AYALA CORPORATION GROUP INC., AYALA CORPORATION BUDGETARIAN ONLINE SHOP, GLOBAL ONLINE AYALA CORPORATION, BELLAVITA AYALA CORPORATION, AYALA CORPORATION E COMMERCE, RICA ANN HARDER, AND LETICIA AYAW GARZO

Securitfes and Exchange Commssion COMMISSION EN BANC Republic of the Phillppines Department of Finance

In the Matter of:

AYAW GARZO, BUDGETARIAN CORPORATION, CORPORATION RICA ANN HARDER, AND LETECIA AYALA INC. GLOBAL AYALA AYALA CORPORATION, CORPORATION ONLINE ONLINE E CORPORATION COMMERCE, BELLAVITA GROUP AYALA AYALA SHOP,

Respondents,

Promulgated: 22 February 2024 SEC CDO Case No. 02-24-110

(EIPD), ENFORCEMENT PROTECTION AND DEPARTMENT INVESTOR Movant.

CEASE AND DESIST ORDER

AYALA CORPORATION, AYALA CORPORATION E COMMERCE (the "Bogus AC Group", their operators, directors, officers, representatives, salesmen, agents, enablers, influencers (collectively referred to as the from further engaging in the sale/offer of unregistered securities without the requisite license from the Commission; and (b) prohibiting the Bogus AC Group and its Agents from transacting any and all business involving the funds in its depository banks, and from transferring, disposing, or and Investor Protection Department (EIPD) of even date, praying that a Cease and Desist Order ("CDO") be issued (a) directing AYALA ONLINE SHOP, GLOBAL ONLINE AYALA CORPORATION, BELLAVITA "Agents"), and any and all persons, conduit entities and subsidiaries claiming and acting for and in its behalf, to immediately cease and desist Order (the "Motion") dated 16 January 2024 filed by the Enforcement CORPORATION GROUP INC. AYALA CORPORATION BUDGETARIAN This resolves the Motion for the Issuance of a Cease and Desist

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In the matter of: Ayala Corporation Group, Inc., et al. SEC CD0 Case No. 02-24-110 Cease and Desist Order Page 2 of 12

conveying in any other manner, any and all assets, properties, real or whatsoever, whether directly or indirectly, under their custody, without authority from the Commission. personal, including bank deposits, if any, of which the named and/or covered persons herein may have any interest, claim or participation

PARTIES

tasked, among others, to investigate motu proprio or upon complaint or Movant, EIPD is one of the Commission's operating departments

implemented, or issued by the Commission, and to seek the issuance of a referral, violations of laws, rules, and regulations administered CD0 whenever warranted by the circumstance.1

have the authority or license to offer and/or sell securities to the public. Commission either as a corporation or as a partnership2 and does not The Bogus AC Group are entities not registered with the

RELEVANT FACTS

Bogus AC Group which prompted the EIPD to investigate the matter for and implemented by the Securities and Exchange Commission (the possible violations of Securities Regulation Code (SRC)3, the Revised Corporation Code (RCC), and other rules and regulations administered "Commission"). complaints regarding the alleged investment solicitation activities of the Beginning June 2023, the EIPD received numerous reports and

scheme, an investor who successfully completes a task is given another engaged in a scheme called "Tasking and Recharging", which offers online jobs to prospective investors who will be asked to perform certain tasks in exchange for monetary rewards in the form of commissions. Under this task which will entitle him/her to receive additional commission(s), if completed. The investor can withdraw the commissions earned upon payment of a so-called "Tax Charge. The investigation of the EIPD showed that the Bogus AC Group is

2Motion (n1)} 3 R.A. No. 8799. 1 sEC Office Order No. 512, series of 2013. NHE DOCUMENTS ON RECOPE CERTIFIED TRUE COFY OE SEC -OGC

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In the matter of: Ayala Corporation Group, Inc., et al. SEC CDO Case No.02-24-110

Cease and Desist Order Page 3 of 12

Group uses an online application called "Ayala Investment App" where it In carrying out the unregistered investment scheme, the Bogus Ac

program, merchants pay the Bogus AC Group commissions for each order the Bogus AC Group deducts the 10% service fee for utilizing the app. and invites the investing public to participate in its program, on a part- time basis, by simply buying consumer products from the partner- made by its members. The commission is then paid to the members after Philippines with main partner-sellers from Amazon, Lazada, and Shopee." On its website and social media platforms, the Bogus AC Group entices sellers/merchants in order to improve store ranking, which in turn, will provide more opportunities and secure more customers.4 Under the claims to be the "largest commercial intermediary platform in the

Bogus Ac Group, because of the guaranteed commissions. However, as soon as a member-investor parts with his/her money, it can no longer be member-investor is held hostage by the Bogus AC Group which demands essentially involves soliciting money from the investing public which it a complaint against the Bogus AC Group, have been obtained by the latter service fees. The scheme is attractive and has in fact enticed a recovered. The evidence on record shows that in some instances, the for additional investment as a condition for the return of the original investment. requires to be sent directly to the accounts of its managers/operators. The amounts paid by its members, a number of whom have already filed through fraudulent machinations y making member-investors believe that they are purchasing consumer goods or paying taxes and similar considerable number of member-investors i.e. 30,000 as claimed by the The unauthorized investment scheme of the Bogus AC Group

investment scheme is being offered on the website of the Bogus AC Group accessible at https://www.77777shop.vip/index/support/index.5 The investigation likewise revealed that the unregistered

DTI Certifications and SEC Registrations shown below:6 To entice the public to invest, the Bogus AC Group is using the fake

4 Motion (ni), Photocopy of Complaints attached as Annex "A." 5 Motion "Annex B" 6 1bid. CERTIFIED TRUE COPY OF SEC -OGC

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In the matter of: Ayala Corporation Group, Inc., et al. SEC CDO Case No. 02-24-110 Cease and Desist Order Page 4 of 12

dt H AYALA COI RPORATION BUDGETARIAN ONUNE SHO AyalA CoPoratioN Group. InC.

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Ayala Corporation's Public Affairs Group - External Affairs & Relations how to address the apparent use and misrepresentation of its company Team ("Ayala Corporation"), seeking guidance from the Commission on On 22 September 2023, the EIPD received an electronic mail from

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In the matter of: Ayala Corporation Group, Inc., et al. SEC CDO Case No. 02-24-110 Cease and Desist Order Page 5 of 12

misleads the public into the belief its operations are legitimate and is logo on various social media platforms of the Bogus Ac Group which connected with Ayala Corporation.

an application or a website dedicated to investments. Ayala Corporation involvement in the investment solicitation activities of the Bogus Ac also informed the public that as a listed company, its stocks may only be Group, and has advised the public that Ayala Corporation does not have purchased via licensed stockbrokers accredited by the Philippine Stock Exchange. Ayala Corporation expressly disclaimed and denied any

Section 8 and 12 of the SRC; has not filed any application for the submitted in evidence the Certifications issued by the Company Securities Regulation Department (MSRD), and the Corporate AYALA CORPORATION, AYALA CORPORATION GROUP, INC.,7 COMMERCE are not registered as corporations, partnerships, or One registration of, and/or a license to sell securities; has not been issued any license to sell securities; and is not a registered issuer of mutual funds exchange traded funds and proprietary/non-proprietary shares or membership certificates and timeshares under Sections 8 and 12 of the SRC.10 the unauthorized sale/offer of unregistered securities, the EIPD Registration and Monitoring Department (CRMD), the Markets and AYALA CORPORATION BUDGETARIAN ONLINE SHOP, GLOBAL ONLINE BELLAVITA AYALA CORPORATION,8 and AYALA CORPORATION E Person Corporations (OPCs)9: has not registered any securities under Governance and Finance Department (CGFD) which all confirmed that In support of its allegation that the Bogus AC Group is engaged in

and warning the public not to invest or to stop investing in any scheme offered by the Bogus AC Group and their Agents which are not authorized to solicit investments from the public, not having secured the requisite licenses from the Commission. On 10 October 2023, the Commission issued an Advisory informing

8 A corporation bearing the name Bellavita Land Corp. under SEC Registration No. AS95002879 is registered 1 Ibid, Annexes "F,"."K"M." and "P." 7 A corporation bearing the name Ayala Corp. under SEC Registration No. 0000034218 is registered with the with the Commission (Annex "O."] 9 Ibid, Annexes "E," "G," "J,""O," and "R." Corporation (Annex "J"). CERTFIED TRUE COFY O SEC - OGC

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However, notwithstanding the issuance of the Advisory, the EIPD

investment solicitation activities. 11 continued to receive reports about Bogus Ac Group's unauthorized

ISSUE

Whether the allegations and the evidence presented by the EIPD in support of its Motion warrant the issuance of a CDO.

RULING

The Commission finds merit in the Motion and hereby grants the same.

public in the form of investment contracts without the requisite license from the Commission. Respondents and their Agents are offering and/or selling securities to the The EIPD was able to establish by substantial evidence that

Section 3.1 of the SRC, defines "securities" as follows:

venture and evidenced by a certificate, contract, instrument, whether written Sec. 3. Definition of Terms. -- 3.1. "Securities" are shares participation or interest in a corporation or in a commercial enterprise or profit making or electronic in character. It includes: XXX

ii. Investment contracts, certificates of interest or participation in a profit sharing agreement, certificates of deposit for a future subscription. (Underscoring supplied) xxx". (Emphasis supplied)

An investment contract is defined as follows:

receives nothing more than a broker's commission." underscoring supplied) "An investment contract is a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits primarily through the efforts of others. It is presumed to exist when a person A common enterprise is deemed created when two (2) or more investors "pool" their resources_creating a common enterprise, even if the promoter seeks to use the money or property of other persons on the promise of profits. (Emphasis and

11 Ibid, Annex "T." &YFIERTEECOPYOr SEC -OGC

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In SEC v. Howey Co.2, the US Supreme Court defined an investment contract as a contract or scheme for the placing of capital or laying out of money in a way intended to secure income or profit from its employment. Investment contracts have been used and adopted in various situations

the expectation that they would earn a profit through the efforts of the promoter or someone other than themselves. where individuals were led to invest money in a common enterprise with

Philippines in the landmark case of Power Homes Unlimited Corp. v. Securities and Exchange Commission13 where the Supreme Court held that This concept of an investment contract has since been used in the

following elements: (1) an investment of money; (2) in a common an investment contract in our jurisdiction, to be a security subject to regulation by the Commission, must be proved to be attended by the enterprise; (3) with expectation of profits. (4) primarily from efforts of others. Under this definition, whenever an investor relinquishes control over his or her funds and submits their control to another for the purpose of deriving profits from them, he or she is in fact investing in a security.14

and so holds that Respondents are engaged in the unauthorized sale contract, considering that all the elements of the Howey Test are present. thus: and/or offer of unregistered securities in the form of an investment Applying the foregoing to the instant case, this Commission finds

scheme of the Bogus AC Group, member-investors are required to invested money in amounts ranging from Six Thousand Pesos (Php First, there is an investment of money. Under the investment invest their hard-earned money for the alleged purpose of buying consumer products and services from partner-sellers/merchants. 6,000.00) to Ninety Thousand Pesos (Php 90,000.00).15 The evidence presented by the EIPD showed that investors actually

involves the pooling of amounts which are directly paid to the managers/operators of the Bogus AC Group, for use in the purchase of consumer goods and services. The Bogus AC Group then utilizes common enterprise that is being sustained by the investments that Second, the EIPD was able to show that the investment scheme these amounts to pay the promised commissions. This is the

12 328 U.S. 293 (1946). 13 G.R. No. 164182, February 26, 2008. 14 Investment Co. Institute v. Camp, 274 F. Supp. 624 (D. D.C. 1967). 15Motion (ni), Complaints attached as Annex "A." TEDDCUMENTSON RECOE * CERTIED TRUE COPYOF SEC -OGC V PAGES

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the Bogus AC Group is receiving from the public, and which ensures its continued operations;

Third, under the scheme of the Bogus AC Group, an investor goods and services.16 Investors are "attracted primarily by the prospects of a return on their investment."17 expects to earn commissions from partner-seller/merchants in Amazon, Lazada and Shopee every time they purchase consumer

public to invest in the Bogus AC Group. Fourth, the expectation of profits is derived primarily through the the Bogus AC Group and/or its Agents who, through the use of the social media, website and online applications continue to entice the marketing and managerial efforts of the managers and operators of

website and online applications constitutes public offering as defined unauthorized investment-taking activities using the social media under Rule 3.1.17 of the 2015 SRC IRR, to wit: Furthermore, the act of the Bogus AC Group in carrying out its

securities for sale through any of the following modes shall be presumed to be a public offering: anyone, whether solicited or unsolicited. Any solicitation or presentation of "3.1.17. Public offering is any offering of securities to the public or to

X X X

3.1.17.3 Advertisement or announcement in radio, television, telephone, any other forms of communication;" (Emphasis supplied) electronic communications, information communication technology or

be sold or offered for sale or distribution within the Philippines, if the same is not registered with the Commission in the form of an approved Registration Statement and a Permit to Offer/Sell issued in favor of the applicant, to wit: Section 8.1 of the SRC categorically provides that securities shall not

prospective purchaser." (Emphasis supplied) "SEC. 8 Requirement of Registration of Securities. -- 8.1. Securities shall not be sold or offered for sale or distribution within the Philippines, without a Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each registration statement duly filed with and approved by the Commission.

16 Motion (n1), Photocopy of Complaints attached as Annex "A." 17 ibid, Screenshot of "About Us" THEDOCUMENEE ON RECORD CERTHTED TRUE COPY OR D SEC -. OGC PAGRS

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Supreme Court emphasized that the purpose of the provision of the SRC requiring the registration of securities is to afford the public protection from investing in worthless securities. In the case of Herbosa vs. ClH Development Corporation,i8 the

registration of the securities that they are currently offering or selling. of the investing public. and CRMD all confirm that the Bogus AC Group and its Agents have no license to sell, offer, or deal with securities; neither have they caused the Respondents are therefore in clear and continuing violation of Sec. 8 of the SRC. This justifies the immediate issuance of a CDO for the protection In the instant case, the Certifications issued by the MSRD, CGFD

operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public, thus: of the SRC provides that the Commission may issue a CDO without the necessity of conducting a hearing if, to its mind, the act or practice will Relative to the prayer of the EIPD for issuance of a CDO, Section 64.1

of a prior hearing if in its judgment the act or practice, unless restrained. or irreparable injury or prejudice to the investing public." (Emphasis supplied) investigation or verification, motu proprio or upon verified complaint by any aggrieved party, may issue a cease and desist order without the necessity will operate as a fraud on investors or is otherwise likely to cause grave "Section 64. Cease and Desist Order. -- 64.1. The Commission, after proper

requisites that must be complied with for a valid issuance of a CDO: Under the afore-quoted provision, there are two (2) essential

1. There must be a conduct of a proper investigation or verification; 2. There is a finding that the act or practice, unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public.19 and

substantially complied with in the instant case. This Commission finds that the foregoing requisites have been

investigation which resulted in the gathering and presentation of evidence in support of its Motion i.e. Certifications from the First, the records disclose that the EIPD conducted an independent

1 Securities and Exchange Commission vs Performance Foreign Exchange Corporation (G.R. No154131 July 20, 2006) 18 G.R. No. 210316, 28 November 2016 O

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Certifications and SEC Registrations,2o screenshots of the online complaints and reports from the public; copy of the email of Ayala Commission's CRMD, MSRD, and CGFD; copies of the spurious DTI application, screenshots of deposits made by the public and copies of Corporation reporting the unauthorized use of its logo by the Respondents.

impersonated Ayala Corporation, a publicly-listed holding company, by prejudice them. In this regard, the case of Securities and Exchange offer, and deal with securities. The Bogus AC Group deliberately defraud and steal money from the investing public. The Bogus AC Group provide its unauthorized investment-taking activities a semblance of legitimacy. The foregoing shows a clear intent on the part of the Bogus AC Group to defraud the public which, if unrestrained, will likely to the public that they are legitimate corporations authorized to sell, using its official logo on their social media and platforms, to actually also used spurious DTI Certifications and SEC Registration Certificates to Commission vs. CJH Development Corp.21 is apt and instructive, thus: Second, Respondents willfully employed fraud by making it appear

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

The act of selling unregistered securities would necessarily operate as a the SRC clearly states that securities shall not be sold or offered for sale or with and approved by the SEC and that prior to such sale, information on the securities, in such form and with such substance as the SEC may prescribe, shall be made available to each prospective buyer." (Emphasis supplied) 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 distribution within the Philippines without a registration statement duly filed

AYALA CORPORATION, AYALA CORPORATION E COMMERCE, and their representatives, salesmen, solicitors, agents, uplines, enablers and influencers, and any and all persons claiming and acting for and in their CORPORATION GROUP INC. AYALA CORPORATION BUDGETARIAN ONLINE SHOP, GLOBAL ONLINE AYALA CORPORATION, BELLAVITA WHEREFORE, premises considered, BOGUS AYALA

21 G.R. No. 210316, November 28, 2016. 20 Motion (n1), par. 5. GEC-OGC

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In the matter of: Ayala Corporation Group, Inc., et al. SEC CDO Case No. 02-24-110 Cease and Desist Order Page 11 of 12

behalf, are hereby directed to IMMEDIATELY CEASE AND DESIST from further engaging in, promoting and facilitating selling and/or offering for activities/transactions relative thereto, until the requisite registration and registration statements are duly filed with and approved by the Commission, and the corresponding license and/or permit to offer/sell sale securities in the form of investment contracts and/or other securities are issued.

institute the appropriate administrative and criminal action against any persons or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers, or the like for and on their behalf. agents, uplines, enablers and influencers, and any and all persons claiming and acting for and in their behalf, are likewise directed to CEASE CORPORATION BUDGETARIAN ONLINE SHOP, GLOBAL ONLINE CORPORATION E COMMERCE, representatives, salesmen, solicitors, their internet presence relating to the transactions and investment scheme covered by this Cease and Desist Order. The Commission will AYALA CORPORATION, BELLAVITA AYALA CORPORATION, AYALA BOGUSAYALA CORPORATION GROUP INC. AYALA

assets, properties, real or personal, including but not limited to bank investors. any business involving the funds covered by this CDO in its depository banks, and from transferring, disposing, or conveying in any manner, all deposits, of which the 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 subsidiaries claiming and acting for and on its behalf from transacting ONLINE SHOP, GLOBAL ONLINE AYALA CORPORATION, BELLAVITA partners, operators, representatives, promoters, and all .persons, conduit entities and CORPORATION GROUP INC. AYALA CORPORATION BUDGETARIAN AYALA CORPORATION,AYALA CORPORATION E COMMERCE, their Finally, the Commission hereby PROHIBITS THE BOGUS AYALA directors, officers, salesmen agents.

posting of this Cease and Desist Order in the Commission's website considering that the BOGUS AYALA CORPORATION GROUP INC. ONLINE AYALA CORPORATION, BELLAVITA AYALA CORPORATION. AYALA CORPORATION E COMMERCE are not registered entities. AYALA CORPORATION BUDGETARIAN ONLINE SHOP, GLOBAL The EIPD of the Commission is hereby DIRECTED to cause the

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In the matter of: Ayala Corporation Group, Inc., et al. SEC CD0 Case No. 02-24-110 Cease and Desist Order Page 12 of 12

report, by way of a pleading, to the Commission En Banc within ten (10) days from receipt of this Cease and Desist Order. The EIPD is FURTHER DIRECTED to submit a formal compliance

Communications Technology, for their information and appropriate Company Registration and Monitoring Department, Corporate Governance and Finance Department, and the Information and Communications Technology Department of this Commission, the Bangko Sentral ng Pilipinas, the Department of Trade and Industry, the National Privacy Commission, and the Department of Information and action. Let a copy of this Cease and Desist Order be furnished to the

the Commission En Banc through the Office of the General Counsel. Section 4-3 of the 2016 Rules of Procedure of the Commission, the parties subject of this CDO may file a verified motion to lift the CDO within five (5) days from receipt thereof. The Motion to Lift the CDO must be filed to In accordance with the provisions of Section 64.3 of the SRC and

FAIL NOT UNDER PENALTY OF LAW.

SO ORDERED.

Makati City, Philippines.

EMILIO B. AQUINO* Chairperson

JAVEY Commissioner PAUL D. FRANCISCO KE Commissioner LEF

KARLO(S} BELLO Commissioner MCJILL BRYANT T. FERNANDEZ* Commissioner

*On Official Business SEC CC

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