Criminal Law, Mercantile Law, Remedial Law

PEOPLE v. JOSE C. GO, et al. G.R. No. 191015, August 06, 2014 certiorari, Demurrer to Evidence, estafa, fiduciary nature of banks, Rule 65, simple loan

FACTS

Orient Commercial Banking Corporation (OCBC), a commercial bank was ordered closed by the BSP.  PDIC was designated as OCBC receiver, and it took over the bank’s affairs, assets and liabilities, records, and collected the bank’s receivables.

In 1997, it appears that fictitious loans in favor of two entities – Timmy’s, Inc. and Asia Textile Mills, Inc. were approved, after which two manager’s checks representing the supposed proceeds of these loans were issued but made payable to two different entities – Philippine Recycler’s Inc. and Zeta International – without any documents issued by the supposed borrowers Timmy’s, Inc. and Asia Textile Mills, Inc. assigning the supposed loan proceeds to the two payees.

Thereafter, these two manager’s checks – together with several others totaling P120,819,475.00 – were encashed, and then deposited in the OCBC Savings Account of Jose Go.  Then, several automatic transfer deposits were made from Go’s savings account to his OCBC Current which were then used to fund Go’s previously dishonored personal checks.

PDIC as receiver sent demand letters to the bank’s debtor-borrowers on record, including Timmy’s, Inc. and Asia Textile Mills, Inc..  In response to the demand letters, Timmy’s, Inc. and Asia Textile Mills, Inc. denied having obtained loans from OCBC.  It was discovered that the signatures of the corporate officers were forgeries, and the purported loans were obtained through falsified loan documents.

After finding probable cause, Informations were filed against the private respondents.

After the presentation of all of the prosecution’s evidence, the private respondents filed a Motion for Leave to File Demurrer to Evidence praying for the dismissal of the criminal cases instituted against them due to the failure of the prosecution to establish their guilt beyond reasonable doubt.

The RTC judge finding the Demurrer to Evidence to be meritorious, dismissed the case and acquitted all of the accused in these cases.

ISSUES

(a)  WON there was GRAVE ABUSE OF DISCRETION WAS COMMITTED BY RESPONDENT RTC JUDGE IN GRANTING THE DEMURRER TO EVIDENCE;

(b) THE ORDER OF ACQUITTAL HAS ALREADY ATTAINED FINALITY WHEN IT WAS NOT CHALLENGED IN A TIMELY AND APPROPRIATE MANNER; AND

(c) WHAT CRIME WAS COMMITTED

RULING:

The Court grants the Petition.

Demurrer to the evidence is “an objection by one of the parties in an action, to the effect that the evidence which his adversary produced is insufficient in point of law, whether true or not, to make out a case or sustain the issue.  The party demurring challenges the sufficiency of the whole evidence to sustain a verdict.  The court, in passing upon the sufficiency of the evidence raised in a demurrer, is merely required to ascertain whether there is competent or sufficient evidence to sustain the indictment or to support a verdict of guilt. x x x Sufficient evidence for purposes of frustrating a demurrer thereto is such evidence in character, weight or amount as will legally justify the judicial or official action demanded according to the circumstances.

To be considered sufficient therefore, the evidence must prove:

(a) the commission of the crime, and

(b) the precise degree of participation therein by the accused.

Thus, when the accused files a demurrer, the court must evaluate whether the prosecution evidence is sufficient enough to warrant the conviction of the accused beyond reasonable doubt.

“The grant or denial of a demurrer to evidence is left to the sound discretion of the trial court, and its ruling on the matter shall not be disturbed in the absence of a grave abuse of such discretion.” (Te v. Court of Appeals, 400 Phil. 127, 139)  As to effect, “the grant of a demurrer to evidence amounts to an acquittal and cannot be appealed because it would place the accused in double jeopardy. The order is reviewable only by certiorari if it was issued with grave abuse of discretion amounting to lack or excess of jurisdiction.” (People v. Sandiganbayan  645 SCRA 726, 731)

When grave abuse of discretion is present, an order granting a demurrer becomes null and void.

As a general rule, an order granting the accused’s demurrer to evidence amounts to an acquittal. There are certain exceptions, however, as when the grant thereof would not violate the constitutional proscription on double jeopardy. For instance, this Court ruled that when there is a finding that there was grave abuse of discretion on the part of the trial court in dismissing a criminal case by granting the accused’s demurrer to evidence, its judgment is considered void, as this Court ruled in People v. Laguio, Jr.:

By this time, it is settled that the appellate court may review dismissal orders of trial courts granting an accused’s demurrer to evidence. This may be done via the special civil action of certiorari under Rule 65 based on the ground of grave abuse of discretion, amounting to lack or excess of jurisdiction. Such dismissal order, being considered void judgment, does not result in jeopardy. Thus, when the order of dismissal is annulled or set aside by an appellate court in an original special civil action via certiorari, the right of the accused against double jeopardy is not violated.

In the instant case, having affirmed the CA finding grave abuse of discretion on the part of the trial court when it granted the accused’s demurrer to evidence, we deem its consequent order of acquittal void.

Grave abuse of discretion is defined as “that capricious or whimsical exercise of judgment which is tantamount to lack of jurisdiction.  ‘The abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility.’  The party questioning the acquittal of an accused should be able to clearly establish that the trial court blatantly abused its discretion such that it was deprived of its authority to dispense justice.”

In the exercise of the Court’s “superintending control over inferior courts, we are to be guided by all the circumstances of each particular case ‘as the ends of justice may require.’ So it is that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice.”wred

Guided by the foregoing pronouncements, the Court declares that the CA grossly erred in affirming the trial court’s Order granting the respondent’s demurrer, which Order was patently null and void for having been issued with grave abuse of discretion and manifest irregularity, thus causing substantial injury to the banking industry and public interest.

The Court finds that the prosecution has presented competent evidence to sustain the indictment for the crime of estafa through falsification of commercial documents, and that respondents appear to be the perpetrators thereof.  In evaluating the evidence, the trial court effectively failed and/or refused to weigh the prosecution’s evidence against the respondents, which it was duty-bound to do as a trier of facts; considering that the case involved hundreds of millions of pesos of OCBC depositors’ money – not to mention that the banking industry is impressed with public interest, the trial court should have conducted itself with circumspection and engaged in intelligent reflection in resolving the issues.

ESTAFA

The elements of estafa through abuse of confidence under Article 315, par. 1(b) of the Revised Penal Code are:

“(a) that money, goods or other personal property is 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;

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

(c) that such misappropriation or conversion or denial is to the prejudice of another; and

(d) there is demand by the offended party to the offender.”awred

Obviously, a bank takes its depositors’ money as a loan, under an obligation to return the same; thus, the term “demand deposit.”

The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan. Article 1980 of the Civil Code expressly provides that “x x x savings x x x deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan.” There is a debtor-creditor relationship between the bank and its depositor.  The bank is the debtor and the depositor is the creditor.  The depositor lends the bank money and the bank agrees to pay the depositor on demand. x x x

Moreover, the banking laws impose high standards on banks in view of the fiduciary nature of banking.  “This fiduciary relationship means that the bank’s obligation to observe ‘high standards of integrity and performance’ is deemed written into every deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family.”

In Soriano v. People, it was held that the President of a bank is a fiduciary with respect to the bank’s funds, and he holds the same in trust or for administration for the bank’s benefit.  From this, it may be inferred that when such bank president makes it appear through falsification that an individual or entity applied for a loan when in fact such individual or entity did not, and the bank president obtains the loan proceeds and converts the same, estafa is committed.

Next, regarding misappropriation, the evidence tends to establish that Manager’s Checks were encashed, using the bank’s funds which clearly belonged to OCBC’s depositors, and then deposited in Go’s savings account although he was not the named payee therein. The evidence strongly indicates that Go converted OCBC funds to his own personal use and benefit.  “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.

To misappropriate for one’s own use includes not only conversion to one’s personal advantage, but also every attempt to dispose of the property of another without right. x x x In proving the element of conversion or misappropriation, a legal presumption of misappropriation arises when the accused fails to deliver the proceeds of the sale or to return the items to be sold and fails to give an account of their whereabouts.  Thus, the mere presumption of misappropriation or conversion is enough to conclude that a probable cause exists for the indictment x x x.”cralawred

As to the third element of estafa, there is no question that as a consequence of the misappropriation of OCBC’s funds, the bank and its depositors have been prejudiced; the bank has been placed under receivership, and the depositors’ money is no longer under their unimpeded disposal.

 

Finally, on the matter of demand, while it has not been shown that the bank demanded the return of the funds, it has nevertheless been held that

“[d]emand is not an element of the felony or a condition precedent to the filing of a criminal complaint for estafa.

Indeed, the accused may be convicted of the felony under Article 315, paragraph 1(b) of the Revised Penal Code if the prosecution proved misappropriation or conversion by the accused of the money or property subject of the Information.  In a prosecution for estafa, demand is not necessary where there is evidence of misappropriation or conversion.”  Thus, strictly speaking, demand is not an element of the offense of estafa through abuse of confidence; even a verbal query satisfies the requirement.  Indeed, in several past rulings of the Court, demand was not even included as an element of the crime of estafa through abuse of confidence, or under paragraph 1(b).

On the other hand, the elements of the crime of falsification of commercial document under Art. 172 are: “(1) that the offender is a private individual; (2) that the offender committed any of the acts of falsification; and (3) that the act of falsification is committed in a commercial document.”  As to estafa through falsification of public, official or commercial documents, it has been held that –

The falsification of a public, official, or commercial document may be a means of committing Estafa, because before the falsified document is actually utilized to defraud another, the crime of Falsification has already been consummated, damage or intent to cause damage not being an element of the crime of falsification of public, official or commercial document.  In other words, the crime of falsification has already existed. Actually utilizing that falsified public, official or commercial document to defraud another is estafa.  But the damage is caused by the commission of Estafa, not by the falsification of the document.  Therefore, the falsification of the public, official or commercial document is only a necessary means to commit the estafa.

In the absence of a satisfactory explanation, one who is found in possession of a forged document and who used or uttered it is presumed to be the forger.

Certainly, the channeling of the subject payments via false remittances to his savings account, his subsequent withdrawals of said amount as well as his unexplained flight at the height of the bank’s inquiry into the matter more than sufficiently establish x x x involvement in the falsification.

GRAVE ABUSE OF DISCRETION

An act of a court or tribunal may only be considered as committed in grave abuse of discretion when the same was performed in a capricious or whimsical exercise of judgment which is equivalent to lack of jurisdiction.

The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and personal hostility. x x x

Finally, it must be borne in mind that “[t]he granting of a demurrer to evidence should x x x be exercised with caution, taking into consideration not only the rights of the accused, but also the right of the private offended party to be vindicated of the wrongdoing done against him, for if it is granted, the accused is acquitted and the private complainant is generally left with no more remedy. In such instances, although the decision of the court may be wrong, the accused can invoke his right against double jeopardy. Thus, judges are reminded to be more diligent and circumspect in the performance of their duties as members of the Bench x x x.”

GG

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