The Supreme Court has denied the petition of Philippine Investment Two (SPV-AMC), Inc. (PI Two) and affirmed the dismissal of a criminal perjury case against Kathrina L. Sebastian, Associate Director for Origination and Client Coverage of Standard Chartered Bank (SCB). The Court ruled that the Court of Appeals (CA) correctly reversed the Regional Trial Court ruling and reinstated the Metropolitan Trial Court order dismissing the case.
The Case
PI Two, a global affiliate of Lehman Brothers Holdings, Inc., filed a Complaint-Affidavit before the Office of the City Prosecutor of Makati (OCP-Makati) charging Sebastian with two counts of perjury under Article 183 of the Revised Penal Code. The charges arose from statements Sebastian made in two pleadings she verified and filed before the Regional Trial Court of Makati acting as a Philippine Rehabilitation Court (PH Rehabilitation Court) in connection with PI Two's corporate rehabilitation proceedings.
On August 17, 2007, Lehman Brothers and SCB's New York branch executed Group Facilities whereby SCB extended financial facilities, including loans, to Lehman Brothers and its global affiliates. Lehman Brothers also executed a Guarantee to secure its own obligations and those of its affiliates, including PI Two. A Pledge Agreement with collaterals dated September 12, 2008 was later executed in favor of SCB, with collaterals that included HD Supply Notes with a market value of USD 90 million. By virtue of the Group Facilities, PI Two obtained a loan from SCB in the amount of PHP 819 million.
On September 15, 2008, Lehman Brothers filed a Petition for Bankruptcy before the United States Bankruptcy Court for the State of New York, which issued a Stay Order on September 16, 2008 preventing creditors from enforcing claims against Lehman Brothers. On September 18, 2008, Metropolitan Bank and Trust Company filed a Petition for Corporate Rehabilitation of PI Two before the PH Rehabilitation Court.
PI Two alleged that Sebastian perjured herself in SCB's verified Comment on the Petition for Rehabilitation by stating, among other things, that PI Two was not able to furnish adequate guarantees or security in exchange for the Lehman Brothers guaranty. PI Two contended this deliberately concealed the Pledge Agreement with collaterals, which it said was more than sufficient to cover PI Two's loan.
The Issue
The central question before the Court was whether the Metropolitan Trial Court of Makati, Branch 66 (MeTC Br. 66) properly granted the public prosecutor's Motion to Withdraw Information and dismissed the perjury case against Sebastian, and whether petitioner PI Two's subsequent appeal to the Regional Trial Court without State conformity was proper.
The Ruling
The Supreme Court held that the MeTC Br. 66's grant of the OCP-Makati's Motion to Withdraw Information and the consequent dismissal of the criminal case against Sebastian was proper. The Court further held that PI Two's appeal to the RTC without State conformity was improper because it essentially prayed for the reinstatement of the criminal case, not merely the civil aspect thereof, and because denial of due process could not be ascribed to the proceedings below.
The Court declared: "In light of the foregoing, the Court holds that the CA correctly reversed and set aside the RTC Br. 147 ruling, and consequently, reinstated that of the MeTC Br. 66."
The dispositive portion of the decision reads: "ACCORDINGLY, the Petition is DENIED. The Decision dated September 7, 2017 and the Resolution dated April 13, 2018 of the Court of Appeals in CA-G.R. CR No. 37898 and CA-G.R. SP No. 137469 are hereby AFFIRMED. Criminal Case No. 375840 for perjury against respondent Kathrina L. Sebastian is DISMISSED."
By the Numbers
- PHP 819 million — loan obtained by PI Two from SCB under the Group Facilities
- USD 90 million — market value of HD Supply Notes included as collaterals under the Pledge Agreement
- August 17, 2007 — date Lehman Brothers and SCB's New York branch executed the Group Facilities
- September 12, 2008 — date of the Pledge Agreement with collaterals
- September 15, 2008 — date Lehman Brothers filed its Petition for Bankruptcy
- September 16, 2008 — date the US Bankruptcy Court issued its Stay Order
- September 18, 2008 — date the Petition for Corporate Rehabilitation of PI Two was filed
- August 22, 2014 — date of the Department of Justice (DOJ) Resolution directing withdrawal of the Information
- September 7, 2017 — date of the CA Decision being affirmed
The Court's Reasoning
The Court found that the MeTC Br. 66 did not merely rubber-stamp the Secretary of Justice's resolution but conducted its own independent evaluation of the evidence before granting the motion to withdraw. The MeTC Br. 66 found that the falsity of the factual statement alleged to be perjurious — that PI Two did not furnish adequate guarantees or security in exchange for the Lehman Brothers guaranty — was not supported by any evidence on record, and that PI Two itself had not refuted that particular fact.
The Court cited the two essential elements of proof of perjury: "(1) the statement made by the defendants must be proven false; and (2) it must be proven that the defendant did not believe those statements to be true." The Court agreed with the Secretary of Justice that Sebastian had sufficiently and reasonably explained the circumstances surrounding her statement, and that she acted in good faith based on facts that led her to believe her assertions were true and correct.
The Court also ruled that the Pledge Agreement referred to in the proceedings was, on its face, provided by Lehman Brothers — not by PI Two — and that no additional or replacement guarantee or security provided by PI Two appeared in the records.
Source: Supreme Court of the Philippines, G.R. Nos. 238729-30. The ponente's name does not appear in the excerpt provided.
This report summarizes a public Supreme Court decision and is not legal advice.