A doctrine-grounded, practice-oriented guide for recruits, “team leaders,” uplines, and counsel

1) The core idea

Joining a “network,” “team,” or “downline” does not shield you from criminal, civil, or administrative liability if what you recruit for turns out to be (a) illegal recruitment (especially for overseas jobs) or (b) an unregistered investment/pyramid scheme. Philippine law punishes the act of recruiting or soliciting itself—not only the masterminds. If you invite, canvass, or collect for an unlawful scheme, you can be treated as a principal (not merely an accessory), and you can also be solidarily liable to refund victims.

2) Two main legal pitfalls

A) Illegal recruitment (local or overseas employment)

What it punishes: Any canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring of workers, with or without fees, without a valid license/authority. For overseas work, licensing/authority is with the Department of Migrant Workers (DMW, formerly POEA); for local private recruitment, DOLE rules apply.
Economic sabotage:
- Large-scale (3 or more victims), or
- Syndicated (3 or more recruiters acting in concert). These carry life imprisonment and heavy fines.
Network exposure: Downline “referrers” who collect CVs, process payments, post ads, schedule interviews, or promise deployment can be charged as principals in illegal recruitment—even if they say they are “just helping” or “just sharing opportunities.”

B) Unregistered investment / pyramid or Ponzi scheme

Securities law angle: “Investment contracts” are securities. Offering or selling them without SEC registration (and without being a licensed salesperson/agent) is unlawful. Anti-fraud provisions also punish misstatements/omissions.
Pyramid sales: Chain distribution/pyramid schemes that pay primarily from joining fees or recruitment, not genuine product sales, are prohibited, and organizers/solicitors can face criminal, administrative, and civil actions.
Network exposure: A downline who solicits money, promises returns, conducts webinars, posts “guaranteed” yields, or collects/forwards contributions acts as a seller/agent and can be charged even if they “only earn referral bonuses.”

3) How “downlines” become criminally liable

3.1. As principal (not just accessory)

Under the Penal Code, anyone who directly participates, or cooperates by indispensable acts, or induces others, is a principal. In practice, downlines are treated as principals when they:

Actively recruit persons for jobs or investments;
Collect application/placement or “investment” money;
Issue receipts, execute contracts, or forward documents/payments;
Pitch returns or deployment as if they speak for the enterprise.

3.2. As conspirator

Conspiracy is proved by concerted acts toward a common unlawful goal. A team that shares scripts, splits commissions, and coordinates events can be deemed conspirators.

3.3. As accomplice/accessory

Even if not a principal, a downline may be liable as an accomplice (knowingly cooperating) or accessory (profiting after the fact, or obstructing justice). This still carries imprisonment/fines.

3.4. Overlay crimes and special laws

Estafa (swindling) if deceit obtains money—PD 1689 (syndicated/large-scale estafa) sharply increases penalties for groups preying on the public.
Cybercrime if solicitation/misrepresentation is done online.
Anti-Money Laundering exposure if proceeds are layered/channeled; violations of the Securities law and estafa are predicate offenses.

4) Civil liability: refunds and damages

Victims may sue the seller/solicitor, the control persons, and the “upline/downline” recruiters for:

Rescission/refund of investment or fees plus interest, upon tender of any instrument;
Actual, moral, and exemplary damages;
Attorney’s fees. Securities law also creates statutory civil liability for sellers/agents of unregistered securities—often solidary with organizers and control persons.

5) What the State must (and must not) prove

Illegal recruitment: Usually malum prohibitum—the act of recruitment without license suffices. The State need not show intent to defraud; good faith (“I thought they were licensed”) is a weak defense, especially if you collected money or promised deployment.
Unregistered securities: The State shows that what was offered was an investment contract, no SEC registration, and you offered/sold or acted as agent. Saying “I was only sharing a link” will not help if you pitched returns, brought in investors, or took commissions.

6) Red flags that put downlines at risk

Recruitment:

No DMW/POEA license number; “partner agency” cannot be verified; placement paid in personal e-wallets; “training/processing fees” collected before any verifiable job order; promises of tourist-to-work conversion.

Investments:

Guaranteed high returns; “profit” from recruiting rather than product sales; no SEC registration of the investment product; no license of the recruiter; payments to personal accounts; pressure tactics; vague “forex/crypto/arbitrage” stories with no audited financials.

7) Typical liability patterns (illustrations)

Team leader organizes Zooms promising 25% monthly “earnings,” collects funds in her GCash, forwards to upline, and pays early “payouts.” → Principal in selling unregistered securities + estafa when it collapses.
Downline canvasses applicants for “factory work abroad,” gathers placement fees, issues informal receipts, and forwards passports to a “coordinator.” → Principal in illegal recruitment; if 3+ victims or 3+ recruiters, economic sabotage.
Member posts scripts and contact lists, trains others to overcome objections, splits commissions. → Conspiracy; liable at par with the head.

8) Defenses & mitigations (what actually helps)

Documented due diligence: Screenshots/copies of DMW license (recruitment) or SEC registration of the security and the agent’s license (investments). Merely seeing an SEC corporate registration is not enough; it is not a license to sell securities.
Prompt withdrawal and restitution upon discovering illegality; return commissions; assist authorities (may mitigate penalties).
No solicitation, no handling of funds, no promises: Passive membership alone typically isn’t charged; but once you invite or collect, you cross the line.
Lack of conspiracy: Show independent actions, absence of shared purpose/benefit.
Victim of deceit: Can reduce moral blame but rarely avoids liability if you actively solicited.

9) Consequences on conviction/violation (snapshot)

Illegal recruitment (economic sabotage): Life imprisonment; multi-million fines; perpetual disqualification from recruitment/placement work; forfeiture of proceeds.
Unregistered securities/anti-fraud: Imprisonment, fines, cease-and-desist, asset freezes, disgorgement/restitution, and administrative penalties.
Estafa/PD 1689: Long prison terms; higher penalties when offenders constitute a syndicate or when the offense is large-scale.
Money laundering: Separate criminal case; freezing/forfeiture of assets.

10) Compliance & self-protection checklists

10.1. Before you “share an opportunity”

Is there a proper license?
- Recruitment → DMW/POEA license and valid job order.
- Investment → SEC-registered security and recruiter is a licensed salesperson/agent.
Do not accept or forward money unless the above exists—ever.
Use corporate accounts (not personal wallets) only after licensing checks pass.
No guarantees; no yield promises without official, filed disclosures.
Keep records of your checks (screenshots, letters, emails).

10.2. If you already recruited/solicited

Stop solicitations immediately; send written rescission/refund notices to uplines.
Return your commissions; offer victims full cooperation.
Preserve evidence (chats, receipts, lists); do not destroy or alter.
Consult counsel about affidavits, plea options, or becoming a state witness when warranted.

11) Employer/Platform and “Upline” exposure

“Uplines,” page admins, and trainers who design scripts, set quotas, or control purse strings are often charged as conspirators/control persons, with solidary civil liability.
Payment platforms that knowingly process illegal collections risk regulatory action and anti-money-laundering flags, though individual downlines remain directly liable for their own solicitations.

12) Practical templates

12.1. Downline cease-and-desist notice to upline

I am ceasing all recruitment/solicitation effective immediately. Kindly cancel any listing under my name, return funds I transmitted on behalf of recruits, and provide proof of license (DMW/SEC registration; agent licenses). Absent proof, I will advise recruits to seek refunds and report to authorities.

12.2. Disclosure to recruits (if the activity is legitimate)

I am licensed to solicit for [entity]; here are my agent credentials and the product’s SEC registration/DMW license link/copy. No guaranteed returns; risks are summarized in the official disclosures. Payments go only to company accounts; I do not accept personal deposits.

13) FAQs

Q: “I only posted on Facebook; I didn’t collect money.” A: Offering or soliciting can already trigger liability, especially if people acted on your post and you connected them for a fee or benefit.

Q: “The company is SEC-registered, so we’re okay, right?” A: No. SEC corporate registration ≠ authority to sell securities. If you’re promising passive income/returns, the product itself must be registered, and you must be licensed to sell it.

Q: “I was told the agency is ‘tied up’ with a licensed recruiter.” A: Unless you or your principal has DMW authority and a valid job order, recruiting is illegal. “Tie-ups” are not a defense without proper documentation.

Q: “Victims signed waivers.” A: Waivers do not legalize crimes nor bar criminal prosecution; they have little weight against statutory protections.

14) Bottom line

Downlines who recruit people or solicit funds for illegal recruitment or investment schemes face serious criminal exposure, solidary civil liability, and administrative sanctions. The safest rule: Don’t invite, don’t collect, don’t promise unless the activity is clearly licensed (DMW for recruitment; SEC for investments) and you are personally authorized to solicit. If you’ve already participated, stop, make restitution, and seek counsel—early cooperation can be the difference between a witness and a defendant.