LEONILA S. PEREZ, PETITIONER, VS. THE PEOPLE OF THE PHILIPPINES AND THE HONORABLE COURT OF APPEALS, RESPONDENTS.

Petition for review on certiorari of the Decision of the
Court of Appeals^[1]
dated February 16, 1976 and its Resolution denying petitioner’s Motion for
Recon­sideration in CA-G.R. No. 15533-CR entitled “People of the
Philippines, Plaintiff-Appellee, versus Leonila S. Perez,
Accused-Appellant,” affirming in toto the amended Decision
of the Court of First Instance of Manila (Criminal Case No. 80842) dated April
3, 1973 convicting the accused of the crime of estafa thru abuse of confi­dence
or unfaithfulness defined under Article 315, sub­section 1(b) of the Revised
Penal Code.

Herein petitioner was charged with the crime of Estafa before the
Court of First Instance of Manila under the following information:

“That on or about and during the period comprised between
February 11, 1964 and February 14, 1964, both dates inclusive, in the City of
Manila, Philippines, the said accused did then and there wilfully, unlaw­fully
and feloniously defraud one Petra Farin in the following manner, to wit:  the said accused by means of fraudulent repre­sentations
and false manifestations which she made to the said Petra Farin that as soon as
she obtain a loan from the bank, she could help Petra Farin in financing her
building, and that to obtain said loan, her current account with the bank
should be activated and for that purpose, they should exchange checks with each
other, and by means of other similar deceits, induced and suc­ceeded in
inducing the said Petra Farin to exchange checks with the said accused, as in
fact the said Petra Farin issued checks to the accused, to which in turn, the said
accused issued the following checks:

Republic Bank Check No. A-309932, dated February 11, 1964, in the amount of ………….. P20,000.00

Republic Bank Check No. A-309933, dated February 11, 1964, in the amount of ………….. P25,000.00

Republic Bank Check No. A-309935, dated February 11, 1964, in the amount of ………….. P25,000.00

Republic Bank Check No. A-309936, dated February 11, 1964, in the amount of ………….. P20,000.00

Republic Bank Check No. A-309937, dated February 11, 1964, in the amount of ………….. P22,000.00

Republic Bank Check No. A-309938, dated February 11, 1964, in the amount of ………….. P23,000.00

Republic Bank Check No. A-309939, dated February 12, 1964, in the amount of ………….. P24,930.00

Republic Bank Check No. A-309941, dated February 12, 1964, in the amount of ………….. P27,300.00

Republic Bank Check No. A-309942, dated February 12, 1964, in the amount of ………….. P33,700.00

Republic Bank Check. No. A-309943, dated February 12, 1964, in the amount of ………….. P29,000.00

Republic Bank Check No. A-309945, dated February 13, 1964, in the amount of ………….. P45,000.00

Republic Bank Check No. A-309947, dated February 14, 1964, in the amount of ………….. P38,000.00

Republic Bank Check No. A-309946, dated February 13, 1964, in the amount of ………….. P45,000.00

all in the total amount of P377,930.00,
thereby making the said Petra Farin believe that all the checks issued by her
were good and with sufficient funds deposited in said bank; but that upon
presentation of said checks to the bank for deposit, they were dishonored for
the reason that the drawer, the herein accused, did not have sufficient funds
deposited in said bank, and said accused, once in possession of the said checks
of Petra Farin, all valued at P377,930.00, which she (accused) encashed and was
paid for, with intent to defraud, did then and there willfully, unlawfully and
feloniously misappropriate, misapply and convert the same to her own personal
use and benefit, to the damage and prejudice of the said Petra Farin in the
aforesaid sum of P377,930.00, Philippine Currency.

Contrary to law.”

In affirming the conviction of the accused-petitioner, the
respondent Court of Appeals adopted the Counter-statement of Facts recited in
the brief of the Government, as follows:

“Complainant Petra Farin is a current account depositor of the
Philippine National Cooperative Bank (PNCB for short) with an overdraft line of
P200,000.00 and a discount­ing line of P200,000.00, or a total accommo­dation
of P400,000.00 with said PNCB (pp. 10­-12, t.s.n., Sept. 13, 1968).  She was like­wise constructing a building in Quezon
City and was negotiating with PNCB authorities for the
transfer of the PNCB to said build­ing upon its completion on a lease basis (p.
6, tsn, Dec. 3, 1968).  As such and
because of other banking transactions, she used to be in the PNCB premises in
España, Manila where she frequently
dealt with Mr. Alfredo Mamuyac, Treasurer of the PNCB, and Atty. Centeno, Legal
Counsel of said banking institution (pp. 3-5, t.s.n., Sept. 13, 1968). 
Sometime in June or July, 1963, Mr. Mamuyac and Atty. Centeno talked to
her and intimated to her that they would like her to meet a friend of theirs, a
certain Atty. Perez, one of the legal counsel of Citizens Bank & Trust
Company (pp. 5-7, tsn, Dec. 3, 1968).  Both gentlemen told Mrs. Farin that they
would like her to help and accommodate Atty. Perez because the latter may in
one way or another be of help to her (Mrs. Farin’s) banking transactions (pp.
8-10, tsn, Dec. 3, 1968).  The meeting
actually materialized and Atty. Perez and his wife, accused Leonila S. Perez,
were then introduced to the complainant (pp. 5-11, tsn, Dec. 3, 1968). 
During the introduction of the accused and husband to the complainant,
Mr. Alfredo Mamuyac and the legal counsel of the PNCB requested said complainant
to give the accused and her hus­band, Atty. Jose Perez, a loan of P50,000.00,
the treasurer and legal counsel of the PNCB as guarantors thereof (p. 9, tsn,
Dec. 3, 1968).  But before consenting to
such re­quest, complainant verified from the Vice-President of the Citizens
Bank, Mr. Arambulo, and found to be true that Atty. Jose Perez, husband of the
accused, was really the assistant legal counsel of said Citizens Bank.  Thereafter, the complainant gave the accused
and her husband a loan in the amount of P25,000.00, payable within thirty (30)
days and then again another loan of P25,000.00. 
Both loans were duly paid by the couple (pp. 6-10, t.s.n., Sept. 13, 1968; pp. 15-21, t.s.n., Dec. 7, 1968).

“Thereafter, accused and her husband continued to meet complainant
every now and then, the aforesaid couple being almost everyday with her, and
most of the time said husband and wife dropped by her place early in the
morning, taking breakfast with her at her residence in 304 Quezon Blvd. Ext.,
Quezon City (pp. 28-29, 26-37, t.s.n., Dec. 3, 1968).  From then on accused started showering her
and her children with gifts of various kinds and because of their con­tinuous
association with one another whereby they met everyday, they became closer and
more intimate (pp. 33-34, t.s.n., Dec.
3, 1968).  It was during this
period of inti­macy that accused and her husband learned from complainant that
she and her daughter had a credit and discounting overdraft line in the total
sum of P400,000.00 with the PNCB (pp. 10-12, tsn, Sept. 13, 1968; p. 26, tsn, July 8, 1969).

“It was during this close relationship that the accused and
her husband, Atty. Jose Perez, proposed to exchange their checks from their
bank, the Republic Bank, with the complainant’s check from the PNCB in order to
activate the account of the couple (accused and her husband) in the Republic
Bank so that they can secure a million-peso loan, having as collateral the
hacienda of the late Filemon Salcedo in Mindoro, the proceeds from which they
(accused and her husband) can in turn help or give a big loan to the
complainant to finance the construction of the latter’s building in Quezon City
(pp. 10-12, t.s.n., Sept. 13, 1968).  On
that occasion Atty. Perez likewise assured com­plainant that being the legal
counsel of Citizens Bank, he had connections with various banks and if
complainant will help him activate their account with the Republic Bank, he, in
turn, can help her also.  When queried as
to what he meant by ‘activate both my account’, Atty. Perez told the complainant
‘that each morning his wife (the herein accused), accompanied by him­self, will
go to complainant’s place, give her checks, and, in turn, the complainant will
issue checks in the same amount as the checks of the accused’, further inform­ing
the complainant that, ‘anyway, you have a P200,000.00 overdraft line and ano­ther
P200,000.00 discounting line.  So all in
all you have an accommodation of P400,000.00 with the PNCB.’ Atty. Perez
further told complainant that he will give her Republic Bank checks and in
return complainant should issue checks of PNCB. 
By constantly exchanging checks, it will appear that complainant having
a big over­draft line, Atty. Perez’ checks will be good and complainant’s
checks will also be good.  In that way
Atty. Perez’ account will be activated and which may enable him to get a
million-peso loan (pp. 39-42, t.s.n., Dec.
3, 1968).

“Having been made to understand that she would get a big
financial assistance from the accused and her husband after the release of the
latter’s million-peso loan, the complainant agreed to the pro­position of
exchanging checks.  She there­fore,
issued several PNCB checks (Exhibits A, A-1 to A-27) all dated in the month of
December, 1963, in the total amount of P441,059.00 in favor of the
accused.  Said checks, Exhibits A, A-1 to
A-27, were all encashed by the accused who was duly paid the corresponding
amounts therein.  The accused on the
other hand issued the cor­responding Republic Bank checks in favor of the
complianant, which the latter was able to encash and collect (pp. 3-7, t.s.n., Oct. 17, 1968).  In the following month of January, 1964, the
complainant, true to their agreement, issued several checks (Exhibits B, B-1 to
B-39) amounting to P843,907.00 in favor of the accused, who also issued in favor
of the complainant the corresponding checks, good and honored (pp. 8-23,
t.s.n., Oct. 13, 1968).  Inas­much as the
promised loan of the accused had not yet been released, the exchange of checks
between her and the complainant continued. 
So from February 5 to February 10, 1964, the complainant again issued
several checks (Exhibits C, C-1 to C-9) in the total amount of P254,600.00 and
as usual, the accused also issued in exchange the cor­responding good and
honored checks (pp. 34-­37, t.s.n., Oct. 17, 1968).

“Since nothing went wrong in the early days of their
transaction covering above exchanges of checks, complainant continued to issue
additional checks in favor of accused (Exhibits D, D-1 to D-12) dated February 10
to 14, 1964, which accused was able to deposit and were honored (pp. 38­-44,
t.s.n., Oct. 17, 1968).  In exchange for
those checks (Exhs. D, D-1 to D-12) accused issued several checks with the same
amount (Exhs. E, F, G, T, I, J, K, L, M, N, O, P, Q, R, S and T) and when
deposited said checks were returned by the Republic Bank with notations ‘Drawn
Against Uncollected Deposits’ and later ‘Stop Payment’ (Exhs. E-1 to T-1).  Complainant got alarmed; but thinking it might
only be due to mathematical errors, she first waited for a couple of days until
she was finally convinced that accused really intended and did something wrong
when she discovered that all her credit lines with her bank were exhausted,
such that some of the checks she issued later were no longer honored by her
bank.  Alarmed, she immediately called
and went to see the accused.  The lat­ter
was, however, making herself unavailable notwithstanding various attempts made
by the complainant to have a talk with her. 
Finally, complainant chose to take along her friend, Mrs. Asuncion
Trinidad, the owner of the Victory Liner, and who assisted her in trying to
have a confrontation with the herein accused. 
After several attempts, complainant finally succeeded in seeing Atty.
Perez, the husband of the accused, who assured complain­ant and Mrs. Trinidad
that she (complainant) should not worry since it will only be a matter of
accounting and that everything will be arranged and cleared and that whatever
is due her (complainant) will be paid unto her. 
Atty. Perez even invited complainant to go with him to the office of
Atty. Faylona, accused’s counsel, for purposes of account­ing in order to
straighten out matters.  Complainant,
however, refused, telling Atty. Perez that they had started their transactions without
any lawyer and, therefore, she saw no reason for a lawyer now intervening
between them.  Notwithstanding all
attempts to make accused return or reimburse complainant for the amounts
represented by the checks she issued in favor of the accused in the total sum
of P377,930.00 which were charged and debited against complainant’s overdraft,
not a single centavo was returned to her (pp. 60-72, t.s.n., Oct. 17, 1968; pp.
2­-19, t.s.n., Oct. 18, 1968).”

On a plea of NOT GUILTY, the case proceeded to trial and upon its
termination, the trial court found the ac­cused-petitioner guilty of the crime
of estafa committed with abuse of confidence or unfaithfulness under Article
315, Sec. 1, sub-sec. (b) of the Code, and in view of the amount involved and
the absence of mitigating or aggravating circumstances, the accused was
sentenced to an indeterminate penalty of SIX (6) YEARS and ONE (1) DAY of prision
mayor, as the minimum, to SEVENTEEN (17) YEARS and FOUR (4) MONTHS of reclusion
temporal, as the maximum, and was ordered to return to the complainant
the amount of P377,930.00 with no subsidiary imprison­ment in case of
insolvency and to pay the costs.

Upon a Motion for Reconsideration and/or New Trial filed by the
accused, which, among others, informed the court of the pendency of Civil Case
No. Q-8446 before the CFI of Rizal wherein the same parties were ordered to
engage the services of an accounting firm to settle their accounts arising from
this same transaction of exchange of checks, the lower court amended its own
decision, to wit:

“The pendency of Civil Case No. Q-8446 before the Court of
First Instance of Rizal, Branch XVIII, entitled ‘Petra Farin, et al.  versus Leonila S. Perez, et al.,’ which has
as its object the recovery of the civil liability arising from the offense
charged in the instant case, not being denied nor controverted by the
prosecution, let the judgment in this case therefore, be accor­dingly amended
so as to delete therefrom ‘to return to the offended party the amount of
P377,930.00.’”

On appeal to respondent Court of Appeals, the deci­sion below was
affirmed in toto and accused’s Motion for Reconsideration was
likewise denied.  Hence, this petition
seeking a reversal of the judgment of conviction on the ground that the
decision is devoid of support in the records; that it is grounded entirely on
speculation and conjecture; that it is so glaringly erroneous as to constitute
serious abuse of discretion; and that the trial court committed injustice in
the wrong evaluation of facts brought out during the trial.^[2]

Accused-petitioner argues that no estafa was committed in the
case at bar; that her liability, if any, is civil in nature; that her guilt has
not been proven beyond reasonable doubt; and that the penalty imposed has
absolutely no basis.  And she assigns the
following errors:

I.           
The respondent court erred in holding that it
was accused who proposed the transaction of exchange of checks and in not
taking into account that complaining witness was engaged in “kiting
operations” (Monetary Board Resolution No. 479, Central Bank of the
Philippines).

II.         
The respondent court erred in not holding that
the transaction of exchange of checks between accused and complaining witness
is civil in nature and hence accused is not criminally liable therefor.

III.        
The respondent court erred in convicting accused
of the kind of estafa which was neither alleged or charged in the infor­mation
nor proved by the evidence.

IV.      
The respondent court erred in sentencing accused
to an indeterminate penalty of 6 years and 1 day of prision mayor, as the
minimum, to 17 years and 4 months of reclusion temporal, as the maximum, there
being no factual or legal basis for the imposition of said penalty.

V.        
The respondent court erred in convicting accused
on the sole testimony of com­plaining witness whose derogatory back­ground has
been duly investigated upon by another government agency which is the Central
Bank of the Philippines.

In sustaining or rejecting the defense of the petitioner, We
quote hereunder the version of the accused in order to have a clear view of the
matters involved in this case arising from a rather unusual and irregular
banking transaction of exchange of checks between her and the complaining
witness (214 checks issued by the accused and 91 checks by the complainant) in
various amounts and on different dates, thus:

“Accused-petitioner Leonila Perez was an old bank client of
the Philippine National Cooperative Bank (PNCB), having obtained a previous
loan from said bank (tsn, p. 11, June
17, 1970, L. Perez).  On the
other hand, complaining witness Mrs. Petra Farin was also a client of the PNCB
with a current account deposit and an overdraft line of P200,000.00 and a
discounting line of P200,000.00 (tsn, p. 5, Sept. 13, 1968, P. Farin).  Mrs. Farin was likewise nego­tiating for the
transfer of the PNCB to the building she was starting to construct in Quezon
City (ibid.).

Both were known to the PNCB officers, Mr. Alfredo Mamuyac (Treasure
of PNCB) and Atty. Centeno (Legal Counsel of PNCB).  They introduced accused to Mrs. Farin for the
purpose of obtaining a loan which ac­cused needed for the additional capitali­zation
of her business (tsn, p. 11, June 17,
1970, L. Perez).  Upon the
personal guaranties and/or signatures of said PNCB officers, Mrs. Farin
extended a loan of P50,000.00 in cash to accused sometime in July 1963, payable
within one month (tsn, p. 18, Aug. 17,
1970, L. Perez).  On August
1963, accused paid the said loan (tsn, p. 9, Sept. 13, 1968, P. Farin). 
Thereafter, accused bought a freezer from Mrs. Farin who was a dealer on
household appliances whose business name is Quezon City Trading Center, Inc.
(tsn, p. 15, July 8, 1969, Sonia del Rosario) which was duly paid for (tsn, p.
19, June 17, 1970, L. Perez).

In the meantime, Mrs. Farin was main­taining 13 current accounts in
13 different banks in Manila, to wit: 
First United Bank, Equitable Bank, China Banking Corporation, Philippine
Bank of Commerce, Rizal Commer­cial Bank, Philippine National Cooperative Bank,
Trader’s Commercial Bank, Consolidated Bank, Merchants Banking Corporation,
Pacific Banking Corporation, Citizens Bank, Conti­nental Bank (tsn, p. 22-26,
Dec. 3, 1968, P. Farin) and in Prudential Bank (tsn, p. 2, Dec. 4, 1968, P.
Farin).  Mrs. Farin therefore needed the
checks of different people in order to actively maintain her 13 dif­ferent
current accounts and further to be able to get money out of issuing checks
through discounting which in banking prac­tice is known as ‘kiting operations’
(tsn, p. 30, Dec. 3, 1958, Atty. Faylona).

For her ‘kiting operations,’ Mrs. Farin had business associates who
were also prominent and/or wealthy women among whom are Atty. Lumen Policarpio,
Mrs. Asuncion Trinidad, owner of big land transporta­tion company (tsn, p. 34,
Sept. 17, 1970, L. Perez) and Sonia del Rosario.  Mrs. Farin made use of and had absolute
control of the current accounts of Atty. Lumen Policarpio with the China
Banking Corporation, Equitable Bank, Rizal Com­mercial Bank, Traders Commercial
Bank and Merchants Banking Corporation. 
The same applies to the current account under the name of Policarpio
Draperies so that Atty. Policarpio signed the checks but Mrs. Farin wrote the
figures and other entries therein (tsn, pp. 10-11, Dec. 4, 1968, P.
Farin).  Moreover, Mrs. Farin made use of
the current accounts with the PNCB under the name of Sonia del Rosario and the
current account with Traders Commercial Bank and with PNCB under the name of
Asuncion Trinidad (tsn, pp. 12-13, Dec.
4, 1968, P. Farin).  Sonia
del Rosario used to give blank checks to Mrs. Farin bearing only her signatures
but the amount, the name of the payee and the date of the checks were filled up
by Mrs. Farin (tsn, p. 13, Aug. 13,
1969, Asuncion Trinidad).

In the light of her said operations which was not known to accused,
Mrs. Farin suggested the idea of exchange of checks (tsn, p. 7, Aug. 10, 1970,
L. Perez) inspite of the fact that accused had only minimal overdraft account
of P10,000.00 with the Republic Bank (tsn, p. 6, Aug. 17, 1970, L. Perez).  Accused agreed to said proposal as a sign of
gratitude since Mrs. Farin had helped her in one of her crucial moments (tsn,
p. 8, Aug. 10, 1970, L.
Perez).  Besides, Mrs. Farin was very
convincing, and her friends and associates surrounding her were prominent and
wealthy people (tsn, p. 34, Aug. 17,
1970, L. Perez).

The exchange of checks started sometime in October 1963 (tsn, p. 3,
1970, L. Perez).  The accused was made to
issue one or two checks a day at first and
three to four checks a day thereafter from the period of October
1963 to December 1963.

During the said period, accused was made to issue the following
checks:

In return or substitution thereof, Mrs. Farin issued the following
checks:

Meanwhile or in December 1963, accused applied for a loan of
P120,000.00 with the PNCB against a collateral of a 3-storey building worth
P300,000.00 which she and her husband owned (tsn, p. 18, Sept. 24, 1970, L. Perez).  When the net proceeds of the said loan were
released by the PNCB, Mrs. Farin used the same (tsn, p. 20, Sept. 24, 1970, L. Perez).

Being very much influential, Mrs. Farin opened a current account
for accused in the Equitable Bank and in the PNCB al­though the
“collaterals are theirs” (tsn, p. 22, Dec. 5, 1968, P. Farin).  These were in addition to the current account
of ac­cused with the Republic Bank. 
Again, the said current accounts in the name of accused were controlled
by Mrs. Farin (tsn, p. 21, Sept. 24,
1970, L. Perez).  The
checkbooks of the said current accounts were kept by Mrs. Farin and she used to
make accused sign all the checks in blank and then took them with her (tsn, pp.
10-15, Sept. 24, 1970, L.
Perez).

During the month of January, 1964, accused was made to issue in
favor of Mrs. Farin as much as 6 checks a day. 
Thus, for one month alone, accused had been made to issue as much as
ninety (90) checks, to wit:

For her part, Mrs. Farin issued the following checks:

Although the exchange of checks became more frequent and numerous,
it went on smoothly.  There were also
times when accused delivered to Mrs. Farin cash checks which accused issued but
cashed herself from the bank and then delivered the cash value to Mrs. Farin
upon the latter’s request (tsn, pp. 24-26, Aug. 17, 1970, L. Perez).  These checks were issued by accused payable
to cash and endorsed by accused herself, to wit:

The next batch of checks which accused was made to issue by Mrs.
Farin during the month of February 1964 were:

In turn, Mrs. Farin issued the following checks:

In the second week of February, 1964, the checks of Mrs. Farin
issued to accused started to be dishonored (Exhs. 59-69).  Upon noti­fication by the Republic Bank,
accused got scared and alarmed (tsn, p. 30, Aug. 10, 1970, L. Perez). 
She asked her husband to accompany her to the house of Mrs. Farin (tsn,
p. 8, Jan. 21, 1971).

Mrs. Farin told accused and her hus­band to redeposit said checks
because she is going to clear them (tsn, p. 9, Jan. 21, 1971, Atty. Jose Perez).  But the checks bounced again (tsn, p. 31, Aug. 10, 1970, L. Perez).  Very much confused and sensing that there was
something wrong with the transaction, accused pleaded with Mrs. Farin to put a
stop on their exchange of checks and to have an accounting but the latter
refused (tsn, pp. 19-20, Aug. 10, 1970,
L. Perez).  Atty. Perez told his wife to
see a lawyer (tsn, p. 9, Jan. 21, 1971,
Atty. Jose Perez).

Accused thereby consulted her lawyer (tsn, pp. 18-19, Aug. 10, 1970, L. Perez).  Upon advise of counsel, the accused caused
the stopping of payments on the checks she had issued to Mrs. Farin during the
second week of February (tsn, pp. 8-9, Aug.
10, 1970, L. Perez).

Accused, through her counsel, took the following steps in order to
terminate once and for all the so-called exchange of checks:

(1) Letter addressed
to the PNCB by Atty. Faylona, counsel of accused, the pertinent portion of
which reads as follows:

‘In view of the fact that the blank checks issued by your bank to
her under the abovecited account is in the posses­sion of a third party from
whom she could not recover them any­more, please close the above current
account upon receipt of this advise. 
This is being done to forestall my client and your bank of being
defrauded under said account.’ (Exh. 70).

(2)  Letter addressed to the Equitable Banking
Corporation by Atty. Faylona in behalf of accused which is of the same tenor as
Exh. 70 (Exh. 71).

(3)  Another letter addressed to the PNCB by Atty.
Faylona requesting said bank to return to accused the cancelled or rejected
checks under her current account with said bank (Exh. 72).

(4)  Another letter addressed to the Equitable
Banking Corporation signed by accused which reads as follows:

‘This will authorize you to pay to Mrs. Petra P. Farin the sum of
P4,960.00 which represents the balance of my current account No. 7-9576 when it
was closed on February 17, 1964, after she has sur­rendered to you your EBC
check book which still contains unused checks with Nos. 44061 to 44075
inclusive.’ (Exh. 73)

In retaliation, Mrs. Farin as a plaintiff filed a civil action
against accused as defendant for the recovery of P356,790.00 which was the
alleged total cash value of the checks issued by her in favor of ac­cused
docketed before the CFI of Rizal as Civil Case No. Q-8446 dated November 18, 1964.  In said civil case, and pursuant to the
agreement of the parties, the court ordered the said parties to engage the
services of a reputable public accountant who shall make the necessary
accounting of the numerous checks issued by one to the other (Annex B of
Petition).

To date, the required accounting has not yet been
accomplished.  In fact, the parties in
said civil case have not yet agreed as to who should be appointed as
accountant.”^[3]

As stated herein earlier, the Court of Appeals convicted the
petitioner, holding that “there was deceit when appellant misrepresented
to complainant that the exchange of checks would be only for the purpose of
‘activating her current account’ with the Republic Bank so that her one-million
peso loan appli­cation would be affirmed by said bank.  This is so because actually, appellant did
not use complainant’s check only to ‘activate’ appellant’s current account as
she represented, but also misappropriated the value of complainant’s check
instead of depositing it in her current account to activate it.  The result was that the checks she issued in
exchange of those of complainant were dishonored to the damage of
complainant.  The supposed application
for a one-million peso loan appears to be pure fiction, the allegation with
respect thereto not having been substantiated by competent proof.  It was evidently made in furtherance of her
scheme of fraud and swindle.”4 The Court of Appeals affirmed the
holding of the trial court that “what appellant did was to appropriate the
money of complainant which she received only in trust or as a deposit, and
therefore with the obligation to return it, which is the estafa defined in Art.
315 Sub-Sec. 1(b) of the Revised Penal Code.”5

We do not agree that under the factual circumstances of the instant
case, there was deceit employed by the accused petitioner in the agreement
between her and the complainant to exchange bank checks to each other.  It must be noted that complainant issued
checks to the peti­tioner, not just one single check and the latter likewise
issued numerous checks to the complainant, and not just only one.  It must also be considered that the exchange
of bank checks is not a usual or normal banking transaction.  The exchange is quite irregular and out of
the ordinary banking practice. 
Complainant herself testified that she entered into the agreement
without any consideration.  (t.s.n., pp.
22-23, Hearing of Dec. 4, 1968).  The number of checks involved in the exchange
was quite numerous, running to hundreds – 214 checks issued by complainant and
91 checks issued by the accused petitioner, in varying amounts and on different
dates between the period October 1963 to February 1964.

Moreover, complainant appears to be an experienced businesswoman,
wise and knowlegeable in banking practices and transactions since admittedly
she has in her own name bank accounts in some 13 established banking
institutions in Manila, such as:  1.  First United Bank; 2.  Traders Commercial Bank; 3.  Rizal Banking Corporation; 4.  Philippine National Cooperative Bank (PNCB);
5.  The China Banking Corporation;
6.  The Equitable Banking Corporation;
7.  The Pacific Banking Corporation; 8.  The Continental Bank and Trust Company;
9.  The Consolidated Bank and Trust
Company; 10.  The Citizens Bank and Trust
Company; 11.  The Philippine Bank of
Commerce; 12.  The Prudential Bank and
Trust Company; and 13.  The Merchants
Banking Corporation.6 It is not likely that complainant
was or can easily be deceived into agreeing to exchange her checks with
petitioner.  Complainant also appears to
have influential connections with the bank­ing community that it was quite easy
for her to check or verify whether petitioner had actually a million peso loan
application or not.  More than that,
approval of loan appli­cation, such as for one million pesos as in the instant
case, is not based nor dependent on the activated bank account of the applicant
but on the net worth or assets of the borrower, his solvency and the value of
collaterals offered as security for the loan.

As the trial court itself observed in its judgment which the
Court of Appeals affirmed in toto, “(d)uring the early days of
their transactions covering those exchanges of checks, nothing went wrong.  All the checks issued by the accused in
exchange of the checks received by her from the complainant were honored and
paid by the accused’s bank.  It was
however, sometime in February of 1964 when the accused’s checks issued and
exchanged for the checks she received from the complainant, (Exhs. E, F, G, T,
I, J, K, L, M, N, O, P, Q, R, S, T) were returned with notations “Drawn
Against Uncollected Deposits” and later “Stop Payment” (Exhs.
E-1 to T-1).7

Clearly therefore, the exchange of checks between accused
petitioner and complainant was from its beginning to February 1964, to the
mutual satisfaction and interest of both parties.  Hence, it is of no moment, immaterial and
inconsequential to decide who induced whom to enter and agree to the
transaction.  Neither is it essential to
inquire into the alleged “kiting” operations of the complainant for
the investigation report to the Monetary Board contained in its Board
Resolution No. 479 submitted as Annex “B” in the Brief for the
Petitioner-Accused before this Court, pages 98-106, is clearly inadmissible in
evidence against the complainant and may not be con­sidered to her
prejudice.  The report originally
submitted in petitioner’s motion for new trial as newly-discovered evidence was
ruled out to be without merits by the trial court in its order of April 3, 1975.

To Our mind, the fundamental issue to be resolved is the defense
of good faith claimed by petitioner con­tending that her liability is purely
civil.

Admittedly, the transaction between the parties involves hundreds
of thousand pesos.  The information in
fact alleges a total amount of P377,930.00 purportedly misappropriated by the
accused petitioner.  It is signi­ficant
that the amount of P377,930.00 is not represented by one single check alone but
is the combined total value of 13 checks listed in the information.  The evidence on record shows that the
complainant issued 214 checks to the accused while the latter issued 91 checks
to the former.  It is also established in
the evidence that the petitioner when informed by the bank that the checks of
the complainant were beginning to be dishonored (Exhs. 59-69) got scared and
alarmed.  She forthwith confronted the
complainant who told her that the checks will be cleared but nonetheless the
checks bounced again.  Petitioner
demanded an accounting which complainant refused.  As a last resort, petitioner consulted her
lawyer who advise her to cause the stopping of payment on petitioner’s checks
and her lawyer further wrote the PNCB (Philippine National Cooperative Bank)
and the Equitable Banking Corporation the following letter of advice:

“February 18, 1964

Philippine National Cooperative Bank

Boston Street,
Port Area

Manila

Gentlemen:

Current Account of Leonila

_______S. Perez_______

This is written on behalf of my client, Mrs. Leonila S. Perez.

In view of the fact that the blank checks issued by your bank to
her under the above-cited account is in the possession of a third party from
whom she could not reco­ver them anymore, please close the above current
account upon receipt of this advice. 
This is being done to forestall my client and your bank of being
defrauded under said account.

Very
sincerely,

S/T K. V. FAYLONA

Counsel for Mrs. Leonila
S. Perez

Conforme:

S/T Leonila S. Perez” (Exh.
“70”)

Petitioner’s counsel also wrote in behalf of petitioner a similar
letter to the Equitable Banking Corporation, Juan Luna
Street, Manila, requesting
that the current account of petitioner with the bank be closed upon receipt of
the letter, (Exh. “71”).  The
same law­yer also addressed another letter to the Philippine National
Cooperative Bank requesting the return to peti­tioner of the cancelled or
rejected checks under her current account with said bank.  (Exh. “72”) There is also another
letter by the petitioner to the Equitable Banking Corporation dated March 11, 1964 which reads:

“This will authorize you to pay to Mrs. Petra P. Farin the sum
of P4,960.00 which represents the balance of my current account NO. 7-9576 when
it was closed on February 17, 1964 after she has surrendered to you your EBC
check book which still contains unused checks with Nos. 44061 to 44075 in­clusive.”
(Exh. “73”)

The above evidence clearly indicate the grave con­cern and alarm
that took over the petitioner who sought the advice of counsel and the latter
wrote the letters hereinabove quoted, after the checks marked Exhibits 59-69
issued by complainant to petitioner started to be dishonored, as can be seen in
the debit statements given by the Republic Bank to the petitioner, Exh. 155
(Original Records, p. 249) with the following data:

The above documentary proof indubitably show that complainant’s
checks bounced first as early as February 11, 1964, causing petitioner to react
by closing her account in order to protect her own interest.  We are in conformity with petitioner’s
contention that she acted in good faith and with justifiable reasons in
stopping payments of the checks which she had issued to the complainant.  Indeed “(g)ood faith and a desire to
protect one’s interest negate criminal intent. 
In prosecutions for estafa under par. 1(b), Article 315 of the Revised
Penal Code, fraudulent misappropriation is mandatory.  But where retention or withholding of funds
was made in good faith or honestly done and for the purpose of self-protection
or where otherwise an accounting appears to be indispensable, there is no
misappropriation and therefore no estafa.” (Reply Brief for Petitioner, p.
32)

It is of record that complainant Petra Farin filed a civil case
against the accused petitioner for the recovery of P357,790.00 which was the
alleged total cash value of the checks issued by her in favor of petitioner
docketed before the Court of First Instance of Rizal as Civil Case No. Q-8446
dated November 18, 1964 which is prior to the filing of the information for
estafa against petitioner on December 3, 1965 but now increased to the amount
of P377,930.00, although based on the same transaction of bank checks exchange
between them.

In the civil case aforementioned, We note the order of the
presiding judge dated July 16, which held that the only issue is who of the
plaintiffs and defendants are indebted to each other, which involve an
accounting of said checks.  The order
reads:

“When this case was called for trial today the attorneys of
the parties manifested that their evidence consists of checks issued by the
plaintiffs and by the defendants in favor of each other; that some of these
checks were honored and some were dishonored; that the only issue is who of the
plaintiffs and defendants are indebted to each other, which involves an
accounting of said checks; and that the said accounting required the ser­vices
of a reputable and competent public accountant, inasmuch as there were so many
checks issued, all involving a considerable amount of money.  The attorneys of parties agreed to engage the
services of a reputable public accountant to be agreed by this Court; and to
submit a stipulation of facts for the consideration of the Court, which
stipulation will contain a reservation to introduce evi­dence on matter not
covered by it.” (Order dated July
16, 1965)8

Implementing the above order, the Court directed the parties to
submit the names of their nominees to act as commissioner for purposes of
making the neces­sary accounting, which however was amended by its order of
December 15, 1976 directing the constitution of a committee of three
commissioners composed of a nominee by the plaintiff Petra Farin, another
nominee by the accused and her husband and a chairman appointed by the Court.  As finally organized the committee con­sisted
of Atty. Mercedes S. Gatmaytan as Chairman with Jose Gozon (plaintiff’s
nominee) and Atty. Samy Y. Militante (defendant’s nominee) as members.

No further proceedings appear on record in said Civil Case No.
Q-8446 although there is a showing that the defendant (petitioner herein) had
filed a bond in the amount of P357,000.00 to answer and indemnify the plaintiff
for whatever amounts may be awarded to her in said case.  And neither has the commissioners met to make
the accounting as directed by the court.

Viewed in the light of the continuing and lengthen­ing duration
of the transaction which was decidedly becoming complicated and becoming more
irregular, the enormous amounts involved, the numerous checks issued as well as
the facts and circumstances immediately preceding the stoppage of payment of
petitioner checks then issued to complainant, which petitioner herself caused
by advising her bank, when complainant’s checks started to bounce and were
dishonored, and consider­ing the proceedings taken and conducted in the civil
case aforecited filed by the complainant against the petitioner for the value
of the checks exchanged by the plaintiff with the defendant petitioner, We are
persuaded and convinced that the petitioner herein acted in good faith not only
to put to a stop the ex­change of checks between them which evidently was going
beyond control but also effect an accounting of the said transaction to
determine their respective finan­cial postiions.  Such an accounting was indeed neces­sary to
find out who owes whom, for according to peti­tioner, complainant owes her
P200,000.00 while peti­tioner on the other hand owes complainant P400,000.00
(t.s.n., p. 52, August 17, 1970 hearing). 
At least, their respective accountings do not tally (t.s.n., pp. 30-33, August 17, 1970), quoted in Brief for
Peti­tioner Accused, pp. 60-61.

The need for an accounting is clear and evident for as explained
by petitioner, “the transaction is a daily and a continuing one which
lasted for five-long months (October 1963 to February 1964).  Although under said transaction both accused
and Mrs. Farin agreed to exchange checks with each other, it did not turn out
to be as simple as that.  For the
exchange of one check with the other is not of the same amount and in fact at
no single day of their transaction did the amount of checks issued by accused
to Mrs. Farin and vice-versa tally with each other.  Space wont suf­fice if we were to mention all
but one good example were the checks dated January 22, 1964.  While accused issued ten (10) checks:  P8,300.00 (Exh. 45), P20,000.00 (Exh. 45-A),
P10,000.00 (Exh. 45-B), P800.00 (Exh. 45-C), P7,340.00 (Exh. 45-D), P29,750.00
(Exh. 45-E), P39,445. (Exh. 95), P39,550.00 (Exh. 961), P38,655.00 (Exh. 97),
P38,775.00 (Exh. 94) in exchange thereof Mrs. Farin issued only two (2) checks
P12,190.00 (Exh. B-21) and P8,300.00 (Exh. B-22).  Neither does the total number of checks
issued by accused to Mrs. Farin and vice-versa tally with each other.”
(Brief for Petitioner-Accused, pp. 54-55)

Under Our jurisprudence, there can be no estafa where a previous
settlement of an account is necessary to determine the balance.  Thus, in United States vs. Camara, 28
Phil. p. 238, 241, it was held that:

“A mere shortage in an account does not prove the
misappropriation and abstraction for which punishment is provided in the
code.  (Decisions of June 9, 1884 and
November 7, 1889).  If a previous
settlement is necessary in order to determine the balance, as in the present
case, where the court ordered one to be made, the crime of estafa does not
exist.  (Decision of May 5, 1886).  Delay in the execution of a commission, or in
the delivery of a sum received by reason thereof, only involves civil
liability.  (Decisions of November 24,
1886 and December 23, 1890).”

It is also material and relevant to consider the discussion made
by the Supreme Court, speaking thru Justice Street in the case of U.S. vs.
Berbari, 42 Phil. 152, 167, on the question of the good or bad faith with
which the accused in an estafa case has acted, which We quote:

“The discussion in cases of this kind must always revolve more
or less around the question of the good or bad faith with which the accused has
acted; and it is fundamental here that, to be characterized as estafa, the
reprobated act must have been done with fraudulent intent.  The authorities upon this point are entirely
clear.  (III Viada, 4th ed., pp. 515, et
seq., especially Questions XIII, XV, XXIII, XXX, and XXXV.) And no case can be
cited where a person believed by the court to have acted honestly, under
reasonable necessity for self pro­tection, has ever been condemned under the
provision of law (Art. 535, subs. 5, Penal Code) which supplies the basis of
this pro­secution.

In considering the application of that provision both judges and
lawyers are prone to proceed upon the assumption that the mere detention of
property by one who has received it under the conditions there defined makes
out a prima facie case of estafa; but as pointed out in United States vs. Bleibel
(34 Phil. 227), this is not absolutely correct. 
It is the fraudulent misapplication, appropriation, or conver­sion of
the property which really consti­tutes the crime of estafa.  The mere delay in the fulfillment of the
trust, without a fraudulent conversion, involves only a civil liability.  In this class of cases perhaps more than any
other is applicable the maxim non est reus
nisi meñs sit rea.

x x x

A court of last resort naturally hesitates to announce any hard and
fast rule that might tend to impair the effi­cacy of article 535, subsection 5,
as a deterrent to dishonesty.  Each case
must be decided on its own particular facts. 
All that can be here safely stated is that a conviction for estafa under
that provision cannot be sustained against any person – be he agent, partner or
what not – who has in good faith retained the property committed to his care
for the purposes of reasonable self-protection against his principal in the
same or related matters.”

The pith and core of Our ruling is that under the factual but
peculiar circumstances and particu­lars of the instant case wherein a
transaction was entered into mutually by and between the petitioner-accused and
the complainant for the exchange of their respective bank checks in varying and
substantial amounts running through a five months period and thereupon said
petitioner-accused, when complainant’s checks “bounced” or were
dishonored, herself caused the stoppage of payments on her own checks issued to
the complainant in order to terminate such an irregu­lar banking transaction of
exchanging checks and there­by effect a needed accounting to determine their
res­pective liabilities for her self-protection, there is no estafa committed
under Article 315, subsection 1(b) of the Revised Penal Code, the
accused-petitioner having acted in good faith and with justifiable rea­sons,
such that her liability if any, is purely civil in nature which may be found
and decided in the civil case pending between them.

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of
conviction rendered by the respondent Court of Appeals is hereby REVERSED, and
the accused is acquitted of the charge.

Costs de oficio.

SO ORDERED.

Teehankee, (Chairman), Makasiar, and
Fernandez, JJ., concur.

Aquino, J., see concurring
opinion.

---

^[1]
Sixth Division, Ponente:  De
Castro, J.; Concurring:  Reyes and
Ericta, JJ.

^[2]
Petition, Records, pp. 8-9.

^[3]
Brief of Accused-Petitioner, pp. 3-24.

5
CA Decision, p. 41, Records

6
Brief for petitioner-accused, pp. 37-38.

7
CFI Decision, pp. 92-93, Records

8
Reply Brief for Petitioner, pp. 27-28.

---

170
Clean
Clean

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