G.R. No. L-1358 : October 23, 1903
THE UNITED STATES, complainant-appellee, vs. LORENZO DURAN, defendant-appellant.

FACTS:
Lorenzo Duran, the municipal president of Polangui, was charged with malversation of public funds. The evidence established that the municipal treasurer had placed public funds in Duran’s custody for safekeeping because the municipality lacked a safe, and it was considered dangerous to send the specie directly to the provincial treasury. This practice was a custom in the province. Duran misused the funds for private purposes but later restored the money in full.

ISSUE:
Whether the defendant is guilty of the crime of malversation under Article 392 of the Penal Code, and if so, under which specific paragraph of said article should he be penalized.

RULING:
Yes, the defendant is guilty of malversation, but under paragraph 3, not paragraph 1, of Article 392 of the Penal Code. The Court affirmed the lower court’s finding that the crime committed was malversation, not estafa. Applying the doctrine based on Article 392, the misuse of public funds by a public officer constitutes malversation. However, when the funds are subsequently restored, the act is properly classified as misapplication of funds under Article 392, not as embezzlement under Article 390. For the penalties under the first paragraph of Article 392 to apply, the prosecution must prove that the malversation caused some distinct injury or irregularity prejudicial to the public service. The record contained no evidence of such injury. Therefore, the offense falls under the third paragraph of Article 392. The judgment was modified, sentencing Lorenzo Duran to two years and one day of suspension from office and a fine of 301 pesos.