My Science of Success Marketing, Inc.

Securities and Exchange Commission Republic of the Philippines Department of Finance

MY SCIENCE OF SUCCESS MARKETING,INC. In the Matter of SEC-CDO CASE NO.09-16-036

ENFORCEMENT PROTECTION DEPARTMENT AND INVESTOR Movant. Desist Order(CDO FORIssuance of Cease and

X

CEASE ANDDESIST ORDER

Investor Protection Department (EIPD) of the Commission praying that the Commission issue a Cease and Desist Order (CDO) against, among others,MY SCIENCE OF SUCCESS and Desist Order(Motion for CD0filed on 13 September 2016by movant Enforcement and MARKETING,INC.SOS) Pending consideration for the Commission En Banc is the Motion for Issuance of Cease

BuildingDon Gil Garcia St.Capitol Site,Cebu CityCebu.The primary purpose of SOS is to engage in operate conduct and carry on the business of trading, buying,selling, distributing, and marketing of products such as moringa coffee, gluthalone with collagen soap and gluta juice at wholesale and retail basis; and to enter into all kinds of contracts for export, inport purchase acquisition sale and other disposition for its own account of and act general/intermational trading adviser of an investment comnanv.close-end or open end investment company,investment house. transfer agent, commoditv/financial futures exchangc/broker/merchant, financing company and time shares/club shares/mcmhershin certificate issuers or selling agents thereof However.the Certificate of Incorporation issued by the Commission does not authorize SOS to act Registration No.CS2015347092 with principal office located at Unit 43rd Floor AVP not engaging in investment solicitation nor investment taking activity". "as broker or dealer in securities. government sccurities eligible dealer(GSED).investment S0S incorporated with the Commission on 28 October 2015 with Company

SOS is only Php 25,000.00.7 The incorporator and president of SOS is Alberto P.Camilotes,while its paid in capital of

s Motion for CDOpar.3,Annex AArticle Vof the Articles of Incorporation ld,par.13 tdpar.1.AnnexAArticle VIll of the Articles of Incorporation Idpar.1 and AnnexA(Certificate of Incorporation of SOS Idpar2AnnexA[Article II of the Articles of Incorporation Motion forCDO dated9 September 2016 See Note 2

Page 2of 10 In the Matter of My Science of Success Marketing. Inc. SEC En Banc Case No. 09-16-036

FACTS

On 6 May 2016.the following persons,among others, appeared before the EIPD in order to express their concerns about SOS, to wit: Rosebella B.Jumeras,Regina B.Ramos, Cesario P.Maloma and Retchie M.Cabangon.

On 18 May 2016,an investigation was conducted by the EIPD investigating team at the alleged business address in Calamba City, Laguna. During the investigation the investigating team discovered that SOS conducted their operations at the 2nd Floor of Andeson Tower I,Brgy Parian, Calamba City,Laguna and at the 2nd Floor of Lydia Building National Highway.Paciano Rizal, Calamba City.Laguna. However, the investigating team was informed that SOS had already left the premises and transferred to another location in Carmona.Cavite.

On 2 lune 2016,Rosebella B.Jumeras filed her affidavit alleging that,sometime in August 2015.she was invited by a certain Adrian Bondad to visit the office of S0S at Lydia Building, Brgy. Paciano Rizal. Calamba City, Laguna. Mr. Bondad explained that, if Ms. Jumeras invests Php 1,610.00,she will receive an interest of Php 550.00 within four 4 days. Such investment will be accompanied by gluthalone and a box of coffee Thereafter.as the downline of Mr. Bondad, Ms. jumeras made an initial investment in the amount of Php 16,100.00. On the 8th day after such investment,she received her profits from S0S in the amount of Php 5,500.00 and her initial investment in the amount of Php 16.100.00. On the belief that it was a good investment, Ms. Jumeras as well as her family members invested with S0S several times totaling amount of Php 161.000.00.However.they have not received the return of their investments.io

On 3 June 2016, Regina B.Ramos executed her affidavit which alleges that sometime in August 2015,she was informed by her friend of a "good income opportunity"The next day she attended an orientation conducted by Albert P.Camilotes,who introduced himself as the President of SOS,and Jason Elders,who is the team leader of Team Dragon. According to them.if they invest Php 1,610.00,the amount will be Php 2,160.00 within four [4 days Thereafter Ms.Ramos invested the amount of Php 3,220.00.while her sisters invested the amount of Php 8,050.00,which were later returned to them including aguaranteed income Afterwards.Ms.Ramos and her friends invested with her. However,their investments were never returned and remain unpaidi

In the case of Cesario P.Maloma,he avers that he was invited by Elvie Datuwho he met at another network company (Klikmart),to invest in SOS. Ms.Datu explained that the compensation plan of soS provides a guaranteed return of investment together with the

O Id, par.4. ' Id., par. 7. 10 d.pars.8 to 11;and AnnexCSinumpaang Salaysay of Rosebella B.Jumeraspars 2 to 13 Id.par.13 and 14and Annex DSinumpaang Salaysay of Regina B.Ramos,pars 1 to 9

In the Matter of My Science of Success Marketing.Inc SEC En Banc Case No.09-16-036 Page 3 of 10

profit within seven 7) days. Further, Ms. Datu stated that, if Mr.Maloma has any person to invite,the latter will be entitled to Php 50.00 as adirect referral fee12

Thereafter, Cesario P.Maloma made his first investment at the office of SOS, on 14 August 2015,in the amount of Php 6,440.00.A few day after,he was informed that he may receive his pay-out"for his investment at the office of SOS. Mr Paloma continued to invest in S0S totaling the amount of Php 82,110.00,and continued to receive his pay-outs for the investment at the office Sos, 13

Cesario P. Maloma made additional investments with SOS under the names of his relatives and his neighbor, Further, due to the promise of a "direct referral bonus" and as instructed by its officers, Cesario P. Maloma was able to invite various persons to the company who likewise placed their investments in the said company. However, such investments were not paid to them allegedly due to a problem with the computer system according to the officers of SOS. Afterwards,the office of SOS was closed and its officers could not be located.i

On 10 June 2016, Retchie Mazo Cabangon stated he was invited by Rodora Rivera to invest in SOS. As in the case of Cesario P. Maloma Ms. Rivera explained that the compensation plan of SoS provides a guaranteed return of investment together with the profit within seven (7 days as well as a"direct referral fee" Because of such enticement, Ms, Cabangon made an initial investment in the amount of Php 8,050.00 which she paid at the SoS office. Afterwards,she received a pay-out for such investment,then continued to make investments and was able to receive additional pay-outs for the said investments.is

As in the case of the previous complainants, Ms. Cabangon made additional investments under the names of her relatives and neighbors. However, Ms.Cabangon and her recruits were not paid by SOS. Ms.Cabangon was likewise informed by SOS that there a problem with the computer system. Afterwards,the office of SOS was closed and its officers could not be located.16

Evidence in support of complainants affidavits show that, for the placement of their investments,SOS issued "Product Purchase Forms"and "Provisional Receipts"to Rosebella B.Jumeras,17 Regina Ramos18 and Cesario P. Maloma,19 Retchie M.Cabangon,20 including

/dpar.15 and Annex E(Complaint Affidavit of Cesario P.Maloma pars.1 and 2 Idpars.15 and 16and AnnexEComplaint Affidavit of Cesario PMalomapars.3 and 4 id.pars 19 to 21and AnnexFComplaint-Affidavit of Retchie M.Cabangon,pars.2 to 4 Id.AnnexCSinumpaang Salaysay of Rosebella B.Jumeras,Annex A[Provisional Receiptissued by SOS] dpars.16 to 18and AnnexEComplaint Affidavit of Cesario P.Maloma.pars.5 to 8 d.pars.22 to 23;and AnnexFComplaint-Affidavit of Retchie M.Cabangon.pars.5 to 8

IdAnnexDSinumpaang Salaysay of Regina B.Ramos,AnnexA"Product Purchase Formissued by SOS] and AnnexA-1["Product Purchase Formissued by SOS]

Id.AnnexEComplaint-Affidavit of Cesario P.MalomaAnnexA[Provisional Receiptissued by SOS] and and AnnexA-1[Provisional Receiptissued by SOS])

AnnexA-1["Product Purchase Formissued by SOS]).

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their respective relatives and friends they invited.2i In the "Product Purchase Form".the sponsor's name was indicated there. For example,in the case of Ritchilda A.Che,who is the person Cesario P.Maloma invited to the scheme,Mr.Maloma is indicated as the sponsor in her "Product Purchase Form"22

On 10 June 2016.the EIPD investigating team conducted another investigation on S0S at Paseo De Carmona in Carmona Cavite but the company already left the premises after conducting its operations only for a short period of time.z3

On 28 June 2016.the EIPD issued a Notice of Conference directing the incorporators to appear before the Commission, but the said incorporators failed to appear on scheduled date of the conference.25

On 21 july 2016.the Markets and Securities Regulation Department (MSRD issued a Certification stating that,per records,the incorporators of SOS have not been issued a license to act as a capital market professional such as associated person, compliance officer salesman, and/or certified investment solicitor of a broker dealer in securities.investment house, underwriter of securities, investment company adviser and/or mutual fund distributor.The certification further provides that the said incorporators have not filed nol have any pending application for said certificates of registration or licenses. Accordingly they not authorized to engage in activities and/or solicit investments.zs

On 14 July 2016,the Corporate Governance and Finance DepartmentCGFD issued a Certification stating that SoS is not a registered issuer of mutual funds, exchange traded funds,membership certificates,time shares and registered but unlisted equity securities.26

In another Certification of the MSRD issued on 25 October 2016,it provides that S0S is not authorized to sell, offer for sale or distribute securities to the public. It further provides that SoS has not been issued a license to act as a broker and/or dealer of securities.

21 Id.Annex CSinumpaang Salaysay of Rosebclla B.Jumeras,Annexes B-1to D-57[Product Purchase z IdAnnex FComplaint-Affidavit of Retchie M.Cabangon AnnexA"[Product Purchase Formissued by SOS] and AnnexA-1[Provisional Receiptissued by SOS]) Forms" and Provisional Receiptsissued by SOS to the family members of Ms.lumeras]: Annex D

[Sinumpaang Salaysay of Regina B.Ramos, Annexes A-3 to A-26["Product Purchase Formsand

P.Maloma Annexes B to D-g["Product Purchase Formsand Provisional Receiptsissued by SOS to the friends and relatives of Mr.Malomal)and Annex FComplaint-Affidavit of Retchie M.Cabangon,Annexes Bto D-2lProduct Purchase Formsand "Provisional Receiptsissued by SOS to the family members and Provisional Receiptsissued by SOS to the friends of Ms.Ramos])AnnexEComplaint-Affidavit of Cesario

Id.AnnexFComplaint-Affidavit of Retchic M.CabangonAnnexD3[Product Purchasc Formissued by 23 (d., par. 24 24 Id., par. 25 is d., par.26 and AnnexG(Certification of the MSRD dated21 July 2016 26dpar.26 and AnnexG-1Certification of the CGFD dated 14July2016 SOS to Retchilda A.Che friends of Ms.Cabangonl)

Page 5 of lo My Science of Succ SEC En Banc Case No.09-16-036 In the Matter of MarketingInc

Hence, the filing of this Motion forCDO

ISSUE

Whether the issuance of a CDO is justificd in this case considering the scheme employed by'Sos.

RULING

Securities are 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 character27 It includes an investment contract. which is defined as a "contract,transaction,or scheme whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others."29

In Power Homes Unlimited Corporation y. Securities and Exchange Commission.30 the Supreme Court stated that an investment contract in our jurisdiction, to be a security subject to regulation by the Commission,must be proved to be (l an investment of money(2) in a common enterprise.(3with expectation of profits,4 primarily from efforts of others

In the case at bar, the investment scheme of SOS constitutes an investment contract considering all four4 elements of an investment contract are present,to wit -

1.An investment of money

As to the first element.an investment of money occurs when an investor commits money to an enterprise or venture in a manner that subjects himself to financial loss. In this case, there is an investment of money with SOS as evidenced by the "Product Purchase Form" and Provisional Receipt"issued to Rosebella B.Jumeras,Regina Ramos,Cesario P.Maloma and Retchie M. Cabangon as well the respective persons they each invited. The Product Purchase Formindicates the amount invested by foregoing investors,which is paid directly at the office of SOS in Calamba. In fact,the investors subjected themselves to financial loss considering they were not paid due to an alleged problem in the computer system of sOS and their officers can no longer be located. Thus, the first element is satisfied considering the investment of money of the investors of Sos.

2.Common enterprise

As to the second element, there is a common enterprise. A common enterprise is deemed created when two (2 or more investors "pool"their resources. Several tests have

31 SEC v. International Mining Exchange. Inc. S15 F.Supp.1062. 27Section 3.1.SRC 30G.RNo,164182, 26 February 2008 28 Section 3.1(b),Id 29 SRC Rule 31G.Amended Implementing Rules and Regulations of the SRC

In the Matter of. My Science of Success Marketing, Inc. SEC En Banc Case No 09-16-036 Page 6 of 10

evolved to determine what constitutes "common enterprise"32 One of these tests is the horizontal commonality approach.Under this test,the determination involves an inquiry into whether the transaction involves the joint participation of more than one investor in (i the investment of funds or ii the sharing of profits.33 Furthermore, joint participation by investors in the same investment enterprise,achieved by pooling the invested funds for a common purpose, is required in order to satisfy the common enterprise element.34

In the case at bar,a common enterprise exists since there is a joint participation of the investors of SOS,such as Rosebella B.Jumeras,Regina Ramos,Cesario P.Maloma and Retchie M. Cabangon and the respective persons they each invited. In other words,these investors pooled their monies when they recruited their relatives and their friends to invest in SoS. Further,the investors,such as Cesario P.Malomawere promised a direct referral feein the amount of Php 50.00 if they were able to invite othersand were likewise instructed to do so. Furthermore,the "Product Purchase Form"requires the complete name of the sponsor of the prospective investor as in case,for example with Ritchilda A.Che who indicated Cesario P. Maloma as her sponsor in the purchase form.3s Clearly,second element is present since there is common enterprise by the joint participation of the foregoing investors and the respective persons they each invited,which participation is achieved by the pooling of their funds.

3. Expectation of profits

As to the third element, there must be an expectation of profits. By profits, the court has meant either capital appreciation resulting from the development of the initial investment,or participation in earnings resulting from the use of investors' funds, In such cases, the said investors are attracted primarily by the prospects of a return on his investment."36

In this case, there is an expectation of profits on the part of the investors of SOs considering that they were guaranteed such profits amounting to Php 550.00 by the company within seven (7) days from the placement of their respective investments Further as can be seen above,the foregoing investors flocked to SoS for the investment opportunities the company offered rather than the purchase of the latter's products,such as coffee and gluthalone. Clearly,the third element is present by the expectation of profits of the foregoing investors.

3S Motion for CDO,Annex FComplaint-Affidavit of Retchie M.CabangonAnnexD3[Product Purchase 32 In the Matter of Octopus Nenvork.Inc.SEC-PED Case No.98.2220,22 May 1998 36 Power Homes Untimited Corporation v.Securities and Exchange Commission. 3d.citing 69 Am Jur 2d citing Stenger v.R.H.Love Galleries,Inc.741 F2d 144 fd.citing Wasnowic v.Chicago Bdof Trade 352 F Supp 1066. Formissued by SOS to Retchilda A.Che])

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4. Primarily from the efforts of others

Lastly as to the fourth element,there must be the expectation of profits primarily from the efforts of others. In this case, the operations and management of the "supposed trading business37 rests upon SOS and the investors do not participate in such operations or management thereof.

Requirement of the registration of securities.or as a broker. dealer. salesman or associated person

Section 8.1 of the SRC provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission.In connection therewith.Section 12.1 of the SRC states that all securities required to be registered under Section 8.1 shall be registered through the filing by the issuer in the main office of the Commission, of a sworn registration statement with respect to such securities,in such form and containing such information and documents as the Commission shall prescribe.

As securities,the investment scheme of SOS must be registered,pursuant to Sections 8.1 and 12.1 of the SRC,since they are offering and selling securities to the general public in the form investment contracts. However,the Certification of the MSRD provides that SOS is not authorized to sell.offer for sale or distribute securities to the public.In fact,in another Certification of the MSRD,it provides that the incorporators of the SOS have not been issued a license to act as a capital market professional such as an associated person, salesman and/or broker dealer in securities.

Despite non-registration of securities, SOS is engaged in the selling securities, in the form of investment contracts to the public,as evidenced by the "Product Purchase Forms and"Provisional Receipts

Justification for the Issuance of the CDO

In view of the foregoing.the issuance of a CDO is warranted pursuant to Section 64. of the SRC3 since the scheme offered by SOS operates as a fraud on investors or causes grave or irreparable injury considering it failed to pay its investors the subsequent guaranteed return which can be considered as a Ponzi scheme.In a recent Supreme Court case,the court described a Ponzi scheme as a type of investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Its

Section 64.1.of the SRC provides that the Commissionafter proper investigation or verification,motu propio Motion forCDO,AnnexAArticle I1 of the Articles of Incorporation

or upon verificd complaint by any aggrieved party,may issue a cease and desist order without the necessity of a prior hearing if in its judgment the act or practice,unless restrained,will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public

My Scicnce of Success Marketing. Inc. Page 8 of t0 SEC En Banc Case No,09-16-036 In the Matter of.

organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes,the perpetrators focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business It is not an investment strategy but a gullibility scheme,which works only as long as there is an ever increasing number of new investors joining the scheme.It is difficult to sustain the scheme over a long period of time because the operator needs an ever larger pool of later investors to continue paying the promised profits to early investors. The idea behind this type of swindle is that the "con-man"collects his money from his second or third round of investors

last weeks,or months at the most.39 Furthermore,with little or no legitimate earnings,Ponzi and then absconds before anyone else shows up to collect. Necessarily,Ponzi schemes only schemes require a consistent flow of money from new investors to continue. Ponzi schemes

investors ask to cash out.40 tend to collapse when it becomes difficult to recruit new investors or when a large number of

In this case,Sos' business is considered as a Ponzi scheme which justifies the issuance of this CDO. As can be seenthe fraudulent scheme employed by SOS is a gullibility scheme which involves the payment to its investors of funds contributed or invested by its new

profit by issuing apay-out"after its initial investment. Furthermore,its scheme is bound to members. Further, Sos gives a "false impression"on its investors that they are earning a collapse in due time considering that the company needs new investors to continue and its paid in capital is ONLY Php 25.000.00. Clearly.the CD0 is justified in this case pursuant to Section 64 of the SRC.

Alberto P.Camilotes, President,its partners,officers, directors, agents,representatives conduits,aSsigns,AND ANY AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR WHEREFORE, premises considered, MY SCIENCE OF SUCCESS MARKETING,INC.

BEHALF are hereby ordered to IMMEDIATELY CEASE AND DESIST41UNDER PAIN OF form of investment contracts or any others of the same nature,as discussed in this Cease and CONTEMPT,from engaging in activities of selling and/or offering for sale securities in the

Desist Order,until the requisite registration statement is duly filed with and approved by the Commission and the corresponding to offer/sell is issued.

criminal action against any persons or entities found to act as solicitors, information providers, salesmen,agents. brokers, dealers or the like for and in behalf of the subject Furthermore, the Commission will institute the appropriate administrative and

corporation.

hereby DIRECTED to:1 serve this Order to MY SCIENCE OF SUCCESS MARKETING,INC The Enforcement and Investor Protection Department of the Commission is

4o United States Securities and Exchange Commission. Ponzi Schemes. www.secgov/answers/ponzi.htm 39 People of the Philippines v.Tibayan,et al.,G.R.No.209655-60,14January 2015. Pursuant to Section 64.1 of the SRC as stated in Note38. (visited 27 September 2016).

My Science of Success Marketing, Inc. SEC En Banc Case No.09-16-036 Page 9 of 10 In the Matter of

House Counsel or partners;and 2 post copies of the Cease and Desist Order at the entrance of the main office and/or branchesif any.of MY SCIENCE OF SUCCESS MARKETING,INC Alberto P.Camilotes.President.its General Manager,Corporate Secretary.Treasurer, In

Let a copy of this Cease and Desist Order be also posted in the Commission's website published in a national newspaper of general circulation and furnished to all Operating Department and Offices of the Commission for their information and appropriate action.

The Enforcement and Investor Protection Department of the Commission is hereby FURTHER DIRECTED to Submit a FORMALCOMPLIANCE REPORT.by way of a pleading.to the Commission En Banc WITHIN FIVE (5 DAYS from receipt of this Cease and Desist Order.

In accordance with the provisions of Sec.64.342 of SRC and Sec.10-3 of the 2006 Rules of Procedure of the Commission the parties subject of this Cease and Desist Order may file a request for the lifting thereof within five(5days from receipt hereof.

FAIL NOT UNDER PENALTY OF LAW

SO ORDERED.

Pasay City:24 November 2016.

SRCScction 64.3.Any person against whom a cease and desist order was Issued maywithin five Sdays from receipt of the order,file a formal request for a lifting thereof. Said request shall be set for hearing by the Commission not later than fifteen 15days from its filing and the resolution thereof shall be made not Jater than ten 10 days from the termination of the hearing If the Commission fails to resolve the request within the time herein prescrihed, the cease and desist order shall automatically be lifted.

My Science of Success MarketingInc Page 10 of 10 In the Matter of SEC En Banc Case No.09-16-036

The dispositive portion of which reads as follows

aSSignSAND ANY AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR BEHALE WHEREFORE.premises considered,MY SCIENCE OF SUCCESS MARKETING,INCAlberto P Camilotes.President, its partners,officers, directors,agents, representatives, conduits, are hereby ordered to IMMEDIATELY CEASE AND DESIST,UNDER PAIN OF CONTEMPT from engaging in activities of selling and/or offering for sale securities in the form of investment contracts or any others of the same nature, as discussed in this Cease and Desist Order, until the requisite registration statement is duly filed with and approved by the Commission and the corresponding to offer/sell is issued

action against any persons or entities found to act as solicitors, information providers salesmen agents,brokersdealers or the like for and in behalf of the subject corporation Furthermore, the Commission will institute the appropriate administrative and criminal

or partners;and 2 post copies of the Cease and Desist Order at the entrance of the main The Enforcement and Investor Protection Department of the Commission is hereby DIRECTED to:1 serve this Order to MY SCIENCE OF SUCCESS MARKETING,INCAlberto P CamilotesPresidentits General Manager Corporate SecretaryTreasurerIn-House Counsel office and/or branches.if anyof MY SCIENCE OF SUCCESS MARKETINGINC

Let a copy of this Cease and Desist Order be also posted in the Commission's website Department and Offices of the Commission for their information and appropriate action published in a national newspaper of general circuiation and furnished to all Operating

the Commission En Banc WITHIN FIVE 5 DAYS from receipt of this Cease and Desist Order. The Enforcement and Investor Protection Department of the Commission is hereby FURTHER DIRECTED to submit a FORMAL COMPLIANCE REPORT,by way of a pleading to

Procedure of the Commission the parties subject of this Cease and Desist Order may file a request for thc lifting thereof within five (5) days from receipt hereof. In accordance with the provisions of Sec 64.3 of SRC and Sec.10-3 of the 2006 Rules of

FAIL NOT UNDER PENALTY OF LAW

SOORDERED.

Pasay City24 November2016

TERESIPAJ.HERBOSA Chairperson aMovta RAO MANUEL Commissioner OB.GAITE ANTONIETA F.IBE Commissioner

EPHYRO LUIS B.AMATONG Commissioner AWX Commissioner amBse JAMESG.C ITERBO