G.R. No. 193092 - Villa-Ignacio vs. Gutierrez

The First Women's Credit Corporation (FWCC) secured a loan amounting to ₱400 million from petitioner Land Bank of the Philippines, as evidenced in a Credit Line Agreement dated August 22, 1997.
As collateral, respondent Ramon P. Jacinto, President of FWCC, issued nine postdated checks totaling ₱465 million drawn against FWCC’s account at the Philippine National Bank.

Prior to the maturity of the issued postdated checks, petitioner and respondent entered into several letter agreements.
These dealings culminated in the execution of a Restructuring Agreement on June 3, 1998, which modified the terms of the original Credit Line Agreement, changing various payment conditions and obligations.

FWCC defaulted on its payment obligations under the restructured terms.
Land Bank subsequently presented the checks for payment as they matured; however, all were dishonored due to “Payment Stopped” or “Drawn Against Insufficient Funds.”
Despite repeated demands, respondent did not honor payment of the checks.

On January 13, 1999, Land Bank, through its Assistant Vice President Udela C. Salvo, filed a Complaint-Affidavit before the Makati City Prosecutor’s Office charging respondent with violation of Batas Pambansa Blg. 22 (the “Bouncing Checks Law”).
In his Counter-Affidavit, respondent contended that the criminal complaint was baseless since the Restructuring Agreement had effectively extinguished the original loan obligation through payment and novation.

The City Prosecutor, supported by Prosecutor George V. De Joya, issued a Resolution on March 3, 1999 dismissing the complaint on the ground that novation had occurred, rendering the checks ineffective as a basis for criminal prosecution.
Petitioner’s subsequent motion for reconsideration on June 21, 1999 was denied, prompting elevation of the matter to the Department of Justice (DOJ).
The DOJ initially dismissed the appeal on April 10, 2000, but later, upon reconsideration, reversed its stance by issuing a Resolution on October 25, 2000, asserting that novation was not a mode of extinguishing criminal liability and directing the filing of information against respondent for nine counts of violation of B.P. 22.
A later motion for reconsideration of this DOJ Resolution was denied in another Resolution on December 18, 2000.
On November 28, 2001, the Court of Appeals (CA) reversed the DOJ’s revised position by reinstating the earlier dismissal of the complaint and ruling that novation could create a prejudicial question if it occurred prior to the filing of the criminal information.

Petitioner challenged the CA’s decision, asserting that even if novation occurred, it did not affect the liability for the bouncing checks under B.P. 22.
Petitioner further argued that the Restructuring Agreement did not release FWCC from its obligation, as it merely accommodated FWCC’s sister company, RJ Ventures and Development Corporation.
The petitioner contended that respondent’s liability for issuing a worthless check should remain irrespective of any alleged novation of the underlying loan obligation.

Whether the Court of Appeals erred in reversing the DOJ Resolution that found probable cause to hold the respondent liable for violation of B.P. 22.
Whether the alleged novation, evidenced by the Restructuring Agreement and preceding letter agreements, effectively extinguished the respondent's criminal liability for issuing the dishonored checks.
Whether the Order dated May 28, 1998, issued by the Regional Trial Court (RTC) in Special Proceedings No. M-4686, which proscribed FWCC from paying its debts, constitutes a justifying circumstance that would prevent criminal liability from attaching to the respondent.
Whether the CA should have taken judicial notice of the provisions in the Land Bank Charter relative to the collection of the bank’s financial exposures and their impact on the issues raised.