G.R. Nos. 172785-86. June 18, 2009.
CRUZVALE, INC., petitioner, vs. JOSE ARMANDO L. EDUQUE, PETER A. BINAMIRA,
JEANETTE C. DELGADO and MA. LETICIA R. JOSON, respondents.
Criminal Procedure; Preliminary Investigation; Probable Cause; The determination of probable
cause for the filing of an information in court is an executive function which pertains at the first
instance to the public prosecutor and then to the Secretary of Justice.—It bears stressing that the
determination of probable cause for the filing of an information in court is an executive function
which pertains at the first instance to the public prosecutor and then to the Secretary of Justice.
Courts are not empowered to substitute their own judgment for that of the executive branch.
Criminal Law; Estafa under Art. 315(1)(b) of the Revised Penal Code; Elements.—To be held
liable for estafa under Article 315(1)(b) of the Revised Penal Code, the following elements must
concur: (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.
Same; Same; Corporation Law; It is basic that only corporate officers shown to have participated
in the alleged anomalous acts may be held criminally liable.—While East Asia acted as
custodian of the LTCPs and was obliged to turn-over the proceeds of the matured LTCPs and to
deliver the outstanding LTCPs to petitioner, with interest payments accruing thereto, there was
no showing that respondents misappropriated or converted the same. East Asia periodically
remitted the proceeds and interest payments to petitioner even before petitioner filed its
complaint-affidavit. Moreover, apart from its sweeping allegation that respondents
misappropriated or converted its money placements, petitioner failed to establish the particular
role or actual participation of each respondent in the criminal act. Neither was it shown that they
assented to its commission. It is basic that only corporate officers shown to have participated in
the alleged anomalous acts may be held criminally liable.
Same; Judgments; Motions for Reconsideration; The propriety or acceptability of a second
motion for reconsideration is not contingent upon the averment of “new” grounds to assail the
judgment.—Petitioner’s motion for partial reconsideration was a second motion for
reconsideration with regard to the dismissal of the criminal charge for estafa under Article
315(1)(b) against Joson. Although it assailed two different orders of two different judges, the
matter being questioned was the same. We reiterate that the propriety or acceptability of a second
motion for reconsideration is not contingent upon the averment of “new” grounds to assail the
judgment.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Poblador, Bautista and Reyes for petitioner.
Romulo, Mabanta, Buenaventura, Sayoc and Delos Angeles Law Offices for respondents
Eduque, Binamira and Delgado.
QUISUMBING, J.:
This is a petition for review on certiorari seeking the reversal of the Decision1 dated March 1,
2006 of the Court of Appeals in CA-G.R. SP Nos. 81518 and 81526 and its Resolution2 dated
May 22, 2006, denying reconsideration. The appellate court ordered the dismissal of the criminal
charge for estafa under Article 315(1)(b)3 of the Revised Penal Code against respondents for
lack of probable cause.
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1 Rollo, pp. 85-109. Penned by Associate Justice Arturo G. Tayag, with Associate Justices Jose
L. Sabio, Jr., and Fernanda Lampas-Peralta concurring.
2 Id., at pp. 111-113.
3 Art. 315. Swindling (estafa).—Any person who shall defraud another by any of the means
mentioned hereinbelow shall be punished by:
xxxx
1. With unfaithfulness or abuse of confidence, namely:
xxxx
(b) By misappropriating or converting, to the prejudice of another, money, goods or any other
personal property received by the offender in trust or on commission, or for administration, or
under
Petitioner is a client of East Asia (AEA) Capital Corporation (East Asia) which is a duly licensed
Philippine investment house engaged in the buy and sell or trading of securities and commercial
papers. As a practice, East Asia purchases Long Term Commercial Papers (LTCPs) for petitioner
from various corporations the latter has chosen. These LTCPs are registered with the issuing
corporations in the name of East Asia in trust for petitioner. In turn, East Asia issues Outright
Sales Invoices and Custodian Receipts to petitioner. Once the LTCPs mature, petitioner instructs
East Asia to re-invest or roll-over the principal amounts and accrued interests to other similar
LTCPs.
Petitioner alleged that sometime in April. 2000, it learned of East Asia’s irregular transactions
and precarious financial condition. Thus, it asked East Asia for an accounting of all its LTCPs.
Meanwhile, petitioner conducted its own investigation and discovered that: (1) some of its
outstanding LTCPs were sold or assigned to third parties; (2) the proceeds of such sale or
assignment were covered by petitioner’s alleged purchase of East Asia promissory notes; (3) the
proceeds of its matured LTCPs were not used to purchase other similar LTCPs but covered
instead petitioner’s alleged purchase of East Asia promissory notes; and (4) interest payments
from its LTCPs were received by East Asia and covered petitioner’s alleged purchase of East
Asia promissory notes. All these were done without petitioner’s prior knowledge and consent.
Petitioner’s representatives met with respondent Jose Armando L. Eduque, Chief Executive
Officer and Director of East Asia, to confirm and discuss the foregoing. Eduque proposed to: (1)
secure the East Asia promissory notes with collateral; and/or (2) dacion the LTCPs with East
Asia real properties and shares of stock.4
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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 other property;
4 Rollo, p. 164.
On June 23, 2000, Eduque proposed the conversion of a part or all of petitioner’s LTCPs into
East Asia equity. Petitioner declined the proposal and made a final demand for the turn-over of
the proceeds of its matured LTCPs and the delivery of its outstanding LTCPs, with interest
payments accruing thereto.5
As the demand remained unheeded, petitioner filed a complaint-affidavit with the Office of the
City Prosecutor of Makati charging respondents, as officers and/or directors of East Asia, with
violation of Article 315(1)(b) and (2)(a)6 of the Revised Penal Code.
On February 5, 2001, an Information for estafa under Article 315(1)(b) was filed against
respondents. Joson filed a motion for reconsideration while Eduque, Binamira and Delgado filed
a petition for review with the Department of Justice. In the meantime, the case was docketed as
Criminal Case No. 01-328 and assigned to Judge Marissa M. Guillen of the Regional Trial Court
of Makati City, Branch 61.
The Secretary of Justice granted the petition and directed the City Prosecutor of Makati to
withdraw the information against respondents.7 On the other hand, the City Prosecutor of Makati
granted Joson’s motion and recommended the dismissal of the charge against her.8
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5 Id., at pp. 165-166.
6 Art. 315. Swindling (estafa).—Any person who shall defraud another by anv of the means
mentioned hereinbelow shall be punished by:
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions; or by means of other similar
deceits.
7 Rollo, pp. 233-238.
8 Id., at pp. 239-241.
The City Prosecutor of Makati then filed a motion to withdraw information which was denied by
Judge Guillen.9 Joson filed a motion for reconsideration separate from the motion for
reconsideration filed by Eduque, Binamira and Delgado.
Judge Romeo F. Barza, who took over as presiding judge, granted10 Joson’s motion but
denied11 that of Eduque, Binamira and Delgado. Thereafter, they were arraigned over their
objections. They filed another motion for reconsideration. Petitioner also moved to reconsider
the withdrawal of the information against Joson.
Due to Judge Barza’s voluntary inhibition, the case was re-raffled and re-assigned to Judge
Rebecca R. Mariano of the RTC of Makati City, Branch 134. Judge Mariano dismissed the
criminal case against all respondents due to the absence of probable cause.12
Petitioner moved for partial reconsideration which Judge Mariano granted.13 She also denied
respondents’ motion for reconsideration and ordered the pre-trial to proceed.14
Before the Court of Appeals, Joson filed a petition for review docketed as CA-G.R. SP No.
81518 while Eduque, Binamira and Delgado filed a petition for review docketed as CA-G.R. SP
No. 81526.
The appellate court granted the petitions on the following grounds: First, petitioner’s motion for
partial reconsideration was a prohibited pleading which Judge Mariano should not have taken
cognizance of. It was a second motion for reconsideration with regard to the dismissal of the
criminal charge for estafa under Article 315(1)(b) against Joson. Second, there was no sufficient
evidence to warrant Joson’s indictment since petitioner failed to show that she participated in the
alleged conversion of the LTCPs and conspired with the other respondents in committing the
same. Third, the Supreme Court ruled in Sesbreño v. Court of Appeals15 that a money market
transaction partakes of a nature of a loan and therefore, the non-payment thereof would not give
rise to criminal liability for estafa through misappropriation or conversion.16 East Asia did not
receive money in trust, or on commission or for administration, or under any other obligation to
make delivery of or to return the same. It did not become a trustee of petitioner, nor was any
fiduciary relationship created. Thus, the appellate court ordered the dismissal of the criminal
charge for estafa under Article 315(1)(b) against respondents for lack of probable cause:
“ALL THE FOREGOING CONSIDERED, the instant consolidated petition (CA-G.R. SP No.
81518 and CA-G.R. SP No. 81526) is hereby GRANTED. Accordingly, the assailed ORDERS
dated 26 May 2003, 25 September 2003 and 29 December 2003, issued by public respondent are
hereby REVERSED and SET ASIDE and the Order dated 13 December 2002 is hereby
REINSTATED.
SO ORDERED.”17
Petitioner submits these issues for our consideration:
I.
WHETHER OR NOT THE COURT OF APPEALS ACTED CONTRARY TO AND
SUBSTANTIALLY DEPARTED FROM LAW AND SETTLED JURISPRUDENCE WHEN IT
RULED THAT SESBREÑO V. COURT OF APPEALS IS APPLICABLE IN THE INSTANT
CASE.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
AND ACTED CONTRARY TO LAW AND SETTLED JURISPRUDENCE WHEN IT RULED
THAT SOME OF THE ELEMENTS OF ESTAFA WITH UNFAITHFULNESS OR ABUSE OF
CONFIDENCE UNDER ARTICLE 315(1)(b) ARE ABSENT IN THE INSTANT CASE,
THEREBY WARRANTING THE DISMISSAL OF THE CHARGES AGAINST THE
RESPONDENTS FOR LACK OF PROBABLE CAUSE.
III.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
AND ACTED CONTRARY TO SETTLED JURISPRUDENCE WHEN IT HELD THAT
PETITIONER CRUZVALE’S MOTION FOR PARTIAL RECONSIDERATION DATED 27
JANUARY 2003 IS A SECOND MOTION FOR RECONSIDERATION WHICH IS NOT
ALLOWED UNDER THE LAW.18
Essentially, we are asked to resolve whether the Court of Appeals erred in: (1) applying Sesbreño
v. Court of Appeals; (2) ruling that some of the elements of estafa under Article 315(1)(b) are
absent; and (3) holding that petitioner’s motion for partial reconsideration is a second motion for
reconsideration which is a prohibited pleading.
Petitioner avers that the instant case is different from Sesbreño for the following reasons. First,
respondents are charged not with the simple failure to return petitioner’s investments, but rather,
with: (1) the violation of their fiduciary obligation under the Custodian Receipts when they sold
or assigned petitioner’s outstanding LTCPs to third parties without its prior knowledge and
consent; (2) the misrepresentation that they still had custody of these LTCPs despite the double
sale to third parties; (3) the violation of their fiduciary obligation as middleman to remit and
account for the interests and proceeds of petitioner’s investments after the corporate borrowers
have paid the same; (4) the misappropriation of these proceeds; and (5) the unilateral conversion
of petitioner’s investments in LTCPs into East Asia promissory notes without its knowledge and
consent. Second, East Asia is not only the middleman but also the custodian of the LTCPs it
purchased in behalf of petitioner as evidenced by the Custodian Receipts. As such, East Asia
became a trustee who has the unconditional obligation to deliver the LTCPs to petitioner who is
the beneficiary-placer. Its failure to deliver the LTCPs to petitioner amounts to conversion or
unlawful deprivation. By selling the LTCPs to third parties and unilaterally replacing them with
East Asia promissory notes without petitioner’s knowledge and consent, East Asia breached its
obligation to hold the same in trust for petitioner’s account. Petitioner adds that the
characterization of the transactions between the parties as akin to a loan is misplaced and
contrary to Fontanilla v. People.19 In Fontanilla, the Court ruled that a fiduciary relationship
exists between an investor and the person to whom he entrusts money for the purpose of
investment.20 In the instant case, the Outright Sales Invoices and Custodian Receipts show that
petitioner turned over money to East Asia for the purchase of LTCPs. The criminal charge
against respondents constitutes estafa through misappropriation or conversion under Article
315(1)(b).
Petitioner also argues that the elements of estafa with unfaithfulness or abuse of confidence
under Article 315(1)(b) are present in the instant case. The subject of the misappropriation was
not the funds invested by petitioner per se but the LTCPs themselves and the interests and
proceeds of petitioner’s investments after the corporate borrowers have paid the same. It is not
always essential for estafa that the complainant seek the return of the very same thing delivered
under trust or for administration. Further, East Asia’s failure to account for the unremitted
portion of the investments, after demand was made, necessarily leads to the conclusion that the
same were misappropriated or converted into personal use.
Finally, petitioner contends that its motion for partial reconsideration is not a second motion for
reconsideration which is a prohibited pleading. The motions questioned the dismissal of the
criminal charge against Joson on two different grounds.
Respondents counter that the instant case involves a money market placement in which an
investor delivers money to an investment house for the purpose of investing it in different
securities in the hope of realizing profit. Whatever stocks, certificate or other documents that
may be issued from these transactions are merely evidence of the money market placement. The
transaction partakes of the nature of a loan and therefore nonpayment thereof would not give rise
to any criminal liability for estafa through misappropriation or conversion. Respondents add that
petitioner has not adduced any evidence to show that they actually participated in any act of
misappropriation or conversion constituting estafa. Respondents also maintain that the
prohibition against second motions for reconsideration does not provide as an exception the
inclusion of new or additional grounds.
The petition is partly meritorious.
In Sesbreño v. Court of Appeals,21 Sesbreño made a money market placement of P300,000 with
Philfinance for a term of 32 days at 20% interest. Philfmance then sold to him a share in Delta
Motors Corporation Promissory No. 2731 which was payable to Philfinance but was in the
custody of Pilipinas Bank. Unknown to Sesbreño, Philfinance and Delta agreed to set-off
Promissory No. 2731 with Philfinance’s Promissory Note No. 143-A which was payable to
Delta. As a result, Delta’s liability under Promissory No. 2731 was extinguished. Later,
Philfinance failed to pay the maturity value of Sesbreño’s investment when it became due.
Sesbreño demanded payment from Delta and asked for the physical delivery of the promissory
note from Pilipinas Bank. The two refused. Sesbreño then filed (1) a civil action for damages
against Delta and Pilipinas Bank (1993 Sesbreño case),22 and (2) a criminal case for estafa
against the officers of Philfinance (1995 Sesbreño case).23
In the 1993 Sesbreño case, this Court ruled that Philfinance and Delta were mutually debtors and
creditors of each other by virtue of the promissory notes they issued. But when they agreed to
set-off the promissory notes, Philfinance stepped into the shoes of Delta and became Sesbreño’s
debtor. This Court also found that a fiduciary relationship was created between Sesbreño and
Pilipinas Bank. Thus, Pilipinas Bank was obliged to return the promissory note upon Sesbreño’s
demand.
In the 1995 Sesbreño case, Sesbreño sought the return of his investment from Philfinance not in
its capacity as middleman or dealer but as debtor. We cannot therefore sweepingly apply our
pronouncement therein that a money market transaction partakes of the nature of a loan and that
nonpayment thereof would not give rise to criminal liability for estafa through misappropriation
or conversion24 for the following reasons: first, the 1995 Sesbreño case involved a money
market placement which dealt with a short-term credit instrument25 and not long term
commercial papers as in this case. Second, the 1995 Sesbreño case dealt with the liability of
Philfinance not as middleman or dealer but as debtor unlike the liability of East Asia as
middleman or dealer and custodian as obtaining here.
On the other hand, we conclude that a fiduciary relationship was created between petitioner and
East Asia. For simultaneously acting as middleman or dealer and custodian, East Asia was
obliged to turn-over the proceeds of the matured LTCPs and to deliver the outstanding LTCPs to
petitioner, with interest payments accruing thereto.
This notwithstanding, we find no reason to depart from the recommendations of the City
Prosecutor of Makati and the Secretary of Justice, which were affirmed by the appellate court, to
dismiss the criminal charge against respondents for lack of probable cause.
It bears stressing that the determination of probable cause for the filing of an information in court
is an executive function which pertains at the first instance to the public prosecutor and then to
the Secretary of Justice.26 Courts are not empowered to substitute their own judgment for that of
the executive branch.27
To be held liable for estafa under Article 315(1)(b) of the Revised Penal Code, the following
elements must concur: (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.28
While East Asia acted as custodian of the LTCPs and was obliged to turn-over the proceeds of
the matured LTCPs and to deliver the outstanding LTCPs to petitioner, with interest payments
accruing thereto, there was no showing that respondents misappropriated or converted the same.
East Asia periodically remitted the proceeds and interest payments to petitioner
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26 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.
27 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.
28 Libuit v. People, G.R. No. 154363, September 13, 2005, 469 SCRA 610, 616.
even before petitioner filed its complaint-affidavit. Moreover, apart from its sweeping allegation
that respondents misappropriated or converted its money placements, petitioner failed to
establish the particular role or actual participation of each respondent in the criminal act. Neither
was it shown that they assented to its commission. It is basic that only corporate officers shown
to have participated in the alleged anomalous acts may be held criminally liable.
Finally, petitioner’s motion for partial reconsideration was a second motion for reconsideration
with regard to the dismissal of the criminal charge for estafa under Article 315(1)(b) against
Joson. Although it assailed two different orders of two different judges, the matter being
questioned was the same. We reiterate that the propriety or acceptability of a second motion for
reconsideration is not contingent upon the averment of “new” grounds to assail the judgment.29
WHEREFORE, the Decision dated March 1, 2006 of the Court of Appeals in CA-G.R. SP Nos.
81513 and 81526 and its Resolution dated May 22, 2006, denying reconsideration, are
AFFIRMED.
Ynares-Santiago,** Chico-Nazario,*** Leonardo-De Castro**** and Brion, JJ., concur.
Judgment and resolution affirmed.
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29 Zarate v. Maybank Philippines, Inc., G.R No. 160976, June 8, 2005, 459 SCRA 785, 795,
citing Ortigas and Company Limited Partnership v. Velasco, G.R. Nos. 109645 & 112564,
March 4, 1996, 254 SCRA 234, 240.
** Designated member of the Second Division per Special Order No. 645 in place of Associate
Justice Conchita Carpio-Morales who is on official leave.
*** Designated member of the Second Division per Special Order No. 658.
**** Designated member of the Second Division per Special Order No. 635 in view of the
retirement of Associate Dante O. Tinga. Cruzvale, Inc. vs. Eduque, 589 SCRA 534, G.R. Nos.
172785-86 June 18, 2009
