Mysuper Saver Company Limited

Securities and Exchange Commission Republic of the Philippines Department of Finance

In the matter of: MYSUPER SAVER COMPANY LIMITED

SEC CDO Case No.09-16-035

ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT, Movant.

CEASE AND DESIST ORDER

corresponding license to offer/sell is issued. filed on 13 September 2016 by the Enforcement and Investor Protection Department (EIPD) praying to enjoin MYSUPER SAVER COMPANY LIMITED securities in the form of investment contracts until the requisite registration statement is duly filed with, and approved by, the Commission and the (MSS) and its representatives/agents from selling and/or offering for sale This resolves the Motion for Issuance of Cease and Desist Orderi (Motion)

Registration No. PL201403978.2 Its principal office is located at 3rd Floor, Unit C, South National Highway, Brgy. Tiniguiban, Puerto Princesa, Palawan3. Its primary purpose, as stated in its Articles of Limited Partnership, is: Juratil and registered with the Commission on 26 February 2014 with Company Westgate Tower, Investment Drive, Madrigal Business Park, Ayala Alabang Muntinlupa City. MSS amended its principal office address to RJML Bldg.KM.3 MSS is a partnership created by Nelson Daryl F. Biasura and Rainer Jay J.

selling, distributing, marketing, importing and exporting at kinds of goods, wares, merchandise or products, whether natural or "To engage in, conduct and carry of (sic) the business of buying. wholesale/retail basis in so far as may be permitted by law, all kinds into all kinds of contracts for the export, import, purchase acquisition, sale at wholesale/retail basis and other disposition for its own account as principal or in representative capacity as manufacturer's representative, merchandise broker, indentor of goods,wares,merchandise of every kind and description, to enter commission merchant, factors or agents, upon consignment of all artificial."4

Princesa City, Palawan. The email senders reported that MSS promises its inquiring on the legitimacy of MSS' investment-taking activities in Puerto Sometime in February 2016, EIPD received emails5 from the public

5 Annexes "C, D. "E of the Motion. 2 Annex A of the Motion. 3 Annex B of the Motion 1 Dated 09 September 2016. 4 bid

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investors that for an entry fee of Php 3,000.00, an investor will earn Php 10,000.00 within 120 days.

An EIPD team, on 18 March 2016, conducted a surveillance and ocular inspection of MSS' previous principal office in Muntinlupa City. However, they discovered that MSS did not operate in the said address.6 To confirm the existence of MSS, MSS' partners' Tax Identification Numbers (TIN). EIPD requested for certifications from the:1.) Office of the City Mayor of Puerto Princesa as to MSS'business permit;and 2.) Bureau of Internal Revenue as to the This prompted EIPD to conduct an investigation on the operations of MSS.

be MSS' "Frequently Asked Questions?" which illustrated the latter's investment scheme. Then,on 14 April 2016, EIPD received a certification8 from the Permits/Licensing Division of the Office of the City Mayor of Puerto Princesa City Brgy. Tiniguiban, Puerto Princesa City, was issued a Mayor's Permit for CY 20169. The permit authorizes MSS to engage in retail and wholesale business of essential/prime commodities; rice/corn/grains; and non-essential/non-prime stating that MSS, which is located at Lacsamana Bldg., South National Highway commodities. On 06 April 2016, EIPD received another email showing what appears to

that MSS entices its investors to place an investment of Php 3,000.00 for 1 after a period of four (4) months, the investors are entitled to a return of 300% soliciting investments from the public in Palawan. The email-sender described account. Upon their investment,they will receive corresponding products. Then for every Php 3,000.00 worth of investment. Labendia also claims that MSS was able to recruit more than 6,000 investors in Palawan. Some of these investors placed initial investments amounting to Php 300,000.00 and expect to earn more than Php 1,000,000.00. On 25 April 2016, EIPD received another email10 reporting that MSS is

Government (DILG) that they were conducting an investigation on MSS's investment taking activities in Palawan. Detection Group (CIDG) Region 4B and the Department of Interior and Local Thereafter, EIPD was informed by the Criminal Investigation and

Palawan. It was reported that MSS continues to solicit investments from the public. Then, EIPD received again reports11 about MSS's investment activities in

Company Registration and Monitoring Department (CRMD) stating that MySuper Subsequently, EIPD secured Certifications12 from the Commission's (1)

6 Paragraph 6 of the Motion. 8 Annex "H" of the Motion. 9 Permit Number BP6140 issued on21 January 2016 and expires on 11 Annexes "K" and -L" of the Motion. 7 Annex "F" of the Motion. 10 Annex "J" of the Motior ber201

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Company Limited has not registered issuer of mutual funds including exchange traded funds, membership certificates, time shares and registered but unlisted equity securities under Section 17.2 (a) of the Securities Regulation Code (SRC) and therefore not licensed to offer or sell such securities to the public. Savers Company Limited was not issued a secondary license as a Broker and/or Dealer of Securities, Dealer in Government Securities, Investment Adviser of an Investment Company, Investment House and Transfer Agent nor is there any Governance and Finance Department (CGFD) stating that MySuper Savers pending application for the said secondary licenses; and (2) Corporate

verify and investigate MSS operations. The EIPD Team was able to interview some investor-complainants of MSS, to wit: Teodolfo S. Azada Jr., Bernadeth C. Ocampo, Maydora S. Pulao, Josephine D. Cabitac, Asah B. Pedoy, and Donald D. Santos. Then, an EIPD Team went to Puerto Princesa City, Palawan to further

stated that after investing, MSS gave them products such as alkaline drops and every Php 3,000.00-3,500.00 worth of investment, they will receive Php 10,000.00-12,000.00 as a return after 120 days, which was later reduced to 15 days as a promotion. All of the complainants presented to the EIPD Team their MSS Membership Application Forms and receipts of their investment. They also rice. In their statements, all claim that they were promised by MSS that for

15 days. However, he was not able to receive the promised return.13 promise that investors will receive Php 12,000, as a return of investment, within Teodolfo S. Azada Jr. states that he invested Php 3,000 in MSS because of a

36,000.00 using the names of her family members. However, after 5 months she in MSS when she heard in an orientation that for an investment of Php 3,000.00, has not received the promised return. She claims that she was enticed to invest the pay-out would be Php 10,000.00.14 Bernadeth C. Ocampo avers that she invested the amount of Php

however she likewise did not receive the promised return.15 Maydora S. Pulao asserts that she invested the amount of Php 21,000.00,

members invested an aggregate amount of Php 96,000.00, however, they were not able to receive any return of their investment.16 Josephine D. Cabitac states that she together with some of her family

16 Annex -S* of the Motion. Sinumpaang Salaysay dated 09 August 2016 I2 Annexes "M" and "N" of the Motion. 14 Annex "Q" of the Motion. 13 AnnexPof the Motion 15 AnnexRof the Motion

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she was able to receive the promised return. This enticed her to place a second MSS. However, this time she did not receive any return of her investment. She also claims that during a seminar conducted in Balayong Hotel in Puerto Princesa City, she was able to hear Jay Juratil enticing potential recruits to invest in MSS.17 investment of Php 9,000.00 with MSS. She also recruited her relatives to join Asah B. Pedoy states that when she invested for the first time with MSS,

claims that he paid the said amount and received alkaline drops and 10 kilos of rice. However, he did not also receive any return of his investment.18 Donald D.Santos declared that he invested Php 3,000.00 with MSS. He

Nelson Daryl F. Biasura (Biasura), one of MSS partners. Biasura admitted that MSS is requiring as membership fee the payment of Php 3,000.00 which will reduced to 15 days as an anniversary promotion. He added that the investor will receive a product package comprising of alkaline water drops (5 bottles = 2 of entitle members to earn Php 10,680.00 within 120 days.The period to earn was 100 ml & 3 of 30 ml). Biasura also claims that for every investment of Php 3,000.00, the investor-member will be eligible to buy grocery products, such as dishwashing liquid, coffee and soap, at a discounted price. On 01 September 2016, the EIPD team conducted a conference19 with

for MSS and did not participate in the operations, product inventory, marketing he is just a limited partner in MSS. He claims that he provided for the software and financial management of the company. He declares that it was Rainer Jay Juratil who handles all the affairs of MSS.20 On 08 September 2016, Biasura filed his position paper which states that

any pending application for registration/permit to sell securities.21 Regulation Department (MSRD) certified that MSS has not registered any securities pursuant to Section 8 and 12 of the SRC. Likewise, MSRD has not issued a Permit to Sell securities in favor of MSS. Also, MSS has not filed nor has Thereafter, on 06 October 2016, the Commission's Market and Securities

on the allegations and evidence presented in the Motion. The foregoing considered, we now resolve the case on the merits based

We find merit in the Motion.

that MSSpromises investors A judicious examination of the evidence presented by the EIPD indicate p to 333%return/profitforan

allegedly gives a product package to its investors comprising of 5 bottles of investment/membership fee of Php 3,000.00 per account within 120 days.MSS

21 MSRD Certification dated 06 October 2016. 20 EIPD's Ex Parte Manifestation dated 28 September 2016 17 Annex T" of the Motion, Pedoy's Sinumpaang Salaysay dated 09. August 2016 18 Annex "U" of the Motion, Santos Sinumpaang Salaysay dated 09 August 2016. I9 Annex "V" of the Motion

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alkaline water drops. MSs also allows its investors to purchase their grocery products at a discounted price. Clearly, the payment of Php 3,000 is not commensurate to the value of the product packages that MSS provides to its investors. Hence, the very incentive for an investor to place his money in MSS is the promised high return of 333% of the investment.

is led to expect profits primarily from the efforts of others. An investment is An "investment contract" means a contract, transaction or scheme (collectively presumed to exist whenever a person seeks to use the money or property of a common enterprise, even if the promoter receives nothing more than a broker's commission. 'contract') whereby a person invests his money in a common enterprise and others on the promise of profits. A common enterprise, on the other hand, is deemed created when two (2) or more investors'pool'their resources -creating Stated otherwise, MSs' scheme can be considered as investment contract.

origin. It traces its roots from the US Supreme Court cases of SEC v. W.J. Howey Philippines, in the case of Power Homes Unlimited Corporation v. Securities and Co.22 and SEC v.Glenn Turner Enterprises, Inc.23.It has since been adopted in the Exchange Commission24, where the Suprem contract in our jurisdiction, The concept of an investment contract in the Philippines is of American f ecuritv Court held that an investment subject to regulation by the

(2) in a common enterprise; (3) with expectation of profits; and (4) Commission, must have the following elements: (1) an investment of money; primarily from efforts of others

another for the purpose of deriving profits from them, he or she is in fact investor relinquishes control over his or her funds and submits their control to investing in a security.25 Under the foregoing elements of an investment contract, whenever an

in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character"26 and includes an investment contract.27 As a rule, securities should not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with, and approved by, the Commission28. Securities which are "shares, participation or interests in a corporation or

of complainants and documents, the four (4) requisites of an investment contract, to wit: In the instant case, EIPD was able to establish, through sworn statements

22 328 U.S.293, 66 S.Ct. 1100, 90 L. Ed.1244. 163 A.L.R. 1043 (1946). 23 474 F.2d 476.414 U.S.821.94(1973) 24 G.R. No. 164182, 26 February 2008 25 investment Co.Institute v.Camp.274F.Supp.624 (D.D.C.1967) 26 Section 3.1.. SRC. 27 Section 3.1.(b). Id. 28 Section 8.I. of the SRC.

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reduced to 15 days as a promotion. enterprise or venture in a manner that subjects himself to financial loss.29 In the instant case at bar, investors place the minimum amount of Php 3,000.00 in MSS where they expect a profit amounting to 333% after 120 days, which was later An investment of money occurs when an investor commits money to an

investment of funds or (ii) the sharing of profits.31 The joint participation by investors in the same investment enterprise, achieved by pooling the invested funds for a common purpose, is required in order to satisfy the common enterprise" 30 One of these tests is the horizontal commonality approach. Under element of the modified Howey test involves an inquiry into whether the said transaction involves the joint participation of more than one investor in (i) the this test, the determination of whether a transaction satisfies the commonality enterprise element.32 Several tests have evolved to determine what constitutes "common

investors' money in MSS without a productive enterprise. Thus, the source of the promised returns is the monies invested by incoming investors. MSs is invested. There are several complainants33 who claimed that they pooled their monies to invest in MSS. In short, the common enterprise is the pooling of current investors. Php 3,000.00 in MSS' business in the hope of earning 333% of the amount dependent upon the influx of new investor's monies to make its payments to In the instant case, an investor, together with the others, places at least

investment within 120 days, which later reduced to 15 days. the development of the initial investment, or participation in earnings resulting to place their monies in MSS because of the high yield returns of 333% of their from the use of investors' funds. In MSS' scheme, its investors are "attracted primarily by the prospects of a return on his investment.34 Investors are enticed Profits may be generated from either capital appreciation resulting from

other than the investors are undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise". must depend primarily from the efforts of others. In Turner35, the US Supreme Court adopted a more realistic test which is "whether the efforts made by those To be considered as an investment contract, the expectation of profits

35 Note 28, Supra. 29SECv.International Mining ExchangeInc.515F.Supp.1062 30 in the Matter of Octopus Network inc., SEC-PED Case No. 98-2220, 22 May 1998. 32 Note 27, citing Wasnowic v. Chicago Ba. of Trade 352 F Supp 1066. 33 Note 13-18.Supra. 31 Note 27, citing 69 Am Jur 2d citing Stenger v. R.H. Love Galleries, Inc. 741F2d 144 34 Note 13-17, Supra

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after a period of 120 days or 15 days. Evidently, investors primarily earn from promotes the investment scheme.36 It operates an office in Palawan. It maintains a website - mysupersaver.com.ph, wherein investors can check their accounts. Investors simply place their monies in MSS and wait for the promised return the efforts of others. In the instant case, it is MSS, who develops, administers, maintains and

to be offering/selling investment contracts to the public. Finding all the elements of an investment contract present, MSS is found

As enunciated in Power Homes37, thus:

it must be registered with public respondent SEC, otherwise the SEC cannot protect the investing public from fraudulent securities. The strict regulation of securities is founded on the premise that the capital markets depend on the investing public's level of confidence in the system. "As an investment contract that is security under R.A. No. 8799

MSS is not authorized to offer/sell securities in the form of investment contracts to the public. Also, it is not licensed as a broker, dealer, salesman or associated person to offer/sell securities to the public. In the instant case, certifications from CRMD, CGFD and MSRD show that

the persons acting for it. In view of the above discussions, we see three (3) violations by MSS and

involved are exempt securities or exempt transactions which are not covered by with and approved by the Commission.38 Prior to such sale, information on the prescribe, shall be made available to each prospective purchaser.39 As discussed above, MSS is engaged in the offering and/or selling of securities in the form of investment contracts which need prior registration with the Commission. the requirement of registration, securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed securities, in such form and with such substance as the Commission may First, the non-registration of securities. Under the SRC, unless what is

the business of buying or selling securities in the Philippines as a broker or person of any broker or dealer. The law provides that no person shall engage in dealer, or act as a salesman, or an associated person of any broker or dealer unless registered as such with the Commission.40 In the instant case, MSS and/or Second, the non-registration as broker, dealer, salesman, or associated

37 Note 28 Supra. 38 Section 8.1. SRC. 40 Section 28.1, SRC. 36 Note 19. Supra. 39 d

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all persons acting for and on their behalf are acting as either broker or dealer or salesman without being registered as such.

shall possess or exercise any corporate powers except those conferred by the conferred.41 In that instant case, MSS's primary purpose does not authorize to placements from the public. Corporation Code or by its Articles of Incorporation/Articles of Partnership and except such as are necessary or incidental to the exercise of the powers so engage in the business of soliciting and accepting investments and money Third, the commission of ultra vires acts. No corporation or partnership

enjoined pursuant to Section 64 of the SRC which provides that: The violations committed by MSS and its agents should immediately be

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

reports from the public about MSS' investment-taking activities. Thereafter, EIPD Azada Jr., Bernadeth C. Ocampo, Maydora S. Pulao, Josephine D. Cabitac, Asah B. Commission may issue a cease and desist order: First, there must be a proper investigation or verification42. In the instant case, EIPD received numerous conducted a thorough investigation and even went to Palawan to verify these allegations. The EIPD investigating team was able to confirm and verify the reports of MSS' investment scheme when they were able to talk to Teodolfo S. Pedoy and Donald D. Santos. From the foregoing, there are two essential requisites before the

to EIPD that MSS is receiving investments from the public with a promised of they conducted a conference with Biasura, one of the partners. Biasura admitted investment contracts without a license from the Commission. high returns. EIPD was able to sufficiently establish, through sworn statements and documentary evidence, that MSS is offering/selling securities in the form of Further,EIPD was able to confirm MSS' investment-taking activities when

will operate as a fraud on investors or is otherwise likely to cause grave or implementing its investment schemes, and if it remains unregulated or irreparable injury or prejudice to the investing public43. It should be noted that without a license from the Commission, MSS' investment-taking activities cannot be regulated nor supervised. Thus,it would have a wide latitude in crafting and Second, there must be a finding that the act or practice, unless restrained.

42 Securities and Exchange Commission vs. Performance Foreign Exchange CorporationGRNo 154131, July 20, 2006. 41 Section45,Corporation Code of the Phiippines 43 bd

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unsupervised, likely defraud the investing public. And in fact, it has already defrauded several complainants by enticing them to invest without paying the promised profit.

Supreme Court expounded on the Commission's duty on the protection of the investing public, to wit: In Primanila Plans, Inc. vs. Securities and Exchange Commission44, the

issued by the SEC motu proprio, it being unnecessary that it results from a verified 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 SEC is obliged to protect. "The law is clear on the point that a cease and desist order may be

form of investment contracts or any others of the same nature until the requisite in the CommissionMYSUPER SAVER COMPANY LIMITED, its partners,officers directors, agents, representatives, conduits, assigns, and any and all persons from engaging in activities of selling and/or offering for sale securities in the the corresponding to offer/sell is issued. claiming and acting for and in behalf and under their authority are hereby ordered to IMMEDIATELY CEASE AND DESIST45,UNDER PAIN OF CONTEMPT registration statement is duly filed with and approved by the Commission and WHEREFORE, premises considered and pursuant to the authority vested

presence relating to above-stated investment activities. The Commission will 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 in behalf of the subject corporations. Furthermore, the subject partnership is directed to cease its internet

the main office and/or branches, if any, of MYSUPER SAVER COMPANY LIMITED. COMPANY LIMITED, their Partners, General Manager, Treasurer, In-House Counsel or other officers, if any; and 2) post copies of the Order at the entrance of The EIPD is hereby DIRECTED to: 1) serve this Order to MYSUPER SAVER

published in a national newspaper of general circulation; 3.) furnished to all the Commission's departments for their information and appropriate action. Let a copy of this Order be: 1.) posted in the Commission's website; 2.)

44 G.R No. 193791, August 6, 2014. 45 Section 64.1. SRC, The Commisionfter proper investigation or verification, motu propi. or upon verified complaint by any aggrievea party,may issue a ceas prejudice to the investing public. acticeunlessrestrained.wil operate as fraud on investors or is otherwise likely to cause grave or irreparable injury or d desist order without the necessity of a prior hearing if in its judgment the act or

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Way of a pleading, to the Commission En Banc WITHIN FIVE (5) DAYS from receipt of this Cease and Desist Order. EIPD is FURTHER DIRECTED to submit a formal compliance report,by

and Desist Order may file a request for the lifting thereof within five (5) days the 2006 Rules of Procedure of the Commission,the parties subject of this Cease from receipt hereof. In accordance with the provisions of Sec. 64.346 of SRC and Sec. 10-3 of

FAIL NOT UNDER PENALTY OF LAW

SO ORDERED.

Pasay City, Philippines; 11 October 2016

TERESITAJ. HERBOSA Chairperson 3

do MT MANUEL Commissioner B.GAITE ANTONIETA F.IBE Commissioner

EPHYRO LUIS B.AMATONG Commissioner nmissioner AMES

*On Leave

46 SRC. Section 64.3. Any person against whom a cease and desist order was isued may. within five (5) days from receipt of the order, file a formal request for a ifting thereof. Said request shall be set for hearing by the Commission not later than the hearing. If the Commission fails to resolve the request within the time herein prescribed, the cease and desist order shall fifteen (15) days from its filing and the resolution thereof shall be made not later than ten (10) days from the termination of automatically be lifted