Daniele Bosio, 46, was holidaying in Manila when he was arrested last month after a children's advocacy group told police they saw him acting inappropriately with three unsupervised boys at a water fun park near Manila.
The boys, aged 9-12, then issued sworn statements to government social workers that before going to the fun park, Bosio took them to an apartment and "fondled their sex organs", according to the prosecutor's complaint.
Prosecutor Agripino Baybay, in his findings, rejected Bosio's defence that he was merely being compassionate and helping poor children have fun by taking them to the water park.
"The acts herein complained of, as shown in the evidence at hand, are lamentably not typical or distinctive of genuine affection for and passion to help the children involved," Baybay said in a nine-page resolution.
"Complainants' allegations that respondent fondled their sex organs...deserves a serious look."
Bosio, Italy's ambassador to Turkmenistan, has previously denied acting inappropriately with the children. Italy's foreign ministry suspended him shortly after he was arrested.
Baybay recommended Bosio be charged with three counts of violating the country's child abuse law, and three counts of human trafficking.
Those charges carry jail penalties of between six years and life.
Baybay did not say when the charges would be filed in court. Under Philippine, law respondents can still appeal the prosecutor's findings before the charges are laid.
Bosio's younger brother, Andreas, and their elderly parents had previously accused the authorities of "profiling" Bosio as a paedophile.
They had described him as an avid backpacker who liked to help underprivileged children and had even helped fund a children's school at a slum in Manila.
Telephone calls made by AFP to Andreas went unanswered Monday.