PAWISNGPINOY ONLINE INVESTMENT

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance IN THE MATTER OF: INVESTMENT PAWISNGPINOY ONLINE ENFORCEMENT PROTECTION (EIPD), AND DEPARTMENT INVESTOR SEC CD0 Case No. 02-22-083 Movant. CEASE AND DESIST ORDER representatives, agents, promoters and any and all persons claiming and disposing any of its properties and/or assets without the prior written authority from the Commission. acting for and in their behalf, from selling, encumbering, conveying, or is selling/offering are not registered with the Securities and Exchange Commission (the "Commission"); and (b) prohibiting directing PAWISNGPINOY ONLINE INVESTMENT, its owners, operators, acting for and in their behalf, to immediately cease and desist from engaging in the sale and/or offer of unregistered securities, and to remove or take down their online posts and offerings, as it does not have the license to solicit, accept or take investments, and the securities that it PAWISNGPINOY ONLINE" INVESTMENT, its owners, operators, representatives, agents, promoters and any and all persons claiming and Department (EIPD) praying that an order be issued (a) directing (the "Motion") filed by the Enforcement and Investor Protection This resolves the Motion for Issuance of a Cease and Desist Orderi THE PARTIES issued by the Commission.2 tasked, among others, to investigate, institute and prosecute administrative actions against persons and entities engaged in the sale and/or offer of unregistered securities without the requisite license The EIPD is one of the Commission's operating departments 1 Filed on 24 February 2022. 2 Section 2-2(c)(1-c), Rule II, Part I of the 2016 SEC Rules. SE OG THE DOCUMENTS ON RECORP CERTIFIFD TRUE COPY O! PAG W G B PAWISNGPINOY ONLINE INVESTMENT SEC CD0 Case No. 02-22-083 Cease and Desist Order In the matter of. Page 2 of 11 Center, EDSA cor. Ortigas Avenue, Quezon City. 00428181, and maintains a business address at 1906 Galleria Corporate as "PAWISNGPINOY") is an entity that is not registered with the an investment-solicitation business online. The relevant online posts on PAWISNGPINOY shows that it represents to be an entity registered with the Department of Trade and Industry (DTI), with DTI Certificate No. Commission as a corporation or partnership, but operates and carries out PAWISNGPINOY ONLINE INVESTMENT (hereinafter referred to RELEVANT FACTS estate operations.5 of By-Laws and an Advisory, purportedly issued by the Commission, to make it appear that it is authorized to solicit, accept and/or take investments from the public,4 allegedly for use in furtherance of its rice trading business, construction and medical supplies distribution, and real operations, PAWISNGPINOY is using a Certificate of Filing of Amendment taking activities of PAWISNGPINOY that are being carried out online.3 Rhany Marlon Grueso who inquired on the legitimacy of the investment- The EIPD also received information that in relation to its online On 22 November 2021, the EIPD received an email from one Mr. Regulations (IRR). conducted an investigation on the operations of PAWISNGPINOY for possible violation of the relevant provisions of Republic Act No. 8799 (the "Securities Regulation Code" or "RCC") and its Implementing Rules and On the basis of the foregoing information, the EIPD formally by PAWISNGPINOY from the Commission's Online Document Retrieval System (ODRS) and edited to make it appear as having been issue to it.6 confirmation that the same is a fake document; one that was originally issued to Top Frontier Investment Holdings, Inc. but which was accessed PAWISNGPINOY is flaunting to the public, the EIPD was able to get As regards the Certificate of Filing of Amendment of By-Laws which who are promised a guaranteed passive income ranging from of Two evidence showing that the latter is soliciting investments from the public PAWISNGPINOY, the EIPD checked and examined the online postings made by the persons who are operating the same, and submitted In relation to the online investment-taking activities of 5 Annex "K" of the Motion Par. 5 of the Motion; See also Annex "D" of the Motion 3 Annex " A" of the Motion 4 See Annexes "B" and "C" of the Motion; see also Par. 4 of the Motion S OG THE DOCUMENTS ON RECORD CERTIFIED TRUE COPYOI + 2 A PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Order In the matter of. Page 3 of 11 Hundred Five to Two Hundred Sixty-Five Percent Return of Investment investment scheme of PAWISNGPINOY consists of the following terms: (205-267% ROI) or more, within a period of five (5) days. Specifically, the Investment (PhP) Amount of 10,000 9,000 8,000 4,000 5,000 6,000 7,000 3,000 2,000 Guaranteed Return 20,500 10,500 14,500 16,500 19,500 12,500 4,500 6,500 8,500 (PhP) 2,500 1,700 1,500 1,700 2,000 Bonus 1,200 (Ph P) 1,000 700 500 funds, exchange traded funds and proprietary/non-proprietary shares or membership certificates and timeshares. Investment Company, Investment House and Transfer Agent. The confirmed that PAWISNGPINOY is not a registered issuer of mutual secondary license as a Lending Company, Broker and/or Dealer of (CGFD) on the other hand, which was submitted in evidence by the EIPD Securities, Dealer in Government Securities, Investment Adviser of an Certification of the Corporate Governance and Finance Department Certification from the Company Registration and Monitoring Department (CRMD)7, which confirmed that PAWISNGPINOY has not been issued a In the course of its investigation, the EIPD was able to secure a issuance of an ADVISORY on 11 January 2022, informing the public that PAWISNGPINOY has not been issued any license offer or sell securities. The continued operations of PAWISNGPINOY has prompted the letter to G-Exchange, Inc. requesting for the "Know Your Client" (KYC) or GCash Account Opening Documents of the said individual on 13 January PAWISNGPINOY is using the GCash account of one Roy. G. in relation to its investment-solicitation activities for which reason, it sent a formal 2022. Moreover, the EIPD was also able to identify and confirm that to sell and/offer securities, which were also unregistered, that the EIPD It is on the basis of PAWISNGPINOY's lack of the required licenses 7 Annex "G" of the Motion. 8 Annex "F" of the Motion S O PAGE THE DOCUMENTS ON RECORD CERTIFIFD TRUE COPY OI 2 PAWISNGPINOY ONLINE INVESTMENT SEC CD0 Case No. 02-22-083 Cease and Desist Order In the matter of: Page 4 of 11 came to this Commission seeking the issuance of a CDO for the protection of the investing public. ISSUE PAWISNGPINOY is warranted based on the findings and evidence presented by the EIPD Whether the issuance of a cease and desist order against RULING The Commission finds the Motion meritorious. and Rule 3.1.17 the SRC-IRR. establish that PAWISNGPINOY is selling and/or offering unregistered securities in the form of investment contracts to the public without the requisite license from the Commission, in violation of Section 8 of the SRC substantial evidence, the Commission holds that the EIPD was able to After carefully considering the Motion which was supported by Section 3 of the SRC defines "securities" as follows: "SEC. 3. Definition of Terms. -- and evidenced by a certificate, contract, instrument, whether written or electronic in character. It includes: 3.1. "Securities" are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture X X X subscription;" (Emphasis supplied) profit sharing agreement, certificates of deposit for" a future (b) Investment contracts, certificates of interest or participation in a follows: Moreover, an "investment contract" is defined in the SRC-IRR as efforts of others. An investment contract is presumed to exist whenever a person seeks to use the money or property of others on the promise of profits. An investment contract means a contract, transaction or scheme (collectively "contract") whereby a person invests his money in a common enterprise and is led to expect profits primarily from the S OG CERTIFIFD TRUE COPY O THE D JMENTS ON RECORD A PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Orde In the matter of. Page 5 of 11 even if the promoter receives nothing'more than a broker's commission."9 (Emphasis supplied) A common enterprise is deemed created when two (2) or more investors "pool" their resources, creating a common enterprise, Statement and a Permit to Offer/Sell issued in favor of the applicant, to registered with the Commission in the form of an approved Registration Wit: be sold or offered for sale within the Philippines if the same are not Section 8.1 of the SRC categorically provides that securities cannot approved by the Commission. Prior such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser." (Emphasis and underscoring 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 registration statement duly filed with and securities that are required to be registered with the Commission for the protection of the investing public, to wit: Commission,10 the Supreme Court ruled that investment contracts are In the case of Power Homes Unlimited v. Securities and Exchange system." (Emphasis supplied) strict regulation of securities is founded on the premise that the capital markets depend on the investing public's level of confidence in the must be registered with public respondent SEC, otherwise the SEC cannot protect the investing public from fraudulent securities. The "As an investment contract that is security under R.A. No. 8799, it common enterprise, (3) with the expectation of profits, (4) to be derived and adopted in various situations where individuals were led to invest money in a common enterprise with the expectation that they would earn a profit through the efforts of the promoter or of someone other than themselves.12 solely from the efforts of others. Investment contracts have been used scheme whereby a person (1) makes an investment of money, (2) in a American origin. It traces its roots from the US Supreme Court case Securities and Exchange Commission v. W.J. Howey Co.11 where the Court stated that an investment contract is a transaction, contract, or The concept of an investment contract in the Philippines is of 12 Ibid. Although the definition as stated in the Howey Case qualified that the carning of profit was expected to be solely through the efforts of another party, Rule 26.3 of the 2015 IRR of the SRC replaced the qualifier % Rule 26.3.5 of the Implementing Rules and Regulations of the SRC. 10 Note 24, Supra. 11 328 U.S. 293, 66 S. Ct. 1100, 90 L. Ed. 1244, 163 A.L.R. 1043 (1946). CERTIFIED TRUE COPY OI THE D IINT NTS oN RECOrE PAG ( PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Order In the matter of: Page 6 of 11 purpose of deriving profits from them, he or she is in fact investing in a efforts of others. Under this definition, whenever an investor relinquishes securitv.14 common enterprise; (3) with expectation of profits, (4) primarily from control over his or her funds and submits their control to another for the used in Power Homes Unlimited Corporation v. Securities and Exchange contract in our jurisdiction, to be a security subject to regulation by the Commission, must be proved to be (1) an investment of money; (2) in a Commission,13 where the Supreme Court ruled that an investment The concept of an investment contract was thereafter adopted and and so holds, that PAWISNGPINOY is unlawfully engaged in the sale and/or offer of unregistered securities in the form of investment contract, because it has no license to carry out the same. Applying the foregoing to the instant case, this Commission finds, investments. initially paying the guaranteed return of its investor's through its designated GCash account i.e. Roy G. The same First, there is an investment of money by the public who paid GCash account was likewise used by PAWISNGPINOY in PAWISNGPINOY for the investment plans that were chosen reality, does not exist. being sustained by the investments received by PAWISNGPINOY, although the same is masked by a product distribution, real estate, and jewelry business which, in existing investors. This is the common enterprise that is medical supplies trading, real estate development, and buying and selling of gold jewelries which are actually, which was utilized to satisfy and pay the guaranteed returns of its scheme of PAWISNGPINOY involves the pooling of the money invested by its investors in rice trading, construction and Second, The EIPD was able to show that the investment invested amount within 5 or 6 days, which was promised to Third, PAWISNGPINOY's investors expect a guaranteed profit in an amount ranging from 205%-267% of the them. with "primarily", acknowledging that an investment contract may still be present where the individual who 13 G.R. No. 164182, 26 February 2008. 14 Investment Co. Institute v. Camp, 274 F. Supp. 624 (D. D.C. 1967). placed the money exerted a small amount of effort in an attempt to earn the profits. S( OG JHE DOCUMENTS ON RECORD CERTIFIED TRUE COPY OY PAG 6 PAG PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Order In the matter of. Page 7 of 11 needed profits which are used to pay for the return of buying and selling of gold jewelries, which is being run by its investments promised to them. Finally, investors have been convinced that the business operation of PAWISNGPINOY consisting of rice, medical, and construction supplies trading, real estate development owners, operators, representatives and agents, generate the securities in the form of investment contracts considering that its business operations are being published online through the social media PAWISNGPINOY's investment scheme involves public offering of platforms. Moreover, the evidence presented by the EIPD also shows that 2015 IRR of the SRC as follows: Public offering of securities is defined under Rule 3.1.17 of the shall be presumed to be a public offering: 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 offering of securities to the public or X X X communication;"15 (Emphasis supplied) telephone, 3.1.17.3 Advertisement or announcement in radio, television, communication electronic technology communications, or any other information forms of PAWISNGPINOY is offering investment plans publicly through its official website and social media platforms, i.e., Facebook, to potential investors without prior registration. Here, the evidence submitted by the EIPD shows that the SRC provides, thus: Relative to a valid issuance of a CDO, Section 64 of injury or prejudice to the investingpublic." (Emphasis supplied) 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 "Section 64. Cease and Desist Order. complaint by any aggrieved party, may issue a cease and desist - 64.1. The Commission, after 15 Rule 3.1.17 of the Implementing Rules and Regulations of the SRC. CERTIEIEDTRUCOPYO SKC OG THE DOCUMENTS ON RECORD PAGE A U PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Order In the matter of: Page 8 of 11 requisites that must be complied with for a cease and desist order can be validly issued: Under the afore-quoted provision, there are two (2) essential 1 There must be a conduct of a proper investigation or verification; and 2 There must be a finding that the act or practice, unless investing public.16 likely to cause grave or irreparable injury or prejudice to the restrained, will operate as a fraud on investors or is otherwise gathered and submitted in support of its Motion showing the unauthorized investment taking activities of PAWISNGPINOY. conducted a proper investigation as evidenced by the various documents Anent the first requisite, the records disclose that the EIPD PAWISNGPINOY employed fraud when its directors, officers, agents, representatives and promoters made it appear to the public that it is investment plans are registered with the Commission and that it is authorized to sell, offer and deal with securities. The second requisite is likewise present considering that held that fraud is a generic term that covers any act calculated to deceive, thus: In People of the Philippines vs. Mateo, et al.17, the Supreme Court conduct, by false or misleading allegations, or by concealment of that which should have been disclosed which deceives or is intended to (Emphasis supplied) the false representation of a matter of fact, whether by words or deceive another so that he shall act upon it to his legal injury." advantage over another by false suggestions or by suppression of truth and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated. On the other hand, deceit is involving a breach of legal or equitable duty, trust, or confidence justly reposed, resulting in damage to another, or by which an undue and unconscientious advantage is taken of another. It is a generic term embracing all multifarious means which human ingenuity can devise, and which are resorted to by one individual to secure an "Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment 16 Securities and Exchange Commission vs. Performance Foreign Exchange Corporation, G.R. No. 154131, 17 G.R. No. 210612, October 9, 2017. July 20, 2006. DG CERTHFHED TRUE COPY O THE DOCUMENTS ON RECORD PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Order In the matter of Page 9 of 11 grave or irreparable injury to the investing public, thus: the Supreme Court emphasized the need for a prompt issuance of a CDO to the public which, if unrestrained, will likely cause grave or irreparable injury or prejudice to the investing public.18 This finds support in the case of Securities and Exchange Commission vs. CJH Development Corp.19 where after a finding of a violation of the SRC that will likely defraud or cause in selling/offering unregistered securities necessarily operates as a fraud Moreover, this Commission holds that the act of PAWISNGPINOY is obliged to protect. 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 also not required whenever the Commission finds it appropriate to issue a cease and desist order that aims to curtail fraud or grave issued by the SEC motu proprio, it being unnecessary that it results from a verified complaint from an aggrieved party. A prior hearing is "The law is clear on the point that a cease and desist order may be 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 The act of selling unregistered securities would necessarily Philippines without a registration statement duly filed with and prescribe, shall be made available to each prospective buyer." (Emphasis supplied) operate as 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 clearly states that securities shall not be sold or offered for sale or distribution within the statement is duly filed with and approved by the Commission. discussed in this Cease and Desist Order, until the requisite registration and any and all persons claiming and acting for and in their behalf, are hereby ordered to IMMEDIATELY CEASE AND DESIST from engaging in the unlawful/unauthorized solicitation, offer and/or sale of securities in the form of investment contracts or any others of the same nature, as INVESTMENT, its owners, operators, representatives, agents, promoters WHEREFORE, premises considered, PAWISNGPINOY ONLINE institute the appropriate administrative and criminal action against any operators, representatives, agents, promoters and any and all persons claiming and acting for and in their behalf, are likewise directed to CEASE their internet presence relating to the transactions and investment scheme covered by this Cease and Desist Order. The Commission will Further, PAWISNGPINOY ONLINE INVESTMENT, its owners, 19 (G.R. No. 210316, November 28, 2016) 18 Section 64 of the Securities Regulation Code. ( ERTIFIED T1 -. U D UMENTS ON RECORD L PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Orde Page 10 of 11 matter of persons or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers or the like for and in their behalf participation, whether directly or indirectly, under their custody, to and all assets, properties, real or personal, including bank deposits, if any, of which the named persons herein may have interest, claim or ensure the preservation of the assets of the investors behalf from transacting any business involving funds in its depository banks, and from transferring, disposing, or conveying in any manner, any ONLINE INVESTMENT, its owners, operators, representatives, agents, promoters and any and all persons claiming and acting for and in their Finally, the Commission hereby PROHIBITS PAWISNGPINOY copy of this Order to PAWISNGPINOY ONLINE INVESTMENT, (b) cause the posting of this Order in the Commission's website, and (c) the publication of the same in a newspaper of general circulation as provided for under Section 4-2, Rule IV, Part I of the 2016 Rules of Procedure of the SEC. The EIPD of the Commission is hereby DIRECTED to (a) serve a DAYS from receipt of this Cease and Desist Order. report, by way of pleading, to the Commission En Banc WITHIN TEN (10) The EIPD is FURTHER DIRECTED to submit a formal compliance appropriate action. and Industry, the National Privacy Commission and the Department of Information and Communications Technology for their information and Information and Communications Technology Department of this Commission, the Bangko Sentral ng Pilipinas, the Department of Trade and Monitoring Department, Market and Securities Regulation Department, Corporate Governance and Finance Department and the Let a copy of this Order be furnished to the Company Registration Part II, Rule IV, Section 4-3 of the 2016 Rules of Procedure of the SEC, the receipt of this Order. Respondent may file a verified Motion to Lift the CDO to the Commission En Banc thru the Office of the General Counsel, within five (5) days from In accordance with the provisions of Section 64.3 of the SRC and FAIL NOT UNDER PENALTY OF LAW. SO ORDERED. Pasay City, Philippines; 1 March 2022. 1 OC THE DOCUMENTS ON RECORD CERTHFIFD TRUE COPY O [D U PAWISNGPINOY ONLINE INVESTMENT SEC CDO Case No. 02-22-083 Cease and Desist Order In the matter of: Page 11 of 11 EMILIO B. AQUINO Chairperson V EPHYRO LUIS B. AMATONG Commissioner JAVEY PAUL D. FRANCISCO Commissioner KELVIN LESTER K. LEE Commissioner KARLO $. BELLO Commissioner S G CERtIFIED TRUE COPY OP THE DOCUMENTS ON RECORD PAG AGYS