Cheng vs. People

An agency to sell jewelry on commission is not transformed into a contract of sale by the principal’s informal use of the word “payment” when the parties’ true intention was to treat a check as security, and the accused’s subsequent default triggered presentment for encashment. Moreover, once the elements of estafa under Article 315(1)(b) are established, the failure to deliver the proceeds of the sale or to return the entrusted goods upon demand raises a legal presumption of misappropriation.

Sometime in 1997, Rowena Rodriguez and Paz Cheng y Chu entered into an arrangement whereby Rodriguez delivered pieces of jewelry to Cheng for the latter to sell on commission basis. Cheng was obliged, one month from delivery, either to remit the proceeds of sold jewelry or to return the unsold items. On three separate dates—July 12, 1997 (P18,000.00), July 16, 1997 (P36,000.00), and August 12, 1997 (P257,950.00)—Rodriguez delivered various sets of jewelry. Upon the last delivery, Cheng issued a PDCP Bank check for P120,000.00 as security for the first two deliveries and partial security for the third. Cheng subsequently failed to remit or return the jewelry, and when Rodriguez presented the check, it was dishonored due to insufficient funds and, after a re-deposit upon Cheng’s assurance, because the account had been closed. Rodriguez confronted Cheng, who retorted, “Akala mo, babayaran pa kita?” This prompted the filing of three separate Informations for estafa.

• The Commission Arrangement: Rowena Rodriguez and Paz Cheng y Chu agreed that Rodriguez would deliver pieces of jewelry to Cheng, who would sell them on commission. Cheng was obligated, one month after delivery, to either remit the proceeds of sold items or return unsold pieces to Rodriguez.
• Deliveries and the Security Check: On July 12, 1997, Rodriguez delivered jewelry worth P18,000.00; on July 16, 1997, jewelry worth P36,000.00; and on August 12, 1997, a final batch worth P257,950.00. Upon delivery of the last batch, Cheng issued a PDCP Bank check for P120,000.00. According to Rodriguez, the check served as security for the first two deliveries and partial security for the last.
• Default and Dishonor: Cheng failed to remit the proceeds or return the unsold jewelry within the one-month period. Rodriguez presented the check for encashment, but it was dishonored for insufficient funds. After Cheng gave assurances, Rodriguez re-deposited the check on November 4, 1997; it was again dishonored, this time because the drawee account had been closed.
• Demand and Charge: Rodriguez confronted Cheng, who retorted, “Akala mo, babayaran pa kita?” Rodriguez then filed three Informations for Estafa under Article 315(1)(b) of the Revised Penal Code.
• The Defense’s Version: Cheng denied ever receiving jewelry or signing any agreement to sell on commission. She alleged Rodriguez was a usurious moneylender and that the check was merely security for an unpaid loan. Cheng presented Virginia Araneta, who testified that she accompanied Cheng to borrow money from Rodriguez and that jewelry was pledged as collateral for the loan.
• Trial Court’s Appreciation: The RTC found Rodriguez’s testimony candid, credible, and straightforward, while characterizing Cheng’s account as self-serving and uncorroborated. The documentary evidence—written agreements and the dishonored check—supported the prosecution’s narrative that the jewelry had been delivered on commission and that Cheng had converted the items or their value to her own use.

• Transaction as Sale: Petitioner maintained that Rodriguez’s own testimony—stating the check was “payment for the first and second transactions” and that the earlier deliveries were “considered paid”—was a judicial admission that the parties had entered into a contract of sale. Consequently, any non-payment gave rise only to civil liability, not criminal estafa.
• Lack of Proof of Misappropriation: Cheng argued the prosecution failed to present direct evidence that she kept the proceeds or disposed of the jewelry for her own benefit.
• Errors in Credibility Assessment: She assailed the lower courts’ disregard of her denial and their preference for Rodriguez’s narrative, insisting the prosecution did not discharge the burden of proving guilt beyond reasonable doubt.

• Conclusive Factual Findings: The Office of the Solicitor General countered that the uniform factual conclusions of the RTC and CA were entitled to great weight and finality, and no exceptional circumstance justified a review.
• Elements of Estafa Proven: The prosecution established all elements: Rodriguez entrusted jewelry to Cheng for sale on commission; Cheng was obligated to return or remit; she failed to do so upon demand; and Rodriguez suffered prejudice.
• Positive Evidence over Denial: Rodriguez’s positive, credible testimony, corroborated by the written agreements and the dishonored check, overwhelmed Cheng’s bare denial and self-serving claim of a loan.

• Nature of the Transaction: Whether the arrangement between Rodriguez and Cheng constituted an agency on commission basis or a contract of sale.
• Proof of Misappropriation: Whether the prosecution proved the element of misappropriation or conversion required for estafa under Article 315(1)(b).
• Sufficiency of Evidence: Whether Cheng’s guilt for three counts of estafa was established beyond reasonable doubt.

• Nature of the Transaction: The transaction was properly characterized as an agency on commission basis, not a sale. Rodriguez’s loose use of the words “payment” and “paid” did not alter the true nature of the agreement, as the check for P120,000.00 was issued and accepted as security. Rodriguez only treated the check as remittance when Cheng defaulted on her undertaking. Moreover, Cheng herself inconsistently claimed the check was security for a loan, undermining any argument of a sale. The written agreements and the overall context demonstrated a principal-agent relationship obligating Cheng to sell the jewelry on commission and to account for it.
• Proof of Misappropriation: The element of misappropriation was adequately established. Under Pamintuan v. People, a legal presumption of misappropriation arises when the accused fails to deliver the proceeds or return the items and fails to give an account of their whereabouts. Cheng neither returned the jewelry nor remitted any proceeds despite Rodriguez’s demand; her failure to account constituted circumstantial evidence of conversion. The twice-dishonored check and her defiant response further evidenced misappropriation.
• Sufficiency of Evidence: Guilt was proven beyond reasonable doubt. All four elements of estafa under Article 315(1)(b) were present: (1) Rodriguez delivered jewelry to Cheng in trust or on commission; (2) Cheng misappropriated or converted the same by failing to return or remit after demand; (3) Rodriguez suffered prejudice; and (4) demand was made upon Cheng. The factual findings of the trial court, as affirmed by the Court of Appeals, were supported by the evidence on record and thus final and binding.

• Presumption of Misappropriation in Estafa by Misappropriation — In proving the element of conversion or misappropriation under Article 315(1)(b), a legal presumption of misappropriation arises when the accused fails to deliver the proceeds of the sale or to return the items to be sold and fails to give an account of their whereabouts. The prosecution need not present direct evidence; failure to account upon demand is sufficient circumstantial evidence of conversion. This doctrine, drawn from Pamintuan v. People, was applied to Cheng, whose unexplained failure to remit or return the jewelry after demand triggered the presumption, which she failed to rebut.
• Finality of Lower Courts’ Factual Findings — Factual findings of the trial court, especially when affirmed by the Court of Appeals, are entitled to great weight and respect and are deemed conclusive when supported by the evidence on record. The Supreme Court declined to reassess the uniform credibility determinations and factual conclusions of the RTC and CA.

• “The words ‘convert’ and ‘misappropriate’ connote the 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.” — This definition, quoting Pamintuan, encapsulates the actus reus of estafa under Article 315(1)(b) and was central to rejecting Cheng’s defense.
• “In proving the element of conversion or misappropriation, a legal presumption of misappropriation arises when the accused fails to deliver the proceeds of the sale or to return the items to be sold and fails to give an account of their whereabouts.” — The core doctrinal statement on circumstantial proof of misappropriation, applied to Cheng’s unexplained default.
• “The fact that Rodriguez loosely used the words ‘payment’ and ‘paid’ should not be taken against her and should not in any way change the nature of her transactions with Rodriguez from an agency on a commission basis to a full-fledged sale.” — This passage clarifies that informal or imprecise language in testimony does not override the true contractual intent as derived from the entire context of the parties’ dealings.

• Pamintuan v. People, 635 Phil. 514 (2010) — The Court relied on this precedent for the elements of estafa under Article 315(1)(b) and for the rule that a legal presumption of misappropriation arises from an unaccounted failure to deliver proceeds or return entrusted property. It served as controlling authority.
• Guevarra v. People, G.R. No. 170462, February 5, 2014, 715 SCRA 384 — Cited to reiterate the well-settled principle that trial court factual findings affirmed by the appellate court are binding and conclusive on the Supreme Court.

• Article 315(1)(b), Revised Penal Code — Defines and penalizes estafa committed through unfaithfulness or abuse of confidence by misappropriating or converting money, goods, or other personal property received in trust, on commission, for administration, or under any obligation to deliver or return the same. The Court enumerated the four elements of this felony and held that each was proven.
• Section 4, Rule 129, Rules of Court (Judicial Admissions) — Although not invoked by the majority, this provision was central to the dissent, which argued that Rodriguez’s testimony constituted a binding judicial admission of a sale. The majority implicitly rejected that characterization by treating the statements as loose language not altering the true agency relationship.

Chief Justice Maria Lourdes P. A. Sereno (Chairperson), Justice Teresita J. Leonardo-De Castro, Justice Jose Portugal Perez.

• Justice Lucas P. Bersamin — Dissented on the ground that the prosecution failed to prove Cheng’s guilt beyond reasonable doubt. Justice Bersamin maintained that Rodriguez’s own testimony unequivocally identified the check as “payment” and characterized the deliveries as “considered paid,” thereby revealing that the transactions were outright sales, not an agency on commission. Once ownership of the jewelry passed to Cheng, she could not misappropriate her own property. The dishonor of the check merely rendered Rodriguez an unpaid seller, giving rise to a pure creditor-debtor relationship and civil liability, not criminal estafa. Because the State did not establish the essential element of a trust or commission relationship, acquittal was warranted.