Tuna Processing, Inc., G.R. No. 185582: Recognition, and Enforcement of Foreign Arbitral Award

TUNA PROCESSING, INC., G.R. No.
185582
Petitioner,
Present:
CARPIO, J.,
-versus- Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.
PHILIPPINE KINGFORD, INC., Promulgated:

Respondent.
February 29, 2012
x-----------------------------------------------------------------------------------------x
DECISION
PEREZ, J.:
Can a foreign corporation not licensed to do business in the Philippines, but which
collects royalties from entities in the Philippines, sue here to enforce a foreign arbitral award?
In this Petition for Review on Certiorari under Rule 45,[if !supportFootnotes][1][endif] petitioner
Tuna Processing, Inc. (TPI), a foreign corporation not licensed to do business in the Philippines,
prays that the Resolution[if !supportFootnotes][2][endif] dated 21 November 2008 of the Regional Trial
Court (RTC) of Makati City be declared void and the case be remanded to the RTC for further
proceedings. In the assailed Resolution, the RTC dismissed petitioners Petition for Confirmation,
Recognition, and Enforcement of Foreign Arbitral Award[if !supportFootnotes][3][endif] against respondent
Philippine Kingford, Inc. (Kingford), a corporation duly organized and existing under the laws of
the Philippines,[if !supportFootnotes][4][endif] on the ground that petitioner lacked legal capacity to sue.[if
!supportFootnotes][5][endif]
The Antecedents
On 14 January 2003, Kanemitsu Yamaoka (hereinafter referred to as the licensor), co-

patentee of U.S. Patent No. 5,484,619, Philippine Letters Patent No. 31138, and Indonesian Patent
No. ID0003911 (collectively referred to as the Yamaoka Patent),[if !supportFootnotes][6][endif] and five (5)
Philippine tuna processors, namely, Angel Seafood Corporation, East Asia Fish Co., Inc., Mommy
Gina Tuna Resources, Santa Cruz Seafoods, Inc., and respondent Kingford (collectively referred
to as the sponsors/licensees)[if !supportFootnotes][7][endif] entered into a Memorandum of Agreement
(MOA),[if !supportFootnotes][8][endif] pertinent provisions of which read:
[if !supportLists]1. [endif]Background and objectives. The Licensor, co-owner of

U.S.Patent No. 5,484,619, Philippine Patent No. 31138, and Indonesian Patent No. ID0003911
xxx wishes to form an alliance with Sponsors for purposes of enforcing his three aforementioned
patents, granting licenses under those patents, and collecting royalties.
The Sponsors wish to be licensed under the aforementioned patents in order to practice the
processes claimed in those patents in the United States, the Philippines, and
Indonesia, enforce those patents and collect royalties in conjunction with
Licensor.
xxx
4. Establishment of Tuna Processors, Inc. The parties hereto agree to the establishment
of Tuna Processors, Inc. (TPI), a corporation established in the State of California, in order
to implement the objectives of this Agreement.
5. Bank account. TPI shall open and maintain bank accounts in the United States, which
will be used exclusively to deposit funds that it will collect and to disburse cash it will be
obligated to spend in connection with the implementation of this Agreement.
6. Ownership of TPI. TPI shall be owned by the Sponsors and Licensor. Licensor shall be
assigned one share of TPI for the purpose of being elected as member of the
board of directors. The remaining shares of TPI shall be held by the
Sponsors according to their respective equity shares. [if !supportFootnotes][9][endif]
xxx
The parties likewise executed a Supplemental Memorandum of Agreement [if !supportFootnotes][10][endif]

dated 15 January 2003 and an Agreement to Amend Memorandum of Agreement[if
dated 14 July 2003.
Due to a series of events not mentioned in the petition, the licensees, including
respondent Kingford, withdrew from petitioner TPI and correspondingly reneged on their
obligations.[if !supportFootnotes][12][endif] Petitioner submitted the dispute for arbitration before the
International Centre for Dispute Resolution in the State of California, United States and won the
case against respondent.[if !supportFootnotes][13][endif] Pertinent portions of the award read:
13.1 Within thirty (30) days from the date of transmittal of this Award to the Parties, pursuant to
the terms of this award, the total sum to be paid by RESPONDENT KINGFORD to
CLAIMANT TPI, is the sum of ONE MILLION SEVEN HUNDRED FIFTY THOUSAND
EIGHT HUNDRED FORTY SIX DOLLARS AND TEN CENTS ($1,750,846.10).
(A) For breach of the MOA by not paying past due assessments, RESPONDENT
KINGFORD shall pay CLAIMANT the total sum of TWO HUNDRED
TWENTY NINE THOUSAND THREE HUNDRED AND FIFTY FIVE
DOLLARS AND NINETY CENTS ($229,355.90) which is 20% of MOA
assessments since September 1, 2005[;]
(B) For breach of the MOA in failing to cooperate with CLAIMANT TPI in fulfilling
the objectives of the MOA, RESPONDENT KINGFORD shall pay
CLAIMANT the total sum of TWO HUNDRED SEVENTY ONE
THOUSAND FOUR HUNDRED NINETY DOLLARS AND TWENTY
CENTS ($271,490.20)[;][if !supportFootnotes][14][endif] and
(C) For violation of THE LANHAM ACT and infringement of the YAMAOKA 619
PATENT, RESPONDENT KINGFORD shall pay CLAIMANT the total
sum of ONE MILLION TWO HUNDRED FIFTY THOUSAND
DOLLARS AND NO CENTS ($1,250,000.00). xxx
xxx[if !supportFootnotes][15][endif]
To enforce the award, petitioner TPI filed on 10 October 2007 a Petition for
Confirmation, Recognition, and Enforcement of Foreign Arbitral Award before the RTC of Makati
City. The petition was raffled to Branch 150 presided by Judge Elmo M. Alameda.
At Branch 150, respondent Kingford filed a Motion to Dismiss.[if !supportFootnotes][16][endif]

After the court denied the motion for lack of merit,[if !supportFootnotes][17][endif] respondent sought for
the inhibition of Judge Alameda and moved for the reconsideration of the order denying the
motion.[if !supportFootnotes][18][endif] Judge Alameda inhibited himself notwithstanding [t]he unfounded
allegations and unsubstantiated assertions in the motion.[if !supportFootnotes][19][endif] Judge Cedrick O.
Ruiz of Branch 61, to which the case was re-raffled, in turn, granted respondents Motion for
Reconsideration and dismissed the petition on the ground that the petitioner lacked legal capacity
to sue in the Philippines.[if !supportFootnotes][20][endif]
Petitioner TPI now seeks to nullify, in this instant Petition for Review on Certiorari
under Rule 45, the order of the trial court dismissing its Petition for Confirmation, Recognition,
and Enforcement of Foreign Arbitral Award.
Issue
The core issue in this case is whether or not the court a quo was correct in so dismissing
the petition on the ground of petitioners lack of legal capacity to sue.
Our Ruling
The petition is impressed with merit.
The Corporation Code of the Philippines expressly provides:
Sec. 133. Doing business without a license. - No foreign corporation

transacting business in the Philippines without a license, or its successors or
assigns, shall be permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under Philippine
laws.
It is pursuant to the aforequoted provision that the court a quo dismissed the petition. Thus:
Herein plaintiff TPIs Petition, etc. acknowledges that it is a foreign corporation established in the
State of California and was given the exclusive right to license or sublicense the Yamaoka Patent
and was assigned the exclusive right to enforce the said patent and collect corresponding royalties
in the Philippines. TPI likewise admits that it does not have a license to do business in the
Philippines.
There is no doubt, therefore, in the mind of this Court that TPI has been
doing business in the Philippines, but sans a license to do so issued by the
concerned government agency of the Republic of the Philippines, when it
collected royalties from five (5) Philippine tuna processors[,] namely[,] Angel
Seafood Corporation, East Asia Fish Co., Inc., Mommy Gina Tuna Resources,
Santa Cruz Seafoods, Inc. and respondent Philippine Kingford, Inc. This being
the real situation, TPI cannot be permitted to maintain or intervene in any action,
suit or proceedings in any court or administrative agency of the Philippines. A
priori, the Petition, etc. extant of the plaintiff TPI should be dismissed for it does
not have the legal personality to sue in the Philippines.[if !supportFootnotes][21][endif]
The petitioner counters, however, that it is entitled to seek for the recognition and
enforcement of the subject foreign arbitral award in accordance with Republic Act No. 9285
(Alternative Dispute Resolution Act of 2004),[if !supportFootnotes][22][endif] the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards drafted during the United Nations
Conference on International Commercial Arbitration in 1958 (New York Convention), and the
UNCITRAL Model Law on International Commercial Arbitration (Model Law),[if
as none of these specifically requires that the party seeking for the
enforcement should have legal capacity to sue. It anchors its argument on the following:
In the present case, enforcement has been effectively refused on a ground not found in the
[Alternative Dispute Resolution Act of 2004], New York Convention, or Model
Law. It is for this reason that TPI has brought this matter before this most
Honorable Court, as it [i]s imperative to clarify whether the Philippines
international obligations and State policy to strengthen arbitration as a means of
dispute resolution may be defeated by misplaced technical considerations not
found in the relevant laws.[if !supportFootnotes][24][endif]
Simply put, how do we reconcile the provisions of the Corporation Code of the
Philippines on one hand, and the Alternative Dispute Resolution Act of 2004, the New York
Convention and the Model Law on the other?
In several cases, this Court had the occasion to discuss the nature and applicability of
the Corporation Code of the Philippines, a general law, viz-a-viz other special laws. Thus, in
Koruga v. Arcenas, Jr.,[if !supportFootnotes][25][endif] this Court rejected the application of the Corporation
Code and applied the New Central Bank Act. It ratiocinated:
Korugas invocation of the provisions of the Corporation Code is

misplaced. In an earlier case with similar antecedents, we ruled that:
The Corporation Code, however, is a general law

applying to all types of corporations, while the New Central
Bank Act regulates specifically banks and other financial
institutions, including the dissolution and liquidation thereof.
As between a general and special law, the latter shall prevail
generalia specialibus non derogant. (Emphasis supplied)[if
Further, in the recent case of Hacienda Luisita, Incorporated v. Presidential Agrarian Reform
Council,[if !supportFootnotes][27][endif] this Court held:
Without doubt, the Corporation Code is the general law providing for
the formation, organization and regulation of private corporations. On the other
hand, RA 6657 is the special law on agrarian reform. As between a general and
special law, the latter shall prevailgeneralia specialibus non derogant.[if
Following the same principle, the Alternative Dispute Resolution Act of 2004 shall apply
in this case as the Act, as its title - An Act to Institutionalize the Use of an Alternative Dispute
Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution,
and for Other Purposes - would suggest, is a law especially enacted to actively promote party
autonomy in the resolution of disputes or the freedom of the party to make their own arrangements
to resolve their disputes.[if !supportFootnotes][29][endif] It specifically provides exclusive grounds available
to the party opposing an application for recognition and enforcement of the arbitral award.[if
Inasmuch as the Alternative Dispute Resolution Act of 2004, a municipal law, applies in
the instant petition, we do not see the need to discuss compliance with international obligations
under the New York Convention and the Model Law. After all, both already form part of the law.
In particular, the Alternative Dispute Resolution Act of 2004 incorporated the New York
Convention in the Act by specifically providing:
SEC. 42. Application of the New York Convention. - The New York
Convention shall govern the recognition and enforcement of arbitral awards
covered by the said Convention.
xxx
SEC. 45. Rejection of a Foreign Arbitral Award. - A party to a foreign

arbitration proceeding may oppose an application for recognition and
enforcement of the arbitral award in accordance with the procedural rules to be
promulgated by the Supreme Court only on those grounds enumerated under
Article V of the New York Convention. Any other ground raised shall be
disregarded by the regional trial court.
It also expressly adopted the Model Law, to wit:
Sec. 19. Adoption of the Model Law on International Commercial

Arbitration. International commercial arbitration shall be governed by the Model
Law on International Commercial Arbitration (the Model Law) adopted by the
United Nations Commission on International Trade Law on June 21, 1985 xxx.
Now, does a foreign corporation not licensed to do business in the Philippines have legal
capacity to sue under the provisions of the Alternative Dispute Resolution Act of 2004? We answer
in the affirmative.
Sec. 45 of the Alternative Dispute Resolution Act of 2004 provides that the opposing
party in an application for recognition and enforcement of the arbitral award may raise only those
grounds that were enumerated under Article V of the New York Convention, to wit:
Article V
1. Recognition and enforcement of the award may be refused, at the request of the party
against whom it is invoked, only if that party furnishes to the competent
authority where the recognition and enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II were, under the law applicable to
them, under some incapacity, or the said agreement is not valid under the law
to which the parties have subjected it or, failing any indication thereon, under
the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitration proceedings or was otherwise
unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the terms
of the submission to arbitration, or it contains decisions on matters beyond the
scope of the submission to arbitration, provided that, if the decisions on matters
submitted to arbitration can be separated from those not so submitted, that part
of the award which contains decisions on matters submitted to arbitration may
be recognized and enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was
not in accordance with the law of the country where the arbitration took place;
or
(e) The award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law
of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the competent
authority in the country where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under
the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the public policy
of that country.
Clearly, not one of these exclusive grounds touched on the capacity to sue of the party seeking the
recognition and enforcement of the award.
Pertinent provisions of the Special Rules of Court on Alternative Dispute Resolution,[if

which was promulgated by the Supreme Court, likewise support this position.
Rule 13.1 of the Special Rules provides that [a]ny party to a foreign arbitration may
petition the court to recognize and enforce a foreign arbitral award. The contents of such petition
are enumerated in Rule 13.5.[if !supportFootnotes][32][endif] Capacity to sue is not included. Oppositely, in
the Rule on local arbitral awards or arbitrations in instances where the place of arbitration is in the
Philippines,[if !supportFootnotes][33][endif] it is specifically required that a petition to determine any
question concerning the existence, validity and enforceability of such arbitration agreement [if
available to the parties before the commencement of arbitration and/or a
petition for judicial relief from the ruling of the arbitral tribunal on a preliminary question
upholding or declining its jurisdiction[if !supportFootnotes][35][endif] after arbitration has already
commenced should state [t]he facts showing that the persons named as petitioner or respondent
have legal capacity to sue or be sued.[if !supportFootnotes][36][endif]
Indeed, it is in the best interest of justice that in the enforecement of a foreign arbitral
award, we deny availment by the losing party of the rule that bars foreign corporations not licensed
to do business in the Philippines from maintaining a suit in our courts. When a party enters into a
contract containing a foreign arbitration clause and, as in this case, in fact submits itself to
arbitration, it becomes bound by the contract, by the arbitration and by the result of arbitration,
conceding thereby the capacity of the other party to enter into the contract, participate in the
arbitration and cause the implementation of the result. Although not on all fours with the instant
case, also worthy to consider is the
wisdom of then Associate Justice Flerida Ruth P. Romero in her Dissenting Opinion in
Asset Privatization Trust v. Court of Appeals,[if !supportFootnotes][37][endif] to wit:
xxx Arbitration, as an alternative mode of settlement, is gaining

adherents in legal and judicial circles here and abroad. If its tested mechanism
can simply be ignored by an aggrieved party, one who, it must be stressed,
voluntarily and actively participated in the arbitration proceedings from the
very beginning, it will destroy the very essence of mutuality inherent in
consensual contracts.[if !supportFootnotes][38][endif]
Clearly, on the matter of capacity to sue, a foreign arbitral award should be respected
not because it is favored over domestic laws and procedures, but because Republic Act No. 9285
has certainly erased any conflict of law question.
Finally, even assuming, only for the sake of argument, that the court a quo correctly
observed that the Model Law, not the New York Convention, governs the subject arbitral award,[if
petitioner may still seek recognition and enforcement of the award in
Philippine court, since the Model Law prescribes substantially identical exclusive grounds for
refusing recognition or enforcement.[if !supportFootnotes][40][endif]
Premises considered, petitioner TPI, although not licensed to do business in the
Philippines, may seek recognition and enforcement of the foreign arbitral award in accordance
with the provisions of the Alternative Dispute Resolution Act of 2004.
II
The remaining arguments of respondent Kingford are likewise unmeritorious.
First. There is no need to consider respondents contention that petitioner TPI improperly raised a
question of fact when it posited that its act of entering into a MOA should not be considered
doing business in the Philippines for the purpose of determining capacity to sue. We reiterate that
the foreign corporations capacity to sue in the Philippines is not material insofar as the
recognition and enforcement of a foreign arbitral award is concerned.
Second. Respondent cannot fault petitioner for not filing a motion for reconsideration of the
assailed Resolution dated 21 November 2008 dismissing the case. We have, time and again,
ruled that the prior filing of a motion for reconsideration is not required in certiorari under Rule
45.[if !supportFootnotes][41][endif]
Third. While we agree that petitioner failed to observe the principle of hierarchy of courts,
which, under ordinary circumstances, warrants the outright dismissal of the case,[if
we opt to relax the rules following the pronouncement in Chua v. Ang,[if
to wit:
[I]t must be remembered that [the principle of hierarchy of courts]

generally applies to cases involving conflicting factual allegations. Cases which
depend on disputed facts for decision cannot be brought immediately before us
as we are not triers of facts.[if !supportFootnotes][44][endif] A strict application of this
rule may be excused when the reason behind the rule is not present in a case, as
in the present case, where the issues are not factual but purely legal. In these
types of questions, this Court has the ultimate say so that we merely abbreviate
the review process if we, because of the unique circumstances of a case, choose
to hear and decide the legal issues outright.[if !supportFootnotes][45][endif]
Moreover, the novelty and the paramount importance of the issue herein raised should be seriously
considered.[if !supportFootnotes][46][endif] Surely, there is a need to take cognizance of the case not only to
guide the bench and the bar, but if only to strengthen arbitration as a means of dispute resolution,
and uphold the policy of the State embodied in the Alternative Dispute Resolution Act of 2004, to
wit:
Sec. 2. Declaration of Policy. - It is hereby declared the policy of the

State to actively promote party autonomy in the resolution of disputes or the
freedom of the party to make their own arrangements to resolve their disputes.
Towards this end, the State shall encourage and actively promote the use of
Alternative Dispute Resolution (ADR) as an important means to achieve speedy
and impartial justice and declog court dockets. xxx
Fourth. As regards the issue on the validity and enforceability of the foreign arbitral award, we
leave its determination to the court a quo where its recognition and enforcement is being sought.
Fifth. Respondent claims that petitioner failed to furnish the court of origin a copy of the motion
for time to file petition for review on certiorari before the petition was filed with this Court.[if
We, however, find petitioners reply in order. Thus:
26. Admittedly, reference to Branch 67 in petitioner TPIs Motion for Time to File a Petition for
Review on Certiorari under Rule 45 is a typographical error. As correctly pointed out by
respondent Kingford, the order sought to be assailed originated from Regional Trial Court,
Makati City, Branch 61.
27. xxx Upon confirmation with the Regional Trial Court, Makati
City, Branch 61, a copy of petitioner TPIs motion was received by the
Metropolitan Trial Court, Makati City, Branch 67. On 8 January 2009, the
motion was forwarded to the Regional Trial Court, Makati City, Branch 61. [if
All considered, petitioner TPI, although a foreign corporation not licensed to do business
in the Philippines, is not, for that reason alone, precluded from filing the Petition for Confirmation,
Recognition, and Enforcement of Foreign Arbitral Award before a Philippine court.
WHEREFORE, the Resolution dated 21 November 2008 of the Regional Trial Court, Branch
61, Makati City in Special Proceedings No. M-6533 is hereby REVERSED and SET ASIDE.
The case is REMANDED to Branch 61 for further proceedings.
SO ORDERED.
[G.R. No. 147904. October 4, 2002]
NESTOR B. MAGNO, petitioner, vs. COMMISSION ON ELECTIONS and CARLOS C.

MONTES, respondents.
DECISION
CORONA, J.:
Before this Court is a petition for certiorari under Rule 65 which seeks to annul and set aside the
resolution dated May 7, 2001 of the Commission on Elections as well as the resolution dated
May 12, 2001 denying petitioners motion for reconsideration.
This petition originated from a case filed by private respondent on March 21, 2001 for the
disqualification of petitioner Nestor Magno as mayoralty candidate of San Isidro, Nueva Ecija
during the May 14, 2001 elections on the ground that petitioner was previously convicted by the
Sandiganbayan of four counts of direct bribery penalized under Article 210 of the Revised Penal
Code. It appears that on July 25, 1995, petitioner was sentenced to suffer the indeterminate
penalty of 3 months and 11 days of arresto mayor as minimum to 1 year 8 months and 21 days of
prision correccional as maximum, for each of the four counts of direct bribery. Thereafter,
petitioner applied for probation and was discharged on March 5, 1998 upon order of the Regional
Trial Court of Gapan, Nueva Ecija.
On May 7, 2001, the Commission on Elections (COMELEC) rendered a decision granting the
petition of private respondent and declaring that petitioner was disqualified from running for the
position of mayor in the May 14, 2001 elections. In ruling against petitioner, the COMELEC
cited Section 12 of the BP 881 or the Omnibus Election Code which provides as follows:
Sec. 12. Disqualifications. Any person who has been declared by competent authority insane or
incompetent, or has been sentenced by final judgment for subversion, insurrection, rebellion or
for any offense for which he has been sentenced to a penalty of more than eighteen (18) months,
or for a crime involving moral turpitude, shall be disqualified to be a candidate and to hold any
office, unless he has been given plenary pardon, or granted amnesty.
The disqualifications to be a candidate herein provided shall be deemed removed upon the
declaration by competent authority that said insanity or incompetence had been removed or after
the expiration of a period of five years from his service of sentence, unless within the same
period he again becomes disqualified.
The above provision explicitly lifts the disqualification to run for an elective office of a person
convicted of a crime involving moral turpitude after five (5) years from the service of sentence.
According to the COMELEC, inasmuch as petitioner was considered to have completed the
service of his sentence on March 5, 1998, his five-year disqualification will end only on March
5, 2003.
On May 10, 2001, petitioner filed a motion for reconsideration but the same was denied by the
COMELEC in its resolution dated May 12, 2001.
Hence, this petition.
Petitioner argues that direct bribery is not a crime involving moral turpitude. Likewise, he cites
Section 40 of RA 7160, otherwise known as the Local Government Code of 1991, which he
claims is the law applicable to the case at bar, not BP 881 or the Omnibus Election Code as
claimed by the COMELEC. Said provision reads:
Section 40. Disqualifications. - The following persons are disqualified from running for any
elective local position:
(a) Those sentenced by final judgment for an offense involving moral turpitude or for an offense
punishable by one (1) year or more of imprisonment, within two (2) years after serving sentence.
xxxx
Petitioner insists that he had already served his sentence as of March 5, 1998 when he was
discharged from probation. Such being the case, the two-year disqualification period imposed by
Section 40 of the Local Government Code expired on March 5, 2000. Thus, petitioner was
qualified to run in the 2001 elections.
Meanwhile, Sonia Lorenzo was proclaimed by the COMELEC as the duly elected mayor of San
Isidro, Nueva Ecija. Thus, on June 19, 2001, petitioner filed a supplemental petition which this
Court merely noted in its resolution dated June 26, 2001. In his supplemental petition, petitioner
assailed the proclamation of Sonia Lorenzo on the ground that the propriety of his
disqualification was still under review by this Court. Petitioner likewise asked this Court to
declare him as the duly elected municipal mayor instead of Sonia Lorenzo.
On July 18, 2001, the Solicitor-General filed his manifestation and agreed with petitioner that
COMELEC should have applied Section 40 of the Local Government Code.
The main issue is whether or not petitioner was disqualified to run for mayor in the 2001
elections. In resolving this, two sub-issues need to be threshed out, namely: (1) whether the
crime of direct bribery involves moral turpitude and (2) whether it is the Omnibus Election Code
or the Local Government Code that should apply in this situation.
Regarding the first sub-issue, the Court has consistently adopted the definition in Blacks Law
Dictionary of moral turpitude as:
x x x an act of baseness, vileness, or depravity in the private duties which a man owes his fellow
men, or to society in general, contrary to the accepted and customary rule of right and duty
between man and woman or conduct contrary to justice, honesty, modesty, or good morals.[1]
Not every criminal act, however, involves moral turpitude. It frequently depends on the
circumstances surrounding the violation of the law.[2]
In this case, we need not review the facts and circumstances relating to the commission of the
crime considering that petitioner did not assail his conviction. By applying for probation,
petitioner in effect admitted all the elements of the crime of direct bribery:
1. the offender is a public officer;
2. the offender accepts an offer or promise or receives a gift or present by himself or through
another;
3. such offer or promise be accepted or gift or present be received by the public officer with a
view to committing some crime, or in consideration of the execution of an act which does not
constitute a crime but the act must be unjust, or to refrain from doing something which it is his
official duty to do; and [Italics supplied]
4. the act which the offender agrees to perform or which he executes is connected with the
performance of his official duties.[3]
Moral turpitude can be inferred from the third element. The fact that the offender agrees to
accept a promise or gift and deliberately commits an unjust act or refrains from performing an
official duty in exchange for some favors, denotes a malicious intent on the part of the offender
to renege on the duties which he owes his fellowmen and society in general. Also, the fact that
the offender takes advantage of his office and position is a betrayal of the trust reposed on him
by the public. It is a conduct clearly contrary to the accepted rules of right and duty, justice,
honesty and good morals. In all respects, direct bribery is a crime involving moral turpitude.
It is the second sub-issue which is problematical. There appears to be a glaring incompatibility

between the five-year disqualification period provided in Section 12 of the Omnibus Election
Code and the two-year disqualification period in Section 40 of the Local Government Code.
It should be noted that the Omnibus Election Code (BP 881) was approved on December 3, 1985
while the Local Government Code (RA 7160) took effect on January 1, 1992. It is basic in
statutory construction that in case of irreconcilable conflict between two laws, the later
enactment must prevail, being the more recent expression of legislative will.[4] Legis posteriores
priores contrarias abrogant. In enacting the later law, the legislature is presumed to have
knowledge of the older law and intended to change it. Furthermore, the repealing clause of
Section 534 of RA 7160 or the Local Government Code states that:
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any provisions of
this Code are hereby repealed or modified accordingly.
In accordance therewith, Section 40 of RA 7160 is deemed to have repealed Section 12 of BP

881. Furthermore, Article 7 of the Civil Code provides that laws are repealed only by subsequent
ones, and not the other way around. When a subsequent law entirely encompasses the subject
matter of the former enactment, the latter is deemed repealed.
In David vs. COMELEC[5], we declared that RA 7160 is a codified set of laws that specifically
applies to local government units. Section 40 thereof specially and definitively provides for
disqualifications of candidates for elective local positions. It is applicable to them only. On the
other hand, Section 12 of BP 881 speaks of disqualifications of candidates for any public office.
It deals with the election of all public officers. Thus, Section 40 of RA 7160, insofar as it
governs the disqualifications of candidates for local positions, assumes the nature of a special
law which ought to prevail.
The intent of the legislature to reduce the disqualification period of candidates for local positions
from five to two years is evident. The cardinal rule in the interpretation of all laws is to ascertain
and give effect to the intent of the law.[6] The reduction of the disqualification period from five
to two years is the manifest intent.
Therefore, although his crime of direct bribery involved moral turpitude, petitioner nonetheless
could not be disqualified from running in the 2001 elections. Article 12 of the Omnibus Election
Code (BP 881) must yield to Article 40 of the Local Government Code (RA 7160). Petitioners
disqualification ceased as of March 5, 2000 and he was therefore under no such disqualification
anymore when he ran for mayor of San Isidro, Nueva Ecija in the May 14, 2001 elections.
Unfortunately, however, neither this Court nor this case is the proper forum to rule on (1) the
validity of Sonia Lorenzos proclamation and (2) the declaration of petitioner as the rightful
winner. Inasmuch as Sonia Lorenzo had already been proclaimed as the winning candidate, the
legal remedy of petitioner would have been a timely election protest.
WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. The challenged

resolutions of the Commission on Elections dated May 7, 2001 and May 12, 2001 are hereby
reversed and set aside. The petitioners prayer in his supplemental petition for his proclamation as
the winner in the May 14, 2001 mayoralty elections in San Isidro, Nueva Ecija, not being within
our jurisdiction, is hereby denied.
SO ORDERED.
Bellosillo, Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez,

and Callejo, Sr., JJ., concur.
Davide, Jr., C.J., Mendoza, and Sandoval-Gutierrez, JJ., on leave.
Morales, J., no part.
SECOND DIVISION
MARIA VIRGINIA V. REMO, G.R. No. 169202
Petitioner,
Present:
CARPIO, J., Chairperson,

-versus- BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
THE HONORABLE SECRETARY
OF FOREIGN AFFAIRS, Promulgated:
Respondent. March 5, 2010
x-----------------------------------------------------------------------------------------x
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review[1] of the 27 May 2005 Decision[2] and 2 August 2005
Resolution[3] of the Court of Appeals in CA-G.R. SP No. 87710. The Court of Appeals affirmed
the decision of the Office of the President, which in turn affirmed the decision of the Secretary
of Foreign Affairs denying petitioners request to revert to the use of her maiden name in her
replacement passport.
The Facts
Petitioner Maria Virginia V. Remo is a married Filipino citizen whose Philippine passport was
then expiring on 27 October 2000. Petitioner being married to Francisco R. Rallonza, the
following entries appear in her passport: Rallonza as her surname, Maria Virginia as her given
name, and Remo as her middle name. Prior to the expiry of the validity of her passport,
petitioner, whose marriage still subsists, applied for the renewal of her passport with the
Department of Foreign Affairs (DFA) office in Chicago, Illinois, U.S.A., with a request to revert to
her maiden name and surname in the replacement passport.
Petitioners request having been denied, Atty. Manuel Joseph R. Bretana III, representing
petitioner, wrote then Secretary of Foreign Affairs Domingo Siason expressing a similar request.
On 28 August 2000, the DFA, through Assistant Secretary Belen F. Anota, denied the request,
stating thus:
This has reference to your letter dated 17 August 2000 regarding one Ms. Maria Virginia V.
Remo who is applying for renewal of her passport using her maiden name.
This Office is cognizant of the provision in the law that it is not obligatory for a married woman
to use her husbands name. Use of maiden name is allowed in passport application only if the
married name has not been used in previous application. The Implementing Rules and
Regulations for Philippine Passport Act of 1996 clearly defines the conditions when a woman
applicant may revert to her maiden name, that is, only in cases of annulment of marriage,
divorce and death of the husband. Ms. Remos case does not meet any of these conditions.[4]
(Emphasis supplied)
Petitioners motion for reconsideration of the above-letter resolution was denied in a letter
dated 13 October 2000.[5]
On 15 November 2000, petitioner filed an appeal with the Office of the President.
On 27 July 2004, the Office of the President dismissed the appeal[6] and ruled that Section 5(d)
of Republic Act No. 8239 (RA 8239) or the Philippine Passport Act of 1996 offers no leeway for
any other interpretation than that only in case of divorce, annulment, or declaration [of nullity]
of marriage may a married woman revert to her maiden name for passport purposes. The
Office of the President further held that in case of conflict between a general and special law,
the latter will control the former regardless of the respective dates of passage. Since the Civil
Code is a general law, it should yield to RA 8239.
On 28 October 2004, the Office of the President denied the motion for reconsideration.[7]
Petitioner filed with the Court of Appeals a petition for review under Rule 43 of the Rules of
Civil Procedure.
In its Decision of 27 May 2005, the Court of Appeals denied the petition and affirmed the ruling
of the Office of the President. The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, premises considered, the petition is DENIED, and the resolution dated July 27,
2004, and the order dated October 28, 2004 of the Office of the President in O.P. Case No. 001-
A-9344 are hereby AFFIRMED.
SO ORDERED.[8]
Petitioner moved for reconsideration which the Court of Appeals denied in its Resolution dated
2 August 2005.
Hence, this petition.
The Court of Appeals Ruling

The Court of Appeals found no conflict between Article 370 of the Civil Code[9] and Section 5(d)
of RA 8239.[10] The Court of Appeals held that for passport application and issuance purposes,
RA 8239 limits the instances when a married woman applicant may exercise the option to
revert to the use of her maiden name such as in a case of a divorce decree, annulment or
declaration of nullity of marriage. Since there was no showing that petitioner's marriage to
Francisco Rallonza has been annulled, declared void or a divorce decree has been granted to
them, petitioner cannot simply revert to her maiden name in the replacement passport after
she had adopted her husbands surname in her old passport. Hence, according to the Court of
Appeals, respondent was justified in refusing the request of petitioner to revert to her maiden
name in the replacement passport.
The Issue
The sole issue in this case is whether petitioner, who originally used her husbands surname in
her expired passport, can revert to the use of her maiden name in the replacement passport,
despite the subsistence of her marriage.
The Ruling of the Court
The petition lacks merit.
Title XIII of the Civil Code governs the use of surnames. In the case of a married woman, Article
370 of the Civil Code provides:
ART. 370. A married woman may use:
(1) HER MAIDEN FIRST NAME AND SURNAME AND ADD HER HUSBANDS SURNAME, OR
(2) HER MAIDEN FIRST NAME AND HER HUSBAND'S SURNAME, OR
(3) HER HUSBANDS FULL NAME, BUT PREFIXING A WORD INDICATING THAT SHE IS HIS WIFE,
SUCH AS MRS.
We agree with petitioner that the use of the word may in the above provision indicates that the
use of the husbands surname by the wife is permissive rather than obligatory. This has been
settled in the case of Yasin v. Honorable Judge Sharia District Court.[11]
In Yasin,[12] petitioner therein filed with the Sharia District Court a Petition to resume the use
of maiden name in view of the dissolution of her marriage by divorce under the Code of Muslim
Personal Laws of the Philippines, and after marriage of her former husband to another woman.
In ruling in favor of petitioner therein, the Court explained that:
When a woman marries a man, she need not apply and/or seek judicial authority to use her
husbands name by prefixing the word Mrs. before her husbands full name or by adding her
husbands surname to her maiden first name. The law grants her such right (Art. 370, Civil
Code). Similarly, when the marriage ties or vinculum no longer exists as in the case of death of
the husband or divorce as authorized by the Muslim Code, the widow or divorcee need not
seek judicial confirmation of the change in her civil status in order to revert to her maiden
name as use of her former husbands is optional and not obligatory for her (Tolentino, Civil
Code, p. 725, 1983 ed.; Art. 373, Civil Code). When petitioner married her husband, she did not
change her but only her civil status. Neither was she required to secure judicial authority to use
the surname of her husband after the marriage as no law requires it. (Emphasis supplied)
Clearly, a married woman has an option, but not a duty, to use the surname of the husband in
any of the ways provided by Article 370 of the Civil Code.[13] She is therefore allowed to use
not only any of the three names provided in Article 370, but also her maiden name upon
marriage. She is not prohibited from continuously using her maiden name once she is married
because when a woman marries, she does not change her name but only her civil status.
Further, this interpretation is in consonance with the principle that surnames indicate
descent.[14]
In the present case, petitioner, whose marriage is still subsisting and who opted to use her
husbands surname in her old passport, requested to resume her maiden name in the
replacement passport arguing that no law prohibits her from using her maiden name. Petitioner
cites Yasin as the applicable precedent. However, Yasin is not squarely in point with this case.
Unlike in Yasin, which involved a Muslim divorcee whose former husband is already married to
another woman, petitioners marriage remains subsisting. Another point, Yasin did not involve a
request to resume ones maiden name in a replacement passport, but a petition to resume ones
maiden name in view of the dissolution of ones marriage.
The law governing passport issuance is RA 8239 and the applicable provision in this case is
Section 5(d), which states:
Sec. 5. Requirements for the Issuance of Passport. No passport shall be issued to an applicant
unless the Secretary or his duly authorized representative is satisfied that the applicant is a
Filipino citizen who has complied with the following requirements: x x x
(D) IN CASE OF A WOMAN WHO IS MARRIED, SEPARATED, DIVORCED OR WIDOWED OR

WHOSE MARRIAGE HAS BEEN ANNULLED OR DECLARED BY COURT AS VOID, A COPY OF THE
CERTIFICATE OF MARRIAGE, COURT DECREE OF SEPARATION, DIVORCE OR ANNULMENT OR
CERTIFICATE OF DEATH OF THE DECEASED SPOUSE DULY ISSUED AND AUTHENTICATED BY THE
OFFICE OF THE CIVIL REGISTRAR GENERAL: PROVIDED, THAT IN CASE OF A DIVORCE DECREE,
ANNULMENT OR DECLARATION OF MARRIAGE AS VOID, THE WOMAN APPLICANT MAY REVERT
TO THE USE OF HER MAIDEN NAME: PROVIDED, FURTHER, THAT SUCH DIVORCE IS RECOGNIZED
UNDER EXISTING LAWS OF THE PHILIPPINES; X X X (EMPHASIS SUPPLIED)
The Office of the Solicitor General (OSG), on behalf of the Secretary of Foreign Affairs, argues
that the highlighted proviso in Section 5(d) of RA 8239 limits the instances when a married
woman may be allowed to revert to the use of her maiden name in her passport. These
instances are death of husband, divorce decree, annulment or nullity of marriage. Significantly,
Section 1, Article 12 of the Implementing Rules and Regulations of RA 8239 provides:
The passport can be amended only in the following cases:
A) AMENDMENT OF WOMANS NAME DUE TO MARRIAGE;
B) AMENDMENT OF WOMANS NAME DUE TO DEATH OF SPOUSE, ANNULMENT OF MARRIAGE

OR DIVORCE INITIATED BY A FOREIGN SPOUSE; OR
C) CHANGE OF SURNAME OF A CHILD WHO IS LEGITIMATED BY VIRTUE OF A SUBSEQUENT

MARRIAGE OF HIS PARENTS.
Since petitioners marriage to her husband subsists, placing her case outside of the purview of
Section 5(d) of RA 8239 (as to the instances when a married woman may revert to the use of
her maiden name), she may not resume her maiden name in the replacement passport.[15]
This prohibition, according to petitioner, conflicts with and, thus, operates as an implied repeal
of Article 370 of the Civil Code.
PETITIONER IS MISTAKEN. THE CONFLICT BETWEEN ARTICLE 370 OF THE CIVIL CODE AND
SECTION 5(D) OF RA 8239 IS MORE IMAGINED THAN REAL. RA 8239, INCLUDING ITS
IMPLEMENTING RULES AND REGULATIONS, DOES NOT PROHIBIT A MARRIED WOMAN FROM
USING HER MAIDEN NAME IN HER PASSPORT. IN FACT, IN RECOGNITION OF THIS RIGHT, THE
DFA ALLOWS A MARRIED WOMAN WHO APPLIES FOR A PASSPORT FOR THE FIRST TIME TO USE
HER MAIDEN NAME. SUCH AN APPLICANT IS NOT REQUIRED TO ADOPT HER HUSBAND'S
SURNAME.[16]
In the case of renewal of passport, a married woman may either adopt her husbands surname
or continuously use her maiden name. If she chooses to adopt her husbands surname in her
new passport, the DFA additionally requires the submission of an authenticated copy of the
marriage certificate. Otherwise, if she prefers to continue using her maiden name, she may still
do so. The DFA will not prohibit her from continuously using her maiden name.[17]
HOWEVER, ONCE A MARRIED WOMAN OPTED TO ADOPT HER HUSBANDS SURNAME IN HER
PASSPORT, SHE MAY NOT REVERT TO THE USE OF HER MAIDEN NAME, EXCEPT IN THE CASES
ENUMERATED IN SECTION 5(D) OF RA 8239. THESE INSTANCES ARE: (1) DEATH OF HUSBAND,
(2) DIVORCE, (3) ANNULMENT, OR (4) NULLITY OF MARRIAGE. SINCE PETITIONERS MARRIAGE
TO HER HUSBAND SUBSISTS, SHE MAY NOT RESUME HER MAIDEN NAME IN THE REPLACEMENT
PASSPORT. OTHERWISE STATED, A MARRIED WOMAN'S REVERSION TO THE USE OF HER
MAIDEN NAME MUST BE BASED ONLY ON THE SEVERANCE OF THE MARRIAGE.
EVEN ASSUMING RA 8239 CONFLICTS WITH THE CIVIL CODE, THE PROVISIONS OF RA 8239
WHICH IS A SPECIAL LAW SPECIFICALLY DEALING WITH PASSPORT ISSUANCE MUST PREVAIL
OVER THE PROVISIONS OF TITLE XIII OF THE CIVIL CODE WHICH IS THE GENERAL LAW ON THE
USE OF SURNAMES. A BASIC TENET IN STATUTORY CONSTRUCTION IS THAT A SPECIAL LAW
PREVAILS OVER A GENERAL LAW,[18] THUS:
[I]t is a familiar rule of statutory construction that to the extent of any necessary repugnancy
between a general and a special law or provision, the latter will control the former without
regard to the respective dates of passage.[19]
Moreover, petitioners theory of implied repeal must fail. Well-entrenched is the rule that an
implied repeal is disfavored. T he apparently conflicting provisions of a law or two laws should
be harmonized as much as possible, so that each shall be effective.[20] For a law to operate to
repeal another law, the two laws must actually be inconsistent. The former must be so
repugnant as to be irreconcilable with the latter act.[21] This petitioner failed to establish.
The Court notes that petitioner would not have encountered any problems in the replacement
passport had she opted to continuously and consistently use her maiden name from the
moment she was married and from the time she first applied for a Philippine passport.
However, petitioner consciously chose to use her husbands surname before, in her previous
passport application, and now desires to resume her maiden name. If we allow petitioners
present request, definitely nothing prevents her in the future from requesting to revert to the
use of her husbands surname. Such unjustified changes in one's name and identity in a
passport, which is considered superior to all other official documents,[22] cannot be
countenanced. Otherwise, undue confusion and inconsistency in the records of passport
holders will arise. Thus, for passport issuance purposes, a married woman, such as petitioner,
whose marriage subsists, may not change her family name at will.
THE ACQUISITION OF A PHILIPPINE PASSPORT IS A PRIVILEGE. THE LAW RECOGNIZES THE

PASSPORT APPLICANTS CONSTITUTIONAL RIGHT TO TRAVEL. HOWEVER, THE STATE IS ALSO
MANDATED TO PROTECT AND MAINTAIN THE INTEGRITY AND CREDIBILITY OF THE PASSPORT
AND TRAVEL DOCUMENTS PROCEEDING FROM IT[23] AS A PHILIPPINE PASSPORT REMAINS AT
ALL TIMES THE PROPERTY OF THE GOVERNMENT. THE HOLDER IS MERELY A POSSESSOR OF THE
PASSPORT AS LONG AS IT IS VALID AND THE SAME MAY NOT BE SURRENDERED TO ANY PERSON
OR ENTITY OTHER THAN THE GOVERNMENT OR ITS REPRESENTATIVE.[24]
As the OSG correctly pointed out:
[T]he issuance of passports is impressed with public interest. A passport is an official document
of identity and nationality issued to a person intending to travel or sojourn in foreign countries.
It is issued by the Philippine government to its citizens requesting other governments to allow
its holder to pass safely and freely, and in case of need, to give him/her aid and protection. x x x
Viewed in the light of the foregoing, it is within respondents competence to regulate any
amendments intended to be made therein, including the denial of unreasonable and whimsical
requests for amendments such as in the instant case.[25]
WHEREFORE, we DENY the petition. We AFFIRM the 27 May 2005 Decision and 2 August 2005
Resolution of the Court of Appeals in CA-G.R. SP No. 87710.
SO ORDERED.
FIRST DIVISION
REPUBLIC OF THE G.R. No. 156956

PHILIPPINES, Represented
by EDUARDO T. MALINIS, Present:
in His Capacity as Insurance
Commissioner, PANGANIBAN, CJ, Chairperson,
Petitioner, YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
- versus - CHICO-NAZARIO, JJ
DEL MONTE MOTORS, INC., Promulgated:
Respondent. October 9, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --- -- -- -- -- x
DECISION
PANGANIBAN, CJ:
The securities required by the Insurance Code to be deposited with the Insurance
Commissioner are intended to answer for the claims of all policy holders in the event that the
depositing insurance company becomes insolvent or otherwise unable to satisfy their claims.
The security deposit must be ratably distributed among all the insured who are entitled to their
respective shares; it cannot be garnished or levied upon by a single claimant, to the detriment
of the others.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to reverse the
January 16, 2003 Order[2] of the Regional Court (RTC) of Quezon City (Branch 221) in Civil Case
No. Q-97-30412. The RTC found Insurance Commissioner Eduardo T. Malinis guilty of indirect
contempt for refusing to comply with the December 18, 2002 Resolution[3] of the lower court.
The January 16, 2003 Order states in full:
On January 8, 2003, [respondent] filed a Motion to Cite Commissioner Eduardo T. Malinis of the
Office of the Insurance Commission in Contempt of Court because of his failure and refusal to
obey the lawful order of this court embodied in a Resolution dated December 18, 2002
directing him to allow the withdrawal of the security deposit of Capital Insurance and Surety
Co. (CISCO) in the amount of P11,835,375.50 to be paid to Sheriff Manuel Paguyo in the
satisfaction of the Notice of Garnishment pursuant to a Decision of this Court which has
become final and executory.
During the hearing of the Motion set last January 10, 2003, Commissioner Malinis or his counsel
or his duly authorized representative failed to appear despite notice in utter disregard of the
order of this Court. However, Commissioner Malinis filed on January 15, 2003 a written
Comment reiterating the same grounds already passed upon and rejected by this Court. This
Court finds no lawful justification or excuse for Commissioner Malinis refusal to implement the
lawful orders of this Court.
Wherefore, premises considered and after due hearing, Commissioner Eduardo T. Malinis is
hereby declared guilty of Indirect Contempt of Court pursuant to Section 3 [of] Rule 71 of the
1997 Rules of Civil Procedure for willfully disobeying and refusing to implement and obey a
lawful order of this Court.[4]
The Facts
On January 15, 2002, the RTC rendered a Decision in Civil Case No. Q-97-30412, finding the
defendants (Vilfran Liner, Inc., Hilaria Villegas and Maura Villegas) jointly and severally liable to
pay Del Monte Motors, Inc., P11,835,375.50 representing the balance of Vilfran Liners service
contracts with respondent. The trial court further ordered the execution of the Decision against
the counterbond posted by Vilfran Liner on June 10, 1997, and issued by Capital Insurance and
Surety Co., Inc. (CISCO).
On April 18, 2002, CISCO opposed the Motion for Execution filed by respondent, claiming that
the latter had no record or document regarding the alleged issuance of the counterbond; thus,
the bond was not valid and enforceable.
On June 13, 2002, the RTC granted the Motion for Execution and issued the corresponding Writ.
Armed with this Writ, Sheriff Manuel S. Paguyo proceeded to levy on the properties of CISCO.
He also issued a Notice of Garnishment on several depository banks of the insurance company.
Moreover, he served a similar notice on the Insurance Commission, so as to enforce the Writ on
the security deposit filed by CISCO with the Commission in accordance with Section 203 of the
Insurance Code.
On December 18, 2002, after a hearing on all the pending Motions, the RTC ruled that the
Notice of Garnishment served by Sheriff Paguyo on the insurance commission was valid. The
trial court added that the letter and spirit of the law made the security deposit answerable for
contractual obligations incurred by CISCO under the insurance contracts the latter had entered
into. The RTC resolved thus:
Furthermore, the Commissioner of the Office of the Insurance Commission is hereby ordered to
comply with its obligations under the Insurance Code by upholding the integrity and efficacy of
bonds validly issued by duly accredited Bonding and Insurance Companies; and to safeguard the
public interest by insuring the faithful performance to enforce contractual obligations under
existing bonds. Accordingly said office is ordered to withdraw from the security deposit of
Capital Insurance & Surety Company, Inc. the amount of P11,835.50 to be paid to Sheriff
Manuel S. Paguyo in satisfaction of the Notice of Garnishment served on August 16, 2002.[5]
On January 8, 2003, respondent moved to cite Insurance Commissioner Eduardo T. Malinis in

contempt of court for his refusal to obey the December 18, 2002 Resolution of the trial court.
Ruling of the Trial Court
The RTC held Insurance Commissioner Malinis in contempt for his refusal to implement its
Order. It explained that the commissioner had no legal justification for his refusal to allow the
withdrawal of CISCOs security deposit.
Hence, this Petition.[6]
Issues
Petitioner raises this sole issue for the Courts consideration:
Whether or not the security deposit held by the Insurance Commissioner pursuant to Section
203 of the Insurance Code may be levied or garnished in favor of only one insured.[7]
The Courts Ruling
The Petition is meritorious.
Preliminary Issue:
Propriety of Review
Before discussing the principal issue, the Court will first dispose of the question of mootness.
Prior to the filing of the instant Petition, Insurance Commissioner Malinis sent the treasurer of
the Philippines a letter dated March 26, 2003, stating that the former had no objection to the
release of the security deposit to Del Monte Motors. Portions of the fund were consequently
released to respondent in July, October, and December 2003. Thus, the issue arises: whether
these circumstances render the case moot.
Petitioner, however, contends that the partial releases should not be construed as an
abandonment of its stand that security deposits under Section 203 of the Insurance Code are
exempt from levy and garnishment. The Republic claims that the releases were made pursuant
to the commissioners power of control over the fund, not to the lower courts Order of
garnishment. Petitioner further invokes the jurisdiction of this Court to put to rest the principal
issue of whether security deposits made with the Insurance Commission may be levied and
garnished.
The issue is not totally moot. To stress, only a portion of respondents claim was satisfied, and
the Insurance Commission has required CISCO to replenish the latters security deposit.
Respondent, therefore, may one day decide to further garnish the security deposit, once
replenished. Moreover, after the questioned Order of the lower court was issued, similar claims
on the security deposits of various insurance companies have been made before the Insurance
Commission. To set aside the resolution of the issue will only postpone a task that is certain to
crop up in the future.
Besides, the business of insurance is imbued with public interest. It is subject to regulation by
the State, with respect not only to the relations between the insurer and the insured, but also
to the internal affairs of insurance companies.[8] As this case is undeniably endowed with
public interest and involves a matter of public policy, this Court shall not shirk from its duty to
educate the bench and the bar by formulating guiding and controlling principles, precepts,
doctrines and rules.[9]
Principal Issue:
Exemption of Security Deposit
from Levy or Garnishment
Section 203 of the Insurance Code provides as follows:
Sec. 203. Every domestic insurance company shall, to the extent of an amount equal in value to
twenty-five per centum of the minimum paid-up capital required under section one hundred
eighty-eight, invest its funds only in securities, satisfactory to the Commissioner, consisting of
bonds or other evidences of debt of the Government of the Philippines or its political
subdivisions or instrumentalities, or of government-owned or controlled corporations and
entities, including the Central Bank of the Philippines: Provided, That such investments shall at
all times be maintained free from any lien or encumbrance; and Provided, further, That such
securities shall be deposited with and held by the Commissioner for the faithful performance by
the depositing insurer of all its obligations under its insurance contracts. The provisions of
section one hundred ninety-two shall, so far as practicable, apply to the securities deposited
under this section.
Except as otherwise provided in this Code, no judgment creditor or other claimant shall have
the right to levy upon any of the securities of the insurer held on deposit pursuant to the
requirement of the Commissioner. (Emphasis supplied)
Respondent notes that Section 203 does not provide for an absolute prohibition on the levy and
garnishment of the security deposit. It contends that the law requires the deposit, precisely to
ensure faithful performance of all the obligations of the depositing insurer under the latters
various insurance contracts. Hence, respondent claims that the security deposit should be
answerable for the counterbond issued by CISCO.
The Court is not convinced. As worded, the law expressly and clearly states that the security
deposit shall be (1) answerable for all the obligations of the depositing insurer under its
insurance contracts; (2) at all times free from any liens or encumbrance; and (3) exempt from
levy by any claimant.
To be sure, CISCO, though presently under conservatorship, has valid outstanding policies. Its
policy holders have a right under the law to be equally protected by its security deposit. To
allow the garnishment of that deposit would impair the fund by decreasing it to less than the
percentage of paid-up capital that the law requires to be maintained. Further, this move would
create, in favor of respondent, a preference of credit over the other policy holders and
beneficiaries.
Our Insurance Code is patterned after that of California.[10] Thus, the ruling of the states
Supreme Court on a similar concept as that of the security deposit is instructive. Engwicht v.
Pacific States Life Assurance Co.[11] held that the money required to be deposited by a mutual
assessment insurance company with the state treasurer was a trust fund to be ratably
distributed amongst all the claimants entitled to share in it. Such a distribution cannot be had
except in an action in the nature of a creditors bill, upon the hearing of which, and with all the
parties interested in the fund before it, the court may make equitable distribution of the fund,
and appoint a receiver to carry that distribution into effect.[12]
Basic is the statutory construction rule that provisions of a statute should be construed in
accordance with the purpose for which it was enacted.[13] That is, the securities are held as a
contingency fund to answer for the claims against the insurance company by all its policy
holders and their beneficiaries. This step is taken in the event that the company becomes
insolvent or otherwise unable to satisfy the claims against it. Thus, a single claimant may not lay
stake on the securities to the exclusion of all others. The other parties may have their own
claims against the insurance company under other insurance contracts it has entered into.
Respondents Inchoate Right
The right to lay claim on the fund is dependent on the solvency of the insurer and is subject to
all other obligations of the company arising from its insurance contracts. Thus, respondents
interest is merely inchoate. Being a mere expectancy, it has no attribute of property. At this
time, it is nonexistent and may never exist.[14] Hence, it would be premature to make the
security deposit answerable for CISCOs present obligation to Del Monte Motors.
Moreover, since insolvency proceedings against CISCO have yet to be conducted, it would be
impossible to establish at this time which claimants are entitled to the security deposit and in
what pro-rated amounts. Only after all other claimants under subsisting policies issued by
CISCO have been heard can respondents share be determined.
Powers of the Commissioner
The Insurance Code has vested the Office of the Insurance Commission with both regulatory
and adjudicatory authority over insurance matters.[15]
The general regulatory authority of the insurance commissioner is described in Section 414 of
the Code as follows:
Sec. 414. The Insurance Commissioner shall have the duty to see that all laws relating to
insurance, insurance companies and other insurance matters, mutual benefit associations, and
trusts for charitable uses are faithfully executed and to perform the duties imposed upon him
by this Code, and shall, notwithstanding any existing laws to the contrary, have sole and
exclusive authority to regulate the issuance and sale of variable contracts as defined in section
two hundred thirty-two and to provide for the licensing of persons selling such contracts, and
to issue such reasonable rules and regulations governing the same.
The Commissioner may issue such rulings, instructions, circulars, orders and decisions as he
may deem necessary to secure the enforcement of the provisions of this Code, subject to the
approval of the Secretary of Finance. Except as otherwise specified, decisions made by the
Commissioner shall be appealable to the Secretary of Finance. (Emphasis supplied)
Pursuant to these regulatory powers, the commissioner is authorized to (1) issue (or to refuse
to issue) certificates of authority to persons or entities desiring to engage in insurance business
in the Philippines;[16] (2) revoke or suspend these certificates of authority upon finding
grounds for the revocation or suspension;[17] (3) impose upon insurance companies, their
directors and/or officers and/or agents appropriate penalties -- fines, suspension or removal
from office -- for failing to comply with the Code or with any of the commissioners orders,
instructions, regulations or rulings, or for otherwise conducting business in an unsafe or
unsound manner.[18]
Included in the above regulatory responsibilities is the duty to hold the security deposits under
Sections 191[19] and 203 of the Code, for the benefit and security of all policy holders. In
relation to these provisions, Section 192 of the Insurance Code states:
Sec. 192. The Commissioner shall hold the securities, deposited as aforesaid, for the benefit and
security of all the policyholders of the company depositing the same, but shall as long as the
company is solvent, permit the company to collect the interest or dividends on the securities so
deposited, and, from time to time, with his assent, to withdraw any of such securities, upon
depositing with said Commissioner other like securities, the market value of which shall be
equal to the market value of such as may be withdrawn. In the event of any company ceasing to
do business in the Philippines the securities deposited as aforesaid shall be returned upon the
companys making application therefor and proving to the satisfaction of the Commissioner that
it has no further liability under any of its policies in the Philippines. (Emphasis supplied)
Undeniably, the insurance commissioner has been given a wide latitude of discretion to
regulate the insurance industry so as to protect the insuring public. The law specifically confers
custody over the securities upon the commissioner, with whom these investments are required
to be deposited. An implied trust[20] is created by the law for the benefit of all claimants under
subsisting insurance contracts issued by the insurance company.[21]
As the officer vested with custody of the security deposit, the insurance commissioner is in the
best position to determine if and when it may be released without prejudicing the rights of
other policy holders. Before allowing the withdrawal or the release of the deposit, the
commissioner must be satisfied that the conditions contemplated by the law are met and all
policy holders protected.
Commissioners Actions
Entitled to Great Respect
In this case, Commissioner Malinis refused to release the security deposit of CISCO. Believing
that the funds were exempt from execution as provided by law, he sought to protect other
policy holders. His interpretation of the provisions of the law carries great weight and
consideration,[22] as he is the head of a specialized body tasked with the regulation of
insurance matters and primarily charged with the implementation of the Insurance Code.
The emergence of the multifarious needs of modern society necessitates the establishment of
diverse administrative agencies. In addressing these needs, the administrative agencies charged
with applying and implementing particular statutes have accumulated experience and
specialized capabilities. Thus, in a long line of cases, this Court has recognized that their
construction of a statute is entitled to great respect and should ordinarily be controlling, unless
clearly shown to be in sharp conflict with the governing statute or the Constitution and other
laws.[23]
Clearly, then, the trial court erred in issuing the Writ of Garnishment against the security
deposit of CISCO. It follows that without the issuance of a valid order, the insurance
commissioner could not have been in contempt of court.[24]
WHEREFORE, the Petition is GRANTED and the assailed Order SET ASIDE. No costs.
SO ORDERED.
G.R. No. 184861 June 30, 2009
DREAMWORK CONSTRUCTION, INC., Petitioner,

vs.
CLEOFE S. JANIOLA and HON. ARTHUR A. FAMINI, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Petitioner Dreamwork Construction, Inc. seeks the reversal of the August 26, 2008 Decision1 in
SCA No. 08-0005 of the Regional Trial Court (RTC), Branch 253 in Las Pias City. The Decision
affirmed the Orders dated October 16, 20072 and March 12, 20083 in Criminal Case Nos.
55554-61 issued by the Metropolitan Trial Court (MTC), Branch 79 in Las Pias City.
The Facts
On October 18, 2004, petitioner, through its President, Roberto S. Concepcion, and Vice-
President for Finance and Marketing, Normandy P. Amora, filed a Complaint Affidavit dated
October 5, 20044 for violation of Batas Pambansa Bilang 22 (BP 22) against private respondent
Cleofe S. Janiola with the Office of the City Prosecutor of Las Pias City. The case was docketed
as I.S. No. 04-2526-33. Correspondingly, petitioner filed a criminal information for violation of
BP 22 against private respondent with the MTC on February 2, 2005 docketed as Criminal Case
Nos. 55554-61, entitled People of the Philippines v. Cleofe S. Janiola.
On September 20, 2006, private respondent, joined by her husband, instituted a civil complaint
against petitioner by filing a Complaint dated August 20065 for the rescission of an alleged
construction agreement between the parties, as well as for damages. The case was filed with
the RTC, Branch 197 in Las Pias City and docketed as Civil Case No. LP-06-0197. Notably, the
checks, subject of the criminal cases before the MTC, were issued in consideration of the
construction agreement.
Thereafter, on July 25, 2007, private respondent filed a Motion to Suspend Proceedings dated
July 24, 20076 in Criminal Case Nos. 55554-61, alleging that the civil and criminal cases involved
facts and issues similar or intimately related such that in the resolution of the issues in the civil
case, the guilt or innocence of the accused would necessarily be determined. In other words,
private respondent claimed that the civil case posed a prejudicial question as against the
criminal cases.
Petitioner opposed the suspension of the proceedings in the criminal cases in an undated
Comment/Opposition to Accuseds Motion to Suspend Proceedings based on Prejudicial
Question7 on the grounds that: (1) there is no prejudicial question in this case as the rescission
of the contract upon which the bouncing checks were issued is a separate and distinct issue
from the issue of whether private respondent violated BP 22; and (2) Section 7, Rule 111 of the
Rules of Court states that one of the elements of a prejudicial question is that "the previously
instituted civil action involves an issue similar or intimately related to the issue raised in the
subsequent criminal action"; thus, this element is missing in this case, the criminal case having
preceded the civil case.
Later, the MTC issued its Order dated October 16, 2007, granting the Motion to Suspend
Proceedings, and reasoned that:
Should the trial court declare the rescission of contract and the nullification of the checks
issued as the same are without consideration, then the instant criminal cases for alleged
violation of BP 22 must be dismissed. The belated filing of the civil case by the herein accused
did not detract from the correctness of her cause, since a motion for suspension of a criminal
action may be filed at any time before the prosecution rests (Section 6, Rule 111, Revised Rules
of Court).8
In an Order dated March 12, 2008,9 the MTC denied petitioners Motion for Reconsideration
dated November 29, 2007.
Petitioner appealed the Orders to the RTC with a Petition dated May 13, 2008. Thereafter, the
RTC issued the assailed decision dated August 26, 2008, denying the petition. On the issue of
the existence of a prejudicial question, the RTC ruled:
Additionally, it must be stressed that the requirement of a "previously" filed civil case is
intended merely to obviate delays in the conduct of the criminal proceedings. Incidentally, no
clear evidence of any intent to delay by private respondent was shown. The criminal
proceedings are still in their initial stages when the civil action was instituted. And, the fact that
the civil action was filed after the criminal action was instituted does not render the issues in
the civil action any less prejudicial in character.10
Hence, we have this petition under Rule 45.
The Issue
WHETHER OR NOT THE COURT A QUO SERIOUSLY ERRED IN NOT PERCEIVING GRAVE ABUSE OF
DISCRETION ON THE PART OF THE INFERIOR COURT, WHEN THE LATTER RULED TO SUSPEND
PROCEEDINGS IN CRIM. CASE NOS. 55554-61 ON THE BASIS OF "PREJUDICIAL QUESTION" IN
CIVIL CASE NO. LP-06-0197.11
The Courts Ruling
This petition must be granted.

The Civil Action Must Precede the Filing of the
Criminal Action for a Prejudicial Question to Exist
Under the 1985 Rules on Criminal Procedure, as amended by Supreme Court Resolutions dated
June 17, 1988 and July 7, 1988, the elements of a prejudicial question are contained in Rule
111, Sec. 5, which states:
SEC. 5. Elements of prejudicial question. The two (2) essential elements of a prejudicial
question are: (a) the civil action involves an issue similar or intimately related to the issue raised
in the criminal action; and (b) the resolution of such issue determines whether or not the
criminal action may proceed.
Thus, the Court has held in numerous cases12 that the elements of a prejudicial question, as
stated in the above-quoted provision and in Beltran v. People,13 are:
The rationale behind the principle of prejudicial question is to avoid two conflicting decisions. It
has two essential elements: (a) the civil action involves an issue similar or intimately related to
the issue raised in the criminal action; and (b) the resolution of such issue determines whether
or not the criminal action may proceed.
On December 1, 2000, the 2000 Rules on Criminal Procedure, however, became effective and
the above provision was amended by Sec. 7 of Rule 111, which applies here and now provides:
SEC. 7. Elements of prejudicial question.The elements of a prejudicial question are: (a) the
previously instituted civil action involves an issue similar or intimately related to the issue
raised in the subsequent criminal action, and (b) the resolution of such issue determines
whether or not the criminal action may proceed. (Emphasis supplied.)
Petitioner interprets Sec. 7(a) to mean that in order for a civil case to create a prejudicial
question and, thus, suspend a criminal case, it must first be established that the civil case was
filed previous to the filing of the criminal case. This, petitioner argues, is specifically to guard
against the situation wherein a party would belatedly file a civil action that is related to a
pending criminal action in order to delay the proceedings in the latter.
On the other hand, private respondent cites Article 36 of the Civil Code which provides:
Art. 36. Pre-judicial questions which must be decided before any criminal prosecution may be
instituted or may proceed, shall be governed by rules of court which the Supreme Court shall
promulgate and which shall not be in conflict with the provisions of this Code. (Emphasis
supplied.)
Private respondent argues that the phrase "before any criminal prosecution may be instituted
or may proceed" must be interpreted to mean that a prejudicial question exists when the civil
action is filed either before the institution of the criminal action or during the pendency of the
criminal action. Private respondent concludes that there is an apparent conflict in the
provisions of the Rules of Court and the Civil Code in that the latter considers a civil case to
have presented a prejudicial question even if the criminal case preceded the filing of the civil
case.
We cannot agree with private respondent.
First off, it is a basic precept in statutory construction that a "change in phraseology by

amendment of a provision of law indicates a legislative intent to change the meaning of the
provision from that it originally had."14 In the instant case, the phrase, "previously instituted,"
was inserted to qualify the nature of the civil action involved in a prejudicial question in relation
to the criminal action. This interpretation is further buttressed by the insertion of "subsequent"
directly before the term criminal action. There is no other logical explanation for the
amendments except to qualify the relationship of the civil and criminal actions, that the civil
action must precede the criminal action.
Thus, this Court ruled in Torres v. Garchitorena15 that:
Even if we ignored petitioners procedural lapse and resolved their petition on the merits, we
hold that Sandiganbayan did not abuse its discretion amounting to excess or lack of jurisdiction
in denying their omnibus motion for the suspension of the proceedings pending final judgment
in Civil Case No. 7160. Section 6, Rule lll of the Rules of Criminal Procedure, as amended, reads:
Sec. 6. Suspension by reason of prejudicial question. - A petition for suspension of the criminal
action based upon the pendency of a prejudicial question in a civil action may be filed in the
office of the prosecutor or the court conducting the preliminary investigation. When the
criminal action has been filed in court for trial, the petition to suspend shall be filed in the same
criminal action at any time before the prosecution rests.
Sec. 7. Elements of prejudicial question. - The elements of a prejudicial question are: (a) the
previously instituted civil action involves an issue similar or intimately related to the issue
raised in the subsequent criminal action, and (b) the resolution of such issue determines
whether or not the criminal action may proceed.
Under the amendment, a prejudicial question is understood in law as that which must precede
the criminal action and which requires a decision before a final judgment can be rendered in
the criminal action with which said question is closely connected. The civil action must be
instituted prior to the institution of the criminal action. In this case, the Information was filed
with the Sandiganbayan ahead of the complaint in Civil Case No. 7160 filed by the State with
the RTC in Civil Case No. 7160. Thus, no prejudicial question exists. (Emphasis supplied.)
Additionally, it is a principle in statutory construction that "a statute should be construed not
only to be consistent with itself but also to harmonize with other laws on the same subject
matter, as to form a complete, coherent and intelligible system."16 This principle is consistent
with the maxim, interpretare et concordare leges legibus est optimus interpretandi modus or
every statute must be so construed and harmonized with other statutes as to form a uniform
system of jurisprudence.171 a vv p h i l
In other words, every effort must be made to harmonize seemingly conflicting laws. It is only
when harmonization is impossible that resort must be made to choosing which law to apply.
In the instant case, Art. 36 of the Civil Code and Sec. 7 of Rule 111 of the Rules of Court are
susceptible of an interpretation that would harmonize both provisions of law. The phrase
"previously instituted civil action" in Sec. 7 of Rule 111 is plainly worded and is not susceptible
of alternative interpretations. The clause "before any criminal prosecution may be instituted or
may proceed" in Art. 36 of the Civil Code may, however, be interpreted to mean that the
motion to suspend the criminal action may be filed during the preliminary investigation with
the public prosecutor or court conducting the investigation, or during the trial with the court
hearing the case.
This interpretation would harmonize Art. 36 of the Civil Code with Sec. 7 of Rule 111 of the
Rules of Court but also with Sec. 6 of Rule 111 of the Civil Code, which provides for the
situations when the motion to suspend the criminal action during the preliminary investigation
or during the trial may be filed. Sec. 6 provides:
SEC. 6. Suspension by reason of prejudicial question.A petition for suspension of the criminal
action based upon the pendency of a prejudicial question in a civil action may be filed in the
office of the prosecutor or the court conducting the preliminary investigation. When the
criminal action has been filed in court for trial, the petition to suspend shall be filed in the same
criminal action at any time before the prosecution rests.
Thus, under the principles of statutory construction, it is this interpretation of Art. 36 of the
Civil Code that should govern in order to give effect to all the relevant provisions of law.
It bears pointing out that the circumstances present in the instant case indicate that the filing of
the civil action and the subsequent move to suspend the criminal proceedings by reason of the
presence of a prejudicial question were a mere afterthought and instituted to delay the
criminal proceedings.
In Sabandal v. Tongco,18 we found no prejudicial question existed involving a civil action for
specific performance, overpayment, and damages, and a criminal complaint for BP 22, as the
resolution of the civil action would not determine the guilt or innocence of the accused in the
criminal case. In resolving the case, we said:
Furthermore, the peculiar circumstances of the case clearly indicate that the filing of the civil
case was a ploy to delay the resolution of the criminal cases. Petitioner filed the civil case three
years after the institution of the criminal charges against him. Apparently, the civil action was
instituted as an afterthought to delay the proceedings in the criminal cases.19
Here, the civil case was filed two (2) years after the institution of the criminal complaint and
from the time that private respondent allegedly withdrew its equipment from the job site. Also,
it is worth noting that the civil case was instituted more than two and a half (2 ) years from
the time that private respondent allegedly stopped construction of the proposed building for
no valid reason. More importantly, the civil case praying for the rescission of the construction
agreement for lack of consideration was filed more than three (3) years from the execution of
the construction agreement.
Evidently, as in Sabandal, the circumstances surrounding the filing of the cases involved here
show that the filing of the civil action was a mere afterthought on the part of private
respondent and interposed for delay. And as correctly argued by petitioner, it is this scenario
that Sec. 7 of Rule 111 of the Rules of Court seeks to prevent. Thus, private respondents
positions cannot be left to stand.
The Resolution of the Civil Case Is Not

Determinative of the Prosecution of the Criminal Action
In any event, even if the civil case here was instituted prior to the criminal action, there is, still,
no prejudicial question to speak of that would justify the suspension of the proceedings in the
criminal case.
To reiterate, the elements of a prejudicial question under Sec. 7 of Rule 111 of the Rules of
Court are: (1) the previously instituted civil action involves an issue similar or intimately related
to the issue raised in the subsequent criminal action; and (2) the resolution of such issue
determines whether or not the criminal action may proceed.
Petitioner argues that the second element of a prejudicial question, as provided in Sec. 7 of
Rule 111 of the Rules, is absent in this case. Thus, such rule cannot apply to the present
controversy.
Private respondent, on the other hand, claims that if the construction agreement between the
parties is declared null and void for want of consideration, the checks issued in consideration of
such contract would become mere scraps of paper and cannot be the basis of a criminal
prosecution.
We find for petitioner.
It must be remembered that the elements of the crime punishable under BP 22 are as follows:
(1) the making, drawing, and issuance of any check to apply for account or for value;
(2) the knowledge of the maker, drawer, or issuer that at the time of issue there are no
sufficient funds in or credit with the drawee bank for the payment of such check in full upon its
presentment; and
(3) the subsequent dishonor of the check by the drawee bank for insufficiency of funds or
credit, or dishonor for the same reason had not the drawer, without any valid cause, ordered
the bank to stop payment.20
Undeniably, the fact that there exists a valid contract or agreement to support the issuance of
the check/s or that the checks were issued for valuable consideration does not make up the
elements of the crime. Thus, this Court has held in a long line of cases21 that the agreement
surrounding the issuance of dishonored checks is irrelevant to the prosecution for violation of
BP 22. In Mejia v. People,22 we ruled:
It must be emphasized that the gravamen of the offense charge is the issuance of a bad check.
The purpose for which the check was issued, the terms and conditions relating to its issuance,
or any agreement surrounding such issuance are irrelevant to the prosecution and conviction of
petitioner. To determine the reason for which checks are issued, or the terms and conditions
for their issuance, will greatly erode the faith the public reposes in the stability and commercial
value of checks as currency substitutes, and bring havoc in trade and in banking communities.
The clear intention of the framers of B.P. 22 is to make the mere act of issuing a worthless
check malum prohibitum.
Lee v. Court of Appeals23 is even more poignant. In that case, we ruled that the issue of lack of
valuable consideration for the issuance of checks which were later on dishonored for
insufficient funds is immaterial to the success of a prosecution for violation of BP 22, to wit:
Third issue. Whether or not the check was issued on account or for value.
Petitioners claim is not feasible. We have held that upon issuance of a check, in the absence of
evidence to the contrary, it is presumed that the same was issued for valuable consideration.
Valuable consideration, in turn, may consist either in some right, interest, profit or benefit
accruing to the party who makes the contract, or some forbearance, detriment, loss or some
responsibility, to act, or labor, or service given, suffered or undertaken by the other side. It is an
obligation to do, or not to do in favor of the party who makes the contract, such as the maker
or indorser.
In this case, petitioner himself testified that he signed several checks in blank, the subject check
included, in exchange for 2.5% interest from the proceeds of loans that will be made from said
account. This is a valuable consideration for which the check was issued. That there was neither
a pre-existing obligation nor an obligation incurred on the part of petitioner when the subject
check was given by Bautista to private complainant on July 24, 1993 because petitioner was no
longer connected with Unlad or Bautista starting July 1989, cannot be given merit since, as
earlier discussed, petitioner failed to adequately prove that he has severed his relationship with
Bautista or Unlad.
At any rate, we have held that what the law punishes is the mere act of issuing a bouncing
check, not the purpose for which it was issued nor the terms and conditions relating to its
issuance. This is because the thrust of the law is to prohibit the making of worthless checks and
putting them into circulation.24 (Emphasis supplied.)
Verily, even if the trial court in the civil case declares that the construction agreement between
the parties is void for lack of consideration, this would not affect the prosecution of private
respondent in the criminal case. The fact of the matter is that private respondent indeed issued
checks which were subsequently dishonored for insufficient funds. It is this fact that is subject
of prosecution under BP 22.lawphil.net
Therefore, it is clear that the second element required for the existence of a prejudicial
question, that the resolution of the issue in the civil action would determine whether the
criminal action may proceed, is absent in the instant case. Thus, no prejudicial question exists
and the rules on it are inapplicable to the case before us.
WHEREFORE, we GRANT this petition. We hereby REVERSE and SET ASIDE the August 26, 2008
Decision in SCA No. 08-0005 of the RTC, Branch 253 in Las Pias City and the Orders dated
October 16, 2007 and March 12, 2008 in Criminal Case Nos. 55554-61 of the MTC, Branch 79 in
Las Pias City. We order the MTC to continue with the proceedings in Criminal Case Nos. 55554-
61 with dispatch.
No costs.
SO ORDERED.

Tuna Processing, Inc., G.R. No. 185582: Recognition, and Enforcement of Foreign Arbitral Award

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Tuna Processing, Inc., G.R. No. 185582: Recognition, and Enforcement of Foreign Arbitral Award

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TUNA PROCESSING, INC., G.R. No.

PHILIPPINE KINGFORD, INC., Promulgated:

On 14 January 2003, Kanemitsu Yamaoka (hereinafter referred to as the licensor), co-

[if !supportLists]1. [endif]Background and objectives. The Licensor, co-owner of

The parties likewise executed a Supplemental Memorandum of Agreement [if !supportFootnotes][10][endif]

At Branch 150, respondent Kingford filed a Motion to Dismiss.[if !supportFootnotes][16][endif]

The petition is impressed with merit.

The Corporation Code of the Philippines expressly provides:

Sec. 133. Doing business without a license. - No foreign corporation

Korugas invocation of the provisions of the Corporation Code is

The Corporation Code, however, is a general law

SEC. 45. Rejection of a Foreign Arbitral Award. - A party to a foreign

It also expressly adopted the Model Law, to wit:

Sec. 19. Adoption of the Model Law on International Commercial

Pertinent provisions of the Special Rules of Court on Alternative Dispute Resolution,[if

xxx Arbitration, as an alternative mode of settlement, is gaining

The remaining arguments of respondent Kingford are likewise unmeritorious.

[I]t must be remembered that [the principle of hierarchy of courts]

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the

NESTOR B. MAGNO, petitioner, vs. COMMISSION ON ELECTIONS and CARLOS C.

1. the offender is a public officer;

It is the second sub-issue which is problematical. There appears to be a glaring incompatibility

In accordance therewith, Section 40 of RA 7160 is deemed to have repealed Section 12 of BP

WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. The challenged

Bellosillo, Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez,

MARIA VIRGINIA V. REMO, G.R. No. 169202

CARPIO, J., Chairperson,

Hence, this petition.

The Court of Appeals Ruling

The Ruling of the Court

The petition lacks merit.

ART. 370. A married woman may use:

(D) IN CASE OF A WOMAN WHO IS MARRIED, SEPARATED, DIVORCED OR WIDOWED OR

The passport can be amended only in the following cases:

A) AMENDMENT OF WOMANS NAME DUE TO MARRIAGE;

B) AMENDMENT OF WOMANS NAME DUE TO DEATH OF SPOUSE, ANNULMENT OF MARRIAGE

C) CHANGE OF SURNAME OF A CHILD WHO IS LEGITIMATED BY VIRTUE OF A SUBSEQUENT

THE ACQUISITION OF A PHILIPPINE PASSPORT IS A PRIVILEGE. THE LAW RECOGNIZES THE

As the OSG correctly pointed out:

REPUBLIC OF THE G.R. No. 156956

On January 8, 2003, respondent moved to cite Insurance Commissioner Eduardo T. Malinis in

Ruling of the Trial Court

Hence, this Petition.[6]

Petitioner raises this sole issue for the Courts consideration:

The Courts Ruling

The Petition is meritorious.

Section 203 of the Insurance Code provides as follows:

Respondents Inchoate Right

Powers of the Commissioner

DREAMWORK CONSTRUCTION, INC., Petitioner,

VELASCO, JR., J.:

Hence, we have this petition under Rule 45.

The Courts Ruling

This petition must be granted.

Criminal Action for a Prejudicial Question to Exist

We cannot agree with private respondent.

First off, it is a basic precept in statutory construction that a "change in phraseology by

Thus, this Court ruled in Torres v. Garchitorena15 that:

The Resolution of the Civil Case Is Not

We find for petitioner.

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