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JEDI BENTILLO

LAW 411
Atty. Oliver Saniel

GS 105 (4:30- 6:30 pm)


July 18, 2016

CASE No.3:

POWER HOMES UNLIMITED CORPORATION vs.


SECURITIES AND EXCHANGE COMMISSION
G.R. No. 164182, February 26, 2008
ISSUE
Where there instances or acts of chain distribution or a pyramid sales scheme?
Cite or identify at least 10 acts.
Acts that justifies the abovementioned case which proved that based on the
unregistered investment contract or securities distributed describes a multilevel marketing scheme was feloniously defrauded its investors.
1) Investment scheme
Business transactions are described to be; as indicated in the case:
(F) clearly, the trainings or seminars are merely designed to
enhance petitioners business of teaching its investors the knowhow of its multi-level marketing business.
(G) An investor enrolls under the scheme of petitioner [Power
Homes];
(H) to be entitled to recruit other investors;
(I) to receive commissions from the investments of those directly
recruited by him.
Under the scheme, the accumulated amount received by the
investor comes
(J) primarily from the efforts of his recruits.
Further characterize the alleged unregistered investment contract to
actually be a security subject to the regulation of the Securities and
Exchange Commission (SEC), as underlined as (J) constitutes an
investment contract that is a security under R.A. No. 8799.
2) Sold unregistered investment contracts
Cited in the case of Power Homes Unlimited Corporation vs.SEC as
(D) investment contracts, which are considered securities under
Sec. 3.1 (b) of Republic Act (R.A.) No. 8799 (The Securities
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Regulation Code), but failed to register them in violation of Sec.


8.1 of the same Act.
Further supported that such considered securities (L) must be registered
with public respondent SEC before its sale or offer for sale or distribution
to the public. As petitioner failed to register the same, its offering to the
public was rightfully enjoined by public respondent SEC. The CDO was
proper even without a finding of fraud.
3) Inexistent properties claim
Also cited in the case of Power Homes Unlimited Corporation vs.SEC as
(A) He (Noel Manero) claimed that he attended a seminar
conducted by petitioner where the latter claimed to sell properties
that were inexistent and (B) without any brokers license.

This along with other letters from different respondents were the
basis to investigate the petitioners (Power Homes Unlimited Corporation)
operations.

4) Insufficient certificates of accreditation


Based on the nature of the referral program and investment scheme
offered by the petitioners company, and the only records provided from
(C) its incorporators were only letters of accreditation/authority or
confirmation from Crown Asia, Fil-Estate Network and Pioneer 29 Realty
Corporation.
5) Multiple letters to request investigation of the said business
Letters of respondents Romulo E. Munsayac, Jr and Noel E. Munsayac,
Jr. provided just basis for a public respondent of SEC to investigate the
petitioners business.
6) Unlicensed brokers claim
Based on the case of Power Homes Unlimited Corporation vs.SEC as (A)
(Noel Manero) He claimed that he attended a seminar conducted by

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petitioner where the latter claimed to sell properties that were inexistent
and (B) without any brokers license.
Because of which inquired and eventually requested a public respondent
from the Securities and Exchange Commission (SEC) along with other
respondent claims, to investigate Power Homes Unlimited Corporations
business operations.
7) Entitlement of recruits
Under the scheme, the accumulated amount received by the investor
comes (J) primarily from the efforts of his recruits. As investors were
motivated (H) to be entitled to recruit other investors in order (I) to receive
commissions from the investments of those directly recruited by him.

8) Enrollment or Investment of money on seminars


As previously cited in the case:
(G) clearly, the trainings or seminars are merely designed to enhance
petitioners business of teaching its investors the know-how of its multilevel marketing business.
(H) An investor enrolls under the scheme of petitioner [Power Homes];
Which strengthens the ruling that investment contract is actually by nature
of transaction as a security needed to be registered before its sale to the
general public.
9) Unsubstantiated returns of investment
As indicated in R.A 8799, the flexible concept of an investment contract
which defines it to be 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.

10) Sole efforts from its investors


Under the scheme, the accumulated amount received by the investor
comes (J) primarily from the efforts of his recruits. Contrary to what was
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described in the conduct of petitioners business on Paragraph 5 of the


same scheme indicates that there exists no employer/employee
relationship between the BCO and the Power Homes Unlimited, Corp.

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