TABLE OF CONTENTS

DESCRIPTION
PAGE
I. Case Work 1

Legal Opinion Writing of LUKAPA, Inc. Case 1-5

II. Case Work 2
a) Position Paper for Juan Dela Cruz
b) Position Paper for the Company (Lugod Makers)
c) Affidavit of Complaint for Qualified Theft against Juan Dela Cruz
to be filed at the Prosecutor’s Office

III. Interview with the lawyers

a) Atty. Arnel R. Patatag
b) Atty. Junrie C. Bragat

IV. Essay

My ideal area of legal practice after taking the Bar

 I- CASE WORK 1

LEGAL OPINION ON LUKAPA INC. CASE

INTRODUCTION
This legal opinion seeks to answer the significant questions on the cease
and desist order and revocation of the certificate of incorporation base on fraud
by the Securities and Exchange Commission (SEC) against LUKAPA INC., a
religious group.

FACTS OR BACKGROUND OF THE CASE

Based on the available facts given, the religious group, LUKAPA Inc.
headed by a certain Pastor Kusogmangilad is asking people to become members
of their religious organization. To become a member, one must “plant” an
amount of not less than Php 5,000.00 and in return he/she will get a monthly
“harvest” of 35% percent per month guaranteed for life. The SEC issued an
advisory against the said group for the violation of Securities Regulation Code.
Later, the SEC issued a cease and desist order and subsequently revoked the
certificate of incorporation of LUKAPA Inc. base on fraud. LUKAPA asked the
Regional Trial Court branch 501 of Cebu and secured an injunction against the
SEC on the grounds that the latter has violated the religious freedom of the
former. The SEC stated they will file criminal action against Pastor
Kusogmangilad, the pastor however countered that nobody in their organization
has complained of being scammed and that the SEC or any government agency
cannot file criminal cases against him as there are no complainants in the case.

ISSUES
Apparently, the main issues of this case are the following:
1. What provisions of the Securities Regulation Code did LUKAPA violated.
2. Whether or not the SEC is correct in revoking the LUKAPA’s certificate of
incorporation?
3. Whether or not the SEC violated the religious freedom of LUKAPA?
4. Can SEC or any government agency file a criminal charges against Pastor
Kusogmangilad even without complainants?
 5. Whether or not the RTC can validly issue injunction against SEC?
DISCUSSION
In order to answer the issues above, we first must answer the following
preliminary but necessary questions:
1. What type of transaction is involved?
2. What are the laws covering such transactions?
Upon review the facts, the transaction involved between the LUKAPA and
the members can be considered as investment contract.
An Investment Contract is a contract, transaction or scheme whereby a
person invests money in a common enterprise and is led to expect profits from
the effort of others.
The arrangement between LUKAPA and its members partakes of an
investment contract, satisfying the four elements laid down in the decision of
the Supreme Court in the case of Power Homes Unlimited Corporation vs.
Securities and Exchange Commission (G.R. No. 164182, 28 February 2008):
a) Money is invested;
b) The money invested is placed in a common enterprise;
c) There is expectation of profit;
d) The profit is derived primarily from the efforts of others.
Under Section 3 (b) of Republic act No. 8799, or the Securities Regulation
Code, investment contracts are securities, defined as shares, participation or
interests in a corporation or in a commercial enterprise or profit-making venture
and evidenced by a certificate, contract, instrument, whether written or
electronic in character.
Section 8 of the Securities Regulation Code provides: “Securities shall not
be sold or offered for sale or distribution wiv thin the Philippines, without a
registration statement duly filed with and approved by the Commission. Prior to
such sale, information on the securities, in such form and with such substance
as the Commission may prescribe, shall be made available to each prospective
purchaser.”
It is clear from the facts above that Pastor Kusogmangilad and the
LUKAPA Inc. is operating illegally as an investment contractor. Being a type of
security that is covered by the SRC, it is illegal because first and foremost, it is
not registered. Secondly, it is illegal because it fails to give further information
as to its activities.
LUKAPA’s Scheme Is a Ponzi scheme
A Ponzi scheme is an investment program that offers impossibly high
returns and pays these returns to early investors out of the capital contributed
by later investors.
In LUKAPA, members are enticed to “plant” with a promise of “harvest”
equivalent to 35% of their plant to be paid out every month and for life. Yet,
LUKAPA does not have any concrete and stable business or source of income.
The investment scheme is doomed to fail. LUKAPA cannot possibly sustain
paying out a 35% monthly interest without recruiting new members and
soliciting more money from the public.
LUKAPA’S Scheme is an Affinity Fraud
Affinity Fraud refers to investment scams where offenders take advantage
of their likeness to identifiable groups such as religious organizations or pretend
to belong to the same group to earn the trust of their victims and prey upon
them. Many affinity scams involve “Ponzi” or pyramiding schemes.
A “church” makes an effective breeding ground for affinity fraud because
an offender can easily pitch investment scheme to a large group of people.
In the case of LUKAPA, headed by Pastor Kusogmangilad exploits his
position and influence as pastor of a religious ministry to dupe members in
investing their hard-earned money in LUKAPA in the guise of a planting.
LUKAPA’S Scheme is an Ultra Vires Act
An Ultra Vires Act is an exercise of a corporate power other than those
conferred by Republic Act No. 11232, or the Revised Corporation Code of the
Philippines, and by the corporation’s articles of incorporation.
In offering and selling securities, LUKAPA committed an ultra vires act,
exceeding the privilege granted to it and misrepresenting itself to the public by
concealing its investment scheme in the guise of a planting to entice the public
to plant when in truth and in fact they are investing.
 Aside from being covered by SEC, it may also fall under Estafa under the
Revised Penal Code. Under Article 315 of the Revised Penal Code, there is Estafa:

By misappropriating or converting, to the prejudice of another,

money, goods, or any other personal property 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, even though such obligation be totally or
partially guaranteed by a bond; or by denying having received such
money, goods, or other property.
This transaction is also demandable under the Civil Code.
First, there is agency because you have entrusted your money as
principals to Pastor Kusogmangilad and LUKAPA Inc. for the purpose of making
profits. As defined in the Civil Code:

Article 1868. By the contract of agency a person binds himself to

render some service or to do something in representation or on
behalf of another, with the consent or authority of the latter.
An agent is liable to his principal based on the following provisions of the
Civil Code:

Article 1884. The agent is bound by his acceptance to carry out

the agency, and is liable for the damages which, through his non-
performance, the principal may suffer.

Article 1889. The agent shall be liable for damages if, there being
a conflict between his interests and those of the principal, he
should prefer his own.
As the Principal, you have the right to revoke the investment and the
agency at will. As stated in the civil code:

Article 1920. The principal may revoke the agency at will, and
compel the agent to return the document evidencing the agency.
Such revocation may be express or implied.
Religious Freedom of LUKAPA

The twist in LUKAPA is the religious element as Mr. Kusogmangilad self-

ascribes as a pastor and LUKAPA as a religious group. This actually raises the
question of whether in fact LUKAPA is a religious organization and in fact is really
more of a secular, self-help organization.

For sure, freedom of religion is a most inalienable and sacred human right
that occupies a preferred status in the hierarchy of rights. Thus Article III, Section
5 of the 1987 Constitution provides: “No law shall be made respecting an
establishment of religion, or prohibiting the free exercise thereof. The free
exercise and enjoyment of religious profession and worship, without
discrimination or preference, shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.”
However, like most rights, freedom of religion is not absolute. The state
can intervene in the exercise of this right when the right of others are affected
or when society itself is threatened. Thus the state cannot condone human
sacrifice, slavery, mass suicide, disregard of rights of women or children or any
other population even when these are justified by religious belief and even
when done voluntarily.
CONCLUSION
The transaction involved in is an investment contract that may fall within
the investment scams defined by the Securities and Exchange Commission (SEC).
Being an investment contract, it is a security regulated by the SEC.
The SEC can file a criminal complaint against LUKAPA along with its head
Pastor Kusogmangilad, for perpetrating an investment scam in violation of
Republic Act No.8799, or the Securities Regulation Code (SRC). LUKAPA have
employed a Ponzi scheme, an investment program that offers impossibly high
returns and pays investors using the money contributed by other investors. This
qualifies as a fraudulent transaction prohibited under Section 26(26.3) of the
SRC. It does not need a member of the LUKAPA as complainant in filing this case.
Aside from the violation of RA No. 8799 or Securities Regulation Code
(SRC), the government can file criminal charges like syndicated estafa if there
are members that are willing to file the case.
The Regional Trial Court was erred in granting injunction against SEC
order. The proper remedy lies with the SEC and not with the Regional Trial
Court. LUKAPA should do, is filing a request for lifting the cease and desist order
within 5 (five) days from the receipt hereof.