SEC En Banc Case No. 07-24-008Tekwang Lending Corp. doing business under the name and style of TEKCASH

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance

IN THE MATTER OF

doing TEKWANG business LENDING under CORP. the SEC En Banc Case No.07-24-008 FLCD CDO Case No.05,Series of2024 name and style of TEKCASH (CS201911369), Movant. NO.28,SERIES OF 2020,SEC MEMORANDUM CIRCULAR NO.19,SERIES OF 2019,FINLEND ORDER DATED 07 FEBRUARY 2024,FINLEND ORDER DATED 06 JULY 2023 FINLEND ORDER DATED 08 JUNE 2023 NO.3,SERIES OF 2022,SEC MEMORANDUM CIRCULAR For:VIOLATION OF THE SEC MEMORANDUM CIRCULAR

X Promulgated: 18 December 2024

RESOLUTION

the name and style of TEKCASH on 12 July 2024, praying that the matter 07 June 2024 (the "Assailed CD0") by the Financing and Lending (the "Motion to Lift") filed by Tekwang Lending Corp. doing business under be set for summary hearing, and that the Cease and Desist Order issued on Companies Department ("FLCD") be lifted.The dispositive portion of the Assailed CDO reads: For consideration of the Commission is the Verified Motion to Lift

and facilitating any lending activity(ies) or transactions(s) doing business under the name and style of TEKCASH, including its 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, PERSONS CLAIMING AND ACTING FOR AND,IN THEIR BEHALF,are owners, operators, promoters, representatives, agents, AND ALL "WHEREFORE, premises considered, TEKWANG LENDING CORP.

SO ORDERED."

RELEVANT FACTS

and existing under Philippine laws, having been issued a Certificate of Incorporation with Company Registration No. CS201911369. Movant is Tekwang Lending (the "Movant") is a corporation duly organized

also a grantee of a license to engage in lending business, having secured from the Commission a Certificate of Authority No. 3032. Its principal

Marajo Tower 313, 26th cor. 4th Ave. 1634, Taguig City. place of business is at Ignition Venture Studio, North Penthouse Unit,

IN THE MATTER OF TEKWANG LENDING CORP. SEC En Banc Case No. 07-24-008 RESOLUTION Page 2 of 7

Movant to immediately cease and desist from engaging in, carrying out, promoting/advertising its lending business through the internet and/or On 07 June 2024, the FLCD issued the Assailed CD01 directing

anchored the need to issue the Assailed CDO on the failure of Tekwang harm to the public and financial consumers, to wit: (the "Subject Regulations") for purposes of preventing fraud, injury or any other media, and/or facilitating any lending activity(ies). The FLCD Lending to comply with the following Memorandum Circulars and Orders

a. MC No. 03, Series of 20222 (MC No. 03), which requires the b. MC No.28,Series of 20223 (MC No.28), which requires the C MC No.19,Series of 20194 (MC No.19),which requires the submission of the Impact Evaluation Report (IER) on or before submission of an official e-mail and contact number; January 15 of each year beginning 2023;

d. Order dated 07 February 20245 (February Order), which e. Order dated 06 July 20236 (July Order), which requires requires the submission of complaints handling mechanism; disclosure of advertisements and reporting of Online Lending Platforms;

f Order dated 08 June 20237 (June Order), which requires the registration with the Credit Information Corporation; and

submission of the list of Third-Party Service Providers (TPSPs).

Regulations placed the general public at risk because the Commission's supervisory powers are rendered useless.: The FLCD ruled that Movant's failure to comply with the Subject

undergoing acquisition and a change of management and is in the process of updating its submissions, including its IER for 2023, which requires a Relative to the June Order, the Movant explained that it is currently CDO is warranted since it already substantially complied with Subject Regulations, except the June Order which it undertook to comply with. In its Motion to Lift,Movant averred that the lifting of the Assailed

3 Requirement for Corporations, Partnerships, Associations, and Individuals to Create and/or Designate E-mail Account Address 4 Disclosure Requirements on Advertisements of Financing Companies and lending Companies and Reporting of Online Lending s Submission of Financing and Lending Companies Complaints Handling Details and Mechanisms. Registration of Financing and Lending Companies to the Creidt Information Corporation and Submission of Related Documents 7 Submission of List of Third-Party Service Providers in Compliance with the Financial Products and Service Products and Section 1, Paragraph D (IV) of SEC's Implementing Rules and regulations of the Financial Products and Services Consumer 2 Implementation of Bangko Sentral ng Pilipinas Circular No. 1133 Series of 2021 on the Ceiling/s on Interest Rates and Other Fees Charged by Lending Companies,Financing Companies,and their Online Lending Platform Protection Act of 2022(SEC-FCPA IRR. and Cellphone Number for Transactions with the Commission. Platforms 8 See Assailed CDO, p.2 Services Cons Pursuant to Section 6d4 of RA No.11765Financial Products and Services Consumer Protection Act"(FCPA) and Rule 6. ler Protection Act of 2022 (R.A.No.11765 and its Implementing Rules and Regulations (SEC FCPA IRR)

IN THE MATTER OF TEKWANG LENDING CORP SEC En Banc Case No.07-24-008 RESOLUTION Page 3 of 7

review of voluminous financial data,which account for the delay in its compliance with the same.9

it was filed only on 12 July 2024 instead of 26 June 2024. However, as regards the substantive aspect, the FLCD affirmed that Movant has prayed for the partial grant of the Motion to Lift on the basis of a finding financial consumers. complied with the Subject Regulations, albeit belatedly. Thus, the FLCD that Movant's partial/belated compliance with the Subject Regulations has ruled out the possible grave or irreparable injury that may befall on Movant's failure to request for the lifting of the Assailed CDO within the Lift was filed twenty-one (21) days beyond the reglementary period i.e. prescribed period. Specifically, the FLCD pointed out that the Motion to In its Comment on the Verified Motion to Lift,10 the FLCD raised

We thus resolve.

and Rule IV, Section 4-3(b) of the 2016 Rules of Procedure of the relative to the belated filing of the Motion to Lift by Movant, 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) Securities and Exchange Commission (the "2016 Rules") require a person subject of a CDO to file a reques Starting off with the procedural issue which the FLCD raised motion to lift the same within five (5) days from receipt thereof, thi ommission has, time and again,

presented herein.11 We find this rule specifically contained in Section 1-4 consistently implemented the established jurisprudential doctrine that in administrative proceedings, rules of procedure are liberally construed to Rule 1 Part I of the 2016 Rules, to wit: facilitate the speedy and inexpensive disposition of the matter(s)

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

Philippine Shoe Expo Marketing Corporation., G.R. No. 194307, November 20, 2013] Motion to Lift, par. 6. 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 the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities.Indeed, the primordial policy is a faithful 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 1o Filed on 06 August 2024. 11 "It is well-settled that "the which are not bound by technical rules of procedu observa of [procedural rulesland their relaxatior of proce G mere tools aimed at facilitating the attainment of justice, rather than its 1 or suspension should only be for persuasive reasons and only in phasis supplied [Birkenstock Orthopaedie GMBH and Co.vs

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its defense(s), this Commission hereby admits the Motion to Lift. Thus, in the interest of affording Movant the opportunity to present

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

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

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 the respective financial regulators. Such enforcement actions may include the following: financial service providers for noncompliance with this Act and other existing laws pertinent to the jurisdiction and authority of impose enforcement actions on their respective supervised

XXX XXX XXX

(4) Issuance of a cease and desist order to the financial service calendar days from its receipt of the order.If no such be final. If a hearing is requested by the financial service provider, the proceedings shall be conducted summarily 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." financial regulator's judgment, the act or practice, unless 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) hearing is requested within the said period, the order shall without adhering to the technical rules of evidence, and all provider without the necessity of a prior hearing if in the restrained, amounts to fraud or a violation of the provisions

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

of a CDO is instructive, to wit: sustained to effectively prevent fraud, violation of a law, rule or regulation, or protect investors/ financial consumers from sustaining Exchange Commission v. CJH Development Corporation12 on the purpose an injunction, the issuance of which has consistently been justified and grave or irreparable injury or prejudice. The doctrine in Securities and

investing in worthless securities." (Emphasis and underscoring supplied) Section 8.1 of the SRC clearly states that securities shall not be sold or 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 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 business of selling securities without the proper registration issued by the Commission. Based on this initial finding, respondents' act of selling unregistered securities would authority to deal on such securities. As correctly cited by the SEC, offered for sale or distribution within the Philippines without a "Lastly, the Court neither agrees with the ruling of the CA that there is nothing in the assailed CDO which shows that the acts sought to be restrained therein operate as a fraud on investors. The SEC arrived at a preliminary finding that respondents are engaged in the investing public by making it appear that respondents have necessarily operate as a fraud on investors as it deceives the

al.13 that would warrant an injunction, to wit: "irreparable injury"in "G"Holdings, Inc..v Leonora De Mesa Hernandez et Relative thereto, the Supreme Court explained the concept of

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 thereof." (Emphasis supplied) "An irreparable injury to authorize an injunction consists of a serious charge of, or is destructive to, the property it affects, either physically or in the character in which it has been held and

immediate issuance of an injunction. The doctrine in Primanila Plans, Inc. v. Securities and Exchange Commission14 relating to the prompt issuance of a CDO for the protection of financial consumers may be applied, by violation of a law, rule or regulation, or a probability that irreparable damage/injury would befall on consumers/investors which justifies the analogy, to wit: It is the determination by the Commission that there is fraud,

12 G.R.No.210316.November 28,2016 14 G.R. No. 193791. August 6, 2014 13 G.R.No. 240835, 29 March 2023

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

cause grave or irreparable damage. From this perspective, a CDO is an before a CDO can be validly issued, to wit: and/or financial consumers from acts or schemes that may defraud or 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 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."15 (Emphasis nonetheless with defined limits. A cease and desist order may only 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) "To equally protect individuals and corporations from baseless and improvident issuances, the authority of the SEC under this rule is

reasons/grounds for the issuance of the Assailed CDO have effectively already committed in relation to the Subject Regulations. finding that Movant allegedly failed to comply with the requirements of the Subject Regulations. Considering that the compliance by Movant was already recognized and affirmed by the FLCD, We agree that the ceased.Consequently,the 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 Movant has In the instant case, the Assailed CDO was issued on the basis of a

dated 26 June 2024 filed by Tekwang Lending Corp. doing business under the name and style TEKCASH is hereby GRANTED.The Cease and Desist hereby LIFTED. Order dated 07 June 2024 issued against Tekwang Lending Corp. is WHEREFORE, premises considered, the Verified Motion to Lift

1s SEC v. CJH Development Corporation. G.R. No. 210316. November 28, 2016

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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 B AQUINO MMw

Chairperson

JAVEY PAUL D.FRANCISCO Commissioner KARLO'S BELLO Commissioner

MCJILLBRYANT T.FERNANDEZ ROGELIOV.QUEVEDO

Commissioner Commissioner