CO IT a.k.a GONZALO CO
“ We find Co It’s positive and categorical statements
more consistent with logic and common human
experience.”
Department of Justice
My Dear Friends,
Based on the NBI Report on GREEN CROSS and ZONROX, the Department of Justice resolved my Complaint against my siblings.
I wish to share with you excerpts from the DOJ Resolution.
NBI – CO IT,
a.k.a. GONZALO CO,
Complainant,
- versus -
Republika ng Pilipinas
KAGAWARAN NG KATARUNGAN
Department of Justice
Manila
ANTHONY A. CO,et.al.,
Respondents.
I.S. NO. 2007-316
For: Violation of Art. 315(1)(b),
RPC; violation of Art. 172 in
relation to Art. 171(2), RPC; and
Violation of Sec. 155, NIRC
x---------------------------------------------------------------------------------------x
RESOLUTION
However, respondents’ allegation that Co It conveyed 225
This resolves the above-captioned case for violations of Article
315, par. l(b), Article 172 in relation to Article 171(2), both of
the Revised Penal Code, and Section 255 of the National Internal
Revenue Code (“NIRC”) against respondents Anthony A. Co,
Mary Co Cho, Peter A. Co, Nancy D. Co, So Hua T. Co, Michael
Anthony Co, Ann Marie Y. Co-Imperial, Joanna Liza Co Yap, Jim
Lewis T. Co, Nessie Pearl C. Chan, Sandy L. Chan, Mark David
C. Cho and Dick Milton C. Cho.
On April 2, 2007, the National Bureau of Investigation (“NBI”)
recommended the above-captioned case for preliminary investigation. Respondents herein are siblings, in-laws, nephews and
nieces of complainant, and are currently the directors and shareholders of Green Cross, Inc. The NBI likewise recommended that
respondents be further investigated by the Anti-Money Laundering Council (“AMLC”) for alleged diversion of Green Cross Inc.
funds to Common Goal Real Properties Inc.
Private complainant Co It alleges that sometime in 1952, he
single-handedly put up Gonzalo Laboratory (“Gonzalo Lab”)
and introduced the brands “GREEN CROSS” rubbing alcohol
and “ZONROX” bleaching liquid. In 1971, through his brother
Joseph’s persuasion, he converted the single proprietorship into a
corporation known as Gonzalo Laboratories, Inc. (“GLI”), which
was registered on August 11, 1971. He claims that since a corporation requires at least five (5) incorporators, he assigned to his
siblings Anthony, Joseph, Mary, and mother Ang Si, shares that he
placed and paid in their names by way of implied trust. Later, also
by implied trust, he placed 10% share in the name of his father, Co
Ay Tian. However, on February 11, 1978, his shares were reportedly reduced to 25% without any supporting deed of assignment.
In December 1986, Co It’s shares in GLI were reduced once
more to 17.5%, and on December 15, 1986, he was forced to sign
a deed of absolute sale on his 874 shares under moral duress. All
the shares that were reduced from him were gradually distributed
over the years to Ang Si, Joseph, Peter, Mary and Co Ay Tian.
On August 22, 1989, the corporate name of GLI was amended to
Green Cross, Inc. By 1991, he did not even own a single share.
Co It alleges that he entrusted the 50% shares in the name of
Anthony, Peter and Mary, who misappropriated these shares by
transferring them to their respective children, respondents Michael Anthony Co, Ann Marie Y. Co Imperial, Nessie Pearl C.
Chan, Mark David C. Cho, Dick Milton C. Cho, Joanna Liza Co
Yap, Jim Lewis T. Co, and in-laws Sandy L. Chan, Nancy D. Co
and So-Hua T. Co. Likewise, Anthony, Peter and Mary misappropriated the 33.4% shares that Co It entrusted to his parents, in
violation of Article 315, par. l(b) of the Revised Penal Code.
He presented one witness, Raymundo D. Dig, who supported his
allegations and accusations against respondents.
x x x
In his reply-affidavit, Co It clarifies that it was him alone who
paid the entire paid-up capital of GLI, because during that time,
his parents and siblings did not have financial capacity to pay the
capital. To prove his point, he presented a copy of the treasurer’s
affidavit, which shows that the 700 shares consisted of P66,700.00
worth of properties from Gonzalo Lab, and P3,300.00 in cash. Noticeably, in the deed of assignment of properties executed by Gonzalo Lab in favor of GLI, Co It, not his father, was the signatory,
because he owned it. This is also the reason why Co Ay Tian is
not an incorporator of GLI. He also denies that he ever conveyed
a total of 225 shares in favor of Ang Si, Joseph and Peter. On the
contrary, he merely signed the stock certificates in his capacity
as president of GLI. Otherwise, these transfers should have been
reflected in the stock certificate themselves, as well as in the stock
and transfer books.
Co It further claims that even if he allegedly sold 874 shares, he
should still have 2,391 shares left, covering the 70% of the paidup capital. Lastly, he alleges that the brands “GREEN CROSS”
and “ZONROX” belong to him and were originally registered in
his name. The deliberate failure to return to him the brands after
he allegedly retired from GLI is misappropriation.
x x x
The undisputed facts are: (1) Co It founded Gonzalo Laboratory in 1951, a single-proprietor business entity, using his own
funds and properties; and (2) Gonzalo Laboratories Inc., now
Green Cross, Inc., is a continuation of Gonzalo Laboratory.
When GLI was incorporated, it had an authorized capital stock
of Five Hundred Thousand Pesos (P500,000.00), divided into five
thousand (5000) shares with a par value of 100 pesos. Paid-up
capital amounted to Two Hundred Thousand Pesos (P200,000.00),
with an outstanding capital stock of two thousand shares (2000).
Co It claims that he owns all of the 2000 shares (100%) of GLI.
His basis for claiming this is that 70% of its paid-up capital came
from the properties of Gonzalo Lab, and 30% thereof was paid
by him in cash. In filing the instant case, he anchors his allegations on the 1000 shares (50%) he bestowed by implied trust upon
respondents Anthony and Mary, his deceased sibling Joseph and
mother, Ang Si; and the other 1000 shares (50%) he conveyed and
sold under moral duress to Anthony, Mary, Peter, Joseph, Ang Si
and Co Ay Tian.
x x x
In re: Co It’s right over his parents’ 33.4% shares in GLI
We agree, and there is no gainsaying that Co It has a right,
by way of inheritance, over the shares left by his parents,
Ang Si and Co Ay Tian, when they passed away on August
27, 1989 and March 4, 1991, leaving behind 3,639 and 3,033
shares,respectively, or a total of exactly 33.36% shares.
x x x
shares or 75 shares each to Ang Si, Joseph and Peter on March
20, 1982 as reflected on stock certificate nos. 15, 16 and 17 cannot be held valid, considering that what respondent submitted
do not contain the dorsal portion of the said stock certificates.
The law is clear that in order that a transfer of stock certificate is
to be effective, the certificate must be properly indorsed and that
title to such certificate of stock is vested in the transferee by the
delivery of the duly indorsed certificate (Razon vs. I.A.C., 207
SCRA 234 [1992]) (emphasis ours)
x x x
In re: Conveyances made by respondents Anthony, Mary, and
Ang Si of the shares of stocks despite non-payment in full over
the subscription thereof
While it is usual to effect the transfer of shares by indorsement
on the certificate, a conveyance may be made by an assignment
in a separate instrument (Uy Piaco vs. McMicking, 10 Phil. 286
[1997], Rivera vs. Florendo, 144 SCRA 643 [1986]). However,
it is necessary to secure the consent of the corporation, by way
of resolution of the board of directors to the transfer or assignment of shares which are not fully paid so that the transfer may
be recorded in the stock and transfer book of the corporation
(SEC Opinion, July 22, 1965).
In this case, respondents were not able to present that the
conveyances in question were authorized by the board of directors through a resolution that would show that the conveyances
were duly recorded in the stock and transfer book. Inasmuch as
respondents submitted photocopies of stock certificate nos. 0110 and the corresponding entry in the stock and transfer book,
the same are not certified true copies.
Nevertheless, an effortless look over stock certificate nos. 0l, 05 and 06 submitted as annexes
to respondents’ joint-rejoinder on June 22, 2007
(“first batch”); and the same stock certificates
01, 05 and 06 submitted in compliance with the
request of this investigating panel on August 17,
2007 (“second batch”), show remarkable differences as seen by the naked eyes, to wit: (1) the
first batch have clear white background, whereas
the second batch have black wavy patterns; (2)
the first batch have round puncher-hole marks
at the upper part of the certificate, whereas the
second batch do not have such markings; and (3)
the lower portion of the first batch are perforated
with rectangular holes, whereas the second batch
contains none.
As to why stock certificate nos. 01-10 were issued
only on January 2, 1979 despite the corporation
having been established as early as August 11,
1971 is a question that beleaguers this investigating panel. To our minds, these are just some
of the badges of fraud that led us to reasonably
consider that probable cause exists to believe that
respondents Anthony, Mary and Peter misappropriated the trust bestowed upon them.
In re: The one (1) share of stock Co It returned to Green
Cross, Inc.
Akin to the 33.4% shares of Ang Si and Co Ay Tian, there is
likewise much unsaid about the one share of stock that complainant allegedly returned to Green Cross, Inc. as a consequence of his retirement in 1997. One would wonder: Where
did that share go? Who benefited from that one share that was
returned to the corporation? Why, as far back as 1991, Co It was
not registered anymore as a stockholder of Green Cross, Inc.
when his retirement came into existence only in January 1997?
Again, this casts a shadow as to the probable deceitful innuendos committed by them.
In re: Implied trust over the 1000 shares (50%) Co It bestowed unto Anthony (400), Mary (200), Ang Si (200) and Joseph (200)
We believe that there is an implied trust created in the name
of Anthony, Mary, Ang Si and Joseph upon the incorporation of
GLI. Trust is defined as the fiduciary relationship concerning
property, which obliges the person holding it to deal with the
property for the benefit of another (Pacheco vs. Arro, 85 Phil
505). Implied trust comes into existence by operation of law,
either through implication of an intention to create a trust as a
matter of law, or through the imposition of the trust irrespective
of, and even contrary to any such intention (Article 1444, Civil
Code). The doctrine of implied trust is founded on equity.
As mere trustees of the 1000 shares, Anthony, Mary, Ang Si
and Joseph are bound to protect and preserve the trust property
and to see to it that it is employed solely for the benefit of the
cestui que trust (Co It). Hence, it is not within their rights to
transfer the 1000 shares to Peter and Co Ay Tian, and later to
respondents Nancy D. Co, So Hua T. Co, Michael Anthony Co,
Ann Marie Y. Co-Imperial, Joanna Liza Co Yap, Jim Lewis T.
Co, Nessie Pearl C. Chan, Sandy L. Chan, Mark David C. Cho
and Dick Milton C. Cho.
Anthony and Mary posit that they paid for the
subscription of the 600 shares in their names in
1971 (TSN p. 10, August 10, 2007). However, according to Co It, they did not have the capacity to
pay for those shares, because they were not
financially able then. We agree with Co It. Indeed,
Anthony and Mary never showed evidence to establish payment; unlike Co It, who submitted evidence to substantiate his claim (cf. Annex “A” Deed
of Assignment, dated October 29, 1970). He who alleges a fact has the burden of proof and mere allegation is not evidence (Pedrano vs. Pedrano, G.R. No.
159666, December 4, 2007).
Even assuming arguendo that Anthony and Mary indeed paid
for it, nonetheless, the fact that they may have paid for these
shares do not make Co It less of a beneficial owner of the said
shares. Such payment is not a mode of acquiring ownership.
Respondents’ position that GLI was a family corporation cannot be sustained. In fact, their argument is belied by their own
admission that GLI was a continuation of Gonzalo Lab, which is
owned by Co It. When the decision to convert Gonzalo Lab into
a corporation was made, the clear intention was for Gonzalo Lab
to earn more profit than what it was generating. In other words,
when Joseph suggested that Gonzalo Lab be converted into a
corporation, he was thinking of the better business opportunities his brother would gain. Nowhere in respondents’ statements
will show that they converted Gonzalo Lab into a corporation
because the latter was a family corporation in the first place.
Naturally, in order to effectuate the conversion of Gonzalo
Lab to GLI, Co It would need five (5) persons, including him
to comply with the requirements of the Corporation Code. And
who would better fill in these positions than this own family:
Anthony, Joseph, Mary and Ang Si? Verily, the shares placed
in their names were for no other purpose but to comply with
the requirements of the law. Therefore, Co It has the beneficial
interest over these disputed shares.
Again, lest it be overlooked, respondents have acknowledged that Co It is the registered owner of Gonzalo Lab (cf.
TSN pp. 7 & 8, August 10, 2OO7).
The elements of estafa with abuse of confidence under Article
315, par. l(b) of the Revised Penal Code are: (1) that money,
goods or other personal property be received by the offender
in trust, or on commission, or for administration, or under any
other obligation involving the duty to make delivery of, or to
return, the same; (2) that there be misappropriation or conversion of such money or property by the offender, or denial on his
part of such receipt; (3) that such misappropriation or conversion or denial is to the prejudice of another; and (4) that there is
demand made by the offended party to the offender.
The essence of estafa under this paragraph is the appropriation
or conversion of money or property received, to the prejudice
of the owner thereof. It takes place when a person actually appropriates the property of another for his own benefit, use and
enjoyment (Filadams Pharma, Inc. vs. Court of Appeals, 426
SCRA 460, 468 [2004]).
All the elements of estafa under Article 315, par. l(b) of the
Revised Penal Code are established in the instant case, viz:
1. Anthony, Mary, Joseph and Ang Si received the shares of
stocks in trust. The absence of a written document showing
receipt of such shares in trust does not necessarily mean that
no such contract exists among the parties (Delos Santos vs.
Jebsen Maritime, Inc 475 SCRA 656, 669 [2005]).
2. There is misappropriation of the subject shares of stocks
when Anthony, Mary, Joseph and Ang Si used or disposed
of these shares held in trust, as if they were their own.
3. That such misappropriation was to the damage and prejudice of Co It.
4. There is demand.
In a prosecution for estafa, demand is not necessary where
there is evidence of misappropriation or conversion; and failure to account upon demand for funds or property held in trust,
is circumstantial evidence of misappropriation (Lee vs. People,
455 SCRA 256, 266-267 [2005]). Failure to account upon demand for the return of the thing delivered in trust raised a presumption of misappropriation. (Manantan vs. People, G.R. No.
156248, August 28, 2007).
Respondents question the intent of Co It in filing the instant
case. They are of the belief that Co It only wanted more money,
and that his silence all these years should bar him from claiming
what he does not own anymore. This cannot be sustained.
In the case at hand, Co It was clearly deprived of the 1000
shares that he entrusted to Anthony, Mary, Joseph and Ang Si.
He cannot be faulted for filing the instant case belatedly, as he
only found out about the fraudulent acts of his siblings only
recently, i.e. during the 35th anniversary celebration of Green
Cross, Inc. When he found out that he was unjustly ousted from
the company and deprived of his 1000 shares, he wasted no time
in demanding the return of these shares by filing the instant case
with the NBI. For this reason, laches or estoppel has not set in.
Even then, laches cannot be invoked when it will cause injustice
to the vested rights of the complainant.
Moreover, the intent to renounce Co It’s beneficial ownership
over the 1000 shares cannot reasonably be drawn from his mere
silence or inaction. The intention to waive a known right must
be clear and unequivocal. It bears to emphasize that the respondents here are not strangers nor ordinary litigants, but family
members, to whom Co It bestowed his trust and confidence. Besides, the allegation that Co It only wanted more money is beyond sensibilities for the man is at the twilight of his life, pained
by the truth that his own brothers and sister betrayed him.
As regards respondents Peter A. Co, Nancy D. Co, So Hua T.
Co, Michael Anthony Co, Ann Marie Y. Co-Imperial, Joanna
Liza Co Yap, Jim Lewis T. Co, Nessie Pearl C. Chan, Sandy L.
Chan, Mark David C. Cho and Dick Milton C. Cho, inasmuch
as they are not those persons to whom Co It personally placed in
implied trust the shares of stocks owned by him, Articles 1455
and 1456 of the Civil Code are clear, viz:
“Article 1455. When any trustee, guardian or other person
holding a fiduciary relationship uses trust funds for the purchase of property and causes the conveyance to be made to
him or to a third person, a trust is established by operation of
law in favor of the person to whom the funds belong.
Article 1456. If property is acquired through mistake or
fraud, the person obtaining it is, by force of law, considered
a trustee of an implied trust for the benefit of the person from
whom the property comes.”
When Anthony, Mary and Ang Si conveyed 100 shares each to
Peter in 1974 and 1976, respectively, Peter acquired these shares
through the fraudulent acts of the former; thereby creating, by
force of law, an implied trust for the benefit of Co It from whom
the shares came (Article 1456, Civil Code). Further, Peter’s own
admission that he acquired 100 shares from Co It in 1976, 75
shares in 1982 albeit unconfirmed, and 185 shares in 1986, flawed
his brazen assertion that he acquired shares to GLI only by reason
of a donation from his mother, Ang Si.
Likewise, when Anthony, Mary, Peter, Joseph, Ang Si and Co Ay
Tian used part of the trust funds to subscribe to additional shares in
1986, when GLI increased its authorized capital stock, and caused
such subscription to be made unto them, a trust was established by
operation of law in favor of Co It to whom the funds belong (Article 1455, Civil Code). The same raison d’etre applies to the subsequent additional subscriptions, particularly in 1997 and 2004,
when Green Cross, Inc. increased its authorized capital stock to
100 Million Pesos and 600 Million Pesos, respectively (cf. Green
Cross, Inc. General Information Sheets, CY 1997 and CY 2004).
In 1996, particularly, the stockholders on record
of Green Cross, Inc. are Anthony, Mary, Peter,
Nancy D. Co and So Hua T. Co. When asked during the clarificatory hearing,
“Q
Nancy is the daughter of?
Ms. Nancy I am the wife of Peter.
Q
Sorry. The wife of Peter and Lucy So Hua?
Ms. Lucy I am the wife of Joseph Co.”
(TSN p. 51, August 10, 2007)
“Q
The question is, it appeared that you
became stockholders of Green Cross
only in 1997. Could you please state
to this to the panel (sic) what were
your sources of income then. Considering that you never file your ITR,
Income Tax Return, as per certifica
tion by the B.I.R.
Ms. Nancy Because that’s share of my husband.
And maybe he thinks I am his lucky charm.
Q
It was the share of your husband?
Ms. Nancy Yes.
Q
You just inherited?
Ms. Nancy I am lucky.
Q
How about Lucy?
Ms. Lucy It also came from my husband.”
By 2004, the stockholders on record of Green Cross, Inc. dramatically increased to include Michael Anthony Co, Ann Marie Y.
Co-Imperial, Joanna Liza Co Yap, Jim Lewis T. Co, Nessie Pearl
C. Chan, Sandy L. Chan, Mark David C. Cho and Dick Milton C.
Cho.
Without meaning to question the resources of respondents in subscribing to said shares, the report of the Bureau of Internal Revenue (“BIR”) dated February 23, 2007 cannot be disregarded. Except for respondent Ann Marie Co-Imperial who filed her income
tax return (“ITR”) in 2000 and 2004, none of the respondents religiously filed their ITRs from the time GLI was incorporated. This
brings us to no other conclusion than this - part of the funds used
to subscribe to the shares of Green Cross, Inc. when it increased
its authorized capital stock in 1997 and 2004 are trust funds; as
such, a trust was established by operation of law in favor of Co It,
to whom the funds belong.
In the same manner, we cannot completely disregard the fact that
two years after respondents Michael Anthony Co, Ann Marie Y.
Co-Imperial, Joanna Liza Co Yap, Jim Lewis T. Co, Nessie Pearl
C. Chan, Sandy L. Chan, Mark David C. Cho and Dick Milton
C. Cho became shareholders of Green Cross, Inc., the authorized
capital stock of Common Goal Real Properties Inc., owned by
herein respondents, significantly increased from 500 Million Pesos to One Billion Pesos. Taking into consideration the BIR report, respondents do not have proof of income during those times,
which made the subscription dubious.
Consequently, when Co It demanded that these shares be returned to him, and respondents refused to acknowledge receipt of,
much less surrender, these shares, probable cause arose to indict
them for estafa under Article 315, par. 1(b), thus:
1. Peter A. Co, Nancy D. Co, So Hua T. Co, Michael Anthony
Co, Ann Marie Y. Co-Imperial, Joanna Liza Co Yap, Jim
Lewis T. Co, Nessie Pearl C. Chan, Sandy L. Chan, Mark
David C. Cho and Dick Milton C. Cho received the
shares of stocks in trust, by operation of law.
2. Denial on their part of such receipt.
3. Such denial is to the prejudice of complainant.
4. There is demand.
x
x
x
x
x
x
Finally, respondents strongly challenge the truthfulness of the
accusations made by Co It in narrating his grievances. Yet, it is
axiomatic that truth is established not by the number of witnesses
but by the quality of their testimonies (People vs. Ramos, 427
SCRA 299, 308 [ 2004]).
3. For violation of Section 255 of the NIRC, a copy of the
records be forwarded and indorsed to the Bureau of Internal
Revenue for further investigation.
4. As to the alleged diversion of Green Cross, Inc. funds to
Common Goal Real Properties, Inc., a copy of the records be
forwarded and indorsed to the Anti-Money Laundering Council for further investigation.
Padre Faura, Manila, January 07, 2008.
Signed
PHILLIP I. KIMPO
Senior State Prosecutor
Chairman
Signed
PHILIP L. DELA CRUZ
State Prosecutor
Vice-Chairman
Signed
ROMEO D.C. GALVEZ
State Prosecutor
Member
Recommending Approval:
Signed
RICHARD ANTHONY D. FADULLON
Assistant Chief State Prosecutor
Approved:
We find Co It’s positive and categorical statements
more consistent with logic and common human experience.
Signed
JOVENCITO R. ZUÑO
Chief State Prosecutor
WHEREFORE, the foregoing considered, it is respectfully recommended that:
1. Informations for violation of Article 315, par. l(b) ofthe Revised Penal Code be FILED against Anthony A. Co, Mary Co
Cho, Peter A. Co, Nancy D. Co, So Hua T. Co, Michael Anthony Co, Ann Marie Y. Co-Imperial, Joanna Liza Co Yap, Jim
Lewis T. Co, Nessie Pearl C. Chan, Sandy L. Chan, Mark David
C. Cho and Dick Milton C. Cho before the appropriate court;
x
x
x
Signed
MARY JANE W. SYTAT
Associate Prosecution Attorney
Member
LUKE 17:3
“Take heed to yourselves: If thy brother
trespass against thee, rebuke him; and if he
repent, forgive him.”
My siblings have not repented. I reach out but
they refused to talk to me. How can i forgive?