Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 1996 > March 1996 Decisions > G.R. No. 111656 March 20, 1996 - MANUEL MANAHAN, JR. v. COURT OF APPEALS, ET AL.:




PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

[G.R. No. 111656. March 20, 1996.]

MANUEL MANAHAN, JR., Petitioner, v. HONORABLE COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, Respondents.

Homer N . Mendoza for Petitioner.

The Solicitor General for Respondents.


SYLLABUS


1. CIVIL LAW; LEASE; FAILURE TO OPT TO CANCEL A LEASE CONTRACT; ITS EFFECT. — When IFC filed Civil Case No. 26078, it correctly pursued its remedy, and the court, after upholding IFC, aptly awarded damages to the latter. IFC, however neither opted to cancel its lease contract with petitioner nor to see to the execution of the decision in Civil Case No. 26078, the net effect of which failure was to permit the contract to remain in force in accordance with Article 1659 of the Civil Code. The decision, it should be noted, was promulgated on 03 April 1978 within the period of the lease contract, i.e., for thirty-six months from May 1976 or until April 1979. IFC’s acquiescence thereafter to petitioner’s continued possession was, in effect, a continuation of the contract under the concept of an implied new lease on a month to month basis under Article 1670, of the Civil Code. The contract subsisted until IFC demanded the return of the equipment on 23 June 1981. From that moment, petitioner could well be made to answer for the corresponding civil liabilities of possessor in bad faith, such as for the loss or deterioration of the thing leased regardless of the cause of such loss or deterioration, i.e., whether on account of his fault or not.

2. CRIMINAL LAW; ESTAFA; ELEMENTS THEREOF. — The elements of estafa are: (a) that personal property is received in trust, on commission, for administration or under any other circumstance involving the duty to make delivery of or to return the same, even though the obligation is guaranteed by a bond; (b) that there is conversion or diversion of such property by the person who has so received it or a denial on his part that he received it; (c) that such conversion, diversion or denial is to the injury of another; and (d) that there be demand for the return of the property.

3. ID.; ID.; REQUIREMENT THAT FOR ESTAFA TO BE COMMITTED, THE REFUSAL OR FAILURE TO DELIVER OR RETURN IS PREDICATED ON MISAPPROPRIATION OR CONVERSION; THAT REQUIREMENT IS ABSENT IN CASE AT BAR. — Petitioner did receive the dump truck from IFC under a lease contract with the specific provision under paragraph 10 thereof requiring petitioner to return the equipment to IFC "at the expiration of the period or extended period hereof or earlier termination of (the) agreement." Although a contract of lease is not fiduciary in nature, still the clause "any other obligation involving the duty to make delivery of or to return" personal property is broad enough to include a "civil obligation." Equally essential, however, before the offense can be considered committed, is that the refusal or failure to deliver or return is, in turn, predicated on misappropriation or conversion by the accused of the subject of the obligation. The appellate court has ruled that petitioner’s "unexplained failure to return the truck to IFC during all the long time that he indisputably could have done so constituted abuse of confidence and virtual conversion." This conclusion looks to be too sweeping. Although, clearly, petitioner has incurred default in his obligation to return the leased unit, it is, nonetheless, unrebutted that he did exert all efforts to recover and retrieve, albeit belatedly and to no avail, the dump truck from Gorospe. The facts on record contrast, in our view, to the idea of a refusal to comply with an undertaking to return the property on account of misappropriation or conversion. Not to be overlooked is that this felony falls under the category of mala in se offenses that require the attendance of criminal intent. Evil intent must unite with an unlawful act for it to be a felony. Actus non facit reum, nisi mens sit rea. Petitioner might have been an inept businessman in failing to promptly obtain possession of the dump truck in Tarlac following the expiration of the sublease in favor of Gorospe; such ineptitude, nevertheless, should not be confused with criminal intent.

4. ID.; CIVIL LIABILITY; AN ACQUITTED PERSON CANNOT ALWAYS ESCAPE FROM CIVIL LIABILITY. — An acquitted person, nevertheless, cannot always escape from civil liability in the attendance of facts from which such liability might arise. Corollarily,. an acquittal based on reasonable doubt that the accused committed the crime charged does not necessarily exempt him from civil liability where a mere preponderance of evidence is required.


D E C I S I O N


VITUG, J.:


Petitioner Manuel L. Manahan, Jr., seeks, in a petition for review on certiorari, the reversal of the decision 1 of the Court of Appeals affirming with modification the judgment of the Regional Trial Court of Makati, Branch 58, 2 which has found him guilty beyond reasonable doubt of the crime of estafa.

On 10 May 1976, Petitioner, as lessee, and IFC Leasing and Acceptance Corporation ("IFC"), as lessor, entered into an Equipment Lease Agreement (Contract No. LC — 2644) over an Isuzu dump truck (Motor No. E120-206525 and Serial No. TMK47E-1732972). The lease was for a period of thirty-six (36) months from May, 1976, at a monthly rental of P3,541.20 with an initial "deposit" of P24,000.00. 3 The dump truck was delivered to petitioner on 30 April 1976. 4 The parties, on 16 September 1976, entered into another Equipment Lease Agreement (Contract No. LC — 2729) over one unit of Kimpo Hough JH65CN Payloader (Motor No. 10282261 and Serial No. JH65CN8484) 5 to last for forty-eight (48) months beginning September of 1976 at a monthly rental of P5,311.80. 6

On 15 March 1977, IFC filed a complaint for a sum of money, with replevin and damages, against petitioner before the then Court of First Instance of Rizal (Civil Case No. 26078). 7 IFC averred that petitioner had incurred "several defaults" and owned, in rentals and expenses, the sum of P160,110.18 as of 20 February 1977 on the lease of the dump truck and another P249,975.44 as of 05 March 1977 on the lease of the payloader. Aside from said amounts, IFC also prayed for 12% interest thereon, plus an equivalent of 20% of the sum, conformably with the terms of the two lease agreements.

On 03 April 1978, the court 8 rendered a decision, the decretal portion of which stated:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant (a) confirming the right of the plaintiff to the ownership and possession of the personal properties heretofore described; (b) ordering the defendant to pay the plaintiff:jgc:chanrobles.com.ph

"(1) On the first cause of action: The sum of P160,110.18, plus the interest at 12% from February 20, 1977 until fully paid, and a further amount equivalent to 20% of the amounts due, as attorney’s fees;

"(2) On the second cause of action: The sum of P249,975.44, plus interest thereon at 12% from March 5, 1977 until fully paid, and the further sum equivalent to 20% of the amount due as attorney’s fees; and

"(c) To pay the costs.

"SO ORDERED." 9

It would appear that an execution of the decision was not pursued. Instead, on 23 June 1981, IFC’s counsel, Attorney Jose Redoblado, sent a letter to petitioner about his still nestled accounts under the two contracts. Since the demand had not been heeded, IFC, this time, charged petitioner with estafa. The information was filed on 15 March 1983 and raffled to Brach 58 of the Regional Trial Court of Makati, it read:jgc:chanrobles.com.ph

"That in or about and during the period from April 30, 1976 and September 7, 1976, in the Municipality of Makati, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, in accordance to a Lease Agreement received from IFC-LEASING AND ACCEPTANCE CORPORATION One (1) Unit Isuzu Dump Truck and One (1) Unit Kimco Hough JH65CN Payloader all valued at P110,000.00, with the obligation to pay rentals as agreed upon and to return the said equipment’s upon termination of the lease period, but accused far from complying with his obligation, with intent of gain, grave abuse of confidence and to defraud the herein complainant, did then and there willfully, unlawfully and feloniously misappropriate. misapply and convert to his own personal use and benefit the said equipment’s, and despite demands failed and refused and still fails and refuses to return the said equipment’s, to the damage and prejudice of said IFC-LEASING AND ACCEPTANCE CORPORATION, represented by one ARMANDO M. MARCELO, in the aforementioned amount of P110,000.00.

"Contrary to law." 10

When arraigned on 25 July 1983, petitioner pleaded "not guilty" to the charge.

At the trial, Melecio Rayosa, records custodian of the IFC, and Leonardo Gado, a security guard and liaison officer of the Bureau of Land Transportation ("BLT"), were presented by the prosecution at the witness stand. Rayosa identified the lease agreement covering the Isuzu dump truck 11 and the delivery receipt showing that petitioner received the equipment on 30 April 1976. 12 Rayosa said that the collection department of IFC demanded from petitioner the payment of unpaid monthly rentals, and that the demand was followed by a letter’s separate accounts under the lease contracts be settled. 13 Rayosa confirmed the civil case previously filed by IFC against petitioner. 14 Gado testified, mainly, that the original registration certificate 15 of the Isuzu dump truck was surrendered to the BLT. 16

Parenthetically, the payloader, the leased equipment under Contract No. LC-2729, would appear to have, in fact, been recovered by IFC and later disposed of by it.

Petitioner admitted having entered into the lease contracts with IFC, receiving the subject units and failing to return the dump truck. 17 Apparently, the truck was subleased to one Mr. Gorospe for the hauling of aggregate materials. After the sublease was terminated, petitioner tried to retake possession of the unit but he was unsuccessful. Testimony was adduced that in June 1983, malefactors, numbering about ten persons, allegedly "men of Gorospe and Espino," dismantled the truck, loaded the parts into another truck, and left only its chassis. The matter was reported to the barangay captain but "nothing happened." Petitioner was furious when informed of the incident but there was not much, he said, that he could do. 18

On 27 July 1989, the trial court rendered its decision convicting petitioner of estafa; hence —

"WHEREFORE, premises considered, the court finds the accused guilty beyond reasonable doubt and hereby sentences him to an indeterminate penalty of 8 years and 1 day of prison mayor as minimum to 10 years and 1 day of prison mayor as maximum and to indemnify the offended party the amount of P55,000.00 without subsidiary imprisonment in case of insolvency.

"SO ORDERED." 19

Petitioner appealed to the Court of Appeals contending, among other things, that the fourth element of the crime of estafa, namely, the misappropriation or conversion by the accused of the thing received to the prejudice of another, was not present in this case. He averred that his failure to return the dump truck was due to circumstances beyond his control, and that it was not he but other persons, particularly Gorospe and Espino and their men, who unlawfully detained the vehicle. 20

On 21 May 1993, the Court of Appeals 21 promulgated its decision which affirmed, except for the penalty which was modified, the trial court’s judgment; thus:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered affirming the appealed decision, with the modification that the proper penalty which the appellant should suffer is the indeterminate penalty of four (4) years and two (2) months of prison correccionals as minimum, to ten (10) years of prison mayor as maximum. Costs against Appellant.

"SO ORDERED." 22

The appellate court ratiocinated that —

"Under Article 315, subdivision 4, paragraph 1(b) of the Revised Penal Code, the elements of estafa with abuse of confidence are:jgc:chanrobles.com.ph

"1) that money, goods, or other personal property be received by the offender in trust, or on commission, or for administration, or under any obligation involving the duty to make delivery of, or to return, the same;

"2) that there be misappropriation or conversion of such money or property by the offender, or denial on his part of such receipt;

"3) that such misappropriation or conversion or denial is to the prejudice of another;

"4) that there is a demand made by the offended party on the offender.

x       x       x


"‘All the foregoing elements are present in this case. The dump truck, a personal property was received by the accused who was under obligation to pay rentals as agreed upon and to return the said equipment upon the termination of the lease period. Accused did not return the equipment to the offended party as accused subleased it to a certain Mr. Gorospe, although accused has no authority to sub-lease it to a third person. Granting therefore that Manuel Manahan, Jr. has no intention of defrauding the owner of the truck, Accused certainly committed abuse of confidence when he sub-leased the equipment without the knowledge and consent of the owner. In sub-leasing the truck to Mr. Gorospe, Accused assumed the right to dispose of it as if it is his (Viada, 446) thereby committing conversion.’ (p. 3, Appealed Decision)

"The appropriation or conversion of money or property received, to the prejudice of the owner thereof, is the essence of estafa through misappropriation. The words ‘convert’ and ‘misappropriate’ connote an act of using or disposing of another’s property as if it were one’s own, or of devoting it to a purpose or use different from that agreed upon. (Saddul, Jr. v. Court of Appeals, 192 SCRA 277).

"Appellant’s contention that one element of estafa, that is, misappropriation or conversion, is not present in the case at bar, us untenable. It must be recalled that under the lease agreement entered into by and between complainant and appellant, any breach of the lease by the latter as lessee would entitle the lessor, upon demand, to the return and possession of the vehicle in question (Exh.’A,’ p. 175, Records). Admittedly, appellant failed to pay the stipulated monthly rentals. Despite IFC’s demand for the return of the vehicle and the decision rendered in its (IFC’s)favor in Civil Case No. 26078, appellant, had failed to give the equipment back its rightful owner. From that time on, appellant Manahan could already be considered to have committed the crime of estafa. His allegation that he could not return chattel because it had been taken by certain persons, namely, Mr. Gorospe and Capt. Espino, fails to persuade. He received IFC’s demand letter on July 6, 1981 (p. 157, Records). The judgment in Civil Case No. 26078 confirming said corporations’ right to ownership and possession of the subject leased equipment was rendered on April 3, 1978 (p. 191, ibid.). The alleged taking of the vehicle was in June, 1983 (TSN, p. 5, March 16, 1988). Had appellant returned the truck to IFC upon the latter’s demand, such taking of the dump truck by Gorospe, if it were true, would not have occurred. Clearly, Accused’s unexplained failure to return the truck to IFC during all the long time that he indisputably could have done so constituted abuse of confidence and virtual conversion.

"Appellant’s contention that he did not sublease the truck to another cannot relieve him of any liability in the present case either. For, during the time that said vehicle remained in the possession of the appellant, the complainant had been deprived of its right to use the same. In other words, there had been a disturbance of the property rights of the offended party. To repeat, the words ‘convert’ and misappropriate’ connote an act of using or disposing of another’s property as if it were one’s own." 23

On a motion for reconsideration, the Court of Appeals, 24 finding no sufficient reason to modify its decision, refused to reconsider.25cralaw:red

The petition before us would fault the appellate court in concluding that petitioner is guilty of estafa given the circumstances heretofore narrated.

Petitioner argues that the mere act of subletting the dump truck to another person without the knowledge and consent of the lessor does not necessarily constitute estafa.

There is merit in the petition.

There could be no question about the fact that petitioner, in subletting the dump truck, violated the lease contract with IFC. The pertinent paragraph of the contract, Exhibit A, provided:jgc:chanrobles.com.ph

"2. UTILITY: The Lessee agrees that the equipment under lease shall be installed and/or utilized at its premises in Manila or such other places as may be designated in the Schedule, and shall not, under any circumstances be removed therefrom without the consent of the Lessor first obtained in writing. The Lessee further agrees not to part with the possession of, sub-lease, pledge, or otherwise encumber or dispose of the leased equipment; . . .. If Lessee uses or allows the leased property to be used for illegal purposes or for purpose not permitted under this lease, Lessee agrees to reimburse Lessor for all damages sustained by Lessor as a result of such misuse including, without limitations, payments of any fine or fines which may be imposed on Lessor. In addition to, and notwithstanding its right to such reimbursement. Lessor may in such event at its option cancel this lease by notifying Lessee to (sic) such cancellation in writing." 26 (Emphasis supplied.)

Thus, when IFC filed Civil Case No. 26078, it correctly pursued its remedy, and the court, after upholding IFC, aptly awarded damages to the latter. IFC, however, neither opted to cancel its lease contract with petitioner nor to see to the execution of the decision in Civil Case No. 26078, the net effect of which failure was to permit the contract to remain in force in accordance with Article 1659 of the Civil Code. 27 The decision, it should be noted, was promulgated on 03 April 1978 within the period of the lease of contract, i.e., for thirty-six months from May 1976 or until April 1979. IFC’s acquiescence thereafter to petitioner’s contained possession was, in effect, a continuation of the contract under the concept of an implied new lease on a month to month basis under Article 1670, of the Civil Code. 28 The contract subsisted until IFC demanded the return of the equipment on 23 June 1981. From that moment, petitioner could well be made to answer for the corresponding civil liabilities of a possessor in bad faith, 29 such as for the loss or deterioration of the thing leased regardless of the cause of such loss or deterioration, i.e., whether on account of his fault or not.

But did petitioner likewise incur criminal liability, specifically under Article 315(b) of the Revised Penal Code, for estafa? Respondents reply in the affirmative, allegedly in petitioner’s —

". . . 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." 30

The elements of this crime are (a) that personal property is received in trust, on commission, for administration or under any other circumstances involving the duty to make delivery of or to return the same, even though the obligation is guaranteed by a bond; (b) that there is conversion or diversion of such property by the person who has so received it or a denial on his part that he received it; (c) that such conversion, diversion or denial is to the injury of another; and (d) that there be demand for the return of the property. 31

Petitioner did receive the dump truck from IFC under a lease contract with the specific provision under paragraph 10 thereof requiring petitioner to return the requirement to IFC" at the expiration of the period extended period thereof or earlier termination of (the) agreement." 32 Although a contract of lease is not fiduciary in nature, still the clause "any other obligation involving the duty to make delivery of or to return" personal property of broad enough to include a "civil obligation." 33 Equally essential, however, before the offense can be considered committed, in that the refusal or failure to deliver or return is, in turn, predicted on misappropriation or conversion by the accused of the subject of the obligation.

The appellate court has ruled that petitioner’s "unexplained failure to return the truck to IFC during all the long time that he indisputably could have done so constituted abuse of confidence and virtual conversion." 34 This conclusion looks to be too sweeping. Although, clearly, petitioner has incurred default in his obligation to return the leased unit, it is, nonetheless, unrebutted that he did exert all efforts to recover and retrieve, albeit belatedly and to no avail, the dump truck from Gorospe. The facts on record contrast, in our view, to the idea of a refusal to comply with an undertaking to return the property on account of misappropriation or conversion.

Not to be overlooked is that this felony falls under the category of mala in se offenses that require the attendance of criminal intent. Evil intent must unite with an unlawful act for it to be a felony. Actus non facit reum, nisi mens sit rea. 35 Petitioner might have been an inept businessman in failing to promptly obtain possession of the dump truck in Tarlac following the expiration of the subleases in favor of Gorospe; such ineptitude, nevertheless, should not be confused with criminal intent. 36

At any rate, any reasonable doubt must be resolved in favor of the accused. Indispensable for conviction is —

". . . such proof to the satisfaction of the court, keeping in mind the presumption of innocence, as precludes every reasonable hypothesis except that which it is given to support. It is not sufficient for the proof to establish a probability, even though strong, that the fact charged of more likely to be true than the contrary. It must establish the return of the fact to a reasonable and moral certainty — a certainty that convinces and satisfies the reason and the conscience of those who are to act upon it." 37

An acquitted person, nevertheless, cannot always escape from civil liability in the attendance of facts from which such liability might arise. 38 Corollarily, an acquittal based on reasonable doubt that the accused committed the crime charged not does not necessarily exempt him form civil liability where a mere preponderance of evidence is required. 39 Petitioner must, therefore, be held responsible for the value (P55,000.00) of the lost dump truck.

WHEREFORE, petitioner is hereby ACQUITTED of the crime of estafa under Article 315 (1) (b) of the Revised Penal Code but he shall pay the IFC Leasing and Acceptance Corporation the amount of P55,000.00 representing the value of the lost dump truck with 12% interest per annum from July 1981 (the month following the demand of 23 June 1981) until full payment of said amount. Costs against petitioner.

SO ORDERED.

Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.

Endnotes:



1. Penned by Associate Justice Alfredo L. Benipayo and concurred in by Associate Justices Serafin E. Camilon and Fermin a. Martin, Jr.

2. Presided by Judged Zosimo Z. Angeles.

3. Exh. A.

4. Exh. B.

5. The agreement was not attached to the records.

6. Exh. D.

7. Exh. D.

8. Presided by Judged Eutropio Migriño.

9. Records, pp. 190-191.

10. Records, p. 1.

11. Exh. A.

12. Exh. B.

13. Exh. C.

14. TSN, January 9, 1985, p. 6.

15. Exh. F.

16. TSN, May 8, 1985, p. 3.

17. TSN, March 3, 1988, p. 3.

18. Testimony of Leolando Mallari, TSN March 1, 1988, pp. 14-20.

19. Rollo, p. 18.

20. Brief for accused-appellant, CA Records, pp. 38 & 43.

21. Through Associate Justices Alfredo L. Benipayo, Serafin E. Camilon and Fermin A. Martin, Jr.

22. Rollo, p. 24.

23. Rollo, pp. 22-23.

24. Through Associate Justices Benipayo, Martin, Jr. and Minerva G. Reyes.

25. Rollo, p. 26.

26. Records, p. 154.

27. "Art. 1659. If the lessor or the lessee should not comply with the obligation set forth in articles 1654 and 1657, then aggrieved party may ask for the rescission of the contact and indemnification for damages, for damages, or only the latter, allowing the contract to remain in force."cralaw virtua1aw library

28. "Art. 1670. If at the end of the contract the lessee should continue enjoying the thing leased for thirteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in articles 1682 and 1687. The other terms of the original contract shall be revived."cralaw virtua1aw library

While the Civil Code contains no special provisions covering personal property, its provisions, however, on the lease of real property which are not peculiar to immovable property could be made applicable.

29. "Art. 1671. If the lessee continue enjoying the thing after the expiration of the contract, over the lessor’s objection, the former shall be subject to the responsibilities of a possessor in bad faith."cralaw virtua1aw library

30. Article 315 (b), Revised Penal Code.

31. Saddul, Jr., v. Court of Appeals, 192 SCRA 277.

32. Exh. A-2.

33. See U.S. v. Lim, 3 Phil. 682.

34. Rollo, p. 23.

35. People v. Pacana, 47 Phil. 48.

36. People v. Pacana, supra.

37. People v. Ng, 142 SCRA 615, 622.

38. Bautista v. Court of Appeals, 213 SCRA 231; Calalang v. Intermediate Appellate Court, 194 SCRA 514.

39. Padilla v. Court of Appeals, 129 SCRA 558.




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  • Adm. Matter No. 94-5-42-MTC March 20, 1996 - QUERY OF JUDGE DANILO M. TENERIFE

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  • Adm. Matter No. 95-1-07-RTC March 21, 1996 - JDF ANOMALY IN THE RTC OF LIGAO, ALBAY

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  • G.R. Nos. 112457-58 March 29, 1996 - PEOPLE OF THE PHIL. v. ROMEO CARTUANO, JR.

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  • G.R. Nos. 112708-09 March 29, 1996 - REPUBLIC OF THE PHIL. v. SANDIGANBAYAN, ET AL.

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  • G.R. No. 116792 March 29, 1996 - BANK OF THE PHILIPPINE ISLANDS, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 117055 March 29, 1996 - SAN MIGUEL CORPORATION v. NATIONAL LABOR RELATIONS COMMISSION

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  • G.R. No. 121527 March 29, 1996 - MARCELO L. ONGSITCO, ET AL. v. COURT OF APPEALS, ET AL.