G.R. No. 180165 , April 7, 2009
METROPOLITAN BANK & TRUST COMPANY, Petitioner, vs. HON. SECRETARY OF JUSTICE RAUL M. GONZALES, OLIVER T. YAO and DIANA T. YAO, Respondents.

FACTS

Petitioner Metropolitan Bank and Trust Company (Metrobank) is a banking institution. Private respondents Oliver T. Yao and Diana T. Yao were the duly authorized representatives of Visaland Inc. On behalf of Visaland, they applied for and were granted 24 letters of credit by Metrobank, with an aggregate amount of ₱68,749,487.96, to finance the importation of materials for a sister company. Simultaneous with the issuance of the letters of credit, private respondents signed trust receipts in favor of Metrobank, binding themselves to sell the goods and remit the proceeds, or to return the goods if not sold, on or before the agreed maturity dates. Upon maturity, private respondents failed to return the goods or their value despite demand. Consequently, Metrobank filed a criminal complaint for estafa under Article 315(1)(b) of the Revised Penal Code in relation to Presidential Decree No. 115 (Trust Receipts Law) against private respondents before the Office of the City Prosecutor of Manila.
In their defense, private respondents denied entering into trust receipt transactions, claiming the contract was a loan secured by a Real Estate Mortgage, and that they signed documents without being apprised of their true nature. The City Prosecutor initially dismissed the complaint for lack of evidence of prior demand. Upon Metrobank’s submission of a demand letter, the City Prosecutor found probable cause and filed 23 Informations for estafa before the Regional Trial Court (RTC) of Manila. Private respondents appealed to the Secretary of Justice, who ruled there was no probable cause, holding the transaction was merely a contract of loan not covered by P.D. No. 115, and directed the withdrawal of the Informations. The RTC granted the withdrawal. Metrobank’s Petition for Certiorari before the Court of Appeals was dismissed, affirming the Secretary of Justice’s finding of no grave abuse of discretion. Metrobank elevated the case to the Supreme Court.

ISSUE

Whether or not probable cause exists for the prosecution of private respondents for the crime of estafa in relation to P.D. No. 115.

RULING

Yes, probable cause exists. The Supreme Court granted the petition, reversed the Court of Appeals Decision and Resolution, and directed the reinstatement of the criminal Informations for estafa against private respondents.
The Court held that the Secretary of Justice committed grave abuse of discretion in ruling there was no probable cause. Probable cause is defined as the existence of facts and circumstances that would excite a reasonable belief that the person charged is guilty of the crime. It does not require certainty or proof beyond reasonable doubt, but only a reasonable ground of presumption that the matter is well-founded. The purpose of a preliminary investigation is merely to determine whether a crime has been committed and if there is probable cause to believe the accused is guilty, not to conduct a full-blown trial on the merits.
In this case, the Secretary of Justice overstepped his authority by making a definitive finding that the transaction was a simple loan, not a trust receipt agreement. This determination is evidentiary and substantive in nature, better suited for evaluation during trial after a full presentation of evidence. At the preliminary investigation stage, it was sufficient that Metrobank presented the trust receipts signed by private respondents and a demand letter, which prima facie established the elements of estafa under the Trust Receipts Law. The self-serving denial and alternative claim of a loan contract by private respondents do not negate the existence of probable cause; they are matters of defense to be threshed out during trial. The Secretary of Justice’s act of weighing the evidence and making a conclusion on the substantive nature of the contract was a patent abuse of discretion, as it effectively preempted the trial court’s function. Therefore, probable cause for prosecuting private respondents for estafa in relation to P.D. No. 115 was sufficiently established.