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Abacan, Jr. vs. Northwestern University, Inc.
*
G.R. No. 140777. April 8, 2005.

ANTONIO ABACAN, JR., RUFO C. VENUS, JR., ENRIQUETO I.

MAGPANTAY and MARIETA Y. PALANCA, petitioners, vs.
NORTHWESTERN UNIVERSITY, INC., respondent.

Actions; Pleadings and Practice; The elementary test for failure to

state a cause of action is whether the complaint alleges facts which if true
would justify the relief demanded, and for which purpose only ultimate facts
and not legal conclusions or evidentiary facts are considered in applying the
test.—It is settled that the existence of a cause of action is determined by the
allegations in the complaint. In resolving a motion to dismiss based on the
failure to state a cause of action, only the facts alleged in the complaint must
be considered. The test is whether the court can render a valid judgment on
the complaint based on the facts alleged and the prayer asked for. Indeed,
the elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded.
Only ultimate facts and not legal conclusions or evidentiary facts, which
should not be alleged in the complaint in the first place, are considered for
purposes of applying the test.

Same; Same; Certiorari; Motions for Reconsideration; The filing of a

motion for reconsideration is a prerequisite to the filing of a special civil
action for certiorari; Exceptions.—It is settled that the filing of a motion for
reconsideration is a prerequisite to the filing of a special civil action for
certiorari. This is to give the lower court the opportunity to correct itself. It
is also the rule that since an order denying a motion to dismiss is only
interlocutory, which is neither appealable until final judgment nor could it
generally be assailed on certiorari, the remedy of the aggrieved party is to
file an answer and interpose as defenses the objections raised in his motion
to dismiss. However, the following have been recognized as exceptions to
the general rule: (a) where the order is a patent nullity, as where the court a
quo has no jurisdiction; (b) where the questions raised in the certiorari
proceedings have been duly raised and passed upon by the lower court, or
are the same as those raised and passed upon in the

_______________

* SECOND DIVISION.

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Abacan, Jr. vs. Northwestern University, Inc.

lower court; (c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests of the
Government or of the petitioner or the subject matter of the action is
perishable; (d) where, under the circumstances, a motion for reconsideration
would be useless; (e) where petitioner was deprived of due process and there
is extreme urgency for relief; (f) where, in a criminal case, relief from an
order of arrest is urgent and the granting of such relief by the trial court is
improbable; (g) where the proceedings in the lower court are a nullity for
lack of due process; (h) where the proceeding was ex parte or in which the
petitioner had no opportunity to object; and (i) where the issue raised is one
purely of law or where public interest is involved.

Same; Administrative Law; Securities and Exchange Commission

(SEC); Prejudicial Questions; Words and Phrases; Generally, a prejudicial
question comes into play 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, because
howsoever the issue 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;
Considering the rationale behind the principle of prejudicial question, being
to avoid two conflicting decisions, prudence dictates that the principle
underlying the doctrine be applied to a case where the question of which
between two factions are the de jure board of directors of an educational
corporation is lodged before the SEC while the complaint before the court
alleges that one faction wrongfully withdrew an amount from the account of
the corporation with its depository bank.—Technically, there would be no
prejudicial question to speak of in this case, if we are to consider the general
rule that a prejudicial question comes into play 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, because howsoever the issue 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. However, considering the rationale behind the
principle of prejudicial question, being to avoid two conflicting decisions,
prudence dictates that we apply the principle underlying the doctrine to the
case at bar. A prejudicial question is that which arises in a case, the
resolution of which is a logical antecedent of the issue involved therein and
the cognizance of which

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138 SUPREME COURT REPORTS ANNOTATED

Abacan, Jr. vs. Northwestern University, Inc.

pertains to another tribunal. The prejudicial question must be determinative

of the case before the court but the jurisdiction to try and resolve it must be
lodged in another court or tribunal. In the present case, the question of
which between the Castro and the Nicolas factions are the de jure board of
directors of NUI is lodged before the SEC. The complaint before the RTC of
Laoag meanwhile alleges that petitioners, together with their co-defendants,
comprised of the “Castro faction,” wrongfully withdrew the amount of P1.4
M from the account of NUI with Metrobank. Moreover, whether or not Roy
Nicolas of the “Nicolas faction” is a duly elected member of the Board of
NUI and thus with capacity to institute the herein complaint in behalf of the
NUI depends on the findings of the SEC in the case pending before it. It
would finally determine whether Castro, et al. legally withdrew the subject
amount from the bank and whether Nicolas lawfully initiated the complaint
in behalf of herein respondent NUI. It is petitioners’ claim, and we agree,
that the presence or absence of their liability for allowing the withdrawal of
P1.4 M from the account of NUI with Metrobank in favor of the “Castro
faction” is reliant on the findings of the SEC as to which of the two factions
is the de jure board. Since the determination of the SEC as to which of the
two factions is the de jure board of NUI is crucial to the resolution of the
case before the RTC, we find that the trial court should suspend its
proceedings until the SEC comes out with its findings.

PETITION for review on certiorari of the decision and resolution of

the Court of Appeals.

The facts are stated in the opinion of the Court.

Alfonso M. Cruz for petitioners.
Tan, Acut & Madrid for respondent.

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari 1

seeking the
annulment of the Court of Appeals (CA’s) Decision dated July

_______________

1 Penned by Associate Justice Jose L. Sabio, Jr., and concurred in by Associate

Justices Hector L. Hofileña and Omar U. Amin; Rollo, pp. 104-107.

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Abacan, Jr. vs. Northwestern University, Inc.
2
22, 1999 and the Resolution dated November 12, 1999, denying the
motion for reconsideration.
The facts are as follows:

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Two opposing factions within respondent Northwestern

University, Inc. (NUI), the “Castro” and the
3
“Nicolas” factions, seek
control as the legitimate board thereof. These two factions are
parties to4 Securities and Exchange Commission (SEC) Case No. 12-
96-5469 which is an action filed by the “Nicolas faction” to nullify
the election of the directors of NUI
5
belonging to the “Castro faction”
and SEC Case No. 12-96-5511 which is a counter-suit initiated by
the “Castro faction” seeking the nullification
6
of several board
resolutions passed by the “Nicolas faction.” On December 19, 1996,
SEC Hearing Officer Rolando G. Andaya, Jr., pursuant to SEC Case
No. 12-96-5511, issued an Order authorizing the “Castro faction”
and the Metropolitan Bank (Metrobank) Laoag City branch to
withdraw the amount
7
of P2,555,274.99 from the account8 of NUI
with said bank. Metrobank complied and released P1.4 M in favor
of the “Castro faction.” The “Nicolas faction” then initiated a
criminal complaint for estafa against the “Castro faction” as well as
the petitioners herein who are officers of Metrobank, to wit: Antonio
Abacan, Jr., President; Rufo C.

_______________

2 Rollo, p. 119.
3 Id., p. 10.
4 Entitled “Northwestern University, Inc., Ben A. Nicolas, Wilfred A. Nicolas,
Alva B. Caday, Adriano D. Lucas, and Purificacion N. Aurelio versus Ernesto B.
Asuncion, Jose G. Castro, Mariel S. Hernando, Virginio C. Rasos, Gervacio A.
Velasco, Romulo P. Felipe, Emilio A. Lorenzo, Bernadette C. Ligot, Ronald A.
Daoang, Jesus G. Bautista, and Juanito B. Chua.”
5 Entitled “Jose G. Castro, et al. vs. NUI, Ben A. Nicolas, Wilfred A. Nicolas,
Alva B. Caday, Adriano D. Lucas, Romulo Felipe and Purificacion N. Aurello.”
6 Rollo, pp. 13-15.
7 Id., p. 45.
8 P1.6 M in the Order of the Regional Trial Court, dated April 28, 1998; Rollo, pp.
73-75.

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Abacan, Jr. vs. Northwestern University, Inc.

Venus, Jr. and Enriqueto I. Magpantay, legal officers; and Marieta Y.

Palanca, assistant branch manager of its Laoag City branch. The
criminal case
9
was later dismissed insofar as petitioners are
concerned.
On July 16, 1997, NUI, through Roy A. Nicolas of the “Nicolas
faction,” filed a complaint, docketed as Civil Case No. 11296-14,
before the Regional Trial Court (RTC) of Laoag, for damages with
application for attachment against petitioners together with the
employees of NUI belonging to the “Castro faction,” namely: Jose
G. Castro, Ernesto B. Asuncion, Gervacio A. Velasco, Mariel S.
Hernando and Virginio C. Rasos as well as their counsel, Edgar S.

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Asuncion, and SEC Hearing Officer Rolando G. Andaya, Jr. NUI

claims that between December 16 and December 20, 1996,
defendants from the “Castro faction,” acting together, and helping
one another, with herein petitioners taking undue and unlawful
advantage of their respective positions in Metrobank, withdrew and
released to themselves, for their own personal gain and benefit,
corporate funds of NUI deposited with said bank in the sum of P1.4
M without the knowledge, consent or approval of NUI to the grave
and serious damage and prejudice of the latter. NUI also claims that
defendants have not accounted 10
for the said amount despite several
demands for them to do so.
On September 15, 1997, defendant, herein petitioner, Marieta Y.
Palanca filed a motion to dismiss alleging that: (1) the complaint
fails to state a cause of action against her since she is not a real party
in interest; (2) plaintiff has no legal capacity to sue; and (3) the
complaint is dismissible under Section 5, Rule 7 of the New 11Rules
of Civil Procedure on the certification against forum shopping. She
likewise pointed out that SEC Case No. 12-96-5469 must take
precedence over

_______________

9 Id., pp. 12-15.

10 Rollo, pp. 40-41.
11 Id., p. 64.

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the civil case12 since it is a logical antecedent to the issue of standing

in said case.
On April 28, 1998, the RTC issued an Order, denying Palanca’s
motion and ordering 13
her and her co-defendants to file their
respective answers. Pertinent portions of the Order read as follows:

“At first impression, the controversy commenced by the complaint appears

to be one involving an intra-corporate dispute. A closer scrutiny of the
allegations in the complaint, however, shows otherwise. Considering the
doctrine that a motion to dismiss hypothetically admits the allegations in the
complaint, what is admitted is that the action is one for a sum of money. The
Court examined Exhibit “C” of movant and found out that it refers to a case
in the Securities and Exchange Commission docketed as Sec. Case No. 12-
96-5511 where the petitioners in said SEC case (some are defendants in the
instant case) were “authorized to withdraw from Metrobank (Laoag City
Branch) the amount of P2,555,274.99 from the Bank account of
Northwestern University, Inc. . . .” On the other hand, the herein complaint
avers that plaintiff Northwestern
14
University, Inc. seeks recovery of the
amount of P1,600,000.00 allegedly withdrawn by the herein defendants
during the period from December 16 to December 20, 1996 from the

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corporate funds of plaintiff deposited with Metrobank Laoag City Branch

under Current Account No. 7-140-525096 and Savings Account No. 3-140-
52509. The SEC Order (Exhibit “C”) was issued December 19, 1996. There
is, therefore, an inference that the withdrawal referred to in the complaint as
having been effected between December 16 to 20, 1996, could possibly be
the withdrawal in consequence of the SEC Order of December 19, 1996.
However, the inference remains as such and cannot ripen to a legal
conclusion because the evidence on hand does not sufficiently preponderate
to warrant such a conclusion. In the first place, there is no evidence adduced
that the purported withdrawal, if ever made, was drawn against the
current/savings accounts mentioned in the complaint. In the second place,
the amount authorized to be withdrawn was P2,555,274.99 while the
amount sought to be recovered is

_______________

12 Id., p. 67.
13 Id., p. 77.
14 P1.4 M in the Complaint; Rollo, p. 41.

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Abacan, Jr. vs. Northwestern University, Inc.
15
P1,600,000.00. The Court cannot rely on inference or speculation to
cogently resolve a matter. While it appears that movants are invoking the
issue of forum shopping, they cannot overcome the issues raised in the
complaint, which as earlier stated, have been hypothetically admitted,
and which issues have to be joined by the filing of the answer by the
defendants. The Court notes that in the instant case, plaintiff is a
corporation and is not a respondent in SEC Case No. 12-96-5511.
Moreover, the issues raised therein and in the instant case are entirely
different. There is also no showing that there is legal basis to pierce the
veil of corporate fiction. In the other case (SEC Case No. 12-96-5469),
while it appears that Northwestern University, Inc. is one of the
plaintiffs therein, the complaint refers to a declaration of nullity of the
special stockholders meeting of 3 October 1996 of the election of
directors and of the October 3, 1996 amended by-laws, and is essentially
an action for damages. The complaint in this case, for a sum of money,
is also far removed from the nature of the action in the said SEC Case.
Thus, it is clear that there are genuine issues to be tried in this case,
which calls for a trial on the merits. The motion to dismiss must,
perforce, be denied.” (Emphasis supplied)
...
As above shown, the alleged fraud is stated in generalities. In this
jurisdiction, fraud is never presumed (Benitez vs. IAC, 154 SCRA 41).

Instead of filing their answers or a motion for reconsideration of the

said Order, herein petitioners Abacan, Magpantay, Venus and
Palanca went to the CA16 on a petition for certiorari and prohibition
raising the same issues.
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On July 22, 1999, the CA rendered the herein assailed decision

which dismissed the petition explaining thus:

“A careful review and consideration of the records of the case, reveal that
petitioner failed to comply with a condition sine qua non

_______________

15 Ibid.
16 Id., p. 86.

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for the filing of the Petition, which is to file a motion for reconsideration. In
Tan vs. CA, 275 SCRA 568 the Supreme Court specifically ruled that: The
special civil action of certiorari will not lie unless a motion for
reconsideration is first filed before the respondent court to allow it an
opportunity to correct its errors.
In filing this instant petition before Us, petitioners in its petition, while
admitting failure to file a Motion for Reconsideration, justified the same,
when it alleged thus:

13.01 Under the circumstances, the filing of a motion for reconsideration may be
dispensed with. All issues are essentially legal and have been squarely raised and
passed upon by the lower court. [Klaveness Maritime Agency, Inc. vs. Palmos, 232
SCRA 448.]

Regrettably, however, the case relied upon by petitioner, a 1994 decision,

is the exception to the rule, and not applicable to the case at Bench. In the
said case the Supreme Court said and We quote “a prior Motion for
Reconsideration is not indispensable for commencement of certiorari
proceedings if the errors sought to be corrected in said proceedings had
been duly heard and passed upon or were similar to the issue/s resolved by
the tribunal or agency below.” (italics for emphasis) A reading of the Order
of public respondent clearly shows that no hearing on the issues was had.
The penultimate paragraph of the Order of public respondent judge states:

WHEREFORE, in view of the foregoing, the Court hereby denies:

1. The motion to dismiss;

2. The application for a writ of preliminary attachment; and
3. The appointment of a special sheriff.

Defendant Jose G. Castro is hereby given eleven (11) days from receipt of a copy
of this denial within which to file his answer; defendant Marietta [sic] Young
Palanca and the other de-fendants who have not filed their answer are given five (5)
days from receipt of the Order to file their respective answers.
SO ORDERED.”

As it was, the only thing resolved by the court a quo was in relation to
the motion to dismiss the application for a writ of prelimi-
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Abacan, Jr. vs. Northwestern University, Inc.

nary attachment and the appointment of a special sheriff. Petitioner has not
filed any answer which would outline the issues that he would want the
court a quo to resolve.
Under such situation, therefore, since no proceedings were done to hear
and pass upon the issues to be raised by petitioner, then the general rule that
a motion for reconsideration must first be filed before a petition under Sec.
1 of Rule 65 must be applied. Having
17
failed to do so, petitioners’ petition
must be, as it is hereby DENIED.

A motion for reconsideration was thereafter filed 18

by petitioners but
was denied by the CA on November 12, 1999.
Hence the present petition.
Petitioners argue that: (1) following
19
the case of Klaveness
Maritime Agency, Inc. vs. Palmos, prior resort to a motion for
reconsideration before the filing of a petition for certiorari or
prohibition is not a mandatory rule and may be dispensed with in
this case since the issues involved herein are purely legal and have
already been passed upon; (2) it is contrary to the policy against
judicial delay and multiplicity of suits for a higher court to remand
the case to the trial court when the former is in a position to resolve
the dispute based on the records before it; (3) the impleaded bank
officers are not real parties-in-interest since they are not privy to the
contract of deposit between NUI and Metrobank, and they merely
complied with the SEC Order authorizing the release of funds from
the account of NUI with Metrobank; (4) the “Nicolas faction” has no
legal capacity to sue in behalf of NUI not being the de jure board of
trustees; and (5) intra-corporate case No. 12-96-5469, lodged before
the SEC, must20take precedence over the damage suit pending before
the trial court.

_______________

17 Rollo, pp. 105-107.

18 Id., p. 119.
19 G.R. Nos. 102310-12, May 20, 1994, 232 SCRA 448.
20 Rollo, pp. 19-20, 22-32.

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Abacan, Jr. vs. Northwestern University, Inc.

Petitioners then prayed for the dismissal of the complaint in Civil

Case No. 11296-14 against them, or in the alternative, to hold in
abeyance the proceedings therein
21
until after the final determination
of SEC Case No. 12-96-5469.
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NUI in its Comment contends that: the Klaveness case does not
apply in the case at bar since the issues raised herein are dependent
upon facts the proof of which have neither been entered into the
records of the case nor admitted by the parties; petitioners cannot, on
their bare and self-serving representation that reconsideration is
unnecessary, unilaterally disregard what the law requires and deny
the trial court its right to review its pronouncements before being
hailed to a higher court to account therefor; and contrary to
petitioners’ assertion, no hearing for the presentation of evidence
was had before the trial court 22
on the factual matters raised in
petitioners’ motion to dismiss.
NUI further argues: it did not fail to state a cause of action; the
complaint alleged that petitioners acted in connivance with their co-
defendants and as joint tortfeasors, are solidarily liable with their
principal for the wrongful act; as officers and employees of the
bank, they are also considered agents thereof who are liable for
fraud and negligence; the complaint charged the perpetration of the
unlawful and unjust deprivation by the petitioners of NUI’s right to
its property for which petitioners may be held liable for damages
making them real parties-in-interest; petitioners, as officers and
employees of Metrobank had an obligation to protect the funds of
NUI and it was the petitioners’ act of conniving to unlawfully
withdraw NUI’s funds which violated NUI’s legal right, thus
entitling the latter to sue for such tortuous act; it is also not true that
petitioners could not be held liable for damages since they merely
complied with the order of the SEC; as pointed out in the Order
dated April 28, 1998, the amount allegedly author-

_______________

21 Id., p. 35.
22 Id., pp. 138-145.

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Abacan, Jr. vs. Northwestern University, Inc.

ized to be withdrawn was P2,555,274.99 while the amount sought to

be recovered in the complaint was P1.6 M; it cannot be inferred
conclusively therefore that the amount subject of the complaint
refers to the same amount authorized by the SEC to be withdrawn;
in any case, such argument is more a subject
23
of defense rather than a
proper ground for a motion to dismiss.
NUI disagrees with the contention of petitioners that it has no
legal capacity to sue, stating that NUI had already conducted
subsequent elections wherein Roy A. Nicolas was elected as
member24of the board of directors and concurrently the administrator
of NUI.
NUI further avers that: there is no merit to the claim of
petitioners that there exists a prejudicial question which should

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prompt the trial court to suspend its proceedings; the rule on

prejudicial question finds no application between the civil complaint
below and the case before the SEC as the rule presupposes the
pendency of a civil action and a criminal action; and even assuming
arguendo that the issues pending before the SEC bear a similarity to
the cause of action below, the complaint of NUI can stand and
proceed separately from the SEC 25
case inasmuch as there is no
identity in the reliefs prayed for.
Evaluating the issues raised, it is clear that the only questions that
need to be answered in order to resolve the present petition are the
following: (1) Whether the complaint states a cause of action; (2)
Whether a motion for reconsideration of the order of the RTC
dismissing a motion to dismiss prior to the filing of a petition for
certiorari before the CA is dispensable; and (3) Whether the
proceedings in Civil Case No. 11296-14 must be held in abeyance
pending resolution of SEC Case No. 12-96-5469.

_______________

23 Rollo, pp. 146-150.

24 Id., pp. 151-152.
25 Id., pp. 155-156.

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Abacan, Jr. vs. Northwestern University, Inc.

First issue. Whether the complaint states a cause of action against

petitioners. We rule in the affirmative.
It is settled that the existence of a cause of action is determined
by the allegations in the complaint. In resolving a motion to dismiss
based on the failure to state a cause of action, only the facts alleged
in the complaint must be considered. The test is whether the court
can render a valid judgment on the 26
complaint based on the facts
alleged and the prayer asked for. Indeed, the elementary test for
failure to state a cause of action is whether the complaint alleges
facts which if true would justify the relief demanded. Only ultimate
facts and not legal conclusions or evidentiary facts, which should
not be alleged in the complaint 27
in the first place, are considered for
purposes of applying the test.
In this case the complaint alleges that:

...
10. Between December 16 and December 20, 1996, the defendants,
acting together and helping one another, with defendants Andaya, Abacan,
Magpantay, Venus and Palanca taking undue and unlawful advantage of
their respective positions, withdrew and released to themselves, for their
own personal gain and benefit, the corporate funds of plaintiff deposited
with Metrobank Laoag City Branch under Current Account No. 7-140-
525096 and Savings Account No. 3 140 52509 in the sum of P1,400,000.00

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without the knowledge, consent or approval 28

of plaintiff to the grave and
serious damage and prejudice of the latter.

From this statement alone, it is clear that a cause of action is present

in the complaint filed a quo. NUI has specifically alleged an act, that
is, the undue withdrawal of funds from its

_______________

26 Peltan Development, Inc. vs. Court of Appeals, G.R. No. 117029, March 19,
1997, 270 SCRA 82, 91.
27 G & S Transport Corp. vs. Court of Appeals, G.R. No. 120287, May 28, 2002,
382 SCRA 262, 274.
28 Rollo, p. 41.

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Abacan, Jr. vs. Northwestern University, Inc.

account with Metrobank, which the petitioners and the other

defendants committed, to the prejudice of NUI’s rights.
Petitioners argue that as mere officers and employees of
Metrobank, they are not privy to the contract of deposit between
their bank and NUI, thus they cannot be held liable for any
erroneous withdrawal made in NUI’s account with their bank. They
also do not stand to be benefited or injured by the judgment, i.e.,
they are not real parties-in-interest, thus the complaint a quo is
dismissible on the ground of failure to state a cause of action.
We are not persuaded.
As aptly explained by respondent NUI in its comment,
petitioners are being sued and held liable for their alleged
participation in the wrongdoing of the other defendants. The
complaint is not based on the contract of deposit between Metrobank
and NUI but on the alleged tortuous act of defendants of wrongfully
withdrawing NUI’s funds. As contracts are not the only sources of
obligations, petitioners cannot escape responsibility on the bare
assertion that the have no contract with NUI.
Second issue. Whether a motion for reconsideration is
dispensable in the case at bar. We rule in the affirmative.
Indeed, it is settled that the filing of a motion for reconsideration
is a prerequisite to the filing of a special civil action for certiorari.
29
This is to give the lower court the opportunity to correct itself. It is
also the rule that since an order denying a motion to dismiss is only
interlocutory, which is neither appealable until final judgment nor
could it generally be assailed on certiorari, the remedy of the
aggrieved party is to

_______________

29 Republic of the Philippines vs. Express Telecommunications Co., Inc., G.R. No.
147096, January 15, 2002, 373 SCRA 316, 343.
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file an answer and30interpose as defenses the objections raised in his

motion to dismiss.
However, the following have been recognized as exceptions to
the general rule:

(a) where the order is a patent nullity, as where the court a quo
has no jurisdiction;
(b) where the questions raised in the certiorari proceedings
have been duly raised and passed upon by the lower court,
or are the same as those raised and passed upon in the
lower court;
(c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests
of the Government or of the petitioner or the subject matter
of the action is perishable;
(d) where, under the circumstances, a motion for
reconsideration would be useless;
(e) where petitioner was deprived of due process and there is
extreme urgency for relief;
(f) where, in a criminal case, relief from an order of arrest is
urgent and the granting of such relief by the trial court is
improbable;
(g) where the proceedings in the lower court are a nullity for
lack of due process;
(h) where the proceeding was ex parte or in which the
petitioner had no opportunity to object; and
(i) where the issue raised
31
is one purely of law or where public
interest is involved. (Emphasis supplied)

Circumstances (b) and (d) above are present in this case.

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30 La Tondeña Distillers, Inc. vs. Judge Bernardo T. Ponferrada, et al., G.R. No.
109656, November 21, 1996, 264 SCRA 540, 543.
31 Abraham vs. National Labor Relations Commission, G.R. No. 143823, March 6,
2001, 353 SCRA 739, 744.

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150 SUPREME COURT REPORTS ANNOTATED

Abacan, Jr. vs. Northwestern University, Inc.

32
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32
In Klaveness Maritime Agency, Inc. vs. Palmos, which is being
invoked by petitioners, we held that:

. . . A prior motion for reconsideration is not indispensable for

commencement of certiorari proceedings if the errors sought to be corrected
in such proceedings had been duly heard and passed upon, or were similar
to the issues already resolved by the tribunal or agency below. Accordingly,
the Court has excused the non-filing of a motion for reconsideration when
such a motion would be basically pro forma in nature and content, and
where, 33as in the present Petition, the questions raised are essentially legal in
nature.

We agree with the argument of petitioners that a motion for

reconsideration of the order of the trial court, prior to the filing of
their petition for certiorari before the CA, was dispensable since the
questions involved are essentially legal in nature and the errors
sought to be corrected had already been heard and passed upon. One
of the errors sought to be corrected is the ruling of the trial court that
there exists a cause of action against petitioners. This issue that was
raised in the motion to dismiss has been heard and passed upon by
the trial court.
The other crucial issue that has been raised in the motion to
dismiss and duly passed upon by the trial court is the question
whether the case before the trial court should be held in abeyance
until resolution of SEC Case No. 12-96-5469. Palanca pointed out in
her motion that said SEC case, which is an action to nullify the
election of the directors of NUI belonging to the “Castro faction,”
must take precedence over Civil Case No. 11296-14 before the trial
court since it is determinative of whether or not Roy Nicolas has the
legal standing to file the suit in behalf of NUI. The trial court ruled
in the negative and held that the civil and the SEC cases can proceed
independently of each other since they involve different parties and
issues. Thus, inasmuch as this issue has already

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32 See footnote 19.

33 Id., p. 452.

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Abacan, Jr. vs. Northwestern University, Inc.

been raised and passed upon in the trial court, we agree with
petitioners that motion for reconsideration in this instance may be
dispensed with.
Third issue. Whether the proceedings in Civil Case No. 11296-14
must be held in abeyance pending resolution of SEC Case No. 12-
96-5469. We rule in the affirmative.
Petitioners argue that SEC Case No. 12-96-5469, which is an
action to nullify the election of the directors of NUI belonging to the
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“Castro faction,” is a necessary and logical antecedent of the issue of

whether the withdrawal of P1.4 M or P1.6 M, as the case may be, as
well as the institution of this suit for the recovery thereof was
authorized by the NUI.
Technically, there would be no prejudicial question to speak of in
this case, if we are to consider the general rule that a prejudicial
question comes into play 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, because howsoever the issue in the civil action
is resolved would be determinative juris et de jure of34the guilt or
innocence of the accused in the criminal case. However,
considering the rationale behind the principle of 35 prejudicial
question, being to avoid two conflicting decisions, prudence
dictates that we apply the principle underlying the doctrine to the
case at bar.
A prejudicial question is that which arises in a case, the
resolution of which is a logical antecedent of the issue involved 36
therein and the cognizance of which pertains to another tribunal.
The prejudicial question must be determina-

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34 Manalo vs. Court of Appeals, G.R. No. 141297, October 8, 2001, 366 SCRA
752, 765.
35 Tuanda vs. Sandiganbayan, G.R. No. 110544, October 17, 1995, 249 SCRA
342, 351.
36 Quiambao vs. Osorio, No. L-48157, March 16, 1988, 158 SCRA 674, 678.

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152 SUPREME COURT REPORTS ANNOTATED

Abacan, Jr. vs. Northwestern University, Inc.

tive of the case before the court but the jurisdiction 37

to try and
resolve it must be lodged in another court or tribunal.
In the present case, the question of which between the Castro and
the Nicolas factions are the de jure board of directors of NUI is
lodged before the SEC. The complaint before the RTC of Laoag
meanwhile alleges that petitioners, together with their co-
defendants, comprised of the “Castro faction,” wrongfully withdrew
the amount of P1.4 M from the account of NUI with Metrobank.
Moreover, whether or not Roy Nicolas of the “Nicolas faction” is a
duly elected member of the Board of NUI and thus with capacity to
institute the herein complaint in behalf of the NUI depends on the
findings of the SEC in the case pending before it. It would finally
determine whether Castro, et al. legally withdrew the subject
amount from the bank and whether Nicolas lawfully initiated the
complaint in behalf of herein respondent NUI. It is petitioners’
claim, and we agree, that the presence or absence of their liability
for allowing the withdrawal of P1.4 M from the account of NUI with

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Metrobank in favor of the “Castro faction” is reliant on the findings

of the SEC as to which of the two factions is the de jure board. Since
the determination of the SEC as to which of the two factions is the
de jure board of NUI is crucial to the resolution of the case before
the RTC, we find that the trial court should suspend its proceedings
until the SEC comes out with its findings.
We 38apply by analogy our pronouncement in Quiambao vs.
Osorio, to wit:

Faced with these distinct possibilities, the more prudent course for the trial
court to have taken is to hold the ejectment proceedings in abeyance until
after a determination of the administrative case. Indeed, logic and
pragmatism, if not jurisprudence, dictate such move. To allow the parties to
undergo trial notwithstanding the

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37 People vs. Consing, G.R. No. 148193, January 16, 2003, 395 SCRA 366, 369.
38 No. L-48157, March 16, 1988, 158 SCRA 674.

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Abacan, Jr. vs. Northwestern University, Inc.

possibility of petitioner’s right of possession being upheld in the pending

administrative case is to needlessly require not only the parties but the court
as well to expend time, effort and money in what may turn out to be a sheer
exercise in futility. Thus, 1 Am. Jur. 2d tells us:

The court in which an action is pending may, in the exercise of a sound discretion,
upon proper application for a stay of that action, hold the action in abeyance to abide
the outcome of another pending in another court, especially where the parties and the
issues are the same, for there is power inherent in every court to control the
disposition of causes on its dockets with economy of time and effort for itself, for
counsel, and for litigants. Where the rights of parties to the second action cannot be
properly determined until the questions raised in the first action are settled the
second action should be stayed.

While this rule is properly applicable to instances involving two [2] court
actions, the existence in the instant case of the same considerations of
identities of parties and issues, economy of time and effort for the court, the
counsels and the parties as well as the need to resolve the parties’ right of
possession before the ejectment case may be properly39
determined, justifies
the rule’s analogous application to the case at bar.

WHEREFORE, the petition is GRANTED. The Court of Appeals

Decision dated July 22, 1999 and Resolution dated November 12,
1999 are SET ASIDE. The RTC of Laoag City, Branch 14, is hereby
DIRECTED to suspend further proceedings in Civil Case No.
11296-14 until after a final determination is made in SEC Case No.
12-96-5469.
No costs.
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SO ORDERED.

Puno (Chairman), Callejo, Sr., Tinga and Chico-Nazario,

JJ., concur.

Petition granted, judgment and resolution set aside.

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39 Id., pp. 678-679.

154

154 SUPREME COURT REPORTS ANNOTATED

F.F. Marine Corporation vs. National Labor Relations Commission,
Second Division

Notes.—Prejudicial question principles are applicable to

administrative proceedings. (Quiambao vs. Osorio, 158 SCRA 674
[1988])
The rules of procedure, including the rule on prejudicial
questions, were conceived to afford parties an expeditious and just
disposition of cases, and the Supreme Court will not countenance
their misuse and abuse to frustrate or delay the delivery of justice,
and to allow in the instant case the civil action raising the alleged
prejudicial question may give rise to the evils of forum shopping.
(First Producers Holdings Corporation vs. Co, 336 SCRA 551
[2000])
A party who raises a prejudicial question is deemed to have
hypothetically admitted that all the essential elements of a crime
have been adequately alleged in the information, considering that the
prosecution has not yet presented a single evidence on the
indictment or may not yet have rested its case. (Marbella-Bobis vs.
Bobis, 336 SCRA 747 [2000])

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