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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 164673 January 15, 2010 SAMUEL U. LEE and MAYBELLE LEE LIM, Petitioners, vs. KBC BANK N.V., Respondent. DECISION CARPIO, J.: The Case This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 10 February 2004 Decision2 and 27 July 2004 Resolution3 of the Court of Appeals in CA-G.R. SP No. 78004. The Court of Appeals set aside the 26 March 2003 Order4 of the Regional Tria
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   1 Republic of the Philippines SUPREME COURT  ManilaSECOND DIVISION G.R. No. 164673 January 15, 2010   SAMUEL U. LEE and MAYBELLE LEE LIM, Petitioners,vs. KBC BANK N.V., Respondent.D E C I S I O N CARPIO,  J.:   The Case  This is a petition 1  for review on certiorari under Rule 45 of the Rules of Court. The petitionchallenges the 10 February 2004 Decision 2  and 27 July 2004 Resolution 3  of the Court of Appealsin CA-G.R. SP No. 78004. The Court of Appeals set aside the 26 March 2003 Order 4  of theRegional Trial Court (RTC), National Capital Judicial Region, Branch 58, Makati City, inCriminal 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 OrderNo. 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-128was allegedly dated 1 October 1997, issued by Otto Versand, and cov ered 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 anamended deed of assi gnment 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 afacility agreement between KBC Bank and MDEC, any default in payment of any obligationunder the agreement would render MDEC in default with regard to the $65,000 loan  —  MDECdefaulted 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 ConfirmedPurchase Order Nos. MTC-548 and WC-128. On 19 March 1998, Otto Versand sent a facsimilemessage to KBC Bank stating that (1) it did not issue the purchase orders, (2) it did not order orreceive the items covered by the purchase orders, and (3) it would not pay MDEC any amount.   2 In a complaint-affidavit 5  dated 21 April 1998, Liza M. Pajarillo, manager of the corporatedivision of KBC Bank, charged Lee and Lim of estafa. In his Resolution 6  dated 27 November2001, 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. StateProsecutor 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 LeeLim.It is an established fact that the confirmed purchase order nos. MTC-548 and WC-128 presentedwith the Bank by the Midas thru respondents Samuel Lee and Maybelle Lee Lim were false andspurious, 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 theBank by Otto Versand. Evidently, respondent Samuel Lee signed the following documents, towit: the conforme portion of the US$2.0 million short-term trade facility, the promissory noteand the corresponding deed of assignment both dated August 12, 1997, covering the confirmedpurchase order no[.] MTC-548, while respondent Maybelle Lee Lim signed in the promissorynote and the corresponding deed of assignment both dated Nov. 14, 1997, the renewedpromissory 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 fromsigning those relevant loan documents, as they also clearly helped one another in fraudulentlyrepresenting 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 theirfraudulent representation, they were able to entice or induce the Bank to extend [to] them theloan of USD$1.4 million and USD$ 65,000 under the short-term trade facility previously grantedto them. 7  Accordingly, two informations for estafa against Lee and Lim were filed with the RTC. Afterfinding probable cause, Judge Winlove M. Dumayas (Judge Dumayas) of the RTC issuedwarrants 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:I. THE RESOLUTIONS OF 27 NOVEMBER 2001 AND 17 APRIL 2002 MERELYRELIED ON HEARSAY EVIDENCE WHICH CANNOT BE THE BASIS FOR AFINDING OF A PROBABLE CAUSE.II. THE ASSAILED RESOLUTIONS WERE ISSUED BASED ONLY ON THEUNCORROBORATED ALLEGATIONS OF PAJARILLO THAT LEE AND LIMMADE FRAUDULENT REPRESENTATIONS TO [KBC BANK].III. THE ASSAILED RESOLUTIONS ERRED IN HOLDING LEE AND LIM TO BECRIMINALLY LIABLE DESPITE THE TWO LOANS CREATING MERELY CIVILLIABILITY ON THE PART OF MIDAS. 9  In his Resolution 10  dated 12 July 2002, Secretary Hernando B. Perez (Secretary Perez) directedthe withdrawal of the informations filed against Lee and Lim. Secretary Perez held that thefacsimile 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 thispoint, Ms. Pajarillo of [KBC Bank] claims that she received a fax message from a representativeof 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   3 the allegation that the subject purchase orders were fake. Since Ms. Pajarillo did not havepersonal knowledge of the fact that the subject purchase orders were in fact fake, her testimonycannot be the basis for finding probable cause against respondents. Ms. Pajarillo can testify onlyto 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 whoshe did not even know personally. Unfortunately, this fax copy is hearsay evidence andtherefore, 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 theRTC, Assistant City Prosecutor Nora C. Sibucao (Assistant City Prosecutor Sibucao) prayed forthe withdrawal of the informations filed against Lee and Lim. Assistant City Prosecutor Sibucaostated that:The Prosecution, through the undersigned Trial Prosecutor, unto the Honorable Court, mostrespectfully moves and prays for the withdrawal of Information filed in the above-entitled casesin view of the resolution of the Department of Justice promulgated on July 12, 2002 reversingthe 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 withdra w 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 privatecomplainant, finds the contentions of the prosecution to be sufficient and meritorious.Accordingly, the Motion to Withdraw Information filed by the Prosecution is hereby granted andthe two (2) informations for the crime of Estafa penalized under par. 2 (a) of the Revised PenalCode 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 withoutspecifying its legal basis.II.The court a quo committed reversible error in prematurely acting upon the Makati Prosecutor’s Mo tion to Withdraw of Information.III.The court a quo committed reversible error in finding that no probable cause exists tohold respondents for trial for estafa under Article 315, par. 2(a) and in granting the Makati Prosecutor’s Motion to Withdraw Infor  mation. 18  In a Resolution 19  dated 23 June 2003, the Court referred the petition to the Court of Appealspursuant to Section 6, 20  Rule 56 of the Rules of Court. In his Resolution 21  dated 19 November   4 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 Duma yas’ 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 acriminal action. The Court thereby acquires jurisdiction over the case, which is the authority tohear and determine the case. When after the filing of the complaint or information, a warrant forthe arrest of the accused is issued by the trial court and the accused either voluntarily submittedhimself to the Court or was duly arrested, the Court thereby acquired jurisdiction over the personof the accused.x x x xThe trial judge practically concurred with the findings of the Secretary of Justice that the faxcopy is hearsay evidence and therefore, inadmissible to prove the truth that it contains , contraryto 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 anoffense 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 bestventilated in a full-blown trial; preliminary investigation is not the occasion for the exhaustivedisplay of presentation of evidence. 22  Hence, the present petition. The Issues  In their petition, Lee and Lim raised as issues that:ITHE COURT EXCEEDED ITS AUTHORITY IN PASSING UPON THE ISSUE OFWHETHER OR NOT THERE WAS PRIMA FACIE EVIDENCE OF ESTAFAAGAINST THE PETITIONERS, AN ISSUE THAT WAS PENDING BEFORE THESECRETARY OF JUSTICEx x x xIIQUESTION IS NOT ONE OF ADMISSIBILITY OF EVIDENCE BUT THE NEED INPRELIMINARY INVESTIGATION FOR EVIDENCE OF VALUE TO ESTABLISHPROBABLE CAUSEx x x xIIIRESPONDENT COURT DID NOT PREMATURELY ALLOW THE WITHDRAWALOF THE INFORMATIONSx x x x
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