G.R. No. L-5141
THE UNITED STATES, plaintiff-appellee, vs. PEDRO A. REYES, defendant-appellant.
January 10, 1910

FACTS: Pedro A. Reyes, the municipal treasurer of Guagua, Pampanga, was subjected to an inspection by Deputy Provincial Treasurer Panfilo Espinosa. During the inspection, Reyes initially delayed, claiming he forgot his keys, and upon his return, was observed to be nervous and with bulging pockets that later subsided. He presented P1,520 from an old cigar box, claiming it was from cashed checks, but Espinosa refused it as legitimate municipal funds since it was not in the safe.

Reyes then gave conflicting accounts of how he obtained the P1,520, eventually confessing to Provincial Treasurer W.W. Barclay that he had taken the money from the municipal safe and loaned it to friends, though he couldn’t name them. During the cash count, Reyes produced additional amounts (P155.86 from a clerk’s drawer and P193.79 from his pocket) to cover shortages. Ultimately, he signed a document (Exhibit A) admitting a total shortage of P1,869.65. He also admitted his responsibility to the district auditor, stating he had refunded the money and asking not to be prosecuted.

A complaint was filed against Reyes for misappropriation of public funds under Act No. 1740 . The Court of First Instance of Pampanga found him guilty, sentencing him to three years’ imprisonment, a fine, subsidiary imprisonment, and perpetual disqualification from public office. Reyes appealed the judgment.

ISSUE: Whether the subsequent refund of misappropriated public funds exempts a bonded officer from criminal liability under Act No. 1740 .

RULING: No, the subsequent refund of misappropriated public funds does not exempt a bonded officer from criminal liability.

The Supreme Court affirmed the conviction of Pedro A. Reyes for misappropriation of public funds. The Court found it fully proven that Reyes, as municipal treasurer, had a shortage of P1,869.65 in the municipal safe. His actions, including his nervousness, the conflicting explanations for the money, his eventual confession of loaning the funds to friends, and the manner in which he produced various amounts from outside the safe, demonstrated that he had unlawfully disposed of and made personal use of public funds, in clear violation of Act No. 1740 .

Section 2 of Act No. 1740 explicitly states that the absence of public funds or the failure/inability to produce them on demand is prima facie evidence of personal use or misappropriation. In this case, there was not only prima facie evidence but also “conclusive proof” through witness testimonies and Reyes’ own confession.

The Court emphasized that the fact that Reyes refunded the misappropriated amount on the same day of the inspection does not absolve him of responsibility. The crime of misappropriation was consummated the moment he withdrew the funds from the safe and used them for personal or unauthorized purposes, in manifest violation of the law requiring public funds to be kept securely.

However, the Court, exercising its discretion, recognized the prompt refund as a mitigating circumstance in sentencing. While affirming the conviction, the Court modified the penalty, reducing the principal penalty to six months’ imprisonment.