Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISIONG.R. No. 126891 August 5, 1998

LIM TAY,petitioner,vs.COURT OF APPEALS, GO FAY AND CO. INC., SY GUIOK, and THE ESTATE OF ALFONSO LIM,respondents.

PANGANIBAN,J.:

The duty of a corporate secretary to record transfers of stocks is ministerial. However, he cannot be compelled to do so when the transferee's title to said shares has noprima facievalidity or is uncertain. More specifically, a pledgor, prior to foreclosure and sale, does not acquire ownership rights over the pledged shares and thus cannot compel the corporate secretary to record his alleged ownership of such shares on the basis merely of the contract of pledge. Similarly, the SEC does not acquire jurisdiction over a dispute when a party's claim to being a shareholder is, on the face of the complaint, invalid or inadequate or is otherwise negated by the very allegations of such complaint. Mandamus will not issue to establish a right, but only to enforce one that is already established.Statement of the CaseThere are the principles, used by this Court in resolving this Petition for Review onCertioraribefore us, assailing the October 24, 1996 Decision1of the Court of Appeals2in CA-GR SP No. 40832, the dispositive portion of which reads:IN THE LIGHT OF ALL THE FOREGOING, the Petition at bench is DENIED DUE COURSE and is hereby DISMISSED. With costs against the [p]etitioner.3By the foregoing disposition, the Court of Appeals effectively affirmed the March 7, 1996 Decision4of the Securities and Exchange Commission (SEC)en banc:WHEREFORE, in view of all the foregoing, judgment is hereby rendered dismissing the appeal on the ground that mandamus will only issue upon a clear showing of ownership over the assailed shares of stock, [t]he determination of which, on the basis of the foregoing facts, is within the jurisdiction of the regular courts and not with the SEC.5The SECen bancupheld the August 16, 1993 Decision6of SEC Hearing Officer Rolando C. Malabonga, which dismissed the action for mandamus filed by petitioner.The FactsAs found by the Court of Appeals, the facts of the case are as follows:. . . On January 8, 1980, Respondent-Appellee Sy Guiok secured a loan from the [p]etitioner in the amount of P40,000 payable within six (6) months. To secure the payment of the aforesaid loan and interest thereon, Respondent Guiok executed a Contract of Pledge in favor of the [p]etitioner whereby he pledged his three hundred (300) shares of stock in the Go Fay & Company Inc., Respondent Corporation, for brevity's sake. Respondent Guiok obliged himself to pay interest on said loan at the rate of 10% per annum from the date of said contract of pledge. On the same date, Alfonso Sy Lim secured a loan from the [p]etitioner in the amount of P40,000 payable in six (6) months. To secure the payment of his loan, Sy Lim executed a "Contract of Pledge" covering his three hundred (300) shares of stock in Respondent Corporation. Under said contract, Sy Lim obliged himself to pay interest on his loan at the rate of 10% per annum from the date of the execution of said contract.Under said "Contracts of Pledge," Respondent[s] Guiok and Sy Lim covenanted,inter alia, that:3. In the event of the failure of the PLEDGOR to pay the amount within a period of six (6) months from the date hereof, the PLEDGEE is hereby authorized to foreclose the pledge upon the said shares of stock hereby created by selling the same at public or private sale with or without notice to the PLEDGOR, at which sale the PLEDGEE may be the purchaser at his option; and the PLEDGEE is hereby authorized and empowered at his option to transfer the said shares of stock on the books of the corporation to his own name and to hold the certificate issued in lieu thereof under the terms of this pledge, and to sell the said shares to issue to him and to apply the proceeds of the sale to the payment of the said sum and interest, in the manner hereinabove provided;4. In the event of the foreclosure of this pledge and the sale of the pledged certificate, any surplus remaining in the hands of the PLEDGEE after the payment of the said sum and interest, and the expenses, if any, connected with the foreclosure sale, shall be paid by the PLEDGEE to the PLEDGOR;5. Upon payment of the said amount and interest in full, the PLEDGEE will, on demand of the PLEDGOR, redeliver to him the said shares of stock by surrendering the certificate delivered to him by the PLEDGOR or by retransferring each share to the PLEDGOR, in the event that the PLEDGEE, under the option hereby granted, shall have caused such shares to be transferred to him upon the books of the issuing company."(idem,supra)Respondent Guiok and Sy Lim endorsed their respective shares of stock in blank and delivered the same to the [p]etitioner.7However, Respondent Guiok and Sy Lim failed to pay their respective loans and the accrued interests thereon to the [p]etitioner. In October, 1990, the [p]etitioner filed a "Petition for Mandamus" against Respondent Corporation, with the SEC entitled "Lim Tay versus Go Fay & Company. Inc., SEC Case No. 03894", praying that:PRAYERWHEREFORE, premises considered, it is respectfully prayed that an order be issued directing the corporate secretary of [R]espondent Go Fay & Co., Inc. to register the stock transfers and issue new certificates in favor of Lim Tay. It is likewise prayed that [R]espondent Go Fay & Co., Inc[.] be ordered to pay all dividends due and unclaimed on the said certificates to [P]laintiff Lim Tay.Plaintiff further prays for such other relief just and equitable in the premises. (page 34,Rollo)The [p]etitioner alleged,inter alia, in his Petition that the controversy between him as stockholder and the Respondent Corporation was intra-corporate in view of the obstinate refusal of the corporate secretary of Respondent Corporation to record the transfer of the shares of stock of Respondent Guiok and Sy Lim in favor of and under the name of the [p]etitioner and to issue new certificates of stock to the [p]etitioner.The Respondent Corporation filed its Answer to the Complaint and alleged, as Affirmative Defense, that:AFFIRMATIVE DEFENSE7. Respondent repleads and incorporates herein by reference the foregoing allegations.8. The Complaint states no cause of action against [r]espondent.9. Complainant is not a stockholder of [r]espondent. Hence, the Honorable Commission has no jurisdiction to enter the present controversy since their [sic] is no intracorporate relationship between complainant and respondent.10. Granting arguendo that a pledge was constituted over the shareholdings of Sy Guiok in favor of the complainant and that the former defaulted in the payment of his obligations to the latter, the same did not automatically vest [i]n complainant ownership of the pledged shares. (pace 37,Rollo)In the interim, Sy Lim died. Respondents Guiok and the Intestate Estate of Alfonso Sy Lim, represented by Conchita Lim, filed their Answer-In-Intervention with the SEC alleging,inter alia, that:xxx xxx xxx3. Deny specifically the allegation under paragraph 5 of the Complaint that, failure to pay the loan within the contract period automatically foreclosed the pledged shares of stocks and that the share of stocks are automatically purchased by the plaintiff, for being false and distorted, the truth being that pursuant to the [sic] paragraph 3 of the contract of pledges, Annexes "A" and "B", it is clear that upon failure to pay the amount within the stipulated period, the pledgee is authorized to foreclose the pledge and thereafter, to sell the same to satisfy the loan. [H]owever, to this point in time, plaintiff has not performed any operative act of foreclosing the shares of stocks of [i]ntervenors in accordance with the Chattel Mortgage law, [n]either was there any sale of stocks by way of public or private auction made after foreclosure in favor of the plaintiff to speak about, and therefore, the respondent company could not be force[d] to [sic] by way of mandamus, to transfer the subject shares of stocks from the name of your [i]ntervenors to that of the plaintiff in the absence of clear and legal basis for such;4. DENY specifically the allegations under paragraphs 6, 7 and 8 of the complaint as to the existence of the alleged intracorporate dispute between plaintiff and company for being without proper and legal basis. In the first place, plaintiff is not a stockholder of the respondent corporation; there was no foreclosure of shares executed in accordance with the Chattel Mortgage Law whatsoever; there were no sales consummated that would transfer to the plaintiff the subject shares of stocks and therefore, any demand to transfer the shares of stocks to the name of the plaintiff has no legal basis. In the second place, [i]ntervenors had been in the past negotiating possible compromise and at the same time, had tendered payment of the loan secured by the subject pledges but plaintiff refused unjustifiably to oblige and accept payment o[r] even agree on the computation of the principal amount of the loan and intereston top of a substantial amount offeredjust to settle and compromise the indebtedness of [i]ntervenors;II. SPECIAL AFFIRMATIVE DEFENSESIntervenors replead by way of reference all the foregoing allegations to form part of the special affirmative defenses;5. This Honorable Commission has no jurisdiction over the person of the respondent and nature of the action, plaintiff having no personality at all to compel respondent by way of mandamus to perform certain corporate function[s];6. The complaint states no cause of action;7. That respondent is not [a] real party in interest;8. The appropriation of the subject shares of stocks by plaintiff, without compliance with the formality of law, amounted to "[p]actum commis[s]orium" therefore, null and void;9. Granting for the sake of argument only that there was a valid foreclosure and sale of the subject st[o]cks in favor of the plaintiff which [i]ntervenors deny still paragraph 5 of the contract allows redemption, for which intervenors are willing to redeem the share of stocks pledged;10. Even the Chattel Mortgage law allowed redemption of the [c]hattel foreclosed;11. As a matter of fact, on several occasions, [i]ntervenors had made representations with the plaintiff for the compromise and settlement of all the obligations secured by the subject pledges even offering to pay compensation over and above the value of the obligations, interest[s] and dividends accruing to the share of stocks but, plaintiff unjustly refused to accept the offer of payment; (pages 39-42,Rollo)The [r]espondents-[i]ntervenors prayed the SEC that judgment be rendered in their favor, as follows:IV. PRAYERIt is respectfully prayed to this Honorable Commission after due hearing, to dismiss the case for lack of merit, ordering plaintiff to accept payment for the loans secured by the subject shares of stocks and to pay plaintiff:1. The sum of P50,000.00, as moral damages;2. the sum of P50,000.00, as attorneys fees; and,3. costs of suit.Other reliefs just and equitable [are] likewise prayed for.(pages 42-43,Rollo)After due proceedings, the [h]earing [o]fficer promulgated a Decision dismissing [p]etitioner's Complaint on the ground that although the SEC had jurisdiction over the action, pursuant to the Decision of the Supreme Court in the case of "Rural Bank of Salinas,et al. vs. Court of Appeals,et al., 210 SCRA 510", he failed to prove the legal basis for the secretary of the Respondent Corporation to be compelled to register stock transfers in favor of the [p]etitioner and to issue new certificates of stock under his name (pages 67-77,Rollo). The [p]etitioner appealed the Decision of the [h]earing [o]fficer to the SEC, but, on March 7, 1996, the SEC promulgated a Decision, dismissing [p]etitioner's appeal on the grounds that: (a) the issue between the [p]etitioner and the [r]espondents being one involving the ownership of the shares of stock pledged by Respondent Guiok and Sy Lim, the SEC had no jurisdiction over the action filed by the [p]etitioner; (b) the latter had no cause of action for mandamus against the Respondent Corporation, the right of ownership of the [p]etitioner over the 300 shares of stock pledged by Respondent Guiok and Sy Lim not having been as yet, established, preparatory to the institution of said Petition for Mandamus with the SEC.Ruling of the Court of AppealsOn the issue of jurisdiction, the Court of Appeals ruled:In ascertaining whether or not the SEC had exclusive jurisdiction over [p]etitioner's action, the [a]ppellate [c]ourt must delve into and ascertain: (a) whether or not there is a need to enlist the expertise and technical know-how of the SEC in resolving the issue of the ownership of the shares of stock; (b) the status of the relationships of the parties; [and] (c) the nature of the question that is the subject of the controversy. Where the controversy is purely a civil matter resoluble by civil law principles and there is no need for the application of the expertise and technical know-how of the SEC, then the regular courts have jurisdiction over the action.8[citations omitted]On the issue of whether mandamus can be availed of by the petitioner, the Court of Appeals agreed with the SEC,viz.:. . . [T]he [p]etitioner failed to establish a clear and legal right to the writ of mandamus prayed for by him. . . . Mandamus will not issue to enforce a right which is in substantial dispute or to which a substantial doubt exists . . . . The principal function of the writ of mandamus is to command and expedite, and not to inquire and adjudicate and, therefore it is not the purpose of the writ to establish a legal right, but to enforce one which has already been established.9[citations omitted]The Court of Appeals debunked petitioner's claim that he had acquired ownership over the shares by virtue of novation, holding that respondents' indorsement and delivery of the shares were pursuant to Articles 2093 and 2095 of the Civil Code and that petitioner's receipt of dividends was in compliance with Article 2102 of the same Code. Petitioner's claim that he had acquired ownership of the shares by virtue of prescription was likewise dismissed by Respondent Court in this wise:The prescriptive period for the action of Respondent[s] Guiok and Sy Lim to recover the shares of stock from the [p]etitioner accrued only from the time they paid their loans and the interests thereon and [made] a demand for their return.10Hence, the petitioner brought before us this Petition for Review onCertiorariin accordance with Rule 45 of the Rules of Court.11Assignment of ErrorsPetitioner submits, for the consideration of this Court, these issues:12(a) Whether the Securities and Exchange Commission had jurisdiction over the complaint filed by the petitioner; and(b) Whether the petitioner is entitled to the relief of mandamus as against the respondent Go Fay & Co., Inc.In addition, petitioner contends that it has acquired ownership of the shares "through extraordinary prescription," pursuant to Article 1132 of the Civil Code, and through respondents' subsequent acts, which amounted to a novation of the contracts of pledge. Petitioner also claims that there wasdacion en pago, in which the shares of stock were deemed sold to petitioner, the consideration for which was the extinguishment of the loans and the interests thereon. Petitioner likewise claims that laches bars respondents from recovering the subject shares.The Court's RulingThe petition has no merit.First Issue: Jurisdiction of the SECClaiming that the present controversy is intra-corporate and falls within the exclusive jurisdiction of the SEC, petitioner relies heavily onAbejo v. De la Cruz,13which upheld the jurisdiction of the SEC over a suit filed by an unregistered stockholder seeking to enforce his rights. He also seeks support fromRural Bank of Salinas, Inc. v. Court of Appeals,14which ruled that the right of a transferee or an assignee to have stocks transferred to his name was an inherent right flowing from his ownership of the said stocks.The registration of shares in a stockholder's name, the issuance of stock certificates, and the right to receive dividends which pertain to the said shares are all rights that flow from ownership. The determination of whether or not a shareholder is entitled to exercise the above-mentioned rights falls within the jurisdiction of the SEC. However, if ownership of the shares is not clearly established and is still unresolved at the time the action for mandamus is filed, then jurisdiction lies with the regular courts.Sec. 5 of Presidential Decree No. 902-A sets forth the jurisdiction of the SEC as follows:Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of stockholders, partners, members of associations or organizations registered with the Commission;(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity;(c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations, partnerships or associations.(d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the Management Committee created pursuant to this decree.15Thus, a controversy "among stockholders, partners or associates themselves"16is intra-corporate in nature and falls within the jurisdiction of the SEC.As a general rule, the jurisdiction of a court or tribunal over the subject matter is determined by the allegations in the complaint.17In the present case, however, petitioner's claim that he was theownerof the shares of stock in question has noprima faciebasis.In his Complaint, petitioner alleged that, pursuant to the contracts of pledge, he became the owner of the shares when the term for the loans expired. The Complaint contained the following pertinent averments:xxx xxx xxx3. On [J]anuary 8, 1990, under a Contract of Pledge, Lim Tay received three hundred (300) shares of stock of Go Fay & Co., Inc., from Sy Guiok as security for the payment of a loan of [f]orty [t]housand [p]esos (P40,000.00) Philippine currency, the sum of which was payable within six (6) months [with interest] at ten percentum (10%) per annum from the date of the execution of the contract;a copy of this Contract of Pledge is attached as Annex"A"and made part hereof;4. On the same date January 8, 1980, under a similar Contract of Pledge, Lim Tay received three hundred (300) shares of stock of Go Pay & Co., Inc. from Alfonso Sy Lim as security for the payment of a loan of [f]orty [t]housand [p]esos (P40,000.00) Philippine currency, the sum of which was payable within six (6) months [with interest] at ten percentum (10%) per annum from the date of the execution of the contract;a copy of this Contract of Pledge is attached as Annex"B"and made part hereof;5. By the express terms of the agreements, upon failure of the borrowers to pay the stated amounts within the contract period, the pledge is foreclosed and the shares of stock are purchased by [p]laintiff, who is expressly authorized and empowered to transfer the duly endorsed shares of stock on the books of the corporation to his own name; . . .18(emphasis supplied)However, the contracts of pledge, which were made integral parts of the Complaint, contain this common proviso:3. In the event of the failure of the PLEDGOR to pay the amount within a period of six (6) months from the date hereof, the PLEDGEE is hereby authorized to foreclose the pledge upon the said shares of stock hereby created by selling the same at public or private sale with or without notice to the PLEDGOR, at which sale the PLEDGEE may be the purchaser at his option; and the PLEDGEE is hereby authorized and empowered at his option, to transfer the said shares of stock on the books of the corporation to his own name and to hold the certificate issued in lieu thereof under the terms of this pledge, and to sell the said shares to issue to him and to apply the proceeds of the sale to the payment of the said sum and interest, in the manner hereinabove provided;This contractual stipulation, which was part of the Complaint, shows that plaintiff was merelyauthorized to foreclosethe pledge upon maturity of the loans, not to own them. Such foreclosure is not automatic, for it must be done in a public or private sale. Nowhere did the Complaint mention that petitioner had in fact foreclosed the pledge and purchased the shares after such foreclosure. His status as a mere pledgee does not, under civil law, entitle him to ownership of the subject shares. It is also noteworthy that petitioner's Complaint did not aver that said shares were acquired through extraordinary prescription, novation or laches. Moreover, petitioner's claim, subsequent to the filing of the Complaint, that he acquired ownership of the said shares through these three modes is not indubitable and still has to be resolved. In fact, as will be shown, such allegation-has no merit. Manifestly, the Complaint by itself did not contain anyprima facieshowing that petitioner was the owner of the shares of stocks. Quite the contrary, it demonstrated that he was merely a pledgee, not an owner. Accordingly, it failed to lay down a sufficient basis for the SEC to exercise jurisdiction over the controversy. In fact, the very allegations of the Complaint and its annexes negated the jurisdiction of the SEC.Petitioner's reliance on the doctrines set forth inAbejo v. De la CruzandRural Bank of Salinas, Inc. v. Court of Appealsis misplaced. InAbejo, he Abejo spouses sold to Telectronic Systems, Inc. shares of stock in Pocket Bell Philippines, Inc. Subsequent to such contract of sale, the corporate secretary, Norberto Braga, refused to record the transfer of the shares in the corporate books and instead asked for the annulment of the sale, claiming that he and his wife had a preemptive right over some of the shares, and that his wife's shares were sold without consideration or consent.At the time the Bragas questioned the validity of the sale, the contract had already been perfected, thereby demonstrating that Telectronic Systems, Inc. was already theprima facieowner of the shares and, consequently, a stockholder of Pocket Bell Philippines, Inc. Even if the sale were to be annulled later on, Telectronic Systems, Inc. had, in the meantime, title over the shares from the time the sale was perfected until the time such sale was annulled. The effects of an annulment operate prospectively and do not, as a rule, retroact to the time the sale was made. Therefore, at the time the Bragas questioned the validity of the tranfers made by the Abejos, Telectronic Systems, Inc. was already aprima facieshareholder of the corporation, thus making the dispute between the Bragas and the Abejos "intra-corporate" in nature. Hence, the Court held that "the issue is not on ownership of shares but rather the non-performance by the corporate secretary of the ministerial duty of recording transfers of shares of stock of the corporation of which he is secretary."19UnlikeAbejo, however, petitioner's ownership over the shares in this case was not yet perfected when the Complaint was filed. The contract of pledge certainly does not make him the owner of the shares pledged. Further, whether prescription effectively transferred ownership of the shares, whether there was a novation of the contracts of pledge, and whether laches had set in were difficult legal issues, which were unpleaded and unresolved when herein petitioner asked the corporate secretary of Go Fay to effect the transfer, in his favor, of the shares pledged to him.InRural Bank of Salinas, Melenia Guerrero executed deeds of assignment for the shares in favor of the respondents in that case. When the corporate secretary refused to register the transfer, an action for mandamus was instituted. Subsequently, a motion for intervention was filed, seeking the annulment of the deeds of assignment on the grounds that the same were fictitious and antedated, and that they were in fact donations because the considerations therefor were below the book value of the shares.Like the Abejo spouses, the respondents inRural Bank of Salinaswere alreadyprima facieshareholders when the deeds of assignment were questioned. If the said deeds were to be annulled later on, respondents would still be considered shareholders of the corporation from the time of the assignment until the annulment of such contracts.Second Issue:Mandamus Will NotIssue to Establish a RightPetitioner prays for the issuance of a writ of mandamus, directing the corporate secretary of respondent corporation to have the shares transferred to his name in the corporate books, to issue new certificates of stock and to deliver the corresponding dividends to him.20In order that a writ of mandamus may issue, it is essential that the person petitioning for the same has a clear legal right to the thing demanded and that it is the imperative duty of the respondent to perform the act required. It neither confers powers nor imposes duties and is never issued in doubtful cases. It is simply a command to exercise a power already possessed and to perform a duty already imposed.21In the present case, petitioner has failed to establish a clear legal right. Petitioner's contention that he is the owner of the said shares is completely without merit. Quite the contrary and as already shown, he does not have any ownership rights at all. At the time petitioner instituted his suit at the SEC, his ownership claim had noprima facieleg to stand on. At best, his contention was disputable and uncertain Mandamus will not issue to establish a legal right, but only to enforce one that is already clearly established.Without Foreclosure andPurchase at Auction, PledgorIs Not the Owner of Pledged SharesPetitioner initially argued that ownership of the shares pledged had passed to him, upon Respondents Sy Guiok and Sy Lim's failure to pay their respective loans. But on appeal, petitioner claimed that ownership over the shares had passed to him, not via the contracts of pledge, but by virtue of prescription and by respondents' subsequent acts which amounted to a novation of the contracts of pledge. We do not agree.At the outset, it must be underscored that petitioner did not acquire ownership of the shares by virtue of the contracts of pledge. Article 2112 of the Civil Code states:The creditor to whom the credit has not been satisfied in due time, may proceed before a Notary Public to the sale of the thing pledged. This sale shall be made at a public auction, and with notification to the debtor and the owner of the thing pledged in a proper case, stating the amount for which the public sale is to be held. If at the first auction the thing is not sold, a second one with the same formalities shall be held; and if at the second auction there is no sale either, the creditor may appropriate the thing pledged. In this case he shall be obliged to give an acquittance for his entire claim.Furthermore, the contracts of pledge contained a common proviso, which we quote again for the sake of clarity:3. In the event of the failure of the PLEDGOR to pay the amount within a period of six (6) months from the date hereof, the PLEDGEE is hereby authorized to foreclose the pledge upon the said shares of stock hereby created by selling the same at public or private sale with or without notice to the PLEDGOR, at which sale the PLEDGEE may be the purchaser at his option; and "the PLEDGEE is hereby authorized and empowered at his option to transfer the said shares of stock on the books of the corporation to his own name, and to hold the certificate issued in lieu thereof under the terms of this pledge, and to sell the said shares to issue to him and to apply the proceeds of the sale to the payment of the said sum and interest, in the manner hereinaboveprovided;22There is no showing that petitioner made any attempt to foreclose or sell the shares through public or private auction, as stipulated in the contracts of pledge and as required by Article 2112 of the Civil Code. Therefore, ownership of the shares could not have passed to him. The pledgor remains the owner during the pendency of the pledge and prior to foreclosure and sale, as explicitly provided by Article 2103 of the same Code:Unless the thing pledged is expropriated, the debtor continues to be the owner thereof.Nevertheless, the creditor may bring the actions which pertain to the owner of the thing pledged in order to recover it from, or defend it against a third person.No Ownershipby PrescriptionPetitioner did not acquire the shares by prescription either. The period of prescription of any cause of action is reckoned only from the date the cause of action accrued.Since a cause of action requires as an essential element not only a legal right of the plaintiff and a correlative obligation of the defendant, but also an act or omission of the defendant in violation of said legal right, the cause of action does not accrue until the party obligated refuses, expressly or impliedly, to comply with its duty."23Accordingly, a cause of action on a written contract accrues when a breach or violation thereof occurs.Under the contracts of pledge, private respondents would have a right to ask for the redelivery of their certificates of stock upon payment of their debts to petitioner, consonant with Article 2105 of the Civil Code, which reads:The debtor cannot ask for the return of the thing pledged against the will of the creditor, unless and until he has paid the debt and its interest, with expenses in a proper case.24Thus, the right to recover the shares based on the written contract of pledge between petitioner and respondents would arise only upon payment of their respective loans. Therefore, the prescriptive period within which to demand the return of the thing pledged should begin to run only after the payment of the loan and a demand for the thing has been made, because it is only then that respondents acquire a cause of action for the return of the thing pledged.Prescription should not begin to run on the action to demand the return of the thing pledged while the loan still exists. This is because the right to ask for the return of the thing pledged will not arise so long as the loan subsists. In the present case, the prescriptive period did not begin to run when the loan became due. On the other hand, it is petitioner's right to demand payment thatmaybe in danger of prescription.Petitioner contends that he can be deemed to have acquired ownership over the certificates of stock through extraordinary prescription, as provided for in Article 1132 of the Civil Code which states:Art. 1132. The ownership of movables prescribes through uninterrupted possession for four years in good faith.The ownership of personal property also prescribes through uninterrupted possession for eight years, without need of any other condition. . . . .Petitioner's argument is untenable. What is required by Article 1132 is possession in the concept of an owner. In the present case, petitioner's possession of the stock certificates came about because they were delivered to him pursuant to the contracts of pledge. His possession as a pledgee cannot ripen into ownership by prescription. As aptly pointed out by Justice Jose C. Vitug:Acquisitive prescription is a mode of acquiring ownership by a possessor through the requisite lapse of time. In order to ripen into ownership, possession must be in the concept of an owner, public, peaceful and uninterrupted. Thus, possession with a juridical title, such as by a usufructory, a trustee, a lessee, agent or a pledgee, not being in the concept of an owner, cannot ripen into ownership by acquisitive prescription unless the juridical relation is first expressly repudiated and such repudiation has been communicated to the other party.25Petitioner expressly repudiated the pledge, only when he filed his Complaint and claimed that he was not a mere pledgee, but that he was already the owner of the shares. Based on the foregoing, petitioner has not acquired the certificates of stock through extraordinary prescription.No Novationin Favor of PetitionerNeither did petitioner acquire the shares by virtue of a novation of the contract of pledge. Novation is defined as "the extinguishment of an obligation by a subsequent one which terminates it, either by changing its object or principal conditions, by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor."26Novation of a contract must not be presumed. "In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point."27In the present case, novation cannot be presumed by (a) respondents' indorsement and delivery of the certificates of stock covering the 600 shares, (b) petitioner's receipt of dividends from 1980 to 1983, and (c) the fact that respondents have not instituted any action to recover the shares since 1980.Respondents' indorsement and delivery of the certificates of stock were pursuant to paragraph 2 of the contract of pledge which reads:2. The said certificates had been delivered by the PLEDGOR endorsed in blank to be held by the PLEDGEE under the pledge as security for the payment of the aforementioned sum and interest thereonaccruing.28This stipulation did not effect the transfer of ownership to petitioner. It was merely in compliance with Article 2093 of the Civil Code,29which requires that the thing pledged be placed in the possession of the creditor or a third person of common agreement; and Article 2095,30which states that if the thing pledged are shares of stock, then the "instrument proving the right pledged" must be delivered to the creditor.Moreover, the fact that respondents allowed the petitioner to receive dividends pertaining to the shares was not meant to relinquish ownership thereof. As stated by respondent corporation, the same was done pursuant to an agreement between the petitioner and Respondents Sy Guiok and Sy Lim, following Article 2102 of the civil Code which provides:It the pledge earns or produces fruits, income, dividends, or interests, the creditor shall compensate what he receives with those which are owing him; but if none are owing him, or insofar as the amount may exceed that which is due, he shall apply it to the principal. Unless there is a stipulation to the contrary, the pledge shall extend to the interest and the earnings of the right pledged.Novation cannot be inferred from the mere fact that petitioner has not, since 1980, instituted any action to recover the shares. Such action is in fact premature, as the loan is still outstanding. Besides, as already pointed out, novation is never presumed or inferred.No Dacion en Pagoin Favor of PetitionerNeither can there bedacion en pago, in which the certificates of stock are deemed sold to petitioner, the consideration for which is the extinguishment of the loans and the accrued interests thereon.Dacion en pagois a form of novation in which a change takes place in the object involved in the original contract. Absent an explicit agreement, petitioner cannot simply presumedacion en pago.Laches Nota Bar to PetitionerPetitioner submits that "the inaction of the individual respondents with respect to the recovery of the shares of stock serves to bar them from asserting rights over said shares on the basis of laches."31Laches has been defined as "the failure or neglect, for an unreasonable length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it."32In this case, it is in fact petitioner who may be guilty of laches. Petitioner had all the time to demand payment of the debt. More important, under the contracts of pledge, petitioner could have foreclosed the pledges as soon as the loans became due. But for still unknown or unexplained reasons, he failed to do so, preferring instead to pursue his baseless claim to ownership.WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED. Costs against petitioner.SO ORDERED.SECOND DIVISION

[G.R. No. 149357. March 04, 2005]MOBILIA PRODUCTS, INC.,petitioner, vs. HAJIME UMEZAWA,respondent.

[G.R. No. 149403. March 04, 2005]PEOPLE OF THE PHILIPPINES,petitioner, vs. HON. JUDGE RUMOLDO R. FERNANDEZ and HAJIME UMEZAWA,respondents.D E C I S I O NCALLEJO, SR.,J.:Before the Court are two consolidated petitions: a petition for review oncertiorarifiled by the People of the Philippines, docketed as G.R. No. 149403 of the Resolution[1]of the Court of Appeals (CA) in CA-G.R. SP No. 52440 which reversed its decision and granted the petition forcertiorari, prohibition and mandamus filed by respondent Hajime Umezawa; and the petition for review oncertioraridocketed as G.R. No. 149357 filed by petitioner Mobilia Products, Inc. (MPI), the intervenor in the CA, assailing the same Resolution of the appellate court.The AntecedentsThe antecedents were amply summarized by the Office of the Solicitor General (OSG) in the petition at bar, to wit:Mobilia Products, Inc. is a corporation engaged in the manufacture and export of quality furniture which caters only to the purchase orders booked and placed through Mobilia Products Japan, the mother company which does all the marketing and booking. After orders from customers are booked at the mother company in Japan, the same are coursed through Mobilia Philippines for implementation and production, after which, the ordered items are shipped to Japan through the mother company.Mobilia Products Japan sent Hajime Umezawa to the Philippines in order to head Mobilia Products, Inc. as President and General Manager. To qualify him as such and as a Board Director, he was entrusted with one nominal share of stock.Sometime in the last week of January 1995, Umezawa, then the President and General Manager of Mobilia Products, Inc., organized another company with his wife Kimiko, and his sister, Mitsuyo Yaguchi, to be known asAstem Philippines Corporation,without the knowledge of the Chairman and Chief Executive Officer Susumo Kodaira and the other members of the Board of Directors of Mobilia.The said company would be engaged in the same business as Mobilia. Spouses Umezawa recruited Justin Legaspi, former Production Manager of Mobilia, to act as Manager and one Yoshikazu Hayano of Phoenix Marble Corporation to serve as investors [sic].Pending formal organization, Spouses Umezawa, Justin Legaspi and Yoshikazu Hayano wanted to accelerate the market potentials of Astem by participating in the International Furniture Fair 1995 held at the Word Trade Centre of Singapore on March 6 to 10, 1995.One of the requirements of such Fair was that the furniture exhibits must arrive and be received at Singapore not later than February 23, 1995. Pressed for time, with less than one month to prepare and while Astem had yet no equipment and machinery, no staff and no ready personnel, Umezawa, with grave abuse of the confidence reposed on him as President and General Manager of Mobilia Products, Inc., and in conspiracy with his wife, his sister Mitsuyo Yaguchi, Yoshikazu Hayano and Justin Legaspi, all with intent to gain for themselves and for their company Astem Philippines Corporation, stole prototype furniture from petitioner Mobilia so that the said pieces of furniture would be presented and exhibited asbelonging to Astem in the International Furniture Fair 95 in Singapore.In order to avoid detection, Umezawa contacted Henry Chua, the owner of Dew Foam, one of the suppliers of Mobilia, for that the latter to load several pieces of prototype furniture into a Dew Foam truck and store them at the Dew Foam warehouse. The first batch of furniture was stolen on February 8, 1995, when Mr. Henry Chua, upon the request of respondent Umezawa, caused to be loaded into his Dew Foam truck two prototype sofa models worthP500,000.00, after which, the same were spirited from the Mobilia compound, then transported and stored in Henry Chuas warehouse.Again, on February 18, 1995, Umezawa, with grave abuse of confidence and taking advantage of his position as President and General Manager, unlawfully stole expensive furniture from Mobilias factory worthP2,964,875.00. In order to avoid detection, the said furniture were loaded in the truck belonging to Dew Foam, with respondent Umezawa personally supervising the loading, the carting and spiriting away of the said furniture. Thus, taking advantage of his position as General Manager, he managed to have the said furniture taken out of the company premises and passed the company guard without any problem and difficulty.Further, on February 19, 1995, around 1 oclock in the afternoon, respondent Umezawa again loaded into his motor vehicle, and took away from company premises under the same irregular and unlawful circumstances, an expensive three-seater sofa worthP255,000.00.The taking out of the said furniture was effected in violation of the standard procedures established by petitioner corporation which requires that every shipment or taking out of the furniture be checked and reviewed by Mobilias Production, Planning, Inventory Costing and Control (PPICC) Division. All the foregoing furniture were transported to and stored at Henry Chuas warehouse. After sometime, the foregoing furniture were photographed for slide photos at Photo Folio at the Reclamation Area, Cebu City and then finally catalogued for use in the Singapore Fair for the use of Astem and its supposed owners, namely: spouses Umezawa, Hayano and Legaspi. The foregoing furniture models were finally shipped for exhibition at the International Furniture Fair 95 in Singapore as furniture belonging to Astem Philippines Corporation.Sometime in March 1995, based on orders booked for Astem, Umezawa, with unfaithfulness and abuse of confidence reposed on him as the President and General Manager of petitioner Mobilia, ordered and caused the manufacture of eighty-nine (89) pieces of furniture with a total value ofP17,108,500.00. The said pieces of furniture were made with Mobilia supplies, materials and machineries, as well as with Mobilia time and personnel, all of which were under the administration and control of Umezawa as President and General Manager. The said materials and supplies, the time and labor, were supposed to be used for the manufacture and production of quality furniture for the EXCLUSIVE USE of Mobilia. However, Umezawa, in violation of his duty to apply the same for the use of Mobilia and the duty to account for the same, converted their use for the benefit of Astem or for the use and benefit of Umezawa, his wife and sister, Yoshikazu Hayano and Legaspi, much to the damage and prejudice of Mobilia Products.The same furniture could also have been taken out of the company premises by Umezawa and cohorts for shipment and delivery to Astem customers had it not been for the timely discovery of the previous theft. [2]The Board of Directors of MPI, consisting of its Chairman Susumo Kodaira and members Yasushi Kato and Rolando Nonato, approved a Resolution on May 2, 1995 authorizing the filing of a complaint against Umezawa for two counts of qualified theft allegedly committed on February 18 and 19, 1995. Attached to the complaint was the Joint Affidavit of Danilo Lallaban, George del Rio and Yasushi Kato. The case was docketed as I.S. No. 95-275.On May 15, 1995, the public prosecutor filed an Information for qualified theft against Umezawa with the Regional Trial Court (RTC) of Lapu-Lapu City. The accusatory portion of the Information, docketed as Criminal Case No. 013231-L, reads:That during or about the period comprised between the 18thand 19thday of February 1995, in the City of Lapu-Lapu, Philippines, within the jurisdiction of this Honorable Court, the accused, while being then the President and General Manager of Mobilia Products, Inc., a corporation engaged in the manufacture and export of furniture, holding office and doing business in the Mactan Export Processing Zone, Lapu-Lapu City, with grave abuse of the confidence reposed upon him by his employer, with intent to gain, did then and there willfully, unlawfully and feloniously take, steal and carry away from the corporations factory in Mactan Export Processing Zone, Lapu-Lapu City, expensive pieces of furniture, to wit:1) 1 set, Model No. 3, 2-seaterGerman leather sofa, worth - - - - - - - - - - - - - - - - - -P 208,125.002) 1 set, Model No. 8, 2-seaterGerman leather sofa, worth - - - - - - - - - - - - - - - - - -P 315,000.003) 1 set, Model No. 5, 2-seaterGerman leather sofa, worth - - - - - - - - - - - - - - - - - -P 108,000.004) 1 set, Model No. 4, 2-seaterGerman leather sofa, worth - - - - - - - - - - - - - - - - - -P 277,500.005) 1 set, Model No. 6, 1-seaterGerman leather sofa, worth - - - - - - - - - - - - - - - - - -P 146,250.006) 1 set, Model No. 2, 2-seaterGerman leather sofa, worth - - - - - - - - - - - - - - - - - -P 225,000.007) 1 set, Model No. 1, 2-seaterGerman leather sofa, worth - - - - - - - - - - - - - - - - - -P 275,000.008) 1 piece, Model Table No. 2,Italian marble table, worth - - - - - - - - - - - - - - - - - - - -P 93,750.009) 1 piece, Model Table No. 4,Italian marble table, worth - - - - - - - - - - - - - - - - - - - -P 105,000.0010) 2 pieces, Model PedestalNo. 6, Italian marble pedestal, worth - - - - - - - - - - - - -P 150,000.0011) 1 piece, Model ColumnStandard No. 11, Italian marble worth - - - - - - - - - - - -P 93,750.0012) 1 piece, Model Table No. 1,Italian marble table, worth - - - - - - - - - - - - - - - - - - - -P 105,000.0013) 1 piece, Model High TableNo. 10, Italian marble, worth - - - - - - - - - - - - - - - - - - -P 187,500.0014) 1 piece, Model Table No. 8,Italian marble table, worth - - - - - - - - - - - - - - - - - - - -P 187,500.0015) 1 piece, Model Table No. 7Italian marble table, worth - - - - - - - - - - - - - - - - - - - -P 187,500.0016) 1 piece, Model Table No. 5Italian marble table, worth - - - - - - - - - - - - - - - - - - - -P 112,500.0017) 1 piece, Model Table No. 9,Italian marble table, worth - - - - - - - - - - - - - - - - - - - -P 187,500.0018) 3-seater sofa, worth- - - - - - - - - - - - - - - - - -P 255,000.00with an aggregate value ofP3,219,875.00, Philippine currency, without the consent of his employer, to the damage and prejudice of Mobilia Products, Inc., in the said amount ofP3,219,875.00.Contrary to law.[3]On motion of the prosecution, the trial court issued a writ of preliminary attachment covering the properties of Umezawa.Umezawa then filed an Omnibus Motion to quash the information filed against him, the discharge of the writ of attachment issued by the trial court, and to set the case for preliminary investigation. MPI, the private complainant therein, opposed the motion.In the meantime on July 21, 1995, MPI filed another criminal complaint for qualified theft against Umezawa, his wife Kimiko Umezawa, Mitsuyo Yaguchi, Justin Legaspi, Yoshikazu Hayano and Henry Chua allegedly committed in March 1995, with the Office of the City Prosecutor. The case was docketed as I.S. No. 95-442.On July 25, 1995, the trial court issued an Order in Criminal Case No. 013231-L denying the omnibus motion. On joint motion of Umezawa and the public prosecutor, the trial court ordered a reinvestigation of the case. Conformably, the public prosecutor conducted a reinvestigation of Criminal Case No. 013231-L jointly with I.S. No. 95-442.On September 25, 1995, Umezawa filed a petition with the Securities and Exchange Commission (SEC), docketed as SEC Case No. 002919, for the nullification of the Resolution issued by the three alleged members of MPI Board of Directors, authorizing the filing of criminal complaints against him in behalf of the corporation.On January 3, 1996, the public prosecutor issued a Joint Resolution finding probable cause for qualified theft and one count of estafa against Umezawa, and dismissing the case against the other accused. The Prosecutor maintained his finding of probable cause against Umezawa in Criminal Case No. 013231-L.On February 20, 1996, the public prosecutor filed an Information for qualified theft with the RTC of Lapu-Lapu City against Umezawa, docketed as Criminal Case No. 013423-L. The accusatory portion reads:That on the 8thday of February 1995, in the City of Lapu-Lapu, Philippines, within the jurisdiction of this Honorable Court, the above-named accused, while being the President and General Manager of Mobilia Products, Inc., a corporation engaged in the manufacture and export of quality furniture, whose principal place of business is at the Mactan Export Processing Zone, Lapu-Lapu City, with intent to gain, without the consent of his employer, and with grave abuse of confidence, did then and there willfully, unlawfully and feloniously take, steal and carry away from the corporations factory the following expensive pieces of furniture, to wit:1) 1 set, Model No. 2, 2-seater Germanleather sofa, all valued at . . . . . . . . . . . . . .P 225,000.002) 1 set, Model No. 1, 2-seater Germanleather sofa, all valued at . . . . . . . . . . . . . . . .P 275,000.00with an aggregate value ofP500,000.00 Philippine Currency, to the damage and prejudice of Mobilia Products, Inc.CONTRARY TO LAW.[4]Another Information for estafa was thereafter filed against the same accused, docketed as Criminal Case No. 013424-L. The accusatory portion reads:That sometime in March 1995, in the City of Lapu-Lapu, Philippines, within the jurisdiction of this Honorable Court, the above-named accused, by means of unfaithfulness and abuse of confidence reposed upon him as the President and General Manager of Mobilia Products, Inc., did then and there willfully, unlawfully and feloniously misappropriate and convert to his own personal use and benefit the amount of Seventeen Million One Hundred Eight Thousand Five Hundred (P17,108,500.00) Pesos, Philippine Currency, which was the total value of the furnitures ordered and manufactured by the accused or at his instance using Mobilia supplies, materials and machineries, as well as time and personnel which were supposed to be for the exclusive use of Mobilia Products, Inc. but were converted for the use and benefit of the accused and Astem Philippines Corporation, a company or firm engaged in the same business as that of Mobilia Products, Inc., which is, [in] the manufacture and production of quality furniture for export, owned by the accused, to the damage and prejudice of Mobilia Products, Inc.CONTRARY TO LAW.[5]On April 25, 1996, Umezawa filed a motion for the suspension of the proceedings on the ground of the pendency of his petition with the SEC in Case No. 002919. The trial court, however, issued an Order on May 21, 1996, denying the said motion. It held that the filing and the pendency of a petition before the SEC did not warrant a suspension of the criminal cases.On September 25, 1998, Umezawa was arraigned and pleaded not guilty.On September 30, 1998, Umezawa filed anew a Joint Motion to Quash the Informations in Criminal Cases Nos. 013231-L and 013423-L, on the ground that the facts alleged therein did not constitute the felony of qualified theft. Umezawa claimed that based on the Joint Affidavit of the witnesses for the prosecution submitted during the preliminary investigation, Yasushi Kato and George del Rio, MPI Vice-President and the head of the Upholstery Department, respectively, the appropriate charge should beestafaand not qualified theft. Umezawa further claimed that for their failure to object to and resist his alleged delictual acts, the said witnesses were as guilty as he was and should have been included in the Information. He also asserted that there was, likewise, no allegation in the Informations as to who was the owner of the articles stolen; hence, there was no offended party. He noted that the Informations merely alleged that MPI was his employer. He further posited that there was no valid charge against him because the resolution authorizing the filing of the cases against him was approved by a mere minority of the members of the MPI Board of Directors.[6]Umezawa, likewise, filed a Motion to Quash[7]the Information in Criminal Case No. 013424-L on the ground that the facts alleged in the Information did not constitute the felony of estafa. He posited that the Information did not contain any allegation that any demand was made for him to return the goods. Furthermore, the owner of the said articles was not specified. He noted that as gleaned from the Joint Affidavit of the witnesses for the prosecution, there was no lawful private complainant. He reiterated that the MPI board resolution authorizing the filing of the charge against him was not approved by the majority of the members of its board of directors. Umezawa also alleged that the charge for estafa with abuse of confidence was already included in the charge for qualified theft, where it was alleged that he committed theft with abuse of confidence; hence, the charge for estafa should be quashed, otherwise, he would be placed in double jeopardy. The motion was duly opposed by the prosecution.On January 29, 1999, the trial court issued a Joint Order[8]dismissing the cases for lack of jurisdiction. It held that the dispute between the private complainant and the accused over the ownership of the properties subject of the charges is intra-corporate in nature, and was within the exclusive jurisdiction of the SEC. It ruled that Umezawa, as a member of the board of directors and president of MPI, was also a stockholder thereof. While Umezawa claimed to be thebona fideowner of the properties subject of the Informations which he appropriated for himself, the private complainant disputes the same; hence, according to the trial court, the conflicting claims of the parties should be resolved by the SEC. The private and public prosecutors received their respective copies of the Joint Order on February 2, 1999.The MPI, through the private prosecutor, filed a motion for reconsideration of the joint order of the court and for the reinstatement of the cases on February 15, 1999. The MPI relied on the following grounds:a. The Honorable Court has jurisdiction and must exercise it over these cases;b. The above-entitled case is not anintra-corporate controversy;andc. The accused could not claim ownership nor co-ownership of the properties of private complainant corporation.[9]The MPI maintained that the trial court had jurisdiction over the cases and cited Section 5 of Presidential Decree (P.D.) No. 902-A, which provides the rules on cases over which the SEC has original and exclusive jurisdiction. A copy of the motion was served on the public prosecutor for his approval. However, the public prosecutor did not affix his conformity to the motion, and instead opted to appear before the trial court during the hearing of the same. During the hearing, both the public and private prosecutors appeared. In support of his motion, the private prosecutor argued that the trial of the case must be done in the presence of and under the control and supervision of the public prosecutor.[10]The trial court denied the motion in an Order dated April 19, 1999. It held that the SEC, not the trial court, had jurisdiction over intra-corporate controversies. It also ruled that the motion of the private complainant waspro forma, it appearing that the public prosecutor had not approved the same.The public prosecutor received a copy of the Order on April 20, 1999. On April 26, 1999, the People of the Philippines, through the OSG, filed a petition forcertiorariandmandamuswith the CA against Presiding Judge Rumuldo R. Fernandez and Umezawa, docketed as CA-G.R. SP No. 52440. The CA allowed the MPI to intervene as petitioner, and admitted its petition- in-intervention.The People of the Philippines, as the petitioner therein, raised the following issues:IWHETHER OR NOT IT IS THE LEGAL AND MINISTERIAL DUTY OF THE REGIONAL TRIAL COURT TO TAKE COGNIZANCE AND JURISDICTION OF THESE SUBJECT CRIMINAL CASES;IIWHETHER OR NOT THE SECURITIES AND EXCHANGE COMMISSION HAS JURISDICTION OVER THE CRIMINAL CASES AGAINST RESPONDENT HAJIME UMEZAWA;IIIWHETHER OR NOT RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISMISSING THE CRIMINAL CASES AND DENYING PETITIONERS MOTION FOR RECONSIDERATION.[11]The People asserted that the controversy involving the criminal cases was not between Umezawa and the other stockholders of MPI, but one between him as the accused therein and the People of the Philippines. It averred that under Section 20(b) of Batas Pambansa (B.P.) Blg. 129, the RTC has exclusive jurisdiction over the cases against Umezawa. It also alleged that in dismissing the criminal cases against Umezawa on the ground that it had no jurisdiction over the crimes charged, the RTC committed grave abuse of its discretion amounting to excess or lack of jurisdiction.On September 2, 1999, the CA rendered judgment granting the petition and nullifying the assailed Orders of the RTC. It ruled that the issue of ownership of the properties subject of the Informations was not an intra-corporate dispute. It held that Umezawa, although president and general manager of the MPI and a stockholder thereof, was not a joint owner or co-owner of the personal properties subject of the charges. It also held that the dispute between a private corporation and any of its stockholders relative to the ownership of properties does notipso factonegate the jurisdiction of the RTC over the criminal cases under B.P. Blg. 129, as amended. It also declared that the material averments of the Informations sufficiently charged qualified theft and estafa.Umezawa filed a motion for the reconsideration of the decision of the CA. In a completevolte face, the appellate court issued a Resolution on August 8, 2001, granting the motion and reversing its decision. It affirmed the ruling of the RTC that the dispute between Umezawa and the other stockholders and officers over the implementation of the MPIs standard procedure is intra-corporate in nature; hence, within the exclusive jurisdiction of the SEC. Citing Section 5(a)(b) of P.D. No. 902-A, and the ruling of this Court inAlleje v. Court of Appeals,[12]the appellate court ruled that based on the material allegations of the Solicitor General in the petition before the CA, the SEC had exclusive jurisdiction over the conflicting claims of the parties. It likewise affirmed the ruling of the RTC that the absence of any allegation in the Information that the MPI was the owner of the properties subject of the Information is fatal.The petitioner MPI filed the instant petition for review on certiorari, raising the following issues:IWHETHER OR NOT THE SECURITIES AND EXCHANGE COMMISSION HAS JURISDICTION OVER THE CRIMINAL CASES AGAINST UMEZAWA.IIWHETHER OR NOT ALL THE NECESSARY ELEMENTS OF THE CRIMES OF QUALIFIED THEFT ANDESTAFAARE SUFFICIENTLY ALLEGED IN THE INFORMATIONS.IIIEVEN ASSUMINGARGUENDOTHAT THE FACTS ALLEGED DO NOT CONSTITUTE AN OFFENSE THE CORRECT RULING IS NOT TO DISMISS THE CASE BUT TO ORDER AMENDMENT.IVWHETHER OR NOT THE STATE HS LOST ITS RIGHT TO APPEAL.VWHETHER OR NOT THE MOTION FOR RECONSIDERATION OF UMEZAWA ISPRO FORMA.[13]The People of the Philippines filed a separate petition for review on certiorari, contending that:1. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF LAW AND GRAVE ABUSE OF DISCRETION IN FINDING THAT THE PETITION FOR MANDAMUS, CERTIORARI AND INJUNCTION WAS FILED OUT OF TIME AND THAT PETITIONER HAS LOST ITS RIGHT TO APPEAL;2. THE COURT OF APEALS COMMITTED SERIOUS ERRORS OF LAW IN RULING THAT NOT ALL THE ELEMENTS OF QUALIFIED THEFT AND ESTAFA ARE PRESENT;3. THE COURT OF APPEALS COMMITTED BLATANT AND SERIOUS ERRORS OF LAW IN FINDING THAT THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS JURISDICTION OVER THE SUBJECT CRIMINAL CASES;4. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF LAW AND GRAVE ABUSE OF DISCRETION IN GIVING DUE COURSE TO THE PRO-FORMA MOTION FOR RECONSIDERATION OF UMEZAWA.[14]The two petitions were consolidated in the Second Division of the Court.The threshold issues for resolution are the following: (a) whether or not the petition forcertiorariof the People of the Philippines in the CA assailing the January 29, 1999 Joint Order of the trial court was time-barred; (b) whether the RTC has jurisdiction over the crimes charged in the said Informations; (c) whether the Informations sufficiently charge the felonies of qualified theft and estafa; and (d) if in the affirmative, whether all the elements of qualified theft and estafa are alleged in the Informations.On the first issue, the CA held that the Public Prosecutor failed to file a motion for the reconsideration of the trial courts January 29, 1999 Joint Order dismissing the cases, that is, within fifteen days from receipt of a copy of the said order on February 2, 1999; neither did the People appeal the said Order within the period therefor. Thus, according to the CA, the People filed its petition forcertiorari, prohibition andmandamusassailing the January 29, 1999 Joint Order of the trial court only on April 26, 1999, well beyond the 60-day period therefor. The appellate court, likewise, held that the filing of the motion for reconsideration of the said Joint Order by the private prosecutor without the conformity of the Public Prosecutor did not toll the period for the People to file its motion for reconsideration thereof, or to appeal therefrom, or to file a petition forcertiorari, prohibition or mandamus. It ruled that, having lost its right to appeal in due course, the People was proscribed from filing a petition for certiorari, prohibition or mandamus. The CA declared that the motion for reconsideration filed by petitioner MPI of the Joint Order of the RTC ispro forma, the public prosecutor not having signified his written conformity thereto.On the other hand, the petitioner People of the Philippines insists that while the public prosecutor did not expressly conform to the motion for reconsideration of the January 29, 1999 Joint Order of the trial court filed by the private prosecutor, through the public prosecutors presence during the hearing of the said motion, his supervision and control over the private prosecutor during the said hearing, he in effect adopted and conformed to the said motion for reconsideration.In his comment on the petitions, respondent Umezawa maintains that the motion for reconsideration of the joint order of the trial court filed by the private prosecutor did not interrupt the period within which the People could appeal, citing the ruling of this Court inCabral v. Puno.[15]The respondent posits that the finding of the trial court, which was affirmed by the CA, that the public prosecutor did not conform to the motion for reconsideration of the private prosecutor, is binding on this Court. The respondent also avers that the petitioner has no personality to file the petition. Moreover, he insists that whether the public prosecutor conformed to the private prosecutors motion for reconsideration is a question of fact which is not proper in a petition for review on certiorari.The Courts RulingThe contention of the petitioner People of the Philippines is not correct. All criminal actions commenced by complaint or information shall be prosecuted under the direction and control of the public prosecutor.[16]When the civil action for civil liability is instituted in the criminal action pursuant to Rule 111 of the Rules on Criminal Procedure, the offended party may intervene, by counsel, in the prosecution of the offense.[17]InRamiscal, Jr. v. Sandiganbayan,[18]we held that under Section 16, Rule 110 of the Rules of Criminal Procedure, the offended party may intervene in the criminal action personally or by counsel, who will then act as private prosecutor for the protection of his interests and in the interest of the speedy and inexpensive administration of justice. A separate action for the purpose would only prove to be costly, burdensome and time-consuming for both parties and further delay the final disposition of the case. The multiplicity of suits must be avoided. With the implied institution of the civil action in the criminal action, the two actions are merged into one composite proceeding, with the criminal action predominating the civil. The prime purpose of the criminal action is to punish the offender in order to deter him and others from committing the same or similar offense, to isolate him from society, reform and rehabilitate him or, in general, to maintain social order.[19]The intervention of the private offended party, through counsel, and his prosecution of the case shall be under the control and supervision of the public prosecutor until the final termination of the case. A public prosecutor who has been entrusted by law with the prosecution of criminal cases is duty-bound to take charge thereof until its final termination, for under the law, he assumes full responsibility for his failure or success since he is the one more adequately prepared to pursue it to its termination.[20]The prosecution of offenses is a public function. Indeed, the sole purpose of the civil action is the resolution, reparation or indemnification of the private offended party for the damage or injury he sustained by reason of the delictual or felonious act of the accused.[21]Under Article 104 of the Revised Penal Code, the following are the civil liabilities of the accused:ART. 104.What is included in civil liability. The civil liability established in Articles 100, 101, 102 and 103 of this Code includes:1. Restitution;2. Reparation of the damage caused;3. Indemnification for consequential damages.Thus, when the offended party, through counsel, has asserted his right to intervene in the proceedings, it is error to consider his appearance merely as a matter of tolerance.[22]The public prosecutor may turn over the actual prosecution of the criminal case, in the exercise of his discretion, but he may, at any time, take over the actual conduct of the trial. However, it is necessary that the public prosecutor be present at the trial until the final termination of the case; otherwise, if he is absent, it cannot be gainsaid that the trial is under his supervision and control.[23]In a criminal case in which the offended party is the State, the interest of the private complainant or the offended party is limited to the civil liability arising therefrom. Hence, if a criminal case is dismissed by the trial court or if there is an acquittal, a reconsideration of the order of dismissal or acquittal may be undertaken, whenever legally feasible, insofar as the criminal aspect thereof is concerned and may be made only by the public prosecutor; or in the case of an appeal, by the State only, through the OSG. The private complainant or offended party may not undertake such motion for reconsideration or appeal on the criminal aspect of the case.[24]However, the offended party or private complainant may file a motion for reconsideration of such dismissal or acquittal or appeal therefrom but only insofar as the civil aspect thereof is concerned.[25]In so doing, the private complainant or offended party need not secure the conformity of the public prosecutor. If the court denies his motion for reconsideration, the private complainant or offended party may appeal or file a petition forcertiorariormandamus, if grave abuse amounting to excess or lack of jurisdiction is shown and the aggrieved party has no right of appeal or given an adequate remedy in the ordinary course of law.The public and private prosecutors are not precluded, whenever feasible, from filing a joint motion for the reconsideration of the dismissal of the case or the acquittal of the accused, on the criminal and civil aspects of the cases.In the present case, only petitioner MPI, through counsel, filed a motion for the reconsideration of the trial courts Joint Order dated January 29, 1999, praying for the reinstatement of the cases insofar as the civil aspect thereof is concerned. The public prosecutor did not approve nor conform to the said motion. Although petitioner MPI provided ample space for the said conformity of the public prosecutor, the latter did not do so; he merely appeared during the hearing of the said motion with the private prosecutor when the latter presented his oral arguments in support of the said motion.The fact that the public prosecutor did not conform to the said motion, however, does not mean that the same ispro forma. It must be stressed that the propriety and efficacy of the motion, insofar as the civil aspect of the cases is concerned, is not dependent upon the conformity of the public prosecutor. Hence, the filing of the joint motion for reconsideration effectively suspended the running of the period for petitioner MPI to assail the joint order in the CAviaan appeal or a special civil action forcertiorariormandamusunder Rule 65 of the Rules of Court.However, since the public prosecutor did not file any motion for the reconsideration of the joint order nor conform to the motion of petitioner MPI, insofar as the criminal aspect of the cases is concerned, the period for the State to assail the said joint order was not suspended. Only the motion for reconsideration filed by the public prosecutor of the joint order of dismissal of the cases could have tolled the period within which the State could appeal, insofar as the criminal aspect of the cases was concerned. The bare fact that the public prosecutor appeared for the State during the hearing of the motion for reconsideration of petitioner MPI does not amount to or constitute his adoption of the said motion as that of the State. As ruled by this Court inCabral v. Puno:[26]While it is true that the offended party, Silvino San Diego, through the private prosecutor, filed a motion for reconsideration within the reglementary fifteen-day period, such move did not stop the running of the period for appeal. He did not have the legal personality to appeal or file the motion for reconsideration on his behalf. The prosecution in a criminal case through the private prosecutor is under the direction and control of the Fiscal, and only the motion for reconsideration or appeal filed by the Fiscal could have interrupted the period for appeal.[27]We agree with the ruling of the CA that the petition for certiorari filed by the petitioner People of the Philippines with the CA on April 26, 1999 was filed beyond the 60-day period as provided in Section 4, Rule 65 of the Rules of Court,[28]it appearing that the public prosecutor received a copy of the joint order of the trial court on February 2, 1999, and, thus, had only until April 3, 1999 within which to file the said petition.Even then, the Court still holds that the CA erred in dismissing the petition of the People of the Philippines simply because the public prosecutor erred in not himself filing a motion for reconsideration of the joint order of the trial court, on his perception that by being present during the hearing of the motion for reconsideration of petitioner MPI, he thereby adopted the said motion as that of the States. The settled rule is that the State is not estopped by the mistakes of its officers and employees. Indeed, inCruz, Jr. v. Court of Appeals,[29]the Court declared: Estoppel does not lie against the government because of the supposedly mistaken acts or omissions of its agents. As we declared in People v. Castaeda, there is the long familiar rule that erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute and that the government is never estopped by mistake or error on the part of its agents.The Court also held inChua v. Court of Appeals:[30] While ordinarily, certiorari is unavailing where the appeal period has lapsed, there are exceptions. Among them are (a) when public welfare and the advancement of public policy dictates; (b) when the broader interest of justice so requires; (c) when the writs issued are null and void; or (d)when the questioned order amounts to an oppressive exercise of judicial authority. [31]On the second issue, the petitioners assert that the CA erred in holding that the dispute between it and the respondent is intra-corporate in nature; hence, within the exclusive jurisdiction of the SEC. As gleaned from the material allegations of the Informations, the RTC had exclusive jurisdiction over the crimes charged. Petitioner MPI further avers that even if there is no allegation in the Informations identifying it as the owner of the personal properties described in the Informations, its ownership of the properties can be inferred from the other allegations. The petitioners maintain that even if the Informations are deficient, the remedy is the amendment of the Informations and not the dismissal of the cases.For his part, the respondent avers that the assailed Resolution of the CA is correct, and that it is the appellate courts decision which is erroneous.We agree with the petitioners.According to Section 20 of B.P. Blg. 129 SEC. 20.Jurisdiction in criminal cases. Regional Trial Courts shall exercise exclusive original jurisdiction in all criminal cases not within the exclusive jurisdiction of any court, tribunal or body, except those now falling under the exclusive and concurrent jurisdiction of the Sandiganbayan which shall hereafter be exclusively taken cognizance of by the latter.Section 32 thereof was later amended by Section 2 of Republic Act No. 7691, as follows:Sec. 32.Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Criminal Cases. Except in cases falling within the exclusive original jurisdiction of the Regional Trial Court and of the Sandiganbayan, the Metropolitan Trial Courts, and Municipal Circuit Trial Courts shall exercise:(1) Exclusive original jurisdiction over all violations of city or municipal ordinances committed within their respective territorial jurisdiction; and(2) Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the amount of fine, and regardless of other imposable accessory or other penalties, including the civil liability arising from such offenses or predicated thereon, irrespective of kind, nature, value or amount thereof: Provided,however, That in offenses involving damage to property through criminal negligence, they shall have exclusive original jurisdiction thereof.Case law has it that in order to determine the jurisdiction of the court in criminal cases, the complaint or Information must be examined for the purpose of ascertaining whether or not the facts set out therein and the prescribed period provided for by law are within the jurisdiction of the court, and where the said Information or complaint is filed. It is settled that the jurisdiction of the court in criminal cases is determined by the allegations of the complaint or Information and not by the findings based on the evidence of the court after trial.[32]Jurisdiction is conferred only by the Constitution or by the law in force at the time of the filing of the Information or complaint. Once jurisdiction is vested in the court, it is retained up to the end of the litigation. Indeed, inPeople v. Purisima,[33]this Court held that:In criminal prosecutions, it is settled that the jurisdiction of the court is not determined by what may be meted out to the offender after trial or even by the result of the evidence that would be presented at the trial,butby theextent of the penalty which the law imposesfor the misdemeanor, crime or violation charged in the complaint. If the facts recited in the complaint and thepunishment provided for by laware sufficient to show that the court in which the complaint is presented has jurisdiction, that court must assume jurisdiction.In Criminal Case No. 013231-L, the value of the properties subject of qualified theft isP3,219,875.00, while in Criminal Case No. 013423-L, the value of the property was pegged atP255,000.00. Under Article 309 of the Revised Penal Code, the penalty for theft when the value of the stolen property exceedsP22,000.00 is as follows:1. The penalty ofprision mayorin its minimum and medium periods, if the value of the thing stolen is more than 12,000 pesos but does not exceed 20,000 pesos; but if the value of the thing stolen exceeds the latter amount, the penalty shall be the maximum period of the one prescribed in this paragraph and one year of each additional ten thousand pesos, but the total of the penalty which may be imposed shall not exceed twenty years. In such cases, and in connection with the accessory penalties which may be imposed and for the purpose of the other provisions of this Code, the penalty shall be termedprision mayororreclusion temporal, as the case may be.Article 310 of the Revised Penal Code further provides for the penalty for qualified theft:Art. 310.Qualified theft. The crime of theft shall be punished by the penalties next higher by two degrees than those respectively specified in the next preceding article, if committed by a domestic servant, or with grave abuse of confidence, or if the property stolen is motor vehicle, mail matter or large cattle or consists of coconuts taken from the premises of a plantation, fish taken from a fishpond or fishery or if property is taken on the occasion of fire, earthquake, typhoon, volcanic eruption, or any other calamity, vehicular accident or civil disturbance.On the other hand, in Criminal Case No. 013424-L for estafa, the amount of the fraud involved isP500,000.00, and under Article 315 of the Revised Penal Code, the penalty for such crime is 1st. The penalty ofprision correccionalin its maximum period toprision mayorin its minimum period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos; and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each additional 10,000 pesos; but the total penalty which may be imposed shall not exceed twenty years. In such cases, and in connection with the accessory penalties which may be imposed and for the purpose of the other provisions of this Code, the penalty shall be termedprision mayor or reclusion temporal, as the case may be.Patently, then, based on the material allegations of the Informations in the three cases, the courta quohad exclusive jurisdiction over the crimes charged.The bare fact that the respondent was the president and general manager of the petitioner corporation when the crimes charged were allegedly committed and was then a stockholder thereof does not in itself deprive the courta quoof its exclusive jurisdiction over the crimes charged. The property of the corporation is not the property of the stockholders or members or of its officers who are stockholders.[34]As the Court held in an avuncular case:[35]... Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its members. While shares of stock constitute personal property, they do not represent property of the corporation. The corporation has property of its own which consists chiefly of real estate (Nelson v. Owen, 113 Ala., 372, 21 So. 75; Morrow v. Gould, 145 Iowa, 1, 123 N.W. 743). A share of stock only typifies an aliquot part of the corporations property, or the right to share in its proceeds to that extent when distributed according to law and equity (Hall & Faley v. Alabama Terminal, 173 Ala., 398, 56 So. 235), but its holder is not the owner of any part of the capital of the corporation (Bradley v. Bauder, 36 Ohio St., 28). Nor is he entitled to the possession of any definite portion of its property or assets (Gottfried v. Miller, 104 U.S., 521; Jones v. Davis, 35 Ohio St., 474). The stockholder is not a co-owner or tenant in common of the corporate property (Harton v. Johnston, 166 Ala., 317, 51 So., 992) [36]As early as the case ofFisher v. Trinidad,[37]the Court already declared that [t]he distinction between the title of a corporation, and the interest of its members or stockholders in the property of the corporation, is familiar and well-settled. The ownership of that property is in the corporation, and not in the holders of shares of its stock. The interest of each stockholder consists in the right to a proportionate part of the profits whenever dividends are declared by the corporation, during its existence, under its charter, and to a like proportion of the property remaining, upon the termination or dissolution of the corporation, after payment of its debts.[38]We also agree with the ruling of the CAin its decisionthat the SEC (now the Regional Trial Court) had no jurisdiction over the cases filed in the courta quo. The appellate courts reliance in the assailed Resolution issued by the Board of Directors of the petitioner corporation, on Section 5(b) of P.D. No. 902, has no factual and legal basis.Section 5 of P.D. No. 902-A provides that the SEC[39]shall have original and exclusive jurisdiction to hear and decide cases involving the following:(a) devices or schemes employed by, or any acts of, the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of association or organizations registered with the Commission, and(b) controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively.InFabia v. Court of Appeals,[40]the Court explained that Section 5 of P.D. No. 902-A should be taken in conjunction with Section 6 of the law. It then proceeded to explain:In synthesis, Sec. 5 ofPD 902-Amandates that cases involving fraudulent actions and devices which are detrimental to the interest of stockholders, members or associates and directors of the corporation are within the original and exclusive jurisdiction of the SEC. Taken in conjunction with Sec. 6 of the same law, it will be gathered that the fraudulent acts/schemes which the SEC shall exclusively investigate and prosecute are those in violation of any law or rules and regulations administered and enforced by the Commission alone. This investigative and prosecutorial powers of the SEC are further without prejudice to any liability for violation of any provision ofThe Revised Penal Code.From the foregoing, it can thus be concluded that the filing of the civil/intra-corporate case before the SEC does not preclude the simultaneous and concomitant filing of a criminal action before the regular courts; such that, a fraudulent act may give rise to liability for violation of the rules and regulations of the SEC cognizable by the SEC itself, as well as criminal liability for violation of theRevised Penal Codecognizable by the regular courts, both charges to be filed and proceeded independently, and may be simultaneously with the other.[41]Thus, the filing of a petition in the SEC for the nullification of the Resolution of May 2, 1995 issued by the Chairman and two members of the Board of Directors of petitioner MPI, which authorized the filing of criminal cases against respondent Umezawa, was not a bar to his prosecution for estafa and qualified theft for his alleged fraudulent and delictual acts. The relationship of the party-litigants with each other or the position held by petitioner as a corporate officer in respondent MPI during the time he committed the crime becomes merely incidental and holds no bearing on jurisdiction. What is essential is that the fraudulent acts are likewise of a criminal nature and hence cognizable by the regular courts.[42]Thus, notwithstanding the fact that respondent Umezawa was the president and general manager of petitioner MPI and a stockholder thereof, the latter may still be prosecuted for the crimes charged. The alleged fraudulent acts of respondent Umezawa in this case constitute the element of abuse of confidence, deceit or fraudulent means, and damage under Article 315 of the Revised Penal Code on estafa.[43]We agree with the encompassing disquisitions of the CA in its decision, to wit: A dispute involving the corporation and its stockholders is not necessarily an intra-corporate dispute cognizable only by the Securities and Exchange Commission. Nor does itipso factonegate the jurisdiction of the Regional Trial Court over the subject cases. The Supreme Court citing the case ofViray v. Court of Appeals(G.R. No. 92481, 191 SCRA 308 [1990]) inTorio v. Court of Appeals(G.R. No. 107293, March 2, 1994, 230 SCRA 626) held:It should be obvious that not every conflict between a corporation and its stockholders involves corporate matters that only the SEC can resolve in the exercise of its adjudicatory or quasi-judicial powers.As the Supreme Court further ruled in theToriocase thata contrary interpretation would distort the meaning and intent of P.D. 902-A, the law re-organizing the Securities and Exchange Commission. The better policy in determining which body has jurisdiction over a case would be to consider not only the relationship of the parties but also the nature of the questions raised in the subject of the controversy.[44]On the last issue, we find and so hold that the Informations state all the essential elements of estafa and qualified theft. It was adequately alleged that respondent Umezawa, being the President and General Manager of petitioner MPI, stole and misappropriated the properties of his employer, more specifically, petitioner MPI. As expostulated by the CA in its decision: In any event, the allegations in the informations, if hypothetically admitted, are sufficient to bind Umezawa to the charges of qualified theft and estafa. As aptly ruled by the court a quo in its Order of July 25, 1995,all the elements of the offense of qualified theft are present. There is no basis for claiming otherwise. Furthermore, the private offended party, as well as the subject matter of the felonious taking and the ownership thereof, have been adequately indicated or identified leaving no room for any doubt on these matters.Considering that the motions to quash of September 30, 1998 are fundamentally rehash of the motion to quash filed on May 29, 1995 and the culpable acts subject of the new informations are virtually the same as the first information filed against Umezawa, there is no conceivable reason why the courta quoabandoned its previous stand and controverted itself in regard the sufficiency of the informations.In our considered view, and as the court a quo had correctly held in its Order of May 26, 1996,even a SEC ruling voiding the resolution authorizing the filing of criminal charges versus the accused Hajime Umezawa can have no bearing on the validity of the informations filed in these three criminal cases as pointed out by private complainant, the public offenses of qualified theft and estafa can [be] prosecuted de officio. The resolution of the office of the prosecutor on the preliminary investigation as well as the re-investigation conducted on the letter-complaint filed by private complainant company sufficiently establishedprima faciecase against the accused and the legality or illegality of the constitution of the board which authorized the filing of the complaint does not materially affect either the informations filed against Umezawa or the pending criminal proceedings. As petitioners contend, the action is now between the People of the Philippines and herein private respondent.[45]IN LIGHT OF ALL THE FOREGOING,the petitions are GRANTED. The Resolution of the Court of Appeals in CA-G.R. SP No. 52440 dated August 8, 2001 is REVERSED and SET ASIDE. The Decision of the Court of Appeals dated September 2, 1999 is AFFIRMED.SO ORDERED.Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISIONG.R. No. 165744 August 11, 2008

OSCAR C. REYES,petitioner,vs.HON. REGIONAL TRIAL COURT OF MAKATI, Branch 142, ZENITH INSURANCE CORPORAT