View full case

BETTY GABIONZA v. CA

FACTS:

On August 21, 2000, petitioners Betty Go Gabionza and Isabelita Tan filed complaints against private respondents Luke Roxas and Evelyn Nolasco, who were officers of ASB Holdings, Inc. (ASBHI). ASBHI was incorporated in 1996 with the primary purpose of investing in real and personal properties and acquiring stocks, bonds, and other securities. Petitioners alleged that they were convinced by ASBHI officers to lend or deposit money with the corporation between 1996 and 1997. They were issued receipts stating that the borrower was ASB Realty Development, which they were told was the same entity as Bank of Southeast Asia (BSA).

Subsequently, receipts were issued in the name of ASBHI. ASBHI would issue postdated checks to its lenders, which would mature in 30 to 45 days. In the first quarter of 2000, ASBHI's checks started to be refused by DBS Bank due to "stop payment" orders from ASBHI. ASBHI filed for rehabilitation and receivership with the Securities and Exchange Commission (SEC) in May 2000, resulting in the filing of complaints by petitioners and others against ASBHI.

A Task Force on Financial Fraud was created by the Department of Justice (DOJ) to investigate the complaints. The Task Force dismissed the complaints, concluding that the transactions were loans that only gave rise to civil liability and that the checks were not securities as contemplated by the Revised Securities Act. Petitioners filed a motion for reconsideration with the DOJ, which was denied. They then filed a joint petition for review with the Secretary of Justice. The Secretary partially reversed the Task Force's decision, directing the filing of Informations for estafa under the Revised Penal Code and violation of the Revised Securities Act.

Private respondents filed a certiorari petition with the Court of Appeals, which reversed the DOJ and ordered the dismissal of the criminal cases. The dismissal was upheld by the appellate court in a denial of petitioners' motion for reconsideration. Gabionza and Tan filed this petition with the Supreme Court. The Court of Appeals deviated from the general rule of respecting the DOJ's discretion in determining probable cause, which the Supreme Court has consistently adhered to. The DOJ found probable cause based on the transactions being renewals of loans and the representation that ASB Realty was connected to BSA.

The complainant-petitioners in this case were induced to lend funds to ASB Realty by false representations made by ASB agents. These representations included claims about ASB's financial capacity and its connection to another entity, BSA. Based on these false representations, the complainant-petitioners agreed to lend the funds to ASB Realty. However, it was later discovered that ASB had no financial capacity to repay the loans as its authorized capital stock was only P500,000.00 and paid-up capital was only P125,000.00.

The complainant-petitioners, had they known about ASB's true financial situation, would not have invested millions of pesos in the business. The false representations made by ASB's agents are attributed to respondents Roxas and Nolasco, ASB's president and senior vice president/treasurer respectively, who directed the agents to make these false representations. Roxas and Nolasco authorized and accepted the fraud-induced loans, making them liable for estafa under Article 315 (paragraph 2 [a]) of the Revised Penal Code. The Court of Appeals and the dissent did not dispute the occurrence of these facts but raised an issue as to whether these facts establish a prima facie case against Roxas and Nolasco. The Department of Justice concluded that the findings in the case align with the elements of estafa by means of deceit under Article 315(2)(a).

(Note: This partial digest only covers the "FACTS" section and does not include the issues, rulings, or principles of the case.)

ISSUES:

  1. Whether the acts committed by ASBHI constitute estafa by means of deceit under Article 315(2)(a) of the Revised Penal Code.

  2. Whether the transactions entered into by ASBHI involving the issuance of postdated checks constitute a violation of the Revised Securities Act.

  3. Whether the postdated checks issued by ASBHI constitute a security under the Revised Securities Act.

  4. Whether the subsequent repeal of the Revised Securities Act spares respondents Roxas and Nolasco from prosecution under said law.

  5. Whether the charges of violation of Article 315 (2)(a) of the Revised Penal Code and Sections 4 in relation to 56 of the Revised Securities Act can be pinned against Roxas and Nolasco.

  6. Whether the failure to implead or try the traders or agents who directly dealt with the complainants is fatal to the complaint.

  7. Whether respondents Roxas and Nolasco can be held liable for the fraud-induced loans made by their agents.

  8. Whether the Department of Justice (DOJ) had sufficient probable cause to prosecute the private respondents.

RULING:

  1. The acts committed by ASBHI constitute estafa by means of deceit under Article 315(2)(a) of the Revised Penal Code. The Department of Justice (DOJ) Resolution established that ASBHI made false representations to induce the petitioners to extend loans, such as the representation that ASBHI owned real and personal properties, that it was connected with DBS Bank, and that it had the necessary resources to repay the loans. The DOJ concluded that there was an explicit and reasonable conclusion that the representations made by ASBHI induced the petitioners to extend the loans, and petitioners sustained considerable damage as a result of these acts.

  2. The transactions entered into by ASBHI involving the issuance of postdated checks constitute a violation of the Revised Securities Act. The DOJ concluded that the postdated checks assumed the character of "evidences of indebtedness" and fall under the definition of "securities" under the Revised Securities Act. ASBHI issued these checks in exchange for individual non-personalized loans solicited from the public. The checks were not mere substitutes for cash in ordinary business transactions, but rather, they assumed the character of evidences of indebtedness. Therefore, the sale or distribution of such unregistered securities without the proper license and registration constitutes a violation of the Revised Securities Act.

  3. The checks issued by ASBHI do constitute a security under the definition set forth in the Revised Securities Act. The DOJ Resolution established a prima facie case for prosecuting respondents for violating the Act. The Court of Appeals erred in dismissing the finding without considering the grave consequences and impact of such a scheme.

  4. The subsequent repeal of the Revised Securities Act does not spare respondents from prosecution under said law. The new Securities Regulation Code of 2000 punishes the same offense alleged against respondents. Criminal acts committed under the old law are not extinguished by the enactment of the new Code.

  5. The charges of violation of Article 315 (2)(a) of the Revised Penal Code and Sections 4 in relation to 56 of the Revised Securities Act can be pinned against Roxas and Nolasco. The DOJ Resolution established a prima facie case against them, as it was found that they instructed their agents to make false representations to the public in order to convince them to invest in ASB.

  6. The failure to implead or try the traders or agents who directly dealt with the complainants is not fatal to the complaint. The determination of criminal liability is individual to each defendant, and the criminal court can still try and ascertain the individual liability of those accused whom it has jurisdiction over. The absence of the traders or agents may impact the available evidence, but it does not deprive the trial court of trying the case based on the evidence that is actually available.

  7. The Supreme Court held that the DOJ had sufficient probable cause to prosecute the private respondents. The Court reversed the decision of the Court of Appeals, which erroneously condoned the possible evasion of liability by Roxas and Nolasco. The Court emphasized that the determination of guilt or acquittal should be made through a full trial on the merits. The Court also reinstated the Resolutions of the DOJ in favor of prosecuting the private respondents.

PRINCIPLES:

  • Estafa by means of deceit under Article 315(2)(a) of the Revised Penal Code is committed when false representations are made to induce another person to part with money or property, and damage or prejudice is suffered by that person as a result.

  • The Revised Securities Act requires the registration of securities and prohibits the sale or distribution of unregistered securities. The term "securities" is broad and encompasses various schemes and forms of instruments used to solicit funds from the public.

  • The definition of "securities" under the Revised Securities Act includes "commercial papers evidencing indebtedness of any person, financial or non-financial entity, irrespective of maturity."

  • Criminal acts committed under a repealed law may still be prosecuted if the repealing law substantially reenacts the former law and does not increase the punishment.

  • When the repealing act reenacts the former statute and punishes the act previously penalized under the old law, a person charged with violating the old law prior to its repeal may still be held liable.

  • Inducement can be as sufficient and effective as direct participation in committing a crime.

  • The non-impleading or non-identification of traders or agents in a criminal case does not negate the potential liability of the individuals who instructed or induced them to commit the crime.

  • The determination of criminal liability is individual to each defendant, and the absence of one or some of the accused may impact the available evidence, but it does not prevent the trial court from trying the case based on the evidence that is actually available.

  • Non-interference with the determination of probable cause by the DOJ, unless there are exceptional circumstances justifying departure from the general rule.

  • Liability of individuals for the actions of their agents, particularly if they authorized and accepted the fraud-induced loans made by their agents.

  • Need for a full trial on the merits to assess and verify the points raised by the parties.