G.R. No. 181021; December 10, 2012
BURGUNDY REALTY CORPORATION, Petitioner, vs. JOSEFA “JING” C. REYES and SECRETARY RAUL GONZALEZ of the DEPARTMENT OF JUSTICE, Respondents.

FACTS

Petitioner Burgundy Realty Corporation engaged private respondent Josefa “Jing” C. Reyes as its real estate agent to purchase parcels of land in Calamba, Laguna, for development. Petitioner released the amount of ₱23,423,327.50 to Reyes to facilitate the acquisitions. Petitioner alleged that Reyes, instead of buying the properties, converted and misappropriated the funds for her personal use. After a formal demand for restitution went unheeded, petitioner filed a complaint for Estafa under Article 315, paragraph 1(b) of the Revised Penal Code against Reyes before the Makati City Prosecutor’s Office.
Reyes admitted acting as an agent but denied misappropriation. She claimed the funds were used for their intended purpose, specifically for down payments to landowners, and that petitioner failed to provide the remaining balances, causing the transactions to fail. She also implicated a sub-broker, Mateo Elejorde, to whom she entrusted portions of the money. The Assistant City Prosecutor found probable cause and filed an Information for Estafa against Reyes. However, upon petition for review, DOJ Secretary Raul Gonzalez reversed the finding and directed the withdrawal of the information. The Court of Appeals affirmed the DOJ Secretary’s resolutions.

ISSUE

Whether the Secretary of Justice committed grave abuse of discretion in finding no probable cause to charge Reyes with Estafa under Article 315, paragraph 1(b) of the Revised Penal Code.

RULING

Yes, the Supreme Court reversed the Court of Appeals and reinstated the Information. The Court held that the DOJ Secretary committed grave abuse of discretion by disregarding the evidence establishing probable cause. Probable cause for prosecution requires only a reasonable belief that a crime has been committed and the accused is probably guilty thereof, based on evidence offered in a preliminary investigation.
The elements of Estafa under Article 315, paragraph 1(b) are: (1) the accused received money, goods, or other personal property in trust, on commission, or for administration; (2) the accused misappropriated or converted such property or denied receiving it; (3) the misappropriation or conversion was to the prejudice of the owner; and (4) there was a demand by the offended party. The evidence showed Reyes received the substantial sum in a fiduciary capacity as an agent. Her failure to account for the funds or return them upon demand, coupled with her own admission of entrusting portions to a sub-agent who allegedly misappropriated it, indicated prima facie misappropriation or conversion. Her defense pertained to the merits of the case proper for trial, not for a preliminary investigation which merely determines probable cause. The Secretary’s conclusion was not merely an error of judgment but a capricious disregard of factual and legal premises, constituting grave abuse of discretion warranting judicial correction. The trial court was directed to proceed with the arraignment.