Republic of the Philippines SUPREME COURT Manila

FIRST DIVISION

G.R. No. 130423 November 18, 2002

VIRGIE SERONA, petitioner, vs. HON. COURT OF APPEALS and THE PEOPLE OF THE
PHILIPPINES, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

During the period from July 1992 to September 1992, Leonida Quilatan delivered
pieces of jewelry to petitioner Virgie Serona to be sold on commission basis. By
oral agreement of the parties, petitioner shall remit payment or return the pieces
of jewelry if not sold to Quilatan, both within 30 days from receipt of the items.

Upon petitioners failure to pay on September 24, 1992, Quilatan required her to
execute an acknowledgment receipt (Exhibit B) indicating their agreement and the
total amount due, to wit:

Ako, si Virginia Serona, nakatira sa Mother Earth Subd., Las Pinas, ay kumuha ng
mga alahas kay Gng. Leonida Quilatan na may kabuohang halaga na P567,750.00 para
ipagbili para ako magkakomisyon at ibibigay ang benta kung mabibili o ibabalik sa
kanya ang mga nasabing alahas kung hindi mabibili sa loob ng 30 araw.

Las Pinas, September 24, 1992.1

The receipt was signed by petitioner and a witness, Rufina G. Navarette.

Unknown to Quilatan, petitioner had earlier entrusted the jewelry to one Marichu
Labrador for the latter to sell on commission basis. Petitioner was not able to
collect payment from Labrador, which caused her to likewise fail to pay her
obligation to Quilatan.

Subsequently, Quilatan, through counsel, sent a formal letter of demand2 to

petitioner for failure to settle her obligation. Quilatan executed a complaint
affidavit3 against petitioner before the Office of the Assistant Provincial
Prosecutor. Thereafter, an information for estafa under Article 315, paragraph
1(b)4 of the Revised Penal Code was filed against petitioner, which was raffled to
Branch 255 of the Regional Trial Court of Las Pinas. The information alleged:

That on or about and sometime during the period from July 1992 up to September
1992, in the Municipality of Las Pinas, Metro Manila, Philippines, and within the
jurisdiction of this Honorable Court, the said accused received in trust from the
complainant Leonida E. Quilatan various pieces of jewelry in the total value of
P567,750.00 to be sold on commission basis under the express duty and obligation of
remitting the proceeds thereof to the said complainant if sold or returning the
same to the latter if unsold but the said accused once in possession of said
various pieces of jewelry, with unfaithfulness and abuse of confidence and with
intent to defraud, did then and there willfully, unlawfully and feloniously
misappropriate and convert the same for her own personal use and

benefit and despite oral and written demands, she failed and refused to account for
said jewelry or the proceeds of sale thereof, to the damage and prejudice of
complainant Leonida E. Quilatan in the aforestated total amount of P567,750.00.

CONTRARY TO LAW.5
Petitioner pleaded not guilty to the charge upon arraignment.6 Trial on the merits
thereafter ensued.

Quilatan testified that petitioner was able to remit P100,000.00 and returned
P43,000.00 worth of jewelriy;7 that at the start, petitioner was prompt in settling
her obligation; however, subsequently the payments were remitted late;8 that
petitioner still owed her in the amount of P424,750.00.9

On the other hand, petitioner admitted that she received several pieces of jewelry
from Quilatan and that she indeed failed to pay for the same. She claimed that she
entrusted the pieces of jewelry to Marichu Labrador who failed to pay for the same,
thereby causing her to default in paying Quilatan.10 She presented handwritten
receipts (Exhibits 1 & 2)11 evidencing payments made to Quilatan prior to the
filing of the criminal case.

Marichu Labrador confirmed that she received pieces of jewelry from petitioner
worth P441,035.00. She identified an acknowledgment receipt (Exhibit 3)12 signed by
her dated July 5, 1992 and testified that she sold the jewelry to a person who
absconded without paying her. Labrador also explained that in the past, she too had
directly transacted with Quilatan for the sale of jewelry on commission basis;
however, due to her outstanding account with the latter, she got jewelry from
petitioner instead.13

On November 17, 1994, the trial court rendered a decision finding petitioner guilty
of estafa, the dispositive portion of which reads:

WHEREFORE, in the light of the foregoing, the court finds the accused Virgie Serona
guilty beyond reasonable doubt, and as the amount misappropriated is P424,750.00
the penalty provided under the first paragraph of Article 315 of the Revised Penal
Code has to be imposed which shall be in the maximum period plus one (1) year for
every additional P10,000.00.

Applying the Indeterminate Sentence Law, the said accused is hereby sentenced to
suffer the penalty of imprisonment ranging from FOUR (4) YEARS and ONE (1) DAY of
prision correccional as minimum to TEN (10) YEARS and ONE (1) DAY of prision mayor
as maximum; to pay the sum of P424,750.00 as cost for the unreturned jewelries; to
suffer the accessory penalties provided by law; and to pay the costs.

SO ORDERED.14

Petitioner appealed to the Court of Appeals, which affirmed the judgment of

conviction but modified the penalty as follows:

WHEREFORE, the appealed decision finding the accused-appellant guilty beyond

reasonable doubt of the crime of estafa is hereby AFFIRMED with the following
MODIFICATION:

Considering that the amount involved is P424,750.00, the penalty should be imposed
in its maximum period adding one (1) year for each additional P10,000.00 albeit the
total penalty should not exceed Twenty (20) Years (Art. 315). Hence, accused-
appellant is hereby SENTENCED to suffer the

penalty of imprisonment ranging from Four (4) Years and One (1) Day of Prision
Correccional as minimum to Twenty (20) Years of Reclusion Temporal.

SO ORDERED.15

Upon denial of her motion for reconsideration,16 petitioner filed the instant
petition under Rule 45, alleging that:

RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN CONCLUDING THAT THERE WAS AN ABUSE
OF CONFIDENCE ON THE PART OF PETITIONER IN ENTRUSTING THE SUBJECT JEWELRIES (sic)
TO HER SUB-AGENT FOR SALE ON COMMISSION TO PROSPECTIVE BUYERS.

II

RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN CONCLUDING THAT THERE WAS

MISAPPROPRIATION OR CONVERSION ON THE PART OF PETITIONER WHEN SHE FAILED TO RETURN
THE SUBJECT JEWELRIES (sic) TO PRIVATE COMPLAINANT.17

Petitioner argues that the prosecution failed to establish the elements of estafa
as penalized under Article 315, par. 1(b) of the Revised Penal Code. In particular,
she submits that she neither abused the confidence reposed upon her by Quilatan nor
converted or misappropriated the subject jewelry; that her giving the pieces of
jewelry to a sub-agent for sale on commission basis did not violate her undertaking
with Quilatan. Moreover, petitioner delivered the jewelry to Labrador under the
same terms upon which it was originally entrusted to her. It was established that
petitioner had not derived any personal benefit from the loss of the jewelry.
Consequently, it cannot be said that she misappropriated or converted the same.

We find merit in the petition.

The elements of estafa through misappropriation or conversion as defined in Article

315, par. 1(b) of the Revised Penal Code are: (1) that the money, good or other
personal property is 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; (2) that there be misappropriation or conversion of
such money or property by the offender or denial on his part of such receipt; (3)
that such misappropriation or conversion or denial is to the prejudice of another;
and (4) that there is a demand made by the offended party on the offender.18 While
the first, third and fourth elements are concededly present, we find the second
element of misappropriation or conversion to be lacking in the case at bar.

Petitioner did not ipso facto commit the crime of estafa through conversion or
misappropriation by delivering the jewelry to a sub-agent for sale on commission
basis. We are unable to agree with the lower courts conclusion that this fact
alone is sufficient ground for holding that petitioner disposed of the jewelry "as
if it were hers, thereby committing conversion and a clear breach of trust."19

It must be pointed out that the law on agency in our jurisdiction allows the
appointment by an agent of a substitute or sub-agent in the absence of an express
agreement to the contrary between the agent and the principal.20 In the case at
bar, the appointment of Labrador as petitioners sub-agent was not expressly
prohibited by Quilatan, as the acknowledgment receipt, Exhibit B, does not

contain any such limitation. Neither does it appear that petitioner was verbally
forbidden by Quilatan from passing on the jewelry to another person before the
acknowledgment receipt was executed or at any other time. Thus, it cannot be said
that petitioners act of entrusting the jewelry to Labrador is characterized by
abuse of confidence because such an act was not proscribed and is, in fact, legally
sanctioned.

The essence of estafa under Article 315, par. 1(b) is the appropriation or
conversion of money or property received to the prejudice of the owner. The words
"convert" and "misappropriated" connote an act of using or disposing of anothers
property as if it were ones own, or of devoting it to a purpose or use different
from that agreed upon. To misappropriate for ones own use includes not only
conversion to ones personal advantage, but also every attempt to dispose of the
property of another without right.21

In the case at bar, it was established that the inability of petitioner as agent to
comply with her duty to return either the pieces of jewelry or the proceeds of its
sale to her principal Quilatan was due, in turn, to the failure of Labrador to
abide by her agreement with petitioner. Notably, Labrador testified that she
obligated herself to sell the jewelry in behalf of petitioner also on commission
basis or to return the same if not sold. In other words, the pieces of jewelry were
given by petitioner to Labrador to achieve the very same end for which they were
delivered to her in the first place. Consequently, there is no conversion since the
pieces of jewelry were not devoted to a purpose or use different from that agreed
upon.

Similarly, it cannot be said that petitioner misappropriated the jewelry or

delivered them to Labrador "without right." Aside from the fact that no condition
or limitation was imposed on the mode or manner by which petitioner was to effect
the sale, it is also consistent with usual practice for the seller to necessarily
part with the valuables in order to find a buyer and allow inspection of the items
for sale.

In People v. Nepomuceno,22 the accused-appellant was acquitted of estafa on facts

similar to the instant case. Accused-appellant therein undertook to sell two
diamond rings in behalf of the complainant on commission basis, with the obligation
to return the same in a few days if not sold. However, by reason of the fact that
the rings were delivered also for sale on commission to sub-agents who failed to
account for the rings or the proceeds of its sale, accused-appellant likewise
failed to make good his obligation to the complainant thereby giving rise to the
charge of estafa. In absolving the accused-appellant of the crime charged, we held:

Where, as in the present case, the agents to whom personal property was entrusted
for sale, conclusively proves the inability to return the same is solely due to
malfeasance of a subagent to whom the first agent had actually entrusted the
property in good faith, and for the same purpose for which it was received; there
being no prohibition to do so and the chattel being delivered to the subagent
before the owner demands its return or before such return becomes due, we hold that
the first agent can not be held guilty of estafa by either misappropriation or
conversion. The abuse of confidence that is characteristic of this offense is
missing under the circumstances.23

Accordingly, petitioner herein must be acquitted. The lower courts reliance on

People v. Flores24 and U.S. v. Panes25 to justify petitioners conviction is
misplaced, considering that the factual background of the cited cases differ from
those which obtain in the case at bar. In Flores, the accused received a ring to
sell under the condition that she would return it the following day if not sold and
without authority to retain the ring or to give it to a sub-agent. The accused in
Panes, meanwhile, was obliged to return the jewelry he received upon demand, but
passed on the same to a sub-agent even after demand for its return had already been
made. In the foregoing cases, it was held that there was conversion or
misappropriation.

Furthermore, in Lim v. Court of Appeals,26 the Court, citing Nepomuceno and the
case of People v. Trinidad,27held that:

In cases of estafa the profit or gain must be obtained by the accused personally,
through his own acts, and his mere negligence in permitting another to take
advantage or benefit from the entrusted chattel cannot constitute estafa under
Article 315, paragraph 1-b, of the Revised Penal Code; unless of course the
evidence should disclose that the agent acted in conspiracy or connivance with the
one who carried out the actual misappropriation, then the accused would be
answerable for the acts of his co-conspirators. If there is no such evidence,
direct or circumstantial, and if the proof is clear that the accused herself was
the innocent victim of her sub-agents faithlessness, her acquittal is in order.28
(Italics copied)

Labrador admitted that she received the jewelry from petitioner and sold the same
to a third person. She further acknowledged that she owed petitioner P441,035.00,
thereby negating any criminal intent on the part of petitioner. There is no showing
that petitioner derived personal benefit from or conspired with Labrador to deprive
Quilatan of the jewelry or its value. Consequently, there is no estafa within
contemplation of the law.

Notwithstanding the above, however, petitioner is not entirely free from any
liability towards Quilatan. The rule is that an accused acquitted of estafa may
nevertheless be held civilly liable where the facts established by the evidence so
warrant. Then too, an agent who is not prohibited from appointing a sub-agent but
does so without express authority is responsible for the acts of the sub-agent.29
Considering that the civil action for the recovery of civil liability arising from
the offense is deemed instituted with the criminal action,30 petitioner is liable
to pay complainant Quilatan the value of the unpaid pieces of jewelry.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R.
CR No. 17222 dated April 30,1997 and its resolution dated August 28, 1997 are
REVERSED and SET ASIDE. Petitioner Virgie Serona is ACQUITTED of the crime charged,
but is held civilly liable in the amount of P424,750.00 as actual damages, plus
legal interest, without subsidiary imprisonment in case of insolvency.

SO ORDERED.

Davide, Jr., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

Footnotes

1 Rollo, p. 42.

2 RTC Records, p. 8.

3 Ibid., at 6.

4 ART. 315. Swindling (estafa). Any person who shall defraud another by any of
the means mentioned hereinbelow shall be punished by:

x x x x x x x x x

1. With unfaithfulness or abuse of confidence, namely:

x x x x x x 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;

x x x x x x x x x.