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RALPH LITO W. LOPEZ v. PEOPLE

FACTS:

Petitioner Ralph Lito W. Lopez was the President and CEO of Primelink Properties and Development Corporation (Primelink), a real estate developer. Primelink entered into a Joint Venture Agreement with Pamana Island Resort Hotel and Marina Club, Inc. (Pamana) to develop a residential resort with a marina called Subic Island Residential Marina and Yacht Club (Club) on an island in Subic, Zambales. Primelink was responsible for providing capital and handling marketing concerns, while Pamana, the owner of the Club site, undertook to keep the title over the island free of encumbrances. Primelink started selling membership shares in the Club.

Private complainant Alfredo Sy placed a reservation to purchase one Club share for P835,999.94, executed the reservation agreement, and paid the reservation fee. Sy fully paid the balance by 19 April 1998. In March 2002, Sy filed a criminal complaint against petitioner and a sales officer of Primelink, Joy Ragonjan, for estafa. Sy claimed that the Club remained undeveloped, and Primelink failed to return his payment despite demands. He also discovered that Primelink did not have a license from the Securities and Exchange Commission (SEC) to sell securities.

The Pasig City Prosecutor found probable cause to indict petitioner and Ragonjan for violation of Article 315, paragraph 2(a) of the Revised Penal Code and filed the Information with the Regional Trial Court of Pasig City. Ragonjan remained at large, leaving petitioner to face trial alone. During trial, Sy testified that Ragonjan assured him that Primelink was licensed to sell Club shares. The defense presented Atty. Jaime Santiago, Primelink's comptroller and drafter of the Joint Venture Agreement, to testify on the circumstances leading to the sale of Club shares and petitioner's role in Primelink's decision to do so. Petitioner also took the stand, testifying that the Club was a legitimate project but became impossible to complete due to Pamana's breach of the Agreement.

The trial court found petitioner guilty as charged and sentenced him to imprisonment and ordered him to indemnify Sy. The Court of Appeals affirmed the trial court's ruling. Petitioner appealed to the Supreme Court, challenging the Court of Appeals' factual findings and its appreciation of conspiracy between petitioner and Ragonjan.

ISSUES:

  1. Whether the Court of Appeals committed an error in affirming petitioner's conviction for estafa.

  2. Whether the prosecution was able to prove the elements of estafa under Article 315, paragraph 2(a) of the Revised Penal Code.

  3. Whether the petitioner is liable for the sale of unregistered Club shares

  4. Whether Ragonjan's assurance of Primelink's status as a licensed securities dealer amounts to a warranty

  5. Whether the contract between Primelink and Sy was a reservation agreement or a contract of sale

  6. Whether there was a law requiring Primelink to obtain a license from the SEC to sell Club shares

  7. Whether the provisions on pre-sale registration for securities apply to the case.

  8. Whether the ruling in G.G. Sportswear Mfg. Corp. v. World Class Properties, Inc. is applicable to the present case.

  9. Whether the amount of damage sustained by the complainant is properly determined.

  10. Whether misappropriation or conversion of money or property is required in estafa under paragraph 2(a) of Article 315 of the Code.

RULING:

  1. The Court of Appeals did not commit an error in affirming petitioner's conviction for estafa.

  2. The prosecution was able to prove the elements of estafa under Article 315, paragraph 2(a) of the Revised Penal Code.

  3. Yes, the petitioner is liable for the sale of unregistered Club shares. The petitioner was not a bystander in Primelink's sale of unregistered shares as he had encouraged and instructed the sale to raise capital for the Club. Petitioner's direct involvement in the sale, coupled with Ragonjan's position in Primelink's organizational and sales structure, proves his liability for the use of false pretense of qualification.

  4. No, Ragonjan's assurance of Primelink's status as a licensed securities dealer does not amount to a warranty. The warranty clause in the reservation agreement refers to warranties on the terms of the share sold, not the capacity of Primelink to sell Club shares. The clause protects Primelink from claims of violation of unwritten warranties, not its officers' criminal liability for fraudulent representations.

  5. The contract between Primelink and Sy is a contract of sale, not a reservation agreement. The defense failed to present any evidence to support the theory that it was a reservation agreement, consistently characterizing it as a "pre-selling" of Club share. The warranty clause in the contract refers to the transaction as a sale.

  6. Yes, there was a law requiring Primelink to obtain a license from the SEC to sell Club shares. Batas Pambansa Blg. 178, which was in effect at the time of the sale, required the registration and permit to sell securities. This law applied to all sales of securities, including the sale of non-proprietary membership certificates sold by Primelink.

  7. The provisions on pre-sale registration for securities apply to the case, including every contract of sale or disposition of a security, irrespective of the stage of development of the project.

  8. The ruling in G.G. Sportswear Mfg. Corp. v. World Class Properties, Inc. is not applicable to the present case as Primelink did not acquire a license to sell from the SEC.

  9. The amount of damage sustained by the complainant is properly determined based on the payments made by the complainant as evidenced by the receipts presented during trial.

  10. Misappropriation or conversion of money or property is not required as an element of estafa under paragraph 2(a) of Article 315 of the Code. Proof of pecuniary damage sustained by the complainant arising from reliance on the fraudulent representation is sufficient.

PRINCIPLES:

  • The scope of review under Rule 45 is limited to questions of law, and exceptions may be made if the Court of Appeals made erroneous inferences, arrived at a conclusion based on speculation or conjectures, or overlooked undisputed facts which lead to a different conclusion.

  • The elements of estafa under Article 315, paragraph 2(a) are: (1) the accused used a fictitious name, false pretense, or other similar deceits; (2) the accused used such deceitful means prior to or simultaneous with the execution of the fraud; (3) the offended party relied on such deceitful means to part with his money or property; and (4) the offended party suffered damage.

  • Liability for use of false pretense of qualification

  • Warranty clauses in contracts

  • Determining the nature of a contract based on the evidence presented

  • Legal requirements for the sale of securities and obtaining a permit from the SEC

  • The provisions on pre-sale registration for securities apply to every contract of sale or disposition of a security, regardless of the stage of development of the project.

  • The ruling in G.G. Sportswear Mfg. Corp. v. World Class Properties, Inc. is not applicable when the developer did not acquire a license to sell from the SEC.

  • The determination of the amount of damage sustained by the complainant is based on the payments made by the complainant, as properly evidenced during the trial.

  • Misappropriation or conversion of money or property is not required for estafa under paragraph 2(a) of Article 315 of the Code; proof of pecuniary damage sustained by the complainant resulting from reliance on the fraudulent representation is sufficient.