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[ GR NO. 167025, Dec 19, 2005 ]



514 Phil. 799


[ G.R. NO. 167025, December 19, 2005 ]




This petition for review on certiorari under Rule 45 of the Rules of Court assails the Decision[1] of the Court of Appeals in CA-G.R. SP No. 82190 dated July 30, 2004 and its Resolution[2] dated February 9, 2005.

Petitioner Herminio C. Principio is a bank examiner at the Supervisions and Examination Department IV of the Bangko Sentral ng Pilipinas (BSP).

On June 25, 2001, respondent Hilario P. Soriano, president and stockholder of the Rural Bank of San Miguel, Inc. (RBSMI for brevity), filed an affidavit-complaint[3] against petitioner with the Office of the Ombudsman for violation of Section 3(e) of Republic Act (RA) No. 3019. Respondent alleged that petitioner, through manifest partiality, evident bad faith and gross inexcusable negligence, caused undue injury to RBSMI by reporting that the bank incurred legal reserve deficiencies of P18 million from December 31, 1995 up to August 21, 1996 and P13 million from August 22, 1996 up to September 1, 1996, and by recommending the imposition of a fine in the amount of P2,538,000.00, which was adopted by the Monetary Board in its Resolution No. 724 dated June 13, 1997.

On September 26, 2002, the Office of the Ombudsman issued a Resolution[4] finding probable cause to indict petitioner for violation of Section 3(e) of RA No. 3019. On November 12, 2002, an information[5] was filed against the petitioner with the Regional Trial Court (RTC) of Manila docketed as Crim. Case No. 02-207793.

On November 25, 2002, petitioner filed a motion for reconsideration[6] which was denied by the Office of the Ombudsman on the ground that the information had already been filed in court.

Accordingly, petitioner filed a motion with the trial court praying that the motion for reconsideration filed with the Office of the Ombudsman be given due course and thereafter, to rule that no probable cause exists.[7]

On December 3, 2003, the trial court denied petitioner's motions to give due course to his motion for reconsideration and to defer proceedings until resolution of the pending issues. It also suspended petitioner from office for a period of 60 days.[8] His motion for reconsideration was denied on January 27, 2004.[9]

Petitioner thus filed a petition for certiorari with the Court of Appeals praying for the annulment of respondent judge's Orders of December 3, 2003 and January 27, 2004 for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

On July 30, 2004, the Court of Appeals dismissed the petition and affirmed the assailed orders of the RTC. On February 9, 2005, the appellate court denied petitioner's motion for reconsideration.

In dismissing the petition, the appellate court noted that:
... [T]he petition stems from an order denying the petitioner's motion to dismiss. The general rule is that the denial of a motion to dismiss is interlocutory and hence, it cannot be questioned in a special civil action of certiorari ....

In effect, petitioner's motion to dismiss is a motion to quash. In the case of Lee vs. People of the Philippines, et al. (393 SCRA 397), it was elucidated that where a motion to quash is denied, the remedy is not certiorari but to go to trial without prejudice to reiterating the special defenses involved in said motion, and if, after trial on the merits an adverse decision is rendered, to appeal therefrom in the manner authorized by law.


In the case at bench, while petitioner ostensibly alleges grave abuse of discretion amounting to lack or excess of jurisdiction, the record does not show such kind of actuation on the part of respondent Judge. Specifically, petitioner delves on the finding of probable cause of respondent Judge. He avers that respondent Judge did not bother to deliberate on the specific circumstances of his case but merely defined "probable cause." From this, it cannot be said that the respondent Judge did not independently evaluate or assess the merits of the case. While it is true that respondent Judge defined "probable cause" in the assailed order, it may not be amiss to state that he clearly stated that probable cause exists in the case below. Respondent Judge's failure to clearly express the nitty-gritty of his findings of probable cause cannot be characterized as an error of jurisdiction.[10]
Hence, the instant petition based on the sole ground that the Court of Appeals erred in ignoring relevant law, jurisprudence, and evidence negating the Ombudsman's finding of probable cause.[11]

Petitioner argues that the general rule that certiorari is not the proper remedy to the denial of a motion to quash is subject to the exception laid down in Mead v. Hon. Argel, etc., et al.,[12] where recourse to the extraordinary legal remedies of certiorari, prohibition and mandamus is considered proper in the interest of "more enlightened and substantial justice." Citing Yap v. Hon. Lutero,[13] petitioner points out that it would be unfair to require the accused to go through the inconvenience, mental agony and torture of a trial on the merits, incurring expenses incidental thereto, when, on appeal, the Supreme Court may set aside judgment of conviction.

Petitioner insists that the Court of Appeals ignored the ruling in Reyes v. Rural Bank of San Miguel (Bulacan), Inc.[14] where this Court exonerated herein petitioner from administrative liability on the ground that he was not guilty of undue haste in the submission of report on RBSMI's general examination.

Petitioner also contends that the Court of Appeals erred in disregarding the fact that the Monetary Board had confirmed the factual and legal bases for the imposition of the penalty against RBSMI. In support of this contention, petitioner explains that although the Ombudsman, in finding probable cause to hold him for trial, found that the BSP approved the reversal of the penalty, this was, however, not an admission by the Monetary Board that it erred in imposing the penalty. The Court in Reyes explained that "it (the reversal) was only an accommodation on the part of the BSP to ease the financial difficulties of RBSMI. More importantly, it was a conditional reversal pending the resolution of the dispute on the finding of legal reserve deficiency." In fact, the Monetary Board, in Resolution No. 462, subsequently confirmed the factual and legal bases for the imposition of the penalty against RBSMI.

Private respondent argues that petitioner's reliance on the Supreme Court's findings in Reyes where petitioner was exonerated from administrative liability is not conclusive of his lack of criminal liability and therefore does not bar a criminal prosecution; that even assuming that the BSP examiners may not be held administratively liable for reports that were recommendatory in nature, they may however be held liable for not following the law, or BSP rules and regulations; that petitioner precipitately concluded that RBSMI incurred legal reserve deficiencies which led to the imposition of the penalty despite his failure to make a cash count; that the Court of Appeals correctly held that the determination of whether there is probable cause is the function of the Office of the Ombudsman, hence, in the absence of clear showing of arbitrariness in the findings and determination of probable cause by the prosecution in the preliminary investigation, the courts must give credence to the same.

The present petition arose from the denial by the trial court of petitioner's motions praying for the dismissal of the criminal charge against him for lack of probable cause. The trial court upheld the Ombudsman's finding of probable cause and dismissed petitioner's arguments ratiocinating that the determination of the existence or absence of probable cause lies within the sound discretion of the Office of Ombudsman. Petitioner filed a petition for certiorari with the Court of Appeals alleging that the trial court acted with grave abuse of discretion in denying the motion. Instead of ruling on the merits of the petition, the Court of Appeals dismissed the petition on a technicality.

Petitioner now seeks a review of the decision of the Court of Appeals, which affirmed the orders of the trial court denying petitioner's motion to dismiss/quash for lack of probable cause.

At the outset, we reiterate the fundamental principle that an order denying a motion to quash is interlocutory and therefore not appealable, nor can it be the subject of a petition for certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. In other words, it cannot be the subject of appeal until the judgment, or a final order is rendered. The proper procedure to be followed is to enter a plea, go to trial, and if the decision is adverse, reiterate the issue on appeal from the final judgment. Although the special civil action for certiorari may be availed of in case there is a grave abuse of discretion or lack of jurisdiction, that vitiating error is not attendant in the present case.[15]

However, the general rule is not absolute. Where special circumstances clearly demonstrate the inadequacy of an appeal, then the special civil action of certiorari or prohibition may exceptionally be allowed. We categorically stated in Salonga v. Cruz Paño[16] that:
... [I]t is also recognized that, under certain situations, recourse to the extraordinary legal remedies of certiorari, prohibition or mandamus to question the denial of a motion to quash is considered proper in the 'interest of more enlightened and substantial justice', ....
After a careful review of the records, we find that such special circumstance obtains in the case at bar. Simply stated, the existing evidence is insufficient to establish probable cause against the petitioner and therefore, the petition must be granted.

In arriving at the conclusion that probable cause exists to prosecute the petitioner, the Ombudsman relied on the ruling of the Court of Appeals in CA-G.R. SP No. 60184 entitled Rural Bank of San Miguel, Inc. v. Alberto V. Reyes, Wilfredo B. Domo-ong, Herminio C. Principio; the BSP; and Members of the Monetary Board wherein petitioner, together with BSP Deputy Governor Alberto Reyes, Director Wifredo B. Domo-ong of the BSP Department of Rural Bank were held administratively liable for unprofessionalism and meted the penalty of fine equivalent to six months salary.[17]

In the same case, the Court of Appeals concluded that petitioner's undue haste in submitting the report is part of the orchestrated scheme by the BSP officials to pressure RBSMI to sell out by subjecting it to many impositions through the Monetary Board.

On appeal, however, the Supreme Court reversed the finding of the appellate court and exonerated petitioner from administrative liability, holding that he is not liable for undue haste in submitting the report to the Monetary Board; and that the imposition of the fine was based on the finding of legal reserve deficiencies. Pertinent portions of the decision are quoted hereunder, thus: [18]
... Soriano wrote to the BSP authorizing the latter to debit its demand deposit in the amount of the penalty a few days after MB Resolution No. 96 was issued. It took RBSMI more than one year before it contested the imposition of the penalty. That the BSP subsequently reversed, albeit conditionally, the debiting of the amount of penalty is not an admission that it erred in imposing the same. It was only an accommodation on the part of the BSP to ease the financial difficulties of RBSMI. More importantly, it was a conditional reversal pending the resolution of the dispute on the finding of legal reserve deficiency.

RBSMI likewise complains that petitioner Principio took part in three consecutive examinations in violation of BSP's own Manual of Examiners ....


But, as petitioners explain, RBSMI was subjected only to one examination the 1996 General Examination in which major exceptions and violations were found. The ensuing examinations were "special examinations" meant to monitor the progress of the bank in correcting the exceptions found. With the finding of serious violations by the bank, the MB, through its Resolution No. 96, thought it best to put the RBSMI under continuous monitoring until the exceptions had been corrected. It is logical for petitioner Principio to be part of the monitoring team considering that he was the initial examiner and was familiar with the matters to be made in order.

By and large, therefore, we find that while there may have been some irregularities and badges of unprofessionalism which can be held against petitioners, these are not so grave as to [merit the imposition of the penalty of fine equal to six months salary imposed by the appellate court. The modification of the Court of Appeals decision is proper.]
The finding of the Office of the Ombudsman that petitioner acted in bad faith was based on the alleged premature submission of his report coupled with the recommendation to impose a fine without factual and legal basis.

However, it appears that although Resolution No. 71 of the Monetary Board dated January 21, 1999, authorized the reversal of 60% of the penalty debited against RBSMI's demand deposit with the BSP, which was subsequently followed by the interim reversal of the entire amount of the penalty, these reversals were conditioned on the result of "the study on the legal and factual basis for the imposition of the penalty." As can be seen, these reversals were temporary and conditional, and should not be interpreted as an admission by the BSP that it erred in imposing the penalty or that petitioner made an unlawful computation of the bank's legal reserve deficiencies. As borne out by subsequent events, RBSMI was found to have committed various exceptions and violations of the banking laws that it was eventually ordered closed and placed under receivership by the Monetary Board on January 21, 2000.

Even private respondent's allegation that petitioner could not justify the alleged deficiencies since no actual cash count was made, is without basis. As explained by petitioner:
It goes without saying that the finding of legal reserve deficiency could only be based on cash shortages as shown by the financial records of RBSM, not on an actual cash count usually conducted at the beginning of the examination period, because the BSP examiner certainly could not have made a count of the cash balance of RBSM on dates prior to the start of the 1996 GE on September 16, 1996.[19]
As pointed out by petitioner, all the exceptions and violations noted in his report were based on bank records and reports, from interviews with bank officers and other sources. The bank officers, including herein respondent, were furnished with the report on January 9, 1997, and even paid the penalty imposed without question. The report was also discussed during conferences between the bank officers and BSP representatives but the former never questioned the propriety of the examination and the legal and factual bases for the imposition of the penalty. It was only after two years that respondent assailed the legality of the imposition and sought its reversal.

More importantly, petitioner's report on RBSMI's financial condition was merely recommendatory, subject to the approval of his immediate superiors and by the Monetary Board, which, in the exercise of its sound discretion, may alter, modify, or review the factual and legal bases of the impositions.

Furthermore, the Ombudsman cannot impute bad faith on the part of the petitioner on the assumption that he, together with other BSP officials, was part of a cabal to apply pressure on RBSMI to sell out by subjecting it to many impositions through the Monetary Board. Bad faith is never presumed while good faith is always presumed and the chapter on Human Relations of the Civil Code directs every person, inter alia, to observe good faith, which springs from the fountain of good conscience.[20] Therefore, he who claims bad faith must prove it. For one to be in bad faith, the same must be "evident." The Ombudsman should have first determined the facts indicating bad faith instead of relying on the tenuous assumption that there was an orchestrated attempt to force RBSMI to sell out.

As a general rule, courts do not interfere with the discretion of the Ombudsman to determine whether there exists reasonable ground to believe that a crime has been committed and that the accused is probably guilty thereof and, thereafter, to file the corresponding information with the appropriate courts. There are, however, well-recognized exceptions to this rule, such as those enumerated in Brocka v. Enrile,[21] to wit:
  1. To afford adequate protection to the constitutional rights of the accused ...;
  2. When necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions ...;
  3. When there is a pre-judicial question which is sub judice ...;
  4. When the acts of the officer are without or in excess of authority ...;
  5. Where the prosecution is under an invalid law, ordinance or regulation ...;
  6. When double jeopardy is clearly apparent ...;
  7. Where the court has no jurisdiction over the offense ...;
  8. Where it is a case of persecution rather than prosecution ...;
  9. Where the charges are manifestly false and motivated by the lust for vengeance ...;
  10. When there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied ...; and
  11. Preliminary injunction has been issued by the Supreme Court to prevent the threatened unlawful arrest of petitioners ....
This is not the first time that we are dismissing a case for want of probable cause. In Cabahug v. People,[22] we took exception to the Ombudsman's determination of probable cause and accordingly dismissed the case against the accused before the Sandiganbayan. Therein, we observed:
While it is the function of the Ombudsman to determine whether or not the petitioner should be subjected to the expense, rigors and embarrassment of trial, he cannot do so arbitrarily. This seemingly exclusive and unilateral authority of the Ombudsman must be tempered by the Court when powers of prosecution are in danger of being used for persecution. Dismissing the case against the accused for palpable want of probable cause not only spares her the expense, rigors and embarrassment of trial, but also prevents needless waste of the courts' time and saves the precious resources of the government.
In Venus v. Hon. Desierto,[23] where the case against the accused was also dismissed for want of probable cause, we clarified that:
Agencies tasked with the preliminary investigation and prosecution of crimes must always be wary of undertones of political harassment. They should never forget that the purpose of a preliminary investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect one from an open and public accusation of crime, from the trouble, expense and anxiety of a public trial, and also to protect the State from useless and expensive trials. It is, therefore, imperative upon such agencies to relieve any person from the trauma of going through a trial once it is ascertained that the evidence is insufficient to sustain a prima facie case or that no probable cause exists to form a sufficient belief as to the guilt of the accused.
And in Fernando v. Sandiganbayan,[24] we directly ordered the discharge of petitioners from the case before the Sandiganbayan for want of probable cause. We reasoned in this wise:
We emphasize at this point that the Court has a policy of non-interference in the Ombudsman's exercise of his constitutionally mandated powers. The overwhelming number of petitions brought to us questioning the filing by the Ombudsman of charges against them are invariably denied due course. Occasionally, however, there are rare cases when, for various reasons there has been a misapprehension of facts, we step in with our review power. This is one such case.

It may also be stressed at this point that the approach of the Courts to the quashing of criminal charges necessarily differs from the way a prosecutor would handle exactly the same question. A court faced with a fifty-fifty proposition of guilt or innocence always decides in favor of innocence. A prosecutor, conscious that he represents the offended party, may decide to leave the problem to the discretion of the court.
Clearly, where the evidence patently demonstrates the innocence of the accused, as in this case, we find no reason to continue with his prosecution; otherwise, persecution amounting to grave and manifest injustice would be the inevitable result.

WHEREFORE, the petition is GRANTED. The Regional Trial Court of Manila, Branch 26, is ORDERED to forthwith DISMISS Criminal Case No. 02-207793, entitled People of the Philippines vs. Herminio C. Principio, and to SUBMIT to this Court a report of its compliance within 10 days from such dismissal.


Davide, Jr., C.J., Quisumbing,  and Azcuna, JJ., concur.
Carpio, J., On official leave.

[1] Rollo, pp. 49-56. Penned by Associate Justice Edgardo F. Sundiam and concurred in by Associate Justices Martin S. Villarama, Jr. and Japar B. Dimaampao.

[2] Id. at 57.

[3] Id. at. 97-99.

[4] Id. at 158-178.

[5] Id. at 179-180.

[6] Id. at 198-203.

[7] Id. at 181-192.

[8] Id. at 92-93. Penned by Judge Oscar P. Barrientos.

[9] Id. at 96.

[10] Id. at 52-53.

[11] Id. at 26.

[12] 200 Phil. 650 (1982).

[13] 105 Phil. 1307 (1959).

[14] 447 Phil. 327 (2003). Decision penned by Supreme Court Associate Justice Vicente V. Mendoza and concurred in by Associate Justices Josue N. Bellosillo, Leonardo A. Quisumbing, Ma. Alicia Austria-Martinez and Romeo J. Callejo.

[15] Socrates v. Sandiganbayan, 324 Phil. 151, 176 (1996).

[16] No. L-59524, February 18, 1985, 134 SCRA 438, 448.

[17] Original Records, Vol. I, p. 295.

[18] Reyes v. Rural Bank of San Miguel (Bulacan), Inc., supra at 345-346. See Rollo, pp. 242-243.

[19] Original Records, Vol. I, p. 96.

[20] Venus v. Hon. Desierto, 358 Phil. 675, 697 (1998).

[21] G.R. Nos. 69863-65, December 10, 1990, 192 SCRA 183, 188-189.

[22] 426 Phil. 490, 510 (2002).

[23] 358 Phil. 675, 699-700 (1998).

[24] G.R. Nos. 96182 & 96183, August 19, 1992, 212 SCRA 680, 687-688.