G.R. No. L-2969

FACTS:
The defendant-appellant, Francisco J. Reyes, was the municipal treasurer of Victorias and deputy provincial treasurer of Occidental Negros from January 1 to June 10, 1905. A complaint was filed against him for the crime of embezzlement of public funds. An examination of his accounts revealed a shortage of P2,362.92, which included a balance of P608.18 received from his predecessor but not entered in his books, and a further amount unaccounted for from his own collections. Upon being informed of the exact shortage, Reyes refunded the total amount to the government treasury on June 20, 1905, during the pendency of the criminal proceedings. He pleaded not guilty but admitted to the diversion (distraccion) of the funds, arguing it was not a taking (sustraccion) with intent to appropriate.

ISSUE:
Whether the defendant is guilty of the crime of embezzlement under Article 392 of the Penal Code and, if so, what is the proper penalty considering his restitution of the funds during the trial and the absence of proven detriment or hindrance to the public service.

RULING:
Yes, the defendant is guilty of embezzlement. The Supreme Court reversed the judgment of the lower court. The Court found that Reyes diverted public funds to his own use, constituting embezzlement under Article 392 of the Penal Code. However, the evidence did not establish an intent to permanently appropriate the funds (sustraccion), nor did it show that his acts caused detriment or hindrance to the public service. Crucially, he made full restitution of the amount before the rendition of final judgment. Applying paragraph 3 of Article 392, which prescribes the penalty for diversion without detriment to public service, and considering the restitution as a favorable circumstance, the Court modified the penalty. Reyes was sentenced to three years of suspension from public office and the right of suffrage, and to pay a fine equal to 10 percent of the amount embezzled, with corresponding subsidiary suspension in case of insolvency.