SECOND DIVISION

BETTY GABIONZA and G.R. No. 161057

ISABELITA TAN,
Petitioners,
Present:
QUISUMBING, J.
Chairperson,
- versus - CARPIO MORALES,
TINGA,
VELASCO, JR., and
COURT OF APPEALS, LUKE BRION, JJ.
ROXAS and EVELYN NOLASCO,
Respondents. Promulgated:
September 12, 2008
x ---------------------------------------------------------------------------------x

DECISION
TINGA, J.:
On 21 August 2000, petitioners Betty Go Gabionza (Gabionza) and Isabelita Tan (Tan) filed their
[1]
respective Complaints-affidavit
charging private respondents Luke Roxas (Roxas) and Evelyn
Nolasco (Nolasco) with several criminal acts. Roxas was the president of ASB Holdings, Inc.
(ASBHI) while Nolasco was the senior vice president and treasurer of the same corporation.
According to petitioners, ASBHI was incorporated in 1996 with its declared primary purpose
to invest in any and all real and personal properties of every kind or otherwise acquire the stocks,
bonds, and other securities or evidence of indebtedness of any other corporation, and to hold or own,
[2]
use, sell, deal in, dispose of, and turn to account any such stocks. ASBHI was organized with an
authorized capital stock of P500,000.00, a fact reflected in the corporations articles of incorporation,
[3]
copies of which were appended as annexes to the complaint.

Both petitioners had previously placed monetary investment with the Bank of Southeast Asia (BSA).
They alleged that between 1996 and 1997, they were convinced by the officers of ASBHI to lend or
deposit money with the corporation. They and other investors were urged to lend, invest or deposit
money with ASBHI, and in return they would receive checks from ASBHI for the amount so lent,
invested or deposited. At first, they were issued receipts reflecting the name ASB Realty
Development which they were told was the same entity as BSA or was connected therewith, but
beginning in March 1998, the receipts were issued in the name of ASBHI. They claimed that they
[4]
were told that ASBHI was exactly the same institution that they had previously dealt with.
ASBHI would issue two (2) postdated checks to its lenders, one representing the principal amount
and the other covering the interest thereon. The checks were drawn against DBS Bank and would
mature in 30 to 45 days. On the maturity of the checks, the individual lenders would renew the
loans, either collecting only the interest earnings or rolling over the same with the principal amounts.
[5]
In the first quarter of 2000, DBS Bank started to refuse to pay for the checks purportedly by virtue
of stop payment orders from ASBHI. In May of 2000, ASBHI filed a petition for rehabilitation and
receivership with the Securities and Exchange Commission (SEC), and it was able to obtain an order
[6]
enjoining it from paying its outstanding liabilities.
This series of events led to the filing of the
complaints by petitioners, together with Christine Chua, Elizabeth Chan, Ando Sy and Antonio
[7]
Villareal, against ASBHI.
The complaints were for estafa under Article 315(2)(a) and (2)(d) of
the Revised Penal Code, estafa under Presidential Decree No. 1689, violation of the Revised
Securities Act and violation of the General Banking Act.
A special task force, the Task Force on Financial Fraud (Task Force), was created by the Department
[8]
of Justice (DOJ) to investigate the several complaints that were lodged in relation to ASBHI. The
Task Force, dismissed the complaint on 19 October 2000, and the dismissal was concurred in by the
[9]
assistant chief state prosecutor and approved by the chief state prosecutor.
Petitioners filed a
[10]
motion for reconsideration but this was denied in February 2001.
With respect to the charges of
estafa under Article 315(2) of the Revised Penal Code and of violation of the Revised Securities Act
(which form the crux of the issues before this Court), the Task Force concluded that the subject
transactions were loans which gave rise only to civil liability; that petitioners were satisfied with the

arrangement from 1996 to 2000; that petitioners never directly dealt with Nolasco and Roxas; and
that a check was not a security as contemplated by the Revised Securities Act.
Petitioners then filed a joint petition for review with the Secretary of Justice. On 15 October
2001, then Secretary Hernando Perez issued a resolution which partially reversed the Task Force and
instead directed the filing of five (5) Informations for estafa under Article 315(2)(a) of the Revised
Penal Code on the complaints of Chan and petitioners Gabionza and Tan, and an Information for
[11]
violation of Section 4 in relation to Section 56 of the Revised Securities Act.
Motions for
reconsideration to this Resolution were denied by the Department of Justice in a Resolution dated 3
[12]
July 2002.
Even as the Informations were filed before the Regional Trial Court of Makati City, private
respondents assailed the DOJ Resolution by way of a certiorari petition with the Court of Appeals.
[13]
In its assailed Decision
dated 18 July 2003, the Court of Appeals reversed the DOJ and ordered
the dismissal of the criminal cases. The dismissal was sustained by the appellate court when it
[14]
denied petitioners motion for reconsideration in a Resolution dated 28 November 2003.
Hence
this petition filed by Gabionza and Tan.
The Court of Appeals deviated from the general rule that accords respect to the discretion of
the DOJ in the determination of probable cause. This Court consistently adheres to its policy of noninterference in the conduct of preliminary investigations, and to leave to the investigating prosecutor
sufficient latitude of discretion in the determination of what constitutes sufficient evidence to
[15]
establish probable cause for the filing of an information against a supposed offender.
At the outset, it is critical to set forth the key factual findings of the DOJ which led to the conclusion
that probable cause existed against the respondents. The DOJ Resolution states, to wit:
The transactions in question appear to be mere renewals of the loans the complainant-petitioners earlier
granted to BSA. However, just after they agreed to renew the loans, the ASB agents who dealt with
them issued to them receipts indicating that the borrower was ASB Realty, with the representation that it
was the same entity as BSA or connected therewith. On the strength of this representation, along with
other claims relating to the status of ASB and its supposed financial capacity to meet obligations, the
complainant-petitioners acceded to lend the funds to ASB Realty instead. As it turned out, however,
ASB had in fact no financial capacity to repay the loans as it had an authorized capital stock of only
P500,000.00 and paid up capital of only P125,000.00. Clearly, the representations regarding its supposed
financial capacity to meet its obligations to the complainant-petitioners were simply false. Had they

known that ASB had in fact no such financial capacity, they would not have invested millions of pesos.
Indeed, no person in his proper frame of mind would venture to lend millions of pesos to a business
entity having such a meager capitalization. The fact that the complainant-petitioners might have
benefited from its earlier dealings with ASB, through interest earnings on their previous loans, is of no
moment, it appearing that they were not aware of the fraud at those times they renewed the loans.
The false representations made by the ASB agents who dealt with the complainant-petitioners and who
inveigled them into investing their funds in ASB are properly imputable to respondents Roxas and
Nolasco, because they, as ASBs president and senior vice president/treasurer, respectively, in charge of
its operations, directed its agents to make the false representations to the public, including the
complainant-petitioners, in order to convince them to invest their moneys in ASB. It is difficult to make
a different conclusion, judging from the fact that respondents Roxas and Nolasco authorized and
accepted for ASB the fraud-induced loans. This makes them liable for estafa under Article 315
(paragraph 2 [a]) of the Revised Penal Code. They cannot escape criminal liability on the ground that
they did not personally deal with the complainant-petitioners in regard to the transactions in question.
Suffice it to state that to commit a crime, inducement is as sufficient and effective as direct participation.
[16]

Notably, neither the Court of Appeals decision nor the dissent raises any serious disputation as to the
occurrence of the facts as narrated in the above passage. They take issue instead with the proposition
that such facts should result in a prima facie case against either Roxas or Nolasco, especially given
that neither of them engaged in any face-to-face dealings with petitioners. Leaving aside for the
moment whether this assumed remoteness of private respondents sufficiently insulates them from
criminal liability, let us first discern whether the above-stated findings do establish a prima facie
case that petitioners were indeed the victims of the crimes of estafa under Article 315(2)(a) of the
Revised Penal Code and of violation of the Revised Securities Act.
Article 315(2)(a) of the Revised Penal Code states:
ART. 315. Swindling (estafa). Any person who shall defraud another by any of the means
mentioned herein below shall be punished by:
xxx xxx xxx
(2) By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneous with the commission of the fraud:
(a) By using a fictitious name, or falsely pretending to possess power, influence,
qualifications, property, credit, agency, business or imaginary transactions, or by means of other
similar deceits;
xxx xxx xxx

The elements of estafa by means of deceit as defined under Article 315(2)(a) of the Revised
Penal Code are as follows: (1) that there must be a false pretense, fraudulent act or fraudulent

means; (2) that such false pretense, fraudulent act or fraudulent means must be made or executed
prior to or simultaneously with the commission of the fraud; (3) that the offended party must have
relied on the false pretense, fraudulent act or fraudulent means, that is, he was induced to part with
his money or property because of the false pretense, fraudulent act or fraudulent means; and (4) that
[17]
as a result thereof, the offended party suffered damage.
Do the findings embodied in the DOJ Resolution align with the foregoing elements of estafa
by means of deceit?
First. The DOJ Resolution explicitly identified the false pretense, fraudulent act or fraudulent
means perpetrated upon the petitioners. It narrated that petitioners were made to believe that ASBHI
had the financial capacity to repay the loans it enticed petitioners to extend, despite the fact that it
[18]
had an authorized capital stock of only P500,000.00 and paid up capital of only P125,000.00.
The deficient capitalization of ASBHI is evinced by its articles of incorporation, the treasurers
affidavit executed by Nolasco, the audited financial statements of the corporation for 1998 and the
general information sheets for 1998 and 1999, all of which petitioners attached to their respective
[19]
affidavits.
The Court of Appeals conceded the fact of insufficient capitalization, yet discounted its
impact by noting that ASBHI was able to make good its loans or borrowings from 1998 until the
[20]
first quarter of 2000.
The short-lived ability of ASBHI, to repay its loans does not negate the
fraudulent misrepresentation or inducement it has undertaken to obtain the loans in the first place.
The material question is not whether ASBHI inspired exculpatory confidence in its investors by
making good on its loans for a while, but whether such investors would have extended the loans in
the first place had they known its true financial setup. The DOJ reasonably noted that no person in
his proper frame of mind would venture to lend millions of pesos to a business entity having such a
meager capitalization. In estafa under Article 315(2)(a), it is essential that such false statement or
false representation constitute the very cause or the only motive which induces the complainant to
[21]
part with the thing.
Private respondents argue before this Court that the true capitalization of ASBHI has always
been a matter of public record, reflected as it is in several documents which could be obtained by the
[22]
petitioners from the SEC.
We are not convinced. The material misrepresentations have been

made by the agents or employees of ASBHI to petitioners, to the effect that the corporation was
structurally sound and financially able to undertake the series of loan transactions that it induced
petitioners to enter into. Even if ASBHIs lack of financial and structural integrity is verifiable from
the articles of incorporation or other publicly available SEC records, it does not follow that the crime
of estafa through deceit would be beyond commission when precisely there are bending
representations that the company would be able to meet its obligations. Moreover, respondents
argument assumes that there is legal obligation on the part of petitioners to undertake an
investigation of ASBHI before agreeing to provide the loans. There is no such obligation. It is unfair
to expect a person to procure every available public record concerning an applicant for credit to
satisfy himself of the latters financial standing. At least, that is not the way an average person takes
care of his concerns.
Second. The DOJ Resolution also made it clear that the false representations have been made
to petitioners prior to or simultaneously with the commission of the fraud. The assurance given to
them by ASBHI that it is a worthy credit partner occurred before they parted with their money.
Relevantly, ASBHI is not the entity with whom petitioners initially transacted with, and they averred
that they had to be convinced with such representations that Roxas and the same group behind BSA
were also involved with ASBHI.

Third. As earlier stated, there was an explicit and reasonable conclusion drawn by the DOJ
that it was the representation of ASBHI to petitioners that it was creditworthy and financially
capable to pay that induced petitioners to extend the loans. Petitioners, in their respective complaintaffidavits, alleged that they were enticed to extend the loans upon the following representations: that
ASBHI was into the very same activities of ASB Realty Corp., ASB Development Corp. and ASB
Land, Inc., or otherwise held controlling interest therein; that ASB could legitimately solicit funds
from the public for investment/borrowing purposes; that ASB, by itself, or through the corporations
aforestated, owned real and personal properties which would support and justify its borrowing
program; that ASB was connected with and firmly backed by DBS Bank in which Roxas held a
substantial stake; and ASB would, upon maturity of the checks it issued to its lenders, pay the same
[23]
and that it had the necessary resources to do so.
Fourth. The DOJ Resolution established that petitioners sustained damage as a result of the
acts perpetrated against them. The damage is considerable as to petitioners. Gabionza lost

[24]
P12,160,583.32 whereas Tan lost 16,411,238.57.
In addition, the DOJ Resolution noted that
neither Roxas nor Nolasco disputed that ASBHI had borrowed funds from about 700 individual
[25]
investors amounting to close to P4B.

To the benefit of private respondents, the Court of Appeals ruled, citing Sesbreno v. Court of
[26]
Appeals,
that the subject transactions are akin to money market placements which partake the
nature of a loan, the non-payment of which does not give rise to criminal liability for estafa. The
citation is woefully misplaced. Sesbreno affirmed that a money market transaction partakes the
nature of a loan and therefore nonpayment thereof would not give rise to criminal liability for estafa
[27]
through misappropriation or conversion.
Estafa through misappropriation or conversion is
punishable under Article 315(1)(b), while the case at bar involves Article 315 (2)(a), a mode of
estafa by means of deceit. Indeed, Sesbreno explains: In money market placement, the investor is a
lender who loans his money to a borrower through a middleman or dealer. Petitioner here loaned his
money to a borrower through Philfinance. When the latter failed to deliver back petitioner's
placement with the corresponding interest earned at the maturity date, the liability incurred by
[28]
Philfinance was a civil one.
That rationale is wholly irrelevant to the complaint at bar, which
centers not on the inability of ASBHI to repay petitioners but on the fraud and misrepresentation
committed by ASBHI to induce petitioners to part with their money.
To be clear, it is possible to hold the borrower in a money market placement liable for estafa if
the creditor was induced to extend a loan upon the false or fraudulent misrepresentations of the
borrower. Such estafa is one by means of deceit. The borrower would not be generally liable for
estafa through misappropriation if he or she fails to repay the loan, since the liability in such
instance is ordinarily civil in nature.
We can thus conclude that the DOJ Resolution clearly supports a prima facie finding that the
crime of estafa under Article 315 (2)(a) has been committed against petitioners. Does it also
establish a prima facie finding that there has been a violation of the then-Revised Securities Act,
specifically Section 4 in relation to Section 56 thereof?
Section 4 of Batas Pambansa Blg. 176, or the Revised Securities Act, generally requires the
[29]
registration of securities and prohibits the sale or distribution of unregistered securities.
The

DOJ extensively concluded that private respondents are liable for violating such prohibition against
the sale of unregistered securities:
Respondents Roxas and Nolasco do not dispute that in 1998, ASB borrowed funds about 700
individual investors amounting to close to P4 billion, on recurring, short-term basis, usually 30 or 45
days, promising high interest yields, issuing therefore mere postdate checks. Under the circumstances, the
checks assumed the character of evidences of indebtedness, which are among the securities mentioned
under the Revised Securities Act. The term securities embodies a flexible rather than static principle, one
that is capable of adaptation to meet the countless and variable schemes devised by those who seek to use
the money of others on the promise of profits (69 Am Jur 2d, p. 604). Thus, it has been held that checks
of a debtor received and held by the lender also are evidences of indebtedness and therefore securities
under the Act, where the debtor agreed to pay interest on a monthly basis so long as the principal checks
remained uncashed, it being said that such principal extent as would have promissory notes payable on
demand (Id., p. 606, citing Untied States v. Attaway (DC La) 211 F Supp 682). In the instant case, the
checks were issued by ASB in lieu of the securities enumerated under the Revised Securities Act in a
clever attempt, or so they thought, to take the case out of the purview of the law, which requires prior
license to sell or deal in securities and registration thereof. The scheme was to designed to circumvent the
law. Checks constitute mere substitutes for cash if so issued in payment of obligations in the ordinary
course of business transactions. But when they are issued in exchange for a big number of individual nonpersonalized loans solicited from the public, numbering about 700 in this case, the checks cease to be
such. In such a circumstance, the checks assume the character of evidences of indebtedness. This is
especially so where the individual loans were not evidenced by appropriate debt instruments, such as
promissory notes, loan agreements, etc., as in this case. Purportedly, the postdated checks themselves
serve as the evidences of the indebtedness. A different rule would open the floodgates for a similar
scheme, whereby companies without prior license or authority from the SEC. This cannot be
countenanced. The subsequent repeal of the Revised Securities Act does not spare respondents Roxas and
Nolasco from prosecution thereunder, since the repealing law, Republic Act No. 8799 known as the
Securities Regulation Code, continues to punish the same offense (see Section 8 in relation to Section 73,
[30]
R.A. No. 8799).

The Court of Appeals however ruled that the postdated checks issued by ASBHI did not
constitute a security under the Revised Securities Act. To support this conclusion, it cited the general
definition of a check as a bill of exchange drawn on a bank and payable on demand, and took
cognizance of the fact that the issuance of checks for the purpose of securing a loan to finance the
activities of the corporation is well within the ambit of a valid corporate act to note that a
corporation does not need prior registration with the SEC in order to be able to issue a check, which
is a corporate prerogative.
This analysis is highly myopic and ignorant of the bigger picture. It is one thing for a
corporation to issue checks to satisfy isolated individual obligations, and another for a corporation to
execute an elaborate scheme where it would comport itself to the public as a pseudo-investment
house and issue postdated checks instead of stocks or traditional securities to evidence the
investments of its patrons. The Revised Securities Act was geared towards maintaining the stability

of the national investment market against activities such as those apparently engaged in by ASBHI.
As the DOJ Resolution noted, ASBHI adopted this scheme in an attempt to circumvent the Revised
Securities Act, which requires a prior license to sell or deal in securities. After all, if ASBHIs
activities were actually regulated by the SEC, it is hardly likely that the design it chose to employ
would have been permitted at all.

But was ASBHI able to successfully evade the requirements under the Revised Securities
Act? As found by the DOJ, there is ultimately a prima facie case that can at the very least sustain
prosecution of private respondents under that law. The DOJ Resolution is persuasive in citing
American authorities which countenance a flexible definition of securities. Moreover, it bears
pointing out that the definition of securities set forth in Section 2 of the Revised Securities Act
includes commercial papers evidencing indebtedness of any person, financial or non-financial entity,
irrespective of maturity, issued, endorsed, sold, transferred or in any manner conveyed to another.
[31]
A check is a commercial paper evidencing indebtedness of any person, financial or nonfinancial entity. Since the checks in this case were generally rolled over to augment the creditors
existing investment with ASBHI, they most definitely take on the attributes of traditional stocks.

We should be clear that the question of whether the subject checks fall within the
classification of securities under the Revised Securities Act may still be the subject of debate, but at
the very least, the DOJ Resolution has established a prima facie case for prosecuting private
respondents for such offense. The thorough determination of such issue is best left to a full-blown
trial of the merits, where private respondents are free to dispute the theories set forth in the DOJ
Resolution. It is clear error on the part of the Court of Appeals to dismiss such finding so
perfunctorily and on such flimsy grounds that do not consider the grave consequences. After all, as
the DOJ Resolution correctly pointed out: [T]he postdated checks themselves serve as the evidences
of the indebtedness. A different rule would open the floodgates for a similar scheme, whereby
[32]
companies without prior license or authority from the SEC. This cannot be countenanced.

This conclusion quells the stance of the Court of Appeals that the unfortunate events befalling
petitioners were ultimately benign, not malevolent, a consequence of the economic crisis that beset
[33]
the Philippines during that era.
That conclusion would be agreeable only if it were undisputed
that the activities of ASBHI are legal in the first place, but the DOJ puts forth a legitimate theory

that the entire modus operandi of ASBHI is illegal under the Revised Securities Act and if that were
so, the impact of the Asian economic crisis would not obviate the criminal liability of private
respondents.
Private respondents cannot make capital of the fact that when the DOJ Resolution was issued,
[34]
the Revised Securities Act had already been repealed by the Securities Regulation Code of 2000.
As noted by the DOJ, the new Code does punish the same offense alleged of petitioners, particularly
Section 8 in relation to Section 73 thereof. The complained acts occurred during the effectivity of
the Revised Securities Act. Certainly, the enactment of the new Code in lieu of the Revised
Securities Act could not have extinguished all criminal acts committed under the old law.
In 1909-1910, the Philippine and United States Supreme Courts affirmed the principle that
when the repealing act reenacts substantially the former law, and does not increase the punishment
of the accused, the right still exists to punish the accused for an offense of which they were
[35]
convicted and sentenced before the passage of the later act.
This doctrine was reaffirmed as
recently as 2001, where the Court, through Justice Quisumbing, held in Benedicto v. Court of
[36]
Appeals
that an exception to the rule that the absolute repeal of a penal law deprives the court of
authority to punish a person charged with violating the old law prior to its repeal is where the
repealing act reenacts the former statute and punishes the act previously penalized under the old law.
[37]
It is worth noting that both the Revised Securities Act and the Securities Regulation Code of
2000 provide for exactly the same penalty: a fine of not less than five thousand (P5,000.00) pesos
nor more than five hundred thousand (P500,000.00) pesos or imprisonment of not less than seven (7)
[38]
years nor more than twenty one (21) years, or both, in the discretion of the court.
It is ineluctable that the DOJ Resolution established a prima facie case for violation of Article
315 (2)(a) of the Revised Penal Code and Sections 4 in relation to 56 of the Revised Securities Act.
We now turn to the critical question of whether the same charges can be pinned against Roxas and
Nolasco likewise.
The DOJ Resolution did not consider it exculpatory that Roxas and Nolasco had not
themselves dealt directly with petitioners, observing that to commit a crime, inducement is as
[39]
sufficient and effective as direct participation.
This conclusion finds textual support in Article

[40]
17
of the Revised Penal Code. The Court of Appeals was unable to point to any definitive
evidence that Roxas or Nolasco did not instruct or induce the agents of ASBHI to make the false or
misleading representations to the investors, including petitioners. Instead, it sought to acquit Roxas
and Nolasco of any liability on the ground that the traders or employees of ASBHI who directly
made the dubious representations to petitioners were never identified or impleaded as respondents.
It appears that the Court of Appeals was, without saying so, applying the rule in civil cases
[41]
that all indispensable parties must be impleaded in a civil action.
There is no equivalent rule in
criminal procedure, and certainly the Court of Appeals decision failed to cite any statute, procedural
rule or jurisprudence to support its position that the failure to implead the traders who directly dealt
[42]
with petitioners is indeed fatal to the complaint.
Assuming that the traders could be tagged as principals by direct participation in tandem with
Roxas and Nolasco the principals by inducement does it make sense to compel that they be jointly
charged in the same complaint to the extent that the exclusion of one leads to the dismissal of the
complaint? It does not. Unlike in civil cases, where indispensable parties are required to be
impleaded in order to allow for complete relief once the case is adjudicated, the determination of
criminal liability is individual to each of the defendants. Even if the criminal court fails to acquire
jurisdiction over one or some participants to a crime, it still is able to try those accused over whom it
acquired jurisdiction. The criminal court will still be able to ascertain the individual liability of those
accused whom it could try, and hand down penalties based on the degree of their participation in the
crime. The absence of one or some of the accused may bear impact on the available evidence for the
prosecution or defense, but it does not deprive the trial court to accordingly try the case based on the
evidence that is actually available.
At bar, if it is established after trial that Roxas and Nolasco instructed all the employees,
agents and traders of ASBHI to represent the corporation as financially able to engage in the
challenged transactions and repay its investors, despite their knowledge that ASBHI was not
established to be in a position to do so, and that representatives of ASBHI accordingly made such
representations to petitioners, then private respondents could be held liable for estafa. The failure to
implead or try the employees, agents or traders will not negate such potential criminal liability of
Roxas and Nolasco. It is possible that the non-participation of such traders or agents in the trial will
affect the ability of both petitioners and private respondents to adduce evidence during the trial, but
it cannot quell the existence of the crime even before trial is had. At the very least, the non-

identification or non-impleading of such traders or agents cannot negatively impact the finding of
probable cause.
The assailed ruling unfortunately creates a wide loophole, especially in this age of call centers,
that would create a nearly fool-proof scheme whereby well-organized criminally-minded enterprises
can evade prosecution for criminal fraud. Behind the veil of the anonymous call center agent, such
enterprises could induce the investing public to invest in fictional or incapacitated corporations with
fraudulent impossible promises of definite returns on investment. The rule, as set forth by the Court
of Appeals ruling, will allow the masterminds and profiteers from the scheme to take the money and
run without fear of the law simply because the defrauded investor would be hard-pressed to identify
the anonymous call center agents who, reading aloud the script prepared for them in mellifluous
tones, directly enticed the investor to part with his or her money.
Is there sufficient basis then to establish probable cause against Roxas and Nolasco? Taking
into account the relative remoteness of private respondents to petitioners, the DOJ still concluded
that there was. To repeat:
The false representations made by the ASB agents who dealt with the complainant-petitioners
and who inveigled them into investing their funds in ASB are properly imputable to respondents Roxas
and Nolasco, because they, as ASBs president and senior vice president/treasurer, respectively,
respectively, in charge of its operations, directed its agents to make the false representations to the
public, including the complainant-petitioners, in order to convince them to invest their moneys in ASB.
It is difficult to make a different conclusion, judging from the fact that respondents Roxas and Nolasco
[43]
authorized and accepted for ASB the fraud-induced loans.

Indeed, the facts as thus established cannot lead to a definite, exculpatory conclusion that
Roxas and Nolasco did not instruct, much less forbid, their agents from making the
misrepresentations to petitioners. They could of course pose that defense, but such claim can only be
established following a trial on the merits considering that nothing in the record proves without
doubt such law-abiding prudence on their part. There is also the fact that ABSHI, their corporation,
actually received the alleged amounts of money from petitioners. It is especially curious that
according to the ASBHI balance sheets dated 31 December 1999, which petitioners attached to their
[44]
affidavit-complaints,
over five billion pesos were booked as advances to stockholder when,
according to the general information sheet for 1999, Roxas owned 124,996 of the 125,000
[45]
subscribed shares of ASBHI.
Considering that ASBHI had an authorized capital stock of

only P500,000 and a subscribed capital of P125,000, it can be reasonably deduced that such
large amounts booked as advances to stockholder could have only come from the loans
extended by over 700 investors to ASBHI.
It is true that there are exceptions that may warrant departure from the general rule of noninterference with the determination of probable cause by the DOJ, yet such exceptions do not lie in
this case, and the justifications actually cited in the Court of Appeals decision are exceptionally
weak and ultimately erroneous. Worse, it too hastily condoned the apparent evasion of liability by
persons who seemingly profited at the expense of investors who lost millions of pesos. The Courts
conclusion is that the DOJS decision to prosecute private respondents is founded on sufficient
probable cause, and the ultimate determination of guilt or acquittal is best made through a full trial
on the merits. Indeed, many of the points raised by private respondents before this Court, related as
they are to the factual context surrounding the subject transactions, deserve the full assessment and
verification only a trial on the merits can accord.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court
of Appeals dated 18 July 2003 and 28 November 2003 are REVERSED and SET ASIDE. The
Resolutions of the Department of Justice in I.S. Nos. 2000-1418 to 1422 dated 15 October 2001 and
3 July 2002 are REINSTATED. Costs against private respondents.

DANTE O. TINGA
Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CONCHITA CARPIO MORALES PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

ARTURO D. BRION
Associate Justice

ATTESTATION

I attest 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 Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
Attestation, it is hereby certified 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 Courts Division.

REYNATO S. PUNO
Chief Justice

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See rollo, pp. 466-558.

Id. at 466, 515.
Id.
Id. at 467-468, 516-517.
Id. at 83.
Id. See also MBTC v. ASB Holdings, Inc., et.al, G.R. No. 166197, 27 Feburary 2007.
Id.
Id. at 22.
Through a Joint-Resolution dated 19 October 2000. See rollo, pp. 96-106.

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Rollo, pp. 108-110.

Id. at 81-88.

[12]

Id. at 89-92. In said Resolution, the DOJ also directed that two additional informations for estafa under Article 315(2)(a) be filed
corresponding to the complaints filed by Ando Sy and Antonio Villareal, whose names were inadvertently omitted in the dispositive portion of [the
DOJ] resolution of October 15, 2001. Id., at 91.
[13]

Id. at 52-62. Penned by Associate Justice R. De Guia-Salvador, concurred in by Associate Justice Marina L. Buzon and Jose C.
Mendoza of the Court of Appeals Special Fifteenth Division.
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Id. at 76-77.
Andres v. Cuevas, G.R. No. 150869, 9 June 2005, 460 SCRA 38, 52.
Rollo, pp. 85-86.

[17]

Aricheta v. People, G.R. No. 172500, 21 September 2007; citing Cosme Jr. v. People, G.R. No. 149753, 27 November 2006, 508
SCRA 190, 203-204.
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Rollo, p. 85.
See e.g., id. at 480-501.

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Id. at 60-61.
L. REYES, II The Revised Criminal Code (2001 ed.) at 767; citing People v. Gines, et al. C.A., 61 O.G. 1365.
Rollo, pp. 332-333.
See id. at 467, 516.
Id. at 84.
Id. at 86.
310 Phil. 671 (1995).
Id. at 681.
Id. at 682.
The provision reads in full:

SECTION 4. Requirement of registration of securities. (a) No securities, except of a class exempt under any of the
provisions of Section five hereof or unless sold in any transaction exempt under any of the provisions of Section six hereof, shall
be sold or offered for sale or distribution to the public within the Philippine unless such securities shall have been registered and
permitted to be sold as hereinafter provided.
(b) Notwithstanding the provisions of paragraph (a) of this Section and the succeeding Sections regarding exemptions, no
commercial paper as defined in Section two hereof shall be issued, endorsed, sold, transferred or in any other manner conveyed
to the public, unless registered in accordance with the rules and regulations that shall be promulgated in the public interest and
for the protection of investors by the Commission. The Commission, however, with due regard to the public interest and the
protection of investors, may, by rules and regulations, exempt from registration any commercial paper that may otherwise be
covered by this paragraph. In either case, the rules and regulations promulgated by the Commission shall be subject to the
approval of the Monetary Board of the Central Bank of the Philippines. The Monetary Board shall, however, have the power to
promulgate its own rules on the monetary and credit aspects of commercial paper issues, which may include the imposition of
ceilings on issues by any single borrower, and the authority to supervise the enforcement of such rules and to require issues of
commercial papers to submit their financial statements and such periodic reports as may be necessary for such enforcement. As
far as practicable, such financial statements and periodic reports, when required by both the Commission and the Monetary
Board, shall be uniform.
(c) A record of the registration of securities shall be kept in a Register of Securities in which shall be recorded orders entered
by the Commission with respect to such securities. Such register and all documents or information with respect to the securities
registered therein shall be open to the public inspection at reasonable hours on business days.
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Rollo, pp. 86-87.

See Section 2, Revised Securities Act.
Rollo, p. 87.
Id. at 61.
Dissenting Opinion, infra.

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Ong Chang Wing v. U.S., 40 Phil. 1046, 1050 (1910).

416 Phil. 722 (2001).
Id. at 744.
See Section 56, Revised Securities Act and Section 73, Securities Regulation Code.
Rollo, p. 86.
Principals. The following are considered principals:
those who take a direct part in the execution of the act;
Those who directly force or induce others to commit it;
Those who cooperate in the commission of the offense by another act without which it would not have been accomplished.
See 1997 RULES OF CIVIL PROCEDURE, Rule 3, Sec. 7.
See rollo, p. 60.
Id. at 86.
Id. at 479, 525.
See id. at 496, 540.