Metropolitan Bank & Trust Co. vs. Tobias

The disputable presumption that the possessor and user of a falsified document is its forger may be overcome by a satisfactory explanation during preliminary investigation, and the Secretary of Justice does not commit grave abuse of discretion in directing the withdrawal of an information when such explanation sufficiently negates probable cause.

Rosella A. Santiago, then OIC-Branch Head of Metropolitan Bank & Trust Company (Metrobank) in Makati City, was introduced to respondent Antonino O. Tobias III by a valued bank client. Tobias opened a savings/current account for his frozen meat business, Adam Merchandising, and subsequently applied for a loan from Metrobank, offering four parcels of land in Malabon City covered by Transfer Certificate of Title (TCT) No. M-16751 as collateral. The dispute arose from the discovery that the title Tobias offered was spurious, leading to criminal charges for estafa through falsification of public documents and the subsequent review of the prosecutor's finding of probable cause by the Secretary of Justice.

In 1997, Rosella A. Santiago, then OIC-Branch Head of Metrobank in Valero Street, Makati City, was introduced to respondent Antonino O. Tobias III by Jose Eduardo Gonzales, a valued client of the bank. Tobias opened a savings/current account for his frozen meat business, Adam Merchandising. Six months later, Tobias applied for a loan from Metrobank, which conducted trade and credit verification that yielded negative findings. Metrobank nonetheless proceeded to appraise the property Tobias offered as collateral — four parcels of land in Malabon City totaling 6,080 square meters covered by TCT No. M-16751 — based on a photocopy of the title and related documents Tobias provided. Based on his financial statements, Metrobank approved a credit line of ₱40,000,000.00.

On August 15, 1997, Joselito Bermeo Moreno, Lead Internal Affairs Investigator of Metrobank, went to the Registry of Deeds of Malabon to annotate the deed of real estate mortgage on TCT No. M-16751 (Entry No. 26897). Tobias initially availed himself of ₱20,000,000.00 and took out the balance within six months. He paid interest on the loan for about a year before defaulting. The loan was restructured to five years upon his request, but after two months he again defaulted. Metrobank foreclosed the mortgage and acquired the property as the lone bidder. On June 11, 1999, the certificate of sale was issued in Metrobank's favor.

When the certificate of sale was presented for registration, no original copy of TCT No. M-16751 was found in the registry vault. Deputy Register of Deeds Atty. Sarah Principe-Bido verified and discovered that Serial No. 4348590 appearing on TCT No. M-16751 had been issued for TCT No. M-15363 in the name of one Alberto Cruz, while TCT No. 16751 (now TCT No. 390146) had been issued in the name of Eugenio S. Cruz and Co. for a parcel of land in Navotas. Metrobank requested the Presidential Anti-Organized Crime Task Force (PAOCTF) to investigate. In its report dated May 29, 2000, PAOCTF concluded that TCT No. M-16751 and the tax declarations submitted by Tobias were fictitious, and recommended filing a criminal complaint for estafa through falsification of public documents under paragraph 2(a) of Article 315, in relation to Articles 172(1) and 171(7) of the Revised Penal Code.

The Office of the City Prosecutor of Malabon charged Tobias with estafa through falsification of public documents, alleging that on or about August 15, 1997, Tobias represented to Metrobank that he was the registered owner of the parcel of land covered by TCT No. M-16751, knowing the title to be fake and spurious, executed a real estate mortgage thereon as collateral, and obtained ₱20,000,000.00 which he misappropriated and failed to return despite repeated demands. Tobias moved for re-investigation, which was granted. In his counter-affidavit, Tobias averred that he had bought the property from one Leonardo Fajardo through real estate brokers Augusto Munsuyac and Carmelito Pilapil; that his financial consultant Natalio Bartolome had convinced him to purchase the property as an ideal site for his meat processing plant; that he had verified TCT No. 106083 under Fajardo's name at the Registry of Deeds; that Metrobank advised him to have the title transferred to his name before the loan could be processed; that he executed a deed of absolute sale with Fajardo which was duly registered; that the transfer was processed by Fajardo and his brokers; that Metrobank's personnel had inspected and verified the title and property; and that he had no intent to defraud Metrobank.

Notwithstanding Tobias's explanation, the City Prosecutor of Malabon on December 27, 2002 still found probable cause and recommended charging him. Tobias appealed to the Department of Justice. On July 20, 2004, Acting Secretary of Justice Ma. Merceditas N. Gutierrez reversed the City Prosecutor's resolution and directed the withdrawal of the information, opining that Tobias had established good faith in purchasing the property, had used part of the loan proceeds to pay the seller, and that Metrobank itself had caused the annotation of the mortgage on the TCT. Metrobank moved for reconsideration, but on November 18, 2005, Secretary of Justice Raul M. Gonzalez denied the motion. Metrobank then filed a petition for certiorari with the Court of Appeals, which on December 29, 2006 dismissed the petition, affirming the DOJ resolutions. Metrobank's motion for reconsideration was likewise denied.

• Presumption of Authorship: Petitioner maintained that the presumption of authorship was sufficient to establish probable cause to hold Tobias for trial, and that the presumption applies when a person is found in possession of a forged instrument, makes use of it, and benefits from it.
• No Requirement of Absence of Explanation: Petitioner argued that there is no requirement that the legal presumption of authorship shall apply only in the absence of a valid explanation from the person found to have possessed, used, and benefited from the forged document.
• Good Faith Is Evidentiary: Petitioner contended that the CA erred in declaring Tobias to be in good faith, because good faith is merely evidentiary and best raised during trial on the merits, not at the preliminary investigation stage.
• Pattern of Fraud: Petitioner asserted that Tobias was heavily involved in a modus operandi of using fake titles, as he was also being tried for a similar crime in the RTC, Branch 133, in Makati City.
• Secretary of Justice Exceeded Authority: Petitioner maintained that the Secretary of Justice improperly determined the innocence of the accused, which should not be done during preliminary investigation.

• Prosecutorial Function: Respondent posited that the core function of the Department of Justice is to prosecute the guilty, not to persecute, and that the Secretary of Justice's review power prevents overzealous prosecutors from persecuting the innocent.
• Lack of Evidence of Fraud: Respondent argued that the Secretary of Justice correctly found lack of evidence to prove that the purported fake title was the very cause that induced Metrobank to grant the loan.
• Good Faith: Respondent contended that the Secretary appropriately found that Tobias dealt with Metrobank in good faith, there being no proof that he employed fraud and deceit in securing the loan.
• Presumption Inapplicable: Respondent argued that the presumption of forgery could not apply because it was Metrobank, through its representative, who annotated the real estate mortgage with the Registry of Deeds; Tobias had no access to or contact with the Registry of Deeds, and whatever went wrong after the annotation was beyond his control.

• Probable Cause and Presumption of Authorship: Whether the Court of Appeals erred in affirming the Secretary of Justice's withdrawal of the information against Tobias, given that the presumption of authorship of falsification was allegedly sufficient to establish probable cause for trial.

• Probable Cause and Presumption of Authorship: No. The Secretary of Justice did not commit grave abuse of discretion in directing the withdrawal of the information, the disputable presumption of authorship having been overcome by Tobias's satisfactory explanation of good faith during the preliminary investigation.

• Probable Cause and Presumption of Authorship: Under the doctrine of separation of powers, courts will not interfere with the executive determination of probable cause absent grave abuse of discretion — that is, abuse so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law. The Secretary of Justice's reversal of the City Prosecutor's finding did not constitute such abuse. The presumption that the possessor and user of a falsified document is its forger is a disputable presumption, not a conclusive one. It applies only in the absence of a satisfactory explanation from the person found in possession. Tobias provided such an explanation: he purchased the property from Leonardo Fajardo through brokers, verified the title at the Registry of Deeds, executed a deed of absolute sale that was duly registered, and the transfer was processed by the seller and his brokers. Furthermore, the presumption of authorship affects the burden of proof and is material during the actual trial of the criminal case, not at the preliminary investigation stage, where the prosecutor only determines the existence of a prima facie case. The investigating prosecutor and the Secretary of Justice have ample discretion to weigh the evidence submitted by both parties, including the respondent's counter-affidavit and explanation. To hold otherwise — that the moment a person possesses and uses a falsified document, probable cause is automatically established regardless of any explanation — would defeat the very purpose of preliminary investigation, which is to secure the respondent against hasty, malicious, and oppressive prosecution. Additionally, Metrobank, as a commercial bank dealing in real property, had the duty to observe due diligence in ascertaining the existence and condition of the realty and the validity of the documents, a duty it evidently failed to discharge. Banks are expected to exercise greater care and prudence than others in their dealings because their business is impressed with public interest; their failure to do so constitutes negligence.

• Non-Interference with Executive Determination of Probable Cause — Courts will not interfere with the executive determination of probable cause for the purpose of filing an information, in the absence of grave abuse of discretion. Such abuse must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, such as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility. In this case, the Secretary of Justice's direction to withdraw the information did not constitute grave abuse, as it was supported by a reasoned evaluation of Tobias's explanation.
• Disputable Presumption of Authorship of Falsification — The presumption that whoever possesses or uses a spurious document is its forger is a disputable presumption that applies only in the absence of a satisfactory explanation. Under Section 3 of Rule 131 of the Rules of Court, disputable presumptions are satisfactory if uncontradicted but may be contradicted and overcome by other evidence. A satisfactory explanation of how one came to possess the falsified document renders the presumption ineffective. The Court applied this doctrine by holding that Tobias's explanation of his purchase of the property from Fajardo through brokers, his verification of the title, and his lack of access to the Registry of Deeds constituted a satisfactory explanation overcoming the presumption.
• Preliminary Investigation as Protection Against Hasty Prosecution — A preliminary investigation is an inquiry to determine whether a crime has been committed and whether there is probable cause to believe the accused is guilty thereof. It is designed to secure the respondent against hasty, malicious, and oppressive prosecution. The respondent is entitled to examine the evidence against him and submit a counter-affidavit to disprove criminal liability. The Court relied on this doctrine to reject Metrobank's argument that the presumption of authorship automatically establishes probable cause regardless of any explanation.
• Bank's Duty of Due Diligence — Banks are expected to exercise greater care and prudence than others in their dealings because their business is impressed with public interest. A commercial bank dealing in real property has the duty to observe due diligence to ascertain the existence and condition of the realty as well as the validity and integrity of the documents bearing on the realty, including dispatching competent representatives to assess the property's actual location and condition and investigating the real owner. Metrobank's failure to diligently perform a thorough check on Tobias and the circumstances surrounding the collateral constituted negligence.

• "The presumption that whoever possesses or uses a spurious document is its forger applies only in the absence of a satisfactory explanation." — This passage states the controlling rule on the disputable nature of the presumption of authorship of falsification, which is the ratio decidendi of the case.
• "We affirm the CA in keeping with the principle of non-interference with the prerogative of the Secretary of Justice to review the resolutions of the public prosecutor in the latter's determination of the existence of probable cause, absent any showing that the Secretary of Justice thereby commits grave abuse of his discretion." — This is the Court's opening statement of the governing principle of judicial restraint vis-à-vis the executive function of determining probable cause.
• "A preliminary investigation is designed to secure the respondent involved against hasty, malicious and oppressive prosecution." — This passage defines the purpose of preliminary investigation and underpins the Court's rejection of Metrobank's argument that the presumption automatically establishes probable cause.
• "Banks are expected to exercise greater care and prudence than others in their dealings because their business is impressed with public interest." — This statement articulates the heightened duty of diligence imposed on banking institutions, which the Court invoked to note Metrobank's own negligence in failing to verify the collateral.

• Balanganan vs. Court of Appeals, Special Nineteenth Division, Cebu City, G.R. No. 174350, August 13, 2008 — Cited as an example where the Secretary of Justice exceeded jurisdiction by requiring "hard facts and solid evidence" to hold a defendant liable, a requirement that should be left to the trial court. The Court used this to illustrate the boundary of the Secretary of Justice's authority, contrasted with the present case where no such excess occurred.
• Serrano vs. Court of Appeals, 404 SCRA 639 (2003) — Cited for the established presumption that a person in possession of a falsified document who makes use of it is presumed to be the forger, and that this presumption applies in the absence of a satisfactory explanation. The Court followed this precedent but held the presumption was overcome.
• People vs. Sendaydiego, 81 SCRA 120 (1978) — Cited for the rule that in the absence of a satisfactory explanation, one found in possession of a forged document who used it is presumed to be the forger. The Court relied on this to confirm the disputable nature of the presumption.
• De Ocampo vs. Secretary of Justice, 480 SCRA 71 (2006) — Cited for the definition of preliminary investigation as an inquiry to determine whether a crime has been committed and whether there is probable cause to believe the accused is guilty.
• Vda. De Jacob vs. Puno, 131 SCRA 144 (1984) — Cited by the Court of Appeals for the remedy available to a private complainant when the Secretary of Justice refuses to file a criminal complaint: the complainant may file a civil action for damages under Article 35 of the Civil Code.

• Article 315, paragraph 2(a), Revised Penal Code — Defines estafa by means of false pretenses or fraudulent acts executed prior to or simultaneously with the commission of fraud. The Court enumerated the elements of estafa through falsification of public documents and required that the false statement or fraudulent representation constitute the very cause or only motive that induced the complainant to part with the thing.
• Articles 172(1) and 171(7), Revised Penal Code — Cited in the PAOCTF report as the falsification provisions in relation to which the estafa charge was brought. Article 171 pertains to falsification by a public officer or employee, and Article 172 to falsification by a private individual.
• Section 3, Rule 131, Rules of Court — Provides that disputable presumptions are satisfactory if uncontradicted but may be contradicted and overcome by other evidence. The Court applied this provision to hold that the presumption of authorship of falsification is disputable and was overcome by Tobias's evidence of good faith.
• Section 3, Rule 112, Rules of Criminal Procedure — Provides that the respondent in a preliminary investigation must be informed of the accusation against him and shall have the right to examine the evidence against him and submit a counter-affidavit to disprove criminal liability. The Court relied on this to affirm the respondent's right to present an explanation during preliminary investigation.
• Article 35, Civil Code — Provides that when a prosecuting attorney refuses or fails to institute criminal proceedings, the complainant may bring a civil action for damages against the alleged offender. The Court of Appeals cited this as the remedy available to Metrobank for the civil aspect of its claim.

Renato C. Corona (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Martin S. Villarama, Jr., and Estela M. Perlas-Bernabe concurred. No separate concurring opinions were written.