SEC En Banc Case No. 07-24-009Makati Loan, Inc. doing business under the Name and Style of Peso Cash Loan

Securities and Exchange Commission Republic of the Philippines Department of Financ.

COMMISSION EN BANC

IN THE MATTER OF: SEC En Banc Case No.07-24-009 FLCD CDO Case No. 01, Series of 2024 MAKATI LOAN, INC., doing business under the Name and Style of Peso Cash Loan. Movant, For: Violation of SEC Memorandum Memorandum Circular No. 28, Series of 2020, Memorandum Circular 10, Series of 2019, FinLend Order dated 7 February Circular No.03,Seriesof2022

2024, FinLend Order No. 06, 2023 & FinLend Order dated 08 June 2023 Promulgated: 18 December 2024

RESOLUTION

This resolves the Verified Motion for Lifting of Cease and Desist Order Ad Cautelam (the "Motion to Lift") filed by Makati Loan Inc., doing business under the name and style of "Peso Cash Loan"on 30 July 2024 praying that the Cease and Desist Order dated 7 June 2024 (the "Assailed) CDO") issued by the Commission's Financing and Lending Companies Division (FLCD) be lifted. The dispositive portion of the Assailed CDO] reads:

"WHEREFORE, premises considered, MAKATI LOAN INC., doing business under the name and style of Peso Cash Loan, including its owners, operators, promoters, representatives, agents, AND ALL PERSONS CLAIMING AND ACTING FOR AND,IN THEIR BEHALF, are hereby DIRECTED to immediately CEASE AND DESIST from engaging in, carrying out, promoting, which includes offering and advertising their lending business through the internet and/or any other media, and facilitating any lending activity(ies) or transaction(s).

SO ORDERED."

RELEVANT FACTS

Makati Loan, Inc. (the "Movant"or "Makati Loan") is a corporation duly organized and existing under the laws of the Philippines, having been issued a Certificate of Incorporation bearing Company Registration

No.CS201917209.Makati Loan is also a grantee of a license to engage in lending business, having secured from the Commission a Certificate of Authority No. 3130. Its principal office address is at Unit 6-C and Unit 6-

SEC En Banc Case No.07-24-009 In the Matter of Makati Loan Inc Resolution Page 2 of 7

D,6th Floor,Marvin Plaza Building,2153 Don Chino Roces Avenue, Brgy Pio del Pilar,Makati City 1230.

On 7 June 2024, the FLCD issued the Assailed CD0, directing Makati Loan to immediately cease and desist from engaging in, carrying out, promoting/advertising its lending business through the internet and/or any other media,and/or facilitating any lending activity(ies). The FLCD anchored the need to issue the Assailed CDO on the failure of Makati Loan to comply with the following Memorandum Circulars and Orders (the "Subject Regulations") for purposes of preventing fraud, injury or harm to the public and financial consumers, to wit:1

MC No. 3,Series of 2022 (MC No.3) which requires the submission of the Impact Evaluation Report (IER) on or before January 15 of each year beginning 2023; MC No.28,Series of 2022 (MC No.28) which requires the submission of an official e-mail and contact number; (ii) MC No.19,Series of 2019 (MC No.19) which requires the disclosure of advertisements and reporting of Online

(iv) Order dated 07 February 2024 (the "February Order") which requires the submission of complaints handling mechanism; Lending Platforms (OLPs);

(v Order dated 06 May 2024 (the "May Order")which requires registration with the Credit Information Corporation (CIC);

and (vi) Order dated 08 June 2024 (the "June Order")which requires the submission of the list of Third-Party Service Providers

(TPSP).

In its Motion to Lift, Makati Loan alleged that it was made aware of the FLCD's findings through a publication in the Commission's website, which prompted a review by it of the documents that it failed to submit.2 After the conduct of such review, Makati Loan manifested that at the time of the issuance of the Assailed CDO, it was already compliant with MC No. 3, MC No. 19, and the May Order.3

As regards MC No.28,the February Order, and the June Order Makati Loan alleged that it has already complied with the same, and submitted in evidence proof of such compliance.4 Makati Loan further

3 Motion to Lift pars. 4.1, 4.3 and 4.6 Assailed CDO,p.1. 4 Ibid. pars. 4.2, 4.4 and 4.7. 2 Motion to Lift. Par.2

SEC En Banc Case No. 07-24-009 In the Matter of Makati Loan Inc. Resolution Page 3 of 7

explained that the belated compliance of the foregoing circular and orders was merely due to inadvertence, and not an intentional or deliberate refusal to comply.5 Makati Loan further claimed that it did not receive any notice of its infractions, which prevented it from timely informing the FLCD of its compliance thereof.6

Motion to Lift ("Comment"), therein affirming that Movant has complied On 21 August 2024, the FLCD filed its Comment on the Verified

with MC No. 3, MC No. 28, and MC. No.19. The FLCD likewise affirmed Movant's belated compliance with the May Order and June Order. However, the FLCD found that Movant has failed to comply with the February Order, since the call receiver denied relationship with it. On account of this, the FLCD prayed that the Assailed CDO be put on hold until Movant fully complies with the February Order.

We thus resolve.

Starting off with the procedural issue which the FLCD raised relative to the belated filing of the Motion to Lift by Makati Loan, We hold that the same is not fatal to warrant the denial thereof. While both Sec. 6(d)(4) of the Financial Products and Services Consumer Protection Act FCPA),and Rule IV,Section 4-3(b) of the 2016 Rules of Procedure of the Securities and Exchange Commission (the"2016 Rules") require a person subject of a CDO to file a request or motion to lift the same within five (5) days from receipt thereof, this Commission has, time and again consistently implemented the established jurisprudential doctrine that in administrative proceedings, rules of procedure are liberally construed to facilitate the speedy and inexpensive disposition of the matter(s) presented herein.7 We find this rule specifically contained in Section 1-4 Rule 1 Part I of the 2016 Rules, to wit

promote public interest, to secure a just, prompt, expeditious, and inexpensive determination of every action and proceedings brought before the Commission and to carry out the objectives of the laws it is mandated to implement." "Technical rules shall be liberally construed and administered to

5 Ibid. par. 6. the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for the proper observance of [procedural rules], and their relaxation or suspension should only be for persuasive reasons and only in meritorious cases, to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed." This is especially true with quasi-judicial and administrative bodies, such as the IPO, which are not bound by technical rules of procedure. (Emphasis supplied) [Birkenstock Orthopaedie GMBH and Co. vs Philippine Shoe Expo Marketing Corporation.G.R.No.194307,November 20,2013] 6 1bid. par. 7. frustration. A strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should never be used to defeat and just determination of his cause, free from the constraints of technicalities."Indeed, the primordial policy is a faithful It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its

SEC En Banc Case No. 07-24-009 In the Matter of Makati Loan Inc. Resolution Page 4 of 7

Thus,in the interest of affording Makati Loan the opportunity to

present its defense(s), this Commission hereby admits the Motion to Lift.

Anent the substantive issue presented in the Motion to Lift, this Commission agrees with Makati Loan that the lifting of the Assailed CDO is warranted by the facts and circumstances. In other words, this Commission is convinced that Makati Loan's compliance with the Subject Regulations negates the probability that a violation of a regulation will result in irreparable damage/injury to consumers/investors which justifies the subsistence of the Assailed CDO. The fact that Makati Loan is yet to comply with the February Order will not change this.

Section 6(d)(4) of the FCPA provides for the authority of the Commission to issue a CDO to prevent or restrain an act which amounts to fraud or a violation of its provisions, or may unjustly cause grave or irreparable injury or prejudice to financial consumers, thus:

under this Act shall have the following powers: "Section 6. Powers of the Financial Regulators. - Financial regulations

XXX XXX XXX

d Enforcement. - Financial regulators shall have the authority to impose enforcement actions on their respective supervised financial service providers for noncompliance with this Act and

other existing laws pertinent to the jurisdiction and authority of the respective financial regulators. Such enforcement actions may include the following:

XXX X XXX

(4) Issuance of a cease and desist order to the financial service provider without the necessity of a prior hearing if in the calendar days from its receipt of the order. If no such financial regulator's judgment, the act or practice, unless restrained,amounts to fraud or a violation of the provisions of this Act and its IRR, or may unjustly cause grave or irreparable injury or prejudice to financial consumers. The financial service provider shall be afforded an opportunity to defend its act or practice in a summary hearing before the financial regulator or its designated body, upon request made by the financial service provider within five (5

be final. If a hearing is requested by the financial service provider, the proceedings shall be conducted summarily hearing is requested within the said period, the order shall

SEC En Banc Case No. 07-24-009 In the Matter of Makati Loan Inc. Resolution Page 5 of 7

without adhering to the technical rules of evidence, and all issues shall be determined primarily on the basis of records, after which the financial regulator may either reconsider or finalize and execute its order; xxx.

In our jurisdiction, a CDO is considered to partake of the nature of

regulation, or protect investors/ financial consumers from sustaining sustained to effectively prevent fraud, violation of a law, rule or an injunction, the issuance of which has consistently been justified and

grave or irreparable injury or prejudice. The doctrine in Securities and Exchange Commission v. CJH Development Corporation8 on the purpose of a CDO is instructive, to wit:

nothing in the assailed CDO which shows that the acts sought to be a preliminary finding that respondents are engaged in the investing public by making it appear that respondents have authority to deal on such securities. As correctly cited by the SEC Section 8.1 of the SRC clearly states 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 SEC and that prior to such sale, information on the securities, in such form and with "Lastly, the Court neither agrees with the ruling of the CA that there is restrained therein operate as a fraud on investors. The SEC arrived at business of selling securities without the proper registration issued by the Commission. Based on this initial finding, respondents' act of selling unregistered securities would necessarily operate as a fraud on investors as it deceives the

investing in worthless securities." (Emphasis and underscoring such substance as the SEC may prescribe, shall be made available to each prospective buyer. The Court agrees with the SEC that the purpose of this provision is to afford the public protection from supplied)

Relative thereto, the Supreme Court explained the concept of "irreparable injury" in "G" Holdings, Inc. v. Leonora De Mesa Hernandez et al.9 that would warrant an injunction,to wit:

thereof." (Emphasis supplied) serious charge of, or is destructive to, the property it affects, either physically or in the character in which it has been held and enjoined, or when the property has some peculiar quality or use, so that its pecuniary value will not fairly recompense the owner of the loss "An irreparable injury to authorize an injunction consists of a

G.R. No. 210316. November 28, 2016. 9G.R.No.240835,29 March 2023.

SEC En Banc Case No. 07-24-009 In the Matter of Makati Loan Inc. Resolution Page 6 of 7

analogy, to wit: of a CDO for the protection of financial consumers may be applied, by v. Securities and Exchange Commission10 relating to the prompt issuance damage/injury would befall on consumers/investors which justifies the immediate issuance of an injunction. The doctrine in Primanila Plans, Inc. violation of a law, rule or regulation, or a probability that irreparable It is the determination by the Commission that there is fraud,

is obliged to protect." (Emphasis supplied) provision, as any delay in the restraint of acts that yield such results can only generate further injury to the public that the SEc or irreparable injury to investors. There is good reason for this from a verified complaint from an aggrieved party. A prior hearing is to issue a cease and desist order that aims to curtail fraud or grave issued by the SEC motu proprio, it being unnecessary that it results also not required whenever the Commission finds it appropriate "The law is clear on the point that a cease and desist order may be

cause grave or irreparable damage. From this perspective, a CDO is an effective regulatory tool that can prevent (further) damage or injury from befalling upon investors and/or consumers. This is the reason why the law and jurisprudence require certain conditions to be complied with before a CDO can be validly issued, to wit: and/or financial consumers from acts or schemes that may defraud or of the power and authority to issue a CDO is intended to protect investors Prescinding from the foregoing, it is clear that the statutory grant

its issuance of the subject cease and desist order."11 (Emphasis be issued by the Commission after proper investigation or verification, and upon showing that the acts sought to be restrained could result in injury or fraud to the investing public. Without doubt, these requisites were duly satisfied by the SEC prior to supplied) improvident issuances, the authority of the SEC under this rule is nonetheless with defined limits. A cease and desist order may only "To equally protect individuals and corporations from baseless and

issuance of the Assailed CDO have effectively ceased. Consequently, the and affirmed by the FLCD,We agree that the reasons/grounds for the finding that Makati Loan allegedly failed to comply with the requirements of the relevant Memorandum Circulars and Orders of the FLCD. Considering that the compliance by Makati Loan was already recognized In the instant case, the Assailed CDO was issued on the basis of a

11 SEC v. CJH Development Corporation. G.R. No. 210316. November 28, 2016. 1o G.R. No. 193791. August 6, 2014.

SEC En Banc Case No. 07-24-009 In the Matter of Makati Loan Inc. Resolution Page 7 of 7

lifting of the Assailed CDO is in order. However, this should be without prejudice to the imposition of the appropriate penalty, after notice and hearing, for the violation(s) that Makati Loan has already committed in relation to the relevant Memorandum Circulars and Orders.

WHEREFORE, premises considered, the Verified Motion for Lifting of Cease and Desist Order Ad Cautelam dated 26 July 2024 filed by Makati Loan Inc. doing business under the name and style Peso Cash Loan is hereby GRANTED. The Cease and Desist Order dated 7 June 2024 issued against Makati Loan, Inc. is hereby LIFTED.

Let a copy of this Resolution be posted on the Commission's website and furnished to all operating departments and offices of the Commission for their information and appropriate action.

SO ORDERED.

Makati City, Philippines.

EMILIO BAQUINO

Chairpersor

JAVE 1 Commissioner PAUL D.FRANCISCO KARLO'S.BELLO Commissioner

MCJILLBRYANT T.FERNANDEZ Commissioner ROGELIOV.QUEVEDO Commissioner