Swindling or estafa – refers to the crime of fraud through certain means.
Art. 315. Swindling (estafa). – Any person who shall defraud another by any of the means mentioned hereinbelow shall be punished by:
1st. The penalty of prisión correccional in its maximum period to prisión mayor in its minimum period, if the amount of the fraud is over Two million four hundred thousand pesos (P2,400,000) but does not exceed Four million four hundred thousand pesos (P4,400,000), 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 Two million pesos (P2,000,000); but the total penalty which may be imposed shall not exceed twenty years. In such cases, and in connection with the accessory penalties which may be imposed and for the purpose of the other provisions of this Code, the penalty shall be termed prisión mayor or reclusion temporal, as the case may be.
2nd. The penalty of prisión correccional in its minimum and medium periods, if the amount of the fraud is over One million two hundred thousand pesos (P1,200,000) but does not exceed Two million four hundred thousand pesos (P2,400,000).
3rd. The penalty of arresto mayor in its maximum period to prisión correccional in its minimum period, if such amount is over Forty thousand pesos (P40,000) but does not exceed One million two hundred thousand pesos (P1,200,000).
4th. By arresto mayor in its medium and maximum periods, if such amount does not exceed Forty thousand pesos (P40,000): Provided, That in the four cases mentioned, the fraud be committed by any of the following means:
(a) altering the substance, quantity, or quality of anything of value which the offender shall deliver by virtue of an obligation to do so, even though such obligation be based on an immoral or illegal consideration.
(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.
(c) By taking undue advantage of the signature of the offended party in blank, and by writing any document above such signature in blank, to the prejudice of the offended party or any third person.
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.
(c) 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.
(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) clays 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 prime facie evidence of deceit constituting false pretense or fraudulent act.
Any person who shall defraud another by means of false pretenses or fraudulent acts as defined in paragraph 2(d) hereof shall be punished by:
1st. The penalty of reclusion temporal in its maximum period, if the amount of fraud is over Four million four hundred thousand pesos (P4,400,000) but does not exceed Eight million eight hundred thousand pesos (P8,800,000). If the amount exceeds the latter, the penalty shall be reclusion perpetua.
2nd. The penalty of reclusion temporal in its minimum and medium periods, if the amount of the fraud is over Two million four hundred thousand pesos (P2,400,000) but does not exceed Four million four hundred thousand pesos (P4,400,000).
3rd. The penalty of prisión mayor in its maximum period, if the amount of the fraud is over One million two hundred thousand pesos (P1,200,000) but does not exceed Two million four hundred thousand pesos (P2,400,000).
4th. The penalty of prisión mayor in its medium period, if such amount is over Forty thousand pesos (P40,000) but does not exceed One million two hundred thousand pesos (P1,200,000).
5th. By prisión mayor in its minimum period, if such amount does not exceed Forty thousand pesos (P40,000).
(c) By removing, concealing or destroying, in whole or in part, any court record, office files, document or any other papers. (As amended by R.A. 10951)
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The three (3) modes of committing estafa:
Estafa in general
The elements of estafa in general are:
1) That the accused defrauded another (a) by abuse of confidence, or (b) by means of deceit; and
2) That damage or prejudice capable of pecuniary estimation is caused to the offended party or third person. (Capulong v. People, G.R. No. 199907, February 27, 2017, Per Peralta, J.)
The first element covers the following ways of committing estafa:
1) With unfaithfulness or abuse of confidence;
2) By means of false pretenses or fraudulent acts;
3) Through fraudulent means. (Capulong v. People , supra.)
Estafa with abuse of confidence
The first way of committing estafa is known as estafa with abuse of confidence, while the second and the third ways cover by means of deceit. (Capulong v. People , supra.)
Estafa by means of deceit
The elements of estafa by means of deceit are as follows:
1) That there must be a false pretense, fraudulent act or fraudulent means;
2) That such false pretense, fraudulent act or fraudulent means must be made or executed prior to ot simultaneously with the commission of the fraud;
3) 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 fraudulent act or fraudulent means; and
4) That as a result thereof, the offended party suffered damage. (Capulong v. People , supra.)
The following are some additional things to note about this offense.
This offense shares common provisions with other offenses under Title X of the Revised Penal Code – Crimes Against Property. See: Crimes Against Property
[T]he gravamen of the [crime of estafa] is the employment of fraud or deceit to the damage or prejudice of another. When fraud pertains to the means of committing a crime or the classes of crimes under Chapter Three, Title Four, , Book Two and Chapter Three, Title Seven, Book Two of the RPC, criminal liability may arise; otherwise, if fraud merely causes loss or injury to another, without being an element of a crime, then it may only be classified as civil fraud from which an action for damages may arise. (Dulay III v. People, G.R. No. 215132, September 13, 2021, Per Hernando, J.)
Deceit is rarely simple and far from cut and dried. Although ostensibly uncomplicated, deception in various forms of dissembling, suppression of truth, concealment and misrepresentation, once established beyond reasonable doubt will give rise to criminal liability. (Dulay III v. People, G.R. No. 215132, September 13, 2021, Per Hernando, J.)
[T]he long-standing general rule is that criminal liability for Estafa is not affected by payment, indemnification, reimbursement of or compromise as to the amounts misappropriated, or by the novation of the contract. This is because Estafa is a public offense which must be prosecuted and punished by the State on its own motion even though complete reparation should have been made of the damage suffered by the offended party. Since it is committed against the State, the private offended party may not waive or extinguish the criminal liability that the law imposes for the commission of the crime. (Sorongon v. People, G.R. No. 230669, June 16, 2021, Per Caguioa, J.)
Nevertheless, in cases involving the type of Estafa under Article 315, paragraph 1 (b), where there is an underlying contractual relationship or bilateral agreement between the parties which they can modify or alter, the Court has consistently acknowledged at the same time the possible effects of novation. The Court held that in these cases, novation may serve to either prevent the rise of criminal liability, or to cast doubt on the true nature of the original basic transaction, whether or not it was such that the breach of the obligation would not give rise to penal responsibility, as when money loaned is made to appear as a deposit, or other similar disguise is resorted to. The prevention of the rise of criminal liability happens when there is novation before an Information is filed in court. (Ibid.)
People v. Nery, En Banc, G.R. No. L-19567, February 5, 1964, Per Reyes, J.B.L. J.:
• The novation theory may perhaps apply prior to the filing of the criminal information in court by the state prosecutors because up to that time the original trust relation may be converted by the parties into an ordinary creditor-debtor situation, thereby placing the complainant in estoppel to insist on the original trust. But after the justice authorities have taken cognizance of the crime and instituted action in court, the offended party may no longer divest the prosecution of its power to exact the criminal liability, as distinguished from the civil. The crime being an offense against the state, only the latter can renounce it (People v. Gervacio, 54 Off. Gaz., 2898: People v. Velasco, 42 Phil., 76; U.S. v. Montañes, 8 Phil. 620).
• It may be observed in this regard that novation is not one of the means recognized by the Penal Code whereby criminal liability can be extinguished; hence, the role of novation may only be to either prevent the rise of criminal liability or to cast doubt on the true nature of the original basic transaction, whether or not it was such that its breach would not give rise to penal responsibility, as when money loaned is made to appear as a deposit, or other similar disguise is resorted to (cf. Abeto v. People, 90 Phil., 581; U.S. v. Villareal, 27 Phil., 481).
Sorongon v. People, G.R. No. 230669, June 16, 2021, Per Caguioa, J.:
• In Nery, the complainant entrusted diamond rings to the accused to be sold by her on commission. The accused, however, neither turned over any proceeds of the sale of the items nor returned them. During the pendency of the case before the trial court, the accused executed a deed in favor of the complainant. The deed contained the promise of accused to pay her debt and committing that in the event that she failed to comply with the said compromise, the case filed against her by the private complainant would push through. When the accused later raised the defense of novation, therefore, the Court rejected the same on the ground that the purported novation occurred after the criminal case had already been instituted and while it was already pending trial.
• [People v. Quinto] also involved the receipt of jewelry by the accused from the complainant for the purpose of selling the same on commission basis and with the express obligation on the part of the accused to turn over the proceeds of the sale thereof, or to return the said jewelry, if not sold. The accused interposed the defense that the agreement between her and the complainant was effectively novated when the latter consented to receive payment on installments directly from the buyers of the jewelry. The Court disagreed, concluding that there has never been any animus novandi between or among the parties. It explained that the changes alluded to by the accused consisted only in the manner of payment. There was really no substitution of debtors since the complainant merely acquiesced to the payment but did not give her consent to enter into a new contract.
• Also, in Metropolitan Bank and Trust Company v. Reynado, the respondents were charged with Estafa under Article 315, paragraph 1(b) for conniving with the bank’s client, Universal Converter Philippines, Inc. (Universal), to make huge withdrawals against uncleared regional check deposits and without prior approval of the bank’s head office. Before the Information was filed in court, however, the bank and Universal entered into a Debt Settlement Agreement. Thus, the issue that confronted the Court was whether the execution of the Debt Settlement Agreement precluded the bank from holding respondents liable to stand trial for Estafa under Article 315, paragraph 1(b). In ruling in the negative, the Court held that the execution of the Debt Settlement Agreement did not prevent the incipience of the criminal liability of respondents.
• In yet another case involving a violation under Article 315, paragraph 1(b), Degaños v. People, the accused was charged with Estafa for misappropriating the pieces of jewelries entrusted to her by the complainants to be sold on commission. The accused argued that his partial payments to the complainants novated his contract with them from agency to loan, thereby converting his liability from criminal to civil. He insisted that his failure to complete his payments prior to the filing of the complaint-affidavit by the complainants notwithstanding the fact that the complainants later required him to make a formal proposal before the barangay authorities on the payment of the balance of his outstanding obligations confirmed that novation had occurred. The Court disagreed with the argument of the accused, expounding once again on the nature and role of novation in a criminal prosecution. It so held that although the novation of a contract of agency to make it one of sale may relieve an offender from an incipient criminal liability, that did not happen in the said case, for the partial payments and the proposal to pay the balance the accused made during the barangay proceedings were not at all incompatible with his liability under the agency that had already attached. Rather than converting the agency to sale, therefore, he even thereby confirmed his liability as the sales agent of the complainants.
• Applying the foregoing discussion to the case at bar, the Court finds that the original contract of commodatum between the herein parties was effectively novated when they entered into an amicable settlement before the barangay in March 2005, which amicable settlement came about before the Information for Estafa against petitioner was filed in January 2006. To reiterate, the subject of the amicable settlement were the unpaid accounts which petitioner supposedly owed Nelly and her husband. The purpose of the proceedings, in other words, was to settle these monetary or civil liabilities of petitioner to the spouses Van der Bom. These unpaid accounts included the value of the cement mixer and some other personal properties, as well as alleged loans and cash advances which petitioner and his wife had borrowed from the couple.
[E]ven assuming that a contract of partnership was indeed entered into by and between the parties, we have ruled that when money or property have been received by a partner for a specific purpose (such as that obtaining in the instant case) and he later misappropriated it, such partner is guilty of estafa. (Liwanag v. CA, G.R. No. 114398, October 24, 1997, Per Romero, J.)
The following are some procedural matters.
Section 1. Any person or persons who shall commit estafa or other forms of swindling as defined in Article 315 and 316 of the Revised Penal Code, as amended, shall be punished by life imprisonment to death if the swindling (estafa) is committed by a syndicate consisting of five or more persons formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme, and the defraudation results in the misappropriation of money contributed by stockholders, or members of rural banks, cooperative, “samahang nayon(s)”, or farmers association, or of funds solicited by corporations/associations from the general public.
When not committed by a syndicate as above defined, the penalty imposable shall be reclusion temporal to reclusion perpetua if the amount of the fraud exceeds 100,000 pesos. (Presidential Decree No. 1689)
Debuque v. Nilson, G.R. No. 191718, May 10, 2021, Per Hernando, J.:
• PD 1689 imposes the penalty of life imprisonment to death if the estafa is committed by a syndicate, defined as a group of “five or more persons formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme…”
• Thus, the elements of Syndicated Estafa are as follows: (a) Estafa or Other Forms of Swindling, as defined in Articles 315 and 316 of the RPC, is committed; (b) the Estafa or Swindling is committed by a syndicate of five 5 or more persons; and, (c) defraudation results in the misappropriation of moneys contributed by stockholders, or members of rural banks, cooperative, “samahang nayon[s],” or farmers’ association, or of funds solicited by corporations/associations from the general public.
Standards by which a group of purported swindlers may be considered as a syndicate under PD No. 1689:
1) They must be at least five (5) in number;
2) They must have formed or managed55 a rural bank, cooperative, “samahang nayon,” farmer’s association or any other corporation or association that solicits funds from the general public.
3) They formed or managed such association with the intention of carrying out an unlawful or illegal act, transaction, enterprise or scheme i.e., they used the very association that they formed or managed as the means to defraud its own stockholders, members and depositors. (Remo v. Devanadera, G.R. No. 192925, December 09, 2016, Per Perez, J.)
/Updated: November 10, 2023