A.M. No.

17-01-04-SC February 7, 2017

RE: COMPLAINT OF AERO ENGR. DARWIN A. RECI AGAINST COURT

ADMINISTRATOR JOSE MIDAS P. MARQUEZ AND DEPUTY COURT
ADMINISTRATOR THELMA C. BAHIA RELATIVE TO CRIMINAL CASE
NO. 05-236956

The Facts

Complainant alleges that he is the older brother of PO2 Dennis Azuela Reci (PO2 Reci),
the accused in Criminal Case No. 05-236956 for the crime of Qualified Trafficking in
Persons defined and penalized under Section 6 of Republic Act No. 9208, otherwise
known as the "Anti-Trafficking in Persons Act of 2003," dockete9 before the Regional
Trial Court of the City of Manila, Branch 9 (RTC) and presided by Judge Amelia Tria
Infante (Judge Infante). It appears that PO2 Reci was convicted in the said case, and as
such, his counsel filed a Notice of Appeal before the RTC. According to complainant, he
discovered that after three (3) long years from the filing of said notice, the case records
have yet to be transmitted to the Court of Appeals, and that it was only after his
subsequent prodding that such transmittal was made. Complainant further alleges that
while the delayed transmittal resulted in administrative sanctions meted by the Second
Division of the Court (i.e., reprimand and warning), he feels that the same were
insufficient as there were no penalties imposed upon the clerk of court and the court
stenographer of the RTC. Thus, he filed the instant complaint accusing CA Marquez
and DCA Bahia of Gross Negligence and Dereliction of Duty "for failing to monitor the
gross incompetence of [Judge Infante]" in the transmittal of the records of Criminal Case
No. 05-236956 to the Court of Appeals in due time. Complainant insists that CA
Marquez and DCA Bahia were equally responsible for the aforesaid delay, and thus,
should also be held administratively liable.1

The Issue Before the Court

The sole issue raised for the Court's resolution is whether or not CA Marquez and DCA
Bahia should be held administratively liable for Gross Negligence and Dereliction of
Duty.

The Court's Ruling

Dereliction of duty may be classified as gross or simple neglect of duty or negligence.

Gross neglect of duty or gross negligence "refers to negligence characterized by the
want of even slight care, or by acting or omitting to act in a situation where there is a
duty to act, not inadvertently but wilfully and intentionally, with a conscious indifference
to the consequences, insofar as other persons may be affected. It is the omission of that
care that even inattentive and thoughtless men never fail to give to their own property."
It denotes a flagrant and culpable refusal or unwillingness of a person to perform a duty.
In cases involving public officials, gross negligence occurs when a breach of duty is
flagrant and palpable.2 In contrast, simple neglect of duty means the failure of an
employee or official to give proper attention to a task expected of him or her, signifying a
"disregard of a duty resulting from carelessness or indifference." 3

In this relation, it is settled that the quantum of evidence necessary to find an individual
liable for the aforesaid offenses is substantial evidence, or "that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a
conclusion."4 Substantial evidence does not necessarily mean preponderant proof as
required in ordinary civil cases, but such kind of relevant evidence as a reasonable mind
might accept as adequate to support a conclusion or evidence commonly accepted by
reasonably prudent men in the conduct of their affairs.5

Applying the foregoing to this case, it is clear that aside from his bare allegations,
complainant has not shown any prima facie evidence to support his claim that CA
Marquez and DCA Bahia should be held equally liable for the delay in the transmittal of
the case records of Criminal Case No. 05-236956 to the Court of Appeals in due time.
Absent any proof to the contrary, CA Marquez and DCA Bahia are presumed to have
regularly performed their duties,6 and consequently, the complaint against them ought
to be dismissed.

WHEREFORE, the complaint is DISMISSED for lack of merit.

 G.R. No. 178947 June 26, 2013

VIRGINIA DE LOS SANTOS-DIO, as authorized representative of H.S.

EQUITIES, LTD., and WESTDALE ASSETS, LTD., Petitioner,
vs.
THE HONORABLE COURT OF APPEALS, JUDGE RAMON S.
CAGUIOA, in his capacity as Presiding Judge of Branch 74, Regional
Trial Court, Olongapo City, and TIMOTHY J. DESMOND, Respondents.

x-----------------------x

G.R. No. 179079

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
TIMOTHY J. DESMOND, Respondent.

DECISION

PERLAS-BERNABE, J.:

Before the Court are consolidated petitions for review on certiorari1 assailing the
November 8, 2006 Decision2 and July 19, 2007 Resolution3 of the Court of Appeals
(CA) in CA-G.R. SP No. 88285, upholding the validity of the trial court’s dismissal of
separate criminal informations for estafa against private respondent Timothy J.
Desmond (Desmond) due to lack of probable cause.

The Facts

In 2001, petitioner Virginia De Los Santos-Dio (Dio), the majority stockholder of H.S.
Equities, Ltd. (HS Equities) and authorized representative of Westdale Assets, Ltd.
(Westdale),4 was introduced to Desmond, the Chairman and Chief Executive Officer
(CEO) of the Subic Bay Marine Exploratorium, Inc. (SBMEI), and the authorized
representative of Active Environments, Inc. and JV China, Inc. (JV China), the majority
shareholder of SBMEI.5 After some discussion on possible business ventures, Dio, on
behalf of HS Equities, decided to invest a total of US$1,150,000.006 in SBMEI’s Ocean
Adventure Marine Park (Ocean Adventure), a theme park to be constructed at the Subic
Bay Freeport Zone which, when operational, would showcase live performances of
false-killer whales and sea lions. In this relation, Dio claimed that Desmond led her to
believe that SBMEI had a capital of US$5,500,000.00, inclusive of the value of the
marine mammals to be used in Ocean Adventure, 7 and also guaranteed substantial
returns on investment.8 Desmond even presented a Business Plan, indicating that: (a)
Ocean Adventure’s "attendance will rise from 271,192 in 2001 to just over 386,728 in
2006, with revenues rising from US$4,420,000.00 million to US$7,290,000.00 million in
the same time frame"; (b) "early investors are expected to reap an annual return of 23%
in 2001, rising to 51% in 2006"; and (c) "fully priced shares would yield a 19% return] in
2001, rising to 42% in 2006."9 Thus, on January 18, 2002, a Subscription
Agreement10 was executed by Desmond, as representative of SBMEI and JV China,
and Dio, as representative of HS Equities.

While no Certificate of Stock was issued either to HS Equities or to Dio, HS Equities

was expressly granted minority protection rights in a subsequent Subscription and
Shareholders Agreement11 dated March 12, 2002, stating that there shall be "a nominee
of the Subscriber to be elected as Treasurer/Chief Financial Officer, who may not be
removed by the Board of Directors without the affirmative vote of the
Subscriber."12 Accordingly, Dio was elected as a member of SBMEI’s Board of Directors
and further appointed as its Treasurer.13 The parties later executed two (2) Investor’s
Convertible Promissory Notes – one dated April 4, 200114 and another dated May 8,
200115 – covering HS Equities’ infusion of a total of US$1,000,000.00 for the purpose of
purchasing machinery, equipment, accessories, and materials to be used for the
construction of Ocean Adventure.

In June 2002, Dio, this time on behalf of Westdale, invested another

US$1,000,000.0016 in a separate business venture, called the Miracle Beach Hotel
Project (Miracle Beach), which involved the development of a resort owned by
Desmond adjoining Ocean Adventure. They agreed that the said investment would be
used to settle SBMEI’s ₱40,000,000.00 loan obligation to First Metro Investment
Corporation and for the construction of 48 lodging units/cabanas.17 However, when the
corresponding subscription agreement was presented to Dio by SBMEI for approval, it
contained a clause stating that the "funds in the Subscription Bank Account" were also
to be used for the "funding of Ocean Adventure’s Negative Cash Flow not exceeding
US$200,000.00."18 This was in conflict with the exclusive purpose and intent of
Westdale’s investment in Miracle Beach and as such, Dio refused to sign the
subscription agreement.

Dio further claimed that she found out that, contrary to Desmond’s representations,
SBMEI actually had no capacity to deliver on its guarantees, and that in fact, as of 2001,
it was incurring losses amounting to ₱62,595,216.00.19 She likewise claimed to have
discovered false entries in the company’s books and financial statements – specifically,
its overvaluation of the marine animals and its non-disclosure of the true amount of JV
China’s investment20 – which prompted her to call for an audit investigation.
Consequently, Dio discovered that, without her knowledge and consent, Desmond
made certain disbursements from Westdale’s special account, meant only for Miracle
Beach expenditures (special account), and diverted a total of US$72,362.78 therein for
the operating expenses of Ocean Adventure.21 When Desmond refused to execute an
undertaking to return the diverted funds, Dio, in her capacity as Treasurer of SBMEI,
suspended the release of the remaining funds in the aforesaid special account. 22

Eventually, after Dio was ousted as Director and Treasurer of SBMEI,23 she filed, on
April 19, 2004, two (2) criminal complaints24 (subject criminal complaints) for estafa (a)
through false pretenses under Article 315(1)(b)25 of the Revised Penal Code26 (RPC);
and (b) with unfaithfulness or abuse of confidence through misappropriation or
conversion under Article 315(2)(a)27 of the RPC, both against Desmond before the
Olongapo City Prosecutor’s Office (City Prosecutor’s Office), docketed as IS Nos. 04-M-
992 and 04-M-993.

In defense, Desmond maintained that his representation of himself as Chairman and

CEO of SBMEI was not a sham and that Dio has not even proven that he did not have
the expertise and qualifications to double her investment. Among others, he also denied
having been fired from Beijing Landa Aquarium Co. Ltd. for his supposed incompetence
and mismanagement. He further asserted that it was not deceitful to value the marine
mammals at US$3,720,000.00 as equity contribution of JV China in SBMEI,
notwithstanding the fact that two (2) false killer whales had already perished before the
company could start operations. This is because the said valuation, in any case, would
be based on the collective income-earning capacity of the entire animal operating
system derived from revenues generated by marine park attendance and admission
fees.28

In reply, Dio insisted that SBMEI, at the outset, never had sufficient assets or resources
of its own because, contrary to Desmond’s claims, the total amount of US$2,300,000.00
it purportedly invested in buildings and equipment actually came from the investments
Dio’s company made in SBMEI.29

After the preliminary investigation, the City Prosecutor issued a Resolution30 dated
August 26, 2004, finding probable cause against Desmond for the abovementioned
crimes, to wit:

The foregoing clearly applies in the instant two (2) cases as borne out by the following
facts, to with [sic]: (1) Desmond, as the Chairman and Chief Executive Office of SBMEI
and in order to persuade Dio to invest, represented that he possessed the necessary
influence, expertise and resources (in terms of credit and property) for the project
knowing the same to be false as he never had the capital for the project as borne out by
his correspondences with Dio; and (2) Dio fell for these misrepresentations and the lure
of profit offered by Desmond, thereby being induced to invest the amounts of
$1,150,000.00 and $1,000,000.00 to the damage and prejudice of her company.

The elements of the crimes charged were thus established in these cases, namely Dio
parted with her money upon the prodding and enticement of respondent on the false
pretense that he had the capacity and resources for the proposed project. In the end,
Dio was not able to get her money back, thus causing her damage and prejudice.
Moreover, such defraudation or misappropriation having been committed by Desmond
through his company SBMEI involving funds solicited from Dio as a member of the
general public in contravention of the public interest, the probable cause clearly exists to
indict Desmond for the crime of Estafa under Article 315 (1)(b) and (2)(a) of the Revised
Penal Code in relation to PD No. 1689.31

In view of the foregoing, corresponding criminal informations32 (subject informations)

were filed with the Regional Trial Court of Olongapo City, Branch 74 (RTC), docketed as
Criminal Case Nos. 516-2004 and 515-2004. The accusatory portions thereof read as
follows:

Criminal Case No. 516-200433

That in or about and sometime in early 2001, in Olongapo City, Philippines, and within
the jurisdiction of this Honorable Court, the abovenamed accused, being the officer of
Subic Bay Marine Exploration, Inc. (SBMEI), acting as a syndicate and by means of
deceit, did then and there, willfully, unlawfully and feloniously defraud H.S. EQUITIES
LIMITED, represented in this case by Virginia S. Delos Santos-Dio in the following
manner, to wit: the said accused by means of false manifestations and fraudulent
representations which he made to said Virginia S. Delos Santos-Dio to the effect that he
had the expertise and qualifications, as well as the resources, influence, credit and
business transaction with the Subic Bay Metropolitan Authority (SBMA) and other
financing institutions to ensure the viability of the Subic Bay Marine Exploration Ocean
Adventure Project (SBMEOA), which he represented to be a qualified and legally
existing investment enterprise with capacity to solicit investment from the general public,
by submitting documents for the purpose, which representations he knew to be false
and fraudulent and the supporting documents are similarly spurious and were only
made in order to induce said Virginia S. Delos Santos-Dio to invest and deliver as in fact
she invested and delivered a total amount of One Million One Hundred Fifty Thousand
US Dollars ($1,150,000.00) to the said accused on the strength of said manifestations
and representations and supporting documents, and said accused, once in possession
of the said amount, misapplied, converted and misappropriated the same to his own
personal use and benefit, to the damage and prejudice of H.S. Equities Limited in the
amount of US $1,150,000.00 or Php57,500,000.00 Pesos, the dollar computed at the
rate of Php 50.00 to [US]$1.00 which was the prevailing rate of exchange of a dollar to
peso at the time of the commission of the offense.

CONTRARY TO LAW.

Criminal Case No. 515-200434

That in or about and sometime during the period from June 2002 to July 2002, in
Olongapo City, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, did then and there, willfully, unlawfully and feloniously defraud
Westdale Assets, Limited represented in this case by Virginia S. Delos Santos-Dio in
the following manner to wit: the said accused received in trust and for administration
from the said Virginia S. Delos Santos-Dio the amount of One Million US Dollars
($1,000,000.00) under the express obligation of using the same to pay the loan facility
of the Subic Bay Marine Exploration, Inc. (SBMEI) with First Metro Investment
Corporation and to fund the construction and development of the Miracle Beach Project
but the said accused, once in possession of the said amount, with grave abuse of
confidence and with intent to defraud, misapplied, misappropriated and converted the
same for his own use and benefit by devoting it to a purpose or use different from that
agreed upon and despite repeated demands made upon him to account for and to
return the said amount, he failed and refused and still fails and refuses to do so, to the
damage and prejudice of the said Westdale Assets, Limited in the amount of US
$1,000,000.00 or its equivalent to FIFTY MILLION (Php 50,000,000.00) Pesos,
Philippine Currency, the dollar being computed at the rate of Php50.00 to $ 1.00 which
was the prevailing rate of exchange at the commission of the offense, to the damage
and prejudice of the latter in the aforementioned amount.

CONTRARY TO LAW.

Aggrieved, Desmond filed a Motion for Reconsideration,35 as well as a Motion to

Withdraw Filed Informations.36 He also filed before the RTC a Motion to Defer Further
Proceedings and to Defer Issuance of Warrant of Arrest37 but subsequently withdrew
the same and filed, instead, a Motion for Judicial Determination of Probable Cause. 38

The RTC Ruling

In an Order39 dated October 21, 2004, the RTC ruled in favor of Desmond and declared
that no probable cause exists for the crimes charged against him since the elements of
estafa were not all present, to wit:
First, the element of misrepresentation or deceit found in par. 2 (a) Article 315 of the
Revised Penal Code is absent. It must be emphasized that the promises allegedly made
to the complainant by the accused that her company’s investment will significantly
increase, clearly appeared in the Subic Bay Marine Exploration, Inc.’s ("SBMEI", for
brevity) printed business plan dated January 12, 2001 (Annex "A", Complaint-Affidavit
dated 19 April 2004). Verily, this is SBMEI’s representation or "come on" to would-be
investors and not a personal assurance of the accused. The fact that accused was the
company’s Chief Executive Officer and Chairman of the Board of Directors is of no
moment in the absence of any evidence to show that accused personally prepared the
business plan thereby making the alleged "rosy picture" his own personal enticements
to the complainant. Therefore, there being a dearth of evidence pointing to the accused
as author of the SBMEI’s business plan, any misrepresentation or deceit committed
cannot be personally attributed to him.

Furthermore, the court cannot find any sufficient evidence that the accused personally
assured the complainant about his so-called power, influence and credit with the SBMA
and other financial institutions that would supposedly insure the viability and profitability
of the project. Note that nowhere in the Complaint-Affidavit of the private complainant
are there specific factual allegations that would show that the accused had personal
business meetings with the SBMA and said financial institutions. As to how and in what
manner and scope accused exercised such alleged power, influence and credit over
these juridical entities remain a bare and self-serving averment in the absence of any
factual detail or account.

Finally, it cannot be gainsaid [sic] that accused was the one who personally valuated the
marine mammals contributed by JV China Incorporated to the Subic Bay Marine
Exploration, Inc. as capital amounting to US$3.724 Million. Evidence clearly point to an
independent valuation done by a third party namely Beijing Landa Aquarium that valued
the marine mammals under the Buy-Out Agreement dated September 9, 1998.
Needless to state, the onus is on complainant to controvert this valuation. Again,
however, no adequate proof was adduced along this line.

Second, the element of personal misappropriation by the accused under par. 1(b)
Article 315 of the Revised Penal Code is likewise not present. While it may be conceded
that there was money utilized to pay salaries of expatriates and staff as well as the cost
of utilities amounting to US$72,272.00 complainant failed to show that said money was
taken from her companies’ investments in SBMEI. It must be pointed out that other than
complainant’s bare allegation, there was no document presented categorically stating
that the investment of complainant’s companies were earmark for a particular payment
or project. Hence, when the investment entered SBMEI’s financial coffers, the same
presumably were co-mingled with other monies of the corporation.
Moreover and more revealing, is the fact that again there was no showing that it was
accused who personally caused the payment of these expenses allegedly in violation of
the objective of the investment. It must be noted that SBMEI is a corporation and not a
single proprietorship. Being a corporation, expenses paid of such a kind as utilities and
salaries are not authorized personally and solely by the President nor the Chief
Executive Officer nor even by the Chairman of the Board for that matter. These are
corporate acts that are passed through board resolutions. Hence, these corporate acts
can in no way be considered personal acts of the accused. Yet, he was singled out
among all 5 members of the Board of Directors who presumably, in the ordinary course
of business, approved by resolution the payments of such utilities and salaries.
Consequently, there is again insufficiency of evidence that the accused alone caused
the payment of these salaries and utilities for the sole purpose of pocketing the money
thereby using the same for personal gain.40

Consequently, the RTC denied the issuance of a warrant of arrest and hold departure
order against Desmond and ordered the dismissal of the cases against him:

WHEREFORE, foregoing considered, the subject motion for judicial determination of

probable cause is favorably granted. There being no probable cause, the cases against
the accused must be dismissed as they are hereby DISMISSED. The motions to issue
warrant of arrest and Hold

Departure Order as well as the prayer for provisional remedy are necessarily DENIED.

SO ORDERED.41

Given the RTC’s dismissal of the foregoing criminal cases, the City Prosecutor’s Office
filed motion for reconsideration which was, however, denied. As such, it filed a petition
for certiorari and mandamus42 before the CA on the ground of grave abuse of discretion.
Relatedly, Dio also filed a petition-in-intervention43 before the CA, praying for the
reinstatement of the subject criminal complaints.

The CA Ruling

In its November 8, 2006 Decision,44 the CA upheld the RTC’s authority to dismiss a
criminal case if in the process of determining probable cause for issuing a warrant of
arrest, it also finds the evidence on record insufficient to establish probable cause. It
explained that such dismissal is an exercise of judicial discretion sanctioned under
Section 6(a), Rule 112 of the Revised Rules of Criminal Procedure. On this score, the
CA evaluated the evidence presented and agreed with the RTC’s conclusions that there
was no sufficient basis showing that Desmond committed estafa by means of false
pretenses. Neither was it established that the money sourced from petitioner Dio was
converted by respondent Desmond for some other purpose other than that for which it
was intended. Pertinent portions of the CA Decision restated the RTC’s observations in
this wise:

In the instant case, the alleged false representations by Desmond which allegedly
induced private complainants H.S. Equities, Ltd. ("H.S. Equities") and Dio, to part with
their money are not supported by the facts on record. First, the alleged false
representation employed by Desmond with respect to his expertise and qualifications in
the form of influence, credit and business transactions with the Subic Bay Metropolitan
Authority (SBMA) and financial institutions and such resources to enable private
complainants to double its investment with SBMEI has not been shown to be false.

Indeed, nowhere in the documentary evidence presented by private complainants that

allegedly contained the above false representations does it show that it was private
respondent himself who made such representation. Notably, the SBMEI’s Business
Plan dated January 12, 2001 to which private complainants anchor such allegation does
not indicate that the representations made therein came personally from Desmond. In
addition, neither does it appear from such document that the statements therein were
used as a form of a personal assurance coming from Desmond that private
complainants would indeed double the amount they had invested with SBMEI. If at all,
we agree with the trial court that statements made in the said business plan were
merely a form of enticement to encourage would-be investors from [sic] investing in
such kind of business undertaking.

Moreover, we likewise agree with the trial court that no factual allegations were made by
private complainants as to how such false pretense of power and influence was made
upon them by Desmond and which convinced private complainants to part with their
money. It bears stressing that the allegations of false pretense of power and influence in
a case of estafa are mere conclusions of law which must be substantiated at the very
least by circumstances which would show that the person accused of committing estafa
did indeed commit acts of false representations. As the records show, there was no
misrepresentation on the part of Desmond that he is the Chairman and Chief Executive
Officer of SBMEI which is a corporation engaged in the business of developing marine
parks. Significantly, the records likewise show that SBMEI did indeed build and develop
a marine park in Subic Bay (Ocean Adventure) for the purposes stated in its business
plan and had entered into a long-term lease agreement with SBMA. Documentary
evidence in the form of the Report of Independent Auditors to SBMEI shows the amount
of investment the corporation had invested in the said business undertaking. For
instance, the corporation had invested the amount of ₱106,788,219.00 in buildings and
equipment alone. It has also assets consisting of marine mammals which are necessary
for the operation of the marine park. In this respect, we cannot subscribe to private
complainants’ contention that there was misrepresentation on the part of private
respondent that he had overvalued the worth of the marine mammals it had purchased
from Beijing Landa Aquarium Co., Ltd. of the Republic of China. This claim of private
complainants of the deceitful acts employed by Desmond in overpricing the value of the
marine animals for US$3.724 Million when in fact the sea animals were only valued for
one U.S. dollar was not corroborated by the evidence on hand.

xxxx

In the same manner, the facts in the case at bar that would allegedly constitute a
criminal charge of estafa under par. 1(b) are wanting. Be it noted that under the said
paragraph, estafa with unfaithfulness or abuse of confidence through misappropriation
or conversion of the money, goods or any other personal property must be received in
trust, on commission, for administration, or under any other obligation which involves
the duty to make delivery thereof or to return the same. It is not amiss to note that a
perusal of private complainants’ Complaint-Affidavit shows that subject money in the
amount of US$1,000,000.00 to be used for the Miracle Beach Project was placed in a
special account with Equitable-PCI Bank. As the records show, the said funds were
placed by Dio under the control of Fatima Paglicawan, an employee of Westdale, such
that, no money can be withdrawn from the special account without the signature of the
said employee, Desmond and a certain John Corcoran. Therefore, at such time, it
cannot be said that the funds were received for administration or already under the
juridical possession of Desmond. Meanwhile, we would like to emphasize that to
constitute conversion, it presupposes that the thing has been devoted to a purpose or
use different from that agreed upon. Verily, a facial examination of the Journal Voucher
and Check Voucher pertaining to the withdrawals made on such account clearly shows
that the disbursements were not only authorized by Paglicawan but likewise indicated
that the purpose for such withdrawals was to cover payments for BIR taxes and the
salaries of local employees and expatriates.

To repeat, these withdrawals as well as the purpose thereof were known to Paglicawan
when [sic] she authorized the disbursements. Paglicawan, who was designated by
private complainant Dio to control the release of the said funds is presumed to have
acted under the latter’s authority. Such miscommunication between Dio and Paglicawan
with respect to the purpose of the funds does not make out a case of estafa there being
no abuse of confidence or conversion to speak of taking into account that the said funds
were released under the presumed authority of private complainants through
Paglicawan, and which were indeed used for the purpose for which it was withdrawn.
That being the case, there can be no damage or prejudice to Westdale and Dio as there
was no disturbance in the property rights of Westdale and Dio in the said funds since
the same were used for the purpose for which it was disbursed.

Then again, we agree with the trial court that there is no sufficient evidence adduced to
support the criminal charges of estafa against Desmond. As pointed out by the trial
court, while private respondent is the Chairman and Chief Executive Officer of SBMEI,
there is no showing that he had personally and solely authorized the application of the
above funds for the payment of expenses not directly connected with the Miracle Beach
Project. Nor does it appear that as Chairman and Chief Executive Officer, Desmond has
been appointed to execute, on his own, such corporate acts.45 (Citations omitted)

The City Prosecutor and Dio filed their respective motions for reconsideration which
were both denied in a Resolution46 dated July 19, 2007.

Hence, the instant petitions.

The Issue Before the Court

The primordial issue in this case is whether or not the CA erred in finding no grave
abuse of discretion on the part of the RTC when it dismissed the subject informations
for lack of probable cause.

The Court’s Ruling

The petitions are meritorious.

Determination of probable cause may be either executive or judicial.

The first is made by the public prosecutor, during a preliminary investigation, where he
is given broad discretion to determine whether probable cause exists for the purpose of
filing a criminal information in court. Whether or not that function has been correctly
discharged by the public prosecutor, i.e., whether or not he has made a correct
ascertainment of the existence of probable cause in a case, is a matter that the trial
court itself does not and may not be compelled to pass upon.47

The second is one made by the judge to ascertain whether a warrant of arrest should be
issued against the accused. In this respect, the judge must satisfy himself that, on the
basis of the evidence submitted, there is a necessity for placing the accused under
custody in order not to frustrate the ends of justice. If the judge, therefore, finds no
probable cause, the judge cannot be forced to issue the arrest warrant. 48 Notably, since
the judge is already duty-bound to determine the existence or non-existence of probable
cause for the arrest of the accused immediately upon the filing of the information, the
filing of a motion for judicial determination of probable cause becomes a mere
superfluity,49 if not a deliberate attempt to cut short the process by asking the judge to
weigh in on the evidence without a full-blown trial.

In the case of Co v. Republic,50 the Court emphasized the settled distinction between an
executive and a judicial determination of probable cause, viz: 51

We reiterate that preliminary investigation should be distinguished as to whether it is an

investigation for the determination of a sufficient ground for the filing of the information
or it is an investigation for the determination of a probable cause for the issuance of a
warrant of arrest. The first kind of preliminary investigation is executive in nature. It is
part of the prosecution's job.1âwphi1 The second kind of preliminary investigation which
is more properly called preliminary examination is judicial in nature and is lodged with
the judge.

On this score, it bears to stress that a judge is not bound by the resolution of the public
prosecutor who conducted the preliminary investigation and must himself ascertain from
the latter’s findings and supporting documents whether probable cause exists for the
purpose of issuing a warrant of arrest. This prerogative is granted by no less than the
Constitution which provides that "no warrant of arrest shall issue except upon probable
cause to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce." 52

While a judge’s determination of probable cause is generally confined to the limited

purpose of issuing arrest warrants, Section 5(a),53 Rule 112 of the Revised Rules of
Criminal Procedure explicitly states that a judge may immediately dismiss a case if the
evidence on record clearly fails to establish probable cause,54 viz:

SEC. 5. When warrant of arrest may issue. – (a) By the Regional Trial Court. – Within
ten (10) days from the filing of the complaint or information, the judge shall personally
evaluate the resolution of the prosecutor and its supporting evidence. He may
immediately dismiss the case if the evidence on record clearly fails to establish probable
cause. If he finds probable cause, he shall issue a warrant of arrest, or a commitment
order if the accused had already been arrested, pursuant to a warrant issued by the
judge who conducted preliminary investigation or when the complaint or information was
filed pursuant to Section 7 of this Rule. In case of doubt on the existence of probable
cause, the judge may order the prosecutor to present additional evidence within five (5)
days from notice and the issue must be resolved by the court within thirty (30) days from
the filing of the complaint or information. (Emphasis and underscoring supplied)
In this regard, so as not to transgress the public prosecutor’s authority, it must be
stressed that the judge’s dismissal of a case must be done only in clear-cut cases when
the evidence on record plainly fails to establish probable cause – that is when the
records readily show uncontroverted, and thus, established facts which unmistakably
negate the existence of the elements of the crime charged. On the contrary, if the
evidence on record shows that, more likely than not, the crime charged has been
committed and that respondent is probably guilty of the same, the judge should not
dismiss the case and thereon, order the parties to proceed to trial. In doubtful cases,
however, the appropriate course of action would be to order the presentation of
additional evidence.55

In other words, once the information is filed with the court and the judge proceeds with
his primordial task of evaluating the evidence on record, he may either: (a) issue a
warrant of arrest, if he finds probable cause; (b) immediately dismiss the case, if the
evidence on record clearly fails to establish probable cause; and (c) order the
prosecutor to submit additional evidence, in case he doubts the existence of probable
cause.56

Applying these principles, the Court finds that the RTC’s immediate dismissal, as
affirmed by the CA, was improper as the standard of clear lack of probable cause was
not observed. In this case, records show that certain essential facts – namely, (a)
whether or not Desmond committed false representations that induced Dio to invest in
Ocean Adventure; and (b) whether or not Desmond utilized the funds invested by Dio
solely for the Miracle Beach Project for purposes different from what was agreed upon –
remain controverted. As such, it cannot be said that the absence of the elements of the
crime of estafa under Article 315(2)(a)57 and 315(1) (b)58 of the RPC had already been
established, thereby rendering the RTC’s immediate dismissal of the case highly
improper.

Lest it be misconceived, trial judges will do well to remember that when a perceived gap
in the evidence leads to a "neither this nor that" conclusion, a purposeful resolution of
the ambiguity is preferable over a doubtful dismissal of the case. Verily, a judge's
discretion to dismiss a case immediately after the filing of the information in court is
appropriate only when the failure to establish probable cause can be clearly inferred
from the evidence presented and not when its existence is simply doubtful. After all, it
cannot be expected that upon the filing of the information in court the prosecutor would
have already presented all the evidence necessary to secure a conviction of the
accused, the objective of a previously-conducted preliminary investigation being merely
to determine whether there is sufficient ground, to engender a well-founded belief that a
crime has been committed and that the respondent is probably guilty thereof and should
be held for trial.59 In this light, given that the lack of probable cause had not been clearly
established in this case, the CA erred, and the RTC gravely abused its discretion, by
ruling to dismiss Criminal Case Nos. 515-2004 and 516-2004. Indeed, these cases must
stand the muster of a full-blown trial where the parties could be given, as they should be
given, the opportunity to ventilate their respective claims and defenses, on the basis of
which the court a quo can properly resolve the factual disputes therein.

WHEREFORE, the petitions are GRANTED. The November 8, 2006 Decision and July
19, 2007 Resolution of the Court of Appeals in CA G.R. SP No. 88285 which affirmed
the October 21, 2004 Order of Dismissal issued by the Regional Trial Court of Olongapo
City, Branch 74 are SET ASIDE. The two (2) criminal informations for estafa against
respondent Timothy J. Desmond in Criminal Case Nos. 515-2004 and 516-2004 are
hereby REINSTATED. Accordingly, the trial court is directed to proceed with the
arraignment of the accused and the trial of the case with dispatch.