BDO Life Assurance, Inc. vs. Atty. Emerson U. Palad

Probable cause to indict a person as a co-conspirator cannot be founded on mere presence at the scene, a family relationship with an alleged co-conspirator, or speculation about the person’s state of mind; there must be reasonable evidence of an overt act or intentional participation in furtherance of the common criminal design.

BDO Life Assurance, Inc. (formerly Generali Pilipinas Life Assurance Co., Inc.) is the insurer that received the claims at issue, while Atty. Emerson U. Palad is a lawyer and the brother-in-law of Vincent Paul L. Amposta, one of the persons implicated in the claims. The dispute is set against the preliminary investigation process, where a prosecutor determines probable cause, and the limited review under Rule 45 of the Rules of Court. The claims involved personal accident insurance for the deaths of Carlos and Norma Andrada and motor vehicle insurance for a Ford Expedition.

BDO Life Assurance, Inc. (formerly Generali Pilipinas Life Assurance Co., Inc.), through authorized representatives Jose Maria F. Ignacio and Roland P. Arcadio, filed a case for estafa through falsification of documents against Raynel Thomas V. Alvarado, Genevie B. Gragas, Vincent Paul L. Amposta, Teodoro M. Olguera, Cynthia O. Taniegra, Armel M. Santos, Imelda B. Neo, and Atty. Emerson U. Palad. Alvarado had already been indicted for attempted estafa through falsification of public documents, but his inclusion for preliminary investigation referred only to the motor vehicle insurance claim he made from petitioner. Records from the National Bureau of Investigation showed that in May 2010, two Personal Accident Insurance claims on the death of spouses Carlos and Norma Andrada were filed by Alvarado in petitioner’s office under the name Carlos Raynel Lao Andrada, the spouses’ designated beneficiary. The benefit coverage amounted to Php3,000,000.00, plus Php200,000.00 as burial expenses and Php200,000.00 as medical expenses for each of the insured. To support his claim, Alvarado submitted the death certificates of Carlos and Norma Andrada; an excerpt from a police blotter dated January 8, 2010 issued by the Philippine National Police, Flora Municipal Police Station, Flora, Apayao; an LTO Official Receipt dated March 3, 2009 issued in the name of Carlos D. Andrada for a motor vehicle with Plate No. WVW 963; an LTO Certificate of Registration dated March 8, 2001 issued in the name of Carlos Andrada for the Ford Expedition with Plate No. WVW 963; and the Professional Driver’s License of Juan Ernesto Magadia Ciso, the alleged driver of the Andradas.

To analyze the two insurance claims, petitioner sought the services of an external investigator to check the veracity of the documents submitted by Alvarado, also known as Carl Andrada. During the investigation, petitioner discovered another claim filed by the beneficiary-son Carl Raynel Lao for his Own Damage and Named Personal Accident on the Ford Expedition with Plate No. WVW 963, the insured vehicle, which allegedly sustained damages on December 28, 2009 due to the homicide hold-up of the insured spouses, their driver Juan Ernesto M. Ciso, and bodyguard Mario Ellie Ciso. That claim was assigned to the Technical Inspection Group, an independent adjuster whose President and Chief Executive Officer was Teodoro M. Olguera. In its Evaluation Report dated March 22, 2010, the Technical Inspection Group confirmed the veracity of the incident and recommended that the motor vehicle claim be paid. The claim was approved, and Alvarado, also known as Carl Andrada, received on March 12, 2010 proceeds amounting to Php100,000.00. The two Personal Accident claims were originally assigned to a different adjuster, but that adjuster requested reassignment to the Technical Inspection Group. Armel Santos, petitioner’s Claims Supervisor, reassigned the claims to the Technical Inspection Group service on Marine Survey and Adjustment Company, an independent claim adjuster, for evaluation and recommendation. The evaluation reports of the adjuster, together with the documents, were considered by Taniegra, who recommended approval of the claims; Santos and Neo processed the approval.

In a separate investigation conducted by petitioner, it was discovered that all the documents submitted by Alvarado to support his personal accident insurance claims and the motor vehicle claim were fakes. Petitioner found that the name “Juan Ernesto M. Ciso” did not exist; no driver’s license was ever issued to the spouses Andrada; the LTO Property Division had not issued Plate No. WVW 963 as of June 10, 2010; per a Certificate issued by the NAPOLCOM PNP, Police Regional Office-Cordillera, SPO1 Julio Caballero Yusop was not an organic member of their Office, and no record of an incident transpired within their area of responsibility on December 28, 2009; and the entries in the police blotter did not exist on record. Alarmed by these findings, petitioner sought the assistance of the Office of the Special Task Force of the NBI for investigation and the arrest of Alvarado, also known as Carl Andrada. Upon verification from the National Statistics Office, it was found that while there indeed was a Carl Raynel Andrada based on his birth record on file, there were no death records of the spouses Andrada. As a result, an entrapment operation was set and implemented on July 2, 2010, at around 2 o’clock in the morning inside petitioner’s office in Makati.

During the operation, Alvarado, Gragas, who represented herself as Alvarado’s aunt, and Palad arrived. Renato A. Vergel De Dios, petitioner’s President, inquired as to the development regarding the police investigation of the incident involving the spouses Andrada. Alvarado and Gragas said that they had not received any word from the police. Palad offered to Vergel De Dios a copy of the Police Report which was originally submitted by Alvarado. When asked for identification documents, Palad presented his identification card issued by the Integrated Bar of the Philippines, while Gragas failed to show any. Nevertheless, they all signed the check voucher and release claim for the payments of the insurance benefit worth almost Php6,240,000.00. When the two marked Banco De Oro checks in the amount of Php3,120,000.00 each were tendered to and received by Alvarado, a pre-arranged signal was given to the NBI operatives, who subsequently arrested the trio. It was then discovered that claimant Carl Andrada’s real name was Raynel Thomas Alvarado, while “Melanie Andrada,” who pretended to be the claimant’s aunt, was actually Genevie Gragas y Bartolome. During questioning, Alvarado and Gragas pointed to Amposta, who happened to be Palad’s brother-in-law, as the mastermind and financier of the modus operandi wherein insurance companies were defrauded by using falsified and fictitious documents.

The assistant city prosecutor found probable cause only against Alvarado, who pretended to be policy beneficiary Carl Andrada, and Gragas, who presented herself as “Carl’s” aunt. The prosecutor ruled that there was no proof that the other named respondents dealt and cooperated with Alvarado and Gragas to such a degree that they could be branded conspirators. As to the other named individuals, it was determined that Neo, Santos, and Taniegra only performed their duties in processing the fraudulent claims; that Olguera, being the President of the Technical Inspection Group and who was requested by Alvarado to survey the factual basis for the Andrada claims, could not be expected to personally conduct the investigations regarding the homicide and hold-up that triggered petitioner’s obligation to pay such claims; that Amposta merely intended to discount the Generali checks that Alvarado and Gragas would have received pursuant to an innocent arrangement he reached with Gragas some months prior; and that Palad merely accompanied Alvarado and Gragas to receive the payment, upon request of the latter. The Court of Appeals later found that Palad had no participation in the insurance fraud, as he was only performing his duty as a lawyer by accompanying his clients in the recovery of the insurance proceeds; that the insurance checks were already ready for collection when Palad came into the scene; that Palad merely submitted the police report supplied by his clients and already on file with petitioner; and that his voluntary submission of his IBP card revealed that he did not know that his clients were not who they represented themselves to be.

• Indispensable Participation and Active Role: Petitioner argued that Palad was not a mere innocent participant accompanying his clients but a willing co-conspirator with his brother-in-law, Amposta, whose presence and cooperation were indispensable to consummate the fraudulent act and ensure receipt of the insurance proceeds. Petitioner maintained that during the entrapment operation, its president Vergel De Dios asked verification questions that were addressed not by Alvarado and Gragas but by Palad, while the two passively observed him perform his part in the conspiracy.
• Masquerade of Fraud and Failure to Verify: Petitioner contended that Palad’s presence was necessary and indispensable in the masquerade of fraud created by Alvarado and Gragas in order to fortify their story and inspire confidence that the claims were valid and legal. It emphasized that any prudent lawyer would not immediately accommodate strangers and represent them in a claim involving more than six million pesos without knowledge or proof of their identities, especially since Amposta had a criminal case for estafa through falsification of public documents in other courts.
• Relationship with Amposta: Petitioner argued that Palad’s relation to Amposta was not merely that of a client but that of a family member upon whom he reposed trust and confidence, creating an inescapable inference that Palad was aware of the fraudulent scheme and decided to take part in the concerted act. It cited People vs. Balasa for the proposition that if the indispensable act is performed by one related to the co-conspirators, it is not a far-fetched assumption that he or she is aware of the fraudulent scheme.
• Preliminary Investigation and Defense at Trial: Petitioner stressed that the function of a preliminary investigation is merely to determine whether a crime has been committed and whether there is probable cause to believe that the accused is guilty thereof. It argued that the venue wherein Palad could present his defense was before the court during a full-blown trial, and that his self-serving denials could not support the Court of Appeals’ Amended Decision recalling the earlier order of indictment against him.

• Absence of Probable Cause and Deference to Prosecutorial Findings: Palad argued that the Court of Appeals did not commit grave abuse of discretion in amending its prior Decision and dismissing the case against him, as the evidence presented by petitioner was insufficient to establish probable cause. He maintained that this was confirmed by two administrative bodies, both of which possess expertise to determine probable cause and whose findings must be accorded great weight and respect.
• No Conspiracy; Mere Presence: Palad argued that he was not a co-conspirator in the crime of estafa through falsification of public documents. His mere presence during the entrapment operation was not enough to hold him as a co-conspirator, as it must first be shown that he actively participated in the commission of the crime charged. Petitioner failed to present clear and convincing evidence that prior to the commission of the crime, Palad previously met with his co-conspirators and agreed to the commission of the offense; petitioner merely inferred conspiracy from the sole fact that Palad is the brother-in-law of the alleged mastermind, Amposta.
• Acts Consistent with Legal Representation: Palad maintained that the acts petitioner proved were not directly related to the elements of estafa through falsification of a public document, such as his presence during the tendering of the check, his presentation of his identification card, and his answering of questions posited to him by Vergel De Dios. To be considered a conspirator, these acts should have a direct and causal connection with the crime or any of its elements and should show an unequivocal intent to commit the crime; instead, they were done in his capacity as a lawyer and in routine fidelity to his client.

• Review of Probable Cause: Whether the determination of probable cause is a question of fact that is not a proper subject of review under a Rule 45 petition.
• Conspiracy and Probable Cause: Whether the Court of Appeals erred in amending its prior Decision and finding that there was no probable cause to indict Palad for the crime of attempted estafa through falsification, as a conspirator.

• Review of Probable Cause: No. The determination of probable cause is a question of fact; a Rule 45 petition is limited to questions of law and to errors of the Court of Appeals, and the Court’s review is confined to ascertaining grave abuse of discretion.
• Conspiracy and Probable Cause: No. Probable cause to indict Palad as a co-conspirator is lacking because his mere presence, presentation of his IBP identification card, delivery of an already-submitted police report, and brother-in-law relationship with Amposta did not establish an overt act or intentional participation in the fraudulent scheme.

• Review of Probable Cause: A petition for review under Rule 45 is limited to questions of law; factual questions are not proper subjects of an appeal by certiorari. The Court is not a trier of facts and will not re-examine evidence already considered in the proceedings below. Review is limited to errors of law committed by the Court of Appeals, not directly those of the trial court or quasi-judicial agency, tribunal, or officer that rendered the decision in the first instance. The determination of probable cause is not lodged with the Court; its duty in an appropriate case is confined to whether the executive or judicial determination of probable cause was done without or in excess of jurisdiction or with grave abuse of discretion amounting to want of jurisdiction. No exception existed to warrant opening the proceedings for a factual review, especially as the Court of Appeals’ Amended Decision conformed without deviation to the factual findings of the Department of Justice, which had the best opportunity and jurisdiction to ascertain probable cause.
• Conspiracy and Probable Cause: Probable cause for preliminary investigation requires sufficient ground to engender a well-founded belief that a crime has been committed and that the respondent is probably guilty thereof and should be held for trial. It requires less than evidence justifying a conviction but demands more than bare suspicion. Direct proof of conspiracy is not indispensable; conspiracy may be inferred from the acts of the perpetrators when such acts point to a joint purpose and design, concerted action, and community of interest. However, the accuser must still show a substantial probability that the accused’s actions or lack thereof constitute participation in the offense, grounded on reasonable evidence and not mere conjecture or speculation. Conspiracy under Article 8 of the Revised Penal Code occurs when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Palad’s presence during the entrapment operation did not in itself constitute a shady occurrence warranting suspicion; mere presence does not make one a party to the crime absent active participation in the furtherance of the common design or purpose. Mere knowledge, acquiescence, or approval of the act, without cooperation and agreement to cooperate, is not enough to establish conspiracy. Palad was merely asked last-minute to join a companion of his brother-in-law, Amposta; his act of accompanying Alvarado and Gragas to receive the checks was a routine action on the part of an attorney as requested. His giving of an identification card indicated that he was out of the loop, particularly because his companions were using aliases. While a lawyer represents that he will exercise ordinary diligence to protect his client’s interests, there was no legal or ethical compulsion for Palad to ascertain that the police report was of legitimate import, especially since the report was likely valid on its face and had already existed even without Palad’s offering it. The checks were already prepared for tendering as a result of the entrapment operation; even if Palad were absent, the giving of the checks would have pushed through. There was no masquerade of fraud because the fraud was already perpetuated. Palad’s relationship with Amposta did not indicate complicity; mere relation is not enough to attribute criminal responsibility, and at best adds to circumstantial proof of motive. People vs. Balasa was inapplicable because the accused there was not implicated solely because he was the father of the principal proponent of the fraud, but due to other convincing proofs such as being an actual paymaster who funded the fraud. Including Palad in the charge sheet and leaving his defense to trial would do away with the role and object of preliminary investigation, which is to secure the innocent against hasty, malicious, and oppressive prosecutions, protect him from the trouble, expenses, and anxiety of a public trial, and protect the State from useless and expensive prosecutions. Absent any motive to be complicit in the scheme, the Court adhered to the constitutionally protected presumption of innocence and removed Palad from the charge sheet, affirming the findings of both the Court of Appeals and the Department of Justice. Petitioner failed to show grave abuse of discretion and voiced only suspicions; probable cause demands more than bare suspicion.

• Probable Cause in Preliminary Investigation — Probable cause for preliminary investigation is the existence of sufficient ground to engender a well-founded belief that a crime has been committed and that the respondent is probably guilty thereof and should be held for trial. It requires less than evidence justifying a conviction but demands more than bare suspicion. The Court applied this standard to find that petitioner showed only suspicions against Palad, not reasonable evidence of participation.
• Conspiracy; Overt Act and Intentional Participation — Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Direct proof of conspiracy is not indispensable; it may be inferred from the mode, method, and manner the offense was perpetrated, or from the acts of the accused when they point to a joint purpose and design, concerted action, and community of interest. An accused participates as a conspirator if he or she performs some overt act as a direct or indirect contribution in the execution of the crime planned. The Court applied this doctrine by requiring reasonable evidence of an overt act or intentional participation, which was absent as to Palad.
• Mere Presence, Knowledge, or Acquiescence — Mere presence at the scene of the crime at the time of its commission is not, by itself, sufficient to establish conspiracy. Mere knowledge, acquiescence, or approval of the act, without cooperation and the agreement to cooperate, is not enough to establish conspiracy; there must be intentional participation in the transaction with a view to furthering the common design and purpose. The Court applied this to Palad’s presence during the entrapment and his signing of documents, finding these insufficient to establish conspiracy.
• Mere Relationship Does Not Establish Conspiracy — A family relationship with an alleged co-conspirator does not, by itself, establish complicity in a conspiracy. At best, it adds to circumstantial proof that may shed light on motives and attributions, but it would set a dangerous precedent to ascribe even a reasonable link for conspiracy solely because the alleged co-conspirators are related. The Court applied this to Palad’s status as Amposta’s brother-in-law and found it insufficient to show knowledge or participation in the fraudulent scheme.
• Rule 45 Review Limited to Questions of Law — A petition for review on certiorari under Rule 45 is limited to questions of law; factual questions are not proper subjects of appeal by certiorari. The Court is not a trier of facts and will not analyze or weigh evidence already considered below. Review is limited to errors of law committed by the Court of Appeals. The Court applied this procedural rule to decline a factual review of the probable cause determination.
• Purpose of Preliminary Investigation — The object of preliminary investigation is to secure the innocent against hasty, malicious, and oppressive prosecutions, to protect the accused from the trouble, expenses, and anxiety of a public trial, and to protect the State from useless and expensive prosecutions. The Court applied this purpose to justify excluding Palad from the charge sheet rather than requiring him to present his defense at trial.
• Ordinary Diligence of a Lawyer — A lawyer represents that he or she will exercise ordinary diligence or that reasonable degree of care and skill having reference to the character of the business undertaken, to protect the client’s interests and take all steps or do all acts necessary therefor. The Court applied this to Palad’s conduct, finding that his actions were not out of the ordinary for a lawyer and that there was no legal or ethical compulsion for him to ascertain the legitimacy of a police report that was valid on its face and already on file.

• "Probable cause, although it requires less than evidence justifying a conviction, demands more than bare suspicion," — This passage states the standard the Court applied in dismissing the petition; it is a frequently cited formulation of the quantum of proof required for probable cause in preliminary investigations.
• "Mere presence at the scene of the crime at the time of its commission is not, by itself, sufficient to establish conspiracy. To establish conspiracy, evidence of actual cooperation rather than mere cognizance or approval of an illegal act is required." — Quoted from Rimando vs. People, this passage is the Court’s central basis for rejecting Palad’s mere presence during the entrapment as proof of conspiracy.
• "Direct proof of conspiracy is rarely found; circumstantial evidence is often resorted to in order to prove its existence. Absent of any direct proof, as in the present case, conspiracy may be deduced from the mode, method, and manner the offense was perpetrated, or inferred from the acts of the accused themselves, when such acts point to a joint purpose and design, concerted action, and community of interest." — This passage acknowledges that conspiracy may be proved by circumstantial evidence, but the Court still required acts pointing to a joint purpose and design, which were not present as to Palad.
• "It is axiomatic that mere knowledge, acquiescence or approval of the act, without the cooperation and the agreement to cooperate, is not enough to establish conspiracy." — This passage defines the minimum showing for conspiracy and was applied to Palad’s alleged awareness of the fraudulent scheme, which the Court found unproved and insufficient.

• Gatan vs. Vinarao, G.R. No. 205912, October 18, 2017, 842 SCRA 602, 610-611 — Cited for the parameters of judicial review under Rule 45: limited to questions of law and errors of the Court of Appeals; factual findings are not reviewed.
• Miro vs. Vda. de Erederos, 721 Phil. 772, 785-787 (2013) — Cited in Gatan vs. Vinarao for the same Rule 45 limitations on factual review.
• P/C Supt. Pfleider vs. People, 811 Phil. 151, 159 (2017) — Cited for the rule that the determination of probable cause is not lodged with the Court; review is confined to whether the determination was done without or in excess of jurisdiction or with grave abuse of discretion.
• De Lima, et al. vs. Reyes, 776 Phil. 623, 636 (2016) — Cited for the preliminary investigation standard: sufficient ground to engender a well-founded belief that a crime was committed and that the respondent is probably guilty.
• Marasigan vs. Fuentes, et al., 776 Phil. 574 (2016) — Cited for the rule that direct proof of conspiracy is not indispensable and may be inferred from acts pointing to joint purpose, concerted action, and community of interest.
• People vs. Jesalva, 811 Phil. 299, 311 (2017) — Cited for the rule that mere presence does not make one a conspirator absent active participation, and that mere knowledge or acquiescence is insufficient.
• Rimando vs. People, G.R. No. 229701, November 29, 2017, 847 SCRA 339 — Quoted for the requirement of actual cooperation and an overt act in furtherance of conspiracy.
• Suarez vs. Court of Appeals, 292-A Phil. 386, 391-392 (1993) — Cited for the ordinary diligence expected of a lawyer in protecting a client’s interests.
• Callo-Claridad vs. Esteban, et al., 707 Phil. 172, 192-193 (2013) — Cited for the purpose of preliminary investigation and the requirement that probable cause be more than bare suspicion.
• People vs. Balasa, 356 Phil. 362, 391 (1998) — Cited by petitioner but distinguished; the accused there was implicated by convincing proof such as being an actual paymaster, not by mere relationship.
• Unilever Philippines vs. Tan, 725 Phil. 486, 497-498 (2014) — Cited by the Court of Appeals for the probable cause standard of reasonableness and believability.

• Article 8, Revised Penal Code — Defines conspiracy as when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. The Court applied this provision by requiring agreement and an overt act in furtherance of the felony, which were not shown as to Palad.
• Article 315, paragraph 2(a), Revised Penal Code — The offense for which Alvarado and Gragas were recommended indicted; the complaint against Palad for attempted estafa through falsification of public documents was dismissed for insufficiency of evidence.
• Rule 45, Rules of Court — Governs petitions for review on certiorari; it limits review to questions of law and errors of the Court of Appeals, which barred a factual review of the probable cause determination.
• Presumption of Innocence, Constitution — The Court invoked the constitutionally protected presumption of innocence in removing Palad from the charge sheet absent clear proof of his involvement.

Justice Peralta (Chairperson), Justice Hernando, and Justice Inting concurred. Justice Leonen was on wellness leave.