Mandriak v. Secretary of the Department of Justice

FIRST DIVISION

[G.R. No. 174766. August 17, 2016.]

ROGER MANDRIAK, petitioner, vs. THE HON. SECRETARY OF THE DEPARTMENT OF JUSTICE, JOSE ARMANDO EDUQUE, GILDA DE JESUS, JEAN DELGADO, REMICAR UY AND JOHN DOES, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated August 17, 2016 which reads as follows:

"G.R. No. 174766 — ROGER MANDRIAK, Petitioner, v. THE HON. SECRETARY OF THE DEPARTMENT OF JUSTICE, JOSE ARMANDO EDUQUE, GILDA DE JESUS, JEAN DELGADO, REMICAR UY and JOHN DOES, Respondents.

Under appeal is the decision promulgated on July 5, 2006, 1 whereby the Court of Appeals (CA) upheld the resolution issued on August 20, 2002 by the Office of the Secretary of Justice 2 denying the petitioner's appeal of the dismissal by the Office of the City Prosecutor of Makati of his criminal complaint for estafa against the respondent officers of East Asia (AEA) Capital Corporation (East Asia) for lack of merit and for insufficiency of evidence through the resolution dated May 30, 2001. 3

Antecedents

In 1996, the petitioner was allegedly induced by East Asia, through its trader, Tina Ramirez, to invest funds in various securities and debt instruments offered by it. He transacted with East Asia for the purchase of commercial papers (CPs), among which were long term CPs issued by Metro Pacific Corporation (MPC), to wit: MPC B1 with Serial Nos. 063810 and 063811, and MPC B2 with Serial No. 063953. For each purchase, East Asia issued a custodian receipt (CR) and a certificate of outright sale (COS) with a caveat that it would hold the securities "in custody for your account." In return, he periodically received sums of money representing accrued interests or profits from the earnings of the CPs. As of May 4, 2000, he had an outstanding placement of P2,272,105.53. 4

In 2000, the petitioner learned of the liquidity problems of East Asia. 5 Thus, he sought the immediate delivery of the investments to him, but East Asia did not comply. Respondent Jean Delgado informed him that his matured MPC B1 with Serial Nos. 063810 and 063811 were substituted by the "Promissory Note of a certain AE Development Corporation with serial no. 25295 and a face value of P2,167,614.15." 6

The petitioner sent a demand letter dated July 17, 2000 claiming that the proceeds of his matured CPs were not delivered to him; that the funds of the CPs had been rebooked or reinvested without his consent and knowledge; and that East Asia's traders had diverted his funds and had used the same to purchase a promissory note of a non-existent company because AEA Development Corporation (AEA) had ceased to exist as early as 1994. 7

In its reply dated July 24, 2000, East Asia denied the petitioner's claims, and averred that the non-delivery of the proceeds of his matured CPs had been a "common industry practice, unless the client clearly informs us at the time of purchase that they do not wish to avail of the option to sell the CP back to us at some later date;" that the reinvestment of his funds in the promissory note had been presumed to be with his consent as indicated in the trading sheet; and that AEA and East Asia were one and the same entity, such that the latter had supposedly been authorized by the Securities and Exchange Commission (SEC) to continue using the former's promissory notes as a cost-saving measure. 8

Not satisfied with East Asia's explanation, the petitioner on August 17, 2000 filed a complaint-affidavit in the Office of the City Prosecutor of Makati 9 charging the respondents with estafa as defined under Article 315, (1) (a) and (b) and 2 (a), of the Revised Penal Code (RPC). CAIHTE

The respondents submitted in their joint counter-affidavit that the acts complained of had involved money market transactions that were not actually outright sales. 10 They insisted that they could not be held liable for estafa under Article 315 (1) (a) of the RPC because they were not under any obligation to "return the very same securities that were previously bought for the complainant;" that they did not commit any misappropriation or conversion in substituting MPC B1 with Serial Nos. 063810 and 063811 with AEA Promissory Note No. 25295; that they did not fraudulently induce him to part with his money; and that the transactions had been regularly executed under East Asia's quasi-banking functions as an investment house.

The Office of the City Prosecutor of Makati rendered its resolution dated May 30, 2001 dismissing the petitioner's complaint, 11 holding:

Proceeding from the above-mentioned undisputed facts, it is thus clear that when complainant transacted with East Asia, he invested his money in money market transaction which involved the purchase of various commercial papers, including the long term Commercial Papers subject of the present complaint. Being a money market placement, the transaction, as held in the case of Sesbreño vs. Court of Appeals (240 SCRA 606), partakes the nature of a loan. The money market transaction being one as in loan, the purchase of the subject commercial papers as evidenced by Outright Sales may not therefore be considered as an actual sale but as evidence of investment in money market. Besides, the fact that the Certificate of Outright Sale on the commercial papers in question bears maturity dates and yields interests, reasonably concludes of a transaction which partake the nature of a loan than that of a sale.

Undoubtedly, the transaction in question being in the nature of a loan, East Asia or the respondents are not duty bound to return the same set of securities to the complainant but the equivalent of the investment placed plus the agreed amount of interest. Appropriately, there being no onerous obligation to deliver something of value, there can be no alteration of substance, quality or quantity to speak of as to say that Article 315 par 1 (a) have been violated.

Similarly, the money of the complainant having been received as an investment in a money market transaction, which as described above partook the nature of a loan, and not in trust, or commission, or for administration, misappropriation or conversion cannot be said obtaining to hold the respondents liable for Violation of Article 315, par. 1(b) of the Revised Penal Code.

There being no positive evidence of deceit, as the respondents herein as officers of East Asia are authorized by its charter to engage in the questioned transaction, the complaint for Violation of art. 315, 2(a), RPC cannot be sustained.

WHEREFORE, premises considered, it is respectfully recommended that the above-captioned complaint be dismissed, as upon approval, it is hereby dismissed for lack of merit and insufficiency of evidence. 12

After the Office of the City Prosecutor of Makati denied the petitioner's motion for reconsideration on August 20, 2001, he appealed to the Secretary of Justice, who affirmed the dismissal of the charge through the resolution dated August 20, 2002. With the denial of his motion for reconsideration, he raised the issue to the CA on certiorari.

As stated, the CA promulgated its assailed decision on July 5, 2006, 13 disposing:

WHEREFORE, premises considered, the instant petition is DENIED. The assailed Resolutions dated August 20, 2002 and January 4, 2005 issued by then Secretary of Justice, Hernando B. Perez, in I.S. No. 00-H-28220 are AFFIRMED.

SO ORDERED.

The CA later denied the petitioner's motion for reconsideration.

Hence, this petition for review. 14

Issue

Did the Secretary of Justice gravely abuse his discretion amounting to lack or excess of jurisdiction in affirming the dismissal of the complaint against the respondent for estafa by the Office of the City Prosecutor of Makati?

Ruling

The petition for review is partly meritorious.

It is noteworthy that this case is similar to Cruzvale, Inc. v. Eduque (Cruzvale)15 and Zamora v. Eduque (Zamora)16 in which the Court declared that the ruling in Sesbreño v. Court of Appeals (Sesbreño) 17 was not applicable because Sesbreño involved money market placements in the form of short term credit instruments (promissory notes) instead of long term credit instruments that were the concern of the present case. Likewise, the liability of the respondents in Sesbreño was similar to that of a debtor, unlike the liability in Cruzvale and Zamora, where the respondents only acted as middlemen or brokers. DETACa

Verily, East Asia was not the debtor of the petitioner. By acting and representing itself as a dealer in CPs and custodian of the long term credit instruments purchased on behalf of the petitioner, it could not later on assert that it had been an ordinary debtor by disregarding the terms of the CR and the COS, in which it clearly agreed and indicated that it would only hold in custody such securities for his account. In other words, a fiduciary relationship existed between them. Furthermore, because East Asia acquired the CPs in trust for the petitioner, it would be obliged to deliver the CPs and their proceeds to him, failing to do would render its responsible officers vulnerable to the charge of estafa.18 In that regard, the CA erred in declaring that the nature of his transactions with East Asia partook that of a loan, and that the relationship existing between him and East Asia was similar to that of a creditor and debtor.

Notwithstanding the foregoing, there is no sufficient cause to undo the dismissal of the criminal charge against the respondents for lack of probable cause.

To be held criminally liable for estafa under Article 315 par. 1 (a), (b) and par. 2 (a) of the RPC, the following elements must concur:

(a) Under Article 315, par. 1 (a):

1) That the offender has an onerous obligation to deliver something of value;

2) That he alters its substance, quantity, or quality; and

3) That damage of prejudice is caused to another.

(b) Under Art. 315, par. 1 (b):

1) That money, goods, or other personal properties are received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to make delivery of, or to return, the same;

2) That there is a misappropriation or conversion of such money or property by the offender or denial on his part of such receipt;

3) That such misappropriation or conversion or denial is to the prejudice of another; and

4) That there is a demand made by the offended party on the offender.

(c) Under Art. 315, par. 2 (a):

1) That there must be false pretense, fraudulent act or fraudulent means;

2) That such false pretense, fraudulent act or fraudulent means must be made or executed prior to or simultaneously with the commission of the fraud;

3) That the offended party must have relied on the false pretense, fraudulent act, or fraudulent means, that is, he was induced to part with his money or property because of the false pretense, fraudulent act or fraudulent means;

4) That as a result, the offended party suffered damage.

Let us look at the petitioner's relevant allegations in his complaint-affidavit 19 to wit:

31. I learned that if a person has the onerous obligation to deliver something of value, and that he alters its substance, quantity or quality, and because of this damage or prejudice is caused to another, then he is liable for estafa under article 315. No. 1 (a) of the Revised Penal Code.

31.1. In the instant case, East Asia et al. clearly delivered a thing under an onerous obligation which is not in accordance with the substance, quality or quantity agreed upon. AEA PN 25295 is remarkably different in substance, quality and quantity from MPC B1 063810 and MPC B1 063811 which East Asia merely holds on my behalf and for my account, for a fee, and the return of which I can demand being the rightful owner thereof.

31.2. The act of East Asia in substituting my MPC B1 063810 and MPC B1 063811 with AEA PN 25295 clearly prejudiced my investments. As I have said earlier, the alleged issuer of AEA PN 25295, AEA Development Corporation, is a non-existing corporation. And even assuming that AEA Development Corporation is the same entity as East Asia, as Mr. Eduque makes it appear in his letter dated 24 July 2000, then the damage to me is still apparent. My investments, previously sound and safe in debt instruments of Metro Pacific Corporation, MPC B1 063810 and MPC B1 063811, are now suddenly in a debt instrument of East Asia, a company faced with serious liquidity problems, AEA PN 25295.

32. I also learned that if a person converts, to the prejudice of another, any personal property received by him in trust, or on commission, or for administration, or under any other obligation involving the duty to make a delivery of or to return the same, then he is liable for estafa under Article 315 No. 1 (b), of the Revised Penal Code. aDSIHc

32.1. East Asia et al. do not deny that they merely purchased the MPC B1 063810 and MPC B1 063811, which are personal properties, for my account. East Asia, et al. themselves expressly acknowledged in CR No. 15963 and OS No. 66809 that MPC B1 063810 and MPC B1 063811 are being held by them in trust, on commission, and/or for administration with the corresponding duty to deliver and return the same to me. However, when I demanded the delivery of MPC B1 063810 and MPC B1 063811, East Asia, contrary to our agreement, failed to deliver the same. Instead, East Asia, et al. assumed and exercised, without my authorization, the right of ownership over MPC B1 063810 and MPC B1 063811 by using the proceeds thereof upon maturity and converting the same into AEA PN 25295, a promissory note of an inexistent company. This act of East Asia, et al. of arrogating upon themselves the right to use and dispose my MPC B1 063810 and MPC B1 063811, as if these were their own properties, was indeed to my prejudice and damage.

32.2. Worse, East Asia et al.'s act of conversion and/or misappropriation is further supported by the fact that they deliberately misrepresented to me, by issuing AEA 25295 on August 23, 1999, that AEA Development Corporation actually existed, when in reality, it had ceased operations in 1994. Surely, if the issuer no longer existed at the date of the issuance of the promissory note, then clearly said note is merely a scrap of paper which evidences nothing as AEA Development Corporation could not have actually received anything. Accordingly, the only logical conclusion is that East Asia et al. has used my funds for their own benefit and seeks to conceal such misappropriation with the purported issuance of a worthless promissory note, AEA 25295.

33. I also learned that the act of falsely pretending to possess property, among others, committed prior to or simultaneously with the commission of fraud is estafa punishable under Article 315 No. 2 (a), of the Revised Penal Code.

33.1 In the event that MPC B1 063810 and MPC B1 063811 which I caused East Asia et al. to purchase on my behalf and for my account are in fact non-existent or that MPC B1 063810 and MPC B1 063811 were not actually purchased by East Asia et al. for my account, then East Asia et al. are guilty of (a) falsely representing power, influence and qualifications to buy from MPC certain LTCPs on behalf of others and/or (b) of falsely pretending to possess property to sell (i.e., MPC B1 063810 and MPC B1 063811) in order to fraudulently induce me to part with my money. I entrusted them with my money only because I was made to believe by them that East Asia et al. would purchase for my account sound, necessarily existing, commercial papers. I relied on these false pretenses of East Asia and this is the reason why I was induced to part with my money. As a result of these fraudulent acts of East Asia, I suffered and continue to suffer damages.

xxx xxx xxx

34.2 Mr. Eduque, Ms. Gilda De Jesus ("Ms. De Jesus"), Ms. Delgado and Ms. Uy are the President, Asst. Vice President for Treasury, Operations Manager and Trader, respectively of East Asia. Not only that Mr. Eduque, Ms. De Jesus, Ms. Delgado and Ms. Uy responsible for the fraudulent acts and false representations and conversions performed by them personally as detailed above, but are liable as responsible officers of East Asia. Having supervision over the operations of the investment house East Asia, it is highly unlikely that these officers were not aware of the irregularities that had been committed in connection with my account. In fact, it is only because these officers and traders acted together in complicity with each other that they were able to successfully convert my funds for their own personal gain or for advantage of their company, East Asia.

In its resolution dated May 30, 2001, the Office of the City Prosecutor of Makati accordingly made the following findings, viz.:

After thoroughly going over the evidence adduced by parties, the undersigned is of the considered view and so holds that there exists no sufficient evidence which would warrant a finding of a prima facie case for the crime complained of.

The respondents in this case were being proceeded against for acts of having allegedly committed, in concert, estafa as defined in Article 315 pars. 1 (a) (b) and 2 (a). To constitute estafa, it is essential for its commission that the following elements concur . . . . .

xxx xxx xxx

A perusal however of the obtaining facts on record would readily show that the above-mentioned elements for each of the acts ascribed against the respondents herein does not appear to have been satisfied.

The fact that East Asia (AEA) Capital Corporation is an investment house imbued with quasi-banking functions duly organized under our law is never disputed. Neither it is disputed that as an investment house, East Asia, for its primary purpose and function engages in money market transactions. And, in money market transactions, it involves among others, the issuance, endorsement, safe, or any mode of conveyance of commercial papers.

xxx xxx xxx

There being no positive evidence of deceit, as the respondents herein as officers of East Asia are authorized by its charter to engage in the questioned transaction, the complaint for violation of Art. 315 2 (a), of the RPC cannot be sustained.20

Obviously, the petitioner did not persuasively and sufficiently show that the respondents had misappropriated or converted the proceeds of the matured CPs. The aforequoted findings were, therefore, well founded. As an investment house, East Asia was imbued with quasi-banking functions; hence, the nature of the transactions with its clients was investment for the main objective of securing and obtaining profit and earnings in the form of interests. In short, East Asia had no obligation to return or to remit the very same securities. Such absolution from liability naturally inured to the benefit of the respondents where only acting for and in behalf of East Asia. ETHIDa

It is relevant to mention that East Asia remitted and consistently paid the interests due to the petitioner, which naturally caused him to invest more funds until he heard of the liquidity problems besetting East Asia. This fact was not disputed by him. Accordingly, neither deceit nor damage occurred.

That the substitution of the CPs with promissory notes issued by AEA, a corporation that had supposedly ceased to exist, was of no consequence. The respondents sufficiently established that East Asia and AEA were one and the same entity, a fact confirmed by East Asia's letter-circular from the SEC approving the change of corporate name.

Worthy to note, too, is that the petitioner simply presumed that the respondents, being the officers of East Asia, had conspired with one another. He did not specify and establish the particular roles or actual participation of each respondent in the criminal act. Implied conspiracy is an exception that can never be presumed and may only be deduced from external acts that evince a community of design and intent. It is a basic legal rule in criminal law, therefore, that only the corporate officers shown to have participated in the anomalous acts could be held criminally liable. 21

Lastly, the petitioner's contention that he had been induced to invest in East Asia by the respondents' false pretense, fraudulent act or fraudulent means must fail. It is evident that the actions and representations of the respondents as East Asia's officers were authorized by its charter as a licensed investment company; hence, such actions and representations could not be considered as false and fraudulent.

Worthy to stress is that the determination of probable cause for purposes of filing the information in court is an exclusively executive function that pertained in the first instance to the public prosecutor and then to the Secretary of Justice. 22 The investigating public prosecutor is under no obligation to file a criminal action unless he is convinced that he has the quantum of evidence at hand to support the charge averred in the information. All prosecuting officers are bound not to prosecute anyone unless they are convinced after investigation or reinvestigation that the evidence adduced would be sufficient to establish a prima facie case against the latter. Accordingly, the determination of the persons to be prosecuted entirely rests primarily in the public prosecutor who is vested with the discretion to do so in the discharge of this executive function. 23 The courts are not permitted to substitute their own judgments for that of the Executive Branch in the discharge of this function. 24

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on July 5, 2006; and ORDERS the petitioner to pay the costs of suit.

SO ORDERED." PERLAS-BERNABE, J., took no part; JARDELEZA, J., designated additional member per raffle dated July 20, 2016.

Very truly yours,

 

(SGD.) EDGAR O. ARICHETADivision Clerk of Court

Footnotes

1. Rollo, pp. 61-72; penned by Associate Justice Estela M. Perlas-Bernabe, with the concurrence of Associate Justice Andres B. Reyes, Jr. (later Presiding Justice) and Associate Justice Hakim S. Abdulwahid (retired).

2. Id. at 76.

3. Id. at 139-144.

4. Id. at 62.

5. Id. at 97.

6. Supra note 4.

7. Id. at 62-63.

8. Id. at 63.

9. Id. at 95-110.

10. Id. at 110-138.

11. Id. at 139-144.

12. Id. at 144.

13. Supra note 1.

14. Rollo, pp. 3-56.

15. G.R. Nos. 172785-86, June 18, 2009, 589 SCRA 534, 544.

16. G.R. No. 174005, January 25, 2012, 664 SCRA 80, 85.

17. G.R. No. 84096, January 26, 1995, 240 SCRA 606, 613-614.

18. Zamora v. Eduque, supra note 16, at 85-86.

19. Rollo, pp. 95-110.

20. Id. at 142-144 (bold emphasis supplied).

21. Crusvale, Inc. v. Eduque, supra note 15.

22. Insular Life Assurance Company, Limited v. Serrano, G.R. No. 163255, June 22, 2007, 525 SCRA 400, 405-406; First Women's Credit Corporation v. Perez, G.R. No. 169026, June 15, 2006, 490 SCRA 774, 777.

23. Dupasquier v. Court of Appeals, G.R. No. 112089, 112737, January 24, 2001, 350 SCRA 146, 153; Hegerty v. Court of Appeals, G.R. No. 154920, August 15, 2003, 409 SCRA 285, 290.

24. Baviera v. Paglinawan, G.R. Nos. 168380 & 170602, February 8, 2007, 515 SCRA 170, 184; Alcaraz v. Gonzalez, G.R. No. 164715, September 20, 2006, 502 SCRA 518, 529.