Dear Atty. Angela,

I am an employee and part of an association or paluwagan where members contributed money for purposes of granting loan to borrowers for interest. When the capital gains profit, this will be divided and returned to members at the end of the year. I was appointed treasurer and administrator of the paluwagan. I was consistent in returning the money but this year, I failed to collect and return the money as the borrowers were victim of hold-up and could not pay. The members filed an Estafa case against me. Would I be held criminally liable?

Loren

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Dear Loren,

All criminal prosecutions are governed by the Constitutional precept that a person is innocent until proven guilty beyond reasonable doubt. Thus, every conviction must rest on the strength of the prosecution’s evidence and not on the weakness of the defense.

In line with this, to ensure a conviction for Estafa under Article 315, paragraph 1(b), of the Revised Penal Code, the prosecution must prove that (i) the offender received money, goods or other personal property in trust, or on commission, or for administration, or under any other obligation involving the duty to deliver, or to return, the same; (ii) he/she misappropriated or converted the money or property received, or denies the receipt of the money or property; (iii) such misappropriation, conversion or denial is to the prejudice of another; and (iv) the offended party made a demand for the return of the money or property given to the offender.

In the case of Cheng v. People, G.R. No. 207373, 23 March 2022, the Court ruled that the essence of estafa committed with abuse of confidence is the misappropriation or conversion of money or property received to the prejudice of the person to whom it should be returned. The petitioner here did not commit abuse of confidence or misrepresentation to dupe the complainants into giving her their money. Rather, the private complainants, along with the petitioner mutually created the paluwagan for the purpose of extending loans to other borrowers, and charging interest. Each member willingly gave their money, knowing that it will be lent to others.

In your case, you lent the members’ money to interested borrowers. There was no misappropriation of funds as if they it was your own, or gain any personal advantage from said funds. As such, you could not be held liable for Estafa. Nonetheless, you may be adjudged to be civilly liable as you kept the money in trust and for administration; thus, the duty to return the money.

Atty. Angela Antonio