Katuwang Poultry Chicken Egg Producing Co.

September 21, 2021 ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT SEC ADVISORY Based on numerous reports and information gathered by the Commission, the entity operating under the name KATUWANG POULTRY CHICKEN EGG PRODUCING CO. through its partners, MANNY NUQUE FERNANDEZ, PHILIP L. MERCADO and NESTOR CASTRO is found to be engaged in investment-taking activities in the Philippines which is NOT AUTHORIZED by the Commission. Based on the information gathered from the said reports, inquiries, and data from open sources such as the social media sites, KATUWANG POULTRY CHICKEN EGG PRODUCING CO. is apparently promising its prospective investors of up to 120% in profit in just only six months depending on the amount of the initial investment. As posted online at its own Facebook page, KATUWANG POULTRY CHICKEN EGG PRODUCING CO. offers four (4) types of investment options or levels, all of which have an option for the investor to earn 10% more in earnings from commissions through referrals. The first package offered starts with an initial investment of P50,000.00 as minimum with a promised profit of 48% in just six months. The biggest package offered by KATUWANG POULTRY CHICKEN EGG PRODUCING CO. starts with an initial investment of P500,000.00 or more with a promised profit of 120% in just six months. To wit: The lock-in program of six months is basically how the investors earn passive income where the investor need not exert any effort except from investing money. Hence, from the promise of 48% to 120% profit in just 6 months without any concrete business plan, it can be inferred that the income of its investors depends on subsequent investors which ultimately defeats sustainability because its whole system depends entirely on the new investors that will be lured in. Applying the Howey Test , 1 KATUWANG POULTRY CHICKEN EGG PRODUCING CO.'s investment taking scheme or its so-called "earn 48-120% in 6 months" program partakes of the nature of securities in the form of an investment contract because it involves the offering and sale of securities to the public where their investors need not exert any effort other than to invest or place money in its scheme in order to earn profit. Briefly, an "investment contract" exists when there is an investment or placement of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others which are prominent on KATUWANG POULTRY CHICKEN EGG PRODUCING CO.'s scheme. Therefore, KATUWANG POULTRY CHICKEN EGG PRODUCING CO. must be duly registered with the Commission and that any person or entity intending to offer and sell its investment contract are required to secure the necessary registration and/or license from the Commission as well. Per our record, although KATUWANG POULTRY CHICKEN EGG PRODUCING CO. has been REGISTERED with the Commission as a partnership on 01 June 2021 under Company Registration No. PG202106004 , it OPERATES WITHOUT THE NECESSARY LICENSE AND/OR AUTHORITY to solicit, accept or take investments/placements from the public nor to issue investment contracts and other forms of securities defined under Section 3 of the Securities Regulation Code (SRC) . Hence, the public is advised NOT TO INVEST or STOP INVESTING in any scheme offered by KATUWANG POULTRY CHICKEN EGG PRODUCING CO. or such other entities engaged in investment taking schemes that are not registered with the Commission. Accordingly, the Commission warns all unscrupulous individuals and/or entities that strict penalties are imposed for violations of the Securities Regulation Code, the Revised Corporation Code, and such other rules and regulations enforced by the Commission . Those who act as salesmen, brokers, dealers or agents of such unauthorized entities like the operators of the Facebook Page of KATUWANG POULTRY CHICKEN AND EGG PRODUCTION CO. in selling or convincing people to invest in their investment scheme offered including solicitations and recruitment through the internet may likewise be criminally prosecuted and penalized with a maximum fine of Five Million pesos (P5,000,000.00) or a penalty of Twenty-one (21) years of imprisonment or both pursuant to Sections 28 and 73 of the SRC. In the same manner, those who invite or recruit others to join or invest in such ventures or offer investment contracts or securities to the public may incur criminal liability, or otherwise be sanctioned or penalized accordingly as held by the Supreme Court in the case of SEC vs. Oudine Santos (G.R. No. 195542, 19 March 2014). The names of all those involved will also be reported to the Bureau of Internal Revenue (BIR) so that the appropriate penalties and/or taxes be assessed correspondingly. Should you have any information regarding any investment solicitation activity by any individual or group of individuals representing KATUWANG POULTRY CHICKEN EGG PRODUCING CO. , please send your report to the EIPD at [emailprotected]. For the guidance of the public. Pasay City, September 21, 2021. Footnotes 1. Power Homes Unlimited vs. SEC (G.R. No. 164182, February 26, 2008).