G.R. No. 214960 - Chua vs. Secretary of Justice

Petitioners: Tony N. Chua, Jimmy N. Chua, and Ernest T. Jeng – responsible officers of NF Agri-Business Corporation (NF ABC).
Respondents: Secretary of Justice (SOJ) and BDO Unibank, Inc. (BDO) – BDO is the surviving entity after several bank mergers including Equitable Banking Corporation.

In 1999, Equitable Banking Corporation issued commercial letters of credit to import goods (primarily Peruvian fish meal and various soybean meals for agriculture) for NF ABC’s account.
The merchandise was delivered to NF ABC, and petitioners executed four trust receipts with amounts totaling P20,409,638.23, payable within 90 days.
NF ABC failed to pay the obligations when due.

On December 16, 2008, BDO demanded payment of P17,430,882.88 from NF ABC. Despite demand, NF ABC failed to remit proceeds of sale or return the goods.
BDO filed a Complaint-Affidavit alleging violation of the Trust Receipts Law.

NF ABC was severely affected by the Asian Financial Crisis and typhoons.
The goods were perishable, and petitioners struggled to find buyers; some goods perished, and they had to sell at a loss.
Petitioners maintained commitment to pay and entered into a written agreement with BDO modifying the payment schedule and interest. Postdated checks were issued covering payments until March 2004.
Petitioners contend that this new payment schedule constituted a novation, converting the original trust receipt obligations into a simple loan.

City Prosecutor of Makati City dismissed the complaint (Nov 25, 2009), citing novation and lack of dishonesty or abuse of confidence.
BDO’s motion for reconsideration denied.
DOJ Chief State Prosecutor affirmed dismissal on June 1, 2010.
On BDO’s motion, the SOJ reversed the dismissal in a March 30, 2011 resolution, finding probable cause and directing the filing of estafa charges under the Revised Penal Code relating to the Trust Receipts Law.
Petitioners’ motion for reconsideration denied by SOJ on February 20, 2012.
Petitioners filed a Petition for Certiorari before the Court of Appeals (CA).

On May 29, 2014, CA affirmed SOJ’s finding of probable cause, ruling no novation occurred; the payment schedule merely modified the original obligation.
Petitioners’ motion for reconsideration was denied on October 15, 2014.

CA committed grave abuse of discretion in affirming probable cause.
The trust receipt agreement was novated and converted into a simple loan, extinguishing original liability.
BDO estopped from insisting on original agreement since the parties’ relationship changed to debtor-creditor.
Novation before information filing precludes criminal liability.
Requested writ of preliminary injunction and temporary restraining order (TRO) to enjoin SOJ from enforcing resolution.

BDO and SOJ argue that novation does not extinguish criminal liability for violation of the Trust Receipts Law.
Failure to remit proceeds or return goods constitutes a violation despite any civil agreement modifications.
No basis exists for injunction or TRO.

Whether the Court of Appeals erred in affirming the Secretary of Justice’s finding of probable cause to charge petitioners with estafa under Article 315, paragraph 1(b) of the Revised Penal Code, in relation to the Trust Receipts Law.

Whether the execution of a new payment schedule constituted a novation extinguishing the petitioners’ liability under the trust receipts and negating criminal liability.

Whether the petitioners are entitled to a writ of preliminary injunction and a temporary restraining order to enjoin the enforcement of the SOJ resolution.