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Capital Markets


Markets for buying and selling equity and debt instruments. Capital markets channel savings and investment between suppliers of capital such as retail investors and institutional investors, and users of capital like businesses, government and individuals. Capital markets are vital to the functioning of an economy, since capital is a critical component for generating economic output. Capital markets include primary markets, where new stock and bond issues are sold to investors, and secondary markets, which trade existing securities.

Capital markets typically involve issuing instruments such as stocks and bonds for the medium-term and long-term. In this respect, capital markets are distinct from money markets, which refer to markets for financial instruments with maturities not exceeding one year.

Equity Capital Invested money that, in contrast to debt capital, is not repaid to the investors in the normal course of business. It represents the risk capital staked by the owners through purchase of a company's common stock (ordinary shares). The value of equity capital is computed by estimating the current market value of everything owned by the company from which the total of all liabilities is subtracted. On the balance sheet of the company, equity capital is listed as stockholders' equity or owners' equity. Also called equity financing or share capital.

stock market or equity market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (shares); these are securities listed on a stock exchange as well as those only traded privately.

he bond market (also debt market or credit market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debtsecurities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on. The primary goal of the bond market is to provide a mechanism for long term funding of public and private expenditures. Traditionally, the bond market was largely dominated by the United States, but today the US is about 44% of the market.[1] As of 2009, the size of the worldwide bond market (total debt outstanding) is an estimated $82.2 trillion,[2] of which the size of the outstanding U.S. bond market debt was $31.2 trillion according to Bank for International Settlements (BIS), or alternatively $35.2 trillion as of Q2 2011 according to Securities Industry and Financial Markets Association (SIFMA).[2] Nearly all of the $822 billion average daily trading volume in the U.S. bond market[3] takes place between broker-dealers and large institutions in a decentralized, over-the-counter(OTC) market. However, a small number of bonds, primarily corporate, are listed on exchanges. References to the "bond market" usually refer to the government bond market, because of its size, liquidity, relative lack of credit risk and, therefore, sensitivity to interest rates. Because of the inverse relationship between bond valuation and interest rates, the bond market is often used to indicate changes in interest rates or the shape of the yield curve. The yield curve is the measure of "cost of funding

Commodity Market'

A physical or virtual marketplace for buying, selling and trading raw or primary products. For investors' purposes there are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities.

Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural resources that must be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities are agricultural products or livestock (corn, wheat, coffee, sugar, soybeans, pork, etc.)

The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. The main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. Electronic Broking Services (EBS) and Reuters 3000 Xtra are two main interbank FX trading platforms. The foreign exchange market determines the relative values of different currencies.[1] The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers,” who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the “interbank market”, although a few insurance companies and other kinds of financial firms are involved. Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars.[citation needed] Because of the sovereignty issue when involving two currencies, Forex has little (if any) supervisory entity regulating its actions.

The exchange where most of the buying and selling of options contracts take place is called the options market. The most common way of trading options is through standardized options contracts. These are listed in various futures and options exchanges. The listing of the contracts and their respective prices is done using ticker symbols.

the Role of an Option Market These exchanges ensure that the contract terms are backed by the credit of the exchange. They also safeguard the anonymity of the counterparties and enforce market regulations to ensure that the trades remain fair and transparent. During fast trading conditions, these exchanges ensure the maintenance of orderly markets.

G.R. No. 164182 February 26, 2008 POWER HOMES UNLIMITED CORPORATION, petitioner, vs. SECURITIES AND EXCHANGE COMMISSION AND NOEL MANERO, respondents. DECISION PUNO, C.J.: This petition for review seeks the reversal and setting aside of the July 31, 2003 Decision1 of the Court of Appeals that affirmed the January 26, 2001 Cease and Desist Order (CDO)2 of public respondent Securities and Exchange Commission (SEC) enjoining petitioner Power Homes Unlimited Corporation’s (petitioner) officers, directors, agents, representatives and any and all persons claiming and acting under their authority, from further engaging in the sale, offer for sale or distribution of securities; and its June 18, 2004 Resolution3 which denied petitioner’s motion for reconsideration. The facts: Petitioner is a domestic corporation duly registered with public respondent SEC on October 13, 2000 under SEC Reg. No. A200016113. Its primary purpose is: To engage in the transaction of promoting, acquiring, managing, leasing, obtaining options on, development, and improvement of real estate properties for subdivision and allied purposes, and in the purchase, sale and/or exchange of said subdivision and properties through network marketing.4 On October 27, 2000, respondent Noel Manero requested public respondent SEC to investigate petitioner’s business. He claimed that he attended a seminar conducted by petitioner where the latter claimed to sell properties that were inexistent and without any broker’s license. On November 21, 2000, one Romulo E. Munsayac, Jr. inquired from public respondent SEC whether petitioner’s business involves "legitimate network marketing." On the bases of the letters of respondent Manero and Munsayac, public respondent SEC held a conference on December 13, 2000 that was attended by petitioner’s incorporators John Lim, Paul Nicolas and Leonito Nicolas. The attendees were requested to submit copies of petitioner’s marketing scheme and list of its members with addresses. The following day or on December 14, 2000, petitioner submitted to public respondent SEC copies of its marketing course module and letters of accreditation/authority or confirmation from Crown Asia, Fil-Estate Network and Pioneer 29 Realty Corporation. On January 26, 2001, public respondent SEC visited the business premises of petitioner wherein it gathered documents such as certificates of accreditation to several real estate companies, list of members with web sites, sample of member mail box, webpages of two (2) members, and lists of Business Center Owners who are qualified to acquire real estate properties and materials on computer tutorials.

A. The Terms and Conditions printed at the back of the application form indicate that the BCO shall mean an independent representative of Power Homes. Prior to such sale. After recruiting 128 persons in a period of eight (8) months for each Left and Right business groups or a total of 256 enrollees whether directly referred by the BCO or through his down lines. after proper investigation or verification. Cease and Desist Order.16 held that "Congress was using a term whose meaning had been crystallized"17 under the state’s "blue sky" laws18 in existence prior to the adoption of the Securities Act.1 of the same Act. (4) to be derived solely from the efforts of others. The disposition pertinent to petitioner reads:9 WHEREFORE. 8799 (The Securities Regulation Code). may issue a cease and desist order without the necessity of a prior hearing if in its judgment the act or practice. 2001. 2001. 2001. petitioner filed in the Court of Appeals a Motion for the Issuance of a Writ of Preliminary Injunction. On July 13. which the appellate court granted. No.Com. who is enrolled in the company’s referral program and who will ultimately purchase real property from any accredited real estate developers and as such he is entitled to a referral bonus/commission. are hereby ordered to immediately CEASE AND DESIST from further engaging in the sale. the BCO who receives a total amount of US$11. 8. or scheme whereby a person (1) makes an investment of money. 2001. CORP.1 of R.700 constituting as his Property Fund placed in a Property Fund account with the Chinabank.000. 2001. [SP] No. 2001. et al. petitioner went to the Court of Appeals imputing grave abuse of discretion amounting to lack or excess of jurisdiction on public respondent SEC for issuing the order. The second issue is whether the business of petitioner involves an investment contract that is considered security11 and thus. after finding petitioner to be engaged in the sale or offer for sale or distribution of investment contracts. No. On July 31. the US Supreme Court was confronted with the issue of whether the Howey transaction constituted an "investment contract" under the Securities Act’s definition of "security.A. Securities shall not be sold or offered for sale or distribution within the Philippines. The issues for determination are: (1) whether public respondent SEC followed due process in the issuance of the assailed CDO. His enrollment entitles him to recruit two investors who should pay US$234 each and out of which amount he shall receive US$92. (2) requested information from the incorporators regarding the nature of petitioner’s business operations.6 public respondent SEC issued a CDO that reads: WHEREFORE.20 after deducting the amount of US$36. and (2) 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. which public respondent SEC denied for lack of merit on February 22. – 64. public respondent SEC moved for reconsideration. which are considered securities under Sec. 2004.00 to answer whatever damages the respondents may suffer should petitioner be adjudged not entitled to the injunctive relief herein granted. Public respondent SEC abundantly allowed petitioner to prove its side. the parties subject of this Cease and Desist Order may file a request for the lifting thereof within five (5) days from receipt.A. 8799 . 2001.A.1. Howey Co. 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. 8799. 8799. WHEREFORE. offer or distribution of the securities upon the receipt of this order. Securities and Exchange Commission (Compliance and Enforcement Department). 64. On May 23. (3) asked them to submit documents pertinent thereto. shall be made available to each prospective purchaser.1. the Court of Appeals consolidated petitioner’s case with CA-G. It also applied for a temporary restraining order. A ll these were done before the CDO was issued by the public respondent SEC. De La Cruz. 62890 entitledProsperity. and (4) visited petitioner’s business premises and gathered information thereat. 8799 as a "contract. (2) in a common enterprise. let a writ of preliminary injunction be issued in favor of petitioner. et al. x x x x the petition for certiorari and prohibition filed by the other petitioner Powerhomes Unlimited Corporation is hereby DENIED for lack of merit and the questioned Cease and Desist Order issued by public respondent against it is accordingly AFFIRMED IN TOTO.700 is used as partial/full down payment for the real property chosen by the BCO from any of *petitioner’s+ accredited real estate developers.80 as property fund from the gross amount of US$184. the BCO will receive a total amount of US$147. it ruled that the use of the catch-all term "investment contract" indicated a congressional intent to cover a wide range of investment transactions. the motion was heard. Incorporated v. the 9thCircuit of the US Court of Appeals ruled that the element that profits must come "solely" from the efforts of others should not be given a strict interpretation. 2001. The records reveal that public respondent SEC properly examined petitioner’s business operations when it (1) called into conference three of petitioner’s incorporators. in such form and with such substance as the Commission may prescribe." It also described the conduct of petitioner’s business as follows: The scheme of the [petitioner] corporation requires an investor to become a Business Center Owner (BCO) who must fill-up and sign its application form. representatives and any and all persons claiming and acting under their authority. Our definition of an investment contract traces its roots from the 1946 United States (US) case of SEC v."15 The US Supreme Court. On July 6. the appellate court granted petitioner’s motion.20 It established a test to determine whether a transaction falls within the scope of an "investment contract. pursuant to the authority vested in the Commission.R. – 8.. the Court of Appeals denied petitioner’s motion for reconsideration. Trite to state. On July 12. viz: Section 8. this petition for review. the Court of Appeals issued its Consolidated Decision. without a registration statement duly filed with and approved by the Commission. In case the two referrals/enrollees would recruit a minimum of four (4) persons each recruiting two (2) persons who become his/her own down lines. 64 of R. POWER HOMES UNLIMITED. public respondent SEC filed its opposition."23Needless to state.20 as property fund from the gross amount of US$11.19 Thus.5 but failed to register them in violation of Sec. must be registered prior to sale or offer for sale or distribution to the public pursuant to Section 8.412. It held that a literal reading of the requirement "solely" would lead to unrealistic results. Cristina T.22Although the proponents must establish all four elements. a formal trial or hearing is not necessary to comply with the requirements of due process. Public respondent SEC found the petitioner "as a marketing company that promotes and facilitates sales of real properties and other related products of real estate developers through effective leverage marketing. contract.80 after deducting the amount of US$363. No. Our R.) No. 2003. agents. information on the securities.10 hence. W. one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits. unless restrained.12 An investment contract is defined in the Amended Implementing Rules and Regulations of R. No.3 of Republic Act No."21 Known as the Howey Test.24 In this case. and considering further that with the continuous implementation of the CDO by the SEC would eventually result to the sudden demise of the petitioner’s business to their prejudice and an irreparable damage that may possibly arise.776. On the first issue.14 In this case. regardless of whether its issuer was engaged in fraudulent practices. On June 19. it requires a transaction. The BCO is required to pay US$234 as his enrollment fee. The Commission. Its essence is simply the opportunity to explain one’s position. This accumulated amount of US$2. Sec. Turner Enterprises. It reasoned out that its flexible reading is in accord with the statutory policy of affording broad protection to the public. the US Supreme Court stressed that the Howey Test "embodies a flexible rather than a static principle. 8799. No. On June 18. After Howey came the 1973 US case of SEC v. petitioner moved for the lifting of the CDO.J. Paragraph 5 of the same indicates that there exists no employer/employee relationship between the BCO and the Power Homes Unlimited. has now an accumulated amount of US$2. after posting a bond in the amount of P500. 8799 provides: Sec. 3.A. Aggrieved.8 On August 8. directors. motu proprio or upon verified complaint by any aggrieved party. its officers. 2001. Corp.7 On February 5. we hereby resolve to grant the preliminary injunction. otherwise known as the Securities Regulation Code. Requirement of Registration of Securities. thus: Considering that the Temporary Restraining Order will expire tomorrow or on July 14. any investment contract covered by the Howey Test must be registered under the Securities Act. Inc."13 It behooves us to trace the history of the concept of an investment contract under R. (3) with the expectation of profits. and it appearing that this Court cannot resolve the petition immediately because of the issues involved which require a further study on the matter. will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public.A. which was not resolved by the Court of Appeals. We hold that petitioner was not denied due process. recognizing that the term "investment contract" was not defined by the Act or illumined by any legislative report. In accordance with the provisions of Section 64.On the same day.1 (b) of Republic Act (R. Glenn W.

(3) with expectation of profits. Because the CA did not act promptly on this application for TRO.6 CA-G. are aimed at interesting others in the Plans.A. granting PCI’s petition and setting aside the SEC-issued CDO. Interestingly. 2003 the CA rendered a decision. We therefore rule that the business operation or the scheme of petitioner constitutes an investment contract that is a security under R.000. Instead of asking the SEC to lift its CDO in accordance with Section 64. Clearly. As an investment contract that is security under R. An investment contract is a contract. The CDO was proper even without a finding of fraud.COM. otherwise the SEC cannot protect the investing public from fraudulent securities. Prescinding from these premises.00 commission. Inc. Thus. the buyer-sponsor received a US$92. the SEC filed with the CA a motion to dismiss the petition on ground of forum shopping." The business scheme of petitioner in the case at bar is essentially similar. the US Court of Appeals of the 9th Circuit held that self-improvement contracts which primarily offered the buyer the opportunity of earning commissions on the sale of contracts to others were "investment contracts" and thus were "securities" within the meaning of the federal securities laws. the petition is DENIED. for the price of US$234. such as seminars. 2001.3 of Republic Act (R. But referrals in a day by the buyer-sponsor should not exceed 16 since the commissions due from excess referrals inure to PCI.. Petitioner. During the pendency of PCI’s action before the SEC. The Ruling of the Court The Securities Regulation Code treats investment contracts as "securities" that have to be registered with the SEC before they can be distributed and sold.) 8799. films. a first-time buyer could earn commissions. A minimum recruitment of four (4) investors by these two (2) recruits. 2012 SECURITIES AND EXCHANGE COMMISSION. an investment contract in our jurisdiction must be proved to be: (1) an investment of money. the same persons who ran the affairs of GVI directed PCI’s actual operations. on January 31.Com. His task is to bring prospective purchasers to "Adventure Meetings. 8799. which company stopped operations after the Securities and Exchange Commission (SEC) issued a cease and desist order (CDO) against it. The strict regulation of securities is founded on the premise that the capital markets depend on the investing public’s level of confidence in the system.3 In response. After hearing. this petition. for which he will receive a part of what they pay. In a Resolution. As petitioner failed to register the same. vs. Rather. J. DECISION ABAD. In Turner. 2003 Decision of the Court of Appeals. As it later on turned out. On the following day. and insurance coverage worth P50. An investor enrolls under the scheme of petitioner to be entitled to recruit other investors and to receive commissions from the investments of those directly recruited by him.R. the trainings or seminars are merely designed to enhance petitioner’s business of teaching its investors the know-how of its multi-level marketing business. This entitles him to recruit two (2) investors who pay US$234 each and out of which amount he receives US$92. PCI devised a scheme in which. We reject petitioner’s claim that the payment of US$234 is for the seminars on leverage marketing and not for any product. The SEC ruled that PCI’s scheme constitutes an Investment contract and.2 it should have first registered such contract or securities with the SEC. To make a profit. finding PCI guilty of forum shopping. 8799. not to the buyer-sponsor. through its Compliance and Enforcement unit. the SEC brought a suit to enjoin the violation of federal securities laws by a company offering to sell to the public contracts characterized as self-improvement courses. PROSPERITY. An investor enrolls in petitioner’s program by paying US$234. enjoining the enforcement of the CDO. Their value for any other purpose is. Thus. February 1. PCI filed with the Court of Appeals (CA) a petition for certiorari against the SEC with an application for a temporary restraining order (TRO) and preliminary injunction in CA-G. The Issue Presented The sole issue presented before the Court is whether or not PCI’s scheme constitutes an investment contract that requires reg istration under R.R. No. At the same time.7 The CA ruled that. (2) in a common enterprise. we affirm the ruling of the public respondent SEC and the Court of Appeals that the petitioner was engaged in the sale or distribution of an investment contract.8 .A. 2001 PCI returned to the SEC and filed with it before the lapse of the five-day period a request to lift the CDO. INC. a PCI buyer must enlist and sponsor at least two other buyers as his own down-lines. 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. 8799. 164197 January 25. the accumulated amount received by the investor comes primarily from the efforts of his recruits. On July 31. in addition to investing money needed to purchase the contract. To benefit from this scheme. This is regardless of the fact that buyers. the CA issued a TRO. PCI moved to withdraw its petition before the CA to avoid possible forum shopping violation. (4) primarily from efforts of others. by referring to PCI his own down-line buyers. SP 62890. The promotional aspects of the plan. Respondent.00.A. On appeal from a grant of preliminary injunction. the purchaser is really buying the possibility of deriving money from the sale of the plansby Dare to individuals whom the purchaser has brought to Dare. 8799.: This case involves the application of the Howey test in order to determine if a particular transaction is an investment contract. The appellate court held: It is apparent from the record that what is sold is not of the usual "business motivation" type of courses. the facts of SEC v. following the Howey test. PCI’s scheme did not constitute an investment contract that needs registration pursuant to R. following the Securities Regulations Code. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. 2001 Cease and Desist Order issued by public respondent Securities and Exchange Commission against petitioner Power Homes Unlimited Corporation. The Facts and the Case Prosperity.5 In a joint resolution. who then recruit at least two (2) each. The July 31. For each pair of down-lines. to put it mildly. minimal.00 (subsequently increased to US$294). and records. or scheme where a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others. alleging that the latter had taken over GVI’s operations. Apparently. interest in real estate in the Philippines and in the United States. In 2001.appears to follow this flexible concept for it defines an investment contract as a contract. No. disgruntled elements of GVI filed a complaint with the SEC against PCI. Inc.A. Once an individual has purchased a Plan. No costs. SP 62890 was consolidated with CA-G. PCI patterned its scheme from that of Golconda Ventures.R. it must be registered with public respondent SEC.4 the CA initially dismissed the petition. to be a security subject to regulation by the SEC. it must be registered with public respondent SEC before its sale or offer for sale or distribution to the public. he turns his efforts toward bringing others into the organization. were obliged to contribute their own efforts in finding prospects and bringing them to sales meetings. IN VIEW WHEREOF. But on PCI’s motion. issued a CDO against PCI. SP 64487 that raised the same issues.1 the SEC. (PCI) sold computer software and hosted websites without providing internet service. SO ORDERED. 2004 Resolution denying petitioner’s Motion for Reconsideration are AFFIRMED. however. (GVI). transaction. affirming the January 26. Turner25 are similar to the case at bar. a buyer could acquire from it an internet website of a 15-Mega Byte (MB) capacity. Under the scheme.R. hence.A. entitles the principal investor to US$184 and the pyramid goes on. its offering to the public was rightfully enjoined by public respondent SEC. the CA reversed itself and reinstated the petition. These second tier of buyers could in turn build up their own down-lines. and its June 18. No.

The buyers of the website do not invest money in PCI that it could use for running some business that would generate profits for the investors. records show that petitioners filed their petition for review only on 19 August 2002. No. As found by the SEC. respondents. PCI is correct in saying that the US$234 it gets from its clients is merely a consideration for the sale of the websites that it provides. one timeshare of Laguna de Boracay for US$7. the Motion for Extension to File Petition for Review dated 09 July 2002 and filed before this Court on 10 July 2002 is GRANTED and petitioners are given a non-extendible period of fifteen (15) days from 10 July 2002 or until 25 July 2002 within which to file the desired petition. But despite repeated demands. However. the buyer can become a down-line seller. Of course. W. 2002. Blg. (2) an investment of money. offer to the public for raising funds that it needs for expansion.4 the antecedent facts are as follows: On October 6. 2002. respondents this time.P. SO ORDERED. ROBERTO A. Philippine jurisprudence has so far not done more to add to the same. Lao and Cynthia V. CESAR LAO and CYNTHIA V. petitioners shall not be given an extension longer than fifteen (15) days from the expiration of the reglementary period.500. transaction. but conditioned on the timeliness of its filing. adopted by most health product distributors. For failure to get an answer to the said letter. and Cecilia R. PCI’s scheme or contract with its buyers must have all these elements. The client can use this website to enable people to have internet access to what he has to offer to them. 2002 within which to appeal. 2002 SEC En Banc Order on July 4. 1998. 2002. together with others. 2002 Decision2 of the Securities and Exchange Commission (SEC) in SEC Case No.. in the absence of a compelling reason that justifies the granting of a longer period of extension. prior to February 11.for violation of Section 4 of Batas Pambansa Bilang (B.8 Petitioner filed an Answer9 to the Complaint but the SEC En Banc. The commissions. ABAD REYNATO S.5 Respondents directly filed with SEC En Banc6 a Complaint7 against petitioner and the Members of its Board of Directors . except for the most compelling reason. and the July 4. 2002. enjoy some degree of persuasiveness insofar as they are logical and consistent with the country’s best interests. otherwise.9 The United States Supreme Court held in Securities and Exchange Commission v. An example that comes to mind would be the long-term commercial papers that large companies. in an Order10 dated April 25. it is PCI that expects profit from the network marketing of its products. the SEC En Banc rendered a Decision in favor of respondents. On March 25. CORTEZ. These can hardly be regarded as profits from investment of money under the Howey test. On March 30. 1998. They buy a product of some value to them: an Internet website of a 15-MB capacity. PCI appears to be engaged in network marketing. Palma .Apart from the definition. to wit: As prayed for. Thus. 2002. Howey Co. 01-99-6199.15 The CA partly granted the motion in an Order dated July 24. otherwise.500. petitioner sought from the CA an extension of 30 days. a tangible asset that PCI creates. within which to appeal. and Cecilia R. say. herein petitioner sold to Ceasar M. the SEC issued a resolution to the effect that petitioner was without authority to sell securities. 1996. a scheme adopted by companies for getting people to buy their products outside the usual retail system where products are bought from the store’s shelf.17 but filed a Petition for Review with the CA on August 19. to sustain the SEC position in this case. counted from July 19. 1998. the United States Supreme Court. Sometime in February 1998. When an investor buys these papers or securities. PCI’s clients do not make such investments. for an investment contract to exist. Palma. However. through counsel.) 16 Petitioner purportedly received the July 24. this Court issued a resolution wherein petitioners were given an extension of ONLY fifteen days from 10 July 2002 or until 25 July 2002 within which to file the petition for review. 11 Thus. has on several occasions discussed the nature of investment contracts. interest in real estate. 2002. Strachan. Angel G. 158941 February 11. referred to as the Howey test must concur: (1) a contract.00 is what the buyer pays for the use of the website. SP 62890.1âwphi1 Here. 2004 of the Court of Appeals in CA-G.00 under Contract No. together with Julius S. he invests his money. petitioner failed and refused to refund or pay respondents. the Court DENIES the petition and AFFIRMS the decision dated July 31. Petitioner received a copy of the June 24.3 which denied petitioner’s Motion for Reconsideration. PUNO G. some skin cream. thus: Under Section 4. like San Miguel Corporation (SMC). assailing the October 30. It also held that the 30 days within which a purchaser may exercise the option to unilaterally rescind the purchase agreement and receive the refund of money paid applies to all purchase agreements entered into by petitioner prior to the effectivity of the Registration Statement. 2002. Under this scheme. Jr. the following elements. the above entitled case will be dismissed. or until August 19. The network goes down the line where the orders to buy come. 2002. respondents wrote petitioner demanding their right and option to cancel their Contract. The CA is right in ruling that the last requisite in the Howey test is lacking in the marketing scheme that PCI has adopted. 200214 and had 15 days or until July 19. like timeshares. The price of US$234. . the CA dismissed the Petition for Review. ordering petitioner. Actually.000.18 In the assailed October 30. Jr.00.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. which is twenty-five (25) days beyond the allowed 15-day extended period granted by this Court. It further stated in the resolution/order that the Registration Statement of petitioner became effective only on February 11.R. 2002 CA Order on July 29. and insurance coverage worth P50. 1998. petitioner. That court’s rulings.Julius S. and (5) profits arising primarily from the efforts of others. using its computer facilities and technical skills. 2003 CA Resolution. DECISION AUSTRIA-MARTINEZ. SMC has to register these commercial papers with the SEC before offering them to investors. 135000998 payable in eight months and fully paid by the respondents. (Emphasis supplied.) 178. grappling with the problem. vs. in SMC with an expectation of profits arising from the efforts of those who manage and operate that company. to pay respondents the amount of US$7. expunged the Answer from the records due to tardiness. Cortez (respondents). while not binding in the Philippines. reiterated their demand through another letter dated June 29. (4) expectation of profits. 1998. Vivar. (3) investment is made in a common enterprise. Evidently.R. Petitioner sought a reconsideration of the aforesaid order but the SEC denied the same in a letter dated March 9. which denied due course to the appeal of Timeshare Realty Corporation (petitioner) from the March 25. J. the above-entitled case will be dismissed.00 are incentives to down-line sellers to bring in other customers. 2000. The latter earns commissions from purchases made by new buyers whom he refers to the person who sold the product to him. WHEREFORE. Vivar. 2002 Resolution. 2003 and the resolution dated June 18. Rule 43 of the 1997 Revised Rules of Civil Procedure. 2002 Resolution1 of the Court of Appeals (CA). which the Implementing Rules and Regulations provide.11 Petitioner filed a Motion for Reconsideration12 which the SEC En Banc denied in an Order13 dated June 24. or scheme. Strachan. Angel G.J.10 that. as it appears that Laguna de Boracay is selling said shares without license or authority from the SEC. on 24 July 2002. 2008 TIMESHARE REALTY CORPORATION. on July 10.

such as by questioning the same before the SEC En Banc." specifically Rule 43. . the provisions of B. The 30-day rescission period for contracts signed before the Registration Statement was rendered effective shall commence on 11 February 1998. in view of the restriction under Section 4. Daoang. as early as February 13. Only one (1) motion for reconsideration shall be allowed. but a 30-day extension of the appeal period.viz: This has reference to your registration statement which was rendered effective 11 February 1998. except of a class exempt under any of the provisions of Section five hereof or unless sold in any transaction exempt under any of the provisions of Section six hereof. The Court is not persuaded. Prior to fulfillment of all the other requirements of Section 8. Corporate registration is just one of several requirements before it may deal with timeshares: Section 8. petitioner has only itself to blame that the Petition for Review it filed on August 19. 1996 purchase agreement with respondents. Period of appeal. The rescission period for contracts after 11 February 1998 shall commence on the date of purchase agreement.36 Finally.21 We deny the petition.WHEREFORE. or from the date of its last publication. Procedure for registration. No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days. Costs against petitioner.28 Instead. SO ORDERED. the petition is DENIED for lack of merit. While such computation of the CA appears to be erroneous. petitioner is already bound by said ruling and can no longer question the same through a direct and belated recourse to us. and resolve the following substantive issues: Whether or not the eventual approval or issuance of license has retroactive effect and therefore ratifies all earlier transactions. 178 do not support the contention of petitioner that its mere registration as a corporation already authorizes it to deal with unregistered timeshares. (Emphasis supplied. Rule 43. . Nevertheless.) WHEREFORE. The 30 days within which a purchaser may exercise the option to unilaterally rescind the purchase agreement and receive the refund of money paid.P.) Petitioner’s Motion for Extension of Time to File Petition for Review flouted the foregoing restriction: it sought.35 However. Upon proper motion and the payment of the full amount of the docket fee before the expiration of the reglementary period. Blg. the Court opts to resolve the substantive issues raised by petitioner in its appeal so as to determine the lawful rights of the parties and put an end to the litigation. ascertaining from the CA whether its motion for extension had been acted upon.32 Petitioner argues that when it was registered and authorized by the SEC as broker of securities33 .such as the Laguna de Boracay timeshares . Whether or not a party in a contract could withdraw or rescind unilaterally without valid reason. It prescribes that such appeal be taken to the CA "by petition for review in accordance with the pertinent provisions of the Rules of Court. Thus. 1999. Section 4 of the 1997 Revised Rules of Civil Procedure. petitioner’s counsel left the country. final order or resolution. the following: xxxx (36) Unless previously filed and registered with the Commission and brought up to date: (a) A copy of its articles of incorporation with all amendments thereof and its existing by-laws or instruments corresponding thereto. hardly qualifies as an imperative cause for moderation of the rules.this is a fundamental principle upon which rests the efficacy of our courts whose processes and decrees command obedience only when these are perceived to have some degree of permanence and predictability. 1999. thus: Section 4. the SEC. after the CA allowed them a 15-day extension only. whatever the name. .25 Section 4 of Rule 43 is restrictive in its treatment of the period within which a petition may be filed: Section 4.27 Its motion for extension being inherently flawed.(a) No securities. The Court notes that the CA reckoned the 15-day extension it granted to petitioner from July 10. must be perfected according to the mode and within the period prescribed by the law and the rules. it already possessed the requisite license and marketing agreement to engage in such transactions. 2002 Decision. 01-99-6199 is hereby DISMISSED for failure of the petitioners to file their Petition for Review under the 15-day period granted by this Court as provided by Rule 43. otherwise. the date petitioner filed its Motion for Extension. 1999. 1996. As cited by the SEC En Banc in its March 25. if the issuer be a corporation. petitioner’s appeal was not perfected within the period prescribed under Rule 43.20 Petitioner filed the present petition.The appeal shall be taken within fifteen (15) days from notice of the award. not a 15 -day. the date of expiration of petitioner’s original period to appeal. 2000. as we have repeatedly ruled.23 Section 70 of Republic Act No. unmindful of the possibility that his client’s period to appeal was about to lapse . if publication is required by law for its effectivity. . other than its counsel’s caseload which. But even if we do reckon the 15-day extension period from July 19. containing or having attached thereto. of a sworn registration statement with respect to such securities. petitioner did not resort to any other administrative remedy against said ruling. 1999 was late by 25 days. and removing any cause for the latter to rescind it. through Director Linda A. A judgment must become final at the time appointed by law22 -. and the judgment becomes binding. 1998. Thus. the Court of Appeals may grant an additional period of fifteen (15) days only within which to file the petition for review. Petitioner claims that at the time it entered into a timeshare purchase agreement with respondents on October 6. applies to all purchase agreements entered into by the registrant prior to the effectivity of the registration statement.30As it were. Requirement of registration of securities. or of the denial of petitioner’s motion for new trial or reconsideration duly filed in accordance with the governing law of the court or agency a quo.29 or at the very least. Either way we reckon it. making petitioner’s appeal still inexcusably tardy by 16 days. Having failed to exhaust the administrative remedies available to it. the appeal is forever barred. already rendered a ruling on the effectivity of the registration statement of petitioner. SO ORDERED. 879924 which was enacted on July 19. petitioner is absolutely proscribed under Section 4 from dealing with unregistered timeshares. judgment. the same would have ended on August 3. shall be sold or offered for sale or distribution to the public within the Philippinesunless such securities shall have been registered and permitted to be sold as hereinafter provided. The CA cannot be faulted for dismissing it. the appeal from the decision of the Securities and Exchange Commission (SEC) Case No. 2003.this had the effect of ratifying its October 6. (Emphasis supplied. an appeal from such it indeed lapsed on July 25. petitioner did not question it in the present petition. is the law which governs petitioner’s appeal from the orders of the SEC En Banc.26 and it did not even bother to cite a compelling reason for such extension. it should have exercised due diligence by filing the proper petition within the allowable period. in the office of the Commission.(Emphasis supplied. therefore. petitioner should not have presumed that the CA would fully grant the same. 1999. 1999. 1998. not being a natural right but a mere statutory privilege.(a) All securities required to be registered under subsection (a) of Section four of this Act shall be registered through the filing by the issuer or by any dealer or underwriter interested in the sale thereof. rather than from July 19.19 and denied petitioner's Motion for Reconsideration in the assailed Resolution dated July 4.)34 Petitioner sought a reconsideration of said ruling but the same was denied by Director Daoang in an Order dated March 9.31 as evidenced by its registration with the SEC as a corporation. urging us to look beyond the procedural lapse in its appeal.