GALVEZ VS. COURT OF APPEALS
FACTS:
In 1999, Radio Marine Network (Smartnet) Inc. (RMSI) claiming to do business under the name Smartnet Philippines[1] and/or Smartnet Philippines, Inc. (SPI),[2] applied for an Omnibus Credit Line for various credit facilities with Asia United Bank (AUB). To induce AUB to extend the Omnibus Credit Line, RMSI, through its directors and officers, presented its Articles of Incorporation with its 400-peso million capitalization and its congressional telecom franchise. RMSI was represented by the following officers and directors occupying the following positions: Gilbert Guy - Exec. V-Pres./Director; Philip Leung - Managing Director
Katherine Guy - Treasurer; Rafael Galvez - Executive Officer; and Eugenio Galvez, Jr. - Chief Financial Officer/Comptroller.
Satisfied with the credit worthiness of RMSI, AUB granted it a P250 million Omnibus Credit Line, under the name of Smartnet Philippines, RMSIs Division. On 1 February 2000, the credit line was increased to P452 million pesos after a third-party real estate mortgage by Goodland Company, Inc.,[3] an affiliate of Guy Group of Companies, in favor of Smartnet Philippines,[4] was offered to the bank. Simultaneous to the increase of the Omibus Credit Line, RMSI submitted a proof of authority to open the Omnibus Credit Line and peso and dollar accounts in the name of Smartnet Philippines, Inc., which Gilbert Guy, et al. represented as a division of RMSI,[5] as evidenced by the letterhead used in its formal correspondences with the bank and the financial audit made by SGV & Co., an independent accounting firm. Attached to this authority was the Amended Articles of Incorporation of RMSI, doing business under the name of Smartnet Philippines, and the Secretarys Certificate of SPI authorizing its directors, Gilbert Guy and Philip Leung to transact with AUB.[6] Prior to this major transaction, however, and, unknown to AUB, while RMSI was doing business under the name of Smartnet Philippines, and that there was a division under the name Smartnet Philippines, Gilbert Guy, et al. formed a subsidiary corporation, the SPI with a paid-up capital of only P62,500.00.
Believing that SPI is the same as Smartnet Philippines - the division of RMSI - AUB granted to it, among others, Irrevocable Letter of Credit No. 990361 in the total sum of $29,300.00 in favor of Rohde & Schwarz Support Centre Asia Ptd. Ltd., which is the subject of these consolidated petitions. To cover the liability of this Irrevocable Letter of Credit, Gilbert Guy executed Promissory Note No. 010445 in behalf of SPI in favor of AUB. This promissory note was renewed twice, once, in the name of SPI (Promissory Note No. 011686), and last, in the name of Smartnet Philippines under Promissory Note No. 136131, bolstering AUBs belief that RMSIs directors and officers consistently treated this letter of credit, among others, as obligations of RMSI.
When RMSIs obligations remained unpaid, AUB sent letters demanding payments. RMSI denied liability contending that the transaction was incurred solely by SPI, a corporation which belongs to the Guy Group of Companies, but which has a separate and distinct personality from RMSI. RMSI further claimed that while Smartnet Philippines is an RMSI division, SPI, is a subsidiary of RMSI, and hence, is a separate entity.
Aggrieved, AUB filed a case of syndicated estafa under Article 315 (2) (a) of the Revised Penal Code in relation to Section 1 of Presidential Decree (PD) No. 1689 against the interlocking directors of RMSI and SPI, namely, Gilbert G. Guy, Rafael H. Galvez, Philip Leung, Katherine L. Guy, and Eugenio H. Galvez, Jr., before the Office of the City Prosecutor of Pasig City.
AUB alleged that the directors of RMSI deceived it into believing that SPI was a division of RMSI, only to insist on its separate juridical personality later on to escape from its liabilities with AUB. AUB contended that had it not been for the fraudulent scheme employed by Gilbert Guy, et al., AUB would not have parted with its money, which, including the controversy subject of this petition, amounted to hundreds of millions of pesos.
The Prosecutor found probable cause against Gilbert Guy, et al. for Estafa under Article 315 of the Revised Penal Code only. Both parties ow question the finding of probable.
ISSUE:
What is the nature of the court’s determination of probable cause?
HELD:
It is worth emphasizing that under Section 1, Rule 112 of the Revised Rules on Criminal Procedure, the function of a preliminary investigation is to determine whether there is a sufficient ground to engender a well-grounded belief that a crime xxx has been committed and that the respondent is probably guilty thereof and should be held for trial.[30]
A finding of probable cause needs only to rest on evidence showing that more likely than not, the accused committed the crime.[31] Preliminary investigation is not the occasion for the full and exhaustive display of the parties' evidence.[32] It is for the presentation of such evidence only as may engender a well-founded belief that an offense has been committed and that the accused is probably guilty thereof.[33] The validity and merits of a party's accusation or defense, as well as admissibility of testimonies and evidence, are better ventilated during the trial proper.[34]
We, therefore, sustain the findings of the CA and the City Prosecutor’s Resolution finding that probable cause exists against Gilbert Guy, et al. for the crime of estafa under Article 315 (2)(a) of the Revised Penal Code and that Gilbert Guy, et al. are probably guilty thereof and should be held for trial. AUBs voluminous documents submitted to this Court overcome this difficulty and established that there is sufficient ground to engender a well-grounded belief that a crime has been committed and that the respondents are probably guilty thereof and should be held for trial.
Lest it be misunderstood, we reiterate that this Courts finding of probable cause is grounded on fraud committed through deceit which surrounded Gilbert Guy, et al.transaction with AUB, thus, violating Article 315 (2) (a) of the Revised Penal Code; it is neither their act of borrowing money and not paying them, nor their denial thereof, but their very act of deceiving AUB in order for the latter to part with its money. As early as the Penal Code of Spain, which was enforced in the Philippines as early as 1887 until it was replaced by the Revised Penal Code in 1932, the act of fraud through false pretenses or similar deceit was already being punished. Article 335 of the Penal Code of Spain punished a person who defrauded another by falsely pretending to possess any power, influence, qualification, property, credit, agency or business, or by means of similar deceit.[35]
Lest it be misunderstood, we reiterate that this Courts finding of probable cause is grounded on fraud committed through deceit which surrounded Gilbert Guy, et al.transaction with AUB, thus, violating Article 315 (2) (a) of the Revised Penal Code; it is neither their act of borrowing money and not paying them, nor their denial thereof, but their very act of deceiving AUB in order for the latter to part with its money. As early as the Penal Code of Spain, which was enforced in the Philippines as early as 1887 until it was replaced by the Revised Penal Code in 1932, the act of fraud through false pretenses or similar deceit was already being punished. Article 335 of the Penal Code of Spain punished a person who defrauded another by falsely pretending to possess any power, influence, qualification, property, credit, agency or business, or by means of similar deceit.[35]
