Balangauan vs. Court of Appeals

A finding of probable cause does not require "hard facts and solid evidence" or absolute certainty; it merely requires such facts and circumstances as would excite belief in a reasonable mind that the person charged is guilty of the crime prosecuted, and a public prosecutor or the Secretary of Justice who demands a higher standard commits grave abuse of discretion amounting to lack or excess of jurisdiction.

Katherene Balangauan was employed as a Premier Customer Services Representative (PCSR) at the Cebu Branch of the Hongkong and Shanghai Banking Corporation, Ltd. (HSBC), managing the accounts of depositors with Premier Status, among them Roger Dwayne York. The criminal complaint for estafa and/or qualified estafa arose from the alleged misappropriation of York's ₱2,500,000.00 time deposit, which York claimed to have invested in a "new product" offered by Katherene but which never appeared in the bank's records.

Katherene Balangauan was a Premier Customer Services Representative (PCSR) at the Cebu Branch of HSBC, tasked with managing the accounts of depositors holding Premier Status. One such client was Roger Dwayne York, who maintained several accounts with the bank. Sometime in April 2002, York visited the Cebu Branch to transact with Katherene regarding his dollar and peso accounts, but she was on vacation, and another PCSR attended to him. During the visit, York inquired about the status of his time deposit in the amount of ₱2,500,000.00, but the attending PCSR could not find any record of such placement in the bank's database.

York insisted that through Katherene, he had placed the ₱2,500,000.00 in a higher-earning time deposit, a product supposedly offered exclusively to Premier clients. Upon further examination, HSBC personnel discovered that on January 18, 2002, York had pre-terminated a ₱1,000,000.00 time deposit, that there were cash movement tickets and withdrawal slips all signed by York for the amount of ₱1,000,000.00, and that beginning January 2002, monthly deposits of ₱12,500.00 and ₱8,333.33 were made into York's accounts — deposits which York denied ever making but surmised were the regular interest earnings from the ₱2,500,000.00 placement. These deposits were transacted using Katherene's computer and work station accessed by the code or personal password "CEO8," which only she could use, as she was provided with a swipe card of which she had sole custody.

HSBC personnel further recounted that prior to the filing of the complaint, they had been in contact with the spouses. Bernyl allegedly met with bank personnel on two occasions: first disavowing any knowledge of York's money, but later admitting that he knew his wife had invested the funds with a "Shell Company" and that he had made the phone banking deposit crediting York's account with the ₱12,500.00 and ₱8,333.33 using their home landline. Katherene allegedly spoke to bank personnel and York on several occasions, admitting that the funds were invested with Shell Company but claiming York knew about it. HSBC reimbursed York the ₱2,500,000.00 to protect its goodwill, and thereafter filed a criminal complaint for estafa and/or qualified estafa before the Office of the City Prosecutor, Cebu City.

The spouses submitted a joint counter-affidavit denying all allegations as fabrications. Katherene denied having spoken on the telephone with bank personnel and York or having admitted to taking York's ₱2,500,000.00 and investing it with Shell Corporation. Bernyl denied having met with the bank personnel or having admitted that York knew about the investment. Regarding the regular monthly deposits made using code "CEO8," they argued that as a PCSR, it was Katherene's duty to accept funds for deposit, and that monies deposited at any bank were entrusted to the bank as a whole, not to any specific employee.

The Assistant City Prosecutor dismissed the complaint for lack of probable cause, finding that York, a long-standing Premier client maintaining accounts in millions, could not have been so unwary as to claim unfamiliarity with withdrawal slips and cash movement tickets he signed on several occasions, and concluding that York freely and knowingly knew what was happening with his money — thereby negating the elements of deceit, fraud, abuse of confidence, and lack of consent. The DOJ affirmed this dismissal twice, reasoning that it did not "dwell on possibilities, suspicion and speculation" and ruled "based on hard facts and solid evidence." The Court of Appeals reversed, finding that the DOJ gravely abused its discretion by applying a standard higher than what probable cause requires and that the evidence on record established a prima facie case warranting the filing of an information.

• Grave Abuse of Discretion by the Court of Appeals: Petitioners maintained that the Court of Appeals committed grave abuse of discretion in reversing the DOJ resolutions and giving due course to HSBC's petition despite the absence of probable cause.
• Lack of Legal Standing of HSBC: Petitioners argued that the Court of Appeals appreciated dubious evidence adduced by HSBC despite the latter's lack of legal standing or personality to file the criminal complaint.
• Overlooking Evidence of Innocence: Petitioners contended that the Court of Appeals denied their motion for reconsideration notwithstanding glaring evidence proving their innocence.
• York's Own Withdrawal of Funds: Petitioners asserted that the Court of Appeals rebuffed their evidence, which, examined alone, would establish that the money in question had already been withdrawn by York himself.
• Procedural Defect in HSBC's Petition: Petitioners argued that the Court of Appeals should have dismissed HSBC's petition outright because the required affidavit of service was not attached, pursuant to Section 13, Rule 13 in relation to Section 3, Rule 46, and Section 2, Rule 56 of the Rules of Court.
• Proper Remedy: Petitioners asserted in their Reply that the Rule 65 petition was properly filed because they raised not only questions of law but also questions of fact and error of jurisdiction, claiming the Court of Appeals "usurped into the jurisdiction and authority of the Public Prosecutor/Secretary of Justice."

• Wrong Mode of Appeal: Respondent HSBC argued that the filing of the present petition was improper and should be dismissed, as the correct remedy was an appeal by certiorari under Rule 45 of the Revised Rules of Court.
• Constitutional Requirement on Decisions: Respondent HSBC maintained that it was incorrect to argue that the Secretary of Justice need not recite the facts and law on which his resolution was based, because courts and quasi-judicial bodies should faithfully comply with Section 14, Article VIII of the Constitution requiring decisions to state clearly and distinctly the facts and the law on which they are based.

• Proper Remedy: Whether a petition for certiorari under Rule 65 is the proper remedy to assail a decision and resolution of the Court of Appeals, or whether the proper remedy is a petition for review on certiorari under Rule 45.
• Grave Abuse of Discretion by the Court of Appeals: Whether the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in reversing and setting aside the DOJ resolutions.
• Standard for Probable Cause: Whether the DOJ committed grave abuse of discretion in requiring "hard facts and solid evidence" as the standard for a finding of probable cause.
• Existence of Probable Cause: Whether the facts and circumstances on record establish probable cause to warrant the filing of an information for estafa and/or qualified estafa against the petitioners.

• Proper Remedy: No. The proper remedy is a petition for review on certiorari under Rule 45, not a petition for certiorari under Rule 65. The CA's decision and resolution were dispositions on the merits, appealable via Rule 45, and the petition was filed 59 days after receipt of the CA's denial — well beyond the 15-day reglementary period and even beyond the maximum 30-day extended period.
• Grave Abuse of Discretion by the Court of Appeals: No. The Court of Appeals did not act with grave abuse of discretion in reversing the DOJ resolutions; its decision and resolution were more in accord with the evidence on record and relevant laws and jurisprudence than the DOJ resolutions.
• Standard for Probable Cause: Yes. The DOJ gravely abused its discretion by requiring "hard facts and solid evidence" for a finding of probable cause, disregarding the definition of probable cause as merely a reasonable ground of presumption that a matter is well-founded, based on opinion and reasonable belief rather than absolute certainty.
• Existence of Probable Cause: Yes. The collective circumstances — the "CEO8" password, the photographs of Katherene carrying a bulky plastic bag, the phone banking deposits traced to the spouses' landline, the admissions allegedly made by both spouses, and the absence of any record of the ₱2,500,000.00 placement — sufficiently established a prima facie case for estafa and/or qualified estafa, warranting the filing of an information.

• Proper Remedy: Rule 45 of the Revised Rules of Court specifically provides that an appeal from judgments, final orders, or resolutions of the Court of Appeals is by verified petition for review on certiorari, raising only questions of law. The CA's April 28, 2006 Decision and June 29, 2006 Resolution were dispositions on the merits, making them appealable via Rule 45. A writ of certiorari under Rule 65 will not issue where the remedy of appeal is available, plain, speedy, and adequate. While the Court has, in certain cases, treated a Rule 65 petition as a Rule 45 petition if filed within the reglementary period, that exception does not apply here because 59 days had elapsed from receipt of the CA's denial of the motion for reconsideration (received July 4, 2006; petition filed September 1, 2006), far beyond the 15-day period and even beyond the maximum 30-day extended period. Petitioners had thus lost the right to appeal via Rule 45. However, if the CA's decision is attended by grave abuse of discretion amounting to lack or excess of jurisdiction, it may be questioned via Rule 65 — but only within the period for filing a Rule 65 petition.

• Grave Abuse of Discretion by the Court of Appeals: Grave abuse of discretion arises when a lower court or tribunal violates the Constitution, the law, or existing jurisprudence — exercising judgment in a capricious and whimsical manner equivalent to lack of jurisdiction, so patent and gross as to amount to an evasion of positive duty. The Court found no such arbitrariness or despotism in the Court of Appeals' ruling. On the contrary, the CA's decision and resolution were more in accordance with the evidence on record and relevant laws and jurisprudence than the DOJ resolutions. The CA correctly identified that the DOJ exceeded its authority by refusing to file an information because it "does not dwell on possibilities, suspicion and speculation," when probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction.

• Standard for Probable Cause: Probable cause is defined as the existence of such facts and circumstances as would excite belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he is prosecuted. It does not mean "actual or positive cause," nor does it import absolute certainty; it is merely based on opinion and reasonable belief. While probable cause demands more than bare suspicion, it requires less than evidence which would justify conviction. By requiring "hard facts and solid evidence" and refusing to "dwell on possibilities, suspicion and speculation," the DOJ disregarded this definition and whimsically and capriciously exercised its discretion, amounting to grave abuse of discretion. The DOJ acted as if no evidence had been presented when the records were teeming with substantiation, or it discounted the value of such evidence when it was adequate to excite in a reasonable mind the probability that the spouses committed the crime. A preliminary investigation is not a quasi-judicial proceeding, and the DOJ is not a quasi-judicial agency; thus, Section 14, Article VIII of the Constitution does not apply to DOJ resolutions on probable cause, though the DOJ rectified the shortness of its first resolution by issuing a lengthier one on reconsideration.

• Existence of Probable Cause: The collective circumstances established a prima facie case: York was a Premier client whose accounts were handled by Katherene; no account reflected the ₱2,500,000.00 placement; Katherene allegedly persuaded York to invest in a "new product" and had him sign documents that turned out to be withdrawal slips and cash movement tickets; regular "loose change" deposits of ₱12,500.00 and ₱8,333.33 were made using Katherene's work terminal accessed by her password "CEO8" and swipe card; one deposit was made via phone banking traced to the spouses' home landline; photographs showed Katherene leaving the bank carrying a bulky plastic bag; both spouses allegedly admitted the funds were invested with Shell Company; and HSBC had to reimburse York ₱2,500,000.00. These circumstances constitute the elements of abuse of confidence, deceit or fraudulent means, and damage under Article 315 of the Revised Penal Code. Petitioners' defenses — denial, shifting doubt to York, and claims of fabrication — are matters of defense whose validity must be tested in a full-blown trial. The presence or absence of the elements of the crime is evidentiary in nature and is a matter of defense best passed upon after trial on the merits.

• Probable Cause — Probable cause is the existence of such facts and circumstances as would excite belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he is prosecuted. It does not mean "actual or positive cause" nor does it import absolute certainty; it is merely based on opinion and reasonable belief. It demands more than bare suspicion but requires less than evidence which would justify conviction. The Court applied this doctrine by holding that the DOJ gravely abused its discretion in demanding "hard facts and solid evidence" as the standard, when the correct standard only requires a reasonable ground of presumption that the matter is well-founded.

• Nature of Preliminary Investigation — A preliminary investigation is not a quasi-judicial proceeding; the prosecutor does not determine guilt or innocence, does not exercise adjudication or rule-making functions, and is not acting as a quasi-court. It is merely inquisitorial, designed to discover persons who may be reasonably charged with a crime and to enable the fiscal to prepare a complaint or information. The Court relied on this doctrine to hold that Section 14, Article VIII of the Constitution (requiring decisions to state facts and law) does not apply to DOJ resolutions on probable cause, since the DOJ is not a quasi-judicial body.

• Grave Abuse of Discretion — Grave abuse of discretion arises when a lower court or tribunal violates the Constitution, the law, or existing jurisprudence, exercising judgment in a capricious and whimsical manner equivalent to lack of jurisdiction — so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined by law. The Court applied this standard to find that the DOJ, not the Court of Appeals, committed grave abuse of discretion by applying an erroneous standard for probable cause.

• Non-Interference in Preliminary Investigations — While it is the Court's general policy not to interfere in the conduct of preliminary investigations, leaving investigating officers sufficient discretion to determine probable cause, exceptions exist when the acts of the officer are without or in excess of authority, resulting from grave abuse of discretion. The Court invoked this exception to uphold the CA's reversal of the DOJ resolutions.

• "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." — This passage, quoted by the Court from the Court of Appeals' decision, articulates the controlling standard for probable cause and the ratio decidendi for finding that the DOJ gravely abused its discretion.

• "In requiring 'hard facts and solid evidence' as the basis for a finding of probable cause to hold petitioners Bernyl and Katherene liable to stand trial for the crime complained of, the DOJ disregards the definition of probable cause – that it is a reasonable ground of presumption that a matter is, or may be, well-founded, such a state of facts in the mind of the prosecutor as would lead a person of ordinary caution and prudence to believe, or entertain an honest or strong suspicion, that a thing is so." — This is the Court's own formulation of the error committed by the DOJ, directly establishing the ratio decidendi that the DOJ's standard was legally erroneous and constituted grave abuse of discretion.

• "The presence or absence of the elements of the crime is evidentiary in nature and is a matter of defense, the truth of which can best be passed upon after a full-blown trial on the merits." — This passage defines the boundary between probable cause determination and trial on the merits, clarifying that defenses such as denial and claims of fabrication are not grounds for dismissal at the preliminary investigation stage.

• Bautista vs. Court of Appeals, 413 Phil. 159 (2001) — Controlling authority for the proposition that a preliminary investigation is not a quasi-judicial proceeding and that the prosecutor does not exercise adjudication or rule-making functions. The Court relied on this case to hold that Section 14, Article VIII of the Constitution does not apply to DOJ resolutions on probable cause.
• R.R. Paredes vs. Calilung, G.R. No. 156055, March 5, 2007 — Followed for the definition of probable cause as the existence of facts and circumstances exciting belief in a reasonable mind that the person charged is guilty, and for the principle that probable cause is based on opinion and reasonable belief, not absolute certainty.
• Webb vs. Hon. De Leon, 317 Phil. 758 (1995) — Cited for the principle that a finding of probable cause merely binds over the suspect to stand trial and is not a pronouncement of guilt.
• D.M. Consunji, Inc. vs. Esguerra, 328 Phil. 1168 (1996) — Followed for the principle that an investigating prosecutor's erroneous exercise of discretion does not render the act amenable to correction by certiorari absent a showing of grave abuse of discretion amounting to excess of jurisdiction.
• Sales vs. Sandiganbayan, 421 Phil. 176 (2001) — Cited for the principle that while there is no general formula for determining probable cause, such a finding should not disregard the facts before the prosecutor or run counter to the clear dictates of reason.

• Section 1, Rule 45, Revised Rules of Court — Provides that a party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals may file with the Supreme Court a verified petition for review on certiorari, raising only questions of law. Applied to hold that the proper remedy for assailing the CA's decision and resolution was a Rule 45 petition, not a Rule 65 petition.
• Section 2, Rule 45, Revised Rules of Court — Requires that the petition be filed within 15 days from notice of the judgment or final order or resolution appealed from, or of the denial of a motion for new trial or reconsideration. Applied to hold that petitioners lost the right to appeal via Rule 45, as 59 days had elapsed from receipt of the CA's denial of their motion for reconsideration.
• Article 315, Revised Penal Code — Defines and penalizes estafa, including elements of abuse of confidence, deceit or fraudulent means, and damage. The Court found that the collective circumstances on record constituted a prima facie case under this provision, warranting the filing of an information against the spouses.
• Section 14, Article VIII, 1987 Constitution — Requires that decisions rendered by courts and quasi-judicial bodies state clearly and distinctly the facts of the case and the law on which the decision is based. The Court held this provision inapplicable to DOJ resolutions on probable cause, since the DOJ is not a quasi-judicial body and a preliminary investigation is not a quasi-judicial proceeding.
• Section 12(c), Department Circular No. 70 (July 2, 2000) — Provides that the Secretary of Justice may motu proprio dismiss outright a petition if there is no showing of any reversible error in the questioned resolution. The DOJ invoked this provision in dismissing HSBC's Petition for Review.
• Section 5, Department Circular No. 70 (July 3, 2000) — Requires that pertinent documents be appended to a petition for review. The DOJ cited HSBC's failure to append all annexes to respondents' urgent manifestations and supplemental affidavits as an additional ground for denial.

Consuelo Ynares-Santiago (Associate Justice, Chairperson), Ma. Alicia Austria-Martinez (Associate Justice, designated additional member in place of Justice Antonio Eduardo B. Nachura who was then the Solicitor General), Dante O. Tinga (Associate Justice), and Ruben T. Reyes (Associate Justice). No separate concurring opinions were written.