FIRST DIVISION

[G.R. No. 130423. November 18, 2002.]

VIRGIE SERONA, petitioner, vs. HON. COURT OF APPEALS and

THE PEOPLE OF THE PHILIPPINES, respondents.

Rico and Associates for petitioner.

The Solicitor General for respondents.

SYNOPSIS

Petitioner Virgie Serona was convicted of estafa by the Regional Trial

Court of Las Piñas. Petitioner appealed to the Court of Appeals, which affirmed
the judgment of conviction but only modified the penalty imposed by the trial
court. Upon denial of her motion for reconsideration, petitioner filed the present
petition for review on certiorari. Petitioner argued 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 submitted that she neither abused the
confidence reposed upon her by the owner of the jewelry 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 the
owner. Moreover, petitioner delivered the jewelry to his sub-agent 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. DcITaC

The Supreme Court upheld petitioner's contention and acquitted her of

the charge of estafa. 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. The Court rejected the lower court's conclusion
that the fact alone was sufficient ground for holding that petitioner disposed of
the jewelry "as if it were hers, thereby committing conversion and a clear
breach of trust." The Court 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. In the case at bar, the appointment of a certain Marichu Labrador
as petitioner's sub-agent was not expressly prohibited by Leonida Quilatan, the
owner of the jewelry, as the acknowledgment receipt 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 petitioner's act of entrusting the jewelry to Labrador was
characterized by abuse of confidence because such an act was not proscribed
and was, in fact, legally sanctioned.

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 SYLLABUS

1. CRIMINAL LAW; ESTAFA; ELEMENTS; NOT ESTABLISHED;

PETITIONER'S ACT OF ENTRUSTING THE JEWELRY TO HER SUB-AGENT IS NOT
CHARACTERIZED BY ABUSE OF CONFIDENCE BECAUSE SUCH ACT WAS NOT
PROSCRIBED AND IS, IN FACT, LEGALLY SANCTIONED. — 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. 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." 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. In the case at bar, the appointment of Labrador as
petitioner's 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 petitioner's 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.
2. ID.; ID.; ID.; ELEMENT OF CONVERSION IS WANTING SINCE THE
PIECES OF JEWELRY WERE NOT DEVOTED TO A PURPOSE OR USE DIFFERENT
FROM THAT AGREED UPON. — The essence of estafa under Article 313, 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 another's property as if it were one's own, or of
devoting it to a purpose or use different from that agreed upon. To
misappropriate for one's own use includes not only conversion to one's personal
advantage, but also every attempt to dispose of the property of another
without right. 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
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 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.
3. ID.; ID.; ID.; NO ESTAFA WITHIN THE CONTEMPLATION OF THE LAW
SINCE PETITIONER DID NOT DERIVE PERSONAL BENEFIT FROM OR CONSPIRED
WITH HER SUB-AGENT TO DEPRIVE THE OWNER OF THE JEWELRY OR ITS
VALUE. — Petitioner herein must be acquitted. The lower courts' reliance on
People v. Flores and U.S. v. Panes to justify petitioner's 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. 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.
4. ID.; CIVIL LIABILITY; PETITIONER HELD CIVILLY LIABLE TO THE
OWNER OF THE JEWELRY. — 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. Considering that the civil action for the recovery of civil liability
arising from the offense is deemed instituted with the criminal action, petitioner
is liable to pay complainant Quilatan the value of the unpaid pieces of jewelry.
CIETDc

DECISION

YNARES-SANTIAGO, J : p

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
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 the pieces of jewelry if not sold to Quilatan, both within 30 days from receipt of
the items.
Upon petitioner's 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
Piñas, 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 Piñas, 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 demand 2

to petitioner for failure to settle her obligation. Quilatan executed a complaint
affidavit 3 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 Piñas. The information alleged:
That on or about and sometime during the period from July 1992
up to September 1992, in the Municipality of Las Piñas, 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 C.
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 jewelry; 7 that at the start, petitioner was prompt
in settling her obligation; however, subsequently the payments were remitted
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 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:
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 I

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 petitioner's 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
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 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 petitioner's 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
another's property as if it were one's own, or of devoting it to a purpose or use
different from that agreed upon. To misappropriate for one's own use includes
not only conversion to one's 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.

I n 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 sub-agent 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 sub-agent
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
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 characteristic of this offense is missing under the circumstances. 23

Accordingly, petitioner herein must be acquitted. The lower courts'

reliance on People v. Flores 24 and U.S. v. Panes 25 to justify petitioner's
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, 27 held 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-agent's
faithlessness, her acquittal is in order. 28 (Emphasis supplied)
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.

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 SO ORDERED.
Davide, Jr., C.J., 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:
xxx xxx xxx

1. With unfaithfulness or abuse of confidence, namely:

xxx xxx xxx
(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;
xxx xxx xxx.
5. Op. cit., note 1 at 46.
6. Op. cit., note 2 at 25.
7. TSN, July 26, 1993, pp. 15–16.
8. TSN, September 13, 1993, p. 8.
9. Op. cit., note 7 at 17.
10. TSN, November 8, 1993, p. 19.
11. Op. cit., note 2 at 49–50.
12. Ibid., at 51.
13. TSN, January 27, 1994, pp. 5–9 & 16–18.
14. Op. cit., note 1 at 51–52.
15. Ibid., at 40.
16. Id., at 41.
17. Op. cit., note 1 at 13–14.
18. Barrameda v. Court of Appeals, 313 SCRA 477, 484 (1999), citing Fontanilla
v. People, 258 SCRA 460 (1996) and Manahan, Jr. v. Court of Appeals, 255
SCRA 202 (1996).
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 19. Op. cit., note 1 at 51.
20. Civil Code of the Philippines, Article 1892. The agent may appoint a
substitute if the principal has not prohibited him from doing so; but he shall
be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

xxx xxx xxx.
21. Amorsolo v. People, 154 SCRA 556, 563 (1987), citing U.S. v. Ramirez, 9
Phil. 67 and U.S. v. Panes, 37 Phil. 116 (1917).
22. CA 46 O.G. 6128 (1949).
23. Ibid., at 6135.
24. 47 O.G. 6210 (1949).

25. 37 Phil. 116 (1917).

26. 271 SCRA 12 (1997).
27. CA 53 O.G. 731 (1956).
28. Op. cit., note 26 at 20.
29. Op. cit., note 20.
30. Revised Rules of Criminal Procedure, Rule 111, Section 1(a).

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