[G.R. No. 138677. February 12, 2002.
]
TOLOMEO LIGUTAN and LEONIDAS DE LA LLANA, Petitioners, v. HON.
COURT OF APPEALS & SECURITY BANK & TRUST
COMPANY, Respondents.
DECISION
VITUG, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court, assailing the decision and resolutions of the Court of Appeals in CA-G.R. CV
No. 34594, entitled "Security Bank and Trust Co. v. Tolomeo Ligutan, Et.
Al." chanrob1es virtua1 1aw 1ibrary
Petitioners Tolomeo Ligutan and Leonidas dela Llana obtained on 11 May 1981 a
loan in the amount of P120,000.00 from respondent Security Bank and Trust
Company. Petitioners executed a promissory note binding themselves, jointly and
severally, to pay the sum borrowed with an interest of 15.189% per annum upon
maturity and to pay a penalty of 5% every month on the outstanding principal and
interest in case of default. In addition, petitioners agreed to pay 10% of the total
amount due by way of attorneys fees if the matter were indorsed to a lawyer for
collection or if a suit were instituted to enforce payment. The obligation matured on
8 September 1981; the bank, however, granted an extension but only up until 29
December 1981.
Despite several demands from the bank, petitioners failed to settle the debt which, as
of 20 May 1982, amounted to P114,416.10. On 30 September 1982, the bank sent a
final demand letter to petitioners informing them that they had five days within
which to make full payment. Since petitioners still defaulted on their obligation, the
bank filed on 3 November 1982, with the Regional Trial Court of Makati, Branch
143, a complaint for recovery of the due amount.
After petitioners had filed a joint answer to the complaint, the bank presented its
evidence and, on 27 March 1985, rested its case. Petitioners, instead of introducing
their own evidence, had the hearing of the case reset on two consecutive occasions.
In view of the absence of petitioners and their counsel on 28 August 1985, the third
hearing date, the bank moved, and the trial court resolved, to consider the case
submitted for decision.
Two years later, or on 23 October 1987, petitioners filed a motion for reconsideration
of the order of the trial court declaring them as having waived their right to present
evidence and prayed that they be allowed to prove their case. The court a quo denied
the motion in an order, dated 5 September 1988, and on 20 October 1989, it rendered
its decision, 1 the dispositive portion of which read:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants, ordering the latter to pay, jointly and severally, to the plaintiff, as
follows:jgc:chanrobles.com.ph
"1. The sum of P114,416.00 with interest thereon at the rate of 15.189% per annum,
2% service charge and 5% per month penalty charge, commencing on 20 May 1982
until fully paid;
"2. To pay the further sum equivalent to 10% of the total amount of indebtedness for
and as attorneys fees; and
"3. To pay the costs of the suit." 2
Petitioners interposed an appeal with the Court of Appeals, questioning the rejection
by the trial court of their motion to present evidence and assailing the imposition of
the 2% service charge, the 5% per month penalty charge and 10% attorneys fees. In
its decision 3 of 7 March 1996, the appellate court affirmed the judgment of the trial
court except on the matter of the 2% service charge which was deleted pursuant to
Central Bank Circular No. 783. Not fully satisfied with the decision of the appellate
court, both parties filed their respective motions for reconsideration. 4 Petitioners
prayed for the reduction of the 5% stipulated penalty for being unconscionable. The
bank, on the other hand, asked that the payment of interest and penalty be
commenced not from the date of filing of complaint but from the time of default as
so stipulated in the contract of the parties.
On 28 October 1998, the Court of Appeals resolved the two motions
thusly:jgc:chanrobles.com.ph
"We find merit in plaintiff-appellees claim that the principal sum of P114,416.00
with interest thereon must commence not on the date, of filing of the complaint as
we have previously held in our decision but on the date when the obligation became
due.
"Default generally begins from the moment the creditor demands the performance of
the obligation. However, demand is not necessary to render the obligor in default
when the obligation or the law so provides.
"In the case at bar, defendants-appellants executed a promissory note where they
undertook to pay the obligation on its maturity date without necessity of demand.
They also agreed to pay the interest in case of non-payment from the date of default.
"x x x
1
"While we maintain that defendants-appellants must be bound by the contract which
they acknowledged and signed, we take cognizance of their plea for the application
of the provisions of Article 1229 . . .
"Considering that defendants-appellants partially complied with their obligation
under the promissory note by the reduction of the original amount of P120,000.00 to
P114,416.00 and in order that they will finally settle their obligation, it is our view
and we so hold that in the interest of justice and public policy, a penalty of 3% per
month or 36% per annum would suffice.
"x x x
"WHEREFORE, the decision sought to be reconsidered is hereby MODIFIED. The
defendants-appellants Tolomeo Ligutan and Leonidas dela Llana are hereby ordered
to pay the plaintiff-appellee Security Bank and Trust Company the
following:jgc:chanrobles.com.ph
"1. The sum of P114,416.00 with interest thereon at the rate of 15.189% per annum
and 3% per month penalty charge commencing May 20, 1982 until fully paid;
"2. The sum equivalent to 10% of the total amount of the indebtedness as and for
attorneys fees." 5
On 16 November 1998, petitioners filed an omnibus motion for reconsideration and
to admit newly discovered evidence, 6 alleging that while the case was pending
before the trial court, petitioner Tolomeo Ligutan and his wife Bienvenida Ligutan
executed a real estate mortgage on 18 January 1984 to secure the existing
indebtedness of petitioners Ligutan and dela Llana with the bank. Petitioners
contended that the execution of the real estate mortgage had the effect of novating
the contract between them and the bank. Petitioners further averred that the mortgage
was extrajudicially foreclosed on 26 August 1986, that they were not informed about
it, and the bank did not credit them with the proceeds of the sale. The appellate court
denied the omnibus motion for reconsideration and to admit newly discovered
evidence, ratiocinating that such a second motion for reconsideration cannot be
entertained under Section 2, Rule 52, of the 1997 Rules of Civil Procedure.
Furthermore, the appellate court said, the newly-discovered evidence being invoked
by petitioners had actually been known to them when the case was brought on appeal
and when the first motion for reconsideration was filed. 7
Aggrieved by the decision and resolutions of the Court of Appeals, petitioners
elevated their case to this Court on 9 July 1999 via a petition for review
on certiorari under Rule 45 of the Rules of Court, submitting thusly
"I. The respondent Court of Appeals seriously erred in not holding that the 15.189%
interest and the penalty of three (3%) percent per month or thirty-six (36%) percent
per annum imposed by private respondent bank on petitioners loan obligation are
still manifestly exorbitant, iniquitous and unconscionable.
"II. The respondent Court of Appeals gravely erred in not reducing to a reasonable
level the ten (10%) percent award of attorneys fees which is highly and grossly
excessive, unreasonable and unconscionable.
"III. The respondent Court of Appeals gravely erred in not admitting petitioners
newly discovered evidence which could not have been timely produced during the
trial of this case.
"IV. The respondent Court of Appeals seriously erred in not holding that there was a
novation of the cause of action of private respondents complaint in the instant case
due to the subsequent execution of the real estate mortgage during the pendency of
this case and the subsequent foreclosure of the mortgage." 8
Respondent bank, which did not take an appeal, would, however, have it that the
penalty sought to be deleted by petitioners was even insufficient to fully cover and
compensate for the cost of money brought about by the radical devaluation and
decrease in the purchasing power of the peso, particularly vis-a-vis the U.S. dollar,
taking into account the time frame of its occurrence. The Bank would stress that only
the amount of P5,584.00 had been remitted out of the entire loan of P120,000.00. 9
A penalty clause, expressly recognized by law, 10 is an accessory undertaking to
assume greater liability on the part of an obligor in case of breach of an obligation. It
functions to strengthen the coercive force of the obligation 11 and to provide, in
effect, for what could be the liquidated damages resulting from such a breach. The
obligor would then be bound to pay the stipulated indemnity without the necessity of
proof on the existence and on the measure of damages caused by the breach. 12
Although a court may not at liberty ignore the freedom of the parties to agree on
such terms and conditions as they see fit that contravene neither law nor morals,
good customs, public order or public policy, a stipulated penalty, nevertheless, may
be equitably reduced by the courts if it is iniquitous or unconscionable or if the
principal obligation has been partly or irregularly complied with. 13
The question of whether a penalty is reasonable or iniquitous can be partly subjective
and partly objective. Its resolution would depend on such factors as, but not
necessarily confined to, the type, extent and purpose of the penalty, the nature of the
obligation, the mode of breach and its consequences, the supervening realities, the
standing and relationship of the parties, and the like, the application of which, by and
large, is addressed to the sound discretion of the court. In Rizal Commercial Banking
Corp. v. Court of Appeals, 14 just an example, the Court has tempered the penalty
charges after taking into account the debtors pitiful situation and its offer to settle
2
the entire obligation with the creditor bank. The stipulated penalty might likewise be
reduced when a partial or irregular performance is made by the debtor. 15 The
stipulated penalty might even be deleted such as when there has been substantial
performance in good faith by the obligor, 16 when the penalty clause itself suffers
from fatal infirmity, or when exceptional circumstances so exist as to warrant it. 17
The Court of Appeals, exercising its good judgment in the instant case, has reduced
the penalty interest from 5% a month to 3% a month which petitioner still disputes.
Given the circumstances, not to mention the repeated acts of breach by petitioners of
their contractual obligation, the Court sees no cogent ground to modify the ruling of
the appellate court..
Anent the stipulated interest of 15.189% per annum, Petitioners, for the first time,
question its reasonableness and prays that the Court reduce the amount. This
contention is a fresh issue that has not been raised and ventilated before the courts
below. In any event, the interest stipulation, on its face, does not appear as being that
excessive. The essence or rationale for the payment of interest, quite often referred to
as cost of money, is not exactly the same as that of a surcharge or a penalty. A
penalty stipulation is not necessarily preclusive of interest, if there is an agreement to
that effect, the two being distinct concepts which may separately be demanded. 18
What may justify a court in not allowing the creditor to impose full surcharges and
penalties, despite an express stipulation therefor in a valid agreement, may not
equally justify the nonpayment or reduction of interest. Indeed, the interest
prescribed in loan financing arrangements is a fundamental part of the banking
business and the core of a banks existence. 19
Petitioners next assail the award of 10% of the total amount of indebtedness by way
of attorneys fees for being, grossly excessive, exorbitant and unconscionable vis-a-
vis the time spent and the extent of services rendered by counsel for the bank and the
nature of the case. Bearing in mind that the rate of attorneys fees has been agreed to
by the parties and intended to answer not only for litigation expenses but also for
collection efforts as well, the Court, like the appellate court, deems the award of 10%
attorneys fees to be reasonable.
Neither can the appellate court be held to have erred in rejecting petitioners call for
a new trial or to admit newly discovered evidence. As the appellate court so held in
its resolution of 14 May 1999
"Under Section 2, Rule 52 of the 1997 Rules of Civil Procedure, no second motion
for reconsideration of a judgment or final resolution by the same party shall be
entertained. Considering that the instant motion is already a second motion for
reconsideration, the same must therefore be denied.
"Furthermore, it would appear from the records available to this court that the newly-
discovered evidence being invoked by defendants-appellants have actually been
existent when the case was brought on appeal to this court as well as when the first
motion for reconsideration was filed. Hence, it is quite surprising why defendants-
appellants raised the alleged newly-discovered evidence only at this stage when they
could have done so in the earlier pleadings filed before this court.
"The propriety or acceptability of such a second motion for reconsideration is not
contingent upon the averment of new grounds to assail the judgment, i.e., grounds
other than those theretofore presented and rejected. Otherwise, attainment of finality
of a judgment might be stayed off indefinitely, depending on the partys
ingenuousness or cleverness in conceiving and formulating additional flaws or
newly discovered errors therein, or thinking up some injury or prejudice to the
rights of the movant for reconsideration." 20
At any rate, the subsequent execution of the real estate mortgage as security for the
existing loan would not have resulted in the extinguishment of the original contract
of loan because of novation. Petitioners acknowledge that the real estate mortgage
contract does not contain any express stipulation by the parties intending it to
supersede the existing loan agreement between the petitioners and the bank. 21
Respondent bank has correctly postulated that the mortgage is but an accessory
contract to secure the loan in the promissory note.chanrob1es virtua1 1aw 1ibrary
Extinctive novation requires, first, a previous valid obligation; second, the agreement
of all the parties to the new contract; third, the extinguishment of the obligation; and
fourth, the validity of the new one. 22 In order that an obligation may be
extinguished by another which substitutes the same, it is imperative that it be so
declared in unequivocal terms, or that the old and the new obligation be on every
point incompatible with each other. 23 An obligation to pay a sum of money is not
extinctively novated by a new instrument which merely changes the terms of
payment or adding compatible covenants or where the old contract is merely
supplemented by the new one. 24 When not expressed, incompatibility is required so
as to ensure that the parties have indeed intended such novation despite their failure
to express it in categorical terms. The incompatibility, to be sure, should take place in
any of the essential elements of the obligation, i.e., (1) the juridical relation or tie,
such as from a mere commodatum to lease of things, or from negotiorum gestio to
agency, or from a mortgage to antichresis, 25 or from a sale to one of loan; 26 (2) the
object or principal conditions, such as a change of the nature of the prestation; or (3)
the subjects, such as the substitution of a debtor 27 or the subrogation of the creditor.
Extinctive novation does not necessarily imply that the new agreement should be
complete by itself; certain terms and conditions may be carried, expressly or by
implication, over to the new obligation.
WHEREFORE, the petition is DENIED.
SO ORDERED.
3
 [G.R. No. 84719. January 25, 1991.]
YONG CHAN KIM, Petitioner, v. 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.
SYLLABUS
1. CRIMINAL LAW; ESTAFA WITH UNFAITHFULNESS OR ABUSE OF
CONFIDENCE; OBLIGATION TO RETURN THE SAME MONEY, GOODS OR
PERSONAL PROPERTY, INDISPENSABLE. In order that a person can be
convicted under the provision of Article 315, 1(b) of the Revised Penal Code it must
be proven that he had the obligation to deliver or return the same money, goods or
personal property that he had received.
2. ID.; ID.; ID.; EMPLOYEE WITHOUT ANY OBLIGATION TO RETURN ANY
CASH ADVANCE RECEIVED NOT GUILTY THEREOF; CASE AT BAR.
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, as per 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." 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.
DECISION
PADILLA, J.:
This petition seeks the review on certiorari of the following:chanrob1es virtual 1aw
library
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 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
petitioners appeal/petition for review for having been filed out of time, and the
resolution, dated 19 August 1988, denying petitioners motion for reconsideration. 4
The antecedent facts are as follows:chanrob1es virtual 1aw library
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.chanrobles lawlibrary : rednad
Petitioner was required to comment on the internal auditors 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
4
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:jgc:chanrobles.com.ph
"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 1(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 of
arresto 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 courts 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. Petitioners 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.chanrobles law library
Petitioners 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 petitioners 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 petitioners 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 courts 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:jgc:chanrobles.com.ph
"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
5
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
landed 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:chanrob1es virtual 1aw library
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.chanrobles lawlibrary : rednad
The second issue has been resolved in our Resolution dated 10 August 1990, when
we granted petitioners 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:jgc:chanrobles.com.ph
"Art. 315. Swindling (Estafa). Any person who shall defraud another by any of the
means mentioned herein below shall be punished by:chanrob1es virtual 1aw library
x x x
"1. With unfaithfulness or abuse of confidence, namely:chanrob1es virtual 1aw
library
(a) . . .
(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 totally or partially
guaranteed by a bond; or by denying having received such money, goods, or other
property."cralaw virtua1aw library
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, goods or
personal property that he had received. 11
Was petitioner under obligation to return the same money (cash advance) which he
had received? We believe not. Executive Order No. 10, dated 12 February 1980
provides as follows:jgc:chanrobles.com.ph
"B. Cash Advance for Travel.
x x x
"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."cralaw virtua1aw library
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
6
form of a loan of money advanced to him by his employer, as per 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.cralawnad
"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."cralaw virtua1aw library
"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."cralaw virtua1aw library
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:jgc:chanrobles.com.ph
"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, he is obliged to return the amount.
Q...
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 the criminal charges filed against him.chanrobles.com.ph : virtual
law library
SO ORDERED.