Estafa via false pretenses


In 1996, a real estate developer entered into a joint venture agreement with a hotel to develop a P60 million project by building an exclusive residential resort in Subic, Zambales. The selling of club memberships for the resort began that same year and the resort was scheduled for completion in July 1998.

An individual purchased one membership share for the resort at P835,999.94, payable in installments. The individual immediately paid the reservation fee of P209,000.00 and fully paid the balance by April 1998.

By 2002, the resort remained undeveloped and the developer refused to return the individual’s payment for his membership share inspite of the individual’s repeated demands. Upon investigation of the real estate developer, it was discovered that the developer never obtained a license to sell securities from the Securities and Exchange Commission (SEC). Thus, a criminal case for estafa was filed against the real estate developer’s president, who was also it’s chief operating officer.

The president put the blame of the undeveloped project on the hotel the developer entered into a joint venture with. It alleged that the project became impossible to complete because the hotel breached its agreement by mortgaging the site of the resort to a bank. The case for breach of contract was still pending in court. The Regional Trial Court, however, rendered the arguments of the president irrelevant and held that the president deliberately misrepresented the real estate developer when it concealed the “material fact that it had not yet secured a license and registration from SEC” and failed to return the payment for the membership share when the amount was asked to be refunded. Thus, the president was found guilty of estafa punishable under Article 315, paragraph 2(a), of the Revised Penal Code. The Court of Appeals affirmed the trial court’s ruling in toto.

The Supreme Court likewise ruled that the elements of estafa by the use, or reliance on, false pretenses was present. The elements under the crime of estafa found punishable under Article 315, paragraph 2(a) were present –

(1) The accused used [a]fictitious name or false pretense that he possesses (a) power, (b) influence, (c) qualifications, (d) property, (e) credit, (f) agency, (g) business or (h) imaginary transaction, or other similar deceits; (2) The accused used such deceitful means prior to or simultaneous with the execution of the fraud; (3) The offended party relied on such deceitful means to part with his money or property; and (4) The offended party suffered damage.

Thus, the Court held that the president used false pretenses when it sold membership shares to the public when it was not duly authorized to do so for failure to secure a license and registration from SEC. It also clarified that unlike estafa under Article 315, paragraph 1(b), estafa under paragraph 2(a) “does not require as an element of the crime proof that the accused misappropriated or converted the swindled money or property. All that is required is proof of pecuniary damage sustained by the complainant arising from his reliance on the fraudulent representation.”

The Court also added that the “registration requirement under BP 178 applies to all sales of securities ‘includ[ing]every contract of sale or disposition of a security,’ regardless of the stage of development of the project on which the securities are based. No amount of ‘industry practice’ works to amend these provisions on pre-sale registration” (Lopez v. People, G.R. No 199294, 31 July 2013, J. Carpio).


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