The Case

This is a petition^[1] for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 10 February 2004 Decision^[2] and 27 July 2004 Resolution^[3] of the Court of Appeals in CA-G.R. SP No. 78004. The Court of Appeals set aside the 26 March 2003 Order^[4] of the Regional Trial Court (RTC), National Capital Judicial Region, Branch 58, Makati City, in Criminal Case Nos. 02-344-45.

The Facts

Midas Diversified Export Corporation (MDEC) obtained a $1,400,000 loan from KBC Bank N.V. (KBC Bank). KBC Bank is a Belgian corporation licensed to do business in the Philippines. On 12 August 1997, Samuel U. Lee (Lee), assistant treasurer and director of MDEC, executed a promissory note in favor of KBC Bank and a deed of assignment transferring all of MDEC's rights over Confirmed Purchase Order No. MTC-548 to KBC Bank. Confirmed Purchase Order No. MTC-548 was allegedly dated 15 July 1997, issued by Otto Versand, a company based in Germany, and covered a shipment of girl's basic denim jeans amounting to $1,863,050.

MDEC obtained another loan, amounting to $65,000, from KBC Bank. On 14 November 1997, Maybelle L. Lim (Lim), treasurer and assistant secretary of MDEC, executed a promissory note in favor of KBC Bank and a deed of assignment transferring all of MDEC's rights over Confirmed Purchase Order No. WC-128 to KBC Bank. Confirmed Purchase Order No. WC-128 was allegedly dated 1 October 1997, issued by Otto Versand, and covered a shipment of boy's bermuda jeans amounting to $841,500.

On 23 December 1997, Lim renewed the 12 August 1997 promissory note and issued a notice of renewal and drawdown certificate to KBC Bank. On 29 December 1997, Lim executed an amended deed of assignment transferring all of MDEC's rights over Confirmed Purchase Order No. MTC-548 to KBC Bank.

MDEC was considered in default in paying the $65,000 loan on 30 January 1998. Under a facility agreement between KBC Bank and MDEC, any default in payment of any obligation under the agreement would render MDEC in default with regard to the $65,000 loan -- MDEC defaulted in paying two other obligations under the agreement. MDEC also failed to pay the $1,400,000 loan when it became due on 9 February 1998.

On 17 March 1998, KBC Bank sent a letter to Otto Versand verifying the validity of Confirmed Purchase Order Nos. MTC-548 and WC-128. On 19 March 1998, Otto Versand sent a facsimile message to KBC Bank stating that (1) it did not issue the purchase orders, (2) it did not order or receive the items covered by the purchase orders, and (3) it would not pay MDEC any amount.

In a complaint-affidavit^[5] dated 21 April 1998, Liza M. Pajarillo, manager of the corporate division of KBC Bank, charged Lee and Lim of estafa. In his Resolution^[6] dated 27 November 2001, State Prosecutor Josefino A. Subia (State Prosecutor Subia) found the existence of probable cause and recommended that two counts of estafa be filed against Lee and Lim. State Prosecutor Subia stated that:

After a careful evaluation of the evidence presented by the Bank, as well as of the respondents, we find the existence of a probable cause to indict respondents Samuel Lee and Maybelle Lee Lim.

It is an established fact that the confirmed purchase order nos. MTC-548 and WC-128 presented with the Bank by the Midas thru respondents Samuel Lee and Maybelle Lee Lim were false and spurious, having been unequivocably repudiated and/or disowned by Otto Versand, Germany, the foreign buyer who allegedly issued the same, as evidenced by a telefax message sent to the Bank by Otto Versand. Evidently, respondent Samuel Lee signed the following documents, to wit: the "conforme" portion of the US$2.0 million short-term trade facility, the promissory note and the corresponding deed of assignment both dated August 12, 1997, covering the confirmed purchase order no[.] MTC-548, while respondent Maybelle Lee Lim signed in the promissory note and the corresponding deed of assignment both dated Nov. 14, 1997, the renewed promissory note and the notice of renewal and drawdown certificate both dated Dec. 23, 1997. Respondents Samuel Lee and Maybelle Lee Lim, thus cannot escape indictment, aside from signing those relevant loan documents, as they also clearly helped one another in fraudulently representing to the Bank that indeed said confirmed two (2) purchased [sic] orders does [sic] exists [sic] and that Midas have [sic] their [sic] rights, titles and interests thereto. With their fraudulent representation, they were able to entice or induce the Bank to extend [to] them the loan of USD$1.4 million and USD$ 65,000 under the short-term trade facility previously granted to them.^[7]

Accordingly, two informations for estafa against Lee and Lim were filed with the RTC. After finding probable cause, Judge Winlove M. Dumayas (Judge Dumayas) of the RTC issued warrants of arrest against Lee and Lim.

Lee and Lim filed a petition^[8] for review dated 26 April 2002 with the Department of Justice. Lee and Lim challenged State Prosecutor Subia's 27 November 2001 Resolution and 17 April 2002 Order denying their motion for reconsideration. They claimed that:

1. THE RESOLUTIONS OF 27 NOVEMBER 2001 AND 17 APRIL 2002 MERELY RELIED ON HEARSAY EVIDENCE WHICH CANNOT BE THE BASIS FOR A FINDING OF A PROBABLE CAUSE.
   
   
2. THE ASSAILED RESOLUTIONS WERE ISSUED BASED ONLY ON THE UNCORROBORATED ALLEGATIONS OF PAJARILLO THAT LEE AND LIM MADE FRAUDULENT REPRESENTATIONS TO [KBC BANK].
   
   
3. THE ASSAILED RESOLUTIONS ERRED IN HOLDING LEE AND LIM TO BE CRIMINALLY LIABLE DESPITE THE TWO LOANS CREATING MERELY CIVIL LIABILITY ON THE PART OF MIDAS.^[9]

In his Resolution^[10] dated 12 July 2002, Secretary Hernando B. Perez (Secretary Perez) directed the withdrawal of the informations filed against Lee and Lim. Secretary Perez held that the facsimile message constituted hearsay evidence:

The twin charges of estafa are primarily anchored on respondents' alleged fraudulent representations to [KBC Bank] that the two purchase orders were fake or sham. To prove this point, Ms. Pajarillo of [KBC Bank] claims that she received a fax message from a representative of Otto Versand, stating that the latter company did not issue the purchase orders mentioned. There was no sworn statement from a responsible officer of Otto Versand presented to attest to the allegation that the subject purchase orders were fake. Since Ms. Pajarillo did not have personal knowledge of the fact that the subject purchase orders were in fact fake, her testimony cannot be the basis for finding probable cause against respondents. Ms. Pajarillo can testify only to those facts that she knew of her personal knowledge. Admittedly, she derived knowledge of the supposed spurious character of the purchase orders from a mere fax copy of a message that [KBC Bank] received from a certain representative of Otto Versand in Germany, someone who she did not even know personally. Unfortunately, this fax copy is hearsay evidence and therefore, inadmissible to prove the truth of what it contains (Pastor vs. Gaspar, 2 Phil 592).^[11] (Emphasis supplied)

KBC Bank filed a motion^[12] for reconsideration dated 2 August 2002 with the Department of Justice.

Lee and Lim had not been arraigned. In a motion^[13] dated 18 October 2002 and filed with the RTC, Assistant City Prosecutor Nora C. Sibucao (Assistant City Prosecutor Sibucao) prayed for the withdrawal of the informations filed against Lee and Lim. Assistant City Prosecutor Sibucao stated that:

The Prosecution, through the undersigned Trial Prosecutor, unto the Honorable Court, most respectfully moves and prays for the withdrawal of Information filed in the above-entitled cases in view of the resolution of the Department of Justice promulgated on July 12, 2002 reversing the resolution of the City Prosecutor of Makati City.^[14]

The RTC's Ruling

In his one-page Order^[15] dated 26 March 2003, Judge Dumayas granted Assistant City Prosecutor Sibucao's motion to withdraw the informations against Lee and Lim. Judge Dumayas held that:

This Court, after an in-depth scrutiny of the arguments raised by the prosecution and private complainant, finds the contentions of the prosecution to be sufficient and meritorious.

Accordingly, the Motion to Withdraw Information filed by the Prosecution is hereby granted and the two (2) informations for the crime of Estafa penalized under par. 2 (a) of the Revised Penal Code are hereby withdrawn from the docket of this court.^[16]

KBC Bank filed with the Court a petition^[17] for review on certiorari under Rule 45 of the Rules of Court. KBC Bank claimed that:

I.

The court a quo committed reversible error in issuing the questioned Order without specifying its legal basis.

II.

The court a quo committed reversible error in prematurely acting upon the Makati Prosecutor's Motion to Withdraw of Information.

III.

The court a quo committed reversible error in finding that no probable cause exists to hold respondents for trial for estafa under Article 315, par. 2(a) and in granting the Makati Prosecutor's Motion to Withdraw Information.^[18]

In a Resolution^[19] dated 23 June 2003, the Court referred the petition to the Court of Appeals pursuant to Section 6,^[20] Rule 56 of the Rules of Court. In his Resolution^[21] dated 19 November 2003, Secretary Simeon A. Datumanong denied KBC Bank's 2 August 2002 motion for reconsideration.

The Court of Appeals' Ruling

In its 10 February 2004 Decision, the Court of Appeals set aside Judge Dumayas' 26 March 2003 Order. The Court of Appeals held that:

It has long been established that the filing of a complaint or information in Court initiates a criminal action. The Court thereby acquires jurisdiction over the case, which is the authority to hear and determine the case. When after the filing of the complaint or information, a warrant for the arrest of the accused is issued by the trial court and the accused either voluntarily submitted himself to the Court or was duly arrested, the Court thereby acquired jurisdiction over the person of the accused.

x x x x

The trial judge practically concurred with the findings of the Secretary of Justice that the "fax copy is hearsay evidence and therefore, inadmissible to prove the truth that it contains", contrary to the well-reasoned findings of the investigating prosecutor. It is emphasized that a preliminary investigation is not the occasion for the full and exhaustive display of the parties' evidence; it is for the presentation of such evidence only as may engender a well-grounded belief that an offense has been committed and that the accused is probably guilty thereof.

The issue of admissibility or inadmissibility of evidence is a matter of defense that is best ventilated in a full-blown trial; preliminary investigation is not the occasion for the exhaustive display of presentation of evidence.^[22]

Hence, the present petition.

The Issues

In their petition, Lee and Lim raised as issues that:

I

THE COURT EXCEEDED ITS AUTHORITY IN PASSING UPON THE ISSUE OF WHETHER OR NOT THERE WAS PRIMA FACIE EVIDENCE OF ESTAFA AGAINST THE PETITIONERS, AN ISSUE THAT WAS PENDING BEFORE THE SECRETARY OF JUSTICE

x x x x

II

QUESTION IS NOT ONE OF ADMISSIBILITY OF EVIDENCE BUT THE NEED IN PRELIMINARY INVESTIGATION FOR EVIDENCE OF VALUE TO ESTABLISH PROBABLE CAUSE

x x x x

III

RESPONDENT COURT DID NOT PREMATURELY ALLOW THE WITHDRAWAL OF THE INFORMATIONS

x x x x

IV

THE TRIAL COURT DID NOT ABDICATE ITS DUTY TO DETERMINE THE SUFFICIENCY OF THE PROSECUTION'S REASON FOR WITHDRAWING THE INFORMATIONS.^[23]

The Court's Ruling

The petition is unmeritorious.

Lee and Lim claim that the Court of Appeals erred when it reviewed the findings of Secretary Perez. They stated that:

[T]he Court of Appeals cannot indirectly review the findings of the Secretary under the pretext of correcting the actuation of the trial court. x x x

[T]he only ruling before the Court of Appeals is the ruling of the trial court x x x.

But the Court of Appeals ignored the fact that the case before it is not one for the review of the final order of the Secretary of Justice, acting as a quasi-judicial officer, which is governed by Rule 43 of the Rules of Court. The actual case filed with it was rather a petition for review on certiorari of the dismissal order of the trial court under Rule 45.^[24]

The Court is not impressed. The Court of Appeals reviewed Judge Dumayas' 26 March 2003 Order, not Secretary Perez's 12 July 2002 Resolution. The Court of Appeals held that Judge Dumayas erred when he failed to make his own evaluation and merely relied on Secretary Perez's recommendation that there was no probable cause. The Court of Appeals stated that:

In a more recent case, the Supreme Court ruled that:

"A judge acts with grave abuse of discretion when he grants a prosecutor's motion to dismiss the criminal charges against an accused on the basis solely of the recommendation of the Secretary of Justice -- his reliance on the prosecutor's averment that the Secretary of Justice had recommended the dismissal of the case against the petitioner is an abdication of the trial court's duty and jurisdiction to determine a prima facie case in blatant violation of the Court's pronouncement in Crespo vs. Mogul."

When the trial judge issued its Order of February 14, 2002 directing the issuance of warrants of arrest against the respondents, he clearly found probable cause to sustain the filing of criminal complaints against the latter. The issuance of a warrant of arrest is not a ministerial function of the court -- it calls for the exercise of judicial discretion on the part of the issuing magistrate.

If the trial court judge finds it appropriate to dismiss the Informations, the same should be based upon his own personal individual conviction that there is no case against the accused/respondents. To rely solely on the recommendation of the Secretary of Justice, to say the least, is an abdication of the judge[']s duty and jurisdiction to determine a prima facie case. What was imperatively required was the trial judge's own assessment of just evidence, it not being sufficient for the valid and proper exercise of judicial discretion merely to accept the prosecution's word for its supposed insufficiency.^[25]

Lee and Lim claim that the Court of Appeals erred when it ruled that the admissibility of the facsimile message is a matter best ventilated in a full-blown trial. They stated that:

At any rate, the Court of Appeals also said in its decision that the issue of admissibility of evidence assailed as hearsay is a matter of defense to be ventilated in a full blown trial. It held that preliminary investigation is not the occasion for exhaustive display of evidence and the issue of admissibility or inadmissibility of evidence is a matter of defense to be ventilated at the trial.

But the Secretary of Justice's rejection of the "fax copy" of Otto Versand's letter as hearsay evidence merely affirmed petitioners' right to due process in a preliminary investigation. x x x

x x x x

Ms. Pajarillo authenticated it by stating under oath that she received it. The cause for its rejection is the fact that its contents are purely hearsay since Ms. Pajarillo who testified about them had no personal knowledge of the fact that the purchase orders were false. The author of the fax message did not swear under oath to the truth of the statement in the document contrary to what section 3 (e) of Rule 112 mandates.

The Office of the Solicitor General agreed with the petitioners. In the comment dated October 28, 2003 that it filed with the Court of Appeals, it said:

x x x x

20. In this case, the Secretary of Justice's realistic judicial appraisal of the merits of petitioner's complaint-affidavit show that its evidence of estafa is insufficient for lack of proof of the requisite element of deceit. So much so that if the case were tried, the trial court would be bound to order an acquittal.^[26]

The Court is not impressed. Whether the facsimile message is admissible in evidence and whether the element of deceit in the crime of estafa is present are matters best ventilated in a full-blown trial, not in the preliminary investigation. In Andres v. Justice Secretary Cuevas,^[27] the Court held that:

[A preliminary investigation] is not the occasion for the full and exhaustive display of [the prosecution's] evidence. The presence or absence of the elements of the crime is evidentiary in nature and is a matter of defense that may be passed upon after a full-blown trial on the merits.

In fine, the validity and merits of a party's defense or accusation, as well as the admissibility of testimonies and evidence, are better ventilated during trial proper than at the preliminary investigation level.^[28] (Emphasis supplied)

Lee and Lim claim that the Court of Appeals erred when it ruled that Judge Dumayas failed to make his own evaluation and merely relied on Secretary Perez's recommendation that there was no probable cause. They stated that:

Contrary to the Court of Appeals['] ruling, the trial court made an effort to evaluate the merit of the prosecution's motion to withdraw the informations. It evaluated the merits of both the prosecution's motion and respondent bank's opposition to the motion. x x x

Clearly, it cannot be said that the trial court abandoned its responsibility of making an independent assessment of the sufficiency of the prosecution motion [sic]. Indeed, it scrutinized the arguments of respondent bank just as it did the arguments of the prosecution in order to determine for itself whether or not the withdrawal of the informations was warranted.^[29]

The Court is not impressed. Judge Dumayas failed to make his own evaluation in granting the motion to withdraw the informations. Judge Dumayas' 26 March 2003 Order states in full:

This Court, after an in-depth scrutiny of the arguments raised by the prosecution and private complainant, finds the contentions of the prosecution to be sufficient and meritorious.

Accordingly, the Motion to Withdraw Information filed by the Prosecution is hereby granted and the two (2) informations for the crime of Estafa penalized under par. 2 (a) of the Revised Penal Code are hereby withdrawn from the docket of this court.

In Co v. Lim,^[30] the Court held that:

Once a case is filed with the court, any disposition of it rests on the sound discretion of the court. The trial court is not bound to adopt the resolution of the Secretary of Justice, since it is mandated to independently evaluate or assess the merits of the case. Reliance on the resolution of the Secretary of Justice alone would be an abdication of its duty and jurisdiction to determine a prima facie case. The trial court may make an independent assessment of the merits of the case based on the affidavits and counter-affidavits, documents, or evidence appended to the Information; the records of the public prosecutor, which the court may order the latter to produce before the court; or any evidence already adduced before the court by the accused at the time the motion is filed by the public prosecutor.

x x x x

[T]he trial judge did not positively state that the evidence presented against the respondents was insufficient for a prima facie case, nor did the aforequoted Order include a discussion of the merits of the case based on an evaluation or assessment of the evidence on record. In other words, the dismissal of the case was based upon considerations other than the judge's own personal individual conviction that there was no case against the respondents. Thus, the trial judge improperly relinquished the discretion that he was bound to exercise, and the Orders dated 11 February 2004 and 29 June 2004 are invalid for having been issued in grave abuse of discretion. (Emphasis supplied)

In Baltazar v. Chua,^[31] the Court held that:

Considering that the trial court has the power and duty to look into the propriety of the prosecution's motion to dismiss, with much more reason is it for the trial court to evaluate and to make its own appreciation and conclusion, whether the modification of the charges and the dropping of one of the accused in the information, as recommended by the Justice Secretary, is substantiated by evidence. This should be the state of affairs, since the disposition of the case -- such as its continuation or dismissal or exclusion of an accused -- is reposed in the sound discretion of the trial court.

In the case under consideration, the City Prosecutor indicted Jaime and Jovito for the crimes of murder and frustrated murder. However, upon review, the Secretary of Justice downgraded the charges to homicide and frustrated homicide. The Secretary also dropped Jaime from the charges. This resolution prompted the City Prosecutor to file a Manifestation and Motion for the Withdrawal of the Informations for Murder and Frustrated Murder and for the Admission of New Informations for Homicide and Frustrated Homicide against Jovito only, which was granted by Judge Cruz in his Order dated 18 November 1997. Judge Cruz, however, failed to make an independent assessment of the merits of the cases and the evidence on record or in the possession of the public prosecutor. In granting the motion of the public prosecutor to withdraw the Informations, the trial court never made any assessment whether the conclusions arrived at by the Secretary of Justice was supported by evidence. It did not even take a look at the bases on which the Justice Secretary downgraded the charges against Jovito and excluded Jaime therefrom.^[32] (Emphasis supplied)

In Ark Travel Express v. The Presiding Judge of Makati,^[33] the Court held that:

It is settled that when confronted with a motion to withdraw an Information on the ground of lack of probable cause based on a resolution of the Secretary of the Department of Justice, the bounden duty of the trial court is to make an independent assessment of the merits of such motion. Having acquired jurisdiction over the case, the trial court is not bound by such resolution but is required to evaluate it before proceeding further with the trial and should embody such assessment in the order disposing the motion.

The subject MTC Orders do not show that the MTC made an independent assessment of the merits of the Motion to Withdraw Informations. x x x

The MTC should have made an independent evaluation and embodied its assessment in at least one of its assailed orders.^[34] (Emphasis supplied)

In Ledesma v. Court of Appeals,^[35] the Court held that:

Once a complaint or information is filed in court, any disposition of the case such as its dismissal or its continuation rests on the sound discretion of the court. Trial judges are thus required to make their own assessment of whether the secretary of justice committed grave abuse of discretion in granting or denying the appeal, separately and independently of the prosecution's or the secretary's evaluation that such evidence is insufficient or that no probable cause to hold the accused for trial exists. They should embody such assessment in their written order disposing of the motion.

x x x x

The trial court's order is inconsistent with our repetitive calls for an independent and competent assessment of the issue(s) presented in the motion to dismiss. The trial judge was tasked to evaluate the secretary's recommendation finding the absence of probable cause to hold petitioner criminally liable for libel. He failed to do so. He merely ruled to proceed with the trial without stating his reasons for disregarding the secretary's recommendation.^[36] (Emphasis supplied)

In the present case, Judge Dumayas, in his 26 March 2003 Order, did not (1) positively state that the evidence against Lee and Lim is insufficient, (2) include a discussion of the merits of the case, (3) assess whether Secretary Perez's conclusion is supported by evidence, (4) look at the basis of Secretary Perez's recommendation, (5) embody his assessment in the order, and (6) state his reasons for granting the motion to withdraw the informations.

Judge Dumayas' failure to make his own evaluation of the merits of the case violates KBC Bank's right to due process and constitutes grave abuse of discretion. Judge Dumayas' 26 March 2003 Order granting the motion to withdraw the informations is void.^[37]

WHEREFORE, the petition is DENIED. The Court AFFIRMS the 10 February 2004 Decision and 27 July 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 78004. The case is REMANDED to the Regional Trial Court, National Capital Judicial Region, Branch 58, Makati City for evaluation on whether probable cause exists to hold the accused for trial.

SO ORDERED.

Velasco, Jr.,^* Brion, Del Castillo, and Perez, JJ., concur.

---

^* Designated additional member per Raffle dated 6 January 2010.

^[1] Rollo, pp. 10-33.

^[2] Id. at 204-212. Penned by Associate Justice Eugenio S. Labitoria, with Associate Justices Mercedes Gozo-Dadole and Rosmari D. Carandang, concurring.

^[3] Id. at 243-244.

^[4] Id. at 77. Penned by Judge Winlove M. Dumayas.

^[5] Id. at 38-40.

^[6] Id. at 52-58.

^[7] Id. at 55.

^[8] CA rollo, pp. 78-88.

^[9] Id. at 82.

^[10] Rollo, pp. 59-62.

^[11] Id. at 60.

^[12] Id. at 63-76.

^[13] Id. at 296.

^[14] Id.

^[15] Id. at 77.

^[16] Id.

^[17] Id. at 78-116.

^[18] Id. at 90.

^[19] CA rollo, p. 240.

^[20] Section 6, Rule 56 of the Rules of Court states:

SEC. 6. Disposition of improper appeal. -- Except as provided in section 3, Rule 122 regarding appeals in criminal cases where the penalty imposed is death, reclusion perpetua or life imprisonment, an appeal taken to the Supreme Court by notice of appeal shall be dismissed.

An appeal by certiorari taken to the Supreme Court from the Regional Trial Court submitting issues of fact may be referred to the Court of Appeals for decision or appropriate action. The determination of the Supreme Court on whether or not issues of fact are involved shall be final.

^[21] Rollo, pp. 199-200.

^[22] Id. at 210-211.

^[23] Id. at 20-29.

^[24] Id. at 20-21.

^[25] Id. at 210-211.

^[26] Id. at 23-26.

^[27] 499 Phil. 36 (2005).

^[28] Id. at 49-50.

^[29] Rollo, pp. 29-30.

^[30] G.R. Nos. 164669 and 164670, 30 October 2009.

^[31] G.R. No. 177583, 27 February 2009, 580 SCRA 369.

^[32] Id. at 377.

^[33] 457 Phil. 189 (2003).

^[34] Id. at 203.

^[35] 344 Phil. 207 (1997).

^[36] Id. at 235-236.

^[37] Summerville General Merchandising and Co., Inc. v. Eugenio, Jr., G.R. No. 163741, 7 August 2007, 529 SCRA 274, 282.