The Court of Appeals (CA) has sustained the legality of the 20 search warrants issued by the Manila City Regional Trial Court against officers and agents of Kapa-Community Ministry International, Inc. that allowed the National Bureau of Investigation to collect evidence, in connection with the group’s alleged involvement in a P50-billion Ponzi investment scheme.
In a 14-page decision, the CA’s Thirteenth Division through Associate Justice Mary Charlene Hernandez-Azura, dismissed the petition filed by KAPA through its representative Pastor Joel Apolinario who sought to quash the search warrants.
KAPA elevated the issue before the appellate court after the RTC denied its petition and motion for reconsideration in 2019 seeking the quashal and the recall of the search warrants and to suppress the evidence seized through the said warrants.
The search warrants issued by the Manila RTC Branch 20 cover KAPA’s offices in Quezon City, Sarangani Province, General Santos City, Taytay, Rizal, and Compostela, among others, where the alleged illegal investment scheme was being conducted.
The NBI sought the issuance of the search warrants in connection with the complaint filed by the Securities and Exchange Commission (SEC) in 2019 against KAPA for violation of Sections 8 and 26, in relation to Section 73, of the Securities Regulation Code and eight counts of syndicated estafa as defined and penalized in Presidential Decree 1689.
Section 8 of the SRC states that “no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered with the SEC.”
On the other hand, Section 26 of the SRC prohibits a Ponzi type of investment scheme and considers it a fraudulent transaction.
The complaint was filed on behalf of three investors of KAPA who claimed that they were duped by its officers into investing their hard-earned money with guaranteed high returns.
Petitioner’s illegal activities revolve around the scheme of soliciting money, in the guise of investment, from the public with a promise of 30 percent return or interest per month.
KAPA argued before the CA that the Manila RTC committed grave abuse of discretion in denying its petition for the quashal of the search warrants despite its lack of jurisdiction to issue the search warrants.
The petitioner also said the Manila RTC issued the search warrants despite the lack of probable cause and that the evidence presented to support the issuance of warrants are considered “hearsay.”’
Besides, KAPA said the search warrants should be nullified for failure to particularly describe the place to be searched and the things to be seized.
But the CA ruled that in special criminal cases, a trial court is authorized to issue search warrants that cover places outside its territorial jurisdiction pursuant to administrative guidelines issued by the Supreme Court.
The appellate court also agreed with the NBI that the issuance of the search warrants in the place outside the jurisdiction of the issuing court was necessary to prevent failure of operation due leakage of information considering that some of petitioners’ agents and investors include staff from the courts and prosecutors’ officer, police personnel, teachers and employees of the local governments in General Santos City and Saranggani province.
“The trial court made a careful examination of all the documents submitted before it and propounded probing questions to the witnesses from respondent NBI and SEC investigating teams, who then testified based on their personal knowledge obtained during their investigation and surveillance operations,” the CA ruled.
“Their personal knowledge is more than enough to sustain a finding of probable cause for the issuance of the subject search warrants,” it said.
On the places to be searched and things to be seized, the CA pointed out that Section 4 of Rule 126 requires that they must be described with particularity to ensure that law enforcement officers have no discretion as to where they search and what they seize.
In the case of KAPA, the CA ruled that the NBI was able to sufficiently describe the places and things that it intended to search and seize, respectively.
“The machines, computer sets, laptops, cellular phones, electronic gadgets, equipment, and paraphernalia, as well as the vehicles, motorcycles, and other means of transportation, are means or tools used in ensuring the commission of the offenses under Sections 8 and 26 of the SRC,” the CA stressed.
“Without these, petitioner’s fraudulent activities of enticing the public to invest, encoding such transactions, and collecting money could not be coordinated and promptly delivered within and among the offices of petitioner,” it said.
Court records showed that KAPA has no license or permit to sell or offer for sale, or distribution of securities within the Philippines as certified to by the SEC’s Markets and Securities Regulation Department (MSRD), the Corporate Governance and Finance Department (CGFD) and the Company Registration and Monitoring Department (CRMD).
With regard to the crime of syndicated estafa, the NBI said this was proven when an NBI team went to KAPA offices to investigate and conduct case build-up and personally witnessed the pyramiding activities of KAPA.
It recounted that the team composed of NBI agents even invested money to KAPA offices as poseur investors just to verify its illegal activities.
Petitioner’s illegal activities revolve around the scheme of soliciting money, in the guise of investment, from the public with a promise of 30 percent return or interest per month.