Personal Blog of Atty. Charizma Cortez-Catague C.P.A., R.E.A., R.E.B.

Issuance of Search Warrant for Violation of the Securities Regulation Code and Estafa Violates the One-Specific Offense Rule

PEOPLE OF THE PHILIPPINES, Petitioner - versus - AMADOR PASTRANA AND RUFINA ABAD, Respondents; G.R. No. 196045 [February 21, 2018]

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A Search Warrant shall be Issued for One Specific Offense

Section 4, Rule 126 of the Rules of Court requires that a search warrant shall only be issued in connection with one specific offense, thus:

SEC. 4. Requisites for issuing search warrant. A search warrant shall not issue except upon probable cause in connection with one specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witness he may produce, and particularly describing the place to be searched and the things to be seized which may be anywhere in the Philippines.

Does a search warrant issued for violation of the Securities Regulation Code and Estafa violate this requirement?

People of the Philippines, petitioner,  versus Amador Pastrana and Rufina Abad, respondents

G.R. No. 196045; February 21, 2018

Facts:

On 26 March 2001, National Bureau of Investigation (NBI) Special Investigator Albert Froilan Gaerlan (SI Gaerlan) filed a Sworn Application for a Search Warrant before the RTC, Makati City, Branch 63, for the purpose of conducting a search of the office premises of respondents Amador Pastrana and Rufina Abad at Room 1908, 88 Corporate Center, Valero Street, Makati City. SI Gaerlan alleged that he received confidential information that respondents were engaged in a scheme to defraud foreign investors. Some of their employees would call prospective clients abroad whom they would convince to invest in a foreign-based company by purchasing shares of stocks. Those who agreed to buy stocks were instructed to make a transfer for the payment thereof. No shares of stock, however, were actually purchased. Instead, the money collected was allocated as follows: 42% to respondent Pastrana’s personal account; 32% to the sales office; 7% to investors-clients, who threatened respondents with lawsuits; 10% to the cost of sales; and 8% to marketing. Special Investigator Gaerlan averred that the scheme not only constituted estafa under Article 315 of the Revised Penal Code (RPC), but also a violation of Republic Act (R.A.) No. 8799 or the Securities Regulation Code (SRC).

In support of the application for search warrant, SI Gaerlan attached the affidavit of Rashed H. Alghurairi, one of the complainants from Saudi Arabia; the affidavits of respondents’ former employees who actually called clients abroad; the articles of incorporation of domestic corporations used by respondents in their scheme; and the sketch of the place sought to be searched.

On 26 March 2001, Judge Tranquil Salvador, Jr. (Judge Salvador, Jr.) of the RTC, Branch 63, Makati City, issued Search Warrant No. 01-118 for violation of Republic Act No. 8799 (The Securities Regulation Code) and Estafa (Art. 315, RPC).

Issue:

Whether Search Warrant No. 01-118 is void for having been issued in violation of the requirement that a search warrant must be issued for one specific offense only.

Arguments:

The Search Warrant is not void

Violation of Section 28.1 of the Securities Regulation Code (SRC) and estafa are so intertwined that the punishable acts defined in one of them can be considered as including or are necessarily included in the other; that operating and acting as stockbrokers without the requisite license infringe Section 28.1 of the SRC; that these specific acts of defrauding another by falsely pretending to possess power or qualification of being a stockbroker similarly constitute estafa under Article 315 of the Revised Penal Code (RPC); and that both Section 28.1 of the SRC and Article 315 of the RPC penalize the act of misrepresentation, an element common to both offenses; thus, the issuance of a single search warrant did not violate the “one specific offense rule”.

The search warrant is void

The subject warrant was issued in connection with more than one specific offense; that estafa and violation of the SRC could not be considered as one crime because the former is punished under the RPC while the latter is punished under a special law; that there are many violations cited in the SRC that there can be no offense which is simply called “violation of R.A. No. 8799;” and that, similarly, there are three classes of estafa which could be committed through at least 10 modes, each one of them having elements distinct from those of the other modes.

Ruling:

Yes, the search warrant violates the “one specific offense rule”.

The purpose of the constitutional provision against unlawful searches and seizures is to prevent violations of private security in person and property, and unlawful invasion of the sanctity of the home, by officers of the law acting under legislative or judicial sanction, and to give remedy against such usurpations when attempted.

One of the constitutional requirements for the validity of a search warrant is that it must be issued based on probable cause which, under the Rules, must be in connection with one specific offense to prevent the issuance of a scatter — shot warrant.

Search Warrant No. 01-118 was issued in violation of this requirement

First, violation of the SRC is not an offense in itself for there are several punishable acts under the said law such as manipulation of security prices, insider trading, acting as dealer or broker without being registered with the SEC, use of unregistered exchange, use of unregistered clearing agency, and violation of the restrictions on borrowings by members, brokers, and dealers among others. Even the charge of “estafa under Article 315 of the RPC” is vague for there are three ways of committing the said crime: (1) with unfaithfulness or abuse of confidence; (2) by means of false pretenses or fraudulent acts; or (3) through fraudulent means. The three ways of committing estafa may be reduced to two, i.e., (1) by means of abuse of confidence; or (2) by means of deceit. For these reasons alone, it can be easily discerned that Search Warrant No. 01-118 suffers a fatal defect.

Indeed, there are instances where the Court sustained the validity of search warrants issued for violation of R.A. No. 6425 or the then Dangerous Drugs Act of 1972.

Those cases, however, are not applicable in this case. Aside from its failure to specify what particular provision of the SRC did respondents allegedly violate, Search Warrant No. 01-118 also covered estafa under the RPC.

Moreover, the SRC is not merely a special penal law. It is first and foremost a codification of various rules and regulations governing securities. Thus, unlike, the drugs law wherein there is a clear delineation between use and possession of illegal drugs, the offenses punishable under the SRC could not be lumped together in categories. Hence, it is imperative to specify what particular provision of the SRC was violated.

Second, to somehow remedy the defect in Search Warrant No. 01-118, petitioner insists that the warrant was issued for violation of Section 28.1 of the SRC, which reads, “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 as such with the Commission.” However, despite this belated attempt to pinpoint a provision of the SRC which respondents allegedly violated, Search Warrant No. 01-118 still remains null and void. The allegations in the application for search warrant do not indicate that respondents acted as brokers or dealers without prior registration from the SEC which is an essential element to be held liable for violation of Section 28.1 of the SRC. It is even worthy to note that Section 28.1 was specified only in the SEC’s Comment on the Motion to Quash, dated 5 April 2002.

In addition, even assuming that violation of Section 28.1 of the SRC was specified in the application for search warrant, there could have been no finding of probable cause in connection with that offense. In People v. Hon. Estrada, the Court pronounced:

The facts and circumstances that would show probable cause must be the best evidence that could be obtained under the circumstances. The introduction of such evidence is necessary especially in cases where the issue is the existence of the negative ingredient of the offense charged — for instance, the absence of a license required by law, as in the present case — and such evidence is within the knowledge and control of the applicant who could easily produce the same. But if the best evidence could not be secured at the time of application, the applicant must show a justifiable reason therefor during the examination by the judge. The necessity of requiring stringent procedural safeguards before a search warrant can be issued is to give meaning to the constitutional right of a person to the privacy of his home and personalities.

Here, the applicant for the search warrant did not present proof that respondents lacked the license to operate as brokers or dealers. Such circumstance only reinforces the view that at the time of the application, the NBI and the SEC were in a quandary as to what offense to charge respondents with.

Third, contrary to petitioner’s claim that violation of Section 28.1 of the SRC and estafa are so intertwined with each other that the issuance of a single search warrant does not violate the one-specific-offense rule, the two offenses are entirely different from each other and neither one necessarily includes or is necessarily included in the other. An offense may be said to necessarily include another when some of the essential elements or ingredients of the former constitute the latter. And vice versa, an offense may be said to be necessarily included in another when the essential ingredients of the former constitute or form part of those constituting the latter.

The elements of estafa in general are the following: (a) that an accused defrauded another by abuse of confidence, or by means of deceit; and (b) that damage and prejudice capable of pecuniary estimation is caused the offended party or third person.

On the other hand, Section 28.1 of the SRC penalizes the act of performing dealer or broker functions without registration with the SEC. For such offense, defrauding another and causing damage and prejudice capable of pecuniary estimation are not essential elements.

Thus, a person who is found liable of violation of Section 28.1 of the SRC may, in addition, be convicted of estafa under the RPC. In the same manner, a person acquitted of violation of Section 28.1 of the SRC may be held liable for estafa. Double jeopardy will not set in because violation of Section 28.1 of the SRC is malum prohibitum, in which there is no necessity to prove criminal intent, whereas estafa is malum in se, in the prosecution of which, proof of criminal intent is necessary.

Finally, the Court’s rulings in Columbia Pictures, Inc. v. CA (Columbia) and Laud v. People (Laud) even militate against petitioner. In Columbia, the Court ruled that a search warrant which covers several counts of a certain specific offense does not violate the one-specific-offense rule, viz.:

In Laud,Search Warrant No. 09-14407 was adjudged valid as it was issued only for one specific offense — that is, for Murder, albeit for six (6) counts.

In this case, the core of the problem is that the subject warrant did not state one specific offense. It included violation of the SRC which, as previously discussed, covers several penal provisions and estafa, which could be committed in a number of ways.

Hence, Search Warrant No. 01-118 is null and void for having been issued for more than one specific offense.

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