Lim vs. Court of Appeals

In estafa through misappropriation under Article 315(1)(b) of the Revised Penal Code, the accused must personally obtain profit or gain through her own acts; mere negligence in permitting a sub-agent to take advantage of the entrusted chattel cannot constitute estafa unless there is evidence of conspiracy or connivance. Furthermore, returning entrusted property to the rightful owner through a third party—whom the owner knows, has previously trusted, and instructed the accused to use as an intermediary—does not constitute conversion or misappropriation, and at worst gives rise only to civil liability for negligence.

The case arose from a jewelry transaction involving a Cebu-based businesswoman (Rosa Lim), a Manila-based jewelry dealer (Victoria Suarez), and a mutual acquaintance (Aurelia Nadera). Lim was entrusted with expensive jewelry to sell on commission. The controversy centered on whether Lim committed estafa when she returned the unsold items to Nadera (who subsequently misappropriated the ring) instead of directly to Suarez, allegedly upon Suarez's instruction.

• In October 1987, Rosa Lim arrived in Manila from Cebu City with her friend Aurelia Nadera.
• On October 8, 1987, they met Victoria Suarez, a jewelry dealer, at the Williams Apartelle in Timog, Quezon City. Nadera had previously sold jewelry for Suarez on commission and had introduced Lim to Suarez as a wealthy businesswoman.
• Suarez offered Lim two pieces of jewelry on commission: a 3.35 carat diamond ring valued at P169,000.00 and a bracelet valued at P170,000.00.
• Lim signed a receipt prepared by Nadera for Suarez, which stated the jewelry was to be sold for cash only within a specified period, and if unsold, must be returned to the owner. The receipt prohibited selling on credit, depositing, lending, pledging, or giving the jewelry as security to third persons.
• On October 12, 1987, before departing for Cebu, Lim called Suarez to inform her she was no longer interested in selling the items. Suarez allegedly instructed Lim to return the jewelry to Nadera, who would in turn return them to Suarez.
• Lim returned both the ring and bracelet to Nadera, who issued a handwritten receipt dated October 12, 1987.
• On March 21, 1988, Suarez sent Lim a demand letter asking for the return of the ring. Lim responded that she had already returned both items to Nadera per Suarez's instruction.
• Suarez filed a complaint for estafa against Lim. During trial, Nadera testified that she received both items from Lim, sold the ring, and issued a check for P169,000.00 to Suarez as payment, which bounced. Nadera admitted she was facing a criminal case for violation of Batas Pambansa Blg. 22 (bouncing check law) filed by Suarez.
• Suarez admitted during cross-examination that the bracelet was returned to her by Nadera.

• The true agreement between the parties was a sale on credit, not an agency to sell, as evidenced by the cross-examination of the petitioner, Aurelia Nadera, and the complainant.
• The ring valued at P169,000.00 was actually returned to the complainant through Aurelia Nadera, as conclusively shown by the fact that Suarez filed a criminal case against Nadera for issuing a bouncing check in the amount of P169,000.00 as payment for the ring.
• Lim returned the jewelry to Nadera in compliance with Suarez's own instruction, and therefore had no intent to defraud or convert the property.
• At most, Lim was merely negligent in assuming Nadera had authority to receive the items, but negligence alone cannot constitute estafa.

• The agreement was clearly an agency to sell on commission, as evidenced by the written receipt signed by Lim which expressly prohibited delivering the jewelry to third persons under any circumstance.
• Suarez denied instructing Lim to return the jewelry to Nadera, claiming she could not have entrusted the return to Nadera because the latter already owed her a substantial amount of money.
• By delivering the ring to Nadera without express authority, Lim assumed the right to dispose of the jewelry as if it were hers, thereby committing conversion and a clear breach of trust.
• Generally, delivery of merchandise held in trust to a third person without the owner's knowledge or authority constitutes estafa, as it shows deceit and causes damage to the owner.

• Procedural Issues: Whether the Supreme Court should grant the motion for reconsideration and reverse its previous decision dated February 28, 1996, which had affirmed the conviction.
• Substantive Issues:
  • Whether Rosa Lim committed estafa under Article 315(1)(b) of the Revised Penal Code by allegedly misappropriating or converting the diamond ring entrusted to her.
  • Whether returning the entrusted jewelry to Aurelia Nadera (a third party) upon the alleged instruction of the owner constitutes conversion or misappropriation sufficient to sustain a conviction for estafa.
  • Whether mere negligence in entrusting the property to a sub-agent who subsequently misappropriated it constitutes estafa.

• Procedural: The Supreme Court granted the motion for reconsideration, set aside its decision dated February 28, 1996, and modified the judgment of the Court of Appeals.
• Substantive:
  • The Court acquitted Rosa Lim of criminal liability for estafa. It ruled that while the general rule states delivery to a third person without authority constitutes estafa, this has been modified by subsequent jurisprudence requiring that the profit or gain must be obtained by the accused personally through her own acts. Mere negligence in permitting another to take advantage of the entrusted chattel cannot constitute estafa unless there is evidence of conspiracy or connivance with the one who carried out the actual misappropriation.
  • The Court found that Lim's purpose in delivering the jewelry to Nadera was solely to effect their return to Suarez, not for Nadera to re-sell them. This act manifests recognition of Suarez's ownership and dominion over the items and cannot be considered conversion or misappropriation, which requires using or disposing of another's property as if it were one's own.
  • The Court held that Lim's belief that Nadera had authority to receive the items was reasonable, given that Nadera had prepared the receipt and introduced Lim to Suarez. At worst, Lim was negligent in assuming Nadera's authority, but settled jurisprudence holds that there can be no estafa through negligence.
  • The Court found that Nadera's admission under oath that she received the ring and issued a bouncing check in payment thereof was a declaration against her own interest and raised reasonable doubt regarding Lim's criminal liability.
  • However, Lim was held civilly liable to pay Victoria Suarez the amount of P169,000.00 as actual damages, plus legal interest at the rate of six percent (6%) per annum from the time of extrajudicial demand, without subsidiary imprisonment in case of insolvency.

• Estafa Through Misappropriation (Personal Gain Requirement) — In cases of estafa under Article 315(1)(b) of the RPC, the profit or gain must be obtained by the accused personally through her own acts. Mere negligence in permitting another person (sub-agent) to take advantage or benefit from the entrusted chattel cannot constitute estafa unless the evidence discloses that the agent acted in conspiracy or connivance with the one who carried out the actual misappropriation. If the accused was merely the innocent victim of the sub-agent's faithlessness, acquittal is in order.
• No Estafa Through Negligence — Criminal liability for estafa requires fraudulent intent (dolus). Negligence (culpa), no matter how gross, cannot give rise to estafa. At worst, negligence gives rise only to civil liability.
• Presumption of Misappropriation — When a demand for the delivery of the thing promised or the return of money delivered in trust is made and such demand is not fulfilled within a reasonable time, a presumption arises that the amount has been misappropriated. However, this inference is only deducible when the explanation given by the accused is absolutely devoid of merits. Where the explanation raises reasonable doubt regarding misappropriation, acquittal is proper.
• Conversion and Misappropriation Defined — Conversion or misappropriation connotes an act of using or disposing of another's property as if it were one's own, or devoting it to a purpose or use different from that agreed upon. Returning property to the rightful owner, even through the mediation of a third party, manifests recognition of the owner's dominion and is not conversion.

• "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..."
• "When a demand for the delivery of the thing promised, or the return of the money delivered in trust, is made, and such demand is not fulfilled within a reasonable time, a presumption arises that the amount has been misappropriated. This inference, however, is only deducible when the explanation given by the accused for his failure to account for the money is absolutely devoid of merits. Where the explanation does not completely destroy the presumption but at least raises reasonable doubt that accused had misappropriated the amount in question, acquittal is in order."
• "It is well-settled that the essence of estafa thru misappropriation is the appropriation or conversion of money or property received to the prejudice of the owner. The words 'convert' and 'misappropriate' connote an act of using or disposing of another's property as if it were one's own or devoting it to a purpose or use different from that agreed upon."
• "Rosa Lim's sole purpose in delivering the pieces of jewelry to Aurelia Nadera, was for Nadera to effect their return to Victoria Suarez. By no stretch of the imagination can the act of returning said items to its rightful owner, although through the mediation of a third party, be considered as conversion or misappropriation."
• "Settled it is in our jurisprudence that there can be no estafa through negligence."

• United States vs. Eustaquio (31 Phil. 188) — Cited for the general rule that delivery of merchandise held in trust to a third person without the owner's knowledge or authority constitutes estafa; distinguished and modified by the Court in favor of the later rule requiring personal gain or conspiracy.
• People vs. Nepomuceno (CA 46 O.G. 6128) — Established the principle that in estafa, the profit must be obtained by the accused personally through her own acts, and mere negligence without conspiracy does not constitute estafa.
• People vs. Trinidad (CA 53 O.G. 731) — Reiterated the rule that the agent must personally obtain profit, and if the accused was merely an innocent victim of the sub-agent's faithlessness, acquittal is proper.
• People vs. Lopez (CA 56 O.G. 5879) — Established the rule on presumption of misappropriation, holding that such presumption arises only when the explanation given by the accused is absolutely devoid of merits; reasonable doubt warrants acquittal.
• Amorsolo vs. People (154 SCRA 556) — Cited for the definition of conversion and misappropriation as acts of using or disposing of another's property as if it were one's own.

• Article 315, paragraph 1(b), Revised Penal Code — Defines estafa with abuse of confidence committed by misappropriating or converting money or property received in trust, or by denying having received such property. This was the provision under which Lim was charged and the Court interpreted the elements of misappropriation and conversion.
• Batas Pambansa Blg. 22 — Mentioned as the law under which Aurelia Nadera was separately charged for issuing a bouncing check in the amount of P169,000.00, which served as evidence that the ring was indeed returned to Nadera.

• N/A (Padilla, Bellosillo, Vitug, and Kapunan, JJ., concurred in the resolution without filing separate opinions).