Criminal Procedure 2E

TOPIC Who may conduct determination of existence of probable cause DATE July 26, 2017

CASE TITLE SEC vs. Price Richardson Corporation GR NO 197032

DOCTRINE • If the public prosecutor finds probable cause to charge a person with a crime, he or she
causes the filing of an information before the court. The court may not pass upon or
interfere with the prosecutor's determination of the existence of probable cause to file an
information regardless of its correctness. It does not review the determination of
probable cause made by the prosecutor. It does not function as the prosecutor's appellate
court. Thus, it is also the public prosecutor who decides "what constitutes sufficient
evidence to establish probable cause."

As an exception, courts may interfere with the prosecutor's determination of probable

cause only when there is grave abuse of discretion. Grave abuse of discretion constitutes
"a refusal to act in contemplation of law or a gross disregard of the Constitution, law, or
existing jurisprudence, accompanied by a whimsical and capricious exercise of judgment
amounting to lack of jurisdiction."

• A prosecutor gravely abuses his or her discretion in not finding probable cause by
disregarding or overlooking evidence that "are sufficient to form a reasonable ground to
believe that the crime . . . was committed and that the respondent was its author."
Further, "what is material to a finding of probable cause is the commission of acts
constituting the offense, the presence of all its elements and the reasonable belief,
based on evidence, that the respondent had committed it."

• A corporation's personality is separate and distinct from its officers, directors and
shareholders. To be held criminally liable for the acts of a corporation, there must be a
showing that its officers, directors, and shareholders actively participated in or had
the power to prevent the wrongful act.
FACTS • A former employee of Richard Price Corporation executed a sworn affidavit before the NBI
Interpol Division alleging that Richard Price Corp engaged in “Boiler Room Operations”
(the company sells non-existent stocks to investors using high pressure sales tactics."
Whenever this activity was discovered, the company would close and emerge under a new
company name.)
• After a search was conducted, the Security and Exchange Commission (SEC) filed a
complaint against the incorporators and directors of Richard Price Corp for violation of Art.
315(b) of the RPC and violation Sections 26.3 and 28 of the Securities Regulation Code.
The brokers Velarde-Albert and Resnick were also charged with violation of Art. 315(b) of
the RPC.
• In defense, the incorporators and directors denied knowing or agreeing to the offenses
charged. They countered that they already transferred their respective shares to various
individuals in December 2000. Velarde-Albert denied the Securities and Exchange
Commission's allegations against her while Resnick did not submit any evidence refuting
the charges.

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• State Prosecutor Aristotle M. Reyes (State Prosecutor Reyes) issued a Resolution,
dismissing the Securities and Exchange Commission's complaint "for lack of probable
cause." ruling that considering that they already relinquished their positions as directors
of Price Richardson when they transferred their shares to third parties. He also found
Velarde-Albert and Resnick not liable for lack of sufficient proof that they engaged in the
trading of securities.
• individuals claiming to have agreed to purchase securities from Price Richardson and have
been defrauded surfaced and executed sworn statements against it. They claimed that
Price Richardson engaged in illegal trade of securities. They filed complaints against Price
Richardson before the Department of Justice for violation of Article 315 (1) (b) of the
Revised Penal Code and Sections 26.3 and 28 of the Securities Regulation Code.
• SEC filed a petition for review before the DOJ = Denied, Motion for Reconsideration =
Denied
• SEC filed a petition for Certiorari before CA = denied
• SEC filed a petition for review before SC.
ISSUE/S Procedural
1. At what instance may the court pass upon a prosecutor’s determination of probable
cause? When there is showing of grave abuse of discretion.
2. WON there is grave abuse of discretion on the part of the State Prosecutor? Yes.
3. WON there is a probably cause to indict Velarde-Albert and Resnick (brokers) for violations
of the Securities Regulation Code and the Revised Penal Code. No.

RATIO Procedural
1. When there is showing of grave abuse of discretion.
General Rule: If the public prosecutor finds probable cause to charge a person with a crime,
he or she causes the filing of an information before the court. The court may not pass upon
or interfere with the prosecutor's determination of the existence of probable cause to file an
information regardless of its correctness. It does not review the determination of probable
cause made by the prosecutor. It does not function as the prosecutor's appellate court. Thus,
it is also the public prosecutor who decides "what constitutes sufficient evidence to establish
probable cause."

However, if the public prosecutor erred in its determination of probable cause, an appeal can
be made before the Department of Justice Secretary. Simultaneously, the accused may move
for the suspension of proceedings until resolution of the appeal.

Exception: As an exception, courts may interfere with the prosecutor's determination of

probable cause only when there is grave abuse of discretion. Grave abuse of discretion
constitutes "a refusal to act in contemplation of law or a gross disregard of the Constitution,
law, or existing jurisprudence, accompanied by a whimsical and capricious exercise of
judgment amounting to lack of jurisdiction."

A prosecutor gravely abuses his or her discretion in not finding probable cause by
disregarding or overlooking evidence that "are sufficient to form a reasonable ground to
believe that the crime . . . was committed and that the respondent was its author." Further,

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"what is material to a finding of probable cause is the commission of acts constituting the
offense, the presence of all its elements and the reasonable belief, based on evidence, that
the respondent had committed it."

2. Yes. Based on the Certification issued by the Market Regulation Department of the Securities
and Exchange Commission, respondent Price Richardson "has never been issued any
secondary license to act as broker/dealer in securities, investment house and dealer in
government securities." Petitioner also certified that respondent Price Richardson "is not,
under any circumstances, authorized or licensed to engage and/or solicit investments from
clients."

However, the documents seized from respondent Price Richardson's office show
possible sales of securities. (There are 9 documents in the full text that were seized.)

Petitioner further supports its charges by submitting the complaint-affidavits and letters of
individuals who transacted with Price Richardson.

The evidence gathered by petitioner and the statement of respondent Price Richardson are
facts sufficient enough to support a reasonable belief that respondent is probably guilty of
the offense charged.

3. Petitioner failed to allege the specific acts of respondents Velarde-Albert and Resnick that
could be interpreted as participation in the alleged violations. There was also no showing,
based on the complaints, that they were deemed responsible for Price Richardson's
violations.

A corporation's personality is separate and distinct from its officers, directors and
shareholders. To be held criminally liable for the acts of a corporation, there must be a
showing that its officers, directors, and shareholders actively participated in or had
the power to prevent the wrongful act.
RULING WHEREFORE, premises considered, the Petition is PARTIALLY GRANTED. The Court of Appeals
Decision dated May 26, 2011 and Department of Justice Secretary Raul M. Gonzalez's Resolutions
dated April 12, 2005 and July 5, 2006 are AFFIRMED in so far as they find no grave abuse of discretion
in the dismissal of the complaints for lack of probable cause against Consuelo Velarde-Albert and
Gordon Resnick for: a)committing Estafa under Article 315 (1) (b) of the Revised Penal Code and b)
violating Sections 26.3 and 28 of the Securities Regulation Code.

This Court, however, finds that the dismissal of the complaint for lack of probable cause against Price
Richardson Corporation for violation of Sections 26.3 and 28 of the Securities Regulation Code was
rendered with grave abuse of discretion amounting to lack or excess of jurisdiction and is, thus,
ANNULLED and SET ASIDE.
NOTES

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