Ponzi Cases

G.R. Nos. 209655-60 January 14, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. PALMY TIBAYAN and RICO Z. PUERTO, Accused-Appellants.

PERLAS-BERNABE, J.:

Assailed in this ordinary appeal1 filed by accused-appellants Palmy Tibayan (Tibayan)

and Rico Z. Puerto (Puerto) (accused-appellants) is the Decision2 dated June 28, 2013

of the Court of Appeals (CA) in CA-G.R. CR Nos. 33063, 33562, 33660, 33669, 33939, and 34398 which modified the Decisions dated December 4, 2009,

3 June 24,

2010,4 August 2, 2010,

5 August 5, 2010,

6 January 21, 2011,

7 and August 18, 2011

8 of

the Regional Trial Court of Las Pias 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.

9

The Facts

Tibayan Group Investment Company,Inc. (TGICI) 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 Treasurers Affidavit before the SEC. Resultantly, on October 21, 2003, the SEC revoked TGICIs corporate registration for being fraudulently procured.11 The foregoing led to the filing of multiple criminal cases

12 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 accusedappellants were arrested, while the others remained at large.15

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 DelaPea, 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.

18

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 TGICIs Articles of Incorporation was a forgery,as she was neither an incorporator nor a director of TGICI.

19

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 Decision

20 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 temporalfor each count and ordering them to pay the amounts of P1,500,000.00 to Hector H. Alvarez, and 119,405.23 and P800,000.00 to Milagros Alvarez;

21 (b) in a Joint Decision

22 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 Decision

24 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 Decision

26 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 temporaland ordering them to pay Emelyn Gomez the amount of P250,000.00;

27 (e) in a Decision

28 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 ofP118,000.00;

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; (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 mayormedium, as minimum, to twenty (20) years of reclusion temporal medium, as maximum, and to pay Cristina Dela Pea 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 temporalmedium, as maximum, and to pay Rodney E. Villareal the amount ofP100,000.00.

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.

33

Aggrieved, accused-appellants separately appealed the foregoing RTC Decisions to the CA, docketed as CA-G.R. CR Nos. 33063, 33562, 33660, 33669, 33939, and 34398. Thereafter, the CA issued a Resolution

34 dated February 19, 2013 ordering the

consolidation of accused-appellants appeals.

The CA Ruling

In a Decision35

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 toP1,530,625.90, apart from the award of US$12,000.00.

37

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.

38 Thus, 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.40

Undaunted, accused-appellants filed the instant appeal.

The Issue Before the Court

The primordial issue for the Courts 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.

The Courts Ruling

The Court sustains the convictions of accused-appellants.

Item 2 (a), Paragraph 4, Article 315 of the RPC provides:

Art. 315. Swindling (estafa). Any person who shall defraud another by any means mentioned hereinbelow shall be punished by:

x x x x

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 fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business, or imaginary transactions; or by means of other similar deceits.

x x x x

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.

41

In relation thereto, Section 1 of PD 1689 defines Syndicated Estafa as follows:

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.

42

In this case, a judicious review of the records reveals TGICIs modus operandiof 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 withoutany paid-up capital and has no clear trade by which it can pay the assured profits to its investors,

44 they cannot 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 ina Ponzi scheme, resulting in the defraudation of the TGICI investors.

To be sure, a Ponzi scheme is a typeof 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 toearly 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.

47

In this light, it is clear that all the elements of Syndicated Esta/a, 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.1wphi1 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.

49

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 Esta/a 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 Nonito Garlan; (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 Cristina Dela Pefia; and (l) P100,000.00 to Rodney E. Villareal.

SO ORDERED.

G.R. No. 115054-66 September 12, 2000

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. VICENTE MENIL, JR., accused-appellant.

D E C I S I O N

GONZAGA-REYES, J.:

On appeal is the joint decision1 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, 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.

The facts of the case are as follows:

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, Surigao City. On July 15, 1989, they, through ushers and sales executives, began soliciting 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 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 amount of P1000.00 for which they were reportedly assured a return of P10,000.00. With respect to their ushers and sales executives, they were given a 10% commission from the total amounts they remitted to the business.

The people who invested in the business were issued coupons which merely indicated the date of entry, the due date of the investment, the amount given, the amount to be received, the name and address of the investor and the name of the sales executive. Sales executives appointed by accused-appellant were given these coupons which they, in turn, gave to the people they solicited from as proof of their investment. The sales executives likewise wrote down on a piece of yellow pad paper the details of the investments they received during a particular day. These sales executives were required to remit the investments they collected daily at the offices of ABM 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 signed the yellow pad paper. The sales executives were then immediately given their 10% commission from the amount remitted. When the investments matured, a lump sum representing the total return of the investments were given to the sales executives who were given the task of distributing them to the investors they dealt with.

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, the amounts invested and the number of depositors increased. On June 30, 1989 alone, the business was able to attract more than 200 investors and the total amount of investments they 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.

Sometime during the first week of August, 1989, accused-appellant and his wife, apparently to clothe their operations with legitimacy, caused the incorporation of their business, under the name 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 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 its Articles of Incorporation,

3 are as follows:

"1. To assist in the total development of community members morally, physically, educationally and economically and socially towards their present and future progress;

2. To operate, coordinate and/or organize community development centers;

3. To make or coordinate in the making of studies and researches;

4. To solicit, receive, channel and/or distribute donations, economic aids, grants, investments in money or in kind;

5. To help train community members in newly acquired knowledge, modern trends and techniques;

6. To promote brotherhood, fellowship and unity among ourselves; and

7. To negotiate, represent, and deal with government and other agencies for the benefit and in behalf of the members as well as for the community."

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 meeting, accused-appellant informed the sales executives that the business of ABM Development Center, Inc. was proceeding normally and that investments were coming in. He advised the sales executives however that beginning that date, all investments accepted by the business would only have returns of 1:7 which investors will receive after fifteen (15) working days, excluding weekends and holidays. As such, if a person gave P100.00, his investment will mature only after

fifteen (15) working days and he will receive only P700.00. This change of policy was contained in a Memorandum dated August 24, 1989.

4

After this August 15, 1989 meeting, the sales executives continued accepting investments from the general public and the offices of accused-appellant kept on accepting the remittances of the sales executives. By this time, daily investments amounting to millions of pesos were pouring into the offices of ABM Development Center, Inc. and payments of the returns became delayed. 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.

On September 19, 1989, the ABM Development Center, Inc. stopped releasing payments. The sales investors went to the offices of ABM Development Center, Inc. to inquire about the release of 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 Prosecutors Office. Of these twenty (20) cases, seven (7) were provisionally dismissed on October 21, 1991 for failure to prosecute.

In Criminal Case No. 2948, the information5 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:

"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."

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:

"That from July 26, 1989 to September 13, 1989, at Placer, Surigao del Norte, Philippines, xxx, the above-named accused xxx 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., xxx 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 xxx misappropriate xxx the said amount xxx remitted to them subject to the condition that xxx after the lapse of 15 working days from remittance, said investment would be returned in seven folds to the investors, but xxx repeated demands made xxx said accused failed and refused to pay or give as agreed upon by them xxx to the damage and prejudice of the investors in the said amount P610,046.00 xxx 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.

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:

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 Mayors 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:

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;

2. That accused Vicente Menil, as General Manager, and Adriana Menil, as Treasurer, operating through the sales executives who solicited/received investments from the general public and remitted to the corporation;

3. That the listed sales executives and the amounts claimed remitted and received are qualifiedly admitted; and

4. That the operation of ABM stopped on September 18, 1989.9

Thereafter, trial on the merits in the fourteen (14) cases commenced.

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 her in an Order dated November 12, 1992.

10

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 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 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 public, and the places where they solicited

11

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 number of witnesses to only four (4) sales executives.

These witnesses, namely Felicitas Gotostos, Gloria Apale, Wlfredo Lisandra and Nena Cagna-an, uniformly declared that they were sales executives and investors appointed by accused-appellant 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 totalling P1,397,619.00 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 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 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.

For the thirteen (13) estafa cases, the prosecution presented the thirteen complainants who were 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 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 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:

CRIMINAL CASE NO.

WITNESS PLACE AMOUNT

2956 Zohar Mandaya Placer, Surigao del Norte P610,046.00

3000 Cedronio Bacuag, Surigao del 136,670.00

Cagampang Norte

3001 Joseph Lacsamana Brgy. del Rosario, Tubod, Surigao del Norte

P203,850.00

3013 Domingo T. Tejada Brgy. Anislagan, Placer, Surigao del Norte

P 29,070.00

3020 Rosiefe M. Laid Brgy. Sta Cruz, Placer, Surigao del Norte

P114,620.00

3021 Gamaliela Mordeno Brgy. Roxas, Mainit, Surigao del Norte

447,960.00

3022 Rebecca Mosca Brgy. Poblacion, Mainit, Surigao del Norte

P275,280.00

3026 Patora Decalit Brgy. Sta. Cruz, Placer, Surigao del Norte

222,120.00

3028 Francisca Tado Tubod, Surigao del Norte P399,650.00

3052 Porferia Etac Brgy. Bad-as, Placer, Surigao del Norte

172,910.00

3053 Leodegaria Paquero Brgy. Marga, Tubod, Surigao del Norte

148,278.00

3054 Felomina Calamba Tubod, Surigao del Norte P320,000.00

3058 Merlina Silva Brgy. Bad-as, Placer, 500,129.00

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 Mayors 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.

14He 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 attache 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 sheriffs 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 decision23

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:

"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:

Crim. Case No. 2948:

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.


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.


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.


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.


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.


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.












An indeterminate penalty of Two (2) Years 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.




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 accuseds preventive detention shall be credited in his favor, pursuant to law.

SO ORDERED."24

Hence, this appeal where accused-appellant raises the following assignment of errors

25 :

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:

"Q: Okay. All right, you know this Crim. Case No. 3053, one Leodegarda 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 Leodegarda Paquero?

Court:

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.

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-appellants 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 off maturing investments were taken from the remittances received by ABM Development Center, Inc. Thus:

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 Im 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 investments made in the previous days, correct?

A: Yes, sir.

Q: And the same thing is followed on the days after?

A: Yes, sir.

Q: Your last due date was August 28?

A: Yes, sir.

Q: Again the returns for these date were taken from the previous days, from the investments of the people from the previous dates?

A: Yes, sir.

x x x

Q: On August 29, were there still investments?

A: There was still investment on that date, sir, but as far as I know there were so many releases on that day. I paid up to September 18. But on September 19, there was already an incident that happened.

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?

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

In other words, accused-appellant merely paid the returns of maturing investments from the 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 pays these returns to early investors out of the capital contributed by later investors. In People vs. Balasa

33 , we had occasion to describe the

workings of the "Ponzi Scheme" as follows:

"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 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 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 conman 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."

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 Mayors 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 Mayors 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.

There is no merit in 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:

"Sec.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 toreclusion perpetua if the amount of the fraud exceeds 100,000 pesos."

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 corporations 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 mayorminimum, 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:

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.

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. 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.



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. 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. 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.



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

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

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.

Iyon namang nanlilinlang. Walang gawaing masama na hindi nabubunyag rin. Totoong mahigpit 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,

10Analina

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,

Documents

Ponzi Cases