METROPOLITAN BANK AND TRUST COMPANY, RICARDO GELLA AND TEOFILO FIESTA, PETITIONERS, VS. COURT OF APPEALS AND ANTONIO LAIÑO, RESPONDENTS.

Metropolitan Bank and Trust Company versus Laiño

The Case

This is a petition for review on certiorari brought by Metropolitan Bank and Trust Company, together with its officers Ricardo Gella and Teofilo Fiesta, against Antonio Laiño. The bank and its officers ask the Supreme Court to reverse the Court of Appeals, which had held them liable for damages arising from malicious prosecution. Laiño had been charged with estafa at the instance of the bank, and that criminal case was dismissed. He then sued the bank for damages. The case matters because it fixes the elements of malicious prosecution, clarifies that a public prosecutor's finding of probable cause does not bind the civil court, and shows how a corporation may be answerable in damages when it uses the criminal process to harass rather than to seek justice.

Procedural History

Teofilo Fiesta, a manager of the bank, filed a letter-complaint with the City Fiscal accusing Laiño of swindling the bank. After preliminary investigation, the City Fiscal issued a resolution finding probable cause to charge Laiño with estafa, and an information was filed with the Regional Trial Court of San Carlos City, Branch 57. Upon a demurrer to evidence filed by Laiño, that court dismissed the criminal case as against him, holding the prosecution evidence lamentably inadequate. The court later also dismissed the case as against Eduardo Tambis, but held Tambis civilly liable to the bank for a reduced amount.

Laiño then filed a complaint for damages against the bank, its officers, and the City Fiscal before the Regional Trial Court of Bacolod City, Branch 45, on the ground of malicious prosecution. The trial court dismissed his complaint and, on the bank's counterclaim, ordered Laiño to pay actual and exemplary damages, attorney's fees, and to return an amount to the bank. Laiño appealed to the Court of Appeals, which set aside the trial court's decision and awarded him moral damages, exemplary damages, and attorney's fees. The bank's motion for reconsideration was denied. The bank and its officers then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Eduardo Tambis opened a personal account with the bank and deposited there two checks payable to ACL Engine Consultant, the sole proprietorship of Antonio Laiño. The bank at first refused the deposit because the checks were payable to ACL and not to Tambis, but it accepted them upon Tambis's insistence and his assurance that the supporting authority from ACL would follow. Tambis then withdrew part of the value of those checks. The bank allowed the withdrawal even though Tambis never presented the promised written authority.

Laiño later protested the transactions to the bank, and he withdrew the full value of the checks. The bank, through Fiesta, then filed a letter-complaint accusing Laiño of swindling it. The City Fiscal found probable cause and recommended the filing of an estafa charge against both Laiño and Tambis, reasoning that Laiño had withdrawn the full amount in disregard of a payment Tambis had made to a supplier.

The criminal case against Laiño was dismissed upon his demurrer to evidence, the trial court finding no proof of any partnership between Tambis and Laiño and the prosecution evidence against Laiño inadequate. Laiño then sued the bank and its officers for damages for malicious prosecution.

Issues

• Whether or not the Court of Appeals correctly held that the criminal prosecution of Laiño was not founded on probable cause.
• Whether or not the bank and its officers acted with malice in initiating the criminal complaint against Laiño.
• Whether or not the bank and its officers are liable for damages for malicious prosecution.

Applicable Provisions

Section 11 of Article III of the Constitution, on the right of access to the courts, provides:

Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty.

This guarantee is the starting point of the Court's reasoning: the right to sue is coupled with the responsibility to show that a suit rests on a legitimate cause of action, and its abuse through a baseless prosecution gives rise to liability.

The Court also grounds the action on the Civil Code provisions on human relations, which it invokes as the basis of a damages claim by one injured by the abuse of judicial processes.

Ruling

On the first issue, the Court sustained the Court of Appeals. It held that probable cause means a reasonable belief of guilt, resting on evidence of the likelihood that a crime was committed and that the person suspected is probably guilty, though it need not rise to clear and convincing evidence or to proof sufficient for conviction. As a general rule, acquittal is not equated with lack of probable cause. But the Court stressed that the prosecutor's finding of probable cause is not conclusive in a later civil action for malicious prosecution, because the civil court may evaluate the facts on which that finding rested.

Examining the City Fiscal's resolution, the Court found that its own findings tended to discount the probability that Laiño committed estafa. The bank itself had allowed Tambis to open the account and deposit the ACL checks, and it had required Tambis to submit a written authorization, a requirement it would not have demanded had it been certain of a partnership. Yet the bank filed the complaint on the bare claim of Tambis that he was Laiño's partner. The bank also allowed Tambis to withdraw more than the amount supposedly owed to the supplier, showing that it treated the account as Tambis's own. The resolution failed to link Laiño to Tambis's transactions.

On the second issue, the Court held that the bank acted with malice. The only basis for the complaint was Tambis's affidavit claiming a partnership, a frivolous excuse coming after the bank had itself insisted on written proof of partnership. The bank discarded its own requirement of written proof and settled for Tambis's bare statement, although it had nothing to hold against Laiño. In pressing charges despite knowledge that it had no cause against him, the bank acted with ill intent and abused the processes of the court.

On the third issue, the Court affirmed the award of damages in Laiño's favor, finding no reversible error in the decision of the Court of Appeals.

Doctrine

To recover damages for malicious prosecution, the plaintiff must prove four elements: that the defendant was himself the prosecutor or at least instigated the prosecution; that the prosecution finally terminated in the plaintiff's acquittal; that in bringing the action the prosecutor acted without probable cause; and that the prosecutor was actuated by malice, meaning improper and sinister motives. The plaintiff must also prove the damages suffered.

Probable cause implies a mere reasonable belief of guilt. It requires more than bare suspicion but need not rest on clear and convincing evidence or on evidence sufficient to convict, and acquittal alone does not establish its absence. Nevertheless, a public prosecutor's finding of probable cause does not bind the court in a civil action for malicious prosecution; otherwise the remedy of damages for malicious prosecution would be rendered obsolete. Malice may be inferred from the prosecutor's knowledge that he had no cause against the accused, as when a bank abandoned its own requirement of written proof and relied on a bare claim to hale an innocent person into court.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, holding the bank and its officers liable to Laiño for moral damages, exemplary damages, and attorney's fees.

Remember This

Memorize the four elements of malicious prosecution and the rule that probable cause means only a reasonable belief of guilt, not proof beyond reasonable doubt. Examiners use this case to test whether a prosecutor's finding of probable cause binds the civil court, and to test malice inferred from a bank's abandonment of its own documentary requirements.