G.R.No.181021.December10,2012.

BURGUNDY REALTY CORPORATION, petitioner, vs. JOSEFA

JING C. REYES and SECRETARY RAUL GONZALEZ of the
DEPARTMENTOFJUSTICE,respondents.

RemedialLawCriminalProcedureAppealsDecisionsorresolutions
of prosecutors are subject to appeal to the Secretary of Justice who, under
the Revised Administrative Code, exercises the power of direct control and
supervisionoversaidprosecutorsandwhomaythusaffirm,nullify,reverse
or modify their rulings.It is not disputed that decisions or resolutions of
prosecutors are subject to appeal to the Secretary of Justice who, under the
Revised Administrative Code, exercises the power of direct control and
supervisionoversaidprosecutorsandwhomaythusaffirm,nullify,reverse
or modify their rulings. Review as an act of supervision and control by the
justice secretary over the fiscals and prosecutors finds basis in the doctrine
ofexhaustionofadministrativeremedieswhichholds

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*THIRDDIVISION.

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VOL.687,DECEMBER10,2012 525

BurgundyRealtyCorporationvs.Reyes

that mistakes, abuses or negligence committed in the initial steps of an

administrativeactivityorbyanadministrativeagencyshouldbecorrectedby
higheradministrativeauthorities,andnotdirectlybycourts.
CriminalLawEstafaTheessenceofestafaunderArticle315,par.1
(b)istheappropriationorconversionofmoneyorpropertyreceivedtothe
prejudiceoftheowner.TheessenceofestafaunderArticle315,par.1(b)
is the appropriation or conversion of money or property received to the
prejudice of the owner. The words convert and misappropriate connote
anactofusingordisposingofanotherspropertyasifitwereonesown,or
of devoting it to a purpose or use different from that agreed upon. To
misappropriate for ones own use includes not only conversion to ones
personal advantage, but also every attempt to dispose of the property of
anotherwithoutright.
Remedial Law Criminal Procedure Preliminary Investigation A
preliminary investigation constitutes a realistic judicial appraisal of the
meritsofacase.Itmustberememberedthatthefindingofprobablecause
was made after conducting a preliminary investigation. A preliminary
investigationconstitutesarealisticjudicialappraisalofthemeritsofacase.
Itspurposeistodeterminewhether(a)acrimehasbeencommittedand(b)
whetherthereisaprobablecausetobelievethattheaccusedisguiltythereof.
Same Same Same In a preliminary investigation, the public
prosecutor merely determines whether there is probable cause or sufficient
ground to engender a wellfounded belief that a crime has been committed,
and that the respondent is probably guilty thereof and should be held for
trial A preliminary investigation does not require a full and exhaustive
presentation of the parties evidence.This Court need not overemphasize
that in a preliminary investigation, the public prosecutor merely determines
whether there is probable cause or sufficient ground to engender a well
founded belief that a crime has been committed, and that the respondent is
probably guilty thereof and should be held for trial. It does not call for the
application of rules and standards of proof that a judgment of conviction
requires after trial on the merits. The complainant need not present at this
stage proof beyond reasonable doubt. A preliminary investigation does not
requireafullandexhaustivepresentationofthepartiesevidence.Precisely,
thereisa

526

526 SUPREMECOURTREPORTSANNOTATED

BurgundyRealtyCorporationvs.Reyes

trial to allow the reception of evidence for both parties to substantiate their
respectiveclaims.
Criminal Law Estafa To misappropriate for ones own use includes
not only conversion to ones personal advantage, but also every attempt to
dispose of the property of another without right.The words convert and
misappropriateconnotetheactofusingordisposingofanotherspropertyas
ifitwereonesown,orofdevotingittoapurposeorusedifferentfromthat
agreed upon. To misappropriate for ones own use includes not only
conversiontoonespersonaladvantage,butalsoeveryattempttodisposeof
the property of another without right. In proving the element of conversion
ormisappropriation,alegalpresumptionofmisappropriationariseswhenthe
accused fails to deliver the proceeds of the sale or to return the items to be
sold and fails to give an account of their whereabouts. Thus, the mere
presumptionofmisappropriationorconversionisenoughtoconcludethata
probablecauseexistsfortheindictmentofReyesforEstafa.Astowhether
thepresumptioncanberebuttedbyReyesisalreadyamatterofdefensethat
canbebestpresentedorofferedduringafullblowntrial.
Remedial Law Criminal Procedure Probable Cause Words and
PhrasesProbablecausehasbeendefinedastheexistenceofsuchfactsand
circumstancesaswouldexcitethebeliefinareasonablemind,actingonthe
facts within the knowledge of the prosecutor, that the person charged was
guiltyofthecrimeforwhichhewasprosecutedAfindingofprobablecause
does not require an inquiry into whether there is sufficient evidence to
procureaconviction.Probable cause has been defined as the existence of
suchfactsandcircumstancesaswouldexcitethebeliefinareasonablemind,
acting on the facts within the knowledge of the prosecutor, that the person
chargedwasguiltyofthecrimeforwhichhewasprosecuted.Probablecause
is a reasonable ground of presumption that a matter is, or may be, well
foundedonsuchastateoffactsinthemindoftheprosecutoraswouldlead
apersonofordinarycautionandprudencetobelieve,orentertainanhonest
orstrongsuspicion,thatathingisso.Thetermdoesnotmeanactualor
positivecausenordoesitimportabsolutecertainty.Itismerelybased
on opinion and reasonable belief. Thus, a finding of probable cause
does not require an inquiry into whether there is sufficient evidence to
procureaconviction.Itisenoughthatitisbe

527

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BurgundyRealtyCorporationvs.Reyes

lieved that the act or omission complained of constitutes the offense

charged.

PETITIONforreviewoncertiorariofthedecisionandresolutionof
theCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
YFLim&AssociatesLawOfficesforpetitioner.
Caballes, Bravo, Fandialan, Guevarra & Associates for
respondents.

PERALTA,**J.:
For resolution of this Court is the Petition for Review on
Certiorari,datedFebruary13,2008,ofpetitionerBurgundyRealty
Corporation, seeking to annul and set aside the Decision1 and
ResolutionoftheCourtofAppeals(CA),datedSeptember14,2007
andDecember20,2007,respectively.
Thefactsfollow.
PrivaterespondentJosefaJingC.Reyes(Reyes),sometimein
1996, offered her services to petitioner as the latters real estate
agentinbuyingparcelsoflandinCalamba,Laguna,whicharetobe
developed into a golf course. She informed petitioner that more or
lessten(10)lotownersareherclientswhowerewillingtoselltheir
properties.Convincedofherrepresentations,petitionerreleasedthe
amount of P23,423,327.50 in her favor to be used in buying those
parcels of land. Reyes, instead of buying those parcels of land,
convertedandmisappropriatedthemoneygivenbypetitionertoher
personaluseandbenefit.PetitionersentaformaldemandforReyes
toreturntheamountofP23,423,327.50,tonoavail

_______________
**ActingChairperson,PerSpecialOrderNo.1394datedDecember6,2012.
1 Penned by Associate Justice Bienvenido L. Reyes (now a member of the
SupremeCourt),withAssociateJusticesAuroraSantiagoLagmanandApolinarioD.
Bruselas,Jr.,concurringRollo,pp.7281.

528

528 SUPREMECOURTREPORTSANNOTATED
BurgundyRealtyCorporationvs.Reyes

despite her receipt of the said demand. As such, petitioner filed a

complaintforthecrimeofEstafaagainstReyesbeforetheAssistant
CityProsecutorsOfficeofMakatiCity.
Reyes, while admitting that she acted as a real estate agent for
petitioner,deniedhavingconvertedormisappropriatedtheinvolved
amountofmoney.Sheclaimedthatthesaidamountwasusedsolely
fortheintendedpurposeandthatitwaspetitionerwhorequestedher
services in procuring the lots. According to her, it was upon the
petitionersproddingthatshewasconstrainedtocontactherfriends
who were also into the real estate business, including one named
Mateo Elejorde. She alleged that prior to the venture, Mateo
Elejorde submitted to her copies of certificates of title, vicinity
plans, cadastral maps and other identifying marks covering the
properties being offered for sale and that after validating and
confirmingthepricesaswellasthetermsandconditionsattendant
to the projected sale, petitioner instructed her to proceed with the
release of the funds. Thus, she paid down payments to the
landowners during the months of February, March, July, August,
SeptemberandOctoberof1996.Reyesalsoinsistedthatpetitioner
knewthattheinitialordownpaymentforeachlotrepresentedonly
50%ofthepurchasepricesuchthattheremainingbalancehadtobe
paid within a period of thirty (30) days from the date of receipt of
the initial payment. She added that she reminded petitioner, after
several months, about the matter of unpaid balances still owing to
the lot owners, but due to lack of funds and noninfusion of
additional capital from other investors, petitioner failed to pay the
landowners of their remaining unpaid balances. Meanwhile, Reyes
received information that her subbroker Mateo Elejorde had been
depositingtheinvolvedmoneyentrustedtohimunderhispersonal
account.OnMarch28,2000,throughaboardresolution,petitioner
allegedlyauthorizedReyestoinstitute,proceed,pursueandcontinue
with whatever criminal or civil action against Mateo Elejorde, or
such person to whom she may have delivered or entrusted the
moneyshehadreceivedintrustfromthefirm,forthepur

529

VOL.687,DECEMBER10,2012 529
BurgundyRealtyCorporationvs.Reyes

pose of recovering such money. Thus, Reyes filed a complaint for

the crime of estafa against Mateo Elejorde before the City
ProsecutorsOfficeofMakatiCitydocketedasI.S.No.98B5916
22,andonMarch30,2001,MateoElejordewasindictedforestafa.
After a preliminary investigation was conducted against Reyes,
the Assistant Prosecutor of Makati City issued a Resolution2 dated
April27,2005,thedispositiveportionofwhichreads:

In view thereof, it is most respectfully recommended that respondent be

indicted of the crime of Estafa defined and penalized under the Revised
Penal Code. It could not be said that she has violated the provision of PD
1689foritwasnotshownthatthemoneyallegedlygiventoherwerefunds
solicitedfromthepublic.Lettheattachedinformationbeapprovedforfiling
incourt.BailrecommendationatPhp40,000.00.3

Thereafter,anInformationforthecrimeofEstafa under Article

315, par. 1 (b) of the Revised Penal Code (RPC) was filed against
ReyesandraffledbeforetheRTC,Branch149,MakatiCity.
Undeterred, Reyes filed a petition for review before the
DepartmentofJustice(DOJ),butitwasdismissedbytheSecretary
ofJusticethroughStateProsecutorJovencitoZuoonJune1,2006.
Aggrieved, Reyes filed a motion for reconsideration, and in a
Resolution4datedJuly20,2006, the said motion was granted. The
decretaltextoftheresolutionreads:

Finding the grounds relied upon in the motion to be meritorious and in

the interest of justice, our Resolution of June 1, 2006 is hereby
RECONSIDERED and SET ASIDE. Accordingly, the petition for review
filedbyrespondentappellantJosefaReyesisherebygiven

_______________
2Rollo,pp.5859.
3Id.,atp.59.
4Id.,atp.63.

530
530 SUPREMECOURTREPORTSANNOTATED
BurgundyRealtyCorporationvs.Reyes

due course and will be reviewed on the merits and the corresponding
resolutionwillbeissuedinduetime.
SOORDERED.

On September 22, 2006, Secretary of Justice Raul Gonzalez

issuedaResolution5 granting the petition for review of Reyes, the
falloofwhichreads:

WHEREFORE, the assailed resolution is hereby REVERSED and SET

ASIDE. The City Prosecutor of Makati City is directed to cause the
withdrawal of the information for estafa filed in court against respondent
Josefa Jing C. Reyes and to report the action taken within five (5) days
fromreceipthereof.
SOORDERED.6

Petitioner filed a motion for reconsideration, but was denied by

the Secretary of Justice in a Resolution dated December 14, 2006.
Eventually,petitionerfiledapetitionforcertiorariunderRule65of
the Rules of Court with the CA. The latter, however, affirmed the
questioned Resolutions of the Secretary of Justice. The dispositive
portionoftheDecisiondatedSeptember14,2007reads:

WHEREFORE, premises considered, the assailed Resolutions[,] dated

22 September 2006 and 14 December 2006[,] both rendered by public
respondentSecretaryofJustice[,]areherebyAFFIRMEDintoto.
SOORDERED.7

ItsmotionforreconsiderationhavingbeendeniedbytheCAina
Resolution dated December 20, 2007, petitioner filed the present
petitionandthefollowingaretheassignederrors:

_______________
5Id.,atpp.6569.
6Id.,atp.69.
7Id.,atp.80.

531

VOL.687,DECEMBER10,2012 531
BurgundyRealtyCorporationvs.Reyes

I
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING
THAT THE DOJ SECRETARY, RAUL GONZALEZ, CAPRICIOUSLY,
ARBITRARILY AND WHIMSICALLY DISREGARDED THE
EVIDENCE ON RECORD SHOWING THE [EXISTENCE] OF
PROBABLECAUSEAGAINSTPRIVATERESPONDENTFORESTAFA
UNDERARTICLE3151(b)OFTHEREVISEDPENALCODE.
II
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT FINDING
BUT INSTEAD CONCURRED IN WITH THE DOJ SECRETARY,
RAUL GONZALEZ, WHO BY GRAVE ABUSE OF DISCRETION
AMOUNTINGTOLACKOREXCESSOFJURISDICTIONHELDTHAT
NOT ALL OF THE ELEMENTS OF ESTAFA UNDER ARTICLE 315 1
(b), PARTICULARLY THE ELEMENT OF MISAPPROPRIATION,
WERENOTSUFFICIENTLYESTABLISHEDINTHISCASE.
III
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING
THAT THE DOJ SECRETARY, RAUL GONZALEZ, ACTED WITH
GRAVEABUSEOFDISCRETIONINACCEPTINGASTRUTHWHAT
WEREMATTERSOFDEFENSEBYPRIVATERESPONDENTINHER
COUNTERAFFIDAVIT WHICH SHOULD HAVE BEEN PROVEN AT
THETRIALONTHEMERITS.8

Thepetitionismeritorious.
Itisnotdisputedthatdecisionsorresolutionsofprosecutorsare
subjecttoappealtotheSecretaryofJusticewho,undertheRevised
Administrative Code,9 exercises the power of direct control and
supervisionoversaidprosecutorsandwhomaythusaffirm,nullify,
reverseormodifytheirrulings.Reviewasanactofsupervisionand
controlbythejusticesecretaryoverthefiscalsandprosecutorsfinds
basisinthe

_______________
8Id.,atpp.1920.
9The1987RevisedAdministrativeCode,ExecutiveOrderNo.292.

532

532 SUPREMECOURTREPORTSANNOTATED
BurgundyRealtyCorporationvs.Reyes

doctrine of exhaustion of administrative remedies which holds that

mistakes, abuses or negligence committed in the initial steps of an
administrative activity or by an administrative agency should be
corrected by higher administrative authorities, and not directly by
courts.10
In the present case, after review and reconsideration, the
Secretary of Justice reversed the investigating prosecutors finding
of probable cause that all the elements of the crime of estafa are
present.Estafa,underArticle315(1)(b)oftheRevisedPenalCode,
iscommittedby
ART.315.Swindling(estafa).Anypersonwhoshalldefraudanotherby
anyofthemeansmentionedhereinbelow:
xxxx
1.Withunfaithfulnessorabuseofconfidence,namely:
(a)xxx
(b)By misappropriating or converting, to the prejudice of another,
money,goods,oranyotherpersonalpropertyreceivedbytheoffender
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, even though such obligation be totally or partially guaranteed
by a bond or by denying having received such money, goods, or
otherpropertyxxx

Theelementsare:
1)that money, goods or other personal property be received by the offender in
trust, or on commission, or for administration, or under any other obligation
involvingthedutytomakedeliveryof,ortoreturn,thesame
2)thattherebemisappropriationorconversionofsuchmoneyorpropertybythe
offender,ordenialonhispartofsuchreceipt

_______________

10SolarTeamEntertainment,Inc.v.Hon.RolandoHow,G.R.No.140863,August22,2000,338SCRA

511,517393Phil.172,179180(2000).(Citationomitted)

533

VOL.687,DECEMBER10,2012 533
BurgundyRealtyCorporationvs.Reyes

3)thatsuchmisappropriationorconversionordenialistotheprejudiceofanother
and
4)thatthereisdemandmadebytheoffendedpartyontheoffender.11

The essence of estafa under Article 315, par. 1 (b) is the

appropriation or conversion of money or property received to the
prejudice of the owner. The words convert and misappropriate
connote an act of using or disposing of anothers property as if it
wereonesown,orofdevotingittoapurposeorusedifferentfrom
thatagreedupon.Tomisappropriateforonesownuseincludesnot
onlyconversiontoonespersonaladvantage,butalsoeveryattempt
todisposeofthepropertyofanotherwithoutright.12
Inreversingthefindingofprobablecausethatthecrimeofestafa
hasbeencommitted,theSecretaryofJusticereasonedoutthat,[the]
theory of conversion or misappropriation is difficult to sustain and
that under the crime of estafa with grave abuse of confidence, the
presumption is that the thing has been devoted to a purpose or is
differentfromthatforwhichitwasintendedbutdidnottakeplace
inthiscase.TheCA,insustainingthequestionedresolutionsofthe
Secretary of Justice, ruled that the element of misappropriation or
conversioniswanting.Itfurtherratiocinatedthatthedemandforthe
returnofthethingdeliveredintrustandthefailureoftheaccusedto
account for it, are circumstantial evidence of misappropriation,
however, the said presumption is rebuttable and if the accused is
able to satisfactorily explain his failure to produce the thing
deliveredintrust,hemaynotbeheldliableforestafa.

_______________
11Reyes,RevisedPenalCodeofthePhilippines,p.716Manahan,Jr.v.Courtof
Appeals,G.R.No.111656,March20,1996,255SCRA202,213325Phil.484,492493
(1996).
12 Amorsolo v. People, G.R. No. L76647, September 30, 1987, 154 SCRA 556,
563 238 Phil. 557, 564 (1987) citing U.S. v. Ramirez, 9 Phil. 67 (1907) and U.S. v.
Panes,37Phil.118(1917).

534

534 SUPREMECOURTREPORTSANNOTATED
BurgundyRealtyCorporationvs.Reyes

It must be remembered that the finding of probable cause was

made after conducting a preliminary investigation. A preliminary
investigationconstitutesarealisticjudicialappraisalofthemeritsof
a case.13 Its purpose is to determine whether (a) a crime has been
committedand(b)whetherthereisaprobablecausetobelievethat
theaccusedisguiltythereof.14
This Court need not overemphasize that in a preliminary
investigation,thepublicprosecutormerelydetermineswhetherthere
is probable cause or sufficient ground to engender a wellfounded
belief that a crime has been committed, and that the respondent is
probablyguiltythereofandshouldbeheldfortrial.Itdoesnotcall
fortheapplicationofrulesandstandardsofproofthatajudgmentof
convictionrequiresaftertrialonthemerits.15Thecomplainantneed
not present at this stage proof beyond reasonable doubt.16 A
preliminary investigation does not require a full and exhaustive
presentation of the parties evidence.17 Precisely, there is a trial to
allowthereceptionofevidenceforbothpartiestosubstantiatetheir
respectiveclaims.18
A review of the records would show that the investigating
prosecutorwascorrectinfindingtheexistenceofalltheelementsof
thecrimeofestafa.Reyesdidnotdisputethatshereceivedintrust
the amount of P23,423,327.50 from petitioner as proven by the
checksandvoucherstobeusedin

_______________
13Villanuevav.Ople,G.R.No.165125,November18,2005,475SCRA539,553
512Phil.187,204(2005).
 14 Gonzalez v. Hongkong & Shanghai Banking Corporation, G.R. No. 164904,
October19,2007,537SCRA255,269.
15 Metropolitan Bank & Trust Company v. Gonzalez, G.R. No. 180165, April 7,
2009,584SCRA631,642.
16Id.
17Angv.Lucero,G.R.No.143169,January21,2005,449SCRA157,169490Phil.
60,71(2005).
18MetropolitanBank&TrustCompanyv.Gonzalez,supranote15.

535

VOL.687,DECEMBER10,2012 535
BurgundyRealtyCorporationvs.Reyes

purchasingtheparcelsofland.Petitionerwroteademandletterfor
Reyes to return the same amount but was not heeded. Hence, the
failureofReyestodeliverthetitlesortoreturntheentrustedmoney,
despite demand and the duty to do so, constituted prima facie
evidence of misappropriation. The words convert and
misappropriate connote the act of using or disposing of anothers
propertyasifitwereonesown,orofdevotingittoapurposeoruse
differentfromthatagreedupon.19Tomisappropriateforonesown
use includes not only conversion to ones personal advantage, but
also every attempt to dispose of the property of another without
right.20Inprovingtheelementofconversionormisappropriation,a
legalpresumptionofmisappropriationariseswhentheaccusedfails
todelivertheproceedsofthesaleortoreturntheitemstobesold
andfailstogiveanaccountoftheirwhereabouts.21Thus,themere
presumption of misappropriation or conversion is enough to
concludethataprobablecauseexistsfortheindictmentofReyesfor
Estafa.AstowhetherthepresumptioncanberebuttedbyReyesis
already a matter of defense that can be best presented or offered
duringafullblowntrial.
Toreiterate,probablecausehasbeendefinedastheexistenceof
such facts and circumstances as would excite the belief in a
reasonable mind, acting on the facts within the knowledge of the
prosecutor,thatthepersonchargedwasguiltyofthecrimeforwhich
he was prosecuted.22 Probable cause is a reasonable ground of
presumptionthatamatteris,ormaybe,wellfoundedonsuchastate
of facts in the mind of the prosecutor as would lead a person of
ordinarycautionand prudence to believe, or entertain an honest or
strongsuspi

_______________
19Seronav.CourtofAppeals,440Phil.508,518392SCRA35,42(2000).
20Id.
21U.S.v.RosariodeGuzman,1Phil.138,139(1902).
 22MetropolitanBank&TrustCompanyv.Gonzales,supranote15,atp.640.

536

536 SUPREMECOURTREPORTSANNOTATED
BurgundyRealtyCorporationvs.Reyes

cion, that a thing is so.23 The term does not mean actual or
positive cause nor does it import absolute certainty.24 It is
merelybasedonopinionandreasonablebelief.25Thus,afinding
ofprobablecausedoesnotrequireaninquiryintowhetherthere
issufficientevidencetoprocureaconviction.26Itisenoughthat
it is believedthatthe act or omission complained of constitutes
theoffensecharged.27
WHEREFORE, premises considered, the present Petition is
herebyGRANTEDand,accordingly,theDecisionandResolutionof
theCourtofAppeals,datedSeptember14,2007andDecember20,
2007, respectively, are hereby REVERSED and SET ASIDE.
Consequently, the Regional Trial Court, Branch 149, Makati City,
where the Information was filed against private respondent Josefa
Jing C. Reyes, is hereby DIRECTED to proceed with her
arraignment.
SOORDERED.

Brion,***Abad,MendozaandLeonen,JJ.,concur.

Petitiongranted,judgmentandresolutionreversedandsetaside.

Notes.TheessenceofestafaunderArticle315,par.1(b)isthe
appropriation or conversion of money or property received to the
prejudice of the owner. (Tabaniag vs. People, 589 SCRA 441
[2009])

_______________
23 Id., citing Yu v. Sandiganbayan, 410 Phil. 619, 627 358 SCRA 353, 359360
(2001).
24Id.,atpp.640641.
25Id.,atp.641.
26Id.
27Id.
***DesignatedActingMember,inlieuofAssociateJusticePresbiteroJ.Velasco,
Jr.,perSpecialOrderNo.1395datedDecember6,2012.

537

VOL.687,DECEMBER10,2012 537
BurgundyRealtyCorporationvs.Reyes
 UnderArticle315,par.1(b)oftheRPC,theelementsofestafa
are as follows: (1) that money, goods or other personal property is
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 be
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) there is demand by the offended party to the
offender.(Treasvs.People,664SCRA355[2012])
o0o

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