The Supreme Court has clarified that a person can be prosecuted for estafa (fraud) under the Revised Penal Code at the same time they are facing civil or intra-corporate charges. This ruling emphasizes that actions which constitute both a violation of corporate regulations and a criminal offense can be pursued through separate legal avenues simultaneously. This simultaneous prosecution is permissible because the criminal liability for estafa is distinct from any administrative or civil liability arising from intra-corporate disputes, allowing the courts to address both aspects of the wrongdoing without one precluding the other.

When Corporate Office Leads to Criminal Charges: Can Estafa and Intra-Corporate Disputes Be Tried Together?

This case revolves around Hernani N. Fabia, who was accused of estafa for allegedly failing to liquidate cash advances he took as the president of the Maritime Training Center of the Philippines (MTCP). The central question was whether the estafa case could proceed independently of, or simultaneously with, any potential intra-corporate dispute regarding the same actions. Fabia argued that the matter should first be resolved as an intra-corporate dispute within the jurisdiction of the Securities and Exchange Commission (SEC), invoking the doctrine of primary jurisdiction. The MTCP, however, contended that the criminal nature of the estafa charge allowed it to be prosecuted in regular courts, regardless of any related intra-corporate issues.

The Supreme Court referenced Section 5 of Presidential Decree No. 902-A, which outlines the jurisdiction of the SEC over cases involving fraud or misrepresentation detrimental to stockholders or members of registered organizations. The Court clarified that while the SEC has the power to investigate and prosecute fraudulent acts that violate laws and regulations it administers, this power does not preclude criminal liability under the Revised Penal Code. This means that a single fraudulent act could lead to both administrative sanctions from the SEC and criminal charges in regular courts. Therefore, the filing of a civil or intra-corporate case does not prevent the simultaneous filing of a criminal action, allowing both to proceed independently.

In this case, the affidavit-complaint from MTCP’s President, Exequiel B. Tamayo, alleged that Fabia failed to liquidate cash advances amounting to P1,291,376.61. These funds were meant for purchasing office equipment, which Fabia allegedly failed to deliver, converting the money for his own benefit. The Court found that these allegations could constitute both an intra-corporate dispute and the crime of estafa. An intra-corporate controversy arises when fraudulent actions are detrimental to the interests of stockholders, directors, and the corporation itself, especially concerning actions taken by a corporate officer against the corporation.

The alleged fraudulent acts also encompass the elements of abuse of confidence, deceit, and damage, as defined under Article 315 of the Revised Penal Code for estafa. Here, the relationship between the parties and Fabia’s position as a corporate officer were incidental to the criminal nature of the acts. What mattered was that these acts constituted a criminal offense, making them cognizable by regular courts. Thus, the Court emphasized that the simultaneous pursuit of both criminal and intra-corporate cases is permissible, as each addresses different facets of the same underlying conduct.

Fabia argued that no finding of probable cause for estafa could be made against him because an accounting issue remained unresolved between him and MTCP. The Court disagreed, stating that probable cause exists when there are sufficient facts and circumstances to convince a reasonable person that the accused committed the crime. This does not require absolute certainty or a full inquiry into whether there is enough evidence for conviction; it only requires a reasonable belief that the act constitutes the charged offense. Therefore, the Court found that the allegations of unliquidated cash advances and misappropriation of funds were sufficient to establish probable cause for estafa, regardless of any outstanding accounting issues.

The Supreme Court distinguished this case from others where a prior accounting or settlement was necessary to determine the balance owed, emphasizing that those cases involved inquiries into guilt beyond a reasonable doubt after a full trial. In this instance, the issue was merely whether there was probable cause to file an information for estafa, which the Court answered affirmatively. Citing Cruz v. People, the Court noted that defenses such as full liquidation of cash advances are best addressed during trial. This highlights the principle that preliminary investigations focus on establishing probable cause, while trials are meant to assess the credibility of defenses and determine guilt or innocence.

The Court then addressed the argument regarding the doctrine of primary jurisdiction. This doctrine typically requires courts to defer to administrative agencies when a case involves issues within the agency’s special competence. However, with the enactment of the Securities Regulation Code (RA 8799), which transferred jurisdiction over intra-corporate disputes to Regional Trial Courts (RTCs), the rationale for prior referral to the SEC has diminished. The Court clarified that while Section 5 of PD 902-A was amended by RA 8799, Section 6, which states that prosecution under the Decree shall be without prejudice to any liability for violation of the Revised Penal Code, was not repealed. This reinforces the permissibility of simultaneous criminal and civil proceedings.

Furthermore, Section 54 of RA 8799 explicitly states that administrative sanctions imposed by the SEC are without prejudice to the filing of criminal charges against the responsible individuals. Thus, the Court concluded that the fraudulent acts committed by Fabia could be prosecuted as estafa under Article 315 of the Revised Penal Code, independently and simultaneously with any corporate/civil case filed for violation of Section 5 of PD 902-A, as amended by RA 8799. In light of these amendments, the doctrine of primary jurisdiction no longer precludes the simultaneous filing of a criminal case alongside a corporate/civil case.

The Supreme Court modified its earlier decision, affirming the Court of Appeals’ directive to file an Information for estafa against Fabia. The RTC was directed to immediately arraign Fabia and proceed with the trial until a final decision is reached. This ruling underscores the importance of upholding both corporate regulations and criminal laws, ensuring that individuals are held accountable for their actions through the appropriate legal channels.

FAQs

What was the key issue in this case?	The main issue was whether an estafa (fraud) case against a corporate officer could proceed simultaneously with any related intra-corporate dispute. The court clarified that simultaneous proceedings are permissible.
What is an intra-corporate dispute?	An intra-corporate dispute involves controversies arising between stockholders, members, or associates of a corporation, or between any of them and the corporation itself. These disputes often relate to the internal affairs and governance of the corporation.
What is the doctrine of primary jurisdiction?	The doctrine of primary jurisdiction guides courts to defer to administrative agencies when a case involves issues within the agency’s special competence. This is to ensure that specialized knowledge and expertise are applied in resolving technical or intricate matters.
How did RA 8799 affect the jurisdiction over intra-corporate disputes?	RA 8799, also known as the Securities Regulation Code, transferred jurisdiction over intra-corporate disputes from the Securities and Exchange Commission (SEC) to the Regional Trial Courts (RTCs). This change aimed to streamline the resolution of corporate disputes.
What is probable cause in the context of this case?	Probable cause refers to the existence of sufficient facts and circumstances that would lead a reasonable person to believe that the accused committed the crime. It is a lower standard than proof beyond a reasonable doubt.
Can administrative sanctions and criminal charges be pursued simultaneously?	Yes, administrative sanctions imposed by regulatory bodies like the SEC can be pursued simultaneously with criminal charges. This is because the administrative and criminal proceedings address different aspects of the same underlying conduct.
What was the Supreme Court’s ruling in this case?	The Supreme Court ruled that the estafa case against Fabia could proceed independently and simultaneously with any related corporate/civil case. This decision reinforced the separate and distinct nature of criminal and civil liabilities.
What is the significance of Article 315 of the Revised Penal Code?	Article 315 of the Revised Penal Code defines and penalizes estafa (fraud). In this case, it was the basis for the criminal charges against Fabia, who was accused of misappropriating corporate funds.

The Supreme Court’s decision reinforces the principle that criminal liability for estafa is distinct from any administrative or civil liability arising from intra-corporate disputes. This ensures that individuals who commit fraudulent acts within a corporate context can be held accountable through both criminal and civil proceedings, providing a comprehensive approach to justice and corporate governance.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: HERNANI   N.   FABIA v. COURT OF APPEALS, G.R. No. 132684, September 11, 2002