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G.R. No. 174168. March 30, 2009.*

SY TIONG SHIOU, JUANITA TAN SY, JOLIE ROSS TAN,
ROMER TAN, CHARLIE TAN, and JESSIE JAMES TAN,
petitioners, vs. SY CHIM and FELICIDAD CHAN SY, respondents.

G.R. No. 179438. March 30, 2009.*

SY CHIM and FELICIDAD CHAN SY, petitioners, vs. SY TIONG
SHIOU and JUANITA TAN, respondents.

Criminal Procedure; Preliminary Investigation; Policy of Non-

Interference; A preliminary proceeding is not a quasi-judicial function and
that the Department of Justice (DOJ) is not a quasi-judicial agency
exercising a quasi-judicial function when it reviews the findings of a public
prosecutor regarding the presence of probable cause; The Supreme Court
has adopted a policy of non-interference in the conduct of preliminary
investigations and leaves to the investigating prosecutor sufficient latitude
of discretion in the determination of what constitutes sufficient evidence as
will establish probable cause for the filing of information against the
supposed offender, except when there is grave abuse of discretion.—A
preliminary proceeding is not a quasi-judicial function and that the DOJ is
not a quasi-judicial agency exercising a quasi-judicial function when it
reviews the findings of a public prosecutor regarding the presence of
probable cause. Moreover, it is settled that the preliminary investigation
proper, i.e., the determination of whether there is reasonable ground to
believe that the accused is guilty of the offense charged and should be
subjected to the expense, rigors and embarrassment of trial, is the function
of the prosecution. This Court has adopted a policy of non-interference in
the conduct of preliminary investigations and leaves to the investigating
prosecutor sufficient latitude of discretion in the determination of what
constitutes sufficient evidence as will establish probable cause for the filing
of information against the supposed offender. As in every rule, however,
there are settled exceptions. Hence, the principle of non-interference does
not apply when there is grave abuse of discretion which would authorize the
aggrieved per-

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* SECOND DIVISION.

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son to file a petition for certiorari and prohibition under Rule 65, 1997
Rules of Civil Procedure.
Same; Same; Prejudicial Questions; Elements; Words and Phrases; A
prejudicial question comes into play generally in a situation where a civil
action and a criminal action are both pending and there exists in the former
an issue which must be preemptively resolved before the criminal action
may proceed since howsoever the issue raised in the civil action is resolved
would be determinative juris et de jure of the guilt or innocence of the
accused in the criminal case.—A prejudicial question comes into play
generally in a situation where a civil action and a criminal action are both
pending and there exists in the former an issue which must be preemptively
resolved before the criminal action may proceed since howsoever the issue
raised in the civil action is resolved would be determinative juris et de jure
of the guilt or innocence of the accused in the criminal case. The reason
behind the principle of prejudicial question is to avoid two conflicting
decisions. It has two essential elements: (a) the civil action involves an issue
similar or intimately related to the issue raised in the criminal action; and (b)
the resolution of such issue determines whether or not the criminal action
may proceed.
Same; Same; In order that probable cause to file a criminal case may
be arrived at, or in order to engender the well-founded belief that a crime
has been committed, the elements of the crime charged should be present.—
The term probable cause does not mean ‘actual and positive cause’ nor does
it import absolute certainty. It is merely based on opinion and reasonable
belief. Thus a finding of probable cause does not require an inquiry into
whether there is sufficient evidence to procure a conviction. It is enough that
it is believed that the act or omission complained of constitutes the offense
charged. Precisely, there is a trial for the reception of evidence of the
prosecution in support of the charge. In order that probable cause to file a
criminal case may be arrived at, or in order to engender the well-founded
belief that a crime has been committed, the elements of the crime charged
should be present. This is based on the principle that every crime is defined
by its elements, without which there should be–at the most–no criminal
offense.
Same; Same; Corporation Law; Violation of Section 74 of the
Corporation Code; Elements.—In the recent case of Ang-Abaya, et al. v.
Ang, et al. (573 SCRA 129 [2008]), the Court had the occasion to

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enumerate the requisites before the penal provision under Section 144 of the
Corporation Code may be applied in a case of violation of a stockholder or
member’s right to inspect the corporate books/records as provided for under
Section 74 of the Corporation Code. The elements of the offense, as laid
down in the case, are: First. A director, trustee, stockholder or member has
made a prior demand in writing for a copy of excerpts from the
corporation’s records or minutes; Second. Any officer or agent of the
concerned corporation shall refuse to allow the said director, trustee,
stockholder or member of the corporation to examine and copy said
excerpts; Third. If such refusal is made pursuant to a resolution or order of
the board of directors or trustees, the liability under this section for such
action shall be imposed upon the directors or trustees who voted for such
refusal; and, Fourth. Where the officer or agent of the corporation sets up
the defense that the person demanding to examine and copy excerpts from
the corporation’s records and minutes has improperly used any information
secured through any prior examination of the records or minutes of such
corporation or of any other corporation, or was not acting in good faith or
for a legitimate purpose in making his demand, the contrary must be shown
or proved.
Same; Same; Same; Same; Burden of Proof; In a criminal complaint
for violation of Section 74 of the Corporation Code, the defense of improper
use or motive is in the nature of a justifying circumstance that would
exonerate those who raise and are able to prove the same—where the
corporation denies inspection on the ground of improper motive or purpose,
the burden of proof is taken from the shareholder and placed on the
corporation.—In a criminal complaint for violation of Section 74 of the
Corporation Code, the defense of improper use or motive is in the nature of
a justifying circumstance that would exonerate those who raise and are able
to prove the same. Accordingly, where the corporation denies inspection on
the ground of improper motive or purpose, the burden of proof is taken from
the shareholder and placed on the corporation. However, where no such
improper motive or purpose is alleged, and even though so alleged, it is not
proved by the corporation, then there is no valid reason to deny the
requested inspection.
Same; Same; Falsification of Public Documents; Elements.—The
Spouses Sy charge Sy Tiong Shiou with the offense of falsification of public
documents under Article 171, paragraph 4; and/or

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perjury under Article 183 of the Revised Penal Code (RPC). The elements
of falsification of public documents through an untruthful narration of facts
are: (a) the offender makes in a document untruthful statements in a
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narration of facts; (b) the offender has a legal obligation to disclose the truth
of the facts narrated; (c) the facts narrated by the offender are absolutely
false; and (d) the perversion of truth in the narration of facts was made with
the wrongful intent to injure a third person.
Same; Same; Perjury; Elements.—The elements of perjury are: (a) that
the accused made a statement under oath or executed an affidavit upon a
material matter; (b) that the statement or affidavit was made before a
competent officer, authorized to receive and administer oath; (c) that in that
statement or affidavit, the accused made a willful and deliberate assertion of
a falsehood; and, (d) that the sworn statement or affidavit containing the
falsity is required by law or made for a legal purpose.
Same; Doctrine of Primary Jurisdiction; The doctrine of primary
jurisdiction no longer precludes the simultaneous filing of the criminal case
with the corporate/civil case.—The Court agrees with the Court of Appeals’
holding, citing the case of Fabia v. Court of Appeals 388 SCRA 574
[2002]), that the doctrine of primary jurisdiction no longer precludes the
simultaneous filing of the criminal case with the corporate/civil case.
Moreover, the Court finds that the City of Manila is the proper venue for the
perjury charges, the GIS having been subscribed and sworn to in the said
place. Under Section 10(a), Rule 110 of the Revised Rules of Court, the
criminal action shall be instituted and tried in the court of the municipality
or territory where the offense was committed or where any of its essential
ingredients occurred. In Villanueva v. Secretary of Justice (475 SCRA 495
[2005]), the Court held that the felony is consummated when the false
statement is made. Thus in this case, it was alleged that the perjury was
committed when Sy Tiong Shiou subscribed and sworn to the GIS in the
City of Manila, thus, following Section 10(a), Rule 110 of the Revised
Rules of Court, the City of Manila is the proper venue for the offense.
Corporation Law; Inter-Corporate Controversies; Statutory
Construction; There is a conflict between Rule 1, Section 8 and Rule 2,
Section 2 of the Interim Rules of Procedure for Inter-Corporate

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Controversies—while a third-party complaint is not included in the allowed

pleadings, neither is it among the prohibited ones; The conflict may be
resolved by following the well-entrenched rule in statutory construction,
that every part of the statute must be interpreted with reference to the
context, i.e., that every part of the statute must be considered together with
the other parts, and kept subservient to the general intent of the whole
enactment.—The conflicting provisions of the Interim Rules of Procedure
for Inter-Corporate Controversies read: x x x There is a conflict, for while a
third-party complaint is not included in the allowed pleadings, neither is it
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among the prohibited ones. Nevertheless, this conflict may be resolved by

following the well-entrenched rule in statutory construction, that every part
of the statute must be interpreted with reference to the context, i.e., that
every part of the statute must be considered together with the other parts,
and kept subservient to the general intent of the whole enactment. Statutes,
including rules, should be construed in the light of the object to be achieved
and the evil or mischief to be suppressed and they should be given such
construction as will advance the object, suppress the mischief and secure the
benefits intended. A statute should therefore be read with reference to its
leading idea, and its general purpose and intention should be gathered from
the whole act, and this predominant purpose will prevail over the literal
import of particular terms or clauses, if plainly apparent, operating as a
limitation upon some and as a reason for expanding the signification of
others, so that the interpretation may accord with the spirit of the entire act,
and so that the policy and object of the statute as a whole may be made
effectual and operative to the widest possible extent. Otherwise stated, the
spirit, rather than the letter of a law determines its construction; hence, a
statute, as in the rules in this case, must be read according to its spirit and
intent.
Same; Same; Civil Procedure; Pleadings and Practice; Third-Party
Complaint; A third-party complaint is not, and should not be prohibited in
controversies governed by the Interim Rules of Procedure for Inter-
Corporate Controversies; Jurisprudence is consistent in declaring that the
purpose of a third-party complaint is to avoid circuitry of action and
unnecessary proliferation of law suits and of disposing expeditiously in one
litigation all the matters arising from one particular set of facts—the
summary nature of the proceedings governed by the Interim Rules, and the
allowance of the filing of third-party complaints is premised on one
objective, which is expedi-

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tious disposition of cases.—A third-party complaint is a claim that a

defending party may, with leave of court, file against a person not a party to
the action, called the third-party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponent’s claim. It is
actually a complaint independent of, and separate and distinct from the
plaintiff’s complaint. In fact, were it not for Rule 6, Section 11 of the Rules
of Court, such third-party complaint would have to be filed independently
and separately from the original complaint by the defendant against the
third-party defendant. Jurisprudence is consistent in declaring that the
purpose of a third-party complaint is to avoid circuitry of action and
unnecessary proliferation of law suits and of disposing expeditiously in one
litigation all the matters arising from one particular set of facts. It thus
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appears that the summary nature of the proceedings governed by the Interim
Rules, and the allowance of the filing of third-party complaints is premised
on one objective—the expeditious disposition of cases. Moreover, following
the rule of liberal interpretation found in the Interim Rules, and taking into
consideration the suppletory application of the Rules of Court under Rule 1,
Sec. 2 of the Interim Rules, the Court finds that a third-party complaint is
not, and should not be prohibited in controversies governed by the Interim
Rules. The logic and justness of this conclusion are rendered beyond
question when it is considered that Sy Tiong Shiou and Juanita Tan are not
complete strangers to the litigation as in fact they are the moving spirit
behind the filing of the principal complaint for accounting and damages
against the Spouses Sy.
Same; Same; Same; Same; The bringing of a third-party defendant is
proper if he would be liable to the plaintiff or to the defendant or both for
all or part of the plaintiff’s claim against the original defendant, although
the third-party defendant’s liability arises out of another transaction.—The
Court also rules that the third-party complaint of the Spouses Sy should be
admitted. A prerequisite to the exercise of such right is that some
substantive basis for a third-party claim be found to exist, whether the basis
be one of indemnity, subrogation, contribution or other substantive right.
The bringing of a third-party defendant is proper if he would be liable to the
plaintiff or to the defendant or both for all or part of the plaintiff’s claim
against the original defendant, although the third-party defendant’s liability
arises out of another transaction. The defendant may implead another as
third-party defendant: (a) on an allegation of liabil-

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ity of the latter to the defendant for contribution, indemnity, subrogation or

any other relief; (b) on the ground of direct liability of the third-party
defendant to the plaintiff; or (c) the liability of the third-party defendant to
both the plaintiff and the defendant.
Same; Same; Same; Same; A third-party complaint must allege facts
which prima facie show that the defendant is entitled to contribution,
indemnity, subrogation or other relief from the third-party defendant.—In
determining the sufficiency of the third-party complaint, the allegations in
the original complaint and the third-party complaint must be examined. A
third-party complaint must allege facts which prima facie show that the
defendant is entitled to contribution, indemnity, subrogation or other relief
from the third-party defendant.

PETITIONS for review on certiorari of the decisions and resolutions

of the Court of Appeals.

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The facts are stated in the opinion of the Court.

E.L. Gayo and Associates and Bonifacio G. Bacani for Sy Tiong
Shiou, et al.
Siguion Reyna, Montecillo and Ongsiako for Sy Chim and
Felicidad Chan Sy.

TINGA, J.:
These consolidated petitions involving the same parties. although
related, dwell on different issues.
G.R. No. 174168.
This is a petition for review1 assailing the decision and resolution
of the Court of Appeals dated 31 May 2006 and 8 August 2006,
respectively, in CA-G.R. SP No. 91416.2

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1 Rollo (G.R. No. 174168), pp. 10-33.
2 Id., at pp. 37-60; Penned by Associate Justice Renato S. Dacudao with the
concurrence of Associate Justice Remedios Salazar-Fernando and Associate Justice
Lucas P. Bersamin.

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On 30 May 2003, four criminal complaints were filed by Sy

Chim and Felicidad Chan Sy (Spouses Sy) against Sy Tiong Shiou,
Juanita Tan Sy, Jolie Ross Tan, Romer Tan, Charlie Tan and Jessie
James Tan (Sy Tiong Shiou, et al.) before the City Prosecutor’s
Office of Manila. The cases were later consolidated. Two of the
complaints, I.S. Nos. 03E-15285 and 03E-15286,3 were for alleged
violation of Section 74 in relation to Section 144 of the Corporation
Code. In these complaints, the Spouses Sy averred that they are
stockholders and directors of Sy Siy Ho & Sons, Inc. (the
corporation) who asked Sy Tiong Shiou, et al., officers of the
corporation, to allow them to inspect the books and records of the
business on three occasions to no avail. In a letter4 dated 21 May
2003, Sy Tiong Shiou, et al. denied the request, citing civil and
intra-corporate cases pending in court.5
In the two other complaints, I.S. No. 03E-15287 and 03E-15288,6
Sy Tiong Shiou was charged with falsification under Article 172, in
relation to Article 171 of the Revised Penal Code (RPC), and perjury
under Article 183 of the RPC. According to the Spouses Sy, Sy
Tiong Shiou executed under oath the 2003 General Information
Sheet (GIS) wherein he falsely stated that the shareholdings of the
Spouses Sy had decreased despite the fact that they had not executed
any conveyance of their shares.7

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3 Id., at pp. 85-94.
4 Id., at p. 83.
5 Civil Case No. 03-106456-00 is for Accounting and Damages pending before
the Regional Trial Court of Manila, Branch 46. Incidentally, the other petition, G.R.
No. 179438 is an offshoot of this civil case.
6 Id., at pp. 95-104.
7 The 2003 GIS, compared to the 2002 GIS showed a decrease from 33.75 % to
only 17.40 % ownership of the outstanding capital stock of the corporation for Sy
Chim and a decrease from 16.88% to 8.70% ownership of the outstanding capital
stock for Felicidad Chan Sy.

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Sy Tiong Shiou, et al. argued before the prosecutor that the issues
involved in the civil case for accounting and damages pending
before the RTC of Manila were intimately related to the two criminal
complaints filed by the Spouses Sy against them, and thus
constituted a prejudicial question that should require the suspension
of the criminal complaints. They also argued that the Spouses Sy’s
request for inspection was premature as the latter’s concern may be
properly addressed once an answer is filed in the civil case. Sy
Tiong Shiou, on the other hand, denied the accusations against him,
alleging that before the 2003 GIS was submitted to the Securities
and Exchange Commission (SEC), the same was shown to
respondents, who at that time were the President/Chairman of the
Board and Assistant Treasurer of the corporation, and that they did
not object to the entries in the GIS. Sy Tiong Shiou also argued that
the issues raised in the pending civil case for accounting presented a
prejudicial question that necessitated the suspension of criminal
proceedings.
On 29 December 2003, the investigating prosecutor issued a
resolution recommending the suspension of the criminal complaints
for violation of the Corporation Code and the dismissal of the
criminal complaints for falsification and perjury against Sy Tiong
Shiou.8 The reviewing prosecutor approved the resolution. The
Spouses Sy moved for the reconsideration of the resolution, but their
motion was denied on 14 June 2004.9 The Spouses Sy thereupon
filed a petition for review with the Department of Justice (DOJ),
which the latter denied in a resolution issued on 02 September
2004.10 Their subsequent motion for reconsideration was likewise
denied in the resolution of 20 July 2005.11

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8 Id., at pp. 111-118; Penned by Assistant City prosecutor Bernardino L. Cabiles.

9 Id., at pp. 137-143.
10 Id., at pp. 183-185.
11 Id., at pp. 207-209.

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The Spouses Sy elevated the DOJ’s resolutions to the Court of

Appeals through a petition for certiorari, imputing grave abuse of
discretion on the part of the DOJ. The appellate court granted the
petition12 and directed the City Prosecutor’s Office to file the
appropriate informations against Sy Tiong Shiou, et al. for violation
of Section 74, in relation to Section 144 of the Corporation Code
and of Articles 172 and 183 of the RPC. The appellate court ruled
that the civil case for accounting and damages cannot be deemed
prejudicial to the maintenance or prosecution of a criminal action for
violation of Section 74 in relation to Section 144 of the Corporation
Code since a finding in the civil case that respondents mishandled or
misappropriated the funds would not be determinative of their guilt
or innocence in the criminal complaint. In the same manner, the
criminal complaints for falsification and/or perjury should not have
been dismissed on the ground of prejudicial question because the
accounting case is unrelated and not necessarily determinative of the
success or failure of the falsification or perjury charges.
Furthermore, the Court of Appeals held that there was probable
cause that Sy Tiong Shiou had committed falsification and that the
City of Manila where the 2003 GIS was executed is the proper
venue for the institution of the perjury charges. Sy Tiong Shiou, et
al. sought reconsideration of the Court of Appeals decision but their
motion was denied.13
On 2 April 2008, the Court ordered the consolidation of G.R.
No. 179438 with G.R. No. 174168.14
Sy Tiong Shiou, et al. argue that findings of the DOJ in
affirming, modifying or reversing the recommendations of the public
prosecutor cannot be the subject of certiorari or review of the Court
of Appeals because the DOJ is not a quasi-judicial body within the
purview of Section 1, Rule 65 of the Rules of Court. Petitioners rely
on the separate opinion of

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12 Id., at pp. 37-66; Decision dated 31 May 2006.
13 Id., at pp. 71-72; Resolution dated 8 August 2006.
14 Id., at pp. 528-529.

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former Chief Justice Andres R. Narvasa in Roberts, Jr. v. Court of

Appeals,15 wherein he wrote that this Court should not be called
upon to determine the existence of probable cause, as there is no
provision of law authorizing an aggrieved party to petition for such a
determination.16 In any event, they argue, assuming without
admitting that the findings of the DOJ may be subject to judicial
review under Section 1, Rule 65 of the Rules of Court, the DOJ has
not committed any grave abuse of discretion in affirming the
findings of the City Prosecutor of Manila. They claim that the
Spouses Sy’s request for inspection was not made in good faith and
that their motives were tainted with the intention to harass and to
intimidate Sy Tiong Shiou, et al. from pursuing the criminal and
civil cases pending before the prosecutor’s office and the Regional
Trial Court (RTC) of Manila, Branch 46. Thus, to accede to the
Spouses Sy’s request would pose serious threats to the existence of
the corporation.17 Sy Tiong Shiou, et al. aver that the RTC had
already denied the motion for production and inspection and instead
ordered petitioners to make the corporate records available to the
appointed independent auditor. Hence, the DOJ did not commit any
grave abuse of discretion in affirming the recommendation of the
City Prosecutor of Manila.18 They further argue that adherence to
the Court of Appeals’ ruling that the accounting case is unrelated to,
and not necessarily determinative of the success of, the criminal
complaint for falsification and/or perjury would unnecessarily indict
petitioner Sy Tiong Shiou for the said offenses he may not have
committed but only because of an outcome unfavorable to him in the
civil action.19
Indeed, a preliminary proceeding is not a quasi-judicial function
and that the DOJ is not a quasi-judicial agency exer-

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15 324 Phil. 568, 619-620; 254 SCRA 307, 349 (1996).
16 Rollo, (G.R. No. 174168), pp. 22-23.
17 Id., at p. 27.
18 Id., at p. 28.
19 Id., at p. 29.

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cising a quasi-judicial function when it reviews the findings of a

public prosecutor regarding the presence of probable cause.20
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Moreover, it is settled that the preliminary investigation proper, i.e.,

the determination of whether there is reasonable ground to believe
that the accused is guilty of the offense charged and should be
subjected to the expense, rigors and embarrassment of trial, is the
function of the prosecution.21 This Court has adopted a policy of
non-interference in the conduct of preliminary investigations and
leaves to the investigating prosecutor sufficient latitude of discretion
in the determination of what constitutes sufficient evidence as will
establish probable cause for the filing of information against the
supposed offender.22
As in every rule, however, there are settled exceptions. Hence,
the principle of non-interference does not apply when there is grave
abuse of discretion which would authorize the aggrieved person to
file a petition for certiorari and prohibition under Rule 65, 1997
Rules of Civil Procedure.23
As correctly found by the Court of Appeals, the DOJ gravely
abused its discretion when it suspended the hearing of the charges
for violation of the Corporation Code on the ground of prejudicial
question and when it dismissed the criminal complaints.
A prejudicial question comes into play generally in a situation
where a civil action and a criminal action are both pending and there
exists in the former an issue which must be preemptively resolved
before the criminal action may proceed since howsoever the issue
raised in the civil action is resolved

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20 Santos v. Go, G.R. No. 156081, 19 October 2005, 473 SCRA 350, 360-361.
21 Cabahug v. People, 426 Phil. 490, 499; 376 SCRA 113, 122 (2002).
22 Yupangco Cotton Mills, Inc. v. Mendoza, G.R. No. 139912, 31 March 2005, 454
SCRA 386, 406.
23 Sistoza v. Desierto, 437 Phil. 117, 129; 388 SCRA 307, 323 (2002).

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would be determinative juris et de jure of the guilt or innocence of

the accused in the criminal case. The reason behind the principle of
prejudicial question is to avoid two conflicting decisions. It has two
essential elements: (a) the civil action involves an issue similar or
intimately related to the issue raised in the criminal action; and (b)
the resolution of such issue determines whether or not the criminal
action may proceed.24
The civil action and the criminal cases do not involve any
prejudicial question.

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The civil action for accounting and damages, Civil Case No. 03-
106456 pending before the RTC Manila, Branch 46, seeks the
issuance of an order compelling the Spouses Sy to render a full,
complete and true accounting of all the amounts, proceeds and fund
paid to, received and earned by the corporation since 1993 and to
restitute it such amounts, proceeds and funds which the Spouses Sy
have misappropriated. The criminal cases, on the other hand, charge
that the Spouses Sy were illegally prevented from getting inside
company premises and from inspecting company records, and that
Sy Tiong Shiou falsified the entries in the GIS, specifically the
Spouses Sy’s shares in the corporation. Surely, the civil case
presents no prejudicial question to the criminal cases since a finding
that the Spouses Sy mishandled the funds will have no effect on the
determination of guilt in the complaint for violation of Section 74 in
relation to Section 144 of the Corporation Code; the civil case
concerns the validity of Sy Tiong Shiou’s refusal to allow inspection
of the records, while in the falsification and perjury cases, what is
material is the veracity of the entries made by Sy Tiong Shiou in the
sworn GIS.
Anent the issue of probable cause, the Court also finds that there
is enough probable cause to warrant the institution of the criminal
cases.

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24 Tuanda v. Sandiganbayan, 319 Phil. 460, 470; 249 SCRA 342, 351 (1995).

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The term probable cause does not mean ‘actual and positive
cause’ nor does it import absolute certainty. It is merely based on
opinion and reasonable belief. Thus a finding of probable cause does
not require an inquiry into whether there is sufficient evidence to
procure a conviction. It is enough that it is believed that the act or
omission complained of constitutes the offense charged. Precisely,
there is a trial for the reception of evidence of the prosecution in
support of the charge.25
In order that probable cause to file a criminal case may be arrived
at, or in order to engender the well-founded belief that a crime has
been committed, the elements of the crime charged should be
present. This is based on the principle that every crime is defined by
its elements, without which there should be–at the most–no criminal
offense.26
Section 74 of the Corporation Code reads in part:

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“x x x
The records of all business transactions of the corporation and the
minutes of any meeting shall be open to inspection by any director, trustee,
stockholder or member of the corporation at reasonable hours on business
days and he may demand, in writing, for a copy of excerpts from said
records or minutes, at his expense.
Any officer or agent of the corporation who shall refuse to allow any
director, trustee, stockholder or member of the corporation to examine and
copy excerpts from its records or minutes, in accordance with the provisions
of this Code, shall be liable to such director, trustee, stockholder or member
for damages, and in addition, shall be guilty of an offense which shall be
punishable under Section 144 of this Code: Provided, That if such refusal is
made pursuant to a resolution or order of the Board of Directors or Trustees,
the liability under this section for such action shall be imposed upon the
directors or trustees who voted for such refusal: and Provided, fur-

_______________
25 Pilapil v. Sandiganbayan, G.R. No. 101978, 7 April 1993, 221 SCRA 349, 360.
26 G.R. No. 178511, 4 December 2008, 573 SCRA 129, citing Duterte v. Sandiganbayan,
G.R. No. 130191, April 27, 1998, 289 SCRA 721.

531

, 531

ther, That it shall be a defense to any action under this section that the
person demanding to examine and copy excerpts from the corporation’s
records and minutes has improperly used any information secured through
any prior examination of the records or minutes of such corporation or of
any other corporation, or was not acting in good faith or for a legitimate
purpose in making his demand.”

Meanwhile, Section 144 of the same Code provides:

“Sec. 144. Violations of the Code.—Violations of any of the provisions

of this Code or its amendments not otherwise specifically penalized therein
shall be punished by a fine of not less than one thousand (P1,000.00) pesos
but not more than ten thousand (P10,000.00) pesos or by imprisonment for
not less than thirty (30) days but not more than five (5) years, or both, in the
discretion of the court. If the violation is committed by a corporation, the
same may, after notice and hearing, be dissolved in appropriate proceedings
before the Securities and Exchange Commission: Provided, That such
dissolution shall not preclude the institution of appropriate action against the
director, trustee or officer of the corporation responsible for said violation:
Provided, further, That nothing in this section shall be construed to repeal
the other causes for dissolution of a corporation provided in this Code.”

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In the recent case of Ang-Abaya, et al. v. Ang, et al.,27 the Court

had the occasion to enumerate the requisites before the penal
provision under Section 144 of the Corporation Code may be
applied in a case of violation of a stockholder or member’s right to
inspect the corporate books/records as provided for under Section 74
of the Corporation Code. The elements of the offense, as laid down
in the case, are:

“First. A director, trustee, stockholder or member has made a prior

demand in writing for a copy of excerpts from the corporation’s records or
minutes;
Second. Any officer or agent of the concerned corporation shall refuse
to allow the said director, trustee, stockholder or member of the corporation
to examine and copy said excerpts;

_______________
27 Id.

532

532 SUPREME COURT REPORTS ANNOTATED

Third. If such refusal is made pursuant to a resolution or order of the

board of directors or trustees, the liability under this section for such action
shall be imposed upon the directors or trustees who voted for such refusal;
and,
Fourth. Where the officer or agent of the corporation sets up the
defense that the person demanding to examine and copy excerpts from the
corporation’s records and minutes has improperly used any information
secured through any prior examination of the records or minutes of such
corporation or of any other corporation, or was not acting in good faith or
for a legitimate purpose in making his demand, the contrary must be shown
or proved.28

Thus, in a criminal complaint for violation of Section 74 of the

Corporation Code, the defense of improper use or motive is in the
nature of a justifying circumstance that would exonerate those who
raise and are able to prove the same. Accordingly, where the
corporation denies inspection on the ground of improper motive or
purpose, the burden of proof is taken from the shareholder and
placed on the corporation.29 However, where no such improper
motive or purpose is alleged, and even though so alleged, it is not
proved by the corporation, then there is no valid reason to deny the
requested inspection.
In the instant case, however, the Court finds that the denial of
inspection was predicated on the pending civil case against the

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Spouses Sy. This is evident from the 21 May 2003 letter of Sy Tiong
Shiou, et al.’s counsel30 to the Spouses Sy,31 which reads:

Gentlemen:
 We write in behalf of our clients, SY SIY HO, INC. ( Guan Yiac Hardware);
SY TIONG SHIOU, JUANITA TAN SY; JOLIE ROSS

_______________
28 Id.
29 Id., citing 5A Fletcher Cyc. Corp. §. 2220, 2008.
30 Atty. Elvin P. Grana of A. Tan, Zoleta and Associates Law Firm.
31 The law firm of Siguion Reyna Montecillo & Ongsiako.

533

, 533

TAN; CHARLIE TAN; ROMER TAN; and JESSE JAMES TAN, relative to your
letter dated 16 May 2003. Please be informed that a case for Accounting and
Damages had already been filed against your clients, Sy Chim and Felicidad Chan
Sy before the Regional Trial Court of Manila, Branch 46, denominated as Civil Case
No. 03-106456.

We fully understand your desire for our clients to respond to your demands,
however, under the prevailing circumstance this would not be advisable. The
concerns that you raised in your letter can later on be addressed after your clients
shall have filed their responsive pleading in the abovesaid case.
We trust that this response will at the moment be enough.”32

Even in their Joint Counter-Affidavit dated 23 September 2003,33

Sy Tiong Shiou, et al. did not make any allegation that “the person
demanding to examine and copy excerpts from the corporation’s
records and minutes has improperly used any information secured
through any prior examination of the records or minutes of such
corporation or of any other corporation, or was not acting in good
faith or for a legitimate purpose in making his demand.” Instead,
they merely reiterated the pendency of the civil case. There being no
allegation of improper motive, and it being undisputed that Sy Tiong
Shiou, et al. denied Sy Chim and Felicidad Chan Sy’s request for
inspection, the Court rules and so holds that the DOJ erred in
dismissing the criminal charge for violation of Section 74 in relation
to Section 144 of the Corporation Code.
Now on the existence of probable cause for the falsification
and/or perjury charges.
The Spouses Sy charge Sy Tiong Shiou with the offense of
falsification of public documents under Article 171, paragraph 4;
and/or perjury under Article 183 of the Revised Penal Code (RPC).

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The elements of falsification of public documents through an

untruthful narration of facts are: (a) the offender

_______________
32 Rollo, (G.R. No. 174168), p. 83.
33 Id., at pp. 106-108.

534

534 SUPREME COURT REPORTS ANNOTATED

makes in a document untruthful statements in a narration of facts;

(b) the offender has a legal obligation to disclose the truth of the
facts narrated;34 (c) the facts narrated by the offender are absolutely
false; and (d) the perversion of truth in the narration of facts was
made with the wrongful intent to injure a third person.35 On the
other hand, the elements of perjury are: (a) that the accused made a
statement under oath or executed an affidavit upon a material matter;
(b) that the statement or affidavit was made before a competent
officer, authorized to receive and administer oath; (c) that in that
statement or affidavit, the accused made a willful and deliberate
assertion of a falsehood; and, (d) that the sworn statement or
affidavit containing the falsity is required by law or made for a legal
purpose.
A General Information Sheet (GIS) is required to be filed within
thirty (30) days following the date of the annual or a special
meeting, and must be certified and sworn to by the corporate
secretary, or by the president, or any duly authorized officer of the
corporation.36 From the records, the 2003 GIS submitted to the SEC
on 8 April 2003 was executed under oath by Sy Tiong Shiou in
Manila, in his capacity as Vice President and General Manager.37 By
executing the document under oath, he, in effect, attested to the
veracity38 of its contents. The Spouses Sy claim that the entries in
the GIS pertaining to them do not reflect the true number of shares
that they own in the company. They attached to their complaint

_______________
34 “Legal obligation” means that there is a law requiring the disclosure of the truth
of the facts narrated, Reyes, The Revised Penal Code, Book Two 210, (15th Ed., Rev.
2001).
35 Enemecio v. Office of the Ombudsman, 464 Phil. 102, 115; 419 SCRA 82, 91
(2004).
36 Rollo, p. 317; As stated in the instructions on the GIS Form.
37 Id., at p. 321.
38 Id.; “that the matters set forth in this General Information Sheet x x x are true
and correct to the best of my knowledge,” last page of the GIS Standard Form.

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535

, 535

the 2002 GIS of the company, also executed by Sy Tiong Shiou, and
compared the entries therein vis-a-vis the ones in the 2003 GIS. The
Spouses Sy noted the marked decrease in their shareholdings,
averring that at no time after the execution of the 2002 GIS, up to
the time of the filing of their criminal complaints did they execute or
authorize the execution of any document or deed transferring,
conveying or disposing their shares or any portion thereof; and thus
there is absolutely no basis for the figures reflected in the 2003
GIS.39 The Spouses Sy claim that the false statements were made by
Sy Tiong Shiou with the wrongful intent of injuring them. All the
elements of both offenses are sufficiently averred in the complaint-
affidavits.
The Court agrees with the Court of Appeals’ holding, citing the
case of Fabia v. Court of Appeals, that the doctrine of primary
jurisdiction no longer precludes the simultaneous filing of the
criminal case with the corporate/civil case.40 Moreover, the Court
finds that the City of Manila is the proper venue for the perjury
charges, the GIS having been subscribed and sworn to in the said
place. Under Section 10(a), Rule 110 of the Revised Rules of Court,
the criminal action shall be instituted and tried in the court of the
municipality or territory where the offense was committed or where
any of its essential ingredients occurred.41 In Villanueva v. Secretary

_______________
39 Supra note 6.
40 Fabia v. Court of Appeals, 437 Phil. 389, 397; 388 SCRA 574, 579 (2002).
41 Saavedra, Jr. v. Department of Justice, G.R. No. 93173, 15 September 1993,
226 SCRA 438, 445 citing Diaz v. People, 191 SCRA 86, 93 (1990); see also Burgos
v. Aquino, 319 Phil. 623; 249 SCRA 504 (1995). The elements of perjury are:
1. The accused made a statement under oath or executed an affidavit
upon a material matter;
2. The statement or affidavit was made before a competent officer
authorized to receive and administer oath;

536

536 SUPREME COURT REPORTS ANNOTATED

of Justice,42 the Court held that the felony is consummated when the
false statement is made.43 Thus in this case, it was alleged that the

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perjury was committed when Sy Tiong Shiou subscribed and sworn

to the GIS in the City of Manila, thus, following Section 10(a), Rule
110 of the Revised Rules of Court, the City of Manila is the proper
venue for the offense.
G. R. No. 179438.
This petition assails the decision44 and resolution45 of the Court
of Appeals dated 26 May 2004 and 29 August 2007, respectively, in
CA-G.R. SP No. 81897.
On 3 February 2003, Juanita Tan, corporate treasurer of Sy Siy
Ho & Sons, Inc. (the corporation), a family corporation doing
business under the name and style Guan Yiac Hardware, submitted a
letter46 to the corporation’s Board of Directors (Board) stating that
the control, supervision and administration of all corporate funds
were exercised by Sy Chim and Felicidad Chan Sy (Spouses Sy),
corporate president and assistant treasurer, respectively. In the same
letter, Juanita Tan disclosed that Felicidad Chan Sy did not make
cash deposits to any of the corporation’s banks from 1 November

_______________
3. In that statement or affidavit, the accused made a willful and
deliberate assertion of a falsehood; and
4. The sworn statement or affidavit containing the falsity is required by
law or made for a legal purpose.
42 Villanueva v. Secretary of Justice, G.R. No. 162187, 18 November 2005, 475
SCRA 495.
43 Id., at p. 512 citing U.S. v. Norris, 300 U.S. 564 (1937).
44 Id., at pp. 386-389.
45 Rollo (G.R. No. 179438), pp. 363-373; Sy Tiong Shiou and Juanita Tan v. Hon.
Artemio S. Tipon, Presiding Judge of the Regional Trial Court, Branch 46, Manila, Sy
Chim and Felicidad Chan Sy, penned by Associate Justice Noel G. Tijam with the
concurrence of Associate Justice Delilah Vidallon-Magtolis and Associate Justice
Edgardo P. Cruz.
46 Id., at pp. 58-59.

537

, 537

2001 to 31 January 2003, thus the total bank remittances for the past
years were less than reflected in the corporate financial statements,
accounting books and records. Finally, Juanita Tan sought to be free
from any responsibility over all corporate funds. The Board granted
Juanita Tan’s request and authorized the employment of an external
auditor to render a complete audit of all the corporate accounting
books and records.47 Consequently, the Board hired the accounting
firm Banaria, Banaria & Company. In its Report48 dated 5 April

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2003, the accounting firm attributed to the Spouses Sy

P67,117,230.30 as unaccounted receipts and disbursements from
1994 to 2002.49
A demand letter50 was subsequently served on the Spouses Sy on
15 April 2003. On the same date, the children of the Spouses Sy
allegedly stole from the corporation cash, postdated checks and
other important documents. After the incident, the Spouses Sy
allegedly transferred residence and ceased reporting to the
corporation. Thereupon, the corporation filed a criminal complaint
for robbery against the Spouses Sy before the City Prosecutor’s
Office of Manila.51 A search warrant was subsequently issued by the
Regional Trial Court.52
On 26 April 2003, Sy Tiong Shiou, corporate Vice President and
General Manager, called a special meeting to be held on 6 May 2003
to fill up the positions vacated by the Spouses Sy. Sy Tiong Shiou
was subsequently elected as the new president and his wife, Juanita
Tan, the new Vice Presi-

_______________
47 Id., at pp. 60-63; Minutes of the Special Meeting dated 24 March 2003.
48 Rollo (G.R. No. 179438), pp. 66-74.
49 Id., at p. 73.
50 Id., at p. 85.
51 Id., at p. 75. The complaint was docketed as IS No. 03D-12147.
52 Id., at pp. 76-77.

538

538 SUPREME COURT REPORTS ANNOTATED

dent.53 Despite these developments, Sy Chim still caused the

issuance of a Notice of Stockholders meeting dated 11 June 2003 in
his capacity as the alleged corporate president.54
Meanwhile, on 1 July 2003, the corporation, through Romer S.
Tan, filed its Amended Complaint for Accounting and Damages55
against the Spouses Sy before the RTC Manila, praying for a
complete and true accounting of all the amounts paid to, received
and earned by the company since 1993 and for the restitution of the
said amount.56 The complaint also prayed for a temporary
restraining order (TRO) and or preliminary injunction to restrain Sy
Chim from calling a stockholders’ meeting on the ground of lack of
authority.
By way of Answer,57 the Spouses Sy averred that Sy Chim was a
mere figurehead and Felicidad Chan Sy merely performed clerical
functions, as it was Sy Tiong Shiou and his spouse, Juanita Tan, who
have been authorized by the corporation’s by-laws to supervise,

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control and administer corporate funds, and as such were the ones
responsible for the unaccounted funds. They assailed the meetings
called by Sy Tiong Shiou on the grounds that the same were held
without notice to them and without their participation, in violation of
the by-laws. The Spouses Sy also pursued their counter-claim for
moral and exemplary damages and attorney’s fees.
On 9 September 2003, the Spouses Sy filed their Motion for
Leave to File Third-Party Complaint,58 praying that their attached
Third Party Complaint59 be allowed and admitted

_______________
53 Rollo (G.R. No. 179436), pp. 78-81; Minutes of the Special Meeting dated 6
May 2003.
54 Id., at p. 84.
55 Id., at pp. 34-49.
56 Id., at pp. 48-49.
57 Id., at pp. 86-113.
58 Id., at pp. 179-185.
59 Id., at pp. 186-197. The third-party plaintiffs prayed that Sy Tiong Shiou and
Juanita Tan directly and solely liable in respect of plaintiff’s claim for accounting and
damages.

539

, 539

against Sy Tiong Shiou and his spouse. In the said third-party

complaint, the Spouses Sy accused Sy Tiong Shiou and Juanita Tan
as directly liable for the corporation’s claim for misappropriating
corporate funds.
On 8 October 2003, the trial court granted the motion for leave to
file the third-party complaint, and forthwith directed the issuance of
summons against Sy Tiong Shiou and Juanita Tan.60 On 16 January
2004, their counsel allegedly discovered that Sy Tiong Shiou and
Juanita Tan were not furnished with the copies of several pleadings,
as well as a court order, which resulted in their having been declared
in default for failure to file their answer to the third-party complaint;
thus, they opted not to file a motion for reconsideration anymore and
instead filed a petition for certiorari before the Court of Appeals.
In its Decision dated 26 May 2004, the Court of Appeals granted
the petition of Sy Tiong Shiou and Juanita Tan.61 The appellate court
declared that a third-party complaint is not allowed under the
Interim Rules of Procedure Governing Intra-Corporate
Controversies Under R.A. No. 8799 (Interim Rules), it not being
included in the exclusive enumeration of allowed pleadings under
Section 2, Rule 2 thereof. Moreover, even if such a pleading were

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allowed, the admission of the third-party complaint against Sy Tiong

Shiou and Juanita Tan still would have no basis from the facts or the
law and jurisprudence.62 The Court of Appeals also ruled that the
respondent judge committed a manifest error amounting to lack of
jurisdiction in admitting the third-party complaint and in summarily
declaring Sy Tiong Shiou and Juanita Tan in default for failure to
file their answer within the purported reglementary period. The
Court of Appeals set aside the trial court’s 8 October 2003 Order
admitting the third-party complaint, as well as the 19 December
2003 Order, declaring Sy

_______________
60 Id., at pp. 229-232.
61 Id., at pp. 363-373.
62 Id., at pp. 368-371.

540

540 SUPREME COURT REPORTS ANNOTATED

Tiong Shiou and Juanita Tan in default for failure to file their
answer. The trial court was further ordered to dismiss the third-party
complaint without prejudice to any action that the corporation may
separately file against Sy Tiong Shiou and Juanita Tan.63
The Spouses Sy filed a motion for reconsideration, but their
motion was denied on 29 August 2007.64
Sy Chim and Felicidad Chan Sy argue before this Court that a
third-party complaint is not excluded or prohibited by the Interim
Rules, and that the Court of Appeals erred in ruling that their third-
party complaint is not actionable because their action is not in
respect of the corporation’s claims. They add that the disallowance
of the third-party complaint will result in multiplicity of suits.
The third-party complaint should be allowed.
The conflicting provisions of the Interim Rules of Procedure for
Inter-Corporate Controversies read:

“Rule 1, Sec. 8. Prohibited pleadings.—The following pleadings are

prohibited:
(1) Motion to dismiss;
(2) Motion for a bill of particulars;
(3) Motion for new trial, or for reconsideration of judgment or
order, or for re-opening of trial;
(4)  Motion for extension of time to file pleadings, affidavits or
any other paper, except those filed due to clearly compelling reasons.
Such motion must be verified and under oath; and
(5)  Motion for postponement and other motions of similar
intent, except those filed due to clearly compelling reasons. Such
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motion must be verified and under oath.

_______________
63 Id., at pp. 363-373; Court of Appeals Decision dated 26 May 2004.
64 Id., at pp. 386-389.

541

, 541

Rule 2, Sec.2. Pleadings allowed.—The only pleadings allowed to be

filed under these Rules are the complaint, answer, compulsory
counterclaims or cross-claims pleaded in the answer, and the answer to the
counterclaims or cross-claims.”65

There is a conflict, for while a third-party complaint is not

included in the allowed pleadings, neither is it among the prohibited
ones. Nevertheless, this conflict may be resolved by following the
well-entrenched rule in statutory construction, that every part of the
statute must be interpreted with reference to the context, i.e., that
every part of the statute must be considered together with the other
parts, and kept subservient to the general intent of the whole
enactment.66 Statutes, including rules, should be construed in the
light of the object to be achieved and the evil or mischief to be
suppressed and they should be given such construction as will
advance the object, suppress the mischief and secure the benefits
intended. A statute should therefore be read with reference to its
leading idea, and its general purpose and intention should be
gathered from the whole act, and this predominant purpose will
prevail over the literal import of particular terms or clauses, if
plainly apparent, operating as a limitation upon some and as a reason
for expanding the signification of others, so that the interpretation
may accord with the spirit of the entire act, and so that the policy
and object of the statute as a whole may be made effectual and
operative to the widest possible extent.67 Otherwise stated, the spirit,
rather than the letter of a law determines its construction; hence, a
statute, as in the rules in this case, must be read according to its
spirit and intent.68

_______________
65 SC-A.M. No. 01-2-04 (2001) Entitled, Interim Rules of Procedure for Intra-
Corporate Controversies.
66 Aisporna v. Court of Appeals, 113 SCRA 459, 467 [1982].
67 H.C. Black, Handbook on the Construction on the Construction and
Interpretation of the Laws 322, (2nd Ed, 1971).
68 Paras v. Commission on Elections, 332 Phil. 56, 64; 264 SCRA 49, 55 (1996).

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542

542 SUPREME COURT REPORTS ANNOTATED

This spirit and intent can be gleaned from Sec. 3, Rule 1 of the
Interim Rules, which reads:

“Sec. 3. Construction.—These Rules shall be liberally construed in

order to promote their objective of securing a just, summary, speedy and
inexpensive determination of every action or proceeding.”69

Now, a third-party complaint is a claim that a defending party

may, with leave of court, file against a person not a party to the
action, called the third-party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponent’s claim. It
is actually a complaint independent of, and separate and distinct
from the plaintiff’s complaint. In fact, were it not for Rule 6, Section
11 of the Rules of Court, such third-party complaint would have to
be filed independently and separately from the original complaint by
the defendant against the third-party defendant. Jurisprudence is
consistent in declaring that the purpose of a third-party complaint is
to avoid circuitry of action and unnecessary proliferation of law suits
and of disposing expeditiously in one litigation all the matters
arising from one particular set of facts.70
It thus appears that the summary nature of the proceedings
governed by the Interim Rules, and the allowance of the

_______________
69 SC-A.M. No. 01-2-04 (2001), Rule 1, Sec. 3.
70 Tayao v. Mendoza, G.R. No. 162733, 12 April 2005, 455 SCRA 726, 732-733;
Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137 Phil. 238,
243; 27 SCRA 418, 423 (1969); British Airways v. Court of Appeals, 349 Phil. 379,
394 (1998) citing 67 CJS 1034. In Asian Construction and Development Corporation
v. Court of Appeals, G.R. No. 160242, 17 May 2005, 458 SCRA 750, the Court had
the occasion to declare that “the purpose of Section 11, Rule 6 of the Rules of Court is
to permit a defendant to assert an independent claim against a third-party which he,
otherwise, would assert in another action, thus preventing multiplicity of suits.”

543

, 543

filing of third-party complaints is premised on one objective—the

expeditious disposition of cases. Moreover, following the rule of
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liberal interpretation found in the Interim Rules, and taking into

consideration the suppletory application of the Rules of Court under
Rule 1, Sec. 271 of the Interim Rules, the Court finds that a third-
party complaint is not, and should not be prohibited in controversies
governed by the Interim Rules. The logic and justness of this
conclusion are rendered beyond question when it is considered that
Sy Tiong Shiou and Juanita Tan are not complete strangers to the
litigation as in fact they are the moving spirit behind the filing of the
principal complaint for accounting and damages against the Spouses
Sy.
The Court also rules that the third-party complaint of the Spouses
Sy should be admitted.
A prerequisite to the exercise of such right is that some
substantive basis for a third-party claim be found to exist, whether
the basis be one of indemnity, subrogation, contribution or other
substantive right. The bringing of a third-party defendant is proper if
he would be liable to the plaintiff or to the defendant or both for all
or part of the plaintiff’s claim against the original defendant,
although the third-party defendant’s liability arises out of another
transaction. The defendant may implead another as third-party
defendant: (a) on an allegation of liability of the latter to the
defendant for contribution, indemnity, subrogation or any other
relief; (b) on the ground of direct liability of the third-party
defendant to the plaintiff; or (c) the liability of the third-party
defendant to both the plaintiff and the defendant.72

_______________
71 SEC. 2. Suppletory application of the Rules of Court.—The Rules of Court,
in so far as they may be applicable and are not inconsistent with these Rules, are
hereby adopted to form an integral part of these Rules.
72 Asian Construction and Development Corporation v. Court of Appeals, G.R.
No. 160242, 17 May 2005, 458 SCRA 750, 759.

544

544 SUPREME COURT REPORTS ANNOTATED

In determining the sufficiency of the third-party complaint, the

allegations in the original complaint and the third-party complaint
must be examined. A third-party complaint must allege facts which
prima facie show that the defendant is entitled to contribution,
indemnity, subrogation or other relief from the third-party
defendant.73
The complaint alleges that the Spouses Sy, as officers of the
corporation, have acted illegally in raiding its corporate funds, hence

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they are duty bound to render a full, complete and true accounting of
all the amounts, proceeds and funds paid to, received and earned by
the corporation since 1993 and to restitute to the corporation all such
amounts, proceeds, and funds which they took and misappropriated
for their own use and benefit, to the damage and prejudice of the
plaintiff and its stockholders.74 On the other hand, in the third-party
complaint, the Spouses Sy claim that it is Sy Tiong Shiou and
Juanita Tan who had full and complete control of the day-to day
operations and complete control and custody of the funds of the
corporation, and hence they are the ones liable for any shortfall or
unaccounted difference of the corporation’s cash account. Thus, Sy
Tiong Shiou and Juanita Tan should render a full, complete and true
accounting of all the amounts, proceeds, funds paid to, received and
earned by the corporation since 1993, including the amount
attributed to the Spouses Sy in the complaint for accounting and
damages. In their prayer, the Spouses Sy moved that Sy Tiong Shiou
and Juanita Tan be declared as directly and solely liable in respect of
the corporation’s claim for accounting and damages, and that in the
event that they, the Spouses Sy, are adjudged liable to the
corporation, Sy Tiong Shiou and Juanita Tan be ordered to pay all
amounts necessary to discharge their liability to the corporation by
way of indemnity or reimbursement.

_______________
73 Id.
74 Rollo (G.R. No. 179438), p. 40.

545

, 545

The allegations in the third-party complaint impute direct liability

on the part of Sy Tiong Shiou and Juanita Tan to the corporation for
the very same claims which the corporation interposed against the
Spouses Sy. It is clear therefore that the Spouses Sy’s third-party
complaint is in respect of the plaintiff corporation’s claims,75 and
thus the allowance of the third-party complaint is warranted.
WHEREFORE, these cases are resolved as follows:
G.R. No. 174168
The petition for review is DENIED. The Decision and Resolution
of the Court of Appeals dated 31 May 2006 and 8 August 2006,
respectively, in CA-G.R. SP No. 91416 are AFFIRMED.
Costs against the petitioners.
G.R. No. 179438

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The petition is GRANTED. The decision and resolution of the

Court of Appeals dated 26 May 2004 and 29 August 2007,
respectively, in CA-G.R. SP No. 81897 are SET ASIDE and the
Orders of the Regional Trial Court of Manila Branch 46 dated 8
October 2003 and 19 December 2003 are REINSTATED.

_______________
75 Allied Banking Corporation v. Court of Appeals, G.R. No. 85868, 13 October
1989, 178 SCRA 526. The tests to determine whether the claim for indemnity in a
third-party claim is “in respect of plaintiff’s claim.” are: (a) whether it arises out of
the same transaction on which the plaintiffs claim is based, or whether the third-
party’s claim, although arising out of another or different contract or transaction, is
connected with the plaintiffs claim; (b) whether the third-party defendant would be
liable to the plaintiff or to the defendant for all or part of the plaintiffs claim against
the original defendant, although the third-party defendant’s liability arises out of
another transaction; or (c) whether the third-party defendant may assert any defense
which the third-party plaintiff has, or may have against plaintiff s claim.

546

546 SUPREME COURT REPORTS ANNOTATED

SO ORDERED.

Quisumbing (Chairperson), Carpio-Morales, Velasco, Jr. and

Nachura,** JJ., concur.

Petition in G.R. No. 174168 denied, judgment and resolution

therein affirmed; while petition in G.R. No. 179438 granted,
judgment and resolution therein set aside.

Notes.—Strictly speaking, the objective of the doctrine of

primary jurisdiction is to guide a court in determining whether it
should refrain from exercising its jurisdiction until after an
administrative agency has determined some question or some aspect
of some question arising in the proceeding before the court.
(Omictin vs. Court of Appeals, 512 SCRA 70 [2007])
While there have been instances where suspension of
proceedings was effectively obtained in pending cases which
technically were not criminal and civil in nature, such action was
based on the court’s discretionary power to stay proceedings, which
is not subject to reversal on review unless it constitutes grave abuse

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of discretion. (Trinidad vs. Office of the Ombudsman, 539 SCRA

415 [2007])
——o0o——

_______________
** Additional member per Raffle dated 25 June 2008 in lieu of J. Arturo D. Brion
who inhibited himself.

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