ORGANICO AGRIBUSINESS VENTURES CORP.,

PICC Secretariat Building, PICC Complex, Pasay City Securities and Exchange Commission Republic of the Philippines Department of Finance COMMISSION EN BANC VENTURES CORP. IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 PROTECTION DEPARTMENT, ENFORCEMENT AND INVESTOR Movant. * CEASE AND DESIST ORDER registration statement is duly filed with and approved by the Commission desist from engaging in activities of selling and/or offering for sale and the corresponding license to offer/sell securities is issued. on 3 May 2019 by the Commission's Enforcement and Investor Protection Department (EIPD), enjoining ORGANICO AGRIBUSINESS VENTURES CORP. (ORGANICO) and their directors and officers, representatives salesmen, agents, and any and all persons, conduits, entities and subsidiaries claiming and acting for and in their behalf, to cease and securities in the form of investment contracts until the requisite This resolves the Motion for Issuance of Cease and Desist Order filed RELEVANT FACTS business at the start of the EIPD investigation. (Company Reg. No. CS201806980). It is alleged to be one and the same as "ORGANICO AGRIBUSINESS VENTURES," which was an unincorporated ORGANICO is a domestic corporation incorporated on 8 May 2018 II Avenue, Cebu City. Street, Alegria, Ormoc City Leyte, Region VIII, Philippines 6538. This was later amended on 19 December 2018 to 3rd Floor Crown 7.Pope John Paul Its original principal office was located at Unit 7 UN Building. Aviles ORGANICO's original primary purpose was: providing services, [including] but not limited to hog, To engage in the business of operating a commercial Hog. Livestock, and Farm Animal Raising Facility and IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 2 of 26 owners and growers. services, and other related activities, including farm to market service for hog, livestock, and farm animal livestock, farm animal raising, management, technical take investments/placements from the public, neither shall it issue investment contracts.1 Provided that, the corporation shall not solicit, accept, or This was later amended as: follows: management, technical services, and other related livestock, and farm animal owners and growers and to To engage, invest, in the business of operating a Facility and providing services, [including] but not activities, including farm to market service for hog, franchise.2 commercial Hog, Livestock, and Farm Animal Raising limited to hog, livestock, farm animal. raising, PHP 3 MILLION subscribed and paid. Its incorporators are: ORGANICO has an authorized capital stock of PHP 5 MILLION, with Karen Maasin Renato Subong Anthony Butaslac Marve Subere Posas Name Cerrone Roial PosasFilipino Filipino CitizenshipAddress Filipino Filipino Filipino Leyte, Region VIII, Philippines 6541 Region VII, Philippines 6003 56 Liloan St., Airport, Ormoc City, Region VIII, Philippines 6541 Sugbo Homes, Nivel Hills, Holy Family Rd., Busay, Cebu City, Cebu, VIII, Philippines 6538 Domino Compound, Barangay 26, Ormoc City, Leyte, Door 2 Fajaron Apt., Barangay Rd. Guiwan 1, Palompon, Leyte, Region Door 2 Fajaron Apt., Barangay Rd., Guiwan 1, Palompon, Leyte, Region VIII, Philippines 6538 RizalExt. REPORTS FROM THE PUBLIC Commission's I-MESSAGE MO online facility, viz. On 2 November 2017, the EIPD received a report through the have any legal documents. Thank you[.13 Hi please do research about this company ORGANICO AGRIBUSINESS VENTURE located at Ormoc[] Leyte[] They are promising high return of interest rate they don't 2 Amended Articles of Incorporation of ORGANICO dated 7 Nov 2018 (Annex X of the Motion) 3 Ticket No. 2017110221212574, sent by "Liway Tagle" on 2 Nov 2017 (Annex B of the Motion) 1 Articles of Incorporation of ORGANICO dated.8 May 2018 (Annex A of the Motion) IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 3 of 26 words like "invest," "wait and earn," "profit," and "investments," viz. Attached was a digital photo4 of the alleged offer which contained INVEST ... WAIT and EARN We are looking for organic minded businessmen who are willing to earn organic profit with 100% pure organic heart. Support our Organic Piggery, Poultry and High Value Crops project[.] STANDARD PLAN For investments Php 1800 up to Php 34,200 - 90 Days Payout (Not Available) - with contract and PDC (for payouts above Php 4500) - 15 Days Payout (Available) PREMIUM PLAN For investments Php 36,000 and above - 90 Days Payout (Available) with contract and PDC - 15 Days Payout (Available) with contract and PDC the Commission's I-MESSAGE MO online facility, viz. On 3 November 2018, the EIPD received another5 report through Good Day: https://www.facebook.com/organix.ronAdmin/ Some of my friends invested money in ORGANICO AGRIBUSINESS VENTURES SCAM. Would you please investigate and let me know. 2. If yes, is OAV registered with SEC? 3. I have the impression that OAV is a PONZI SCHEME 1. Does OAV need to register with BIR and SEC? I have several questions: Thank you very much for your kind assistance. Best regards, Albert Uy6 5 Ticket No. 2107110310464521, sent by "David Moille" on 3 Nov 2017 (Annex C of the Motion) 6 Although the report is signed "Albert Uy" the online profile was under the name "David Moille." 4 Photo of alleged offer (Annex B of the Motion) IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 4 of 26 CRMD NEGATIVE CERTIFICATION not registered as either a corporation or a partnership. [Note: At the time Monitoring Department (CRMD) issued a Certification7 that ORGANICO is of the request, ORGANICO was not yet incorporated] November 2017, the Commission's Company Registration and On 14 December 2017, in response to an EIPD request dated 22 OCULAR INSPECTION OF SEC CEBU IN ORMOC dated 24 November 2017, the SEC Cebu Extension Office (SEC Cebu) conducted an ocular inspection at ORGANICO's principal office at UN Building, Alegria, Ormoc City, Leyte.8 On 19 February 2018, in response to a EIPD request to investigate the time of the inspection, ORGANICO was not yet incorporated]. read: "Organico Agribusiness Ventures Corporation." SEC Cebu was able to talk to some staff of ORGANICO, but did not get an answer as to why the business was being falsely represented to be a corporation [Note: At 2nd Floor of the building. On one of the doors, there was a signage that SEC Cebu discovered that ORGANICO occupied several units on the the internet." According to the staff: (1) an investor must invest at least entitles an investor to receive Php 450 every 15 days for 3 months. certain "Cerrone Posas" who owns "many diverse businesses."9 The staff also stated that ORGANICO engages in "crowdfunding activities through 10 "shares." with each "share" valued at Php 1.800: and (21 a "share" SEC Cebu learned from the staff that ORGANICO is owned by a DOCUMENTS OBTAINED FROM ORGANICO [It even states: "Copyrights @ Organico Agribusiness Ventures, All Rights Reserved"1 entitled "FAQ," which clarifies its scheme, viz. SEC Cebu was able to obtain a document authored by ORGANICO Posas' businesses, such as: (1) piggery, (2) telemarketing, (3) music studio, and (4) construction. ORGANICO does not have a Business Permit to operate in Ormoc City. (See Annex G of the Motion) 7 CRMD Negative Certification dated 19 Dec 207 (Annex F of the Motion) 8 Prior to this inspection, SEC Cebu obtained a Certification from the Ormoc Mayor's Office that 9 Annex G of Motion includes handwritten notes of SEC Cebu investigators which enumerate Cerrone IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 5 of 26 FAQ will get guaranteed cash back of Php1800.00 plus the Php900.00 profit as easy as you read the ABC Alphabet. every 15 days for a total of Php2700.00 in 3 months. That's a 150% return [on] investment in 3 months. You What is the 15-day payout? - For every Php1,800.00 investment, you get Php450.00 plus one. Php3600.00 plus the Php3400.00 profit as easy as one payout of Php700.00 after 90 days. That's a 194% return What is the 90-day payout? - For every Php3600 investment, you get a one-time [on] investment. You will get guaranteed cash back of thank you to our loyal and devoted investors. recruits a new investor. This serves [as] a way of [saying] What is a referral bonus? - This is a payment given to an existing investor who address. deposited[] we put expertise and thorough study of Post-Dated Cheques [to be delivered] to your desired Do you think our investment is secured and because we make sure[] [for] every every venture we decide. - Besides, we provide Physical Agreement Contract and - Yes, as we promise, your investment is in good hands guaranteed? investment How can I invest or join? - Simple just follow the step below [Screenshot of the ORGANICO online signup page] -Fill in your personal information What are the assets of the company? - We don't disclose our assets unless you will invest 10 Million. can be able to help jobless Filipinos. Is there a cut off of your investment? So far, it won't happen because we venture more profitable businesses that can sustain our payouts and by sharing [with] them [the] easy way to earn profit at number one employment provider, to help more people What are your future plans? - The future plans of the company [is that we] will be the home. IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 6 of 26 Rights Reserved10 Copyrights @ Organico Agribusiness Ventures - All itself as a corporation (even though unincorporated at the time), viz. entitled "About Organico Agribusiness Ventures," where it represented SEC Cebu also obtained a document authored by ORGANICO About Organico Agribusiness Ventures They're done by a team of people." -.Steve Jobs The concept of Organico Agribusiness Ventures Corporation simplifies [sic] this quote: "Great things in business are never done by one person. and probiotics. about us [is] we manufacture our own feeds and fertilizers through the use of indigenous herbs, legumes, focused in the cultivation and breeding of animals, vegetables, livestock, and other products used to sustain and enhance human life through science. The good thing OAVC (Organico Agribusiness Ventures Corp.) is a local agricultural-based"crowdfunding company, originally integrated individual definition. Let us learn together the basic knowledge of Organic Farming, Organic Poultry, and Organic Piggery by its What is Organic? - It's a living matter or known as natural resurces. processes, stores and sells farm commodities. - It engages in the producing operations of a farm, manufactures and distributes farming supplies, and What is Agribusiness? - It's a risky decision that dares to undertake [an] - A venture is a project or activity which is new, exciting. and difficult because it involves the risk of failure. What is Venture? unpleasant business journey engages [in] organic farming, poultry, piggery, Organico Agribusiness Ventures is a corporation that agricultural products, andother non-agricultural products.11 ORGANICO's various affiliates, viz. The same "About Organico" document includes a list of 11 "About Organico Agribusiness Ventures" is included in Annex G of the Motion 10 "FAQ" document is included in Annex G of Motion IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 7 of 26 Bldg., Barangay Alegria, Ormoc City, Leyte, Philippines On August 12, 2017, Organico Agribusiness Ventures Corporation opened [its] new physical office at 2/F UN 6541. "O'Mart," [which stands for] "Organico Meatshop & Mart," located at Rizal Extension, District 26, Ormoc City. Leyte, Philippines 6541. And more branches will be Later, in October 2017, the first fruit of labor [was] established and became operational. We named coming soon. it located at Unit 6 UN Bldg., Brgy. Alegria, Ormoc City; and namely: Organico Beach Farm, located at Brgy Unit 5, UN Bldg., Brgy. Alegria, Ormoc City; Undercover Talent Center, located at Unit 2 Rizal Ext., Ormoc City; O'Music Lights & Sounds, located at Unit 4, UN Bldg., [with] and subsidizes different profitable companies, Bantigue, Ormoc City; O'Bookstore Cafe Spot, located at Brgy. Alegria, Ormoc City; O'Support Contact Solution, more soon to come.12 Organico Agribusiness Ventures Corporation affiliates wait, and earn," making it crystal clear that the investors "don't need ORGANICO goes on to state that investors simply have to "invest, to work," viz. Invincibly [sic], OAVC is now widely known and recognized in local, nationwide, and abroad, because of their devoted and loyal investors who have been earning great return [on] their investment in a very simple step, the "INVEST, WAIT, AND EARN." TheINVEST-WAIT-EARN formulated by the Founder/cEO/President, Cerrone concept was thoroughly Roial G. Posas, that provides a passive income while at home. It means. "Youdon't need to work on your own money to earn profit. But simply invest and we will bonuses, and great profit at no risk. You will receive do the rest." What we provide is assurance, unlimited desired address, and a post-dated cheque based on the computed receivable amount you have invested. Physical Agreement Contract to be sent directly to your PROFIT WITH 100% PURE ORGANIC HEART." BUSINESSMEN WHO ARE WILLING TO EARN ORGANIC "WE ARELOOKING [FOR]ORGANICMINDED REACHING PEOPLE, BUILDING LIVES... GO ORGANICO! 12 d IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 8 of 26 Rights Reserved13 Copyrights @ Organico Agribusiness Ventures - All 1st NEGATIVE CERTIFICATIONS FROM MSRD/CGFD from the Commission's Markets and Securities Regulation Department Corporate Finance and Governance Department (CGFD) dated 2 April (MSRD) dated 27 March 2018, stating that ORGANICO is not a registered issuer or broker-dealer of securities, and from the Commission's Acting on SEC Cebu's findings, the EIPD obtained Certifications exchange-traded funds, or proprietary shares. 2018, stating that ORGANICO is not a registered issuer of mutual funds. SEC ADVISORY ISSUED AGAINST ORGANICC On 21 May 2018, the En Banc issued an advisory stating that ORGANICO is not licensed to offer, sell, or distribute securities. INCORPORATION AND REQUEST TO LIFT ADVISORY On 8 May 2018, ORGANICO was incorporated. However, it did not apply for registration as an issuer of securities. On 7 June 2018, ORGANICO wrote through counsel that: (1) it had already incorporated; and (2) the SEC Advisory should be lifted because it is not soliciting investments from the public and has faithfully complied with its primary purpose which is merely to operate a piggery. On 29 June 2018, the EIPD denied the request to lift because ORGANICO was not able to prove that it was no longer soliciting investments from the public. 2nd NEGATIVE CERTIFICATIONS FROM MSRD/CGFD On 2 July 2018, the EIPD obtain a second set of Negative Certifications from the MSRD and CGFD, after it inquired as to whether ORGANICO had any pending applications to be a registered issuer of securities and confirming that there were no such applications. On 3 July 2018, the EIPD proposed to the En Banc that the SEC Advisory should be amended since it only says that: 13 IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 9 of 26 as a partnership under the Corporation Code of the NOT registered with the Commission as a corporation or Philippines. ORGANICO AGRIBUSINESS VENTURES CORPORATION iS would have stated: The EIPD alleged in its Motion that the proposed amendment Commission showed that the subject company has already secured its primary registration with Company Registration No. CS201806980 [...] [...] Please be informed that the records of the Regulation Code. obtained a secondary license [...] nor has it been issued a pending. application .for registration of securities pursuant to Sections 8 and 12 of the Securities [...] To date, ORGANICO has NOT applied for and/or permit to offer/sell securities, nor [does it have] a of ORGANICO merely confers upon the entity a juridical personality under the Corporation Code of the Philippines, The public is hereby informed that primary registration AGRIBUSINESS and we REITERATE that ORGANICO VENTURES CORPORATION require a Secondary License from the Commission, and the securities or investment product should likewise be registered with the SEC before they can be offered or sold to the public under Sections 8 and 12 of the Securities Regulation Code (SRC). [...] ("ORGANICO") is not authorized to offer, solicit, sell, or distribute any investments/securities. Such activities The En Banc confirmed that EIPD was correct in not granting ORGANICO's request to lift. However, it refrained from amending the original SEC Advisory on that occasion. MEMORANDUM FROM CRMD THAT ORGANICO HAS NO SECONDARY LICENSE On 25 July 2018, the CRMD sent a Memorandum to EIPD, in response to a query as to whether ORGANICO had been issued a Secondary License to issue securities, and confirming that ORGANICO did not have a secondary license. NEGATIVE CERTIFICATION FROM BUREAU OF ANIMAL REGISTRY IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 10 of 26 necessary permit to operate a hog farm (i.e. its primary purpose). to an inquiry from the EIPD, certified that ORGANICO does not have the On 11 October 2018, the Bureau of Animal Registry, responding FOR SERIOUS MISREPRESENTATION EIPD'S SHOW CAUSE ORDER or is doing to the great prejudice of damage to the public. ORGANICO, directing it to file an Answer as to why it should not be revoked for Serious Misrepresentation as to what the corporation can do. On 9 August 2018, the EIPD issued a Show Cause Order to that ORGANICO was a "backyard piggery business" among friends that started in late 2017, and that it had become profitable after its founders enlisted "the best farm technicians and experts in hog raising, in order to reach the optimal growth of their hogs at the least cost."14 which merely describes the growth of ORGANICO as a piggery. It recounts On 23 October 2018, the EIPD received ORGANICO's Answer wholesale/retail) for the piggery were stalled by requests for supporting documents from potential suppliers and customers. Thus, the founders ORGANICO further stated that their expansion plans (e.g. incorporated ORGANIC0 in May 2018. Furthermore, ORGANICO explicitly denied that it was soliciting investments from the public and maintained that its sole business activity Was running a piggery, viz. solicitation activities as described in' the SEc Advisory. Instead, ORGANIZCO is into the buy-and-sell of livestock, specifically piglets/swine, and [it has] tied- up with numerous farm-owners in the provinces for the The officers and incorporators of ORGANICO [deny] that it is engaged in investment-taking activities and rearing of the same.15 term "invest" or "investment," viz. It explained that its clients are probably misusing the According to ORGANICO, its officers, and incorporators, the confusion may have started since its clients loosely use the term "invest" and "investment" whenever one [of them] purchases of a thing of value [which] may have the potential for appreciation Most of the clients who availed of the program and 14 ORGANICO's Answer, entitled "Show Cause Order-Repiy" (Annex U of the Motion). 15 IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 11 of 26 its clients. However, how these clients explain to third persons the program of ORGANICO is not to the legal definition of "invest" or "investment," which most laymen do not have knowledge on. The word of mouth among clients and third parties is extremely difficult for ORGANICO to'control and correct. As much as possible, whenever one avails of the program of ORGANICO, all the details of the sale and its corresponding option agreement are well-explained to anymore under its control.16 (Emphasis supplied) rearing would call it an "investment" considering the piglets' value will increase over time. This is contrary [opted] to [turnover] the piglets to ORGANICO for ORGANICO described its business model, viz. price to be determined by the existing market value of client a certain fee, as well.17 (Emphasis supplied) the piglets. The client may opt to bring with him/her the over the said farm animal to ORGANICO for rearing. several farm in the provinces. After [a] certain period, wherein said animal [would have] reached its optimal purchase price. The client may opt to claim back the animal, [in which] case, ORGANICO shall pay the said purchased swine/hog, or he/she may choose to turn- considering that ORGANICO growth and is ready for sale, the client may claim back the swine/hog at a certain price, Iess the original ORGANICO's clients may buy hogs/swine from it for a [has]tied-up with "ORGANICO" that has been posting videos online, viz. In addition, ORGANICO claimed that it is distinct from another are not [its] doing. Aside from that, the kind of Facebook posts and Youtube videos circulating about ORGANICO and how its business works. ORGANICO and its officers and incorporators categorically deny that these are from ORGANICO. ORGANICO does not have an official Facebook page: All Facebook posts relating to ORGANICO are not sanctioned by said corporation and ORGANICO understands that there have been several the same as that of ORGANICO. The people who posted ORGANICO's officers and incorporators.18 business being described in the said posts and not on Facebook are not in any way connected with ORGANICO, and most of them are unknown to construction. At present, the official website of ORGANICO is still under Considering that ORGANICO AGRIBUSINESS VENTURES CORPORATION, as a new 1 d 16 Id 18 Id. IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 12 of 26 completed [its] website which is organicoagricorp.com Moreover, ORGANICO does not have any Facebook page, Facebook posts, and Youtube channel or posts.19 business which only started out this year, [it has] not yet Memorandum of Agreement,20 viz. ORGANICO also provided' a Sample Deed of Sale with the seller's farm/facility and raise them as their own for HUNDRED (Php3,600.00) PESOS per piglet. The BUYER may buy as many piglets as he/she wishes after complying with the requirement set by the seller; 1. WHEREAS, the BUYER is willing to buy piglet/s from a reduced price of only THREE THOUSAND SIX provide full vaccination, and all other hog-raising months from turn-over of the piglet/piglets. Three month is the average period within which a pig [will] reach its optimal growth; mix which are from indigenous materials and probiotics, services that [will] ensure optimal disposal after 3 SELLER is willing to rear the piglet/piglets for and hog-raising, feeding them with special fermented feed 2 piglet/piglets to the BUYER for the latter to rear, the [on] behalf of the buyer, using a special system in WHEREAS, instead of giving/turning-over the feed, vaccinate, and provide all other care required and necessary for the optimal growth of the pigs. pertain to the SELLER; 3. WHEREAS, the SELLER accepts full responsibility to There will be no additional costs to the BUYER other than the amount paid during the sale. All costs thereafter will 4. WHEREAS, after 90 days/3 months (period of optimal growth of pigs) from sale, the BUYER has to choose [from] any of the following options: includes, but is not limited to: feeds, vaccination, labor, 4.1. Claim back the pig/s (swine) from the SELLER at Php3,600.00 (each pig/swine) +15% service fee, less the selling price/purchase price of the piglet/piglets (@Php3,600.00 each). The amount paid by the BUYER covers the total cost of rearing the animals, which and utilities; OR pig/piglets [at] a rate of Php6,000 (each pig/swine) which will directly be deposited to the assigned bank 4.2. The SELLER offers to retain (buy out) the account of the BUYER; 20 Attached to Answer (Annex U of the Motion) 19 Id IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 13 of 26 5 days before said inspection. All expenses/costs related farm/facility at any time during the 90-day period/3 months (period of optimal growth for pigs) after giving notice or informing the SELLER of said intention at least to said inspection shall pertain to the BUYER; 5. WHEREAS, the BUYER has the right to inspect the majeure; (3) similar other natural and man-made calamities and incidents that will greatly affect the hog- state of calamity or emergency is not necessary. IN such case, the SELLER shall immediately (within 24 hours), in whatever form of notice (e.g. call, SMS, email) inform the BUYER of said risk/loss. following hog/swine risk and loss from the time of the sale and during the 90-day period/3 months: death, However, the SELLER shall not assume risks and loss caused by the following and all related calamities thereto: (1) acts of God [..] which will affect the facility/farm or the transport of feeds and hogs; (2) force raising management. A local/national declaration of 6. WHEREAS, the BUYER shall be free only from the sickness, theft, poor farm/facility management. liabilities shall only be limited up to what is agreed on in this Memorandum. (Emphasis supplied) This is not an investment contract. neither [is it] a contract of partnership between the parties. Their Note that the "Php3,600 per piglet" investment and "90 davs/3 months" payback period, are the same terms as in the offer documents obtained by SEC Cebu. However, ORGANICO promises a payback of only Php6,000.00 in this document, as opposed to the Php7,000.00 payback stipulated on the offer documents from Ormoc City. ORGANICO'S AMENDED PRIMARY PURPOSE On 7 November 2018, ORGANICO amended the purpose clause in its Articles of Incorporation, viz. To engage, invest in the business of operating a commercial Hog, Livestock, and Farm Animal Raising limited to hog, livestock, farm animal raising, management, technical services, and other related Facility and providing services, [including] but not activities, including farm to market service for hog. livestock, and farn animal owners and growers and to franchise. IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 14 of 26 COOPERATIVE DEVELOPMENT AUTHORITY (CDA) ADVISORY NEGATIVE CERTIFICATION FROM THE BPLO-ORMOC AND have a business permit to operate a piggery. Business Permits, Licensing and Franchising Office (BPLO) of Ormoc City dated 30 October 2018 that ORGANICO, even after incorporation, did not On 12 November 2018, the EIPD obtained a Certification from the entity is the subject of a SEC Advisory for possible violation of the SRC. published a CDA Advisory22 on its website, stating that ORGANICO has not filed any application to register as a cooperative, and that the same Peachy Lei" that ORGANICO had organized itself as a cooperative.21 On 23 November 2018, the Cooperative Development Authority (CDA) The EIPD also sought to verify an email report from a certain "Ms. OCULAR INSPECTION OF EIPD IN QUEZON CITY ORGANICO had expanded its operations to Metro Manila. Meanwhile, the EIPD acted on a Facebook post stating that the alleged ORGANICO office at 2nd Floor Shoppes Victoria Towers. Timog corner Panay Street, Quezon City. The results were summarized in an EIPD Field Report (Annex AA of the Motion), viz. On 4 December 2018, the EIPD conducted an ocular inspection at Money Promo;" a. [According to the Front Desk Secretary] ORGANICO is currently [unable] to orient or entertain the team, since they are [still busy] conducting collection of "pay-ins" of those [new investors] who availed of the "Double Your b. The Front Desk Secretary, however, explained that an investment of Php3,600.00 earns Php7,000.00 after 90 days, [while] the [return] was originally Php6,000; c. That the promo is good until 18 December 2018; added that there is a necessity for a "referror;" d. The Lady Guard, together with various people inside the office, concurred with the information given and e. The persons inside the office confirmed that each investments being offered by ORGANICO; member/investor is allowed to orient and offer 21 The email report is attached to the EIPD Letter to the CDA (Annex W of the Motion) 22 Annex Z of Motion IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 15 of 26 f. For every referral in the pay-ins [new investors], the referrer is entitled to a commission of Php140.00; g. Pay-outs are given through bank-to-bank transactions; and issued for every investment, [a copy of] which was shown to the Investigating Team during the inquiry. h. There is a Memorandum of Agreement (MOA) SIGNAGE AT QUEZON CITY Quezon City office, viz. The EIPD Filed Report includes a photo23 of the signage at the ORGANICO Reaching People, Building Lives crowdfunding" business inspected by SEC Cebu in Ormoc City. This is the exact same advertising slogan of the ORGANICO "online ORGANICO DOCUMENT FROM QUEZON CITY includes a Pay-In/Pay-Out invoice from ORGANICO Quezon City. Although not mentioned in the Motion, the EIPD Field Report also It contains the mark "ORGANICO AGRIBUSINESS VENTURES" and a circular logo with a depiction of a plant/tree. The_exact same combination of words and logo is on the offer document entitled "90 Days Investment" gathered by SEC Cebu from the ORGANICO "online crowdfunding business" in Ormoc City."24 may be offices elsewhere, but there is no mention of Ormoc City. It also mentions "CASH Pay-Out in QC Office," implying that there Finally, the invoice contains the old-fashioned spelling of the word check ("cheque") which is exactly same as in the "INVEST WAIT, AND EARN" portion of the "About Organico" document from Ormoc City.25 ORGANICO'S AMENDED PRINCIPAL ADDRESS 23 Annex AA of the Motion 24 Annex G of the Motion 25 Annex G of the Motion IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 16 of 26 Articles of Incorporation was amended to 3rd Floor Crown 7. Pope John On 19 December 2018, ORGANICO's principal address in its Paul II Avenue, Cebu City. AFFIDAVIT OF RONALYN G. DE LOYOLA On 21 December 2018, the EIPD obtained the Affidavit26 of a certain Ronalyn G. De Loyola, an investor/member of ORGANICO, which Was summarized in its Motion, viz. a. She was invited by a certain Rochelle Camacho to [payback] of Php6,000.00 invest an amount of Php3,600.00 with a guaranteed b. She was added to the closed group chat exclusively for ORGANICO; c. She was also added to ORGANICO's Facebook closed/secret group named "ORGANICO AGRIBUSINESS 20,703 members; VENTURES CORPORATION" where, to date, there are d. She was able to see the MOA sent by Karen Camacho; e. Ron Posas, ORGANICO's President, is also a member of the Facebook closed/secret group; and f. She learned that there is a referral bonus of Php140.00 for every investment of Php3,600. Although not highlighted in the Motion, the Affidavit also includes screenshots from Ms. De Loyola's cellphone, which she swears under oath are genuine, viz. XXX XXX XXX 13. Attached herein are my observed posts in the said closed group chat and closed Facebook secret group; XXX XXX XXX chats, MOA, messages, and other documents, as herein 15. That I took screenshots of the abovementioned group attached; 16. That I have not edited nor changed the attached screenshots taken from my cellphone and [that these] are a complete reproduction thereof.27 27 d 26 Annex AC of the Motion IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 17 of 26 AGRIBUSINESS VENTURES CORPORATION" and bearing the same circular logo as in the documents from Ormoc City and Quezon City. The screenshots show a Facebook group named "ORGANICO as her name appears in her Driver's License submitted to EIPD. screenshots is allegedly one and the same as "Ronalyn Gaudia De Loyola, The "LHEN GAUDIA DE LOYOLA, New Member" in these Founder of ORGANICO the unincorporated "online crowdfunding' ORGANICO corporation, which claims to be a piggery. allegedly one and the same as "Cerrone Roial G. Posas," who is (1) the business in Ormoc City, and (2) the President and Incorporator of It also shows a certain "RON GACASAN POS, Admin" who is pictures of the SEC Advisory in one post, and stated the following: "RON GACASAN POS, Admin" (Cerrone Roial G. Posas) uploaded Important Notice: would like to inform all members that we do not need to the SEC requires the complainant to present verified act on this notice because it is only a complaint filed by any person, may it be a member or a non-member, and information or proof of transaction, or any receipt or check that is proven unpaid and overdue. In response to this "complaint" issued from the SEC, we If the complainant CANNOT present any documents that can be used against Organico, then this will just be filed as pending complaint or may be dismissed by the Commission. No need to worry. Rest assured, ALL payouts have been paid to date. have fears and doubts of [sic] our company's integrity. We are also actively returning the money of those who continue our advocacy to "Reach more people, and Build We have grown stronger and better. Expect more enemies and adversaries to go against us. But this is nothing compared to the people we've helped. Let us more lives." Go Organico!!! In another post, "RON GACASAN POS, Admin" (Cerrone Roial G. Posas) states that he is aware of the SEC Advisory and nevertheless advises ORGANICO members to go against the SEC Advisory, while IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 18 of 26 assuring them that they are planning to reorganize as a cooperative (i.e., in an effort to evade SEC scrutiny), viz. Effective October 15, 2018 URGENT ANNOUNCEMENT!!! [have] alarmed the BSP and SEC for the 3rd time and advised our Unionbank account to be closed Please be advised that [as to] the recent promo, that we immediately. their branches which started their compliance protocol. Now only BDO is left and is already red flagged. Unionbank account manager also informed us that there was a person who submitted a SEC Advisory in one of With this situation, WE ADVISE THAT ALL PAY-INS WILL BE THRU THE OFFICE ONLY. Rest assured that WE ARE SPEEDING UP THE PROCESS OF OUR COOPERATIVE so that we can redirect our cashflow. We advise ALL UNIONBANK CHECK HOLDERS for both Organico Builders and Organico Agri to coordinate with our office regarding your payouts. We will deposit it to your account. Memorandum of Agreement obtained by the EIPD in Quezon City. attached by Ronalyn G. De Loyola appears to be exactly the same as the Finally, the picture of the ORGANICO Memorandum of Agreement Hence, this Motion. DISCUSSION through substantial evidence that: (1) ORGANICO, the unincorporated business in Ormoc City, founded by Cerrone Roial G. Posas, which was It must be mentioned at the outset that the EIPD has established inspected by SEC Cebu, is one and the same as (2) ORGANICO, the corporation, where Cerrone Roial G. Posas serves as ORGANICO inspected by the EIPD in Quezon City. Thus. We refer to any President/Incorporator. They are also one and the same as the and all of them when we refer to "ORGANICO." The En Banc rejects ORGANICO's unsupported claim to be separate and distinct from the "Organico Agribusiness Ventures Corporation" on Facebook, Youtube, and other sites which solicits investments. 6 IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 19 of 26 The EIPD was able to prove with substantial evidence that ORGANICO, the online entity, is one and the same as ORGANICO, the respondent corporation. It has also proven with substantial evidence that administrator of the ORGANICO Facebook group. Cerrone Roial G. Posas is one and the same as "RON GACASON POS," the The En Banc has noted certain telling similarities such as: (1) The same Founder/Incorporator and President. CERRONE ROIAL G. POSAS: (2) The same name, marks, logos, and slogans; 3 The same terms (P3,600 per piglet, 3-month payback period); (4 The same pretext of raising pigs; 5 The same absence of permits to operate a piggery; (1 The same absence of secondary license to sell securities. Moreover, the En Banc noted certain admissions of ORGANICO in its Answer and in its Sample Memorandum, such as: connected with ORGANICO, and most of them are The people who posted on Facebook are not in any way unknown to ORGANICO's officers and incorporators. ORGANICO'S INVESTMENT CONTRACTS ARE SECURITIES There is substantial evidence that ORGANICO is selling or offering for sale securities in the form of investment contracts in the Philippines, without the necessary license from the Commission. Securities are defined in Section 3.1 of the SRC, viz. Section 3. Definition of terms. - IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 20 of 26 instrument, whether written or electronic in character. 3.1 "Securities are shares_ participation or interests in a making venture and evidenced by a certificate, contract, corporation or in_a commercial enterprise or profit a flexible rather than static principle, one that is capable of adaptation to meet the countless and variables schemes devised by those who seek to use the money of others on the promise of profits."28 According to the Supreme Court, "The term 'securities' embodies participation in a profit-making venture (e.g., piggery where ORGANICO Wait, and Earn" document, "90 Days Investment" document, Memorandum of Agreement, Pay-In/Pay-Out) or electronic form. will do the hog-raising), evidenced by instruments in written (e.g., "Invest, Here, the securities are investment contracts, which are Unlimited Corporation v. SEC,30 viz. elements of the Howey Test29 as laid down in the case of Power Homes Moreover, ORGANICO's investment contract satisfies the four (4) (1) Investment of Money to operate a piggery, so it cannot do that legally]. supposedly to buy a pig. [Note that ORGANICO has no permit ORGANICO's investors/members "pay-in" an initial sum. The element is satisfied even if amount of initial investment may vary (e.g., "P1,800 per share," or "P3,600 per piglet"). This is precisely what is referred to as "INVEST" in ORGANICO's "Invest-Wait-Earn." Common Enterprise ORGANICO will direct the investments of its members into a great pains to establish that it is really just a piggery including an unbelievable tale of a "backyard venture" turned profit-making venture (e.g., a piggery). ORGANICO has taken corporation that enlisted "hog-raising experts." [To reiterate, ORGANICO has no permit to operate a piggery, let alone enlist hog-raising expert to run its farms, if any.] But even if there is no piggerv. the element would be satisfied. This is because merely managing the investments is an enterprise. 28 Gabionza, et. al. v. CA, G.R. No. 161057, 12 September 2008 (citing 69 Am Jur 2&, p. 604) 29 Originally pronounced in the U.S. Supreme Court case of SEC v, Howey Co. (66 s.Ct.1100, 27 May 1946), as modified by SEC v. Glenn Turner Enterprises. Inc. (474 F.2d 476, 1 February 1973). 30 G.R. No. 164182, 26 February 2008. IN RE: ORGANICO AGRIBUSINESS SEC CD0 Case No. 04-19-047 Page 21 of 26 3 Expectation of Profit - ORGANICO's investors expect to be paid-back at a profit (e.g. (during which time ORGANICO claims it will have raised/sold a pig). They can also earn referral fees. This pertains to "EARN" in ORGANICO's "Invest-Wait-Earn." P7,000, which is a profit of P3,400) after 90 days or 3 months 4 Primarily from the Efforts of Others Wait-Earn." ORGANICO will exert all or almost all of the effort This is what is meant by "WAIT" in ORGANICO's "Invest. (supposedly to raise/sell a pig), while investors do nothing ORGANICO's "INVEST-WAIT-EARN" system, which is still carried-over to its more recent "Promos," viz. In light of the Howey Test,: here again is a description of The INVEST-WAIT-EARN concept Was thoroughly formulated by the Founder/CEO/President, Cerrone computed receivable amount you have invested. Roial G. Posas, that provides a passive income while at home. It means, "You don't need to work on.your own money to earn profit. But simply invest and we will do the rest." What we provide is assurance, unlimited bonuses, and great profit at no risk. You will receive Physical Agreement Contract to be sent directly to your desired address, and a post-dated cheque based on the "WEARELOOKING[FOR]ORGANIC MINDED BUSINESSMEN WHO ARE WILLING TO EARN ORGANIC PROFIT WITH 100% PURE ORGANIC HEART. REACHING PEOPLE, BUILDING LIVES... GO ORGANICO! Rights Reserved31 Copyrights @ Organico Agribusiness Ventures - All Likewise, applying Section 3.1 of the SRC, there is a participation (as investor) in profit-making enterprise (ORGANICO) in written form (Memorandum of Agreement), and this is therefore a Security. It is immaterial that ORGANICO has written "This is not an investment contract" on its Memorandum of Agreement," as mere denial does not make the contract regular. 3.1 of the SRC and the Howey Test and are clearly "securities" within the Therefore, ORGANICO's investment contracts satisfy both Section regulatory power of the Commission. 31 Annex G of the Motion IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 22 of 26 ORGANICO IS OFFERING SECURITIES FOR SALE approved by the Commission pursuant to Sections 8 and 12 of the Securities Regulation Code (SRC). the Philippines without a Registration Statement duly filed with and As a general rule, securities cannot be sold or offered for sale within Viz. The registration of securities is provided in Section 8.1 of the SRc, Sec. 8. Requirement of Registration of Securities. with such substance as the Commission may prescribe, shall be made available to each or distribution within the Philippines, without a approved by the Commission. Prior to such sale, information on the securities, in such form and prospective purchaser. 8.1 Securities shall not be sold or offered for sale registration statement duly filed with and Regulations of the SRC defines "Public Offering" as: In this regard, Rule 3.1.17 of the 2015 Implementing Rules and [A]ny offering of securities to the public or to anyone, whether solicited or unsolicited. to be a public offering: through any of the following modes shall be presumed Any solicitation or presentation of securities for sale 1. Publication in any newspaper, magazine or printed Philippines; reading material which is distributed within the 2. Presentation in any public or commercial place; 3. Advertisement or announcement on radio, television. telephone, electronic communications, information communication. technology or other forms of communication; or 4 Distribution and/or making available flyers, through brochures or any offering material in a public or commercial place or to prospective purchasers the postal system, information information distribution. communication technology and other means of IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 23 of 26 subject to the strict registration requirements under Sections 8 and 12 profit-sharing in the raising of pigs), which is considered a security. This constitutes a public offering as defined under SRC Rule 3.1.17, and is of the SRC before being offered or sold to the public. Here, ORGANICO is offering investment contracts (in the guise of security, the offer and sale of which requires a secondary license. Ormoc City documents, the Quezon City documents, and the screenshots attached to Ms. De Loyola's Affidavit--do not affect its nature as a The variances in the terms of the investment contract--among the Moreover, there is:no record that ORGANICO has ever applied for a MSRD, CGFD, and CRMD, stating that ORGANICO does not possess the requisite secondary license to sell or offer to sell securities to the public. secondary license. The record contains Certifications issued by the Commission's piggery it is still not authorized to solicit investments into any kind of profit-making enterprise. business operation (i.e. piggery), since it does not even have the requisite Licenses and Franchises Office (BPLO). Even if ORGANICO actually did own or_operate a piggery. or if its profits are earned somehow from permits from the Bureau of Animal Industry and the Business Permits, The record also disproves ORGANICO's claim to be a legitimate by ORGANICO is in violation of Sections 8 and 12 of the SRC. Therefore, the unregistered public offering investment contracts LIABILITY OF PARTICIPANTS IN THE OFFER OR SALE be held liable for "solicitation" in relation to the selling or offering for sale of unregistered securities, viz: Santos,32 the Supreme Court held that even "information providers" may In the case of Securities and Exchange Commission vs. Oudine information; it is not a commitrnent to an agreement. Solicitation is the act of seeking or asking for business or brought about the sale of securities made by PIPC Corporation and/or PIPC-BVI to certain individuals, specifically private complainants Sy and Lorenzo by providing information on the investment products of Santos, by the very nature of her function as what she now unaffectedly calls an information provider 32 G.R. No. 195542, March 19, 2014. IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 24 of 26 PIPC Corporation and/or PIPC- BVI with the end in view of PIPC Corporation closing a sale. or Lorenzo's investments, Santos procured the sale of these unregistered securities to the two (2) complainants by providing information on the investment products being offered for sale by PIPC Corporation and/or PIPC- BVI and convincing them to invest therein. While Santos was not a signatory to the contracts on Sy's facie established.33 No matter Santos' strenuous objections, it is apparent Lorenzo, to PIPC Corporation and/or PIPC-BVI, acting as an ostensible agent of the latter on the viability of PIPC Corporation as an investment company. At each point of Sy's and Lorenzo's investment, Santos' participation thereon, even if not shown strictly on paper, was prima that she connected the probable investors, Sy and AGRIBUSINESS VENTURES CORP. in the unregistered public offering and sale of investment contracts. This ruling applies to the present or future agents of ORGANICO provides that "no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as salesmen, or an associated person or any broker or dealer unless registered to act as such with the Commission.' associated person, in violation of Section 28.1 of the SRC, which clearly Neither can respondents engage a broker, dealer, salesman, or THE CDO IS URGENT AND MAY BE ISSUED EX PARTE may be issued without necessity of a prior hearing if it, viz: Section 64.1 of the SRC provides that the Cease and Desist Order or irreparable injury or prejudice to the investing the act or practice, unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave public. SEC. 64. Cease and Desist Order. 64.1. The Commission, after proper investigation or any aggrieved party, may issue a cease and desist order without necessitv of a prior hearing if in its judgment verification, motu propio, or upon verified complaint by The SRc is explicit that, as a general rule, securities should be registered with the Commission before being offered or sold to the public in order to protect the investing public from worthless securities, which. 33 d injury to the investors and the public in general. if unchecked, is likely to cause grave and irreparable damage and IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 25 of 26 issued. ORGANICO without the required license from the Commission makes the public offering and selling a continuing_illegal act which makes it imperative and necessary that a Cease and Desist Order be immediately The continued public offering and sale of investment contracts by approved by the Commission and the corresponding permit to offer/sell is issued. activities of selling and/or offering for sale securities in the form of investment contracts or any others of the same nature as discussed in this Order, until the requisite registration statement is duly filed with and conduits, assigns, AND ANY AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR BEHALF are hereby ordered to IMMEDIATELY CEASE AND DESIST,35 UNDER PAIN OF CONTEMPT, from engaging in Pos"), their partners, officers, directors, agents, representatives, ORGANICO) and CERRONE ROIAL G. POSAS34 (a.ka. "RON GACASAN VENTURES CORP. (a.k.a. ORGANICO AGRIBUSINESS VENTURES CORPORATION a.k.a. ORGANICO AGRIBUSINESS VENTURES a.k.a. WHEREFORE, premises considered, ORGANICO AGRIBUSINESS to above-stated investment activities. Respondents are directed to cease its internet presence relating indirectly, immediately upon receipt of this Order, until further orders from this Commission. if any under their custody, of which the named persons herein may have any interest, claim, or participation whatsoever, whether directly or agents, are all ENJOINED from (a) transacting any and all business involvingthefunds in itsdepositarybanks.and(blfrom transferring, disposing, or conveying in any other manner any and all assets and properties, real or personal, including bank deposits. the activities of such corporation, officers, representatives, salesmen, and for and in their behalf, and such other persons directing or controlling and to ensure the preservation of the assets for the benefit of investors, respondents or any of their representatives, or any person/s acting Moreover, to forestall grave damage and prejudice to all concerned, public. 34 TIN Number 927-680-106-000 based on ORGANICO's Articles of Incorporation or upon verified complaint by any aggrieved party, may issue a cease and desist order without the necessity of a prior hearing if in its judgment the act or practice, unless restrained, will operate as fraud on investors or is otherwise likeiy to cause gr'ave or irreparable injury or prejudice to the investing 35 Section 64.1 of the SRC -- The Commission, after proper investigation or verification, motu propio, IN RE: ORGANICO AGRIBUSINESS SEC CDO Case No. 04-19-047 Page 26 of 26 information providers, salesmen, agents, brokers, dealers or the like for and in behalf of the subject corporations. criminal action against any persons or entities found to act as solicitors, The Commission will institute the appropriate administrative and The EIPD is hereby DIRECTED to: and on its President, General Manager, Corporate Secretary, Treasurer, In-House Counsel or partners; and [A] Serve this Order to ORGANICO AGRIBUSINESS VENTURES CORP. branches, if any, of ORGANICO AGRIBUSINESS VENTURES CORP. [B] Post copies of the Order at the entrance of the main office and/or Commission En Banc within five (5) days from receipt of this Cease and Desist Order. The EIPD is further directed to submit a Compliance Report to the respondents may file a Motion to Lift the CDQ within five (5) days from receipt of this Cease and Desist Order. Section 4-3 of the 2016 Rules of Procedure of the Commission, the In accordance with the provisions of Section 64.336 of the SRC and SO ORDERED. Pasay City, Philippines; 28 May 2019. EMILYC A Chai BIAQUINO rperson Zmixs Meitune. ANTONIETA F. IBE Commissioner EPHYRO LUIS B. AMATONG Commissioner JAVEY/PAUL D. FRANCISCO Commissioner KELVINLESTER K. LEE Commissioner five (5) days from receipt of the order, file a formal request for a lifting thereof. xxx 36 Section 64.3 of the SRC -- Any person against whom a cease and desist order was issued may, within