THIRD DIVISION
G.R. No. 132422 March 30, 2004
FILADAMS PHARMA, INC., petitioner,
vs.
HONORABLE COURT OF APPEALS and ANTONIO FERIA, Respondents.
D E C I S I O N
CORONA, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking to annul and set aside the resolution1 dated May 29, 1997 of the Court of Appeals denying petitioner's petition for certiorari and its resolution2 dated January 23, 1998 denying petitioner's motion for reconsideration.
The antecedent facts follow.
Petitioner Filadams Pharma, Inc. (Filadams) was a corporation engaged in the business of selling medicines to wholesalers. Private respondent Antonio Feria was its sales representative from November 3, 1993 until his dismissal on March 9, 1994. In an audit conducted sometime between March 10 to 26, 1994, respondent Feria was found accountable for ₱41,733.01 representing unsold but unreturned stocks and samples, unremitted collections and unliquidated cash advances. Filadams alleged that these shortages and accountabilities were admitted by respondent through his wife and counsel in a conference held at its office but despite repeated demands, respondent failed to settle them to its damage and prejudice.3
In his defense, respondent denied the charge. He averred that, although he was an agent of the corporation, he was not the trustee of its products. The cash advances were spent, as intended, for promoting the products of the company and it was only the unexpended amount that was supposed to be returned by way of liquidation. The cash rebates were properly given to the customers concerned although the same were given in kind, as requested by the customers. In a spot check conducted in his area in January and February of 1994, the stock overages in his possession were segregated and returned to the company but he was not given the returned goods slip (RGS). He also returned various items or medicines on March 14, 1994 amounting to ₱19,615.49 but what was reflected in the inventory report was only ₱8,185.30. He maintained that he neither misappropriated nor converted the subject sums of money for his personal use or benefit. If ever, his obligation was purely civil in nature and the company in fact accepted his partial payment of ₱3,000 through his wife in a conference held at petitioner’s office on September 13, 1994.4
In a reply-affidavit, the internal auditor of Filadams asserted that respondent occupied a position of trust and confidence. He was not given a new cash advance but merely a replenishment of the used revolving fund. The cash rebates were never received by the customer as confirmed by the customer himself. Respondent signed the physical inventory
report so he could not claim that he made returns that were not recorded. Paying back the amount of ₱3,000 to the company was an acknowledgment of his stock shortages and proof of his breach of trust and confidence resulting in the company's damage and prejudice.5
The Assistant City Prosecutor of Quezon City dismissed the complaint-affidavit for lack of cause of action:
A careful examination of the affidavit complaint plus the reply affidavit of complainant failed to state the ultimate facts constituting the cause of action.
While complainant states that their audit resulted in Feria's misappropriation of the company's products, unremitted collections, unreturned advances and unsubmitted sales proceeds in the total amount of ₱41,733.01, the specifics of the misappropriation, (i.e., [ineligible]. . . when committed, where committed, how much per act of misappropriation or was the misappropriation a one-act deal…[ineligible]) were all conclusions a general recitals (sic) of the fact of commission/omission followed by the personal conclusion of guilt by the complainant which are not sustained by admissible evidence.6
Petitioner filed a motion for reconsideration but this was denied by 1st Assistant City Prosecutor Gerona who ruled that there was no "manifest error or grave abuse of discretion to justify reversal, alteration or modification of the challenged resolution."7
Petitioner appealed to the Secretary of Justice under the 1993 Revised Rules on Appeals from Resolutions in Preliminary Investigations or Reinvestigations.8
But the Department of Justice (DOJ), through the Office of the Chief State Prosecutor,9 also dismissed the appeal:
While it is an undisputed fact that respondent incurred some accountabilities with Filadams during the duration of his employment, as shown by respondent's payment of the amount of ₱3,000.00 on September 13, 1994, mere acknowledgment by respondent of these accountabilities does not of itself establish that estafa under par. 1 (b) was committed. What is apparent from the evidence adduced is the necessity for the parties to sit down together and make an accounting of the alleged accountability. Complainant failed to present any evidence of conversion of the property to the benefit of the respondent or of some other person. Respondent's failure to return the goods or cash advances in this case is not sufficient proof of conversion. If at all, respondent's liability to the company is purely civil in nature as the acts complained of do not constitute the crime of estafa.10
On the ground of grave abuse of discretion, Filadams filed with the Court of Appeals a petition for certiorari under Rule 65 of the Rules of Court seeking to annul the above-quoted decision of the DOJ dismissing its appeal and affirming the resolution of the Assistant City Prosecutor of Quezon City. The Court of Appeals denied the petition on two grounds: (1) the proper remedy for the petitioner was a petition for review under Rule 45 and not a petition for certiorari inasmuch as certiorari was available only if there was no appeal or any plain, speedy and adequate remedy in the ordinary course of law, and (2) assuming that a petition for certiorari was proper, the DOJ decision was not marked by grave abuse of discretion.11
Hence, the petitioner filed the instant petition seeking to annul the decision of the Court of Appeals and raising the following issues:
I
WHETHER OR NOT APPEAL AND NOT CERTIORARI IS THE PROPER REMEDY IN ASSAILING THE TWO RESOLUTIONS OF THE CHIEF STATE PROSECUTOR FINDING THE ABSENCE OF PROBABLE CAUSE.
II
WHETHER OR NOT BOTH THE CHIEF STATE PROSECUTOR AND THE COURT OF APPEALS HAVE COMMITTED A (SIC) GRAVE ABUSE OF DISCRETION IN DISREGARDING THE GUIDELINES SET BY THIS HON. SUPREME COURT IN DETERMINING THE EXISTENCE OF A PROBABLE CAUSE TO WARRANT THE FILING OF AN INFORMATION IN COURT.12
Before anything else, we need to clarify some ground rules. This case was elevated to the Court of Appeals by way of a petition on certiorari under Rule 65 of the 1997 Rules of Civil Procedure. The Court of Appeals dismissed the petition for certiorari on the ground that the proper remedy was petition for review under Revised Circular No. 1-91, now embodied in Rule 43 of the 1997 Rules of Civil Procedure. Rule 43 applies to "appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of quasi-judicial functions to the Court of Appeals."13 The question is: was the Office of the Prosecutor of Quezon City a quasi-judicial agency whose resolutions were appealable to the Court of Appeals under Rule 43? In Bautista vs. Court of Appeals,14 we ruled:
Petitioner submits that a prosecutor conducting a preliminary investigation performs a quasi-judicial function, citing Cojuangco v. PCGG, Koh v. Court of Appeals, Andaya v. Provincial Fiscal of Surigao del Norte and Crespo v. Mogul. In these cases this Court held that the power to conduct preliminary investigation is quasi-judicial in nature. But this statement holds true only in the sense that, like quasi-judicial bodies, the prosecutor is an office in the executive department exercising powers akin to those of a court. Here is where the similarity ends.
A closer scrutiny will show that preliminary investigation is very different from other quasi-judicial proceedings. A quasi-judicial body has been defined as "an organ of government other than a court and other than a legislature which affects the rights of private parties through either adjudication or rule-making."
In Luzon Development Bank v. Luzon Development Bank Employees, we held that a voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency, hence his decisions and awards are appealable to the Court of Appeals. This is so because the awards of voluntary arbitrators become final and executory upon the lapse of the period to appeal; and since their awards determine the rights of parties, their decisions have the same effect as judgments of a court. Therefore, the proper remedy from an award of a voluntary arbitrator is a petition for review to the Court of Appeals, following Revised Administrative Circular No. 1-95, which provided for a uniform procedure for appellate review of all adjudications of quasi-judicial entities, which is now embodied in Rule 43 of the 1997 Rules of Civil Procedure.
On the other hand, the prosecutor in a preliminary investigation does not determine the guilt or innocence of the accused. He does not exercise adjudication nor rule-making functions. Preliminary investigation is merely inquisitorial, and is often the only means of discovering the persons who may be reasonably charged with a crime and to enable the fiscal to prepare his complaint or information. It is not a trial of the case on the merits and has no purpose except that of determining whether a crime has been committed and whether there is probable cause to believe that the accused is guilty thereof. While the fiscal makes that determination, he cannot be said to be acting as a quasi-court, for it is the courts, ultimately, that pass judgment on the accused, not the fiscal.
Hence, the Office of the Prosecutor is not a quasi-judicial body; necessarily, its decisions approving the filing of a criminal complaint are not appealable to the Court of Appeals under Rule 43. Since the ORSP (Office of the Regional State Prosecutor) has the power to resolve appeals with finality only where the penalty prescribed for the offense does not exceed prision correccional, regardless of the imposable fine, the only remedy of petitioner, in the absence of grave abuse of discretion, is to present her defense in the trial of the case.
With our ruling in Bautista that the Office of the Prosecutor was not covered by the appellate process under Rule 43 of the Rules of Court, what then was petitioner's remedy from the resolution of the Assistant Prosecutor dismissing his complaint? Based on the 1993 Revised Rules on Appeals from Resolutions in Preliminary Investigations or Reinvestigations — now the 2000 NPS15 Rule on Appeals — the petitioner could appeal to the Secretary of Justice. In this case, the petitioner did appeal to the Secretary of Justice but his appeal was dismissed. His motion for reconsideration was also dismissed. Since there was no more appeal or other remedy available in the ordinary course of law, the petitioner correctly filed a petition for certiorari with the Court of Appeals on the ground of grave abuse of discretion.
The next question now arises: was the Court of Appeals correct in dismissing the petition for certiorari on the ground that there was no grave abuse of discretion on the part of the DOJ (in dismissing the petitioner's appeal, thus affirming the resolution of the Assistant City Prosecutor)? The Court of Appeal’s cryptic ruling on this matter read:
His ruling that "in the crime of estafa under Art. 315 par. 1 (b), it is an essential element that there be proof of misappropriation or conversion", is not inconsistent with the ruling of the Supreme Court in Ilagan vs. Court of Appeals, 239 SCRA 575, on which petitioner relies that the operative act in the perpetration of estafa under the said article and paragraph is the failure of the agent to turn over or deliver to his principal the amounts he collected despite the duty to do so.16
To determine whether there was probable cause warranting the filing of the information for estafa through misappropriation or with abuse of confidence17, the presence of the following elements assumes critical importance:
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 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.18
The first, third and fourth elements were duly established by the complaint-affidavits and were not disputed by the parties. What was disputed was whether the element of misappropriation, the most important element of the crime charged, was shown by the affidavits to engender a well-founded belief that a crime was committed and the respondent was probably guilty thereof.19 Invoking Ilagan vs. Court of Appeals,20 petitioner contends that it is the mere failure to turn over or to deliver to the principal the amounts collected, despite the duty to do so, that constitutes the operative fact in the crime of estafa through unfaithfulness or abuse of confidence. In short, the mere failure of respondent Feria to turn over the stock shortages, money collections, cash advances and unused cash rebates, despite demand and the duty to do so, constituted prima facie evidence of misappropriation.
The essence of estafa under Article 315 (1)(b) of the Revised Penal Code is the appropriation or conversion of money or property received, to the prejudice of the owner thereof. It takes place when a person actually appropriates the property of another for his own benefit, use and enjoyment. The failure to account, upon demand, for funds or property held in trust is circumstantial evidence of misappropriation.21 For example, in an agency for the sale of jewelry, it is the agent's duty to return the jewelry upon demand of the owner and the failure to do so is evidence of conversion of the property by the agent.22 In other words, the demand for the return of the thing delivered in trust and the failure of the accused to account for it are circumstantial evidence of misappropriation. However, this presumption is rebuttable. If the accused is able to satisfactorily explain his failure to produce the thing delivered in trust, he may not be held liable for estafa.23
Did private respondent Feria satisfactorily explain his failure to produce the goods delivered to him in trust as well as turn over his collections upon demand by the petitioner? His own counter-affidavit showed that he did not. He claimed that he returned various items sometime in March, 1994 amounting to ₱19,615.49. He, however, neither presented any supporting evidence nor clarified why he failed to account for his collections. His explanations, on the other hand, regarding his unliquidated cash advances and unused cash rebates were also inadequate inasmuch they were self-serving and unsubstantiated.24
In its reply-affidavit, petitioner was able to controvert the explanations of respondent. The unrecorded returns claimed by respondent were belied by the physical inventory report prepared and signed by both the warehouseman and respondent himself. Respondent admitted that he was given checks for cash rebates to particular customers. Since the rebates given to customers were in the form of goods, as admitted by the respondent himself, why did he therefore not return the checks given to him? With respect to the unliquidated cash advances, petitioner clarified that it was incorrect for respondent to allege that he had already liquidated his cash advances when he was given another ₱1,500 after his first cash advance of ₱2,500. The truth was that he was given another ₱1,500 not because he had already liquidated his first cash advance of ₱2,500 but because it was the company's practice to replenish the revolving fund to its original amount. Therefore, the release of a new cash advance was not proof of liquidation of his previous cash advances. The inventory clearly showed in fact that he still had not liquidated his cash advances.25
In the face of petitioner’s fully documented evidence (inventory reports, receipts, balances of accountabilities, computations of short/over samples, job description and demand letter addressed to respondent), all respondent Feria could offer were a lame denial and an unsubstantiated, off-tangent explanation. He offered absolutely no clarification concerning the unremitted collections and unreturned, unused check rebates.
The rule that "the failure to account, upon demand, for funds or property held in trust is circumstantial evidence of misappropriation" applies without doubt in the present case. Since a preliminary investigation is merely a determination of "whether there is a sufficient ground to engender a well-founded belief that a crime has been committed and the respondent is probably guilty thereof, and should be held for trial,"26 we find the documented allegations in the complaint-affidavit and reply-affidavit of petitioner Filadams sufficient to generate such well-founded belief.
While it is this Court’s general policy not to interfere in the conduct of preliminary investigations, leaving the investigating officers sufficient discretion to determine probable cause,27 we have nonetheless made some exceptions to the general rule, such as:
1. when necessary to afford adequate protection to the constitutional rights of the accused;
2. when necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions;
3. when there is a prejudicial question which is sub judice;
4. when the acts of the officer are without or in excess of authority;
5. where the prosecution is under an invalid law, ordinance or regulation;
6. when double jeopardy is clearly apparent;
7. where the court has no jurisdiction over the offense;
8. where it is a case of persecution rather than prosecution;
9. where the charges are manifestly false and motivated by the lust for vengeance;
10. when there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied.28 (emphasis ours)
From the records, it is clear to us that a prima facie case for estafa exists. The dismissal of petitioner’s complaint-affidavit and the DOJ's affirmance thereof on appeal was a patent error constituting grave abuse of discretion within the ambit of exception no. 4 above.
WHEREFORE, the petition is hereby GRANTED. The resolution of the Court of Appeals dated May 29, 1997 finding no grave abuse of discretion and its resolution dated January 23, 1998 denying petitioner's motion for reconsideration are hereby REVERSED and SET ASIDE; and the resolution of the Department of Justice through the Chief State Prosecutor dated January 8, 1997 dismissing the appeal of the petitioner and affirming the resolution of the Assistant City Prosecutor of Quezon City dated February 28, 1995 dismissing petitioner's complaint for estafa against private respondent Antonio Feria is hereby ANNULLED for grave abuse of discretion.
SO ORDERED.
Vitug, J., (Chairman) * on leave Sandoval-Gutierrez,** (Acting Chairman) Corona and Carpio Morales, JJ. concur
A T T E S T A T I O N
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
Acting Chair, Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairman’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
HILARIO G. DAVIDE, JR.
Chief Justice
Footnotes
* On official business leave.
** Acting Third Division Chair.
1 Penned by Associate Justice Hector L. Hofileña and concurred in by Associate Justices Artemon
D. Luna and Artemio G. Tuquero of the Twelfth Division; Rollo, pp. 34-35.
2 Rollo, pp. 44-45.
3 Annex "A," Resolution of Chief State Prosecutor Zuno; Rollo, p. 23.
4 Ibid.
5 Ibid., p. 24.
6 Records, p. 33.
7 Ibid., p. 39.
8 Records, p. 41-47.
9 Previously, appeals to the Secretary of Justice may be referred to and resolved by the Chief State Prosecutor. This practice was changed on October 12, 1998 by Department Circular No. 69 entitled "Disposition and Resolution of Petitions for Review / Appeals to the Department and all Motions for Reconsideration Arising Therefrom" which provides that "all petitions for review/appeals to the Department of Justice from the resolutions of the Regional State Prosecutors, Provincial and City Prosecutors together with the Motions for Reconsideration arising therefrom shall be referred, resolved and acted upon only by [the Secretary of Justice]."
10 Rollo, pp. 24-25.
11 Ibid., pp. 44-45.
12 Rollo, pp. 14-15.
13 Sec. 1, Rule 43, 1997 Rules of Civil Procedure.
14 360 SCRA 618 [2001].
15 National Prosecution Service.
16 Rollo, p. 35.
17 Subdivision No. 1, Par. (b), Article 315, Revised Penal Code.
18 Mangio vs. Court of Appeals, 371 SCRA 466, 477 [2001].
19 Section 1, Rule 112, 2000 Revised Rules of Criminal Procedure.
20 239 SCRA 575 [1994].
21 Tubb vs. People, 101 Phil 114 [1957]; Panlilio vs. CA, 115 Phil 168 [1962]; Sullano vs. People, 17 SCRA 488 [1966].
22 U.S. vs. Zamora, 2 Phil 583 [1903].
23 III R. Aquino, The Revised Penal Code 264 [1997].
24 Records, pp. 24-25.
25 Ibid., pp. 27-31.
26 Section 1, Rule 112, 2000 Revised Rules of Criminal Procedure; Advincula vs. CA, 343 SCRA 583 [2000].
27 Mendoza-Arce vs. Ombudsman, 380 SCRA 325 [2002], citing Sebastian, Sr. vs. Garchitorena, 343 SCRA 463 [2000]; Camanag vs. Guerrero, 268 SCRA 473 [1997]; Fernando vs. Sandiganbayan, 212 SCRA 680 [1992].
28 Mendoza-Arce vs. Ombudsman, 380 SCRA 325 [2002], citing Posadas vs. Ombudsman, 341 SCRA 388 [2000]; Venus vs. Desierto, 298 SCRA 196 [1998]; Brocka vs. Enrile, 192 SCRA 183 [1990].
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