Probable cause

“Probable cause” is one phrase that the Ombudsman seems to misunderstand or refuses to understand up to now especially with regards to the fertilizer fund scam. This case of Orly and Dina should once and for all awaken her that probable cause simply means the existence of such facts and circumstances as would excite the belief in a reasonable mind that the person charged is guilty of the crime for which he is prosecuted; and that a finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction.

Orly and Dina were the duly authorized representative of a real estate development company (VI) which applied from a bank (MBTC) for 24 letters of credit (L/C) amounting to P68.7 million to finance the importation of materials necessary for the operations of its sister company (TICDC). Simultaneously with the issuance of the letters of credit, Orly and Dina signed trust receipts (TRs) in favor of MBTC wherein they bound themselves to sell the goods covered by the L/C and to remit the proceeds to the bank, if sold, or to return the goods if not sold on or before the agreed maturity dates.

When the TRs matured, Orly and Dina failed to return the goods or their value amounting to P68.7 million despite demand. Thus MBTC filed a criminal complaint for Estafa against VI, Orly and Dina pursuant to P.D. 115 which considers violations of any undertaking under the TR as estafa under Article 315 (1)(b) committed through fraud. In its complaint, the bank enumerated the facts and circumstances regarding the trust receipt transactions and attached the said TRs.

After preliminary investigation, the City Prosecutor initially dismissed the complaint not because no trust receipt transactions existed but for lack of proof that demand has been made. But when the MBTC asked for reconsideration and attached the demand letter, the City Prosecutor found probable cause and filed Estafa charges against Orly and Dina before the Regional Trial Court.

Orly and Dina appealed these findings of the Prosecutor to the Secretary of Justice. They insisted that the contract they entered into with MBTC was contract of loan secured by a Real Estate Mortgage (REM) over two parcels of land registered in the name of the spouses Ching. They however did not even specify how they are related to said spouses nor did they attach the REM. Orly and Dina also claimed that MBTC just made them sign documents bearing fine prints without telling them of the real nature of the transaction.

The Secretary of Justice (DOJ) sustained the claims of Orly and Dina and ruled that there was no probable cause to prosecute them. The DOJ declared that the legitimate transactional relationship between the parties was merely a contract of loan and its violation was not covered by P.D. 115. The Court of Appeals (CA) sustained the DOJ. Was the CA correct in affirming the ruling of the DOJ?

No. In a preliminary investigation, the public prosecutor merely determines whether there is probable cause or sufficient ground to engender a well-founded belief that a crime has been committed and that the person charged is probably guilty thereof and should be held for trial. It does not call for the application of the rules and standards of proof that a judgment of conviction requires after trial on the merits. A preliminary investigation does not require full and exhaustive presentation of the parties’ evidence. Precisely there is a trial to allow the reception of evidence for both parties to substantiate their respective claims. As implied by the words themselves, “probable cause” is concerned with probability, not absolute or moral certainty.

In this case, as found in the affidavit complaint of MBTC, Orly and Dina were charged with failing to account for or turn over to MBTC the merchandise or goods covered by the TRs or the proceeds of the sale thereof in payment of their obligations there-under. The following pieces of evidence and documents adduced and submitted with the affidavit complaint before the City Prosecutor are sufficient to establish the existence of probable cause: first, the trust receipt bearing the signatures of Orly and Dina; second, the demand letter of MBTC addressed to them; and third the initial admission by Orly and Dina of the receipt of the imported goods.

The DOJ therefore patently committed a grave abuse of discretion in holding that the contractual relationship between the parties was a simple loan; for in so doing it assumed the trial judge’s function of calibrating evidence on record done only after full blown trial on the merits (Metropolitan Bank and Trust Co. vs. Secretary of Justice Raul Gonzalez et. al. G.R. 180165, April 7, 2009).  

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

* * *

E-mail at: [email protected]