SEC En Banc Case No. 08-11-133 In the matter of PIPC Corproation (formerly known as CARAVAGGIO HOLDINGS, INC.)

SEC Bldg. EDSA, Greenhills, Mandaluyong City SECURITIES AND EXCHANGE COMMISSION Republic of the Philippines

Investor Protection Department), HOLDINGS, INC.), (now known as the Enforcement & In the matter of PIPC CORPORATION (formcrly known as CARAVAGGIO ENFORCEMENT AND PROSECUTION DEPARTMENT Petitioner. SEC Admin. Case No. 08-11-133 For: Revocation of Corporate Registration

DECISION

4-9 of the 2006 Rules of Procedure of the Securities & Exchange Commission (SEC). the corporation can do or is doing to the great prejudice of or damage to the general public under Sec. 6 (l) (2) of Presidential Decree No. 902-A (PD 902-A), as amended. It also prays for the issuance of Summons to be effected by publication pursuant to Section (EPD), praying for the revocation of the Certificate of Registration of PIPC CORPORATION (PIPC Corp.) on the ground of serious misrepresentation as to what This resolves the Petition, filed by the Enforcement and Prosecution Department

the same were posted in the SEC website. officers. Because PIPC Corp. and its officers moved out of their registered addresses and their whereabouts are unknown and cannot be ascertained by diligent inquiry, service of summons upon PIPC Corp. and its officers were ordered to be effected by publication on 19 October 2011. On 06 January 2012, the EPD filed a Compliance stating that the Order and the Summons were published in the Philippine Star on 29 November 2011 and that Summonses were issued but were returned unserved upon PIPC Corp. and its

PIPC Corp. is considered as "in default" pursuant to Section 3-12 of the same Rules' of Procedure, which reads: Since no Answer has been filed within the period stated in the published Order.

required to submit ex parte additional evidence. judgment granting the complainant such relief as the complaint may warrant, unless the Hearing Panel or Officer determines that the complainant should be default. The Hearing Panel or Officer shall, motu proprio, proceed to render answer the complaint within the abovestated period, he shall be considered as in "Sec. 3-12. Effect of Failure to Answer. If the respondent fails to

Enforcement and Prosecution Department, Petitioner (formerly known as Caravaggio Holdings, Inc.). SEC Administrative Case No. 08-11-133 In the matter of PIPC Corporation Page 2 of 6

evidence. Hence, we resolve the petition based on the aifegations supported by substantial

revocation of certificates of registration of.corporations that violate the laws it implements. Petitioner EPD is the SEC's department mandated to prosecute cases for the

Makati City. Its primary purpose, as stated in its Amended Articles of Incorporation,3 is No. A200102293.' Based on the latest General: Information Sheet2 filed with the SEC, its principal office address is located at 315t Floor, Citibank Tower, 8741 Paseo de Roxas, "Caravaggio Holdings, Inc." with the SEC on 21 February 2001 under SEC Registration as follows: Respondent PIPC Corp. is a stock corporation originally registered as

special management services and/or specific technical, consultancy or advisory kinds of enterprises, projects or programs. Within this frame of reference, the scope of the Corporation business shall include but not necessarily be limited to the services specifically stated hereunder, it being understood that the enumeration of specific purposes shall not be held to be a restriction to the undertaking by the Corporation of allied and/or incidental services to that hereby specifically set forth, or to the carrying on by the Corporation of other activities allocation of its resources, except management of funds, portfolio and similar assets of the managed entity _or_corporation and without engaging as securities adviser, broker/dealer, and investment house." services including research and allied facilities may be offered to any and all necessary to its existence, to its efficient operation, or conducive to the proper "To establish a lawful and formal medium through which general or

arm of its clients, whether foreign or local, providing management, consultancy or investment house or engaging in the management of funds, portfolio and: similar assets of the managed entity or corporation. advisory services, without engaging in activities of a securities adviser, broker/dealer, and In other words, PIPC Corp. was authorized to act only as a technical or research

the Commission received several complaints alleging, among others, that PIPC Corp.. individuals (complainants-investors) such amounts of money to be invested in through its directors, officers, employees and agents, has solicited from several Notwithstanding the limitations provided by law and its Articles of Incorporation.

3 Id., p. 1 83, Vol.' V. 2 Id., pp. 1 84-189, Vol. V, 2006 GIS. ' Records, page 192, Vol. V.

Enforcement and Prosecution Department, Petitioner (formerly known as Caravaggio Holdings, Inc.), SEC Administrative Case No. 08-11-133 In the matter of PIPC Corporation Page 3 of 6

benefits, distributed brochures and solicited monies from complainants-investors and that agents conceptualized and packaged the program including the entitlement to the the latter relied wholly on their representations and enticements. Performance Investments Products Corporation (PIPC, a fully owned subsidiary of the Performance Group of Companies) with a promise of higher returns ranging from 12% to 18% interest per annum. It was also alleged that the funds of various investors pooled, batched and deposited by PIPC Corp will form a massive asset base, which will be entrusted to professional and experienced foreign traders chosen by PIPC Corp, while the profits generated will be distributed to the investors without any participation or effort on their part. It was further alleged that PIPC Corp.'s directors, officers, employees and

or investment house. under its Articles of Incorporation, or specifically, whether it was holding itself out to the public as licensed to offer or sell securities, or to act as a securities adviser, broker/dealer At the core of this case is determining whether PIPC Corp. exceeded its purposes

exercised by a corporation to those conferred by law, its Articles of Incorporation and those necessary or incidental to the exercise of the powers so conferred. Section 45 of the Corporation Code defines and limits the powers that may be

license or permit is likewise obtained.4, clear in its Articles of Incorporation. Clearly, it is not authorized to engage in the licensc or permit to operate from the SEC or other government agency unless such management of funds, portfolio and similar assets of the managed entity or corporation. Nor is it authorized to act as securities adviser, broker/dealer or investment house. While its Certificate of Registration states that juridical personality is granted to the corporation. PIPC Corp. is not authorized "to undertake business activities requiring a secondary In the instant case, the limits of the power of PIPC Corp. as a corporation is very

statement duly filed with and approved by the SEC. Securities, as defined in Section 3.1 offering for sale or selling of securities within the Philippines without a registration of the SRC, include investment contracts. An investment contract is a contract, transaction or scheme whereby a person invests his money in a common enterprise and is investment contract exists when there is (1) an investment of money, (2) in a common enterprise, (3) with expectation of profits, and (4) primarily from efforts of others. led to expect profits primarily from the efforts of others. In Power Homes Unlimited Corporation v. Securities and Exchange Commission, the Supreme Court held that an Anent thereto, Section 8 of the Securities Regulation Code (SRC) prohibits the

5 Rule 3 of the Amended Implementing Rules and Regulations of the SRC. 6 G.R. No. 164182, 26 February 2008. 4 Records, p. 192, Vol. V.

Enforcement and Prosecution Department, Petitioner (formerly known as Caravaggio Holdings, Inc.), SEC Administrative Case No. 08-11-133 In the matter of PIPC Corporation Page 4 of 6

the end of the eight calendar week lock-in period, will be distributed among the investors. bank deposits. Company. and product brochures? distributed by PIPC Corp. to deposited by PIPC, through PIPC Corp., with a PIPC designated bank account acting as offshore account in the name of Performance Group of Companies (Performance Group), Corp., through its directors, officers, employees and agents, enticed complainants- investors to place their money in PIPC with a promise of higher investment returns than complainants-investors reveal that funds of various investors are pooled, batched and custodian bank, to form a massive asset base. The funds will thereafter be remitted to ar and will thereafter be traded by currency traders selected and monitored by PIPC Corp Profits generated from such trading is credited into the Profit and Loss Account, which at In the instant case, all the elements of an investment contract are present. PIPC

investor and PIPC to participate in the global financial market." monitors the activities of the currency traders, offers investment opportunities with professional management and assists in completing a balanced investment portfolio by indicates that PIPC Corp. is offering for sale to the public the investment product called optimizing capital investment with calculated risk management. Said brochure also "Performance Managed Portfolio (PMP), which is a partnership agreement between the The same company and product brochures also show that PIPC Corp. selects and

PIPC Corp., through its directors, officers, employees and agents, enticed complainants- financial institutions. investors to place their monies in PIPC with a promise of profits ranging from 12% to opposed to other types of traditional investment products offered by banks and other 18% interest per annum, through its investment product PMP, at relatively low-risk as The unrebutted affidavits submitted by the complainants-investors maintain that

to his dollar account in the Philippines after deducting trading commissions and the representations of PIPC Corp.'s directors, officers, employees and agents that the funds invested would be managed by experienced fund managers, and that the PIPC foreign currency trading and as provided in the PMP, profits realized are allocated among the investors and PIPC. Thereafter, the latter will remit the profit earned by the investor Corp. is the Philippine office/branch of Performance Group, which has affiliates in different countries, and that its directors, officers, employees and agents secured proper management fees therefrom. Complainants-investors further contend that they relied on The same affidavits also aver that PIPC Corp. utilized the invested funds for

7 Records, pp. 54-67, Vol. I. s Records, pp. 1-169, Vol. V; pp. I 364, Vol. IV; pp. 1-364, Vol.III; pp. 1-368, Vol. II; and pp. 1-416, Vol. I.

Enforcement and Prosecution Department, Petitioner (formerly known as Caravaggio Holdings, Inc.). SEC Administrative Case No. 08-I I -133 In the matter of PIPC Corporation Page 5 of 6

individual licenses from the SEC as salesmen of securities to enable them to solicit, offer and sell the same.

(USD$3,000,000.00) worth of investments have been collected by PIPC Corp. from complainants-investors alone. The same affidavits also reveal that more than Three Million U.S. Dollars

constitutes a profit-seeking business venture offering an opportunity to its investors to share in the profits of PIPC without any participation in its operation. Consequently, the act of distributing brochures and solicitation by salesmen, agents, employees, officers and directors of PIPC Corp. constitutes a public offering of securities as defined under Rule 3. (1) (N) of the Amended Implementing Rules and Regulations of the SRC, and therefore, requires prior registration with the SEC. Clearly, the requisites of an investment contract are present as the entire scheme

had secured any exemption from the requirement of registration with the SEC. sell securities in the Philippines. The certifications' issued by the Corporation Finance Sections 8 and 12 of the SRC. There is also no record showing that these corporations Department of the SEC clearly show that PIPC Corp., Performance Investment Products Corporation, Performance Investment Products Corporation B.V. and Performance Investment Products Corporation Ltd. are not registered issuers of securities pursuant to However, PIPC Corp. did not obtain any license or authority to issue or offer or

personality is granted to the corporation but "does not authorize it to undertake business selling securities to complainants-investors, PIPC Corp., through its directors, officers, activities requiring a secondary license or permit to operate from the SEC or other government agency unless such license or permit is likewise obtained.10, By offering and employees and agents, engaged, although indirectly, in the business of managing funds of PIPC, and has acted as a securities adviser, broker and dealer of said securities. Moreover, PIPC Corp's Certificate of Registration only states that juridical

required license from the SEC while holding itself out as authorized to do so, violates not only Section 8 of the SRC but also contradicts the primary purpose stated in PIPC Corp.'s Corp. of offering and selling investment contracts to the general pubiic without the Articles of Incorporation. Clearly, these acts constitute serious misrepresentation as to what the corporation can do or is doing to the great prejudice or damage of the public warranting the revocation of PIPC Corp.'s Certificate of Registration pursuant to Sec. 6 (l) (2) of Presidential Decree No. 902-A (PD 902-A). Accordingly, the acts by the salesmen, agents, employees and directors of PIPC

Id., p.299-3 02, Vol. 2. :o See note 4.

Enforcement and Prosecution Department, Petitioner (formerly known as Caravaggio Holdings, Inc.). SEC Administrative Case No. 08-11-133 In the matter of PIPC Corporation

Page 6 of 6

Accordingly, the Certificate of Registration of PIPC CORPORATION is hereby REVOKED WHEREFORE, premises considered, the instant Petition is hereby GRANTED

once in a national newspaper of general circulation. Let a copy of this Decision be posted in the Commission's website and published

the Information & Communications Department for its information and appropriate Monitoring Department, Enforcement and Investment Protection Department, Markets & Securities Regulation Department, Human Resources & Administrative Department and Also, let a copy of this Decision be furnished to the Company Registration &

action.

SO ORDERED.

17 October 2013, Mandaluyong City, Philippines.

TERESITA J. HERBOSA* Chairperson

MA. JUANITAE. CUETO Commissioner MANUEL HUBERTO B. GAITE Commissioner

datut4Mot ELADIOM Commis$ioner JALA ANTONIETA FORTUNA-IBE Commissioner

*On official leave