G.R. No.

18056 March 16, 1922

THE UNITED STATES, plaintiff-appellee,

Claro M. Recto for appellant.

OSTRAND, J.:

The defendant is charged with the crime of estafa under paragraph 5 of article 535 of the Penal
Code. The Court of First Instance of Manila found him guilty and sentenced him to presidio
correccional for the term of one year, eight months and twenty-one days, with the accessory
penalties prescribed by article 58 of the Penal Code and with the costs. The case is now before
this court upon appeal from that sentence.

Though counsel for the appellant has made twenty-three assignments of error and has argued
all of them very earnestly and at great length, the case, from our point of view, yields readily to
analysis and is in reality comparatively simple. The material facts relevant to the issues are
practically undisputed and upon the points where there is any conflict of testimony, we shall, for
the sake of the argument, adopt the view most favorable to the appellant. We will concede that
he was a man of good character, reputation, and social position; that he possessed ample
means and that his official record up to the time of the events hereinafter related was
unblemished and exceedingly creditable to him.

The evidence shows that during the month of June, 1921, the appellant was the treasurer and
responsible financial officer of the Manila Railroad Company. As such, his duties were thus
defined in section 6 of article IV of the By-laws of the corporation:

SECTION 6. The Treasurer. — The Treasurer shall keep full and accurate accounts of
the receipts and disbursements of the Company; shall deposit all moneys, checks and
other obligations to the credit of the company in such depositories as may be designated
by the Board of Directors; shall disburse the funds of the Company as ordered by the
Board of Directors or Executive Committee, taking proper vouchers for such
disbursements; shall render a statement of his accounts and transactions whenever
required by the Board of Directors or Executive Committee; and generally perform all
duties incident to the position of Treasurer subject to the control of the Board of
Directors.

One of the subordinates of the treasurer was denominated cashier and was a bonded
employee, having charge of the cash and the disbursements under the immediate direction of
the treasurer.

On June 18, 1921, the appellant took, through his subordinate, the cashier, the sum of P8,330
out of the funds of the Railroad Company, giving in return therefor his personal check for the
same amount, drawn on the Philippine National Bank; on the 21st of the same month he cashed
a check for p1,670 in the same manner and on the 29th another check for P2,000. In all
instances he directed the cashier to hold the checks and not to deposit them on the current
bank account of the Railroad Company until the end of the month. It is admitted that the
appellant used the money for his personal or private purposes, though the exact character of
the investments made his apparently not been truthfully disclosed.

For the purpose of obtaining data as to the financial condition of the Railroad Company with a
view to a bond issue then in contemplation, the Insular Auditor in the morning of July 1st
commenced an examination of its accounts. In counting the case preliminary to the examination
of the books, the appellant's checks were discovered and it was found that they were carried in
the accounts as part of the cash on hand. An inquiry at the National Bank disclosed that the
appellant then had only P125.66 to his credit there. The appellant could not be found until in the
afternoon of the same day when it appeared that he, at 3 o'clock of that afternoon, had
deposited on his current account with the National Bank the sum of P12,000, the total amount of
the checks.

The checks were not presented for payment until July 6, Though not, as far as we can see, of
any special importance, it may be noted that according to the evidence withdrawn by the
appellant would have drawn interest at the rate of, at least, 2 per cent per annum if it had been
deposited in the National Bank on the current account of the Railroad Company.

The law applicable to this case is found in article 535 of the Penal Code, the pertinent part of
which reads as follows:

ART. 535. The penalties prescribed by the next preceding article shall be imposed upon:

xxx xxx xxx

5. Any persons who, to the prejudice ( perjuicio) of another, shall convert or

As will be seen, there are three essential elements in the offense here defined: (a) Money,
goods, or other personal property received for safe-keeping or on commission or for
administration or for any other purpose giving rise to the obligation to make delivery, or to
return, the same; (b) conversion or diversion of such money or property by the person who has
so received it, or denial on his part of such receipt; and (c) that such conversion, diversion or
denial is the injury of another.

Fraudulent intent in committing the conversion or diversion is very evidently not a necessary
element of the form of estafa here discussed; the breach of confidence involved in the
conversion or diversion of trust funds takes the place of fraudulent intent and is in itself
sufficient. The reason for this is obvious: Grave as the offense is, comparatively few men
misappropriate trust funds with the intention of defrauding the owner; in most cases the offender
hopes to be able to restore the funds before the defalcation is discovered. We may say in
passing that the view here expressed is further strengthened by the fact that of the nine
paragraphs of article 535, the paragraph here under discussion is the only one in which the
words "fraud" or "defraud" do not occur.

Applying the legal principles here stated to the facts of the case, we find all of the necessary
elements of estafa under paragraph 5, supra, present. That the money for which the appellant's
checks were substituted was received by him for safe-keeping or administration, or both, can
hardly be disputed. He was the responsible financial officer of the corporation and as such had
immediate control of the current funds for the purposes of safe-keeping and was charged with
the custody of the same. That he, in the exercise of such control and custody, was aided by
subordinates cannot alter the case nor can the fact that one of the subordinates, the cashier,
was a bonded employee who, if he had acted on his own responsibility, might also have
misappropriated the same funds and thus have become guilty of estafa.

Neither can there by any doubt that, in taking money for his personal use, from the funds
entrusted to him for safe-keeping and substituting his personal checks therefor with instructions
that the checks were to be retained by the cashier for a certain period, the appellant
misappropriated and diverted the funds for that period. The checks did not constitute cash and
as long as they were remained by the appellant or remained under his personal control they
were of no value to the corporation; he might as well have kept them in his pocket as to deliver
them to his subordinate with instructions to retain them.

This is not a case were money was exchanged for checks drawn against existing funds and
available for immediate presentation to the bank for payment. In such a case the checks, while
not actual money, would practically be the equivalent thereof and the momentary diversion of
the coin or currency would probably not be held to constitute estafa.

But it is argued in the present case that it was not the intention of the accused to permanently
misappropriate the funds to himself. As we have already stated, such intention rarely exists in
cases of this nature and, as we have seen, it is not a necessary element of the crime. Though
authorities have been cited who, at first sight, appear to hold that misappropriation of trust funds
for short periods does not always amount to estafa, we are not disposed to extend this
interpretation of the law to cases where officers of corporation convert corporate funds to their
own use especially where, as in this case, the corporation is of a quasi-public character. The
statute clear and makes no distinction between permanent misappropriations and temporary
ones. We can see no reason in the present case why it should not be applied in its literal sense.

The third element of the crime with which the appellant is charged is injury to another. The
appellant's counsel argues that the only injury in this case is the loss of interest suffered by the
Railroad Company during the period the funds were withheld by the appellant. It is, however,
well settled by former adjudications of this court that the disturbance in property rights caused
by the misappropriation, though only temporary, is in itself sufficient to constitute injury within
the meaning of paragraph 5, supra. (U. S. vs. Goyenechea, 8 Phil., 117; U.S. vs. Malong, 36
Phil., 821.)

The sentenced appealed from is in accordance with the law and the established facts and is
hereby affirmed, with costs against the appellant. So ordered.