Estafa (deceit/swindling) under Art. 315, Rev.

Penal Code

For legal research purposes of my readers, may I share the jurisprudential part of a motion for
reconsideration I have just filed with the office of the city prosecutor of a city in southern Metro
Manila seeking the indictment for estafa of the respondent therein. The investigating fiscal had
earlier indicted the respondent only for violation of BP Blg. 22 (bouncing check law). I felt that
the respondent should be likewise indicted for Estafa under Art. 315 of the Rev. Penal Code. I
removed all references to names of parties and the like.

MOTION FOR RECONSIDERATION

THE COMPLAINANT, by counsel, respectfully states:

1. On March 27, 2012 the complainant received via registered mail a copy of the
RESOLUTION, dated March 13, 2012, dismissing the complaint for SYNDICATED ESTAFA and
indicting the respondent x x x merely for violation of B.P. Blg. 22.

The 15th day of the complainant to file this motion expires on April 11, 2012.

Hence, this motion.

2. The complainant submits that the resolution erred in not indicting x x x at the very least for
the felony of regular or ordinary ESTAFA under Art. 315 of the Rev. Penal Code (assuming,
arguendo, that PD 1689, re: Syndicated Estafa does not apply in the instant case).

The complainant agrees, though, that x x x was correctly indicted for violation of B.P. Blg. 22.

(As of this date, the complainant has paid the requisite filing and docket fees with the Office of
the Clerk of Court of the Metropolitan Trial Court of x x x City, in the amount of more than P95,
000.00, so that the said case for violation of B.P. Blg. 22 may forthwith proceed with dispatch in
the said Court).

3. The complainant humbly submits that the resolution erred in finding that there was no
estafa (whether syndicated or regular/ordinary) because the transaction was a simple loan; that
what motivated the complainant to issue his checks was not the malice or deceit of SON but the
complainant’s desire for interest income.

The complainant will not contest anymore the issue of Syndicated Estafa under P.D. No. 1689
but will simply focus herein on the sole issue of whether or not x x x should have been likewise
indicted for the felony of Ordinary/Regular Estafa under Art. 315, Rev. Penal Code.

4. The resolution failed to appreciate the points of law and fact raised by the complainant in
his Reply-Affidavit, to wit:

X x x.
4. Likewise, the resolution erred in not appreciating the proofs of deceit/malice described in
the Complaint as alleged bythe complainant, to wit:

X x x.

5. The complainant does not have the duty to submit proofs of the nonexistence of the
alleged x x x PROJECT. Sufficie it to state that upon the presentation by the complainat in his
Complaint of concrete allegations aboput the clear use by x x x of the x x x PROJECT as her
express excuse to exact money from the complainant, the BURDEN OF EVIDENCE had shifted
to x x x to prove the existence of the said Project to show the purity of her intentions and
conscience. But x x x failed to do this.

6. LOAN per se does not exempt a criminal from indictment for estafa so long as it can be
proved, as is the factual mileu in the instant case, that the motive behind such a transaction was
deceit, swindling and malice on the part of the debtor/respondent.

7. We repeat hereinbelow what we had argued in our previous pleadings before this
Honorable Office.

8. In the case of LIBERATA AMBITO, BASILIO AMBITO, and CRISANTO AMBITO vs.
PEOPLE OF THE PHILIPPINES and COURT OF APPEALS, G.R. No. 127327, February 13, 2009,
it was held that in the prosecution for Estafa under Article 315, paragraph 2(a) of the RPC,[1] it
is indispensable that the element of deceit, consisting in the false statement or fraudulent
representation of the accused, be made prior to, or at least simultaneously with, the delivery of
the thing by the complainant; and that false pretense or fraudulent act must be committed prior
to or simultaneously with the commission of the fraud, it being essential that such false
statement or representation constitutes the very cause or the only motive which induces the
offended party to part with his money. Thus:

“x x x.

The elements of Estafa by means of deceit, whether committed by false pretenses or

concealment, are the following – (a) that there must be a false pretense, fraudulent act or
fraudulent means. (b) That such false pretense, fraudulent act or fraudulent means must be
made or executed prior to or simultaneous with the commission of the fraud. (c) That the
offended party must have relied on the false pretense, fraudulent act or fraudulent means, that
is, he was induced to part with his money or property because of the false pretense, fraudulent
act or fraudulent means. (d) That as a result thereof, the offended party suffered damage.[2]

In the prosecution for Estafa under Article 315, paragraph 2(a) of the RPC,[3] it is indispensable
that the element of deceit, consisting in the false statement or fraudulent representation of the
accused, be made prior to, or at least simultaneously with, the delivery of the thing by the
complainant.

The false pretense or fraudulent act must be committed prior to or simultaneously with the
commission of the fraud, it being essential that such false statement or representation
constitutes the very cause or the only motive which induces the offended party to part with his
money. In the absence of such requisite, any subsequent act of the accused, however fraudulent
and suspicious it might appear, cannot serve as basis for prosecution for estafa under the said
provision.[4]

In the case at bar, the records would show that PSI was given assurance by petitioners that they
will pay the unpaid balance of their purchases from PSI when the CCTDs with petitioners’
banks, the Rural Bank of Banate, Inc. (RBBI) and/or the Rural Bank of Leon, Inc. (RBLI), and
issued under the name of PSI, would be presented for payment to RBBI and RBLI which, in
turn, will pay the amount of deposit stated thereon. The amounts stated in the CCTDs
correspond to the purchase cost of the machineries and equipment that co-petitioner Basilio
Ambito bought from PSI as evidenced by the Sales Invoices presented during the trial. It is
uncontroverted that PSI did not apply for and secure loans from RBBI and RBLI. In fine, PSI
and co-petitioner Basilio Ambito were engaged in a vendor-purchaser business relationship
while PSI and RBBI/RBLI were connected as depositor-depository. It is likewise established
that petitioners employed deceit when they were able to persuade PSI to allow them to pay the
aforementioned machineries and equipment through down payments paid either in cash or in
the form of checks or through the CCTDs with RBBI and RBLI issued in PSI’s name with
interest thereon. It was later found out that petitioners never made any deposits in the said
Banks under the name of PSI. In fact, the issuance of CCTDs to PSI was not recorded in the
books of RBBI and RBLI and the Deputy Liquidator appointed by the Central Bank of the
Philippines even corroborated this finding of anomalous bank transactions in her testimony
during the trial. [5]

As borne by the records and the pleadings, it is indubitable that petitioners’ representations
were outright distortions of the truth perpetrated by them for the sole purpose of inducing PSI
to sell and deliver to co-petitioner Basilio Ambito machineries and equipments. Petitioners
knew that no deposits were ever made with RBBI and RBLI under the name of PSI, as
represented by the subject CCTDs, since they did not intend to deposit any amount to pay for
the machineries. PSI was an innocent victim of deceit, machinations and chicanery committed
by petitioners which resulted in its pecuniary damage and, thus, confirming the lower courts’
finding that petitioners are guilty of the complex crime of Estafa through Falsification of
Commercial Documents.

X x x.”

10. Article 315 of the Revised Penal Code on deceit/swindling (estafa) provides any person who
shall defraud another by any of the means mentioned therein shall be punished by the penalty
of prision correccional in its maximum period to prision mayor in its minimum period, if the
amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos, and if such amount
exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum
period, adding one year for each additional 10,000 pesos; but the total penalty which may be
imposed shall not exceed twenty years; provided that the fraud be committed by any of the
following means:
1. With unfaithfulness or abuse of confidence, namely:
X x x.
(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.
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of other similar
deceits.
X x x.
(a) By pretending to have bribed any Government employee, without prejudice to the
action for calumny which the offended
party may deem proper to bring against the offender. In this case, the offender shall be
punished by the maximum period of the penalty.
(b) By post-dating a check, or issuing a check in payment of an obligation when the
offender had no funds in the bank, or his funds deposited therein were not sufficient to cover
the amount of check. The failure of the drawer of the check to deposit the amount necessary to
cover his check within three (3) days from receipt of notice from the bank and/or the payee or
holder that said check has been dishonored for lack of insufficiency of funds shall be prima facie
evidence of deceit constituting false pretense or fraudulent act. (As amended by Republic Act
No. 4885, approved June 17, 1967.)
10.1. Article 316 (other forms of swindling) of the Revised Penal Code provides that the penalty
of arresto mayor in its minimum and medium periods and a fine of not less than the value of
the damage caused and not more than three times such value, shall be imposed upon “any
person who, to the prejudice of another, shall execute any fictitious contract.”
10.2. Article 318 (other deceits) of the Revised Penal Code provides that the penalty of arresto
mayor and a fine of not less than the amount of the damage caused and not more than twice
such amount shall be imposed upon any person who shall defraud or damage another by “any
other deceit not mentioned in the preceding articles of this chapter.”

9. In PEOPLE OF THE PHILIPPINES vs. VIRGINIA BABY P. MONTANER, G.R. No.

184053, August 31, 2011, the accused was convicted for the crime of Estafa as defined and
penalized under paragraph 2(d), Article 315 of the Revised Penal Code. The Information alleged
that on or about May 17, 1996 in the Municipality of San Pedro, Province of Laguna and within
the jurisdiction of this Honorable Court accused Virginia (Baby) P. Montaner did then and there
willfully, unlawfully and feloniously defraud one Reynaldo Solis in the following manner: said
accused by means of false pretenses and fraudulent acts that her checks are fully funded draw,
make and issue in favor of one Reynaldo Solis ten (10) Prudential Bank Checks, all having a
total value of FIFTY THOUSAND PESOS (P50,000.00) and all aforesaid checks were postdated
June 17, 1996 in exchange for cash knowing fully well that she has no funds in the drawee bank
and when the said checks were presented for payment the same were dishonored by the drawee
bank on reason of “ACCOUNT CLOSED” and despite demand accused failed and refused to
pay the value thereof to the damage and prejudice of Reynaldo Solis in the aforementioned total
amount of P50,000.00.

X x x.

The Court cited Paragraph 2(d), Article 315 of the Revised Penal Code provides:
ART. 315. Swindling (estafa). – Any person who shall defraud another by any of the means
mentioned hereinbelow x x x:

xxxx

2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:

xxxx

(d) By postdating a check, or issuing a check in payment of an obligation when the offender had
no funds in the bank, or his funds deposited therein were not sufficient to cover the amount of
the check. The failure of the drawer of the check to deposit the amount necessary to cover his
check within three (3) days from receipt of notice from the bank and/or the payee or holder that
said check has been dishonored for lack or insufficiency of funds shall be prima facie evidence
of deceit constituting false pretense or fraudulent act.

According to the Court, the elements of estafa under paragraph 2(d), Article 315 of the Revised
Penal Code are: (1) the postdating or issuance of a check in payment of an obligation contracted
at the time the check was issued; (2) lack of sufficiency of funds to cover the check; and (3)
damage to the payee.[6]

In the said case, the prosecution sufficiently established appellant’s guilt beyond reasonable
doubt for estafa under paragraph 2(d), Article 315 of the Revised Penal Code. According to
Solis’s clear and categorical testimony, appellant issued to him the 10 postdated Prudential
Bank checks, each in the amount of P5, 000.00 or a total of P50, 000.00, in his house in exchange
for their cash equivalent.

From the circumstances, the Court held that it was evident that Solis would not have given P50,
000.00 cash to appellant had it not been for her issuance of the 10 Prudential Bank checks. These
postdated checks were undoubtedly issued by appellant to induce Solis to part with his cash.
However, when Solis attempted to encash them, they were all dishonored by the bank because
the account was already closed.

Solis wrote appellant a demand letter dated October 13, 1996 which was received by appellant’s
husband to inform appellant that her postdated checks had bounced and that she must settle
her obligation or else face legal action from Solis. Appellant did not comply with the demand
nor did she deposit the amount necessary to cover the checks within three days from receipt of
notice. This gave rise to a prima facie evidence of deceit, which is an element of the crime of
estafa, constituting false pretense or fraudulent act as stated in the second sentence of
paragraph 2(d), Article 315 of the Revised Penal Code.

X x x.

10. In the case of BETTY GABIONZA AND ISABELITA TAN, PETITIONERS, VS. COURT OF
APPEALS, LUKE ROXAS AND EVELYN NOLASCO, RESPONDENTS, [G.R. No. 161057,
September 12, 2008], it was held that “to be clear, it is possible to hold the borrower in a money
market placement liable for estafa if the creditor was induced to extend a loan upon the false or
fraudulent misrepresentations of the borrower”; that “such estafa is one by means of deceit”;
that “the borrower would not be generally liable for estafa through misappropriation if he or
she fails to repay the loan, since the liability in such instance is ordinarily civil in nature”, except
when deceit is present, of course. Thus:

“x x x.

We can thus conclude that the DOJ Resolution clearly supports a prima facie finding that the
crime of estafa under Article 315 (2) (a) has been committed against petitioners. Does it also
establish a prima facie finding that there has been a violation of the then-Revised Securities Act,
specifically Section 4 in relation to Section 56 thereof?

Section 4 of Batas Pambansa Blg. 176, or the Revised Securities Act, generally requires the
registration of securities and prohibits the sale or distribution of unregistered securities.[29] The
DOJ extensively concluded that private respondents are liable for violating such prohibition
against the sale of unregistered securities:

Respondents Roxas and Nolasco do not dispute that in 1998, ASB borrowed funds about 700
individual investors amounting to close to P4 billion, on recurring, short-term basis, usually 30
or 45 days, promising high interest yields, issuing therefore mere postdate checks. Under the
circumstances, the checks assumed the character of "evidences of indebtedness," which are
among the "securities" mentioned under the Revised Securities Act. The term "securities"
embodies a flexible rather than static principle, one that is capable of adaptation to meet the
countless and variable schemes devised by those who seek to use the money of others on the
promise of profits (69 Am Jur 2d, p. 604). Thus, it has been held that checks of a debtor received
and held by the lender also are evidences of indebtedness and therefore "securities" under the
Act, where the debtor agreed to pay interest on a monthly basis so long as the principal checks
remained uncashed, it being said that such principal extent as would have promissory notes
payable on demand (Id., p. 606, citing Untied States v. Attaway (DC La) 211 F Supp 682). In the
instant case, the checks were issued by ASB in lieu of the securities enumerated under the
Revised Securities Act in a clever attempt, or so they thought, to take the case out of the
purview of the law, which requires prior license to sell or deal in securities and registration
thereof. The scheme was to
designed to circumvent the law. Checks constitute mere substitutes for cash if so issued in
payment of obligations in the ordinary course of business transactions. But when they are
issued in exchange for a big number of individual non-personalized loans solicited from the
public, numbering about 700 in this case, the checks cease to be such. In such a circumstance,
the checks assume the character of evidences of indebtedness. This is especially so where the
individual loans were not evidenced by appropriate debt instruments, such as promissory
notes, loan agreements, etc., as in this case. Purportedly, the postdated checks themselves serve
as the evidences of the indebtedness. A different rule would open the floodgates for a similar
scheme, whereby companies without prior license or authority from the SEC. This cannot be
countenanced. The subsequent repeal of the Revised Securities Act does not spare respondents
Roxas and Nolasco from prosecution thereunder, since the repealing law, Republic Act No. 8799
known as the "Securities Regulation Code," continues to punish the same offense (see Section 8
in relation to Section 73, R.A. No. 8799).[30]
The Court of Appeals however ruled that the postdated checks issued by ASBHI did not
constitute a security under the Revised Securities Act. To support this conclusion, it cited the
general definition of a check as "a bill of exchange drawn on a bank and payable on demand,"
and took cognizance of the fact that "the issuance of checks for the purpose of securing a loan to
finance the activities of the corporation is well within the ambit of a valid corporate act" to note
that a corporation does not need prior registration with the SEC in order to be able to issue a
check, which is a corporate prerogative.

This analysis is highly myopic and ignorant of the bigger picture. It is one thing for a
corporation to issue checks to satisfy isolated individual obligations, and another for a
corporation to execute an elaborate scheme where it would comport itself to the public as a
pseudo-investment house and issue postdated checks instead of stocks or traditional securities
to evidence the investments of its patrons. The Revised Securities Act was geared towards
maintaining the stability of the national investment market against activities such as those
apparently engaged in by ASBHI. As the DOJ Resolution noted, ASBHI adopted this scheme in
an attempt to circumvent the Revised Securities Act, which requires a prior license to sell or
deal in securities. After all, if ASBHI's activities were actually regulated by the SEC, it is hardly
likely that the design it chose to employ would have been permitted at all.

But was ASBHI able to successfully evade the requirements under the Revised Securities Act?
As found by the DOJ, there is ultimately a prima facie case that can at the very least sustain
prosecution of private respondents under that law. The DOJ Resolution is persuasive in citing
American authorities which countenance a flexible definition of securities. Moreover, it bears
pointing out that the definition of "securities" set forth in Section 2 of the Revised Securities Act
includes "commercial papers evidencing indebtedness of any person, financial or non-financial
entity, irrespective of maturity, issued, endorsed, sold, transferred or in any manner conveyed
to another."[31] A check is a commercial paper evidencing indebtedness of any person, financial
or non-financial entity. Since the checks in this case were generally rolled over to augment the
creditor's existing investment with ASBHI, they
most definitely take on the attributes of traditional stocks.

We should be clear that the question of whether the subject checks fall within the classification
of securities under the Revised Securities Act may still be the subject of debate, but at the very
least, the DOJ Resolution has established a prima facie case for prosecuting private respondents
for such offense. The thorough determination of such issue is best left to a full-blown trial of the
merits, where private respondents are free to dispute the theories set forth in the DOJ
Resolution. It is clear error on the part of the Court of Appeals to dismiss such finding so
perfunctorily and on such flimsy grounds that do not consider the grave consequences. After
all, as the DOJ Resolution correctly pointed out: "[T]he postdated checks themselves serve as the
evidences of the indebtedness. A different rule would open the floodgates for a similar scheme,
whereby companies without prior license or authority from the SEC. This cannot be
countenanced."[32]

This conclusion quells the stance of the Court of Appeals that the unfortunate events befalling
petitioners were ultimately benign, not malevolent, a consequence of the economic crisis that
beset the Philippines during that era.[33] That conclusion would be agreeable only if it were
undisputed that the activities of ASBHI are legal in the first place, but the DOJ puts forth a
legitimate theory that the entire modus operandi of ASBHI is illegal under the Revised
Securities Act and if that were so, the impact of the Asian economic crisis would not obviate the
criminal liability of private respondents.

X x x.

It is ineluctable that the DOJ Resolution established a prima facie case for violation of Article
315 (2)(a) of the Revised Penal Code and Sections 4 in relation to 56 of the Revised Securities
Act. X x x

X x x.”

11. IN FINE, respondent x x x must be indicted at the least for the felony of ordinary/regular
ESTAFA under Art. 315, Rev. Penal Code.

WHEREFORE, premises considered, it is respectfully prayed that resolution, dated March 13,
2012, be reconsidered and that a new resolution be issued FURTHER indicting x x x for the
felony of regular/ordinary ESTAFA under Art. 315, Rev. Penal Code. Involving the two checks
issued by the complainant to satisfy the total claim of the complainant in the amount of Five
Million Pesos (P5, 000,000.00), plus exemplary damages of P100, 000.00, moral damages of P100,
000.00, attorney’s fees of P125, 000.00 plus 5% of the recoverable amounts, and costs of suit.

Las Pinas City, April 10, 2012.

LASERNA CUEVA-MERCADER
LAW OFFICES
Counsel for the Complainant
Unit 15, Star Arcade. C.V. Starr Ave.
Philamlife Village, Las Pinas City 1740
Tel. No. 8725443; Fax No. 8462539.