FIRST DIVISION

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

PEOPLE OF THE PHILIPPINES, plainti-appellee, vs. PALMY
TIBAYAN and RICO Z. PUERTO, accused-appellants.
DECISION
PERLAS-BERNABE, J :
p

Assailed in this ordinary appeal 1 led 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, 33669, 33939, and 34398 which modied 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,
dened 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 Treasurer's Adavit 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 ling 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 Pea,
and Rodney E. Villareal 16 (private complainants) were enticed to invest in TGICI
due to the oer 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 Certicate of Share and post-dated checks, representing
the amount of the principal investment and the monthly interest earnings,
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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 oce to demand payment. At the oce, 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 oce closed down without private complainants having been
paid and, thus, they were constrained to le criminal complaints against the
incorporators and directors of TGICI. 18
TCEaDI

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 suer 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 suer 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 suer 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
suer 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 suer
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 dierent penalties per count, as follows: (i)
for the rst count, they were sentenced to suer the penalty of imprisonment for
a period of four (4) years and two (2) months of prision correccional medium, as
minimum, to fteen (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 suer the penalty of imprisonment for a period of
ten (10) years of prision mayor medium, as minimum, to twenty (20) years of
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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 suer
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 Pea the amount of P250,000.00; and (iv)
for the last count, they were sentenced to suer the penalty of imprisonment for
a period of four (4) years and two (2) months of prision correccional medium, as
minimum, to fteen (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 accusedappellants and the other directors/incorporators of TGICI that their investments
would yield very protable returns. In this relation, the RTC found that accusedappellants 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 Decision 35 dated June 28, 2013, the CA modied 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 ve (5) persons, accusedappellants' criminal liability should be upgraded to that of Syndicated Estafa, and
their respective penalties increased accordingly. 40
Undaunted, accused-appellants led the instant appeal.

SaHIEA

The Issue Before the Court

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The primordial issue for the Court's resolution is whether or not accusedappellants are guilty beyond reasonable doubt of the crime of Syndicated Estafa
dened 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:
xxx xxx xxx
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 ctitious name, or falsely pretending to possess
power, inuence, qualications, property, credit,
agency, business, or imaginary transactions; or by
means of other similar deceits.
xxx xxx xxx

The elements of E st afa 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, inuence, qualications, 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 oended 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 oended party suered damage. 41
In relation thereto, Section 1 of PD 1689 denes Syndicated Estafa as follows:
Section 1. Any person or persons who shall commit estafa or other
forms of swindling as dened 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 ve 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 ar e: (a) Estafa or other forms of

swindling, as dened in Articles 315 and 316 of the RPC, is committed; (b) the
Estafa or swindling is committed by a syndicate of ve (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
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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 ve
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 prots 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 proting 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 dicult 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 prots 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
CIDcHA

In this light, it is clear that 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 ve (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
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Rico Z. Puerto are found GUILTY beyond reasonable doubt of 13 and 11 counts,
respectively, of Syndicated Estafa and are sentenced to suer 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 Pea; and (l)
P100,000.00 to Rodney E. Villareal.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Perez, JJ., concur.
Footnotes
1. See Notice of Appeal dated July 10, 2013; rollo, pp. 24-25.
2. 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, 040441, 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. 2532.
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.
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, 040622, 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, 040441, 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.
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13. Rollo, p. 6.
14. Id. at 5.
15. Id. at 7.
16. Id. at 6.
17. Id. at 7.
18. Id.
19. Id. at 9-10.
20. CA rollo (CA-G.R. CR No. 33063), pp. 39-50.
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.
23. Id. at 42.
24. CA rollo (CA-G.R. CR No. 33669), pp. 29-41.
25. Id. at 40.
26. CA rollo (CA-G.R. CR No. 33660), pp. 20-32.
27. Id. at 31.
28. CA rollo (CA-G.R. CR No. 33939), pp. 25-32.
29. Id. at 31.
30. CA rollo (CA-G.R. CR No. 34398), pp. 41-53.
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), p. 50; CA rollo (CA-G.R. CR No. 33562), p.
41; CA rollo (CA-G.R. CR No. 33669), pp. 38-39; CA rollo (CA-G.R. CR No.
33660), pp. 28 and 31; CA rollo (CA-G.R. CR No. 33939), p. 31; and CA rollo
(CA-G.R. CR No. 34398), p. 51.
34. CA rollo (CA-G.R. CR No. 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 21-22.
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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 prots 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., 394 Phil. 433, 453 [2000], citing
People v. Balasa, 356 Phil. 362, 387 [1998].)
45. United States Securities and Exchange Commission, Ponzi Schemes.
<www.sec.gov/answers/ponzi.htm> (visited December 19, 2014).
46. People v. Romero, 365 Phil. 531, 542 (1999), 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, 484 Phil. 87, 98 (2004).
49. Id.

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