G.R. No.

L-16968             July 31, 19626g

PHILIPPINE NATIONAL BANK, plaintiff-appellee,

vs.
CONCEPCION MINING COMPANY, INC., ET AL., defendants-appellants.

Ramon B. de los Reyes for plaintiff-appellee.

Demetrio Miraflor for defendants-appellants.

LABRADOR, J.:

Appeal from a judgment or decision of the Court of First Instance of Manila,

Hon. Gustavo Victoriano, presiding, sentencing defendants Concepcion Mining
Company and Jose Sarte to pay jointly and severally to the plaintiff the
amount of P7,197.26 with interest up to September 29, 1959, plus a daily
interest of P1.3698 thereafter up to the time the amount is fully paid, plus
10% of the amount as attorney's fees, and costs of this suit.

The present action was instituted by the plaintiff to recover from the
defendants the face of a promissory note the pertinent part of which reads as
follows:

Manila, March 12, 1954

NINETY DAYS after date, for value received, I promise to pay

to the order of the Philippine National Bank . . . .

In case it is necessary to collect this note by or through an

attorney-at-law, the makers and indorsers shall pay ten percent
(10%) of the amount due on the note as attorney's fees, which
in no case shall be less than P100.00 exclusive of all costs and
fees allowed by law as stipulated in the contract of real estate
mortgage. Demand and Dishonor Waived. Holder may accept
partial payment reserving his right of recourse again each and
all indorsers.

(Purpose — mining industry)

CONCEPCION MINING COMPANY, INC.,
By:
(Sgd.) VICENTE LEGARDA
President
(Sgd.) VICENTE LEGARDA
(Sgd.) JOSE S SARTE

"Please issue check to —

Mr. Jose S. Sarte"

Upon the filing of the complaint the defendants presented their answer in
which they allege that the co-maker the promissory note Don Vicente L.
Legarda died on February 24, 1946 and his estate is in the process of judicial
determination in Special Proceedings No. 29060 of the Court of First
Instance of Manila. On the basis of this allegation it is prayed, as a special
defense, that the estate of said deceased Vicente L. Legarda be
included as party-defendant. The court in its decision ruled that the
inclusion of said defendant is unnecessary and immaterial, in accordance with
the provisions of Article 1216 of the Deny Civil Code and section 17 (g) of
the Negotiable Instruments Law.

A motion to reconsider this decision was denied and thereupon defendants

presented a petition for relief, asking that the effects of the judgment be
suspended for the reason that the deceased Vicente L. Legarda should have
been included as a party-defendant and his liability should be determined in
pursuance of the provisions of the promissory note. This motion for relief was
also denied, hence defendant appealed to this Court.

Section 17 (g) of the Negotiable Instruments Law provides as follows:

SEC. 17. Construction where instrument is ambiguous. — Where the language

of the instrument is ambiguous or there are omissions therein, the following
rules of construction apply:

xxx     xxx     xxx

(g) Where an instrument containing the word "I promise to pay" is signed by
two or more persons, they are deemed to be jointly and severally liable
thereon.

And Article 1216 of the Civil Code of the Philippines also provides as follows:

ART. 1216. The creditor may proceed against any one of the solidary debtors
or some of them simultaneously. The demand made against one of them
shall not be an obstacle to those which may subsequently be directed
against the others so long as the debt has not been fully collected.

In view of the above quoted provisions, and as the promissory note was
executed jointly and severally by the same parties, namely, Concepcion
Mining Company, Inc. and Vicente L. Legarda and Jose S. Sarte, the payee of
the promissory note had the right to hold any one or any two of the signers of
the promissory note responsible for the payment of the amount of the note.
This judgment of the lower court should be affirmed.

Our attention has been attracted to the discrepancies in the printed record on
appeal. We note, first, that the

 names of the defendants, who are evidently the Concepcion Mining Co.,
Inc. and Jose S. Sarte, do not appear in the printed record on
appeal. The title of the complaint set forth in the record on appeal
does not contain the name of Jose Sarte, when it should, as two
defendants are named in the complaint and the

 only defense of the defendants is the non-inclusion of the deceased

Vicente L. Legarda as a defendant in the action. We also note that the
 copy of the promissory note which is set forth in the record on
appeal does not contain the name of the third maker Jose S.
Sarte. Fortunately, the brief of appellee on page 4 sets forth said name
of Jose S. Sarte as one of the co-maker of the promissory note.

Evidently, there is an attempt to mislead the court into believing that Jose S.
Sarte is no one of the co-makers. The attorney for the defendants Atty.
Jose S. Sarte himself and he should be held primarily responsible for
the correctness of the record on appeal. We, therefore, order the said
Atty. Jose S. Sarte to explain why in his record on appeal his own name as
one of the defendants does not appear and neither does his name appear as
one of the co-signers of the promissory note in question. So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Barrera, Paredes, Dizon,

Regala and Makalintal, JJ., concur.
Reyes, J.B.L., J., took no part.

REPUBLIC PLANTERS BANK V. COURT

OF APPEALS
216 SCRA 738
 

FACTS:
Yamaguchi   and   Canlas   are   officers   of   the   Worldwide   Garment Manufacturing, which
later changed its name to Pinch Manufacturing.  They were authorized to apply for credit facilities
with the petitioner bank.  The two officers signed the promissory notes issued to secure the
payment of the  obligations.    Later,  the  bank  instituted  an  action  for  collection  of money, 
impleading  also  the  two  officers.    The  trial  court  held  the  two officers personally liable also. 

HELD:
Canlass  is  solidarily  liable  on  each  of  the  promissory  notes  to  which  his signature 
appears.    The  promissory  notes  in  question  are  negotiable instruments and thus, governed by
the Negotiable Instruments Law.
 
Under  the  Negotiable Instruments Law,  persons  who  write  their  names  in  the  instrument  are
makers are liable as such.  By signing the note, the maker promises to pay to the order of the
payee or any holder the tenor of the obligation.  Based on the above provisions of the law, there is
no denying that Canlass is one of the co-makers of the promissory note.

G.R. No. 93073 December 21, 1992

REPUBLIC PLANTERS BANK, petitioner,

vs.
COURT OF APPEALS and FERMIN CANLAS, respondents.
CAMPOS, JR., J.:

This is an appeal by way of a Petition for Review on Certiorari from the

decision * of the Court of Appeals in CA G.R. CV No. 07302, entitled "Republic Planters Bank.Plaintiff-Appellee vs.
Pinch Manufacturing Corporation, et al., Defendants, and Fermin Canlas, Defendant-Appellant", which affirmed the
decision ** in Civil Case No. 82-5448 except that it completely absolved Fermin Canlas from liability under the promissory
notes and reduced the award for damages and attorney's fees. The RTC decision, rendered on June 20, 1985, is quoted
hereunder:

WHEREFORE, premises considered, judgment is hereby rendered in favor of

the plaintiff Republic Planters Bank, ordering defendant Pinch Manufacturing
Corporation (formerly Worldwide Garment Manufacturing, Inc.) and
defendants Shozo Yamaguchi and Fermin Canlas to pay, jointly and severally,
the plaintiff bank the following sums with interest thereon at 16% per annum
from the dates indicated, to wit:

Under the promissory note (Exhibit "A"), the sum of P300,000.00 with
interest from January 29, 1981 until fully paid; under promissory note
(Exhibit "B"), the sum of P40,000.00 with interest from November 27, 1980;
under the promissory note (Exhibit "C"), the sum of P166,466.00 which
interest from January 29, 1981; under the promissory note (Exhibit "E"), the
sum of P86,130.31 with interest from January 29, 1981; under the
promissory note (Exhibit "G"), the sum of P12,703.70 with interest from
November 27, 1980; under the promissory note (Exhibit "H"), the sum of
P281,875.91 with interest from January 29, 1981; and under the promissory
note (Exhibit "I"), the sum of P200,000.00 with interest from January 29,
1981.

Under the promissory note (Exhibit "D") defendants Pinch

Manufacturing Corporation (formerly named Worldwide Garment
Manufacturing, Inc.), and Shozo Yamaguchi are ordered to pay jointly and
severally, the plaintiff bank the sum of P367,000.00 with interest of 16% per
annum from January 29, 1980 until fully paid

Under the promissory note (Exhibit "F") defendant corporation Pinch

(formerly Worldwide) is ordered to pay the plaintiff bank the sum of
P140,000.00 with interest at 16% per annum from November 27, 1980 until
fully paid.

Defendant Pinch (formely Worldwide) is hereby ordered to pay the plaintiff

the sum of P231,120.81 with interest at 12% per annum from July 1, 1981,
until fully paid and the sum of P331,870.97 with interest from March 28,
1981, until fully paid.

All the defendants are also ordered to pay, jointly and severally, the plaintiff
the sum of P100,000.00 as and for reasonable attorney's fee and the further
sum equivalent to 3% per annum of the respective principal sums from the
dates above stated as penalty charge until fully paid, plus one percent (1%)
of the principal sums as service charge.

With costs against the defendants.

SO ORDERED.  1
From the above decision only defendant Fermin Canlas appealed to the then
Intermediate Court (now the Court Appeals). His contention was that inasmuch as he
signed the promissory notes in his capacity as officer of the defunct Worldwide
Garment Manufacturing, Inc, he should not be held personally liable for such authorized
corporate acts that he performed. It is now the contention of the petitioner Republic
Planters Bank that having unconditionally signed the nine (9) promissory notes with
Shozo Yamaguchi, jointly and severally, defendant Fermin Canlas is solidarity liable
with Shozo Yamaguchi on each of the nine notes.

We find merit in this appeal.

From the records, these facts are established: Defendant Shozo Yamaguchi and private
respondent Fermin Canlas were President/Chief Operating Officer and Treasurer
respectively, of Worldwide Garment Manufacturing, Inc.. By virtue of Board Resolution
No.1 dated August 1, 1979, defendant Shozo Yamaguchi and private respondent
Fermin Canlas were authorized to apply for credit facilities with the petitioner
Republic Planters Bank in the forms of export advances and letters of credit/trust receipts
accommodations. Petitioner bank issued nine promissory notes, marked as Exhibits
A to I inclusive, each of which were uniformly worded in the following manner:

___________, after date, for value received, I/we, jointly and severaIly promise to pay to
the ORDER of the REPUBLIC PLANTERS BANK, at its office in Manila, Philippines, the
sum of ___________ PESOS(....) Philippine Currency...

On the right bottom margin of the promissory notes appeared the signatures of Shozo
Yamaguchi and Fermin Canlas above their printed names with the phrase "and (in) his
personal capacity" typewritten below. At the bottom of the promissory notes appeared:
"Please credit proceeds of this note to:

________ Savings Account ______XX Current Account

No. 1372-00257-6

of WORLDWIDE GARMENT MFG. CORP.

These entries were separated from the text of the notes with a bold line which ran
horizontally across the pages.

In the promissory notes marked as Exhibits C, D and F, the name Worldwide Garment
Manufacturing, Inc. was apparently rubber stamped above the signatures of defendant
and private respondent.

On December 20, 1982, Worldwide Garment Manufacturing, Inc. noted to change its
corporate name to Pinch Manufacturing Corporation.

On February 5, 1982, petitioner bank filed a complaint for the recovery of sums of money
covered among others, by the nine promissory notes with interest thereon, plus
attorney's fees and penalty charges. The complainant was originally brought against
Worldwide Garment Manufacturing, Inc. inter alia, but it was later amended to drop
Worldwide Manufacturing, Inc. as defendant and substitute Pinch Manufacturing
Corporation it its place. Defendants Pinch Manufacturing Corporation and Shozo
Yamaguchi did not file an Amended Answer and failed to appear at the scheduled
pre-trial conference despite due notice. Only private respondent Fermin Canlas filed
an Amended Answer wherein he, denied having issued the promissory notes in
question since according to him, he was not an officer of Pinch Manufacturing
Corporation, but instead of Worldwide Garment Manufacturing, Inc., and that when
he issued said promissory notes in behalf of Worldwide Garment Manufacturing, Inc., the
same were in blank, the typewritten entries not appearing therein prior to the time he
affixed his signature.

In the mind of this Court, the only issue material to the resolution of this appeal is
whether private respondent Fermin Canlas is solidarily liable with the other
defendants, namely Pinch Manufacturing Corporation and Shozo Yamaguchi, on
the nine promissory notes.

We hold that private respondent Fermin Canlas is solidarily liable on each of the
promissory notes bearing his signature for the following reasons:

The promissory motes are negotiable instruments and must be governed by the
Negotiable Instruments Law.  2

Under the Negotiable lnstruments Law, persons who write their names on the face of
promissory notes are makers and are liable as such.  By signing the notes, the maker
3

promises to pay to the order of the payee or any holder   according to the tenor 4

thereof.  Based on the above provisions of law, there is no denying that private
5

respondent Fermin Canlas is one of the co-makers of the promissory notes. As such, he
cannot escape liability arising therefrom.

Where an instrument containing the words "I promise to pay" is signed by two or
more persons, they are deemed to be jointly and severally liable thereon.  An 6

instrument which begins" with "I" ,We" , or "Either of us" promise to, pay, when signed by
two or more persons, makes them solidarily liable.   The fact that the singular pronoun is
7

used indicates that the promise is individual as to each other; meaning that each of the
co-signers is deemed to have made an independent singular promise to pay the notes in
full.

In the case at bar, the solidary liability of private respondent Fermin Canlas is made
clearer and certain, without reason for ambiguity, by the presence of the phrase "joint
and several" as describing the unconditional promise to pay to the order of Republic
Planters Bank. A joint and several note is one in which the makers bind themselves
both jointly and individually to the payee so that all may be sued together for its
enforcement, or the creditor may select one or more as the object of the suit. 8 A joint and
several obligation in common law corresponds to a civil law solidary obligation; that is, one of several debtors bound in such
wise that each is liable for the entire amount, and not merely for his proportionate share. 9 By making a joint and several
promise to pay to the order of Republic Planters Bank, private respondent Fermin Canlas assumed the solidary liability of a
debtor and the payee may choose to enforce the notes against him alone or jointly with Yamaguchi and Pinch Manufacturing
Corporation as solidary debtors.

As to whether the interpolation of the phrase "and (in) his personal capacity" below the
signatures of the makers in the notes will affect the liability of the makers, We do not find
it necessary to resolve and decide, because it is immaterial and will not affect to the
liability of private respondent Fermin Canlas as a joint and several debtor of the notes.
With or without the presence of said phrase, private respondent Fermin Canlas is
primarily liable as a co-maker of each of the notes and his liability is that of a solidary
debtor.

Finally, the respondent Court made a grave error in holding that an amendment in a
corporation's Articles of Incorporation effecting a change of corporate name, in this case
from Worldwide Garment manufacturing Inc to Pinch Manufacturing Corporation
extinguished the personality of the original corporation.
The corporation, upon such change in its name, is in no sense a new corporation, nor
the successor of the original corporation. It is the same corporation with a different
name, and its character is in no respect changed. 10

A change in the corporate name does not make a new corporation, and whether effected
by special act or under a general law, has no affect on the identity of the corporation, or
on its property, rights, or liabilities. 
11

The corporation continues, as before, responsible in its new name for all debts or other
liabilities which it had previously contracted or incurred.
12

As a general rule, officers or directors under the old corporate name bear no personal
liability for acts done or contracts entered into by officers of the corporation, if duly
authorized. Inasmuch as such officers acted in their capacity as agent of the old
corporation and the change of name meant only the continuation of the old juridical
entity, the corporation bearing the same name is still bound by the acts of its agents if
authorized by the Board. Under the Negotiable Instruments Law, the liability of a person
signing as an agent is specifically provided for as follows:

Sec. 20. Liability of a person signing as agent and so forth. Where the instrument
contains or a person adds to his signature words indicating that he signs for or on behalf
of a principal , or in a representative capacity, he is not liable on the instrument if he
was duly authorized; but the mere addition of words describing him as an agent, or
as filling a representative character, without disclosing his principal, does not
exempt him from personal liability.

Where the agent signs his name but nowhere in the instrument has he disclosed the
fact that he is acting in a representative capacity or the name of the third party for
whom he might have acted as agent, the agent is personally liable to take holder of the
instrument and cannot be permitted to prove that he was merely acting as agent of
another and parol or extrinsic evidence is not admissible to avoid the agent's
personal liability. 
13

On the private respondent's contention that the promissory notes were delivered to
him in blank for his signature, we rule otherwise. A careful examination of the notes in
question shows that they are the stereotype printed form of promissory notes generally
used by commercial banking institutions to be signed by their clients in obtaining loans.
Such printed notes are incomplete because there are blank spaces to be filled up
on material particulars such as payee's name, amount of the loan, rate of interest,
date of issue and the maturity date. The terms and conditions of the loan are printed
on the note for the borrower-debtor 's perusal. An incomplete instrument which has
been delivered to the borrower for his signature is governed by Section 14 of the
Negotiable Instruments Law which provides, in so far as relevant to this case, thus:

Sec. 14. Blanks: when may be filled. — Where the instrument is wanting in any material
particular, the person in possesion thereof has a prima facie authority to complete it by
filling up the blanks therein. ... In order, however, that any such instrument when
completed may be enforced against any person who became a party thereto prior to its
completion, it must be filled up strictly in accordance with the authority given and within a
reasonable time...

Proof that the notes were signed in blank was only the self-serving testimony of
private respondent Fermin Canlas, as determined by the trial court, so that the trial court
''doubts the defendant (Canlas) signed in blank the promissory notes". We chose to
believe the bank's testimony that the notes were filled up before they were given to
private respondent Fermin Canlas and defendant Shozo Yamaguchi for their signatures
as joint and several promissors. For signing the notes above their typewritten names,
they bound themselves as unconditional makers. We take judicial notice of the customary
procedure of commercial banks of requiring their clientele to sign promissory notes
prepared by the banks in printed form with blank spaces already filled up as per agreed
terms of the loan, leaving the borrowers-debtors to do nothiang but read the terms and
conditions therein printed and to sign as makers or co-makers. When the notes were
given to private respondent Fermin Canlas for his signature, the notes were
complete in the sense that the spaces for the material particular had been filled up by the
bank as per agreement. The notes were not incomplete instruments; neither were
they given to private respondent Fermin Canlas in blank as he claims. Thus, Section 14
of the NegotiabIe Instruments Law is not applicable.

The ruling in case of Reformina vs. Tomol relied upon by the appellate court in reducing
the interest rate on the promissory notes from 16% to 12% per annum does not squarely
apply to the instant petition. In the abovecited case, the rate of 12% was applied to
forebearances of money, goods or credit and court judgemets thereon, only in the
absence of any stipulation between the parties.

In the case at bar however , it was found by the trial court that the rate of interest is
9% per annum, which interest rate the plaintiff may at any time without notice, raise
within the limits allowed law. And so, as of February 16, 1984 , the plaintiff had fixed the
interest at 16% per annum.

This Court has held that the rates under the Usury Law, as amended by Presidential
Decree No. 116, are applicable only to interests by way of compensation for the use or
forebearance of money. Article 2209 of the Civil Code, on the other hand, governs
interests by way of damages.  This fine distinction was not taken into consideration by
15

the appellate court, which instead made a general statement that the interest rate be at
12% per annum.

Inasmuch as this Court had declared that increases in interest rates are not subject to
any ceiling prescribed by the Usury Law, the appellate court erred in limiting the interest
rates at 12% per annum. Central Bank Circular No. 905, Series of 1982 removed the
Usury Law ceiling on interest rates. 
16

In the 1ight of the foregoing analysis and under the plain language of the statute and
jurisprudence on the matter, the decision of the respondent: Court of Appeals absolving
private respondent Fermin Canlas is REVERSED and SET ASIDE. Judgement is hereby
rendered declaring private respondent Fermin Canlas jointly and severally liable
on all the nine promissory notes with the following sums and at 16% interest per annum
from the dates indicated, to wit:

Under the promissory note marked as exhibit A, the sum of P300,000.00 with interest
from January 29, 1981 until fully paid; under promissory note marked as Exhibit B, the
sum of P40,000.00 with interest from November 27, 1980: under the promissory note
denominated as Exhibit C, the amount of P166,466.00 with interest from January 29,
1981; under the promissory note denominated as Exhibit D, the amount of P367,000.00
with interest from January 29, 1981 until fully paid; under the promissory note marked as
Exhibit E, the amount of P86,130.31 with interest from January 29, 1981; under the
promissory note marked as Exhibit F, the sum of P140,000.00 with interest from
November 27, 1980 until fully paid; under the promissory note marked as Exhibit G, the
amount of P12,703.70 with interest from November 27, 1980; the promissory note
marked as Exhibit H, the sum of P281,875.91 with interest from January 29, 1981; and
the promissory note marked as Exhibit I, the sum of P200,000.00 with interest on
January 29, 1981.
The liabilities of defendants Pinch Manufacturing Corporation (formerly Worldwide
Garment Manufacturing, Inc.) and Shozo Yamaguchi, for not having appealed from the
decision of the trial court, shall be adjudged in accordance with the judgment rendered by
the Court a quo.

With respect to attorney's fees, and penalty and service charges, the private respondent
Fermin Canlas is hereby held jointly and solidarity liable with defendants for the amounts
found, by the Court a quo. With costs against private respondent.

SO ORDERED.

Narvasa, C.J., (Chairman), Feliciano, Regalado and Nocon, JJ., concur.

PEOPLE V. ROMERO
306 SCRA 90
 

FACTS:
Complainant  was  a  radio  commentator  who  interviewed  the  two  accused regarding  their 
marketing  business,  which  solicits  funds  from  the  general public,  promising  an  800% 
profit.    The  latter  induced  the  complainant  to invest  in  the  business,  in  the  process 
thereof,  issued  a  postdated  check wherein  the  amount  in  figures  was  P1,200,000  and  the 
amount  in  words was P1,000,200.   The check when presented in the bank was dishonored and
the accused refused to redeem or pay the check.  This prompted the complainant to file a case of
estafa against the accused to which they were
found guilty of.   
 

HELD:
Accused tried to contend that if the trial court followed the admission and stipulation  of  facts 
submitted  by  them,  it  would  prove  that  there  was sufficient  funds.    The  check  had  a 
discrepancy  between  the  amount  in figures   and   in   words.      Following   NIL,   the   check  
was   issued   for P1,000,200—meaning   that   this   could   be   validly   supported   by   their
business’  funds.    Nonetheless,  this  is  misplaced  since  this  rule  of interpretation  finds  no 
room  in  this  case.    The  agreement  was  perfectly clear  that  at  the  end  of  21  days,  the 
investment  of  complainant  would increase by 800% or P1,200,000.

G.R. No. 112985 April 21, 1999

PEOPLE OF THE PHILIPPINES, plaintiff-appellee

vs.
MARTIN L. ROMERO and ERNESTO C. RODRIGUEZ, accused-appellants.

PARDO, J
The case before the Court is an appeal of accused Martin L. Romero and
Ernesto C. Rodriguez from the Joint Judgment  of the Regional Trial Court, Branch
1

2, Butuan City, convicting each of them of estafa under Article 315, par. 2 (d) of the
Revised Penal Code, in relation to Presidential Decree No. 1689, for widescale swindling,
and sentencing each of them to suffer the penalty of life imprisonment and to jointly and
severally pay Ernesto A. Ruiz the amount of one hundred fifty thousand pesos
(P150,000.00), with interest at the rate of twelve percent (12%) per annum, starting
September 14, 1989, until fully paid, and to pay ten thousand pesos (P10,000.00), as
moral damages.

On October 25, 1989, Butuan City acting fiscal Ernesto M. Brocoy filed with the Regional
Trial Court, Butuan City, in Information against the two (2) accused estafa,  as follows:
2

That on or about September 14, 1989, at Butuan City, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused being the General
Manager and Operation Manager which solicit funds from the general public for
investment, conspiring, confederating together and mutually helping, one another,
by means of deceit and false pretense, did then and there willfully, unlawfully and
feloniously deliberately defraud one Ernesto A. Ruiz by convincing the latter to invest
his money in the amount of P150,000.00 with a promise return of 800 % profit within 21
days and in the process caused the issuance of Butuan City Rural [sic] Bank Check
No. 158181 postdated to October 5, 1989 in the amount of One Million Two Hundred
Thousand Pesos (P1,200,000.00) Philippine Currency, that upon presentation of said
check to the drawee bank for payment the same was dishonored and that
notwithstanding repeated demands made on said accused to pay and/or change the
check to cash, they consistently failed and refused and still fail and refuse to pay or
redeem the check, to the damage and prejudice of the complainant in the aforestated
amount of P1,200,000.00. 3

On the same day, the city fiscal filed with the same court another information
against the two (2) accused for violation of Batas Pambansa Bilang 22, arising from
the issuance of the same check. 4

On January 11, 1990, both accused were arraigned before the Regional Trial Court,
Branch 5,   Butuan City, where they plead not guilty to both informations.
5

The prosecution presented its evidence on January 10, 1991, with complainant, Ernesto
A. Ruiz, and Daphne Parrocho, the usher/collector of the corporation being managed by
accused, testifying for the prosecution.

On August 12, 1991, the defense presented its only witness, accused Martin L. Romero.

On November 13, 1992, the parties submitted a joint stipulation of facts, signed only by
their respective counsels. Thereafter, the case was submitted for decision.

On March 30, 1993, the trail court promulgated a Joint Judgment dated March 25, 1993.
The trial court acquitted the accused in Criminal Case No. 3806  based on reasonable
6

doubt, but convicted them in Criminal Case No. 3808  and accordingly sentenced
7

each of them, as follows:

IN VIEW OF THE FOREGOING, the Court hereby renders judgments, finding or

declaring —

(a) Accused Martin L. Romero and Ernesto C. Rodriguez innocent on reasonable

doubt in Criminal Case No. 3806, for violation of Batas Pambansa Bilang 22;
(b) Accused Martin L. Romero and Ernesto C. Rodriguez guilty beyond reasonable
doubt in Criminal Case No. 3808 for estafa under P.D. 1689 for wide scale [sic]
swindling and accordingly sentences them to suffer life imprisonment (Section 1 P.D.
1689) and ordered jointly and severally to return to Ernesto A. Ruiz the amount of One
Hundred Fifty Thousand Pesos (P150,000.00) with interest thereon at the rate of Twelve
percent (12%) per annum starting from September 14, 1989 until fully paid and to pay
the amount Of Ten Thousand Pesos (P10,000.00) as moral damages.

In the service of their sentence, the accused pursuant to R.A. 6127, shall be credited for
the preventive imprisonment they have undergone (PP vs. Ortencio, 38 Phil 941; PP vs.
Gabriel, No. L-13750, October 30, 1959, cited in Gregorio's "Fundamentals of Criminal
Law Review", P. 178, Seventh Edition, 1985). 8

On March 31, 1993, accused filed their notice of appeal, which the trial court gave
due course on April 5, 1993. On March 16, 1994, this Court ordered the, accused to file
their appellants' brief.

Accused-appellants filed their brief on October 30, 1995, while the Solicitor General filed
the appellee's brief on March 8, 1996.

During the pendency of the appeal, on November 12, 1997, accused Ernesto
Rodriguez died.   As a consequence of his death before final judgment, his criminal and
9

civil liability ex delicto, were extinguished.  10

Complainant Ernesto A. Ruiz was a radio commentator of Radio DXRB, Butuan City. In
August, 1989, he came to know the business of Surigao San Andres Industrial
Development Corporation (SAIDECOR), when he interviewed accused Martin
Romero and Ernesto Rodriguez regarding the corporation's investment operations in
Butuan City and Agusan del Norte. Romero was the president and general manager of
SAIDECOR, while Rodriguez was the operations manager.

SAIDECOR started its operation on August 24, 1989 as a marketing business. Later, it
engaged in soliciting funds and investments from the public. The corporation guaranteed
an 800% return on investment within fifteen (15) or twenty one (21) days. Investors were
given coupons containing the capital and the return on the capital collectible on the
date agreed upon. It stopped operations in September, 1989.

On September 14, 1989, complainant Ernesto A. Ruiz went to SAIDECOR office in

Butuan City to make an investment, accompanied by his friend Jimmy Acebu, and
SAIDECOR collection agent Daphne Parrocho. After handing over the amount of one
hundred fifty thousand pesos (P150,000.00) to Ernesto Rodriguez, complainant
received a postdated Butuan City Rural Bank check instead of the usual redeemable
coupon. The check indicated P1,000,200.00 as the amount in words, but the amount
in figures was for P1,200,000.00, as the return on the investment. Compliant did not
notice the discrepancy.

When the check was presented to the bank for payment on October 5, 1989, it was
dishonored for insufficiency of funds, as evidenced by the check return slip issued by the
bank.   Both accused could not be located and demand for payment was made only
11

sometime in November 1989 during the preliminary investigation of this case. Accused
responded that they had no money.

Daphne Parrocho,   testified that on September 14, 1989, complainant, with his friend
12

Jimmy Acebu, approached her to invest the amount of P150,000.00 at SAIDECOR. As

she has reached her quota, and therefore, no longer authorized to receive the
amount, she accompanied them to the office of SAIDECOR at Ong Yiu District, Butuan
City. Accused Ernesto Rodriguez accepted the investment and issued the check
signed by him and Martin Romero.

For their defense, accused Martin Romero  testified that on September 14, 1989, he
13

issued a check in the amount of P1,2000,000.00 corresponding to the total of the

P150,000.00 investment and the 800% return thereon. He claimed that the corporation
had a deposit of fourteen million pesos (P14,000,000.00) at the time of the issuance of
the check and four million pesos (P4,000,000.00) at the time SAIDDECOR stopped
operations. Romero knew these things because he used to monitor the funds of the
corporation with the bank. He was not aware that the check he issued was dishonored
because he never had the occasion to meet the complainant again after the September
14, 1989 transaction. He only came to know about this when the case was already filed
in court sometime in the second or third week of January 1990.

In this appeal, both accused did not deny that complainant made an investment
with SAIDECOR in the amount of P150,000.00. However, they denied that deceit was
employed in the transaction. They assigned as errors: (1) their conviction under P.D.
1689 due to the prosecution's failure to establish their guilt beyond reasonable doubt;
and (2) the trial court's failure to consider the joint stipulation of facts in their favor. 
15

There is no merit in this appeal. We sustain accused-appellant's conviction.

Under paragraph 2 (d) of Article 315, as amended by R.A. 4885,   the elements of estafa
16

are: (1) a check was postdated or issued in payment of an obligation contracted at the
time it was issued; (2) lack or insufficiency of funds to cover the check; (3) damage to the
payee thereof.   The prosecution has satisfactorily established all these elements.
17

Fraud, in its general sense, is deemed to comprise anything calculated to deceive,

including all acts, omissions, and concealment involving a breach of legal equitable duty,
trust, or confidence justly reposed, resulting in damage to another, or by which an undue
and unconscientious advantage is taken of another.   It is a generic term embracing all
18

multifarious means which human ingenuity can device, and which are resorted to by one
individual to secure an advantage over another by false suggestions or by suppression of
truth and includes all surprise, trick, cunning, dissembling and any unfair way by which
another is cheated. 19

Deceit is a specific of fraud. It is actual fraud, and consists in any false representation or
contrivance whereby one person overreaches and misleads another, to his hurt. Deceit
excludes the idea of mistake.   There is deceit when one is misled, either by guide or
20

trickery or by other means, to believe to be true what is really false.   In this case, there
21

was deception when accused fraudulently represented to complainant that his

investment with the corporation would have an 800% return in 15 or 21 days.

Upon receipt of the money, accused-appellant Martin Romero issued a postdated check.
Although accused-appellant contends that sufficient funds were deposited in the
bank when the check was issued, he presented no officer of the bank to substantiate
the contention. The check was dishonored when presented for payment, and the
check return slip submitted in evidence indicated that it was dishonored due to
insufficiency of funds.

Even assuming for the sake of argument that the check was dishonored without any
fraudulent pretense or fraudulent act of the drawer, the latter's failure to cover the
amount within three days after notice creates a rebuttable presumption of fraud.  22

Admittedly (1) the check was dishonored for insufficiency of funds as evidenced by the
check return slip; (2) complainant notified accused of the dishonor; and (3) accused failed
to make good the check within three days. Presumption of deceit remained since
accused failed to prove otherwise. Complainant sustained damage in the amount of
P150,000.00.

Accused-appellant also contends that had the trial court admitted the Admission and
Stipulaion of Facts of November 9, 1992, it would prove that SAIDECOR had sufficient
funds in the bank.

-----=====Accused-appellant relies on the fact that there was a discrepancy

between the amount in words and the amount in figures in the check that was
dishonored. The amount in words was P1,000,200.00, while the amount in figures was
P1,200,000.00. It is admitted that the corporation had in the bank P1,144,760.00 on
September 28, 1989, and P1,124,307.14 on April 2, 1990. The check was presented for
payment on October 5, 1989. The rule in the Negotiable Instruments Law is that
when there is ambiguity in the amount in words and the amount in figures, it would
be the amount in words that would prevail.  23

However, this rule of interpretation finds no application in the case. The agreement
was perfectly clear that at the end of twenty one (21) days, the investment of
P150,000.00 would become P1,200,000.00. Even if the trial court admitted the
stipulation of facts, it would not be favorable to accused-appellant.

The factual narration in this case established a kind of Ponzi scheme.   This is "an
24

investment swindle in which high profits are promised from fictitious sources and
early investors are paid off with funds raised from later ones." It is sometimes called
a pyramid scheme because a broader base of gullible investors must support the
structure as time passes.

In the recent case of People vs. Priscilla Balasa,   this Court held that a transaction
25

similar to the case at hand is not an investment strategy but a gullibility scheme, which
works only as long as there is an ever increasing number of new investors joining the
scheme. It is difficult to sustain over a long period of time because the operator needs an
ever larger pool of later investors to continue paying the promised profits to early
investors. The idea behind this type of swindle is that the "con-man" collects his money
from his second or third round of investors and then absconds before anyone else shows
up to collect. Necessarily, these schemes only last weeks, or months at most, just like
what happened in this case.

The Court notes that one of the accused-appellants, Ernesto Rodriguez, died pending
appeal. Pursuant to the doctrine established in People vs. Bayotas,   the death of the
26

accused pending appeal of his conviction extinguishes his criminal liability as well
as the civil liability ex delicto. The criminal action is extinguished inasmuch as there is
no longer a defendant to stand as the accused, the civil action instituted therein for
recovery of civil liability ex delicto is ipso facto extinguished, grounded as it is on the
criminal case. Corollarily, the claim for civil liability survives notwithstanding the
death of the accused, if the same may also be predicted on a source of obligation
other than delicit. 27

Thus, the outcome of this appeal pertains only remaining accused-appellant, Martin L.
Romero. The trail court considered the swindling involved in this case as having
been committed by a syndicate   and sentenced the accused to life imprisonment
28

based on the provisions of Presidential Decree 1689, which increased the penalty for
certain forms of swindling or estafa.   However, the prosecution failed to clearly establish
29

that the corporation was a syndicate, as defined under the law. The penalty of life
imprisonment cannot be imposed. What would be applicable in the present case is the
second paragraph of a Presidential Decree No. 1689, Section 1, which provides that:
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.

Art. 77 of the Revised Penal Code on complex penalties provides that "whenever the
penalty prescribed does not have one of the forms specially provided for in this Code, the
periods shall be distributed, applying by analogy the prescribed rules," that is, those in
Articles 61 and 76.   Hence, where as in this case, the penalty provided by Section 1 of
30

Presidential Decree No. 1689 for estafa under Articles 315 and 316 of the Code
is reclusion temporal to reclusion perpetua, the minimum period thereof is twelve (12)
year and one (1) day to sixteen (16) years of reclusion temporal; the medium period is
sixteen (16) years and one (1) day to twenty (20) years of reclusion temporal; and the
maximum period is reclusion perpetua.

In the case at bar, no mitigating or aggravating circumstance has been alleged or proved.
Applying the rules in the Revised Penal Code for graduating penalties by degreses   to 31

determine the proper period,   the penalty for the offense of estafa under Article 315, 2(d)
32

as amended by P.D. 1689 involving the amount of P150,000.00 is the medium of the
period of the complex penalty in said Section 1, that is, sixteen (16) years and one (1)
day to twenty (20) years. This penalty, being that which is to be actually imposed in
accordance with the therefor and not merely imposable as a general prescription under
the law, shall be the maximum range of the indeterminate sentence.   The minimum 33

thereof shall be taken, as aforesaid, from any period of the penalty next lower in degree
which is prision mayor.

To enable the complainant to obtain means, diversion or amusements that will serve to
alleviate the moral sufferings undergone by him, by reason of the failure of the accused
to return his money, moral damages are imposed against accused-appellant Martin L.
Romero in the amount of twenty thousand pesos (P20,000.00),   To serve as an example
34

for the public good, exemplary damages are awarded against him in the amount of fifteen
thousand pesos (P15,000. 00).  35

WHEREFORE, the Court hereby AFFIRMS WITH MODIFICATION the appealed

judgment. The Court hereby sentences accused-appellant Martin Romero to suffer an
indeterminate penalty of ten (10) years and one (1) day of prision mayor, as minimum, to
sixteen (16) years and one (1) day of reclusion temporal, as maximum, to indemnify
Ernesto A. Ruiz in the amount of one hundred fifty thousand pesos (P150,000.00) with
interest thereon at six (6%) per centrum per annum from September 14, 1989, until fully
paid, to pay twenty thousand pesos (P20,000.00) as moral damages and fifteen
thousand pesos (P15,000.00), as exemplary damages, and the costs. 1âwphi1.nêt

SO ORDERED.

Davide, Jr., C.J., Melo, Kapunan and Ynares-Santiago, JJ., concur.