Returning Property Through a Third Party: A Defense Against Estafa?

G.R. No. 102784, April 07, 1997

Imagine entrusting a friend with valuable jewelry to sell on your behalf. The friend, in turn, passes the jewelry to another person, who then fails to remit the proceeds. Are you, the original entrusted party, criminally liable for estafa (swindling)? This scenario highlights the complexities of agency, trust, and criminal liability. The Supreme Court case of Rosa Lim vs. Court of Appeals and People of the Philippines delves into this very issue, providing clarity on when returning property through a third party can serve as a valid defense against estafa charges.

Rosa Lim was accused of estafa after jewelry she received to sell on commission was not returned or paid for. The key question before the Supreme Court was whether Lim’s act of returning the jewelry to a third party, with the intention of it being returned to the owner, constituted a breach of trust sufficient to warrant a conviction for estafa.

Understanding Estafa and Breach of Trust

Estafa, under Article 315, paragraph 1(b) of the Revised Penal Code, involves misappropriating or converting money or property received in trust or administration, to the prejudice of another. The elements of estafa are: (1) the offender receives money or property 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) the offender misappropriates or converts such money or property or denies receiving the same; (3) such misappropriation or conversion or denial is to the prejudice of another; and (4) the offended party suffers damage as a result.

The concept of “breach of trust” is central to this type of estafa. It implies a violation of the confidence reposed in someone, leading to the misuse or unauthorized disposal of entrusted property. However, not every breach of trust leads to criminal liability. The key is whether the accused acted with criminal intent to defraud the owner. For example:

• If a sales agent receives cash payments from customers but uses the money to pay their personal debts instead of remitting it to the company, they are likely committing estafa.
• If a warehouse manager sells company inventory for personal profit, without the company’s consent, that would also be estafa.

Article 315 of the Revised Penal Code states in part:
“Article 315. Swindling (estafa). — Any person who shall defraud another by any of the means mentioned herein below shall be punished: 1. With unfaithfulness or abuse of confidence, namely: (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.”

The Case of Rosa Lim: A Detailed Look

The story unfolds with Rosa Lim’s arrival in Manila from Cebu, accompanied by her friend Aurelia Nadera. They met Victoria Suarez, a jewelry dealer, through Nadera, who frequently sold jewelry for Suarez on commission. Suarez entrusted Lim with a diamond ring and a bracelet to sell on commission, evidenced by a signed receipt. The receipt stipulated that Lim was to sell the jewelry for cash only and return it if unsold.

Shortly before leaving for Cebu, Lim informed Suarez she was no longer interested in selling the jewelry. Suarez instructed her to return the pieces to Nadera, who would then return them to Suarez. Lim returned the jewelry to Nadera, who issued a receipt. Later, Suarez demanded the return of the ring from Lim, leading to the estafa complaint when the ring was not returned to her satisfaction.

The case proceeded through the following stages:

• Regional Trial Court: Convicted Lim of estafa.
• Court of Appeals: Affirmed the RTC’s decision.
• Supreme Court: Initially sustained the Court of Appeals, but upon motion for reconsideration, reversed the decision and acquitted Lim.

Key quotes from the Supreme Court’s final decision:

“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…”

“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.”

Practical Implications and Key Takeaways

This case highlights that the intent to defraud is a crucial element in estafa. Returning property, even through a third party, demonstrates a lack of intent to misappropriate or convert the property for personal gain. The court emphasized that Lim’s actions showed she recognized Suarez’s ownership of the jewelry.

However, it’s also a cautionary tale. While Lim was acquitted of estafa, she was held civilly liable for the value of the ring due to her negligence in returning it to someone whose authority was later disputed. It underscores the importance of ensuring proper authorization when dealing with entrusted property.

Key Lessons:

• Intent is Key: Estafa requires proof of intent to defraud. Actions demonstrating a lack of such intent can be a valid defense.
• Authorization Matters: Always verify the authority of anyone receiving entrusted property on behalf of the owner.
• Civil vs. Criminal Liability: Even if acquitted of a crime, you may still be civilly liable for damages caused by negligence.

A business consigns goods to a dealer, but requires all returns to be coursed through an authorized representative. The dealer, due to unforeseen circumstances, returns goods to someone else. Even if that person absconds with the goods, the dealer would likely not be held liable for estafa, but would be liable for the value of the goods.

Frequently Asked Questions

Q: What is the difference between estafa and theft?

A: Estafa involves deceit or abuse of trust, while theft involves the unlawful taking of property without the owner’s consent. In estafa, the offender initially receives the property legally but later misappropriates it. In theft, the taking is unlawful from the beginning.

Q: What constitutes misappropriation in estafa cases?

A: Misappropriation means 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. It includes conversion to one’s personal advantage or any unauthorized disposal of the property.

Q: Can I be charged with estafa if I fail to return borrowed money?

A: Generally, failure to pay a debt is not estafa. However, if you obtained the loan through deceit or misrepresentation, or if you misappropriated the money for a purpose other than what was agreed upon, you could be charged with estafa.

Q: What is the role of a receipt in estafa cases?

A: A receipt serves as evidence of the transfer of property and the terms under which it was received. It can be crucial in proving the existence of a trust relationship or obligation to return the property.

Q: What should I do if someone accuses me of estafa?

A: Seek legal advice immediately. Gather all relevant documents, such as receipts, contracts, and communication records. Your lawyer can help you understand your rights and build a strong defense.

Q: If I am found not guilty of Estafa can I still be held liable for damages?

A: Yes. While you may not be criminally liable, the court can still award civil damages to the offended party. The standard of proof for civil liability is lower than the standard of proof for criminal liability.

ASG Law specializes in criminal defense and civil litigation. Contact us or email hello@asglawpartners.com to schedule a consultation.