G.R. No. 218830 September 14, 2017
JESUS V. COSON, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.

FACTS

Petitioner Jesus V. Coson, Chairman and CEO of Good God Development Corporation (GGDC), was charged with Estafa under Article 315(1)(b) of the Revised Penal Code. The Information alleged that on July 29, 2003, Coson received in trust from private complainant Atty. Nolan Evangelista a Transfer Certificate of Title (TCT No. 261204), which was mortgaged to secure a loan of ₱4,784,000.00. Coson borrowed the title under a Memorandum of Agreement (MOA), promising to use it to obtain a loan from the PAG-IBIG Fund and to pay Evangelista from the proceeds. The PAG-IBIG Fund subsequently released ₱9,000,000.00 to GGDC as the first tranche of a developmental loan.
Despite the release of the loan proceeds and subsequent demands, Coson failed to pay Evangelista. The Regional Trial Court (RTC) found Coson guilty of estafa, a ruling affirmed by the Court of Appeals (CA). Both courts held that Coson received the title in trust under the MOA, misappropriated the loan proceeds by not paying the obligation, and thereby committed estafa through abuse of confidence.

ISSUE

Whether the Court of Appeals erred in affirming petitioner Jesus V. Coson’s conviction for the crime of Estafa under Article 315(1)(b) of the Revised Penal Code.

RULING

The Supreme Court REVERSED the CA decision and ACQUITTED petitioner Jesus V. Coson. The Court held that the prosecution failed to prove all the essential elements of estafa under Article 315(1)(b) beyond reasonable doubt. Specifically, the element of misappropriation or conversion was not established. The evidence showed that the loan of ₱4,784,000.00 was a corporate obligation of GGDC, secured by a real estate mortgage over its property. The subsequent MOA and the act of borrowing the title were incidental to this pre-existing civil obligation.
The Court emphasized that for estafa through misappropriation to exist, the property received in trust must be the very same property alleged to have been misappropriated. Here, the property received was the TCT, which was eventually returned to the mortgagee, Evangelista. The subject of the alleged conversion was the money from the PAG-IBIG loan. However, this loan was granted to GGDC for a specific developmental purpose, as evidenced by the Loan Agreement, and its proceeds were not shown to have been personally received by Coson in trust for Evangelista. The failure to pay a debt, even if sourced from a subsequent loan, constitutes a breach of contract, not criminal misappropriation. The obligation remained civil in nature. Since the criminal intent to misappropriate was not proven, Coson’s criminal liability could not arise from what was essentially a default on a loan.