G.R. Nos. 19403, 19404, 19405. January 30, 1923

Three criminal cases grew out of the manipulation of funds through the
purchase of German marks, by Isidoro Lerma, chief of the foreign department of
the Philippine National Bank. The first prosecution (No. 23463 below; here, No.
19403) was for the crime of estafa in the amount of P37,573.90. The
second prosecution (No. 23478 below; here, No. 19404) was for the crime of
estafa committed by means of falsification of private documents in the
amount of P38,359. And the third prosecution (No. 23594 below; here, No. 19405)
was, likewise, for the crime of estafa through falsification of private
documents in the amount of P14,333. Convicted in all three cases after separate
trials, defendant Lerma has appealed to this court.

The cases can be more accurately resolved by considering the facts and the
law pertaining to each, separately.

I. R. G. NO. 19403

Between September 27, 1919, and October 9, 1919, both dates inclusive, the
New York branch of the Philippine National Bank bought 1,850,000 marks at
P0.092125, P0.0796, and P0.076 per mark. Of these marks 1,780,000 were sold to
different persons at prices ranging from P0.10 to P0.1175 per mark, or a total
of P193,625. This latter sum, Isidoro Lerma, chief of the foreign department of
the Philippine National Bank, should have turned in and credited to the bank.
Instead of doing this, only the sum of P154,477.50 was credited. The difference
between the sum which should have been actually set up on the books of the bank
and the sum which apparently was set up represents the sum of P39,147.50, which
Lerma is alleged to have misappropriated.

The device conceived and executed by Lerma was something as follows: Soon
after notice was received by the Philippine National Bank that the marks ordered
had been purchased and remitted to its Berlin correspondent, Lerma transferred
the entire lot to the account of one Nicanor Carag, although this person in fact
ordered no marks and made no deposit for their purchase. Lerma made it appear
that Carag bought the marks at prices slightly greater than the purchase price.
This done, the numerous orders for marks were filled at prices allowing a
considerable margin of profit, which was entered in the books as deposits made
by N. Carag.

The explanation offered by defendant Lerma was as follows: On September 27,
1919, N. Carag ordered the purchase of one million marks and deposited P5,000 to
safeguard the bank against all possible fluctuation in the price of the mark.
This transaction was approved by Manuel Concepcion, Secretary of the Philippine
National Bank. Lerma then claims that he had authority from Carag to resell the
marks at advantageous terms. Since at that time no other marks were available in
the Manila market, the customers of the bank had to be served by selling them
the Carag marks.

Predicated on the testimony of the defendant, counsel claims that he should
only be held guilty of having violated business ethics. But sad to relate,
defendant’s version of the transaction does not ring true. In the first place,
there is no record of a written contract between N. Carag and the Philippine
National Bank. In the next place, the so-called deposit by Carag was not entered
in the books of the bank. Finally, Carag was not called upon to testify that
such contract really existed, or that such deposit was really made, or that he
collected or received the profit which resulted from the speculation. There are
a number of other reasons which might be cited, all going to disprove the
testimony of the defendant, but sufficient has been said to demonstrate the
untenability of his position.

What really happened, therefore, is that Lerma, taking advantage of his
position in the bank, created, in so far as the transaction was concerned, a
fictitious purchaser of marks and a fictitious depositor. While as a bank
official he was not prohibited from speculating with his own money in foreign
exchange, he was not authorized as a bank official to purchase marks for the
bank and then to so manipulate their sale as to gain a compensation for himself
personally. The real clients of the bank believed at all times that they were
dealing with the bank through Lerma, and had no way of knowing that he merely
held himself out as an intermediary and as a private speculator.

The trial judge found the defendant guilty of the crime of estafa as
punished by article 535, paragraph 5, in relation to article 534, paragraph 3,
of the Penal Code. The judgment was that defendant Lerma be sentenced to two
years, eleven months, and ten days’ imprisonment (presidio correccional),
with suspension from all public professions, offices, and rights during the time
of the sentence, to indemnify the National Bank in the sum of P31,147.50, with
subsidiary imprisonment in case of insolvency, and to pay the costs. The
Attorney-General suggests that the indemnity should be P39,147.50, in place of
P31,147.50. This, however, cannot be, since the information only alleges a
misappropriation in the amount of P37,573.90, the limit of reimbursement which
can be imposed. With this slight modification, we agree in all respects with the
decision of the trial judge.

II. R. G. NO. 19404

On October 18, 1919, Isidoro Lerma, chief of the foreign department of the
Philippine National Bank, received advices from the New York branch of the bank
that one million marks had been purchased at the rate of P0.073 a mark, and
remitted to Berlin to the account of the Philippine National Bank. Between
October 22 and October 25, 1919, 938,000 of these marks were sold to different
persons at rates varying from P0.10 to P0.115 a mark, for a total of P105,251.
Lerma, however, only turned over to the Philippine National Bank P78,000, the
difference, P27,251, being the amount which he is alleged to have
misappropriated to his own use.

N. Carag was made the purchaser of the million marks. Entries in the surety
account of the Philippine National Bank dated October 22, 23, 24, and 25, 1921,
credited Carag with deposits in payment of marks at the rate of P0.078 a mark,
when in fact these purchases and these payments were made by other persons at
higher rates. The difference between P0.078 and P0.10 or P0.115 a mark, as the
case might be, was then accumulated in two accounts; one in the name of C. Reyes
and the other in the name of P. Rivera. Afterwards, the sums placed to the
credit of these two accounts were withdrawn by means of a check in the name of
Sergia Lerma, the daughter of the accused.

Lerma in his own defense stated that it was only a mistake of his which
caused him to transform N. Carag into a purchaser of marks, when the truth was
that the purchasers were C. Reyes and P, Rivera. The defendant further testified
that he did not know the identity and residence of Reyes and Rivera. He further
said that he drew the check in favor of his daughter, for the purpose of
delivering the amounts due to the said C. Reyes and P. Rivera, when they are
encountered.

Nicanor Carag, who was called as a witness in this case, testified that he
never dealt in marks. No effort was made to secure the presence of C. Reyes and
P. Rivera, if indeed any such persons existed.

Counsel argues that the book, Exhibit LL, called surety account, is not a
mercantile document. We do not find this claim sustainable and are of the
opinion that the surety account is just as much a commercial document as journal
books, ledgers, etc. (2 Viada, Codigo Penal, p. 419.)

The trial judge found the defendant guilty of the complex crime of
estafa committed by means of falsification of a mercantile document as
punished by article 301 of the Penal Code, as amended, in relation with articles
535, paragraph 1, and 89, of the Penal Code. The judgment was that the defendant
should suffer six years’ imprisonment (prision correccional), should pay
a fine of 250 pesetas, and should indemnify the Philippine National Bank
in the sum of P27,251, or in case of insolvency, should suffer the corresponding
subsidiary imprisonment, with the accessory penalties provided by law, and the
costs. This is correct, with the rather insignificant change that instead of 250
pesetas, which is the minimum fine provided by the Code, a somewhat
higher fine should be imposed, in order to comply with the law; we fix this fine
at P200.

III. R. G. NO. 19405

On October 30, 1919, 1,100,000 marks were ordered from New York at P0.0644
per mark by the Philippine National Bank and sent to Germany. All but 10,000 of
these marks were sold later in Manila to two persons; 750,000 at P0.0693 a mark,
and 340,000 at P0.11 a mark, making in all P89,375. But Lerma caused it to
appear in the books of the Philippine National Bank that the entire 1,090,000
marks were sold to one C. Reyes at P0.0689 a mark or for a total of P75,901. The
difference of P14,274 was the sum misappropriated by the accused.

C. Reyes was not called to testify, and the lower court pronounced him a
fictitious person created by the defendant to cloak his misdeed.

The trial judge in this case found the defendant guilty of the crime of
estafa with falsification of a mercantile document, in accordance with
article 301 of the Penal Code, as amended, in relation to article 535 of the
Penal Code. The judgment was that the defendant be sentenced to five years, four
months, and twenty-one days’ imprisonment (prision correccional), to pay
a fine of 250 pesetas, and to indemnify the Philippine National Bank in
the sum of P15,007, or to suffer the corresponding subsidiary imprisonment in
case of insolvency, with the accessory penalties provided by law, and the costs.
This is correct, except that again a fine of P200 must be substituted for the
fine of 250 pesetas, and that the indemnity must be fixed at P14,274.

JUDGMENTS

We find, therefore, that notwithstanding the arguments advanced by counsel
for the defendant, who has done all possible for his client, the defendant and
appellant has been proved guilty beyond all reasonable doubt of the crimes
alleged in the three informations. We also find no reversible error present, and
that the law has been correctly applied to the facts. We find finally that the
judgments are substantially correct, with the minor changes previously
indicated.

The judgment in case No. 19403 is affirmed, with the sole modification that
the indemnity shall be P37,573.90, in lieu of P31,147.50. The judgment in case
No. 19404 is affirmed, with the sole modification that the fine shall be P200 in
lieu of 250 pesetas. The judgment in case No. 19405 is affirmed, with the
sole modifications that the fine shall be P200 in lieu of 250 pesetas,
and the indemnity shall be P14,274, in lieu of P15,007. The costs of each of the
three cases shall be taxed against the appellant. So ordered.

Araullo,
C.J., Street, Avanceña, Villamor, Ostrand, Johns, and Romualdez, JJ.,
concur.