PNB V.

CONCEPCION MINING

115 PHIL 723

FACTS:

A case for collection of a sum of money was filed against defenda

nts in
connection with a promissory note they issued with others. Th
e
defendants move that since their co-makers have died, claim should
be also against the estates of such. This was denied by the court.

HELD:

Where an instrument containing the words “I promise to pay” is signed by

two or more persons, they are deemed to be jointly and severally l
iable
thereon. By virtue of this provision found in Section 17, and as th
e
promissory note was executed jointly and severally by the parties, th
e payee of the
promissory note had the right to hold any one of the them
responsible for the payment of the amount of the note.

G.R. No. L-16968 July 31, 1962

PHILIPPINE NATIONAL BANK, plaintiff-appellee,

vs.
CONCEPCION MINING COMPANY, INC., ET AL., defendants-appellants.

Ramon B. de los Reyes for plaintiff-appellee.

Demetrio Miraflor for defendants-appellants.

LABRADOR, J.:
Appeal from a judgment or decision of the Court of First Instance of Manila, Hon.
Gustavo Victoriano, presiding, sentencing defendants Concepcion Mining
Company and Jose Sarte to pay jointly and severally to the plaintiff the amount
of P7,197.26 with interest up to September 29, 1959, plus a daily interest of
P1.3698 thereafter up to the time the amount is fully paid, plus 10% of the
amount as attorney's fees, and costs of this suit.

The present action was instituted by the plaintiff to recover from the defendants
the face of a promissory note the pertinent part of which reads as follows:

Manila, March 12, 1954

NINETY DAYS after date, for value received, I promise to pay to

the order of the Philippine National Bank . . . .

In case it is necessary to collect this note by or through an

attorney-at-law, the makers and indorsers shall pay ten percent
(10%) of the amount due on the note as attorney's fees, which in
no case shall be less than P100.00 exclusive of all costs and fees
allowed by law as stipulated in the contract of real estate
mortgage. Demand and Dishonor Waived. Holder may accept
partial payment reserving his right of recourse again each and all
indorsers.

(Purpose — mining industry)

CONCEPCION MINING COMPANY, INC.,
By:
(Sgd.) VICENTE LEGARDA
President
(Sgd.) VICENTE LEGARDA
(Sgd.) JOSE S SARTE

"Please issue check to —

Mr. Jose S. Sarte"

Upon the filing of the complaint the defendants presented their answer in which
they allege that the co-maker the promissory note Don Vicente L. Legarda died
on February 24, 1946 and his estate is in the process of judicial determination in
Special Proceedings No. 29060 of the Court of First Instance of Manila. On the
basis of this allegation it is prayed, as a special defense, that the estate of said
deceased Vicente L. Legarda be included as party-defendant. The court in its
decision ruled that the inclusion of said defendant is unnecessary and
immaterial, in accordance with the provisions of Article 1216 of the Deny Civil
Code and section 17 (g) of the Negotiable Instruments Law.

A motion to reconsider this decision was denied and thereupon defendants

presented a petition for relief, asking that the effects of the judgment be
suspended for the reason that the deceased Vicente L. Legarda should have
been included as a party-defendant and his liability should be determined in
pursuance of the provisions of the promissory note. This motion for relief was
also denied, hence defendant appealed to this Court.

Section 17 (g) of the Negotiable Instruments Law provides as follows:

SEC. 17. Construction where instrument is ambiguous. — Where the language

of the instrument is ambiguous or there are omissions therein, the following
rules of construction apply:

xxx xxx xxx

(g) Where an instrument containing the word "I promise to pay" is signed by two
or more persons, they are deemed to be jointly and severally liable thereon.

And Article 1216 of the Civil Code of the Philippines also provides as follows:

ART. 1216. The creditor may proceed against any one of the solidary debtors or
some of them simultaneously. The demand made against one of them shall not
be an obstacle to those which may subsequently be directed against the others
so long as the debt has not been fully collected.

In view of the above quoted provisions, and as the promissory note was
executed jointly and severally by the same parties, namely, Concepcion Mining
Company, Inc. and Vicente L. Legarda and Jose S. Sarte, the payee of the
promissory note had the right to hold any one or any two of the signers of the
promissory note responsible for the payment of the amount of the note. This
judgment of the lower court should be affirmed.

Our attention has been attracted to the discrepancies in the printed record on
appeal. We note, first, that the names of the defendants, who are evidently the
Concepcion Mining Co., Inc. and Jose S. Sarte, do not appear in the printed
record on appeal. The title of the complaint set forth in the record on appeal
does not contain the name of Jose Sarte, when it should, as two defendants are
named in the complaint and the only defense of the defendants is the
non-inclusion of the deceased Vicente L. Legarda as a defendant in the action.
We also note that the copy of the promissory note which is set forth in the record
on appeal does not contain the name of the third maker Jose S. Sarte.
Fortunately, the brief of appellee on page 4 sets forth said name of Jose S. Sarte
as one of the co-maker of the promissory note. Evidently, there is an attempt to
mislead the court into believing that Jose S. Sarte is no one of the co-makers.
The attorney for the defendants Atty. Jose S. Sarte himself and he should be
held primarily responsible for the correctness of the record on appeal. We,
therefore, order the said Atty. Jose S. Sarte to explain why in his record on
appeal his own name as one of the defendants does not appear and neither does
his name appear as one of the co-signers of the promissory note in question. So
ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Barrera, Paredes, Dizon,

Regala and Makalintal, JJ., concur.
Reyes, J.B.L., J., took no part.
 REPUBLIC PLANTERS BANK V. COURT OF
APPEALS
216 SCRA 738

FACTS:
Yamaguchi and Canlas are officers of the Worldwide Garment Manufacturing, which
later changed its name to Pinch Manufacturing. They were authorized to apply for credit facilities
with the petitioner bank. The two officers signed the promissory notes issued to secure the payment
of the obligations. Later, the bank instituted an action for collection of
money, impleading also the two officers. The trial court held the two officers personally
liable also.

HELD:
Canlass is solidarily liable on each of the promissory notes to which his
signature appears. The promissory notes in question are negotiable instruments and thus,
governed by the Negotiable Instruments Law.

Under the Negotiable Instruments

Law, persons who write their names in the instrument are makers are liable as such. By
signing the note, the maker promises to pay to the order of the payee or any holder the tenor of the
obligation. Based on the above provisions of the law, there is no denying that Canlass is one of the
co-makers of the promissory note.

G.R. No. 93073 December 21, 1992

REPUBLIC PLANTERS BANK, petitioner,

vs.
COURT OF APPEALS and FERMIN CANLAS, respondents.

CAMPOS, JR., J.:

This is an appeal by way of a Petition for Review on Certiorari from the

decision * of the Court of Appeals in CA G.R. CV No. 07302, entitled "Republic Planters Bank.Plaintiff-Appellee vs. Pinch
Manufacturing Corporation, et al., Defendants, and Fermin Canlas, Defendant-Appellant", which affirmed the decision ** in
Civil Case No. 82-5448 except that it completely absolved Fermin Canlas from liability under the promissory notes and
reduced the award for damages and attorney's fees. The RTC decision, rendered on June 20, 1985, is quoted hereunder:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

plaintiff Republic Planters Bank, ordering defendant Pinch Manufacturing
Corporation (formerly Worldwide Garment Manufacturing, Inc.) and defendants
Shozo Yamaguchi and Fermin Canlas to pay, jointly and severally, the plaintiff
bank the following sums with interest thereon at 16% per annum from the dates
indicated, to wit:

Under the promissory note (Exhibit "A"), the sum of P300,000.00 with interest
from January 29, 1981 until fully paid; under promissory note (Exhibit "B"), the
sum of P40,000.00 with interest from November 27, 1980; under the
promissory note (Exhibit "C"), the sum of P166,466.00 which interest from
January 29, 1981; under the promissory note (Exhibit "E"), the sum of
P86,130.31 with interest from January 29, 1981; under the promissory note
(Exhibit "G"), the sum of P12,703.70 with interest from November 27, 1980;
under the promissory note (Exhibit "H"), the sum of P281,875.91 with interest
from January 29, 1981; and under the promissory note (Exhibit "I"), the sum of
P200,000.00 with interest from January 29, 1981.

Under the promissory note (Exhibit "D") defendants Pinch Manufacturing

Corporation (formerly named Worldwide Garment Manufacturing, Inc.), and
Shozo Yamaguchi are ordered to pay jointly and severally, the plaintiff bank the
sum of P367,000.00 with interest of 16% per annum from January 29, 1980
until fully paid

Under the promissory note (Exhibit "F") defendant corporation Pinch (formerly
Worldwide) is ordered to pay the plaintiff bank the sum of P140,000.00 with
interest at 16% per annum from November 27, 1980 until fully paid.

Defendant Pinch (formely Worldwide) is hereby ordered to pay the plaintiff the
sum of P231,120.81 with interest at 12% per annum from July 1, 1981, until
fully paid and the sum of P331,870.97 with interest from March 28, 1981, until
fully paid.

All the defendants are also ordered to pay, jointly and severally, the plaintiff the
sum of P100,000.00 as and for reasonable attorney's fee and the further sum
equivalent to 3% per annum of the respective principal sums from the dates
above stated as penalty charge until fully paid, plus one percent (1%) of the
principal sums as service charge.

With costs against the defendants.

SO ORDERED. 1

From the above decision only defendant Fermin Canlas appealed to the then Intermediate
Court (now the Court Appeals). His contention was that inasmuch as he signed the
promissory notes in his capacity as officer of the defunct Worldwide Garment
Manufacturing, Inc, he should not be held personally liable for such authorized corporate
acts that he performed. It is now the contention of the petitioner Republic Planters Bank
that having unconditionally signed the nine (9) promissory notes with Shozo Yamaguchi,
jointly and severally, defendant Fermin Canlas is solidarity liable with Shozo Yamaguchi
on each of the nine notes.

We find merit in this appeal.

From the records, these facts are established: Defendant Shozo Yamaguchi and private
respondent Fermin Canlas were President/Chief Operating Officer and Treasurer
respectively, of Worldwide Garment Manufacturing, Inc.. By virtue of Board Resolution
No.1 dated August 1, 1979, defendant Shozo Yamaguchi and private respondent Fermin
Canlas were authorized to apply for credit facilities with the petitioner Republic Planters
Bank in the forms of export advances and letters of credit/trust receipts accommodations.
Petitioner bank issued nine promissory notes, marked as Exhibits A to I inclusive, each of
which were uniformly worded in the following manner:

___________, after date, for value received, I/we, jointly and severaIly promise to pay to
the ORDER of the REPUBLIC PLANTERS BANK, at its office in Manila, Philippines, the
sum of ___________ PESOS(....) Philippine Currency...

On the right bottom margin of the promissory notes appeared the signatures of Shozo
Yamaguchi and Fermin Canlas above their printed names with the phrase "and (in) his
personal capacity" typewritten below. At the bottom of the promissory notes appeared:
"Please credit proceeds of this note to:

________ Savings Account ______XX Current Account

No. 1372-00257-6

of WORLDWIDE GARMENT MFG. CORP.

These entries were separated from the text of the notes with a bold line which ran
horizontally across the pages.

In the promissory notes marked as Exhibits C, D and F, the name Worldwide Garment
Manufacturing, Inc. was apparently rubber stamped above the signatures of defendant
and private respondent.

On December 20, 1982, Worldwide Garment Manufacturing, Inc. noted to change its
corporate name to Pinch Manufacturing Corporation.

On February 5, 1982, petitioner bank filed a complaint for the recovery of sums of money
covered among others, by the nine promissory notes with interest thereon, plus attorney's
fees and penalty charges. The complainant was originally brought against Worldwide
Garment Manufacturing, Inc. inter alia, but it was later amended to drop Worldwide
Manufacturing, Inc. as defendant and substitute Pinch Manufacturing Corporation it its
place. Defendants Pinch Manufacturing Corporation and Shozo Yamaguchi did not file an
Amended Answer and failed to appear at the scheduled pre-trial conference despite due
notice. Only private respondent Fermin Canlas filed an Amended Answer wherein he,
denied having issued the promissory notes in question since according to him, he was not
an officer of Pinch Manufacturing Corporation, but instead of Worldwide Garment
Manufacturing, Inc., and that when he issued said promissory notes in behalf of
Worldwide Garment Manufacturing, Inc., the same were in blank, the typewritten entries
not appearing therein prior to the time he affixed his signature.

In the mind of this Court, the only issue material to the resolution of this appeal is whether
private respondent Fermin Canlas is solidarily liable with the other defendants, namely
Pinch Manufacturing Corporation and Shozo Yamaguchi, on the nine promissory notes.
We hold that private respondent Fermin Canlas is solidarily liable on each of the
promissory notes bearing his signature for the following reasons:

The promissory motes are negotiable instruments and must be governed by the
Negotiable Instruments Law. 2

Under the Negotiable lnstruments Law, persons who write their names on the face of
promissory notes are makers and are liable as such. By signing the notes, the maker
3

promises to pay to the order of the payee or any holder according to the tenor 4

thereof. Based on the above provisions of law, there is no denying that private
5

respondent Fermin Canlas is one of the co-makers of the promissory notes. As such, he
cannot escape liability arising therefrom.

Where an instrument containing the words "I promise to pay" is signed by two or more
persons, they are deemed to be jointly and severally liable thereon. An instrument which 6

begins" with "I" ,We" , or "Either of us" promise to, pay, when signed by two or more
persons, makes them solidarily liable. The fact that the singular pronoun is used
7

indicates that the promise is individual as to each other; meaning that each of the
co-signers is deemed to have made an independent singular promise to pay the notes in
full.

In the case at bar, the solidary liability of private respondent Fermin Canlas is made
clearer and certain, without reason for ambiguity, by the presence of the phrase "joint and
several" as describing the unconditional promise to pay to the order of Republic Planters
Bank. A joint and several note is one in which the makers bind themselves both jointly and
individually to the payee so that all may be sued together for its enforcement, or the
creditor may select one or more as the object of the suit. 8 A joint and several obligation in common law
corresponds to a civil law solidary obligation; that is, one of several debtors bound in such wise that each is liable for the entire
amount, and not merely for his proportionate share. 9 By making a joint and several promise to pay to the order of Republic
Planters Bank, private respondent Fermin Canlas assumed the solidary liability of a debtor and the payee may choose to
enforce the notes against him alone or jointly with Yamaguchi and Pinch Manufacturing Corporation as solidary debtors.

As to whether the interpolation of the phrase "and (in) his personal capacity" below the
signatures of the makers in the notes will affect the liability of the makers, We do not find it
necessary to resolve and decide, because it is immaterial and will not affect to the liability
of private respondent Fermin Canlas as a joint and several debtor of the notes. With or
without the presence of said phrase, private respondent Fermin Canlas is primarily liable
as a co-maker of each of the notes and his liability is that of a solidary debtor.

Finally, the respondent Court made a grave error in holding that an amendment in a
corporation's Articles of Incorporation effecting a change of corporate name, in this case
from Worldwide Garment manufacturing Inc to Pinch Manufacturing Corporation
extinguished the personality of the original corporation.

The corporation, upon such change in its name, is in no sense a new corporation, nor the
successor of the original corporation. It is the same corporation with a different name, and
its character is in no respect changed. 10

A change in the corporate name does not make a new corporation, and whether effected
by special act or under a general law, has no affect on the identity of the corporation, or on
its property, rights, or liabilities. 11

The corporation continues, as before, responsible in its new name for all debts or other
liabilities which it had previously contracted or incurred. 12
As a general rule, officers or directors under the old corporate name bear no personal
liability for acts done or contracts entered into by officers of the corporation, if duly
authorized. Inasmuch as such officers acted in their capacity as agent of the old
corporation and the change of name meant only the continuation of the old juridical entity,
the corporation bearing the same name is still bound by the acts of its agents if authorized
by the Board. Under the Negotiable Instruments Law, the liability of a person signing as an
agent is specifically provided for as follows:

Sec. 20. Liability of a person signing as agent and so forth. Where the instrument contains
or a person adds to his signature words indicating that he signs for or on behalf of a
principal , or in a representative capacity, he is not liable on the instrument if he was duly
authorized; but the mere addition of words describing him as an agent, or as filling a
representative character, without disclosing his principal, does not exempt him from
personal liability.

Where the agent signs his name but nowhere in the instrument has he disclosed the fact
that he is acting in a representative capacity or the name of the third party for whom he
might have acted as agent, the agent is personally liable to take holder of the instrument
and cannot be permitted to prove that he was merely acting as agent of another and parol
or extrinsic evidence is not admissible to avoid the agent's personal liability.
13

On the private respondent's contention that the promissory notes were delivered to him in
blank for his signature, we rule otherwise. A careful examination of the notes in question
shows that they are the stereotype printed form of promissory notes generally used by
commercial banking institutions to be signed by their clients in obtaining loans. Such
printed notes are incomplete because there are blank spaces to be filled up on material
particulars such as payee's name, amount of the loan, rate of interest, date of issue and
the maturity date. The terms and conditions of the loan are printed on the note for the
borrower-debtor 's perusal. An incomplete instrument which has been delivered to the
borrower for his signature is governed by Section 14 of the Negotiable Instruments Law
which provides, in so far as relevant to this case, thus:

Sec. 14. Blanks: when may be filled. — Where the instrument is wanting in any material
particular, the person in possesion thereof has a prima facie authority to complete it by
filling up the blanks therein. ... In order, however, that any such instrument when
completed may be enforced against any person who became a party thereto prior to its
completion, it must be filled up strictly in accordance with the authority given and within a
reasonable time...

Proof that the notes were signed in blank was only the self-serving testimony of private
respondent Fermin Canlas, as determined by the trial court, so that the trial court ''doubts
the defendant (Canlas) signed in blank the promissory notes". We chose to believe the
bank's testimony that the notes were filled up before they were given to private
respondent Fermin Canlas and defendant Shozo Yamaguchi for their signatures as joint
and several promissors. For signing the notes above their typewritten names, they bound
themselves as unconditional makers. We take judicial notice of the customary procedure
of commercial banks of requiring their clientele to sign promissory notes prepared by the
banks in printed form with blank spaces already filled up as per agreed terms of the loan,
leaving the borrowers-debtors to do nothing but read the terms and conditions therein
printed and to sign as makers or co-makers. When the notes were given to private
respondent Fermin Canlas for his signature, the notes were complete in the sense that the
spaces for the material particular had been filled up by the bank as per agreement. The
notes were not incomplete instruments; neither were they given to private respondent
Fermin Canlas in blank as he claims. Thus, Section 14 of the NegotiabIe Instruments Law
is not applicable.

The ruling in case of Reformina vs. Tomol relied upon by the appellate court in reducing
the interest rate on the promissory notes from 16% to 12% per annum does not squarely
apply to the instant petition. In the abovecited case, the rate of 12% was applied to
forebearances of money, goods or credit and court judgemets thereon, only in the
absence of any stipulation between the parties.

In the case at bar however , it was found by the trial court that the rate of interest is 9% per
annum, which interest rate the plaintiff may at any time without notice, raise within the
limits allowed law. And so, as of February 16, 1984 , the plaintiff had fixed the interest at
16% per annum.

This Court has held that the rates under the Usury Law, as amended by Presidential
Decree No. 116, are applicable only to interests by way of compensation for the use or
forebearance of money. Article 2209 of the Civil Code, on the other hand, governs
interests by way of damages. This fine distinction was not taken into consideration by the
15

appellate court, which instead made a general statement that the interest rate be at 12%
per annum.

Inasmuch as this Court had declared that increases in interest rates are not subject to any
ceiling prescribed by the Usury Law, the appellate court erred in limiting the interest rates
at 12% per annum. Central Bank Circular No. 905, Series of 1982 removed the Usury Law
ceiling on interest rates.16

In the 1ight of the foregoing analysis and under the plain language of the statute and
jurisprudence on the matter, the decision of the respondent: Court of Appeals absolving
private respondent Fermin Canlas is REVERSED and SET ASIDE. Judgement is hereby
rendered declaring private respondent Fermin Canlas jointly and severally liable on all the
nine promissory notes with the following sums and at 16% interest per annum from the
dates indicated, to wit:

Under the promissory note marked as exhibit A, the sum of P300,000.00 with interest from
January 29, 1981 until fully paid; under promissory note marked as Exhibit B, the sum of
P40,000.00 with interest from November 27, 1980: under the promissory note
denominated as Exhibit C, the amount of P166,466.00 with interest from January 29, 1981;
under the promissory note denominated as Exhibit D, the amount of P367,000.00 with
interest from January 29, 1981 until fully paid; under the promissory note marked as
Exhibit E, the amount of P86,130.31 with interest from January 29, 1981; under the
promissory note marked as Exhibit F, the sum of P140,000.00 with interest from
November 27, 1980 until fully paid; under the promissory note marked as Exhibit G, the
amount of P12,703.70 with interest from November 27, 1980; the promissory note marked
as Exhibit H, the sum of P281,875.91 with interest from January 29, 1981; and the
promissory note marked as Exhibit I, the sum of P200,000.00 with interest on January 29,
1981.

The liabilities of defendants Pinch Manufacturing Corporation (formerly Worldwide

Garment Manufacturing, Inc.) and Shozo Yamaguchi, for not having appealed from the
decision of the trial court, shall be adjudged in accordance with the judgment rendered by
the Court a quo.
With respect to attorney's fees, and penalty and service charges, the private respondent
Fermin Canlas is hereby held jointly and solidarity liable with defendants for the amounts
found, by the Court a quo. With costs against private respondent.

SO ORDERED.

Narvasa, C.J., (Chairman), Feliciano, Regalado and Nocon, JJ., concur.

PEOPLE V. ROMERO
306 SCRA 90

FACTS:
Complainant was a radio commentator who interviewed the two accused
regarding their marketing business, which solicits funds from the general
public, promising an 800% profit. The latter induced the complainant to
invest in the business, in the process thereof, issued a postdated check
wherein the amount in figures was P1,200,000 and the amount in words was
P1,000,200. The check when presented in the bank was dishonored and the accused refused to
redeem or pay the check. This prompted the complainant to file a case of estafa against the
accused to which they were
found guilty of.

HELD:
Accused tried to contend that if the trial court followed the admission and
stipulation of facts submitted by them, it would prove that there was
sufficient funds. The check had a discrepancy between the amount in
figures and in words. Following NIL, the check was issued for
P1,000,200—meaning that this could be validly supported by their
business’ funds. Nonetheless, this is misplaced since this rule of
interpretation finds no room in this case. The agreement was perfectly
clear that at the end of 21 days, the investment of complainant would increase by
800% or P1,200,000.

G.R. No. 112985 April 21, 1999

PEOPLE OF THE PHILIPPINES, plaintiff-appellee

vs.
MARTIN L. ROMERO and ERNESTO C. RODRIGUEZ, accused-appellants.
PARDO, J

The case before the Court is an appeal of accused Martin L. Romero and Ernesto
C. Rodriguez from the Joint Judgment of the Regional Trial Court, Branch 2, Butuan
1

City, convicting each of them of estafa under Article 315, par. 2 (d) of the Revised Penal
Code, in relation to Presidential Decree No. 1689, for widescale swindling, and sentencing
each of them to suffer the penalty of life imprisonment and to jointly and severally pay
Ernesto A. Ruiz the amount of one hundred fifty thousand pesos (P150,000.00), with
interest at the rate of twelve percent (12%) per annum, starting September 14, 1989, until
fully paid, and to pay ten thousand pesos (P10,000.00), as moral damages.

On October 25, 1989, Butuan City acting fiscal Ernesto M. Brocoy filed with the Regional
Trial Court, Butuan City, in Information against the two (2) accused estafa, as follows:
2

That on or about September 14, 1989, at Butuan City, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused being the General
Manager and Operation Manager which solicit funds from the general public for
investment, conspiring, confederating together and mutually helping, one another, by
means of deceit and false pretense, did then and there willfully, unlawfully and feloniously
deliberately defraud one Ernesto A. Ruiz by convincing the latter to invest his money in
the amount of P150,000.00 with a promise return of 800 % profit within 21 days and in the
process caused the issuance of Butuan City Rural [sic] Bank Check No. 158181
postdated to October 5, 1989 in the amount of One Million Two Hundred Thousand Pesos
(P1,200,000.00) Philippine Currency, that upon presentation of said check to the drawee
bank for payment the same was dishonored and that notwithstanding repeated demands
made on said accused to pay and/or change the check to cash, they consistently failed
and refused and still fail and refuse to pay or redeem the check, to the damage and
prejudice of the complainant in the aforestated amount of P1,200,000.00. 3

On the same day, the city fiscal filed with the same court another information against the
two (2) accused for violation of Batas Pambansa Bilang 22, arising from the issuance of
the same check. 4

On January 11, 1990, both accused were arraigned before the Regional Trial Court,
Branch 5, Butuan City, where they plead not guilty to both informations.
5

The prosecution presented its evidence on January 10, 1991, with complainant, Ernesto A.
Ruiz, and Daphne Parrocho, the usher/collector of the corporation being managed by
accused, testifying for the prosecution.

On August 12, 1991, the defense presented its only witness, accused Martin L. Romero.

On November 13, 1992, the parties submitted a joint stipulation of facts, signed only by
their respective counsels. Thereafter, the case was submitted for decision.

On March 30, 1993, the trail court promulgated a Joint Judgment dated March 25, 1993.
The trial court acquitted the accused in Criminal Case No. 3806 based on reasonable
6

doubt, but convicted them in Criminal Case No. 3808 and accordingly sentenced each of
7

them, as follows:

IN VIEW OF THE FOREGOING, the Court hereby renders judgments, finding or declaring
—
(a) Accused Martin L. Romero and Ernesto C. Rodriguez innocent on reasonable doubt in
Criminal Case No. 3806, for violation of Batas Pambansa Bilang 22;

(b) Accused Martin L. Romero and Ernesto C. Rodriguez guilty beyond reasonable doubt
in Criminal Case No. 3808 for estafa under P.D. 1689 for wide scale [sic] swindling and
accordingly sentences them to suffer life imprisonment (Section 1 P.D. 1689) and ordered
jointly and severally to return to Ernesto A. Ruiz the amount of One Hundred Fifty
Thousand Pesos (P150,000.00) with interest thereon at the rate of Twelve percent
(12%) per annum starting from September 14, 1989 until fully paid and to pay the amount
Of Ten Thousand Pesos (P10,000.00) as moral damages.

In the service of their sentence, the accused pursuant to R.A. 6127, shall be credited for
the preventive imprisonment they have undergone (PP vs. Ortencio, 38 Phil 941; PP vs.
Gabriel, No. L-13750, October 30, 1959, cited in Gregorio's "Fundamentals of Criminal
Law Review", P. 178, Seventh Edition, 1985). 8

On March 31, 1993, accused filed their notice of appeal, which the trial court gave due
course on April 5, 1993. On March 16, 1994, this Court ordered the, accused to file their
appellants' brief.

Accused-appellants filed their brief on October 30, 1995, while the Solicitor General filed
the appellee's brief on March 8, 1996.

During the pendency of the appeal, on November 12, 1997, accused Ernesto Rodriguez
died. As a consequence of his death before final judgment, his criminal and civil
9

liability ex delicto, were extinguished.

10

Complainant Ernesto A. Ruiz was a radio commentator of Radio DXRB, Butuan City. In
August, 1989, he came to know the business of Surigao San Andres Industrial
Development Corporation (SAIDECOR), when he interviewed accused Martin Romero
and Ernesto Rodriguez regarding the corporation's investment operations in Butuan City
and Agusan del Norte. Romero was the president and general manager of SAIDECOR,
while Rodriguez was the operations manager.

SAIDECOR started its operation on August 24, 1989 as a marketing business. Later, it
engaged in soliciting funds and investments from the public. The corporation guaranteed
an 800% return on investment within fifteen (15) or twenty one (21) days. Investors were
given coupons containing the capital and the return on the capital collectible on the date
agreed upon. It stopped operations in September, 1989.

On September 14, 1989, complainant Ernesto A. Ruiz went to SAIDECOR office in

Butuan City to make an investment, accompanied by his friend Jimmy Acebu, and
SAIDECOR collection agent Daphne Parrocho. After handing over the amount of one
hundred fifty thousand pesos (P150,000.00) to Ernesto Rodriguez, complainant received
a postdated Butuan City Rural Bank check instead of the usual redeemable coupon. The
check indicated P1,000,200.00 as the amount in words, but the amount in figures was for
P1,200,000.00, as the return on the investment. Compliant did not notice the discrepancy.

When the check was presented to the bank for payment on October 5, 1989, it was
dishonored for insufficiency of funds, as evidenced by the check return slip issued by the
bank. Both accused could not be located and demand for payment was made only
11
sometime in November 1989 during the preliminary investigation of this case. Accused
responded that they had no money.

Daphne Parrocho, testified that on September 14, 1989, complainant, with his friend
12

Jimmy Acebu, approached her to invest the amount of P150,000.00 at SAIDECOR. As

she has reached her quota, and therefore, no longer authorized to receive the amount,
she accompanied them to the office of SAIDECOR at Ong Yiu District, Butuan City.
Accused Ernesto Rodriguez accepted the investment and issued the check signed by him
and Martin Romero.

For their defense, accused Martin Romero testified that on September 14, 1989, he
13

issued a check in the amount of P1,2000,000.00 corresponding to the total of the

P150,000.00 investment and the 800% return thereon. He claimed that the corporation
had a deposit of fourteen million pesos (P14,000,000.00) at the time of the issuance of the
check and four million pesos (P4,000,000.00) at the time SAIDDECOR stopped
operations. Romero knew these things because he used to monitor the funds of the
corporation with the bank. He was not aware that the check he issued was dishonored
because he never had the occasion to meet the complainant again after the September
14, 1989 transaction. He only came to know about this when the case was already filed in
court sometime in the second or third week of January 1990.

In this appeal, both accused did not deny that complainant made an investment with
SAIDECOR in the amount of P150,000.00. However, they denied that deceit was
employed in the transaction. They assigned as errors: (1) their conviction under P.D. 1689
due to the prosecution's failure to establish their guilt beyond reasonable doubt; and (2)
the trial court's failure to consider the joint stipulation of facts in their favor.
15

There is no merit in this appeal. We sustain accused-appellant's conviction.

Under paragraph 2 (d) of Article 315, as amended by R.A. 4885, the elements of estafa
16

are: (1) a check was postdated or issued in payment of an obligation contracted at the
time it was issued; (2) lack or insufficiency of funds to cover the check; (3) damage to the
payee thereof. The prosecution has satisfactorily established all these elements.
17

Fraud, in its general sense, is deemed to comprise anything calculated to deceive,

including all acts, omissions, and concealment involving a breach of legal 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
18

multifarious means which human ingenuity can device, 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. 19

Deceit is a specific of fraud. It is actual fraud, and consists in any false representation or
contrivance whereby one person overreaches and misleads another, to his hurt. Deceit
excludes the idea of mistake. There is deceit when one is misled, either by guide or
20

trickery or by other means, to believe to be true what is really false. In this case, there
21

was deception when accused fraudulently represented to complainant that his investment
with the corporation would have an 800% return in 15 or 21 days.

Upon receipt of the money, accused-appellant Martin Romero issued a postdated check.
Although accused-appellant contends that sufficient funds were deposited in the bank
when the check was issued, he presented no officer of the bank to substantiate the
contention. The check was dishonored when presented for payment, and the check return
slip submitted in evidence indicated that it was dishonored due to insufficiency of funds.

Even assuming for the sake of argument that the check was dishonored without any
fraudulent pretense or fraudulent act of the drawer, the latter's failure to cover the amount
within three days after notice creates a rebuttable presumption of fraud. 22

Admittedly (1) the check was dishonored for insufficiency of funds as evidenced by the
check return slip; (2) complainant notified accused of the dishonor; and (3) accused failed
to make good the check within three days. Presumption of deceit remained since accused
failed to prove otherwise. Complainant sustained damage in the amount of P150,000.00.

Accused-appellant also contends that had the trial court admitted the Admission and
Stipulaion of Facts of November 9, 1992, it would prove that SAIDECOR had sufficient
funds in the bank.

Accused-appellant relies on the fact that there was a discrepancy between the amount in
words and the amount in figures in the check that was dishonored. The amount in words
was P1,000,200.00, while the amount in figures was P1,200,000.00. It is admitted that the
corporation had in the bank P1,144,760.00 on September 28, 1989, and P1,124,307.14
on April 2, 1990. The check was presented for payment on October 5, 1989. The rule in
the Negotiable Instruments Law is that when there is ambiguity in the amount in words
and the amount in figures, it would be the amount in words that would prevail. 23

However, this rule of interpretation finds no application in the case. The agreement was
perfectly clear that at the end of twenty one (21) days, the investment of P150,000.00
would become P1,200,000.00. Even if the trial court admitted the stipulation of facts, it
would not be favorable to accused-appellant.

The factual narration in this case established a kind of Ponzi scheme. This is "an 24

investment swindle in which high profits are promised from fictitious sources and early
investors are paid off with funds raised from later ones." It is sometimes called a pyramid
scheme because a broader base of gullible investors must support the structure as time
passes.

In the recent case of People vs. Priscilla Balasa, this Court held that a transaction similar
25

to the case at hand 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. It is
difficult to sustain 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, these schemes only last weeks, or months at most, just like what happened
in this case.

The Court notes that one of the accused-appellants, Ernesto Rodriguez, died pending
appeal. Pursuant to the doctrine established in People vs. Bayotas, the death of the
26

accused pending appeal of his conviction extinguishes his criminal liability as well as the
civil liability ex delicto. The criminal action is extinguished inasmuch as there is no longer
a defendant to stand as the accused, the civil action instituted therein for recovery of civil
liability ex delicto is ipso facto extinguished, grounded as it is on the criminal case.
Corollarily, the claim for civil liability survives notwithstanding the death of the accused, if
the same may also be predicted on a source of obligation other than delicit. 27
Thus, the outcome of this appeal pertains only remaining accused-appellant, Martin L.
Romero. The trail court considered the swindling involved in this case as having been
committed by a syndicate and sentenced the accused to life imprisonment based on the
28

provisions of Presidential Decree 1689, which increased the penalty for certain forms of
swindling or estafa. However, the prosecution failed to clearly establish that the
29

corporation was a syndicate, as defined under the law. The penalty of life imprisonment
cannot be imposed. What would be applicable in the present case is the second
paragraph of a Presidential Decree No. 1689, Section 1, which provides that:

When not committed by a syndicate as above defined, the penalty imposable shall
be reclusion temporal to reclusion perpetua if the amount of the fraud exceeds 100.000
pesos.

Art. 77 of the Revised Penal Code on complex penalties provides that "whenever the
penalty prescribed does not have one of the forms specially provided for in this Code, the
periods shall be distributed, applying by analogy the prescribed rules," that is, those in
Articles 61 and 76. Hence, where as in this case, the penalty provided by Section 1 of
30

Presidential Decree No. 1689 for estafa under Articles 315 and 316 of the Code
is reclusion temporal to reclusion perpetua, the minimum period thereof is twelve (12)
year and one (1) day to sixteen (16) years of reclusion temporal; the medium period is
sixteen (16) years and one (1) day to twenty (20) years of reclusion temporal; and the
maximum period is reclusion perpetua.

In the case at bar, no mitigating or aggravating circumstance has been alleged or proved.
Applying the rules in the Revised Penal Code for graduating penalties by degreses to 31

determine the proper period, the penalty for the offense of estafa under Article 315, 2(d)
32

as amended by P.D. 1689 involving the amount of P150,000.00 is the medium of the
period of the complex penalty in said Section 1, that is, sixteen (16) years and one (1) day
to twenty (20) years. This penalty, being that which is to be actually imposed in
accordance with the therefor and not merely imposable as a general prescription under
the law, shall be the maximum range of the indeterminate sentence. The minimum 33

thereof shall be taken, as aforesaid, from any period of the penalty next lower in degree
which is prision mayor.

To enable the complainant to obtain means, diversion or amusements that will serve to
alleviate the moral sufferings undergone by him, by reason of the failure of the accused to
return his money, moral damages are imposed against accused-appellant Martin L.
Romero in the amount of twenty thousand pesos (P20,000.00), To serve as an example
34

for the public good, exemplary damages are awarded against him in the amount of fifteen
thousand pesos (P15,000. 00). 35

WHEREFORE, the Court hereby AFFIRMS WITH MODIFICATION the appealed

judgment. The Court hereby sentences accused-appellant Martin Romero to suffer an
indeterminate penalty of ten (10) years and one (1) day of prision mayor, as minimum, to
sixteen (16) years and one (1) day of reclusion temporal, as maximum, to indemnify
Ernesto A. Ruiz in the amount of one hundred fifty thousand pesos (P150,000.00) with
interest thereon at six (6%) per centrum per annum from September 14, 1989, until fully
paid, to pay twenty thousand pesos (P20,000.00) as moral damages and fifteen thousand
pesos (P15,000.00), as exemplary damages, and the costs. 1âwphi1. nêt

SO ORDERED.

Davide, Jr., C.J., Melo, Kapunan and Ynares-Santiago, JJ., concur.