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[ GR No. 16480, Dec 11, 1920 ]



41 Phil. 922

[ G.R. No. 16480, December 11, 1920 ]




On May 10,  1919, Agapito Beltran borrowed from Facundo Haw, the owner of a chineleria, the sum of P74.50. At the same time, Beltran signed a receipt of the following tenor:
"I borrowed from Mr. Facundo Haw the sum of seventy- four pesos and fifty centavos (P74.50),  by virtue of our agreement that I shall work while I have  not paid, and that I shall pay every week by installment."
Beltran worked continuously in Haw's shop from March 17,  1919,  until  August 30, 1919.  During this period Beltran claims that he paid  Haw P24 on account of his debt. Beltran left the employ of Haw because of a disagreement with the wife of his employer and because  there was not enough  work and material to keep him busy.

For  failure to fulfill  his  agreement,  Agapito  Beltran was prosecuted, first in  the  municipal  court of the city of Manila, and later, on appeal, in  the Court of  First Instance of the city  of Manila, for a violation of section 1 of Act No. 2098, an Act relating to contracts of personal services and  advances thereunder, and providing  punishment  for  certain offenses  connected  therewith.  He was found guilty and was sentenced by the latter court to two months' imprisonment, to pay  Facundo  Haw  the  sum of P83.65,  and to pay one-half of the costs.

On  appeal, the defendant relies on two assignments of error.   The first is, that the lower court erred in not holding that Act No. 2098 has been repealed  by Act No. 2300 of the Philippine Legislature.  This court has heretofore held that Act No. 2098 of the Philippine Legislature is constitutional.  (Ramirez  vs.  Orozco  [1.916],  34 Phil.,  412.) But we need not pause to resolve the specific point presented, although parenthetically it may be remarked that it would require strong argument to demonstrate that Act No. 2300  prohibiting slavery, involuntary servitude, and peonage in the Philippine Islands, and enacted not long after  Act No. 2098, has by its terms impliedly repealed Act No. 2098, because a decision on the second assignment of error, going to the facts in relation with a construction of Act No. 2098, is sufficient to decide the case.

All three sections of Act No. 2098 begin with the words "No person who, with intent to injure or defraud."  Consequently, in order for there to be a conviction under Act No. 2098,  section 1, it  must be shown that at the time the  contract was entered into,  the employee did so with intention to defraud  the  emplgyer.   In other words,  it is the fraudulent intent to get  the money or property of another  and not mere breach of contract which is made a crime  by  the  statute.  What  is punished  is fraudulent practices and not a failure to pay  a debt.  Unless the court is fully satisfied  of an  element of  fraud  in the transaction, there would only be a  breach of contract, and for this  the defendant could not be prosecuted criminally. Bad faith is the test.  (See Ex parte Hollman [1908], 79 S. C,  9; 21 L. R. A.  [N. S.], 242, and  extensive note; U. S. vs. Aduna, R. G. No. 15082, decided August 25, 1919, not reported.)

The foregoing interpretation of the Philippine statute is deemed  to be correct notwithstanding  our conception of the motives of the Legislature in enacting the law.   The Legislature saw clearly that if Philippine  trade and commerce was to prosper, fraud must be guarded against and contracts between employer and employee  must  be enforced.   On the other hand, the purpose of the Legislature could only  be carried out by enacting a law which would carefully avoid the pitfalls of the constitutional inhibitions against imprisonment for debt and  a violation of the freedom of  contract.   As Mr.  Justice Hughes  well  said in delivering the opinion of the United States Supreme Court in the leading  case of Bailey vs. Alabama  ([1910],  219 U. S.,  219),  "There is no more important  concern  than to safeguard the freedom of labor upon which alone  can enduring prosperity be based."

That the construction  we give to the Philippine statute is correct,  is  shown by contrasting  it  with the law of Alabama on the same subject, as analyzed by the United States Supreme  Court.   Before the  amendment to  the Alabama law  in  1903 and 1907, held unconstitutional by the United States Supreme Court, the Code  of  Alabama contained a provision substantially  the same as our Act No. 2098.  The construction  which the Supreme  Court of Alabama placed upon the statute as it then  stood in Ex parte Riley ([1891], 94  Ala., 82), quoted approvingly by the United States Supreme Court in Bailey vs. Alabama, supra, was as follows:
"The ingredients  of this statutory offense  are:  (1)  A contract in writing by the accused for the performance of any act or service;  (2)  an intent on  the part of the accused, when he entered into the contract,  to injure or defraud his employer;  (3)  the obtaining by the accused of money or other personal property from such employer by means of such contract entered into  with such intent; and (4) the refusal by the accused, with like intent, and without just cause, and without refunding such money, or paying for such property, to perform  such act or service.  This statute by  no  means provides that a person  who has  entered  into a  written contract  for the performance  of services, under which he has  obtained money or other personal  property,  is punishable  as if he had  stolen such money or  other  personal property, upon his refusal  to perform  the  contract, without  refunding the money  or paying for the property.  A  mere breach of a contract is not by the statute made  a crime.   The criminal feature of the transaction is wanting unless the  accused entered into  the  contract  with intent  to injure  or  defraud his employer,  and unless his refusal to perform was with like intent and  without just cause.   That there was an intent to injure ,pr defraud  the employer, both when the contract was entered into  and when the accused refused performance,  are  facts which must  be  shown by  the evidence. As the intent  is the design, purpose, resolve,  or  determination in the mind of the accused, it can rarely be proved by direct evidence, but must be ascertained by means of inferences from the facts and circumstances developed by the proof.  (Carlisle vs. State, 76 Ala., 75; Mack vs. State, 63 Ala., 138.)  In the absence, however, of evidence from which such inferences may be  drawn, the jury  are  not justified  in indulging in mere unsupported  conjectures, speculations, or suspicions as to intentions which were not disclosed by any visible  or  tangible  act, expression, or circumstance.  (Green vs. State, 68 Ala,,  539.)"
Applying the foregoing principles to the facts,  we  find nothing to show  that when the  defendant borrowed from the complainant  the amount of money mentioned in  the receipt, he had made  up  his mind not to  pay his  debt, or to injure his employer.   If  anything,  the  fact that  the accused worked for the complainant continuously for three or four months after the debt was incurred, would  indicate good  faith on  the part  of the accused at the time  the agreement was signed.  In addition  to this the testimony of the accused  with  regard to the reason which compelled him  to seek  work in another place, appears to be more convincing than that of the complainant on the same point. Judgment is reversed,  and  the defendant is acquitted with all costs de officio.   So ordered.

Mapa,  C. J., Araullo,  Street, Avancena,  and Villamor, JJ., concur.