This Supreme Court decision clarifies that a real estate broker who falsely represents their authority to sell a property and induces another to part with their money commits estafa, even if the money is later returned. The ruling emphasizes that the crime of estafa is consummated upon the defrauded party’s parting with their money due to the false pretenses, and subsequent restitution does not negate criminal liability. This means that real estate professionals must be transparent about their authority and avoid misleading representations during property transactions, or they may face criminal charges.

When a Broker’s False Promises Lead to Criminal Charges of Estafa

In 2001, Ingeborg De Venecia Del Rosario met Luis T. Arriola, a real estate broker, who informed her about a lot for sale adjacent to a property she already owned in Tagaytay City. Arriola presented a letter purportedly from the lot owner, Paciencia G. Candelaria, authorizing him to sell the property. Del Rosario, interested in purchasing the lot, paid Arriola P437,000.00 as full payment. However, Arriola failed to deliver the original Transfer Certificate of Title (TCT). Del Rosario eventually contacted Candelaria, who denied selling the property or authorizing Arriola to do so, leading to the filing of an estafa case against Arriola.

The Regional Trial Court (RTC) convicted Arriola of estafa, finding that he had defrauded Del Rosario through false representations. The Court of Appeals (CA) affirmed the RTC’s decision, emphasizing that the elements of estafa were present. The Supreme Court agreed with the lower courts’ findings, holding Arriola criminally liable for estafa by false deceits under Article 315, Paragraph 2(a) of the Revised Penal Code (RPC). This provision states that estafa is committed by:

“By using a fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business or transactions, or by means of other similar deceits.”

Arriola argued that the prosecution’s evidence was hearsay and that he acted in good faith by returning the money. He also invoked the equipoise doctrine, claiming that the evidence was equally balanced. However, the Supreme Court found these arguments unconvincing, emphasizing the totality of circumstantial evidence that sufficiently established Arriola’s guilt. The Court also discussed the hearsay rule and its exceptions, noting that Del Rosario’s testimony regarding her conversation with Candelaria was admissible as an independently relevant statement to prove that Candelaria denied authorizing Arriola.

The Supreme Court underscored that fraud includes “all acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidence justly reposed, resulting in damage to another.” It found that Arriola committed several acts of deceit. First, he presented himself as duly authorized to sell Candelaria’s lot, showing Del Rosario a letter that only authorized him to receive payment, not to sell the property. As the Court highlighted, Article 1874 of the Civil Code requires that an agent’s authority to sell real property must be in writing; otherwise, the sale is void.

Second, Arriola presented a fax transmission purportedly from Candelaria, which also lacked any explicit indication that he was entrusted with the sale. Third, he presented a Deed of Absolute Sale with Candelaria’s signature already affixed. The Supreme Court noted the glaring differences between Candelaria’s signatures on the Authorization, fax transmission, and Deed of Absolute Sale, suggesting that the documents were not genuine. Additionally, the phone calls between Atty. Roa and Candelaria bolstered the claim that Candelaria never authorized Arriola to sell her property. The Court also pointed out that Arriola’s failure to attend trial hearings and be cross-examined further weakened his defense.

The elements of estafa by means of deceit under Article 315, Paragraph 2(a) of the RPC are: (1) a false pretense or fraudulent representation; (2) the pretense or representation was made prior to or simultaneously with the fraud; (3) the offended party relied on the false pretense and parted with their money or property; and (4) the offended party suffered damage. The Supreme Court found that all these elements were present in Arriola’s case. Regarding Arriola’s claim of good faith, the Court stated that good faith is “an elusive idea” consisting in honesty in belief or purpose, faithfulness to one’s duty or obligation, or absence of intent to defraud. The Supreme Court found that Arriola’s actions, as a real estate broker, did not align with good faith. He misrepresented his authority to sell Candelaria’s lot, leading to damage to Del Rosario.

The return of the amount owed to Del Rosario did not cancel Arriola’s criminal liability for estafa. The Court cited Section 27, Rule 130 of the Rules of Court, which states that in criminal cases, an offer of compromise by the accused may be received as an implied admission of guilt. Thus, Arriola’s reimbursement efforts could be construed as an admission of guilt. The Supreme Court also clarified that the equipoise rule, which applies when the evidence is equally balanced, was inapplicable because the evidence heavily favored the prosecution. Arriola’s failure to present his version of events during trial further weakened his case.

Finally, the Supreme Court modified the penalty imposed on Arriola, taking into account Republic Act No. 10951 (RA 10951), which adjusted the amounts upon which penalties for crimes are based. Given that the amount involved was P437,000.00, the Court sentenced Arriola to an indeterminate penalty of two (2) months and one (1) day of arresto mayor, as minimum, to one (1) year and one (1) day of prision correccional, as maximum.

FAQs

What was the key issue in this case?	The key issue was whether Luis T. Arriola committed estafa by falsely representing his authority to sell a property and inducing Ingeborg De Venecia Del Rosario to pay him for it. The Supreme Court had to determine if the elements of estafa were present and if Arriola’s actions constituted criminal fraud.
What is estafa under Philippine law?	Estafa is a crime under Article 315 of the Revised Penal Code, involving fraud or deceit that causes damage to another person. It can be committed through various means, including false pretenses or fraudulent acts before or during the commission of the fraud.
What are the elements of estafa by means of deceit?	The elements of estafa by means of deceit are: (1) a false pretense or fraudulent representation; (2) the pretense was made before or during the fraud; (3) the offended party relied on the false pretense; and (4) the offended party suffered damage as a result.
Why was Arriola’s claim of good faith rejected?	Arriola’s claim of good faith was rejected because, as a real estate broker, he should have known the requirements for a valid authorization to sell property. His actions in misrepresenting his authority and failing to ensure a legitimate transaction indicated a lack of honesty and intent to defraud.
How did the return of money affect the estafa charge?	The return of the money did not negate the estafa charge. While restitution might be a mitigating factor in sentencing, it does not erase the fact that the crime was already consummated when Del Rosario parted with her money due to Arriola’s false pretenses.
What is the significance of Republic Act No. 10951 in this case?	Republic Act No. 10951 adjusted the penalties for crimes based on the value of the property involved. The Supreme Court considered RA 10951 when modifying Arriola’s sentence to align with the current penalties for estafa involving the amount he defrauded from Del Rosario.
What is an independently relevant statement?	An independently relevant statement is a statement admitted as evidence to prove that the statement was made, regardless of its truth. In this case, Del Rosario’s testimony about her conversation with Candelaria was used to show that Candelaria denied authorizing Arriola, not necessarily to prove the truth of Candelaria’s denial.
What is the equipoise rule and why was it inapplicable in this case?	The equipoise rule states that when the evidence is equally balanced, the party with the burden of proof loses. It was inapplicable here because the evidence presented by the prosecution was overwhelming, and Arriola’s defense was weak due to his failure to present his own testimony.

This case underscores the importance of honesty and transparency in real estate transactions. Real estate professionals must accurately represent their authority and avoid misleading representations that could lead to financial harm for their clients. The Supreme Court’s decision serves as a reminder that false pretenses in property dealings can result in criminal liability, even if restitution is made later.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Luis T. Arriola v. People, G.R. No. 199975, February 24, 2020