TOGACHAT ACADEMY ACADEMY PHILIPPINES INC.

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance In the Matter of: TOGACHAT ACADEMY PHILIPPINES INC. SEC CD0 Case No. 10-19-059 PROTECTION DEPARTMENT, ENFORCEMENT AND INVESTOR Movant. CEASE AND DESIST ORDER corresponding license to offer/sell is issued. registration statement is duly filed and approved by the Commission and the PROTECTION DEPARTMENT ("EIPD" for brevity), enjoining TOGACHAT ACADEMY PHILIPPINES INC., its officers, directors, salesmen, agents, representatives and any and all persons claiming and acting for and in their behalf, to cease and desist from engaging in activities of selling and/or offering for sale of securities in the form of investment contract until the requisite "Motion", filed by the Commission's ENFORCEMENT AND INVESTOR This resolves the Motion for the Issuance of Cease and Desist Order' (the RELEVANT FACTS reasonably be expected to cause significant, imminent, and irreparable danger or injury to public safety or welfare injury to the public and to enjoin an act or practice which is fraudulent or can or verification, if there is a finding that the grounds for the issuance of the CDO Section 179(f) of the Revised Corporation Code of the Philippines (RCCP) is the power to issue cease and desist orders ex parte to prevent imminent fraud or the Commission and to, among others, initiate the issuance of a Cease and Desist filing of an application with the Commission En Banc, through the Office of the General Counsel (OGC), by any Operating Department, either motu proprio or upon a verified complaint by the public, after conducting a proper investigation or injunction are present. Likewise, among its powers and functions under Order (CDO) by the Commission.2 Pursuant to Section 4-1, Rule IV, Party II of The 2016 Rules of Procedure of the Securities and Exchange Commission (SEC)) an action for the issuance of a CDO or injunction may be commenced upon the upon complaint or referral, violations of the law and the rules and regulations of Movant, EIPD is the Department tasked to investigate, motu proprio or Respondent, TOGACHAT ACADEMY PHILIPPINES INC 2 SEC Office Order No. 512, series of 2013. 1 Dated 24 October 2019. PACE TIE IOCUMENTS ON RECORD CERTIFIEDTRUE COPYOL Nt ( (0 Y In re: Togachat Academy Philippines, Inc. vs .EIPD SEC CDO Case No. 10-19-059 Page 2 of 10 at Unit No. 14-02 Annapolis, Wilshire. Plaza Condominium, #11 Annapolis of Incorporation issued by the Commission on 07 December 2016, with Company Registration No. CS201628323. Its principal office address is located (TOGACHAT, for brevity) is a registered domestic corporation with Certificate Street, San Juan City,1500, Philippines. provides: The Certificate of Incorporation3 issued to TOGACHAT explicitly other government agencies require a license or permit." (Emphasis house, transfer agent, commodity/financial futures exchange/ broker/merchant, financing company, pre-need plan issuer, general agent in pre-need plans and time shares/club shares/membership certificates issuers or selling agents thereof. Neither does this Certificate constitute as permit to undertake activities for which supplied). Secondary License from this Commission such as, but not limited company, close-end or open-end investment company, investment to, acting as: broker or dealer in securities, government securities eligible dealer (GSED), investment adviser of an investment "This Certificate grants juridical personality to the corporation but does not authorize it to undertake business activities requiring a Articles of Incorporation (AOD)4 is: The primary purpose of. respondent TOGACHAT, as stated in its or memory device, telecommunication facilities such as video. agreements 'and partnerships, with other private or public allowed by law via any media such as TV, radio, print, CD, DVD, voice and data and conducting meetings, seminars, training and companies, xxx. all of its related products and services by way of educating the websites, internet, electronic facilities such as use of any gagdets. "To promote the TogaChat Social Messaging Application and public, marketing the products through any and all possible means Technology Platform of TogaCapitalSdnBhd and Toga Ltd., and are as follows: The names, nationalities and addresses of its incorporators and directors, Name Nationality Residence Yee Hing Yip Malaysian #47/48 Jalan Jambu Berasa Jinjang Selatan, 52000 Kiala Lumpur, Malaysia Liew Choon Fook Malaysian # P.O. Box 8128, Kelana Jaya, 46782 Petaling Jaya, Malaysia Jose Lyceus P. Aranal Filiping #5 Malumanay Street, Sikatuna Village, Quezon City 3 Attached as Annex "A" of the Motion 4 Attached as Annex "B" of the Motion. THEICUMENTS ON REOR CERTIFIED PRUE COPYOH S ( i PAGE U : Y In re: Togachat Academy Philippines, Inc. vs .EIPD SEC CDO Case No. 10-19-059 Page 3 of 10 Reymelyn M. Cortes Filipino #53 Matias Street, Brgy. Paltok, SFDM, Quezon City Tita C. Anquilero Filipino #8417-C, Mayapis Street, Brgy. San Antonio, Makati City positions, of respondent TOGACHAT :as appearing in its 2018 General Information Sheet (GIS) are as follows: Moreover, the' names of the directors and officers, with their respective Name Incorporator Board Officer Stockholder Yec Hing Yip Y Member N/A Y Liew Choon Fook T Member NA Y Denia Isidro Filipino Member NA Y Reymelyn M. Cortes T Chairman President Y Tita C. Anquilero Y Member Treasurer Secretary Y Message Mo' facility informing it of the fraudulent transactions/activities of TOGACHAT involving the sale of stocks in the form of Toga Points. Content of the email are extracted as follows: On 29 April 2018, the EIPD received an e-mail through the SEC I. INC. "SEC registered name TOGACHAT ACADEMY PHILIPPINES of TP (Toga Points). Yippi a chat software used by TOGACHAT to sell stocks in the form The company is Listed not authorized nor approved by BNM (Central Bank of Malaysia) X X x 50% income from downline signup. Toga Limited has a MLM sy'stem of which the upline will received points in Philippines, America, Indonesia and reportedly in Malaysian Base company is registerecl in USA and selling TP Thailard. Please check TOGACHAT if. its: doing business according in Philippines Laws 5 Attached as Annex "D" of the Motioni. " Attached as Annex "E" of the Motion. 7 i-Message Mo facity is a wei-based online. aplication for lodging of questons, requests, Complaints, (ssues. concerns, suggestions/opinions, tips/alerts, etc: THE DOCUMENTS ON RECORD CERIIFIHTRIEGOPYG PACHE PGFS In re: Togachat Academy Philippines, Inc. vs .ElPD SEC CDO Case No. 10-19-059 Page 4 of 10 Commission in order for them to validly transact and solicit investments from to check whether TOGACHAT has secured a secondary license to the the legitimacy of the respondent's business operation which prompted the EIPD the public. Succeeding emails were received from various individuals inquiring on investments from the Commission; and is therefore not a registered issuer of securities as prescribed under Section 8 and Section 12 of the Securities Department (MSRD) both dated 17 May 2018, respondent TOGACHAT, has Regulation Code (SRC). Finance Department (CGFD)8 and Markets' and "Securities Regulation not been issued any Secondary License by the SEC authorizing it to solicit Based on the Certifications issued by the Corporate Governance and most importantly, its compensation plans which are as follows: investigating team to join TOGACHAT by discussing the company profile and TOGACHAT. During the said meeting, Mr. Bailingo tried to convince the (EIPD-SOD) spearheaded an investigation and proceeded to the office of respondent TOGACHAT to conduct an ocular inspection and surveillance of its operations. Based the Field Investigation Reporti the team met Mr. Aries Bailingo and his male associate who introduced themselves as agents of On 04 July 2018, elements of the EIPD's Special Operations Division Rose Gold Palladium Silver Gold Platinum Bronze Titanium PACKAGE AMOUNT in $ 100,000 30,000 10,000 3,000 1;000 300 100 Toga Credits 500,000 135,000 40,000 10,500 3,000 200 750 He also claimed that TOGACHAT is registered with the OTC1 Market in the investors will get from direct referrals, there is also a Pairing Bonus, where the new investor, i.e. a meinber will receive.50% Toga Credit for each referral depending on the package availed of by the recruited person. The more Toga Credits earned transiates. into a. higher ceiling .of Toga Points which could be used to buy shares of Toga Capital Limited. Aside from the profit which agent/member earns additional Toga Credit for every pair in the binary structure. the equivalent conversion in US dollars; and as can be seen in the investment scheme provided by Mr. Bailingo, there are also corresponding Toga Credits for each package. A Toga Credit is earned every time an existing investor recruits a investor of any of the seven (7) packages available shall be paid in US dollars or Further, the presentation of Mr. Bailingo disclose that purchase by an % Attached as Annex "H" of the Motiori. Attached as Annex "I" of the Motion. 10 Attached as Annex "J" and "J-1 " of the Motion. 11 Over-the-counter (OTC) or off-exchange .tradimy is done directly between of an exchange. twp parties, without thersuperyision:.** THEDXXUMENT'SON RYARE PAGI I In re: Togachat Academy Philippines, Inc. vs .EIPD SEC CDO Case No. 10-19-059 Page 5 of t0 Exchange which is an internal platform of Toga Limited where stocks are traded. United States of America, and that. Toga stocks are being traded in TOGA purpose of inviting/enticing them to join and invest its scheme. media, particularly on its Facebook account, its investment schemes for the encouraged its members to discuss, orient and market to the public through social The investigation report likewise.disclose that respondent TOGACHAT refers to the show cause order against Toga Capital Limited. website. The first Order!3 stated that Toga Capital Limited "Toga" (CIK No. with a class of securities registered with US SEC, while the Second Order14 where he informed EIPD there were two (2) Orders posted in the US SEC Zamboanga Extension Office submitted a Memorandum dated 27 March 201912 1586227) is a revoked Nevada corporation located in Kuala Lumpur, Malaysia Records of the EIPD also reveal that Dir. Jesus Salvador A. Uro of SEC that it was not engaged in the sale/offer of securities to the public, and it has not respondent TOGACHAT, on 17 July 2019, the Commission posted an has no secondary license required under Sec. 8.1 of the SRC. Subsequently, a Show Cause Order1 was issued by the EIPD against respondent TOGACHAT, addressed to all its incorporators, directing it to show-cause why its Certificate of Incorporation should not be revoked. On 06 September 2019, respondent TOGACHAT submitted its reply17 which essentially contained general denial violated the SRC. Advisory15 informing the public to stop investing in the investment scheme being offered by respondent TOGACHAT. It further stated that based on the records of the Commission, TOGACHAT is not authorized to solicit investments as it To inform and warn the public of the widespread fraudulent activities of present. The test-buy operation was completed when one of the investigating agents invested the amount of Php5,600.00, which is equivalent to a bronze package. The operation was evidenced by a field investigation report!8 and the SEC and PNP-CIDG. The members of the team attended the seminar conducted by respondent TOGACHAT where at least fifteen (15) other persons were official receipti On 01 October 2018, the joint test-buy operation was conducted by the presented as proof of payment. sale of securities without the requisite registration statement approved by the sufficient grounds to issue Cease and Desist Order against respondent TOGACHAT which has been shown to be engaged in the sale and/or offer for Commission. On account of the foregoing, EIPD alleged in its Motion that there are I2 Attached as Annex "EE" of the Motion. I4 Attached as Annex "GG" of the Motion. 16 Attached as Annex "J." of the Motion, dated August 14, 2019 I3 Attached as Annex "FF" of the Motion. 15 Attached as Annex "ll" of the Motion 17 Attached as Annex "KK" of the Motion W Y 19 Attached as Annex "R?" of the Motion. 1a Attached as Annex "Q" of the Motion THE IXCUMENISON REGORD CERIIFIFDTRUECOPYOI PAGE 5 () A In re: Togachat Academy Philippines, Inc. vs .EIPD SEC CDO Case No. 10-19-059 Page 6 of 10 ISSUE presented by the EIPD in support thereof warrant the issuance of a Cease and Desist Order. Whether the allegations in the Motion together with the pieces of evidence DISCUSSION The Commission finds the Motion to be impressed with merit. duly approved by the Commission is an indispensable requirement before an entity can offer or sell securities to the public, thus: Section 8 paragraph 8.1 of the SRC is clear that a registration statement "REGISTRATION OF SECURITIES without a registration statement duly filed with and approved by the not be sold or offered for sale or distribution within the Philippines, Commission. Xxx." SEC. 8 Requirement of Registration of Securities. -- 8.1. Securities shall offer, solicitation and sale of securities to the public without the required Based on the evidence presented, respondent TOGACHAT is engaged in registration statement duly filed and approved by the Commission. TOGACHAT'S scheme whereby an investor pays a minimum amount of money to purchase a package offered by it to be invested in the shares of stock of Toga Capital Limited, clearly falls within the definition of "Securities" under Section 3.1 of the SRC: written or electronic in character. It includes: or interest in a corporation or in a commercial enterprise or profit-making venture and evidenced by' a certificate, contract, instrument, whether "Sec. 3. Definition of Terms. -- 3.1 "Securities" are shares, participation (a) Shares of stocks, bonds, debentures, notes, evidences of indebtedness, asset-backed securities; a profit sharing agreement, certificates of deposit for a future subscription; XXX. b Investment contracts, certificates of interest or participation in Moreover, it also appears. that the investment scheme of respondent TOGACHAT is covered by the concept of an.investment contract under Rule 26.3.5 of the 2015 Implementirig Rules and Regulations of the SRC which is defined as follows: (collectively "contract") whereby a person invests his money in a common "An investment contract neans a contract. transaction or scheme enterprise and is led to expect profits primarily from the efforts.of.others. An investment contract is presumed to exist whenever a person se. }Y ImeNt's cks to I : (PYO v PAH Y 1 A In re: Togachat Academy Philippines, Inc. vs .EIPD SEC CDO Case No. 10-19-059 Page 7 of 10 use the money or property.of others on the promise of profits. receives nothing more than a broker's commission. "pool" their resources, creating a common enterprise, even if the promoter A common enterprise is deemed created when two (2) or more investors investment contract were enumerated as follows : so-called Howey Test enunciated in SEC vs Howey2, the elements of an In the case of Power Homes Unlimited Corporation vs. SEC20 citing the (1) an investment of money; (3) with expectation of profits and; (2) in a common enterprise; (4) primarily from efforts of others. managerial efforts of respondent TOGACHAT. The direct referral commissions and the pairing bonus are given by respondent TOGACHAT to entice existing profit/shares to their account by doing so. being offered by respondent TOGACHAT and pay the corresponding amount. however hold an expectation of deriving profits from the entrepreneurial or investors to recruit new investors since they will be earning additional By doing so, the investor enters into a contract with respondent TOGACHAT. investors have no control on management of the amount pooled. The investors offered by respondent TOGACHAT, an investor has to choose a package that is The money invested is placed and used to carry out a common enterprise where Records show that in order to join and profit from the scheme being respondent TOGACHAT is engaged in the sale, solicitation and/or offering of TOGACHAT carried out its investment scheme as presented by Mr. Bailingo Desist Order was triggered because respondent TOGACHAT was in effect defrauding the investing public. securities, in the form of investment contract, to the public which required a registration statement duly approved by the Commission. When respondent without the registration statement, the necessity for the issuance of the Cease and Based on the foregoing, the Commission affirms the finding of EIPD that DEVELOPMENT CORPORATION22 where the Supreme Court held: The foregoing finds support in 'the case of SEC vs. CJH a fraud on investors as it deceives the investing public by making it appear that respondents have authority to deal on such securities. Section 8.1 of the SRC ciearly states that securities shall not be sold or -The act of selling unregistered securities would necessarily operate as offered for sale or distribution within the Philippines without a registration statement duly filed with and approved by the SEC and that prior to such sale, inforimation on tre securities, in such form and with each prospective buyer: such substance as the SEC may prescribe, shall be made available to 21 328 U.S. 293 (1946) 20 G.R. No. 164182, 26 Februery 2008 22 G.R. No. 210316, 28 November 2016 TA H: THEDOGUNENT'SON RIEY CFRIIFItTR K I In re: Togachat Academy Philippines, Inc. vs .EIPD SEC CDO Case No. 10-19-059 Page 8 of 10 Rules and Regulations of the SRC, thus: considered as "public offering" defined under Rule 3.1.17 of the Implementing members to promote and market to prospective investors its products and investment scheme through, seminars, public presentations or in the social media, and subsequently entice them to invest their hard earned money is In the same manner, the act of respondent TOGACHAT of allowing its shall be presumed to be a public 'offering: public or to anyone, whether solicited or unsolicited. Any solicitation or presentation of securities for sale through any of the following modes "3.1.17. Public Offering" is any means offering of securities to the XXx. 3.1.17.2 Presentation in any public or commercial place; technology or any other forms of communication; or 3.1.17.3 Advertisement 0 telephone, electronic communications, information communication announcement on radio, television, offering material in a public or commercial place, or to prospective technology and other means of information distribution." (Emphasis 3.1.17.4 Distribution and/or making available flyers, brochures or any purchasers through the postal system, information communication supplied) before the US SEC. The foregoing serious misrepresentation which respondent misrepresented to the public that by the year 2019, Toga Limited shares will be registered with NASDAQ and as a consequence thereof, the market value of Toga Limited shares may increase up to 10,000%.23 However, records reveal TOGACHAT has been using as a tool to promote its unauthorized investment taking activities should be restrained. TOGACHAT, claiming to be under TOGA CAPITAL LIMITED, also that contrary to its claims, respondent TOGACHAT's corporate license in Nevada, U.S.A. is already revoked and it has pending administrative cases of new investors to invest their hard earned money with them, respondent Moreover, records reveal that in order to entice and facilitate recruitment referrals. Considering that.Ponzi schemes will work only as long as the number investors will ultimately end up being victins of the investment scam perpetrated is a Ponzi scheme which is a type of an investment fraud. The additional shares reason why respondent TOGACHAT is giving additional income for successful by respondent TOGACHAT. supported by evidence, that the investment scheme of respondent TOGACHAT that will be used by existing investors to purchase Toga Points (or stocks of Toga Capital Limited) would come from the investments of later investors. This is the of new investors continue to increase which is in reality, unsustainable, the new Finally, the Commission agrees with the finding of EIPD, which is duly S+ K CERTIFHFD TRUE COPYO 23 See Annex "K" of the Memorandum. THEIOUMENTSONREGOR PAGE 0 In re: Togachat Academy Philippines, Inc. vs .EIPD SEC CDO Case No. 10-19-059 Page 9 of 10 tool in committing a crime, thus: of considering Ponzi scheme as a criminal fraud because the same is used as a In the case of People vs Aquino24, the Supreme Court went to the extent 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 investors. The idea behind this type of swindle is that the 'con-man' collects his money from his second or third round of investors and then absconds before anyone else shows up to collect. Necessarily, Ponzi schemes only last weeks, or months at the most." ever larger pool of later investors to continue paying the promised profits to early 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 fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Its organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with Felix and his co-accused's modus operandi is constitutive of criminal fraud as they used the same to commit a crime. In fact, their modus operandi may be characterized as a kind of Ponzi scheme, which schemes have gained notoriety in modern times. As generally defined, a Ponzi scheme is "a type of investment "Far from being a legitimate business venture, the .Court herein observes that in the Order, until the. requisite registration statement is duly filed with and approved by the Commission and the corresponding permit to offer/sell is issued. Reymelyn M. Cortes and Tita C. Anquilero, its directors namely: Yee Hing Yip, BEHALF, are hereby ORDERED to immediately CEASE AND DESIST, UNDER PAIN OF CONTEMPT, from further engaging in activities of selling and/or offering for sale of securities or any others of the same nature as discussed WHEREFORE, premises considered, TOGACHAT, its officers namely: Liew Choon Fook, Jose Lyceus P. Aranal, Reymelyn M. Cortes, Tita C! Anquilero and Denia Isidro Filipino, representatives, salesmen, agents AND ANY AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR have any interest, claim, or, participation whatsoever, whether directly or indirectly, immediately upon receipt of this Order. and to ensure the preservation 'of assets for the benefit of investors, their behalf, and such other persons directing or controlling the activities of such depositary banks, and (b) transferring, disposing, or conveying in any other corporation, officers, representatives, salesmen, agents, are all ENJOINED from (a) transacting any and all business involving the funds in its manner any and all assets and properties, real or personai, including bank deposits, if any, under their custody, of which the named persons herein may TOGACHAT, or any of their representatives, or any person/s acting for and in Furthermore, to.forestall grave damage and prejudice to all concerned. agents, representatives and any and all persons claimipg and-acting"for'and-in 24 G.R. No. 2328 18, November 5, 2018. Finally, TOGACHAT, the above named directors and officers, salesmen, A THEINXUMLNTS ON RECORD CERTFHED TRUEGYO G SFK 0 In re: Togachat Acade SEC CDO Case No. 10-19-059 y Philippines, Inc. vs .EIPD Page 10 of 10 media platforms. The Commission will institute appropriate administrative and/or criminal action against any person/s or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers or the like for and in behalf of respondent TOGACHAT. their hehalf, are .directed to immediately CEASE AND DESIST from conducting their investment-taking activities using the internet and/or any social The EIPD is hereby DIRECT'ED to: Treasurer or Ir-House Counsel; 1.) serve this Order to TOGACHAT, its President, Corporate Secretary, branches, if any, of TOGACHAT. 2.) post copies of this Order at the entrance of the main office and/or by way of pleading, to the Commis.sion En Banc WITHIN TEN (10) DAYS from receipt of this Cease and Desist Order. EIPD is FURTHER DIRECTED to submit a formal compliance report. Let a copy of this Order be posted inr the Commission's website. 3, Rule IV, Part II of the 2016 Rules26, the parties subject of the Cease cind Desist Order may file a request -for lifting thereof within five (5) days from receipt hereof. In accordance with the provisions, of Sec. 64.325 of the SRC and Sec. 4- SO ORDERED. Pasay City, Philippines; 17 December 2019. EMII B. AQUINO glirperson EPHYRO LUIS'B. AM ATONG Commissioner JAVEM PAUL D. FRANCISCO Commissioner KL KEY LESTERK.LEE KAREO S.BELLO Commissioner Commissioner 2 The 2016 Rules o(' Procedure of the Securi tes and Exchange Conimission. 25 Section 64.3. Any person against whor. from the receipt of the Order, file a forrmal resuest for a tifting thereof. Xxx. Aorse and desist order was issued - y. within five$Ydays( THE DCUMENTS ON RECORD CERTIFIEDTRUE COPY OE PAGE (o D PAGFS