Estafa is a crime committed thru abuse of confidence, false pretenses or fraudulent means. The common form of estafa is misappropriation through abuse of confidence under Article 315, paragraph 1 [b] of the Revised Penal Code [RPC].
The essence of estafa committed with abuse of confidence is the misappropriation or conversion of money or property received to the prejudice of person/entity to whom it should be returned. To convertconnotes the act of using or disposing of another person’s property as if it were one’s own, or devoting it to a purpose or use different from that agreed upon. To misappropriate for one’s own use includes every attempt to dispose of the property of another without right. The law abhors the act of defrauding another person through abuse of trust and/or deceit and thus, criminalizes this kind of fraud. The penalty depends on the value of fraud, means used and its circumstances ranging from minimum of one to six months [arresto mayor] up to maximum of 12 to 20 years [reclusion temporal]. To ensure conviction under Article 315, par. 1 [b], RPC the prosecution must prove four elements: [1] offender received the money, goods or personal property either in trust, on commission, administration or with obligation to deliver or return the same; [2] offender misappropriated or converted them or denies their receipt; [3] such misappropriation, conversion or denial is to the prejudice of another and [4] offended made a demand to the offender for the return of the money given.
Is there estafa if one fails to return the money entrusted to him? This was the issue in Cheng v. People, G.R. No. 207373, 23 March 2022. In 1994, several employees of the National Police Commission formed an association – NAPOLCOM Employees Paluwagan. Each member contributed money for the purpose of granting loan to borrowers with interest. It was agreed that collected contributions will earn 5% interest per month and the dividends will be returned at the end of the year. Lourdes was appointed as secretary, treasurer and administrator of the paluwagan. One time, the members inquired their contributions and found out that their funds were depleted after Lourdes failed to collect the money lent to non-members. She also undertook to return their money as soon as she can collect from borrowers.
In 2000, she was charged with estafa under Article 315 [1] [b] RPC for failure to return the money despite demand for defrauding 40 complainants totaling P838,000 she received in trust with express duty to return them.
In 2007, the Regional Trial Court convicted her as she received the funds with obligation to return them upon demand, but used and disposed them as if it were hers. There was abuse of confidence when she lent the money to non-members of the paluwagan. She was sentenced from eight to 20 years. In 2012, the Court of Appeals affirmed the RTC and ruled that failure of Lourdes to account the funds she held in trust is circumstantial evidence of misappropriation.
On appeal, our Supreme Court ruled that in all criminal prosecution, accused is presumed innocent until proven guilty beyond reasonable doubt. The prosecution bears the burden of proof of establishing the guilt of the accused. Thus, every conviction must rest on the strength of the evidence of the prosecution and not on the weakness of the defense. In this case, complainants mutually created the paluwagan to extend loans and charge interest thereon. Each member willingly gave his money, knowing it will be lent to others. Lourdes Cheng lent the complainants’ money to interested borrowers. Clearly, petitioner did not misappropriate the funds as if they were her own, or gain any personal advantage from said funds. Her failure to return the money upon demand was due to the borrower’s default. For almost four years, not a single member complained against this practice, thereby proving that Lourdes was allowed to lend money to non-members. The CA erred in ruling that failure to return or account the funds is a circumstantial evidence of misappropriation since Section 4, Rule 133, Revised Rules on Evidence requires more than one circumstance if the conviction is based on circumstantial evidence.
There is also no abuse of confidence or misrepresentation when complainants gave their money. Rather, complainants mutually created the paluwagan to extend loans and get interest thereon. The prosecution miserably failed to prove that lending to non-members was not allowed. The failure to return the money upon demand was not fraudulent but due to the fact that the borrowers failed to pay their loans. Thus, Cheng was acquitted of the charge of estafa but is still civilly liable.
