G.R. No. 89483 - Republic vs. Migrino

Case Summary (G.R. No. 89483)

Petitioners, Respondent and Key Dates

Petitioners sought review of the Court of Appeals’ affirmation of the Regional Trial Court conviction for Estafa under Article 315(1)(b) of the Revised Penal Code. Key dates: capital contribution delivered January 25, 1991; demand letters sent December 13, 1999 and January 25, 2000 (received December 28, 1999 and January 5, 2000); arraignment March 28, 2001; RTC decision December 9, 2009; CA decision June 27, 2013; Supreme Court decision rendered July 4, 2016. Applicable constitutional framework: 1987 Philippine Constitution.

Charge and Information

The Information charged that, on or about January 25, 1991 and thereafter, the petitioners, conspiring together, received P400,000 in trust from the Fukamis to be used in constructing a factory on one-half of the petitioners’ lot in Cainta, Rizal, but, with abuse of confidence and intent to defraud, misappropriated and converted the amount to their own use and refused to return it despite repeated demands, contrary to law. The charge invoked Article 315(1)(b) (estafa by misappropriation or conversion of money received in trust).

Facts Established at Trial

The parties discussed a joint venture beginning in 1989 for the manufacture and export of women’s wear; the Fukamis agreed to contribute P400,000 for a factory building.
The agreement was verbal; petitioners offered their lot in Cainta in lieu of Cubao. Construction began in 1991.
A two-door studio-type apartment (duplex) was constructed on the lot; petitioners asserted that one half would be used as the garments factory and the other half as residence. Rosalinda presented a plan captioned “Construction of Two-Unit Studio-type Apartments.”
The Fukamis deposited the P400,000 in a Boston Bank joint account opened in the names of Belen and Rosalinda; Belen issued four checks of P100,000 each from her Las Piñas residence that were picked up by a messenger for the petitioners and withdrawn.
The Fukamis later discovered that a duplex apartment, not the contemplated two-storey factory, had been erected; they caused demand letters to be sent after unsuccessful attempts at contacting the petitioners. The petitioners admitted receipt of the funds but claimed the funds were used for the joint venture and that construction complied substantially with the agreement.

Procedural History

Petitioners pleaded not guilty at arraignment. The RTC (Branch 253, Las Piñas City) reversed the order of trial because the defense was affirmative and later convicted the petitioners of estafa, sentencing them to an indeterminate term (Prision Correccional as minimum to Reclusion Temporal as maximum), ordering reimbursement of P400,000 with 12% interest from January 21, 1991, and awarding P100,000 for litigation expenses and attorneys’ fees. The Court of Appeals affirmed the RTC in toto. The petitioners elevated the case to the Supreme Court.

Issues Presented to the Supreme Court

(1) Whether the prosecution proved beyond reasonable doubt all elements of estafa under Article 315(1)(b); (2) Whether conspiracy between the petitioners was established; (3) Whether the RTC of Las Piñas City had jurisdiction over the crime charged.

Applicable Law and Elements of Estafa (Art. 315(1)(b)) and Burden of Proof

Article 315(1)(b) (estafa with unfaithfulness or abuse of confidence) requires proof of: (1) receipt by the offender in trust, on commission, or under an obligation involving duty to return or deliver; (2) misappropriation or conversion of such money or denial of receipt; (3) prejudice to another; and (4) demand by the offended party. Because estafa is a mala in se offense, criminal liability requires proof of malicious intent (dolus malus). All elements, and malicious intent, must be established beyond reasonable doubt.

Supreme Court on Territorial Jurisdiction

The Supreme Court upheld the RTC of Las Piñas City’s territorial jurisdiction. Although the joint account was in San Juan City, the Court relied on precedent (Tan v. People) that delivery of the checks and the acceptance thereof at the private complainants’ residence in Las Piñas signified not only transfer of funds but also the creation of a fiduciary relation; the checks were issued in Las Piñas and picked up there, giving Las Piñas territorial nexus for the crime.

Supreme Court Analysis on Elements — Misappropriation and Prejudice

The Court found the first (receipt in trust) and fourth (demand) elements established: the petitioners received the P400,000 for construction and the Fukamis made demands via counsel. However, the Court determined that the prosecution failed to prove misappropriation/ conversion and prejudice beyond reasonable doubt. The Court explained that “convert” and “misappropriate” mean using or disposing of another’s property as one’s own or devoting it to a purpose different from that agreed upon. Here, the petitioners used the funds to erect a structure on the agreed lot; although the structure differed from the private complainants’ expectation (a two-storey factory versus a duplex studio-type apartment), the Court found the purpose — erection of a building to be used in the enterprise, with one unit intended for factory use — was substantially complied with. The subsequent delivery and installation of five sewing machines by the Fukamis (later withdrawn for repairs) supported the conclusion that the end sought by the contribution was not rendered illusory. Absent convincing proof of appropriation to the petitioners’ personal use or purposeful disposition beyond the venture, misappropriation and resulting prejudice were not established to the criminal standard.

Supreme Court Analysis on Criminal Intent (Dolus Malus)

The Court emphasized that

Case Syllabus (G.R. No. 89483)

Procedural History

Petition for review on certiorari filed by Rosalinda S. Khitri and Fernando S. Khitri (collectively, the petitioners) assails the Court of Appeals (CA) Decision of June 27, 2013 in CA-G.R. CR No. 33961, which affirmed the Regional Trial Court (RTC) of Las Piñas City, Branch 253, Decision dated December 9, 2009 in Criminal Case No. 00-1023 convicting the petitioners of Estafa under Article 315(1)(b) of the Revised Penal Code (RPC).
Petitioners were arraigned on March 28, 2001 and pleaded "not guilty"; RTC reversed the order of trial because the defense was primarily an affirmative allegation.
Petitioners appealed the RTC decision to the CA; the CA affirmed in toto the RTC decision on June 27, 2013. A motion for reconsideration was denied by CA Resolution dated November 21, 2013.
Petitioners raised grounds in the Supreme Court challenging jurisdiction, the criminal (versus civil) nature of liability, and the existence of conspiracy.
Supreme Court rendered decision on July 4, 2016 (notice of judgment received August 15, 2016), reversing and setting aside the CA decision, acquitting the petitioners of Estafa but ordering reimbursement with interest.

Parties

Petitioners: Rosalinda S. Khitri and Fernando S. Khitri; Rosalinda is Fernando’s mother.
Private complainants: Spouses Hiroshi Fukami and Belen Fukami.
Respondent: People of the Philippines (prosecution); Office of the Solicitor General (OSG) represented the State.

Charge / Information

Information charged petitioners, alleging that on or about January 25, 1991 and thereafter, in Las Piñas City, the petitioners, conspiring and confederating, received in trust P400,000.00 from the complainants to be used in construction of a factory building on one-half of petitioners' lot at Monte Vista Park Subd., Sto. NiÑo, Cainta, Rizal, but with abuse of confidence and intent to defraud misappropriated and converted the P400,000.00 to their own use and failed to return it despite repeated demands — contrary to law (Art. 315, paragraph 1(b) RPC).

Antecedent Facts (Common and Disputed)

The parties were introduced in 1986 through Hiroshi’s agent; the petitioners were engaged in garments manufacturing and exporting.
Hiroshi proposed a joint venture circa 1989 to manufacture and export women’s wear requiring a factory; private complainants agreed to contribute P400,000.00 toward construction.
The petitioners offered their lot in Monte Vista Park Subdivision, Cainta, Rizal for the factory; parties’ agreement was verbal, not written.
Construction commenced in 1991. The parties understood one-half of the lot would be reserved for the factory and the other half for petitioners’ residence.
Private complainants gave P400,000.00 on January 25, 1991; a Boston Bank joint account was opened in Belen’s and Rosalinda’s names in San Juan City; four checks of P100,000.00 each were issued by Belen to Rosalinda and were picked up by the petitioners’ messenger and withdrawn from the account.
After withdrawals, petitioners became difficult to contact by phone; private complainants visited the site and discovered a two-door studio-type apartment (a residential duplex) rather than the two-storey factory they expected; Belen photographed the apartment.
Private complainants demanded return of money through counsel via demand letters dated December 13, 1999 and January 25, 2000 (received Dec. 28, 1999 and Jan. 5, 2000 respectively); petitioners did not reply to demands.
Petitioners maintain the money was a joint-venture contribution and that they substantially complied by constructing a two-door studio-type apartment, one unit of which would be used as the garments factory; they assert no criminal intent and continued communications (they also claim that sewing machines were installed by Hiroshi and later pulled out for repairs).

Testimony of Rosalinda Khitri

Admitted receipt of P400,000.00 from Hiroshi and Belen Fukami.
Testified she manufactures and exports ladies’ lingerie and wear; offered her lot in Monte Vista and caused construction of the two-door studio-type apartment.
Presented a plan labeled "Construction of Two-Unit Studio-type Apartments" prepared for "Rosalinda P. Subido."
Stated the verbal agreement included that one-half of the building would be used as factory and the other half as residence; acknowledged there was no approved plan for a two-storey factory but only for two studio-type apartments.
Testified Hiroshi signified acceptance by delivering and installing five sewing machines in the apartment units, though no government permit to operate was obtained; two weeks later machines were pulled out for repairs.

Testimony of Fernando Khitri

Testified as garments manufacturer since 1979, proprietor of Allure Garments and interest in Venus Fashion Apparel Corporation; Rosalinda owns Nandy’s Enterprises.
Stated Hiroshi first purchased garments from him in 1988 and later proposed the joint venture; recalled agreement that the factory would be built in their Cainta lot.

Testimony of Private Complainants (Hiroshi and Belen Fukami)

Belen confirmed sourcing garments from petitioners from 1988 to 1992 and recounted approach by petitioners for formation of a corporation for manufacture/export; private complainants hesitated because of costs for two-storey factory but agreed after viewing petitioners’ lot in Cainta and a sketch of a two-storey factory.
Belen testified the P400,000.00 contribution was given and deposited in Boston Bank joint account; later shocked to discover a two-door studio-type apartment of which they were not shown plans; demands for return were ignored.
Hiroshi testified negotiations began in 1989, trust in petitioners led to no written contract, and he saw a rough sketch of a two-storey factory and the lot; after learning of the completed duplex he withdrew from the venture and demanded return of money; he also testified that he had seen petitioners in Las Piñas only once or twice and that some negotiations were in his office in Que