Other forms of swindling, A316 Revised Penal Code

1. Concept

Other forms of swindling –under the Revised Penal Code, refers to specific forms of swindling under Article 316.

2. Modes of commission

The following are the modes of committing the offense:

1) By pretending to be owner of any real property, shall convey, sell, encumber or mortgage the same;

2) By knowing that real property is encumbered, shall dispose of the same, although such encumbrance be not recorded;

3) Being the owner of any personal property, by wrongfully taking it from its lawful possessor, to the prejudice of the latter or any third person;

4) By executing any fictitious contract to the prejudice of another;

5) By accepting any compensation given him under the belief that it was in payment of services rendered or labor performed by him, when in fact he did not actually perform such services or labor; and

6) While being a surety in a bond given in a criminal or civil action, without express authority from the court or before the cancellation of his bond or before being relieved from the obligation contracted by him, by selling, mortgaging, or, in any other manner, encumbering the real property or properties with which he guaranteed the fulfillment of such obligation.

a. Mode 1: Pretending to be owner of real property to sell, encumber, or mortgage

Elements of the offense:

1) That the thing be immovable, such as a parcel of land or a building;

2) That the offender who is not the owner of said property should represent that he is the owner thereof;

3) That the offender should have executed an act of ownership, e.g., selling, leasing, encumbering, or mortgaging the property; and

4) That the act be made to the prejudice of the owner or a third person. (Estrellado-Minar v. People, G.R. No. 184320, July 29, 2015, Per Brion, J.)

1) Element 1: Immovable

For the 1^st element, the thing should be immovable, such as a parcel of land or a building.

Thus, this provision shall not apply to if the thing is not an immovable, such as a movable or a personal property.

2) Element 2: Representation as owner

For the 2^nd element, the offender who is not the owner of said property should represent that he is the owner thereof.

Estrellado-Minar v. People, G.R. No. 184320, July 29, 2015, Per Brion, J.:

• The presence of the first and third elements are beyond question, as the parties admitted that [the Accused] sold to Naval a 200-square meter parcel of land located in Matina Aplaya, Davao City. The fourth element is likewise settled, as [the Accused] did not deny that Naval paid her a total of ₱123,000.00. The fact of destruction of Naval’s house by the representatives of JS Francisco is also not disputed.

• With regard to the second element, we hold that the prosecution failed to prove the allegation in the Information that [the Accused] pretended to be the lawful owner of a 200-square meter portion of a lot covered by TCT No. 19932.

• In Naval’s own complaint-affidavit, he stated that [the Accused] informed him during the negotiations for the sale “that the area that I will buy would still be segregated from the mother title.” In this same complaint-affidavit, Naval also stated that he caused the property to be surveyed in order to determine the boundaries of the area he bought, and to separate it from the mother title. These statements were corroborated by Naval’s wife, Josephine, who stated in her own affidavit that [the Accused] told her and Naval that the subject property was still part of the mother title. In addition, stipulation no. 3 of the Agreement to Buy and Sell provides that “xxx the SELLER shall cause the subdivision of the title and take out two hundred (200) square meters portion of the BUYER from the SELLER’s nine hundred thirty six (936) square meters share.” Under these circumstances, it is clear that [the Accused] did not pretend to be the owner of the property sold. From the very start, [the Accused] made it clear to Naval that the subject property was still under the name of her (Accused’s) father; and that the area subject of the sale would still be segregated from the mother title. Naval also admitted that he saw the front page of the land’s title showing Nicolas to be its registered owner. The element of deceit – central to prosecutions for swindling – is therefore wanting. We additionally point out that Nicolas’ heirs (Narcisa and his nine legitimate children) eventually executed an Extrajudicial Settlement of Estate with Renunciation of Shares, Donation and Deed of Absolute Sale31 where they agreed, among others, to give a portion (totalling 1,236-square meters) of the land covered by TCT No. T-364319 to [the Accused].

• In the light of these considerations, we cannot hold [the Accused] liable for other forms of swindling under Article 316, paragraph 1 of the Revised Penal Code absent a finding that she employed fraud or deceit in the form of false pretenses with regard to her ownership of the real property sold.

3) Element 3: Executed act of ownership

For the 3^rd element, the offender should have executed an act of ownership, e.g., selling, leasing, encumbering, or mortgaging the property.

4) Element 4: Prejudices owner or third person

For the 4^th element, the act of ownership done prejudices the owner or a third person.

a) Double sale of immovable property

In the case of United States vs. Drilon (36 Phil., 834), a second sale of the same property was held to constitute estafa under this same article of the Penal Code then in force, which decision was based on similar decisions of the Supreme Court of Spain, based on identical language in the Spanish Penal Code. (People v. Uehara, En Banc, G.R. No. L-42605, October 11, 1935, Per Hull, J., citing United States vs. Drilon, En Banc, G.R. No. 12502, September 6, 1917, Per Street, J.)

b. Mode 2: Knowingly disposing encumbered real property

Elements of the offense:

1) That the thing disposed of be real property;

2) That the offender knew that the real property was encumbered, whether the encumbrance is recorded or not;

3) That there must be express representation by the offender that the real property is free from encumbrance; and

4) That the act of disposing of the real property be made to the damage of another. (Estrellado-Minar v. People, G.R. No. 184320, July 29, 2015, Per Brion, J.)

1) Element 1: Real property

For the 1^st element, the thing disposed of is real property.

2) Element 2: Knowledge of encumbrance

For the 2^nd element, the offender knows that real property is encumbered, although such encumbrance be not recorded.

3) Element 3: Express representation

For the 3^rd element, there must be express representation by the offender that the real property is free from encumbrance.

Paragraph 2 of Article 316 does not prohibit the sale of an encumbered property; the vendor must have represented to the buyer that the property was free from encumbrance. What brings about criminal liability is the deceit in selling the property. (Estrellado-Minar v. People [2015], supra.)

The gravamen of the crime is the disposition of legally encumbered real property by the offender under the express representation that there is no encumbrance thereon. Hence, for one to be criminally liable for estafa under the law, the accused must make an express representation in the deed of conveyance that the property sold or disposed of is free from any encumbrance. (Naya v. Sps. Abraham, G.R. No. 146770, February 27, 2003, Per Callejo, Sr., J.)

In Naya v. Abing, the Court set aside the petitioner’s conviction for estafa under Article 316(2) of the Revised Penal Code since there had been no allegation in the Information that he (petitioner) expressly represented in the sale of the subject property to William Po that the said property was free from any encumbrance. We explained that the gravamen of the crime is the disposition of legally encumbered real property by the offender under the express representation that there is no encumbrance thereon; and that the accused must make an express representation in the deed of conveyance that the property sold or disposed of is free from any encumbrance for one to be criminally liable. (Estrellado-Minar v. People [2015], supra., citing Naya v. Abing, G.R. No. 146770, February 27, 2003, Per Callejo, Sr., J.)

Estrellado-Minar v. People, G.R. No. 184320, July 29, 2015, Per Brion, J.:

• The Information in the present case, aside from expressly indicating in its caption that it is charging the petitioner under Article 316, paragraph 1 of the Revised Penal Code, alleged that the petitioner “with deceit and intent to defraud,” pretended to be the lawful owner of a 200-square meter portion of a lot covered by TCT No. T-19932 despite her knowledge that the entire property had already been sold and was owned by JS Francisco. Notably, it had not been alleged that the petitioner expressly represented to Naval that the subject property was free from any encumbrance.

• We reiterate that the Information in the present case did not allege that the petitioner made an express representation that the property sold is free from any encumbrance. This Information was crafted in such a way that only one particular crime was charged (i.e., Article 316, paragraph 1), and the alleged manner through which such offense was committed (that is, by pretending to be the lawful owner x x x) did not constitute ground for conviction under paragraph 2, which may be committed even by the owner of the property.

• Significantly, the Agreement to Buy and Sell between the petitioner and Naval also did not contain any representation by the petitioner that the property being sold was free from any encumbrance.

At any rate, paragraph 2 of Article 316 does not prohibit the sale of an encumbered property; the vendor must have represented to the buyer that the property was free from encumbrance. What brings about criminal liability is the deceit in selling the property. Corollarily, the deed must have a statement of warranty that is false in order to commit the offense. The petitioner’s passive attitude regarding the presence of an adverse claim (she assumed that Naval became aware of this inscription after showing to him a copy of TCT No. T-19932 and “never complained”) is not sufficient to constitute fraud within the meaning of the law. The fraud and/or deceit by misrepresentation contemplated by law must be the result of overt acts; they cannot be implied or presumed.

• In the light of these considerations, we hold that the trial courts erroneously convicted the petitioner of other forms of swindling under Article 316, paragraph 2 of the Revised Penal Code. To uphold the petitioner’s conviction for an offense other than that charged in the Information would be a violation of her right to be informed of the nature and cause of the accusation against her.

4) Element 4: Damage

For the 4^th element, the act of disposing of the real property be made to the damage of another.

People v. Supnad, En Banc, G.R. No. L-18747, March 30, 1963, Per Paredes, J.:

• The instant case falls within the purview of [Article 316(2) RPC], under which [the Accused] were prosecuted. [The Accused] sold the property in question to Damian Vasquez knowing that the same was mortgaged to Teresa Bautista, although such encumbrance be not recorded. The mortgagee who was prejudiced, had come to the court to vindicate her right as an offended party…

• In the instant case, the party who has a lien upon the property in question or for whose benefit the mortgage was credited or constituted is the mortgagee (Teresa Bautista), and the expression “such party” refers to the mortgagee herself. While [the Accused] as the vendors, had not made misrepresentations to the mortgagee, because the mortgagee knew of the encumbrance made in her favor, still the vendors-[the Accused] committed or practiced fraud upon her, because [the Accused] sold to the vendee the property which they had previously mortgaged to the mortgagee (herein offended party), without her knowledge and consent. So that, “if it can be proven as charged and which is in fact charged in the information that the mortgagee suffered damages in the amount of P2,500.00; by the act of the vendors in misrepresenting to the vendee that the real property in question (house) was unencumbered, well knowing that it was encumbered in favor of the mortgagee, then, the vendee could be held liable.”

c. Mode 3: Wrongful taking of personal property

Elements of the offense:

1) The offender is the owner of a personal property;

2) The offender wrongfully takes such personal property from its lawful possessor; and

3) Such act prejudices the lawful possessor or any third person. (REVISED PENAL CODE, Article 316[3])

1) Element 1: Owner of personal property

For the 1^st element, the offender is the owner of personal property.

Thus, the offense does not apply to immovable or real properties.

2) Element 2: Wrongful taking

For the 2^nd element, the offender wrongfully takes such personal property from its lawful possessor.

This is the gravamen of the offense.

While the offender may have been the owner of the personal property that has been taken, another person was at that time the lawful possessor or had rights to possess the personal property even as against the owner.

For example, in a loan of personal property involving commodatum, the bailee (borrower) has a right to possess the thing even against the bailor (owner/lender). Thus, if the bailor takes the personal property prior to the termination of the bail agreement or in violation thereof, then there is wrongful taking.

See related:

• Obligations of the bailor, A1946-1952 Civil Code

a) Distinguished from theft

In wrongful taking of personal property, the offender is the owner of the personal property.

In theft, the offender is not the owner of the personal property.

See related:

• Theft, A308-309 Revised Penal Code

• Qualified theft, A310 Revised Penal Code

3) Element 3: Prejudices lawful possessor or third person

For the 3^rd element, such act prejudices the lawful possessor or any third person.

Due to the wrongful taking, the lawful possessor of the personal thing or third person experiences prejudice or suffers damage.

a) Lawful possessor

The lawful possessor may be anyone who has been previously granted a right over the personal property by the offender who is the owner thereof.

This may include: bailee/borrower under a commodatum contract, a vendor under a consignment agreement whereby the owner leaves goods for a certain period of time at the vendor’s store to be sold, and so on.

b) Third person

The third person may be enjoying the personal property via the lawful possessor’s right to possess such property.

For example, if a bailee/borrower borrowed a bow and arrow from a bailor/owner so that such personal property may be offered for entertainment at a bazaar/fair, the third person is the customer who paid for the use of said bow and arrow. If the owner wrongfully takes the personal property, then the third person who is the customer is prejudiced.

d. Mode 4: Execution of fictitious contract

Elements of the offense:

1) The offender executes any fictitious contract; and

2) Such act prejudices another. (REVISED PENAL CODE, Article 316[4])

1) Element 1: Execution of fictitious contract

For the 1^st element, the offender executes any fictitious contract.

2) Element 2: Prejudices another

For the 2^nd element, such act prejudices another.

e. Mode 5: Receiving compensation for unperformed labor or service

Elements of the offense:

1) The offender accepts any compensation given to him/her;

2) The offended party paid under the belief that it was in payment of services rendered or labor performed by him/her; and

2) The offender in fact he did not actually perform such services or labor. (REVISED PENAL CODE, Article 316[5])

See related:

• Solutio indebiti, A2154 Civil Code

1) Element 1: Receipt of compensation

For the 1^st element, the offender accepts any compensation given him under the belief that it was in payment of services rendered or labor performed by him.

The operative word herein is “accept”. There is nothing in the article requiring that the offender request, demand, or deceive the offended party into paying. Rather, the fact of receipt by the offender is what matters.

a) Solutio indebiti

Incorrectly receiving payment is covered by solution indebiti under the Civil Code:

Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.

Thus, the offender is under a civil obligation to return payment.

2) Element 2: Belief that payment was due

For the 2^nd element, the offended party paid under the belief that it was in payment of services rendered or labor performed by him/her.

This belief may solely be created in the mind of the offended party without the offender causing it, such as the offended party mistaking the offender for someone else or the offended party having mixed up payment information resulting in the payment going to the offender who is not entitled thereto.

On the other hand, the belief may also be caused by the offender through fraud or via false pretenses, such as misleading the offended party, introducing him/herself as another person who is the one entitled to the payment, and analogous thereto.

NB: As it is worded, Article 316[5] RPC do not a require the offender to have caused such mistaken belief. It is submitted that this offense should require some fraudulent act on the part of the offender considering that Article 316 covers other forms of swindling. Otherwise, an innocent person who simply received money (e.g., wired to a bank account) my be held criminally liable under this article even if such person did not have any criminal intent to defraud another.

3) Element 3: Non-performance of service or labor

For the 3^rd element, the offender in fact did not actually perform such services or labor.

In terms of working relationship between the offender and the offended party, the following are the possible scenarios under Article 316[5]:

1) The offender has no working relationship to the offended party;

2) The offender has a working relationship and performs labor or service to the offended party.

a) No working relationship

In the first case, there is no working relationship between the offender and the offended party, i.e., they are strangers to each other. However, for some reason, the offended party paid compensation to the offender under the belief that payment was due for labor or service. This could be due to a case of mistaken identity, mixing up payment information, etc.

NB: For this no working relationship arrangement, the offender may or may NOT have committed any fraudulent act that caused the payment being sent to him/her. If the offender committed some fraudulent act, then the offense may have been committed. However if the offender did not commit any fraudulent act but is simply the recipient of a mistaken payment, it is submitted that this should not bring about criminal liability as the offender had no criminal intent; notwithstanding, the offender has the civil liability of returning the money under the principle of solutio indebiti.

b) Working relationship

In the second case, there is a working relationship between the offender and the offended party. However, the offender receives compensation for labor or service despite not having any done any of these.

f. Mode 6: Selling, mortgaging, encumbering secured properties

Elements of the offense:

1) The offender is a surety in a bond given in a criminal or civil action;

2) The offender guarantees the fulfillment of such obligation via real property or properties.

3) The offender sells, mortgages, or, in any other manner, encumbers the real property or properties with which he guaranteed the fulfillment of such obligation;

4) The offender did so without express authority from the court or before the cancellation of his bond or before being relieved from the obligation contracted by him. (REVISED PENAL CODE, Article 316[6])

1) Element 1: Offender is a surety

For the 1^st element, the offender is a surety in a bond given in a criminal or civil action.

By being a surety to a criminal or civil action, the offender is subject to the authority of the court and the terms/stipulations of the suretyship agreement.

Under Article 204 7 of the Civil Code, suretyship is defined as:

Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.

If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be observed. In such case the contract is called a suretyship.

[A] contract of suretyship [is] “an agreement where a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third person called the obligee. Specifically, suretyship is a contractual relation resulting from an agreement whereby one person, the surety, engages to be answerable for the debt, default or miscarriage of another, known as the principal.” (CCC Insurance Corporation v. Kawasaki Steel Corporation, G.R. No. 156162, June 22, 2015, Per Leonardo-De Castro, J.)

“[A] surety’s liability is joint and several, limited to the amount of the bond, and determined strictly by the terms of contract of suretyship in relation to the principal contract between the obligor and the obligee. It bears stressing, however, that although the contract of suretyship is secondary to the principal contract, the surety’s liability to the obligee is nevertheless direct, primary, and absolute.” (CCC Insurance Corporation v. Kawasaki Steel Corporation [2015], supra.)

a) Administrative action, etc.

Article 316[6] RPC specifically identifies only criminal or civil actions. Thus, this provision may not be applicable to administrative actions or other forms of court actions unless they are either criminal or civil actions.

2) Element 2: Guarantees obligation via real property/ies

For the 2^nd element, the offender guarantees the fulfillment of such obligation via real property/ies.

In line with his/her obligation as a surety in a civil or criminal action, the offender offers real property/ies to act as security for the obligations covered by the suretyship agreement.

3) Element 3: Sells, mortgages, encumbers secured properties

For the 3^rd element, the offender sells, mortgages, or, in any other manner, encumbers the real property or properties with which he guaranteed the fulfillment of such obligation. This is the gravamen of the offense.

The real property/ies serve as security for the bond under a suretyship agreement. If the party covered by the bond is unable to perform any obligation that may be required of him/her, then it is bond which shall be used to cover for any resulting costs/expenses and damages.

4) Element 4: No court authority, before cancellation of bond or being relief from obligation

For the 4^th element, the offender did so without express authority from the court or before the cancellation of his bond or before being relieved from the obligation contracted by him.

Being subject to the authority of the court for which the offender made him/herself a surety and/or the terms/stipulations in the suretyship contract, the offender cannot unilaterally sell, mortgage, encumber properties used as security for the suretyship.

References

⦁ Title 10 – Crimes Against Property, Book 2, Revised Penal Code

/Updated: November 21, 2023

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