SEC Administrative Case No. 11-10-124 In the matter of: Philbio Renewable Energy Resources Corp., Enforcement and Prosecution Department Petitioner.

1 36 THE Securities and Exchange Commission SEC BuildingEDSA,GreenhillMandaluyong City Republic of the Philippines Office of the General Counsel Department of Finance

In the matter of: RESOURCES CORP., PHILBIO RENEWABLE ENERGY

SEC Admin Case No.11-10-124

DEPARTMENT , ENFORCEMENTAND PROSECUTION Petitioner. X

27 April 2016

TO:

Incorporator PhilBio Renewable Energy RESOURCES CORP. #42 Sixto Gaerlan, Baguio City PHILBIO GUIA L.RAMIREZ Resources Corp. #42 Sixto Gaerlan, Baguio City RENEWABLE ENERGY Mandaluyong City ENFORCEMENT 5th Floor, SEC Building, EDSA, Greenhills, PROTECTION DEPARTMENT Securities and Exchange Commission & INVESTOR

GREETINGS:

entitled case, the original of which is now on file with this office. Please take notice that on 27 April 2016 a DECISION was issued in the above-

Mandaluyong CityPhilippines

By Authority of the Commission En Banc: M

Office pf the Commission Secretary ARMANDOA.PANJR. Officer-in-charge

tlt/avf

Republic of the Philippines

Department of Finance

SEC Building, EDSA, Greenhills, Mandaluyong City Securities and Exchange Commission

In the matter of: PHILBIO RENEWABLE ENERGY RESOURCES CORP.

SEC Admin Case No. 11-10-124

DEPARTMENT, ENFORCEMENT AND PROSECUTION Petitioner.

DECISION

(for brevity "PHILBIO), on the ground of serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general imposing the appropriate penalties and fines against PHILBIO for violation of Section Imposition of Administrative Penalties) filed on 11 November 2010 by the Enforcement and Prosecution Department (EPD)2 seeking to revoke the certificate of registration of PHILBIO RENEWABLE ENERGY RESOURCES CORPORATION public as provided for under Section 6, paragraph (L) (2) of P.D.No. 920-A; and 8 of the Securities Regulation Code (SRC). This resolves the Petition (for Revocation of Certificate of Incorporation and

Facts of the Case

19 March 2009 under SEC Company Registration No. CS2009258583. Its principal Ferdinand Carlos A. Ramirez;2 Guia L. Ramirez;3 Carl Milagros L.Ramirez; 4 Carl Mari L. Ramirez; 5) Marvin V. Perez4. Its purposes are: office is located at #42 Sixto Gaerlan Street, Baguio City. Its incorporators are: 1 PHILBIO is a domestic stock corporation registered with the Commission on

"A.) that the primary purpose of this corporation is to study, the rest of the world towards a clean environment; and to gain educate, produce, maintain, and use fuel generated from biodegradable raw materials that are locally found. B.) That the secondary purpose of this corporation is to unite with

2 Presently Enforcement and Investor Protection Department. 3 Certificate of Incorporation, Annex A of the Petition; Records pp. 190. 4 Articles of Incorporation of PHILBIO, Annex "B" of the Petition, Records pp. 183-188. Dated 10 November 2010; Records pp. 1-202.

Enforcement and Investor Protection Department In re:Philbio Renewable Energy Resources Corp SEC Admin Case No. 11-10-124 Page 2 of 7

freedom from the dependence on imported fuel for energy generation."'s

27 and 30, 2009, inquiring on the legitimacy of PHILBIO's business operations. PHILBIO's Jathropa Processing Plant (biodiesel) in Sablan, Benguet. Ramirez (minimum) to Php 500,000.00 (maximum) with a promised return amounting to 180% According to Ms. Abando, a certain Guia Ramirez (Ramirez) enticed her to invest in claimed that an investor can invest in PHILBIO in the amount of Php 25,000.00 of the investment per year in 12 equal paymentst. EPD received an email from a certain Kathleen Abando (Abando), on March

conduct an investigation on PHILBIO's investment-taking activities. EPD's investigation revealed that PHILBIO, through its incorporator Ramirez, was These websites showed that PHILBIO offers to the public an investment program 180% return of investment per annum or at least 6% per month7. The said websites advertising investment programs in www.sulit.com and www.pinoymoneytalk.com. wherein an investor can invest Php 25,000.00 to Php 500,000.00 with a guaranteed further showed that there were around 39 individuals who were inquiring about PHILBIO's investment program. On the basis of Abando's statement, EPD formed a team (EPD team) to

securities and not licensed to offer or issue securities to the public, as per certification of the Commission's Corporate Finance Department(CFD). EPD's further investigation revealed that PHILBIO is not a registered issuer of

(SEC-BEO) to further investigateand verify PHILBIO's investment-taking activitieslo. SEC-BEO contactedPHILBIO,throughadummyaccount Baguio will be the first among many that will be the source of biofuel for the public transport groups in the Philippines. Likewise, Ramirez declared that they are looking the PHILBIO biodiesel business. Ramirez claimed that the Biodiesel refinery plant in for prospective investors because they are building more storage tanks. Thus, she invited Jocson to invest a minimum amount of Php 50,000.00 in PHILBIO with a buy 2 lots of 10,000 shares of PHILBIO's common stocks at Php 50,000.00 each12 mgjocson@aol.com (Jocson account) under a fictitious name Miguel Jocson (Jocson who pretended to be an interested investor. Ramirez replied and introduced promised return on investment of 180%. She also provided Jocson with PHILBIO's business plan, company profile and investment agreementli. She offered Jocson to This prompted EPD to request the Commission's Baguio Extension Office

6 Annexes "C" and "D" of the Petition; Records pp. 179-182. 8 presently Corporate Governance and Finance Department. AnnexGof the Petition; Records pp.47. 1 Annex "J" SEC-BEO's Report; Records pp. 35-37. 5 bid. 10 Annex "I" of the Petition; Records pp. 38-45. 12 Records page 33. 7 Annexes "E" and "F" of the Petition; Records pp. 48-178

Enforcement and Investor Protection Department In re: Philbio Renewable Energy Resources Corp SEC Admin Case No.I1-10-124

Page 3 of 7

shed light on the operations of PHILBIOl3. During said conference, Ramirez confirmed that there was an internet advertisement of PHILBIO's business and that the corporation does not have a secondary license to offer/sell securities. SEC-BEO directed Ramirez to refrain from soliciting investments from the public until PHILBIO obtains a secondary license from the Commission.14 Thereafter, SEC-BEO invited Ramirez for a conference on 20 July 2009 to

to solicit investments for PHILBIO. Ramirez again replied and invited Jocson to invest in PHILBIO15. To further confirm said findings, SEC-BEO created another through her new email - tagabaguio@consultant.com, to verify if she still continues dummy account - flgapuz@gmail.com (Gapuz account) under a fictitious name "Floramel Gapuz (Gapuz) to pose as an interested investor. Again, Ramirez replied and invited Gapuz to invest in PHILBIO16. She offered Gapuz to invest a minimum on investment of 150% per year payable in 12 equal payments every month starting amount of Php 100,000.00 to a maximum amount of Php 1,000,000.00 with a return 30 days after day of investment17 Thereafter, SEC-BEO, using the Jocson account, again contacted Ramirez

before the SEC-DEO.i8 During said conference, Ramirez denied that she was conference. It was only Ramirez and Ferdinand Carlo A. Ramirez who appeared soliciting investments from the public. She admitted that PHILBIO still does not have a secondary license to offer/sell securities to the public. SEC-BEO gave Ramirez one (1) month to file PHILBIO's registration statement with the Commission. On 26 January 2010, SEC-BEO invited all of PHILBIO's incorporators for a

file its registration statement19. Thus, on 11 November 2010, EPD filed the instant petition for revocation. Finally,EPD, upon verification with CFD, found out that PHILBIO did not

Answer to EPD's Petition. The said Summons was duly served upon Ramirez21 on 26 November 2010, but to date, PHILBIO did not file any Answer to EPD's Petition Hence, the instant case was submitted for resolution. The Commission issued Summonses2 to PHILBIO and its officers to file their

Issuels

CORPORATION violated Section 8 of the Securities Regulation Code for offering Whether or not PHILBIO RENEWABLE ENERGY RESOURCES

14 Records pp. 14-15. 20 Dated 12 November 2010; Records pp. 203 21 Affidavit of Service dated 01 December 2010 executed by Joel C. Fernandez; Records pp. 210. 13 Records pp. 16-17. I5 Annexes "L" and "M" of the Petition; Records pp. 7-8. 16 Annex "N" of the Petition; Records pp. 4-6. I7 Records page 5. 18 Annex "O" of the Petition; Records pp. 3. 9 Annexes "Pand Qof the Petition; Records pp. 1-2.

Enforcement and Investor Protection Department In re: Philbio Renewable Energy Resources Corp SEC Admin Case No. 11-10-124

Page 4 of 7

and/or selling unregistered securities (investment contract based on the evidence presented.

revoked on ground of serious misrepresentation as to what the corporation can do or is Section 6, paragraph (l) (2) of P.D. No. 920-A based on the evidence presented. doing to the great prejudice of or damage to the general public as provided for under Whether or not the subject corporation's certificate of registration should be

Ruling

Section 3-1222 of the 2006 Rules of Procedure of the Commission, PHILBIO is basis of the Petition and the evidence on record. issue at hand. PHILBIO failed to file its Answer despite the fact that Summons was duly served upon Ms. Guia Ramirez, one of the incorporators. Thus, pursuant to considered as in default. Consequently, the Commission shall render judgment on the Before we delve into the merits of the case, we first resolve the procedural

We find merit in the Petition.

Unregistered Securities

Securities are shares, participation or interests in a corporation or in a

securities are investment contracts23 commercial enterprise or profit-making venture and evidenced by a certificate. contract, instruments, whether written or electronic in character. One of the types of

Commission4, the Supreme Court declared that an investment contract in our In Power Homes Unlimited Corporation v. Securities and Exchange

jurisdiction, to be a security subject to regulation by the Commission, must be proved

investing in a security.25 to be (1 an investment of money; 2 in a common enterprise; 3 with control to another for the purpose of deriving profits from them, he or she is in fact expectation of profits, (4) primarily from efforts of others. Under this definition, whenever an investor relinquishes control over his or her funds and submits their

investment in PHILBIO. These investments are pooled together to fund PHILBIO's biodiesel business operations. Investors expect to earn 80% to 180% from the company which is managed and controlled by Ramirez. The investors simply earn profits by placing money in PHILBIO as they merely rely on latter's operations to In the case at bar, investors place Php 25,000.00 to Php 50,000.00 as

22 SEC. 3-12. Effect of Failure to Answer. - If the respondent fails to answer the complaint within the above stated period. he shall be considered as in default. The hearing Panel or Officer shall, motu proprio, proceed to render judgment granting the complainant such h e complainant should be required to submit ex parte additional evidence lef mplaint unless the Hearing Panel or Officer determines that

25 Investment Co. Institute v. Camp, 274 F. Supp. 624 (D. D.C. 1967). 24 G.R. No. 164182, 26 February 2008. Section 3, (b) of the SRC.

Enforcement and Investor Protection Department In re:Philbio Renewable Energy Resources Corp SEC Admin Case No.1I-10-124

Page 5 of 7

receive the promised return. Thus, it is evident that all the requisites of an investment contract is present.

the dummy accounts, PHILBIO's company profile26, business plan27 and investment agreement28. Hence, it can be clearly seen that PHILBIO is offering/selling securities in the form of investment contracts. These findings are supported by the exchange of emails between Ramirez and

by the Commission29. In the case at bar, CFD (then the pertinent operating within the Philippines, without a registration statement duly filed with and approved Department) certified that PHILBIO is not a registered issuer of securities and not licensed to offer or issue securities to the public. As a rule, all securities shall not be sold or offered for sale or distribution

general to any who will buy, whether solicited or unsolicited. One of the modes that is presumed to be a public offering is advertisement or announcement in any radio or television or any online or e-mail system30. Based on EPD's investigation, PHILBIO, through Ramirez, is publicly advertising/promoting its investment program in www.sulit.com and www.pinoymoneytalk.com. Public offering means a random or indiscriminate offering of securities in

In view of the above discussions,we see two 2 violations by PHILBIO

prospective purchaser.32 As discussed above, PHILBIO is engaged in the offering and Philippines, without a registration statement duly filed with and approved by the Commission.31 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 exempt securities or exempt transactions which are not covered by the requirement of registration, securities shall not be sold or offered for sale or distribution within the selling of securities in the form of investment contracts which need prior registration with the Commission. First, non-registration of securities. Under the law, unless what is involved are

PHILBIO, through Ramirez, is acting as either broker or dealer without being shall engage in the business of buying or selling securities in the Philippines as a broker or dealer unless registered as such with the Commission.33 In the instant case, registered as such. Second, non-registration as broker or dealer. The law provides that no person

30 Rule 3, paragraph 1, sub-paragraph N of the Amended Implementing Rules and Regulations of the SRC. 26 Records page 32. 27 Records pages 23-31. 28 Records pages 20-22. 29 Section 8.1 of the SRC. 31 Section 8.1., SRC. 33 Section 28.1., SRC. 32 d

Enforcement and Investor Protection Department In re:Philbio Renewable Energy Resources Corp SEC Admin Case No.11-10-124

Page 6 of 7

Serious Misrepresentation

primary franchise or certificate of registration of a corporation, on the following to the great prejudice of or damage to the general public; x x x". Commission has exclusive jurisdiction over actions for revocation/cancellation of the grounds: "2.) Serious misrepresentation as to what the corporation can do or is doing Section 6 (l), sub-paragraph 2 of P.D. No. 902-A, provides that the

requiring a secondary license from the Commission.34 In this connection, EPD presented evidence of the fact that PHILBIO is engage in offering/selling of securities in the form of investment contracts without the requisite registration statement or secondary license as required by law. maintain and use fuel from biodegradable raw materials. It is also stated in its Certificate of Incorporation that it not authorized to undertake business activities In the instant case, PHILBIO's primary purpose is to study, educate, produce,

websites - www.sulit.com and www.pinoymoneytalk.com. Further,SEC-BEO's investigation corroborated and verified EPD's findings when they contacted PHILBIO by e-mail. In fact, SEC-BEO was able to elicit admissions from Ramirez that PHILBIO solicits investments, through the internet, and it has no secondary license to do so35. Likewise, CFD also certified that PHILBIO is not a registered issuer of securities and not licensed to offer or issue securities to the public36 EPD's investigation show that PHILBIO solicits investments using the

operates an investment-taking scheme which is therefore considered as an ultra vires public that it can solicit investments despite the fact that it is not one of the purposes of the corporation. Worse, it does not have a license to offer/sell securities. PHILBIO act37. These acts constitute serious misrepresentation as to what the corporation can do or doing to the great prejudice to the general public. From the foregoing, it is indubitable that PHILBIO misrepresented itself to the

the laws of the State and the limitations of its charter. There is therefore a reserved right of the State to inquire how these privileges had been employed, and whether common good. Hence, the special privileges and franchises it receives are subject to Moreover, a corporation as a creature of the State is presumed to exist for the

34 Philbio's Certificate of Incorporation - "This Certificate grants juridical personality to the Corporation but does not 35 Note 14, Supra. 37 An ultra vires act is "one committed outside the object for which a corporation is created as defined by the law of its organization and, therefore, beyond the powers conferred upon it by law, - Republic vs. Acoje Mining Co., Inc. G.R. No. L18062,February 28,1963 citing 19 C.J.S., Section 965,p.419) authorized it to undertake business activities requiring a Secondary License from this Commission such as but not limited investment . company, close-end commodity/financial futures exchange/broker/merchant, financing company,pre-need plan issue need plans and time shares/club shares/membership certificates issuers or selling agent thereof. Neither does this Certificate constitute as permit to undertake activities for which other government agencies require a license or permit. to acting as: broker or dealer in securities, go 36 Note 9, Supra C open-enc investmen Bt curities eligible dealer (GSED),investment adviser of an company, investment house,transfer agent rpenera agent in pre

Enforcement and Investor Protection Department In re: Philbio Renewable Energy Resources Corp SEC Admin Case No.11-10-124 Page 7 of 7

they have been abused.38 Hence, a corporation's juridical existence, being a mere provided for by law39 privilege granted by the sovereign, may, at any time, be withdrawn on grounds

the form of investment contracts without a secondary license. Thus, it violated Section 8 of the SRC. Also, it misrepresented to the public that it can sell securities despite the fact that it has no license to do so. Hence, it violated Section 6 (l), sub-paragraph 2 of P.D. No. 902-A. Due to these severe violations, the Commission is constrained to impose the supreme penalty of revocation. In summary, it was clearly established that PHILBIO is selling securities in

GRANTED. The Certificate of Incorporation of PHILBIO RENEWABLE ENERGY RESOURCES CORPORATION is hereby REVOKED, based Section 6 (l) sub-paragraph 2 of Presidential Decree No. 902-A without prejudice to any criminal offense/s that may be filed. WHEREFORE, premises considered, the instant petition is hereby or

Monitoring Department and the Economic Research &Training Department for their information and appropriate action. Let a copy of this Decision be furnished to the Company Registration &

SO ORDERED.

Mandaluyong City, Philippines; 27 April 2016.

C TERESITA J. HERBOSA Chairperson

MANUE Commissioner TO B.GAITE ANTONIETA F.IBE Dret teiaao. Commissioner

EPHYRO LUIS B.AMATONG Commissioner BLAS JAMES G.VITERBO** Commissioner

39 In the Matter of: Maasin Traders Lending Corporation, SEC Case No. 02-07-169. **On Official Business 38 Yun Kwan Byung vs. Philippine Amusement and Gaming Corporation, G.R. No. 163553, 11 December 2009 *On Leave