G.R. Nos. L-49607-13 and L-55775-86, August 26, 1985
Benjamin Lu Hayco, petitioner-appellant, vs. The Honorable Court of Appeals, et al., respondents-appellees.

FACTS

Petitioner Benjamin Lu Hayco was the manager of Units Optical Supply Company, owned by Lu Chiong Sun and Lu Chiong Pee, by virtue of a Special Power of Attorney. This authority included the power to deposit and withdraw company funds. From October to December 1972, instead of depositing customer payments into the company’s bank accounts, Hayco deposited a total of P139,000.00 into his personal accounts with Equitable Banking Corporation and Associated Banking Corporation. Following demands for an accounting from the owners, which Hayco failed to provide, multiple criminal complaints for estafa were filed against him.
Hayco was initially acquitted in one estafa case where the Special Power of Attorney was declared valid. However, he was subsequently charged with seventy-five counts of estafa before different branches of the Court of First Instance of Manila. Three separate trial court decisions convicted him on a total of nineteen counts of estafa under Article 315(1)(b) of the Revised Penal Code, for misappropriating or converting company funds. The Court of Appeals affirmed these convictions, prompting Hayco to elevate the case to the Supreme Court via petitions for review.

ISSUE

The core issue is whether the act of depositing company funds into a manager’s personal bank account, without immediate proof of permanent deprivation or personal use, constitutes the crime of estafa through misappropriation or conversion under Article 315(1)(b) of the Revised Penal Code.

RULING

The Supreme Court dismissed the petitions and affirmed the convictions. The legal logic centers on the interpretation of “conversion” and “damage” under the law. Hayco argued that mere deposit into a personal account did not constitute conversion or misappropriation since the funds remained in the bank and there was no proof he used them for personal benefit. The Court rejected this, ruling that conversion occurs the moment an agent, entrusted with funds, diverts them to a personal account, thereby placing them beyond the owner’s immediate control and disposal.
The Court clarified that actual, permanent pecuniary loss is not required to establish the element of damage for estafa. Citing precedent (U.S. v. Goyenechea), it held that a “disturbance in property rights” constitutes sufficient damage. By depositing the funds into his personal accounts, Hayco deprived the company owners of their unimpeded right to use and dispose of the money, causing at least temporary prejudice. This act of placing the funds under his exclusive control, requiring his consent for their withdrawal, fulfilled the element of conversion. Furthermore, the Court emphasized that fraudulent intent to permanently deprive the owner is not a necessary element for this form of estafa; the breach of confidence inherent in the unauthorized diversion of trust funds is sufficient in itself to constitute the crime.