SEC Declares CDO Against HASMADAI Permanent

The Securities and Exchange Commission (SEC) has made permanent the cease and desist order against Humanitarian and Spiritual Mission Apostulates of Davao and Asia, Inc., HASMADAI Foundation, Inc. and Humanitarian Institute of Technology Corp. for their unauthorized solicitation of investments.

In a resolution dated December 3, the Commission En Banc affirmed the issuance of the CDO against the HASMADAI Group, effectively denying the company’s motion to lift.

The SEC issued the CDO against HASMADAI Group on May 21, after it was found to be soliciting investments from the public through several branches in the CARAGA Region, without the necessary license from the Commission.

HASMADAI Group’s scheme revolved around the solicitation of donations ranging from P5,000 to P20,000, with the donor guaranteed to get a monthly “missionary allowance” equivalent to 27% to 34% of the donation. A donor of P5,000 is guaranteed to receive P8,100 over a six-month period, while a donor of P20,000 will get more than twice the amount at P41,4000.

The scheme involved the sale and/or offer of securities in the form of investment contracts, whereby a person makes an investment of money, in a common enterprise, with the expectation of profits, to be derived solely from the efforts of others, the Commission held.

Section 8 of Republic Act No. 8799, or the Securities Regulation Code (SRC), provides that 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 SEC. 

In its motion to lift, HASMADAI maintained that the amounts received by the corporation are donations and not investments, and as such, cannot be considered as securities under the contemplation of the SRC.

It further argued that it is a religious organization whose operations are supported by the donations it receives from willing donors, both locally and abroad, and from the profits generated by its shopping centers.

The Commission En Banc dismissed the HASMADAI Group’s arguments, and ruled that its members are not donating out of gratuity, but because of the promised missionary allowance ranging from 27% to 34% that they will receive.

“The use of the term ‘donation’ by HASMADAI does not operate to negate the fact that the unauthorized investment scheme which it is carrying out consists of selling/offering unregistered securities in the form of investment contract,” the Commission En Banc held.