Unpaid loan or estafa: Which will send you to prison?

Atty. Noel Atienza
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A client once asked me if a person can be imprisoned because of the non-payment of loan. I believe that many have the same question in mind.

The Constitution has a clear answer.

The provision in Section 20 of Article III Bill of Rights of the 1987 New Constitution states that “no person shall be imprisoned for non-payment of debt”. The said provision is self-explanatory and there is no room for interpretation.      

Simple Loan or Mutuum is a contract whereby one of the parties delivers to another money or other consumable thing with the understanding that the same amount of the same kind and quality shall be paid involves the return of the equivalent only because the borrower acquires the ownership.

However, aside from the contract of loan there are other acts attached thereto like when the loan is secured by the issuance of a checks and the checks when presented for payment were dishonored either for insufficiency of funds or closed account, the act of issuing worthless checks is being penalized for imprisonment not the contract of loan.

Other instance where a simple loan may subject the debtor to imprisonment as when the debtor obtained the loan through fraud or deceit without which the creditor could not have released the said loan. This is known as estafa” or swindling.

“Swindling or estafa is punishable under Article 315 of the RPC. There are three ways of committing estafa, viz.: (1) with unfaithfulness or abuse of confidence; (2) by means of false pretenses or fraudulent acts; or (3) through fraudulent means. The three ways of committing estafa may be reduced to two, i.e., (1) by means of abuse of confidence; or (2) by means of deceit.”

The elements of estafa in general are the following: (a) that an accused defrauded another by abuse of confidence, or by means of deceit; and (b) that damage and prejudice capable of pecuniary estimation is caused the offended party or third person. [Sy vs People, G.R. No. 183879, April 14, 2010]”

Not because you cannot be imprisoned with a simple loan, you’ll not going to pay for it? You should. Huge loan interest is still stressful.

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