The misuse of money entrusted for safekeeping is one of the most frequently litigated issues in Philippine courts. The same set of facts—someone receives money with the instruction “keep this safe for me” and later spends or fails to return it—can either constitute the crime of estafa through misappropriation or conversion under Article 315, paragraph 1(b) of the Revised Penal Code, or give rise only to purely civil liability under the Civil Code provisions on obligations, deposit, or unjust enrichment. The distinction determines whether the erring party faces imprisonment and moral damages, or merely an order to return the money with interest and possibly civil damages.

This article exhaustively discusses the legal framework, elements, distinctions, remedies, prescription periods, and settled Supreme Court doctrines as of November 2025.

I. The Crime of Estafa by Misappropriation or Conversion (Art. 315, par. 1[b], RPC, as amended by RA 10951)

Legal Provision

“Art. 315. Swindling (estafa). — Any person who shall defraud another by any of the means mentioned hereinbelow x x x

With unfaithfulness or abuse of confidence, namely:
x x x
(b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal property received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to make delivery of or to return the same, even though such obligation be totally or partially guaranteed by a bond; or by denying having received such money, goods, or other property.”

Penalty (as amended by RA 10951, 2017):

If the amount exceeds P4,400,000 – reclusion perpetua
Scaled downward in graduated amounts; the threshold amounts were significantly increased so that small amounts now carry much lighter penalties (arresto mayor or prision correccional only).

Essential Elements (settled since Tubb v. People, G.R. No. 98149, 1991, reiterated in countless cases up to 2025)

Receipt of the money or personal property in trust, on commission, for administration, or under any obligation involving the duty to return the same or deliver it.
Existence of a juridical possession in the offender (i.e., possession distinct from ownership; ownership remains with the owner/complainant).
Misappropriation or conversion, or denial of receipt.
Prejudice or damage to the owner.
Demand (jurisprudential, not statutory) when the demand is necessary to prove conversion (e.g., when the offender’s act is not clearly incompatible with the trust relation).

Application to Money Entrusted for Safekeeping

When money is handed over with the explicit or implicit instruction “itago mo ito” or “ingatan mo ito, ibabalik ko lang,” the relationship is one of depositum (Civil Code, Art. 1962) or a simple trust relationship under Art. 1440 (innominate contract of do ut facias). Juridical possession transfers to the depositary; ownership remains with the depositor.

If the depositary spends the money on personal expenses, gambles it away, or uses it in business without authority, there is conversion or misappropriation. The act of spending the identical money entrusted is inherently incompatible with the obligation to keep it safe and return it upon demand. This constitutes estafa even without prior demand in most cases (People v. Pujalte, G.R. No. 137983, 2000; Serzo v. People, G.R. No. 218424, 2017).

II. When the Act Constitutes Only Civil Liability (No Estafa)

The Supreme Court has repeatedly ruled that not every failure to return entrusted money is estafa. The following situations give rise only to civil liability:

Ownership and juridical possession were transferred
Example: The parties agreed that the money is an investment, a loan, or payment for a service/goods with risk of loss on the giver. In such cases there is no “duty to return the same thing” because ownership already passed. Failure to pay profit or return capital is a simple breach of contract (Aca v. CA, G.R. No. 101883, 1993; Libuit v. People, G.R. No. 202866, 2014).
The contract is a commodatum or mutuum of fungible money with authority to use
If the parties agreed that the recipient may use the money and simply return the equivalent amount later, it is a loan (mutuum). Non-payment is purely civil (Art. 1953, Civil Code).
Mere inability to return due to fortuitous event or business reversal without bad faith
Bad faith or deceit at the time of receipt or subsequent fraudulent intent is required for estafa. Mere negligence or poor financial management is civil (Pamintuan v. People, G.R. No. 172928, 2010).
The money was received as payment of a pre-existing obligation
Ownership transfers upon delivery; failure to deliver goods or services in return is civil breach.
Investment schemes where the investor assumed the risk of loss
If the agreement clearly states that the money is for trading, lending, or business with the investor bearing the risk, non-return due to legitimate loss is not estafa (People v. Menil, G.R. No. 115054-66, 2000; SEC Opinion 2019-2023 rulings consistently applied).

III. Civil Law Framework Governing the Relationship

Even when estafa is present, the underlying civil obligation remains governed by the Civil Code:

Contract of Deposit (Arts. 1962–1995)
- Gratuitous or onerous.
- Depositary is obliged to keep the thing with the diligence of a good father of a family (Art. 1979).
- If money is deposited and the depositary uses it without authority, he is liable for damages and interest from the moment of unauthorized use (Art. 1988).
- Loss due to fraud or negligence makes the depositary liable even for fortuitous events (Art. 1973).
Quasi-Delict (Art. 2176–2194)
If there is no pre-existing contractual relation, misuse may constitute fault or negligence giving rise to quasi-delict.
Unjust Enrichment (Art. 22)
“No person shall unjustly enrich himself at the expense of another.” This is the fallback action when no contract or quasi-delict exists.
Action for Recovery of Sum of Money with Damages
Filed in civil court (Rule 4, Rules of Court) or as reserved civil action in estafa case.

IV. Civil Liability in Estafa Cases

In every criminal prosecution for estafa, the civil liability ex delicto is deemed instituted (Rule 111, Revised Rules of Criminal Procedure) unless waived, reserved, or previously filed.

The civil liability includes:

Restitution of the thing or its value
Reparation of the damage caused
Indemnification for consequential damages
Moral and exemplary damages (frequently awarded P50,000–P300,000 depending on amount and circumstances)

Interest: 6% per annum from finality of judgment until full payment (Nacar v. Gallery Frames, G.R. No. 189871, 2013).

V. Prescription Periods (as of 2025)

Estafa: 15 years if penalty is reclusion temporal or higher; otherwise according to the penalty (Act No. 3326, as amended). After RA 10951 adjustments, many small estafa cases now prescribe in 10 years or less.
Pure civil action based on written contract: 10 years (Art. 1144)
Oral contract or quasi-delict: 4 years (Arts. 1145–1146)
Unjust enrichment: 4 years from discovery

VI. Key Supreme Court Doctrines (Consolidated 1990–2025)

Demand is not an element of estafa under Art. 315(1)(b); it is only evidentiary when conversion is not manifest (Chua-Burce v. CA, G.R. No. 109595, 2000).
Post-dated checks issued as security for an investment do not by themselves prove estafa if the underlying contract is valid (Llamado v. CA, 1999; reaffirmed in numerous 2020s cases).
Text messages, chat logs, and acknowledgment receipts are sufficient to prove the trust relation even without a written contract (People v. Tanchanco, G.R. No. 247506, 2022).
If the recipient immediately informed the giver that he would use the money for his own purpose and the giver acquiesced, there is novation → no estafa (Colinares v. People, G.R. No. 182748, 2011, still good law).
Corporate officers who receive money for the corporation but divert it to personal use commit estafa (Sy v. People, G.R. No. 228531, 2020).

VII. Practical Guidelines for Complainants and Accused

For the person who entrusted the money:

File estafa immediately if there is clear evidence of personal appropriation.
Reserve the civil action if you want to pursue higher damages in a separate civil case.
Gather all evidence of the trust relation (Viber/Facebook messages, witnesses, acknowledgment receipts).

For the recipient accused of estafa:

Prove that the transaction was a loan, investment with assumed risk, or payment of debt.
Consignation of the amount in court stops interest and may mitigate penalty.

Conclusion

The boundary between estafa and purely civil liability in cases of money entrusted for safekeeping is the presence or absence of juridical possession coupled with abuse of confidence and intent to gain wrongfully. When the recipient was given the money with the clear obligation to keep it safe and return the very same funds, any personal use constitutes criminal misappropriation. When, however, ownership and risk were transferred by agreement (loan, investment, sale), only civil remedies lie.

Understanding this distinction is crucial: an erroneous estafa complaint may be dismissed with finality and expose the complainant to malicious prosecution charges, while treating a clear estafa as a mere civil debt allows the offender to escape criminal accountability. In practice, Philippine courts continue to protect the sanctity of trust reposed in personal and business relationships by sustaining estafa convictions whenever the evidence shows that the money was indeed received “for safekeeping” and was deliberately converted to personal use.