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Property rules

Hoodwinked

Orly was the registered owner of a parcel of residential land with an area of 485 square meters covered by Transfer Certificate of Title No. 1234.

In December 1987, Orly and spouses Abe and Lerma entered into a Contract to Sell, in which Orly sold to the spouses two parcels of land with an area of 400 sqm for the total price of P60,000.

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Under the terms of the Contract to Sell, Orly, as seller, agreed to, among others, that: (a) after the spouses Abe and Lerma have paid the amount of P20,000, the balance of P40,000 payable in monthly installments of P1,015.74, for five years to start on June 30, 1988 and for every 30th of the month thereafter; (b) he also bound himself to execute a first deed of sale over the said property and deliver title to the vendees over said property free from encumbrance and liens upon full payment of the purchase price of the property; and (c) upon full payment of purchase price, he shall deliver to the buyers a final Deed of Sale and Certificate of Title in their names free of encumbrance.

The Lerma remitted to Orly the amount of P20,000 as down payment and the amount of P2,000 a month, even in excess of the monthly amount of P1,015.74 agreed upon in the Contract to Sell. The seven monthly installment payments were received by Orly and his agent Lory.

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Unknown to the spouses, Orly executed in January 1989 a Deed of Absolute Sale over the lots in question, and his other lots in favor of Willy for the price of P200,000, receipt of which Orly acknowledged. Orly represented in said deed that he was the lawful owner of the properties, free from all taxes and encumbrances and that the properties were untenanted. Said deed was registered with the Register of Deeds in December 1989. On the same date, a new transfer certificate of title was issued under the name of Willy, as vendee.

Orly never told the spouses of said sale to Willy. Nevertheless, the spouses continued remitting to Orly amounts in partial payments of the purchase price of the lots for which he issued receipts.

Over time, the spouses had paid Orly P54,000 inclusive of the P20,000, which the spouses had paid upon the signing of the Contract to Sell.

In December 1989, Orly consented to the construction by the spouses of a fence and a residential house or warehouse in the subject lots. The spouses purchased hollow blocks for their fence for the price of P40,000.

The spouses were flabbergasted when during the construction of the fence, Willy evicted them. The construction materials for the house of the couple remained unused. It was then that the spouses subsequently learned that Orly in January of 1989, had sold the subject lots to Willy for the amount of P200,000 and that the latter had already secured a title over the property under his name.

After the requisite preliminary investigation, a criminal information was filed against Orly for the crime of estafa, under Article 316, paragraph 2, of the Revised Penal Code. The said information reads as follows:

The undersigned accuses Orly of the crime of estafa, under Article 316, paragraph 2, of the Revised Penal Code, committed as follows:

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That sometime in the month of November 1989, more or less, in the Municipality of Talisay, Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, with intent to defraud, knowing that Lot xxx which is a portion of Lot No. 2049, under Transfer Certificate of Title No. 1234, of a subdivision plan, located at Tabunok, Talisay, Cebu, with a total area of 400 sqm, were already encumbered, did then and there willfully, unlawfully and feloniously sell, cede, transfer and convey or dispose of the same real properties to Willy, to the damage and prejudice of spouses Abe and Lerma in the total amount of P92,000.

Orly was convicted by the trial court for having violated the provisions of Art. 316, par. 2 of the Revised Penal Code.

Q: What is Article 316, par. 2 of the Revised Penal Code?

A: Article 316, paragraph 2 of the Revised Penal Code reads: Art. 316. Other forms of swindling.—The penalty of arresto mayor in its minimum and medium periods and a fine of not less than the value of the damage caused and not more than three times such value, shall be imposed upon: (1) xxx xxx xxx; 2. Any person who, knowing that the real property is encumbered, shall dispose of the same, although such encumbrance be not recorded;
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.

Q: What are the essential elements of the crime for the accused to be criminally liable for estafa under Article 316, paragraph 2 of the Revised Penal Code?

A: The elements of the crime are as follows:

That the thing disposed of be real property.
That the offender knew that the real property was encumbered, whether the encumbrance is recorded or not.
That there must be express representation by the offender that the real property is free from encumbrance.
That the act of disposing of the real property be made to the damage of another.

Q: Was the trial court correct when it convicted Orly for the crime of estafa under Art. 316, par. 2 of the Revised Penal Code?

A: No, because there is no allegation in the Information that Orly expressly represented in the sale of the subject property to Willy that the said property was free from any encumbrance.

Section 14(2) of Article III of the 1987 Constitution provides that an accused has the right to be informed of the nature and cause of the accusation against him. Indeed, Section 6, Rule 110 of the Revised Rules of Criminal Procedure requires that the acts or omissions complained of as constituting the offense must be alleged in the information. Section 8 of said rule provides that the information shall state the designation of the offense given by the statute and aver the acts or omissions constituting the offense. The real nature of the crime charged is determined by the facts alleged in the information and not by the title or designation of the offense contained in the caption of the information. It is fundamental that every element of which the offense is comprised must be alleged in the information. What facts and circumstances are necessary to be alleged in the information must be determined by reference to the definition and the essential elements of the specific crimes.
Irrefragably, then, Orly was not charged with estafa under Article 316, paragraph 2 of the Revised Penal Code.

Q: Can Orly be held liable to pay damages even if his conviction was reversed by the appellate court?

A: Notwithstanding the reversal of his conviction for estafa, Orly is nevertheless liable to Abe and Lerma for their payments of the subject lots and the value of hollow blocks used in the construction of their fence. Orly is also liable to the spouses for moral damages it appearing in the record that he acted in evident bad faith and succeeded in defrauding the spouses.

The spouses purchased the subject lots and paid the price therefor with the undertaking of Orly that upon payment in full of the purchase price of the property, he will execute the final Deed of Absolute Sale over the property and cause the issuance under the spouses’ names the title over the subject property without any liens or encumbrances. However, Orly hoodwinked the spouses and sold the property to Willy. Although Orly was no longer the owner of the property, he continued receiving from the spouses their partial payments for the property. Worse, Orly even allowed the spouses to cause the construction of a fence around the perimeter of the property although he had already sold the property to Willy. Fraud and bad faith of Orly having been proved by the prosecution, he is liable to the spouses respondents for moral damages in the amount of P40,000 and for exemplary damages in the amount of P20,000.

(Source: Naya vs. Sps. Abing and People of the Philippines, G.R. No. 146770, February 27, 2003)

Ma. Soledad Deriquito-Mawis, Dean, Lyceum of the Philippines University, Chairman, Philippines Association of Law Schools, Mawis Law Office

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