KAPA Officials Summoned To DOJ To Face Raps: Republic Act No. 8799, The Securities Regulation Code (SRC)

KAPA officials summoned to DOJ to
face raps
Kapa-Community Ministry International Inc. founder and president Joel Apolinario and his fellow
officials have been summoned by the Department of Justice (DOJ) to face the criminal complaint
filed against them by the Securities and Exchange Commission (SEC) which accused them of
engaging in an investment scam.
In its complaint that was filed before the DOJ last June 18, the SEC accused Kapa of violating
Republic Act No. 8799, the Securities Regulation Code (SRC).
“A person found to have violated the SRC, or the relevant rules and regulations promulgated by the
SEC, will face a maximum fine of P5 million or imprisonment of seven to 21 years, or both,”
the SEC earlier said.
The SEC pointed out Kapa violated in Sections 8 and 28 of the SRC which disallows the sale of
securities without prior registration and approval of the SEC.
“Those who sell or offer securities to the public without the necessary license may be held
criminally liable and accordingly sanctioned or penalized pursuant to the decision of the
Supreme Court in the case of the SEC vs. Oudine Santos on March 19, 2014 and within the
definition of securities solicitation in the 2015 SRC Rules,” it stated.
The SEC also found Kapa to have employed “a Ponzi scheme, an investment program that offers
impossibly high returns and pays investors using the money contributed by other investors.”
“This qualifies as a fraudulent transaction prohibited under Section 26 (26.3) of the SRC,” it
stated.
Under the scheme, the SEC explained Kapa “enticed the public to ‘donate’ at least P10,000 in
exchange for a 30% monthly ‘blessing’ or ‘love gift’ for life, without having to do anything other
than invest and wait for the payout.”
SEC issues rules on crowdfunding

The Securities and Exchange Commission (SEC) has issued Rules and Regulations Governing
Crowdfunding (CF Rules) to allow startups and small and medium-sized enterprises (SMEs) greater
access to capital while giving the public more investment options.
Crowdfunding is a fundraising activity typically conducted through an online platform and usually
for startups and SMEs.
SEC Chairperson Emilio B. Aquino said“the Commission hopes to support recent financial
innovations on providing easier access to finance especially for smaller business startups or
ventures while ensuring the integrity and fairness of financial systems and the protection of
investors.”
Generally, there are four forms of crowdfunding:
donation-based crowdfunding,
reward-based crowdfunding,
lending-based crowdfunding, and
equity-based crowdfunding.
Reward-based and donation-based crowdfunding are two prevalent forms of community

crowdfunding which are not subject to securities regulation as they do not involve offers of
securities or the prospect of financial returns.
On the other hand, the financial return model includes lending-based and equity-based
crowdfunding. Considering it involves the offer of securities in the form of debentures or shares,
the financial return model is subject to securities regulation.
The CF Rules primarily govern the operation and use of equity- and lending-based crowdfunding by
registered persons such as brokers, investment houses, funding portal, and issuers and investors who
participate in such fundraising activities online.
Crowdfunding through means other than online electronic platform is not within the
coverage of the CF Rules; hence, the usual requirements under the SRC shall apply.
Under the new rules, CF transactions must be done through registered CF intermediaries, the
aggregate amount of securities that can be offered and sold by issuer within a 12-month period shall
be limited to P10 million when offered and sold to any investor; and P50 million when offered and
sold to qualified investors.
There is also a limit on investments of investors: during the 12-month period:a maximum of 5
percent of total income per year for retail investors with annual income of up to P2 million, and up to
10 percent for those earnings more than P2 million a year. Qualified investors are not subject to the
limits.
The Sandiganbayan has ordered the forfeiture of the unexplained wealth of retired Police
Chief Supt. Danilo Mangila totaling P15.81 million.
“Verily and with these facts on hand, …respondent Mangila’s lawful income for the said
period…was grossly insufficient to finance the acquisition of his assets in the aggregate amount
of P15,806,403.65,” the court concluded in the decision penned by Associate Justice Georgina
Hidalgo.
The court said government employees were not prohibited from acquiring properties as long as they
could show that these assets came from the “fruits of their legitimate toils.”
“Membership in the government service does not in any way strip government employees of
their constitutionally guaranteed right to own properties. Unfortunately, respondent Mangila
failed to prove that he has lived a life proportionate to his means,” the court said.
The assets were already seized through notices of preliminary attachment issued on September 6,
2011.
The court’s 4th Division in March 2017 acquitted Mangila of criminal charges of perjury in
connection with his alleged misdeclaration of outstanding liabilities in his Statements of Assets,
Liabilities and Net Worth (SALNs) for the years 1998 to 2003.
The Department of Justice defended the President’s action, saying he

had the authority to stop PCSO games.
Justice Secretary Menardo Guevarra said the suspension of PCSO

operations did not violate the license of private operators.
“A gaming license is not a contractual right, but a mere privilege that

may be revoked at any time by the state,” Guevarra explained.
“The President has the authority to order the suspension, even the
termination, of PCSO-licensed gaming operations upon prima facie
proof that licensees are not faithfully complying with their legal
obligation to remit the correct amount of the government’s share in
revenues, or that their operations are tainted by fraud, deceit, or
corruption,” he said.

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KAPA Officials Summoned To DOJ To Face Raps: Republic Act No. 8799, The Securities Regulation Code (SRC)

Uploaded by

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Available Formats

KAPA officials summoned to DOJ to

SEC issues rules on crowdfunding

Generally, there are four forms of crowdfunding:

Reward-based and donation-based crowdfunding are two prevalent forms of community

The Department of Justice defended the President’s action, saying he

Justice Secretary Menardo Guevarra said the suspension of PCSO

“A gaming license is not a contractual right, but a mere privilege that

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