Question

Commercial

Prosperidad Agricultural Corporation (PAC) offered to the public a scheme called "Harvest Bonds." Under the scheme, investors would remit PHP 100,000 each to PAC, which would use the pooled funds to plant and harvest rice on PAC's agricultural lands. PAC promised investors a return of PHP 20,000 per annum, sourced from the proceeds of the harvest, with PAC handling all planting, cultivation, and selling operations. PAC marketed the scheme without registering any securities with the Securities and Exchange Commission (SEC), claiming that the "Harvest Bonds" were not securities but merely a form of agricultural investment arrangement. The SEC ordered PAC to cease and desist from offering the scheme on the ground that PAC was selling unregistered securities in violation of the Securities Regulation Code. Is the SEC correct? (Bar 2026 Syllabus)

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