Facts

• Between July and September 1992, Leonida Quilatan (the principal) delivered pieces of jewellery to petitioner Virgie Serona (the agent) to be sold on commission.
• By their oral agreement, Serona was to remit the proceeds or return the unsold pieces to Quilatan within 30 days from receipt.
• Unknown to Quilatan, Serona had in turn entrusted the jewellery to Marichu Labrador§ (the sub-agent), for the latter to sell on commission. (Their oral agreement carried no prohibition against appointing a sub-agent — the point on which the estafa charge would turn, since misappropriation, not mere sub-delegation, is what the crime requires.)
• Labrador failed to pay.
• Serona was consequently unable to account to Quilatan for jewellery valued at about ₱424,750.
• She executed an acknowledgment of her indebtedness and made partial payments, but the balance went unsettled.
• Trial court — convicted of estafa. Serona was charged with and convicted of estafa under Article 315§ (1)(b) of the Revised Penal Code by the trial court.
• Court of Appeals — conviction affirmed. The Court of Appeals affirmed her conviction on April 30, 1997, denying reconsideration on August 28, 1997.
• Before the Supreme Court. She elevated the case.

Issue

Ruling

Ratio

• The elements are: (a) receipt of money, goods, or other personal property in trust, on commission, for administration, or under an obligation to deliver or return it.
• (B) misappropriation or conversion of the thing, or denial of receipt; (c) prejudice to another; and (d) demand.
• The dispute centred on the second element.
• "Misappropriation or conversion" means taking or devoting the property to a purpose or use different from that agreed upon, or disposing of another's property as though it were one's own.

• Serona did not use the jewellery for a purpose other than the one agreed upon.
• Her arrangement with Quilatan was that the jewellery be sold; that is exactly what she attempted, through Labrador.
• She did not pawn, appropriate, or divert the items to her own use.

• Applying Article 1892§, an agent may appoint a substitute where the principal has not prohibited him from doing so.
• The oral agreement between Quilatan and Serona contained no prohibition against re-selling or entrusting the jewellery to another for sale.
• Absent such a prohibition, Serona did not exceed her authority, and no criminal intent could be inferred from her having done what the law permits.

• Article 1892§ also makes the agent responsible for the acts of the substitute.
• Serona's undertaking to Quilatan was not discharged by delivering the jewellery to Labrador.
• Her obligation to remit the proceeds or return the goods subsisted.
• She therefore remains civilly liable for the unpaid balance.
• The Court emphasised that acquittal on reasonable doubt does not extinguish civil liability arising from the same act.

Doctrine

• Article 1892§ in a criminal setting. Where the agency agreement does not forbid it, an agent may entrust the principal's goods to a sub-agent, and doing so is neither a breach of the agency nor the misappropriation that estafa requires.
• Misappropriation defined. It is the use of the thing for a purpose other than that agreed upon, or disposing of it as one's own. Pursuing the very purpose of the agency through another is not conversion.
• Civil liability survives. The agent remains answerable to the principal for the sub-agent's acts and for the value of the unreturned goods, even where the criminal charge fails.