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750 Phil. 910

FIRST DIVISION

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

PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. PALMY TIBAYAN AND RICO Z. PUERTO, ACCUSED-APPELLANTS.

D E C I S I O N

PERLAS-BERNABE, J.:

Assailed in this ordinary appeal[1] 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,[5]August 5, 2010,[6] January 21, 2011,[7] and August 18, 2011[8] 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.[9]

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.[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 accused-appellants 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 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.[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 TGICI’s 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 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 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 temporal, and 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 of P118,000.00;[29]; and (f) in a  Joint Decision[30] 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.[33]

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 Resolution[34] dated February 19, 2013 ordering the consolidation of accused-appellants’ appeals.

The CA Ruling

In a Decision[35] 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.[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 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.

The Court’s 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 herein below shall be punished by:

x x x x
  1. 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.

    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 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 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.[47]

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.[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 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.

SO ORDERED.

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur.



[1] See Notice of Appeal Notice of Appeal dated July 10, 2013; rollo, pp. 24-25.

[2] Rollo, pp. Id. at 3-23. Penned by Associate Justice Mario V. Lopez, with Associate Justices Jose C. Reyes, Jr., and Socorro B. Inting, concurring.

[3] See Joint Decision in Crim. Case Nos. 04-0391, 06-0042, and 06-0045 penned by Judge Erlinda Nicolas-Alvaro; CA rollo (CA-G.R. CR No. 33063), pp. 39-50.

[4] See Joint Decision in Crim. Case Nos. 04-0619, 04-0622, 04-0627, 04-0635, and 04-0636; CA rollo (CA-G.R. CR No. 33562), pp. 28-42.

[5] See Joint Decision in Crim. Case Nos. 05-0710, 05-0779, 05-0784, 05-0803, and 05-0809; CA rollo (CA-G.R. CR No. 33669), pp. 29-41.

[6] See Joint Decision in Crim. Case Nos. 04-0070, 04-0085, 04-0125, 04-0330, 04-0441, and 04-0714; CA rollo (CA-G.R. CR No. 33660), pp. 20-32.

[7] See Decision in Crim. Case No. 04-1028; CA rollo (CA-G.R. CR No. 33939), pp. 25-32.

[8] See Joint Decision in Crim. Case Nos. 04-0570, 04-0567, 04-0598, and 04-0613; CA rollo (CA-G.R. CR No. 34398), pp. 41-53.

[9] Entitled “INCREASING THE PENALTY FOR CERTAIN FORMS OF SWINDLING OR ESTAFA.” (April 6, 1980).

[10] Rollo, pp. 4-5.

[11] See id. at 5. Rollo, pp. 4-5.

[12] The criminal cases were ultimately decided in six (6) separate RTC Decisions, as follows: (a) the 1st RTC Decision covered Crim. Case Nos. 04-0391, 06-0042, and 06-0045; (b) the 2nd RTC Decision covered Crim. Case Nos. 04-0619, 04-0622, 04-0627, 04-0635, and 04-0636; (c) the 3rd RTC Decision covered Crim. Case Nos. 05-0710, 05-0779, 05-0784, 05-0803, and 05-0809; (d) the 4th RTC Decision covered Crim. Case Nos. 04-0070, 04-0085, 04-0125, 04-0330, 04-0441, 04-0714; (e) the 5th RTC Decision covered Crim. Case No. 04-1028; and (f) the 6th RTC Decision covered Crim. Case Nos. 04-0570, 04-0567, 04-0598, and 04-0613.

[13] Rollo, p. 6.

[14] Id. at 5 Rollo, p. 6.

[15] Id. at 7.

[16] Id. at 6.

[17] Id. at 7.

[18] Id.

[19] Id. at 9-9-10.

[20] CA rollo (CA-G.R. CR No. 33063), pp. 39-50. Penned by Judge Erlinda Nicolas-Alvaro.

[21] Id at 50.“P119,000.23” in some parts of the records.

[22] CA rollo (CA-G.R. CR No. 33562), pp. 28-42. Penned by Judge Erlinda Nicolas-Alvaro.

[23] Id. at 42.

[24] CA rollo (CA-G.R. CR No. 33669), pp. 29-41. Penned by Judge Erlinda Nicolas-Alvaro.

[25] Id. at 40.

[26] CA rollo (CA-G.R. CR No. 33660), pp. 20-32. Penned by Judge Erlinda Nicolas-Alvaro.

[27] Id. at 31.

[28] CA rollo (CA-G.R. CR No. 33939), pp. 25-32. Penned by Judge Erlinda Nicolas-Alvaro.

[29] Id. at 31.

[30] CA rollo (CA-G.R. CR No. 34398), pp. 41-53. Penned by Judge Erlinda Nicolas-Alvaro.

[31] Id. at 52.

[32] See CA rollo (CA-G.R. CR No. 33063), pp. 48-49; CA rollo (CA-G.R. CR No. 33562), pp. 39-41; CA rollo(CA-G.R. CR No. 33669), pp. 38-40; CA rollo (CA-G.R. CR No. 33660), pp. 28-31; CA rollo (CA-G.R. CR No. 33939), pp. 30-31; and CA rollo (CA-G.R. CR No. 34398), pp.49-51.

[33] See CA rollo (CA-G.R. CR No. 33063), pp. 45-50;. CA rollo (CA-G.R. CR No. 33562), pp. 37-41; CA rollo (CA-G.R. CR No. 33669), pp. 38-39;. CA rollo (CA-G.R. CR No. 33660), pp. 28 and p. 26-31;. CA rollo (CA-G.R. CR No. 33669), pp. 36-40. CA rollo (CA-G.R. CR No. 33939), pp. 29-31; and CA rollo (CA-G.R. CR No. 34398), pp. 5147-52.

[34] CA rollo (CA-G.R. CRNo. 33063), pp. 140-142.

[35] Rollo, pp. 3-23.

[36] Id. at 21-22.

[37] Id. at 22.

[38] Id. at 16-17.

[39] Id. at 17-18.

[40] Id. at 21-2216-22.

[41] People v. Chua, G.R. No. 187052, September 13, 2012, 680 SCRA 575, 592, citing Sy v. People, G.R. No. 183879, April 14, 2010, 618 SCRA 264, 271.

[42] Galvez v. CA, G.R. No. 187919, 187979, and 188030, February 20, 2013, 691 SCRA 455, 467.

[43] See rollo, p. 7.

[44] “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.” (People v. Menil, Jr., G.R. No. 115054-66, September 12, 2000, 394 Phil 433, 453 [2000] SCRA, , citing People v. Balasa, G.R. Nos. 106357 & 108601-02, September 3, 1998, 295 SCRA 49, 356 Phil. 362, 387 [1998].)

[45] United States Securities and Exchange Commission, Ponzi Schemes. (visited December 19 September 26, 2014).

[46] People v. Romero, citing People v. Balasa, supra note 44, at 388-389.

[47] People v. Menil, supra note 44, at 455, citing People v. Balasa, id.

[48] Eusebio-Calderon v. People, October 21, 2004, 484 Phil 87, 98 (2004).

[49] Id.

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