Imprisonment over non-payment of debts? (Part 1)

Christian Andrew Labitoria Gallardo[1]

Enshrined in the Philippine Constitution is the principle that “no person shall be imprisoned for non-payment of debt”.[2] It is an explicit recognition of the supremacy of human freedom over property rights. While civil cases for collection of the sum of money can be filed in order to enforce the payment of debts, a person shall not be deprived of his liberty for the sole reason that his property is not enough to cover all his debts.[3]

Yet, why do some people get imprisoned when their debtors file a case against them? This is so because they are being punished not because of the fact that they have an unpaid debt, but because of the deceit or abuse of confidence they have employed in order for another person to part with their property in their favor. This deceit or abuse of authority is punishable as estafa or swindling under the Revised Penal Code.[4]

Defining Estafa

Swindling or Estafa is an act committed by any person who defrauds another with unfaithfulness or abuse of confidence, by means of false pretenses or fraudulent acts executed prior to or simultaneous with the commission of fraud, or through fraudulent means.[5] Specifically, the following acts are punished:

I. Altering the substance, quantity, or quality or 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, with unfaithfulness or abuse of confidence.

II. 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, with unfaithfulness or abuse of confidence.

III. 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 of any third person, with unfaithfulness or abuse of confidence.

IV. 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, executed prior to or simultaneously with the commission of the fraud.

V. Altering the quality, fineness or weight of anything pertaining to his art or business, executed prior to or simultaneously with the commission of the fraud.

VI. 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, executed prior to or simultaneously with the commission of the fraud.

VII. Post-dating a check, or issuing a check in payment of an obligation when the offender 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 of insufficiency of funds shall be prima facie evidence of deceit constituting false pretense or fraudulent act, executed prior to or simultaneously with the commission of the fraud.

VIII. Obtaining any food, refreshment or accommodation at a hotel, inn, restaurant, boarding house, lodging house, or apartment house and the like without paying therefor, with intent to defraud the proprietor or manager thereof, or by obtaining credit at hotel, inn, restaurant, boarding house, lodging house, or apartment house by the use of any false pretense, or by abandoning or surreptitiously removing any part of his baggage from a hotel, inn, restaurant, boarding house, lodging house or apartment house after obtaining credit, food, refreshment or accommodation therein without paying for his food, refreshment or accommodation, executed prior to or simultaneously with the commission of the fraud.

IX. Inducing another, by means of deceit, to sign any document.

X. Resorting to some fraudulent practice to insure success in a gambling game.

XI. Removing, concealing or destroying, in whole or in part, any court record, office files, document or any other papers[6]

XII. Conveying, selling, encumbering or mortgaging a real property under the pretense of an owner

XIII. Disposing a real property despite knowing that it is encumbered, even if the encumbrance is not recorded.

XIV. Taking of an owner of a personal property from its lawful possessor, to the prejudice of the latter or any third person.

XV. Executing any fictitious contract to the prejudice of another.

XVI. Accepting compensation from any person under the belief of the latter that it was in payment of services rendered or labor performed by the former, when in fact the former did not actually perform such services or labor

XVII. Selling, mortgaging or encumbering of a real property by a surety who gave such property as a bond 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.[7]

Okay. That was quite a long list. Note however that the following deceitful acts are not exclusive. The law punishes all forms of deceit used to defraud or damage another, including the interpretation of dreams and fortunetelling for profit or gain, albeit on a lighter penalty.[8]

An essential element of estafa however is damage to another. Such damage need not be a permanent deprivation of money or property, but may be in the form of temporary prejudice or disturbance to the property right of another.[9] Hence, the mere fact of depositing company funds in the personal account of the accused with abuse of confidence, although the accused was not able to withdraw it for his gain, constitutes estafa.[10]

Let us discuss the different common forms of Estafa in the succeeding articles. Please join our facebook page for more free online legal advice.

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Cover Photo by Alice Pasqual on Unsplash

[1] Christian Andrew Labitoria Gallardo is a recent graduate of the Ateneo School of Law with a Juris Doctor degree, and is currently an associate of the Sangalang and Gaerlan, Business Lawyers, a law firm specializing in labor, corporate and business law. You may reach him through a phone call or message (09157042132) or via email (andrew.gallardo@paladinslaw.org). [2] Art III, § 20, PHILIPPINE CONSTITUTION [3] Art III, § 20, PHIL. CONST. [4] Art. 315, Revised Penal Code. [5]Id. [6] Id. [7] Id., Art 316. [8]Id., Art 318. [9] Khitri v People, G.R. No. 210192 (2016). [10] Lu Hayco v CA, G.R. Nos L-49607-13 (1985).