G.R. No. 154685 ; November 27, 2006
METROPOLITAN BANK AND TRUST COMPANY, RICARDO GELLA and TEOFILO FIESTA, Petitioners, vs. COURT OF APPEALS and ANTONIO LAIÑO, Respondents.

FACTS

Metrobank, through its officers Ricardo Gella and Teofilo Fiesta, filed a criminal complaint for estafa against Antonio Laiño. The complaint stemmed from a transaction involving Eduardo Tambis, Jr., who deposited checks payable to Laiño’s sole proprietorship, ACL Engine Consultant, into a personal account and subsequently withdrew funds. Laiño protested the withdrawals to the bank. After a preliminary investigation, the City Fiscal found probable cause and filed an Information. However, the Regional Trial Court (RTC) dismissed the criminal case against Laiño upon demurrer to evidence, finding no proof of a partnership between Laiño and Tambis and holding the prosecution’s evidence inadequate.
Subsequently, Laiño filed a civil case for damages against Metrobank and its officers, alleging malicious prosecution. The RTC dismissed Laiño’s complaint and granted Metrobank’s counterclaim for damages. On appeal, the Court of Appeals (CA) reversed the RTC, finding Metrobank and its officers liable for damages in favor of Laiño. The CA held that the petitioners acted with malice and without probable cause in initiating the criminal complaint. Metrobank and its officers then elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals erred in holding petitioners Metropolitan Bank and Trust Company, Ricardo Gella, and Teofilo Fiesta liable for damages based on malicious prosecution.

RULING

The Supreme Court denied the petition and affirmed the CA decision. The Court held that for a malicious prosecution suit to prosper, the plaintiff must prove that the prosecution was initiated without probable cause, that it was prompted by malice, and that it was terminated in favor of the plaintiff. All these elements were present. The RTC’s dismissal of the criminal case based on demurrer to evidence, due to a complete lack of evidence against Laiño, constituted a termination in his favor.
On the element of probable cause, the Court found that petitioners had none. The bank officers relied solely on the Fiscal’s resolution, which was based on an erroneous presumption of a partnership between Laiño and Tambis. The evidence clearly showed ACL Engine Consultant was Laiño’s sole proprietorship, and there was no proof he authorized Tambis’s acts. Petitioners, as the complainants, had a duty to exercise due diligence and ascertain the facts. Their failure to do so, and their insistence on prosecuting Laiño despite knowing Tambis acted without authority, demonstrated a lack of honest belief in his guilt.
Regarding malice, the Court found it was sufficiently established by the petitioners’ improper motive. Their act of filing the criminal complaint immediately after Laiño filed a separate civil case against the bank for the same transaction indicated an intent to harass and retaliate, rather than a genuine desire to prosecute a crime. This use of the judicial process for an illegitimate purpose constituted legal malice, warranting an award of moral and exemplary damages.