Disturbance of property rights

The elements of estafa through misappropriation or conversion of money, goods or property under Article 315 paragraph 1(b) of the Revised Penal Code, are the following:(1) that money, goods or other personal property is received by a person 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; (2) that the person converts or misappropriates such money or property, or denies having received it;(3) that such misappropriation or denial is to the prejudice of another; and (4) that demand is made by the offended party to the offender. What constitutes misappropriation? Must the offended party be the owner of the goods misappropriated? Is demand always necessary? These are some of the questions answered in this case of Jerry.

Jerry was the Vice President of AMD Corp. and consultant of UG Inc. AMD and UGI are domestic corporations which supply finished clothes like ladies jeans, to a New York based corporation, SKI which imports clothes from the Philippines through its buying agent OPI.

In December 1985 SKI informed its agent OPI that it needs jeans to be delivered in January 1986. Thus OPI contacted AMD/UGI and issued purchase and sales contracts to the latter to supply 700 dozens of three different designs of Ladies Basic pocket stretch twill jeans payable by an "at sight" letter of credit. SKI confirmed such contracts.

On January 7, 1986, the parties agreed that SKI would advance to AMG/UGI $41,300.00 to procure the raw materials for the manufacture of the jeans. Such amount would be considered as advance payment of the order for 700 dozen jeans. So the said amount was remitted by telegraphic transfer to the joint account of Jerry and his wife and the President of AMD/UGI and his wife. On January 16 and 22, 1986, Jerry withdrew a total of $ 41,675.21 from said account and caused the remittance of the amount withdrawn to another account abroad by telegraphic transfer, then got its equivalent in pesos. But instead of purchasing 10,000 meters of fabrics as raw materials only 3,000 meters was purchased enough to produce only 200 dozens of jeans. When OPI inquired about the insufficient purchase, they could not locate Jerry any more. So a complaint for estafa was filed by SKI through its local agent, against Jerry.

For his defense Jerry claimed that payment for the 3,000 meters fabrics had been made and the balance returned to AMD/UGI, so there was no misappropriation. He also contended that he had no obligation to account to SKI the proceeds of the amount withdrawn since it is AMD/UGI which is the owner of the amount and it has not been alleged nor was evidence presented that damage has been caused to AMD/UGI. Furthermore, according to Jerry, no demand was shown to have been made by SKI on him. Demand was made by SKI only on AMD/UGI, so he could not be guilty of estafa which requires demand as an element for conviction.

Was Jerry correct?

No.

The words "convert" and "misappropriate" as used in Art.315 par1(b) of the Revised Penal Code, connote an act of using or disposing of another’s property as if it were one’s own, or of devoting it to a purpose or use different from that agreed upon. Even a temporary disturbance of property rights constitutes misappropriation. To "misappropriate" a thing of value for one’s own use includes not only conversion to one’s personal advantage but also every attempt to dispose of the property of another without right. Thus when Jerry caused the remittance of the amount withdrawn to another account, such act constituted conversion or misappropriation or unauthorized disposition of the money contrary to the purpose for which the money was devoted.

The fact that SKI, the party prejudiced, is no longer the owner of the sum misappropriated, does not mean that Jerry is not liable for estafa. In estafa, the person prejudiced or the immediate victim of the fraud need not be the owner of the goods misappropriated. Thus Art. 315 1(b) provides that "any person who shall defraud another by any means mentioned in said article (315) may be held liable for estafa. The use by the law of the word "another" instead of the word "owner" means that as an element of the offense, loss should have befallen upon someone other than the perpetrator of the crime.

The element of demand was satisfied when demand was made upon AMD/UGI. To require SKI to make a demand on Jerry would be superfluous and would serve no other purpose. As far as SKI and it local agent are concerned, it was the obligation of AMD/UGI to deliver the jeans, which at the time of demand was not complied with. Thus SKI acted appropriately when it demanded from AMD/UGI, the return of the amount advanced. To require that demand should have been made by SKI upon Jerry himself is to sustain a blind application of the law. The law does not require a demand as a condition precedent to the crime of embezzlement. It so happens only that failure to account, upon demand for funds and property held in trust, is a circumstantial evidence of misappropriation. In prosecution for estafa, demand is not necessary when there is evidence of misappropriation (Salazar vs. People of the Philippines G.R. No. 149472 December 15, 2002).

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