G.R. No. 130423. November 18, 2002.
VIRGIE SERONA, petitioner, vs. HON. COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents.

FACTS

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, petitioner was to remit payment or return the jewelry if not sold within 30 days. 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 of P567,750.00. Unknown to Quilatan, petitioner had earlier entrusted the jewelry to Marichu Labrador for the latter to sell on commission basis. Petitioner was unable to collect payment from Labrador, causing her to default on her obligation to Quilatan. After a formal demand, an information for estafa under Article 315, paragraph 1(b) of the Revised Penal Code was filed against petitioner. The Regional Trial Court found petitioner guilty, sentencing her to imprisonment and ordering her to pay P424,750.00. The Court of Appeals affirmed the conviction but modified the penalty. Petitioner filed the instant petition, arguing that the prosecution failed to establish the elements of estafa, specifically that there was no abuse of confidence or misappropriation on her part.

ISSUE

Whether the Court of Appeals erred in affirming petitioner’s conviction for estafa under Article 315, paragraph 1(b) of the Revised Penal Code, specifically in concluding that there was abuse of confidence and misappropriation or conversion when petitioner entrusted the jewelry to a sub-agent and failed to return it.

RULING

The Supreme Court GRANTED the petition. It REVERSED and SET ASIDE the decision of the Court of Appeals and ACQUITTED petitioner Virgie Serona of the crime charged. However, she was held civilly liable in the amount of P424,750.00 as actual damages, plus legal interest.
The Court held that the second element of estafa through misappropriation or conversion—that there be misappropriation or conversion of the property by the offender—was lacking. Petitioner did not commit estafa by delivering the jewelry to a sub-agent for sale on commission basis. The law on agency allows the appointment of a substitute or sub-agent in the absence of an express agreement to the contrary. The acknowledgment receipt did not contain any such prohibition, nor was petitioner verbally forbidden from doing so. Therefore, her act was not characterized by abuse of confidence and was legally sanctioned. The essence of estafa is the appropriation or conversion of property to the prejudice of the owner, meaning using or disposing of another’s property as if it were one’s own or devoting it to a purpose different from that agreed upon. Here, the jewelry was given to Labrador to achieve the very same purpose for which it was delivered to petitioner—to sell it on commission. Consequently, there was no conversion as the property was not devoted to a different purpose. Petitioner’s inability to comply was due to Labrador’s failure to abide by their agreement. Citing People v. Nepomuceno, the Court ruled that where an agent’s inability to return property is solely due to the malfeasance of a sub-agent to whom the property was entrusted in good faith and for the same purpose, the agent is not criminally liable for estafa. Nevertheless, petitioner is civilly liable for the value of the unpaid jewelry, as the civil action is deemed instituted with the criminal action.