sec_resolution SEC CDO Case No. 01-24-106InSEC CDO Case No. 01-24-106In

SEC CDO Case No. 01-24-106In the Matter of: MARIA FRANCESCA TAN (MFT) GROUP OF COMPANIES, INC. DOING BUSINESS UNDER THE NAMES AND STYLES OF MFT GROUP AND MFT GROUP OF COMPANIES, FOUNDRY VENTURES I INC., MARIA FRANCESCA F. TAN, CHARLES EDWARD F. TAN, CHRISTIAN KONSTANTIN "CK" P. AGBAYANI, RONALDO G. NERY, PARKER R. ONG, CHIQUI T. TAN, JD B. MONTELIBANO, ROMARICO "RICO" S. RUIZ, ARLENE M. NAVARRO, B

Securities and Exchange Commission COMMISSION EN BANC Republic of the Phillppines Department of Finance

In the matter of:

MARIA FRANCESCA TAN (MFT) GROUP OF COMPANIES, INC. DOING

VENTURES I INC., MARIA FRANCESCA F. TAN, a.k.a. "MICA TAN," FLORITA F. BUSINESS UNDER THE NAMES AND STYLES OF MFT GROUP AND MFT GROUP OF COMPANIES, FOUNDRY

TAN, CHARLES EDWARD F. TAN, CHRISTIAN KONSTANTIN I"CK" P AGBAYANI, RONALDO G. NERY, PARKER R. ONG, CHIQUI T. TAN, JD B. MONTELIBANO, ROMARICO "RICO" S. R. TOMAS, MARY RUTH A. OQUENDO, JOANNE A. CABAERO, THUY NGUYEN, RUIZ, ARLENE M. NAVARRO, BEATRIZ

GABRIEL R. CANCIO, JR., NOEL M. OLAN, JR HERNANDEZ, CHRISTIAN OLAN ROXANNE TITO G COSEJO, AGBAYANI, JR. LUIS and CHRISTIAN "KENCHI" DE VERA,

SEC CD0 Case No. 01-24-106 Promulgated: 01 April 2024

PROTECTION DEPARTMENT, ENFORCEMENT AND INVESTOR Movant.

RESOLUTION

are the: (a) Motion to Lift Cease and Desist Order with Motion for January 2024 by Respondents Maria Francesca Tan (MFT) Group of Clarification dated 23 January 2024 (the "Motion to Lift"), filed on 24 For consideration of the Commission En Banc (the "Commission")

In the matter of: Maria Francesca Tan (MFT) Group of Companies, Inc. Doing Business Under the Names and Styles of MFT Group and MFT Group of Companies, et al. SEC CDO Case No. 01-24-106 RESOLUTION Page 2 of 21

Respondents as defined below, praying for the lifting and/or the Nguyen, Roxanne G. Agbayani, Luis Gabriel R. Cancio, Jr., Noel M. Olan, Jr. the Omnibus Motion filed on 08 March 2024 filed by the Withdrawn 16 January 2024 (the "Assailed CD0"), the dispositive portion of which, Companies, Inc., (the "MFT Group"), Foundry Ventures I, Inc. (the "Foundry") (the MFT Group and the Foundry are hereinafter collectively referred to as the "Respondent Corporations"], Maria Francesca F. Tan a.k.a. "Mica Tan", Florita F. Tan, Charles Edward F. Tan, Christian Konstantin "CK" P. Agbayani, Ronaldo G. Nery, Parker R. Ong, Chiqui T. Tan, JD B. Montelibano, Romarico "Rico" s. Ruiz, Arlene M. Navarro, Beatriz R. Tomas, Mary Ruth A. Oquendo, Joanne A. Cabaero, Thuy Hernandez, Christian Olan, Tito Cosejo, Jr. , and Christian "Kenchi" De Vera, (collectively referred to as the "Individual Respondents"); and (b) declaration of the automatic lifting of the Cease and Desist Order dated in part, reads:

enablers and influencers, and any and all persons claiming IMMEDIATELY CEASE AND DESIST from further engaging approved by the Commission, and the corresponding license and/or permit to offer/sell securities are issued. ROXANNE G. AGBAYANI, LUIS GABRIEL R. CANCIO, JR., COSEJO, JR., and CHRISTIAN "KENCHI" DE VERA representatives, salesmen, solicitors, and acting for and in their behalf, are hereby directed to in, promoting and facilitating selling and/or offering for sale securities in the form of evidence of indebtedness and/or requisite registration statements are duly filed with and MARIA FRANCESCA TAN (MFT) GROUP OF COMPANIES, CHRISTIAN KONSTANTIN "CK" P. AGBAYANI, RONALDO G. NERY, PARKER R. ONG, CHIQUI T. TAN, JD B. MONTELIBANO, ROMARICO "RICO" S. RUIZ, ARLENE M. NOEL M. OLAN, JR. HERNANDEZ, CHRISTIAN OLAN, TITO other activities/transactions relative thereto, until the "WHEREFORE, premises considered, Respondents INC. DOING BUSINESS UNDER THE NAME AND STYLES OF MFT GROUP AND MFT GROUP OF COMPANIES, FOUNDRY VENTURES I, INC., MARIA FRANCESCA F. TAN a.k.a. "MICA TAN", FLORITA F. TAN, CHARLES EDWARD F. TAN, NAVARRO, OQUENDO, BEATRIZ JOANNE A. CABAERO, THUY NGUYEN, R.TOMAS, MARY RUTH A. agents, uplines,

Respondents MARIA FRANCESCA TAN (MFT) GROUP OF COMPANIES, INC. DOING BUSINESS UNDER THE NAME

salesmen, agents, brokers, dealers or the like for and on their enablers and influencers, and any and all persons claiming and acting for and in their behalf, are likewise directed to investment scheme covered by this Cease and Desist Order. administrative and criminal action against any persons or entities found to act as solicitors, information providers, behalf. NOEL M. OLAN, JR. HERNANDEZ, CHRISTIAN OLAN, TITO COSEJO, JR., and CHRISTIAN "KENCHI" DE VERA representatives, salesmen, solicitors, agents, uplines, CEASE their solicitations relating to the transactions and "CK" P. AGBAYANI, RONALDO G. NERY, PARKER R. ONG, S. RUIZ, ARLENE M. NAVARRO, BEATRIZ R. TOMAS, MARY ROXANNE G. AGBAYANI, LUIS GABRIEL R. CANCIO, JR., The AND STYLES OF MFT GROUP AND MFT GROUP OF COMPANIES, FOUNDRY FRANCESCA F. TAN a.k.a. "MICA TAN", FLORITA F. TAN, CHARLES EDWARD F. TAN, CHRISTIAN KONSTANTIN CHIQUI T. TAN, JD B. MONTELIBANO, ROMARICO "RICO" RUTH A. OQUENDO, JOANNE A. CABAERO, THUY NGUYEN, Commission will VENTURES institute the appropriate I INC.. MARIA

real or personal, including but not limited to bank deposits, and subsidiaries claiming and acting for and on its behalf from transacting any business involving the funds covered by disposing, or conveying in any manner, all assets, properties, ROXANNE G. AGBAYANI, LUIS GABRIEL R. CANCIO, JR., NOEL M. OLAN, JR. HERNANDEZ, CHRISTIAN OLAN, TITO COSEJO,JR., and CHRISTIAN "KENCHI" DE VERA their partners, operators, directors, officers, salesmen agents, representatives, promoters, and all persons, conduit entities this CDo in its depository banks, and from transferring, VENTURES I, INC., MARIA FRANCESCA F. TAN a.k.a. "MICA G. NERY, PARKER R. ONG, CHIQUI T. TAN, JD B. MONTELIBANO, ROMARICO "RICO" S. RUIZ, ARLENE M. NAVARRO, BEATRIZ OQUENDO, Finally, the Commission hereby PROHIBITS MARIA DOING BUSINESS UNDER THE NAME AND STYLES OF MFT GROUP AND MFT GROUP OF COMPANIES, FOUNDRY TAN", FLORITA F. TAN, CHARLES EDWARD F. TAN, CHRISTIAN KONSTANTIN "CK" P. AGBAYANI, RONALDO FRANCESCA TAN (MFT) GROUP OF COMPANIES, INC. JOANNE A. CABAERO, THUY NGUYEN, R.TOMAS, MARY RUTH A.

In the m Doing Business Under the Names and Styles of MFT Group and r of: Maria Francesca Tan (MFT) Group of Companies, Inc MFT Group of Companies, et al. SEC CD0 Case No. 01-24-106 RESOLUTION Page 4 of 21

claim or participation whatsoever, directly or indirectly, under its/their custody, to ensure the preservation of the of which the named persons herein may have any interest, assets for the benefit of the investors."

The records bear out the following antecedents:

Department ("EIPD") filed before the Commission a Petition for Issuance of a Cease and Desist Orderi (the "Petition") seeking to stop Respondent Corporations and Individual Respondents from carrying out their unauthorized offer or sale of unregistered securities. On 11 January 2024, the Enforcement and Investor Protection

in violation of Section 8 of the Securities Regulation Code (SRC), in relation to Sec. 3.1.17.2 of the 2015 Implementing Rules and Regulations Individual Respondents which promises high returns are securities in the form of investment contracts as all the elements of the Howey Test are loans obtained or solicited from the public which are used to fund the finding that Respondent Corporations and the Individual Respondents are selling or offering unregistered securities in the form of investment contracts and/or evidences of indebtedness without the requisite license, of the SRC (the "2015 SRC-IRR"). In particular, the Commission found that the investment solicitation scheme of the Respondent Corporations and present. The Commission also found that the loan agreements and form of evidences of indebtedness inasmuch as they were executed in exchange for a considerably big number of individual non-personalized promissory notes that are being executed and issued are securities in the operations of their alleged subsidiaries. On 16 January 2024, the Commission issued the Assailed CD0 after

Individual Respondents prayed for the lifting of the Assailed CDO, securities, either in the form of an investment contract or as evidence of essentially arguing that the loan agreements that were issued are not indebtedness. They further argued that the Assailed CDO is infirm because the requirements prescribed for its issuance were not complied with by the Commission. In the instant Motion to Lift,2 the Respondent Corporations and

A.K.A. "Mica Tan," Ronald G. Nery, Halmond Parker R. Ong, Maricris T. Tan, Jose Donnie B. Montelibano, Arlene C. Mauricio, Maria Beatriz On 07 February 2024, the MFT Group, Maria Francesca F. Tan

2 Motion to Lift dated 23 January 2024. Petition for Issuance of a Cease and Desist Order dated 11 January 2024.

In the matter of: Maria Fran Doing Business Under the Names ca Tan (MFT) Group of Companies, Inc MFT Group of Companies, et al. s and Styles of MFT Group and SEC CDO Case No. 01-24-106 RESOLUTION Page 5 of 21

Rules of Court which, according to them, is the proper remedy given the alleged urgency to address the blatant disregard and violation of their constitutional rights. Dolores R. Tomas, and Mary Ruth A. Oquendo (the "Withdrawn Respondents") filed a Notice to Withdraw with Entry of Appearance dated 5 February 2024 (the "Notice to Withdraw"), informing the Commission of their decision to withdraw as Movants in the Motion to Lift, and to file with the appellate court a Petition for Certiorari under Rule 65 of the

for Special Raffle (the "Petition for Certiorari") filed by the Withdrawn of a Petition for Certiorari with Extremely Urgent Application for the Respondents with the Court of Appeals (CA). Issuance of TRO and/or Writ of Preliminary Injunction and Urgent Motion On 08 February 2024, the Commission was furnished with a copy

prejudicial question to the instant case, warrants the grant of the same. to Suspend proceedings arguing that the principle of judicial courtesy, as well as the issues raised in the Petition for Certiorari which pose al On 19 February 2024, the Withdrawn Respondents filed a Motion

have been removed as movants in the Motion to Lift. the Notice of Withdrawal and declaring the Withdrawn Respondents to On 22 February 2024, the Commission issued a Resolution noting

Writ of Preliminary Injunction. prayer of the Withdrawn Respondents for the issuance of a TRO and/or On 23 February 2024, the CA issued a Resolution denying the

Motion to Lift3 ("Comment/Opposition") which prayed for the denial of the Motion to Lift, maintaining its position that the loan agreements and Individual Respondents are securities in the form of investment from the Commission. The EIPD also maintained that the Assailed CDO was validly issued as all the requirements prescribed by law were complied with. Promissory Notes executed by the Respondent Corporations and contracts which were being offered or sold without the requisite license On 29 February 2024, the EIPD filed a Comment/Opposition to the

assets and funds generated from unauthorized public offering or sale of unregistered securities as the same would cause grave or irreparable and Individual Respondents should not be allowed to dispose of the The EIPD further maintained that the Respondent Corporations

3 29 February 2024.

In the matter of: Maria Franc. Doing Business Under the Names and Styles of MFT Group and a Tan (MFT) Gro MFT Group of Companies, et al. SEC CDO Case No. 01-24-106 RESOLUTION Page 6 of 21

injury or prejudice to their investors. Relative thereto, the EIPD pointed out that the Audited Financial Statements (AFS) of the Respondent Corporations revealed that the monies received were not even Respondent Corporations, which means that they can conveniently be recognized either as part of equity or liabilities in the books of the disposed of by the Respondent Corporations and Individual Respondents.

should be excluded as a respondent in the Assailed CDO since he already Respondent Christian "Kenchi" De Vera ("Respondent De Vera"). Respondent De Vera, who claimed to have never been a stockholder or a member of the Board of the Respondent Corporations, argued that he resigned from the MFT Group last 07 June 2020. (In the SEC Cease and Desist Order Dated 16 January 2024)4 was filed by On 01 March 2024, a Motion for Exclusion as One of the Respondents

the 2016 Rules. the automatic lifting of the Assailed CDO. The Withdrawn Respondents the failure to resolve the Motion to Lift within the period prescribed in Respondents praying for: (1) the striking out of the EIPD's Comment/Opposition from the records for being belatedly filed; and (2) claimed that the Assailed CDO should be declared automatically lifted for On 08 March 2024, an Omnibus Motion was filed by the Withdrawn

1 The Assailed CDO is not

automatically lifted; the CDO is not yet terminated. proceedings on the Assailed

to set a hearing after the Motion to Lift was filed, and to actually resolve the same resulted in the automatic lifting of the assailed CDO after the 64.3 of the SRC as basis for their position that the Assailed CDO was automatically lifted. They maintained that the failure of the Commission lapse of the 10-day period provided in the said provision. In the Omnibus Motion, the Withdrawn Respondents invoked Sec.

The Withdrawn Respondents are wrong.

interpretation of the provisions of the SRC and the SRC-IRR must always which underlie the very purpose for which the law was enacted, thus: be anchored on the declared State policies embodied in Sec. 2 of the SRc This Commission has consistently held that a correct and proper

4 Motion for Exclusion dated 27 February 2024.

In the matter of: Maria Francesca Tan (MFT) Group of Con Doing Business Under the Names and Styles of MFT Group and MFT Group of Companies, et al. SEC CDO Case No. 01-24-106 RESOLUTION Page 7 of 21 es, In

that regulates itself, encourage the widest participation of ownership in enterprises, enhance the democratization of wealth, promote the development of the capital market trading and other fraudulent or manipulative devices Code is hereby enacted." (Emphasis supplied) "The State shall establish a socially conscious, free market securities, minimize if not totally eliminate insider market. To achieve these ends, this Securities Regulation protect investors, ensure full and fair disclosure about and practices which create distortions in the free

and the SRC-IRR from which we can derive the intent and purpose for which the law was enacted. Thus, the interpretation and implementation pursue intent of the Congress to protect the investing public and promote of its provisions should be carried out in a manner that will actualize and the integrity of the capital markets. The afore-quoted provision embodies the raison d'etre of the SRC

emphasized that Section 2 of the SRC which embodies the core principles of the securities laws of the country should be considered in interpreting its provisions to ensure that they are effectively carried out, thus: In the case of Palanca IVv. RCBC Securities, Inc.,5 the Supreme Court

will carry out the foregoing principles. We therefore lays down seven core principles of our securities widest participation of ownership in enterprises, capital market development, protection of investors, ensuring full and fair disclosure about securities, and implementing rules must be resolved in a manner that giving particular attention to the principles of full disclosure, investor protection, and the elimination of fraudulent or manipulative devices and practices." (Emphasis supplied) "It has been observed that the afore-quoted provision regulation laws: self-regulation, encouragement of the minimization, if not total elimination, of insider trading and other fraudulent or manipulative devices and practices that create distortions in the free market, with the unifying principles animate the whole of the SRC; and as such, any doubt or conflict in the interpretation of the SRC and its resolve the issues before Us with these principles in mind, enhancement of the democratization of wealth, promotion of principle being the protection of investors. These core

5 G.R. No. 241905, [March 11, 2020].

In the matter of: Maria Francesca Tan (MFT) Group of Companies, Inc Doing Business Under the Names and Styles of MFT Group and MFT Group of Companies, et al SEC CDO Case No. 01-24-106 RESOLUTION Page 8 of 21

that in implementing a statute, the Commission is mandated to effectuate SRC, including Sec. 64 which is at issue in the instant case, should thus be interpreted in a way that will promote and ensure the protection of investors, being the central and unifying principle of the securities laws in our jurisdiction. In this regard, the Supreme Court, in Securities and Exchange Commission v. Interport Resources Corporation,6 emphasized its general policies, to wit: Guided by the afore-quoted doctrine, the various provisions of the

regulations cannot assert for themselves a more extensive have the power to promulgate rules and regulations to implement a given statute and to effectuate its policies, terms and standards prescribed by the statute as well as purport to carry into effect its general policies. Nevertheless, it is undisputable that the rules and prerogative or deviate from the mandate of the statute." (Emphasis supplied) "It is well established that administrative authorities provided such rules and regulations conform to the

investors. Only from such perspective can Sec. 64 of the SRC truly have a seen and exercised with a view of implementing the core principles in our securities laws--the most of important of which is the protection of meaningful and impactful implementation that is consistent with the intent of the law. The foregoing finds support in Primanila Plans Inc. vs emphasized that the purpose of a CDO to curtail fraud and prevent injury Securities and Exchange Commission,7 where the Supreme Court upon the investing public, thus: The power of the Commission to issue a CDO must therefore be

may be issued by the SEC motu proprio, it being unnecessary that it results from a verified complaint from an aggrieved irreparable injury to investors. There is good reason for public that the SEC is obliged to protect." (Emphasis Commission finds it appropriate to issue a cease and desist order that aims to curtail fraud or grave or this provision, as any delay in the restraint of acts that yield such results can only generate further injury to the "The law is clear on the point that a cease and desist order party. A prior hearing is also not required whenever the supplied

6 SEC v. Interport Resources Corporation (G.R. No. 135808. October 6, 2008) 7G.R. No. 193791. August 6, 2014

In the matter of: Maria Frances. Doing Business Under the Names ? a Tan (MFT) Group of Co MFT Group of Companies, et al. SEC CDO Case No. 01-24-106 and Styles of MFT Group and RESOLUTION Page 9 of 21 es, In

mere lapse of time, even if the proceedings on the same are not yet applies in cases where the proceedings on the CDO is not yet terminated. upon a complaint, if it finds or has a reason to believe, based on substantial evidence, that a person has committed, or is about to commit any act or practice that constitutes a violation of the SRC and/or the SRC. or injury that they may possibly sustain. Necessarily, as long as the by the Commission should subsist and continue to have full force and contrary view will incentivize scheming fraudsters and con artists who can conveniently take advantage of an automatic lifting of a CDO by a terminated, as what happened in the instant case. Such is clearly not the intent of the law. This also explains why the law does not require proof of actual damage or actual complainants as conditions precedent for a valid issuance of a CDO. Thus, the Commission holds that a CDO issued motu proprio will, by express provision of law, stand and continue to have full force and effect if anchored on a determination supported by substantial evidence that the acts or transactions being restrained will likely defraud, prejudice or damage the investing public. The same rule IRR.8 The purpose is essentially to protect investors and to prevent fraud violation subsists or that a violation will be committed, the CDO issued effect; otherwise the purpose of Sec. 64 of the SRC will be negated. A The Commission is duty-bound to issue a CDO, motu proprio or

Specifically, subsequent to the Motion to Lift, the following pleadings were filed: (1) Notice to Withdraw on 7 February 2024; (2) respective pleadings effectively prevented the Commission from fully Lift was filed on 23 January 2024, the parties continued to file their respective pleadings where they presented additional arguments in support of their positions and sought new reliefs from the Commission. Comment/0pposition of the EIPD on 29 February 2024; (3) Motion for Exclusion as one of the Respondents on 1 March 2024; and (4) Omnibus Motion to Declare Automatic Lifting of CD0 on 8 March 2024. These show and confirm that the proceeding on the Motion to Lift was not yet terminated. In other words, the continued filing by the parties of their resolving the Motion to Lift. In the instant case, the records disclose that after the Motion to

automatic lifting of the Assailed CDO which the latter is advancing. Corporations and the Individual Respondents militates against the be exposed to the risk of being prejudiced and/or defrauded by the unauthorized sale or offer of unregistered securities by the Respondent More importantly, the fact that the investing public continues to

8 See Sections 53.3 and 64 of the SRC on the concept of CDO.

In the matter of: Maria Francesca Tan (MFT) Group of Companies, Inc Doing Business Under the Names and Styles of MFT Group and MFT Group of Companies, et al. SEC CDO Case No. 01-24-106 RESOLUTION Page 10 of 21

fact, Sec. 4-3(d), Part II, Rule IV of the 2016 Rules is emphatic in stating Respondent Corporations and the Individual Respondents' position are clearly repugnant to the intent and purpose of Section 64 of the SRC. In that a CDO may only by lifted by the Commission, at its discretion, "upon a finding that the grounds for the issuance of the same no longer exist, or the objective of the CDO of protecting the public from harm or fraud has already been accomplished."

administrative proceedings, the term "hearing" is used in a general Individual Respondents that the Commission failed to conduct a hearing to be devoid of basis. The concept of a hearing under Sec. 64 of the SRC required liberal construction of the provisions of the SRc,9 as well as the established rule in administrative proceedings that technical rules of procedure are not strictly applied.10 In the case of Perez vs. Philippine sense to cover an entire proceeding instead of a single rigid proceeding, to wit: vis-a-vis Sec. 4-3 Rule V Part II of the Rules is broad enough to cover the that it affords parties the opportunity to present their defenses, considering that the law specifically excluded their involvement or participation in the investigation proceedings. This is consistent with Telegraph and Telephone Company,11 the Supreme Court ruled that in entire proceeding covering a CDO issued by the Commission in the sense We also find the claim of the Respondent Corporations and

adaptability to meet the peculiarities of a given situation. opportunity, is couched in general language revealing the legislative intent to give some degree of flexibility or "The standard for the hearing requirement, ample To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit.

adduce his evidence to support his side of the case and A hearing means that a party should be given a chance to that the evidence should be taken into account in the adjudication of the controversy. "To be heard" does not

just, prompt, expeditious, and inexpensive determination of every action and proceeding before the procedure and evidence are not strictly applied and administrative due process cannot be fully equated with due process in its strict judicial sense." (Samalio vs Court of Appeals. G.R. No. 140079. 9 "These Rules shall be liberally construed and administered to promote public interest, to secure a Commission and to carry out the objectives of the laws it is mandated to implement." procedural requirements, subject to the observance of fundamental and essential requirements of due process in justiciable cases presented before them. In administrative proceedings, technical rules of March 31, 2005). 1o "Administrative tribunals exercising quasi-judicial powers are unfettered by the rigidity of certain 11 G.R. No. 152048. April 7, 2009

mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings." (Emphasis supplied)

lifted or will be made permanent. Respondent Corporations and the Individual Respondents' reliance on Sec. 64.3 of the SRC is clearly misplaced as the hearing on the Assailed Assailed CDO was not yet submitted for resolution necessarily precludes the automatic lifting thereof precisely because it is the resolution which the Commission will issue that will determine if the Assailed CDO will be CDO was not yet terminated. The fact that the proceeding involving the On account thereof, this Commission finds and so holds that the

Notice of Withdrawal which this Commission noted and acted favorably. operated to effectively withdraw the Motion to Lift, as if the same was never filed at all. This resulted in the Assailed CDO becoming permanent for failure of the Withdrawn Respondents to file a Motion to Lift within the reglementary period. The doctrine in the case of Central Luzon Drug Corporation vs. Commissioner of Internal Revenue,12 which is applicable by analogy, is instructive, thus: The foregoing notwithstanding, We find and so hold that the

becomes final and executory. "When an appeal is withdrawn, the assailed decision

XXXXXXXXX

instant case should be with prejudice. By withdrawing the appeal, petitioner is deemed to have accepted the decision of the CTA. And since the CTA had already denied petitioner's request for the issuance of a tax credit certificate in the amount of 32,170,409 for insufficiency of evidence, it may cannot be allowed to circumvent the denial of its request for a tax credit by abandoning its appeal and filing a new claim. However, we agree with the OSG that the dismissal of the no longer be included in petitioner's future claims. Petitioner To reiterate, "an appellant who withdraws his appeal x x x must face the consequence of his withdrawal, such as the decision of the court a quo becoming final and executory.

12 G.R. No. 181371. March 2, 2011.

In the matter of: Maria Francesca Tan (MFT) Group of Companies, Inc. Doing Business Under the Names and Styles of MFT Group and MFT Group of Companies, et al. SEC CD0 Case No. 01-24-106 RESOLUTION Page 12 of 21

withdraw and abandon their Motion to Lift after they determined that remedy under Sec. 4-3(c), Part II, Rule IV of the 2016 Rules which provides for the lifting of a CDO based on a verified motion to lift. Consequently, the Assailed CDO became permanent as to the Withdrawn Respondents, by virtue of Sec. 4-3(d), Part II, Rule IV of the 2016 Rules. the proper remedy is the filing of a Petition for Certiorari under Rule 65 with the CA. Their conscious and deliberate withdrawal of the Motion to Lift can be considered as an express waiver on their part to avail of the In the instant case, the Withdrawn Respondents decided to

issue on alleged failure of the Commission to set the same for hearing emphasized that since a CDO is essentially an interlocutory order, the which was already addressed earlier. In the case of SEC vs. CJH Development Corporation13 (the "CJH Case"), the Supreme Court prima facie finding of violation of Sec. 8 of the SRC made by the Commission may still be overcome in the hearing, thus: More importantly, the withdrawal of the Motion to Lift mooted the

assailed CDO, can still be refuted and disproved by contrary engaged in the business of selling securities without the the subject of an appeal. "In the present case, it is clear from the dispositive portion of the CDO that its issuance is based on the findings of the SEC that there exists prima facie evidence that respondents are proper registration issued by the Commission. Prima facie means a fact presumed to be true unless disproved by some evidence to the contrary. Applied to the instant case, it means that the findings of the SEC, as contained in the evidence. This only means that the CDO is not final. is just provisional, and that the prohibition thereunder is merely temporary. subject to the determination of the parties' respective evidence in a subsequent hearing. It is, therefore, clear that the subject CDO, being interlocutory, may not be

XXXXXXXXX

Hence, as cited above, instead of filing an appeal with the CA, respondents should have filed a motion to lift the assailed motion be heard by the SEC, it is during this hearing that respondents could have presented evidence in support CDO. Since the law and the SEC Rules require that this

13 G.R. No. 210316. November 28, 2016.

motion." (Emphasis and underscoring supplied) of their contentions. However, they chose not to file the said

hearing, and mooted any issue which they presented relating thereto. facie finding made by this Commission in the Assailed CDO, after they willfully and deliberately decided to avail of the remedy under Rule 65 of the Rules of Procedure. Respondents clearly opted not to refute the prima facie finding of the Commission and to present contrary evidence in a hearing on the main issue. The withdrawal of the Motion to Lift precluded the conduct of any The Withdrawn Respondents cannot therefore say that the Commission failed to conduct a hearing because as to them, it was legally impossible to do so. Moreover, the principle of estoppel and the rule on judicial admission prohibit the Withdrawn Respondents from refuting the prima With their withdrawal of the Motion to Lift, the Withdrawn

The Loan Agreements are investment contracts and/or securities in the form evidence of indebtedness of

will show that the Assailed CDO should be made permanent not only because of the failure of the Withdrawn Respondents to file a verified motion to lift, but because their unauthorized investment scheme will prejudice and defraud the investing public, and compromise the integrity Withdrawn Respondents, this Commission finds it important to reiterate its findings in the Assailed CDO which sufficiently justifies not only its issuance, but also the permanency thereof. The following disquisitions of the capital markets. Notwithstanding the withdrawal of the Motion to Lift by the

securities acts of other jurisdictions, specifically the United States of intended to be liberally construed in order to achieve the main purpose of its enactment, i.e., regulation of the issuance and sale of securities and America, the SRC adopted a very broad definition of securities,14 which is prevention of fraud to protect investors. At the outset, emphasis should be made of the fact that just like the

is considered a security under the SRC, as follows: Rule 26.3.5 of the SRC-IRR defines an "investment contract," which

profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character." (Section 3.1 of the SRC) 14 "Securities are shares, participation or interests in a corporation or in a commercial enterprise or

"An investment contract means a contract, transaction or scheme whereby a person invests his money in a common the promise of profits." (Emphasis and underscoring enterprise and is led to expect profits primarily from the efforts of others. It is presumed to exist whenever a person seeks to use the money or property of others on supplied)

or considered, or ought to be known or considered to be such, in the the purported issuer is, or will be using to further his business is money put in by the public who expects a return of their investment. Consistent with the broad definition of securities, the term investment contract should include and cover all forms and varieties thereof which are known financial world. The law considers investment contracts as securities because what

been duped by scamsters and con artists has led the Supreme Court to is capable of adaptation to meet the countless and variable schemes devised by those who seek to use the money of others on the promise of profits.16 adopt the doctrine in the United States (US) case of SEC v. W.J. Howey Co. and held in Gabionza v. Court of Appeals15 (the "Gabionza Case") that the term "securities" embodies a flexible rather than static principle, one that Moreover, the sad experiences of people around the world who have

emphasized that it is not the nature of the assets behind a particular instrument which defines whether the same should be considered a security. What is controlling is the attribution given in commerce based on the terms thereof, to wit: In the US case of SEC v. Joiner Leasing Corp.,17 the US Supreme Court

instrument is given in commerce by the terms of the offer, the been guided by the nature of the assets back of a particular document or offering. The test, rather, is what character the "In applying acts of this general purpose, the courts have not

16 In the US case of Reves et al vs. Ernst & Young the US Supreme Court stated that the US Congress showing that the note bears a strong resemblance to the one of the enumerated categories of instrument that does not fall under the securities category.Reves et al. vs. Ernst & Young, 494 U.s. be sold as an investment. Because the US Securities Acts define "security" to include "any note," the presumption is that every note is a security and that presumption may be rebutted only by a 17 320 U.s. 344 (1943) [https://supreme.justia.com/cases/federal/us/320/344/] 15 G.R. No. 161057, 12 September 2008. enacted a definition of "security" sufficiently broad to encompass virtually any instrument that might 56, 21 February 1990.

In the matter of: Maria Francesca Tan (MFT) Group of Companies, Inc Doing Business Under the Names and Styles of MFT Group and MFT Group of Companies, et al. SEC CD0 Case No. 01-24-106 RESOLUTION Page 15 of 21

to the prospect. In the enforcement of an act such as this, it is not inappropriate that promoters' offerings be judged as being what they were represented to be." (Underscoring plan of distribution, and the economic inducements held out supplied)

proceeds or net profits of enterprises managed by those disposing in real estate, it is the individual control which the purchaser has over the property or venture in which he acquired an interest that should be examined. Generally, if the purchaser is to partake of the gross of the interest, the instrument involved is held to be an investment contract. On the other hand, if the purchaser of real property is to occupy the premises and conduct the enterprise with others, the instrument involved is generally not an investment contract or a security.19 determining whether an interest is an investment contract or an interest Thus, in State v. Silberberg,18 the Ohio Court explained that in

adjudicatory bodies are not bound by legal perspective expounded in the aforementioned case, said case provides a useful framework in our own examination of the scope of the term securities. Although foreign case law is merely persuasive authority and our

written representation of debt securities or obligations of corporations such as long term commercial and short-term commercial papers.20 A certificate of indebtedness pertains to certificates for the creation and maintenance of a permanent improvement revolving fund, similar to a acknowledgement of an obligation to pay a fixed sum of money. It is usually used for the purpose of long-term loans.21 "bond." Being equivalent to a bond, it is properly understood as On the other hand, a certificate or evidence of indebtedness is a

agreements and checks, can be regarded as shares of stocks if issued of the corporation (and actually expects a return on their investments), papers evidencing indebtedness, which certainly include loan pursuant to a scheme that enables the lenders to participate in the profits thus: In the Gabionza Case, the Supreme Court ruled that commercial

2o Decasa, Lucia M., Securities Regulations Code Annotated with Implementing Rules and Regulations, 21 G.R. No. 93397, Traders Royal Bank vs. Court of Appeals, 3 March 1997. 18 166 Ohio St. 101, 139 N.E. 2d 342 (1956). 19 Leslie J. Crocker, 1966, Investment Contracts under Federal and State Law, Case Western Reserve Law Review, Volume 17, Issue 4, page 15 2004, 1st ed., p.7

In the matter of: Maria Francesca Tan (MFT) Group of Companies, Inc. Doing Business Under the Names and Styles of MFT'Group and MFT Group of Companies, et al. SEC CDO Case No. 01-24-106 RESOLUTION Page 16 of 21

apparently engaged in by ASBHI. As the DOJ Resolution noted, ASBHI adopted this scheme in an attempt to activities were actually regulated by the SEc, it is hardly likely that the design it chose to employ would have been permitted at all. picture. It is one thing for a corporation to issue checks to satisfy isolated individual obligations, and another for a corporation to execute an elaborate scheme where it would comport itself to the public as a pseudo investment house and issue postdated checks instead of stocks or traditional securities to evidence the investments of its patrons. The Revised Securities Act was geared towards maintaining the stability of the national investment market against activities such as those circumvent the Revised Securities Act, which requires a prior license to sell or deal in securities. After all, if ASBHI's "This analysis is highly myopic and ignorant of the bigger

requirements under the Revised Securities Act? As found by indebtedness of any person, financial or non-financial entity. Since the checks in this case were generally rolled the DOJ, there is ultimately a prima facie case that can at the that law. The DOJ Resolution is persuasive in citing American authorities which countenance a flexible definition of securities. Moreover, it bears pointing out that the definition of "securities" set forth in Section 2 of the Revised Securities Act includes "commercial papers evidencing indebtedness of any person, financial or non- financial entity, irrespective of maturity, issued, endorsed, sold, transferred or in any manner conveyed to another." A check is a commercial paper evidencing over to augment the creditor's existing investment with ASBHI, they most definitely take on the attributes of traditional stocks." (Emphasis supplied) very least sustain prosecution of private respondents under But was ASBHI able to successfully evade the

and must be registered with the Commission unless the issuer shows that the same are exempt from registration. Subsection 8.1 of the SRC is categorical in stating 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." The reason for this is that stock market transactions affect the general public and the national Under the SRC, evidences of indebtedness are considered securities

economy. The rise and fall of stock market indices reflect, to a considerable degree, the state of the economy. Trends in stock prices subject to public regulation.22 In the CJH Case, the Supreme Court emphasized that the purpose of requiring the registration of securities is to afford the public protection from investing in worthless securities. tend to herald changes in business conditions. Consequently, securities transactions are impressed with public interest, and are thus

registration requirements prescribed under the SRC are applicable if the transaction involves a public offering depends on all the surrounding between the company or the person making the offer and the persons to the public, and in such case the fact that the offer is made to a limited class, e.g., to the members of a single company (not being the company offering its shares), or to the members of a few companies, or to the registrant, or someone acting for it, intends a public offering or distribution of the registrant's securities.24 Whether a particular circumstances; the test is: "Is there a sufficient subsisting connection whom the offer is made as friends, customers, or co-adventurers, etc. or are the persons mere outsiders? If they are mere outsiders the offer is made to members of a particular profession, or to the investors in a particular class of companies, does not make it less an offer to the public."25 Relative thereto, the Commission has consistently held23 that the

an offer or sale of unregistered securities in the form of investment contracts and/or evidences of indebtedness. finding of this Commission that the unauthorized investment scheme of Respondents which made use of loan agreements and checks constituted In the instant case, the evidence on record shows and affirms the

exchange for the investments of its client-investors were investment investors showed that there was actual investment of money ranging from Fifty Thousand Pesos (Php 50,000.00) to Eight Million Pesos (Php 8,000,000.00).26 Second, the monies collected from their investors were pooled to finance "sure projects" of its subsidiaries, i.e., 32nd Street Prime contracts as all the elements of the Howey Test were present. First, the complaints which were filed with the Commission by some of their The loan agreements which the Respondents were executing in

26 Motion for CDO. Annexes "O" and "Q" 24 SEC-0GC Opinion No. 04-09, Re: Registration of Securities, 16 February 2009. 22 G.R. No. 160016, Abacus Securities Corporation vs. Ampil, 27 February 2006 23 See (a) In the Matter of ALPHANETWORLD CORPORATION doing business under the name and Community Foundation Et. Al. [SEC CDO Case No. 05-22-090]; (c) In the matter of Superbreakthrough Enterprises Corp. [SEC CD0 Case No. 11-23-104] 25 bid style of NWORLD [SEC CDO Case No. 02-22-081]; (b) In the Matter of Astrazion Noble Task

Diner, Inc., Mondial Medical Technologies, Inc., Mr. Angel Credit Corporation, Asianinvest Consultants, Inc., Meihao Corporation, Accentik, Inc. Saladstop Spain.27 This is the common enterprise which Respondents were operating to sustain their unauthorized investment scheme. Third, their investors expected a return on their investment at the rate of 1%: Fourth, the returns on investments were made possible primarily from the efforts of the Respondent Corporations and the Individual 2% per month (12-24% per annum) which the Respondents guaranteed) Respondents.

appear to have deliberately circumvented the SRC, there is no way to in the form of evidences of indebtedness considering that they clearly registered as Respondent Corporations and the Individual Respondents investing public. The unauthorized investment scheme being perpetrated issued by the Respondent Corporations and the Individual Respondents, insofar as they were used to obtain funds from the public, are securities took on the attributes of traditional stocks. By using the loan agreements and checks, the Respondent Corporations and the Individual Respondents were using the investments made by the public to carry out protect the investing public through the regulatory requirements and mechanisms governing registered issuers. Thus, until Respondent Corporations and the Individual Respondents secure the required keep the Assailed CDO in full force and effect subsists. A contrary position will encourage circumvention of the SRC through the use of commercial documents, transactions and arrangements at the expense of the by Respondent Corporations and the Individual Respondents is the activity the SRC seeks to regulate; the sale or offer of unregistered securities in whatever form is the evil that the law seeks to avoid for the their business operation. However, since these documents are not registration statement duly approved by the Commission, the need to protection of the investing public. This is the very reason why the Commission was expressly granted by law the power to issue a CDo. In the same manner, the loan agreements and checks executed and

and/or persons subject thereof should be equally restrained from using, unauthorized investment-taking activities are licensed to offer or sell CDo for that matter, requires that any and all corporations, entities disposing of, and/or dealing in any manner with the proceeds or assets generated from the unauthorized investment activities. The purpose is to defrauded and/or misled into the belief that persons engaged in the preserve such assets for the benefit of the investors who have been Finally, the effective implementation of the Assailed CDO, or any

27 Motion for CDO (n1), Par. 47.

In the matter of: Maria Frances Doing Business Under the Names and Styles of MFT Group and ca Tan (MFT) Group of Companies, Inc MFT Group of Companies, et al. SEC CD0 Case No. 01-24-106 RESOLUTION Page 19 of 21

carrying out an unauthorized investment-taking activities can securities when such is not the case. Without this directive, persons conveniently abscond with the investors' hard earned money, leaving them holding on to an empty bag.

unregistered securities without the required license is in fact highlighted fraud as defined under Sec. 3(f) of R.A. No. 11765, otherwise known as the Financial Products and Services Consumer Protection Act, to wit: by the Congressional act of specifically considering it as an investment The seriousness, gravity and repugnant nature of offering/selling

license or permit from the SEc, unless such offering or selling involves exempt securities or are considered as or offer of profits or returns which are sourced from the investments or contributions made by the investors themselves, boiler room operations, and the offering or selling of investment schemes to the public without the exempt transactions as provided for under existing laws;" (Emphasis supplied) solicitation of investments from the public. This includes Ponzi schemes and such other schemes involving the promise "(f) Investment fraud refers to any form of deceptive

securities laws, which is to provide an effective mechanism that fully, Services Consumer Protection Act of the State policy granting financial misuse.28 With this new legislation, we see a crystallization of the intent act, the Congress is nonetheless fully aware that criminal prosecution may take time, and there is an urgent need in the interim to protect consumers/investors' assets which are in the hands/custody of the perpetrators. This explains the inclusion in the Financial Products and consumers the right to protection of their assets against fraud and of the Congress as regards the interpretation and implementation of adequately and relevantly protect the investors and their investments. While investment fraud is specifically characterized as a criminal

the authority to issue a CDO that will effectively protect investors' assets against fraud and misuse. This addresses and puts to rest what Professor embodies the Congressional fiat granting the Commission, among others, Davis have called the fundamental problem of administrative law29, by The Financial Products and Services Consumer Protection Act now

29 Davis. Ombudsmen in America: Officers to Criticize Administrative Action, 109 U. PA. L. Rev. 1057, 23 Sec. 2 1062 (1961).

In the matter of: Maria Francesca Tan (MFT) Group of Companies, ] Doing Business Under the Names and Styles of MFT Group and MFT Group of Companies, et al SEC CDO Case No. 01-24-106 RESOLUTION Page 20 of 21

Sanctioning a prohibition that, to the mind of the Congress, will protect and preserve the assets of investors. In other words, the prohibition to use and dispose of the investments/assets obtained from the unauthorized investment-taking activities was justified under the SRc, albeit impliedly, as a necessary imperative to effectively protect investors and their investments. Under the Financial Products and Services Consumer Protection Act, the Congress itself has made the express declaration that such prohibition will protect investors' assets against fraud and misuse, hence, should be included in the CDO.

funds covered by the Assailed CDO in its depository banks, and from real or personal, including but not limited to bank deposits, of which the be preserved for the benefit of the latter. of a prohibition directed against the Respondent Corporations and the Individual Respondents from "transacting any business involving the transferring, disposing, or conveying in any manner, all assets, properties, named persons herein may have any interest, claim or participation whatsoever, directly or indirectly, under its/their custody, to ensure the preservation of the assets for the benefit of the investors." Together with effectively prevent more investors from being defrauded, the afore- quoted prohibition on the disposition of the assets obtained from the unauthorized offer/sale of unregistered securities will ensure that the hard-earned money which the Respondent Corporations and the Individual Respondents' have received from their existing investors will the prohibition from offering/selling unregistered securities which will The foregoing therefore justifies the inclusion in the Assailed CDO

monies are in the possession and control of the Individual Respondents the instant case where the evidence shows that the monies invested in the Respondent Corporations were neither entered nor reflected in their books, whether as equity or liability. This clearly indicates that the which may easily be disposed of. The prohibition becomes even more significant and imperative in

Desist Order dated 23 January 2023, filed by Respondents Foundry Ventures I, Inc. Florita F. Tan, Charles Edward Tan, Christian Konstantin "CK" P. A. Cabaero, Thuy Nguyen, Roxanne Agbayani, Luis Gabriel R. Cancio, Noel M. Olan, JR Hernandez, Christian Olan, Tito Cosejo Jr., and Christian Styles of MFT Group and MFT Group of Companies, and Maria Francesca Agbayani, Chiqui Tan, Romarico Rico S. Ruiz, Arlene M. Navarro, Joanne "Kenchi" De Vera; and (b) the Omnibus Motion filed by Maria Francesca Tan (MFT) Group of Companies, Inc. Doing Business Under the Name and WHEREFORE, premises considered, the (a) Motion to Lift Cease and

5 F. Tan a.k.a. "Mica Tan," Ronaldo G. Nery, Halmond Parker R. Ong, hereby made PERMANENT as to the remaining Movants who did not withdraw. Maricris T. Tan, Jose Donnie B. Montelibano, Arlene C. Mauricio, Maria Beatriz Dolores R. Tomas, and Mary Ruth A. Oquendo are hereby DENIED for lack of merit. The Cease and Desist Order dated 16 January 2024 is

and the Department of Information and Communications Technology, website; and (b) be furnished to the Company Registration and and the relevant local government unit(s) for their information and MonitoringDepartment, Department of this Commission, the Bangko Sentral ng Pilipinas, the Department of Trade and Industry, the National Privacy Commission, appropriate action. Department, and the Information and Communications Technology Let a copy of this RESOLUTION be (a) posted in the Commission's Corporate Governance and Finance

pleading, to the Commission En Banc WITHIN TEN (10) DAYS from FURTHER DIRECTED to submit a formal compliance report, by way of a receipt of this Resolution. The EIPD, in coordination with other concerned departments, is

SO ORDERED.

Makati City, Philippines.

EMILVO Chaifperson AQUINO

Av Y PAUL D. FRANCISCO Commissioner KARLQ S BELLO Commissioner

MCIILL BRYANT T. FERNANDEZ Commissioner

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