PHILIPPINE INVESTMENT TWO (SPV-AMC), INC., PETITIONER, VS. KATHRINA L. SEBASTIAN, RESPONDENT.

Philippine Investment Two versus Sebastian

The Case

This is a criminal case for perjury that never reached trial, and the real question it raises is who may speak for the State when a criminal case is dismissed. Philippine Investment Two, a corporation that had borrowed money from Standard Chartered Bank and later sought rehabilitation, accused Kathrina Sebastian, the bank officer who verified the bank's pleadings, of making false statements under oath. The case matters because the Supreme Court uses it to fix the boundaries of standing in criminal appeals: the private complainant is a witness, not a party, and cannot appeal a dismissal on the criminal aspect without the conformity of the public prosecutor or the Office of the Solicitor General.

Procedural History

The complaint for two counts of perjury was filed with the Office of the City Prosecutor of Makati and later transferred to the Department of Justice. The Department of Justice found probable cause on one count, and an Information was filed before the Metropolitan Trial Court of Makati. That court denied Sebastian's motions, first through Branch 67 and then through Branch 138 of the Regional Trial Court of Makati, which denied her petitions for certiorari. The case was later re-raffled to Branch 66 of the Metropolitan Trial Court after the presiding judge inhibited himself.

Meanwhile, the Secretary of Justice reversed the Department of Justice and directed the withdrawal of the Information. Branch 66 granted the motion to withdraw and dismissed the case, finding no probable cause and crediting Sebastian's good faith. Philippine Investment Two appealed to Branch 147 of the Regional Trial Court of Makati without the conformity of the prosecutor or the Solicitor General, and that court reversed, reinstated the Information, and remanded the case for trial. On appeal, the Court of Appeals reversed Branch 147, reinstated the dismissal, and held that the private complainant had no legal personality to appeal. The case then reached the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Philippine Investment Two was a global affiliate of Lehman Brothers. Under Group Facilities executed in August 2007, Standard Chartered Bank extended loans to Lehman Brothers and its affiliates, and Lehman Brothers executed a Guarantee. A Pledge Agreement with collaterals worth ninety million dollars followed in September 2008. Philippine Investment Two drew a loan of 819 million pesos.

On September 15, 2008, Lehman Brothers filed for bankruptcy in New York, and a Stay Order barred creditors from enforcing claims against it. Three days later, a creditor petitioned for the rehabilitation of Philippine Investment Two before the Makati rehabilitation court. Standard Chartered filed claims in both proceedings. Sebastian verified the bank's Comment on the rehabilitation petition, which stated that the loan was inadequately secured by the Lehman Brothers guaranty, and later verified a Comment on a motion to disclose.

Philippine Investment Two charged her with perjury, claiming she concealed the Pledge Agreement. Sebastian answered that she acted in good faith, believing the guaranty and pledge could not be enforced because of the Stay Order, and that the second statement was a legal argument of counsel, not an assertion of fact. The Secretary of Justice agreed with her and directed withdrawal of the Information.

Issues

• Whether or not the private complainant, without the conformity of the public prosecutor or the Office of the Solicitor General, has legal personality to appeal the dismissal of a criminal case.
• Whether or not the Court of Appeals correctly reinstated the order of Branch 66 granting the motion to withdraw the Information and dismissing the criminal case against Sebastian.

Applicable Provisions

Section 1 of Rule 122 of the 2000 Revised Rules on Criminal Procedure provides:

Section 1. Who may appeal. – Any party may appeal from a judgment or final order, unless the accused will be placed in double jeopardy.

The Court construes the phrase "any party" to mean only the real parties in interest, namely the State, the accused, and in limited instances the private complainant.

Section 35(1) of the 1987 Administrative Code provides:

Section 35. Powers and Functions. – The Office of the Solicitor General shall represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of a lawyer.

This identifies the Office of the Solicitor General as the counsel of the State in criminal litigation, which is why its conformity is required for the appeal.

Ruling

On the first issue, the Court held that the appeal was defective. Criminal actions are instituted in the name of the State to determine penal liability, and the private complainant is regarded merely as a witness for the State. The phrase "any party" in Rule 122, Section 1 therefore includes only the real parties in interest. The Office of the Solicitor General represents the Government in litigation, and here both the prosecutor and the Solicitor General refused conformity, declaring that as far as the State is concerned it had no more case against Sebastian. The private complainant's interest, at most, relates to the civil aspect, and the appeal attacked the criminal aspect.

On the second issue, the Court held that the Court of Appeals correctly reinstated the dismissal. Branch 66 did not merely rubber-stamp the directive of the Secretary of Justice; it made an independent assessment of the evidence, examined the challenged paragraph, and found that the statements of fact were not willful and deliberate falsehoods, and that Sebastian bona fide believed them true in light of the Stay Order. The grant or denial of a motion to withdraw rests on the sound discretion of the trial court.

Doctrine

First, under Rule 122, Section 1, only real parties in interest may appeal a judgment or final order in a criminal case: the State, the accused, and in limited instances the private complainant. The private complainant is a witness for the State and cannot appeal the dismissal of the criminal aspect without the conformity of the public prosecutor or the Office of the Solicitor General.

Second, when the prosecution moves to withdraw an Information, the trial court must make its own independent assessment of probable cause; it is not bound by the directive of the Secretary of Justice, and its resolution of the motion is an exercise of sound discretion.

Third, good faith, or a bona fide belief in the truth of a statement, is an adequate defense in a prosecution for perjury, which requires a willful and deliberate assertion of falsehood on a material matter.

Disposition

The petition was denied; the Court of Appeals stood affirmed, the dismissal of the criminal case was sustained, and Sebastian prevailed.

Remember This

Memorize this line: the private complainant is only a witness for the State and cannot appeal a criminal dismissal without the conformity of the prosecutor or the Solicitor General. Examiners use this case on the phrase "any party" in Rule 122, Section 1, and on the trial court's duty to independently assess a motion to withdraw.