Case Digest: Chee Kiong Yam, et al., v. Hon. Nabdar J. Malik, et al., G.R. No. L-50550-52, October 31, 1979

Commercial Law | Mutuum

Recit Ver: 

• Criminal Case No. M-111:
• Rosalinda M. Amin charges Yam Chee Kiong and Yam Yap Kieng with estafa for misappropriating P50,000.00.
• The amount was received from Rosalinda M. Amin as a loan.
• Criminal Case No. M-183:
• Tan Chu Kao charges Yam Chee Kiong, Jose Y.C. Yam, Ampang Mah, and Anita Yam alias Yong Tay with estafa involving P30,000.00.
• The complaint states the P30,000.00 was "a simple loan."
• Criminal Case No. M-208:
• Augusto Sajor charges Jose Y.C. Yam, Anita Yam alias Yong Tai Mah, Chee Kiong Yam, and Richard Yam with estafa involving P20,000.00.
• The complaint does not explicitly state the amount was received as a loan.
• However, a sworn statement by Augusto Sajor confirms the amount was a "loan."
• Municipal Judge Nabdar J. Malik held preliminary investigation, found a prima facie case, and issued warrants of arrest.
• Whether the respondent judge have acted without jurisdiction, in excess of jurisdiction and with grave abuse of discretion. YES
• The facts alleged in the complaints did not constitute estafa.
• Misappropriation of funds requires the obligation to return the same money or property received, which is not present in loan transactions.
• The complaints clearly state the transactions as loans, not involving an obligation to return the same money.
• Municipal court lacks jurisdiction due to penalties exceeding its authority.
• The criminal complaints declared null and void. Respondent judge ordered to dismiss the cases and recall warrants of arrest and rebuked for ignorance of elementary law.

Facts: 

• Criminal Case No. M-111:
• Rosalinda M. Amin charges petitioners Yam Chee Kiong and Yam Yap Kieng with estafa through misappropriation of the amount of P50,000.00. 
• The petitioners received the amount from respondent Rosalinda M. Amin "as a loan." 
• Civil Case No. N-5, filed independently by Rosalinda M. Amin, also refers to the P50,000.00 as a "simple business loan" with interest.
• Criminal Case No. M-183:
• Tan Chu Kao charges petitioners Yam Chee Kiong, Jose Y.C. Yam, Ampang Mah and Anita Yam, alias Yong Tay, with estafa through misappropriation of the amount of P30,000.00. 
• The complaint states on its face that the P30,000.00 was "a simple loan."
• Civil Case No. N-8 filed by Tan Chu Kao for the same amount describes it as "a simple loan."
• Criminal Case No. M-208: 
• Augusto Sajor charges petitioners Jose Y.C. Yam, Anita Yam alias Yong Tai Mah, Chee Kiong Yam and Richard Yam, with estafa through misappropriation of the amount of P20,000.00. 
• Unlike the other cases, the complaint does not explicitly state the amount was received as a loan
• However, in a sworn statement submitted to respondent judge to support the complaint, respondent Augusto Sajor states that the amount was a "loan."

Municipal Judge Nabdar J. Malik of Jolo, Sulu:

• Held in the preliminary investigation of the charges of estafa filed by respondents against petitioners that there was a prima facie case against the latter;
• Issued warrants of arrest against petitioners after making the above determination; and
• Undertook to conduct trial on the merits of the charges.

Issue: 

• Whether the respondent judge have acted without jurisdiction, in excess of jurisdiction and with grave abuse of discretion because the facts recited in the complaints did not constitute the crime of estafa. YES

Held:

The facts alleged in the three criminal complaints do not constitute estafa through misappropriation.

Estafa through misappropriation is committed according to Article 315, paragraph 1, subparagraph (b), of the Revised Penal Code as follows:

Art. 315. Swindling (Estafa). — Any person who shall defraud another by any of the means mentioned herein below shall be punished by:

xxx xxx xxx

1. With unfaithfulness or abuse of confidence namely:

xxx xxx xxx

b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal property received by the offender in trust or 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.

In order that a person can be convicted under the abovequoted provision, it must be proven that he has the obligation to deliver or return the same money, goods or personal property that he received. Petitioners had no such obligation to return the same money, i.e., the bills or coins, which they received from private respondents. This is so because as clearly stated in criminal complaints, the related civil complaints and the supporting sworn statements, the sums of money that petitioners received were loans.

The nature of simple loan is defined in Articles 1933 and 1953 of the Civil Code.

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 loam ownership passes to the borrower.

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.

It can be readily noted from the above-quoted provisions that in simple loan (mutuum), as contrasted to commodatum, the borrower acquires ownership of the money, goods or personal property borrowed. Being the owner, the borrower can dispose of the thing borrowed (Article 248, Civil Code) and his act will not be considered misappropriation thereof.

In U.S. vs. Ibañez, 19 Phil. 559, 560 (1911), this Court held that it is not estafa for a person to refuse to nay his debt or to deny its existence.

We are of the opinion and so decide that when the relation is purely that of debtor and creditor, the debtor can not be held liable for the crime of estafa, under said article, by merely refusing to pay or by denying the indebtedness.

It appears that respondent judge failed to appreciate the distinction between the two types of loan, mutuum and commodatum, when he performed the questioned acts, He mistook the transaction between petitioners and respondents Rosalinda Amin, Tan Chu Kao and Augusto Sajor to be commodatum wherein the borrower does not acquire ownership over the thing borrowed and has the duty to return the same thing to the lender.

Under Sec. 87 of the Judiciary Act, the municipal court of a provincial capital, which the Municipal Court of Jolo is, has jurisdiction over criminal cases where the penalty provided by law does not exceed prision correccional or imprisonment for not more than six (6) years, or fine not exceeding P6,000.00 or both, The amounts allegedly misappropriated by petitioners range from P20,000.00 to P50,000.00. The penalty for misappropriation of this magnitude exceeds prision correccional or 6 year imprisonment. (Article 315, Revised Penal Code), Assuming then that the acts recited in the complaints constitute the crime of estafa, the Municipal Court of Jolo has no jurisdiction to try them on the merits. The alleged offenses are under the jurisdiction of the Court of First Instance.

Respondents People of the Philippines being the sovereign authority can not be sued for damages. They are immune from such type of suit.

With respect to the other respondents, this Court is not the proper forum for the consideration of the claim for damages against them.

WHEREFORE, the petition is hereby granted; the temporary restraining order previously issued is hereby made permanent; the criminal complaints against petitioners are hereby declared null and void; respondent judge is hereby ordered to dismiss said criminal cases and to recall the warrants of arrest he had issued in connection therewith. Moreover, respondent judge is hereby rebuked for manifest ignorance of elementary law. Let a copy of this decision be included in his personal life. Costs against private respondents.