ESTAFA ARISING FROM A SELLER’S FAILURE TO REFUND AN INVALID LAND SALE (Philippine Legal Perspective, 2025)
1. Background and Typical Fact Pattern
A buyer pays for a parcel of land. Later it turns out the seller cannot convey valid title—e.g., the OCT/TCT is spurious, the property is already titled to someone else, or the seller lacks authority as heir/attorney-in-fact. The buyer demands rescission and refund; the seller refuses or disappears. Aside from civil remedies, the buyer may explore criminal prosecution for estafa under Article 315 of the Revised Penal Code (RPC).
2. Which Kind of Estafa?
| Variant | Core Act | Commonly Invoked When Seller… |
|---|---|---|
| Art. 315 §1(b) “Misappropriation or conversion” | Receives money/property in trust, on commission, for administration, or under any other obligation to deliver/return, then misappropriates it | Accepts the purchase price with a duty to return it once the sale is void/annulled and instead appropriates or spends it |
| Art. 315 §2(a) “False pretenses or fraudulent acts” | Defrauds another by any deceit prior to or simultaneous with the transaction | Pretends to own land, shows fake title, or conceals an adverse claim to induce the buyer to pay |
Either form may apply; prosecutors often charge both in the Information and let the trial court determine which is proven.
3. Elements the Prosecution Must Prove
3.1 Estafa by Misappropriation (Art. 315 §1(b))
- Money, goods, or other personal property is received in trust, on commission, for administration, or under any other obligation to deliver or return.
- The offender misappropriates, converts, or denies receipt of the same.
- Such act is to the prejudice of another.
- There is demand by the offended party.¹
3.2 Estafa by False Pretenses (Art. 315 §2(a))
- False pretense, fraudulent act, or fraudulent means executed prior to or simultaneously with the commission of the fraud.
- The offended party relied on the deceit and parted with money or property.
- Causal connection between deceit and damage to the offended party.
4. Key Doctrines from Jurisprudence
| Case (SC) | G.R. No. / Date | Take-away |
|---|---|---|
| People v. Berdin | 16990, 29 Jan 1965 | Mere breach of promise to convey land is not estafa unless deceit existed at inception. |
| Spouses Uy v. SPS. Court | 98756, 17 Mar 1999 | When seller accepted payment knowing title was defective and refused refund, estafa (misappropriation) lies. |
| People v. Malabago | 20824, 23 Apr 1966 | Deceit shown where accused exhibited a fake TCT to secure payment. |
| Fernandez v. People | 203236, 2 Feb 2021 | Refund after demand does not erase criminal liability, but may mitigate penalty. |
| Naseco v. Angeles | 77372, 13 May 1992 | Demand letter is not an element for §2(a) estafa, but is best evidence of deceit’s continuance. |
5. Distinguishing Civil Breach from Criminal Estafa
- Intent to Defraud (Animus Furandi) must exist at the time of sale (for §2(a)) or upon demand to return (for §1(b)).
- Good-faith inability to refund—e.g., funds frozen, property under dispute—negates criminal intent and confines the matter to a civil action (rescission/annulment under Arts. 1191 or 1390 Civil Code).
- Courts dismiss estafa where the quarrel is a mere collection dispute absent deceptive conduct.
6. Procedure for Filing an Estafa Complaint
- Demand Letter (notary-assisted) demanding refund within a reasonable period.
- Affidavit-Complaint and supporting evidence (contract of sale, receipts, titles, sworn statements) filed with the Office of the City/Provincial Prosecutor.
- Preliminary Investigation: seller files counter-affidavit. Prosecutor decides probable cause.
- If probable cause exists, Information filed in the Regional Trial Court (RTC) because estafa involving real-estate deals invariably exceeds ₱20,000 (jurisdictional threshold after RA 11576).
7. Penalties (Art. 315 as amended by RA 10951, 2017)
| Amount Defrauded | Penalty | Range (prision correccional/prision mayor) |
|---|---|---|
| Above ₱2.0 M | Reclusión temporal max to reclusión perpetua | 17 y 4 m – 40 yrs |
| ₱1.2 M – 2.0 M | Prisión mayor medium to max | 10 y 1 m – 20 yrs |
| ₱600 k – 1.2 M | Prisión mayor min to med | 6 y 1 m – 10 yrs |
| ₱40 k – ₱600 k | Prisión correccional max | 4 y 2 m – 6 yrs |
| ₱20 k – ₱40 k | Prisión correccional medium | 2 y 4 m – 4 y 2 m |
| Up to ₱20 k | Prisión correccional min or arresto mayor + fine | Up to 2 yrs 4 m |
The court must also award restitution to the buyer.
8. Prescription
- Estafa prescribes in 10 years (Art. 90 RPC) when the penalty is prision correccional — common in land deals since amounts now usually exceed ₱40 k; if the amount exceeds ₱1.2 M (penalty prision mayor) prescription is 15 years.
- Period begins on the day of discovery of the fraud and is tolled by filing of the complaint-affidavit.
9. Possible Defenses
- Good Faith / Lack of Deceit – Seller honestly believed title was valid, acted on lawyer’s advice, or immediately tried to cure defect.
- Refund or Novation before Criminal Action – May negate intent though does not automatically extinguish liability.
- No Fiduciary Relationship (§1(b)) – Funds were not entrusted in trust but delivered as consideration, so misappropriation element missing.
- Statute of Limitations – Complaint filed beyond prescriptive period.
- Buyer’s Prior Knowledge – Buyer already knew of title defect (principle of estoppel).
10. Civil Remedies Parallel to Criminal Case
| Remedy | Basis | Relief |
|---|---|---|
| Annulment of Sale | Art. 1390 Civil Code (voidable), or Art. 1398 if incapacity | Declaration of nullity, restitution, damages |
| Rescission | Art. 1191 (reciprocal obligations) | Return of price + interest, mutual restoration |
| Action for Reconveyance / Quieting of Title | PD 1529 (Land Registration Act) | Cancellation of TCT, reconveyance |
| Maceda Law (RA 6552) if sale on installment | Refund of cash surrender value | Not applicable to cash sales |
11. Evidentiary Tips for Buyers
- Always secure original Official Receipts or Acknowledgment Receipts with tax identification of seller.
- Obtain certified true copy of TCT/OCT from the Registry of Deeds on the day of signing.
- Use escrow; release of purchase price only upon confirmation of title.
- If fraud suspected, send notarized demand; keep registry-return card or courier proof.
- Collect communications, bank records, screenshots, and witnesses attesting to demand and refusal.
12. Practical Strategy for Complainants
- Dual-track filing: institute both civil (to secure attachments on seller’s assets) and criminal (to pressure refund).
- Claim interest and moral, exemplary damages in civil case; estafa does not automatically cover them.
- Consider settlement during plea-bargaining—courts frequently approve plea to Attempted Estafa upon full restitution.
- Coordinate with PNP-CIDG or NBI-ACG for manhunt warrants if seller absconds.
13. Conclusion
Philippine law treats the refusal to refund money from an invalid land sale as potentially estafa where deceit or misappropriation is demonstrated. Yet not every failed land deal is criminal; the line lies in proven fraudulent intent. Knowing the elements, procedural steps, penalties, and defenses equips buyers and their counsel to evaluate whether to pursue criminal action, civil remedies, or both. As with all real-estate transactions, due diligence before payment is the best defense against estafa.
This article is for informational purposes only and does not constitute legal advice. For case-specific counsel, consult a Philippine lawyer admitted to the Integrated Bar of the Philippines.