G.R. No. 187919, G.R. No. 187979 & G.R. No. 188030, April 25, 2012
RAFAEL H. GALVEZ and KATHERINE L. GUY, Petitioners, vs. HON. COURT OF APPEALS and ASIA UNITED BANK, Respondents. (Consolidated with ASIA UNITED BANK vs. GILBERT G. GUY, et al., and GILBERT G. GUY, et al. vs. ASIA UNITED BANK)

FACTS

Radio Marine Network (Smartnet) Inc. (RMSI) applied for and was granted a substantial Omnibus Credit Line by Asia United Bank (AUB). RMSI’s directors and officers, including petitioners Gilbert Guy, Philip Leung, Katherine Guy, Rafael Galvez, and Eugenio Galvez, Jr., presented RMSI’s strong financial credentials to induce the loan. They represented that RMSI was doing business under the name “Smartnet Philippines.” Unknown to AUB, the same individuals had incorporated a separate, thinly capitalized subsidiary named Smartnet Philippines, Inc. (SPI). Through the use of similar names and letterheads, they led AUB to believe that SPI was merely a division of RMSI. Relying on this representation, AUB extended credit, including an Irrevocable Letter of Credit, to SPI. When the obligations defaulted, the directors denied RMSI’s liability, asserting SPI’s separate juridical personality.
AUB filed a syndicated estafa case against the directors. The City Prosecutor found probable cause for estafa. The Department of Justice (DOJ) reversed, dismissing the charge. The Court of Appeals then reinstated the Prosecutor’s finding of probable cause. The directors elevated the case to the Supreme Court, arguing the DOJ correctly found no deceit.

ISSUE

Whether the Court of Appeals erred in reinstating the finding of probable cause for estafa under Article 315(2)(a) of the Revised Penal Code against the corporate directors.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals. Probable cause for estafa exists. The legal logic centers on the element of deceit. Probable cause merely requires a reasonable belief that a crime has been committed, and it is not the function of the reviewing authority to weigh evidence exhaustively but to determine if such a belief is justified. The directors’ actions constituted a scheme to deceive AUB. They used RMSI’s solid financial standing to secure credit but then channeled obligations to the undercapitalized SPI, all while obscuring the distinction between the two entities through misleading representations. This created a false pretense that the creditworthy RMSI was the true obligor. Their subsequent denial of liability by hiding behind SPI’s separate corporate veil, after inducing the bank’s reliance, prima facie demonstrates fraudulent intent. The separate corporate personality of SPI cannot be used as a shield to justify a fraud perpetrated on a creditor. The finding of probable cause does not equate to a finding of guilt but correctly permits the case to proceed to trial where the accused may present their full defense.