I. SHORT TITLE: PEOPLE VS.

MATEO
II. FULL TITLE: People Of The Philippines Vs. Ervin Y. Mateo, Evelyn E. Mateo,
Carmelita B. Galvez, Romeo L. Esteban, Galileo J. Saporsantos And Nenita S.
Saporsantos, Ervin Y. Mateo - G.R. No. 210612, October 9, 2017, J. Peralta
III. TOPIC: DISSOLUTION
IV. STATEMENT OF THE FACTS:
In March 2001, private complainant Herminia Alcid, Jr. (Herminia, Jr.) met a
certain Geraldine Alejandro (Geraldine)who introduced herself as the head of the
Business Center of MMG International Holdings Co., Ltd. (MMG).Geraldine was then
soliciting investments and has shown a brochure showcasing the investments and
businesses of the said entity. Herminia, Jr. was also shown Articles of Partnership to
prove that MMG is registered with the 'Securities and Exchange
Commission (SEC). The Articles of Partnership showed accused-appellant as a
general partner. who has contributed ₱49,750,000.00 to MMG. The other accused
were shown to be limited partners who have contributed ₱50,000.00 each.
Convinced by the representations of Geraldine, Herminia, Jr.
invested ₱50,000.00 with MMG on April 20, 2002. Subsequently, all the interests and
principal were promptly paid, which induced him to make a bigger investment. On
May 2, 2002, Herminio, Jr. and his father, Herminia, Sr., made a joint investment of
₱200,000.00. Later, Geraldine was also able to convince Herminia, Jr.'s sister,
.Melanie, who made an investment of ₱50,000.00 with MMG.
The private complainants' investments were covered by a notarized
Memorandum of Agreement (MOA), signed by accused-appellant, which stipulated,
among others, that MMG was being represented by its President, herein accused-
appellant, and that the investors will be earning 2.5% monthly interest income from
the capital they have invested.
Subsequently, the complainants received several post-dated checks covering
their investments. However, when they tried to deposit the checks, their banks
informed them that these were dishonored because MMG's accounts in the bank
from which the checks were drawn were already closed. The complainants then
demanded from the accused the return of their money, but their demands were
unheeded.
V. STATEMENT OF THE CASE:
The private complainants and other investors then went to the SEC to file a
complaint, where they discovered that MMG was not a registered issuer of
securities. The SEC forwarded their complaint to the City Prosecutor of Makati.
Subsequently, on April 11, 2003, the Assistant City Prosecutor of Makat City filed
two separate Informations with the RTC of Makati City charging accused-appellant,
together with Evelyn E. Mateo, Carmelita B. Galvez, Romeo L. Esteban, Galileo J.
Saporsantos and Nenita S. Saporsantos with the crime of syndicated estafa. Among
the accused, only accused-appellant was arrested and when arraigned on February
19, 2004, he pleaded not guilty to all the charges.
Pre-trial was then conducted. Thereafter, Criminal Case Nos. 03-2936 and 03-
2987 were jointly tried. After the prosecution rested its case, the defense,
represented by private counsel, failed to present its evidence despite several re-
settings made by the RTC. Thus, upon motion of the prosecution, the case was
deemed submitted for resolution.
On October 22, 2008, the RTC rendered its Judgment finding accused-appellant
guilty as charged. The RTC found that all the elements of the crime of syndicated
estafa are present, to wit: (1) MMG was formed by accused-appellant, together with
five (5) other persons; (2) accused-appellant, together with his co-accused,
committed fraud in inducing private complainants to part with their money; and (3)
the fraud resulted in the misappropriation of the money contributed by the private
complainants.
Accused-appellant appealed the RTC Decision with the CA which affirmed the said
decision in toto.
On August 8, 2013, accused-appellant, through counsel, filed a Notice of
Appeal manifesting his intention to appeal the CA Decision to this Court.
In its Resolution dated August 29, 2013, the CA gave due course to accused-
appellant's Notice of Appeal and ordered the elevation of the records of the case to
this Court.
Hence, this appeal was instituted.

VI. ISSUE:
a) WON accused-appellant may be convicted with estafa under article 315,
paragraph 2(a) in relation to p.d. 1689.
b) WON the suspension of all claims as an incident to MMG Group of
Companies'. corporate rehabilitation also contemplate the suspension of
criminal charges filed against herein accused-appellant as an officer of the
distressed corporation.
VII. RULING:
a) Yes, the accused-appellant may be convicted.
The elements of estafa by means of deceit under Article 315 (2 )(a) of the
RPC 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.
In addition, 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. 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.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.
In relation to the above, the elements of syndicated estafa as defined under
Section 1 of PD 1689 are: (a) estafa or other forms of swindling as defined in Articles
315 and 316 of the Revised Penal Code is committed; (b) the estafaor swindling is
committed by a syndicate of five or ·more persons; and (c) defraudation results in
the misappropriation of moneys contributed by stockholders, or members of rural
banks, cooperatives, "samahang nayon(s)," or farmers' associations, or of funds
solicited by corporations/associations from the general public.
Thus, in the present case, it is clear that all the elements of syndicated estafa,
are present, considering that: (a) the incorporators/directors of MMG comprising
more than five (5) people, including herein accused-appellant, made false. pretenses
and representations to the investing public - in this case, the private complainants -
regarding a supposed lucrative investment opportunity with MMG 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 MMG; and (d) the
incorporators/directors of MMG ended up running away with the private
complainants' investments, obviously to the latter's prejudice.

b) No, the criminal charges are not deemed suspended.

There is no reason why criminal proceedings should be suspended during
corporate rehabilitation, more so, since the prime purpose of the criminal action is
.to punish the offender in order to deter him and others from committing the same
or similar offense, to isolate him from society, reform and rehabilitate him or, in
general, to maintain social order. As correctly observed in Rosario, it would be
absurd for one who has engaged in criminal conduct could escape punishment by
the mere filing of a petition for rehabilitation by the corporation of which he is an
officer.
The prosecution of the officers of the corporation has no bearing on the
pending rehabilitation of the corporation, especially since they are charged in their
individual capacities. Such being the case, the purpose of the law for the issuance of
the stay order is not compromised, since the appointed rehabilitation receiver can
still fully discharge his functions as mandated by law. It bears to stress that the
rehabilitation receiver is not charged to defend the officers of the corporation. If
there is anything that the rehabilitation receiver might be remotely interested in is
whether the court also rules that petitioners are civilly liable. Such a scenario,
however, is not a reason to suspend the criminal proceedings, because as aptly
discussed in Rosario, should the court prosecuting the officers of the corporation
find that an award or indemnification is warranted, such award would fall under the
category of claims, the execution of which would be subject to the stay order issued
by the rehabilitation court.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the Court AFFIRMS the Decision dated July 16, 2012 and Resolution
dated July 1, 2013 of the Court of Appeals in CA-G.R. CR-H.C. No. 04001.
SO ORDERED.
 I. SHORT TITLE: MANUEL R. DULAY ENTERPRISES, INC., ET AL. V. CA
II. FULL TITLE: MANUEL R. DULAY ENTERPRISES, INC., VIRGILIO E. DULAY
AND NEPOMUCENO REDOVAN, vs. THE HONORABLE COURT OF APPEALS,
EDGARDO D. PABALAN, MANUEL A. TORRES, JR., MARIA THERESA V.
VELOSO AND CASTRENSE C. VELOSO, G.R. No. 91889, August 27, 1993, J.
NOCON

III.
IV. TOPIC: CLOSE CORPORATION
V. STATEMENT OF THE FACTS:
Petitioner Manuel R. Dulay Enterprises, Inc, a domestic corporation with the
following as members of its Board of Directors: Manuel R. Dulay with 19,960 shares
and designated as president, treasurer and general manager, Atty. Virgilio E. Dulay
with 10 shares and designated as vice-president; Linda E. Dulay with 10 shares;
Celia Dulay-Mendoza with 10 shares; and Atty. Plaridel C. Jose with 10 shares and
designated as secretary, owned a property covered by TCT No. 17880 4and known
as Dulay Apartment consisting of sixteen (16) apartment units on a six hundred
eighty-nine (689) square meters lot, more or less.
Petitioner corporation through its president, Manuel Dulay, obtained various
loans for the construction of its hotel project, Dulay Continental Hotel (now
Frederick Hotel). It even had to borrow money from petitioner Virgilio Dulay to be
able to continue the hotel project. As a result of said loan, petitioner Virgilio Dulay
occupied one of the unit apartments of the subject property since property since
1973 while at the same time managing the Dulay Apartment at his shareholdings in
the corporation was subsequently increased by his father. 5chanrobles virtual law
library
On December 23, 1976, Manuel Dulay by virtue of Board Resolution
No 18 of petitioner corporation sold the subject property to private respondents
6

spouses Maria Theresa and Castrense Veloso in the amount of P300,000.00 as

evidenced by the Deed of Absolute Sale. 7Thereafter, TCT No. 17880 was cancelled
and TCT No. 23225 was issued to private respondent Maria Theresa
Veloso. 8 Subsequently, Manuel Dulay and private respondents spouses Veloso
executed a Memorandum to the Deed of Absolute Sale of December 23, 1976 giving
Manuel Dulay within (2) years or until December 9, 1979 to repurchase the subject
property for P200,000.00 which was, however, not annotated.
On December 24, 1976, private respondent Maria Veloso, without the
knowledge of Manuel Dulay, mortgaged the subject property to private respondent
Manuel A. Torres for a loan of P250,000.00 which was duly annotated as Entry No.
68139 in TCT No. 23225.
Upon the failure of private respondent Maria Veloso to pay private respondent
Torres, the subject property was sold on April 5, 1978 to private respondent Torres
as the highest bidder in an extrajudicial foreclosure sale as evidenced by the
Certificate of Sheriff's Sale 11issued on April 20, 1978.
On July 20, 1978, private respondent Maria Veloso executed a Deed of
Absolute Assignment of the Right to Redeem 12in favor of Manuel Dulay assigning
her right to repurchase the subject property from private respondent Torres as a
result of the extra sale held on April 25, 1978.
 As neither private respondent Maria Veloso nor her assignee Manuel Dulay was
able to redeem the subject property within the one year statutory period for
redemption, private respondent Torres filed an Affidavit of Consolidation of
Ownership with the Registry of Deeds of Pasay City. Title was subsequently issued
to private respondent Manuel Torres on April 23, 1979.
We do not agree.chanroblesvirtualawlibrarychanrobles virtual law library
VI. STATEMENT OF THE CASE:
On October 1, 1979, private respondent Torres filed a petition for the
issuance of a writ of possession against private respondents spouses Veloso and
Manuel Dulay in LRC Case No. 1742-P. However, when petitioner Virgilio Dulay was
never authorized by the petitioner corporation to sell or mortgage the subject
property, the trial court ordered private respondent Torres to implead petitioner
corporation as an indispensable party but the latter moved for the dismissal of his
petition which was granted in an Order dated April 8, 1980.
On June 20, 1980, private respondent Torres and Edgardo Pabalan, real
estate administrator of Torres, filed an action against petitioner corporation, Virgilio
Dulay and Nepomuceno Redovan, a tenant of Dulay Apartment Unit No. 8-A for the
recovery of possession, sum of money and damages with preliminary injunction in
Civil Case, No. 8198-P with the then Court of First Instance of Rizal.
On July 21, 1980, petitioner corporation filed an action against private
respondents spouses Veloso and Torres for the cancellation of the Certificate of
Sheriff's Sale and TCT No. 24799 in Civil Case No. 8278-P with the then Court of
First Instance of Rizal.
On January 29, 1981, private respondents Pabalan and Torres filed an action
against spouses Florentino and Elvira Manalastas, a tenant of Dulay Apartment Unit
No. 7-B, with petitioner corporation as intervenor for ejectment in Civil Case No. 38-
81 with the Metropolitan Trial Court of Pasay City.
Thereafter or on May 17, 1985, petitioner corporation and Virgilio Dulay
filed an action against the presiding judge of the Metropolitan Trial Court of Pasay
City, private respondents Pabalan and Torres for the annulment of said decision
with the Regional Trial Court of Pasay in Civil Case No. 2880-
P.chanroblesvirtualawlibrarychanrobles virtual law library
Thereafter, the three (3) cases were jointly tried and the trial court rendered
a decision in favor of private respondents. Not satisfied with said decision,
petitioners appealed to the Court of Appeals.
During the pendency of this petition, private respondent Torres died on April
3, 1991 as shown in his death certificate 17and named Torres-Pabalan Realty &
Development Corporation as his heir in his holographic will 18dated October 31,
1986.chanroblesvirtualawlibrarychanrobles virtual law library

VII. ISSUE:
Whether the sale of the subject property between spouses Veloso and Manuel
Dulay has no binding effect on the corporation as Board Resolution 18 which
authorized the sale of the subject property was resolved without the approval of
 all the members of the board of directors and said Board Resolution was
prepared by a person not designated by the corporation to be its secretary.
VIII. RULING: No, the sale binds the corporation.
Section 101 of the Corporation Code of the Philippines provides that "When
board meeting is unnecessary or improperly held. Unless the by-laws provide
otherwise, any action by the directors of a close corporation without a meeting shall
nevertheless be deemed valid if: (1) Before or after such action is taken, written
consent thereto is signed by all the directors; or (2) All the stockholders have actual
or implied knowledge of the action and make no prompt objection thereto in
writing; or (3) The directors are accustomed to take informal action with the
express or implied acquiesce of all the stockholders; or (4) All the directors have
express or implied knowledge of the action in question and none of them makes
prompt objection thereto in writing.
If a directors' meeting is held without proper call or notice, an action taken
therein within the corporate powers is deemed ratified by a director who failed to
attend, unless he promptly files his written objection with the secretary of the
corporation after having knowledge thereof." Herein, the corporation is classified as
a close corporation and consequently a board resolution authorizing the sale or
mortgage of the subject property is not necessary to bind the corporation for the
action of its president.
At any rate, a corporate action taken at a board meeting without proper call
or notice in a close corporation is deemed ratified by the absent director unless the
latter promptly files his written objection with the secretary of the corporation after
having knowledge of the meeting which, in this case, Virgilio Dulay failed to do.
The corporation's claim that the sale of the subject property by its president,
Manuel Dulay, to spouses Veloso is null and void as the alleged Board Resolution 18
was passed without the knowledge and consent of the other members of the board
of directors cannot be sustained. Virgilio E. Dulay's protestations of complete
innocence to the effect that he never participated nor was even aware of any
meeting or resolution authorizing the mortgage or sale of the subject premises is
difficult to believe.
On the contrary, he is very much privy to the transactions involved. To begin
with, he is an incorporator and one of the board of directors designated at the time
of the organization of Manuel R. Dulay Enterprises, Inc. In ordinary parlance, the
said entity is loosely referred to as a "family corporation." The nomenclature, if
imprecise, however, fairly reflects the cohesiveness of a group and the parochial
instincts of the individual members of such an aggrupation of which Manuel R.
Dulay Enterprises, Inc. is typical: four-fifths of its incorporators being close relatives
namely, 3 children and their father whose name identifies their corporation.
Besides, the fact that Virgilio Dulay on 24 June 1975 executed an affidavit that he
was a signatory witness to the execution of the post-dated Deed of Absolute Sale of
the subject property in favor of Torres indicates that he was aware of the
transaction executed between his father and Torres and had, therefore, adequate
knowledge about the sale of the subject property to Torres.
Consequently, the corporation is liable for the act of Manuel Dulay and the
sale of the subject property to Torres by Manuel Dulay is valid and binding.
 IX. DISPOSITIVE PORTION:
WHEREFORE, the petition is DENIED and the decision appealed from is hereby
AFFIRMED.
SO ORDERED.