Section 8.1 of R.A. No. 8799; investment contracts


The Court resolves to GRANT petitioner's Motion for Extension of Time seeking an additional period of 30 days from the expiration of the reglementary period within which to file his Petition for Review on Certiorari.

After carefully reviewing the allegations, arguments, and issues in the Petition for Review on Certiorari, the Court further resolves to DENY the same for failure of the petitioner to show that the Court of Appeals (CA) committed any reversible error in issuing its Decision dated May 31, 2017 and Resolution dated December 27, 2017 in CA-G.R. CR No. 37723 to warrant the exercise of this Court's discretionary appellate jurisdiction. On the contrary, the CA's Decision is in accord with the facts and applicable laws and jurisprudence.

Petitioner was charged with violation of Section 8.1, in relation to Section 73, of Republic Act (R.A.) No. 8799, otherwise known as the Securities Regulations Code, for selling securities without a registration statement duly filed with and approved by the Securities and Exchange Commission (SEC).

Section 8.1 of R.A. No. 8799 provides:
Section 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 approved by the Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser.

Section 3.1 of the same law defines securities as follows:

Section 3. Definition of Terms. - 3.1. "Securities" are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character. It includes:
(a) Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-backed securities;
(b) Investment contracts, certificates of interest or participation in a profit sharing agreement, certifies [sic] of deposit for a future subscription;
(c) Fractional undivided interests in oil, gas or other mineral rights;
(d) Derivatives like option and warrants;
(e) Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments;
(f) Proprietary or nonproprietary membership certificates in corporations; and
(g) Other instruments as may in the future be determined by the Commission. (Emphasis supplied)
Further, Section 73 of the same law provides:
Section 73. Penalties. - Any person who violates any of the provisions of this Code, or the rules and regulations promulgated by the Commission under authority thereof [sic], or any person who, in a registration statement filed under this Code, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, shall, upon conviction, suffer a fine of not less than Fifty thousand pesos (P50,000.00) nor more than Five million pesos (P5,000,000.00) or imprisonment of not less than seven (7) years nor more than twenty-one (21) years, or both in the discretion of the court. If the offender is a corporation, partnership or association or other juridical entity, the penalty may in the discretion of the court be imposed upon such juridical entity and upon the officer or officers of the corporation, partnership, association or entity responsible for the violation, and if such officer is an alien, he shall in addition to the penalties prescribed, be deported without further proceedings after service of sentence.
In this case, we agree with the findings of the trial court which were affirmed by the CA that private complainants spouses Arnel and Rebecca Guia were enticed to invest with the Tibayan Group of Investment Company, Inc. (TGIC) through its subsidiary, Matcor Holdings Co., Ltd. (Matcor), the amount of P100,000.00 as it would supposedly earn three percent (3%) monthly interest for a period of six (6) months. In return, they were issued a Statement of Private Business Affair which was signed by petitioner Rico Z. Puerto (petitioner) as manager of Matcor, as well as post-dated checks signed by accused Palmy Tibayan.The CA correctly held that the transaction involving the Statement of Private Business Affair signed by petitioner fell under the term investment contract under Section 3.1, paragraph b of R.A. No. 8799. As such, the said contract should have been registered with the SEC. Records, however, show that neither TGIC nor Matcor were authorized to sell securities it transacted with the private complainants as evidenced by the Certification issued by the SEC. It is clear that Matcor, acting through its manager, the petitioner in this case, issued an unregistered security in clear contravention of the Securities Regulation Code. Mere selling of securities without prior authority to do so already consummates the offense under the Securities Regulation Code as the same is a malum prohibitum.

ACCORDINGLY, the Court resolves to AFFIRM the May 31, 2017 Decision and December 27, 2017 Resolution of the Court of Appeals in CA-G.R. CRNo. 37723.

SO ORDERED. Sereno, C.J., on leave; De Castro, J., designated as Acting Chairperson of the First Division per Special Order No. 2540 dated February 28, 2018.

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