Estafa Through Misappropriation of Entrusted Funds: How to File a Case (Philippines)

Introduction

In the Philippine legal system, estafa is a form of swindling or fraud recognized as a crime under the Revised Penal Code (RPC). Among its various modes, estafa through misappropriation of entrusted funds—commonly referred to as estafa under Article 315, paragraph 1(b) of the RPC—occurs when an individual receives money, goods, or personal property in trust or under an obligation to return or deliver it, but instead misappropriates or converts it for personal use, causing prejudice to another party. This offense is particularly prevalent in business dealings, fiduciary relationships, and transactions involving agents, employees, or trustees.

This article provides a comprehensive overview of estafa through misappropriation in the Philippine context, including its legal definition, elements, examples, penalties, defenses, and a step-by-step guide on how to file a case. It draws from established Philippine jurisprudence and statutory provisions, emphasizing that while estafa is a criminal offense, it often carries civil implications for restitution. Note that legal advice should always be sought from a qualified attorney, as outcomes depend on specific facts and evolving case law.

Legal Basis

Estafa is codified in Article 315 of the RPC, as amended by Republic Act No. 10951 (An Act Adjusting the Amount or the Value of Property and Damage on Which a Penalty is Based, and the Fines Imposed Under the Revised Penal Code). Paragraph 1(b) specifically addresses misappropriation:

"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."

This provision is rooted in the principle of protecting trust in commercial and personal transactions. Related laws include the Civil Code (Articles 1455-1456 on obligations arising from quasi-delicts) and the Bouncing Checks Law (Batas Pambansa Blg. 22), which may overlap in cases involving checks. Jurisprudence from the Supreme Court, such as in People v. Cortez (G.R. No. 239078, 2019), clarifies that the essence of this estafa mode is the breach of a fiduciary duty.

Elements of the Crime

For a successful prosecution, the prosecution must prove beyond reasonable doubt the following four elements, as outlined in People v. Mejia (G.R. No. 228850, 2018):

Receipt of Property in Trust or Under Obligation: The offender must have received money, goods, or personal property under a fiduciary relationship, such as trust, commission, administration, or any obligation to return or deliver it. This includes scenarios like loans for specific purposes, agency agreements, or deposits. The property must be personal (movable), not real estate.
Misappropriation, Conversion, or Denial: The offender diverts the property for personal gain or benefit, converts it to something else, or denies receipt. Misappropriation implies use contrary to the agreed purpose; conversion means treating the property as one's own.
Prejudice to Another: The act must cause damage or injury to the owner or a third party. Prejudice can be actual (e.g., financial loss) or potential, but it must be proven.
Demand by the Offended Party: A formal demand (e.g., via letter) for return or accounting is typically required, though jurisprudence holds it unnecessary if misappropriation is evident (e.g., People v. Bautista, G.R. No. 217805, 2017).

Failure to prove any element results in acquittal. Intent to defraud (dolo) is presumed from the acts but can be rebutted.

Examples and Common Scenarios

Estafa through misappropriation often arises in everyday transactions:

Business Agents: An employee collects payments from clients but pockets the funds instead of remitting them to the employer (e.g., People v. Villanueva, G.R. No. 226106, 2018).
Loans with Specific Purpose: Borrowing money for a business venture but using it for personal expenses, failing to repay.
Pawning Entrusted Items: Receiving jewelry for safekeeping or sale on commission, then pawning it without permission.
Denial of Receipt: An administrator denies receiving rental collections from tenants.
Corporate Contexts: A treasurer misuses company funds for personal investments.

Distinguish from theft (no initial lawful possession) or qualified theft (with abuse of confidence but no obligation to return).

Penalties

Penalties are graduated based on the value of the misappropriated property, as amended by RA 10951:

Value of Property	Penalty
P200 or less	Arresto mayor (1 month and 1 day to 6 months)
Over P200 but not exceeding P12,000	Arresto mayor in its maximum period to prisión correccional in its minimum period (4 months and 1 day to 2 years and 4 months)
Over P12,000 but not exceeding P22,000	Prisión correccional in its minimum and medium periods (6 months and 1 day to 4 years and 2 months)
Over P22,000 but not exceeding P1,000,000	Prisión correccional in its maximum period to prisión mayor in its minimum period (4 years, 2 months and 1 day to 8 years)
Over P1,000,000 but not exceeding P10,000,000	Prisión mayor in its medium period (8 years and 1 day to 10 years)
Over P10,000,000	Prisión mayor in its maximum period to reclusión temporal in its minimum period (10 years and 1 day to 14 years and 8 months)

Aggravating circumstances (e.g., abuse of confidence) increase the penalty by one degree. Mitigating factors (e.g., voluntary surrender) may reduce it. Additionally, the offender is liable for civil restitution of the amount misappropriated, plus damages and interest (Article 100, RPC).

Jurisdiction: Municipal Trial Courts (MTC) for penalties not exceeding 6 years; Regional Trial Courts (RTC) for higher penalties.

Defenses and Mitigations

Common defenses include:

Lack of Fiduciary Relationship: Arguing the transaction was a simple debt or loan without obligation to return specific funds (civil, not criminal; Rosita v. Dala, G.R. No. 216453, 2017).
No Misappropriation: Proving funds were used as agreed or returned.
Absence of Demand or Prejudice: If no demand was made or no loss occurred.
Good Faith or Novation: Agreement to convert the obligation into a civil debt extinguishes criminal liability (People v. Bayocot, G.R. No. 226296, 2018).
Prescription: The crime prescribes in 15 years for affidavits of desistance or 10-20 years otherwise (Act No. 3326).

Affidavit of desistance may lead to dismissal if filed before trial, but not if public interest demands prosecution.

How to File a Case: Step-by-Step Guide

Filing an estafa case is a criminal process initiated by the victim (private complainant) but prosecuted by the state. It cannot be settled privately without court approval.

Step 1: Gather Evidence

Documents proving entrustment (e.g., receipts, contracts, MOAs).
Proof of misappropriation (e.g., bank statements, witness testimonies).
Demand letter (notarized, sent via registered mail).
Affidavits from witnesses.
Computation of damages.

Consult a lawyer to ensure completeness.

Step 2: File the Complaint

Draft a complaint-affidavit detailing facts, elements, and evidence.
File it with the Office of the City or Provincial Prosecutor (fiscal) in the place where the crime occurred or where the offender resides (Rule 110, Revised Rules of Criminal Procedure).
Pay filing fees (minimal for indigent litigants).
Include certification of non-forum shopping.

Step 3: Preliminary Investigation

The prosecutor conducts an investigation: subpoenas the respondent for a counter-affidavit, allows replies/rejoinders.
Determines probable cause (prima facie evidence).
If no probable cause, case dismissed. If yes, resolution forwarded to the court.

Step 4: Court Proceedings

Prosecutor files an information (formal charge) in the appropriate court (MTC/RTC).
Warrant of arrest issued if necessary.
Arraignment: Accused pleads guilty/not guilty.
Pre-trial: Stipulations, plea bargaining.
Trial: Presentation of evidence, cross-examination.
Judgment: Conviction or acquittal.

Step 5: Appeals and Remedies

Appeal to higher courts (Court of Appeals, Supreme Court) if convicted.
Civil aspect can be pursued separately or integrated (Rule 111).

Timeline: Preliminary investigation (60-90 days); trial (varies, often 1-3 years). Barangay conciliation is not required for estafa (Katarungang Pambarangay Law excludes crimes with imprisonment over 1 year).

Related Considerations

Bail: Available, amount based on penalty (e.g., P36,000 for prisión correccional).
Corporate Liability: Officers can be held personally liable if involved.
International Aspects: If offender flees, extradition possible under treaties.
Preventive Measures: Use written agreements, bonds, or escrow services in transactions.

Conclusion

Estafa through misappropriation undermines trust in Philippine society and economy, hence its strict penalization. Victims are encouraged to act promptly with solid evidence to secure justice. While the process is rigorous, it upholds the rule of law. For personalized guidance, consult the Integrated Bar of the Philippines or public attorneys. Remember, prevention through due diligence is key to avoiding such disputes.