United States vs. Reyes

An agent who collects money for his principal and retains the amount collected beyond his commission is guilty of estafa under Article 535, paragraph 5, of the Penal Code even if he claims a higher commission, because the right to a commission does not entitle him in advance to a percentage of the amount actually collected or authorize him to hold out any sum he chooses.

R. B. Blackman, a surveyor in Pangasinan, and Domingo Reyes, a resident of the same province, dealt with each other under an oral agency arrangement. The case was decided under the old Penal Code and Civil Code, with the estafa charge brought under Article 535, paragraph 5, of the Penal Code and the agent’s duty to account governed by Article 1720 of the Civil Code.

R. B. Blackman was a surveyor in the Province of Pangasinan, and Domingo Reyes also lived in that province. Blackman employed Reyes to collect certain amounts due from twelve individuals for Blackman’s work in connection with the survey of their lands. The total amount to be collected by Reyes was P860. Reyes succeeded in collecting P540. He delivered to Blackman P368 and retained the balance of P172.

The exact terms of the contract were disputed because the agreement was merely oral. Blackman claimed that he agreed to pay Reyes a commission of 10 per cent. Reyes claimed that he was to receive a commission of 20 per cent. The trial court, in its decision, stated that Blackman, the surveyor, ordered the accused to collect certain debts due for surveying and offered a 10 per cent commission on all accounts collected.

Marked discrepancies in connection with the evidence, particularly those concerning the figures, were noted. If Blackman’s statements were accepted, Reyes was entitled to 10 per cent of P540 (or P530), or P54, making P172 misappropriated, or, if his commission were deducted, P118. If Reyes’s statements were accepted, 20 per cent of the total amount to be collected, P860, was exactly P172, the amount claimed to have been misappropriated.

The trial court accepted Blackman’s account and found that the agreed commission was 10 per cent. The amount claimed to have been misappropriated was P172, and the discrepancy in the figures and the terms of the oral contract became the central factual dispute in the estafa charge against Reyes.

• Estafa by Agent: Whether Domingo Reyes is guilty of estafa under Article 535, paragraph 5, of the Penal Code for retaining P172 collected on behalf of R. B. Blackman.
• Commission and Retention: Whether Reyes’s claim to a 20 per cent commission entitles him to retain P172, or whether his commission should be computed on the amount actually collected.
• Preliminary Investigation Transcript: Whether the nonproduction by the fiscal of the transcription of the preliminary investigation is reversible error.

• Estafa by Agent: Yes. All requisites of estafa under Article 535, paragraph 5, of the Penal Code were present; as agent, Reyes was bound to turn over the amount collected minus his commission.
• Commission and Retention: No. Even if 20 per cent was agreed, Reyes was not entitled in advance to 20 per cent of the amount actually collected, and the right to a commission did not authorize him to hold out any sum he chose.
• Preliminary Investigation Transcript: No. The nonproduction was not particularly important because secondary evidence was admitted and the substantial rights of the accused were not affected.

• Estafa by Agent: The SC accepted the trial court’s findings because of discrepancies in the evidence and was not disposed to set up its judgment as superior to that of the trial court. Under the oral contract, Reyes was an agent bound to pay to the principal all that he had received by virtue of the agency (Civil Code, article 1720; U.S. vs. Kiene). Since the agency was for all practical purposes terminated, the agent was obligated to turn over to the principal the amount collected, minus his commission on that amount (U.S. vs. Schneer). On these facts, all requisites of estafa under Article 535, paragraph 5, of the Penal Code were present.
• Commission and Retention: The SC rejected the commission defense. Conceding that Reyes was to receive 20 per cent, unless some contrary and express stipulation was included, this would not entitle him in advance to 20 per cent of the amount actually collected. The right to receive a commission of either 10 or 20 per cent did not authorize him to hold out any sum he chose (Campbell vs. The State). The trial court found the agreed commission was 10 per cent, and the SC upheld that finding.
• Preliminary Investigation Transcript: The SC held the assignment of error not particularly important because secondary evidence was admitted and the substantial rights of the accused were not affected.

• Agency and Estafa by Misappropriation — An agent who receives money for his principal is bound to pay over all that he received by virtue of the agency; he may retain only his commission. If he retains the balance, he is liable for estafa under Article 535, paragraph 5, of the Penal Code. The SC applied this to Reyes, who collected P540, delivered P368, and retained P172.
• Commission Does Not Authorize Arbitrary Retention — The right to a commission, whether 10 or 20 per cent, does not entitle an agent in advance to a percentage of the amount actually collected, absent an express contrary stipulation, and does not authorize him to hold out any sum he chooses. The SC used this to reject Reyes’s claim that his 20 per cent commission justified retaining P172.
• Trial Court’s Factual Findings — Where the evidence is discrepant, the SC is not disposed to set up its judgment as superior to that of the trial court. The SC accepted the trial court’s finding that the commission was 10 per cent.
• Preliminary Investigation Transcript — The nonproduction by the fiscal of the transcription of the preliminary investigation is not reversible error where secondary evidence was admitted and the substantial rights of the accused were not affected. The SC applied this to reject the assigned error.

• "There are a number of reasons which impel us to the conclusion that the defendant and appellant is guilty as charged." — The SC states its conclusion after noting the discrepancies in the evidence and the disputed terms of the oral contract.
• "In the second place, conceding that Reyes was to receive 20 per cent, this, unless some contrary and express stipulation was included, would not entitle him in advance to 20 per cent of the amount actually collected." — The SC rejects the argument that a 20% commission justified retaining P172.
• "In the third place, the right to receive a commission of either 10 or 20 per cent did not make to hold out any sum he chose." — The SC holds that a commission right does not authorize an agent to retain any amount he chooses.
• "All the requisites of estafa as punished by article 535, paragraph 5, of the Penal Code, and as construed by the commentators, are here present." — The SC concludes that the facts constitute estafa under the specified provision.

• Campbell vs. The State, 35 Ohio St., 70 (1878) — Cited for the rule that the right to receive a commission does not authorize an agent to hold out any sum he chooses.
• U.S. vs. Kiene, 7 Phil. Rep., 736 (1907) — Cited for the rule that under the Civil Code, an agent is bound to pay to the principal all that he received by virtue of the agency.
• U.S. vs. Schneer, 7 Phil. Rep., 523 (1907) — Cited for the rule that after the agency is terminated, the agent must turn over the amount collected minus his commission.

• Article 535, paragraph 5, Penal Code — The estafa provision under which Reyes was convicted; the SC found all its requisites present.
• Article 1720, Civil Code — The provision holding an agent bound to pay to the principal all that he received by virtue of the agency; the SC applied it to Reyes’s retention of the collected amount.