G.R. No. L-1238 : October 9, 1903
THE UNITED STATES AND MANUEL PARDO, complainants-appellants, vs. MARCELO DOMINGUEZ, defendant-appellee.

FACTS:
The defendant, Marcelo Dominguez, was accused of the crime of estafa (swindling) under Article 535 of the Penal Code. He had received rice from one Borras under a contract of deposit (depósito). After the death of the bailor, Borras, a demand was made upon Dominguez to return the rice. Dominguez refused, claiming that he had already delivered the rice to Alejandro Cornejo a few days before Borras’s death, pursuant to a written order from Borras himself. The prosecution argued that Dominguez’s refusal to return the property constituted estafa. The lower court ruled in favor of the defendant, and the complainants appealed.

ISSUE:
Whether the defendant’s mere refusal to return a thing deposited, without denying having received it, constitutes the crime of estafa under Article 535 of the Penal Code.

RULING:
No. The Supreme Court affirmed the judgment of the lower court, acquitting the defendant of the criminal charge of estafa. The Court held that under the fifth clause of Article 535 of the Penal Code, a depositary is guilty of estafa if he denies having received the deposit. In this case, the defendant never denied receiving the rice; he expressly admitted it and presented a justification for its non-return (delivery to a third party by order of the bailor). The mere refusal to return the property is not, by itself, sufficient to prove estafa. To establish criminal liability, there must be evidence that the depositary appropriated or diverted the property to his own use or that of another. No such evidence was presented. The Court distinguished criminal liability from civil liability, noting that any potential civil obligation of the defendant was not the subject of the criminal proceedings. The appeal was dismissed.