Ms. XXX Ms. Yyy: Suspected-Financial-Scams-In-The-Philippines-According-Sec

1
05 March 2018
Ms. Xxx
Ms. Yyy
Complainant – Investors
LEGAL OPINION RE: POSSIBLE INVESTMENT SCAM TRANSACTIONS WITH Zzz
Last 20 February 2018, you approached me asking for legal advice and possible engagement of my legal
services regarding your issue:
POSSIBLE INVESTMENT SCAM WITH Zzz
Facts / Background of the Case:
Based on your narration and submission of several screenshot documents, both of you have been
enticed to invest hard earned money to a certain Mr. Zzz under a certain investment group called “Team
Z”. The idea and part of the enticement is to invest in Bit Coin and the promise of earning “to good to
be true” fixed high returns or profits in short periods only. At the beginning, there was a return of
investment as part of the bait. However later on, the group became more and more obscure on its
transactions and the lack of transparency became obvious and the elements of a classic investment
scam began to surface: the rush to invest now, the use of jargon to discuss the complex product, the
high return for zero to low risk, and the lack of registration/license1. To be more specific, below are
some of the signs of the scam:
1. Lack of official receipt or acknowledgement receipt

2. Unwillingness or hesitation to give additional information
3. Use or creation of ghost characters
4. Lack of investment contracts
5. Introduction of product (BitCoin) but failure to provide documents/ proof of its activity
The main person in charge of this scam as you pointed is a certain Mr. Zzz with residential address at
QQQ. Mr. Zzz is connected with ARE.
The Issues
Apparently, your main issues are the following:
1. How to claim full refund of the amount invested

2. How to stop, entrap Mr. Zzz from his illicit business activities
Discussion:
1
17 Financial Investment Scams in the Philippines According to SEC (Update) link: http://clipseum.com/10-
suspected-financial-scams-in-the-philippines-according-sec/
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In order to answer your issues above, we first must answer the following preliminary but necessary
questions:
1. What type of transaction is involved?

2. What are the laws covering such transactions?
It is an investment contract
An investment contract means a contract, transaction or scheme whereby a person invests his money in
a common enterprise and is led to expect profits primarily from the efforts of others. Below are some
features of an investment contract:
1. A presumption that a contract is an investment contract arises whenever a person seeks to use
the money of others on the promise of profits.
2. When two or more investors pool their resources, there is a common enterprise, even if the
promoter does not do more than receive a broker’s commission.
3. Requisites of an investment contract:
a. An investment of money
b. In a common enterprise
c. Expectation of profit
d. Primarily from the efforts of others2
It is clear from the facts above that Mr. Zzz and Team Z is operating illegally as an investment contractor.
Being an investment contract, it is a Security which is covered by the Securities Regulation Code.
Under RA 8799 or THE SECURITIES REGULATION CODE:
Section 3. Definition of Terms. - 3.1. "Securities" are shares, participation or

interests in a corporation or in a commercial enterprise or profit-making venture
and evidenced by a certificate, contract, instruments, whether written or electronic
in character. It includes:
(a) Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-

backed securities;
(b) Investment contracts, certificates of interest or participation in a profit sharing

agreement, certifies of deposit for a future subscription;
(c) Fractional undivided interests in oil, gas or other mineral rights;
(d) Derivatives like option and warrants;
(e) Certificates of assignments, certificates of participation, trust certificates, voting

trust certificates or similar instruments
(f) Proprietary or nonproprietary membership certificates in corporations; and
2
Howes Unlimited Corp v SEC, G.R. 164182, Feb. 26, 2008
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(g) Other instruments as may in the future be determined by the Commission.
Being a type of security that is covered by the SRC, it is illegal because first and foremost, it is not
registered. Secondly, it is illegal because it fails to give further information as to its activities.
Aside from being covered by SEC, it may also fall under Estafa under the Revised Penal Code. Under
Article 315 of the Revised Penal Code, there is Estafa:
(b) By misappropriating or converting, to the prejudice of another, money, goods,

or any other personal property received by the offender in trust or on commission,
or for administration, or under any other obligation involving the duty to make
delivery of or to return the same, even though such obligation be totally or
partially guaranteed by a bond; or by denying having received such money, goods,
or other property.
This transaction is also demandable under the Civil Code.
First, there is agency because you have entrusted your money as principals to Mr. Zzz for the purpose of
making profits. As defined in the Civil Code:
Article 1868. By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of another, with the
consent or authority of the latter.
An agent is liable to his principal based on the following provisions of the Civil Code:
Article 1884. The agent is bound by his acceptance to carry out the agency, and is
liable for the damages which, through his nonperformance, the principal may
suffer.
Article 1889. The agent shall be liable for damages if, there being a conflict
between his interests and those of the principal, he should prefer his own.
As the Principal, you have the right to revoke the investment and the agency at will. As stated in the civil
code:
Article 1920. The principal may revoke the agency at will, and compel the agent to
return the document evidencing the agency. Such revocation may be express or
implied.
Having cited numerous laws covering your transactions, full recovery of the investment amount may be
made by first filing a demand letter, invoking the laws mentioned above. Once the demand letter is
unheeded, then the appropriate criminal and civil actions may be filed such as:
1. Collection of Sum of Money under the Small Claims Procedure

2. Entrapment in coordination with the NBI, PNP
3. Report the matter to the SEC Enforcement and Investor Protection Department
4. File criminal charges
Entrapment may be done in coordination with the PNP and NBI.

4
Conclusion:
The transaction you are involved in is an investment contract that may fall within the investment scams
defined by the Securities and Exchange Commission. Being an investment contract, it is a security
regulated by the SEC. There are several laws applicable and which may be invoked in order to recover
your money as well as punish the perpetrator such as the Securities Regulation Code, Revised Penal
Code and Civil Code. However, before your rights may be invoked, a demand letter is necessary. This
demand letter can only be sent once there is an established link between your funds, Mr. Zzz, and the
investment scheme. Although there is disclaimer of ‘risk taker’ being continuously published online, this
declaration will fail and can be used against him.
Charges for legal services
Should you decide to pursue legal remedies with my services, below are the fees which may apply at the
moment:
1. Demand Letter – PhP 3,000.00 per person per demand letter
2. Appearance before Government Agencies – PhP 2,500.00 per appearance
3. Pleadings/Affidavit: PhP 1,500.00 per person per pleading/affidavit
As discussed, engagement will be on an as needed basis. Hence, availment of one service does not make
the other services and the applicable fees demandable.
Fees involving the courts and the judicial proceedings will be discussed separately once it is elevated to
the courts. At the moment, we are still at the executive level of government. Of course the goal is to be
able to claim your investments without going to the courts, which should be the last resort.
Respectfully yours,
Atty. AAA

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LEGAL OPINION RE: POSSIBLE INVESTMENT SCAM TRANSACTIONS WITH Zzz

POSSIBLE INVESTMENT SCAM WITH Zzz

Facts / Background of the Case:

1. Lack of official receipt or acknowledgement receipt

Apparently, your main issues are the following:

1. How to claim full refund of the amount invested

1. What type of transaction is involved?

Under RA 8799 or THE SECURITIES REGULATION CODE:

Section 3. Definition of Terms. - 3.1. "Securities" are shares, participation or

(a) Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-

(b) Investment contracts, certificates of interest or participation in a profit sharing

(c) Fractional undivided interests in oil, gas or other mineral rights;

(d) Derivatives like option and warrants;

(e) Certificates of assignments, certificates of participation, trust certificates, voting

(f) Proprietary or nonproprietary membership certificates in corporations; and

(g) Other instruments as may in the future be determined by the Commission.

(b) By misappropriating or converting, to the prejudice of another, money, goods,

This transaction is also demandable under the Civil Code.

1. Collection of Sum of Money under the Small Claims Procedure

Entrapment may be done in coordination with the PNP and NBI.

Charges for legal services

1. Demand Letter – PhP 3,000.00 per person per demand letter

2. Appearance before Government Agencies – PhP 2,500.00 per appearance

3. Pleadings/Affidavit: PhP 1,500.00 per person per pleading/affidavit

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