G.R. No. 161057 September 12, 2008
BETTY GABIONZA and ISABELITA TAN, Petitioners, versus COURT OF APPEALS, LUKE ROXAS and EVELYN NOLASCO, Respondents.

FACTS

Petitioners Betty Gabionza and Isabelita Tan filed criminal complaints against private respondents Luke Roxas (President) and Evelyn Nolasco (Senior Vice President/Treasurer) of ASB Holdings, Inc. (ASBHI). Petitioners, who had previously invested with Bank of Southeast Asia (BSA), alleged that between 1996 and 1997, ASBHI officers convinced them to lend or deposit money with ASBHI, representing that ASBHI was the same entity as or connected to BSA. Initially, receipts were issued under “ASB Realty Development,” later changed to ASBHI. ASBHI issued postdated checks for the principal and interest, drawn against DBS Bank. In the first quarter of 2000, DBS Bank refused payment due to stop-payment orders. In May 2000, ASBHI filed for rehabilitation, leading petitioners to file complaints for estafa under Article 315(2)(a) and (2)(d) of the Revised Penal Code, estafa under P.D. No. 1689, violation of the Revised Securities Act, and violation of the General Banking Act. The DOJ Task Force initially dismissed the complaints but was reversed by then Secretary Hernando Perez, who directed the filing of Informations for estafa under Article 315(2)(a) and violation of the Revised Securities Act. Private respondents assailed this via certiorari in the Court of Appeals, which reversed the DOJ and ordered dismissal. Petitioners then elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in reversing the DOJ Resolution and dismissing the criminal cases, thereby disregarding the finding of probable cause for estafa under Article 315(2)(a) of the Revised Penal Code and violation of the Revised Securities Act.

RULING

The Supreme Court GRANTED the petition, REVERSED the Court of Appeals Decision, and REINSTATED the DOJ Resolution directing the filing of Informations. The Court held that the DOJ correctly found probable cause for estafa under Article 315(2)(a). The elements were satisfied: (1) False pretenses existed as ASBHI misrepresented its financial capacity (authorized capital stock of only P500,000.00 and paid-up capital of P125,000.00) to induce loans; (2) These misrepresentations were made prior to or simultaneously with the fraud; (3) Petitioners relied on these pretenses, as they would not have lent millions had they known the true capitalization; (4) Petitioners suffered damage when checks were dishonored. The Court rejected the Court of Appeals’ view that the transactions were mere loans giving rise only to civil liability, emphasizing that deceit vitiates consent and transforms the transaction into a criminal act. Regarding the Revised Securities Act, the Court found probable cause for violation, noting that the checks issued could be considered securities under a broad interpretation, as they were part of an investment scheme. The Court also held that private respondents, as corporate officers directing the fraudulent representations, could be held criminally liable despite not dealing directly with petitioners, as inducement is as effective as direct participation. The Court reiterated the policy of non-interference with the DOJ’s discretion in preliminary investigations unless grave abuse of discretion is shown, which was not present here.