NIDC stipulated, in fine, that AII shall develop the Bugsuk property for the growing of hybrid
seednuts and sell the entire production to NIDC, which shall in turn pay AII part of the costs in the development
and operation of the seed garden and the support facilities. 13
On June 11, 1978, President Marcos issued P.D. No. 1468, otherwise known as the Revised Coconut Industry
Code, substituting the United Coconut Planters Bank (UCPB) for the NIDC as administrator trustee of the CIDF.
UCPB is a commercial bank acquired by the government through the CCSF for the benefit of the coconut
farmers. On August 27, 1982, President Marcos lifted the coconut levy. With the only financial source of the CIDF
depleted, UCPB had no choice but to terminate the agreement with the AII effective December 31, 1982.

Adversely affected by this turn of events, All demanded arbitration. A Board of Arbitrators was created pursuant
to the arbitration clause in the MOA. AII nominated Atty. Esteban Bautista while UCPB designated Atty. Anacleto
Dideles. In turn, the two appointed Atty. Bartolome Carale, a professor at the UP College of Law, as third member
and Chairman of the Board.

On March 29, 1983, the Board of Arbitrators rendered a decision awarding to AII liquidated damages for Nine
Hundred Fifty-Eight Million Six Hundred Fifty Thousand Pesos (P958,650,000.00) from the CIDF. From this
award was deducted the Four Hundred Twenty-Six Million Two Hundred Sixty-One Thousand Six Hundred Forty
Pesos (P426,261,640.00) advanced by the NIDC for the development of the seed garden, leaving a balance due
to AII amounting to Five Hundred Thirty-Two Million Three Hundred Eighty-Eight Thousand Three Hundred Fifty-
Four Pesos (P532,388,354.00). Costs of arbitration and the arbitrator's fee of One Hundred Fifty Thousand
Pesos (P150,000.00) were also taken from the CIDF. 14

On April 19, 1983, the UCPB Board of Directors, composed of respondents Cojuangco, Jr., as President, Enrile
as Chairman, Dela Cuesta, Zayco, Ursua and Pineda as members, adopted Resolution No. 111-83, resolving to
"note" the decision of the Board of Arbitrators, allowing the arbitral award to lapse with finality.

The complaint filed by the Solicitor General alleged that the MOA "is a one-sided contract with provisions clearly
stacked up against the NIDC thereby placing the latter in a no-win situation." It cited several stipulations in the
contract to substantiate its claim, to wit:15

1. Under Section 9.1 of the MOA, neither party shall be liable for any loss or damage due to the
non-performance of their respective obligations resulting from any cause beyond the reasonable control
of the party concerned. However, under Section 9.3, notwithstanding the occurrence of such causes, the
obligation of the NIDC to pay AII's share of the development costs amounting to P426,260,000.00 would
still remain enforceable.

2. Under Sec. 11.2, if NIDC fails to perform its obligations, for any cause whatsoever, it will be liable
out of the CIDF, not only for the development costs, but also for liquidated damages equal to the
stipulated price of the hybrid seednuts for a period of five (5) years at the rate of 19,173,000 seednuts
per annum, totaling P958,650.00.16

3. Under Section 11.3, while AII was given the right to terminate the contract in case of force
majeure, no such right was given in favor of NIDC. Moreover, AII can do so without incurring any liability
for damages.

4. AII was only required to exert best efforts to produce a projected number of seednuts while NIDC
was required to set aside and reserve from CIDF such amount as would insure full and prompt payment.

Respondent Cojuangco, Jr. sought the dismissal of the complaint on the ground of prescription, citing the 1992
cases of People v. Sandiganbayan,17 and Zaldivia v. Hon. Andres B. Reyes.18

On December 29, 1997, Graft Investigation Officer (GIO) Manuel J. Tablada recommended the dismissal of the
case, which was subsequently assigned to GIO I Emora C. Pagunuran. GIO I Pagunuran issued the assailed
memorandum, denominated "Review and Recommendation", dated August 6, 1998 wherein she found that the
alleged offense had allegedly prescribed. Following the case of People v. Sandiganbayan, GIO I Pagunuran
reckoned the prescription period from the date the Memorandum of Agreement was entered into, or on November
20, 1974. As the case was filed only on February 12, 1990, respondent Ombudsman ruled that the same was
filed beyond the prescriptive period of ten (10) years as fixed under Sec. 11 of R.A. No. 3019. In addition, the
"Review and Recommendation" ruled that the questioned MOA was expressly confirmed and ratified by P.D. No.
96119 (1976) and P.D. No. 146820 (1978) and, thus, was given "legislative imprimatur." The OSG filed a Motion for
Reconsideration dated September 11, 1998, arguing that (a) the offense charged in the complaint falls within the
category of an ill-gotten wealth case which under the Constitution is imprescriptible; and (b) that void contracts
are not subject to ratification and/or confirmation. Inasmuch public respondent Ombudsman denied petitioner's
motion for reconsideration in the Order dated September 25, 1998, petitioner interposed on December 28, 1998
the instant petition raising two (2) issues for resolution, to wit: 21

WHETHER THE OMBUDSMAN ACTED WITH GRAVE ABUSE OF DISCRETION IN DECLARING THAT THE
OFFENSE CHARGED IN THE COMPLAINT FOR VIOLATION OF RA. NO. 3019 HAD ALREADY PRESCRIBED
WHEN THE COMPLAINT WAS FILED.

II
WHETHER THE OMBUDSMAN ACTED WITH GRAVE ABUSE OF DISCRETION IN DECLARING THAT THERE
IS NO BASIS TO INDICT PRIVATE RESPONDENTS FOR VIOLATION OF THE ANTI-GRAFT LAW BASED ON
THE CONTRACT IN QUESTION.

Respondents aver that the instant petition for certiorari is but a mere attempt to substitute for a lost appeal and
was filed out of time. While the petitioner concedes that its petition suffers from procedural infirmities, it urges this
Court to exercise its equity jurisdiction.

At the outset, this Court notes that the petitioner received a copy of the assailed memorandum dated August 6,
1998 on August 28, 1998. Petitioner interposed a motion for reconsideration on September 11, 1998. On October
28, 1998, petitioner received a copy of the order denying its motion for reconsideration. Following Section 4 of
Rule 65 of the 1997 Rules of Civil Procedure, as amended by Circular No. 39-98, 22 which took effect on
September 1, 1998, the instant petition should have been filed on December 13, 1998. Thus, since the instant
petition was filed only on December 28, 1998, it was filed fifteen (15) days beyond the sixty (60) day reglementary
period prescribed by the Rules. However, during the pendency of the instant petition, the Court promulgated A.M.
No. 00-2-03-SC,23 effective on September 1, 2000, which further amended Section 4 of Rule 65 of the 1997 Rules
of Civil Procedure to read as:

SECTION 4. When and where petition filed. — The petition shall be filed not later than sixty (60) days
from notice of judgment, order or resolution. In case a motion for reconsideration or new trial is timely
filed, whether such motion is required or not, the sixty (60) day period shall be counted from notice of the
denial of said motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or
of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or
not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate
jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by
law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason and in no case
exceeding fifteen (15) days.24

Statutes regulating procedure of the courts will be construed as applicable to actions pending and undetermined
at the time of their passage. In that context and in view of the retroactive application of procedural laws, 25 the
instant petition should thus be considered timely filed.

On the matter of prescription, before B.P. Blg. 195, which was approved on March 16, 1982, the prescription
period for violation of the Anti-Graft Practices Act was ten (10) years. The complaint for violation of R.A. No. 3019
was filed before the PCGG on February 12, 1990 or more than fifteen (15) years after the birth of the allegedly
illegal contract.

The Solicitor General presents a novel theory to advance his view that the prescription period in R.A. No. 3019
does not apply to respondents. The Solicitor General asserts that the respondents are public officers within the
coverage of the Anti-Graft Law since they are being prosecuted as members and officers of the Board of
Directors of the UCPB, which was acquired by the government through the coco levy funds. He argues that while
the dismissed complaint is for violation of R.A. No. 3019, or the AntiGraft and Corrupt Practices Act, the
prosecution thereof is actually a suit intended to recover ill-gotten wealth from public officials, and therefore
covered by R.A. No. 1379, entitled "An Act Declaring Forfeited in Favor of the State Any Property Found to Have
been Unlawfully Acquired By Any Public Officer or Employee and Providing for the Procedure Therefor."

As this is supposedly a suit under R.A. No. 1379, the Solicitor General urges the Court to follow its ruling in
Republic v. Migrino,26 which held that cases falling under the said law are imprescriptible. According to Migrino,
Sec. 2 of R.A. No. 1379 which provides that petition for forfeiture of unlawfully acquired wealth shall prescribe
within four (4) years from the date of resignation, dismissal or separation or expiration of the officer or employee
concerned should be deemed amended or repealed by Section 15, Article XI of the 1987 Constitution which
provides:

The right of the State to recover properties unlawfully acquired by public officials or employees, from
them or their nominees, shall not be barred by prescription, laches, or estoppel.

It has already been settled in Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto 27 that
Section 15 of Article XI of the Constitution applies only to civil actions for recovery of illgotten wealth, and not to
criminal cases such as the complaint against the respondents in OMB-0-902808. Conversely, prescription of
criminal cases are governed by special laws on prescription.

Furthermore, to construe Section 15, Article XI of the 1987 Constitution in order to give it retroactive application
to the private respondents will run counter to another constitutional provision, that is, Section 22, Article III which
provides that "No ex post facto law or bill of attainder shall be enacted." An ex post facto law is defined, in part,
as a law which deprives persons accused of crime of some lawful protection of a former conviction or acquittal,
or of the proclamation of amnesty; every law which, in relation to the offense or its consequences, alters the
situation of a person to his disadvantage. 28 A construction which raises a conflict between different parts of the
constitution is not permissible when by reasonable construction, the parts may made to harmonize. 29
We now turn to another novel theory of the Solicitor General. He claims that there are "special circumstances"
that would warrant the reckoning of the prescription period, not from the date of the violation of the penalizing law
because "it could not have been known at that time", but from the EDSA Revolution of February 1986, which is
supposedly the only time that the offense could have been discovered. According to the Solicitor General: 30

It bears emphasizing that the criminal acts complained of against private respondents in this case were
committed during the Marcos regime. Private respondents were closely associated with Marcos who
unquestionably wielded power and influence and/or who, by themselves, were also highly-placed in
government. Thus assuming that the offense charged is deemed to have been committed upon the
execution of the contract in question, who could have known of the existence of this contract apart from
the contracting parties thereto? Being privies to the contract, would private respondents have initiated
criminal suits against themselves? Assuming that third persons to the contract knew of its existence, was
there a reasonable opportunity, or even political will, to prosecute those involved in the execution of the
questioned contract?

To recall, due to the abnormal situation obtaining at that time, no one dared question the excesses and
abscesses of the officialdom which is eloquently exemplified by subject case.

The applicable provisions of law on prescription of offenses are found in Article 90 and Article 91 of the Revised
Penal Code for offenses punishable thereunder and Act No. 3326 for those penalized by special laws. R.A. No.
3019 being a special law, the commencement of the period for the prescription for any act violating it is governed
by Section 2 of Act No. 3326,31 which provides:

SECTION 2. Prescription shall begin to run from the day of the commission of the violation of the law,
and if the same be not known at the time, from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person and shall
begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.

As a rule, if the commission of the crime is known, the prescriptive period shall commence to run on the day it
was committed.32 However, in cases where the time of commission is unknown, prescription shall only run from its
discovery and institution of judicial proceedings for its investigation and punishment. Ordinarily, there is no
problem in determining the date when the crime consists of a series of acts, especially when some or all of these
acts are innocent in themselves.

The Ombudsman and private respondents relied on our ruling in People v. Sandiganbayan, involving the
prosecution of a Provincial Attorney who allegedly influenced officials in the Bureau of Lands to issue a free
patent in his favor. The prosecution advanced the theory that the prescriptive period should not commence upon
the filing of the application because no one could have known about it except the accused and the Lands
Inspector. In rejecting his theory and ruling that "the date of the violation of the law becomes the operative date of
the commencement of the period of prescription", this Court ratiocinated:

It is not only the Lands Inspector who passes upon the disposability of public land x x x other public
officials pass upon the application for a free patent including the location of the land and, therefore, the
disposable character thereof. Indeed, practically all the department personnel, who had a hand in
processing and approving the application, namely x x x could not have helped "discovering" that the
subject of the application was nondisposable public agricultural land.

This issue confronted this Court anew, albeit in a larger scale, in Presidential Ad Hoc Fact-Finding Committee on
Behest Loans v. Desierto.33 In the said recent case, the Board of Directors of the Philippine Seeds, Inc. and
Development Bank of the Philippines were charged with violation of paragraphs (e) and (g) of Section 3 of R.A.
No. 3019, by the Presidential Ad Hoc Fact-Finding Committee on Behest Loans, created by then President Fidel
V. Ramos to investigate and to recover the so-called "Behest Loans", where the Philippine Government
guaranteed several foreign loans to corporations and entities connected with the former President Marcos. As in
the present case, the Ombudsman in that case dismissed the complaint on the ground of prescription. In holding
that the case had not yet prescribed, this Court ruled that:

In the present case, it was well-nigh impossible for the State, the aggrieved party, to have known the
violations of R.A. No. 3019 at the time the questioned transactions were made because, as alleged, the
public officials concerned connived or conspired with the "beneficiaries of the loans." Thus, we agree with
the COMMITTEE that the prescriptive period for the offenses with which the respondents in OMB-0-96-
0968 were charged should be computed from the discovery of the commission thereof and not from the
day of such commission.

xxx xxx xxx

People v. Duque is more in point, and what was stated there stands reiteration: In the nature of things,
acts made criminal by special laws are frequently not immoral or obviously criminal in themselves; for
this reason, the applicable statute requires that if the violation of the special law is not known at the time,
the prescription begins to run only from the discovery thereof i.e., discovery of the unlawful nature of the
constitutive act or acts. (Italics supplied)
There are striking parallelisms between the said Behest Loans Case and the present one which lead us to apply
the ruling of the former to the latter. First, both cases arose out of seemingly innocent business transactions;
second, both were "discovered" only after the government created bodies to investigate these anomalous
transactions; third, both involve prosecutions for violations of R.A. No. 3019; and, fourth, in both cases, it was
sufficiently raised in the pleadings that the respondents conspired and connived with one another in order to keep
the alleged violations hidden from public scrutiny.

This Courts pronouncement in the case of Domingo v. Sandiganbayan34 is quite relevant and instructive as to the
date when the discovery of the offense should be reckoned, thus:

"In the present case, it was well-nigh impossible for the government, the aggrieved party, to have known
the violations committed at the time the questioned transactions were made because both parties to the
transactions were allegedly in conspiracy to perpetrate fraud against the government. The alleged
anomalous transactions could only have been discovered after the February 1986 Revolution when one
of the original respondents, then President Ferdinand Marcos, was ousted from office. Prior to said date,
no person would have dared to question the legality or propriety of those transactions. Hence, the
counting of the prescriptive period would commence from the date of discovery of the offense, which
could have been between February 1986 after the EDSA Revolution and 26 May 1987 when the
initiatory complaint was filed."35

We do not subscribe to the Ombudsman's view that P.D. Nos. 961 and 1468 ipso facto served to insulate the
private respondents from prosecution. The "legislative imprimatur" allegedly granted by the then President
Marcos to the MOA is not necessarily inconsistent with the existence of a violation of R.A. No. 3019. Thus,
Section t, Article III of P.D. No. 961, promulgated in 1976, reads:

SECTION 3. Coconut Industry Development Fund. — There is hereby created a permanent fund to be
known as Coconut Industry Development Fund which shall be deposited, subject to the provisions of
P.D. No. 755, with, and administered and utilized by the Philippine National Bank subsidiary, the National
Investment and Development Corporation for the following purposes:

a) To finance the establishment operation and maintenance of a hybrid coconut seednut farm
under such terms and conditions that may be negotiated by the National Investment and
Development Corporation with any private person, corporation, firm or entity as would insure that
the country shall have, at the earliest possible time, a proper, adequate and continuous supply of
high-yielding hybrid seednuts and, for this purpose, the contract entered into by the NIDC as
herein authorized is hereby confirmed and ratified; x x x

A similarly worded provision in P.D. 1468, promulgated in 1978, reads:

SECTION 3. Coconut Industry Development Fund. — There is hereby created a permanent fund
to be known as Coconut Industry Development Fund which shall be administered and utilized by
the bank acquired for the benefit of the coconut farmers under P.D. 755 for the following
purposes:

a) To finance the establishment, operation and maintenance of a hybrid coconut seednut

farm under such terms and conditions that may be negotiated by the National Investment
and Development Corporation (NIDC) with any private person, corporation, firm or entity
as would insure that the country shall have, at the earliest possible time, a proper,
adequate and continuous supply of highyielding hybrid seednuts and, for this purpose,
the contract, including the amendments and supplements thereto as provided for herein,
entered into by NIDC as herein authorized is hereby confirmed and ratified, and the bank
acquired for the benefit of the coconut farmers under P.D. 755 shall administer the said
contract, including its amendments and supplements, and perform all the rights and
obligation of NIDC thereunder, utilizing for that purpose the Coconut Industry
Development find; x x x

R.A. No. 3019, as applied to the instant case, covers not only the alleged one-sidedness of the MOA, but also as
to whether the contracts or transactions entered pursuant thereto by private respondents were manifestly and
grossly disadvantageous to the government36 , whether they caused undue injury to the government, 37 and
whether the private respondents were interested for personal gain or had material interest in the transactions. 38

The task to determine and find whether probable cause to charge the private respondents exists properly belongs
to the Ombudsman. We only rule that the Office of the Ombudsman should not have dismissed the complaint on
the basis of prescription which is erroneous as hereinabove discussed. The Ombudsman should have given the
Solicitor General the opportunity to present his evidence and then resolve the case for purposes of preliminary
investigation. Failing to do so, the Ombudsman acted with grave abuse of discretion.

WHEREFORE, the instant petition is hereby GRANTED. The assailed Review and Recommendation dated
August 6, 1998 of Graft Investigation Officer Emora C. Pagunuran, and approved by Ombudsman Aniano A.
Desierto, dismissing the petitioner's complaint in OMB-0-90-2808, and the Order dated September 25, 1998
denying the petitioner's motion for reconsideration, are hereby REVERSED and SET ASIDE.

The Ombudsman is hereby directed to proceed with the preliminary investigation of the case OMB-0-902808.
No pronouncement as to costs.

SO ORDERED.

3. Act No. 3326 as amended by Act No. 3763

ACT NO. 3326

ACT NO. 3326 - AN ACT TO ESTABLISH PERIODS OF PRESCRIPTION FOR VIOLATIONS PENALIZED BY
SPECIAL ACTS AND MUNICIPAL ORDINANCES AND TO PROVIDE WHEN PRESCRIPTION SHALL BEGIN
TO
RUN

Section 1. Violations penalized by special acts shall, unless otherwise provided in such acts, prescribe in
accordance with the following rules: (a) after a year for offenses punished only by a fine or by imprisonment for
not more than one month, or both; (b) after four years for those punished by imprisonment for more than one
month, but less than two years; (c) after eight years for those punished by imprisonment for two years or more,
but less than six years; and (d) after twelve years for any other offense punished by imprisonment for six years
or more, except the crime of treason, which shall prescribe after twenty years. Violations penalized by municipal
ordinances shall prescribe after two months.

Sec. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same
be not known at the time, from the discovery thereof and the institution of judicial proceeding for its investigation
and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person, and shall begin to
run again if the proceedings are dismissed for reasons not constituting jeopardy.

Sec. 3. For the purposes of this Act, special acts shall be acts defining and penalizing violations of the law not
included in the Penal Code.

Sec. 4. This Act shall take effect on its approval.

4. Romualdez v. Marcelo, G.R. No. 165510, 28 July 2006

G.R. Nos. 165510-33 July 28, 2006

BENJAMIN ("KOKOY") T. ROMUALDEZ, petitioner, vs.

HON. SIMEON V. MARCELO, in his official capacity as the Ombudsman, and PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT, respondents.

RESOLUTION

YNARES-SANTIAGO, J.:

For resolution is petitioner’s Motion for Reconsideration 1 assailing the Decision dated September 23, 2005, the
dispositive portion of which states:

WHEREFORE, the petition is DISMISSED. The resolutions dated July 12, 2004 and September 6, 2004
of the Office of the Special Prosecutor, are AFFIRMED.

SO ORDERED.2

Petitioner claims that the Office of the Ombudsman gravely abused its discretion in recommending the filing of 24
informations against him for violation of Section 7 of Republic Act (RA) No. 3019 or the AntiGraft and Corrupt
Practices Act; that the Ombudsman cannot revive the aforementioned cases which were previously dismissed by
the Sandiganbayan in its Resolution of February 10, 2004; that the defense of prescription may be raised even
for the first time on appeal and thus there is no necessity for the presentation of evidence thereon before the
court a quo. Thus, this Court may accordingly dismiss Criminal Case Nos. 28031-28049 pending before the
Sandiganbayan and Criminal Case Nos. 04-231857– 04-231860 pending before the Regional Trial Court of
Manila, all on the ground of prescription.

In its Comment,3 the Ombudsman argues that the dismissal of the informations in Criminal Case Nos. 13406-
13429 does not mean that petitioner was thereafter exempt from criminal prosecution; that new informations may
be filed by the Ombudsman should it find probable cause in the conduct of its preliminary investigation; that the
filing of the complaint with the Presidential Commission on Good Government (PCGG) in 1987 and the filing of
the information with the Sandiganbayan in 1989 interrupted the prescriptive period; that the absence of the
petitioner from the Philippines from 1986 until 2000 also interrupted the aforesaid period based on Article 91 of
the Revised Penal Code.

For its part, the PCGG avers in its Comment 4 that, in accordance with the 1987 Constitution and RA No. 6770 or
the Ombudsman Act of 1989, the Omdudsman need not wait for a new complaint with a new docket number for it
to conduct a preliminary investigation on the alleged offenses of the petitioner; that considering that both RA No.
3019 and Act No. 3326 or the Act To Establish Periods of Prescription For Violations Penalized By Special Acts
and Municipal Ordinances and to Provide When Prescription Shall Begin To Run, are silent as to whether
prescription should begin to run when the offender is absent from the Philippines, the Revised Penal Code, which
answers the same in the negative, should be applied.

The issues for resolution are: (1) whether the preliminary investigation conducted by the Ombudsman in Criminal
Case Nos. 13406-13429 was a nullity; and (2) whether the offenses for which petitioner are being charged have
already prescribed.

Anent the first issue, we reiterate our ruling in the assailed Decision that the preliminary investigation conducted
by the Ombudsman in Criminal Case Nos. 13406-13429 is a valid proceeding despite the previous dismissal
thereof by the Sandiganbayan in its Minute Resolution 5 dated February 10, 2004 which reads:

Crim. Cases Nos. 13406-13429–PEO. vs. BENJAMIN T. ROMUALDEZ

Considering that the Decision of the Honorable Supreme Court in G.R. Nos. 143618-41, entitled
"Benjamin ‘Kokoy’ Romualdez vs. The Honorable Sandiganbayan (First Division, et al.)" promulgated on
July 30, 2002 annulled and set aside the orders issued by this Court on June 8, 2000 which, among
others, denied the accused’s motion to quash the informations in these cases; that in particular the
above-mentioned Decision ruled that the herein informations may be quashed because the officer who
 filed the same had no authority to do so; and that the said Decision has become final and executory on
November 29, 2002, these cases are considered DISMISSED. Let these cases be sent to the archives.

The aforesaid dismissal was effected pursuant to our ruling in Romualdez v. Sandiganbayan6 where petitioner
assailed the Sandiganbayan’s Order dated June 8, 2000 in Criminal Case Nos. 13406-13429 which denied his
Motion to Quash, terminated the preliminary investigation conducted by Prosecutor Evelyn T. Lucero and set his
arraignment for violations of Section 7 of RA No. 3019 on June 26, 2000. 7 In annulling and setting aside the
aforesaid Order of the Sandiganbayan, we held that:

In the case at bar, the flaw in the information is not a mere remediable defect of form, as in Pecho v.
Sandiganbayan where the wording of the certification in the information was found inadequate, or in
People v. Marquez, where the required certification was absent. Here, the informations were filed by an
unauthorized party. The defect cannot be cured even by conducting another preliminary investigation.
An invalid information is no information at all and cannot be the basis for criminal proceedings. 8

In effect, we upheld in Romualdez v. Sandiganbayan9 petitioner’s Motion to Quash and directed the dismissal of
Criminal Case Nos. 13406-13429 because the informations were filed by an unauthorized party, hence void.

In such a case, Section 6, Rule 117 of the Rules of Court is pertinent and applicable. Thus:

SEC. 6. Order sustaining the motion to quash not a bar to another prosecution; exception. – An order
sustaining the motion to quash is not a bar to another prosecution for the same offense unless the
motion was based on the grounds specified in section 3(g) and (i) 10 of this Rule.

An order sustaining a motion to quash on grounds other than extinction of criminal liability or double jeopardy
does not preclude the filing of another information for a crime constituting the same facts. Indeed, we held in
Cudia v. Court of Appeals11 that:

In fine, there must have been a valid and sufficient complaint or information in the former prosecution. If,
therefore, the complaint or information was insufficient because it was so defective in form or substance
that the conviction upon it could not have been sustained, its dismissal without the consent of the
accused cannot be pleaded. As the fiscal had no authority to file the information, the dismissal of the first
information would not be a bar in petitioner’s subsequent prosecution. x x x. 12

Be that as it may, the preliminary investigation conducted by the Ombudsman in the instant cases was not a
violation of petitioner’s right to be informed of the charges against him. It is of no moment that the cases
investigated by the Ombudsman bore the same docket numbers as those cases which have already been
dismissed by the Sandiganbayan, to wit: Criminal Case Nos. 13406-13429. As we have previously stated:

The assignment of a docket number is an internal matter designed for efficient record keeping. It is
usually written in the Docket Record in sequential order corresponding to the date and time of filing a
case.

This Court agrees that the use of the docket numbers of the dismissed cases was merely for
reference. In fact, after the new informations were filed, new docket numbers were assigned, i.e.,
Criminal Cases Nos. 28031-28049 x x x.13

Besides, regardless of the docket numbers, the Ombudsman conducted the above-referred preliminary
investigation pursuant to our Decision in Romualdez v. Sandiganbayan14 when we categorically declared therein
that:

The Sandiganbayan also committed grave abuse of discretion when it abruptly terminated the
reinvestigation being conducted by Prosecutor Lucero. It should be recalled that our directive in G.R. No.
105248 for the holding of a preliminary investigation was based on our ruling that the right to a
preliminary investigation is a substantive, rather than a procedural right. Petitioner’s right was violated
when the preliminary investigation of the charges against him were conducted by an officer without
jurisdiction over the said cases. It bears stressing that our directive should be strictly complied with in
order to achieve its objective of affording petitioner his right to due process. 15

Anent the issue on the prescription of the offenses charged, we should first resolve the question of whether this
Court may validly take cognizance of and resolve the aforementioned issue considering that as we have said in
the assailed Decision, "this case has never progressed beyond the filing of the informations against the
petitioner"16 and that "it is only prudent that evidence be gathered through trial on the merits to determine whether
the offense charged has already prescribed."17 We reconsider our stance and shall rule in the affirmative.

Rule 117 of the Rules of Court provides that the accused may, at any time before he enters his plea, move to
quash the complaint and information18 on the ground that the criminal action or liability has been extinguished, 19
which ground includes the defense of prescription considering that Article 89 of the Revised Penal Code
enumerates prescription as one of those grounds which totally extinguishes criminal liability. Indeed, even if there
is yet to be a trial on the merits of a criminal case, the accused can very well invoke the defense of prescription.

Thus, the question is whether or not the offenses charged in the subject criminal cases have prescribed?
We held in the case of Domingo v. Sandiganbayan20 that:

In resolving the issue of prescription of the offense charged, the following should be considered: (1) the
period of prescription for the offense charged; (2) the time the period of prescription starts to run; and (3)
the time the prescriptive period was interrupted.21

Petitioner is being charged with violations of Section 7 of RA No. 3019 for failure to file his Statements of
Assets and Liabilities for the period 1967-1985 during his tenure as Ambassador Extraordinary and
Plenipotentiary and for the period 1963-1966 during his tenure as Technical Assistant in the Department of
Foreign Affairs.

Section 11 of RA No. 3019 provides that all offenses punishable therein shall prescribe in 15 years. Significantly,
this Court already declared in the case of People v. Pacificador22 that:

It appears however, that prior to the amendment of Section 11 of R.A. No. 3019 by B.P. Blg. 195 which
was approved on March 16, 1982, the prescriptive period for offenses punishable under the said statute
was only ten (10) years. The longer prescriptive period of fifteen (15) years, as provided in Section 11 of
R.A. No. 3019 as amended by B.P. Blg. 195, does not apply in this case for the reason that the
amendment, not being favorable to the accused (herein private respondent), cannot be given retroactive
effect. Hence, the crime prescribed on January 6, 1986 or ten (10) years from January 6, 1976. 23

Thus, for offenses allegedly committed by the petitioner from 1962 up to March 15, 1982, the same shall
prescribe in 10 years. On the other hand, for offenses allegedly committed by the petitioner during the period
from March 16, 1982 until 1985, the same shall prescribe in 15 years.

As to when these two periods begin to run, reference is made to Act No. 3326 which governs the computation of
prescription of offenses defined by and penalized under special laws. Section 2 of Act No. 3326 provides:

SEC. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if
the same be not known at the time, from the discovery thereof and the institution of judicial proceedings
for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person, and shall
begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.

In the case of People v. Duque,24 we construed the aforequoted provision, specifically the rule on the running of
the prescriptive period as follows:

In our view, the phrase "institution of judicial proceedings for its investigation and punishment" may be
either disregarded as surplusage or should be deemed preceded by the word "until." Thus, Section 2
may be read as:

"Prescription shall begin to run from the day of the commission of the violation of the law; and if
the same be not known at the time, from the discovery thereof;"

or as:

"Prescription shall begin to run from the day of the commission of the violation of the law, and
if the same be not known at the time, from the discovery thereof and until institution of judicial
proceedings for its investigation and punishment." (Emphasis supplied) 25

Thus, this Court rules that the prescriptive period of the offenses herein began to run from the discovery thereof
or on May 8, 1987, which is the date of the complaint filed by the former Solicitor General Francisco I. Chavez
against the petitioner with the PCGG.

In the case of Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto 26 this Court already took
note that:

In cases involving violations of R.A. No. 3019 committed prior to the February 1986 EDSA Revolution
that ousted President Ferdinand E. Marcos, we ruled that the government as the aggrieved party could
not have known of the violations at the time the questioned transactions were made. Moreover, no
person would have dared to question the legality of those transactions. Thus, the counting of the
prescriptive period commenced from the date of discovery of the offense in 1992 after an exhaustive
investigation by the Presidential Ad Hoc Committee on Behest Loans. 27

However, both respondents in the instant case aver that, applying Article 91 of the Revised Penal Code
suppletorily, the absence of the petitioner from the Philippines from 1986 until April 27, 2000 prevented the
prescriptive period for the alleged offenses from running.

We disagree.
Section 2 of Act. No. 3326 is conspicuously silent as to whether the absence of the offender from the Philippines
bars the running of the prescriptive period. The silence of the law can only be interpreted to mean that Section 2
of Act No. 3326 did not intend such an interruption of the prescription unlike the explicit mandate of Article 91.
Thus, as previously held:

Even on the assumption that there is in fact a legislative gap caused by such an omission, neither could
the Court presume otherwise and supply the details thereof, because a legislative lacuna cannot be filled
by judicial fiat. Indeed, courts may not, in the guise of the interpretation, enlarge the scope of a statute
and include therein situations not provided nor intended by the lawmakers. An omission at the time of the
enactment, whether careless or calculated, cannot be judicially supplied however after later wisdom may
recommend the inclusion. Courts are not authorized to insert into the law what they think should be in it
or to supply what they think the legislature would have supplied if its attention has been called to the
omission.28

The only matter left to be resolved is whether the filing of the complaint with the PCGG in 1987 as well as the
filing of the informations with the Sandiganbayan to initiate Criminal Case Nos. 13406-13429 in 1989 interrupted
the running of the prescriptive period such that when the Ombudsman directed petitioner to file his counter-
affidavit on March 3, 2004, the offenses have already prescribed.

Under Section 2 of Act No. 3326, the prescriptive period shall be interrupted "when proceedings are instituted
against the guilty person." However, there is no such proceeding instituted against the petitioner to warrant the
tolling of the prescriptive periods of the offenses charged against him.

In Romualdez v. Sandiganbayan,29 petitioner averred that PCGG acted without jurisdiction and/or grave abuse of
discretion in conducting a preliminary investigation of cases not falling within its competence. 30 This Court, in its
resolve to "deal with the merits of the case to remove the possibility of any misunderstanding as to the course
which it wishes petitioner’s cases in the Sandiganbayan to take" 31declared invalid – the preliminary investigation
conducted by the PCGG over the 24 offenses ascribed to Romualdez (of failure to file annual statements of
assets and liabilities), for lack of jurisdiction of said offenses. 32 In Romualdez v. Sandiganbayan,33 petitioner
assailed the validity of the informations filed with the Sandiganbayan in Criminal Case Nos. 13406-13429
considering that the same were subscribed and filed by the PCGG. In granting petitioner’s plea, this Court held,
thus:

Here, the informations were filed by an unauthorized party. The defect cannot be cured by conducting another
preliminary investigation. An invalid information is no information at all and cannot be the basis for criminal
proceedings.34

Indeed, the nullity of the proceedings initiated by then Solicitor General Chavez in 1987 with the PCGG and by
the PCGG with the Sandiganbayan in 1989 is judicially settled. In contemplation of the law, no proceedings exist
that could have merited the suspension of the prescriptive periods.

Besides, the only proceeding that could interrupt the running of prescription is that which is filed or initiated by the
offended party before the appropriate body or office. Thus, in the case of People v. Maravilla,35 this Court ruled
that the filing of the complaint with the municipal mayor for purposes of preliminary investigation had the effect of
suspending the period of prescription. Similarly, in the case of Llenes v. Dicdican,36 this Court held that the filing
of a complaint against a public officer with the Ombudsman tolled the running of the period of prescription.

In the case at bar, however, the complaint was filed with the wrong body, the PCGG. Thus, the same could not
have interrupted the running of the prescriptive periods.

However, in his Dissenting Opinion, Mr. Justice Carpio contends that the offenses charged against the petitioner
could not have prescribed because the latter was absent from the Philippines from 1986 to April 27, 2000 and
thus the prescriptive period did not run from the time of discovery on May 8, 1987, citing Article 91 of the Revised
Penal Code which provides that "[t]he term of prescription should not run when the offender is absent from the
Philippine Archipelago."

Mr. Justice Carpio argues that –

Article 10 of the same Code makes Article 91 "x x x supplementary to [special laws], unless the latter
should x x x provide the contrary." Nothing in RA 3019 prohibits the supplementary application of Article
91 to that law. Hence, applying Article 91, the prescriptive period in Section 11 of RA 3019, before and
after its amendment, should run only after petitioner returned to this jurisdiction on 27 April 2000.

There is no gap in the law. Where the special law is silent, Article 10 of the RPC applies suppletorily, as
the Court has held in a long line of decisions since 1934, starting with People v. Moreno. Thus, the Court
has applied suppletorily various provisions of the RPC to resolve cases where the special laws are silent
on the matters in issue. The law on the applicability of Article 10 of the RPC is thus well-settled, with the
latest reiteration made by this Court in 2004 in Jao Yu v. People.

He also expresses his apprehension on the possible effects of the ruling of the Majority Opinion and argues that –
 The accused should not have the sole discretion of preventing his own prosecution by the simple
expedient of escaping from the State’s jurisdiction. x x x An accused cannot acquire legal immunity by
being a fugitive from the State’s jurisdiction. x x x.

To allow an accused to prevent his prosecution by simply leaving this jurisdiction unjustifiably tilts the
balance of criminal justice in favor of the accused to the detriment of the State’s ability to investigate and
prosecute crimes. In this age of cheap and accessible global travel, this Court should not encourage
individuals facing investigation or prosecution for violation of special laws to leave Philippine jurisdiction
to sit-out abroad the prescriptive period. The majority opinion unfortunately chooses to lay the basis for
such anomalous practice.

With all due respect, we beg to disagree.

Article 10 of the Revised Penal Code provides:

ART. 10. Offenses not subject to the provisions of this Code. – Offenses which are or in the future may
be punishable under special laws are not subject to the provisions of this Code. This Code shall be
supplementary to such laws, unless the latter should specially provide the contrary.

Pursuant thereto, one may be tempted to hastily conclude that a special law such as RA No. 3019 is
supplemented by the Revised Penal Code in any and all cases. As it is, Mr. Justice Carpio stated in his
Dissenting Opinion that –

There is no gap in the law. Where the special law is silent, Article 10 of the RPC applies suppletorily, as
the Court has held in a long line of decisions since 1934, starting with People v. Moreno. Thus, the Court
has applied suppletorily various provisions of the RPC to resolve cases where the special laws are silent
on the matters in issue. The law on the applicability of Article 10 of the RPC is thus well-settled, with the
latest reiteration made by this Court in 2004 in Jao Yu v. People.

However, it must be pointed out that the suppletory application of the Revised Penal Code to special laws, by
virtue of Article 10 thereof, finds relevance only when the provisions of the special law are silent on a particular
matteras evident from the cases cited and relied upon in the Dissenting Opinion:

In the case of People v. Moreno,37 this Court, before ruling that the subsidiary penalty under Article 39 of the
Revised Penal Code may be applied in cases of violations of Act No. 3992 or the Revised Motor Vehicle Law,
noted that the special law did not contain any provision that the defendant can be sentenced with subsidiary
imprisonment in case of insolvency.

In the case of People v. Li Wai Cheung, 38 this Court applied the rules on the service of sentences provided in
Article 70 of the Revised Penal Code in favor of the accused who was found guilty of multiple violations of RA No.
6425 or The Dangerous Drugs Act of 1972 considering the lack of similar rules under the special law.

In the case of People v. Chowdury, 39 the Court applied Articles 17, 18 and 19 of the Revised Penal Code to
define the words "principal," "accomplices" and "accessories" under RA No. 8042 or the Migrant Workers and
Overseas Filipinos Act of 1995 because it was not defined therein although it referred to the same terms in
enumerating the persons liable for the crime of illegal recruitment.

In the case at bar, the silence of RA No. 3019 on the question of whether or not the absence of the accused from
the Philippines prevents or tolls the running of the prescriptive period is more apparent than real.

Even before the enactment of RA No. 3019 in 1960, Act No. 3326 was already in effect as early as December 4,
1926. Section 3 thereof categorically defines "special acts" as "acts defining and penalizing violations of the
law not included in the Penal Code".

Thus, in the case of Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto, 40 this Court was
categorical in ruling that –

The law on prescription of offenses is found in Articles 90 and 91 of the Revised Penal Code for offenses
punishable thereunder. For those penalized under special laws, Act No. 3326 applies.

Section 2 of Act No. 3326 provides that the prescription shall begin to run from the day of the commission of the
violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of
judicial proceedings for its investigation and punishment. The running of the prescriptive period shall be
interrupted when proceedings are instituted against the guilty person, and shall begin to run again if the
proceedings are dismissed for reasons not constituting jeopardy. Clearly, Section 2 of Act No. 3326 did not
provide that the absence of the accused from the Philippines prevents the running of the prescriptive period.
Thus, the only inference that can be gathered from the foregoing is that the legislature, in enacting Act No. 3326,
did not consider the absence of the accused from the Philippines as a hindrance to the running of the prescriptive
period. Expressio unius est exclusio alterius. To elaborate, -

Indeed, it is an elementary rule of statutory construction that the express mention of one person, thing,
act, or consequence excludes all others. This rule is expressed in the familiar maxim "expressio unius est
 exclusio alterius." Where a statute, by its terms, is expressly limited to certain matters, it may not, by
interpretation or construction, be extended to others. The rule proceeds from the premise that the
legislature would not have made specified enumerations in a statute had the intention been not to restrict
its meaning and to confine its terms to those expressly mentioned. 41

Had the legislature intended to include the accused’s absence from the Philippines as a ground for the
interruption of the prescriptive period in special laws, the same could have been expressly provided in Act No.
3326. A case in point is RA No. 8424 or the Tax Reform Act of 1997 where the legislature made its intention clear
and was thus categorical that –

SEC. 281. Prescription for Violations of any Provision of this Code – All violations of any provision of
this Code shall prescribe after five (5) years.

Prescription shall begin to run from the day of the commission of the violation of the law, and if the same
be not known at the time, from the discovery thereof and the institution of judicial proceedings for its
investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty persons and shall
begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.

The term of prescription shall not run when the offender is absent from the Philippines.
(Emphasis supplied)

According to Mr. Justice Carpio, Article 91 of the Revised Penal Code fills the so-called "gap" in Act No. 3326.
Thus, while Act No. 3326 governs the operation of the prescriptive period for violations of R.A. No. 3019, Article
91 of the Revised Penal Code can and shall still be applied in cases where the accused is absent from the
Philippines. In effect, Article 91 would supplement Act No. 3326. This could not have been the intention of the
framers of the law. While it is true that Article 10 of the Revised Penal Code makes the Code suppletory to
special laws, however, Act No. 3326 cannot fall within the ambit of "special law" as contemplated and used in
Article 10 of the RPC. In the case of United States v. Serapio,42 the Court had the occasion to interpret the term
"special laws" mentioned in Article 7 of then Penal Code of the Philippines, which is now Article 10 of the Revised
Penal Code, as referring to penal laws that punish acts not defined and penalized by the Penal Code of the
Philippines. Thus –

This contention makes it necessary to define "special laws," as that phrase is used in article 7 of the
Penal Code. Does this phrase "leyes especiales," as used in the Penal Code (article 7) have the
meaning applied to the phrase "special laws," as the same is generally used? x x x It is confidently
contended that the phrase "leyes especiales," as used in the Penal Code (article 7) is not used with this
general signification: In fact, said phrase may refer not to a special law as above defined, but to a
general law. A careful reading of said article 7 clearly indicates that the phrase "leyes especiales" was
not used to signify "special laws" in the general signification of that phrase. The article, it will be noted,
simply says, in effect, that when a crime is made punishable under some other law than the Penal Code,
it (the crime) is not subject to the provisions of said code. 43

Even if we consider both Act No. 3326 and Article 91 as supplements to RA No. 3019, the same result would
obtain. A conflict will arise from the contemporaneous application of the two laws. The Revised Penal Code
explicitly states that the absence of the accused from the Philippines shall be a ground for the tolling of the
prescriptive period while Act No. 3326 does not. In such a situation, Act No. 3326 must prevail over Article 91
because it specifically and directly applies to special laws while the Revised Penal Code shall apply to special
laws only suppletorily and only when the latter do not provide the contrary. Indeed, elementary rules of statutory
construction dictate that special legal provisions must prevail over general ones.

The majority notes Mr. Justice Carpio’s reservations about the effects of ruling that the absence of the accused
from the Philippines shall not suspend the running of the prescriptive period. Our duty, however, is only to
interpret the law. To go beyond that and to question the wisdom or effects of the law is certainly beyond our
constitutionally mandated duty. As we have already explained –

Even on the assumption that there is in fact a legislative gap caused by such an omission, neither could
the Court presume otherwise and supply the details thereof, because a legislative lacuna cannot be filled
by judicial fiat. Indeed, courts may not, in the guise of interpretation, enlarge the scope of a statute and
include therein situations not provided nor intended by the lawmakers. An omission at the time of the
enactment, whether careless or calculated, cannot be judicially supplied however after later wisdom may
recommend the inclusion. Courts are not authorized to insert into the law what they think should be in it
or to supply what they think the legislature would have supplied if its attention has been called to the
omission.44

Mr. Justice Carpio also remarks that the liberal interpretation of the statute of limitations in favor of the accused
only relates to the following issues: (1) retroactive or prospective application of laws providing or extending the
prescriptive period; (2) the determination of the nature of the felony committed vis-à-vis the applicable
prescriptive period; and (3) the reckoning of when the prescriptive period runs. Therefore, the aforementioned
principle cannot be utilized to support the Majority Opinion’s conclusion that the prescriptive period in a special
law continues to run while the accused is abroad.
We take exception to the foregoing proposition.

We believe that a liberal interpretation of the law on prescription in criminal cases equally provides the authority
for the rule that the prescriptive period runs while the accused is outside of Philippine jurisdiction. The nature of
the law on prescription of penal statutes supports this conclusion. In the old but still relevant case of People v.
Moran,45 this Court extensively discussed the rationale behind and the nature of prescription of penal offenses –

"We should at first observe that a mistake is sometimes made in applying to statutes of limitation in
criminal suits the construction that has been given to statutes of limitation in civil suits. The two classes
of statutes, however, are essentially different. In civil suits the statute is interposed by the legislature as
an impartial arbiter between two contending parties. In the construction of the statute, therefore, there is
no intendment to be made in favor of either party. Neither grants the right to the other; there is therefore
no grantor against whom the ordinary presumptions, of construction are to be made. But it is, otherwise
when a statute of limitation is granted by the State. Here the State is the grantor, surrendering by act of
grace its rights to prosecute, and declaring the offense to be no longer the subject of prosecution.' The
statute is not a statute of process, to be scantily and grudgingly applied, but an amnesty,
declaring that after a certain time oblivion shall be cast over the offence; that the offender shall
be at liberty to return to his country, and resume his immunities as a citizen and that from
henceforth he may cease to preserve the proofs of his innocence, for the proofs of his guilt are
blotted out. Hence it is that statutes of limitation are to be liberally construed in favor of the defendant,
not only because such liberality of construction belongs to all acts of amnesty and grace, but because
the very existence of the statute, is a recognition and notification by the legislature of the fact that time,
while it gradually wears out proofs of innocence, has assigned to it fixed and positive periods in which it
destroys proofs of guilt. Independently of these views, it must be remembered that delay in instituting
prosecutions is not only productive of expense to the State, but of peril to public justice in the attenuation
and distortion, even by mere natural lapse of memory, of testimony. It is the policy of the law that
prosecutions should be prompt, and that statutes, enforcing such promptitude should be vigorously
maintained. They are not merely acts of grace, but checks imposed by the State upon itself, to exact
vigilant activity from its subalterns, and to secure for criminal trials the best evidence that can be
obtained." (Emphasis supplied)

Indeed, there is no reason why we should deny petitioner the benefits accruing from the liberal construction of
prescriptive laws on criminal statutes. Prescription emanates from the liberality of the State. Any bar to or cause
of interruption in the operation of prescriptive periods cannot simply be implied nor derived by mere implication.
Any diminution of this endowment must be directly and expressly sanctioned by the source itself, the State. Any
doubt on this matter must be resolved in favor of the grantee thereof, the accused.

The foregoing conclusion is logical considering the nature of the laws on prescription. The exceptions to the
running of or the causes for the interruption of the prescriptive periods may and should not be easily implied. The
prescriptive period may only be prevented from operating or may only be tolled for reasons explicitly provided by
the law.

In the case of People v. Pacificador,46 we ruled that:

It bears emphasis, as held in a number of cases, that in the interpretation of the law on prescription of
crimes, that which is more favorable to the accused is to be adopted. The said legal principle takes into
account the nature of the law on prescription of crimes which is an act of amnesty and liberality on the
part of the state in favor of the offender. In the case of People v. Moran, this Court amply discussed the
nature of the statute of limitations in criminal cases, as follows:

The statute is not statute of process, to be scantily and grudgingly applied, but an amnesty,
declaring that after a certain time oblivion shall be cast over the offense; that the offender shall
be at liberty to return to his country, and resume his immunities as a citizen; and that from
henceforth he may cease to preserve the proofs of his innocence, for the proofs of his guilt are
blotted out. Hence, it is that statues of limitation are to be liberally construed in favor of the
defendant, not only because such liberality of construction belongs to all acts of amnesty and
grace, but because the very existence of the statute is a recognition and notification by the
legislature of the fact that time, while it gradually wears out proofs of innocence, has assigned to
it fixed and positive periods in which it destroys proofs of guilt. 47

In view of the foregoing, the applicable 10-and-15-year prescriptive periods in the instant case, were not
interrupted by any event from the time they began to run on May 8, 1987. As a consequence, the alleged
offenses committed by the petitioner for the years 1963-1982 prescribed 10 years from May 8, 1987 or on May 8,
1997. On the other hand, the alleged offenses committed by the petitioner for the years 1983-1985 prescribed 15
years from May 8, 1987 or on May 8, 2002.

Therefore, when the Office of the Special Prosecutor initiated the preliminary investigation of Criminal Case Nos.
13406-13429 on March 3, 2004 by requiring the petitioner to submit his counter-affidavit, the alleged offenses
subject therein have already prescribed. Indeed, the State has lost its right to prosecute petitioner for the offenses
subject of Criminal Case Nos. 28031-28049 pending before the Sandiganbayan and Criminal Case Nos. 04-
231857–04-231860 pending before the Regional Trial Court of Manila.
WHEREFORE, premises considered, petitioner’s Motion for Reconsideration is GRANTED. Criminal Case Nos.
28031-28049 pending before the Sandiganbayan and Criminal Case Nos. 04-231857–04-231860 pending before
the Regional Trial Court of Manila are all hereby ordered DISMISSED.

SO ORDERED.

5. Cruz III v. Go, G.R. No. 223446, 28 November 2016

[G.R. No. 223446. November 28, 2016.]

RICARDO RANIER G. CRUZ III, IN HIS CAPACITY AS DIRECTOR GENERAL OF THE BUREAU
OF CORRECTIONS; RICHARD W. SCHWARZKOPF, IN HIS CAPACITY AS
SUPERINTENDENT, NEW BILIBID PRISON, BUREAU OF CORRECTIONS; AND
EMERENCIANA M. DIVINA, IN HER CAPACITY AS THE OFFICER-IN-CHARGE, INMATE
DOCUMENTS AND PROCESSING DIVISION OF THE NEW BILIBID PRISON, BUREAU OF
CORRECTIONS, petitioners, vs. ROLITO T. GO, DETAINED AT THE MAXIMUM SECURITY
COMPOUND, NEW BILIBID PRISON, JOINED BY HIS WIFE ELSA ANG GO, respondent.

NOTICE

Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution dated November 28, 2016, which
reads as follows:
G.R. No. 223446 — (Ricardo Ranier G. Cruz III, in his capacity as Director General of the
Bureau of Corrections; Richard W. Schwarzkopf, in his capacity as Superintendent, New Bilibid
Prison, Bureau of Corrections; and Emerenciana M. Divina, in her capacity as the Officer-in-Charge,
Inmate Documents and Processing Division of the New Bilibid Prison, Bureau of Corrections v. Rolito
T. Go, detained at the Maximum Security Compound, New Bilibid Prison, joined by his wife Elsa Ang
Go)

RESOLUTION

Before us is a petition for review on certiorari 1 filed under Rule 45 of the Rules of Court wherein
petitioners assail the Decision 2 of the Court of Appeals (CA) dated 27 August 2015 in CA-G.R. SP No.
135263, dismissing their appeal for being an improper remedy. The petitioners seek to reverse and set aside
the Decision 3 of the Regional Trial Court (RTC), Branch 204, Muntinlupa City in SP. Proc. Case No. 14-004
dated 28 April 2014, which granted a Writ of Habeas Corpus in favor of respondent Rolito T. Go (Go).
The antecedents of this petition follow.
By virtue of the 4 November 1993 Decision of the RTC, Branch 168, Pasig City in Criminal Case No.
87411, respondent Rolito T. Go was convicted of murder and sentenced to suffer the penalty of reclusion
perpetua. He began serving his sentence on 30 April 1996 at the New Bilibid Prison.
On 30 July 2008, in carrying out the Resolution and Certificate of Eligibility by then Bureau of
Corrections (BuCor) Director Oscar C. Calderon, the New Bilibid Prison Classification Board granted Go,
along with other 24 inmates, a colonist status. Accordingly, in view of his commuted sentence, Go filed a
petition for habeas corpus on 30 January 2014, pleading for his release. He posits that his original prison
sentence which shall expire on 31 January 2022 instead should have expired on 21 August 2013 upon
deduction of lawful and proper allowances for good conduct, colonist status, and preventive imprisonment
based on the provisions of Act No. 2489, otherwise known as "An Act Authorizing Special Compensation,
Credits, and Modification in the Sentence of Prisoners as a Reward for Exceptional Conduct and
Workmanship and for Other Purposes."
In opposition to Go's release, petitioners maintained that Go's sentence neither has expired nor was
commuted. According to petitioners, the grant of colonist status on Go did not carry with it the automatic
commutation of his sentence from the indivisible penalty of reclusion perpetua to thirty (30) years because
only the President has the power to commute a sentence. Sans the signature of the President, any
commutation is ineffectual. TCAScE
On 28 April 2014, the RTC granted the petition and issued a Writ of Habeas Corpus. The RTC found
that Go's sentence was validly commuted from reclusion perpetua to 30 years pursuant to Section 7, Chapter
3 of the BuCor Manual:
Section 7. Privileges of a colonist. — A colonist shall have the following privileges:
a. credit of additional GCTA of five (5) days for such calendar month while retains said
classification aside from the regular GCTA authorized under
Article 97 of the Revised Penal Code;
b. automatic reduction of life sentence imposed on the colonist to a sentence of thirty
(30) years; (Emphasis supplied)
The BuCor Manual is very clear. No ambiguity attends that provision that once an inmate is granted a
colonist status, his life sentence is commuted to 30 years. The RTC further held that, "[w]hile it is true that the
President may commute the service of sentence of a prisoner, the law also recognizes partial reduction of
sentences under Art. 97 of the Revised Penal Code which provides for allowances of good conduct." Contrary
to petitioners' contention that the penalty of reclusion perpetua cannot be commuted to 30 years, the RTC
cited Article 70 of the Revised Penal Code, which specifically provides that for perpetual penalties like
reclusion perpetua, the duration shall be computed at 30 years. Clearly, it is not correct that only the
President can commute a sentence as these provisions, i.e., Articles 70 and 97, warrant partial
extinguishment or commutation of sentence.
The pertinent portion of the Decision of the RTC granting the Writ of Habeas Corpus reads:
The court adheres therefore to the computation of GO's expiration of sentence on
August 21, 2013 which is based on the 30 year reduction of his life sentence. His further
detention beyond this period to the mind of the court is illegal.
WHEREFORE, premises considered, the petition is hereby GRANTED. The
petitioner ROLITO GO y TAMBUNTING is ordered released from custody having fully served
his sentence unless detained for some other legal cause.
Let notices of this Decision be served personally to the petitioner and to the public
respondents by the Process Server or Sheriff of this court. SO ORDERED. 4
Aggrieved, petitioners elevated the case to the CA via ordinary appeal through Rule 41 of the Rules
of Court. On 27 August 2015, the CA in a Decision dated 27 August 2015, dismissed the appeal as an
improper remedy. The CA resolved that because the appeal raised only pure question of law, as the sole
issue involved in the present case is whether the BuCor may validly commute a sentence, the proper
recourse should have been a petition for review on certiorari under Rule 45 of the Rules of Court before the
Supreme Court (SC).
The Motion for Reconsideration was also denied in a Resolution dated 14 March 2016.
Hence, the present Petition which argues that the CA committed a reversible error in dismissing
petitioners' appeal filed under Rule 41 for improper remedy. Petitioners also aver that the commutation of
Go's prison sentence is ineffective because it has no prior approval by the President in violation of Section
19, Article VII of the Constitution, which mandates that only the President has the power to exercise executive
clemency.
First, the issue of whether or not the proper remedy is an appeal via Rule 41 of the Rules of Court.
cTDaEH
Judgments of the RTC may be appealed either through (1) an ordinary appeal to the CA in cases
decided by the RTC in the exercise of its original jurisdiction which may involve either questions of fact or
mixed questions of fact and law; (2) a petition for review before the CA in cases decided by the RTC in the
exercise of its appellate jurisdiction raising questions of fact, of law, or both; and (3) a petition for review on
certiorari directly filed with the SC where only questions of law are raised. Adherence to the principle of
judicial hierarchy of courts dictates that recourse must first be made to the lower ranked court exercising
concurrent jurisdiction with a higher court. At the outset, therefore, in the exercise of its appellate jurisdiction,
regardless of whether the issue involves a question of fact, of law, or mixed questions of fact and law, an
appeal to the CA is in order. 5 This rule however, admits of certain exceptions. As already held, when the
case does not involve factual, but purely legal questions, the appeal may be elevated directly to the SC. 6
Such is the attendant circumstance in the present case.
The facts surrounding the case are undisputed and the sole issue raised is a pure question of law,
i.e., whether or not the BuCor has authority to commute a prison sentence. As succinctly resolved by the CA,
petitioners never disputed Go's "classification as a colonist status, the pertinent portions of the BuCor
Operating Manual, and the refusal of respondents-appellants to apply the privileges provided therein were
never questioned by either parties. [Petitioners] were only assailing the correctness of the RTC's
interpretation of Section 7, Chapter 3 of the BuCor Operating Manual, the conclusions drawn therefrom, and
its application to the settled facts surrounding [Go's] case. There is therefore no need to evaluate the
evidence on record to determine the power of the BuCor, or its lack thereof, to commute an inmate's
sentence." Indeed, the CA is correct in dismissing the appeal for improper remedy because the issue raised
before it is purely a question of law, which is within the jurisdiction of this Court.
Now, the main issue.
Petitioners aver that Go's commutation of sentence as a result of the grant of penal colonist status,
deduction of lawful and proper allowances for good conduct, and preventive imprisonment of Go is ineffective
without prior approval by the President because it violates Section 19, Article VII of the Constitution, which
mandates that only the President has the power to exercise executive clemency. 7
 We deny the petition.
As correctly resolved by the trial court, while only the President can commute a prison sentence,
Articles 70 8 and 97 9 of the Revised Penal Code (RPC) recognize partial reduction or commutation of
sentences by providing that "for penal penalties, the duration shall be computed for 30 years and the
allowances of good conduct must be applied on top of the [good conduct time allowance] accorded to an
inmate with a colonist status."
Accordingly, to implement the provisions of Article 97, the law has granted the Director of Prisons the
power to grant good conduct allowances. The mandate of the Director of Prisons embodied in Article 99 of
the RPC is clear and unambiguous. In fact, once granted, such allowances shall not be revoked. Article 99 of
the RPC explicitly states:
Art. 99. Who grants time allowances. — Whenever lawfully justified, the Director of
Prisons shall grant allowances for good conduct. Such allowances once granted shall
not be revoked. (Emphasis supplied)
Therefore, after crediting his preventive imprisonment of nine (9) months and sixteen (16) days, and
the regular Good Conduct Time Allowance (GCTA) under Act No. 3815 and Special Credit Time Allowance
(SCTA) under Act No. 2409 granted upon him, Go has completed serving his sentence of thirty (30) years on
21 August 2013, which he commenced to serve on 30 April 1996. 10
The intent and spirit of the law in affording persons the remedy of writ of habeas corpus is to devise a
speedy and effective means to relieve persons from unlawful restraint. 11 To rule otherwise would render
Article 99 of the RPC as a mere surplusage and would unduly impose excessive imprisonment on inmates in
violation of the basic right to liberty.
WHEREFORE, the petition is DENIED. This Resolution is IMMEDIATELY EXECUTORY. The
Director of the Bureau of Corrections is ordered to immediately RELEASE petitioner Rolito T. Go from
detention unless he is detained for any other lawful cause.
(Jardeleza, J., no part due to his prior action as Solicitor General; Bersamin, J., additional member.)
SO ORDERED.
||| (Cruz III v. Go, G.R. No. 223446 (Notice), [November 28, 2016])
6. People v. Bayotas, G.R. No. 102007, 2 September 1994

G.R. No. 102007 September 2, 1994

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.

ROGELIO BAYOTAS y CORDOVA, accused-appellant.

The Solicitor General for plaintiff-appellee.

Public Attorney's Office for accused-appellant.

ROMERO, J.:

In Criminal Case No. C-3217 filed before Branch 16, RTC Roxas City, Rogelio Bayotas y Cordova was charged
with Rape and eventually convicted thereof on June 19, 1991 in a decision penned by Judge Manuel E. Autajay.
Pending appeal of his conviction, Bayotas died on February 4, 1992 at the National Bilibid Hospital due to cardio
respiratory arrest secondary to hepatic encephalopathy secondary to hipato carcinoma gastric malingering.
Consequently, the Supreme Court in its Resolution of May 20, 1992 dismissed the criminal aspect of the appeal.
However, it required the Solicitor General to file its comment with regard to Bayotas' civil liability arising from his
commission of the offense charged.

In his comment, the Solicitor General expressed his view that the death of accused-appellant did not extinguish
his civil liability as a result of his commission of the offense charged. The Solicitor General, relying on the case of
People v. Sendaydiego 1 insists that the appeal should still be resolved for the purpose of reviewing his conviction
by the lower court on which the civil liability is based.

Counsel for the accused-appellant, on the other hand, opposed the view of the Solicitor General arguing that the
death of the accused while judgment of conviction is pending appeal extinguishes both his criminal and civil
penalties. In support of his position, said counsel invoked the ruling of the Court of Appeals in People v. Castillo
and Ocfemia 2 which held that the civil obligation in a criminal case takes root in the criminal liability and,
therefore, civil liability is extinguished if accused should die before final judgment is rendered.

We are thus confronted with a single issue: Does death of the accused pending appeal of his conviction
extinguish his civil liability?

In the aforementioned case of People v. Castillo, this issue was settled in the affirmative. This same issue posed
therein was phrased thus: Does the death of Alfredo Castillo affect both his criminal responsibility and his civil
liability as a consequence of the alleged crime?

It resolved this issue thru the following disquisition:

Article 89 of the Revised Penal Code is the controlling statute. It reads, in part:

Art. 89. How criminal liability is totally extinguished. — Criminal liability is totally
extinguished:

1. By the death of the convict, as to the personal penalties; and as to the

pecuniary penalties liability therefor is extinguished only when the death of the
offender occurs before final judgment;
 With reference to Castillo's criminal liability, there is no question. The law is plain. Statutory
construction is unnecessary. Said liability is extinguished.

The civil liability, however, poses a problem. Such liability is extinguished only when the death of
the offender occurs before final judgment. Saddled upon us is the task of ascertaining the legal
import of the term "final judgment." Is it final judgment as contradistinguished from an
interlocutory order? Or, is it a judgment which is final and executory?

We go to the genesis of the law. The legal precept contained in Article 89 of the Revised Penal
Code heretofore transcribed is lifted from Article 132 of the Spanish El Codigo Penal de 1870
which, in part, recites:

La responsabilidad penal se extingue.

1. Por la muerte del reo en cuanto a las penas personales siempre, y respecto a
las pecuniarias, solo cuando a su fallecimiento no hubiere recaido sentencia
firme.

xxx xxx xxx

The code of 1870 . . . it will be observed employs the term "sentencia firme." What is "sentencia
firme" under the old statute?

XXVIII Enciclopedia Juridica Española, p. 473, furnishes the ready answer: It says:

SENTENCIA FIRME. La sentencia que adquiere la fuerza de las definitivas por

no haberse utilizado por las partes litigantes recurso alguno contra ella dentro
de los terminos y plazos legales concedidos al efecto.

"Sentencia firme" really should be understood as one which is definite. Because, it is only when
judgment is such that, as Medina y Maranon puts it, the crime is confirmed — "en condena
determinada;" or, in the words of Groizard, the guilt of the accused becomes — "una verdad
legal." Prior thereto, should the accused die, according to Viada, "no hay legalmente, en tal caso,
ni reo, ni delito, ni responsabilidad criminal de ninguna clase." And, as Judge Kapunan well
explained, when a defendant dies before judgment becomes executory, "there cannot be any
determination by final judgment whether or not the felony upon which the civil action might arise
exists," for the simple reason that "there is no party defendant." (I Kapunan, Revised Penal
Code, Annotated, p. 421. Senator Francisco holds the same view. Francisco, Revised Penal
Code, Book One, 2nd ed., pp. 859-860)

The legal import of the term "final judgment" is similarly reflected in the Revised Penal Code.
Articles 72 and 78 of that legal body mention the term "final judgment" in the sense that it is
already enforceable. This also brings to mind Section 7, Rule 116 of the Rules of Court which
states that a judgment in a criminal case becomes final "after the lapse of the period for
perfecting an appeal or when the sentence has been partially or totally satisfied or served, or the
defendant has expressly waived in writing his right to appeal."

By fair intendment, the legal precepts and opinions here collected funnel down to one positive
conclusion: The term final judgment employed in the Revised Penal Code means judgment
beyond recall. Really, as long as a judgment has not become executory, it cannot be truthfully
said that defendant is definitely guilty of the felony charged against him.

Not that the meaning thus given to final judgment is without reason. For where, as in this case,
the right to institute a separate civil action is not reserved, the decision to be rendered must, of
necessity, cover "both the criminal and the civil aspects of the case." People vs. Yusico
(November 9, 1942), 2 O.G., No. 100, p. 964. See also: People vs. Moll, 68 Phil., 626, 634;
Francisco, Criminal Procedure, 1958 ed., Vol. I, pp. 234, 236. Correctly, Judge Kapunan
observed that as "the civil action is based solely on the felony committed and of which the
offender might be found guilty, the death of the offender extinguishes the civil liability." I
Kapunan, Revised Penal Code, Annotated, supra.

Here is the situation obtaining in the present case: Castillo's criminal liability is out. His civil
liability is sought to be enforced by reason of that criminal liability. But then, if we dismiss, as we
must, the criminal action and let the civil aspect remain, we will be faced with the anomalous
situation whereby we will be called upon to clamp civil liability in a case where the source thereof
— criminal liability — does not exist. And, as was well stated in Bautista, et al. vs. Estrella, et al.,
CA-G.R.
No. 19226-R, September 1, 1958, "no party can be found and held criminally liable in a civil suit,"
which solely would remain if we are to divorce it from the criminal proceeding."

This ruling of the Court of Appeals in the Castillo case 3 was adopted by the Supreme Court in the cases of
People of the Philippines v. Bonifacio Alison, et al., 4 People of the Philippines v. Jaime Jose, et al. 5 and
 6
People of the Philippines v. Satorre by dismissing the appeal in view of the death of the accused pending
appeal of said cases.

As held by then Supreme Court Justice Fernando in the Alison case:

The death of accused-appellant Bonifacio Alison having been established, and considering that
there is as yet no final judgment in view of the pendency of the appeal, the criminal and civil
liability of the said accused-appellant Alison was extinguished by his death (Art. 89, Revised
Penal Code; Reyes' Criminal Law, 1971 Rev. Ed., p. 717, citing People v. Castillo and Ofemia
C.A., 56 O.G. 4045); consequently, the case against him should be dismissed.

On the other hand, this Court in the subsequent cases of Buenaventura Belamala v. Marcelino Polinar 7 and
Lamberto Torrijos v. The Honorable Court of Appeals 8 ruled differently. In the former, the issue decided by this
court was: Whether the civil liability of one accused of physical injuries who died before final judgment is
extinguished by his demise to the extent of barring any claim therefore against his estate. It was the contention
of the administrator-appellant therein that the death of the accused prior to final judgment extinguished all
criminal and civil liabilities resulting from the offense, in view of Article 89, paragraph 1 of the Revised Penal
Code. However, this court ruled therein:

We see no merit in the plea that the civil liability has been extinguished, in view of the provisions
of the Civil Code of the Philippines of 1950 (Rep. Act No. 386) that became operative eighteen
years after the revised Penal Code. As pointed out by the Court below, Article 33 of the Civil
Code establishes a civil action for damages on account of physical injuries, entirely separate and
distinct from the criminal action.

Art. 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.

Assuming that for lack of express reservation, Belamala's civil action for damages was to be
considered instituted together with the criminal action still, since both proceedings were
terminated without final adjudication, the civil action of the offended party under Article 33 may
yet be enforced separately.

In Torrijos, the Supreme Court held that:

xxx xxx xxx

It should be stressed that the extinction of civil liability follows the extinction of the criminal
liability under Article 89, only when the civil liability arises from the criminal act as its only basis.
Stated differently, where the civil liability does not exist independently of the criminal
responsibility, the extinction of the latter by death, ipso facto extinguishes the former, provided, of
course, that death supervenes before final judgment. The said principle does not apply in instant
case wherein the civil liability springs neither solely nor originally from the crime itself but from a
civil contract of purchase and sale. (Emphasis ours)
xxx xxx xxx

In the above case, the court was convinced that the civil liability of the accused who was charged with
estafa could likewise trace its genesis to Articles 19, 20 and 21 of the Civil Code since said accused had
swindled the first and second vendees of the property subject matter of the contract of sale. It therefore
concluded: "Consequently, while the death of the accused herein extinguished his criminal liability
including fine, his civil liability based on the laws of human relations remains."

Thus it allowed the appeal to proceed with respect to the civil liability of the accused, notwithstanding the
extinction of his criminal liability due to his death pending appeal of his conviction.

To further justify its decision to allow the civil liability to survive, the court relied on the following ratiocination:
Since Section 21, Rule 3 of the Rules of Court 9 requires the dismissal of all money claims against the defendant
whose death occurred prior to the final judgment of the Court of First Instance (CFI), then it can be inferred that
actions for recovery of money may continue to be heard on appeal, when the death of the defendant supervenes
after the CFI had rendered its judgment. In such case, explained this tribunal, "the name of the offended party
shall be included in the title of the case as plaintiff-appellee and the legal representative, or the heirs of the
deceased-accused should be substituted as defendants-appellants."

It is, thus, evident that as jurisprudence evolved from Castillo to Torrijos, the rule established was that the survival
of the civil liability depends on whether the same can be predicated on sources of obligations other than delict.
Stated differently, the claim for civil liability is also extinguished together with the criminal action if it were solely
based thereon, i.e., civil liability ex delicto.

However, the Supreme Court in People v. Sendaydiego, et al. 10 departed from this long-established principle of
law. In this case, accused Sendaydiego was charged with and convicted by the lower court of malversation thru
falsification of public documents. Sendaydiego's death supervened during the pendency of the appeal of his
conviction.

This court in an unprecedented move resolved to dismiss Sendaydiego's appeal but only to the extent of his
criminal liability. His civil liability was allowed to survive although it was clear that such claim thereon was
exclusively dependent on the criminal action already extinguished. The legal import of such decision was for the
court to continue exercising appellate jurisdiction over the entire appeal, passing upon the correctness of
Sendaydiego's conviction despite dismissal of the criminal action, for the purpose of determining if he is civilly
liable. In doing so, this Court issued a Resolution of July 8, 1977 stating thus:

The claim of complainant Province of Pangasinan for the civil liability survived Sendaydiego
because his death occurred after final judgment was rendered by the Court of First Instance of
Pangasinan, which convicted him of three complex crimes of malversation through falsification
and ordered him to indemnify the Province in the total sum of P61,048.23 (should be
P57,048.23).

The civil action for the civil liability is deemed impliedly instituted with the criminal action in the
absence of express waiver or its reservation in a separate action (Sec. 1, Rule 111 of the Rules
of Court). The civil action for the civil liability is separate and distinct from the criminal action
(People and Manuel vs. Coloma, 105 Phil. 1287; Roa vs. De la Cruz, 107 Phil. 8).

When the action is for the recovery of money and the defendant dies before final judgment in the
Court of First Instance, it shall be dismissed to be prosecuted in the manner especially provided
in Rule 87 of the Rules of Court (Sec. 21, Rule 3 of the Rules of Court).

The implication is that, if the defendant dies after a money judgment had been rendered against
him by the Court of First Instance, the action survives him. It may be continued on appeal
(Torrijos vs. Court of Appeals, L-40336, October 24, 1975; 67 SCRA 394).

The accountable public officer may still be civilly liable for the funds improperly disbursed
although he has no criminal liability (U.S. vs. Elvina, 24 Phil. 230; Philippine National Bank vs.
Tugab, 66 Phil. 583).

In view of the foregoing, notwithstanding the dismissal of the appeal of the deceased
Sendaydiego insofar as his criminal liability is concerned, the Court Resolved to continue
exercising appellate jurisdiction over his possible civil liability for the money claims of the
Province of Pangasinan arising from the alleged criminal acts complained of, as if no criminal
case had been instituted against him, thus making applicable, in determining his civil liability,
Article 30 of the Civil Code . . . and, for that purpose, his counsel is directed to inform this Court
within ten (10) days of the names and addresses of the decedent's heirs or whether or not his
estate is under administration and has a duly appointed judicial administrator. Said heirs or
administrator will be substituted for the deceased insofar as the civil action for the civil liability is
concerned (Secs. 16 and 17, Rule 3, Rules of Court).

Succeeding cases 11 raising the identical issue have maintained adherence to our ruling in Sendaydiego; in other
words, they were a reaffirmance of our abandonment of the settled rule that a civil liability solely anchored on the
criminal (civil liability ex delicto) is extinguished upon dismissal of the entire appeal due to the demise of the
accused.

But was it judicious to have abandoned this old ruling? A re-examination of our decision in
Sendaydiego impels us to revert to the old ruling.

To restate our resolution of July 8, 1977 in Sendaydiego: The resolution of the civil action impliedly instituted in
the criminal action can proceed irrespective of the latter's extinction due to death of the accused pending appeal
of his conviction, pursuant to Article 30 of the Civil Code and Section 21, Rule 3 of the Revised Rules of Court.

Article 30 of the Civil Code provides:

When a separate civil action is brought to demand civil liability arising from a criminal offense,
and no criminal proceedings are instituted during the pendency of the civil case, a
preponderance of evidence shall likewise be sufficient to prove the act complained of.

Clearly, the text of Article 30 could not possibly lend support to the ruling in Sendaydiego. Nowhere in its text is
there a grant of authority to continue exercising appellate jurisdiction over the accused's civil liability ex delicto
when his death supervenes during appeal. What Article 30 recognizes is an alternative and separate civil action
which may be brought to demand civil liability arising from a criminal offense independently of any criminal action.
In the event that no criminal proceedings are instituted during the pendency of said civil case, the quantum of
evidence needed to prove the criminal act will have to be that which is compatible with civil liability and that is,
preponderance of evidence and not proof of guilt beyond reasonable doubt. Citing or invoking Article 30 to justify
the survival of the civil action despite extinction of the criminal would in effect merely beg the question of whether
civil liability ex delicto survives upon extinction of the criminal action due to death of the accused during appeal of
his conviction. This is because whether asserted in
the criminal action or in a separate civil action, civil liability ex delicto is extinguished by the death of the accused
while his conviction is on appeal. Article 89 of the Revised Penal Code is clear on this matter:

Art. 89. How criminal liability is totally extinguished. — Criminal liability is totally extinguished:

1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties, liability
therefor is extinguished only when the death of the offender occurs before final judgment;

xxx xxx xxx

However, the ruling in Sendaydiego deviated from the expressed intent of Article 89. It allowed claims for civil
liability ex delicto to survive by ipso facto treating the civil action impliedly instituted with the criminal, as one filed
under Article 30, as though no criminal proceedings had been filed but merely a separate civil action. This had
the effect of converting such claims from one which is dependent on the outcome of the criminal action to an
entirely new and separate one, the prosecution of which does not even necessitate the filing of criminal
proceedings. 12 One would be hard put to pinpoint the statutory authority for such a transformation. It is to be
borne in mind that in recovering civil liability ex delicto, the same has perforce to be determined in the criminal
action, rooted as it is in the court's pronouncement of the guilt or innocence of the accused. This is but to render
fealty to the intendment of Article 100 of the Revised Penal Code which provides that "every person criminally
liable for a felony is also civilly liable." In such cases, extinction of the criminal action due to death of the accused
pending appeal inevitably signifies the concomitant extinction of the civil liability. Mors Omnia Solvi. Death
dissolves all things.

In sum, in pursuing recovery of civil liability arising from crime, the final determination of the criminal liability is a
condition precedent to the prosecution of the civil action, such that when the criminal action is extinguished by the
demise of accused-appellant pending appeal thereof, said civil action cannot survive. The claim for civil liability
springs out of and is dependent upon facts which, if true, would constitute a crime. Such civil liability is an
inevitable consequence of the criminal liability and is to be declared and enforced in the criminal proceeding. This
is to be distinguished from that which is contemplated under Article 30 of the Civil Code which refers to the
institution of a separate civil action that does not draw its life from a criminal proceeding. The Sendaydiego
resolution of July 8, 1977, however, failed to take note of this fundamental distinction when it allowed the survival
of the civil action for the recovery of civil liability ex delicto by treating the same as a separate civil action referred
to under Article 30. Surely, it will take more than just a summary judicial pronouncement to authorize the
conversion of said civil action to an independent one such as that contemplated under Article 30.

Ironically however, the main decision in Sendaydiego did not apply Article 30, the resolution of July 8, 1977
notwithstanding. Thus, it was held in the main decision:

Sendaydiego's appeal will be resolved only for the purpose of showing his criminal liability which
is the basis of the civil liability for which his estate would be liable. 13

In other words, the Court, in resolving the issue of his civil liability, concomitantly made a determination on
whether Sendaydiego, on the basis of evidenced adduced, was indeed guilty beyond reasonable doubt of
committing the offense charged. Thus, it upheld Sendaydiego's conviction and pronounced the same as the
source of his civil liability. Consequently, although Article 30 was not applied in the final determination of
Sendaydiego's civil liability, there was a reopening of the criminal action already extinguished which served as
basis for Sendaydiego's civil liability. We reiterate: Upon death of the accused pending appeal of his conviction,
the criminal action is extinguished inasmuch as there is no longer a defendant to stand as the accused; the civil
action instituted therein for recovery of civil liability ex delicto is ipso facto extinguished, grounded as it is on the
criminal.

Section 21, Rule 3 of the Rules of Court was also invoked to serve as another basis for the Sendaydiego
resolution of July 8, 1977. In citing Sec. 21, Rule 3 of the Rules of Court, the Court made the inference that civil
actions of the type involved in Sendaydiego consist of money claims, the recovery of which may be continued on
appeal if defendant dies pending appeal of his conviction by holding his estate liable therefor. Hence, the Court's
conclusion:

"When the action is for the recovery of money" "and the defendant dies before final judgment in the court of First
Instance, it shall be dismissed to be prosecuted in the manner especially provided" in Rule 87 of the Rules of
Court (Sec. 21, Rule 3 of the Rules of Court).

The implication is that, if the defendant dies after a money judgment had been rendered against him by the Court
of First Instance, the action survives him. It may be continued on appeal.

Sadly, reliance on this provision of law is misplaced. From the standpoint of procedural law, this course taken in
Sendaydiego cannot be sanctioned. As correctly observed by Justice Regalado:

xxx xxx xxx

I do not, however, agree with the justification advanced in both Torrijos and Sendaydiego which,
relying on the provisions of Section 21, Rule 3 of the Rules of Court, drew the strained
implication therefrom that where the civil liability instituted together with the criminal liabilities had
 already passed beyond the judgment of the then Court of First Instance (now the Regional Trial
Court), the Court of Appeals can continue to exercise appellate jurisdiction thereover despite the
extinguishment of the component criminal liability of the deceased. This pronouncement, which
has been followed in the Court's judgments subsequent and consonant to Torrijos and
Sendaydiego, should be set aside and abandoned as being clearly erroneous and unjustifiable.
Said Section 21 of Rule 3 is a rule of civil procedure in ordinary civil actions. There is neither
authority nor justification for its application in criminal procedure to civil actions instituted together
with and as part of criminal actions. Nor is there any authority in law for the summary conversion
from the latter category of an ordinary civil action upon the death of the offender. . . .

Moreover, the civil action impliedly instituted in a criminal proceeding for recovery of civil liability ex delicto can
hardly be categorized as an ordinary money claim such as that referred to in Sec. 21, Rule 3 enforceable before
the estate of the deceased accused.

Ordinary money claims referred to in Section 21, Rule 3 must be viewed in light of the provisions of Section 5,
Rule 86 involving claims against the estate, which in Sendaydiego was held liable for Sendaydiego's civil liability.
"What are contemplated in Section 21 of Rule 3, in relation to Section 5 of Rule 86, 14 are contractual money
claims while the claims involved in civil liability ex delicto may include even the restitution of personal or real
property." 15 Section 5, Rule 86 provides an exclusive enumeration of what claims may be filed against the estate.
These are: funeral expenses, expenses for the last illness, judgments for money and claim arising from contracts,
expressed or implied. It is clear that money claims arising from delict do not form part of this exclusive
enumeration. Hence, there could be no legal basis in (1) treating a civil action ex delicto as an ordinary
contractual money claim referred to in Section 21, Rule 3 of the Rules of Court and (2) allowing it to survive by
filing a claim therefor before the estate of the deceased accused. Rather, it should be extinguished upon
extinction of the criminal action engendered by the death of the accused pending finality of his conviction.
Accordingly, we rule: if the private offended party, upon extinction of the civil liability ex delicto desires to recover
damages from the same act or omission complained of, he must subject to Section 1, Rule 111 16 (1985 Rules on
Criminal Procedure as amended) file a separate civil action, this time predicated not on the felony previously
charged but on other sources of obligation. The source of obligation upon which the separate civil action is
premised determines against whom the same shall be enforced.

If the same act or omission complained of also arises from quasi-delict or may, by provision of law, result in an
injury to person or property (real or personal), the separate civil action must be filed against the executor or
administrator 17 of the estate of the accused pursuant to Sec. 1, Rule 87 of the Rules of Court:

Sec. 1. Actions which may and which may not be brought against executor or administrator. —
No action upon a claim for the recovery of money or debt or interest thereon shall be
commenced against the executor or administrator; but actions to recover real or personal
property, or an interest therein, from the estate, or to enforce a lien thereon, and actions to
recover damages for an injury to person or property, real or personal, may be commenced
against him.

This is in consonance with our ruling in Belamala 18 where we held that, in recovering damages for injury to
persons thru an independent civil action based on Article 33 of the Civil Code, the same must be filed against the
executor or administrator of the estate of deceased accused and not against the estate under Sec. 5, Rule 86
because this rule explicitly limits the claim to those for funeral expenses, expenses for the last sickness of the
decedent, judgment for money and claims arising from contract, express or implied. Contractual money claims,
we stressed, refers only to purely personal obligations other than those which have their source in delict or tort.

Conversely, if the same act or omission complained of also arises from contract, the separate civil action must be
filed against the estate of the accused, pursuant to Sec. 5, Rule 86 of the Rules of Court.

From this lengthy disquisition, we summarize our ruling herein:

1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the
civil liability based solely thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior
to final judgment terminates his criminal liability and only the civil liability directly arising from and based solely on
the offense committed, i.e., civil liability ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also
be predicated on a source of obligation other than delict. 19 Article 1157 of the Civil Code enumerates these other
sources of obligation from which the civil liability may arise as a result of the same act or omission:

a) Law 20

b) Contracts

c) Quasi-contracts

d) . . .

e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be
pursued but only by way of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on
Criminal Procedure as amended. This separate civil action may be enforced either against the
executor/administrator or the estate of the accused, depending on the source of obligation upon which the same
is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by
prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the private-
offended party instituted together therewith the civil action. In such case, the statute of limitations on the civil
liability is deemed interrupted during the pendency of the criminal case, conformably with provisions of Article
1155 21 of the Civil Code, that should thereby avoid any apprehension on a possible privation of right by
prescription. 22

Applying this set of rules to the case at bench, we hold that the death of appellant Bayotas extinguished his
criminal liability and the civil liability based solely on the act complained of, i.e., rape. Consequently, the appeal is
hereby dismissed without qualification.

WHEREFORE, the appeal of the late Rogelio Bayotas is DISMISSED with costs de oficio.

SO ORDERED.

7. Securities and Exchange Commission v. Intraport Resources Corp, G.R. No. 135808, 6 October 2008

G.R. No. 135808 October 6, 2008

SECURITIES AND EXCHANGE COMMISSION, petitioner, vs.

INTERPORT RESOURCES CORPORATION, MANUEL S. RECTO, RENE S. VILLARICA, PELAGIO
RICALDE, ANTONIO REINA, FRANCISCO ANONUEVO, JOSEPH SY and SANTIAGO TANCHAN, JR.,
respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision, 1 dated 20
August 1998, rendered by the Court of Appeals in C.A.-G.R. SP No. 37036, enjoining petitioner Securities and
Exchange Commission (SEC) from taking cognizance of or initiating any action against the respondent
corporation Interport Resources Corporation (IRC) and members of its board of directors, respondents Manuel S.
Recto, Rene S. Villarica, Pelagio Ricalde, Antonio Reina, Francisco Anonuevo, Joseph Sy and Santiago
Tanchan, Jr., with respect to Sections 8, 30 and 36 of the Revised Securities Act. In the same Decision of the
appellate court, all the proceedings taken against the respondents, including the assailed SEC Omnibus Orders
of 25 January 1995 and 30 March 1995, were declared void. The antecedent facts of the present case are as
follows.

On 6 August 1994, the Board of Directors of IRC approved a Memorandum of Agreement with Ganda Holdings
Berhad (GHB). Under the Memorandum of Agreement, IRC acquired 100% or the entire capital stock of Ganda
Energy Holdings, Inc. (GEHI),2 which would own and operate a 102-megawatt (MW) gas turbine power-
generating barge. The agreement also stipulates that GEHI would assume a five-year power purchase contract
with National Power Corporation. At that time, GEHI's power-generating barge was 97% complete and would go
on-line by mid-September of 1994. In exchange, IRC will issue to GHB 55% of the expanded capital stock of IRC
amounting to 40.88 billion shares which had a total par value of P488.44 million.3

On the side, IRC would acquire 67% of the entire capital stock of Philippine Racing Club, Inc. (PRCI). PRCI owns
25.724 hectares of real estate property in Makati. Under the Agreement, GHB, a member of the Westmont Group
of Companies in Malaysia, shall extend or arrange a loan required to pay for the proposed acquisition by IRC of
PRCI.4

IRC alleged that on 8 August 1994, a press release announcing the approval of the agreement was sent through
facsimile transmission to the Philippine Stock Exchange and the SEC, but that the facsimile machine of the SEC
could not receive it. Upon the advice of the SEC, the IRC sent the press release on the morning of 9 August
1994.5

The SEC averred that it received reports that IRC failed to make timely public disclosures of its negotiations with
GHB and that some of its directors, respondents herein, heavily traded IRC shares utilizing this material insider
information. On 16 August 1994, the SEC Chairman issued a directive requiring IRC to submit to the SEC a copy
of its aforesaid Memorandum of Agreement with GHB. The SEC Chairman further directed all principal officers of
IRC to appear at a hearing before the Brokers and Exchanges Department (BED) of the SEC to explain IRC's
failure to immediately disclose the information as required by the Rules on Disclosure of Material Facts. 6
In compliance with the SEC Chairman's directive, the IRC sent a letter dated 16 August 1994 to the SEC,
attaching thereto copies of the Memorandum of Agreement. Its directors, Manuel Recto, Rene Villarica and
Pelagio Ricalde, also appeared before the SEC on 22 August 1994 to explain IRC's alleged failure to immediately
disclose material information as required under the Rules on Disclosure of Material Facts. 7

On 19 September 1994, the SEC Chairman issued an Order finding that IRC violated the Rules on Disclosure of
Material Facts, in connection with the Old Securities Act of 1936, when it failed to make timely disclosure of its
negotiations with GHB. In addition, the SEC pronounced that some of the officers and directors of IRC entered
into transactions involving IRC shares in violation of Section 30, in relation to Section 36, of the Revised
Securities Act.8

Respondents filed an Omnibus Motion, dated 21 September 1994, which was superseded by an Amended
Omnibus Motion, filed on 18 October 1994, alleging that the SEC had no authority to investigate the subject
matter, since under Section 8 of Presidential Decree No. 902-A, 9 as amended by Presidential Decree No. 1758,
jurisdiction was conferred upon the Prosecution and Enforcement Department (PED) of the SEC. Respondents
also claimed that the SEC violated their right to due process when it ordered that the respondents appear before
the SEC and "show cause why no administrative, civil or criminal sanctions should be imposed on them," and,
thus, shifted the burden of proof to the respondents. Lastly, they sought to have their cases tried jointly given the
identical factual situations surrounding the alleged violation committed by the respondents. 10

Respondents also filed a Motion for Continuance of Proceedings on 24 October 1994, wherein they moved for
discontinuance of the investigations and the proceedings before the SEC until the undue publicity had abated
and the investigating officials had become reasonably free from prejudice and public pressure. 11

No formal hearings were conducted in connection with the aforementioned motions, but on 25 January
1995, the SEC issued an Omnibus Order which thus disposed of the same in this wise: 12

WHEREFORE, premised on the foregoing considerations, the Commission resolves and hereby rules:

1. To create a special investigating panel to hear and decide the instant case in accordance with the
Rules of Practice and Procedure Before the Prosecution and Enforcement Department (PED),
Securities and Exchange Commission, to be composed of Attys. James K. Abugan, Medardo Devera
(Prosecution and Enforcement Department), and Jose Aquino (Brokers and Exchanges Department),
which is hereby directed to expeditiously resolve the case by conducting continuous hearings, if
possible.

2. To recall the show cause orders dated September 19, 1994 requiring the respondents to appear and
show cause why no administrative, civil or criminal sanctions should be imposed on them.

3. To deny the Motion for Continuance for lack of merit.

Respondents filed an Omnibus Motion for Partial Reconsideration, 13 questioning the creation of the special
investigating panel to hear the case and the denial of the Motion for Continuance. The SEC denied
reconsideration in its Omnibus Order dated 30 March 1995. 14

The respondents filed a petition before the Court of Appeals docketed as C.A.-G.R. SP No. 37036, questioning
the Omnibus Orders dated 25 January 1995 and 30 March 1995. 15 During the proceedings before the Court of
Appeals, respondents filed a Supplemental Motion 16 dated 16 May 1995, wherein they prayed for the issuance of
a writ of preliminary injunction enjoining the SEC and its agents from investigating and proceeding with the
hearing of the case against respondents herein. On 5 May 1995, the Court of Appeals granted their motion and
issued a writ of preliminary injunction, which effectively enjoined the SEC from filing any criminal, civil or
administrative case against the respondents herein.17

On 23 October 1995, the SEC filed a Motion for Leave to Quash SEC Omnibus Orders so that the case may be
investigated by the PED in accordance with the SEC Rules and Presidential Decree No. 902-A, and not by the
special body whose creation the SEC had earlier ordered. 18

The Court of Appeals promulgated a Decision 19 on 20 August 1998. It determined that there were no
implementing rules and regulations regarding disclosure, insider trading, or any of the provisions of the Revised
Securities Acts which the respondents allegedly violated. The Court of Appeals likewise noted that it found no
statutory authority for the SEC to initiate and file any suit for civil liability under Sections
8, 30 and 36 of the Revised Securities Act. Thus, it ruled that no civil, criminal or administrative proceedings may
possibly be held against the respondents without violating their rights to due process and equal protection. It
further resolved that absent any implementing rules, the SEC cannot be allowed to quash the assailed Omnibus
Orders for the sole purpose of re-filing the same case against the respondents. 20

The Court of Appeals further decided that the Rules of Practice and Procedure Before the PED, which took effect
on 14 April 1990, did not comply with the statutory requirements contained in the Administrative Code of 1997.
Section 8, Rule V of the Rules of Practice and Procedure Before the PED affords a party the right to be present
but without the right to cross-examine witnesses presented against him, in violation of Section 12(3), Chapter 3,
Book VII of the Administrative Code. 21
In the dispositive portion of its Decision, dated 20 August 1998, the Court of Appeals ruled that 22:

WHEREFORE, [herein petitioner SEC's] Motion for Leave to Quash SEC Omnibus Orders is hereby
DENIED. The petition for certiorari, prohibition and mandamus is GRANTED. Consequently, all
proceedings taken against [herein respondents] in this case, including the Omnibus Orders of January
25, 1995 and March 30, 1995 are declared null and void. The writ of preliminary injunction is hereby
made permanent and, accordingly, [SEC] is hereby prohibited from taking cognizance or initiating
any action, be they civil, criminal, or administrative against [respondents] with respect to Sections 8
(Procedure for Registration), 30 (Insider's duty to disclose when trading) and 36 (Directors, Officers and
Principal Stockholders) in relation to Sections 46 (Administrative sanctions) 56 (Penalties) 44 (Liabilities
of Controlling persons) and 45 (Investigations, injunctions and prosecution of offenses) of the Revised
Securities Act and Section 144 (Violations of the Code) of the Corporation Code. (Emphasis provided.)

The SEC filed a Motion for Reconsideration, which the Court of Appeals denied in a Resolution 23 issued on 30
September 1998.

Hence, the present petition, which relies on the following grounds 24:

THE COURT OF APPEALS ERRED WHEN IT DENIED PETITIONER'S MOTION FOR LEAVE TO
QUASH THE ASSAILED SEC OMNIBUS ORDERS DATED JANUARY 25 AND MARCH 30, 1995.

II

THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE IS NO STATUTORY AUTHORITY
WHATSOEVER FOR PETITIONER SEC TO INITIATE AND FILE ANY SUIT BE THEY CIVIL, CRIMINAL
OR ADMINISTRATIVE AGAINST RESPONDENT CORPORATION AND ITS DIRECTORS WITH
RESPECT TO SECTION 30 (INSIDER'S DUTY TO DISCOLSED [sic] WHEN TRADING) AND 36
(DIRECTORS OFFICERS AND PRINCIPAL STOCKHOLDERS) OF THE REVISED SECURITIES ACT;
AND
III

THE COURT OF APPEALS ERRED WHEN IT RULED THAT RULES OF PRACTICE AND
PROSECUTION BEFORE THE PED AND THE SICD RULES OF PROCEDURE ON ADMINISTRATIVE
ACTIONS/PROCEEDINGS25 ARE INVALID AS THEY FAIL TO COMPLY WITH THE STATUTORY
REQUIREMENTS CONTAINED IN THE ADMINISTRATIVE CODE OF 1987.

The petition is impressed with merit.

Before discussing the merits of this case, it should be noted that while this case was pending in this Court,
Republic Act No. 8799, otherwise known as the Securities Regulation Code, took effect on 8 August 2000.
Section 8 of Presidential Decree No. 902-A, as amended, which created the PED, was already repealed as
provided for in Section 76 of the Securities Regulation Code:

SEC. 76. Repealing Clause. - The Revised Securities Act (Batas Pambansa Blg. 178), as amended, in its
entirety, and Sections 2, 4 and 8 of Presidential Decree 902-A, as amended, are hereby repealed. All
other laws, orders, rules and regulations, or parts thereof, inconsistent with any provision of this Code
are hereby repealed or modified accordingly.

Thus, under the new law, the PED has been abolished, and the Securities Regulation Code has taken the place
of the Revised Securities Act.

The Court now proceeds with a discussion of the present case.

I. Sctions 8, 30 and 36 of the Revised Securities Act do not require the enactment of implementing rules
to make them binding and effective.

The Court of Appeals ruled that absent any implementing rules for Sections 8, 30 and 36 of the Revised
Securities Act, no civil, criminal or administrative actions can possibly be had against the respondents without
violating their right to due process and equal protection, citing as its basis the case Yick Wo v. Hopkins.26 This is
untenable. In the absence of any constitutional or statutory infirmity, which may concern Sections 30 and 36 of
the Revised Securities Act, this Court upholds these provisions as legal and binding. It is well settled that every
law has in its favor the presumption of validity. Unless and until a specific provision of the law is declared invalid
and unconstitutional, the same is valid and binding for all intents and purposes. 27 The mere absence of
implementing rules cannot effectively invalidate provisions of law, where a reasonable construction that will
support the law may be given. In People v. Rosenthal,28 this Court ruled that:

In this connection we cannot pretermit reference to the rule that "legislation should not be held invalid on
the ground of uncertainty if susceptible of any reasonable construction that will support and give it effect.
 An Act will not be declared inoperative and ineffectual on the ground that it furnishes no adequate means
to secure the purpose for which it is passed, if men of common sense and reason can devise and
provide the means, and all the instrumentalities necessary for its execution are within the reach of those
entrusted therewith." (25 R.C.L., pp. 810, 811)

In Garcia v. Executive Secretary,29 the Court underlined the importance of the presumption of validity of laws and
the careful consideration with which the judiciary strikes down as invalid acts of the legislature:

The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of the
political departments are valid in the absence of a clear and unmistakable showing to the contrary. To
doubt is to sustain. This presumption is based on the doctrine of separation of powers which enjoins
upon each department a becoming respect for the acts of the other departments. The theory is that as
the joint act of Congress and the President of the Philippines, a law has been carefully studied and
determined to be in accordance with the fundamental law before it was finally enacted.

The necessity for vesting administrative authorities with power to make rules and regulations is based on the
impracticability of lawmakers' providing general regulations for various and varying details of management. 30 To
rule that the absence of implementing rules can render ineffective an act of Congress, such as the Revised
Securities Act, would empower the administrative bodies to defeat the legislative will by delaying the
implementing rules. To assert that a law is less than a law, because it is made to depend on a future event or act,
is to rob the Legislature of the power to act wisely for the public welfare whenever a law is passed relating to a
state of affairs not yet developed, or to things future and impossible to fully know. 31 It is well established that
administrative authorities have the power to promulgate rules and regulations to implement a given statute and to
effectuate its policies, provided such rules and regulations conform to the terms and standards prescribed by the
statute as well as purport to carry into effect its general policies. Nevertheless, it is undisputable that the rules
and regulations cannot assert for themselves a more extensive prerogative or deviate from the mandate of the
statute.32 Moreover, where the statute contains sufficient standards and an unmistakable intent, as in the case of
Sections 30 and 36 of the Revised Securities Act, there should be no impediment to its implementation.

The reliance placed by the Court of Appeals in Yick Wo v. Hopkins33 shows a glaring error. In the cited case, this
Court found unconstitutional an ordinance which gave the board of supervisors authority to refuse permission to
carry on laundries located in buildings that were not made of brick and stone, because it violated the equal
protection clause and was highly discriminatory and hostile to Chinese residents and not because the standards
provided therein were vague or ambiguous.

This Court does not discern any vagueness or ambiguity in Sections 30 and 36 of the Revised Securities Act,
such that the acts proscribed and/or required would not be understood by a person of ordinary intelligence.

Section 30 of the Revised Securities Act

Section 30 of the Revised Securities Act reads:

Sec. 30. Insider's duty to disclose when trading. - (a) It shall be unlawful for an insider to sell or buy a
security of the issuer, if he knows a fact of special significance with respect to the issuer or the security
that is not generally available, unless (1) the insider proves that the fact is generally available or (2) if the
other party to the transaction (or his agent) is identified, (a) the insider proves that the other party knows
it, or (b) that other party in fact knows it from the insider or otherwise.

(b) "Insider" means (1) the issuer, (2) a director or officer of, or a person controlling, controlled by, or
under common control with, the issuer, (3) a person whose relationship or former relationship to the
issuer gives or gave him access to a fact of special significance about the issuer or the security that is
not generally available, or (4) a person who learns such a fact from any of the foregoing insiders as
defined in this subsection, with knowledge that the person from whom he learns the fact is such an
insider.

(c) A fact is "of special significance" if (a) in addition to being material it would be likely, on being
made generally available, to affect the market price of a security to a significant extent, or (b) a
reasonable person would consider it especially important under the circumstances in determining his
course of action in the light of such factors as the degree of its specificity, the extent of its difference from
information generally available previously, and its nature and reliability.

(d) This section shall apply to an insider as defined in subsection (b) (3) hereof only to the extent
that he knows of a fact of special significance by virtue of his being an insider.

The provision explains in simple terms that the insider's misuse of nonpublic and undisclosed information is the
gravamen of illegal conduct. The intent of the law is the protection of investors against fraud, committed when an
insider, using secret information, takes advantage of an uninformed investor. Insiders are obligated to disclose
material information to the other party or abstain from trading the shares of his corporation. This duty to disclose
or abstain is based on two factors: first, the existence of a relationship giving access, directly or indirectly, to
information intended to be available only for a corporate purpose and not for the personal benefit of anyone; and
second, the inherent unfairness involved when a party takes advantage of such information knowing it is
unavailable to those with whom he is dealing.34
In the United States (U.S.), the obligation to disclose or abstain has been traditionally imposed on corporate
"insiders," particularly officers, directors, or controlling stockholders, but that definition has since been
expanded.35 The term "insiders" now includes persons whose relationship or former relationship to the issuer
gives or gave them access to a fact of special significance about the issuer or the security that is not generally
available, and one who learns such a fact from an insider knowing that the person from whom he learns the fact
is such an insider. Insiders have the duty to disclose material facts which are known to them by virtue of their
position but which are not known to persons with whom they deal and which, if known, would affect their
investment judgment. In some cases, however, there may be valid corporate reasons for the nondisclosure of
material information. Where such reasons exist, an issuer's decision not to make any public disclosures is not
ordinarily considered as a violation of insider trading. At the same time, the undisclosed information should not be
improperly used for noncorporate purposes, particularly to disadvantage other persons with whom an insider
might transact, and therefore the insider must abstain from entering into transactions involving such securities. 36

Respondents further aver that under Section 30 of the Revised Securities Act, the SEC still needed to define the
following terms: "material fact," "reasonable person," "nature and reliability" and "generally available." 37 In
determining whether or not these terms are vague, these terms must be evaluated in the context of Section 30 of
the Revised Securties Act. To fully understand how the terms were used in the aforementioned provision, a
discussion of what the law recognizes as a fact of special significance is required, since the duty to disclose such
fact or to abstain from any transaction is imposed on the insider only in connection with a fact of special
significance.
Under the law, what is required to be disclosed is a fact of "special significance" which may be (a) a material
fact which would be likely, on being made generally available, to affect the market price of a security to a
significant extent, or (b) one which a reasonable person would consider especially important in determining his
course of action with regard to the shares of stock.

(a) Material Fact - The concept of a "material fact" is not a new one. As early as 1973, the Rules Requiring
Disclosure of Material Facts by Corporations Whose Securities Are Listed In Any Stock Exchange or
Registered/Licensed Under the Securities Act, issued by the SEC on 29 January 1973, explained that "[a] fact is
material if it induces or tends to induce or otherwise affect the sale or purchase of its securities." Thus, Section 30
of the Revised Securities Act provides that if a fact affects the sale or purchase of securities, as well as its price,
then the insider would be required to disclose such information to the other party to the transaction involving the
securities. This is the first definition given to a "fact of special significance."

(b.1) Reasonable Person - The second definition given to a fact of special significance involves the judgment of
a "reasonable person." Contrary to the allegations of the respondents, a "reasonable person" is not a problematic
legal concept that needs to be clarified for the purpose of giving effect to a statute; rather, it is the standard on
which most of our legal doctrines stand. The doctrine on negligence uses the discretion of the "reasonable man"
as the standard.38 A purchaser in good faith must also take into account facts which put a "reasonable man" on
his guard.39 In addition, it is the belief of the reasonable and prudent man that an offense was committed that sets
the criteria for probable cause for a warrant of arrest. 40 This Court, in such cases, differentiated the reasonable
and prudent man from "a person with training in the law such as a prosecutor or a judge," and identified him as
"the average man on the street," who weighs facts and circumstances without resorting to the calibrations of our
technical rules of evidence of which his knowledge is nil. Rather, he relies on the calculus of common sense of
which all reasonable men have in abundance. 41 In the same vein, the U.S. Supreme Court similarly determined
its standards by the actual significance in the deliberations of a "reasonable investor," when it ruled in TSC
Industries, Inc. v. Northway, Inc., 42 that the determination of materiality "requires delicate assessments of the
inferences a ‘reasonable shareholder' would draw from a given set of facts and the significance of those
inferences to him."

(b.2) Nature and Reliability - The factors affecting the second definition of a "fact of special significance," which
is of such importance that it is expected to affect the judgment of a reasonable man, were substantially lifted from
a test of materiality pronounced in the case In the Matter of Investors Management Co., Inc. 43:

Among the factors to be considered in determining whether information is material under this test are the
degree of its specificity, the extent to which it differs from information previously publicly disseminated,
and its reliability in light of its nature and source and the circumstances under which it was received.

It can be deduced from the foregoing that the "nature and reliability" of a significant fact in determining the course
of action a reasonable person takes regarding securities must be clearly viewed in connection with the particular
circumstances of a case. To enumerate all circumstances that would render the "nature and reliability" of a fact to
be of special significance is close to impossible. Nevertheless, the proper adjudicative body would undoubtedly
be able to determine if facts of a certain "nature and reliability" can influence a reasonable person's decision to
retain, sell or buy securities, and thereafter explain and justify its factual findings in its decision.

(c) Materiality Concept - A discussion of the "materiality concept" would be relevant to both a material fact which
would affect the market price of a security to a significant extent and/or a fact which a reasonable person would
consider in determining his or her cause of action with regard to the shares of stock. Significantly, what is referred
to in our laws as a fact of special significance is referred to in the U.S. as the "materiality concept" and the latter
is similarly not provided with a precise definition. In Basic
v. Levinson,44 the U.S. Supreme Court cautioned against confining materiality to a rigid formula, stating thus:

A bright-line rule indeed is easier to follow than a standard that requires the exercise of judgment in the
light of all the circumstances. But ease of application alone is not an excuse for ignoring the purposes of
 the Securities Act and Congress' policy decisions. Any approach that designates a single fact or
occurrence as always determinative of an inherently fact-specific finding such as materiality, must
necessarily be overinclusive or underinclusive.

Moreover, materiality "will depend at any given time upon a balancing of both the indicated probability that the
event will occur and the anticipated magnitude of the event in light of the totality of the company activity." 45 In
drafting the Securities Act of 1934, the U.S. Congress put emphasis on the limitations to the definition of
materiality:

Although the Committee believes that ideally it would be desirable to have absolute certainty in the
application of the materiality concept, it is its view that such a goal is illusory and unrealistic. The
materiality concept is judgmental in nature and it is not possible to translate this into a numerical
formula. The Committee's advice to the [SEC] is to avoid this quest for certainty and to continue
consideration of materiality on a case-by-case basis as disclosure problems are identified."
House Committee on Interstate and Foreign Commerce, Report of the Advisory Committee on Corporate
Disclosure to the Securities and Exchange Commission, 95th Cong., 1st Sess., 327 (Comm.Print 1977).
(Emphasis provided.)46

(d) Generally Available - Section 30 of the Revised Securities Act allows the insider the defense that in a
transaction of securities, where the insider is in possession of facts of special significance, such information is
"generally available" to the public. Whether information found in a newspaper, a specialized magazine, or any
cyberspace media be sufficient for the term "generally available" is a matter which may be adjudged given the
particular circumstances of the case. The standards cannot remain at a standstill. A medium, which is widely
used today was, at some previous point in time, inaccessible to most. Furthermore, it would be difficult to
approximate how the rules may be applied to the instant case, where investigation has not even been started.
Respondents failed to allege that the negotiations of their agreement with GHB were made known to the public
through any form of media for there to be a proper appreciation of the issue presented.

Section 36(a) of the Revised Securities Act

As regards Section 36(a) of the Revised Securities Act, respondents claim that the term "beneficial ownership" is
vague and that it requires implementing rules to give effect to the law. Section 36(a) of the Revised Securities Act
is a straightforward provision that imposes upon (1) a beneficial owner of more than ten percent of any class of
any equity security or (2) a director or any officer of the issuer of such security, the obligation to submit a
statement indicating his or her ownership of the issuer's securities and such changes in his or her ownership
thereof. The said provision reads:

Sec. 36. Directors, officers and principal stockholders. - (a) Every person who is directly or indirectly
the beneficial owner of more than ten per centum of any [class] of any equity security which is registered
pursuant to this Act, or who is [a] director or an officer of the issuer of such security, shall file, at the time
of the registration of such security on a securities exchange or by the effective date of a registration
statement or within ten days after he becomes such a beneficial owner, director or officer, a statement
with the Commission and, if such security is registered on a securities exchange, also with the exchange,
of the amount of all equity securities of such issuer of which he is the beneficial owner, and within ten
days after the close of each calendar month thereafter, if there has been a change in such ownership
during such month, shall file with the Commission, and if such security is registered on a securities
exchange, shall also file with the exchange, a statement indicating his ownership at the close of the
calendar month and such changes in his ownership as have occurred during such calendar month.
(Emphasis provided.)

Section 36(a) refers to the "beneficial owner." Beneficial owner has been defined in the following manner:

[F]irst, to indicate the interest of a beneficiary in trust property (also called "equitable ownership"); and
second, to refer to the power of a corporate shareholder to buy or sell the shares, though the shareholder
is not registered in the corporation's books as the owner. Usually, beneficial ownership is distinguished
from naked ownership, which is the enjoyment of all the benefits and privileges of ownership, as against
possession of the bare title to property. 47 Even assuming that the term "beneficial ownership" was vague,
it would not affect respondents' case, where the respondents are directors and/or officers of the
corporation, who are specifically required to comply with the reportorial requirements under Section 36(a)
of the Revised Securities Act. The validity of a statute may be contested only by one who will sustain a
direct injury as a result of its enforcement.48

Sections 30 and 36 of the Revised Securities Act were enacted to promote full disclosure in the securities market
and prevent unscrupulous individuals, who by their positions obtain non-public information, from taking
advantage of an uninformed public. No individual would invest in a market which can be manipulated by a limited
number of corporate insiders. Such reaction would stifle, if not stunt, the growth of the securities market. To avert
the occurrence of such an event, Section 30 of the Revised Securities Act prevented the unfair use of non-public
information in securities transactions, while Section 36 allowed the SEC to monitor the transactions entered into
by corporate officers and directors as regards the securities of their companies.

In the case In the Matter of Investor's Management Co.,49 it was cautioned that "the broad language of the anti-
fraud provisions," which include the provisions on insider trading, should not be "circumscribed by fine distinctions
and rigid classifications." The ambit of anti-fraud provisions is necessarily broad so as to embrace the infinite
variety of deceptive conduct.50

In Tatad v. Secretary of Department of Energy,51 this Court brushed aside a contention, similar to that made by
the respondents in this case, that certain words or phrases used in a statute do not set determinate standards,
declaring that:

Petitioners contend that the words "as far as practicable," "declining" and "stable" should have been
defined in R.A. No. 8180 as they do not set determinate and determinable standards. This stubborn
submission deserves scant consideration. The dictionary meanings of these words are well settled and
cannot confuse men of reasonable intelligence. x x x. The fear of petitioners that these words will result
in the exercise of executive discretion that will run riot is thus groundless. To be sure, the Court has
sustained the validity of similar, if not more general standards in other cases.

Among the words or phrases that this Court upheld as valid standards were "simplicity and dignity," 52 "public
interest,"53 and "interests of law and order."54

The Revised Securities Act was approved on 23 February 1982. The fact that the Full Disclosure Rules were
promulgated by the SEC only on 24 July 1996 does not render ineffective in the meantime Section 36 of the
Revised Securities Act. It is already unequivocal that the Revised Securities Act requires full disclosure and the
Full Disclosure Rules were issued to make the enforcement of the law more consistent, efficient and effective. It
is equally reasonable to state that the disclosure forms later provided by the SEC, do not, in any way imply that
no compliance was required before the forms were provided. The effectivity of a statute which imposes reportorial
requirements cannot be suspended by the issuance of specified forms, especially where compliance therewith
may be made even without such forms. The forms merely made more efficient the processing of requirements
already identified by the statute.

For the same reason, the Court of Appeals made an evident mistake when it ruled that no civil, criminal or
administrative actions can possibly be had against the respondents in connection with Sections 8, 30 and 36 of
the Revised Securities Act due to the absence of implementing rules. These provisions are sufficiently clear and
complete by themselves. Their requirements are specifically set out, and the acts which are enjoined are
determinable. In particular, Section 855 of the Revised Securities Act is a straightforward enumeration of the
procedure for the registration of securities and the particular matters which need to be reported in the registration
statement thereof. The Decision, dated 20 August 1998, provides no valid reason to exempt the respondent IRC
from such requirements. The lack of implementing rules cannot suspend the effectivity of these provisions. Thus,
this Court cannot find any cogent reason to prevent the SEC from exercising its authority to investigate
respondents for violation of Section 8 of the Revised Securities Act.

II. The right to cross-examination is not absolute and cannot be demanded during investigative
proceedings before the PED.

In its assailed Decision dated 20 August 1998, the Court of Appeals pronounced that the PED Rules of Practice
and Procedure was invalid since Section 8, Rule V 56 thereof failed to provide for the parties' right to cross-
examination, in violation of the Administrative Code of 1987 particularly Section 12(3), Chapter 3, Book VII
thereof. This ruling is incorrect.

Firstly, Section 4, Rule I of the PED Rules of Practice and Procedure, categorically stated that the proceedings
before the PED are summary in nature:

Section 4. Nature of Proceedings - Subject to the requirements of due process, proceedings before the
"PED" shall be summary in nature not necessarily adhering to or following the technical rules of evidence
obtaining in the courts of law. The Rules of Court may apply in said proceedings in suppletory character
whenever practicable.

Rule V of the PED Rules of Practice and Procedure further specified that:

Section 5. Submission of Documents - During the preliminary conference/hearing, or immediately

thereafter, the Hearing Officer may require the parties to simultaneously submit their respective verified
position papers accompanied by all supporting documents and the affidavits of their witnesses, if any
which shall take the place of their direct testimony. The parties shall furnish each other with copies of the
position papers together with the supporting affidavits and documents submitted by them.

Section 6. Determination of necessity of hearing. - Immediately after the submission by the parties of
their position papers and supporting documents, the Hearing Officer shall determine whether there is a
need for a formal hearing. At this stage, he may, in his discretion, and for the purpose of making such
determination, elicit pertinent facts or information, including documentary evidence, if any, from any party
or witness to complete, as far as possible, the facts of the case. Facts or information so elicited may
serve as basis for his clarification or simplifications of the issues in the case. Admissions and stipulation
of facts to abbreviate the proceedings shall be encouraged.

Section 7. Disposition of Case. If the Hearing Officer finds no necessity of further hearing after the parties
have submitted their position papers and supporting documents, he shall so inform the parties stating the
 reasons therefor and shall ask them to acknowledge the fact that they were so informed by signing the
minutes of the hearing and the case shall be deemed submitted for resolution.

As such, the PED Rules provided that the Hearing Officer may require the parties to submit their respective
verified position papers, together with all supporting documents and affidavits of witnesses. A formal hearing was
not mandatory; it was within the discretion of the Hearing Officer to determine whether there was a need for a
formal hearing. Since, according to the foregoing rules, the holding of a hearing before the PED is discretionary,
then the right to cross-examination could not have been demanded by either party.

Secondly, it must be pointed out that Chapter 3, Book VII of the Administrative Code, entitled "Adjudication," does
not affect the investigatory functions of the agencies. The law creating the PED, Section 8 of Presidential Decree
No. 902-A, as amended, defines the authority granted to the PED, thus:

SEC. 8. The Prosecution and Enforcement Department shall have, subject to the Commission's control
and supervision, the exclusive authority to investigate, on complaint or motu proprio, any act or
omission of the Board of Directors/Trustees of corporations, or of partnerships, or of other associations,
or of their stockholders, officers or partners, including any fraudulent devices, schemes or
representations, in violation of any law or rules and regulations administered and enforced by the
Commission; to file and prosecute in accordance with law and rules and regulations issued by the
Commission and in appropriate cases, the corresponding criminal or civil case before the Commission or
the proper court or body upon prima facie finding of violation of any laws or rules and regulations
administered and enforced by the Commission; and to perform such other powers and functions as may
be provided by law or duly delegated to it by the Commission. (Emphasis provided.)

The law creating PED empowers it to investigate violations of the rules and regulations promulgated by the SEC
and to file and prosecute such cases. It fails to mention any adjudicatory functions insofar as the PED is
concerned. Thus, the PED Rules of Practice and Procedure need not comply with the provisions of the
Administrative Code on adjudication, particularly Section 12(3), Chapter 3, Book VII.

In Cariño v. Commission on Human Rights,57 this Court sets out the distinction between investigative and
adjudicative functions, thus:

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research
on, study. The dictionary definition of "investigate" is "to observe or study closely; inquire into
systematically: "to search or inquire into" xx to subject to an official probe xx: to conduct an official
inquiry." The purpose of an investigation, of course is to discover, to find out, to learn, obtain information.
Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the
facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry
or observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to
find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" "to inquire; to make an
investigation," "investigation" being in turn described as "(a)n administrative function, the exercise of
which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; xx an inquiry, judicial or
otherwise, for the discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine,
resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of parties
to a court case) on the merits of issues raised: xx to pass judgment on: settle judicially: xx act as judge."
And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: xx to
award or grant judicially in a case of controversy x x x."

In a legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally.
Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle, or
decree, or to sentence or condemn. x x x Implies a judicial determination of a fact, and the entry of a judgment."

There is no merit to the respondent's averment that the sections under Chapter 3, Book VII of the Administrative
Code, do not distinguish between investigative and adjudicatory functions. Chapter 3, Book VII of the
Administrative Code, is unequivocally entitled "Adjudication." Respondents insist that the PED performs
adjudicative functions, as enumerated under Section 1(h) and (j), Rule II; and Section 2(4), Rule VII of the PED
Rules of Practice and Procedure:

Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential Decree
No. 902-A, as amended by Presidential Decree No. 1758, the Prosecution and Enforcement Department
is primarily charged with the following:

xxxx

(h) Suspends or revokes, after proper notice and hearing in accordance with these Rules, the franchise
or certificate of registration of corporations, partnerships or associations, upon any of the following
grounds:

1. Fraud in procuring its certificate of registration;

 2. Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or
damage to the general public;

3. Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts
which would amount to a grave violation of its franchise; x x x x

(j) Imposes charges, fines and fees, which by law, it is authorized to collect;

xxxx

Section 2. Powers of the Hearing Officer. The Hearing Officer shall have the following powers:

xxxx

4. To cite and/or declare any person in direct or indirect contempt in accordance with pertinent provisions
of the Rules of Court.

Even assuming that these are adjudicative functions, the PED, in the instant case, exercised its investigative
powers; thus, respondents do not have the requisite standing to assail the validity of the rules on adjudication. A
valid source of a statute or a rule can only be contested by one who will sustain a direct injury as a result of its
enforcement.58 In the instant case, respondents are only being investigated by the PED for their alleged failure to
disclose their negotiations with GHB and the transactions entered into by its directors involving IRC shares. The
respondents have not shown themselves to be under any imminent danger of sustaining any personal injury
attributable to the exercise of adjudicative functions by the SEC. They are not being or about to be subjected by
the PED to charges, fees or fines; to citations for contempt; or to the cancellation of their certificate of registration
under Section 1(h), Rule II of the PED Rules of Practice and Procedure.

To repeat, the only powers which the PED was likely to exercise over the respondents were investigative in
nature, to wit:

Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential Decree
No. 902-A, as amended by Presidential Decree No. 1758, the Prosecution and Enforcement Department
is primarily charged with the following:

xxxx

b. Initiates proper investigation of corporations and partnerships or persons, their books, records and
other properties and assets, involving their business transactions, in coordination with the operating
department involved;

xxxx

e. Files and prosecutes civil or criminal cases before the Commission and other courts of justice
involving violations of laws and decrees enforced by the Commission and the rules and regulations
promulgated thereunder;

f. Prosecutes erring directors, officers and stockholders of corporations and partnerships,

commercial paper issuers or persons in accordance with the pertinent rules on procedures;

The authority granted to the PED under Section 1(b), (e), and (f), Rule II of the PED Rules of Practice and
Procedure, need not comply with Section 12, Chapter 3, Rule VII of the Administrative Code, which affects only
the adjudicatory functions of administrative bodies. Thus, the PED would still be able to investigate the
respondents under its rules for their alleged failure to disclose their negotiations with GHB and the transactions
entered into by its directors involving IRC shares.

This is not to say that administrative bodies performing adjudicative functions are required to strictly comply with
the requirements of Chapter 3, Rule VII of the Administrative Code, particularly, the right to cross-examination. It
should be noted that under Section 2.2 of Executive Order No. 26, issued on 7 October 1992, abbreviated
proceedings are prescribed in the disposition of administrative cases:

2. Abbreviation of Proceedings. All administrative agencies are hereby directed to adopt and include in
their respective Rules of Procedure the following provisions:

xxxx

2.2 Rules adopting, unless otherwise provided by special laws and without prejudice to Section 12,
Chapter 3, Book VII of the Administrative Code of 1987, the mandatory use of affidavits in lieu of direct
testimonies and the preferred use of depositions whenever practicable and convenient.

As a consequence, in proceedings before administrative or quasi-judicial bodies, such as the National Labor
Relations Commission and the Philippine Overseas Employment Agency, created under laws which authorize
summary proceedings, decisions may be reached on the basis of position papers or other documentary evidence
only. They are not bound by technical rules of procedure and evidence. 59 In fact, the hearings before such
agencies do not connote full adversarial proceedings. 60 Thus, it is not necessary for the rules to require affiants to
appear and testify and to be cross-examined by the counsel of the adverse party. To require otherwise would
negate the summary nature of the administrative or quasijudicial proceedings. 61 In Atlas Consolidated Mining and
Development Corporation v. Factoran, Jr.,62 this Court stated that:

[I]t is sufficient that administrative findings of fact are supported by evidence, or negatively stated, it is
sufficient that findings of fact are not shown to be unsupported by evidence. Substantial evidence is all
that is needed to support an administrative finding of fact, and substantial evidence is "such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion."

In order to comply with the requirements of due process, what is required, among other things, is that every
litigant be given reasonable opportunity to appear and defend his right and to introduce relevant evidence in his
favor.63

III. The Securities Regulations Code did not repeal Sections 8, 30 and 36 of the Revised Securities Act
since said provisions were reenacted in the new law.

The Securities Regulations Code absolutely repealed the Revised Securities Act. While the absolute repeal of a
law generally deprives a court of its authority to penalize the person charged with the violation of the old law prior
to its appeal, an exception to this rule comes about when the repealing law punishes the act previously penalized
under the old law. The Court, in Benedicto v. Court of Appeals, sets down the rules in such instances:64

As a rule, an absolute repeal of a penal law has the effect of depriving the court of its authority to punish
a person charged with violation of the old law prior to its repeal. This is because an unqualified repeal of
a penal law constitutes a legislative act of rendering legal what had been previously declared as illegal,
such that the offense no longer exists and it is as if the person who committed it never did so. There are,
however, exceptions to the rule. One is the inclusion of a saving clause in the repealing statute that
provides that the repeal shall have no effect on pending actions. Another exception is where the
repealing act reenacts the former statute and punishes the act previously penalized under the old law. In
such instance, the act committed before the reenactment continues to be an offense in the statute books
and pending cases are not affected, regardless of whether the new penalty to be imposed is more
favorable to the accused. (Emphasis provided.)

In the present case, a criminal case may still be filed against the respondents despite the repeal, since Sections
8, 65 12,66 26,67 2768 and 2369 of the Securities Regulations Code impose duties that are substantially similar to
Sections 8, 30 and 36 of the repealed Revised Securities Act.

Section 8 of the Revised Securities Act, which previously provided for the registration of securities and the
information that needs to be included in the registration statements, was expanded under Section 12, in
connection with Section 8 of the Securities Regulations Code. Further details of the information required to be
disclosed by the registrant are explained in the Amended Implementing Rules and Regulations of the Securities
Regulations Code, issued on 30 December 2003, particularly Sections 8 and 12 thereof.

Section 30 of the Revised Securities Act has been reenacted as Section 27 of the Securities Regulations Code,
still penalizing an insider's misuse of material and non-public information about the issuer, for the purpose of
protecting public investors. Section 26 of the Securities Regulations Code even widens the coverage of
punishable acts, which intend to defraud public investors through various devices, misinformation and omissions.

Section 23 of the Securities Regulations Code was practically lifted from Section 36(a) of the Revised Securities
Act. Both provisions impose upon (1) a beneficial owner of more than ten percent of any class of any equity
security or (2) a director or any officer of the issuer of such security, the obligation to submit a statement
indicating his or her ownership of the issuer's securities and such changes in his or her ownership thereof.

Clearly, the legislature had not intended to deprive the courts of their authority to punish a person charged with
violation of the old law that was repealed; in this case, the Revised Securities Act.

IV. The SEC retained the jurisdiction to investigate violations of the Revised Securities Act, reenacted in
the Securities Regulations Code, despite the abolition of the PED.

Section 53 of the Securities Regulations Code clearly provides that criminal complaints for violations of rules and
regulations enforced or administered by the SEC shall be referred to the Department of Justice (DOJ) for
preliminary investigation, while the SEC nevertheless retains limited investigatory powers. 70 Additionally, the SEC
may still impose the appropriate administrative sanctions under Section 54 of the aforementioned law. 71

In Morato v. Court of Appeals,72 the cases therein were still pending before the PED for investigation and the SEC
for resolution when the Securities Regulations Code was enacted. The case before the SEC involved an intra-
corporate dispute, while the subject matter of the other case investigated by the PED involved the schemes,
devices, and violations of pertinent rules and laws of the company's board of directors. The enactment of the
Securities Regulations Code did not result in the dismissal of the cases; rather, this Court ordered the transfer of
one case to the proper regional trial court and the SEC to continue with the investigation of the other case.
The case at bar is comparable to the aforecited case. In this case, the SEC already commenced the investigative
proceedings against respondents as early as 1994. Respondents were called to appear before the SEC and
explain their failure to disclose pertinent information on 14 August 1994. Thereafter, the SEC Chairman, having
already made initial findings that respondents failed to make timely disclosures of their negotiations with GHB,
ordered a special investigating panel to hear the case. The investigative proceedings were interrupted only by the
writ of preliminary injunction issued by the Court of Appeals, which became permanent by virtue of the Decision,
dated 20 August 1998, in C.A.-G.R. SP No. 37036. During the pendency of this case, the Securities Regulations
Code repealed the Revised Securities Act. As in Morato v. Court of Appeals, the repeal cannot deprive SEC of its
jurisdiction to continue investigating the case; or the regional trial court, to hear any case which may later be filed
against the respondents.

V. The instant case has not yet prescribed.

Respondents have taken the position that this case is moot and academic, since any criminal complaint that may
be filed against them resulting from the SEC's investigation of this case has already prescribed. 73 They point out
that the prescription period applicable to offenses punished under special laws, such as violations of the Revised
Securities Act, is twelve years under Section 1 of Act No. 3326, as amended by Act No. 3585 and Act No. 3763,
entitled "An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal
Ordinances and to Provide When Prescription Shall Begin to Act." 74 Since the offense was committed in 1994,
they reasoned that prescription set in as early as 2006 and rendered this case moot. Such position, however, is
incongruent with the factual circumstances of this case, as well as the applicable laws and jurisprudence.

It is an established doctrine that a preliminary investigation interrupts the prescription period. 75 A preliminary
investigation is essentially a determination whether an offense has been committed, and whether there is
probable cause for the accused to have committed an offense:

A preliminary investigation is merely inquisitorial, and it is often the only means of discovering the
persons who may be reasonably charged with a crime, to enable the fiscal to prepare the complaint or
information. It is not a trial of the case on the merits and has no purpose except that of determining
whether a crime has been committed or whether there is probable cause to believe that the accused is
guilty thereof.76

Under Section 45 of the Revised Securities Act, which is entitled Investigations, Injunctions and Prosecution of
Offenses, the Securities Exchange Commission (SEC) has the authority to "make such investigations as it deems
necessary to determine whether any person has violated or is about to violate any provision of this Act XXX."
After a finding that a person has violated the Revised Securities Act, the SEC may refer the case to the DOJ for
preliminary investigation and prosecution.

While the SEC investigation serves the same purpose and entails substantially similar duties as the preliminary
investigation conducted by the DOJ, this process cannot simply be disregarded. In Baviera v.

Paglinawan,77 this Court enunciated that a criminal complaint is first filed with the SEC, which determines the
existence of probable cause, before a preliminary investigation can be commenced by the DOJ. In the aforecited
case, the complaint filed directly with the DOJ was dismissed on the ground that it should have been filed first
with the SEC. Similarly, the offense was a violation of the Securities Regulations Code, wherein the procedure for
criminal prosecution was reproduced from Section 45 of the Revised Securities Act. 78 This Court affirmed the
dismissal, which it explained thus:

The Court of Appeals held that under the above provision, a criminal complaint for violation of any law or
rule administered by the SEC must first be filed with the latter. If the Commission finds that there is
probable cause, then it should refer the case to the DOJ. Since petitioner failed to comply with the
foregoing procedural requirement, the DOJ did not gravely abuse its discretion in dismissing his
complaint in I.S. No. 2004-229.

A criminal charge for violation of the Securities Regulation Code is a specialized dispute. Hence, it must
first be referred to an administrative agency of special competence, i.e., the SEC. Under the doctrine of
primary jurisdiction, courts will not determine a controversy involving a question within the jurisdiction of
the administrative tribunal, where the question demands the exercise of sound administrative discretion
requiring the specialized knowledge and expertise of said administrative tribunal to determine technical
and intricate matters of fact. The Securities Regulation Code is a special law. Its enforcement is
particularly vested in the SEC. Hence, all complaints for any violation of the Code and its implementing
rules and regulations should be filed with the SEC. Where the complaint is criminal in nature, the SEC
shall indorse the complaint to the DOJ for preliminary investigation and prosecution as provided in
Section 53.1 earlier quoted.

We thus agree with the Court of Appeals that petitioner committed a fatal procedural lapse when he filed
his criminal complaint directly with the DOJ. Verily, no grave abuse of discretion can be ascribed to the
DOJ in dismissing petitioner's complaint.

The said case puts in perspective the nature of the investigation undertaken by the SEC, which is a requisite
before a criminal case may be referred to the DOJ. The Court declared that it is imperative that the criminal
prosecution be initiated before the SEC, the administrative agency with the special competence.
It should be noted that the SEC started investigative proceedings against the respondents as early as 1994. This
investigation effectively interrupted the prescription period. However, said proceedings were disrupted by a
preliminary injunction issued by the Court of Appeals on 5 May 1995, which effectively enjoined the SEC from
filing any criminal, civil, or administrative case against the respondents herein. 79 Thereafter, on 20 August 1998,
the appellate court issued the assailed Decision in C.A. G.R. SP. No. 37036 ordering that the writ of injunction be
made permanent and prohibiting the SEC from taking cognizance of and initiating any action against herein
respondents. The SEC was bound to comply with the aforementioned writ of preliminary injunction and writ of
injunction issued by the Court of Appeals enjoining it from continuing with the investigation of respondents for 12
years. Any deviation by the SEC from the injunctive writs would be sufficient ground for contempt. Moreover, any
step the SEC takes in defiance of such orders will be considered void for having been taken against an order
issued by a court of competent jurisdiction.

An investigation of the case by any other administrative or judicial body would likewise be impossible pending the
injunctive writs issued by the Court of Appeals. Given the ruling of this Court in Baviera v. Paglinawan,80 the DOJ
itself could not have taken cognizance of the case and conducted its preliminary investigation without a prior
determination of probable cause by the SEC. Thus, even presuming that the DOJ was not enjoined by the Court
of Appeals from conducting a preliminary investigation, any preliminary investigation conducted by the DOJ
would have been a futile effort since the SEC had only started with its investigation when respondents
themselves applied for and were granted an injunction by the Court of Appeals.

Moreover, the DOJ could not have conducted a preliminary investigation or filed a criminal case against the
respondents during the time that issues on the effectivity of Sections 8, 30 and 36 of the Revised Securities Act
and the PED Rules of Practice and Procedure were still pending before the Court of Appeals. After the Court of
Appeals declared the aforementioned statutory and regulatory provisions invalid and, thus, no civil, criminal or
administrative case may be filed against the respondents for violations thereof, the DOJ would have been at a
loss, as there was no statutory provision which respondents could be accused of violating.

Accordingly, it is only after this Court corrects the erroneous ruling of the Court of Appeals in its Decision dated
20 August 1998 that either the SEC or DOJ may properly conduct any kind of investigation against the
respondents for violations of Sections 8, 30 and 36 of the Revised Securities Act. Until then, the prescription
period is deemed interrupted.

To reiterate, the SEC must first conduct its investigations and make a finding of probable cause in accordance
with the doctrine pronounced in Baviera v. Paglinawan. 81 In this case, the DOJ was precluded from initiating a
preliminary investigation since the SEC was halted by the Court of Appeals from continuing with its investigation.
Such a situation leaves the prosecution of the case at a standstill, and neither the SEC nor the DOJ can conduct
any investigation against the respondents, who, in the first place, sought the injunction to prevent their
prosecution. All that the SEC could do in order to break the impasse was to have the Decision of the Court of
Appeals overturned, as it had done at the earliest opportunity in this case. Therefore, the period during which the
SEC was prevented from continuing with its investigation should not be counted against it. The law on the
prescription period was never intended to put the prosecuting bodies in an impossible bind in which the
prosecution of a case would be placed way beyond their control; for even if they avail themselves of the proper
remedy, they would still be barred from investigating and prosecuting the case.

Indubitably, the prescription period is interrupted by commencing the proceedings for the prosecution of the
accused. In criminal cases, this is accomplished by initiating the preliminary investigation. The prosecution of
offenses punishable under the Revised Securities Act and the Securities Regulations Code is initiated by the
filing of a complaint with the SEC or by an investigation conducted by the SEC motu proprio. Only after a finding
of probable cause is made by the SEC can the DOJ instigate a preliminary investigation. Thus, the investigation
that was commenced by the SEC in 1995, soon after it discovered the questionable acts of the respondents,
effectively interrupted the prescription period. Given the nature and purpose of the investigation conducted by the
SEC, which is equivalent to the preliminary investigation conducted by the DOJ in criminal cases, such
investigation would surely interrupt the prescription period.

VI. The Court of Appeals was justified in denying SEC's Motion for Leave to Quash SEC Omnibus Orders
dated 23 October 1995.

The SEC avers that the Court of Appeals erred when it denied its Motion for Leave to Quash SEC Omnibus
Orders, dated 23 October 1995, in the light of its admission that the PED had the sole authority to investigate the
present case. On this matter, this Court cannot agree with the SEC.

In the assailed decision, the Court of Appeals denied the SEC's Motion for Leave to Quash SEC Omnibus
Orders, since it found other issues that were more important than whether or not the PED was the proper body to
investigate the matter. Its refusal was premised on its earlier finding that no criminal, civil, or administrative case
may be filed against the respondents under Sections 8, 30 and 36 of the Revised Securities Act, due to the
absence of any implementing rules and regulations. Moreover, the validity of the PED Rules on Practice and
Procedure was also raised as an issue. The Court of Appeals, thus, reasoned that if the quashal of the orders
was granted, then it would be deprived of the opportunity to determine the validity of the aforementioned rules
and statutory provisions. In addition, the SEC would merely pursue the same case without the Court of Appeals
having determined whether or not it may do so in accordance with due process requirements. Absent a
determination of whether the SEC may file a case against the respondents based on the assailed provisions of
the Revised Securities Act, it would have been improper for the Court of Appeals to grant the SEC's Motion for
Leave to Quash SEC Omnibus Orders.
In all, this Court rules that no implementing rules were needed to render effective Sections 8, 30 and 36 of the
Revised Securities Act; nor was the PED Rules of Practice and Procedure invalid, prior to the enactment of the
Securities Regulations Code, for failure to provide parties with the right to crossexamine the witnesses presented
against them. Thus, the respondents may be investigated by the appropriate authority under the proper rules of
procedure of the Securities Regulations Code for violations of Sections 8, 30, and 36 of the Revised Securities
Act.82

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. This Court hereby REVERSES the assailed
Decision of the Court of Appeals promulgated on 20 August 1998 in CA-G.R. SP No. 37036 and LIFTS the
permanent injunction issued pursuant thereto. This Court further DECLARES that the investigation of the
respondents for violations of Sections 8, 30 and 36 of the Revised Securities Act may be undertaken by the
proper authorities in accordance with the Securities Regulations Code. No costs.

SO ORDERED.

8. People v. Consorte, G.R. No. 194068, 26 November 2014

G.R. No. 194068 November 26, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs.

BENJIE CONSORTE y FRANCO, Accused-Appellant.

RESOLUTION

PEREZ, J.:

For the resolution of the Court is the Motion for Reconsideration 1 of our Decision dated 9 July 2014, 2 which
affirmed the conviction of accused appellant Benjie Consorte y Franco for the murder of Elizabeth Palmar, the
dispositive portion of which reads:

WHEREFORE, the Decision of the Court of Appeals dated 27 May 2010 in CA-G.R. CR HC No. 01806 is
AFFIRMED with the following MODIFICATIONS (1) that the amount of civil indemnity is increased from
₱50,000.00 to ₱75,000.00; and (2) that the amount of exemplary damages is increased from ₱25,000.00 to
₱30,000.00. An interest, at the rate of six percent (6%) per annum shall be imposed on all the damages awarded
in this case from the date of finality of this judgment until they are fully paid.

SO ORDERED.3

Accused-appellant raises the incredibility of his identification as the perpetrator of the crime. 4 He avers that
despite the alleged positive identification made by Rolando Visbe (Visbe), the testimony of prosecution witness
Aneline Mendoza clearly shows the impossibility of the same. 5 Moreover, further casting doubt on the alleged
identification of accused appellant is Visbe’s unbelievable and inconsistent statements on how such
identification was made.6 Meanwhile, in a Letter dated 21 September 2014, 7 the Officer-in Charge of the New
Bilibid Prison (NBP) informed the Court that accused appellant died on 14 July 2014, as evidenced by the
attached Death Certificate issued by NBP Medical Officer III Ruth B. Algones, M.D. 8

Owing to this development, the Court now addresses the effect of death pending accused-appellant’s appeal with
regard to his criminal and civil liabilities.

Article 89 (1) of the Revised Penal Code is illuminating:

Art. 89. How criminal liability is totally extinguished. – Criminal liability is totally extinguished: (1) By the death of
the convict, as to the personal penalties; and as to pecuniary penalties, liability therefor is extinguished only when
the death of the offender occurs before final judgment;

xxxx

In People v. Brillantes,9 the Court, citing People v. Bayotas,10 clarified that:

1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil
liability based solely thereon.1âwphi1 As opined by Justice Regalado, in this regard, "the death of the accused
prior to final judgment terminates his criminal liability and only the civil liability directly arising from and based
solely on the offense committed, i.e., civil liability ex delicto in senso strictiore."

In the case at bar, accused-appellant died before final judgment, as in fact, his motion for reconsideration is still
pending resolution by the Court. As such, it therefore becomes necessary for us to declare his criminal liability as
well as his civil liability ex delicto to have been extinguished by his death prior to final judgment. 11

WHEREFORE, the criminal and civil liability ex delicto of accused appellant Benjie Consorte y Franco are
declared EXTINGUISHED by his death prior to final judgment. The judgment or conviction against him is
therefore SET ASIDE.

SO ORDERED.