Rosaria, Jr. v. Securities and Exchange Commission

SECOND DIVISION [CA-G.R. SP NO. 48013. July 30, 1999.] JEREMIAS E. ROSARIA, JR., doing business under the style JUSTEE TERMS ENTERPRISES , petitioner , vs. SECURITIES AND EXCHANGE COMMISSION , respondent . DECISION LUNA , J p : This is a petition for review of the Orders of the Securities and Exchange Commission (SEC, for short), issued in PED Case No. 98-2216, on February 25, and May 29, 1998. CAIHTE Justee Terms Enterprises (Justee, for short), is a business name, firm or style with business address at 0561 Quirino Avenue, San Dionisio, Paraaque, Metro Manila, and registered by Jeremias E. Rosaria, Jr., with the Department of Trade and Industry. On February 25, 1998 the SEC issued a "Show Cause Order" against 12 entities, including "Justee Terms Enterprises," pertinent portion of which reads: "The Commission upon proper investigation has determined that the documents/papers in the form of x x x certificates x x x being issued, sold, disposed, offered or distributed to the public for value by x x x. xxx xxx xxx 4. JUSTEE TERMS ENTERPRISES xxx xxx xxx are not registered and permitted to be sold in accordance with the registration requirements mandated by Section 4 of the Re vised Securitie s Act. WHEREFORE, the above indicated corporations, firms, entities and its operators, promoters proprietors, directors and officers are hereby ordered to SHOW CAUSE in writing why no sanctions should be imposed against them for said violation. xxx xxx xxx x x x the aforecited x x x entities and any and all persons acting for and on behalf or participating thereat are hereby ordered to CEASE AND DESIST from further offering, distributing, disposing and/or selling x x x certificates x x x which the Commission considers 'securities' under Section 2 of the Re vised Securitie s Act including any and all activities in pursuance thereof. FURTHER, the operators x x x are hereby ordered to appear at the hearing of these cases with the Commission En Banc on March 20, 1998 x x x." Justee's counsel submitted a Compliance to (the) Show Cause Order, a Position Paper, and a Memorandum. aScITE Mr. Rosaria, Jr., its proprietor/owner appeared with his legal counsels during the hearings conducted by the SEC Commission En Banc on March 20, and April 6, 1998. Pertinent portion of the May 29th Order, is quoted below: "In its Position Paper and Memorandum, Justee poses the argument that the certificates of level attainment do not fall within the definition of "securities" as defined in Section 2 of B atas Pambansa Bl g. 178, otherwise known as the Rev ised Securities Act (RS A). The issue to be resolved by the Commission in the exercise of its regulatory functions as mandated by the RSA is whether or not JUSTEE TERMS ENTERPRISES in engaging in the line of business of selling, or offering for sale or distribution to the public the certificates of level attainment pursuant to a marketing scheme has violated the provisions of the Re vised Securitie s Act , more particularly Section 4 in relation to Section 2, thereof . Section 4(a) of RSA mandates that, to wit: '(a) No securities x x x shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have been registered and permitted to be sold as hereinafter provided.' This Commission rules in the affirmative. Section 2 of the Revised Securities Act provides: '(a) Securities shall include bonds, debentures, notes, evidences of indebtedness, shares in a company, preorganization certificates or subscriptions, investment contracts, certificates of interest or participation in a profit sharing agreement, collateral trust certificates, equipment trust certificates (including conditional shares contracts or similar interest or instruments serving the same purpose), voting trust certificates, certificates of deposit for a security or fractional undivided interest in oil, gas or other mineral rights, or in general interests or instruments commonly considered to be 'securities,' or certificates of interest or participation in temporary or interim certificates for, receipts for, guarantees to or warrants or rights to subscribe to or buy or sell any of the foregoing; or commercial papers evidencing indebtedness of any person, financial, or non-financial entity, irrespective of maturity, issued, endorsed, sold, transferred or in any manner conveyed to another, with or without recourse, such as promissory notes, repurchase agreements, certificates of assignment, certificates of participation trust certificates or similar instruments; or propriety or non-propriety membership certificates, commodity futures contracts, transferable stock options, pre-need plans, pension plans, life plans joint venture contracts, and similar contracts and investments where there is no tangible return on investment plus profits but an appreciation of capital as well as enjoyment of particular privileges and services.' The RSA under Section 2 thereof defines the word securities by enumerating what are included in the word 'securities.' DETACa The Commission , being the agency exclusively tasked to implement the RSA under Section 3 thereof has after careful and exhaustive evaluation of the evidence available in this case determined that the marketing scheme adopted or used by subject corporation in its business operation including the distribution and/or sale of certificates of level attainment to the public is an 'investment contract' which is one of those classified as 'securities' within the meaning of Section 2 of the RSA. In construing a provision of law, it is important to consider the legislative intent. The basic philosophy for the enactment of the RSA is to protect the investing public. Parenthetically, considering that the RSA has been patterned after the American Uniform Sale of Securities and the Federal Securities Act of 1933, the Commission in order to fully address and resolve the issues involved has found persuasive the comments of the authorities in the field of securities including the interpretation of aforesaid foreign laws by the U.S. courts. Admittedly, the definition of securities is extraordinarily broad. Included within the scope of 'security' are such standard documents as stocks and bonds. Also included are instruments of a more variable character designated by such descriptive terms as 'investment contract' and 'in general any interest or instrument commonly known as security .' In particular, the term 'investment contract' has been viewed by the courts as a 'catch all' phrase designed to encompass novel devices which serve the same purpose as a 'security' (Cary & Eisenberg Corp. 6th Ed. Concise UCB-22 p. 948). In SEC vs. W.J. Howey Co. , 328 U.S. 293 (1946), the U.S. Supreme Court established a definition of an investment contract. 'An investment contract for purposes of the Se curities Ac t means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party. x x x' It was further modified in SEC vs. Glenn Turner Enterprises, Inc. , 474 F. 2d 476, 414 U.S. 821, 94. In the modified Howey test, the touchstone is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others (69 Am Jr 2d. p. 108). HEITAD I. There is a contract, transaction or scheme. The phrase 'investment contract' as enumerated under Sec. 2 of the RS A is taken from the Federal Securitie s Act. Said phrase or term as appearing in the Federal and Hawaii S ecurities A ct is designed to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits (infra). It is clear that the term 'investment contract' as interpreted in the Howey case was not limited to the existence of a mere agreement by and between the promoter and the investor. It was given such a broad meaning as to include schemes for as long as it involves the use of the money of others on the promise of profits . Moreover, a writing is not essential for an investment contract (1 Loss, Securities Regulation 2d Ed. 489). In the case at bar, Justee is undisputedly engaged in a multi-level marketing scheme which indispensably makes use of the distribution and/or sale of 'Certificates of level attainment' with promise of financial yield or cash windfall . Looking deeper into its so called marketing scheme as clearly shown in the certificates and leaflets being distributed to participants, the same has seven (7) levels . The levels represent the ranking or position of the participants and tell how far a participant has gone into the scheme with the newest participant starting from the lowest position (7th level) until he reaches the top or number one level . The levels likewise represent the processes one has to undergo if one has to derive the full benefits from the scheme , to wit: LEVEL 7 YOU as newest participant as appearing in seventh (7th) level in the certificate will invite/recruit three (3) prospective participants. LEVEL 6 These 3 new participants will invite/recruit three (3) each prospective participants (3 x 3 = 9) and YOU as appearing in the certificate will be promoted to sixth (6th) level. LEVEL 5 These 9 new participants will invite/recruit three (3) each prospective participants (9 x 3 = 27) and YOU as appearing in the certificate will go to fifth (5th) level. LEVEL 4 These 27 new participants will invite/recruit three (3) each prospective participants (27 x 3 = 81) and YOU as appearing in the certificate will be in fourth (4th) level. LEVEL 3 These 81 new participants will invite/recruit three (3) each prospective participants (81 x 3 = 243) and YOU as appearing in the certificate will be promoted to third (3rd) level. LEVEL 2 These 243 new participants will invite/recruit three (3) each prospective participants (243 x 3 = 729) and YOU as appearing in the certificate will be placed in the second (2nd) level. LEVEL 1 YOU as appearing in the certificate will be on the top level. These 729 new participants will invite/recruit three (3) each prospective participants (729 x 3 = 2,187). 2,187 These 2,187 new participants should pay or remit to YOU (as participant on the top level) P500.00 each to your bank account (2,187 x P500.00 = P1,093,500.00). These 2,187 new participants will invite three each prospective participants and the participants will be promoted to their respective level or rank as recruitment of participants continue and the process repeated as designed and conceptualized in the scheme. The levels in the scheme having been presented as shown above, it is necessary to look into the 'procedures' in order for one to be qualified as participant. As clearly shown and indicated in the certificate and the leaflet, the prospective participant shall purchase a certificate (from one already a participant) in the amount of P500.00; deposit the amount of P500.00 to the bank account of the person on the top or in the number one level as appearing in the certificate; deposit the amount of P500.00 to the bank account of Justee, submit or present the purchased certificate together with the two (2) machine validated deposit slip to the Office of Justee (for remote area activation the purchased certificate and the two machine validated deposit slip should be sent by mail), receive the three (3) original certificates with the name of the new participant appearing in the bottom level (7th level), distribute or sell the three (3) certificates to three (3) prospective participants at P500.00 each . Simply put, as participants come into the picture, one reaches a certain level or position and when he reaches top or number one level, the 2,187 participants will remit to his bank account P500.00 each or a total sum of P1,093,500.00 . aDSIHc II. There is an investment of money. As it is, one joining Justee' multi-level marketing scheme stands to part with the amount of P1,500.00 with the intention of participating in the scheme including all the seven (7) levels as herein above with the expectation of receiving P1,093,500 in accordance with the scheme, hence, there is an investment. To further bolster the existence of an investment, Atty. Rebecca A. Manuel counsel for subject entity testified as follows: CHAIRMAN YASAY: So between now and up to the top level, wala muna siyang tinanggap? ATTY. MANUEL: Only the return of investment, Your Honor. CHAIRMAN YASAY: ATICcS One Thousand Five Hundred (P1,500.00). ATTY. MANUEL: From the first three monitoring certificates (t.s.n. page 41). xxx xxx xxx Likewise, at the back of the certificate being issued by Justee appeared the following: xxx xxx xxx STEP 7 Share your certificate and recover right away your 'Investment' of P1,500.00 From the foregoing, it is quite clear that the money being shelled out, though it is paid to three different persons namely the immediate recruiter, Justee Term Enterprises and the person appearing on the top or number one level, is an investment, intended to derive therefrom the amount of P1,093,500.00 by way of profit. III. The investment is made in a common enterprise. Several tests have evolved to determine what constitutes 'common enterprise.' One of these tests is the horizontal commonality approach. Under this test, the determination of whether a transaction satisfies the commonality element of the modified Howey test involves an inquiry into whether said transaction involved the joint participation of more than one investor in the investment of funds or the sharing of profits . (69 Am Jur 2d citing Stenger v. R.H. Love Galleries, Inc. 741 F2d 144). Furthermore, joint participation by investors in the same investment enterprise, achieved by pooling the invested funds for a common purpose, is required in order to satisfy the common enterprise element ( Wasnowic v. Chicago Bd. of Trade , 352 F. Supp. 1066). In the case at bar, there are almost 5,000 participants in the scheme based upon the "List of Participants" submitted by Justee to this Commission. Clearly, the horizontal approach has been satisfied with the number of participants that have joined the scheme since its inception. Likewise, there is a pooling of investment as participants deposit P500.00 each by remitting the same to the participant on the top position. ETHIDa IV. There is expectation of profits. As previously discussed, a participant in order to get into the scheme must shell out a total of P1,500.00, P500.00 of which will be paid to Justee for "activation" of his participation and for the issuance in his favor three (3) certificates which said participant can dispose of to prospective participants for P500.00 each. If the said participant moves on in accordance with the scheme and thus reaches the top level or number one position, the investment of P1,500.00 will earn P1,093,500.00. This fact has been admitted and confirmed by Atty. Manuel, counsel for subject entity. "CHAIRMAN YASAY: x x x Now my question is here, there is nothing here that explains further what you will just have describe Counselor meaning this is just really a two page leaflets, two page data sheet or certificate. I just very plainly here says, once you reach the top level which means that 2,187 people will have deposited P500.00 in your bank account you will be receiving P1,093.500.00 there's nothing here where it says that less all of the monitoring information are drawn are submitted, nothing, that so are explain here. How will the investor or participant know in fact what he is going to expect if by the clear import of this document the reason that I will be join here is to entice to get to the top level. I will receive P1,093,500.00. ATTY. MANUEL: Your Honor in this green leaflets, it is explain here to show to earn P1,093,500.00 so from that three (3) certificates another nine (9) certificates should be drawn and another 27 and another 243 so the participating players Your Honor are aware that each monitoring guide will be on different stages Your Honor because it will require simultaneous stage level in order to be able reach the 2,187. So it's how to search P1,093,500.00 (t.s.n. pages 32 & 33)." The receipt of a maximum of P1,093,500.00 is but the last stage in the scheme and is evidently the inducement for one to join the scheme. Elsewise stated, a participant who joins the scheme expects to derive profits therefrom. V. Profits arise from the entrepreneurial and managerial efforts of others. The question under the modified Howey test is whether efforts made by those other than the investor are undeniably the significant ones, those essential managerial efforts that affect failure or success of the enterprise (SEC v. Glenn Tumer, Supra) . In the instant case, profits in the maximum amount of P1,093,500.00 out of an investment in the amount of P2,500.00 arise without a doubt from the entrepreneurial and managerial efforts of Justee. Firstly, the scheme subject of this case as a multi level marketing network was conceptualized and promoted by Justee . Secondly, the manner by which one can avail of the benefits of the scheme is dictated undoubtedly by Justee . Say, if one will not obtain a certificate or fail to follow the instructions/steps as appearing in the certificates being issued, his participation will not be processed and activated and thus be enable to get into the scheme and receive the P1,093,500.00. Once activated, it is Justee and not the participants who determines one's level in the scheme . TIADCc As may be clearly observed, the efforts exerted by Justee are undeniably the significant one, since the participants are substantially dependent upon the activation and monitoring and management of Justee in order to obtain the promised windfall . Upon the other hand, the participant while he is not totally inactive, merely participates to a limited degree in the operation of the scheme. The U.S. courts have held that a pyramid selling scheme constituted investment contracts notwithstanding the fact that the investors themselves participated in the operation of the enterprise (SEC v. Glenn Tumer, Supra) . Moreover, in SEC v. International Network, Inc., et al. , 968 F. 1304 (D.C. Cir. 1992) where a corporation promoting "financial redistribution system," sold memberships to approximately 40,000 investors without any product and with a promise of $100,000.00 return, it was held, using the Howey test, that the scheme was a "security" considering that the company's income were derived from the recruitment of members whose membership fees were paid to earlier investors. The totality of the elements of the Howey test being present in the instant case, taking into consideration every step of the way the general legislative intent of protection to public investors, the Commission is convinced that the multi level marketing scheme of Justee Terms Enterprises including the distribution of "Certificates of level attainment" to the public is an investment contract and therefore a security within the purview of the RSA . Being a security, it cannot be offered publicly without first being registered with this Commission. Section 46 of the RSA provides for an administrative sanction, to wit: "If after proper notice and hearing, the Commission finds that there is a violation of this Act x x x it shall, in its discretion, impose any or all of the following sanctions: xxx xxx xxx (b) A fine of no less than two hundred (P200.00) pesos nor more than fifty thousand (P50,000.00) pesos plus not more than five hundred (P500.00) pesos each day of continuing violation. xxx xxx xxx (d) Other penalties within the power of the Commission under existing laws." cSEDTC WHEREFORE, foregoing considered, for having violated Section 4 (a) in relation to Section 46 of the Revi sed Securities A ct, Mr. Jeremias E. Rosaria, Jr. proprietor/owner of Justee Terms Enterprises, the issuer of 'Certificates of level attainment' and promoter of the subject multi level marketing scheme is hereby FINED in the amount of FIFTY THOUSAND (P50,000.00) PESOS. Rosaria, Jr. is likewise ordered to return the investment in the guise of "service fees" paid by the participants in the amount of P500.00 each . The Cease and Desist directive contained in the Show Cause Order of this Commission on February 25, 1998 in so far as Justee Terms Enterprises, Mr. Jeremias Rosaria, Jr. including any and all persons/individuals or participants are concerned is hereby made PERMANENT . Moreover, Mr. Jeremias Rosario, Jr. is hereby directed to submit a compliance report to the Commission on the return of investments within thirty (30) days from receipt hereof. This Order imposing administrative sanctions shall be without prejudice to the filing of criminal charges against the proprietor/owner and his agents. SO ORDERED." Hence, this petition. Petitioner contends that the SEC erred and/or committed grave abuse of discretion, tantamount to lack of jurisdiction: I. IN DECLARING THAT HE IS ENGAGED IN THE ISSUANCE OF "SECURITIES," AS CONTEMPLATED UNDER THE REVISED SECURITIES ACT. II. IN DECLARING THAT HE HAS VIOLATED THE REGISTRATION REQUIREMENT UNDER THE REVISED SECURITIES ACT. III. IN MAKING PERMANENT THE CEASE-AND-DESIST ORDER, IN IMPOSING FINE, AND IN ORDERING THE RETURN OF THOSE FEES PAID BY THE PARTICIPANTS IN HIS NETWORKING OPERATIONS. Petitioner argues that the Revised Securities Act does not define the term "securities"; that the "Certificate of Level Attainment" does not fall within the meaning of "investment contract" under the standard set by American Jurisprudence; and that the determination of whether the "Certificate of Level Attainment" is an investment contract, is a legal question within the competence of regular courts. The SEC did not submit its comment to the petition. AIDSTE DISCUSSION BP 178, otherwise known as the "Revised Securities Act" (RSA, for short), repealed CA 83, as amended, the former Securities Act of 1936, which is patterned with slight modification from the American Amended Uniform Sale of Securities Act, the Federal Securities Act of 1933, as amended, and the Federal Exchange Act of 1934. The Revised Securities Act contains the following features: (1) It vests the SEC with authority to administer and enforce the Act and to promulgate such rules and regulations as it may consider appropriate in the public interest for the enforcement of the provisions thereof (Secs. 3, 45 & 47); (2) It prohibits the sale or offer for sale or distribution to the public of any security except an exempt security or one sold in an exempt transaction, unless such security shall have been registered and permitted to be sold by the Securities and Exchange Commission (Secs. 4-6); (3) It provides for disclosure requirements in the registration of securities and for a continuous system of disclosure (Secs. 8, 11, 15, 16); (4) It imposes civil liabilities in connection with prospectuses, communications, and reports (Sec. 13) and on controlling persons (Sec. 44); (5) It requires those selling or dealing in securities, such as brokers, dealers, and salesmen to be registered by the SEC, so as to prevent the unworthy, from engaging in the business and to place their activities under its supervision (see Secs. 19-20); (6) It likewise requires the registration of stock exchanges, placing their operation under the jurisdiction of the SEC (see Secs. 21-22); (7) It prescribes certain requirements in trading in securities, and at the same time, outlaws manipulations, and other fraudulent practices in the sale of securities (see Secs. 23-37); (8) It vests the SEC with specific powers with respect to exchanges and securities for the protection of investors (Secs. 38-39); (9) It authorizes the SEC to establish trust funds for the purpose of compensating investors for losses suffered due to business failure, fraud, or mismanagement of persons with whom they transact (Sec. 41); and (10) It makes all information filed with the SEC available to any member of the general public (Sec. 49). Section 4, of the RSA requires the registration of securities. Thus, Section 4 -(b), -(c), and -(d), provides: SDAaTC "(b) Notwithstanding the provisions of paragraph (a) No securities, 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, shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have been registered and permitted to be sold as hereinafter provided. (c) Notwithstanding the provisions of paragraph (a) of this Section and of the succeeding Sections regarding exemptions, no commercial paper as defined in Section two hereof shall be issued, endorsed, sold, transferred or in any other manner conveyed to the public, unless registered in accordance with the rules and regulations that shall be promulgated in the public interest and for the protection of investors by the Commission. The Commission, however, with due regard to the public interest and the protection of investors, may, by rules and regulations, exempt from registration any commercial paper that may otherwise be covered by this paragraph. In either case, the rules and regulations promulgated by the Commission shall be subject to the approval of the Monetary Board of the Central Bank of the Philippines. The Monetary Board shall, however, have the power to promulgated its own rules on the monetary and credit aspects of commercial paper issues, which may include the imposition of ceilings on issues by any single borrower, and the authority to supervise the enforcement of such rules and to require issues of commercial papers to submit their financial statements and such periodic reports as may be necessary for such enforcement. As far as practicable, such financial statements and periodic reports, when required by both the Commission and the Monetary Board, shall be uniform. (d) A record of the registration of securities shall be kept in a Register of Securities in which shall be recorded orders entered by the Commission with respect to such securities. Such registers and all documents or information with respect to the securities registered therein shall be open to public inspection at reasonable hours on business days. A broker, dealer, or salesman is prohibited from engaging in business as such broker, dealer, or salesman or selling any securities, including securities exempted in Section 5, except in transaction exempt under Section 6, unless he has registered as broker, dealer, or salesman pursuant to Section 19. The following are the requisites for registration." Section 45, of the RSA confers the SEC with the powers of investigation, injunction and prosecution of offenses. Thus: "(a) The Commission may, in its discretion, make such investigations as it deems necessary to determine whether any person has violated or is about to violate any provision of this Act or any rule or regulation thereunder, and may require or permit any person to file with it a statement in writing, under oath or otherwise, as the Commission shall determine, as to all facts and circumstances concerning the matter to be investigated. The Commission is authorized, in its discretion, to publish information concerning any such violations, and to investigate any fact, condition, practice or matter which it may deem necessary or proper to aid in the enforcement of the provisions of this Act, in the prescribing of rules and regulations thereunder, or in securing information to serve as a basis for recommending further legislation concerning the matters to which this Act relates: Provided, however, That no such investigation shall be conducted unless the person investigated is furnished with a copy of any complaint which may have been the cause of the initiation of the investigation or is notified in writing of the purpose of such investigation: Provided, further, That all criminal complaints for violations of this Act, and the implementing rules and regulations enforced or administered by the Commission shall be referred to the National Prosecution Service of the Ministry of Justice for preliminary investigation and prosecution before the proper court: and, Provided, finally, That the investigation prosecution, and trial of such cases shall be given priority. AaCTcI (b) For the purpose of any such investigation, or any other proceeding under this Act, the Commission or any officer designated by its empowered to administer oaths and affirmations, subpoena witnesses, compel attendance, take evidence, require the production of any book, paper, correspondence, memorandum, or other record which the Commission deems relevant or material to the inquiry, and to perform such other acts necessary in the conduct of such investigation or proceedings. (c) Any person who, without just cause, fails or refuses to comply with any order, decision or subpoena issued by the Commission, in the proper exercise of its authority and jurisdiction under subparagraph (b) or subparagraph (c) of this Section or Section 47 of this Act, if in the power of such person to do so, shall, after due notice and hearing, be guilty of contempt of the Commission and shall be subject to discipline by the Commission as in the case of contempt of court, either by a fine in such reasonable amount as the Commission may determine, or when such failure or refusal is a clear and open defiance of the Commission's order, decision or subpoena, by detention under an arrest order, as may be issued by the Commission, at the discretion of the Commission, until such order, decision or subpoena is complied with. (d) The powers of the Commission under this Section shall be in addition to any other powers granted under existing laws." Section 46 of the RSA are the administrative sanctions that the SEC may impose for violation of the Act, among them: "(b) A fine of no less than two hundred (P200.00) Pesos not more than Fifty Thousand (P50,000.00) Pesos plus not more than Five Hundred (P500.00) Pesos for each day of continuing violation, and (d) Other penalties within the power of the Commission under existing laws." and without prejudice to the filing of criminal charges against individuals responsible for the violation. acEHCD And, finally, Section 47, of the RSA empowers the SEC to issue cease and desist orders without the necessity of a prior hearing if in its judgment the act or practice, unless restrained may cause grave or irreparable injury or prejudice to the investing public or may amount to fraud or violation of the disclosure requirements of the Act and the rules and regulations of the Commission. Thusly, Section 2-(a), of the RSA provides that: " Securities shall include bonds, debentures, notes , evidences of indebtedness, shares in a company, preorganization certificates or subscriptions, investment contracts , certificates of interest or participation in a profit sharing agreement, collateral trust certificates, equipment trust certificates (including conditional sale or contracts or similar interests or instruments serving the same purpose ), voting trust certificates, certificates of deposit for a security, or fractional undivided interest in oil, gas, or other mineral rights, or, in general, interests or instruments commonly considered to be "securities," or certificates of interests or participation in, temporary or interim certificates for, receipts for, guarantees of, or warrants or rights to subscribe to or buy or sell any of the foregoing; or commercial papers evidencing indebtedness of any person, financial or non-financial entity, irrespective of maturity, issued, endorsed, sold, transferred or in any manner conveyed to another, with or without recourse, such as promissory notes, repurchase agreements, certificates of assignments, certificates of participation, trust certificates or similar instruments; or proprietary or non-proprietary membership certificates, commodity futures contracts, transferable stock options, pre-need plans, pension plans, life plans, joint-venture contracts, and similar contracts and investments where there is no tangible return on investments plus profits but an appreciation of capital as well as enjoyment of particular privileges and services." While the RSA does not define an "investment contract," the words and phrases used Section 2-(a) of the statute should be given their plain, ordinary, and common meaning ( Mustang Lumber vs. Court of Appeals , 257 SCRA 430). The word "investment," means the act of investing, the laying out of money in the purchase of something. It is the act of investing in which money is invested. Plainly, an investment contract is a contract of investment as the phrase involves an agreement for the placement of money for profit. The investment contract, as aptly portrayed at the back of the "Certificate of Level Attainment," is as follows: "x x x You have just received your certificate in claiming a great sum of money worth more than a million . Be listed by simply following the procedure below: EcTCAD STEP 1 Play in cash P500 to person who gave you this certificate STEP 2 Fill up the Data Sheet STEP 3 Deposit a cash amount of P500 to the person on TOP LEVEL STEP 4 Deposit a cash amount of P500 to JUSTEE TERMS either FAR EASTBANK and TRUST COMPANY (Sucat Branch) SAVINGS ACCOUNT #0121-33422-8 or UNITED COCONUT PLANTERS BANK (Sucat Branch) SAVINGS ACCOUNT #176-101355-8 or BANK OF THE PHILIPPINE ISLAND (Kabihasnan Branch) CURRENT ACCOUNT #3295-1082-06 STEP 5 Bring the two machine validated deposit slip and this certificate to JUSTEE TERMS , 0587 (2nd Floor) Quirino Ave., San Dionisio, Paraaque Metro Manila from 2:00-7:00 PM, Monday-Friday STEP 5a For remote area activation, send the two machine validated deposit slip and this certificate by mail (Please include a self address envelop with stamp) STEP 6 Receive your three original certificates STEP 7 Share your certificate and recover right away your "investment" of P1,500 STEP 8 Monitor your team mates" The "Certificate of Level Attainment" as written were issued by the "JUSTEE," with the expressed term that "You have just received your certificate, in claiming a great sum of money x x x," and that of "Share your certificate and recover right away your investment of P1,500.00." Those words and phrases, among others, indicate a promise to pay a sum certain in money, payable to the recipient of the certificate at a determinable future time. And the person primarily liable under the certificate is the person who by its terms is obliged to pay the undertaking. As mandated by the RSA, by virtue of its special competence on the subject, the SEC has the power and authority to pass upon and interpret the investment scheme in question because of its principal function to supervise and control corporations, partnerships, and associations with the end in view to encourage investments in those entities, safeguard public interest, and protect the investing public from fraud and deceit in such transactions. Thus, in China Banking Corporation vs. Court of Appeals , 270 SCRA 503, 512-516, the High Court reiterated the sound policy enunciated in Abejo v. De la Cruz , (149 SCRA 654), as follows: "6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions and boards the power to resolve specialized disputes in the field of labor (as in corporations, public transportation and public utilities) ruled that Congress in requiring the Industrial Court's intervention in the resolution of labor-management controversies likely to cause strikes or lockouts meant such jurisdiction to be exclusive, although it did not so expressly state in the law. The Court held that under the sense-making and expeditious doctrine of primary jurisdiction . . . the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered . SDHTEC In this era of clogged court dockets, the need for specialized administrative boards or commissions with the special knowledge, experience and capability to hear and determine promptly disputes on technical matters or essentially factual matters, subject to judicial review in case of grave abuse of discretion, has become well nigh indispensable. Thus, in 1984, the Court noted that "between the power lodged in an administrative body and a court, the unmistakable trend has been to refer it to the former. 'Increasingly, this Court has been committed to the view that unless the law speaks clearly and unequivocably, the choice should fall on [an administrative agency.]'" The Court in the earlier case of Ebon v. De Guzman , noted that the lawmaking authority, in restoring to the labor arbiters and the NLRC their jurisdiction to award all kinds of damages in labor cases, as against the previous P.D. amendment splitting their jurisdiction with the regular courts evidently, . . . had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that setup would mean duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim. In this case, the need for the SEC's technical expertise cannot be overemphasized involving as it does the meticulous analysis and correct interpretation of a corporation's by-laws as well as the applicable provisions of the Corporation Code in order to determine the validity of VGCCI's claims. The SEC, therefore, took proper cognizance of the instant case." The SEC, in finding that the Certification of Level Attainment well fall within the classification and definition of "securities," as defined in Section 2 of BP 178, cited American authorities, specially the case of SEC vs. W.J. Howey , 328 U.S. 293, reasoning out that Section 2, supra , was taken from the Federal Securities Act, and hence the decision of the United States Courts, containing similar laws are entitled to great respect. We find no reason to reverse said finding and conclusion as well as in imposing the fine for issuing, selling, disposing, offering and distributing the certificates without the Justee having been previously registered with the SEC, in violation of the RSA, and for ordering the return of the investment to the participants. "We have previously stated that in case of laws patterned after or adopted from those of the United States, decisions of United States courts construing similar laws are entitled to great weight. Generally speaking, when a statute has been adopted from another State and such statute has previously been construed by the courts of such State or country, this statute is deemed to have been adopted with the construction so given it. It has been uniformly held that if a broker extends credit to a customer in violation of the Se curities A ct or the regulations promulgated pursuant thereto, all to induce a customer to purchase securities, then the broker has violated the law and the customer may recover from him any loss proximately resulting therefrom. The customer's right of action is not affected by his participation in the transaction "since the legislation regarded him as incapable of protecting himself." It has been held that such protection was intended to apply only to innocent investors as distinguished from those who lose their innocence and wait to see how their investments turn out before deciding to invoke the act. The acts of protecting investors extends to corporations as well as to individuals. We hold that such principles are applicable to the case at bar." ( Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc. , 97 SCRA 734) HSAcaE Finally, since the SEC, as discussed earlier, had resolve the main issue posed, the orders in question are equivalent to and/or had the effect of a permanent injunction. WHEREFORE, the petition for review is hereby DISMISSED, and the Orders in question are AFFIRMED in toto . SO ORDERED. (SGD.) ARTEMON D. LUNA Associate Justice Carpio Morales and Abesamis, JJ. , concur.