G.R. No. 208587, July 29, 2015
JM DOMINGUEZ AGRONOMIC COMPANY, INC., HELEN D. DAGDAGAN, PATRICK PACIS, KENNETH PACIS, and SHIRLEY DOMINGUEZ, Petitioners, vs. CECILIA LICLICAN, NORMA D. ISIP, and PURITA DOMINGUEZ, Respondents.

FACTS

During the annual stockholders meeting of JM Dominguez Agronomic Company, Inc. (JMD) on December 29, 2007, an election for a new set of directors was conducted. Conflict ensued when petitioners Patrick and Kenneth Pacis were allegedly not allowed to vote. Respondents walked out. The remaining stockholders proceeded with the election, resulting in petitioners Helen Dagdagan, Patrick Pacis, Kenneth Pacis, and Shirley Dominguez being elected as officers. On the same date, respondents executed a separate Board Resolution certifying a different set of directors and officers, including themselves. Petitioners filed a civil case (Civil Case No. 6623-R) before the RTC of Baguio City for nullification of meetings, election, and acts of directors and officers. Subsequently, JMD, represented by petitioners Dagdagan and Patrick Pacis, filed criminal complaints for qualified theft against respondents Liclican and Isip, alleging unauthorized withdrawals from corporate bank accounts. The Office of the City Prosecutor recommended the filing of informations, which were raffled to RTC Branch 7, presided by Judge Mona Lisa V. Tiongson-Tabora, the same judge overseeing the Judicial Dispute Resolution (JDR) of the civil case. Judge Tiongson-Tabora issued Orders dated March 10, 2009, finding probable cause and ordering the issuance of warrants of arrest against respondents. Respondents filed a petition for certiorari with the Court of Appeals, arguing the existence of a prejudicial question, as the issue of who are the legitimate directors of JMD—which determines who had authority to initiate the criminal proceedings—was pending in the intra-corporate dispute (Civil Case No. 6623-R).

ISSUE

Whether Civil Case No. 6623-R constituted a prejudicial question warranting the suspension of the proceedings in the criminal cases for qualified theft, and whether the trial court committed grave abuse of discretion in issuing the Orders for the issuance of warrants of arrest.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals. The Court held that Civil Case No. 6623-R posed a prejudicial question to the criminal cases. A prejudicial question exists when a civil action involves an issue similar or intimately related to an issue in a criminal action, and the resolution of that issue determines whether the criminal action may proceed. Here, the intra-corporate dispute directly involved the determination of who were the rightfully elected directors and officers of JMD. This determination was essential to resolve the issue in the criminal cases of whether petitioners had the authority to file the complaint-affidavit for qualified theft on behalf of the corporation. Since the validity of the board elections was in doubt, the authority of the officers to act for the corporation was also in doubt. Therefore, Judge Tiongson-Tabora acted with grave abuse of discretion by proceeding with the criminal cases and ordering the arrests despite the pending prejudicial question. The Court emphasized that grave abuse of discretion arises when power is exercised in a capricious, arbitrary, or despotic manner, equivalent to a lack of jurisdiction. The trial court should have exercised prudence by holding the criminal cases in abeyance pending the resolution of the intra-corporate dispute.