Fernandez vs. People

A conviction for estafa through falsification of public document cannot rest on hearsay testimony or on the bare, unsubstantiated allegation of conspiracy; the prosecution must prove each element of the offense and the existence of conspiracy by proof beyond reasonable doubt, based on evidence of personal knowledge. The presumption that a person in possession of a falsified document is the material author thereof does not arise absent proof of possession, use, or profit from the document.

Sta. Ines Melale Forest Products, Inc. (MELALE), through its president Atty. Oscar Beltran, needed a counter attachment bond in the amount of ₱500,000.00 to secure the lifting of a writ of preliminary attachment issued against it in Civil Case No. 3226 pending before the Regional Trial Court of Agusan del Norte, Butuan City. Beltran contacted a friend, Deputy Sheriff Manuel de Castro, to help locate a bonding company. De Castro engaged Melencio Cruz, an assistant to an insurance agent, who in turn contacted Efren Olesco, a branch manager of Interworld Assurance Corporation. Olesco eventually produced Counterbond No. JCR 00300 purportedly issued by First Integrated Bonding and Insurance Company, Inc. MELALE paid ₱50,000.00 as premium. The bond was later discovered to be spurious. Roberto Fernandez, along with Olesco and Nicanor Gatchalian, Jr., was charged with estafa through falsification of public document. Gatchalian died during trial, and the case proceeded against Olesco and Fernandez.

• The Need for a Counterbond: Sometime in December 1987, the Regional Trial Court of Agusan del Norte, Branch V, Butuan City issued a writ of preliminary attachment against the properties of Sta. Ines Melale Forest Products, Inc. (MELALE) in Civil Case No. 3226. To secure the lifting of the writ, MELALE, through its President Atty. Oscar Beltran, needed a counter attachment bond in the amount of ₱500,000.00.

• Procurement of the Bond: On the morning of December 14, 1987, Beltran called his friend Manuel de Castro, Deputy Sheriff of RTC Branch 137, Makati, requesting help in finding a bonding company. De Castro went to the office of insurance agent Manuel "Boy" Reyes at the Chateau Building, Makati. Reyes was absent; his helper-assistant Melencio Cruz attended to de Castro. Cruz informed de Castro that he would consult Efren Olesco, a Branch Manager of Interworld Assurance Corporation with an office on the second floor of the same building. Cruz returned with blank application and indemnity agreement forms, which de Castro brought to Beltran for accomplishment.

• Delivery of the Counterbond and Payment: At around 4:45 p.m. that afternoon, de Castro returned the accomplished forms to Cruz, who brought them to Olesco's office. About twenty minutes later, Olesco and Cruz came down and handed de Castro Counterbond No. JCR 00300 dated December 14, 1987 for ₱500,000.00 issued by First Integrated Bonding and Insurance Company, signed by Eduardo V. Gadi, and notarized by Notary Public Benito Salandanan of Manila. When de Castro asked why the bond was from First Integrated and not Interworld, Olesco stated that Interworld's Butuan City branch had closed and that he had sought the help of Roberto Fernandez and Nicanor Gatchalian, Jr. for the issuance of the bond. De Castro handed Olesco ₱50,000.00 as premium payment. Olesco acknowledged receipt by issuing Hexagon Surety Services, Inc. Official Receipt No. 157, which Cruz also signed as a witness to Olesco's receipt of the money.

• Discovery of the Falsification: Beltran filed the counterbond with the RTC of Butuan City. On January 8, 1988, Beltran learned that Atty. Rogelio Mendoza, Legal Counsel of First Integrated Bonding and Insurance Company, Inc., had filed a Manifestation and Motion before the same court denying that the company had issued the counterbond, declaring it spurious because the company had no officer or employee named Eduardo Gadi and the document lacked the company letterhead.

• The Confrontation: Beltran immediately called de Castro to arrange a meeting with Olesco, Gatchalian, and Fernandez. Only Olesco and Fernandez attended. During the confrontation, they allegedly assured Beltran that the counterbond was genuine. Beltran had never met either Olesco or Fernandez prior to this meeting.

• Criminal Complaint and Trial: Beltran wrote to the Southern Police District requesting investigation, leading to the filing of the Information. At trial, the prosecution presented Beltran, de Castro, Cruz, Consuelo San Juan (a court interpreter from Butuan City), and Atty. Mendoza. Neither Fernandez nor Olesco presented evidence; Fernandez's Demurrer to Evidence was denied.

• Inadmissible Evidence Linking Fernandez: De Castro testified that Olesco told him he "asked the help of Mr. Roberto Fernandez and Mr. Gatchalian for the issuance of the bond." De Castro admitted he did not know whether Olesco actually secured such help. Cruz's testimony similarly failed to establish any personal knowledge of Fernandez's participation. No evidence placed Fernandez at the scene of the transactions on December 14, 1987, nor showed him in possession of the spurious bond or the premium payment.

• Lower Courts' Findings: The RTC and Court of Appeals applied the presumption that persons in possession of a falsified document who use and profit from it are presumed to be its material authors, concluding that Fernandez, as a source of the fake bond alongside Olesco, failed to rebut this presumption.

• Lack of Direct Evidence: Petitioner contended that the trial court itself found no direct evidence proving he conspired in committing the offense, making the Court of Appeals' affirmance erroneous.

• Reliance on Hearsay and Presumption: Petitioner argued that the Court of Appeals affirmed his conviction based on mere presumptions and the imputations made by Beltran in his testimony, violating both the res inter alios acta rule and the hearsay rule.

• Failure to Independently Review Legal Basis: Petitioner maintained that neither the trial court nor the Court of Appeals demonstrated that the essential elements of estafa through falsification of public document were sufficiently proved, nor that conspiracy between him and Olesco was established beyond reasonable doubt.

• Sufficiency of Evidence: The People, through the Office of the Solicitor General, and the Court of Appeals maintained that the conviction was proper. The RTC applied the established rule that a person in possession of a falsified document who uses it and profits thereby is, absent satisfactory explanation, presumed to be the material author of the falsification.

• Proof of Participation: The Court of Appeals held that petitioner's participation in the issuance of the fake counterbond was proved by de Castro's testimony and confirmed by Beltran's testimony, thus the presumption was properly applied and the conviction should stand.

• Admissibility of Evidence: Whether the testimonies of prosecution witnesses de Castro and Cruz linking petitioner Fernandez to the crime were admissible, or whether they constituted inadmissible hearsay and violated the res inter alios acta rule.

• Proof of Conspiracy: Whether the prosecution proved beyond reasonable doubt that a conspiracy existed between petitioner Fernandez and co-accused Olesco to commit estafa through falsification of public document.

• Application of the Presumption of Authorship: Whether the presumption that the possessor of a falsified document is its material author could be validly applied to petitioner Fernandez absent evidence that he was ever in possession of, used, or profited from the spurious counterbond.

• Admissibility of Evidence: The testimonies of de Castro and Cruz linking Fernandez to the crime were hearsay and inadmissible. Neither witness had personal knowledge that Fernandez aided Olesco in procuring the counterbond. De Castro admitted he did not know if Olesco actually secured Fernandez's help. De Castro's testimony merely recounted what Olesco told him, which falls squarely within the definition of hearsay under Section 36, Rule 130 of the Revised Rules of Court, which limits a witness's testimony to facts of his own personal knowledge. Moreover, Olesco's alleged out-of-court statements implicating Fernandez could not be utilized against Fernandez, who had no opportunity to cross-examine Olesco, as this transgresses the res inter alios acta rule, which provides that the rights of a party cannot be prejudiced by the act, declaration, or omission of another.

• Proof of Conspiracy: No evidence established a conspiracy between Fernandez and Olesco beyond reasonable doubt. As a manner of incurring criminal liability, conspiracy requires the same quantum of proof as the crime itself — proof beyond reasonable doubt. The records of both the trial court and the Court of Appeals contained no mention of any testimony or evidence proving an agreement between Olesco and Fernandez to defraud MELALE, nor any overt act by Fernandez in furtherance of a conspiracy. Fernandez was not present during the entire day of December 14, 1987 and did not witness or participate in any of the events: the negotiation through Cruz, the accomplishment of the application form, the delivery of the bond by Olesco to de Castro, the payment of ₱50,000.00, or the issuance of the official receipt. Beltran's uncorroborated assertion that Fernandez admitted facilitating the bond during the confrontation was contradicted by de Castro's own testimony that only Olesco delivered the counterbond. The mere fact that Fernandez allegedly claimed the bond was genuine did not prove knowledge of its spuriousness, participation in its procurement, or possession thereof.

• Application of the Presumption of Authorship: The presumption that the possessor of a falsified document is its material author was erroneously applied. The rule requires proof that the accused was in possession of the falsified document, used it, took advantage of it, and profited thereby. No evidence whatsoever placed Fernandez in possession of the fake counterbond, demonstrated his use of it, or showed he profited from it. The lower courts' conclusion that Fernandez was a "source" of the bond rested solely on Olesco's inadmissible hearsay statement.

• Hearsay Rule — Section 36, Rule 130 of the Revised Rules of Court ordains that a witness can testify only to those facts which he knows of his own personal knowledge, i.e., those derived from his own perception. Any evidence, oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of another person not on the witness stand. The Court applied this rule to exclude de Castro's and Cruz's testimonies about Olesco's statements implicating Fernandez, as neither witness possessed personal knowledge of Fernandez's involvement.

• Res Inter Alios Acta Rule — The rights of a party cannot be prejudiced by an act, declaration, or omission of another. An extrajudicial statement made by one accused implicating a co-accused is inadmissible against the latter who had no opportunity to cross-examine the declarant. Olesco's statements to de Castro, even if testified to by de Castro, could not be used as evidence against Fernandez.

• Proof of Conspiracy — As a manner of incurring criminal liability, conspiracy must be established by proof beyond reasonable doubt — the same degree of proof required to establish the crime itself. Mere speculation, probabilities, or suspicion, no matter how strong, cannot substitute for the proof required to establish guilt. The Court found that no independent evidence of an agreement between Fernandez and Olesco, nor any overt act by Fernandez in furtherance of a conspiracy, was adduced by the prosecution.

• Presumption of Authorship of Falsified Document — If a person had in his possession a falsified document, used it (uttered it), took advantage of it, and profited thereby, he is, in the absence of satisfactory explanation, presumed to be the material author of the falsification. This presumption does not arise unless possession, use, and profit are first established by competent evidence. The Court held this presumption inapplicable to Fernandez because no evidence proved he possessed, used, or profited from the spurious bond.

• Presumption of Innocence and Reasonable Doubt — In all criminal cases, the constitutional right to be presumed innocent until proven guilty can be overthrown only by proof beyond reasonable doubt. Where the guilt of the accused has not been proven with moral certainty, the presumption of innocence must be favored, and exoneration must be granted as a matter of right. When reasonable doubt exists as to the guilt of the accused, an acquittal must follow even if innocence may be doubted.

• "Section 36, Rule 130 of the Revised Rules of Court provides that 'a witness can testify only to those facts which he knows of his own knowledge; that is, which are derived from his own perception x x x.' Thus, any evidence, whether oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of some other person not on the witness stand." — This passage articulates the Court's application of the hearsay rule to the prosecution's evidence and forms the core basis for excluding the testimonies of de Castro and Cruz.

• "As a manner of incurring criminal liability, the same degree of proof necessary to establish the crime is required to establish a finding of criminal conspiracy, that is proof beyond reasonable doubt." — This statement reinforces the high evidentiary standard for conspiracy and undergirds the Court's finding that the prosecution failed to meet its burden.

• "In all criminal cases, mere speculation and probabilities cannot substitute for proof required to establish the guilt of an accused beyond reasonable doubt. Suspicion no matter how strong can not sway judgment." — This encapsulates the principle that drove the acquittal, emphasizing that conjecture cannot fill gaps in the prosecution's evidence.

• "When the guilt of the accused has not been proven with moral certainty, it is our policy of long standing that the presumption of innocence of the accused must be favored and his exoneration be granted as a matter of right." — This passage reaffirms the constitutional bedrock of the presumption of innocence and the mandatory consequence of the prosecution's failure to meet its burden.

• People vs. Juego, 298 SCRA 22 [1998] — Cited for the four requisites of estafa under Article 315, paragraph 2(a) of the Revised Penal Code: (1) false pretenses or fraudulent representations regarding power, influence, qualifications, property, credit, agency, business, or imaginary transactions; (2) such representations were made prior to or simultaneous with the fraud; (3) the representations induced the offended party to part with money or property; and (4) the offended party suffered damage.

• Pecho vs. Sandiganbayan, 238 SCRA 116 [1994] — Cited for the doctrine that a person in possession of a falsified document who uses it and profits from it is presumed, absent satisfactory explanation, to be its material author. The Court distinguished this precedent, holding the presumption inapplicable because Fernandez was never shown to have possessed the document.

• People vs. Raquel, 265 SCRA 248 [1996] — Cited for the res inter alios acta rule: the rights of a party cannot be prejudiced by an act, declaration, or omission of another, rendering Olesco's out-of-court statements inadmissible against Fernandez.

• People vs. Gomez, 270 SCRA 432 [1997] and People vs. Viernes, 262 SCRA 655 [1996] — Cited for the rule that conspiracy must be proven by the same quantum of evidence as the crime itself: proof beyond reasonable doubt.

• People vs. Isla, 278 SCRA 47 [1997] — Cited for the principle that mere speculation and probabilities, or suspicion no matter how strong, cannot substitute for proof beyond reasonable doubt.

• Cosep vs. People, 290 SCRA 378 [1998] — Cited for the policy that where guilt has not been established with moral certainty, the presumption of innocence prevails and exoneration must be granted as a matter of right.

• Article 315, Paragraph 2(a), Revised Penal Code — Defines estafa or swindling committed by falsely pretending to possess power, influence, qualifications, property, credit, agency, business, or imaginary transactions, or by means of other similar deceits executed prior to or simultaneously with the commission of the fraud. The Court enumerated the four requisites for conviction under this provision and found that the prosecution failed to prove, through admissible evidence, that Fernandez made any false pretenses or fraudulent representations.

• Article 8, Revised Penal Code — Defines conspiracy as existing when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. The Court held that no evidence beyond reasonable doubt established such an agreement between Fernandez and Olesco.

• Section 36, Rule 130, Revised Rules of Court — Governs the admissibility of testimonial evidence, limiting a witness's testimony to facts of personal knowledge. The Court applied this provision to exclude the hearsay testimony of de Castro and Cruz regarding Olesco's statements.

Melo (Chairman), Vitug, Panganiban, and Purisima, JJ., concurred.