Chee Kiong Yam vs. Malik

A debtor who receives money as a simple loan (mutuum) acquires ownership thereof and cannot be held liable for estafa through misappropriation by merely refusing to pay or denying the indebtedness, the obligation being purely civil in nature.

Petitioners Chee Kiong Yam, Ampang Mah, Anita Yam, Jose Y.C. Yam, and Richard Yam were charged with estafa through misappropriation before the Municipal Court of Jolo, Sulu, by private respondents Rosalinda Amin, Tan Chu Kao, and Augusto Sajor in three separate criminal cases. The same private respondents had separately filed civil actions for collection of the same amounts with the Court of First Instance of Sulu. The dispute centered on whether the sums received by petitioners were held in trust or were simple loans, and whether the municipal court could try the cases on the merits.

In Criminal Case No. M-111, Rosalinda M. Amin charged Yam Chee Kiong and Yam Yap Kieng with estafa through misappropriation of ₱50,000. The complaint stated on its face that the amount was received "as a loan." A related civil action, Civil Case No. N-5, filed by Amin with the Court of First Instance of Sulu on September 11, 1975, described the ₱50,000 as a "simple business loan" earning interest, originally demandable six months from July 12, 1973.

In Criminal Case No. M-183, Tan Chu Kao charged Yam Chee Kiong, Jose Y.C. Yam, Ampang Mah, and Anita Yam, alias Yong Tay, with estafa through misappropriation of ₱30,000. The complaint likewise stated that the amount was "a simple loan." The corresponding civil action, Civil Case No. N-8, filed by Tan Chu Kao on April 6, 1976 with the Court of First Instance of Sulu for collection of the same amount, described the ₱30,000 as a simple loan.

In Criminal Case No. M-208, Augusto Sajor charged Jose Y.C. Yam, Anita Yam alias Yong Tai Mah, Chee Kiong Yam, and Richard Yam with estafa through misappropriation of ₱20,000. Unlike the other two complaints, the criminal complaint itself did not state that the amount was received as a loan. However, in a sworn statement dated September 29, 1976, submitted to the respondent judge to support the complaint, Sajor stated that the amount was a "loan."

Respondent Judge Nabdar J. Malik conducted preliminary investigations of all three charges, found a prima facie case against the petitioners, issued warrants of arrest, and undertook to conduct trial on the merits. Petitioners filed the present petition for certiorari, prohibition, and mandamus, alleging that the facts recited in the complaints did not constitute the crime of estafa and that, assuming they did, the offenses were not within the jurisdiction of the respondent judge.

• No Estafa: Petitioners argued that the facts alleged in the three criminal complaints did not constitute estafa through misappropriation because the sums received were simple loans, in which ownership of the money passes to the borrower.
• Lack of Jurisdiction: Petitioners maintained that even assuming the acts constituted estafa, the Municipal Court of Jolo had no jurisdiction to try the cases on the merits because the penalty for misappropriation of the amounts involved exceeded prision correccional.

• Dismissal of Petition: Respondent judge and private respondents prayed for the dismissal of the petition.
• No Objection to Reliefs: The Solicitor General, representing the People of the Philippines, manifested no objection to the grant of the reliefs prayed for, except the claim for damages.

• Elements of Estafa: Whether the facts alleged in the criminal complaints constitute the crime of estafa through misappropriation.
• Jurisdiction of Municipal Court: Whether the Municipal Court of Jolo had jurisdiction to try the criminal cases on the merits.
• Damages: Whether damages may be awarded against the respondents in this petition.

• Elements of Estafa: No. The facts alleged do not constitute estafa through misappropriation because the sums received were simple loans (mutuum), in which ownership passes to the borrower, who may dispose of the money without committing misappropriation.
• Jurisdiction of Municipal Court: No. Under Section 87 of the Judiciary Act, the municipal court's jurisdiction is limited to offenses punishable by prision correccional or imprisonment not exceeding six years; the penalty for misappropriation of the amounts involved exceeds that threshold.
• Damages: No. The People of the Philippines is immune from suit for damages, and the Supreme Court is not the proper forum for the claim for damages against the other respondents.

• Elements of Estafa: Estafa through misappropriation under Article 315, paragraph 1(b) of the Revised Penal Code requires that the offender received money, goods, or personal property in trust, on commission, for administration, or under any obligation involving the duty to make delivery of or to return the same. The complaints, related civil actions, and supporting sworn statements all described the transactions as simple loans. Under Articles 1933 and 1953 of the Civil Code, in a simple loan (mutuum), the borrower acquires ownership of the money borrowed and may dispose of it; his act is not misappropriation. Because the relation between the parties was purely that of debtor and creditor, the refusal to pay or denial of indebtedness does not constitute estafa. The respondent judge failed to appreciate the distinction between mutuum and commodatum, mistakenly treating the transactions as commodatum, where the borrower does not acquire ownership and has the duty to return the same thing.

• Jurisdiction of Municipal Court: Under Section 87 of the Judiciary Act, the municipal court of a provincial capital has jurisdiction over criminal cases where the penalty does not exceed prision correccional or imprisonment for not more than six years, or a fine not exceeding ₱6,000, or both. The amounts allegedly misappropriated ranged from ₱20,000 to ₱50,000, and the penalty for misappropriation of this magnitude under Article 315 of the Revised Penal Code exceeds prision correccional. Even assuming the acts constituted estafa, the Municipal Court of Jolo had no jurisdiction to try them on the merits; the offenses fall under the jurisdiction of the Court of First Instance.

• Damages: The People of the Philippines, as sovereign authority, is immune from suit for damages. With respect to the other respondents, the Supreme Court is not the proper forum for the consideration of the claim for damages against them.

• Mutuum vs. Commodatum Distinction in Estafa — In a simple loan (mutuum) under Articles 1933 and 1953 of the Civil Code, ownership of the money or fungible thing borrowed passes to the borrower, who may dispose of it without committing misappropriation. In commodatum, the bailor retains ownership and the borrower has the duty to return the same thing. Estafa through misappropriation requires an obligation to deliver or return the same thing received, which exists in commodatum but not in mutuum. The Court applied this distinction to hold that the transactions were simple loans and therefore could not constitute estafa.

• Non-Payment of Debt Is Not Estafa — When the relation is purely that of debtor and creditor, the debtor cannot be held liable for estafa by merely refusing to pay or denying the indebtedness. This principle, drawn from U.S. vs. Ibañez, 19 Phil. 559 (1911), was applied to negate the estafa charges against the petitioners.

• "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." — This is the ratio decidendi, establishing that non-payment of a simple loan does not constitute estafa through misappropriation.

• "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." — This passage articulates the doctrinal basis for distinguishing mutuum from commodatum in estafa cases, explaining why ownership acquired through a simple loan negates the element of misappropriation.

• U.S. vs. Ibañez, 19 Phil. 559 (1911) — Cited as controlling precedent for the proposition that it is not estafa for a person to refuse to pay his debt or to deny its existence. The Court followed this ruling to hold that the petitioners' failure to pay the loans did not constitute estafa.

• Article 315, paragraph 1(b), Revised Penal Code — Defines estafa through misappropriation, requiring that money, goods, or personal property be received in trust, on commission, for administration, or under any obligation involving the duty to deliver or return the same. The Court held that the element of obligation to return the same thing was absent because the transactions were simple loans.

• Articles 1933 and 1953, Civil Code — Define simple loan (mutuum), providing that the borrower acquires ownership of the money or fungible thing borrowed and is bound to pay an equal amount of the same kind and quality. The Court relied on these provisions to distinguish mutuum from commodatum and to negate the element of misappropriation.

• Section 87, Judiciary Act — Defines the jurisdiction of municipal courts of provincial capitals over criminal cases where the penalty does not exceed prision correccional or imprisonment for not more than six years. The Court applied this provision to hold that the Municipal Court of Jolo lacked jurisdiction over the offenses charged.

Barredo, Antonio, and Santos, JJ., concurred. Aquino, J., concurred separately, stating that the claim for damages in the certiorari, mandamus, and prohibition case was not warranted under Section 3, Rule 65 of the Rules of Court. Concepcion Jr., J., was on leave.