G.R. No. L-19567; February 5, 1964
PEOPLE OF THE PHILIPPINES, complainant-appellee, vs. SOLEDAD NERY, accused-appellant.

FACTS

The accused-appellant, Soledad Nery, received two diamond rings from Federico Matillano on November 15, 1954, under an agreement to sell them on commission and remit P230.00 the following day. She failed to deliver the amount, later claiming her buyer withdrew. After Matillano reported the matter to police in January 1955, Nery executed a written promise to pay by January 25, 1955, which she also breached. Following a dismissed complaint in the municipal court, during which Nery made two partial payments, the City Fiscal filed an information for estafa with the Court of First Instance in June 1958.
While the case was pending in the Court of First Instance, Nery, assisted by her counsel, executed a new compromise agreement in October 1958, promising to pay the balance in installments. She made a P50.00 payment in March 1959 but failed to settle the remaining balance. The trial court convicted her of estafa. On appeal, the sole legal issue raised was whether the subsequent payments and compromise agreement novated the original transaction, thereby extinguishing her criminal liability.

ISSUE

Whether the subsequent partial payments and the execution of a compromise agreement novated the original trust agreement, thereby extinguishing the criminal liability for estafa.

RULING

The Supreme Court affirmed the conviction, ruling that novation does not extinguish criminal liability for estafa, especially after the criminal action has been instituted. The Court explained that a crime is a public offense against the State, and the offended party cannot waive or extinguish the criminal liability once the state prosecutors have filed the information in court. While novation may potentially prevent the rise of criminal liability if it occurs before any criminal prosecution and transforms the relationship into an ordinary debtor-creditor one, it cannot absolve an accused after the criminal case has commenced.
The Court further held that the Penal Code does not recognize novation as a mode of extinguishing criminal liability. The acceptance of partial payments, without a clear intent to transform the fundamental nature of the obligation, does not constitute novation. In this case, the alleged novation via the 1958 compromise occurred long after the estafa was committed and while the criminal case was already pending trial. The earlier dismissal by the municipal court was irrelevant as it lacked jurisdiction over the offense. Therefore, Nery’s criminal liability remained intact and unaffected by the subsequent private agreements.