PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
vs. PALMY TIBAYAN and RICO Z. PUERTO, Accused-Appellants. G.R. Nos. 209655-60, January 14, 2015
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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 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 TGICI’s 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.1âwphi1 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
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