KAPA Padayon

March 8, 2019 SEC ADVISORY This Commission has received reports that there is a circulating YOUTUBE video featuring the alleged news stating, among others , that KAPA PADAYON has obtained a Temporary Restraining Order (TRO) against the CEASE & DESIST ORDER (CDO) issued by the SEC against KAPA-COMMUNITY MINISTRY INTERNATIONAL, INC. (KAPA) and its allied entities. To set the record straight, the application for issuance of a TRO filed by KAPA before Branch 58 of the Regional Trial Court, General Santos City, was DENIED by the Honorable Presiding Judge JOYCE KHO MIRABUENO in the ORDER dated 01 March 2019, the pertinent portion of which reads, as follows: "Thus, we find that in the present petition, the Regional Trial Court of General Santos cannot properly issue a 72-hour-TRO to stop the implementation of a SEC Advisory (Annex A) and a SEC Cease and Desist Order (Annex B). WHEREFORE, premises considered, the prayer for the issuance of a 72-hour-TRO is DENIED. The Office of the Clerk of Court of the Regional Trial Court is directed to comply with the procedure in Section 5 of Rule 58 of the Rules of Court on Preliminary Injunction, and to serve a copy of this order upon petitioner, through counsel. SO ORDERED." It must be stressed that the CDO issued by the SEC against KAPA, remains effective and still valid. Hence, the public is hereby warned to be cautious in dealing with the above-mentioned KAPA and its allied entities, particularly in investing their money with said entities. CAIHTE The public is hereby advised to call the Enforcement and Investor Protection Department at telephone nos. (02) 818-6337 or (02) 818-5324 for any inquiries/clarifications and updates on this matter. Pasay City, March 8, 2019. ATTACHMENT Republic of the Philippines Regional Trial Court 11th Judicial Region Branch 58 General Santos City Office of the Vice-Executive Judge SPECIAL CIVIL CASE NO. 18-806 KAPA-COMMUNITY MINISTRY INTERNATIONAL, INC., REPRESENTED BY PASTOR JOEL A. APOLINARIO, petitioner , vs . SECURITIES AND EXCHANGE COMMISSION, respondent . FOR : Injunction with Application for Issuance of a 72-Hour Restraining Order, a Temporary Restraining Order and/or a Writ of Preliminary Injunction ORDER This case for Injunction with Application for Issuance of a 72-Hour Restraining Order, a Temporary Restraining Order and/or a Writ of Preliminary Injunction was referred this Friday afternoon to the Office of the Vice-Executive Judge, because the Executive Judge is on Official Business in Cagayan de Oro City. For immediate resolution, in accordance with Section 5 of Rule 58 of the Rules of Court on Preliminary Injunction, is the petitioner's prayer for the issuance of a 72-hour Temporary Restraining Order (TRO), quoted below: "Upon the filing of the instant Petition, a 72-hour TRO be issued against respondent SEC enjoining it from implementing the Assailed Advisory and the Assailed CDO." The PETITION : Petitioner KAPA-COMMUNITY MINISTRY INTERNATIONAL, INC., (petitioner/KAPA) is represented by PASTOR JOEL A. APOLINARIO (Pastor Apolinario). Respondent is the Securities and Exchange Commission (SEC), a government agency. Petitioner prayed for the Court to issue a 72-hour TRO, prior to the granting of a TRO and a writ of preliminary injunction, and eventually, a permanent injunction, to stop the SEC from implementing the Assailed Advisory (Annex A) and the Assailed CDO (Annex B). According to petitioner, it has established its clear and unmistakable right in esse , which is the constitutional right to the free exercise of religion. The issuances of the SEC, which petitioner sought to be subject of injunction, are violative of petitioner's exercise of freedom of religion. Freedom of religion includes the right of the religious organization to receive donations from its members so that it could propagate its religious mission to provide for and support the needs of the members, and continue with its charitable activities. This grave injury consists of the violation of its constitutional right to free exercise of religion. If the SEC issuances are implemented, the petitioner, as a religious organization relying on the generosity of its members to sustain its activities and maintain its existence would in effect be abolished by the SEC. DETACa To summarize, petitioner stated: First, it has a clear and unmistakable right to be protected, the right to religious freedom. Second, this right is directly threatened by the impending implementation of assailed SEC issuances. Third, the invasion of the right is material and substantial. Fourth, there is an urgent necessity for the preliminary injunction to prevent serious and irreparable damage. Attached to the petition are Annexes A and B. Annex A is a SEC Advisory dated October 3, 2018, consisting of two pages. The 6th paragraph in the first page states: "In view thereof, the public is advised to STOP INVESTING in this kind of investment activity and to take the necessary precautions in dealing with the above-named entity and/or its representatives." Portions of the second page of Annex A gave the general public the addresses of the SEC Davao and Cagayan De Oro Extension Offices where persons can seek assistance. Quoted herein, including the emphasis, is the final paragraph in the second page: "For further reference, on 08 March 2017, the Commission issued an ADVISORY on KAPPA (KABUS PADATOON) founded by a certain MR. JOEL APOLINARIO collecting investments with a promise that 30% of one's investment will be paid back every month until forever. The public was advised to STOP INVESTING in these kinds of investment activities and to take the necessary precaution in dealing with the said entity and/or its representatives which can be viewed at the Commission's website at www.sec.gov.ph ." Annex B is a CEASE AND DESIST ORDER (CDO) dated 14 February 2019 in SEC Admin. Case No. 02-19-181. Pertinent sections of the dispositive portion of this 15-page CDO, with emphasis, are quoted below: "WHEREFORE, premises considered, KAPA COMMUNITY MINISTRY INTERNATIONAL, INC., KAPA KABUS PADATUON (ENRICH THE POOR), KAPA/KAPPA (KABUS PADATOON) KAPA-CO CONVENIENCE STORE AND GENERAL MERCHANDISE, KAPA WORLDWIDE MINISTRY , and/or Mr. JOEL APOLINARIO , their partners, officers, directors, agents, representatives, conduits, assigns and ANY AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR BEHALF are hereby ordered to IMMEDIATELY CEASE AND DESIST UNDER PAIN OF CONTEMPT , from engaging in activities of selling and/or offering for sale securities in the form of investment contracts in the guise of a donation or any other forms of the same nature as discussed above." xxx xxx xxx. "The Enforcement and Investor Protection Department is hereby directed to: (1) serve this Order to KAPA COMMUNITY MINISTRY INTERNATIONAL, INC., its President, General Manager, Corporate Secretary, Treasurer, In-House Counsel or partners; and 2) post copies of the Order at the entrance of the main office and/or branches, if any, of KAPA COMMUNITY MINISTRY INTERNATIONAL, INC." "Let a copy of this Order be also posted in the Commission's website, published in a national newspaper of general circulation and furnished to the Company Registration and Monitoring Department, the Corporate Governance and Finance Department and the Economic Research and Information Department for their information and appropriate action." "The EIPD is further directed to submit a formal compliance report, by way of a pleading, to the Commission En Banc within five (5) days from receipt of this Cease and Desist Order." "In accordance with the provisions of Sec. 64.3 of SRC and Sec. 4-3 of the 2016 Rules of Procedure of the Commission, the parties subject of the Cease and Desist Order may file a request for the lifting thereof within five (5) days from receipt hereof." There is an ISSUE that needs to be resolved first: In the petition at hand, can the Regional Trial Court of General Santos City properly issue a 72-hour-TRO to stop the implementation of the issuances of the Securities and Exchange Commission, namely: SEC Advisory (SEC Advisory) dated October 3, 2018 and CEASE AND DESIST ORDER (CDO) dated 14 February 2019 in SEC Admin. Case No. 02-19-181. aDSIHc PRELIMINARY FINDINGS & EVALUATION OF THE COURT: Petitioner stated that: "Respondent SEC has already issued the Assailed Advisory and is poised to implement the Assailed CDO if no 72-hour Restraining Order, TRO and writ of preliminary injunction are issued by the Honorable Court." A reading of the SEC Advisory dated October 3, 2018 shows that the public was ADVISED "to STOP INVESTING in these kinds of investment activities and to take the necessary precaution in dealing with the said entity and/or its representatives which can be viewed at the Commission's website at www.sec.gov.ph ." This Advisory does not appear to have any mode of implementation that needs to be restrained. The general public was advised to stop investing, but other than this exhortation to the general public, there does not appear to be any positive action that the SEC needs to do to "implement" this advise. If petitioner want this SEC Advisory recalled or set aside, its legal remedy lies with the SEC, and not with the Regional Trial Court. Petitioner stated that it submitted to the SEC, letters dated 22 October, 24 October, 15 November, 17 December 2018; and 31 January 2019, and presented proof that it is a religious organization which does not solicit money from the public with a promise of return on investment. According to petitioner, despite these letters and proof, the SEC issued the CDO. The Court finds that the assailed CDO has provided how a legal remedy may be availed: "In accordance with the provisions of Sec. 64.3 of SRC and Sec. 4-3 of the 2016 Rules of Procedure of the Commission, the parties subject of the Cease and Desist Order may file a request for the lifting thereof within five (5) days from receipt hereof." Section 64 of Republic Act No. 8799, the Securities Regulation Code, refers to a Cease and Desist Order. Section 64.3 specifically provides what can be done by a person or entity upon whom a CDO had been issued: "64.3. Any person against whom a cease and desist order was issued may, within five (5) days from receipt of the order, file a formal request for a lifting thereof. Said request shall be set for hearing by the Commission not later than fifteen (15) days from its filing and the resolution thereof shall be made not later than ten (10) days from the termination of the hearing. If the Commission fails to resolve the request within the time herein prescribed, the cease and desist order shall automatically be lifted." There is nothing in the petition to show that this remedy with the SEC itself has been availed by petitioner. The petitioner, if facing "extreme urgency," appears to have a remedy with the SEC because: "If the Commission fails to resolve the request within the time herein prescribed, the cease and desist order shall automatically be lifted." In the case of SEC, et al. vs. CJH Development Corporation, et al. (G.R. No. 210316, November 28, 2016) , the Supreme Court had shown that the 2006 Rules of Procedure of the SEC provided the legal remedies for a party subject of a CDO. Although this case does not fall squarely with the present petition, and this Court clearly sees that the present petition is not one wherein petitioner is appealing the SEC Advisory or the CDO, it would appear that relief from the CDO issued by the SEC may be had with the SEC, and not with the Regional Trial Court. Thus, we find that in the present petition, the Regional Trial Court of General Santos cannot properly issue a 72-hour-TRO to stop the implementation of a SEC Advisory (Annex A) and a SEC Cease and Desist Order (Annex B). WHEREFORE, premises considered, the prayer for the issuance of a 72-hour-TRO is DENIED. The Office of the Clerk of Court of the Regional Trial Court is directed to comply with the procedure in Section 5 of Rule 58 of the Rules of Court on Preliminary Injunction, and to serve a copy of this Order upon petitioner, through counsel. SO ORDERED. General Santos City, Philippines, March 1, 2019. ETHIDa (SGD.) JOYCE KHO MIRABUENO Judge