Tanzo V Drilon

SUPREME COURT REPORTS ANNOTATED VOLUME 329 17/3/20, 12:15 AM
VOL. 329, MARCH 30, 2000 147

Tanzo vs. Drilon
*
G.R. No. 106671. March 30, 2000.
HARRY TANZO, petitioner, vs. HON. FRANKLIN M.

DRILON, in his capacity as Secretary of Justice, MANUEL
J. SALAZAR and MARIO J. SALAZAR, respondents.
Criminal Law; Estafa; When the relation is purely that of debtor

and creditor, the debtor cannot be held liable for the crime of estafa x
x x by merely, refusing to pay or by denying the indebtedness.·
PetitionerÊs contention that private respondents have committed
the crime of estafa x x x necessarily fails. This Court has ruled that
when the relation is purely that of debtor and creditor, the debtor
cannot be held liable for the crime of estafa, under the above quoted
provision; by merely refusing to pay or by denying the indebtedness.
The reason behind this rule is simple. In order that a person can be
convicted of estafa under Article 315, par 1(b) of the Revised Penal
Code, it must be proven that he has the obligation to deliver or
return the same money, goods or personal property that he has
received. The obligation to deliver exactly the same money, that is,
bills or coins, is non-existent in a simple loan of money because in
the latter, the borrower acquires ownership of the money borrowed.
Being the owner, the borrower can dispose of the thing borrowed
and his act will not be considered misappropriation thereof.
______________
* SECOND DIVISION.
148
148 SUPREME COURT REPORTS ANNOTATED
Tanzo vs. Drilon
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Same; Same; Mere non-compliance of a promise to perform a

thing does not constitute deceit because it is hard to determine and
infer a priori the criminal intent to the person promising.·As we
have explained earlier, the true nature of the contract between
petitioner and private respondents was that of a simple loan. In
such a contract, the debtor promises to pay to the creditor an equal
amount of money plus interest if stipulated. It is true that private
respondents failed to fulfill their promise to petitioner to return his
money plus interest at the end of one month. However, mere
noncompliance of a promise to perform a thing does not constitute
deceit because it is hard to determine and infer a priori the criminal
intent to the person promising. In other words, deceit should be
proved and established by acts distinct from and independent of,
the noncompliance of the promise, and this, petitioner failed to do.
SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.
The facts are stated in the opinion of the Court.

Virgilio M. Alameda for petitioner.
Ronald Olivar Solis for private respondent.
DE LEON, JR., J.:
Before us is a special civil action for certiorari under Rule

65 of the Rules of Court seeking to annul and set aside the
April 10, 1992 Resolution of public respondent Secretary of
Justice, as well as the latterÊs August 6, 1992 Resolution
denying the petitionerÊs motion for reconsideration. The
assailed Resolutions upheld the Quezon City ProsecutorÊs
dismissal of the criminal complaint for estafa filed by
petitioner Harry Tanzo against private respondents
Manuel and Mario Salazar.
The facts are:
Private respondents are brothers who were engaged in
the business of forwarding and transporting „balikbayan‰
boxes from California, U.S.A. to Metro Manila, Philippines.
Manuel J. Salazar (hereinafter „Manuel‰) managed the
Philippine side via MANSAL Forwarders, a business
registered in his
149
VOL. 329, MARCH 30, 2000 149

Tanzo vs. Drilon
name with principal office at No. 48 Scout Tobias Street,

Quezon City. On the other hand, Mario J. Salazar
(hereinafter „Mario‰) handled the U.S. side of the
forwarding business as General Manager of M.J.S.
International, Inc., a corporation with principal office at
No. 3400 Fletcher Drive, Los Angeles, California, U.S.A.
According to the petitioner, sometime in February of
1989, while he was in Los Angeles, California, U.S.A.,
Mario tried to convince him to invest some money in the
said business. Mario had allegedly represented that
petitionerÊs money will be held in trust and administered
by both him and his brother for the exclusive use of their
forwarding and transporting business. Petitioner further
alleged that Mario promised him a return on his
investment equivalent to ten per centum (10%) for one
month, at the end of which, his money plus interest earned
shall be returned to him.
When petitioner returned to the Philippines, it was
ManuelÊs turn to persuade him to part with his money
under the said investment scheme. Eventually convinced
by the private respondentsÊ representations and
assurances, petitioner agreed to invest the total amount of
US$34,000.00 which he entrusted to his aunt, Liwayway
Dee Tanzo, who was residing in the U.S.A. Thus, petitioner
issued 1several personal
2
checks made out 3to Liwayway Dee
Tanzo, or to „Calfed,‰ or payable to cash, to wit:
California Federal Date of Check Amount

Savings and Loan Asso.
Check Numbers
319 August 04, 1989 US$5,000.00
320 August 09, 1989 9,000.00
321 August 09, 1989 9,000.00
________________
1 California Federal checks nos. 319, 323 and 324 were payable to the
order of Liwayway Dee Tanzo. Rollo, pp. 22, 26-27.
2 California Federal check no. 321 was payable to „Calfed‰ or
California Federal Savings and Loan Association. Rollo, p. 24.
3 California Federal checks nos. 320 and 322 were payable to cash.
Rollo, pp. 23 and 25.
150

Tanzo vs. Drilon
322 August 08, 1989 2,000.00

323 August 10, 1989 4,000.00
324 August 14, 1989 5,000.00
4
Total US$34,000.00
Except for California Federal Check No. 322 which was

encashed by Mario himself, private respondents received
the proceeds of the above checks through Liwayway Dee
Tanzo on several occasions in August 1989.
Meanwhile,
5
Mario encountered serious liquidity
that prompted him to petition the U.S. Bankruptcy Court for a release
problems
from his debts on September 27, 1990. He was ordered „released from all
dischargeable debts‰ by the said court on January 25, 1991.6
Upon the expiration of the thirty (30) day investment
period, petitioner demanded from Mario in the States and
Manuel in Quezon City proper accounting of his financial
investment and/or the return of his capital plus interest
earned. At the outset, private respondents avoided their
obligation to petitioner by making various excuses but after
persistent demands by the latter, Manuel finally admitted
that their shipments had encountered some problems with
the Bureau of Customs. Thus, on January 29, 1990,
Manuel executed a letter authorizing the petitioner to
withdraw documents to assist in the release of their
shipments from the Bureau of Customs. However, when
petitioner attempted to secure the release of the
„balikbayan‰ boxes from the Bureau of Customs, he
discovered that the same had actually contained smuggled
goods and were accordingly seized and forfeited in favor of
the government.
When private respondents continued to ignore
petitionerÊs demand for the return of his money, the latter
filed, on June 31, 1991, a complaint-affidavit for estafa
against private respondents before the Office of the Quezon
City Prosecutor
151
VOL. 329, MARCH 30, 2000 151

Tanzo vs. Drilon
(hereinafter „prosecutor‰). In a resolution dated September

4, 1991 the prosecutor dismissed the said complaint on the
ground that „[t]he Quezon City ProsecutorÊs Office has no
territorial jurisdiction over the offense charged
7
as it was
committed not in Quezon City, Philippines.‰ PetitionerÊs
motion for reconsideration of the said resolution8
was
denied by the prosecutor on the same ground. Petitioner
then filed a petition for review of the dismissal of his
complaint for estafa against private respondents with then
Secretary of Justice, Franklin M. Drilon. On April 10, 1992,
Acting Secretary of Justice, Eduardo G. Montenegro
dismissed the said petition for review in a resolution which
reads:
xxx xxx xxx

An evaluation of the records of the case disclosed that the
incident complained of took place in the United States, and under
Article 2 of the Revised Penal Code, our courts have no jurisdiction
over offenses committed outside the territory of the Philippines.
While the rule allows certain exceptions, the facts do not show that
the case falls within any of said exceptions. Hence, we are
convinced, and hereby hold, that there is no cogent reason to
disturb the findings of the Quezon City ProsecutorÊs Office in the
questioned resolution.
9
ACCORDINGLY, your petition is dismissed for lack of merit.
Dissatisfied, petitioner sought a reconsideration of the

above resolution. However, the Secretary of Justice denied
petitionerÊs motion for reconsideration and stated in a
resolution dated August 6, 1992 that:
xxx xxx xxx

After a careful analysis of the issues raised in your motion and a
re-evaluation of the evidence on record, we find no valid reason to
justify a reversal of our previous resolution.
______________
7 Rollo, p. 36.
8 Rollo, p. 39.
9 Rollo, p. 20.
152

Tanzo vs. Drilon
Aside from your bare allegations that there was a trust agreement
between you and the respondents, and that deceit and
misappropriation which are the important elements of estafa were
committed by them in the Philippines, you did not present any
concrete or convincing evidence to support the same. On the
contrary, your own evidence shows that you transacted with Mario
Salazar through your aunt, Liwayway Dee Tanzo. This bolsters the
claim of Manuel Salazar that the sums of money received by Mario
from Liwayway in Los Angeles, California, U.S.A., were simple
loans as shown by the loan contracts executed by them in the said
place.
WHEREFORE, your motion for reconsideration is hereby
10
denied.
Hence, this petition.

Petitioner contends that the Secretary of Justice
committed grave abuse of discretion in dismissing the
criminal case for estafa against the private respondents on
the ground of lack of jurisdiction as the 11
crime charged was
actually committed in the United States.
At the outset, we must point out that the Secretary of
Justice dismissed the criminal charges against the
respondents not only for lack of jurisdiction but also, and
more importantly, because it found petitionerÊs evidence
insufficient to support his charge of estafa against the
private respondents. Thus, the immediate issue for the
determination of this Court is whether prima facie
evidence exists that the private respondents had committed
the crime of estafa and should be held for trial. After all, a
finding that petitionerÊs complaint for estafa is not
supported by that quantum of evidence necessary to justify
the filing of a criminal case in court shall render irrelevant
the question of territorial jurisdiction over the offense
charged.
A judicious scrutiny of the evidence on record leads us to
agree with the Secretary of Justice that the transactions
between private respondents, particularly, Mario and the
peti-
153
VOL. 329, MARCH 30, 2000 153

Tanzo vs. Drilon
tioner, were simple loans, and did not constitute a trust

agreement, the violation of which would hold the private
respondents liable for estafa.
Petitioner failed to present evidence other than his bare
assertion that he had invested money in private
respondentsÊ business on the basis of a trust agreement.
The photocopies of the checks allegedly subject of the trust
agreement did more damage than good to petitionerÊs
proposition. None of these checks were issued to either
Mario or Manuel and were in fact payable to „Liwayway
Dee Tanzo,‰ „Calfed‰ or „Cash.‰ Moreover, only one of these
checks was actually encashed by Mario, the rest by
Liwayway Dee Tanzo. On the basis of the foregoing alone,
private respondents could have completely denied the
existence of their liability to petitioner as neither proof in
writing nor witnesses exist to substantiate petitionerÊs
claim of a trust agreement between himself and the private
respondents. On the contrary, Manuel does not deny that
Mario had indeed received money from the petitioner,
albeit claiming that the latterÊs liability thereunder is
purely civil in nature for being rooted in a simple loan
contract. Manuel offered in evidence copies of the contracts
of loan entered into 12between M.J.S. International and
Liwayway Dee Tanzo. We agree with the petitioner that
these loan contracts do not by themselves prove that his
agreement with the private respondents was also a loan. As
correctly pointed out by the petitioner, he is not a party to
these contracts that clearly stipulate „Liwayway Dee
Tanzo‰ as creditor and „M.J.S. International represented by
its General Manager, Mario J. Salazar‰ as debtor.
These loan contracts may, however, be given evidentiary
value in support of ManuelÊs claim that the agreement with
petitioner was no different from the loan contracts with
Liwayway Dee Tanzo. Under the rule of res inter alios acta
evidence that one did or did not do a certain thing at one
time is not admissible to prove that he did or did not do the
same or similar thing at another time, but it may be
received to
____________
12 Rollo, pp. 125-130.
154

Tanzo vs. Drilon
prove a specific intent or knowledge, identity,13 plan, system,

scheme, habit, custom or usage, and the like.
Elaborating thus, we have held that:
[Clollateral] facts may be received as evidence under exceptional

circumstances, as when there is a rational similarity or
resemblance between the conditions giving rise to the fact offered
and the circumstances surrounding the issue or fact to be proved.
Evidence of similar acts may frequently become relevant, especially
in actions based on fraud and deceit, because it sheds light on the
state of mind or knowledge person; it provides insight into such
personÊs motive or intent; it uncovers a scheme, design or plan, or it
14
reveals a mistake. (Italics supplied)
The series of transactions between M.J.S. International

and Liwayway Dee Tanzo were entered into under similar
circumstances as those surrounding the contract between
petitioner and Mario. Just like the alleged trust agreement
between petitioner and Mario, the loan contracts between
M.J.S. International and Liwayway Dee Tanzo provide that
the creditor shall lend to the debtor a specific
15
amount for
use by the latter in its business operations. Petitioner also
admits that he entrusted the checks to Liwayway Dee
Tanzo for investment in private respondentsÊ business. This
shows that private respondents were transacting directly
with Liwayway Dee Tanzo in the usual manner that they
conduct business, that is the loan of money for stipulated
interest. Hence, private respondentsÊ modus operandi, if
there ever was one, in raising additional capital for M.J.S.
International was to borrow money from willing investors.
It is thus unlikely, considering the scheme of things, that
private respondents would all of a sudden deviate from an
established business practice to enter into a trust
agreement with the petitioner.
In view of the foregoing and the unfortunate fact that
petitioner has failed to present controverting evidence, this
Court
______________
13 Section 34, Rule 130 of the Rules of Court.

14 Cruz vs. Court of Appeals, 293 SCRA 239, 255 (1998).
15 Rollo, pp. 125-130.
155
VOL. 329, MARCH 30, 2000 155

Tanzo vs. Drilon
is constrained to adopt private respondentsÊ position that

the agreement between Mario and the petitioner was in the
nature of a simple loan agreement.
Therefore, petitionerÊs contention that private
respondents have committed the crime of estafa
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,
16
goods, or other property;
necessarily fails. This Court has ruled that when the

relation is purely that of debtor and creditor, the debtor
cannot be held liable for the crime of estafa, under the
above quoted provision, by 17
merely refusing to pay or by
denying the indebtedness. The reason behind this rule is
simple. In order that a person can be convicted of estafa
under Article 315, par 1(b) of the Revised Penal Code, it
must be proven that he has the obligation to deliver or
return the same money, goods or personal property that he
has received. The obligation to deliver exactly the same
money, that is, bills or coins, is non-existent in a simple
loan of money because in the latter,18the borrower acquires
ownership of the money borrowed.‰ Being the owner, the
borrower can dispose of the thing borrowed 19and his act will
not be considered misappropriation thereof.
_________________
16 Article 315, par. 1 (b) of the Revised Penal Code.

17 Yam vs. Malik, 94 SCRA 30, 35 (1979) citing U.S. vs. Ibañez, 19
Phil. 559 (1911).
18 Art. 1953 of the Civil Code.·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.
19 Yam v. Malik, supra at pp. 34-35.
156

Tanzo vs. Drilon
In the alternative, petitioner accuses private respondents

of committing the crime of estafa under Article 315, par.
2(a) of the Revised Penal Code which provides as follows:
2. By means of any of the following false pretenses or fraudulent

acts executed prior to or simultaneously with the commission of the
fraud
(a) By using a fictitious name, or falsely pretending to possess
power, influence, qualifications, property, credit, agency, business or
imaginary transactions; or by means of other similar deceits.
Specifically, petitioner contends that he was deceived by

private respondents to part with his money on their
representation that the same would be held in trust for
investment in their legitimate freight business only to find
out later on that private respondents used his money for
the illicit activity
20
of smuggling prohibited goods into the
Philippines.
This contention cannot be sustained for lack of evidence.
Petitioner claims that private respondents used his money
for smuggling. The fact, however, that several shipments
from M.J.S. International Freight Services to Mansal
Forwarders were seized and forfeited by the Bureau of
Customs for containing smuggled items does not prove that
petitionerÊs money was indeed used by private respondents
in the said illegal activity. Petitioner himself admits that
he and his relatives 21were regular clients of private
respondents since 1988. It cannot, thus, be doubted that
the private respondents were likewise engaged in a
legitimate forwarding business in which business
petitionerÊs money could have actually been invested.
The letter issued by Manuel authorizing petitioner to
withdraw documents covering the containers that were
later seized by the Bureau of Customs bears little weight in
view of the fact that the same was not even presented
before the prosecutor and the Secretary of Justice. Further,
as correctly
________________
20 Rollo, p. 15.
21 Rollo, p. 4.
157
VOL. 329, MARCH 30, 2000 157

Tanzo vs. Drilon
pointed out by the private respondents, it is a mere blank

form that does not22
even indicate petitionerÊs name as
authorized bearer.
As we have explained earlier, the true nature of the
contract between petitioner and private respondents was
that of a simple loan. In such a contract, the debtor
promises to pay to the creditor23
an equal amount of money
plus interest if stipulated. It is true that private
respondents failed to fulfill their promise to petitioner to
return his money plus interest at the end of one month.
However, mere non-compliance of24 a promise to perform a
thing does not constitute deceit because it is hard to
determine and infer
25
a priori the criminal intent to the
person promising. In other words, deceit should be proved
and established by acts distinct from 26
and independent of,
the non-compliance of the promise, and this, petitioner
failed to do.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
Bellosillo (Chairman), Mendoza, Quisumbing and

Buena, JJ., concur.
Petition dismissed.
Note.·Estafa is a crime committed by a person who

defrauds another causing him to suffer damages, by means
of unfaithfulness or abuse of confidence, or of false
pretenses or of fraudulent acts. (Liwanag vs. Court of
Appeals, 281 SCRA 225 [1997])
________________
22 Rollo, p. 28.
23 Supra, see note 18.
24 Gregorio, A., FUNDAMENTALS OF CRIMINAL LAW REVIEW 810
(9th ed., 1997), citing People vs. Villarin, 50 O.G. 262.
25 Ibid., citing People vs. Yee, CA-G.R. No. 21602-R, Oct. 2, 1958.
26 Supra, see note 20.
158
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SUPREME COURT REPORTS ANNOTATED VOLUME 329 17/3/20, 12:15 AM

VOL. 329, MARCH 30, 2000 147

HARRY TANZO, petitioner, vs. HON. FRANKLIN M.

Criminal Law; Estafa; When the relation is purely that of debtor

148 SUPREME COURT REPORTS ANNOTATED

Tanzo vs. Drilon

Same; Same; Mere non-compliance of a promise to perform a

SPECIAL CIVIL ACTION in the Supreme Court.

The facts are stated in the opinion of the Court.

DE LEON, JR., J.:

Before us is a special civil action for certiorari under Rule

VOL. 329, MARCH 30, 2000 149

name with principal office at No. 48 Scout Tobias Street,

California Federal Date of Check Amount

150 SUPREME COURT REPORTS ANNOTATED

322 August 08, 1989 2,000.00

Except for California Federal Check No. 322 which was

VOL. 329, MARCH 30, 2000 151

(hereinafter „prosecutor‰). In a resolution dated September

xxx xxx xxx

Dissatisfied, petitioner sought a reconsideration of the

xxx xxx xxx

152 SUPREME COURT REPORTS ANNOTATED

Hence, this petition.

VOL. 329, MARCH 30, 2000 153

tioner, were simple loans, and did not constitute a trust

12 Rollo, pp. 125-130.

154 SUPREME COURT REPORTS ANNOTATED

prove a specific intent or knowledge, identity,13 plan, system,

[Clollateral] facts may be received as evidence under exceptional

The series of transactions between M.J.S. International

13 Section 34, Rule 130 of the Rules of Court.

15 Rollo, pp. 125-130.

VOL. 329, MARCH 30, 2000 155

is constrained to adopt private respondentsÊ position that

1. With unfaithfulness or abuse of confidence, namely:

necessarily fails. This Court has ruled that when the

16 Article 315, par. 1 (b) of the Revised Penal Code.

156 SUPREME COURT REPORTS ANNOTATED

In the alternative, petitioner accuses private respondents

2. By means of any of the following false pretenses or fraudulent

Specifically, petitioner contends that he was deceived by

VOL. 329, MARCH 30, 2000 157

pointed out by the private respondents, it is a mere blank

Bellosillo (Chairman), Mendoza, Quisumbing and

Note.·Estafa is a crime committed by a person who

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