Reyes v.

Pearlbank Securities, Inc

Topic: Probable Cause in Preliminary Investigations; Definition; Determination is
an Executive Function *sorry mahaba, nagulhan me sa facts hehehuhu, and ni
include ko narin other issues just to be sure
Pearlbank (PEARLBANK) Securities Inc. is engaged in securities business while
Westmont Investment Corp (WINCORP) is operating as an investment houses. And
one of the services offered by WINCORP to its clients is the arranging and brokering
of loans. Petitioner Reyes in here was formally the VP for Operations and
Administration of WINCORP
PEARLBANK alleged that in March 2000, it received letters from persons who
invested in WINCORP demanding payment of their matured investment. These
investors stated that WINCORP told them the PEARLBANK was the borrower of
their investment and that WINCORP was unable to pay its investors because
PEARLBANK was unable to pay the loans which were extended by WINCORP.
As proof of the investors claim, they presented:
(a) Confirmation Advices - the period covered was from Jan 25, 2000 - April 3
2000 bearing the words Borrower: PEARLBANK
(b) SPA and Certifications signed and issued to these investors by WINCORP
PEARLBANK alleged that WINCORPs act of stating and making it appear in
several Confirmation Advices, SPA and Certifications that PEARLBANK was the
borrower of the funds from the investors of WINCORP, constituted
FALSIFICATION of COMMERCIAL and PRIVATE DOCUMENTS and
PEARLBANK also alleged that these accounts were settled by an offsetting
agreement and denied obtaining loans from Dec 11 1998 - Jan 18 1999.
Pearlbank served a final demand letter from WINCORP asking for full accounting of
the identities and investment of the investors and alleged loan obligations of
PEARLBANK with supporting documents including the purported Confirmation
Advices but WINCORP still failed to act on such demand.
PEARLBANK filed 2 complaints with SEC for full accounting of the investments
of WINCORP and PEARLBANKs alleged loan obligations to WINCORP
Also, Tan (treasurer of Pearlbank) filed a complaint on behalf of PERALBANK for
FALSIFICATION by PRIVATE INDIVIDUALS of commercial and private
documents before the DOJ
WINCORP answered to the case filed before the DOJ denying that there was
falsification and stated that WINCORP approved a credit line in favour of
PEARLBANK to which it was renewed and the amount was increased from 250M to
850M to which WINCORP issued promissory notes to those additional loans but
those PN were never returned. It also stated that the Confirmation Advices, SPA were
prepared in good faith.
Jan 2, 2001 - Ong, Lucena, Briones, Espiruted filed a Motion to Admit Attached
Memorandum before the DOJ, stating that the criminal complaint against them
should be dismissed for LACK of PROBABLE CAUSE or SUSPENDED due to
the existence of prejudicial question in the SEC cases

June 18, 2001 (Rances resolution 1) - Prosecutor Rances of DOJ Task Force on
Financial fraud (found probable cause) issued a resolution recommending the filing
of Informations for falsification of commercial and private documents by private
individuals against petitioner Reyes, Ong, Briones, Lucena, Espiritu, and
Tamundong.
Aug. 21, 2001 - before the expiration for the period of filing an MR, informations for
falsifications were filed against petitioners before the MTC relying on the Rances
resolution; another MR was filed raising the same issue of lack of probable cause and
existence of prejudicial question.
Dec 13, 2001 (Rances resolution 2) - Prosecutor Rances denied the 2 MRs; from
such denial, they appealed (Petition for review) to the Office of DOJ Secretary (Usec
Guiterrez)
June 27, 2003 (Guiterrez resolution)- Usec Guiterrez REVERESED the 2 Rances
resolutions and ordered the Office of the Chief Prosecutor to move for withdrawal of
the informations filed at the MTC, Usec stated that:
a. the confirmation advices were only renewals which formed part of the
earlier loans of Pearlbank
b. Ong, Lucena, Briones, Tamundong & Espirutu are performed it in good
faith
c. Confirmation Advices are not commercial documents
d. SEC cases is a prejudicial question which involves issues that are intimately
related to the issues in the present case .
Due to that reversal, PEARLBANK filed an MR with a motion praying that Usec
Guiterrez should inhibit herself from the proceedings
Dec 4, 2003 (Dumantong resolution) - DOJ Sec Datumanong issued a resolution
granting the MR, Dumantong reversed the Guiterrez resolution and reinstated the
Rances resolution 1.
Dumantong stated that:
a. there is a finding probable cause to charge petitioner and respondents except
for Espirutu because considering the nature of the certifications in question
and his unties, he was entitle to rely on the certifications and representations
of those in the Treasury group
b. no prejudicial question - the existence of outstanding obligation of
PEARLBANK under its credit line with WINCORP was irrelevant &
immaterial to the falsifications cases and should not be determinative of the
criminal cases
c. Admissions of PEARLBANK that the loans were offset
Jan 8, 2004- Reyes filed MR of the Dumantong resolution while the others filed a
separate MR, both of which were denied by Dumantong
Petitioner appealed to CA via Rule 65 to nullify the Dumantong resolution still
based on the same arguments. While the appeal to the CA was pending, petitioner
filed an Motion to suspend further proceedings before the MTC NCR but CA found
that DOJ did not commit any grave abuse of discretion in finding that there was

probable cause and petitioners liability for the crime of falsification could be best
treated out at the trial on the merits of the case
Petitioner appeal to SC alleging that there is no probable cause to charge him for
falsification; that the proceedings in the criminal cases should be suspending pending
resolution of the SEC cases which were transferred to RTC Makati
ISSUE:
(a) whether or not there is probable cause to file an information for
falsification of private and commercial documents against petitioner;
and
(b) whether the two cases before the SEC are prejudicial questions which have
to be resolved before the criminal cases may proceed.
HELD:
Probable cause are those facts which are sufficient to engender a well-founded
belief that a crime has been committed and that respondent is probably guilty
thereofa finding of probable cause needs only to rest on evidence showing that
more likely than not a crime has been committed by the suspects
The term does not mean actual and positive cause nor does it import absolute
certainty. It is merely based on opinion and reasonable belief. It need not be
based on clear and convincing evidence of guilt, not on evidence establishing guilt
beyond reasonable doubt, and definitely not on evidence establishing absolute
certainty of guilt. In determining probable cause, the average man weighs facts and
circumstances without resorting to the calibrations of the rules of evidence of
which he has no technical knowledgehe relies on common sense.

In this case, petitioner was not able to convince this Court to deviate from the
general rule of non- interference. The Court of Appeals did not err in dismissing
petitioners application for a writ of certiorari, absent grave abuse of discretion on
the part of the DOJ Secretary in finding probable cause against him for the
falsification of commercial and private documents.
The Department of Justice (DOJ) Secretary is not precluded from making
inferences of fact and conclusions of law which may be different from, contrary to,
or even entirely abandoning, the findings made by his Undersecretary (Gutierrez)
although they were both faced with the same evidence and arguments; The purpose
of a motion for reconsideration is precisely to request the court or quasi-judicial body
to take a second look at its earlier judgment and correct any errors it may have
committed therein
-

1st: Dumantong issued the resolution due to the MR filed by PEARLBANK

and such resolution was the result on his acting on the MR. And the purpose
of the MR is to request the court / quasi-judicial body to take a 2nd look at
its earlier judgement and correct any errors

2nd: Dumantong resolution cannot be said that it was without bases.

Because reviewing Prosecutors Rances finding probable cause to believe
that they were guilty of falsification based on essentially the SAME
evidence & arguments

3rd: Dumantong exhaustively presented in his resolution the legal and

factual reasons for his reversal of Guiterrez resolution which negated the
negated the allegation of petitioner that Dumantong committed GAD

These findings of probable cause fall within the jurisdiction of the prosecutor or
fiscal in the exercise of executive power, which the courts do not interfere (noninterference) with unless there is grave abuse of discretion. The determination of
its existence lies within the discretion of the prosecuting officers after conducting
a preliminary investigation upon complaint of an offended party. Thus, the
decision whether to dismiss a complaint or not is dependent upon the sound
discretion of the prosecuting fiscal.22 He may dismiss the complaint forthwith, if he
finds the charge insufficient in form or substance or without any ground. Or he may
proceed with the investigation if the complaint in his view is sufficient and in proper
form.

While the right to equal protection of the law requires that litigants are treated in an equal
manner by giving them the same rights under similar circumstances, it may not be perversely
used to justify desistance by the authorities from prosecution of a criminal case, just because
not all of those who are probably guilty thereof were charged. Citing the case of Webb v De
Leon: [T]he prosecution of crimes appertains to the executive department of government
whose principal power and responsibility is to see that our laws are faithfully executed. A
necessary component of this power to execute our laws is the right to prosecute their
violators. The right to prosecute vests the prosecutor with a wide range of discretionthe
discretion of whether, what and whom to charge, the exercise of which depends on a
smorgasboard of factors which are best appreciated by prosecutors x x x.

HENCE, the determination of probable cause for the filing of information in court is
an executive function, one that properly pertains at the first instance to the public
prosecutor and, ultimately, to the Secretary of Justice, who may direct the filing
of the corresponding information or move for the dismissal of the caseand, unless
made with grave abuse of discretion, findings of the Secretary of Justice are not
subject to review. Such rule is consistent with the general rule that criminal
prosecutions may not be restrained or stayed by injunction, preliminary or final.

A prejudicial question is defined as one which arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the cognizance of which pertains to
another tribunal; The prejudicial question must be determinative of the case before the court,
but the jurisdiction to try and resolve the question must be lodged in another court or tribunal;
The rationale behind the principle of prejudicial question is to avoid two conflicting
decisions.
- In this case, although arising from same set of facts, issues in the crim and civ cases are
different