VIRGINIA DE LOS SANTOS­DIO, AS AUTHORIZED REPRESENTATIVE OF H.S. EQUITIES, LTD., AND WESTDALE ASSETS, LTD., VS. THE HONORABLE COURT OF APPEALS, JUDGE RAMON S. CAGUIOA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 74, REGIONAL. TRIAL COURT, OLONGAPO CITY, AND TIMOTHY J. DESMOND.

Ruling

Accordingly, Dio was elected as a member of SBMEIs Board of Directors and further appointed as its Treasurer. [13] The parties later executed two (2) Investors Convertible Promissory Notes one dated April 4, 2001 [14] and another dated May 8, 2001 [15] covering HS Equities infusion of a total of US$1,000,000.00 for the purpose of purchasing machinery, equipment, accessories, and materials to be used for the construction of Ocean Adventure. In June 2002, Dio, this time on behalf of Westdale, invested another US$1,000,000.00 [16] in a separate business venture, called the Miracle Beach Hotel Project (Miracle Beach), which involved the development of a resort owned by Desmond adjoining Ocean Adventure. They agreed that the said investment would be used to settle SBMEIs P40,000,000.00 loan obligation to First Metro Investment Corporation and for the construction of 48 lodging units/cabanas. [17] However, when the corresponding subscription agreement was presented to Dio by SBMEI for approval, it contained a clause stating that the "funds in the Subscription Bank Account" were also to be used for the "[f]unding of Ocean Adventures Negative Cash Flow not exceeding [US$200,000.00]." [18] This was in conflict with the exclusive purpose and intent of Westdales investment in Miracle Beach and as such, Dio refused to sign the subscription agreement. Dio further claimed that she found out that, contrary to Desmonds representations, SBMEI actually had no capacity to deliver on its guarantees, and that in fact, as of 2001, it was incurring losses amounting to P62,595,216.00. [19] She likewise claimed to have discovered false entries in the companys books and financial statements specifically, its overvaluation of the marine animals and its non-disclosure of the true amount of JV Chinas investment [20] which prompted her to call for an audit investigation. Consequently, Dio discovered that, without her knowledge and consent, Desmond made certain disbursements from Westdales special account, meant only for Miracle Beach expenditures (special account), and diverted a total of US$72,362.78 therein for the operating expenses of Ocean Adventure. [21] When Desmond refused to execute an undertaking to return the diverted funds, Dio, in her capacity as Treasurer of SBMEI, suspended the release of the remaining funds in the aforesaid special account. [22] Eventually, after Dio was ousted as Director and Treasurer of SBMEI, [23] she filed, on April 19, 2004, two (2) criminal complaints [24] (subject criminal complaints) for estafa (a) through false pretenses under Article 315(1)(b) [25] of the Revised Penal Code [26] (RPC); and (b) with unfaithfulness or abuse of confidence through misappropriation or conversion under Article 315(2)(a) [27] of the RPC, both against Desmond before the Olongapo City Prosecutors Office (City Prosecutors Office), docketed as IS Nos. 04-M-992 and 04-M-993. In defense, Desmond maintained that his representation of himself a