Estafa Case Against a Debtor — Even When They Eventually Offer to Pay

Philippine Legal Framework, Doctrinal Roots, and Practical Guidance

Key take-away: In the Philippines, mere non-payment of a loan is a civil matter; an estafa charge succeeds only when deceit or misappropriation is proven at the moment the money or property changed hands. A belated promise to pay (or even full restitution) does not erase the criminal act, although it can soften the penalty or help achieve an acquittal if it shows lack of original fraudulent intent.

1. Statutory Backbone

Provision	Mode of Estafa	Core Act	Penalty Range (after R.A. 10951, 2017)
Art. 315 ¶ 1(b), Revised Penal Code (RPC)	Abuse of confidence / misappropriation	Debtor originally receives money in trust, on commission, for administration, or under any obligation to return or deliver, but later misappropriates or converts it.	Depends on the amount defrauded: ≤ ₱10,000 → arresto menor to arresto mayor ₱10,001 – ₱1.2 M → prision correccional (up to 6 years) > ₱1.2 M → prision mayor to reclusion temporal (up to 20 years)
Art. 315 ¶ 2(a)	False pretenses or fraudulent representations	Debtor obtains money or credit by lying about existing facts, fictitious power, or imagined resources.	Same graduated scale
Presidential Decree 1689	Syndicated Estafa	Five or more offenders, or corporations committing estafa against the investing public.	Life imprisonment
B.P. 22 (Bouncing Checks Law)	Not estafa but often filed together.	Issuing a worthless check, regardless of intent.	Up to 1 year and/or fine up to double the amount but ≤ ₱200k

2. “I’ll Pay You Later” – Why It Usually Fails as a Defense

The crime is consummated the instant deceit or conversion occurs.
- People v. Dizon (G.R. No. 243. L-1970): restitution after discovery “does not obliterate criminal liability.”
- People v. Benitez (CA-G.R. No. 9490-R, 1952): repayment tendered on arrest was “at best an extenuating circumstance.”
Restitution is only a mitigating circumstance (RPC Art. 13 ¶ 7) or an analogous circumstance (Art. 13 ¶ 10). It can reduce—but never totally erase—the penalty.
Affidavit of Desistance or Compromise Agreement
- The Supreme Court has repeatedly held (e.g., Sy Tiong Shiou v. People, G.R. No. 132398, 2000) that criminal actions cannot be dismissed solely because the complainant has “forgiven” the accused or accepted payment. Prosecution is a matter of public interest.

3. Distinguishing Civil Default from Estafa

Scenario	Result
Simple inability to pay a legitimate loan, no badge of fraud at inception	Civil liability only (collection or sum of money case).
Postdated check knowingly issued without funds	B.P. 22 and possibly estafa under Art. 315 ¶ 2(d) if deceit shown.
Loan obtained by falsifying collateral, fictitious receipts, or imaginary supplier	Estafa under Art. 315 ¶ 2(a).
Funds given in trust (e.g., remittance, cooperative share) later diverted to personal use	Estafa under Art. 315 ¶ 1(b). Subsequent repayment offers do not bar prosecution.

Rule of thumb: No prior deceit → No estafa. Courts look for fraudulent intent before or during transfer of the money/property, not after.

4. Elements the Prosecution Must Prove

(A) Estafa by Abuse of Confidence (Art. 315 ¶ 1(b))

Money, goods, or personal property is received in trust, on commission, for administration, or under any other obligation to deliver or return it;
The offender misappropriates or converts it or denies receipt;
Such act causes prejudice to another; and
Demand by the offended party is made (not an element per se but strong evidence of misappropriation).

(B) Estafa by False Pretenses (Art. 315 ¶ 2(a))

False pretense or fraudulent representation of (i) power/imaginary transactions, (ii) non-existent property, or (iii) false identity;
Deceit must be prior to or simultaneous with the fraud;
Reliance by the offended party, resulting in parting with money/property;
Damage or prejudice ensues.

Late repayment offer fails because it addresses only damage, not the deceit or conversion already perfected.

5. Recent Thresholds and Prescription

Thresholds after R.A. 10951 (2017): Amounts adjust every three degrees of penalty. For example, estafa involving more than ₱8.8 M now merits reclusion temporal (12 yrs + 1 day to 20 yrs).
Prescription Period:
- Estafa punished by prision correccional → 10 years
- Punished by prision mayor or above → 15 years (RPC Art. 90) Running of prescription is interrupted by filing of complaint or information and resumes only when the proceedings end without conviction or acquittal.

6. Interaction with Novation & Compromise

Novation (Civil Code Art. 1291): Requires (i) a new obligation, (ii) clear intent to extinguish the old, and (iii) consent of the creditor. Even if valid, it “does not obliterate liability for estafa already consummated” (Yu An v. Yang, C.A., 1968).
Compromise or payment after the fact affects only the civil aspect (restitution, damages). Prosecution remains a State prerogative.
Bankruptcy or Insolvency of the debtor similarly does not bar prosecution if deceit at inception is shown.

7. Defenses Typically Raised—and Why They Fail or Succeed

Defense	Chance of Success	Notes
No deceit at the start (honest loan, business failure)	⭐⭐⭐	If evidence shows open accounting and borrower’s good faith, estafa cannot stand.
Payment or offer to pay later	⭐	Only mitigating. Does not extinguish liability.
Affidavit of Desistance by complainant	⭐⭐	Court may consider it, but prosecution can proceed motu proprio.
Accounting discrepancies blamed on staff / bookkeeper	⭐⭐	Possible if accused exercised due diligence and funds were diverted without their participation.
Lack of demand (for misuse cases)	⭐	In estafa by conversion, demand is strong but not indispensable evidence; absence weakens case but is not fatal if other proof exists.

8. Procedural Roadmap

Complaint-Affidavit filed with the Office of the City/Provincial Prosecutor.
Preliminary Investigation: Respondent submits Counter-Affidavit.
Information Filed in RTC (if penalty > 6 yrs) or MTCC (≤ 6 yrs).
Arrest & Bail: Estafa is generally bailable; amount set by trial court guidelines.
Arraignment → Trial → Judgment.
Civil Liability automatically included (Art. 100, RPC). Restitution can be enforced through writs of execution after conviction.

9. Penalty Mitigation and Alternatives

Article 13 mitigating factors: restitution, voluntary surrender, lack of prior conviction.
Probation: Available if penalty imposed ≤ 6 years and accused has not served time previously for a non-probationable offense.
Plea-Bargaining: Accused may plead guilty to lesser offense such as “attempted estafa” or “failure to return loan” to reduce penalty, subject to prosecutor and court approval.

10. Practical Tips

For Creditors / Complainants	For Debtors / Accused
Document all representations (texts, e-mails, checks).	Gather evidence of good faith: business ledgers, genuine efforts to settle.
Demand letters bolster inference of misappropriation.	Immediate restitution may lighten sentence; combine with written apology.
Consider B.P. 22 if checks were used—it requires less proof of intent.	Avoid making new false promises; they can aggravate penalties.
Prepare for lengthy litigation; criminal courts move slower than civil.	Explore mediation for civil aspect; it does not admit guilt but can narrow issues.

11. Syndicated Estafa & Investor Scams

If five or more persons formed a syndicate to defraud lenders or investors, PD 1689 elevates the offense to “syndicated estafa” with life imprisonment. Restitution or repayment offers are rarely entertained at this level because of the public impact.

12. Summary

Late payment offers do not erase estafa. The decisive question is: Was there fraudulent intent when the money was first obtained or entrusted?
Debtors who can prove sincere intent and transparent dealings may defeat an estafa charge, but they carry the burden of creating reasonable doubt.
Creditors must establish deceit or misappropriation—mere unpaid debt is not enough.
Restitution, compromise, or affidavits of desistance are useful for penalty reduction and civil recovery, not for dismissal of a well-founded criminal case.

This article is for informational purposes only and does not constitute legal advice. For specific situations, consult a Philippine lawyer experienced in criminal litigation and debtor-creditor law.