BENITO SY Y ONG, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, AND COURT OF APPEALS, RESPONDENTS.

Convicted of Estafa under Article 315,
Paragraph 1(b) of the Revised Penal Code by three (3) Courts, namely, the
Metropolitan Trial Court, Caloocan City, Branch 52;^[1]
the Regional Trial Court of the same City, Branch 129;^[2]
and respondent Court of Appeals, petitioner now seeks to break the chain of
convictions.

The indictment against petitioner-accused, filed on 18 August 1986, reads:

“That on or about and during the month of January 1986 in Caloocan City, Metro Manila and within the jurisdiction of
this Honorable Court, the above-named accused received from the Panama Sawmill
Inc., represented in this case by TE PENG MEN, PBC Check No. 291616 dated
January 15, 1986 for P6,000.00 which check was subsequently encashed
by said accused for the purpose of and under the express obligation on his part
to use the said amount in securing a Marine Insurance coverage for
P3,000,000.00 on a shipment of logs owned by Panama Sawmill Inc. but said
accused with abuse of trust and confidence reposed upon him far from complying
with his obligation and with intent to deceive and defraud said corporation,
did then and there willfully, unlawfully and feloniously receive a Marine
Insurance coverage for only P1,000,000.00 to cover said shipment of logs,
paying therefor only the amount of P2,712.50 as
insurance premium without the knowledge and consent of said Panama Sawmill
Inc., and thereafter, said accused misappropriated and converted to his own
personal use and benefit the balance of P3,287.50, and despite repeated demands
upon him, said accused refused and failed to account for said sum of P3,287.50
to the damage and prejudice of said Panama Sawmill, Inc., in the aforestated amount of P3,287.50.” (p. 3, Original
Record)

After trial on the merits, the Metropolitan
Trial Court of
Caloocan City
convicted petitioner in a Decision, dated 17 December 1986, the dispositive
portion of which reads:

“WHEREFORE, by proof beyond reasonable doubt, the accused
BENITO SY is found GUILTY of violating Art. 315, par. 3 of the Revised Penal
Code, he is sentenced to a straight penalty of FOUR (4) MONTHS imprisonment, to
reimburse or give restitution in the amount of THREE THOUSAND TWO HUNDRED
EIGHTY SEVEN (P3,287.50) PESOS AND 50/100 CENTAVOS and to pay costs.” (p.
37, Original Record)

On appeal before it, the Regional
Trial Court of Caloocan
City, affirmed the judgment of
conviction on 3 June 1987,
but increased the penalty, as follows:

“IN VIEW OF THE FOREGOING, this Court finds the accused Benito
SY y Ong
guilty beyond reasonable doubt of the crime of estafa,
thru misappropriation, as defined under par. 1 (b) and penalized under the 3rd
par. of Art. 315 of the Revised Penal Code and there being no attendant
mitigating nor aggravating circumstance, he is hereby sentenced to suffer an
indeterminate penalty of THREE (3) MONTHS OF ARRESTO MAYOR TO ONE (1) YEAR AND
ONE (1) DAY OF PRISION CORRECCIONAL; to suffer the accessory penalties provided
for by law; and to pay complainant Panama Sawmill Co., by way of reparation,
the amount of P3,287.50.  Costs against
appellant.” (p. 304, Original Record)

On 30 June 1988 respondent Court of Appeals affirmed the Regional
Trial Court Decision^[3]
notwithstanding two (2) Manifestations in lieu of Comment submitted by the
Office of the Solicitor General, dated 3 March 1988 and 3 October 1988,
respectively, recommending acquittal of petitioner-accused.

Before us now, petitioner re-asserts his innocence.  The Solicitor General has also reiterated his
recommendation for acquittal.

According to Te Peng Men, Manager of
Panama Sawmill, Inc., (henceforth, simply “Panama”),
and sole witness of the prosecution, the developments in this case unfolded as
follows:

1.  Sometime in January 1986
“Panama”
engaged petitioner, an insurance agent, to obtain marine insurance in the amount of P3M to cover its log shipment from Palawan to Manila.

2.  As instructed, on 14 January 1986 petitioner secured
Marine Insurance Policy No. OAC-M-86/002 from Oriental Assurance Corporation
(“Oriental”, for short), with a face value of P3M (Exhibit
“A”).  Only the duplicate
original of the Policy was left with “Panama”.

3.  On 15 January 1986, “Panama”
gave petitioner Philippine Bank of Communication Check No. 291616 in the amount
of P6,000.00 payable to “Oriental” for the policy coverage of P3M.

4.  On 28 January 1986 some of the logs valued at P1.2M
were lost when the barge transporting the shipment encountered rough seas in
the vicinity of Dumaran
Island, Palawan.

5.  “Panama” filed
a claim for loss against “Oriental” only to be informed by the latter
that its marine insurance coverage was only for P1M and that petitioner had
paid a premium of only P2,712.50 (Exhibit “D”).

6.  Contending that
petitioner had misappropriated the difference of P3,287.50 for his personal use
and benefit to its prejudice, “Panama”
charged petitioner with Estafa.

For his part, petitioner maintains that the following details constitute
the truth:

a) Petitioner had never, at
any one time, dealt with prosecution witness, Te Peng
Men.  It was only through one Tau Tian that petitioner had any
contact with “Panama.”

b) “Oriental” had
issued a Marine Insurance Policy in the amount of P3M in favor of “Panama”
through petitioner’s efforts.

c)  However, Tau Tian requested petitioner to
return the Policy since the rate was quite high and “Panama”
wanted to pay only P6,000.00. 
Thereafter, Tau Tian
returned the original of the Policy to petitioner but retained the duplicate
copy.  Tau Tian instructed petitioner to obtain a reduction of the
premium from P8,137.50 to P6,000.00.

d) Since petitioner was not able to secure a reduction in the
premium, he obtained instead a P1M policy from “Oriental” paying for
that purpose a premium of P2,712.50. in addition, he obtained a P2M policy from the First Integrated
Insurance Co., Inc., paying a premium therefor of
P3,255.00.  The two policies totalled P3M and the premiums paid reached P5,967.50, or almost
P6,000.00.

e) The real reason why
“Panama”
was not able to recover on the aforementioned policies was because the policy or “Oriental” was for total
loss only and not for partial loss.  In
fact, even the Tan Gatue Adjustment Company sustained
the rejection of “Panama’s”
claim for that reason.

Defense witness, Kent Cotoco, the
Underwriting Manager of “Oriental.” corroborated petitioner’s
testimony that the P3M Policy first issued by “Oriental” (Exhibit
“1”) was cancelled and replaced by a P1M Policy (Exhibit
“3”).  He explained that before
the P3M Policy was cancelled, petitioner had surrendered the original to
“Oriental”; that the original and the replacement Policies bear the
same serial number 86/002 because it is company policy for the replacement
Policy to carry the same number as the original Policy; and that he was aware that the First Integrated
Insurance Co., Inc., had issued a P2M Policy for “Panama” (t.s.n., November 21, 1986. pp. 78-80) because the latter
company charges a lower premium rate than “Oriental” (ibid., pp.
80-82).

Is the accused guilty of Estafa
committed through misappropriation under paragraph 1(b) Article 315 of the
Revised Penal Code?  Said provision
reads:

“ART. 315. Swindling (estafa).  Any person who shall defraud another by any
of the means mentioned herein-below shall be punished by:

x        x          x

“(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.”

For the crime of Estafa through
misappropriation to exist, the following elements must be present:

1.    That money, goods or other personal property
is 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;

2.    That there be misappropriation or conversion
of such money or property by the offender, or denial on his part of such
receipt;

3.    That such misappropriation or conversion or
denial is to the prejudice of another: 
and

4.    That there is a demand made by the offended
party to the offender (II Criminal Law, Luis B. Reyes, 12th Edition, p. 717)

Have the foregoing elements been met in respect of
petitioner-accused?  Petitioner,
supported by the Solicitor General, avers that they have not because no
conversion or misappropriation has been committed and that there was no demand
for the return of the P6,000.00 given to petitioner.  In other words, elements 2, 3, and 4 of the crime are lacking.

The totality of the evidence yields the following
incontrovertible data in chronological order:

Upon the established facts, there can be no dispute that
petitioner received a check in the amount of P6,000.00 from “Panama”
for the particular purpose of securing a marine insurance coverage of P3M.  That marked the creation of a fiduciary
relation between them, the existence of which, either in the form of a trust or under any other obligation involving
the duty to make delivery of the same, is an essential element of the crime of Estafa by misappropriation or conversion.  The first element of the crime of Estafa, therefore, is satisfied.

As to the second element of “misappropriation or
conversion” of the money or property received, petitioner contends that
the same is inattendant because petitioner had, in
fact, procured the P3M insurance coverage from two companies, spending therefor all of the entrusted amount of P6,000.00 for
premiums.

We find ourselves in disagreement.

To “convert” (“distraer“)
connotes the act of using or disposing of another’s property as if it were
one’s own.  And to
“misappropriate” (“appropiar“)
means to own, to take something for one’s own benefit (II Criminal Law, Luis B.
Reyes, 12th Edition, p. 729).  That there
was conversion or misappropriation by petitioner is immediately shown by the
fact that, as admitted by him on cross-examination, he had deposited the
“Panama” check, of P6,000.00 payable to “Oriental” in his
own personal account (t.s.n, November 21, 1986. p.
30) even though he was not authorized to do so by “Oriental” being
merely an ordinary, not a special agent, as testified to by the underwriting
agent of “Oriental” (ibid., pp.
70-74).  Petitioner assumed the
right to dispose of it as if it were his, thus committing conversion with
unfaithfulness and a clear breach of trust. 
A check, while not regarded as legal tender is normally, under
commercial usage, a substitute for cash. 
The credit represented by it in stated monetary value is properly
capable of appropriation (Galvez vs. Court of
Appeals, L-22760, November 29, 1971, 42 SCRA 278).

More, petitioner only gave a duplicate original copy of the
“Oriental” policy to “Panama”,
which accepted it as the right policy. 
If, as petitioner alleges, “Panama”
had asked him to secure a reduction in premium, it would have been a simple
matter for him to have informed
“Panama”
of the second Policy for P1M he had secured from “Oriental”, as well
as the P2M Policy from First Integrated. 
But, no.  All these were
fraudulently concealed from “Panama”
and were brought out only during the preliminary investigation of the case
before the City Fiscal’s Office.

Petitioner’s obtainment of the First Integrated Policy, with a
coverage of P2M, was only on paper.  He had
failed to pay the premium therefor of P3,255.00 at
the time of issuance so that the Policy never became valid and binding (Sec.
77, Insurance Code of 1978).  Eloquent
proof of that is the Endorsement of 2
May 1986 of First Integrated canceling its said Policy for
non-payment of premium “effective as of its inception date,” or on 15 January 1986.  Petitioner’s explanation that he paid for the
premium twice – the first time on 21 January 1986 except that he was not issued
a receipt because he paid for it in cash (t.s.n.,
November 21, 1986, pp. 36-37), and the second time on 10 June 1986
“because the first time my sub-agent did not pay it directly to the
company on the first time so I paid it again,” (ibid., p. 38) – is prevarication, pure and
simple.

Petitioner paid the premium for the First Integrated Policy only
on 10 June 1986 or five (5) months after its issuance and five (5) months after
the partial loss of the shipment, and while the case was already pending
investigation at the City Fiscal’s Office.  The company reinstated the Policy, also on 10 June 1986, but on the condition
that “no loss had occurred prior to the date of issuance of this
endorsement.” It was a useless reinstatement, therefore, and the stark
fact remains that at the time of loss there was no coverage from First
Integrated because of non-payment of premium. 
Evidently, petitioner paid the premium at that late date in a futile
attempt to revive the Policy and
as a last-ditch effort to show
that the entire P6,000.00 amount received from “Panama”
was used by petitioner for the purpose intended – namely, the payment of
premium for marine insurance coverage of P3M. 
Indications are that no payment of premium to First Integrated would
have been made either, but for this criminal charge.  The evidence is clear that he had utilized
the balance of the P6,000.00 (after deducting the premium of P2,712.50 paid to
“Oriental”) for his own benefit, and with abuse of confidence, which
is the very essence of misappropriation. 
And he would have gotten away scot-free if no loss of the shipment had
occurred.

The third element of Estafa is likewise present.  The misappropriation or conversion resulted
in prejudice to “Panama”
which had believed all along that its shipment was insured for P3M.  There was disturbance in its property rights
and, although temporary, is sufficient to constitute injury within the meaning
of Article 315 (1-b) of the Revised Penal Code (Lu Hayco
vs. Court of Appeals, L-49607-13 & 55775-86.  August
26, 1985, 138 SCRA 227).

As to the fourth essential element, that of demand made by the
offended party to the offender, which petitioner claims is wanting in this case, suffice it to state that demand is not
necessary when there is evidence of misappropriation as in this case.

“It so happens only that failure to
account, upon demand, for funds or property held in trust, is circumstantial
evidence of misappropriation.  The same
may, however, be established by other proof, such as that introduced in the case
at bar.” (Tubb vs. People, et al., 101 Phil. 114
(1957)

All the essential elements of Estafa
through misappropriation or conversion being present, we do not see our way
clear to breaking the chain of convictions by the other Courts before us.  The guilt of petitioner-accused has been
proven beyond reasonable doubt.

WHEREFORE, the judgment under review is hereby
AFFIRMED.  With costs against
petitioner-accused, Benito Sy y Ong.

SO ORDERED.

Paras, Padilla, Sarmiento,
and Regalado,
JJ., concur.

^[1]
Presided over by Judge Carlos C. Ofilada.

^[2]
Presided over by Judge Domingo M. Angeles.

^[3]
Penned by Justice Segundino G. Chua and concurred in by Justices Fidel P. Purisima and Nicolas P. Lapena,
Jr.