Cruz vs. Gonzalez

Courts will not interfere with the Secretary of Justice's determination of probable cause in the absence of any showing of manifest error, grave abuse of discretion, or prejudice, and a finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been committed and there is enough reason to believe that it was committed by the accused. Probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction.

Petitioner Ligaya P. Cruz was the in-house legal counsel and wife of Benjamin J. Cruz, president of Hermosa Savings and Loans Bank, Inc. (HSLBI), a participating financial institution that availed of forty loans from the Development Bank of the Philippines (DBP) pursuant to a Subsidiary Loan Agreement dated 27 January 1994. The loans were intended for relending to Investment Enterprises, and DBP required assurance that these enterprises were actually existing and duly registered. Petitioner's role included rendering a legal opinion on the existence and good standing of the Investment Enterprises and notarizing deeds of assignment utilized as supporting documents.

On 27 January 1994, Hermosa Savings and Loans Bank, Inc. (HSLBI) availed of forty loans from the Development Bank of the Philippines (DBP) pursuant to a Subsidiary Loan Agreement. In support of the loan agreement and applications, HSLBI, through bank officers Benjamin J. Cruz, Rodolfo C. Buenaventura, Librada Y. Dio, Nilda S. Fajardo, Lelaine V. Fernandez, and Atty. Ligaya P. Cruz as its legal counsel, submitted the required documents — project evaluation reports, financial package approval, deeds of undertaking, certificates of registration, promissory notes, supplemental deeds of assignment, and Investment Enterprise/sub-borrowers' consent. These documents were submitted to assure DBP that the respective Investment Enterprises were actually existing and duly registered with the government; that the subsidiary loan would be exclusively used for relending to these Investment Enterprises; and that the concerned Investment Enterprises were amenable to the assignment of debt in favor of HSLBI.

On 31 March 2001, the Bangko Sentral ng Pilipinas (BSP) conducted an examination of HSLBI's loan portfolio. The BSP found that most of HSLBI's loan documents were either forged or inexistent. The Transfer Certificates of Title (TCTs) of properties submitted as collaterals were found to be inexistent, registered in another person's name, or already foreclosed or mortgaged to another bank. The annotations on the TCTs in favor of HSLBI were also inexistent. The signatures of sub-borrowers/Investment Enterprises appearing on documents were all forged. The BSP also discovered that the credit accounts assigned to DBP were in the names of non-existing Investment Enterprises.

On 19 December 2001, DBP filed a complaint for forty counts of estafa through falsification of commercial documents or for large scale fraud against the aforementioned officers of HSLBI and petitioner Atty. Cruz. Atty. Cruz was included in the complaint because she, as in-house legal counsel of HSLBI, rendered an opinion that all the purported Investment Enterprises were duly organized, validly existing, and in good standing under Philippine laws, and for notarizing two deeds of assignment utilized as supporting documents. The document she issued, entitled "Opinion of Counsel to the Participating Financial Institution," stated that the PFI and IE were duly organized, validly existing, and in good standing; that they had full legal right, power, and authority to carry on their present business; that all appropriate corporate and legal actions had been taken; and that all consents, licenses, approvals, and authorizations had been obtained.

Petitioner argued that she should not be held liable since she only signed a pro-forma opinion prepared by DBP and merely notarized the documents submitted by HSLBI, finding no indication of any irregularity on their face. She also claimed that HSLBI was duly accredited as a participating financial institution of DBP after complying with stringent conditions, and that DBP should have discovered any questionable transactions through its regular project visitations. She contended that even if she were held liable, her liability was only civil and not criminal in view of the creditor-debtor relationship between HSLBI and DBP.

• Lack of Supporting Evidence: Petitioner argued that the resolution of the Secretary of Justice was devoid of supporting evidence, based on the alleged conflicting resolutions of the Office of the Secretary of Justice.
• Pro-Forma Opinion: Petitioner argued that she should not be held liable for the offense since she only signed a pro-forma opinion prepared by DBP and merely notarized the documents submitted by HSLBI to DBP, finding no indication of any irregularity or taint of illegality on the documents she signed.
• DBP's Negligence: Petitioner claimed that HSLBI was duly accredited as a participating financial institution of DBP after complying with stringent conditions, with accreditation reviewed and renewed annually and project visitations regularly conducted by DBP personnel; hence, DBP should have discovered any questionable transactions through due diligence.
• Civil, Not Criminal, Liability: Petitioner contended that even if she were held liable, her liability was only civil and not criminal in view of the creditor-debtor relationship between HSLBI and DBP.

• Instrumental Role in Deceit: DBP established, and the Secretary of Justice found, that the funds would not have been released pursuant to the subsidiary loan agreement if HSLBI had no sub-borrowers/Investment Enterprises; the collaterals submitted were inexistent, the purported sub-borrowers/Investment Enterprises were fictitious, and the signatures of sub-borrowers and supporting documents were all forged.
• Legal Opinion as Basis for Probable Cause: The findings of probable cause against petitioner were based on the document she issued entitled "Opinion of Counsel to the Participating Financial Institution," which was instrumental in the deceit committed against DBP.

• Probable Cause Determination: Whether the Court of Appeals erred in sustaining the Secretary of Justice's ruling that there is probable cause to indict petitioner Atty. Cruz.

• Probable Cause Determination: No. The Court of Appeals did not err in sustaining the Secretary of Justice's finding of probable cause. The Court affirmed the CA decision in line with the principle of non-interference with the prerogative of the Secretary of Justice to review the resolutions of the public prosecutor in the determination of the existence of probable cause, absent any showing of manifest error, grave abuse of discretion, or prejudice.

• Probable Cause Determination: The Court cited the rule established in Galario vs. Office of the Ombudsman that a finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been committed and there is enough reason to believe that it was committed by the accused. It need not be based on clear and convincing evidence of guilt, neither on evidence establishing absolute certainty of guilt. Probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction. The Court affirmed the CA decision in line with the principle of non-interference with the prerogative of the Secretary of Justice to review the resolutions of the public prosecutor in the determination of the existence of probable cause. For reasons of practicality, the Court, as a rule, does not interfere with the prosecutor's determination of probable cause, for otherwise courts would be swamped with petitions to review the prosecutor's findings in such investigations. In the absence of any showing that the Secretary of Justice committed manifest error, grave abuse of discretion, or prejudice, courts will not disturb its findings. The Court declined to interfere because the records show that the finding of probable cause is supported by evidence, law, and jurisprudence. The Secretary of Justice found sufficient evidence to indict petitioner: it was adequately established by DBP that the funds would not have been released pursuant to the subsidiary loan agreement if HSLBI had no sub-borrowers/Investment Enterprises; the collaterals submitted were inexistent; the purported sub-borrowers/Investment Enterprises were fictitious and inexistent; and the signatures of the sub-borrowers and supporting documents were all forged. The findings of probable cause against petitioner were based on the document she issued entitled "Opinion of Counsel to the Participating Financial Institution," which stated that the PFI and IE were duly organized, validly existing, and in good standing. It was evident that petitioner's opinion was instrumental in the deceit committed against DBP. As a lawyer and in-house legal counsel of HSLBI, it was highly doubtful that she would have affixed her signature without knowing that there were defects in those documents. The Court quoted the Office of the Chief State Prosecutor's finding that petitioner's claim of innocence was difficult to sustain — being the wife of respondent Benjamin J. Cruz and a lawyer at that, she should have refrained or inhibited from rendering an opinion that is totally in contravention of what had actually transpired. Her legal opinion that the forty loan applicants were legally existing and in good standing necessarily caused damage and injury to complainant DBP. Whether or not there was negligence on the part of DBP was of no moment; petitioner cannot conveniently blame DBP for allegedly not double-checking the documents because by affixing her signature on these documents and negotiating the subsidiary loan agreement on behalf of fictitious sub-borrowers/Investment Enterprises, she actively represented that these entities were indeed existing and eligible for the loan. The flip-flopping resolutions of the Secretary of Justice did not constitute grave abuse of discretion; if at all, it was indicative of the fact that the Office of the Secretary of Justice carefully studied and reviewed the facts of the case in arriving at its final resolution.

• Non-Interference with Prosecutor's Determination of Probable Cause — Courts, as a rule, do not interfere with the prosecutor's determination of probable cause, for otherwise courts would be swamped with petitions to review the prosecutor's findings in such investigations. In the absence of any showing that the Secretary of Justice committed manifest error, grave abuse of discretion, or prejudice, courts will not disturb its findings. The Court applied this doctrine in affirming the CA decision, finding that the records show the finding of probable cause is supported by evidence, law, and jurisprudence.

• Probable Cause Standard — A finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been committed and there is enough reason to believe that it was committed by the accused. It need not be based on clear and convincing evidence of guilt, neither on evidence establishing absolute certainty of guilt. A finding of probable cause merely binds over the suspect to stand trial; it is not a pronouncement of guilt. The term does not mean "actual and positive cause" nor does it import absolute certainty; it is merely based on opinion and reasonable belief. Probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction.

• "A finding probable cause needs only to rest on evidence showing that more likely than not a crime has been committed and there is enough reason to believe that it was committed by the accused. It need not be based on clear and convincing evidence of guilt, neither on evidence establishing absolute certainty of guilt. A finding of probable cause merely binds over the suspect to stand trial. It is not a pronouncement of guilt." — This passage from Galario v. Office of the Ombudsman, quoted by the Court, defines the controlling standard for probable cause in criminal prosecutions and is the canonical formulation of the rule.

• "In the absence of any showing that the Secretary of Justice committed manifest error, grave abuse of discretion or prejudice, courts will not disturb its findings. Moreover, this Court will decline to interfere when records show that the findings of probable cause is supported by evidence, law and jurisprudence." — This passage articulates the principle of non-interference with the Secretary of Justice's determination of probable cause, which is the central doctrine applied in this case.

• "It is evident therefore that petitioner's opinion was instrumental in the deceit committed against DBP. As a lawyer and in-house legal counsel of HSLBI, it is highly doubtful that she would have affixed her signature without knowing that there were defects in those documents." — This passage states the Court's reasoning for sustaining the finding of probable cause against petitioner, emphasizing her professional role and the instrumental nature of her legal opinion in the fraud.

• Galario vs. Office of the Ombudsman, G.R. No. 166797, 10 July 2007, 527 SCRA 190 — Controlling precedent cited for the definition and standard of probable cause in criminal prosecutions; the Court quoted extensively from this case to establish that probable cause need only rest on evidence showing that more likely than not a crime has been committed.

• Ladlad vs. Velasco, G.R. Nos. 172070-72, 1 June 2007, 523 SCRA 318 — Cited for the principle of non-interference with the prosecutor's determination of probable cause, supporting the Court's refusal to disturb the Secretary of Justice's findings.

• Article 315, paragraph 2(a), Revised Penal Code — The provision defining the crime of estafa with which petitioner was charged; the Court sustained the finding of probable cause for forty counts of estafa under this provision.

• Presidential Decree No. 1689 — The law defining large scale fraud, which was initially included in the charges but later dropped by the Secretary of Justice in the 4 January 2005 resolution; the Court noted that the final informations were for estafa under Article 315, par. 2(a) only.

• Rule 45, Rules of Court — The procedural basis for the petition for review on certiorari before the Supreme Court.

• Rule 65, Rules of Court — The procedural basis for the petition for certiorari filed by petitioner before the Court of Appeals.

• Section 13, Article VIII, Constitution — Referenced in the Certification portion of the decision regarding the consultation requirement before the case was assigned to the writer of the opinion of the Court's Division.

• Carpio, J. (Chairperson)
• Brion, J.
• Sereno, J.
• Reyes, J.