4. sec v santos

7/25/2019 4. sec v santos

1/24

SECOND DIVISION

G.R. No. 195542, March 19, 2014

SECURITIES AND EXCHANGE COMMISSION,Petitioner, v. OUDINE SANTOS,Respondent.

D E C I S I O N

PERE,J.!

Before us is another cautionary tale of an investment arrangement which, at the outset, appearedgood, unraveling unhappily as a deal "oo#$oo%#"o#&'#"r('.

This petition for review on certiorariunder Rule 45 of the Rules of Court assails the Decision 1of

the Court of ppeals in C!".R. #$ %o. 11&'(1 affirming the Resolutions&

of the #ecretary of)ustice in *.#. %o. &++'!1+54 which, among others, dismissed the criminal complaint forviolation of #ection &( of Repulic ct %o. ('--, the #ecurities Regulation Code, filed ypetitioner #ecurities and /change Commission 0#C against respondent 2udine #antos0#antos.

#ometime in &++', yet another investment scam was e/posed with the disappearance of itsprimary perpetrator, 3ichael .. 6iew 06iew, a self!styled financialguruand Chairman of theBoard of Directors of $erformance *nvestment $roducts Corporation 0$*$C!B7*, a foreigncorporation registered in the British 7irgin *slands.

To do usiness in the $hilippines, $*$C!B7* incorporated herein as $hilippine *nternational$lanning Center Corporation 0$*$C Corporation.

Because the head of $*$C Corporation had gone missing and with it the monies and investmentof a significant numer of investors, the #C was flooded with complaints from thirty!one 081individuals against $*$C Corporation, its directors, officers, employees, agents and ro9ers foralleged violation of certain provisions of the #ecurities Regulation Code, including #ection &(thereof. #antos was charged in the complaints in her capacity as investment consultant of $*$CCorporation, who supposedly induced private complainants 6uisa 3ercedes $. 6oren:o06oren:o and Ric9y lino $. #y 0#y, to invest their monies in $*$C Corporation.

The common recital in the 81 complaints is that;chanRolesvirtual6awlirary

/ / / s directors, officers andemployees?agents?ro9ers, the former were enticed to invest their hard!earned money, theminimum amount of which must e @#A4+,+++.++, with $*$C!B7*, with a promise of higherincome potential of an interest of 1& to 1(percentum0 per annum at relatively low!ris9investment program. The private complainants also claimed that they were made to elieve that$*$C Corporation refers to $erformance *nvestment $roduct Corporation, the $hilippine office or


2/24

ranch of $*$C!B7*, which is an entity engaged in foreign currency trading, and not $hilippine*nternational $lanning Center Corporation.8

#oon thereafter, the #C, through its Compliance and ndorsement Division, filed a complaint!affidavit for violation of #ections (,4&5and &(of the #ecurities Regulation Code efore the

Department of )ustice which was doc9eted as *.#. %o. &++'!1+54. mong the respondents inthe complaint!affidavit were the principal officers of $*$C; 6iew, Chairman and $residentCristina "on:ale:!Tuason, Director and "eneral 3anager 3a. Cristina Bautista!)urado,Director and herein respondent #antos.

$rivate complainants, 6oren:o and #y, in their affidavits anne/ed to #C>s complaint!affidavit,respectively narrated #antos> participation in how they came to invest their monies in $*$CCorporation;chanRolesvirtual6awlirary

1. 6oren:o>s affidavit

/ / / /

&. * heard aout $*$C Corporation from my friend Derric9 #antos during an informal gatheringsometime in 3arch &++. e said that the investments in $*$C Corporation generated a return of1(!&+ p.a. every two 0& months. e then gave me the numer of his sister, O(%)*' Sa*"o+who wor9ed for $*$C $hilippines to discuss the investment further.

8. * then met with 2udine #antos sometime during the first wee9 of pril &++ at $*$C$hilippines> lounge / / /. 2udine #antos conducted for my personal enefit a presentation of thecharacteristics of their investment product called E$erformance 3anaged $ortfolioF 0$3$. Themain points of her presentation are indicated in a summary she gave me, / / /;chanRolesvirtual6awlirary

/ / / /

4. * as9ed 2udine #antos who were the traders, she said their names were Econfidential.F

5. 2udine #antos also emphasi:ed in that same meeting that * should 9eep this transaction tomyself ecause they were not allowed to conduct foreign currency trading. owever, she assuredme that * should not worry ecause they have a lot of Eig peopleF ac9ing them up. #he alsomentioned that they were applying for a seat in the Estoc9 e/change.F

. * ultimately agreed to put in G2RTH T2@#%D @# D266R# 0@#A4+,+++.++ in their

investment product.

'. 2udine #antos then gave me instructions on how to place my money in $3$ and made mesign a $artnership greement. / / /.

/ / / /

(. #oon thereafter, pursuant to the instructions 2udine #antos gave me, * remitted @#A4+,+++.++


3/24

to B%!3R2 ong ong.

-. fterwards, * received a letter dated 1' pril &++, signed y 3ichael .. 6iew, welcomingmy investment.

/ / / /

1+. #ometime on 3ay &++, * added another @#A +,+++.++ to my then susisting accountI1(18'&, thus totaling @#A1++,+++.++. This amount, pursuant to the instructions of 2udine#antos, was remitted to #tandard Chartered Ban9.

/ / / /

14. Then sometime on 3ay &++', * planned to pull out my remaining @#A1++,+++.++investment in $*$C $hilippines. 2n && 3ay &++', * met with 2udine #antos at the 15th Gloor ofCitian9 Tower in 3a9ati City. * told her * wanted to terminate all my investments.

15. 2udine #antos instead said that $*$C $hilippines has a new product * might e interested in./ / / #he e/plained that this product had the following characteristics;chanRolesvirtual6awlirary

/ / / /

1. 2udine #antos reiterated these claims in an email she sent me on && 3ay &++'. / / /.

1'. nticed y these assurances and promises of large earnings, * put in G2@R @%DRDT2@#%D @# D266R# 0@#A4++,+++.++ in $3$ 0RJB, which ecame account IR14-48&.

1(. $ursuant to the instructions 2udine #antos gave me, * remitted the amount of @#A4++,+++.++ to RJB ustria, #ingapore Branch.

/ / / /

&&. * tried calling 2udine #antos and was finally ale to reach her at around ' in the morning.#he confirmed what 6eah Caringal told me. * told her then that * want full recovery of myinvestment in accordance with their 1++ principal guarantee. To this day


4/24

wor9ing as an investment consultant for a certain company, $erformance *nvestment $roductsCorporation


5/24

Corporation who actively engaged in the solicitation and recruitment of investors. $rivatecomplainants maintain that #antos, apart from eing $*$C Corporation>s employee, acted as$*$C Corporation>s agent and made representations regarding its investment products and that ofthe supposed gloal corporation $*$C!B7*. Gacilitating 6oren:o>s and #y>s investment with$*$C Corporation, #antos represented to the two that investing with $*$C Corporation, an

affiliate of $*$C!B7*, would e safe and full!proof.

*n #C>s complaint!affidavit, it charged the following;chanRolesvirtual6awlirary

/ / / /

1&. This case stems from the act of fraud and chicanery masterfully orchestrated and e/ecutedy the officers and agents of $*$C Corp. against their unsuspecting investors. The deception isfounded on the basic fact that neither PIPC Corp. nor its officers, employees and agents are

registered brokers/dealers, making their numerous transactions of buying and selling securitiesto the public a blatant violation of the provisions of the SRC, specifically Sections and !

thereof.Their illegal offer?sale of securities in the form of the E$erformance 3anagement$artnership greementF to the pulic was perpetrated for aout nine 0- years and would havecontinued were it not for the alleged, and most proaly, contrived and delierate withdrawal ofthe entire funds of the corporation y 3ichael .. 6iew. The


6/24

&8. 6uisa3ercedes $.

6oren:o

2udine#antos

RJB ustria,#ingapore

Branch

)une&++'

R14-48& @#A5++,+++ %ot provided

/ / / /

8&. Ric9y

lino $. #y

2udine

#antos

B%!3R2

Ban9ong9ong

-

2ctoer&++

+(++&(''- @#A4+,+++ B$* $asong Tamo

B-

&8. careful perusal of the complaint!affidavits revealed that for every completed investmenttransaction, a company rochure, depending on the type of investment portfolio chosen, wasprovided to each investor containing the following information on $erformance B7* and itsinvestment product called $erformance 3anaged $ortfolio or $3$, the points of which are asfollows;

a. ( calendar wee9 maturity period


7/24

f. t maturity, profits accumulated in the settlement account shall edistriuted and deposited into each investor>s dollar an9 account withinfourteen 014 an9ing days

g. The funds of various investors are pooled, atched and deposited with

$*$C designated an9 account acting as custodian an9, to form a massiveasset ase. This account is separate and distinct from the $rofit and 6ossccount. The line from this pooled fund is then entrusted to full timeprofessional and e/perienced foreign traders who each speciali:e in thefollowing currencies; )apanes Hen, uro, British $ound, #wiss Grancs andustralian Dollar. $rofits generated from trading these maMor currencies iscredited into the $rofit and 6oss ccount, which at the end of the eightcalendar wee9 loc9!in period, will e distriuted among the investors.*nvestors are informed of their account status thru trading statementsissued y $*$C every time there is a trade made in their respectiveaccounts.

/ / / /

&5. Gurthermore, it was relayed y the officers and agents to complainants!investors that $*$CCorp. is the $hilippine office of the $erformance "roup of Companies affiliates situated indifferent parts of the world, particularly China, *ndonesia, ong ong, )apan, orea, #ingapore,and the British 7irgin *slands 0B7*, even reaching #wit:erland. Nith such asic depiction of thelegitimacy and staility of $*$C Corp., complainants!investors deduced that it was clothed withthe authority to solicit, offer


8/24

18. That * was an employee and, later on, an independent information provider of $*$C Corp. isof little conseKuence. 3y duties as such were limited to providing information aout thecorporate clients of $*$C Corp. that had een e/pressly reKuested y interested individuals. *performed my assigned Mo without any criminal intent or malice. *n this regard, * have een

advised that offenses penali:ed under the R$C are intentional felonies for which criminalliaility attaches only when it is shown that the malefactors acted with criminal intent or malice.There can e no crime when the criminal mind is wanting. *n this case, * performed my tas9 ofproviding reKuested information aout the clients of $*$C Corp. without any intent to violate thelaw. Thus, there can e no criminal liaility.


9/24

&4. *ndeed, complainant>s own evidence show that the $ortfolio 3anagement $artnershipgreement, #ecurity greement and Declaration of Trust were e/ecuted etween $*$C!B7* andthe individual complainants. Gurther, paragraph & of the Declaration of Trust e/plicitly stated that$*$C!B7* Ehold the said amount of money @$2% TR@#T for the Beneficiary 2wner.F Thecomplainants cannot, therefore, hold $*$C Corp., or any of its officers or employees, with

misappropriating their money or property when they were fully aware that they delivered theirmoney to, and transacted solely with, $*$C!B7*, and not $*$C Corp.

&5. *t also ears stressing that of the twenty!one 0&1 complainants in this case, onlycomplainant Ric9y lino #y alleged that he had actually dealt with me. Complainant #yhimself never alleged that he delivered or entrusted any money or property to me. 2n thecontrary, complainant #y admitted that he deposited his investment of @.#.A4+,+++.++ y an9transfer to $*$C!B7*>s account in the B% mro Ban9. That the money was delivered to$*$C!B7*, and not to me, is shown y the fact that the receipt was issued y $*$C!B7*. * neversigned or issued any ac9nowledgement receipt, as * never received any such money. %either did *ever gain physical or Muridical possession of the said money.11 0"mphasis and underscoring

supplied.

#antos> defense consisted in; 01 denying participation in the conspiracy and fraud perpetratedagainst the investor!complainants of $*$C Corporation, specifically #y and 6oren:o 0&claiming that she was initially and merely an employee of, and suseKuently an independentinformation provider for, $*$C Corporation 08 $*$C Corporation eing a separate entity from$*$C!B7* of which #antos has never een a part of in any capacity 04 her not having receivedany money from #y and 6oren:o, the two having, in actuality, directly invested their money in$*$C!B7* 05 #antos having dealt only with #y and the latter, in fact, deposited money directlyinto $*$C!B7*>s account and 0 on the whole, $*$C!B7* as the other party in the investmentcontracts signed y #y and 6oren:o, thus the only corporation liale to #y and 6oren:o and the

other complainants.

2n 1( pril &++(, the D2), in *.#. %o. &++'!1+54, issued a Resolution signed y a panel ofthree 08 prosecutors, with recommendation for approval of the ssistant Chief #tate $rosecutor,and ultimately approved y Chief #tate $rosecutor )ovencito R. JuLo, indicting; 0a 6iew and"on:ale:!Tuason for violation of #ections ( and & of the #ecurities Regulation Code and 0herein respondent #antos, along with Cristina "on:ale:!Tuason and 1& others for violation of#ection &( of the #ecurities Regulation Code. The same Resolution li9ewise dismissed thecomplaint against ( of the respondents therein for insufficiency of evidence. *n the 1( pril&++( Resolution, the D2) discussed at length the liaility of $*$C Corporation and its officers,employees, agents and all those acting on $*$C Corporation>s ehalf, to wit; chanRolesvirtual6awlirary

Girstly, complainant #C filed the instant case for alleged violation y respondents


10/24

prospective purchaser.

Based on the aove provision of the law, complainant #C is now accusing all respondents


11/24

'uying and selling of securitiesis an indispensale element that ma9es one a ro9er or dealer. #oif one is not engaged in the usiness of uying and selling of securities, naturally he or shecannot e considered as a ro9er or dealer. owever, a person may e considered as an agent ofanother, Muridical or natural person, if it can e inferred that he or she acts as an agent of his orher principal as aove!defined. 2ne can also e an investor and agent at the same time.

n e/amination of the records and the evidence sumitted y the parties, we have oserved thatall respondents are investors of $*$C!B7*, same with the private complainants, they also lostthousands of dollars. Ne also noted the fact that most of the private complainants and allegedro9ers or agents are long time friends if not lood related individuals. %otaly also is the factthat most of them are highly educated usinessmen?usinesswomen who are financially well!off.ence, they are regarded to e wiser and more prudent and e/pected to e/ercise due diligence ofa good father of a family in managing their finances as compared to those who are less fortunatein life.

owever, we still need to delve deeper into the facts and the participations and if on the asis of their actions, it can e inferredthat they acted as employees!agents or investor!agents of $*$C Corp. or $*$C!B7* then areliale under #ection &( of the #RC otherwise, they cannot e


12/24

guaranteed. *n addition, they also facilitated their clients> investments with $*$C!B7* and some,if not all, even received money investors as evidenced y the ac9nowledgement receipts theysigned and on ehalf of $*$C!B7*. The documentary evidence sumitted y witnesses and theircategorical and positive assertion of facts which, ta9en together corroorate one another, prevailsover the defense of denial raised y the aove!named respondents which are mostly self!serving

in nature.

formal or written contract of agency etween two or more persons is not necessary for one toecome an agent of the other for as long as it can e inferred from their actions that there e/ists aprincipal!agent relationship etween them on the one hand and the $*$C Corp. or $*$C!B7* onthe other hand, then, it is implied that a contract of agency is created.

s to their contention that they are not officers or employees of $*$C Corp., the #upreme Courtruled that one may e an agent of a domestic corporation although he or she is not an officerthereto. / / /. The asis of agency is representation the Kuestion of whether an agency has eencreated is ordinarily a Kuestion which may e estalished in the same way as any other fact,

either y direct or sustantial evidence though that fact or e/tent of authority of the agents maynot, as a general rule, e estalished from the declarations of the agents alone, if one professes toact as agent for another, he or she is estopped to deny her agency oth as against the assertedprincipal and third persons interested in the transaction in which he or she is engaged.

Gurther, they cannot raise the defense of good faith for the simple reason that the #RC is aspecial law where criminal intent is not an essential element. 3ere violation of which ispunishale e/cept in some provisions thereof where fraud is a condition sine Kua non such as#ection & of the said law.

/ / / /

NRG2R, the foregoing considered, it is respectfully recommended that this resolution e$$R27D and that;

1. n information for violation of #ection ( of the #RC e filed against respondent$*$C Corp., 3*C6 . 6*N and CR*#T*% "2%J6J!T@#2%

&. n information for violation of #ection & thereof e also filed againstrespondents 3*C6 . 6*N and CR*#T*% "2%J6J!T@#2% and

8. n information for violation of #ection &( thereof e filed against respondentsCR*#T*% "2%J6J!T@#2%, 3. CR*#T*% B@T*#T!)@RD2,BRBR "RC*, %T2%H *R@6G, @"% "2, 3*C636C2R %@B6, 3. $36 32RR*#, 6@*# P)*3B2> R"2%,R%T2 #R3*%T2, )R., 7*CT2R )2# 7R"6 D D*2#, %*C26*%32R%T2 3%D2J, )2# P)H> T%"C2 ***,


13/24

4. The complaint against 3H%% CR32%, HH #% $DR2!C2,3* 6"RD, %*C26 2RT", D7*D C@!@%#@, #T%6HC@!@%#@, DB2R 7. HB@T, CR*#T*% H@ and )2%T%2C3$2 e dismissed for insufficiency of evidence.1& 0mphasis supplied

*n sum, the D2) panel ased its finding of proale cause on the collective acts of the maMorityof the respondents therein, including herein respondent #antos, which consisted in their acting asemployees!agent and?or investor!agents of $*$C Corporation and?or $*$C!B7*. #pecificallyalluding to #antos as *nvestment Consultant of $*$C Corporation, the D2) found proale causeto indict her for violation of #ection &( of the #ecurities Regulation Code for engaging in theusiness of selling or offering for sale securities, on ehalf of $*$C Corporation and?or $*$C!B7* 0which were found to e an )++('r18of securities without the necessary registration from the#C without #antos eing registered as a ro9er, dealer, salesman or an associated person.

2n separate motions for reconsideration of the respondents therein, including herein respondent

#antos, the D2) panel issued a Resolution dated & #eptemer &++( modifying its previous rulingand e/cluding respondent 7ictor )ose 7ergel de Dios from prosecution for violation of #ection&( of the #ecurities Regulation Code, thus; chanRolesvirtual6awlirary

fter an assiduous re!evaluation of the facts and the evidence sumitted y the parties in supportof their respective positions, the undersigned panel finds / / /


14/24

contracts, certificates of interest or participation in a profit sharing agreement, certificates ofdeposit for a future suscription.

@nder the #RC>s mended *mplementing Rules and Regulations, specifically Rule 8, par. 1supar. ", an investment contract has een defined as a contract, transaction or scheme

0collectively EcontractF, wherey a person invests his money in a common enterprise and is ledto e/pect profits primarily from the efforts of others. *t is li9ewise provided in the said provisionthat an investment contract is presumed to e/ist whenever a person see9s to use the money orproperty of others on the promise of profits and a common enterprise is deemed created whentwo 0& or more investors EpoolF their resources creating a common enterprise, even if thepromoter receives nothing more than a ro9er>s commission. @ndoutedly, the $3$ is aninvestment contract falling within the purview of the term securities as defined y law.

/ / / /

*t ears to emphasi:e that the purpose of a preliminary investigation and?or confrontation

etween the party!litigants is for them to lay down all their cards on the tale to properly informand apprise the other of the charges against him?her, to avoid suprises and to afford the adverseparty all the opportunity to defend himself?herself ased on the evidence sumitted againsthim?her. Thus, failure on the part of the defaulting party to sumit evidence that was thenavailale to him is deemed a waiver on his part to sumit it in the same proceedings against thesame party for the same issue.

NRG2R, the foregoing premises considered, the undersigned panel of prosecutorsrespectfully recommends that the assailed resolution e modifiedy dismissing the complaintagainst 7ictor )ose 7ergel De Dios and that the *nformation filed with the appropriate court forviolation of #ection &( of the #RC e amended accordingly.14

Respondent #antos filed a petition for review efore the 2ffice of the #ecretary of the D2)assailing the Resolutions dated 1( pril &++( and & #eptemer &++( and claiming that she was amere clerical employee?information provider who never solicited nor recruited investors, inparticular complainants #y and 6oren:o, for $*$C Corporation or $*$C!B7*. #antos alsoclaimed dearth of evidence indicating she was a salesman?agent or an associated person of aro9er or dealer, as defined under the #ecurities Regulation Code.

The #C filed its Comment opposing #antos> petition for review. Thereafter, the 2ffice of the#ecretary of the D2), through its then @ndersecretary Ricardo R. Blancaflor, issued a Resolutiondated 1 2ctoer &++- which, as previously adverted to, e/cluded respondent #antos from

prosecution for violation of #ection &( of the #ecurities Regulation Code. Gor a complete picture,we Kuote in full the disKuisition of the #ecretary of the D2); chanRolesvirtual6awlirary


15/24

and even earned profits from these transactions through direct dealing with $*$C!B7* andwithout her participation. *n addition, she maintains that 6uisa 3ercedes $. 6oren:o and Ric9ylino $. #y had several opportunities to divest or withdraw their respective investments utopted not to do so at their own volitions.

/ / / /

The sole issue in this case is whether or not respondent #antos acted as agent of $*$C Corp. orhad enticed 6uisa 3ercedes $. 6oren:o or Ric9y lino $. #y to uy $*$C Corp. or $*$C!B7*>sinvestment products.

Ne resolve in the negative.

S'c")o* 2 o/ "h' S'c(r)")'+ R'$(-a")o* Co%' SRC r'a%+!

#C. s investmentproducts.

The anne/ EDF 0ENelcome to $3$F 6etter dated


16/24

#y with stamped signature for $*$C!B7* of the complaint!affidavit dated


17/24

/pectedly, after the denial of the #C>s motion for reconsideration efore the #ecretary of theD2), the #C filed a petition forcertiorariefore the Court of ppeals see9ing to annul the 12ctoer &++- Resolution of the D2).

The Court of ppeals dismissed the #C>s petition for certiorariand affirmed the 1 2ctoer&++- Resolution of the #ecretary of the D2); chanRolesvirtual6awlirary

$rescinding from the foregoing, a person must first and foremost e engaged in the usiness ofuying and selling securities in the $hilippines efore he can e considered as a ro9er, a dealeror salesman within the coverage of the #ecurities Regulation Code. The record in this casehowever is ereft of any showing that


18/24

owever, the authority of the prosecutor and the D2) is not asolute it cannot e e/ercisedaritrarily or capriciously. Nhere the findings of the investigating prosecutor or the #ecretary ofthe D2) as to the e/istence of proale cause are eKuivalent to a gross misapprehension of facts,certiorariwill lie to correct these errors.1(

Nhile it is our policy not to interfere in the conduct of preliminary investigations, we have, onmore than one occasion, adhered to some e/ceptions to the general rule; chanRolesvirtual6awlirary

1. when necessary to afford adeKuate protection to the constitutional rights of theaccused

&. when necessary for the orderly administration of Mustice or to avoid oppression ormultiplicity of actions

8. when there is a preMudicial Kuestion which issub )udice

4. %hen the acts of the officer are %ithout or in e(cess of authority*

5. where the prosecution is under an invalid law, ordinance or regulation

. when doule Meopardy is clearly apparent

'. where the court has no Murisdiction over the offense

(. where it is a case of persecution rather than prosecution

-. where the charges are manifestly false and motivated y the lust for vengeance

1+. when there is clearly no prima facie case against the accused and a motion toKuash on that ground has een denied.1- 0*talics supplied.

*n e/cluding #antos from the prosecution of the supposed violation of #ection &( of the#ecurities Regulation Code, the #ecretary of the D2), as affirmed y the appellate court,deun9ed the D2) panel>s finding that #antos wasprima facieliale for either; 01 sellingsecurities in the $hilippines as a ro9er or dealer, or 0& acting as a salesman, or an associatedperson of any ro9er or dealer on ehalf of $*$C Corporation and?or $*$C!B7* without eingregistered as such with the #C.

To get to that conclusion, the #ecretary of the D2) and the appellate court ruled that no evidencewas adduced showing #antos> actual participation in the final sale y $*$C Corporation and?or$*$C!B7* of unregistered securities since the very affidavits of complainants 6oren:o and #yproved that #antos had never signed, neither was she mentioned in, any of the investmentdocuments etween 6oren:o and #y, on one hand, and $*$C Corporation and?or $*$C!B7*, onthe other hand.


19/24

The conclusions made y the #ecretary of the D2) and the appellate court are a myopic view ofthe investment solicitations made y #antos on ehalf of $*$C Corporation and?or $*$C!B7*while she was not licensed as a ro9er or dealer, or registered as a salesman, or an associatedperson of a ro9er or dealer.

Ne sustain the D2) panel>s findings which were not overruled y the #ecretary of the D2) andthe appellate court, that $*$C Corporation and?or $*$C!B7* was; 01 an issuer of securitieswithout the necessary registration or license from the #C, and 0& engaged in the usiness ofuying and selling securities. *n connection therewith, we loo9 to #ection 8 of the #ecuritiesRegulation Code for pertinent definitions of terms; chanRolesvirtual6awlirary

#ec. 8.Definition of Terms.! / / /.

/ / / /

8.8. EBro9erF is a person engaged in the usiness of uying and selling securities for the accountof others.

8.4. EDealerF means


20/24

#antos, y the very nature of her function as what she now unaffectedly calls an informationprovider, rought aout the sale of securities made y $*$C Corporation and?or $*$C!B7* tocertain individuals, specifically private complainants #y and 6oren:o y providing informationon the investment products of $*$C Corporation and?or $*$C!B7* with the end in view of $*$CCorporation closing a sale.

Nhile #antos was not a signatory to the contracts on #y>s or 6oren:o>s investments, #antosprocured the sale of these unregistered securities to the two 0& complainants y providinginformation on the investment products eing offered for sale y $*$C Corporation and?or $*$C!B7* and convincing them to invest therein.

%o matter #antos> strenuous oMections, it is apparent that she connected the proale investors,#y and 6oren:o, to $*$C Corporation and?or $*$C!B7*, acting as an ostensile agent of thelatter on the viaility of $*$C Corporation as an investment company. t each point of #y>s and6oren:o>s investment, #antos> participation thereon, even if not shown strictly on paper, wasprima facie estalished.

*n all of the documents presented y #antos, she never alleged or pointed out that she did notreceive e/tra consideration for her simply providing information to #y and 6oren:o aout $*$CCorporation and?or $*$C!B7*. #antos only claims that the monies invested y #y and 6oren:odid not pass through her hands. *n short, #antos did not present in evidence her salaries as asupposed Emere clerical employee or information providerF of $*$C!B7*. #uch presentationwould have foreclosed all Kuestions on her status within $*$C Corporation and?or $*$C!B7* atthe lowest rung of the ladder who only provided information and who did not use her discretionin any capacity.

Ne cannot overemphasi:e that the very information provided y #antos loc9ed the deal onunregistered securities with #y and 6oren:o.

*n fact, #y alleged in his affidavit, which allegation was not refuted y #antos, that he wasintroduced to #antos while he performed routine transactions at his an9; chanRolesvirtual6awlirary

&. * have een a depositor of the Ban9 of the $hilippine *slands 0B$* $asong Tamo ranch forthe past 15 years. #ometime in the last Kuarter of &++, * was at B$* $asong Tamo to accomplishcertain routine transactions. Being a client of long standing, the an9 manager


21/24

investment returns than an9 deposits while still having the advantage of security and liKuidity.#he told me that they were engaged in foreign currency trading aroad and that they only employprofessional and e/perienced foreign e/change traders who speciali:e in trading the )apaneseHen, uro, British $ound, #wiss Grancs and ustralian Dollar. * then told her that * did not haveany e/perience in foreign currency trading and was Kuite conservative in handling my money&1

#antos countered that;chanRolesvirtual6awlirary

&(. * also categorically deny complainant #y>s allegation that * EenticedF him to enter into a$artnership greement with $*$C!B7*. *n the first place, * came to 9now complainant #y onlywhen he was referred to me y a mutual acKuaintance, 3s. na 6iliosa #antos, who was then the3anager of the Ban9 of the $hilippine *slands, $asong Tamo Branch. 3s. na #antos set up ameeting etween complainant #y and me ecause complainant #y wanted to 9now more aout$*$C!B7*. s with the other individuals who e/pressed interest in $*$C Corp.>s clientcompanies, * then provided complainant #y with additional information aout $*$C!B7*. Thedecision to enter into the aforementioned $artnership greement with $*$C!B7* was made y

complainant #y alone without any inducement or undue influence from me, as in fact * only methim twice ! the first one was on the meeting set up y 3s. na #antos and the second one was tointroduce him to 3ichael 6iew. *ndeed, complainant #y appears to e a well!educated personwith years of e/perience as a usinessman. *t is reasonale to assume that efore entering intothe said $artnership greement with $*$C!B7*, complainant #y had fully understood the natureof the agreement and that in entering thereto, he had een motivated y a desire to earn a profitand had elieved, as * myself have een led to elieve, that $*$C!B7* was a legitimate usinessconcern which offered a reasonale return on investment, 3oreover, complainant #y could havewithdrawn his initial investment of @#A4+,+++.++ on its date of maturity, i.e., & )anuary &++',as indicated in the $*$C!B7*>s letter dated 1+ %ovemer &++, a copy of which is attached tocomplainant #y>s #worn #tatement. Complainant #y, however, oviously decided on his own

volition to 9eep his investment with $*$C!B7* presumaly ecause he wanted to gain moreprofit therefrom. Complainant #y in fact admitted that he received monetary returns from $*$C!B7* in the total amount of @#A&,48-.1&.&&

Nhat is palpale from the foregoing is that #y and 6oren:o did not go directly to 6iew or any of$*$C Corporation>s and?or $*$C!B7*>s principal officers efore ma9ing their investment orrenewing their prior investment. owever, undenialy, #antos actively recruited and referredpossile investors to $*$C Corporation and?or $*$C!B7* and acted as the go!etween on ehalfof $*$C Corporation and?or $*$C!B7*.

The D2)>s and Court of ppeals> reasoning that #antos did not sign the investment contracts of

#y and 6oren:o is specious. The contracts merely document the act performed y #antos.

*ndividual complainants and the #C have categorically alleged that 6iew and $*$C Corporationand?or $*$C!B7* is not a legitimate investment company ut a company which perpetrated ascam on 81 individuals where the president, a foreign national, 6iew, ran away with their money.6iew>s asconding with the monies of 81 individuals and that $*$C Corporation and?or $*$C!B7* were not licensed y the #C to sell securities are uncontroverted facts.


22/24

The transaction initiated y #antos with #y and 6oren:o, respectively, is an investment contractor participation in a profit sharing agreement that falls within the definition of the law. Nhen theinvestor is relatively uninformed and turns over his money to others, essentially depending upontheir representations and their honesty and s9ill in managing it, the transaction generally isconsidered to e an investment contract.&8The touchstone is the presence of an investment in a

common venture premised on a reasonale e/pectation of profits to e derived from theentrepreneurial or managerial efforts of others.&4

t ottom, the e/culpation of #antos cannot e preliminarily estalished simply y asserting thatshe did not sign the investment contracts, as the facts alleged in this case constitute fraudperpetrated on the pulic. #pecially so ecause the asence of #antos> signature in the contractis, li9ewise, indicative of a scheme to circumvent and evade liaility should the pyramid fallapart.

6astly, we clarify that we are only dealing herein with the preliminary investigation aspect of thiscase. Ne do not adMudge respondents> guilt or the lac9 thereof. #antos> defense of eing a mere

employee or simply an information provider is est raised and threshed out during trial of thecase.

HERE3ORE, the petition is GRANTED. The Decision of the Court of ppeals in C!".R.%o. #$ %o. 11&'(1 and the Resolutions of the Department of )ustice dated 1 2ctoer &++- and&8 %ovemer &++- are ANNUEDand SET ASIDE. The Resolution of the Department of)ustice dated 1( pril &++( and & #eptemer &++( are REINSTATED. The Department of)ustice is directed to include respondent 2udine #antos in the *nformation for violation of#ection &( of the #ecurities and Regulation Code.

SO ORDERED.

Carpio, +Chairperson, 'rion, -el Castillo,andReyes,., concur.

Endnotes!

S$er #pecial 2rder %o. 15+ dated 18 3arch &+14.

1$enned y ssociate )ustice *saias Dicdican with ssociate )ustices #tephen C. Cru: and )aneurora C. 6antion, concurring. Rollo, pp. 5!.

&Dated 1( pril &++( and & #eptemer &++(. *d. at &4!&- and &'+!&''.

8*d. at 5'.

4#ec. (.Requirement of Registration of Securities. (.1. #ecurities shall not e sold oroffered for sale or distriution within the $hilippines, without a registration statement duly filedwith and approved y the Commission. $rior to such sale, information on the securities in suchform and with such sustance as the Commission may prescrie, shall e made availale to each


23/24

prospective purchaser.

5#ec. &. Fraudulent Transactions.! *t shall e unlawful for any person, directly or indirectly,in connection with the purchase or sale of any securities to; chanRolesvirtual6awlirary

&.1. mploy any device, scheme, or artifice to defraud

&.&. 2tain money or property y means of any untrue statement of a material fact of anyomission to state a material fact necessary in order to ma9e the statements made, in the light ofthe circumstances under which they were made, not misleading or

&.8. ngage in any act, transaction, practice or course of usiness which operates or wouldoperate as a fraud or deceit upon any person.

#ec. &(. Registration of Brokers, Dealers, Salesmen and Associated Persons. &(.1. %operson shall engage in the usiness of uying or selling securities in the $hilippines as a ro9er

or dealer, or act as a salesman, or an associated person of any ro9er or dealer unless registeredas such with the Commission.

'Rollo, pp. (8!(-.

(*d. at 11&!118.

-*d. at 1''!1(&.

1+*d. at 1'4!1(4.

11*d. at &+&!&+'.

1&*d. at &4(!&'.

18#C. 8.-efinition of Terms. ! / / /.8.& E*ssuerF is the originator, ma9er, oligor, or creator of the security.

14Rollo,pp. &'1!&'4.

15*d. at 818!81'.

1*d. at 5!.

1'Po v. -epartment of ustice,".R. %os. 1-51-( and 1-'+-(, 11 Geruary &+18, -+ #CR &14,&&4!&&5.

1(0irst 1omen2s Credit Corporation v. 3on. Pere4,5&4 $hil. 8+5, 8+(!8+- 0&++ citing3egertyv. Court of 5ppeals,45 $hil. 54&, 54'!54( 0&++8Pun4alan v. -ela Pena, 4'( $hil. ''1, '(80&++4.


24/24

1-0iladas Pharma, Inc. v. Court of 5ppeals, ".R. %o. 18&4&&, 8+ 3arch &++4, 4& #CR 4+,4'+, citing6endo4a75rce v. 8ffice of the 8mbudsman +9isayas, 48+ $hil. 1+1, 118 0&++&.

&+http;??thelawdictionary.org?solicitation!&? last visited 1' Geruary &+14.

&1

Rollo,p. 11&.&&*d. at &+(!&+-.

&8People v. Petralba,4(& $hil. 8&, 8'' 0&++4.

&4*d

4. sec v santos

Documents