Lee vs. People

Corporate officers may be liable for estafa with abuse of confidence for misappropriating corporate funds, and the validity of the corporation's dissolution or the trustee's appointment is not a prejudicial question suspending the criminal prosecution where resolution of the civil dissolution issue would not necessarily determine criminal liability. Interlocutory denials of suspension, unaccompanied by lack or excess of jurisdiction or grave abuse of discretion, are not correctible by certiorari, and defenses negating misappropriation must be proved at trial.

Johnson Lee and Sonny Moreno served as President and Secretary of Neugene Marketing, Inc. (NMI). NMI, through its designated trustee Atty. Roger Z. Reyes, accused them of retaining corporate funds paid through them. A separate case questioning the validity of NMI's dissolution and Reyes's designation as trustee was pending before the Securities and Exchange Commission and later before the Supreme Court as G.R. No. 112941.

Neugene Marketing, Inc., through its designated trustee Atty. Roger Z. Reyes, charged Johnson Lee and Sonny Moreno with estafa with abuse of confidence before the Office of the City Prosecutor of Bacolod City. The charge concerned P1,500,150.00 in corporate funds allegedly paid to NMI through petitioners as payment for plastic bought by Victorias Milling Corporation from NMI, which petitioners upon demand failed to deliver to the trustee.

After the City Prosecutor absolved petitioners on December 14, 1988 and the Department of Justice denied NMI's appeal, NMI moved for reconsideration. Then Undersecretary Silvestre Bello III ordered reinvestigation on January 4, 1991, and upon City Prosecutor Augusto C. Rallos's recommendation on March 9, 1991, Criminal Cases Nos. 10010 and 10011 were filed against petitioners. Petitioners sought reinvestigation from the DOJ in May 1992 but were denied for lack of prior trial court permission.

Thereafter petitioners moved before the trial court to suspend proceedings, invoking the need for reinvestigation and a prejudicial question in SEC Case No. 3318, later G.R. No. 112941, questioning the validity of NMI's dissolution and Reyes's designation as trustee. The trial court first granted reinvestigation but reconsidered on the prosecutor's motion and set arraignment. When petitioners again moved on January 19, 1996 to suspend on the same prejudicial-question ground, the trial court denied the motion on June 27, 1996 and scheduled arraignment for June 28, 1996. Petitioner Lee failed to appear on that date, prompting the order for a warrant of arrest and additional P30,000 bond.

According to the prosecution, petitioners misappropriated the corporate funds paid through them and failed to deliver the same upon demand. Petitioners, for their part, maintained they refused to turn the money over to the trustee because they were keeping it for the protection of the corporation itself, that the elements of misappropriation and damage were absent for lack of proof of conversion for personal benefit, and that they had already turned the money over to the majority stockholder of the defunct corporation.

• Attempted Estafa Only: Petitioner argued that the complaint allegations showed only an attempt to commit estafa in that the accused refused to turn over sums of money, taken as evidence of criminal intent to appropriate, and there is no crime of attempted estafa under Article 315, paragraph 1(b) of the Revised Penal Code.
• Prejudicial Question — Trusteeship: Petitioner maintained that the criminal cases should have been dismissed at least provisionally upon showing that the appointment of complainant law firm as trustee was in issue before the Securities and Exchange Commission in SEC Case No. 3318.
• Intra-Corporate Jurisdiction: Petitioner argued that the criminal cases nonetheless should have been dismissed at least provisionally because they involved an intra-corporate issue within the exclusive, sole and original jurisdiction of the Securities and Exchange Commission under Dionisio vs. CFI.
• Due Process and Equal Protection: Petitioner maintained that the numerous twists and turns during the preliminary stage, including reopening after dismissal a year or so earlier without motions for reconsideration by the private complainant, violated rights to due process and equal protection.
• Speedy Disposition and Absence of Misappropriation: Petitioner argued that long delay in resolution at the DOJ and trial court violated the right to speedy disposition, and that as officers keeping money for the corporation's protection without conversion for personal benefit, with turnover to the majority stockholder, the elements of misappropriation and damage were absent.

• Delay Attributable to Petitioners: Respondent countered through the Solicitor General that no violative delay attended investigation and proceedings because petitioners filed a series of repetitious and dilatory motions — motions to disqualify private prosecutor and law firm, motions for reinvestigation and comprehensive review, motions to quash, dismiss or suspend, motions to recall warrants of arrest, motions to inhibit judges and prosecutors, plus related SEC, RTC and Court of Appeals actions — all of which were denied or dismissed.

• Certiorari — Grave Abuse: Whether the trial court's denial of suspension and issuance of arrest and bond orders constituted patent and gross abuse of discretion amounting to lack or excess of jurisdiction correctible by certiorari.
• Nature of Defense — Attempted Estafa and Misappropriation: Whether petitioners' claims of mere criminal intent to appropriate without conversion, absence of misappropriation and damage, and turnover to the majority stockholder warranted dismissal rather than trial on the merits.
• Prejudicial Question: Whether the pending case on validity of NMI's dissolution and designation of trustee posed a prejudicial question requiring suspension or provisional dismissal of the estafa cases.
• Intra-Corporate Jurisdiction: Whether the cases involved an intra-corporate dispute within the exclusive jurisdiction of the Securities and Exchange Commission and thus had to be dismissed.
• Due Process, Equal Protection and Speedy Disposition: Whether reinvestigation after prior dismissal and alleged long delay violated petitioners' rights to due process, equal protection, and speedy disposition.

• Certiorari — Grave Abuse: No. No patent and gross abuse of discretion was shown; at most errors of judgment were alleged, and interlocutory orders are generally not reviewable by certiorari which corrects only jurisdictional errors.
• Nature of Defense — Attempted Estafa and Misappropriation: No. The claims negating misappropriation are defenses requiring testimonial and documentary proof at trial and do not affect the trial court's jurisdiction.
• Prejudicial Question: No. Resolution of the dissolution validity issue would not necessarily determine criminal liability for misappropriation of corporate funds.
• Intra-Corporate Jurisdiction: No. Estafa and intra-corporate disputes are entirely different matters, the SEC does not try criminal cases, and RTCs are now competent over corporate disputes.
• Due Process, Equal Protection and Speedy Disposition: No. DOJ procedure was substantially followed with adequate justification of prima facie estafa, and delay was principally caused by petitioners' own repetitious motions.

• Certiorari — Grave Abuse: Certiorari requires clear showing of evasion of positive duty or arbitrary and despotic exercise of power, not mere incorrect findings. Because respondent court acted with jurisdiction over the criminal cases, any mistake in findings was an error of judgment reviewable on appeal after trial, not grave abuse. Tolerance of certiorari against interlocutory orders would delay justice and unduly burden courts.
• Nature of Defense — Attempted Estafa and Misappropriation: The criminal cases concerned funds allegedly received and, upon demand, not delivered to the trustee, with petitioners asserting retention for corporate protection and later turnover to the majority stockholder. Such factual contentions on intent, conversion, damage, and attempted versus consummated estafa require appreciation of evidence at hearing. Moreover, the Rule 65 petition was premature where Section 3(a), Rule 117 allowed a motion to quash for failure to charge an offense, which petitioners did not show to have filed and been denied, and denial of such motion is in any event generally remediable by trial and appeal, not certiorari, without prior reconsideration and Section 1, Rule 65 grounds. Review under Rule 45 is further limited to questions of law.
• Prejudicial Question: Even if dissolution were declared void and petitioners remained President and Secretary, liability for estafa with abuse of confidence could still attach if corporate funds were misappropriated for personal use, since estafa under Article 315 is committed by defrauding another regardless of corporate officership. The SEC case concerned validity of voluntary dissolution among stockholders without NMI's involvement, while the criminal cases concerned misappropriation with NMI as complainant, and any SEC ruling would not affect NMI's ownership of the subject money.
• Intra-Corporate Jurisdiction: Estafa and intra-corporate disputes have entirely different elements, and the SEC is not a trier of criminal estafa. Even treated as purely corporate, quasi-judicial SEC jurisdiction was transferred to RTCs pursuant to Section 5.2 of Republic Act No. 8799, on Congress's recognition that such disputes do not require a specialized agency.
• Due Process, Equal Protection and Speedy Disposition: The intricate law-and-fact issues justified DOJ reinvestigation and its prima facie finding, adequately justified by then Undersecretary Bello notwithstanding unproven malice claims, in substantial compliance with procedure despite prior dismissals. The uncontroverted Solicitor General tabulation showed petitioners filed multiple disqualification, reinvestigation, quash, suspend, recall-warrant, and inhibition motions plus collateral SEC, RTC, and appellate actions, all denied or dismissed, so petitioners principally dragged the proceedings and could not complain of delay.

• Certiorari for grave abuse of discretion — Certiorari lies only upon clear showing of patent and gross abuse amounting to evasion of positive duty or virtual refusal to perform a legal duty, or arbitrary and despotic exercise of power by reason of passion or hostility; it corrects errors of jurisdiction, not errors of procedure or mistakes in findings and conclusions. Applied to reject review of orders denying suspension and ordering arrest and bond, which at most involved errors of judgment.
• Interlocutory orders and certiorari — An interlocutory order may be assailed by certiorari or prohibition only upon showing lack or excess of jurisdiction or grave abuse of discretion, a remedy generally disfavored because routine review delays justice and burdens courts. Applied to the trial court's suspension denials and arraignment settings.
• Motion to quash; remedy upon denial — Under Section 3(a), Rule 117, the accused may move to quash where facts charged do not constitute an offense; denial is generally remediable by proceeding to trial without prejudice to reiterating special defenses and appealing an adverse judgment, not by Rule 65, except upon proper reconsideration and Section 1 grounds. Applied to hold the Court of Appeals petition premature where no motion to quash and denial was shown.
• Rule 45 limited to questions of law — A petition for review under Rule 45 allows only questions of law. Applied to preclude assessment of factual defenses negating misappropriation requiring testimonial and documentary evidence.
• Prejudicial question — Suspension requires that resolution of the civil issue be necessarily determinative of criminal liability. Applied to hold dissolution validity and trusteeship did not determine whether officers misappropriated P1,500,150.00 in corporate funds.
• Estafa liability of corporate officers — A person who defrauds another by means in Article 315 of the Revised Penal Code commits estafa whether or not an officer of the corporation defrauded; presidential or secretarial status does not immunize misappropriation of corporate funds for personal use. Applied to reject dismissal despite petitioners' officership.
• Criminal jurisdiction over intra-corporate matters; transfer of SEC jurisdiction — Estafa is distinct from intra-corporate disputes in elements and forum, the SEC not trying criminal cases; in any event, SEC quasi-judicial jurisdiction over intra-corporate disputes transferred to RTCs under Section 5.2 of Republic Act No. 8799. Applied to sustain RTC jurisdiction.

• "We have consistently ruled that certiorari lies only where it is clearly shown that there is a patent and gross abuse of discretion amounting to an evasion of positive duty or virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility." — States the threshold for certiorari and why petitioners' factual defenses did not qualify as jurisdictional abuse.
• "In other words, certiorari will issue only to correct errors of jurisdiction and not to correct errors of procedure or mistakes in the court's findings and conclusions." — Defines the jurisdictional-error limitation that confined petitioners to trial and appeal rather than Rule 65.
• "The fact that petitioners are the President and Secretary of the Nuegene (sic) Corporation does not mean that they could not be held liable for Estafa with Abuse of Confidence, if they did in fact misappropriate the corporate fund for personal use." — Articulates the rejection of the prejudicial-question and corporate-status defense to estafa liability.

• Crespo vs. Mogul, 151 SCRA 403 [1987] — Followed as basis for requiring trial court permission before reinvestigation after filing, grounding denial of petitioners' May 1992 DOJ reinvestigation petitions.
• J.L. Bernardo Construction vs. Court of Appeals, 324 SCRA 24 [2000] — Cited as authority for the certiorari grave-abuse standard.
• Lalican vs. Vergara, 276 SCRA 518 [1997] — Cited for the rule disfavoring certiorari against interlocutory orders and limiting it to jurisdictional errors.
• Jalandoni vs. Drilon, 327 SCRA 107 [2000] — Cited for the rule that certiorari must rest on jurisdictional grounds and errors of judgment are correctible on appeal.
• Tano vs. Socrates, 278 SCRA 154 [1997]; Lai vs. Intermediate, 220 SCRA 149 [1993] — Cited for the rule that denial of a motion to quash is generally remediable by trial and appeal, with reconsideration prerequisite for exceptional Rule 65 recourse.
• Baricuatro, Jr. vs. Court of Appeals, 325 SCRA 137 [2000] — Cited for the limitation of Rule 45 review to questions of law.
• Dionisio vs. CFI, 124 SCRA 222 — Invoked by petitioners for exclusive SEC jurisdiction over intra-corporate issues; not sustained, the criminal estafa and transferred RTC jurisdiction being distinguished.

• Article 315, paragraph 1(b), Revised Penal Code — Defines estafa with abuse of confidence, including misappropriation; applied to hold that officer status does not preclude liability and that attempted-versus-consummated and intent issues are trial defenses.
• Section 3(a), Rule 117, Revised Rules of Criminal Procedure — Allows motion to quash where facts charged do not constitute an offense; applied to find the Rule 65 petition premature absent such motion and denial.
• Section 1, Rule 65, Rules of Court — Provides grounds for certiorari of grave abuse of discretion without plain adequate remedy; applied to find no qualifying ground alleged.
• Rule 45, 1997 Rules of Civil Procedure — Limits Supreme Court review to questions of law; applied to decline factual appraisal of misappropriation defenses.
• Section 5.2, Republic Act No. 8799, The Securities Regulation Code — Transfers SEC quasi-judicial jurisdiction over intra-corporate disputes to RTCs; applied to sustain trial court competence even if corporate issues were involved.

Justices Panganiban (Acting Chairman), Sandoval-Gutierrez and Morales concurred. Justice Puno (Chairman) was on official leave.