SECOND DIVISION

August 16, 2017

G.R. No. 217777

PRISCILLA Z. ORBE, Petitioner,

vs.

LEONORA O. MIARAL,, Respondent.

DECISION

CARPIO, J.:

The Case

This petition for review on certiorari1 under Rule 45 of the Rules of Court seeks to annul the 24
September 2014 Decision2 and the 24 March 2015 Resolution3 of the Court of Appeals in CA-G.R. SP No.
134555, which annulled and set aside the 27 August 20134 and 7 January 20145 Orders of the Regional
Trial Court (RTC) of Quezon City, Branch 104.

The RTC Orders denied the Motion to Withdraw Information6 for Estafa filed by Quezon City Prosecutor
Donald T. Lee in Criminal Case Q- 12-174206, entitled People of the Philippines v. Leonora O. Miaral, et
al.

The Facts

On 6 March 1996, Leonora O. Miaral (respondent) agreed to engage in the garment exportation
business with her sister, Priscilla Z. Orbe (petitioner). They executed a partnership agreement7 where
they agreed to contribute Two Hundred Fifty Thousand Pesos (₱250,000.00) each to Toppy Co., Inc. and
Miaral Enterprises, and to equally divide the profits they may earn. The partnership agreement reads:
Agreement

Agreement is executed [on the] 6111 day of March 1996 by:

Mrs. Nora 0. Miaral

11-0 Legaspi Towers, R[o]xas Blvd., Mla.

as (Party [A])

and Mrs. Priscilla Orbe of No._, Villa

Verde Subd., Novaliches, Quezon City

as (Party B).

Both parties agreed on the ff:

Both parties A & B shall invest ₱250,000.00 each in cash & or goods into a buying & selling of stock lots
of garments to be exported to the United States particularly in Los Angeles, California. Authorized
purchaser may be Party A or B;

That the exportation of garments shall be done by Toppy Co., Inc. using Toppy’s available quota;

That the importation of garments shall be done by Miaral Enterprises in U.S.A.

That whatever income in sales both retail & wholesale shall be divided into equal share after deducting
all expenses in export & import including taxes & sea/air freight expenses in connection with the buying
and selling of stocks & garments.

That this Contract is renewable yearly as both parties may wish.

Conforme:
(Sgd.)

Party A (Sgd.)

Party B

Signed in the presence of

Petitioner initially invested the amount of One Hundred Eighty-Three Thousand Nine Hundred Ninety-
Nine Pesos (₱183,999.00).8 She subsequently tendered the amount of Twenty Thousand Pesos
(₱20,000.00) for the payment of salaries of the workers at the factory.9

On one trip to the United States of America in April of 1996, respondent told petitioner that petitioner
could join respondent, her daughter Anne Kristine, and her granddaughter Ara in the trip to the United
States. Respondent convinced petitioner to pay for the plane tickets of respondent, Anne Kristine and
Ara amounting to Two Thousand Seventy One Dollars (US$2,071.00) with a promise to pay petitioner
once they arrive in the United States.10

Upon arrival, respondent issued three (3) checks drawn in a bank in the United States as payment.
However, one of the checks was dishonored for having been drawn against insufficient funds.11
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 Two Hundred Three
Thousand Nine Hundred Ninety-Nine Pesos (₱203,999.00) and One Thousand Dollars (US$1,000.00).
Despite demands, respondent and Anne Kristine failed to return the money.12

On 7 February 2011, petitioner filed a complaint13 for estafa against respondent and Anne Kristine
before the Office of the City Prosecutor (OCP) of Quezon City.

In their counter-affidavit,14 respondent and Anne Kristine denied petitioner's allegations and claimed,
among others, that the partnership agreement they entered into rules out a successful prosecution for
estafa. They also claimed that the action had already prescribed since the complaint was filed 15 years
after the agreement. They contended that it was petitioner who owed them the amount of Two
Hundred Seven Thousand Eighty-Seven Pesos and Sixty-Five Centavos (₱207,087.65) because she issued
several checks in the name of respondent and Anne Kristine. Lastly, they alleged that Anne Kristine
could not be held liable because she was merely acting under her mother's direction.

In her reply-affidavit,15 petitioner claimed that the twenty-four (24) checks amounting to Two Hundred
Seven Thousand Eighty-Seven Pesos and Sixty-Five Centavos (₱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 OCP of Quezon City issued a Resolution dated 15 July 2011,16 the dispositive portion of which
reads:

WHEREFORE, it is respectfully recommended that, upon approval of this Resolution, the attached
Information for Estafa under Article 315, paragraph 2(a) of the Revised Penal Code be filed against
respondents Leonora O. Miaral and Anne Kristine O. Miaral.17

Respondent and Anne Kristine filed a Motion for Reconsideration with Motion for Inhibition18 dated 27
January 2012, on the ground that petitioner failed to establish the elements of the crime charged.
Subsequently, they filed a Motion to Suspend Proceedings and to Lift/Recall Warrant of Arrest19 on 14
February 2012.

On 10 August 2012, the OCP of Quezon. City issued a Resolution resolving the Motion for
Reconsideration with Motion for Inhibition filed by respondent and Anne Kristine, assailing the 15 July
2011 Resolution, the dispositive portion of which reads:

Premises considered, the resolution dated July 15, 2011 is hereby set aside on the ground that the
transaction between the parties is civil in nature. The attached Motion to Withdraw Information against
movants in Crim. Case No. Q-12-174206 is to be filed in court for the purpose.20

Accordingly, the City Prosecutor filed with the RTC a Motion to Withdraw Information.21 On 27 August
2013, the RTC issued an Order22 denying the Motion to Withdraw Information, and directing the
arraignment of respondent and Anne Kristine.
On 14 October 2013, respondent and Anne Kristine moved for the reconsideration of said Order.23 On
30 October 2013, petitioner filed her corresponding comment,24 contending that the alleged
partnership entered into by the parties merely existed on paper. In fact, respondent and Anne Kristine
deceived her into contributing substantial sums of money for a sham investment. The Motion for
Reconsideration was denied by the RTC in its Order dated 7 January 2014.25

The Ruling of the Court of Appeals

On 25 March 2014, respondent filed with the Court of Appeals a Petition for Certiorari26 under Rule 65
of the Rules of Court, assailing the Orders of the RTC dated 27 August 2013 and 7 January 2014. In its
Decision27 dated 24 September 2014, the Court of Appeals granted the petition, and reversed and set
aside the assailed Orders of the RTC. It further directed the RTC to issue an order for the withdrawal of
the Information for estafa against respondent and Anne Kristine.28

Petitioner filed a Motion for Reconsideration29 dated 18 October 2014 which was denied by the Court
of Appeals on 24 March 2015.30

Hence, this petition.

The Issues

Petitioner presents the following issues in this petition:

1. 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;

2. 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; and

3. Whether the action for estafa penalized under Article 315 2(a) of the Revised Penal Code has been
barred by prescription.
The Ruling

The petition is meritorious.

The Court of Appeals erred in overturning

the Orders of the RTC and in ruling that the

RTC gravely abused its discretion when it

denied the Motion to Withdraw Information.

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. As the representative
of the State, the public prosecutor determines in a preliminary investigation whether there is probable
cause that the accused committed a crime.31 Probable cause is defined as "such facts and
circumstances that will engender a well-founded belief that a crime has been committed and that
respondent is probably guilty thereof, and should be held for trial."32

The general rule is that in the conduct of a preliminary investigation, the prosecutor is given a wide
latitude of discretion to determine what constitutes sufficient evidence as will establish probable
cause.33 However, when the respondent establishes that the prosecutor committed grave abuse of
discretion amounting to lack or excess of jurisdiction in determining whether there is probable cause,
the courts may interfere. Under the doctrine of separation of powers, the courts have no right to decide
matters where full discretionary authority has been delegated to the Executive Branch, or to substitute
their own judgements for that of the. Executive Branch, in the absence of grave abuse of discretion.34
The abuse of discretion must be "so 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."35

In this case, the OCP found that no probable cause existed against respondent and Anne Kristine for the
commission of the crime of estafa. In its Resolution36 dated 10 August 2012, relying mainly on the case
of United States v. Clarin,37 the OCP found that there was a partnership agreement between the
parties, thus resolving that the failure of a partner to account for partnership funds may only give rise to
a civil obligation, not a criminal case for estafa. The OCP held:

After a careful and more circumspect evaluation of the evidence on record in relation to the issues in the
Motion for Reconsideration, provisions of law involved and pertinent jurisprudence on the matter, we
find the existence of a partnership agreement between complainant and her sister, respondent Leonora
O. Miaral to have been duly established. The Agreement signed by them on March 6, 1996 clearly
speaks for itself, among others a ₱250,000.00 investment each with equal profit sharing minus all
expenses. It also defined in unequivocal terms the buy and sell business, exporting of garments to be
undertaken by respondent Leonora Miaral’s Toppy Co. Inc. and importation of garments by Miaral
Enterprises in the United States.

Such being the case, Estafa either by means of deceit or misappropriation will not lie against
respondents, because "partners are not liable for estafa of money or property received for the
partnership when the business commenced and profits accrued." (U.S. vs. Clarin, 17 P[h]il. 85). It was
further held in said case that "when two or more persons bind themselves to contribute money,
property or industry to a common fund, with the intention of dividing the profits among themselves, a
contract is formed which is a partnership."

Furthermore, "failure of a partner to account for partnership funds may give rise to a civil obligation only
not estafa." (People vs. Alegre, Jr., C.A. 48 O.G. 5341) x x x.38

We disagree with the ruling of the Court of Appeals when it sustained the OCP on the issue of whether
there is probable cause to file an Information. The OCP was in the best position to determine whether or
not there was probable cause that the crime of estafa was committed. However, the OCP erred gravely,
amounting to grave abuse of discretion, when it applied United States v. Clarin39 as basis for dismissing
the complaint for lack of probable cause. United States v. Clarin has already been superseded by
Liwanag v. Court of Appeals.40

In Clarin, four individuals entered into a contract of partnership for the business of buying and selling
mangoes. When one of the partners demanded from the other three the return of his monetary
contribution, this Court ruled that "the action that lies with the [capitalist] partner x x x for the recovery
of his money is not a criminal action for estafa, but a civil one arising from the partnership contract for a
liquidation of the partnership and a levy on its assets, if there should be any."41 Simply put, if a partner
demands his money back, the duty to return the contribution does not devolve on the other partners;
the duty now belongs to the partnership itself as a separate and distinct personality.

In 1997, a case with similar circumstances was decided differently. In Liwanag v. Court of Appeals,42
three individuals entered into a contract of partnership for the business of buying and selling cigarettes.
They agreed that one would contribute money to buy the cigarettes while the other two would act as
agents in selling. When the capitalist partner demanded from the industrial partners her monetary
contribution because they stopped informing her of business updates, this time, this Court held the
industrial partners liable for estafa.
In this case, the OCP erred gravely when it based its conclusion on the Clarin case. Liwanag applies to
the partnership agreement executed between petitioner and respondent. Petitioner's initial
contributions of ₱183,999.00 and ₱20,000.00 were all for specific purposes: for the buying and selling of
garments and for the salaries of the factory workers, respectively. When respondent failed to account
for these amounts or to return these amounts to petitioner upon demand, there is probable cause to
hold that respondent misappropriated the amounts and had not used them for their intended purposes.
The Information for estafa should thus proceed.

In Liwanag, this Court held:

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.43 (Emphasis supplied)

Furthermore, the RTC made its own independent assessment whether or not probable cause exists that
the crime was committed by respondent and Anne Kristine. 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.44
"Independent assessment" does not mean mere approval or disapproval of the prosecution's stand; it
also means that the RTC must itself be convinced that indeed there is or there is no sufficient evidence
against the accused.45

Both the 27 August 2013 and 7 January 2014 Orders of the RTC were based on facts and allegations of
both parties. The RTC held:

From the evidence adduced by the parties, the Court finds that there is probable cause that the crime
charged was committed by the accused when they convinced the complainant to invest money in a
business partnership which appears to be non-existent. It was not controverted that Leonora received
the total amount of ₱183,999.00 from the complainant. Accused failed to present evidence to show the
existence of a business partnership apart from relying on the Agreement dated March 6, 1996. Neither
was there any evidence presented showing that complainant's money was used to purchase garments
to be sold abroad. Basic is the rule that one who alleges must prove. In this case, the accused failed to
establish, by clear and convincing evidence, their defense of partnership.46 (Emphasis supplied)
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.47 This Court finds that it did.

The action for estafa penalized under paragraph 2(a),

Article 315 of the Revised Penal Code

has not yet been barred by prescription.

Under Article 315 of the Revised Penal Code, the penalty for estafa shall be determined by the amount
allegedly swindled by the accused. The first paragraph of Article 315 reads:

ART. 315. Swindling (estafa). - Any person who shall defraud another by any of the means mentioned
hereinbelow shall be punished by:

1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if
the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos; and if such amount
exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period,
adding one year for each additional 10,000 pesos; but the total penalty which may be imposed shall not
exceed twenty years. In such cases, and in connection with the accessory penalties which may be
imposed under the provisions of this Code, the penalty shall be termed prision mayor or reclusion
temporal, as the case may be. (Emphasis supplied)

The total amount allegedly swindled by respondent is ₱203,999.00 for the buying of garments and
workers' salaries plus US$ 1,000.00for 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 on respondent shall be prision mayor in its maximum period to reclusion temporal,
the total penalty not exceeding twenty (20) years.

Under Article 25 of the Revised Penal Code, the penalties of prision mayor and reclusion temporal are
included in the enumeration of afflictive penalties.1âwphi1 Furthermore, Article 90 of the Revised Penal
Code states that crimes punishable by afflictive penalties, such as the crime of estafa, prescribe in fifteen
(15) years.

The said prescriptive period is computed under Article 91 of the Revised Penal Code, as follows:
ART. 91. Computation of prescription of offenses. - The period of prescription shall commence to run
from the day on which the crime is discovered by the off ended party, the authorities, or their agents,
and shall be interrupted by the filing of the complaint or information, and shall commence to run again
when such proceedings terminate without the accused being convicted or acquitted, or are unjustifiably
stopped for any reason not imputable to him.

xxxx

In this case, the fifteen-year prescriptive period commenced in April 1996 when the petitioner
discovered that one of the checks that respondent issued as payment was dishonored for having been
drawn against insufficient funds. At around that time, 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 fifteen-year period was interrupted on 7 February 2011 when petitioner filed a complaint for estafa
against respondent and Anne Kristine before the OCP of Quezon City. In People v. Olarte,48 "the filing of
the complaint, even if it be merely for purposes of preliminary examination or investigation, should and
does interrupt the period of prescription of the criminal responsibility, even if the court where the
complaint or information is filed cannot try the case on its merits."

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.

WHEREFORE, we GRANT the petition. We REVERSE the 24 September 2014 Decision and the 24 March
2015 Resolution of the Court of Appeals in CA-G.R. SP No. 134555. We REINSTATE the Orders of the
Regional Trial Court of Quezon City, Branch 104, dated 27 August 2013 and 7 January 2014, directing the
arraignment of Leonora 0. Miaral and Anne Kristine Miaral. The case against Leonora O. Miaral and Anne
Kristine Miaral may still proceed because prescription has not set in.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:
DIOSDADO M. PERALTA

Associate Justice

ESTELA M. PERLAS-BERNABE

Associate Justice (on official leave)

ALFREDO BENJAMIN S. CAGUIOA

Associate Justice

ANDRES B. REYES, JR.

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice