JR HAULING SERVICES AND OSCAR MAPUE, PETITIONERS, VS. GAVINO L. SOLAMO, RAMIL JERUSALEM, ARMANDO PARUNGAO, RAFAEL CAPAROS, JR., NORIEL SOLAMO, ALFREDO SALANGSANG, MARK PARUNGAO AND DEAN V. CALVO, RESPONDENTS.

Jose Rizal L. Remo, et al. Vs. The Honorable Secretary of Justice Agnes VST Devenadera, et al.
G.R. No. 192925. December 9, 2016

The Batangas II Electric Cooperative, Inc. (BATELEC II) is a cooperative engaged in the distribution and transmission of electric power to certain parts of the Batangas province. It was organized and duly registered as a non-profit electric cooperative with the National Electrification Administration (NEA), pursuant to Presidential Decree (PD) No. 269, on 12 August 1977.

The contributions of the members of BATELEC II were paid to the latter not out of any fraudulent act, transaction or scheme. As admitted by Manalo et al., the "contributions" of the members of BATELEC II comprise of their payments for the electricity being supplied by the cooperative.

In 2004, BATELEC II entered into two (2) contracts that required it to spend a total of P81,100,000.00.

In 2005, a NEA audit report8found the ITI and Supertrac contracts as having been replete with various irregularities and violations of NEA guidelines.

Spurred by the audit report's findings, some members-consumers of BATELEC II filed before the NEA an administrative complaint charging the directors of the cooperative who approved the ITI and Supertrac contracts with gross mismanagement and corruption.

In the meantime, Manalo and the other private respondents18 (Manalo et al.)—acting ostensibly for and on behalf of BATELEC II—filed a criminal complaint against petitioners, Trinidad and Bangayan before the Office of the City Prosecutor (OCP) of Lipa City. The complaint was docketed in the OCP as I.S. Nos. 07-0552 to 0553.

The complaint accused petitioners, Trinidad and Bangayan of having committed the crime of syndicated estafa under Presidential Decree (PD) No. 1689 in relation to Article 315(1)(b) of the Revised Penal Code (RPC). Manalo et al. alleged that petitioners, Trinidad and Bangayan acted in conspiracy, and as a syndicate, to defraud BATELEC II by way of the highly irregular and anomalous ITI and Supertrac contracts. According to Manalo et al., the implementation of such contracts have led to the misappropriation of millions and millions of pesos worth of funds of BATELEC II.

1.    Will the case of syndicated estafa prosper against Trinidad and Bangayan?

No.

In order to commit the crime of syndicated estafa, the estafa must be committed by a "syndicate" as contemplated by the law. However, the petitioners under circumstances could not considered as a "syndicate" under PD No. 1689.

2.    What is syndicated estafa?

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.

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.

3.    What are the elements of syndicated estafa?

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

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

3.    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.

4.    Define Syndicate under PD No. 1689.

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."

Moreover, 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.

5.    Enumerate the standards by which a group of purported swindlers may be considered as a syndicate under PO 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 scheme i.e., they used the very association that they formed or managed as the means to defraud its own stockholders, members and depositors.

6.    Is the third standard satisfied? Explain.

No.

The third standard requires that the purported swindlers used the very association they formed or managed to defraud its members.

However, in this case, BATELEC II received the contributions of its members via legitimate transactions: as admitted by Manalo et al., the "contributions" of the members of BATELEC II comprise of their payments for the electricity being supplied by the cooperative. Any alleged misuse of such contributions committed by petitioners after BATELEC II has already received them through legal means would not constitute as defraudation committed through the cooperative, but would merely be an act of mismanagement committed against it. Clearly then, the third standard of Galvez was not met.

7.    Distinguish the penalty of simple estafa and syndicated estafa.

The penalty for syndicated estafa under PD No. 1689 is significantly heavier than that of simple estafa under Article 315 of the RPC.50 The penalty irnposable for simple estafa follows the schedule under Article 315 and is basically dependent on the value of the damage or prejudice caused by the perpetrator, but in no case can it exceed twenty (20) years imprisonment.51 Syndicated estafa, however, is punishable by life imprisonment to death regardless of the value of the damage or prejudiced caused.

8.    Are the petitioners liable for simple estafa?

No. The elements of simple estafa are not present in this case.

First, the petitioners—even in their capacities as directors of BATELEC—do not acquire juridical possession of the funds of the cooperative.

Second, there was no proof, based on the facts, that the funds of the cooperative had been paid to persons or for purposes other than those to whom and for which the said funds ought to be paid under the contracts.

Third. Moreover, the absolution of both Trinidad and Bangayan—on the ground that they were not in conspiracy with the petitioners—greatly undermines any potential inference of misappropriation or conversion on the part of the petitioners. It negates the possibility that petitioners could have used the ITI and Supertrac contracts to embezzle funds from the cooperative. More significantly, it indirectly proves petitioners' good faith in approving the ITI and Supertrac contracts.

9.    What is juridical possession?

Juridical possession is the type of possession that is acquired by the transferee of a thing when he receives the same under the circumstances mentioned in Article 315(1)(b) of the RPC. When juridical possession is acquired, the transferee obtains such right over the thing that he can set up even against its owner.

Petitioners, despite their collective authority as directors to authorize expenditures for BATELEC II, do not have juridical possession over the funds of the cooperative. They simply do not have any right over such funds that they can set up against BATELEC II.

10.  What are the elements of Estafa?

Broken down, estafa under Article 315(1)(b) of the RPC has the following elements:

1) That money, goods or other personal property is 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; 2) That there be misappropriation or conversion of such money or property by the offender or denial on his part of such receipt; 3) That such misappropriation or conversion or denial is to the prejudice of another; and 4) That there is a demand made by the offended party on the offender.

11.  Discuss the liability of the accused.

Without proof of misappropriation or conversion, the finding that petitioners may have committed the crime of estafa under Article 315(1)(b), much less of syndicated estafa, obviously, cannot hold. As we have seen, the evidence of Manalo et al. only tends to establish that petitioners have committed various lapses and irregularities in approving the ITI and Supertrac contracts and that such lapses and irregularities, in turn, caused some prejudice to BATELEC II. Such evidence, by itself, is certainly not enough for purposes of criminal prosecution for estafa.

Given the evidence at hand, petitioners, at most, may only be held civilly liable for the prejudice sustained by BATELEC II subject to defenses petitioners may raise.