REYES V PEARLBANK SECURITIES - LAZATIN

TOPIC: Probable Cause in Preliminary Investigations

FACTS:
Reyes is the VP of Wincorp, a corporation that
arranges and brokers loans of its clients, one of
whom is Pearlbank Securities.
Sometime before this case, investors or lenders
made demands on Pearlbank to pay several loans
that were brokered by Wincorp. The investors
alleged that they werent able to collect on their
outstanding
credits
with
Wincorp
because
Pearlbank didnt pay. Apparently, Pearlbank alleges
that it did not have any outstanding loans that
WINCORP brokered. Thus, Pearlbank investigated
on these alleged debts.
Pearlbank demanded from Wincorp a full and
accurate accounting of the identities and
investments of the lenders and the alleged debts of
Pearlbank with supporting records and documents.
Wincorp did not respond to this demand.
Pearlbank instituted a case with the SEC, now
pending with the RTC (bec. of the law which
transferred jd with the RTCs)
Pearlbank, through its treasurer, also filed
complaints with the DOJ against officers of Wincorp,
one of them was Reyes, for falsification of
commercial and private documents.
The DOJ filed the criminal case with the MTC. Later,
however, DOJ USec Merciditas Gutierrez ordered the
withdrawal of the Informations. This decision was
reversed by the DOJ Sec, thus the case proceeded.
Reyes filed a petition for certiorari with the CA,
where he raised, among others, that the SEC case
is a prejudicial question to the criminal case for

falsification. CA denied certiorari thus criminal case

proceeds.
ISSUE: WON the SEC case is a prejudicial question that
has to be resolved before the criminal case for falsification
may proceed- NO
RULING:
A prejudicial question is defined as one which arises
in a case, the resolution of which is a logical
antecedent of the issue involved therein, and the
cognizance of which pertains to another tribunal.
It is a question based on a fact distinct and
separate from the crime, but so intimately
connected with it that it determines the guilt or
innocence of the accused.
It comes into play generally in a situation in which a
civil action and a criminal action are both pending
and there exists in the former an issue which must
be preemptively resolved before the criminal action
may proceed, because howsoever the issue raised
in the civil action is resolved would be a
determinative presumption of the guilt or
innocence of the accused in the criminal case.
The rationale behind the principle of prejudicial
question is to avoid two conflicting decisions. The
elements of a prejudicial question are: (a) the
previously instituted civil action involves an issue
similar or intimately related to the issue raised in
the subsequent criminal action, and (b) the
resolution of such issue determines whether or not
the criminal action may proceed.
One of the issues taken in the SEC case is whether
Pearlbank has outstanding loans with Wincorp.
However, a finding that Pearlbank indeed has

outstanding debts will not totally absolve Reyes of

any criminal liability. In other words, it is not an
absolute defense, since what is determinative in

the falsification case is whether there really were

falsified documents.