Orbe vs. Miaral

A partner who receives money or property for a specific purpose and later misappropriates it is guilty of estafa even if a partnership agreement exists; accordingly, a prosecutor’s reliance on the superseded doctrine in United States vs. Clarin to dismiss the complaint is grave abuse of discretion, and the RTC must independently assess the totality of the evidence before granting a motion to withdraw the information. The estafa charge under Article 315, paragraph 2(a), of the Revised Penal Code prescribes in 15 years from discovery, interrupted by the filing of the complaint.

Petitioner Priscilla Z. Orbe and respondent Leonora O. Miaral are sisters who executed a partnership agreement on 6 March 1996 to engage in the buying and selling of stock lots of garments for export to the United States. They agreed to contribute ₱250,000 each to Toppy Co., Inc. and Miaral Enterprises and to divide profits equally after expenses, with exportation to be undertaken by Toppy Co., Inc. and importation by Miaral Enterprises in the United States. The dispute implicated the crime of estafa under Article 315, paragraph 2(a), of the Revised Penal Code and the procedural rules governing preliminary investigation, probable cause, and motions to withdraw informations.

On 6 March 1996, petitioner Priscilla Z. Orbe and her sister, respondent Leonora O. Miaral, executed a partnership agreement to engage in the buying and selling of stock lots of garments for export to the United States. They agreed to contribute ₱250,000 each to Toppy Co., Inc. and Miaral Enterprises and to divide profits equally after deducting all expenses, including taxes and sea/air freight. The agreement provided that exportation would be undertaken by Toppy Co., Inc. using its available quota and importation by Miaral Enterprises in the United States. Petitioner initially invested ₱183,999.00 and subsequently tendered ₱20,000.00 for the payment of salaries of the workers at the factory.

In April 1996, on a trip to the United States, respondent told petitioner that petitioner could join respondent, her daughter Anne Kristine, and her granddaughter Ara. Respondent convinced petitioner to pay for the plane tickets of respondent, Anne Kristine, and Ara amounting to US$2,071.00, with a promise to pay petitioner once they arrived in the United States. Upon arrival, respondent issued three checks drawn in a bank in the United States as payment, but one of the checks was dishonored for having been drawn against insufficient funds. Petitioner likewise discovered that there was no exportation of garments to the United States or any other transactions in the United States that took place.

Petitioner demanded from respondent and Anne Kristine the total payment of ₱203,999.00 and US$1,000.00. Despite demands, respondent and Anne Kristine failed to return the money. On 7 February 2011, petitioner filed a complaint for estafa against respondent and Anne Kristine before the Office of the City Prosecutor of Quezon City.

In their counter-affidavit, respondent and Anne Kristine denied petitioner’s allegations. They claimed that the partnership agreement ruled out a successful prosecution for estafa; that the action had already prescribed since the complaint was filed 15 years after the agreement; that petitioner owed them ₱207,087.65 because she issued several checks in the name of respondent and Anne Kristine; and that Anne Kristine could not be held liable because she was merely acting under her mother’s direction. In her reply-affidavit, petitioner claimed that the 24 checks amounting to ₱207,087.65 were only borrowed from her as an accommodation party, and that it was respondent who ordered her to close her account with the Republic Planters Bank.

The RTC later found probable cause that the crime charged was committed when the accused convinced the complainant to invest money in a business partnership which appeared to be non-existent. It noted that it was not controverted that Leonora received the total amount of ₱183,999.00 from the complainant. The accused failed to present evidence to show the existence of a business partnership apart from relying on the Agreement dated March 6, 1996, and no evidence was presented showing that complainant’s money was used to purchase garments to be sold abroad. The RTC stated that the accused failed to establish, by clear and convincing evidence, their defense of partnership.

• Grave Abuse of Discretion: Petitioner argued that the Court of Appeals committed reversible error in ruling that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it denied the Motion to Withdraw Information.
• Withdrawal of Information: Petitioner maintained that the Court of Appeals erred in reversing and setting aside the RTC’s 27 August 2013 and 7 January 2014 Orders and in directing the issuance of an order for the withdrawal of the Information for estafa against respondent and Anne Kristine.
• Prescription: Petitioner argued that the action for estafa under Article 315, paragraph 2(a), of the Revised Penal Code has not been barred by prescription.
• Sham Partnership and Deceit: Petitioner contended that the alleged partnership merely existed on paper and that respondent and Anne Kristine deceived her into contributing substantial sums of money for a sham investment.
• Accommodation Checks: In her reply-affidavit, petitioner claimed that the 24 checks amounting to ₱207,087.65 were only borrowed from her as an accommodation party and that respondent ordered her to close her account with the Republic Planters Bank.

• Partnership Bars Estafa: Respondent and Anne Kristine denied petitioner’s allegations and claimed that the partnership agreement they entered into ruled out a successful prosecution for estafa.
• Prescription: They claimed that the action had already prescribed since the complaint was filed 15 years after the agreement.
• Offsetting Liability: They contended that petitioner owed them ₱207,087.65 because she issued several checks in the name of respondent and Anne Kristine.
• Anne Kristine’s Non-Liability: They alleged that Anne Kristine could not be held liable because she was merely acting under her mother’s direction.
• Lack of Elements: In their Motion for Reconsideration with Motion for Inhibition before the OCP, they argued that petitioner failed to establish the elements of the crime charged.

• Grave Abuse of Discretion: Whether the Court of Appeals committed reversible error in ruling that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction.
• Withdrawal of Information: Whether the Court of Appeals committed reversible error in reversing and setting aside the 27 August 2013 and 7 January 2014 Orders of the RTC, and in directing the issuance of an Order for the Withdrawal of the Information for estafa against respondent and Anne Kristine.
• Prescription: Whether the action for estafa penalized under Article 315, paragraph 2(a), of the Revised Penal Code has been barred by prescription.

• Grave Abuse of Discretion: Yes. The Court of Appeals committed reversible error; the RTC did not gravely abuse its discretion in denying the Motion to Withdraw Information. The OCP’s reliance on United States vs. Clarin was gravely erroneous because Clarin had been superseded by Liwanag vs. Court of Appeals.
• Withdrawal of Information: Yes. The Court of Appeals erred in reversing and setting aside the RTC Orders and in directing withdrawal of the Information; the RTC made an independent assessment and found probable cause.
• Prescription: No. The action for estafa under Article 315, paragraph 2(a), of the Revised Penal Code has not prescribed; only 14 years and 10 months had elapsed when the complaint was filed on 7 February 2011.

• Grave Abuse of Discretion: Under Section 5, Rule 110 of the Rules of Court, all criminal actions commenced by a complaint or information shall be prosecuted under the direction and control of the prosecutor. The public prosecutor determines probable cause, defined as such facts and circumstances as will 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. The prosecutor is generally given wide latitude in preliminary investigation, but courts may interfere when grave abuse of discretion amounting to lack or excess of jurisdiction is shown. The abuse must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, such as where the power is exercised in an arbitrary or despotic manner by reason of passion or hostility. Here, the OCP found no probable cause based on United States vs. Clarin, ruling that the partnership agreement made the failure to account for partnership funds a civil obligation only. But Clarin had been superseded by Liwanag vs. Court of Appeals. In Clarin, four individuals entered into a partnership for buying and selling mangoes; when one partner demanded the return of his monetary contribution, the Court ruled that the action was civil, not estafa, because the duty to return belonged to the partnership. In Liwanag, three individuals entered into a partnership for buying and selling cigarettes; when the capitalist partner demanded her contribution because the industrial partners stopped informing her of business updates, the Court held the industrial partners liable for estafa. Liwanag applies. Petitioner’s contributions of ₱183,999.00 and ₱20,000.00 were for specific purposes: buying and selling garments and paying the salaries of factory workers. When respondent failed to account for these amounts or return them upon demand, probable cause existed to hold that she misappropriated them and had not used them for their intended purposes. The OCP therefore erred gravely, and the Information for estafa should proceed.
• Withdrawal of Information: When the RTC is confronted with a Motion to Withdraw Information on the ground of lack of probable cause, its duty is to make an independent assessment of the totality of the evidence presented by both parties, including affidavits, counter-affidavits, evidence appended to the complaint, and records produced by the OCP on court order. “Independent assessment” does not mean mere approval or disapproval of the prosecution’s stand; the RTC must itself be convinced that there is or there is no sufficient evidence against the accused. Both the 27 August 2013 and 7 January 2014 Orders of the RTC were based on facts and allegations of both parties. The RTC found probable cause that the accused convinced the complainant to invest money in a business partnership which appeared to be non-existent; it was not controverted that Leonora received ₱183,999.00 from the complainant; the accused failed to present evidence to show the existence of a business partnership apart from relying on the Agreement dated March 6, 1996; no evidence showed that complainant’s money was used to purchase garments to be sold abroad; and the accused failed to establish by clear and convincing evidence their defense of partnership. The question is not so much whether the RTC has the authority to grant or not to grant the OCP’s Motion to Withdraw Information, because it has such authority, but whether, in the exercise of that authority, the RTC acted justly and fairly. It did. The Court of Appeals therefore erred in reversing the RTC Orders.
• Prescription: Under Article 315 of the Revised Penal Code, the penalty for estafa is determined by the amount allegedly swindled. The first paragraph provides that if the amount of the fraud is over ₱12,000 but does not exceed ₱22,000, the penalty is prision correccional in its maximum period to prision mayor in its minimum period; if the amount exceeds ₱22,000, the penalty provided in that paragraph shall be imposed in its maximum period, adding one year for each additional ₱10,000, but the total penalty shall not exceed 20 years. The total amount allegedly swindled by respondent is ₱203,999.00 for the buying of garments and workers’ salaries plus US$1,000.00 for the plane tickets, which exceeds ₱22,000.00. Taking into consideration the whole amount with the additional one year for each additional ₱10,000.00, the penalty imposable is prision mayor in its maximum period to reclusion temporal, with the total penalty not exceeding 20 years. Under Article 25 of the Revised Penal Code, prision mayor and reclusion temporal are afflictive penalties. Under Article 90, crimes punishable by afflictive penalties prescribe in 15 years. Under Article 91, the period of prescription commences from the day on which the crime is discovered by the offended party, the authorities, or their agents, and is interrupted by the filing of the complaint or information; it commences to run again when the proceedings terminate without the accused being convicted or acquitted, or are unjustifiably stopped for a reason not imputable to the accused. Here, the 15-year prescriptive period commenced in April 1996 when petitioner discovered that one of the checks issued by respondent as payment was dishonored for having been drawn against insufficient funds, and when petitioner likewise discovered that there was no buying, selling, and exportation of garments or any other transactions that took place in the United States. The period was interrupted on 7 February 2011 when petitioner filed a complaint for estafa before the OCP of Quezon City. As of that filing, the prescriptive period had run for 14 years and 10 months. Thus, the 15-year period had not yet prescribed. People vs. Olarte holds that the filing of the complaint, even if merely for purposes of preliminary examination or investigation, interrupts the period of prescription of criminal responsibility.

• Probable cause and prosecutorial discretion — Probable cause is defined as such facts and circumstances as will 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. The public prosecutor has wide latitude in preliminary investigation, and courts may interfere only upon a showing of grave abuse of discretion amounting to lack or excess of jurisdiction. The abuse must be patent and gross, such as an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or the exercise of power in an arbitrary or despotic manner by reason of passion or hostility. In this case, the OCP’s reliance on United States vs. Clarin was gravely erroneous because Liwanag vs. Court of Appeals had superseded it.
• Independent assessment of a motion to withdraw information — When an RTC is confronted with a motion to withdraw an information on the ground of lack of probable cause, it must make an independent assessment of the totality of the evidence presented by both parties, including affidavits, counter-affidavits, evidence appended to the complaint, and records produced by the OCP on court order. Independent assessment does not mean mere approval or disapproval of the prosecution’s stand; the RTC must itself be convinced that there is or is no sufficient evidence against the accused. The RTC did so here and found probable cause.
• Partnership does not bar estafa for misappropriation of funds received for a specific purpose — Even assuming that a contract of partnership exists, when money or property is received by a partner for a specific purpose and the partner later misappropriates it, the partner is guilty of estafa. United States vs. Clarin, which treated a partner’s demand for the return of his contribution as purely civil, was superseded by Liwanag vs. Court of Appeals. Petitioner’s contributions were for specific purposes—buying and selling garments and paying factory workers’ salaries—so the failure to account for or return them upon demand gave rise to probable cause for estafa.
• Prescription of estafa under Article 315(2)(a) — The penalty for estafa is determined by the amount allegedly swindled. Where the amount exceeds ₱22,000, the penalty is prision mayor in its maximum period to reclusion temporal, an afflictive penalty, and the crime prescribes in 15 years. The period commences from the day the crime is discovered by the offended party, the authorities, or their agents and is interrupted by the filing of the complaint or information, even if filed merely for preliminary examination or investigation. Here, the period began in April 1996 and was interrupted on 7 February 2011, after only 14 years and 10 months, so prescription had not set in.

• "Thus, even assuming that a contract of partnership was indeed entered into by and between the parties, we have ruled that when money or property [had] been received by a partner for a specific purpose (such as that obtaining in the instant case) and he later misappropriated it, such partner is guilty of estafa." — This is the Court’s quotation of Liwanag vs. Court of Appeals, articulating the controlling rule that a partnership does not preclude estafa where funds are received for a specific purpose and later misappropriated.
• "When the RTC is confronted with a Motion to Withdraw Information on the ground of lack of probable cause, its duty is to make an independent assessment of the totality of the evidence presented by both parties, including affidavits, counter-affidavits, evidence appended to the complaint, and records produced by the OCP on court order." — This defines the RTC’s duty when resolving a motion to withdraw an information based on lack of probable cause.
• "The question is not so much whether the RTC has the authority to grant or not to grant the OCP's Motion to Withdraw Information, because it has such authority, but whether, in the exercise of that authority, the RTC acted justly and fairly." — This frames the standard of review over the RTC’s action on the motion to withdraw.
• "As of the filing of the complaint on 7 February 2011, the prescriptive period had run for fourteen (14) years and ten (10) months. Thus, the fifteen-year period has not yet prescribed." — This states the prescription computation and the conclusion that the estafa charge had not prescribed.

• United States vs. Clarin, 17 Phil. 84 (1910) — Cited by the OCP as basis for ruling that the failure of a partner to account for partnership funds gives rise only to a civil obligation. The Supreme Court held that Clarin had been superseded by Liwanag and could not support the OCP’s dismissal of the complaint.
• Liwanag vs. Court of Appeals, 346 Phil. 211 (1997) — Controlling precedent. The Court held that even assuming a partnership, a partner who receives money or property for a specific purpose and later misappropriates it is guilty of estafa. Applied to petitioner’s contributions for buying and selling garments and workers’ salaries.
• People vs. Olarte, 125 Phil. 895, 902 (1967) — Cited for the rule that the filing of the complaint, even if merely for preliminary examination or investigation, interrupts the period of prescription of criminal responsibility.
• Ledesma vs. Court of Appeals, 344 Phil. 207, 217 (1997) — Cited for the RTC’s duty to make an independent assessment of the totality of evidence when confronted with a motion to withdraw information.
• Fuentes vs. Sandiganbayan, 527 Phil. 58, 65 (2006) — Cited for the rule that “independent assessment” does not mean mere approval or disapproval of the prosecution’s stand; the RTC must itself be convinced that there is or is no sufficient evidence against the accused.
• Callo-Claridad vs. Esteban, 707 Phil. 172, 183 (2013) — Cited for the standard of grave abuse of discretion and the separation-of-powers limitation on judicial interference with the Executive’s probable-cause determination.

• Section 5, Rule 110, Rules of Court — All criminal actions commenced by a complaint or information shall be prosecuted under the direction and control of the prosecutor. The Court used this to explain the public prosecutor’s authority to determine probable cause during preliminary investigation.
• Article 315, paragraph 2(a), Revised Penal Code — Defines estafa by means of deceit, the offense charged against respondent and Anne Kristine. The Court held that the OCP’s dismissal of the complaint for lack of probable cause was improper under this provision.
• Article 315, first paragraph, Revised Penal Code — Sets the penalty for estafa according to the amount of fraud. The Court applied it to the alleged amount of ₱203,999.00 plus US$1,000.00, which exceeds ₱22,000, yielding prision mayor in its maximum period to reclusion temporal, with the total penalty not exceeding 20 years.
• Article 25, Revised Penal Code — Classifies prision mayor and reclusion temporal as afflictive penalties. The Court used this classification to determine the prescriptive period for the estafa charge.
• Article 90, Revised Penal Code — Provides that crimes punishable by afflictive penalties prescribe in 15 years. The Court applied this to the estafa charge.
• Article 91, Revised Penal Code — Governs computation of the prescription of offenses. The period commences from the day the crime is discovered by the offended party, the authorities, or their agents, and is interrupted by the filing of the complaint or information. The Court applied it to find that the 15-year period had not lapsed.
• Rule 45, Rules of Court — The petition for review on certiorari filed by petitioner. The Court entertained the petition under this Rule.
• Rule 65, Rules of Court — The respondent’s petition for certiorari before the Court of Appeals. The Court of Appeals granted it, but the Supreme Court reversed.

Diosdado M. Peralta, Estela M. Perlas-Bernabe (on official leave), Alfredo Benjamin S. Caguioa, and Andres B. Reyes, Jr.