G.R. No. 134436 ; August 16, 2000
Metropolitan Bank and Trust Company, petitioner, vs. Joaquin Tonda and Ma. Cristina Tonda, respondents.

FACTS

Spouses Joaquin and Ma. Cristina Tonda, acting as officers of Honey Tree Apparel Corporation (HTAC) and in their personal capacities, executed eleven trust receipts in favor of Metropolitan Bank and Trust Company (Metrobank) to secure the release of imported raw textile materials valued at P2,803,000.00. The Tondas failed to account for the goods or the proceeds of their sale upon the obligations’ maturity. Consequently, Metrobank filed a criminal complaint for violation of the Trust Receipts Law (P.D. 115) in relation to Article 315(1)(b) of the Revised Penal Code. The Provincial Prosecutor of Rizal initially recommended dismissal, but the Department of Justice (DOJ), on appeal, reversed this and directed the filing of an information against the Tondas.
The Tondas filed a petition for certiorari with the Court of Appeals. They argued that they had already settled the principal obligation under the trust receipts by depositing checks totaling P2.8 million with Metrobank as part of a proposed loan restructuring agreement. The appellate court granted their petition, dismissing the complaint. It ruled that Metrobank failed to establish a prima facie case, as the deposit of the checks constituted payment, thereby negating criminal intent for estafa.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion in reversing the DOJ’s resolution which found probable cause to prosecute the respondents for violation of the Trust Receipts Law.

RULING

Yes, the Supreme Court reversed the Court of Appeals and reinstated the DOJ resolution. The Court held that the appellate court overstepped its jurisdiction by substituting its own judgment for that of the executive branch on the existence of probable cause. Judicial review in such cases is limited to determining whether the DOJ committed grave abuse of discretion. The DOJ’s finding was based on sufficient evidence: the existence of the trust receipts, the entrustment of the goods, and the failure to account for them or remit the proceeds as agreed. The alleged payment via deposited checks was irrelevant for determining probable cause at the preliminary investigation stage, as the checks were not actually applied by Metrobank to the obligation and their acceptance was conditional upon a restructuring agreement that was never finalized. The essence of a trust receipt transaction is the fiduciary duty to account, and the mere failure to do so constitutes the offense. The DOJ did not act capriciously in finding probable cause based on these undisputed facts. The Court emphasized that a preliminary investigation is not the venue for a full-blown trial on the merits, and the DOJ’s finding of a prima facie case was a proper exercise of its discretion.