G.R. No. L-6421 / August 14, 1911
THE UNITED STATES, plaintiff-appellee, vs. CAYETANO IBAÑEZ, defendant-appellant.

FACTS

The defendant, Cayetano Ibañez, was charged with the crime of estafa in the Court of First Instance of Leyte. He was convicted and sentenced to imprisonment for two months and one day of arresto mayor, with accessories, and to pay costs, under Article 535(5) in relation to Article 534 of the Penal Code. The evidence established that the relationship between Ibañez and the complaining witness, Tan-Chingco, was purely that of debtor and creditor. No other relationship, such as bailment, agency, or a fiduciary duty, was shown to exist.

ISSUE

Whether a debtor, whose relationship with the complainant is purely that of a debtor and creditor, can be held criminally liable for estafa under Article 535(5) of the Penal Code for merely refusing to pay or denying the debt.

RULING

No. The Supreme Court reversed the judgment of the lower court and ordered the complaint dismissed, absolving the defendant from all liability.

The Court held that when the relationship between the parties is purely that of debtor and creditor, the debtor cannot be held criminally liable for estafa under the cited articles by merely refusing to pay or by denying the indebtedness. The Court found it unnecessary to discuss the other errors assigned by the appellant.

In a concurring opinion, Justice Carson clarified that the conflict in Spanish authority pertained to whether a false denial of a debt made knowingly, maliciously, and with intent to gain (con animo de lucro) constitutes estafa. However, applying the strict construction required for penal statutes, the Court was justified in departing from the doctrine of the Supreme Court of Spain and holding that such a false denial does not constitute the crime of estafa as defined in the Penal Code.