Tibayan Group Investment Company, Inc.; Tg Asset Management Corporation; Matcor Holdings Company, Ltd.; Jetcor Equity Company, Ltd.; Sta. Rosa Management And Trading Corporation; Westar Royalty Management And Trading Corporation; Starboard Management And Trading Corporation; United Alpa Management And Trading Corporation; Global Progress Management And Trading Corporation; Athon Management And Tra

SECURItIES AND EXCHANGE COMMISSiON SEC Buitding, EDSA, Greenhiils Republic of the Philippines Mandafuyong City 100 AA OFFICE OF THE GENERAL COUNSEL :124: 18 In the Matter of: MENT AND TRADING CORPORATION. TRADING CORPORATION, AND INTERNATIONAL HOLDINGS CO. LTD MANAGEMENT CORPORATION, MATCOR HOLDINGS COMPANY, LTD., JETCOR EQUITY COMPANY, LTD., STA. ROSA MANAGEMENT STARBOARD MANAGEMENT AND TRADING CORPORATION, UNITED CORPORATION, GLOBAL PROGRESS MANAGEMENT AND TRADING CORPORATION, ATHON MANAGE. DAMOND STAR MANAGEMENT & TIBAYAN MANAGEMENT GROUP TIBAYAN GROUP INVESTMENT COMPANY, INC., TG ASSET AND TRADING CORPORATION, WESTAR ROYALTY MANAGEMENT AND TRADING CORPORATION, ALPA MANAGEMENT AND TRADING CED CASE NO. 02-2719 March 11,2003 TO: 318 Alabang Zapote Road TIBAYAN GROUP INVESTMENT COMPANY, INC. Tibayan Group Business Gallery Bldg.. Building 318, Alabang Zapote Road TG ASSET MANAGEMENT CORPORATION Tibayan Group Business Gallery MATCOR HOLDING COMPANY LTD. Unit 402, 318 Interior Gallery Building Alabang, Zapote St., BERV, Las Pinas City, MM LTD. Blk. 17 Lot 24 M. Consing JETCOR EQUITY COMPANY STA. ROSA MANAGEMENT AND TRADING CORPORATION #1679 National Road, Sta. Rosa, Laguna 3rd Level Rosie's Mall WESTAR ROYALTY MANAGE- MENT AND TRADING CORP. Capt. Nazareno St. Naic, Cavite West Avenue, Quezon City STARBOARD MANAGEMENT AND TRADING CORPORATION West City Plaza, Rm. 404 UNITED ALPA MANAGEMENT Suite 401, South Center Tower 2206 Market Avenue, Madrigal lupa City AND TRADING CORP. Business Park, Alabang, Muntin- 3rd Floor, J & M Mendoza Building Subdivision, Paranaque City GLOBAL PROGRESS MANAGEMENT AND TRADING CORPORATION Dona Soledad Avenue, Betterliving U-10 Olivarez Plaza, NAIA Avenue Sucat, Paranaque City ATHON MANAGEMENT AND TRADING CORPORATION 6th and 7th Lacson Streets DIAMOND STAR MANAGEMENT Bacolod City AND TRADING CORPORATION Virgen Sang Barangay Building TIBAYAN MANAGEMENT GROUP INTERNATIONAL Zapote-Alabang Road, Las Pinas, HOLDINGS CO. LTD 318 Interior Gallery Building Metro Manila DEPARTMENT, 5th Floor, SEC Building EDSA, Mandaluyong City COMPLIANCE AND ENFORCEMENT Greetings: Commission in thc above-entitled case, the original of which is now on file in this Commission. Please take notice that on February 24. 2003 an ORDER was issued by the Very truly y T VERNETTE G. UMALI-PACO General Counsel 231c SECURITIES AND EXCHANGE COMMISSION Republic of the Philippines. : : SEC Building, EDSA,Greenhills Mandaluyong City Metro Manila Philippines In the Matter of TIBAYAN GROUP INVESTMENT COM- PANY, INC., TG ASSET MANAGEMENT CORPORATION, MATCOR HOLDINGS NATIONAL HOLDINGS CO. LTD. COMPANY,LTD., JETCOR EQUITY MENT AND TRADING CORPORATION. AND TRADING CORPORATION, STAR- BOARD MANAGEMENT AND TRADING CORORATION, UNITED ALPA MANAGE. NAGEMENT AND TRADING CORPORA- COMPANY, LTD., STA. ROSA MANAGE. WESTAR ROYALTY MANAGEMENT MENT AND TRADING CORPORATION GLOBAL PROGRESS MANAGEMENT AND TRADING CORPORATION, ATHON MA- & TRADING CORPORATION, AND TI- BAYAN MANAGEMENT GROUP INTER. TION, DIAMOND STAR MANAGEMENT CED Case No. 02-2719 ORD E R by Mr. Jesus T. Tibayan (hereinafter referred to as the Movant) on February 3, 2003 for and in behalf of the respondent companies and the Motiou to Declare Cease and Desist Order Permanent filed by the Compliance and Enforcement Department (CED) on February 17, 2003. This resolves the Motion to Lift Cease and Desist Order (CDO) filed on the Tibayan Group of Companies.' These companies are: of a painstaking and grueling investigation work conducted by an audit team The Cease and Desist Order dated December 23, 2003 is an offshoot ' Office Order No. 120 &ated June 14, 2002. A. Tibayan Group Investment Company Inc. (TGICI) B. TG Asset Management Corporation (TG ASSET) C. Matcor Holdings Company Ltd. (MATCOR) I. Global Progress Management and Trading Corporation (GLOBAL) H. United Alpa Management and Trading Corporation (ALPA) G. Starboard Management and Trading Corporation (STARBOARD) J. Athon Management and Trading Corporation (ATHON) D. Jetcor Equity Company, Ltd. (JETCOR) E. Sta. Rosa Management and Trading Corporation (STA. ROSA) F. Westar Royalty Management and Trading Corporation (WESTAR) L. Tibayan Management Group International Holdings Co. Ltd. K. Diamond Star Management & Trading Corporation (DIAMOND) (TMGHHCL) connivance with each other, engaged in the offering and sale of investment Commission shows that the respondent companies, in concert: and in A perusal of the evidence on hand so far and presented to this investments from the general public without the proper authority or license contracts, and the solicitation and acceptance of deposits and : placement of from this Commission. Tibayan.? Jesus Tibayan or by TMGIHCL, which is also owned and controlied by Mr All of the respondent companies are either owned or controlled by hand,TMGIHCL owns from 93% to 99% of the subscribed capital stock of capital stock of TGICI, MATCOR, TMGIHCL and JETCOR. On the other TG ASSET, STA. ROSA, WESTAR, STARBOARD, ALPA, GLOBAL, ATHON, and DIAMOND. Records show that Mr. Tibayan owns 99% or more of the subscribed Mr. Tibayan, thus, owns and effectively controls the whole group of companies. as a mutual fund company by the Corporation Finance Department (CFD). However, instead of operating as a mutual fund, TGICI engaged itself in the On 21 September 2001, TGICI was granted a secondary license to act 2 See Annex UU of of CED's Motion for Issuance of CDO for the Articles of Incorporation of the See Annex A to K of CED's Motion espondent companies (hereinafter referred to as the CED's Motion.) 2 following acts: modus operandi of the company is as follows: prospective investors are either approached by representatives of TGICI or referred by other investors. Upon placement by the investor, TGICI will do any one or two of the selling of investment contracts without license from the Commission.4 The a. issue to the investor at least seven (7) post dated checks representing the interest and principal; b. issue only one post dated check while the interest of the placement will be deposited directly to the bank account 'of the c. issue transmittal receipt, acknowledgement receipt and schedule d. give Sunrise Magazine to investors, which contains the entice the prospective investors to invest. of dividends credit; affiliations of TGICI and impressive write-ups intended to investor: a post dated check for the incentive rate but will deposit the amount upon rate is given in addition to the income or dividend rate, TGICI will not issue maturity. The evidence submitted shows that pre-termination of investment is not allowed by the company. Documents submitted to this Commission show that Ms. Marites Fajardo, an investor, requested the pre-termination of her investment on December 10, 2002 but the request was denied. Instead, investors are made to wait for the maturity of the investment before the indicate a term of placement ranging from six (6) months to.one (1) year. The post dated checks and transmittal receipts also reflect an income/dividend rate ranging from 3 to 5.5% per month.5 If an incentive principal can be returned. The post dated checks and transmittal receipts given to the investors activities other than those of a mutual fund. We are convinced that the company is offering and selling investment contracts. First, TGICI returns for mutual funds are not guaranteed but dependent on a Net Asset guarantees a fixed income rate to investors. On the other hand, investments Value Per Share of the fund. Secoud, the investments are not allowed to be pre-terminated by the investor, while investment shares in a mutual fund are allowed to be redeemed at any time. The submitted documents clearly show that the company conducted Annex Q, and O-44 toO-47, CED's Motion. " Annex XX of the CED Motion Annex O-42 to O-42C, CED's Motion. 7 Annex O-45E, CED's Motion. 3 TGICI's act of engaging in the business of issuing and selling investments/securities other than what is authorized, to more than nineteen (19) persons within any twelve-month period, is an open Violation of Sectior 8.1 of the Securities Regulation Code which states that: "Sec.8. Requirement of Registration of Securities.-8.I. Securities shall not be sold or offered for sale or distribution : within the Philippines, without registration statement duly filed with and approved by the Commission. Prio? form and with such substance as the Commissior to such sale, information on the securities, in such prospective buyer. "(Underscoring ours.) may prescribe, shall be made available to each reports to the Commission pregnant with false representations. After being directed by the CFD, Polymar M. Masuli, Chief Accountant of TGICI Records will also show that the company has repeatedly submitted submitted the list of certificates/shares issued to its mutual funds holders for the period September 25, 2001 to December 5, 2002. The aforementioned list reveals names of stockholders/incorporators of the various subsidiaries and affiliates of the United Group of Companies Tibayan Group. The said submission, however, fails to refiect the names of at least thirty-five (35) showing that they are investors of the company.' Worse, the monthly sales investors who directiy submitted their documents to this Commission report submitted by TGICI declared it had no sales from January 2002 to company from July 2002 to December 2002.10 team from the investors show that there were in fact sales made by the August 2002. On the contrary, the stock certificates obtained by the audit investments contracts without any secondary license from the CFD in violation of Section 8.1 of the SRC" Presented to the Commission are "Pre- forty-two (42) investors.'2 These investment transactions are misleadingly Transactional Business Partners Data" for investments in securities from denominated as "Private Investment in a Mutual Fund" or "Capital the presence of the following elements: Contributions." These investments are in fact investment in securities duc to The evidence against MATCOR shows that the company issued : Annex N and N-1 of CED's Motion Annex O-1 to O-59 of CED's Motion "Annex P of CED's Motion 11 Annex AA of CED's Motion 12 Annex Z-18 to Z-54 of CED's Motion D O A contract, transaction or scheme b. an investment of money C investment is made in a common enterprise e. profits arise primarily from the efforts of others d. expectation of profits These investments carry a return rate of between three (3) to five (5) percent per month and have term ranging from six (6) months to (12) twelve months. is apparent in the copies of the Pre-Transactional Business Partner Data by the CED.:4 TG ASSET, thus, offered/sold securities, other than the registered security of TGICI, without obtaining the necessary secondary act as an investment advisor but as a marketing arm of the MATCOR. This between MATCOR and two (2) investors which were submitted as evidence license from the CFD, in violation of Section 8.1 and Section 28.1 of the SRC. Section 28. 1 of the SRC reads: company adviser. TG ASSET, on the other hand, is authorized to act as an investment The evidence however shows that TG ASSET did not person shall engage in the business of buying or dealer, or act as a salesman, or an associated person of any hroker or dealer unless registered as Salesmen and Associated Persons.-28.1 No such by the Commission. ' selling securities in the Philippines as a broker or "Sec.28. Registration of Brokers, Dealers, the SRC.is DIAMOND all conducted investment taking activities for MATCOR. The abovementioned companies acted as MATCOR's marketing subsidiary, without any authority or license from the CFD in violation of Section 28.1 of WESTAR, STARBOARD, UNITED ALPA, GLOBAL, ATHON and Like TG ASSET, the other companies, JETCOR, STA. ROSA (2) investors.1 Like TGICI, JETCOR submitted to the Commission a Evidence shows that JETCOR solicited investment contracts from two 13 Annex R and R-1 of CED's Motion 1+ See Annex V-1 to V-3 of Motion +5 See Annex DD, GG,II, KK, MM, OO, RR, TT of the CED's Motion for the negative certifications issued by the CFD to the effect 16 Annex CC-a to CC-2 of CED's Motion 5 misleading and false letter dated 10 October 2002 stating that since its incorporation it has not started commercial operations.17 The two investment contracts submitted belie this statement. STA. ROSA also acted as a marketing subsidiary for MATCOR. It investors.18 As with JETCOR, STA. ROSA, through its President, Elizabeth 31, 2001.19 C. Mendoza, submitted to the Commission a letter falsely stating that the entered into investment transactions for MATCOR with at least five (5) company has no operation of any kind for the period August 20 to December two (2) investors .20 WESTAR engaged in investment taking activities for MATCOR with MATCOR.21 STARBOARD solicited investments from two (2) persons for with at least two (2) investors.22 UNITED ALPA undertook investment taking activities for MATCOR MATCOR with at least five (5) investors.23On 11 February 2002, Mr. Caesar Bryan D. Laxamana, President of Global Progress, submitted to the kind for the period of August 9 to December 31, 2001.2 However, the Pre- Commission an affidavit stating that the company has no operation of any Commission dated 10 December 2001 indicates that the said corporation transactional Business Partner's Data submitted by an investor to the Similarly, GLOBAL undertook investment taking activities for was actually operating, contrary to what was represented. four (4) investors. ATHON marketed investment in securities for MATCOR to at least the investment taking activities of WESTAR and TG ASSET. Records The evidence submitted against TMGIHCL show that it is involved in 2z Annex Z-31 and Annex Z-43 to Z-43 A of CED's Motion 2" Annex HH-1 to HH-2 of CED's Motion 17 Annex BB of CED's Motion 18 Annexes Z-19 to Zl9B,Z-25 to Z-25A,Z-36 to Z-36A,Z-37 to Z-37A, Z-40 and Z-47 to Z-47A of 21 Annex JJ-1 to JJ-1C of CED's Motion 23 Annex Z-18 to Z-18B,Z-27, Z-29 and Z-3() to Z-30B 24 Annex PP of CED's Motion 2s Annex Z-21, 33, 34 and 42 of CED's Mo(ion 19 Annex FF of CED's Motion CED's Motion submitted show that it is TMGIHCL that issued checks and business partnership receipts for the two companies. Bismarck Arvisu, an investor of WESTAR, was .issued a business partner income receipt by TMGIHCL. 2 advisor, or to engage in investment taking activities .29 issue checks payable to TMGIHCL.27 Orlando Yaneza, an investor of not have any secondary license to act as a mutual fund, as an investment TMGIC/TG ASSET was issued checks by TMGIHCL.28"TMGIHCL does Edison Camacho and/or Cherie Amor, investors of WESTAR, were made to submitted to this Commission, it is manifest that the respondent companies, in concert and in connivance with each other, are engaged in the unlawful Thus, based on the evidence gathered by the investigation and offering and sale of investment contracts, and unlawful solicitation and acceptance of deposits or placement of investments from the public. TGICI MATCOR. and TMGIHCL offered investment contracts to the public without the proper authority from the CFD. The investment contracts are misleadingly denominated as "Private Investment in a Mutual Fund" or "Capital Contributions" when these are actually investments in securities, for which these companies do not have any license to offer to the public. The investments contracts are marketed in connivance with the other Tibayan controlled companies, narmely, TG ASSET, JETCOR, STA ROSA,WESTAR, STARBOARD, UNITED ALPA, GLOBAL, ATHON and DIAMOND which acted as conduits or channels. This elaborate scheme of using the various subsidiaries is clearly employed as subterfuge to necessary registration of securities or license with the CFD as prescribed under Section 10.1 (k) of the SRC and SRC Rule 10-1 (4)(c). Although these circumvent the 19-lender rule for investment taking activities without the respondents are corporations separately registered, the law allows the to "promote unfair objectives"3 Clearly, the evidence presented warrants fraud are evident.30 The corporate veil may also be pierced where it is used that these companies should be treated as one, and thus, held collectively liable for the violations herein recited. Commission to pierce the veil of corporate fiction when circumstance of CED issued the subject CDO directing the respondents, their respective On 23 December 2003, this Commission, upon urgent motion of the 26 Annex VV-1 to VV-7 of CED's Motion 3o Remo, Jr. vs. Intermediate Appeliate Court, 172 SCRA 406. 31 Villanueva vs. Andre, 172 SCRA 876. 27 Annex VV-8 to VV-11 of CED's Motion 23 Annex O-10, O-10A, O-10B of CED's Motion Annex WW of CED's Motion 1 and/or in their behalf to "cease and desist from further offering, soliciting. issuing, receiving any amount in whatever guise, negotiating, distributing or Fund" and "Capital Contribution" or other instruments." officers, partners, representatives, agents and any and all persons acting for otherwise dealing in securities using the "Private Investment in Mutual respondent companies a Motion for Reconsideration with request .to lift set on 12 February 2003. On 11 February 2003, movant filed a received the copy of the CDO, Mr. Tibayan filed for and in behalf of the CDO, and SHOW CAUSE not (sic) to permanent CDO. Pursuant to Article 2, Rule III of SEC Circular No. 4 (2001), a hearing was immediately Supplemental Motion. On 3 February 2003, or within five (5) days after respondents received. It also argued that as the pleadings filed by movant are not despite notice. During the said hearing, the CED moved that movant be declared as in default for his failure to appear despite due notice duly properly verified, these should be considered as not having been filed. However, on the said scheduled hearing, movant failed to appear Desist Permanent which is actually an opposition to the motion of the respondents. On 17 February 2003, the CED filed its Motion to Declare Cease and Article 4, Rule I, Part III of SEC Circular No. 4 (2001) reads: Motion to Lift CDO shall be verified, and three (3) copies shall be filed with the Central Receiving and Records Division, Isi Floor, SEC Building. within five (5) days from receipt of the CDO as stated in the registiy return card or if the same was served personally, from the stamped receipt of the Commission process server. An unverified motion shall not interrupt_the running of the five (5) day period."(Underscoring ours.) "ART. 4. Motion to Lift CDO -- (a) The Commission, it can not ignore the fact that the pleadings submitted by the movant are not properly verified as required by the rules. There is thus no While the rules of procedure are liberally construed by this pleadings have-been filed in good faith.32 While the lack 'of verification is a mere formal defect that can be remedied during trial, the absence of the movant in the scheduled hearing for his Motion has defeated the possibility of immediate correction of the defective pleading. assurance that the allegations in the pleadings are true and correct, and not the product of the imagination or a matter of speculation and that the as a mere scrap of paper not worthy of consideration. Not having been movant is deemed as an unsigned pleading33, and is therefore treated as if ot f 1ed properly verified as required by the rules, the pleading submitted by the Thus, this Commission is constrained to treat Mr. Tibayan's pleading movant relies to support his defense. The Motion also did not make any basis to entitle the respondent companies to the reliefs sought. The Motion specific denials nor sets forth the substance of the matters upon which settlement offer in accordance with Section 55 of SRC and SRC Rule 55.1,l and Part IV, Rule V of Circular No. 4 (2001). Motion for Reconsideration as well as the Supplemental Motion ought to be fails miserably to even set up a decent defense. Neither does it assert any denied as both are so anemic and do not present any sufficient ground or Nevertheless, even if we put aside the procedural requisites, the honest mistake and ignorance of the rules. [In effect, movant relies on the that the CDO actually derailed the companies' efforts to institute recovery measures. Movant is implying that by reason of the CDO issued by this Commission, the existing investors suffered irreparable damage. supposed good faith of the respondent companies to extricate them from the indefensible pit hole that they deeply dug themselves in.] Movant even asks for guidance and assistance from this Commission and depicts the respondents companies as victim of injustice and prejudice, and even claims complained of that constituted violations of the rules were a by product of Movant would like this Commission to believe that all the acts by his blatant illusions of persecution. We hasten to add that while the respondent corporations' ignorance of the law is abysmal, their chronic dishonesty even surpassed the gravity of their offenses. We are appalled by the temerity displayed by the movant, as well as 33 Sec. 4, Rule 7 of the New Rules on Civil Procedure applies in a suppletory manner. 3 Sce Oshita vs. Republic, 19 SCRA 700. D In sum, the unrefuted evidence before this Commission can not help but clearly demonstrate that the respondent companies, acting as one, are guilty of flagrantly and continuously violating the SRC and the rules and regulations issued thereunder. The evidence have demonstrated respondents disturbing and contemptible habit of repeatedly submitting false or misleading documents and records to this Commission. Considering the gravity of the offenses committed, the multitude of affected investors, as well as the propensity of the respondent company to submit false declarations and misleading reports to this Commission, and in order to prevent further violations and protect the investing public from similar machinations and grave and irreparable damage in the future, it is imperative that the Cease and Desist Order dated 23 December 2002 be made permanent. WHEREFORE, in view of the foregoing, the Motion for Reconsideration with Prayer to Lift CDO filed by Jesus B. Tibayan dated 3 dated 23 December 2002 is hereby rendered PERMANENT. February 2002 is hereby DENIED. The CEASE AND DESIST ORDER SO ORDERED. Mandaluyong City, 24 February 2003. 8 LILIA R. BAUTISTA Chairperson 10 FE ELOISA C. GLORIA Lu JOSELIA(. POBLADOR Commissioner Commissioner 1 m+/e:Qu MA. JUANITA E. CUETO JESUS EMRIOUEG.MARTINEZ Commissioner Cdmmissioner I