G.R. No. 207373 - Cheng vs. People

The case originated from a criminal action charging Lourdes Cheng with estafa under Article 315, paragraph 1(b) of the Revised Penal Code.
An Information was filed on November 24, 2000 against petitioner for allegedly defrauding several private complainants of their money, which totaled over Php838,000.00.
After a series of proceedings, the Regional Trial Court (RTC) rendered a Decision on February 9, 2007 convicting petitioner of estafa.
The Court of Appeals (CA) affirmed the RTC’s ruling in a Decision dated May 31, 2012 and later denied a Motion for Reconsideration in its Resolution dated May 6, 2013.
Petitioner then elevated the case to the Supreme Court by filing a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

In January 1994, several employees of the National Police Commission (NAPOLCOM) formed a group called the “NAPOLCOM Employees Paluwagan,” which accepted contributions to grant loans with an agreed interest rate of five percent per month.
Petitioner's roles were clearly defined as secretary, treasurer, and administrator, giving her the authority to disburse loans, collect contributions, record transactions, and manage the paluwagan’s funds.
From 1994 to 1997, petitioner diligently returned the contributions along with the corresponding interest at the close of each year.

In December 1998, petitioner failed to return the contributions and the accrued interest when due.
On January 1999, private complainants inquired about the fate of their contributions. Petitioner explained that the collection of loaned funds, particularly from borrowers in areas such as Dagat-dagatan, was unsuccessful due to circumstances like a reported hold-up incident.
Despite her assurances to return the money upon collection, six months had elapsed without repayment, and on July 31, 1999, the complainants issued a formal demand for payment in the total amount of Php852,000.00.

The private complainants alleged that petitioner, having received the funds in trust, misappropriated and converted the money for her personal use, particularly through the disbursement of loans to non-members of the paluwagan.
The RTC found that petitioner acquired material and juridical possession of the funds, used them as if they were her own, and committed abuse of confidence by lending to non-members.
Petitioner, however, consistently maintained that:

The complainants willingly contributed money under the understanding that it would yield interest through loans.
Her failure to return the funds was due to difficulties in collecting from borrowers, not an act of misappropriation or conversion.
The practice of lending funds to non-members was not explicitly prohibited, having been generally accepted and even practiced by the group for years.

While the defense argued that the elements of estafa—specifically misappropriation or conversion—were not proven beyond reasonable doubt, the prosecution relied on circumstantial evidence, such as petitioner’s inability to render an accounting of the funds.
In its final resolution, even though petitioner was acquitted of the criminal charge due to reasonable doubt over fraudulent misappropriation, she was ordered to pay the private complainants a total of Php691,912.81 with specified interest rates, reflecting her civil liability for the funds received in trust.

Whether or not petitioner is guilty beyond reasonable doubt of estafa under Article 315, paragraph 1(b) of the Revised Penal Code.
Whether the prosecution established that petitioner committed misappropriation or conversion of the funds received in trust, amounting to estafa with abuse of confidence.

Whether the prosecution proved that petitioner received money in trust or for administration, misused it to her personal advantage, and despite demand, failed to return the funds to the rightful owners.
Whether petitioner’s conduct in lending money to non-members, which was allegedly prohibited by the terms of the paluwagan, constitutes criminal conversion under the law.

Whether the failure to return the funds, even if not amounting to criminal estafa, still gives rise to a separate civil liability.
Whether the nature of the transaction—being more akin to contractual arrangements among group members—precludes criminal liability while imposing civil liability.