ROBERT CRISANTO D. LEE, PETITIONER, VS. PEOPLE OF THE PHILIPPINES AND ATOZ TRADING CORPORATION, RESPONDENTS.

Lee versus People of the Philippines

The Case

This is the case of Lee versus People of the Philippines and Atoz Trading Corporation. Robert Crisanto Lee, the marketing manager of Atoz Trading Corporation, was charged with nine counts of estafa by misappropriation or conversion under the Revised Penal Code, for failing to remit to his employer payments made by a client through telegraphic transfers that landed in his own bank account. The case matters because it settles a question that recurs in every estafa prosecution: whether a prior demand is a condition precedent to filing the criminal complaint, and if so, what form that demand must take. The Court answers both questions in a way every reviewee must be able to state from memory.

Procedural History

Ten separate Informations were filed against Lee before the Regional Trial Court of Pasig City, Branch 159. One case was dismissed on motion of the prosecution, and the remaining nine were tried jointly. After the prosecution rested, Lee filed a Demurrer to Evidence, arguing that there was no evidence of a formal demand before the filing of the cases. The trial court denied the demurrer and, after trial, rendered judgment convicting Lee of nine counts of estafa and ordering him to pay actual damages in each case, plus costs.

Lee appealed to the Court of Appeals, insisting that the trial court erred in finding him guilty despite the absence of evidence of prior demand, and that there was no evidence of conversion. The Court of Appeals dismissed the appeal and later denied his motion for reconsideration. Lee then filed a petition for review on certiorari under Rule 45 of the Revised Rules of Court before the Supreme Court.

Facts

Atoz Trading Corporation is a stock corporation engaged in the trading of animal feeds and feed ingredients. Lee served as its sales manager from the early nineties until 1994. In the course of his employment, he brought in Ocean Feed Mills, a Bacolod-based manufacturer of pelletized feeds, as a client, and he personally handled that account.

Transactions between the two companies were coursed through Lee. Upon his instructions, Ocean Feed Mills addressed its payments by telegraphic transfer to Atoz Trading and/or Robert Lee, or to Robert Lee alone, because he explained that it was difficult for him to claim checks at the bank in Greenhills, San Juan. The payments were credited to Lee's own savings account with the same bank.

When Lee stopped reporting for work in 1994, Atoz audited the accounts he handled and discovered that Ocean Feed Mills had an unpaid account of 318,672 pesos. Ocean Feed Mills, however, produced a certification and summary of payments showing that it had fully settled its accounts and had even overpaid. The bank documents showed that the telegraphic transfers had been credited to Lee's personal account. The cashier of Atoz testified that she never received these payments from Ocean Feed Mills. Before the criminal cases were filed, the president of Atoz, accompanied by counsel and policemen, went to Lee's residence in Parañaque in the evening of August 12, 1994, and asked him to remit the payments made by Ocean Feed Mills. Lee failed to account for and return the funds.

Issues

• Whether or not a prior formal demand is an essential element of, or a condition precedent to, a prosecution for estafa by misappropriation or conversion under Article 315, paragraph 1(b) of the Revised Penal Code.
• Whether or not the prosecution proved the element of misappropriation or conversion, and whether or not the Court of Appeals acted with grave abuse of discretion in affirming the conviction.

Applicable Provisions

Article 315, paragraph 1(b) of the Revised Penal Code, as quoted in the decision, provides:

Article 315. Swindling (estafa). Any person who shall defraud another by any of the means mentioned herein below shall be punished by: ... 1. With unfaithfulness or abuse of confidence, namely: ... (b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal property received by the offender 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, even though such obligation be totally or partially guaranteed by a bond; or by denying having received such money, goods, or other property.

This is the very provision under which Lee was charged and convicted, and its text supplies the three elements the Court applies in this case.

Ruling

On the first issue, the Court ruled that demand is not an element of the felony and not a condition precedent to the filing of a criminal complaint for estafa. The accused may be convicted under Article 315, paragraph 1(b) if the prosecution proves misappropriation or conversion of the money or property subject of the Information. Demand is not necessary where there is evidence of misappropriation or conversion. What the failure to account upon demand does supply is circumstantial evidence of misappropriation. The Court also held that demand need not be formal and may be verbal, and that even a query as to the whereabouts of the money is tantamount to a demand. The Court quoted its earlier ruling:

It must be noted that the specific word "demand" need not be used to show that demand had, indeed, been made upon the person charged of the offense. A query as to the whereabouts of the money, such as the one proven in the case at bench, is tantamount to a demand.

The Court added that the fact that the demand was proved through a rebuttal witness rather than in the evidence-in-chief did not weaken the prosecution, because the trial court must consider all the evidence adduced, whether on direct, rebuttal, or sur-rebuttal.

On the second issue, the Court held that the elements of estafa with abuse of confidence were all proved: that the money was received by the offender in trust or under an obligation to deliver or return it; that there was misappropriation or conversion or denial of receipt; and that the misappropriation was to the prejudice of another. The Court defined the operative words, holding that to convert or misappropriate means to use or dispose of another's property as if it were one's own, or to devote it to a purpose different from that agreed upon. It stressed that misappropriation may be proved by direct or circumstantial evidence. Lee himself admitted on cross-examination that the telegraphic transfers were credited to his personal account and that he withdrew the amounts, yet the account of Ocean Feed Mills with Atoz remained outstanding. The Court thus found no grave abuse of discretion in the decision and resolution of the Court of Appeals.

Doctrine

First, demand is not an element of estafa by misappropriation or conversion under Article 315, paragraph 1(b) of the Revised Penal Code, and is not a condition precedent to the filing of the criminal complaint. The felony is complete upon proof of the three elements: receipt of the money or property in trust or under an obligation to deliver or return it, misappropriation or conversion or denial of receipt, and prejudice to another.

Second, failure to account upon demand for funds or property held in trust is merely circumstantial evidence of misappropriation, not an ingredient of the crime.

Third, demand need not be formal; it may be verbal, and even a query as to the whereabouts of the money is tantamount to a demand.

Fourth, misappropriation or conversion may be established by direct or circumstantial evidence, and the trial court must consider all the evidence, including rebuttal and sur-rebuttal evidence, in resolving the case.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, so Lee stands convicted of nine counts of estafa and remains liable for the actual damages awarded in each case, plus costs.

Remember This

Memorize this line: demand is not an element of estafa under Article 315, paragraph 1(b), and it need not be formal, for even a query as to the whereabouts of the money is tantamount to a demand. Examiners use this case to test whether a candidate can separate the true elements of estafa by misappropriation from the evidentiary role of demand, and to test the rule that rebuttal evidence may supply proof of demand.