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A.M. No.

297-MJ September 30, 1975


AVELINA SERAFIN, complainant,
vs.
MUNICIPAL JUDGE SANTIAGO LINDAYAG, respondent.

TEEHANKEE, J.:
The Court finds from the documentary evidence and established facts of the case that respondent municipal judge grossly
failed to perform his duties properly and is unfit for the office and therefore orders his separation from the service. It is selfevident from the very face of the "criminal complaint" for estafa, and the supporting sworn statements filed with and sworn
to before him as well as the very notes of preliminary examination taken by him that the "criminal" charge against
complainant showed no vestige of the essential elements of estafa but simply recited complainant's failure to pay the
creditors as alleged offended parties a simple indebtedness. Respondent judge's subsequent crass attempt at exculpation
by the submission of spurious evidence to cover up his liability is more reprehensible than his guilt under the charge and
shows his unworthiness for the office.
Complainant originally filed on October 19, 1971 with the Secretary of Justice the instant administrative complaint for
capricious and malicious admission in his court of a criminal complaint for estafa against complainant and causing her
wrongful arrest and detention, against respondent Santiago Lindayag, municipal judge of Guiguinto, Bulacan. On
December 28, 1971, then Executive Judge Andres Sta. Maria to whom the administrative complaint had been referred
sent his indorsement to the Department of Justice recommending the exoneration of respondent on the ground that
complainant, assisted by her counsel, had filed a motion to withdraw her complaint.
No further action was taken until January 29, 1973 when the Department of Justice forwarded the record of the case to
this Court. After the transfer to this Court of the power of administrative supervision over all inferior courts with the power
to discipline and dismiss judges under the 1973 Constitution, 1 the Court, in view of the gravity of the charges as borne out
by the documentary evidence, referred anew on October 29, 1973 the complaint to the District Judge of Baliwag, Bulacan
for investigation and report, notwithstanding the previously reported withdrawal of the complaint. The Court per its
Resolution of December 19, 1973 denied respondent's petition to "consider the matter close and terminated" by virtue of
the previous recommendation in 1971 of Judge Sta. Maria and directed the District Judge to proceed with the
investigation.
On February 11, 1974, the Court received the overly long and detailed 34-page (single-space) report 2 of the investigation
conducted by Judge Juan F. Echiverri of the Baliwag court of first instance. The complaint with its documentary evidence,
the Investigator's Report and record of the proceedings and the evidence of record amply substantiate the complaint,
notwithstanding complainant's desistance because she afterwards took pity on respondent and no longer wanted to be
involved in the case, as manifested by her when she appeared at the hearing and submitted the documentary evidence
supporting her complaint, pursuant to the process issued by the Investigating Judge for her attendance.
The criminal complaint for estafa against complainant (docketed as Criminal Case No. 1602) was filed on July 21, 1971
with respondent judge by then Guiguinto chief of police Juan P. Estrella at the instance of Carmelito Mendoza, then
municipal secretary and his wife Corazon Mendoza. Said complaint sworn to by said police chief before respondent judge
on its face does not charge any crime but merely recites complainant's failure to pay asimple indebtedness, thus:
That on or about the 20th day of July 1971, in the Municipality of Guiguinto, Province of Bulacan,
Philippines and within the preliminary jurisdiction of this Honorable Court, the above-named accused with
intent of gain did then and there willfully, unlawfully and feloniously owe the sum of ONE THOUSAND
FIVE HUNDRED (P1,500.00) PESOS, Philippine Currency, that said amount has long been due since
January 28, 1971 and Mrs. Avelina N. Serafin failed to pay her account in spite ofdue notice sent by
registered mail and up to the present she failed to settle her obligation. 3

The supporting statements 4 executed and sworn to by the Mendoza spouses as offended parties before respondent judge
likewise show on their very face that their complaint was about a simple debt of P1,500.00borrowed by complainant from
Mrs. Mendoza and which she had failed to repay despite her promise to do so by January and February, 1971. (Both
sworn statements recite that complainant borrowed the amount - "ayumutang..... si ginang Avelina N. Serafin" and did not
pay the same.)
The notes taken during the preliminary examination conducted by respondent 5, consisting of seven simple questions
propounded by police chief Estrella as "private prosecutor" and of seven simple answers thereto given by Carmelito
Mendoza show beyond doubt that there is novestige of the essential elements of estafa as provided in Article 315 of the
Revised Penal Code but that they had simply lent complainant the sum of P1,500.00 without any collateral or security
because complainant was an old friend ("sapagkat matagal na naming siyang kaibigan"), that they believe her to be a
good person ("at ang paniwala namin ay mabuti siyang tao") and that when they wrote her a letter of demand, she
promised to pay them and said that if she failed to keep her promise, they could get her valuable things at her home.
In the same notes of preliminary examination, there is recorded as one "searching question and (sic) provided for by
Republic Act sec. (sic) 6" 6 what appears to be respondent's question as to whether complainant had paid the money
taken by her and Mendoza's answer in the negative, stating that such non-payment was the reason why they filed the
complaint so that she would be punished! 7
In admitting such a "criminal complaint" that was plainly civil in aspects from the very face of the complaint and the
"evidence" presented, and issuing on the same day the warrant of arrest upon his utterly baseless finding "that the
accused is probably guilty of the crime charged," respondent grossly failed to perform his duties properly which in this
instance was to dismiss the complaint outright since it is elementary that non-payment of an indebtedness is not a criminal
act, much less estafa; and that no one may be criminally charged and punished for non-payment of a loan of a sum of
money.
In recklessly issuing the warrant of arrest on July 22, 1971, respondent further enabled police chief Estrella as "private
prosecutor" of complainant's creditors, the Mendozas, to avail of the despicable practice of some police officers to use the
warrant as a means of harassment and serve it on Saturdays when the person arrested cannot raise bail, as in fact
complainant was arrested on a Saturday, July 25, 1971 at a time when the bonding companies were closed for business
and she consequently had to undergo the humiliation of being detained for three days in the municipal jail up to July 28,
1971 when she finally succeeded in putting up the P1,000.-bail bond fixed for her release. 8
A modicum of circumspection on the part of respondent could have easily prevented such an injustice and trampling upon
of the complainant's basic rights. Indeed, two months afterwards, upon the merit of complainant's counsel's motion to
quash the criminal complaint (which motion, however, somehow and notably got lost from the record of the case, infra)
respondent in an Order dated September 30, 1971 ultimately found the quashal motion as "well taken" and ordered the
dismissal of the case.
The Judiciary Act, Republic Act No. 296, precisely requires in section 87 thereof that "(N)o warrant of arrest shall be
issued by any municipal judge in any criminal case filed with him unless he first examines the witness or witnesses
personally, and the examination shall be under oath and reduced to writing in the form of searching questions and
answers." Respondent utterly failed to comply with this requirement of searching questions and answers in his
examination of the complaining witness. Worse, the one question propounded by him shows that he did comprehend that
the "criminal" complaint involved a mere failure to pay a simple indebtedness and yet he found probable cause of the
herein complainant's guilt of estafa and forthwith issued the warrant of arrest against her which would indicate that
either he believed that non-payment of an indebtedness constitutes the crime of estafa which would make him guilty of
gross ignorance of the law or although knowing the law, of nevertheless disregarding it and giving due course to the town
police chief's "prosecution" on behalf of the municipal secretary which would constitute an utter betrayal of his oath of
office to render justice to every man.
It should also be noted that the Court directed the Investigating Judge to include in his report of investigation certified true
copies of the complete records of the criminal case thus filed against complainant. This could not be wholly complied with,

due to the loss of some of the records of the said Criminal Case No. 1602, attributed by respondent to damage wrought
by the 1972 floods.
Strangely enough, however, the motion to quash filed by complainant through counsel which was eventually granted by
respondent after two months was allegedly never found. Said motion to quash would have been most likely on the selfevident ground that the facts charged do not constitute an offense since no evidence whatever was presented by herein
complainant in support thereof and respondent's order of September 30, 1971 granting the same and dismissing the case
made no mention of any counter-evidence from complainant but simply granted the same as "meritorious and welltaken". 9 If so, the motion to quash would have further reinforced the complaint that respondent either out of ignorance or
partiality and malice issued the baseless warrant of arrest. Respondent, notwithstanding the hearing given him on
September 12, 1974 by the Court and a further opportunity to submit a memorandum which was filed by him on
November 11, 1974, did never clarify or explain to the Court's satisfaction this matter as well as his other anomalous
actions, as set forth in this decision.
The alleged loss of some records of the case furthermore furnished respondent the occasion to include in the records of
the case (as submitted by him to the Investigator) a purported Amended Complaint 10 allegedly executed and sworn to
before him by police chief Estrella on the same date as the original criminal complaint (which would introduce the element
of estafa by alleging that complainant borrowed the sum of P1,500.00 from the Mendozas on the promise to buy on their
behalf some ornamental lamps but that she defrauded them, neither buying the lamps nor returning the money) and
another set of purported notes of preliminary examination 11 based on the Amended Complaint which respondent allegedly
conducted within 30 minutes of the examination conducted by him as per the original notes of preliminary
examination, 12 supra, (which would apparently justify his finding of probable cause and issuance of the warrant of arrest)
but both documents were found by the Investigator to be spurious. From an examination of the record and the
evidence, the Court finds in order the Investigator's findings and conclusion, as follows:
Indeed, the alleged amendment (Exh. 2) and the Notes of the Preliminary Examination (Exhs. 1, 1-a, 1-B,
1-c and 1-d) if admitted as genuine and authentic part of the records of Crim. Case 1602 would find the
charges of the complainant herein entirely baseless. But, as indicated in pages 17-18 herein, even only
a superficial examination of the appearance and condition of these documents, the manner it was
probably treated and dirtied, the alleged signature of Chief of Police Juan P. Estrella, as well as the
absence of "staple-holes on the top and sides of these documents" which are present in the admitted
genuine and authentic records of said Crim. Case 1602, would lead us to the inescapable conclusion that
these Exhibits (1, 1-a, 1-b, 1-c, 1-d and 2) are definitely not genuine and authentic parts of the records of
Crim. Case No. 1602.
It is conceivable that two preliminary examinations of a criminal case could take place within the space
of 30 minutes after the first one was taken.
Painful as it may be, we feel duty bound to conclude and so find that respondent acted whimsically, and
capriciously in giving due course to the estafa complaint (Exh. 1 D), and issuing the warrant for the arrest
of Avelina N. Serafin, complainant herein, especially considering that later on Sept. 30, 1971, said
respondent found that the Motion to Quash filed by counsel for the accused was "meritorious and well
taken the same is granted" and consequently the case was dismissed. 13
In the Court's view, such a crass attempt at exculpation and cover-up by the submission of spurious evidence as
supposed records of the criminal case is more reprehensible than his guilt under the charge and shows his unworthiness
for the office.
A word as to then police chief Juan P. Estrella. The Court has examined the two complaints allegedly executed by him as
of the same date, July 21, 1971 and fully concurs with the Investigator's observation that a comparison of Estrella's
alleged signature on the purported Amended Complaint with his admittedly genuine signature on the original complaint
(Exhs. A and D) 14 would show that the former alleged signature is "NOT GENUINE". 15 Respondent never presented
Estrella at the investigation to testify as to the authenticity of his alleged signature or the alleged second preliminary
examination based on the purported Amended Complaint. In respondent's memorandum submitted to this Court on

November 11, 1974, there is, however, submitted as Annex "A" a photocopy of an affidavit purportedly executed on
September 30, 1974 by Estrella attesting to his having executed an Amended Complaint and as to the genuineness of his
signature thereon, notwithstanding the evident dissimilarity and disparity thereof, to the naked eye, with his admittedly
genuine signature on the original complaint. This matter shall be referred to the National Bureau of Investigation for the
determination of the genuineness of said signature on the purported Amended Complaint, as now belatedly claimed by
Estrella in his affidavit and contrary to the Investigator's finding, which claim if determined to be untrue, would warrant his
criminal prosecution.
This referral, however, can in no way affect the disposition of the case at bar. Such belated affidavit of Estrella can not be
admitted at this stage. Nevertheless, assuming that there were such a purported amended complaint and a second
preliminary examination conducted by respondent on the basis thereof, still a judge of discernment and circumspection
would have been wary of such a second sworn complaint on the very same day totally contradictory of the first complaint
which referred to a plain indebtedness and was manifestly oblivious of the sacredness of an oath and intended to make
out a case of instant estafa regardless of the true facts, as recited by the alleged offended parties in their original sworn
statements and demand letter for payment.
Even prescinding from the aggravation of the cover-up, the Court finds that the penalty of dismissal is called for, in line
with the precedents and standards set by it.
In the analogous case of Carreon vs. Flores, 16 the Court ordered therein respondent municipal judge's separation from
the service for having rendered a verdict of conviction against therein complainant for alleged theft of about a cavan of
palay which could in no way be factually or legally justified, in that the essential elements of unlawful taking and that the
property stolen belonged to another were lacking.
As stressed therein by the Court citing other precedents, "(A) judge who disregards deliberately or is ignorant of the basic
fundamentals of law and justice is unfit to continue in office. Respondent's separation from the service is thus called for, in
line with the Court's action in Tadiar vs. Caces 17 (dismissing therein respondent judge for dereliction of duty in resolving a
motion to dismiss a criminal case only after 18 months and failing to file the same and serve a copy thereof on the
prosecution) and in Municipal Council of Casiguran Quezon vs. Morales18 (dismissing therein respondent judge for
unjustified absences from his station and being "unmindful of the exigencies of the public service and neglectful of his
duties to the prejudice of the residents of Casiguran")."
ACCORDINGLY, respondent is hereby dismissed from the office of municipal judge of Guiguinto, Bulacan.
The Clerk of Court is directed to endorse to the Chief, National Bureau of Investigation, the original complaint and
purported amended complaint both allegedly executed by former Guiguinto chief of police Juan P. Estrella as per his
affidavit submitted with respondent's memorandum of November 11, 1974 as well as other pertinent documents and
exhibits for comparison and determination of the genuineness of said signatures and for the filing of the proper criminal
prosecution should the findings of the National Bureau of Investigation so warrant.
SO ORDERED.

[G.R. No. L-2509. November 29, 1968.]


NILDA SURA, in her behalf and in behalf of her minor child VICENTE MARTIN, JR., Plaintiff-Appellee, v. VICENTE
SILVESTRE MARTIN, SR., Defendant-Appellant.
Bartolome Sim. Palma for Appellee.
Adrian H. Villasis and Plaridel S. Katalbas, for Defendant-Appellant.
SYLLABUS
1. REMEDIAL LAW; JUDGMENTS; FAILURE TO COMPLY WITH A FINAL AND DECLARATORY JUDGMENT, NOT
DISOBEDIENCE TO BE CONSIDERED INDIRECT CONTEMPT. The orders for the arrest and imprisonment of
defendant for contempt for failure to satisfy a judgment to pay past and future support are illegal because such judgment
is a final disposition of the case and is declaratory of the rights or obligations of the parties. Under Section 3(b), Rule 71 of
the Rules of Court, the disobedience to a judgment considered as indirect contempt refers to a special judgment which is
defined in Section 9, Rule 39 of the Rules of Court, as that which requires the performance of any other act than the
payment of money, or sale or delivery of real or personal property which must be enforced by proper contempt
proceedings.
2. ID.; ID.; EXECUTION OF; IMPRISONMENT FOR NON-PAYMENT OF DEBT VIOLATIVE OF THE CONSTITUTION.
Where the sheriffs return shows that the judgment debtor in an action for support was insolvent, the orders for the arrest
and imprisonment of the defendant for failure to satisfy the judgment, in effect, authorized his imprisonment for debt in
violation
of
the
Constitution.
3. ID.; ID.; ID.; WHERE DISOBEDIENCE OF A WRIT OF EXECUTION NOT CONTEMPTIBLE. The writ of execution
issued on the judgment with respect to past support required "the sheriff or other proper officer" to whom it was directed
(Rule 39, Section 8, Rules of Court) to satisfy the amount out of all property, real and personal, of the judgment debtor in
the manner specified in Rule 39, Section 15 of the Rules of Court. The writ of execution was, therefore, a direct order to
the sheriff or other proper officer to whom it was directed, and not an order to the judgment debtor. In view thereof, the
judgment debtor could not, in the very nature of things, have committed disobedience to the writ, which justifies the arrest
and imprisonment of defendant for contempt of court.
DECISION

CAPISTRANO, J.:
Appeal from the Orders of January 9 and February 1, 1965, of the Court of First Instance of Negros Occidental ordering
the arrest and imprisonment of the defendant, Vicente Martin, Sr., for contempt, "hasta que cumpla con la decision dictada
en esta causa."cralaw virtua1aw library
Appellants statement of facts, accepted by the appellee, is as follows:jgc:chanrobles.com.ph
"In Civil Case No. 5580 of the Court of First Instance of Negros Occidental entitled, `NILDA SURA, In her behalf and in
behalf of her minor child, VICENTE MARTIN, JR., plaintiffs, versus VICENTE SILVESTRE MARTIN, SR., defendant,
judgment was rendered on June 20, 1961, amended on July 15, 1961, as follows:chanrob1es virtual 1aw library
`EN MERITOS DE TODO LO EXPUESTO, el Juzgado falla esta causa como sigue:chanrob1es virtual 1aw library
(a) Se sobresee el primer motivo de accion de la demanda;
(b) Se ordena al demandado a que reconozca al demandante Vicente Martin, Jr. como su hijo natural; y
(c) Se condena al demandado a pagar al demandante Vicente Martin, Jr., alimentos atrasados a razon de P100.00
mensuales a contar desde el dia 10 de Diciembre de 1959, fecha de la presentacion de la demanda, y a pasar al mismo
demandante una pension mensual de Pl00.00 hasta que el misno llegue a la mayor edad.
(d) Se condena al demandado a pagar los honorarios del abogado de las demandantes en la cantidad de P1,000.00
Las costas del presente juicio seran pagadas por el demandado.
Ciudad de Bacolod, Julio 15, 1961
(Fdo) EDUARDO D. ENRIQUEZ
Juez
"From the above judgment, the defendant appealed to the Court of Appeals, and the latter Court, in C.A. G.R. No. 30388R, affirmed said decision on January 30, 1964.
"On May 9, 1964, the Court of First Instance of Negros Occidental issued the following order:chanrob1es virtual 1aw
library
`Upon petition of counsel for the plaintiff, the Clerk of Court is hereby ordered to issue writ of execution, same be
forwarded to the Provincial Sheriff of Negros Oriental.
SO ORDERED.
Bacolod City, Philippines, May 9, 1964
(Sgd) JOSE R. QUERUBIN
Judge
"Pursuant to this aforecited order, a writ of execution was issued on May 9, 1964 by the Clerk of Court, and the Provincial
Sheriff of Negros Oriental served the same upon the defendant in Tanjay, Negros Oriental but returned the writ
unsatisfied. The second paragraph of the Sheriffs return of service, dated September 21, 1964, stated:chanrob1es virtual
1aw library
`The judgment debtor is jobless, and is residing in the dwelling house and in the company of his widowed mother, at
Tanjay, this province. Debtor has no leviable property; he is even supported by his mother. Hereto attached is the
certificate of insolvency issued by the Municipal Treasurer of Tanjay Negros Oriental, where debtor legally resides.
"On October 6, 1964, counsel for the plaintiff prayed that defendant, for failure to satisfy the writ of execution, be adjudged

guilty of contempt of court. On November 28, 1964, the Court issued the following order:chanrob1es virtual 1aw library
`AUTO
A peticion del abogado Sr. Villasis que representa al demandado, y con la conformidad del abogado Sr. Tupaz, por el
presente se le concede al demandado un plazo de 30 dias a contar desde esta fecha, para cumplir con la decision de
este Juzgado antes de que se le declare en desacato.
Asi se ordena.
Ciudad de Bacolod, Noviembre 28, 1964
(Fdo) EDUARDO D. ENRIQUEZ
Juez
"The defendant having failed to satisfy said order, the Court on January 9, 1965 issued the following order:chanrob1es
virtual 1aw library
`AUTO
Habiendo dejado de cumplir con la orden de este Juzgado de fecha 28 de Noviembre de 1964, por el presente se ordena
el arresto del demandado Vicente Silvestre, Sr.
Asi se ordena.
Ciudad de Bacolod, Enero 9, 1965
EDUARDO D. ENRIQUEZ
Juez
"Notice of appeal from the last aforecited order was filed on January 26, 1965 by attorney for the defendant who at the
same time prayed for the fixing of a bond for the temporary release of the defendant. On February 1, 1965, the Court
issued the following order:chanrob1es virtual 1aw library
AUTO
Oidas y consideradas las explicaciones dadas por el demandado en la silla testifical el dia 28 de Noviembre de 1964, y
no encontrando bien fundadas las razones alegadas por el, por el presente se ordena el confinamiento de dicho
demandado en la carcel provincial hasta que cumpla cun la decision dictada en esta causa. Se fija en P7,000.00 la fianza
que el demandado debe prestar si desea apelar contra la orden dictada en esta misma fecha.
Asi se ordena.
Ciudad de Bacolod, February 1, 1965
EDUARDO D. ENRIQUEZ
Juez
The orders for the arrest and imprisonment of the defendant, Vicente Martin, Sr., for contempt of court for failure to satisfy
the judgment were illegal, in view of the following considerandos:chanrob1es virtual 1aw library
(1) The judgment ordering the defendant to pay past and future support at P100 per month was a final disposition of the
case and was declaratory of the obligation of the defendant. The writ of execution issued on the judgment with respect to
past support in the amount of about P6,000 required "the sheriff or other proper officer" to whom it was directed (Rule 39,
Section 8, Rules of Court) to satisfy the amount out of all property, real and personal, of the judgment debtor in the
manner specified in Rule 39, Section 15, of the Rules of Court. The writ of execution was, therefore, a direct order to the
sheriff or other proper officer to whom it was directed, and not an order to the judgment debtor. In view thereof, the
judgment debtor could not, in the very nature of things, have committed disobedience to the writ.

(2) The sheriffs return shows that the judgment debtor was insolvent. Hence the Orders of January 9 and February 1,
1965, in effect, authorized his imprisonment for debt in violation of the Constitution.
(3) The disobedience to a judgment considered as indirect contempt in Section 3(b) of Rule 71 of the Rules of Court, does
not refer to a judgment which is a final disposition of the case and which is declaratory of the rights of the parties, but to a
special judgment, which is defined in Section 9, Rule 39 of the Rules of Court as a judgment "which requires the
performance of any other act than the payment of money, or the sale or delivery of real or personal property."cralaw
virtua1aw library
According to Moran:jgc:chanrobles.com.ph
"Generally, any order or judgment of a court finally disposing of an action should be enforced by ordinary execution
proceedings, except special judgments which should be executed by contempt proceedings in accordance with Rule 39,
Sec. 9," citing Caluag, Et. Al. v. Pecson, Et Al., 82 Phil., 8 (Moran, Comments on the Rules of Court, 1963 Ed., Vol. 3, p.
320.)
IN VIEW OF ALL THE FOREGOING, the appealed Orders of January 9 and February 1, 1965, are hereby reversed. No
costs.

G.R. No. 81559-60 April 6, 1992


PEOPLE OF THE PHILIPPINES, (public petitioner) and ALLIED BANKING CORPORATION (private petitioner),
vs.
HON. JUDGE DAVID G. NITAFAN (public respondent) and BETTY SIA ANG (private respondent).

GUTIERREZ, JR., J.:


This petition for certiorari involves an issue that has been raised before this Court several times in the past. The petitioner,
in effect, is asking for a re-examination of our decisions on the issue of whether or not an entrustee in a trust receipt
agreement who fails to deliver the proceeds of the sale or to return the goods if not sold to the entruster-bank is liable for
the crime of estafa.
Petitioner Allied Banking Corporation charged Betty Sia Ang with estafa in Criminal Case No. 87-53501 in an information
which alleged:
That on or about July 18, 1980, in the City of Manila, Philippines, the said accused, being then the
proprietress of Eckart Enterprises, a business entity located at 756 Norberto Amoranto Avenue, Quezon
City, did then and there wilfully, unlawfully and feloniously defraud the Allied Banking Corporation, a
banking institution, represented by its Account Officer, Raymund S. Li, in the following manner, to wit: the
said accused received in trust from the aforesaid bank Gordon Plastics, plastic sheeting and Hook
Chromed, in the total amount of P398,000.00, specified in a trust receipt and covered by Domestic Letter
of Credit No. DLC-002-801254, under the express obligation on the part of said accused to sell the same
and account for the proceeds of the sale thereof, if sold, or to return said merchandise, if not sold, on or
before October 16, 1980, or upon demand, but the said accused, once in possession of the said articles,
far from complying with the aforesaid obligation, notwithstanding repeated demands made upon her to
that effect, paid only the amount of P283,115.78, thereby leaving unaccounted for the amount of
P114,884.22 which, once in her possession, with intent to defraud, she misappropriated, misapplied and
converted to her own personal use and benefit, to the damage and prejudice of said Allied Banking
Corporation in the aforesaid sum of P114,884.22, Philippine Currency. (Rollo, pp. 13-14)
The accused filed a motion to quash the information on the ground that the facts charged do not constitute an offense.

On January 7, 1988, the respondent judge granted the motion to quash. The order was anchored on the premise that a
trust receipt transaction is an evidence of a loan being secured so that there is, as between the parties to it, a creditordebtor relationship. The court ruled that the penal clause of Presidential Decree No. 15 on the Trust Receipts Law is
inoperative because it does not actually punish an offense mala prohibita. The law only refers to the relevant estafa
provision in the Revised Penal Code. The Court relied on the judicial pronouncements in People v. Cuevo, 104 SCRA 312
[1981] where, for lack of the required number of votes, this Court upheld the dismissal of a charge for estafa for a violation
of a trust receipt agreement; and in Sia v. People, 121 SCRA 655 [1983] where we held that the violation merely gives rise
to a civil obligation. At the time the order to quash was issued or on January 7, 1988, these two decisions were the only
most recent ones. Hence, this petition.
The private respondent adopted practically the same stance of the lower court. She likewise asserts that P.D. 115 is
unconstitutional as it violates the constitutional prohibition against imprisonment for non-payment of a debt. She argues
that where no malice exists in a breach of a purely commercial undertaking, P.D. 115 imputes it.
This Court notes that the petitioner bank brought a similar case before this Court in G.R. No. 82495, entitledAllied Banking
Corporation v. Hon. Secretary Sedfrey Ordoez and Alfredo Ching which we decided on December 10, 1990 (192 SCRA
246). In that case, the petitioner additionally questioned, and we accordingly reversed, the pronouncement of the
Secretary of Justice limiting the application of the penal provision of P.D. 115 only to goods intended to be sold to the
exclusion of those still to be manufactured.
As in G.R. No. 82495, we resolve the instant petition in the light of the Court's ruling in Lee v. Rodil, 175 SCRA 100 [1989]
and Sia v. Court of Appeals, 166 SCRA 263 [1988]. We have held in the latter cases that acts involving the violation of
trust receipt agreements occurring after 29 January 1973 (date of enactment of P.D. 115) would make the accused
criminally liable for estafa under paragraph 1 (b), Article 315 of the Revised Penal Code (RPC) pursuant to the explicit
provision in Section 13 of P.D. 115.
The relevant penal provision of P.D. 115 provides:
Sec. 13 of P.D. No. 115 provides:
. . . Penalty clause. The failure of an entrustee to turn over the proceeds of the sale of the goods,
documents or instruments covered by a trust receipt to the extent of the amount owing to the entruster or
as appears in the trust receipt or to return said goods, documents or instruments if they were not sold or
disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa,
punishable under the provisions of Article Three Hundred and Fifteen, paragraph one (b) of Act Numbered
Three Thousand Eight Hundred and Fifteen, as amended, otherwise known as the Revised Penal Code.
If the violation or offense is committed by a corporation, partnership, association or other juridical entities,
the penalty provided for in this Decree shall be imposed upon the directors, officers, employees or other
officials or persons therein responsible for the offense, without prejudice to the civil liabilities arising from
the criminal offense.
Section 1 (b), Article 315 of the RPC under which the violation is made to fall, states:
. . . Swindling (estafa). Any person who shall defraud another by any of the means mentioned herein
below . . . :
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, good, or other
property.
The factual circumstances in the present case show that the alleged violation was committed sometime in 1980 or during
the effectivity of P.D. 115. The failure, therefore, to account for the P114,884.22 balance is what makes the accusedrespondent criminally liable for estafa. The Court reiterates its definitive ruling that, in the Cuevo andSia (1983) cases
relied upon by the accused, P.D. 115 was not applied because the questioned acts were committed before its effectivity.
(Lee v. Rodil, supra, p. 108) At the time those cases were decided, the failure to comply with the obligations under the
trust receipt was susceptible to two interpretations. The Court in Siaadopted the view that a violation gives rise only to a

civil liability as the more feasible view "before the promulgation of P.D. 115," notwithstanding prior decisions where we
ruled that a breach also gives rise to a liability for estafa. (People v. Yu Chai Ho, 53 Phil. 874 [1929]; Samo v. People, 115
Phil. 346 [1962]; Philippine National Bank v. Arrozal, 103 Phil. 213 [1958]; Philippine National Bank v. Viuda e Hijos de
Angel Jose, 63 Phil. 814 [1936]).
Contrary to the reasoning of the respondent court and the accused, a trust receipt arrangement does not involve a simple
loan transaction between a creditor and debtor-importer. Apart from a loan feature, the trust receipt arrangement has a
security feature that is covered by the trust receipt itself. (Vintola v. Insular Bank of Asia and America, 151 SCRA 578
[1987]) That second feature is what provides the much needed financial assistance to our traders in the importation or
purchase of goods or merchandise through the use of those goods or merchandise as collateral for the advancements
made by a bank. (Samo v. People, supra). The title of the bank to the security is the one sought to be protected and not
the loan which is a separate and distinct agreement.
The Trust Receipts Law punishes the dishonesty and abuse of confidence in the handling of money or goods to the
prejudice of another regardless of whether the latter is the owner or not. The law does not seek to enforce payment of the
loan. Thus, there can be no violation of a right against imprisonment for non-payment of a debt.
Trust receipts are indispensable contracts in international and domestic business transactions. The prevalent use of trust
receipts, the danger of their misuse and/or misappropriation of the goods or proceeds realized from the sale of goods,
documents or instruments held in trust for entruster-banks, and the need for regulation of trust receipt transactions to
safeguard the rights and enforce the obligations of the parties involved are the main thrusts of P.D. 115. As correctly
observed by the Solicitor General, P.D. 115, like Batas Pambansa Blg. 22, punishes the act "not as an offense against
property, but as an offense against public order. . . ." The misuse of trust receipts therefore should be deterred to prevent
any possible havoc in trade circles and the banking community (citing Lozano v. Martinez, 146 SCRA 323 [1986]; Rollo, p.
57) It is in the context of upholding public interest that the law now specifically designates a breach of a trust receipt
agreement to be an act that "shall" make one liable for estafa.
The offense is punished as a malum prohibitum regardless of the existence of intent or malice. A mere failure to deliver
the proceeds of the sale or the goods if not sold, constitutes a criminal offense that causes prejudice not only to another,
but more to the public interest.
We are continually re-evaluating the opposite view which insists that the violation of a trust receipt agreement should
result only in a civil action for collection. The respondent contends that there is no malice involved. She cites the dissent of
the late Chief Justice Claudio Teehankee in Ong v. Court of Appeals, (124 SCRA 578 [1983]) to wit:
The old capitalist orientation of putting importers in jail for supposed estafa or swindling for non-payment
of the price of the imported goods released to them under trust receipts (a purely commercial transaction)
under the fiction of the trust receipt device, should no longer be permitted in this day and age.
As earlier stated, however, the law punishes the dishonesty and abuse of confidence in the handling of money or goods to
the prejudice of the bank.
The Court reiterates that the enactment of P.D. 115 is a valid exercise of the police power of the State and is, thus,
constitutional. (Lee v. Rodil, supra; Lozano v. Martinez, supra) The arguments of the respondent are appropriate for a
repeal or modification of the law and should be directed to Congress. But until the law is repealed, we are constrained to
apply it.
WHEREFORE, the petition is hereby GRANTED. The Order of the respondent Regional Trial Court of Manila, Branch 52
dated January 7, 1988 is SET ASIDE. Let this case be remanded to the said court for disposition in accordance with this
decision.
SO ORDERED.