The Court of Appeals (CA) has affirmed its decision that declared valid the 20 search warrants issued by the Manila regional trial court (RTC) against officers and members of the Kapa-Community Ministry International, Inc. (KAPA) for alleged involvement in the reported P50 billion Ponzi investment scheme.

In a resolution, the CA denied KAPA’s motion for reconsideration filed on May 12, 2023.

Google says: “A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk.”

In its motion to reconsider the CA’s March 27, 2023 decision, KAPA said that the Supreme Court (SC) did not authorize the Manila RTC to issue and execute the warrants outside of its jurisdiction.

KAPA claimed that the warrants were implemented without the use of body-worn cameras as ordered by the SC.

It also claimed that the search warrants were issued based on doubtful, hearsay, and inconsistent testimonies and documents which were not thoroughly validated and authenticated.

It then asked in its motion to suppress and declare inadmissible all the alleged evidence secured when the warrants were implemented.

But the CA rejected KAPA’s arguments.  It said: “As the other arguments submitted by petitioner (KAPA), the Court finds them exactly the same as the arguments and issues that have already been passed upon and settled in the decision dated March 27, 2023 being sought to be considered.”

The search warrants covered KAPA’s offices in Quezon City, Sarangani Province, General Santos City, Taytay in Rizal, Compostela, among other places.

The warrants were issued on the petition filed by the NBI based on the complaint lodged by the Securities and Exchange Commission (SEC) in 2019.

SEC charged KAPA members and officers of alleged violations of Sections 8 and 26, in relation to Section 73, of the Securities Regulation Code (SRC) and eight counts of syndicated estafa as defined and penalized under Presidential Decree 1689.

Section 8 of SRC provides 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,” while Section 26 prohibits a Ponzi type of investment scheme as it considers it as a fraudulent transaction.

In filing the complaint, SEC acted on complaints from KAPA investors who claimed they were duped by its officers into investing their hard- earned money with guaranteed high returns of at least 30 percent a month.

SEC told the NBI that based on records, 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).

In seeking the issuance of search warrants, the NBI said that a team of its agents went to KAPA offices to investigate and conduct case build-up and personally witnessed the pyramiding activities of KAPA.

The NBI also said that its agents acted as poseur investors to fully verify the illegal activities of KAPA.

In seeking the nullity of the warrants, KAPA claimed there was lack of probable cause since the evidence presented were mere “hearsay” and that the places to be searched and things to be seized were not specified in the warrants.

In its March 27, 2023 decision, the CA said that in special criminal cases, a trial court is authorized to issue search warrants outside of its territorial jurisdiction pursuant to administrative guidelines issued by the SC.

It pointed out that the issuance of a search warrant in places outside of the jurisdiction of a trial court to prevent leakage of information.

“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 said.

“Their personal knowledge is more than enough to sustain a finding of probable cause for the issuance of the subject search warrants,” it stressed.