This is a petition for review of the decision^[1] of the Court of Appeals, dated July 28, 1995, affirming the trial court's order denying petitioners' Motion to Dismiss Civil Case No. Q-93-15691 for alleged failure of private respondents to state in their complaint a cause of action against petitioners and the appellate court's resolution, dated March 1, 1996, denying reconsideration of the same.

Petitioner State Investment Trust, Inc. (SITI), formerly State Investment House, Inc. (SIHI), is an investment house engaged in quasi-banking activities. Petitioner Reynaldo Cometa is its president. Private respondent Honeycomb Builders, Inc. (HBI), on the other hand, is a corporation engaged in the business of developing, constructing, and selling townhouses and condominium units. Private respondent Reynaldo Guevara is president of HBI and chairman of the board of directors of Guevent Industrial Development Corp. (GIDC).

Sometime in 1979, petitioner SITI extended loans in various amounts to GIDC which the latter failed to pay on the dates they became due. For this reason, a rehabilitation plan was agreed upon for GIDC under which it mortgaged several parcels of land to petitioner SITI. Among those mortgaged was a Mandaluyong lot covered by TCT No. 462855 (20510).  However, GIDC again defaulted. Hence, petitioner SITI foreclosed the mortgages and, in the foreclosure sale, acquired the properties as highest bidder.^[2]

Alleging irregularities in the foreclosure of the mortgages and the sale of properties to petitioner SITI, GIDC filed a case entitled "Guevent Industrial Development Corp. et al., plaintiffs v. State Investment House Inc. et al., defendants," in the Regional Trial Court of Pasig. The case was eventually settled through a compromise agreement which became the basis of the trial court's judgment. A dispute later arose concerning the interpretation of the compromise agreement, as respondent HBI offered to purchase from GIDC the lot covered by TCT No. 462855 (20510) and the latter agreed but petitioner SITI (the mortgagee) refused to give its consent to the sale and release its lien on the property.^[3] For this reason, GIDC asked the trial court for a clarification of its decision.^[4]

Subsequently, the trial court directed petitioner SITI to accept the offer of respondent HBI to purchase the property covered by TCT No. 462855 (20510).  Petitioner SITI appealed the order to the Court of Appeals which affirmed the same.  On appeal to this Court, the decision of the Court of Appeals was affirmed.^[5]

Meanwhile, respondent HBI applied to the Housing and Land Use Regulatory Board for a permit to develop the property in question. Its application was granted, on account of which respondent HBI built a condominium on the property called "RSG Condominium Gueventville II."  When respondent HBI applied for a license to sell the condominium units it was required by the HLURB to submit an Affidavit of Undertaking which in effect stated that the mortgagee (SITI) of the property to be developed agrees to release the mortgage on the said property as soon as the full purchase price of the same is paid by the buyer.  Respondent HBI submitted the required affidavit purportedly executed by petitioner Cometa as president of SITI (mortgagee).

Petitioner Cometa denied, however, that he ever executed the affidavit. He asked the National Bureau of Investigation for assistance to determine the authenticity of the signature on the affidavit. The NBI found Cometa's signature on the Affidavit of Undertaking to be a forgery on the basis of which a complaint for falsification of public document was filed against HBI president Guevara.^[6]  However, the Rizal Provincial Prosecutor's Office found no probable cause against private respondent Guevara and accordingly dismissed the complaint in its resolution of September 25, 1989.^[7]

Petitioners appealed the matter to then Secretary of Justice Franklin Drilon who reversed the Provincial Prosecutor's Office and ordered it to file an information against private respondent Guevara for falsification of public document.^[8] Private respondent Guevara moved for a reconsideration of the aforesaid resolution, but his motion was denied.^[9]

An information for Falsification of Public Document was thus filed against private respondent Guevara in the Regional Trial Court of Makati where it was docketed as Criminal Case No. 90-3018.^[10] After the prosecution presented its evidence, Guevara filed a demurrer to evidence which the trial court, presided over by Judge Fernando V. Gorospe, Jr., granted.^[11]

Following the dismissal of the criminal case against him, private respondents Reynaldo S. Guevara and HBI filed a complaint for malicious prosecution against petitioners Cometa and SITI in the Regional Trial Court of Quezon City.^[12]

Petitioners SITI and Cometa filed their respective answers. After the pre-trial of the case, they filed a joint motion to dismiss with alternative motion to drop respondent HBI as a party plaintiff, upon the following grounds:^[13]

1.  The complaint states no cause of action.

2.  Secretary Drilon, Undersecretary Bello and the prosecutor, not impleaded herein, are the real parties in-interest-defendants, which again makes the complaint lack a cause of action.  At the least, the above public official  are indispensable parties, and their non-inclusion renders this court without jurisdiction over the case.

3.  The action seeks to impose a penalty on the right to litigate and for that reason is unconstitutional and against settled public policy.

On May 30, 1994, the trial court, through Judge George Macli-ing, denied petitioners' joint motion for the following reasons:

Acting on the MOTION TO DISMISS With Alternative Motion to Drop Honeycomb Builders, Inc. as Party Plaintiff filed by Defendants Reynaldo T. Cometa and State Investment House, Inc. (SIHI) thru counsel, together with the OPPOSITION filed by Plaintiffs thru counsel, after a thorough perusal of the contents embodied in said pleadings, the Court in the exercise of its sound judicial discretion finds that there are sufficient allegations of cause of action in the Complaint, and in the interest of justice, the Plaintiff thru counsel should be given an opportunity to introduce proof in support of his allegations, which could at best be attained thru a full blown hearing on the merits of the case.  The defense of lack of cause of action, and that defendants are not the real parties in interest, in the considered opinion of this Court, are matters of defense, which will be considered, after the contending parties thru counsel shall have rested their cases, and the case submitted for Decision.

As regards the Alternative Motion to Drop Honeycomb Builders, Inc. as Party Plaintiff, the Complaint shows that Reynaldo Guevara, is the President, Chairman of the Board and Majority Stockholder of HBI, the same will likewise be taken into consideration when proofs will be introduced for or against this particular matter.  At this point in time, let Honeycomb Builders, Inc. remain as party plaintiff.^[14]

Petitioners, in separate motions, asked for a reconsideration but their motions were denied on August 12, 1994.^[15] They then filed a petition for certiorari and prohibition. The Court of Appeals immediately issued a temporary restraining order on September 22, 1994 and, on October 28, 1994, upon petitioners' posting of a P1,000.00 bond, issued a writ of preliminary injunction enjoining the trial court from conducting further proceedings in the case. On July 28, 1995, the Court of Appeals rendered its decision^[16] denying the petition for certiorari and prohibition of petitioners. Petitioners filed a motion for reconsideration but the appellate court denied their motion in a resolution,^[17] dated March 1, 1996.

Hence, this petition. The principal question for decision is whether the complaint filed by private respondents against petitioners in the Regional Trial Court states a cause of action.  First, petitioners maintain it does not as the allegations in the complaint are insufficient and indispensable parties were not impleaded in the case. Secondly, they contend that private respondent HBI should have been dropped as a party plaintiff upon petitioners' motion therefor.

Both contentions are without merit.

First. A complaint for malicious prosecution states a cause of action if it alleges ¾

1.  that the defendant was himself the prosecutor or that at least he instigated the prosecution;

2.  that the prosecution finally terminated in the plaintiff's acquittal;

3.  that in bringing the action the prosecutor acted without probable cause; and

4.  that the prosecutor was actuated by malice, i.e., by improper and sinister motives.^[18]

Thus, the question is: whether the facts pleaded and the substantive law entitle plaintiff to a judgment.^[19] Otherwise stated, can a judgment be rendered upon the facts alleged and deemed admitted, in accordance with the prayer in the complaint?^[20]  To resolve this, the allegations of the complaint must be examined.

Paragraphs 12 to 13^[21] of the complaint allege that SITI and Cometa (petitioners herein) filed a complaint against respondent Guevara which led to the filing by the provincial prosecutor of an information for falsification of public documents against him (Guevara) in the RTC. It is thus alleged that petitioners instigated the prosecution of private respondents.^[22]

Paragraph 17^[23] of the complaint alleges that the trial court granted respondent Guevara's demurrer to the evidence and ordered the dismissal of the criminal case against him as shown in the order of the trial court acquitting respondent Guevara, a copy of which is made part of the complaint.^[24] The second requisite, namely, that the criminal case terminated in plaintiff's (private respondent Guevara) acquittal is thus alleged.

With regard to the requirement of malice, paragraphs 7 to 12 and paragraph 18^[25] of the complaint allege:

1)  that a compromise agreement was entered into between GIDC and SITI in connection with contracts of loan;

2)  that in the course of implementing the agreement, HBI offered to purchase from GIDC one of the mortgaged properties;

3)  that GIDC accepted the offer but despite tender of the purchase price, SITI refused to approve the sale and the release of its mortgage lien on the property;

4)  that a dispute arose between the parties regarding the interpretation and implementation of the compromise agreement;

5)  that GIDC filed a "Motion for Clarification and to Suspend Sales" in the Regional Trial Court (which had approved the Compromise Agreement), while SITI filed a "Motion for Execution" praying for consolidation in its favor of the titles over GIDC's remaining properties;

6)  that the trial court granted GIDC's motion and ordered SITI to accept HBI's offer to purchase one of the mortgaged properties;

7)  that SITI appealed the order to the Court of Appeals and, when it lost, appealed the matter to the Supreme Court which sustained both the appellate court and the lower court;

8)  that while SITI's appeal was still pending, SITI and its president, Cometa, filed a criminal case against Guevara; and

9)  that petitioners filed the aforesaid case with the sole intent of harassing and pressuring Guevara, in his capacity as chairman of GIDC, to give in to their illicit and malicious desire to appropriate the remaining unsold properties of GIDC.

The foregoing statements sufficiently allege malice. These allegations are averments of malice in accordance with Rule 6, §5 of the Rules of Civil Procedure which provides:

Sec. 5.  Fraud, mistake, condition of mind. - In all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity.  Malice, intent, knowledge or other condition of the mind of a person may be averred generally (emphasis added).

Contrary to petitioners' contention, they are not mere conclusions.

As regards the requirement of lack of probable cause, paragraph 18^[26] of the complaint alleges that the criminal case filed had absolutely no basis in fact and in law in light of the factual allegations mentioned earlier and that a reading of the order^[27] of the trial court in the criminal case, a copy of which is annexed to the complaint and made an integral part thereof, will show that the prosecution failed to establish even a prima facie case against Guevara.  Clearly, the complaint alleges that there was no probable cause for respondent Guevara's prosecution.

As held in Far East Marble (Phils.), Inc. v. Court of Appeals,^[28]  a complaint is sufficient if it contains sufficient notice of the cause of action even though the allegations may be vague or indefinite, for, in such case, the recourse of the defendant is to file a motion for a bill of particulars. Pleadings should be liberally construed so that litigants can have ample opportunity to prove their claims and thus prevent a denial of justice due to legal technicalities.

It is nonetheless pointed out that the complaint itself alleges that a preliminary investigation was conducted, that the Secretary of Justice ordered the filing of the information, and that the trial court issued a warrant of arrest against private respondent Guevara. Such allegations in the complaint, petitioners claim, negate the existence of probable cause. Petitioners cite the case of Martinez v. UFC^[29] in which this Court sustained the dismissal of a complaint for malicious prosecution for failure to state a cause of action on the basis of similar allegations in the complaint and the findings of the criminal court in acquitting the plaintiff, which this Court ruled belied the allegations of malice and want of probable cause in the complaint.

The mere allegation in a complaint for malicious prosecution that an information was filed after preliminary investigation and that a warrant of arrest  was thereafter issued does not by itself negate allegations in the same complaint that the prosecution was malicious. All criminal prosecutions are by direction and control of the public prosecutor.^[30] To sustain petitioners' stand that an allegation in a complaint for malicious prosecution that the information in the criminal case was filed after appropriate preliminary investigation negates a contrary allegation that the filing of the case was malicious would result in the dismissal of every action for malicious prosecution.

What was decisive in Martinez was the finding in the criminal case that complainant had acted in good faith in bringing the charge against accused.  For the fact in that case was that accused was acquitted because, although it was true he had disposed of properties, he did not do so prior to or simultaneously with the fraud. There was deceit, but it was not the "efficient cause" of the defraudation. On this basis, this Court found that in bringing the case the complainant in that case acted in good faith.

Said this Court:^[31]

The findings of fact made by the Court in its decision of acquittal bear materially on the question of malice and want of probable cause. The evidence, said the court, showed that when the plaintiff executed the chattel mortgage on the stock inventory in his store on November 29, 1960 he was the owner thereof, and therefore made no false representation when he executed said mortgage to secure the loan of P58,381.13 he obtained from the defendant; but that "some weeks or months after November 29, 1960, with intent to defraud the complainant United Finance Corporation, the accused succeeded in disposing of the whole or a part of said store and stock merchandise in favor of a third party, to the complainant's prejudice..."  The basis of the acquittal, according to the court, was that "deceit, to constitute estafa, should be the efficient cause of the defraudation and as such should either be prior to, or simultaneous with the act of fraud," citing People vs. Fortune, 73 Phil. 407.

The foregoing facts, alleged in the complaint for malicious prosecution either directly or by reference to its annexes, show that in filing the criminal charge the defendant was not actuated by malice, nor was there want of probable cause.  It had been the victim of deceit committed by the plaintiff, and whether or not such deceit constituted estafa was a legal question properly submitted first to the City Fiscal and then to the court after the necessary preliminary investigation was conducted.  The very fact that the plaintiff's acquittal was based on reasonable doubt as to his guilt demonstrates that the defendant was justified in submitting its grievances to the said authorities for ruling and possible redress.

In contrast, the decision of the criminal court in the present case indicates that there was not even prima facie evidence to prove the alleged guilt of the accused.  Consequently, a trial was in fact unnecessary and the criminal court dismissed the case against private respondent Guevara on the basis of a demurrer to evidence.

A court, dealing with a motion to dismiss an action for malicious prosecution, has only to determine whether the allegations of the complaint, assuming them to be true, entitle the plaintiff to a judgment.  The trial court is not to inquire into the truth of the allegations.  Indeed, it cannot do so without depriving the plaintiff an opportunity to be heard on his allegations.^[32]

The case of Martinez is exceptional.  This is not the first time we are clarifying its scope. In Ventura v. Bernabe,^[33] we stated:

It is true that in that case of Martinez, this Court sustained the order of dismissal of the complaint for malicious prosecution partly because a preliminary investigation had been conducted by the fiscal who had found probable cause for the filing of an estafa case against Martinez, but the main consideration for such action of this Court was the fact that from the recitals in the judgment acquitting the plaintiff, it appeared that although the court found that said plaintiff had been guilty of deceit, the issue resolved by the court was that in law such deceit did not constitute estafa, a matter which had been passed upon by the fiscal in a different way, naturally, without any fault on the part of the defendant.  In other words, in Martinez case, the findings of the criminal court in the decision of acquittal negatived the imputation of malice on the part of the defendant in charging plaintiff with estafa before the fiscal.

. . .

For the rest, it might just as well be clarified here, lest some statements in Martinez and Buenaventura relative to the materiality of the fiscal's having filed an information on the question of malice of the accuser may be misunderstood, that such participation of the fiscal is not decisive and that malice may still be shown, the holding of a preliminary investigation and the finding of probable cause by the fiscal notwithstanding.  The same may be said of cases where preliminary investigations are conducted by judges.  The determination of the issue of malice must always be made to rest on all the attendant circumstances, including the possibility of the fiscal or judge being somehow misled by the accuser's evidence.  No doubt, the very purpose of preliminary investigations is to avoid baseless and malicious prosecutions, still, whether or not in a particular case such an objective has been duly pursued is a matter of proof. . . .

It is hardly necessary to say that to allow the present action to proceed is not to impose a penalty on the right to litigate. For trial is still to be conducted and liability is not automatic. It is only to acknowledge the truism that

Just as it is bad to encourage the indiscriminate filing of actions for damages by accused persons after they have been acquitted, whether correctly or incorrectly, a blanket clearance of all who may be minded to charge others with offenses, fancied or otherwise, without any chance of the aggrieved parties in the appropriate cases of false accusation to obtain relief, is in Our Opinion short of being good law.^[34]

Second. Petitioners contend that the Secretary and the Undersecretary of the Department of Justice and the Assistant Provincial Prosecutor should have been included in the case for malicious prosecution because it was they who found probable cause against private respondents and under the law the prosecution of criminal actions is vested in the public prosecutor.  According to petitioners, they did not conduct the preliminary investigation or order the filing of an information and their participation was limited to initiating the investigation in the NBI and testifying.^[35]  In support of their contention, they cite the ruling in Lagman v. Intermediate Appellate Court^[36] which expounded on the ruling in Buenaventura v. Sto. Domingo:^[37]

The mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution for generally, it is the Government or representative of the State that takes charge of the prosecution of the offense.  There must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person for if the rule were otherwise, every acquitted person can turn against the complainant in a civil action for damages.

There is no merit in this contention. The issue in those cases was not whether the complaint stated a cause of action against defendants who were complainants in the  criminal cases which led to the filing of civil cases for damages but whether they were liable to the plaintiffs. The Court merely ruled in those cases that the complainant in the criminal case is not necessarily liable simply because he initiated the criminal case which eventually  was dismissed.  It is noteworthy that, in the case at bar, private respondents do not only allege that petitioners initiated the filing of the criminal case against them but that because of the evidence they (petitioners) presented, the Department of Justice could have been induced to order the filing of a criminal case in court.^[38]

Third. It is contended that HBI is not a real-party-in-interest, whatever interest it may have being purely speculative.^[39] On this point, we think the Court of Appeals correctly ruled:^[40]

Section  11 of Rule 3 of the Rules of Court provides:

Misjoinder and non-joinder of parties.  Misjoinder of parties is not a ground for dismissal of an action. Parties may be dropped or added by order of the court or on motion of any party or on its own initiative at any stage of the action and on such terms as are just.

. . . .

Given (1) the foregoing rule, (2), the fact that Guevara, in his capacity as president of HBI, filed HBI's application to sell at the HLURB and it was in the same capacity and in connection with the application that he was criminally charged, and (3) the allegations in the complaint including that stating that by the filing of the criminal case against Guevara, "the application of HBI with the HLURB for a regular  license  to sell the condominium units . . . had been delayed," resulting in the corresponding delay in the sale thereof on account of which "plaintiffs incurred over runs in development, marketing and financial costs and charges, resulting in actual damages," the deferral by public respondent of petitioners' motion to drop HBI as party plaintiff cannot be said to have been attended with grave abuse of discretion.  It bears emphasis that the phraseology of Section 11 of Rule 3 is that "parties may be dropped . . .  at any stage of the action."

It is true that a criminal case can only be filed against the officers of a corporation and not against the corporation itself.^[41]  It does not follow from this, however, that the corporation cannot be a real-party-in-interest for the purpose of bringing a civil action for malicious prosecution.

Lastly, the statement of the judge in the assailed order of May 30, 1994 that "[t]he defense of lack of cause of action and that the defendants are not the real parties in interest .... are matters of defense" was correctly held by the appellate court as mere dictum, said judge having earlier stated in the same order that "there are sufficient allegations of causes of action in the Complaint."

WHEREFORE, the decision of the Court of Appeals  is AFFIRMED.

SO ORDERED.

Bellosillo (Chairman), Puno, Quisumbing and Buena, JJ., concur.

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^[1] Per Justice Conchita Carpio Morales, concurred in by Justice Cancio C. Garcia and Justice Romeo J. Callejo, Sr.

^[2] Rollo, pp. 122-123.

^[3] Id., p. 68.

^[4] Ibid.

^[5] Ibid.

^[6] Rollo, p. 69.

^[7] Ibid.

^[8] Ibid.

^[9] Rollo, pp. 69-70.

^[10] Id., p. 70.

^[11] Ibid.

^[12] Ibid.

^[13] Rollo, pp. 70-71.

^[14] Id., pp. 71-72.

^[15] Id., p. 72.

^[16] Id., pp. 67-79.

^[17] Id., p. 81.

^[18] Madera v. Lopez, 102 SCRA 700 (1981).

^[19] Del Bros Hotel Corporation v. Court of Appeals, 210 SCRA 33 (1992).

^[20] De Dios v. Bristol Laboratories (Phils.), Inc., 55 SCRA 349 (1974).

^[21] Rollo, pp. 99-100.

^[22] Id., p. 100.

^[23] Id., p. 101.

^[24] Id., pp. 90-95, 101.

^[25] Id., pp. 97-101.

^[26] Id., p. 101.

^[27] Id., pp. 90-95.

^[28] 225 SCRA 249 (1993).

^[29] 34 SCRA 524 (1970).

^[30]  Rule 110, §5.

^[31] 34 SCRA 524, 528-529 (1970).

^[32] Palma v. Graciano, 99 Phil. 72 (1956).

^[33] 38 SCRA 587 (1971).

^[34] Id. at 600.

^[35] Rollo, pp. 49-53.

^[36] 166 SCRA 734, 740 (1988).

^[37] 103 Phil. 239 (1958).

^[38] Rollo, p. 77.

^[39] Id., pp. 57-61.

^[40] Id., pp. 78-79.

^[41] Francisco, Criminal Procedure 15-16 (1994).