Soliciting funds from and eventually defrauding the general public constitutes syndicated estafa

amounting to economic sabotage [People vs. Balasa (1998)]

The crime of syndicated estafa is different from the crime of simple estafa. Syndicated
estafa is punished under Presidential Decree No. 1689 (“PD 1689”) while simple estafa is
punished under Article 315 of Act No. 3815, or otherwise known as the Revised Penal Code
(“RPC”).

The crime known as syndicated estafa is set forth and penalized by Section 1 of PD No.
1689. The said section reads:

“Section 1. Any person or persons who shall commit estafa or other forms of swindling as
defined in Article 315 and 316 of the Revised Penal Code, as amended, shall be punished
by life imprisonment to death if the swindling (estafa) is committed by a syndicate consisting
of five or more persons formed with the intention of carrying out the unlawful or illegal act,
transaction, enterprise or scheme, and the defraudation results in the misappropriation of
moneys contributed by stockholders, or members of rural banks, cooperative, “samahang
nayon(s)“, or farmers’ associations, or of funds solicited by corporations/associations from
the general public.”

In essence, syndicated estafa is but the commission of any kind of estafa under Article 315
of the RPC (or other forms of swindling under Article 316) with two (2) additional conditions,
namely:

1. the estafa or swindling was perpetrated by a “syndicate“; and

2. the estafa or swindling resulted in the “misappropriation of money contributed by
stockholders, or members of rural banks, cooperative, samahang nayon(s), or farmers
association, or of funds solicited by corporations/associations from the general public.

In the recent case of Remo, et al. vs. SOJ Devanadera, et al., G.R. No. 192925, 09
December 2016, the Supreme Court detailed the elements of syndicated estafa as follows:

Estafa or other forms of swindling as defined in Articles 315 and 316 of the Revised Penal
Code is committed:

1. The estafa or swindling is committed by a syndicate; and

2. The defraudation results in the misappropriation of moneys contributed by
stockholders, or members of rural banks, cooperatives, samahang nayon(s), or farmers
associations, or of funds solicited by corporations/associations from the general public.

As stated in the foregoing discussion, in order to commit the crime of syndicated estafa, the
estafa must be committed by a “syndicate” as contemplated by the law. In PD No. 1689, the
term syndicate is described as “consisting of five or more persons formed with the intention
of carrying out the unlawful or illegal act, transaction, enterprise or scheme x x x.”

This definition is somewhat vague that is why the term syndicate has been elucidated upon
by the Court.
 In order to be considered as a syndicate under PD No. 1689, the perpetrators of an estafa
must not only be comprised of at least five individuals but must have also used the
association that they formed or managed to defraud its own stockholders, members
or depositors. Only those who formed or manage associations that receive
contributions from the general public who misappropriated the contributions can
commit syndicated estafa.

The Court was able to come up with the following standards by which a group of purported
swindlers may be considered as a syndicate under PD No. 1689:

1. They must be at least five (5) in number;

2. They must have formed or managed a rural bank, cooperative, “samahang nayon,”
farmer’s association or any other corporation or association that solicits funds from the
general public.
3. They formed or managed such association with the intention of carrying out an
unlawful or illegal act, transaction, enterprise or schemei.e., they used the very
association that they formed or managed as the means to defraud its own stockholders,
members and depositors.

The penalty for syndicated estafa under PD No. 1689 is significantly heavier than that of
simple estafa under Article 315 of the RPC. The penalty imposable for simple estafa follows
the schedule under Article 315, as amended by Republic Act No. 10951, and is basically
dependent on the value of the damage or prejudice caused by the perpetrator . Syndicated estafa,
however, is punishable by life imprisonment to death regardless of the value of the damage
or prejudiced caused.

HOME DEVELOPMENT MUTUAL FUND (HDMF) PAG-IBIG FUND, Petitioner, -versus- CHRISTINA SAGUN,
Respondent. G.R. No. 205698, EN BANC, July 31, 2018, BERSAMIN,J.

For a charge of syndicated estafa to prosper, the following elements must concur: (1) they must be at
least five in number; (2) they must have formed or managed a rural bank, cooperative, samahang
nayon, farmer's association or any other corporation or association that solicits funds from the
general public and; (3) they formed or managed such association with the intention of carrying out
an unlawful or illegal act, transaction, enterprise or scheme. First, syndicated estafa must be
committed by at least five persons but in this case, it is not present as there are only four persons from
Globe Asiatique which were charged with the offense. Furthermore, the association of the respondents
did not solicit funds from the general public. The funds supposedly misappropriated did not belong to
Globe Asiatique’s stockholders or members, or to the general public, but to the HDMF. There was also
no allegation that Globe Asiatique was incorporated to defraud its stockholders or members.

However, the respondents may be charged with the crime of simple estafa as there is sufficient basis to
support a reasonable belief that the respondents were probably guilty of simple estafa. The provisions in
the FCAs providing that the loan agreements which the Globe Asiatique assessed and approved were
existing and qualified and the documents they have submitted are valid are reasons why the HDMF
entered into the agreement. Without such representations, the HDMF would not have entered into the
FCA. In addition, it is probable for the respondents to use their own positions to facilitate a common
criminal design to make it appear that Globe Asiatue had numerous qualified borrowers/buyers that
would satisfy the HDMF’s conditions for the loan takeouts.

In People of the Philippines vs. Rosario Baladjay (G.R. No. 220458, 26 July 2017), the Supreme
Court, through Justice Velasco, had the opportunity to resurrect the said scheme. But first, let me
give you a brief summary of the facts of the case.
Multinational Telecom Investors Corporation (“Multitel”, for brevity), where the accused was
the president, along with her cartel of officers (9 of them remained-at-large), was engaged in a
devious scheme whereby they will search for investors with a promised yield of 5-12% monthly
interest in their total investment. Sounds good to be true? Well technically yes. It turns out that
the promise is only good for the first few months, after which, sayonara.

In fact one of the private complainants Rolando T. Custodio found out “that Multitel was not
issued a secondary license by the Securities and Exchange Commission (SEC) to deal in
securities and solicit investments from the general public. In fact, per an SEC Advisory, the
company and its conduits were not duly registered and had no juridical personality and authority
to engage in an activity, let alone investment-taking.”
So, the supreme tribunal rendered a guilty verdict of Syndicated Estafa as per Article 315 (2)(a)
of the Revised Penal Code (RPC) in relation to Section 1 of Presidential Decree (P.D.) 1689.

Estafa; syndicated estafa; elements. The elements of syndicated estafa are: (a) estafa or other forms of
swindling as defined in Article 315 and 316 of the Revised Penal Code is committed; (b) the estafa or
swindling is committed by a syndicate of five or more persons; and (c) defraudation results in the
misappropriation of moneys contributed by stockholders, or members of rural banks, cooperatives,
“samahang nayon(s),� or farmers’ associations or of funds solicited by corporations/associations from
the general public. In other words, only those who formed and manage associations that receive contributions
from the general public who misappropriated the contributions can commit syndicated estafa. Gilbert Guy, et
al, however, are not in any way related either by employment or ownership to Asia United Bank (AUB). They
are outsiders who, by their cunning moves were able to defraud an association, which is the AUB. They had
not been managers or owners of AUB who used the bank to defraud the public depositors. The present petition
involves an estafa case filed by a commercialbank as the offended party against the accused who, as clients,
defrauded the bank. Therefore, the Supreme Court ruled that the accused should only be charged for simple
estafa. Rafael H. Galvez and Katherine L. Guy v. Asia United Bank/Asia United Bank v. Gilbert, et al./Gilbert
Guy, et al v. Asia Untied Bank,  G.R. Nos. 187919/G.R. No. 187979/G.R. No. 188030, February 20, 2013.
 PEOPLE OF THE PHILIPPINES vs. ROSARIO BALADJAY
G.R. No. 220458, July 26, 2017 
VELASCO, JR., J.:
Facts: In an Information, appellant Baladjay and her nine co-accused were indicted with
the crime of Syndicated Estafa as follows: that accused, being officers, employees,
and/or agents of Multitel, an association operating on funds solicited from the public,
conspiring one another, feloniously defraud complainants by means of false pretenses
or fraudulent acts to the effect that they have the business, property and power to solicit
and accept investments and deposits from the general public and capacity to pay the
complainants guaranteed monthly interest on investment from 5% to 6% and lucrative
commissions, and succeeded in inducing the complainants to invest, deposit, give and
deliver as in fact the latter gave the accused the total amount of P7,810,000.00 as
investment or deposit, accused misappropriated and converted the same to their own
personal benefits to the damage and prejudice of said complainants.
Baladjay, as the sole witness, denied transacting with the private complainants.
However, Baladjay admitted that she was also known as the president of Multitel.
Issue: Whether or not appellant is guilty of syndicated estafa.
Ruling: Yes. The elements of Syndicated Estafa are: (a) Estafa or other forms of
swindling, as defined in Articles 315 and 316 of the RPC, is committed; (b) it committed
by a syndicate of five (5) or more persons; and (c) the defraudation results in the
misappropriation of moneys contributed by stockholders, or members of rural banks,
cooperatives, "samahang nayon(s)," or farmers' associations, or of funds solicited by
corporations/associations from the general public.
Here, using Multitel as their conduit, Baladjay and her more than five (5) counselors
employed deceit and falsely pretended to have the authority to solicit investments from
the general public when, in truth, they did not have such authority. Baladjay's
counselors actively solicited investments from the public, promising very high interest
returns. Convinced of Baladjay's and her counselors' promise of lucrative income, the
private complainants were then enticed to invest in Multitel. Eventually, Baladjay and
her cohorts ran away with the private complainants' money causing them damage and
prejudice.