G.R. No. 29278, October 3, 1928
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. YU CHAI HO, defendant-appellant.

FACTS

The defendant-appellant, Yu Chai Ho, as managing partner of Gui Sing & Co., ordered merchandise from Wm. H. Anderson & Co. The goods were shipped from New York, consigned to the seller. The shipping documents were sent to the International Banking Corporation (IBC) in Cebu, with instructions to release them only upon payment. Gui Sing & Co. accepted the draft but could not pay. Through the intervention of Anderson & Co.’s manager, IBC agreed to release the documents upon execution of a trust receipt. The trust receipt stated that the goods were held in trust for IBC, with liberty to sell but with the obligation to remit the proceeds to IBC to pay the draft. Yu Chai Ho obtained the goods using the documents but sold them and failed to remit the proceeds to IBC. Wm. H. Anderson & Co., as guarantors, were compelled to pay IBC the amount due.

ISSUE

Whether the defendant is guilty of estafa under paragraph 5, Article 535 of the Penal Code, considering that the entity which ultimately suffered the loss (Wm. H. Anderson & Co.) was not the entity to which the goods were to be returned or delivered under the trust receipt (International Banking Corporation).

RULING

YES, the defendant is guilty of estafa. The Supreme Court affirmed the conviction.

1. Nature of the Trust Receipt: The Court held that under the trust receipt, the title to the merchandise remained with the International Banking Corporation as security until the loan was paid. The defendant received the goods for a specific purpose (to sell and remit proceeds) and under an obligation to return them or their value.

2. Element of Prejudice: The crime of estafa under paragraph 5 of Article 535 requires that the misappropriation or conversion be “to the prejudice of another.” The Court ruled that this phrase is not limited to “to the prejudice of the owner.” The person prejudiced is the one to whom the obligation to deliver or return the goods is owed. In this case, that entity was the International Banking Corporation, which held the title and released the goods based on the trust receipt. The defendant’s violation of the trust receipt terms directly prejudiced IBC’s security interest.

3. Rejection of Defense: The defense argued that since Wm. H. Anderson & Co. ultimately paid the bank, the bank suffered no loss, and only a civil obligation to Anderson & Co. was incurred. The Court rejected this, stating that the estafa was consummated at the moment of misappropriation to the prejudice of IBC. The subsequent payment by the guarantor did not extinguish the criminal liability.

4. Dissent: Justice Malcolm dissented, arguing that the information was defective because it alleged prejudice to Wm. H. Anderson & Co., while the entity immediately prejudiced by the misappropriation was the bank. He believed the conviction on that information was improper and a new information should be filed.

DOCTRINE:
The crime of estafa by misappropriation under paragraph 5, Article 535 of the Penal Code is committed when a person converts or misappropriates personal property received under an obligation to deliver or return it, to the prejudice of the person to whom such obligation is owed. The phrase “to the prejudice of another” is not limited to the absolute owner of the property but includes any person (such as a secured creditor holding title under a trust receipt) who suffers damage due to the violation of that obligation. The subsequent reimbursement of the prejudiced party by a third party does not negate the criminal act.