You are on page 1of 12

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 84719 January 25, 1991


YONG CHAN KIM, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, HON. EDGAR D. GUSTILO, Presiding Judge, RTC, 6th Judicial
Region, Branch 28 Iloilo City and Court of Appeals (13th Division) respondents.
Remedios C. Balbin and Manuel C. Cases, Jr. for petitioner.
Hector P. Teodosio for private respondent.

PADILLA, J.:p

This petition seeks the review on certiorari of the following:


1. The decision dated 3 September 1986 of the 15th Municipal Circuit Trial Court (GuimbalIgbaras-Tigbauan-Tubungan) in Guimbal, Iloilo, in Criminal Case No. 628, 1 and the affirming
decision of the Regional Trial Court, Branch XXVIII, Iloilo City, in Criminal Case No. 20958,
promulgated on 30 July 1987; 2
2. The decision of the Court of Appeals, dated 29 April 1988, 3 dismissing petitioner's
appeal/petition for review for having been filed out of time, and the resolution, dated 19 August
1988, denying petitioner's motion for reconsideration. 4
The antecedent facts are as follows:
Petitioner Yong Chan Kim was employed as a Researcher at the Aquaculture Department of the
Southeast Asian Fisheries Development Center (SEAFDEC) with head station at Tigbauan,
Province of Iloilo. As Head of the Economics Unit of the Research Division, he conducted prawn
surveys which required him to travel to various selected provinces in the country where there
are potentials for prawn culture.
On 15 June 1982, petitioner was issued Travel Order No. 2222 which covered his travels to
different places in Luzon from 16 June to 21 July 1982, a period of thirty five (35) days. Under
this travel order, he received P6,438.00 as cash advance to defray his travel expenses.
Within the same period, petitioner was issued another travel order, T.O. 2268, requiring him to
travel from the Head Station at Tigbauan, Iloilo to Roxas City from 30 June to 4 July 1982, a
period of five (5) days. For this travel order, petitioner received a cash advance of P495.00.

On 14 January 1983, petitioner presented both travel orders for liquidation, submitting Travel
Expense Reports to the Accounting Section. When the Travel Expense Reports were audited, it
was discovered that there was an overlap of four (4) days (30 June to 3 July 1982) in the two (2)
travel orders for which petitioner collected per diems twice. In sum, the total amount in the form
of per diems and allowances charged and collected by petitioner under Travel Order No. 2222,
when he did not actually and physically travel as represented by his liquidation papers, was
P1,230.00.
Petitioner was required to comment on the internal auditor's report regarding the alleged
anomalous claim for per diems. In his reply, petitioner denied the alleged anomaly, claiming that
he made make-up trips to compensate for the trips he failed to undertake under T.O. 2222
because he was recalled to the head office and given another assignment.
In September 1983, two (2) complaints for Estafa were filed against the petitioner before the
Municipal Circuit Trial Court at Guimbal, Iloilo, docketed as Criminal Case Nos. 628 and 631.
After trial in Criminal Case No. 628, the Municipal Circuit Trial Court rendered a decision, the
dispositive part of which reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the court finds the
accused, Yong Chan Kim, guilty beyond reasonable doubt for the crime of Estafa
penalized under paragraph l(b) of Article 315, Revised Penal Code. Records
disclose there is no aggravating circumstance proven by the prosecution. Neither
there is any mitigating circumstance proven by the accused. Considering the
amount subject of the present complaint, the imposable penalty should be in the
medium period ofarresto mayor in its maximum period to prision correccional in
its minimum period in accordance with Article 315, No. 3, Revised Penal Code.
Consonantly, the Court hereby sentences the accused to suffer an imprisonment
ranging from four (4) months as the minimum to one (1) year and six (6) months
as the maximum in accordance with the Indeterminate Sentence Law and to
reimburse the amount of P1,230.00 to SEAFDEC.
The surety bond of the accused shall remain valid until final judgment in
accordance herewith.
Costs against the accused. 5
Criminal Case No. 631 was subsequently dismissed for failure to prosecute.
Petitioner appealed from the decision of the Municipal Circuit Trial Court in Criminal Case No.
628. On 30 July 1987, the Regional Trial Court in Iloilo City in Criminal Case No. 20958
affirmed in toto the trial court's decision. 6
The decision of the Regional Trial Court was received by petitioner on 10 August 1987. On 11
August 1987, petitioner, thru counsel, filed a notice of appeal with the Regional Trial Court
which ordered the elevation of the records of the case to the then Intermediate Appellate Court
on the following day, 12 August 1987. The records of the case were received by the
Intermediate Appellate Court on 8 October 1987, and the appeal was docketed as CA-G.R. No.
05035.

On 30 October 1987, petitioner filed with the appellate court a petition for review. As earlier
stated, on 29 April 1988, the Court of Appeals dismissed the petition for having been filed out of
time. Petitioner's motion for reconsideration was denied for lack of merit.
Hence, the present recourse.
On 19 October 1988, the Court resolved to require the respondents to comment on the petition
for review. The Solicitor General filed his Comment on 20 January 1989, after several grants of
extensions of time to file the same.
In his Comment, the Solicitor General prayed for the dismissal of the instant petition on the
ground that, as provided for under Section 22, Batas Pambansa 129, Section 22 of the Interim
Rules and Guidelines, and Section 3, Rule 123 of the 1985 Rules of Criminal Procedure, the
petitioner should have filed a petition for review with the then Intermediate Appellate Court
instead of a notice of appeal with the Regional Trial Court, in perfecting his appeal from the RTC
to the Intermediate Appellate Court, since the RTC judge was rendered in the exercise of its
appellate jurisdiction over municipal trial courts. The failure of petitioner to file the proper petition
rendered the decision of the Regional Trial Court final and executory, according to the Solicitor
General.
Petitioner's counsel submitted a Reply (erroneously termed Comment) 7 wherein she contended
that the peculiar circumstances of a case, such as this, should be considered in order that the
principle barring a petitioner's right of review can be made flexible in the interest of justice and
equity.
In our Resolution of 29 May 1989, we resolved to deny the petition for failure of petitioner to
sufficiently show that the Court of Appeals had committed any reversible error in its questioned
judgment which had dismissed petitioner's petition for review for having been filed out of time. 8
Petitioner filed a motion for reconsideration maintaining that his petition for review did not limit
itself to the issue upon which the appellate court's decision of 29 April 1988 was based, but
rather it delved into the substance and merits of the case. 9
On 10 August 1990, we resolved to set aside our resolution dismissing this case and gave due
course to the petition. In the said resolution, we stated:
In several cases decided by this Court, it had set aside technicalities in the Rules
in order to give way to justice and equity. In the present case, we note that the
petitioner, in filing his Notice of Appeal the very next day after receiving the
decision of the court a quo lost no time in showing his intention to appeal,
although the procedure taken was not correct. The Court can overlook the wrong
pleading filed, if strict compliance with the rules would mean sacrificing justice to
technicality. The imminence of a person being deprived unjustly of his liberty due
to procedural lapse of counsel is a strong and compelling reason to warrant
suspension of the Rules. Hence, we shall consider the petition for review filed in
the Court of Appeals as a Supplement to the Notice of Appeal. As the Court
declared in a recent decision, '. . . there is nothing sacred about the procedure of
pleadings. This Court may go beyond the pleadings when the interest of justice
so warrants. It has the prerogative to suspend its rules for the same purpose. . . .
Technicality, when it deserts its proper office as an aid to justice and becomes its

great hindrance and chief enemy, deserves scant consideration from courts.
[Alonzo v. Villamor, et al., 16 Phil. 315]
Conscience cannot rest in allowing a man to go straight to jail, closing the door to
his every entreaty for a full opportunity to be heard, even as he has made
a prima facie showing of a meritorious cause, simply because he had chosen an
appeal route, to be sure, recognized by law but made inapplicable to his case,
under altered rules of procedure. While the Court of Appeals can not be faulted
and, in fact, it has to be lauded for correctly applying the rules of procedure in
appeals to the Court of Appeals from decisions of the RTC rendered in the
exercise of its appellate jurisdiction, yet, this Court, as the ultimate bulwark of
human rights and individual liberty, will not allow substantial justice to be sacrified
at the altar of procedural rigor. 10
In the same resolution, the parties were required to file their respective memoranda, and
in compliance with said resolution, petitioner filed his memorandum on 25 October 1989,
while private respondent SEAFDEC filed its required memorandum on 10 April 1990. On
the other hand, the Solicitor General filed on 13 March 1990 a Recommendation for
Acquittal in lieu of the required memorandum.
Two (2) issues are raised by petitioner to wit:
I. WHETHER OR NOT THE DECISION (sic) OF THE MUNICIPAL CIRCUIT
TRIAL COURT (GUIMBAL, ILOILO) AND THE REGIONAL TRIAL COURT,
BRANCH 28 (ILOILO CITY) ARE SUPPORTED BY THE FACTS AND
EVIDENCE OR CONTRARY TO LAW AND THAT THE TWO COURTS A
QUO HAVE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION OR HAVE ACTED WITHOUT OR IN EXCESS OF
JURISDICTION.
II. WHETHER OR NOT THE DECISION OF THE HONORABLE COURT OF
APPEALS IS CONTRARY TO LAW, ESTABLISHED JURISPRUDENCE,
EQUITY AND DUE PROCESS.
The second issue has been resolved in our Resolution dated 10 August 1990, when we granted
petitioner's second motion for reconsideration. We shall now proceed to the first issue.
We find merit in the petition.
It is undisputed that petitioner received a cash advance from private respondent SEAFDEC to
defray his travel expenses under T.O. 2222. It is likewise admitted that within the period covered
by T.O. 2222, petitioner was recalled to the head station in Iloilo and given another assignment
which was covered by T.O. 2268. The dispute arose when petitioner allegedly failed to return
P1,230.00 out of the cash advance which he received under T.O. 2222. For the alleged failure
of petitioner to return the amount of P1,230.00, he was charged with the crime of Estafa under
Article 315, par. 1(b) of the Revised Penal Code, which reads as follows:
Art. 315. Swindling (Estafa). Any person who shall defraud another by any of the
means mentioned herein below shall be punished by:

xxx xxx xxx


1. With unfaithfulness or abuse of confidence, namely:
(a) xxx xxx xxx
(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 any other obligation involving the duty
to make delivery of; or to return, the same, even though such obligation be fatally
or partially guaranteed by a bond; or by denying having received such money,
goods, or other property.
In order that a person can be convicted under the abovequoted provision, it must be proven that
he had the obligation to deliver or return the same money, good or personal property that he
had received. 11
Was petitioner under obligation to return the same money (cash advance) which he had
received? We belive not. Executive Order No. 10, dated 12 February 1980 provides as follows:
B. Cash Advance for Travel
xxx xxx xxx
4. All cash advances must be liquidated within 30 days after date of projected
return of the person. Otherwise, corresponding salary deduction shall be made
immediately following the expiration day.
Liquidation simply means the settling of an indebtedness. An employee, such as herein
petitioner, who liquidates a cash advance is in fact paying back his debt in the form of a loan of
money advanced to him by his employer, asper diems and allowances. Similarly, as stated in
the assailed decision of the lower court, "if the amount of the cash advance he received is less
than the amount he spent for actual travel . . . he has the right to demand reimbursement from
his employer the amount he spent coming from his personal funds. 12 In other words, the money
advanced by either party is actually a loan to the other. Hence, petitioner was under no legal
obligation to return the same cash or money, i.e., the bills or coins, which he received from the
private respondent. 13
Article 1933 and Article 1953 of the Civil Code define the nature of a simple loan.
Art. 1933. By the contract of loan, one of the parties delivers to another, either
something not consumable so that the latter may use the same for a certain time
and return it, in which case the contract is called a commodatum; or money or
other consumable thing, upon the condition that the same amount of the same
kind and quality shall be paid, in which case the contract is simply called a loan
or mutuum.
Commodatum is essentially gratuitous.

Simple loan may be gratuitous or with a stipulation to pay interest.


In commodatum the bailor retains the ownership of the thing loaned, while in
simple loan, ownership passes to the borrower.
Art. 1953. A person who receives a loan of money or any other fungible thing
acquires the ownership thereof, and is bound to pay to the creditor an equal
amount of the same kind and quality.
The ruling of the trial judge that ownership of the cash advanced to the petitioner by private
respondent was not transferred to the latter is erroneous. Ownership of the money was
transferred to the petitioner. Even the prosecution witness, Virgilio Hierro, testified thus:
Q When you gave cash advance to the accused in this Travel
Order No. 2222 subject to liquidation, who owns the funds,
accused or SEAFDEC? How do you consider the funds in the
possession of the accused at the time when there is an actual
transfer of cash? . . .
A The one drawing cash advance already owns the money but
subject to liquidation. If he will not liquidate, be is obliged to return
the amount.
Q xxx xxx xxx
So why do you treat the itinerary of travel temporary when in fact
as of that time the accused owned already the cash advance. You
said the cash advance given to the accused is his own money. In
other words, at the time you departed with the money it belongs
already to the accused?
A Yes, but subject for liquidation. He will be only entitled for that
credence if he liquidates.
Q If other words, it is a transfer of ownership subject to a
suspensive condition that he liquidates the amount of cash
advance upon return to station and completion of the travel?
A Yes, sir.
(pp. 26-28, tsn, May 8, 1985).

14

Since ownership of the money (cash advance) was transferred to petitioner, no fiduciary
relationship was created. Absent this fiduciary relationship between petitioner and private
respondent, which is an essential element of the crime of estafa by misappropriation or
conversion, petitioner could not have committed estafa. 15
Additionally, it has been the policy of private respondent that all cash advances not liquidated
are to be deducted correspondingly from the salary of the employee concerned. The evidence

shows that the corresponding salary deduction was made in the case of petitioner vis-a-vis the
cash advance in question.
WHEREFORE, the decision dated 3 September 1986 of the 15th Municipal Circuit Trial Court in
Guimbal, Iloilo in Criminal Case No. 628, finding petitioner guilty of estafa under Article 315, par.
1 (b) of the Revised Penal Code and the affirming decision of the Regional Trial Court, Branch
XXVIII, Iloilo City, in Criminal Case No. 20958, promulgated on 30 July 1987 are both hereby
SET ASIDE. Petitioner is ACQUITTED of criminal charge filed against him.
SO ORDERED.

SECOND DIVISION

[G.R. No. 118375. October 3, 2003]

CELESTINA T. NAGUIAT, petitioner, vs. COURT OF APPEALS and


AURORA QUEAO, respondents.
DECISION
TINGA, J.:

Before us is a Petition for Review on Certiorari under Rule 45, assailing


the decision of the Sixteenth Division of the respondent Court of Appeals
promulgated on 21 December 1994 , which affirmed in toto the decision
handed down by the Regional Trial Court (RTC) of Pasay City.
[1]

[2]

The case arose when on 11 August 1981, private respondent Aurora


Queao (Queao) filed a complaint before the Pasay City RTC for
cancellation of a Real Estate Mortgage she had entered into with petitioner
Celestina Naguiat (Naguiat). The RTC rendered a decision, declaring the
questioned Real Estate Mortgage void, which Naguiat appealed to the Court
of Appeals. After the Court of Appeals upheld the RTC decision, Naguiat
instituted the present petition.
The operative facts follow:
Queao applied with Naguiat for a loan in the amount of Two Hundred
Thousand Pesos (P200,000.00), which Naguiat granted. On 11 August 1980,
Naguiat indorsed to Queao Associated Bank Check No. 090990 (dated 11
August 1980) for the amount of Ninety Five Thousand Pesos (P95,000.00),
which was earlier issued to Naguiat by the Corporate Resources Financing
Corporation. She also issued her own Filmanbank Check No. 065314, to the
order of Queao, also dated 11 August 1980 and for the amount of Ninety
Five Thousand Pesos (P95,000.00). The proceeds of these checks were to
constitute the loan granted by Naguiat to Queao.
[3]

To secure the loan, Queao executed a Deed of Real Estate


Mortgage dated 11 August 1980 in favor of Naguiat, and surrendered to the
latter the owners duplicates of the titles covering the mortgaged
properties. On the same day, the mortgage deed was notarized, and Queao
issued to Naguiat a promissory note for the amount of TWO HUNDRED
THOUSAND PESOS (P200,000.00), with interest at 12% per annum, payable
[4]

on 11 September 1980. Queao also issued a Security Bank and Trust


Company check, postdated 11 September 1980, for the amount of TWO
HUNDRED THOUSAND PESOS (P200,000.00) and payable to the order of
Naguiat.
[5]

Upon presentment on its maturity date, the Security Bank check was
dishonored for insufficiency of funds. On the following day, 12 September
1980, Queao requested Security Bank to stop payment of her postdated
check, but the bank rejected the request pursuant to its policy not to honor
such requests if the check is drawn against insufficient funds.
[6]

On 16 October 1980, Queao received a letter from Naguiats lawyer,


demanding settlement of the loan. Shortly thereafter, Queao and one Ruby
Ruebenfeldt (Ruebenfeldt) met with Naguiat. At the meeting, Queao told
Naguiat that she did not receive the proceeds of the loan, adding that the
checks were retained by Ruebenfeldt, who purportedly was Naguiats agent.
[7]

Naguiat applied for the extrajudicial foreclosure of the mortgage with the
Sheriff of Rizal Province, who then scheduled the foreclosure sale on 14
August 1981. Three days before the scheduled sale, Queao filed the case
before the Pasay City RTC, seeking the annulment of the mortgage
deed. The trial court eventually stopped the auction sale.
[8]

[9]

On 8 March 1991, the RTC rendered judgment, declaring the Deed of


Real Estate Mortgage null and void, and ordering Naguiat to return to Queao
the owners duplicates of her titles to the mortgaged lots. Naguiat appealed
the decision before the Court of Appeals, making no less than eleven
assignments of error. The Court of Appeals promulgated the decision now
assailed before us that affirmed in toto the RTC decision. Hence, the present
petition.
[10]

Naguiat questions the findings of facts made by the Court of Appeals,


especially on the issue of whether Queao had actually received the loan
proceeds which were supposed to be covered by the two checks Naguiat had
issued or indorsed. Naguiat claims that being a notarial instrument or public
document, the mortgage deed enjoys the presumption that the recitals therein
are true. Naguiat also questions the admissibility of various representations
and pronouncements of Ruebenfeldt, invoking the rule on the non-binding
effect of the admissions of third persons.
[11]

The resolution of the issues presented before this Court by Naguiat


involves the determination of facts, a function which this Court does not
exercise in an appeal by certiorari. Under Rule 45 which governs appeal by
certiorari, only questions of law may be raised as the Supreme Court is not a
[12]

trier of facts. The resolution of factual issues is the function of lower courts,
whose findings on these matters are received with respect and are in fact
generally binding on the Supreme Court. A question of law which the Court
may pass upon must not involve an examination of the probative value of the
evidence presented by the litigants. There is a question of law in a given
case when the doubt or difference arises as to what the law is on a certain
state of facts; there is a question of fact when the doubt or difference arises as
to the truth or the falsehood of alleged facts.
[13]

[14]

[15]

[16]

Surely, there are established exceptions to the rule on the conclusiveness


of the findings of facts of the lower courts. But Naguiats case does not fall
under any of the exceptions. In any event, both the decisions of the appellate
and trial courts are supported by the evidence on record and the applicable
laws.
[17]

Against the common finding of the courts below, Naguiat vigorously insists
that Queao received the loan proceeds. Capitalizing on the status of the
mortgage deed as a public document, she cites the rule that a public
document enjoys the presumption of validity and truthfulness of its
contents. The Court of Appeals, however, is correct in ruling that the
presumption of truthfulness of the recitals in a public document was defeated
by the clear and convincing evidence in this case that pointed to the absence
of consideration. This Court has held that the presumption of truthfulness
engendered by notarized documents is rebuttable, yielding as it does to clear
and convincing evidence to the contrary, as in this case.
[18]

[19]

On the other hand, absolutely no evidence was submitted by Naguiat that


the checks she issued or endorsed were actually encashed or deposited. The
mere issuance of the checks did not result in the perfection of the contract of
loan. For the Civil Code provides that the delivery of bills of exchange and
mercantile documents such as checks shall produce the effect of payment
only when they have been cashed. It is only after the checks have produced
the effect of payment that the contract of loan may be deemed perfected. Art.
1934 of the Civil Code provides:
[20]

An accepted promise to deliver something by way of commodatum or simple


loan is binding upon the parties, but the commodatum or simple loan itself
shall not be perfected until the delivery of the object of the contract.
A loan contract is a real contract, not consensual, and, as such, is
perfected only upon the delivery of the object of the contract. In this case,
the objects of the contract are the loan proceeds which Queao would enjoy
[21]

only upon the encashment of the checks signed or indorsed by Naguiat. If


indeed the checks were encashed or deposited, Naguiat would have certainly
presented the corresponding documentary evidence, such as the returned
checks and the pertinent bank records. Since Naguiat presented no such
proof, it follows that the checks were not encashed or credited to Queaos
account.
Naguiat questions the admissibility of the various written representations
made by Ruebenfeldt on the ground that they could not bind her following
the res inter alia acta alteri nocere non debet rule. The Court of Appeals
rejected the argument, holding that since Ruebenfeldt was an authorized
representative or agent of Naguiat the situation falls under a recognized
exception to the rule. Still, Naguiat insists that Ruebenfeldt was not her
agent.
[22]

Suffice to say, however, the existence of an agency relationship between


Naguiat and Ruebenfeldt is supported by ample evidence. As correctly
pointed out by the Court of Appeals, Ruebenfeldt was not a stranger or an
unauthorized person. Naguiat instructed Ruebenfeldt to withhold from
Queao the checks she issued or indorsed to Queao, pending delivery by
the latter of additional collateral. Ruebenfeldt served as agent of Naguiat on
the loan application of Queaos friend, Marilou Farralese, and it was in
connection with that transaction that Queao came to know Naguiat. It was
also Ruebenfeldt who accompanied Queao in her meeting with Naguiat and
on that occasion, on her own and without Queao asking for it, Reubenfeldt
actually drew a check for the sum of P220,000.00 payable to Naguiat, to cover
for Queaos alleged liability to Naguiat under the loan agreement.
[23]

[24]

The Court of Appeals recognized the existence of an agency by


estoppel citing Article 1873 of the Civil Code. Apparently, it considered that
at the very least, as a consequence of the interaction between Naguiat and
Ruebenfeldt, Queao got the impression that Ruebenfeldt was the agent of
Naguiat, but Naguiat did nothing to correct Queaos impression. In that
situation, the rule is clear. One who clothes another with apparent authority
as his agent, and holds him out to the public as such, cannot be permitted to
deny the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith, and in the honest
belief that he is what he appears to be. The Court of Appeals is correct in
invoking the said rule on agency by estoppel.
[25]

[26]

[27]

More fundamentally, whatever was the true relationship between Naguiat


and Ruebenfeldt is irrelevant in the face of the fact that the checks issued or

indorsed to Queao were never encashed or deposited to her account of


Naguiat.
All told, we find no compelling reason to disturb the finding of the courts a
quo that the lender did not remit and the borrower did not receive the
proceeds of the loan. That being the case, it follows that the mortgage which
is supposed to secure the loan is null and void. The consideration of the
mortgage contract is the same as that of the principal contract from which it
receives life, and without which it cannot exist as an independent contract. A
mortgage contract being a mere accessory contract, its validity would depend
on the validity of the loan secured by it.
[28]

[29]

WHEREFORE, the petition is denied and the assailed decision is


affirmed. Costs against petitioner.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr.,
JJ., concur.