REPUBLIC OF THE PHILIPPINES DEPARTMENT OF JUSTICE

OFFICE OF THE CITY PROSECUTOR MANILA

PHILIP H. PICCIO, Complainant-Affiant,

- versus - I.S. No. __________________ For: Syndicated Estafa AMBASSADOR ALFONSO T. YUCHENGCO, HELEN YUCHENGCO DEE, ALFONSO S. YUCHENGCO III, ALFONSO S. YUCHENGCO, JR., YVONNE S. YUCHENGCO, SUSANNE YUCHENGCO SANTOS, RICARDO K. CHUA, PORFIRIO S. DE GUZMAN, JR., JOSE C. DELA CRUZ, FELIX B. DESIDERIO, JR., MARCELO T. DY, ERNESTO C. GARCIA, LIWAYWAY F. GENER, NORMAN N. GONZALEZ, JOSEPH I. GRIÑO, ARMANDO M. MEDINA, MARIBEL A. OBIDOS, NILO ONA, PATRICIO A. PICAZO, GUIA MARGARITA SANTOS QUA, EMETERIO ROA, JR., ARMELA SANTIAGO, MARIA JEANETTE C. TECSON, SAMUEL V. TORRES, AND ADELITA A. VERGEL DE DIOS,

Respondents.

x---------------------------------------------------x

COMPLAINT-AFFIDAVIT COMPLAINANT-AFFIANT PHILIP H. PICCIO, Filipino, of legal age,

married, with residence address at No. 40 Buchanan Street, North Greenhills,

San Juan, Metro Manila, after being sworn in accordance with law, hereby

deposes and states that:

1

The Parties

1. Complainant-Affiant is the holder of one (1) fully paid Traditional

Pacific Educational Plans (hereinafter “PEPTRAD”), described as follows:

Beneficiary Type of Plan Date & Place of Issue EPA No. Paola Nicola T. Piccio Traditional Dec. 18, 1990, Manila 1085648-5

Copies of Complainant-Affiant’s respective plan and certificate are hereto

attached as Annexes “A” and “B”, respectively.

2. Pacific Plans, Inc. (hereinafter “PPI”) is a domestic corporation duly

organized and existing under Philippine laws, with current office address at No.

9304 Kamagong corner Dungon Sts., Barangay San Antonio, Makati City.

However, during the pertinent period when the crime was committed, and as

stated in its January 5, 2005 General Information Sheet (GIS) and Articles of

Incorporation filed with the Securities and Exchange Commission, its principal

office is located at Y Tower I, 500 Q. Paredes Street, Binondo, Manila.

3. Respondents are the Directors and/or officers of PPI who, as a

syndicate consisting of more than five (5) persons, carried out the unlawful and

fraudulent acts described herein. Specifically, they have defrauded herein

Complainant-Affiant and other members of the general public numbering at least

34,000 planholders by: 1) falsely pretending to possess power, capability and

capacity to assume the risks inherent in open-ended Traditional Educational

Plans and to honor its contractual obligations to its Traditional Educational

planholders “irrespective of cost at the time of availment”; and 2) inducing

Complainant-Affiant and other private citizens into signing contracts for

Traditional Educational Plans with PPI and parting with their hard-earned

money, based on their fraudulent misrepresentation that they will assume the

risks inherent in open-ended Traditional Educational Plans and honor PPI’s

contractual obligations. Respondents are charged for committing the crime of

Syndicated Estafa under Article 315, Par. 3(a) and Article 315, Par. 2(a) of the

Revised Penal Code, as amended by P.D. 1689.

2

4. The identified members of the Board of Directors and officers of

PPI from 1986, when the Company started selling and misrepresenting to the

public that it will assume the risks inherent in its open-ended Traditional

Educational Plans, until the present time when it reneged on its contractual

obligations, are as follows:

NAMES OF RESPONDENTS ADDRESS a) Chua, Ricardo K. c/o Pacific Plans Inc., GPL Bldg., 221 Gen. Gil J. Puyat

Ave., Makati City b) Dee, Helen Yuchengco 1150 Tamarind Road, Forbes Park, Makati City c) De Guzman, Porfirio S.,

Jr. 33 Soriano St., BF Homes, Parañaque City

Tordesillas, Salcedo Village, Makati City d) Dela Cruz, Jose C. c/o Pacific Plans Inc., GPL Bldg., 221 Gen. Gil J. Puyat

Ave., Makati City e) Desiderio, Felix B., Jr. 501 One Magnificent Mile-Citra, San Miguel Ave.,

Ortigas Center, Pasig City f) Dy, Marcelo T. 23 Reynado St., T. Bella Homes, Tandang Sora,

Quezon City g) Garcia, Ernesto C. 3rd Floor, Grepalife Building, 221 Gen. Puyat Ave.,

Makati City h) Gener, Liwayway F. c/o Y Tower I, 500 Q. Paredes Street, Binondo, Manila i) Gonzalez, Norman N. Y Tower II, 500 Q. Paredes St., Binondo, Manila j) Griño, Joseph I. c/o Y Tower I, Q. Paredes St., Binondo, Manila k) Medina, Armando M. Alexandra Condominium, Pasig City l) Obidos, Maribel A. Y Tower II, 500 Q. Paredes St., Binondo, Manila m) Ona, Nilo c/o Pacific Plans Inc., GPL Bldg., 221 Gen. Gil J. Puyat

Ave., Makati City n) Picazo, Patricio A. c/o Pacific Plans Inc., GPL Bldg., 221 Gen. Gil J. Puyat

Ave., Makati City o) Qua, Guia Margarita

Santos Wack Wack Cond., Mandaluyong City

p) Roa, Emeterio, Jr. 549 Greenhills, Mandaluyong City q) Santiago, Armela c/o Pacific Plans Inc., GPL Bldg., 221 Gen. Gil J. Puyat

Ave., Makati City r) Santos, Susanne

Yuchengco 47 McKinley Road, Forbes Park, Makati City

s) Tecson, Maria Jeanette C. 501 One Magnificent Mile-Citra, San Miguel Ave., Ortigas Center, Pasig City

t) Torres, Samuel V. c/o 7th Floor, Yuchengco Tower I, RCBC Plaza, 6819 Ayala Avenue, Makati City

u) Vergel de Dios, Adelita A. GPL Building, 221 Gil Puyat Ave., Makati City v) Yuchengco, Ambassador

Alfonso T. 29 Tamarind Rd., Forbes Park, Makati City

w) Yuchengco, Alfonso S., Jr.

Yuchengco Drive, Pacific Malayan Village, Alabang, Muntinlupa City

x) Yuchengco, Alfonso S. III 1202 Salcedo Place Condominium, Tordesillas, Salcedo Village, Makati City

y) Yuchengco, Yvonne S. Alexandra Condominium, Pasig City

5. This Criminal Complaint also impleads “John Does” who participated in

the criminal acts described hereunder but whose exact identities and addresses

cannot yet be ascertained at the present time. Complainant-Affiant undertakes to

identify them during the course of these proceedings.

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Acts Constituting Violations of Article 315 Par. 3(a) and Article 315, Par.

2(a) of the Revised Penal Code

PPI and Respondents induced Complainant-Affiant and other private citizens into signing contracts for Traditional Educational Plans with PPI and parting with their money, based on their fraudulent misrepresentation that they will assume the risks inherent in open-ended Traditional Educational Plans and honor PPI’s contractual obligations.

6. Article 315, Par. 3 (a) of the Revised Penal Code states that

Swindling or Estafa is committed:

“3. Through any of the following fraudulent means:

(a) By inducing another, by means of deceit, to sign any document….”

7. In 1986, PPI, through its Directors and Officers, sold its Traditional

Educational Plan (“PEPTRAD”) to the general public. In its Educational Plan

Agreement, PPI represented to the general public that, under its PEPTRAD

policies, it will pay, “irrespective of cost at the time of availment”, the tuition

and standard school fees for enrollment of the scholar, to wit:

“In consideration of the payment of the Pre-

Need Price (PNP), including handling charges if any, and the fulfillment of the other terms and conditions of the Education Plan Agreement, PACIFIC guarantees to pay, irrespective of cost at the time of availment, the tuition and other standard school fees for enrollment of the SCHOLAR in the Educational Program contracted by the PLANHOLDER.”1 (Emphasis supplied.)

A copy of the PEPTRAD Educational Plan Agreement which Complainant-Affiant

executed with PPI is attached hereto as Annex “A”.

1 Education Plan Agreement (Annex “A”), First Paragraph, Section I (“Consideration and

Guarantees”).

4

8. In its plan-agreements, advertisements, product brochures, letterhead

and other printed materials, PPI proudly carried the familiar blue hexagon logo of

the Yuchengco Group of Companies (hereinafter “YGC”) and boldly identified

itself as “a YGC Company”.

9. The Yuchengco Group of Companies is a formidable conglomerate of

some of the country’s top corporations, which include the Malayan Group, the

Grepalife Group, the Rizal Commercial Banking Corporation (hereinafter

“RCBC”) Group and the House of Investments Group, under which falls the EEI

Corporation, Landev Corporation, Funeraria Paz Sucat, Manila Memorial Park

Cemetery, Inc. and Mapua Institute of Technology.

10. The plan-agreements, advertisements, product brochures, letterhead

and other printed materials which were disseminated by PPI and its Directors

and officers to the general public capitalized on the financial muscle of the

Yuchengco Group of Companies and the renowned Yuchengco name to induce

and entice Complainant-Affiant and numerous other planholders, numbering at

least 34,000, to choose PPI’s Traditional Education Plans over comparative

products offered by other pre-need companies.

11. Relying on PPI’s guarantee that it will pay, irrespective of cost at the time of availment, the tuition and standard school fees for enrollment of the

scholar, Complainant-Affiant was induced to part with his hard earned money

and purchase one (1) Traditional Educational Plan from PPI on March 2, 1992.

a) By buying an educational plan from PPI,

Complainant-Affiant obliged himself to regularly pay

for the monthly premiums due and the corresponding

penalties for late payments.

b) PPI’s obligation, on the other hand, is stated under

the Education Plan Agreement (hereinafter “EPA”),

wherein PPI guaranteed that it will pay, “irrespective of cost at the time of availment”, the tuition and

standard school fees for enrollment of the scholar

(Annex “A”).

5

12. Complainant-Affiant invested in the PEPTRAD because he dreamt of

giving his child a better future by ensuring that his child receives quality

education. Little did Complainant-Affiant know that, after inveigling him to part

with his hard-earned money, PPI, through its Directors and officers, will now try

to avoid compliance with its contractual obligation to pay for the tuition and other

standard school fees of the beneficiaries of the PEPTRAD plans.

PPI fraudulently pretended to possess the power and ability to assume the risks inherent in its open-ended Traditional Educational Plans and to honor its contractual obligation to pay, “irrespective of cost at the time of availment”, the tuition and other standard school fees for enrollment of its scholars.

13. Article 315, Par. 2(a) of the Revised Penal Code states that Swindling

or Estafa is committed:

“2. By means of any of the following false pretenses or

fraudulent acts executed prior to or simultaneously with the commission of the fraud:

“(a) By using a fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions or by means of similar deceits.” (Emphasis supplied)

14. The elements of the crime of Estafa by means of deceit under

Paragraph 2(a), Article 315 of the Revised Penal Code are:

a) That there must be a false pretense, fraudulent act or fraudulent means;

b) That such false pretense, fraudulent act or fraudulent means must be made or executed prior to or simultaneously with the commission of the fraud;

c) That the offended party must have relied on the false pretense, fraudulent act, or fraudulent means; that is, he was induced to part with his money or property because of the false pretense, fraudulent act, or fraudulent means; and

d) That as a result thereof, the offended party suffered damage.

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15. All the above-mentioned elements are present in the case at bar, thus

warranting the conviction of Respondents for the crime of Syndicated Estafa

under Article 315, Par. 2(a) of the Revised Penal Code, as amended by P.D.

1689.

16. As stated under the Education Plan Agreement, PPI, through its

Directors and officers, guaranteed that it will pay, “irrespective of cost at the time of availment”, the tuition and other standard school fees for enrollment of

the scholars. This misrepresentation and false pretense that it possesses

power, capacity and capability to assume the risks inherent in its open-ended

Traditional Educational Plans and to honor its contractual obligations thereunder

were made by PPI, through its Directors and officers, prior to or simultaneously

with the commission of the fraud in order to induce Complainant-Affiant and other

planholders to part with their hard-earned money. Complainant-Affiant believed in

PPI’s false pretense that it would assume the risks inherent in its open-ended

Traditional Educational Plans and honor its contractual obligation to shoulder the

tuition and other standard school fees for enrollment of the planholders’ scholars.

17. PPI, through its Directors and officers, profusely assured

Complainant-Affiant and other planholders that they made the right choice in

purchasing the Traditional Educational Plans and that “no matter what the cost is, no matter what happens, (their) child is assured of education”. Thus, in

its congratulatory letter to buyers of PEPTRAD plans, PPI acclaimed:

“You could not have made a wiser decision

when you decided to get a PACIFIC EDUCATION PLAN (PEP) for your child. In so doing, you have just made certain that no matter what the cost is, no matter what happens, your child is assured of education.

THIS PLAN IS AN INHERITANCE OF KNOWLEDGE THAT YOU ARE HANDING TO YOUR CHILD. IT IS OF INESTIMABLE VALUE. THERE CAN BE NO GREATER GIFT.

PACIFIC EDUCATION PLAN offers more than just an education. It assures your child’s future and everything that comes with it.” (Emphasis supplied.)

A copy of a sample congratulatory letter from PPI is attached hereto as

Annex “C”.

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18. The Education Plan Agreement or PEPTRAD policy itself expressly

guarantees as follows:

“In consideration of the payment of the Pre-

Need Price (PNP), including handling charges if any, and the fulfillment of the other terms and conditions of the Education Plan Agreement, PACIFIC guarantees to pay, irrespective of cost at the time of availment, the tuition and other standard school fees for enrollment of the SCHOLAR in the Educational Program contracted by the PLANHOLDER.”2 (Emphasis supplied.)

A copy of the PEPTRAD Educational Plan Agreement which Complainant-Affiant

executed with PPI is attached hereto as Annex “A”.

19. The policy likewise provided for other benefits, such as cash awards

for scholastic achievement and insurance benefits (Please see Complainant-

Affiant’s PEPTRAD Education Plan Agreement attached hereto as Annex “A”.)

20. Complainant-Affiant and the other planholders scrimped, saved and/or

borrowed to meet payments due on their respective PEPTRAD policies, which

are comparatively more expensive than the fixed value plans, in order to avoid

cancellation of the plans and forfeiture of their payments.

21. Any planholder who failed to pay any installment, regardless of the

reason for such failure to pay, was subjected to the following penalty provisions

of the Education Plan Agreement:

“VIII. GRACE PERIOD

PLANHOLDER is given a grace period of two (2) months within which to pay any installment due. If any installment remains unpaid beyond the grace period, this Agreement shall be considered of no force and effect. However, the PLANHOLDER shall be allowed to reinstate this Agreement within a period of two (2) years from date of default. Otherwise, this Agreement shall be considered automatically cancelled and all payments shall be forfeited in favor of PACIFIC as liquidated damages.”3

2 Education Plan Agreement (Annex “A”), First Paragraph, Section I (“Consideration and

Guarantees”). 3 Education Plan Agreement (Annex “A”), Section VIII.

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Furthermore, reinstatement was conditioned upon full payment of all

overdue installments with surcharge from due date at the rate of 18% per annum.”4

22. On June 9, 2004, the Board of Directors of PPI, who included some of

the Respondents herein, passed a Board Resolution approving the sale of PPI’s

memorial, pension and fixed educational plans to Lifetime Plans, Inc., in

exchange for shares of stock in said corporation.

23. Subsequently, on August 12, 2004, Lifetime Plans was incorporated

as a wholly-owned subsidiary of PPI via an asset-for-share swap. PPI assigned

to Lifetime Plans all its pre-need plans businesses (except the long-discontinued

PEPTRAD) in exchange for one million (1,000,000) shares of stock of Lifetime

Plans, with a total par value of One Hundred Million Pesos (Php100,000,000.00).

A copy of PPI’s 2005 audited Financial Statements (which contain its audited

Financial Statements for the Years 2004 and 2005) is attached hereto as Annex

“D”.

24. Sometime in August, 2004, PPI, through its Board of Directors,

approved the sale of all its shares of stock in Lifetime Plans to PPI’s own parent company, GPL Holdings, Inc., at a purchase price of only Php205,137,860.00. PPI, therefore, violated its representation to the SEC that Lifetime Plans would be a wholly-owned subsidiary of PPI. Moreover, PPI did not receive a centavo of the Php205,137,860.00 purchase price in cash. In his Affidavit of General Financial Condition,5 PPI’s incumbent

President/Chairman Ernesto C. Garcia explained that the Php205,137,860.00

purchase price was offset against an alleged liability of PPI to GPLHI.6

Strangely, however, while GPLHI is the parent company of PPI and is clearly a related party to the latter, no mention of any such alleged liability of PPI to GPLHI appears in the auditor’s notes on “Related Party Transactions” in either the 2003 or 2004 audited Financial Statements of PPI. Moreover, neither PPI nor Lifetime Plans disclosed to the SEC that PPI was

about to transfer its entire shareholdings in Lifetime Plans.

4 Ibid, Section IX(3). 5 PPI’s Petition for Corporate Rehabilitation with Prayer for Suspension of Payments, Annex

“E”. 6 Ibid., page 6, item 17C.

9

25. By virtue of the foregoing transfers and misappropriation of funds, trust

funds and assets from PPI to Lifetime Plans, PPI, through its Directors and

Officers, self-engineered its state of “financial distress” and artificially contrived a

“liquidity problem” for PPI to support its Petition for Corporate Rehabilitation and

Suspension of Payments and effectively deny Complainant-Affiant and the other

planholders of their full rights under their Traditional Educational Plans.

26. Thus, on March 31, 2005, the members of the Board of Directors of

PPI, who include some of the Respondents herein, passed a Board Resolution

approving the filing of a Petition for Corporate Rehabilitation with Suspension of

Payments in court. Subsequently, on April 7, 2005, without prior notice to the

planholders, PPI filed said Petition in Special Proceedings No. M-6059 before

Branch 61 of the Regional Trial Court of Makati City. A copy of said Petition is

attached hereto as Annex “E”.

27. In Special Proceedings No. M-6059, PPI, through its Directors and

Officers, seeks to impose upon PEPTRAD planholders a mandatory swap at a lower yield of seven percent per annum (7% p.a.) to mature and be paid-out date in the year 2010.

28. This clearly deviates from the agreement of the parties, as stated in

the Educational Plan Agreement (Annex “A”), that “PACIFIC guarantees to pay, irrespective of cost at the time of availment, the tuition and other standard school fees for enrollment of the SCHOLAR in the Educational Program

contracted by the PLANHOLDER”7

29. Thus, after swindling the planholders off their hard-earned money,

PPI, through its Directors and Officers, now tries to avoid compliance with its

contractual obligations. The fraudulent scheme perpetrated by PPI was severely

criticized by SEC on pages 49-55 of its Comment dated May 16, 2005 which it

filed in Special Proceedings No. M-6059, stating: a) that PPI’s Petition for

Corporate Rehabilitation filed before the RTC of Makati City is “part of a pre-

designed plan of Pacific”; b) that “the series of dispositions and acquisitions by

Pacific vis a vis its related companies is a FRAUDULENT SCHEME to keep its

assets away from the reach of the traditional planholders”; and c) that PPI has

been guilty of bad faith in its dealings with SEC and the BIR, to wit:

7 Express guarantee of PPI in the Education Plan Agreement or PEPTRAD policy (Annex

“A”), which PPI itself drafted.

10

“The sequence of actions undertaken by Pacific prior to its filing of the instant petition plainly shows that this petition is part of a pre-designed plan of Pacific to relieve release of its not so profitable business, which is the traditional education plans…

The hasty recourse to this Court appears to be a ploy on the part of Pacific to Elude SEC intervention and enable it to force its Swap Offer to the planholders in the guise of a rehabilitation proceedings. With the filing of the instant petition, Pacific simple wanted to tie the hands of the SEC so that it can no longer pursue administrative measures to protect the investors, as it has been duty bound to do…

The series of dispositions and acquisitions by Pacific vis-à-vis its related companies is a FRAUDULENT SCHEME to keep its assets away from the reach of traditional planholders…

This, in addition to the abovementioned actions by Pacific, exhibits the company’s BAD FAITH in its dealings with the SEC and BIR…”8 (Emphasis supplied)

A copy of SEC’s Comment dated May 16, 2005 is attached hereto as

Annex “F”.

30. Subsequently, in an Order dated 24 May 2005 and a Resolution dated

24 June 2005, the SEC en banc revoked the Certificate of Incorporation of

Lifetime Plans, Inc., in recognition of the said corporation’s role in the fraudulent

transfer of PPI assets to put them beyond the reach of the rightful beneficiaries:

the planholders. Copies of the SEC’s Order dated 24 May 2005 and the

Resolution dated 24 June 2005 are hereto attached and made an integral part

hereof as Annexes “G” and “H”.

31. Now, PPI, through its Directors and Officers, conveniently claims that

it can no longer comply with its obligation to “pay, irrespective of cost at the time of availment, the tuition and standard school fees for enrollment of the

scholar,” to the prejudice of Complainant-Affiant and other planholders who have

religiously complied with their obligation to pay their monthly premiums.

Consequently, Complainant-Affiant suffered actual damage and sleepless nights,

resulting from the non-payment of the full tuition fees and other standard school

fees for School Year 2005-2006.

8 Securities and Exchange Commission COMMENT dated 16 May 2005 (Annex “F), pp. 49-

55.

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32. While PPI, through its Directors and Officers, claims that it is “illiquid”

and, therefore, needs to suspend payment to its planholders, its own audited

Financial Statements for the Years 2004 and 2005 show otherwise. Indeed,

PPI’s own audited Financial Statements for the Years 2004 and 2005 will show

that PPI is liquid and solvent. They also show that PPI’s Trust Fund has a

positive variance when compared to its Actuarial Reserve Liability, thus evincing

that it has sufficient funds to pay the benefits due its planholders and that it has

sufficient liquid assets to pay the same within the maturity periods of the plans.

A copy of PPI’s 2005 audited Financial Statements (which contain its audited

Financial Statements for the Years 2004 and 2005) is attached hereto as Annex

“D”.

33. That PPI is indeed liquid and solvent is confirmed by no less than the

Securities and Exchange Commission, the supervisory arm of the Philippine

Government, which reported on pages 32-49 of its Comment dated May 16, 2005

filed in Special Proceedings No. M-6059 (a copy of which is attached as Annex

“F” hereof) that:

a) “(P)er the documents submitted to the SEC in compliance

with its reportorial obligations, Petitioner is solvent and liquid.

Thus, resort to corporate rehabilitation is not necessary”

(See page 49 of SEC’s Comment attached as Annex “F”

hereof);

b) PPI is a “financially stable corporation capable of meeting its

obligations as they fall due” (See page 46 of SEC’s

Comment attached as Annex “F” hereof);

c) PPI’s 2004 audited Financial Statements show that, as of

December 2004: 1) its assets exceeded its liabilities and it

had a Solvency Ratio of 1.24:1.0; 2) its current assets

exceeded its current liabilities and it had a Liquidity Ratio of

1.77: 1 (See pages 33 and 47 of SEC’s Comment attached

as Annex “F” hereof);

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d) “(A)s of December 2004, PPI exceeded its Trust Fund

Liquidity Reserve Requirement by P3,772,485,371.66”. (See

page 33 of SEC’s Comment attached as Annex “F” hereof);

e) “The company has been declaring stock and cash dividends

since 1989”. (See page 40 of SEC’s Comment attached as

Annex “F” hereof);

f) Based on the Table of Projected Benefits and Trust Fund

Contributions submitted by PPI on October 29, 2004, PPI is

capable of meeting its projected obligations until the year

2014. According to SEC, “in fact, its trust fund exceeds its

projected benefits by P1,209,062,409.26, which does not

even include interest income that should accrue annually on

the trust fund and possible foreign exchange gain that may

be earned by the Napocor bonds, the main asset of the trust

fund.” (See pp. 47-48 of Comment attached as Annex “F”

hereof).

34. Based on the foregoing findings by SEC, PPI is not a “financially

distressed corporation”, as it misrepresents itself to be. SEC, therefore,

concluded that:

“All these audit findings reveal a healthy

financial status of Pacific…and its deliberate attempt to evade the payment of its contractual obligations by diverting its funds to the payment of dividends to its stockholders to the prejudice of the planholders.” ((See page 45 of SEC’s Comment attached as Annex “F” hereof).

35. Pursuant to the Order dated April 12, 2005 issued by the Court in

Special Proceedings No. M-6059, PPI released tuition support for the first

semester of School Year 2005-2006. Such tuition support, however, fell short of

the full tuition and PPI’s contractual obligation to pay “irrespective of cost at the time of availment”. Likewise, little or no tuition support was given for the

second semester of school year 2005-2006. Consequently, Complainant-Affiant

suffered actual damage and sleepless nights, resulting from the non-payment of

the full tuition fees and other standard school fees for School Year 2006-2005.

The tuition and other standard school fees for enrollment of the planholders’

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designated scholars which PPI failed to pay, thus causing damage and prejudice

to herein Complainant-Affiant, are as follows:

Beneficiary Tuition Support Actual Tuition Balance Paola Nicola T. Piccio P28,000.00 P32,000.00 P4,000.00

A copy of the tuition fee receipt in support of the foregoing is hereto attached and

made an integral part hereof as Annex “I”.

36. Despite repeated demands made by Complainant-Affiant and other

planholders, PPI, through its Directors and Officers, continues to fail and refuse

to comply with its contractual obligation under the Education Plan Agreement,

wherein it guaranteed to pay “irrespective of cost at the time of availment”,

the tuition and other standard school fees for enrollment of the scholars (Annex

“A”).

D. Elements of Syndicated Estafa under PD 1689

37. Presidential Decree No. 16899 (hereinafter “PD 1689”) increases the

penalty of Swindling or Estafa which is committed by a syndicate consisting of

five or more persons. The elements of the crime are as follows:

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

b. The estafa or swindling is committed by a syndicate; 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.10

38. All the above-mentioned elements are present in the case at bar, thus

warranting the application of PD 1689 with the consequent increase in the

penalty to life imprisonment to death.

9 P.D. No. 1689 – Increasing the Penalty for Certain Forms of Swindling or Estafa. 10 Bobis, et al. v. The Provincial Sheriff of Camarinas Norte, G.R. No. L-29838. March 18,

1983.

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a) As already discussed earlier, Estafa under Article 315 of the

Revised Penal Code has been committed by PPI and

Respondents through their fraudulent representations and

machinations in order to avoid compliance with PPI’s

contractual obligations.

b) PD 1689 defines a syndicate as "consisting of five or more

persons formed with the intention of carrying out the unlawful or

illegal act, transaction, enterprise or scheme." Here,

Respondents number more than five (5), acting together to

defraud herein Complainant-Affiant and other PEPTRAD

planholders.

c) Respondents’ acts amounted to a defraudation resulting in the

misappropriation of funds solicited by corporations/associations

from the general public:

i. As a pre-need company, PPI operated on funds

solicited from the general public to whom it marketed

its products.

ii. The Supreme Court has ruled that to be criminally

liable under PD 1689, one need not necessarily

threaten the economic stability of the nation; it is

enough that the acts complained of contravenes

public interest:

“Assuming arguendo that the preamble was part of the statute, appellants' contention that they should not be held criminally liable because it was not proven that their acts constituted economic sabotage threatening the stability of the nation remains too flimsy for extensive discussion. As the preamble of P.D. No. 1689 shows, the act prohibited therein need not necessarily threaten the stability of the nation. It is sufficient that it "contravenes public interest." Public interest was affected by the solicitation of deposits under a promise of substantial profits, as it was people coming from the lower income

15

brackets who were victimized by the illegal scheme.”11

iii. The perpetration by PPI of its scheme to eschew its

clear contractual obligation has eroded the public

confidence in pre-need companies, precipitating the

demise of the pre-need industry in our country.

Respondents’ acts, therefore, contravened public

interest because they victimized at least 34,000

planholders, thus resulting in the erosion of public

confidence in the pre-need industry.

iv. The SEC has confirmed that “Pacific is not an

ordinary corporation. Its business activity is imbued

with public interest considering that its clients are the

innocent investors, parents mostly who pay their hard-

earned money to these pre-need companies in order

to secure the education of their children.” (See page

51 of SEC’s Comment dated May 16, 2005, attached

as Annex “F” hereof.)

39. As clearly established above, the elements of PD 1689 are all

present in this case, hence, warranting the imposition of the increase in the

penalty of the crime to life imprisonment to death, with the consequence of

having the offense elevated to a non-bailable offense.

40. Considering that PPI is a corporation, the case of Prudential Bank vs.

IAC12 clearly states that “It is clear that if the violation or offense is committed by

a corporation, partnership, association or other juridical entities, the penalty shall

be imposed upon the directors, officers, employees or other officials or persons

therein responsible for the offense.”

41. The crime of Estafa committed herein was committed as early as

1990 and continues until the present time, and the same may be tried in the court

of the municipality or territory wherein any one of the essential ingredients

thereof took place.

11 People v. Balasa, et al., G.R. No. 106357. September 3, 1998. 12 December 1992.

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