G.R. No. 166758 ; June 27, 2012
MANILA ELECTRIC COMPANY, represented by MANOLO C. FERNANDO, Petitioner, vs. VICENTE ATILANO, NAZAAR LUIS, JOCELYN DELA DINGCO, SHARON SEE VICENTE, and JOHN DOES, Respondents.

FACTS

Petitioner MERALCO invested substantial funds through respondent Corporate Investments Philippines, Inc. (CIPI), an investment house. In May 2000, upon learning of CIPI’s liquidity problems, MERALCO agreed to place additional investments on the specific condition that they be secured by Government Securities or Commercial Papers from the Lopez Group. MERALCO alleged that respondents, CIPI officers, instead diverted the funds into CIPI’s own promissory notes and commercial papers of non-Lopez Group companies, failing to deliver the agreed-upon securities despite demands and a subsequent written undertaking to rectify the situation.
MERALCO filed a complaint for estafa. The investigating prosecutor dismissed the complaint for insufficiency of evidence, finding no clear proof of misappropriation or deceit, noting that CIPI’s financial troubles were disclosed beforehand and that no written instructions restricting the investments were presented. The Department of Justice affirmed this dismissal. MERALCO’s petition for certiorari at the Court of Appeals was denied, prompting this appeal to the Supreme Court.

ISSUE

Whether the Court of Appeals committed reversible error in upholding the dismissal of the estafa complaint against the respondents.

RULING

The Supreme Court denied the petition and affirmed the dismissal. The Court emphasized that in a petition for certiorari under Rule 65 assailing the prosecutor’s finding of probable cause, the inquiry is limited to determining whether the executive branch committed grave abuse of discretion amounting to lack or excess of jurisdiction. The Court found no such abuse. The elements of estafa under Article 315, particularly deceit and misappropriation, were not sufficiently established. The prosecutor correctly noted that the respondents disclosed CIPI’s precarious financial state to MERALCO before the investments were made, negating the element of false pretense or deceit. Furthermore, the substitution of securities, while potentially a breach of the investment agreement, did not conclusively prove criminal conversion or misappropriation for personal gain, as the funds ostensibly remained within the course of CIPI’s business operations. The Court ruled that the disagreement pertained primarily to the terms of a civil investment contract, and the prosecutor’s determination that the evidence did not warrant a criminal indictment was a proper exercise of executive discretion not tainted with arbitrariness.