G.R. No. 171643 - Verzano, Jr. vs. Paro

Case Summary (G.R. No. 171643)

Factual Background

On March 14, 2002, petitioner was dismissed from service by Wyeth after the company conducted an internal investigation and afforded him the opportunity to explain his side. The administrative complaint alleged that petitioner violated company policy by allegedly allowing prohibited “sales” of drug samples that were intended to be given free to doctors. It also alleged an unauthorized act of “channeling,” described as the transfer of stocks within the same area falsely creating an impression of a sale. Among the complainants were respondents, who were territory managers under petitioner’s supervision.

Aggrieved by the termination, petitioner filed a complaint for illegal dismissal before the labor authorities in Bacolod City. Wyeth filed a position paper supported by the affidavits of respondents. On the basis of those affidavits, petitioner filed a criminal complaint against respondents for perjury, false testimony, and incriminatory machination, contending that the affidavits contained material falsehoods, particularly on the alleged date of sale and on the asserted fact that petitioner sold products that were supposed to be free samples for doctors. Petitioner further alleged that his claimed “channeling” acts were false and unfounded.

Proceedings Before the City Prosecutor

Subpoenas were issued by the City Prosecutor for the submission of counter-affidavits. The returns showed that respondents could not be located at their given addresses. Despite the absence of counter-affidavits, the City Prosecutor issued a Resolution dated March 3, 2004 recommending dismissal for insufficiency of evidence. Petitioner sought reconsideration, but the City Prosecutor denied it in a Resolution dated June 11, 2004.

Review by the Regional State Prosecutor and Directive to File Informations

Petitioner then appealed to the Office of the Regional State Prosecutor through a petition for review. On July 30, 2004, the Regional State Prosecutor reversed the City Prosecutor’s dismissal. The Resolution directed the filing of Informations for perjury against respondents within five days from receipt, requiring proof of compliance.

Respondents moved for reconsideration, but on August 25, 2004, the Regional State Prosecutor denied the motion, thereby affirming the directive. On September 20, 2004, two Informations for perjury were filed in the Municipal Trial Court in the Cities (MTCC), Bacolod City. The Information against Florencio was docketed as Criminal Case No. 049-8479, and the Information against Paro was docketed as Criminal Case No. 049-8480.

Judicial Actions Triggered by the Perjury Informations and the CA Petition

On September 20, 2004, respondents filed a petition for certiorari with the CA assailing the Regional State Prosecutor’s Resolutions that reversed the City Prosecutor and directed the filing of the Informations. Respondents also sought a temporary restraining order (TRO). On October 7, 2004, the MTCC issued warrants of arrest. Respondent Florencio posted bail on the same day, and respondent Paro followed on October 8, 2004.

On October 14, 2004, the CA issued a TRO enjoining the Chief Prosecutor from acting on the challenged Regional State Prosecutor order for 60 days from receipt. In light of the TRO, respondents filed a Manifestation and Urgent Motion to Suspend Proceedings with the MTCC on November 2, 2004. On November 10, 2004, the MTCC granted the motion to suspend proceedings.

CA Disposition and Subsequent Motion for Reconsideration

On July 28, 2005, the CA rendered its Decision granting respondents’ petition. The CA reversed and set aside the Resolutions dated July 30, 2004 and August 25, 2004. The CA ruled that the Regional State Prosecutor committed grave abuse of discretion by directing the filing of the Informations for perjury based solely on the fact that respondents had not submitted counter-affidavits. The CA also held that, even after the Informations were filed in the MTCC, the CA still retained authority to correct acts tainted with grave abuse of discretion.

Petitioner’s motion for reconsideration was denied by the CA in a Resolution dated February 7, 2006. Petitioner then filed the present petition before the Supreme Court.

Issues Raised by Petitioner

Petitioner raised three issues. First, he argued that respondents’ CA petition had become moot and academic because the perjury cases were already filed in court. Second, he contended that the Regional State Prosecutor did not commit grave abuse of discretion in reversing the City Prosecutor’s finding of no probable cause. Third, petitioner asserted that certiorari was not the proper remedy and that respondents should have appealed to the Secretary of Justice under Department Circular No. 70 (the “2000 NPS Rule on Appeal”).

Supreme Court’s Treatment of Mootness: Effect of Filing in Court

Petitioner relied on Crespo v. Mogul to argue that once an information is filed in court, the prosecution’s disposition such as dismissal becomes the court’s discretion, and the prosecutor cannot impose his will. He also invoked the fact that warrants of arrest were issued and that respondents had posted bail.

The Court held that petitioner’s reliance on Crespo was incomplete. Citing Ledesma v. Court of Appeals, the Court explained that Crespo does not foreclose appellate review through the proper remedial route when a prosecutor’s action in the determination of probable cause is alleged to constitute grave abuse of discretion. The Court further relied on the doctrinal clarification in Marcelo v. Court of Appeals, where it was recognized that review by the Secretary of Justice may still be pursued despite the filing of an information in court. The Court agreed with the CA that the same principles apply to the CA’s authority to correct prosecutorial acts tainted with grave abuse of discretion, notwithstanding the filing of the Informations in the MTCC.

The Court also emphasized that the CA petition was filed under Rule 65, thereby empowering the CA to determine whether the Regional State Prosecutor acted with grave abuse of discretion amounting to lack or excess of jurisdiction. It further noted Ledesma’s guidance that where the Secretary of Justice exercises review after an information is filed, trial courts should defer or suspend proceedings while the appeal is resolved. Thus, the MTCC’s suspension of proceedings in response to respondents’ CA petition was treated as an exercise of its jurisdiction and was not speculative or illusory.

Grave Abuse of Discretion by the Regional State Prosecutor

On the second issue, the Court found the petition without merit. The CA’s finding of grave abuse of discretion rested on the manner in which the Regional State Prosecutor interpreted and applied the rules on preliminary investigation, particularly the effect of the failure of respondents to submit counter-affidavits.

The Court examined the July 30, 2004 Resolution of the Regional State Prosecutor. It observed that the Resolution treated the failure to file counter-affidavits as automatically decisive. The Regional State Prosecutor reasoned that respondents’ counter-affidavits were required to dispute or controvert the complaint’s allegations and that absent such counter-affidavits, the allegations remained uncontroverted. The Regional State Prosecutor also invoked Section 3, paragraph (d) of Rule 112 in concluding that where counter-affidavits were not submitted within the period, the investigating officer should resolve the complaint based on the evidence presented by the complainant.

The Court agreed with the CA that the Regional State Prosecutor’s approach did not reflect a genuine and independent evaluation of whether probable cause existed. It considered as controlling that the Regional State Prosecutor’s theory effectively implied that probable cause would automatically arise from the procedural default of not submitting counter-affidavits. The CA was therefore considered correct in its criticism that such an approach would produce an absurd outcome in which a criminal complaint would automatically be resolved in favor of the complainant in the absence of counter-affidavits.

The Court further noted that the Regional State Prosecutor continued to adhere to the same theory even in the August 25, 2004 Resolution denying respondents’ motion for reconsideration. There, the Regional State Prosecutor relied on an additional misconstruction of Section 3, paragraph (b) of Rule 112, which the Court characterized as flawed in its implication that the mere issuance of subpoenas and continuance of investigation necessarily meant a conclusion of probable cause.

The Court explained that Section 3, paragraph (b) allowed the investigating prosecutor to issue subpoenas if he found grounds to continue the investigation. However, the continuance of the investigation did not logically and legally require an automatic finding of probable cause. The Court characterized the Regional State Prosecutor’s reasoning as defeating the purpose of the counter-affidavit, which is to honor due process by providing the respondent an opportunity to refute the allegations in the complaint. The Court thus held that the CA correctly concluded that the Regional State Prosecutor committed grave abuse of discretion when he resolved the case by interpretations and applications of the Rules of Court lacking legal basis.

Remedy Through Certiorari and the Administrative Exhaustion Rule

On the third issue, petitioner argued that respondents should have appealed to the Secretary of Justice under Department Circular No. 70 instead of filing certiorari with the CA. The Court gave the argument scant consideration. It reaffirmed that the doctrine of exhaustion of administrative remedies admits exceptions. It ruled that the Regional State Prosecutor’s acts were patently illegal and amounted to lack or excess of jurisdiction, which brought the controversy within an exception to exhaustion. Accordingly, r

Case Syllabus (G.R. No. 171643)

Filemon A. Verzano, Jr. petitioned the Supreme Court under Rule 45 to set aside the Court of Appeals rulings in CA-G.R. SP No. 86521.
Francis Victor D. Paro and Janet A. Florencio were the respondents in the Court of Appeals petition and the accused in the perjury cases.
The petition sought review of the July 28, 2005 Decision and the February 7, 2006 Resolution of the Court of Appeals.
The controversy arose from conflicting prosecutorial resolutions in a perjury complaint that followed a prior labor-related dismissal of the petitioner from employment.

Parties and Procedural Posture

Petitioner was Filemon A. Verzano, Jr., a former District Manager of Wyeth Philippines, Inc. for the islands of Panay and Negros.
Respondents were Francis Victor D. Paro, Janet A. Florencio, Hon. Regional State Prosecutor, and Hon. City Prosecutor of Bacolod.
The petitioner’s labor termination led to his filing of a criminal complaint for perjury, false testimony, and incriminatory machination against Paro and Florencio.
The City Prosecutor dismissed the criminal complaint for lack of probable cause.
The Regional State Prosecutor reversed and directed the filing of perjury informations.
After informations were filed in the MTCC, respondents sought certiorari in the Court of Appeals under Rule 65, and the Court of Appeals issued a TRO.
The Court of Appeals granted the respondents’ petition and reversed the prosecutorial resolutions, then later denied reconsideration.
The MTCC ultimately granted motions for leave to withdraw the informations after the Court of Appeals decision, prompting the issue of mootness in the Supreme Court petition.

Key Factual Allegations

The administrative complaint against the petitioner alleged violation of company policy on prohibited sale of drug samples meant to be distributed for free to doctors.
The administrative complaint also alleged unauthorized “channeling”, described as transfer of stocks within the same area that falsely created the impression that there was a sale.
The administrative investigation and denial of the petitioner’s defenses resulted in the petitioner’s dismissal from service on March 14, 2002.
The respondents (Paro and Florencio) participated in the administrative complaint as territory managers under the petitioner’s supervision.
In the labor case before the NLRC, the petitioner filed a complaint for illegal dismissal and the employer’s position paper attached affidavits of Paro and Florencio.
The petitioner later filed the criminal complaint alleging the respondents’ affidavits contained falsehoods on material points, including the alleged date of sale and the claimed sale of products intended to be given free to doctors.
The petitioner further argued that the claimed act of “channeling” was false and unfounded.

Administrative Termination Background

The petitioner’s termination stemmed from his alleged acts in relation to drug samples and internal stock movements.
After being dismissed, the petitioner pursued labor remedies, while the respondents’ affidavits used in the labor proceedings became the factual basis of the petitioner’s later perjury accusation.

Criminal Investigation Events

Subpoenas were issued by the City Prosecutor for the submission of counter-affidavits by the respondents.
The returns of the subpoenas showed that the respondents could not be located at their given addresses.
The City Prosecutor resolved on March 3, 2004 to dismiss all charges for insufficiency of evidence despite the lack of counter-affidavits.
The petitioner sought reconsideration, but the City Prosecutor denied it on June 11, 2004.
In a petition for review, the Office of Regional State Prosecutor reversed the dismissal on July 30, 2004, directing the filing of perjury informations against Paro and Florencio within five days.

Court of Appeals Certiorari

Respondents filed a petition for certiorari before the Court of Appeals challenging the Regional State Prosecutor’s resolutions.
Respondents also prayed for a TRO, and the Court of Appeals issued a TRO on October 14, 2004 to enjoin the chief prosecutor from acting on the assailed orders for 60 days.
The respondents then sought suspension of proceedings before the MTCC, and on November 10, 2004, the MTCC granted the motion to suspend.

MTCC Informations and Bail

On September 20, 2004, two Informations for perjury were filed in the MTCC, Bacolod City.
The Information against Florencio was docketed as Criminal Case No. 049-8479, while the one against Paro was docketed as Criminal Case No. 049-8480.
Arrest warrants were issued on October 7, 2004, and Florencio posted bail on the same day.
Paro posted bail on October 8, 2004.

Court of Appeals Ruling

The Court of Appeals granted the certiorari petition on July 28, 2005 and reversed and set aside the resolutions dated July 30, 2004 and August 25, 2004.
The Court of Appeals held that the Regional State Prosecutor committed grave abuse of discretion by directing the filing of informations based on the premise of respondents’ failure to submit counter-affidavits.
The Court of Appeals ruled that the filing of the informations in the MTCC did not bar it from correcting acts tainted with grave abuse of discretion.
The Court of Appeals denied reconsideration on February 7, 2006.
The Court of Appeals’ analys