J.A.B. Bulao & Associates

CASE NO. 2011-0127: DONNINA C. HALLEY VS. PRINTWELL, INC. (G.R. No. 157549, 30 MAY 2011, BERSAMIN, J) SUBJECTS: TRUST FUND DOCTRINE, JUDGE COPYING MEMORANDUM OF PARTY. CHECK AS PAYMENT.  (BRIEF TITLE: HALLEY VS. PRINTWELL).

==========================

SUBJECT: TRUST FUND DOCTRINE

The trust fund doctrineenunciates a –

xxx rule that the property of a corporation is a trust fund for the payment of creditors, but such property can be called a trust fund ‘only by way of analogy or metaphor.’ As between the corporation itself and its creditors it is a simple debtor, and as between its creditors and stockholders its assets are in equity a fund for the payment of its debts.^[1][32]

The trust fund doctrine, first enunciated in the American case of Wood v. Dummer,^[2][33]was adopted in our jurisdiction in Philippine Trust Co. v. Rivera,^[3][34]where thisCourt declared that:

It is established doctrine that subscriptions to the capital of a corporation constitute a fund to which creditors have a right to look for satisfaction of their claims and that the assignee in insolvency can maintain an action upon any unpaid stock subscription in order to realize assets for the payment of its debts. (Velasco vs. Poizat, 37 Phil., 802) xxx^[4][35]

We clarify that the trust fund doctrineis not limited to reaching the stockholder’s unpaid subscriptions. The scope of the doctrine when the corporation is insolvent encompasses not only the capital stock, but also other property and assets generally regarded in equity as a trust fund for the payment of corporate debts.^[5][36]All assets and property belonging to the corporation held in trust for the benefit of creditors thatwere distributed or in the possession of the stockholders, regardless of full paymentof their subscriptions, may be reached by the creditor in satisfaction of its claim.

SUBJECT: PROPRIETY OF COPYING PORTIONS OF MEMORANDUM OF A PARTY BY A JUDGE IN HIS DECISION

It is to be observed in this connection that a trial or appellate judge may occasionally viewa party’s memorandum or brief as worthy of due consideration either entirely or partly. When he does so, the judgemay adopt and incorporatein his adjudicationthe memorandum or the parts of it he deems suitable,and yet not be guilty of the accusation of lifting or copying from the memorandum.^[6][24] This isbecause ofthe avowed objective of the memorandum to contribute in the proper illumination and correct determination of the controversy.Nor is there anything untoward in the congruence of ideas and views about the legal issues between himself and the party drafting the memorandum.The frequency of similarities in argumentation, phraseology, expression, and citation of authorities between the decisions of the courts and the memoranda of the parties, which may be great or small, can be fairly attributable tothe adherence by our courts of law and the legal profession to widely knownor universally accepted precedents set in earlier judicial actions with identical factual milieus or posing related judicial dilemmas.

SUBJECT: CHECK IS NOT PAYMENT IF NO PROOF IS PRESENTED THAT IT WAS ENCASHED

The petitioner’s ORNo. 227,presentedto prove the payment of the balance of her subscription, indicated that her supposed payment had beenmade by means of a check. Thus, to discharge theburden to prove payment of her subscription, she had to adduce evidence satisfactorily proving that her payment by check wasregardedas payment under the law.

Paymentis defined as the delivery of money.^[7][45]Yet, because a check is not money and only substitutes for money, the delivery of a check does not operate as payment and does not discharge the obligation under a judgment.^[8][46] The delivery of a bill of exchange only produces the fact of payment when the bill has been encashed.^[9][47]The following passage fromBank of Philippine Islands v. Royeca^[10][48]is enlightening:

Settled is the rule that payment must be made in legal tender. A check is not legal tender and, therefore, cannot constitute a valid tender of payment. Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized.

To establish their defense, the respondents therefore had to present proof, not only that they delivered the checks to the petitioner, but also that the checks were encashed. The respondents failed to do so. Had the checks been actually encashed, the respondents could have easily produced the cancelled checks as evidence to prove the same. Instead, they merely averred that they believed in good faith that the checks were encashed because they were not notified of the dishonor of the checks and three years had already lapsed since they issued the checks.

Because of this failure of the respondents to present sufficient proof of payment, it was no longer necessary for the petitioner to prove non-payment, particularly proof that the checks were dishonored. The burden of evidence is shifted only if the party upon whom it is lodged was able to adduce preponderant evidence to prove its claim.

Ostensibly, therefore, the petitioner’s mere submission of the receipt issued in exchange of the check did not satisfactorily establish her allegation of full payment of her subscription. Indeed, she could not even inform the trial court about the identity of her drawee bank,^[11][49]and about whether the check was cleared and its amount paid to BMPI.^[12][50]In fact, she did not present the check itself.

=================================

Republic of thePhilippines

Supreme Court

Manila

THIRD DIVISION

x—————————————————————————————–x

D E C I S I O N

BERSAMIN, J:

          Stockholders of a corporation are liable for the debts of the corporation up to the extent of their unpaid subscriptions. They cannot invoke the veil of corporate identity as a shield from liability, because the veil may be lifted to avoid defrauding corporate creditors.

Weaffirm with modification the decisionpromulgated on August 14, 2002,^[13][1]whereby the Court of Appeals(CA) upheld thedecision of the Regional Trial Court, Branch 71, in Pasig City (RTC),^[14][2]ordering the defendants (including the petitioner)to pay to Printwell, Inc. (Printwell) the principal sum of P291,342.76 plus interest.

Antecedents

The petitioner wasan incorporator and original director of Business Media Philippines, Inc. (BMPI), which, at its incorporation on November 12, 1987,^[15][3]had an authorized capital stock of P3,000,000.00 divided into 300,000 shares each with a par value of P10.00,of which 75,000 were initially subscribed, to wit:

Printwellengaged in commercial and industrial printing.BMPI commissioned Printwell for the printing of the magazine Philippines, Inc. (together with wrappers and subscription cards) that BMPI published and sold. For that purpose, Printwell extended 30-day credit accommodations to BMPI.

In the period from October 11, 1988 until July 12, 1989, BMPI placedwith Printwell several orders on credit, evidenced byinvoices and delivery receipts totalingP316,342.76.Considering that BMPI paidonlyP25,000.00,Printwell suedBMPIon January 26, 1990 for the collection of the unpaid balance of P291,342.76 in the RTC.^[16][4]

On February 8, 1990,Printwell amended thecomplaint in order to implead as defendants all the original stockholders and incorporators to recover on theirunpaid subscriptions, as follows:^[17][5]

          The defendants filed a consolidated answer,^[18][6]averring that they all had paid their subscriptions in full; that BMPI had a separate personality from those of its stockholders; thatRizalino C. Viñeza had assigned his fully-paid up sharesto a certain Gerardo R. Jacinto in 1989; andthat the directors and stockholders of BMPI had resolved to dissolve BMPI during the annual meetingheld on February 5, 1990.

          To prove payment of their subscriptions, the defendantstockholderssubmitted in evidenceBMPI official receipt (OR) no. 217, OR no. 218, OR no. 220,OR no. 221, OR no. 222, OR no. 223, andOR no. 227,to wit:

          In addition, the stockholderssubmitted other documentsin evidence, namely:(a) an audit report dated March 30, 1989 prepared by Ilagan, Cepillo & Associates (submitted to the SEC and the BIR);^[19][7](b) BMPIbalance sheet^[20][8] and income statement^[21][9]as of December 31, 1988; (c) BMPI income tax return for the year 1988 (stamped “received” by the BIR);^[22][10](d) journal vouchers;^[23][11](e) cash deposit slips;^[24][12] and(f)Bank of the Philippine Islands (BPI) savings account passbookin the name of BMPI.^[25][13]

Ruling of the RTC

          On November 3, 1993, the RTC rendereda decision in favor of Printwell, rejecting the allegation of payment in full of the subscriptions in view of an irregularity in the issuance of the ORs and observingthat the defendants had used BMPI’s corporate personality to evade payment and create injustice, viz:

The claim of individual defendants that they have fully paid their subscriptions to defend[a]nt corporation, is not worthy of consideration, because: —

a)      in the case of defendants-spouses Albert and Zenaida Yu, it will be noted that the alleged payment made on May 13, 1988amounting to P135,000.00, is covered by Official Receipt No. 218 (Exh. “2”), whereas the alleged payment made earlier on November 5, 1987, amounting to P5,000.00, is covered by Official Receipt No. 222 (Exh. “3”). This is cogent proof that said receipts were belatedly issued just to suit their theory since in the ordinary course of business, a receipt issued earlier must have serial numbers lower than those issued on a later date. But in the case at bar, the receipt issued on November 5, 1987 has serial numbers (222) higher than those issued on a later date (May 13, 1988).

b)      The claim that since there was no call by the Board of Directors of defendant corporation for the payment of unpaid subscriptions will not be a valid excuse to free individual defendants from liability. Since the individual defendants are members of the Board of Directors of defendantcorporation, it was within their exclusive power to prevent the fulfillment of the condition, by simply not making a call for the payment of the unpaid subscriptions. Their inaction should not work to their benefit and unjust enrichment at the expense of plaintiff.

Assuming arguendo that the individual defendants have paid their unpaid subscriptions, still, it is very apparent that individual defendants merely used the corporate fiction as a cloak or cover to create an injustice; hence, the alleged separate personality of defendant corporation should be disregarded (Tan Boon Bee & Co., Inc. vs. Judge Jarencio, G.R. No. 41337, 30 June 1988).^[26][14]

          Applying the trust fund doctrine, the RTC declared the defendant stockholders liable to Printwell pro rata, thusly:

Defendant Business Media, Inc. is a registered corporation (Exhibits “A”, “A-1” to “A-9”), and, as appearing from the Articles of Incorporation, individual defendants have the following unpaid subscriptions:

                  Names                         Unpaid Subscription

                  Donnina C. Halley                    P262,500.00

                  Roberto V. Cabrera, Jr.              135.000.00

                  Albert T. Yu                               135,000.00

                  Zenaida V. Yu                          15,000.00

                  Rizalino V. Vineza                        15,000.00

                                                                  ——————–

                              Total                            P562,500.00

and it is an established doctrine that subscriptions to the capital stock of a corporation constitute a fund to which creditors have a right to look for satisfaction of their claims (Philippine National Bank vs. Bitulok Sawmill, Inc., 23 SCRA 1366) and, in fact, a corporation has no legal capacity to release a subscriber to its capital stock from the obligation to pay for his shares, and any agreement to this effect is invalid (Velasco vs. Poizat, 37 Phil. 802).

The liability of the individual stockholders in the instant case shall be pro-rated as follows:

                  Names                         Amount

                  Donnina C. Halley                    P149,955.65

                  Roberto V. Cabrera, Jr.                77,144.55

                  Albert T. Yu                                 77,144.55

                  Zenaida V. Yu                               8,579.00

                  Rizalino V. Vineza                          8,579.00

                                                                  ——————

                              Total                            P321,342.75^[27][15]

The RTC disposed as follows:

       WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants, ordering defendants to pay to plaintiff the amount of P291,342.76, as principal, with interest thereon at 20% per annum, from date of default, until fully paid, plus P30,000.00 as attorney’s fees, plus costs of suit.

         Defendants’ counterclaims are ordered dismissed for lack of merit.

         SO ORDERED.^[28][16]

Ruling of the CA

          All the defendants, except BMPI, appealed.

Spouses Donnina and Simon Halley, andRizalinoViñeza defined the following errors committed by the RTC, as follows:

I.

THE TRIAL COURT ERRED IN HOLDING APPELLANTS-STOCKHOLDERS LIABLE FOR THE LIABILITIES OF THE DEFENDANT CORPORATION.

II.

ASSUMING ARGUENDO THAT APPELLANTS MAY BE LIABLE TO THE EXTENT OF THEIR UNPAID SUBSCRIPTION OF SHARES OF STOCK, IF ANY, THE TRIAL COURT NONETHELESS ERRED IN NOT FINDING THAT APPELLANTS-STOCKHOLDERS HAVE, AT THE TIME THE SUIT WAS FILED, NO SUCH UNPAID SUBSCRIPTIONS.

          On their part, Spouses Albert and Zenaida Yu averred:

I.

THE RTC ERRED IN REFUSING TO GIVE CREDENCE AND WEIGHT TO DEFENDANTS-APPELLANTS SPOUSES ALBERT AND ZENAIDA YU’S EXHIBITS 2 AND 3 DESPITE THE UNREBUTTED TESTIMONY THEREON BY APPELLANT ALBERT YU AND THE ABSENCE OF PROOF CONTROVERTING THEM.

II.

THE RTC ERRED IN HOLDING DEFENDANTS-APPELLANTS SPOUSES ALBERT AND ZENAIDA YU PERSONALLY LIABLE FOR THE CONTRACTUAL OBLIGATION OF BUSINESS MEDIA PHILS., INC. DESPITE FULL PAYMENT BY SAID DEFENDANTS-APPELLANTS OF THEIR RESPECTIVE SUBSCRIPTIONS TO THE CAPITAL STOCK OF BUSINESS MEDIA PHILS., INC.

          Roberto V. Cabrera, Jr. argued:

I.

IT IS GRAVE ERROR ON THE PART OF THE COURT A QUO TO APPLY THE DOCTRINE OF PIERCING THE VEIL OF CORPORATE PERSONALITY IN ABSENCE OF ANY SHOWING OF EXTRA-ORDINARY CIRCUMSTANCES THAT WOULD JUSTIFY RESORT THERETO.

II.

IT IS GRAVEERRORONTHE PART OF THE COURT A QUO TO RULE THAT INDIVIDUAL DEFENDANTS ARE LIABLE TO PAY THE PLAINTIFF-APPELLEE’S CLAIM BASED ON THEIR RESPECTIVE SUBSCRIPTION. NOTWITHSTANDING OVERWHELMING EVIDENCE SHOWING FULL SETTLEMENT OF SUBSCRIBED CAPITAL BY THE INDIVIDUAL DEFENDANTS.

          On August 14, 2002, the CA affirmed the RTC, holding that the defendants’ resort to the corporate personality would createan injustice becausePrintwell would thereby be at a loss against whom it would assert the right to collect, viz:

       Settled is the rule that when the veil of corporate fiction is used as a means of perpetrating fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievements or perfection of monopoly or generally the perpetration of knavery or crime, the veil with which the law covers and isolates the corporation from the members or stockholders who compose it will be lifted to allow for its consideration merely as an aggregation of individuals (First Philippine International Bank vs. Court of Appeals, 252 SCRA 259). Moreover, under this doctrine, the corporate existence may be disregarded where the entity is formed or used for non-legitimate purposes, such as to evade a just and due obligations or to justify wrong (Claparols vs. CIR, 65 SCRA 613).

         In the case at bench, it is undisputed that BMPI made several orders on credit from appellee PRINTWELL involving the printing of business magazines, wrappers and subscription cards, in the total amount of P291,342.76 (Record pp. 3-5, Annex “A”) which facts were never denied by appellants’ stockholders that they owe appellee the amount of P291,342.76. The said goods were delivered to and received by BMPI but it failed to pay its overdue account to appellee as well as the interest thereon, at the rate of 20% per annum until fully paid. It was also during this time that appellants stockholders were in charge of the operation of BMPI despite the fact that they were not able to pay their unpaid subscriptions to BMPI yet greatly benefited from said transactions. In view of the unpaid subscriptions, BMPI failed to pay appellee of its liability, hence appellee in order to protect its right can collect from the appellants’ stockholders regarding their unpaid subscriptions. To deny appellee from recovering from appellants would place appellee in a limbo on where to assert their right to collect from BMPI since the stockholders who are appellants herein are availing the defense of corporate fiction to evade payment of its obligations.^[29][17]

          Further, the CA concurred with the RTC on theapplicability of thetrust fund doctrine, under which corporate debtors might look to the unpaid subscriptions for the satisfaction of unpaid corporate debts, stating thus:

       It is an established doctrine that subscription to the capital stock of a corporation constitute a fund to which creditors have a right to look up to for satisfaction of their claims, and that the assignee in insolvency can maintain an action upon any unpaid stock subscription in order to realize assets for the payment of its debts (PNB vs. Bitulok Sawmill, 23 SCRA 1366).

         Premised on the above-doctrine, an inference could be made that the funds, which consists of the payment of subscriptions of the stockholders, is where the creditors can claim monetary considerations for the satisfaction of their claims. If these funds which ought to be fully subscribed by the stockholders were not paid or remain an unpaid subscription of the corporation then the creditors have no other recourse to collect from the corporation of its liability. Such occurrence was evident in the case at bar wherein the appellants as stockholders failed to fully pay their unpaid subscriptions, which left the creditors helpless in collecting their claim due to insufficiency of funds of the corporation. Likewise, the claim of appellants that they already paid the unpaid subscriptions could not be given weight because said payment did not reflect in the Articles of Incorporations of BMPI that the unpaid subscriptions were fully paid by the appellants’ stockholders. For it is a rule that a stockholder may be sued directly by creditors to the extent of their unpaid subscriptions to the corporation (Keller vs. COB Marketing, 141 SCRA 86).

         Moreover, a corporation has no power to release a subscription or its capital stock, without valuable consideration for such releases, and as against creditors, a reduction of the capital stock can take place only in the manner and under the conditions prescribed by the statute or the charter or the Articles of Incorporation. (PNB vs. Bitulok Sawmill, 23 SCRA 1366).^[30][18]

          The CAdeclared thatthe inconsistency in the issuance of the ORs rendered the claim of full payment of the subscriptions to the capital stock unworthy of consideration; andheld that the veil of corporate fiction could be pierced when it was used as a shield to perpetrate a fraud or to confuse legitimate issues, to wit:

Finally, appellants SPS YU, argued that the fact of full payment for the unpaid subscriptions was incontrovertibly established by competent testimonial and documentary evidence, namely – Exhibits “1”, “2”, “3” & “4”, which were never disputed by appellee, clearly shows that they should not be held liable for payment of the said unpaid subscriptions of BMPI.

The reliance is misplaced.

We are hereby reproducing the contents of the above-mentioned exhibits, to wit:

Exh: “1” – YU – Official Receipt No. 217 dated November 5, 1987amounting to P45,000.00 allegedly representing the initial payment of subscriptions of stockholder Albert Yu.

Exh: “2” – YU – Official Receipt No. 218 dated May 13, 1988 amounting to P135,000.00 allegedly representing full payment of balance of subscriptions of stockholder Albert Yu. (Record p. 352).

Exh: “3” – YU – Official Receipt No. 222 dated November 5, 1987amounting to P5,000.00 allegedly representing the initial payment of subscriptions of stockholder Zenaida Yu.

Exh: “4” – YU – Official Receipt No. 223 dated May 13, 1988amounting to P15,000.00 allegedly representing the full payment of balance of subscriptions of stockholder Zenaida Yu. (Record p. 353).

Based on the above exhibits, we are in accord with the lower court’s findings that the claim of the individual appellants that they fully paid their subscription to the defendant BMPI is not worthy of consideration, because, in the case of appellants SPS. YU, there is an inconsistency regarding the issuance of the official receipt since the alleged payment made on May 13, 1988 amounting to P135,000.00 was covered by Official Receipt No. 218 (Record, p. 352), whereas the alleged payment made earlier on November 5, 1987 amounting to P5,000.00 is covered by Official Receipt No. 222 (Record, p. 353). Such issuance is a clear indication that said receipts were belatedly issued just to suit their claim that they have fully paid the unpaid subscriptions since in the ordinary course of business, a receipt is issued earlier must have serial numbers lower than those issued on a later date. But in the case at bar, the receipt issued on November 5, 1987 had a serial number (222) higher than those issued on May 13, 1988 (218). And even assuming arguendo that the individual appellants have paid their unpaid subscriptions, still, it is very apparent that the veil of corporate fiction may be pierced when made as a shield to perpetuate fraud and/or confuse legitimate issues. (Jacinto vs. Court of Appeals, 198 SCRA 211).^[31][19]

          Spouses Halley and Viñeza moved for a reconsideration, but the CA denied their motion for reconsideration.

Issues

Only Donnina Halley has come to the Court to seek a further review, positing the following for our consideration and resolution, to wit:

I.

THE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE DECISION THAT DIDNOTSTATETHE FACTS AND THE LAW UPON WHICH THE JUDGMENT WAS BASED BUT MERELY COPIED THE CONTENTS OF RESPONDENT’S MEMORANDUM ADOPTING THE SAME AS THE REASON FOR THE DECISION

II.

THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT WHICH ESSENTIALLY ALLOWED THE PIERCING OF THE VEIL OF CORPORATE FICTION

III.

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE TRUST FUND DOCTRINE WHEN THE GROUNDS THEREFOR HAVE NOT BEEN SATISFIED.

          On the first error, the petitioner contends that the RTC lifted verbatim from the memorandum of Printwell; and submits that the RTCthereby violatedthe requirement imposed in Section 14, Article VIII of the Constitution^[32][20] as well as in Section 1,Rule 36 of the Rules of Court,^[33][21]to the effect that a judgment or final order of a court should state clearly and distinctly the facts and the law on which it is based. The petitioner claims that the RTC’s violation indicated that the RTC did not analyze the case before rendering its decision, thus denying her the opportunity to analyze the decision; andthat a suspicion of partiality arose from the fact that the RTC decision was but a replica of Printwell’s memorandum.She cites Francisco v. Permskul,^[34][22] in which the Court has stated that the reason underlying the constitutional requirement, that every decision should clearly and distinctly state the facts and the law on which it is based, is to inform the reader of how the court has reached its decision and thereby give the losing party an opportunity to study and analyze the decision and enable such party to appropriately assign the errors committed therein on appeal.

          On the second and third errors, the petitioner maintains that the CA and the RTC erroneously pierced the veil of corporate fiction despite the absence of cogent proof showing that she, as stockholder of BMPI, had any hand in transacting with Printwell; thatthe CA and the RTC failed to appreciate the evidence that she had fully paid her subscriptions; and the CA and the RTCwrongly relied on the articles of incorporation in determining the current list of unpaid subscriptions despite the articles of incorporationbeing at best reflectiveonly of the pre-incorporation status of BMPI.

          As her submissions indicate, the petitioner assails the decisions of the CA on: (a) the propriety of disregarding the separate personalities of BMPI and its stockholdersby piercing the thin veil that separated them; and (b) the application of the trust fund doctrine.

Ruling

          The petition for review fails.

I

The RTC did not violate

the Constitution and the Rules of Court

The contention of the petitioner, that the RTC merely copied the memorandum of Printwell in writing its decision, and did not analyze the records on its own, thereby manifesting a bias in favor of Printwell, is unfounded.

It is noted that the petition for review merely generally alleges that starting from its page 5, the decision of the RTC “copied verbatim the allegations of herein Respondents in its Memorandum before the said court,” as if “the Memorandum was the draft of the Decision of the Regional Trial Court of Pasig,”^[35][23]but fails to specify either the portions allegedly lifted verbatim from the memorandum, or why she regards the decision as copied. The omission renders thepetition for review insufficient to support her contention, considering that the mere similarityin language or thought between Printwell’s memorandum and the trial court’s decisiondid not necessarily justify the conclusion that the RTC simply lifted verbatim or copied from thememorandum.

It is to be observed in this connection that a trial or appellate judge may occasionally viewa party’s memorandum or brief as worthy of due consideration either entirely or partly. When he does so, the judgemay adopt and incorporatein his adjudicationthe memorandum or the parts of it he deems suitable,and yet not be guilty of the accusation of lifting or copying from the memorandum.^[36][24] This isbecause ofthe avowed objective of the memorandum to contribute in the proper illumination and correct determination of the controversy.Nor is there anything untoward in the congruence of ideas and views about the legal issues between himself and the party drafting the memorandum.The frequency of similarities in argumentation, phraseology, expression, and citation of authorities between the decisions of the courts and the memoranda of the parties, which may be great or small, can be fairly attributable tothe adherence by our courts of law and the legal profession to widely knownor universally accepted precedents set in earlier judicial actions with identical factual milieus or posing related judicial dilemmas.

We also do not agree with the petitioner that the RTC’s manner of writing the decisiondeprivedher ofthe opportunity to analyze its decisionas to be able to assign errors on appeal. The contrary appears, considering that she was able to impute and assignerrors to the RTCthat she extensively discussed in her appeal in the CA, indicating her thorough analysis ofthe decision of the RTC.

Our own readingof the trial court’s decision persuasively shows that the RTC did comply with the requirements regarding the content and the manner of writing a decision prescribed in the Constitution and the Rules of Court. The decision of the RTC contained clear and distinct findings of facts, and stated the applicablelaw and jurisprudence, fully explaining why the defendants were being held liable to the plaintiff.  In short, the reader was at once informed of the factual and legal reasons for the ultimate result.

II

Corporate personality not to be used to foster injustice

Printwell impleaded the petitioner and the other stockholders of BMPI for two reasons, namely: (a) to reach the unpaid subscriptions because it appeared that such subscriptions were the remaining visible assets of BMPI; and (b) to avoid multiplicity of suits.^[37][25]

The petitionersubmits that she had no participation in the transaction between BMPI and Printwell;that BMPI acted on its own; and that shehad no hand in persuading BMPI to renege on its obligation to pay. Hence, she should not be personally liable.

We rule against the petitioner’s submission.

Although a corporation has a personality separate and distinct from those of its stockholders, directors, or officers,^[38][26]such separate and distinct personality is merely a fiction created by law for the sake of convenience and to promote the ends of justice.^[39][27]The corporate personality may be disregarded, and the individuals composing the corporation will be treated as individuals, if the corporate entity is being used as a cloak or cover for fraud or illegality;as a justification for a wrong; as an alter ego, an adjunct, or a business conduit for the sole benefit of the stockholders.^[40][28] As a general rule, a corporation is looked upon as a legal entity, unless and until sufficient reason to the contrary appears. Thus,the courts always presume good faith, andfor that reason accord prime importance to the separate personality of the corporation, disregarding the corporate personality only after the wrongdoing is first clearly and convincingly established.^[41][29]It thus behooves the courts to be careful in assessing the milieu where the piercing of the corporate veil shall be done.^[42][30]

Although nowhere in Printwell’s amended complaint or in the testimonies Printwell offered can it be read or inferred from that the petitioner was instrumental in persuading BMPI to renege onits obligation to pay; or that sheinduced Printwell to extend the credit accommodation by misrepresenting the solvency of BMPI toPrintwell, her personal liability, together with that of her co-defendants, remainedbecause the CA found her and the other defendant stockholders to be in charge of the operations of BMPI at the time the unpaid obligation was transacted and incurred, to wit:

In the case at bench, it is undisputed that BMPI made several orders on credit from appellee PRINTWELL involving the printing of business magazines, wrappers and subscription cards, in the total amount of P291,342.76 (Record pp. 3-5, Annex “A”) which facts were never denied by appellants’ stockholders that they owe(d) appellee the amount of P291,342.76. The said goods were delivered to and received by BMPI but it failed to pay its overdue account to appellee as well as the interest thereon, at the rate of 20% per annum until fully paid. It was also during this time that appellants stockholders were in charge of the operation of BMPI despite the fact that they were not able to pay their unpaid subscriptions to BMPI yet greatly benefited from said transactions. In view of the unpaid subscriptions, BMPI failed to pay appellee of its liability, hence appellee in order to protect its right can collect from the appellants stockholders regarding their unpaid subscriptions. To deny appellee from recovering from appellants would place appellee in a limbo on where to assert their right to collect from BMPI since the stockholders who are appellants herein are availing the defense of corporate fiction to evade payment of its obligations.^[43][31]

It follows, therefore, that whether or not the petitioner persuaded BMPI to renege on its obligations to pay, and whether or not she induced Printwell to transact with BMPI were not gooddefensesin the suit.

III

Unpaid creditor may satisfy its claim from

unpaid subscriptions;stockholders must

prove full payment oftheir subscriptions

Both the RTC and the CA applied the trust fund doctrineagainst the defendant stockholders, including the petitioner.

The petitionerargues, however,that the trust fund doctrinewas inapplicablebecause she had already fully paid her subscriptions to the capital stock of BMPI. She thus insiststhat both lower courts erred in disregarding the evidence on the complete payment of the subscription, like receipts, income tax returns, and relevant financial statements.

The petitioner’s argumentis devoid of substance.

          The trust fund doctrineenunciates a –

xxx rule that the property of a corporation is a trust fund for the payment of creditors, but such property can be called a trust fund ‘only by way of analogy or metaphor.’ As between the corporation itself and its creditors it is a simple debtor, and as between its creditors and stockholders its assets are in equity a fund for the payment of its debts.^[44][32]

The trust fund doctrine, first enunciated in the American case of Wood v. Dummer,^[45][33]was adopted in our jurisdiction in Philippine Trust Co. v. Rivera,^[46][34]where thisCourt declared that:

It is established doctrine that subscriptions to the capital of a corporation constitute a fund to which creditors have a right to look for satisfaction of their claims and that the assignee in insolvency can maintain an action upon any unpaid stock subscription in order to realize assets for the payment of its debts. (Velasco vs. Poizat, 37 Phil., 802) xxx^[47][35]

We clarify that the trust fund doctrineis not limited to reaching the stockholder’s unpaid subscriptions. The scope of the doctrine when the corporation is insolvent encompasses not only the capital stock, but also other property and assets generally regarded in equity as a trust fund for the payment of corporate debts.^[48][36]All assets and property belonging to the corporation held in trust for the benefit of creditors thatwere distributed or in the possession of the stockholders, regardless of full paymentof their subscriptions, may be reached by the creditor in satisfaction of its claim.

Also, under the trust fund doctrine,a corporation has no legal capacity to release an original subscriber to its capital stock from the obligation of paying for his shares, in whole or in part,^[49][37] without a valuable consideration,^[50][38] or fraudulently, to the prejudice of creditors.^[51][39]The creditor is allowed to maintain an action upon any unpaid subscriptions and thereby steps into the shoes of the corporation for the satisfaction of its debt.^[52][40]To make out a prima facie case in a suit against stockholders of an insolvent corporation to compel them to contribute to the payment of its debts by making good unpaid balances upon their subscriptions, it is only necessary to establish that thestockholders have not in good faith paid the par value of the stocks of the corporation.^[53][41]

The petitionerposits that the finding of irregularity attending the issuance of the receipts (ORs) issued to the other stockholders/subscribers should not affect her becauseher receipt did not suffer similar irregularity.

Notwithstanding that the RTC and the CA did not find any irregularity in the OR issued in her favor,we still cannot sustain the petitioner’s defense of full payment of her subscription.

In civil cases, theparty who pleads payment has the burden of proving it, that even where the plaintiff must allege nonpayment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove nonpayment.  In other words, the debtor bears the burden of showing with legal certainty that the obligation has been discharged by payment.^[54][42]

Apparently, the petitioner failed to discharge her burden.

A receipt is the written acknowledgment of the fact of payment in money or other settlement between the seller and the buyer of goods, thedebtor or thecreditor, or theperson rendering services, and theclient or thecustomer.^[55][43]Althougha receipt is the best evidence of the fact of payment, it isnot conclusive, but merely presumptive;nor is it exclusive evidence,considering thatparole evidence may also establishthe fact of payment.^[56][44]

The petitioner’s ORNo. 227,presentedto prove the payment of the balance of her subscription, indicated that her supposed payment had beenmade by means of a check. Thus, to discharge theburden to prove payment of her subscription, she had to adduce evidence satisfactorily proving that her payment by check wasregardedas payment under the law.

Paymentis defined as the delivery of money.^[57][45]Yet, because a check is not money and only substitutes for money, the delivery of a check does not operate as payment and does not discharge the obligation under a judgment.^[58][46] The delivery of a bill of exchange only produces the fact of payment when the bill has been encashed.^[59][47]The following passage fromBank of Philippine Islands v. Royeca^[60][48]is enlightening:

Settled is the rule that payment must be made in legal tender. A check is not legal tender and, therefore, cannot constitute a valid tender of payment. Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized.

To establish their defense, the respondents therefore had to present proof, not only that they delivered the checks to the petitioner, but also that the checks were encashed. The respondents failed to do so. Had the checks been actually encashed, the respondents could have easily produced the cancelled checks as evidence to prove the same. Instead, they merely averred that they believed in good faith that the checks were encashed because they were not notified of the dishonor of the checks and three years had already lapsed since they issued the checks.

Because of this failure of the respondents to present sufficient proof of payment, it was no longer necessary for the petitioner to prove non-payment, particularly proof that the checks were dishonored. The burden of evidence is shifted only if the party upon whom it is lodged was able to adduce preponderant evidence to prove its claim.

Ostensibly, therefore, the petitioner’s mere submission of the receipt issued in exchange of the check did not satisfactorily establish her allegation of full payment of her subscription. Indeed, she could not even inform the trial court about the identity of her drawee bank,^[61][49]and about whether the check was cleared and its amount paid to BMPI.^[62][50]In fact, she did not present the check itself.

Theincome tax return (ITR) and statement of assets and liabilities of BMPI, albeit presented, had no bearing on the issue of payment of the subscription because they did not by themselves prove payment. ITRsestablish ataxpayer’s liability for taxes or a taxpayer’s claim for refund. In the same manner, the deposit slips and entries in the passbook issued in the name of BMPI were hardly relevant  due to their not reflecting the alleged payments.

It is notable, too, that the petitioner and her co-stockholders did not support their allegation of complete payment of their respective subscriptions with the stock and transfer book of BMPI. Indeed, books and records of a corporation (including the stock and transfer book) are admissible in evidence in favor of or against the corporation and its members to prove the corporate acts, its financial status and other matters (like the status of the stockholders), and are ordinarily the best evidence of corporate acts and proceedings.^[63][51]Specifically, a stock and transfer book is necessary as a measure of precaution, expediency, and convenience because it provides the only certain and accurate method of establishing the various corporate acts and transactions and of showing the ownership of stock and like matters.^[64][52]That she tendered no explanation why the stock and transfer book was not presented warrants the inference that the book did not reflect the actual payment of her subscription.

Nor did the petitioner present any certificate of stock issued by BMPI to her. Such a certificate covering her subscription might have been a reliable evidence of full payment of the subscriptions, considering that under Section 65 of the Corporation Code a certificate of stock issues only to a subscriber who has fully paid his subscription. The lack of any explanation for the absence of a stock certificate in her favor likewise warrants an unfavorable inference on the issue of payment.

Lastly, the petitioner maintains that both lower courts erred in relying on the articles of incorporationas proof of the liabilities of the stockholders subscribing to BMPI’s stocks, averring that the articles of incorporationdid not reflect the latest subscription status of BMPI.

Although the articles of incorporation may possibly reflect only the pre-incorporation status of a corporation, the lower courts’ reliance on that document to determine whether the original subscribersalready fully paid their subscriptions or not was neither unwarranted nor erroneous. As earlier explained, the burden of establishing the fact of full payment belonged not to Printwell even if it was the plaintiff, but to the stockholders like the petitioner who, as the defendants, averredfull payment of their subscriptions as a defense. Their failure to substantiate their averment of full payment, as well as their failure to counter the reliance on the recitals found in the articles of incorporation simply meant their failure or inability to satisfactorily prove their defense of full payment of the subscriptions.

To reiterate, the petitionerwas liablepursuant to the trust fund doctrine for the corporate obligation of BMPI by virtue of her subscription being still unpaid. Printwell, as BMPI’s creditor,had a right to reachher unpaid subscription in satisfaction of its claim.

IV

Liability of stockholders for corporate debts isup

to the extentof their unpaid subscription

The RTC declared the stockholders pro rata liable for the debt(based on the proportion to their shares in the capital stock of BMPI); and held the petitionerpersonally liable onlyin the amount of P149,955.65.

We do not agree. The RTC lacked the legal and factual support for its prorating the liability. Hence, we need to modify the extent of the petitioner’s personal liability to Printwell. The prevailing rule is that a stockholder is personally liable for the financial obligations of the corporation to the extent of his unpaid subscription.^[65][53]In view ofthe petitioner’s unpaid subscription being worth P262,500.00, shewas liable up to that amount.

Interest is also imposable on the unpaid obligation. Absent any stipulation, interest is fixed at 12% per annum from the date the amended complaint was filed on February 8, 1990 until the obligation (i.e., to the extent of the petitioner’s personal liability of P262,500.00) is fully paid.^[66][54]

Lastly, we find no basis togrant attorney’s fees, the award for which must be supported by findings of fact and of law as provided under Article 2208 of the Civil Code^[67][55]incorporated in the body of decision of the trial court. The absence of the requisite findings from the RTC decision warrants the deletion of the attorney’s fees.

ACCORDINGLY, we deny the petition for review on certiorari;and affirm with modification the decision promulgated on August 14, 2002by ordering the petitionerto pay to Printwell, Inc. the sum of P262,500.00, plus interest of 12% per annum to be computed from February 8, 1990 until full payment.

The petitioner shall paycost of suit in this appeal.

SO ORDERED.

                                                                    LUCAS P. BERSAMIN

                                                                          Associate Justice

WE CONCUR:

                                                                                                                                                CONCHITA CARPIOMORALES                             

Associate Justice

 Chairperson

          ARTURO D. BRION                                MARTIN S. VILLARAMA

    Associate Justice                                               Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

A T T E S T A T I O N

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                CONCHITA CARPIO MORALES

                                                               Associate Justice

                                                                   Chairperson

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                RENATO C. CORONA

                                                          Chief Justice

CASE NO. 2011-0126: GEORGE MILLER VS. SECRETARY HERNANDO B. PEREZ, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF JUSTICE AND GIOVAN BERNARDINO ( G.R. NO. 165412, 30 MAY 2011, VILLARAMA, JR., J) SUBJECTS: PROBABLE CAUSE; PRELIMINARY INVESTIGATION. (BRIEF TITLE: MILLER VS. SEC. PEREZ)

==========================

SUBJECT: PRELIMINARY INVESTIGATION

We need not over-emphasize that 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 respondent is probably guilty thereof and should be held for trial.  In a preliminary investigation, a full and exhaustive presentation of the parties’ evidence is not required, but only such as may engender a well-grounded belief that an offense has been committed and that the accused is probably guilty thereof.  Certainly, it does not involve the determination of whether or not there is evidence beyond reasonable doubt pointing to the guilt of the person.  Only prima facie evidence is required; or that which is, on its face, good and sufficient to establish a given fact, or the group or chain of facts constituting the party’s claim or defense; and which, if not rebutted or contradicted, will remain sufficient.  Therefore, matters of evidence, such as who are the conspirators, are more appropriately presented and heard during the trial.

SUBJECT: DEFINITION OF PROBABALE CAUSE

The term “probable cause” does not mean actual and positive cause nor does it import absolute certainty.  It is merely based on opinion and reasonable belief.  Thus, 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. Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.

SUBJECT: WHEN DOJ SECRETARY RENDERS A RESOLUTION DISMISSING A COMPLAINT DESPITE SUFFICIENT EVIDENCE TO SUPPORT FINDING OF PROBABLE CAUSE HE COMMITS GRAVE ERROR. COURTS MUST SUBSTITUTE THEIR JUDGMENT.

While it is this Court’s general policy not to interfere in the conduct of preliminary investigations, leaving the investigating officers sufficient discretion to determine probable cause, courts are nevertheless empowered to substitute their judgment for that of the Secretary of Justice when the same was rendered without or in excess of authority.  Where the Secretary of Justice dismissed the complaint against the respondent despite sufficient evidence to support a finding of probable cause, such clearly constitutes grave error, thus warranting a reversal. The CA thus clearly erred in sustaining the ruling of Secretary Perez for the exclusion of respondent Bernardino from the charge of attempted murder despite a prima facie case against him having been established by the evidence on record.

=============================

THIRD DIVISION

x- – – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

DECISION

VILLARAMA, JR., J.:

          Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision dated June 14, 2004 and Resolution dated September 14, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 72395.  The CA dismissed the petition for certiorari after finding no grave abuse of discretion on the part of public respondent Secretary of Justice in issuing his Resolution dated March 21, 2002 which ordered the exclusion of respondent Giovan Bernardino (Bernardino) from the Information for attempted murder.

The facts as culled from the records:

Petitioner George Miller is a British national and an inmate at the Maximum Security Compound of the New Bilibid Prison (NBP) inMuntinlupaCity.  In November and December 1998, while serving as Acting Secretary General of the Inmates’ Crusade Against Drugs (ICAD) based at NBP, petitioner wrote two confidential lettersaddressed to then NBP Superintendent Col. Gregorio Agalo-os. The letters contained a detailed report of the alleged irregularities and drug trading activities of respondent Bernardino and Rodolfo Bernardo (Bernardo), both inmates at the Medium Security Compound and ICAD Treasurer and Chairman, respectively.  Petitioner also recommended the transfer of Bernardino and Bernardo to the Maximum Security Compound.

          On January 6, 1999, at around 2:30 p.m., while proceeding towards the volleyball court at the Medium Security Compound, petitioner felt a crushing blow at the back of his head.  As blood oozed from his head, petitioner ran to the Infirmary for first aid treatment.  Later, petitioner was transferred to the NBP hospital.  On January 17, 1999, Dr. Ma. Corazon S. Alvarez, Medical Specialist at the NBP hospital, issued a Medical Certificate with the following findings:

–          lacerated wound, one (1), about 8 to 9 cms. long,

1 cm. deep, on parietal area of the head.

–          Barring unforseen (sic) circumstances, healing period is

from 7 to 10 days.

Investigation of the incident was immediately ordered by Supt. Agalo-os.   PGIII Cecilio M. Lopez conducted the investigation and submitted to the NBP Director his Reportdated January 5, 1999.  Based on the sworn statement of petitioner and the verbal admissions made by inmates Constantino Quirante, Jr. (Quirante)  and Roberto Ceballos (Ceballos), it was found that a few days before the incident, Bernardo and Bernardino confronted petitioner regarding the letters he wrote reporting the alleged illegal drug activities of Ace Aprid (Aprid), Bernardo and Bernardino at ICAD.  Bernardo and Bernardino were furious when petitioner admitted having authored the letters, threatening him with the words “Mamamatay ka,” which petitioner fully understood: he is going to die.  Petitioner discovered that another inmate (Valeroso) to whom he confided the matter, had divulged the existence of the letters to Bernardo and Bernardino.   At the time he was hit at the back of his head, petitioner was able to turn around and saw his assailant, later identified as Quirante, who ran away through the gate leading to the “talipapa” where petitioner lost sight of him.  Petitioner then saw two persons standing near the entrance of the “talipapa” and shouted at one of them asking for the identity of his assailant and if he saw the incident.  However, the man just kept mum.  As petitioner realized that blood was oozing from his head, he immediately went to the Infirmary.

The day after the incident, Bernardo and Bernardino along with fellow inmates Aprid, Virgilio Adrales, Rogelio Aguilar, Amable Bendoy, Arnel Modrigo, Alfred Magno and Vergel Bustamante, were brought to the investigation section.

In the course of the investigation, Quirante and Ceballos admitted their participation in the attack on petitioner and the information they provided was summarized by the investigating officer as follows:

x x x x

While the investigation was in progress, inmates Roberto Ceballos and Constantino Quirante voluntarily surfaced admitting their participation in the clubbing of Miller.  After having been informed of their constitutional rights, the two during interrogation and without second thought, narrated in detail how and why they attempted to kill Miller in the following manner:

At around 10:30 A.M. of January 6, 1999, in whiling the time under the shade of a tree in a basketball court of the Medium Security Camp, Quirante and Ceballos were approached by Aprid and Bernardino to engage their services and offered an amount of P1,500.00 to kill Miller.  Being in dire need of money at the very moment, Quirante and Ceballos accepted the offer.  Quirante admitted treacherously hitting Miller at the back of his head with a piece of wood but for failing to get him with one blow, he had to flee.  On the other hand, Ceballos admitted as the lookout and was asked by Miller the identity of his assailant right after he was clubbed.  Accordingly, what motivated them to reveal everything is the fact that only P100.00 was paid in advance to them by Bernardino and Aprid and the balance of P1,400.00 as promised to be paid sooner was never fulfilled.  The duo even signified their intention to reduce their participation in writing to authenticate the admission of their guilt.  However, in the absence of a lawyer to assist them and to safeguard their constitutional rights, the officer on case opted not to do so.

To ascertain the veracity of Ceballos and Quirante’s confession, a confrontation was made at the Director’s Office.  Several inmates were lined-up with Ceballos and Quirante.  Miller when asked to identify his assailant, he spontaneously pointed to Quirante as the one who clubbed him on the head and likewise pointed to Ceballos as the man whom he had shouted at asking for the identity of his assailant.

x x x x

On the basis of the foregoing, PGIII Lopez recommended that Quirante and Ceballos be charged with Frustrated Murder and the case be placed under further investigation “pending the establishment of sufficient evidence to indict inmates Rodolfo Bernardo, Giovan Bernardino and Ace Aprid.”   On February 10, 1999, the case was endorsed to the Office of the City Prosecutor submitting to the said office the following documents: (1) Investigation Report of PGIII Lopez; (2) Sworn Statement of petitioner; (3) Medical Certificate; (4) Routing Slip of Supt. Agalo-os; and (5) petitioner’s letters dated November 21, 1998 and December 27, 1998 addressed to the NBP Superintendent.  The case was docketed as I.S. No. 99-B-01314.

On March 30, 1999, Prosecutor Antonio V. Padilla issued his resolutionfinding the evidence sufficient to charge Quirante with attempted murder while dismissing the case against Ceballos for insufficiency of evidence, thus:

Anent the charge against Giovan Bernardino and Rodolfo Bernardo, we noticed that the same is merely anchored on suspicion and conjecture.  Except the bare allegations of the complainant, nothing would link them to the assault against the complainant.  In fact, their names were not even mentioned in the referral letter, dated February 10, 1999, of the Bureau of Corrections addressed to our Office.

WHEREFORE, premises considered, the undersigned respectfully recommends that the attached Information be filed in court.  Further, it is recommended that the charge against Ceballos be dismissed on ground of insufficiency of evidence.  As to the charge against Bernardino and Bernardo the same is likewise recommended dismissed on ground of insufficiency of evidence without prejudice to the refilling of same in the event that evidence against them may be unearthed by concerned authorities. (Italics supplied.)

Thereafter, an information for attempted murder was filed against Quirante only in the Regional Trial Court (RTC) ofMuntinlupaCity(Branch 256), docketed as Criminal Case No. 99-452.

On or about April 14, 1999, Quirante and Ceballos executed a joint affidavit in Tagalog (“Pinagsamang Sinumpaang Salaysay”) which was sworn to before Prosecutor Padilla.   They declared that at noontime of January 6, 1999, their services were engaged through their “Bosyo” or Commander, Rodrigo Toledo (Toledo), who told them that if they hit (“paluin”) petitioner they will be paid P1,500 by Bernardino and Bernardo. Hence, they carried out the clubbing of petitioner by 2:00 in the afternoon of the same day infront of the volleyball court of the Medium Security Compound while petitioner was walking from the “talipapa.”   Quirante struck at petitioner from behind using a piece of wood and then ran away towards the “talipapa.”  Petitioner turned around and saw Ceballos whom he asked for the identity of his assailant. In pain and with bleeding wound on his head, petitioner momentarily sat down and then brought himself to the infirmary.   Ceballos thought that petitioner did not recognize him since his face was then covered with shirt cloth. A day later, Toledo handed them P100 as initial payment, the balance to be paid by Bernardo and Bernardino also through Toledo.  However, three days passed without the P1,400 being paid to them, until they were called to appear before the Director’s office.  When questioned during the investigation, they readily owned up to the assault on petitioner because Bernardino and Bernardo did not pay the agreed amount.

The sworn statement of Quirante and Ceballos was corroborated by Toledowho likewise executed a “Sinumpaang Salaysay” on even date stating that as early as December 1998, Bernardo and Bernardino have been talking to him about their plan to have petitioner killed.  Toledo being the leader of their group (BC 45) at the Medium Security Compound, Bernardo and Bernardino promised that they will pay whoever among his (Toledo) men can do it.   Toledo claimed that he initially declined but due to the daily conversations with Bernardo and Bernardino who also gave him food, he finally called on two of his men, Quirante and Ceballos, to carry out the plan to kill petitioner.  He was confident that everything will be alright since Bernardo and Bernardino committed to pay P1,500 for the job.  A day after the clubbing of petitioner, he gave Quirante and Ceballos P100 as initial payment by Bernardo and Bernardino for their services.  Three days later, he learned that Quirante and Ceballos were summoned before the Director’s Office in connection with the incident.  He affirmed the truth of the admissions made by Quirante and Ceballos because Bernardo and Bernardino failed to comply with their undertaking.

On December 2, 1999, Quirante, Ceballos andToledoexecuted new affidavitsin English, which were sworn to before Bureau of Corrections Assistant Director Joselito A. Fajardo and Prosecutor Leopoldo B. Macinas.  These new affidavits gave a more detailed narration of the incident and pointed to Bernardo and Bernardino as the “masterminds” with Aprid being an accomplice.  Bernardo and Aprid allegedly planned the killing of petitioner together with Toledo, the BC 45 Gang Commander, wherein Quirante agreed to be the one to kill petitioner while another gang member, Ceballos, would act as his lookout.  The affidavits also mentioned what transpired during the preliminary investigation conducted by Prosecutor Padilla and the earlier April 1999 Tagalog affidavits they executed before Prosecutor Padilla. These documents were submitted during the reinvestigation conducted by Prosecutor Macinas.

Bernardo and Bernardino submitted their Joint Counter-Affidavitdated January 19, 2000, stating that it was the second time they were being implicated in the case and pointing out that both investigations by the Investigation Section of the Bureau of Corrections and the Office of the City Prosecutor, Muntinlupa City showed that they have no participation in the commission of the offense.  They asserted that the charges against them have no basis and the fruit of the wrong and malicious imputations of the witnesses. They denied having committed any violation of the rules and regulations of ICAD, of which Bernardo is Chairman while Bernardino is the Treasurer.  They claimed that in the three years they have been serving the ICAD, the organization has more than progressed and benefitted their fellow inmates at the NBP.  As to the statements given by Quirante, Ceballos andToledo, and other witnesses, these are conflicting and muddled, showing so much evidence of them having been tutored.

Bernardo and Bernardino likewise presented a “Sinumpaang Salaysay” executed by their witnesses, co-inmates Arnel Modrigo, Virgilio Adrales and Rogelio Aguilar.    Said affiants declared that when petitioner approached them and asked if Aprid and Bernardo had anything to do with the incident, they plainly answered in the negative and told petitioner he should ask those persons instead. Everyday, petitioner goes to them asking them to pinpoint Aprid, Bernardo and Bernardino as the masterminds in order to strengthen the case against them.   Petitioner even asked them to sign a handwritten letter prepared by petitioner himself, addressed to Supt. Agalo-os and which, while requesting for their transfer to the Medium Security dormitories, also affirmed the culpability of Aprid, Bernardo and Bernardino for the attempt on the life of petitioner. However, they refused to do so as they know there was no truth to the contents of said letter.

On March 20, 2000, Prosecutor Leopoldo Macinas issued his Memorandumaddressed to the City Prosecutor finding probable cause against Quirante, Ceballos andToledoin conspiracy with Bernardino, Aprid and Bernardo, for the crime of attempted murder.  Prosecutor Macinas was convinced that the detailed account given by Quirante, Ceballos andToledowere executed freely and voluntarily, and found no reason why they would incriminate their co-inmates other than the truth of the statements in their affidavits.  On the other hand, the defenses proffered by Bernardo and Bernardino are evidentiary matters which can be best passed upon after a full-blown trial.

WHEREFORE, it is respectfully recommended that respondents Giovan Bernardino, Rod[o]lfo Bernardo, Rodrigo Toledo, Ace Aprid and Roberto Ceballos be all indicted by way of the herein attached amended information as co-conspirators of accused Constantino Quirante in attempting to kill George Miller, prima facie case having been established.

Consequently, an Amended Information was filed with the RTC which included the names of Bernardino, Aprid, Bernardo,Toledoand Ceballos as co-conspirators in the crime of attempted murder.

Bernardino filed a petition for reviewwith the Department of Justice (DOJ) arguing that there was no sufficient evidence presented to support a claim of conspiracy, which was based merely on conflicting testimonies or affidavits in a language foreign to the affiants.  He noted that the English affidavits pointed to three people as the masterminds when originally only two have been implicated by the perpetrators (Quirante and Ceballos).

Petitioner filed his opposition,alleging that contrary to the claim of Bernardino, the Bureau’s investigation was far from complete as the Report of PGIII Lopez itself stated that the case is recommended for further investigation “pending the establishment of sufficient evidence to indict inmates Rodolfo Bernardo, Giovan Bernardino and Ace Aprid”.  As to the Tagalog affidavits, petitioner pointed out that these could not have been produced during the preliminary investigation conducted by Prosecutor Padilla since the documents were executed only on April 14, 1999, two weeks after Prosecutor Padilla rendered his resolution.  Further investigation by the Bureau led to the execution of two affidavits in Tagalog (Quirante, Ceballos andToledo) without the knowledge of petitioner. However, said Tagalog affidavits “disappeared” and petitioner was not allowed access to the Investigation Section’s file despite his complaints to Director Sistoza, the Bureau and DOJ.  Prior to the November 25, 1999 hearing on reinvestigation, petitioner had new affidavits in English prepared with the assistance of a former Supreme Court interpreter (inmate Chua) and these were subsequently signed  by Toledo, Quirante and Ceballos and sworn to before Prosecutor Macinas.  Hence, the said documentary evidence was already considered in the March 20, 2000 Resolution of Prosecutor Macinas.  Petitioner further alleged that Bernardo and Bernardino received thru registered mail copy of the March 20, 2000 Resolution on June 16, 2000 but the petition for review before the DOJ was actually filed only on July 27, 2000 but conveniently dated July 14, 2000.

On March 21, 2002, public respondent, then Secretary of Justice Hernando B. Perez, issued his Resolutionfinding merit in the petition.   According to Secretary Perez, the new affidavits of Quirante, Ceballos andToledoare not credible considering “the length of time they were executed since the commission of the crime” and also because said documents cannot be considered newly discovered evidence.  He further noted that the affidavits were executed by the same persons investigated by the Bureau of Corrections and who all participated in the preliminary investigation of the case.  At most, said affidavits can only be considered as “afterthought or made upon the prodding or influence of other persons.”  Public respondent thus ordered:

WHEREFORE, the questioned resolution is MODIFIED.  The City Prosecutor of Muntinlupa City is directed to amend the information to exclude accused Giovan Bernardino therefrom, and to report action taken within ten (10) days from receipt hereof.

SO ORDERED.

On March 25, 2002, a Motion to Admit Second Amended Information, which dropped the name of respondent Bernardino as one of the accused, was filed in court.

Petitioner filed a motion for reconsideration which was denied under Resolutiondated August 1, 2002.

Aggrieved, petitioner elevated the case to the CA via a Petition for Certiorari under Rule 65.  Petitioner argued that public respondent gravely abused his discretion in disregarding all material evidence presented which clearly showed that the affidavits of Quirante, Ceballos andToledo had not been submitted during the preliminary investigation conducted by Prosecutor Padilla.  Contrary to the pronouncement of the Secretary of Justice, the absence of said affidavits could not be construed as an irregularity in the conduct of preliminary investigation.  This must be so since the March 30, 1999 resolution of Prosecutor Padilla explicitly stated that if and when evidence be unearthed by the concerned authorities, the case may still be re-filed against the other suspects, including Bernardo and Bernardino, for conspiracy in the attempted murder of petitioner. Petitioner also faulted the public respondent in granting the petition for review despite the same having been filed out of time, more than one month after receipt of the DOJ resolution.

On June 14, 2004, the CA rendered its Decision sustaining the ruling of the Secretary of Justice, finding no grave abuse of discretion in the issuance of the questioned resolutions. Petitioner’s motion for reconsideration was likewise denied by the CA.

Petitioner is now before this Court, alleging that –

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF LAW, AND AS SUCH THE INSTANT PETITION SHOULD BE ALLOWED, WHEN, IN AFFIRMING THE DECISION OF THE SECRETARY OF JUSTICE DISREGARDING THE AFFIDAVITS OF THE WITNESSES DATED APRIL 14, 1999 AND DECEMBER 2, 1999, IT RELIED HEAVILY ON A MERE INFERENCE BASED NOT ON ESTABLISHED FACTS BUT ON ANOTHER INFERENCE.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF LAW, AND AS SUCH THE INSTANT PETITION SHOULD BE ALLOWED, WHEN, IN AFFIRMING THE DECISION OF THE SECRETARY OF JUSTICE REVERSING THE INVESTIGATING PROSECUTOR’S FINDINGS OF PROBABLE CAUSE AGAINST THE PRIVATE RESPONDENT, IT DEPARTED FROM THE ESTABLISHED FACTS, AND IN THE PROCESS, FAILED TO MAKE AN INDEPENDENT AND THOROUGH DETERMINATION OF THE EXISTENCE OF PROBABLE CAUSE IN LIGHT OF APPLICABLE LAWS, RULES AND JURISPRUDENCE.

Petitioner contends that the CA erred in concluding that the decision of the Secretary of Justice was supported with factual basis notwithstanding that its conclusion that the new affidavits were executed upon the influence of persons who merely wanted to indict respondent Bernardino, was based merely on another inference – that there was considerable length of time before the said affidavits were executed.  He assails the CA which, like the Secretary of Justice, closed its eyes on the clear indications of culpability appearing on the faces of the affidavits presented during the reinvestigation. The CA disregarded these pieces of evidence despite the same having established prima facie that respondent Bernardino is probably guilty of the charge, for the reason alone that since the Secretary of Justice himself “doubts the veracity of the affidavits of Quirante, Ceballos and Toledo, it would be embarrassing to compel [him] to prosecute the case.”

On the other hand, respondent Bernardino in his Comment argued that the “plain, speedy and adequate remedy” of petitioner from the ruling of the Secretary of Justice should have been the trial court’s resolution of the “Motion for Leave to File Second Amended Information” which had been set for hearing, and not the petition for certiorari he filed before the CA.  He also insists that only one copy of the March 20, 2000 Memorandum of Prosecutor Macinas was sent to the NBP which was addressed to petitioner.  It was only on July 4, 2000 that his family was able to secure a copy from the Office of the City Prosecutor.  As to the resolution of public respondent Secretary, respondent Bernardino maintains that the Secretary of Justice was correct in disregarding the new English affidavits as they were subscribed by unlettered affiants who can hardly speak Filipino and know only the Visayan dialect.

On its part, the Office of the Solicitor General (OSG) prays for the dismissal of the petition as the Secretary of Justice committed no grave abuse of discretion in modifying the ruling of Prosecutor Macinas by ordering the exclusion of respondent Bernardino from the Information.   Considering that the affidavits indicting respondent Bernardino were executed after the initial preliminary investigation and after an information was already filed in court, the Secretary of Justice was justified in giving less credence to the said evidence.

We find the petition meritorious.

Probable cause is defined as the existence of such facts and circumstances as would excite the 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 was prosecuted.  To determine the existence of probable cause, there is need to conduct preliminary investigation. A preliminary investigation constitutes a realistic judicial appraisal of the merits of a case.  Its purpose is to determine whether (a) a crime has been committed; and (b) whether there is a probable cause to believe that the accused is guilty thereof.  It is a means of discovering which person or persons may be reasonably charged with a crime.

It is well-settled that the determination of probable cause for the purpose of filing an information in court is an executive function which pertains at the first instance to the public prosecutor and then to the Secretary of Justice.The Secretary of Justice may reverse or modify the resolution of the prosecutor, after which he shall direct the prosecutor concerned either to file the corresponding information without conducting another preliminary investigation, or to dismiss or move for dismissal of the complaint or information with notice to the parties.

The Court considers it sound judicial policy to refrain from interfering in the conduct of preliminary investigations and to leave the Department of Justice ample latitude of discretion in the determination of what constitutes sufficient evidence to establish probable cause for the prosecution of supposed offenders.  Its duty in an appropriate case is confined to the issue of whether the executive or judicial determination, as the case may be, of probable cause was done without or in excess of jurisdiction or with abuse of discretion amounting to want of jurisdiction.

However, this Court may ultimately resolve the existence or non-existence of probable cause by examining the records of the preliminary investigation when necessary for the orderly administration of justice.Although policy considerations call for the widest latitude of deference to the prosecutor’s findings, courts should never shirk from exercising their power, when the circumstances warrant, to determine whether the prosecutor’s findings are supported by the facts, or by the law.

In this case, Secretary Perez disregarded the new (English) affidavits executed by Quirante, Ceballos andToledo, saying it was an afterthought or made simply upon the prodding or influence of other persons.  He also stated that Quirante, Ceballos andToledoall participated in the investigations of the Bureau of Corrections.  No mention, however, was made of the fact that said new affidavits firmly reiterated what Quirante, Ceballos andToledodeclared in their earlier Tagalog affidavits and their verbal admissions during the investigation proceedings conducted by PGIII Lopez.  These Tagalog affidavits in turn, although executed two weeks after the initial preliminary investigation conducted by Prosecutor Padilla, were properly admitted and considered by the investigating officer, Prosecutor Macinas who took over during the reinvestigation of the case.  The recommendation of Prosecutor Padilla which initially found probable cause only against Quirante, explicitly reserved the inclusion of Bernardo and Bernardino whose complicity may eventually be established, by qualifying the dismissal of the case as against them for insufficiency of evidence, with the words “without prejudice to the refiling of the same in the event that evidence against them may be unearthed by concerned authorities.”  The reservation made by Prosecutor Padilla for the inclusion of other persons who may have had complicity in the commission of the crime was grounded on reasonable belief that there were other conspirators or masterminds, on the basis of the findings of PGIII Lopez during the investigation by the Bureau, the verbal admissions of Quirante and Ceballos as to their culpability and the alleged masterminds they identified. Hence, the English affidavits submitted during the reinvestigation cannot be considered an afterthought and executed merely upon the influence of certain persons, and Prosecutor Macinas properly admitted those in evidence.

Indeed, the English affidavits contained a reiteration and more detailed account of the clubbing incident earlier given by Quirante, Ceballos andToledoin the Tagalog affidavits. In these affidavits executed on December 2, 1999, as well as in the Tagalog affidavits dated April 14, 1999, they were consistent in pointing to Bernardo and Bernardino as the masterminds with Aprid as accomplice, in the crime charged.  Further, the English affidavits fully explained the circumstances as to why they were not able to give sworn statements during the Bureau investigation and initial preliminary investigation conducted by Prosecutor Padilla, before whom they subscribed their Tagalog affidavits, and the reason for the execution of new affidavits in English which were subscribed before Prosecutor Macinas.  Thus, the pertinent portions of their individual affidavits in English read:

            Affidavit of Roberto Ceballos

x x x x

On January 9^th 1999 at around 10:00 a.m. inmate Constantino Quirante was arrested by theICA (Inmates Custodial Aide) who took him to the Overseer’s Office for interrogation. I was arrested shortly afterwards by theICA and taken to their office also for investigation.  Inmate Constantino Quirante and I were then confined to the Bartolina (disciplinary cell) where we remained for two months and twenty one days (2 mos. 21 days) before being transferred to the Maximum Security Compound.

Shortly after being confined in the disciplinary cell at the Medium Security Compound, inmate Quirante and I were summoned to the Maximum Security Compound for interrogation. We first went to the office of Superintendent Agalo-os and made a joint statement which we did not sign as we were nervous and a lawyer (Ace Aprid’s counsel I think) was present.  We were then taken to the ante-room of the Director’s office where inmate Dr. George Miller was with an Inspector Lopez from the Bureau’s Investigation Section and an [illegible] Inspector Lopez’s questions in Tagalog and Dr. Miller asked why those people from ICAD wished to have him killed. We told him it was because he had informed on them with a report to the Superintendent.  While confined in the Medium Security Compound’s Bartolina we were visited by Giovan Bernardino who told us to keep quiet about what had happened and gave us hamburgers.  He also promised us money but this never materialized.

Later in the beginning of March we were escorted to the Muntinlupa City Prosecutor’s Office for a preliminary hearing.  We were surprised nobody from ICAD was there but Miller said he would not prefer charges against us provided we turned State’s witnesses and deposed to a counter-affidavit exposing the “masterminds”, those in fact who had commissioned the crime. Quirante and I requested the Asst. Prosecutor Padilla for a few days within which to think about submitting a counter-affidavit.  The Asst. Prosecutor Padilla arranged a second preliminary hearing which was on the 11^th March 1999 when we informed him we were still thinking it over.  Afterwards when we were transferred to the Maximum Security Compound we discovered the Bureau of Corrections’ Investigation Section had commenced an inquiry into the management of ICAD.  We were summoned to the Penal Superintendent’s office with inmate Rudy Toledo, when Quirante and I gave a joint affidavit withToledo giving another of his own account. All three of us were then escorted to Assistant Prosecutor Padilla’s office inMuntinlupaCity when we swore in our respective affidavits.  I understand from Dr. Miller these affidavits have been “misplaced” and he is unable to access copies from the Bureau of Corrections.  I therefore agreed to execute another deposition which differs from the joint affidavit sworn earlier in that this is more thorough.

Affidavit of Constantino Quirante

x x x x

On January 9^th, I was urinating in front of building 5 when I was called to the office of Inspector Del Prado.  I changed into my issue uniform at the brigada and proceeded to Inspector Del Prado’s office where I was arrested.  I admitted to the “hit” on Miller and that I was acting on orders received from Boy Bernardo and Giovan Bernardino of ICAD given to the BC 45 gang commander, Rudy Toledo.  I was then confined at the Medium Security Compound’s disciplinary cell.  Roberto Ceballos, who had been arrested and interrogated by theICA joined me in the bartolina.  Giovan Bernardino later visited us in the bartolina bringing hamburgers but no money.  Upon his request I promised to keep quiet about the involvement of inmate Boy Bernardo and himself. He assured me not to worry and that everything would be taken care of.

Round about Jan. 29^th, Roberto Ceballos and I were escorted to the office of Superintendent Agalo-os at the Maximum Security Compound.  We gave Superintendent Agalo-os a statement but did not sign it.  I believe the attorney of Ace Aprid was present so Ceballos and I were nervous of signing.  We were then taken to the ante room of the Director’s office where inmate Miller was present with Inspector Lopez of the Investigation Section and an interpreter.  We were asked a number of questions in Tagalog by Inspector Lopez and Dr. Miller asked why Bernardino and Bernardo wished him to be killed  [illegible]    myself provided we completed a counter-affidavit naming Bernardo and Bernardino as the “masterminds”.  Asst. City Prosecutor Padilla said he would give us some time to consider and he arranged a second preliminary hearing for March 11^th 1999.  At the second meeting we refused to give a counter-affidavit as we had not yet decided and also we were worried.

Thereafter we were transferred to the Maximum Security Compound on the 30^th of March. Approximately one month later we were called to the office of Superintendent Agalo-os with inmate Rudy Toledo.  Ceballos and I prepared a joint affidavit for the Bureau’s Investigation section and Rudy Toledo completed a sep[a]rate affidavit.  These handwritten affidavits were photocopied in Super[intendent] Agalo-os’s office by the Investigation Section Officer and at approximately 4:00 p.m. we were escorted into Assistant City Prosecutor Padilla’s office w[h]ere the affidavits were sworn.

This further affidavit is made at the request of Dr. Miller, as I understand the prior affidavits sworn in front of Attorney Padilla have disappeared and he has not been allowed access to the Bureau of Correction[s’] file copies with the Investigation Section.  This affidavit is more comprehensive and better than our first joint affidavit which was hurriedly completed in manuscript.

Toledo’s affidavit not only dovetailed with the above-mentioned circumstances surrounding the execution of the two sets of affidavits, but also positively identified Bernardo, Bernardino and Aprid as the masterminds and detailed how the crime was planned and carried out on January 6, 1999.  Thus:

x x x x

On or about December 15^th, 1998 I had a meeting with inmate Giovan Bernardino at the Inmates Crusade Against Drugs restaurant in the Medium Security Compound of Camp Sampaguita.  The meeting was arranged by Giovan Bernardino when he spoke to me in my capacity as commander of the BC 45 Gang (Medium Security Compound) requesting that I arrange for some of my members to kill Dr. George Miller of the Inmates Crusade Against Drugs.  He offered the sum of one thousand five hundred pesos (PHP 1,500.00) to be paid after the task was accomplished.  Initially, I refused to accept this mission.  Thereafter, we met several times in ICAD’s premises mainly, at the billiard table.  At each meeting, he endeavoured to persuade me of that which he required earlier, namely to have some of my gang members kill inmate George Miller.  Everytime I refused inmate Bernardino said there was no need to worry he was able to take care of everything afterwards.  In January he contacted me again when I was invited to ICAD’s offices where I remember seeing a computer.  Inmate Rodolfo “Boy” Bernardo, the Chairman of the Inmates Crusade Against Drugs was present with another ICAD member inmate, Ace Aprid, who was the Sigue Sigue Sputnik commander of the Medium Security Compound.  Inmates Bernardo and Aprid were the colleagues of inmate Bernardino and all of them wanted Miller killed as they stated he had submitted a report concerning their activities in ICAD to Superintendent Agalo-os and was responsible for ICAD’s premises being subjected to a search by sniffer dogs at the Superintendent’s direction.  Later I arranged for two of my gang members, inmates Constantino Quirante and Roberto Ceballos, who agreed to do as ICAD’s Bernardo, Bernardino and Aprid had requested.  This was the morning of the 6^th of January and it was agreed that Quirante would be the assassin while Ceballos was to be the “lookout.”  At the meeting it was planned that I would arrange for a distraction to take place simultaneously when Quirante and Ceballos where [sic] killing Miller.  Inmate Miller’s movements to the High School and elsewhere that day were closely monitored and in the afternoon he went to the store of inmate Boy Sabater at the talipapa.  I organized Sinulog Dancing for the BC 45 Gang anniversary at Camp Sampaguita’s Plaza Compound with gang members to divert attention from Quirante’s and C[e]ballo’s assassination of  Miller. When the dancing was finished one of my men informed me that Miller was still alive and had been sent to theNBPHospital from the Camp Sampaguita Infirmary.  Quirante had struck Miller on the head from behind when he left the talipapa but failed to kill him.  Afterwards inmates Giovan Bernardino and Ace Aprid gave Quirante and Ceballos the sum of one hundred pesos (PHP100.00).  They were not paid the promised one thousand five hundred pesos (PHP1,500.00) as their “mission was not completed” in that they failed to kill Miller.

In February I was transferred to the Maximum Security Compound where I met Dr. Miller and informed him that I was prepared to testify regarding the foregoing.  Inmates Quirante and C[e]ballos had been transferred earlier to the Maximum Security Compound after confessing their involvement.  Later the Bureau of Corrections carried out an investigation regarding the affairs of ICAD when Quirante, C[e]ballos and myself where [sic] summoned to the Penal Superintendent Agalo-os’s office.  The Bureau’s Investigation Section then took an affidavit from me and a joint affidavit was completed by Quirante and C[e]ballos.  Thereafter we were escorted to the City Prosecutor[’s] Office inMuntinlupaCity where the affidavits were sworn in before the Assistant Prosecutor Padilla.  Copies were taken for the Investigation Section’s file. I was informed by Dr. Miller that the affidavits in the City Prosecutor[’s] Office have “disappeared” and he had been prevented to date from accessing the Bureau of Correction’s file, hence this further affidavit.

Confronted with these evidence clearly showing prima facie that respondent Bernardino was among those involved in the crime committed against petitioner, Prosecutor Macinas was correct in finding probable cause, upon reinvestigation, to include respondent Bernardino along with Bernardo, Aprid, Quirante, Ceballos and Toledo as those who will be formally charged with attempted murder and recommending the filing of an amended information for this purpose.  In modifying the said amended information by dropping the name of respondent Bernardino, Secretary Perez gravely abused his discretion, his conclusion that the new affidavits were mere afterthought being contrary to the facts on record.  Besides, the Secretary’s act of  absolving respondent Bernardino arbitrarily ignored the consistent and categorical declarations of Quirante, Ceballos and Toledo that respondent Bernardino together with Bernardo and Aprid instigated, planned and ordered the attack on petitioner, harping solely on their belated execution of affidavits even if such delay have been satisfactorily explained.

We need not over-emphasize that 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 respondent is probably guilty thereof and should be held for trial.  In a preliminary investigation, a full and exhaustive presentation of the parties’ evidence is not required, but only such as may engender a well-grounded belief that an offense has been committed and that the accused is probably guilty thereof.  Certainly, it does not involve the determination of whether or not there is evidence beyond reasonable doubt pointing to the guilt of the person.  Only prima facie evidence is required; or that which is, on its face, good and sufficient to establish a given fact, or the group or chain of facts constituting the party’s claim or defense; and which, if not rebutted or contradicted, will remain sufficient.  Therefore, matters of evidence, such as who are the conspirators, are more appropriately presented and heard during the trial.

The term “probable cause” does not mean actual and positive cause nor does it import absolute certainty.  It is merely based on opinion and reasonable belief.  Thus, 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. Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.

While it is this Court’s general policy not to interfere in the conduct of preliminary investigations, leaving the investigating officers sufficient discretion to determine probable cause, courts are nevertheless empowered to substitute their judgment for that of the Secretary of Justice when the same was rendered without or in excess of authority. Where the Secretary of Justice dismissed the complaint against the respondent despite sufficient evidence to support a finding of probable cause, such clearly constitutes grave error, thus warranting a reversal.The CA thus clearly erred in sustaining the ruling of Secretary Perez for the exclusion of respondent Bernardino from the charge of attempted murder despite a prima facie case against him having been established by the evidence on record.

WHEREFORE, the petition for review on certiorari is GRANTED.   The Decision dated June 14, 2004 and Resolution dated September 14, 2004 of the Court of Appeals in CA-G.R. SP No. 72395 are hereby REVERSED and SET ASIDE.  The Secretary of Justice is hereby DIRECTED to REINSTATE or RE-FILE with deliberate dispatch the Amended Information which included Giovan Bernardino as accused in Criminal Case No. 99-452 of the National Capital Judicial Region,RegionalTrialCourtofMuntinlupaCity, Branch 256.

No costs.

SO ORDERED.

A T T E S T A T I O N

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

Rollo, pp. 20-25.  Penned by Associate Justice Romeo A. Brawner (now deceased), with Associate Justices Juan Q. Enriquez, Jr. and Vicente Q. Roxas concurring.

Id.at 27.

CA rollo, pp. 22-23.

Rollo, pp. 66-77.

Id.at 64.

Id.at 58-61.

Id.at  60.

Id.at 60-61.

Id.at 57.

CA rollo, pp. 35-36.

Id.at 36.

Id.at 25-26.

Id.at 27.

Id.at 193-199; DOJ records, pp. 98-102.

DOJ records, pp. 34-41.

Id.at 32-33.

Id.at 30-31.

CA rollo, pp. 37-38.

Id.at 38.

DOJ records, pp. 81-95.

Id.at 111-119.

Supra note 3.

Id.at 23.

DOJ records, pp. 123-126.

Id.at 162.

CA rollo, pp. 12-16.

Rollo, p. 8.

Cruz, Jr. v. People, G.R. No. 110436, June 27, 1994, 233 SCRA 439, 459, cited in Ladlad v. Velasco, G.R. Nos. 172070-72, 172074-76 & 175013, June 1, 2007, 523 SCRA 318, 335.

Metropolitan Bank & Trust Company, G.R. No. 180165, April 7, 2009, 584 SCRA 631, 641, citing Villanueva v. Ople, G.R. No. 165125, November 18, 2005, 475 SCRA 539, 553.

Id., citing Gonzalez v. Hongkong & Shanghai Banking Corporation, G.R. No. 164904, October 19, 2007, 537 SCRA 255, 269.

Insular Life Assurance Company, Limited v. Serrano, G.R. No. 163255, June 22, 2007, 525 SCRA 400, 405-406, citing  Hegerty v. Court of Appeals, 456 Phil. 542 (2003) and First Women’s Credit Corporation v. Perez, G.R. No. 169026, June 15, 2006, 490 SCRA 774, 777.

Tan v. Ballena, G.R. No. 168111, July 4, 2008, 557 SCRA 229, 252, citing Sec. 4, last paragraph, Rule 112, Rules of Court.

Reyes v. Pearlbank Securities, Inc. G.R. No. 171435, July 30, 2008, 560 SCRA 518, 536.

Manebo v. Acosta, G.R. No. 169554, October 28, 2009, 604 SCRA 618, 627, citing Alawiya v. Datumanong, G.R. No. 164170, April 16, 2009, 585 SCRA 267, 281.

Id.at 627-628.

Social Security System v. Department of Justice, G.R. No. 158131, August 8, 2007, 529 SCRA 426, 442, citing Acuña v. Deputy Ombudsman for Luzon, G.R. No. 144692, January 31, 2005, 450 SCRA 232.

DOJ records, pp. 98-99; CA rollo, pp. 195-196.

Id.at 100-101; id. at 193-194.

Id.at 102; id. at 197.

Manebo v. Acosta, supra note 34 at 633, citing Metropolitan Bank & Trust Company v. Gonzales, G.R No. 180165, April 7, 2009, 584 SCRA 631, 642.

Tan v. Ballena, supra note 32 at 253-254, citing People v. CA, 361 Phil. 492 (1999), Ledesma v. CA, 344 Phil. 207, 226 (1997) and Wa-acon v. People, G.R. No. 164575, December 6, 2006, 510 SCRA 429, 439.

United Coconut Planters Bank v. Looyuko, G.R. No. 156337, September 28, 2007, 534 SCRA 322, 336-337, citing Garcia-Rueda v. Pascasio, 344 Phil. 323, 330-331 (1997).

Sy v. Secretary of Justice, G.R. No. 166315, December 14, 2006, 511 SCRA 92, 99, citing Filadams Pharma, Inc. v. Court of Appeals, G.R. No. 132422, March 30, 2004, 426 SCRA 460, 470.

Id.