by: Atty. Gregorio B. Austral, CPA
Repa scam: robbing Juan to pay Pedro
The Repa scam is proof that “a sucker is born every minute.” These are the strong words of Justice Romero in People vs. Priscila Balasa, et.al., G.R. No. 106357 September 3, 1998, after affirming the conviction of the corporate officers of the Panata Foundation of the Philippines, Inc.
Panata Foundation was registered at the Securities and Exchange Commission with the following purposes: (1) to uplift members’ economic condition by way of financial consultative basis; (2) to encourage members in a self-help program; (3) to grant educational assistance; (4) to implement the program on the Anti-Drug campaign; and (5) to organize seminars or conferences specially in rural areas and selected cities.
Immediately after its SEC registration was obtained, the foundation sent out brochures soliciting deposits from the public, assuring would-be depositors that their money would either be doubled after 21 days or trebled after 30 days. Priscilla Balasa also went around convincing people to make deposits with the foundation at their office in Puerto Princesa.
As summarized in the Supreme Court decision, the modus operandi for investing with the foundation was as follows:
When a person would deposit an amount, the amount would be taken by a clerk to be given to the teller. The teller would then fill up a printed form called a “slot.” These “slots” were part of a booklet, with one booklet containing one hundred “slots.” A “slot,” which resembled a check contains a control number and other information. The control number indicated the number of the “slot” in a booklet, while the space after “date” would contain the date when the slot was acquired, as well as the date of its maturity. The amount deposited determined the number of shares, one share being equivalent to one hundred pesos. The depositor had the discretion when to affix his signature on the space provided therefor. Some would sign their slot only after payment on maturity, while others would sign as soon as they were given the slot. However, without the control number and the stamp of the teller, duly signed or initialed, no depositor could claim the proceeds of his deposit upon maturity.
After the slot had been filled up by the teller, he would give it to the clerk assigned outside. The clerk would then give the slot to the depositor. Hence, while it was the teller who prepared and issued the slot, he had no direct contact with the depositor. The slots handed to a depositor were signed beforehand by the president of the foundation.
Every afternoon, the comptrollers would take the list of depositors made by the tellers with the amounts deposited by each, and have these typed. Norma Francisco would then receive from the tellers the amounts deposited by the public. It was also her job to pay the salaries of the foundation’s employees. For his part, Guillermo Francisco would release money whenever a deposit would mature as indicated in the slots.
According to the foundation’s rules, an investor could deposit up to P5,000.00 only, getting a slot corresponding thereto. Anyone who deposited more than that amount would, however, be given a slot but the slot had to be in the name of another person or several other persons, depending upon the amount invested. According to Sylvia Magnaye, a foundation teller, all deposits maturing in August 1989 were to be tripled. For such deposits, the slots issued were colored yellow to signify that the depositor would have his deposit tripled. Deposits that would mature subsequent to August were only given double the amount deposited. However, there were times when it was the depositor who would choose that his deposit be tripled, in which case, the deposit would mature later.
The amounts received by the foundation were deposited in banks. Thus, a foundation teller would, from time to time, go to PNB, PCI Bank, DBP and the Rural Bank of Coron to deposit the collections in a joint account in the names of Priscilla Balasa and Norma Francisco.
Initially, the operation started with a few depositors, with most depositors investing small amounts to see whether the foundation would make good on its promise. When the foundation paid double or triple the amounts of their investment at maturity, most not only reinvested their earnings but even added to their initial investments. As word got around that deposits could be doubled within 21 days, or tripled if the period lasted for more than 30 days, more depositors were attracted. Blinded by the prospect of gaining substantial profits for nothing more than a minuscule investment, these investors, like previous ones, were lured to reinvest their earnings, if not to invest more.
Most would invest more than P5,000.00, the investment limit set by the foundation. Priscilla Balasa would, however, encourage depositors to invest more than P5,000.00, provided that the excess was deposited under the name of others. She assured the depositors that this was safe because as long as the depositor was holding the slots, he was the “owner” of the amount deposited. Most investors then deposited amounts in the names of their relatives.
At the outset, the foundation’s operations proceeded smoothly, as satisfied investors collected their investments upon maturity. On November 29, 1989, however, the foundation did not open. Depositors whose investments were to mature on said date demanded payments but none was forthcoming. On December 2, 1989, Priscilla Balasa announced that since the foundation’s money had been invested in the stock market, it would resume operations on December 4, 1989. On that date, the foundation remained closed. Depositors began to demand reimbursement of their deposits, but the foundation was unable to deliver.
The trial court convicted the officers and employees involved in the scam of the crime of syndicated estafa. The court found that the testimonial evidence presented by the prosecution proves that appellants employed fraud and deceit upon gullible people to convince them to invest in the foundation. It has been held that where one states that the future profits or income of an enterprise shall be a certain sum, but he actually knows that there will be none, or that they will be substantially less than he represents, the statement constitutes actionable fraud where the hearer believes him and relies on the statement to his injury. That there was no profit forthcoming can be clearly deduced from the fact that the foundation was not engaged nor authorized to engage in any lucrative business to finance its operation. It was not shown that it was the recipient of donations or bequest with which to finance its “double or triple your money” scheme, nor did it have any operating capital to speak of when it started operations. Parenthetically, what appellants offered the public was a “Ponzi scheme,” an investment program that offers impossibly high returns and pays these returns to early investors out of the capital contributed by later investors.