Credit Transactions_1 - 2 Yong Chan Kim vs. People to Celestina Naguiat vs. CA

8/9/2019 Credit Transactions_1 - 2 Yong Chan Kim vs. People to Celestina Naguiat vs. CA

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Republic of the PhilippinesSUPREME 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 JudicialRegion, 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 (Guimbal-Igbaras-Tigbauan-Tubungan) in Guimbal, Iloilo, in Criminal Case No. 628, 1 and the affirmingdecision 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'sappeal/petition for review for having been filed out of time, and the resolution, dated 19 August1988, 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 theSoutheast 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 prawnsurveys which required him to travel to various selected provinces in the country where thereare potentials for prawn culture.

On 15 June 1982, petitioner was issued Travel Order No. 2222 which covered his travels todifferent places in Luzon from 16 June to 21 July 1982, a period of thirty five (35) days. Underthis 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 totravel from the Head Station at Tigbauan, Iloilo to Roxas City from 30 June to 4 July 1982, aperiod 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 TravelExpense Reports to the Accounting Section. When the Travel Expense Reports were audited, itwas 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 formof 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 allegedanomalous claim for per diems. In his reply, petitioner denied the alleged anomaly, claiming thathe made make-up trips to compensate for the trips he failed to undertake under T.O. 2222because 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 theMunicipal 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, thedispositive part of which reads as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the court finds theaccused, Yong Chan Kim, guilty beyond reasonable doubt for the crime of Estafapenalized under paragraph l(b) of Article 315, Revised Penal Code. Recordsdisclose there is no aggravating circumstance proven by the prosecution. Neitherthere is any mitigating circumstance proven by the accused. Considering theamount subject of the present complaint, the imposable penalty should be in themedium period of arresto mayor in its maximum period to prision correccional inits minimum period in accordance with Article 315, No. 3, Revised Penal Code.Consonantly, the Court hereby sentences the accused to suffer an imprisonmentranging from four (4) months as the minimum to one (1) year and six (6) monthsas the maximum in accordance with the Indeterminate Sentence Law and toreimburse the amount of P1,230.00 to SEAFDEC.

The surety bond of the accused shall remain valid until final judgment inaccordance 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 Courtwhich ordered the elevation of the records of the case to the then Intermediate Appellate Courton the following day, 12 August 1987. The records of the case were received by theIntermediate 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 earlierstated, on 29 April 1988, the Court of Appeals dismissed the petition for having been filed out oftime. 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 petitionfor review. The Solicitor General filed his Comment on 20 January 1989, after several grants ofextensions of time to file the same.

In his Comment, the Solicitor General prayed for the dismissal of the instant petition on theground that, as provided for under Section 22, Batas Pambansa 129, Section 22 of the InterimRules and Guidelines, and Section 3, Rule 123 of the 1985 Rules of Criminal Procedure, thepetitioner should have filed a petition for review with the then Intermediate Appellate Courtinstead of a notice of appeal with the Regional Trial Court, in perfecting his appeal from the RTCto the Intermediate Appellate Court, since the RTC judge was rendered in the exercise of itsappellate jurisdiction over municipal trial courts. The failure of petitioner to file the proper petitionrendered the decision of the Regional Trial Court final and executory, according to the SolicitorGeneral.

Petitioner's counsel submitted a Reply (erroneously termed Comment) 7 wherein she contendedthat the peculiar circumstances of a case, such as this, should be considered in order that theprinciple barring a petitioner's right of review can be made flexible in the interest of justice andequity.

In our Resolution of 29 May 1989, we resolved to deny the petition for failure of petitioner tosufficiently 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 limititself to the issue upon which the appellate court's decision of 29 April 1988 was based, butrather 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 duecourse to the petition. In the said resolution, we stated:

In several cases decided by this Court, it had set aside technicalities in the Rulesin order to give way to justice and equity. In the present case, we note that thepetitioner, in filing his Notice of Appeal the very next day after receiving thedecision 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 totechnicality. The imminence of a person being deprived unjustly of his liberty dueto procedural lapse of counsel is a strong and compelling reason to warrantsuspension of the Rules. Hence, we shall consider the petition for review filed inthe Court of Appeals as a Supplement to the Notice of Appeal. As the Courtdeclared in a recent decision, '. . . there is nothing sacred about the procedure ofpleadings. This Court may go beyond the pleadings when the interest of justiceso 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 tohis every entreaty for a full opportunity to be heard, even as he has madea 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 faultedand, in fact, it has to be lauded for correctly applying the rules of procedure inappeals to the Court of Appeals from decisions of the RTC rendered in theexercise of its appellate jurisdiction, yet, this Court, as the ultimate bulwark ofhuman rights and individual liberty, will not allow substantial justice to be sacrifiedat the altar of procedural rigor. 10

In the same resolution, the parties were required to file their respective memoranda, andin compliance with said resolution, petitioner filed his memorandum on 25 October 1989,while private respondent SEAFDEC filed its required memorandum on 10 April 1990. Onthe 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 CIRCUITTRIAL COURT (GUIMBAL, ILOILO) AND THE REGIONAL TRIAL COURT,BRANCH 28 (ILOILO CITY) ARE SUPPORTED BY THE FACTS ANDEVIDENCE OR CONTRARY TO LAW AND THAT THE TWO COURTS AQUO HAVE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TOLACK OF JURISDICTION OR HAVE ACTED WITHOUT OR IN EXCESS OFJURISDICTION.

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 grantedpetitioner'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 todefray 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 assignmentwhich was covered by T.O. 2268. The dispute arose when petitioner allegedly failed to returnP1,230.00 out of the cash advance which he received under T.O. 2222. For the alleged failureof 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 themeans 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 oncommission, or for administration, or under any other obligation involving the dutyto make delivery of; or to return, the same, even though such obligation be fatallyor 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 thathe had the obligation to deliver or return the same money, good or personal property that hehad received. 11

Was petitioner under obligation to return the same money (cash advance) which he hadreceived? 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 projectedreturn of the person. Otherwise, corresponding salary deduction shall be madeimmediately 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 ofmoney advanced to him by his employer, as per diems and allowances. Similarly, as stated inthe assailed decision of the lower court, "if the amount of the cash advance he received is lessthan the amount he spent for actual travel . . . he has the right to demand reimbursement fromhis employer the amount he spent coming from his personal funds. 12 In other words, the moneyadvanced by either party is actually a loan to the other. Hence, petitioner was under no legalobligation to return the same cash or money, i.e., the bills or coins, which he received from theprivate 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 timeand return it, in which case the contract is called a commodatum; or money orother consumable thing, upon the condition that the same amount of the samekind and quality shall be paid, in which case the contract is simply called a loanor 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 thingacquires the ownership thereof, and is bound to pay to the creditor an equalamount of the same kind and quality.

The ruling of the trial judge that ownership of the cash advanced to the petitioner by privaterespondent was not transferred to the latter is erroneous. Ownership of the money wastransferred to the petitioner. Even the prosecution witness, Virgilio Hierro, testified thus:

Q When you gave cash advance to the accused in this TravelOrder No. 2222 subject to liquidation, who owns the funds,accused or SEAFDEC? How do you consider the funds in thepossession of the accused at the time when there is an actualtransfer of cash? . . .

A The one drawing cash advance already owns the money butsubject to liquidation. If he will not liquidate, be is obliged to returnthe amount.

Q xxx xxx xxxSo why do you treat the itinerary of travel temporary when in factas of that time the accused owned already the cash advance. Yousaid the cash advance given to the accused is his own money. Inother words, at the time you departed with the money it belongsalready to the accused?

A Yes, but subject for liquidation. He will be only entitled for thatcredence if he liquidates.

Q If other words, it is a transfer of ownership subject to asuspensive condition that he liquidates the amount of cashadvance 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 fiduciaryrelationship was created. Absent this fiduciary relationship between petitioner and privaterespondent, which is an essential element of the crime of estafa by misappropriation orconversion, petitioner could not have committed estafa. 15

Additionally, it has been the policy of private respondent that all cash advances not liquidatedare 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 inGuimbal, 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 herebySET ASIDE. Petitioner is ACQUITTED of criminal charge filed against him.

SO ORDERED.



SECOND DIVISION

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

CELESTINA T. NAGUIAT, peti t ioner, vs. COURT OF APPEALS andAURORA QUEAÑO, respondents .

D E C I S I O N

TINGA, J .:

Before us is a Petition for Review on Certiorari under Rule 45, assailingthe decision of the Sixteenth Division of the respondent Court of Appeals

promulgated on 21 December 1994[1], which affirmed in toto the decisionhanded down by the Regional Trial Court (RTC) of Pasay City. [2]

The case arose when on 11 August 1981, private respondent AuroraQueaño (Queaño) filed a complaint before the Pasay City RTC forcancellation of a Real Estate Mortgage she had entered into with petitionerCelestina Naguiat (Naguiat). The RTC rendered a decision, declaring thequestioned Real Estate Mortgage void, which Naguiat appealed to the Courtof Appeals. After the Court of Appeals upheld the RTC decision, Naguiatinstituted the present petition.

The operative facts follow:

Queaño applied with Naguiat for a loan in the amount of Two HundredThousand Pesos (P200,000.00), which Naguiat granted. On 11 August 1980,Naguiat indorsed to Queaño 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 FinancingCorporation. She also issued her own Filmanbank Check No. 065314, to theorder of Queaño, also dated 11 August 1980 and for the amount of NinetyFive Thousand Pesos (P95,000.00). The proceeds of these checks were to

constitute the loan granted by Naguiat to Queaño.[3]

To secure the loan, Queaño executed a Deed of Real EstateMortgage dated 11 August 1980 in favor of Naguiat, and surrendered to thelatter the owner’s duplicates of the titles covering the mortgagedproperties.[4] On the same day, the mortgage deed was notarized, and Queañoissued to Naguiat a promissory note for the amount of TWO HUNDREDTHOUSAND PESOS (P200,000.00), with interest at 12% per annum, payable

http://sc.judiciary.gov.ph/jurisprudence/2003/oct2003/118375.htm#_ftn1

















on 11 September 1980.[5]Queaño also issued a Security Bank and TrustCompany check, postdated 11 September 1980, for the amount of TWOHUNDRED THOUSAND PESOS (P200,000.00) and payable to the order ofNaguiat.

Upon presentment on its maturity date, the Security Bank check wasdishonored for insufficiency of funds. On the following day, 12 September1980, Queaño requested Security Bank to stop payment of her postdatedcheck, but the bank rejected the request pursuant to its policy not to honorsuch requests if the check is drawn against insufficient funds. [6]

On 16 October 1980, Queaño received a letter from Naguiat’s lawyer ,demanding settlement of the loan. Shortly thereafter, Queaño and one RubyRuebenfeldt (Ruebenfeldt) met with Naguiat. At the meeting, Queaño toldNaguiat that she did not receive the proceeds of the loan, adding that thechecks were retained by Ruebenf eldt, who purportedly was Naguiat’s agent. [7]

Naguiat applied for the extrajudicial foreclosure of the mortgage with theSheriff of Rizal Province, who then scheduled the foreclosure sale on 14 August 1981. Three days before the scheduled sale, Queaño filed the casebefore the Pasay City RTC,[8] seeking the annulment of the mortgagedeed. The trial court eventually stopped the auction sale.[9]

On 8 March 1991, the RTC rendered judgment, declaring the Deed ofReal Estate Mortgage null and void, and ordering Naguiat to return to Queañothe owner’s duplicates of her titles to the mortgaged lots. [10] Naguiat appealedthe decision before the Court of Appeals, making no less than elevenassignments of error. The Court of Appeals promulgated the decision nowassailed before us that affirmed in toto the RTC decision. Hence, the presentpetition.

Naguiat questions the findings of facts made by the Court of Appeals,especially on the issue of whether Queaño had actually received the loanproceeds which were supposed to be covered by the two checks Naguiat hadissued or indorsed. Naguiat claims that being a notarial instrument or publicdocument, the mortgage deed enjoys the presumption that the recitals thereinare true. Naguiat also questions the admissibility of various representations

and pronouncements of Ruebenfeldt, invoking the rule on the non-bindingeffect of the admissions of third persons. [11]

The resolution of the issues presented before this Court by Naguiatinvolves the determination of facts, a function which this Court does notexercise in an appeal by certiorari . Under Rule 45 which governs appeal bycertiorari, only questions of law may be raised[12] as the Supreme Court is not a

































trier of facts.[13] The resolution of factual issues is the function of lower courts,whose findings on these matters are received with respect and are in factgenerally binding on the Supreme Court. [14] A question of law which the Courtmay pass upon must not involve an examination of the probative value of theevidence presented by the litigants. [15] There is a question of law in a given

case when the doubt or difference arises as to what the law is on a certainstate of facts; there is a question of fact when the doubt or difference arises asto the truth or the falsehood of alleged facts. [16]

Surely, there are established exceptions to the rule on the conclusivenessof the findings of facts of the lower courts. [17] But Naguiat’s case does not fallunder any of the exceptions. In any event, both the decisions of the appellateand trial courts are supported by the evidence on record and the applicablelaws.

Against the common finding of the courts below, Naguiat vigorously insiststhat Queaño received the loan proceeds. Capitalizing on the status of themortgage deed as a public document, she cites the rule that a publicdocument enjoys the presumption of validity and truthfulness of itscontents. The Court of Appeals, however, is correct in ruling that thepresumption of truthfulness of the recitals in a public document was defeatedby the clear and convincing evidence in this case that pointed to the absenceof consideration.[18] This Court has held that the presumption of truthfulnessengendered by notarized documents is rebuttable, yielding as it does to clearand convincing evidence to the contrary, as in this case. [19]

On the other hand, absolutely no evidence was submitted by Naguiat thatthe checks she issued or endorsed were actually encashed or deposited. Themere issuance of the checks did not result in the perfection of the contract ofloan. For the Civil Code provides that the delivery of bills of exchange andmercantile documents such as checks shall produce the effect of paymentonly when they have been cashed.[20] It is only after the checks have producedthe effect of payment that the contract of loan may be deemed perfected. Art.1934 of the Civil Code provides:

“ 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, isperfected only upon the delivery of the object of the contract. [21] In this case,the objects of the contract are the loan proceeds which Queaño would enjoy







































only upon the encashment of the checks signed or indorsed by Naguiat. Ifindeed the checks were encashed or deposited, Naguiat would have certainlypresented the corresponding documentary evidence, such as the returnedchecks and the pertinent bank records. Since Naguiat presented no suchproof, it follows that the checks were not encashed or credited to Queaño’s

account.

Naguiat questions the admissibility of the various written representationsmade by Ruebenfeldt on the ground that they could not bind her followingthe res inter alia acta alteri nocere non debet rule. The Court of Appealsrejected the argument, holding that since Ruebenfeldt was an authorizedrepresentative or agent of Naguiat the situation falls under a recognizedexception to the rule.[22] Still, Naguiat insists that Ruebenfeldt was not heragent.

Suffice to say, however, the existence of an agency relationship betweenNaguiat and Ruebenfeldt is supported by ample evidence. As correctlypointed out by the Court of Appeals, Ruebenfeldt was not a stranger or anunauthorized person. Naguiat instructed Ruebenfeldt to withhold fromQueaño the checks she issued or indorsed to Queaño, pending delivery bythe latter of additional collateral. Ruebenfeldt served as agent of Naguiat onthe loan application of Queaño’s friend, Marilou Farralese, and it was inconnection with that transaction that Queaño came to know Naguiat.[23] It wasalso Ruebenfeldt who accompanied Queaño in her meeting with Naguiat andon that occasion, on her own and without Queaño asking for it, Reubenfeldt

actually drew a check for the sum of P220,000.00 payable to Naguiat, to coverfor Queaño’s alleged liability to Naguiat under the loan agreement. [24]

The Court of Appeals recognized the existence of an “agency byestoppel[25] citing Article 1873 of the Civil Code. [26] Apparently, it considered thatat the very least, as a consequence of the interaction between Naguiat andRuebenfeldt, Queaño got the impression that Ruebenfeldt was the agent ofNaguiat, but Naguiat did nothing to correct Queaño’s impression. In thatsituation, the rule is clear. One who clothes another with apparent authorityas his agent, and holds him out to the public as such, cannot be permitted todeny 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 honestbelief that he is what he appears to be.[27] The Court of Appeals is correct ininvoking the said rule on agency by estoppel.

More fundamentally, whatever was the true relationship between Naguiatand Ruebenfeldt is irrelevant in the face of the fact that the checks issued or

























indorsed to Queaño were never encashed or deposited to her account ofNaguiat.

All told, we find no compelling reason to disturb the finding of the courts aquo 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 whichis supposed to secure the loan is null and void. The consideration of themortgage contract is the same as that of the principal contract from which itreceives life, and without which it cannot exist as an independent contract. [28] Amortgage contract being a mere accessory contract, its validity would dependon the validity of the loan secured by it. [29]

WHEREFORE, the petition is denied and the assailed decision isaffirmed. Costs against petitioner.

SO ORDERED.

Bellosillo, (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr.,JJ., concur .









Documents

Credit Transactions_1 - 2 Yong Chan Kim vs. People to Celestina Naguiat vs. CA