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FIRST DIVISION

PEOPLE
OF
THE
PHILIPPINES,
Plaintiff-Appellee,

G.R. Nos. 209655-60

Present:
SERENO,C.J., Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
PEREZ, and
PERLAS-BERNABE, JJ.

- versus -

PALMY TIBAYAN and RICO

Z. PUERTO,
Accused-Appellants.

Promulgated:

JAN 1 4 2015

x--------------------------------------------------------------------------------~------==----------x
DECISION

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
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 ofthe Regional

See Notice of Appeal dated July 10, 2013; rollo, pp. 24-25.
Id. at 3-23. Penned by Associate Justice Mario V. Lopez with Associate Justices Jose C. Reyes, Jr. and
Socorro B. Inting, concurring.
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.
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.
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.
.
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.
See Decision in Crim. Case No. 04-1028; CA rollo (CA-G.R. CR No. 33939), pp. 25-32.
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.

Decision

G.R. Nos. 209655-60

Trial Court of Las Pias City, Branch 198 (RTC) and convicted accusedappellants 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 Dela Pea, and Rodney E. Villareal16 (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
9
10
11
12

13
14
15
16
17

Entitled INCREASING THE PENALTY FOR CERTAIN FORMS OF SWINDLING OR ESTAFA (April 6, 1980).
Rollo, pp. 4-5.
See id. at 5.
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. 040570, 04-0567, 04-0598, and 04-0613.
Rollo, p. 6.
Id. at 5.
Id. at 7.
Id. at 6.
Id. at 7.

Decision

G.R. Nos. 209655-60

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 Decision20 dated December 4, 2009, the RTC found accused-appellants
guilty beyond reasonable doubt of three (3) counts of Estafa, sentencing
them to suffer the penalty of imprisonment for a period of 20 years of
reclusion temporal for each count and ordering them to pay the amounts of
1,500,000.00 to Hector H. Alvarez, and 119,405.23 and 800,000.00 to
Milagros Alvarez;21 (b) in a Joint Decision22 dated June 24, 2010, the RTC
acquitted Puerto of all the charges, but found Tibayan guilty beyond
reasonable doubt of two (2) counts of Estafa, sentencing her to suffer the
penalty of imprisonment for a period of 20 years of reclusion temporal for
each count, and ordering her to pay the amounts of 1,300,000.00 and
US$12,000.00 to Clarita P. Gacayan and 500,000.00 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
1,000,000.00 to Yolanda Zimmer and 556,376.00 to Nonito Garlan;25 (d)
in a Joint Decision 26 dated August 5, 2010, the RTC found the accusedappellants guilty beyond reasonable doubt of one (1) count of Estafa,
18
19
20
21
22
23
24
25
26

Id.
Id. at 9-10.
CA rollo (CA-G.R. CR No. 33063), pp. 39-50.
Id at 50. 119,000.23 in some parts of the records.
CA rollo (CA-G.R. CR No. 33562), pp. 28-42.
Id. at 42.
CA rollo (CA-G.R. CR No. 33669), pp. 29-41.
Id. at 40.
CA rollo (CA-G.R. CR No. 33660), pp. 20-32.

Decision

G.R. Nos. 209655-60

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 250,000.00; 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 118,000.00; 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 100,000.00; (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 200,000.00; (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 Pea the amount of 250,000.00; 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 100,000.00.31
In the aforesaid decisions, the RTC did not lend credence to accusedappellants 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,

27
28
29
30
31
32

Id. at 31.
CA rollo (CA-G.R. CR No. 33939), pp. 25-32.
Id. at 31.
CA rollo (CA-G.R. CR No. 34398), pp. 41-53.
Id. at 52.
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.

Decision

G.R. Nos. 209655-60

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 Resolution34 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 accusedappellants 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 1,300,000.00 to 1,530,625.90,
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

33

34
35
36
37
38
39
40

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.
CA rollo (CA-G.R. CR No. 33063), pp. 140-142.
Rollo, pp. 3-23.
Id. at 21-22.
Id. at 22.
Id. at 16-17.
Id. at 17-18.
Id. at 21-22.

Decision

G.R. Nos. 209655-60

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:
xxxx
2. By means of any of the following false
pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the
fraud:
(a) By using fictitious name, or falsely
pretending to possess power, influence,
qualifications, property, credit, agency,
business, or imaginary transactions; or
by means of other similar deceits.
xxxx

The elements of Estafa by means of deceit under this provision are the
following: (a) that there must be a false pretense or fraudulent representation
as to his power, influence, qualifications, property, credit, agency, business
or imaginary transactions; (b) that such false pretense or fraudulent
representation was made or executed prior to or simultaneously with the
commission of the fraud; (c) that the offended party relied on the false
pretense, fraudulent act, or fraudulent means and was induced to part with
his money or property; and (d) that, as a result thereof, the offended party
suffered damage.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
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.

Decision

G.R. Nos. 209655-60

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
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
42
43
44

45
46

Galvez v. CA, G.R. No. 187919, 187979, and 188030, February 20, 2013, 691 SCRA 455, 467.
See rollo, p. 7.
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., 394 Phil 433, 453 [2000], citing People v. Balasa, 356
Phil. 362, 387 [1998].)
United States Securities and Exchange Commission, Ponzi Schemes. <www.sec.gov/answers/ponzi.htm>
(visited December 19, 2014).
People v. Romero, 365 Phil 531, 542 (1999), citing People v. Balasa, supra note 44, at 388-389.

Decision

G.R. Nos. 209655-60

third round of investors and then absconds before anyone else shows up to
47
collect. Necessarily, Ponzi schemes only last weeks, or months at the most.
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 Esta/a to Syndicated Esta/a. 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, accusedappellants' 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, accusedappellants 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) Pl ,500,000.00 to Hector
H. Alvarez; (b) Pl 19,405.23 and P800,000.00 to Milagros Alvarez; (c)
Pl,530,625.90 and US$12,000.00 to Clarita P. Gacayan; (d) P500,000.00 to
Irma T. Ador; (e) Pl,000,000.00 to Yolanda Zimmer; (/) P556,376.00 to
Nonito Garlan; (g) P250,000.00 to Emelyn Gomez; (h) Pl 18,000.00 to Judy
C. Rillon; (i) Pl 00,000.00 to Reynaldo A. Dacon; (j) P200,000.00 to
Leonida D. Jarina; (k) P250,000.00 to Cristina Dela Pefia; and (l)
Pl 00,000.00 to Rodney E. Villareal.
SO ORDERED.

JAa,,,;/

ESTELA M~iERLAS-BERNABE
Associate Justice
47
48

49

People v. Menil, supra note 44, at 455, citing People v. Balasa, id.
Eusebio-Calderon v. People, 484 Phil 87, 98 (2004).
Id.

G.R. Nos. 209655-60

Decision

WE CONCUR:

MARIA LOURDES P.A. SERENO

Chief Justice
Chairperson

~~11~

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

JOS

EREZ

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that
the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.

MARIA LOURDES P. A. SERENO

Chief Justice