In the Philippines, the allure of high returns often leads individuals into "get-rich-quick" schemes. When these investments turn out to be fraudulent, victims must navigate the intricate intersection of the Revised Penal Code (RPC) and the Securities Regulation Code (SRC) to seek justice. Filing criminal charges requires a clear understanding of the legal definitions, the elements of the crime, and the procedural steps involved.
1. The Legal Framework: Estafa vs. Securities Fraud
The primary weapon against investment scams is Article 315 of the Revised Penal Code, which defines Estafa (Swindling). However, when the scam involves the public offering of investment contracts without a license, the Securities Regulation Code (Republic Act No. 8799) also applies.
Estafa through Deceit
Under Article 315, paragraph 2(a), Estafa is committed by any person who defrauds another by using a fictitious name, falsely pretending to possess power, influence, qualifications, property, credit, agency, or business, or by means of other similar deceits.
Elements of Estafa through Deceit:
- That there must be a false pretense, fraudulent act, or fraudulent means.
- That such false pretense, fraudulent act, or fraudulent means must be made or executed prior to or simultaneously with the commission of the fraud.
- That the offended party relied on the false pretense, fraudulent act, or fraudulent means and was thus induced to part with his money or property.
- That as a result thereof, the offended party suffered damage.
Presidential Decree No. 1689 (Syndicated Estafa)
If the fraud is committed by a syndicate consisting of five or more persons and results in the misappropriation of funds contributed by stockholders, or members of associations, or the general public, the charge is elevated to Syndicated Estafa. This is a non-bailable offense carrying the penalty of life imprisonment.
2. The Role of the Securities Regulation Code (SRC)
Many investment scams operate as "Ponzi schemes," where returns to earlier investors are paid using the capital of newer investors. Even if the elements of Estafa are hard to prove, the promoters may be liable under the SRC.
- Section 8: Prohibits the sale or distribution of securities (including investment contracts) without a registration statement duly filed with and approved by the Securities and Exchange Commission (SEC).
- Section 26 (Fraudulent Transactions): Prohibits any person, in connection with the purchase or sale of securities, to employ any device, scheme, or artifice to defraud.
3. Procedural Steps for Filing Charges
Filing a criminal case in the Philippines follows a specific trajectory, starting from the collection of evidence to the filing in court.
Step 1: Gathering Evidence
The strength of a criminal case relies on documentation. Victims should compile:
- Proof of Investment: Receipts, deposit slips, screenshots of bank transfers, or notarized contracts.
- Marketing Materials: Brochures, social media posts, or screenshots of chats promising "guaranteed" high returns.
- SEC Certifications: A certification from the SEC stating that the entity is not registered to solicit investments from the public.
Step 2: Filing the Complaint-Affidavit
The victim (Complainant) must prepare a Complaint-Affidavit. This document narrates the facts of the case, identifies the perpetrators (Respondents), and attaches all supporting evidence. This must be sworn to before a prosecutor or a notary public.
Step 3: Preliminary Investigation
The complaint is filed with the Office of the City or Provincial Prosecutor where the crime was committed (usually where the money was handed over).
- The Prosecutor issues a subpoena to the Respondents.
- Respondents file a Counter-Affidavit.
- The Prosecutor determines if there is Probable Cause—a well-founded belief that a crime has been committed and the respondents are likely guilty.
Step 4: Filing the Information in Court
If the Prosecutor finds probable cause, they file a formal document called "Information" with the Regional Trial Court (RTC). The court then issues a warrant of arrest for the accused.
4. Distinguishing Between Civil and Criminal Liability
A common defense in investment scams is the claim that the matter is "purely civil in nature"—a simple breach of contract. To prevail in a criminal case for Estafa, the prosecution must prove that the deceit was the efficient cause of the loss. If the intent to defraud existed from the very beginning (e.g., the business was a sham), it is criminal. If a legitimate business simply failed later due to market conditions, it may only be a civil liability.
5. Summary of Key Charges
| Offense | Basis | Key Characteristic | Penalty |
|---|---|---|---|
| Simple Estafa | Art. 315, RPC | Deceit or abuse of confidence. | Depends on the amount defrauded. |
| Syndicated Estafa | P.D. 1689 | 5+ persons; targets the general public. | Life Imprisonment (Non-bailable). |
| SRC Violations | R.A. 8799 | Selling unregistered securities/no license. | Fine and/or Imprisonment. |
6. Important Considerations
- Venue: The case must be filed in the municipality or city where any of the essential elements of the crime took place.
- Prescription Period: Criminal actions for Estafa typically prescribe in 20 years if the penalty is afflictive (e.g., more than 6 years). However, immediate action is recommended to prevent the flight of the suspects.
- Corporate Liability: Under the SRC, if the violation is committed by a corporation, the penalty may be imposed upon the directors, officers, or employees responsible for the violation.