Case Digest (G.R. No. 164197)
Facts:
Securities and Exchange Commission v. Prosperity.Com, Inc., G.R. No. 164197, January 25, 2012, the Supreme Court Third Division, Abad, J., writing for the Court.Prosperity.Com, Inc. (PCI) sold computer software and hosted websites but did not provide internet service. PCI offered a 15‑megabyte website to a buyer for US$234.00 (later increased to US$294.00) and structured a multi‑level referral scheme: a first‑time buyer had to sponsor at least two down‑line buyers to qualify for commissions, real‑estate interests (in the Philippines and the United States), and insurance coverage worth P50,000.00. For each pair of down‑lines the sponsor received US$92.00, subject to a 16‑referral daily cap; excess referral commissions accrued to PCI.
PCI’s scheme paralleled that of Golconda Ventures, Inc. (GVI); the same persons who ran GVI were later shown to have directed PCI. After disgruntled GVI elements filed a complaint, the SEC’s Compliance and Enforcement unit issued a cease‑and‑desist order (CDO) against PCI, ruling that PCI’s scheme constituted an investment contract that should have been registered under the Securities Regulation Code (R.A. No. 8799).
Instead of immediately seeking lifting of the SEC CDO under R.A. 8799 § 64.3, PCI filed a petition for certiorari with the Court of Appeals (CA) (CA‑G.R. SP 62890) with an application for a TRO and preliminary injunction. When the CA did not act promptly, PCI timely filed a request with the SEC to lift the CDO (January 31, 2001) and then moved to withdraw its CA petition (February 1, 2001) to avoid forum‑shopping. Nevertheless, the CA issued a TRO enjoining enforcement of the CDO; the SEC moved to dismiss the CA petition for forum‑shopping. The CA initially dismissed the petition (Resolution dated March 13, 2001), then reinstated it (Resolution dated April 30, 2001). The CA later consolidated CA‑G.R. SP 62890 with CA‑G.R. SP 64487 (Resolution dated July 6, 2001).
On July 31, 2003 the CA (decision penned by Justice Eloy R. Bello, Jr., joined by Justices Cancio C. Garcia and Mariano C. Del Castillo) granted PCI’s petition and set aside the SEC’s CDO, applying the Howey te...(Pro-only)
Issues:
- Does Prosperity.Com, Inc.’s marketing scheme constitute an "investment contract" that must be registered under R.A. No. 8...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)