ERLINDA ASEJO, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.

Asejo versus People of the Philippines

The Case

This is the story of Erlinda Asejo, who was charged with the crime of estafa, swindling, together with her husband, for receiving one hundred thousand pesos from Vilma Castro and failing to return it. The case matters because it settles two questions that examiners love: first, whether the crime of estafa by misappropriation or conversion requires a formal, written demand, and second, whether money received under a trust undertaking is held in trust or merely borrowed. The Supreme Court answers both against the accused, and in doing so draws a clean line between a trust and a loan.

Procedural History

Erlinda Asejo and her husband Eliseo were charged with estafa before the Regional Trial Court of Quezon City, Branch 104. Only Erlinda was arraigned, and she pleaded not guilty; her husband remained at large and was never tried. After trial, the Regional Trial Court convicted her as principal of estafa and sentenced her to an indeterminate penalty of four years and two months of prision correccional as minimum to nine years and six months of prision mayor as maximum, and ordered her to pay the complainant one hundred thousand pesos.

She appealed to the Court of Appeals, which affirmed the conviction but modified the penalty, raising the maximum to thirteen years and one day of reclusion temporal. She then came to the Supreme Court by petition for review, asking that the judgment of conviction be reversed.

Facts

On April 30, 1998, the Asejo spouses went to the house of Vilma Castro to borrow one hundred thousand pesos. The money was to be shown to a bank as show money, to make it appear that the Asejos were financially liquid. On May 6, 1998, Erlinda returned to Castro's house, received the amount, and signed a Trust Undertaking. That document acknowledged receipt of one hundred thousand pesos, stated that the amount was extended and received not as a loan or credit and without interest, and bound the signers to return the same amount on or before July 18, 1998, without need of prior demand.

When the obligation fell due, Castro went to the spouses to demand payment, but she was unable to collect. A corroborating witness, Alberto Bato, testified that he saw Erlinda at Castro's house on May 6, 1998, and that he was called to sign as a witness to the Trust Undertaking.

Erlinda admitted receiving the one hundred thousand pesos but claimed it was Castro's down payment for a lot she was selling. She said they had agreed on a price of two hundred fifty thousand pesos, with one hundred thousand as down payment, but that Castro withdrew and demanded the return of her money. Erlinda returned only fifteen thousand pesos and six pigs allegedly valued at seventeen thousand four hundred ninety eight pesos. She also claimed that in 1999 she was harassed into signing an antedated Trust Undertaking. The trial court rejected her version, finding among other things that the property was already mortgaged and sold at public auction on May 8, 1998, and that the Trust Undertaking was already attached to the affidavit-complaint filed in September 1998, so it could not have been signed in 1999.

Issues

• Whether or not a formal demand is required to hold the petitioner liable for estafa under Article 315, paragraph 1, subparagraph b, of the Revised Penal Code.
• Whether or not the amount received was pursuant to a loan rather than a trust agreement, such that the liability would be merely civil and not criminal.

Applicable Provisions

Article 315 of the Revised Penal Code, in its relevant paragraphs, provides:

Article 315. Swindling (estafa). Any person who shall defraud another by any of the means mentioned hereinbelow shall be punished by: 1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos; and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each additional 10,000 pesos; but the total penalty which may be imposed shall not exceed twenty years. In such cases, and in connection with the accessory penalties which may be imposed and for the purpose of the other provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal, as the case may be; provided that in the cases mentioned, the fraud be committed by any of the following means: With unfaithfulness or abuse of confidence, namely: (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.

This is the very provision under which the petitioner was convicted, and its text supplies the elements of the crime and the penalty imposed.

Ruling

On the first issue, the Court held that the petition has no merit and that a demand in estafa under Article 315, paragraph 1, subparagraph b, need not be formal or written. The law is silent as to the form of the demand, and as the Court of Appeals put it, when the law does not qualify, we should not qualify. The failure of the prosecution to present a written demand is therefore not fatal. The Court recalled its earlier ruling in Tubb versus People, where a mere verbal inquiry about money entrusted to the accused was held to be tantamount to a demand, and it noted that here demand was in fact made, as both Castro and the petitioner admitted in their testimonies.

On the second issue, the Court held that the transaction was a trust and not a loan. Article 315, paragraph 1, subparagraph b, expressly includes money in its scope, and the law already accounted for the nature of money, that the exact bills and coins received cannot be returned. As long as money is received in trust, on commission, for administration, or under an obligation to return, failure to account for it upon demand is punishable. The Court adopted the Solicitor General's distinction: in a trust agreement, the transfer of property to the trustee is mere physical possession and not juridical possession, whereas in a loan the debtor acquires juridical possession and becomes the owner. Here the money was entrusted for the sole purpose of serving as show money to the bank, so the petitioner did not acquire the right to dispose of it as she saw fit; she had the obligation to account for it. The Trust Undertaking itself stated that the amount was received not as a loan or credit, and under the parol evidence rule she could not vary those written terms by claiming the money was a down payment for a sale.

The Court also laid out the elements of estafa with abuse of confidence under Article 315, paragraph 1, subparagraph b: that the money, goods, or other personal property be 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; that there be misappropriation or conversion of such money or property by the offender, or denial on his part of such receipt; that such misappropriation or conversion or denial is to the prejudice of another; and that there is a demand made by the offended party to the offender. It found all four present: the petitioner admitted receiving the amount in trust, the amount was misappropriated or converted, the misappropriation was to Castro's prejudice, and Castro demanded payment.

Doctrine

First, in estafa under Article 315, paragraph 1, subparagraph b, of the Revised Penal Code, the demand required by law need not be formal or written; an oral demand, or even a mere verbal inquiry about the money entrusted, suffices, because the law does not qualify the form of the demand and the courts should not qualify it either.

Second, money may be the subject of estafa by misappropriation or conversion. The law already contemplated that the exact bills and coins received in trust cannot be returned; what matters is that the money was received in trust or under an obligation to return it, and that the offender failed to account for it upon demand.

Third, the distinction between a trust and a loan lies in the kind of possession transferred. In a trust, the trustee receives mere physical possession and holds the thing for a particular purpose, with a fiduciary obligation to account for it; in a loan, the debtor receives juridical possession and becomes the owner, free to dispose of the amount. Where money is entrusted for a specific purpose, such as show money, the recipient may not spend it as she pleases.

Fourth, under the parol evidence rule, a party cannot vary the terms of a written agreement, such as a trust undertaking stating that the amount was received not as a loan or credit, by claiming a different transaction.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, finding Erlinda Asejo guilty of estafa under Article 315, paragraph 1, subparagraph b, of the Revised Penal Code, sentencing her to an indeterminate penalty of four years and two months of prision correccional as minimum to thirteen years and one day of reclusion temporal as maximum, and ordering her to pay the complainant one hundred thousand pesos.

Remember This

Memorize this line: in estafa by misappropriation or conversion, demand need not be formal or written, and money received in trust for a particular purpose is held in trust, not borrowed. Examiners use this case to test the elements of estafa under Article 315, paragraph 1, subparagraph b, the trust versus loan distinction, and the rule that when the law does not qualify, we should not qualify.