Greenlife Leisure Farms, Inc. AND/OR Greenlife Leisure Farm and Development, Inc.

Republic of the Philippines

Department of Finance Securities and Exchange Commission PICC Secretariat Building, PICC Complex, Pasay City

In the matter of: GREENLIFE LEISURE FARMS, INC. AND/OR GREENLIFE LEISURE FARM AND DEVELOPMENT, INC.

SEC CDO Case No. 04-17-041

ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT, Movant.

X X

CEASE AND DESIST ORDER

This resolves the Motion for Urgent Ex-Parte Cease and Desist Order filed on 18 April 2017 by the Enforcement and Investor Protection Department (EIPD). enjoining GREENLIFE LEISURE FARMS, INC. (GREENLIFE FARMS) AND GREENLIFE LEISURE FARM AND DEVELOPMENT, INC. (GREENLIFE DEVELOPMENT) and their interlocking directors and officers, representatives, salesmen, agents and any and all persons, conduit, entities and subsidiaries claiming and acting for and in their behalf, to cease and desist from engaging in activities of selling and/or offering for sale securities in the form of investment contracts until the requisite registration statement is duly filed with and approved by the Commission and the corresponding license to offer/sell securities is issued.

GREENLIFE FARMS AND GREENLIFE DEVELOPMENT FACTS ESTABLISHED BY THE ARTICLES S OF INCORPORATION OF

The respective Articles of Incorporation of GREENLIFE FARMS and GREENLIFE DEVELOPMENT reveal the following information:

GREENLIFE FARMS DEVELOPMENT GREENLIFE

Principal Address Domestic/Foreign Stock/Non-Stock Filipino Equity Registration Date Registration Number Corporate Name 41TimogAvenue,Diliman,41TimogAvenue,Diliman Stock Domestic Greenlife Leisure Farms, Inc. 100% 9 March 2010 CS201003562 Domestic Stock GreenlifeLeisure Development, Inc. 13 December 2010 100% CS201020464 Farm and

1 Dated 18 April 2017.

In re: GREENLIFE FARMS and GREENLIFE DEVELOPMENT

Enforcement and Investor Protection Department

SEC CDO Case No. 04-17-04 1

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Primary Purpose Authorized Capital Stock and Initial Directors (with Name, Residence interlocking directors shaded) Nationality, of Incorporators and Quezon City 57 P.Tuazon StCubaoQuezon PHP 1,000,000 divided into 10,000 shares with a par value of PHP 100 maintain the business of production, equipment, construction equipment, per share To engage in, operate, conduct and manufacturing, importing, bartering, warehousing, whether as principal or agent or otherwise, the term marketing to include purchase, kinds wares which are the lawful objects limited to agricultural products and transporting, export trade, commodities, of commerce, by materials, and requirements, foods, drugs, and cosmetics. Mandaluyong City Vincent L. Lopez City 32 Arayat Street corner Road 1 (Filipino) 41 Ilaya St.Mandaluyong City Nemecio C.Barrameda Filipino Ceferina Corrine T.Lopez Filipino Francis Gerard M.Sia 258 F.Bernardo St.Mandaluyong Filipino) Francisco M. Laigo (Filipino) Park, Quezon City Juan City 71 Chestnut St., Ritche A. Watanabe City. (Filipino) 183 Pilar St., Addition Hills, San products. of and or deal in, all products. such as but not sales, merchandise, West Fairview sale. construction processing. marketing, import, goods, and Quezon City PHP 1,000,000 divided into 10,000 To deal and engage in land or branches and ramifications, to hold, shares with a par value of PHP 100 development business in all its develop, manage, administer, sell, acquire, rent, or otherwise deal in and dispose of, for itself and for commercial, industrial, agricultural, urban or other kinds or real property, improved or unimproved, with or to such persons and entities andundersuchterms and per share property convey, others for profit and advantage, residential including but not limited to, all kinds of housing projects, conditions as ay be permitted by law; to acquire, purchase, hold, manage, develop, and sell lots, with form as the corporation may consideration and in such manner or operate, lease, in whole or in part, buildings and tenements of the be proper or legal and to exercise or undertake such other powers and purposes as may be required and or determine or as the law permits; to erect, construct, alter, manage, commission or for such fees as may 57 P.Tuazon St.CubaoQuezon improvements purpose herein mentioned Nemecio C.Barrameda necessarily Vincent L.Lopez Ceferina Corrine T.Lopez 41 Ilaya St.Mandaluyong City 32 Arayat Street corner Road 1, Francis Gerard M.Sia 258 F.Bernardo St,Mandaluyong (Filipino) City (Filipino) (Filipino) Mandaluyong City 57 P. Tuazon St., Cubao, Quezon City Raymond L. Lopez (Filipino) Filipino) City without encumber, management implied buildings for from purchase, such and the or

In re: GREENLIFE FARMS and GREENLIFE DEVELOPMENT

Enforcement and Investor Protection Department

SEC CDO Case No. 04-17-04

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Raul Leo C. Solomon (Filipino) Unit 706, Bel Air Soho Condo, Jose Alejandro E. Galvez 2510 Bigbend St., Phase 5 Constancia S. Sibulo Agripina P. Zafra Polaris St., Makati City (Filipino) Parkhomes Subd., Muntinlupa City 34 Sta. Fe, bo Kapitolyo, Pasig City (Filipino) 129 Scout Lozano St., Quezon City (Filipino)

29 Ortigas St. San Rafael, Pasay Jeff Yu Lu (Filipino)

Type of License not allowed to sell securities. separate juridical personality but City Primary License only. Granted Primary License only. Granted separate juridical personality but not allowed to sell securities.

Note that GREENLIFE FARMS and GREENLIFE DEVELOPMENT have the following in common: (a) four (4) interlocking directors; (b) same principal address; (c) same identifying phrase "Greenlife Leisure" in their corporate name; (d) same year of incorporation, 2010; (e) same financial structure (i.e., ACS of PHP 1,000,000 divided into 10,000 shares of PHP 100 par value); and (f) same license granted, primary only.

I. FACTS ESTABLISHED BY THE COMPLAINT-AFFIDAVIT OF WILLIE B. DAVID

The complainant, Willie B. David (Willie David"), stated under oath that:

(A) met representatives of GREENLIFE FARMS. He received some flyers, Sometime in early 2010, Willie attended a Livelihood Expo where he

was given a verbal overview of the company and the mechanics of the investment, and was asked to sign their visitor book.

(B) After a few days, Willie David received a phone call from a certain

Lorena Fausto and she invited him to an Investors Briefing to be conducted by the company President, Vincent ("Vince") Lopez.

(C On the scheduled date, Willie attended the Investors' Briefing, where he spoke with Vince Lopez (President), Francis Sia (Finance Officer).

and Lorena Fausto (Membership Director) of GREENLIFE FARMS.

(D Vince Lopez pointed-out some other directors/officers present, but these persons did not converse with Willie David as they were busy

doing one-on-one solicitation with the other potential investors.

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SEC CDO Case No. 04-17-041

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(E Willie David was convinced by the presentation given by Vince Lopez and Lorena Fausto, the substance of which was:

( GREENLIFE FARMS has access to a farm named "Greenlife Mango Orchard a.k.a.Hacienda Verde, located in Acoje

Road, Lucanpon South, Sta. Cruz, Zambales, originally a Lopez family property, which has five hundred (500) mango trees that are known to produce export-quality mangoes.

() GREENLIFE FARMS presented statistics to show that mango exports is a viable market; considering that Vince Lopez

already had access to a mango farm, GREENLIFE FARMS was created in 2010 specifically to seize this opportunity.

(3) GREENLIFE FARMS would be more profitable if it exports

certified-organic mangoes and thus it applied for certification

Philippines (OCCP). When approved-supposedly in 2013 the price of GREENLIFE's export mangoes would practically as an Organic Farm with the Organic Certification Center of the

double, from PHP 500/kilo to PHP 800-1,000/kilo.

(4 GREENLIFEFARMS explainedthata "Preferred

Member/Investor" would be entitled to a 60% share of the

to GREENLIFE FARMS.2 In contrast, a "Non-preferred annual profits from existing mango trees, the other 40% going Member/Investor" would be entitled to future profits from mango trees yet unplanted.

(5 For preferred member/investors, the profit-sharing scheme would begin in 2013, the year when OCCP certification was

expected. For non-preferred member/investors, it would begin in 2016, when the mango seedlings mature into fruit-bearing trees. Profits were expected to rise annually, viz:

(a) Preferred member/investors are entitled to profits from PHP 48,000 on the 6th year (2016) matured/existing mango trees, to wit: PHP 30,000 on the 3rd year (2013) PHP 36,000 on the 4th year (2014) PHP 42,000 on the 5th year (2015) PHP 54,000 on the 7th year (2017) PHP 60,000 on the 8th year (2018) PHP 60,000 on the 9th year (2019) PHP 60,000 on the 10th year (2010)

2 Annexes E and G of Complaint-Affidavit of Willie B. David.

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SEC CDO Case No. 04-17-041

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(b) Preferred member/investors are also granted incentives

in exchange for sponsoring mango seedlings to Non- preferred member/investors, to wit: PHP 24,000 on the 6th year (2016) PHP 24,000 on the 7th year (2017) PHP 48,000 on the 8th year (2018) PHP 48,000 on the 9th year (2019) PHP 48,000 on the 10th year (2020)

(c) Non-preferred member/investors, are entitled to profits

from the yet-unplanted mango seedlings, to wit:

All member/investors (preferred and non-preferred) would also be entitled to Lifetime Free Access to the mango farm (Greenlife Orchard a.k.a. Hacienda Verde3. GREENLIFE FARMS represented that, starting 2011, farm amenities would include picnic pavilion, cafe restaurant, view-deck, horseback riding, ATV trail, bike trail, and jogging path. To date, these amenities are still non-existent.

All member/investors (preferred and non-preferred) will also receive an annual free vacation of 21 days and 20 nights at GREENLIFE FARMS' next project, the Sambali Wellness Beach Resort.4 Upon completion in 2015, resort facilities would include kayak, pedal boat, island boat ride, jet ski, team- building facilities, campsite, beach volleyball, infinity pool. aqua slide, spa, karaoke, pool cafe, and gourmet restaurant. To date, these facilities are still non-existent.

( GREENLIFE explained that it uses a "pooling system" to reduce risk, insuring the annual income to member/investors

against natural calamities that would affect mango trees.

member/investors help preserve the mango farm, while member/investors are transferable to their family members. receiving export profits and using the farm/resort facilities. GREENLIFE also explained that benefits enjoyed by thus creatinga"lifetimepartnership" wherethe

(F On 25 June 2010, Willie David deposited One Hundred Nine Thousand Seven Hundred Sixty Pesos (PHP 109,760) to BDO

Account No. 4950264616 in the name of GREENLIFE FARMS.

3 Annexes E1 and F of Complaint-Affidavit of Willie B. David. Annexes E1 and F1 of Complaint-Affidavit of Willie B.David

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(G GREENLIFE FARMS issued to Willie David the following documents, which were duly attached to the complaint-affidavit:

(l) GREENLIFE FARMS Official Receipt5 No.0019;

(2) GREENLIFE FARMS Membership Card No.9232064;

(3) GREENLIFE FARMS Confirmation Letter; and

(4) GREENLIFE FARMS Certificate of Sponsorship7

(5 an email to Willie David (but addressed to all GREENLIFE On 14 November 2012, before profits became due, Vince Lopez sent

member/investors), announcing the conversion of GREENLIFE

stock. In the email signature line, Vince Lopez identified himself as the FARMS membership to GREENLIFE DEVELOPMENT shares of "President/Founder,presumably of the same"Greenlife" or

that he specifically represents GREENLIFE DEVELOPMENT. Pictures of Hacienda Verde were also attached to the email. "Greenlife Leisure in the address bar, but the signature clearly states

The email was among those duly attached (as "Annex G) to Willie David's complaint-affidavit. It contains the names"Greenlife,"

"Greenlife Leisure Farm and Development" which are used membership in one entity (GREENLIFE FARMS) for equity shares of "Greenlife Leisure,""Greenlife Leisure Farms,Inc.," and interchangeably by Vince Lopez. Moreover, there is a conversion of

another entity (GREENLIFE DEVELOPMENT). For convenience, the full text (with typos) of Vince Lopez' email is reproduced here:

Vince Lopez <vincelopez@greenlifeleisure> O willie david

production for the next 5 years by consistently nurturing each mango trees. Greetings to all Greenlife Members, Project. Currently we are rehabilitating our Mango Orchard. We are expected to harvest by 2013 our first batch of Organic Mangoes. But still a lot of work to do so we can achieve higher output from each tree. We are targeting to increase our Thank you very much for the trust and support you have given our Green

show my sincere appreciation for all the support and great advise given to me by the Just an update , we are no longer accepting members to join greenlife. To

Annex C of Complaint-Affidavit of Willie B.David. 7 Annex D of Complaint-Affidavit of Willie B. David. 5 Annex B of Complaint-Affidavit of Willie B.David.

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Enforcement and Investor Protection Department

SEC CDO Case No. 04-17-041

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Preferred Members, I am converting your Membership to Ownership by issuing you shares of stock coming from Greenlife Leisure Farm and Development, Inc. by 2013. Mangoes and also other income generating projects of Greenlife. But wait there's The difference would be a lot, since your dividends now in not only concentrated on

more since land titles are under Greenlife, making you a shareholder means you are a partowner of the company making your investment secure. Lastly you can still retain your membership status if you prefer to be a member.

Here's updated pictures of Greenlife Hacienda Verde.

Vincent Lopez President / Founder Greenlife Leisure Farm and Development Inc. Thank you and Best Regards.

( from 29 June 2010 to 9 February 2017, which he attached to his Willie David maintained an email correspondence with Vince Lopez

Complaint-Affidavit as Annex G.

(8 On 7 February 2017, after several years of not giving member/investors any return, whether as profit-share in GREENLIFE

FARMS or as stock dividend in GREENLIFE DEVELOPMENT, Vince Lopez suggested via Email that Willie David should try selling his membership/share to others, to wit:

Start ko palang magbenta ulet. Baka may buyer ka rin marefer much better. Nasa contract naman na pwede nyo ibenta sa iba":

9 To reiterate, Willie David transacted with both GREENLIFE FARMS and GREENLIFE DEVELOPMENT, through the entities' common

representative/head, Vince Lopez. The dividing line between the two is blurred because Vince Lopez communicated on behalf of "Greenlife" and "Greenlife Leisure," which could refer to either.

H. FACTS ESTABLISHED BY THE SURVEILLANCE EFFORTS OF MOVANT EIPD

A. Ocular Inspection

1 On 15 February 2017, the EIPD conducted an ocular inspection of

and surveillance operation at the common registered address of GREENLIFE FARMS and GREENLIFE DEVELOPMENT at 57-A P

had been vacated or unoccupied for a considerable time. Tuazon Street, Cubao, Quezon City to validate the allegations of Willie David. The business address turned out to be a residential house that

Email of Vince Lopez to Willie David (7 February 2017 at 9:29 pm), Annex G4 of Complaint-Affidavit of Willie B. David. 9 Pars.9-10 of Motion

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2. On 4 April 2017 and on 12 April 2017,the EIPD conducted ocular inspections of and surveillance operations at the Greenlife Orchard

a.k.a. Hacienda Verde, where the organic mangoes for export are supposedly being grown. According the. "GreenlifeLeisure

Cruz, Zambales. There the website, the farm was located (b) a man wearing fat Acoje Road, Barangay Lucapon, Sta ame late (a) a certain Alex Rivera; "Tamandong; and a certain Elmer aretaker. Theseindividuals confirmed that Hacienda 01A eG "the Lopezes," by which they meant M10 a-naKa (partners).Vince Lopez was said to often visit Hacienda a Verde and was scheduled to visit that weekend. The caretake ted settin an appointment with Vince

Website (i.e., different from the "Greenlife Leisure" website).to Lopez, whose details may be gleaned from the "Hacienda Verde

B. Website Inspection

1."Greenlife Leisure" website (www.greenlifeleisure.com) On 13 March 2017, the EIPD inspected the "Greenlife Leisure website, as indicated in the brochures presented by Willie David. The

EIPD confirmed that GREENLIFE FARMS was indeed offering membership cards that carry certain benefits, including "shares" of GREENLIFE DEVELOPMENT. The website explained that

Elite Members" will get a minimum of 1 share. GREENLIFE FARMS "Platinum Members"will get a minimum of 2 shares, while "Preferred

members shall be given Certificates of Title to farm lots in Hacienda Verde. as well as stock dividends from GREENLIFE

different from those narrated by Willie David. Nonetheless, it is clear that the lines are blurred between GREENLIFE FARMS and GREENLIFE DEVELOPMENT. Consistent with the allegations of DEVELOPMENT. Thus, the current terms of membership are

Willie David, membership(profit-sharing)in GREENLIFE FARMS results in stock ownership in GREENLIFE

and the resort facilities of Sambali Wellness Beach Resort.11 benefits include free access to the farm facilities of Hacienda Verde DEVELOPMENT. Consistent with Willie David's claim, additional

2 "Hacienda Verde" website (Facebook account)

On 4 April 2017, the EIPD inspected the Hacienda Verdewebsite,

common/confusing names "Greenlife" and "Greenlife Leisure." The as suggested by its caretaker, Elmer Dimaculangan. The Hacienda Verde website also included advertisements for GREENLIFE FARMS and GREENLIFE DEVELOPMENT specifically, as well as the

EIPD verified the Greenlife is offering the following investment

10 Par. 15 of the Motion. 11 Pars.12-14 of Motion

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SEC CDO Case No. 04-17-041

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opportunities: (@) Organic Mango Partnership Program, divided into Preferred and Non-preferred, exactly as claimed by Willie David including the clearly stated PHP 109.760 investment entitling a preferred member to 60% profit-share; (b) Preferred Membership Card; (c) Platinum Membership Card; (d) Profit-Sharing Program; and (e) schemes unrelated to mangoes, such as Cattle Fattening Operation etc. On the same website, GREENLIFE FARMS represents that it will

DEVELOPMENT by 2013. Screenshots of the "Hacienda Verde" website were duly attached to the Motion as Annex H.1? convert its members to shareholders ofGREENLIFE

C. MSRD Certification that neither GREENLIFE FARMS nor GREENLIFE

DEVELOPMENT has been granted a Permit to Sell securities.

D. CGFD Certification that neither GREENLIFE FARMS nor GREENLIFE

DEVELOPMENT is a registered issuer of mutual funds.

IV GREENLIFE FARMS AND GREENLIFE DEVELOPMENT ARE ALTER EGOS

incorporation documents reveal common ownership and common-involvement in the GREENLIFE FARMS' and GREENLIFE DEVELOPMENT's respective

mango partnership; both entities even used the same fictitious business address.

President/Founder Vince Lopez.13 GREENLIFE FARMS and GREENLIFE DEVELOPMENT, as evident from the "Greenlife" and"Greenlife Leisure" are names used to identify either/both "Greenlife Leisure" website/brochures, as well as the emails of common

FARMS memberships were converted into GREENLIFE DEVELOPMENT shares; interchangeably in that email. he uses the names "Greenlife" and "Greenlife Leisure" to describe either/both entities In his 14 November 2012 email, Vince Lopez clearly stated that GREENLIFE

terms of Willie David's membership"contract" (profit-sharing certificate) in GREENLIFE FARMS, about 4 years after heconverted it into shares of stock in GREENLIFEDEVELOPMENT;eventheinvestmentinoneentity Similarly, in his 7 February 2017 email, Vince Lopez refers to the binding is interchangeable with an investment in the other.

Vince Lopez and his partners an advantage. There is a clear intention to blur the lines between these 2 entities; they are clearly alter egos of each other. It may be inferred that the entity-at-play depends entirely on what would give

12 Pars. 16-20 of Motion. 13 Annex G of the Complaint-Affidavit of Willie B.David.

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SEC CDO Case No. 04-17-041

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The foregoing considered, we now resolve the case on the merits based on the allegations contained in the motion and the evidence presented.

We find merit in the motion.

FARMS and GREENLIFE DEVELOPMENT are selling or offering for sale to the EIPD's motion, supported by substantial evidence, shows that GREENLIFE

public securities in the form of investment contracts without the necessary license

there is even a purported issuance of shares of stock (Section 3(a) of the SRC) of be considered a certificate of participation in a profit sharing agreement, under from the Commission. Over and above a textbook example of investment contracts. GREENLIFE DEVELOPMENT, in exchange for membership interest--which may Section 3(b) of the SRCin GREENLIFE FARMS.

Securities are "shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character"14 and includes an investment contract.1s

Section 8.1 of the SRC provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission. In connection therewith, Section 12.1 of the SRC states that all securities required to be registered under Subsection 8.1 shall be registered through the filing by the issuer in the main office of the Commission, of a sworn registration statement with respect to such securities, in such form and containing such information and documents as the Commission shall prescribe.

An "investment contract" has been defined as follows:

"G. An investment contract means 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.

1. An investment is presumed to exist whenever a person seeks to use the money or property of others on the promise of profits.

receives nothing more than a broker's commission.".e 2. A common enterprise is deemed created when two (2) or more investors 'pool' their resources -- creating a common enterprise, even if the promoter

The concept of an investment contract in the Philippines is of American origin

v. W.J. Howey Co.17 where the Court stated that an investment contract is a It traces its roots from the US Supreme Court case Securities Exchange Commission

I5 Section 3.1 (b), SRC. 17 SEC v. Howey, 328 U.S. 293, 66 S. Ct. 1100, 90 L. Ed. 1244, 163 A.L.R. 1043 (1946). It Section 3.1, Securities Regulation Code (SRC) 16 SRC Rule 3(1)(G), Amended Implementing Rules and Regulations (IRR) of the SRC.

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transaction, contract, or scheme whereby a person (1) makes an investment of money. (2) in a common enterprise, (3) with the expectation of profits, (4) to be derived solely from the efforts of others.

In the subsequent U.S. Supreme Court case of Securities Exchange Commission v. Glenn W. Turner Enterprises, Inc., it was held that the element that profits must come "solely" from the efforts of others should be liberally construed as "primarily." The court reasoned that a literal reading of the requirement "solely would lead to unrealistic results, whereas a flexible reading is in accord with the statutory policy of affording broad protection to the public. Thus, it is no longer necessary that the expected profit accrue solely from the efforts of others. 18

Philippines. In the landmark case of Power Homes Unlimited Corporation v. Securities and Exchange Commission19, the Philippine Supreme Court stated that an The concept of an investment contract has since been transported in the

investment contract in our jurisdiction, to be a security subject to regulation by the Commission, 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.

or she is in fact investing in a security.20 Under this definition, whenever an investor relinquishes control over his or her funds and submits their control to another for the purpose of deriving profits from them, he

One Hundred Nine Thousand Seven Hundred Sixty Pesos (PHP 109,760). In return. commits money to an enterprise or venture in a manner that subjects himself to financial loss.21 In the instant case, Willie David joined GREENLIFE FARMS as a preferred member/investor in the mango partnership program by paying the amount of As to the first requisite, an investment of money occurs when an investor

he and other such investors (whether preferred or non-preferred) would supposedly receive future profits from the non-ongoing export of organic mangoes, plus future free access to non-existent farm and resort amenities. All of these member/investors.

other entity (DEVELOPMENT) as well. Thus, the first element is present. according to Vince Lopez, are presently stockholders of GREENLIFE DEVELOPMENT. The investment in one entity (FARMS) was investment in the

horizontal commonality approach. Under this test, the determination of whether determine what constitutes "common enterprise".22 One of these tests is the a transaction satisfies the commonality element of the modified Howey test participation of more than one investor in (i) the investment of funds or (ii) the two (2) or more investors "pool" their resources. Several tests have evolved to involves an inquiry into whether the said transaction involves the joint As to the second requisite, a common enterprise is deemed created when

20 investment Co. Institute v.Camp, 274 F. Supp. 624 (D.D.C.1967). 22 In the Matter of Octopus Network, Inc., SEC-PED Case No. 98-2220, 22 May 1998. 21 SEC v. International Mining Exchange, Inc., 515 F. Supp. 1062. 19 G.R. No. 164182, 26 February 2008. 18 SECv. Turner, 474 F. 2d 476, 414 U.S. 821, 94 (1973).

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sharing of profits.23 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.24

In the instant case, GREENLIFE FARMS and DEVELOPMENT (collectively as Greenlife or Greenlife Leisure themselves represent that they pool their investors' (Willie David's and others') money into a common fund. Willie David

livelihood expo, and (b) at the investors' briefing. Moreover, the pivotal conversion of twice verified the existence of his fellow preferred member/investors: (a) at the GREENLIFE FARMS membership to GREENLIFE DEVELOPMENT shares in 2012 removed all doubt that FARMS' pool of capital is one and the same as DEVELOPMENT's pool of capital. Therefore, the second requisite is present.

As to the third requisite, there must be an expectation of profits. Profits may either be through capital appreciation resulting from the development of the initial investment, or participation in earnings resulting from the use of prospects of a return on his investment.25 In the instant case, Willie David, as a investors' funds. In both cases, investors are "attracted primarily by the

preferred member/investor, was promised a 60% profit share, increasing annually from the export of organic mangoes produced by the existing mango trees at Greenlife Orchard a.k.a. Hacienda Verde. Non-preferred member/investors would be entitled to lesser annual profits from yet-unplanted mango trees. The projected amounts are all written in the "Greenlife Mango Partnership Program" brochure2 and in Vince Lopez' emails27. Additional benefits such as free access to farm and resort facilities. as well as the transferability of these benefits to family members, sweetened the deal. This expectation of profit from GREENLIFE FARMS turned into an expectation from GREENLIFE DEVELOPMENT, when the member/investors' of one entity were converted into shareholders of the other in 2012. Thus, the third element is present.

As to the fourth requisite, there must be the expectation of profits primarily from the efforts of others. In Turner28, the US Supreme Court adopted

are undeniably significant ones, those essential managerial efforts which affect a more realistic test--whether the efforts made by those other than the investors

the failure or success of the enterprise. In the instant case, GREENLIFE FARMS and GREENLIFE DEVELOPMENT, through their common founder Vince Lopez, created, marketed, and operated the "mango partnership." Willie David, for instance, did not exert any effort beyond investing his money. The member/investors of

primarily from the efforts of others. Therefore, the fourth element is present. GREENLIFE FARMS, now stockholders of GREENLIFE DEVELOPMENT, earn

23 Note 26, citing 69 Am Jur 2d citing Stenger v. R.H. Love Galleries, Inc. 741 F2d 144. 24 Note 26, citing Wasnowic v. Chicago Bd. of Trade 352 F Supp 1066. 25 Power Homes Unlimited Corporation v. Securities and Exchange Commission. 26 Annex E of Complaint-Affidavit of Willie B. David. 28 Note 33, Supra. 27 Annex G of Complaint-Affidavit of Willie B. David.

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FARMS and GREENLIFE DEVELOPMENT should be considered as engaged in Since all the elements of an investment contract are present, GREENLIFE

selling and/or offering for sale of investment contracts, which are considered "securities"under the SRC. In fact, GREENLIFE DEVELOPMENT, according to Vince Lopez, is even offering shares of stock, which is obviously a security? :1n exchange for the membership interest (which the EIPD rightly points out as a certificate of participation in a profit-sharing agreement, another obvious security30 in GREENLIFE FARMS.

In Power Homes Unlimited vs. Securities and Exchange Commission31, the Supreme Court ruled that:

"As an investment contract that is security under R.A. No. 8799, it must be registered with public respondent SEC, otherwise the SEC cannot protect the investing public from fraudulent securities. The strict

depend on the investing public's level of confidence in the system." regulation of securities is founded on the premise that the capital markets

Since GREENLIFE FARMS and GREENLIFE DEVELOPMENT are

investment contracts or otherwise, both of them should be registered with the engaged in selling and/or offering for sale securities, whether in the form of

Commission.

Furthermore, Rule 3, paragraph 1, sub-paragraph N of the SRC provides that:

modes shall be presumed to be a public offering: "Public offering means a random or indiscriminate offering of securities in general to anyone who will buy, whether solicited or unsolicited. Any solicitation or presentation of securities for sale through any of the following

iii. Advertisement or announcement in any radio or television, or any online or I. iv. Distribution and/or making available flyers, brochures or any offering Publication in a newspaper, magazine or printed reading material which is Presentation in any public or commercial place distributed within the Philippines or any part thereof; e-mail system; or

material in a public or commercial space,or mailing the same to prospective purchasers."

potential investors without prior registration. FARMS and GREENLIFE DEVELOPMENT are offering for sale its investment schemes publicly through one-on-one sales, brochures, and online advertisements to In the instant case, evidence adduced by EIPD show that GREENLIFE

Relative thereto, Section 64 of the SRC provides that:

29 Section 3(a), SRC. 30 Section 3 (b), SRC. 31 Note 34 Supra.

Inre:GREENLIFE FARMS and GREENLIFE DEVELOPMENT

Enforcement and Investor Protection Department SEC CDO Case No. 04-17-041

Page 14 of 16

irreparable injury or prejudice to the investing public. Section 64. Cease and Desist Order. - 64.1. The Commission, after proper investigation or verification, motu proprio or upon verified complaint by any operate as a fraud on investors or is otherwise likely to cause grave or prior hearing if in its judgment the act or practice, unless restrained, will aggrieved party, may issue a cease and desist order without the necessity of a

irreparable injury or prejudice to the investing public.32 cease and desist order is issued: First, a proper investigation or verification was conducted; and Second, there must be a finding that the act or practice, unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or Thus, there are two essential requirements that must be complied with before a

CGFD Certifications were obtained, which clearly indicate that GREENLIFE It is evident that EIPD conducted a diligent investigation of both entities. two (2) website inspections as evidenced by its Investigation Reports. MSRD and FARMS and GREENLIFE DEVELOPMENT are both not licensed to sell securities. As to the first requirement, EIPD conducted three (3) ocular inspections and

based on the continuous advertising via the "Greenlife Leisure" and "Hacienda the Commission. Vince Lopez's emails to its investors--the latest received by Willie David was as recent as 9 February 2017--where the latter are encouraged to sell to others, and (b) engaged in the offering and selling of securities without the necessary license from Verdewebsites,GREENLIFE FARMS and GREENLIFE DEVELOPMENT are still As to the second requirement, based on EIPD's investigation, (a) based on

securities, whether in the form of investment contracts or otherwise. GREENLIFE DEVELOPMENT should be restrained from offering or selling Thus, in the absence of a secondary license, GREENLIFE FARMS and

approved by the Commission and the corresponding to offer/sell is issued. OF CONTEMPT, from engaging in activities of selling and/or offering for sale discussed in this Order, until the requisite registration statement is duly filed with and INC. and GREENLIFE LEISURE FARM AND DEVELOPMENT,INC.,their partners, officers, directors, agents, representatives, conduits, assigns, AND ANY are hereby ordered to IMMEDIATELY CEASE AND DESIST33, UNDER PAIN securities in the form of investment contracts or any others of the same nature, as AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR BEHALF WHEREFORE, premises considered, GREENLIFE LEISURE FARMS,

by any aggrieved party, may iss injury or prejudice to the investing public. 32 SEC vs. Performance Foreign Exchange Corporation, G.R. No. 154131, 20 July 2006. act or practice, unless restrained, will operate as fraud on investors or is otherwise likely to cause grave or irreparable 33 Section 64.1, SRC - The Commission, after proper investigation or verification, motu propio, or upon verified complaint ue a cease and desist order without the necessity of a prior hearing if in its judgment the

Inre:GREENLIFE FARMS and GREENLIFE DEVELOPMENT

Enforcement and Investor Protection Department SEC CDO Case No. 04-17-041

Page 15 of 16

Furthermore, the subject corporations are directed to cease its internet

the appropriate administrative and criminal action against any persons or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers or the like for and in behalf of the subject corporations. presence relating to above-stated investment activities. The Commission will institute

DIRECTED to: 1) serve this Order to GREENLIFE LEISURE FARMS,INC.and GREENLIFE LEISURE FARM AND DEVELOPMENT, INC., their President General Manager, Corporate Secretary, Treasurer, In-House Counsel or partners; 2) post copies of the Order at the entrance of the main office and/or branches, if any, of GREENLIFE LEISURE FARMS, INC. and GREENLIFE LEISURE FARM AND DEVELOPMENT, INC. The Enforcement and Investor Protection Department is hereby

Company Registration and Monitoring Department, the Corporation Finance information and appropriate action. published in a national newspaper of general circulation and furnished to the Department and the Economic Research and Information Department for their Let a copy of this Order be also posted in the Commission's website;

way of a pleading, to the Commission En Banc WITHIN FIVE (5) DAYS from receipt of this Cease and Desist Order. EIPD is FURTHER DIRECTED to submit a formal compliance report, by

2016 Rules of Procedure of the Commission, the parties subject of this Cease and hereof. Desist Order may file a request for the lifting thereof within five (5) days from receipt In accordance with the provisions of Sec. 64.334 of SRC and Sec. 4-3 of the

FAIL NOT UNDER PENALTY OF LAW.

SO ORDERED

Pasay City, Philippines; 18 May 2017.

34 Section 64.3, SRC - Any person against whom a cease and desist order was issued may, within five (5) days from desist order shall automatically be lifted. termination of the hearing. If the Com receipt of the order, file a formal request for a lifting thereof. Said request shall be set for hearing by the Commission not later than fifteen (15) days from its filing and the resolution thereof shall be made not later than ten (10) days from the mission fails to resolve the request within the time herein prescribed, the cease and

In re:GREENLIFE EARMS aDd GREENLIFE DEVELOPMENT

Enforcement and Investor Protection Department SEC CDO Case No. 04-17-041

Page 16 of 16

The dispositive portion reads:

investment contracts or any others of the same nature, as discussed in this Order, until the requisite registration statement is duly filed with and approved by the Commission and the corresponding to GREENLIFE LEISURE FARM AND DEVELOPMENT, INC., their partners, officers, directors, agents, representatives, conduits, assigns, and any and all persons claiming and acting for and in THEIR behalf are hereby ordered to IMMEDIATELY CEASE AND DESIST,UNDER PAIN OF CONTEMPT, from engaging in activities of selling and/or offering for sale securities in the form of offer/sell is issued. WHEREFORE, premises considered, GREENLIFE LEISURE FARMS, INC. and

above-stated investment activities. The Commission will institute the appropriate administrative and criminal action against any persons or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers or the like for and in behalf of the subject corporations. Furthermore, the subject corporations are directed to cease its internet presence relating to

this Order to GREENLIFE LEISURE FARMS, INC. and GREENLIFE LEISURE FARM AND Counsel or partners; 2) post copies of the Order at the entrance of the main office and/or branches, if any, of GREENLIFE LEISURE FARMS, INC. and GREENLIFE LEISURE FARM AND DEVELOPMENT, INC., their President, General Manager, Corporate Secretary, Treasurer, In-House DEVELOPMENT, INC. The Enforcement and Investor Protection Department is hereby DIRECTED to: 1) serve

Department, the Corporation Finance Department and the Economic Research and Information Department for their information and appropriate action. newspaper of general circulation and furnished to the Company Registration and Monitoring Let a copy of this Order be also posted in the Commission's website; published in a national

pleading, to the Commission En Banc within five (5) days from receipt of this Cease and Desist Order. EIPD is FURTHER DIRECTED to submit a formal compliance report, by way of a

Procedure of the Commission, the parties subject of this Cease and Desist Order may file a request for the lifting thereof within five (5) days from receipt hereof. In accordance with the provisions of Sec. 64.3 of SRC and Sec. 4-3 of the 2016 Rules of

FAIL NOT UNDER PENALTY OF LAW

SO ORDERED.

TERESITA J. HERBOSA Chairperson

amamt ANTONIETA F. IBE N EMI

Commissioner Con

Wx EPHYRO LUIS B. AMATONG Commissioner BLAS JAMES G. VITERBO * Commissioner *On Vacation Leave