THIRD DIVISION Iyon namang nanlilinlang. Walang gawaing masama na hindi nabubunyag rin.
Totoong mahigpit
G.R. No. 106357 September 3, 1998
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. PRISCILLA BALASA, NORMITA
VISAYA, GUILLERMO FRANCISCO, NORMA FRANCISCO and ANALINA FRANCISCO,
accused, NORMA FRANCISCO, GUILLERMO FRANCISCO and ANALINA
FRANCISCO, Accused-Appellants.
G.R. No. 108601-02 September 3, 1998
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. PRISCILLA BALASA, NORMITA
VISAYA, GUILLERMO FRANCISCO, NORMA FRANCISCO and ANALINA FRANCISCO,
accused, NORMA FRANCISCO, GUILLERMO FRANCISCO and ANALINA
FRANCISCO, Accused-Appellants.
 
ROMERO, J.:
Avarice, mother of crimes, greedy for more the more she possesses, eversearching open-
mouthed for gold. 1
Greed has always been one of man's failings. The hope of greater gain has lured many a man to
throw caution, and his common sense, to the wind. This human foible, known to many, has been
exploited throughout the ages by con men, charlatans and cheats to bilk the gullible public of their
hard-earned money. History has thus seen the unraveling of various disingenuous stratagems
which are at bottom nothing but seams. The case at hand once again proves that "a sucker is born
every minute."
Totoong walang pagkaubos sa ating daigdig ang mga taong nanlilinlang. Hindi magkakagayon
naman kung walang nagpapalinlang. Dahil sa kanilang malaking hangarin na magkamal ng kimpal
kimpal na kayamanan, pinapasukan nila ang mga kaduda-dudang alok ng mga mapagsamantala
na kung sila ay mamuhunan ng kaunting salapi, ito ay tutubo ng malaki sa ilang araw lamang.
Kaya't napakaraming mga tao ang nagagantso. Hindi masasabing mga hangal o dili kaya'y mga
maralita na walang gaanong pinag-aralan ang mga nabibiktima. Kahit ang mga maykaya at
matataas sa ating lipunan ay napaglalaruan din. Milyun-milyong salapi ang nahuhuthot sa kanila,
hindi ng mga masakim na magnanakaw, kundi ng kanila na ring mga kasamahan sa tinatawag na
"alta sociedad." Mismong mga kaibigan at kapanatag ng loob ang naguudyok sa kanilang sumali
sa mga pakana na magpapayaman sa kanila. Higit namang nakakaawa kapag ang naloloko ay
iyong nangungutang lamang at nagbabakasakali na ang ilang daan nila ay magiging libo.
Itong kapasiyahang ito ng Mataas na Hukuman ay nagbababalang muli. Magpakaingat-ingat ang
lahat. Ang naghahangad ng kagitna, isang salop ang nawawala.
ang ating batas na pumaparusa sa mga ganyang hindi na natututo, lalo't higit kung ang mga
salarin ay mga sindikato.
Tunghayan natin kung papaano naganap ang gawang panloloko sa mga taga Palawan ng mga
dayo lamang.
On July 6, 1989, the Panata Foundation of the Philippines, Inc., a non-stock, non-profit corporation
with principal address at San Miguel, Puerto Princesa, Palawan, was registered with the securities
and Exchange Commission, under S.E.C. Reg. No. 165565. Its ten incoporators were Priscilla
Balasa, Normita Visaya, Analina Francisco, Lolita Gelilang, Cynthia Ang, Norma Francisco,
Purabel Espidol, Melinda Mercado, Rodolfo Ang, Jr. and Teresa G. Carandang. Five
incorporators, namely, Priscilla Balasa, Normita Visaya, Analina Francisco, Lolita Gelilang and
Cynthia Ang were named first trustees.
In addition, the management of the foundation was entrusted to Priscilla Balasa, as president and
general manager; Normita Visaya as corporate secretary and head comptroller; Norma Francisco
as cashier; Guillermo Francisco as the disbursing officer; and Analina Francisco as treasurer. The
latter also doubled as a typist of the Foundation.
On the other hand, the employees of the foundation were the tellers Rosemarie Balasa, Sylvia
Magnaye, Judith Ponciano, Jessica Buaya, Rosario Arciaga, Paul Francisco, Enriquita Gabayan
and Anita Macmac. The comptrollers, Ruth Jalover, Amarino Agayo, and Avelina Yan were under
the supervision of Normita Visaya. Nelia Daco, one of the clerks assigned outside, was the one in
direct contact with the depositors.
The Foundation's purposes, as stated in its by-laws, were as follows:
1. Uplift members' economic condition by way of financial or consultative basis (sic);
2. To encourage members in a self-help program;
3. To grant educational assistance;
4. To implement the program on the Anti-Drug campaign;
5. To acquire facilities either by or through purchase, lease, bequest of donations, equipments
(sic), machineries (sic) and supplies for purposes of carrying out its business operation or hold
such real or personal properties as may be convenient and proper in order to achieve the purpose
of this corporation;
6. To cooperate with other organizations, institutions with similar activities for purposes of carrying
out its business; and
7. To organize seminars or conferences specially in the rural areas and other selected cities. 2
After obtaining its SEC registration, the foundation immediately swung into operation. It sent out
brochures soliciting deposits from the public, assuring would-be depositors that their money would
either be doubled after 21 days or trebled after 30 days. Priscilla Balasa also went around
convincing people to make deposits with the foundation at their office at the Diaz Apartment,
Puerto Princesa.
The modus operandi for investing with the foundation was as follows:
When a person would deposit an amount, the amount would be taken by a clerk to be given to the
teller. The teller would then fill up a printed form called a "slot." These "slots" were part of a
booklet, with one booklet containing one hundred "slots." A "slot," which resembled a check,
contained the following data:
PANATA FOUNDATION Control No. 33
(Logo) OF THE PHILIPPINES INC. Date 12-5-87 / Dec. 26, 1987
PFOPI Puerto Princesa, Palawan Amount P 500.00
Sec. Reg. No. 165565
M CHESTER MONREAL
Address RPC
Share FIVE
Amount in words FIVE HUNDRED PESOS Only
(Sgd.)
(Sgd.) PRICILLA BALASA
--------- ---------
Signature of Member President / Manager
No. 30333 3
The control number indicated the number of the "slot" in a booklet, while the space after "date"
would contain the date when the slot was acquired, as well as the date of its maturity. The amount
deposited determined the number of shares, one share being equivalent to one hundred pesos.
The depositor had the discretion when to affix his signature on the space provided therefor. Some
would sign their slot only after payment on maturity, while others would sign as soon as they were
given the slot. However, without the control number and the stamp of the teller, duly signed or
initialed, no depositor could claim the proceeds of his deposit upon maturity. 4
After the slot had been filled up by the teller, he would give it to the clerk assigned outside. The
clerk would then give the slot to the depositor. Hence, while it was the teller who prepared and
issued the slot, he had no direct contact with the depositor. The slots handed to a depositor were
signed beforehand by the president of the foundation.
Every afternoon, the comptrollers would take the list of depositors made by the tellers with the
amounts deposited by each, and have these typed. Norma Francisco would then receive from the
tellers the amounts deposited by the public. It was also her job to pay the salaries of the
foundation's employees. For his part, Guillermo Francisco would release money whenever a
deposit would mature as indicated in the slots.
According to the foundations rules, an investor could deposit up to P5,000.00 only, getting a slot
corresponding thereto. Anyone who deposited more than that amount would, however, be given a
slot but the slot had to be in he name of another person or several other persons, depending upon
the amount invested. 5 According to Sylvia Magnaye, a foundation teller, all deposits maturing in
August 1989 were to be tripled. For such deposits, the slots issued were colored yellow to signify
that the depositor would have his deposit tripled. Deposits that would mature subsequent to
August were only given double the amount deposited. 6 However, there were times when it was
the depositor who would choose that his deposit be tripled, in which case, the deposit would
mature later 7.
The amounts received by the foundation were deposited in banks. Thus, a foundation teller would,
from time to time, go to PNB, PCI Bank, DBP and the Rural Bank of Coron to deposit the
collections in a joint account in the names of Priscilla Balasa and Norma Francisco.
Initially, the operation started with a few depositors, with most depositors investing small amounts
to see whether the foundation would make good on its promise. When the foundation paid double
or triple the amounts of their investment at maturity, most not only reinvested their earnings but
even added to their initial investments. As word got around that deposits could be doubled within
21 days, or tripled if the period lasted for more than 30 days, more depositors were attracted.
Blinded by the prospect of gaining substantial profits for nothing more than a minuscule
investment, these investors, like previous ones, were lured to reinvest their earnings, if not to
invest more.
Most would invest more than P5,000.00, the investment limit set by the foundation. Priscilla Balasa
would, however, encourage depositors to invest more than P5,000.00, provided that the excess
was deposited under the name of others. She assured the depositors that this was safe because
as long as the depositor was holding the slots, he was the "owner" of the amount deposited. Most
investors then deposited amounts in the names of their relatives.
At the outset, the foundation's operations proceeded smoothly, as satisfied investors collected
their investments upon maturity. On November 29, 1989, however, the foundation did not open.
Depositors whose investments were to mature on said date demanded payments but none was
forthcoming. On December 2, 1989, Priscilla Balasa announced that since the foundation's money
had been invested in the stock market, it would resume operations on December 4, 1989. On that
date, the foundation remained closed. Depositors began to demand reimbursement of their
deposits, but the foundation was unable to deliver.
Consequently, sixty-four informations, all charging the offense of estafa, as defined in Presidential
Decree No. 1689, were filed against Priscilla Balasa, Normita Visaya, Norma Francisco, Guillermo
Francisco, Analina Francisco and eight other persons, mostly incorporators and employees of the
Panata Foundation, before the Regional Trial Court of Palawan. Fourteen cases, including
Criminal Case Nos. 8429 and 8751, were raffled off to Branch 52. Two more cases, Criminal Case
Nos. 8704 and 8749, were similarly assigned to it. Of the sixteen casts assigned to Branch 52,
eight were, with the consent of the accused, provisionally dismissed for lack of evidence.
In Criminal Case No. 8429, the information charging the accused with the crime of estafa "as
amended by PD 1689" was filed on December 12, 1989. The accused in this case were: Priscilla
Balasa, Almarino Agayo, Norma Francisco, Normita Visaya, Paul Francisco, Nelia Daco, Ruth
Jalover, 8 Guillermo Francisco, Candido Tolentino, Jr., Rosemarie Balasa, 9 Ricardo del Rosario,
Emelita Gabayan, Rosario Arciaga, Jessica Buaya, Avelina Yan, Anita Macmac, Gina Gabaldon,
Ronaldo Belo, Fernando Cadauan, Lolita Gelilang, Cynthia Ang, Judith Ponciano, Sylvia
Magnaye, 10 Analina Francisco and Sulpicio Nabayan. As Amended on February 16, 1990, the
information in this case reads as follows:
That sometime on (sic) December, 1989, the above-named accused being the Manager and
employees of the PANATA Foundation of the Philippines, Inc., with office at No. 20 Diaz
Apartment, Manalo Extension, Puerto Princesa City, Philippines, and within the jurisdiction of this
Honorable Court, the said accused conspiring and confederating with one another and operating
as a syndicate, did then and there wilfully, unlawfully and feloniously defraud one Estrella San
Gabriel y Lacao by means of false representation and fraudulent means which they made to said
Estrella San Gabriel to the effect that as an investor/subscriber to the PANATA Foundation, Inc.
which is a non-stock corporation allegedly registered with the SEC under Registration No. 165565
and by means of other similar deceit induce the said Estrella San Gabriel to give and deliver to the
said accused the amount of P5,500.00 as her investment in said foundation, and by manifestation
and misrepresentation by the said accused that the said invested amount will be doubled or tripled
within a certain period of days said accused knowing fully well that their manifestation and
representations were false and fraudulent as they are made only for the purpose of obtaining as in
fact they obtained the amount with intent to defraud misapply, misappropriate and convert the said
amount for their own personal use and benefit, to the damage and prejudice of said Estrella San
Gabriel in the amount of P5,500.00, Philippine Currency.
CONTRARY TO LAW and penalized under Presidential Decree No. 1689.
Likewise, in Criminal Case No. 8704, the information, filed on May 23, 1990, charged Priscilla
Balasa, Norma Francisco, Guillermo Francisco, Normita Visaya, Analina Francisco, Lolita
Gelilang, Cynthia Ang, Rodolfo Ang, Jr., Purable Espidol, Melinda Mercado, Almarino Agayo,
Candido Tolentino, Jr., Ricardo del Rosario, Fernando Caduan, Paul Francisco and Teresita
Carandang with the crime of estafa "as amended by Presidential Decree No. 1689" as follows:
That sometime in July, 1989 to December 1989, the above-named accused being then the
Manager incorporators, members of the board of trustees, officers and employees of the PANATA
FOUNDATION OF THE PHIL., INC. with Office No. 20 Diaz Apartment, Manalo Extension, Puerto
Princess City, Philippines and within the jurisdiction of this Honorable Court, the said accused
conspiring, confederating together and mutually helping one another, and operating as a
syndicate, did then and there wilfully, unlawfully and feloniously defraud, the complainant Conchita
Bigornia, by means of false pretenses/representation and fraudulent means which they made to
said Conchita Bigornia to the effect that as depositor/subscriber to the PANATA FOUNDATION
OF THE PHIL., INC., which is a non-stock corporation allegedly registered with the SEC under
Registration No. 165565 and by means of other similar deceit induce the said Conchita Bigornia,
to give and deliver to the said accused the amount of TWENTY FOUR THOUSAND ONE
HUNDRED (P24,100.00) PESOS, Philippine Currency, as his/her deposit/subscription in said
Foundation, and by manifestation and misrepresentation by the said accused that the said
deposited/subscription amount will be doubled or tripled within a certain period of days said
accused knowing fully well that this manifestation were (sic) false and fraudulent as they are made
only for the purpose of obtaining as in fact they obtained the amount of TWENTY FOUR
THOUSAND ONE HUNDRED PESOS (P24,100.00) from the said (Conchita Bigornia) and the
said accused once in possession of the said amount with intent to defraud, misapply,
misappropriate and convert the said amount for their own personal use and benefit, to the damage
and prejudice of the said Conchita Bigornia in the amount aforestated.
CONTRARY TO LAW and penalized under P.D. No. 1689.
Similar informations were filed against the same persons in Criminal Cases Nos. 8749 and 8751.
The complainant in Criminal Case No. 8749, complainant Shiela San Juan, was allegedly
defrauded of P25,800.00 while in Criminal Case No. 8751, the amount of P6,800.00 was allegedly
defrauded from Benjamin Yangco.
In like manner, similarly worded informations in Criminal Case Nos. 8734 and 8428, raffled off to
Branch 50, alleged that Elisia Mensias was defrauded in the amount of P4,500.00 and Alfonso and
Prescilla Lacao defrauded in the amount of P58,850.00, respectively.
After the filing of the informations, warrants for the arrest of the defendants in the corresponding
criminal cases were issued. However, only Priscilla Balasa, Normita Visaya, Guillermo Francisco,
Norma Francisco and Analina Francisco were arrested, the rest of the defendants having gone
into hiding.
On arraignment, the arrested defendants all pleaded not guilty to the crimes charged but before
the presentation of prosecution evidence, Priscilla Balasa and Normita Visaya escaped from police
custody. With their escape, only the spouses Guillermo and Norma Francisco were called to
present evidence on behalf of the defense. Analina Francisco, being a deaf-mute, was not called
to the witness stand due to the lack of a competent interpreter. The spouses, in denying criminal
liability, presented the following facts:
Priscilla Balasa, Normita Visaya, and Analina Francisco, full-blooded sisters, are the common
children of appellant spouses Guillermo and Norma Francisco. Before the Panata Foundation
started operations in July 1989, Priscilla had been living with her parents in San Mateo, Isabela.
Analina, on the other hand, was living with their elder sister, Normita, in Manila. Priscilla, however,
left for Palawan in June 1989.
Sometime thereafter, Guillermo Francisco received a letter from Priscilla asking him to come to
Palawan to provide her company, the latter's husband having left for abroad as a seaman.
Consequently, Francisco came to Palawan sometime in August 1989 to live with Priscilla at the
Diaz Apartment in Puerto Princesa. Norma Francisco also came to Palawan in August, purportedly
to visit Priscilla's daughter, whom she missed. Analina likewise came to Palawan from Manila in
August.
Guillermo denies participation in the commission of the crime charged. In his testimony, he limits
his participation in the foundation's activities to paying the holders of matured slots. It was the
comptroller, Ruth Jalover, who would give him the record on which to base the remittances he
would make. 11 The money he disbursed was not always in his possession, as it would have to
come from the bank. It was Sylvia Magnaye who would withdraw the money from the bank while it
was Nelia Daco who would directly receive money from the people. Thus, not even once did he
participate in the process of receiving money. His daughters Priscilla Balasa and Normita Visaya
performed other jobs in the operation of the foundation while his other daughter, Analina
Francisco, only typed documents. He knew that the foundation helped people who received
money from it. 12 Although the primary purpose of the foundation was to help the needy, Guillermo
testified having knowledge of only one recipient thereof, the church of Aborlan.
In her testimony, Norma Francisco also denied complicity in the crime charged, claiming that she
only did household chores in Puerto Princesa. She alleged that sometimes, she would "help the
tellers." However, because Ruth Jalover was educated and she was not, the former would
sometimes become the "acting manager of her daughter." Sylvia Magnaye, her daughter's sister-
in-law and a permanent employee of the foundation, was one of the tellers who would deposit and
withdraw from the bank. The eight tellers of the foundation all applied for their jobs with Priscilla
but it was Normita who interviewed them. However, Normita was only a clerk in the foundation
while Analina would type whatever work Ruth Jalover would give her. While Norma had no official
position in the foundation, her husband, Guillermo, was the paymaster. During her stay in Puerto
Princesa, she knew of no other business that her daughter Priscilla was engaged in except the
foundation and a  paluwagan, which she ran together with a certain Manny Diaz. Norma knew that
the foundation was a charitable institution that had helped a lot of people. She did not help Ruth
Jalover in the same way that she helped Sylvia Magnaye with her job as teller, but she had
nothing to do with the keeping of records. She knew that money came from the tellers, who got the
money from Nelia Daco, the one receiving money from prospective investors. 13
On March 31, 1992, Branch 50 of the Regional Trial Court of Palawan issued a joint decision in
Criminal Case Nos. 8734 and 8428 finding the accused guilty of the crime charged and of having
acted in conspiracy in committing the same. Finding no aggravating or mitigating circumstances in
the commission of the crime, the trial court decreed thus:
WHEREFORE AND IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby
rendered finding all the accused in the 2 above-entitled cases guilty as principals of the crime of
estafa as the same is defined and penalized under the Revised Penal Code.
a. In Criminal Case No. 8428 accused Priscilla Balasa, Normita Visaya, Analina Francisco,
Guillermo Francisco and Norma Francisco are hereby sentenced to suffer the penalty of reclusion
perpetua as well as to pay the costs. The accused are jointly and severally ordered to pay the
offended party Alfonso Lacao the sum of Fifty Eight Thousand Eight Hundred Fifty (P58,850.00)
Pesos and to pay the further sum of Thirty Thousand Pesos (P30,000.00) as and for moral
damages;
b. In Criminal Case No. 8734, accused Normita Visaya, Analina Francisco, Norma Francisco and
Guillermo Francisco are hereby sentenced to suffer the penalty of reclusion perpetua as well as to
pay the costs. They are furthermore ordered jointly and severally to indemnify the offended party
Elisea Mensias the sum of Four Thousand Five Hundred (P4,500.00) Pesos as well as to pay the
additional sum of Fifteen Thousand (P15,000.00) Pesos as and for moral damages.
The cases against the accused Almarino Agayo, Paul Francisco, Candido Tolentino, Jr., Ricardo
del Rosario, Jessica Buaya, Fernando Cadauan, Lolita Gelilang Cynthia Ang, Rodolfo Ang Jr.,
Purable Espidol, Melinda Mercado, and Teresit Carandang who remained at large up to the
present time are hereby ordered archived to be reinstated in the docket of this Court as soon they
shall have been arrested or surrendered voluntarily to the jurisdiction of this Court.
SO ORDERED.
On the other hand, Branch 52 rendered separate decisions in the cases assigned to it. Thus, on
October 14, 1991, the trial court in Criminal Case No. 8429 rendered a decision, the dispositive
portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered finding co-accused PRISCILLA
BALASA, NORMITA VISAYA, GULLLERMO FRANCISCO, and NORMA FRANCISCO guilty
beyond reasonable doubt as co-principals of the crime of estafa committed by a syndicate in
violation of Section 1 of Presidential Decree No. 1689, and each of the aforenamed accused is
sentenced to reclusion perpetua; to pay to Estrella Lacao San Gabriel, jointly and severally, by
way of restitution, the sum of P5,500.00.00, with interest thereon of 12% per annum from
December, 1989, until fully paid; and to pay the costs.
On grounds of reasonable doubt engendered by lack of sufficiently clear and convincing evidence
as against her, co-accused Analina Francisco is acquitted of the offense charged.
SO ORDERED.
Although Branch 52 rendered separate decisions in the cases assigned to it, all had essentially the
same disposition - imposing the penalty of reclusion perpetua  upon each of the convicted accused
- only the name of the offended party and the amount to be restituted varied. Thus, in Criminal
Case No. 8704, 14 the trial court ordered the accused to pay Conchita Bigornia by way of
restitution, the amount of P24,200.00 with interest thereon of 12% per annum from December
1989. In Criminal Case No. 8749, 15 the same convicted accused were ordered to restitute Shiela
San Juan the amount of P25,800.00 plus 12% per annum from December 1989. In Criminal Case
No. 8751, 16 the convicted accused were ordered to restitute Benjamin Yangco the amount of
P6,800.00 with 12% interest per annum from December 1989.
Guillermo and Norma Francisco filed notices of appeal in Criminal Case Nos. 8429, 8704, 8749
and 8751. Their appeal was docketed as G.R. No. 106357. Likewise, the joint decision in Criminal
Case Nos. 8734 and 8428 was appealed to this Court by Guillermo Francisco, Norma Francisco,
Analina Francisco, and Normita Visaya, docketed herein as G.R. Nos. 108601-02. Noting Normita
Visaya's escape from police custody after arraignment, the Court, on August 15, 1994, and
pursuant to Section 8, Rule 124 of the Revised Rules of Court, ordered the dismissal of her appeal
on the ground of abandonment. The Court also considered Priscilla Balasa's conviction to be final
and executory, in light of her escape from police custody. It also ordered the issuance of a warrant
for the arrest of Normita Visaya and an alias  warrant of arrest against Priscilla Balasa.
On October 16, 1993, appellants' counsel, Atty. Agustin Rocamora, filed an appellants' brief in
G.R. No. 106357. Thereafter, appellants appointed the Maramba and Mamauag Law Office as
new counsel in substitution of Atty. Rocamora. On November 2, 1994, new counsel filed a motion
to consolidate G.R. No. 106357 and G.R. Nos. 108601-02. On December 7, 1994, the Court
granted the motion and ordered the consolidation of the two cases. On the same day, counsel for
appellants submitted a consolidated appellants' brief.
In G.R. No. 106357, counsel for appellants raise the following errors:
1. The trial court erred in convicting the appellants despite the total absence of evidence against
them;
2. The trial court erred in ruling that conspiracy existed on the basis of the relationship of the
appellants to the principal accused; and
3. The trial court erred in convicting appellants despite their prior conviction for the same offense
in Criminal Case No. 8429.
On the other hand, the brief filed by appellants in the consolidated cases mainly argues that they
cannot be convicted of the defined in Presidential Decree No. 1689 because the informations filed
against them alleged prejudice against the complaining witnesses, not against the national,
provincial, or city economy nor was evidence presented therefor.
Appellants' conviction must, however, be sustained, the issues raised being devoid of merit. The
number and diversity of issues raised by appellants impel us to discuss the points raised seriatim.
For the first assignment of error, we hold that the elements of the crime defined and penalized by
P.D. No. 1689 have been proven beyond reasonable doubt in these appealed cases. The
informations filed against appellants alleged that by means of false representation or false
pretenses and through fraudulent means, complainants were defrauded of various amounts of
money by the accused. Article 315, paragraph 2 (a) of the Revised Penal Code provides that
swindling or estafa by false pretenses or fraudulent acts executed prior to or simultaneously with
the commission of the fraud is committed by "using fictitious name, or falsely pretending to
possess power, influence, qualifications, property, credit, agency, business or imaginary
transactions, or by other similar deceits." The elements of estafa under this penal provision are: (1)
the accused defrauded another by means of deceit and (2) damage or prejudice capable of
pecuniary estimation is caused to the offended party or third party. 17 It is indisputable that the
foundation failed to return the investments of the complaining witnesses, hence it is undeniable
that the complainants suffered damage in the amount of their unrecouped investments. What
needs elucidation is whether or not the element of defraudation by means of deceit has been
established beyond reasonable doubt.
Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all
acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidence
justly reposed, resulting in damage to another, or by which an undue and unconscientious
advantage is taken of another. 18 It is a generic term embracing all multifarious means which
human ingenuity can device, and which are resorted to by one individual to secure an advantage
over another by false suggestions or by suppression of truth and includes all surprise, trick,
cunning, dissembling and any unfair way by which another is cheated. 19 On the other hand, deceit
is the false representation of a matter of fact whether by words or conduct, by false or misleading
allegations, or by concealment of that which should have been disclosed which deceives or is
intended to deceive another so that he shall act upon it to his legal injury. 20
In pursuit of their agenda, appellants established a foundation which, by its articles of
incorporation, was established, allegedly to "uplift members' economic condition by way of
financial or consultative basis." Organized as a non-stock, non-profit charitable institution, its funds
were to be obtained through membership dues and such other assessments as may be agreed
upon by its board of directors. 21 Furthermore, the modus operandi 22 of the foundation, duly signed
by Priscilla Balasa, provided that:
Funding
Any funding requirements to finance the operation of the association shall be done through the
collection of membership fees, dues, donations, bequests and other assessments. The amount of
which shall be subject to the approval of the general membership of the association.
Likewise, all funds in-flows would be used exclusively to carry out the purposes for which the
FOUNDATION is established and would not inure to the benefit of any single member of the
FOUNDATION.
The operations personnel shall come from volunteers among its members and should the need
arise, hiring of additional personnel be resorted to.
In contravention of these by-laws and modus operandi, the people behind the foundation enticed
people to "deposit or invest" funds in the foundation under a "double or treble your deposit"
scheme. These investment activities were clearly ultra vires acts or acts beyond the foundation's
authority. Evidently, SEC registration was obtained only for the purpose of giving a semblance of
legitimacy to the foundation; that the foundation's business was sanctioned by the government;
and that it was allowed by law to accept deposits. This pretension was carried out even on the
slots it issued, the foundations' S.E.C. registry number being indicated thereon.
In carrying out the charade, the manager went to the extent of delivering a speech and personally
encouraging people to deposit or invest in the foundation. Alfonso Lacao, a complainant and
prosecution witness, testified:
Q: Have you heard of this so called Panata Foundation?
A: Yes, ma'm I heard it from my friends who are talking about this Panata Foundation they even
informed me that the manager of this Panata Foundation is calling for a meeting for all depositors
and prospective depositors on Saturday afternoon.
Q: With that information did you get interested in the proposed meeting being called by this Panata
Foundation?
A: I was curious and came Saturday I went to the office of the Panata Foundation to attend the
meeting.
Q: And at that time where was this office located?
A: At Diaz Apartment, Manalo Extension, Puerto Princesa City.
Q: Did you attend that meeting?
A: Yes ma'am.
Q: Whom did you see sponsoring that meeting on that particular day?
A: Upon arrival I saw a woman delivering her message to the depositors and to the prospective
depositors. I asked a friend of me (sic) who is that woman and he informed me that she is the
manager of the Panata Foundation Priscilla Balasa.
xxx xxx xxx
Q: What was Priscilla Balasa doing if any in that particular meeting?
A: In her message she was convincing all the people there to make their deposit to the Panata
Foundation because according to her they were sent here to help the people of Puerto Princesa
City and the people of Palawan.
Q: Aside from that what did Priscilla Balasa tell those people who attended the meeting?
A: She was assuring the people that they must not be afraid to deposit their money because they
will not be fooling around with them.
xxx xxx xxx
Q: And did Priscilla Balasa tell those persons attending the meeting what would happen with the
money they will deposit with the Panata Foundation?
A: She was telling the people that you could deposit the money and it will be doubled within 21
days. I was further informed that the maximum amount to be deposited is P5,000,00.
Q: You stated a while ago that the amount deposited will be doubled after 21 days?
A: Yes ma'am.
Q: Aside from that what else if any did Priscilla Balasa tell the public who attended that meeting?
A: She was telling the public to make ease with their deposit because they were sent here to help
the people of Puerto Princesa City and Palawan.
Q: Did she tell the public as to where the money would be coming from?
A: Right that moment she was not able to tell the public. 23
On cross-examination, Mr. Lacao testified:
Q: But did it not occur to your mind considering your past experience to investigate or cause the
investigation of this Panata Foundation considering your connection as to whether they are in a
position to make double your money investment specially so they are not engage (sic) in business,
so to speak?
A: Once I overheard the manager say when she was there telling the people around the
depositors that their money is being invested in a world bank. 24
Priscilla Balasa, thus, promised the credulous public quick financial gains on their investments.
The foundation even printed brochures proclaiming the merits of the foundation's investment
scheme. 25 Likewise, to bolster the illusion that indeed, the foundation was legitimate, the claim
was made that deposits would be invested abroad in a world bank, with said transactions allegedly
enabling the foundation to double or treble depositors' investments. The evidence, however,
proves the contrary. Sylvia Magnaye, one of the tellers, testified:
Q: Other than to issue slots, do you know what other phase of operation in running the Panata
Foundation during the time that you were employed?
A: No sir, I can only observe that issuing of slots.
Q: Madam Witness, aside from issuing slots, there is only the activity of the foundation that you
are well aware of?
A: Sometimes they also sent me to deposit.
Q: The deposit of the amount collected in the bank, is that correct?
A: I do not know but they just send me to deposit amounts.
Q: But you do not know in what other business activity other than the matter of collecting money
and issuance of slots you do not know if the Panata Foundation is involved in any business
activity?
A: Yes, sir.
Q: You do not know whether the foundation receives money regularly from any other source?
A: I do not know sir. 26
On cross-examination, she testified:
Q: You mentioned Madam Witness, that on several occasions you were asked to deposit certain
amounts in the bank, do you remember having told the Court that?
A: Right, sir.
Q: Do you remember how many banks these deposited amounts were if you remember?
A: I deposited at PNB, PCIBank, and DBP and Rural Bank of Coron.
Q: Do you remember in whose names you deposited these amounts you deposited?
A: In the name of the joint account of Priscilla Balasa and Norma Francisco. 27
The testimonial evidence presented by the prosecution proves that appellants employed fraud and
deceit upon gullible people to convince them to invest in the foundation. It has been held that
where one states that the future profits or income of an enterprise shall be a certain sum, but he
actually knows that there will be none, or that they will be substantially less than he represents, the
statement constitutes actionable fraud where the hearer believes him and relies on the statement
to his injury. 28 That there was no profit forthcoming can be clearly deduced from the fact that the
foundation was not engaged nor authorized to engage in any lucrative business to finance its
operation. It was not shown that it was the recipient of donations or bequest with which to finance
its "double or triple your money" scheme, nor did it have any operating capital to speak of when it
started operations.
Parenthetically, what appellants offered the public was a "Ponzi scheme," an investment program
that offers impossibly high returns and pays these returns to early investors out of the capital
contributed by later investors. 29 Named after Charles Ponzi who promoted the scheme in the
1920s, the original scheme involved the issuance of bonds which offered 50% interest in 45 days
or a 100% profit if held for 90 days. Basically, Ponzi used the money he received from later
investors to pay extravagant rates of return to early investors, thereby inducing more investors to
place their money with him in the false hope of realizing this same extravagant rate of return
themselves. This was the very same scheme practiced by the Panata Foundation.
However, the Ponzi scheme works only as long as there is an ever-increasing number of new
investors joining the scheme. To pay off the 50% bonds Ponzi had to come up with a one-and-a-
half times increase with each round. To pay 100% profit he had to double the number of investors
at each stage, and this is the reason why a Ponzi scheme is a scheme and not an investment
strategy. The progression it depends upon is unsustainable. The pattern of increase in the number
of participants in the system explains how it is able to succeed in the short run and, at the same
time, why it must fail in the long run. This game is difficult to sustain over a long period of time
because to continue paying the promised profits to early investors, the operator needs an ever
larger pool of later investors. 30 The idea behind this type of swindle is that the "con-man" collects
his money from his second or third round of investors and then absconds before anyone else
shows up to collect. Necessarily, these schemes only last weeks, or months at most. 31
Note should also be taken of the fact that appellants used "slots" in their operation. These slots
are actually securities, 32 the issuance of which needs the approval of the Securities and Exchange
Commission. Knowing fully well that the S.E.C. would not approve the issuance of securities by a
non-stock, non-profit organization, the operators of the Ponzi scheme, nevertheless, applied for
registration as a foundation, an entity not allowed to engage in securities.
Finally, if the foundation were indeed legitimate, the incorporators, outside of the members of the
Francisco family, would not have escaped from the clutches of the law. If the foundation and its
investment scheme were legal, then it behooved them to come out and testify for their own
exoneration. The wicked flee when no man pursueth: but the righteous are bold as a lion. 33
In their defense, appellants would shift the blame on the investors. Invoking the legal principle
of caveat emptor, they maintain that it was the investors' own greed that did them in, implying that
the depositors should have known that no sensible business could afford to pay such extravagant
returns. Having investigated the foundation and its activities, the investors should fault themselves,
not the appellants, for investing in the foundation despite the patent impossibility of its claims.
The contention is untenable. The fact that the buyer makes an independent investigation or
inspection has been held not to preclude him from relying on the representation made by the seller
where the seller has superior knowledge and the falsity of such representation would not be
apparent from such examination or inspection, and, a fortiori, where the efforts of a buyer to learn
the true profits or income of a business or property are thwarted by some device of the seller, such
efforts have been held not to preclude a recovery. 34 It has often been held that the buyer of a
business or property is entitled to rely on the seller's statements concerning its profits, income or
rents. The rule - that where a speaker has knowingly and deliberately made a statement
concerning a fact the falsity of which is not apparent to the hearer, and has thus accomplished a
fraudulent result, he cannot defend against the fraud by proving that the victim was negligent in
failing to discover the falsity of the statement - is said to be peculiarly applicable where the owner
of the property or a business intentionally makes a false statement concerning its rents, profits or
income. The doctrine of caveat emptor has been held not to apply to such a case. 35
The second assignment of error is likewise devoid of merit. Appellants deny the existence of a
conspiracy in the perpetration of the fraudulent scheme, charging that mere relationship does not
prove conspiracy. Guillermo Francisco further maintains that he was not even an incorporator of
the foundation.
The evidence adduced by the prosecution confirms the existence of a conspiracy among the
appellants in committing the crime charged. The fact that Guillermo Francisco was not an
incorporator of the foundation does not make him any less liable for the crime charged. By his own
admission, he participated in the foundation's activities by serving as its paymaster. Because he is
father and husband to three of the organizers of the foundation, it is not farfetched to presume that
he was aware of its operations. By his active cooperation, he showed a community of design with
the incorporators of the foundation, thereby making him a co-conspirator and equally liable for the
crime charged. His voluntary and indispensable cooperation was a concatenation of the criminal
acts performed by his co-accused. 36 In this regard, appellant Guillermo Francisco is not being
implicated as a co-conspirator solely because he is the father of the principal proponent of the
Ponzi scheme. He is held liable as a conspirator because of his indispensable act of being the
paymaster of the foundation.
Likewise, Norma Francisco's bare denial cannot exempt her from complicity. Denials of an
accused cannot be accorded greater evidentiary weight than the positive declarations of credible
witnesses who testify on affirmative matters. 37 Moreover, her efforts to show that she was a mere
housewife who simply helped in her daughter's "business" is refuted by the prosecution witnesses.
Ruth Jalover testified:
Q: Madam Witness, do you know a person by the name of Norma Francisco?
A: Yes sir.
Q: And how did you come to Know her Madam Witness?
A: She is my co-employee at the Panata Foundation sir.
Q: What was her job in the Panata Foundation?
A: She was the one who received the money from our tellers every afternoon. 38
Sylvia Magnaye, on the other hand, testified:
Q: Madam Witness, do you know a person by the name of Norma Francisco?
A: Yes sir.
Q: How did you come to know her Madam Witness?
A: She is our former cashier sir.
Q: In the Panata Foundation?
A: Yes sir. 39
On cross-examination, she further testified:
Q: Now, I would like to direct your attention also to the other accused, Norma Francisco. You
stated that she is your cashier, do you remember having done that?
A: Yes sir.
Q: When you say she is the cashier, do you mean to say that she is the one who pays out money
or amounts to the employees Madam Witness?
A: Yes sir. 40
Aside from being the cashier, Norma Francisco was also an incorporator of the foundation.
Likewise, the money invested in the foundation was deposited in joint bank accounts in Priscilla
Balasa's name and hers. Norma Francisco's activities would thus show a community of design
with the other accused making her a co-conspirator and equally liable for the crime charged. Her
voluntary and indispensable cooperation concurred with the criminal acts performed by her co-
accused.
As for Analina Francisco, however, the evidence adduced as to her complicity in the nefarious
scheme is far from conclusive. While she was an incorporator and treasurer of the foundation,
there is no denying the fact that she is a deaf-mute. As such, she is incapable of communicating
and conveying her thoughts to the complaining witnesses and other depositors. This casts serious
doubt on whether she could be deemed to have similarly conspired and confederated with the
other accused. As Branch 52 pointed out, on paper she might have been in the thick of the
foundation's operation - being an incorporator and treasurer. We are not, however, convinced that
she was actually involved in the sinister scheme. In fact, she was given the manual task of typing
papers, despite her being the treasurer of the foundation. Her disability might have been the
principal reason for giving her that job - she was literally deaf and mute to the nefarious activities
going on in the foundation that she did not pose a danger to it. Furthermore, it is well settled that
where the acts of an accused are capable of two interpretations, that which is in consonance with
innocence should prevail.
With respect to the third assignment of error, appellants cannot raise the defense of double
jeopardy for which the following requisites must concur: (1) a first jeopardy must have attached
prior to the second; (2) the first jeopardy must have been validly terminated; (3) the second
jeopardy must be for the same offense, or the second offense includes or is necessarily included
in the offense charged in the first information, or is an attempt to commit the same or a frustration
thereof. 41 In the instant case, the offense charged in Criminal Case No. 8429 is different from the
offense charged in the other cases. While these cases arose out of the same scheme, the
fraudulent acts charged were committed against different persons, hence they do not constitute
the same offense.
Lastly, appellants assert that they cannot be convicted under P.D. No. 1689. They contend that
the following requisites must concur for conviction under P.D. No. 1689: (1) that estafa is
committed under Articles 315 or 316 of the Revised Penal Code; (2) by a syndication of five or
more persons; (3) against a) stockholders or members of rural banks, cooperatives, or samahang
nayon; b) corporations or associations the funds of which are solicited from the general public; and
(4) such defraudation erodes the confidence of the public in the banking and cooperative systems,
contravenes public interest, and (5) constitutes economic sabotage that threatens the stability of
the nation. 42
In support of their argument, appellants point out that there could not have been economic
sabotage under the facts of the case because the total amount of P125,400.00 allegedly
embezzled "by the other accused (not herein appellants)," did not weaken or threaten national
economic stability. To emphasize that point, appellants enumerate the revenue collections of
Palawan and Puerto Princesa City, "for dearth of a better reference," from 1987 to 1992 showing
that the revenue collections for 1989 alone amounted to P75,002,499,19. Appellants assert that as
compared to such revenue collection in 1989, the amount allegedly embezzled was negligible. As
such, the crime committed in this case was not of the same genre as the "Agrix" and "Dewey Dee"
scams that "spurred the birth of P.D. No. 1689. 43
Appellants, in a desperate attempt to avoid conviction, grasp at straws. The law upon which
appellants have been charged and convicted reads as follows:
PRESIDENTIAL DECREE NO. 1689
INCREASING THE PENALTY FOR CERTAIN FORMS OF
SWINDLING OR ESTAFA.
WHEREAS, there is an upsurge in the commission of swindling and other forms of frauds in rural
banks, cooperatives, "samahang nayon(s)", and farmers' associations or corporations/associations
operating on funds solicited from the general public;
WHEREAS, such defraudation or misappropriation of funds contributed by stockholders or
members of such rural banks, cooperatives, "samahang nayon(s)", or farmers' associations, or of
funds solicited by corporations/associations from the general public, erodes the confidence of the
public in the banking and cooperative system, contravenes the public interest, and constitutes
economic sabotage that threatens the stability of the nation;
WHEREAS, it is imperative that the resurgence of said crimes be checked, or at least minimized,
by imposing capital punishment on certain forms of swindling and other frauds involving rural
banks, cooperatives, "samahang nayon(s)", farmers' associations or corporations/associations
operating on funds solicited from the general public;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers vested in me by the Constitution, do hereby decree and order as follows:
Sec. 1. Any person or persons who shall commit estafa or other forms of swindling as defined in
Article 315 and 316 of the Revised penal Code, as amended, shall be punished by life
imprisonment to death if the swindling (estafa) is committed by a syndicate consisting of five or
more persons formed with the intention of carrying out the unlawful or illegal act, transaction,
enterprise or scheme, and the defraudation results in the misappropriation of moneys contributed
by stockholders, or members of rural banks, cooperatives, "samahang nayon(s)", or farmers
associations, or of funds solicited by corporations/associations from the general public.
When not committed by a syndicate as above defined, the penalty imposable shall be  reclusion
temporal to reclusion perpetua if the amount of the fraud exceeds 100,000 pesos.
Sec. 2. This decree shall take effect immediately.
DONE in Manila, Philippines, this 6th day of April, in the year of Our Lord, nineteen hundred and
eighty.
Under this law, the elements of the crime are: (a) estafa or other forms of swindling as defined in
Articles 315 and 316 of the Revised Penal Code is committed; (b) the estafa or swindling is
committed by a syndicate, and (c) defraudation results in the misappropriation of moneys
contributed by stockholders, or members of rural banks, cooperatives, "samahang nayon(s)," or
farmers associations, or of funds solicited by corporations/associations from the general public.
These are the only elements of the crime under Section 1 of the decree. The two other
"ingredients" added by appellants to constitute the crime of economic sabotage under P.D. No.
1689 have been taken from the "whereas" clause or preamble of the law. A preamble is not
exactly an essential part of an act as it is an introductory or preparatory clause that explains the
reasons for the enactment, usually introduced by the word "whereas." 44 In People v.
Purisima, 45 we explained that the preamble serves as the key to the intent and spirit of the decree.
It enumerates the facts or events justifying the promulgation of the decree. It enumerate the fact or
events justifying the promulgation of the decree and the sanctions for the acts prohibited therein.
As such, although it is an aid in interpretation, the preamble of an act or decree is not the law
subject thereof. Appellants' novel theory must, therefore, be given short shrift by this Court.
Assuming arguendo that the preamble was part of the statute, appellants' contention that they
should not be held criminally liable because it was not proven that their acts constituted economic
sabotage threatening the stability of the nation remains too flimsy for extensive discussion. As the
preamble of P.D. No. 1689 shows, the act prohibited therein need not necessarily threaten the
stability of the nation. It is sufficient that it "contravenes public interest." Public interest was
affected by the solicitation of deposits under a promise of substantial profits, as it was people
coming from the lower income brackets who were victimized by the illegal scheme.
Similarly, the fact that the entity involved was not a rural bank, cooperative, samahang nayon or
farmers' association does not take the case out of the coverage of P.D. No. 1689. Its third
"whereas clause" states that it also applies to other "corporations/associations operating on funds
solicited from the general public." The foundation fits into these category as it "operated on funds
solicited from the general public." To construe the law otherwise would sanction the proliferation of
minor-league schemers who operate in the countryside. To allow these crimes to go unabated
could spell disaster for people from the lower income bracket, the primary target of swindlers.
Again, P.D. No. 1689 penalizes offenders with life imprisonment to death regardless of the amount
involved, provided that a syndicate committed the crime. A syndicate is defined in the same law as
"consisting of five or more persons formed with the intention of carrying out the unlawful or illegal
act, transaction, enterprise or scheme." If the offenders are not members of a syndicate, they shall
nevertheless be held liable for the acts prohibited by the law but they shall be penalized
by reclusion temporal to reclusion perpetua if the amount of the fraud is more than one hundred
thousand pesos (P100,000.00).
In the instant case, a syndicate perpetrated the Ponzi scheme. The evidence shows that at least
five persons - Priscilla Balasa, Normita Visaya, Norma Francisco, Guillermo Francisco, and the
other incorporators of the foundation - collaborated, confederated and mutually helped one
another in directing the foundation's activities.
violation of the same law under the corresponding criminal cases. Appellant ANALINA
FRANCISCO is hereby ACQUITTED of the crimes charged under Criminal Case Nos. 8428 and
8734 on ground of reasonable doubt and her immediate release from custody is ordered unless
she is being held on other legal grounds.
Let a copy of this Decision be furnished the Department of Justice and the Philippine National
Police in order that the arrest of Priscilla Balasa, Normita Visaya and the others who have so far
eluded the law shall be effected with dispatch.
SO ORDERED.

In its decision in Criminal Case Nos. 8428 and 8734, Branch 50 found that the "accused
numbering 5 who composed the Francisco Family together with others acted and operated as a
syndicate as defined under P.D. No. 1689 and should be held liable therefor." 46 However, it
imposed the penalty of reclusion perpetua, the penalty imposable under the second paragraph of
Section 1 of P.D. No. 1689 - where the offenders are not members of a syndicate and the amount
involved is more than P100,000.00. The existence of a syndicate having been proved, the crime
falls under the first paragraph of Section 1 of P.D. No. 1689, with an imposable penalty of life
imprisonment to death. Hence, the imposition of reclusion perpetua is incorrect. Given the
absence of aggravating or mitigating circumstances, the lesser penalty, or life imprisonment,
should have been meted out. 47

Branch 52, likewise, ruled that the accused committed the offense of estafa by a syndicate under
P.D. No. 1689. Therefore appellants, due to the absence of mitigating or aggravating
circumstances, should have been punished with life imprisonment. However, in the dispositive
portion of its decision in the four cases assigned to it, Branch 52 imposed the penalty of reclusion
perpetua instead.

The Court finds this an opportune time to restate that the penalties of life imprisonment
and reclusion perpetua are not the same. Thus:

While "life imprisonment" may appear to be the English translation of reclusion perperua, in reality,
it goes deeper than that. First, "life imprisonment" is invariably imposed for serious offenses
penalized by special laws, while reclusion perpetua is prescribed under The Revised Penal Code.
Second, "life imprisonment," unlike reclusion perpetua, does not carry with it any accessory
penalty. Third, "life imprisonment" does not appear to have any definite extent or duration,
while reclusion perpetua entails imprisonment for at least thirty (30) years after which the convict
becomes eligible for pardon, although the maximum period thereof shall in no case exceed forty
(40) years. 48

WHEREFORE, premises considered, the decisions appealed from are hereby AFFIRMED in so
far as appellants GUILLERMO and NORMA FRANCISCO are convicted for violation of the first
paragraph of Section 1 of Presidential Decree No. 1689 and ordered to restitute to complainants
the amounts they have been defrauded, subject to the MODIFICATION that appellants
GUILLERMO and NORMA FRANCISCO shall each suffer the penalty of life imprisonment for each
 THIRD DIVISION received was more than P40,000.00. Because of the small amounts initially involved, Accused-
appellant and his wife were able to pay the returns on the investments as they fell due.
[G.R. No. 115054-66. September 12, 2000.]
Sometime during the first week of August 1989 accused-appellant and his wife, apparently to
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. VICENTE MENIL, JR., Accused- clothe their operations with legitimacy caused the incorporation of their business, under the name
Appellant. ABM Development Center Inc. with the Securities and Exchange Commission. As registered
under S.E.C Reg. No. 167274, 2 the ABM Development Center, Inc. was a non-stock corporation
DECISION with twelve (12) incorporators and trustees, including accused-appellant Vicente Menil, Jr. and his
wife Adriana B. Menil. Adriana B. Menil was likewise appointed as the treasurer of the non-stock
corporation. The corporation had a total capitalization of P12,000.00 and its purposes as stated in
GONZAGA-REYES, J.: its Articles of Incorporation, 3 are as follows:chanrob1es virtua1 1aw 1ibrary

"1. To assist in the total development of community members morally, physically, educationally
and economically and socially towards their present and future progress;
On appeal is the joint decision 1 dated 16 August 1993, of the Regional Trial Court of Surigao City,
Branch 30, in Criminal Case Nos. 2948, 2956, 3000, 3001, 3013, 3020, 3021, 3022, 3026, 3028,
2. To operate coordinate and/or organize community development centers;
3052, 3053, 3054, and 3058, convicting accused-appellant Vicente "Boy" Menil, Jr. of one (1)
count of large scale swindling and thirteen (13) counts of estafa.chanrob1es virtua1 1aw 1ibrary
3. To make or coordinate in the making of studies and researches;
The facts of the case are as follows:chanrob1es virtual 1aw library
4. To solicit, receive, channel and/or distribute donations, economic aids, grants, investments in
money or in kind;
Vicente Menil, Jr. and his wife, Adrian B. Menil, were the proprietors of a business operating under
the name ABM Appliance and Upholstery with offices at the Denso Building, Capitol Road,
5. To help train community members in newly acquired knowledge, modern trends and
Surigao City. On July 15, 1989, they, through ushers and sales executives began soliciting
techniques;
investments from the general public in Surigao City and its neighboring towns. They assured
would be investors that their money would be multiplied ten-fold after fifteen (15) calendar days. In
6. To promote brotherhood, fellowship and unity among ourselves; and
other words, if a person invested P100.00, they claimed that after fifteen (15) calendar days the
investor would get the amount of P1,000.00 in return. Each investor may invest a maximum
7. To negotiate, represent, and deal with government and other agencies for the benefit and in
amount of P1,000.00 for which they were reportedly assured a return of P10,000.00. With respect
behalf of the members as well as for the community."cralaw virtua1aw library
to their ushers and sales executives, they were given a 10% commission from the total amounts
they remitted to the business.
On August 15, 1989 accused-appellant and his wife held a meeting with the sales executives and
ushers of the ABM Development Center,, Inc. at the Provincial Convention Center. At this
The people who invested in the business were issued coupons which merely indicated the date of
meeting, Accused-appellant informed the sales executives that the business of ABM Development
entry, the due date of the investment, the amount given, the amount to be received, the name and
Center, Inc. was proceeding normally and that investments were coming in. He advised the sales
address of the investor and the name of the sales executive. Sales executives appointed, by
executives however that beginning that date, all Investments accepted by the business would only
accused-appellant were given these coupons which they in turn, gave to the people they solicited
have returns of 1.7 which investors will receive after fifteen (15) working days excluding weekends
from as proof of their investment. The sales executives likewise wrote down on a piece of yellow
and holidays. As such if a person gave P100.00, his Investment will mature only after fifteen (15)
pad paper the details of the investments they received during a particular day. These sales
working days and he will receive only P700.00. This change of policy was contained in a
executives were required to remit the investments they collected daily at the offices of ABM
Memorandum dated August 24, 1989. 4
Appliance and Upholstery by presenting the money and the yellow pad containing the names of
the investors. A representative of ABM Appliance and Upholstery then received the money and
After this August 15, 1989 meeting, the sales executives continued accepting Investments from
signed the yellow pad paper. The sales executives were then immediately given their 10%
the general public and the offices of accused-appellant kept on accepting the remittances of the
commission from the amount remitted. When the investments matured, a lump sum representing
sales executives. By this time daily investments amounting to millions of pesos were pouring into
the total return of the investments were given to the sales executives who were given the task of
the offices of ABM Development Center, Inc. and payments of the returns became delayed.
distributing them to the investors they dealt with.
Allegedly due to the delay in the counting of the money for release to investors, the payments
which were set for release on August 28, 1989 were completely paid only on September 18, 1989.
Initially, the operation started with a few investors who invested small amounts. On the day of the
start of the operations, for example, less than P200.00 were invested at their offices. Gradually.
On September 19, 1989 the ABM Development Center, Inc. stopped releasing payments. The
the amounts invested and the number of depositors increased. On June 30, 1989 alone the
sales investors went to the offices of ABM Development Center Inc. to inquire about the release of
business was able to attract more than 200 investors and the total amount of investments they
payments but there was no one around to address their complaints. The whereabouts of accused-
appellant and his wife was also unknown.
On October 10, 1989, Accused-appellant and his wife made an announcement over the radio that
payments were forthcoming and that the investors should have no cause for alarm. They also
repeated their announcement on television. Despite these assurances and despite repeated
demands made by the investors, Accused-appellant released no further payments and neither did
he refund any investment remitted to him. Accused-appellant and his wife went into hiding in
Davao City but eventually they were arrested by police authorities led by a certain Colonel
Panchito.
Consequently a case for large scale swindling was filed by the City Prosecutor of Surigao City
against the accused-appellant and his wife. Additionally, twenty cases for estafa were filed against
accused-appellant and his wife by the Provincial Prosecutor’s Office. Of these twenty (20) cases,
seven (7) were provisionally dismissed on October 21, 1991 for failure to prosecute.chanrob1es
virtua1 1aw 1ibrary
In Criminal Case No. 2948, the information 5 charging accused-appellant and his wife with the
crime of large scale swindling was filed on December 14, 1989. The information in this case reads
as follows:jgc:chanrobles.com.ph
"That in or about the month of August, 1989, and/or sometime prior or subsequent thereto, in the
city of Surigao, Philippines, and within the jurisdiction of this Honorable Court, the above-named
accused, conspiring and confederating together and mutually helping one another, did then and
there willfully, unlawfully and feloniously defraud thousands of investors using as instruments
innocent and defrauded sales executives and/or ushers, in the following manner to wit the above-
named accused, pretending to possess credit, property and a secret formula in their pyramiding
business scheme, enticed the general public to invest with ABM Development Center,
Incorporated, thru false manifestations and representations that the amount they would invest
would earn seven hundred percent (700%) after fifteen (15) working days from date of investment,
by which enticing offer, the general public was persuaded to invest large sums of money thru the
innocent sales executives and/or ushers amounting to more than ONE HUNDRED THOUSAND
PESOS (P100,000.00), Philippine Currency, which were duly remitted to and received by the
accused doing business under the name and style ABM Development Center, Incorporated, which
was the front of their illegal transactions, but the accused once in the possession of the amounts
invested and far from complying with their aforesaid obligation with deceit aforethought,
misapplied, misappropriated, converted and absconded the amounts received as investments to
their own personal use and benefit and despite repeated demands made for the payment of the
benefits of the investments and/or the return of the amounts invested, said accused failed and
refused, and still fail and refuse to do so, to the damage and prejudice of the investors in such
sums as may be proven and such other damages as may be allowed by law.
Contrary to Article 315 of the Revised Penal Code, in relation to paragraph 2 of Presidential
Decree No. 1689."cralaw virtua1aw library
In Criminal Case No. 2956, Accused appellant and his wife were charged with violation of Article
315 of the Revised Penal Code. The information in this case reads as
follows:jgc:chanrobles.com.ph
"That from July 26, 1989 to September 13, 1989, at Placer, Surigao del Norte, Philippines . . . the
above-named accused . . . with deliberate criminal intent to defraud the general public by
pretending to have a huge amount as sinking fund but later on was found out to be a pyramiding
scam, Accused Vicente Menil, Jr. being the Manager, and his wife accused Adriana B. Menil being
the Treasurer of their association known as ABM Development Center Inc., . . . operating on funds
solicited from the general public in the form of investments with the enticing return of 10 times then
later reduced to 7 times the Investment after due date and having successfully solicited thru their
sales executive, Zohar Mondaya the total amount of P610,046.00, did then and there . . .
misappropriate . . . the said amount . . . remitted to them subject to the condition that . . . after the
lapse of 15 working days from remittance, said investment would be returned in seven folds to the
Investors, but . . . repeated demands made . . . said accused failed and refused to pay or give as
agreed upon by them . . . to the damage and prejudice of the investors in the said amount
P610,046.00 . . . resulting to more financial difficulties of the general public and therefore
constitutes economic sabotage that threatens the stability of the nation.
Contrary to Art. 315 of the Revised Penal Code." 6
Similarly worded informations were filed against the accused-appellant and his wife in Criminal
Case Nos. 3000, 3001, 3013, 3020, 3021, 3022, 3026 3028, 3052, 3053, 3054 and 3058. These
Informations likewise charged accused-appellant and his wife with violations of Article 315 of the
Revised Penal Code and differed only in the amount allegedly swindled, the names of the
complainants and the sales executives, and the time and place where the alleged swindling
occurred.chanrob1es virtua1 1aw 1ibrary
Accused-appellant and his wife, upon being arraigned on April 4, 1990, pleaded not guilty to all the
charges leveled against them. 7
In the case for large scale swindling and in the thirteen (13) cases for estafa, a pre-trial was
conducted. The pre-trial order 8 in Criminal Case No. 2948, for large scale swindling, shows the
following stipulations:chanrob1es virtual 1aw library
1. That the accused Vicente Menil, Jr. and Adriana Menil are the General Manager and Treasurer.
respectively of the ABM Appliances and Upholstery with Assurances and Privileges which later on
changed to ABM Development Center;
2. That the ABM Development Center was operating business in Surigao City, particularly at the
Capitol Road, that it was duly registered with the Securities and Exchange Commission and was
duly issued a Mayor’s Permit to operate the same;
3. That the ABM Appliances and Upholstery with Assurances and Privileges, and later ABM
Development Center were merged into one, under one sanitary permit to operate as one entity,
4. That on August 24, 1989, Vicente Menil Jr., the General Manager, issued a Memorandum to all
investors thereof regarding the decrease of the proceeds of the investment from one thousand
percent to 700% so that the P10.00 investment will get only the proceeds of P70.00; and;
5. That what remain to be proved in the trial on the merits will be limited only to the names of the
sales executives/investors and amounts of investment.
For the thirteen estafa cases, the following-facts were stipulated:chanrob1es virtual 1aw library
1. That the accused operated the ABM Appliance and Upholstery with Assurance Privileges and
ABM Development Center, Inc., the latter being duly registered with the Securities and Exchange
Commission;
they remitted to ABM and which remained unpaid. Following is a summary of the amounts that
these witnesses claim as having been duly received by ABM for investment purposes and which
remained unpaid to date:chanrob1es virtual 1aw library
CRIMINAL WITNESS PLACE AMOUNT

2. That accused Vicente Menil, as General Manager, and Adriana Menil, as Treasurer, operating CASE NO.
through the sales executives who solicited/received investments from the general public and
remitted to the corporation; 2956 Zohar Mandaya Placer, Surigao del Norte P610,046.00

3. That the listed sales executives and the amounts claimed remitted and received the qualifiedly 3000 Cedronio Cagampang Bacuag, Surigao del Norte P136,670.00
admitted; and
3001 Joseph Lacsamana Brgy. del Rosario, Tubod, P203,850.00
4. That the operation of ABM stopped on September 18, 1989. 9
Surigao del Norte
Thereafter trial on the merits in the fourteen (14) cases commenced.
3013 Domingo T. Tejada Brgy Anislagan, Placer, P29,070.00
During the trial of the case, Accused Adrian B. Menil, the wife of accused-appellant died of
tuberculosis on November 5, 1992 and accordingly the trial court dismissed the cases as against Surigao del Norte
her in an Order dated November 12, 1992. 10
3020 Rosiefe M. Laid Brgy. Sta. Cruz, Placer, P114,620.00
In all the fourteen (14) cases before the trial court the documentary evidence for the prosecution
was similar, consisting mainly of the investment records containing a listing of remittances made Surigao del Norte
by the sales executives/ushers of ABM Appliance and Upholstery and ABM Development Center,
Inc. Likewise, the testimonial evidence for the prosecution consisted mainly of the testimonies of 3021 Gamaliela-Mordeno Brgy. Roxas, Mainit, P447,960.00
the sales executives/ushers of ABM Appliance and Upholstery and ABM Development Center Inc.
who testified on the mode of operations the respective amounts which they solicited from the Surigao del Norte
public and the places where they solicited. 11
3022 Rebecca Mosca Brgy. Poblacion, Mainit, P275,280.00
In Criminal Case No. 2948, for violation of P.D. 1689, due to the large number of witnesses listed
in the complaint and Information (91 in all), the prosecution and defense agreed to limit the Surigao del Norte
number of witnesses to only four (4) sales executives.
3026 Patora Decalit Brgy. Sta. Cruz, Placer, P222,120.00
These witnesses, namely Felicitas Gotostos, Gloria Apale, Wilfredo Lisandra and Nena Cagna-an,
uniformly declared that they were sales executives and investors appointed by accused-appellant Surigao del Norte
Vicente Menil, Jr. to solicit investments from people in Surigao City. Witness Felicitas Gatostos
claimed that she remitted a total of P257,180.00. Gloria Apale turned over investments totaling 3028 Francisca Tado Tubod, Surigao del Norte P399,650.00
P1,897,619.00 while Nena Cagna-an claimed to have remitted a total of P94,120.00. Finally,
witness Wilfredo Lisondra allegedly turned over investments totaling P1,124,358.00. These 3052 Porferia Etac Brgy Bad-as, Placer P172,910.00
amounts were listed on sheets of paper which were marked and acknowledged received by
representatives of the ABM office. These four investments were included in a Summary of Total Surigao del Norte
Investments presented by the prosecution containing the names of 1,124 sales executives and/or
investors who all in all remitted a total amount of P45,494,936.00.chanrob1es virtua1 1aw 1ibrary 3053 Leodegaria Paquero Brgy. Marga, Tubod P148,278.00

For the thirteen (13) estafa cases, the prosecution presented the thirteen complainants who were Surigao del Norte
sales executives and/or Investors of ABM assigned to the different barangays and municipalities in
Surigao del Norte where ABM collected investments. They all testified on the modus operandi 3054 Felomina Calamba Tubod, Surigao del Norte P320,000.00
employed by accused-appellant in conducting his "investment business" and they identified
documents which showed the names of the investors they solicited from and the amounts which 3058 Merlina Silva Brgy Bad-as, Placer P500,129.00
Accused Vicente Menil Jr. put up a common defense in all the cases filed against him.
He testified that his investment business started on June 15, 1989 in Surigao City. 12 He insists
that his investment business was legitimate as his corporation was registered with the Securities
and Exchange Commission. He pointed out that under paragraphs 3 and 4 of the Articles of
Incorporation of ABM Development Center, Inc. he was authorized to solicit and receive
investments in money and in kind. He also presented a Mayor’s Permit which he claimed
authorized him to run the business. 13
In answer to a question as to how his business operates the accused-appellant described it as a
rolling system" which paid off dividends in the ratio of one is to ten initially and then one is to seven
beginning August 15, 1989. 14 He claimed to have paid off these Investments as they matured
beginning June 30, 1989 and that he was able to pay off all investments received by his office
which matured on August 28, 1989 and earlier. 15 He stated however, that because of the large
amounts involved he was able to pay off the investments maturing on August 28, 1989 only on
September 18, 1989 as the counting of the money alone took two or three days to finish. 16
He alleged that he stopped giving payments after September 18, 1989 due to circumstances
beyond his control. He claimed that on September 19, 1989, he and his wife were fetched by a
certain Lt. Arab and were brought to the PC Headquarters where a certain Col. Macatangcop
questioned them as to the delay in the payment of investments. He was then mauled by a certain
Lt. Arab and two sons of Col. Macatangcop when he refused to issue to them a check for
P500,000.00. He was released by Col. Macatangcop only after he issued a check for P250,000.00
and after he promised that he will not submit himself to a medical examination. 17
After his experience with Col. Macatangcop, he proceeded back to his office to rest and to plan his
next course of action. He then went to the Provincial Hospital in order to have his injuries checked.
He was able to secure a medical certificate attesting to the injuries that he sustained. 18 While at
the hospital, he heard rumors that he was being hunted by the military and so he transferred to the
Miranda Clinic Thereafter, he went to Toril. Davao City where he was arrested by a certain Col.
Panchito. 19
He stated that while in Davao City, a certain Sgt. Patino ransacked his belongings and took away
his attaché case containing P50,000.00 in cash, several pieces of jewelry, watches, a camera, and
an undisclosed amount in British pounds and American dollars. All in all, he claimed that he lost a
total of half a million pesos. 20 He further stated that he left around P3,000,000.00 inside a steel
cabinet in his office which had been taken into the custody of the city sheriff. When he checked the
contents with the sheriff’s office, he stated that the steel cabinet had been forcibly opened and the
money was now missing. 21
He further alleged that he had money in the Surigao City Banks amounting to half a million pesos
but he gradually withdrew this amount to pay off his obligations. At this point, he could no longer
pay off all his financial obligations as he had no more money and because he was detained at the
Surigao City jail. 22
On August 16, 1993, the trial court rendered a joint decision 23 finding accused-appellant guilty of
one count of large scale swindling and thirteen (13) counts of estafa. The dispositive portion of the
joint decision provides, as follows:jgc:chanrobles.com.ph
"WHEREFORE, this Court hereby finds accused Vicente Menil, Jr. GUILTY beyond reasonable
doubt of Estafa, defined and penalized in Article 315, first paragraph and Sections 1(b) and 2(a) of
the Revised Penal Code, in all the above-entitled thirteen (13) provincial cases and one (1) city
case, and accordingly, hereby sentences him, the following penalties:chanrob1es virtual 1aw
library
Crim. Case No. 2948:chanrob1es virtual 1aw library
The qualified penalty provided for in second paragraph of Section 1, Presidential Decree No.
1689, for Large Scale Swindling, and metes out an imprisonment of reclusion perpetua; and to
indemnify all the listed investors in Exhibits "PP-1" to "PP-2", in the total sum of P45,494,936.00,
Exhibit "PP" ; to suffer the accessory penalties provided for by law; and to pay the costs.
Crim. Case No. 2956:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-5" to "A-188", in the amount of
P624,726.00; to suffer the accessory penalties provided for by law; and, to pay the
costs.chanrob1es virtua1 1aw 1ibrary
Crim. Case No. 3000:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A" to "A-27", the sum of P136,670.00; to
suffer the accessory penalties provided for by law; and to pay the costs.
Crim. Case No. 3001:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-83", the sum of P203,850.00; to
suffer the accessory penalties provided for by law; and, to pay the costs.
Crim. Case No. 3013:chanrob1es virtual 1aw library
An indeterminate penalty of Two (2) years, Four (4) Months of prision correccional, as the
minimum, to Eight (8) years of prision mayor, as the maximum; to indemnify the investors listed in
Exhibits "A-1" to "A-8" the sum of P29,070.00; to suffer the accessory penalties provided for by
law and, to pay the costs.
Crim. Case No. 3020:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-126" the sum of P114,620.00; to
suffer the accessory penalties provided for by law; and, to pay the costs.
Crim. Case No. 3021:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-126" the sum of P447,960.00; to
suffer the accessory penalties provided for by law; and, to pay the costs.
Crim. Case No. 3022:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-64" the sum of P275,280.00; to
suffer the accessory penalties provided for by law; and, to pay the costs.
Crim. Case No. 3026:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-28" the sum of P222,120.00; to
suffer the accessory penalties provided for by law; and, to pay the costs
Crim. Case No. 3028:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-74" the sum of P399,650.00; to
suffer the accessory penalties provided for by law and. to pay the costs.
Crim. Case No. 3052:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion temporal
to indemnify the investors listed in Exhibits "A-1" to "A-26" the sum of P172,910.00; to suffer the
accessory penalties provided for by law; and to pay the costs.
Crim. Case No. 3053:chanrob1es virtual 1aw library
An indeterminate penalty of Two (2) Year and Four (4) Months of prision correccional, as the
minimum, to Eight (8) years of prision mayor; to indemnify the investors listed in Exhibits "A-1" to
"A-17" the sum of P36,970.00: to suffer the accessory penalties provided for by law and to pay the
costs.
Crim. Case No. 3054:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-198" the sum of P920,883.00; to
suffer the accessory penalties provided for by law; and, to pay the costs.
Crim. Case No. 3058:chanrob1es virtual 1aw library
An indeterminate penalty of Eight (8) years of prision mayor to Twenty Years of reclusion
temporal; to indemnify the investors listed in Exhibits "A-1" to "A-150" the sum of P500,129.00; to
suffer the accessory penalties provided for by law; and, to pay the costs.
Without subsidiary imprisonment, in case of insolvency.
Pursuant to Article 70, the penalty of reclusion perpetua shall be served first and; thereafter, the
simultaneous service of the penalties imposed in the thirteen (13) provincial cases. Provided,
however, that the maximum period shall in no case exceed Forty (40) Years, after applying the
three-fold rule length of time, corresponding to the most severe of the penalties imposed, which is
reclusion perpetua, computed at Thirty (30) years.
The accused’s preventive detention shall be credited in his favor, pursuant to law.chanrob1es
virtua1 1aw 1ibrary
SO ORDERED. 24
Hence this appeal where accused-appellant raises the following assignment of errors.25cralaw:red
I.
THE COURT A QUO ERRED IN NOT DECLARING AS PURELY CIVIL THE LIABILITY OF
ACCUSED-APPELLANT TO THE PRIVATE COMPLAINANTS/INVESTORS.
II.
THE COURT A QUO MANIFESTLY ERRED IN CONVICTING ACCUSED-APPELLANT FOR
LARGE SCALE SWINDLING UNDER P.D. 1869 IN CRIM. CASE NO. 2948 AND ESTAFA IN
CRIM. CASE NOS. 2956-3058 RESPECTIVELY, DESPITE THE FACT THAT HIS GUILT WAS
NOT PROVED BEYOND REASONABLE DOUBT
We affirm the conviction of Accused-Appellant.
In convicting accused-appellant of the crimes of Large Scale Swindling punishable under P.D.
1689 in Criminal Case No. 2948 and estafa in the thirteen other criminal cases filed against
accused-appellant the trial court made reference to Article 315 par. 2 (a) of the Revised Penal
Code. Under this provision, swindling or estafa by false pretenses or fraudulent acts executed
prior to or simultaneously with the commission of the fraud is committed by "using fictitious name,
or falsely pretending to possess power influence, qualifications, property, credit, agency; business,
or imaginary transactions, or by other similar deceits." The elements of estafa under this penal
provision are; (1) the accused defrauded another by means of deceit and (2) damage or prejudice
capable of pecuniary estimation is caused to the offended party or third party. 26
In the case at bench it is not disputed that the accused-appellant failed to pay the expected returns
of the investments and/or solicitations of the private complainants. Accused-appellant himself
admits that he was not able to pay the returns on the investments due August 29, 1989 onwards.
Neither did he return the amount of their investments. Thus:jgc:chanrobles.com.ph
"Q: Okay. All right, you know this Crim. Case No. 3053, one Leodegaria Paquero claims that she
had invested the amount of P36,970.00 duly acknowledged as to have been received by the ABM.
Can you tell, Mr. Menil, what happened to this investment made by the said Leodegaria Paquero?
Court:chanrob1es virtual 1aw library
What municipality is that?
Pros. Calang.
Tubod, Barangay Marga, your Honor please.
Atty. Canoy
I would like to request counsel to pinpoint your honor please, the amount?
Pros. Calang
On pages 31-45 inclusive, on record.
Q What happened to her Investment of P36,970.00?
A It was included in the damage when the business was closed.
Q Meaning to say, not paid?
A Not paid sir.
Q Even the total amount of investment was not returned?
A Yes it was not returned, sir.
Q In Crim. Case No. 3000, one Cedronio Cagampang claims that he had invested to the ABM
Development Center, Inc. as usher as well as investor in the amount of P136,670.00 turned over
and received by the ABM Development Center, Incorporated. Kindly tell this Honorable Court what
happened to this investment?
A This one which was not yet due or arrived to its due date so this was not paid.
Atty. Canoy
Your honor please, I think there is no need to present the same because it is admitted, your Honor
that all monies invested and which became due after August 28 were not received.chanrob1es
virtua1 1aw 1ibrary
Court
Yes, that is why there is that manifestation. So we will save time the same is true with the other
cases where it was shown that the money were invested and due after August 28." 27
What needs to be determined therefore is whether or not the element of defraudation by means of
deceit has been established by the prosecution beyond reasonable doubt.
Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all
acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidence
justly reposed, resulting in damage to another, or by which an undue and unconscientious
advantage is taken of another. 28 It is a generic term embracing all multifarious means which
human ingenuity can devise and which are resorted to by one individual to secure an advantage
over another by false suggestions or by suppression of truth and includes all surprise, trick,
cunning, dissembling and any unfair way by which another is cheated. 29 On the other hand,
deceit is the false representation of a matter of fact, whether by words or conduct, by false or
misleading allegations, or by concealment of that which should have been disclosed which
deceives or is intended to deceive another so that he shall act upon it to his legal injury. 30
With these legal doctrines in mind, we hold that the testimonial and documentary evidence
presented by the prosecution, as well as the admissions made by accused-appellant, sufficiently
prove that accused-appellant employed fraud and deceit upon gullible people to induce them to
invest in his "business." The inducement consisted of accused-appellant’s assurance that money
invested in his "business" would have returns of 1000%, later reduced to 700%, after 15 days.
Lured by the false promise of quick financial gains on their investments, the unsuspecting people
of Surigao del Norte readily turned over their hard-earned money to the coffers of ABM.
It has been held that where one states that the future profits or income of an enterprise shall be a
certain sum, but he actually knows that there will be none, or that they will be substantially less
than he represents, the statements constitute an actionable fraud where the hearer believes him
and relies on the statement to his injury. 31 In the case at bench, it is abundantly clear that
ultimately, the profits which accused-appellant promised to his investors would not be realized.
Accused-appellant admitted during his testimony that the money he used to pay of maturing
investments were taken from the remittances received by ABM Development Center, Inc.
Thus:chanrob1es virtual 1aw library
Q As far as you can recall as of June 30, 1989, how much investments were already made or
received by your office?
A More than forty thousand pesos.
Q Your first due date was June 30, 1989 you said, the returns is estimated to be more than one
thousand pesos?
A Yes, sir
Q Where do you get this one thousand pesos for the investment due on June 30, 1989 is it not
that you get it from the investment of the previous days?
A That is the amount that I’m going to use. But I also have my own funds.
Q How much was your funds as of June 30, 1989?
A Two Hundred Fifty Thousand (P250,000.00) Pesos.
Q The investments that were due on July 1, 1989, the money that you are to pay for these returns
were taken from the previous days, correct?
A Yes, sir.
Q The same is true with the investments due on July 2, you get all the money to pay from the In other words, Accused-appellant merely paid the returns of maturing investments from the
investments made in the previous days correct? remittances of succeeding investors. What accused-appellant actually offered to the public was a
"Ponzi Scheme," an unsustainable investment program that offers extravagantly high returns and
A Yes, sir. pays these returns to early investors out of the capital contributed by later investors. In People v.
Balasa, 33 we had occasion to describe the workings of the "Ponzi Scheme" as
Q And the same thing is followed on the days after? follows:jgc:chanrobles.com.ph

A Yes, sir. "Named after Charles Ponzi who promoted the scheme in the 1920’s, the original scheme involved
the issuance of bonds which offered 50% interest in 45 days or a 100% profit if held for 90 days.
Q Your last due date was August 28? Basically, Ponzi used the money he received from later investors to pay extravagant rates of
return to early investors, thereby inducing more investors to place their money with him in the false
A Yes, sir. hope of realizing this same extravagant rate of return themselves. This was the very scheme
practiced by the Panata Foundation.
Q Again the returns for these date were taken from the previous days, from the investments of the
people from the previous dates? However, the Ponzi scheme works only as long as there is an ever-increasing number of new
investors joining the scheme. To pay off the 50% bonds Ponzi had to come up with one-and-a-half
A Yes, sir. times increase with each round. To pay 100% profit, he had to double the number of investors at
each stage, and this is the reason why a Ponzi scheme is a scheme and not an investment
x           x           x strategy. The progression it depends upon is unsustainable. The pattern of increase in the number
of participants in the system explains how it is able to succeed in the short run and, at the same
time, why it must fail in the long run. This game is difficult to sustain over a long period of time
Q On August 29, were there still investments? because to continue paying the promised profits to early investors, the operator needs an ever
larger pool of later investors. The idea behind this type of swindle is that the conman collects his
A There was still investment on that date, sir, but as far as I know there were so many releases on money from his second or third round of investors and then absconds before anyone else shows
that day. I paid up to September 18. But on September 19, there was already an incident that up to collect. Necessarily these schemes only last weeks, or months at most."cralaw virtua1aw
happened. library

Q The returns you made of investments on September 18, when was that investment made?
A From the previous investments.
Q My question is: Those amounts you paid on September 18, when was . . . were those amounts
invested, do you agree that it was also fifteen days before?
A Every due date we completely paid it. Every due date, we paid completely before going to the
next day. Due date, for example, it was delayed because it was delayed in counting money. For
example, the one hundred thousand pesos, it takes time in counting that one hundred thousand
pesos.
Q Are we to understand from you, Mr. Witness, that the returns of the investments due on August
28 were already paid on August 28?chanrob1es virtua1 1aw 1ibrary
A Yes, sir.
Q And the money that you used in paying these returns were also taken from the previous days,
from the investments of the people?
A Yes, sir. 32
That there was no profit forthcoming can likewise be deduced from the fact that accused-appellant
was not engaged nor authorized to engage in any lucrative business to finance its operation. On
this point accused-appellant points out that under the Articles of Incorporation of ABM
Development Center, Inc., he was authorized to make or coordinate in the making of studies and
researches" and "to solicit, receive, channel and/or distribute donations, economic aids, grants
investments in money or in kind. Likewise, he presented a Mayor’s Permit that he claimed
authorized him to engage in the investment business.
There is no merit in these contentions of Accused-Appellant. As proven by the prosecution the
incorporation of the ABM Development Center, Inc. on August 21, 1989 was undertaken by
accused-appellant only to give a semblance of legitimacy to its illegal operations. Accused-
appellant started receiving investments from the public as early as July 15, 1989 and yet it was
only after he was warned by a representative of the Department of Trade and Industry that his
operation was illegal that he went about with the business of incorporating his moneymaking
scheme. 34 Moreover, as borne out by the Articles of Incorporation, the ABM Development
Center, Inc. was incorporated as a non-stock corporation. As a non-stock corporation, ABM
Development Center, Inc. may only be formed or organized for charitable, religious, educational
professional, cultural, fraternal, literary, scientific, social, civic, or other similar purposes. 35 It may
not engage in undertakings such as the investment business where profit is the main or underlying
purpose. Although the non-stock corporation may obtain profits as an incident to its operation such
profits are not to be distributed among its members but must be used for the furtherance of its
purposes. 36 In the same vein, the Mayor’s Permit issued to accused-appellant shows that he was
only permitted to "act as dealer of appliances and upholstery." The permit did not give accused-
appellant authority to engage in the investment business.
Finally the fact that accused-appellant could not present any specific business plan or cite any
donations or bequests which he received to finance his money-making scheme clearly shows that
the investment scheme which he foisted on the unsuspecting public was fraudulent. It must be
noted that according to the Articles of Incorporation of ABM Development Center, Inc., its paid-up
capital was only P11,000.00 and yet it was able to transact business in terms of millions of pesos.
It must likewise be stressed that accused-appellant refused to answer when asked about the
specifics of his business and about how he would be able to fulfill his obligation of paying the
promised exorbitant rates of return.
In his defense, Accused-appellant points to the fact that several investors were paid the
corresponding returns on their investments. This fact, Accused-appellant argues, negates any
perceived false pretense or deceit on his part and as such, his liability; if any should only be civil in
nature.chanrob1es virtua1 1aw 1ibrary
There is no merit en this argument. As previously explained, the payment of returns to early
investors is an integral part of the illegal Ponzi scheme foisted by accused-appellant on the
unsuspecting public. The fact that early investors were paid the returns on their investments
induced more people to participate in the illegal scheme with the hope of realizing the same
extravagant rate of return. In fact, after word of these payments spread like wildfire, the amount of
investments received by accused-appellant ballooned from thousands of pesos to several millions
of pesos.
The prosecution having proved the two elements of damage and deceit in all the cases filed
against accused-appellant, the trial court thus committed no error in finding accused-appellant
guilty of one count of large scale swindling and thirteen (13) counts of estafa. The Court notes,
however, that the penalties imposed by the trial court are erroneous.
In Criminal Case No. 2948, Accused-appellant was charged with violation of P.D. 1689 and
sentenced to imprisonment of reclusion perpetua Section 1 of the said law provides as
follows:jgc:chanrobles.com.ph
"SECTION 1. Any person or persons who shall commit estafa or other forms of swindling as
defined in Articles 315 and 316 of the Revised Penal Code, as amended, shall be punished by life
imprisonment to death if the swindling (estafa) is committed by a syndicate consisting of five or
more persons formed with the intention of carrying out the unlawful or illegal act, transaction,
enterprise or scheme, and the defraudation results in the misappropriation of moneys contributed
by stockholders, or members of rural banks cooperatives, "samahang nayons," or farmers
associations, or of funds solicited by corporations/associations from the general public.
When not committed by a syndicate as above defined, the penalty imposable shall be reclusion
temporal to reclusion perpetua if the amount of the fraud exceeds 100,000 pesos."cralaw
virtua1aw library
P.D. No. 1689 thus penalizes offenders with life imprisonment to death regardless of the amount
involved, provided that a syndicate committed the crime. A syndicate is defined in the same law as
"consisting of five or more persons formed with the intention of carrying out the unlawful or illegal
act, transaction, enterprise or scheme." If the offenders are not members of a syndicate, they shall
nevertheless be held liable for the acts prohibited by the law but they shall be penalized by
reclusion temporal to reclusion perpetua if the amount of the fraud is more than one hundred
thousand pesos.
In the instant case, there was no showing by the prosecution that a syndicate perpetrated the
Ponzi scheme. While the prosecution proved that a non-stock corporation with eleven (11)
incorporators including accused-appellant and his wife, was involved in the illegal scheme there
was no showing that these incorporators collaborated, confederated, and mutually helped one
another in directing the corporation’s activities. In fact, the evidence for the prosecution shows that
it was only accused-appellant and his wife who had knowledge of and who perpetrated the illegal
scheme.
As such, the trial court was correct in convicting accused-appellant under the second paragraph of
Section 1 of P.D. 1689 considering that the amount swindled by accused-appellant totals
P45,494,936.00. The trial court erred, however, in imposing the penalty of reclusion perpetua.
Given the absence of mitigating or aggravating circumstances, the lesser penalty imposed under
the said paragraph, reclusion temporal, should have been imposed in its medium period. Applying
the Indeterminate Sentence Law, Accused-appellant, in Criminal Case No. 2948, should have
been sentenced to an indeterminate penalty of ten (10) years of prision mayor medium, as
minimum, to twenty-(20) years of reclusion temporal medium, as maximum.
The trial court likewise erred in its application of the provisions of Article 315 of the Revised Penal
Code and of the Indeterminate Sentence Law in the imposition of the proper penalties for the
thirteen (13) estafa cases.
The penalty for estafa depends on the amount defrauded. Article 315 of the Revised Penal Code
provides that "the penalty of prision correccional in its maximum period to prision mayor in its
minimum period (or imprisonment ranging from 4 years, 2 months, and 1 day to 8 years), if the
amount of the fraud is over P12,000.00 but does not exceed P22,000.00, and if such amount
exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum
period (6 years, 8 months and 21 days to 8 years), adding one year for each additional
P10,000.00 pesos; but the total penalty which may be imposed shall not exceed twenty years. In
such case, and in connection with the accessory penalties which may be imposed and for the
purpose of the other provisions of this Code the penalty shall be termed prision mayor or reclusion
temporal, as the case may be. 37
Under the Indeterminate Sentence Law, the maximum term of the penalty shall be "that which in
view of the attending circumstances, could be properly imposed" under the Revised Penal Code,
and the minimum shall be "within the range of the penalty next lower to that prescribed for the
offense. 38 The penalty next lower should be based on the penalty prescribed by the Code for the
offense, without first considering any modifying circumstance attendant to the commission of the
crime. The modifying circumstances are considered only in the imposition of the maximum term of
the indeterminate sentence. 39
In computing the penalty for estafa, the fact that the amounts involved exceed P22,000.00 should
not be considered in the initial determination of the indeterminate penalty; instead the matter
should be taken as analogous to modifying circumstances in the imposition of the maximum term
of the full indeterminate sentence. This interpretation of the law is in accord with the rule that penal
laws should be construed in favor of the accused. Since the penalty prescribed by law for estafa is
prision correccional maximum to prision mayor minimum the penalty next lower would then be
prision correccional in its minimum to medium periods. Thus, the minimum term of the
indeterminate sentence should be anywhere within six (6) months and one (1) day to four (4)
years and two (2) months while the maximum term of the indeterminate sentence should at least
be six (6) years and one (1) day because the amounts involved exceeded P22,000.00, plus one
(1) year for each additional P10,000.00. 40 The maximum penalty should not exceed twenty
years.
Accordingly, with respect to the cases of estafa filed against accused-appellant, the applicable
periods of imprisonment should, respectively, be as follows:chanrob1es virtual 1aw library
In Criminal Case No 2956, where the amount swindled is P624,726.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as
maximum.chanrob1es virtua1 1aw 1ibrary
In Criminal Case No. 3000, where the amount involved is P136,670.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to nineteen (19) years of reclusion temporal as maximum.
In Criminal Case No. 3001, where the amount involved is P203,850.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
In Criminal Case No. 3013, where the amount involved is P29,070.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum to eight (8) years of prision mayor as maximum.
In Criminal Case No 3020, where the amount involved is P114,620.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to seventeen (17) years of reclusion temporal as maximum.
In Criminal Case No. 3021, where the amount involved is P447,960.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
In Criminal Case No. 3022, where the amount involved is P275,280.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum to twenty (20) years of reclusion temporal as
maximum.chanrob1es virtua1 1aw 1ibrary
In Criminal Case No. 3026, where the amount involved is P222,120.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
In Criminal Case No. 3028, where the amount involved is P399,650.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
In Criminal Case No. 3052, where the amount involved is P172,910.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
In Criminal Case No. 3053, where the amount involved is P36,970.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to nine (9) years of prision mayor as maximum.
In Criminal Case No. 3054, where the amount involved is P920,883.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
In Criminal Case No. 3058, where the amount involved is P500,129.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
The amounts ordered reimbursed to the respective complainants and investors listed in the
documentary exhibits of the prosecution are hereby affirmed.
WHEREFORE premises considered, the decision appealed from is hereby AFFIRMED, subject to
the following modifications.
In Criminal Case No. 2948, where the total amount of the fraud is P45,494,936.00, Accused-
appellant is hereby sentenced to an indeterminate penalty of ten (10) years of prision mayor
medium as minimum to twenty (20) years of reclusion temporal medium, as maximum.
In Criminal Case No. 2956, where the amount swindled is P624,726.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.
In Criminal Case No. 3000, where the amount involved is P136,670.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to nineteen (19) years of reclusion temporal as maximum.
In Criminal Case No. 3001, where the amount involved is P203,850.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to twenty (20) years of reclusion temporal as
maximum.chanrob1es virtua1 1aw 1ibrary
In Criminal Case No. 3013, where the amount involved is P29,070.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum to eight (8) years of prision mayor as maximum.
In Criminal Case No. 3020, where the amount involved is P114,620.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to seventeen (17) years of reclusion temporal as maximum.
In Criminal Case No. 3021, where the amount involved is P447,960.00, Accused-appellant is
hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to twenty (20) years of reclusion temporal as maximum.

In Criminal Case No. 3022, where the amount involved is P275,280.00, Accused-appellant is

hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.

In Criminal Case No. 3026, where the amount involved is P222,120.00, Accused-appellant is

hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to twenty (20) years of reclusion temporal as maximum.

In Criminal Case No. 3028, where the amount involved is P399,650.00, Accused-appellant is

hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to twenty (20) years of reclusion temporal as maximum.

In Criminal Case No. 3052, where the amount involved is P172,910.00, Accused-appellant is

hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to twenty (20) years of reclusion temporal as maximum.

In Criminal Case No. 3053, where the amount involved is P36,970.00, Accused-appellant is

hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium as minimum, to nine (9) years of prision mayor as maximum.

In Criminal Case No. 3054, where the amount involved is P920,883.00, Accused-appellant is

hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as maximum.

In Criminal Case No. 3058, where the amount involved is P500,129.00, Accused-appellant is

hereby sentenced to an indeterminate penalty of four (4) years and two (2) months of prision
correccional medium, as minimum, to twenty (20) years of reclusion temporal as
maximum.chanrob1es virtua1 1aw 1ibrary

The amounts ordered reimbursed to the respective complainants and investors listed in the
documentary exhibits of the prosecution are hereby affirmed.

SO ORDERED.

SECOND DIVISION
 G.R. No. 195542, March 19, 2014
SECURITIES AND EXCHANGE COMMISSION, Petitioner, v. OUDINE SANTOS, Respondent.
DECISION
PEREZ, J.:
Before us is another cautionary tale of an investment arrangement which, at the outset, appeared
good, unraveling unhappily as a deal too–good–to–be–true.
This petition for review on certiorari under Rule 45 of the Rules of Court assails the Decision 1 of
the Court of Appeals in CA–G.R. SP No. 112781 affirming the Resolutions 2 of the Secretary of
Justice in I.S. No. 2007–1054 which, among others, dismissed the criminal complaint for violation
of Section 28 of Republic Act No. 8799, the Securities Regulation Code, filed by petitioner
Securities and Exchange Commission (SEC) against respondent Oudine Santos (Santos).
Sometime in 2007, yet another investment scam was exposed with the disappearance of its
primary perpetrator, Michael H.K. Liew (Liew), a self–styled financial guru and Chairman of the
Board of Directors of Performance Investment Products Corporation (PIPC–BVI), a foreign
corporation registered in the British Virgin Islands.
To do business in the Philippines, PIPC–BVI incorporated herein as Philippine International
Planning Center Corporation (PIPC Corporation).
Because the head of PIPC Corporation had gone missing and with it the monies and investment of
a significant number of investors, the SEC was flooded with complaints from thirty–one (31)
individuals against PIPC Corporation, its directors, officers, employees, agents and brokers for
alleged violation of certain provisions of the Securities Regulation Code, including Section 28
thereof.  Santos was charged in the complaints in her capacity as investment consultant of PIPC
Corporation, who supposedly induced private complainants Luisa Mercedes P. Lorenzo (Lorenzo)
and Ricky Albino P. Sy (Sy), to invest their monies in PIPC Corporation.
The common recital in the 31 complaints is that:chanRoblesvirtualLawlibrary
x x x [D]ue to the inducements and solicitations of the PIPC corporation’s directors, officers and
employees/agents/brokers, the former were enticed to invest their hard–earned money, the
minimum amount of which must be US$40,000.00, with PIPC–BVI, with a promise of higher
income potential of an interest of 12 to 18 percentum (%) per annum at relatively low–risk
investment program. The private complainants also claimed that they were made to believe that
PIPC Corporation refers to Performance Investment Product Corporation, the Philippine office or
branch of PIPC–BVI, which is an entity engaged in foreign currency trading, and not Philippine
International Planning Center Corporation.3
Soon thereafter, the SEC, through its Compliance and Endorsement Division, filed a complaint–
affidavit for violation of Sections 8,4 265 and 286 of the Securities Regulation Code before the
Department of Justice which was docketed as I.S. No. 2007–1054.  Among the respondents in the
complaint–affidavit were the principal officers of PIPC: Liew, Chairman and President; Cristina
Gonzalez–Tuason, Director and General Manager; Ma. Cristina Bautista–Jurado, Director; and
herein respondent Santos.
Private complainants, Lorenzo and Sy, in their affidavits annexed to SEC’s complaint–affidavit,
respectively narrated Santos’ participation in how they came to invest their monies in PIPC
Corporation:chanRoblesvirtualLawlibrary
1. Lorenzo’s affidavit
xxxx
2.  I heard about PIPC Corporation from my friend Derrick Santos during an informal gathering
sometime in March 2006. He said that the investments in PIPC Corporation generated a return of
18–20% p.a. every two (2) months. He then gave me the number of his sister, Oudine
Santos who worked for PIPC Philippines to discuss the investment further.
3.  I then met with Oudine Santos sometime during the first week of April 2006 at PIPC Philippines’
lounge x x x.  Oudine Santos conducted for my personal benefit a presentation of the
characteristics of their investment product called “Performance Managed Portfolio” (PMP). The
main points of her presentation are indicated in a summary she gave me, x x
x:chanRoblesvirtualLawlibrary
xxxx
4.  I asked Oudine Santos who were the traders, she said their names were “confidential.”
5.  Oudine Santos also emphasized in that same meeting that I should keep this transaction to
myself because they were not allowed to conduct foreign currency trading. However, she assured
me that I should not worry because they have a lot of “big people” backing them up. She also
mentioned that they were applying for a seat in the “stock exchange.”
6.  I ultimately agreed to put in FORTY THOUSAND US DOLLARS (US$40,000.00) in their
investment product.
7.  Oudine Santos then gave me instructions on how to place my money in PMP and made me
sign a Partnership Agreement.  x x x.
xxxx
8.  Soon thereafter, pursuant to the instructions Oudine Santos gave me, I remitted US$40,000.00
to ABN–AMRO Hong Kong.
9.  Afterwards, I received a letter dated 17 April 2006, signed by Michael H.K. Liew, welcoming my
investment.
xxxx
10.  Sometime on May 2006, I added another US$ 60,000.00 to my then subsisting account
#181372, thus totaling US$100,000.00. This amount, pursuant to the instructions of Oudine
Santos, was remitted to Standard Chartered Bank.
xxxx
14.  Then sometime on May 2007, I planned to pull out my remaining US$100,000.00 investment
in PIPC Philippines. On 22 May 2007, I met with Oudine Santos at the 15th Floor of Citibank
Tower in Makati City. I told her I wanted to terminate all my investments.
15.  Oudine Santos instead said that PIPC Philippines has a new product I might be interested in.
x x x She explained that this product had the following characteristics:chanRoblesvirtualLawlibrary
xxxx
16.  Oudine Santos reiterated these claims in an email she sent me on 22 May 2007.  x x x.
17.  Enticed by these assurances and promises of large earnings, I put in FOUR HUNDRED
THOUSAND US DOLLARS (US$400,000.00) in PMP (RZB), which became account # R149432.
18.  Pursuant to the instructions Oudine Santos gave me, I remitted the amount of US$
400,000.00 to RZB Austria, Singapore Branch.
xxxx
22.  I tried calling Oudine Santos and was finally able to reach her at around 7 in the morning. She
confirmed what Leah Caringal told me. I told her then that I want full recovery of my investment in
accordance with their 100% principal guarantee. To this day[,] I have not received my principal
investment.7
5. Sy’s affidavit
2.  I have been a depositor of the Bank of the Philippine Islands (BPI) Pasong Tamo branch for the
past 15 years. Sometime in the last quarter of 2006, I was at BPI Pasong Tamo to accomplish
certain routine transactions. Being a client of long standing, the bank manager[,] as a matter of
courtesy, allowed me to wait in her cubicle. It was there that the bank manager introduced me to
another bank client, Ms. Oudine Santos. After exchanging pleasantries, and in the course of a
brief conversation, Ms. Santos told me that she is a resident of Damariñas Village and was
working as an investment consultant for a certain company, Performance Investment Products
Corporation [PIPC]. She told me that she wanted to invite me to her office at the Citibank Tower in
Makati so that she could explain the investment products that they are offering. I gave her my
contact number and finished my transaction with the bank for that day;
3.  Ms. Santos texted me to confirm our meeting. A few days later, I met her at the business
lounge of [PIPC] located at the 15th Floor of Citibank Tower, Makati. During the meeting, Ms.
Santos enticed me to invest in their Performance Managed Portfolio which she explained was a
risk controlled investment program designed for individuals like me who are looking for higher
investment returns than bank deposits while still having the advantage of security and liquidity.
She told me that they were engaged in foreign currency trading abroad and that they only employ
professional and experienced foreign exchange traders who specialize in trading the Japanese
Yen, Euro, British Pound, Swiss Francs and Australian Dollar. I then told her that I did not have
any experience in foreign currency trading and was quite conservative in handling my money;
4.  Ms. Santos quickly allayed my fears by emphasizing that the capital for any investment with
[PIPC] is secure. She then trumpeted [PIPC’s] track record in the Philippines, having successfully
solicited investments from many wealthy and well–known individuals since 2001;
5.  Ms. Santos convinced me to invest in Performance Management Portfolio I x x x [which]
features full protection for the principal investment and a 60%–40% sharing of the profit between
the client and [PIPC] respectively;
6.  In November of 2006, I decided to invest USD 40,000 specifically in Performance Management
Portfolio I x x x.  After signing the Partnership Agreement, x x x, I was instructed by Ms. Santos to
deposit the amount by telegraphic transfer to [PIPC’s] account in ABN AMRO Bank Hong Kong. I
did as instructed;
xxxx
8.  Sometime January to March of 2007, [Santos] was convincing me to make an additional
investment under a second product, Performance Management Portfolio II [PMP II] which provides
a more limited guarantee for the principal investment of USD 100,000 and a 80%–20% sharing of
the profit between the client and [PIPC] respectively. In both schemes, the client’s participation will
be limited to choosing two currencies which will in turn be traded by professional traders abroad.
Profit earned from the transaction will then be remitted to the client’s account every 8 weeks;
xxxx
10.  After I made my USD 40,000 PMP I investment, Ms. Santos invited me to meet Mr. Michael
Liew in the business lounge some time during the first quarter of this year. My impression was that
he was quite unassuming considering that he was the head of an international investment firm.  x
x x.8
On the whole, Lorenzo and Sy charge Santos in her capacity as investment consultant of PIPC
Corporation who actively engaged in the solicitation and recruitment of investors.  Private
complainants maintain that Santos, apart from being PIPC Corporation’s employee, acted as PIPC
Corporation’s agent and made representations regarding its investment products and that of the
supposed global corporation PIPC–BVI.  Facilitating Lorenzo’s and Sy’s investment with PIPC
Corporation, Santos represented to the two that investing with PIPC Corporation, an affiliate of
PIPC–BVI, would be safe and full–proof.
In SEC’s complaint–affidavit, it charged the following:chanRoblesvirtualLawlibrary
xxxx
12.  This case stems from the act of fraud and chicanery masterfully orchestrated and executed by
the officers and agents of PIPC Corp. against their unsuspecting investors. The deception is
founded on the basic fact that neither PIPC Corp. nor its officers, employees and agents are
registered brokers/dealers, making their numerous transactions of buying and selling securities to a. 8 calendar week maturity period[,]
the public a blatant violation of the provisions of the SRC, specifically Sections 8 and 28 b. principal investment (minimum of USD 40,000) is protected[,]
thereof. Their illegal offer/sale of securities in the form of the “Performance Management c. investments maintained in strict confidentiality[,]
Partnership Agreement” to the public was perpetrated for about nine (9) years and would have d. features: security, liquidity, short term commitment,
continued were it not for the alleged, and most probably, contrived and deliberate withdrawal of e. tax–exemption status for offshore investments.
the entire funds of the corporation by Michael H.K. Liew. The [scam] was masked by a supposed
offshore foreign currency trading scheme promising that the principal or capital infused will be 24. The investment flow is described as follows:
guaranteed or fully protected. Coupled with this [full] guarantee for the principal is the prospect of
profits at an annual rate of 12 to 18%. [One of] the other enticements provided by the subject
company were free use of its business either for personal or business purposes, free subscription a. Investors’ funds will be placed into a fixed deposit account with a PIPC
of imported magazines, [trips] abroad, and insurance coverage, just to name a few. Fully designated bank and shall not be exposed for trading purposes. The
convinced and enamored [by the] thought of earning higher rates of interest along with the PIPC designated bank shall then extend a margin line request for trading
promise of a guaranteed [capital] the investors placed and entrusted their money to PIPC Corp., based on the deposit;
only to find out later [that they] had been deceived and taken for a ride.
b. PIPC shall open a separate account which will contain an amount of not
xxxx more than 30% of its own funds to serve as a profit and loss account;

17.  Sometime in 2006, an investigation was undertaken by the [Compliance and Enforcement c. Trading will commence with PIPC designated bank closely monitoring
Division of the SEC] on the [account] of PIPC Corp. Per its Articles of Incorporation, PIPC Corp. the performance to ensure that if losses are incurred trading will cease
was authorized to engage [in the] dissemination of information on the current flow of foreign immediately should the 20% stop limit be hit;
exchange (forex) as x x x precious metals such as gold, silver, and oil, and items traded in stock
and securities/commodities exchanges around the world.  To be more specific, PIPC Corp. [was] d. Profits will be credited into the Profit and Loss account with PIPC
authorized to act only as a research arm of their foreign clients. designated bank account. Losses will be debited from the same account
up to the controlled 20% limit;
xxxx
e. Notice of withdrawals must be submitted two weeks prior to schedule of
22.  x x x. maturity otherwise investment is automatically rolled over to the next
batch;
Name of Broker / Bank/Location Date Account Amount of Bank/Location
Investors Agent   to which Number Investment xxx f. At maturity, profits accumulated in the settlement account shall be
  funds were distributed and deposited into each investor’s dollar bank account within
  transferred fourteen (14) banking days;
xxxx
23. Luisa Oudine RZB Austria, June R149432 US$500,000 Not provided g. The funds of various investors are pooled, batched and deposited with
Mercedes P. Santos Singapore 2007 PIPC designated bank account acting as custodian bank, to form a
Lorenzo Branch massive asset base. This account is separate and distinct from the Profit
xxxx and Loss Account. The line from this pooled fund is then entrusted to full
time professional and experienced foreign traders who each specialize
32. Ricky Oudine ABN–AMRO 9 0800287769 US$40,000 BPI Pasong Tamo
in the following currencies: Japanes Yen, Euro, British Pound, Swiss
Albino P. Sy Santos Bank October B9
Francs and Australian Dollar. Profits generated from trading these major
Hongkong 2006
currencies is credited into the Profit and Loss Account, which at the end
of the eight calendar week lock–in period, will be distributed among the
investors. Investors are informed of their account status thru trading
23.  A careful perusal of the complaint–affidavits revealed that for every completed investment statements issued by PIPC every time there is a trade made in their
transaction, a company brochure, depending on the type of investment portfolio chosen, was respective accounts.
provided to each investor containing the following information on Performance BVI and its
investment product called Performance Managed Portfolio or PMP, the points of which are as
follows: xxxx

25.  Furthermore, it was relayed by the officers and agents to complainants–investors that PIPC
Corp. is the Philippine office of the Performance Group of Companies affiliates situated in different
parts of the world, particularly China, Indonesia, Hong Kong, Japan, Korea, Singapore, and the
British Virgin Islands (BVI), even reaching Switzerland. With such basic depiction of the legitimacy
and stability of PIPC Corp., complainants–investors deduced that it was clothed with the authority
to solicit, offer [and] sell securities. As regards the officers and agents of [PIPC Corp.], they
secured proper individual licenses with the SEC as brokers/dealers of securities to enable to
solicit, offer and/or sell the same.
26.  Official SEC documents would show that while PIPC Corp. is indeed registered with the SEC,
it having engaged in the solicitation and sale of securities was contrary to the purpose for which it
was established which is only to act as a financial research. Corollarily, PIPC Corp.’s officers,
agents, and brokers were not licensed to solicit, offer and sell securities to the public, a glaring
violation of Sections 8 and 28 of the SRC.10
In refutation, Santos denied intentionally defrauding complainants Lorenzo and
Sy:chanRoblesvirtualLawlibrary
12.  I cannot understand how I can be charged of forming, or even of being a part of, a syndicate
“formed with the intention of carrying an unlawful or illegal act, transaction, enterprise or scheme.”
If this charge has reference to PIPC Corp. then I certainly cannot be held liable therefore.  As I
mentioned above, I joined PIPC Corp. only in April 2005 and, by that time, the company was
already in existence for over four years. I had no participation whatsoever in its creation or
formation, as I was not even connected with PIPC Corp. at the time of its incorporation. In fact, I
have never been a stockholder, director, general manager or officer of PIPC Corp. Further, PIPC
Corp. was duly registered with the Securities and Exchange Commission and was organized for a
legitimate purpose, and certainly not for the purpose of perpetrating a fraud against the public.
13.  That I was an employee and, later on, an independent information provider of PIPC Corp. is of
little consequence. My duties as such were limited to providing information about the corporate
clients of PIPC Corp. that had been expressly requested by interested individuals. I performed my
assigned job without any criminal intent or malice. In this regard, I have been advised that
offenses penalized under the RPC are intentional felonies for which criminal liability attaches only
when it is shown that the malefactors acted with criminal intent or malice. There can be no crime
when the criminal mind is wanting. In this case, I performed my task of providing requested
information about the clients of PIPC Corp. without any intent to violate the law. Thus, there can
be no criminal liability.
[14]. I have also been advised that under the law, the directors and officers of a corporation who
act for and in behalf of the corporation, who keep within the lawful scope of their authority, and act
in good faith, do not become liable, whether civilly or otherwise, for the consequences of their acts,
as these acts are properly attributed to the corporation alone. The same principle should apply to
individual, like myself, who was only acting within the bounds of her assigned tasks and had
absolutely no decision–making power in the management and supervision of the company.
[15]. Neither can I be liable of forming a syndicate with respect to PIPC–BVI. To reiterate, at no
time was I ever a stockholder, director, employee, officer or agent of PIPC–BVI. Said company is
simply one of many companies serviced by PIPC Corp. I had no participation whatsoever in its
creation and/or in the direction of its day–to–day affairs.
xxxx
19.  Further, I have been advised by counsel that conspiracy must be established by positive and
conclusive evidence. It cannot be based on mere conjecture but must be established as a fact. In
this case, no proof of conspiracy was presented against me. In fact, it appears that I have been
dragged in to this allegation based on the hearsay statement of Felicia Tirona that I was one of the
in–house “account executives” or “work force” of PIPC–BVI and PIPC Corp. There was no
allegation whatsoever of any illegal act done by me to warrant the institution of criminal charges
against me. If at all, only Michael Liew should be held criminally liable, as he was clearly the one
who absconded with the money of the investors of PIPC–BVI. Mr. Liew has since disappeared and
efforts to locate him have apparently proved to be futile to date.
xxxx
23.  In the first place, I did not receive any money or property from any of the complainants. As
clearly shown by the documents submitted to this Honorable Office, particularly, the Portfolio
Management Partnership Agreement, Security Agreement, Declaration of Trust, bank statements
and acknowledgement receipts, complainants delivered their money to PIPC–BVI, not to PIPC
Corp. Complainants deposited their investment in PIPC–BVI’s bank account, and PIPC–BVI would
subsequently issue an acknowledgement receipt. No part of the said money was ever delivered to
PIPC Corp. or to me.
24.  Indeed, complainant’s own evidence show that the Portfolio Management Partnership
Agreement, Security Agreement and Declaration of Trust were executed between PIPC–BVI and
the individual complainants. Further, paragraph 2 of the Declaration of Trust explicitly stated that
PIPC–BVI “hold the said amount of money UPON TRUST for the Beneficiary Owner.”  The
complainants cannot, therefore, hold PIPC Corp., or any of its officers or employees, with
misappropriating their money or property when they were fully aware that they delivered their
money to, and transacted solely with, PIPC–BVI, and not PIPC Corp.
25.  It also bears stressing that of the twenty–one (21) complainants in this case, only complainant
Ricky Albino Sy alleged that he had actually dealt with me.  Complainant Sy himself never alleged
that he delivered or entrusted any money or property to me.  On the contrary, complainant Sy
admitted that he deposited his investment of U.S.$40,000.00 by bank transfer to PIPC–BVI’s
account in the ABN Amro Bank.  That the money was delivered to PIPC–BVI, and not to me, is
shown by the fact that the receipt was issued by PIPC–BVI.  I never signed or issued any
acknowledgement receipt, as I never received any such money. Neither did I ever gain physical or
juridical possession of the said money.11  (Emphasis and underscoring supplied).
Santos’ defense consisted in: (1) denying participation in the conspiracy and fraud perpetrated
against the investor–complainants of PIPC Corporation, specifically Sy and Lorenzo; (2) claiming
that she was initially and merely an employee of, and subsequently an independent information
provider for, PIPC Corporation; (3) PIPC Corporation being a separate entity from PIPC–BVI of
which Santos has never been a part of in any capacity; (4) her not having received any money
from Sy and Lorenzo, the two having, in actuality, directly invested their money in PIPC–BVI; (5)
Santos having dealt only with Sy and the latter, in fact, deposited money directly into PIPC–BVI’s
account; and (6) on the whole, PIPC–BVI as the other party in the investment contracts signed by
Sy and Lorenzo, thus the only corporation liable to Sy and Lorenzo and the other complainants.
On 18 April 2008, the DOJ, in I.S. No. 2007–1054, issued a Resolution signed by a panel of three
(3) prosecutors, with recommendation for approval of the Assistant Chief State Prosecutor, and
ultimately approved by Chief State Prosecutor Jovencito R. Zuño, indicting: (a) Liew and
Gonzalez–Tuason for violation of Sections 8 and 26 of the Securities Regulation Code; and (b)
herein respondent Santos, along with Cristina Gonzalez–Tuason and 12 others for violation of
Section 28 of the Securities Regulation Code.  The same Resolution likewise dismissed the
complaint against 8 of the respondents therein for insufficiency of evidence.  In the 18 April 2008
Resolution, the DOJ discussed at length the liability of PIPC Corporation and its officers,
employees, agents and all those acting on PIPC Corporation’s behalf, to
wit:chanRoblesvirtualLawlibrary
Firstly, complainant SEC filed the instant case for alleged violation by respondents [therein,
including herein respondent, Santos,] of Section 8 of the SRC.
Sec. 8.  Requirement of Registration of Securities. – 8.1. Securities shall not be sold or offered for
sale or distribution within the Philippines, without a registration statement duly filed with and
approved by the Commission. Prior to such sale, information on the securities, in such form and
with such substance as the Commission may prescribe, shall be made available to each
prospective purchaser.
Based on the above provision of the law, complainant SEC is now accusing all respondents
[therein, including Santos,] for violating the same when they allegedly sold and/or offered for sale
unregistered securities.
However, Section 8.5 thereof provides that “The Commission may audit the financial statements,
assets and other information  of a firm applying for registration of its securities whenever it deems
the same necessary to insure full disclosure or to protect the interest of the investors and the
public in general.”
The above–quoted provision is loud and clear and needs no further interpretation.  It is
the firm through its authorized officers that is required to register its securities with the SEC and
not the individual persons allegedly selling and/or offering for sale said unregistered securities.  To
do otherwise would open the floodgates to numerous complaints against innocent individuals who
have no hand in the control, decision–making and operations of said investment company.
Clearly, it is only the PIPC Corp. and respondents Michael H. Liew and Cristina Gonzalez–Tuason
being the President and the General Manager respectively, of PIPC Corp. who violated Section 8
of the SRC.
xxxx
Respondents Liew and Tuason are directors and officers of PIPC Corp. who exercise power of
control and supervision in the management of said corporation. Surely they cannot claim having
no knowledge of the operations of PIPC Corp. vis–à–vis its scope of authority since they are the
ones who actually created and manage the same. They are well aware that PIPC Corp. is a mere
financial research facility and has nothing to do with selling or offering for sale securities to the
general public. But despite knowledge, they continue to recruit and deceive the general public by
making it appear that PIPC Corp. is a legitimate investment company.
Moreover, they cannot evade liability by hiding behind the veil of a corporate fiction.  x x x.
xxxx
In the case at bar, the investors were made to believe that PIPC Corp. and PIPC–BVI is one and
the same corporation. There is nothing on record that would show that private complainants were
informed that PIPC Corp. and PIPC–BVI are two entities distinct and separate from one another.
In fact, when they invested their money, they dealt with PIPC Corp. and the people acting on its
behalf but when they signed documents they were provided with ones bearing the name of PIPC–
BVI. Clearly, this obvious and intentional confusion of names of the two entities is designed to
defraud and later to avoid liabilities from their victims. Therefore, the defense of a corporate fiction
is unavailing in the instant case.
xxxx
Buying and selling of securities is an indispensable element that makes one a broker or dealer. So
if one is not engaged in the business of buying and selling of securities, naturally he or she cannot
be considered as a broker or dealer. However, a person may be considered as an agent of
another, juridical or natural person, if it can be inferred that he or she acts as an agent of his or her
principal as above–defined. One can also be an investor and agent at the same time.
An examination of the records and the evidence submitted by the parties, we have observed that
all respondents are investors of PIPC–BVI, same with the private complainants, they also lost
thousands of dollars. We also noted the fact that most of the private complainants and alleged
brokers or agents are long time friends if not blood related individuals. Notably also is the fact that
most of them are highly educated businessmen/businesswomen who are financially well–off.
Hence, they are regarded to be wiser and more prudent and expected to exercise due diligence of
a good father of a family in managing their finances as compared to those who are less fortunate
in life.
However, we still need to delve deeper into the facts and the [evidence] on record to determine the
degree of respondents’ participations and if on the basis of their actions, it can be inferred that
they acted as employees–agents or investor–agents of PIPC Corp. or PIPC–BVI then are liable
under Section 28 of the SRC otherwise, they cannot be [blamed] for being mere employees or
investors thereof.
xxxx
Oudine Santos.  Investment Consultant of PIPC Corp. who allegedly invited, convinced and
assured private complainants Luisa Mercedes P. Lorenzo and Ricky Albino P. Sy to invest in PIPC
Corp. To prove their allegations, respondents attached email exchanges with respondent Santos
regarding the details in investing with PIPC–BVI. Respondent Santos failed to submit counter–
affidavit despite subpoena.
xxxx
After painstakingly going over the record and the supporting documents attached thereto and after
carefully evaluating the respective claims and defenses raised by all the parties, the undersigned
panel of prosecutors has a reason to believe that Section 28 of the SRC has been violated and
that the following respondents are probably guilty thereof and should, therefore, be held for trial:
1. Cristina Gonzalez–Tuason
2. x x x.
xxxx
13. Oudine Santos
The above–named respondents, aside from being officers, employees or investors, clearly acted
as agents of PIPC Corp. who made representations regarding PIPC Corp. and PIPC–BVI
investment products. They assured their clients that investing with PIPC–BVI will be 100%
guaranteed. In addition, they also facilitated their clients’ investments with PIPC–BVI and some, if
not all, even received money investors as evidenced by the acknowledgement receipts they
signed and on behalf of PIPC–BVI. The documentary evidence submitted by witnesses and their
categorical and positive assertion of facts which, taken together corroborate one another, prevails
over the defense of denial raised by the above–named respondents which are mostly self–serving
in nature.
A formal or written contract of agency between two or more persons is not necessary for one to
become an agent of the other for as long as it can be inferred from their actions that there exists a
principal–agent relationship between them on the one hand and the PIPC Corp. or PIPC–BVI on
the other hand, then, it is implied that a contract of agency is created.
As to their contention that they are not officers or employees of PIPC Corp., the Supreme Court
ruled that one may be an agent of a domestic corporation although he or she is not an officer
thereto.  x x x. The basis of agency is representation; the question of whether an agency has been
created is ordinarily a question which may be established in the same way as any other fact, either
by direct or substantial evidence; though that fact or extent of authority of the agents may not, as a
general rule, be established from the declarations of the agents alone, if one professes to act as
agent for another, he or she is estopped to deny her agency both as against the asserted principal
and third persons interested in the transaction in which he or she is engaged.
Further, they cannot raise the defense of good faith for the simple reason that the SRC is a special
law where criminal intent is not an essential element. Mere violation of which is punishable except
in some provisions thereof where fraud is a condition sine qua non such as Section 26 of the said
law.
xxxx
WHEREFORE, the foregoing considered, it is respectfully recommended that this resolution be
APPROVED and that:
1. An information for violation of Section 8 of the SRC be filed against respondent
PIPC Corp., MICHAEL H. LIEW and CRISTINA GONZALEZ–TUASON;
2. An information for violation of Section 26 thereof be also filed against
respondents MICHAEL H. LIEW and CRISTINA GONZALEZ–TUASON; and
3. An information for violation of Section 28 thereof be filed against respondents
CRISTINA GONZALEZ–TUASON, MA. CRISTINA BAUTISTA–JURADO,
BARBARA GARCIA, ANTHONY KIERULF, EUGENE GO, MICHAEL MELCHOR
NUBLA, MA. PAMELA MORRIS, LUIS ‘JIMBO’ ARAGON, RENATO
SARMIENTO, JR., VICTOR JOSE VERGEL DE DIOS, NICOLINE AMORANTO
MENDOZA, JOSE ‘JAY’ TENGCO III, [respondent] OUDINE SANTOS AND
HERLEY JESUITAS; and
4. The complaint against MAYENNE CARMONA, YEYE SAN PEDRO–CHOA, MIA
LEGARDA, NICOLE ORTEGA, DAVID CHUA–UNSU, STANLEY CHUA–UNSU,
DEBORAH V. YABUT, CHRISTINE YU and JONATHAN OCAMPO be dismissed
for insufficiency of evidence.12  (Emphasis supplied)
In sum, the DOJ panel based its finding of probable cause on the collective acts of the majority of
the respondents therein, including herein respondent Santos, which consisted in their acting as
employees–agent and/or investor–agents of PIPC Corporation and/or PIPC–BVI.  Specifically
alluding to Santos as Investment Consultant of PIPC Corporation, the DOJ found probable cause
to indict her for violation of Section 28 of the Securities Regulation Code for engaging in the
business of selling or offering for sale securities, on behalf of PIPC Corporation and/or PIPC–BVI
(which were found to be an issuer13 of securities without the necessary registration from the SEC)
without Santos being registered as a broker, dealer, salesman or an associated person.
On separate motions for reconsideration of the respondents therein, including herein respondent
Santos, the DOJ panel issued a Resolution dated 2 September 2008 modifying its previous ruling
and excluding respondent Victor Jose Vergel de Dios from prosecution for violation of Section 28
of the Securities Regulation Code, thus:chanRoblesvirtualLawlibrary
After an assiduous re–evaluation of the facts and the evidence submitted by the parties in support
of their respective positions, the undersigned panel finds x x x [that the] rest of the respondents
mainly rehashed their earlier arguments except for a few respondents who, in one way or another,
failed to participate in the preliminary investigation; hence raising their respective defenses for the
first time in their motions for reconsideration.
xxxx
With respect to respondents Luis “Jimbo” Aragon and Oudine Santos who also claimed to have
not received subpoenas, this panel, after thoroughly evaluating their respective defenses, finds
them to be similarly situated with the other respondents who acted as agents for and in behalf of
PIPC Corp. and/or PIPC–BVI; hence, their inclusion in the information is affirmed.
xxxx
x x x As to the issue on whether or not PMPA is a security contract, we rule in the affirmative, as
supported by the herein below provisions of the SRC, particularly:chanRoblesvirtualLawlibrary
Sec. 8. Requirement of Registration of Securities. – 8.1. Securities shall not be sold or offered for
sale or distribution within the Philippines, without registration statement duly filed with and
approved by the Commission. Prior to such sale, information on the securities, in such form and
with such substance as the Commission may prescribe, shall be made available to each
prospective purchaser.
Securities have been defined as shares, participation or interest in a corporation or in a
commercial enterprise or profit making venture and evidenced by a certificate, contract,
instrument, whether written or electronic in character. It includes among others, investment
contracts, certificates of interest or participation in a profit sharing agreement, certificates of
deposit for a future subscription.
Under the SRC’s Amended Implementing Rules and Regulations, specifically Rule 3, par. 1
subpar. G, an investment contract has been defined as a contract, transaction or scheme
(collectively “contract”), whereby a person invests his money in a common enterprise and is led to
expect profits primarily from the efforts of others. It is likewise provided in the said provision that
an investment contract is presumed to exist whenever a person seeks to use the money or
property of others on the promise of profits and a common enterprise is deemed created when two
(2) or more investors “pool” their resources creating a common enterprise, even if the promoter
receives nothing more than a broker’s commission. Undoubtedly, the PMPA is an investment
contract falling within the purview of the term securities as defined by law.
xxxx
It bears to emphasize that the purpose of a preliminary investigation and/or confrontation between
the party–litigants is for them to lay down all their cards on the table to properly inform and apprise
the other of the charges against him/her, to avoid suprises and to afford the adverse party all the
opportunity to defend himself/herself based on the evidence submitted against him/her. Thus,
failure on the part of the defaulting party to submit evidence that was then available to him is
deemed a waiver on his part to submit it in the same proceedings against the same party for the
same issue.
WHEREFORE, the foregoing premises considered, the undersigned panel of prosecutors
respectfully recommends that the assailed resolution be modified by dismissing the complaint
against Victor Jose Vergel De Dios and that the Information filed with the appropriate court for
violation of Section 28 of the SRC be amended accordingly. 14
Respondent Santos filed a petition for review before the Office of the Secretary of the DOJ
assailing the Resolutions dated 18 April 2008 and 2 September 2008 and claiming that she was a
mere clerical employee/information provider who never solicited nor recruited investors, in
particular complainants Sy and Lorenzo, for PIPC Corporation or PIPC–BVI.  Santos also claimed
dearth of evidence indicating she was a salesman/agent or an associated person of a broker or
dealer, as defined under the Securities Regulation Code.
The SEC filed its Comment opposing Santos’ petition for review. Thereafter, the Office of the
Secretary of the DOJ, through its then Undersecretary Ricardo R. Blancaflor, issued a Resolution
dated 1 October 2009 which, as previously adverted to, excluded respondent Santos from
prosecution for violation of Section 28 of the Securities Regulation Code. For a complete picture,
we quote in full the disquisition of the Secretary of the DOJ:chanRoblesvirtualLawlibrary
[Santos] argues that while Luisa Mercedes P. Lorenzo and Ricky Albino P. Sy mentioned two (2)
instances wherein she allegedly enticed them to invest, their own pieces of evidence, particularly
the Annex “E” series (several “Details of Profit distribution & Renewal of Partnership Agreement”
bearing different dates addressed to Ricky Albino P. Sy with stamped signature for PIPC–BVI),
indicate that they invested and reinvested their money with PIPC–BVI repeatedly and even earned
profits from these transactions through direct dealing with PIPC–BVI and without her participation.
In addition, she maintains that Luisa Mercedes P. Lorenzo and Ricky Albino P. Sy had several
opportunities to divest or withdraw their respective investments but opted not to do so at their own
volitions.
xxxx
The sole issue in this case is whether or not respondent Santos acted as agent of PIPC Corp. or
had enticed Luisa Mercedes P. Lorenzo or Ricky Albino P. Sy to buy PIPC Corp. or PIPC–BVI’s
investment products.
We resolve in the negative.
Section 28 of the Securities Regulation Code (SRC) reads:
SEC. [28].  Registration of Brokers, Dealers, Salesmen and Associated Persons. – 28.1. No
person shall engage in the business of buying or selling securities in the Philippines as a broker or
dealer unless registered as such with the Commission.
28.2. No registered broker or dealer shall employ any salesman or any associated person, and no
issuer shall employ any salesman, who is not registered as such with the Commission.
Jurisprudence defines an “agent” as a “business representative, whose function is to bring about,
modify, affect, accept performance of, or terminate contractual obligations between principal and
third persons.”  x x x On the other hand, the Implementing Rules of the SRC simply provides that
an agent or a “salesman” is a person employed as such or as an agent, by the dealer, issuer or
broker to buy and sell securities x x x.
A judicious examination of the records indicates the lack of evidence that respondent Santos
violated Section 28 of the SRC, or that she had acted as an agent for PIPC Corp. or enticed Luisa
Mercedes P. Lorenzo or Ricky Albino P. Sy to buy PIPC Corp. or PIPC–BVI’s investment
products.
The annex “D” (“Welcome to PMP” Letter dated [17 April 2006] addressed to Luisa Mercedes P.
Lorenzo signed by Michael Liew as president of PIPC–BVI), Annex “E” (Fixed Deposit Advice
Letter dated [26 June 2006] addressed to Luisa Mercedes P. Lorenzo and stamped signature for
PIPC–BVI), and Annex “H” (“Welcome to PMP” Letter dated [30 May 2007] addressed to Luisa
Mercedes P. Lorenzo signed by Michael Liew as President of PIPC–BVI) of the complaint–affidavit
dated [11 September 2007] of Luisa Mercedes P. Lorenzo show that she directly dealt with PIPC–
BVI in placing her investment.  The same is true with regard to Annex “A” series (Portfolio
Management Partnership Agreement between Ricky Albino P. Sy and PIPC–BVI, Security
Agreement between Ricky Albino P. Sy and PIPC–BVI, and Declaration of Trust between Ricky
Albino P. Sy and PIPC–BVI), Annex “B” (Official Receipt dated 09 November 2006 issued by
PIPC–BVI), Annex “C’ (“Welcome to PMP” Letter dated [10 November 2006] addressed to Ricky
Albino P. Sy and signed by Michael [Liew] as President of PIPC–BVI), and Annex “D” (Fixed
Deposit Advice Letter dated [29 January 2007] addressed to Ricky Albino P. Sy with stamped
signature for PIPC–BVI) of the complaint–affidavit dated [26 September 2007] of Ricky Albino P.
Sy. These documents categorically show that the parties therein, i.e., Luisa Mercedes P. Lorenzo
or Ricky Albino P. Sy and PIPC–BVI, transacted with each other directly without any participation
from respondent Santos. These documents speak for themselves. Moreover, it bears stressing
that Luisa Mercedes P. Lorenzo and Ricky Albino P. Sy admit in their respective affidavits that
they directly deposited their investments by bank transfer to PIPC–BVI’s offshore bank account.
Annex “B” (Printed background of the PMP of [PIPC]–BVI enumerating the features of said
product) and Annex “C” (Printed “Procedures in PMP Account Opening” instructing the client what
to do in placing his/her investment) of the complaint–affidavit of Luisa Mercedes P. Lorenzo
actually supports the allegations of respondent Santos that there were printed forms/brochures for
distribution to persons requesting the same. These printed/prepared handouts contain the
assurances or guarantees of PIPC–BVI and the instructions on where and how to deposit the
investors’ money.
Likewise, Luisa Mercedes P. Lorenzo’s Annex “A” (2006 GIS of PIPC Corp. listing the
stockholders, board of directors an[d] officers thereof), Annex “F” (Deposit Confirmation dated [14
June 2006] from Standard Chartered Bank) and Annexes “I” to “L” (SEC Certifications stating that
PIPC Corp., PIPC, PIPC–BVI and Performance Investment Products Ltd., respectively, are not
registered issuer of securities nor licensed to offer or sell securities to the public) are not evidence
against respondent Santos. Her name is not even mentioned in any of these documents.  If at all,
these documents are evidence against PIPC Corp. and its officers named therein.
Further, it is important to note that in the “Request Form,” one of the documents being distributed
by respondent Santos x x x, it is categorically stated therein that said request “shall not be taken
as an investment solicitation x x x, but is mainly for the purpose of providing me with
information.” Clearly, this document proves that respondent Santos did not or was not involved in
the solicitation of investments but merely shows that she is an employee of PIPC Corp. In addition,
the “Information Dissemination Agreement” between her employer PIPC Corp. and PIPC–BVI
readably and understandably provides that she is prohibited from soliciting investments in behalf
of PIPC–BVI and her authority is limited only to providing interested persons with the  “necessary
information regarding how to communicate directly with PIPC.” Parenthetically, the decision to sign
the partnership Agreement with PIPC–BVI to invest and repeatedly reinvest their monies with
PIPC–BVI were made by Luisa Mercedes P. Lorenzo and Ricky Albino P. Sy themselves without
any inducement or undue influence from respondent Santos.
xxxx
WHEREFORE, the assailed resolution is hereby MODIFIED, the Chief State Prosecutor is
directed to EXCLUDE respondent Oudine Santos from the Information for violation of Section 28
of the Securities and Regulation Code, if any has been filed, and report the action taken thereon
within ten (10) days from receipt hereof.15
Expectedly, after the denial of the SEC’s motion for reconsideration before the Secretary of the
DOJ, the SEC filed a petition for certiorari before the Court of Appeals seeking to annul the 1
October 2009 Resolution of the DOJ.
The Court of Appeals dismissed the SEC’s petition for certiorari and affirmed the 1 October 2009
Resolution of the Secretary of the DOJ:chanRoblesvirtualLawlibrary
Prescinding from the foregoing, a person must first and foremost be engaged in the business of
buying and selling securities in the Philippines before he can be considered as a broker, a dealer
or salesman within the coverage of the Securities Regulation Code. The record in this case
however is bereft of any showing that [Santos] was engaged in the business of buying and selling
securities in the Philippines, whether for herself or in behalf of another person or entity. Apart from
[SEC’s] sweeping allegation that [Santos] enticed Sy and Lorenzo and solicited from them
investments for PIPC–BVI without first being registered as broker, dealer or salesman with SEC,
no evidence had been adduced that shows [Santos’] actual participation in the alleged offer and
sale of securities to the public, particularly to Sy and Lorenzo, within the Philippines. There was
likewise no exchange of funds between Sy and Lorenzo, on one hand, and [Santos], on the other
hand, as the price of certain securities offered by PIPC–BVI. There was even no specific proof that
[Santos] misrepresented to Sy and Lorenzo that she was a licensed broker, dealer or salesperson
of securities, thereby inducing them to invest and deliver their hard–earned money with PIPC–BVI.
In fact, the Information Dissemination Agreement between PIPC Corporation, [Santos’ employer],
and PIPC–BVI clearly provides that [Santos] was prohibited from soliciting investments in behalf of
PIPC–BVI and that her authority is limited only to providing prospective client with the “necessary
information on how to communicate directly with PIPC.” Thus, it is obvious that the final decision of
investing and reinvesting their money with PIPC–BVI was made solely by Sy and Lorenzo
themselves.
xxxx
WHEREFORE, in view of the foregoing premises, the petition filed in this case is
hereby DENIED and, consequently, DISMISSED. The assailed Resolutions dated [1 October
2009] and [23 November 2009] of the Secretary of Justice in I.S. No. 2007–1054 are
hereby AFFIRMED.16
Hence, this appeal by certiorari raising the sole error of Santos’ exclusion from the Information for
violation of Section 28 of the Securities Regulation Code.
Generally, at the preliminary investigation proper, the investigating prosecutor, and ultimately, the
Secretary of the DOJ, is afforded wide latitude of discretion in the exercise of its power to
determine probable cause to warrant criminal prosecution.  The determination of probable cause is
an executive function where the prosecutor determines merely that a crime has been committed
and that the accused has committed the same.17 The rules do not require that a prosecutor has
moral certainty of the guilt of a person simply for preliminary investigation purposes.
However, the authority of the prosecutor and the DOJ is not absolute; it cannot be exercised
arbitrarily or capriciously.  Where the findings of the investigating prosecutor or the Secretary of
the DOJ as to the existence of probable cause are equivalent to a gross misapprehension of
facts, certiorari will lie to correct these errors.18
While it is our policy not to interfere in the conduct of preliminary investigations, we have, on more
than one occasion, adhered to some exceptions to the general rule:chanRoblesvirtualLawlibrary
1. when necessary to afford adequate protection to the constitutional rights of the
accused;
 2. when necessary for the orderly administration of justice or to avoid oppression or
multiplicity of actions;
3. when there is a prejudicial question which is sub judice;
4. when the acts of the officer are without or in excess of authority;
5. where the prosecution is under an invalid law, ordinance or regulation;
6. when double jeopardy is clearly apparent;
7. where the court has no jurisdiction over the offense;
8. where it is a case of persecution rather than prosecution;
9. where the charges are manifestly false and motivated by the lust for vengeance;
10. when there is clearly no prima facie case against the accused and a motion to
quash on that ground has been denied. 19  (Italics supplied).
In excluding Santos from the prosecution of the supposed violation of Section 28 of the Securities
Regulation Code, the Secretary of the DOJ, as affirmed by the appellate court, debunked the DOJ
panel’s finding that Santos was prima facie liable for either: (1) selling securities in the Philippines
as a broker or dealer, or (2) acting as a salesman, or an associated person of any broker or dealer
on behalf of PIPC Corporation and/or PIPC–BVI without being registered as such with the SEC.
To get to that conclusion, the Secretary of the DOJ and the appellate court ruled that no evidence
was adduced showing Santos’ actual participation in the final sale by PIPC Corporation and/or
PIPC–BVI of unregistered securities since the very affidavits of complainants Lorenzo and Sy
proved that Santos had never signed, neither was she mentioned in, any of the investment
documents between Lorenzo and Sy, on one hand, and PIPC Corporation and/or PIPC–BVI, on
the other hand.
The conclusions made by the Secretary of the DOJ and the appellate court are a myopic view of
the investment solicitations made by Santos on behalf of PIPC Corporation and/or PIPC–BVI while
she was not licensed as a broker or dealer, or registered as a salesman, or an associated person
of a broker or dealer.
We sustain the DOJ panel’s findings which were not overruled by the Secretary of the DOJ and
the appellate court, that PIPC Corporation and/or PIPC–BVI was: (1) an issuer of securities
without the necessary registration or license from the SEC, and (2) engaged in the business of
buying and selling securities. In connection therewith, we look to Section 3 of the Securities
Regulation Code for pertinent definitions of terms:chanRoblesvirtualLawlibrary
Sec. 3.  Definition of Terms. – x x x.
xxxx
3.3. “Broker” is a person engaged in the business of buying and selling securities for the account
of others.
3.4. “Dealer” means [any] person who buys [and] sells securities for his/her own account in the
ordinary course of business.
3.5. “Associated person of a broker or dealer” is an employee thereof whom, directly exercises
control of supervisory authority, but does not include a salesman, or an agent or a person whose
functions are solely clerical or ministerial.
xxxx
3.13. “Salesman” is a natural person, employed as such [or] as an agent, by a dealer, issuer or
broker to buy and sell securities.
To determine whether the DOJ Secretary’s Resolution was tainted with grave abuse of discretion,
we pass upon the elements for violation of Section 28 of the Securities Regulation Code: (a)
engaging in the business of buying or selling securities in the Philippines as a broker or dealer; or
(b) acting as a salesman; or (c) acting as an associated person of any broker or dealer, unless
registered as such with the SEC.
Tying it all in, there is no quarrel that Santos was in the employ of PIPC Corporation and/or PIPC–
BVI, a corporation which sold or offered for sale unregistered securities in the Philippines.  To
escape probable culpability, Santos claims that she was a mere clerical employee of PIPC
Corporation and/or PIPC–BVI and was never an agent or salesman who actually solicited the sale
of or sold unregistered securities issued by PIPC Corporation and/or PIPC–BVI.
Solicitation is the act of seeking or asking for business or information; it is not a commitment to an
agreement.20
Santos, by the very nature of her function as what she now unaffectedly calls an information
provider, brought about the sale of securities made by PIPC Corporation and/or PIPC–BVI to
certain individuals, specifically private complainants Sy and Lorenzo by providing information on
the investment products of PIPC Corporation and/or PIPC–BVI with the end in view of PIPC
Corporation closing a sale.
While Santos was not a signatory to the contracts on Sy’s or Lorenzo’s investments, Santos
procured the sale of these unregistered securities to the two (2) complainants by providing
information on the investment products being offered for sale by PIPC Corporation and/or PIPC–
BVI and convincing them to invest therein.
No matter Santos’ strenuous objections, it is apparent that she connected the probable investors,
Sy and Lorenzo, to PIPC Corporation and/or PIPC–BVI, acting as an ostensible agent of the latter
on the viability of PIPC Corporation as an investment company. At each point of Sy’s and
Lorenzo’s investment, Santos’ participation thereon, even if not shown strictly on paper, was prima
facie established.
In all of the documents presented by Santos, she never alleged or pointed out that she did not
receive extra consideration for her simply providing information to Sy and Lorenzo about PIPC
Corporation and/or PIPC–BVI.  Santos only claims that the monies invested by Sy and Lorenzo
did not pass through her hands. In short, Santos did not present in evidence her salaries as a
supposed “mere clerical employee or information provider” of PIPC–BVI.  Such presentation would
have foreclosed all questions on her status within PIPC Corporation and/or PIPC–BVI at the
lowest rung of the ladder who only provided information and who did not use her discretion in any
capacity.
We cannot overemphasize that the very information provided by Santos locked the deal on
unregistered securities with Sy and Lorenzo.
In fact, Sy alleged in his affidavit, which allegation was not refuted by Santos, that he was
introduced to Santos while he performed routine transactions at his
bank:chanRoblesvirtualLawlibrary
2.  I have been a depositor of the Bank of the Philippine Islands (BPI) Pasong Tamo branch for the
past 15 years. Sometime in the last quarter of 2006, I was at BPI Pasong Tamo to accomplish
certain routine transactions. Being a client of long standing, the bank manager[,] as a matter of
courtesy, allowed me to wait in her cubicle. It was there that the bank manager introduced me to
another bank client, Ms. Oudine Santos. After exchanging pleasantries, and in the course of a
brief conversation, Ms. Santos told me that she is a resident of Damariñas Village and was
working as an investment consultant for a certain company, Performance Investment Products
Corporation [PIPC]. She told me that she wanted to invite me to her office at the Citibank Tower in
Makati so that she could explain the investment products that they are offering. I gave her my
contact number and finished my transaction with the bank for that day;
3.  Ms. Santos texted me to confirm our meeting. A few days later, I met her at the business
lounge of [PIPC] located at the 15th Floor of Citibank Tower, Makati. During the meeting, Ms.
Santos enticed me to invest in their Performance Managed Portfolio which she explained was a
risk controlled investment program designed for individuals like me who are looking for higher
investment returns than bank deposits while still having the advantage of security and liquidity.
She told me that they were engaged in foreign currency trading abroad and that they only employ
professional and experienced foreign exchange traders who specialize in trading the Japanese
Yen, Euro, British Pound, Swiss Francs and Australian Dollar. I then told her that I did not have
any experience in foreign currency trading and was quite conservative in handling my money; 21
Santos countered that:chanRoblesvirtualLawlibrary
28.  I also categorically deny complainant Sy’s allegation that I “enticed” him to enter into a
Partnership Agreement with PIPC–BVI. In the first place, I came to know complainant Sy only
when he was referred to me by a mutual acquaintance, Ms. Ana Liliosa Santos, who was then the
Manager of the Bank of the Philippine Islands, Pasong Tamo Branch.  Ms. Ana Santos set up a
meeting between complainant Sy and me because complainant Sy wanted to know more about
PIPC–BVI. As with the other individuals who expressed interest in PIPC Corp.’s client companies,
I then provided complainant Sy with additional information about PIPC–BVI.  The decision to enter
into the aforementioned Partnership Agreement with PIPC–BVI was made by complainant Sy
alone without any inducement or undue influence from me, as in fact I only met him twice – the
first one was on the meeting set up by Ms. Ana Santos and the second one was to introduce him
to Michael Liew.  Indeed, complainant Sy appears to be a well–educated person with years of
experience as a businessman.  It is reasonable to assume that before entering into the said
Partnership Agreement with PIPC–BVI, complainant Sy had fully understood the nature of the
agreement and that in entering thereto, he had been motivated by a desire to earn a profit and had
believed, as I myself have been led to believe, that PIPC–BVI was a legitimate business concern
which offered a reasonable return on investment, Moreover, complainant Sy could have withdrawn
his initial investment of US$40,000.00 on its date of maturity, i.e., 26 January 2007, as indicated in
the PIPC–BVI’s letter dated 10 November 2006, a copy of which is attached to complainant Sy’s
Sworn Statement. Complainant Sy, however, obviously decided on his own volition to keep his
investment with PIPC–BVI presumably because he wanted to gain more profit therefrom.
Complainant Sy in fact admitted that he received monetary returns from PIPC–BVI in the total
amount of US$2,439.12.22
What is palpable from the foregoing is that Sy and Lorenzo did not go directly to Liew or any of
PIPC Corporation’s and/or PIPC–BVI’s principal officers before making their investment or
renewing their prior investment. However, undeniably, Santos actively recruited and referred
possible investors to PIPC Corporation and/or PIPC–BVI and acted as the go–between on behalf
of PIPC Corporation and/or PIPC–BVI.
The DOJ’s and Court of Appeals’ reasoning that Santos did not sign the investment contracts of
Sy and Lorenzo is specious.  The contracts merely document the act performed by Santos.
Individual complainants and the SEC have categorically alleged that Liew and PIPC Corporation
and/or PIPC–BVI is not a legitimate investment company but a company which perpetrated a
scam on 31 individuals where the president, a foreign national, Liew, ran away with their money.
Liew’s absconding with the monies of 31 individuals and that PIPC Corporation and/or PIPC–BVI
were not licensed by the SEC to sell securities are uncontroverted facts.
The transaction initiated by Santos with Sy and Lorenzo, respectively, is an investment contract or
participation in a profit sharing agreement that falls within the definition of the law. When the
investor is relatively uninformed and turns over his money to others, essentially depending upon
their representations and their honesty and skill in managing it, the transaction generally is
considered to be an investment contract.23 The touchstone is the presence of an investment in a
common venture premised on a reasonable expectation of profits to be derived from the
entrepreneurial or managerial efforts of others. 24
At bottom, the exculpation of Santos cannot be preliminarily established simply by asserting that
she did not sign the investment contracts, as the facts alleged in this case constitute fraud
perpetrated on the public.  Specially so because the absence of Santos’ signature in the contract
is, likewise, indicative of a scheme to circumvent and evade liability should the pyramid fall apart.
Lastly, we clarify that we are only dealing herein with the preliminary investigation aspect of this
case.  We do not adjudge respondents’ guilt or the lack thereof. Santos’ defense of being a mere
employee or simply an information provider is best raised and threshed out during trial of the case.
WHEREFORE, the petition is GRANTED.  The Decision of the Court of Appeals in CA–G.R. No.
SP No. 112781 and the Resolutions of the Department of Justice dated 1 October 2009 and 23
November 2009 are ANNULLED and SET ASIDE.  The Resolution of the Department of Justice
dated 18 April 2008 and 2 September 2008 are REINSTATED.  The Department of Justice is
directed to include respondent Oudine Santos in the Information for violation of Section 28 of the
Securities and Regulation Code.
SO ORDERED.
 FIRST DIVISION
G.R. Nos. 209655-60, January 14, 2015
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. PALMY TIBAYAN AND RICO Z.
PUERTO, Accused-Appellants.
DECISION
PERLAS-BERNABE, J.:
1
Assailed in this ordinary appeal  filed by accused-appellants Palmy Tibayan (Tibayan) and Rico Z.
Puerto (Puerto) (accused-appellants) is the Decision 2 dated June 28, 2013 of the Court of Appeals
(CA) in CA-G.R. CR Nos. 33063, 33562, 33660, 33660, 33669, 33939, and 34398 which modified
the Decisions dated December 4, 2009,3 June 24, 2010,4 August 2, 2010,5August 5,
2010,6 January 21, 2011,7 and August 18, 20118 of the Regional Trial Court of Las Piñas City,
Branch 198 (RTC)and convicted accused-appellants of the crime of Syndicated Estafa, defined
and penalized under Item 2 (a), Paragraph 4, Article 315 of the Revised Penal Code (RPC) in
relation to Presidential Decree No. (PD) 1689.9chanRoblesvirtualLawlibrary
The Facts
Tibayan Group Investment Company, Inc. (TGICI) is is an open-end investment company
registered with the Securities and Exchange Commission (SEC) on September 21,
2001.10 Sometime in 2002, the SEC conducted an investigation on TGICI and its subsidiaries.In
the course thereof, it discovered that TGICI was selling securities to the public without a
registration statement in violation of Republic Act No. 8799, otherwise known as “The Securities
Regulation Code,” and that TGICI submitted a fraudulent Treasurer’s Affidavit before the SEC.
Resultantly, on October 21, 2003, the SEC revoked TGICI’s corporate registration for being
fraudulently procured.11chanRoblesvirtualLawlibrary
The foregoing led to the filing of multiple criminal cases12 for Syndicated Estafa against the
incorporators and directors of TGICI,13 namely, Jesus Tibayan, Ezekiel D. Martinez, Liborio E.
Elacio, Jimmy C. Catigan, Nelda B. Baran, and herein accused-appellants. 14 Consequently,
warrants of arrest were issued against all of them; however, only accused-appellants were
arrested, while the others remained at large.15chanRoblesvirtualLawlibrary
According to the prosecution, private complainants Hector H. Alvarez, Milagros Alvarez, Clarita P.
Gacayan, Irma T. Ador, Emelyn Gomez, Yolanda Zimmer, Nonito Garlan, Judy C. Rillon, Leonida
D. Jarina, Reynaldo A. Dacon, Cristina Dela Peña, and Rodney E. Villareal 16 (private
complainants) were enticed to invest in TGICI due to the offer of high interest rates, as well as the
assurance that they will recover their investments. After giving their money to TGICI, private
complainants received a Certificate of Share and post-dated checks, representing the amount of
the principal investment and the monthly interest earnings, respectively. 17 Upon encashment, the
checks were dishonored,as the account was already closed, prompting private complainants to
bring the bounced checks to the TGICI office to demand payment. At the office, the TGICI
employees took the said checks, gave private complainants acknowledgement receipts, and
reassured that their investments, as well as the interests, would be paid. However, the TGICI
office closed down without private complainants having been paid and, thus, they were
constrained to file criminal complaints against the incorporators and directors of
TGICI.18chanRoblesvirtualLawlibrary
In their defense, accused-appellants denied having conspired with the other TGICI incorporators
to defraud private complainants. Particularly, Puerto claimed that his signature in the Articles of
Incorporation of TGICI was forged and that since January 2002,he was no longer a director of
TGICI. For her part, Tibayan also claimed that her signature in the TGICI’s Articles of
Incorporation was a forgery, as she was neither an incorporator nor a director of
TGICI.19chanRoblesvirtualLawlibrary
The RTC Rulings
On various dates, the RTC issued six (6) separate decisions convicting Tibayan of 13 counts and
Puerto of 11 counts of Estafa under Item 2 (a), Paragraph 4, Article 315 of the RPC in relation to
PD 1689, to wit: (a) in a Joint Decision20 dated December 4, 2009, the RTC found accused-
appellants guilty beyond reasonable doubt of three (3) counts of Estafa,  sentencing them to suffer
the penalty of imprisonment for a period of 20 years of reclusion temporal for each count, and
ordering them to pay the amounts of P1,500,000.00, to Hector H. Alvarez, and P119,405.23 and
P800,000.00 to Milagros Alvarez;21; (b) in a Joint Decision22 dated June 24, 2010, the RTC
acquitted Puerto of all the charges, but found Tibayan guilty beyond reasonable doubt of two (2)
counts of Estafa, sentencing her to suffer the penalty of imprisonment for a period of 20 years
of reclusion temporal for each count, and ordering her to pay the amounts of P1,300,000.00 and
US$12,000.00 to Clarita P. Gacayan and P500,000.00 to Irma T. Ador; 23; (c) in a Joint
Decision24 dated August 2, 2010, the accused-appellants were found guilty beyond reasonable
doubt of two (2) counts of Estafa, and were sentenced to suffer the penalty of imprisonment for a
period of 20 years of reclusion temporal for each count, and ordered to pay the amounts of
P1,000,000.00 to Yolanda Zimmer and P556,376.00 to Nonito Garlan; 25;(d) in a Joint
Decision26 dated August 5, 2010, the RTC found the accused-appellants guilty beyond reasonable
doubt of one (1) count of Estafa, sentencing them to suffer the penalty of imprisonment for a
period of 20 years of reclusion temporal, and ordering them to pay Emelyn Gomez the amount of
P250,000.00;27; (e) in a Decision28 dated January 21, 2011, accused-appellants were found guilty
beyond reasonable doubt of one (1) count of Estafa each, and were sentenced to suffer the
penalty of imprisonment for a period of 20 years of reclusion temporal, and ordered to pay Judy C.
Rillon the amount of P118,000.00;29; and (f) in a  Joint Decision30 dated August 18, 2011, accused-
appellants were each convicted of four (4) counts of Estafa, and meted different penalties per
count, as follows: (i) for the first count, they were sentenced to suffer the penalty of imprisonment
for a period of four (4) years and two (2) months of prision correcional medium, as minimum, to
fifteen (15) years of reclusion temporal medium, as maximum, and to pay Reynaldo A. Dacon the
amount of P100,000.00; to;(ii) for the second count, they were sentenced to suffer the penalty of
imprisonment for a period of ten (10) years of prision mayor medium, as minimum, to twenty (20)
years of reclusion temporal medium, as maximum, and to pay Leonida D. Jarina the amount of
P200,000.00; (iii) for the third count, they were sentenced to suffer the penalty of imprisonment for
a period of ten (10) years of prision mayor medium, as minimum, to twenty (20) years of reclusion
temporal medium, as maximum, and to pay Cristina Dela Peña the amount of P250,000.00; and
(iv) for the last count, they were sentenced to suffer the penalty of imprisonment for a period of
four (4) years and two (2) months of prision correcional medium, as minimum, to fifteen (15) years
of reclusion temporal medium, as maximum, and to pay Rodney E. Villareal the amount of
P100,000.00.31.
In the aforesaid decisions, the RTC did not lend credence to accused-appellants’ denials in light of
the positive testimonies of the private complainants that they invested their money in TGICI
because of the assurances from accused-appellants and the other directors/incorporators of TGICI
that their investments would yield very profitable returns. In this relation, the RTC found that
accused-appellants conspired with the other directors/incorporators of TGICI in misrepresenting
the company as a legitimate corporation duly registered to operate as a mutual fund, to the
detriment of the private complainants.32 However, the RTC convicted accused-appellants of
simple Estafa only, as the prosecution failed to allege in the informations that accused-appellants
and the other directors/ incorporators formed a syndicate with the intention of defrauding the
public, or it failed to adduce documentary evidence substantiating its claims that the accused-
appellants committed Syndicated Estafa.33chanRoblesvirtualLawlibrary
Aggrieved, accused-appellants separately appealed the foregoing RTC Decisions to the CA,
docketed as CA-G.R. CR Nos. 33063, 33562, 336609, 336690, 33939, and 34398. Thereafter, the
CA issued a Resolution34 dated February 19, 2013 ordering the consolidation of accused-
appellants’ appeals.cralawred
The CA Ruling
35
In a Decision  dated June 28, 2013, the CA modified accused-appellants’ conviction to that of
Syndicated Estafa, and accordingly, increased their respective penalties to life imprisonment for
each count.36 The CA also increased the amount of actual damages awarded to private
complainant Clarita P. Gacayan from P1,300,000.00 to P1,530,625.90, apart from the award of
US$12,000.00.37chanRoblesvirtualLawlibrary
It held that TGICI and its subsidiaries were engaged in a Ponzi scheme which relied on
subsequent investors to pay its earlier investors – and is what PD 1689 precisely aims to punish.
Inevitably, TGICI could no longer hoodwink new investors that led to its collapse. 38Thus, the CA
concluded that as incorporators/directors of TGICI, accused-appellants and their cohorts
conspired in making TGICI a vehicle for the perpetuation of fraud against the unsuspecting public..
As such, they cannot hide behind the corporate veil and must be personally and criminally liable
for their acts.39 The CA then concluded that since the TGICI incorporators/directors comprised
more than five (5) persons, accused-appellants’ criminal liability should be upgraded to that of
Syndicated Estafa, and their respective penalties increased
accordingly.40chanRoblesvirtualLawlibrary
Undaunted, accused-appellants filed the instant appeal.cralawred
The Issue Before the Court
The primordial issue for the Court’s resolution is whether or not accused-appellants are guilty
beyond reasonable doubt of the crime of Syndicated Estafa defined and penalized under Item 2
(a), Paragraph 4, Article 315 of the RPC in relation to PD 1689.cralawred
The Court’s Ruling
The Court sustains the convictions of accused-appellants.
Item 2 (a), Paragraph 4, Article 315 of the RPC provides:chanroblesvirtuallawlibrary
Art. 315. Swindling (estafa). – Any person who shall defraud another by any means mentioned
herein below shall be punished by:
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed
prior to or simultaneously with the commission of the fraud:
(a) By using a fictitious name, or falsely pretending to possess power, influence,
qualifications, property, credit, agency, business, or imaginary transactions; or by
means of other similar deceits.
xxxx
The elements of Estafa by means of deceit under this provision are the following: (a) that there
must be a false pretense or fraudulent representation as to his power, influence, qualifications,
property, credit, agency, business or imaginary transactions; (b) that such false pretense or
fraudulent representation was made or executed prior to or simultaneously with the commission of
the fraud; (c) that the offended party relied on the false pretense, fraudulent act, or fraudulent
means and was induced to part with his money or property; and (d) that, as a result thereof, the
offended party suffered damage.41chanRoblesvirtualLawlibrary
In relation thereto, Section 1 of PD 1689 defines Syndicated Estafa as
follows:chanroblesvirtuallawlibrary
Section 1. Any person or persons who shall commit estafa or other forms of swindling as defined
in Articles 315 and 316 of the Revised Penal Code, as amended, shall be punished by life
imprisonment to death if the swindling (estafa) is committed by a syndicate consisting of five or
more persons formed with the intention of carrying out the unlawful or illegal act, transaction,
enterprise or scheme, and the defraudation results in the misappropriation of moneys contributed
by stockholders, or members of rural banks, cooperatives, “samahang nayon(s),” or farmers’
associations, or funds solicited by corporations/associations from the general public.
Thus, the elements of Syndicated  Estafa are: (a) Estafa or other forms of swindling, as defined in
Articles 315 and 316 of the RPC,, is committed; (b) the Estafa or swindling is committed by a
syndicate of five (5) or more persons; and (c) defraudation results in the misappropriation of
moneys contributed by stockholders, or members of rural banks, cooperative, “samahang
nayon(s),” or farmers’ associations, or of funds solicited by corporations/associations from the
general public.42chanRoblesvirtualLawlibrary
In this case, a judicious review of the records reveals TGICI’s modus operandi of inducing the
public to invest in it on the undertaking that their investment would be returned with a very high
monthly interest rate ranging from three to five and a half percent (3%-5.5%). 43 Under such
lucrative promise, the investing public are enticed to infuse funds into TGICI. However, as the
directors/incorporators of TGICI knew from the start that TGICI is operating without any paid-up
capital and has no clear trade by which it can pay the assured profits to its investors, 44 they cannot SO ORDERED.cralawlawlibrary
comply with their guarantee and had to simply abscond with their investors’ money. Thus, the CA
correctly held that accused-appellants, along with the other accused who are still at large, used
TGICI to engage in a Ponzi scheme, resulting in the defraudation of the TGICI investors.

To be sure, a Ponzi scheme is a type of investment fraud that involves the payment of purported
returns to existing investors from funds contributed by new investors. Its organizers often solicit
new investors by promising to invest funds in opportunities claimed to generate high returns with
little or no risk. In many Ponzi schemes, the perpetrators focus on attracting new money to make
promised payments to earlier-stage investors to create the false appearance that investors are
profiting from a legitimate business.45  It is not an investment strategy but a gullibility scheme,
which works only as long as there is an ever increasing number of new investors joining the
scheme.46 It is difficult to sustain the scheme over a long period of time because the operator
needs an ever larger pool of later investors to continue paying the promised profits to early
investors. The idea behind this type of swindle is that the “con-man” collects his money from his
second or third round of investors and then absconds before anyone else shows up to collect.
Necessarily, Ponzi schemes only last weeks, or months at the most. 47chanRoblesvirtualLawlibrary

In this light, it is clearthat all the elements of Syndicated Estafa, committed through a Ponzi
scheme,are present in this case, considering that: (a) the incorporators/directors of TGICI
comprising more than five (5) people, including herein accused-appellants,, made false pretenses
and representations to the investing public – in this case,the private complainants – regarding a
supposed lucrative investment opportunity with TGICI in order to solicit money from them; (b) the
said false pretenses and representations were made prior to or simultaneous with the commission
of fraud; (c) relying on the same, private complainants invested their hard earned money into
TGICI; and (d) the incorporators/directors of TGICI ended up running away with the private
complainants’ investments, obviously to the latter’s prejudice.

Corollary thereto, the CA correctly upgraded accused-appellants’ conviction from simple Estafa to

Syndicated Estafa. In a criminal case, an appeal throws the whole case wide open for review.
Issues whether raised or not by the parties may be resolved by the appellate court. 48 Hence,
accused-appellants’ appeal conferred upon the appellate court full jurisdiction and rendered it
competent to examine the records, revise the judgment appealed from, increase the penalty, and
cite the proper provision of the penal law. 49chanRoblesvirtualLawlibrarychanrobleslaw

WHEREFORE, the appeal is DENIED. The Decision dated June 28, 2013 of the Court of Appeals
in CA-G.R. CR Nos. 33063, 33562, 33660, 33669, 33939, and 34398 is hereby AFFIRMED.
Accordingly, accused-appellants Palmy Tibayan and Rico Z. Puerto are found GUILTY beyond
reasonable doubt of 13 and 11 counts, respectively, of Syndicated Estafa and are sentenced to
suffer the penalty of life imprisonment for each count. Accused-appellants are further ordered to
pay actual damages to each of the private complainants in the following amounts: (a)
P1,500,000.00 to Hector H. Alvarez; (b) P119,405.23 and P800,000.00 to Milagros Alvarez; (c)
P1,530,625.90 and US$12,000.00 to Clarita P. Gacayan; (d) P500,000.00 to Irma T. Ador; (e)
P1,000,000.00 to Yolanda Zimmer; (f) P556,376.00 to NonitoGarlan; (g) P250,000.00 to Emelyn
Gomez; (h) P118,000.00 to Judy C. Rillon; (i) P100,000.00 to Reynaldo A. Dacon; (j) P200,000.00
to Leonida D. Jarina; (k) P250,000.00 to CristinaDela Peña; and (l) P100,000.00 to Rodney E.
Villareal.
THIRD DIVISION
 G.R. No. 220458, July 26, 2017
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. ROSARIO BALADJAY, Accused-
Appellant.
DECISION
VELASCO JR., J.:
"... the only people who get rich from "get rich quick" books are those who write them."
-Richard M. Nixon
Nature of the Case
Before this Court is an appeal from the November 13, 2014 Decision 1 of the Court of Appeals (CA)
in CA-G.R. CR HC No. 06308 finding the accused-appellant, Rosario Baladjay (Baladjay), guilty
beyond reasonable doubt of the crime of Syndicated Estafa defined and penalized under Article
315 (2) (a) of the Revised Penal Code (RPC) in relation to Section 1 of Presidential Decree No.
(PD) 1689.2
The Facts
In an Information dated August 6, 2003, accused-appellant Baladjay and her co-accused were
indicted with the crime of Syndicated Estafa. The accusatory portion of the Information reads:
The undersigned Prosecutor accuses ROSARIO BALADJAY, SATURNINO BALADJAY, LITO
NATIVIDAD, RANDY RUBIO, TESS VILLEGAS, OLIVE MARASIGAN, LORNA PANGAN,
CARMEN CHAN, STELLA ILAGAN and JOHN MUNOZ of the crime of SYNDICATED ESTAFA
under Article 315, par. 2(a) of the Revised Penal Code in relation to [PD] 1689, committed as
follows:
That on or about and sometime during the months covering the period from May 2001 to October
2002, in the City of Makati, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, being officers, employees, and/or agents of Multinational Telecom
Investors Corporation (Multitel), an association operating on funds solicited from the public,
conspiring or confederating with and mutually helping one another, and confederating as a
syndicate, did then and there, willfully, unlawfully and feloniously defraud complainants JOSE
SAMALA, HENRY CHUA CO, ROLANDO T. CUSTODIO, KATHERINE T. HEBRON AND
STELLA P. LEE by means of false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of fraud to the effect that they have the business, property
and power to solicit and accept investments and deposits from the general public and capacity to
pay the complainants guaranteed monthly interest on investment from 5% to 6% and lucrative
commissions, and by means of other deceits of similar import, induced and succeeded in inducing
the complainants to invest, deposit, give and deliver as in fact the latter gave the accused the total
amount of [Php]7,810,000.00 as investment or deposit, accused knowing fully well that said
pretenses and representations are fraudulent scheme to enable them to obtain said amount, and
thereafter, having in their possession said amount, with intent to gain and to defraud,
misappropriated and converted the same to their own personal benefits to the damage and
prejudice of said complainants in the aforementioned amount.
CONTRARY TO LAW.3
Upon motion of the public prosecutor, the charge against Carmen Chan was dismissed for lack of
probable cause; while the other accused, aside from Baladjay, remained at large. On arraignment,
Baladjay pleaded not guilty to the offense charged. Thereafter, trial on the merits ensued.
The prosecution presented Rolando T. Custodio (Rolando), Estella Pozon Lee (Estella), Henry M.
Chua Co (Henry), and Yolanda Baladjay (Yolanda) to testify against accused-appellant Baladjay.
When Rolando took to the stand, he narrated that sometime in  February 2001, his neighbor told
him about Multitel, a company which allegedly pays its investors an interest income of at least five
percent (5%) per month. Enticed with the prospective returns, Rolando invested the amount of
Php100,000.00 in Multitel and received monthly interest payments, as promised. 4
Thereafter, Rolando met Gladina Baligad (Gladina), a counselor of Multitel, who explained to him
that the company was engaged in the telecommunications business. Convinced of Gladina's
representations regarding Multitel's legitimacy and her assurances as to its profitability, Rolando
increased his investment in the company to Php2,000,000.00. Gladina then made a more
attractive offer, promising an increased monthly earning of eight to twelve percent (8%-12%) of the
investments, luring Rolando to invest a total of Php3,200,000.00 in Multitel. A receipt was issued
for every placement that Rolando made, together with checks personally signed by Baladjay,
representing his principal investment.5
However, sometime in October 2002, when he had yet to receive his interest income for the
month, Rolando learned that Baladjay was under investigation. Knowledge of this prompted him to
call Gladina, who assured him that Multitel would still be able to deliver on its promised returns.
Nevertheless, despite Gladina's assurance, Multitel defaulted. Rolando then conducted his own
investigation on the matter and found out that Multitel was not issued a secondary license by the
Securities and Exchange Commission (SEC) to deal in securities and solicit investments from the
general public. In fact, per an SEC Advisory, the company and its conduits were not duly
registered and had no juridical personality and authority to engage in any activity, let alone
investment-taking.6
Rolando exerted all effort to recover his investments after his discovery. He even attended the
meetings conducted by Multitel, the last one of which was held on November 5, 2002. During the
final meeting, Baladjay's co-accused Randy Rubio, Olive Marasigan, and Tess Villegas, all officers
of Multitel, met with the investors and repeatedly assured the latter that Multitel was a legitimate
company and that it was merely organizing its books so as to meet the monthly withdrawals.
Multitel, however, was unable to deliver on the promised returns, prompting Rolando to file a
criminal complaint.7
In her account of the events, Estella claimed that she was advised by Carmencita Chan
(Carmencita), a Multitel counselor, to invest in the company through the One Heart Multi-Purpose
Cooperative (One Heart).8 As Carmencita explained to her, One Heart was an agent of Multitel,
which could receive investments in the latter's behalf. Carmencita also informed Estella in one of
their meetings at One Heart's office at the Enterprise Building in Makati City that Multitel is a local
subsidiary of a New York-based telecommunications company. 9
Carmencita later introduced Estella and her husband to accused Manolito Natividad (Manolito),
who confirmed the information about Multitel. With the promised yield of six percent (6%) monthly
interest, Estella's total investment with Multitel amounted to Php3,280,000.00 and US$7,520.00.
Estella initially received the promised interest yields. However, in October 2002, no interest
income was deposited to Estella's account. This impelled Estella to call Carmencita, who told her
that she had to wait before she could get her income for the month. 10
Subsequently, Estella constantly called and followed up with Carmencita and even Multitel's
advertised hotline only to be repeatedly told that she would be informed of the status of her
investments. However, no information ever reached her, and her investments were never returned
by Multitel.11
In his testimony, Henry claimed that he knew the accused Baladjay, Satumino Baladjay, Randy
Rubio, Lito Natividad, and Tess Villegas. According to him, he was also persuaded by Gladina to
invest in Multitel because of the promise of a five percent (5%) monthly interest income. His total
investments amounted to Php1,050,000.00, for which he received interest payment only
once.12 When the guaranteed return never arrived, Henry called Gladina who relayed to him that
Baladjay was having difficulty with respect to the Multitel funds. Henry then became suspicious,
prompting him to consult with the SEC where he was informed that Multitel is a scam, and that a
Cease and Desist Order had already been issued against it for soliciting funds from the public
without a valid license.13
Henry then confronted Gladina, only to be redirected to Baladjay's then counsel. He then
attempted to settle with Baladjay, but the latter can no longer be contacted. And in his last-ditch
effort to recover his investment, he attended the investors meeting organized by Multitel
counselors, including Randy Rubio, Olive Marasigan, and Tess Villegas, among others. 14
Lastly, Yolanda testified that her and Baladjay's husbands are brothers. 15 Baladjay offered her a
job as a Multitel counselor, promising her commissions equivalent to seven percent (7%) of the
capital infused by the investors that she would convince. Accepting the offer, Yolanda ushered in
clients to Baladjay's office at the Enterprise Building in Ayala, Makati City until 2001. Thereafter,
Yolanda and the other Multitel counselors were assigned to different groups or cooperatives,
which Baladjay herself had established. According to her, the investments were placed in the
cooperatives, which, in turn, placed them in Multitel. 16
By September 2002, Multitel started to have problems with the SEC. Consequently, the investors
demanded from Yolanda that she return their money placements. However, she could not address
their demands as she could no longer contact Baladjay, who, by then, was already nowhere to be
found.17
For its part, the defense presented accused-appellant Baladjay as its sole witness. Baladjay, in her
testimony, denied knowing, meeting, or transacting with the private complainants. She insisted on
her innocence and decried the allegations that she took the private complainants' money in the
aggregate amount of Php7,810,000.00.18
Baladjay added that while she is the President and Chairman of the Board of Multitel International
Holdings, Inc. (MIHI), it is a company totally distinct and separate from Multinational Telecom
Investors Corporation or Multitel. She claimed that her company, which was registered with the
SEC, was only engaged in the selling of cell phones and did not solicit any investment from the
public. However, Baladjay admitted that she was also known as the president of Multitel. 19
The Ruling of the RTC
On December 3, 2012, the Regional Trial Court (RTC), Makati City, Branch 58, rendered judgment
in Criminal Case No. 03-3261 finding Baladjay guilty of Syndicated Estafa,  disposing as follows:
WHEREFORE, premises considered, JUDGMENT is hereby rendered as follows:
1. Convicting the accused Rosario Baladjay of the crime of syndicated estafa and is hereby
ordered to suffer life imprisonment.
By way of civil liability
2. To pay Dr. Rolando T. Custodio the sum of Php3,200,000.00 as actual damages and
Php500,000.00 as moral damages;
3. To pay Estella Ponce Lee the sum of Php3,280,000.00 and US$ 7,520.00 the rate to be
computed from the time of its investment and Php500,000.00 as moral damages;
4. To pay Henry M. Chua Co the sum of Php1,050,000.00 and Php500,000.00 as moral damages;
Considering that the Court has yet to acquire jurisdiction over the other accused, let alias warrants
of arrest be issued against them.
SO ORDERED.
An Amended Decision20 was later issued on April 26, 2013 to correct the middle name of one of
the private complainants, Estella Pozon Lee.
Baladjay interposed an appeal from the above-quoted RTC ruling, arguing that the trial court
gravely erred in convicting her when her guilt has not been proven beyond reasonable doubt. 21
The Ruling of the CA
In its November 13,2014 Decision, the CA affirmed the guilty verdict meted by the RTC, but with
modification with respect to the amount of moral damages awarded. The CA held that all the
elements of Estafa  under Article 315 (2) (a) of the RPC are present in the instant case, and that
the crime was committed by Baladjay together with her counselors numbering more than five (5),
thus, qualifying the felony to Syndicated Estafa in accordance with PD 1689. The dispositive
portion of the CA Decision states:
ACCORDINGLY, the appeal is DENIED and the Decision dated December 3, 2012, AFFIRMED
WITH MODIFICATION, reducing the award of moral damages to Php100,000.00 for each of the
private complainant.
SO ORDERED.22
Aggrieved, accused-appellant Baladjay elevated the case before Us, raising the same arguments
she had at the CA.
The Issue
The sole issue in this case is whether or not the appellate court gravely erred in affirming the
accused-appellant's conviction for Syndicated Estafa.
The Court's Ruling
We find no merit in the instant appeal.
All the elements of Syndicated Estafa
are present in the instant case
Accused-appellant and her eight (8) co-accused were charged with Syndicated Estafa,  in relation
to Article 315 (2)(a) of the RPC, viz:
Art. 315.  Swindling (estafa). – Any person who shall defraud another by any means mentioned
herein below shall be punished by:
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using a fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business, or imaginary transactions; or by means of other similar deceits.
xxxx
Jurisprudence elucidates that the elements of Estafa  by means of deceit under this provision are
as follows: (a) that there must be a false pretense or fraudulent representation as to the offender's
power, influence, qualifications, property, credit, agency, business or imaginary transactions; (b)
that such false pretense or fraudulent representation was made or executed prior to or
simultaneously with the commission of the fraud; (c) that the offended party relied on the false
pretense, fraudulent act, or fraudulent means and was induced to part with his money or property;
and (d) that, as a result thereof, the offended party suffered damage. 23
In relation to the foregoing, Section 1 of PD 1689 qualifies the offense of Estafa  if it is committed
by a syndicate, viz:
Section 1. Any person or persons who shall commit estafa or other forms of swindling as defined
in Articles 315 and 316 of the Revised Penal Code, as amended, shall be punished by life
imprisonment to death if the swindling (estafa) is committed by a syndicate consisting of five or
more persons formed with the intention of carrying out the unlawful or illegal act, transaction,
enterprise or scheme, and the defraudation results in the misappropriation of moneys contributed
by stockholders, or members of rural banks, cooperatives, "samahang nayon(s),"  or farmers'
associations, or funds solicited by corporations/associations from the general public.
Synthesizing the two provisions of law, the elements of Syndicated Estafa, therefore, are as
follows: (a) Estafa or other forms of swindling, as defined in Articles 315 and 316 of the RPC, is
committed; (b) the Estafa  or swindling is committed by a syndicate of five (5) or more persons;
and (c) the defraudation results in the misappropriation of moneys contributed by stockholders, or
members of rural banks, cooperatives, "samahang nayon(s),"  or farmers' associations, or of funds
solicited by corporations/associations from the general public. 24
The special law is typically invoked by those who fall prey to the too-good-to-be-true promises of a
Ponzi scheme, wherein the purported investment program offers impossibly high returns and pays
these returns to early investors out of the capital contributed by later investors. The history of such
a stratagem has been discussed in the landmark ruling of People v. Balasa (Balasa):
x x x x Named after Charles Ponzi who promoted the scheme in the 1920s, the original scheme
involved the issuance of bonds which offered 50% interest in 45 days or a 100% profit if held for
90 days. Basically, Ponzi used the money he received from later investors to pay extravagant
rates of return to early investors, thereby inducing more investors to place their money with him in
the false hope of realizing this same extravagant rate of return themselves. x x x x
However, the Ponzi scheme works only as long as there is an ever-increasing number of new
investors joining the scheme. To pay off the 50% bonds Ponzi had to come up with a one-and-a-
half times increase with each round. To pay 100% profit he had to double the number of investors
at each stage, and this is the reason why a Ponzi scheme is a scheme and not an investment
strategy. The progression it depends upon is unsustainable. The pattern of increase in the number
of participants in the system explains how it is able to succeed in the short run and, at the same
time, why it must fail in the long run. This game is difficult to sustain over a long period of time
because to continue paying the promised profits to early investors, the operator needs an ever
larger pool of later investors. The idea behind this type of swindle is that the "con-man" collects his
money from his second or third round of investors and then absconds before anyone else shows
up to collect. Necessarily, these schemes only last weeks, or months at most. 25
In Balasa,  Panata Foundation of the Philippines, Inc. sent out brochures soliciting deposits from
the public, assuring would-be depositors that their money would either be doubled after 21 days or
tripled after 30 days. Under its alleged investment program, a depositor hands his investment to a
clerk who, in turn would give it to the teller. In exchange, the depositors would receive filled-up
printed forms called "slots," which bear resemblance to bank checks and were already signed
beforehand by the president of the foundation. The amounts received by the foundation were
deposited in various banks under the names of its president and/or secretary. 26
 dissembling and any unfair way by which another is cheated. On the other hand, deceit is the false
The foundation started with a few depositors, most of whom only invested small amounts to see representation of a matter of fact whether by words or conduct, by false or misleading allegations,
whether the foundation would make good on its promise. As word got around that the foundation or by concealment of that which should have been disclosed which deceives or is intended to
was able to fulfill its obligations, more depositors were attracted by the promised returns. Blinded deceive another so that he shall act upon it to his legal injury. 34
by the prospect of gaining substantial profits for nothing more than a minuscule investment, these
investors were lured to reinvest their earnings, if not to invest more. 27
In the case at bar, it can be observed that Multitel engaged in a modus operandi that does not
deviate far from those practiced in the above-cited cases. The similarity of the pattern is uncanny.
The operations initially proceeded smoothly. However, on November 29, 1989, the foundation
Here, using Multitel as their conduit, Baladjay and her more than five (5) counselors employed
closed down. Depositors then began to demand for the reimbursement of their deposits, but the
deceit and falsely pretended to have the authority to solicit investments from the general public
foundation was unable to deliver. Consequently, sixty-four informations, all charging the offense of
when, in truth, they did not have such authority. The deception continued when Baladjay's
Syndicated Estafa  were filed against the officers and trustees of the foundation.28 The cashier and
counselors actively solicited investments from the public, promising very high interest returns
the disbursing officer of the foundation were eventually found guilty beyond reasonable doubt of
starting at five percent (5%) per month. Convinced of Baladjay's and her counselors' promise of
the offense charged. They were sentenced to suffer the penalty of life imprisonment, and were
lucrative income, the private complainants were then enticed to invest in Multitel. However,
ordered to restitute to complainants the amounts defrauded.
unknown to them, the promised high-yielding venture was unsustainable, as Multitel was not really
engaged in any legitimate business. Eventually, Baladjay and her cohorts ran away with the
Parallelisms can be drawn between Balasa and People v. Menil.29 In the said case, the spouses
private complainants' money causing them damage and prejudice.
Menil were the proprietors of a business operating under the name ABM Appliance and
Upholstery. Through ushers and sales executives, they began soliciting investments from the
Clearly, all the elements of Syndicated Estafa obtain in this case, considering that: (a) more than
general public in Surigao City and its neighboring towns, assuring would-be investors that their
five (5) persons are involved in Multitel's grand fraudulent scheme, including Baladjay and her co-
money would be multiplied tenfold after fifteen (15) calendar days. 30
accused - who employed deceit, false pretenses and representations to the private complainants
regarding a supposed lucrative investment opportunity with Multitel in order to solicit money from
Instead of the "slots" that were given to the investors in Balasa, the spouses Menil issued
them; (b) the said false pretenses and representations were made prior to or simultaneous with
"coupons" as proofs of investment. And just as in Balasa,  the initial amounts involved were small,
the commission of fraud; (c) relying on the false promises and misrepresentations thus employed,
and so the spouses Menil were able to pay the returns on the investments as they fell due.
private complainants invested their hard-earned money in Multitel; and (d) Baladjay and her co-
However, the amounts invested and the number of depositors gradually increased until it reached
accused defrauded the private complainants, obviously to the latter's prejudice.
a point wherein the daily investments amounting to millions of pesos were pouring in and
payments of the returns were delayed.31 On September 19, 1989, the spouses stopped releasing
Baladjay's connection with Multitel
payments altogether, prompting the investors to charge them with large-scale swindling. 32
has been clearly established
More recently, in People v. Tibayan,33 the Court has convicted two incorporators of the Tibayan
Baladjay contends, however, that the prosecution failed to prove her connection with Multitel,
Group Investment Company, Inc. (TGICI) of multiple counts of Syndicated Estafa  and sentencing
which is supposedly an entity distinct from the company she actually owns.
them to suffer life imprisonment for each count. As in the other fraudulent investment schemes,
the private complainants in that case were enticed to invest in TGICI due to the offer of high
We are not convinced.
interest rates, as well as the assurance that they will recover their investments. After parting with
their monies, the private complainants received a Certificate of Share and post-dated checks,
Multitel was sufficiently proven to be owned by and linked to Baladjay. The positive and
representing the amount of the principal investment and the corresponding monthly interest
straightforward testimony of her own sister-in-law, Yolanda, shows not only Baladjay's direct
earnings. The checks, however, were dishonoured upon encashment, and the TGICI office closed
connection with Multitel, but also her active participation in soliciting and convincing prospective
down without private complainants having been paid. The investors were then constrained to file
investors to place their investments in Multitel, viz:
criminal complaints against the incorporators and directors of TGICI.

The gravamen of the offenses charged in all the afore-mentioned cases is the employment of ATTY. FERMO
fraud or deceit to the damage or prejudice of another. As defined in Balasa:
Q: Why did you agree to become a counselor of Ms. Baladjay and recruit investors, Ms.
Witness?
Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all
acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidence A: Because I will earn something from the persons that I will be recruiting, ma'am.
justly reposed, resulting in damage to another, or by which an undue and unconscientious
advantage is taken of another. It is a generic term embracing all multifarious means which human Q: You mentioned that you will earn, why, how much will you earn if you will be able to recruit
ingenuity can device, and which are resorted to by one individual to secure an advantage over investors of Multitel?
another by false suggestions or by suppression of truth and includes all surprise, trick, cunning,
A: She'll give me seven percent (7%) and then to the person they will be given four percent Q: So, who established this cooperative, Madam witness?
(4%).
A: She established the cooperative Ma'am and we have our own chairman.
xxxx
Q: How many cooperatives were established, if you know, madam witness?
Q: Were you able to recruit or persuade others to invest at Multitel, Madam witness?
A: 16 Cooperatives, ma'am but I can only remember three names Telecon, Star Enterprise,
A: Yes, ma'am and the persons whom I recruited, I brought them to her residence and she One Heart.
personally talked to them.
Q: And what is the name of your cooperative?
Q: When you brought these persons to her house, did they immediately invest?
A: Star Enterprise, ma'am.35
A: Yes, ma'am they invested immediately because she is very articulate.
Q: After these investors made their investment, when will you receive the three percent (3%) Further, Baladjay's claim that she has not transacted with the private complainants, or has never
commission? known the supposed Multitel counselors to whom the victims of Multitel's fraudulent scheme
delivered their money, cannot prevail over the evidence on record. Baladjay cannot feign
A: Every month rna'am, I will receive the commission and the investors will also receive their innocence by hiding behind her so-called "counselors" because not only did they positively identify
monthly interest. her, she also signed the checks issued in favor of the investors.
Q: Do you know what are the proofs to show that people invested in Multitel, Madam witness? The RTC and the CA both found that the witnesses presented in the instant case were credible,
A: She issued us post dated checks for the principal and the monthly interest was given in having given their respective testimonies in a straightforward manner, corroborated by
cash and we have to sign in the paper. documentary evidence. Accordingly, the totality of the testimonies of the witnesses, documentary
evidence on record, and findings of the SEC all point to Baladjay as the perpetrator of a grand
xxxx scheme to defraud investors of their investments in her company, Multitel. 36

Q: For how long have you been a counselor of Multitel, Madam witness? Based on the foregoing, the CA correctly affirmed Baladjay's guilt.
A: I started with her ma'am and it was already at Multitel Office in Ayala.
Notably, the crime of Estafa under Article 315 (2)(a) of the RPC was committed by accused-
Q: When was that? appellant together with her counselors, numbering more than five (5), qualifying the crime to
Syndicated Estafa in accordance with PD 1689. Thus, the imposition of the penalty of life
A: In the year 2000 rna'am. imprisonment should be upheld, as well as the order to pay the actual damages suffered by each
of the private complainants. In addition thereto, the Court imposes interest on the monetary
Q: Year 2000 when she had an office at Ayala?
penalty at the rate of six percent (6%) per annum from the time of the demand, which shall be
A: Yes, ma'am. deemed as made on the same day the Information was filed against accused-appellant, until the
amounts are fully paid. 37
Q: What building is that Madam witness?
As regards the award of moral damages, the CA was correct in reducing the same to a fair, just
A: At Enterprise Building Ma'am. and reasonable amoune38 of One Hundred Thousand Pesos (Php100,000.00) for each of the
Q: For how long were you able to bring investors at her office at Enterprise Building? private complainants. The Court also imposes an interest at the rate of six percent (6%) per
annum on the moral damages assessed from finality of this ruling until full payment. 39
A: Until 2001, ma'am.
IN VIEW OF THE FOREGOING, the Court ADOPTS the findings and conclusions of law in the
Q: So, why, what happened after 2001? Decision dated November 13, 2014 of the Court of Appeals in CA-G.R. CR HC No. 06308
A: Because we already have our own group or cooperative. and AFFIRMS said Decision WITH MODIFICATION that (1) accused-appellant is assessed and
shall pay an interest at the rate of six percent (6%) per annum on the amount of actual damages
Q: What do you mean, that you became part of the cooperative? suffered by each of the private complainants, reckoned from the filing of Information on August 27,
2003 until fully paid, and (2) an interest at the rate of six percent (6%) per annum on the amount of
A: Because there were plenty of investors, rna'am and her office can no longer accommodate moral damages awarded to each of the private complainants from the finality of the Court's
us. Decision until full payment.
As thus modified, the judgment of the Regional Trial Court of Makati City, Branch 58, promulgated
on December 3, 2012, as amended on April 26, 2013, shall read as follows: Art. 53. Chain Distribution Plans or Pyramid Sales Schemes. - Chain distribution plans or pyramid
sales schemes shall not be employed in the sale of consumer products.
WHEREFORE, premises considered, JUDGMENT is hereby rendered as follows:

1. Convicting the accused Rosario Baladjay of the crime of Syndicated Estafa and ordering her to
suffer the penalty of life imprisonment.

By way of civil liability

2. To pay Dr. Rolando T. Custodio the sum of Php3,200,000.00 as actual damages;

3. To pay Estella Pozon Lee the sum of Php3,280,000.00 and US$7,520.00 the rate to be
computed from the time of its investment;

4. To pay Henry M. Chua Co the sum of Php1,050,000.00;

The afore-stated amounts shall be paid with legal interest at the rate of six percent (6%) per
annum from August 27, 2003 until fully paid.

By way of moral damages

5. To pay Dr. Rolando T. Custodio, Estella Pozon Lee, and Henry M. Chua Co the amount of One
Hundred Thousand Pesos (Php100,000.00) each, with interest at the rate of six percent (6%) per
annum from the finality of the Court's Decision until fully paid.

Considering that the Court has yet to acquire jurisdiction over the other accused, let alias warrants
of arrest be issued against them.

SO ORDERED.

Definition of Pyramiding from Consumers Act

(k) "Chain distribution plans" or "pyramid sales schemes" means sales devices whereby a person,
upon condition that he makes an investment, is granted by the manufacturer of his representative
a right to recruit for profit one or more additional persons who will also be granted such right to
recruit upon condition of making similar investments: Provided, That the profits of the person
employing such a plan are derived primarily from the recruitment of other persons into the plan
rather than from the sale of consumer products, services and credit: Provided, further, That the
limitation on the number of participants does not change the nature of the plan.