RAFAEL H. GALVEZ and KATHERINE L. GUY v. HON. COURT OF APPEALS and ASIA UNITED BANK G.R. No. 187919 ASIA UNITED BANK v. GILBERT G. GUY, PHILIP LEUNG, KATHERINE L. GUY, RAFAEL H. GALVEZ and EUGENIO H. GALVEZ, JR. G.R. No. 187979 GILBERT G. GUY, PHILIP LEUNG and EUGENIO H. GALVEZ, JR. v. ASIA UNITED BANK G.R. No. 188030 April 25, 2012

 

RAFAEL H. GALVEZ and KATHERINE L. GUY v. HON. COURT OF APPEALS and ASIA UNITED BANK G.R. No. 187919 ASIA UNITED BANK v. GILBERT G. GUY, PHILIP LEUNG, KATHERINE L. GUY, RAFAEL H. GALVEZ and EUGENIO H. GALVEZ, JR. G.R. No. 187979 GILBERT G. GUY, PHILIP LEUNG and EUGENIO H. GALVEZ, JR. v. ASIA UNITED BANK G.R. No. 188030 April 25, 2012

In this case, the Court holds that AUB, being a commercial bank, is not beyond the coverage of PD No. 1689. The Court asserts that a bank is a corporation whose fund comes from the general public and PD No. 1689 does not distinguish the nature of the corporation. It requires, rather, that the funds of such corporation should come from the general public. This was highlighted by the third "whereas clause" of the quoted law which states that the same also applies to other "corporations/associations operating on funds solicited from the general public."

FACTS: In 1999, Radio Marine Network (Smartnet) Inc. (RMSI) claiming to do business under the name Smartnet Philippines and/or Smartnet Philippines, Inc. (SPI), applied for an Omnibus Credit Line for various credit facilities with Asia United Bank (AUB). To induce AUB to extend the Omnibus Credit Line, RMSI, through its directors and officers, presented its Articles of Incorporation with its 400-peso million capitalization and its congressional telecom franchise.

Satisfied with the credit worthiness of RMSI, AUB granted a P250 million Omnibus Credit Line, under the name of Smartnet Philippines, RMSI's Division. Later, it was increased to P452 minion after a third-party real estate mortgage by an affiliate of Guy Group of Companies, in favor of Smartnet Philippines, was offered to the bank. Simultaneous to the increase, RMSI submitted a proof of authority to open the Omnibus Credit Line and peso and dollar accounts in the name of Smartnet Philippines, Inc., which Gilbert Guy, et al., represented as a division of RMSI, as evidenced by the letterhead used in its formal correspondences with the bank and the financial audit made by SGV & Co. Attached to this authority was the Amended Articles of Incorporation of RMSI, doing business under the name of Smartnet Philippines, and the Secretary's Certificate of SPI authorizing its directors, Gilbert Guy and Philip Leung to transact with AUB. Prior to this major transaction, however, and, unknown to AUB, Gilbert Guy, et al. formed a subsidiary corporation, the SPI with a paid-up capital of only P62,500.00.

Believing that SPI is the same as Smartnet Philippines AUB granted it, among others, an Irrevocable Letter of Credit in the total sum of $29,300.00 in favor of Rohde & Schwarz Support Centre Asia Ptd. Ltd., which is the subject of these consolidated petitions. To cover this liability Gilbert Guy executed Promissory Note (PN) in behalf of SPI in favor of AUB. This PN was renewed twice, once, in the name of SPI, and last, in the name of Smartnet Philippines, bolstering AUB's belief that RMSI's directors and officers consistently treated this letter of credit, among others, as obligations of RMSI.

When RMSI's obligations remained unpaid, AUB sent demand letters. RMSI denied liability contending that the transaction was incurred solely by SPI, a corporation which belongs to the Guy Group of Companies, which has a separate and distinct personality from RMSI. It further claimed that while Smartnet Philippines is an RMSI division, SPI, is a subsidiary of RMSI, and hence, is a separate entity.

Aggrieved, AUB filed a case of syndicated estafa under Article 315(2)(a) of the Revised Penal Code in relation to Section 1 of PD No. 1689 against the interlocking directors of RMSI and SPI, namely, Gilbert G. Guy, Rafael H. Galvez, Philip Leung, Katherine L. Guy, and Eugenio H. Galvez, Jr., before the Office of the City Prosecutor of Pasig City. Accordingly, an Information was filed against Gilbert Guy, et al., with the RTC of Pasig City. Both parties filed their respective Petitions for Review with the Department of Justice (DOJ) assailing the Resolution of the Office of the City Prosecutor of Pasig City. The DOJ reversed the City Prosecutor's Resolution and ordered the dismissal of the estafa charges against Gilbert Guy, et al. for insufficiency of evidence. The AUB's Motion for Reconsideration was denied.

AUB then assailed the DOd Resolution before the CA. The CA partially granted AUB's petition. Hence, these consolidated petitions.

ISSUE: Whether there is probable cause to prosecute Gilbert Guy, et al., for the crime of syndicated estafa under PD No. 1689.

HELD: Anent the issue as to whether or not Gilbert Guy, et al., should be charged for syndicated estafa in relation to Section 1 of PD No. 1689, which states that:

Section 1. Any person or persons who shall commit estafa or other forms of swindling as defined in Article 315 and 316 of the Revised Penal Code, as amended, shall be punished by life imprisonment to death if the swindling (estafa) is committed by a syndicate consisting of five or more persons formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme, and the defraudation results in the misappropriation of moneys contributed by stockholders, or members of rural banks, cooperatives, "samahang nayon(s)," or farmers associations, or of funds solicited by corporationsl associations from the general public.

The Court holds that the afore-quoted law applies to the case at bar. Gilbert Guy et al. want the Court to believe that AUB, being a commercial bank, is beyond the coverage of PD No. 1689. The Court holds, however, that a bank is a corporation whose fund comes from the general public. PD No. 189 does not distinguish the nature of the corporation. It requires, rather, that the funds of such corporation should come from the general public. This is bolstered by the third "whereas clause" of the quoted law which states that the same also applies to other "corporations/associations operating on funds solicited from the general public." This is precisely the very same scheme that PD No. 1689 contemplates to "be checked or at least be minimized by imposing capital punishment involving funds solicited by corporations/associations from the general public" because "this erodes the confidence of the public in the banking and cooperative system, contravenes public interest and constitutes economic sabotage that threatens the stability of the nation."