Philippine Investment Two (SPV-AMC), Inc. vs. Sebastian

A private complainant has no legal personality to appeal the dismissal of a criminal case on its criminal aspect without the conformity of the State, through the Office of the Solicitor General (for appeals to the CA and Supreme Court) or through the relevant officials of the National Prosecution Service (for appeals to the RTC from first-level courts). The trial court, once an information has been filed, must make an independent assessment of the merits of a motion to withdraw information and should not blindly follow the resolutions of the Department of Justice.

Petitioner Philippine Investment Two (SPV-AMC), Inc. (PI Two) was a global affiliate of Lehman Brothers Holdings, Inc. (Lehman Brothers), a corporation organized under the laws of New York, United States. Respondent Kathrina L. Sebastian was the Associate Director for Origination and Client Coverage of Standard Chartered Bank (SCB). On August 17, 2007, Lehman Brothers and SCB's New York branch executed Group Facilities, whereby SCB undertook to extend financial facilities to Lehman Brothers and its global affiliates, including PI Two, with Lehman Brothers executing a Guarantee to secure its own obligations and those of its affiliates. Lehman Brothers later secured a Pledge Agreement with collaterals dated September 12, 2008 in favor of SCB, which included HD Supply Notes with a market value of USD 90 million. PI Two obtained a loan from SCB in the amount of PHP 819 million by virtue of the Group Facilities.

Petitioner Philippine Investment Two (SPV-AMC), Inc. (PI Two) was a global affiliate of Lehman Brothers Holdings, Inc. (Lehman Brothers), a New York corporation. Respondent Kathrina L. Sebastian was the Associate Director for Origination and Client Coverage of Standard Chartered Bank (SCB). On August 17, 2007, Lehman Brothers and SCB's New York branch executed Group Facilities, whereby SCB extended financial facilities to Lehman Brothers and its global affiliates, including PI Two, secured by a Guarantee executed by Lehman Brothers. Lehman Brothers later secured a Pledge Agreement with collaterals dated September 12, 2008 in favor of SCB, which included HD Supply Notes with a market value of USD 90 million. PI Two obtained a loan from SCB in the amount of PHP 819 million.

On September 15, 2008, Lehman Brothers filed a Petition for Bankruptcy before the United States Bankruptcy Court for the State of New York, which issued a Stay Order dated September 16, 2008 preventing creditors from enforcing their claims against Lehman Brothers. On September 18, 2008, Metropolitan Bank and Trust Company filed a Petition for Corporate Rehabilitation before the Regional Trial Court of Makati (PH Rehabilitation Court) seeking the rehabilitation of PI Two. SCB filed its Claims before both the US Bankruptcy Court and the PH Rehabilitation Court.

According to PI Two, Sebastian, acting on behalf of SCB, perjured herself in two pleadings submitted to the PH Rehabilitation Court. First, PI Two alleged that SCB's Comment on the Petition for Rehabilitation, verified by Sebastian, contained perjurious statements, including: "The fact that Philippine Investment Two was not able to furnish adequate guarantees or security in exchange for the inadequate [Lehman Brothers] guaranty, nor to fully comply with the request of SCB for documents upon demand (Annex 12), gives the latter the right to demand payment of the whole amount of the obligation." Second, PI Two alleged that SCB's Comment to the Motion to Disclose, also verified by Sebastian, contained perjurious statements regarding the enforceability of the Pledge Agreement. PI Two alleged that these statements deliberately concealed the Pledge Agreement with collaterals which was more than enough to pay for PI Two's loan with SCB.

Sebastian maintained that she made the alleged perjurious statements in good faith, in the honest belief that PI Two's loan was inadequately secured, considering the Stay Order issued by the US Bankruptcy Court. She contended that since rights under the Guarantee could no longer be enforced by virtue of the Stay Order, the specific mention of the Pledge Agreement was rendered unnecessary. Regarding the Comment to the Motion to Disclose, she asserted that the statement was not an assertion of fact but a legal argument styled in question form by SCB's counsel.

The DOJ issued a Resolution dated September 16, 2013 finding probable cause to indict Sebastian for perjury only insofar as the Comment to the Petition was concerned. Sebastian moved for partial reconsideration, which was denied, and she filed a Petition for Review before the Secretary of Justice (SOJ). Meanwhile, an Information dated September 16, 2013 was filed before the Metropolitan Trial Court, initially raffled to MeTC Br. 67. Sebastian filed an Omnibus Motion for judicial determination of probable cause, which was denied, and a Motion to Quash, which was also denied. The case was eventually raffled to MeTC Br. 66 after Sebastian's Motion for Voluntary Inhibition was granted.

The SOJ, in a Resolution dated August 22, 2014, reversed the DOJ Resolutions, finding insufficient evidence to indict Sebastian, and directed the OCP-Makati to withdraw the Information. The SOJ noted that the only security directly securing PI Two's loan was the Guarantee, that the Pledge Agreement secured Lehman Brothers's obligations under the Guarantee, and that the Stay Order prevented SCB from enforcing its claims. The SOJ concluded that Sebastian relied in good faith on her understanding that no benefit could be derived from the Guarantee and Pledge Agreement due to the Stay Order. Pursuant to the SOJ's directive, the OCP-Makati filed a Motion to Withdraw Information dated November 11, 2014, which PI Two opposed.

The MeTC Br. 66 granted the Motion to Withdraw in an Order dated January 23, 2015, finding that the evidence on record failed to establish probable cause. The MeTC Br. 66 found that paragraph 22 of SCB's Comment contained only two statements of fact: (a) PI Two did not furnish any guarantee or security in exchange for the Lehman Brothers Guarantee; and (b) PI Two did not fully comply with SCB's request for documents. The MeTC Br. 66 noted that PI Two never refuted these facts, and that the Pledge Agreement was provided by Lehman Brothers, not PI Two itself. The MeTC Br. 66 also agreed with the SOJ's conclusion that Sebastian had sufficiently explained the circumstances surrounding her statement and acted in good faith.

PI Two sought the OSG's conformity to appeal, but the OSG declined in letters dated April 27, 2015 and May 25, 2015, considering that the State had already opted to withdraw the Information and the MeTC Br. 66 had granted the Motion to Withdraw after independent assessment. Notwithstanding the OSG's refusal, PI Two filed an appeal which was raffled to RTC Br. 147. The OCP-Makati filed a Manifestation dated June 8, 2015 informing the RTC Br. 147 that PI Two's appeal lacked the required conformity from the State.

The RTC Br. 147, in an Order dated August 27, 2015, reversed the MeTC Br. 66 rulings and ordered the reinstatement of the Information. The RTC Br. 147 pointed out that probable cause had already been determined in the MeTC Br. 67 JDPC Resolutions and affirmed by RTC Br. 138, and that the public prosecutor should have proceeded with trial. The RTC Br. 147 also ruled that PI Two could appeal without the conformity of the OCP-Makati or OSG, citing Rule 122, Section 1 of the 2000 Revised Rules on Criminal Procedure allowing "any party" to appeal.

Sebastian appealed to the CA, docketed as CA-G.R. CR No. 37898, which was consolidated with CA-G.R. SP No. 137469. The OSG filed a Comment reiterating that PI Two's appeal was made without its conformity, and that the phrase "any party" in Rule 122, Section 1 only pertains to the prosecution or the accused, not the private complainant. The CA, in a Decision dated September 7, 2017, reversed the RTC Br. 147 ruling and reinstated the MeTC Br. 66 ruling, holding that PI Two had no legal personality to appeal without the conformity of the public prosecutor or the OSG, and that the MeTC Br. 66 had satisfied the requirement of making an independent assessment of the evidence. The CA denied PI Two's Motion for Reconsideration in a Resolution dated April 13, 2018, prompting PI Two to file the present Petition.

• Legal Personality to Appeal: PI Two argued that the conformity of the State through the OSG is not required in appeals involving criminal actions brought before second-level courts assailing the ruling of first-level courts, since the Administrative Code and relevant case law such as Austria vs. AAA only delved on appeals at the level of the CA and the Supreme Court.
• Exceptions to State Conformity: PI Two insisted that its case falls under the exceptions to the rule on State conformity, namely: (a) only the civil aspect of the criminal action is involved; (b) denial of due process to the prosecution and the State or its agents refuse to act; (c) grave error committed by the judge or the interest of substantial justice so requires; or (d) grave abuse of discretion.
• Reinstatement of Information: PI Two essentially prayed for the reinstatement of the criminal case against Sebastian, arguing that the RTC Br. 147 correctly reversed the MeTC Br. 66 ruling.

• Lack of Legal Personality: Sebastian argued that PI Two, as a private complainant, had no legal personality to appeal the dismissal of the criminal case without the conformity of the State, and seconded the OSG's contentions in its Comment.
• Propriety of Withdrawal: Sebastian maintained that the MeTC Br. 66 properly granted the Motion to Withdraw Information after making an independent assessment of the evidence on record, and that the RTC Br. 147 erred in overturning that ruling.

• Legal Standing of Private Complainant: Whether the private complainant has legal personality to appeal the dismissal of a criminal case to the RTC without the conformity of the State through the public prosecutor or the OSG.
• Propriety of Granting Motion to Withdraw: Whether the MeTC Br. 66 correctly granted the OCP-Makati's Motion to Withdraw Information and dismissed the criminal case against Sebastian.

• Legal Standing of Private Complainant: No. The private complainant has no legal personality to appeal the dismissal of a criminal case on its criminal aspect without the conformity of the State. For appeals to the RTC from first-level courts, the required conformity must be obtained from the relevant officials of the National Prosecution Service (regional prosecutor, provincial prosecutor, or city prosecutor) in charge of the specific area where such courts are located.
• Propriety of Granting Motion to Withdraw: Yes. The MeTC Br. 66 correctly granted the Motion to Withdraw Information, as it made an independent assessment of the evidence on record and did not blindly rely on the SOJ's resolution, consistent with Crespo vs. Judge Mogul.

• Legal Standing of Private Complainant: The Court explained that criminal actions are instituted in the name of the State, i.e., the People of the Philippines, against the accused, and the private complainant is regarded merely as a witness for the State. The phrase "any party" in Rule 122, Section 1 of the 2000 Revised Rules on Criminal Procedure must be construed to include only those deemed as real parties in interest: the State, the accused, or in certain limited instances, the private complainant. Citing Austria vs. AAA, the Court noted that the private offended party may appeal only the civil aspect of the case without the OSG's intervention, but may not appeal the criminal aspect without State conformity. The Court extended the Austria guidelines to appeals before second-level courts, with the modification that the required conformity should be obtained from the relevant officials of the National Prosecution Service, pursuant to Republic Act No. 10071 (Prosecution Service Act of 2010), which designates provincial and city prosecutors to have charge of the prosecution of crimes in their respective areas. The Court found that PI Two's appeal to the RTC Br. 147 was made without the required conformity, as evinced by the OSG's letters declining conformity, the OCP-Makati's Manifestation, and the OSG's Comment. The RTC Br. 147 should have dismissed the appeal on this ground alone. None of the exceptions applied: the appeal did not merely involve the civil aspect; denial of due process could not be ascribed since PI Two was given the opportunity to oppose the Motion to Withdraw; the MeTC Br. 66 did not commit grave error; and the dismissal was not tainted with grave abuse of discretion.

• Propriety of Granting Motion to Withdraw: The Court reiterated the elementary rule that once an information has been filed in court, the court acquires jurisdiction over the criminal case, and the dismissal of the criminal case depends on the court's independent assessment of the merits of the motion seeking such dismissal. Citing Crespo vs. Judge Mogul, the Court emphasized that the trial court is the best and sole judge on what to do with the case before it, and a motion to dismiss filed by the fiscal should be addressed to the court, which has the option to grant or deny the same. The Court agreed with the OSG's submission that despite the MeTC Br. 67 JDPC Resolutions, the MeTC Br. 66 was not precluded from making a second assessment of probable cause, since Crespo authorizes courts to scrutinize a motion to withdraw at any time. The Court found that the MeTC Br. 66's Order dated January 23, 2015 showed that it made an independent re-evaluation of the evidence on record. The MeTC Br. 66 found that paragraph 22 of SCB's Comment contained only two statements of fact, that PI Two did not refute these facts, and that the Pledge Agreement was provided by Lehman Brothers, not PI Two. The MeTC Br. 66 also agreed with the SOJ's conclusion that Sebastian acted in good faith, noting that the two essential elements of proof of perjury — that the statement was false and that the defendant did not believe it to be true — were absent. Thus, the MeTC Br. 66's grant of the Motion to Withdraw was proper.

• Nature of Criminal Actions — Criminal actions are instituted to determine the penal liability of the accused for having outraged the State with their crime. They are instituted in the name of the State, i.e., the People of the Philippines, against the accused, and the private complainant, if any, is regarded merely as a witness for the State. The Court applied this doctrine to hold that the private complainant's interest in a criminal case is restricted to the civil liability of the accused, and appeals on the criminal aspect may be undertaken only by the State.

• Legal Standing of Private Complainant to Appeal (Austria Guidelines) — The private complainant has legal personality to appeal the civil liability of the accused or file a petition for certiorari to preserve interest in the civil aspect, but must allege specific pecuniary interest. The private complainant has no legal personality to appeal or file a petition for certiorari to question judgments or orders involving the criminal aspect of the case unless made with the OSG's conformity (for appeals to the CA and Supreme Court) or with the conformity of the relevant officials of the National Prosecution Service (for appeals to the RTC from first-level courts). The Court extended the Austria guidelines to appeals before second-level courts, with the modification that conformity should be obtained from the regional prosecutor, provincial prosecutor, or city prosecutor in charge of the specific area where such courts are located.

• Trial Court's Discretion in Resolving Motion to Withdraw Information (Crespo Doctrine) — Once a complaint or information is filed in court, any disposition of the case, whether dismissal or conviction or acquittal of the accused, rests in the sound discretion of the court. Although the fiscal retains direction and control of the prosecution of criminal cases even while the case is already in court, the fiscal cannot impose his opinion on the trial court. The court should not blindly follow the resolutions issued by the DOJ and should determine the propriety of the dismissal on its own. The Court applied this doctrine to uphold the MeTC Br. 66's grant of the Motion to Withdraw, finding that it made an independent assessment of the evidence on record.

• Elements of Perjury — Perjury is the willful and corrupt assertion of a falsehood under oath or affirmation administered by authority of law on a material matter. The two essential elements of proof of perjury are: (1) the statement made by the defendant must be proven false; and (2) it must be proven that the defendant did not believe those statements to be true. The Court applied this doctrine in affirming the MeTC Br. 66's finding that the records proved the absence of both essential elements, and thus there was no evidence to support a finding of probable cause.

• "The rationale behind this rule is that in a criminal case, the state is the party affected by the dismissal of the criminal action and not the private complainant. The interest of the private offended party is restricted only to the civil liability of the accused. In the prosecution of the offense, the complainant's role is limited to that of a witness for the prosecution such that when a criminal case is dismissed by the trial court or if there is an acquittal, an appeal on the criminal aspect may be undertaken only by the State through the OSG." — This passage from Austria v. AAA, quoted by the Court, articulates the controlling doctrine on the limited legal standing of the private complainant in criminal appeals and is central to the Court's ruling that PI Two lacked legal personality to appeal without State conformity.

• "The rule therefore in this jurisdiction is that once a complaint or information is filed in Court[,] any disposition of the case as its dismissal or the conviction or acquittal of the accused[,] rests in the sound discretion of the Court. Although the fiscal retains the direction and control of the prosecution of criminal cases even while the case is already in Court[,] he cannot impose his opinion on the trial court. The Court is the best and sole judge on what to do with the case before it." — This passage from Crespo v. Judge Mogul establishes the doctrine that the trial court has exclusive discretion over the disposition of a criminal case once an information has been filed, and was applied to uphold the MeTC Br. 66's independent assessment in granting the Motion to Withdraw.

• "In fine, there are 'two essential elements of proof of perjury: (1) the statement made by the defendants must be proven false; and (2) it must be proven that the defendant did not believe those statements to be true.' The records in the case prove the absence of both essential elements and, thus, there is no evidence to support a finding of probable cause." — This passage from the MeTC Br. 66 Order, quoted approvingly by the Court, states the essential elements of perjury and explains why the evidence failed to establish probable cause against Sebastian.

• Austria vs. AAA, 924 Phil. 41 (2022) — Controlling precedent that established the guidelines on the legal standing of a private complainant in assailing judgments or orders in criminal proceedings before the CA and the Supreme Court. The Court extended these guidelines to appeals before second-level courts, with the modification that conformity should be obtained from the relevant officials of the National Prosecution Service.

• Crespo vs. Judge Mogul, 235 Phil. 465 (1987) — Controlling precedent that established the doctrine that once a complaint or information is filed in court, any disposition of the case rests in the sound discretion of the court, and the fiscal cannot impose his opinion on the trial court. The Court applied this doctrine to uphold the MeTC Br. 66's independent assessment in granting the Motion to Withdraw.

• Isturis-Rebuelta vs. Rebuelta, 949 Phil. 1116 (2023) — Followed as precedent that applied the Austria guidelines to appeals and certiorari petitions filed by private complainants before the RTC, with the provincial or city prosecutors acting as counsel for the State.

• Fenequito vs. Vergara, Jr., cited in Isturis-Rebuelta — Cited for the delineation of functions between the OSG and the provincial or city prosecutors in acting as counsels for the State, which the Court relied upon in determining that the required conformity for appeals to the RTC should come from the National Prosecution Service.

• Laurel vs. Delute, 880 Phil. 474 (2020) — Cited for the proposition that criminal actions are instituted in the name of the State and the private complainant is regarded merely as a witness for the State.

• Article 183, Revised Penal Code — The provision defining and penalizing perjury, which was the crime charged against Sebastian in the Information filed before the MeTC.

• Rule 122, Section 1, 2000 Revised Rules on Criminal Procedure — The provision stating that "any party" may appeal from a judgment or final order in a criminal case, unless the accused will be placed in double jeopardy. The Court construed this phrase to include only real parties in interest: the State, the accused, or in certain limited instances, the private complainant.

• Book IV, Title III, Chapter 12, Section 35(1), 1987 Administrative Code of the Philippines — The provision granting the OSG the power to represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings. The Court applied this provision to determine that the OSG represents the State in criminal appeals before the CA and the Supreme Court.

• Republic Act No. 10071 (Prosecution Service Act of 2010), Sections 5, 7, and 9 — The statute that designates the Prosecution Staff, Regional Prosecutors, and Provincial/City Prosecutors to act as counsel for the People of the Philippines in criminal cases pending before trial courts. The Court applied this statute to determine that the required conformity for private complainants appealing to the RTC from first-level courts should be obtained from the relevant officials of the National Prosecution Service.

Gesmundo, C.J., Leonen, SAJ., Caguioa, Hernando, Inting, Zalameda, Gaerlan, Rosario, Lopez, Dimaampao, Marquez, and Villanueva, JJ., concurred. Lazaro-Javier, J., filed a separate concurrence. Singh, J., was on leave but left a concurring vote.

N/A — No dissenting opinions were noted in the case text.