G.R. No. 159823 - Reyes vs. Rossi

On October 31, 1997, Teodoro A. Reyes (Reyes) and Advanced Foundation Construction Systems Corporation (Advanced Foundation), represented by Ettore Rossi (Rossi), executed a deed of conditional sale for equipment (Warman Dredging Pump HY 300A) worth P10,000,000.00.
Reyes was to pay P3,000,000.00 downpayment and P7,000,000.00 balance through four post-dated checks.
Reyes requested restructuring in January 1998; Advanced Foundation agreed to replace four post-dated checks with nine post-dated checks totaling P7,125,000.00, adding interest of P25,000.00/month on specified dates.

Reyes issued nine post-dated checks drawn on United Coconut Planters Bank.
Rossi deposited three checks (No. 72807, 79125, 72808) on maturity; two were stopped on Reyes’s instruction, one was dishonored for insufficient funds.
Two more checks (No. 72809, 72801) were deposited and returned marked "Account Closed." Remaining checks were not deposited assuming dishonor.

On July 29, 1998, Reyes sued Advanced Foundation before the RTC Quezon City for rescission of contract and damages.
Reyes alleged that the Caterpillar engine was misrepresented at 1200 horsepower when it was only 560 horsepower and concealed cracks existed on the pump.
Sought rescission, return of downpayment with interest, attorney’s fees, and damages.

On September 8, 1998, Rossi filed five counts of estafa and five counts of violation of Batas Pambansa Blg. 22 (Bouncing Checks Law) against Reyes before the City Prosecutor of Makati for dishonor of certain checks. A separate charge for violation of the same law was filed in Quezon City.

Reyes claimed checks were without consideration due to Advanced Foundation’s misrepresentations.
He ordered stop payment of some checks and questioned jurisdiction of Makati prosecutor citing issuance of checks occurred in Quezon City.
Requested suspension of criminal proceedings because of the pending civil action for rescission.

The Assistant City Prosecutor recommended dismissal of estafa charges and suspension of criminal proceedings for bouncing checks due to prejudicial question raised by civil action.
City Prosecutor of Makati approved said recommendation and ordered suspension pending resolution of civil case.

Rossi appealed to Secretary of Justice, who denied the appeal.
Rossi filed certiorari petition in the Court of Appeals (CA), which reversed suspension but affirmed dismissal of estafa complaints.

Reyes appealed CA decision to the Supreme Court, arguing (a) existence of prejudicial question, (b) fatal defects in petition should dismiss case, (c) CA erred relying on unrelated jurisprudence, and (d) no grave abuse of discretion by Secretary of Justice.
Rossi countered, calling the petition fatally defective and supporting CA ruling against suspension.
Reyes’s reply argued substantial compliance, existence of prejudicial question, and asserted error by CA in denying relief.

Whether the pending civil action for rescission of the contract constitutes a prejudicial question that warrants suspension of the criminal proceedings for violations of Batas Pambansa Blg. 22.
Whether the appeals and petitions were properly handled considering procedural and substantive defects claimed by Reyes.
Whether the Secretary of Justice committed grave abuse of discretion in upholding the suspension of the criminal proceedings.