Metropolitan Bank v. Reynado
REITERATIONFacts
The Antecedents: Petitioner Metropolitan Bank and Trust Company (Metrobank) charged respondents Rogelio Reynaldo and Jose C. Adraneda with estafa under Article 315, paragraph 1(b) of the Revised Penal Code. Metrobank alleged that respondents, as members of the Port Area branch's credit committee, connived with Universal Converter Philippines, Inc. (Universal) in fraudulent transactions. Universal, despite limited capital and balance, was able to withdraw ₱81,652,000.00 against uncleared regional checks deposited in its account. These withdrawals were made without head office approval, and the checks were later dishonored for "Account Closed." Respondents denied responsibility, claiming they intended to increase branch transactions. Procedural History: The City Prosecutor recommended dismissal, citing a Debt Settlement Agreement between Metrobank and Universal as novation that prevented the incipience of criminal liability. The Department of Justice (DOJ) affirmed this, stating Metrobank chose to file estafa only against its employees while settling with Universal, and that no damage was caused to Metrobank due to the settlement. The Court of Appeals (CA) affirmed the DOJ's resolutions, holding that since Universal could not be held responsible due to novation, neither could the respondents who acted in complicity. The CA noted that novation, while not extinguishing criminal liability, may prevent its rise if it occurs before the filing of the criminal information. The Petition: Metrobank filed a Petition for Review on Certiorari, arguing that novation and the undertaking to pay do not extinguish criminal liability, and that it is the prosecutor's duty to implead all responsible persons. The Office of the Solicitor General (OSG), in its comment, agreed that the DOJ erred in dismissing the complaint, stating that restitution does not negate an offense already committed and that the proper remedy for non-inclusion of other parties is their inclusion in the information, not dismissal.
Issue(s)
Whether the execution of the Debt Settlement Agreement precluded petitioner from holding respondents liable to stand trial for estafa under Art. 315 (1)(b) of the Revised Penal Code. Whether the public prosecutor and the Secretary of Justice committed grave abuse of discretion in dismissing the complaint for estafa.
Ruling
The petition is GRANTED. The assailed Decision of the Court of Appeals and its Resolution denying reconsideration are REVERSED and SET ASIDE. The public prosecutor is ordered to file the necessary information for estafa against the respondents.
Ratio Decidendi
On the issue of novation and its effect on criminal liability for estafa: The Court reiterated the hornbook doctrine that novation is not a mode of extinguishing criminal liability under the Revised Penal Code. Citing a catena of cases, including Firaza v. People, Recuerdo v. People, People v. Moreno, People v. Ladera, and Metropolitan Bank and Trust Company v. Tonda, the Court held that a compromise or settlement entered into after the commission of estafa affects only the civil liability of the offender and does not extinguish the criminal liability or bar prosecution. The Court emphasized that estafa is a public offense that must be prosecuted by the government on its own motion, even if complete reparation has been made. Therefore, the Debt Settlement Agreement between Metrobank and Universal Converter Philippines, Inc. merely extinguished the civil aspect of Universal's liability but not the criminal liability of the individuals who allegedly committed the crime. The respondents, not being parties to the agreement, could not take refuge from it to bar their anticipated trial for estafa. On the issue of grave abuse of discretion by the public prosecutor and the Secretary of Justice: The Court found that the public prosecutor and the Secretary of Justice committed grave abuse of discretion amounting to lack or excess of jurisdiction. The Court noted that the investigating prosecutor initially found that the offense of estafa was sufficiently established but then changed her stance due to the Debt Settlement Agreement, citing novation. The DOJ, in affirming the dismissal, ruled out estafa based on evidentiary matters, such as the alleged lack of clear misappropriation, the approval of transactions by Metrobank's committees, and the absence of damage due to the settlement. The Supreme Court held that these were matters of defense best left for the trial court to resolve after a full trial, not during a preliminary investigation. The Court reiterated that a finding of probable cause does not require evidence sufficient for conviction but only a well-founded belief that an offense has been committed and the respondent is probably guilty. The DOJ's reasoning was found to be arbitrary and capricious, amounting to a virtual refusal to perform a duty enjoined by law, particularly in disregarding the established jurisprudence on novation and estafa. The Court also addressed the DOJ's reasoning regarding the non-inclusion of Universal's officers, stating that it is within the prosecutor's discretion to determine who to charge, and the proper remedy for non-inclusion is to include them in the information, not to dismiss the complaint.
Main Doctrine
Novation is not a mode of extinguishing criminal liability for estafa. A compromise or settlement entered into after the commission of the crime affects only the civil liability and does not extinguish the criminal liability or bar prosecution. Furthermore, the determination of probable cause is a function of the public prosecutor, and judicial review is allowed only in cases of grave abuse of discretion.