Power Homes Unlimited Corp v SEC GR 164182, Feb 26, 2008

FACTS: (Short lang since emphasize ni maam)

 Power Homes (P) was engaged in managing real estate properties for subdivision & allied purposes and in the
purchase, exchange, and/or sale of such through network marketing.
 Manero & Munsayac requested SEC (R) to investigate P’s business since he attended a seminar conducted by P
where the latter claimed to sell properties that were inexistent and without any broker’s license & desires to
know if network marketing is legitimate.
 P submitted to R copies of its marketing course module and letters of accreditation/authority or confirmation from
Crown Asia, Fil-Estate Network and Pioneer 29 Realty Corporation after a conference held by R.
 R found P to be engaged in the sale or offer for sale or distribution of investment contracts, which are considered
securities under Sec. 3.1 (b) of R.A. No. 8799 (The Securities Regulation Code), but failed to register them in
violation of Sec. 8.1 of the same Act. R then issued a CDO to P to enjoin the latter from engaging in the sale,
offer or distribution of the securities.
ISSUE: Whether petitioner’s business constitutes an investment contract which should be registered with public
respondent SEC before its sale or offer for sale or distribution to the public.
HELD: Yes. An investment contract is defined in the Amended Implementing Rules and Regulations of R.A. No. 8799 as
a "contract, transaction or scheme (collectively ‘contract’) whereby a person invests his money in a common enterprise
and is led to expect profits primarily from the efforts of others."
It applied the Howey Test and cited the case of SEC v. Glenn W. Turner Enterprises, Inc. et a. Thus our R.A. No. 8799
appears to follow this flexible concept for it defines an investment contract as a contract, transaction or scheme
(collectively "contract") whereby a person invests his money in a common enterprise and is led to expect profits not
solely but primarily from the efforts of others. Thus, to be a security subject to regulation by the SEC, an investment
contract in our jurisdiction must be proved to be: (1) an investment of money, (2) in a common enterprise, (3) with
expectation of profits, (4) primarily from efforts of others.
The business scheme of petitioner in the case at bar is essentially similar. An investor enrolls in petitioner’s program by
paying US$234. This entitles him to recruit two (2) investors who pay US$234 each and out of which amount he receives
US$92. A minimum recruitment of four (4) investors by these two (2) recruits, who then recruit at least two (2) each,
entitles the principal investor to US$184 and the pyramid goes on.
The trainings or seminars are merely designed to enhance P’s business of teaching its investors the know-how of its multi-
level marketing business. An investor enrolls under the scheme of P to be entitled to recruit other investors and to receive
commissions from the investments of those directly recruited by him. Under the scheme, the accumulated amount
received by the investor comes primarily from the efforts of his recruits.
Citibank NA and Citigroup Private Bank v Ester Tanco-Gabaldon et al GR 198444 Sep 4, 2013
IMPORTANT ISSUE: The bone of the contention in this case was the prescriptive period of the criminal case filed by
private respondents. Petitioner contends that the action has prescribed since Section 62 of the SRC provides for the
prescriptive period of the SRC which is 2-5 years:
Section 62 of the SRC provides that no o action shall be maintained to enforce any liability created under Section
56 of the SRC (False registration statement) and 57 (sale of unregistered security and liabilities arising in
connection with prospectus, communication and other reports) unless brought within two (2) years after the
discovery of the untrue statement or the omission, but not more than five (5) years after the security was bona
fide offered to the public, ormore than five (5) years after the sale.
HELD: The action did not prescribe because the nature of the action filed by Respondents is criminal in nature. The
prescriptive periods under the mentioned sections pertain only to civil liability in cases of violations under SRC and not to
criminal liability under the same violations. In cases of criminal liability, Act 3326 is the prevailing law ( ACT TO ESTABLISH
PERIODS OF PRESCRIPTION FOR VIOLATIONS PENALIZED BY SPECIAL ACTS AND MUNICIPAL ORDINANCES AND TO PROVIDE WHEN
PRESCRIPTION SHALL BEGIN TO RUN). Under Section 73 (PENALTIES) of the SRC, violation of its provisions or the rules and
regulations is punishable with imprisonment of not less than seven (7) years nor more than twenty-one (21) years.
Applying Section 1 of Act No. 3326, a criminal prosecution for violations of the SRC shall, therefore, prescribe in twelve
(12) years.
SEC v. Price Richardson Corp
To be held criminally liable for the acts of a corporation, there must be a showing that its officers, directors, and
shareholders actively participated in or had the power to prevent the wrongful act
An examination of the records reveals that probable cause exists to file an information against respondent Price
Richardson for violating the laws.
SECURITIES REGULATION CODE
Section 26. Fraudulent Transactions. – It shall be unlawful for any person, directly or indirectly, in connection with the
purchase or sale of any securities to:
26.3. Engage in any act, transaction, practice or course of business which operates or would operate as a fraud or deceit
upon any person.
Section 28. Registration of Brokers, Dealers, Salesmen and Associated Persons. – 28.1. No person shall engage in the
business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated
person of any broker or dealer unless registered as such with the Commission.
REVISED PENAL CODE
ARTICLE 315. Swindling (Estafa). — Any person who shall defraud another by any of the means mentioned hereinbelow
shall be punished by:
4th. By arresto mayor in its medium and maximum periods, if such amount does not exceed 200 pesos, provided that in
the four cases mentioned, the fraud be committed by any of the following means:

1. With unfaithfulness or abuse of confidence, namely:(b) By misappropriating or converting, to the prejudice of another,
money, goods, or any other personal property received by the offender in trust or on commission, or for administration, or
under any other obligation involving the duty to make delivery of or to return the same, even though such obligation be
totally or partially guaranteed by a bond; or by denying having received such money, goods, or other property.
Probable Cause existed thus the filing of the information was proper.
Based on the Certification dated October 11, 2001 issued by the Market Regulation Department of the Securities
and Exchange Commission, respondent Price Richardson "has never been issued any secondary license to act as
broker/dealer in securities, investment house and dealer in government securities. Petitioner also certified that
respondent Price Richardson "is not, under any circumstances, authorized or licensed to engage and/or solicit investments
from clients.

Petitioner further supports its charges by submitting the complaint-affidavits and letters of individuals who transacted with
Price Richardson:

Furthermore, there are other complainants against Price Richardson who deserve to have their complaints aired and tried
before the proper court. Mr. Johannes Jacob Van Prooyen filed a complaint against Price Richardson with the National
Bureau of Investigation . . . In the said complaint, Mr. Van Prooyen clearly pointed to Price Richardson as the ones who
contacted him on June 12, 2001 to buy 2000 shares of Hugo Intl. Telecom, Inc. and on July 10, 2001 to buy 2000 shares
of GeoAlert. At no time at such relevant dates was Price Richardson licensed to act as traders or brokers of securities in
the Philippines.

Mr. Bjorn L. Nymann of Oslo, Norway wrote about Price Richardson to this very same Department of Justice, which
letter was received on July 9, 2002. In his letter Mr. Nymann admitted dealing with Price Richardson. He admitted to
having bought 3000 shares of Hugo Intl. Telecom, Inc. . . . Although Mr. Nymann is not a complaining witness against
Price Richardson, his letter is relevant as at no time at such relevant date was Price Richardson licensed to act as traders or
brokers of securities in the Philippines.
If this Honorable Court were to consider the set-up of Price Richardson, it was as if it engaged in outsourced operations
wherein persons located in the Philippines called up persons located in foreign locations to inform them of certain
securities available in certain locations, and to determine if they wanted to buy these securities which are offered in a
different country.115
The evidence gathered by petitioner and the statement of respondent Price Richardson are facts sufficient enough to
support a reasonable belief that respondent is probably guilty of the offense charged.
(Point is maraming mga taong nag come forward saying they were sold Securities by Richardson tapos Citibank Certified
na he had no authority at all)
Margarita Benedicto Munoz v Ma Angela Cacho Oliveros
Cuaycong misappropriated money given by respondent, for his own benefit and in payment of his own marginal debts in
several investments of his and that of his brother. These acts were done with the help of several other people who kept
quite and aided in the accomplishment of these acts. Subsequently there was a Compromise Agreement between
Cuaycong ang the respondents which absolved the former from liability. However, the remaining parties who “helped”
were still held liable.
The SC HELD: The foregoing allegations plead the substantive unity in the alleged fraud and deceit that the Cuaycong
brothers and the petitioners committed against respondents, which resulted in a single injury-the loss of investments in the
amount of Php 7,040,645.22 (which is also the actual damages claimed in the Original Complaint, and the amount
subject of the Compromise Agreement in Civil Case No. 66321). Each of the petitioners performed an indispensable act
that aided and abetted the illegal activities of the Cuaycong brothers, without which the latter would not be able to
successfully consummate their fraudulent scheme. In their Appellants' Brief, respondents acknowledged that conspiracy
existed between the Cuaycong brothers and the petitioners.

Conversely, the indispensable parties in this case are not only the Cuaycong brothers but also the petitioners. On the
contrary, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible
from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to
the parties in court. Since the Cuaycong brothers and the petitioners, as indispensable parties, had played various
interconnected roles that led to the singular injury and loss of the respondents, their liabilities cannot be separately
determined.