Understanding Estafa in Fraudulent Investment Schemes
Dear PAO,
I was invited to invest in a company that promised a 5 percent return on investment every month. Unfortunately, after several months, no payout was made and the company representatives no longer spoke to us. We discovered that the corporation was not engaged in any form of business and just invited people to invest. Can we file a criminal case for Estafa?
Mily
Legal Analysis
Dear Mily,
Please be informed of the Supreme Court’s ruling in the case of People of the Philippines vs. Felix Aquino, et al., where the Supreme Court stated the distinction between legitimate and fraudulent investment schemes.
In the same case, the Supreme Court enumerated the elements of this type of Estafa, which include:
- False pretense or fraudulent representation of power, influence, qualifications, property, credit, agency, business, or imaginary transactions
- False pretense executed prior to or simultaneously with the commission of the fraud
- Reliance on the false pretense or fraudulent act leading to the victim parting with money or property
- Damages suffered by the victim as a result
From the Supreme Court decision, it is clear that Estafa is committed when false pretenses or fraudulent representations induce a person to part with money. In your case, the promise of a 5 percent return on investment was a false pretense as the company was not engaged in any legitimate business to generate returns.
Therefore, your situation falls within the category of Estafa as defined and penalized by the Revised Penal Code.
We hope this analysis clarifies your concerns. Please note that our advice is based on the facts presented and may vary with additional information.